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In his financial disclosure form for the year 2005, Justice Stephen Breyer reported that he owned up to $50,000 of common stock in the Duke Energy Corp., which supplies power to more than 2 million people in North and South Carolina. Duke Energy is also the respondent in a major environmental case set for argument Nov. 1, Environmental Defense v. Duke Energy Corp. As federal law requires justices and judges to recuse in cases in which they hold a financial interest, “however small,” how is it that Breyer has not yet recused in the case? When justices recuse, they ordinarily do so at every step of the Court’s handling of the case�starting with the decision to grant review, which, in this case, occurred May 15. There was no indication then or since that Breyer has recused. It turns out that Breyer has an explanation for staying in the case. Asked about the seeming conflict, Breyer told Legal Times through Court spokeswoman Kathy Arberg that the stock belonged to his wife Joanna and was sold earlier this year, before the case went to conference. Breyer did not specify a date for the sale, but under his scenario it would have taken place before the May 11 conference, at which the Court apparently voted to grant certiorari, or possibly earlier. The petition and Duke Energy’s reply were circulated to the justices March 22. As a result of the sale, the case apparently did not trigger any red flags in Breyer’s chambers. Environmental Defense filed its petition for certiorari Dec. 28, 2005, when, according to his 2005 form, Breyer or his wife still owned Duke Energy stock. Judicial-ethics experts say his obligation to recuse was not triggered until the conference at which the Court took action on the case�by which time, Breyer says, he no longer owned the stock. But Breyer’s nonconflict highlights the challenges faced by judges in policing potential conflicts of interest, especially so soon after the Judicial Conference last month imposed new requirements on lower federal judges to redouble their efforts to detect and prevent conflicts of interest through conflict-checking software and other means. Breyer’s stock ownership in Duke Energy was on the public record and online. Yet a spot-check of lawyers involved in the case suggests they were not aware of Breyer’s interest, which would have been an automatic cause for recusal�if not for the new information about the stock sale revealed by Breyer. “First I heard about it,” says Sean Donahue, lawyer for Environmental Defense. “It’s news to me,” says Carter Phillips of Sidley Austin, who represents Duke Energy. And the Court’s file on the case contains no letter from any lawyer in the case suggesting that Breyer recuse or asking whether recusal was warranted. Stephen Shapiro, partner at Mayer, Brown, Rowe & Maw and co-author of Supreme Court Practice, says it would be unusual for a lawyer to make such an inquiry. “There is concern about doing this because, if the motion is denied, the judge may take offense at the suggestion that he or she is not being vigilant in reviewing such matters,” Shapiro says. Under the Court’s Rule 29.6, Shapiro adds, the Court “expects the parties to be diligent,” when they file briefs on behalf of a company, to also reveal the names of any parent corporations or other entities that own 10 percent or more of the company’s stock. But beyond that, Shapiro indicated, it is up to the justice to take that information and establish procedures that will flag potential conflicts. In essence, justices are on their own when it comes to gathering the information they need to make recusal decisions. So now that Breyer is staying in the case, who benefits? At issue is the Environmental Protection Agency’s “new source review” program, which imposes licensing requirements on companies adding new pollution sources to existing plants and factories. Duke Energy and other businesses are asking the Court not to impose the requirements when modernization and modification projects do not increase a facility’s hourly rate of emissions. Environmental groups counter that the improvements should be covered by the regulations because they allow the plants to operate more hours, thereby increasing overall emissions when measured on an annual basis. Donahue declines to predict which way Breyer would vote and what his presence in the case means, adding that he hopes his arguments appeal to all the justices. Phillips says, “I’m always happy to have Justice Breyer sitting. He makes the arguments more fun.” More seriously, Phillips adds, “Any recusal would be a plus for us, because a 4-4 vote would be a win.” When a case is decided by an evenly divided Supreme Court, the lower court decision�which Duke Energy won in this instance� stands.

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