* Due to the length of this document, the ILM Managing Editor has only reproduced portions of the decision. This document was reproduced and reformatted from the text appearing at the U.S. State Department web site at<http://www.state.gov/documents/organization/51052.pdf>(Visited on October 24, 2005), where the full text of this decision can be found.

1 Along with many other materials in these arbitration proceedings, the Partial Award and the Tribunal's Decisions have been published (but not by the Tribunal) on the internet: e.g. http://www.naftaclaims.com and http://www.state.gov/s/l/c5818.htm.

2 See Ms Menaker, Counsel for the USA, Transcript Day 2, p. 422. (For ease of reference in this Award, references to the corrected transcript of the main hearing in June 2004 are as follows: Transcript Day 1 [i.e. 7^th June 2004] to Transcript Day 9 [i.e. 17^th June 2004], with page number. The corrected transcript is currently available at e.g. http://www.state.gov/s/l/c5818.htm. Where reference is made to the transcript of, say, the procedural meeting of March 2003, this is made clear in the relevant footnote.)

3 The text of Mr Christopher's response of 20^th September 2002 is set out below, in Chapter II E of this Award.

4 The withdrawal of Mr Christopher later became a ground for Methanex's Request for Reconsideration of Chapters J and K of the Partial Award, considered below in Chapter IIE of this Award.

5 Transcript Day 9, pp. 2199-2200.

1 See e.g. Dugan, Mr, Counsel for Methanex, Transcript Day 8, pp. 1853-1854.Google Scholar

2 Methanex's Reply, paras. 198-202.

3 Mr Dugan for Methanex, Transcript Day 1, p. 155.

4 Article 2101 NAFTA, on which Methanex also relies, considered further in Part IV below.

5 Access to Information under Article 9 of the OSPAR Convention (Ireland v. United Kingdom), para. 85, 42 ILM 1118,1136.

6 Mr Dugan for Methanex, Transcript Day 1, p. 35: “Now, is WTO law controlling? No, obviously not. But should it be treated as persuasive precedent if its analysis and its rules are well developed and consistent and logical? Yes, it should be.“

7 Amended Statement of Defense, para. 304.

8 See Methanex’ s Notice of a Submission of a Claim to Arbitration dated 3rd December 1999, p. 2. Article 1120(1) NAFTA provides: “Exceptas provided in Annex II 20.I , and provided that six months have elapsed since the events giving rise to a claim, a disputing investor may submit the claim to arbitration under: … ( c) the Uncitral Arbitration Rules”.

9 Article 1120(2) NAFTA provides: “The applicable arbitration rules shall govern the arbitration except to the extent modified by this Section.“

10 See e.g. Mr Dugan for Methanex, Transcript Day 8, pp. 1836- 1837.

11 See e.g. Sinclair, The Vienna Convention on the Law of Treaties, 2“d ed., 1984, p.121. Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals, 1953, p.114.

12 The MOX Plant case (Ireland v. United Kingdom), Order on Provisional Measures, 3rd December 2001, para. 51, 41 ILM 405, 413, quoted in Access to Information under Article 9 of the OSPAR Convention (Ireland v. United Kingdom), para. 141, 42 ILM 1118, 1144.

13 See Ms Menaker for the USA, Transcript Day 3, p. 566.

14 Yearbook of the International Law Commission, 1966, Vol. II, p. 221, para. 14.

15 Kasikili/Sedudu Island (Botswana v. Namibia ) 1999, ICJ Rep. 1, para. 49.

16 Daillier et al., Droit International Public, 6th ed., p. 254.

17 Yearbook of the International Law Commission, 1966, Vol. II, p. 223, para. 18.

18 Article 9.2 sets out seven grounds (a) - (g), here incorporated by reference.

1 Mr Dugan for Methanex, Transcript Day 8, p. 1819.

2 This title ‘'Second Amended Statement of Claim'’ is the name given to this pleading by Methanex. In fact, in the Partial Award, the Tribunal did not allow Methanex's application to amend its claim as set out in the draft Amended Statement of Claim dated 12th February 2001. Thus, although the pleading of 5th November 2002 is here described as the Second Amended Statement of Claim, it is strictly Methanex's first Amended Statement of Claim in these arbitration proceedings. For ease of reference, however, the Tribunal is content to follow Methanex's nomenclature.

3 Second Am. Claim, para. 22. As noted elsewhere, Methanex’ s claim as formulated in its original Statement of Claim of 3rd December 1999 did not allege that the California Regulations were a “measure”. (These regulations only took effect after Methanex's submission of this pleading).

4 Partial Award, paras. 13 and 93.

5 The Disputing Parties also made submissions on Methanex's application in respect of further evidence (considered below, in Chapter II G of this Award).

6 The transcript is available at http://www.state.gov/documents/organization/19455.pdf.

7 The full text of this statement may be obtained from http://www.dfait-maeci.gc.ca/nafta-alena/Nondisputing-en.pdf.

8 The Tribunal notes that in its joint statement of 16th July 2004, the FTC stated: “We are pleased that the transparency initiatives we took during our October 2003 meeting have already begun to improve the operation of the investment chapter investor-state dispute-settlement mechanism. Earlier this year, for the first time a tribunal accepted written submisions from a non-disputing party and adopted the procedures that we recommended following our October 7, 2003 meeting in Montreal, for the handling of such submissions.''

9 These submissions are available on the internet at http://www.state.gov/s/l/c5818.htm.

10 So far as witnesses are concerned, “x” signifies direct examination, “xx” signifies cross-examination, and “xxx” signifies re-direct examination.

11 Transcript Day 9, p. 2198. Article 29(1) provides: “The arbitral tribunal may inquire of the parties if they have any further proof to offer or witnesses to be heard or submissions to make and, if there are none, it may declare the hearings closed. ‘

1 Second Am. Claim, paras. 12 and 89.

2 Id., paras. 91-94 and 101-102.

3 Id., para. 86.

4 Id., para. 70.

5 Id., para. 93.

6 Id., para. 158.

7 Id., paras. 77-83. There appears to be some overlap so far as concerns categories (ii) and (iii). See e.g. Mr Dugan for Methanex, Transcript, Day 1, pp. 27-28.

8 Nor is it covered by the waiver annexed to the Second Am.claim.

9 A sum that Methanex claims to be inadequate to fund properly the assigned work: see Second Am. Claim, para. 112.

10 Id., para. 21.

11 Id., paras. 114-116.

12 Id., para. 22. See further Part III below.

13 Id., paras. 89-90 and 191-201.

14 Id., para. 105.

15 Id., paras. 105-110.

16 Id., paras. 141 and 143.

17 Id., para. 296.

18 Id., para. 313.

19 Id., para. 317.

20 Id., paras. 282-285 and 296.

21 Id., paras. 286-290.

22 Id., para. 327.

23 Mr Dugan for Methanex, Transcript Day 8, p. 1998.

1 Partial Award, paras. 172(1) and (7). The Partial Award also contains decisions on Methanex's application to amend its Statement of Claim and Methanex's request for documentary disclosure: see Chapters F and G of the Partial Award.

2 In relevant part, Article 1101(1) provides that Chapter 11 of NAFTA “applies to measures adopted or maintained by a Party relating to: (a) investors of another Party; (b) investments of investors of another Party in the territory of the Party …”.

3 Partial Award, paras. 129-147, 150 and 172(2).

4 Id., paras. 151, 153, 157.

5 This is a reference to the draft Amended Statement of Claim of 12^th February 2001.

6 Partial Award, paras. 172(2)-(5). See also paras. 151-161, 169.

7 With respect to certain “Further Matters'’ raised by Methanex, particularly Methanex's renewed request for an order compelling the USA to produce any potentially relevant parts of NAFTA's negotiating history, see below, at Chapter II H of this Award.

