The Cross-Border Trucking Dispute: Finding a Way out of the Conflict between NAFTA and U.S. Environmental Law*

I. Introduction Since 1982, the United States has maintained a moratorium on the issuance of most new permits to Mexican trucking companies seeking to operate within the U.S.1 To this day, despite the intervening adoption of the North American Free Trade Agreement (NAFTA), Mexico-domiciled trucks are prohibited, under most circumstances, from operating in most of the U.S. In recent years, the controversy has come to a head, resulting in two rulings-one by an arbitral panel, one by a United States Court of Appeals-that are seemingly at odds with each other. The dispute is a symptom of a broader conflict that has been brewing for years: the tension between NAFTA and the U.S. system of domestic environmental protection law. The trucking moratorium has been the subject of controversy from the beginning. When the ban was instituted, President Reagan justified it on the ground that Mexico had failed to open its trucking market to U.S. interests.2 Later, interest groups raised concerns over whether ending the moratorium might threaten American highway safety.3 Most recently, the debate has centered on the environmental impact of opening the borders. The present controversy poses a direct conflict between U.S. domestic environmental law and the lifting of the trucking moratorium.4 The United States, Mexico, and Canada signed NAFTA in 1992.5 NAFTA requires, among other things, that each member state refrain from discrimination and unequal treatment with respect to citizens of the other member states.6 In furtherance of these principles, the United States agreed in Annex I of NAFTA to phase out the trucking moratorium by December 18, 1995.7 When the phase-out deadline passed without any sign of U.S. action, Mexico filed an arbitration action pursuant to Chapter 20 of NAFTA.8 The arbitral panel issued its opinion in the case, In re Cross-Border Trucking Services, on February 6, 2001.9 The panel agreed with Mexico, finding that the United States was in breach of its NAFTA obligations.10 Following the panel's report, the U.S. Department of Transportation (DOT) promulgated regulations that would allow it to resume issuing permits to Mexican trucking companies.11 At that point, a new roadblock arose: A coalition of U.S.-based environmental, consumer, and trucking organizations filed suit in U.S. federal court.12 The plaintiffs sought to enjoin the implementation of the new regulations on the ground that the DOT had failed to comply with two federal environmental statutes: the National Environmental Policy Act of 1969(13) (NEPA) and the Clean Air Act.14 That case, Public Citizen v. Department of Transportation, came before the United States Court of Appeals for the Ninth Circuit, which, in an opinion dated January 16, 2003, sided with the plaintiffs and remanded the case to the DOT to conduct further environmental study.15 Although the Supreme Court has agreed to review the Ninth Circuit's decision, the administration's plans to lift the ban on Mexican trucks have once again ground to a halt for the time being. Taken together, the decisions of the Cross-Border Trucking panel and the Ninth Circuit in Public Citizen bring the tension between NAFTA and U.S. environmental law-an issue that has received increasing attention in recent years-into sharp relief.16 According to the Ninth Circuit, U.S. law requires the government to conduct an extensive environmental impact study before opening the country's borders to Mexican trucks. Yet, Cross-Border Trucking suggests that compliance with Public Citizen will lead to a further breach of the United States' NAFTA obligations, which in turn could open the door to trade sanctions and other negative consequences. The Supreme Court may well overturn the Ninth Circuit's specific holding in Public Citizen, but the existence of other recent NAFTA-related cases suggests that far from being an isolated event, the trucking dispute may be a harbinger of future, potentially more intractable conflicts. …

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