Mining Ban: Good for the Grand Canyon, but Not for El Salvador?

U.S. trade partners have to worry that if they pursue responsible stewardship, they could get rewarded with a big fat corporate lawsuit.

By Sarah Anderson

With patriotic fanfare, the Obama administration announced this week that it would ban new uranium mining projects around the Grand Canyon. At a ceremony at the National Geographic Society in Washington, Interior Secretary Ken Salazar said the ban was "the right approach for this priceless American landscape."

He pointed out that millions of people depend on the Colorado River, which runs through the Grand Canyon, for drinking water. "We have been entrusted to care for and protect our precious environmental and cultural resources, and we have chosen a responsible path that makes sense for this and future generations," Salazar said.

Makes sense to me too. But too bad U.S. trade partners have to worry that if they pursue similarly responsible stewardship, they could get rewarded with a big fat corporate lawsuit.

That's what has happened in El Salvador, where the international corporation Pacific Rim is suing the government for the right to mine the country's gold resources. Like many in the Colorado River Basin, people in El Salvador are concerned that mining could contaminate their drinking water. More than half the population relies on one river, the Lempa. Pacific Rim is demanding compensation of more than $77 million under the investor protections of the U.S.-Central America Free Trade Agreement.

That's also what happened in Mexico, where the government had to pay off a U.S. corporation that wanted to operate a hazardous waste facility in an environmentally sensitive area. When the local community opposed the project, California-based Metalclad won about $15.5 million from the government through a claim under the North American Free Trade Agreement (NAFTA).

In Peru, U.S.-based Renco is demanding $800 million in damages after the Peruvian government revoked an operating license for a smelter, charging that the company had failed to fulfill contractual obligations for environmental clean-up. The U.S.-Peru free trade agreement made their lawsuit possible.

Who knows, the Grand Canyon mining ban could also provoke similar lawsuits. It wouldn't be the first time a foreign corporation tried to cash in by using the "investor-state" dispute settlement system granted by our trade agreements.

In 2003, for example, the Canadian company Glamis Gold sued the U.S. government under NAFTA, demanding $50 million in compensation for regulations enacted to protect the environment and indigenous communities from the impacts of open-pit mining. A tribunal set up under the arbitration system that handles such cases eventually dismissed the Glamis case, after years of legal wrangling. But the U.S. government still had to pay for one-third of the arbitration costs and its own legal defense. The United States has faced more than a dozen such NAFTA investor claims.

We should applaud the Obama administration's stand on mining around the Grand Canyon. And then we should urge them to take an even more important stand in support of social and environmental stewardship by rewriting our trade rules to put people and the planet first.