S.C. Elec. v. Randall

• Decision Date: 06 August 2018
• Docket Number: Civil Action No.: 3:18-cv-01795-JMC
• Citation: 333 F.Supp.3d 552
• 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.

333 F.Supp.3d 552

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 6, 2018

333 F.Supp.3d 557

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, Julia C. Barrett, King and Spalding LLP, Atlanta, GA, for Plaintiff.

John M. Reagle, Thomas Kennedy Barlow, Halligan Mahoney Williams Smith Fawley and Reagle PA, Columbia, SC, for Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER AND OPINION DENYING SCE & G'S MOTION FOR PRELIMINARY INJUNCTION²

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

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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 (1) Act of June 28, 2018, 2018 South Carolina Laws Act 287 (H.B. 4375) ("Act 287"³ ) and (2) Act of July 2, 2018, 2018 South Carolina Laws Resolution 285 (S. 0954) ("Resolution 285").⁴ (ECF No. 68 at 7 ¶ 18 & 47 ¶ 239–53 ¶ 284.)

This matter is before the court on SCE & G's Motion for Preliminary Injunction (ECF No. 5), which is opposed by Defendants and by South Carolina House of Representatives Speaker Jay Lucas ("Speaker Lucas"), South Carolina Senate President Pro Tempore Hugh K. Leatherman, Sr. ("President Leatherman") (together, "Intervenor Defendants"), and South Carolina Attorney General Alan Wilson ("Attorney General Wilson").⁵ (ECF Nos. 31, 54, 59, 61.) For the reasons set forth in detail below, the court DENIES SCE & G's Motion for Preliminary Injunction. (ECF No. 5.)

I. JURISDICTION

1. The court has jurisdiction under 28 U.S.C. §§ 1331 and 1343(a)(3) because SCE & G is suing Defendants pursuant to 28 U.S.C. § 1983 for violations of 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. (ECF No. 68 at 7 ¶ 18.)

2. Additionally, the court has determined that its exercise of jurisdiction is not constrained by application of the Johnson Act, 28 U.S.C. § 1342, Younger abstention, Pullman abstention, Burford abstention, or sovereign immunity. (See ECF No. 97 at 7–19.)

II. FINDINGS OF FACT RELEVANT TO PENDING MOTION

3. 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. 68 at 1–2.)

4. 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.⁶ (See ECF No. 68 at 7 ¶ 20, 13 ¶ 54–14 ¶ 61.)

5. SCE & G's incentive for the Project occurred as a result of the South Carolina

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General Assembly's passage of the Base Load Review Act, S.C. Code Ann. § 58-33-210 et seq. (2015⁷ ) ("BLRA"), which became "effective upon signature of the Governor on May 3, 2007." S.C. Code Ann. § 58-33-210.⁸

6. The PSC is "vested with power and jurisdiction to supervise and regulate the rates and service of every public utility in this State and to fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be furnished, imposed, or observed, and followed by every public utility in this State." S.C. Code Ann. § 58-3-140(A). As a result, all rates charged by a utility in the state of South Carolina must be approved by the PSC. See S.C. Code Ann. §§ 58-27-820, -830.

7. On May 30, 2008, SCE & G filed a Combined Application for Certificate of Environmental Compatibility, Public Convenience and Necessity⁹ (the "Application") with the PSC, pursuant to the BLRA. (ECF No. 68 at 14 ¶ 65.) SCE & G sought approval for construction of the Project based on a projected cost of $6.3 billion. (Id. ¶ 64.) SCE & G initially projected that it would complete V.C. Summer Unit 2 by April 1, 2016, and Unit 3 by January 1, 2019. (ECF No. 68-2 at 17.) In order to avail itself of tax credits and to get the revised rates under the BLRA, SCE & G needed to complete the Project by 2020. (ECF No. 99 at 58:20–23.) SCE & G later amended the scheduling dates to convey that it would not complete Unit 2 until 2022 and Unit 3 until 2024. (Id. at 60:8–12.)

8. On March 2, 2009, the PSC approved SCE & G's Application to construct the Project finding that its construction "is reasonable and prudent." (See ECF No. 68-3 at 6 ¶ 11; see also ECF Nos. 68-1, 68-2.)

9. SCE & G began construction on the Project. (ECF No. 68 at 20 ¶ 96.)

10. On nine occasions between 2008 and 2016, the PSC approved SCE & G's revised-rate requests, permitting it to recover for the capital costs of the Project amounting to $445 million annually. (ECF Nos. 68-6 to 68-14.¹⁰ )

11. As of September 30, 2017, SCE & G has invested approximately $5 billion on the Project and $316 million in transmission costs related to delivery facilities. (ECF No. 99 at 14:16–23; ECF No. 68 at 26 ¶ 124.)

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12. Ratepayers have paid to SCE & G roughly $2 billion in revised rates for financing the Project. (ECF No. 99 at 61:10–15.)

13. On July 31, 2017, SCE & G "announced that it would cease construction of the [Project's] Units and request recovery of its abandoned costs, an outcome expressly contemplated by the BLRA." (ECF No. 68 at 31–32 ¶ 158.)

14. On August 1, 2017, SCE & G filed a Petition for Prudency Determination Regarding Abandonment, Amendments to the Construction Schedule, Capital Cost Schedule and Other Terms of the BLRA Orders for the V.C. Summer Units 2 & 3 and Related Matters (the "Petition") with the PSC to abandon construction of the Project. (ECF No. 68 at 32 ¶ 159.) In the Petition, SCE & G alleges that it asked the PSC to "enter an order finding that SCE & G's decision to abandon the construction of the [V.C. Summer] Units was reasonable and prudent" and "sought authorization to calculate revised rates reflecting SCE & G's incurred construction costs and costs of abandonment, pursuant to the BLRA." (Id. ¶¶ 160–61.)

15. On August 9, 2017, the South Carolina Office of Regulatory Staff ("ORS") moved to dismiss SCE & G's Petition. (Id. ¶ 162.)

16. SCE & G contends that it voluntarily withdrew its Petition on August 15, 2017, "after legislative leadership demanded more time for legislators to review the project and threatened to bring the South Carolina General Assembly back into a special session for the specific purpose of preventing SCE & G from recovering its abandoned costs." (Id. ¶¶ 164–165.)

17. On January 12, 2018, SCE & G and Dominion Energy, Inc., filed a Joint Application and Petition ("Joint Petition"), PSC Docket 2017-370-E, with the PSC for review and approval of the merger between SCE & G and Dominion. (ECF No. 31-1.) In the Joint Petition, SCE & G requested that the PSC permit SCE & G to recover up to $5 billion from ratepayers over the next 20 years for the abandoned Project. (Id. at 51–52.)

18. 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.) Act 287 became law on June 28, 2018, and Resolution 285 became law on July 2, 2018. Act 287 instructs 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...