[Federal Register Volume 72, Number 159 (Friday, August 17, 2007)]
[Notices]
[Pages 46263-46289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-16207]


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DEPARTMENT OF TRANSPORTATION

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; response to public comments.

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SUMMARY: The FMCSA announces its intent to proceed with a project to 
demonstrate the ability of Mexico-domiciled motor carriers to operate 
safely in the United States, beyond the commercial zones along the 
U.S.-Mexico border. On May 1, 2007, FMCSA published a notice in the 
Federal Register announcing its plans to initiate a project as part of 
the Agency's implementation of the North American Free Trade Agreement 
(NAFTA) cross-border trucking provisions, and requesting public comment 
on those plans. On June 8, 2007, FMCSA published a notice in response 
to section 6901(b)(2)(B) of the ``U.S. Troop Readiness, Veterans' Care, 
Katrina Recovery, and Iraq Accountability Appropriations Act, 2007'' 
(the 2007 Act) seeking public comment on certain additional details 
concerning the demonstration project. The FMCSA has reviewed, assessed 
and evaluated the required safety measures as noted in the previous 
notice, and considered all the comments received as of July 31, 2007 in 
response to the May 1 and June 8 notices. Once the U.S. Department of 
Transportation's Inspector General completes his report to Congress, as 
required by section 6901(b)(1) of the 2007 Act, and the Agency 
completes

[[Page 46264]]

any follow-up actions needed to address any issues that may be raised 
in the report, FMCSA will proceed with the demonstration project.

DATES: This notice is effective August 17, 2007.

ADDRESSES: Docket: Background documents or comments to the docket for 
this notice may be accessed through the Docket Management System (DMS) 
at http://dms.dot.gov through reference to the docket number set forth 
at the beginning of this notice. These docket materials may also be 
reviewed at the U.S. Department of Transportation, Docket Operations, 
M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, 
SE., Washington, DC 20590 between 9 a.m. and 5 p.m., ET, Monday through 
Friday, except Federal holidays. The DMS is available electronically 24 
hours each day, 365 days each year.
    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 http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Milt Schmidt, Division Chief, 
North American Borders Division, Federal Motor Carrier Safety 
Administration, West Building 6th Floor, 1200 New Jersey Avenue, SE., 
Washington, DC 20590-0001. Telephone (202) 366-4049; e-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    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 in 
Canada or Mexico, or owned or controlled by persons of those countries. 
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.\1\ 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.
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    \1\ Commercial zones are not of uniform size, as they are 
primarily based on the population and size of the applicable border 
municipality. Thus, the San Diego, CA commercial zone is 
considerably larger than the Brownsville, TX commercial zone. In a 
limited number of cases, specific commercial zones have been 
established by statute or regulation.
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    Trucking issues at the U.S./Mexico border were addressed by 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 Mexico-
domiciled property carrier applications (Form OP-1(MX)). This rule 
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.
    Mexico filed complaints against the United States under NAFTA's 
dispute resolution provisions, challenging the delay in opening the 
border to long-haul vehicles. An arbitration panel issued a report in 
February 2001 concluding that the blanket refusal to process 
applications of Mexico-domiciled long-haul carriers breached NAFTA. 
After the Administration responded to the arbitration panel decision by 
announcing its intent to resume the process for opening the border, 
Congress enacted section 350 of the Department of Transportation (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), issued 
pursuant to section 350, on the implementation of safety requirements 
at the U.S.-Mexico border. In a January 2005 follow-up report, also 
issued pursuant to section 350, 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.

Announcement of the Plan To Initiate a Demonstration Project

    On February 23, 2007, United States Secretary of Transportation 
Mary E. Peters and Mexico Secretary of Communications and 
Transportation Luis T[eacute]llez 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.
    On May 1, 2007, FMCSA published notice of the demonstration project 
in the Federal Register (72 FR 23883). The Agency explained that 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 must comply with all motor carrier safety laws and 
regulations and all other applicable U.S. laws and regulations, 
including those concerned with customs, immigration, vehicle emissions, 
employment, vehicle

[[Page 46265]]

registration and taxation, and fuel taxation.
    The Agency explained that the safety performance of the 
participating carriers will be tracked closely by FMCSA and its State 
partners, a joint U.S.-Mexico monitoring group \2\, and an evaluation 
panel \3\ independent of the DOT. The FMCSA indicated the resulting 
data will be considered carefully before decisions are made concerning 
the further implementation of the NAFTA trucking provisions. The 
comment period for the notice ended on May 31.
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    \2\ The Department of Transportation 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.
    \3\ The Secretary appointed former DOT Inspector General Kenneth 
Mead, former DOT Deputy Secretary Mortimer Downey and former House 
Appropriations Subcommittee 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. It will 
operate independently from other monitoring efforts and provide its 
own assessment of the project. Its conclusions will be considered 
carefully before a decision is made concerning the full 
implementation of the NAFTA trucking provisions.
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    On May 25, 2007, the President signed into law the U.S. Troop 
Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act, 2007 (the 2007 Act), (Pub. L. 110-28). Section 6901 
of the 2007 Act requires that certain actions be taken by DOT as a 
condition of obligating or expending appropriated funds to grant 
authority to Mexico-domiciled motor carriers to operate in the United 
States beyond the municipalities and commercial zones on the United 
States-Mexico border.
    On June 8, 2007, FMCSA published a notice in response to section 
6901(b)(2)(B) of the 2007 Act. The Agency explained that section 
6901(a) requires that grants of authority for Mexico-domiciled motor 
carriers to operate beyond the border commercial zones be tested first 
as part of a ``pilot program.'' The Agency also indicated that section 
6901 required the pilot program to comply with section 350 of the 2002 
DOT Appropriations Act and 49 U.S.C. 31315(c), concerning requirements 
for pilot programs. The comment period was originally scheduled to end 
on June 28, 2007; it was extended until July 9, 2007. However, the 
Agency has considered all comments filed as of July 31, 2007.

II. General Discussion of Comments

    The purpose for this notice-and-comment process is to provide all 
interested parties with the opportunity to review information published 
by the Agency and comment on the specific details about the 
demonstration project. As of July 31, FMCSA received 2,359 comments, or 
docket submissions, in response to the May 1 and June 8 notices. The 
Agency received approximately 2,330 comments from the general public, 
including truck drivers and small trucking companies based in the U.S. 
Most of these commenters expressed concerns that Mexico-domiciled 
trucking companies pose a safety risk to the traveling public. The 
remaining comments were from organizations and associations expressing 
their views on specific details about the demonstration project.
    The Agency's announcement of its intent to proceed with the project 
is based on its consideration of all data and information currently 
available, including information submitted by the commenters. About 
2,330 of the comments were submissions by individuals that were no more 
than a few sentences and consisted of conclusory statements indicating 
that Mexico-domiciled carriers are unsafe and that the demonstration 
project should be abandoned. These comments, most of which were 
submitted electronically, did not include information concerning 
technical (e.g. specific safety oversight procedures or processes) or 
legal aspects of the demonstration project or economic issues, or any 
other information supporting the assertions made therein. While FMCSA 
is not responding to these comments individually, the Agency is neither 
ignoring them, but instead believes that its responses to the 
substantive comments it has received more than adequately addresses the 
brief comments submitted by these individuals.

Commenters Discussing Technical and Economic Issues

    The agency received detailed comments from: Advocates for Highway 
and Auto Safety (Advocates); AFL-CIO, Transportation Trades Department 
(TDD); Altshuler Berzon, LLP (Altshuler); \4\ American Trucking 
Associations (ATA); Arkansas Trucking Association; the Demarche 
Alliance, Inc. (Demarche); the Free Trade Alliance (FTA); the 
International Brotherhood of Teamsters (Teamsters); the Owner-Operator 
Independent Drivers Association (OOIDA); the Oregon Department of 
Transportation, Motor Carrier Transportation Division (ODOT); Public 
Citizen; and the Truck Safety Coalition (the Coalition), a partnership 
between Citizens for Reliable and Safe Highways (CRASH) and Parents 
Against Tired Truckers (P.A.T.T.).
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    \4\ The law firm submitted comments on behalf of the Sierra 
Club, Public Citizen, Environmental Law Foundation, International 
Brotherhood of Teamsters, Brotherhood of Teamsters, Auto and Truck 
Drivers Local 70, and the Owner-Operator Independent Drivers 
Assocation.
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A. General Comments in Support of the Demonstration Project
    Several commenters supported the demonstration project. The 
comments ranged from general remarks to reactions to opposition 
comments in the docket. Several commenters supported the project as 
important in meeting U.S. obligations under NAFTA.
    For example, one of the supporters is Congressman Jeff Flake, from 
Arizona. Acknowledging NAFTA's continued emphasis on safety, 
Congressman Flake said, ``[T]he Department should move ahead with this 
demonstration project and I look forward to the full implementation of 
our NAFTA commitments.''
    Other examples are the Greater San Antonio Chamber of Commerce (GSA 
Chamber of Commerce), the San Antonio Economic Development Foundation, 
Inc., and the San Antonio Hispanic Chamber of Commerce. The GSA Chamber 
of Commerce believes cross border trucking is critical to the 
competitiveness of the North American region, and specifically the 
Texas-Northern Mexico region. The GSA Chamber of Commerce stated:

    Regional projects like the Toyota plant in San Antonio, that 
source components in a just-in-time fashion from suppliers in 
Northern Mexico, need cross border trucking to achieve ideal 
efficiencies. These efficiencies are critical to making the Toyota 
project, and others like it, competitive with manufacturers in other 
regions around the world.

    The San Antonio Hispanic Chamber of Commerce stated:

    In the global environment that we operate in, the strategic 
advantage that both the U.S. and Mexico mutually share in competing 
with other counties is our proximity to each other. We cannot afford 
to give away this strategic advantage but unfortunately continue to 
do so. As a result of transferring trailers prior to crossing the 
border into our respective countries, we continuously are

[[Page 46266]]

faced with unnecessary costs and time incurred at the border.

    FTA believes the demonstration program is a critical step in the 
process of moving forward with the Nation's obligations under NAFTA. 
FTA stated that under the current system of moving freight from Mexico 
to the United States, as many as three carriers might handle a single 
shipment. FTA believes the current system costs consumers an average of 
$400 million per year and that the demonstration project would lead to 
reduced shipping costs.
B. General Comments in Opposition to the Demonstration Project
    Most of the commenters to the May 1 and June 8 notices believe the 
demonstration project will create safety and economic risks, violate 
procedural and substantive requirements of U.S. law, or have other 
adverse effects. These commenters also asserted that Mexican drivers 
would accept lower wages, resulting in job losses for U.S. drivers. 
Many of the safety-related comments were based on the presumption that 
Mexico-domiciled carriers and drivers will be unwilling or unable to 
comply with U.S. laws because the carriers and drivers are governed by 
less stringent laws and subject to less stringent enforcement in 
Mexico.
    The Teamsters wrote that the demonstration project will put the 
public in danger, and that the project ``should not proceed until it is 
certain that FMCSA has the ability and resources to monitor and 
implement this program in a way that ensures that public safety is not 
endangered.''
    In addition, 114 members of Congress co-signed a letter to the 
President on the matter. A copy of the letter is in the docket 
referenced at the beginning of this notice. These members expressed 
concern about the demonstration project. They understand the 
President's responsibility to fulfill the United States' obligations 
under NAFTA but argue that the interest in opening the border should 
not be put ahead of public safety, homeland security, and economic 
vitality.

III. Comments Concerning Requirements Under the 2007 Act

A. Section 6901(a), Fulfilling the Requirements of Section 350

Comments About FMCSA's Interpretation of Section 6901(a)
    Advocates believe FMCSA failed to ``fully comply'' with the section 
350 requirements. Advocates also contend FMCSA may not begin the 
demonstration project until the Department of Transportation's 
Inspector General verifies the Agency has completed the tasks required 
under subsection (1)(E) of section 350(c) of the 2002 DOT 
Appropriations Act, dealing with the information infrastructure in 
Mexico for handling Mexican licenses.
    OOIDA argued that FMCSA's interpretation that the new law is 
satisfied by the previously published OIG reports ``* * * violates the 
canons of statutory interpretation that a law may not be interpreted in 
a way that renders it meaningless.'' OOIDA also said it was appropriate 
to conclude from hearings conducted two years after the 2005 Inspector 
General's report that Congress ``* * * had significant questions as to 
whether or not DOT was in compliance with Section 350.''
    FMCSA Response:
    The requirements of section 350 have been satisfied through past 
rulemakings and other agency actions. Previous OIG reports demonstrate 
FMCSA's completion of the tasks listed in subsection (1)(E) of section 
350(c). The Agency emphasizes that the provisions of section 350 which 
require rulemaking for implementation were incorporated into a series 
of rules published on March 19, and May 13, 2002. Under the rules 
adopted on March 19, 2002, FMCSA will: (1) Conduct safety examinations 
or pre-authorization safety audits (PASA) \5\ on Mexico-domiciled 
carriers seeking authority to operate beyond the border zones, 
encompassing the nine areas required by section 350(a)(1)(B); (2) 
assign a distinctive U.S. DOT number to each Mexico-domiciled motor 
carrier operating beyond the border zones, in accordance with section 
350(a)(4); (3) require Mexico-domiciled motor carriers operating beyond 
the border zones to certify that they will have their vehicles 
inspected by a certified inspector every three months, in accordance 
with section 350(a)(5); and (4) require Mexico-domiciled carriers to 
provide proof of valid insurance issued by an insurance company 
licensed in the United States before granting them authority to operate 
beyond the border zones, in accordance with section 350(a)(8).
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    \5\ A detailed discussion of the PASA is provided later in this 
notice.
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    In fulfilling other requirements of section 350(a), FMCSA will 
continue to exceed the requirement in section 350(a)(1)(C) that 50% of 
the PASAs be conducted onsite. For this demonstration project the 
Agency will conduct all of the PASAs onsite.
    With regard to certain other requirements in section 350(a), the 
Agency is prepared to conduct a compliance review (CR) of all Mexico-
domiciled carriers that are granted provisional operating authority 
within 18 months [350(a)(2)], if there is a need to do so during the 
12-month demonstration project, based on certain factors. The FMCSA 
will prioritize long-haul Mexico-domiciled carriers for CRs based on a 
number of factors including the amount of time the carrier has been 
operating beyond the commercial zones, and the carrier's safety 
performance as measured through roadside inspections and crash 
involvement.
    During the demonstration project, FMCSA and State inspectors will 
verify electronically the status and validity of the license of each 
driver of a participating Mexico-domiciled motor carrier crossing the 
border [section 350(a)(3)]. Enforcement officials have been provided 
with the means of querying the Mexican Licencia Federal Information 
System (LIFIS) and the FMCSA's 52nd State System, a repository of 
Mexico-domiciled drivers' convictions while operating vehicles in the 
U.S. A more detailed discussion of the process for checking the status 
of drivers' licenses is presented later in this notice.
    The Agency will satisfy section 350(a)(6) through its routine 
policies and procedures. The results of roadside inspections conducted 
by State officials are regularly uploaded to FMCSA's databases. Each 
year, the results from approximately 3 million roadside inspections are 
uploaded to FMCSA. The results include information identifying the 
motor carrier, the vehicle, the driver, and any violations discovered 
during the inspection.
    As to the requirement of section 350(a)(7), FMCSA has worked with 
its State partners to equip all U.S.-Mexico commercial border crossings 
with scales suitable for enforcement of U.S. CMV weight restrictions.
    In addition, sections 350(c)(1) and 350(d) of the 2002 DOT 
Appropriations Act required the OIG to conduct a comprehensive review 
of FMCSA border operations before vehicles operated by Mexico-domiciled 
carriers may operate beyond the border commercial zones and to conduct 
periodic follow-up reviews. The OIG conducted its initial review in 
June 2002 and has since conducted the required follow-up reviews. 
Section 350(c)(2) required the Secretary of Transportation to certify 
in writing in a manner addressing the Inspector General's findings that 
the opening of the border does not pose an unacceptable safety risk to 
the American public before Mexico-domiciled motor carriers may operate 
CMVs beyond the border commercial zones. Secretary

