The Second Coming of Smyth v. Ames

36 Pages Posted: 23 Apr 2013

See all articles by James Ming Chen

James Ming Chen

Michigan State University - College of Law

Date Written: 1999


The last time a book on regulatory policy caused this great a stir, "Bork" was a proper noun rather than an impertinent verb. Deregulatory Takings and the Regulatory Contract: The Competitive transformation of Network Industries in the United States, is almost surely the most controversial book of its kind in two decades. For the last three years, Gregory Sidak and Daniel F. Spulber have comprehensively reconceptualized public utility law as a branch of Takings Clause jurisprudence. Their aggressive theory has drawn a comparably fierce response, including a critical assessment by Jim Rossi in a recent issue of this law review. The long and prestigious list of challengers includes even William J. Baumol, who has collaborated extensively with Sidak.

In the belief that "joining issue is the sincerest form of flattery," I now offer my contribution to this debate. In the modest forum that the Texas Law Review has so graciously provided, I shall not engage Deregulatory Takings's legal analysis on its own terms. Others have performed that task with great panache. Trained as I am in law rather than economics, I do regret my part in "divert[ing] the attention" in this discussion "from what is economically wise to what is legally permissible. "

I begin by surveying the legal terrain on which Deregulatory Takings will most likely face its first serious test. If successful, Sidak and Spulber's proposal would transmogrify the abstract metaphor of a "regulatory contract" into a formidable constitutional obstacle to meaningful regulatory reform. The threat is serious enough to warrant one more sober look. A closer inspection of Deregulatory Takings ultimately reveals that it represents an unwitting corruption of Smyth v. Ames, an 1898 decision most closely associated with the doctrine that unfavorable ratemaking can effectively (and unconstitutionally) confiscate utility property. Is it mere happenstance that Sidak and Spulber's manifesto coincides with the centennial of the most notorious decision in the law of regulated industries? "Surely some revelation is at hand;/Surely the Second Coming is at hand. "

Suggested Citation

Chen, James Ming, The Second Coming of Smyth v. Ames (1999). Texas Law Review, Vol. 77, pp. 1535-1569,1999. Available at SSRN:

James Ming Chen (Contact Author)

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

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