Alabama v. North Carolina – Oral Argument – January 11, 2010

Media for Alabama v. North Carolina

Audio Transcription for Opinion Announcement – June 01, 2010 in Alabama v. North Carolina

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John G. Roberts, Jr.:

We will hear argument first this morning in Case 132 on our original docket, Alabama v. North Carolina.

Stephen G. Breyer:

I mean, how does it work?

John G. Roberts, Jr.:

Mr. Phillips.

Carter G. Phillips:

Thank you, Mr. Chief Justice, and may it please the Court: North Carolina breached the Southeast Compact in this case.

Whether you examine it from the perspective of the sanctions that were imposed by the Commission, or whether you evaluate it from the perspective of the repeated statements by the executives of the Commission that there had been a material breach and a repudiation, or whether you examine it from the perspective of the undisputed record that was collected by the Special Master, the conclusion, it seems to me, is inescapable that what North Carolina did here by taking no action between December 1997 and July of 1996 simply does not fulfill the responsibilities that they had — that North Carolina had assumed, and therefore the only issue should be: What is the appropriate remedy for this extraordinary breach?

To go to the specific record, just to be clear about this, the Special Master says at page 10 of his report:

“The parties do not dispute that North Carolina did not take additional steps to pursue a license for a waste facility during that period. “

Our undisputed statement of facts is that North Carolina took no further steps to license between 1997 and 1999.

Ruth Bader Ginsburg:

Mr. Phillips, the point that North Carolina makes is it would be throwing away the taxpayers’ money to no purpose.

That is, what is the point of continuing to pursue a license when North Carolina does not have the funding to continue the process and to open the disposal facility?

So North Carolina’s point of view is: What does it mean to continue to seek the license when they are not going to have the money to get to the end of the line?

Carter G. Phillips:

Right.

Well, North Carolina assumed the responsibility more than a decade prior to that time to take all appropriate steps in order to provide for licensing and for construction of a facility.

“Appropriate steps” in that context has to mean something more than simply doing nothing, declaring categorically that you are going to repudiate the agreement, and attempting to extort from the compact and its Commission additional monies that it is absolutely clear that the Commission has no responsibility to North Carolina to pay.

Ruth Bader Ginsburg:

But the–

Antonin Scalia:

But how much — how much did the Commission give before this?

It just did that out of the goodness of its heart?

Carter G. Phillips:

No, it did it with — with the approval of the other States in the compact, for the purpose of promoting the ultimate objective of the — of the contract–

Antonin Scalia:

And — and I think that one of the best indications of what — what a contract means is the manner in which the parties act under the contract, and that suggests to me that it was never contemplated that North Carolina alone would foot the bill for — for obtaining this license.

Carter G. Phillips:

–The language of the — of the compact itself, Justice Scalia, is quite plain.

It’s clear that the Commission has no responsibility to create — to pay for the creation of this — of this facility.

That was clear from day one.

North Carolina, not only in its legislation authorizing its authority, but also its governor repeatedly saying, we understand that we have a responsibility to create this facility, that–

Sonia Sotomayor:

At what cost?

Carter G. Phillips:

–At whatever cost–

Sonia Sotomayor:

What the Special Master said was, I believe, that there was never an obligation to do it at all costs.

They didn’t have to bankrupt their treasury to do this; is that correct?

Carter G. Phillips:

–Well–

Sonia Sotomayor:

Do you accept that as a working proposition?

Carter G. Phillips:

–I would say that the — that the State of North Carolina would have — have a defense of impossibility if they could argue that going down this path would have bankrupted North Carolina.

Sonia Sotomayor:

Well, I think there was certainly a significant amount of evidence that the cost of completing this project was way above any reasonable expectation of the parties at the time of contracting, correct?

Carter G. Phillips:

Yes, but the — but the payment of $80 million by the Commission was way above what any of the parties expected at the beginning of the process as well.

Sonia Sotomayor:

What — what do you believe the evidence shows with respect to the reasonable cost of completing this project?

Carter G. Phillips:

I think it was reasonable to assume that the construction of the facility itself would have cost an additional $75 million.

Sonia Sotomayor:

And about a — an additional 34,000 to get the license?

Carter G. Phillips:

Probably 34 million to complete the license.

Sonia Sotomayor:

So — I’m sorry.

I misspoke.

So over $100 million?

Carter G. Phillips:

Right, but the — the–

Sonia Sotomayor:

An amount equal to what they had already — everybody had already put in?

Carter G. Phillips:

–To be sure, but the — but the–

Sonia Sotomayor:

And about how many times greater than the initial estimates?

Carter G. Phillips:

–I don’t know that there were any initial estimates, at least that I recall.

Sonia Sotomayor:

I thought it was about 20 or 30 million dollars was initially estimated to-to do this project.

Carter G. Phillips:

I doubt that that would have included the full construction.

Sonia Sotomayor:

I — I’m only going through these to try to get a sense from you of at what point did North Carolina have a right to claim impossibility?

You are saying that–

Carter G. Phillips:

Yes.

I mean, I think North Carolina — first of all, North Carolina never did assert a right of impossibility.

Sonia Sotomayor:

–Well, it did by saying, we can’t complete this project.

Carter G. Phillips:

Well, it said it wouldn’t complete this project.

It imposed upon us and unilaterally imposed upon the other States to the compact the obligation to fund, an obligation none of them had — had assumed under the contract.

To be sure, they had provided moneys to North Carolina with the expectation that North Carolina would use those moneys ultimately to build a project.

But the reality is in 1997, in December, North Carolina unilaterally declared that they were not going to complete the project and that they were going to take no actions further — in furtherance–

Ruth Bader Ginsburg:

–So your argument is then that they acted 2 years too late.

When they gave notice that they were not able to go forward, but they were going to keep this thing going, so if the funds should somehow become available, they would have the — they would have things still in place.

They wouldn’t have terminated the effort.

Carter G. Phillips:

–Right.

Yes, Justice Ginsburg.

Carter G. Phillips:

Our argument is that — you know, whether — you know–

Ruth Bader Ginsburg:

So if they had done everything the same–

Carter G. Phillips:

–I think there’s an open question of whether the withdrawal in ’97 would have been in good faith or not.

That would be a separate issue.

But there is no question that the one thing that a contracting party does not have the right to do is to unilaterally decide to repudiate the agreement, get the benefit of the agreement–

Ruth Bader Ginsburg:

–But they told you what-it was totally up-front.

They said: Look, we can’t go forward with this.

We haven’t got the money.

We’ll let everything sit, to see if someone will come up with the money.

That’s — it’s — you paint a picture of repudiating the contract, when North Carolina gave notice in ’97 that it would have to fold if it didn’t get the money.

Carter G. Phillips:

–Right, and — and the question then, obviously, that — the legal issue that that presents is whether or not a party to a contract who is not entitled to expect the other participants to the agreement to pay any more money or in fact any money whatsoever has the authority essentially to attempt to extort that money while continuing to gain the benefits of the contract for an additional year and a half; at that point, then they — then they withdraw.

We can debate about whether the withdrawal was in good faith or not.

But the bottom line is there is no substantial difference between the repudiation and the complete disregard of the contractual obligations.

Ruth Bader Ginsburg:

What were the benefits that North Carolina was getting by paying whatever it was — 400-odd thousand dollars — to keep it going for another 2 years?

Carter G. Phillips:

Well, the benefits of being a part of the compact is all of the powers that the Commission had to deal with other compacts in terms of how to license — not how to license, but how to dispose of waste.

They got all of the benefits of being a part of a compact during the entirety of that period.

So, you know, it was not in their interest to repudiate this agreement or to withdraw from it until they got to the point where they were — where they recognized that they were about to be sanctioned for their failure to comply with their responsibilities.

Antonin Scalia:

Were there any benefits to the contract at all until — unless and until there was a waste facility constructed?

Carter G. Phillips:

Well, there were huge benefits, Justice Scalia.

Antonin Scalia:

What?

Carter G. Phillips:

The Barnwell facility in South Carolina was disposing of waste and was only going to take wastes from the compact States in the Southeast Compact.

So North Carolina had — had ample access to that South Carolina facility that, if it had never joined the compact, it never would have had available to it.

Ruth Bader Ginsburg:

At what point did South Carolina withdraw?

Carter G. Phillips:

In 1995, Justice Ginsburg.

Ruth Bader Ginsburg:

And so they — by 1997, they didn’t have any access to Barnwell anymore.

Carter G. Phillips:

Right, but they still had the benefit of the compact’s — the Commission’s authority to negotiate on behalf of the member States deals with other compacts for the disposal in those facilities which you otherwise don’t have the benefit of.

Antonin Scalia:

It sounds to me pretty hypothetical.

And 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 can withdraw at any time.

You talk about good faith withdrawal.

What would be bad faith withdrawal?

Antonin Scalia:

North Carolina simply says: It’s no longer worth our trouble.

Carter G. Phillips:

Well, this would be bad faith withdrawal.

Antonin Scalia:

Why?

Carter G. Phillips:

Where the State assumes — accepts $80 million, goes down a path, is not entitled to any of that money or to any other money, and then unilaterally withdraws–

Anthony M. Kennedy:

Did it misspend that money?

Are you saying the money was misspent?

Carter G. Phillips:

–That’s an open issue at this point.

We haven’t analyzed that.

That’s part of what I think what would be involved with the last three counts of the — of the complaint.

We don’t know exactly whether that money was properly spent or not.

But — but either way, I think it is important to recognize that, even if it were not, quote 80 million?

Is it the six members of the compact today?

No.

It’s North Carolina.

If the — if the Federal Government were to declare tomorrow, in response to some terrorist problem, that on-site storage of low-level nuclear waste is no longer permissible and that those wastes have got to be disposed of somewhere other — in some other kind of a facility, the State that is — other than Texas, which is about to start one up, but the State that’s clearly in the best position to do that today is North Carolina.