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Norman Mineta issued that certification in November 2002, and the 
President thereafter ended the 1982 moratorium on the cross-border 
operation of Mexico-domiciled carriers beyond the border commercial 
zones, directing the Secretary to grant authority for such operations 
to qualified Mexican carriers.
    In its 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.\6\
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    \6\ The OIG's latest follow-up report has been submitted to 
Congress and is expected to be made public near the publication date 
of this notice.
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    Given this background, FMCSA interprets section 6901(a) to mean 
that the Agency must ensure that all rules adopted pursuant to section 
350 remain applicable to Mexico-domiciled motor carriers participating 
in the demonstration project, and that the Agency must remain in 
compliance with all other section 350 requirements as they relate to 
the demonstration project, including the requirements concerning 
staffing, facilities, equipment, and procedures that the OIG was 
required to review. The FMCSA believes it has fully satisfied the 
requirements of section 350 and section 6901(a).
Adequacy of Enforcement Resources
    Several commenters believe there would be inadequate Federal and 
State enforcement resources to ensure the participating carriers and 
drivers comply with the demonstration project requirements. Commenters 
asserted that FMCSA's proposed demonstration project would create an 
added burden on enforcement staff and result in non-enforcement of the 
project requirements. Commenters also said that there would be 
insufficient personnel at border crossings and insufficient physical 
space for inspections. Commenters questioned the extent to which the 
Mexican government was responsible for enforcement.
    Advocates believe the demonstration project ``raises the issue of 
whether the U.S. border inspection facilities actually have the 
capacity to fulfill this commitment in light of the unknown number of 
trucks that may participate in the [demonstration project].''
    Public Citizen wrote, ``FMCSA has demonstrated little capacity to 
conduct compliance reviews of motor carriers.'' Public Citizen 
indicated that in 2003, 12,000 compliance reviews were conducted out of 
670,000 registered carriers. Public Citizen also noted that ``the 
notice does not suggest that new inspectors will be hired to undertake 
the burden [created by the demonstration project], nor is there an 
estimate of what the burden to inspectors would be to carry out these 
compliance reviews.''
    The Teamsters believe the Mexican government failed to initiate 
safety requirements, and entered into negotiation for such requirements 
only under pressure to facilitate Mexican trucks coming into the United 
States. The Teamsters said, ``Without sufficient enforcement on the 
Mexican side of the border that establishes a strong no-tolerance 
policy, Mexican truck drivers will arrive at the U.S. border without 
the benefit of government and industry practices that deter this kind 
of [non-compliant] behavior.'' The Teamsters also believe FMCSA is 
relying heavily on State and local law enforcement to keep watch over a 
vast expanse of territory and prevent those trucks authorized to 
operate only in the commercial zones from entering other parts of the 
United States. The Teamsters argued that those responsible for the task 
must receive the proper training so that they know what process to 
follow when they have to put a Mexican truck or driver out of service; 
and that there is no evidence presented by FMCSA that this has been 
accomplished. The ATA echoed these concerns.
    OOIDA and Altshuler asked for more information on the demonstration 
project training for U.S. enforcement personnel. Altshuler asserted, 
``The Notice does not identify when the training and guidance will 
occur, who will be trained, or how many individuals will be trained.'' 
OOIDA stated that it has received almost no indication from State 
enforcement officials that they have been required to address this 
issue.
    The ATA, noting the complexities of cabotage regulations, also 
requested information on the cabotage regulations enforcement training 
materials for State and local law enforcers developed by the 
International Association of Chiefs of Police and FMCSA.
    FMCSA Response:
    The FMCSA and its State partners have sufficient staff, facilities, 
equipment, and procedures in place to meet the requirements of section 
350. This conclusion is based on the Agency's experience providing 
safety oversight for Mexico-domiciled motor carriers currently 
authorized to operate in the commercial zones and on its regular 
liaison with its State enforcement partners with whom the Agency has 
worked for years in anticipation of the opening of the border to long-
haul Mexican motor carriers.
    Section 350 of the 2002 DOT Appropriations Act provided more than 
$25,000,000 for the salary, expense, and capital costs associated with 
implementing the requirements of the statute. This funding was ``in 
addition to amounts otherwise made available in the Act'' and was 
continued in each subsequent appropriations bill. Further, the statute 
specifies that resources for implementing the cross-border provisions 
are not to be fulfilled using personnel from other programs, thus FMCSA 
was specifically required to hire staff for this purpose. The FMCSA 
staff hired pursuant to this funding are specifically assigned to 
enforce U.S. safety requirements for Mexico-domiciled carriers. The 
FMCSA currently employs 274 Federal personnel dedicated to border 
enforcement activities.
    In response to the Teamsters' concerns about the burden on the 
States for providing safety oversight for Mexico-domiciled carriers, 
FMCSA is authorized under 49 U.S.C. 31107 to provide border enforcement 
grants for carrying out commercial motor vehicle safety programs and 
related enforcement activities and projects. The Agency's State 
partners along the border employ 349 State officials for this purpose. 
Therefore, the Congress has provided funding for enforcement resources 
dedicated exclusively to ensuring the safe operation of foreign-
domiciled motor carrier operations.
    The FMCSA works with the States to ensure that motor carrier safety 
enforcement personnel receive extensive training. In 2006, 
approximately 1,880 State motor carrier safety inspectors received 
North American Standard (NAS) inspection procedures training. To date 
in 2007, approximately 1,602 State motor carrier safety inspectors have 
completed this training. The NAS training course is designed to provide 
State motor carrier safety enforcement personnel with the basic 
knowledge, skills, practices, and procedures necessary for performing 
inspections under the Motor Carrier Safety Assistance Program (MCSAP).
    Additionally, through the Agency's partnership with the 
International Association of Chiefs of Police (IACP), four Foreign 
Commercial Motor Vehicle (CMV) Awareness Training sessions were 
conducted in the last quarter of 2006. Approximately 245 officers were 
certified to train law enforcement officers throughout the United 
States. During the months of August and September 2007, it is 
anticipated that five Foreign CMV Awareness training sessions will be 
conducted, training an additional 60 trainers. The training

[[Page 46268]]

these officers will provide to other law enforcement officials will 
ensure patrol officers are informed about potential safety and 
enforcement issues involving foreign-based CMVs and drivers operating 
beyond the commercial zones. Therefore, not only has FMCSA provided 
funding resources to support the States' role in providing Safety 
oversight for Mexico-domiciled carriers operating in the U.S., the 
Agency has provided training.
    The FMCSA notes that the number of Mexico-domiciled carriers and 
vehicles that will participate in the demonstration project is 
extremely small compared to the population of carriers and vehicles 
currently operating in the commercial zones. Most of the motor carriers 
that would participate in the demonstration project already have 
authority to operate in the commercial zones so their participation in 
the project would not result in a significant increase in the 
population of Mexico-domiciled carriers operating in the United States. 
Further, as to concerns regarding possible strains on border inspection 
facility capacity, it should be noted that FMCSA has no reason to 
believe the number of Mexican trucks crossing the border during the 
demonstration project will increase significantly because the cargo 
carried by the long-haul trucks would have crossed the border in any 
event via short-haul, commercial zone trucks. Based on the PASA 
information presented in the June 8 notice, the Mexico-domiciled 
carriers for covered in the table or chart identified 142 drivers and 
155 vehicles that were intended for use in the United States, for 
operations beyond the commercial zones during the demonstration 
project. Thus, the project should create no additional inspection 
burden at the border.
    With regard to comments about Mexican safety regulations, FMCSA 
emphasizes that all participating motor carriers must comply with, and 
the Agency and its State partners will enforce, all U.S. motor carrier 
safety laws and regulations. Moreover, no commenter articulated any 
reasonable basis to support their presumption that Mexico-domiciled 
motor carriers cannot or will not comply with strictly enforced U.S. 
safety rules because of an absence of similar requirements in Mexico, 
and FMCSA is unaware that any evidence exists supporting this 
presumption. Indeed, the experience of the commercial zone carriers 
demonstrates that the opposite is true: Under the border inspection 
regime, which long-haul carriers will also be subject to, the Mexican 
carriers achieved a vehicle out-of-service rate in 2006 (21.51%) that 
is lower than the 2006 out-of-service rate for U.S. carriers (24.73%). 
The driver out-of-service rates in 2006 were 1.29% for Mexico-domiciled 
carriers and 7.67% for U.S.-domiciled carriers. Finally, all 
participating carriers will be subjected to a PASA, and failure to 
demonstrate adequate safety management controls will result in the 
carrier failing the PASA; thus rendering the carrier ineligible to 
participate in the demonstration project.
    With regard to PASAs, FMCSA has the necessary resources, as noted 
in the OIG's 2003 and 2005 audits, to conduct an on-site PASA for each 
carrier that is eligible to participate in the demonstration project. 
The Agency has conducted PASA training for its enforcement personnel in 
preparation for the demonstration project and they are fully prepared 
to complete the necessary PASA for each eligible carrier. A copy of the 
PASA training material is in the docket referenced at the beginning of 
this notice.
    In addition, FMCSA has also provided training to Federal and State 
enforcement personnel concerning cabotage. A discussion of commenters' 
concerns about cabotage and the training provided to ensure strict 
enforcement of the prohibition against Mexico-domiciled carriers 
engaging in cabotage is provided later in this notice.
Obtaining Commercial Vehicle Safety Alliance (CVSA) Decals
    ODOT supported the requirement that long-haul, Mexico-domiciled 
motor carriers must display a current CVSA decal, but indicated this 
may result in out-of-service (OOS) trucks being stranded for an 
unreasonable period of time. ODOT noted that Oregon has fewer Level 1 
certified inspectors than Level 2 certified inspectors, so there may be 
situations when a Level 1 inspector cannot be expeditiously dispatched 
to check an OOS truck, verify repairs, and issue a new CVSA decal. ODOT 
concluded that FMCSA should inform states if there is any expectation 
to inspect a Mexican carrier's truck placed OOS within a certain 
period. ODOT suggested the listing of a failure to have a current CVSA 
decal as a violation on the inspection report, then DOT could 
investigate this allegation after the inspection and determine if the 
Mexican carrier should continue in the demonstration project.
    FMCSA Response:
    The FMCSA understands the concerns of ODOT and other State motor 
carrier safety agencies. The Agency emphasizes Mexico-domiciled 
vehicles that fail to meet certain safety requirements are to be 
treated the same as other vehicles operated in the U.S. If a Mexico-
domiciled vehicle is found to be in violation of a rule and the 
violation is included in the OOS criteria, the vehicle must be placed 
out of service, regardless of the availability of certified Federal or 
State enforcement personnel to re-inspect the vehicle and issue a CVSA 
decal. Safety is FMCSA's top priority, and safety will not be 
compromised for scheduling convenience.
    The FMCSA and its State partners have adopted a policy of stopping 
every vehicle operated by a participating Mexico-domiciled motor 
carrier, every time it crosses the U.S.-Mexico border. During the stop, 
the driver will be checked to ensure he has a valid license. If the 
vehicle is being operated under the control of a Mexico-domiciled 
carrier with authority to operate beyond the commercial zones, and it 
does not display a current CVSA decal, the vehicle will be subjected to 
a safety inspection.
    The initial burden for ensuring that Mexico-domiciled vehicles are 
inspected falls on FMCSA and the States of Arizona, California, New 
Mexico, and Texas because they must ensure that only those vehicles 
that display a current CVSA decal are allowed to proceed beyond the 
commercial zones. As required by section 350 of the 2002 DOT 
Appropriations Act, any vehicle that does not display a current CVSA 
decal must be stopped for an inspection and prohibited from leaving the 
border area until it passes an inspection. The FMCSA will continue 
working with its State partners along the border to ensure every truck 
operated by a carrier with long-haul authority is checked for a CVSA 
decal each time it enters the U.S.
    Congress authorized, and FMCSA provides, Federal grants to these 
border States to cover the financial burden for assisting FMCSA in 
providing motor carrier safety oversight along the U.S.-Mexico border. 
Presently, the resources go toward ensuring that Mexico-domiciled motor 
carriers operating in the commercial zones along the border comply with 
applicable safety requirements. Under the demonstration project, long-
haul Mexico-domiciled motor carriers, unlike commercial zone Mexican 
carriers, and U.S. and Canadian carriers operating in the U.S., are not 
authorized to operate in the U.S. without a valid CVSA decal. Any CMVs 
operated by long-haul Mexico-domiciled carriers that do not display a 
current CVSA decal will be stopped for

[[Page 46269]]

a safety inspection; the vehicle must pass the inspection and have a 
CVSA decal affixed to it by a Federal or State inspector before the 
driver is allowed to proceed on his trip.

B. Section 6901(a), Fulfilling the Requirements of 49 U.S.C. 31315

    Under 49 U.S.C. 31315(c)(2), a pilot program must include safety 
measures designed to achieve a level of safety that is equivalent to, 
or greater than, the level of safety that would otherwise be achieved 
through compliance with the FMCSRs. Pilot programs are also required to 
have the following six elements:
    a. A scheduled life of not more than 3 years.
    b. A specific data collection and safety analysis plan that 
identifies a method for comparison.
    c. A reasonable number of participants necessary to yield 
statistically valid findings.
    d. An oversight plan to ensure participants comply with the terms 
and conditions of the program.
    e. Adequate countermeasures to protect the public health and safety 
of study participants and the general public.
    f. A plan to inform State partners and the public about the pilot 
program and to identify approved participants to safety compliance and 
enforcement personnel and to the public.
Verifying Carrier Safety Compliance
    Four commenters addressed safety compliance verification. Altshuler 
argued the program plan does not identify ``[a]n oversight plan to 
ensure that participants comply with the terms and conditions of 
participation'' [49 U.S.C. 31315(c)(2)(D)]. Altshuler noted that the 
description of the bi-national monitoring group states only that the 
group will ``supervise the implementation of the demonstration project 
and * * * find solutions to issues affecting the operational 
performance of the project.'' Altshuler does not believe that the 
monitoring group can ensure compliance by the project participants, and 
that it is unclear whether the bi-national monitoring group has a real 
oversight role.
    In addition, Altshuler said that the notice asserts that Federal 
and State auditors, inspectors, and investigators will have ``knowledge 
and understanding'' of the program, and of potential enforcement 
measures. Altshuler then points out that the notice does not identify 
when the training and guidance will occur to provide ``knowledge and 
understanding,'' who is trained, or how many individuals will be 
trained. Altshuler argued that there is no way of determining whether 
the proposed activities will ``ensure that participants comply with the 
terms and conditions of participation.''
    The Teamsters stated that, even with enforcement, there seems to be 
a willingness on the part of Mexican carriers and drivers to ignore 
some of the basic requirements for operating in the commercial zone. 
The Teamsters noted that the SafeStat figures for 2005 show 9,205 
specified traffic violations by Mexican carriers. Of that number, 8,684 
are size and weight violations.
    Public Citizen stated that the 108 compliance reviews conducted by 
FMCSA of Mexico-domiciled carriers in 2005 represents less than 1 
percent of the 14,000 carriers operating in the border zone.
    FMCSA Response:
    The FMCSA and its State partners will ensure compliance with the 
requirements of the demonstration project the same way the Agency and 
the States ensure that Mexico-domiciled motor carriers operating in the 
commercial zones comply with the applicable safety regulations. The 
FMCSA and the States have a robust safety oversight program for Mexico-
domiciled carriers that are currently allowed to operate commercial 
motor vehicles in the U.S. Further, in order to assist in ensuring 
compliance, FMCSA imposed the following on Mexico-domiciled carriers 
participating in the demonstration program: (1) The application for 
long-haul operating authority, which includes requirements for proof of 
a continuous financial responsibility versus trip insurance used by 
commercial zone carriers; (2) successful completion of the PASA prior 
to being granted provisional authority; (3) the requirement to display 
a valid CVSA decal; and (4) the requirement to have a special 
designation in their USDOT identification numbers to allow enforcement 
officials to readily distinguish between commercial zone carriers and 
those authorized to go beyond the commercial zones.
    In addition, section 350 and 49 CFR part 385 require that a 
compliance review (CR) be conducted within 18 months of the carrier 
being granted provisional operating authority. In the context of the 
12-month demonstration project, FMCSA will prioritize long-haul Mexico-
domiciled carriers for CRs based on a number of factors such as the 
carrier's safety performance as measured through roadside inspections 
and crash involvement.
    The FMCSA and its State partners have for many years provided 
safety oversight under the same regulations for a much larger 
population of Mexico-domiciled carriers operating in U.S. commercial 
zones than the group that will participate in the demonstration 
project. As such, the Agency effectively already has a plan in place to 
ensure participants comply with the terms and conditions of the 
project; full compliance with existing U.S. safety regulations and 
cabotage rules will be required, as is the case with Mexico-domiciled 
carriers operating in the border commercial zones, and the enforcement 
of those requirements is already well established.
    Table 1 below provides roadside inspection data for fiscal years 
2001 through the present. For five consecutive fiscal years (including 
fiscal year 2007, which ends on September 30, 2007), the FMCSA and its 
State partners have increased the number of inspections, and currently 
conduct in excess of 125,000 inspections each year.

                              Table 1.--Truck Inspection (Non-Hazmat) for Mexico-Domiciled Carriers in the Commercial Zones
                                                      [Based on MCMIS snapshot as of June 22, 2007]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Total driver                                    Total vehicle
               Fiscal year                  Inspection     Total driver         OOS         Driver OOS     Total vehicle        OOS         Vehicle OOS
                                              totals        inspections     inspections   rate (percent)    inspections     inspections   rate (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001....................................          59,171          59,038           4,951            8.39          54,481          18,280           33.55
2002....................................          80,464          80,149           5,957            7.43          73,088          19,872           27.19
2003....................................         127,855         127,700           4,576            3.58         113,610          27,208           23.95
2004....................................         129,004         128,721           2,575            2.00         119,031          28,810           24.20
2005....................................         156,821         156,688           1,837            1.17         143,601          31,679           22.06
2006....................................         177,124         176,722           2,274            1.29         165,320          35,556           21.51

[[Page 46270]]

 
2007....................................         140,562         140,519           1,486            1.06         128,358          27,859          21.70
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note:
FY2007--Inspections that occurred between October 1, 2006 and June 22, 2007.
Vehicle Inspections--Level 1, 2, and 5 Inspections.
Driver Inspections--Level 1, 2, 3 Inspections.

    As Table 1 demonstrates, enforcing the safety regulations against 
Mexico-domiciled motor carriers is not a new concept for the Agency and 
its State motor carrier safety enforcement partners. The only 
significant enforcement change that will occur during the demonstration 
project is that States beyond the four border States will now encounter 
Mexico-domiciled carriers. These State motor carrier safety enforcement 
personnel are already trained and experienced in motor carrier safety, 
having conducted more than 3 million roadside inspections each year. 
Their experience demonstrates they are aware of how to enforce motor 
carrier safety requirements, including rules pertaining to operating 
authority.
    Additionally, FMCSA has developed, in cooperation with the 
International Association of Chiefs of Police, a ``Foreign Commercial 
Motor Vehicle Awareness Training Program'' which includes a brochure 
entitled ``Understanding the Basic Operating Requirements of Foreign-
Based Motor Carriers, CMVs, and Drivers.'' The purpose of the program 
is to inform patrol officers (officers that do not conduct motor 
carrier safety enforcement activities) of potential safety and 
enforcement issues involving foreign-based CMVs and drivers operating 
outside commercial zones. The information will be useful during a 
routine traffic stop or in response to a crash. The training is being 
provided to local law enforcement personnel nationwide by certified 
roadside inspectors.
    With regard to comments about the role of the monitoring group, the 
FMCSA emphasizes that neither the group nor the independent evaluation 
panel established by DOT has responsibilities for ensuring that 
participating motor carriers comply with the requirements of the 
project. The roles of the monitoring group and evaluation panel are 
explained above.
    As for the number of compliance reviews conducted on Mexico-
domiciled motor carriers, FMCSA emphasizes that the CR is an 
enforcement tool used to assess the safety fitness of motor carriers. 
The selection of carriers is prioritized based on a number of factors, 
such as high crash rates, roadside inspection results, etc. Thus, the 
number of CRs conducted is based on the number of high-risk carriers 
that have been identified based on those factors, not on the total 
number of carriers subject to FMCSA's jurisdiction. The Agency has 
sufficient resources to ensure that high-risk carriers are evaluated in 
a timely manner. The Agency will not conduct CRs for the sake of 
meeting a quota without regard for the overall safety outcomes of such 
activities in terms of crash prevention. Under the demonstration 
program the Agency will prioritize long-haul Mexico-domiciled carriers 
for CRs based on a number of factors including the amount of time the 
carrier has operating beyond the commercial zones, and the carrier's 
safety performance as measured through roadside inspections and crash 
involvement.
    In response to Altshuler's comments about specific details on 
training of Federal and State enforcement personnel to verify carriers 
comply with the terms of the demonstration project, FMCSA provides a 
detailed discussion elsewhere in this notice.
    With regard to the Teamsters' comment about Mexico-domiciled 
carriers' level of compliance with U.S. safety requirements, the 
inspection data above demonstrates the exact opposite. When the 
inspection data are viewed in the context of the number of Mexico-
domiciled CMV crossings into the U.S. each year, the number of traffic 
violations cited by the Teamsters suggests the vast majority of Mexico-
domiciled drivers comply with U.S. traffic rules. Each year there are 
approximately 4.5 million Mexican CMV crossings into the United States. 
Putting the Teamsters figure in context, 8,684 size and weight 
violations represents a violation rate of only two-tenths of one 
percent. Further, as to the remaining 521 traffic violations, for 4.5 
million trips, this figure is far from alarming.
One-Year Limit for the Demonstration Project
    Advocates and Public Citizen both argued against truncating the 
test period from 3 years authorized by 49 U.S.C. 31315(c) to 1 year. 
Both commenters questioned whether the duration of the project will 
allow for the collection of sufficient data for accurate and complete 
analysis to make credible and defensible generalizations about the 
safety of the project.
    Advocates made reference to Agency statements indicating that the 
agency plans to increase participation by adding 25 motor carriers per 
month over a 4-month period. Advocates believe this results in a lack 
of clarity whether the previously announced 1-year time limit for the 
project will stretch to 16 months in order to give each motor carrier 
one year of experience participating in the project. Advocates also 
stated that the notice indicated that ``up to'' 100 Mexico-domiciled 
motor carriers will be selected, thus the final number of selected 
carriers is unknown.
    ATA believes the information provided by the Agency suggests that 
after the 1-year project period, motor carriers do not have to reapply 
under their respective country's application process to continue 
operations. ATA sought further clarification from FMCSA and the 
Secretaria de Comunaciones y Transportes (SCT) regarding the ``post-
demonstration project'' for continued cross-border operations after 
successful review of the 1-year time period.
    FMCSA Response:
    The FMCSA believes that a 1-year demonstration project is 
sufficient to determine whether the safety oversight program the Agency 
adopted in response to section 350 of the 2002 DOT Appropriations Act 
will enable the Agency to ensure that Mexico-domiciled motor carriers 
operating beyond the border zones can achieve a level of safety 
equivalent to, or greater than, the

