Demonstration Project on NAFTA Trucking Provisions, 23883-23886 [07-2152]


[Federal Register Volume 72, Number 83 (Tuesday, May 1, 2007)]
[Pages 23883-23886]
From the Federal Register Online via the Government Printing Office []
[FR Doc No: 07-2152]



Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2007-28055]

Demonstration Project on NAFTA Trucking Provisions

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice; request for public comment.


SUMMARY: FMCSA announces the initiation of a project to demonstrate the 
ability of Mexico-based motor carriers to operate safely in the United 
States beyond the commercial zones along the U.S.-Mexico border. The 
project is part of FMCSA's implementation of the North American Free 
Trade Agreement (NAFTA) cross-border trucking provisions. The 
demonstration project will allow up to 100 Mexico-domiciled motor 
carriers to operate throughout the United States for one year. Up to 
100 U.S.-domiciled motor carriers will be granted reciprocal rights to 
operate in Mexico for the same period. Participating Mexican carriers 
and drivers will be required to comply with all applicable U.S. laws 
and regulations, including those concerned with motor carrier safety, 
customs, immigration, vehicle registration and taxation, and fuel 
taxation. The safety of the participating carriers will be tracked 
closely by FMCSA and its State partners, a joint U.S.-Mexico monitoring 
group, and an evaluation panel independent of the Department of 
Transportation (DOT). The resulting data will be considered carefully 
before further decisions are made concerning the implementation of the 
NAFTA trucking provisions.

DATES: Comments must be received on or before May 31, 2007.

ADDRESSES: You may submit comments identified by DOT DMS Docket Number 
FMCSA-2007-28055 by any of the following methods:
     Web Site: Follow the instructions for 
submitting comments on the DOT electronic docket site.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-0001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays.
     Federal eRulemaking Portal: Go to 
Follow the online instructions for submitting comments.
    Instructions: All submissions must include the Agency name and 
docket number for this notice. For detailed instructions on submitting 
comments and additional information, see the Public Participation 
heading below. Note that all comments received will be posted without 
change to, including any personal information 
provided. Please see the Privacy Act heading below.
    Docket: For access to the docket to read background documents or 
comments received, go to at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m., e.t., Monday through Friday, 
except Federal holidays.
    Privacy Act: Anyone is able to search the electronic form of all 
comments received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477-78) or you may visit
    Public Participation: The DMS is available 24 hours each day, 365 
days each year. You can get electronic submission and retrieval help 
and guidelines under the ``help'' section of the DMS Web site. Comments 
received after the comment closing date will be included in the docket, 
and will be considered to the extent practicable.

FOR FURTHER INFORMATION CONTACT: Mr. Milt Schmidt, Division Chief, 
North American Borders Division, Federal Motor Carrier Safety 
Administration, 400 Seventh Street, SW., Washington, DC 20590-0001. 
Telephone (202) 366-4049; e-mail



    Before 1982, Mexico- and Canada-domiciled motor carriers could 
apply to the Interstate Commerce Commission (ICC) for authority to 
operate within the United States. As a result of complaints that U.S. 
motor carriers were not allowed the same access to Mexican and Canadian 
markets that carriers from those nations enjoyed in this country, the 
Bus Regulatory Reform Act of 1982 imposed a moratorium on the issuance 
of new grants of operating authority to motor carriers domiciled, or 
owned or controlled by someone, in Canada or Mexico. While the 
disagreement with Canada was quickly resolved, the issue of trucking 
reciprocity with Mexico was not. Currently, most Mexican carriers are 
allowed to operate only within the border commercial zones extending 
approximately 25 miles into the United States. Every year Mexico-
domiciled commercial motor vehicles (CMVs) cross into the U.S. about 
4.5 million times. U.S.-domiciled motor carriers are not authorized to 
operate in Mexico at all.
    Trucking issues at the U.S./Mexico border were not fully addressed 
until NAFTA in the early 1990s, when both nations agreed to change 
their policies. NAFTA required the United States incrementally to lift 
the moratorium on licensing Mexico-domiciled motor carriers to operate 
beyond the border zones. On January 1, 1994, the President modified the 
moratorium and the ICC began accepting applications from Mexico-
domiciled passenger carriers to conduct international charter and tour 
bus operations in the United States. In December 1995, the ICC 
published a rule and a revised application form for the processing of 