8 Referring to Ford Aerospace & Comm. Corp. v. Air Force of Islamic Republic of Iran, 6 Iran-US CTR, 104, 109; and van Hof, Commentary on the Uncitral Arbitration Rules, p. 218: ”… Although the preliminary draft did not define the term “award”, it was meant to include interim, interlocutory or partial awards, as well as final awards. After a suggestion at the Commission's deliberation, an explicit provision to this effect was included in this article, the present para. 1. The present para. 2 was included in the earlier draft as part of para. 1, which was later renumbered. The second sentence was only added after it was made a separate sentence.“

9 Methanex's letter of 14^th April 2004 stated: “Mr. Christopher personally pitched a case to Governor Davis after this case had commenced, and Governor Davis personally decided,over the objection of his Attorney General, to award a lucrative representation to Mr. Christopher's firm”. Mr Christopher stated in his Response of 20^th September 2002: “ I did not make a personal appeal to the Governor to obtain that representation for O ‘Melveny over the opposition of the Attorney and, indeed, I have never spoken to Governor Davis about the case”. See further below.

10 Mr Dugan for Methanex, Transcript Day 8, pp. 1818-1819.

11 This is a reference to the new Counsel then acting for Methanex in place of its original Counsel at the time of Mr Christopher's appointment. (Subsequently, Paul Hastings, Janofsky& Walker LLP acted as Counsel for Methanex).

12 There is no dispute as to the jurisdiction of the Tribunal to make a partial, as opposed to a final, award. That jurisdiction is expressly established by Article 32(1) of the Uncitral Rules.

13 Partial Award, para. 172(4); also paras. 172(2) and (6).

14 Transcript of 12^th July 2001, p. 364.

15 Even if the Tribunal had upheld one or more of the USA's challenges, it would still have had to make a further award on costs as issues on costs had not been fully debated before the Tribunal.

16 Transcript of 13^th July 2001, pp. 541-542.

17 Braspetro Oil Services Co. v. Great Man-Made River Project (1999) XXIVa ICCA YBCA 296; Publicis Communications v. True North Communications Inc 203 F.3d 725 (7^th Cir. 2000); (2000) XXV ICCA YBCA 1152.

18 If relevant, the Tribunal would have found that reconsideration of the Partial Award would have caused prejudice to the USA. There is little point in any arbitration tribunal making jurisdictional decisions intended and understood to be final and binding on the parties if, much later, a disappointed party can re-argue its jurisdictional case and turn the arbitration into the equivalent of Sisyphus's torment or the film “Groundhog Day”.

1 Dugan for Methanex, Transcript Day 1, pp. 120-123.

2 A proposed draft regulation, substantively in the same form as was subsequently adopted on 1^st May 2003, had been annexed to Methanex's Second Am. Claim and was referred to in that pleading, at para. 122.

3 Mr Dugan for Methanex, Transcript Day 8, pp. 1787-1789.

4 Mr Dugan for Methanex, Transcript Day 8, pp. 1810-1811.

5 Exhibit 1 to Methanex's History and Amendments to California Phase Three Reformulated Gasoline (CaRFG3) (referred to below as Methanex's History).

6 Methanex cited this text in its Amended Article 1119 Notice to the USA of 22^nd December 2000 and its Request to Extend or Suspend the Current Jurisdictional Schedule also of 22^ndDecember 2000.

7 Exhibit 1 to Methanex's History, p. 24.

8 Cal. Air Resources Bd., Res. 99-39, 3^rd December 1999, 16 JS Tab 24 to the USA's Am. Defense; Exhibit 2 to Methanex's History, p. 2.

9 Cal. Air Resources Bd., Final regulation Order, Amendments to Postpone Imposition of the CaRFG3 Standards, 8^th November 2002, 14 JS Tab 17 to the USA's Am. Defense (the new regulations being cited at para. 75, p. 28, of that pleading); and Exhibit 4 to Methanex's History, p. 13.

10 Exhibit 5 to Methanex's History, p. 5; see also Cal. Air Resources Bd., Proposed Regulation Order, Amendments to the California Phase 3 Gasoline Regulation to Refine the Prohibitions of MTBE. In November 2002, these proposed amended regulations had not been brought into force.

11 Exhibit 6 to Methanex's History, p. 2.

12 Mr Dugan for Methanex, Transcript Day 8, pp. 1790-1792, 1811.

13 See Methanex's Reply, paras. 30 and 246.

14 Mr Legum for the USA, Transcript Day 9, pp. 2030-2046. The USA had also contended that, as explained in a Statement of Reasons issued by the California Air Resources Board, the 11 compounds were listed in § 2262.6(c)(4) because they comprised all the compounds listed in the test method for the presence of oxygenates in gasoline as set out by the American Society of Testing and Materials. The USA maintained that its contentions in this regard had not been challenged by Methanex (Am. Defense, fn. 267 at p. 60, Transcript Day 2, pp. 326-327).

15 Mr Dugan for Methanex, Transcript Day 8, p. 1797.

16 Id., p. 1811: ”… I may be beating a dead horse…. You [the Tribunal] asked what is the subsequent effect of this latest change for a methanol producer? There is none …”.

1 See e.g. Smit, Hans, “Assistance Rendered by the United States in Proceedings before International Tribunals” (1962) 62 Colum. L Rev. 1264 CrossRefGoogle Scholar; and “International Litigation Under the United States Code” (1965) 65 Col L Rev. 1015. More recently, see Smit, Hans “The Supreme Court Rules on the Proper Interpretation of Section 1782: Its Potential Significance for International Arbitration” (2003) 14 Am Rev. Int. Arb 295 Google Scholar.

2 See footnote 1, at p. 3 of Methanex's First Request for Additional Evidence: “Although courts have held that it may not be necessary for a litigant to obtain the permission of the Tribunal before seeking an order in [a] district court… Methanex wishes to avoid any dispute as to whether it was first required to obtain a Tribunal order.“

3 Intel Corp v Advanced Micro Devices, 542 U.S. 241 (2004), holding that US District Courts have a discretion under 28 U.S.C. § 1782(a) to order discovery to a private party for use in an anti-trust investigation by the EU Commission to which that party had filed a complaint. The EU Commission was.treated as a “foreign tribunal“; and the Supreme Court rejected the Commission's argument (as amicus) that such an order should only be made at the request of the Commission and not at the behest of a private complainant only.

4 Representations were made by Mr Dugan on behalf of Methanex, and by Mr Clodfelter, Mr Legum and Ms Menaker on behalf of the USA (submissions in respect of 28 U.S.C. § 1782 on behalf of the USA were made principally by Mr Legum).

5 Transcript of 31^st March 2003, pp. 28 and 33.

6 Id., p. 36-38.

7 Id., pp. 34, 42 and 98.

8 Id., p. 43.

9 Id., pp. 57-58.

10 Similarly, that there were also issues as to whether the USA could be a person subject to discovery under 28 U.S.C. § 1782 and as to whether the relief sought would violate the Eleventh Amendment. Transcript of 31^st March 2003, pp. 62-64.

11 Id., pp. 65-67. In this respect, cf. Methanex's 4^th October 2002 Request and its letter of 30^th January 2003.

12 Transcript of 31^st March 2003, p. 95. Its position was that the evidence from the public record was nonetheless sufficient to sustain a judgment that California had acted with the intent of protecting ethanol producers and disadvantaging their competitors.

13 Id., pp. 96-102.

14 Id., pp. 108-109.

15 Id., P- 127.

16 The dates in Intel Corp v Advanced Micro Devices, 542 U.S. 241 (2004) are instructive; the dates of the three judgments are: (i) 7^th January 2002: District Court for the Northern District of California; (ii) 6^th June 2002: Court of Appeals for the Ninth Circuit; and (iii) 21^st June 2004: US Supreme Court.

17 Transcript of 31^st March 2003, pp. 154-155.

18 540 U.S. 93, 124 S. Ct. 619 (2003).

19 Mr Dugan for Methanex, Transcript Day 8, pp. 1846-1848, 1850-1851.

20 Id. p. 1851.

21 This was not withstanding a specific request from the Tribunal, Transcript Day 8, p. 1846.

22 Mr Dugan for Methanex, Transcript Day 8, p. 1841.

23 Transcript of 31^st March 2003, p. 40.

1 Mr Dugan for Methanex, Transcript Day 8, pp. 1826-1827, 1831.

2 The FTC's statement of 16^th July 2004 noted: “We are committed to transparency in trade negotiations. The negotiating texts of the NAFTA are documents of historical value and we recognize the level of public interest in them. We asked our officials to compile the NAFTA negotiating texts, bearing in mind the time necessary to complete this. We began the process with Chapter 11 and are pleased to announce that Chapter I1 texts will be available through our websites”. The negotiating history is available at <http://www.dfait-maeci.gc.ca/tna-nac/disp/trilateral_neg-en.asp>.

