TRAIL, B.C. - On a beach in northeast Washington state near the Canadian border, Patti Bailey grabs a handful of what looks like sand and rolls the dark grains through her hands.
It's slag, the grainy waste from the Teck Resources (TSX:TCK.B) lead and zinc smelter in Trail, B.C., about 10 kilometres north of the nearby Canadian border.
"They're little time bombs and they're releasing zinc, copper, arsenic and other metals into the environment," said Bailey, an environmental planner for the Confederated Tribes of the Colville Reservation.
A Washington state judge has ruled that Teck is liable for the costs of cleaning up contamination in the Columbia River south of the border from decades of dumping slag and effluent from the company's Trail operations.
In a decision announced late last week, Judge Lonny Suko ruled that, "for decades Teck's leadership knew its slag and effluent flowed from Trail downstream and are now found in Lake Roosevelt, but nonetheless Teck continued discharging wastes into the Columbia River."
Suko noted that the company admitted treating the international waterway as a free waste disposal service. Specifically, the judge in Yakima, Wash., found that from 1930 to 1995, Teck intentionally discharged at least 9.97 million tons of slag that included heavy metals such as lead, mercury, zinc and arsenic.
The judge also found that Teck knew the hazardous waste disposed of in the Columbia River was likely to cause harm.
The decision gives the U.S. Environmental Protection Agency the ability to force Teck to pay for the cleanup, and potentially for any ongoing damages and losses that result from the ongoing contamination. That issue has yet to be determined by the court.
Some believe the landmark case could have implications for mining and other industrial interests on both sides of the border. The Canadian government, the province of British Columbia and the U.S. National Mining Association have all intervened in the case to argue that the issue should be resolved bilaterally.
As they awaited the judge's decision, Washington state officials were optimistic.
"We're hopeful after... how many years has it been?" joked Kristie Elliott, lawyer for the Washington state Attorney General. "After this much significant litigation we're now finally to the substance of the case."
Eight years after the case was launched and on the eve of a trial this fall, Teck admitted to discharging slag and liquid effluent into the river from 1896 to 1995. But it argued the U.S. law that forces companies to clean up contamination sites, known as the Superfund law, was never intended to reach across the international border.
But Elliot said complaints about the contamination from the Trail smelter surfaced as early as the 1940s, when farmers from Washington state sued Cominco, Teck's predecessor, over air pollution from the smelter. That case was eventually resolved in arbitration by the two federal governments, and set a precedent for cross-boundary pollution law.
"Still, they continued to discharge, and they knew it was accumulating in Lake Roosevelt and that studies being done by various government agencies were finding mercury contamination down there," Elliott said. The 209-kilometre long lake was created in 1941 after the Grand Coulee Dam was built on the Columbia River.
The company took out insurance to cover liability, but didn't stop discharging effluent for decades, she said.
Within the fences of the largest smelting operation in North America, about a billion and a half dollars has been spent modernizing Teck's Trail Operations over the past 25 years. A new furnace installed in 1996 cut emissions dramatically.
Last month, Teck completed a $5.8-million project to reduce the risk of a spill into the river.
The company is now installing a $1.2-million automated leak detection system, and a $125-million acid plant that will reduce sulphur dioxide emissions a further 15 to 20 per cent.
Recycled lead makes up about 20 per cent of total production and anything that can be used or recycled is, right down to granules of slag sold for processing into Portland cement.
"The employees who work here at Trail Operations live in this local area, and participate and take part in everything it has to offer," said Richard Deane, manager of environment, health and safety at the smelter.
"It's a great area from an outdoor quality of life perspective. Everyone here enjoys the benefits of the river — swimming, kayaking, fishing, all these types of things."
The company has also spent tens of millions of dollars on environmental rehabilitation, from digging up contaminated gardens and bringing in replacement soil, to replanting dead trees.
Lead emissions have decreased from about 100 tonnes a year in the early 1990s to about half a tonne last year.
Teck is now taking aim at "fugitive dust" emissions, covering raw materials stored outdoors, and is building an indoor facility for all mixing processes that stir up dust.
That has not been the case south of the border, say the Colville tribes.
Years of discussions went nowhere, so they petitioned the U.S. Environmental Protection Agency in 1999 to assess the river contamination under the U.S. Superfund law. The agency found the river was indeed contaminated, and it found Teck was responsible. That's when the legal battle began.
Frustrated by the lack of action, two band members launched civil action eight years ago. The legal wrangling has gone all the way to that country's highest court — the U.S. Supreme Court refused to hear Teck's appeal.
The smoke-billowing smelter on the banks of the Columbia River towers over Trail like a fortified castle of old. The town has literally grown around this industrial giant, which first fired up its stacks in 1896.
"Teck is Trail and Trail is Teck," said Mayor Dieter Bogs, a former Teck engineer-turned-politician. "I don't know what Trail would be like without Teck, because the city and the company are really one and the same."
Bogs admitted there are concerns about a recent study that found elevated levels of bowel disease in the Washington state community of Northport, just across the border.
In Trail, it was blood lead levels in children that sparked alarm in the 1970s. That has greatly improved, Bogs said. In children under three, levels are considered safe but remain persistently higher than the community's health committee would like.
The Trail Health and Environment Committee released results last month of the most recent annual testing, which found an average level of 5.4 micrograms of lead per decilitre — higher than last year's average of 5 micrograms. Eighty-four per cent of children tested below 10 micrograms, the level Health Canada considers a concern.
The committee is working on a plan to minimize exposure.
"If people work with us, as far as I'm concerned this is a very safe place to live," said Bogs, committee chairman.
He said the U.S. court case is a concern because anything that affects the company affects the town. The price tag for the cleanup alone in Washington state has been estimated at $1 billion.
Vancouver-based Teck Resources Ltd. ended fiscal 2011 with a $4.4 billion profit.
Teck American Inc., the company's U.S. branch, entered into an agreement with the U.S. Environmental Protection Agency in 2006 to undertake a remedial investigation and feasibility study of the Upper Columbia.
It has spent $55 million so far, and the company says it has found encouraging results in water and fish testing. The Colville tribes disagree.
John Sirois, chairman of the Colville Business Council, welcomed the decision.