REPORT OF THE TEXAS CENTER FOR POLICY STUDIES
ON CEC JPAC and COUNCIL MEETINGS
BANFF, CANADA; JUNE 27-29TH, 1999
Mary Kelly, Director of the Texas Center for Policy Studies, attended the annual meetings of the Joint Public Advisory Committee (JPAC) and the Council of the Commission for Environmental Cooperation (CEC). (The Council is made up of the three NAFTA countries' environment ministers-EPA Administrator Carol Browner, SEMARNAP Secretary Julia Carabias and Canadian Environment Minister Christine Stewart).
This report highlights issues raised at the meeting by non-governmental organizations, JPAC members and government officials. It is not intended to be a complete summary of all the issues raised; rather, it highlights those issues that seemed to be of priority concern. For more information on this meeting, check the CEC web site.
Summary
Three issues were front and center during these meetings:
Article 14/15 Guideline Revisions: In 1998, several revisions to the citizen submission guidelines were proposed. Reaction from non-governmental organizations and members of the JPAC to these proposed revisions were universally negative, based on the fact that the revisions would have added additional procedural and other burdens to the already complex and untimely citizen submission process. The JPAC gathered additional public comment, including holding a meeting in Montreal in January 1999 on the proposed revisions. The JPAC's advice to the Council and the public comment all argued against the proposed revisions.
In Banff, the Council decided to reject most of the proposed revisions. It did adopt a few changes to the guidelines. These changes relate generally to the explanation the Secretariat must provide to Council at various stages of the submission process.
Public comment at the Council meeting cautioned that these changes not be implemented in a way that would undermine the independence or autonomy of the Secretariat in reviewing and responding to citizen submissions. In response, the Council members, in particular Secretary Carabias, stated that it was not the intent of the revisions to undermine the Secretariat's autonomy in these matters.
TEIA: Article 10(7) of the NAFTA environmental side agreement contains one of the agreement's few mandates. It directed the three countries to negotiate, within three years of the agreement's effective date, an agreement for assessing the environmental impacts of proposed projects likely to "cause significant adverse transboundary effects." The CEC Secretariat convened an experts' group and held a workshop in late 1997 to explore possible approaches to the TEIA. The experts' group drafted a potential agreement for consideration by the governments. The negotiations were then basically placed in the hands of the countries' respective foreign relations secretaries, with some participation by the respective environmental agencies. The Department of State is the lead negotiator for the U.S.
These negotiations have yet to produce an agreement. Council members attributed this failure to differences among the three countries environmental protection laws and framework. Other information indicates that one central concern is the United States' failure to agree to include projects which are under state (vs. EPA) lead permitting authority. Mexico, in particular, appears to be opposed to just a federal-to-federal TEIA process, since many projects with potentially significant transboundary environmental impacts (such as proposed radioactive and hazardous waste sites in the U.S./Mexico border region) are reviewed and permitted by state authorities in the U.S.
Several non-governmental organizations and representatives of the National Advisory Committees in Mexico and the United States and the U.S. Governmental Advisory Committee urged the Council to see that the TEIA negotiations be concluded quickly and produce an agreement. The Texas Center for Policy Studies urged that the negotiations address the need to ensure that state-lead projects in the United States were subject to the TEIA process.
The Council responded that it will urge negotiators to take a different approach-i.e. that it will "urge" states to develop "reciprocal good neighbor agreements" with bordering governments under which they would share information about projects with potential transboundary impacts. It is unclear whether this approach will really lead to further progress or whether it will, in fact, address the legitimate concerns that have been raised by Mexico about including projects that are under the authority or jurisdiction of state governments in the U.S.
NAFTA Chapter 11 Challenges: A very significant issue raised by many of the non-governmental organizations and by JPAC was the increasing use of the investor protection provisions of NAFTA Chapter 11 to challenge environmental regulations or decisions in the three countries. A new report by the Institute for Sustainable Development (IISD) provides an extremely thorough and useful overview of this problem. (The report can be found on the IISD web site.) The table below, excerpted from the IISD report, shows the environmental challenges that have been brought to date under the Chapter 11 provisions. The latest challenge has been filed by a Canadian producer of MTBE, a gasoline additive, challenging California's decision to ban MTBE because of groundwater contamination problems.
