Kyle Tisdel

April 8, 2005

I.                   Introduction

Globalization has a long arm. Through technology, communication, economics, science and countless other influences, there is little in our daily life that is not touched by the international hand. Certainly among the areas where globalization has had one of its most profound influences is through international trade. It is without question that the movement of foreign capital and the expansion of foreign economic markets are driving factors behind globalization. Principal in advancing the influence of these factors of international trade is the growth and expanding role of international trade agreements.

Significant to the relationship between globalization and international trade, new research is consistently reinforcing the reality that environmental degradation - and its many impacts - is neither limited to, nor recognized by international borders. The expanding scope of these global environmental problems has caused both domestic and international environmental laws to increase upon early safeguards, incorporating broader protections to address this new reality. The growth of the environmental law edifice is realized through a multiplicity of international environmental treaties and conventions, as well as many other international covenants; namely international trade agreements. Due to the distinctive relationship between trade and the environment, provisions have been written into many international trade agreements that are designed to offer a variety of environmental safeguards. In theory, such protections would allow "environmentalists" to breath a sigh of relief. However, as applied, many of these protections are undercut by other conditions within the trade agreements that favor trade at any cost; and in some cases even undercut existing international and domestic environmental protections. The latter of these phenomena has been an unexpected consequence of the North American Free Trade Agreement ("NAFTA"). The application of NAFTA's investment security provision, Chapter 11, allows corporations to be compensated for the indirect expropriation of an investment.

The purpose of this editorial is not to argue that - because of a lack of environmental protection - international trade agreements and free trade are bad. Nor is the purpose to suggest that as a result of the unexpected environmental consequences of trade, we should rebuild the proverbial walls around our borders. Rather, we need to rethink our approach to international trade and its connection with the environment. Moreover, we need to develop solutions that not only continue to expand markets and create capital, but also ensure that market growth is sustainable and available for future generations.

II.                Movement of Foreign Private Capital

Globalization's influence on the movement of foreign private capital is consistently increasing: "from 1990 to 1996, the amount of private capital flowing to developing countries increased tenfold, from US billion to US 4 billion."[1] In the developing world, regulations - specifically environmental regulations - are commonly designed to promote the investment of foreign private capital. Although such regulations have largely proven successful at increasing a country's gross domestic product ("GDP"), they often result in a "race to the bottom." This race encourages countries to adopt lax environmental regulations in an effort to attract foreign capital investment.[2] Examples of this trend are numerable, and can be witnessed in developing economies throughout the world.[3] The attractions of foreign investment and the long-term benefits of establishing environmental safeguards are viewed as seemingly incompatible in much of the developing world. This conflict often results in a decision favoring short-term economic gains. Of course, these decisions are not without their drawbacks. The continued opening of markets to foreign direct investment often "lead to patterns of investment and production that are not desirable in that market conditions do not adequately allow for the internalization of social (including environmental) costs."[4]

The recognition of this trend has prompted a significant move internationally to establish norms and principles offering a base line of environmental protection. This movement has been the principal motivation for a number of international environmental conventions, beginning with Stockholm in 1972.

III.             International Environmental Law

International environmental treaties and conventions originated from necessity, and have since developed a baseline of environmental protection based upon the creation of environmental norms and principles. These norms and principles underlie what has now become international environmental law, and have also been utilized by countries throughout the world as a foundation upon which domestic protections have been developed. The Stockholm Declaration of 1972[5] was the first widely accepted effort to set forth basic environmental concepts and principles, including the integration of the environment and development.[6] Subsequent international environmental declarations, such as the Rio Declaration on Environment and Development,[7] served to reinforce and expand upon the environmental concepts and principles first established at Stockholm. Two of the principles that came out of these declarations are the polluter pays principle and the precautionary principle, both of which are fundamental in the relationship between trade and the environment.

