Driftless Area Land Conservancy v. Valcq, 20-3325

• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)
• Writing for the Court: Sykes, Chief Judge.
• Citation: 16 F.4th 508
• Parties: DRIFTLESS AREA LAND CONSERVANCY and Wisconsin Wildlife Federation, Plaintiffs-Appellees, v. Rebecca VALCQ and Tyler Huebner, in their official capacities as members of the Public Service Commission of Wisconsin, Defendants-Appellants, and American Transmission Company LLC, et al., Intervenor Defendants-Appellants.
• Docket Number: No. 20-3325,20-3325
• Decision Date: 21 October 2021

16 F.4th 508

DRIFTLESS AREA LAND CONSERVANCY and Wisconsin Wildlife Federation, Plaintiffs-Appellees,
v.
Rebecca VALCQ and Tyler Huebner,^* in their official capacities as members of the Public Service Commission of Wisconsin, Defendants-Appellants,
and
American Transmission Company LLC, et al., Intervenor Defendants-Appellants.

No. 20-3325

United States Court of Appeals, Seventh Circuit.

Argued February 17, 2021
Decided October 21, 2021
Rehearing Denied November 16, 2021

Stephen Paul Hurley, Catherine E. White, Attorneys, Hurley Burish, S.C., Madison, WI, Howard A. Learner, Attorney, Environmental Law & Policy Center, Chicago, IL, for Plaintiffs-Appellees.

Christianne Whiting, Zachary Peters, Cynthia E. Smith, Attorneys, Public Service Commission of Wisconsin, Madison, WI, for Defendants-Appellants.

Brian H. Potts, Attorney, Perkins Coie LLP, Madison, WI, for Intervenor American Transmission Company LLC.

Justin W. Chasco, Attorney, Wheeler, Van Sickle & Anderson, Madison, WI, for Intervenor Dairyland Power Cooperative.

Valerie Herring, Attorney, Taft Stettinius & Hollister LLP, Minneapolis, MN, for Intervenor ITC Midwest LLC.

Before Sykes, Chief Judge, and Flaum and Rovner, Circuit Judges.

Sykes, Chief Judge.

This appeal is another chapter in concurrent federal and state litigation challenging the construction of a $500 million, 100-mile power line in southwestern Wisconsin. In September 2019 the Public Service Commission of Wisconsin issued a permit authorizing two transmission companies and an electricity cooperative to build and operate the line. A few months later, two environmental groups filed lawsuits in both federal and state court seeking to invalidate the permit. As relevant here, the parallel suits allege that two of the three commissioners had disqualifying conflicts of interest and should have recused themselves. Both suits raise federal due-process claims; the state litigation also invokes state recusal law and contests the permit on other state-law grounds.

The case was last here at an early stage of the proceedings when the district judge rejected the permit holders’ motion to intervene. We reversed that decision and remanded with instructions to grant the intervention motion.

16 F.4th 515

Driftless Area Land Conservancy v. Huebsch ("Driftless I "), 969 F.3d 742 (7th Cir. 2020). Rulings on dismissal motions followed, and the judge significantly narrowed the scope of the case. But he denied the commissioners’ motion to dismiss based on sovereign immunity. The case returns to us on that issue.

The commissioners have been sued in their official capacities, so sovereign immunity blocks this suit in its entirety unless it falls within the Ex parte Young exception, which authorizes a federal suit against state officials for the purpose of obtaining prospective relief against an ongoing violation of federal law. The environmental groups seek an order vacating the permit or enjoining its enforcement; the latter is prospective relief. The harder question is whether the suit challenges an ongoing violation of federal law. The alleged due-process violation occurred (if at all) in September 2019 when the commissioners approved the permit. The environmental groups contend that the violation is ongoing as long as the permit remains in force and effect and the commissioners have the power to enforce, modify, or rescind it. Though there is little precedent precisely on point for a claim like this one, we hold that Ex parte Young applies and therefore agree with the judge's ruling on sovereign immunity.

The commissioners also moved for abstention under Colorado River Water Conservation District v. United States , 424 U.S. 800, 818, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), which authorizes a federal court to abstain from exercising jurisdiction and stay a case to await the outcome of parallel state litigation when there is a substantial likelihood that the state case will resolve the federal claim. The judge denied the request, reasoning that the federal and state suits are not parallel because the state case doesn't raise a federal due-process claim. That was an error; as we've noted, both cases raise federal due-process claims. Although the abstention ruling is not before us, we may raise abstention sua sponte and do so here.

