Office of Inspector General

Audit Report

INCREASED PARTICIPATION AND IMPROVED 

OVERSIGHT MECHANISMS WOULD BENEFIT THE 

NAFTA PILOT PROGRAM

Federal Motor Carrier Safety Administration

Report Number: MH-2012-169

Date Issued: August 16, 2012
U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: Increased Participation and Improved 

Oversight Mechanisms Would Benefit the NAFTA 

Pilot Program

Federal Motor Carrier Safety Administration

Report No. MH-2012-169

Date: August 16, 2012

From:

Joseph W. Comé

Assistant Inspector General for

Highway and Transit Audits

Reply to 

Attn. of: JA-40

To: Federal Motor Carrier Safety Administrator

On July 8, 2011, the Federal Motor Carrier Safety Administration (FMCSA)

published a Federal Register notice1 authorizing Mexico–domiciled motor carriers 

to transport cargo under a pilot program beyond the commercial zones2 and 

throughout the United States (long–haul operations). The pilot program is intended 

to implement provisions of the 1992 North American Free Trade Agreement 

(NAFTA). We are required by law3 to review FMCSA’s conduct of cross–border 

trucking pilot programs and issue initial, interim, and final audit reports to 

Congress and the Secretary of Transportation. We issued an initial report4

Our objectives for this interim audit were to determine whether (1) the pilot 

program consists of an adequate and representative sample of Mexico–domiciled 

carriers that are likely to engage in cross–border operations beyond the United 

States municipalities and commercial zones on the United States–Mexico border,

(2) Federal and State monitoring and enforcement activities are sufficient to 

on 

August 19, 2011, and on October 14, 2011, FMCSA formally initiated the pilot 

program by granting long–haul operating authority to the first participant.

 1 Pilot Program on the North American Free Trade Agreement (NAFTA) Long-Haul Trucking Provisions, Docket 

No. FMCSA-2011-0097, 76 Fed. Reg. 40420 (July 8, 2011). 2 Commercial zones generally extend from 3 miles to 25 miles north of United States border municipalities in 

California, New Mexico, and Texas (or 75 miles in Arizona). 3 Pub.L. No. 110-28 (2007). 4 OIG Report Number MH-2011-161, “FMCSA Generally Complies With Statutory Requirements, but Actions Are 

Needed Prior To Initiating Its NAFTA Cross-Border Trucking Pilot Program,” August 19, 2011. OIG reports are 

available on our Web site at http://www.oig.dot.gov.
2

ensure that participants in the pilot program are complying with all applicable laws 

and regulations, and (3) the Department has established sufficient mechanisms to 

determine whether the pilot program is adversely affecting motor carrier safety.

To conduct our audit work, we reviewed pilot program documents, interviewed 

FMCSA personnel, monitored pilot program participation levels, directly observed 

three pre–authorization safety audits (PASA)5

RESULTS IN BRIEF

conducted by FMCSA in the United 

States and Mexico, and analyzed data generated from electronic monitoring 

devices installed on participating trucks. We conducted this audit from 

October 2011 through May 2012 in accordance with generally accepted 

Government auditing standards. We also updated our report to reflect additional 

program participation activity that occurred from levels we reported in our May 

2012 draft report. Exhibit A details our objectives, scope, and methodology, and 

exhibit B identifies the organizations we visited or contacted.

The low participation in the pilot program puts FMCSA at risk of not meeting its 

goals for providing an adequate and representative sample of Mexico–domiciled 

carriers and inspections necessary to assess the impact on motor carrier safety. 

FMCSA estimates that at least 46 carriers will be needed to obtain a target of 

4,100 inspections within 3 years to provide a statistically valid analysis of program 

participants’ safety performance.

6

FMCSA's oversight mechanisms did not ensure full compliance with pilot 

program requirements; and at the time of our review, it was still developing certain 

monitoring mechanisms. Specifically, FMCSA staff did not comply with new 

English language proficiency requirements for testing drivers on traffic and road 

signs during two of three PASAs we observed.

FMCSA has approved long–haul operating 

authority for four carriers and completed 89 of the 4,100 inspections, 52 of which 

extended beyond the commercial zone. Although the 30 applications FMCSA 

received indicates that participation may increase, we cannot determine at this 

time whether increased participation will be sufficient to provide an adequate and 

representative sample of carriers and inspections.

7

 5 A PASA is an FMCSA review in which the motor carrier must demonstrate that it complies with requirements for 

drug and alcohol testing, hours-of-service, insurance, vehicle maintenance and inspections, and qualified drivers.

FMCSA’s quality assurance 

personnel approved PASA results for two of three Mexico–domiciled carriers 

before verifying that required driver’s license testing had been completed, and 

made errors in determining whether one potential carrier complied with Federal 

drug and alcohol testing regulations. Additionally, FMCSA’s monitoring plan did 

not include periodic reviews of electronic monitoring data quality and reporting 

6 According to FMCSA, statistically valid results would detect differences in violation rates between United States

and Mexican carriers of 2 percentage points or greater with 90–percent confidence. 7 FMCSA completed a total of five PASAs during our audit field work.
3

accuracy as the pilot program moves forward and participation increases. Finally, 

FMCSA has delayed development of a mechanism for detecting cabotage 

violations.

8

At the time of our review, FMCSA did not have sufficient data to determine

whether the pilot program poses risks to safety. Additionally, the current low 

participation rate does not allow us to make reliable statistical projections 

regarding safety attributes. We will continue to monitor the progress of the 

program during the final stage of our audit series to determine whether sufficient 

data becomes available to make reliable conclusions on the potential risks to safety 

that the pilot program poses.

