May 20, 2019

CERCLA Heads Back to the U.S. Supreme Court

Darin Smith

In September 2018, the U.S. Court of Appeals for the Ninth Circuit issued a decision marking “the latest chapter in a multi-decade dispute.” Pakootas v. Teck Cominco Metals, Ltd., 905 F.3d 565, 571 (9th Cir. 2018). That dispute involves Teck Metals, Ltd.’s (Teck’s) liability under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) for discharging several million tons of waste into the Columbia River. Id. The Ninth Circuit’s latest decision upheld personal jurisdiction over Teck, which is a Canadian company, and affirmed Teck’s liability for more than $8.25 million in CERCLA response costs. Id. On March 4, 2019, Teck filed with the U.S. Supreme Court (SCOTUS) its petition for a writ of certiorari, largely asking the high court—again—to define the boundaries of CERCLA’s extraterritorial reach. Eleven years after Teck’s first petition for certiorari on this issue, will SCOTUS now weigh in?

Relevant Background on the Pakootas Litigation

Teck owns and operates the world’s largest lead and zinc smelter in Trail, British Columbia, approximately 10 miles north of the U.S.-Canada border. Id. at 572. For nearly a century, Teck discharged slag and effluent into the Columbia River that then settled in and around Lake Roosevelt and the Grand Coulee Dam in Washington State. Id. In 1999, the Confederated Tribes of the Colville Reservation (the Tribes), which retain certain rights in and title to the Columbia River, petitioned the U.S. Environmental Protection Agency (EPA) to assess and investigate the Upper Columbia River (the Site). Id. at 573.

EPA thereafter issued a unilateral administrative order (UAO) under CERCLA directing Teck to perform a remedial investigation and feasibility study of the Site. Id. When Teck disputed whether it was subject to CERCLA, EPA did not enforce its order, but two individual members of the Tribes filed a citizen suit to enforce the order. Id. The Tribes later joined the lawsuit as a co-plaintiff, and the State of Washington (the State) later joined as a plaintiff-intervenor. Id.

Teck moved to dismiss the citizen suit, arguing, inter alia, that CERCLA could not apply extraterritorially to its activities in Canada. Id. The district court denied the motion and certified the issue for immediate interlocutory appeal. Id. The Ninth Circuit accepted the appeal and affirmed the district court’s decision, holding “that the suit did not involve an extraterritorial application of CERCLA because Teck’s pollution had ‘come to be located’ in the United States.” Id. (quoting Pakootas v. Teck Cominco Metals, Ltd., 452 F.3d 1066, 1074 (9th Cir. 2006)).

In that 2006 case, the Ninth Circuit reasoned that CERCLA defines “facility” as “any site or area where a hazardous substance has . . . otherwise come to be located.” Pakootas, 452 F.3d at 1074 (quoting 42 U.S.C. § 9601(9)). And, EPA’s UAO further described the Site as the “extent of contamination in the United States associated with the Upper Columbia River.” Id. (emphasis in original). Thus, the CERCLA facility at issue was the Site (which Teck did not dispute) and the Site was entirely within the United States. Id. In other words, extraterritorial application of CERCLA was not invoked “precisely because this case involves a domestic facility.” Id. Teck petitioned for certiorari on this issue, generally arguing that Congress did not intend CERCLA to apply to acts of transboundary pollution, but SCOTUS denied Teck’s petition. See Teck Cominco Metals, Ltd. v. Pakootas, 128 S. Ct. 858 (2008).

In the ensuing bench trial, Teck was found jointly and severally liable as an arranger under CERCLA. See Pakootas, 905 F.3d at 574. The district court again rejected Teck’s argument that Washington courts lacked personal jurisdiction over it, and Teck again appealed. Id.

The 2018 Ninth Circuit Decision

On appeal, Teck challenged the district court’s exercise of personal jurisdiction, and therefore the extraterritorial reach of CERCLA, on two grounds: (1) the district court erroneously applied the “effects” test of Calder v. Jones, 465 U.S. 783 (1984); and/or (2) the Calder effects test was not satisfied in any event because Teck’s discharges into the Columbia River were not expressly aimed at Washington. Id. at 576–77.

The Court held that the Calder effects test applied. Id. at 577. Here, the Court found that Calder was appropriate because claims for cost recovery and natural resources are akin to tort claims and the “purposeful direction” analysis under Calder is applied in tort claims. Id.

