S.C. Elec. & Gas Co. v. Whitfield
This text of 329 F. Supp. 3d 191 (S.C. Elec. & Gas Co. v. Whitfield) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
J. Michelle Childs, United States District Judge *198ORDER AND OPINION
Plaintiff South Carolina Electric and Gas Company ("SCE & G") brings this action pursuant to
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") (together "Intervenor Defendants").3 (ECF Nos. 48, 50, 52.) SCE & G has not yet responded to Defendants and Intervenor Defendants' Motions; however, as explained below, the pleading deficiencies in SCE & G's Complaint cannot be remedied by arguments of counsel. Therefore, in light of the expedited schedule in this case, the court exercises its discretion to decide the matter without awaiting SCE & G's response. See , e.g. , Planned Parenthood of Kan. v. Mosier , Case No. 16-2284-JAR-GLR,
I. RELEVANT BACKGROUND TO PENDING MOTIONS
This case arises out of SCE & G's attempt to construct two nuclear reactors *199known as VC 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,4 and enable it to meet the electricity demands of its South Carolina customers. (See ECF No. 1 at 6 ¶ 19, 13 ¶¶ 56-59.) SCE & G alleges that the incentive for the Project occurred as a result of the South Carolina General Assembly's passage of the Base Load Review Act,
The PSC is granted the power to regulate, oversee, and approve "electric rates that SCE & G charges to retail electric ratepayers, and prudency determinations of SCE & G's actions under the BLRA." (ECF No. 1 at 5 ¶ 15 (citing
Pursuant to the BLRA, a utility undertaking the construction of a base load review plant, as defined in
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J. Michelle Childs, United States District Judge *198ORDER AND OPINION
Plaintiff South Carolina Electric and Gas Company ("SCE & G") brings this action pursuant to
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") (together "Intervenor Defendants").3 (ECF Nos. 48, 50, 52.) SCE & G has not yet responded to Defendants and Intervenor Defendants' Motions; however, as explained below, the pleading deficiencies in SCE & G's Complaint cannot be remedied by arguments of counsel. Therefore, in light of the expedited schedule in this case, the court exercises its discretion to decide the matter without awaiting SCE & G's response. See , e.g. , Planned Parenthood of Kan. v. Mosier , Case No. 16-2284-JAR-GLR,
I. RELEVANT BACKGROUND TO PENDING MOTIONS
This case arises out of SCE & G's attempt to construct two nuclear reactors *199known as VC 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,4 and enable it to meet the electricity demands of its South Carolina customers. (See ECF No. 1 at 6 ¶ 19, 13 ¶¶ 56-59.) SCE & G alleges that the incentive for the Project occurred as a result of the South Carolina General Assembly's passage of the Base Load Review Act,
The PSC is granted the power to regulate, oversee, and approve "electric rates that SCE & G charges to retail electric ratepayers, and prudency determinations of SCE & G's actions under the BLRA." (ECF No. 1 at 5 ¶ 15 (citing
Pursuant to the BLRA, a utility undertaking the construction of a base load review plant, as defined in
*200
SCE & G alleges that on May 30, 2008, it filed a Combined Application for Certificate of Environmental Compatibility, Public Convenience and Necessity7 (the "Application") with the PSC, pursuant to the BLRA. (ECF No. 1 at 14 ¶ 63.) SCE & G sought approval for construction of the Project based on a projected cost of $6.3 billion. (Id. ¶ 64.) 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. 1-3 at 6 ¶ 11; see also ECF Nos. 1-1, 1-2.) Thereafter, SCE & G alleges that from 2008 through 2016, the PSC approved revised rates related to recovery for the capital costs of the Project amounting to $445 million annually. (See ECF Nos. 1-5 to 1-12.) In or around July 31, 2017, SCE & G alleges that it was forced by specified circumstances to reach a decision that it could not complete the Project and "announced that it would cease construction of the Units and request recovery of its abandoned costs, an outcome expressly contemplated by the BLRA."8 (ECF No. 1 at 30 ¶ 156.)
SCE & G alleges that on August 1, 2017, it filed with the PSC 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 to abandon construction of the Project (the "Petition"). (Id. at 31 ¶ 157.) 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 *201to calculate revised rates reflecting SCE & G's incurred construction costs and costs of abandonment, pursuant to the BLRA." (Id. ¶¶ 158-159.) On August 15, 2017, SCE & G alleges that it voluntarily withdrew its Petition "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. ¶¶ 162-163.) After it announced its abandonment of the Project, SCE & G alleges that numerous members of the South Carolina political community expressed the desire "to punish SCE & G for its decision to abandon the nuclear facilities." (Id. at 34 ¶ 172; see generally ECF No. 1 at 32 ¶ 166-35 ¶ 174.)
