A Lawyer Olympics
Last year’s nuclear energy project was a decathlon of legal actions
Published in 2019 South Carolina Super Lawyers Magazine — May 2019 on July 25, 2019
On July 31, 2017, SCANA Corporation and South Carolina Electric & Gas Company filed a petition for approval with the Public Service Commission of South Carolina to stop construction of two nuclear reactors in Jenkinsville. The time and money in the original plan were running out, and completing it would take significantly more of both. The problem: It had already cost more than $9 billion and produced zero energy.
What resulted were legal actions filed from every conceivable side. Matthew Richardson estimates it involved more than 70 attorneys from 18 firms.
“It has been a lawyer Olympics, there’s no question,” says Bobby Stepp, who represented House Speaker Jay Lucas.
The case began with the Office of Regulatory Staff, which protects public utility ratepayers, and investigates, audits and files actions as it deems necessary. Because of the case’s scope, it sought outside litigators and tapped Matthew Richardson in March 2018 to prevent SCE&G from charging ratepayers for the construction costs already incurred, and to set the utility rates going forward.
“In litigation, sometimes we have to be a jack of all trades—even if we’re a master of none—and that’s a pretty good explanation of me,” Richardson says with a laugh. “It was a 10-year nuclear construction project, so it had the aspects of a huge construction law case; it was a financial fraud case; and it was about setting the permanent abandonment rate for the nuclear costs for the next 20 years. Each one of those could have been a multi-year litigation. Combined into one, you can imagine the complexity.
“I’ve been told it’s the largest public utility-rate case in South Carolina history.”
To make matters worse: “The legislature said the Public Service Commission had to deal with its issues by the end of the year,” says Wallace Lightsey, who assisted in the ORS case. “For as big a case as it is to move as fast as it did is pretty extraordinary.”
Last June, the General Assembly enacted temporary rate relief until the PSC made its decision. “When they did that, SCE&G said it was too much, and the Senate hired us to defend that rate cut,” Richardson says. “It was $270 million for 700,000 customers over five months. It was an important relief for the ratepayers, and we were able to successfully defend it.”
SCE&G also challenged the legality of the legislature setting utility rates and preventing its rights to recover expenditures. That’s when Stepp became involved. He has repped the House and its speakers on several occasions, but this was something new: “It’s very rare when someone asks a federal court to enjoin state legislation that’s been dually enacted and doesn’t involve criminal activity to come in and substitute its own judgment,” he says.
“It was an interesting case because SCE&G came in and took a full swing at the legislation, on an expedited basis, and tried to get the court to throw it out—unsuccessfully—and then appealed to try to get the Fourth Circuit to grant an injunction against the implementation of it, and struck out as well,” he adds.
Richardson’s father, Terry, was also involved in litigation. “He brought a class action in state court on behalf of the ratepayers for what they paid in the past. I was brought in to enforce the protections in the rates going forward. So, in a way, it was complementary,” Matthew says.
The case broke new ground. “It took me a while to get up to speed—and I’m not entirely sure I ever did,” Lightsey says with a laugh. “There were questions about [Freedom of Information Act] requests in respect to documents ORS received during discovery, and I have a lot of experience with FOIA, so I handled those motions and other discovery issues that came up with SCANA.
“It was a huge case, and challenging both factually and legally. It was just this sort of mammoth, sprawling thing that had to be resolved very quickly. That’s what I’ll remember: That Nov. 1 date bearing down on us the whole time and trying to move it as fast as we could.”
Discovery was challenging in part because of hidden information such as the Bechtel report. It was written in 2015, but kept out of public view until Santee Cooper released it a few years later. “Then everyone saw what they were hiding: that the project could cost another 10 years and another $10 billion, and it had substantial management problems,” Richardson says. “At that point, it became obvious to everyone that the plant would not be built. Then we went to Pennsylvania, Washington D.C., and other parts of the country to get testimony from people involved, and we uncovered a lot more. We went through a million-and-a-half documents, had 50 witnesses at the hearing, and presented the wide range of issues.”
The hearing ended Nov. 21 and, one month later, PSC made its decision. When the temporary cut was approved in July, it was $125.34 a month for the average residential ratepayer. “Nobody thought we could get the permanent monthly rate that low. By the end, we got it less: $125.26,” Richardson says, noting that relief totaled $4 billion. “It wasn’t perfect. Nobody’s happy that there has to be cost recovery for something that will never produce electricity. But, ultimately, that was a great success for ORS and the ratepayers.”
More good news came in January: SCANA and its new parent company, Dominion Energy, dismissed the appeal challenging the temporary rate—and settled the ratepayer litigation for $115 million plus $60 to $80 million in property, due for final approval in May.
Other pieces of litigation remain, Richardson notes: investors of the publicly traded SCANA could argue that decisionmakers withheld or gave misleading information that led them to buy stock; junior partner Santee Cooper and its ratepayers also footed about $4 billion of the project’s cost.
“There’s no question the final chapter has yet to be written,” Richardson says.