We are making recommendations to enhance the effectiveness of FMCSA’s 

monitoring and enforcement activities based on our observations and analysis of 

available data during the first 6 months of the pilot program.

BACKGROUND

On August 19, 2011, before the pilot program was initiated, we provided the 

Secretary and Congress an initial audit report verifying FMCSA’s compliance 

with requirements Congress established in 2001.9

The pilot program, as defined in the July 8, 2011, Federal Register notice, would 

last up to 3 years and allow Mexico–domiciled motor carriers to operate 

throughout the United States. Passenger and hazardous materials carriers are not 

allowed to participate in the program. Before receiving permanent long–haul 

operating authority, pilot program participants with provisional operating authority 

are required to progress through a series of inspections and evaluations of safety 

performance. Participants must comply with motor carrier safety regulations in 

addition to requirements associated with acceptance into the pilot program.

The Department submitted a 

report to Congress on October 3, 2011, detailing actions taken in response to our 

recommendations.

In designing the pilot program, FMCSA projected that 46 carriers would be 

needed to achieve a target of 4,100 inspections in order to obtain statistically valid 

results that detect differences in violation rates between United States and 

Mexican carriers of 2 percentage points or greater with 90 percent confidence. 

FMCSA issued updated guidance for conducting PASAs10

 8 Cabotage is a prohibited activity under the provisions of the pilot program whereby motor carriers pick up cargo 

from one location in the United States and deliver the same cargo to another location within the United States.

and for using electronic 

monitoring devices installed on pilot program trucks. FMCSA must complete a 

PASA of each prospective carrier and must publish the results of each PASA in 

9 Department of Transportation and Related Agencies Appropriations Act, Pub. L. No. 107-87, Title I, §350(a) (2001). 10 Section 350 of Pub.L. No. 107-87 defines elements that FMCSA must review during PASAs for each Mexico–

domiciled carrier applying for participation in the pilot program.
4

the Federal Register for public comment before granting long–haul authority. In 

addition, FMCSA must equip each participating truck with an electronic 

monitoring device with Global Positioning System capabilities that transmits data 

for monitoring compliance with the hours–of–service and cabotage regulations.

FMCSA IS AT RISK OF NOT MEETING PARTICIPATION GOALS 

NECESSARY TO ASSESS MOTOR CARRIER SAFETY

The low participation in the pilot program puts FMCSA at risk of not meeting its 

goals for providing an adequate and representative sample of Mexico–domiciled 

carriers and inspections necessary to assess the impact on motor carrier safety. 

Although the 30 applications FMCSA received indicates that participation may 

increase, we cannot determine at this time whether increased participation will be 

sufficient to provide an adequate and representative sample of carriers and 

inspections.

Pilot Program Participation Has Been Minimal

Unless the number of program participants significantly increases, FMCSA could 

be at risk of not meeting its pilot program participation goals to provide an 

adequate and representative sample of Mexico–domiciled carriers and inspections 

necessary to assess the impact on motor carrier safety. As shown in figure 1, 

participation in the pilot program is substantially lower than FMCSA’s goals for 

the number of carriers participating in the program and the number of inspections 

conducted.

Figure 1. FMCSA’s Limited Progress in Meeting Pilot Targets

Source: FMCSA

Four carriers—Transportes Olympic, Moises Alvarez Perez, Baja Express 

Transportes, and Transportes Del Valle—are participating in the pilot program. 

FMCSA estimated that at least 46 carriers would be needed to achieve a 3–year 

target of 4,100 inspections for statistically valid analysis of the safety performance 

of pilot program participants. Table 1 shows that FMCSA approved long–haul 
5

operating authority for four carriers and completed 89 of the 4,100 inspections, 

52 of which extended beyond the commercial zone.

Table 1. Pilot Program Participant Crossings, Inspections, and 

Out-of-Service Rates

Source: FMCSA data

* Out-of-service (OOS) rates are calculated by dividing the number of OOS inspections by the total number of 

inspections for each category when at least one violation is available for the previous 12-month period.

Transportes Olympic is a one–truck and two–driver carrier from Nuevo Leon, and 

received pilot program authority in October 2011. The carrier is the only pilot 

program participant traveling beyond the border States at this time, and has made 

trips through Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, 

Mississippi, North Carolina, South Carolina, and Tennessee. Transportes 

Olympic’s 18–month participation in the previous pilot program qualifies it for the 

permanent authority stage11

Moises Alvarez Perez is a one–truck and one–driver carrier from Tijuana. This 

carrier participated in the previous pilot program and was approved for the second 

pilot program on December 28, 2011. Moises Alvarez Perez has remained within 

the border States.

of the current pilot program and exempts it from the 

inspection requirements for new carrier participants.

Baja Express is a one–truck and one–driver carrier from Tijuana. Baja Express 

entered the pilot program as a new carrier operation and was granted authority on 

March 30, 2012. Baja Express has remained within the border States for 5 of its 

35 crossings and within the commercial zone for the other 30 crossings.

Transportes del Valle is a one–truck and one–driver carrier from Tijuana. 

Transportes del Valle entered the pilot program as a new carrier operation and was 

granted authority on June 12, 2012. Transportes del Valle has remained within the 

border States.

