TY - JOUR
T1 - Deregulatory takings and breach of the regulatory contract
AU - Sidak, J. Gregory
AU - Spulber, Daniel F.
N1 - Funding Information:
The authors are grateful to the Facultad de Ciencias Qu?micas de la Universidad Aut?noma de Nuevo Le?n and the Consejo Nacional de Ciencia y Tecnolog?la (CONACYT) for the financial support provided [grant number 79746].
PY - 1996/10
Y1 - 1996/10
N2 - Over the past century, as the regulatory state steadily expanded its reach, courts frequently addressed claims that regulatory actions amounted to an unconstitutional taking. Recently, however, legislation in the telecommunications and electric power industries have brought deregulatory concerns to the fore. In this landmark Article, Mr. Sidak and Professor Spulber present the first detailed analysis of the interaction between the Takings Clause, deregulation, network pricing, and contract law. In the typical case of regulated industries, firms and their investors agree to bear considerable "incumbent burdens" in exchange for a regulated rate of return. Sidak and Spulber first demonstrate that this arrangement represents a regulatory contract and find that recent deregulatory measures constitute breach. The authors then argue that, whether or not a regulatory contract in fact exists, recent mandatory unbundling in the electric power industry and open-access regulation in the telecommunications field effectuate a taking without just compensation. Finally, relying on concepts such as investment-backed expectations and the efficient component-pricing rule, the authors not only demonstrate that damages would be equivalent under either contract or takings theory, but also warn that governments could face enormous liability for their deregulatory measures.
AB - Over the past century, as the regulatory state steadily expanded its reach, courts frequently addressed claims that regulatory actions amounted to an unconstitutional taking. Recently, however, legislation in the telecommunications and electric power industries have brought deregulatory concerns to the fore. In this landmark Article, Mr. Sidak and Professor Spulber present the first detailed analysis of the interaction between the Takings Clause, deregulation, network pricing, and contract law. In the typical case of regulated industries, firms and their investors agree to bear considerable "incumbent burdens" in exchange for a regulated rate of return. Sidak and Spulber first demonstrate that this arrangement represents a regulatory contract and find that recent deregulatory measures constitute breach. The authors then argue that, whether or not a regulatory contract in fact exists, recent mandatory unbundling in the electric power industry and open-access regulation in the telecommunications field effectuate a taking without just compensation. Finally, relying on concepts such as investment-backed expectations and the efficient component-pricing rule, the authors not only demonstrate that damages would be equivalent under either contract or takings theory, but also warn that governments could face enormous liability for their deregulatory measures.
UR - http://www.scopus.com/inward/record.url?scp=0030520277&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0030520277&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:0030520277
VL - 71
SP - 851
EP - 999
JO - New York University Law Review
JF - New York University Law Review
SN - 0028-7881
IS - 4
ER -