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Driftless Area Land Conservanc v. Michael Huebsch, 20-1350 (2020)

Court: Court of Appeals for the Seventh Circuit Number: 20-1350 Visitors: 17
Judges: Sykes
Filed: Aug. 11, 2020
Latest Update: Aug. 11, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 20-1350 DRIFTLESS AREA LAND CONSERVANCY and WISCONSIN WILDLIFE FEDERATION, Plaintiffs-Appellees, v. MICHAEL HUEBSCH, et al., Defendants-Appellees. APPEAL OF: AMERICAN TRANSMISSION COMPANY LLC, et al., Intervenors-Defendants-Appellants. _ Appeal from the United States District Court for the Western District of Wisconsin. No. 19-cv-1007-wmc — William M. Conley, Judge. _ SUBMITTED JULY 2, 2020 — DECIDED AUGUST 11, 2020 _ Before SYK
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                            In the

    United States Court of Appeals
                For the Seventh Circuit
                   ____________________
No. 20-1350
DRIFTLESS AREA LAND CONSERVANCY and
WISCONSIN WILDLIFE FEDERATION,
                                             Plaintiffs-Appellees,

                               v.

MICHAEL HUEBSCH, et al.,
                                           Defendants-Appellees.

APPEAL OF: AMERICAN TRANSMISSION COMPANY LLC, et al.,
                        Intervenors-Defendants-Appellants.
                   ____________________

           Appeal from the United States District Court
               for the Western District of Wisconsin.
         No. 19-cv-1007-wmc — William M. Conley, Judge.
                   ____________________

    SUBMITTED JULY 2, 2020 — DECIDED AUGUST 11, 2020
                 ____________________

   Before SYKES, Chief Judge, and FLAUM and ROVNER, Circuit
Judges.
   SYKES, Chief Judge. The Wisconsin Public Service Com-
mission issued a permit authorizing the construction of a
$500 million electricity transmission line in southwestern
2                                                No. 20-1350

Wisconsin. Two environmental groups sued the Commis-
sion to invalidate the permit. The permit holders moved to
intervene to protect their interest in the permit; without it
the power line cannot be built. The district court denied the
motion, and the permit holders appealed.
   Briefing was completed at the end of June, and we set the
case for oral argument on September 22, 2020. The permit
holders moved for expedited review without oral argument;
they want an earlier ruling because the case continues
without them in the district court. The environmental
groups responded in opposition, and the matter is ready for
decision.
    We grant the motion. The briefs and record adequately
address the single issue raised on appeal, and oral argument
would not significantly assist the court. See FED. R. APP.
P. 34(a)(2)(C). The case is submitted on the briefs, and we
now reverse the district court. The permit holders are enti-
tled to intervene under Rule 24(a)(2) of the Federal Rules of
Civil Procedure. In many respects this is a paradigmatic case
for intervention as of right.
                       I. Background
    The plaintiffs are two Wisconsin environmental groups,
Driftless Area Land Conservancy and Wisconsin Wildlife
Federation. The defendants are the Wisconsin Public Service
Commission of Wisconsin and its three commissioners
(collectively, “the Commission”). The Commission regulates
public utilities in the state. Two of the proposed interve-
nors—American Transmission Company LLC and ITC
Midwest LLC—are Wisconsin electric-power utilities. The
No. 20-1350                                                  3

third, Dairyland Power Cooperative, is a cooperative associ-
ation that furnishes electricity to its members.
    In April 2018 the two utilities and the cooperative filed
an application with the Commission for permission to
construct a high-voltage transmission line running from
Madison through the southwestern part of the state and
ending in Dubuque County, Iowa. A project of this type is
subject to heavy regulatory oversight and requires a special
permit from the Commission known as a “certificate of
public convenience and necessity.” WIS. STAT. § 196.491(3).
The two utilities each own 45.5% of the project; the coopera-
tive owns the remaining 9%. (We refer to the utilities and the
cooperative collectively as “the transmission companies.”)
The estimated cost of the project is $500 million.
   The permitting process requires a “class 1” contested case
hearing.
Id. § 227.01(3)(a). An
exhaustive administrative
proceeding ensued, spanning almost 18 months and draw-
ing more than 50 intervenors. At the end of September 2019,
the Commission approved the project and issued a permit
authorizing the transmission companies to construct the
proposed power line and acquire easements through emi-
nent domain as necessary to complete construction.
   In December 2019 Driftless Area Land Conservancy and
the Wisconsin Wildlife Federation filed this lawsuit against
the Commission seeking to invalidate the permit. Both
groups had participated in the permit proceedings as inter-
venors in opposition, but their views obviously did not carry
the day. The complaint raises three constitutional claims
under 42 U.S.C. § 1983. The first alleges that the adjudicative
process was tainted by the appearance of bias because two of
the three commissioners had apparent conflicts of interest,
4                                                 No. 20-1350