The polluter pays principle is codified in Principle 16 of the Rio Declaration,[8] and is designed to internalize environmental externalities by shifting the cost of environmental harm from society to the person causing the harm.[9] Although originally recommended by the OECD Council in May 1972, it is still highly controversial, particularly in developing countries where the burden of internalizing environmental costs is perceived as being too high.[10] Nevertheless, it is a fundamental tool in safeguarding the environment as it integrates environmental protection and economic activities, ensuring that full environmental and social costs are reflected in the ultimate market price for a good.[11] The polluter pays principle is critical in harmonizing environmental standards across countries, and is endorsed in Agenda 21 by urging governments to use "free market mechanisms in which the prices of goods and services … increasingly reflect the environmental costs."[12]

In turn, the precautionary principle addresses how environmental decisions are made in the face of scientific uncertainty.[13] Principle 15 of the Rio Declaration offers the most widely accepted elaboration of the principle, providing in part: "[w]here there are threats of serious or irreversible damage, lack of scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation."[14] Thus, the focus is on avoiding delay and acting before environmental harm occurs. Principle 15 forbids using scientific uncertainty as a reason for postponing cost-effective measures to prevent environmental harm. This doctrine does not prescribe what policy measures should be taken, only when.[15]

Both the polluter pays principle and the precautionary principle serve as guiding doctrines of international environmental law, and are fundamental to a country's ability protect the environment. These, as well as other concepts and principles of environmental protection have been widely accepted internationally, and have been integrated at both the domestic and international level.

IV.              Free Trade Agreements - NAFTA

Free Trade Agreements, both bilateral and multilateral, borrow from the environmental concepts and principles established in international law. For example, NAFTA's environmental side agreement ("NAAEC"),[16] hailed as a landmark in providing for environmental protection within a free-trade agreement,[17] utilizes many of the concepts and principles established in international environmental law.[18] However, unlike international or even domestic environmental law, trade agreements are premised on establishing free-trade first and foremost, and in turn include provisions that significantly weaken the enforcement and functionality of the environmental protections offered. While the environmental protections under NAFTA[19] are expansive, they are nevertheless significantly undercut by the provisions within Chapter 11.[20] Similarly, although space does not permit analysis, comparable limitations exist under the WTO regime; a contention supported by a number of high-profile cases.[21]

While on its face Chapter 11 does not seem to address the environment at all, as applied it has proven to be a significant obstacle to environmental protection. The language of NAFTA's Chapter 11 provides: "No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment."[22] This provision was "intended to stimulate foreign direct investment by assuring investors that they would be protected against [expropriation]."[23] However, despite the expansive environmental protections in NAFTA, "companies have begun to use [Chapter 11] to challenge measures promoted by governments as necessary to protect the environment and human health."[24] Moreover, the expropriation provision of NAFTA is being used throughout the world as model in trade agreements, providing foreign investors with significantly greater rights than would be afforded under domestic law.[25] Therefore, although this discussion is seemingly limited to NAFTA, the problem is indeed far more reaching in scope.

Although there are a number of examples that could be used to demonstrate how Chapter 11 has undermined efforts to protect human health and the environment,[26] two of the more troubling examples are Ethyl Corp. v. Canada,[27] and the pending case of Methanex Corp. v. United States.[28] Both cases deal with the ban of a fuel additive, and thus offer a rational basis for analysis. However, before examination of these cases, a brief discussion on the fundamental elements of the Chapter 11 indirect expropriation provision is appropriate.

Underlying the indirect expropriation provision, two primary concerns exist; namely the secrecy of the arbitral process, and the conflicts it creates with U.S. takings jurisprudence. First, the NAFTA arbitral tribunals that resolve these investor claims have traditionally been closed to public participation, in keeping with the rules of international arbitration.[29] However, this process is directly in contravention to traditional democratic principles that open the court process to public scrutiny and participation - especially in the appellate context. Moreover, arbitral panels generally don't need to base their judgments on precedent or any external rule of law; drawing significant concern with possible conflicts between the judgments and domestic laws and regulations.

