Trade tribunal strikes blow against Methanex Corp's nearly $1B complaint over Calif's banning of gasoline additive MTBE

Methanex supplies methanol to companies that make MTBE

In complicated ruling, N American Free Trade Agreement (NAFTA) panel said it needed more evidence to support Methanex's claim

Methanex says it was victim of political deal between Calif Gov Gray Davis and agribusiness company Archer Daniels Midland

3-member panel says Methanex can file a new complaint, but warned company it also needs to clarify its argument

Methanex has 90 days to decide, but may be given more time

Methanex 1st argued Calif MTBE ban was not based on scientific evidence and water pollution could be solved by fixing leaking underground storage tanks at gas stations

Calif ban was financial blow to Methanex because CA is largest auto market in US, and other states look to it in setting environmental standards

NAFTA prohibits unfair protection of domestic industries, and Methanex's original complaint alleged US officials acted improperly to protect US ethanol industry

Methanex later amended complaint w/ claim that Davis and ADM officials met secretly during 1998 campaign and ADM contributed over $200,000 to Davis' campaign

Methanex's case filed under NAFTA's Chapter 11 investor protection rules may be example of how private companies can use NAFTA to undermine government efforts to protect environment

Ruling appears to help US because it put onus on Methanex to prove Calif intentionally banned MTBE to hurt foreign producers of methanol

"Methanex has had years to make its case and the tribunal has so far not accepted its case." -- William Rukeyser, spokesman for Calif Environmental Protection Agency

"It's definitely not a dismissal. They could have done that and we're disappointed that they didn't do that. We thought that the case was a stretch from the beginning." -- Dan Seligman, spokesman for Sierra Club

Calif is phasing out MTBE (methyl tertiary butyl ether) which is used to reduce auto air pollution

Calif says additive was contaminating drinking water supplies

Archer Daniels Midland makes a rival additive product from ethanol which competes against MTBE