Reproduced, with permission, from: Kelly, M. E. 1993. NAFTA's Environmental Side Agreement: A review and analysis. Austin, Texas: Texas Center for Policy Studies.

PART TWO

REVIEW OF KEY FEATURES OF THE ENVIRONMENTAL SIDE AGREEMENT

I. INTRODUCTION

This review of the recently negotiated environmental side agreement for the pending North American Free Trade Agreement (NAFTA) focusses on four key issues:

(1) citizen participation in the proceedings of the new Commission on Environmental Cooperation (CEC);

(2) citizen access to documents, decisions and reports of the CEC;

(3) the nature of CEC recommendations; and

(4) funding for CEC operations.

We focus on this relatively limited range of issues for several reasons. First, we view them as key indicators of whether or not the CEC will actually be able to prevent the expected adverse environmental effects of liberalized North American trade and investment. Second, we selected these issues because the U.S. and Mexico have already developed a track record under the 1983 La Paz agreement for the U.S./Mexico border environment.[1] That track record provides important lessons in regard to each of these four issues.

Finally, with respect to citizen participation and citizen access, because the CEC is a brand new trinational institution, its establishment offers an opportunity for the three North American countries to structure a transparent and accountable institution--one in which the public in all three countries can have confidence. Given that increased economic integration between our three countries, with or without NAFTA, is likely to lead to greater political and social integration at some point in the future, it is important that any new trinational institution be structured in a way that provides for maximum citizen participation and transparency. While this is a difficult issue, particularly because of different views of citizen participation and freedom of information between the countries, it is one that we cannot afford to ignore, either now or in the future.

This analysis does not deal in detail with the mechanics of the proposed dispute resolution process or the "sanctions" provisions. These aspects of the side agreement have been thoroughly covered by others, both supporters and opponents of NAFTA.

The side agreement does represent an important step forward in trying to establish a framework for dealing with environmental aspects of trade and investment liberalization and for increased North American cooperation to protect the environment. This is no small achievement for the Clinton Administration, faced as it was with negotiating this agreement in a politically-charged atmosphere, on a short time-frame and in the middle of a transition.[2]

In particular, the provisions of the side agreement that deal with access to private remedies under domestic law could, if properly implemented, help provide both Mexican and U.S. citizens with some new tools to protect their environment.[3] In addition, the Commission staff has an important degree of independence, being expressly protected from undue influence by any national government.[4] It is also clear that the U.S. was able to prevail in its position that both the staff and the Public Advisory Board should be joint bodies, and not comprised strictly of national sections. This is important to the Commission functioning as a trinational body, not just warring national sections.

Finally, the CEC has been given broad latitude in the range of issues and problems it can discuss.[5] Nevertheless, as we believe our analysis demonstrates, the non-binding, virtually advisory role of most CEC reports and recommendations undermines the value of having such a broad scope of issues come under the CEC.[6]

II. SUMMARY OF FINDINGS

This section briefly summarizes the findings of TCPS' evaluation of the four selected aspects of the side agreement.

A. Citizen Participation

1. Public Advisory Board

* The Public Advisory Board acts in a purely advisory role to the Council; there are no provisions requiring that the Council give any weight to the Board's recommendations.

* The Advisory Board's access to documents of the Commission or Council is quite limited.

* There is no requirement that the governments appoint an advisory board that represents a diversity of interests.

2. Citizen Submission Process

* The agreement has significantly undermined the citizen submission (citizen petition) idea. The process is now full of secret decision-making, with no timelines but with a number of opportunities for countries to block even limited "factual" investigations by the Secretariat of the Commission.

* The scope of possible citizen submissions has been limited to lax enforcement matters and submissions are subject to a number of limiting pre-conditions.

* The citizen submission process lacks any provisions which would give citizens the right to find out what happened to their complaint, or even to see the "factual record" before it is finally approved by the Council.

3. Public Hearings

* The Agreement's text does not expressly authorize this relatively non-controversial form of public participation.

4. Citizen Participation in Dispute Resolution under the Side Agreement

* There are no provisions for citizen participation in the dispute resolution/sanctions process under the side agreement, despite the fact that this process has been said by many advocates of the side agreement to be central to its effectiveness.

