Void Ab Initio and Retroactive Injunction: Enforcing Iowa’s Title and Single-Subject Requirements in Electric Transmission ROFR

Void Ab Initio and Retroactive Injunction: Enforcing Iowa’s Title and Single-Subject Requirements in Electric Transmission ROFR

Introduction

This commentary examines the Iowa Supreme Court’s decision in LS Power Midcontinent, LLC and Southwest Transmission, LLC v. State of Iowa, 24-0641 (Iowa May 30, 2025). The dispute centers on Iowa Code § 478.16, a statute enacted during the COVID-19 pandemic that granted incumbent utilities a “right of first refusal” (ROFR) over new high-voltage interstate transmission projects without competition. LS Power (a nonresident transmission developer) challenged the statute as unconstitutional under the Iowa Constitution’s title and single-subject requirements. After initial litigation delays and a split decision on standing, the Iowa Supreme Court ultimately held the ROFR void ab initio, affirmed a district court’s permanent injunction—including retroactive relief preventing the incumbents and the Iowa Utilities Board from proceeding with projects awarded under the ROFR—and deferred federal law issues to FERC.

Summary of the Judgment

  • The court unanimously affirms the district court’s permanent injunction barring enforcement of § 478.16 and its implementing administrative rule.
  • It holds that a statute enacted in violation of article III, § 29 (title and single-subject requirements) is void ab initio, as a matter of Iowa law.
  • The district court was empowered to grant retroactive relief—enjoining participation in the LRTP Tranche 1 projects awarded under the ROFR in 2022—because no vested rights protected the incumbents who proceeded with full knowledge of the constitutional challenge.
  • Administrative remedies under Iowa Code chapter 17A were unnecessary to invalidate the administrative rule; the statute’s unconstitutionality automatically voided the rule.
  • The court rejects arguments that FERC has exclusive jurisdiction over remedy, clarifying that state courts retain authority to enforce state constitutional requirements for siting and construction of transmission facilities, while deferring remaining federal questions to FERC.

Analysis

1. Precedents Cited

• LS Power I (988 N.W.2d 316 (Iowa 2023)): Vacated court of appeals’ no-standing ruling; held LS Power had standing and preliminarily enjoined § 478.16.

• State v. Taylor (557 N.W.2d 523 (Iowa 1996)): Declared that statutes violating Iowa’s title or single-subject rules are “void and unenforceable,” vacating a conviction obtained under such a statute.

• Grandview Baptist Church v. Zoning Board of Adjustment (301 N.W.2d 704 (Iowa 1981)): Held that an appeal challenging a building permit remains effective despite completion of construction; vested-rights doctrine does not defeat relief when the challenger acted timely.

• Tindal v. Norman (427 N.W.2d 871 (Iowa 1988)): Explained that administrative remedies are inadequate to test facial constitutionality of a statute, allowing direct judicial challenge without first pursuing chapter 17A proceedings.

Federal cases on complementary state and federal regulation under the Federal Power Act (FPA) were also cited (e.g., FERC v. Electric Power Supply Ass’n, 577 U.S. 260 (2016)).

2. Legal Reasoning

• Subject-Matter Jurisdiction: The FPA leaves “no gaps” for regulation; states retain siting and construction authority, so Iowa courts properly address constitutional defects in state statutes affecting transmission projects.

• Void Ab Initio: A statute enacted in violation of the title and single-subject requirements never takes legal effect. Consistent with Taylor (void and unenforceable) and modern commentary, the court treats § 478.16 as if it never existed.

• Retroactive/Injunctive Relief: A permanent injunction may be issued to restore the prior status quo when a party proceeds under notice of a constitutional challenge. No vested-rights protection applies to incumbents who knowingly relied on a defective statute (see Grandview Baptist Church and analogous procurement rebidding cases).

• Administrative-Rule Invalidation: When a statute is declared unconstitutional, its implementing rules are automatically void (§ 17A.7(4)), and no separate chapter 17A challenge is required under Tindal.

• Equitable Balancing: The incumbents can apply for cost recovery or abandoned-plant incentives before FERC; MISO can rebid; the public benefits from competition. Meanwhile, LS Power’s only adequate remedy is competitive rebidding, justifying the injunction.

3. Impact

  • Reinforces strict enforcement of Iowa Constitution’s title and single-subject mandates—legislation enacted in violation will be treated as null from inception.
  • Confirms that Iowa courts may grant backward-looking equitable relief (including retroactive injunctions) to vindicate constitutional rights and remedy competitive distortions.
  • Deters strategic delay: parties cannot both contest standing due to lack of imminent projects and simultaneously pursue those projects under a challenged statute.
  • Clarifies interplay with federal regulation under the FPA: states retain a crucial role in siting and remedying constitutional defects, while federal agencies (FERC/RTOs) address pricing, cost recovery, and technical approvals.
  • Offers a roadmap for developers and agencies to navigate constitutional challenges and ensure robust competition in grid expansion projects financed by federal infrastructure legislation.

Complex Concepts Simplified

  • Right of First Refusal (ROFR): A statutory entitlement allowing an incumbent utility to claim a project without a competitive bid. Here, it functioned as a “right of preemption.”
  • Void Ab Initio: A legal doctrine treating an unconstitutional statute as if it never existed from day one.
  • Title and Single-Subject Requirements: Iowa Constitution, art. III, § 29 mandates each bill have a clear, descriptive title and address only one subject to prevent legislative logrolling and hidden provisions.
  • Vested Rights: Protections for parties who have relied in good faith on valid law; not available when defendants act with notice of a pending successful challenge.
  • Chapter 17A Exhaustion: Normally required administrative review before judicial appeal, but inadequate when testing the facial validity of a statute.

Conclusion

The Iowa Supreme Court’s decision in LS Power Midcontinent establishes a clear precedent: statutes enacted in violation of the Constitution’s title and single-subject rules are void from inception, and courts may enjoin actions taken under such statutes—even retroactively—when the affected parties proceeded with full knowledge of a successful challenge. By affirming a permanent injunction and requiring competitive rebidding, the court safeguards the integrity of Iowa’s legislative process and promotes fair competition in electric transmission projects. The decision confirms the complementary roles of state and federal regulation under the FPA, ensuring that constitutional requirements are enforced at the state level while technical and economic matters remain with FERC and the regional transmission organizations.

Case Details

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