 11 Under the pilot program, participating carriers operate under three successive stages of monitoring. After operating 

in the pilot program for 18 months with a satisfactory safety rating and no pending enforcement or safety 

improvement actions, carriers advance to the permanent operating authority stage of the pilot program.
6

FMCSA Received 30 Applications for the Pilot Program

FMCSA has received 30 Mexico–domiciled carrier applications for the pilot 

program. According to data in FMCSA’s electronic Mexican Carrier Application 

Tracking System, seven carriers were being vetted, two carriers were awaiting a 

PASA, five carriers were undergoing PASAs, and nine carriers had successfully 

passed a PASA. In addition, FMCSA dismissed four applications and three

carriers withdrew their applications.

FMCSA indicated that ongoing vetting of carriers’ past safety performance and 

affiliations with other carriers, outstanding requests for carrier information, and 

safety assessments of potential PASA locations in Mexico contributed to delays in 

processing applications. Figure 2 illustrates where delays are occurring within the 

application process.

Figure 2. Pilot Program Application Processing Delays

Source: OIG analysis

FMCSA IS STILL DEVELOPING OVERSIGHT MECHANISMS FOR 

SOME PILOT PROGRAM REQUIREMENTS

FMCSA’s oversight mechanisms did not ensure full compliance with pilot 

program requirements, and at the time of our review, it was still developing certain 

monitoring mechanisms. Specifically, FMCSA staff did not comply with new 

English language proficiency requirements for testing drivers on traffic and road 

signs during two of three PASAs we observed. FMCSA’s quality assurance 

personnel approved PASA results for two of three Mexico–domiciled carriers 
7

before verifying that required driver’s license testing had been completed, and 

made errors in determining whether one potential carrier complied with Federal 

drug and alcohol testing regulations. Additionally, FMCSA’s monitoring plan did 

not include periodic reviews of electronic monitoring data quality and reporting 

accuracy as the pilot program moves forward and participation increases. Finally, 

FMCSA has delayed development of a mechanism for detecting cabotage 

violations.

FMCSA Did Not Comply with PASA Requirements for ELP Traffic and 

Road Sign Testing

FMCSA’s PASA auditors did not comply with FMCSA’s Federal Register notice 

that sets forth ELP requirements for testing drivers on traffic and road signs. 

During PASAs, FMCSA determines a driver’s proficiency in English through an

interview and a traffic and road sign test. FMCSA’s July 8, 2011, Federal Register 

notice requires that responses to these tests be made in English. Contrary to this

requirement, at two of the three PASAs we observed, FMCSA auditors allowed 

drivers to give responses to traffic and road sign questions in Spanish.

Specifically, during the three PASAs we observed––two in the United States and 

one in Mexico—the FMCSA auditors correctly followed the requirements for the 

driver interview.

12

The ELP guidance and training was developed for expeditious testing by 

enforcement officials in a time–sensitive roadside environment. However, PASAs 

are not conducted under such constraints. Based on our observations of PASAs,

sufficient time is available for testing drivers on all 21 road signs rather than the 

4 randomly selected signs. Mexico–domiciled drivers may not recognize all 

critical road signs. For example, drivers who did not pass the road sign test were 

often unable to explain the meaning of “Railroad Crossing” and “Wrong Way”

signs in either language. Testing drivers on all 21 signs could provide a greater 

level of safety assurance and better ensure drivers’ comprehensive knowledge of 

road signs.

This interview tests prospective drivers on their ability to 

respond in English to a minimum of four questions. For the traffic and road sign 

portion of the ELP test, FMCSA’s 2008 ELP policy provides a list of 21 traffic 

and road signs from which its auditors randomly choose 4 signs to test drivers. 

The July 8, 2011, Federal Register notice requires responses to this test in English, 

and FMCSA did not update the 2008 ELP policy to reflect this requirement. This 

was a factor in safety auditors allowing Spanish responses as we observed 

FMCSA auditors using the 2008 ELP policy memo during the PASA.

 12 FMCSA completed five PASAs in the first 100 days of the pilot program–two in the United States and three in 

Mexico.
8

Finally, FMCSA does not require traffic and road sign tests to include a height 

clearance sign, which could be a potential risk factor as height clearance is an 

important factor in driving large commercial trucks.

FMCSA Did Not Always Complete Required Driver’s License

Testing Verifications Before Quality Assurance Personnel 

Approved PASA Results

In two of three instances we reviewed, FMCSA’s quality assurance personnel

approved PASA results for Mexico–domiciled carriers before FMCSA verified 

that Mexico’s transportation ministry—Secretaria de Communiciones y 

Transportes (SCT)—had tested the qualifications of 18 prospective pilot program 

drivers for commercial driver’s licenses (CDL). Although this oversight did not 

result in Federal Register publications of PASA results or the approval of 

unqualified drivers, it showed that FMCSA had not updated its quality assurance 

procedures for PASAs to reflect the requirement to verify the SCT confirmation.

By law, FMCSA must verify that Mexico has tested the qualifications of 

prospective pilot program drivers.

