Teck Cominco Metals, Ltd. (Teck), a Canadian company, sought interlocutory review of a district court's denial of its motion to dismiss an action brought by individual members of the Confederated Tribes of the Colville Reservation (Pakootas), in which the State of Washington intervened. Pakootas sought under the citizen suit provision of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),[1] a declaration that Teck violated a 2003 Environmental Protection Agency (EPA) order requiring Teck to assess a contaminated site on the Columbia River in Washington (Site). Pakootas had also sought penalties for non-compliance as well as recovery of costs and fees. The Ninth Circuit upheld the district court's denial of Teck's motion to dismiss for failure to state a claim, rejecting Teck's arguments that its Canadian smelter's discharge of waste into the Columbia did not cause it to become liable for arranging for the disposal of hazardous substances under CERCLA as well as Teck's argument that this case involved an extraterritorial application of CERCLA.
In response to a 1999 petition by the Colville Tribes under CERCLA § 9605,[2] EPA assessed the Site, discovered heavy-metal contamination and the presence of slag, a smelting byproduct, and concluded in 2003 that the Site warranted listing on the National Priorities List (NPL).[3] Teck owns and operates a smelter in Trail, British Columbia, which from 1906 to 1995 discharged up to 145,000 tons of slag annually into the Columbia River some of which accumulated at the Site. In December 2003, the EPA ordered Teck, under CERCLA, to conduct a remedial investigation/feasibility study (RI/FS)[4] for the Site. As of the date of the appellate decision's filing, Teck had not obeyed this order (Order),[5] and the EPA had not attempted to enforce it.
In response to Pakootas's citizen suit, Teck filed a motion to dismiss, arguing that the district court lacked personal and subject matter jurisdiction because the Order was based on activities by a Canadian entity with no United States presence and because the activities took place in Canada. Teck also argued that Pakootas failed to state a valid claim under CERCLA. The district court denied Teck's motion to dismiss, holding that while the case involved CERCLA's extraterritorial application, dismissal was inappropriate because there was a significant federal question under CERCLA and that under CERCLA, Teck was a "person"[6] and could be held liable as a hazardous waste "generator"[7] or as a hazardous waste disposal "arranger."[8] The district court sent its order for immediate review by the Ninth Circuit, per 28 U.S.C § 1292(b).[9] Subsequently, the Ninth Circuit granted Teck's petition for interlocutory appeal and the district court granted Teck's motion to halt proceedings pending the appeal's outcome. The Ninth Circuit reviews de novo questions of law[10] as well as district court rulings on motions to dismiss for failure to state a claim.[11]
The Ninth Circuit began by addressing Teck's argument that because Congress did not clearly indicate that it intended CERCLA to apply extraterritorially, Pakootas's suit involved an invalid extraterritorial application of CERCLA. Noting that CERCLA, unlike the Clean Water Act,[12] the Clean Air Act,[13] and the Resource Conservation and Recovery Act (RCRA),[14] is not regulatory in nature, but instead imposes liability for hazardous waste site cleanup. The court explained that three conditions must be satisfied for CERCLA liability to attach: 1) the site where there is a release, actual or threatened, of hazardous materials must be a "facility";[15] 2) a release, actual or threatened, of hazardous materials must have occurred from the facility;[16] and 3) the party must fit within one of the four categories of persons subject to liability.[17]
The Ninth Circuit next discussed whether the Site fit CERCLA's definition of "facility."[18] The court reasoned that the Order correctly defined the pertinent "facility" as the Site because slag came to be located there.[19] Noting that Teck did not argue against identification of the Site as a CERCLA "facility," the court concluded that, because the Site is within the United States, Pakootas's complaint did not entail an extraterritorial application of CERCLA.
Next, the Ninth Circuit addressed the "release" element of CERCLA liability. Noting the statutory definition of "release"[20] and Ninth Circuit precedent establishing "that the passive migration of hazardous substances into the environment from where hazardous substances have come to be located is a release under CERCLA,"[21] the court held that the leaching of dangerous substances from the Site's slag was an entirely domestic release under CERCLA.
The Ninth Circuit next addressed the final condition of CERCLA liability, considering whether Teck was a "covered person" under CERCLA. The court began by evaluating Teck's alternate argument that if Teck had indeed "arranged for disposal" of the slag in Canada under § 9607(a)(3),[22] then basing CERCLA liability on these actions entailed CERCLA's improper extraterritorial application. Teck argued that while § 9607(a)(3) applies to "any person," the Supreme Court's recent determination in Small v. United States[23] that the phrase "any court"[24] does not encompass foreign courts necessarily excluded foreign corporations from CERCLA's "any person." Providing that the Supreme Court used United States v. Palmer[25] in deciding Small, the Ninth Circuit applied the two guidelines used in Palmer to discern whether a statutory term like "any person" applies to foreign parties: 1) state jurisdiction over the party, and 2) legislative intent for the term to apply.[26] In considering the first Palmer guideline, the court noted that Teck did not appeal the district court's finding of specific personal jurisdiction, and provided that although not required to consider this determination sua sponte[27] it agreed with the district court's finding based on Washington State's long-arm statute[28] and Ninth Circuit precedent.[29]
Next, the Ninth Circuit considered the second Palmer guideline. Noting that beyond the definition of "any person" CERCLA does not indicate whom it covers, the court looked to CERCLA's definition of "environment,"[30] which includes "any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States."[31] The court explained that this definition, considered in light of Congress's intent for CERCLA to apply to parties responsible for hazardous waste releases in the United States,[32] showed that the second Palmer guideline was met.
