The Supreme Court Runs Through It: Private Entities May Intervene in Catawba River Dispute

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SandBar 9:1, April, 2010 Recommended citation: Bowling, Terra , The Supreme Court Runs Through It: Private Entities May Intervene in Catawba River Dispute , 9:1 SandBar 4 (2010). The Supreme Court Runs Through It: Primate Entities May Intervene in Catawba River Dispute Terra Bowling, J.D. In January, a dispute over water rights to the Catawba River heated up when the U.S. Supreme Court ruled that private water users, including Duke Energy, could intervene in a dispute between South Carolina and North Carolina.1 Background The Catawba River stems from the Blue Ridge Mountains in North Carolina and flows for 300 miles through the city of Charlotte and into Lake Wateree in South Carolina.2 The river serves as the border between the two states for approximately ten miles. In 2008, the Catawba was named as the most endangered river in the United States due to increasing pressures on the river.3 In 2007, South Carolina filed suit in the U.S. Supreme Court, claiming North Carolina’s authorization of upstream transfers exceed its equitable share of the river. South Carolina specifically objected to the North Carolina Environmental Management Commission’s issuance of two permits, one to Charlotte for the transfer of up to 33 million gallons per day (mgd), and one to the North Carolina cities of Concord and Kannapolis for the transfer of 10 mgd. The state also objected to a statute that “grandfathered” a 5 mgd transfer by the Catawba River Water Supply Project (CRWSP). South Carolina asked the Court to equitably apportion the river, enjoin North Carolina from authorizing transfers in excess of the state’s equitable share, and to strike down North Carolina’s permitting statute authorizing the water transfers. The Court agreed to hear the case pursuant to “original jurisdiction,” which allows it to hear a case that has not proceeded through a lower court. The Supreme Court has original jurisdiction in just a few instances, including disputes between two or more U.S. states. As in this case, the issues often involve natural resource apportionment. Intervention After the case was filed, several parties, Duke Energy Carolinas (Duke Energy), the CRWSP, and the city of Charlotte, sought to intervene. The Court allows private parties to intervene, as long as they meet the standard for a nonstate entity’s intervention in an original action as defined in New Jersey v. New York.4 In that case, the State of New Jersey sued New York and the city of New York for their diversion of the Delaware River’s headwaters.5 The Court allowed Pennsylvania to intervene, but when the city of New York moved to modify the decree more than twenty years later, the Court denied the city of Philadelphia’s motion to intervene. The Court found that “an 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.”6 In the Catawba River case, the CRWSP argued for intervention, asserting that its interest would not be adequately represented by either state because it supplies water to and is owned by counties from both states. Duke Energy sought to intervene citing an interest as the operator of eleven dams and reservoirs on the Catawba River that control the river’s flow, as the holder of a fifty-year license governing Duke Energy’s hydroelectric power operations, and as the entity that orchestrated the multi-stakeholder negotiation process culminating in a Comprehensive Relicensing Agreement (CRA) signed by seventy entities from both states in 2006. The city of Charlotte sought to intervene claiming that North Carolina could not represent its interests, since it was the holder of a permit authorizing the largest single transfer identified in the complaint and the potential source of other transfers in the complaint. Additionally, the city claimed that the State was required to represent other users whose interests were not aligned with Charlotte’s. The Court referred all three motions to a Special Master, who recommended that all three parties be permitted to intervene. In making its decision, the Special Master used a broad rule distilled from several Supreme Court cases in which nonstate parties participated as defendants, as well as cases in which they intervened. In an opinion by Justice Samuel Alito, the Court rejected the broad rule in favor of the New Jersey v. New York standard and held that two of the three proposed intervenors, Catawba River Water Supply Project and Duke Energy, satisfied the standard for intervention. CRWSP The Court concluded that the CRWSP could intervene, because as a bi-state entity it demonstrated a sufficiently compelling interest apart from the interests of other citizens of the states. Specifically, the Court noted that the CRWSP was established as a joint venture of both states, has an advisory board consisting of representatives from both counties, draws its revenues from its bi-state sales, and operates infrastructure and assets that are owned by both counties as tenants-in-common. In addition, the CRWSP relies on authority granted by both States to draw water from the Catawba River and transfer that water from the Catawba River basin. The Court concluded that because both states would likely argue for reduction of water to the CRWSP neither state would adequately represent the entity’s interests. Duke Energy The Court next found that Duke Energy would be allowed to intervene, since it showed “unique and compelling interests.” The Court noted that Duke Energy operates eleven dams and reservoirs in both States that generate electricity for the region and control the flow of the river, noting “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 provide electricity to the region.”7 Further, there is no other similarly situated entity on the Catawba River, setting Duke’s unique interests apart from the class of all other citizens. The Court also noted Duke’s interest in protecting the terms of its existing FERC license and the CRA that Duke helped negotiate. Charlotte The Court concluded that Charlotte did not carry its burden of showing a sufficient interest for intervention. The Court found that Charlotte “occupies a class of affected North Carolina users of water, and the magnitude of Charlotte’s authorized transfer does not distinguish it in kind from other members of the class.”8 The Court further noted that, unlike the CRWSP, the viability of Charlotte’s operations was not “called into question” by the litigation. Its interest is solely as a user of North Carolina’s share of the Catawba River’s water. The Court concluded, “Charlotte’s interest falls squarely within the category of interests with respect to which a State must be deemed to represent all of its citizens.”9 Conclusion With water quantity issues on the rise, the Court’s ruling may point to more intervention by private water users in these types of cases. However, not all of the Supreme Court Justices agreed with the opinion. Justices Roberts, Thomas, Ginsburg, and Sotomayor dissented from part of the opinion. Although the dissenting Justices agreed with the denial of Charlotte’s intervention, the Justices would have also denied Duke Energy and CRWSP’s motions for intervention. The dissent reasoned that “[a] judgment in an equitable apportionment action binds the States; it is not binding with respect to particular uses asserted by private entities. Allowing intervention by such entities would vastly complicate and delay already complicated and lengthy actions.”10 The case will continue with a hearing by the Special Master, who will then report back to the Supreme Court. As noted in the dissent, those not allowed to intervene may still file briefs as amici curiae, or “friends of the court.” Endnotes 1. South Carolina v. North Carolina, 130 S. Ct. 854 (2010). 2. http://www.catawbariverkeeper.org/about-the-catawba/catawba-wateree-facts/ . 3. Id. 4. 345 U.S. 369 (1953). 5. Id. at 370. 6. Id. 7. 130 S. Ct. at 866. 8. Id. at 867. 9. Id. 10. Id. at 877.
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SandBar 9:1, April, 2010
Recommended citation: Bowling, Terra , The Supreme Court Runs Through It: Private Entities May Intervene in Catawba River Dispute , 9:1 SandBar 4 (2010).