* Only final dispute resolution panel decisions are available to the public.

B. Citizen Access to Information

* Public access to decisions and recommendations of the Council is limited primarily to the final annual report. Release of most decisions and recommendations can be blocked by a 2/3 vote of the Council.

* Public access to other documents of the Council is ambiguous under the side agreement text, but it appears that the Council is free to develop rules of procedure that would effectively prevent public access to most documents.

C. Nature of CEC Recommendations

* There are no timelines under which the Council has to consider making recommendations in any area, except with respect to recommendations for a process to deal with transboundary pollution sources. In that latter instance, the Council is given three years to come up with recommendations.

* The recommendations of the Council are merely advisory. There is no obligation of the governments to even consider implementing the recommendations of the Council.[7]

D. Funding

* There is no guaranteed, sustained source of funding for CEC operations.

III. CITIZEN PARTICIPATION

There are four main aspects of citizen participation under the side agreement:

(1) the Public Advisory Board;

(2) the citizen submission process;

(3) public hearings; and

(4) participation in dispute resolution/sanctions process.

Each of these aspects is reviewed below. The lack of meaningful avenues for broad public participation under the 1983 La Paz Agreement has been one of that agreement's serious failings.[8] In shielding themselves from public participation in the binational relationship, the U.S. and Mexican environmental agencies have undermined public confidence in the La Paz process. In addition, without strong public participation, and the consequent increase in public awareness that comes with it, there has in the past been little public support for adequate levels of funding for the environmental agencies to carry out work under the La Paz agreement.

On its face, the environmental side agreement does go beyond La Paz in establishing some avenues for public participation. A careful look, however, shows that this progress has been greatly limited by the addition of various mechanisms allowing each country to throw substantial roadblocks in the way of effective public participation.

A. Public Advisory Board

As noted above, the U.S. government was successful in negotiating a joint Public Advisory Board for the CEC.[9] Under Art. 16, this Advisory Board would have 15 members, with each country receiving 5 appointments to the Board. The Board would meet at least annually. It could meet more often, if authorized to do so by the Council or by a majority vote of the Advisory Board's members.[10]

While the establishment of this Advisory Board is important, there are several limits on its effectiveness. First, the Board acts only in a purely advisory capacity to the Council.[11] The Council is not bound by the express terms of the agreement to consider or give any particular weight to the Advisory Board's recommendations or opinions.

Second, there is no express provision allowing the Advisory Board to see a draft of the Council's annual report before it is finalized.[12] Also, in the situation where the Secretariat has cleared all the hurdles necessary to prepare a "factual record" in response to a citizen submission, a 2/3 vote of the Council is required to make the factual record available to the Advisory Board.[13]

Finally, there is no requirement that the governments ensure a diversity of interests are represented in their Advisory Board appointments. The agreement leaves the appointments totally to the discretion of the governments.

One border group with direct experience serving on the Public Advisory Committee (PAC) for the EPA/SEDESOL Integrated Border Environmental Plan (IBEP) predicts that the new Advisory Board for the CEC will be even less effective than the PAC.[14] This is particularly troublesome given the fact that one prominent member temporarily resigned from the PAC to protest its ineffectiveness and the PAC's members have repeatedly complained to the U.S. EPA about the lack of a meaningful role for their Committee.

In TCPS' view, the Advisory Board should have had at least the following minimal authority and functions:

* Access to all factual records, even at the draft stage, with an ability to disclose the contents unless prohibited by a unanimous vote of the Council based on a clearly demonstrated national security concern;

* Access to all communications between the governments related to any aspect of the side agreement, again unless restricted by a unanimous vote of the Council based on a clearly demonstrated national security concern;

* The power to make majority vote recommendations/comments on the Commission's annual program, draft annual report and other reports. These recommendations would have to be given great weight by the Council, with a public explanation of why any recommendation was rejected;

* The authority to hold public hearings and by majority vote request that the Secretariat investigate citizen submissions presented at the public hearings. If the Secretariat or Council declined to conduct an investigation in response to an Advisory Board request, the reason for the doing so would have to be made public, in writing.