The Chapter 11 indirect expropriation provision also departs from established areas within the U.S. legal framework, differing substantially with U.S. takings jurisprudence. Regulatory takings, although still an emerging area of U.S. law, is well defined in its treatment of regulations that "substantially advance legitimate state interests."[30] The U.S. Supreme Court has consistently upheld regulations taken to address a host of environmental of human health problems. [31] Because these regulations "substantially advance legitimate state interests," the Court has comprehensively denied the right to compensation.

Generally, a regulation will amount to a compensable taking only if it "denies all economically beneficial or productive use."[32] Therefore, a "mere diminution in the value of property, however serious, is insufficient to demonstrate a taking."[33] Even under principles of international law, "a State is not liable for economic injury which is a consequence of bona fide ‘regulation' within the accepted police powers of states."[34] Nevertheless, under Chapter 11 and its indirect expropriation provision, actions have been commenced despite the fact that they would clearly be non-compensable under U.S. domestic takings jurisprudence. Unlike the takings clause of the Fifth Amendment, NAFTA's expropriation provision expands investor rights to nonproprietary interests.[35] In other words, Chapter 11 protects not only real property, but also investments that could include interests such as the right to develop, the right to produce a certain product, or the right to possess a certain product in the course of doing business.[36] This expansion has proven detrimental to domestic efforts to protect the environment.

a.       Ethyl

In Ethyl Corp. v. Canada,[37] Canada enacted a regulation prohibiting the import and transprovincial trade of manganese-based substances, including the fuel additive methylcyclopentadienyl manganese tricarbonyl ("MMT").[38] The fuel additive MMT is designed to prevent automobile engine knocking.[39] However, auto manufactures asserted that MMT harms automobile on-board diagnostic systems, which could lead to a failure to detect high levels of pollutant emissions.[40] Ethyl Corporation, a U.S. based business with a wholly-owned Canadian subsidiary that acts as the sole Canadian importer, processor and distributor of MMT, claimed that the Canadian law constituted an expropriation, and sought US 0 million for its investment in Canada.[41]

Ethyl claimed there was not sufficient scientific support for Canada to prohibit MMT under the Canadian Environmental Protection Act ("CEPA") or Canadian health laws.[42] Moreover, because Canada failed to make a complete prohibition on the use of MMT in Canadian gasoline,[43] it supposedly substantiated the scientific uncertainty and raised further questions as to how harmful MMT actually was.[44] "Ethyl argued that the Canadian measure was a discriminatory attempt to protect domestic industry, rather than a legitimate restriction for environmental or health reasons."[45] Based on these arguments, Ethyl asserted that such a measure amounts to an expropriation due to the "substantial and unreasonable interference with the enjoyment of a property right."[46] In the end, Canada elected to settle Ethyl's NAFTA challenge prior to an award on the merits, paying roughly US million and rescinding the ban on the use of MMT.[47]

Arguably, the Canadian measure would have been defensible if Canada had enacted the environmental regulation directly, rather than through trade restrictions. However, the Methanex case raises doubt as to whether even a direct regulation, enacted to benefit human health and the environment, would be defensible under Chapter 11.

b.      Methanex

Methanex Corp. v. United States of America[48] originates from a California measure phasing-out the use of methyl tertiary butyl ether ("MTBE"), an oxygenate and gasoline additive that can lead to groundwater contamination when gasoline is spilled or leaks from engines or storage tanks.[49] Once released into the environment, MTBE behaves differently than other gasoline compounds, and is about 30 times more soluble than benzene (another fuel compound) in water.[50] Once in the groundwater, MTBE travels at about the same rate as the groundwater, resulting in more costly site investigations, the need for more monitoring wells, and more samples to characterize the larger plume.[51]

Methanex, a Canadian manufacturer of a chemical used to make MTBE, challenged the ban pursuant to Chapter 11 as tantamount to expropriation, and claimed damages of US $ 970 million.[52] Methanex argues that the U.S. should pay for the profits that it would lose as a result of the California ban,[53] claiming that the removal of MTBE from gasoline will not address the ultimate issue of underground storage tank leakage.[54] Methanex thus asserts that the requirement under the WTO Agreement on Technical Barriers to Trade, that regulations be as "least trade restrictive" as possible, also apply to NAFTA.[55] Adding controversy to the claim, Methanex alleges that the ban is a result of campaign contributions from ethanol producers (an oxygenate and substitute to MTBE), which improperly influenced then California Governor Gray Davis into signing the MTBE phase-out Executive Order.[56] Aside from the allure to conspiracy theorists, the Methanex suit represents a very real concern to the U.S. as well as the international community.

