LS Power Midcontinent, LLC v. State
| Decision Date | 08 July 2022 |
| Docket Number | 21-0696 |
| Parties | LS POWER MIDCONTINENT, LLC and SOUTHWEST TRANSMISSION, LLC, Plaintiffs-Appellants, v. 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. |
| Court | Iowa Court of Appeals |
LS POWER MIDCONTINENT, LLC and SOUTHWEST TRANSMISSION, LLC, Plaintiffs-Appellants,
v.
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.
No. 21-0696
Court of Appeals of Iowa
July 8, 2022
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.
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.
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 nongovernmental entities known as Regional Transmission Organizations (RTOs)-
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).
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
the Iowa Constitution[6] 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 Midwest, LLC applied as intervenors under Iowa Rule of Civil Procedure 1.407(1)(b) and joined the motion to dismiss; both petitions to intervene were ultimately granted, and MidAmerican and ITC both filed resistances to the request for a temporary injunction.
The district court heard arguments on both the motion to dismiss and the temporary injunction in January 2021. In response to the standing challenge, LSP argued it was injured as a non-incumbent transmission line company subject to the new ROFR and because they could not participate in the legislative process or garner public opposition. In March, a written order granted the motion to dismiss and denied the temporary injunction because LSP did not have standing to bring any of its claims. LSP filed a motion for reconsideration, enlargement, or modification, as well as a motion to amend their petition. The court denied the motion to reconsider and held that, as the petition had been dismissed, the motion to amend it was denied. LSP timely appealed.
After the appeal was filed, but before our court heard oral argument on the case, LSP filed a motion for temporary injunction, informing the court MISO is scheduled to approve a new slate of projects on July 25, 2022; LSP asks us to enjoin the application of section 478.16(3) to these projects' processes. We allowed additional time at oral argument for the appellants, appellee, and appellee-intervenors to present arguments about the injunction.
II. Analysis.
We review a district court's dismissal of a case based on standing for correction of errors at law. Hawkeye Foodservice Distrib., Inc. v. Iowa Educators Corp., 812 N.W.2d 600, 604 (Iowa 2012). "A court should grant a motion to dismiss 'only if the petition on its face shows no right of recovery under any state of facts.'" Young v. HealthPort Techs., Inc., 877 N.W.2d 124, 127 (Iowa 2016) (citation omitted). But, courts "must decide the merits of a motion to dismiss based on the facts alleged in the petition, not the facts alleged by the moving party or facts that may be developed in an evidentiary hearing."[7] Id. We take the facts in the light most favorable to the plaintiff. Id. at 128.
While both the technical and regulatory mechanisms affected by this case are complicated, at this stage, this case hinges on a purely legal, base-level inquiry-does LSP have standing to bring this claim? Before reaching that determination, we must first decide whether we can take judicial notice of developments in the energy sphere since this case's inception.
a. Judicial Notice.
LSP asks us to take judicial notice that, as of September 2021, MISO stated it could release a batch of recommended projects as early as March 2022. See Iowa R. Evid. 5.201(b)(2) (allowing a court to "judicially notice a fact that is not subject to reasonable dispute because it . . . [c]an be accurately and readily determined from sources whose accuracy cannot reasonably be questioned"). March 2022 has gone and passed, but LSP informed the court that projects were recommended in May 2022; these recommendations have not yet been approved and are not slated for approval until July 2022.[8] The State argues we should not take judicial notice of these facts on appeal because they are from a private organization rather than a government record, court record, or generally known fact.
Courts can take judicial notice of adjudicative facts on appeal. See Iowa R. Evid. 5.201(a), (d); State v. Washington, 832 N.W.2d 650, 655 (Iowa 2013) ("Judicial notice may be taken on appeal."); In re Marriage of Tresnak, 297 N.W.2d 109, 112 (Iowa 1980) ("Courts are permitted to dispense with formal proof of matters which...
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