Why?

Because they have got a $134 million jump on everybody, $80 million the benefit of which was conferred by the Commission and the compact and the sister States that were a part of–

John Paul Stevens:

But, Mr. Phillips, I really don’t quite understand a part of your argument.

I’m not sure what happened to the $80 million, and I guess you aren’t, either.

And if in fact — and maybe it was — they had in good faith used that money to try and complete the facility and then decided it’s just not worth it, would you still be entitled to get the 80 million back?

Carter G. Phillips:

–I — I think if — it would be a tougher case if they had taken the 80 million and come to the conclusion of this and there was a finding by the State authorities that this facility simply cannot be built consistent with health and safety.

I think that would be an argument that we are not entitled to the money back.

But what I think you are not entitled to do, as North Carolina, is to decide unilaterally that more money should be paid, which is not provided for under the agreement, and insist on that as a condition of fulfilling any of its responsibilities under the agreement.

Samuel A. Alito, Jr.:

What is your position — what do you say that the States contemplated regarding the financing of these — of these projects?

That the State that was unfortunate enough to be selected as the second State would have to pay the full cost, even if it was $200 million, and then would — how long would it take for that State to get that money back?

Would it have to wait until, you know, 80, 100 years later to get the benefit of some other State having to finance a project?

Carter G. Phillips:

No.

I mean, well, the working assumption is that the facilities would be in operation for 20 years.

And the reality, Justice Alito, is that once you have one of these facilities built, given that there are not very many of them and they are and would be a monopoly within the compact region, you have virtually limited — unlimited authority to dictate whatever price you want to require for taking on the disposal.

And if you look at the sites that exist — it was true in Barnwell; it’s certainly true in Utah and in Washington — I mean, those are licenses to print money, essentially, at this point.

Carter G. Phillips:

And the expectation–

Ruth Bader Ginsburg:

But in — but in the–

Carter G. Phillips:

–I’m sorry.

Ruth Bader Ginsburg:

–case of this compact and the other ones, as I — do I understand correctly, Mr. Phillips, that none of these — none of these compacts that were negotiated around the same time, none of them yielded a disposal — an operative disposal facility?

Carter G. Phillips:

None so far.

Texas I think is as — is as far along in its process as — as anyone, and it’s — and it’s part of a compact.

But you know, obviously there is a “not in my backyard” mentality here.

But the — at the end of the day, the fundamental question remains, you know, what — who bears the responsibility?

North Carolina — it wasn’t as though North Carolina was the unfortunate recipient of this particular decision and then said, you know, we don’t want to do this, we can’t pay for this, there’s no way we can accomplish this.

North Carolina, after having been designated as the host State, affirmatively passed legislation accepting that responsibility and committing the State to actually providing for a facility.

Now, Justice Stevens, I agree, if it had turned out that as a matter of public health and safety — that’s the big bugaboo here — if that had been an obstacle, or maybe, Justice Sotomayor, if the expense had been so far out of the range of what’s conceivable, maybe there’s an impossibility element to it.

But the–

Sonia Sotomayor:

Could I interrupt just a moment?

Carter G. Phillips:

–Of course.

Sonia Sotomayor:

Let’s assume they hadn’t taken the 80 million.

Let’s assume they had sunk all of that money themselves–

Carter G. Phillips:

Right.

Sonia Sotomayor:

–and they looked and said: It’s going to take us another 120 million to complete this; we just can’t.

What in the compact stopped them from withdrawing?

Because the only provision I see in the contract about withdrawing is the one that says once the facility is completed–

Carter G. Phillips:

Right.

Sonia Sotomayor:

–you have to keep — you have to give notice, four-year notice.

Carter G. Phillips:

Right.

The only thing — there is nothing express in the contract, in the compact, that would prevent them from doing that.

I do think there is an implied duty of good faith.

But in the situation you pose, Your Honor, I don’t think there’s any question that they acted in good faith.

Sonia Sotomayor:

Right, okay.

So assuming they are acting in good faith, I still don’t quite understand what the difference is except the fact that they took what you’ve described in other counts as an unjust enrichment.

You got us to give you some money to help you along in this project.

But the situation hasn’t changed.

Sonia Sotomayor:

We can’t spend more money.

We certainly can’t spend the amount of money it will take to complete this project.

I’m not sure what turns that into bad faith, other than your claim that they–

Carter G. Phillips:

Well, other than — other than the fact that to say “We can’t” strikes me as utterly implausible.

To say “We don’t want to” strikes me as much more arguable.

Sonia Sotomayor:

–Well, but the hypothetical I gave you before you described as good faith: Just too much money.

Carter G. Phillips:

Right.

But the problem was–

Sonia Sotomayor:

What turns it into bad faith?

Carter G. Phillips:

–Well, I think the problem — what turns it into bad faith is taking the 80 million, consistently committing to going forward with it, and then walking away right before you are going to get sanctioned for failure to comply with the — with the agreement.

I think those are the elements that make it–

Antonin Scalia:

Do you have any precedent from this Court for reading into a contract between States an obligation of good faith?

Carter G. Phillips:

–I don’t have any — any decision of this Court.

I do have an opinion by the D.C. Circuit some years ago that says that every contract carries with it an implied duty of good faith and fair dealing.

You may remember that opinion.

Stephen G. Breyer:

Then how do you — what is — is that absolutely necessary?

Any party State may withdraw from the compact by enacting a law repealing the compact.

That sentence seems to me your toughest point because that’s what they did.

They simply withdrew.

Carter G. Phillips:

Right.

Stephen G. Breyer:

Now, where in the contract is it something that says — I mean, maybe that was foolish, to put that in there, but they did put it in.

And so how do you deal with that sentence, which is one that Justice Scalia brought up in his–

Carter G. Phillips:

Well, the only — the only argument we have with respect to that — and it’s important to recognize, we don’t have to win this issue in order to win the breach of contract claim in this particular case.

Stephen G. Breyer:

–Well — all right.

Well, go ahead, explain.

Carter G. Phillips:

Well, because there’s massive repudiation long before the — the question still is, what do you do with 1997 to 1999?

Before they withdraw, they have repudiated the agreement.

They have breached it totally.

The very essence of the agreement was lost once North Carolina refused to take any steps, much less appropriate steps.

Stephen G. Breyer:

Is there in this implicit that the State of North Carolina, prior to their withdrawal, while they are still acting, will appropriate reasonable amounts of money for this?

Carter G. Phillips:

And take — well, what they are supposed to do is take appropriate steps to license, which means–

Stephen G. Breyer:

Do appropriate steps include–

Carter G. Phillips:

–continue to do what’s necessary to get a license.

Stephen G. Breyer:

–do they — does this — if we have a lend-lease agreement entered into a treaty and absolutely ratified, I suppose that if Congress decides not to lend and won’t appropriate the money to do it, we are in breach of the treaty.

Carter G. Phillips:

Yes.

Stephen G. Breyer:

And I assume if there is a similar agreement here and North Carolina’s legislature doesn’t appropriate any money for whatever internal reasons, North Carolina is in breach of the treaty.

Carter G. Phillips:

Right.

Stephen G. Breyer:

Do I understand this correctly?

Carter G. Phillips:

Yes, that’s absolutely right, Justice Breyer.

Stephen G. Breyer:

Is there any authority for the proposition that when a legislature does not appropriate the money that the executive of a State has committed to another State, that State is in breach, irrespective of whose fault it is within the State?

Carter G. Phillips:

I don’t know that there is specific authority for that proposition.

But, Justice Breyer, it seems to me what you describe there is exquisitely close to what this — what this Court resolved in Mobil Oil Exploration, where Congress passed a statute saying that the administrative side would not be permitted to go forward, and this Court said that action constituted a repudiation of the underlying obligation, even though it was far from clear that there would ever be any exploration or production of oil on this — on the outer continental shelf sites that were in there.

This Court said that when — that if an obligor will commit a breach that would of itself give the obligee a claim for damages for total breach, so that it so substantially impairs the value of the contract, and the government said it would break or did break an important contractual promise, impairing the value of the contract, then the government must give the companies back the money.

Stephen G. Breyer:

Okay.

So this case then boils down to, am I correct, in the years prior to their withdrawal, did they take the steps, appropriate steps, that this contract obliges them to make?

Carter G. Phillips:

Yes, I think that’s a fair–

Stephen G. Breyer:

And you say they did not?

Carter G. Phillips:

–But we have other arguments, obviously, but then — but on the breach–

Stephen G. Breyer:

But that’s — but if you win on that one, you win.

Carter G. Phillips:

–we should win.

In my judgment, that’s — the conduct of North Carolina between 1997 and 1999 is exactly the same conduct that the United States entered into in Mobil Exploration.

Stephen G. Breyer:

And the state of the finding of the Commission in respect to that precise point, and it’s called — what is it called?

The “Impact Commission”?

Do we have the same thing in mind, the Commission?

Is that what it’s called?

Carter G. Phillips:

Yes, it’s a–

Stephen G. Breyer:

They have — they are the ones who are the judge, it says.

Carter G. Phillips:

–I believe that they are the sole judge, yes.

Stephen G. Breyer:

All right.

That’s what it says.

Carter G. Phillips:

Article 7(C).

Stephen G. Breyer:

The findings in respect to that specific 2-year point are what, and where are they in the record?

Carter G. Phillips:

Okay.

That’s in the — that will be in the sanctions order that’s in the appendix, so that — in the record.

I think it’s around page 400.

I will get that for you, Justice Breyer.

But the specific finding is that North Carolina had a duty to go forward and — and stopped completely.

It repudiated.

In addition to that, when North Carolina announced that it was shutting down the project and that it was not going forward, that it was just going to run out and wait and hope, frankly, that additional funding would come forward, the — the compact — the director of the compact specifically wrote to the governor twice, saying: These are acts in repudiation and in violation of the agreement; it is your responsibility.