[[Page 23884]]

property carrier applications (Form OP-1(MX)). These rules anticipated 
the implementation of the second phase of NAFTA, providing Mexican 
property carriers access to California, Arizona, New Mexico and Texas, 
and the third phase, providing access throughout the United States. 
However, at the end of 1995, the United States announced an indefinite 
delay in opening the border to long-haul Mexican CMVs.
    After the Administration announced its intent to resume the process 
for opening the border in 2001, Congress enacted section 350 of the DOT 
and Related Agencies Appropriations Act for Fiscal Year 2002 (Pub. L. 
107-87, 115 Stat. 833, at 864). Section 350 prohibited FMCSA from using 
Federal funds to review or process applications from Mexico-domiciled 
motor carriers to operate beyond the border commercial zones until 
certain preconditions and safety requirements were met. The 
requirements of section 350 have been reenacted in each subsequent DOT 
Appropriations Act. The rulemaking requirements of the Act were met by 
a series of rules published on March 19, 2002 (67 FR 12653, 67 FR 
12702, 67 FR 12758, 67 FR 12776) and a further rule published on May 
13, 2002 (67 FR 31978).
    In November 2002, Secretary of Transportation Norman Mineta 
certified, as required by section 350(c)(2), that authorizing Mexican 
carrier operations beyond the border commercial zones does not pose an 
unacceptable safety risk to the American public. Later that month, the 
President modified the moratorium to permit Mexico-domiciled motor 
carriers to provide cross-border cargo and scheduled passenger 
transportation beyond the border commercial zones. The Secretary's 
certification was made in response to the June 25, 2002, report of 
DOT's Office of Inspector General (OIG) on the implementation of safety 
requirements at the U.S.-Mexico border. In a January 2005 follow-up 
report, the OIG concluded that FMCSA had sufficient staff, facilities, 
equipment, and procedures in place to substantially meet the eight 
Section 350 requirements the OIG was required to review.
    On February 23, 2007, United States Secretary of Transportation 
Mary E. Peters and Mexico Secretary of Communications and 
Transportation Luis Tellez Kuenzler announced a demonstration project 
to implement the trucking provisions of NAFTA. The purpose of the 
project is to demonstrate the effectiveness of the safety programs 
adopted by Mexico-domiciled motor carriers and the monitoring and 
enforcement systems developed by DOT, which together ensure that 
Mexican motor carriers operating in the United States can maintain the 
same level of highway safety as U.S.-based motor carriers.

Demonstration Project Description

    The demonstration project has a one-year limit. It will allow up to 
100 Mexico-domiciled motor carriers to operate beyond the border 
commercial zones and transport international cargo throughout the 
United States. For purposes of the demonstration project, 
``international cargo'' means cargo transported by Mexico-domiciled 
motor carriers in CMVs from Mexico to the United States, with no 
loading in the United States, or from the United States to Mexico, with 
no unloading in the United States [49 CFR 365.501(b)]. Drivers for 
participating motor carriers must comply with the entry requirements of 
the Department of Homeland Security (DHS). Under DHS regulations, 
``[p]urely domestic [U.S.] service or solicitation [by non-U.S. 
drivers], in competition with the United States operators [i.e., 
drivers], is not permitted'' [8 CFR 214.2(b)(4)(i)(E)(1)]. 
Participating motor carriers will be required to comply with all State 
and Federal environmental and emission regulations. Carriers must 
certify that their vehicles have been manufactured in accordance with 
the National Highway Traffic Safety Administration's (NHTSA) Federal 
Motor Vehicle Safety Standards (FMVSS).
    All Mexico-domiciled participants operating in the United States 
under the demonstration project will be required to comply with all 
United States safety standards including hours of service, driver 
medical standards, financial responsibility, drug and alcohol testing, 
size and weight limits, and the ability to communicate in English. 
Every Mexico-domiciled CMV scheduled to be used beyond the border 
commercial zones will undergo an in-depth safety inspection before 
being allowed to operate in the U.S. and must display a valid 
Commercial Vehicle Safety Alliance (CVSA) inspection decal indicating 
it has passed a thorough vehicle inspection. CVSA decals are valid for 
up to 3 consecutive months, so follow-up inspections on Mexico-
domiciled CMVs will be required at least every 3 months. Each vehicle 
will be checked for a valid CVSA decal every time it enters the U.S., 
and the validity of each operator's driver's license will also be 
checked. The display of a valid CVSA decal will not necessarily exempt 
a vehicle from safety inspections.
    Participating motor carriers must file proof of insurance 
underwritten by a U.S. insurance company and pay State registration 
fees and State and Federal fuel taxes.
    The demonstration project gives participants no exemptions from 
U.S. safety requirements. In fact, it requires compliance with 
additional safety requirements not applicable to other motor carriers 
operating in this country, such as having a current CVSA decal on the 
vehicle at all times, and passing a safety audit prior to receiving 
operating authority. Furthermore, under 49 CFR 385.105, FMCSA has 
developed additional monitoring criteria for Mexico-domiciled motor 
carriers. Every vehicle operated by these carriers in the U.S. will 
also be subject to the inspection standards in 49 CFR 365.511.
    The demonstration program is reciprocal. Up to 100 U.S.-domiciled 
motor carriers will be allowed to operate in Mexico on terms similar to 
those applicable to Mexico-domiciled carriers operating in this 
country. The Mexican government is finalizing an application form and 
procedures for use by interested U.S. motor carriers.