[[Page 46271]]

level attained by other motor carriers operating in the U.S.
    Although section 6901 of the 2007 Act requires that the 
demonstration project meet the requirements of 49 U.S.C. 31315(c) 
concerning pilot programs, that statute does not require that such 
programs be 3 years in duration. Section 31315(c)(1)(A) provides for a 
``scheduled life of each pilot program of not more than 3 years.'' 
Therefore, the statute sets 3 years as a maximum, not a minimum.
    The Agency will allow up to 100 carriers to participate in the 
project. This represents a significant percentage--100 out of 989 
carriers, or about 10%--of the motor carriers that had submitted 
applications for operating authority prior to the announcement of the 
Agency's plans to conduct the demonstration project and will generate 
more than enough data for a meaningful safety analysis. The Agency 
acknowledges that the number of participating carriers may fall below 
the goal of 100. However, the Agency believes there is sufficient 
interest in the project to ensure an appropriate number of 
participants.
    In addition to the number of participants, the volume of the data 
depends on the frequency with which the participating carriers operate 
in the United States. For example, if few trips are made, there will be 
few safety inspections at the border and even fewer in non-border 
States. The FMCSA is not aware of any information suggesting that the 
amount of freight transported during the project would vary 
significantly based on the scheduled life of the project. The Agency 
believes the decision to limit the project to 1 year is appropriate in 
light of the number of carriers, drivers, vehicles, and their exposure 
rate during the project.
    With regard to the ATA comment, FMCSA contemplates that the 
demonstration will last for one year from the date of FMCSA's initial 
grant of authority.
Participating Carrier Number and Diversity
    The Teamsters, Public Citizen, the Coalition, and Altshuler believe 
that the selection of motor carriers to participate in the project 
would negatively affect the data. Public Citizen argued that the 
participants might not be representative of the entire universe of 
eligible carriers. The Coalition believes the Agency has not completed 
preparations for organizing and conducting a safe and scientifically 
valid pilot program as required by 49 U.S.C. 31315(c).
    The Teamsters argued that selection bias in favor of the safest 
carriers will slant the data on violations, crashes, and other 
compliance issues. They claimed that this non-representative data might 
then be misused to proclaim the project a success and justify a full 
opening of the border after the 1-year period.
    Similarly, Advocates believe the Agency also fails to fulfill 
section 6901(c)(3), which directs the Secretary to ensure that ``the 
pilot program consists of a representative and adequate sample of 
Mexico-domiciled carriers likely to engage in cross-border operations 
beyond United States municipalities and commercial zones on the United-
States Mexico border.'' Advocates argued that ``cherry-picking'' only 
scrupulously screened Mexican motor carriers and not comparing them 
against a comparable cohort, but against all U.S. motor carriers, is 
not selecting ``a representative'' sample.
    Advocates noted that FMCSA provided information on the status of 
107 motor carriers, but has not provided any details about why each 
motor carrier passed, failed, or withdrew its application.
    Altshuler argued the Agency has offered insufficient information 
about who will participate in the project. Also, Altshuler stated that 
the demonstration project does not include a ``plan to inform State 
partners and the public about the pilot program and to identify 
approved participants to safety compliance and enforcement personnel 
and to the public'' [49 U.S.C. 31315(c)(2)(F)]. Altshuler argued the 
selection of carriers appears to be a wholly closed process, with no 
opportunity for the public to comment on applications of particular 
carriers. The law firm noted that there is no plan to educate the 
public or the State and local authorities about the program or the 
carriers participating in it.
    In addition, Altshuler stated that the notice provides incomplete 
information regarding the program's reciprocal nature. Altshuler said 
the notice indicates that the proposed program is ``reciprocal,'' and 
that ``[u]p 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.'' However, the commenter 
stated the notice provides no information as to the specific terms on 
which U.S.-domiciled motor carriers may operate in Mexico. Without this 
information, the commenter argued that there is no way to assess 
whether these terms are actually similar to those proposed in the 
program.
    FMCSA Response:
    Section 350 of the 2002 DOT Appropriations Act and section 6901 of 
the 2007 Act clearly prescribe what FMCSA must do prior to granting 
operating authority for long-haul Mexico-domiciled carriers to operate 
in the U.S. The FMCSA will ensure, consistent with Congress' expressed 
intent, only safe carriers are permitted to operate in the U.S.
    The Agency has selected carriers from among those that submitted an 
application for authority to operate beyond commercial zones since the 
Agency began accepting applications under its 2002 application 
regulation. The Agency will allow into the program only those carriers 
that meet the safety criteria, as demonstrated through the successful 
completion of the PASA. To the extent that there is an opportunity to 
achieve some geographic and operating size diversity, the Agency will 
select carriers accordingly. However, safety is FMCSA's top priority. 
The Agency will not compromise highway safety for the sake of achieving 
carrier diversity.
    In response to Advocates comment about the PASA information 
presented in the June 8 notice, the notice includes details about why 
motor carriers failed the PASA. For each carrier that failed the PASA, 
the Agency identified which of the six factors the carrier failed to 
satisfy.
    The FMCSA disagrees with comments alleging that the Agency is 
manipulating the outcome of the project by selecting only those 
carriers with the best safety performance records. The Agency's 
selection criteria do not impose safety performance standards for the 
demonstration project that are beyond those provided in the safety 
regulations, including the PASA requirements. These are the same 
regulations that would apply were Mexican carriers to be considered for 
long-haul operating authority outside the context of a demonstration 
project. Participating carriers must have safety performance records 
that reflect the ability to operate safely in the U.S., and safety 
management controls to demonstrate the willingness to comply with U.S. 
safety regulations. The FMCSA expects that participating carriers to 
demonstrate the ability to operate safely.
    With regard to Altshuler's remarks about the opportunity for public 
comment on individual carriers applications for operating authority, 
the FMCSA emphasizes that the public has the opportunity to comment in 
response to the FMCSA Register on every application that the Agency 
proposes to grant. As explained in the June 8 notice, if the carrier 
has successfully completed the PASA, FMCSA publishes the carrier's 
request for authority in the

[[Page 46272]]

FMCSA Register. The FMCSA Register can be viewed by going to: http://li-public.fmcsa.dot.gov/LIVIEW/pkg_html.prc_limain and then selecting 
``FMCSA Register'' from the drop-down box in the upper right corner of 
the screen. Any member of the public may protest the carrier's 
application on the grounds that the carrier is not fit, willing, or 
able to provide the transportation services for which it has requested 
approval. FMCSA must consider all protests before determining whether 
to grant provisional operating authority. The Agency's rules governing 
protests, codified at 49 CFR part 365, subpart B, are the same rules 
applicable to protesting operating authority requests filed by U.S. and 
Canada-domiciled carriers.
    In addition, as required by section 6901(b)(2)(B)(ii) of the 2007 
Act, FMCSA will publish in the Federal Register, and provide for public 
comment, comprehensive data and information on PASA's conducted after 
the date of enactment of the 2007 Act. The Agency will publish 
information about PASA's completed since the list presented in the June 
8 notice was prepared; the June 8 notice covered PASA's completed as of 
May 31, 2007. Therefore, the public has two opportunities to comment on 
Mexico-domiciled carriers' applications: In response to the FMCSA 
Register, and in response to the Federal Register notice required by 
section 6901(b)(2)(B)(ii). Additional carriers can be added to the 
ongoing program after PASA information about them is published and an 
adequate opportunity for comment is provided.
    In response to the comment about reciprocity for U.S. carriers, 
FMCSA continues to work closely with the Mexican government to ensure 
that up to 100 U.S.-domiciled carriers are granted authority to operate 
in Mexico during the demonstration project. The Agency is working with 
the U.S. trucking industry to facilitate the exchange of information 
between the Mexican government and U.S. trucking companies interested 
in applying for authority to enter Mexico. The project will not 
commence until such reciprocity is provided. However, FMCSA is not 
required to provide notice and comment on the Mexican government's 
application process for obtaining operating authority, or its criteria 
for selecting U.S.-domiciled carriers.
    In response to comments about the plan to inform the States about 
the program, FMCSA reiterates the Agency and its State partners have 
extensive experience providing safety oversight for a much larger 
population of Mexico-domiciled carriers operating in U.S. commercial 
zones than the group that will participate in the demonstration 
project. The Agency will inform State motor carrier safety enforcement 
personnel about the demonstration project through its existing routine 
methods of sharing with them information about new programs. These 
methods include, but are not limited to, conferences, meetings, and in-
service-training. For example, the Agency has worked with the IACP 
Border Group to discuss the demonstration project, including meetings, 
memoranda and e-mail communications.\7\ In addition, the MX suffix on 
their USDOT numbers will identify motor carriers participating in the 
demonstration project to the public at large.
---------------------------------------------------------------------------

    \7\ A southern border state Steering Committee was established 
to review policies, evaluate procedures and advise the FMCSA on 
matters of concern to law enforcement along the U.S.-Mexico border. 
The Steering Committee meets as needed to study issues relating to 
the effect of the NAFTA on the law enforcement and commercial 
vehicle regulation along the border. Membership of this committee 
consists of the chief administrators of the state agencies 
responsible for commercial vehicle safety and enforcement in the 
four southern Border States (CA, AZ, NM, and TX).
---------------------------------------------------------------------------

    For law enforcement officials that do not routinely handle CMV 
enforcement, the FMCSA has developed, as discussed above in this 
notice, a ``Foreign Commercial Motor Vehicle Awareness Training 
Program'' which includes a brochure entitled ``Understanding the Basic 
Operating Requirements of Foreign-Based Motor Carriers, CMVs, and 
Drivers. The purpose of the program is to inform patrol officers of 
potential safety and enforcement issues involving foreign-based CMVs 
and drivers operating outside commercial zones.

C. Section 6901(b)(2)(B)(i)--Comprehensive PASA Information

    Altshuler does not believe FMCSA provided sufficient notice and 
opportunity to comment on the PASAs to satisfy the requirements of 
section 6901 of the 2007 Act. Altshuler stated the PASA data provided 
shows that 33 of 107 carriers have passed the PASAs and that at least 
nine carriers who have applied to participate in the program are 
waiting to have PASAs scheduled. Altshuler argues the 2007 Act requires 
the Secretary to publish PASA information regarding carriers 
participating in the project prior to the initiation of the 
demonstration project but nothing in FMCSA's June 8 notice explains 
when the Agency intends to publish a Federal Register notice with the 
PASA results for the remaining carriers.
    In addition, Altshuler stated that the June 8 notice does not 
explain what agency action will constitute initiation of the program, 
and thus would trigger a cut-off by which all PASA information must 
have been made public and available for comment. Altshuler argues that 
until FMCSA has published a notice and provided an opportunity for 
public comment on the PASA information for all the anticipated 
participants in the proposed pilot program, that Agency cannot initiate 
the program.
    Altshuler, Advocates, and Public Citizen questioned the accuracy of 
certain PASA information presented in the June 8 notice. For example, 
Altshuler explained Luciano Padilla Martinez (USDOT No. 557972), listed 
in row 12 of the PASA results table, is shown as having 3 vehicles it 
intends to operate in the U.S. in Table 2, while the carrier is shown 
as having 6 vehicles that it intends to operate in the U.S. and have 
current CVSA decals in Table 4. Similarly, Francisco Ulloa Montano 
(USDOT No. 817872), listed in row 45, is shown as having 7 vehicles it 
intends to operate in the U.S. but Table 4 indicates that only 3 
vehicles were inspected during the PASA, with 2 of the 3 receiving CVSA 
decals.
    Public Citizen and Advocates noted that 6 of the 33 motor carriers 
listed as having ``passed'' the PASA are not listed as having met the 
five mandatory safety elements required for column J. Public Citizen 
said ``The fact that it is unclear whether or not nearly one fifth of 
the motor carriers asserted to have `passed' the PASA have actually met 
FMCSA's mandatory requirements is an alarming error in the agency's 
data.'' In commenting about carriers that withdrew their applications 
for long-haul operating authority, Public Citizen stated `` * * * there 
is no explanation as to why a plurality of the carriers withdrew their 
applications and whether this fact should be read as an admission of 
failure or not.''
    FMCSA Response:
    The FMCSA does not believe the specific questions they raised about 
the PASA information presented in the June 8 notice supports assertions 
that the Agency failed to provide sufficient opportunity for public 
comment about the PASAs conducted. Among other things, the 2007 Act 
does not require data and information on PASAs for all carriers that 
will ultimately participate in the demonstration project to be subject 
to notice and comment through publication in the Federal Register 
before the program can begin. The statute is satisfied, if prior to the 
program's initiation, such notice and

[[Page 46273]]

opportunity for comment is provided with respect to PASAs for all 
carriers that will initially participate. Additional carriers can be 
added to the ongoing program after PASA information about them is 
published and an adequate opportunity for comment on it is provided. 
The Agency thus fulfilled the requirements of section 6901 of the 2007 
Act for providing comprehensive information through its June 8 notice, 
and through the inclusion in the public docket, of its February 21, 
2007, guidance memorandum, ``Conducting the Pre-Authorization Safety 
Audit,'' and a sample PASA report.
    The PASA memorandum explains how the PASAs are to be conducted by 
FMCSA personnel, the documentation the motor carrier will need for 
review by the safety auditor during the PASA, and the procedures the 
auditor will follow while using the FMCSA's Compliance Analysis and 
Performance Review Information (CAPRI) software. The sample PASA report 
provides a representative sample of a completed PASA so that all 
interested parties will have the opportunity to better understand all 
the topics reviewed in a PASA and how the audit is documented.
    The FMCSA emphasizes that the Agency has not yet initiated the 
demonstration project. The fact that a significant amount of 
preparatory work has been completed, including conducting numerous 
PASAs, does not mean that the demonstration project has already 
started. The Agency has not granted any Mexico-domiciled motor carriers 
provisional operating authority to conduct operations beyond the 
commercial zones. The Agency will not grant such authority, which would 
represent the start of the demonstration project, until the Inspector 
General completes his report to Congress, as required by section 
6901(b)(1) of the 2007 Act, and the Agency completes any follow-up 
actions needed to address any issues that may be raised in the report.
    As to Altshuler's comment about PASA results for carriers that were 
not identified as passing the PASA in the June 8 notice, FMCSA will 
publish PASA results for additional carriers in the Federal Register, 
as required by section 6901.
    With regard to comments about the accuracy of the information 
presented in the June 8 notice, FMCSA notes that in the case of 6 motor 
carriers that were identified as having passed the PASA, the Agency 
inadvertently omitted ``yes'' in ``Column J--Passed Verification 5 
Elements.'' All 6 motor carriers passed all 5 elements or factors 
identified in the table.
    On the subject of vehicle inspections, the Agency's PASA memorandum 
explains the policy for conducting vehicle inspections. Auditors must 
conduct an inspection on all available CMVs that have been identified 
as long-haul vehicles if those vehicles have not already received a 
decal required by 49 CFR 385.103(c). Therefore, there may be one or 
more PASAs during which vehicles are not inspected if it has been 
determined the vehicles have already been inspected and received a CVSA 
decal or the vehicle is not available because it is in transportation 
during the audit. The Agency emphasizes that any vehicle operated by a 
Mexico-domiciled long-haul carrier that does not display a current CVSA 
decal will be stopped for an inspection as it crosses the border. 
Unless the vehicle passes the inspection and receives a CVSA decal, it 
will not be allowed to operate in the U.S.
    In response to Public Citizens' comment about carriers withdrawing 
their applications, FMCSA is not aware of the reasons for these 
withdrawals and, in any event, is not required to provide an 
explanation why a motor carrier withdraws its application for operating 
authority. Such disclosure is not required for U.S.- or Canada-
domiciled carriers and there is no reason why it should be an issue for 
the demonstration project--carriers that withdraw their applications 
obviously cannot participate in the project.
Section 6901(b)(2)(B)(ii)--Measures To Protect Health and Safety 
General Motor Carrier Safety and Environmental Compliance Concerns
    Numerous commenters expressed concern that demonstration project 
participants would not comply with various safety and environmental 
regulations. These commenters discussed the differences between U.S. 
and Mexican regulatory requirements and also expressed a concern that 
Mexican carriers will use trucks that fail to meet the standards U.S. 
carriers must meet.
    Advocates believe ``the substantial differences between the safety 
regulatory regimes of the United States and Mexico will render many 
vehicles and drivers from Mexico ill prepared to meet U.S. safety 
requirements and to operate safely on U.S. highways.'' Advocates 
claimed that ``Mexican regulations do not appear to require truck 
drivers to keep records of their hours of service [HOS] to show 
compliance for enforcement purposes or for motor carrier safety 
inspections, safety audits, or compliance reviews.''
    Advocates argued that Mexican carriers would falsify applications 
and CMV certifications to show compliance with U.S. regulations and 
obtain U.S. operating authority.
    Numerous individual commenters submitted letters asserting that 
when enforcement authorities stop Mexican trucks on U.S. highways, they 
find high rates of poorly adjusted brakes and inoperable lamps. Public 
Citizen also made this assertion.
    Three commenters expressed environmental concerns. Altshuler 
pointed out that the Federal Register notice states that 
``[p]articipating motor carriers will be required to comply with all 
State and Federal environmental and emission regulations'' but provides 
no information that would indicate that the program participants would 
be able to comply with State and Federal environmental law, nor does it 
reflect the establishment of any enforcement mechanisms to ensure such 
compliance. Altshuler stated that FMCSA should provide detailed 
information to the public and to the Federal and State environmental 
agencies charged with monitoring emissions and enforcing emissions 
standards as to the types, manufacturers, and model years of the 
engines in the participating vehicles. Altshuler believes FMCSA also 
should publish any additional information that shows that the 
participating vehicles will conform to emissions standards at the time 
they enter the U.S., as required by Federal law. The law firm argued 
that FMCSA should explain how it intends to work with the Federal and 
State environmental enforcement agencies to ensure compliance, and 
should provide a plan that at a minimum requires initial emission 
inspections of the participating vehicles, as well as inspections of 
every vehicle that enters the U.S.
    Altshuler also stated that the notice fails to provide information 
sufficient to determine whether the vehicles approved for participation 
in the pilot program will employ so-called ``defeat devices'' of the 
kind prohibited by consent decrees entered into by the Environmental 
Protection Agency, the Department of Justice, and certain engine 
manufacturers. Altshuler believes FMCSA should inspect the vehicles of 
participating carriers to ensure that their engines do not have defeat 
devices, and should prohibit any carrier that uses vehicles with such 
engines from participating in the pilot program.
    Demarche expressed concern that the demonstration project's impact 
on the environment will negatively affect disadvantaged communities. 
The

