[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Rules and Regulations]
[Pages 7502-7504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3473]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 123
[T.D. 99-10]
RIN 1515-AB88
Foreign-Based Commercial Motor Vehicles in International Traffic
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations to allow certain
foreign-based commercial motor vehicles, which are admitted as
instruments of international traffic, to engage in the transportation
of merchandise or passengers between points in the United States where
such transportation is incidental to the immediately prior or
subsequent engagement of such vehicles in international traffic. Any
movement of these vehicles in the general direction of an export move
or as part of the return movement of the vehicles to their base country
shall be considered incidental to the international movement. The
benefit of this liberalization of current cabotage restrictions inures
in particular to both the United States and foreign trucking industries
inasmuch as it allows more efficient and economical utilization of
their respective vehicles both internationally and domestically.
EFFECTIVE DATE: March 18, 1999.
FOR FURTHER INFORMATION CONTACT:
Legal aspects: Glen E. Vereb, Office of Regulations and
Rulings,202-927-2320.
Operational aspects: Eileen A. Kastava, Office of Field Operations,
202-927-0983.
SUPPLEMENTARY INFORMATION:
Background
Pursuant to 19 U.S.C. 1322, vehicles and other instruments of
international traffic shall be excepted from the application of the
Customs laws to such extent and subject to such terms and conditions as
may be prescribed in regulations or instructions of the Secretary of
the Treasury.
This statutory mandate pertaining to foreign-based commercial motor
vehicles is implemented in Sec. 123.14 of the Customs Regulations (19
CFR 123.14). Section 123.14(a) states that to qualify as instruments of
international traffic, such vehicles having their principal base of
operations in a foreign country must be arriving in the United States
with merchandise destined for points in the United States, or arriving
empty or loaded for the purpose of taking merchandise out of the United
States.
Section 123.14(c), Customs Regulations, states that with one
exception, a foreign-based commercial motor vehicle, admitted as an
instrument of international traffic under Sec. 123.14(a), shall not
engage in local traffic in the United States. The exception, set out in
Sec. 123.14(c)(1), states that such a vehicle, while in use on a
regularly scheduled trip, may be used in local traffic that is directly
incidental to the international schedule.
Section 123.14(c)(2), Customs Regulations, provides that a foreign-
based truck trailer admitted as an instrument of international traffic
may carry merchandise between points in the United States on the return
trip as provided in Sec. 123.12(a)(2) which allows use for such
transportation as is reasonably incidental to its economical and prompt
departure for a foreign country.
In regard to these cabotage restrictions, Customs received a
petition from the American Trucking Association (ATA) requesting a
change in Customs interpretation of its regulations governing the use
of foreign-based trucks in local traffic in the United States. This
petition was the culmination of joint discussions beginning in July of
1994 between the ATA and the Canadian Trucking Association (CTA) to
obtain mutually agreed upon parameters with respect to the
liberalization of current truck cabotage restrictions in their
respective countries.
After reviewing the petition, Customs published a notice in the
Customs Bulletin pursuant to 19 U.S.C. 1625(c)(1) (see 31 Cust. Bull.
and Dec. No. 40, 7 (October 1, 1997)), which revised the interpretation
of when a foreign-based truck would be considered as used in
international traffic under existing Sec. 123.14. However, the proposal
advanced by the ATA regarding the use of a foreign-based commercial
motor vehicle, including a truck, in permissible local traffic under
Sec. 123.14(c) was, of course, not addressed in the Customs Bulletin
notice. To effect this change required an amendment of the regulation
under the Administrative Procedure Act, 5 U.S.C. 553.
Accordingly, by a document published in the Federal Register (63 FR
27533) on May 19, 1998, Customs proposed an amendment of
Sec. 123.14(c)(1), which would allow certain foreign-based commercial
motor vehicles, admitted as instruments of international traffic, to
engage in the transportation of merchandise between
[[Page 7503]]
points in the United States where such local traffic is incidental to
the immediately prior or subsequent engagement of such vehicles in
international traffic. In addition, this revision would eliminate the
current requirement that such international traffic be regularly
scheduled. Furthermore, any movement of these vehicles in the general
direction of an export move or as part of the return movement of the
vehicles to their base country would be considered incidental to the
international movement.
