Supreme Court Expands Intervention Rights to Private Water Users in Interstate Water Litigation

In a 5-4 decision, the United States Supreme Court opened the door last month to private water users to intervene in interstate water rights disputes. South Carolina v. North Carolina.[1] Over strong objections from Chief Justice John Roberts and U.S. Solicitor General Elena Kagan, the Court rejected the state of South Carolina’s efforts to prevent an energy company and a private water supplier from actively participating in a dispute with North Carolina over rights to water in the Catawba River. The Court denied municipalities the right to intervene, concluding that their interests were already represented by the states who were party to the litigation.

Supreme Court Original Jurisdiction Over Interstate Water Disputes

The Supreme Court has “original jurisdiction” in a very small number of cases.  Original jurisdiction is the right to consider the facts and the law of a case without the case first been addressed by a lower court. Water disputes between two or more U.S. States are among the cases over which the Supreme Court has original and exclusive jurisdiction.[2]

The Catawba River Water Dispute

The headwaters of the Catawba River are in the Blue Ridge Mountains in North Carolina. The River then flows through the Charlotte metropolitan area, into South Carolina, joins the Mataree River, and eventually flows out into the Atlantic Ocean. The Catawba River forms approximately ten miles of the border between North and South Carolina.

In 2007, the Supreme Court granted South Carolina leave to file a complaint alleging that North Carolina has authorized upstream water transfers from the Catawba River that exceed North Carolina’s equitable share of the river.[3] North Carolina has issued large water permits to the city of Charlotte and the cities of Concord and Kannapolis.  The latter permit would authorize large interbasin water transfers out of the Catawba River Basin and into the neighboring Pee Dee River Basin, where Concord and Kannapolis are expecting a daily shortfall of 22 million gallons of water a day (mgd) by 2035.[4] Under their proposed permit, those cities want to pump up to 36 million gallons of water daily from the Catawba.[5]

In 2008, American Rivers named the Catawba-Mataree River the most endangered river in the United States.[6] The River supplies drinking water to more than a million people along the way and supports the water needs of numerous coal and nuclear power plants. American Rivers listed the Catawba-Mataree River to, in part, highlight drought in the Southeast United States and encourage better water-use planning.

South Carolina claims that the net effect of North Carolina’s upstream water transfers is to deprive South Carolina of its equitable share of the Catawba River’s water, particularly during droughts and low river flows.[7] South Carolina seeks a decree from the Supreme Court that equitably apportions the Catawba River between the two States, enjoins North Carolina from authorizing transfers of water from the Catawba River exceeding that State’s equitable share, and declares invalid a North Carolina statute that State is using to permit water transfers to the cities.[8]

Interventions Sought

Shortly after the Supreme Court granted South Carolina leave to file its complaint, two of the entities named in the complaint—the Catawba River Water Supply Project (Catawba Project) and Duke Energy—filed motions for leave to intervene as parties.

Duke Energy asserted an interest in the case as the operator of 11 dams and reservoirs on the Catawba River that control the river’s flow, as the holder of a 50-year license governing its hydroelectric power operations, and as the entity that orchestrated a multi-stakeholder negotiation process culminating in a Comprehensive Relicensing Agreement (CRA) signed by 70 entities from both States in 2006.[9] The CRA set forth the terms under which Duke Energy applied to renew its Federal Energy Regulatory Commission (FERC) license and Duke Energy asserted that neither State would represent its “particular amalgam of federal, state and private interests.”

The Catawba Project sought leave to intervene as a party-defendant, asserting its interest as a “riparian user of the Catawba River” and claiming that this interest was not adequately represented because of the Catawba Project’s “interstate nature.”[10] The Catawba Project is a joint venture between the two states that treats and distributes Catawba River water to roughly 200,000 people. The Catawba Project noted that it is a bi-state entity that is jointly owned and regulated by, and supplies water to, North Carolina’s Union County and South Carolina’s Lancaster County.[11]

The City of Charlotte also sought to intervene as a party-defendant. Charlotte asserted an interest, both as the holder of a permit authorizing the transfer of 33 mgd from the Catawba River basin—the largest single transfer identified in the complaint—and as the potential source of the 10 mgd transfer approved for the cities of Concord and Kannapolis.[12]

Supreme Court Grants Intervention to Private Water Users, Denies Right to Municipality

In a 5-4 decision issued on January 20, 2010, the Supreme Court granted Duke Energy and the Catawba Project leave to intervene as parties to the case.[13] The Court, however, denied intervention to Charlotte. The Court has not yet considered the water-use dispute raised by South Carolina’s complaint.