Ruth Bader Ginsburg:

But they also — you said — you said in your brief that the — in 1997, the Commission came forward with some kind of additional funding proposal, which North Carolina came down — turned down.

Carter G. Phillips:

Refused, right.

Ruth Bader Ginsburg:

What — what was that?

Carter G. Phillips:

The basic proposal — the draft memorandum of understanding would have — would have led to the Commission providing, I think, about $21 million, and the generators in the Southeast States providing a loan to North Carolina of an additional — I think it was $13 million.

And that gets you the $34 million — comes from — for the — for the finalized elements of getting a license put in place.

So we had — you know, we thought we had in place an offer to fund.

I mean, that’s what makes North Carolina–

Ruth Bader Ginsburg:

Why did — why did North Carolina turn it down?

Carter G. Phillips:

–You might want to ask Mr. Dellinger that question.

They didn’t — they didn’t provide us with any explanation for why they didn’t-why they turned that down.

Ruth Bader Ginsburg:

But you say there was a package, that there was a — an offer in place where the Commission would pay X and the generators would kick in an additional amount as well.

Carter G. Phillips:

Right.

And that would have been a loan for the future.

Ruth Bader Ginsburg:

And that was — that — everybody had signed — everybody who was part of that offer had signed onto it?

Carter G. Phillips:

Right.

Everybody on our side had agreed to that, including the — the other members of the compact.

Antonin Scalia:

Why did they agree to it?

Carter G. Phillips:

Because the–

Antonin Scalia:

Once again, they are just tender-hearted?

I mean, even though North Carolina had an obligation to fund all of it?

They just come forward and say: Yes, extort us.

Antonin Scalia:

I mean, I–

Carter G. Phillips:

–Well, you know, when you — when you’ve got the power to extort, you know, the temptation to go down that path, Justice Scalia, is obviously pretty strong.

And the reason they did it was–

Antonin Scalia:

–I suggest it’s not the power to extort; it’s the power to withdraw.

And that power to withdraw suggests that there is no absolute obligation to come up with the funding.

The two seem to me so — so inconsistent with — with one another.

Carter G. Phillips:

–Well, the difficulty–

Antonin Scalia:

So long as you can withdraw at any time–

Carter G. Phillips:

–Right.

But remember, you are talking now also about the Commission and the other compact States having sunk $80 million in the investment to get this site up and running.

So we’ve — I mean, we’ve already got $80 million in the hole.

John G. Roberts, Jr.:

Would your position be the — be the same if it were $20 million?

Carter G. Phillips:

Yes, our position would be exactly the same.

John G. Roberts, Jr.:

So whatever the Commission contributed?

In other words, it doesn’t have to be enough to trigger an obligation on the part of North Carolina to move forward.

I assume there is some level where you would say, you know, they took their chances, and it didn’t work out — as opposed to they obviously committed in light of the money they accepted.

Carter G. Phillips:

Well, I think the answer to your question is — you know, of course, is: What’s the appropriate remedy for the particular breach in any given case?

In this context, if we were talking about a couple thousand dollars–

John G. Roberts, Jr.:

No, I don’t think so.

I think it’s a question of whether there’s a breach.

I would say that if you gave them $1 million, you should not view that as: Well, we’ve supported your efforts; you are committed to do this, no matter how much it costs, because we have given you $1 million.

It seems to me at some point the amount becomes pertinent in assessing whether you have a claim.

Carter G. Phillips:

–But I — well, I think the ultimate question is still: What is the obligation?

And Justice Breyer identified it, I think, quite precisely.

And again, this is only with respect to count 2 in that breach claim.

But our argument there is that they had a responsibility from December 1997 until July of 1999 to take appropriate steps.

And they massively repudiated that obligation and repudiated the entirety of–

Sonia Sotomayor:

My — my problem remains–

Carter G. Phillips:

–of the contract.

Sonia Sotomayor:

–with that answer, is that you earlier said that they could — forgetting if they didn’t take any money — under the terms of this compact — and Justice Scalia has been noting this repeatedly — have withdrawn at any time because they didn’t want to sink any more money into this project; is that correct?

Carter G. Phillips:

Yes.

Subject to what I would think was a duty of good faith, they could have done that.

But they didn’t do that.

Sonia Sotomayor:

Well, let’s put aside that duty of good faith–

Carter G. Phillips:

Right.

Sonia Sotomayor:

–because with that duty of good faith, you’re suggesting that merely because they took a million — that’s what the Chief Justice is asking you — or 80 million, that that somehow converted or changed the express terms of the contract and bound them in some way to find funding that they chose not to.

That — that’s really the argument I’m hearing you make.

Carter G. Phillips:

No, I think it’s more subtle than that, Justice Sotomayor.

I mean, my point is they always had an obligation to take appropriate steps to get licensed.

That was an obligation that lasted until they withdrew.

And from — from December 1997 on, they refused to take any steps toward getting a license.

And we don’t know today whether something could have happened in that year and a half that might have changed the entire dynamic of this and allowed it to in fact be completed in a way that all of the parties would have been satisfied with.

Sonia Sotomayor:

May I ask you just one question on the sovereign immunity issue?

Carter G. Phillips:

Of course.

Sonia Sotomayor:

Is there any factual development that needs to occur before the Special Master to address the legal questions that have been presented?

And I see the legal questions as whether or not, in fact, the claim belongs to the Commission or to the States for the $80 million and the $10 million in lost revenue.

Carter G. Phillips:

Right.

Sonia Sotomayor:

Is there any factual development that needs to occur, or is that a pure legal question based on the arguments that are contained in the briefs before us?

Carter G. Phillips:

I think it’s a pure legal argument.

I think we have put forward everything before the Special Master that we think is relevant for the — for a disposition of that–

Anthony M. Kennedy:

What is there in the record that shows that the claims of the States are identical to the claim the Commission is asserting, which was the — which was the instance in the Arizona-California case?

Carter G. Phillips:

–Right.

The bill of complaint itself doesn’t distinguish between claims based on any particular party.

They list the parties and they list the claims, and there is no effort to mix and match as between them.

In terms–

Anthony M. Kennedy:

It seems to me that it’s the obligation of the Commission to show that there is an absolute parallel between the claims.

And I just don’t see where I can infer from the record or conclude that that is the case.

And if — and if that is not so, then the Commission is not like the Indian tribes in the Arizona case.

Carter G. Phillips:

–Well, I would think at a minimum we are very much like the private oil companies in the Maryland v. Louisiana case, in any event, where, you know, the claims were out there; it was far from clear exactly how those claims were going to play out in one way or another.

And this Court didn’t sit down and say: We have to sort that out ahead of going forward with the litigation.

Carter G. Phillips:

What the Court said was: These all look to be pretty close and there’s no basis on which to assume that they are doing more — that they are asking for more, and therefore there’s no Eleventh Amendment problem.

And, of course, remember the Special Master has held open the possibility that if for some reason the claims of the Commission were to deviate from the claims of — of any of the compact States, which as far as I can tell to this point they have — they have not deviated one iota, then the Special Master would allow North Carolina to revisit — to renew its motion at that point.

Sonia Sotomayor:

But isn’t there an obligation before we exercise original jurisdiction to ensure that there is at least a potential viable claim by the States that they have a cause of action?

I mean, that then becomes a legal question.

Is the compact — is the Commission an agent?

Carter G. Phillips:

Right.

Sonia Sotomayor:

Do the States own these revenues?

Carter G. Phillips:

Well–

Sonia Sotomayor:

You are suggesting that–

Carter G. Phillips:

–But that — it seems to me, Justice Sotomayor, what you are doing there is collapsing the question on the merits into the jurisdictional issue of–

Sonia Sotomayor:

–But we do that all the time, for example, with — with sovereign immunity.

We–

Carter G. Phillips:

–Right.

Sonia Sotomayor:

–We tell district courts when there is a sovereign immunity issue, do the — whatever discovery you need on the question, but address it, because it’s jurisdictional.

Carter G. Phillips:

Right.

Although–

Sonia Sotomayor:

There has to be a basis for the claim.

Carter G. Phillips:

–Right.

Although this — this Court has also recognized in Georgia v. United States, for instance, that if — if there are clearly claims that exist, that are legitimately litigable, notwithstanding the Eleventh Amendment, and there may be some question about others, that the Court nevertheless should go forward and figure out–

Sonia Sotomayor:

I’m not — I’m not–

Carter G. Phillips:

–which ones work and which ones don’t.

Sonia Sotomayor:

–I don’t question that the States may have some legitimate claims.

The question is do they have legitimate claims to what the Commission is seeking.

I think that’s the question.

Carter G. Phillips:

Right.

And I think the answer to that is — just as the Special Master said, it’s premature to try to judge that until we get to a point in the litigation where it becomes clear that there is some departure between what the States are doing and what the Commission is doing.

Anthony M. Kennedy:

Well, I am conscious of your white light, but it does seem to me–

Carter G. Phillips:

I get–

Anthony M. Kennedy:

–that the Commission is — is asking for the money for itself.

Carter G. Phillips:

–No, the Commission is asking for the money on behalf of the — of the compact States, and the compact States are asking for the money on their own behalf.

Carter G. Phillips:

I do think it’s an easier vehicle for the Court to be able to provide a remedy by giving money under these circumstances.

John G. Roberts, Jr.:

Thank you, Mr. Phillips.

Mr. Kneedler.

Edwin S. Kneedler:

Mr. Chief Justice, and may it please the Court: The United States has participated in this case both, at the Court’s invitation, at the motion for leave to file stage and then before the Special Master, primarily on the issues that were addressed in the Special Master’s preliminary report, which go to questions of the assertion of Eleventh Amendment immunity in original actions as well as the structure of the compact and the compact’s power to assess monetary sanctions itself.

