Advice Letter - May 7, 2004

May 7, 2004

The Honorable Michael O. Leavitt
Administrator, U.S. Environmental Protection Agency
1200 Pennsylvania Avenue N.W.
Washington, D.C. 20460

Dear Administrator Leavitt:

The National Advisory Committee (NAC) to the U.S. Representative to the North American Commission for Environmental Cooperation (CEC) held its twenty-second meeting on April 29 and 30, 2004, in Washington, D.C.

We would like to express our gratitude to all of the government officials who took the time to brief us on various aspects of the CEC's work, including Jerry Clifford, Heidi Bell, Joe Ferrante, Evonne Marzouk, and Nadtya Ruiz from the EPA Office of International Affairs, Jocelyn Adkins from the EPA Office of General Counsel, and Darci Vetter from the Office of the U.S. Trade Representative. We would also like to thank Daiva Balkus, Mark Joyce, Oscar Carrillo, Nancy Bradley, and Geraldine Brown from the EPA Office of Cooperative Environmental Management for organizing and staffing the meeting. We very much appreciated the participation of Doug Wright from the CEC Secretariat and Jane Gardner from the Joint Public Advisory Committee. Finally, we were happy to have the opportunity to meet with Jennifer Haverkamp and John Mizroch, the U.S. members of the CEC Ten-Year Review and Assessment Committee (TRAC).

We would also like to thank Assistant Administrator Judith Ayres for her February 6, 2004 letter responding to our advice letter of October 29. This kind of detailed response greatly helps us to follow up on our advice and to provide useful advice in the future.

We spent most of our time and attention on two topics: the draft "Vision/Mission/Goals" paper prepared by EPA to spark discussion of a long-term strategy for the CEC; and the draft report on the ten-year review conducted by the TRAC. Because the Alternative Representatives to the CEC Council are meeting this week in Mexico to begin to discuss a long-term CEC strategy, in preparation for the June 2004 Council meeting, we were encouraged to provide an immediate response to the draft Vision/Mission paper. As a result, we provided EPA a two-page response at the close of our meeting, on April 30. We emphasized at the time that the paper was necessarily informal because we did not have time to receive the concurrence of NAC members who were not able to attend our Friday session. Upon review, the paper has received their concurrence, and it is attached to this letter as our Advice No. 2004-1, with the addition only of a statement on the importance of using quantitative measures.

We look forward to returning to these issues as they continue to be considered by the U.S. government. In particular, we welcome Jerry Clifford's suggestion that he might hold a conference call to tell us about any outcomes of the Alternative Representatives' retreat.

Because the TRAC Report is also on a short time-line, and because we believe that it is valuable to provide the TRAC a range of reactions to its draft report, we have decided to include all of the responses members of the NAC provided, rather than attempting to reach a consensus position. Although consensus would have been possible to reach, we were concerned that obtaining it would have taken too long, given the need of the TRAC members to finalize their report as soon as possible. Our responses are included in Advice No. 2004-2, which we request that you provide to the TRAC.

We considered three other topics more briefly: the proposed agenda for reinvigorating the Article 10(6) process; the Article 14-15 submissions procedure; and issues of finance and the environment. Advice on each is attached.

On all of these matters, we hope our advice is useful to EPA and other government officials as they prepare for the CEC Council meeting in Mexico next month. If your schedule permits, we would very much welcome the opportunity to meet with you there, as the NAC did last year. We would also like to pursue a joint meeting of the advisory committees, as we did last year.

Very truly yours,

John H. Knox
Chair, National Advisory Committee

cc: Judith Ayres, Assistant Administrator for International Affairs
Jerry Clifford, Deputy Assistant Administrator for International Affairs
Stephen Mahfood, Chair, U.S. Governmental Advisory Committee
Donna Tingley, Chair, Joint Public Advisory Committee
Jean Perras, Chair, Canadian National Advisory Committee

Members of the U.S. National Advisory Committee:
Dennis Aigner	Anne Perrault
Michael Andrews	Robert Shinn, Jr.
Adam Greene	Wilma Subra
Richard Guimond	Dolores Wesson
César Luna	David Wirth
Aldo Morell

National Advisory Committee
to the U.S. Representative to the
Commission for Environmental Cooperation

Advice 2004-1 (May 5, 2004): Response to EPA Draft Strategic Plan

In general, we think that neither the EPA draft Strategic Plan nor the CEC Operational Plan is the best basis on which to think about the CEC. In particular, neither document distinguishes between mandatory and discretionary CEC functions. In addition, they do not recognize the importance of treating the CEC as a "conveyor belt" for most issues – and virtually all of its discretionary programs.

