Office of Inspector GeneralAudit Report - PDF document

1 Office of Inspector GeneralAudit Report
Office of Inspector GeneralAudit Report FMCSA ADEQUATELY MONITORED ITS NAFTA CROSSBORDER TRUCKING PILOT PROGRAM BUT LACKED A REPRESENTATIVE SAMPLE TO PROJECT OVERALL SAFETY PERFORMANCEFederal Motor Carrier Safety AdministrationReport Number: 2015014Date Issued: December, 2014 MemorandumU.S. Department ofTransportationOffice of the Secretaryof TransportationOffice of Inspector General Subject: ACTION : FMCSA Adequately Monitored Its Border Trucking Pilot ProgramLacked a Representative Sample o Project Overall Safety Performance Federal Motor Carrier SafetyAdministrationNo. ST2015014 Date: December 10, 2014 From: Mitchell Behm Assistant Inspector General for SurfaceTransportation Audits Reply to Attn. of: JA To: Acting Federal Motor Carrier Safety Administrator North American Free Trade Agreement (NAFTA), the United States and Mexico agreed to longborder transportation of cargo and passengers between the two countries. Congress prohibited the Federal Motor Carrier Safety Administration (FMCSA) from processing Mexicodomiciled motor carrier applications to operate beyond United States commercial zonesuntil certain requirements are met and a pilot program for granting longhaul authority to Mexicodomiciled motor carriers has evaluated the potential impact on safety.Under Section 6901 of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act (the we were required to (1) provide an initial review verifying the pilot programcomplies with requirements set forth in Section 350(a) of the Department of Transportation and Related Agencies Appropriation Act(2) monitor the program and provide an interim report 6 months after initiationand (3) provide a final report within days after the program’s conclusion.FMCSA formally initiated the pilot program on October 14, 2011, and ended the program on October 10, 2014 Commercial zones generally extend up to 25 miles north of United States border municipalities in California, NewMexico, and Texas (or 75 miles in Arizona).Pub. L. No. 10787, Title I, § 350(a)2001 �� 2 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;Our audit objectives were to determine whether (1) Federal and tate monitoring and enforcement activities

2 are sufficient to ensure that participan
are sufficient to ensure that participants in the pilot program are in compliance with all applicable laws and regulations, (2) the Department has established sufficient mechanisms to determine whether the pilot program is having any ffects on motor carriersafety, and (3) the program consists of an adequate and representative sample of Mexicodomiciled carriers likely to engage in crossborder operations beyond the United States municipalities and commercial zones on the United StatesMexico border.We conducted this audit in accordance with generally accepted Government auditing standards. n consultation with our tatistician, we analyzed FMCSA’s pilot program data, such as pilot program carrier business types and fleet size, crash and outservicerates, participant border crossings, truck and driver inspections, and other relevant information. We evaluated FMCSA’s mechanisms for providing oversight of the pilot program, observed border inspections of pilot program participants, and interviewed FMCSA personnel locatedin its Headquarters offices and border crossingExhibit A provides further details on our scope and methodologyBACKGROUNDFMCSA initiated thepilot programto test and demonstrate Mexicodomiciled motor carriers’ ability to operate safely beyond the United StatesMexico border. Passenger and hazardous materials carriers were not allowed to participate in the program. To receive pilot program provisional motorcarrier certificates of , carriershad to safety and security vetting processa PreAuthorizationSafety Audit (PASA)PASA required the carrier to demonstrate that it had a controlled substance and alcohol testing program, a system for complying with hoursservice requirements, (3) proof of or ability to obtain it, (4) records of periodic inspections of vehicles usein the United States, and (5) qualified drivers for operations in the United States.he participants were also required progress through stages of inspections and comply with United States laws and regulationsgoverning motor carrier safety, customs and immigration, vehicle registration and taxation, and fuel taxationAdditionally, before 18 monthsof pilot program operations, the carriers had to receive a satisfactory rating from acompliance reviewSee table 1 for a description of the different of operating authority for carriers that the pilot program. A driver placed out of service may not operate a commercial motor vehicle until the reason for the outservice order is remedied. Similarly, a commercial vehicle placed out of service may not be operated until all repairs required by the service order are satisfactorily completed.In calculating the 18 months

3 under the current pilot program, carrie
under the current pilot program, carriers could receive credit for time operated during FMCSA’s 20072009 demonstration project. �� 3 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;Table 1. Stages of Operating Authoritiesfor Pilot Program Participant CarriersPilot Program Provisional Motor Carrier Certificate of RegistrationStage 1:Participant carriers with pilot program provisional motor carrier certificates of registrationwere inspected each time they entered the United States for at least 3months of participation or until they completed at least threeinspections. Stage 2:After the first 3 months, participant carriers were monitored and inspected at a rate comparable to other Mexicodomiciled motor carriers that cross the United StatesMexico border until they reached a total of 18 months of participation. To proceed to stage 3, a carrier must have received a satisfactory safety rating during itscompliance review and have no pending enforcement or safety improvement actions. Pilot Program Permanent Motor Carrier Certificate of RegistrationStage 3:To obtain pilot program permanent motor carrier certificates of registration, participant carriers must comply with all Federal Motor Carrier Safety Regulations(FMCSR) and renew their Commercial Vehicle Safety Alliance(CVSA)decals every 90days for 3years. Standard Motor Carrier Operating AuthorityRegistrationPostPilot Program:Upon completion of the pilot program,ilot participants were eligibleforstandard motor carrier operating authoritysimilar to that of U.S.domiciledmotor carrierut with significant restrictions and requirementssuch as limitations to international cargo and required inspection decals. Provisional Motor Carrier Operating AuthorityRegistrationPost Pilot Program: Upon completion of the pilot program, pilot participants with pilot program provisional motor carrier certificates of registrationwere eligible to be converted to provisional motor carrier operating authority. These motor carriers must undergo a compliance review, receive a satisfactory ratingand have no pending enforcement or safety improvementactions before being considered eligible to receive a standard motor carrier operating authority Source: Office of Inspector General (OIGsummary ofoperating authorities, verified by FMCSA.initial reporton the pilot programfound F

