• Supreme Court Adopts Special Master's Reports in Alabama v. North Carolina
  • June 9, 2010 | Authors: Aaron D. Van Oort; Marie E. Williams
  • Law Firms: Faegre & Benson LLP - Minneapolis Office ; Faegre & Benson LLP - Denver Office
  • On June 1, the Supreme Court issued an opinion in Alabama v. North Carolina, No. 132, Orig., a case brought under the Court's original jurisdiction over disputes between states, holding that a regional multi-state compact does not authorize monetary sanctions against North Carolina for failing to develop a plan to construct and operate a low-level radioactive waste storage facility, and North Carolina was not liable for breach of contract for that failure.

    In 1986, Congress gave its consent under the Compact Clause of the Constitution to a compact among eight southeastern states to promote development of new facilities for the long-term disposal of low-level radioactive waste generated in the region. The Compact required a Commission, composed of two voting members from each of the states, to oversee the development of a new regional disposal facility to replace an existing facility that was scheduled to close. The Commission designated North Carolina as the host for the second facility, thereby obligating North Carolina to take "appropriate steps" to ensure that an application for a license to construct and operate a facility was filed with and issued by the appropriate authority.

    During the next decade, the Commission provided North Carolina with nearly $80 million, as costs for the project increased and the expected licensing date extended further into the future. In 1997, however, the Commission notified North Carolina that, absent a plan for funding the remaining licensing, it would not disburse additional funds. North Carolina informed the Commission that it would commence an orderly shutdown of its licensing project, and since then it has taken no steps toward obtaining a license for the facility.

    In 1999, after attempts to resolve the funding impasse had failed, Florida and Tennessee filed with the Commission a complaint for sanctions against North Carolina. North Carolina then withdrew from the Compact. The Commission held a sanctions hearing in which North Carolina did not participate, concluded that North Carolina had failed to fulfill its obligations under the Compact, and demanded that North Carolina repay more than $90 million, plus attorney's fees. When North Carolina did not comply, several states, joined by the Commission, received permission from the Supreme Court to file a bill of complaint against North Carolina, asserting claims for violation of the party States' rights under the Compact, breach of contract, unjust enrichment, promissory estoppel, and money had and received.

    The Court assigned the case to a Special Master who conducted proceedings and filed two reports. The Master recommended, among other things, granting North Carolina's motion to dismiss portions of the bill of complaint that sought enforcement of the Commission's sanctions resolution; granting North Carolina's motion for summary judgment on the claim for breach of contract; and denying North Carolina's motion for summary judgment on Plaintiffs' remaining claims.

    The Court considered numerous objections to the Master's recommendations from all parties, overruled all of them, and affirmed the reports in their entirety. The Court first held that summary judgment in favor of North Carolina on Count I, seeking to enforce the Commission's sanctions resolution, was appropriate because the plain language of the Compact does not give the Commission authority to impose monetary sanctions. The Court further held that it is not bound by, or even required to give deference to, the Commission's conclusion that North Carolina violated the Compact because the Compact does not contain an explicit provision or other clear indication that the Commission is the sole arbiter of disputes regarding a State's compliance with the Compact. The Court then concluded that North Carolina did not breach the plain language of the Compact or repudiate it. The Court also held that North Carolina did not breach any duty of good faith and fair dealing by withdrawing from the Compact because no such duty is implied in an interstate compact. The Court concluded that it was reasonable for the Special Master to defer ruling on North Carolina's motion for summary judgment on the remaining claims, in light of his conclusion that those claims require further briefing and argument, and possibly further discovery. Finally, the Court held that the Special Master properly deferred ruling on whether the Eleventh Amendment prohibits the Commission's equitable claims against North Carolina until the merits issues are further clarified.

    Justice Scalia delivered the opinion of the Court, in which Justices Stevens, Ginsburg, and Alito joined, and in which Chief Justice Roberts and Justices Kennedy, Sotomayor, Thomas, and Breyer joined in various parts. Justice Kennedy, joined by Justice Sotomayor, filed an opinion concurring in part and concurring in the judgment. Chief Justice Roberts, joined by Justice Thomas, filed an opinion concurring in part and dissenting in part. Justice Breyer, joined by Chief Justice Roberts, filed an opinion concurring in part and dissenting in part.