3 Mr Dugan for Methanex, Transcript Day 8, pp. 1825, 1829.

4 Id., p. 1830: “as to what should have been raised in 2003, Methanex, in retrospect, probably should have raised it, but it was a matter of in litigation you pick and choose where you make your requests and where you fight your fights. And Methanex decided not to.“

5 Id., Transcript Day 8, p. 1821.

6 Transcript Day 8, p. 1822; Canfor Corporation v. The USA, Procedural Order No. 5 of 28^th May 2004 (This Canfor order is available on the internet: see <www.naftalaw.org>).

7 Mr Dugan for Methanex, Transcript Day 8, p. 1831.

8 Id., Transcript Day 8, pp. 1829-1830.

9 id., Transcript Day 8, p. 1825.

10 Id., Transcript Day 8, p. 1826.

11 Id., Transcript Day 8, pp. 1835, 1836-1837.

12 Id., Transcript Day 8, p. 1823. The USA was ordered to disclose the texts. See Canfor Corporation v. The USA, Procedural Order No. 5 of 28^th May 2004, para. 8.

13 Mr Dugan for Methanex, Transcript Day 8, pp. 1838-1840.

14 The position in this arbitration may be contrasted with the parties’ position in Canfor v. The USA. This Tribunal does not know the circumstances under Article 32 which may have moved the Canfor tribunal to decide as it dId., but would in any event not subscribe to the international legal reasons given by the Canfor tribunal for its Order No. 5, at para. 22 (see reference above).

15 Oppenheim's International Law, 9^th ed., Volume 1, p. 630.

16 Waste Management Inc v. United Mexican States, Award of 30^th April 2004, 43 ILM 967 (discussed further in Part IV below).

17 See the Commentary of the International Law Commission referred to above, in Chapter II B.

18 In the Canfor case, the NAFTA tribunal decided that internal memoranda of one NAFTA Party do not reflect the common negotiating intention of the NAFTA Parties in drafting, adopting or rejecting a particular provision: see Canfor Corporation v. The USA, Procedural Order No. 5 of 28^th May 2004, para. 19. The NAFTA tribunal case did not therefore order disclosure of such memoranda, although it did order the disclosure of communications, explanation notes, position papers or memoranda that were shared amongst the NAFTA Parties: see Id., paras. 20-21. For the reasons stated above, this Tribunal does not share the view expressed by the Canfor tribunal.

1 Transcript Day 3, p. 619.

2 Id., PP. 595-603.

3 Id., pp. 604-609.

4 Id., pp 637-638

5 Id., pp. 641, 678.

6 Id., p. 677.

7 Id., PP. 646-652.

8 Id., p. 664.

9 Id., pp. 682-684.

10 Id., p. 685.

11 Id., pp. 686-689.

12 Id., pp. 693-707. Methanex relied on two signed receipts,subsequently numbered exhibits X6-X7, as evidence that the originals had been handed over to Methanex's counsel on 8^thJune 2004.

13 Transcript Day 3, p. 713.

14 Id., PP. 715-717.

15 Id., PP. 718-719.

16 Id., pp. 722-724.

17 The photographs were subsequently admitted into evidence by the Tribunal and numbered Exhibits X8-X10. The USA also tendered two satellite photographs and a map of the area of the Regent International offices, which were numbered Exhibits X11-X12 and X13 respectively.

18 Transcript Day 4, pp. 1011-1012.

19 Id., pp. 943-945.

20 Id., pp. 1018-1019.

21 Id., pp. 998-1002.

22 Id., p. 1003.

23 Id., p. 1008.

24 Id., pp. 1008-1011.

25 The photograph was numbered Exhibit X14.

26 Transcript Day 7, p. 1606.

27 Id., p. 1613.

28 Id., pp. 1614-1616.

29 Id., p.1624.

30 Id., pp. 1634-1635.

31 Id., p.1643.

32 Id., pp. 1644-1645.

33 Id., pp. 1669-1670.

34 Id., pp. 1648-1649.

35 Id., pp. 1651-1654.

36 Id., pp. 1664-1666.

37 Id., p. 1655.

38 Id., P- 1650.

39 Id., pp. 1704-1722.

40 Id., pp. 1729 and 1767-1768.

1 Professor Graham E. Fogg, Transcript Day 5, pp. 1232; 1235- 1236.

2 Arturo Keller et al., Executive Summary, Recommendations, Summary, in UC Report Vol. I: Summary& Recommendations, at pp. 9-10 (4 JS tab 36) (hereinafter Keller et al., UC Report Vol. 1).

3 Ibid

4 Ibid

5 Keller et al., UC Report Vol. 1, at 11 (4 JS tab 36).

6 Id.

7 Id., PP. 16-18.

8 Id., PP. 15, 18.

9 Id., p. 15.

10 Id.

11 Id., P. 11.

12 Id.

13 Id.

14 Id., pp. 11-12.

15 Id., p. 12.

16 Id.

17 Id.

18 Id.

19 Id.

20 Id., pp. 12-13.

21 Id.

22 Id., p. 13.

23 Id

24 Id., p. 14.

25 Transcript of UC Report Hearing at Diamond Bar, at pp. 18- 87, 19^th February 1999 (15 JS tab 22 at 581); Transcript of UC Report Hearing at Sacramento, at pp. 2-81, 23^rd February 1999 (15 JS tab 22 at 782).

26 Transcript of UC Report Hearing at Sacramento, 23^rd February 1999 (15 JS Tab 22 at 913-1017).

27 US Geological Survey, Comments on Health and Environmental Assessment of MTBE, p. 2 (18 JS 148).

28 US Dep't of Health& Human Servs., Comments on Health and Environmental Assessment of MTBE (24^th December 1998) (18 JS 145).

29 US Dep't of Health&Human Servs., Comments on Health and Environmental Assessment of MTBE (18 JS 145).

30 Cal. Air Resources Bd., Comments on Health and Environmental Assessment of MTBE, (16 JS 25).

31 1999 Executive Order, preamble (1 JS Tab 1 (c)).

32 Id.

33 1999 Executive Order, para. 4 (1 JS Tab 1 (c)).

34 Id., para. 2.

35 Id., para. 10.

36 1999 Executive Order, para. 10 (1 JS Tab 1 (c)).

37 Certification of Human Health or Environmental Risks of Using Gasoline Containing MTBE in California (16 JS Tab 35 at 1289).

38 Letter From Governor Davis to Carol M. Browner, Administrator, US Environmental Protection Agency, 12^th April 1999 (16 JS tab 65).

39 16 JS Tab 66 at 1581.

40 16 JS Tab 67 at 1583.

41 Press Release, Office of the Governor of Cal., Governor Davis Sues US EPA over Gasoline Additive, 13^th August 2001 (17 JS tab 117).

42 Davis v. EPA, 336 F.3d 965, 969 (9th Cir. 2003) (16 JS Tab 41 at 1331).

43 Press Release, Office of Governor Davis, Statement Regarding Federal Court's MTBE Ruling, 17^th July 2003 (17 JS tab 116).

44 Letter From Governor Davis to Marianne Lamont Horinko, Acting Administrator, US Environmental Protection Agency, 6^th August 2003 (16 JS Tab 68 at 1585).

45 SB 989, Senate Bill-History-18 JS Tab 128 at 2512.

46 Association of Cal. Water Agencies, More About ACWA, at http://www.acwanet.com/aboutacwa/ more about acwa.asp.

47 8 JS 180 through to 9 JS 184.