[[Page 46274]]

commenter noted that the probability for minority communities, 
specifically African-Americans, to live near industrial areas is much 
higher than other racial and ethnic groups. Demarche Alliance also 
noted that recent studies have shown that highly concentrated minority 
populations are predisposed to develop diseases related to elevated 
levels of air toxins. The commenter concluded with several data 
illustrating the negative environmental impacts of the demonstration 
project.
    OOIDA believes an example of environmental considerations being 
ignored is that new trucks sold in Mexico are not required to meet 
current U.S. emission standards. OOIDA states that Congress clearly 
intends DOT to address the environmental impacts of the demonstration 
project.
    FMCSA Response:
    The FMCSA believes commenters' concerns about adverse environmental 
effects of the demonstration project are unwarranted.
    First, as noted previously, Mexican carriers operating in the 
United States must comply with all applicable Federal and State laws, 
including those related to the environment. The FMCSA has no reason to 
doubt that its sister Federal and State agencies will enforce their 
laws and regulations as they apply to long-haul Mexican carriers, just 
as they have done for years with respect to the commercial zone 
carriers and U.S. carriers.
    Second, FMCSA does not have statutory authority to enforce Federal 
environmental laws and regulations. The Agency cannot, for example, 
condition the grant of operating authority to a carrier on the 
carrier's demonstration that its truck engines comply with EPA engine 
standards. The FMCSA does not construe section 6901 as expanding the 
scope of the agency's regulatory authority into environmental 
regulation or any other new area of regulation. Section 6901 makes no 
mention of environmental regulation, and FMCSA construes the reference 
to ``measures * * * to protect public health and safety'' in section 
6901(b)(2)(B)(ii) in the context of the scope of the agency's existing 
statutory authority. Relatedly, because FMCSA is a safety rather than 
an environmental regulatory agency, and consistent with the scope of 49 
U.S.C. 31315(c), the demonstration project is appropriately focused on 
evaluating the safety of long-haul Mexican truck operations in the 
United States. DOT has, however, advised EPA of the demonstration 
project and notified EPA that the Secretary will contact EPA toward the 
end of the project to solicit any environment-related views that EPA 
might have to assist her in her overall evaluation of the project.
    Third, the Agency conducted an environmental review of its rules 
governing the application and safety monitoring procedures for Mexico-
domiciled carriers in connection with the issuance of these rules in 
2002. That review analyzed the impact of the rules on the full 
implementation of the cross-border transportation provisions of NAFTA, 
as authorized by the President upon his modification of the 1982 
moratorium and determined that the rules were not major Federal actions 
significantly affecting the quality of the human environment, a 
determination that was upheld by the United States Supreme Court in 
2004. These are the same rules that control carrier eligibility for 
participation in the demonstration project, which contemplates only a 
limited implementation of the NAFTA provisions in terms of the number 
of carriers and trucks that will be permitted to operate beyond the 
border commercial zones.
    Finally, EPA and at least one of the border states have addressed 
emissions issues related to Mexican trucks. EPA, in partnership with 
Mexico and other entities on both sides of the border, is conducting 
numerous diesel emissions reduction projects. These include vehicle 
testing, monitoring, and tracking, diesel retrofitting, accelerated use 
of ultra-low sulfur diesel fuel, and anti-idling programs. In addition, 
the State of California regulates particulate matter emissions from 
trucks through roadside emissions testing conducted throughout the 
State, including in its border commercial zones. California has also 
recently issued regulations requiring truck engines, including those in 
Mexican trucks, to have proof that they were manufactured in compliance 
with the EPA emissions standard in effect on the date of their 
manufacture. Carriers are subject to penalties for the violation of 
these regulations.
    With regard to comments about safety, FMCSA believes that Mexico-
domiciled carriers are capable of complying with U.S. laws and 
regulations. As explained above, there is no evidence that these 
carriers are unable or unwilling to comply with U.S. requirements 
simply because they operate under a different regulatory regime in 
Mexico. Moreover, in concluding that the U.S. breached its obligations 
under NAFTA, the NAFTA arbitration panel rejected the argument that 
differences in the two nations' safety regulatory regimes justified 
prohibiting all Mexico-domiciled carriers from operating beyond the 
border commercial zones. As noted elsewhere in this notice, the driver 
and vehicle out-of-service rates for Mexico-domiciled carriers 
currently operating in the commercial zones is significantly lower than 
that of U.S.-domiciled carriers. While violations are discovered, 
inspection data for 2006 demonstrates Mexico-domiciled carriers are 
more than capable of achieving compliance with U.S. safety 
requirements.
    Finally, FMCSA notes that Mexico does have hours-of-service 
requirements. Those requirements are discussed in detail later in the 
notice. With regard to allegations that carriers will falsify 
applications for operating authority and CMV certifications, the Agency 
will conduct an on-site PASA for each carrier that participates in the 
demonstration project. During the PASA, FMCSA auditors can assess the 
motor carrier's ability to comply with U.S. safety requirements. 
Looking specifically at CMV certifications (i.e., compliance with the 
FMVSSs), the Agency issued an enforcement policy memorandum in 2005 to 
provide guidance to Federal and State motor carrier enforcement 
personnel on determining whether vehicles meet the FMVSS. A copy of the 
memorandum is in the docket referenced at the beginning of this notice. 
Additional information concerning the FMVSS issue is provided below.
Federal Motor Vehicle Safety Standards (FMVSS)
    Advocates and ATA argued against the demonstration project 
requirement that carriers certify that their vehicles have been 
manufactured in accordance with the National Highway Traffic Safety 
Administration's (NHTSA) FMVSS. Advocates stated that this requirement 
is of little value or legal significance for two reasons. First, the 
motor carrier applying for operating authority may have no knowledge of 
the safety standards to which the manufacturer originally built or 
manufactured a particular motor vehicle. Second, motor carriers that do 
not have the relevant facts and information regarding the manufacture 
of the motor vehicle have a strong incentive to falsely certify that 
their vehicles meet U.S. safety standards in order to obtain operating 
authority in the U.S.
    Advocates argued that the FMVSS certification requirement applies 
to vehicles manufactured abroad that enter the U.S. under NAFTA. 
Advocates believe FMCSA's demonstration project would, without 
justification or authority, contradict longstanding Federal law.

[[Page 46275]]

    ATA noted that a motor carrier's responsibility is to ensure its 
compliance with the FMCSRs, not with the FMVSS, and it is not the motor 
carrier's responsibility to certify that a truck meets the FMVSS from a 
manufacturing standpoint. ATA noted that because motor carriers and 
inspection officials cannot check in-service vehicles for compliance 
with many of the FMVSS, mandating certification label retention or re-
labeling accomplishes little more than creating a complex paperwork 
burden. In addition, the commenter noted that FMCSA provides no 
specific means by which the motor carrier must undertake such 
certification.
    FMCSA Response:
    The FMCSA has concluded that it is appropriate to require Mexico-
domiciled motor carriers to certify on their applications for operating 
authority that CMVs used in the U.S. meet the applicable FMVSSs in 
effect on the date of manufacture.
    On March 19, 2002, FMCSA and NHTSA published four notices 
requesting public comments on regulations and policies directed at 
enforcement of the statutory prohibition on the importation of 
commercial motor vehicles that do not comply with the applicable 
FMVSSs. The notices were issued as follows: (1) FMCSA's notice of 
proposed rulemaking (NPRM) proposing to require motor carriers to 
ensure their vehicles display an FMVSS certification label (67 FR 
12782); (2) NHTSA's proposed rule to issue a regulation incorporating a 
1975 interpretation of the term ``import'' (67 FR 12806); (3) NHTSA's 
draft policy statement providing that a vehicle manufacturer may, if it 
has sufficient basis for doing so, retroactively certify a motor 
vehicle complied with all applicable FMVSSs in effect at the time of 
manufacture and affix a label attesting this (67 FR 12790); and (4) 
NHTSA's proposed rule concerning recordkeeping requirements for 
manufacturers that retroactively certify their vehicles (67 FR 12800).
    After reviewing the public comments in response to those notices, 
FMCSA and NHTSA withdrew their respective proposals on August 26, 2005. 
(See FMCSA's August 26, 2005, withdrawal notice, 70 FR 50269.) NHTSA 
withdrew a 1975 interpretation in which the agency had indicated that 
the Vehicle Safety Act is applicable to foreign-based motor carriers 
operating in the United States. Although FMCSA withdrew its NPRM, the 
Agency indicated that it would continue to uphold the operational 
safety of commercial motor vehicles on the nation's highways--including 
that of Mexico-domiciled CMVs operating beyond the U.S.-Mexico border 
commercial zones--through continued vigorous enforcement of the FMCSRs, 
many of which cross-reference specific FMVSSs.
    The FMCSA explained in its withdrawal notice that Mexico-domiciled 
motor carriers are required under 49 CFR 365.503(b)(2) and 368.3(b)(2) 
to certify on the application form for operating authority that all 
CMVs they intend to operate in the United States were built in 
compliance with the FMVSSs in effect at the time of manufacture. These 
vehicles will be subject to inspection by enforcement personnel at 
U.S.-Mexico border ports of entry and at roadside inspection sites in 
the United States to ensure their compliance with applicable FMCSRs, 
including those that cross-reference the FMVSSs. For vehicles lacking a 
certification label, it has been determined that enforcement officials 
could, as necessary, refer to the VIN (vehicle identification number) 
in various locations on the vehicle. The VIN will assist inspectors in 
identifying the vehicle model year and country of manufacture to 
determine compliance with the FMVSS.
    Based on information provided by the Truck Manufacturers 
Association in a September 16, 2002, letter to former NHTSA 
Administrator Jeffrey W. Runge, M.D., and former FMCSA Administrator 
Joseph M. Clapp, the FMCSA believes model year 1996 and later CMVs 
manufactured in Mexico meet the FMVSSs.
    In 2005, FMCSA issued a policy memorandum, ``Enforcement of Mexico-
Domiciled Motor Carriers'' Self-Certification of Compliance with Motor 
Vehicle Safety Standards,'' providing guidance to Federal and State 
enforcement personnel on this issue. The memorandum indicated that if 
FMCSA finds, during the pre-authority audit or subsequent inspections 
and compliance reviews, that a Mexico-domiciled carrier has falsely 
certified on the application for authority that its vehicles are FMVSS 
compliant, that Agency may use this information to deny, suspend, or 
revoke the carrier's operating authority or issue appropriate penalties 
for the falsification. A copy of the Agency's 2005 memorandum is 
included in the docket referenced at the beginning of this notice.
    Although Mexico-domiciled vehicles are less likely to display FMVSS 
certification labels, FMCSA believes continued strong enforcement of 
the FMCSRs in real-world operational settings, coupled with existing 
regulations and enhanced enforcement measures, will ensure the safe 
operation of Mexico-domiciled CMVs in interstate commerce. As stated in 
the 2005 withdrawal notice, enforcement of the FMCSRs, and by extension 
the FMVSSs they cross-reference, is the bedrock of these compliance 
assurance activities. The Agency concluded it is not necessary to amend 
the FMCSRs to require commercial motor vehicles to display an FMVSS 
certification label in order to achieve effective compliance with the 
FMVSSs. Simply requiring CMVs to bear FMVSS certification labels would 
not ensure their operational safety. The American public is better 
protected by enforcing the FMCSRs than by a label indicating a CMV was 
originally built to certain manufacturing performance standards.
Federal Motor Carrier Safety Regulations (FMCSRs)
    Altshuler believes FMCSA has failed to provide any assessment of 
whether the program has proposed safety measures that are ``designed to 
achieve a level of safety that would otherwise be achieved'' through 
the applicable federal laws and regulations [49 U.S.C. 31315(c)(2)]. 
Altshuler argued that such information, together with a full analysis 
of how the proposed program will achieve the necessary levels of 
safety, is a prerequisite for approval of any pilot program.
    Demarche stated that many organizations and businesses believe the 
standards that Mexican-based carriers must meet are not comparable to 
U.S. standards, and therefore, many Mexican carriers may have unsafe 
drivers and equipment. Demarche stated that if HOS compliance, 
commercial driver's license (CDL) requirements, English language 
proficiency, and drug and alcohol testing are not reviewed, it will 
create a trucking environment that does not incorporate U.S. standards, 
open potential safety risk to American citizens, and place merchandise 
and goods in jeopardy of being exposed to damage or loss. Demarche 
requested further research on the process for continuous safety 
compliance.
    Public Citizen mentioned specific safety concerns regarding driver 
and vehicle violations, drug and alcohol testing, HOS, and hazardous 
materials.
    OOIDA stated that the demonstration project effectively provides 
exemptions to some U.S. safety requirements for Mexico-domiciled 
carriers and drivers, based on: (1) Specific statements that have been 
made by DOT officials and the Federal Register notice, and (2) the 
inherent impracticalities that foreign-domiciled motor carriers and 
drivers face in attempting to comply with U.S. safety rules. OOIDA 
noted that U.S.

[[Page 46276]]

safety regulations exist for which Mexico has no equivalent law or 
regulation. In addition, OOIDA asked if any current U.S. exemptions 
(i.e., oil field operations) could extend to Mexican drivers engaged in 
similar cross-border endeavors. OOIDA stated that if FMCSA does not 
publish answers to the specific questions asked in the OOIDA comment 
letter, then FMCSA should concede that it intends to exempt Mexico-
domiciled motor carriers and drivers from certain regulations.
    OOIDA also stated that there are U.S. rules for which Mexican motor 
carriers and drivers will have a de facto exemption. OOIDA argued that 
``blanket statements'' that Mexican carriers will be required to comply 
with all U.S. rules do not adequately respond to these concerns. OOIDA 
stated that the Agency's response indicates that it has not considered 
all of the implications of its plan.
    Advocates said that one of the most significant safety problems for 
the proposal is the wide gap in approaches to motor carrier safety 
between U.S. and Mexican regulations. The commenter noted that the U.S. 
and Mexico have not reconciled their distinctly different regulatory 
systems with respect to critical areas of safety performance, including 
the basis for issuing and revoking commercial driver's licenses, 
procedures for conducting drug and alcohol testing, and HOS 
requirements leading to driver fatigue and the safety of passenger bus 
and hazardous materials transportation. Advocates argued that there are 
many well-known differences, like those between the Mexican Licencia 
Federal de Conductor (LFC) and the U.S. CDL, and that the lack of 
cogent information about underlying Mexican regulations and procedures 
obscures many other differences.
    OOIDA and Advocates stated that, even beyond the imposition of 
additional requirements, it is evident that important regulatory 
aspects of the FMCSRs, such as HOS and drug/alcohol testing regulations 
will be substantively altered to accommodate Mexican motor carriers and 
operators. As a result, the commenters said these alternative 
regulatory requirements must be tested and evaluated under a pilot 
program established pursuant to 49 U.S.C. 31315(c). OOIDA noted that 
the June 8 Federal Register notice announced that the Agency will 
accept the Mexican LFC, driver medical qualification standards, and 
drug testing procedures in place of compliance with U.S. rules; this is 
an admission that Mexican drivers are being exempted from compliance 
with the U.S. CDL, medical qualification, and drug testing rules.
    FMCSA Response:
    This demonstration project does not provide Mexico-domiciled motor 
carriers with exemptions from any of the Agency's regulations (or make 
them eligible for any existing exemptions), nor will the project test 
any innovative approaches to regulation. To the contrary, carriers 
participating in the project will be subject to existing regulations, 
including the regulations mandating the PASA. Additionally, because no 
exemptions from or new approaches to the safety regulations are being 
employed in the demonstration project, the level of safety that will be 
achieved in the project is the same that would otherwise be achieved if 
Mexican carriers were granted authority to operate beyond the border 
commercial zones outside the context of a demonstration project or 
pilot program.
    As to the issue of driver's license equivalency, the Agency has 
long recognized Mexico's LFC as equivalent to the CDL as a valid 
substitute for the CDL and is the basis for a signed international 
agreement under which the United States and Mexico have recognized each 
other's commercial licenses, a decision that was upheld on judicial 
review. See International Brotherhood of Teamsters v. Pe[ntilde]a, 17 
F.3rd 1478 (D.C. Cir. 1994). The Agency has also long recognized 
Mexico's physical qualification standards and the controlled substances 
and alcohol collection procedures to be applied if participants in the 
demonstration project choose to have collections conducted \8\ in 
Mexico. These are not exemptions, but well-established alternative 
means of meeting U.S. standards that pre-date the demonstration 
project.
---------------------------------------------------------------------------

    \8\ To date, all Mexico-domiciled carriers that have passed the 
PASA are sending their drivers to the U.S. for controlled substance 
testing collections.
---------------------------------------------------------------------------