After determining that CERCLA applied to Teck under Palmer, the Ninth Circuit considered whether this application was domestic or impermissibly extraterritorial. The court noted that liability under CERCLA is triggered neither by arranging for the disposal of hazardous substances, nor by their actual disposal, but by the threatened release or release of such a substance.[33] Thus, a currently legal disposal activity could result in CERCLA liability if that disposal threatens or causes the release of a hazardous substance.[34] Because CERCLA liability does not attach to arranging for the disposal of hazardous substances or to actually disposing of such substances, the court surmised that the location where a party conducted such acts is not relevant in determining if there is an extraterritorial application of CERCLA. The court concluded that because Teck's actual or threatened release took place at the Site in the United States, this case entails CERCLA's domestic application.
Next, the Ninth Circuit reinforced its conclusion that this case does not involve CERCLA's extraterritorial application by comparing CERCLA to RCRA. The district court had assumed that this case involved extraterritorial application of CERCLA because to find otherwise would mean relying on the "legal fiction"[35] that the release of hazardous substances at the Site is completely separate from Teck's discharge of those substances into the Columbia River in Canada. The Ninth Circuit provided that this "legal fiction" is a result of the distinctly separate purposes of CERCLA and RCRA; CERCLA imposes liability for cleanup of sites where there has been a threatened or actual release of hazardous substances and does not require that liable parties change their disposal practices, while RCRA and Canada's equivalent of RCRA regulate disposal activities in their respective countries.
Finally, the Ninth Circuit addressed Teck's argument that because it disposed of the slag itself it could not be held liable under § 9607(a)(3) for arranging the slag's disposal by another entity. Noting that neither the Order nor Pakootas specifically alleged Teck's liability as an "arranger," the court nevertheless considered the parties' arguments for a different meaning of the following ambiguous language in § 9607(a)(3):
any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for the transport for disposal or treatment, of hazardous substances owned or possessed by such a person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such substances . . . shall be liable for . . . certain costs of cleanup.[36]
Pakootas argued the phrase "by any other party or entity" refers to the party owning the waste, while Teck argued that the phrase refers to a party with whom the owner arranges for disposal. The Ninth Circuit adopted Pakootas's construction, such that a party could be liable as an arranger without owning the waste. This is an approach the court had used in the past[37] and entails reading the word "or" into the section: "any person who . . . arranged for disposal . . . of hazardous substances owned or possessed by such person [or] by any other party or entity." Teck argued for a construction of § 9607(a)(3) requiring the removal of two commas, such that the pertinent language would read: "any person who . . . arranged for disposal or treatment . . . of hazardous substances owned or possessed by such person [] by any other party or entity []." Although the court acknowledged that an implication from an earlier Ninth Circuit case, Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp. (Kaiser Aluminum)[38] supported Teck's construction, the court reasoned that this construction would allow a hazardous waste generator to escape CERCLA liability by not "arranging" for disposal with a second party, contrary to the intent of Congress and CERCLA's comprehensive statutory scheme.[39] The court took the suggestion of the State of Washington and Pakootas and dismissed the statement in Kaiser Aluminum upon which Teck had relied, declaring that the statement was ambiguous as well as classifiable as a dictum.
In conclusion, the Ninth Circuit upheld the district court's denial of Teck's motion to dismiss for failure to state a claim, rejecting Teck's arguments that it was not liable under CERCLA for slag discharged from its Canadian smelter into the Columbia River that came to rest in Washington State.
[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-75 (2000).
[2] Id. § 9605.
[3] See 4 William H. Rodgers, Jr., Environmental Law: Hazardous Wastes and Substances § 8.7(C) (Supp. 2005) (The NPL "is a compilation of uncontrolled hazardous substances releases in the United States that are 'priorities' for long-term evaluation and response," but, "[i]inclusion of a site or facility on the list requires no action, assigns no liability, and does not pass judgment on the owner or operator. . . . [T]he key consequence of being listed is that only NPL sites qualify for [Superfund] financed remedial action.").
[4] See 40 C.F.R. § 300.430(a)(2) (2006) (describing purpose of RI/FS).
The purpose of the [RI/FS] is to assess site conditions and evaluate alternatives to the extent necessary to select a remedy. Developing and conducting an RI/FS generally includes the following activities: project scoping, data collection, risk assessment, treatability studies, and analysis of alternatives. The scope and timing of these activities should be tailored to the nature and complexity of the problem and the response alternatives being considered.