48 Summ-1 (25 JS Tab 15).

49 Volume 1, pp. 1-22 (25 JS Tab 6).

50 Volume 3, Air Quality Impact of the Use of Ethanol in California Reformulated Gasoline, p. 3 (13A JS Tab 8).

51 Volume 5, Response to Comments, p. B-32 (25 JS Tab 6).

52 Cal. Code Regs. Tit. 13, § 2262.6(a) (2000) (14 JS tab 10, 18).

53 Id., § 2262.3(a).

54 Cal. Air Resources Bd., Res. 99-39, at pp. 6-7 (16 JS tab 24).

55 2002 Cal. Exec. Order D-52-02 (16 JS tab 46).

56 Id., preamble.

57 Id. (emphasis added).

58 Press Release, Office of Governor Davis, Governor Davis Allows More Time for Ethanol Solution, 15^th March 2002 (17 JStab 115).

59 Second Am. Claim, paras. 111-117; Reply, paras. 75-83.

60 Reply, para. 75.

61 Second Am. Claim, para. 112.

62 Reply, para. 76.

63 Id., para. 78.

64 Id.

65 Am. Defense, para. 54.

66 Am. Defense, paras. 53-54.

67 Reply, para. 147; Transcript Day 1, pp. 246-247 (Mr Dugan for Methanex).

68 Exponent, Evaluation of UST/LUST Status in California and MTBE in Drinking Water, November 2002, Second Am. Claim, Exhibit E.

69 Id., p. xiv.

70 Id

71 Id

72 Id

73 Exponent, Evaluation of the University of California Report Titled “Health&Environmental Assessment of MTBE”, January 2003 (12 JS tab C).

74 Id., p. 3.

75 Id., p. 7.

76 Id., pp. 9 and 11.

77 Id., p. 14.

78 Exponent, Evaluation of the Cal-EPA Report Titled “Health& Environmental Assessment of the Use of Ethanol as a Fuel Oxygenate”, January 2003 (12 JS tab D).

79 Id., p. 3.

80 Id., p. 7.

81 Id., pp. 7-8.

82 Id., p. 9.

83 Id., p. ES-2.

84 Gordon C. Rausser, Was the Decision to Ban MTBE Supported by the Empirical Evidence?, 31^st January 2003, p. 5 (12 JS tab F).

85 Id., p. 5.

86 Id., p. 6.

87 Ibid

88 Report of Gordon Rausser, 19^th February 2004, p. 3 (20 JS tab A).

89 C. Herb Ward, Transport, Fate, and Remediation of MTBE and Ethanol Used as Fuel Oxygenates, 31^st January 2003, pp. 2-3 (12 JS tab G).

90 C. Herb Ward, Response to Rebuttal of the Methanex Report on Transport, Fate, and Remediation of MTBE and Ethanol Used as Fuel Oxygenates, 19^th February 2004, pp. 2-3 (20 JS tab B).

91 Id., P- 2.

92 Id.

93 Expert Report of Pamela Williams (undated), p. 2 (12 JS tab B).

94 Rebuttal Report by Dr Pamela Williams to Amended Statement of Defense of Respondent and Selected expert Reports in Methanex v. USA, 19^thFebruary 2004, p.l (20 JS tab C).

95 Id., P. 2.

96 Id., P. 3.

97 Id., P. 4.

98 Id., pp. 6-7.

99 Dr Williams' First Expert Report, p. 3.

100 Id., P. 4.

101 Id., P. 5.

102 Expert Report of Bruce F. Burke, December 2003, p. 4, para. 21 (13 JS tab B).

103 Id., p. 37. para 126.

104 Rejoinder Expert Report of Bruce F.Burke, April 2004, rejoinder Report, pp. 10-11, paras. 34-37 (24 JS tab A).

105 Mr Burke, Transcript Day 6, pp. 1414, 1415, 1422 and 1484.

106 Id., pp. 1430, 1432-1433.

107 Expert Report of Graham E. Fogg, 1^st December 2003, pp. 2-3 (13 JS tab D).

108 Id., pp. 3-7.

109 Rejoinder Report of Graham E. Fogg, p. 5 (24 JS tab B).

110 Professor Fogg, Transcript Day 5, pp. 1232 and 1235-1236.

111 Id., pp. 1246, 1248 and 1259.

112 Dr Anne Happel, Analysis of the California UST & LUST Programs and the Impacts of MTBE and Ethanol to California Groundwater resources, December 2003, p. 1 (13 JS tab E).

113 Id., pp. 3-7.

114 Id., pp. 57-58 and 64-65.

115 Rejoinder Report of Dr Anne Happel, 23^rd April 2004.

116 Id., p. 12.

117 Id., p. 12; cf. Dr Pamela Williams’ Rebuttal Report, p. 12.

118 Id., p. 16.

119 Id., p. 30.

120 Id., pp. 32-33.

121 Id., p. 46.

122 Id.

123 Dr Happel, Transcript Day 5, pp. 1160-1162.

124 Id., pp. 1164-1165.

125 Id., pp. 1180-1185.

126 Expert Report of Ed Whitelaw, November 2003, p. 9 (13A JS tab K).

127 Id., pp. 3-5.

128 Id., p 7.

129 Id., pp 8, 9 and 49.

130 Rejoinder Expert Report of Ed Whitelaw, 21^st April 2004, pp. 7-8 (24 JS tab E).

131 Professor Rausser's Report of 19^th February 2004, p. 10.

132 Id., p. Id.

133 Id., p. 8.

134 Id., p. 23.

135 Professor Whitelaw, Transcript Day 6, p. 1536; see also pp. 1499, 1533-1536.

136 Witness Statement of Dean C. Simeroth, 3^rd December 2003, para. 10 (13A JS tab H).

137 Id., para. 14.

138 Id., paras. 10-11.

139 Id., para. 30.

140 Id.

141 Id., paras. 33-34.

142 Id., para. 41.

143 Id.

144 Id., p. 11, para. 43.

145 Mr Simeroth, Transcript Day 5, pp. 1270-71, 1279-1281, 1290, 1299-1300.

1 Second Am. Claim at Part VI.

2 Id., para. 144.

3 E.g., Transcript Day 8, p. 1911 (lines 12-17)

4 Second Am. Claim, para. 146.

5 Ibid.

6 Id., paras. 149-157.

7 Id., para. 152.

8 Id., para. 146 (citing Cal. Food & Agric. Code § 502 (1983)).

9 Widespread use of MTBE did not begin until after the passage of the federal Clean Air Act Amendments of 1990, requiring that the areas of the United States with sub-standard air quality use reformulated gasoline with an increased oxygen content. See John Froines et al., An Evaluation of the Scientific Peer-Reviewed Research and Literature on the Human Health Effects of MTBE, Its Metabolites, Combustion Products and Substitute Compounds, in U.C. Report Vol. II: Human Health Effects, p. 2 (4 JS tab 37); see also Arturo Keller et al., Executive Summary, Recommendations, Summary, in U.C. Report Vol. I: Summary & Recommendations, p. 15 (4 JS tab 36); Am. Defense, paras. 19-21.

10 Second Am. Claim, para. 146 (citing Stats. 1984, Ch. 268, § 16.91, effective 30^th June, 1984).

11 Reply at tbl.l.

12 Ibid

13 Ibid.

14 Cal. Air Resources Bd., An Overview of the Use of Oxygenates in Gasoline, at 1, 9-10 (September 1998) (2 JS tab 3); Letter from Tom Soto, P.S. Enterprises, to Assemblywoman Denise Moreno Ducheny (25^th August 1997) (11 JS tab 221).

15 For sample statements by interested parties, see Cal. Envtl. Policy Council, Public Hearing, Transcript of Proceedings: Meeting To Consider Staff Reports on the Environmental Fate and Transport and Potential Health Effects of Using Ethanol in California Reformulated Gasoline, at 69 (18^th January 2000) (comments of Lloyd Forrest, TSS Consultants—a company involved in “risk assessment'’ for ethanol investors); Id., p. 70 (comments of Necy Sumait, Manager for Arkenol Holdings, an ethanol project).

16 Second Am. Claim para. 278 (quoting California State Senator Tom Hayden, expressing a preference for a domestic fuel source).

17 Reply, paras. 95-96. James Boyd, of the California Energy Commission (CEC), also spoke indirectly of interest in promoting an in-state industry, Second Am. Claim, para. 157.

