WASHINGTON (CN) - In a rare 90-minute session, the Supreme Court heard arguments Monday on whether North Carolina violated a radioactive waste storing agreement when it abandoned the deal but kept the investment amount of $80 million. "That's the deal. They can run away. But in addition, take $80 million?" asked a skeptical Justice Stephen Breyer.
Justice Sonia Sotomayor also appeared concerned about the financial losses suffered from the other states. "The compact expressly says that none of the contracting states have any liabilities"
North Carolina in 1999 pulled out of a deal with other southern states to cooperate in the storing of radioactive material. South Carolina had the only previously existing facility of the group, but North Carolina was next in line to develop and host a site, receiving almost $80 million in assistance over the course of 9 years.
North Carolina's withdrawal was in response to a 1995 cut in outside funding for the facility even though such contributions had not originally been mandated by the agreement.
The Southeast Low-Level Radioactive Waste Management Compact and the states of Alabama, Virginia, Tennessee and Florida responded by suing North Carolina and the case was assigned to a special master, which found that North Carolina did not breach the compact.
Carter Phillips from Sidley Austin represented the group of states and the commission. He argued that North Carolina violated the agreement when it continued to send waste to South Carolina while halting its own efforts to license a new facility.
While he acknowledged that the agreement only restricted states from pulling out of the deal after a storage site is built, he said states had an implied duty to act in good faith.
Reading out loud the agreement between the states, Breyer said, "Any party state may withdraw from the compact by enacting a law repealing the compact." He then said to Phillips, "That sentence seems to me your toughest point because that's what they did. They simply withdrew."
Sotomayor seemed to defend North Carolina's reasons for dropping the agreement. "What the special master said was that there was never an obligation to do it at all costs," Sotomayor said. "The cost of completing this project was way above any reasonable expectation of the parties at the time."
Walter Dellinger from O'Melveny & Meyers represented North Carolina. He argued that North Carolina had the right to withdraw and when questioned about the lost outside investments, said the state "generously" sunk $34 million of its own money into the failed project.
But Chief Justice John Roberts appeared skeptical. "You took $80 million and they got nothing for it," he said to Dellinger.
Breyer noted that North Carolina profited from sending its radioactive waste to South Carolina, but that it ran away before its turn, taking $80 million in investments. He cited the amicus brief in saying, "It will be impossible for many other states to resist that same route. And that will be the end of compacts to the United States, and what we will have is low-level waste without storage."
And Justice Antonin Scalia appeared critical of North Carolina for halting development of its facility long before dropping the agreement. "You have that absolute right to withdraw, but you didn't withdraw. You went on for two years, still as a member of the compact," he said, and in reference to North Carolina's efforts to license a new facility, added, "You took no steps at all. You took zero steps."
There was also some debate over whether the commission had the authority to sue North Carolina, or whether this right should be left to true states and the federal government.
The Obama administration, arguing as an independent amicus curiae, argued that the commission should be able to sue, and Justice Ruth Bader Ginsburg appeared to agree. "Why not?" she said. "I mean, it is totally a creature of states."
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