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A review of six new U.S.-majority-owned maquiladora plants in Mexico discovered that each began operating without complying with the Mexican government's environmental regulations, an occurrence that is reportedly widespread among many sectors of the Mexican economy. The Mexican government considers these environmental controls, mainly environmental impact appraisals and operating permits, critical to Mexico's ability to handle environmental issues arising from the potential U.S.-Mexico free trade agreement. This report (1) assesses whether a sample of six U.S. maquiladora companies that built plants in Mexico prepared environmental impact appraisals and obtained operating permits before starting up, (2) provides information on needed improvements in these environmental controls, (3) discusses Mexico's limitations on the public's participation in approving environmental impact appraisals and operating permits, (4) identifies Mexico's budget for its environmental protection program and other efforts to strengthen environmental protection, and (5) discusses the extent of U.S.-Mexican cooperation to beef up environmental impact appraisal compliance.