[Federal Register Volume 60, Number 201 (Wednesday, October 18, 1995)]
[Proposed Rules]
[Pages 53894-53906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25773]



49 CFR Parts 1043 and 1160

[Ex Parte No. 55 (Sub-No. 96)]

Freight Operations by Mexican Motor Carriers--Implementation of 
North American Free Trade Agreement

AGENCY: Interstate Commerce Commission.

ACTION: Proposed rules.


SUMMARY: The purpose of this Notice is to announce implementation of 
the provisions of the second phase of the North American Free Trade 
Agreement (NAFTA) relating to land transportation, and to promulgate 
rules and develop an application form required to carry out the 
provisions. Under existing law, effective December 18, 1995, the 
Commission will process applications filed by Mexican motor carriers of 
property for operating authority to provide service across the United 
States-Mexico international boundary line to and from points in 
California, Arizona, New Mexico, and Texas, and by persons of Mexico 
who establish enterprises in the United States seeking to distribute 
international cargo in the United States.

DATES: Comments must be filed by November 7, 1995.

ADDRESSES: An original and 10 copies of comments referring to Ex Parte 
No. 55 (Sub-No. 96) must be sent to: Interstate Commerce Commission, 
Office of the Secretary, Case Control Branch, 1201 Constitution Avenue, 
N.W., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Bernard Gaillard, (202) 927-5500 or 
Stanley M. Braverman, (202) 927-6316. [TDD for the hearing impaired: 
(202) 927-5721.]

SUPPLEMENTARY INFORMATION: Section 6 of the Bus Regulatory Reform Act 
of 1982 (codified at 49 U.S.C. 10922(m)) imposed a 2-year moratorium 
(subject to renewal) on the Commission's issuance of new grants of 
operating authority to motor carriers domiciled in or owned or 
controlled by persons of Mexico or Canada. Under this statute, the 
President has the authority to remove or modify the moratorium if he 
determines it to be in the national interest, i.e., if overriding 
economic or foreign policy considerations make such an action 
advisable, or if a negotiated settlement with one country or the other 
can be reached. Under the moratorium, the President must notify 
Congress in writing 60 days before the date on which the removal or 
modification is to take effect.
    Shortly after the moratorium went into effect, the President 
exercised his authority and removed the moratorium with respect to 
Canada. The President indicated in a memorandum to the United States 
Trade Representative that the United States and Canada had reached a 
bilateral understanding that would ensure fair and equitable treatment 
for both U.S. and Canadian motor carriers on both sides of the 
international boundary line. 47 FR 54053 (1982).
    The moratorium remained in place for Mexican motor carriers because 
the Mexican Government continued to restrict U.S. motor carriers' 
access to Mexico. The moratorium prohibits Mexicans from seeking 
operating authority that carriers of other nations can obtain.1

    \1\The moratorium does not entirely bar Mexican carriers from 
operating in the United States. Pursuant to the provisions of 49 
U.S.C. 10922(m) and 10530, Mexican carriers may operate in the 
United States, but only in United States border commercial zones, 
and only pursuant to certificates of registration known as ``MX 

    NAFTA was signed on December 17, 1992. It ``entered into force'' 
(i.e., it took effect) on January 1, 1994. NAFTA contemplates that the 
moratorium on Mexican motor carriers will be lifted in phases, and that 
restrictions imposed by the Mexican government on U.S. carriers 
operating in Mexico will be similarly relaxed.2 The phases are as 

    \2\The NAFTA schedule of liberalization does not remove all 
limitations on Mexican motor carrier operations in the United 
States. The moratorium will remain in place for Mexican carriers in 
the one area that was not liberalized, namely, point-to-point 
carriage of domestic cargo in the United States. This means that 
Mexican property carriers will be able to operate only in 
international commerce (between points in the United States and 
points in Mexico), but they will not be able to engage in 
transportation between points in the United States.

    1. The first phase of NAFTA granted access to Mexican charter 
and tour bus operators to provide international transportation 
service between Mexico and all points in the United States;3

    \3\In Passenger Operations By Mexican Carriers--NAFTA, 9 
I.C.C.2d 1258 (1993), we crafted a special authorization for 
international charter and tour bus service.

    2. Three years after signature (December 17, 1995), NAFTA 
provides for access by Mexican motor property carriers into United 
States border States, and establishment of 

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companies to distribute international cargo within the United 

    \4\Because December 17, 1995 falls on a Sunday, we will begin 
processing applications on Monday, December 18, 1995.

    3. Three years after entry into force (January 1, 1997), NAFTA 
provides for access by Mexican regular-route passenger carriers to 
perform international service to all points in the United States;
    4. Six years after entry into force, NAFTA provides for access 
for cross-border operations by Mexican motor property carriers to 
all points in the United States; and
    5. Seven years after entry into force, NAFTA provides for bus 
services by Mexican carriers between points in the United States.