    While certain commenters argue that the Agency is unknowingly 
providing relief, those commenters have not supported their assertions 
with any specific facts. These arguments appear to be based simply on 
the recurring but unsupported presumption that given the absence of 
certain regulatory requirements in Mexico, and certain differences 
between U.S. and Mexico safety requirements, Mexican carriers are 
unwilling or unable to achieve full compliance with U.S. safety 
requirements. As explained above, the Agency finds no substance to that 
argument. The FMCSA's regulations issued pursuant to section 350 make 
it clear that Mexico-domiciled motor carriers are subject to very 
strict safety oversight. The requirements of the implementing 
regulations are applicable regardless of what actions the government of 
Mexico takes--all long-haul Mexico-domiciled motor carriers must comply 
with all applicable U.S. requirements, and FMCSA has no reason to 
believe that these carriers are any less capable of complying with 
these requirements than are the commercial zone carriers currently 
operating in the United States. Any Mexico-domiciled motor carrier that 
intends to operate in the U.S. must comply with our rules in order to 
operate in the United States beyond the border commercial zones. If the 
carrier violates the operating authority rules, its vehicles will be 
placed out of service when they reach the U.S.
    Federal and State officials' experience since 1995 demonstrates 
Mexico-domiciled carriers are capable of complying with U.S. safety 
requirements when there is strong enforcement. The fact that Mexico has 
different safety regulations does not mean carriers based there cannot 
comply with U.S. requirements. This assumption was proven false years 
ago with Canada-based motor carriers entering the U.S., and continues 
to be without merit.
    The May 1 and June 8 notices describe in significant detail the on-
site PASAs for each eligible carrier and the requirement that only 
those carriers that successfully complete the PASA will be allowed to 
operate in the demonstration program. The PASA provides FMCSA the 
opportunity to have Federal staff review Mexico-domiciled carriers' 
safety management controls at the carrier's place of business, and to 
verify the carrier has in place the controls to achieve full compliance 
with FMCSA's regulations. The public record thus documents the Agency's 
approach for ensuring that Mexico-domiciled motor carriers comply with 
all applicable regulations. While commenters may disagree with the 
approach, none provided any information showing that FMCSA's approach 
will not be effective, or that there are practical alternatives. 
Moreover, the regulations creating the PASA were issued in 2002 and 
have already been subject to public notice and comment and judicial 
review.
Driver Safety and Compliance Issues
    Advocates expressed concern that Mexico-domiciled drivers would be 
``ill prepared'' to meet U.S. safety requirements and operate safely on 
U.S. highways. For example, said Advocates, ``The regulations governing 
driver maximum hours of service

[[Page 46277]]

requirements, are apparently substantively different in the U.S. and 
Mexico.'' Advocates argued that in Mexico there is no requirement for a 
truck driver to keep records of driving time. Advocates do not believe 
Mexico has ``regulatory regimes'' comparable to the U.S. for alcohol 
and drug testing and commercial operating licensing. Advocates argue 
``FMCSA does not state in the project notice that all participating 
drivers at the start of the Demonstration Project will have received 
pre-employment or random controlled substances tests.'' Advocates also 
believe the demonstration project will not hold drivers to account 
through random drug and alcohol tests.
    Advocates also expressed concerns about entry-level driver 
training. Advocates noted that FMCSA does not indicate whether 
participating Mexico-domiciled drivers would be required to take the 
minimal training requirements for properly observing HOS that the 
Agency required for entry-level drivers operating in the U.S. Advocates 
argued that the Agency has failed to require any entry-level driver 
training compliance as part of the demonstration project.
    Public Citizen listed several minimum safety requirements it said 
Mexico-domiciled carriers would violate. These included drivers 
operating in violation of out-of-service orders, without a license or 
with an inappropriate license, or without HOS records of duty status 
(RODS). Like Advocates, Public Citizen also asserted that Mexico does 
not require driver drug or alcohol testing, nor, said Public Citizen, 
does Mexico have a certified laboratory for evaluating samples.
    FMCSA Response:
    The FMCSA is not aware of any evidence that drivers employed by 
Mexico-domiciled motor carriers are unable or unwilling to comply with 
applicable U.S. safety regulations. Again, the border commercial zone 
experience is instructive: As is the case with truck out-of-service 
rates, the driver out-of-service rate for commercial zone drivers 
(1.29% in 2006) is below the rate for U.S. drivers (7.67% in 2006). 
While it is well understood that Mexico's safety regulations differ 
from those in the United States, FMCSA's position is clear--Mexico-
domiciled drivers must comply with all applicable American safety 
regulations in the U.S. while participating in the demonstration 
project. This is the same approach that has been used by the Agency in 
dealing with drivers employed by Canada-domiciled motor carriers. For 
example, Mexico does have hours-of-service requirements, including a 
rule for records of duty status (RODS), and there is a requirement for 
drug testing. Although the standards in Mexico are different from those 
in the U.S. those differences do not suggest that Mexico-domiciled 
carriers are unable or unwilling to comply with U.S. requirements. The 
FMCSA will not extend any exemptions to Mexico-domiciled drivers 
involved in the project. The FMCSA has not extended any exemptions to 
Mexico-domiciled drivers operating in the commercial zones, or to 
Canada-based drivers operating in the U.S. and there is no reason to do 
so for drivers participating in the demonstration project.
    The FMCSA has provided educational and outreach material to the 
Mexican government and industry representatives to ensure they have 
access to the most up-to-date information about the U.S. requirements. 
A copy of some of this material is included in the docket referenced at 
the beginning of this notice. However, the responsibility for preparing 
individual drivers to operate in the U.S. rests with the employer. The 
FMCSA will assess each participating motor carrier's safety management 
controls during the PASA to ensure that all participating drivers are 
prepared to achieve full compliance with U.S. safety requirements. The 
Agency will continue to monitor the participating carriers' safety 
performance through roadside inspection results.
    With regard to Advocates' comments about entry-level driver 
training, FMCSA does not interpret 49 CFR 380.501 as applying to 
Mexico-domiciled drivers. Section 380.501 is applicable to all entry-
level drivers who drive in interstate commerce and are subject to the 
CDL requirements of 49 CFR part 383. Because the Agency has determined 
that the Mexican commercial license is equivalent to a State-issued 
CDL, Mexico-domiciled drivers are not required to obtain a CDL issued 
in the U.S. Consequently, the entry-level driver training rules, like 
other CDL qualification requirements, do not apply to Mexico-domiciled 
drivers. (The same is true for Canadian drivers.) Mexico-domiciled 
drivers are subject to certain other requirements under 49 CFR part 
383, specifically driver disqualifications rules, but not the 
requirement to hold a State-issued CDL.
    The FMCSA contacted the Mexican government to gather information 
about driver training standards in Mexico. The Agency was advised that 
in order to obtain a Licencia Federal de Conductor (Mexico's CDL), a 
driver must prove his driving qualifications with a training 
certificate from an accredited training center or by passing a test 
administered by the General Directorship of Federal Motor Carrier 
Transportation (DGAF)--FMCSA's counterpart--of the Secretariat of 
Communication and Transportation (SCT--U.S. DOT's counterpart). The 
DGAF established the guidelines for accreditation as an authorized 
commercial driver training center. DGAF also established commercial 
driver minimum training requirements that such training centers must 
comply with. DGAF implemented a Web based information system for the 
communication with and control of these training centers. The training 
centers report attendance and testing results via this information 
system. Interested parties may access the list of SCT accredited 
training centers at: http://dgaf.sct.gob.mx/index.php?id=468 by 
clicking on DIRECTORIO DE CENTROS DE CAPACITACION.
    The DGAF-SCT indicated that its intent is that all drivers go 
through the training to obtain and renew their LFC. To date however, 
there are not enough training centers available yet to make the 
training mandatory. Only the Mexico City DGAF field office and the DGAF 
licensing offices in the states of Nuevo Leon, Tamaulipas and Queretaro 
make it mandatory to go through the training for the two-year renewals 
only. The rest of the 46 field offices allow the test only option to 
the training certificate. The DGAF test is automatically generated from 
a pool of over 600 questions in a similar manner to the tests used in 
the U.S. States.
    The minimum training requirements establish a minimum curriculum 
and time both in the classroom and on vehicle/simulator. The amount of 
hours depends on the class of license (bus, straight truck, vehicle 
combination, hazmat) and whether it is an issuance or renewal.
Inadequate Databases for Tracking Driver History
    Several commenters discussed whether the U.S. and Mexico maintained 
databases sufficient for the demonstration project. Many commenters 
believe the Mexican government has no database with information on 
carrier and driver history. Several commenters said many U.S. States 
failed to update the Commercial Driver's License Information System 
(CDLIS). Commenters also doubted the accuracy of the Licencia Federal 
de Conductor Information System.
    Advocates expressed general concerns regarding CDLIS, noting that 
FMCSA is ``in the midst of an effort to reform and

[[Page 46278]]

upgrade CDLIS, so firm reliance on this database at the present time is 
not possible.'' It said FMCSA did not provide any assurances that CDLIS 
will be ``complete, timely, and reliable as a source for licensing and 
violations status of commercial drivers.'' Commenting on FMCSA's use of 
Mexican data systems, Advocates noted that the Inspector General 
``found in 2005 that 67 percent of Mexico-domiciled motor carriers had 
not submitted updated census forms, 51 percent of the carriers reported 
having no power units, and 52 percent reported that they had no 
drivers.''
    Advocates indicated that some U.S. States were unable to send 
Mexican driver convictions to FMCSA's database and that some States 
underreported driver convictions. Advocates cited the DOT Inspector 
General's March 8, 2007 testimony that there are continuing 
inadequacies in driver records databases and that one of three 
databases with traffic convictions of Mexico-domiciled commercial 
drivers is incomplete. Advocates reported the Inspector General's 
finding of a ``precipitous drop in traffic conviction data from Texas'' 
because that State stopped entering this information in the database, 
and similar shortcomings for conviction data reporting from New Mexico, 
Arizona, and California.
    Altshuler believes FMCSA failed to meet the requirements in section 
350 calling for an accessible database with sufficiently comprehensive 
data to monitor all Mexico-domiciled commercial driver traffic 
convictions in the U.S. Public Citizen also wrote that States lack data 
``on driver convictions and license suspensions.'' Public Citizen 
asserted that U.S. States are unprepared to place Mexico-domiciled 
drivers and vehicles out of service, that those authorities responsible 
already underreport violations, and that these authorities likely would 
underreport violations in implementing FMCSA's proposed action.
    The Teamsters noted ``the decision that the Transportation Security 
Administration (TSA) took with regard to the Mexican criminal data base 
in issuing regulations to administer the Free and Secure Trade (FAST) 
commercial driver card.'' The Teamsters asserted that the TSA used the 
U.S. criminal database to perform criminal background checks on Mexican 
drivers who haul hazardous materials into the U.S. because TSA found 
the ``Mexican criminal database was incomplete and not easily 
accessible.''
    FMCSA Response:
    The FMCSA has satisfied the requirement of section 350(c)(1)(G) 
concerning an accessible database containing sufficiently comprehensive 
data to allow safety monitoring of carriers operating beyond the 
commercial zones and their drivers. Looking specifically at driver 
monitoring, in 2002 FMCSA established the 52nd State System, which 
serves as the repository of the U.S. conviction history on Mexican CMV 
drivers. The system allows FMCSA to disqualify such drivers if they are 
convicted of disqualifying offenses listed in the FMCSRs.
    The system is integrated into the Agency's gateway to CDLIS such 
that when enforcement personnel perform a Mexican CDLIS-Check, the 
gateway simultaneously queries both the Mexican Licencia Federal 
Information System (LIFIS) and the 52nd State System. The response is a 
single consolidated driver U.S./Mexican record showing the driver's 
status from the two countries' systems.
    The States also have the capability to forward U.S. convictions of 
Licencia Federal holders, and other drivers from Mexico, to the 52nd 
State System via CDLIS. To accomplish this, the States implemented 
changes to their information systems and tested their ability to make a 
status/history inquiry and to forward a conviction to the 52nd State 
System. All States (except Oregon, which does not transmit convictions 
electronically) and the District of Columbia have successfully tested 
forwarding convictions electronically on Mexican CMV drivers. Both 
these jurisdictions can transmit the information manually to FMCSA for 
uploading into the system.
    As of June 13, 2007, 26,457 convictions were transmitted to the 
52nd State System by the border States between 2002 and 2007. Of that 
number, 21,712 were transmitted electronically and 4,745 were manually 
entered into the system. It should be noted that only 667 of these 
convictions were for major traffic offenses (listed in 49 CFR 
383.51(b)), and 16 were for serious traffic offenses (listed in 49 CFR 
383.51(c)).
    The conviction data show that the system does work and that States 
can both transmit the conviction data on Mexico-domiciled drivers and 
query the system to retrieve conviction data. The FMCSA and its State 
partners have experience from providing safety oversight for Mexico-
domiciled drivers currently operating in commercial zones. It is 
unreasonable to believe that the small group of drivers who would be 
involved in the demonstration project will be more difficult to monitor 
than the much larger population of Mexico-domiciled drivers currently 
allowed to operate in the U.S. commercial zones.
    With regard to the Teamsters' comment about TSA's FAST program, 
FMCSA emphasizes that motor carriers participating in the demonstration 
project are not allowed to transport hazardous materials. Therefore, 
none of the drivers participating in the project are required by TSA to 
be enrolled in the FAST program for a background records check required 
by the FAST program. The FAST program background check is similar to 
that required of commercial motor vehicle drivers licensed in the 
United States to transport hazardous material in commerce. This 
requirement is enforced by the Department of Homeland Security, not 
FMCSA.
    In response to Advocates' comment about data from Texas, FMCSA has 
worked with the State to resolve the issue. Because the 52nd State 
system generates a monthly tracking report, FMCSA was aware that Texas 
had stopped entering the driver conviction information in the database. 
Once FMCSA became aware of the situation, FMCSA worked with the State 
to ensure the backlog of driver conviction information was uploaded. 
Presently, the 52nd State system in Texas is current with conviction 
data and conviction data is now uploaded electronically.
Driver's License Documentation Concerns
    Many individuals submitted letters asserting that drivers could 
obtain fake licenses in Mexico.
    FMCSA Response:
    The FMCSA does not believe there is a significant risk that Mexico-
domiciled drivers could operate in the demonstration project with 
falsified driver's licenses.
    First, during the PASA, FMCSA reviews the Mexico-domiciled 
carriers' records at their place of business in Mexico. The Agency 
identifies all drivers the carrier intends to use in the demonstration 
project so that appropriate reviews of their background and safety 
performance can be completed prior to making a determination whether 
the carrier will successfully complete the PASA. Participating carriers 
may add new drivers after the PASA has been completed; drivers whose 
files were not reviewed during the PASA will still receive a license 
check at the border.
    Second, the FMCSA will check the status of every driver in the 
demonstration program at the U.S.-Mexico border, every time the driver 
enters the United States. This process

[[Page 46279]]

will ensure that only those drivers who have been issued a license by 
the appropriate authorities in Mexico may operate commercial vehicles 
in the U.S. As discussed earlier in this notice, the FMCSA has 
established a 52nd State System that enables FMCSA and its State 
partners to check the Mexican government's database of LFC holders to 
verify the status of the license.
    As is the case for U.S. drivers, while a false license document may 
be generated, there will no electronic record of that license in the 
government database making the falsified document easy to discover 
during an electronic license check. The FMCSA and its State partners 
must check at least 50 percent of Mexico-domiciled drivers' licenses as 
they cross the border to comply with the requirements of section 350 of 
the 2002 DOT Appropriations Act. The Agency has announced its intention 
to exceed the statutory requirement by checking all drivers 
participating in the demonstration project.
CDL and LFC Verification Issues
    DOT determined in November 1991 that the Mexican Licencia Federal 
de Conductor is issued in accordance with requirements equivalent to 49 
CFR part 383 and that the holder of an LFC would be allowed to operate 
in the U.S. on the same basis as the holder of a CDL. The U.S. and 
Mexican governments entered into a Memorandum of Understanding to this 
effect. OOIDA noted that there have been important substantive changes 
to U.S. CDL requirements since then. These include the mandatory 
disqualification for violations of out-of-service orders (59 FR 26022, 
May 18, 1994), disqualification for violations of railroad highway 
grade crossing rules (64 FR 48104, Sept. 2, 1999), and disqualification 
for violations of specific laws in noncommercial vehicles (68 FR 4394, 
Jan 29, 2003). The commenter said the nearly 16 year-old assessment of 
their equivalency is not current or reliable.
    OOIDA said the June 8 notice states in Table 1 that the Mexican 
license ``can'' be cancelled under several circumstances. OOIDA noted 
that U.S. CDL disqualification is mandatory in specific circumstances, 
and Table 1 implies that the license cancellation rules are 
discretionary in Mexico. OOIDA concluded that this table does not 
demonstrate how Mexican license rules for cancellation provide for at 
least the same level of safety as the U.S. CDL disqualification rules.
    OOIDA added that the notice states that FMCSA will verify each 
driver's qualifications, including confirming the validity of each 
driver's LFC. OOIDA had serious concerns about the limits of the 
databases available to check the qualification of Mexico-domiciled 
drivers. The commenter said the Mexican Licencia Federal Information 
System (LIFIS) does not contain all traffic conviction data occurring 
in Mexico, and conversations with representatives from the Los Angeles 
District Attorney's Office indicate the lack of any accessible Mexican 
database regarding criminal history information. OOIDA has learned that 
moving violations recorded in LIFIS are violations or incidents that 
occur only on Mexican federal highways, not local highways or roads. If 
true, the commenter said this system fails to record accurately an 
undetermined amount of violations and incidents committed by drivers 
that could disqualify them from operating within the U.S. without a 
detailed and systematic safety analysis. The commenter argued that 
without the ability to verify accurately traffic conviction and 
criminal history records of Mexican commercial license holders, U.S. 
officials do not have the same ability to enforce Mexican driver 
compliance with U.S. CDL rules and a violation of the 1991 CDL MOU 
arguably exists.
    Furthermore, OOIDA stated that the lack of a database containing 
the background of Mexican drivers that is as complete or reliable as 
the databases available about U.S. drivers creates a double standard. 
The commenter explained that U.S. drivers are held to a higher standard 
because of the availability of databases, such as CDLIS, NLETS, and 
NDR, which contain more comprehensive and accurate histories of 
individuals than any information available about Mexican drivers. The 
commenter noted that Congress has authorized funds to address the 
problem of drivers effectively ``masking'' their traffic conviction 
history by obtaining CDLs in different states, but OOIDA has no 
information as to whether Mexico has made similar efforts. The 
commenter said this issue is crucial because the FMCSRs contain 
provisions that disqualify a driver based upon certain traffic 
violations, including those which occur in a driver's personal vehicle.
    Similarly, the Teamsters noted that under the Motor Carrier Safety 
Improvement Act of 1999, U.S. drivers are subject to CDL 
disqualification for serious driving violations occurring in their 
personal vehicle. The commenter argued that, in fairness, these same 
regulations should apply to Mexican drivers operating in the U.S.
    Advocates said the declared equivalence of the LFC and the U.S. CDL 
is an alternative regulation to the U.S. CDL requirements because 
anecdotal information indicates that all LFC holders are automatically 
qualified to transport hazardous materials, and some types of the LFC 
allow mixed transportation of both freight and passengers, among other 
differences. The Agency is imposing ``a system for monitoring the 
performance of Mexican drivers while in the U.S. and taking steps to 
disqualify these drivers if they incur violations that would result in 
a U.S. driver's license being suspended.'' The commenter stated that 
this includes violations in a non-CMV that results in suspension or 
revocation of a non-CMV license of a U.S. commercial driver, a 
violation that may not exist in Mexico.
    ODOT stated that it has recently encountered drivers that hold both 
a Mexico-issued LFC and a U.S.-issued CDL. ODOT indicated it is unclear 
what enforcement action, if any, is appropriate and the Commercial 
Vehicle Safety Alliance (CVSA) Out-of-Service Criteria are silent on 
this matter. ODOT believes the States need an answer to two questions: 
(1) what is the appropriate action when a driver is found to possess 
both a Mexican and U.S. driver license; and (2) what is the appropriate 
action when a driver is found with two licenses and one is suspended?
    FMCSA Response:
    The determination of LFC/CDL equivalency pre-dates the 
demonstration project by more than 15 years, is memorialized in a 
binding agreement between the United States and Mexico, and has helped 
ensure the safe operation of Mexican trucks in the border commercial 
zone by Mexican drivers. The demonstration project is not the 
appropriate context for any reconsideration of that determination.
    U.S. CDL regulations have been amended since 1991, as OOIDA noted, 
mainly by the adoption of new disqualification provisions. However, 
none of those changes affects the validity of the decision by the U.S. 
and Mexico to recognize each other's commercial licenses. Both parties 
understood that their respective regulatory systems differed in certain 
respects. The agreement simply recognized that the knowledge, skills, 
and other prerequisites for obtaining a commercial license were 
equivalent in the U.S. and Mexico, and that each nation should 
therefore accept the other's license as valid for operating a CMV. 
Neither party agreed in 1991 that it would adopt the same enforcement 
or disqualification standards, or assess the