TCPS also believes that the Public Advisory Board could have been strengthened by a specific obligation on the part of the governments to appoint members representing environmental, community and public health interests.

B. Citizen Submission Process

In early discussions about the new trinational commission, one of the most promising aspects for its effectiveness was the citizen submission or citizen petition process. As originally contemplated, even in the initial U.S. negotiating position,[15] if a citizen submission met certain considerations, as determined by the Secretariat, the Secretariat, either at the request of the Council or on its own initiative, could have developed a full investigative report. These reports in response to citizen submissions would have been allowed not only for allegations of lax environmental law enforcement, but also for "any matter of substantial importance" under the scope of the side agreement.[16]

The citizen submission process that resulted from the negotiations, however, is an emasculated cousin of the original idea. It is apparently designed to discourage citizen submissions by severely limiting their scope and sending them off into an oblivion of secret decision-making.

Neither the Secretariat or the Council has only obligation to respond to citizen submissions on matters other than lax environmental law enforcement.[17] With respect to citizen submissions on lax enforcement, the Secretariat may initially take up the matter, if it meets certain criteria,[18] by "determining whether the submission merits a response."[19] In making this determination, the Secretariat is to consider several factors, one of which is whether "harm" is alleged to the person or organization.[20] It is not clear how much weight this factor is to be given, but if it is weighed too heavily it will prevent citizen submissions that are made in an attempt to prevent harm from occurring in the first instance.[21]

The Secretariat is also required to consider whether "private remedies" have been pursued.[22] Again, depending on the weight given to this factor, it could tend to discourage submissions from those who can not afford to pursue private remedies such as tort litigation.

If the Secretariat determines that a response to the citizen submission from the government complained of is in order, the submission is forwarded to the government with a request for response.[23] No action is required of the Secretariat if it decides not to forward the submission. Thus, the citizen submitting the information is not entitled to any explanation of what happened to his or her submission. Moreover, there is no time limit for the Secretariat to make its decision on whether to initiate action on any particular submission.

Once the government complained against receives the submission, it can halt all further action by the Secretariat with the mere claim that the "matter is the subject of a pending judicial or administrative proceeding."[24] Note that this does not have to be an enforcement proceeding. Article 45(3) defines "judicial or administrative proceeding" as:

(a) a domestic judicial, quasi-judicial or administrative action pursued by the Party in a timely fashion and in accordance with its law. Such actions comprise: mediation, arbitration; the process of issuing a license, permit or authorization; seeking an assurance of voluntary compliance or a compliance agreement; seeking sanctions or remedies in an administrative or judicial forum; and the process of issuing an administrative order;

Again, the citizen has no right to find out whether the government exercised this virtual lock on the process and, if so, what "proceeding" is alleged to preclude further action. Moreover, the country is under no obligation to demonstrate to the Secretariat how or if the pending proceeding will address the citizen's problem. Thus, for example, if a citizen complains the government is failing to effectively enforce water pollution standards against an existing plant, there is nothing that prevents the government from halting the Secretariat's investigation by claiming it is seeking "voluntary compliance" from the discharger, or even that it is in the process of permitting an expansion of the plant.

It is difficult to conceive of many situations where the governments will not be able to block further action by the Secretariat using Art. 14(3)(a). But even if the Secretariat gets past this formidable hurdle, it must still ask for and a receive a 2/3 vote of the Council to proceed with development of a "factual record".[25] Again, there are no time limits for the Secretariat to ask the Council for permission to proceed, and no time limit for the Council to respond to a request from the Secretariat. And, again, the citizen who submitted the petition has no right to find out what happened to his submission.

In the rare instance where the Secretariat actually reaches the stage of preparing a factual record, the draft record is provided only to the Council. There is no time limit on how long the Secretariat can spend in preparing the record, but if it ever gets to the Council, the governments have 45 days to comment. Note that the draft factual record appears to be available only to the Council--the citizen complaining has no express right to see it.