    Pursuant to 49 U.S.C. 10922(m)(2)(A), the President notified 
Congress, on November 4, 1993, in a Statement of Administrative Action 
to Implement NAFTA, of his intention to modify the moratorium in 
conformity with the entry phases of NAFTA. We are thus instituting a 
rulemaking proceeding, in anticipation of the President's specific 
modification of the moratorium, to implement phase 2 of NAFTA, which 
governs international cargo transportation between the U.S.-Mexico 
international boundary and points in the four U.S. border States, as 
well as the distribution and transportation of international cargo by a 
Mexican-owned or controlled company based in the United States.
    We will require operating certificates for private as well as for 
for-hire Mexican carriers of property (including exempt 
commodities),5 because the current moratorium on grants of 
authority to Mexican carriers clearly includes Mexican private carriers 
and carriers of exempt commodities. Indeed, the phase 2 NAFTA entry 
provisions, which contemplate a partial lifting of the moratorium, 
define ``truck services'' as including for-hire, private, or exempt 
services. North American Free Trade Agreement, January 1, 1994, Annex 
I--United States (1-U-19); see also North American Free Trade Agreement 
Implementation Act (Dec. 8, 1993), Pub. L. No. 103-182, 107 Stat. 2057, 
190 U.S.C.S. 3301 (1993).

    \5\These certificates may be obtained through the filing of an 
``OP-1MX Application form'' for Mexican carriers.

    Because NAFTA is designed to provide simultaneous access to each 
country's border States for international shipments and to allow the 
establishment of carriers to carry international cargo, reciprocal 
treatment in practice must be achieved. Accordingly, to guard against a 
failure to adhere to the NAFTA principles of reciprocal access for U.S. 
carriers in Mexico, the Commission will issue conditional grants of 
authority to Mexican applicants (common carriers, contract carriers, 
private carriers, household goods carriers, and companies established 
to distribute international cargo within the United States). The 
certificates that we issue to Mexican motor carriers will usually be 
framed to authorize service:

    Over irregular routes, in foreign commerce, transporting general 
and exempt commodities (with the usual exceptions), between ports of 
entry on the international boundary between the U.S. and Mexico, on 
the one hand, and on the other, points in California, Arizona, New 
Mexico, and Texas.
    Condition: The duration of this grant is subject to the 
condition that U.S. carriers obtain reciprocal access in Mexico. 
This certificate will terminate 30 days after service of a 
Commission decision finding that reciprocal access has not been 
granted by Mexico.

    The Commission, on its own motion or on petition by interested 
persons, may initiate a proceeding to determine whether Mexico has 
failed to grant reciprocal access. The U.S. Department of 
Transportation (DOT) will be invited to participate in any such 
proceeding. Upon a determination by the Commission that reciprocal 
access in Mexico has been denied, the conditional grants of authority 
to Mexican carriers would be terminated.6

    \6\ Reciprocal treatment does not require the establishment of 
identical entry procedures in both countries. Rather, NAFTA simply 
mandates reciprocal access in the territories of both countries.

    Petitions to invoke the termination of these grants of authority 
will not be entertained in the absence of allegations of comprehensive 
efforts by Mexico to deny or discourage entry into or establishment of 
transportation operations within that country. All terminated grants 
would be reinstated upon a finding in a subsequent proceeding that 
reciprocity has been achieved.
    In general, the application procedures and regulations that apply 
to United States for-hire carriers will also apply to Mexican 
carriers.7 For example, to be issued operating certificates in 
accordance with current law, carriers must abide by all DOT safety 
regulations, comply with the Commission's insurance requirements (49 
U.S.C. 10927, 49 CFR Part 1043), publish and file with the Commission 
applicable tariffs (49 U.S.C. 10761, 10762), and file with the 
Commission agents for service of process (49 U.S.C. 10330). After 
initiating service, carriers must maintain compliance with DOT's safety 
fitness standards. Failure to do so will result in the revocation of 
the authority.

    \7\See 49 CFR Part 1160, along with the proposed amendments 
required to implement phase 2 of NAFTA.

    Attached as Appendix A is the proposed OP-1MX Application and the 
instructions on how it should be completed. The application is designed 
to collect information from Mexican applicants seeking operating 
authority to conduct private and for-hire motor carrier cross border 
operations (including the carriage of exempt commodities) into and from 
the four United States border States, and for Mexican-owned or 
controlled enterprises established in the United States to transport 
international cargo in foreign commerce.
    We believe that a separate application form designed to authorize 
this phase of NAFTA service will help to avoid confusion and errors, 
thereby improving the speed and efficiency of the application 
processing. At the request of the Federal Highway Administration, our 
application forms will alert applicants to the safety fitness 
conditions imposed on all certificates by the Commission in Safety 
Fitness Policy, 8 I.C.C.2d 123 (1991), and will require a certification 
that the applicant can produce records demonstrating compliance with 
the Federal Motor Carrier Safety Regulations and the Hazardous 
Materials Transportation Regulations. Because certain Mexican carriers 
may want to file ``OP-2'' Forms seeking authority to operate only in 
U.S. border commercial zones under the more limited MX certificates, 
rather than operating under the broader conditional licenses 
contemplated here, we will continue to process requests for MX 
certificates, unless Congress amends or repeals section 10530.
    We will provide a short comment period to enable interested persons 
to submit written views, arguments, or representations. Comments filed 
with the Commission must be identified as such and must comply with the 
requirements for filing pleadings specified at 49 CFR 1104.1-1104.3. 
Pursuant to 5 CFR 1320.5(a)(iv)(A)(6), comments may also be filed with 
the Office of Management and Budget, Office of Information and 
Regulatory Affairs, Washington, D.C. 20403.