Today we make two principal arguments: one, that the Court should deny North Carolina’s motion to dismiss the Commission as a party, rejecting at this time or for the time being the assertion of Eleventh Amendment immunity; and second, that the Court should deny the claim that the Commission has the power itself to impose monetary sanctions under article 7(F).

That’s not to say that the States party may not seek monetary relief, appropriate monetary relief, themselves in an original action in this Court.

It’s only to say that the compact Commission is not a forum established by the compact itself, which is not only a compact between the States, but an Act of Congress, to do that.

Sonia Sotomayor:

Can I ask you, what is the policy advantage of the rule you are proposing with respect to the first question, the joinder of the Commission in this original action, of us proceeding to answer substantive questions about the interpretation of the compact, et cetera, without addressing initially the right of the Commission to bring this action as an original action at all?

It seems to be putting the cart before the horse, or — because I’m not sure why we should be reaching the merits, deciding the merits, before identifying which are the parties and what claims they have before us.

Edwin S. Kneedler:

Well, I — I, think, as Mr. Phillips suggested, this Court’s decision in — in the United States v. Georgia establishes the Court is not required to, and in some circumstances it — it may be possible to dispose of the case on — on the merits because the plaintiff States in this case I think undoubtedly have a cause–

Sonia Sotomayor:

But this one won’t.

Edwin S. Kneedler:

–Well, the plaintiff States undoubtedly have a cause of action for breach of the compact.

They are parties to the compact, and as parties to the compact, they can bring an action whether or not the Commission is properly before — before the Court.

And the question of whether the — North Carolina violated the compact therefore can be adjudicated solely on the basis of — of the plaintiff States’ claim, without having to reach the question of — of whether the Commission could properly be made a party.

If this Court were to agree with the Special Master that there was no violation of the compact, then the question of whether the Commission could be — could also bring that claim and what — what remedy there might be for that, either to the States or to the Commission, would never have to be-to be reached.

So there is, I think, some efficiency with — with respect to that.

But on the Eleventh Amendment question–

Ruth Bader Ginsburg:

Do we have — Mr. Kneedler–

Edwin S. Kneedler:

–I’m sorry.

Ruth Bader Ginsburg:

–Mr. Kneedler, do we have any decision that deals with the standing of a commission to sue a State in its own right?

Or this is a novel question?

Edwin S. Kneedler:

This is — this is a novel question as — as far as I — as far as I am aware.

And — and that may be one reason why the Court would prefer not to specifically address the question.

But I — but I do think on the — on the basic principles of Eleventh Amendment immunity, that this Court’s decision in Arizona v. California, at least at this stage of the case, is dispositive.

Because there the Court concluded that the States — because the United States had intervened, they had no assertion of Eleventh Amendment immunity with respect to the subject matter of the dispute.

As the Court put it, the tribes are not bringing any new claims or issues before the Court, and therefore the judicial power of this Court would not be enlarged and the State’s sovereign immunity would not be compromised by the Indian tribes’ participation in the case.

We think that’s an important principle, at least with respect to Indian tribes, who this Court recognized in Arizona–

Anthony M. Kennedy:

But here the Commission is seeking sums for itself.

What assurance do we have that the Commission, if it received the money, would give it back to the States exactly in the ratio the States demand it?

Edwin S. Kneedler:

–Well, I — I don’t think the Court–

Anthony M. Kennedy:

I — I think it’s their obligation to show the complete parallel between — between the claims, and that that has not been done.

Edwin S. Kneedler:

–Well, two things about that.

In Maryland v. Louisiana, which was a suit brought by a number of States to challenge a — a Louisiana tax on Commerce Clause grounds, that case went forward on the suit of the — of those States, but the natural gas companies who paid the tax were permitted to intervene, and the Court did that, notwithstanding the Eleventh Amendment.

Surely, the claim of the States parens patriae was not identical to the claims of the individual natural gas companies to get a refund on their own behalf, but the Court nonetheless allowed them to intervene, and the Court’s judgment in this case awarded — required the State of Louisiana to make refunds to — to all taxpayers.

So I — I don’t think — especially in an original action where the State has a certain parens patriae responsibility, I don’t think that the claims have to be identical in the precise way that they were in — in Arizona v. California.

John Paul Stevens:

Mr. Kneedler, can I ask you sort of a basic question about the Eleventh Amendment argument?

You — you framed it entirely in terms of the Eleventh Amendment, but is there not also a common law immunity that the States can plead against non-sovereigns?

Edwin S. Kneedler:

Yes, although I — I think-I think — I don’t know whether this falls within the precise terms of the Eleventh Amendment.

It would depend on whether the compact Commission is regarded as a citizen of another State, which I think it would not be.

But, yes, it would be the — the principle recognized in Alden.

But I — the principles that I am describing here I think would apply equally to that immunity, as they would to the other–

Stephen G. Breyer:

Why is it — to go back to the word “sanctions”, when I read the word “sanctions” in the law, the thing that comes to my mind first and foremost is the money, like a fine; and sort of second, imprisonment.

But paying a fine, that — that seems to me the most primitive and basic sanction of anything.

And — and why — and particularly, if you say the fine was limited to giving back money you previously took.

So, why wouldn’t you read this clause here which says “including” — and then it doesn’t mention money, but it includes some other things, and you say well, sure, they include the other things because the word “sanction” doesn’t automatically call to mind those other things, but it does automatically call to mind a fine.

Edwin S. Kneedler:

–There — there are several points that I think are important to bear in mind with this.

I think this Court has always recognized that monetary liability on the part of a State is distinct from prospective relief, and I think the Court should not lightly assume that States have agreed to have a nonjudicial forum, like a–

Stephen G. Breyer:

Now, are we supposed to — are we supposed to treat compacts among States as if we are dealing with those who want to impose obligations on the States?

Edwin S. Kneedler:

–No, but–

Stephen G. Breyer:

Here, aren’t we trying to say what obligations did the States themselves want to impose on themselves?

Edwin S. Kneedler:

–Yes, and as we point out in pages 26 and 27 of our — of our brief, there were three — it’s actually four compacts that were adopted or approved in the very same Act of Congress which specifically provide for monetary sanctions — or monetary — monetary remedies, which shows that the compacting parties knew how to do it when they wanted to.

But beyond that, I think it’s important to look at the overall structure of article 7, where the sanctions power appears.

First of all, article 7(F), which is on page 19a of the blue brief, refers to any party State which fails to comply, et cetera,

“may be subject to sanctions, including suspension of rights under the compact and revocation. “

Those are all forward-looking sanctions.

But — but I think what really reinforces that is if you look at the title of article 7, which is on page 17a, it says — it deals with eligible parties, withdrawal, revocation, entry into force, and termination.

Article 7 is all about membership in the — in the Commission.

The Commission’s powers, by contrast, are set out in article 4 of the — of the compact.

There are enumerated powers there and, for example, article 4(E)(11), on page 11a — the only enumerated power with respect to sanctions there, at the bottom of 11a, is to revoke the membership of a party State in accordance with article 7(F).

One would think, if there — if there was an extraordinary power to grant monetary sanctions, that it would have appeared in the enumerated powers, and in fact, in the one compact adopted at the same time that provides for imposition of fines, it actually appears in the enumerated powers portion of the relevant compact, not in the membership.

Edwin S. Kneedler:

And, Justice Breyer, you asked about section — article 7(C), with respect to the power of the Commission to be the judge of — of certain matters.

I think it’s pretty clear that what that’s driving at is the Commission being the judge of the qualifications of the — of the States and the members of the Commission appointed by the States to participate.

It’s like the power of any legislative body, the power of Congress to determine the qualifications of someone who’s about — who has been voted in, should that person be seated.

I think article 7(C) is directed at that, not at some power of–

Stephen G. Breyer:

Well, it adds — it adds-it starts “Qualifications”.

It says it’s the judge of qualification and it’s the judge of their compliance with the conditions and requirements of this compact.

Edwin S. Kneedler:

–But if you continue — “And the laws”–

Stephen G. Breyer:

“And the laws of the States relating to the enactment of the compact. “

Edwin S. Kneedler:

–Right, but — but — the — the laws of the parties — if I may finish?

“The laws of the parties State. “

the final phrase relating to the enactment of the compact, I think would modify the qualifications — compliance with the conditions and requirements of the compact with respect to membership.

Again, I think that comes from the first part of article 7(C), but I think it’s — it’s the overall thrust of article 7 that it deals with membership.

John G. Roberts, Jr.:

Thank you, Mr. Kneedler.

Mr. Dellinger.

Walter E. Dellinger, III:

Mr. Chief Justice, and may it please the Court: I think I should begin with a simple question that my grandson asked me, which is why did North Carolina quit?

Which I think sheds light on what its obligations were and what the understanding was.

This is a compact.

It is not based upon a coercive model.

You could have one, where States — all the States are required to remain in the compact, withdrawal is a nullity, the Commission can enforce financial sanctions, and the compact members waive sovereign immunity and can be sued in Federal court.

This compact is based on a consensual model, where it — each — each State can withdraw, and therefore the compact has to be in the rough financial interest of each of the States at any point in time, which is what–

John G. Roberts, Jr.:

You took — you took $80 million, and they got nothing for it.

That would be a question your grandson might ask.

[Laughter]

What did you do with the $80 million?

Walter E. Dellinger, III:

–The $80 million came from-not the State — the statement that the States gave North Carolina $80 million and North Carolina has kept it and didn’t give it back is a shorthand that is misleading in every single respect.

The funds, of course, didn’t come from the States.

They contributed $25,000 apiece.

It came from charges on generators from all over the country.

The funds went to the authority established under North Carolina law and could only be used for the purposes of the Low-Level Waste Authority, and indeed they all were used for the purposes of the Low-Level Waste Authority.

