OOIDA files suit to halt Mexican truck pilot program

Within hours of the announcement that the U.S. and Mexico had officially signed an agreement for a  new cross-border trucking pilot program, opponents of the deal fired back, including the Owner-Operator Independent Drivers Assn. (OOIDA), which filed a petition with the U.S. Court of Appeals for the Washington D.C. Circuit seeking to halt the program.

OOIDA is asking the court to “enjoin, set-aside, suspend (in whole or in part) or determine the validity of the implementation of this program.” Filed by the Cullen Law Firm of Washington, DC, on behalf of OOIDA, the petition states that the “implementation of the pilot program is arbitrary, capricious, and abuse of discretion, and otherwise not in accordance with law.”

Secretary of Transportation Ray LaHood signed the binational agreement Wednesday that will allow Mexican motor carriers to have operating authority beyond the border commercial zone inside the U.S. The agreement is designed to end a long battle over cross-border trucking dating back to 1994 and the signing of the NAFTA treaty. A similar pilot program was cancelled in 2009.

“If the agreement is good for the U.S. why the hell is [LaHood] sneaking down there to sign it?” said Jim Johnston, president of OOIDA, in a statement. “So much for their supposed transparency. Why not let the public see the details before signing the agreement? Seems like the administration is dead set on caving to Mexico’s shakedown regardless of the costs to the American public and our tax coffers.”

According to the Memorandum of Understanding (MOU) reached between the U.S. Dept. of Transportation (DOT) and the Secretaria de Communicaciones y Transportes of Mexico, the pilot program is not to exceed three years, but could run as short as 18 months.

Once a Mexican carrier successfully passes the “pilot” period, it could be granted full operating authority as long as it maintains a satisfactory safety rating, according to FMCSA.

While the focus here is tightly on Mexican carriers operating in the U.S., the MOU also grants the same privileges to U.S. carriers wanting to operate inside Mexico.

(Read the full MOU here)

Unlike OOIDA, the largest U.S. truck lobby favors the deal. “American Trucking Assns. (ATA) welcomes this latest step in improving the efficiency of trucking and trade at our southern border,” said Gov. Bill Graves, ATA president & CEO. “By signing this historic agreement, the U.S. and Mexico have laid the groundwork for continued economic growth on both sides of the border.

“Further,” Graves added, “ATA is encouraged that Mexico will soon be dropping its incredibly damaging tariffs, which will also spur growth in trade between our two countries. “

The MOU specifically states that the agreement “does not authorize [carriers] to engage in domestic cartage of goods point-to-point in the territory of the other country.”

All Mexican carriers seeking to participate are subject to a Pre-Authorization Safety Audit (PASA) performed by the U.S. Federal Motor carrier Safety Administration (FMCSA).

The audits will include:

• Security and background checks of the carrier and its drivers
• Validation of existing Mexican Licencia Federal de Conductor license numbers
• Vehicle safety and records inspections, including maintenance records, performance data and safety management programs
• Controlled substances and alcohol testing programs and results.

Also, the Mexican carriers must provide proof of the ability to obtain insurance in the U.S., as well as that they meet all FMCSR, FMVSS, state, and federal laws and regulations, including emissions standards in effect as of 1998 or later.

Mexican drivers must also prove they understand English and can read all U.S. road signs.

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In exchange for the pilot program, Mexico has agreed to cut $2.4 billion in tariffs it imposed following the cancellation of the previous trucking demonstration project in 2009. Mexico will lift 50% of the tariffs within 10 days and the remainder of the tariffs will be removed within five days of the first Mexican trucking company to receive U.S. operating authority.

Business organizations are relieved that the deal will bring an end to the tariffs that they argue have restricted trade and hurt American workers.

The American Frozen Food Institute, which represents the frozen food industry, was quick to applaud the MOU, citing more than $33 million in lost revenues for the industry due to the tariffs.

“The memorandum ensures the U.S. will be in full compliance with its international trade commitments and will immediately help restore some of the lost jobs and lost market access U.S. frozen food producers have suffered,” said Kraig R. Naasz, president & CEO.

The U.S. Chamber of Commerce responded to the news positively as well.