Process for Applying for OP-1(MX) Operating Authority

    To participate in the project, a Mexico-domiciled motor carrier 
must, pursuant to regulations already in place, submit (1) Form OP-
1(MX), entitled ``Application to Register Mexican Carriers for Motor 
Carrier Authority to Operate Beyond U.S. Municipalities and Commercial 
Zones on the U.S.-Mexico Border''; (2) Form MCS-150, the ``Motor 
Carrier Identification Report''; and (3) notification of the means used 
to designate agents for service of legal process, either by submitting 
Form BOC-3, ``Designation of Agents--Motor Carriers, Brokers and 
Freight Forwarders,'' or a letter stating that the applicant will use a 
process agent service that will submit Form BOC-3 electronically. The 
forms are available on the Internet at The FMCSA will compare the information and 
certifications provided in the application with information maintained 
in databases of the governments of Mexico and the United States.
    FMCSA has developed special rules that govern Mexico-domiciled 
motor carriers during the application process and for several years 
after receiving OP-1(MX) operating authority. They are codified in 49 
CFR 365.501 through 365.511. These rules impose requirements on Mexico-
domiciled motor carriers in addition to those imposed on U.S. domiciled 
motor carriers seeking operating authority.

[[Page 23885]]

Selection of Carriers To Participate in the Demonstration Program

    Several hundred Mexico-domiciled carriers have filed a complete OP-
1(MX) application, and more applications are expected. The carriers 
that were ready for an audit were subjected to an extensive vetting 
process. Those known to transport hazardous materials or passengers 
were eliminated. All carriers were also checked against the FMCSA 
enforcement management information database. Carriers were eliminated 
if there were any enforcement actions pending, such as unpaid fines, 
unresolved expedited action letters, or operating authority 
suspensions/revocations. The remaining carriers were then checked 
against a U.S. database for involvement in illegal drug activities. 
Those that passed the vetting process were considered for the 
demonstration project. Other carriers may be considered for the project 
as new applications are submitted.
    From among the currently-eligible prospective participants, FMCSA 
is in the process of conducting pre-authorization safety audits on a 
group of motor carriers diverse both in fleet size and geographical 
location. Of the carrier applicants selected by the Agency for audit, 
18 percent are from non-border states in Mexico, while 82 percent are 
domiciled in one of Mexico's six border states. About 46 percent of the 
participants are expected to enter the United States through 
California, 41 percent through Texas/New Mexico, and 13 percent through 
Arizona. Some 70 percent of the carrier applicants operate small 
vehicle fleets, while 25 percent have medium-sized and 5 percent have 
large fleets. For this demonstration program, a small vehicle fleet is 
20 trucks or less, while a medium-sized fleet consists of 21 to 100 
trucks. A large fleet is anything in excess of 100 trucks.

Pre-Authorization Safety Audit (PASA)

    A Mexico-domiciled carrier must satisfactorily complete the FMCSA-
administered pre-authorization safety audit (PASA) required under FMCSA 
regulations before it is granted provisional authority to operate in 
the United States beyond the border commercial zones. This pre-
authorization audit is not required for U.S.-based motor carriers. The 
PASA is a review of the carrier's safety management systems including 
written procedures and records to validate the accuracy of information 
and certifications provided in the application. The PASA will determine 
whether the carrier has established and exercises the basic safety 
management controls necessary to ensure safe operations. The carrier 
will not be granted provisional operating authority if FMCSA finds that 
its safety management controls are inadequate, using the standards in 
Appendix A to Subpart E of 49 CFR part 365. All PASAs performed under 
the demonstration project will be conducted at the motor carrier's 
place of business in Mexico. Vehicles the motor carrier intends to use 
for operations within the U.S. will be inspected and will be required 
to have a valid CVSA decal affixed or to pass an in-depth North 
American Standard Truck Inspection.
    As required by FMCSA regulations, the carrier will be denied 
provisional operating authority if the FMCSA can not:
    1. Verify the existence of a controlled substances and alcohol 
testing program consistent with 49 CFR part 40. The Agency will ensure 
that the carrier has information on collection sites and laboratories 
it intends to use.
    2. Verify a system of compliance with hours-of-service rules in 49 
CFR part 395, including recordkeeping and retention;
    3. Verify proof of financial responsibility, as required by 49 CFR 
part 387;
    4. Verify records of periodic vehicle inspections, as required by 
49 CFR part 396; and
    5. Verify that each driver the carrier intends to assign to operate 
under the demonstration project meets the requirements of 49 CFR parts 
383 and 391. This will include confirmation of the validity of each 
driver's Licencia Federal de Conductor through the Mexican driver 
license information system and a check of the Commercial Driver's 
License Information System (CDLIS) for violations, suspensions, etc.