In conjunction with the amendments to Sec. 123.14, the proposed
rule also included conforming amendments to Sec. 123.16 regarding the
return of the qualifying vehicles to the United States.
The benefit of this liberalization of current cabotage restrictions
would inure in particular to both the United States and foreign
trucking industries inasmuch as it would allow more efficient and
economical utilization of their respective vehicles both
internationally and domestically. Thus, while prompted by the ATA
petition, which was developed in concert with the CTA, as described
above, the proposed amendments would be universally applicable, and not
be limited to just Canadian-based vehicles.
Discussion of Comments
A total of thirty-three comments were received from the public in
response to the notice of proposed rulemaking. Thirteen commenters
supported the rule as proposed, although one of these commenters urged
that the rule be restricted to Canadian-based vehicles. Twenty
commenters opposed the rule, with fifteen of these commenters urging
Customs to change the rule, if adopted, so that it would be limited to
Canada. Also, the Immigration and Naturalization Service (INS)
submitted a comment which, while taking no position on the proposed
rule, provided clarification as to that agency's position with regard
to the use of alien commercial drivers in the U.S.
A discussion, together with Customs analysis, of the critical
issues that were raised with respect to the proposed rule is set forth
below.
Comment: It was believed that the proposed expanded operation of
foreign trucks in the U.S. would further encourage the employment of
lower-cost foreign drivers. This would result in a significant increase
in unauthorized foreign driver activity in the U.S., and induce U.S.
trucking companies ultimately to pressure the INS to relax its current
restrictions in this regard, thereby reducing jobs for U.S. truck
drivers.
Customs Response: Customs believes that the expanded use of
foreign-based vehicles in the U.S., as proposed, will not have any
impact on the existing limited scope of alien-driver activities in the
U.S., as enforced by the INS. Customs will, of course, continue to
defer to the INS in this matter.
To make this clear, Sec. 123.14(c)(1) is revised to indicate that
alien drivers will not be permitted to operate foreign vehicles
carrying merchandise or passengers between points in the U.S., unless
the drivers are in compliance with the applicable regulations of the
INS.
Generally, under the existing rules of the INS, as explained in its
comment on the proposed rule, a nonimmigrant alien who is driving a
truck or operating another commercial motor vehicle in international
traffic is admitted to the U.S. only as a visitor for business (a so-
called ``B-1'' classification) under the Immigration and Naturalization
Act (INA), as amended (8 U.S.C. 1101(a)(15)(B)).
However, while an alien who is admitted as a B-1 visitor may
transport goods or passengers from a foreign country to the U.S., and
may transport goods or passengers from the U.S. to a foreign country,
the alien would not be permitted to engage in point-to-point
transportation of goods or passengers within the U.S. This restriction
is codified in the INS regulations, specifically at 8 CFR 214.2(b)(4)
which also describes the permissible scope of business activities for
aliens admitted under the B-1 classification, and defines the criteria
for admission of B-1 visitors pursuant to Chapter 16 of the North
American Free Trade Agreement (NAFTA) (Appendix 1603.A.1 to Annex 1603
of the NAFTA).
Thus, while the subject rule allows for the use of commercial motor
vehicles in the transportation of goods between points within the U.S.,
provided such use is incidental to the employment of those vehicles in
international traffic as prescribed in Sec. 123.14(c)(1), an alien
driver or other vehicle operator seeking admission to the U.S. as a B-1
visitor for business under these circumstances would be denied
admission.
In order to load and transport goods or passengers within the U.S.
from one location to another (which, as noted, is outside the scope of
the B-1 classification), an alien must either be a lawful permanent
resident of the U.S. or must have authorization from the INS for
employment in the U.S.
Comment: One commenter thought that the adoption of the proposed
amendments would have a negative competitive impact on the domestic-
based commercial motor carrier industry, by affording lower-cost
foreign carriers greater access to domestic freight markets.
