Freight Operations by Mexican Motor CarriersImplementation of North American Free Trade Agreement

INTERSTATE COMMERCE COMMISSION

49 CFR Parts 1043 and 1160

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

Freight Operations by Mexican Motor Carriers--Implementation of

North American Free Trade Agreement

AGENCY: Interstate Commerce Commission.

ACTION: Proposed rules.

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SUMMARY: The purpose of this Notice is to announce implementation of

the provisions of the second phase of the North American Free Trade

Agreement (NAFTA) relating to land transportation, and to promulgate

rules and develop an application form required to carry out the

provisions. Under existing law, effective December 18, 1995, the

Commission will process applications filed by Mexican motor carriers of

property for operating authority to provide service across the United

States-Mexico international boundary line to and from points in

California, Arizona, New Mexico, and Texas, and by persons of Mexico

who establish enterprises in the United States seeking to distribute

international cargo in the United States.

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

ADDRESSES: An original and 10 copies of comments referring to Ex Parte

No. 55 (Sub-No. 96) must be sent to: Interstate Commerce Commission,

Office of the Secretary, Case Control Branch, 1201 Constitution Avenue,

N.W., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Bernard Gaillard, (202) 927-5500 or

Stanley M. Braverman, (202) 927-6316. [TDD for the hearing impaired:

vember 7, 1995.

ADDRESSES: An original and 10 copies of comments referring to Ex Parte

No. 55 (Sub-No. 96) must be sent to: Interstate Commerce Commission,

Office of the Secretary, Case Control Branch, 1201 Constitution Avenue,

N.W., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Bernard Gaillard, (202) 927-5500 or

Stanley M. Braverman, (202) 927-6316. [TDD for the hearing impaired:

(202) 927-5721.]

SUPPLEMENTARY INFORMATION: Section 6 of the Bus Regulatory Reform Act

of 1982 (codified at 49 U.S.C. 10922(m)) imposed a 2-year moratorium

(subject to renewal) on the Commission's issuance of new grants of

operating authority to motor carriers domiciled in or owned or

controlled by persons of Mexico or Canada. Under this statute, the

President has the authority to remove or modify the moratorium if he

determines it to be in the national interest, i.e., if overriding

economic or foreign policy considerations make such an action

advisable, or if a negotiated settlement with one country or the other

can be reached. Under the moratorium, the President must notify

Congress in writing 60 days before the date on which the removal or

modification is to take effect.

Shortly after the moratorium went into effect, the President

exercised his authority and removed the moratorium with respect to

Canada. The President indicated in a memorandum to the United States

Trade Representative that the United States and Canada had reached a

bilateral understanding that would ensure fair and equitable treatment

for both U.S. and Canadian motor carriers on both sides of the

international boundary line. 47 FR 54053 (1982).

The moratorium remained in place for Mexican motor carriers because

the Mexican Government continued to restrict U.S. motor carriers'

access to Mexico. The moratorium prohibits Mexicans from seeking

operating authority that carriers of other nations can obtain.1

the United States and

points in Mexico), but they will not be able to engage in

transportation between points in the United States.

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1. The first phase of NAFTA granted access to Mexican charter

and tour bus operators to provide international transportation

service between Mexico and all points in the United States;3

\3\In Passenger Operations By Mexican Carriers--NAFTA, 9

I.C.C.2d 1258 (1993), we crafted a special authorization for

international charter and tour bus service.

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2. Three years after signature (December 17, 1995), NAFTA

provides for access by Mexican motor property carriers into United

States border States, and establishment of

companies to distribute international cargo within the United

States;4

\4\Because December 17, 1995 falls on a Sunday, we will begin

processing applications on Monday, December 18, 1995.

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3. Three years after entry into force (January 1, 1997), NAFTA

provides for access by Mexican regular-route passenger carriers to

perform international service to all points in the United States;

4. Six years after entry into force, NAFTA provides for access

for cross-border operations by Mexican motor property carriers to

all points in the United States; and

5. Seven years after entry into force, NAFTA provides for bus

services by Mexican carriers between points in the United States.

egular-route passenger carriers to

perform international service to all points in the United States;

4. Six years after entry into force, NAFTA provides for access

for cross-border operations by Mexican motor property carriers to

all points in the United States; and

5. Seven years after entry into force, NAFTA provides for bus

services by Mexican carriers between points in the United States.