18 S. 1728 (Cal. 2002); Reply at tbl. 1, para. 100.

19 Second Am. Claim, para. 152.

20 A number of events prior to the passage of Senate Bill 521 raised concerns in California. Am. Defense, paras. 42, 45-47. These concerns regarding leaking USTs and water contamination yielded a number of proposed resolutions in 1997 and 1998, which were summarised in the UC Report. Graham E. Fogg et al., Impacts of MTBE on California Groundwater, in UC Report Vol. IV: Ground & Surface Water, App. A, pp. 69-71 (4 JS tab 39A). The Government's and public's perception of a significant threat was later articulated at the public hearings held in February 1999 to discuss the findings of the UC Report, e.g., Testimony of James Giannopoulos, Principal Engineer for SWRCB, Transcript of Proceedings: Public Hearing to Accept Public Testimony on the University of California's Report on the Health and Environmental Assessment of MTBE, at p. 216 (19^th February 1999) (15 JS tab 22 at 761). Furthermore, evidence was presented corroborating the perceived threat, e.g., Fogg et al., supra, pp. 6, 25, 45; Graham E. Fogg, Expert Report Prepared for the Office of the Legal Advisor, US State Dep't, pp. 10-11, 38-39 (December 2003) (13 JS tab D); also 65 Fed. Reg. 16094 (24^th March 2000) (18 JS tab 146).

21 1999 Cal. Executive Order D-5-99, pmbl. (stating the basis for the order); e.g., Am. Defense, para. 123.

22 Ibid. The subsequent regulations adopted by the California Air Reserve Board - the California Reformulated Gasoline Phase 3 (CaRFG3) standards - were similarly based upon the finding that MTBE leaking from USTs posed a threat that could not be addressed solely by upgrading the tanks. Cal. Air Reserve Bd., Res. 99-39, at pp. 6-7 (9^th December 1999) (16 JS tab 24); Am. Defense, paras. 71-72.32

23 S. 521, 1997-98 Reg. Sess. (Cal. 1997) (enacted). Prior to the passage of Senate Bill 521, the proposed bill was analysed and commented on by the California EPA and its Air Reserve Board. E.g., Cal. EPA, Office of Envtl. Health Hazard Assessment, Short Form Analsis of SB 521 (14^th April 1997) (11 JS tab 248); Cal. EPA, Office of Envtl. Health Hazard Assessment, Short Form Analysis of SB 521 (8^th May 1997) (11 JS tab 249); Cal. Air Reserve Bd., Bill Analysis of SB 521 (4^th April 1997) (11 JS tab 240); Cal. Air Reserve Bd., Bill Analysis of SB 521 (8^th May 1997) (11 JS tab 242). It is not clear to what extent Methanex seeks to argue that Senate Bill 521 itself was a pretext. Methanex argues that the bill underfunded the UC Report and did not allocate sufficient time. Second Am. Claim, para. 112. Witnesses at the main hearing who were engaged in the study did not testify that the study was underfunded. Methanex also claims (though does little to substantiate) a tie from the ethanol lobby to Senator Mountjoy and in turn to his introduction of the Bill. Ibid. But Methanex does not make any direct assertion of Senate Bill 521 being a pretext - it is not one of the so-called challenged measures. Methanex notes, for example, that the 34 bill called for an objective, thorough study. Id., paras. 111-112.

24 Second Am.Claim at Part III.

25 Governor Davis was elected in November 1998. Senate Bill 521 was signed by his predecessor, Governor Pete Wilson, who Methanex has described as unwilling to “give ethanol a ‘marked advantage’ over all other oxygenates''. Second Am. Claim, para. 126. This supports the conclusion that Governor Wilson's approval of Senate Bill 521, which ultimately led to the removal of MTBE, was not intended to harm methanol or Methanex.

26 Methanex has quoted the LA. Times as saying,”ADM wasn't a major campaign donor in California until last year [1998]”. Second Am. Claim, para. 217. The role of ADM is discussed further infra “Dot 4''. The Tribunal notes that elswhere Methanex argued that the ethanol lobby began trying to influence California politics as early as 1997. Transcript Day 1, p. 163 (lines 1-19).

27 C£ Supp. Aff. of Robert T. Wright, 29^th January 2003, para. 6 (12 JS tab A) (indicating that Senate Bill 521 was not the first legislative attempt); cf. also S. 1186, 1995-96 Reg. Sess. (Cal. 1995) (not enacted) (a bill introduced to prohibit use of 33 MTBE as a gasoline additive).

28 Cal. Air Reserve Bd., Bill Analysis of SB 521 (8^th May 1997) (11 JS tab 242) (indicating that the proposed Senate Bill 521 was amended, eliminating an immediate ban).

29 Second Am. Claim at Section VI.E; Transcript Day 1, p. 195 (lines 8-10) (“[M]ethanol, because of ADM's contributions to Davis, was denied the best treatment accorded to ethanol”.).

30 Infra “Dot 4“; “Dot 5”.

31 United States v. Andreas, 216 F.3d 645 (7th Cir. 2000) (affirming convictions for conspiring to violate § 1 of the Sherman Antitrust Act) (21 JS tab 3). In 1996 ADM agreed to plead guilty to price-fixing charges and to pay a fine of one hundred million dollars to the US government. ADM was also one of five companies fined by the European Commission for operating a price-fixing cartel. Second Am. Claim para. 214; Grain Group to Pay $100m Fines, Fin. Times (London), 15^thOctober 1996, at 1 (7 JS tab 105); Press Release, European Commission, Commission Fines ADM, Ajinomoto, Others in Lysine Cartel (7^th June 2000) (7 JS tab 95).

32 The Tribunal notes, by way of background which is illuminating but not pertinent to this decision, that various countries allow private contributions, including Australia, France, Brazil, India, Greece, Italy, Japan, and Germany. Over the past decade, many countries that allow political giving have placed new restrictions on corporate donations and have required increased disclosure. For example, Japan introduced various limits in the 1990s; Germany and France introduced new campaign finance requirements more recently.

33 As further background material, the Tribunal notes that there are countries that do not allow corporations to make campaign contributions. France, for example, banned donations from private sector corporations in 1995. Some countries, like Canada and the UK, also place some limits on the amounts that can be spent on campaigns. The laws in the United States are more liberal than most other countries. For such background discussion, see, for example, Karl-Heinz Nassmacher, Party Funding in Continental Western Europe, in Funding of Political Parties and Election Campaigns 117-37 (Int'l Inst. For Democracy & Electoral Assistance, Reginald Austin & Maya Tjernstrom eds., 2004).

34 2 U.S.C. § 441b(a); McConnell v. Fed. Election Comm'n, 124 S.Ct. 619, 694 n.86 (2003) (23 JS tab 36).

35 It is a matter of background material not pertinent to the decision at-hand that more than half of states currently do allow for such contributions, albeit generally in limited amounts. For such background materials, see Brief of Amici Curiae, States of Iowa et al. at 22, McConnell v. Fed. Election Comm'n, 124 S.Ct. 619 (2003) (No. 02-1674 et al.) (citing background materials); Nat'l Conference of State Legislatures, How States Regulate Money in Elections, at http://www.ncsl.org/programs/legman/about/campfin.htm.

36 E.g., Second Am. Claim, para. 143.

37 As of 1996 California state law only limited contributions for special elections. In November 1996, California voters approved Proposition 208 which amended the Political Reform Act of 1974 and established, among other things, limits on campaign contributions. However, Proposition was enjoined by a US District Court in January 1998, California ProLife Council PAC v. Scully, 989 F.Supp. 1282 (E.D. Cal. 1998). E.g., Letter from Dick Vind to Marty Andreas (16^th July 1998)(mentioning Proposition 208 and the district court's decision) (5 JS tab 58).

38 Cal. Sec'y of State, Political Reform Division, at http:// www.ss.ca.gov/prd/prd.htm (16 JS tab 34). During the relevant time period for this case, the central disclosure requirements were set forth by California's Political Reform Act of 1974.Cal. Gov. Code § 81000 et seq.

