Solid Waste & Recycling

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The Long Arm of American Justice

The import of American hazardous waste to Canadian landfills has recently received media attention, but anyone even remotely involved in waste management knows that the converse is true; a great deal ...


The import of American hazardous waste to Canadian landfills has recently received media attention, but anyone even remotely involved in waste management knows that the converse is true; a great deal of Canadian waste crosses the border to the south.

Waste managers in Canada must consider and observe a myriad of municipal, provincial and national standards. Generally, laws in jurisdictions outside of Canada are not contemplated when making business decisions within. However, over the last several years it has become increasingly apparent that decisions made north of the 49th parallel may well have legal implications arising from the regulatory environment south of it.

A case in point is the Comprehensive Environmental Response, Compensation and Liability Act (or CERCLA, also known as “Superfund” legislation). This is the federal U.S. legislation that governs liability issues for contamination of the environment. It’s used to fund remediation of contaminated sites. Intuitively, it would not seem that the remediation of contaminated sites in the U.S. could affect Canadian businesses. However, these businesses have in fact recently been subjected to Superfund liability by Canadian courts.

CERCLA provides the tools to assign liability for site contamination. For example, any person who arranges for waste disposal (or treatment) directly or via a contractor or transporter may be liable for remedial costs, among other costs or damages. While there are other Superfund mechanisms that create liability for the operators of waste management systems, this is an example of how liability could bind to a waste generator or broker. It’s clear that various parties — from an owner or operator of a landfill to waste brokers or waste generators — can be liable for waste that is, at one point or other, within their control.

The Canadian connection

Two Ontario cases demonstrate how Canadian individuals and businesses have been found liable for remedial costs under the Superfund legislation.

The first is the 1995 Ontario case of U.S.A. v. Ivey. The defendants (the president of two Ontario corporations and the corporations themselves) were ordered to pay damages pursuant to two judgments originally made against them in Michigan for remedial actions undertaken by the U.S. EPA in Michigan.

The defendants (although Ontario residents) owned and controlled Liquid Disposal Inc., a Michigan corporation that owned a site that became the subject of EPA remedial activities. The Ontario court found that there was no reason to prevent the plaintiff (the U.S. government) from recovering cleanup costs.

The other Canadian case was that of U.S.A. v. Friedland. The EPA once again sought to recover cleanup costs through the Ontario courts from a Canadian resident (Friedland) who was co-founder and president of two companies that owned and operated the Summitville mine in Colorado.

In Friedland, the court considered an injunction (freezing the defendant’s Canadian assets). However, the court ultimately (on mostly procedural grounds) found in favour of the defendant and rejected the injunction. The important point to be taken from this case, is that the EPA once again attempted to enforce a judgment of an American court in Canada. Had there been no procedural flaws in the application of the U.S. regulator, it’s quite possible that the injunction would have been permitted.

Implications

As is demonstrated by these two cases, it’s quite possitlbe that Canadian companies or public bodies (such as municipalities) sending waste to a solid waste landfill in the U.S. could be held liable for Superfund cleanup costs at that landfill.

That having been said, Superfund legislation is not part of the normal discourse in the Canadian waste management industry, and owners and operators do not generally consider such liability.

This approach is increasingly risky. The zealousness with which the EPA will act cannot be understated. In the Friedland case, the lack of abandon with which it sought the injunction was, in part, the reason that the court denied the injunction. As a result, any Canadian individual or organization that finds itself on the other end of a lawsuit with the EPA can expect a “no holds barred” approach to litigation that is perhaps more in vogue with American justice than is commonly experienced in Canada.

These cases should encourage Canadian participants in the American waste management market to reevaluate their approach and to scrutinize potential liabilities very carefully.


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