Issuance of Operating Authority

    If a carrier successfully completes the PASA and the FMCSA approves 
its application, the Agency will publish a summary of the application 
as a preliminary grant of authority in the FMCSA Register, which is 
available at However, the carrier will not be authorized to operate until it 
has made the insurance filings required by 49 CFR 365.507(e)(1) and 
designated a process agent as required by 49 CFR 365.503(a)(3). 
Additionally, no carrier will be authorized to operate until this 
notice-and-comment procedure is completed.
    Upon granting provisional operating authority, the Agency will 
assign a unique USDOT Number, including an ``X'' suffix, which 
identifies the motor carrier as authorized to operate beyond the 
municipalities and commercial zones on the U.S.-Mexico border.
    The issuance of OP-1(MX) provisional operating authority will 
supersede any other operating authority the FMCSA may have issued the 
carrier, including authority to operate within the border commercial 
zone. The participating carrier's entire U.S. operations will be 
subject to the terms and limitations in the OP-1(MX) document, 
including the prohibition on transporting hazardous materials and 

Termination of Provisional Operating Authority

    The demonstration project will terminate and all provisional 
operating authority certificates expire one year from the date FMCSA 
grants the first provisional certificate.
    Provisional operating authority may be suspended or revoked at any 
time during the demonstration project if FMCSA determines that the 
carrier's safety performance does not meet the standards established in 
49 CFR part 385, subpart B. Operating authority may also be suspended 
or revoked if the motor carrier is found to have transported hazardous 
materials or passengers in the U.S., or otherwise to be operating 
beyond the scope of its provisional authority.
    If a Mexico-domiciled motor carrier held FMCSA operating authority 
to operate exclusively within the border commercial zones (OP-2 
authority) before being granted provisional OP-1(MX) operating 
authority, the certificate of registration to operate exclusively 
within the border commercial zones will be reinstated at no cost to the 
motor carrier upon expiration of the demonstration project, providing 
the carrier's safety record during the project has been satisfactory.

Operating in the U.S. Under OP-1(MX) Provisional Operating Authority

    Mexico-domiciled motor carriers are subject to DHS and DOT cabotage 
requirements and prohibited from providing domestic point-to-point 
transportation while operating in the U.S. Carriers found to have 
violated the cabotage requirements will be placed out-of-service under 
the DOT regulations. DHS could also prohibit the driver from entering 
the U.S. in the future. FMCSA, in coordination with the International 
Association of Chiefs of Police (IACP), has developed and provided 
training to State and local law enforcement agencies on the cabotage 

[[Page 23886]]