Pursuant to 49 U.S.C. 10922(m)(2)(A), the President notified

Congress, on November 4, 1993, in a Statement of Administrative Action

to Implement NAFTA, of his intention to modify the moratorium in

conformity with the entry phases of NAFTA. We are thus instituting a

rulemaking proceeding, in anticipation of the President's specific

modification of the moratorium, to implement phase 2 of NAFTA, which

governs international cargo transportation between the U.S.-Mexico

international boundary and points in the four U.S. border States, as

well as the distribution and transportation of international cargo by a

Mexican-owned or controlled company based in the United States.

We will require operating certificates for private as well as for

for-hire Mexican carriers of property (including exempt

commodities),5 because the current moratorium on grants of

authority to Mexican carriers clearly includes Mexican private carriers

and carriers of exempt commodities. Indeed, the phase 2 NAFTA entry

provisions, which contemplate a partial lifting of the moratorium,

define ``truck services'' as including for-hire, private, or exempt

services. North American Free Trade Agreement, January 1, 1994, Annex

I--United States (1-U-19); see also North American Free Trade Agreement

Implementation Act (Dec. 8, 1993), Pub. L. No. 103-182, 107 Stat. 2057,

190 U.S.C.S. 3301 (1993).

\5\These certificates may be obtained through the filing of an

``OP-1MX Application form'' for Mexican carriers.

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e Agreement, January 1, 1994, Annex

I--United States (1-U-19); see also North American Free Trade Agreement

Implementation Act (Dec. 8, 1993), Pub. L. No. 103-182, 107 Stat. 2057,

190 U.S.C.S. 3301 (1993).

\5\These certificates may be obtained through the filing of an

``OP-1MX Application form'' for Mexican carriers.

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Because NAFTA is designed to provide simultaneous access to each

country's border States for international shipments and to allow the

establishment of carriers to carry international cargo, reciprocal

treatment in practice must be achieved. Accordingly, to guard against a

failure to adhere to the NAFTA principles of reciprocal access for U.S.

carriers in Mexico, the Commission will issue conditional grants of

authority to Mexican applicants (common carriers, contract carriers,

private carriers, household goods carriers, and companies established

to distribute international cargo within the United States). The

certificates that we issue to Mexican motor carriers will usually be

framed to authorize service:

Over irregular routes, in foreign commerce, transporting general

and exempt commodities (with the usual exceptions), between ports of

entry on the international boundary between the U.S. and Mexico, on

the one hand, and on the other, points in California, Arizona, New

Mexico, and Texas.

Condition: The duration of this grant is subject to the

condition that U.S. carriers obtain reciprocal access in Mexico.

This certificate will terminate 30 days after service of a

Commission decision finding that reciprocal access has not been

granted by Mexico.

nal boundary between the U.S. and Mexico, on

the one hand, and on the other, points in California, Arizona, New

Mexico, and Texas.

Condition: The duration of this grant is subject to the

condition that U.S. carriers obtain reciprocal access in Mexico.

This certificate will terminate 30 days after service of a

Commission decision finding that reciprocal access has not been

granted by Mexico.

The Commission, on its own motion or on petition by interested

persons, may initiate a proceeding to determine whether Mexico has

failed to grant reciprocal access. The U.S. Department of

Transportation (DOT) will be invited to participate in any such

proceeding. Upon a determination by the Commission that reciprocal

access in Mexico has been denied, the conditional grants of authority

to Mexican carriers would be terminated.6

\6\ Reciprocal treatment does not require the establishment of

identical entry procedures in both countries. Rather, NAFTA simply

mandates reciprocal access in the territories of both countries.

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Petitions to invoke the termination of these grants of authority

will not be entertained in the absence of allegations of comprehensive

efforts by Mexico to deny or discourage entry into or establishment of

transportation operations within that country. All terminated grants

would be reinstated upon a finding in a subsequent proceeding that

reciprocity has been achieved.

