NAFTA panel rules against Methanex in MTBE case
Tue Aug 9, 2005 06:46 PM ET
VANCOUVER, British Columbia, Aug 9 (Reuters) - A trade panel has ruled against Methanex Corp.'s lawsuit for $970 million in damages over California's decision to ban the use of gasoline additive MTBE, the company said on Tuesday.
Vancouver-based Methanex, which produces methanol, the base chemical used to make MTBE, said it was still studying the lengthy ruling, which it said rejected its claim on the basis of a lack of jurisdiction.
It marked the second time a North American Free Trade Agreement tribunal has ruled against Methanex in the case it filed in 1999 under the trade pact's controversial Chapter 11 provisions.
California has banned the use of MTBE (methyl tertiary butyl ether), which is used to reduce air pollution, because concerns the additive was contaminating drinking water supplies.
Methanex argued the ban that took effect at the end of 2003 after a year's delay was not based on scientific evidence, and the water pollution could be solved by fixing leaking underground storage tanks at gas stations.
NAFTA's Chapter 11 provisions prohibit unfair protection of domestic industries, and Methanex's original complaint alleged U.S. officials acted improperly to protect the U.S. ethanol industry, which competes against MTBE as a gasoline additive to reduce toxic emissions.
The company later amended its case to a claim that linked the state's decision to political contributions received by its then Governor Gray Davis from major ethanol producers.
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