Monitoring, Oversight and Enforcement

    FMCSA will monitor the operational safety of all Mexico-domiciled 
motor carriers participating in the demonstration project. To 
accomplish this, FMCSA will work closely with State commercial vehicle 
safety agencies, the IACP, CVSA, DHS, and others.
    Field monitoring will include inspections of vehicles, verification 
of compliance with the terms of the provisional operating authority, 
driver license checks, crash reporting, and initiation of enforcement 
actions when appropriate. Additionally, a Mexico-domiciled motor 
carrier committing any violations specified in 49 CFR 385.105(a) and 
identified through roadside inspections or by other means, may be 
subject to a compliance review and enforcement action.
    Monitoring will also include electronic data collection and 
analysis. Data collected as a result of field monitoring and other 
activities will be entered into FMCSA databases. The data will be 
tracked and analyzed to identify potential safety issues. Appropriate 
action will be taken to resolve any identified safety issues. This 
could include suspension or revocation of the provisional operating 
authority or the initiation of other enforcement action against the 
carrier or driver.
    The DOT and the Mexican Secretaria de Comunicaciones y Transportes 
(Secretariat of Communication and Transport, or SCT) have established a 
bi-national monitoring group. The group includes officials from FMCSA, 
DOT, and the U.S. Trade Representative. Mexican participants include 
representatives from the Federal Motor Carrier General Directorate, 
Communications and Transport Secretariat (SCT); the Services 
Negotiations General Directorate, Economy Secretariat; and the SCT 
Centers from the Mexican Border States. The monitoring group's 
objective is to supervise the implementation of the demonstration 
project and to find solutions to issues affecting the operational 
performance of the project. The group will generally convene weekly via 
video conference.
    Enforcement is a key component of the monitoring and oversight 
effort. FMCSA has trained and provided guidance to Federal and State 
auditors, inspectors and investigators to ensure their knowledge and 
understanding of the demonstration project and the procedures for 
taking enforcement actions against carriers or drivers participating in 
the project.
    To ensure carrier compliance with operating authority limitations, 
including the prohibition of domestic point-to-point transportation of 
cargo in the U.S., FMCSA and the IACP have developed and implemented a 
training program that provides State and local officials detailed 
information on cabotage regulations and enforcement procedures.
    FMCSA is also working with the DHS to develop guidance concerning 
the enforcement of DHS cabotage regulations. This material will be 
incorporated into the CVSA North American Standard Inspection Course 
and provided to roadside enforcement officers.
    FMCSA will be issuing policy memoranda and guidance to the Federal 
field staff, State agencies and others concerning monitoring and 
enforcement issues, including English language proficiency, inspection 
of each participating Mexico-domiciled vehicle every time it enters the 
U.S., enforcement of the Federal Motor Vehicle Safety Standards, and 
enforcement of the CVSA decal requirement.
    To ensure uniformity and effective enforcement, the CVSA has 
revised the North American Standard Out-of-Service Criteria to include 
as out-of service criteria, violations of 49 CFR 391.11(b)(2) relating 
to the driver's ability to communicate in English while operating in 
the U.S. and violations of 49 CFR 385.103(c) relating to the display of 
a valid CVSA decal on vehicles operated by project participants.

Evaluation and Reporting

    The DOT will evaluate the success of the demonstration project by 
examining the safety performance of Mexico-domiciled motor carriers 
operating in the U.S. Specifically, FMCSA anticipates examining the 
crash rate of Mexican carriers, convictions of Mexican drivers for 
violations of U.S. traffic safety laws, the rate at which Mexican 
drivers and vehicles are placed out of service when inspected in the 
U.S., violations discovered during pre-authority safety audits, and 
compliance of Mexican trucking companies with U.S. drug and alcohol 
testing regulations. These data will be collected through police 
reporting of crashes and moving violations, uploads of roadside 
inspection results performed by FMCSA or our State partners, and 
uploads of safety audits and compliance reviews of Mexican motor 
carriers performed by FMCSA staff.
    The DOT also intends to provide for an independent evaluation of 
the demonstration project. The Secretary has asked former DOT Inspector 
General Kenneth Mead, former DOT Deputy Secretary Mortimer Downey and 
former House Appropriations Sub-Committee Chairman Jim Kolbe to serve 
on an evaluation panel. The panel will be responsible for evaluating 
the safety impacts of allowing Mexico-domiciled motor carriers to 
operate on U.S. roads beyond the border commercial zone. They will 
operate independently from other monitoring efforts and provide their 
own assessment of the project. Their conclusions will be considered 
carefully before a decision is made on a permanent full implementation 
of the NAFTA trucking provisions.

Request for Comments

    The FMCSA has decided to request public comment from all interested 
persons on the demonstration project outlined above. The FMCSA has 
fulfilled all of the statutory requirements necessary for the lifting 
of the moratorium against certain Mexico-domiciled motor carriers. The 
Agency intends the demonstration project to be the means of validating 
its safety oversight regime.
    All comments received before the close of business on the comment 
closing date indicated at the beginning of this notice will be 
considered and will be available for examination in the docket at the 
location listed under the address section of this notice. Comments 
received after the comment closing date will be filed in the public 
docket and will be considered to the extent practicable. In addition to 
late comments, the FMCSA will also continue to file, in the public 
docket, relevant information that becomes available after the comment 
closing date. Interested persons should continue to examine the public 
docket for new material.

    Issued on: April 27, 2007.
John H. Hill,
[FR Doc. 07-2152 Filed 4-30-07; 8:45 am]