13 FMCSA recognizes Mexico’s Licencia 

Federal de Conductor as equivalent to CDLs in the United States. In the 

October 12, 2011, Federal Register, FMCSA tightened its rules to require that 

SCT test all pilot program drivers, after a FMCSA review of third–party testing 

facilities14

We found that verification of SCT testing did not always occur before or during 

the PASA. We reviewed documentation for the three PASAs we observed and 

found that the FMCSA supervisors and new entrant specialists assigned to review

PASA results for two carriers completed the quality assurance review process and 

approved the PASA results before FMCSA confirmed that SCT tested the carrier’s 

prospective drivers. For one carrier, FMCSA entered the approved PASA results 

into its Mexican Carrier Application Tracking System (eMCATS) on 

November 29, 2011, although FMCSA received confirmation on the SCT license 

check on January 3, 2012. For the second carrier, FMCSA entered the approved 

in Mexico found deficiencies such as passing rates below the required 

threshold and missing portions of the required curriculum. FMCSA’s pilot 

program process calls for verifying the SCT testing of prospective drivers during 

its applicant vetting process, which is followed by the PASA. Once the carrier 

successfully completes the PASA, FMCSA publishes the results in the Federal 

Register.

 13 Department of Transportation and Related Agencies Appropriations Act, Pub. L. No. 107-87, Title I, 

§ 350(a)(1)(B)(viii) (2001). 14 49 C.F.R. § 383.5 defines a third-party tester as a person (including, but not limited to, another State, a motor carrier, 

a private driver training facility or other private institution, or a department, agency or instrumentality of a local 

government) authorized by the State to employ examiners to administer the CDL skills tests.
9

PASA results into eMCATS on January 3, 2012, although FMCSA received 

confirmation on the SCT license check on January 30, 2012.

Although FMCSA completed the quality assurance review process and approved 

the PASA results before it confirmed that SCT tested the carrier’s prospective 

drivers, no FMCSA Register Notices were actually published before the driver 

qualifications were confirmed, and no unqualified drivers were approved. In our 

opinion, FMCSA’s quality assurance personnel overlooked the SCT testing 

requirement because it was not included in FMCSA’s PASA policy. Without clear 

procedures and quality assurance controls in place for its pre–authorization 

process, such as a comprehensive quality assurance checklist, FMCSA does not 

have adequate assurance that carriers have met requirements for participation in 

the pilot program.

FMCSA Made Errors in Validating that One Potential Pilot Program 

Carrier Complied With Drug and Alcohol Testing Regulations

FMCSA’s PASA auditor did not follow FMCSA’s procedures for assessing one 

potential carrier’s compliance with drug and alcohol testing program requirements. 

Although we identified errors for only one of the three carriers

15 we reviewed, the 

auditor did not verify the enrollment of the carrier’s 16 potential drivers in a 

random drug and alcohol testing pool. Additionally, the auditor did not investigate

why the carrier’s drug and alcohol statistical summary report16

Under Federal regulations, each driver must be enrolled in a random drug and 

alcohol testing pool

contained eight 

incomplete random drug tests and two incomplete random alcohol tests. Although 

the auditor reviewed the summary report to ensure drivers were tested at required 

rates, the auditor did not verify driver enrollment in a random testing pool or 

determine whether the incomplete tests were for drivers the carrier employed and 

the reasons for the incomplete tests. Also, FMCSA’s quality assurance personnel 

did not identify or investigate the discrepancies.

17 and must have an equal chance for testing each time 

selections are made.18 Additionally, according to Federal regulations, the failure of 

a driver to appear for a random drug or alcohol test is considered a refusal to test.

19

 15 We accompanied FMCSA on three of the five PASAs conducted as of January 27, 2012. For further information on 

our methodology see Exhibit A.

As a result of this violation of the regulations, the driver is prohibited from 

16 49 C.F.R. § 382.401 requires employers to maintain records of drug and alcohol testing, including the collection 

process and the refusal of any driver to submit for testing. 17 49 C.F.R. § 382.305(j)(1) requires that all covered drivers be enrolled in a random drug and alcohol testing pool. 18 49 C.F.R. § 382.305(i)(2) requires that each driver selected for random alcohol and controlled substances testing 

under the selection process used, shall have an equal chance of being tested each time selections are made. 19 49 C.F.R. §§ 40.191(a)(1) and .261(a)(1) state that if an employee fails to appear for any drug or alcohol tests, except 

a pre-employment test, the employee has refused to take a drug or alcohol test. 49 C.F.R. §§ 40.191(11)(c) and 

.261(b) state that the employee is subject to the consequences for a violation of agency regulations.
10

performing safety–sensitive functions.20

We compared the carrier’s list of drivers submitted for the pilot program to the 

carrier’s drivers enrolled in the random testing pool and identified 1 of the 

16 drivers that was omitted from the random testing pool. In response to our 

inquiry, FMCSA confirmed that the omitted driver was not enrolled in the random 

drug and alcohol testing pool and had performed safety sensitive duties for 

approximately 10 months. FMCSA attributed the omission to human error by its 

auditor. On December 22, 2011, we requested documentation for eight incomplete 

random drug tests and two incomplete random alcohol tests. FMCSA met with the 

carrier on February 10, 2012, and identified one active driver who did not report 

for testing. According to the carrier, the driver did not report for testing because 

the driver operated only in Mexico. FMCSA’s review of its inspection records 

indicated that the driver operated in the United States on several occasions, the 

most recent on June 21, 2011. FMCSA disqualified the driver from performing 

safety–sensitive duties and required the carrier to take corrective action to address 

the problems identified with its drug and alcohol testing program.

To return to duty, the driver must be 

referred to and treated by a substance abuse professional, retested, and undergo a 

minimum of six follow–up tests.