depriving the plaintiffs and their members of due process.
The second and third claims challenge the authorization to
use eminent domain as an unlawful taking of private prop-
erty in violation of the Fifth Amendment’s takings clause.
    The Commission filed a motion to dismiss in January
2020. A week later the transmission companies moved to
intervene, seeking intervention as of right under
Rule 24(a)(2), or alternatively, permissive intervention under
Rule 24(b). As required by Rule 24(c), they tendered pro-
posed pleadings—answers and a motion to dismiss—with
the intervention motion.
    The district judge rejected intervention as of right, con-
cluding that the transmission companies and the Commis-
sion have the same goal—dismissal of the lawsuit—and the
Commission adequately represents that shared objective.
The judge also declined to authorize permissive interven-
tion, saying that adding the transmission companies as
parties would “almost certainly and needlessly complicate
and delay this case.” The judge denied the motion without
prejudice and invited the transmission companies to renew
their request if “a concrete, substantive conflict or actual
divergence of interests should emerge” later in the litigation.
Alternatively, he invited a “standby” application to inter-
vene—essentially a placeholder motion that could be acti-
vated if circumstances changed. See Solid Waste Agency of N.
Cook Cty. v. U.S. Army Corps of Eng’rs (SWANCC), 
101 F.3d 503
, 509 (7th Cir. 1996).
   Not content to rely on governmental regulators to protect
their $500 million private investment, the transmission
companies appealed.
No. 20-1350                                                             5

                            II. Discussion
A. Appellate Jurisdiction
    We begin by addressing a skirmish over appellate juris-
diction. 1 It will not take long. It is well established that “from
the perspective of a disappointed prospective intervenor, the
denial of a motion to intervene is the end of the case, so an
order denying intervention is a final, appealable decision
under 28 U.S.C. § 1291.” CE Design, Ltd. v. Cy’s Crab House
N., Inc., 
731 F.3d 725
, 730 (7th Cir. 2013). Notwithstanding
this rule, the plaintiffs moved to dismiss for lack of appellate
jurisdiction, arguing that the judge’s order is not final be-
cause he left open the possibility of a new intervention
motion if things change later in the litigation.
    The possibility of a new motion if circumstances change
does not block an immediate appeal. The contingency that
the judge has in mind might never arise, leaving the trans-
mission companies on the sidelines of the litigation without
appellate review of their intervention claim. Nor does the
incantation of the words “without prejudice” automatically
defeat finality; what matters is that the judge addressed the
substantive merits of the intervention motion and conclu-
sively denied it, freezing the transmission companies out of
the case. See United States v. City of Milwaukee, 
144 F.3d 524
,
531 n.14 (7th Cir. 1998). Finally, the judge’s invitation to file a

1 There is also a minor debate about standing. We do not understand
why. The transmission companies hold valuable rights under a
government-issued permit authorizing them to build a major power line
that will yield a return on their investment for many years to come. The
permit—and thus the entire power-line project—is at risk of nullification
in this litigation. A favorable decision will prevent that injury. No more
is needed for Article III standing.
6                                                 No. 20-1350