4 MCSA had not finalized its process for c
MCSA had not finalized its process for conducting 50 percent of PASAs and compliance site in Mexico; (2)issued sitespecific plans for checking drivers and trucks at the border; (3)established a system to verify driver and truck eligibility for the pilot program; (4)issued an implementation plan or acquired electronic monitoring devices for use in the pilot program; and (5)conducted pilot program training for inspection personnel at the border and within the United States. After audit, the Departmentsubmitted a report to Congress detailing its actions to address the issues raised. FMCSA Generally Complies With Statutory Requirements, but Actions Are Needed Prior To Initiating Its NAFTA CrossBorder Trucking Pilot ProgramOIG Report Number MH2011161, Aug19, 2011.OIGreports are available our Web site at: www.oig.dot.gov . �� 4 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;In August 2012, we issued an interim reporton the status of FMCSA’s pilot program. We found that low participation in the pilot program put FMCSA at risk of potentially not meeting its goals for providing an adequate and representative sample of Mexicodomiciled carriers and inspections necessary to assess the pilot program’s pact on motor carrier safety, and would prohibit us from making reliable statistical projections. Additionally, FMCSA’s oversight mechanisms did not ensure full compliance with pilot program requirements, andmonitoring mechanismswere still in development at the time of our interim auditRESULTS IN BRIEFDuring the course of the pilot program, FMCSA established sufficient monitoring and enforcement activities to comply with the 34 distinct requirements set forth in 350(a)FMCSA was not able to fully comply with one requirement for percent ofPASAson site in Mexico. While the Agency conducted only 38 percent of the PASAs on siteconcerns for the safety and security of conducting operationsprevented full complianceThereforedetermined that FMCSA made reasonable efforts to conduct PASAs in Mexico. Additionally, FMCSA took reasonable actions to implement the nine recommendations we made in our initial and interim pilotprogram audits for ng its monitoring and enforcement activities to ensure that pilot program participants comply with safety laws and regulation

5 s.FMCSA established a sufficient mechani
s.FMCSA established a sufficient mechanism, through an internal analysis of carrier safety data, to determine whether the pilot program had adverse ffects on motor carrier safety. FMCSA reviewed carrier safety datasuch as vehicle and driver rates, crash rates, and safety ratingsto evaluate the impact of the pilot program on safety. The Agency concluded that pilot program participant , as well as Mexicodomiciled and Mexicanowned carriers with existing authority to operate in the United States,performed nothan United States and Canadian motor carriers. Accordingly, at the end of the pilot program, FMCSA converted 9 of 13participant carriers that had pilot program permanent motor carrier certificates of registrationto standarmotor carrier operating authorityFMCSA also converted the remaining four participant carriers that had pilot program provisional motor carrier certificates of registrationto provisional motor carrier operatingauthority pending successful completion of a compliance We confirmed FMCSA’s conclusions regarding participant carriers’ safety performance. Increased Participation and Improved Oversight Mechanisms Would Benefit the NAFTA Pilot ProgramOIGee exhibit B or a complete list of Section 350(a)requirements. �� 5 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;FMCSA lacked an adequate number of Mexicodomiciled pilot program to yield statistically valid findings forthe pilot program. According toFMCSA officials, the termination of the previous demonstration project, the temporary status of the pilot program, increased interest in etypesof operating authorities, and lack of established business relationships in theUnited States in less interest in the pilot program. Because the pilot program lacked an adequate number of participants, we could not determine withconfidence whether carriers are representative.Without being able to determine the representativeness of the 15carriers, one cannot project the safety performance for the population of Mexicodomiciled carriers that may qualify for longoperating authority in the future.We are not making recommendations to improve FMCSA’s oversight of the pilot program at this time, as FMCSA formally ended the pilot program on FMCSA IMPLEMENTED ADEQUATE PILOT PROGRAM MONITORING AND ENF

6 ORCEMENT ACTIVITIETO ENSURE CARRIER COMP
ORCEMENT ACTIVITIETO ENSURE CARRIER COMPLIANCE WITH LAWS AND REGULATIONSFMCSA established sufficient monitoring and enforcement activitiefor its pilot program to ensure compliance with Section 350(a) requirements and to address recommendations from our previous audits of the pilot program. In our 2011 initial audit and August 2012 interim audit, we reported that FMCSA’s monitoring and enforcement activities did not ensure full compliance with pilot program requirements and that FMCSA was still developing some oversight mechanisms. During this current review, we determined that FMCSA took reasonable actions to implement nine recommendations we made in our interim reportfor improving FMCSA’s monitoring and enforcement (see table 2 for a list of our prior recommendations) A total of 15 carriers enrolled in the pilot program. However, at the end of the pilot program, one carrier had withdrawn, and one carrier had its pilot programoperating authority revoked, resulting in only 13 participant carriers. �� 6 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;Table OIG Pilot Program Recommendations Initial Report (August 2011) Finalize plans for how FMCSA will comply with Section 350(a) requirements to conduct half of PASAs and compliance reviews in Mexico. Issue site specific plans, or an alternative plan, for coordinating with United States Customs and Border Protection and the States to ensure that pilot program drivers and trucks are inspected at the border. Establish a system to verify driver and truck eligibility for the pilot program. Issue an implementation plan for using electronic monitoring devices in the pilot program. Conduct pilot program training for inspection and enforcement personnel at the border and within the United States. Interim Rep ort (August 2012) Revise FMCSA’s traffic and road sign testing policy and procedures to (a) require English responses to questions about traffic and road signs, (b) require testing of all 21 traffic and road signs used for the PASA test, (c) add a height clearance sign to the traffic and road sign test, and (d) provide training and guidance on traffic and road sign testing to all enforcement officials. Revise FMCSA’s quality assurance procedures for PASAs to ensure tha

