Article III Redressability Limits: No Standing to Enjoin State Utility Regulators When a Nonparty RTO/ISO Applies the Challenged State ROFR

I. Introduction

LSP Transmission Holdings II, LLC v. Commonwealth Edison Company of Indiana, Inc. is a Seventh Circuit decision vacating a preliminary injunction on Article III standing grounds in a high-stakes dispute over who gets to build new interstate electric transmission projects in Indiana. Plaintiffs (LSP Transmission Holdings II, LLC and affiliates) are non-incumbent developers seeking to compete to build MISO-planned transmission facilities. Defendants are the Chair and Commissioners of the Indiana Utility Regulatory Commission (the “IURC Commissioners”), and intervening defendants are incumbent transmission owners that benefit from Indiana’s state right of first refusal (“ROFR”).

The challenged statute, Ind. Code § 8-1-38-9(a)(1) (2024), grants incumbent transmission owners a ROFR to build certain new interstate transmission facilities that connect to facilities they already own. Plaintiffs alleged the statute violates the dormant Commerce Clause and sought a preliminary injunction—but only against the IURC Commissioners.

The central issue on appeal was not whether the statute is constitutional. It was whether plaintiffs had standing to obtain the specific preliminary injunction they requested: an order barring the IURC Commissioners from “enforcing” the ROFR law, even though project planning and assignment occurs through Midcontinent Independent System Operator (MISO), a non-governmental entity operating under a FERC-approved tariff.

II. Summary of the Opinion

The Seventh Circuit (Hamilton, J.) vacated the preliminary injunction and remanded for further proceedings, holding that plaintiffs lacked standing to seek this preliminary injunction because they failed to show redressability.

  • The court concluded the IURC Commissioners had no relevant enforcement responsibilities under the challenged ROFR statute; the statute largely requires incumbents to provide the IURC notices and information.
  • Plaintiffs’ alleged injury—being excluded from competition for MISO-assigned projects—would be caused (if at all) by MISO’s project assignment under its tariff requiring compliance with “Applicable Laws” granting ROFRs.
  • Because MISO is not a party, an injunction against the IURC Commissioners was not reasonably likely to change MISO’s conduct. MISO confirmed via amicus briefing it did not view itself as bound by the preliminary injunction.
  • The court rejected the dissent’s alternative standing theory that would effectively read the injunction as compelling the IURC to use broader utility powers to block MISO/FERC-approved projects—an interpretation not advanced by plaintiffs and likely to create a federal-state regulatory conflict.

III. Analysis

A. Precedents Cited

1. Standing and redressability framework

The court applied the canonical three-part test for standing—injury in fact, traceability, and redressability—citing TransUnion LLC v. Ramirez (standing elements), Lujan v. Defenders of Wildlife (core standing requirements), and Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc. (standing must be shown for each form of relief sought).

For the key redressability obstacle—injury dependent on third-party conduct—the court leaned on:

  • Allen v. Wright (standing doctrine and the “independent action of some third party not before the court” problem), and Simon v. Eastern Kentucky Welfare Rights Org. (redressability undermined where relief depends on third-party choices).
  • Murthy v. Missouri (reaffirming limits on redressing injuries caused by independent third parties).
  • Clapper v. Amnesty International USA and Department of Commerce v. New York, as quoted through California v. Texas, for the point that predicting third-party reactions makes standing “substantially more difficult.”

2. The court’s use of California v. Texas to reject a “merits-like” standing theory

The majority invoked California v. Texas in two ways:

  • First, it cited Justice Thomas’s concurrence to caution against adopting an undeveloped, “merits-like” standing theory without party briefing— analogizing the dissent’s approach to “standing-through-inseverability.”
  • Second, it relied on the Court’s core holding: if the named defendant does not enforce the challenged provision, plaintiffs cannot manufacture standing by pointing to other statutory obligations that do not themselves violate the Constitution. This reasoning was reinforced by Blum v. Yaretsky and by circuit applications like Davis v. Colerain Township, Ohio and National Federation of the Blind of Texas, Inc. v. Abbott.

3. Preliminary injunctions are not final adjudications (limits on what they change)

To undercut the argument that a preliminary injunction renders the ROFR law “inapplicable” to MISO under the tariff, the court emphasized the non-final nature of preliminary relief, citing Lackey v. Stinnie and Winter v. Natural Res. Def. Council, Inc.. It drew on Seventh Circuit precedent—Lacy v. Cook County and Michigan v. U.S. Army Corps of Eng'rs—to reiterate: preliminary findings are provisional and “remain subject to change.”

