The Canadian Bar Association

The 2009 National Environmental, Energy and Resources Law Summit

CANADA/U.S. ENVIRONMENTAL DISPUTES: REACHING ACROSS THE 49TH PARALLEL

Vancouver, British Columbia May 1 - 2, 2009 MARC McAREE th Reaching Across the 49 Parallel th Reaching Across the 49 Parallel th Reaching Across the 49 Parallel th Reaching Across the 49 Parallel

• Canada and U.S. share 5,525 miles of border and hundreds of water bodies including the Great Lakes • Traditionally environmental differences were resolved through diplomacy and bi-lateral treaties such as • Boundary Waters Treaty of 1909 • NAFTA’s North American Agreement on Environmental Cooperation (1994) • More recently cross-border environmental disputes wind up before courts and arbitrators to resolve • extraterritorial application of environmental laws of one jurisdiction across the border • prejudice in fair trade decisions • Environmental pollution respects no political border and nor does environmental law, or does it? Current Canada/U.S. Environmental Disputes

• Dow AgroSciences (Indiana/Canada): U.S. company submits NAFTA claims for $2M against Canadian Government for cosmetic pesticides ban of pesticide 2,4-D in 2006 (October 2008)

• Detroit Edison (Michigan/Ontario): U.S. energy generator prosecuted in Ontario for contributing to St. Clair River total mercury loading (“Area of Concern” - U.S./Canada Great Lakes Water Quality Agreement) (February 2007)

• Province of Manitoba (Manitoba/U.S. EPA): Manitoba and 9 U.S. States sue the U.S. EPA for declaratory and injunctive relief re a water transfer rule alleging violation of the Clean Water Act (U.S.) that could cause injury to the waters of the province and states (September 2008) Current Canada/U.S. Environmental Disputes

• Teck Cominco (/B.C.): Citizen suit by Confederated Colville Tribes in Washington to enforce a U.S. EPA Unilateral Administrative Order against Teck Cominco – Canadian company – for discharge from Teck’s smelter lead-zinc operations in Trail, B.C. to the (1999) • Bilnia (New Jersey/Nova Scotia): A Delaware company applies for approval to develop a 120 hectare basalt quarry in Nova Scotia and was denied, and Bilnia now seeks $188M in damages - NAFTA claim (February 2008) Our Cross Border Panel

• Richard Du Bey (Seattle) • Counsel to Pakootas • To discuss Pakootas v. Teck Cominco • Barry Appleton (Toronto/Washington) • Counsel to Bilnia • To discuss Bilnia NAFTA claim • Dr. Shi-Ling Hsu (Vancouver) • Professor of Law at University of British Columbia Faculty of Law • To discuss trends in cross-border environmental litigation and broader implications RICHARD DU BEY Superfund (CERCLA) 42 U.S.C. §§ 9601 et seq. (1980)

• Provides a Federal “Superfund” to clean up uncontrolled or abandoned hazardous-waste sites . . . , and other . . . releases . . . into the environment • Potentially responsible parties (PRPs) are held strictly jointly and severally liable for total cleanup cost Superfund (CERCLA) 42 U.S.C. §§ 9601 et seq. (1980)

• Provides for enforcement by Tribal, State and Federal governmental agencies for the clean up of hazardous substances and each of the three sovereigns may assert statutory claims for Natural Resource Damages (NRD) Tribal Interests at Risk

• Indian Reservations are the remaining homeland of Indian Tribes

• Tribes entitled to use and enjoy their reservation homeland and associated on and off-Reservation natural resources

• Tribal rights to natural resources have significant economic, cultural and spiritual value Case Study: the Upper Columbia River

• Lake Roosevelt created by Grand Coulee Dam in 1942 • 150 miles between Grand Coulee Dam and US/Canada border • Colville Reservation west of Lake Roosevelt • Spokane Reservation east of Lake Roosevelt Area of Concern Cominco Smelter

Transboundary vs. Ontario contribution to PM2.5 – 1998 Spring averages Source: Ontario Ministry of the Environment The Grand Coulee Dam Source of Contamination

• Contamination from world’s largest lead-zinc smelter 16 km upstream from border • 1992 USGS sediment study identified elevated levels of metals in sediments • 1994 WA Dept. of Health issued fish consumption advisory Trail Smelter Timeline

• 1999 Tribe Petitioned U.S. Environmental Protection Agency (EPA) for PA • Sept 2000 – EPA granted Tribe’s petition for Superfund Preliminary Assessment • 2001 EPA conducting sampling/analysis sources of hazardous substances • 2003 EPA issued Unilateral Administrative Order (UAO) to Teck Cominco, a Canadian corporation (TCM) EPA’s unilateral order concluded that Teck:

• Arranged for the disposal of its hazardous substances from the Trail Smelter into the Upper Columbia River by directly discharging up to 145,000 tons of slag annually prior to mid-1995. • In addition, hazardous substances as liquid effluent were discharged into the Columbia River. • Both slag and effluent were carried downstream and settled in slower flowing areas. Rejection of EPA Order

• TCM rejects the EPA Order and asserts that EPA does not have jurisdiction. • 2004 CERCLA Citizen Suit filed by 2 Tribal members against TCM seeking to enforce the UAO issued by EPA. • Before answering the complaint, TCM filed a motion to dismiss the case. Issue Presented

• Whether U.S. Environmental Law (CERCLA) can be applied to a Canadian company whose discharges into the Columbia River flowed into Washington state. • The case presents an issue of jurisdiction: whether Congress intended to make a foreign entity subject to CERCLA. Presumption Against Extraterritoriality

It is a longstanding principle of American law “that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the .” . . . It serves to protect against unintended clashes between our laws and those of other nations which could result in international discord.

EEOC v. Arabian American Oil Company and Aramco Services Company, 499 U.S. 244, 111 S. Ct. 1227 Exception: The Effects Doctrine

“[T]he presumption [against extraterritoriality] is generally not applied where the failure to extend the scope of the statute to a foreign setting will result in adverse effects within the United States.”

Environmental Defense Fund, Inc. v. Massey, 986 F.2d 528, 531 (D.C. Cir. 1993), citing Restatement (Second) of Foreign Relations Law, §§ 38, 17 CERCLA to Remedy Domestic Conditions

“[The purpose of] CERCLA . . . was (1) to ensure the prompt and effective cleanup of waste disposal sites, and (2) to assure that parties responsible for hazardous substances bore the cost of remedying the conditions they created.” CERCLA is to be liberally construed to achieve those goals.

Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863, 880-81 (9th Cir. 2000), quoting Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1455 (9th Cir. 1986) District Court Decision

• Court denies TCM motion to dismiss (November 2004) finding that: • Court has subject matter and personal jurisdiction and • That the Complaint stated a cognizable claim for relief The District Court held that:

• CERCLA was intended to address domestic pollution, even when the source of the domestic pollution originated in Canada under Canadian permits.

• Congress clearly intended that CERCLA be used to clean up hazardous substances within the United States. The District Court Found That CERCLA Applied Extraterritorially

There is no doubt that CERCLA affirmatively expresses a clear intent by Congress to remedy ‘domestic conditions’ within the territorial jurisdiction of the U.S. That clear intent, combined with the well-established principle that the presumption [against extraterritoriality] does not apply where failure to extend the scope of the statute to a foreign setting will result in adverse effects within the United States, leads this court to conclude that extraterritorial application of CERCLA is appropriate in this case.

2004 U.S. Dist. LEXIS 23401 (E.D. Wash., Nov 8, 2004). th Appeal to 9 Circuit

• District Court opinion provided leave for TCM to file an immediate appeal to the Ninth Circuit Court of Appeals

• February 2005, the Ninth Circuit agreed to hear TCM’s appeal

• Trial Court proceedings were stayed (so long as EPA continues to fund the RI/FS) Case of First Impression

• First time in the 25 years since the Superfund was enacted, a circuit court will address whether a Canadian corporation operating in Canada can be held liable under a U.S. strict liability statute for the transboundary release of hazardous substances into the United States. Ninth Circuit Holds That CERCLA Is Being Applied Domestically

“We hold that because CERCLA liability is triggered by an actual threatened release of hazardous substances, and because a release of hazardous substances took place within the United States, this suit involves a domestic application of CERCLA.”

452 F.3d 1066, 1068 (9th Cir. 2006) United States Opposes Teck Cominco’s Petition for Writ of Certiorari

• Teck seeks en banc review by 9th Circuit and review is not granted. • Teck next filed a writ of certiorari to the U.S. Supreme Court. • Court requests brief from the United States, and the U.S. brief states that: “Because this case involves a direct and compelling United States’ interest, an assertion of jurisdiction to prescribed law would be consistent with considerations of international comity.”

Brief of the United States at 16 United States Rejects Teck Cominco’s International Law Challenge

• In its brief the United States rejects Teck Cominco’s international law challenge. • [a] A state has jurisdiction to prescribe law with respect to . . . conduct outside its territory that has or is intended to have substantial effect within its territory.

(Quoting Restatement (Third) of Foreign Relations Law of the United States § 402(1)(c) at 227-228 The United States Solicitor General goes on to say that:

• “Here, petitioner’s deliberate 90 year discharge of millions of tons of hazardous substances into a river just upstream from the United States directly and foreseeably caused harmful effects in the United States.”

Brief of United States at 17 United States Supreme Court Denies Petition for Writ of Certiorari

• Case returns to district court for litigation of enforcement action. • Teck Cominco is proceeding with CERCLA-like RIFS under settlement agreement with EPA. • Trial on the question of Teck Cominco’s liability under CERCLA as a covered person is set for October 2010. The Earth and myself are of one mind. The measure of the land and the measure of our bodies are the same.