With the passage of Act 287 and Resolution 285, the South Carolina General Assembly modified the process for establishing and appealing 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.
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 that 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.) SCE & G's federal lawsuit does not challenge or seek review of any order by the PSC.10 (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. (Id. ) The first billing cycle in August begins on August 7, 2018. (ECF No. 9 at 2.) In light of the August 7, 2018 implementation date, the court granted an expedited schedule for this case. (ECF No. 21.)
*202Additionally, on July 3, 2018, Intervenor Defendants filed Motions to Intervene (ECF Nos. 7, 8), which the court granted on July 18, 2018. (ECF No. 41.) Additionally, on July 5, 2018, Alan Wilson, Attorney General of South Carolina ("Attorney General Wilson"), moved to file an Amicus Brief (ECF No. 10) and the court granted Attorney General Wilson's Motion on July 12, 2018. (ECF No. 27.)
Thereafter, on July 20, 2018, Defendants and Intervenor Defendants filed the instant Motions to Dismiss.
II. LEGAL STANDARD
A. 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 ,
A Rule 12(b)(6) motion should not be granted unless it appears certain that the plaintiff can prove no set of facts that would support her claim and would entitle her to relief. Mylan Labs., Inc. v. Matkari ,
B. 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. ,
III. ANALYSIS
A. Failure to State a Claim
Defendants bring a Motion to Dismiss pursuant to Rule 12(b)(6). (ECF Nos. 48-1 at 8-17.) Defendants assert that SCE & G has failed to state a claim as to any of its alleged constitutional violations. (ECF No. 48-1 at 8-17.)
SCE & G is able to bring a Section 1983 claim because it is considered an "other person" for the purposes of Section 1983 and it is suing in its own right.11 See ANR Pipeline Co. v. Mich. Pub. Serv. Comm'n,
SCE & G seeks review of the alleged unconstitutional statutory provisions enacted by the South Carolina General Assembly, and it does not challenge or seek review of any order by the PSC or any other South Carolina agency. (ECF No. 1 at 3 ¶ 4.) However, SCE & G also seeks to enjoin the experimental rate set by the PSC from being implemented. (ECF No. 5-1 at 18.) Additionally, SCE & G requests that the court "[e]nter a temporary, preliminary and permanent injunction that directs 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 the unconstitutional Act and Joint Resolution." (ECF No. 1 at 48 ¶ B.) SCE & G has not alleged that any of the PSC Commissioners, acting *204under color of state law, violated SCE & G's constitutional rights. (See ECF No. 7 at 5); see also Clelland v. Glines , No. CIV. A. 02-2223-KHV,
SCE & G must "state a claim to relief that is plausible on its face," pleading facts that allow the court to reasonably infer that Defendants are liable for the misconduct alleged. See Iqbal ,
B. The Johnson Act
Defendants and Intervenor Defendants all assert that the Johnson Act applies because SCE & G seeks to enjoin the experimental rate set by the PSC's July 3, 2018 Order (ECF No. 33-4). (See ECF Nos. 48-1 at 17, 52-1 at 11-12, 50-1 at 24.)
The Johnson Act codified in
The district courts shall not enjoin, suspend or restrain the operation of, or compliance with any order affecting rates chargeable by a public utility and made by a state administrative agency or a rate-making body of a State political subdivision, where: (1) jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; (2) the order does not interfere with interstate commerce; (3) the order has been made after reasonable notice and hearing; and (4) a plain, speedy and efficient remedy may be had in the courts of such State.
"[B]y its broad wording it is clear that [the Johnson Act] was intended to keep constitutional challenges to orders affecting rates out of the federal courts 'lock, stock and barrel,' or, ... a general hands-off policy relative to state rate making." Tennyson v. Gas Serv. Co. ,
SCE & G asserts that the Johnson Act does not bar its requested relief [declaratory and injunctive relief] because "SCE & G seeks review only of the unconstitutional statutory provisions enacted by the General Assembly; it does not challenge or seek review of any order by the PSC or any other South Carolina agency." (ECF No. 5-1 at 15 n.7.) However, SCE & G challenges the PSC's experimental rate order asserting that "[t]he act immediately prohibits SCE & G from recovering investments made after June 30, 2010, pursuant to the BLRA," which allegedly constitutes a taking. (ECF No. 1 at 43 ¶ 223.) SCE & G also challenges "on due process grounds," Resolution 285's mandate that there shall be no hearing until after November 1, 2018 on the merits of the experimental rate or any other "docket in which requests were made pursuant to the BLRA." (Id. at 45 ¶245.)