Customs Response: Customs does not contemplate any significant
competitive impact on carriers that operate exclusively within the
U.S., given the petition and strong support for the adoption of the
subject rule by the American Trucking Association (ATA), which
represents over 35,000 motor carriers of every type and class in the
U.S. It should further be mentioned in this context that the domestic
use of foreign-based commercial vehicles under the rule is strictly
circumscribed by, and contingent upon, such use of the vehicles being
incidental to their immediately prior or subsequent engagement in
international traffic, as described in Sec. 123.14(c)(1).
Comment: It was urged that the proposed amendments be limited to
Canadian-based vehicles. To do otherwise, it was argued, would occasion
an increase in the number of unsafe and uninsured vehicles on U.S.
roads. It was also emphasized here that the reciprocity in relation to
truck cabotage restrictions that would result from the adoption of the
proposed amendments would exist only between Canada and the U.S.
Customs Response: Our international obligations do not permit a
reciprocity requirement with regard to this matter. As such, no
reciprocal agreement may be required for vehicles of any country in
order to engage in local traffic as prescribed under the subject
regulatory amendments. Nevertheless, foreign-based vehicles must, of
course, comply with the operating requirements imposed by the
Department of Transportation and other U.S. Government agencies before
being used as provided in Sec. 123.14(c)(1).
Conclusion
In view of the foregoing, and following careful consideration of
the comments received and further review of the matter, Customs has
concluded that the proposed amendments with the modification discussed
above should be adopted.
Regulatory Flexibility Act and Executive Order 12866
The final rule document greatly relaxes current cabotage
restrictions for both the U.S. and foreign trucking industries,
enabling more efficient and economical use of their respective vehicles
both internationally and domestically. As such, under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), it is certified that the rule
will
[[Page 7504]]
not have a significant economic impact on a substantial number of small
entities. Nor does the rule result in a ``significant regulatory
action'' under E.O. 12866.
List of Subjects in 19 CFR Part 123
Administrative practice and procedure, Canada, Common carriers,
Customs duties and inspection, Imports, International traffic, Motor
carriers, Trade agreements, Vehicles.
Amendments to the Regulations
Part 123, Customs Regulations (19 CFR part 123), is amended as set
forth below.
PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO
1. The general authority citation for part 123, and the relevant
specific sectional authority citation, continue to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436,
1448, 1624.
* * * * *
Sections 123.13--123.18 also issued under 19 U.S.C. 1322;
* * * * *
2. Section 123.14 is amended by revising paragraph (c)(1) to read
as follows:
Sec. 123.14 Entry of foreign-based trucks, busses and taxicabs in
international traffic.
* * * * *
(c) Use in local traffic. * * *
(1) The vehicle may carry merchandise or passengers between points
in the United States if such carriage is incidental to the immediately
prior or subsequent engagement of that vehicle in international
traffic. Any such carriage by the vehicle in the general direction of
an export move or as part of the return of the vehicle to its base
country shall be considered incidental to its engagement in
international traffic. An alien driver will not be permitted to operate
a vehicle under this paragraph, unless the driver is in compliance with
the applicable regulations of the Immigration and Naturalization
Service.
* * * * *
3. Section 123.16 is amended by revising paragraph (b) to read as
follows:
Sec. 123.16 Entry of returning trucks, busses, or taxicabs in
international traffic.
* * * * *
(b) Use in local traffic. Trucks, busses, and taxicabs in use in
international traffic, which may include the incidental carrying of
merchandise or passengers for hire between points in a foreign country,
or between points in this country, shall be admitted under this
section. However, such vehicles taken abroad for commercial use between
points in a foreign country, otherwise than in the course of their use
in international traffic, shall be considered to have been exported and
must be regularly entered on return.
Raymond W. Kelly,
Commissioner of Customs.
Approved: January 15, 1999.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-3473 Filed 2-12-99; 8:45 am]
BILLING CODE 4820-02-P