| Company | Country against which complaint filed | Nature and Status |
| Ethyl Corporation | Canada | Challenge to import ban on MMT gasoline additive; settled by Canada for $ 13 million payment to company |
| Metalclad Corp. | Mexico | $ 65 million claim; Challenge to state and municipal action prohibiting landfill opening; hearing scheduled for Sept. 2, 1999 |
| Desona de C.V. | Mexico | $ 17 million claim; Alleged breach of contract to operate landfill; oral hearings scheduled for June 1999 |
| USA Waste ("Acaverde") | Mexico | $ 60 million claim; Believed to be related to landfill activities; arbitration panel being selected |
| S.D. Myers | Canada | $ 20 million claim; Challenge to Canada's temporary ban on PCB waste exports; Hearings scheduled to begin in February 2000 |
| Sun Belt Water, Inc. | Canada | $ 220 million claim: allegedly biased treatment by provincial government of British Columbia of U.S. partner in water export venture; consultations on-going |
| Pope & Talbot | Canada | $ 130 million claim; Allegedly discriminatory export quotas under U.S. -Canada softwood lumber agreement; arbitrated in March 1999 |
| Methanex | United States | $ 970 million claim; Challenge to California's ban on MTBE gasoline additive; filed June 19, 1999 |
The NGOs and JPAC expressed vigorous opposition to such uses of the NAFTA Chapter 11 provisions, and concern about the fact that the Chapter 11 dispute resolution process essentially takes place behind closed doors, with little or no information available to the public. The NGOs and JPAC strongly urged the Council to actively insert itself into the Chapter 11 process, pursuant to the duties and powers ascribed to the CEC in Article 10(6) of the NAFTA side agreement. Under this article, the Council is to be a "point of inquiry" for NGOs on trade and environment issues, assist in consultations under Article 1114 of NAFTA and help "prevent and resolve" environment-related trade disputes.
The NGOs also made it very clear that these types of Chapter 11 cases would be an central issue in future debates over NAFTA expansion, the proposed Free Trade Agreement for the Americas and other trade negotiations.
The Council's response was to express reaffirmation of the "sovereign right of governments to legislate in the area of the environment". The Council "encouraged" the NAFTA Free Trade Commission to continue discussions on Chapter 11 and offered to "provide any assistance required by the FTC."
OTHER HIGHLIGHTS
This section describes highlights of the JPAC meeting; public comment to JPAC; public comment to the Council and the Council's responses to that public comment. The following discussion is based on notes taken at the meeting; while we have tried to be as accurate as possible, we offer advance apologies for any inaccuracies that may have found their way into these summaries and highlights of presentations. If there are any corrections that should be made, please do not hesitate to let us know at tcps@econet.org (Mary Kelly).
JPAC Meeting (Sunday June 27th)
The Joint Public Advisory Committee met on Sunday to (1) hear comments from the CEC Executive Director Janine Ferretti; (2)hear comments from the National Advisory Committee representatives from the U.S., Mexico and Canada and the U.S. Governmental Advisory Committee and (3)hear presentations from CEC staff on various program areas of the CEC's 1999-2001 work program.
Ms. Ferretti highlighted several CEC accomplishments for 1999:
Ms. Ferretti stated that the CEC budget is still tight, but it is working to leverage funds from other sources, such as $ 500,000 from the National Science Foundation for biodiversity work and $ 375,000 from the Global Environment Fund (GEF) of the World Bank and the Pan American Health Organization (PAHO) for DDT use reduction in Mexico. She also acknowledged that the TEIA process has been slow, but said that the Secretariat is still hoping for progress.
The Mexican National Advisory Committee Chair, Mateo Castillo Ceja, highlighted the following issues of concern, issues on which the Mexican NAC has provided comments to the Mexican government: (1) that CEC should begin to examine the proliferation of genetically-engineered organisms and the potential risks adverse effects of their trade in North America and (2) CEC should work to develop standards that can be used by North American environmental laboratories for mutual recognition of test results. The Mexico NAC is trying to stay in contact with the National and Regional Sustainable Development Councils in Mexico. Other issues it is examining include: national reference terms for coastal development and protection; coastal environmental indicators; the New River and All-American Canal issues; and the Rio San Pedro issues. Resources for NAC meetings in Mexico are an issue.
The U.S. National Advisory Committee Chair, Sandy Gaines, said that the U.S. NAC has focused on two recommendations:
The Canadian NAC Chair, Stewart Elgie, complemented the JPAC on its Article 14/15 outreach. He said the Canada NAC was focused on:
The U.S. Governmental Advisory Committee Chair, Robert Varney, focused on the need for the CEC to have a higher public profile, suggesting a conference to help achieve this. He also noted that the GAC was disappointed with the lack of progress in the TEIA negotiations.
