Penalty Transfer Provisions Questions & Answers
Posted 1/31/2013, Updated 7/2/2013
Question 1: What percentage of funds are subject to transfer?
Answer 1: States that fail to enact or enforce compliant Open Container and/or Repeat Offender laws by October 1 of each fiscal year will have an amount equal to 2.5 percent (previously 3 percent) of Federal-aid funds apportioned for the National Highway Performance Program (NHPP) and the Surface Transportation Program (STP) (apportioned under 23 U.S.C. § 104(b) (1) and 23 U.S.C. § 104(b)(2)) reserved until the State certifies how it will use the reserved funds. The penalties are cumulative; that is a 2.5 percent penalty applies separately for each program (i.e., Section 154 or 164) where non-compliance occurs.
Question 2: What is the new process for penalty transfer funds for States that do not comply with 23 U.SC. 154 and 23 U.S.C. 164?
Answer 2: Some significant changes to the penalty transfer funds under MAP-21 include:
- FHWA will reserve the penalty funds on October 1 of each fiscal year until the States certify how they intend to use those funds.
- The penalty funds will be reserved from the State's Federal-aid funds apportioned for the National Highway Performance Program (NHPP) and the Surface Transportation Program (STP).
- States must certify how they intend to use the funds by notifying the NHTSA Regional Administrator and FHWA Division Administrator how the funds will be "split" between the permitted uses.
- If a State elects to use the funds for alcohol-impaired driving programs, the funds will be transferred to NHTSA's Section 402 apportionment.
- If the State elects to use the funds to conduct HSIP eligible activities, the funds will be released to the State DOT.
Question 3: Does MAP-21 change the compliance criteria for the Repeat Offender law (23 USC 164)?
Answer 3: Yes. MAP-21 makes a change to the mandatory license suspension criteria to the Repeat Offender law. States now have to require the use of an interlock for not less than one year or require a one-year hard license suspension to be compliant. Also, MAP-21 no longer requires location restrictions on operation of a motor vehicle equipped with an ignition interlock during the one-year license suspension period. The other compliance criteria are unchanged by MAP-21 and remain applicable.
Question 4: When will the changes to the penalty transfer provisions take effect?
Answer 4: The effective date of MAP-21 is October 1, 2012. The changes will impact the penalty transfer funds for States starting in FY 2013 and each fiscal year thereafter.
Question 5: When will the penalties for 154 and 164 be posted for the states?
Answer 5: The Final Apportionment Notice issued by FHWA, which normally occurs on October 1st each fiscal year, details the apportionments by State and program, the States subject to penalty provisions, and the amount of funds affected by those penalty provisions. The Section 154 and 164 penalty amounts are reserved from the apportionments.
Question 6: Will the penalty transfer funds released back to the State DOT be transferred into the Highway Safety Improvement Program (HSIP)?
Answer 6: No. Penalty transfer funds are released to the State DOT to conduct HSIP eligible activities, but they are not transferred into the HSIP. Separate accounting codes will be established for the penalty funds.
Question 7: How are section 154 and 164 penalty fund amounts calculated for Puerto Rico?
Answer 7: The Puerto Rico Highway Program is an allocated program. However, Section 165 of title 23, United States Code states that for the purpose of imposing penalties under sections 154 and 164, Puerto Rico Highway Program funds are treated as being apportioned. Therefore, to calculate the penalty amounts, FHWA applies the following process:
First, the total amount authorized for the Puerto Rico Highway Program is distributed among the programs apportioned under 23 U.S.C. 104(b) and 144, as in effect for FY 1997 and in the same proportions as Puerto Rico's FY 1997 apportionments (the last year Puerto Rico's funds were apportioned rather than allocated).
Next, the total amount treated as being apportioned for the National Highway System, (NHS), Surface Transportation Program (STP), and Interstate Maintenance (IM) programs is deemed to have been apportioned 50 percent for the National Highway Performance Program (NHPP) and 50 percent for STP.
Finally, based on noncompliance with the Open Container law (23 U.S.C. 154) and the Repeat Offender law (23 U.S.C. 164), the 2.5 percent penalty is applied to the amounts deemed to be Puerto Rico's apportioned NHPP and STP funding. The resulting amounts are Puerto Rico's penalty funds for sections 154 and 164.
Note that similar calculations are used to determine all other Puerto Rico penalty amounts, such as the section 158 withholding penalty.
Question 8: How are the penalty transfer funds for Puerto Rico treated with regard to the application of obligation limitation?
Answer 8: The "Obligation Limitation Associated with Penalty Funds" section of the interim Guidance covers the topic of obligation limitation for State penalty amounts. This information generally applies to the Puerto Rico penalty amounts. However, the Puerto Rico Highway Program is an allocated program, so there are important distinctions. First, the "excess" contract authority (CA) (i.e., the difference between the authorization and the amount of limitation received) is "lopped off" and redistributed among the States as CA that can be used on STP-eligible projects. The result is that Puerto Rico's penalty CA and obligation limitation are made equal to one another. Second, for penalty amounts that are designated for HSIP eligible activities, any obligation limitation not able to be utilized by the end of the fiscal year in which it is provided must be returned for August redistribution. The same amount of obligation limitation that is returned will be provided back to Puerto Rico in the subsequent fiscal year (as is the case for all allocated programs).
Question 9: What are the FMIS codes for the penalty funds that are released to the State DOT for HSIP eligible activities?
For the States the FMIS codes are:
Section 154: MS31
Section 164: MS32
For Puerto Rico the FMIS codes are:
Section 154: MP40
Section 164: MP50