State ban could cost U.S. millions
California’s action one year ago regarding MTBE could end up costing the United States $970 million.
Methanex Corporation, a Vancouver, British Columbia company that is one of the world’s leading producers of methanol, filed a $970 million complaint under the North American Free Trade Agreement last year relating to California’s phaseout of MTBE.
It was the second time in NAFTA’s five-year history that such a claim has been filed against the United States, according to Methanex.
Under NAFTA, says the Canadian company, a business in a NAFTA-member country is entitled to enjoy certain conditions relating to its investment in another NAFTA-member company.
“The California governor’s order to ban the use of MTBE in that state unfairly targets MTBE in what are really broader gasoline and water resource issues,” Pierre Choquette, Methanex’s president and CEO, said in a news release last year. “Our mandate is to act in the best interests of our shareholders, and we are confident we have a valid claim for damages under NAFTA.”
Under NAFTA, a federal government is responsible for the actions of its states or provinces.
Todd Glass, spokesman of the U.S. Trade Representatives Office, said the United States and Methanex are in a dispute-settlement process. The United States and Methanex are trying to choose a three-judge panel to hear the complaint. After that happens, a hearing will be scheduled.
Glass declined to comment further.
John Meinhold, a Sierra Club member from Portsmouth, N.H., and longtime opponent of MTBE, said he thought California Gov. Gray Davis likely anticipated litigation or complaints such as this and still took appropriate, strong action.
“I’m sure they realized there would probably be litigation,” he said. “I think Gov. Davis should be commended for taking such strong action even in the face of litigation. It was the right thing.”
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