4. Injunctions bind parties, not nonparties

The majority grounded the remedial limitation in classic injunction doctrine: Driftless Area Land Conservancy v. Valcq (injunctions run against officials; laws remain “on the books”), United States v. Kirschenbaum and Regal Knitwear Co. v. NLRB (nonparty binding limits under Rule 65(d)). Because MISO was neither a party nor acting “in active concert or participation” with the IURC Commissioners, the injunction could not compel MISO.

5. Federal power regulation context (FERC, tariffs, RTOs/ISOs)

The decision sits in a dense federal-state regulatory landscape, and the court cited many authorities to explain it:

  • Public Utilities Comm'n of Rhode Island v. Attleboro Steam & Elec. Co. (historical “regulatory gap”), New York v. FERC and FPC v. Southern California Edison Co. (FERC’s jurisdiction over interstate transmission under the Federal Power Act), and Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 (tariffs and RTO/ISO operation).
  • Illinois Commerce Comm'n v. FERC (describing RTOs/ISOs and MISO’s role in grid planning).
  • MISO Transmission Owners v. FERC, South Carolina Pub. Serv. Auth. v. FERC, and FERC’s Transmission Planning & Cost Allocation by Transmission Owning & Operating Public Utilities (Order 1000) (removal of federal ROFRs but explicit statement that Order 1000 does not “limit, preempt, or otherwise affect” state laws on construction).
  • Entergy Arkansas, LLC v. FERC (FERC review of tariff changes under 16 U.S.C. § 824d).

6. Severability as a boundary on the dissent’s theory

Although the case was decided on standing, the majority used severability principles to reject the dissent’s attempt to expand the injunction into broader IURC action. It cited Alaska Airlines, Inc. v. Brock and Regan v. Time, Inc. for the rule against invalidating more than necessary, and referenced Indiana’s severability statute Ind. Code § 1-1-1-8(a) along with Indiana cases Paul Stieler Enterprises, Inc. v. City of Evansville and Ettinger v. Studevent.

B. Legal Reasoning

1. The “wrong defendant / wrong relief” redressability problem

The court’s holding turns on a practical, defendant-specific view of redressability: plaintiffs sought to prevent their exclusion from competition for MISO-assigned projects, but they sued only the IURC Commissioners. The opinion reads Ind. Code § 8-1-38-9 as granting ROFR rights to incumbents while assigning the IURC mostly a ministerial notice-receipt role: incumbents “give written notice” and provide project information, but the statute does not empower the IURC to police MISO’s assignment decisions.

Because the IURC Commissioners do not “enforce” the ROFR in a way that affects MISO’s project assignments, an injunction against them was not “reasonably likely” to change the plaintiffs’ competitive position. The court thus treated the case as a textbook instance of an injury that cannot be redressed because the causal chain runs through a nonparty third party.

2. Why “MISO will treat the state law as void” was too speculative—especially after MISO’s amicus brief

Plaintiffs’ primary redressability theory was behavioral: even if MISO was not bound, it would voluntarily treat the ROFR law as inoperative once a federal court enjoined the IURC from enforcing it. The district court accepted that prediction. The Seventh Circuit rejected it for two reasons:

  • Doctrinal: preliminary injunctions do not conclusively resolve legality (citing Lackey v. Stinnie and Lacy v. Cook County); nonparties are not ordinarily bound (Rule 65(d) cases).
  • Factual/record-based: MISO expressly stated it “need not and will not respond” as plaintiffs predicted. That record development was decisive: it converted what might have been an arguable inference into a failed proof of likelihood.

3. The dissent’s alternative theory—and the majority’s refusal to adopt it

The dissent would find redressability by relying on the IURC’s general enforcement authority in Ind. Code § 8-1-2-115 and reading the injunction as requiring the IURC to use broader regulatory tools to prevent incumbents from building MISO-assigned projects under the ROFR.