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., we 
have examined the impact of this proposed action on small businesses 
and small organizations. We expect that the new application form 
designated for Mexican applicants (Form OP-1MX), and the corresponding 
regulations, will simplify and clarify the application process. Use of 
the existing Form OP-1 for these new 

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applications, by contrast, would cause confusion and would require more 
work on the part of Mexican carrier applicants. Therefore, the proposed 
action should reduce paperwork burdens on small businesses.

Paperwork Burden Analysis

    We have submitted notice of this rulemaking and the new application 
Form OP-1MX, entitled Application for Operating Authority by Mexican 
Carriers Provided by the North American Free Trade Agreement, to the 
Office of Management and Budget (OMB) for review under Section 3504(h) 
of the Paperwork Reduction Act of 1980 [44 U.S.C. Chapter 35]. The form 
is designed to collect information from Mexican carriers to allow the 
Commission to evaluate whether an operating authority proposal meets 
the Commission's standards for granting certificates of authority.
    We estimate that an average of 1.5 burden hours will be required to 
complete the proposed form. The Commission estimates it will receive 
approximately 18,800 applications each year for a total of 28,200 
burden hours. The estimated burden hours include time for reviewing 
instructions, gathering and maintaining the needed data, and completing 
and reviewing the collection of information.

Environmental and Energy Considerations

    We conclude that the rules proposed here will not significantly 
affect either the quality of the human environment or the conservation 
of energy resources.

List of Subjects

49 CFR Part 1043

    Insurance, Motor Carriers, Surety Bonds.

49 CFR Part 1160

    Administrative practice and procedure, Brokers, Buses, Freight 
forwarders, Maritime carriers, Motor carriers, Moving of household 

    Decided: October 12, 1995.

    By the Commission, Chairman Morgan, Vice Chairman Owen, 
Commissioners Simmons and McDonald.
Vernon A. Williams,
    For the reasons set forth in the preamble, title 49, chapter X, 
parts 1043 and 1160 are proposed to be amended as set forth below:


    1. The authority citation for part 1043 continues to read as 

    Authority: 49 U.S.C. 10101, 10321, 11701, 10927; 5 U.S.C. 553.

Sec. 1043.1  [Amended]

    2. Section 1043.1 paragraphs (a)(1) and (b) are amended as follows:
    a. In paragraph (a)(1) add the words ``or foreign (Mexican) motor 
private carrier or foreign motor carrier transporting exempt 
commodities'' after the words ``No common or contract carrier''.
    b. In paragraph (b) add the words ``nor any foreign (Mexican) 
common carrier of exempt commodities'' after the words ``title 49 of 
the U.S. Code''.


    3. The authority citation for part 1160 continues to read as 

    Authority: 5 U.S.C 553 and 559; 16 U.S.C. 1456; 49 U.S.C. 10101, 
10305, 10321, 10921, 10922, 10923, 10924, 10928 and 11102.

    4. In Sec. 1160.1 a new paragraph (h) is added to read as follows:

Sec. 1160.1  Applications governed by these rules.

* * * * *
    (h) Applications for Mexican carriers to operate in foreign 
commerce as common, contract or private motor carriers of property 
(including exempt items) between the U.S./Mexico border, and points in 
California, Arizona, New Mexico and Texas.

Sec. 1160.3  [Amended]

    5. In Sec. 1160.3, paragraph (a), remove the word ``and'' after the 
words ``of household goods;''; add the words ``and Form OP-1MX for 
Mexican motor property carriers'' after the words ``for water 

Sec. 1160.4  [Amended]

    6. Section 1160.4, paragraphs (a)(1) and (d) are amended as 
    a. In paragraph (a)(1) add the words ``, Mexican motor property 
carriers that perform private carriage and transport exempt items,'' 
after the words ``(except household goods)''.
    b. In paragraph (d) introductory text add the words ``, including 
Mexican carrier applicants'' after the words ``household goods 
    c. In the Note at the end of Sec. 1160.4 add the words ``Form OP-
1MX for Mexican property carriers,'' after the words ``OP-1 for motor 
property carriers,''.
    7. In Sec. 1160.5 a new paragraph (a)(8) is added to read as 

Sec. 1160.5  Commission review of the applications.

    (a) * * *
    (8) All applications must be completed in English.
* * * * *

    Note: The following appendix will not appear in the Code of 
Federal Regulations.


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Appendix A--OP-1 MX Application

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[FR Doc. 95-25773 Filed 10-17-95; 8:45 am]