The JPAC then spent considerable time discussing a proposed resolution advising the CEC and the Council to better incorporate participation of indigenous peoples into CEC activities and programs. While there was strong support from all members for the principle expressed in the resolution, JPAC members from Mexico believed that more time needed to be spent on the resolution before it was forwarded to the CEC. The Mexico JPAC members wanted to insure that there was broader consultation with indigenous peoples about how they wanted to be involved or participate and that the resolution and supporting materials better recognize differences among indigenous peoples in Canada, the U.S. and Mexico. The JPAC decided to continue a work group on this resolution.
The JPAC meeting resumed with CEC Staff presentations after a break during which the JPAC met with the Council in a non-public session.
Sarah Richardson (srichar@ccemtl.org ) of the CEC Trade and Environment program discussed release of the NAFTA Effects Analysis. There will be a meeting in September 1999 for comments on the draft final analytic framework being released by the CEC (for analyzing the environmental effects of NAFTA). Also, the CEC is issuing a "call for papers", in which it will ask researchers for proposals to analyze the effects of NAFTA on various economic sectors, using the CEC's analytic framework. The proposals will probably be due in October 1999. JPAC urged CEC to include "priority sectors" in the call for papers. Ms. Richardson also discussed CEC projects related to "by-product synergy" (i.e. using waste products from one industry as input for others-this work has been focused in Calgary, Alberta and Tampico, Tamaulipas) and tourism (CEC sponsored a tourism workshop, the proceedings of which should be available soon; CEC might next look at "case studies" of tourism that promotes sustainable economic development and conservation).
According to CEC staff, the Council is quite interested in the new "Emerging Trends" project at CEC. This project will try to identify and analyze emerging North American environmental issues. (See the CEC 1999-2001 Work Program for more information; CEC staff contact is Scott Vaughan (svaughn@ccemtl.org). The focus of this work will be to identify "economic drivers" of environmental change (including trade, monetary policy and domestic economic policy) and examine their potential correlation with environmental trends. Water, transportation and air quality will be early areas of study for the emerging trends program.
Hans Herrmann (hherrman@ccemtl.org ) presented an overview of the biodiversity conservation program activities. This program has tried to be more focused than in the past, seeking out areas where it can "add value" to existing activities and leverage resources. The North American Bird Conservation Initiative is one example of this work. The CEC Biodiversity program is also focusing on the Gulf of Maine and the Bight of the Californias regions, looking at land-based sources of marine pollution and options for controlling those sources. It is proposing to establish a North Americas Marine Protected Areas Network, as well as map more marine and estuarine ecosystems. The program will also be publishing a report on the conservation status of migratory and transboundary species.
Nick Nikkila of the CEC staff spoke about a new project on NAFTA Transportation Corridors. Apparently, this project would be designed to look at such issues as harmonization of vehicle inspection and maintenance standards; vehicle emission standards; fuels and increased use of rail transportation, as well as "permitting issues for stationary sources". (TCPS Editorial note: this project could tread on troublesome ground if it promotes trade-offs between vehicle emission/fuel standards and air emission permitting requirements in non-attainment or near non-attainment metropolitan areas along NAFTA trade corridors, since vehicle and fuel standards are likely to be much less enforceable than stationary source permitting requirements).
The Sound Management of Chemicals program will be focusing on hexachlorobenzene; dioxins and furans; and some continuing focus on mercury. (CEC staff contact: Andy Hamilton, ahamilto@ccemtl.org). The CEC has available the following documents that may be of interest to many NGOs working on toxics issues:
JPAC Meeting, Continued (Monday, June 28th)
During the Monday morning session of the JPAC meeting, CEC program directors again summarized brief highlights of the direction their programs were taking, then JPAC opened the floor to public comment on these programs. JPAC summarized the public comment from each of the four morning sessions, and one person from the public was selected to present each session's comment to the full Council. The following highlights some of the public comment made to the JPAC on the CEC work program. The commenters are generally from non-governmental organizations unless otherwise noted. As we are presenting very summarized versions of the remarks, we have chosen not to identify the commenters for purposes of this report.
Environment, Economy and Trade Program: A commenter from British Columbia expressed concerns that water not be treated as a "commodity" for trade purposes and said that even with B.C.'s ban on water exports, many groups were concerned about potential export schemes for Canada's water. A commenter from Jalisco, Mexico, discussed the need for additional support for farmers to make transitions to more sustainable agricultural practices and noted that the environmental and human health costs of pesticide use are not being accounted for in the price of agricultural products. A representative from the business community said that the CEC needs to make sure it focuses sufficiently on trade and investment patterns, including in the call for papers that will be issued under this program. A commenter from Ontario discussed trends in electricity deregulation and the trade and environment aspects of those trends, noting the need for harmonization of environmental regulations applicable to the utility industry; the potential for more use of market instruments for emissions trading throughout North America (not just in U.S.); and the potential of Chapter 11 of NAFTA to interfere with state's ability to put environmental performance requirements on the utility industry.
