9th Circuit Court of Appeals Settles Mexican Truck Permits Issue
9th Circuit Settles Mexican Truck Permits Issue

On June 29, 2017, the 9th Circuit Court of Appeals dismissed a lawsuit petitioned by the International Brotherhood of Teamsters.

This case was filed against the Department of Transportation (DOT) with Owner-Operator Independent Drivers Association (OOIDA) as the union’s intervenor. The litigation reviewed the FMCSA’s authority in allowing Mexican-domiciled carriers to perform long-haul operations throughout the United States, which effectively ended Mexico’s imposition of retaliatory tariffs on the States due to an agreement breach.

The basis of the argument presented was the methodology of a pilot program previously conducted by the FMCSA. The union believes the study — which is a prerequisite to the access grant of Mexican-domiciled carriers — to be statistically insignificant.

The court, however, justified that the Congress did not impose any statistical constraints to the program’s results.

With the lack of a benchmark, the panel has no way of gauging the agency’s discretion.

The judges, therefore, dismissed the petition due to the insufficiency of significant merits that were raised in the union’s arguments.

Retaliatory Tariffs

A prime influence of the resolutions being made is the North American Free Trade Agreement (NAFTA) that took effect in 1994. In essence, this negotiation offered the United States and Mexico open trade between the countries.

The U.S. started the NAFTA with a program that gradually integrates Mexican-domiciled carriers into operating throughout the country. This intent soon dissipated as the government started limiting trucker access to only certain locations within Southern border states.

Mexico took their complaints to a NAFTA arbitration panel which, after completing the investigation, ruled against the United States. The body awarded Mexico the opportunity to impose retaliatory tariffs if carriers still aren’t allowed operation throughout the country.

U.S. government responded by giving the FMCSA authority to grant permits to Mexican-domiciled carriers for national access. It also mandated a pilot program to be conducted to verify the road safety levels of Mexican drivers.

Despite its kick-off at 2007, the study was soon defunded by legislation signed by President Obama. Because of this, Mexico sanctioned the United States with retaliatory tariffs reaching approximately $2.4 billion annually.

Congress soon reinstated the funding which allowed the pilot program to recommence on October 14, 2011.

Upon the return of the study, Mexico lifted its economic sanction on the United States.

A report on the results of the pilot program was released last January 2015. Data revealed that only thirteen Mexican-domiciled carriers took part in the Congress-mandated study. The DOT believed the sample size to be insufficient to draw any significant inferences on the safety level of the entire Mexican carrier population.

The FMCSA, however, still concluded that the data obtained was representative.

The agency supplemented the findings of the thirteen participants with information from other Mexico-domiciled carriers currently operating in the country.

Results show the Mexican carrier groups to perform just as well as other carrier groups currently in operation. This conclusion led to the approval of the level of safety that Mexican-domiciled companies operate with.

Permits for operation within the United States granted to Mexican carriers soon began to normalize.

Lawsuit Dismissed

The entry of Mexican-domiciled truckers into the American market raised economic threats to the U.S. based truckers. The court fully recognized that the increase in competition might give stateside carriers a more difficult time to profit.

The union challenged the validity of FMCSA’s authority in granting permits to Mexican carriers. They argued that the agency has not yet met the prerequisite stipulated in the Accountability Appropriations Act of 2007.

The legislation mandated that a pilot program is required before the FMCSA could allow the operation of Mexican-domiciled carriers within the country. The law also stated the need for a reasonable amount of participants required to provide statistically valid findings in the pilot program’s plans.

The group claimed the conclusion of the pilot program to be invalid due to the insufficient sample size.

However, the court justified that the number of participants needed only referred to the “plans” of the pilot program. The legislation did not mention anything about the “results” having to be statistically valid.

The panel, therefore, held that the act has no benchmark to gauge FMCSA’s exercise of discretion. With this inability to measure the actions of the agency, the judges decided to dismiss the lawsuit — ruling in favor of the FMCSA.

What’s Next?

Because of the ever-changing landscape of the trucking industry, companies that lack preparation risk sinking under regulatory stress.

Stay tuned to learn more about the latest happenings and trends in the trucking industry.

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