Oral argument: Oct. 5, 2009
Original Jurisdiction: United States Supreme Court
The dispute between the South Carolina and North Carolina concerns the equitable apportionment of the Catawba River. The Supreme Court is hearing the case under 28 U.S.C. § 1251, which provides it with original jurisdiction over disputes between states. The narrow issue that the Court will resolve is the right of non-state parties to intervene in litigation between South Carolina and North Carolina. South Carolina opposes the interventions, while North Carolina is in favor of them. Both parties argue their case using a standard the Court articulated in New Jersey v. New York, 345 U.S. 369 (1953). In that case, the Court ruled that in an equitable apportionment action between two States brought under the Court’s original jurisdiction, intervention by a non-state entity is proper only when the putative intervenor demonstrates a compelling interest in its own right, separate from the interests of either of the party states. South Carolina contends that the parties’ interests are insufficiently unique to satisfy the Court’s rule, while North Carolina and the intervenors contend that they have unique interests not represented by either South Carolina or North Carolina. The Court’s ruling will clarify the correct interpretation of the standard set forth in New Jersey v. New York.
In an equitable apportionment action between two States brought under this Court’s original jurisdiction, intervention by a non-state entity is proper only when the putative intervenor demonstrates (1) a “compelling interest in [its] own right,” (2) “apart from [its] interest in a class with all other citizens and creatures of the state,” (3) “which interest is not properly represented by the state.” New Jersey v. New York, 345 U.S. 369, 373 (1953) (per curiam). The State of South Carolina excepts to the following conclusions of the Special Master:
- That intervention is proper regardless of whether the party States adequately represent the movant’s interests, whenever the movant is the “instrumentality” authorized to engage in conduct alleged to harm the plaintiff State, has an “independent property interest” at issue in the action, or otherwise has a “direct stake” in the outcome of the action. See First Interim Report at 10-21.
- That the City of Charlotte, North Carolina, the Catawba River Water Supply Project, and Duke Energy Carolinas, LLC should be permitted to intervene in this original action. See First Interim Report at 21-32.
Whether, in an original jurisdiction case pertaining to equitable apportionment of a water resource, a non-state party can intervene as a defendant where the putative intervenor is the agent authorized by the defendant to carry out the supposed harm to the plaintiff, has a property interest in the outcome of the case, or otherwise has a direct interest in the case.
The Catawba River (“the Catawba”) originates in the mountains of North Carolina, flows through the state, and passes into South Carolina at Lake Wylie. Both North Carolina and South Carolina use the river’s resources for hydroelectric power and water supplies, among other things. The Catawba is subject to severe fluctuations in water level, including droughts.
In June 2007, South Carolina filed a complaint in the Supreme Court, invoking the Court’s original jurisdiction under Article III, § 2 of the Constitution and 28 U.S.C. § 1251(a). South Carolina claimed that a North Carolina law, instituted in 1991, exacerbated the harms South Carolinians suffer during times of drought in the Catawba. The North Carolina statute states that “a person or entity wishing to transfer two million or more gallons of water per day from specified river basins, including the Catawba, [must] obtain a permit from the North Carolina Environmental Management Commission (EMC).” South Carolina claims that North Carolina uses this law to authorize the transfer of at least 48 million gallons per day from the Catawba—more than its fair share.
South Carolina seeks an equitable apportionment of the Catawba River. As well, it seeks an injunction against North Carolina for any past or future transfers of water from the Catawba that are inconsistent with the apportionment. In January 2008, the Supreme Court appointed a Special Master to oversee the case.
Three parties seek to intervene in the dispute between South Carolina and North Carolina: Duke Energy, Catawba River Water Supply Project, and the City of Charlotte. Duke Energy is a large electric power company headquartered in Charlotte, North Carolina. To generate power, it operates a system of eleven reservoirs, six of which are in North Carolina, four of which are in South Carolina, and one of which is at Lake Wylie, on the state border.
The Catawba River Water Supply Project is a joint venture entity authorized by North Carolina to transfer water from the Catawba. The City of Charlotte is the largest municipality on the Catawba, and has a permit allowing it to transfer up to 33 million gallons of water per day from the Catawba. After Duke Energy, it consumes the most water in either North Carolina or South Carolina.
