UPDATES & ANALYSIS

Iowa Supreme Court sends case on “protectionist” legislation back to trial court with pointed language about legislative logrolling

by Rox Laird | March 31, 2023

The Iowa Constitution requires that bills enacted by the General Assembly contain a single subject in the title. Although legislators often use vaguely general titles on bills that contain many unrelated provisions, the Iowa Supreme Court has been reluctant to declare the practice unconstitutional: In the 166 years since the Constitution was written, the Court has invalidated statutes under the single-subject rule only 13 times in more than 90 cases brought since 1876.

That number could increase by one with a case decided March 24 (LS Power Midcontinent and Southwest Transmission v. State of Iowa, Iowa Utilities Board, et al.).

Article III, Section 29 of the Iowa Constitution states: “Every act shall embrace but one subject, and matters properly connected therewith; which subject shall be expressed in the title. But if any subject shall be embraced in an act which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be expressed in the title.”

While the Court did not rule definitively on the single-subject rule in this case, it said the legislation at issue “likely was enacted with a title that does not comply” with that constitutional provision.

The appeal before the Court involved legislation enacted in the 2020 session that gave Iowa-based utilities the right of first refusal (ROFR) to bid on constructing utility infrastructure projects, such as power transmission lines, before any out-of-state firm could bid on the project. The appellants who brought the case – Missouri power companies LS Power Midcontinent and Southwest Transmission –  argued the legislation violated equal protection and violated the single-subject rule.

The initial question was whether the Missouri companies had “standing” to bring suit in the first place. In other words, could they show particular harm from Iowa’s law, or was it speculative, in which case the court lacked jurisdiction to hear it? The Polk County District Court held that the plaintiffs lacked standing because they failed to show they were injured because they could not point to a specific project they had been denied as a result of the 2020 legislation. The Iowa Court of Appeals affirmed that ruling.

Upon considering the case on further review, the Iowa Supreme Court vacated the Court of Appeals ruling, reversed the District Court, and remanded the case to the trial court, meaning the plaintiffs have a second shot at making the case that the 2020 statute is unconstitutional. The opinion for the Court was written by Justice Thomas Waterman joined by Chief Justice Susan Christensen and Justices Edward Mansfield and Christopher McDonald. Justices Matthew McDermott, Dana Oxley, and David May did not participate in the case.

Other than holding that the plaintiffs had standing to bring the suit, the Court did not take a position on the merits of the Missouri companies’ constitutional claims in returning the case to the trial court. But it said the plaintiffs have shown a likelihood of success on the merits and it granted a temporary injunction blocking enforcement of the statute pending resolution of the case.

The Court also used some pointed language on the question of the single-subject rule in this case.

The right-of-first-refusal language was passed in the wee hours of the morning on the final day of the 2020 session as part of a 50-page appropriations bill that contained 34 divisions and what Waterman described as “a potpourri of various unrelated subjects.”

Waterman noted that in an effort to capture the broad range of subjects included, “the bill bore a remarkably general” title: “An Act relating to state and local finances by making appropriations, providing for legal and regulatory responsibilities, providing for other properly related matters, and including effective date and retroactive applicability provisions.”

Although the right-of-first-refusal language was added to the bill in the final hours, the existing title was not changed, and Waterman said, “[w]e are skeptical that any single subject could encompass the breathtaking sweep of matters” included in the bill.

The Court also took note of the fact that the utilities language passed only as part of a large collection of legislative provisions after it had failed to pass as a standalone bill in two previous attempts, including earlier in the same session.

“The appropriations bill, necessary to fund the operations of the government, presented a ready vehicle to carry the ROFR across the finish line. Rolling it all into one bill brought legislative success, but triggered LSP’s constitutional challenge. Attaching an unpopular matter to a bill that is sure to pass is a hallmark of logrolling,” Waterman wrote.

“We are not surprised the ROFR lacked enough votes to pass without logrolling,” he added. “The provision is quintessentially crony capitalism. This rent-seeking, protectionist legislation is anticompetitive. Common sense tells us that competitive bidding will lower the cost of upgrading Iowa’s electric grid and that eliminating competition will enable the incumbent to command higher prices for both construction and maintenance. ultimately, the ROFR will impose higher costs on Iowans.”

[Disclosure: Lynn C. Herndon of Nyemaster Goode represented the Coalition of MISO Transmission Customers on the coalition’s amicus brief filed with the Court in support of the plaintiffs-appellants.]

Tags: Iowa Supreme Court 2022-23