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November 16, 2012

Fracking Causes Friction Between Trade And Environment

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The truth is becoming clear -- trade rules are being used to threaten policies that protect wildlife, preserve scarce natural resources, and promote clean energy and green jobs. The most recent clash between free trade and our environment is in Quebec, where communities are fighting against the harmful effects of fracking, the hazardous process used to extract natural gas by blasting significant amounts of water, chemicals, and sand into rock formations deep underground.

On November 8th, Lone Pine Resources, a Delaware-incorporated oil and gas firm with operations in Canada, filed notice of its intent to sue Canada for $250 million under the North American Free Trade Agreement (NAFTA) over Quebec’s moratorium on fracking. The moratorium is set to stay in place as Quebec studies the environmental risks associated with fracking. Quebec also passed legislation in June banning drilling below the St. Lawrence River.

Placing a moratorium on fracking in order to study environmental risk is sound public policy. Who can argue that?

Answer: Lone Pine Resources. The company claims that the moratorium violates their rights as an investor under NAFTA and constitutes an expropriation of their drilling permit. They’re taking advantage of NAFTA’s controversial chapter on investment that gives corporations the right to sue a government over nearly any law or policy that the government argues is hurting its ability to profit. It’s almost impossible to believe, but it’s true.


By the end of 2011, corporations such as Chevron, Exxon Mobil, Dow Chemical, and Cargill have launched 450 investor-state cases against 89 governments, including the United States. Over $700 million has been paid to corporations under U.S. free trade agreements and bilateral investment treaties, about 70 percent of which are from challenges to natural resource and environment policies.   Corporations have launched attacks on a range of public interest and environmental regulations, including bans or phase-outs of toxic chemicals, timber regulations, permitting rules for mines, green jobs and renewable energy programs, and more. This case, however, is the first to directly threaten the obligation of governments to protect its people from the destructive effects of fracking.

Lone Pine Resources’ claim might not make it to arbitration; the company says it wants to settle the case rather than see it through.

But what must the people of Canada forfeit in order to settle this case? Clean air? Clean water? Quebec must be able to keep its fracking moratorium, and this case should be dismissed if it goes to arbitration. Rules to protect the public and the environment must not be up for negotiation. And governments should not be afraid to protect their people.

Amazingly, instead of looking for ways to scale back and eliminate the rules in our trade agreements that threaten public interest policies in favor of corporate profits, eleven countries, including the United States and Canada, are currently in the middle of negotiations to expand the NAFTA investment rules in the Trans-Pacific Partnership trade pact. Under the Trans-Pacific Partnership, our air and our water could be threatened by more cases like this one. Governments must stop writing and signing trade pacts that put the interests and profits of corporations above the well-being and rights of communities.

--Ilana Solomon, Sierra Club Trade Representative, and Deb Nardone, Director of the Beyond Natural Gas Campaign

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