The Secretariat then gets an unlimited amount of time to incorporate the Council's comments and then, but only by a 2/3 vote of the Council, the factual record "may" be made public. To top it all off, the factual record is nothing more than that--facts. It is not contemplated to contain recommendations for corrective action or even referral to the Art.22 consultation procedures.

Thus, the governments have turned the positive citizen submission idea into a unnecessarily secretive process full of roadblocks and unlimited processing time. The frustrations and inaction sure to be encountered by the first few citizens to submit complaints are likely to deter any significant use of this unwieldy process.

C. Public Hearings

Public hearings are a valuable form of public participation. They allow citizens to offer direct testimony, usually on a wide range of issues. They also often serve to increase the general public's awareness and knowledge of the issues.

Both the U.S. government and the seven environmental organizations who set out their demands for the side agreement in May 1993 contemplated that at least the Secretariat of the new trinational commission would be able to hold public hearings.[26] Nevertheless, even this relatively non-controversial form of public participation is not expressly included in the final side agreement. The Secretariat is authorized to gather information through "public consultations, such as conferences, seminars and symposia."[27] These types of fora, unlike public hearings, are generally tightly controlled with pre-selected speakers.

The agreement does provide that the Council of environmental ministers shall hold "public meetings" in the course of all regular sessions.[28] This would seem at first glance to require the Council to hold some type of forum where it received public comments or testimony. However, the section goes on to state that "[o]ther meetings held in the course of regular or special sessions shall be public where the Council so decides." This implies that the obligation is only for the Council to open its meeting to public view, not necessarily that it would have to receive public comments.

Hopefully, at a minimum, the side agreement can be interpreted consistent with the agreement's objectives to "promote

public participation"[29], to allow the Secretariat or the Council to conduct public hearings on all matters within the scope of the agreement.

D. Participation in Dispute Resolution/Sanctions Process

To its credit, the Clinton administration initially proposed that, at a minimum, the dispute resolution process under the environmental side agreement would include public access to the hearings of the dispute resolution panel.[30] The administration was also at that time apparently considering other ways to open up this process.[31] Unfortunately, the U.S. did not maintain this position in the negotiations. The final text does not provide for either public sessions of dispute resolution panels or for any other opportunities for public participation in the dispute settlement process under the side agreement. In fact, only if the panel issues a final report is anything at all made public about the dispute and its resolution.[32]

Thus, the final agreement does not provide for any meaningful citizen participation in the process which is supposed to remedy instances of lax enforcement of environmental law. This central feature of the side agreement therefore depends solely on a government-initiated and secret process.

IV. CITIZEN ACCESS TO INFORMATION

This section discusses the provisions of the side agreement relating to citizen access to documents, decisions and reports of the CEC.[33] The very limited access provided by the agreement's provisions belie its stated objective of promoting "transparency...in the development of environmental...policies."

A. Background

As in the arena of citizen participation, the lack of citizen access to information under the La Paz Agreement has been particularly troublesome.[34] Getting access to information obtained by EPA "under" the La Paz Agreement has always been difficult, but the situation seems to have actually deteriorated recently. For example, the U.S. EPA has now decided to withhold data from the highly-touted new U.S./Mexico hazardous waste tracking system.[35] EPA has also decided to withhold information supplied by Mexico on a proposed new coal-fired power plant in Piedras Negras, Mexico,

located about 120 miles south of Big Bend National Park.[36]

In each case, EPA claims Mexico asked for information to be withheld under Article 16 of La Paz. It is difficult to understand the justification for withholding such basic environmental information, however. Residents of the border region should be fully entitled to know what environmental data is being gathered and evaluated with their tax dollars. In neither case has EPA alleged national security concerns and it is difficult, if not impossible, to see what national security concerns could be associated with release of basic environmental data. Moreover, when the agencies refuse to release such data, it is easy for the public or concerned citizens to conclude that the data do in fact show some problem that might be an embarrassment to one or more governmental agencies.

In TCPS' view, both the La Paz agreement and the environmental side agreement for NAFTA should set the presumption that all information, decisions or reports gathered or prepared pursuant to the agreements will be available to the public. Only when a genuine national security concern is demonstrated should data be withheld.