Justice Samuel Alito wrote the majority opinion joined by four justices (John Paul Stevens, Antonin Scalia, Anthony Kennedy, and Stephen Breyer). The Supreme Court has long exercised jurisdiction over non-state parties in original actions between two or more states.[14] In a seminal decision, the Court heldin New Jersey v. New York, that“[a]n intervenor whose state is already a party should have the burden of showing some compelling interest in his own right, apart from his interest in a class with all other citizens and creatures of the state, which interest is not properly represented by the state.”[15]

In the North Carolina decision, the Court held that Duke Energy met the New Jersey standard for intervention. The Court noted that “[a] compelling reason for allowing citizens to participate in one original action is not necessarily a compelling reason for allowing them to intervene in all original actions.”[16] The Court reasoned that Duke Energy’s substantial dam and reservoir operations on the Catawba River, its federal hydroelectric license, and the CRA, met its burden of showing unique and compelling interests. The Court, therefore, found it “likely that any equitable apportionment of the river will need to take into account the amount of water that Duke Energy needs to sustain its operations,” and that there is no other similarly situated entity on the river, setting Duke’s interests apart from the class of all other citizens of the States.[17]

The Court also held that the Catawba Project met the New Jersey standard for intervention and should be allowed to intervene. As to the Catawba Project, the Court found that it had shown a compelling interest in protecting the viability of its operations, which are premised on a fine balance between the joint venture’s two participating counties.  Thus, the stresses the interstate litigation would place on the Project threaten to upset that balance and neither State has sufficient interest in maintaining that balance to represent the full scope of the Project’s interests. Furthermore, the Court found that “any disruption to the Catawba Project’s operations would increase—not lessen—the difficulty of achieving a ‘just and equitable’ allocation in this dispute.”[18]

The Court held, however, that the city of Charlotte did not meet the standard for intervening because its interests fell within the same class as other affected municipal users of water in North Carolina. The Court held that Charlotte’s interests fall “squarely within the category of interests with respect to which a State must be deemed to represent all of its citizens” and that “[r]espect for ‘sovereign dignity’ … requires us to recognize that North Carolina properly represents Charlotte in this dispute over a matter of uniquely sovereign interests.”[19]  Nor does Charlotte represent interstate interests that fall on both sides of the dispute, such as those interests the Catawba Project represents.

Dissenting Voices

Chief Justice John Roberts, joined by three justices (Clarence Thomas, Ruth Bader Ginsburg, and Sonia Sotomayor), dissented from the majority's ruling. The dissent raised concerns that the ruling could turn a system intended to solve interstate disputes into "a forum for airing private interests." In notably strong language, the Roberts’ penned opinion says "[t]his Court has never before granted intervention in such a case to an entity other than a State, the United States, or an Indian tribe. Never."[20] The opinion goes on to explain "[t]hat is because the apportionment of an interstate waterway is a sovereign dispute, and the key to intervention in such an action is just that – sovereignty."[21]

The majority was also unswayed by advice from the U.S. Solicitor General, Elena Kagan, offered in an amicus brief. The Solicitor General urged the Court to deny all three intervenors’ motions for intervention, arguing “they have the same interest as everyone in the Catawba River Basin who hopes to draw water from the river.”

Conclusion

The Supreme Court’s procedural decision in South Carolina v. North Carolina opens the door to private water users to intervene in water resource disputes between states and foreshadows more active private party involvement in such cases. The eventual substantive outcome of the case may also impact other water disputes. In the southeast, Tennessee and South Carolina have worried that Atlanta may look to the nearby Tennessee or Savannah rivers for relief from droughts that often plague the area. Similarly, Georgia, Alabama, and Florida have fought over how much water can be stored in north Georgia lakes, keeping water from flowing to downstream states. Similarly, although states in the Midwest and west have entered compacts governing interstate water use, many issues within and outside those compacts remain unresolved and are potentially ripe for litigation before the Supreme Court.

For more information on water resource issues, please contact Jeff Kray or any other member of Marten Law’s Water Resources practice group.