Fielding Chemical can now sue the federal government for damages, for the extra costs it incurred in disposing of PCB waste because of federal orders closing the US border to PCB exports, and as a result of storing the PCB waste at its facility for additional years while losing the opportunity to use the land and equipment for other purposes. The orders were issued in 1995 – 1997, purportedly for environmental reasons, under the Canadian Environmental Protection Act. As a result, Fielding was forced to use the Alberta Swan Hills facility to destroy its PCB wastes, instead of the less expensive services offered by US company SD Myers. Last month, Fielding had an important success.
SD Myers successfully challenged the orders under Chapter 11 of the North American Free Trade Agreement. In 2000, Canada was ordered to pay SD Myers $6,050,000 as damages plus costs, on the ground that the orders breached NAFTA and that “there was no legitimate environmental reason for introducing the ban”. The Federal Court of Canada upheld the award, concluding:
“[t]here is no dispute that the Canadian ban on PCB exports sought to protect the Canadian companies from U.S. competition and was not for a legitimate environmental purpose”: Canada (Attorney General) v. S.D. Myers, Inc., , [2004] 3 F.C.R. 368 (T.D.), at paras. 18 and 73.
Fielding then launched its own lawsuit in the Ontario Superior Court, alleging that the former Minister of the Environment, the former Minister of Health, and/or officers and employees of Environment Canada and the Ministry of Health engaged in misfeasance in public office when authorizing, approving, recommending or concurring with the issuance of the orders in the purported exercise of public functions under CEPA.
The federal government tried to block the Fielding lawsuit, arguing that they should have sought relief in the Federal Court (where there is a 30 day time limit and where they could not obtain damages.) The case was argued to the Ontario Court of Appeal with three others in 2008; the court decided that all four claims could proceed in the Superior Court.
The federal government obtained leave and appealed three of the cases further to the Supreme Court of Canada: Fielding, Telezone and McArthur. In January, Telezone and McArthur were argued, with four other similar cases from around the country. (Presumably, the parties sensibly agreed to be bound by the Telezone decision.) In December, the Supreme Court rejected the Telezone and McArthur appeals, and upheld the decision of the Ontario Court of Appeal, allowing both plaintiffs to sue the government for damages. Since the Fielding case involves the same principles, Fielding must now be able to proceed with its lawsuit for damages that it suffered because of the orders closing the border to exports of PCB wastes. Many other companies suffered similar damages, but may have missed the limitation period for commencing claims of their own.
Fielding’s position is perfectly understandable: its pocket was picked for political reasons. Still, if Fielding ultimately prevails, it could become even harder for environmental regulators to make decisions against the interests of industry. And the short lived PCB waste export ban of 15 years ago will become even more expensive for today’s taxpayers.