B. Access to Decisions. Reports of the CEC

Article 9(7), in a striking parallel to Article 16 of the La Paz agreement, provides:

...All decisions and recommendations of the Council shall be made public, except as the Council may otherwise decide or as otherwise provided in this Agreement.

Thus, the Council members can, in all cases not otherwise explicitly covered by the side agreement, decide to keep decisions and recommendations confidential.

Several provisions of the side agreement relate to the release of specific decisions or reports, including:

* Art. 12(1): the final annual report of the Commission (prepared in draft form by the Secretariat and modified/approved by the Council) must be made public;[37]
* Art. 13(3)--the Council may decide to withhold any report of the Secretariat on an "environmental matter related to the cooperative functions of this Agreement" No justification is required for a decision to withhold the report.
* Art. 15(7)--the Council "may, by a two-thirds vote, make the final factual record [prepared in response to citizen submission] publicly available" (emphasis added). There is no requirement to make the factual record available, and no justification is required to withhold it;
* Art. 23(4)--the Council may, by a two-thirds vote, make available recommendations it develops in the course of pre-dispute resolution consultations under Art. 23; and
* Art. 32(3)--A final report of a dispute resolution must be made public.

There are many instances, however, where the agreement fails to indicate whether the decisions or recommendations of the Council or the Secretariat will be available to the public. For example, there is no mention of public availability of decisions on panel recommendations under Arts. 33-34[38]; Art. 35[39]; or Art. 36.[40]

C. Access to Documents of CEC

Access to documents of the CEC refers to documents prepared by or submitted to the Council, Secretariat or Public Advisory Board that are other than decisions, recommendations or reports. This might include, for example, data gathered by the Secretariat from independent sources or from the countries in the course of preparing a factual record under Article 15. It would also include background information developed by the Secretariat for the Council in regards to one of the many issues listed in Article 10.

In this respect, as in many others, the text of the side agreement is ambiguous. Article 11(8)(a) provides that the Secretariat "shall safeguard from disclosure" information that could identify a non-governmental organization (NGO) or person making a submission, if so requested by the NGO or person. Article 11(8)(b) provides that if an NGO or person making a submission requests that information in submission it considers to be proprietary or confidential not be disclosed, the Secretariat must withhold it.

While it is laudatory that the governments are apparently trying to protect citizens from reprisals if they submit a complaint regarding lax enforcement, it should be noted that nongovernmental organizations are defined by Art. 45 of the agreement to include business, industry and trade associations. The Article 11 protections do not distinguish between types of NGOs for purposes of confidentiality protection. Thus, the Secretariat could withhold basic environmental data submitted by an industrial plant, if the plant asked that it be withheld for confidentially purposes.[41]

No other provision of the side agreement text speaks directly to the release of documents held or developed by the Secretariat that are not decisions or recommendations. Thus, one could interpret the text as requiring the Secretariat and/or the Council to make available to the public on request all documents that do not fall under the confidentiality protection of Article 11(8). However, based on the track record under the La Paz agreement and other provisions of the side agreement that generally do not favor broad release of CEC information, the text should have been made explicit on this point. Because the text is ambiguous, it leaves the Council free to develop rules that block access to most information gathered by the Commission.

V. CEC RECOMMENDATIONS

A central function of newly-created Commission on Environmental Cooperation is to "consider" and "develop recommendations" regarding a wide scope of environmental matters.[42] This function could be useful in improving environmental protection systems in all three countries. As it stands, it should help promote at least further discussion of environmental matters of common concern. Nevertheless, the governments have failed in the side agreement to make this consultation and recommendation function effective. First, with the exception of possible recommendations regarding proposed projects with potential adverse transboundary effects,[43] there is no time-line on which the Council must address the various issues.

Second, and more importantly, the recommendations of the Council are merely advisory. Only the recommendations developed under Article 10(5)(b) (relating to "appropriate limits for specific pollutants") are expressly entitled any formal consideration by the NAFTA governments. Article 2(2) provides:

Each Party shall consider implementing in its law any recommendation developed by the Council under Article 10(5)(b).