Mandatory vs discretionary programs. The Parties and the Secretariat should recognize that several CEC functions are mandatory and are therefore not subject to substantive revision now, absent amendment to the NAAEC itself. Those mandatory functions include the obligations to prepare an annual report under Article 12, to administer the citizen submissions procedure under Articles 14 and 15, and to facilitate the trade/environment intersection pursuant to Article 10(6).

We believe that identifying goals is important primarily, if not solely, with respect to the discretionary programs, since the NAAEC gives the Parties virtually unlimited discretion to decide what issues to bring to the CEC. It is crucially important to bring only those issues to the CEC that it can most usefully address in light of those goals, given the limited resources available to the CEC.

The goals of the CEC can be described in various ways, but we believe that the discretionary programs generally should further one of two fundamental goals: (a) improving domestic environmental protection (including through capacity-building); and (b) addressing issues that, because of their transboundary or continental nature, cannot satisfactorily be addressed by any Party on its own.

We also believe that EPA and the CEC should seek to quantify all goals. Quantifying the goals can be difficult if one starts with a broad statement such as "improving domestic environmental protection," but it should be possible to develop discretionary programs that attack specific, quantifiable aspects of environmental protection. The quantified goals can range from a measure of environmental protection, such as the number of endangered species, to a study of the major activities impacting some measurable aspect of the environment so that future work can be initiated for maximum benefit to environmental protection.

The CEC as a "conveyor belt." While the CEC's mandatory functions will stay with it for the foreseeable future, its discretionary projects should virtually always be temporary. They should move through the CEC along a kind of conveyor belt, in which projects are added only if they meet a clear set of criteria, including that the projects will be handed off to partners to implement. The Parties and Secretariat would work together to add projects to the conveyor belt through the annual budget/work program.
The criteria need further development, but they could include something along the following lines:

The suggested project would further one of the CEC's core goals.
The problem the project would address is not being addressed by another institution with the ability to do so satisfactorily.
The project would benefit from attention by the CEC Secretariat, the CEC Council, CEC working groups, and/or the Joint Public Advisory Committee, through a function that cannot better be provided elsewhere.

*******Before deciding to add projects, the Parties and the Secretariat should give serious attention to which functions each element of the CEC is best suited to provide. For example, the list of things that the CEC Secretariat can best provide is quite focused: convening a wide range of governmental and non-governmental stakeholders, impartially investigating and reporting on topics, disseminating information, and providing education. *******

Partners have been identified that would be able to add value (money, expertise, public participation) to the CEC project and that would be prepared to implement the project at the end of the conveyor belt.
A timeline has been defined (e.g., 1, 3, 5 years) at the end of which the project would be handed off.

Some process will have to be devised to determine which proposals meet these criteria and, among those that do, which should be assigned the highest priority.

The Parties and the Secretariat should determine where existing projects are, or should be, on this conveyor belt. Specifically, they should decide what CEC attention is still necessary or desirable, which partners have been or could be identified that will implement the project, and when the project will be handed off to those partners.

National Advisory Committee
to the U.S. Representative to the
Commission for Environmental Cooperation

Advice 2004-2 (May 5, 2004): Response to the Draft Report
of the Ten-Year Review and Assessment Committee

We appreciate the commitment of Jennifer Haverkamp, John Mizroch, and the other four members of the Ten-Year Review and Assessment Committee (TRAC). They have had an extraordinarily difficult job and very little time in which to accomplish it. Their willingness to carry out this responsibility with no remuneration is particularly admirable.

Because the TRAC needs comments on its draft report as soon as possible, we have decided not to take the time necessary to reach consensus advice on the report, but rather to present the comments of individual members of the NAC so that those comments may be considered in a timely way. Some members of the NAC will also present more detailed comments directly to the TRAC.