The master assumes that — that all–

Sonia Sotomayor:

How did that help the other compacting States, giving them the $80 million and North Carolina walking away?

Walter E. Dellinger, III:

–Well, Justice Sotomayor, no one was helped by this process or the process of the other compacts, none of which resulted in a — in a facility.

But what North Carolina did was to carry out its responsibilities to take appropriate steps and, as I will show in a moment, fully in accord with the understanding of the Commission and North Carolina, that they would be — it would be jointly financed, even though the Commission had no legal obligation.

But the key reason–

Sonia Sotomayor:

I’m hard-pressed to understand where that comes from.

Under the terms of the contract — the compact, the compact expressly says that none of the contracting States have any liabilities with respect to this–

Walter E. Dellinger, III:

–That is correct, and it says that the Commission does not have any legal obligation–

Sonia Sotomayor:

–Exactly.

Walter E. Dellinger, III:

–under the compact to fund it, either.

But it was because this is a consensual compact and because of the right to withdrawal, as the master noted, it would have been surprising if a facility were constructed without significant assistance from the States that were not the host State because of the right to withdraw, and that indeed was recognized from the very beginning.

For example, in 1996, when the — the chairman of the Commission was hoping to speed up the completion, the chairman noted that the opening of a new regional facility in North Carolina would ensure a source of revenues for site development in the third host State.

Indeed, it’s not surprising that, from the beginning of the compact, the Commission provided a substantial amount of the funding because North Carolina could have withdrawn at any point.

And the Commission repeatedly recognized that it was, quote,

“necessary and appropriate and reasonable and equitable. “

for the Commission to contribute to this.

Mr. Phillips cites the North Carolina legislation — the North Carolina legislation, which notes that, among the Commission’s — the authority’s corporate powers, when it sets up the authority or the financing — but the North Carolina legislation, as the Commission expressly recognized and cited in providing the money, provides that North Carolina may accept funds from its general assembly.

The North Carolina authority may accept funds from the North Carolina general assembly, from the Commission compact, from other States, from the Federal Government, or from generators.

And they begin to say it’s necessary and appropriate.

At every step, they — the Commission says that in — in February of ’88, October of ’89, September of ’92, November of ’92,

“reasonable and equitable to provide this funding. “

and of course it makes sense, given the consensual nature of the compact.

So, what happened?

Why did North Carolina quit?

What happened was, because of the right to withdraw, South Carolina withdrew in 1995.

When South Carolina withdrew, this of course deprived the Commission of a ready source of funding from the fees that were being paid to the facility in Barnwell, South Carolina.

But much — or of equal significance is the fact that South Carolina, having withdrawn, no longer had to comply with the compact requirement, that South Carolina ceased operating a facility on December 31, 1992.

Why was that important?

Because the compact creates, as Mr. Phillips noted, something like a monopoly within the region, and when you are financing the facility you know, if you are the financing authority, that you will have a captive market–

Stephen G. Breyer:

Okay.

I see.

Stephen G. Breyer:

So–

Walter E. Dellinger, III:

–Unless — unless States can withdraw.

Stephen G. Breyer:

–So I was thinking of this, is: What we have are a group of States, each of whom feels it’s necessary to build a cholera plant.

And they know that the cholera plant will be hated by everybody in their State, but it’s necessary.

So they each say: We’ll undertake it, okay?

But the deal is you do, too.

Now, that’s their basic deal.

I don’t know that they ever would have entered into this as part of the basic deal that State A depends for 4 years on State B doing it, but when it’s State A’s turn, they run away.

Well, that’s the deal.

They can run away.

But in addition, take $80 million?

Okay.

That’s where we are back with the Chief’s question.

Now, I don’t know whether it is an appropriate step or not an appropriate step to keep the 80 million as well as running away.

But it seems to me that we have an arbitrator that was supposed to decide whether it was or whether it wasn’t, and they said it was an appropriate step.

They foresaw you would take the 80 million, never give it back, at least.

But the Commission thinks it isn’t.

And the arbitrator paid no attention whatsoever to the Commission.

And what the Commission says in the language that I quoted is that the Commission is the judge of the members’ compliance with the requirements of this contract.

So when I read that, I think: Surely, he should have paid some attention to the fact that the Commission thought that what was keeping the 80 million was not an appropriate step.

Now, there we are.

That’s my question.

And the only answer I’ve heard so far is, if I read the rest of the sentence, it talks about laws of States relating to the enactment of this contract — compact.

And I don’t know that you read “enactment” so narrowly to refer to laws that talked about how you adopt it.

There might be a whole lot of laws.

I guess you pay attention to all of them.

So I don’t see what the last phrase has to do with it.

But anyway, that’s my basic question in the case.

Walter E. Dellinger, III:

All right.

I’ll — I’ll answer them in reverse order: The keeping the 80 million and the Commission’s judgment about that.

Walter E. Dellinger, III:

Their argument is either that, you know, the Commission is somehow the sole judge of these issues or that there’s some — that you should treat a State as something like a regulated industry under an agency model.

And they — and they point to 7(C), or at least the part of 7(C) that they leave in their quote, as establishing that.

And what I think Mr. Kneedler was attempting to say when his time ran out is that, if you just read 7(C), it’s about membership.

7(C) is in a five-provision sequence: (A), (B), (C), (D), and (E).

(A) lists the initial State members; (B) says how other States can become members; (D) provides that the first three States which enact and pay their fees will bring the compact into existence.

And (E) states that members of other compacts are not eligible for membership.

Then (C), in the middle, says that each State shall be declared a party State upon payment of the fees and enactment, and the Commission is the judge of the qualifications of the party States and of its members and their compliance with the conditions and requirements of the compact — and if I may go “dot, dot, dot” — relating to the enactment of this compact.

Now, that phrase “relating to the enactment” might refer just to the preceding phrase about laws of the party States.

But Mr. Kneedler and I both read it more naturally in the context of the Commission as judge, that this is about how you judge who’s a member.

It is, in that sense, like the House of Representatives provision they quote, except it doesn’t say “sole judge”.

Stephen G. Breyer:

So, in your opinion, the Commission is not the judge of anything other than membership?

Walter E. Dellinger, III:

Not with–

Stephen G. Breyer:

So, therefore, the six pages or so of this compact that has to do with a lot of detailed issues that might appear before the Commission — it is not the judge of whether there is compliance with those issues–

Walter E. Dellinger, III:

–With respect to — with respect to–

Stephen G. Breyer:

–because this concerns only membership?

Walter E. Dellinger, III:

–With respect to parties to the compact, the Commission, of course, has to interpret the compact when it engages in its sanction authority.

If it’s going to sanction a State that is blocking the transmit of other States, it has to interpret what it is applying.

I think what the — counsel is arguing that it was entitled to some special deference, and what the master is saying is: Given the right to withdraw, why should North Carolina — why should it be allowed any deference over a determination by the State that’s not a party to the compact?

It was not required to — not a party to — at that point, to the compact.

Now, I do want to answer your question about North Carolina keeping the money, because this is important.

Where–

Antonin Scalia:

Before you get to that–

Walter E. Dellinger, III:

–Yes.

Antonin Scalia:

–While we are on 7(C), I’m not clear on how you are reading that last section.

Is the last phrase —

“relating to the enactment of this compact. “

–is it your position that that phrase is joined not only with the immediately preceding words —

“the laws of the party States. “

relating to the enactment of this compact — but that it also refers back to compliance with the conditions and requirements of this compact relating to the enactment of this compact?

Walter E. Dellinger, III:

Yes, I am.

Walter E. Dellinger, III:

And that’s not grammatically compelled; it is permitted.

Antonin Scalia:

It certainly isn’t grammatically compelled, but does it make any sense?

Walter E. Dellinger, III:

Yes, it does.

Antonin Scalia:

Conditions and requirements relating to the enactment of the compact?

Walter E. Dellinger, III:

Yes.

This is about — it’s not very beautifully done, but it’s about the Commission judging who becomes a member.

In (A), (B), (C), (D), and (E), and as Mr. Kneedler noted, in the other compacts that were based on a model, this-the seventh article is all about eligibility for membership.

The powers and sanctions and parts are elsewhere in the compact.

Ruth Bader Ginsburg:

Are you relying on the caption to article 7 —

“Eligible Parties; Withdrawal; Revocation; Entry into Force; Termination? “

The caption to article 7?

Walter E. Dellinger, III:

Yes.

And it’s — it’s also captions about that subject.

But if I may return to the question of who’s got the money: The $80 million coming from fees generated by users around the country went through the Commission to the authority.

It was set up in a special separate account just for the purposes of the authority.

All of the funds were expended over this process of a massive amount of studies that were done.

Not a penny of it could ever be spent by the North Carolina General Assembly for any purposes whatsoever.

Ruth Bader Ginsburg:

Mr. Dellinger, what of-what of Mr. Phillips’s argument that that $80 million gave North Carolina a leg up, should there ever be any revival of the development of a disposal facility; North Carolina is much better situated than anyone else to do this, because they have already sunk $80,000 into pursuing a license?

Walter E. Dellinger, III:

Well, it has been 10 or 12 years since this occurred, Justice Ginsburg, and there has been no effort and no plan in North Carolina to build a facility, and to begin the licensing process anew.

Some of the information they — the authority retained, which would be of use to the Commission anywhere, whether there is any sitespecific information that would still be good 15 or 20 years out, I think is just pure speculation.

Anthony M. Kennedy:

Take a hypothetical case where North Carolina did have a real advantage and they used the money to create a facility, would that bear on the unjust enrichment claim or even the sanctions claim?

Walter E. Dellinger, III:

Yes.

It might well bear on the unjust enrichment, if there was, you know, an enrichment.

What happened here is that the North Carolina General Assembly appropriated money that went to the authority.

