Court Rules Out NAFTA Environmental Study : Treaty: The decision means that the Clinton Administration will not have to prepare a lengthy report before the pact goes into effect.

The U.S. Court of Appeals on Friday overturned a lower court ruling that would have required the Clinton Administration to conduct a cumbersome environmental impact study before the North American Free Trade Agreement could take effect.

The decision removes a legal roadblock that could have derailed the three-way trade agreement among the United States, Mexico and Canada, although NAFTA opponents say they will appeal the appeals court ruling to the Supreme Court.

“The cloud is removed,” Associate Atty. Gen. Webster Hubbell said at a news conference at the White House.

Still, formidable obstacles remain. Proponents of the trade pact, which would create a tariff-free trading zone from the Arctic to the Yucatan, acknowledged that overcoming opposition in Congress offers a difficult challenge.

Seeking to increase NAFTA’s momentum, Administration officials disclosed that the World Bank next week will announce a $3-billion loan to help pay for a mandated cleanup of the heavily polluted U.S.-Mexican border.

The money would be loaned to Mexico for use in a border environment fund. The cleanup requirement was one of the provisions added to the trade pact in supplemental agreements intended to overcome concerns that NAFTA did too little to protect the environment and labor.

A senior U.S. trade official said the loan would be one step in the effort “to reassure Congress and the public there will be long-term funding” to pay for the border cleanup.

In the appeals court decision, the chief judge, Abner Mikva, relied on essentially procedural technicalities to rule that because the agreement has not been formally submitted to Congress, there were no grounds for the district court to order the environmental study.

Further, the three-judge appeals panel ruled that once the agreement is officially dispatched to Congress, it becomes an action undertaken by the President and is not subject to court interference.

“The President is not obligated to submit any agreement to Congress, and until he does there is no final action. If and when the agreement is submitted to Congress, it will be the result of action by the President, action clearly not reviewable” under the provisions of the Administrative Procedure Act, Mikva wrote.

“NAFTA’s fate now rests in the hands of the political branches. The judiciary has no role to play,” he wrote.

Clinton, speaking with reporters after returning to the White House from a trip to Florida, praised the ruling. “I applaud the decision,” he said. “If this agreement goes through, it will lead to improvements in the environment and increased investment on the Mexican side of the border in environmental cleanup.”

The legal challenge was brought by Public Citizen, a consumer advocacy group founded by Ralph Nader, and by two environmental organizations, the Sierra Club and Friends of the Earth.

They argued that under the Administrative Procedure Act and the National Environmental Policy Act, the White House is required to study the impact the free trade pact would have on the environment before proceeding with the agreement. U.S. District Judge Charles R. Richey ruled on June 30 that such a review, which could have taken from several months to several years to complete, was indeed required.

Representatives of the groups that brought the suit dismissed the reversal as a technical ruling that left unchallenged the merit of their argument. They said the Office of the U.S. Trade Representative should nevertheless prepare an environmental study.

“Even in the absence of a court order, the trade representative, who is sworn to uphold the laws of the United States, still must do the right thing and prepare an environmental impact statement,” said Patti A. Goldman, the lead attorney for Public Citizen.

U.S. Trade Representative Mickey Kantor said the Environmental Protection Administration will “do our own review . . . and we’ll make that public.”

While many large environmental groups have endorsed the trade pact, the Sierra Club and several smaller groups have fought it, arguing that it would undermine American environmental laws.

Jane Perkins, president of Friends of the Earth, and other environmentalists said the Administration’s unwillingness to carry out the study would raise suspicions among what she said was an increasingly skeptical public.

“While the pro-NAFTA forces may have won a minor legal victory in the courts, we expect to win in the court of public opinion,” said Larry Williams, Washington director of the Sierra Club’s international program.

Kantor said the lifting of Richey’s ruling would give the Administration momentum in its push for congressional approval.

Even with the court victory, the agreement’s political future remains murky.

One well-connected Republican who in recent weeks had maintained that the agreement might yet win congressional approval said Friday he had seen movement away from the pact in the House, and “now I have doubts.”

Senate Minority Leader Bob Dole (R-Kan.) said that Republicans in the House, on whom the Administration is counting to make up for a shortage of votes among the Democrats, are getting uneasy about lining up with the President.

“There are some Republicans, I think particularly in the House, who feel that they’re going to walk the plank so some Democrat can get off the hook on this, and they’re not too eager to do that,” Dole said at a breakfast with Times editors and reporters.

Times staff writer Melissa Healy contributed to this story.