The Supreme Court Runs Through It:

Primate Entities May Intervene in Catawba River Dispute

Terra Bowling, J.D.

In January, a dispute over water rights to the Catawba River heated up when the U.S. Supreme Court ruled that private water users, including Duke Energy, could intervene in a dispute between South Carolina and North Carolina.1

Background
The Catawba River stems from the Blue Ridge Mountains in North Carolina and flows for 300 miles through the city of Charlotte and into Lake Wateree in South Carolina.2 The river serves as the border between the two states for approximately ten miles. In 2008, the Catawba was named as the most endangered river in the United States due to increasing pressures on the river.3
In 2007, South Carolina filed suit in the U.S. Supreme Court, claiming North Carolina’s authorization of upstream transfers exceed its equitable share of the river. South Carolina specifically objected to the North Carolina Environmental Management Commission’s issuance of two permits, one to Charlotte for the transfer of up to 33 million gallons per day (mgd), and one to the North Carolina cities of Concord and Kannapolis for the transfer of 10 mgd. The state also objected to a statute that “grandfathered” a 5 mgd transfer by the Catawba River Water Supply Project (CRWSP). South Carolina asked the Court to equitably apportion the river, enjoin North Carolina from authorizing transfers in excess of the state’s equitable share, and to strike down North Carolina’s permitting statute authorizing the water transfers.
The Court agreed to hear the case pursuant to “original jurisdiction,” which allows it to hear a case that has not proceeded through a lower court. The Supreme Court has original jurisdiction in just a few instances, including disputes between two or more U.S. states. As in this case, the issues often involve natural resource apportionment.

