Testimony of Todd Spencer

Executive Vice President
Owner-Operator Independent Drivers Association

Submitted to a joint hearing between the

U.S. Senate Committee on Commerce Science and Transportation
Surface Transportation and Merchant Marine Subcommittee

and

Senate Committee on Appropriations
Transportation Subcommittee

June 27, 2002 OOIDA 1 NW OOIDA Drive Grain Valley, Missouri 64029 816-229-5791or 800-444-5791 OOIDA.com

Cross Border Trucking Issues
The Many Challenges That Remain

Testimony of Todd Spencer

Executive Vice President
Owner-Operator Independent Drivers Association

June 27, 2002

I. Introduction

The Owner-Operator Independent Drivers Association would like to compliment Congress on its efforts to ensure Mexican motor carrier compliance with U.S. trucking safety laws. At the same time we would like to remind Congress that our country did not make a bargain in NAFTA that the border would open if Mexican trucks complied solely with our truck safety rules. They are required to comply with every U.S. law and the NAFTA rules that put limits on the activities of Mexican trucks in our country, and pay their fair share of federal and state truck and highway user taxes.
The NAFTA requirements include compliance with immigration and customs laws. As the Inspector General has reported in the past and in its new report, Mexican carriers, drivers and their trucks have been violating these rules without any penalty for years. There is little or no effort by federal or state governments to address these problems, and the impact they will have on our country will only become worse when we allow more foreign trucks into our country.

II. The Intent of the NAFTA Negotiators

The NAFTA rules should be viewed as a unified collection of rules that, working together, will promote healthy trade across our continent. They are like the parts of an engine in a truck. For the NAFTA trade engine to run as it was designed, all of its parts must function properly. While it is very important to scrutinize the safety part, it is just as important to plan to keep the immigration and customs parts in working order.
Mexican truckers must also pay their fair share of highway user and truck excise taxes to ensure that we can maintain the roads that keep that trade moving. To judge NAFTA's success solely upon whether goods are moving back and forth between our country and Mexico, and ignore the manner in which that trade is conducted, is to throw away significant parts of the trade agreement without which it would not have been adopted.

III. Immigration Issues

The NAFTA agreement certainly did not allow for the unimpeded immigration of Mexican truck drivers to work in the United States. Immigration rules under NAFTA allow foreign drivers to come into our country only to move products from one country to another. If foreign drivers come into the country legally, and then begin transporting shipments from point to point within our domestic marketplace, they are performing work not permitted by NAFTA. When a Mexican driver begins such work without the proper visa, he becomes an illegal immigrant. Our domestic truck drivers must then compete with illegal immigrants.
Illegal immigrant truckers are always paid less than U.S. truckers, and they do not pay taxes. Competition with these truck drivers will lower the income of our already poorly paid truck drivers, force many to leave their jobs, and reduce the quality of persons driving trucks on our highways. Enforcement of our immigration rules restricting the purpose for which Mexican and Canadian drivers are allowed into our country under NAFTA would prevent the loss of our country's legal, safe, tax-paying drivers.

IV. Customs Issues

Customs rules largely mirror the immigration rules. Foreign trucks are only allowed to enter the country to move products from one country to another. If a foreign truck begins to haul domestic shipments, that truck may have been technically imported without paying duties and tariffs. If foreign trucks begin working in domestic commerce, the demand for U.S. truckers will decrease and so will the number of trucks purchased here. As we have seen over the last year, when truck purchases decline the federal government loses millions of dollars in he heavy truck excise tax dollars that go to the federal highway trust fund.
Foreign trucks also do not face the same environmental requirements as U.S. trucks. An EPA rule for new heavy-duty truck engines set to go into effect this fall is predicted to add $10,000 to $15,000 to the cost of a new truck.
Not having to pay the higher costs of U.S. trucks or pay federal excise taxes reduces the operating costs of illegal foreign truck operations in the United States and gives them a huge competitive advantage over U.S. trucking companies. Enforcement of customs rules would prevent the loss, due to NAFTA, of legal, safer, and more environmentally friendly U.S. trucking companies.

V. Reduced Tax Revenue for Roads

Federal fuel taxes are also avoided when Mexican trucks fuel up across the border and then burn most of that fuel on our roads. All of the lower 48 states and the Canadian provinces (except the Yukon Territory) have entered into the International Fuel Tax Agreement to ensure that the state taxes a trucker pays at the pump are redistributed to account for the actual miles the driver travels in each state. No Mexican federal or state government is part of this agreement, therefore, states are losing a significant part of highway revenue for the truck miles driven on their roads.