7 t field supervisors and new entrant s p
t field supervisors and new entrant s pecialists validate the Agency’s verification of Secretaria de Communicaiones y Transporte ( SCTtested drivers and ensure accuracy of drug and alcohol statistical summary reports and the accuracy of random drug and alcohol testing pools before approving PASAs. Revise FMCSA’s pilot program monitoring plan to include proactive controls such as periodic checks of electronic monitoring data quality and reporting accuracy. When appropriate program participation warrants, complete the development of mechanism s for detecting cabotage violations as called for in the electronic monitoring contract. Source: FMCSA Generally Complies With Statutory Requirements, but Actions Are Needed Prior To Initiating Its NAFTA CrossBorder Trucking Pilot Program(OIG Report Number MH161), Aug. 19, 2011; Increased Participation and Improved Oversight Mechanisms Would Benefit the NAFTA Pilot ProgramOIGFMCSA substantially complied with the 34 distinct requirements set forth in Section 350(a)as a result of these improved monitoring and enforcement efforts. For exampleIn October 2011, FMCSA issued a plan its field staff forscheduling PASAs pilot program carrier compliance reviews, which was intendedcomply with the requirement that 50 percent of these reviews conducted on site in Mexico. At the end of the pilot program, FMCSA had conducted 7 of ee exhibit B or a complete list of Section 350(a)requirements. �� 7 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 2 ;&#x/MCI; 2 ;11 (64 percent) of compliance reviewsHowever, only 8 of percentof PASAswere conducted in MexicoAccording to FMCSA officials, concerns about the safety and security of its personnel prevented full compliance. In some areas where motor carriers were located, State Department of significant organized crime activity, kidnappingsand homicides. In light of these concerns and associatedtravel restrictions, FMCSA deferredthe scheduling of PASAs in Mexico.ur review determined that FMCSAmadereasonable effortsto conduct PASAsin In its 2011 report to Congress on the pilot program, FMCSA stated that it had developed an overall plan for coordinating with United States Customs and Border Protectionand the States for drivers and trucks at the border. a formal coordination plan, FMCSA i

8 mplemented an internal inspection policy
mplemented an internal inspection policy and used the geofencing functionof its electronic monitoring devices to alert inspectors of approaching vehicles that required inspection. During our site visits to the border crossings, we confirmed this mechanism was working as designed.FMCSA installed electronic monitoring devices pilot program truckmonitor truck locations, travel times, and general travel patterns to monitorcompliance with hoursibited transportationin the United States. We verified that the electronic monitoring devices were operational, that a process was in place to mitigate technical difficulties, and FMCSA utilizing the electronicmonitoring system to identify approaching pilot program vehiclesat both portvisited. Although FMCSA had planned to requirepilot program carriers to return the electronic monitoring devices, FMCSA officials told us that allowthe carriers to retain ated equipmentwould be more costeffectiveIn June 2012,FMCSA issued an updated PASA policy, including English Language Proficiency and traffic and road sign testing guidance. FMCSA provided training on the updated policy and guidance to its staff in 2012. Although FMCSA did not conduct PASAs during ourto the inspection sites, we reviewed the training materials and verified training logs to confirm that FMCSA staff had received the guidance.In May 2013, FMCSA updated its processes and procedures for conducting PASAs, including those for ensuring carrier compliance with drug and alcohol FMCSA created a geofence, or virtual perimeter, at specific points at or near each border port of entry to electronically track pilot program vehicles approaching the ports of entry.Mexicodomiciled motor carriers are subject to Department of Homeland Security and Department of Transportation requirements and are prohibited from providing domestic pointpoint transportation while operating in the United ates. �� 8 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 2 ;&#x/MCI; 2 ;testing. We contacted drug and alcohol consortiums by participant carriers and confirmed each carrier’s enrollment during the pilot program.established a sufficientprocess to monitor and identify potential cases of cabotage, or prohibited point transportation of domestic cargo wholly within the United States. During the pilot p

9 rogram, FMCSA staff reviewed electronic
rogram, FMCSA staff reviewed electronic monitoring data reports to monitor and identify potential point rule violations. The Agency identified and investigated potential violations by pilot program carriers but did not identify any actual violations. We reviewed FMCSA’s investigation files and verified that its cabotage investigation process was working as designedFMCSA ESTABLISHED A SUFFICIENT MECHANISMTO DETERMINE THE PILOT PROGRAM PARTICIPANTSIMPACT ON SAFETYFMCSA established a sufficient mechanism, an internal analysis of carrier safetto determine whether the pilot program had adverse effectson motor carrier safety. Our review confirmed FMCSA’s conclusionthat pilot program participants performthan United Statesmotor carriersdomiciled and Mexicanowned motor carriers with existing authority to within the United StatesOur review identified one concern that nonpilot program driver inspectionwere included in FMCSA’s total inspection count, but these additional data were notused in its analysis of driver outdo not alter our conclusion that the participant carriers operated safely during the pilot program.Pilot Program Participants Performed No WorsehanOther Motor Carrier GroupsFMCSA’s internal analysis of carrier data found that pilot program participant , as well as an estimated 1,000 Mexicodomiciled and Mexicanowned motor carriers with existing authority to operate within the United States, performed no worsethan United StatescarriersTo evaluate the impact of the pilot program on safety, FMCSA reviewed carrier safety performance metricssuch as vehicle and driver outservice rates, inspections per truck, roadside violations, crash rates, and safety ratingsfrom the first months of the pilot program (2011 to June20, 2014pilot programcarriers participated in the pilot program with trucks and drivers approved for longhaul operations. These participant were times during the period of the preliminary analysis provided by FMCSA’s internal analysis combined United States and Canadian carriers into one comparison group. �� 9 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;FMCSAn an effort to inspection rate and safety performance data that are comparable to those of pilot program carriersFMCSA’s analysisexcluded conducted le a car

10 rier had a pilot program provisional mot
rier had a pilot program provisional motor carrier certificate of registrationa period of at least 3 monthsduring required to be inspected each time they crossBecause of this exclusion, FMCSA analyzed a total of of pilot program provisional motor carrier certificates of and stage pilot program permanent motor carrier certificatesof during which participant carriers were inspected at a frequency consistent with standard procedures at the southern bordert the end of the pilot program, FMCSA administratively converted all participant carriers’ operating authority. Specifically, FMCSA converted 9 of 13participant carriers that had pilot program permanent motor carrier certificates of registrationto standard motor carrier operating authorityFMCSA also converted the remaining four pilot program carriers that had pilot program provisional motor arrier certificates of registrationto provisional motor carrier operatingauthority pending completion of a compliance review.We conducted our own assessment of participant carriers’ service, inspection, and crash rates, confirmed FMCSA’s conclusions regarding pilot program carriers’ safety performance.Our analysis included inspections for the entire duration of the pilot program (Octoberto October 10, 2014)We also compared the participant carriers’ safety performance metrics to motor carrier groupssuch as United States, Canadian, ertificate,and nterprise carriers.ilot rogram participantcarriersdriver and vehicle outcompared to United StatesCanadian, certificateenterprise carriers A total of 15 carriers enrolled in the pilot program. However, at the end of the pilot program, 1 carrier had withdrawn, and 1 carrier had its pilot programoperating authority revoked, resulting in only 13 participant carriers.FMCSA indicated that it is completing an analysis for the entire pilot program period, but this analysis had not been completed at the time of our auditCertificate carriers are Mexicodomiciled companies owned or controlled by United States companies that transport exempt commodities beyond the border commercial zones. These carriers operate under Certificates of Registration obtained before the passage of the 2002 Interim FinalRules implementing NAFTA.FMCSA estimates that certificatecarrierscurrently have operating authority.Enterprise carriers are Mexicanowned companies domiciled in the United States. These carriers operate in the United States and transport crossborder international cargo that originates in or is destined for a foreign country. These carriers are subject to all United States, State, and local laws pertaining to motor carrier operations and their vehicl