Id.
[5] Administrative Order on Consent for Remedial Investigation/Feasibility Study at 2, In re Upper Columbia River Site, No. CERCLA-10-2004-0018 (Dec. 11, 2003), available at http://yosemite.epa.gov/R10/CLEANUP.NSF/UCR/Enforcement.
[6] 42 U.S.C. § 9601(21) (2000).
[7] Id. § 9607(a)(3).
[8] Id.
[9] See 28 U.S.C. § 1292(b) (2000) (giving a district court the discretion to certify for immediate appeal an otherwise unappealable order if the judge is "of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation").
[10] Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997).
[11] Decker v. Advantage Fund Ltd., 362 F.3d 593, 595-96 (9th Cir. 1997).
[12] Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1387 (2000).
[13] Clean Air Act, 42 U.S.C. §§ 7401-7671q (2000).
[14] Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. §§ 6901-92k (2000) (amending Solid Waste Disposal Act, Pub. L. No. 89-272, 79 Stat. 992 (1965)).
[15] 42 U.S.C. § 9601(9) (2000).
[16] Id. § 9607(a)(4).
[17] Id.
[18] See id. § 9601(9) (defining "facility" as "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise comes to be located").
[19] See 3550 Stevens Creek Assocs. v. Barclays Bank of Cal., 915 F.2d 1355, 1360 n.10 (9th Cir. 1990) ("[T]he term facility has been broadly construed by the courts, such that in order to show that an area is a facility, the plaintiff need only show that a hazardous substance under CERCLA is placed there or has otherwise come to be located there." (internal quotation marks omitted)).
[20] See 42 U.S.C. § 9601(22) (2000) (defining "release" as "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment").
[21] Pakootas v. Teck Cominco Metals, 452 F.3d 1066, 1075 (9th Cir. 2006).
[22] 42 U.S.C. § 9607(a)(3) (2000).
[23] 544 U.S. 385, 390-91 (2005).
[24] 18 U.S.C. § 922(g)(1) (2000).
[25] 16 U.S. (3 Wheat.) 610 (1818) (holding that although a statute's definition of "persons" did not specifically include foreign parties, the statute regardless applied to foreign parties)
[26] Id. at 631.
[27] See Smith v. Idaho, 392 F.3d 350, 355 n.3 (9th Cir. 2004) (citing the "longstanding rule that personal jurisdiction, in the traditional sense, can be waived and need not be addressed sua sponte").
[28]Wash. Rev. Code § 4.28.185 (2005).
[29] See Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1486 (9th Cir. 1993) (holding that "personal jurisdiction can be predicated on (1) intentional actions (2) expressly aimed at the forum state (3) causing harm, the brunt of which is suffered--and which the defendant knows is likely to be suffered--in the forum state").
[30] 42 U.S.C. § 9601(8) (2000).
[31] Id. (emphasis added).
[32] See ARC Ecology v. U.S. Dep't of the Air Force, 411 F.3d 1092, 1096-98 (9th Cir. 2005) (citing legislative history demonstrating that Congress intended CERCLA to apply to cleanup hazardous waste sites in the United States).
[33] 42. U.S.C. § 9607(a)(4) (2000).
[34] See Cadillac Fairview/California, Inc. v. United States (Cadillac Fairview/California I), 41 F.3d 562, 565-66 (9th Cir. 1994) (holding that a party that sold a product to another party "arranged for disposal" of a hazardous substance); Cadillac Fairview/California, Inc. v. Dow Chem. Co. (Cadillac Fairview/California II), 299 F.3d 1019, 1029 (9th Cir. 2002) (characterizing the conduct at issue in Cadillac Fairview/California I as "legal at the time").
[35] Pakootas v. Teck Cominco Metals, 452 F.3d 1066, 1079 (9th Cir. 2006).
[36] 42 U.S.C. § 9607(a)(3) (2000) (emphasis added).
[37] See Cadillac Fairview/California I, 41 F.3d at 565 (interpreting CERCLA).
Liability is not limited to those who own the hazardous substances, who actually dispose of or treat such substances, or who control the disposal or treatment process. The language explicitly extends liability to persons "otherwise arrang[ing]" for disposal or treatment of hazardous substances whether owned by the arranger or "by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity."
Id.(quoting 42 U.S.C. § 9607(a)(3) (2000)).
[38] 976 F.2d 1338, 1341 (9th Cir. 1992) (suggesting that Teck's construction may be appropriate, stating: "Nor has [Plaintiff] alleged that [Defendant] arranged for the contaminated soil to be disposed of 'by any other party or entity' under 9607(a)(3)").
[39] See Cadillac Fairview/California I, 41 F.3d at 565 n.4 (stating § 9607(a)(3) "must be given a 'liberal judicial interpretation . . . consistent with CERCLA's overwhelmingly remedial statutory scheme.'" (quoting United States v. Aceto Agric. Chem. Corp., 872 F.2d 1373, 1380 (8th Cir. 1989)).