VI. The Enforcement Problem

The lack of a comprehensive enforcement effort over NAFTA rules is a result of the same problems Congress is discovering about our national security efforts. Enforcement jurisdiction is split among several different federal and state agencies. There is no single enforcement official in the United States who can stop a Mexican truck and determine whether a foreign trucker has a valid commercial driver's license, determine whether the trucker has valid insurance, determine whether the truck is safe, determine whether the foreign truck was properly entered in the country, and determine whether the load is a legal NAFTA shipment into or out of the country. More importantly, even if one enforcement official could identify all of those facts, he or she would not have the authority to enforce more than one of these issues.
The Inspector General correctly illuminates the problem that two of our four border states with Mexico have not given its enforcement personnel the power to put out- of-service a trucker found to not have the proper DOT operating authority. But the IG does not mention that the administration is hurrying to allow Mexican trucks to operate not just in the border states but in all 48 lower states. Every state will see Mexican trucks on its roads (they already do), and every state needs to give its officers the power to put out-of-service those trucks operating in violation of our laws, including the NAFTA rules.
In March 2000, the DOT published a rule requiring all states to pass laws authorizing their enforcement officers to take actions against trucks operating without DOT authority. If only two states have passed such a law to date, we hope the Congress and DOT does everything it can to prompt the rest to follow suit as soon as possible. As we point out, however, DOT rules are not the only rules foreign trucks are required to follow, but they are the only rules that state enforcement officials have the authority to enforce.
Once a truck crosses the border and enters the interior of our country, state officials are the only enforcement personnel that a foreign trucker is ever likely to see. There is little, if any, federal presence beyond the border to inspect the activity of foreign trucks to determine their compliance with our laws under NAFTA. State officials do not have the training to recognize whether a truck is in compliance with customs rules, whether a driver is in compliance with immigration rules, or whether a load is being hauled legally under NAFTA rules.
State enforcement officials have expressed frustration to OOIDA for the lack of direction and lack of information they are given in exercising their limited authority over a foreign trucker. Some enforcement personnel have told OOIDA that their biggest frustration is not being able to communicate with foreign drivers to get their cooperation to conduct a safety inspection (being able to communicate in English is a requirement of the federal motor carrier safety regulations). Others describe a multitude of the problems they find in trucks that have already passed the border. Here is quote from a recent e-mail I recently received from a state trooper from Vermont:

" FYI on Saturday 3/23/2002 we identified and turned over to Border Patrol a Mexican National who had [previously] been deported in 1997. This driver owned the truck he was driving a 1994 Freightliner with 1,046,000 miles on it and in terrible shape. Of great concern during the inspection was that we located a inspection done in May of 2001 by his former employer, [an American carrier] listing numerous defects. We then found 4 more inspections dated after that showing no defects, 1 by [the carrier], 1 by a independent service company, and 2 by Texas DPS. During our Level 1 inspection we located 3 of the defects still existed. When asked the driver said they had never been fixed.

It seems that the first thing that FMCSA should do if they are serious about truck safety is remove these guys from the road. Since I am sure they are undercutting the legitimate truck driver and forcing down the rates. It has been my experience over the course of about 470 MCSAP inspections that there are to many of these gypsy truckers who [don't] pay their fuel taxes or registration fees, operate unsafe trucks are not paying income tax, social security and probably are not insured. Also these [foreign] drivers are sending all their money home so it [doesn't] return to our economy."

It is clear from this e-mail that the problem is not that there are not enough inspectors and that this trucker avoided inspection, but that those who inspect them do not have the power to take definitive action, even when the problems are egregious.
OOIDA members report to us that the enforcement officials in some states have given up trying to inspect foreign trucks. They just waive foreign trucks through the weigh station while U.S. truckers are stopped and put through the normal inspections. This is an outrageous state of affairs that we did not bargain for in NAFTA. There either needs to be a much larger federal enforcement effort or better federal-state coordination if there is to be a meaningful NAFTA enforcement effort.

VII. National Security Implications

Finally, we must consider the national security issues implicated by an open border policy. OOIDA is less than confident in the security of the Mexican system to issue CDLs. Beyond whether or not a Mexican CDL indicates whether a driver is qualified to drive a truck, we understand that it is relatively easy to purchase a Mexican CDL if you know the right people or have enough money.
A potential terrorist would have very little difficulty obtaining a Mexican CDL, driving into our country with a legal NAFTA shipment, and then disappearing into the country with an 18-wheel tractor-trailer. He may not even need to disappear to achieve his goals. With little chance of seeing any federal enforcement after passing through the border, a foreign driver could operate his vehicle on our highways in plain view with little worry about being caught.
From a security perspective, opening the border to more Mexican trucks will just exacerbate the major immigration problems we have identified in the last nine months. It is unbelievable that our country is rushing to open the Mexican border almost as if September 11 didn't happen.

VII. Conclusion

If we do not plan to bring foreign motor carriers, trucks, and drivers into compliance with our laws and the NAFTA rules, as Mexico agreed they should be, then the net benefit of NAFTA to the United States will be less than what we bargained for. Without a broader approach to NAFTA enforcement, the border may open to foreign trucks as agreed to, and the border officials may determine that the truck passes a safety inspection at that time, but the rest of the laws foreign truckers must follow will be unenforced and rendered meaningless.
We encourage these committees to continue its close scrutiny of the FMCSA's safety enforcement effort. The standard you set should be whether the United States is adequately prepared to ensure that Mexican trucks and drivers comply with our laws and are safe; not whether the Department is doing the best it can with its limited resources and staff. But we also encourage the committee to adopt as broad a view of NAFTA compliance as our trade negotiators took when they drafted the agreement. There are more requirements in NAFTA than safety, and if we ignore them, the negative effects of non-compliance will greatly compromise whatever benefits we may see through freer trade.