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Cross-border disputes

Sovereignty arguments often ignored
|Written By Marc McAree
Cross-border disputes

In the rapidly evolving world of environmental case and statute law, it’s prudent to have a solid grasp of regulatory provisions on both sides of the border.

Several Canadian companies have been subject of a lawsuit or summons filed by an American citizen in the past few years. Instead of crying foul in a Canadian court, those companies are being dragged into American courts to be judged against sometimes higher U.S. federal or state-set pollution control standards than those in Canada.

U.S. courts appear to be ignoring sovereignty arguments and assuming jurisdiction through creative judicial reasoning. In a recent case involving the prosecution of Teck Cominco, a Canadian company, by private U.S. citizens, Pakootas v. Teck Cominco Metals, Ltd., the Ninth Circuit Court of Appeals held the U.S. Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, applies to Teck Cominco.

The company operated and discharged emissions into Canadian waters in compliance with Canadian laws. However, the court reasoned contamination was “released” into the U.S., as defined by CERCLA, because the emissions settled in the Columbia River and Lake Roosevelt. The court distinguished the contaminant emission at source from the final resting point — “release.” The court held this is not an extraterritorial application of CERCLA. The U.S. Supreme Court refused to grant leave to appeal. The plaintiffs applied for and were granted costs for litigation to date. 


Teck Cominco brought a counterclaim against one of the plaintiffs, the Confederated Tribes of the Colville Reservation, of which Joseph Pakootas is a member, claiming the tribes contributed to the pollution. The counterclaim was dismissed. 


U.S. courts are not alone in assuming jurisdiction over cross-border pollution issues. The Ontario Superior Court of Justice issued a summons in 2008 requiring an American firm, DTE Energy Co., to face charges under Canada’s Fisheries Act, related to mercury emissions originating in the U.S. and harming fish in the St. Clair River. Charges were brought by a private citizen, Scott Edwards. DTE agreed to address their mercury emissions and charges were withdrawn.


Canada and the U.S. have found themselves before the International Joint Commission to resolve environmental disputes. The most notable dispute involved cross-border air pollution from a smelter in Trail, B.C. The issue was argued by the Canadian and American governments beginning in 1927. It was resolved in 1938 by arbitration. The decision turned on the sovereignty of each state and the application of international law principles. Due to the environmental damage resulting from smelting, at the time owned by Consolidated Metal, then Teck Cominco, Canada was ordered to pay $350,000 for damages prior to 1932 and $78,000 for damages between 1932 and 1937.


Cross-border contamination is not the only source of environmental friction between the U.S. and Canada. The U.S. also has considerable interest in — and much to complain about — the federal and provincial statutes that govern what is discharged from the smokestacks and wastewater pipes of facilities situated firmly on Canadian soil. American interests are aggressively challenging the validity of a number of Canadian environmental statutes and policies under the dispute resolution apparatus of NAFTA. These companies are using the fair trade provision under Chapter 11 of NAFTA to circumvent Canadian environmental laws and policies, and sue for purported damages. Most recently, Dow AgroSciences Canada Inc. brought a claim for $2 million in response to Quebec’s ban on the cosmetic use of certain pesticides manufactured by Dow AgroSciences. A ban on lindane-based seed treatments by the federal Pest Management Regulatory Agency resulted in a similar $100-million suit by the U.S.-based Chemtura Corp. And the failure of a proposed quarry in Nova Scotia to gain approval following a full environmental assessment caused the U.S. proponent Bilcon to bring a claim under NAFTA for $188 million in damages against the Canadian government. 


This kind of cross-border litigation cuts both ways. The Manitoba government, along with nine U.S. states, has brought a claim against the U.S. Environmental Protection Agency under the U.S. Clean Water Act. The claim alleges the EPA is allowing water transfers that could injure waters in Manitoba and elsewhere. The case is currently stayed pending the outcome of another case that will determine if such a challenge may be brought before the courts.


While final judgment is pending in several of these cases, they all serve as a warning to in-house counsel on either side of the border. Just because you operate on one side of the border, it doesn’t mean you are shielded from environmental laws on both.


Marc McAree is a partner at Willms & Shier Environmental Lawyers LLP in Toronto.

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