FMCSA Did Not Plan to Periodically Review the Quality of Electronic 

Monitoring Data

FMCSA incorporated electronic monitoring devices in its approach for monitoring 

participant carriers’ compliance with pilot program rules and motor carrier 

regulations and installed these devices on two trucks, one for each of the two 

approved carriers. However, FMCSA’s pilot program monitoring plan does not 

call for periodic reviews of electronic monitoring data quality and reporting 

accuracy as the pilot program progresses. Rather, FMCSA has relied heavily on a 

federally required self–certification made by the equipment manufacturer and has 

used a reactive approach toward identifying data issues.

Although FMCSA addressed the data issues we identified, its approach to 

providing controls for such issues has been reactive rather than proactive. In one 

instance, 5 days after the first vehicle used in the pilot program began operations,

FMCSA resolved an issue regarding the use of multiple assigned vehicle 

identifiers in the electronic monitoring data. FMCSA also addressed 

inconsistencies we identified in weekly operational reports generated from 

electronic data for inspections and northbound border crossings. For example, 

FMCSA amended two weekly operational reports to reflect a November 15, 2011,

inspection and a December 27, 2011, northbound border crossing that were not 

indicated in previous reports. FMCSA also reviewed a potential hours of service 

 20 49 C.F.R. § 382.211 prohibits employers from using a driver who refuses to submit to testing from performing or 

continuing to perform safety-sensitive functions.
11

violation we identified in raw data that turned out to be an erroneous alert 

triggered by the electronic monitoring device. A manufacturer software upgrade 

resolved this issue.

Despite the actions FMCSA took in response to the data issues we identified, 

FMCSA’s monitoring plan does not call for periodic reviews of electronic 

monitoring data quality and reporting accuracy as the pilot program moves 

forward and participation increases. For example, it has no provision in its pilot 

program monitoring plan to compare electronic data with the data obtained during 

border inspections as a check on the consistency of both data sources.

FMCSA Has Delayed Development of a Mechanism for Detecting 

Cabotage Violations

FMCSA has not completed full development of mechanisms for detecting 

cabotage. FMCSA assigned its electronic monitoring contractor21

Cabotage is a prohibited activity under the provisions of the pilot program 

whereby motor carriers pick up cargo from one location in the United States and 

deliver the same cargo to another location within the United States. Federal 

regulations

the 

responsibility to develop a methodology and tools for detecting patterns of activity 

that could indicate cabotage. However, FMCSA indicated the contractor’s 

development of the methodology remains on hold because it would not be 

cost-effective given the low participation in the pilot program.

22 and the NAFTA agreement23

FMCSA DOES NOT HAVE SUFFICIENT PILOT PROGRAM 

PERFORMANCE DATA TO DETERMINE SAFETY EFFECTS

also prohibit cabotage. FMCSA has 

implemented a manual procedure for its field staff to use in checking weekly 

electronic monitoring reports to detect and follow up on suspicious routing. 

However, FMCSA staff in its Headquarters and field offices expressed concern 

that FMCSA does not currently have in place an effective means for detecting 

cabotage.

Because of the low participation rate in the pilot program, we are unable to assess 

whether the pilot program will adversely affect motor carrier safety. At this point, 

no statistically reliable projections or estimates can be made on important safety 

characteristics, such as the number of crashes that could be expected from long–

haul Mexico-domiciled carriers. We will continue to monitor progress during the 

final stage of our audit series to determine whether sufficient data become 

 21 FMCSA negotiated a firm-fixed-price per unit contract with Teletrac, Inc., for the installation and monitoring of 

electronic monitoring equipment in pilot program trucks. The contract is for one base year through August 31, 2012, 

and two option years through August 31, 2014. 22 49 C.F.R. Part 365. 23 NAFTA Annex I, page I-U-20.
12

available to make reliable conclusions regarding the safety performance of pilot 

program participants.

To date, our analysis is limited to 27 of the 30 pilot program applicants,24

Table 2. Characteristics of Pilot Program Applicants

but we 

were unable to identify any safety trends. Table 2 provides general descriptive 

statistics regarding the characteristics of the applicant pool.

Source: OIG analysis

The majority of program applicants expressed interest in participating with fewer 

than five trucks. Based on our tracking of applications, two carriers with larger 

fleets (Transportes Unimex with 30 trucks and GCC Transporte with 15 trucks)

may receive pilot program authority, which would yield increased program 

activity.

CONCLUSION

Under the NAFTA cross–border trucking provisions, the United States and 

Mexico agreed to facilitate the transport of goods and services between the two 

nations. FMCSA’s pilot program authorizes Mexico–domiciled motor carriers to 

transport cargo throughout the United States, but FMCSA must ensure these

carriers have basic safety management controls in place before beginning long–

haul operations. A robust oversight program is vital to the success of the pilot 

program. Taking proactive steps to improve its guidance, monitoring, enforcement 

mechanisms, and data quality controls based on our findings during the early 

stages of the program will better position FMCSA to avoid any risks to motor 

carrier safety within the United States.

 24 Only 27 applications were uploaded into FMCSA’s application tracking system at the time of our review.
13

RECOMMENDATIONS

We recommend that the Federal Motor Carrier Safety Administrator:

1. Revise FMCSA’s traffic and road sign testing policy and procedures to

a. Require English responses to questions about traffic and road signs, in 

accordance with the Federal Register requirements.

b. Require testing of all 21 traffic and road signs used for the PASA test.

c. Add a height clearance road sign to the traffic and road sign test.

d. Provide training and guidance on traffic and road sign testing to all 

enforcement officials.

