Illinois Court Snatches Away Permit for Grain Belt Express

It's dead folks.  Dead, dead, deader than dead.

This isn't a "casting of doubt" or a "speed bump."  This is the end of Grain Belt Express.

On Tuesday, the 5th District Appellate Court of Illinois "reversed where the Commission lacked the authority to grant a nonpublic utility company a certificate of public convenience and necessity under the expedited review process set forth in the Illinois Public Utilities Act."

If that's not clear as a bell, there's also this:

The order of the Commission is hereby reversed and remanded where it granted a
nonpublic utility company the authority to construct and manage an electrical transmission line project under the Act's expedited review process without the requisite
finding that the applicant was a public utility.

That's right, Grain Belt Express no longer has a permit to construct in Illinois.  Grain Belt Express has no approvals in Illinois.  It's back to square one.

And appeals will be fruitless, because the court cited last year's opinion from the Illinois Supreme Court that determined the exact same thing.  Clean Line is not a public utility and therefore the Illinois Commerce Commission cannot grant it a certificate of public convenience and necessity.  Done deal.

Does Clean Line have legal options?  Sure.  But those options will be very, very expensive and very, very time consuming.  Only an idiot would commit to spending millions and trying to fight this battle for several more years, when its also engaged in a similar battle in Missouri.  At what point will Clean Line run out of money?  And will its investors give it more cash to waste pretending there's still a chance for these projects?  My opinion is no.  No, this is the last hurdle GBE just can't jump.

This turn of events is completely unsurprising.  I've been remarking for months that Illinois was about to snatch away GBE's permit.  There was absolutely no chance that the court would decide otherwise after the Illinois Supreme Court decision.  The die was cast.  It's another case of permit whack-a-mole.

So, what did the 5th District opinion say?

Pursuant to section 8-406.1, the section utilized by GBX in the instant case, "[a]
public utility may apply for a certificate of public convenience and necessity pursuant to
this Section for the construction of any new high voltage electric service line and related
facilities (Project)."

Section 3-105 of the Act defines a "public utility" as follows:
"[E]very corporation, company, limited liability company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever that owns, controls, operates or manages, within this State, directly or indirectly, for public use, any plant,
equipment or property used or to be used for or in connection with, or owns or controls any franchise, license, permit or right to engage in ***

We note, however, that the definition of "public utility" was recently clarified by the Illinois Supreme Court in Illinois Landowners Alliance, NFP v. Illinois Commerce Comm'n, 2017 IL 121302. In Illinois Landowners Alliance, NFP, our supreme court determined that when the Commission grants a company a certificate of public convenience and necessity under section 8-406 of the Act, the "central question remains: Does it even qualify as a public utility under Illinois law so as to be eligible for such a certificate under section 8-406 of the Public Utilities Act?"

Our supreme court determined that Rock Island, a new entrant, was required to present ownership of utility infrastructure assets to qualify as a public utility, as defined in section 3-105, in order to obtain a certificate of public convenience and necessity under section 8-406 of the Act. Id. ¶ 48. In order to qualify as a public utility, our supreme court concluded that "the company must also own, control, operate , or manage, within this State, directly or indirectly, a plant, equipment, or property used or to be used for or in connection with (or must own or control any franchise, license, permit, or right to engage in) the production, transmission, sale, etc. of one of the specified commodities or services." Id. ¶ 39. The supreme court noted that the statute is phrased in the present tense because it requires that a company must own, control, operate, or manage, within the state, a plant, equipment, property, franchise, etc. at the time it seeks certification by the Commission.

The supreme court reasoned that when the General Assembly repealed the prior language in section 3-105 of the Act, which defined a public utility as "every corporation *** that now or hereafter *** may own, control, operate or manage" specific plants, equipment, or property (Ill. Rev. Stat. 1965, ch. 1112/3, ¶ 10.3), it intended, as the court
must presume, to speak only to ownership in the present tense when it eliminated the words "that now or hereafter *** may." Id. ¶ 42. As a result, the court determined that courts must read the statute as "evincing an intention by the legislature to limit the definition of 'public utility' to situations where the subject entity meets the ownership test
at the present time."

Here, GBX similarly fails to establish that it was a public utility at the time it filed its application with the Commission. It is undisputed that GBX does not presently, or at
the time it filed its disputed application with the Commission, own, control, manage, or operate any plant, equipment, or property in Illinois used or to be used for or in connection with the production, transmission, sale, etc. of one of the specified commodities or services. Accordingly, GBX did not meet the definition of a "public utility" under section 3-105 of the Act at the time it filed its application with the
Commission.

...we are not persuaded that the legislature intended for the expedited review process to be an available avenue for nonpublic utility entities. The Commission's conclusion that any nonpublic utility may apply to be a public utility under section 8-406.1 ignores the express language set out in section 8-406.1(a). Significantly, section 8-406.1 of the Act clearly and unambiguously reads that "[a] public utility may apply for a certificate of public convenience and necessity pursuant to this Section ***."  As such, our interpretation of section 8-406.1 requires that the applicant must meet the definition of a public utility. In order to obtain status as a public utility, the applicant must meet the ownership test at the time of application, the same prerequisite in section 8-406, and the Commission must make this finding before issuance of a certificate. Here, GBX holds an option to purchase property that would serve as the site to place equipment for the proposed project. "[H]aving an option to buy something is not the same as owning or even controlling it," and an option agreement "does not involve the transfer or [sic] property or an interest therein." Illinois Landowners Alliance, NFP

The court says that Section 8.406.1, the "expedited process" under which GBE applied for its permit is specifically reserved for existing public utilities.  GBE is not a public utility because it doesn't own or control any utility property in Illinois.  It uses the Supreme Court's opinion in Illinois Landowners (RICL decision) as the basis for its finding.  The only place for Clean Line to appeal this is at the Illinois Supreme Court.  That's a dead end.  The Supreme Court is unlikely to reconsider the same argument and come to a different conclusion.

But don't despair, Clean Line, there's still a "way forward" for GBE... you don't need a permit from Illinois to build your project at all!  The only thing is, without a permit and a public utility designation from the ICC, you won't have eminent domain authority.  I mean, you have always said you weren't seeking eminent domain for your projects, right, Clean Line?  Go ahead, try to obtain needed rights of way across Illinois without the coercion of eminent domain.  Landowners love you, right?  That's what the court has instructed you to do:

The supreme court noted, however, that the Act does not prohibit new entrants from commencing development as a purely private project before applying to become a public utility in Illinois:
"Once their projects are further underway and they have obtained the ownership, management, or control of utility-related property or equipment required to qualify as public utilities, they may then seek certification to operate as public utilities if they wish to conduct their business in a way that would make them subject to the Public Utilities Act's regulatory framework."

As a result, the Commission must find that an entity is a public utility at the time of application in order to utilize the expedited review process in section 8-406.1 of the Act.
Unable to meet the requisite ownership test, GBX is not a public utility under section 3-105 of the Act, but rather an entity with a purely private project that does not require the
Commission's authority to proceed.

The media says, "Clean Line officials couldn't be reached yesterday."

Maybe Michael Skelly simply couldn't reach the telephone?