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October Term, 2009

January 20, 2010

Today the Supreme Court issued a decision, described below, of interest to the business community.

The Supreme Court’s Original Jurisdiction—Standard for Intervention by Non-State Entities

South Carolina v. North Carolina, No. 138 Orig.

Under 28 U.S.C. § 1251, the Supreme Court exercises “original and exclusive jurisdiction” to resolve “controversies between two or more States.” Because original jurisdiction cases tax its limited resources, the Court has held that a party wishing to intervene in such an action must demonstrate a “compelling interest in his own right, apart from his interest in a class with all other citizens and creatures of the state, which interest is not properly represented by the state.” New Jersey v. New York, 345 U. S. 369, 373 (1953) (per curiam). Today, in a 5-4 decision, the Supreme Court concluded that an interstate water supply project and a private energy company—but not a municipality—had satisfied that high standard.

South Carolina brought an original action against North Carolina, seeking equitable apportionment of the waters of a river that runs between the two states. Three non-state entities—the Catawba River Water Supply Project (“CRWSP”), Duke Energy Carolinas, LLC, and the city of Charlotte, N.C.—filed motions seeking leave to intervene as parties. South Carolina opposed the motions, and the Court referred the matter to a Special Master.

After a hearing, the Special Master granted all three non-state entities leave to intervene. In her view, the CRWSP, an unusual bi-state entity that supplies water from the river to counties in each state, had shown a unique and compelling interest in protecting the viability of its operations. Similarly, she concluded, Duke Energy—which owns 11 dams and reservoirs on the river and holds a 50-year federal license governing its hydroelectric power operations—had a compelling interest in safeguarding the terms of its license and a comprehensive re-licensing agreement it has negotiated with 70 different entities from both states. Finally, she held that the city of Charlotte, as the holder of the largest water permit at issue, had a compelling interest unique from other citizens in the state.

In an opinion authored by Justice Alito, the Supreme Court agreed that CRWSP and Duke Energy were entitled to intervene, but it held that the city of Charlotte had not sustained its burden in demonstrating a “compelling interest in his own right.” In its view, the city’s interest in the case was solely as a user of North Carolina’s share of the river’s water, and therefore “falls squarely within the category of interests with respect to which a State must be deemed to represent all of its citizens.”

Chief Justice Roberts, joined by Justices Thomas, Ginsburg, and Sotomayor, concurred in part and dissented in part. In their view, none of the proposed intervenors had a sufficiently unique interest to warrant intervention. Moreover, they explained, “this Court has never before granted intervention in such a case to an entity other than a State, the United States, or an Indian tribe. Never. That is because the apportionment of an interstate waterway is a sovereign dispute, and the key to intervention in such an action is just that—sovereignty.” In their view, the majority’s decision could “alter in a fundamental way the nature of our original jurisdiction, transforming it from a means of resolving high disputes between sovereigns into a forum for airing private interests.” 

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