A lawsuit brought by the International Brotherhood of Teamsters was recently dismissed by the federal court. The 9th Circuit Court of Appeals filed last June 29, 2017, that it sided with the Department of Transportation (DOT) in this case.

The petition challenged the FMCSA’s authority to permit Mexican-domiciled carriers to conduct long-haul operations in the United States. The Owner-Operator Independent Drivers Association (OOIDA) also backed the Brotherhood in this case, acting as an intervenor in the litigation.

The union claimed that the Mexican-granted access was primarily based on a pilot study previously conducted by the agency. The group claimed the program, that was a prerequisite to the issuance of permits, contained faulty methodology.

The court ruled that the pilot program could not be reviewed and dismissed the petition challenging it.

The panel held this position because Congress didn’t impose any sample size or statistical validity requirements for the study. The lack of established standards means the court has no way of measuring the FMCSA’s decision to allow the entry.

The denied petition

The judges recognized that the unions had sufficient reason to file the complaint. The FMCSA’s decision on allowing Mexican long-haul carriers to operate within the U.S. increased the amount of competition present.

According to the doctrine of “competitor standing,” a rise of competition eventually results in injury. The panel noted that this increase in market players give current stateside carriers a harder time to obtain profit.

The petitioners filed three separate appeals, all of which was consolidated by the court for review.

  • The FMCSA’s decision of granting Mexican carrier Trajosa operating authority within the United States;
  • The FMCSA declining the union’s protest against the permit application of Trajosa; and,
  • The pilot program report being issued.

The judges held that the FMCSA’s release of the study cannot be challenged.

The Congress-mandated program is a prerequisite to long-haul permits being granted to Mexican-domiciled carriers. The publication was not a final action by the agency and, therefore, had no legal consequence in its issuance.

The FMCSA could still legally choose to decline permits granted to Mexican carriers even with positive results. Because the study’s release lacked any substantial legal effect, the panel decided to dismiss this particular petition.

The union’s challenge on the other two appeals was grounded on the requirements of the Accountability Appropriations Act of 2007. The legislation mandated that the pilot program’s plans contain a reasonable amount of participants needed to provide statistically valid findings.

The petitioners argued that the report’s conclusion was unsupported due to the collected data relying on an insufficient sample size. They believed that the FMCSA lacked the authority to grant Trajosa the operating permit because of the invalid study.

The panel justified that the number of participants mentioned only referred to the pilot program’s “plans.”

Since the Act did not state anything about the “results” being statistically valid, no legal imposition can be made. The judges believe that the Act contains no explicit standard to measure and judge FMCSA’s exercise of discretion.

Because of the inability to gauge the agency’s actions, the court ruled in favor of the FMCSA and dismissed the petitions.

The pilot program

This case is not the first time that the union filed against FMCSA’s pilot program. Before the study even began, the group had already petitioned to the D.C. Circuit to have the research enjoined.

The Brotherhood primarily questioned FMCSA’s plan regarding the participant amount needed to obtain statistically valid results. They argued that the lack of a fixed threshold on the number of carriers joining the study compromised sample size.

The court justified that FMCSA had an adequate participant amount by allowing an unlimited number of carriers to participate. The judges rejected the union’s appeal and allowed the agency to proceed with their study.

The program ended with a report being released last January 2015 detailing the results.

Only thirteen carriers participated in the study. The DOT concluded that the sample size was too small to draw inferences on the entire Mexico-domiciled carrier population’s safety.

The FMCSA still decided the data to be representative.

The findings obtained from the thirteen participants were supplemented with information from 952 other Mexican-domiciled carriers operating in the U.S.

The agency found Mexican carrier groups to perform just as well as U.S. and Canada-based carrier groups.

The FMCSA approved of the safety levels of Mexican-domiciled companies, which led to the normalization of application acceptance and granting permit in the U.S.

The NAFTA dispute

One of the key factors influencing the decisions being made is the North American Free Trade Agreement (NAFTA). NAFTA is an agreement that allows reciprocated open trade between the United States and Mexico.

After the agreement had taken effect on 1994, the U.S. announced a program to allow Mexican-domiciled carriers to operate throughout the country. The U.S. Government soon limited this access to specific areas within southern border states.

Mexico complained about the unfair treatment to a NAFTA arbitration panel.

After the investigation, the body granted Mexico permission to impose retaliatory tariffs until carriers are allowed operation inside the United States. President Bush signed a law in response that gave the FMCSA authority to allow Mexican-domiciled carriers access in the country.

Another Congress-mandated legislation was imposed which required the implementation of a pilot program to ensure Mexican trucker road safety. This study started in 2007 but was soon defunded by a law signed by former President Obama. In response, Mexico imposed a $2.4 billion retaliatory tariff on the United States.

To fix the situation, President Obama signed a law which reinstated the funding, thereby allowing the study to recommence.

With the pilot program back in effect on October 14, 2011, Mexico suspended the tariff imposed on the United States.

What’s next?

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