Intervention
After the case was filed, several parties, Duke Energy Carolinas (Duke Energy), the CRWSP, and the city of Charlotte, sought to intervene. The Court allows private parties to intervene, as long as they meet the standard for a nonstate entity’s intervention in an original action as defined in New Jersey v. New York.4
      In that case, the State of New Jersey sued New York and the city of New York for their diversion of the Delaware River’s headwaters.5 The Court allowed Pennsylvania to intervene, but when the city of New York moved to modify the decree more than twenty years later, the Court denied the city of Philadelphia’s motion to intervene. The Court found that “an 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.”6
      In the Catawba River case, the CRWSP argued for intervention, asserting that its interest would not be adequately represented by either state because it supplies water to and is owned by counties from both states. Duke Energy sought to intervene citing an interest as the operator of eleven dams and reservoirs on the Catawba River that control the river’s flow, as the holder of a fifty-year license governing Duke Energy’s hydroelectric power operations, and as the entity that orchestrated the multi-stakeholder negotiation process culminating in a Comprehensive Relicensing Agreement (CRA) signed by seventy entities from both states in 2006. The city of Charlotte sought to intervene claiming that North Carolina could not represent its interests, since it was the holder of a permit authorizing the largest single transfer identified in the complaint and the potential source of other transfers in the complaint. Additionally, the city claimed that the State was required to represent other users whose interests were not aligned with Charlotte’s.
      The Court referred all three motions to a Special Master, who recommended that all three parties be permitted to intervene. In making its decision, the Special Master used a broad rule distilled from several Supreme Court cases in which nonstate parties participated as defendants, as well as cases in which they intervened. In an opinion by Justice Samuel Alito, the Court rejected the broad rule in favor of the New Jersey v. New York standard and held that two of the three proposed intervenors, Catawba River Water Supply Project and Duke Energy, satisfied the standard for intervention.

CRWSP
The Court concluded that the CRWSP could intervene, because as a bi-state entity it demonstrated a sufficiently compelling interest apart from the interests of other citizens of the states. Specifically, the Court noted that the CRWSP was established as a joint venture of both states, has an advisory board consisting of representatives from both counties, draws its revenues from its bi-state sales, and operates infrastructure and assets that are owned by both counties as tenants-in-common. In addition, the CRWSP relies on authority granted by both States to draw water from the Catawba River and transfer that water from the Catawba River basin. The Court concluded that because both states would likely argue for reduction of water to the CRWSP neither state would adequately represent the entity’s interests.

Duke Energy
The Court next found that Duke Energy would be allowed to intervene, since it showed “unique and compelling interests.” The Court noted that Duke Energy operates eleven dams and reservoirs in both States that generate electricity for the region and control the flow of the river, noting “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 provide electricity to the region.”7 Further, there is no other similarly situated entity on the Catawba River, setting Duke’s unique interests apart from the class of all other citizens. The Court also noted Duke’s interest in protecting the terms of its existing FERC license and the CRA that Duke helped negotiate.

Charlotte
The Court concluded that Charlotte did not carry its burden of showing a sufficient interest for intervention. The Court found that Charlotte “occupies a class of affected North Carolina users of water, and the magnitude of Charlotte’s authorized transfer does not distinguish it in kind from other members of the class.”8 The Court further noted that, unlike the CRWSP, the viability of Charlotte’s operations was not “called into question” by the litigation. Its interest is solely as a user of North Carolina’s share of the Catawba River’s water. The Court concluded, “Charlotte’s interest falls squarely within the category of interests with respect to which a State must be deemed to represent all of its citizens.”9

Conclusion
With water quantity issues on the rise, the Court’s ruling may point to more intervention by private water users in these types of cases. However, not all of the Supreme Court Justices agreed with the opinion.
Justices Roberts, Thomas, Ginsburg, and Sotomayor dissented from part of the opinion. Although the dissenting Justices agreed with the denial of Charlotte’s intervention, the Justices would have also denied Duke Energy and CRWSP’s motions for intervention.
The dissent reasoned that “[a] judgment in an equitable apportionment action binds the States; it is not binding with respect to particular uses asserted by private entities. Allowing intervention by such entities would vastly complicate and delay already complicated and lengthy actions.”10
The case will continue with a hearing by the Special Master, who will then report back to the Supreme Court. As noted in the dissent, those not allowed to intervene may still file briefs as amici curiae, or “friends of the court.”

Endnotes
1.    South Carolina v. North Carolina, 130 S. Ct. 854 (2010).
2.    http://www.catawbariverkeeper.org/about-the-catawba/catawba-wateree-facts/ .
3.    Id.
4.    345 U.S. 369 (1953).
5.    Id. at 370.
6.    Id.
7.    130 S. Ct. at 866.
8.   Id. at 867.
9.    Id.
10. Id. at 877.