2. Revise FMCSA’s quality assurance procedures for PASAs to ensure that field 

supervisors and new entrant specialists validate the agency’s verification of the 

Secretaria de Communiciones y Transportes–tested drivers and ensure the 

accuracy of drug and alcohol statistical summary reports and the accuracy of 

random drug and alcohol testing pools before approving PASAs.

3. Revise FMCSA’s pilot program monitoring plan to include proactive controls 

such as periodic checks of electronic monitoring data quality and reporting 

accuracy.

4. When appropriate program participation warrants, complete the development 

of mechanisms for detecting cabotage violations as called for in the electronic

monitoring contract.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

We provided FMCSA with our draft report for review and comment on 

May 11, 2012. We received its technical comments on May 24, 2012, and its 

formal response on July 27, 2012. FMCSA’s response is included in its entirety as 

an appendix to this report. FMCSA concurred with recommendations 1 and 4. We 

consider FMCSA’s actions to address recommendation 1 sufficient but open 

pending receipt of documentation of its actions. We consider recommendation 4 to 

be resolved and closed based on actions FMCSA has taken.

FMCSA did not concur with recommendations 2 and 3, which call for FMCSA to 

revise its PASA quality assurance procedures and its pilot program data 

monitoring plan; but it did agree to re–emphasize and monitor existing procedures. 

Although FMCSA agreed that effective processes, controls, and monitoring are
14

critical, it had concerns that the instances we observed were isolated events. While 

we continue to believe that the NAFTA pilot program could benefit from 

improved procedures in the areas noted, we recognize that the program has had 

minimal participation and thus provided limited operational data for review. 

Further, FMCSA has demonstrated a willingness to address issues we raised 

during our audit and in response to our draft report. Accordingly, we consider 

FMCSA’s actions on recommendations 2 and 3 to be sufficient at this time, and 

the recommendations will be closed but subject to review during our next audit. 

We will evaluate FMCSA’s actions to address all recommendations during our 

congressionally mandated final audit of the pilot program, which is due 6 months 

after the pilot program ends.

ACTIONS REQUIRED

In accordance with the follow–up provisions in Department of Transportation 

Order 8000.1C, we request that FMCSA provide us within 30 days documentation 

of its June 11, 2012, PASA policy and a roster for its August 2012 refresher 

training. Upon receipt of this documentation, we will close recommendation 1. No 

additional action is required.

We 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) 366–5630

or Kerry R. Barras, Program Director, at (817) 978–3318.

#

cc: Karen Lynch, FMCSA Liaison, MC-PRS

Martin Gertel, OST Liaison, M-1
15

Exhibit A. Scope and Methodology

EXHIBIT A. SCOPE AND METHODOLOGY

We conducted our work from October 2011 through May 2012 in accordance with 

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 believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Our objectives for this interim audit were to determine whether (1) the pilot 

program consists of an adequate and representative sample of Mexico–domiciled 

carriers that are likely to engage in cross–border operations beyond the United 

States municipalities and commercial zones on the United States–Mexico border,

(2) Federal and State monitoring and enforcement activities are sufficient to 

ensure that participants in the pilot program are complying with all applicable laws 

and regulations, and (3) the Department has established sufficient mechanisms to 

determine whether the pilot program is adversely affecting motor carrier safety.

To determine whether the pilot program consists of a representative and adequate 

sample of Mexico–domiciled carriers that are likely to engage in cross–border 

operations beyond the United States municipalities and commercial zones on the 

United States–Mexico border, we monitored the progress of the pilot program and 

collected applicant and participant data.

To determine whether monitoring and enforcement activities were sufficient to 

ensure that pilot program participants complied with applicable laws and 

regulations, we conducted audit procedures for each process we examined, 

including those for pilot program applications, conduct of PASAs, border 

enforcement plans, and electronic monitoring devices. We reviewed guidance and 

attended pilot program training courses and webinars provided to FMCSA and 

State law enforcement officials. We accompanied FMCSA on three of the five 

PASAs conducted, two in the United States and one in Mexico. We selected the 

three PASAs for observation based on timing and location factors. We observed

procedures FMCSA personnel used to qualify carriers for the pilot program, 

including identifying and inspecting commercial vehicles and testing prospective 

drivers. We interviewed FMCSA personnel to gauge their understanding of PASA

procedures and vehicle/driver inspections, and to resolve any differences we 

observed between planned and actual procedures used by FMCSA personnel.

To assess whether the Department has established sufficient mechanisms to 

determine whether the pilot program is adversely affecting motor carrier safety we 

reviewed performance data FMCSA intends to use, provided an interim snapshot 

of the pilot program, and identified key characteristics of the applicant group 

(business type, fleet size, etc.).
16

Exhibit B. Activities Visited or Contacted

EXHIBIT B. ACTIVITIES VISITED OR CONTACTED

U.S. Department of Transportation

Office of the Secretary 

Office of Drug and Alcohol Policy and Compliance, Washington, DC

Federal Motor Carrier Safety Administration

Headquarters Offices, Washington, DC

Field Offices

San Diego, California 

El Paso, Texas

Weslaco, Texas

Mexico-Domiciled Carriers (Observations of PASAs)

