LS Power Midcontinent, LLC v. State

CourtCourt of Appeals of Iowa
DecidedJuly 8, 2022
Docket21-0696
StatusPublished

This text of LS Power Midcontinent, LLC v. State (LS Power Midcontinent, LLC v. State) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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LS Power Midcontinent, LLC v. State, (iowactapp 2022).

Opinion

THE COURT OF APPEALS OF IOWA

No. 21-0696 Filed July 8, 2022

LS POWER MIDCONTINENT, LLC and SOUTHWEST TRANSMISSION, LLC, Plaintiffs-Appellants,

vs.

STATE OF IOWA, IOWA UTILITIES BOARD, GERI D. HUSER, GLEN DICKINSON, and LESLIE HICKEY, Defendants-Appellees,

and

MIDAMERICAN ENERGY COMPANY and ITC MIDWEST LLC, Intervenors. ________________________________________________________________

Appeal from the Iowa District Court for Polk County, Celene Gogerty, Judge.

Energy companies appeal the dismissal of their case for lack of standing

and request injunctive relief at this appellate stage. AFFIRMED.

Charles F. Becker, Michael R. Reck, and Erika L. Bauer of Belin

McCormick, P.C., Des Moines, for appellants.

Thomas J. Miller, Attorney General, and David M. Ranscht and Benjamin

Flickinger, Assistant Attorneys General, for appellees.

Elizabeth R. Meyer, Stanley J. Thompson (until withdrawal), and Tara Z.

Hall of Dentons Davis Brown, P.C., Des Moines, for intervenors MidAmerican

Energy Company. 2

Amy Monopoli of ITC Holdings Corp. (until withdrawal), Des Moines, and

Bret A. Dublinske and Lisa M. Agrimonti of Fredrickson & Byron, P.A., Des Moines,

for intervenors ITC Midwest LLC.

Kelly A. Cwiertny and Terri C. Davis of Shuttleworth & Ingersoll, P.L.C.,

Cedar Rapids, for amicus curiae Resale Power Group of Iowa.

Lynn C. Herndon of Nyemaster Goode, P.C., Des Moines, and Kenneth R.

Stark, Harrisburg, Pennsylvania, for amicus curiae Coalition of MISO Transmission

Customers.

Heard by May, P.J., and Greer and Chicchelly, JJ. 3

GREER, Judge.

In June 2020, the Iowa legislature passed H.F. 2643, an omnibus

appropriations bill, codified in Iowa Code section 478.16 (2020), effective July 1,

2020. One of the results of this was the reinstitution of a right of first refusal

(ROFR) for incumbent electric transmission owners. At its core, this ROFR gave

energy companies with existing energy infrastructure the ability to have the first

shot at new projects scheduled within the territory they already occupy. Missouri-

based energy companies LS Power Midcontinent, LLC and Southwest

Transmission, LLC—together a part of LS Power Group (LSP)1—filed suit against

the State, arguing the ROFR violated the Iowa constitution and seeking injunctive

relief to prevent the publication or enforcement of the new law. The State moved

to dismiss, arguing LSP did not have standing to bring suit because they had

suffered no injury in fact. The district court agreed and dismissed the case.

Because LSP has not shown they have been injured by the enactment of the law,

we affirm the district court’s decision. In the interim, LSP also moved to enjoin any

bidding on projects during this appellate process; with this decision we deny that

request.

I. Background Facts and Proceedings.

The energy that powers everyday life in Iowa makes its way into

communities through a highly regulated planning system. Companies can be

involved in that system by generating, transmitting, or distributing power. Two non-

governmental entities known as Regional Transmission Organizations (RTOs)—

1 We refer to the plaintiffs collectively as LSP in this decision. LSP develops, constructs, and manages wholesale electric transmission projects. 4

the Southwest Power Pool (SPP) and Midcontinent Independent System Operator

(MISO)—oversee the transmission stage by planning any necessary expansion of

interstate, high-voltage transmission grids in the state.2 As RTOs, SPP and MISO

are regulated by the Federal Energy Regulatory Commission (FERC). Companies

must be qualified members of MISO or SPP to bid on that RTO’s planned projects.

Once MISO or SPP determine that a member company has won the bid for the

Iowa project, the Iowa Utilities Board (IUB) then facilitates and oversees the

project’s specifics, such as the route and land use.

In June 2020, the Iowa legislature passed H.F. 2643, titled “FY 2021

Appropriations Bill.” The bill’s Division XXXIII, Section 128, was titled “Electric

Transmission Lines.”3 This specific portion of H.F. 2643 gave the owners of current

electric transmission infrastructure that would connect to any new project

necessary in the state the ROFR for that new project unless the project was

already subject to a federal-level ROFR. In other words, rather than MISO or SPP

fielding bids from all interested member companies, the RTOs follow the state

regulation and a member with existing infrastructure in the territory gets the first

crack at taking on the new development. The incumbent then has ninety days to

decide whether it wants the project; if it declines, the IUB can determine whether

another company can take on the project. Iowa Code § 478.16(3).

2These RTOs operate across multiple states. 3This section was not present in H.F. 2643 when it was passed by the Iowa House of Representatives. Rather, it was added in the Iowa Senate by amendment S- 5163 in the early morning hours of June 14, 2020. The amended bill was then passed by the House later that day. 5

ROFRs have been a part of the landscape for projects like this—before

2011, MISO and SPP each had a federal ROFR in their own tariffs. But, in 2011,

FERC issued Order Number 1000, which directed RTOs to remove federal-level

ROFRs from tariffs to allow for a more competitive bidding process. Transmission

Planning & Operating Public Utilities, Order No. 1000, 76 Fed. Reg. 49,842, 49,855

(2011). This move toward elimination applied only to projects “selected in a

regional transmission plan for purposes of cost allocation.”4 Id. at 49,846. But

Order Number 1000 left the door open for state-level ROFRs.5 Both MISO and

SPP adjusted their tariffs accordingly to remove the relevant portions of their

federal ROFR.

The two Missouri-based companies here went through the process to

become qualified members of an RTO—LS Power is qualified through MISO and

Southwest Transmission is qualified through SPP. But neither have existing

infrastructure in Iowa.

After H.F. 2643 was signed by Governor Kim Reynolds, LSP petitioned for

declaratory and injunctive relief, citing several constitutional shortcomings. The

complaint named the State of Iowa, the IUB, IUB Chair Geri Huser, Director of the

Legislative Services Agency Glen Dickinson, and Iowa Code Editor Leslie Hickey

as defendants. It specifically asserted H.F. 2643 violated article III, section 29 of

4 Iowa Code section 478.16(3), then, fills the gap Order Number 1000 created. 5 The order states explicitly: “[W]e note that nothing in this Final Rule is intended to limit, preempt, or otherwise affect state or local laws or regulations with respect to construction of transmission facilities, including but not limited to authority over siting or permitting of transmission facilities.” Transmission Planning & Operating Public Utilities, 76 Fed. Reg. at 49,880. 6

the Iowa Constitution6 and both the equal protection and privileges and immunities

clauses found in article I, section 6. The defendants moved to dismiss the action,

arguing LSP lacked standing; brought unripe and untimely claims; named

unnecessary parties in Huser, Dickinson, and Hickey; and should fail on the merits.

The day after the motion was filed, MidAmerican Energy Company and ITC

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