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Rights of states under waste disposal compact

Below, Josh Friedman of Akin Gump previews the case argued this morning, Alabama v. North Carolina. Check the Alabama v. North Carolina (132 Original) SCOTUSwiki page for additional updates.

The Supreme Court was “going to Carolina in [its] mind” this morning when it heard arguments in Alabama v. North Carolina.  Far from the picturesque scenery of James Taylor’s classic ballad, however, at issue is the fallout from a twenty-year-old interstate compact regulating the disposal of nuclear waste.

With Congress’s consent, in 1986 the states of Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, and Virginia entered into the Southeast Interstate Low-Level Radioactive Waste Management Compact (the “Compact”).  Among other responsibilities, the Compact created a Commission tasked with selecting a location for a regional waste-disposal facility.  Individual states, if selected as a host for such a facility, commit to “take appropriate steps” to procure any necessary licensing.  Finally, although states are permitted to withdraw from the Compact, the agreement contemplates that the Commission may subject non-compliant states to sanctions, “including suspension of rights under [the] compact and revocation of [their] status as a party state.”

In 1986, the Commission designated North Carolina as a host site for a future disposal facility.  Though the terms of the Compact did not contemplate financial assistance, the Commission decided it was “necessary and appropriate” to provide financial assistance for the project’s completion.  Ultimately, between 1986 and 1997, North Carolina received over $80 million in financial assistance, but it nonetheless failed to obtain the necessary licenses.  In 1997, the Commission ceased providing funding for North Carolina, and in 1999 North Carolina withdrew from the Compact.

In response to North Carolina’s withdrawal, the Commission held a sanctions hearing, in which North Carolina refused to participate.  The Commission found North Carolina to be in breach of the Compact, and it levied a penalty of nearly $90 million against the state.  North Carolina did not pay this fine.  By 2003 only four states – Alabama, Florida, Tennessee, and Virginia – remained members of the Compact; together they joined the Commission in petitioning the Supreme Court, under the Court’s original jurisdiction, to file a bill of complaint against North Carolina.  The Court agreed and subsequently assigned the case to Master Bradford R. Clark.

Master Clark issued the first of two reports in 2006.  In the first report, he concluded that North Carolina did not enjoy sovereign immunity from suit by the Commission, but he also recommended that the Court reject the plaintiffs’ argument that they were entitled to summary judgment.  He reasoned that the Compact did not authorize the Commission to impose monetary sanctions against the member states.  Additionally, even were such damages appropriate, North Carolina was not subject to the sanctions authority of the Commission because it withdrew before sanctions were imposed.  Addressing motions filed by North Carolina, Master Clark then recommended dismissing the plaintiffs’ argument that North Carolina had waived its right to object by not participating in the initial sanctions proceedings.  However, he also recommended rejecting North Carolina’s motion to dismiss the suit for failure to state a claim, because in his view the remedies available were not limited to those prescribed by the Compact.

Following the issuance of the First Report, the parties participated in discovery, which culminated in a new round of motions for summary judgment.  In response to these motions, Master Clark issued a Second Report that again recommended denying the plaintiffs’ motion for summary judgment.  The Second Report also concluded that North Carolina did not breach its duty to obtain licensing for the designated disposal facility or violate the implied covenant of good faith and fair dealing.  Master Clark reserved judgment on a motion by North Carolina to dismiss the plaintiffs’ remaining equitable claims, however, concluding that those claims required further briefing.  Yet rather than solicit that briefing at this time, Master Clark submitted his reports to the Court, reasoning that such briefing may be unnecessary if the Court rejects his recommendations regarding the other motions.

The argument today was to focus on the recommendations of Master Clark and the underlying merits of the parties’ motions.  In their briefs, the plaintiffs continue to argue that they are entitled to summary judgment and appropriate restitution for damages stemming from North Carolina’s alleged breach.  North Carolina, in response, has renewed its objection that it enjoys sovereign immunity from suit by the Commission.  The state also urges the Court to dismiss the plaintiffs’ equitable claims.  The argument thus promised to be a mix of constitutional and contract law, perhaps not too different from a well-written first-year exam.