[[Page 46280]]

same penalties. The differences between the standards and penalties 
enforced in the U.S. and Mexico are simply irrelevant to the continued 
validity of the 1991 agreement.
    The Teamsters, OOIDA and others have misunderstood FMCSA's 
statement that Mexico-domiciled drivers and carriers will be subject to 
the same standards as U.S. drivers and carriers. This does not mean, as 
their comments suggest, that U.S. standards must be applied to Mexican 
drivers and carriers operating in Mexico. The Teamsters, for example, 
seem to believe that FMCSA should disqualify Mexican drivers from 
operating in the U.S. for violations committed in their personal 
vehicles (non-CMVs) in Mexico if the Agency would disqualify a U.S. 
driver who committed the same violation in a non-CMV in this country. 
In an argument summarized earlier in this notice, Altshuler claimed 
that failure to disqualify a Mexican driver under these circumstances 
would constitute an exemption under 49 U.S.C. 31315(b) which would 
require further notice and comment on that point before the 
demonstration project could proceed. It would also contradict FMCSA's 
assurances that Mexican carriers and drivers will be held to the same 
standards as their U.S. counterparts.
    The FMCSA cannot grant an exemption under section 31315(b) unless 
it first has jurisdiction over the driver, carrier or vehicle. The 
Agency has no authority to apply U.S. standards to driver or carrier 
actions in Mexico, i.e., it has no extraterritorial jurisdiction to 
enforce FMCSA rules. If Mexico chooses to suspend or revoke a driver's 
LFC for violations committed in a non-CMV in Mexico, Licencia Federal 
Information System (LIFIS) will reflect that fact and FMCSA will refuse 
to let the driver operate in this country. As a condition of 
participating in the demonstration project, Mexican carriers must use 
qualified drivers. The FMCSA, however, cannot disqualify an LFC-holder 
for acts occurring in Mexico because those actions do not violate 49 
CFR part 383, which does not apply in Mexico. Despite Altshuler's 
argument, FMCSA has not granted an exemption pursuant to section 
31315(b) or (c) when it fails to apply to Mexican drivers operating in 
Mexico the same standards it applies to U.S. drivers operating in the 
U.S. The Agency does not have universal jurisdiction. But FMCSA will 
not grant exemptions from its regulations where it has jurisdiction to 
enforce those regulations, i.e., on U.S. territory.
    As for OOIDA's comment regarding alleged deficiencies in Mexico's 
criminal history database, it is not apparent why that is relevant to 
the demonstration project. U.S. drivers applying for a hazardous 
materials endorsement to a CDL are required by Transportation Security 
Administration (TSA) regulations to undergo a security threat 
assessment which includes a criminal history records check (49 CFR part 
1572). TSA has accepted as equivalent to a threat assessment under part 
1572 the background check performed by the Bureau of Customs and Border 
Protection (CBP), Department of Homeland Security (DHS), on Mexican and 
Canadian hazmat drivers seeking a Free and Secure Trade (FAST) card in 
order to obtain expedited processing at U.S. borders (71 FR 44874, 
August 7, 2006). However, vehicles transporting hazmat are not allowed 
to participate in the demonstration project. Neither FMCSA nor TSA 
require criminal background checks of CDL drivers who do not seek a 
hazardous materials endorsement.
    All drivers operating CMVs in the U.S. are subject to the same 
driver disqualification rules, regardless of the jurisdiction that 
issued the driver's license. The driver disqualification rules apply to 
driving privileges in the U.S. Any convictions for disqualifying 
offenses that occur in the U.S. will result in the driver being 
disqualified from operating a CMV for the period of time prescribed in 
the Federal Motor Carrier Safety Regulations.
    With regard to ODOT's comments, if a State licensing agency 
determines that an individual holds an LFC, the State should decline 
the driver's application for a CDL. If a State enforcement official 
discovers an individual with an LFC and a State-issued CDL, the 
official should cite the individual for violation of the State's 
regulation corresponding to 49 CFR 383.21, concerning the Federal 
prohibition against CMV operators having more than one driver's 
license. The State enforcement agency should also immediately notify 
FMCSA and the State licensing agency that issued the CDL so that 
appropriate actions can be taken to prevent the individual from 
continuing to operate with two commercial licenses. The FMCSA will 
report these activities to the Mexican government so that appropriate 
actions can be taken in Mexico.
Electronic Data Collection and Analyses
    Advocates, the Teamsters, Parfrey Trucking Brokerage, and OOIDA 
argued that Mexico has incomplete driver history databases to monitor 
the Mexican carriers.
    The Teamsters argued that Mexican criminal databases are incomplete 
and not easily accessible, and could be the reason that FMCSA did not 
include hazardous material drivers in the demonstration project. OOIDA 
believes the Mexican LIFIS does not contain all traffic conviction data 
occurring in Mexico. OOIDA also questioned how broad, up-to-date, and 
trustworthy the Mexican database will prove. They also argued that 
without a full enforcement history or driver criminal history for 
Mexican carriers, FMCSA could not verify that Mexican drivers are 
eligible under U.S. CDL or hours-of-service rules. OOIDA and Parfrey 
Trucking asked about Federal and State law enforcement's access to the 
Mexican driver database.
    Some of the commenters believe the U.S. database for the 
demonstration project has flawed data collection measures. Advocates 
and Public Citizen commented that some U.S. States, particularly border 
States, do not or cannot report all Mexican carrier violations and 
convictions to the Federal database.
    FMCSA Response:
    As discussed earlier in this notice, the FMCSA has established a 
52nd State System which enables States to capture conviction data on 
Mexico-domiciled drivers and to access information about the status of 
LFC holders. The conviction data presented previously provides evidence 
that convictions have been uploaded from the States, with Texas 
recording 25,755 convictions since the system was established in 2002. 
Therefore, the Agency believes that the 52nd State System provides an 
effective means for monitoring the safety performance of Mexico-
domiciled motor carriers while they are operating under the 
jurisdiction of FMCSA and the States. The Agency has disqualified 
Mexico-domiciled drivers based on convictions for disqualifying 
offenses listed in 49 CFR 383.51 that occurred in the U.S.
    As mentioned above, U.S. regulations do not require such criminal 
background checks as a prerequisite for obtaining a CDL, unless the 
driver applies for a hazardous materials endorsement. Because none of 
the carriers participating in the demonstration project are allowed to 
transport hazardous materials, their drivers are not required to obtain 
a hazardous materials endorsement. The condition of Mexican criminal 
databases is irrelevant to the demonstration project. What matters is 
that FMCSA has established from queries of the LIFIS database, that the 
Government of

[[Page 46281]]

Mexico maintains accurate information regarding the status of drivers' 
licenses.
Hours of Service (HOS)
    Several Commenters expressed concern that the less stringent duty-
time standards in Mexico will result in fatigued drivers entering the 
U.S. Commenters also asserted that Mexican drivers will be 
inexperienced in keeping hours-of-service logbooks in compliance with 
FMCSA's HOS regulations.
    Advocates and OOIDA stated that Mexico has no specific or 
comparable HOS requirements for commercial drivers and that compliance 
and enforcement are questionable. Advocates argued that if FMCSA 
requires a participating truck driver to maintain 7 previous days of 
records of duty status (RODS) and make it available for inspection 
while on duty, as required in Part 395, then the Agency has an 
obligation to be able to corroborate the accuracy of entries made in 
the logbook. However, if there are no comparable commercial driver RODS 
required and enforced in Mexico and the veracity of a Mexican truck 
driver's RODS for the prior 7 days cannot be validated by U.S. 
enforcement officials, Advocates argue that accepting Mexican driver 
RODS for operations in Mexico is a regulatory alternative to U.S. HOS 
requirements.
    Furthermore, Advocates said FMCSA does not explain how Mexican 
drivers who are not subject to the requirements for RODS or logbooks in 
their home country can expect to keep appropriate records in compliance 
with the FMCSA's HOS requirements. Advocates concluded that Mexico-
domiciled drivers would not be able to meet the U.S. HOS recordkeeping 
requirements that include verification of hours of work, hours of 
driving, and hours of off-duty time.
    The Teamsters stated that there has not been any real enforcement 
of any HOS regulations in Mexico, beyond the recent requirement of 
drivers having to carry logbooks. The Teamsters indicated that FMCSA 
and DOT can demand paper records, but without enforcement, those 
records are suspect.
    Public Citizen stated that commercial vehicles entering the U.S. 
from Mexico should have electronic on-board recorders installed to 
ensure that drivers entering the U.S. have some record of HOS, by which 
compliance with U.S. HOS regulations can be determined.
    FMCSA Response:
    The FMCSA requires that all motor carriers operating commercial 
motor vehicles within the United States comply with the applicable HOS 
requirements. The Agency acknowledges that Mexican HOS requirements are 
different. However, it does not follow as a matter of law or logic that 
Mexico-domiciled carriers have thus been effectively exempted from the 
applicable Federal requirements, or have been given an alternative to 
those requirements, when those carriers are operating in the U.S.
    In March 2000, the Mexican government amended its regulations to 
require the use of records of duty status (RODS) or logbooks by all 
drivers working for motor carriers authorized to operate on Federal 
roads in Mexico. Prior to the 2000 amendment, RODS were only required 
of drivers transporting hazardous materials.
    The minimum information that must be recorded in the RODS is as 
follows:
    1. The motor carrier's name and address;
    2. Motor carrier service classification;
    3. Vehicle make/year/license plate tag;
    4. RODS completion date;
    5. Driver name;
    6. Driver license number and expiration date;
    7. Origin/destination/route;
    8. Hours for departure/arrival/driving/on-duty without driving;
    9. Exception cases when driver may exceed hour-of-service limits; 
and,
    10. Driver and carrier representative signatures.
    Under Mexican labor law, drivers daily hours of service are limited 
to 8 hours for the day shift (6 a.m.-8 p.m.), 7 hours for the night 
shift (8 p.m.-6 a.m.) and 7.5 hours for a mixed shift. During a 
continuous work day, workers must rest for at least one half hour and 
if the worker cannot leave the workplace for rest or meal breaks, the 
corresponding time must be counted as part of the hours of service. 
Drivers may accumulate daily overtime of up to three hours, but only 
three times a week (maximum 9 hours per week total). Drivers must be 
paid double their hourly rate for overtime.
    DGAF and General Directorship of Protection and Preventive Medicine 
in Transportation (DGPMPT) inspectors, with the assistance of the 
Federal Preventive Police (PFP), enforce Mexico's driver hours-of-
service logbook regulations. Drivers are required to carry the hours of 
service logbooks for the last seven days. DGPMPT physicians inspect 
drivers for fatigue symptoms at terminals and the roadside. At the 
carrier site, DGAF inspectors audit carrier drivers' logbooks for the 
last 60 days during a carrier compliance review.
    Based on the information above, FMCSA believes it is reasonable to 
conclude that Mexico-domiciled drivers are capable of complying with 
U.S. hours-of-service requirements, including the requirement to 
maintain a RODS.
    Mexico-domiciled drivers operating in the U.S. must be able to 
produce upon the demand of a Federal or State enforcement official, an 
up-to-date record of duty status (RODS) or ``log book'' that accounts 
for the duty status for the current day, and the previous 7 days, 
unless the driver is covered by the 100 air-mile radius exception under 
49 CFR 395.1(e)(1), an exception that applies to drivers of all 
carriers, foreign and domestic. The RODS must cover the required time 
periods even if the driver was operating in Mexico during those 
periods. Federal and State enforcement personnel inspect the RODS 
during roadside inspections, including inspections at ports of entry, 
and during on-site reviews at motor carriers' facilities. The FMCSA 
will have information from the on-site PASAs to determine whether the 
100 air-mile radius exception applies to the participating carriers' 
employees expected to drive in the demonstration project. If the 
exception applies, the Agency can assess whether the carrier has the 
necessary documentation to verify work schedules of the drivers. If the 
exception does not apply, the Agency expects that the carrier will 
maintain RODS and supporting documents, to ensure compliance with the 
HOS rules while operating in the U.S. Supporting documents, such as 
fuel receipts, toll receipts, shipping papers, etc., with information 
concerning the date, time and locations at which certain activities 
have taken place can be compared with the RODS to verify the accuracy 
of the entries in the logbook.
    The FMCSA emphasizes that the Agency and its State partners have 
extensive experience enforcing the HOS rules for U.S. carriers and 
Mexico-domiciled carriers currently authorized to operate in the 
commercial zones. Appropriate enforcement actions will be taken against 
participating drivers if they are found to be in violation of the HOS 
rules during roadside inspections.
    In light of the applicability and enforcement of the existing HOS 
rules as explained above, FMCSA finds no justification for singling out 
Mexican carriers by requiring them to install electronic on-board 
recorders to help verify driver hours, something that is not required 
of U.S. and Canadian carriers.
    While the May 1 notice did not specifically discuss training of 
Mexico-domiciled carrier officials and drivers to

[[Page 46282]]

ensure they understand the applicable Federal safety requirements, the 
FMCSA worked with the Mexican motor carrier industry to provide 
training concerning U.S. requirements following the publication of the 
Agency's March 2002 rulemakings mentioned previously in this notice.
Controlled Substances and Alcohol Testing
    Many commenters asserted that Mexico does not require drug or 
alcohol testing for drivers. Several commenters said drug and alcohol 
testing labs in Mexico are inaccurate. Others said there are no 
certified laboratories in Mexico for drug and alcohol testing. 
Commenters also wrote that border checks would be less effective than 
random drug tests.
    Advocates wrote that there are numerous references in the FMCSRs to 
workplace ``controlled substances [drug and alcohol] testing, including 
training for specimen collectors, oversight of the collection site and 
its equipment, and maintenance of the chain of custody ensuring that 
specimens are valid and accurately indexed to each worker.'' Advocates 
argued that FMCSA failed to specify in the May 1 notice whether 
participating drivers would have received pre-employment or random 
controlled substances tests. Public Citizen wrote that Mexico has no 
laboratories certified to perform drug and alcohol testing, and that 
the situation would hinder FMCSA's ability to conduct random drug and 
alcohol use reviews.
    Advocates also questioned whether drug tests at the border would be 
effective. The commenter asserted, ``[I]f the alternative procedure of 
sample collection at the border is permitted, Mexican drivers will know 
in advance that a drug/alcohol test may be required on entry into the 
U.S.'' Advocates said the driver may predict and control testing, a 
circumstance at odds with the goal of surprise, random workplace 
testing.
    FMCSA Response:
    There is no basis for the commenters implicit assumptions that 
Mexico-domiciled long-haul carriers are any less capable of complying 
with the applicable Federal requirements than their border commercial 
zone counterparts are.
    The FMCSA's rules required controlled substances and alcohol 
testing for foreign-based carriers beginning on July 1, 1997. If an 
employer began its highway transportation operations in the U.S. after 
July 1, 1997, it must begin its testing program on the day the employer 
begins operations in the U.S. Therefore, the Agency has extensive 
experience enforcing the controlled substances and alcohol testing 
rules on Mexico-domiciled motor carriers operating in the commercial 
zones as well as Canadian carriers that are also not required to have 
pre-employment or random drug tests under Canadian regulations.
    Mexico-domiciled carriers must have a testing program that provides 
pre-employment controlled substances testing for all drivers who will 
be assigned to operate CMVs in the U.S. Mexican drivers participating 
in the demonstration project are subject to pre-employment controlled 
substances testing if they have not previously operated in the U.S. 
(i.e., as drivers operating in the border zones), and are not currently 
covered by a controlled substances testing program that meets U.S. 
requirements.
    The program must also provide random controlled substances and 
alcohol testing, post-accident controlled substances and alcohol 
testing for certain crashes that occur in Mexico during trips to the 
U.S., while operating in the U.S., and in Mexico during trips from the 
U.S.\9\ Drivers who test positive must follow the instructions provided 
by substance abuse professionals that meet U.S. requirements, undergo 
return-to-duty testing, and the required follow-up testing regime.
---------------------------------------------------------------------------

    \9\ On April 4, 1997 (62 FR 16369), the Federal Highway 
Administration published ``Regulatory Guidance for the Federal Motor 
Carrier Safety Regulations.'' The guidance explains the post-
accident alcohol and drug testing requirements for foreign drivers 
involved in crashes occurring outside the United States.
---------------------------------------------------------------------------

    Because there presently are no U.S.-certified collection facilities 
and laboratories in Mexico, Mexico-domiciled long-haul carriers must 
comply by using collection facilities and certified laboratories in the 
United States, just as their border commercial zone counterparts have 
done for a decade. For example, drivers selected for random controlled 
substances tests would be notified after they enter the U.S. to report 
to a designated collection site in the commercial zones where there are 
assurances that the requirements of 49 CFR Part 40 would be fulfilled. 
The specimens would then be forwarded to a certified laboratory in the 
United States, and the results processed in accordance with Federal 
requirements. Drivers who refuse to report to the collection facility 
in a timely manner would be considered to have refused to undergo the 
required random test, and the motor carrier would be required to 
address the issue in accordance with the requirements under 49 CFR Part 
382.
    Currently, Mexico-domiciled drivers operating within the commercial 
zones may use this approach to fulfill the random testing requirements 
of 49 CFR 382.305. The selection of drivers must be made by a 
scientifically valid method, each driver selected for testing must have 
an equal chance (compared to the carrier's other drivers operating in 
the U.S.) of being selected, and drivers must be selected during a 
random selection period. Also, the tests must be unannounced and the 
dates for administering random tests must be spread reasonably 
throughout the calendar year. Employers must require that each driver 
who is notified of selection for random testing proceeds to the test 
site immediately. Based on FMCSA's experience enforcing the controlled 
substances and alcohol testing requirements on commercial zone 
carriers, the Agency believes long-haul Mexico-domiciled carriers can 
and will comply with the random testing requirements, especially given 
that many of the participants in the demonstration project already have 
authority to conduct commercial zone operations.
    Given the procedures explained above, it is clear that Mexico-
domiciled carriers are not being granted an exemption from the 
controlled substances and alcohol testing requirements. Through the 
PASA process described in the June 8 Federal Register notice, the 
Agency can determine with certainty whether the motor carrier has in 
place a program to achieve full compliance with the controlled 
substances and alcohol testing requirements under 49 CFR Parts 40 and 
382. And the ability of the commercial zone carriers to follow these 
procedures demonstrates that Mexican carriers are capable of satisfying 
the Agency's drug and alcohol testing requirements. At the time this 
notice was prepared, all Mexico-domiciled carriers that have passed the 
PASA process have chosen to use controlled substances and alcohol 
facilities in the U.S. and not Mexican collection sites.