While a billion dollar judgment represents a very tangible warning to the U.S., the implications are far more reaching. A substantial number of countries have signed trade agreements that include provisions modeled after NAFTA's Chapter 11. As a result, the nearly billion-dollar suit in and of itself can create a significant disincentive for governments to pass measures regulating substances and activities harmful to the environment and human health, thus undermining otherwise legitimate protections.

V.                 Conclusions

Evidenced by the above examples, NAFTA's Chapter 11 draws a somewhat murky line between legitimate environmental protections and a measure tantamount to expropriation. Indeed, the way that these cases are perceived will ultimately determine the impact this will have on a countries motivation to implement domestic environmental protections. As observed in the Ethyl case, implementing a measure lacking absolute scientific certainty is clearly insufficient under NAFTA's Chapter 11. However, even when the harm is well documented as in Methanex, fear of a billion-dollar expropriation judgment could destroy any motivation to take measures protecting human health and the environment. What remains clear is that suits under Chapter 11 can have much broader and far-reaching implications than the judgments themselves.

The trepidation arising from Chapter 11 is coupled with the uncertain impacts of globalization, the opening of foreign markets to free trade, and the movement of foreign capital. Even if it were desirable to reverse these trends and take an isolationist approach toward the global economy, our current and future interdependence prevents this option from being legitimate. Therefore, we are left trying to address a problem that has no clear solution. How can trade and environmental protection coexist?

While the race to the bottom theory offers effective analysis and recognition of the problems that foreign investment and free trade can bring, especially for the environment, it is incomplete in that it does not take into account a countries ability to get out of the race. Conceivably, the only plausible way for a country already caught up in this race to remove itself from the downward spiral is through the strengthening of its political and legal institutions, and the implementation and enforcement of environmental protections. Yet, how is this possible when the trade agreements that tender necessary economic benefits include provisions that nullify environmental protections and undercut domestic measures? Moreover, when the expropriation provisions within these agreements stymie countries with strong global economies and viable domestic industry, what message does this send to the developing world and their ability to pass stricter protections when faced with evidence of new and growing risks?

Of course, the answers to these questions are uncertain. Reliance on international environmental concepts and principles, such as the polluter pays principle and the precautionary principle, clearly face significant challenges when confronted with provisions of international trade agreements designed to protect investor rights. Although investment security should not be marginalized, I contend that there is a balance to be struck. Countries must be allowed to take measures necessary for the protection of the environment and human health. While every effort should be made to ensure that such measures are not disguised as restrictions on trade, countries should be able to champion international environmental principles without fear of a suit. Perhaps the correct answer is also one of the simplest. International expropriation provisions should parallel modern takings jurisprudence, limiting compensation to the taking of real property that denies all economically beneficial or productive use, and allowing regulations to advance legitimate state interests - conceivably striking a balance between trade and the environment.

[1] J. Martin Wagner, International Investment, Expropriation and Environmental Protection, 29 Golden Gate U. L. Rev. 465, 468 (1999) (citing Gretta Goldenman, The Environmental Implications of Foreign Direct Investment: Policy and Institutional Issues 2 (OECD Conf. on FDI and the Env't, Jan. 29, 1999), OECD Doc. CCNM/EMEF/EPOC/CIME(98)3).

[2] See Lyuba Zarsky, Havens, Halos and Spaghetti: Untangling the Evidence About Foreign Direct Investment and the Environment (OECD Conference on Foreign Direct Investment and the Environment, Jan. 29, 1999) OECD Doc. CCNM/EMEF/EPOC/CIME(98)5 at 3. "[A] concern to be attractive to foreign investors in a highly competitive global economy has kept a lid on local/national [environmental] standards or enforcement standards. While there has not been a universal ‘race to the bottom,' increased globalization . . . has inhibited a ‘race to the top' and caused environmental commitments to be ‘stuck in the mud.'" Id.