South Carolina opposed the three interventions. The Special Master granted the motions to intervene. Upon South Carolina’s request, the Special Master issued the order granting intervention as an Interim Report, to enable South Carolina to present exceptions to the rulings. South Carolina filed its exceptions to the Interim Report, and the Supreme Court ordered a hearing on those exceptions.
South Carolina urges the Supreme Court to limit the parties in this case to the two states. South Carolina claims that Duke Energy, Catawba River Water Supply Project (CRWSP), and the City of Charlotte (“Charlotte”) cannot meet the Court’s strict standard for allowing intervention by private parties in an original jurisdiction case between two states. However, North Carolina and the intervenors contend that intervention is appropriate because the interests and involvement of each of the intervenors are so great that any disposition of the case without them would be unjust.
South Carolina’s concern is that allowing Duke Energy, Catawba River Water Supply Project (“CRWSP”), and the City of Charlotte (“Charlotte”) to intervene will open the floodgates to many more intervenors. The United States raises the same concern in its amicus curiae brief. South Carolina cautions that allowing intervention by CRWSP and Charlotte would allow the twenty-two other interbasin transfer entities authorized under North Carolina statute to intervene as well. It argues that it would be difficult to place “any practical limitation” on numerous other entities intervening if the court allows these first couple of interventions. South Carolina adds that widespread interventions of non-state parties is inappropriate, considering the Court’s constitutional mandate to exercise its original jurisdiction sparingly.
Charlotte and the CRWSP argue that South Carolina overstates its concern about a flood of additional intervenors. CRWSP contends that it is unlikely that other interbasin transfer entities will seek to be intervenors, because South Carolina’s complaint specifically seeks injunctions against the City of Charlotte and CRWSP’s interbasin transfers but not against others. To prove its point, The City of Charlotte emphasizes the fact that South Carolina’s initial opposition to intervention raised this same concern; however, only three parties have sought to intervene.
The Prospects for Settlement
The United States argues that allowing interventions by non-state parties makes it less likely that the parties will be able to settle their case out of court. It points out that the likelihood for settlement is further reduced when non-state parties “advance a narrower and more parochial interest than the State litigants.” The United States contends that the intervention of Duke Energy, CRWSP, and the City of Charlotte would allow these parties “to object to any portion of a settlement that implicates their asserted interest.”
The City of Charlotte counters this argument by pointing out that if all the interested parties are involved in shaping the settlement, it is more likely to be permanent. North Carolina supports Charlotte’s argument by pointing out that an interstate compact, such as a settlement, must be ratified by the states’ legislatures. As a result, the settlement must encompass the interests of the intervenors, for they can lobby their representatives to reject the settlement.
South Carolina disagrees with North Carolina and the proposed intervenors about both the appropriate legal standard for determining the right to intervene in original actions and the nature of the intervenors’ interests in the dispute.
Legal Standard for Intervention
The parties’ conflicting assertions of the appropriate legal test for intervention are essentially different interpretations of a standard the Court articulated in New Jersey v. New York, 345 U.S. 369 (1953). In that case, the Supreme Court set out a standard for when a non-state actor should be allowed to intervene in an original action: the putative intervenor must show “(1) a ‘compelling interest in [its] own right,’ (2) ‘apart from [its] interest in a class with all other citizens and creatures of the state,’ (3) ‘which interest is not properly represented by the state.’” New Jersey v. New York,345 U.S. 369, 373 (1953). South Carolina construes the standard as a strict three-factor test, requiring that an intervenor have a compelling, unique interest inadequately represented by one of the state parties. North Carolina construes the standard as a flexible, fact-specific balancing rule.
Duke Energy and CRWSP agree with North Carolina. They view the standard as part of a balancing test to determine whether due process is possible without the prospective intervenor. CRWSP further contends the Court should balance the prospective intervenor’s unique interest in the suit against the presumption that its home state will represent that interest.” It advocates that allowing a private party to intervene is appropriate when the Court’s decision will bind the proposed intervenor or greatly affect its rights and interests.
South Carolina points out that under the parens patriae doctrine, the state is deemed to represent the interest of all its citizens when it is a party to a suit representing its sovereign interests. This strict standard, South Carolina contends, prevents the Court from being drawn into an intramural battle over resources within a state. Moreover, South Carolina asserts, the Supreme Court has never allowed a non-state party to intervene as a defendant in an original jurisdiction case to equitably apportion an interstate river.
