Jan. 7 (Bloomberg) -- The U.S. Supreme Court refused to shield foreign companies from lawsuits accusing them of discharging pollution that made its way into American territory.

The justices today rejected an appeal by Teck Cominco Ltd., which sought to block a lawsuit over its British Columbia lead- zinc smelter located 10 miles (16 kilometers) north of the U.S. border. The smelter until 1995 discharged waste into the Upper Columbia River, which flows into Washington state.

The governments of Canada and British Columbia, siding with Teck Cominco, were among those objecting to a 9th U.S. Circuit Court of Appeals decision allowing the lawsuit by two members of a U.S. Indian tribe. Business groups said Canada might respond by demanding payment from U.S. plants whose pollution ends up in Canada.

``If Canada wishes to retaliate for the 9th Circuit's unwarranted intrusion into its sovereignty, it will find an easy basis under that court's reasoning for imposing liability upon U.S. businesses,'' the U.S. Chamber of Commerce argued in court papers filed in Washington.

The appeal suffered a setback in November when the Bush administration urged the high court not to hear the case. Although the administration said the lawsuit should be thrown out on other grounds, the government told the justices that foreign companies shouldn't be given an absolute shield from U.S. pollution lawsuits.

Teck Cominco's ``deliberate, 90-year discharge of millions of tons of hazardous substances into a river just upstream from the United States directly and foreseeably caused harmful effects in the United States,'' argued U.S. Solicitor General Paul Clement, the administration's top courtroom lawyer.

Indian Lawsuit

The lawsuit, filed by two members of the Confederated Tribes of the Colville Indian Reservation, says slag discharged from the smelter for almost a century, until 1995, has contaminated Washington's Lake Roosevelt. The suit invokes the Comprehensive Environmental Response, Compensation and Liability Act and accuses Teck Cominco of not complying with an order issued by the U.S. Environmental Protection Agency.

Joseph Pakootas and Donald Michel want Teck Cominco to investigate the contamination and pay for cleanup. Washington state is backing the suit.

``The natural and inevitable consequence of Teck Cominco's discharge of hazardous substances into the river in Canada was that they would be released into the environment in the United States,'' Patookas and Michel argued.

In its appeal, Vancouver-based Teck Cominco said the 9th Circuit ruling ``upsets a century-old tradition of bilateral solutions to transboundary pollution problems.''

Teck Cominco last year reached a settlement with the Bush administration on the issue, agreeing to conduct a study of the site under EPA supervision. The accord marked the first time the EPA had settled with a foreign company on pollution from abroad.

In urging the Supreme Court not to take up the case, the Bush administration said the settlement takes away the basis for the tribal members' suit.

The case is Teck Cominco Metals v. Pakootas, 06-1188.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: January 7, 2008 10:08 EST