Further, SCE & G asserts that Act 287 violates the Takings Clause of the 5th and 14th Amendments, the Due Process Clause *205of the 14th Amendment, and the Act constitutes an unlawful Bill of Attainder. (ECF No. 1 at 42 ¶¶ 216-258.) SCE & G seeks a declaratory judgment that Act 287 is unconstitutional and also seeks injunctive relief preventing implementation of the Act. (ECF No. 1 at 44 ¶ 230; 45 ¶ 239; 46 ¶ 249; 47 ¶ 258.)
The Johnson Act applies to the extent that SCE & G is requesting the court to enjoin the PSC's July 3, 2018 Order (ECF No. 33-4) from taking effect. The Johnson Act also applies to SCE & G's challenge to Act 287 and Resolution 285. If the court finds Act 287 and Resolution 285 unconstitutional, it would necessarily nullify the PSC's July 3, 2018 Order by preventing it from taking effect. (See ECF No. 52-1 at 11.) This nullification would strip the PSC of its power to carry forth its mandate, from the legislature, to set the experimental rate. See Hanna Mining Co. v. Minn. Power & Light Co.,
(1) Repugnance of the July 3, 2018 Order to the United States Constitution
This prong is met because Counts I-IV challenge the constitutionality of Act 287 and Resolution 285, which mandate that the PSC utilize its authority to establish utility rates, to set an experimental rate, and eventually to hold a hearing on the merits of any docket in which requests were made pursuant to the BLRA.
(2) Interference with Interstate Commerce14
The experimental rate set forth by the PSC by mandate of Act 287 only effects South Carolina rate payers. (See ECF No. 50-1 at 25; ECF No. 52-1 at 13.) "[U]nder the wording of the Johnson Act, it is not enough that an intrastate rate-making policy merely 'affect' interstate commerce." Nelson ,
(3) Reasonable Notice and Hearing
"[The Johnson Act] requires only that the rate-making body satisfy any notice or hearing requirements mandated by state law." ACTS Ret.-Life Cmtys, Inc. ,
Although the PSC did not have to give notice to SCE & G or hold a hearing, the PSC held a hearing on July 2 and July 3, 2018, of which SCE & G had notice. (See PSC Docket No. 2018-217-E, Id Nos. 276985, 277008.)15 SCE & G filed a letter within PSC Docket No. 2018-217-E with proposals as to how to implement Act 287. (See PSC Docket No. 2018-217-E, Id No. 276967.) Docket No. 2018-217-E is currently open before the PSC, and pursuant to Act 287, the PSC has the authority to "monitor the net effect of the experimental rate and may alter the experimental rate, on its own motion, only if it determines that an adjustment to the experimental rate is necessary to satisfy constitutional requirements of utility ratemaking."
(4) Plain, Speedy, and Efficient Remedy at the State Level
Defendants assert that SCE & G has available state court remedies either before the PSC or before the Supreme Court of South Carolina. (ECF No. 48-1 at 9; ECF No. 52-1 at 15; ECF No. 50-1 at 27-28); see
A party may appeal to the Supreme Court of South Carolina or the South Carolina Court of Appeals, any final order or decision of the commission pursuant to
Resolution 285 states that "[n]o final determination of matters described in this joint resolution, whether by a final order issued by the Public Service Commission or by operation of law, shall occur earlier than [November 1, 2018]. The Public Service Commission's failure to issue a final order prior to the time period established in this joint resolution shall not constitute approval by the Public Service Commission and a utility must not put into effect the change in rates it requested in its schedule."
Because the PSC's July 3, 2018 Order setting the experimental rate does not constitute a final order by the PSC, SCE & G is not able to appeal the PSC's July 3, 2018 Order (ECF No. 33-4) at this time pursuant to
Defendants and President Leatherman also assert that SCE & G can move for a rehearing pursuant to
The court notes that the experimental rate set by the PSC's July 3, 2018 Order takes effect during the August billing cycle which begins on August 7, 2018. (See ECF Nos. 9, 33-4.) If the experimental rate is enforced, SCE & G asserts that it would lose more than $1 million dollars per day. (ECF No. 5-1 at 30.) SCE & G cannot be heard regarding the constitutionality of the experimental rate before November 1, 2018. Therefore, SCE & G's remedy at the state level would not be "speedy" given the impending August 7, 2018 experimental rate implementation deadline. SCE & G does not have a "plain, speedy and efficient remedy" at the state level at this time because the remedies are either foreclosed due to the lack of a "final order" by the *209PSC or they are foreclosed by Act 287 or Resolution 285.
