Consolidated Edison Co. of New York, Inc. V. Pataki

By Rice, Seth A. | Energy Law Journal, January 1, 2003 | Go to article overview

Consolidated Edison Co. of New York, Inc. V. Pataki


Rice, Seth A., Energy Law Journal


I. INTRODUCTION

Since entering into a 1997 settlement agreement, the Consolidated Edison Company of New York (Con Ed) had been permitted to utilize a fuel adjustment clause (FAC) to pass through costs to its ratepayers. In February 2000, a steam tube failure occurred inside the Indian Point 2 generator of Con Ed's Indian Point Nuclear plant, necessitating the facilities emergency shut down. Con Ed was forced to purchase replacement power for the lost generating capacity while the plant remained offline at a cost of roughly $200 million dollars.

Con Ed quickly began to pass replacement power costs on to ratepayers via the 1997 FAC arrangement and in March of 2000, the New York Public Service Commission (NYPSC) commenced a prudence review.1 Shortly thereafter and prior to the completion of the prudence review, the New York legislature passed the Indian Point 2 Nuclear Facility-Radiation Leak-Recovery Act (Indian Point Law).2 The Indian Point Law terminated Con Ed's use of the FAC to recover replacement power costs, finding that imprudent operation of the Indian Point Nuclear plant by Con Ed had necessitated the shut down.

Con Ed claimed that the legislature's action was an unconstitutional bill of attainder3 and amounted to a punitive freeze on proper recovery of costs from ratepayers via the FAC. The utility prevailed in a suit brought on these grounds in the United States District Court for the Northern District of New York.4 On appeal, the Second Circuit Court of Appeals affirmed the district court ruling.

The Supreme Court has yet to directly address the applicability of the bill of attainder clause to corporations, however, the Court has signaled support for such a construction. The Second Circuit seized on this favorable Supreme Court dicta and two decades of corporate constitutional development to extend bill of attainder protection into the realm of corporate law.5 The approach taken by the Second Circuit reaffirmed not only the validity of the bill of attainder clause in modern jurisprudence, but also the Supreme Court's broad interpretation of the clause United States v. Brown.6

The Second Circuit considered two principal issues. The first and threshold issue was whether the bill of attainder clause was a purely personal guarantee, such that corporations as non-natural persons are excluded from the protections afforded by the clause.7 The Con Ed court also considered whether the Indian Point Law satisfied the punishment element under the traditional bill of analysis. Here, the relationship between the statute and the costs incurred by the utility as a result of the plant shut down were crucial.

This note will address the application and scope of the bill of attainder clause as it relates to this case, with particular focus on the availability of such a legal theory for corporate plaintiffs seeking to challenge legislative enactments. Before treating the underlying facts of the Con Ed case in greater detail, a brief background on the history and application of the bill of attainder clause is in order.

II. BILL OF ATTAINDER THEORY

A. Historical Perspective of the Bill of Attainder

During the sixteenth, seventeenth, and eighteen centuries in England, a bill of attainder was a parliamentary death sentence for people who sought or threatened to overthrow the government.8 America's thirteen colonies continued the bill of attainder tradition, particularly during the revolutionary period.9 English law also included a provision for bills of pains and penalties.10 Such bills exacted punishment less than death, primarily involving confiscation of property. The American concept of bill of attainder protection developed to encompass both death and property confiscation as banned forms of legislative punishment.11 Additionally, the English common law recognized that corporations (the historical equivalent) could suffer property deprivation akin to the modern concept of a taking. …

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