11 es. FMCSA estimates that 813 enterprisec
es. FMCSA estimates that 813 enterprisecarriers currently have operating authority. �� 10 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;Table OIG Analysis of Driver and VehicleOutService Rates C arrier Group DriverOutofService Rates(%) Vehicle Outof Service Rates(%) Pilot program participants 0.2 8. 9 United States carriers 5.3 22 .0 Canadian carriers 3.7 12.5 Certificate carriers 1.7 18 .0 Enterprise carriers 1.6 17.6 Source: FMCSA data from the Motor Carrier Management Information SystemfromOctober2011to October 10, 2014shows that pilot program participantalso subject to higher rates of inspection than comparable carrier groups.Table . OIG Analysis of Carrier Inspections and Inspection Rates Carrier Group Number of Inspections Inspections Per Truck Pilot rogram participants 5,269 45.1* United States carriers 14,403,547 2.3 Canadian carriers 474,887 2.4 Certificate carriers 31,819 7.9 Enterprise carriers 128,212 5.1 Source: FMCSA data from the Motor Carrier Management Information System fromOctober2011, to October 10, 2014.* To confirm FMCSA’s internal analysis, we calculated the pilot program participants’ inspections per truck using the 2,841 stage 2 & 3 inspections.identified one reportable crash that occurred during the pilot program involving a participant truck. This crash occurred in San Diego, on a private drive and involved a personal vehicle that veered out of its lane and hit the truck. We also identifiedcrashes that involved participant pilot program trucks, all of which occurred within the commercial these crashes are outside the scope of pilot program evaluation.could not reasonably assess the impact of crashes on future carrier activitybecause FMCSA enrolled too few carriers in the program �� 11 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;FMCSA’s Analysis of Pilot Program SafetyIncluded NonPilot Program Data butDemonstrates hat ParticipaOpe

12 rateSafelyFMCSA’s count of pilot pr
rateSafelyFMCSA’s count of pilot programinspections included those of nonprogram drivers operatingpilot program trucks in the commercial zone, but these additional data do not alter our conclusion that participant carriers operated safely during the pilot programWhile observing a demonstration of FMCSA’s electronic monitoring interface at the Otay Mesaentry, we noticedthat a pilot program truck was operating without a pilot programapproved driver. FMCSA stated that it allowed participantcarriers to use nonprogram drivers within the commercial zone, and that its analysis of pilot program service rates included inspection data for pilot program vehicles operated by nonpilot program driversBeforethe pilot programstarted, FMCSA had at it would need at least 4,100 roadside inspections to obtain statistically valid results when detectdifferences in violation rates between United Statesand Mexicodomiciled FMCSA reported a total of 5,545 inspections for the pilot program. Our review of FMCSA inspection data for the entire pilot program found that over percent (1,525) of the 5,545 inspections involved pilot program trucks driven by nonpilot program drivers operating within the commercial zones. Out of these 5 inspections, 1,236 were Level only inspectionsthe nonpilot program drivers’ safety fitnessIf the inspections of nonpilot program drivers are removed from the total number of inspectionsthe pilotprogram yielded 4,309inspections of pilot program which is still above FMCSA’s target of 4,100 inspections.Still, because tpilot program was intended to test the safety of pilot programparticipant carriers conducting longe most useful inspection data for supporting the carriers’ safety performance are data involvinilot programapproved drivers haul operationswitilot programapproved truckshile FMCSA excluded thenonpilot programfrom calculations of pilot program outFMCSA officials that they wanted to include more data on the operational condition of pilot program trucks, including those operatedby nonprogram drivers. Theseadditional ions do not alter our conclusion that the participants carriers safely during the pilot program According to FMCSA, a statistically valid result would be a difference in violation rate of 2percentage points or greater, with 90percent confidence.A Level III inspection is a driver/credential inspectionincluding an examination of the driver’s license, medical examiner’s certificate, record of duty status, and hours of service. �� 12 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#

13 x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#
x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;THE PILOT PROGRAM LACKED AN ADEQUATE SAMPLE TO PROJECT SAFETY PERFORMANCE OFLONGHAUL OPERATIONS BY MEXICODOMICILED MOTOR CARRIERSFMCSA’s pilot programlackedan adequate number of Mexicodomiciled participant to yield statistically valid findings for the pilot programBecause FMCSA lacked an adequate number of participants, we could not determine with confidence whether the 15are representative. Without being able to determine the representativeness of the 15carriers, one cannot project the safety performance for the population of Mexicodomiciled carriers that may qualify for longhaul operating authority in the future.ilot Program Lackedan AdequateNumber of Participants o Determine hether the Sample WasRepresentativeAlthough FMCSA made an effort to promote the 3year pilot program, the number of participant carriers was not sufficient to yield statistically valid findings for the pilot program. During the program, 37 carriers applied for authority to participateHowever, only 15 total carriers were granted permission to participatecarriers either withdrew or had their pilot program operating authority revoked, resulting in only 13 participant carriers at the end of the pilot program. The act requires pilot program plans to have enough participants to yield statistically valid findings,but the pilot program’s sample of15 carriers was considerably smaller than the 46carriers that FMCSA originally estimated it would need.FMCSA’s April 13, 2011, pilot program proposal calculated that 46 participant carriers would be needed to achieve the targetinspections withyears. FMCSA based this calculation on the assumption that pilot program participants would perform, on average, one longhaul border crossing per week per truck and have, on average, two trucks participating in the pilot program. FMCSA ted that if participating carriers performedmore crossings per week or more vehicles, fewer carriers would be needed for the program.FMCSA officials stated that termination of the previous demonstration project, the temporary status of the pilot programand increased interest in the Agency’s nterprise operating authority resulted in lower levels of program.MCSA officials pointed out that Mexican longhaul authority only Section 6901 of the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Actrequires FMCSA to

