All parts of NAFTA good you say?
Billion Dollar NAFTA Challenge To California MTBE Ban
By Cat Lazaroff
WASHINGTON, DC, September 11, 2000 (ENS) - An international tribunal has begun considering a claim that the United States must pay a foreign investor almost $1 billion because of a California measure to prevent water contamination.
The Canadian challenger, Methanex Corporation, has argued that a plan to remove the toxic chemical MTBE (methyl tertiary butyl ether) from California's gasoline violates the North American Free Trade Agreement (NAFTA).
Rusted underground gasoline storage tanks like these can leak fuel, spreading MTBE into drinking water supplies (Photo courtesy U.S. Environmental Protection Agency)
Methanex is a major producer of methanol, one key component of MTBE. Methanex claims that under NAFTA, it is owed $970 million in profits it will lose if California bans MTBE.
Methanex has sued under Chapter 11 of NAFTA, a clause intended to protect foreign investors when they sink money into projects in NAFTA member countries, including the United States, Canada and Mexico. In this case, Canadian Methanex says an environmental law passed by a U.S. state would cost the company millions in lost profits.
"The Methanex case is a clear illustration of one of NAFTA's most serious environmental flaws," said Martin Wagner, attorney for the environmental group Earthjustice. "Methanex's claim is tantamount to extortion, because they are demanding almost a billion dollars if California insists on keeping its drinking water free of toxic contaminants."
California Governor Gray Davis ordered the MTBE phase out by 2003 after studies showed that the additive may cause cancer as well as neurological, dermatological and other problems in humans.
California Governor Gray Davis passed a law authorizing a statewide ban on the use of MTBE (Photo courtesy Office of the Governor)
Leaks of MTBE from cars, boats and underground storage tanks are threatening serious contamination of California's water supplies.
Several other states have banned or proposed banning MTBE, and the federal government is considering a nationwide ban.
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