39 The general statutory instrument for California election law may be found at Cal Gov. Code § 84200 et seq.

40 Cal. Gov. Code § 84600 et seq.; Am. Defense, para. 180, n.33.

41 E.g., Second Am. Claim, para. 143. In the Partial Award, the Tribunal noted that Methanex had not argued that any violations of US or California campaign contribution or criminal law had taken place. Partial Award para. 70. During the main hearing, Methanex again conceded that it could not establish any “quid pro quo”. Transcript Day 1, pp. 135, 180.

42 Reply at Sub-section II.B.3. Earlier in the Reply, Methanex stated, it was ‘ ‘improper influence—bought by ADM's contributions—that triggered Davis‘[s] MTBE ban in the first place”. Id., para. 5.

43 Transcript Day 1, p. 135 (line 8).

44 Id., p. 136 (line 15) (internal quotation marks omitted); Reply, para. 69.

45 Transcript Day 2, p. 409 (lines 1-21); Rejoinder, para. 72 (emphasis added).

46 Reply, para. 70; Transcript Day 1, p. 184 (lines 1-5) (“Methanex submits that … in California between 1999 and 2000 … [t]he United States ethanol industry captured the quid pro quo process and used it for its own ends”.).

47 Cal. Penal Code § 68; Rejoinder, para. 72 .

48 Reply, para. 3 (emphasis added).

49 540 U.S. 93, 124 S.Ct. 619 (2003).

50 E.g., Reply, paras. 42^4.

51 McConnell, 124 S.Ct. at 626-27 (regarding the constitutionality of Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155). The BCRA-codified at 2 U.S.C. § 431 et seq.amended the Federal Election Campaign Act of 1971, the Communications Act of 1934, and other portions of the United States Code. Id.,

52 McConnell, 124 S.Ct. at 628.

53 2 U.S.C. § 441i(a); McConnell (discussing § 441i and other sections discussed below). Soft money refers simply to political donations that are given in such a way as to avoid legal regulation. Following the BCRA, all donations - including those to political parties for supposedly general “party building” activities - are subject to regulation.

54 E.g., 2 U.S.C. §§ 441i(d); 441i(e).

55 E.g., 2 U.S.C. § 441b(b)(2).

56 Only a handful of BCRA's provisions apply to state-level politics. For example, candidates and state or local parties cannot accept “soft money'’ donations from foreign nationals. 2 U.S.C. § 441e. Also, any campaign activity a state political party engages in on behalf of a federal candidate must be paid for with “hard money” (i.e., money that is raised subject to the legal constraints on political contributions). 2 U.S.C. §§ 431(20)(A), 441i(b).

57 E.g., Transcript Day l,p. 131 (lines 1-6) (“Methanex believes that the Supreme Court's findings in that opinion and what was said by the Solicitor General, conclusively validate Methanex's position here”.); UL, p. 139 (lines 1-4) (describing it as a “permissible inference“). But at least at one point during the main hearing, Methanex seemed to acknowledge that McConnell alone could not supply the basis for an inference. Counsel for Methanex noted, “The issue is whether this type of political corruption that the Solicitor General and the United States Supreme Court is referring to [in McConnell],took place here”. Transcript Day 1, p. 135 (lines 7-10) (emphasis added).

58 E.g., McConnell, 124 S.Ct. at 628.

59 Reply, para. 43 (internal quotation marks omitted) (citing Brief for the Federal Election Commission).

60 McConnell, 124 S.Ct. at 664.

61 E.g., Id., p. 648, 652.

62 E.g., Transcript Day 2, pp. 410-11 (lines 16-21, 2-3).

63 In two respects, Methanex argues by analogy - offering evidence that is one or more steps removed from the case before us. First, Methanex suggests that Mr Davis was influenced, on matters unrelated to ethanol, MTBE, or methanol, by financial contributions by other donors. Second Am. Claim, paras. 218- 220 (citing journalists’ opinion pieces to support these claims). Second, Methanex also points to ADM's practices of making political contributions and lobbying in other parts of the United States. E.g., Id. at para. 209 (noting contributions to federal candidates); Reply, para. 55 (describing ADM's characterisation of methanol as foreign). Methanex also tries to draw an attenuated connection between ADM and Senator Mountjoy, who authored Senate Bill 521. However, Methanex does not provide any information about any financial connection between ADM and Senator Mountjoy, and ultimately simply states that he had been “using the issue [of MTBE] to widen his political base”. Second Am. Claim, paras. 210-211. This could be true - Senator Mountjoy had long been involved in the issue and had authored a number of environmentally related bills - but the Tribunal cannot see how this conjecture assists Methanex's case.

64 Transcript Day 1, p. 167 (lines 19-20).

65 S. 521, 1997-98 Reg. Sess. § 3(f) (Cal. 1997) (enacted).

66 Id., § 3(e).

67 Second Am. Claim, para. 229; Transcript Day 1, pp. 167-68.

68 Second Am.Claim, para. 229; Transcript Day 1, p. 168.

69 Dan Morgan, In Energy Bill, A Daschle Nod to Key Farm States; Ethanol Provision Spurs Lobbying Fight, Wash. Post. 19^th February 2002, at A4 (7 JS tab 120); Letter from Gray Davis, Governor of California, to Carol B. Browner, Administrator, U.S. EPA (12^th April 1999) (6 JS tab 62); Am. Defense, paras. 64-67. The Executive Order itself required state agencies to seek a waiver of the federal reformulated gasoline oxygenate requirement; this would allow California to meet air quality standards without using ethanol. 1999 Cal. Executive Order D-5-99 para. 2; Transcript Day 2, pp. 293-94 (lines 18-21, 1-3).

70 Cal. S. Comm. on Envtl. Quality, Analysis of S. 989, 1999-2000 Reg. Sess., 12^th April 1999 (18 JS tab 129); S. 989, 1999-2000 Reg. Sess. (Cal. 1999) (enacted).

71 E.g., Transcript Day 1, p. 179.

72 Cal. Sec'y of State, Candidates for Constitutional Offices Complete Financial Activity (1998 Election), http://www.ss.ca.gov/prd/finance98_general_final/financial_const.htm (16 JS tab 32 at 1275).

73 Am. Defense, para. 178 (citing relevant contribution documents); Transcript Day 2, at 412 (lines 5-20) (“[T]he record contains evidence showing that Arco contributed approximately the same amount as did … ADM … to Governor Davis's campaign”.). As a foreign corporation, Methanex and its US subsidiaries were, by law, prohibited from contributing to Davis's campaign (or to other state or federal elections).Nonetheless, according to at least one source, Methanex Corporation's US subsidiary tried to donate $10,000 to the Democratic National Committee and $15,000 to the Republican National Committee. Damon Chappie, Republicans Return Illegal Donation from Canadian Company, Roll Call, 21^stOctober 1996, at 1 (25 JS tab 10 at 2938-39).

74 E.g., Second Am. Claim, paras. 222-232; Reply at Sub-section II.B.5 (“Gray Davis Meets the U.S. Ethanol Industry“).

75 E.g., Transcript Day 1, p. 237 (lines 8-12) (explaining that Methanex's view is that the Executive Order “flowed” from ADM's contributions and from the August 4th dinner meeting).

76 Transcript Day 4, p. 847 (line 17) (Mr Roger Listenberger); Second Am. Claim, para. 222 (draft itinerary allotted less than two hours).

77 Witness Statement of Richard Vind, 21^st November 2003, para. 2 (13A JS tab I).

78 Transcript Day 4, pp. 988 (line 7), 991 (line 4) (Mr Richard Vind).

79 Id., p. 992 (lines 1-2) .

80 Transcript Day 1, p. 180 (lines 11-14).

81 E.g., Reply, para. 61.

82 E.g., Second Am. Claim, paras. 223-227.

83 E.g., id_, para. 228 (noting that participants in the meeting were “known to have condemned methanol… as a ‘foreign' product“).

84 Am. Defense, para. 126, n.218 (citing proper forms, on record at 18 JS tab 28). There was no obligation to make further disclosures. Id., paras. 177, 180; Rejoinder, paras. 59-60; Transcript Day 2, p. 402 (lines 8-20); McCormick v. United States, 500 U.S. 257, 272 (1991); Bruce v. Riddle, 631 F.2d 272, 280 (4th Cir. 1980).

