CHICAGO (CN) — A Seventh Circuit panel on Thursday lifted a federal judge’s preliminary injunction against the commissioners and chair of the Indiana Utility Regulatory Commission.
The majority of the three-judge panel found a group of related electric infrastructure developers lacked standing in the relevant case to justify the injunction against the commissioners.
“Plaintiffs have not shown that the injunction is reasonably likely to redress or prevent their feared injuries,” U.S. Circuit Judge David Hamilton, a Barack Obama appointee, wrote in the 31-page majority decision. He was joined in that decision by U.S. Circuit Judge Candace Jackson-Akiwumi, a Joe Biden appointee.
The preliminary injunction — entered by U.S. District Judge Tanya Walton Pratt this past December — prevented the commissioners from enforcing part of a 2023 Indiana law known as House Enrolled Act 1420 which gives “incumbent” electric transmission facility owners the right of first refusal on certain electric transmission construction projects. In other words, allowing incumbent energy utilities to be the first to decide whether to construct those projects before they’re opened up to other bidders.
Electric infrastructure developer LSP Transmission Holdings, along with its subsidiaries and an affiliate, sued the regulatory commissioners and several Indiana energy utilities this past October in opposition to the first refusal provision. The developer sought an injunction on the grounds that, among other arguments, incumbent facility owners’ right of first refusal is discriminatory and violates the commerce clause of the U.S. Constitution.
LSP said in its complaint it had “aspirations” to build new electric transmission facilities in Indiana “that would be subject to competitive bidding but for Indiana’s new law.”
Pratt, an Obama appointee, agreed the challenged right of first refusal provision “expressly discriminates against interstate commerce.” She found “it can only stand if it serves a legitimate governmental interest for which there is no nondiscriminatory alternative.”
“House Enrolled Act 1420 cannot withstand strict scrutiny. Although it serves legitimate governmental interests — promoting transmission reliability, maintaining cost-effective infrastructure, and continuity of service — Indiana already requires ‘every public utility … to furnish reasonably adequate service and facilities,'” Pratt wrote in her preliminary injunction order, quoting state law.
That order became the subject of a lengthy appeals fight. The Seventh Circuit stayed Pratt’s injunction ruling only about two weeks after she issued it, then lifted the stay on the injunction in mid-January. The appellate court heard oral arguments on the issue in late January, and on Thursday, finally vacated the injunction altogether and sent the case back to Pratt for further proceedings.
The appellate majority found LSP lacked standing for the preliminary injunction because the Indiana utility regulatory commissioners don’t actually have responsibility for enforcing the statute provision LSP opposes. A more appropriate target to address the developer’s grievances, Hamilton wrote, would be Midcontinent Independent System Operator — a federally-regulated electric grid operator whose area of responsibility stretches across 15 states, including much of Indiana.
Hamilton explained that it’s MISO, not the regulatory commissioners, which “plans, approves, and assigns construction for new interstate transmission projects in Indiana.”
Despite MISO’s relevance to the lawsuit, it isn’t a named defendant.
“Plaintiffs believe the rights of first refusal granted under House Enrolled Act are unconstitutional. They seek to require MISO to assign the rights to build and operate… projects using competitive bidding by all interested and qualified bidders,” Hamilton wrote. “Plaintiffs did not, however, seek any injunctive relief against MISO itself or even name MISO as a defendant.”
Hamilton and Jackson-Akiwumi’s ruling did not touch on LSP’s standing for permanent injunction, however.
“MISO has told us and shown us that the preliminary injunction against the IURC Commissioners is not affecting its actions. Standing to seek permanent injunctive relief is not before this court in this appeal,” Hamilton wrote.
U.S. Circuit Judge Michael Scudder, a Donald Trump appointee, seized on this point in his dissenting take. He asked what could allow LSP to seek a permanent injunction on remand, if the appellate majority had concluded it lacked standing for a preliminary injunction.
“The clear answer is, in a word, nothing,” Scudder wrote.
Scudder wrote he would affirm the preliminary injunction on the commissioners because he found the right of first refusal provision “facially discriminates against interstate commerce” without congressional authorization. He also found the “balance of equities” weighed in LSP’s favor, despite Indiana’s arguments that the right of first refusal helps protect energy costs and efficient electric transmission.
“A preliminary injunction does not imminently threaten any Indiana residents losing power or hamper the ability of current operators to respond to service disruptions,” Scudder wrote. “So I fail to see irreparable harm in requiring incumbents to compete for these planned projects in the first instance.”