In general, the application procedures and regulations that apply

to United States for-hire carriers will also apply to Mexican

carriers.7 For example, to be issued operating certificates in

accordance with current law, carriers must abide by all DOT safety

regulations, comply with the Commission's insurance requirements (49

U.S.C. 10927, 49 CFR Part 1043), publish and file with the Commission

applicable tariffs (49 U.S.C. 10761, 10762), and file with the

Commission agents for service of process (49 U.S.C. 10330)

can

carriers.7 For example, to be issued operating certificates in

accordance with current law, carriers must abide by all DOT safety

regulations, comply with the Commission's insurance requirements (49

U.S.C. 10927, 49 CFR Part 1043), publish and file with the Commission

applicable tariffs (49 U.S.C. 10761, 10762), and file with the

Commission agents for service of process (49 U.S.C. 10330). After

initiating service, carriers must maintain compliance with DOT's safety

fitness standards. Failure to do so will result in the revocation of

the authority.

\7\See 49 CFR Part 1160, along with the proposed amendments

required to implement phase 2 of NAFTA.

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Attached as Appendix A is the proposed OP-1MX Application and the

instructions on how it should be completed. The application is designed

to collect information from Mexican applicants seeking operating

authority to conduct private and for-hire motor carrier cross border

operations (including the carriage of exempt commodities) into and from

the four United States border States, and for Mexican-owned or

controlled enterprises established in the United States to transport

international cargo in foreign commerce.

We believe that a separate application form designed to authorize

this phase of NAFTA service will help to avoid confusion and errors,

thereby improving the speed and efficiency of the application

processing. At the request of the Federal Highway Administration, our

application forms will alert applicants to the safety fitness

conditions imposed on all certificates by the Commission in Safety

Fitness Policy, 8 I.C.C.2d 123 (1991), and will require a certification

that the applicant can produce records demonstrating compliance with

the Federal Motor Carrier Safety Regulations and the Hazardous

Materials Transportation Regulations. Because certain Mexican carriers

may want to file ``OP-2'' Forms seeking authority to operate only in

U.S

n all certificates by the Commission in Safety

Fitness Policy, 8 I.C.C.2d 123 (1991), and will require a certification

that the applicant can produce records demonstrating compliance with

the Federal Motor Carrier Safety Regulations and the Hazardous

Materials Transportation Regulations. Because certain Mexican carriers

may want to file ``OP-2'' Forms seeking authority to operate only in

U.S. border commercial zones under the more limited MX certificates,

rather than operating under the broader conditional licenses

contemplated here, we will continue to process requests for MX

certificates, unless Congress amends or repeals section 10530.

We will provide a short comment period to enable interested persons

to submit written views, arguments, or representations. Comments filed

with the Commission must be identified as such and must comply with the

requirements for filing pleadings specified at 49 CFR 1104.1-1104.3.

Pursuant to 5 CFR 1320.5(a)(iv)(A)(6), comments may also be filed with

the Office of Management and Budget, Office of Information and

Regulatory Affairs, Washington, D.C. 20403.

Regulatory Flexibility Act

Under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., we

have examined the impact of this proposed action on small businesses

and small organizations. We expect that the new application form

designated for Mexican applicants (Form OP-1MX), and the corresponding

regulations, will simplify and clarify the application process. Use of

the existing Form OP-1 for these new

applications, by contrast, would cause confusion and would require more

work on the part of Mexican carrier applicants. Therefore, the proposed

action should reduce paperwork burdens on small businesses.

Paperwork Burden Analysis

Mexican applicants (Form OP-1MX), and the corresponding

regulations, will simplify and clarify the application process. Use of

the existing Form OP-1 for these new

applications, by contrast, would cause confusion and would require more

work on the part of Mexican carrier applicants. Therefore, the proposed

action should reduce paperwork burdens on small businesses.

Paperwork Burden Analysis

We have submitted notice of this rulemaking and the new application

Form OP-1MX, entitled Application for Operating Authority by Mexican

Carriers Provided by the North American Free Trade Agreement, to the

Office of Management and Budget (OMB) for review under Section 3504(h)

of the Paperwork Reduction Act of 1980 [44 U.S.C. Chapter 35]. The form

is designed to collect information from Mexican carriers to allow the

Commission to evaluate whether an operating authority proposal meets

the Commission's standards for granting certificates of authority.

We estimate that an average of 1.5 burden hours will be required to

complete the proposed form. The Commission estimates it will receive

approximately 18,800 applications each year for a total of 28,200

burden hours. The estimated burden hours include time for reviewing

instructions, gathering and maintaining the needed data, and completing

and reviewing the collection of information.

