July 7, 2011

Independent truckers, trucking labor take legal steps to block implementation of U.S.-Mexico pact

LaHood exceeded authority, OOIDA lawyers argue.

By Mark B. Solomon

Independent trucking and labor groups were stunned by the July 6 announcement that U.S. Transportation Secretary Ray LaHood had traveled to Mexico City to sign an agreement opening the U.S. market to qualified Mexican truckers. In response, they have either taken or are mulling legal action to block the process.

In a July 6 statement, Teamsters Union General President James P. Hoffa said the agreement could be considered illegal because Congress did not authorize DOT to grant Mexican truckers permanent operating rights to serve the United States.

Hoffa also questioned the legality of a controversial move by DOT to use money from the nation's highway trust fund to pay for electronic on-board recorders to monitor a Mexican truck's movement and location.

Teamsters spokesman Galen Munroe said the union is weighing its legal options, which may include a request for a hearing before the full U.S. Eighth Circuit Court of Appeals in St. Louis. He declined further comment.

The same day, lawyers for the Independent Owner-Operator Drivers Association (OOIDA), which represents the nation's owner-operator drivers, filed suit in federal appeals court in Washington alleging LaHood "exceeded his statutory authority" in signing the agreement and asked the court to "enjoin, set aside, suspend or, at the very least, determine the validity" of the pilot program.

In comments filed in mid-May with the Federal Motor Carrier Safety Administration, the OOIDA attorneys said the pilot program unlawfully grants Mexican truckers "special treatment" by allowing them to comply with Mexican laws and regulations governing commercial drivers licenses, drivers' medical qualifications, and driver drug testing. In contrast, the 1994 North American Free Trade Agreement (NAFTA), the law that mandated cross-border truck access, requires the U.S. to provide its trading partners with "national treatment." This means the United States is only obligated to treat Mexican carriers in the same manner it treats U.S. carriers, according to OOIDA's attorneys.

"Special treatment is not required under NAFTA and runs afoul of a number of U.S. statutory provisions that require uniform treatment for all participants" in the U.S. trucking industry, the OOIDA attorneys argued.

The attorneys added that DOT has no authority from Congress to issue either provisional or permanent operating certificates to Mexican truckers. Even if DOT was empowered to issue provisional operating authority as part of the three-step pilot program announced April 9, "there is no authority to extend operating authority permanently at the conclusion of a pilot program," the attorneys wrote in their comments.

The calls for legal action were accompanied by harsh rhetoric from both groups. OOIDA President Jim Johnston all but accused LaHood of stealing away to Mexico with virtually no advance notice to sign an agreement behind the backs of Congress and the American people.

"If the agreement is good for the U.S., why the hell is [Secretary LaHood] sneaking down there to sign it?" said Johnston. "So much for their supposed transparency. Why not let the public see the details before signing the agreement."

Meanwhile, Reps. Peter DeFazio (D-Ore.); Duncan R. Hunter, (R-Calif.), and Daniel Lipinski, (D-Ill.) introduced legislation on Wednesday that would bar DOT from granting permanent operating authority to any Mexican trucker. The legislation would also cap a Mexican trucker's provisional authority to no longer than three years and shift the financial responsibility for electronic on-board monitoring to Mexican interests.

The action by LaHood and his Mexican counterpart, Dionsio Arturo Pérez-Jácome Friscone, comes three months after President Obama and Mexican President Felipe Calderon signed an accord effectively ending a two-year battle over Mexican truck access that began when Congress in 2009 suspended funding for a pilot program effectively denying Mexican carriers into the U.S. beyond a 25-mile border commercial zone. Mexico retaliated by slapping tariffs on 89 U.S. imports valued at more than $2 billion a year. The tariffs had an adverse impact on many agricultural and industrial producers who regarded Mexico as their biggest export market.

Under the March accord signed by the presidents, Mexico would lift half of the tariffs once an agreement is finalized, and then remove the remaining half once the first Mexican trucker is granted operating authority.

The FMCSA then proposed a three-phase pilot program for Mexican truck access. The first stage, which runs three months, would begin when a Mexican trucker is issued provisional operating authority and would require each truck and driver to be inspected every time they entered U.S. commerce. The second stage would require each Mexican vehicle to be inspected with a frequency comparable to that of other Mexican trucks crossing the border. Within 18 months of the carrier's receiving its original provisional authority, the certificate would become permanent as long as the carrier had a satisfactory safety rating and no pending enforcement actions against it.

In a provision that may have the most durable free-market impact, Mexican trucks would be prohibited from hauling freight between points within the United States.

In a statement, LaHood hailed the agreement as a victory for both highway safety and for trade. In the statement, DOT said it will review the full records of each driver and require all drug-testing samples to be analyzed at U.S.-based labs approved by the Department of Health and Human Services. The agreement "also ensures that Mexico will provide reciprocal authority for U.S. carriers to engage in cross-border long-haul operations into that country," according to the DOT statement. The American Trucking Associations (ATA) and the U.S. Chamber of Commerce, long supporters of open access for Mexican truckers, hailed the announcement.

The language prohibiting Mexican truckers from operating wholly within the United States will effectively deter Mexican truckers from deeply penetrating the U.S. market, said Lana R. Batts. Now managing director of mergers and acquisitions advisory firm Transport Capital Partners, Batts headed policy and international affairs for ATA in the 1980s and early 1990s. According to Batts, Mexican truckers, most of whom have fleets of six trucks or less, can ill afford to dispatch rigs deep into U.S. commerce only to be forced to wait five or six days to carry a load back to Mexico. This is especially true when they are barred from serving points within the U.S. interior, Batts said.

"I don't think you are going to see many Mexican trucks come very far north unless they can see significant lane density," she said.

James H Burnley IV, who served as DOT secretary during the Reagan Administration and now heads the transportation practice at Washington law firm Venable LLP, doubts opponents of the measure will be able to mount a successful fight in the courts. Burnley added that members of Congress whose constituents have been affected by the Mexican tariffs would be unwilling at this point to challenge an agreement that reopens the market to those industries.

More articles by Mark B. Solomon

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