[3] An example of this phenomenon has recently taken place just across the United States border in Mexico. A number of U.S. power companies have moved their power plant operations to Mexico, sending the energy back across the border to U.S. consumers. Environmental standards and human health protections are less stringent in Mexico, offering these companies a lower cost of production. If the transfer of operations to Mexico were upheld, the long-term operation of these plants would significantly degrade US air and water quality, and likely harm public health and the environment in the border region; not to mention the harm done to communities in Mexico where these plants have relocated. See Earthjustice, Urgent Cases: Mexican Border Power Plants, at http://www.earthjustice.org/urgent/display.html?ID=106 (last visited Nov. 14, 2004).

[4] Wagner, supra note 1, at 469 (citing J(Hans) B. Opschoor, Multilateral Agreements on Investment and the Environment 9 (OECD Conf. on FDI and the Env't, Jan. 29, 1999)).

[5] Declaration of the United Nations Conference on the Human Environment, June 16, 1972, reprinted in 11 I.L.M. 1416 [hereinafter "Stockholm Declaration"].

[6] David Hunter, et. al., International Environmental Law and Policy 372 (2d ed. 2002).

[7] Rio Declaration on Environment and Development, June 13, 1992, reprinted in 31 I.L.M. 876 [hereinafter "Rio Declaration"].

[8] Id. at Princ. 16; see also North American Agreement on Environmental Cooperation, Sept. 14, 1993, Can.-Mex.-U.S., 32 I.L.M. 1480 (1993) (entered into force Jan. 1, 1994) [hereinafter "NAAEC"].

[9] Wagner, supra note 1, at 469.

[10] See OECD Council Recommendation on Guiding Principles Concerning International Aspects of Environmental Policies, May 26, 1972, C(72)128 (1972).

[11] Hunter, et. al., supra note 6, at 412.

[12] United Nations Conference on Environment and Development, Agenda 21, U.N. Doc. A/Conf.151/26, ¶ 30.3 (1992), available at www.un.org/esa/sustdev/agenda21text.htm (last visited Nov. 14, 2004).

[13] Hunter, et. al., supra note 6, at 405.

[14] Rio Declaration, supra note 7, at Princ. 15.

[15] Hunter, et. al., supra note 6, at 406.

[16] North American Agreement on Environmental Cooperation, Sept. 14, 1993, Can.-Mex.-U.S., 32 I.L.M. 1480 (1993) (entered into force Jan. 1, 1994) [hereinafter "NAAEC"].

[17] See Terri L. Lilley, Keeping NAFTA "Green" for Investors and the Environment, 75 S. Cal. L. Rev. 727 (2002).

[18] See NAAEC, supra note 16, at Art. 1. "The objectives of this Agreement are to: (a) foster protection and improvement of the environment in the territories of the Parties for the well-being of present and future generations; (b) promote sustainable development based on cooperation and mutually supportive environmental and economic policies; (c) increase cooperation between the Parties to better conserve, protect, and enhance the environment, including wild flora and fauna; (d) support the environmental goals and objectives of the NAFTA; (e) avoid creating trade distortions or new trade barriers; (f) strengthen cooperation on the development and improvement of environmental laws, regulations, procedures, policies and practices; (g) enhance compliance with, and enforcement of, environmental laws and regulations;
(h) promote transparency and public participation in the development of environmental laws, regulations and policies; (i) promote economically efficient and effective environmental measures; and (j) promote pollution prevention policies and practices." Id.

[19] North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., Parts One-Three, 32 I.L.M. 289, Part Four-Eight & Annexes, 32 I.L.M. 605 (1993) (entered into force Jan. 1, 1994) [hereinafter NAFTA].

[20] Id. at Art. 1110.