Properly considered, North Carolina — the Commission provided money to the authority.

The North Carolina General Assembly provided money for the authority.

All the funds were spent.

The only State that contributed money to this process was North Carolina, and North Carolina contributed $34 million.

Now, why did they — I think one of the most useful documents we have is in the–

Anthony M. Kennedy:

I just want — you said the only State that contributed money to the Commission was North Carolina?

Anthony M. Kennedy:

I just want to make sure I heard that right.

Walter E. Dellinger, III:

–Every State contributed $25,000–

Anthony M. Kennedy:

That’s it?

Walter E. Dellinger, III:

–to sign up.

Anthony M. Kennedy:

Right.

Walter E. Dellinger, III:

But aside from that, North Carolina General Assembly appropriated $34 million to the North Carolina authority, the — the waste disposal authority.

They were the only State to do so.

So 80 million had come from the fees generated at Barnwell, 34 million from North Carolina, and the — what happened was — once South Carolina withdrew from the compact, was liberated from this obligation to close, was announcing that it was now going to continue and is open to the world, they had a cost advantage and a location advantage over North Carolina.

So in — in 1996, the joint supplemental fact brief at — appendix at page 143, is where the head of the North Carolina authority writes to the head of the Commission and notes that, with the withdrawal of South Carolina and their decision to continue the operation at Barnwell, the financing options have been substantially changed.

Under the current compact, any State can withdraw up until the North Carolina facility becomes operational.

With an available alternative disposal facility now in South Carolina, there is no assurance to potential bondholders or financiers that there will be a revenue stream from which to repay any indebtedness.

Therefore, the authority is in a position where the intended vehicles for financing are no longer possible.

One possibility is to modify the compact to preclude withdrawal from the compact, once the license is issued for the North Carolina facility, and that would — such an amendment would allow — future use of the facility would be assured, and revenue financing could be considered.

It was not practical to submit that to all seven of the other — all seven legislatures and to Congress, but the other problem is it would not have — its — its passage would, by no means, have been assured.

The States, at that moment, could either stay in or go.

So North Carolina is faced, after South Carolina’s withdrawal, with the prospect of advancing — trying to advance bonds for another, at minimum, $75 million for construction costs, which would bring the whole project up to 223 million, close to a quarter of a billion dollars, and with now a South Carolina facility that is closer to every State in the compact, except Virginia, and where, because it was built in 1981, it has a competitive cost advantage.

So why is Georgia going to stay in the compact, when it has what may be a — a less costly and less distant alternative in going to Barnwell, South Carolina?

Stephen G. Breyer:

Well, why — why would anyone stay in the contract?

I take it that your point, which is an awfully good one, is that this compact was designed, like others, to solve a political problem.

It’s necessary for the country to store low-level radioactive waste, necessary for health and safety, but because of the politics and people’s understanding, incomplete, no one wants it, and so, now, the States have formed a series of compacts.

And we are told, in an amicus brief, that, if this compact is interpreted to allow one State to take advantage of another State’s having done so for years and then run away and keep $80 million to boot, it will be impossible for many other States to resist that same route.

And that will be the end of compacts through the United States, and what we will have is low-level waste without storage.

That’s argument, roughly, that’s made in an amicus brief in this case, and I would like to know your opinion.

Walter E. Dellinger, III:

My response to that is that the amicus’ suggestion that a decision for North Carolina would impair the very useful mechanism of interstate compacts has it exactly backwards.

States establishing compacts remain entirely free to include or add provisions limiting the right to withdraw; permitting the imposition of sanctions, including financial sanctions; imposing those on States that are no longer members; defining whether the limits will be a million dollars or a hundred million for what they will impose — or no limits at all; and, as the Central Compact did, requiring a waiver of sovereign immunity so that these judgments can be enforced in Federal court.

All that’s possible.

But a decision in — whether or not you decide for North Carolina, if that’s what you want in a compact, you can have that compact, and nothing in a decision for North Carolina would change that.

A decision in favor of North Carolina would, in fact, benefit the compacting process because it would provide assurances to State legislators that you can pick up a copy of the proposed compact and read it and know that that is the extent of the liabilities to which you are imposing your — exposing your State, and that is the limit of the obligations you are taking on to–

Ruth Bader Ginsburg:

In this case — in this case, how did it come about that the right to withdraw any time until the second plant was operable, was that — that was North Carolina’s proposal after it was designated to be the site?

Walter E. Dellinger, III:

–Justice Ginsburg, the original compact had no limits whatsoever on withdrawal, and when North Carolina was chosen as the site, it proposed, as a necessary condition to its not — not withdrawing, that the compact be admitted to add a provision, 7(H), which would say that after — 30 days after the second facility becomes operational, no State may withdraw without the consent of all the other States.

Walter E. Dellinger, III:

So North — North Carolina added a limitation on the — at their behest, a limitation on the right to withdraw.

When South Carolina pulled out, it was clear that that limitation on the right to withdrawal wasn’t good enough because it meant that States could withdraw at any time up until the new facility became operational, in which case it was going to be too late.

If they pulled out then and went to — to Barnwell, that made it unbondable because there’s no guarantee — what made it possible to contemplate financing this by bonds and by other financing mechanisms was the insurance of a market and the right to withdraw–

Antonin Scalia:

Well, why didn’t you withdraw?

I mean, all this is very good.

You had that absolute right to withdraw, but you didn’t withdraw in — when was it — ’97.

You went on for 2 years, still as a member of the compact and still subject to obligations under the compact.

How could it be said that you were taking all appropriate steps?

What is the language — all–

Walter E. Dellinger, III:

–Yes.

Appropriate steps–

Antonin Scalia:

–Yes.

Walter E. Dellinger, III:

–to ensure that a license is held and obtained.

Antonin Scalia:

You took no steps at all.

You took zero steps.

Walter E. Dellinger, III:

North–

Antonin Scalia:

Why didn’t you withdraw?

Walter E. Dellinger, III:

–Because North Carolina hoped that — and no longer spending 2 million a year, it spent half a million to get — to keep the authority going, North Carolina kept open the possibility that there would be some possible financing that might allow this project to be completed.

They did not, as Mr. Phillips suggested, I think in error — they did not have access by staying in the compact to the facility at Barnwell, South Carolina.

South Carolina was — would close that to North Carolina, so — so–

Antonin Scalia:

They had no benefit from the compact for those 2 years?

Walter E. Dellinger, III:

–But the steps North Carolina took for those last 19 months were exactly the steps that were appropriate.

Because they did not have an obligation to fund this at whatever cost and because they were willing — North Carolina’s willingness to continue the same ratio of funding that had been a part of the process for the preceding 8 years was not going to provide the sums necessary to complete it, it would have been a waste and a squandering of the money of North Carolina’s taxpayers and the Commission to take any steps that required the expenditure–

Sonia Sotomayor:

What–

Antonin Scalia:

Well, you are not arguing impossibility, though.

I mean, the other side–

Walter E. Dellinger, III:

–No, Justice Scalia.

I’m not arguing that it’s impossible.

What — what I’m arguing is that, if North Carolina had continued the level of funding, about $3 million a year, on — on average, North Carolina had been contributing; the Commission, an average of $7 million had been — if North Carolina had contributed that and some — it would not have come close — after the withdrawal of South Carolina, it would not have come close to providing the funds needed to complete the facility.

Therefore, any funds expended would have been wasteful and inappropriate.

Ruth Bader Ginsburg:

Mr. Dellinger, your brief makes — I think the reply brief made some reference to North Carolina’s attempting to get funding from another source after Barnwell — the revenues from Barnwell were no longer available to it.

I think, in — in your reply brief, you make some reference to an effort on North Carolina’s part to get — what — what was that effort?

Walter E. Dellinger, III:

Well, the document I cited, December 13, ’96, begins to set out some of the proposals.

One proposal, for example, was to ask generators — major generators to take an equity position in the authority, that the North Carolina General Assembly would continue its funding at the same rate it had.

Till the last day, North Carolina was willing to spend at that rate.

Stephen G. Breyer:

But what — what — you just said — I may not have misunderstood, but I thought you said, in response to Justice Scalia, that, during 1997 and ’98, when he said why didn’t you take appropriate steps, that you said you didn’t do anything, and that was the appropriate step; is that right?

If you — if you said that–

Walter E. Dellinger, III:

Yes.

Stephen G. Breyer:

–If I heard you correctly.

All right.

But then it shows in the — in the Special Master’s report that, during that time, you received from the Commission funds over $7 million.

So you may not have done anything, but you did take $7 million at that time from other people.

And so they are saying, fine, if you didn’t take any anything, didn’t do anything, and that was the appropriate step, why isn’t it the appropriate step now to give us the 7 million back?

Walter E. Dellinger, III:

Justice Breyer, there is a — I — there is a disconnect between when funds are expended and when they are paid into.

There is some deficit financing, so that the Commission’s payment in 1998 would have been to provide for expenditures that occurred earlier.

So there was no — there was — and there’s no suggestion that there is any money left over.

And — and, how can I put it?

North Carolina doesn’t — never had that money.

It went to the authority in a separate and dedicated fund that could only be used for the authority’s purposes.

Antonin Scalia:

–Did North Carolina continue to fund the authority during this interim period?

Walter E. Dellinger, III:

Yes, North Carolina spent half a million dollars a year to fund the authority for the remaining 19 months.

Antonin Scalia:

So it didn’t do nothing during this period?

Walter E. Dellinger, III:

That’s correct.

And let me read you–

Stephen G. Breyer:

You say — well — in other words, North Carolina’s money in ’97 and ’98, which was $4 million, went to pay for current expenditures during North — during that year, ’97/’98, but the Commission’s money, which amounted to $7 million in that time, was not spent on current things?

It was rather a payment for things done in the past?