The majority refused to adopt this theory because:

  • It was not the theory plaintiffs litigated, the district court adopted, or the parties briefed.
  • It would effectively convert the injunction into an order forcing a state regulator to obstruct facilities “approved and assigned” through MISO and “implicitly” FERC—creating a likely federal-state conflict in a field Congress assigned to FERC (notably 16 U.S.C. § 824(c) and New York v. FERC).
  • It risked the California v. Texas problem: attempting to obtain redress for alleged unconstitutionality in one provision (HEA 1420’s ROFR) by enjoining other statutory powers that are not themselves unconstitutional—raising traceability and remedial overbreadth concerns.

4. The “federal checkpoints” point: the ROFR’s operative effect ran through a FERC-approved tariff

A subtle but important feature of the opinion is its recognition that the challenged ROFR was not merely “state law in the abstract.” It had been incorporated into MISO’s FERC-approved tariff (Attachment FF, ¶ VIII.A.1), giving it a federally supervised operational pathway: MISO “shall comply with any Applicable Laws and Regulations granting a right of first refusal.”

That framing reinforced the court’s view that meaningful, direct redress would need to involve MISO (or FERC processes), not an injunction against state commissioners with no assignment authority.

C. Impact

1. Litigation strategy in ROFR/dormant Commerce Clause challenges

The immediate impact is procedural but powerful: challengers to state ROFR statutes in RTO regions must match their defendants and requested relief to the entity that actually applies the ROFR in the project assignment process. In Indiana’s MISO context, this opinion strongly signals that suing only state utility regulators may fail at the threshold unless plaintiffs can prove those officials have concrete enforcement mechanisms that would likely change outcomes.

2. Standing doctrine: higher bar when relief depends on nonparty behavior

The decision reinforces a strict application of redressability where the remedy’s efficacy depends on predictions about a third party’s response—especially where the third party appears and denies it will act as predicted. The opinion thus operationalizes the Supreme Court’s skepticism (as reflected in California v. Texas and Clapper v. Amnesty International USA) in the context of modern, privatized regulatory intermediaries (RTOs/ISOs).

3. Administrative law channeling: FERC proceedings as an alternative forum

The court highlighted that plaintiffs can raise issues in proceedings before FERC with judicial review under 16 U.S.C. § 825l(b). Practically, this encourages challengers to pursue tariff interpretation/enforcement or related challenges within FERC’s system when a tariff’s “Applicable Laws” clause is the mechanism by which state ROFRs are applied.

4. Preliminary vs. permanent relief: nonfinal orders may not move regulated ecosystems

The opinion has broader implications for regulated industries in which private actors coordinate behavior around legal risk. The Seventh Circuit underscored that preliminary injunctions are provisional and do not, by themselves, conclusively render a statute inapplicable to nonparties. Litigants relying on “market reaction” to preliminary relief must substantiate that reaction with concrete evidence, not assumption.

IV. Complex Concepts Simplified

  • Dormant Commerce Clause: a judge-made doctrine inferred from the Commerce Clause that limits states from discriminating against or unduly burdening interstate commerce, even when Congress has not legislated on the subject.
  • Standing (Article III): the constitutional requirement that a plaintiff show (1) a real, personal injury, (2) caused by the defendant, and (3) likely fixable by the court. The third element—redressability—was dispositive here.
  • Redressability: the requested court order must be likely to remedy the injury. If the injury will continue because a nonparty controls the relevant decision, redressability is often missing.
  • RTO/ISO (MISO): a regional, non-governmental grid operator that plans and coordinates transmission projects under rules filed with and approved by FERC.
  • FERC tariff: the filed, enforceable document (rates, terms, and practices) governing transmission services; once approved, it has binding legal effect.
  • ROFR (Right of First Refusal): a preference allowing incumbents to take specified projects before competitors can bid.
  • Preliminary injunction: temporary relief based on likelihood of success, not a final ruling; typically binds only parties and specified affiliates under Rule 65(d).

V. Conclusion

The Seventh Circuit’s decision establishes a clear, practical rule for constitutional challenges in federally structured energy markets: plaintiffs lack Article III standing to obtain a preliminary injunction against state utility commissioners when those officials do not enforce the challenged ROFR in a way that would likely change project assignments, and when meaningful relief depends on a nonparty RTO/ISO’s conduct.

The opinion’s significance lies less in its dormant Commerce Clause discussion (which it did not reach) and more in its insistence that standing doctrine must track real-world regulatory authority and causal control. In modern electricity transmission governance—where FERC-approved tariffs and non-governmental ISOs operationalize state policies—plaintiffs must align their defendant choices and requested remedies with the actors who can actually deliver redress.