Under well-established principles of statutory interpretation, the provision effectively means that the governments are not under any obligation to give any weight or consideration to the Council's recommendations in any of the myriad areas it can address.

The governments will surely argue that, of course, the Council's recommendations will be "considered". But, the fact remains that there is no specific obligation on any of the governments to implement (or even try to implement) the Council's recommendations.

Thus, there are two serious limitations to the CEC functions-the lack of timelines for making recommendations and the completely non-binding nature of any recommendations ultimately made. Given these limitations, it is unlikely that the CEC will be effective in ensuring that the potential adverse environmental and public health effects of NAFTA are timely prevented or mitigated. These limitations are particularly disappointing given the wide range of issues that could be addressed by the Council.[44]

VI. FUNDING

Experience with the 1983 La Paz Agreement has shown that without a secure source of adequate funding very little happens in the cooperative binational relationship. Up until NAFTA's fate became a hot political issue, EPA had devoted very few resources to work with Mexico under the La Paz Agreement. This underfunding occurred despite the border region's rapid industrialization and its clearly visible environmental and public health problems. Moreover, what work EPA did do on the border was fragmented between its Dallas and San Francisco regional offices and EPA headquarters in Washington, D.C. Mexico's resources have been even more limited, and the asymmetry often hurts the establishment of effective cooperative relationships.

Because it does not provide for specific levels of funding nor identify where such funds will come from on a continuing basis, the side agreement does not bode well for the effectiveness of the CEC.

In their May 4, 1993 letter, national environmental groups asked that the side agreement "provide for a secure source of funds in an amount sufficient to enable" the trinational commission to undertake "each of its responsibilities and functions." One of these groups, the National Wildlife Federation, later estimated that commission operations would require about $30 to $73 million annually, depending on the staff size.[45]

Yet, the side agreement negotiated provides only that:

Each Party shall contribute an equal share of the annual budget of the Commission, subject to the availability of appropriated funds in accordance with the Party's legal procedures. No Party shall be obligated to pay more than any other Party in respect of an annual budget. (Art. 43).

This is virtually the same language that was used for the funding provisions of the La Paz Agreement.[46]

This lack of commitment to establishing a permanent and secure source of funding for CEC operations is likely to further undermine the effectiveness of the commission. While first year funding might be secured due to NAFTA politics, each year the CEC will have to fight budget battles in all three countries to keep a reasonable source of funding.

1 Agreement Between the United States of America and the United States of Mexico on Cooperation for Protection and Improvement of the Environment in the Border Region, 22 I.L.M. 1025 (1983).

2 See Kelly, Mary E., Negotiation of an Environmental Side Agreement to the North American Free Trade Agreement: Is the Fuse Too Short, 8 N.M. Nat. Res. L. Rep. 73 (Summer 1993).

3 See Article 6 of the North American Agreement on Environmental Cooperation (September 1993). Hereinafter, citations of specific articles refer to this agreement, unless otherwise noted.

4 Article 11(4).

5 Art. 10 (2)-(5). See also Art. 1, Objectives.

6 See Section IV, below.

7 One small exception is the recommendations that could by made by the Council under Art. 10(5)(b) [relating to pollutant limits]. Art. 2(2) of the agreement requires that the governments consider implementing the recommendations in this regard, which implies, of course, that for all the other myriad areas in which the Council may act, there is no obligation on the governments to consider the recommendations.

8 Article 9 of the La Paz Agreement provides merely that the governments, if both agree, may invite representatives of nongovernmental organizations to the binational coordinators meetings, if the group has some technical or scientific expertise to offer.

9 Art. 17 of the side agreement does provide that each country may also have a "national" advisory board.

10 Art. 16(1)

11 Art. 16(4)

12 It is unclear whether, even if the Advisory Board could get a draft, that a Board member could discuss it with members of the public. Art. 12(1) [regarding the annual report] implies that only the final report is to be made public. The rules of procedure for the Advisory Board including, presumably, procedures for public disclosure of information, are not set out in the side agreement itself, but are instead left to the Council. Art. 16(2).