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LEGAL: Mexico: Not Ready for Prime Crime

The North American Free Trade Agreement (NAFTA), which became effective in 1994, has sparked significant changes in the trading of goods between the United States, Canada and Mexico, and markedly has contributed to the improvement and transformation in many segments of Mexico's economy, politics and culture.

Unfortunately, the legal system below the border has failed to keep pace, stubbornly clinging to esoteric, outdated codes and rigid procedures based on legal traditions from Continental Europe. Moreover, the Mexican legal system tolerates entrenched and widespread inefficiency and corruption by officials in all branches of government.

The problems with law and justice in Mexico are illustrated particularly well in the case of Metales Y Derivados.

In 1972, New Frontier Trading Corp., a San Diego-based wholesale metals firm, opened a business in Tijuana, Mexico, under the name Metales Y Derivados (“Metales”). The company operated a smelter, recovering lead and copper from used lead acid batteries from American cars and boats. Approximately 10 years later, the company moved to an industrial park less than a mile from the United States border. The company shipped lead slag to Europe until the requirements for international waste shipments were upgraded in the 1980s, driving Metales to begin onsite storage and disposal.

At the time, Mexican law and international agreements required border businesses (known as maquiladoras) to return generated wastes to the country of their origin. Instead, Metales dumped lead and hazardous wastes from the smelting process here and there around the site. Not until 1987 did environmental authorities in Tijuana demand that Metales cleanup the site. The company took no action, ignoring a stream of official threats, warnings and cleanup directives.

In 1992, the Los Angeles County District Attorney's Office filed a 26-count felony complaint against New Frontier and its elderly owner, José Kahn, for the unlawful transportation of hazardous waste. Each violation carried a maximum sentence of three years in prison and/or a $100,000 per day fine. Some observers speculated that prosecutors in the United States had no patience with or confidence in the Mexican justice system. In April 1993, Kahn pleaded guilty to two counts of illegal transportation of lead waste, paid a $50,000 fine, and pledged to cleanup the Metales site. Oddly, his promise was not formally incorporated into the settlement, and he was allowed to continue his operation, which employed some 35 workers.

Metales continued to accumulate hazardous wastes on the site. Finally, in 1994, Mexican authorities shut down the plant. The following year, a Mexican judge issued an arrest warrant for Kahn who was then living in San Diego. Still residing there, he has never returned to Mexico.

Kahn later was convicted of many environmental violations by a Mexican court, according to The Wall Street Journal. The Mexican government took control of the site in 1996, building a brick wall around the facility and placing a polyethurine cover over the 6,000 metric tons of abandoned lead slag. During the years, acids on the site have eaten through portions of the wall and the plastic has shredded.

Although the Metales site has become the archetype for border waste cases under NAFTA, Mexico inexplicably has failed to ask the United States to extradite Kahn to face punishment for his conviction. Nor has it brought a civil case against New Frontier and Kahn. If Mexico obtained a money judgment against either or both defendants, it likely could collect it by filing an official record of the ruling in a U.S. court.

“The time is ripe for trying to win a case in Mexico and enforce a money judgment across the border,” says U.S. Environmental Protection Agency (EPA) lawyer John Rothman.

Easier said than done.

“Our civil codes aren't prepared to tackle a problem like Metales,” Gabriel Calvillo says, chief counsel for PROFEPA, Mexico's counterpart to the EPA.

Moreover, while U.S. laws, particularly Superfund, allow the government to commence a cleanup at its expense and later recoup the costs from responsible parties, no comparable system exists under Mexican law. Even if such authority existed in Mexico, the government simply cannot afford to advance the millions of dollars it would take to remediate the Metales site.

“It's bad precedent for Mexico to pay to clean it up [because] we are so unsure of ever getting paid back in the courts,” says a former PROFEPA attorney.

To make matters worse, PROFEPA is not “legally recognized as the representative of the people,” says Calvillo. Only nearby residents and others who are directly affected by pollution from the site can bring a lawsuit — individually and not collectively. The law in Mexico does not recognize class action lawsuits or, for that matter, punitive damages.

Shockingly, Kahn may be even less stressed these days in his luxurious San Diego surroundings. In 1999, the Mexican government told an investigating NAFTA commission that a 1996 comprehensive amendment of the country's environmental laws invalidated Kahn's 1995 conviction. The amendment merely renumbered the provisions under which Kahn was charged.