The state and federal suits are clearly parallel for purposes of Colorado River . The environmental groups have raised materially identical due-process recusal claims in both state and federal court. Given the context—this case implicates serious state interests regarding the operation of Wisconsin administrative law and judicial review of state-agency proceedings—it's appropriate to abstain from exercising federal jurisdiction to give the state courts an opportunity to decide the recusal issue. Litigating the same conflict-of-interest questions in both court systems is duplicative and wasteful; comity and the sound administration of judicial resources warrant abstention under Colorado River . We remand with instructions to stay the case pending resolution of the state proceedings.

I. Background

The underlying administrative proceedings are complex, but the details are largely unimportant here. What's needed is a basic understanding of the state regulatory framework and the background of the federal and state litigation. We assume familiarity with Driftless I and will be as brief as possible, but some length cannot be avoided.

The plaintiffs are two Wisconsin environmental groups, Driftless Area Land Conservancy and the Wisconsin Wildlife Federation. They sued the Public Service Commission of Wisconsin and its three commissioners—Rebecca Valcq, Michael Huebsch, and Ellen Nowak. The intervenors are the utility companies that hold the permit and will own and operate the power line: American Transmission Company LLC, ITC Midwest LLC, and Dairyland

16 F.4th 516

Power Cooperative (we refer to them collectively as "the transmission companies").

To place the sovereign-immunity and abstention issues in context, some background about the regulatory scheme is necessary. The Commission "has jurisdiction to supervise and regulate every public utility" in Wisconsin. WIS. STAT. § 196.02(1). Its three commissioners are appointed by the governor and confirmed by the state senate. One of the Commission's many duties is to regulate the construction of high-voltage electricity transmission lines. Id. § 196.491(1)(e), (3). With one irrelevant exception, transmission lines may be constructed only if the Commission grants a permit known as a "certificate of public convenience and necessity." Id. § 196.491(3)(a)1. Although a permit is a prerequisite for projects that require the use of eminent domain, the Commission itself does not condemn the land needed for construction. Rather, state law transfers the state's eminent-domain power to the utility once the permit has been approved. Id. § 32.02. That is, a utility company holding an approved permit may use the condemnation power to acquire the land needed to complete an approved project.

The permitting process is complex. The Commission may grant a permit only if the transmission line is "in the public interest." Id. § 196.491(3)(d)3. An application commences a highly technical inquiry. The Commission must consider a multitude of factors such as the reliability of the power supply, alternative sources of supply, economic factors, engineering obstacles, safety, and environmental impact. Id. The Commission's role continues after it issues a permit. The enabling statute is expansive and gives the Commission sweeping jurisdiction to "supervise and regulate every public utility in this state and to do all things necessary and convenient to its jurisdiction." Id. § 196.02(1). This includes the power to file lawsuits, id. § 196.02(12), and to "rescind, alter[,] or amend" a permit at any time, id. § 196.39(1).

The Commission also coordinates with the Midcontinent Independent System Operator ("MISO"), a regional transmission organization that operates interstate electricity grids on behalf of its constituent utility companies.¹ MISO must involve the Commission in all grid-expansion activities. See 18 C.F.R. § 35.34(k)(7). In order to coordinate with MISO, the Commission delegates to one commissioner the authority to represent it before MISO's Advisory Committee and the Board of the Organization of MISO States, a group that represents the interests of state regulators. Commissioner Huebsch was the Commission's designated MISO representative during the relevant period, and he also served as secretary of the Organization of MISO States.

The events giving rise to the parallel state and federal litigation began in April 2018 when the transmission companies applied for a permit to construct a 100-mile, high-voltage power line stretching from Dane County in south central Wisconsin to Dubuque County in eastern Iowa. At a projected cost of about $500 million, the power line would serve the electricity needs of consumers in the southwestern quadrant of the state. The application required the Commission to convene a class 1 "contested case" proceeding under state administrative law. WIS. STAT. § 227.01(3)(a). More than 50 parties intervened, including Driftless and the Wildlife

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