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A good day for North Carolina?

The following is a recap of the oral argument on Monday in Alabama v. North Carolina (132 Original) by Josh Friedman of Akin Gump. To see Josh’s earlier preview of the argument, check the case’s page on SCOTUSwiki.

A fair read of Monday morning’s oral argument suggests that the Court harbors at least some skepticism regarding the impropriety of North Carolina’s withdrawal from the interstate compact.  From the start of his argument on behalf of the plaintiff states and the Commission, eight Justices barraged Carter Philips with questions regarding whether North Carolina had actually acted in bad faith.  The tenor of these questions, which touched upon both contract law (Justice Scalia: “I find it difficult to believe that there is an obligation to commit money and a liability for failure to do so in a compact which says that the State may withdraw at any time.”) and the particular facts of this case (Justice Stevens: “I’m not sure what happened to the $80 million, and I guess you aren’t, either.”) suggest that the Court is at least empathetic to North Carolina’s defense that it did not seek the necessary licensing because it would have been futile to do so.  Mr. Phillips responded that regardless whether North Carolina had the resources to build the plant, it was obligated to take some steps to secure the appropriate licensing.  It is not apparent, however, that this notion assuaged the Court’s doubts.

Much of Mr. Phillips’s time was devoted to the principles of contract law underlying the dispute, and in fact he addressed the states’ constitutional argument only briefly towards the end of his argument.  On this point he contended that the Eleventh Amendment does not bar the Commission’s claims against North Carolina because those claims are identical, or at least sufficiently close enough in light of the relevant precedent, to the states’ claims.

Deputy Solicitor General Edwin Kneedler next addressed the Court on behalf of the United States as an amicus in support of the states and Commission.  Mr. Kneedler explained that the interest of the United States was two-fold:  First, he argued that the United States did not believe that the Eleventh Amendment precluded the Commission’s claims.  Rather, he explained, the Court’s precedent is replete with non-State entities that have successfully litigated claims against states.  Second, the Court should not construe the Compact as empowering the Commission to award money damages to the complaining plaintiffs.  This must be so, he explained, both because the Compact contemplated only prospective sanctions and because monetary sanctions do not expressly appear among the enumerated powers of the Commission.

Walter Dellinger, on behalf of North Carolina, spoke next.  The thrust of Mr. Dellinger’s argument was that because the states were party to an interstate compact, “not based on a coercive model,” North Carolina is not liable for damages.  Specifically, Mr. Dellinger averred that North Carolina’s withdrawal did not breach the Compact because the states were plainly afforded such rights.  Mr. Dellinger explained that as more states withdrew and the Commission ceased providing funding, it was simply impracticable for North Carolina to remain party to the Compact.  The Court also pressed Mr. Dellinger on both the steps North Carolina took towards compliance with the contract after South Carolina’s 1995 withdrawal, as well as whether North Carolina continued to receive Commission funds after ceasing all steps towards compliance.  Both of these issues could prove dispositive if decided in the plaintiff-states’ favor.  However, Mr. Dellinger’s answers – that the State continued funding its intrastate waste disposal authority until and that at least some of the funds received in later years went to paying existing debts – met with little resistance from the Court.

Mr. Dellinger also briefly addressed about the constitutional issues raised in this case.  In particular, he asserted – in contrast to arguments made by Mr. Phillips – that the Commission and the plaintiff-states were advancing different arguments and that in any event the Court’s precedents prohibit non-entities from asserting claims against states.

On a few separate instances Mr. Dellinger spoke at length, which marked a reversal from the back-and-forth argument that characterized Mr. Phillips’ time at the podium and which at least suggests that the Justices are leaning in North Carolina’s favor.  At the least, it appears that the Court is wary of reaching a result that would penalize a state for refusing to take wasteful steps towards a project that was destined to fail.

On rebuttal, Mr. Phillips advanced two final points.  First, he contended that each plaintiff-state had a right under the Compact to the $80 million given to North Carolina, such that the money is properly recoverable if North Carolina breached the Compact.  Second, he disputed Mr. Dellinger’s claims that North Carolina was left with nothing of value in the aftermath of the dissolution of the Compact.

Thus, although those scoring at home would be right to conclude Mr. Phillips faced the more active panel, following Monday’s oral argument it is far from certain how this case will turn out.