“If we’re going to boost U.S. exports and create jobs here at home, we must hold on to our major export markets, such as Mexico, where American companies are already doing well,” said Thomas J. Donohue, Chamber president & CEO. “Today’s news will help American businesses to do just that. We urge Congress to support this agreement and let this dispute be brought to an end.”

The agreement includes a stipulation that Mexican carriers install electronic onboard recorders (EOBRs) on trucks that will enter the U.S. The EOBRs would be paid for by the U.S. government.

Rep. Peter DeFazio (D-OR), Ranking Member of the House Subcommittee on Highways and Transit, contends that the EOBR measure is an inappropriate use of U.S. funds. Therefore, DeFazio introduced a bill yesterday (Protecting America’s Roads Act – PARA) that would specifically prevent the use of U.S. funds to pay for the recorders.

“As we debate deep and harsh cuts to programs that help middle class families, it is outrageous that taxpayers are being told to foot the bill for the Mexican trucking industry to comply with American safety standards,” DeFazio said. “My bill would stop the Dept. of Transportation from raiding the Highway Trust Fund to pay for equipment on Mexican trucks. Let the Mexican government or the Mexican carriers pay for their equipment and let’s use U.S. gas tax revenue for its intended purpose of putting Americans to work rebuilding our roads and bridges.”

ATA expressed a more nuanced take on footing the EOBR bill. “We … note that Mexican fleets participating in the program will be bound by the same rules and regulations applicable to American carriers, and we are pleased that the agreement allows for U.S. carriers to compete in Mexico,” ATA’s Graves said. “ATA has been, and continues to be concerned with the expenditure of taxpayer dollars for equipment to be used to monitor Mexican carriers’ hours of service and track their movements in order prevent domestic freight moves. However, we do appreciate the Dept. of Transportation’s position that this financial help will be limited to the term of the pilot program and allows the U.S. to more effectively audit participating Mexican carriers.”

DeFazio’s bill, co-sponsored by Rep. Dan Lipinski (D-IL) and Rep. Duncan Hunter (R-CA), would also prevent the DOT from granting permanent operating authority to any Mexican carrier beyond the conclusion of the pilot program.

Teamsters general president Jim Hoffa said the program is “probably illegal” because Congress has not granted DOT the authority to grant permanent operating authority to Mexican trucks, which would occur following 18 months after the pilot program, he said. In addition, Hoffa questioned whether money from the Highway Trust Fund could be used to pay for electronic onboard recorders (EOBRs) for the Mexican trucks legally.

According to a spokesperson for DOT, the agency is simply acting on “explicit statutory authority” to meet the requirements of NAFTA. A report on the pilot program’s progress will be prepared for Congress, the spokesperson noted.

“Opening the border to dangerous trucks at a time of high unemployment and rampant drug violence is a shameful abandonment of the DOT’s duty to protect American citizens from harm and to spend American tax dollars responsibly,” Hoffa stated.

“It adds insult to injury to force U.S. taxpayers to pay for monitoring equipment on Mexican trucks so Mexican carriers can take away their jobs,” he added. “The DOT shows more loyalty to the Mexican people than it does to Americans.” 

Indeed, over the years the entry of Mexican carriers has met its fair share of critics, with many of the arguments centering on jobs and “unsafe” Mexican trucks.

“People in Washington are constantly talking about two things these days – creating good jobs for Americans and cutting wasteful spending,” OOIDA’s Spencer said. “This program does exactly the opposite for both. This program will jeopardize the livelihoods of tens of thousands of U.S.-based small-business truckers and professional truck drivers and undermine the standard of living for the rest of the driver community.”

Hoffa and the Teamsters have continually labeled the Mexican trucks “unsafe,” insisting from the beginning that the Obama Administration challenge what it labeled as “excessive tariffs” on U.S. goods.

“This so-called pilot program is a concession to multinational corporations that send jobs to Mexico,” Hoffa said. “It erodes our national security. It endangers motorists. It ignores the rampant corruption among Mexican law enforcement. It lowers wages and robs jobs from hard-working American truck drivers and warehouse workers.”

Ultimately, for Hoffa and many other critics of the program, it comes down to safety on U.S. highways.

“Mexican trucks simply don’t meet the same standards as U.S. trucks,” Hoffa argued. “Medical and physical standards for Mexican trucking firms are lower than for U.S. companies. And how can Mexico enforce highway safety laws when it can’t even control drug cartels?”