Under Calder, the Court evaluated whether Teck (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that Teck knew was likely to be suffered in the forum state. Id. While the Court admitted that “[e]xpress aiming is an ill-defined concept . . . taken to mean ‘something more’ than ‘a foreign act with foreseeable effects in the forum state,’” the Court nevertheless had “no difficulty concluding that Teck expressly aimed its waste at” Washington. Id. at 577–78 (quoting Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1087 (9th Cir. 2000)). The Court dismissed Teck’s defense that its discharges “were aimed only at the Columbia River, which in turn was aimed at Washington.” Id. at 578. As the Court put it: “Rivers are nature’s conveyor belts.” Id. Because the Court determined that “there would be no fair play and no substantial justice if Teck could avoid suit in the place where it deliberately sent its toxic waste,” the Court upheld personal jurisdiction over Teck in Washington. Id. Teck subsequently filed with SCOTUS its—second—petition for certiorari.

Will the U.S. Supreme Court Weigh In this Time on the Extraterritorial Reach of CERCLA?

In its petition for certiorari, Teck presents three questions, two of which concern the extraterritorial application of CERCLA: (1) whether holding Teck liable for its discharges in Canada was an impermissible extraterritorial application of CERCLA; and (2) whether a State may exercise specific personal jurisdiction over a defendant because the defendant knew its conduct would have in-State effects but where the relevant conduct occurred elsewhere. See Pet. for a Writ of Cert. at i-ii, No. 18-1160 (filed Mar. 4, 2019).

As to the first question presented, Teck argues that the Ninth Circuit’s extraterritoriality ruling contradicts SCOTUS’s decisions in Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), and RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016). As Teck frames it, Morrison holds that courts must assume a statute does not apply extraterritorially unless a contrary intent appears in the text, and RJR Nabisco holds that a court must look at where the targeted conduct takes place to determine whether a statute is being applied extraterritorially. See id. Here, Teck argues that CERCLA evinces no such intent to apply extraterritorially and that its conduct took place in Canada. See id. at 4.

As to the second question presented, Teck argues that the Ninth Circuit’s reliance on Calder was misplaced as SCOTUS’s decision in Walden v. Fiore, 571 U.S. 277 (2014), has significantly limited Calder. See id. at 4–5. Teck positions Walden for the proposition that foreseeable harm in the forum is not sufficient to create personal jurisdiction over an out-of-state defendant. See id. at 5. On this point, Teck alleges that the Ninth Circuit decision splits from the Second, Fifth, and Seventh Circuits’ interpretations of Walden. See id.

In support of Teck’s petition, the U.S. Chamber of Commerce (the Chamber), the National Mining Association (NMA), Her Majesty the Queen in Right of the Province of British Columbia (British Columbia), and the Government of Canada all filed briefs as amici curiae. The Chamber and NMA highlight “the importance of this case to the U.S. business community and the negative consequences that would flow from” the Ninth Circuit’s decision. See Br. for the Chamber and NMA at 1, No. 18-1160 (filed Apr. 5, 2019). British Columbia maintains that “[t]he Ninth Circuit’s opinion is profoundly unsettling . . . , because it undermines the trans-boundary agreements between” the United States and Canada and creates uncertainty for British Columbia and businesses operating there. See Br. of British Columbia at 2-3, No. 18-1160 (filed Apr. 5, 2019). And, the Government of Canada raises concerns about the “established bilateral mechanisms and agreements between” the United States and Canada as well as “Canada’s sovereign prerogative to regulate conduct within its own borders through its own robust framework of environmental laws.” See Br. for the Government of Canada at 2, No. 18-1160 (filed Apr. 5, 2019).

In opposition, the State posits that “[t]he extraordinary facts of this case dispel any notion that exercising personal jurisdiction over Teck is unfair or is based on anything other than Teck’s purposeful connection to the forum, as required by” SCOTUS precedent. See Br. of the State at 1-2, No. 18-1160 (filed May 6, 2019). And, the Tribes argue, generally, that “Teck’s disposal of its wastes in the United States was part of a plan to dispose of its wastes without cost” as “Teck used Lake Roosevelt as a ‘free’ and ‘convenient disposal facility.’” See Br. of the Tribes at 1, No. 18-1160 (filed May 6, 2019). The Tribes also repeatedly highlight that Teck’s extraterritorial challenges have been raised before and dismissed by both the district court and Ninth Circuit, as well as previously denied certiorari by SCOTUS.

This time, it will be up to SCOTUS to decide in taking the case which weighs more heavily, the backing of seemingly all of Canada behind Teck, or, law of the case precedent in favor of the Tribes and the State.

Darin Smith

Published: May 20, 2019

Darin Smith is an associate in the Denver, Colorado, office of Squire Patton Boggs (US) LLP. He is a member of the firm’s Environmental, Safety & Health Practice Group where he counsels clients on a wide range of environmental liability issues relating to CERCLA, Resource Conservation and Recovery Act (RCRA), Clean Water Act (CWA), National Environmental Policy Act (NEPA), Endangered Species Act (ESA), and Oil Pollution Act (OPA).