14 conduct the pilot program in compliance
conduct the pilot program in compliance with Title 49 United States Code Section 31315(c). Under this statute, pilot program plans must include certain elements, including a reasonable number of participants to yield statistically valid findings. In addition, Title 49 Code of Federal Regulations Section 381.400(d) states that the number of participants in a pilot program must be large enough to ensure statistically valid findings. �� 13 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;allows transportation of international caandMexican motor carriers generally do not have established business relationships in the United States to transport freight back to Mexico tlongoperations profitable.While the 15 pilot program participantdid not raise concerns regarding safety, too smallfor us produce statistically reliable estimatesBecause FMCSA lacked an adequate number of participants, we could not determine with confidence whether the 15carriers are representative.Without an adequate and representative sample, one cannot project the safety performance for an unknown population of Mexicodomiciled carriers that may be granted longhaul operating authority in the future.e performed other analyses to determine whether the pilot program participant carriers were a representative sample. For example, we compared the participant carriers’ business characteristics (such as form of business, type of registration, and United States operating status) to of the applicants not chosen for the pilot programidentify any statistically significant differences between the groups. However, to yield reliablethe statistical test needs to have a minimum expected number offivers in each characteristica condition that was not met for characteristics form of business, type of registration tatesoperating status)Most Pilot Program Activity Was Attributed to Two Carriers and Occurred in the Commercial Zone, Making AnyProjection ofSafetyUnreliableDuring the pilot program, 90 percent 25,630 of 28,225of the border crossings and 80 percent 4,473 of 5,545of the inspections conducted were attributed to only 2carriers. This skewed distribution of activity makes a statistical projection about the ability of Mexicodomiciled carriers to operate safely beyond the commercial zones along the United StatesMexico border unreliable.For exam

15 ple, according to an FMCSA official, the
ple, according to an FMCSA official, the most active carrier in the pilot program primarily made deliveries of Toyota parts to a location in the commercial zone within 2 miles of the border. According to preliminary FMCSA data as of Mexicodomiciled motor carrier Servicio de Transporte Internacional y Local made 13,598 trips into the United States, but only trips involved operations outside of the commercial zone, and only inspections were conducted during 99 longhaul trips. A sample size of 15 motor carriers would be enough to estimate an unknown prevalence of an attribute with percent confidence and 10percent precision if the universe size of Mexicodomiciled carriers likely to exist in future longhaul operations were only 18 carriers. This is less than half the size of the applicant pool of 37 carriers who were interested in participating in the pilot program. �� 14 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;FMCSA also tracked mileage accrued by the pilot program carriers using data collected from the electronic monitoring devices installed on each truck. According to FMCSA, pilot program carriers traveled 1.5 million miles the pilot program. However, only 255,392 of these miles 17 percentwere accrued while traveling outside of four States.or the four States, FMCSA did not differentiate between mileage totals within the commercial zonebeyondthe commercial zonesAs a result, wewere unable to determine what percentage of the mileage accrued could be attributed to longhaul CONCLUSIONFMCSA initiated the pilot program to test and demonstrate the ability of Mexicodomiciledmotor carriersto operate safely beyond commercial zones along the United StatesMexico borderIn response to our initial and interim report recommendations, FMCSA improved its monitoring and enforcement activities for the pilot program to ensure compliance with Section 350(a) requirements. FMCSA concluded that pilot program participant carriers, as well as Mexicodomiciled and owned carriers with existing authority to operate in the United States, performed no worse than United States and Canadian motor carriers. However, the pilot programlackedan adequate and representative sample of participant carriers these results across the universe of Mexicodomiciled carriers likely to engage in

16 crossborder operations. FMCSA indicated
crossborder operations. FMCSA indicated that it will decide what take in regardsto crossborder trucking longhaul operations once this report.AGENCY COMMENTS AND OFFICEOF INSPECTOR GENERALRESPONSEWe provided a draft of this report to FMCSA on December 5, 2014. FMCSA provided a formal response to our draft report on Dece9, 2014, which is included in the appendix to this report. In its response, FMCSA stated that it believes the pilot program provided sufficient and representative information on future participation. According to FMCSA, it analyzed the safety records of not only the 15 pilot program participant carriers but also more than 1,000 Mexicodomiciled certificate carriers and Mexicanowned enterprise carriers. As a result, FMCSA states that it was able to achieve statistically valid findings that support pilot program analysis and conclusions. While we verified the calculations used by FMCSA to assess the performance data for enterprise and certificate we did not test the hypothesis that these groups were similar in safety performance, as Section6901 of the U.S. Troop Readiness, Veterans’ Care, The four southern border States are Texas, New Mexico, Arizona, and California �� 15 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.2;ؓ ;ij.;’ 5;.29; ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0; &#x/MCI; 0 ;&#x/MCI; 0 ;Katrina Recovery, and Iraq Accountability Appropriations Act limited our audit scope to pilot program applicants and participants. Further, FMCSA contends that the pilot program participants are representative of Mexican carriers likely to engage in longhaul trucking in terms of carrier size and safety performance. As support, FMCSA presented a chart that shows the number of trucks for participants and Mexicowide carriers. However, we maintain that a testfor a statistically significant difference between these groups would be unreliable because of the small number of participants. Finally, FMCSA stated that it will submit its full analysis of the pilot program to Congress in early 2015.appreciate the courtesies and cooperation of Department of Transportation and Federal Motor Carrier Safety Administration representatives during this audit. If you have any questions concerning this report, please call me at (202) 3665630 or KerryBarras, ProgramDirector, at (817) 978cc: DOT Audit Liaison, MFMCSA Audit Liaison, MCPRS �

17 000;� 16 &#x/Att;¬he; [/
000;� 16 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;
.0;٩ ;4.3;ډ ;Р.;r 4; .75;‡ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;
.0;٩ ;4.3;ډ ;Р.;r 4; .75;‡ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;Exhibit A. Objectives, Scope, and MethodologyEXHIBIT A. OBJECTIVES, SCOPEAND METHODOLOGYWe conducted our work from July 2014 through December 2014 in accordance generally accepted Government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believethat the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.Our audit objectives were to determine whether (1) Federal and State monitoring and enforcement activities are sufficient to ensure thatparticipants in the pilot program are in compliance with all applicable laws and regulations, (2) the Department has established sufficient mechanisms to determine whether the pilot program is having any adverse effects on motor carrier safety, and (3) thprogram consists of an adequate and representative sample of Mexicodomiciled carriers likely to engage in crossborder operations beyond the United States municipalities and commercial zones on the United StatesMexico border.To determine whethermonitoring and enforcement activities were sufficient to ensure that pilot program participants complied with applicable laws and regulations, we relied on our prior work and followed upour audit recommendations. For each recommendation, we evalFMCSA’sprogress in implementing planned actions. We observed FMCSA inspections of motor carriers operating at the border in Otay Mesa, TX, the two most ports in thepilotprogram. We interviewed FMCSA personnel to gauge their understanding of and driver inspectionprocedures, and to resolve any differences we observed between planned and actual inspection procedures.To assess whether the Department established sufficient mechanisms to determine whether the pilot program adversely affectedmotor carrier safetye conductedan independent analysis of the performance data FMCSA usedto evaluate pilot program safety, and identified key business characteristics of the participant and applicant group(business type, fleet size, etc.). We verified the calculations used by FMCSA to assess the performance data for nterprise and ertificate carriers, did not assess whether these groups were comparable t

18 o other domiciled and Mexicancarriers. W
o other domiciled and Mexicancarriers. We interviewed FMCSA officialstheir plans for future operations.To determine whether the pilot program consists of a representative and adequate sample of Mexicodomiciled carriers, we evaluthe participantand potential applicants to determine if the participants provided a representative sample of Mexican carriers that were interested in operating in longoperations. Our statistician evaluated the sample for statistical adequacy. �� 17 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;6.5;) 4;X.6; 53;&#x.730; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;6.5;) 4;X.6; 53;&#x.730; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;Exhibit B. Requirements of Public Law 10787, Section 350(a)EXHIBIT B. REQUIREMENTS OF PUBLIC LAW 10787, SECTION350( No. Reference Requir e m e nt §35 0 (a) ( a) No f un d s l i m ited o r a p pr o pr iated in t h is A ct m a y b e ob li g ated o r e x p e n d ed prolicatiier r to ate ited Staticialiti cial itedStatico bordMo ier Sa f e t y A d m i n i s t r ati on — 1 §35 0 ( a )( 1 )( A ) r e q u i r es a s a f e t y e x a m i n a t i o n o f s u ch m o t o r ca rr ier to b e p e r f o r m ed b e f or e t h e ierteditiatiy toate ited Statesicialiies cialState ico bord e r ; §35 0 (a) ( 1) ( B ) r e q u i r es t h e s a f e t y e x a m i n ati o n to i n c l u d e — 2 §35 0 ( a )( 1 )( B )( i) v e r i f ic a ti o n o f a v aila b le p e r f or m a n ce d ata a n d s a f e t y m a n a g e m e n t pro g r a m s ; 3 §35 0 ( a )( 1 )( B )( ii) v e r i f ic a ti o n o f a dru g a n d al c o h o l te s t i n g pro g r a m c on s i s t e n t w i t h p a r t 4 0 of title 49 , C od e o f Fe d e r al R e g u lati o ns ; 4 §35 0 ( a )( 1 )( B )( iii) v e r i f ic a ti o n o f t h at m o t o r ca rr i e r ’ s s ys t e m o f c o m p li a n ce w it h h o u r s - of - s e r v ice r u le s , i n c l u d i n g h o u r s - o f - s e rv i ce r ec ord s ; 5 §35 0 ( a )( 1 )( B )( i v ) v e r i f ic a ti o n o f proo f o f i n s u r a n ce; 6 §35 0 ( a )( 1 )( B )( v ) a r e v i e w o f a v a ila b le d ata c o n ce r n i n g t h at m o t o r c a rr ie r ’ s s a f e t y h i s t o r y , a n d ete y MoierleslatiHazardo s M ate r ials r u l e s a n d r e g u lati on s ;

19 7 §35 0 ( a )( 1 )( B )( v i) an
7 §35 0 ( a )( 1 )( B )( v i) an i ns p ecti o n o f t h at M e x ic a n m o t o r ca rr ie r’ s c o mm e r cial v e h icles to b e us ed aticialles r ecei v ed a d ecal f ro m t h e i ns p ecti o n r e q u i r ed in s u b s ecti o n ( a )(5) ; 8 §35 0 ( a )( 1 )( B )( v ii) an e v a l u a t i o n o f t h at m o t o r c a rr ie r ’ s s a f e t y i ns p ecti o n , m a i n t e n a n ce, a n d r e p air aciliiesicatiord v e h i c le i n s p ecti o n s ; 9 §35 0 ( a )( 1 )( B )( v iii) v e r i f ic a ti o n o f dr i v e r s ’ q u al i f i cati o ns , i n c l u d i n g a c on f i r m a t i o n o f t h e v a li d i t y ciaier w h o w ill b e op e r ati n g un d er s u ch a u t h or i t y ; a nd 10 §35 0 ( a )( 1 )( B )( i x ) an i n te r v i e w w i th o f f icials o f t h at m o t o r ca rr ier to r e v i e w s a f e t y m a n a g e m e n t c o n t ro ls a n d e v a l u ate a n y w r i t ten s a f e t y o v e r s i g h t po licies a n d pr actice s . §35 0 (a) ( 1)( C) r e q u i r es t h a t — 11 §35 0 ( a )( 1 )( C )( i) M e x ic a n m o t o r ca rr ie r s w i th t h r ee o r f e w er c o m m e r cial v e h i c les n eed n o t ite atier all e x a m i n a t i o n s o f all Me x ican m o t o r ca rr ie r s sh all b e c o n d u c ted o ns ite; a n d 12 §35 0 ( a )( 1 )( C )( ii) su c h on - s i te i n s p ecti o n s sh a l l c o v er at lea s t 5 0 p e r ce n t o f e s t i m ated t r u c k t r a f f ic in a n y y ea r . 13 §35 0 ( a )( 2 ) r e q u i r es a f u ll s a f e t y c o m p li a n ce r e v i e w o f t h e ca rr ier c o ns i s te n t w i t h t h e atipro of ier e iertedatiy toate ited Statesicialiies cialState ico bordsulace iertedati , pro v i d ed t h at — �� 18 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;6.5;) 4;X.6; 53;&#x.730; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;6.5;) 4;X.6; 53;&#x.730; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;Exhibit B. Requirements of Public Law 10787, Section 350(a) No. Reference Requir e m e nt 14 §35 0 ( a )( 2 )( A ) M e x ic a n m o t o r ca rr ie r s w i th t h r ee o r f e w er c o m m e r cial v e h i c les n eed n o t all r e v i e w s o f a l l