Environmental and Energy Considerations

We conclude that the rules proposed here will not significantly

affect either the quality of the human environment or the conservation

of energy resources.

List of Subjects

49 CFR Part 1043

Insurance, Motor Carriers, Surety Bonds.

49 CFR Part 1160

Administrative practice and procedure, Brokers, Buses, Freight

forwarders, Maritime carriers, Motor carriers, Moving of household

goods.

Decided: October 12, 1995.

es proposed here will not significantly

affect either the quality of the human environment or the conservation

of energy resources.

List of Subjects

49 CFR Part 1043

Insurance, Motor Carriers, Surety Bonds.

49 CFR Part 1160

Administrative practice and procedure, Brokers, Buses, Freight

forwarders, Maritime carriers, Motor carriers, Moving of household

goods.

Decided: October 12, 1995.

By the Commission, Chairman Morgan, Vice Chairman Owen,

Commissioners Simmons and McDonald.

Vernon A. Williams,

Secretary

For the reasons set forth in the preamble, title 49, chapter X,

parts 1043 and 1160 are proposed to be amended as set forth below:

PART 1043--SURETY BONDS AND POLICIES OF INSURANCE

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

follows:

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

Sec. 1043.1 [Amended]

2. Section 1043.1 paragraphs (a)(1) and (b) are amended as follows:

a. In paragraph (a)(1) add the words ``or foreign (Mexican) motor

private carrier or foreign motor carrier transporting exempt

commodities'' after the words ``No common or contract carrier''.

b. In paragraph (b) add the words ``nor any foreign (Mexican)

common carrier of exempt commodities'' after the words ``title 49 of

the U.S. Code''.

PART 1160--RULES GOVERNING APPLICATIONS FOR OPERATING AUTHORITY

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

follows:

Authority: 5 U.S.C 553 and 559; 16 U.S.C. 1456; 49 U.S.C. 10101,

10305, 10321, 10921, 10922, 10923, 10924, 10928 and 11102.

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

Sec. 1160.1 Applications governed by these rules.

* * * * *

e''.

PART 1160--RULES GOVERNING APPLICATIONS FOR OPERATING AUTHORITY

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

follows:

Authority: 5 U.S.C 553 and 559; 16 U.S.C. 1456; 49 U.S.C. 10101,

10305, 10321, 10921, 10922, 10923, 10924, 10928 and 11102.

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

Sec. 1160.1 Applications governed by these rules.

* * * * *

(h) Applications for Mexican carriers to operate in foreign

commerce as common, contract or private motor carriers of property

(including exempt items) between the U.S./Mexico border, and points in

California, Arizona, New Mexico and Texas.

Sec. 1160.3 [Amended]

5. In Sec. 1160.3, paragraph (a), remove the word ``and'' after the

words ``of household goods;''; add the words ``and Form OP-1MX for

Mexican motor property carriers'' after the words ``for water

carriers''.

Sec. 1160.4 [Amended]

6. Section 1160.4, paragraphs (a)(1) and (d) are amended as

follows:

a. In paragraph (a)(1) add the words ``, Mexican motor property

carriers that perform private carriage and transport exempt items,''

after the words ``(except household goods)''.

b. In paragraph (d) introductory text add the words ``, including

Mexican carrier applicants'' after the words ``household goods

applications''.

c. In the Note at the end of Sec. 1160.4 add the words ``Form OP-

1MX for Mexican property carriers,'' after the words ``OP-1 for motor

property carriers,''.

7. In Sec. 1160.5 a new paragraph (a)(8) is added to read as

follows:

Sec. 1160.5 Commission review of the applications.

ry text add the words ``, including

Mexican carrier applicants'' after the words ``household goods

applications''.

c. In the Note at the end of Sec. 1160.4 add the words ``Form OP-

1MX for Mexican property carriers,'' after the words ``OP-1 for motor

property carriers,''.

7. In Sec. 1160.5 a new paragraph (a)(8) is added to read as

follows:

Sec. 1160.5 Commission review of the applications.

(a) * * *

(8) All applications must be completed in English.

* * * * *

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

Federal Regulations.

BILLING CODE 7035-01-P

Appendix A--OP-1 MX Application

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

BILLING CODE 7035-01-C