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Alabama v. North Carolina

ELR Citation: 40 ELR 20148
Nos. No. 132, (U.S., 06/01/2010)

The U.S. Supreme Court holds that North Carolina should not be held liable or subject to monetary sanctions for failing to fulfill its obligations to an interstate radioactive waste compact. Under the agreement, North Carolina was to take "appropriate steps" to obtain a license and then construct and operate a low-level radioactive waste storage facility by 1991. Yet by the mid 1990s, North Carolina was still many years—and many tens of millions of dollars—away from obtaining even a license. In 1997, the commission overseeing the compact ceased providing financial assistance to North Carolina, and the state began a shutdown of the project. In 1999, North Carolina withdrew from the compact. The commission then demanded that the state repay approximately $80 million in addition to other monetary penalties. North Carolina did not comply. The Supreme Court assigned the case to a Special Master, and the Court adopted its recommendations. The terms of the Compact do not authorize the commission to impose monetary sanctions against North Carolina. Nor did North Carolina breach its contractual obligation to take “appropriate steps” toward the issuance of a license. The parties' course of performance establishes that it was not appropriate for North Carolina to proceed with the very expensive licensing process without external-financial assistance. Nothing in the compact's text or structure requires North Carolina to cover all licensing and building costs on its own. And the state did not breach an implied duty of good faith and fair dealing when it withdrew from the compact. The compact by its terms imposes no limitation on North Carolina's right to withdraw from the compact.