Tijuana, Mexico

El Paso, Texas

Weslaco, Texas, and Pharr, Texas
17

Exhibit C. Major Contributors to This Report

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT

Kerry R. Barras Program Director

Name Title

Darrell A. Riegel Project Manager

Brian L. Chapman Senior Analyst

Patrick D. Conley Senior Auditor

Anthony V. Saraco Senior Auditor

Anette Soto Senior Analyst

Stuart I. Weibel Senior Auditor

Harriet E. Lambert Writer–Editor

Seth B. Kaufman Senior Counsel

William Savage Information Technology Specialist

Petra Swartzlander Senior Statistician
18

Appendix. Agency Comments

APPENDIX. AGENCY COMMENTS

 Memorandum

U.S. Department of

Transportation

Federal Motor Carrier

Safety Administration

Subject: INFORMATION: Response to OIG Interim 

Draft Report on NAFTA Pilot Program

Date: July 26, 2012

From Anne S. Ferro

Administrator

Reply to

Attn: of William A. Quade

Associate Administrator 

 for Enforcement

X62172

To: Joseph W. Comé

Assistant Inspector General for

 Highway and Transit Audits

Prior to the implementation of the U.S.-Mexico Cross Border Long Haul Trucking Pilot 

Program, the Federal Motor Carrier Safety Administration (FMCSA) established the necessary 

policies, procedures, and guidelines to conduct a safe and effective pilot program. The FMCSA 

has been diligent in its efforts to monitor participating carriers and drivers, ensure that the pilot 

program is operating in accordance with the Agency’s regulations and commitments, and is 

resulting in a safe and effective program. 

The FMCSA designed the pilot program to exceed all legal and regulatory requirements 

regarding the safety of carriers. The Agency implemented a vigorous safety and security vetting 

program that successfully identified four carriers that were not allowed to participate due to a 

poor safety history or because they did not meet the Department of Homeland Security (DHS) 

requirements. We also implemented a comprehensive driver vetting process that compiles the 

driver’s driving history in Mexico and the U.S. and ensures their original testing met the 

requirements of the U.S.-Mexico Memorandum of Understanding regarding Commercial Driver 

Licenses. The FMCSA also developed a comprehensive policy for conducting Pre Authority 

Safety Audits (PASA) that includes reviewing each applicant’s capabilities for ensuring 

compliance with regulations for key safety systems. These audits also ensure that each driver 

and every vehicle intended for participation in the program is in compliance with the regulations. 

Following entry into the program, FMCSA has an aggressive monitoring program that includes 

utilizing electronic monitoring devices installed on each vehicle that enables the Agency to: 

1) receive notifications before participating vehicles reach the border; 2) monitor the drivers’ 

hours-of-service compliance, and 3) have visibility into vehicle movements to identify possible 

violations of authority that would exist if the carrier transports cargo from point-to-point within 

the U.S. The monitoring program has resulted in all required inspections being conducted on 
19

Appendix. Agency Comments

Mexican carriers (each carrier is subject to inspection every time they cross for the first 3 months 

they participate in the program) and includes having investigators perform weekly reviews of the 

data from the system to identify and follow-up on possible violations. 

The FMCSA’s rigorous screening and monitoring program has resulted in over 52,000 miles of 

travel by participating carriers without a crash and 83 inspections during which only one vehicle 

and no drivers were placed out-of-service (the national out-of-service rates for all inspections in 

the U.S. are 20.7 percent for vehicles and 5.5 percent for drivers). 

To the extent that the OIG may have identified an occurrence based on limited observations that 

could suggest further improvement to the program, we ask that the OIG ensure the presentation 

of the issue in its report comport with the limited scale of the program and its observations. For 

example, FMCSA performed a review of the drug and alcohol testing program for every carrier 

that received a PASA. These requirements are established in FMCSA’s electronic Field 

Operations Training Manual (eFOTM) and each auditor and investigator is trained on these 

requirements prior to being certified to conduct safety audits or compliance reviews. During the 

course of its work, OIG noted a single instance where an FMCSA auditor made an error in the 

process used to verify the accuracy of the driver list submitted for random drug tests. While this 

error should not have occurred, it is not indicative of a systemic failure of process, but as an 

isolated error noted in an observation of a single test. 

Presently, four carriers are approved to operate in the program. The Agency continues to 

conduct the verification and oversight actions necessary and is considering additional carriers for 

participation in the program. While FMCSA will draw what lessons it can from the pilot 

program, the Agency recognizes that statistically valid results will require much broader 

participation as identified at the outset of the program. The Agency continues to work with the 

Government of Mexico to provide information regarding the pilot program to interested carriers.

RECOMMENDATIONS AND RESPONSES

Recommendation 1: Revise FMCSA’s traffic and road sign testing policy and procedures to:

(a) require English responses to questions about traffic and road signs, in accordance with the

Federal Register requirements; (b) require testing of all 21 traffic and road signs used for the 

PASA test; (c) add a height clearance road sign to the traffic and road sign test; and, (d) provide 

training and guidance on traffic and road sign testing to all enforcement officials. 

Response: Concur. The FMCSA issued a revised policy memorandum to reiterate to the 

Agency’s auditors that the English Language Proficiency interview and sign evaluation must be 

conducted completely in English during the PASA, in keeping with the requirements explained 

in the Agency’s Federal Register notices regarding the pilot program. In addition, this policy 

added a height restriction sign and requires that all 22 signs be tested during the PASA. This 

policy was approved on June 11, 2012, and distributed to FMCSA’s field staff on June 12, 2012. 

