7 N.E.3d 1045
Mass.2014Background
- In 2012 the Legislature authorized a Storm Trust Fund and empowered the Department of Public Utilities (DPU) to assess electric companies proportionally by intrastate operating revenues; the statute also expressly forbids companies from seeking recovery of that particular assessment in any rate proceeding.
- The DPU imposed the FY2013 storm assessment of $191,153 (pro rata across companies) and reiterated the statutory prohibition on recovery in its order.
- Petitioning electric companies challenged the recovery prohibition as an unconstitutional taking under art. 10 of the Massachusetts Declaration of Rights and the Fifth and Fourteenth Amendments. They sought a declaration that the ban on recovery is unconstitutional and severance of the prohibition from the statutory scheme.
- The central legal questions were whether (a) the assessment plus statutory ban on recovery is a per se taking, (b) the ban results in a confiscatory rate by denying a reasonable rate of return, or (c) the DPU order effects a regulatory taking under Penn Central.
- The court assumed independent review of constitutional claims, required the petitioners to prove a violation, and noted that resolution often depends on the context of an actual rate proceeding because the DPU controls rate base and rate of return determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assessment + statutory ban on recovery is a per se taking | Recovery ban permanently takes shareholder property because companies cannot recoup the assessment | A monetary obligation that does not appropriate a specific identified property interest is not a per se taking | Not a per se taking — monetary obligation without physical appropriation or total deprivation is not per se taking |
| Whether the ban facially denies utilities a reasonable rate of return (confiscation) | Ban prevents any recovery and thus deprives companies of opportunity to earn reasonable return | Confiscation analysis requires a challenge to a specific rate order; absent a concrete rate proceeding petitioners haven’t shown any particular rate is confiscatory | Claim fails now — must be raised in context of a specific rate proceeding to show an ultimately confiscatory rate |
| Whether the DPU order + ban constitutes a regulatory taking (Penn Central factors) | Imposition of the assessment plus prohibition on recovery is a regulatory taking interfering with property rights | The assessment is tiny relative to company revenues, utilities expect regulation, and the statute serves legitimate public purposes | No regulatory taking on these facts — economic impact is minimal, expectations limited by regulation, and the statute serves a legitimate public purpose |
| Proper scope/interpretation of the recovery prohibition | Statute forbids any recovery in any rate proceeding, eliminating all avenues of compensation | The statute can reasonably be read more narrowly (e.g., barring listing as a recoverable expense in the rate base) and DPU has discretion in application | Court accepts narrower plausible interpretations; scope matters and takings analysis depends on how DPU applies the ban in actual rate proceedings |
Key Cases Cited
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) (multifactor test for regulatory takings)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (per se taking for permanent physical occupation)
- Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (per se taking where regulation deprives owner of all economically beneficial use)
- Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989) (utility confiscation jurisprudence; utilities entitled to opportunity for reasonable return)
- Boston Gas Co. v. Department of Pub. Utils., 387 Mass. 531 (1982) (rate‑base inclusion limits and confiscation analysis)