The Public Law of Public Utilities

Abstract

The institutional structure of public utility regulation is grounded in early twentieth century legal theories that supported state and federal control of public utilities. In the early twentieth century, courts tolerated economic regulations that interfered with private property rights once a given firm was designated as a public utility, when courts accommodated powerful regulatory interventions, including many that would raise separation-of-powers concerns today. The analysis in this paper connects New Deal cases that expanded the regulatory reach of government to much older debates about the public utility idea and its special amenability to regulation, and the constitutional history of public utility regulation helps make sense of apparent puzzles and inconsistencies in modern administrative law. For nearly five decades prior to 1935, courts used rights-based arguments, not structural ones such as the non-delegation doctrine, to limit administrative capacity. Then, once the Supreme Court abandoned its freedom of contract jurisprudence, public utility case breathed new life into the doctrine at the start of the New Deal, and it did so as part of Court’s turn from rights-based limits on agency interventions to structural limits. Today’s administrative law reflects an ad hoc revival of public utility legal concepts, and it reinvents these concepts such that they bear little resemblance to their public utility genealogy.