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NAFTA Lawsuit against Clean Water Law Hits Road Block

California Environmental Law May Win Reprieve, but Others Still in Peril
Sierra Club
August 7th, 2002

For Immediate Release
Contact: Zack Roth, (202) 675-6279

Statement of Daniel Seligman
Responsible Trade Program, Director

The Methanex Corporation, a Canadian chemical company, stumbled today in its attempt to sue the U.S. government for almost $1 billion over a crucial California clean water law. The Sierra Club welcomes the decision by a tribunal under the North America Free Trade Agreement of the Americas (NAFTA). But we are concerned that the narrow procedural ruling left the door open for future anti-environmental decisions by this tribunal or by NAFTA tribunals in other cases.

Under today's ruling, Methanex must show that the California government intended to discriminate against the company when it banned the toxic gasoline additive, MTBE, which is polluting drinking water across the state. Methanex claims that the MTBE ban hurt sales of Methanol, its main product and the key ingredient in MTBE.

We're pleased that the NAFTA tribunal created a new hurdle for Methanex on its path to winning $1 billion of US taxpayer money. We hope the case is eventually dismissed. On the other hand, NAFTA tribunals are not bound by precedent, so nothing requires future NAFTA tribunals to apply the procedural hurdle created for Methanex. Our environmental laws won't be safe from future corporate lawsuits unless NAFTA itself is changed.

Of even more concern, the Bush administration wants to expand NAFTA's "corporate lawsuit" provisions across the western hemisphere, creating a Free Trade Area of the Americas that allows foreign companies from Chile to Canada to jeopardize crucial public interest laws for their own profit.

However welcome today's decision may be, the risk to environmental health and safety would only grow if the Bush administration were to expand NAFTA corporate lawsuit provisions as it now plans to.