SCE & G could have filed this case in South Carolina state court and in many instances, SCE & G would have to exhaust its state remedies before proceeding to federal court. See Peoples Nat. Util. Co. ,
C. Abstention
Abstention is a judicially created doctrine in which the federal courts may abstain from exercising jurisdiction out of respect for the independence of state governments and in the interest of facilitating the smooth working of the federal judiciary. Railroad Comm'n of Tex. v. Pullman Co. ,
The Younger abstention doctrine requires a court to abstain from exercising jurisdiction over an on-going state proceeding where: (1) the state proceeding is judicial in nature; (2) the proceeding implicates important state interests; and (3) there exists an adequate opportunity in the state proceeding to raise constitutional challenges. Middlesex Ethics Comm'n v. Garden State Bar Ass'n ,
The Burford abstention doctrine is as follows:
Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar;" or (2) where the "exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy *210with respect to a matter of substantial public concern."
New Orleans Pub. Serv., Inc., v. Council of City of New Orleans ,
The Pullman abstention doctrine applies in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent law. Colo. River Water Conservation District v. U.S. ,
The South Carolina Supreme Court has held that Commission proceedings are quasi-judicial. See Util. Servs. of S.C., Inc. v. S.C. Office of Regulatory Staff ,
Act 287 suspends SCE & G's right to petition for a hearing on the rate change or any rate change going forward "for any pending matters related to V.C. Summer Nuclear Reactor Units 2 and 3 at Jenkinsville, South Carolina."
The case law that Defendants and Intervenor Defendants rely upon is distinguishable because the present case lacks the adequate and timely state review that is required to exercise abstention under all three doctrines. But cf. Younger ,
Based on the foregoing, the court finds that an adequate and timely state review is not currently available to SCE & G, therefore preventing the court from applying any of the three abstention doctrines raised by Defendants and Intervenor Defendants.
D. Sovereign Immunity
Only Speaker Lucas argues that Defendants are entitled to dismissal of the Complaint under Rule 12(b)(6) because they "as agents of the state-are entitled to sovereign immunity under the Eleventh Amendment of the U.S. Constitution." (ECF No. 52-1 at 23.) In support of his argument for immunity, Speaker Lucas asserts that "South Carolina has not consented to be sued" and "[D]efendants as agents of the State of South Carolina, are deemed to be the state itself, the Court is precluded from considering an official capacity claim against them because they are not 'persons' within the meaning of Section 1983." (ECF No. 52-1 at 24 (citing
When a defendant raises the jurisdictional issue of immunity, the court must resolve this threshold matter prior to addressing the merits of the plaintiff's claims. See Steel Co. v. Citizens for a Better Env't ,
*212Bd. of Trustees of Univ. of Ala. v. Garrett ,
State agencies like the PSC "that may be properly characterized as arms of the State ... are also entitled to the same immunity as the state itself.22 Harter v. Vernon ,
*213Allen ,
Upon its review, the court finds that the aforementioned exception is inapplicable because SCE & G has not stated allegations regarding specific acts of Defendants showing their enforcement of Act 287 and Resolution 285 that would subject them to the consequences of their official conduct. Accordingly, Defendants are entitled to dismissal of this action.
IV. CONCLUSION
For the reasons stated above, the court GRANTS IN PART and DENIES IN PART the Motions to Dismiss of Defendants and Intervenor Defendants. (ECF Nos. 48, 50, 52.) The court DENIES all portions of the Motions which assert the applicability of the Johnson Act or any abstention doctrine. However, because SCE & G fails to plead any allegations against Defendants specifically; the court GRANTS Defendants' Motion to Dismiss pursuant to Rule 12(b)(6) and Speaker Lucas' Motion to Dismiss pursuant to Defendants' sovereign immunity under the Eleventh Amendment. Therefore, the clerk is ordered to DISMISS without prejudice SCE & G's Complaint (ECF No. 1) against Defendants. Intervenor Defendants were only permissively allowed to intervene in this case. (See ECF No. 41.) As a result of the aforementioned, the court DISMISSES Intervenor Defendants from the case based on legislative immunity. See, e.g., Bruce v. Riddle ,
In light of the expedited schedule of this case as it relates to the pending Motion for Preliminary Injunction (ECF No. 5), the court exercises the discretion given to it by Federal Rule of Civil Procedure 15(a)(2) and GRANTS SCE & G leave to file an amended complaint only until Friday, July 27, 2018 at 3:00 p.m. If an amended complaint is filed, Intervenor Defendants will automatically be allowed to re-intervene pursuant to the court's discretion under Rule 24. Any responsive pleading or motion filed regarding SCE & G's amended complaint shall be filed by Saturday, July 28 at 3 p.m.
IT IS SO ORDERED.
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