Kevin earlier today asked about the extraterritorial reach of human rights treaties. But, what about U.S. statutes – how far do they reach? What exactly constitutes an extraterritorial application of U.S. law? On July 6, the Ninth Circuit addressed this issue in Pakootas v. Teck Cominco Metals, Ltd. (see here). The Ninth Circuit ruled that “slag” metal discharges from Teck Cominco’s smelter in Trail, British Columbia, which had traveled down the Columbia River and come to rest within U.S. territory, were subject to regulation under the U.S. Superfund statute – the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 USC 9601 et seq. The defendant, Teck Cominco, had argued that applying CERCLA to conduct by a Canadian company in Canada would violate the judicial canon that U.S. statutes do not apply extraterritorially unless Congress makes clear its intent to do so. The Court’s decision, however, avoided this presumption against extraterritoriality entirely; it interpreted CERCLA’s scope, involving a “facility” engaged in the “release” or “threatened release” of hazardous substances, to apply to the actual polluted sites within U.S. territory, notwithstanding that the polluted substances had originated in Canada. As such, the Court reasoned holding Teck Cominco liable under CERCLA constituted a “domestic” — not an “extraterritorial” — application of CERCLA (the court hinted, in any event, that it would have applied CERCLA on the grounds that Teck Cominco’s foreign acts produced “domestic effects” within the United States – a situation that in the past has led U.S. courts to recognize an exception to the presumption against extraterritoriality).
No less than four things fascinate me about this case. First, I love the irony that Teck Cominco’s smelter is the very same smelter that led to the seminal international environmental law decision — the Trail Smelter Arbitration. In that case, the smelter was discharging air pollutants (sulfur dioxide) in Canada that crossed the border and caused damage to U.S. property. The tribunal held Canada liable for the damage caused in the United States by this privately-owned facility. The case is often remembered for establishing liability under international law for transboundary environmental pollution, but it’s often forgotten that the arbitral panel reached its decision by applying international and U.S. law.
Second, although both Canadian and U.S. officials have been heavily involved in finding a way to get the pollution in the United States cleaned up, there’s been relatively little argument over the U.S. ability to exercise prescriptive jurisdiction over Teck Cominco’s pollution as a matter of international law. Indeed, even though the Ninth Circuit did not go so far, the United States had a strong case that regulating Teck Cominco’s polluting activities in Canada falls under the objective territoriality principle of prescriptive jurisdiction (a.k.a. the “effects doctrine”), which allows a state to regulate conduct occurring outside its territory which has substantial effects within its territory. But this fight centered, not on whether the U.S.
could regulate Teck Cominco’s conduct under international law, but whether Congress
had regulated that conduct when it enacted CERCLA – i.e., a question of domestic statutory construction.
Third, the Ninth Circuit decided to apply CERCLA to Teck Cominco notwithstanding that Teck Cominco and the EPA had reached a negotiated settlement under which Teck Cominco will reportedly pay an initial $20 million to fund clean-up costs. The Court reasoned that since this settlement agreement did not involve the Pakootas Tribe, which had brought the suit to enforce CERCLA, nor the intervening U.S. state of Washington, the suit could proceed (see footnote 10 of the opinion). As such, it will be interesting to see if the district court on remand makes Teck Cominco pay more money than it thought it was agreeing to pay via its deal with EPA.
Finally, the Teck Cominco decision parallels the Supreme Court’s opinion last year in Spector v. Norwegian Cruise Lines, in deciding to avoid the presumption against extraterritoriality issue by focusing on a statute’s regulation of conduct within the United States while downplaying any attendant extraterritorial impacts. In Spector, the Supreme Court held that the Americans with Disabilities Act (ADA) generally applied to foreign-flag cruise ships in U.S. waters notwithstanding complaints that such an application would control cruise-ship operations and facilities outside of U.S. territory and conflict with foreign laws. Similarly, here, CERCLA may be applied only within U.S. territory in the Court’s eyes, but you can bet that the decision to apply CERCLA will have attendant impacts on how Teck Cominco conducts its Canadian operations. I wonder whether cases such as these signal a new trend, where U.S. courts go out of their way to avoid the extraterritoriality question by arguing that the case only involves construing how a statute applies within U.S. territory. Could it be that the courts, and by implication Congress, are moving away from the presumption against extraterritoriality, even while they maintain lip service to the canon? If so, is that easily reconciled with the United States’ simultaneous stated interest in limiting the extraterritorial reach of its treaty obligations?
For those who want to know (much) more about the Teck Cominco case and its antecedent Trail Smelter arbitration, check out Professor Robinson-Dorn’s extremely useful web-site here, which collects virtually all the relevant documents leading up to the Ninth Circuit’s decision.
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