20 M e x ic a n m o t o r ca rr ie r s
M e x ic a n m o t o r ca rr ie r s sh all b e c o n d u cted on - s ite; a n d 15 §35 0 ( a )( 2 )( B ) a n y M e x ican m o t o r ca rr ier with 4 o r m or e c o m m e r cial v e h icles t h a t d id n o t )(1)(allite s a f e t y c o m p li a n ce r e v i e w u n d er t h is s ec t i o n . 16 §35 0 ( a )( 3 ) r e q u i r es Fe d e r al a n d State i n s p ect or s to v e r i f y elect ron ic a l l y t h e s ta t u s a n d aliicaniercial v e h i c le c ro ss i n g t h e bord e r ; 17 §35 0 ( a )( 3 )( A ) f o r e v e r y s u c h v e h icle ca r r y i n g a p laca rd a b le q u a n ti t y o f h a za rdo u s m ate r ial s ; 18 §35 0 ( a )( 3 )( B ) w h e n e v er t h e i n s p ecti o n r e q u i r ed in su b s ecti o n ( a )(5 ) is p e r f or m e d ; a n d 19 §35 0 ( a )( 3 )( C ) r a n d o m l y f o r o t h er M e x ican m o t o r ca rr ier c o m m e r cial v e h i cle s , b u t in n o c a s e le s s t h an 5 0 p e r ce n t o f all o t h e r su ch c o mm e r ci a l v e h icle s . 20 §35 0 ( a )( 4 ) g i v e s a d i s t i n ct i v e De p a r t m e n t o f T r a ns por tati o n nu m b er to each M e x ican ieraticial in ieretylatiice les un d er p a r t 39 5 o f title 49 , Cod e o f Fe d e r al R e g u lati o ns ; 21 §35 0 ( a )( 5 ) r e q u i r e s , w i th t h e e x ce p ti o n o f M e x ican m o t o r ca rr ie r s t h at h a v e b een g r a n ted p e r m a n e n t op e r ati n g a u t h or i t y f o r t h r ee c o ns e c u t i v e y ea r s — 22 §35 0 ( a )( 5 )( A ) i ns p ecti o n s o f all c o m m e r cial v e h i c les o f M e x ic a n m o t o r ca rr ie r s a u t h or ize d , to ateitedStataliticialStateicobordlayalidcialiclelliectiecal,ied ordectier ectiecti atiof t h e dr i v e r , v e h icle e x te r i o r a n d v e h icle un d e r - ca rr i a g e; 23 §35 0 ( a )( 5 )( B ) a C o mm e r cial Ve h i c le S a f e t y A l l ia n ce d ecal to b e a f f i x ed to each s u ch cialicleletiecti ) ectiecti ; a nd 24 §35 0 ( a )( 5 )( C ) t h at a n y s u ch d ecal, w h e n a ff i x e d , e x p i r e at t h e e n d o f a p e r i o d o f n o t m or e all he atiecti alid ecti a iedStateetees ticle y v i o lati o n su b s e q u e n t to t h e i n s p ecti o n f o r w h i c h t h e d ecal was g r a n te d . 25 §35 0 ( a )( 6 ) r e q u i r es S

21 tate i ns p ect or s w h o d etect
tate i ns p ect or s w h o d etect v i o lati on s o f Fe d e r al m o t o r ca rr i e r s a f e t y latito eities v i o lati on s ; 26 §35 0 ( a )( 7 )( A ) e q u i p s all U n ited State s - M e x i co c o mm e r cial bord er c r o ss i n g s w i t h s c a les actiat cialiclebordto iercialStatesaid W I M e q u i pp ed h i g h v o l u m e bord er c ro ss i n g s ; a n d 27 §35 0 ( a )( 7 )( B ) i n itiat e s a s t u d y to d ete r m i n e w h i c h o t h er c ro ss i n g s s h o u ld al s o b e e q u i pp ed w i t h w e i g h - i n - m o ti o n s y s t e m s ; �� 19 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.0;‰ 4;X.6; 52;&#x.290; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;�.6;· ;5.0;‰ 4;X.6; 52;&#x.290; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;Exhibit B. Requirements of Public Law 10787, Section No. Reference Requir e m e nt 28 §35 0 ( a )( 8 ) t h e Fe d e r al Mo t o r C a rr ier Sa f e t y A d m i n i s t r ati o n h as i m p l e m e n ted a po licy to at iertedto ate itedStaticialiticialited StateicobordierproaliditedStat 29 §35 0 ( a )( 9 ) r e q u i r es c o mm e r cial v e h icles op e r ated b y a M e x ican m o t o r ca rr ier to e n ter t h e itedStatcialbordied ierectateacityto iciicleectito ateicllacediceecti §35 0 (a) ( 10) p u b li sh e s — 30 §35 0 ( a )( 1 0)( A ) i n te r i m f i n al r e gu la t i o n s u n d er s ecti o n 210(b ) o f t h e Mo t o r C a rr ier Sa f e t y pro3114te)um to ensuat he atiproicieati 31 §35 0 ( a )( 1 0) ( B ) i n te r i m f i n al r e gu la t i o n s u n d er s ecti o n 3114 8 o f title 49 , U n ited States C od e, t h at to proicatiier 32 §35 0 ( a )( 1 0)( C ) a po licy un d er s ecti o n s 218( a) a n d (b ) o f t h at A ct (4 9 U . S . C . 311 3 3 n o te) etepproprof al Stateieritedico bord 33 §35 0 ( a )( 1 0)( D) a po licy un d er s ecti o n 219(d ) o f t h at A ct (4 9 U . S . C . 1490 1 n o te) t h at pro h i b its iclto ato tprodctsto titedStatileto a ictito ateitedState 34 §35 0 ( a )( 1 0)( E ) a po licy un d er s ecti o n 219( a) o f t h at A ct (4 9 U . S . C . 1490 1 n o te) t h at pro h i b its atiitedStatesto op e r ated ill e g al l y i n t h e U n ited Stat e s .