A commenter from the U.S. urged the CEC to focus on investment and consumption patterns; the effects of trade in energy on consumption patterns; and the trade of "products as pollutants". Another commenter from the U.S. said that while the CEC has been doing good work, it still has not produced a "concrete effect" on trade policy. He noted that CEC work under Article 10(6) of NAFTA has been extremely limited and that JPAC should urge that the trade/environment official consultations that have begun under this article actually have an impact on policy, especially regarding the implications of Chapter 11 of NAFTA.
Conservation of Biodiversity. Several commenters were supportive of the new directions in the CEC's biodiversity program. A commenter from Mexico spoke of problems of protecting grey whales of the coast of Baja California and a commenter from the U.S. echoed these remarks. A commenter from Canada highlighted the use of endangered species (especially migratory endangered species) as indicators of environmental quality and habitat integrity. She also said that several Canadian groups are continuing to press Canada to enact an endangered species protection law.
Sound Management of Chemicals. Commenters on this part of the CEC program were strongly supportive of CEC's plans to examine dioxins/furans and hexachlorobenzene. One commenter mentioned recent reports about discovery of pesticides in amniotic fluid, and discussed work that has been done to force more disclosure of the "inert" ingredients in pesticides. CEC staff mentioned that dioxin may be used to refine the continental pollutant pathways model (of air pollution transportation) and that Mexico may be developing a dioxin inventory. (Editorial note: TCPS and the Comision de Solidaridad y Defensa de Derechos Humanos, A.C. (Chihuahua) have produced a Spanish language report examining cement kiln incineration of hazardous waste in Mexico. Cement kiln incineration of hazardous waste often produces dioxins and furans. The full report can be ordered from TCPS).
Environmental Law Enforcement. A commenter from the United States asked the CEC to examine enforcement of environmental laws in natural protected areas. He cited a situation along Mexico's Baja coast where PROFEPA's own report had found that a salt manufacturing company was potentially at fault for the death of several sea turtles, but that conservation organizations in Mexico had to resort to legal remedies in order to pressure PROFEPA to take appropriate enforcement action. This commenter also remarked, in response to questions from JPAC, that he believed that Chapter 11 of NAFTA, in combination with other provisions of NAFTA, could reasonably be interpreted to negate the kind of claims now being filed against environmental actions and that an interpretative statement would help the situation. Another commenter from the U.S. asked CEC to address four issues in its enforcement program: (1) more public involvement; (2) making sure that national and subnational governments are using their enforcement authority to ensure that non-compliance with environmental regulations does not become a competitive advantage for particular companies; (3) examine whether policies related to audit privilege make it hard to evaluate compliance and enforcement in the three countries; and (4) ensure that review of enforcement programs encompass more than just "bean counting".
Public Meeting of the Council (Monday afternoon, June 28th)
After opening remarks by the Canadian and Mexican environment ministers summarizing actions taken by the Council during its meetings in Banff (see CEC Press Release on Banff meeting, the ministers heard public testimony (each commenter was given two minutes in order to accommodate the large number of people that wanted to speak). The following highlights some of the remarks from the public comment period. The commenters were generally from non-governmental organizations, unless otherwise noted. As we are presenting very summarized versions of the remarks, we have chosen not to identify the commenters for purposes of this report.
A commenter from the business community stated that while he agreed that Chapter 11 of NAFTA could be interpreted to protect the NAFTA countries' rights to set environmental laws governing production as they see fit, he did not think that environmental laws based on "ownership" were similarly protected. A commenter from Canada presented a letter supported by 15 North American non-governmental organizations opposing the newly-filed Methanex complaint filed under NAFTA Chapter 11 and asked that the environment ministers, through the CEC, get involved in defending against this claim. (More information on this letter should be available from the Sierra Club of Canada). In response, EPA Administrator Carol Browner stated that EPA's did not believe "Methanex has a claim, period."
A commenter from the U.S. presented two concerns: (1) that the revisions to Art. 14/15 guidelines agreed to by the Council could potentially undermine the independence and neutrality of the Secretariat in the Art. 14/15 process and that the Council should not "micro-manage" the process; and (2) that the recent string of NAFTA Chapter 11 cases challenging environmental actions were a serious problem, representing an "unintended" use of Chapter 11 and that such cases will be an issue in FTAA negotiations.
A commenter from Canada stated that the CEC should have procedures for citizens to make "submissions" under other provisions of the NAFTA environmental side agreement, specifically mentioning Articles 3, 4 and 10(3). A commenter from Mexico raised concerns about the revisions to the Article 14/15 guidelines and the lack of an agreement on TEIA. This commenter also supported Canadian NGO calls for an endangered species act for Canada.