General Comments

One area on which there is a wide range of opinion is the report's "balance." Some NAC members feel that the report is too soft on the governments, relative to the JPAC and the Secretariat. They cite, for example, a sentence on p. 32 stating that "JPAC's protracted advocacy in support of an effective citizens' submissions process . . . arguably hurt its relationship with the Council and the Alt Reps." They argue that this formulation obscures the real problem, which is the governments' unwillingness to accept JPAC advice. They also state that the report falls into stating government positions as fact, while portraying others' statements as allegations. For example, the sentence that begins at the bottom of p. 19 ("In the case of the NAFTA Chapter 11 investor-state disputes, efforts to engage the CEC were unsuccessful largely because . . . .") appears to be a governmental position but is presented as if it were a TRAC finding. Similarly, the statement on p. 42 that the "Council has adopted a series of measures" to make the 14/15 procedure "more predictable" appears to accept the governments' word for what they are doing.

Others feel that the report is, on the whole, fairly balanced. One NAC member notes that the finding at the end of the section on the citizen submissions procedure states that "Council's constraining actions have upset the balance set out in the NAAEC . . ." which is properly critical of the governments. Another suggests that the report does an excellent job of presenting all sides, and in particular accurately reflects the feeling in the business community that the CEC pays less attention to their views than to those of the "environmental" community. He also commends the report for providing a good overview without getting bogged down in legal detail.

In general, there is widespread agreement among NAC members that the TRAC report should always make clear when it is presenting an opinion of another entity, and when it is presenting its own views. Statements that do not make clear that they reflect an external viewpoint will normally be taken as representing the views of the TRAC, even if the TRAC means only to present the point of view of a particular stakeholder. Moreover, more factual statements need to be supported by citations to documentation and literature.

On another matter, a NAC member states that it is misleading for the report to suggest that the CEC may not have reached its "potential." He says that limited as it is by its relatively tiny $9 million annual budget, it has clearly met its potential; it may not have met all of its objectives, he notes, but that is a different issue. He also suggests that the report could usefully place the CEC in a broader context, showing how it fits between the array of bilateral institutions on the one hand and multilateral institutions like the OECD and UNEP on the other. It was also noted that the section on the World Bank Inspection Panel at the end of the section on the citizen submissions procedure is not enough in this direction and, by itself, is not helpful. Finally, another member suggests that the questionnaire used for TRAC interviews be attached to the report.

A North American Environmental Agenda
(meeting obligations of the agreement; the work program; increasing capacity; etc.)

A NAC member states that this part of the report does not provide enough information to support its statement that the CEC program should be more focused. In particular, while it acknowledges that "the program is less scattered than the number of projects might indicate as they are not all funded equally" (p. 8), it does not provide the budgetary information necessary for a clear picture of the CEC program. In fact, the lion's share of the budget goes to a relatively small number of projects. The report's focus on the number of projects obscures this point.

Another NAC member emphasizes that the report should add a section on the CEC budget, showing what the organization has done with the money it has been provided. It has also been suggested that the chart on p. 5 could usefully show the federal/state environmental budgets in each of the three countries, to further demonstrate the disparity in resources among them.

A NAC member states that the report should say more about success stories: instances when the CEC has been an effective catalyst for action. For example, the report could say more about the value of the education the CEC provides: the cooperative meetings, etc. that raise the level of discussion of particular issues. She also suggests that the report should also say more about partnerships between the CEC and others – both examples of partnerships that have been successfully forged and opportunities that have not been taken.

Another member states that the report should make clearer the distinction between mandatory and discretionary programs. The latter can be the subject of catalyzing and handing off to other parties; the former cannot be. Most of the CEC cooperative programs are in the latter category.

On the section of this part on the obligations of the agreement, a member states that the TRAC should underline in a finding its conclusion in the text (on p. 7) that the Parties are failing to comply effectively with their obligation to self-report under Article 12. It is highly troubling that the TRAC is unable even to speculate on whether the Parties are meeting their obligations in Part Two of the NAAEC.

The report was commended on its emphasis on capacity-building.