While training prior to implementation of the pilot program provided the instruction that sign 

testing be performed in English, refresher training for FMCSA’s auditors is scheduled for 

August 2012. The revised policy will be reinforced during the refresher training session.
20

Appendix. Agency Comments

Recommendation 2: Revise FMCSA’s quality assurance procedures for PASAs to ensure that 

field supervisors and new entrant specialists validate the Agency’s verification of the Secretaria 

de Communiciones y Transportes (SCT)-tested drivers and ensure the accuracy of drug and 

alcohol statistical summary reports and the accuracy of random drug and alcohol testing pools 

before approving PASAs. 

Response: Non-concur. The Agency recognizes the importance of effective PASA processes 

and quality controls and established protocols for confirming the validity of a motor carrier’s 

drug and alcohol testing program. This review process is used during a PASA, a compliance 

review, or other investigation of a carrier’s drug and alcohol testing program. The

documentation for this process is contained in the Agency’s eFOTM. 

The FMCSA implemented processes to ensure that field supervisors and new entrant specialists

verify that drivers are tested by SCT. FMCSA’s North American Borders Division, not the 

Agency’s field staff, is responsible for this process. The North American Borders Division 

submits requests to SCT for verification and maintains the documentation provided by SCT for 

each driver a carrier would use in the pilot program. An interim driver vetting policy was 

updated in February 2012 to outline where the responsibility for this function lies within the 

organization. 

Further, the Agency’s PASA approval process provides for several internal controls, including 

final approval authority within the North American Borders Division. No PASAs were approved 

by the North American Borders Division prior to confirmation of the drivers’ licenses and 

SCT-testing. In addition, the PASA must be completed before the Agency posts the carrier’s 

name in the FMCSA Register to enable interested parties to protest the application for operating 

authority; the FMCSA Register process is applied to all motor carriers seeking operating 

authority. There are no instances of an FMCSA Register notification being issued for a carrier 

before FMCSA confirmed the drivers’ licenses and SCT-testing. To date, FMCSA has not 

issued an FMCSA Register notification concerning GCC Transporte’s application for operating 

authority. 

For example, the dates that drivers’ license records were received for Baja Express and GCC 

Transporte are as follows:

Baja Express

Federal Policy Conviction Check: January 24, 2012

SCT – DGAF Conviction Check: January 31, 2012

Licencia Federal Test Location Check Received: January 3, 2012

PASA Approved: February 21, 2012

GCC Transporte

Federal Policy Conviction Check: January 5, 2012

SCT-DGAF Conviction Check: January 27, 2012

Licencia Federal Test Location Check Received: January 30, 2012

PASA Approved: Not yet approved
21

Appendix. Agency Comments

The FMCSA notes that during the PASA observed by OIG, FMCSA’s auditor collected 

significant documentation of GCC Transporte’s drug and alcohol testing program. However, the 

FMCSA auditor did not strictly follow the established protocol for the drug and alcohol program. 

FMCSA considers this instance a single noncompliance with existing policy by staff, and not 

evidence of the need to revise its quality assurance procedures for PASAs. Therefore, while 

FMCSA will reemphasize the procedures in the refresher training scheduled for August 2012, it 

considers the procedures in place to be adequate. It will continue to monitor the implementation 

of these procedures but does not plan to revise them at this time.

Recommendation 3: Revise FMCSA’s pilot program monitoring plan to include proactive 

controls such as periodic checks of electronic monitoring data quality and reporting accuracy. 

Response: Non-concur. The FMCSA’s Monitoring Policy establishes the procedures for 

routinely reviewing the reports and data concerning electronic monitoring devices for potential 

violations of the pilot program’s requirements. This process has been successfully used to 

identify potential issues for subsequent investigation. 

The Agency acknowledges that two operational reports reviewed by OIG staff during this 

engagement were subsequently updated. The FMCSA discovered the errors and the reports were 

revised accordingly. Further, the revisions made to the reports did not have an adverse impact on 

the Agency’s oversight of the pilot program.

With regard to the potential hours-of-service (HOS) violation identified by the OIG based on its 

review of raw data from the monitoring system, the Agency notes that while the Teletrac unit on 

the vehicle reported a potential HOS violation, the system’s software correctly interpreted the 

final data set and determined that there was no HOS violation. Further, FMCSA staff reviewed 

the duty status information and confirmed that there was no HOS violation. Additionally, 

Teletrac upgraded the in-vehicle unit to prevent future false alerts of violations related to drivers’ 

use of sleeper berths. This programming upgrade was completed within days of the false alert in 

the raw data.

Recommendation 4: When appropriate program participation warrants, complete development 

of mechanisms for detecting cabotage violations as called for in the electronic monitoring 

contract. 

Response: Concur. As noted above, the Agency established a methodology for using the 

Teletrac equipment to collect data on compliance with cabotage restrictions. Should an incident

of cabotage be identified in this program, FMCSA would contact the DHS Customs and Border 

Protection component, the Federal agency responsible for enforcing the cabotage regulations. 

Although the Agency’s contract with Teletrac includes a clause for the contractor to develop an 

automated means of detecting cabatoge, FMCSA has not exercised this automated support option 

because participation in the program remains low and this level of support is not needed at this 

time. However, when participation levels increase to the point where manual monitoring would 

not be practicable, we will exercise the automated support provision of the contract. 
22

Appendix. Agency Comments

We appreciate the continuing dialogue with OIG to address these issues. Should you have any 

questions on the pilot program, or need additional information regarding our responses, please 

contact William A. Quade, Associate Administrator for Enforcement at 202-366-2172 or 

william.quade@dot.gov.