This sounds not — I’m not — I mean, that’s possible, but I just don’t recall anything that suggests that.

Walter E. Dellinger, III:

–North Carolina’s 2 million also would have been paid for past — there was not $2 million spent on activities in 1998.

That’s — that’s the payment of prior bills.

There’s — these–

Stephen G. Breyer:

So the whole formula–

Walter E. Dellinger, III:

–These funds are coming into the — coming into the authority.

Stephen G. Breyer:

–and the whole–

Antonin Scalia:

You have the authority still in existence, right?

Walter E. Dellinger, III:

Right.

Antonin Scalia:

Don’t they have any employees?

Walter E. Dellinger, III:

Yes, they do.

That’s–

Antonin Scalia:

So somebody has to be keeping the authority alive, right?

Who did that?

Walter E. Dellinger, III:

–The admission of — the authority with funds from — that had come from the Commission and from the North Carolina General Assembly.

Here’s the actual–

Antonin Scalia:

So — wait, wait, wait.

You said all the Commission funds were for prior expenditures.

Walter E. Dellinger, III:

–Well, not necessarily.

Antonin Scalia:

Oh.

Walter E. Dellinger, III:

That is to say — there was not $6 million expended during that period.

There’s not an exact match-up between that list of when payments were made and when expenditures were made.

But the record showed that North Carolina spent about — I believe about — the authority spent about half a million dollars those last 19 months.

Now, here’s the — here’s the actual admission that North Carolina, quote, “did nothing”.

Paragraph — this is at the Plaintiffs’ appendix 460.

The admission request was: Admit that North Carolina took no further steps after December 19th to ensure that an application for a license was filed.

Response: It is admitted that the authority was deprived of funding upon notification from the Commission in or around 1997 that the Commission was terminating its transmittal to the authority of portions of funds derived from fees and surcharges imposed on generators.

It is further admitted that the authority had justifiably relied — the North Carolina authority — on the continued provision of these funds in light of the Commission’s previous words and actions.

For this reason, the authority did not thereafter take — thereafter take additional steps to site–

Ruth Bader Ginsburg:

What about the offer — what about the offer that Mr. Phillips brought up, said Commission was ready to pay another $21 million, and there was going to be loans from the generators?

Walter E. Dellinger, III:

–That proposal, first of all, left a significant shortfall, as the master found.

Even with that proposal, which North Carolina thought there were some legal problems with whether it would be — that loans from private generators would allow bonding of the remaining financing — the master says it was still a substantial gap left, even if North Carolina continued to pay the same amount of money.

So, with North Carolina willing to continue to pay at the same rate it had for the previous 8 years, and the Commission unwilling or unable to do so, it meant that that level of expenditure by North Carolina would be a worthless expenditure of its taxpayers’ money and the Commission’s money.

The Commission’s position seems to be that they should have taken steps just for the sake of taking steps, like building half a bridge to nowhere, when you know that there’s no financing in sight.

Walter E. Dellinger, III:

They could have withdrawn on December 19th, and they took exactly the steps that were appropriate, which is not to spend money that is futile and wasteful.

Sonia Sotomayor:

–Could I ask you a question?

Is all of this money that has been spent or was spent up until 1999 — has it been washed away?

Meaning — and this may be what remains for the unjust enrichment claims, but is there any value left to what occurred?

Walter E. Dellinger, III:

I don’t know that there is, Justice Sotomayor.

I would not assume there is any-any value.

Sonia Sotomayor:

There’s no facility–

Walter E. Dellinger, III:

There’s no — as far as I know, there’s no value to North Carolina.

There’s no — in that sense.

The — of the quasi-contract claims.

Could I turn, if I could, to the participation of the Commission, which we think raises a — a substantial constitutional question?

This is actually, and should be, a very simple question.

States, either at common law or constitutionally — for these purposes, it doesn’t matter which side of the fence you are on in Alden.

States have a right not to be subject to suit by parties that aren’t the United States or a sister State, absent a valid abrogation.

The Commission is neither.

It’s not a State, and that should be pure and simply the answer to the question.

The issues are whether somehow there should be an exception for a compact.

It should be treated like a State and allowed to sue; or, even if it’s treated like any other private litigant, there is some kind of same-claims exception — in fact, there is one case, Arizona, only, which really addresses this point — there should be a same-claims exception.

First of all, with respect to whether the compact ought to be able to sue as if it were a State, I think that’s resolved — and this Court, when it rejected a compact suit in number 131 — of-the Commission suit, might have thought the same — by the Hess case.

It says that compacts cannot claim sovereign immunity.

If they don’t have the dignity or status to claim sovereign immunity, they surely ought not be able to affirmatively pierce the sovereign immunity of something that is undoubtedly a State.

They are not–

Ruth Bader Ginsburg:

But that was in — Hess came up in a different posture.

It wasn’t — I think — it was an attempt to sue the authority, wasn’t it?

Walter E. Dellinger, III:

–That is — that is correct.

Ruth Bader Ginsburg:

So I don’t think that they are at all comparable.

This is a case of does the — does the authority have standing or — to bring the claim.

Walter E. Dellinger, III:

You could distinguish them — but — distinguish the two situations.

But that would cut in favor of this situation.

You might think that a compact has the right to sue as if it were a State, another State, a State, and still think that — you might think it had sovereign immunity, but not that it could bring a suit against a State.

Walter E. Dellinger, III:

But you certainly wouldn’t think that if it’s not even entitled to invoke sovereign immunity on its own behalf, that it ought to be able to bring it.

But no matter.

There’s no good argument.

With or without Hess, there is no good argument for treating a compact as if it were a State.

That is a slippery road–

Ruth Bader Ginsburg:

Why — why not?

I mean, if it’s totally a creature of States — that’s all it’s — there’s no other shareholders, nobody in the picture, just — they are all States that create it?

Walter E. Dellinger, III:

–The States do not control this private — this separate entity.

Ruth Bader Ginsburg:

They create it, though.

They — the States create the–

Walter E. Dellinger, III:

The States created it.

It is run by a group of commissioners, two from each State, who vote individually and are not bound.

For example, the representatives from Georgia and Mississippi on the Commission voted to bring this litigation against North Carolina.

The States of Georgia and Mississippi did not decide to join.

They — they voted differently from where their States are.

And — and one of the things about the — the Commission doesn’t have the same constraints that a State has.

The attorney general of Alabama might think long and hard before submitting an onerous document discovery request on a sister State and making that kind of scorched-earth litigation a practice.

Something that’s not a State doesn’t have those constraints.

Anthony M. Kennedy:

Suppose — suppose we think that the same State — or the same-claim rule applies, and that if the Commission is asserting the same claim as the State, that then it can sue.

Suppose that’s the rule.

Are these the same claims?

Walter E. Dellinger, III:

They are — first of all, they are not the same claims.

The States who gave $25,000 are trying to claim that the Commission either is their agent or that they can bring a suit that restitution ought to be made to the Commission, that is a — the short answer is those are different routes.

They are not the same claims, but–

Ruth Bader Ginsburg:

–How can — how could they not be, Mr. Dellinger?

There’s only one complaint, and that complaint is on behalf of all the Plaintiffs, not–

Walter E. Dellinger, III:

–Yes.

But you would have the same last line of a complaint if 1 million people joined the State who brought an antitrust suit against another State.

It is simply that — award the Plaintiffs such damages as this Court deems just and proper.

Ruth Bader Ginsburg:

–But there’s no discrete claim made by the Commission as distinguished from South Carolina.

Walter E. Dellinger, III:

Yes, the Commission is making a straight-up restitution claim, which, as the — the entity that provided the funds, it does not.

But let me say why I think the separate and — even if the claims were identical, we don’t know, at this point, that they will wind up being identical, and States shouldn’t have to litigate until we find out.

The master just says it’s not necessarily the case that they will wind up being identical.

Mr. Phillips says — counsel for the Plaintiffs said they would not concede that they would not, at the end of the day, forgo any claim on behalf of the — of the States that the Commission didn’t have.

But, most importantly, there is Alden.

Alden makes this a civil case because Alden says that private suits against non-consenting States present the indignity of subjecting a State to the coercive processes of judicial tribunals.

If you allow another party in that’s not a State, you are subjecting a State to all of the discovery, all of the different theories, all of the depositions, all of the document requests.

A sister State may, in its attorney general’s office, think twice about doing that.

A private litigant will not.

So I think this case is that — I believe if you didn’t want to overrule Arizona, you could say it’s a case where the United States brought a case in its role as trustee for the Indian tribes and the tribes themselves were allowed to intervene, and they were, therefore, virtually one and the same party.

And you wouldn’t need to overrule it.

I don’t think, if it stands for any broader principle, it can survive Alden v. Maine.

Now, if the Commission is out, then we think there is — and if you agree that there was no breach of contract, then I think the Court should direct the dismissal of the quasi-contract claims because only the States will be left as a party.

And those claims — quasi-contract claims of restitution, it’s — they are claims that are governed by the subject matter of the compact between the States, and as to parties to the compact, there can’t be any such claims, and I think that should be the end of it.

Thank you.

John G. Roberts, Jr.:

Thank you, Mr. Dellinger.

Mr. Phillips, have you 10 minutes.

Carter G. Phillips:

Thank you, Mr. Chief Justice.

I would like to respond to a number of the points that have been made.

It seems to me the most fundamental one that Mr. Dellinger relies upon is the notion that this $80 million was not the money of the compact States, and he — he keeps saying that repeatedly — you know, based solely on the fact that the money doesn’t come through the treasury of the States.

But he ignores, on 12A, article 4(H)(2)(b), which says, with respect to the levying of the special fees or surcharges, which was the basis upon which the entirety of the $80 million comes, that this must represent the financial commitments of all party States to the Commission.

