Judge Deals Blow to Free Trade Pact : Commerce: U.S. is ordered to fully assess environmental impact of North American treaty. Long process raises concerns accord may never be approved.

The federal government must complete a full study of the environmental effects of the North American Free Trade Agreement, a U.S. District Court ruled Wednesday, dealing a jarring setback to White House efforts to gain quick approval of the accord.

Clinton Administration officials said that they will appeal the decision quickly. If the ruling by Judge Charles R. Richey is upheld, it could mean that congressional consideration of the agreement tearing down trade barriers among the United States, Mexico and Canada will be delayed for several months to several years while the environmental review takes place.

The Administration insisted Wednesday that it will proceed with its campaign to carry out the agreement in January. But the obstacle erected by Richey created a severe challenge, adding weight to arguments by opponents of the pact and prompting new concerns, even among its supporters, that it may never be approved by Congress.

Environmental activists maintained that the decision also could prompt the government to pay strict attention to environmental concerns in all future trade agreements, most notably a global effort to reduce tariffs and other barriers to international commerce that is now being negotiated in Geneva.

U.S. Trade Representative Mickey Kantor said that the Administration would appeal the ruling “expeditiously” and that it would not alter its plan for sending the agreement, one of its leading economic priorities, to Congress in September.

Its prospects there, however, remain uncertain. In an interview with The Times on Wednesday before Richey’s ruling was made public, David C. Wilhelm, chairman of the Democratic National Committee, bluntly declared that the pact might fare better if it is not introduced in Congress until the economy appears stronger.

And Rep. Lee H. Hamilton (D-Ind.), chairman of the House Foreign Affairs Committee, said in a speech that if it is submitted now, the pact would be defeated.

The agreement would remove tariffs and other obstacles to free trade among the three nations over a 15-year period. It was negotiated by the George Bush Administration and initialed by heads of state last October.

During the presidential campaign last autumn, Clinton hinged his support of the agreement on supplemental texts that would protect environmental standards and workers’ rights. They are now being negotiated.

The Administration had hoped to submit the package of agreements to Congress in early September so they can take effect next Jan. 1. They require approval by a simple majority in the House and Senate.

At the heart of environmentalists’ concerns are fears that lax enforcement of costly regulations and laws protecting the environment in Mexico will lead U.S. businesses to relocate there, prompting further air and water degradation and causing harm to areas of the United States.

The court decision, said Lori Wallach, director of the trade program at Public Citizen, a public interest advocacy group founded by Ralph Nader, is “a major victory in the area of international trade and its implications for health and safety regulations.”

Richey acted in a suit filed by Public Citizen and two environmental groups, the Sierra Club and Friends of the Earth.

“NAFTA will have significant environmental effects and . . . may worsen the environmental problems already existing in the United States-Mexico border area,” Richey said in his ruling.

He said that the Bush Administration violated the Administrative Procedures Act by failing to prepare an environmental impact statement. He said that a statement must be completed “forthwith” but he set no deadline, nor did he forbid the Administration to send the agreement and accompanying legislation to Congress before such a statement is prepared.

But Joan Claybrook, president of Public Citizen, said in an interview: “We think it would be political suicide should the President decide” to send the measures to Congress without first adhering to Richey’s ruling.

After Solicitor General Drew S. Days III reviewed Richey’s ruling, Kantor said at a news conference at the White House that the Administration would argue on appeal that preparing the environmental statement would interfere “with the President’s ability to negotiate international trade agreements.”

The ruling set off a torrent of faxed statements and animated debate in the Capitol.

Rep. Jerry Lewis (R-Redlands) expressed the concern that without “an immediate and forceful” response by Clinton, “this ruling could kill NAFTA.” Sen. John McCain (R-Ariz.) said that Richey, “uninformed about the constitutional issues involved,” was imposing “policy preferences” on Congress and the Administration.

While the court ruling upset supporters of the agreement, companies already doing business in Mexico said that a delay in approval by Congress would have no impact on their plans, although it could hamper the growth potential of Mexico’s economy.

But in Mexico, political analysts said a delay would be a major setback for President Carlos Salinas de Gortari, who needs the agreement in place before campaigning begins in January for the next presidential election to avoid an embarrassment to his party.

They said that a delay could cast a shadow over the candidate of his party, which has ruled Mexico for six decades. Salinas cannot run for reelection.

“He (Salinas) bet everything on it and he didn’t get it on time,” said Jorge Castaneda, a Mexico City political scientist and frequent government critic.

“This is a disaster,” Mexico City economist Rogelio Ramirez de la O said of the ruling.

Times staff writers Juanita Darling in Mexico City and Patrick Lee in Los Angeles contributed to this story.