85 Transcript Day 4, p. 800 (lines 10-11) (Ms Claudia Callaway).

86 E.g., Second Am. Claim, para. 232 .

87 Id., para. 223 (“It is apparent … that there was only one issue on the agenda for the meetings: ethanol”.).

88 Discussion infra of their testimony.

89 Transcript Day 4, p. 803 (lines 12-13) (Mr Roger Listenberger).

90 Id., p. 775 (line 4).

91 Id., p. 775 (lines 8-15).

92 Id., p. 775 (lines 16-21).

93 Id., p. 815 (Mr Daniel Weinstein).

94 Id., p. 816-17.

95 Id., p. 819 (lines 7-10).

96 Id., pp. 820-821.

97 Witness Statement of Richard Vind, 21^st November 2003, para. 2.

98 Id., para. 6.

99 Id., paras. 9-11.

100 E.g., Transcript Day 4, p. 803 (Iine4) (Mr Roger Listenberger).

101 E.g., Witness Statement of Richard Vind, 21^st November 2003, para. 9.

102 E.g., Second Am. Claim, paras. 212, 228, 273-274.

103 One participant group is paid lobbyists, which Methanex itself retained.

104 Aff. of Robert T. Wright, 4^th November 2002, para. 3 (Second Am. Claim at Exh. B); Supp. Aff. of Robert T. Wright, 29^thJanuary 2003, para. 13 (12 JS tab A).

105 Aff. of Robert T. Wright, 4^th November 2002, para. 3.

106 Ibid.

107 Cf Supp. Aff. of Robert T. Wright, 29^th January 2003, para. 13.

108 S. 521, 1997-98 Reg. Sess. § 3(e) (Cal. 1997) (enacted).

109 Reply, para. 37, n. 54-55 (citing attachments to Mr Michael Macdonald's third affidavit); Memorandum from Susan McCabe, Brady & Berliner, to John Lynn (31^st January 1998) (19 JS tab 13); Memorandum from Rose & Kindel (25^th-29^thJanuary 1999) (19 JS tab 14A).

110 Reply, para. 37 (citing January 1999 memos from Ms Susan McCabe of Brady&Berliner and from Rose & Kindel).

111 IbId., (internal quotation marks omitted) (quoting Memorandum from Susan McCabe, Brady& Berliner, to John Lynn (31^st January 1999), at 2).

112 In addition to the Governor Davis's Executive Order, ultimate passage by the California government refers to S. 989, 1999- 2000 Reg. Sess. (Cal. 1999).

113 1999 Cal. Executive Order D-5-99 paras. 2, 10.

114 E.g., Davis v. U.S. EPA, 336 F.3d 965 (2003) (16 JS tab 41).

1 For ease of reference, these and other provisions of NAFTA Chapter 11 are set out in full in Annex 4 to this Chapter.

2 Second Am. Claim, para. 322.

3 Ibid.

4 Id., para. 323.

5 Ibid.

6 See id., para. 324.

7 Id., para 327.

1 Draft Amended Statement of Claim at Sections I.A-I.B.

2 Second Am. Claim, para. 300 (citing Expert Op. of Robert Jennings, 4^th November 2002, at p. 10 (Second Am. Claim, Exhibit C).

3 Expert Op. of Claus-Dieter Ehlermann, 4^th November 2002 (Second Am. Claim Exhibit D).

4 European Communities-Measures Affecting Asbestos and Asbestos-Containing Products (Eur. Comm. v. Can.), WT/ DS135/AB/R (hereinafter Asbestos), (2001) 40 ILM 1408 (Second Am. Claim App., 3 LA tab 79).

5 S. D. Myers v. Canada, Partial Award, (2001) 40 ILM 1193 (Second Am. Claim App., 4 LA tab 97).

6 Second Am. Claim, para. 301.

7 Id., para. 303.

8 E.g., Second Am. Claim at Section V.B.

9 Reply, para. 27 (citing U.S. Envtl. Protection Agency, Oxygenate Identification (22 JS tab 20)); Second Am. Claim, para. 70.

10 E.g., Second Am. Claim, paras. 78-80; Reply, para. 236.

11 Second Am. Claim, para. 80; Reply, para. 23; see also Contract Between Methanex Methanol Company and Valero Refining and Marketing Company (Second Am. Claim, Exhibit A tab 1).

12 E.g., Second Am. Claim at Section V.B.

13 Pope & Talbot, Inc. v. Canada, Final Award, paras. 39-42 (NAFTA 2001) (Second Am. Claim, App., 4 LA tab 92).

14 Second Am. Claim, paras. 308-312.

15 Ibid.

16 Reply, para. 188.

17 United States —Standards for Reformulated and Conventional Gasoline,(US v. Braz.), WT/DSZ/AB/R (WTO 1996) (Reply App. LA tab 15).

18 In re Cross-Border Trucking Services, Final Report (NAFTA 2001) (discussed at Transcript Day 1, pp. 14, 38-39 (Mr Dugan for Methanex) and on record during the jurisdictional phase).

19 E.g., Reply, paras. 191-197.

20 E.g., Second Am. Claim, para. 294.

21 E.g., Id., para. 298.

22 E.g., ibid.

23 E.g., Am. Defense at Section III.B.

24 Reply, para. 168.

25 Rejoinder, para. 152.

26 Id., para. 154.

27 See Canada's Fourth Article 1128 Submission, para. 11.

28 Transcript Day 2, at p. 265.

29 First Expert Report of Mr Burke, para. 66.

30 Pope&Talbot, Inc., paras. 87-88.

31 Second Am. Claim, para. 308.

32 E.g., Second Am. Claim, paras. 298-301 (citing Expert Op. of Robert Jennings, 4^th November 2002, at p. 10 for its discussion of the applicability of GATT jurisprudence and citing Expert Op. of Claus-Dieter Ehlermann, 4^th November 2002, para. 24 for its explanation that GATT jurisprudence identifies “like products” on the basis of “competitive relationships between and among products“); see generally id. at Section V.B (arguing that methanol and ethanol are essentially interchangeable and present consumers with a “binary choice“).

33 Id., para. 304.

34 Am. Defense, paras. 138-140 (asserting that methanol and ethanol are not essentially interchangeable and disagreeing with Methanex's contention that the products directly compete).

35 E.g., id., paras. 142, 147-148 (discussing why methanol is not and cannot be used as an oxygenate in gasoline).

36 E.g., id., para. 318.

37 Id., para. 323.

38 Id., para. 322.

39 Id., paras. 11,282.

40 Id., paras. 302-304.

41 Asbestos, para. 101.

42 Am. Defense, paras. 309-325.

43 Id., paras. 326-342.

44 Am. Defense, para. 331 (citing Asbestos, para. 92).

45 Reply, para. 173.

46 Id., para. 177.

47 Id., para. 187.

48 Id., paras. 188-190.

49 Id., paras. 191-192.

50 Brief of Amicus Curiae, International Institute for Sustainable Development, para. 34 (9^th March 2004).

51 Articles 301 (National Treatment) and 309 (Import and Export Restrictions), and the provisions of Article XX(b) of the GATT as incorporated into Article 2101(1) (General Exceptions), do not apply to any sanitary or phytosanitary measure.

52 These investments are: “(a) an enterprise; (b) an equity security of an enterprise; (c) a debt security of an enterprise c(i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the debt security is at least three years, but does not include a debt security, regardless of original maturity, of a state enterprise; (d) a loan to an enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the loan is at least three years, but does not include a loan, regardless of original maturity, to a state enterprise; (e) an interest in an enterprise that entitles the owner to share in income or profits of the enterprise; (f) an interest in an enterprise that entitles the owner to share in the assets of that enterprise on dissolution, other than a debt security or a loan excluded from subparagraph (c) or (d); (g) real estate or other property, tangible or intangible, acquired in the expectation or used for the purpose of economic benefit or other business purposes; and (h) interests arising from the commitment of capital or other resources in the territory of a Party to economic activity in such territory, such as under (i) contracts involving the presence of an investor's property in the territory of the Party, including turnkey or construction contracts, or concessions, or (ii) contracts where remuneration depends substantially on the production, revenues or profits of an enterprise; …”.