It was the understanding that, in exercising the authority to levy these amounts of money in order to generate this, that that was the States’ money, all of the States’ money, and ultimately, if this Court would have determined that the money–

Sonia Sotomayor:

That provision just says the States don’t have to give anything more than that, that that’s what satisfies whatever obligations they may or may have.

But where does it say that money belongs to them?

Carter G. Phillips:

–It says each State hosting-you know, “shall annually levy surcharges”.

The total of those surcharges represent the financial commitments of all of the party States to the Commission.

That seems to me to say that it is the commitment of the party States that’s — that’s being provided for in that context.

It’s not the money of the Commission.

It’s not the money of the generators.

It’s the money of the compact States that’s being used for whatever purpose is necessary in order to fulfill the overall objectives of the compact.

Carter G. Phillips:

In this context, it was used to ask North Carolina to go forward to site a facility.

Antonin Scalia:

Wait.

I don’t — I don’t understand that.

Carter G. Phillips:

I’m sorry.

Antonin Scalia:

It never passes through the States, and this provision just waves a magic wand and says that it represents the financial commitments of all party States to the Commission.

What proportion from each State?

Do we know?

Carter G. Phillips:

We don’t know, and we wouldn’t — and the truth is, at the end–

Antonin Scalia:

I think all this means is that that is the only financial commitment that the States are obliged to — to make.

Carter G. Phillips:

–I think there’s no question that it — that it can be read as — as saying that, which, of course, then tells you, if it’s not the Commission’s responsibility and it’s not the States’ responsibility, then it was clearly, from the outset and has always been, North Carolina’s.

But I think it goes beyond that, Justice Scalia.

I think it actually tells you, as an agreement among all of the party States to this compact, that this is the money of the States, and ultimately–

Antonin Scalia:

It can’t be the money of the States if you can’t say how much of it belongs to each State.

Carter G. Phillips:

–Oh, no.

You–

Antonin Scalia:

That just doesn’t make any sense.

Carter G. Phillips:

–Well, there would be a way to allocate it.

It seems to me that maybe — that either the Commission, based on the vote of the parties — the party States, could either allocate it back on a pro rata basis, or they can do it on the basis of the percentage of the — of the waste that was used in any particular fund.

There’s no specific provision on that, but it seems to me that doesn’t detract, Justice Scalia, from the fundamental point that what the compact members agreed upon was that this money would be the money of all of the States.

And, therefore, we can’t keep it as a Commission.

John Paul Stevens:

But the money that’s — but the money that is talked about in that section, as I read it, that’s money that would be generated after the facility was completed.

Carter G. Phillips:

Right, South Carolina, in this particular context.

The — immediately, it would be South Carolina, and ultimately, then — assuming North Carolina or another State were to site a facility, then, from there on, that money would continue to be their commitment.

John Paul Stevens:

So you’re saying the money generated by the South Carolina facility was the money of the compact members?

Carter G. Phillips:

Yes.

John Paul Stevens:

And that was the money that was given to North Carolina?

Carter G. Phillips:

Right, because the compact agreed among themselves, as part of this agreement, that the — that they would have authority to impose those surcharges on the generators, as they brought the money in.

John G. Roberts, Jr.:

But then — but those States couldn’t take the money.

They couldn’t say, I want my share?

Carter G. Phillips:

Well, I think they could have, actually.

John G. Roberts, Jr.:

You are saying it was their money, but they had no access to it.

Carter G. Phillips:

Well, no, but I — through their membership, they certainly did.

If the States agreed to disband the compact and the — the Commission disappears and there’s $80 million in the pot, that money’s going somewhere.

It’s not staying in — it may get paid for legal fees, but other than that–

Stephen G. Breyer:

How does it work?

The — there’s a — there’s a plant in South Carolina, and a truck comes up filled with radioactive waste out of Georgia.

Carter G. Phillips:

–Right.

Stephen G. Breyer:

And they go to a booth, and now they are charged something.

And is the fee and special surcharge, which this refers to, the total charge?

Carter G. Phillips:

Yes.

Stephen G. Breyer:

Total charge.

And what does that amount to, primarily?

Do we have any idea on a typical–

Carter G. Phillips:

You mean, in terms as a percentage off the — off the normal charges?

Stephen G. Breyer:

–No — well, I don’t know how they did it.

But, anyway, there’s a charge.

Say it’s $1,000, or maybe it’s $10,000.

Carter G. Phillips:

Yes, that would be a bit high.

Stephen G. Breyer:

So — so the truck company has to pay $10,000 to the authority.

Carter G. Phillips:

Right, the generator does.

Stephen G. Breyer:

And they are saying here that that $10,000 represents–

Carter G. Phillips:

Represents the commitment of the States.

Stephen G. Breyer:

–the financial commitment of all party States to the Commission.

Carter G. Phillips:

Right.

And all that’s saying is that that money, even though that — I mean, the alternative way to do it, obviously–

Stephen G. Breyer:

That money might — seems to come from a private company.

Carter G. Phillips:

–Right.

Stephen G. Breyer:

It comes from a private company.

It goes to the — it goes to the Commission — it goes to South Carolina–

Carter G. Phillips:

Right, and then it comes to the Commission–

Stephen G. Breyer:

–and they give it to the Commission.

Carter G. Phillips:

–and the Commission then used it in this context.

But that’s the basic point, Justice Breyer.

If they didn’t have this provision, you would — you might assume it was the generators’ money or somebody else’s money.

The whole point of this provision was to say these moneys, which can only be levied because of the compact and the Commission’s authority, remain the responsibility of the States and, ultimately, to my mind at least, would clearly go back to them.

Justice Breyer, I wanted to answer your question with respect to findings of breach.

January ’98, there is — the joint supplemental appendix, page 55, makes the — is the Commission sanction order, and April ’99 — and, again, at appendix 323 and appendix 412 — those are specific findings by the Commission that there have been breaches.

Sonia Sotomayor:

Could I just understand — and I don’t know if I am missing something — your theory that this belongs to the States relies exclusively on either an agency or an ownership theory as alternatives?

Carter G. Phillips:

Well, I mean–

Sonia Sotomayor:

There’s nothing else that would make it–

Carter G. Phillips:

–Well, I’m relying on this provision of the compact that says it is the–

Sonia Sotomayor:

–That’s — that’s — if we disagree with that–

Carter G. Phillips:

–Then we have an agency theory as well.

Sonia Sotomayor:

–All right.

And then we have to address that.

Is there any other theory that would give the States the right to make the claims the Commission is making?

Carter G. Phillips:

Well, I mean, yes–

Sonia Sotomayor:

For the return of the $80 million.

Carter G. Phillips:

–I — I think that the Court — yes, I think the Court would still have the authority, even in dealing with what is the appropriate rule of restitution, because we are too far away from that at this stage.

We’re not — we’re not there.

But I think, if the Court finds that North Carolina breached the compact, it ought to try to find a reasonable way to remedy that particular problem, even if the technical standards didn’t apply.

Sonia Sotomayor:

If we don’t do that, what are you left with?

Carter G. Phillips:

Well, no, Justice Sotomayor, you do do that.

I mean, when the Court in Kansas v. Colorado was trying–

Sonia Sotomayor:

I already posed a hypothetical.

Don’t — if we don’t, what is left of this case?

Carter G. Phillips:

–It seems to me the Court still has the authority, in deciding what is the appropriate standard of restitution in a problem as unique as this one, to do what it did in Kansas v. Colorado, which is to say: How do we measure the damages to this party?

Let’s look at what the injury was to the farmers who were completely unrelated to it.

They clearly wouldn’t — they weren’t parties to that litigation, and the Court said that’s a perfectly legitimate way to figure out the right damages.

So I think we would still have an argument that you — that the Court would have the authority to grant that form of restitution under these circumstances.

Carter G. Phillips:

Mr. Dellinger spent a lot of time on what strikes me as sort of a complete fantasy with respect to the funding situation that North Carolina faced.

You know, once South Carolina left, to be sure, we lost the ability to take money and help North Carolina.

But the notion that North Carolina, if it had completed this facility, was not going to have a license to print money in the — in going forward and that funding wouldn’t have been available back in those days is not in the record.

And, frankly, it’s completely counterintuitive, because they have a monopoly.

That’s what the compact specifically provides for them, is the monopoly to be able to control the fees that — on these particular wastes.

Yes, Your Honor?

Antonin Scalia:

The ability to withdraw terminates upon completion of the facility?

Carter G. Phillips:

Yes.

Six months afterwards.

Antonin Scalia:

Six months afterwards.

So the — the facility’s completed.

It’s clear they are going to have to — they are going to be charging more than South Carolina, which is a lower cost facility, having been in existence for longer.

Why wouldn’t everybody get out?

Carter G. Phillips:

Because the risk that South Carolina is going to pull up stakes and stop because it’s been making that noise from the beginning — that was the reason for the crisis.

Washington and South Carolina said: We’re not going to take every other — every other State’s waste, and we are getting out of this business.

So the risk you would take in jumping out in the six months is that you then find out at the back end you have no place to dispose of your waste.

So the reality is, they had — all of the incentives to go forward existed as much in 1997 as they did in 1995, as they did in 1999.

The only thing that’s fundamental here is they had a responsibility not just to do what was appropriate; it was to do what was appropriate to get a license, and that’s what they never did.

They walked away.

They took no action.

Trying to negotiate funding in the abstract doesn’t have anything to do with moving forward to get a license.

On that score, the authority shut down and closed.

Justice Sotomayor, you asked: Is there any benefit that remains?

Well, the reality is, geology studies and hydrology studies that get done, those things don’t change for a billion years.

So every one of those studies that was done is going to be just as valid today 12 years later, although I do think the right way to analyze this is not in terms of 12 years later, but what would have happened at the time.

I thank Your Honors.

John G. Roberts, Jr.:

Thank you, Counsel.

The case is submitted.