D. Section 6901(b)(2)(B)(iii)--English Language Proficiency and 
Cabotage Enforcement

English Language Proficiency
    Several commenters wrote about potential problems related to 
participating drivers' inability to understand English. Commenters 
asserted that the demonstration project does not require English 
proficiency and expressed concern that drivers might

[[Page 46283]]

fail to understand crucial traffic signals and signs.
    OOIDA and Advocates stated that the notice falls short of providing 
the specific measures required by Congress regarding English language 
requirements. Advocates said the notice declares that Mexico-domiciled 
participants will be required to have ``the ability to communicate in 
English.'' Advocates said the Agency failed to demonstrate that it will 
ensure, at the border, that every driver participating in the project 
will be required to demonstrate English proficiency with regard to the 
four separate requirements specified in the regulation.\10\ Instead, 
Advocates argue FMCSA indicated that verification of English 
proficiency will occur only if some unspecified dissatisfaction occurs 
on the part of a U.S. Federal or State inspection official ``when 
[they] interact with the driver in English,'' and if ``there appears to 
be a communication problem, the driver will be directed to a site where 
a full driver inspection will be conducted.'' Advocates said this 
unspecified ``interaction'' with the driver does not fulfill the 
requirement in Section 6901 for verifying, in each instance, that a 
project driver meets each of the four requirements of the English 
proficiency regulation.
---------------------------------------------------------------------------

    \10\ 49 CFR 391.11(b)(2) requires that drivers read and speak 
the English language sufficiently to: (1) Converse with the general 
public; (2) understand highway traffic signs and signals in the 
English language; (3) respond to official inquiries; and, (4) make 
entries on reports and records.
---------------------------------------------------------------------------

    FMCSA Response:
    As stated in the June 8 notice, FMCSA and its State partners will 
check Mexico-domiciled drivers and vehicles entering the U.S. as part 
of the demonstration project. During that check, which will include 
verification of a current CVSA decal on the vehicle and the driver's 
Mexican CDL, inspectors will conduct a driver interview in English. The 
interview will include, at a minimum, inquiries about: The origin and 
destination of the trip; the amount of time spent on duty, including 
driving time, and the record of duty status (or log book); the driver's 
license; and vehicle components and systems subject to the FMCSRs. If 
the inspector determines the driver is unable to understand and respond 
to official inquiries and directions in English, the driver will be 
cited for a violation of 49 CFR 391.11(b)(2) and placed out-of-service 
in accordance with the out-of-service criteria.
    English proficiency will also be evaluated by means of an interview 
during any other vehicle inspections occurring in the U.S. and will 
likewise result in an out-of-service order if the driver can not meet 
the requirements of section 391.11(b)(2). Although a violation of 49 
CFR 391.11(b)(2) has been included in the North American Uniform Out-
of-Service Criteria published by the Commercial Vehicle Safety Alliance 
(CVSA) since April 1, 2005, FMCSA personnel are not bound by the OOS 
criteria. In fact, the Agency did not immediately change its previous 
practice, which was simply to cite drivers and/or motor carriers when 
violations were discovered.
    While FMCSA has codified its own authority to issue OOS orders for 
relatively common violations, such as those involving drivers' hours of 
service (49 CFR 395.13) and mechanical defects (49 CFR 396.9(c)), both 
the Motor Carrier Act of 1935 (49 U.S.C. 31502(b)) and the Motor 
Carrier Safety Act of 1984 (49 U.S.C. 31136) implicitly authorize the 
Agency to place drivers and vehicles OOS for all violations of 
regulations based on those statutes. Any other conclusion would prevent 
FMCSA from halting unsafe practices the statutes were enacted to 
address.
    The driver interview complies with the rule. If the driver 
successfully completes the interview, it is likely that the driver can 
communicate at some level with the general public, understand traffic 
signs in English, and make entries on reports and records required by 
the FMCSA.
Cabotage Requirements
    The ATA discussed the difficulty that experienced motor carriers 
and law enforcement officials have in understanding existing cabotage 
rules for Mexican carriers. The Teamsters and Public Citizen also 
expressed concerns about enforcing the existing cabotage laws. The 
Teamsters stated, ``[T]here will be a strong temptation by unscrupulous 
employers to capitalize on lower wage Mexican drivers and entice them 
into carrying domestic cargo in the United States. We know that this 
occurs, as Mexican trucks have been caught over the years operating 
illegally in more than 25 states.'' OOIDA asked whether cabotage 
violations were grounds for disqualification from the demonstration 
project.
    There were also comments about training and the training materials 
used by law enforcement to implement the cabotage laws. ATA said, ``The 
notice states that FMCSA has worked with the International Association 
of Chiefs of Police (IACP) to provide training to state and local law 
enforcement agencies. ATA supports the development of such training 
materials, and request that FMCSA share its training materials in the 
docket for review by stakeholders to ensure our mutual understanding as 
to what is being presented and asked of local and state law enforcement 
personnel for such enforcement activities.'' OOIDA asked for more 
information on who would receive the training and the content of that 
training.
    OOIDA posed questions about potential loopholes in cabotage rules. 
They inquired about regulations concerning Mexico-domiciled carriers 
hauling loads from Mexico to Canada, hauling ``in-bond'' between U.S. 
maritime ports and U.S. Free Trade Zones, and hauling international 
cargo from inside the U.S. to a U.S. maritime port. According to 
Advocates, ``the FMCSA has no reliable figures or information regarding 
the relationship of operating authority violations to cabotage 
violations.'' Advocates stated that ``not only are a tiny percentage of 
operating authority violations detected but, that the agency has no 
idea how many of these involved a violation of cabotage.''
    FMCSA Response:
    The issues the commenters raise are not new with regard to Mexico-
domiciled carriers. The FMCSA emphasizes that Mexico-domiciled motor 
carriers are already allowed to operate in U.S. commercial zones along 
the U.S.-Mexico border. And 49 CFR 365.501(b) requires that ``a Mexico-
domiciled carrier may not provide point-to-point transportation 
services, including express delivery services, within the United States 
for goods other than international cargo.''
    Furthermore, as indicated in the Agency's June 8 notice concerning 
the demonstration project, the provisional operating authority granted 
to a Mexico-domiciled motor carrier to operate beyond the commercial 
zone is limited to the transportation of international freight. 
Therefore, a carrier providing point-to-point transportation services 
in the U.S. is operating beyond the scope of its operating authority 
and is in violation of 49 CFR 392.9a(a). Commercial vehicles found to 
be operating beyond the scope of the carrier's provisional operating 
authority will be placed out of service, and the motor carrier may be 
subject to penalties.
    The FMCSA has trained all State truck inspectors regarding 
enforcement of operating authority and conducted significant outreach 
to the law enforcement community to ensure they are aware of these 
provisions and that they will examine MX trucks to determine if they 
are violating these regulations. Additionally, we have provided and 
will continue to provide

[[Page 46284]]

training to State and local law enforcement agencies on conducting 
roadside vehicle/driver traffic stops and detecting cabotage violations 
during stops of commercial motor vehicles for traffic violations. This 
training, aimed at law enforcement agents who are not full-time truck 
inspectors, but may encounter a Mexican truck during a traffic stop, is 
being conducted in cooperation with the IACP, as mentioned previously 
in this notice. The training material FMCSA developed with the IACP 
includes a module on operating authority; part of this module includes 
guidance concerning cabotage.
    As FMCSA explained in its June 8 notice, previous efforts in 
training on the enforcement of operating authority rules have been 
successful. In 2006, the Southern border States (California, Arizona, 
New Mexico, and Texas) discovered 2,328 instances (from 951,229 
inspections) where a carrier was found to be operating outside the 
scope of its operating authority. While these carriers may have been 
operating outside the scope of their authority for reasons other than 
cabotage (i.e., operating beyond the commercial zones or having not 
received commercial zone authority), this data shows State and Federal 
enforcement personnel are successfully enforcing this regulation.
    The Agency and its State enforcement partners will also use records 
such as logbooks and associated supporting documents such as bills of 
lading during compliance reviews to determine if a Mexican carrier has 
been operating beyond the scope of its authority by engaging in 
cabotage.
    With regard to OOIDA's questions, the FMCSA considers all point-to-
point deliveries of freight within the U.S., regardless of the origin 
of the freight, to be prohibited. Once the freight has been delivered 
to an international port in the U.S., any subsequent movement of the 
load from the port to another destination in the U.S. is considered a 
point-to-point movement within the U.S. Therefore, participating 
carriers are prohibited from engaging in such transportation 
activities. If a participating carrier engages in such activities 
during the demonstration project, FMCSA will remove the carrier from 
the project.

E. Section 6901(b)(2)(B)(iv)--Evaluation Standards

Evaluating Carrier and Driver Safety Performance
    The ATA, Altshuler, and Advocates argued that the evaluation 
process for the demonstration project must include safety performance 
standards. Advocates asked FMCSA to provide information on the safety 
evaluation criteria.
    FMCSA Response:
    The FMCSA's June 8 notice provided appropriate safety performance 
standards for the participating carriers. These carriers must comply 
with all U.S. safety requirements and will not be granted an exemption 
for the purpose of participating in the project.
    The evaluation process will provide an assessment of whether the 
safety performance of Mexico-domiciled carriers operating beyond the 
border commercial zones in the U.S. differs from the performance 
exhibited by U.S.-domiciled carriers. Specifically, the evaluation will 
focus on answering the following five key safety questions:
     Are the available crash data for Mexico-domiciled carriers 
participating in the project statistically different from comparable 
U.S.-domiciled carriers?
     Do Mexico-licensed commercial drivers pose a greater risk 
to the traveling public than U.S. CDL holders in terms of demonstrated 
unsafe driving practices, such as speeding, improper lane changes, 
controlled substances use/alcohol misuse?
     Are the trucks operated by Mexico-domiciled motor carriers 
maintained at levels similar to those of U.S.-domiciled carriers, or do 
they have higher out-of-service rates?
     In the course of conducting PASAs, did FMCSA detect 
violations of critical safety regulations in any greater proportion 
than found in new entrant audits of U.S.-domiciled carriers?
     What other safety problems are being experienced by 
enforcement personnel and others in the course of implementing the 
demonstration project?
    The FMCSA's June 8 notice explained how the Agency will assess 
crash rates, driver behavior, the number of driver out-of-service 
orders, the number of PASA violations, and post-authority safety 
violations. The Agency believes the level of detail provided in the 
June 8 notice fulfills the requirements of 49 U.S.C. 31315.
Data Collection and Evaluation
    Advocates expressed concern about the project's data collection 
methodology and the quality of the data sample. Advocates also remarked 
that the notice does not describe specific data collection measures. 
The organization expressed concern that data analysis would be 
inadequate without a control group and application of other peer-
approved scientific principles.
    Furthermore, Advocates argued ``This is not only an unfair basis 
for comparison, but FMCSA is ignoring scientific, peer accepted 
principles on how a comparison or control group is carefully selected 
to compare with a study group.'' Altshuler agreed, saying, ``* * * the 
notice fails to offer any criteria pursuant to which the program's 
success may be assessed. Although certain statistics apparently will be 
tracked, there is no framework or method for evaluating those 
statistics.''
    FMCSA Response:
    The FMCSA disagrees with Advocates' assertions. The Agency has 
structured the demonstration project in a manner that will enable an 
appropriate collection and analysis of data. As discussed in the June 8 
notice, the Secretary has appointed a panel of three independent 
transportation evaluators to assess the safety performance of Mexico-
domiciled carriers operating beyond the border commercial zone in the 
United States. The evaluators are Mortimer L. Downey III, former Deputy 
Secretary of Transportation, Kenneth M. Mead, former DOT Inspector 
General, and James T. Kolbe, former U.S. Congressman from Arizona. The 
Office of the Secretary has asked DOT's Research and Innovative 
Technology Administration's Transportation Safety Institute (TSI) to 
manage the project independently of FMCSA for independent evaluation 
purposes. TSI has retained a project manager and technical staff to 
work with the evaluators. The evaluation will provide an assessment of 
whether the safety performance of Mexico-domiciled carriers operating 
beyond the border commercial zone in the U.S. differs from the 
performance exhibited by U.S.-domiciled carriers. The data will be 
collected in the United States by FMCSA and the States through their 
routine monitoring of the Mexico-domiciled carriers and will be 
forwarded to the Evaluation Panel for any subsequent analysis.
Report to Congress on the Independent Evaluation
    Several commenters expressed concern that the project did not 
contain credible independent evaluation. Advocates commented that the 
demonstration project failed to provide a method for reporting its 
findings to Congress. They expressed concern that only U.S. DOT and 
FMCSA will review the project without reporting its results. The ATA 
suggested that FMCSA form an independent evaluation panel to review and 
assess the impact of the demonstration project.

[[Page 46285]]

    FMCSA Response:
    The FMCSA's June 8 notice identified the independent evaluation 
team, and no commenter has provided any evidence that would question 
the team's credibility. The work of the team and its project management 
staff will be completely independent of DOT.
    The FMCSA's June 8 notice also explains the requirements of section 
6901, which includes the requirement for the OIG to transmit to 
Congress and the Secretary of Transportation a report verifying 
compliance with each of the requirements of subsection (a) Of section 
350 of the 2002 DOT Appropriations Act. Section 6901 also requires that 
the OIG submit to Congress and the Secretary an interim report 6 months 
after the commencement of the project, and a final report within 60 
days after the conclusion of the project. In addition, because section 
6901 requires that FMCSA satisfy the requirements of 49 U.S.C. 31315(c) 
in conducting the demonstration project, the Agency is required to, and 
will, submit a report detailing the results of the project to Congress 
upon the project's completion.
    Also, the Secretary of Transportation has committed to having a bi-
partisan independent review panel assert its involvement from the onset 
to the conclusion of the demonstration project. There will be more than 
adequate opportunity for an independent evaluation of the project.

F. Section 6901(b)(2)(B)(v)--Equivalent U.S. and Mexican Standards

Physical Qualification Standards
    The Teamsters, Public Citizen, OOIDA, and Advocates expressed 
concern over driver compliance with medical qualifications. The 
Teamsters said that in FMCSA's recent Notice of Proposed Rulemaking for 
combining the medical qualifications with the CDL process, FMCSA 
indicated that there is no agreement between the U.S. and Mexico 
concerning the medical qualifications for drivers. The commenter said 
little is known about the physical and medical criteria used to qualify 
truck drivers in Mexico, and FMCSA must know how the Mexican system of 
evaluating drivers compares to the U.S. system. Public Citizen said 
that FMCSA has acknowledged in pending rulemaking that commercial 
drivers will select health care providers who will find them physically 
fit to operate commercial motor vehicles. The commenter expressed 
concern about the quality of the medical examinations and physical 
fitness requirements for CDLs in Mexico.
    Similarly, Advocates stated that because FMCSA did not provide 
specific information about the Mexican physical qualification 
standards, the public cannot determine whether, in fact, they are 
equivalent to U.S. physical qualification standards.
    FMCSA Response:
    The FMCSA determined in 1991 that the physical qualifications 
standards in Mexico are comparable to, but not identical to U.S. 
requirements. This notice and comment process is not addressing whether 
the Agency's previous determination was appropriate.
    In Mexico, in order to obtain the Licencia Federal de Conductor a 
driver must meet the requirements established by the Ley de Caminos, 
Puentes y Autotransporte Federal (LCPAF or Roads, Bridges and Federal 
Motor Carrier Transportation Act) Article 36, and Reglamento de 
Autotransporte Federal y Servicios Auxiliares (RAFSA, or Federal Motor 
Carrier Transportation Act) Article 89, which state a Mexican driver 
must pass the medical exam performed by Mexico's Secretariat of 
Communications and Transportation (SCT), Directorship General of 
Protection and Prevention Medicine in Transportation (DGPMPT). The 
medical exams are conducted by government doctors instead of the 
private physicians performing the exam on U.S. drivers.
    The Agency emphasizes that drivers for Mexico-domiciled motor 
carriers have been operating within commercial zones for years with the 
medical certification provided as part of the LFC, and the Agency is 
not aware of any safety problems that have arisen as a result. 
Accordingly, FMCSA sees no reason to revise its previous judgment that 
the medical standards are comparable.

IV. Other Issues Raised by Commenters

Impact on Truck Drivers, Small Fleets, and Businesses

    Numerous commenters expressed concern that the demonstration 
project would adversely affect U.S. carriers by giving a competitive 
advantage to Mexican carriers. Several commenters noted that Mexican 
carriers would benefit from lower wages for drivers. Commenters also 
discussed taxes and fees that carriers must pay.
    Demarche wrote:

    ``Smaller, minority-owned carriers have the ability to service 
shippers domestically, and desire to have the same opportunities 
available to them as other carriers. The demonstration project tilts 
the competitive advantage to Mexican carriers and creates increased 
competition for smaller carriers in the U.S., causing a potential 
strain on the trucking industry.''

    Demarche discussed driver shortages in the industry, and projected 
that a decrease in the industry's white male population ``provides an 
opportunity for traditionally disadvantaged groups to gain sustainable 
employment in the industry and fulfill the lofty employment 
requirements of many carriers.'' Demarche noted that the industry 
generates business growth in certain demographic groups and concluded 
that the proposed demonstration project would allow Mexican carriers to 
ship freight to U.S. destinations at lower labor costs than U.S.-based 
carriers can. Demarche believes ``Lower labor costs [in Mexico] will 
lead to lower rates [than U.S. carriers] carriers can provide, 
ultimately enticing shippers to use Mexican domiciled carriers to haul 
freight.'' Demarche also expressed concern that shippers have no 
incentive to ensure driver compliance with applicable laws and ``may 
not have an overwhelming concern on who is hauling goods, just as long 
as freight is received by the customer at the right price and place.'' 
Demarche argued that this scenario increased competition among smaller 
and minority-owned carriers, caused these carriers to lower costs and 
further decrease profit margins, and essentially shut out minority-
owned carriers from this segment of the industry.
    OOIDA believes the demonstration project would be disadvantageous 
to U.S. motor carriers because ``Complying with our tax regulations 
will place them in an uneven economic competitive environment compared 
to foreign rivals.'' OOIDA indicated that Mexican carriers are likely 
to cross the border with fuel tanks filled to capacity to avoid paying 
Federal or State fuel taxes. OOIDA continued, ``With industry fuel 
mileage averages, Mexican trucks could be expected to operate between 
1,500 and 1,800 miles without purchasing U.S. taxed fuel.''
    OOIDA commented on the impacts of insurance on small business 
owners, in relation to cross-border trucking. OOIDA wrote ``All 
commercially available U.S. insurance policies that cover the vehicle 
itself specifically exclude travel into Mexico[,]'' and that only large 
self-insured carriers likely will have access to Mexico. The 
organization concluded that the demonstration project effectively would 
exclude small business truckers from the Mexican market. OOIDA knew of 
no available insurance coverage for a small business motor carrier 
operating in Mexico with mortgaged equipment.

