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The Glamis case

The Glamis Gold v. United States case is a key example of NAFTA Chapter 11's threat to state legislative authority.  The involves the State of California.  If the tribunal currently hearing the Glamis case were to decide against the United States, this could cast a shadow over state and local governments' ability to adopt public health and environment standards.

In the early 1990s, Vancouver-based Glamis Gold Ltd. acquired dozens of mining claims in the Imperial Valley, a relatively pristine desert environment east of San Diego.  Glamis proposed constructing a large, open pit mine that would use the “cyanide heap-leach” process to extract gold from low grade ore.  Approximately 422 tons of ore would be required to produce an ounce of gold. 

Glamis proposed to build the mine next to a protected wilderness area that provides a habitat for desert wildlife.  The proposed Glamis project would have tapped 389 million gallons of water every year from the aquifer lying under the Imperial Valley desert.

Finally, the area where Glamis proposed digging its gold mine is sacred to the Quechen Indian Nation,and they use it to practice of their religion and venerate their ancestors.  Ancient trails of sacred significance to the Quechen people stretch across the area, which abounds in archeological sites.

In early 2003, the California State Mining and Geology Board acted in 2003 to require that the holes dug by open pit mines be backfilled and re-contoured after mining operations are completed.  California passed these regulations in order to protect Native American sacred sites and other sites of particular environmental or cultural value.  

In July 2003, Glamis filed a NAFTA claim seeking $50 million from the United States government.  Glamis filed the case challenging a California state law. However, because the federal government and not the State of California is the signatory party under NAFTA, the 'defendant' in the case is the United States.  Thus Glamis Gold Ltd. v. United States.

Glamis wants compensation from the United States for alleged financial losses resulting from California's land use regulations that require extensive reclamation of open pit gold mining sites. 

NAFTA’s investment chapter is unique among multilateral trade and investment agreements.  It  allows a transnational corporation like Glamis to act on its own initiative to bring the United States before an international tribunal.  And it allows transnational investors to seek hundreds of millions of dollars in damages for the acts of state and local governments.  This claim for compensation would never be accepted by domestic courts applying U.S. constitutional standards.

In this case, the Glamis corporation has challenged California's exercise of its sovereign power to engage in traditional land-use regulation.  If Glamis wins, the United States will have to pay to allow California to continue to engage in land-use regulation, even when it is undertaken for reasons of environmental conservation and cultural preservation.

The case is currently being heard before an international tribunal.  Because there is no formal precedent in the IIA system, members of the Glamis tribunal could cite the Metalclad case, or the Methanex case, or make up their own new theory of law regarding Glamis.  This case is being closely watched.  Check the Forum's 'News' section for updates.

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