[21] Notably, the chapeau to Article XX (which offers an exception to WTO rules for measures taken, for example, for the conservation of exhaustible natural resources), is used to invalidate environmental measures that constitute a means of arbitrary or unjustifiable discrimination. General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, T.I.A.S. 1700, 55 U.N.T.S. 194, art. XX [hereinafter "GATT"] (emphasis added). In Shrimp-Turtle I and II, Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (Oct. 12, 1998) [hereinafter "Shrimp-Turtle I"]; United States-Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/RW (Oct. 22, 2001) [hereinafter "Shrimp-Turtle II"], the panel ultimately affirmed a compromised measure taken by the United States to protect sea turtles from incidental take during shrimp harvesting; a measure originally taken pursuant to the US Endangered Species Act. 16 U.S.C. §§ 1531-1544 (1994). This compromised measure resulted in far greater difficulty in monitoring and enforcement capability, and significantly weakened the measures effectiveness. A similar interplay between trade and measures necessary to protect life or health can be examined through cases dealing with the Agreement on Sanitary and Phytosanitary Measures, Dec. 15, 1993, MTN/FA II-AIA-6 [hereinafter "SPS Agreement"]. Specifically, EC Measures Concerning Meat and Meat Products (Hormones) WT/DS26/AB/R, WT/DS48/AB/R (Jan. 16, 1998), deals with the European Communities attempt to ban imports of meat and meat products derived from cattle to which hormones have been administered for growth promotion purposes. Finding there was scientific uncertainty on the health impacts of these hormones, the Panel ultimately concluded that banning the use of a substance does not necessarily offer better protection of human health than other means of regulating its use, and invalidated the EC prohibition. This case exemplifies the disparity between trade and environmental protection, where a principle of international environmental law - the precautionary principle - was ignored in the furtherance of free-trade.

[22] NAFTA, supra note 19, at art. 1110 (emphasis added).

[23] Lilley, supra note 17, at 728.

[24] Wagner, supra note 1, at 466.

[25] See Matthew C. Porterfield, International Expropriation Rules and Federalism, 23 Stan. Envtl. L. J. 3, 7 (2004).

[26] See, e.g., Metalclad Corp. v. United Mexican States (U.S. v. Mex.), 40 I.L.M. 36 (2001) (NAFTA Arb. Trib. (Aug. 30, 2000)) (the US-based Metalclad Corp. operated a toxic waste facility in Mexico. Because the facility had a history of contaminating local groundwater, the Governor of the Mexican state of San Luis Potosi deemed the facility to be an environmental hazard and ordered the facility to shut down. Metalclad claimed it had been denied the right to operate, and thus asserted that it had been expropriated, entitling the Company to US million. The tribunal found that Mexico had violated Chapter 11); SD Myers v. Canada, Partial Award of Nov. 13, 2000, available at http://www.appletonlaw.com/cases/Myers_ Second%20Partial%20Award%20-%20Oct21-02.pdf (A U.S. corporation with a facility to dispose of PCB wastes in Ohio filed a claim against Canada for losses arising out of a 15 month Canadian ban on the export of PCBs. The ban was the result of Canadian ratification of the Basel Convention, Mar. 22, 1989, 28 I.L.M. 657 (1989) (entered into force May 5, 1992), which prohibits countries from exporting hazardous waste to nonparties like the US without ensuring they will be managed in an environmentally sound manner. In March 1996, the US issued new regulations governing the import of PCB wastes, and Canada rescinded its ban. While the tribunal held that under principals of international law, a regulation is rarely perceived as an expropriation, it limited its decision to instances of a temporary ban.).

[27] Ethyl Corp. v. Canada, 38 I.L.M. 708 (1999) (NAFTA Arb. Trib. (June 24, 1998))

[28] For a list of NAFTA claim documents on Methanex Corp. v. United States, visit http://www.naftaclaims.com (last visited Nov. 14, 2004).

[29] UNCITRAL Arbitration Rules, Adopted by the United Nations Commission on International Trade Law on April 29, 1976, and approved by Resolution 31/98 of the United Nations General Assembly on December 15, 1976, available at http:// www.uncitral.org/english/texts/arbitration/arb-rules.htm (last visited Nov. 14, 2004).

