usmca environmental issues

Recourse for USMCA Environmental Issues

By Jim Holbein, Of Counsel, Braumiller Law Group

Introduction

This article seeks to assist potential users of the provisions of the Agreement Between the United States of America, the United Mexican States, and Canada (USMCA) to understand the multiple layers of review required for an issue to wend its way through the environmental review bodies. The USMCA replaced the North American Free Trade Agreement (NAFTA) when it entered into force on July 1, 2020. Like other modern Free Trade Agreements, the USMCA expanded coverage of environmental issues that impact international trade by adding an entire chapter dedicated to the environment, infusing many of the ideas that were rolled into NAFTA’s side agreement on the environment, the North American Agreement on Environmental Cooperation (NAAEC). The update to that side agreement, the Environmental Cooperation Agreement, continued the role of the supranational Commission for Environmental Cooperation (CEC), which served as the focal point for environmental studies and issue resolution for 25 years (ECA Part Two, Art. 2-8; NAAEC Part 3, Art. 8-19). Both the USMCA and the ECA entered into force July 1, 2020. This article describes the various administrative mechanisms under the USMCA related to environmental issues generally. Chapter 24 contains provisions for consultation, private rights of action, and dispute resolution, as well as the substantive commitments on major environmental laws and agreements.

Chapter 24 on Environment

The initial articles of the USMCA Environment Chapter, (Articles 24.1 – 24.7) outline the rules for the parties to provide environmental protections and establish procedures internally. Articles 24.8 – 24.16 set out the list of Multilateral Environmental Agreements (MEAs) and the specific commitments of the Parties for each one. Fishing and marine resources are the focus for Articles 24.17 – 24.21, given their importance among the common interests in the waters that surround the Parties. The next three provisions identify specific commitments on trade as it relates to conservation, sustainable forest management, and goods and services. The administrative and dispute settlement processes are articulated in Articles 24.24 – 24.32. The organizations established by the chapter enable the full airing of environmental concerns of the governments and of the private sector.

Structure of the Agreements

The USMCA’s chapter on the environment expressly states that no party may encourage trade by relaxing environmental standards without clear consequences. In contrast, NAFTA only offered consultation when a Party alleged another Party “encouraged investment by relaxing domestic health, safety or environmental measures.” There was no express mention of the CEC or its foundational agreement, the NAAEC, in NAFTA, whereas the CEC and the replacement for the NAAEC, the ECA, are explicitly established in the USMCA. The procedures available for environmental matters are clearly enumerated in Chapter 24, with a clear path from consultation to dispute resolution embedded in the structure of the document.

Environment Committee

Article 24.26 establishes the trilateral Environment Committee composed of senior governmental officials representing both trade and environmental authorities. That body oversees the operation of the environmental chapter and has Contact Points for each government. In the U.S., the USTR leads through the Environment and Natural Resources Office that serves as the contact point, in coordination with the Environmental Protection Agency (EPA) and State Department Bureau of Oceans and International Scientific Affairs. The committee is the primary forum for oversight of the implementation of the commitments of Chapter 24. It reports directly to the Ministerial-level Free Trade Commission (FTC) established in Article 30.1. It also reports to the Ministerial-level CEC Council established under Article 3 of the ECA. The Environment Committee also reviews all disputes referred to Senior Representative Consultations under Article 24.30. The Committee meets at least every two years and must hold a public session at each meeting. If private parties have issues that they believe require government involvement, they can present them to the Contact Point to determine whether they are interested and willing to begin a dialogue among the Parties about the issue.

Raising Environmental Issues and Disputes

When a private party brings an environmental matter to the attention of the parties, there are a number of steps and bodies that become involved, all seeking to resolve the dispute at the earliest step possible, while remaining true to the agreement commitments. Article 24.27 provides for Submissions on Enforcement Matters (SEM). “Any person of a Party may file a submission asserting that a Party is failing to effectively enforce its environmental laws. Such submissions shall be filed with the Secretariat of the Commission for Environmental Cooperation (CEC Secretariat)”. (Article 24.27.1) The CEC Secretariat reviews all submissions to determine whether the matter is communicated in writing to the relevant authorities of the Party and the response, if any. The Secretariat also analyzes whether the submission alleges harm to the submitter, whether it “raises matters about which further study would advance the goals of the Chapter,” (Article 24.27.3(b)), whether the submitters pursued private remedies, and whether the submission is drawn exclusively from mass media reports. If the CEC Secretariat determines the SEM merits a response from the Party, it forwards all information to the Party and the Party must respond within 60 days. If the matter is subject to a pending judicial or administrative proceeding, then the CEC Secretariat proceeds no further and the proceeding of the Party is, by implication, the forum for resolution of the matter. The Party may also inform the submitter about enforcement of the environmental law in the Party and whether private remedies are available and have been pursued.

Factual Record

In order for the CEC Secretariat to develop a factual record based on the response of the Party that allegedly failed to enforce its environmental law effectively, it must inform the CEC Council established under Part Two of the ECA and obtain approval from two of the three members. If that approval is given, which is by no means a certainty, then the Secretariat can compile a factual record, drawing on public information, public submissions, and other enumerated sources. The CEC Secretariat submits any factual record directly to the CEC Council when it is completed. There is no further disposition required by the USMCA of a factual record, nor any requirement that the matter involved go into the consultation or dispute settlement process.

Consultations

USMCA Chapter 24 provides for multiple levels of consultation for matters raised by one Party against another. The Environment Committee would obviously be involved, at both the basic consultation level in Article 24.29, and as Senior Representatives pursuant to Article 24.30. If the matter is bumped to Ministerial Consultations pursuant to Article 24.31, it is not clear whether the Free Trade Commission, or the CEC Council, would be implicated (probably both, because the issue is so serious that it is not resolved at the highest levels of government). Only after these multiple rounds of consultations would an issue be ripe for dispute resolution under the agreement.

Dispute Resolution

Pursuant to Article 24.32, if the Parties fail to resolve the dispute through consultations within the allotted time period, the requesting Party may ask for the establishment of a panel. Such a panel may seek advice or technical assistance to address the specific matter, will allow the Parties the opportunity to provide their respective comments and will consider any interpretative guidance in making its findings and recommendations.

CEC

As of the end of March 2021, the CEC reports on its website (www.cec.org) that it received its 100th Submission on Enforcement in February 2021, the first under the USMCA. This level of activity is somewhat surprising given the administrative hurdles under NAFTA that are essentially carried over into the USMCA. The CEC has produced hundreds of publications on environmental matters and possesses a wide range of data tools and information repositories. The continuation of the CEC under the USMCA is welcome, and important, to continuing contributions to environmental cooperation and protection in the next decade.

Conclusion

The USMCA deals with environmental cooperation and protection in a more diversified manner and structure than the predecessor NAFTA. The mechanisms for raising issues and resolving disputes can be seen as either multiple points to reach an agreement or layers of governmental hurdles to be overcome, depending on the viewpoint one brings. It is difficult for the lay person to identify the right body from whom to seek guidance or recourse. As seen in the analysis, the large number of players involved in administering environmental issues raised under the agreement require a time-consuming and often confusing process. Substantial time is required to comply with all of the internal administrative and judicial avenues for recourse available in each USMCA partner country. The USMCA enables review of environmental issues, but the time involved for each issue may, and often will, delay effective action for months and even years. *The author gratefully acknowledges the assistance of Melissa Kotulski in the production of this article.