1 Second Am. Claim, para. 313; see id., para. 314 (referencing the NAFTA award in S.D. Myers ).

2 Id., para. 315.

3 Reply, paras. 203-204; see generally Free Trade Commission Clarifications Related to NAFTA Chapter 11, 31'1 July 2001.

4 Id., para. 205; see id., para. 206.

5 Transcript Day 8, p. 1854 (lines 6-7).

6 Id. at p. 1855 (lines 16-18).

7 Expert Op. of Robert Jennings, 6th September 2001 (Methanex's Submission in Response to the NAFTA Free Trade Commission Interpretation, 18th September 2001, Exh. 1).

8 Am. Defense at Part IV A.

9 See id., para. 365.

10 See, e.g., id., paras. 366-370.

11 Waste Mgmt. Inc. v. Mexico, Arb (AF)/00/3, paras. 98-99 (ICSID 2004);e.g., Transcript Day 8, pp. 1939, 1944 (Mr Dugan for Methanex); Transcript Day 9, pp. 2151-2153 (Ms Guymon for the USA).

12 Transcript Day 8, pp. 1944-1945.

13 Id. at pp. 1940-1942.

14 See, e.g., Metalclad Corp. v. Mexico, 5 ICSID Reports 209 (Second Am. Claim App., 3 LA tab 85); S. D. Myers v. Canada, Partial Award 40 ILM 1408 (Second Am. Claim App., 4 LA tab 97); Mondev Int'l Ltd. v. United States, 6 ICSID Reports 181, 42 ILM 85 (Am. Defense App., 4 LA tab 61); The Loewen Group, Inc. v. United States, 42 ILM 811 (Am. Defense App., 4 LA tab 58); ADF Group Inc. v. United States, 6 ICSID Reports 470, (Am. Defense App., I LA tab 2).

15 Mondev Int'l Ltd., paras. 120-121.

16 ADF Group Inc., para. 184.

17 The Loewen Group, Inc., para. 132.

18 Expert Op. of Robert Jennings, 6th September 2001.

19 Rejoinder, para. 186.

20 The Washington Treaty of 8 May 1871 between the United Kingdom and the USA included agreement on three rules applicable to the United Kingdom as a neutral during the Civil War, which ensured that the United Kingdom would be held liable by the Geneva tribunal, even though these rules imposed higher duties than those previously accepted under international law (subject only to quantum and jurisdiction over the so-called “Indirect Claims“). See Bingham, Tom, The Alabama Claims Arbitration, 54 ICLQ 1 (2005)Google Scholar.

21 See generally W. Michael Reisman, Nullity and Revision: The Review and Enforcement of International Judgments and Awards (1971).

22 Rights of Asylum ( Colombia v. Peru), 1950 ICJ Rep. 266, 276 (US Reply Mem. on Jurisdiction, Admissibility, and the Proposed Amendment App., 1 LA tab 11).

23 Waste Mgmt. Inc., para. 98.

24 Id. (emphasis added).

1 Second Am. Claim at Section VII.C; Reply, paras. 207-208,717.

2 Second Am. Claim at Section VII.C; Reply, paras. 213-214.

3 Second Am. Claim, paras. 317-320.

4 See Am. Defense at Sections V.B-V.D.

5 Sub-section III.D.l.

6 See Rejoinder at Part V.

7 Metalclad Corp. v. Mexico, Arb(AF)/97/l, 5 ICSID Reports, 209, para. 103 (Second Am. Claim App., 3 LA tab 85); see Transcript Day 8, at 1949; Reply, para. 216.

8 See Reply, paras. 218-221, 241.

9 See Reply, para. 222; see also Pope & Talbot, Inc. v. Canada, Interim Award, para. 96 (NAFTA 2000) (Am. Defense App., 4 LA tab 71); S. D. Myers v. Canada, Partial Award, para. 281 (NAFTA 2000) (Second Am. Claim App., 4 LA tab 97).

10 Revere Copper & Brass, Inc. v. Overseas Private Invest. Corp., 56 ILR 258, 17 ILM 1321, 1331, cited in Waste Mgmt. Inc. (2004).

11 Waste Mgmt. Inc., 43 ILM 967, para. 98 (emphasis added).

12 See Aff. of Robert T. Wright, 4^th November 2002, para. 1 (Second Am. Claim Exh. B).

13 See supra Chapter III B (noting, for example, that California's application for a waiver from the Clean Air Act's oxygenate requirement was inconsistent with the allegation that California intended to injure MTBE and methanol producers in order to transfer the market to the ethanol industry or to encourage the development of an ethanol industry in California).

14 Feldman v. Mexico, Arb(AF)/99/l, para. 152 (ICSID 2002) (Am. Def. App., 3 LA tab 33).

15 Pope & Talbot Inc., para. 96.

16 Gillian White, Nationalisation of Foreign Property 49 (1961), cited at Am. Defense, para. 169, fn. 622.

1 E.g., Am. Defense, paras. 109-110; Rejoinder, paras. 16-20; id. at Section LA.

2 Transcript Day 2, pp. 477-478.

3 E.g., Am. Defense, para. III; id. at Section I.B.; Rejoinder at Section II.B.

4 E.g., Rejoinder, paras. 5, 18; id. at Section II.B.

5 E.g., Id., para. 42.

6 E.g., Am. Defense at Section I.B (citing Mr Caldwell and Mr Burke); see also Bruce Burke, First Expert Report (December 2003) (13 JS tab B); Witness Statement of James W. Caldwell, 1^st December 2003 (13 JS tab C).

7 Am. Defense at Section I.B.

8 Rejoinder, para. 36.

9 Id., para. 46. But cf. Am. Defense, para. 162.

10 Am. Defense at Sub-Section I.B.3; Rejoinder at Sub-Section I.B.2.

11 Am. Defense at Section I.C.

12 M at Sub-section I.C.5., paras. 196-199.

13 E.g., Rejoinder, paras. 12, 124.

14 Id., para. 62.

15 Uncitral Rules, Art. 24(1) (“Each party shall have the burden of proving the facts relied on to support his claim or defence.“).

16 Article 9(5) of the IB A Rules provides: “If a Party fails without satisfactory explanation to make available any other relevant evidence, including testimony, sought by one Party to which the Party to whom the request was addressed has not objected in due time or fails to make available any evidence, including testimony, ordered by the Arbitral Tribunal to be produced, the Arbitral Tribunal may infer that such evidence would be adverse to the interests of that Party.”(Methanex concedes that Article 9 of the IB A Rules has no direct application as there had been no agreement to apply this part of the IBA Rules in the joint letter of the Disputing Parties dated 14^th August 2000.)

17 Rejoinder, para. 62.

18 Second Am. Claim, paras. 19-22.

19 Id., paras. 142-143.

20 Transcript Day 1, at pp. 71 (lines 7-8), 70 (lines 18-19); Reply, para. 79.

21 Transcript Day 1, at p. 72 (lines 6-17).

22 Reply, para. 108.

23 Id., para. 156.

24 Id., para. 157.

25 Id., para. 94.

26 Testimony of Michael P. Kenny, Exec. Off., Cal. Air Res. Bd., for U.S. Senate, Comm. on Envt'l& Pub. Works, Subcomm. on Clean Air, Wetlands, Private Prop.& Nuclear Safety, at p. 6 (23 JS tab 45).

27 Second Am. Claim, para. 159.

28 Transcript Day 1, at p. 177 (lines 3-8); Witness Statement of Roger Listenberger, 24^th October 2003 (13 JS tab F).

29 Transcript Day 1, p. 177.

30 E.g., Id., p. 180.

31 Id., p. 181.

32 Ibid.

33 E.g., Id., p. 123; Transcript Day 8, pp. 1799-1800.

1 Article 39(1) requires the fees of the arbitral tribunal to be reasonable in amount, taking into account inter alia the time spent by the arbitrators.

2 Wetter, & Priem, , “Costs and their Allocation in Internationa Commercial Arbitrations” (1991) 2 Am Rev Int Arb 249 Google Scholar.