[[Page 46286]]

    FMCSA Response:
    The FMCSA does not believe the demonstration project will have a 
significant adverse impact on U.S. motor carriers or drivers. As an 
initial matter, however, it is important to note that FMCSA lacks the 
authority to alter the terms under which Mexican carriers operate in 
the United States based on the possible economic impact of those 
carriers on U.S. carriers. FMCSA's responsibility, pursuant to the 
President's November 2002 order, is to implement NAFTA's motor carrier 
provisions in a manner consistent with the motor carrier safety laws.
    While the wages for a Mexico-domiciled driver may differ from those 
of a U.S.-domiciled driver, wages represent only one factor in the cost 
of a trucking operation. The costs for safety management controls to 
achieve full compliance with U.S. safety requirements, equipment 
maintenance, fuel, taxes and insurance costs must also be considered. 
Therefore, driver wages alone should not be considered the determining 
factor for an economic advantage.
    Also, Mexico-domiciled motor carriers cannot compete against U.S.-
domiciled carriers for point-to-point deliveries of domestic freight 
cabotage within the United States. Section 365.501(b) provides that ``a 
Mexico-domiciled carrier may not provide point-to-point transportation 
services, including express delivery services, within the United States 
for goods other than international cargo.''
    The provisional operating authority granted to a Mexican domiciled 
motor carrier to operate beyond the commercial zone is limited to the 
transportation of international freight. Therefore, a carrier providing 
point-to-point transportation services in the U.S. is operating beyond 
the scope of its operating authority and is in violation of 49 CFR 
392.9a(a). Commercial vehicles found to be operating beyond the scope 
of the carrier's provisional operating authority will be placed out of 
service, and the motor carrier may be subject to penalties.

Concerns About Furthering Illegal Activity

    Many commenters argued that the demonstration project generally 
will further illegal activity within the U.S. Commenters specified drug 
trafficking, illegal immigration, smuggling, illegal cargo, and tax 
evasion. Commenters also believed that drivers would violate laws 
unrelated to motor carriage.
    FMCSA Response:
    The FMCSA disagrees with the commenters on this issue. The FMCSA is 
not aware of any information that would suggest the demonstration 
project will increase the extent to which illegal activities occur. 
Mexico-domiciled motor carriers are already allowed to operate in 
commercial zones. Many of the carriers that have applied for authority 
to operate beyond the commercial zones and participate in the 
demonstration project are already conducting CMV operations in the 
U.S., albeit limited to the commercial zones. Therefore, FMCSA does not 
anticipate problems with this population of carriers
    As indicated in the May 1 notice, participating carriers were 
selected from several hundred Mexico-domiciled carriers that filed a 
complete OP-1 (MX) application. The carriers that are 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. Therefore, FMCSA does not 
believe the participating carriers represent a significant risk of 
illegal drug activities.
    The participating carriers, like the carriers currently operating 
into the border commercial zones, will be subject to the full array of 
customs and immigration inspections when they enter the United States. 
Persons entering the U.S. for business purposes and traveling beyond 
the commercial zones must obtain a visa.
    It is inappropriate to conclude that Mexico-domiciled carriers are 
likely to engage in illegal activities simply because they are from 
Mexico. In any case, FMCSA does not have the statutory authority to 
deny long-haul Mexico-domiciled carriers operating authority based 
solely on commenters' perceptions that they are more likely than U.S. 
carriers to engage in illegal activities.

Hazardous Materials and Passenger Carriers

    Altshuler, ODOT, and Advocates noted that the Federal Register 
notice does not explicitly state that motor carriers transporting 
hazardous materials (HM) or passengers are not eligible to participate 
in the demonstration project. These commenters requested a definitive 
statement on this issue from FMCSA.
    The Teamsters noted that one of the most frequent out-of-service 
(OOS) violations for Mexican drivers hauling HM into the commercial 
zones is displaying incorrect placards or no placards at all. The 
Teamsters questioned how FMCSA would assure the stop of HM inside 
commercial zones without proper placards.
    FMCSA Response:
    The FMCSA emphasizes that the May 1 and June 8 notices did include 
statements indicating Mexico-domiciled motor carriers transporting 
passengers or hazardous materials will not be permitted to participate 
in the demonstration project. For example, the portion of the May 1 
notice that discusses the selection criteria for participating carriers 
indicates that carriers known to transport passengers of hazardous 
materials would be eliminated from consideration. The FMCSA takes this 
opportunity to reiterate that Mexico-domiciled carriers transporting 
passengers or hazardous materials will not be allowed to participate in 
the demonstration project. The Agency will ensure that this aspect of 
the project is continually emphasized in materials provided to 
potential program participants before the PASA is conducted, in 
conversations with carrier officials during the PASA, and in the 
operating authority document.

Minimum Levels of Financial Responsibility

    The Truck Safety Coalition (the Coalition) stated that although 
FMCSA asserts that Mexican-domiciled motor carriers will be required to 
carry insurance through a U.S. insurer, the current level of insurance 
is only $750,000, an amount that is too low to protect American 
citizens. The Coalition suggested that there should be a substantial 
increase in the minimum amount of insurance coverage required for 
foreign carriers operating inside the U.S., at least to an amount that 
might be more commensurate with the losses suffered in the event of a 
crash involving personal injury and death.
    FMCSA Response:
    There is no merit to the Coalition's suggestion that Mexico-
domiciled motor carriers transporting general freight should be 
required to have a greater level of financial responsibility than U.S.-
based motor carriers transporting the same types of cargo. Mexico-
domiciled carriers must establish financial responsibility, as required 
by 49 CFR part 387, through an insurance carrier licensed in a State in 
the United States. Based on the terms provided in

[[Page 46287]]

the required endorsement, FMCSA Form MCS-90, if there is a final 
judgment against the motor carrier for loss and damages associated with 
a crash in the United States, the insurer must pay the claim. The 
financial responsibility claims would involve legal proceedings in the 
United States and an insurer based here. There is no reason that a 
Mexico-domiciled carrier, insured by a U.S.-based company, should be 
required to have a greater level of insurance coverage than a U.S.-
based carrier.

Vehicle Inspection and Fleet Safety

    Altshuler expressed concern that the May 1 Federal Register notice 
provided no specific details on the PASA, e.g., the scope of that 
inspection, whether the inspection is physical or merely an audit of 
the carrier's vehicle's paperwork, and whether the results of those 
inspections will be made public. Altshuler stated that the notice also 
fails to identify the frequency with which the PASA and the inspections 
will be performed and it is unclear if the safety audit will be 
repeated every 3 months, or if some other, type of inspection will 
occur every 3 months.
    Advocates said the statement ``Every truck that crosses the border 
as part of the pilot will be checked--every truck, every time'' gives 
the impression that each participating vehicle will be inspected upon 
each entry into the U.S. However, the commenter noted that the notice 
states that ``[e]ach 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,'' which appears to mean that 
demonstration project vehicles will not be fully inspected on each 
entry.
    FMCSA Response:
    The June 8 notice provides details about the PASA. During the on-
site PASA, FMCSA will select vehicles for inspection from among those 
that are intended for use in the United States. The Agency will also 
review fleet maintenance records to assess the carrier's inspection, 
repair and maintenance practices. A complete copy of the Agency's PASA 
training material is in the docket listed at the beginning of this 
notice.
    In response to Altshuler's question, each participating carrier 
will be required to successfully complete subjected to only one PASA.
    In response to questions about roadside inspections, FMCSA and its 
State partners will check participating carrier's CMVs every time they 
cross the border to ensure the vehicles display current CVSA decals. 
However, the Agency and the States do not intend to conduct a full 
safety inspection of vehicles operated by participating carriers when 
such vehicles display a current CVSA decal unless the vehicle has an 
obvious safety deficiency, in which case an inspection will be 
conducted regardless of whether there is a current CVSA decal.
    The FMCSA notes there is no statutory or regulatory requirement to 
check every Mexico-domiciled truck, every time. The statement Advocates 
referenced was part of a media advisory and was meant to emphasize 
Mexico-domiciled trucks coming into the U.S. would be held to the same 
safety standards as U.S. trucks. Every truck, every time is expected to 
be in compliance with U.S. safety requirements.

Suspension and Revocation of Participating Carriers

    The Teamsters said it was unclear as to the criteria to use for 
disqualifying carriers. Both the Teamsters and OOIDA recommended that 
violating cabotage laws should disqualify a carrier from participating 
in the demonstration project. The Teamsters recommended that FMCSA 
should terminate any Mexican carriers caught hauling hazardous 
materials loads from the demonstration project.
    FMCSA Response:
    Any Mexico-domiciled carrier operating as part of this 
demonstration program will immediately be subject to suspension and 
revocation of its registration if it receives an ``Unsatisfactory'' 
safety rating. Any Mexico-domiciled carrier that receives a 
``Conditional'' safety rating as a result of a compliance review will 
have its authority revoked unless it can demonstrate corrective action 
within 30 days--this is a more stringent standard for U.S.-based 
carriers that receive a conditional rating; they are allowed to 
continue operating. Also, any carrier in the demonstration project will 
have its authority suspended if it fails to maintain insurance on file 
with FMCSA. Any vehicles found operating in the United States by a 
carrier without active operating authority will be placed out of 
service.
    In addition to loss of authority for less than satisfactory safety 
ratings or absence of insurance, drivers and carriers participating in 
the demonstration project, like all commercial motor vehicle drivers 
and motor carriers operating in the U.S., are subject to civil 
penalties for violations of the Federal Motor Carrier Safety 
Regulations.
    Participating carriers will be removed from the program if FMCSA 
determines the carrier violates U.S. cabotage rules or transports 
hazardous materials or passengers beyond the commercial zones.

FMCSA Authority To Proceed With the Project

    Altshuler set out its interpretation of the process requirements 
under section 350(c). It said that provision requires DOT's Inspector 
General ``to conduct a `comprehensive review of borders operations' to 
verify the existence of 8 conditions (and to) perform such a review 
`180 days after the first review is completed, and at least annually 
thereafter'.'' The commenter said the Secretary of Transportation then 
must certify in writing and addressing any Inspector General finding 
relating to the eight conditions, ``* * * that the opening of the 
border does not pose an unacceptable safety risk to the American 
public.'' Other commenters expressed the same or similar views.
    OOIDA believes ``Section 6901 does not permit FMCSA to proceed with 
a pilot program until the [Inspector General] publishes a new report 
and that report verifies FMCSR compliance with Section 350.'' The 
Teamsters argued that the Inspector General's not having made the 
required verifications ``begs the question as to whether the DOT has 
acted prematurely and without proper statutory authority to conduct 
this pilot program.''
    Advocates said, ``At the threshold, the Project violates section 
31315 because providing notice and comment did not occur prior to 
implementation of the Project[.]'' Advocates asserted that the Agency 
already had taken ``major actions'' to allow Mexico-domiciled carriers 
to operate in the U.S. beyond the border zones, that the May 1 Notice 
conceded the Agency already had begun the project, and that the Office 
of the Secretary had characterized the demonstration project as a 
``fait accompli'' in February 2007. Advocates pointed out that the 
Secretary said, on February 23, 2007, that FMCSA would complete initial 
safety audits for project participants in 60 days so that the selected 
carriers could begin traveling beyond the border areas. The comment 
observed, ``That 60-day calendar for implementing the Demonstration 
Project would conclude prior to the date of the instant notice asking 
for public comment on the content of the Project.''
    FMCSA Response:
    There is no basis for the claim by Altshuler and others that the 
Secretary of Transportation must repeat the certification required by 
section

[[Page 46288]]

350(c)(2) of the 2002 DOT Appropriations Act after each OIG review 
required by section 350(c)(1) and (d). In 2002 the OIG verified FMCSA's 
compliance with section 350(c)(1)(A)-(H), and the Secretary certified 
``that the opening of the border does not pose an unacceptable safety 
risk to the American public,'' as required by section 350(c)(2). 
Section 350(d) requires the OIG to conduct its second review and 
subsequent annual reviews ``using the criteria in (c)(1)(A) through 
(c)(1)(H) consistent with paragraph (c) of this section. * * *'' 
Section 350(d) is directed exclusively to the OIG; it does not refer to 
section 350(c)(2), nor does it mention a Secretarial certification. 
There is nothing to suggest that OIG reviews subsequent to the initial 
finding of compliance with section 350(c)(1) require a corresponding 
certification by the Secretary.
    The demonstration project will commence upon the grant of 
provisional operating authority to long-haul Mexico-domiciled carriers. 
However, FMCSA will not begin granting such authority until after the 
report required by section 6901(b)(1) has been completed and the Agency 
completes any follow-up actions needed to address any issues that may 
be raised in the report.
    With regard to Advocates' comment, FMCSA emphasizes the project is 
not a ``pilot program'' within the meaning of 49 U.S.C. 31315(c) 
because the Agency is not testing innovative approaches to motor 
carrier safety and is not granting any exemptions from the safety 
regulations. The requirements of 49 U.S.C. 31315(c) were not applicable 
to the demonstration project until the enactment of the 2007 Act. In 
accordance with the 2007 Act, FMCSA published a notice in the Federal 
Register on June 8, 2007, announcing additional details about the 
project and requesting public comment.
    The demonstration project satisfies the requirement that the level 
of safety provided be equivalent to or greater than the level of safety 
provided through existing safety regulations. The participating 
carriers will not be provided exemptions from any of the existing 
safety regulations.
    The Advocates claim that the Agency had already initiated the 
program prior to the publication of either the May 1 or June 8 notice 
are incorrect. In fact, no Mexico-domiciled motor carrier has been 
granted authority to operate beyond the commercial zones. The Agency 
has completed significant amounts of preparatory work in anticipation 
of launching the project, such as reviewing applications for operating 
authority and conducting PASAs. However, FMCSA has not granted 
authority to Mexico-domiciled carriers to operate beyond the commercial 
zones.

``Demonstration Project'' or ``Pilot Program''

    Responding to the May 1 Notice, Advocates argued that FMCSA was 
undertaking a statutory ``pilot program'' under 49 U.S.C. 31315(c) that 
required following a number of procedural steps and meeting various 
statutory preconditions. Advocates argue that the demonstration project 
``is testing an `innovative approach to motor carrier, commercial motor 
vehicle, and driver safety,'' and ``is intended to evaluate 
alternatives to regulations.''
    FMCSA Response:
    The demonstration project is not a ``pilot program'' within the 
meaning of 49 U.S.C. 31315 because the Agency is not testing an 
innovative approach to motor carrier safety and is not granting any 
exemptions from its safety regulations. During the demonstration 
project, all participating carriers will be required to comply with 
existing U.S. safety regulations; no alternatives to existing 
regulations are being implemented, and no exemptions are being 
provided. However, because section 6901 of the 2007 Act requires that 
FMCSA ensure that the demonstration project satisfies the pilot program 
prerequisites of 49 U.S.C. 31315, Advocates' concerns have been 
effectively resolved by the 2007 statute.

Collection of Taxes

    OOIDA noted that FMCSA was without authority or responsibility for 
collecting various State and Federal taxes, and therefore the Agency 
could offer no assurances ``Mexican motor carrier will pay all 
applicable U.S. `vehicle registration and taxation, and fuel taxes.'' 
OOIDA emphasized the Agency could not audit Mexican carriers for their 
required compliance with the International Fuel Tax Agreement, or 
provide assistance to the States to help ensure the Mexico-domiciled 
carriers comply with the International Registration Plan, nor ensure 
Mexican carriers pay other State taxes and fees imposed on the U.S. 
motor carrier industry.
    FMCSA Response:
    The collection of State taxes and registration fees are State 
responsibilities over which the Agency has no control. However, FMCSA 
has worked with State tax and vehicle registration officials to ensure 
that Mexico-domiciled long-haul motor carriers will pay applicable fuel 
taxes and registration fees for operating commercial vehicles in the 
U.S. and that those taxes and fees will be subject to apportionment 
among the U.S. states and Canadian provinces as required by law.
    Specifically, in 2001 the National Governors Association Center for 
Best Practices, in cooperation with the International Fuel Tax 
Association, Inc. (IFTA, Inc.), the group responsible for managing the 
International Fuel Tax Agreement (IFTA), and the International 
Registration Plan, Inc. (IRP, Inc.), which manages the International 
Registration Plan (IRP), convened a Fuel Tax and Registration Working 
Group comprised of State officials to recommend strategies for 
collecting appropriate taxes and fees from Mexico-domiciled carriers as 
they begin operations under NAFTA. Subsequently, a NAFTA Border States 
Working Group was formed consisting of representatives from each of the 
border States, and representatives from IFTA, IRP, the U.S. Department 
of Transportation, Transport Canada, Mexico SCT, and ATA to further 
develop these strategies. The Working Group's recommendations have been 
adopted by the States and Provinces that are parties to IRP and IFTA. 
As a result of these efforts, Mexican long-haul carriers participating 
in the demonstration project will be subject to the same state fuel tax 
and registration fees and apportionment system that applies to U.S. and 
Canadian carriers and will be subject to State fuel tax and 
registration fee audits.
    The FMCSA worked with the NAFTA Border States Working Group to 
develop an IRP/IFTA awareness course. The course was presented to 
Mexico-domiciled motor carriers and Mexican government officials at six 
locations in Mexico and the United States. The training provided an 
overview of IRP/IFTA and the principles of reciprocity between member 
jurisdictions. The course presented the basic IRP/IFTA forms and a 
demonstration of record keeping requirements. It also provides points-
of-contact for the four Southern Border States. Trainings sessions were 
held in: Monterrey, Mexico; Mexico City, Mexico; Otay Mesa, California; 
Laredo, Texas; El Paso, Texas; and, Nogales, Arizona.

IV. FMCSA Intent To Proceed With the Demonstration Project

    In consideration of the above, FMCSA believes it is appropriate to 
commence the demonstration project after the U.S. Department of 
Transportation's Inspector General completes his report to Congress, as 
required by section 6901(b)(1) of the Act, and the Agency completes any 
follow-up actions needed

[[Page 46289]]

to address any issues that may be raised in the report.

    Issued on: August 10, 2007.
David H. Hugel,
Deputy Administrator.
 [FR Doc. E7-16207 Filed 8-16-07; 8:45 am]
BILLING CODE 4910-EX-P