22 �� 20 &#x/Att;¬he;&
�� 20 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;
.0;٩ ;H.1;ډ ;Є.;R 6;.55;‡ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [1;
.0;٩ ;H.1;ډ ;Є.;R 6;.55;‡ ];&#x/Sub;&#xtype;&#x /Fo;&#xoter;&#x /Ty;&#xpe /;&#xPagi;&#xnati;&#xon 0;Exhibit C. Major Contributors to This ReportEXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT Name Kerry R. BarrasProgram DirectorAnette SotoProject ManagerPat ConleyKevin LynchAnalystPetra SwartzlanderSenior StatisticianMarvin TuxhornSenior AuditorSeth KaufmanSenior CounselWriterEditor �� 21 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [7;.06;i 5; .44;‰ 2;ƒ.9; 74;&#x.838; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [7;.06;i 5; .44;‰ 2;ƒ.9; 74;&#x.838; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;Appendix. Agency Comments APPENDIX. AGENCY COMMENTS.S.Department TransNewJerseyAveS.E. Washington,20590 Federal MotorCarrierSafety Administration December2014 ACTION DraftReporFMCSAAdequaMonitored ItsNAFTACrossBorderTruckingPilotProgramLackedRepresentativeSampleProjectOverallSafetyPerformance FROM:TO: MitchellBehm AssistantInspectorGeneral forSurfaceTransportation TheFederalMotorCarrierSafetyAdministration(FMCSA)appreciatestheworktheOffice of theInspectorGeneral(OIG)to conductfinalaudittheU.S.MexicoCrosBorderLongHaulTruckingPilotProgram. arepleasedthattheOIG's reportacknowledgesthatthe AgencyestablishedmonitoringandenforcementactivitiesforPilotProgramure compliancewithallrequirementsandaddressrecommendationsfromyourpreviousauditsof thePilotProgram. TheauditadditionallyrecognizesthatFMCSAestablishedsufficient mechanismsandanalysiscarriersafetydatato determinewhetherthePilotProgramhad adverseeffectsmotorcarriersafety. FurthermornotedthattheOIG's riewconfirms FMCSconclusionthatPilotProgramparticipantsdemonstratedbettersafetyperformance thanU.S.andCanadianmotorcarriers. FMCSArecognizesthatSectiontheTroopReadinVeteraCare,Katrina Recovery,andIraqAccountabilityAppropriationsActlimitedtheOIanadata compiledthePilotProgramcarriers. ThereportconcludthatFMCSPilot Programlackedadequatenumberof MexicdomiciledparticipantcarriersbecausetheOIG couldnotdeterminewithconfidencewhetherthePilotProgramcarriersarerepresentativetheationMexicandomiciledmotorcarriersthatgrantedlonhaulauth

23 ory. However,FMCSAbelievesthatthePilotPr
ory. However,FMCSAbelievesthatthePilotProgramdatais,thechartbelowindicaterepresentativetheMexicanmotorcarrierslikelyengagelonghaultruckingterbothcarriersizeandsafetyperformancThechartbelowcomparthedistributionPilProgramcarrierssizethatdistributioncompaniesMexico. �� 22 &#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [7;.06;i 7;.68;‰ 2;ƒ.9; 90;&#x.078; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;&#x/Att;¬he; [/;ott;&#xom ];&#x/BBo;&#xx [7;.06;i 7;.68;‰ 2;ƒ.9; 90;&#x.078; ]/;&#xSubt;&#xype ;&#x/Foo;&#xter ;&#x/Typ; /P; gin; tio;&#xn 00;Appendix. Agency Comments NumberTrucks Mexicowide Pilot Program Participants* 1 - 5 82.7% 80.0% (12 out 15) 6 - 30 15.1% 6.7% (1 out of 15) 31 - 100 1.7% 0.0% (0 out of 15) 10 0 + 0.5% 13.3% (2 out of 15) Withrespecttherepresentativenessthepilotcarriersafetyperformancedata,therearea limitednumbercompaniesthatwouldprofitfromtransportinggoodsbeyondthecommercial zones,andfewerthatwouldhaveestablishedbusinessrelationshipsthatwouldsupport transportationbeyondtheborderStates. thesemotorcarriersmaytransportdomestic freightfrompointpointtheUnitedStates,theymusthaveproducthaulbackMexico travelbeyondthecommercialzonesprofitable. result,ievethatthepilot programdid,fact,providesufficientandrepresentativeinformationfutureparticipatioespeciallytheterm. notedtheAgency's AprilandJulyFederalRegisternotices,FMCSA includedreviewof the safetyrecordsothertypesMexicacontrolledoperations(EnterpriseandCertificate carriers')safetyrecordsforthissameyearperiod.Theseoperationsallowforicancontrolledvehiclesto operatelonhaulintotheU.S. As aresult,MCSAexaminedsafedata frompopulationmorethanMexicodomiciled(Certificate)Mexicaowned (Enterprise)motorcarriersthatconductedlonhaultransportationbeyondthecommercialzones duringthePilotProgramperiod. ThisincludedEnterprisecarriersthatreceivedauthority duringthissameyearperiod. FMCSAbelievesthisrobustsetdatabe representativecarrierslikelyoperatelonhauloperations,FMCSAwasableachievestatisticallyvalidfindingsregardingthe performanceMexicdomiciledandMexicaownedlonghaulmotorcarriers,whichsupport thePilotProgramanalysisandconclusions. BasedthisdatFMCSAfindsthattherecordsof thesecarriersindicatethattheyare safand,mostmetricssafethanU.S.andCanadian motorcarriers. ThisfullanalysiswillconveyedFMCSReportCongresswhichwill submittedearly AgaithanktheOIGfortimelyreportandits advicethroughoutthePilotProgram. Shouldyouhaveanyquestionneedadditionalinformationregardingresponse,please contactWilliamQuade,AssociateAdministratorforEnforcement,at368163.