The Interests of The City of Charlotte
The City of Charlotte (“Charlotte”) contends that the target of South Carolina’s complaint is the thirty-three million gallon per day interbasin transfer from the Catawba River that the city carries out. It argues that since it is “the authorized agent for the execution of the sovereign policy which allegedly injures South Carolina,” it has “a direct stake” and “a vital interest” in the case. Charlotte adds that the state of North Carolina cannot adequately represent its interests because Charlotte’s interests are much narrower and more pointed than that of the rest of North Carolina’s citizens.
South Carolina contends that Charlotte’s interests are perfectly aligned with North Carolina’s interests: they both seek to defend the interbasin transfers for the benefit of their citizens. And even if their interests differ slightly, the difference would result in an intrastate struggle over the use of the resources North Carolina is able to secure at the end of the litigation. Because South Carolina’s complaint encompasses any and all transfers North Carolina makes out of the Catawba River, South Carolina argues, Charlotte’s interest in its interbasin transfer is encompassed in the state’s interest as a whole.
The Interests of the Catawba River Water Supply Project
The Catawba River Water Supply Project argues that its interests are uniquely affected by this litigation because South Carolina’s complaint specifically targets the CRWSP’s interbasin transfer of 5 million gallons per day from the Catawba River basin to Union County, North Carolina. As a result, it argues, its interest in the case is “substantial, concrete, and immediate,” as the outcome could “severely disrupt CRWSP’s ongoing operations and financial health.” Furthermore, because of the uniquely bi-state nature of the CRWSP, neither state will vigorously advocate for the Project’s interests.
South Carolina contends that CRWSP’s claim to intervention fails for substantially the same reason as Charlotte’s claim. First, because the complaint targets not just one or two transfers, but all of the North Carolina transfers out of the Catawba River, CRWSP has no unique interest that warrants intervention. Second, the Project’s bi-state nature is irrelevant, as it will have both North Carolina and South Carolina considering and defending its interests in the litigation.
The Interests of Duke Energy Carolinas, LLC
Duke Energy asserts that because it effectively controls the flow of the Catawba River through its system of reservoirs and has a federal license to do so, it is not just another water user. It argues that its particular duties under its FERC license give it unique interests in this litigation. It also contends that its interest in implementation of a Comprehensive Relicensing Agreement (“CRA”) it entered into with other stakeholders in the Catawba render intervention appropriate. It maintains that because its primary interests lie in its FERC license and the CRA, North Carolina cannot adequately represent those interests in this litigation. In fact, Duke Energy argues, because both states seek to maximize their share of the river, the litigation puts the CRA in a precarious position, and Duke Energy should be able to intervene to protect the Agreement upon which its license renewal depends.
South Carolina disagrees with Duke Energy’s assertions that it is unlike other water users and that its interests will not be represented by North Carolina. South Carolina characterizes Duke Energy as “a large water user” whose primary concern is its ability to use the waters of the Catawba for its power generation operations. The state argues that Duke Energy’s interests in the FERC license and the CRA are simply factors that go into its ability to carry out its operations as a user of the Catawba River, and so should not justify intervention. South Carolina argues that Duke Energy’s interests align with those of North Carolina, as it is primarily concerned with the flow of the Catawba River north of the border between the two states and seeks to maximize the amount of water available within North Carolina for its use.
As an original jurisdiction case, the litigation between North Carolina and South Carolina must dispense of its threshold procedural issues in front of the Supreme Court. Yet, while this particular dispute seems to focus entirely on the minutiae common to questions of civil procedure, in reality, it implicates much larger issues. Chief among these is the balance between using the Court’s original jurisdiction sparingly so as to conserve resources and providing due process to parties whose interests are implicated in a dispute that just happens to be heard by the Supreme Court sitting as a trial court.
Prepared by: Rebecca Vernon
Edited by: Lucienne Pierre
- Additional Sources
- Wex: Law about Original Jurisdiction
- Charlotte Observer: Water Permits Bill Rankles Industry, Farmers (March 19, 2009)
- Legal Dictionary: Water Rights
- The Post and Courier: U.S. Supreme Court to Hear Arguments in SC-NC Water Lawsuit (March 30, 2009)