he state Legislature likely has full authority to subpoena documents from energy companies it's investigating for price manipulation, according to a report released Friday by two Sacramento law professors.
The report, issued by McGeorge School of Law's Capital Center for Government Law and Policy, says that Delaware-based Enron Corp. is unlikely to succeed in a suit challenging the validity and enforceability of a Senate committee's subpoena and recommendation of contempt against the energy provider.
The suit filed by Enron in Sacramento County Superior Court in July marks the first time in more than 70 years that a company has challenged the Senate's authority to subpoena company documents as part of a state investigation.
The legal action comes in response to the state's probe of energy price manipulation and questions the Senate's jurisdictional power to subpoena out-of-state documents. The suit also challenges the Senate's authority to hold Enron in contempt for failing to comply with its orders.
Lawyers and lawmakers agree that the separation of powers issue in Enron Corp. v. Senate Select Committee to Investigate Price Manipulation, 01A-S04141, will likely have to be decided by the California or U.S. Supreme Court.
But the analysis by McGeorge professors J. Clark Kelso and Thomas Main concludes that a court is likely to "defer to the Legislature's exercise of its broad authority to conduct legislative inquiries into matters of great public importance."
In court papers, Enron asserts that the Senate is violating the separation of powers by threatening acts that are judicial - not legislative - in nature.
"The true purpose of the committee's subpoena is to pursue discovery to develop information solely pertinent to whether existing law has allegedly been violated, or to assist the civil class action attorneys, neither of which is a proper legislative function of the committee," Enron attorney Michael Kirby writes in court papers.
Kirby, of San Diego's Post Kirby Noonan & Sweat, could not be reached Wednesday to comment on the eight-page independent report titled California State Senate versus Enron Corp.: An Analysis of Legal Issues Involving the Power of Legislative Contempt.
In their report, Kelso and Main say case law makes clear that a court's authority to second-guess the determinations of a legislative body is extremely limited.
"Enron's technical and procedural arguments, and its contention that the subpoena is outside the scope of the Legislature's authority, are unlikely to prevail," the study says.
The study goes on to say, "It is a well-settled principle that the legislative branch is entitled to deference from the courts because of the constitutional separation of powers."
The authors though suggest that the Legislature modify the current contempt sanctions to avoid imposing a fine against Enron of "unlawful proportions."
The Senate committee, led by Sen. Joseph Dunn, D-Garden Grove, has suggested that the full Senate impose a fine for each day that Enron fails to comply with the subpoena order.
The full Senate has yet to vote on the contempt motion, but under that model, the fine would start at $100 and double every day after, resulting in a fine of $1 billion after just 20 days. In order to avoid imposing an unlawful fine, Kelso and Main suggest that the Senate cap the fine at $5 million per day after 13 days.
Kelso said Wednesday that he was prompted to do the analysis because of the sheer rarity of the legal action.
"It's a big issue," he said, "a novel issue."
