Library:
The U.S. Government’s Long Arm
Published in the January 2008 issue of Litigation Notes - View Article
Synopsis: The U.S. Supreme Court has refused to hear an appeal by Teck Cominco from a decision of the Ninth Circuit Court of Appeals which confirmed that U.S. courts can enforce U.S. environmental laws against a Canadian polluter, even where the source of the pollution was in Canada.
In the September 2006 issue of Litigation Notes we reported on an insurance coverage dispute between Teck Cominco Metals Ltd. (“Teck”) and its insurers (“Forum Shopping for Insurance Coverage”). In the April 2007 edition, we commented on the decision of the British Columbia Court of Appeal in that dispute (“Teck Cominco Appeal Dismissed”).
The underlying dispute has continued. Teck owns and operates a lead-zinc smelter in Trail, British Columbia. A by-product of the smelting process is known as “barren slag” and Teck discharged this substance into the Columbia River from the 1920s until the mid 1990s. In the 1930s and 1940s the Grand Coulee Dam was constructed on the Columbia River in Washington State, creating a reservoir known as Lake Roosevelt. In 2004, an action was commenced in Washington State, requiring Teck to comply with the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA” or “Act”). The action was commenced by Joseph Pakootas and other members of the Colville Tribe who reside in the vicinity of Lake Roosevelt. The action was commenced pursuant to the Citizens Suit Provision of CERCLA and seeks enforcement of an order issued by the Environmental Protection Agency (“Order”) requiring Teck to conduct a remedial investigation/feasibility study with respect to the extent of contamination in Lake Roosevelt.
Teck argued before the District Court that the Court lacked subject matter jurisdiction, because the Order was based on activities carried out by Teck in Canada and lacked personal jurisdiction over Teck, a Canadian corporation with no presence in the United States. Furthermore, Teck argued that the Order was an impermissible extraterritorial application of CERCLA. Teck was unsuccessful and appealed to the United States Court of Appeals for the Ninth Circuit. In the Court of Appeals, Teck did not repeat its arguments based on subject matter or personal jurisdiction. Rather Teck concentrated on the argument that applying the Order to Teck’s activities in Canada would be an impermissible extraterritorial application of United States law and also that Teck was not liable as a person who “arranged for disposal” of hazardous substances within the meaning of CERCLA.
The Court of Appeals points out that unlike other environmental laws in the United States, CERCLA is not a regulatory statute, but rather imposes liability for the cleanup of sites where there is a release or threatened release of hazardous substances into the environment. CERCLA liability attaches when three conditions are satisfied:
(1) The site at which there is an actual or threatened release of hazardous substances is a “facility” within the meaning of the Act;
(2) A “release” or “threatened release” of a hazardous substance from the facility has occurred; and
(3) The party is within one of the four classes of persons subject to liability under the Act.
A facility is defined as “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located”.
Lake Roosevelt was deemed to be a “facility” as the slag had “come to be located” at that site and the first element of liability was therefore met.
With respect to the second element, the Court found that there were several events which could be characterized as releases. There was the discharge of the slag from the Trail smelter into the Columbia River in Canada. There was the discharge or escape of the slag from Canada when the Columbia River enters the United States and finally there was the leaching of various heavy metals and other hazardous substances from the slag into the environment.
The term “person” in the Act includes “an individual, firm, corporation, association, partnership, consortium, joint venture, or commercial entity”. Teck argued that because the definition did not indicate whether foreign corporations are covered and because recent caselaw from the US Supreme Court had held that the term “any court” does not include foreign courts, the term “any person” should be interpreted to exclude foreign corporations. The Court of Appeals disagreed, relying on the case of United States v. Palmer, in which the US Supreme Court dealt with a statute prohibiting piracy on the high seas and concluded that although the statute did not specifically enumerate foreign parties as “persons”, the statute should be interpreted to apply to punish piracy committed by foreign parties against vessels belonging to subjects of the United States.
The Court went on to hold that the location where a party arranged for disposal of disposed of hazardous substances is not controlling for purposes of determining whether CERCLA is being applied on an extraterritorial basis. “Because the actual or threatened release of hazardous substances triggers CERCLA liability, and because the actual or threatened release here, the leaching of hazardous substances from slag that settled at the Site, took place in the United States, this case involves a domestic application of CERCLA”. The Court of Appeals therefore denied Teck’s appeal.
Teck argued that it had not “arranged for disposal” of the waste, because CERCLA refers to the arranging being done by “another person or entity” and Teck had done it itself. This argument was, not surprisingly, rejected.
Teck sought leave to appeal to the Supreme Court of the United States and on January 7, the Supreme Court denied Teck’s application.
Joseph A. Pakootas et al v. Teck Cominco Metals Ltd., 452 F.3d 1066 (Ninth Circuit)Supreme Court Docket No. 06-1188