[30] Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015-17 (1992) (quoting Agins v. City of Tiburon, 447 U.S. 255, 260 (1980)).

[31] Wagner, supra note 1, at 498 (citing Lucas, 505 U.S. at 1022). "[A] long line of the Court's cases sustaining against Due Process and Takings Clause challenges the State's use of its ‘police powers' to enjoin a property owner from activities akin to public nuisances." Id. (citations omitted). See, e.g., Northwestern Laundry v. Des Moines, 239 U.S. 486 (1916) (regulations prohibiting smoke emissions); Agins, 447 U.S. at 262 (limiting the size of buildings to avoid "unnecessary conversion of open space land … protecting against the resultant adverse impacts such as air, noise, and water pollution, … disturbance of the ecology and the environment …"); Andrus v. Allard, 444 U.S. 51, 64-68 (1979) (prohibiting sale of items from endangered species); Hadacheck v. Sebastian, 239 U.S. 394, 410-11 (1915) (banning brickyard operations in a residential area because of their adverse impacts on human health).

[32] Lucas, 505 U.S. at 1015-19.

[33] Concrete Pipe & Prods. of Calif. v. Construction Laborers Pension Trust, 508 U.S. 602, 643 (1993).

[34] Sedco, Inc. v. National Iranian Oil Co., Interlocutory Award 9 Iran-U.S. Cl. Trib. Rep. 248, 275 (1985).

[35] See Edward J. Sullivan and Kelly D. Connor, Making the Continent Safe for Investors - NAFTA and the Takings Clause of the Fifth Amendment of the American Constitution, 36 Urb. Law. 99, 114 (2004).

[36] Id.

[37] Ethyl Corp. v. Canada, 38 I.L.M. 708 (1999) (NAFTA Arb. Trib. (June 24, 1998))

[38] Lilley, supra note 17, at 757.

[39] See Manganese-Based Fuel Additives Act (MBFAA), Ch. 11, 1997 S.C. (Can.).

[40] Wagner, supra note 1, at 487.

[41] Id.

[42] Id. at 489.

[43] Reportedly the Canadian government had not banned MMT directly because there was no proof that is was toxic at low levels of exposure. Shawn McCarthy, Failed Ban Becomes Selling Point for MMT, The Globe and Mail, July 21, 1998 at A3.

[44] See Lilley, supra note 17, at 758.

[45] Wagner, supra note 1, at 488.

[46] Id.

[47] See Lilley, supra note 17, at 757; Wagner, supra note 1, at 488.

[48] For a list of NAFTA claim documents on Methanex Corp. v. United States, visit http://www.naftaclaims.com (last visited Nov. 14, 2004).

[49] See International Institute for Sustainable Development, Methanex Corporation v. United States of America: A background on the controversial case under NAFTA's Chapter 11, and on IISD's involvement, at http://www.iisd.org/pdf/trade_methanex_background.pdf. (last visited Nov. 14, 2004).

[50] Northeast States for Coordinated Use Management, The Impact of MTBE on Treatment and Remediation of Water Resources in the Northeast, Aug. 1999, 4-5, available at http://www.nescaum.org/pdf/MTBE_PH2/Ph2remed.pdf (last visited Nov. 14, 2004).

[51] Id.

[52] See Edward J. Sullivan and Kelly D Connor, Making the Continent Safe for Investors - NAFTA and the Takings Clause of the Fifth Amendment of the American Constitution, 36 Urb. Law. 99, 126 (2004).

[53] See Earthjustice, Urgent Cases: Methanex Corp. Challenges US Environmental Protections, at http://www.earthjustice.org/urgent/display.html?ID=58 (last visited Nov. 14, 2004).

[54] See Lilley, supra note 17, at 759.

[55] Stefan Matiation, Arbitration with Two Tests: Loewen v. United States and Free Trade Commission Intervention in NAFTA Chapter 11 Disputes, 24 U. Pa. J. Int'l Econ. L. 451, 475 (2003).

[56] See IISD, supra note 49.