Achieving the Environmental Goals and Objectives of NAFTA
(cooperation with the Free Trade Commission; studying the effects of free trade)

Some NAC members believe that the report's treatment of trade/environment issues is highly problematic. In particular, they cite the finding on p. 25 that "The expectations about the influence the CEC could or should have on the FTC were unrealistic." They suggest that second-guessing the expectations built into the NAAEC is beyond the scope of the TRAC, which should instead confine itself to asking whether the requirements of the Agreement were met and if not, why not. There is concern that the potential for meaningful implementation of Article 10(6), which the NAC and others have strongly promoted, would be dropped entirely if the TRAC message is that trying to build a CEC/FTA link is unrealistic. Moreover, they believe that the meeting of the Alt Reps in Mexico in the first week of May demonstrates the possibility of an effective Article 10(6) bridge, since the Alt Reps and their trade counterparts are meeting to discuss potential topics for a 10(6) agenda. Finally, they emphasize that the obligation to consult embodied in Article 10(6) binds the Parties, not just the environmental ministries, and therefore includes the reciprocal obligation on the part of the trade ministers to consult with the environmental ministers.

A member notes that the question in the heading of Part 4, "Has the CEC helped to achieve the environmental goals and objectives of the NAFTA?" does not clearly relate to the text of that section, since the report does not describe those environmental goals. He also suggests that the question is the wrong one for the NAAEC, since its purpose is rather to offset the potential adverse environmental consequences of the NAFTA. He also suggests that the statement at the top of p. 20 that "the private investor, as one of the two parties to a dispute, would have to consent to the CEC's involvement" is disputable, at least, as a matter of law.

Another member contrasts two statements on p. 24: "For the most part, competitive factors triggering ‘pollution havens' and ‘race-to-the-bottom' scenarios feared by some have not materialized" and "One of the biggest environmental concern[s] when the NAFTA was signed was that there would be a ‘race to the bottom.' This did not occur." He states that the report provides insufficient evidence or sources to satisfactorily support the second, stronger statement.

Cooperation Among the CEC Institutions

A member underlines the importance of the TRAC statement on p. 27 that "the CEC appears caught in a vicious circle: Council members pay insufficient attention to its work program because it is not delivering meaningful results for the Parties; without the Council's engagement and leadership, however, the Secretariat is unable to identify and deliver these results." It is critical to make clear that the TRAC is referring to the Council ministers here, and for the final report to emphasize this point. More generally, the report should always make clear when it is referring to the governments generally, when it is referring to the Alt Reps, and when it is referring to the ministers; the term "Council" without more can be read as referring to any or all of these.

A member suggests giving the CEC "working groups" their own heading, rather than placing them under the Secretariat. They are typically composed of officials of the governments rather than of the Secretariat and, perhaps more important, they deserve more attention in this report, since they carry out much of the work program. In particular, it would be useful to identify the major working groups and to give examples of working groups that support the characterizations in the report. For example, the last sentence of the section, on p. 31, states that "The most effective groups have been characterized by . . . ." but does not give any instances of such groups.

Public Involvement
(NAFEC; citizen submissions procedure; etc.)

A NAC member states that the description of the NAFEC funding is inaccurate, since it suggests that the funding has gone predominantly to Mexican recipients. For the most recent round of funding, at least, her experience was that the recipients were more or less equally divided among all three countries.

Another member states that the discussion of the citizen submissions procedure should not treat it as an end in itself, but should look at whether domestic avenues of legal redress were improving. In other words, it is not necessarily a good sign if the CEC procedure is receiving many submissions; it may indicate that submitters are not able to pursue effective remedies in their domestic courts.

Another member notes that the TRAC finding that "More recently, Council's constraining actions have upset the balance set out in the NAAEC and undermined the Secretariat's roles in ways that could compromise the process's effectiveness and credibility" is an extremely important statement, since it supports the views expressed by the NAC, JPAC, and others. He urges the TRAC to leave that finding in the final report.

A member indicates that the statement on p. 39 that NGOs have "widely hailed" the citizen submissions procedure is inaccurate with respect to U.S. NGOs' current attitude. Currently, many are disappointed that the procedure has not proved more effective, and have lost interest in it.

National Advisory Committee
to the U.S. Representative to the
Commission for Environmental Cooperation

Advice 2004-3 (May 5, 2004): Reinvigoration of the Article 10(6) Process

The NAC was pleased to hear that the Alternative Representatives are meeting to discuss topics that could be part of an Article 10(6) agenda. We particularly welcomed the news that the Alt Reps are meeting with their trade counterparts. We look forward to hearing about the results of the meeting and encourage EPA and USTR to continue to pursue the reinvigoration of the Article 10(6) process. Consistent with our position on CEC topics generally, we recommend that the U.S. government consider now, at the outset of the discussion, what it hopes to achieve and, in particular, how and to whom the products of CEC consideration will be handed off or presented.