Himmaton Yalatkit (Joseph) Nez Perce Chief Teck Cominco Smelter, Trail BC

ARSENIC LEAD ZINC CADMIUM MERCURY BARRY APPLETON International Litigation of Environmental Issues

• International law can be used to address litigation of trans-boundary environmental issues. • Domestic litigation can handle long- arm pollution effects. • Trade agreements like NAFTA can deal with failure of governments to properly address environmental laws. NAFTA & Environmental Issues

• NAFTA environmental side agreement allows NAEC to review non- enforcement of national environmental laws. • NAFTA Investment Chapter (Chapter 11) allows compensation to companies for government failure to meet NAFTA investment obligations. • These arbitrations provide monetary compensation only – they cannot provide final injunctive relief or strike down laws. NAFTA Chapter 11 Obligations

• §1114 – obligation not to relax environmental standards to attract foreign investment. • § 1105 – obligation to provide fair treatment, protection against arbitrary or discriminatory treatment. • § 1102 – obligation to provide treatment as good as that given to locals under like circumstances. • Obligations of national government includes sub-national governments and agencies. Example: The Bilcon Case

• A NAFTA claim on unfair and inappropriate use of discretion in a federal-provincial EA in Nova Scotia, Canada. • Claim is about raising Canadian environmental standards and requiring rule of law to apply. • US investors proposed a basalt quarry and marine terminal located on Digby Neck in the Bay of Fundy. The Project

• Investor proposed expansion of quarry and new marine dock. This required some government permits. • Some local residents were supportive but local fishers and out of area cottage residents opposed project. • Government used discretion to impose lengthy EA process. There are no guidelines on the use of EA discretion in Canada – different from US NEPA process. • Government adopted EA panel’s negative recommendation. The Key Arguments

• Canada’s failure to meet high standards in its administration of its EA Regime violates the following NAFTA rules: • International law standards because the operation of the regime was done in an arbitrary, non-transparent, discriminatory and unfair manner. • National treatment because more favourable treatment was given to Canadian- owned companies for the same types of environmental assessment and the same types of projects. Bilcon NAFTA Claim

What’s the problem? • Generally, there is no requirement for an environmental assessment panel for this type of project but Bilcon was subjected to a panel through ongoing negative use of discretionary powers by government. • Should politics rule over law? The local area was represented by the Canadian federal Fisheries Minister. Fisheries then became the lead department in the EA for a basalt quarry. The Process of the NAFTA Claim

• Claim issued in June 2008. • Three person NAFTA Tribunal constituted in January 2009. • Hearing is expected to take place in late 2010. • Decision in 2011? Implications for other areas?

• The Bilcon case is an important test case regarding the requirement for NAFTA governments to fairly apply their own rules to the private sector. • The scope for these cases is limited only to apply where a foreign investor has an investment, loan or other type of interest. Will governments enhance protections for locals to match? • Similar fairness obligations exist in over 2,500 other investment treaties around the world. SHI-LING HSU A Short History

• Boundary Waters Treaty (1909) – International Joint Commission

• Trail Smelter Arbitration (1931, 1941)

• International Air Quality Advisory Board of the IJC (1966)

• Air Quality Agreement (1991)

• North American Agreement on Environmental Cooperation (1993)

• Ozone Annex (2000) A Short History (cont’d)

• Michie v. Great Lakes Steel (1974)

• Devils Lake (2005)

• Pakootas v. Teck Cominco (2004)

• B.C. v. Imperial Tobacco (2005) Public Tort Litigation

• Tobacco • Lead paint • Handguns • Asbestos • Climate change • Transboundary environmental harm? Transboundary vs. Ontario contribution to PM2.5 – 1998 Spring averages Source: Ontario Ministry of the Environment Attributable Health Costs

Ontario Trans- Total Ontario boundary Proportion

Premature 2130 2751 4881 44% Death Hospital Admissions 6541 11,939 18,480 35%

Emergency Room Visits 7950 13,925 21,875 36%

Minor Illnesses 2,119,608 2,682,437 4,802,045 44%

$2.866 B $3.723 B $6.589 B 44%

Source: Ontario Ministry of the Environment • Tobacco • Lead paint • Handguns • Asbestos • Climate change • Transboundary environmental harm? • Tar sands? Marc McAree Willms & Shier Environmental Lawyers LLP Tel: 416-862-4820 Email: [email protected]

Richard Du Bey Short Cressman & Burgess PLLC Tel: 206-470-3587 Email: [email protected]

Barry Appleton Appleton & Associates Tel: 416-966-8800 Email: [email protected]

Shi-Ling Hsu University of British Columbia Tel: 604-822-2870 Email: [email protected]