A commenter from Canada seconded earlier comments about the potential effects of the Article 14/15 revisions; said that a TEIA agreement should be a top priority for the Council (and described an example of a proposed mining operation on the British Columbia/Alaska border as evidence of the need for such an agreement). Another commenter from Canada recounted the extraordinarily long time it has taken the CEC to process the commenter's Article 14 submission (submission filed in late 1997, and still no decision about whether to even prepare a factual record).
A commenter from the United States focused on the risks of mercury emissions from coal-fired power plants and the potential for these risks to increase if electricity deregulation leads to increased use of older coal-fired power plants, including for cross-border marketing of electricity. Two commenters, one from Mexico and one from the U.S., stated that Mexico needed to have a "right-to-know" emission reporting law in place that covered all industry. The U.S. commenter also asked EPA to avoid limiting the U.S. toxics release inventory law.
A U.S. commenter from a state-based consortium talked about the efforts of states in the northeastern U.S. to work together to improve air quality.
A Canadian commenter seconded earlier remarks expressing concern about the NAFTA Chapter 11 cases.
The Texas Center for Policy Studies offered comments supporting previous remarks about the revisions to the Article 14 and 15 guidelines and NAFTA Chapter 11 cases; expressing concern that any agreement on TEIA fully apply to projects in the U.S. over which state environmental authorities had jurisdiction; and expressing disappointment with Mexico's decision not to participate in a "tracer" study to further investigate causes of air quality degradation in the Big Bend/Maderas del Carmen region. (View TCPS earlier statement about this issue to the U.S./Mexico National Coordinators meeting.). (Note: several other commenters also expressed support for the early comments on the revisions to the Article 14/15 guidelines and the NAFTA Chapter 11 cases).
A commenter from a local government in southern Arizona expressed appreciation for the CEC's work on the San Pedro report and expressed the view that the effort was a good step toward resolving some of the issues in this binational watershed. A commenter from the Guanajuato state government expressed appreciation for CEC's assistance in respect to the Silva Reservoir clean-up and other environmental issues in this Central Mexico state.
A commenter from Canada focused on the continuing need for public access to information, while a commenter from the U.S. highlighted the need for CEC to make sure it reaches out to low income communities. Another commenter from the U.S. discussed a citizen submission that has been filed related an abandoned industrial site (Metales y Derivados) in Tijuana.
Council Responses to Public Comment: In closing the session, the three ministers responded to some of the public comments. EPA Administrator Browner acknowledged that the TEIA negotiation process had been painfully slow, at least in part because of differences in the environmental protection framework in the three countries. She stated that because U.S. federal authority to require states to participate in a transboundary EIA process is "somewhat limited", the new approach would be to encourage states to engage in "good neighbor" practices and share information with authorities in bordering countries/states/provinces. Administrator Browner said that EPA would work at the federal level to make sure information on projects with transboundary impacts was available to the other NAFTA countries. She agreed with comments about the importance of mandatory emission reporting requirements and said that the CEC is trying to determine how best to use the Taking Stock report series.
Secretary Carabias stated that the "right-to-know" theme has received much attention during the Council meetings and that it is a very important issue. She acknowledged that Mexico still doesn't have the full system it hopes to eventually have and that RTK/emission reporting has been hard to develop in Mexico. Secretary Carabias stated that Mexico does now have an institutional platform for emission reporting and hopes to soon have results. She said that the Metales y Derivados case (the subject of an Article 14/15 complaint) is a very high priority and that Mexico is trying to advance the extradition of the facility owner (who is Chilean) from the U.S. and hopes the CEC can help with this matter. She stated that Mexico is interested in participating in the conservation of the binational San Pedro watershed and knows there is work to be done. The area of the basin in Mexico has been declared a protected natural area-to be linked to the Los Ajos corridor-and the management plan will focus on water resources.
With respect to the revisions to the Article 14/15 guidelines, Secretary Carabias said the Council did take into account JPAC and public comments opposing any revisions to the guidelines and that the comments resulted in significant changes in the scope of revisions earlier proposed by the Council. She believes, however, that there were some problems that needed to be addressed by revising the guidelines and to giving "certainty" to the citizen submission process. According to Secretary Carabias, the Council sought to balance the need for more certainty with not in any way limiting public access to the complaint process or weakening public participation.
Minister Stewart also stated that she did not believe the revisions to the Article 14/15 guidelines would undermine the Secretariat's independence or result in micro-management of the citizen submission process.