We also welcome the EPA/USTR list of specific topics, but we were surprised that it did not mention NAFTA working groups engaged in activities within the purview of the CEC. We again encourage EPA and USTR to include on the 10(6) agenda ways that the NAFTA working groups might be informed by and might inform the work of the CEC. We refer them to our Advice No. 2003-11 of last October, in which we emphasized the degree of overlap between the substantive activities of the NAFTA working groups on the one hand and the CEC on the other, and in which we expressed our concern about the relatively small degree of coordination between the two sets of activities. We urge the government to see this as an opportunity to strengthen both institutions by drawing in a wider range of stakeholders.

We also note that we have previously encouraged the government to consider including Chapter 11 and "precaution" as topics of discussion. While we understand the reluctance to include Chapter 11, we believe that the environmental issues raised by Chapter 11 cases deserve consideration in a CEC/FTC forum, for the reasons we have previously expressed. And while we understand that precaution has been the topic of discussion before and that the Parties are sensitive to suggestions that they harmonize their positions on it, we suggest that there is room for a "light touch" follow-up discussion of this important topic.

With respect to the suggested topic of "green products," we strongly encourage the governments to look at the life-cycles of products, not just the one-time impact of their method of production. The environmental effects of a product over its lifetime can be far greater than the effect of its production examined alone. The broader approach is also consistent with Article 10(2)(m) of the NAAEC, which authorizes the CEC Council to consider, and to develop recommendations regarding, "the environmental implications of goods throughout their life cycles."

National Advisory Committee
to the U.S. Representative to the
Commission for Environmental Cooperation

Advice 2004-4 (May 5, 2004): The Ontario Logging Submission

We have previously taken the position that a Council interpretation limiting the scope of inquiry under Articles 14 and 15 to individual cases and excluding broader allegations of failure to effectively enforce would be problematic, both because it would lead to an inefficient use of the Secretariat's resources, and because it would be contrary to the strong presumption of legitimacy that should attach to Secretariat recommendations for factual records. The citizen submissions procedure is designed to produce impartial reports on whether a Party has failed to effectively enforce its own law, so the Council will always have something of a conflict of interest in passing on the validity of further investigating those submissions. The Council should therefore normally refrain from overruling the Secretariat's recommendations, even if they are not the recommendations the Council would have preferred.

We were therefore pleased to learn that the Council had approved preparation of a broad-based factual record in the Ontario Logging case. We believe that this is an important step in the right direction. We note that the submitters provided a great deal of additional information to support its submission, in response to the Council's request to do so. We continue to feel that while submissions must adequately support their allegations of failure to effectively enforce environmental laws, the standard should not be set so high that a submitter must prepare a factual record in order to justify preparation of a factual record. We again note that the procedure was intended to be used by ordinary people without the resources to undertake expensive, time-consuming investigations, and that the point of the procedure is that the investigations are to be undertaken by the Secretariat, not the submitters.

National Advisory Committee
to the U.S. Representative to the
Commission for Environmental Cooperation

Advice 2004-5 (May 5, 2004): Disclosure of Environmental Information
and the Financial Sector

Many provisions in the NAAEC charge the CEC with providing policy-relevant environmental information. And in the CEC's 2004-06 Operational Plan, under Goal 3 with reference to its objective to make sure that "North American environmental, economic and trade policies are mutually supportive," is a commitment to "encourage disclosure of relevant environmental information."

Disclosure of relevant environmental information and consistent environmental reporting are critical not just for policy-making (e.g., environmental regulation) but for the financial sector, which can be a powerful force in promoting improved environmental performance in industry. This is specifically mentioned in last year's CEC Ministerial Statement by way of encouraging the provision of environmental information useful to financial analysts and investors.

In this regard, the NAC supports the CEC's efforts to encourage disclosure of environmental information that is relevant for policy-making and for use by the financial sector, recognizing that these may differ by type (e.g., toxic releases vs. impacts on biodiversity) and by scale (e.g., region vs. company). We applaud EPA's efforts with its web portal project and its initiative to aggregate plant-specific environmental information to the company level.

Advice Letter - May 7, 2004

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