S.C. Elec. & Gas Co. v. Randall

• Decision Date: 02 August 2018
• Docket Number: Civil Action No.: 3:18-cv-01795-JMC
• Citation: 331 F.Supp.3d 485
• Court: U.S. District Court — District of South Carolina
• Parties: SOUTH CAROLINA ELECTRIC & GAS COMPANY, Plaintiff, v. Cromer H. RANDALL, in his official capacity as Chairman of the South Carolina Public Service Commission; Swain E. Whitfield, in his official capacity as Commissioner of the South Carolina Public Service Commission; John E. Howard, in his official capacity as Commissioner of the South Carolina Public Service Commission; Elliot F. Elam, Jr., in his official capacity as Commissioner of the South Carolina Public Service Commission; G. O'Neal Hamilton, in his official capacity as Commissioner of the South Carolina Public Service Commission; and Thomas J. Ervin, in his official capacity as Commissioner of the South Carolina Public Service Commission, Defendants.

331 F.Supp.3d 485

SOUTH CAROLINA ELECTRIC & GAS COMPANY, Plaintiff,

v.Cromer H. RANDALL, in his official capacity as Chairman of the South Carolina Public Service Commission; Swain E. Whitfield, in his official capacity as Commissioner of the South Carolina Public Service Commission; John E. Howard, in his official capacity as Commissioner of the South Carolina Public Service Commission; Elliot F. Elam, Jr., in his official capacity as Commissioner of the South Carolina Public Service Commission; G. O'Neal Hamilton, in his official capacity as Commissioner of the South Carolina Public Service Commission; and Thomas J. Ervin, in his official capacity as Commissioner of the South Carolina Public Service Commission, Defendants.¹

Civil Action No.: 3:18-cv-01795-JMC

United States District Court, D. South Carolina, Columbia Division.

Signed August 2, 2018

Benjamin Palmer Carlton, Steven J. Pugh, Richardson Plowden and Robinson, George Craig Johnson, Is Leevy Johnson, Johnson Toal and Battiste, Columbia, SC, Ashley C. Parrish, King and Spalding LLP, Washington, DC, Brandon R. Keel, David L. Balser, Jonathan R. Chally, King and Spalding, Julia C. Barrett, King and Spalding LLP, Atlanta, GA, for Plaintiff.

John M. Reagle, Thomas Kennedy Barlow, Childs and Halligan, Columbia, SC, for Defendants.

ORDER AND OPINION

J. Michelle Childs, United States District Judge

Plaintiff South Carolina Electric & Gas Company ("SCE & G") brings this action pursuant to 42 U.S.C. § 1983 alleging constitutional claims against the following Defendants in their official capacities as Commissioners of the South Carolina Public Service Commission ("PSC"): Swain E. Whitfield, Comer H. Randall, John E. Howard, Elliot F. Elam, Jr., Thomas J. Ervin, and G. O'Neal Hamilton (collectively, "Defendants"). (ECF No. 68.) Specifically, SCE & G alleges that its rights under the Due Process Clause of the Fourteenth Amendment to the United States Constitution; the Bill of Attainder Clause of Article 1, § 10 of the United States Constitution; and the Takings Clause of the Fifth and Fourteenth Amendments to the United States Constitution were violated when the South Carolina General Assembly passed 2018 South Carolina Laws Act 287 (H.B. 4375) ("Act 287"² ) and 2018 South Carolina Laws Resolution 285 (S. 0954) ("Resolution 285").³ (ECF No. 68 at 7 ¶ 18 & 47 ¶ 239–53 ¶ 284.)

This matter is before the court by way of Motions to Dismiss pursuant to Rules 12(b)(1) and 12(b)(6) filed by Defendants and by South Carolina House of Representatives Speaker Jay Lucas ("Speaker Lucas") and South Carolina Senate President Pro Tempore Hugh K. Leatherman, Sr. ("President Leatherman")⁴ (together, "Intervenor Defendants").⁵ (ECF Nos. 76, 77, 78.) SCE & G opposes these Motions in their entirety. (ECF No. 91.) For the reasons set forth below, the court DENIES Defendants and Intervenor Defendants' Motions to Dismiss (ECF Nos. 76, 77, 78).

I. RELEVANT BACKGROUND TO PENDING MOTIONS

This case arises out of SCE & G's abandonment of the construction of two nuclear reactors known as V.C. Summer Units 2 and 3 (the "Project") in Jenkinsville, South Carolina, and the South Carolina General Assembly's passage of Act 287 and Resolution 285. (E.g. , ECF No. 1 at 17 ¶¶ 81–82, 43 ¶ 220.) The purpose of the Project was to increase SCE & G's base load capacity and enable it to meet the electricity demands of its South Carolina customers. (See ECF No. 68 at 7 ¶ 20, 13 ¶ 54–14 ¶ 61.) SCE & G's incentive for the Project occurred as a result of the South Carolina General Assembly's passage of the Base Load Review Act, S.C. Code Ann. § 58-33-210 et seq. (2015 6 ) ("BLRA"), which became "effective upon signature of the Governor on May 3, 2007." S.C. Code Ann. § 58-33-210.

