The 7th U.S. Circuit Court of Appeals has tossed a temporary injunction against Indiana’s right of first refusal law and sent the case back to a lower court, leaving plaintiff LS Power with more work ahead of it to increase competitively bid transmission projects in MISO.   

The court decided LS Power’s arguments were directed at the wrong party and said the company should have named MISO, not the Indiana Utility Regulatory Commission (IURC), as the source depriving it of the chance to bid on long-range transmission projects. The appeals court remanded the case to the district court that issued a preliminary injunction against the right of first refusal (ROFR) law and vacated the injunction (25-1024). The controversy again awaits proceedings from the U.S. District Court for the Southern District of Indiana. 

The higher court concluded in its March 13 order that LS Power lacked standing to request the injunction because MISO is the entity responsible for assigning projects from its long-range transmission portfolios to developers. The court also said that because the preliminary injunction was meant for Indiana regulators alone, MISO isn’t beholden to the ban.  

The case has raised questions about who administers Indiana’s ROFR law.  

LS Power, a competitive transmission developer in MISO, has claimed for months that Indiana’s ROFR is unconstitutional and violates the dormant commerce clause by treating in-state developers differently from out-of-state developers. The company won a preliminary injunction barring Indiana regulators from enforcing the law in December 2024, days before MISO approved a $21.8 billion long range transmission plan for MISO Midwest, raising doubts on who could build projects in the state. (See “Indiana ROFR Reversal Complicates Project Assignment,” MISO Board Endorses $21.8B Long-range Transmission Plan.) 

‘An Unusual Situation’

The 7th Circuit acknowledged the case presented “an unusual situation,” with gray area over whether IURC has the authority to enforce the state’s ROFR. It eventually sided with counsel for the Indiana commissioners, who said commissioners are powerless to designate or reassign developers to the regional transmission projects MISO plans and approves.  

“Even the subsections of the statute that mention the IURC make clear that the IURC functions only as a notice repository, not as an enforcer of the rights of first refusal,” the court said of the IURC’s role in the ROFR. It said a “genuine redress would have to operate against” MISO.  

However, the district court reasoned months before that because IURC enforces the ROFR, MISO would “no longer be permitted to recognize an incumbent’s right of first refusal” and would treat the law as void.  

But the 7th Circuit said incumbents taking advantage of their right to first dibs on construction only file notices of intent and descriptions of construction with the state regulatory body, noting that they don’t ask permission.  

Furthermore, the court said a preliminary injunction of a state law “does not change the applicability of the law in question to non-parties.”  

MISO, meanwhile, has no intention of competitively bidding the Indiana share of its long-range transmission projects.  

In an amicus brief in the case, MISO said it did not view itself as bound by the injunction, even though its tariff requires it to follow all applicable state laws. The RTO said the district court’s preliminary injunction “does not direct MISO to take any action, nor does it prohibit MISO from taking any action.”  

The court agreed and said because LS Power named Indiana commissioners as defendants and failed to mention MISO in its request for injunctive relief, the company ensured the lower court “could not operate against MISO directly.”  

LS Power has attempted to close that gap through FERC. The company in February filed a complaint against MISO, arguing the grid operator should be forced to obey preliminary injunctions of state laws and should open about $1 billion in new long-range transmission projects in Indiana for competitive solicitation. (See LS Power Files Complaint Against MISO over Indiana ROFR.)  

The apparent uncertainty over the IURC’s authority drew a dissenting opinion from Circuit Judge Michael Scudder, who argued that ROFR enforcement can be traced to Indiana regulators. Scudder said Indiana law provides “every indication” that IURC has the power to prevent an incumbent transmission owner from building and operating a transmission project in the state.  

“Everyone agrees that the commission is the regulatory agency with authority over public utilities in Indiana,” he wrote. “Everyone agrees that HEA 1420 is a law ‘relating to public utilities.’ … It defies belief that the Indiana General Assembly vested the commission with broad enforcement authority, but the commissioners are nevertheless powerless to impose any limitation on a utility company’s ability to construct, own, operate or maintain electric transmission facilities within the state. To adopt that view is to conclude that Indiana law does not mean what it says.” 

Scudder said he would have affirmed the district court’s preliminary injunction.  

But the 7th Circuit’s majority judges agreed that ordering the IURC to block construction of interstate, MISO-approved transmission lines “would force the IURC into a power struggle with FERC over whether legitimately assigned and important projects” could be built.  

“The dissenting opinion would in effect conscript the IURC to enforce the dormant commerce clause rather than carry out its more general duties to enforce Indiana public utility laws,” the court said.