United States: USDOT’s Latest Announcement On Mexican Trucks: A Turning Point Or Another Non-Event?

Since the North American Free Trade Agreement ("NAFTA") took effect on January 1, 1994, the United States has been obligated to phase in U.S. market access for Mexico-based trucking companies. Mexico undertook, and has implemented, a reciprocal obligation toward U.S.-based carriers. In December 1995, however, the United States Department of Transportation ("USDOT") placed an indefinite hold on implementing the NAFTA motor carrier access provisions relating to Mexico. During the ensuing nineteen years, successive Congresses—at the behest of labor groups and self-appointed "safety" advocates—have hamstrung efforts at broad implementation of those provisions.

Recent U.S. administrations have made sporadic efforts to uphold their end of the NAFTA bargain. A "demonstration project" announced in 2007 allowed 28 small Mexican motor carriers to operate in the U.S. under a stringent safety inspection regime, but was squelched in March 2009 by further legislation. A more elaborate "Pilot Program" announced in April 2011 was intended to test the ability of Mexican carriers to operate safety in the U.S. over a three-year term ending in October 2014. This program attracted even fewer carrier participants, however, because of ongoing litigation, its inherent term limitation, and the procedural hurdles mandated by Congress.

Will the third time be the charm? Perhaps. On January 15, 2015, USDOT's  Federal Motor Carrier Safety Administration ("FMCSA") cited the "successful completion of the Pilot Program" in announcing that it would "again accept applications from Mexico-domiciled motor carriers seeking authority to operate in long-haul [truck] transportation" extending into the U.S. interior (80 Fed. Reg. 2179). In a report to Congress dated January 9, 2015, (available here) in Docket FMCSA-2011-0097 (the Report), FMCSA further stated that the 13 carriers "participating in the Pilot Program at its completion" were receiving "new authority...to continue long-haul operations in the United States" (Report, at p.2).

In the Report, FMCSA implicitly answered the "safety" advocates with 16 pages of statistics on safety performance by Mexican trucks during the period of the Pilot Program. Interestingly, the statistics included not only the carriers participating in the Pilot, but 260 other Mexican truck fleets with pre-existing authority to haul exempt commodities or provide private carriage ("certificate carriers"), as well as 692 Mexican-controlled fleets that were domiciled in the U.S. ("enterprise carriers") (Report, at pp. 3-4). The study concluded that these three categories of carriers collectively "had safety records that were equal to or better than the national average for U.S. and Canadian motor carriers operating in the United States" (Report, at p. 1).

It remains to be seen whether these statistics will silence the perennial critics of Mexican truck access to the U.S., and result in permanent implementation of the NAFTA trucking provisions. Congressional reaction to FMCSA's January 15 announcement has been notably absent thus far.

If FMCSA's announcement does "stick," Mexican carriers interested in crossing the U.S. border will need to understand both the similarities and the differences between the long-haul cross-border operations that were permitted under the Pilot Program and those for which FMCSA operating authority will be available now. A few particulars follow.

First, some of the similarities. Future authorities granted to Mexican carriers, like those granted under the Pilot, will be limited to "international traffic" between the U.S. and Mexico (Report, p. 10; compare 49 CFR § 365.801(b)). Applications for future authorities, like applications under the Pilot, will require completion of FMCSA's Form OP-1(MX), which extends to 39 pages in a bilingual hard-copy format (plus 12 pages of instructions in Spanish). This form includes many questions (including "essay questions" on safety management) which FMCSA does not currently pose to non-Mexican motor carrier applicants.

On the other hand, future non-Pilot operating authorities for Mexican carriers will be less restrictive in some respects. For example, future applicants will be able (if approved) to transport placardable quantities of hazardous materials (Report, p. 10; compare pp. 10, 19-20 of Form OP-1(MX)). Their U.S. operations will not be limited to particular drivers and vehicles specifically approved by FMCSA; particular vehicles will not be required to have electronic monitoring devices, and these carriers will not necessarily be subject to safety inspections every time they cross the border (Report, pp. 22, 28, 30, 32). Instead, these carriers will be subject to the same safety monitoring (including interventions under the Compliance, Safety, Accountability program or CSA, plus on-site compliance reviews if issues are detected) as non-Mexican motor carriers regulated by FMCSA (Report, pp. 36-37).

Mexican interests not wishing to deal with the complexities of the OP-1(MX) application process have another set of options during the next few months. If they establish or acquire a U.S.-domiciled "enterprise carrier" under their ownership or control, the current application process uses the much simpler OP-1 form. An "enterprise carrier" is still prohibited from transporting U.S. domestic traffic (see Form OP-1, section II), but even this limitation can be avoided if the Mexican party confines its equity in the U.S.-domiciled carrier to a non-controlling investment. Mexican interests desiring to establish an "enterprise carrier" may want to act in the next few months because the current OP-1 form is likely to be replaced this summer by one that will be hardly less complex than the OP-1(MX) form.

The above discussion only scratches the surface of the regulatory issues that Mexican carriers would have to deal with in order to enter the U.S. market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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