SCE & G alleges that from 2008 through 2016, the PSC approved revised rates, permitting SCE & G to recover for the capital costs of the Project amounting to $445 million annually. (ECF No. 68 at 29 ¶ 141; see also ECF Nos. 1-5 to 1-12.) On or around July 31, 2017, SCE & G alleges it was forced by specified circumstances to conclude it could not complete the Project and "announce[ ] that it would cease construction of the Units and request[ ] recovery of its abandoned costs, an outcome expressly contemplated by the BLRA." (ECF No. 68 at 31–32 ¶ 158.)

SCE & G alleges that in response to the Project's abandonment, the South Carolina General Assembly passed Act 287 and Resolution 285. (ECF No. 68 at 36 ¶ 177.) Further, SCE & G alleges that with the passage of Act 287 and Resolution 285, the South Carolina General Assembly modified the process that was in place for establishing and revising utility rates. Act 287 instructed the PSC to set utility rates for SCE & G at a level equal to their current rates less the increases previously granted under the BLRA within five (5) days of the passage of the Act. 2018 S.C. Acts 258 § 3. Act 287 specified the "experimental rate" would be effective from the PSC's implementation until the conclusion of the abandonment proceedings regarding the Project currently before the PSC. Id. Resolution 285 prohibited the PSC from holding a hearing or issuing a final decision in the abandonment proceedings prior to November 1, 2018. 2018 S.C. Acts 285 § 1. Both the Act and the Resolution repealed any sections of law in conflict with their operation. 2018 S.C. Acts 258 § 2; 2018 S.C. Acts 285 § 3.

On June 29, 2018, SCE & G filed its Verified Complaint for Declaratory Judgment and Temporary, Preliminary, and Permanent Injunctive Relief against Defendants challenging the constitutionality of both Act 287 and Resolution 285, asserting the elimination of the rate increases violates SCE & G's constitutional rights and "impermissibly interfere[s] with interstate commerce." (ECF No. 1 at 2 ¶ 2.) This lawsuit does not challenge or seek review of any PSC order. (Id. at 3 ¶ 4.)

On July 3, 2018, the PSC set an experimental rate, as required by Act 287. (See ECF No. 33-4.) The PSC's July 3, 2018 Order directs SCE & G to begin implementing the experimental rate in the first billing cycle in August, which begins on August 7, 2018. (ECF No. 33-4; ECF No. 9 at 2.)

On July 20, 2018, Defendants and Intervenor Defendants filed Motions to Dismiss. (ECF Nos. 48, 50, 52.) On July 26, 2018, the court granted in part and denied in part those Motions, dismissed the Complaint, and granted SCE & G leave to file an amended complaint until July 27, 2018. (ECF No. 67.) On July 27, 2018, SCE & G filed an Amended Complaint, renewing its request that the court: (1) "Enter a declaratory judgment declaring Act 287 and Resolution 285 are unconstitutional in that they constitute an unlawful taking; violate the substantive and procedural components of the Due Process Clause, and constitute an unlawful bill of attainder"; and (2) "Enter a temporary, preliminary and permanent injunction directing the Chairman and Commissioners of the PSC, and their officers, agents, servants, employees, and attorneys, and any other persons who are in active concert or participation with them, to refrain from implementing Act [287] and Joint Resolution [285]." (ECF No. 68 at 53.)

On July 28, 2018, Defendants and Intervenor Defendants filed renewed Motions to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6)⁷ (ECF Nos. 76, 77, 78). On July 30, 2018, SCE & G filed a response in opposition (ECF No. 91). The court heard the parties' arguments regarding the Motions to Dismiss during the Preliminary Injunction hearing on July 30–31, 2018.

II. LEGAL STANDARD

A. Motions to Dismiss Pursuant to Rule 12(b)(1)

A Rule 12(b)(1) motion for lack of subject matter jurisdiction raises the fundamental question of whether a court has jurisdiction to adjudicate the matter before it. Fed. R. Civ. P. 12(b)(1). "Federal courts are courts of limited subject matter jurisdiction, and as such there is no presumption that the court has jurisdiction." Pinkley, Inc. v. City of Frederick, Md. , 191 F.3d 394, 399 (4th Cir. 1999). In determining whether jurisdiction exists, the court is to "regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Richmond, Fredericksburg & Potomac R.R. Co. v. United States , 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams v. Bain , 697 F.2d 1213, 1219 (4th Cir. 1982) ). "The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Id. (citation omitted). "[W]here a party challenges the subject matter jurisdiction of the court on the grounds that the party is an arm of the state entitled to sovereign immunity, the burden of persuasion lies with the party asserting the immunity." Hutto v. S.C. Ret. Sys. , 899 F.Supp.2d 457, 466 (D.S.C. 2012) (citing Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ. , 466 F.3d 232, 237 (2d Cir. 2006) ).

B. Motions to Dismiss Pursuant to Rule 12(b)(6)

A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted "challenges the legal sufficiency of a complaint." Francis v. Giacomelli , 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin , 980 F.2d 943, 952 (4th Cir. 1992) ("A motion to dismiss under Rule 12(b)(6)... does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses."). To be legally sufficient, a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2).

A Rule 12(b)(6) motion should not be granted unless it appears certain the plaintiff can prove no set of facts that would support her claim and would entitle her to relief. Mylan Labs., Inc. v. Matkari , 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6) motion, the court should accept as true all well-pleaded allegations and should view the complaint...