Lawsuit accuses Iowa Legislature of ‘logrolling’ and creating a utility monopoly

A pair of Missouri companies are suing the state of Iowa, accusing legislators of acting “in the dark of night” to create a new kind of monopoly for the owners of electric power lines.

At issue is the Iowa Legislature’s alleged practice of “logrolling” — deliberately packaging together unrelated and relatively unpopular pieces of legislation to ensure that a majority of lawmakers will support something in the bill and give it their approval.

The lawsuit was filed by LS Power Midcontinent and Southwest Transmission, both based in St. Louis, Mo., and both hoping to construct, own and maintain electric transmission lines in Iowa.

Their lawsuit focuses on House File 2643, also known as the Omnibus Appropriations Bill, that was passed into law by the Iowa Legislature last June. The bill deals with a wide variety of issues, including search warrants, voting, public health emergencies, the mental health system, the appointment of court clerks, alarm system contractor fees, hemp regulations and electric transmission lines.

The bill gives current owners of electric transmission lines the right of first refusal when it comes to the construction and maintenance of certain new, high-voltage transmission lines in Iowa. Only if those owners refuse the opportunity can the Iowa Utilities Board permit someone else to do the job.

Although that proposal was the subject of a House study bill earlier in the session, the subcommittee to which it was assigned never formally met to discuss the bill and never advanced it beyond the subcommittee. As a result, the measure died without further consideration on Feb. 21, 2020.

But on the last day of the legislative session, the language of that bill was added to the larger appropriations bill through a Senate amendment that was first taken up on the Senate floor at 1:35 a.m. Four hours later, at 5:47 a.m., the amended appropriations bill was approved by the Senate, and at 1:07 p.m. that day, it was passed by the House without debate.

The lawsuit alleges that this “late-night amendment and the short period of time between the amendment and the passing of the bill prevented citizens and the general public from being informed of and weighing in to their legislators.” The legislation, the lawsuit claims, was passed in “the dark of night” and “at the last minute, without any meaningful opportunity for input” by Iowans.

The effect of the law, according to the plaintiffs, is to distinguish between electric transmission entities currently operating in Iowa and those not presently operating in Iowa, granting the former a right of first refusal on construction of new lines, while denying others the opportunity to break into the marketplace.

The lawsuit claims that studies already underway are likely to spawn new electric transmission projects in Iowa over the next five to 10 years, but LS Power Midcontinent and Southwest Transmission will be prevented from being winning a competitively priced project in Iowa as a result of the new law.

The plaintiffs allege that in order to pass the law, the Legislature engaged in “logrolling,” whereby lawmakers package diverse and unrelated matters that don’t have majority support into a single “omnibus” bill. The practice used to leverage the support of all the backers of each individual measure that, if left to stand on their own, would not be approved on their own merits.

The Iowa Constitution prohibits logrolling by requiring that “every act” passed by lawmakers “shall embrace but one subject, and matters properly connected therewith,” the plaintiffs claim. They say House File 2643 embraced numerous dissimilar subjects that were “purposely placed into one bill to engage in logrolling, constituting fraud, deceit and surprise.”

The lawsuit seeks a judicial finding that the electric-line provisions of the bill are unconstitutional and cannot be enforced.

The lawsuit also claims the bill violates the equal protection clause of the Iowa Constitution, which states that all persons similarly situated should be treated alike in Iowa.  The plaintiffs claim the bill grants special, favorable status to Iowa’s existing electric transmission owners and creates “an anti-competitive and monopolistic regulatory scheme.”

The state has denied any wrongdoing, and at one stage it successfully sought to have the case dismissed due to the plaintiffs failing to identify specific projects for which they’re prevented from competing. Since then, the plaintiffs have filed a new petition detailing the projects they believe they’re barred from pursuing.

Two Iowa-based utilities, Mid-American Energy Co. and ITC Midwest have each sought to intervene in the case, arguing that if the new law is deemed unconstitutional, they will lose its right of first refusal to connect new utility lines to its facilities. The companies say their interests would clearly be impaired by such a ruling.

In January, the court allowed both companies to intervene and present arguments in the case.