“standby” motion does not prevent finality. The availability
of that optional procedure—an innovation mentioned in
SWANCC but not specified in any procedural rule—does not
foreclose an appeal. Nothing we said in SWANCC eliminates
a disappointed intervenor’s right to immediately appeal an
order denying intervention.
    The plaintiffs rely on City of Milwaukee, but that case ac-
tually supports rather than defeats appellate jurisdiction.
There the district court denied an intervention motion based
on a purely technical error: the intervenor failed to include a
proposed pleading with his intervention motion as required
by Rule 24(c).
Id. at 527.
The judge denied the motion with-
out prejudice to give the intervenor an opportunity to refile
it with the required pleading; the judge did not address the
merits of the intervention question.
Id. at 528–29.
We dis-
missed the appeal, explaining that “a decision denying
intervention on strictly procedural grounds is not a final judg-
ment when the district court expressly contemplates that the
putative intervenor subsequently will file a procedurally
correct motion.”
Id. at 530.
   This case is not remotely analogous. As we specifically
observed in City of Milwaukee,
      the circumstances would be different if a dis-
      trict court denied a motion to intervene on the
      ground that the putative intervenor’s interests
      were adequately protected by the existing par-
      ties but entered the denial “without prejudice”
      in recognition of the fact that the circumstances
      of the case may change such that intervention
      at a later date would be appropriate.
No. 20-1350                                                    7
Id. at 531
n.14. That describes this case.
   The judge’s order is final and appealable under § 1291.
CE 
Design, 731 F.3d at 730
. Appellate jurisdiction is secure.
B. Intervention as of Right
    With the jurisdictional hurdle cleared, we move to the
intervention question. The rule governing intervention as of
right provides:
       (a) Intervention of Right. On timely motion, the
       court must permit anyone to intervene who:
           …
           (2) claims an interest relating to the proper-
           ty or transaction that is the subject of the ac-
           tion[] and is so situated that disposing of
           the action may as a practical matter impair
           or impede the movant’s ability to protect its
           interest, unless existing parties adequately
           represent that interest.
FED. R. CIV. P. 24(a)(2) (emphasis added).
    The rule is straightforward: the court must permit inter-
vention if (1) the motion is timely; (2) the moving party has
an interest relating to the property or transaction at issue in
the litigation; and (3) that interest may, as a practical matter,
be impaired or impeded by disposition of the case. A pro-
posed intervenor who satisfies these three elements is enti-
tled to intervene unless existing parties adequately represent
his interests.
    Everyone agrees that the three basic criteria for interven-
tion are satisfied: the intervention motion was timely; the
transmission companies hold a valuable property interest in
8                                                   No. 20-1350

the permit that is under attack in this litigation; and their
interest will be extinguished (not just “impaired” or “imped-
ed”) if the plaintiffs prevail. The only disputed question is
whether the existing defendants—the Commission and its
members—adequately represent their interests. The district
court answered “yes” and denied intervention as of right.
We review that determination de novo. Wis. Educ. Ass’n
Council v. Walker (WEAC), 
705 F.3d 640
, 658 (7th Cir. 2013).
    “The most important factor in determining adequacy of
representation is how the interest of the absentee compares
with the interests of the present parties.” 7C CHARLES ALAN
WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL
PRACTICE AND PROCEDURE § 1909 (3d ed. 2007). Our recent
decision in Planned Parenthood of Wisconsin, Inc. v. Kaul
describes our circuit’s three-tiered methodology for evaluat-
ing adequacy of representation under Rule 24(a)(2). 
942 F.3d 793
, 799 (7th Cir. 2019). “The default rule,” we explained, “is
a liberal one.”
Id. It derives from
the Supreme Court’s deci-
sion in Trbovich v. United Mine Workers of America, which
explained that “the requirement of the Rule is satisfied if the
applicant shows that representation of his interest ‘may be’
inadequate; and the burden of making that showing should
be treated as minimal.” 
404 U.S. 528
, 538 n.10 (1972).
    However, if the interest of the absentee is identical to that
of an existing party, or if a governmental party is charged by
law with representing the absentee’s interest, then the
standard for measuring adequacy of representation changes.
In both situations—where the absentee and an existing party
have identical interests, or the existing party is a governmen-
tal agency or official with a legal duty to represent the
absentee’s interest—a rebuttable presumption of adequate
No. 20-1350                                                    9

representation arises, and the prospective intervenor must
carry a heightened burden to establish inadequacy of repre-
sentation. The degree of this heightened burden varies.
    In Planned Parenthood we explained the presumption in
this way:
       Where the prospective intervenor and the
       named party have the same goal, … there is a
       rebuttable presumption of adequate represen-
       tation that requires a showing of some conflict
       to warrant intervention. This presumption of
       adequacy becomes even stronger when the
       representative party is a governmental body
       charged by law with protecting the interests of
       the proposed intervenors; in such a situation
       the representative party is presumed to be an
       adequate representative unless there is a show-
       ing of gross negligence or bad 
faith. 942 F.3d at 799
(quotation marks and citation omitted).
    In the district court, the plaintiffs advocated for the high-
est standard, which applies when a governmental party is
legally required to represent the absentee’s interests. This
standard sets a nearly insurmountable bar: the absentee
must show that the existing representation is grossly negli-
gent or in bad faith. The judge declined to go that far; he was
not convinced that the Commission is charged by law with
protecting the transmission companies’ interests. Still, he
applied the presumption of adequacy in its weaker form. He
first concluded that the transmission companies and the
Commission share the same goal: dismissal of the plaintiffs’
suit. Extrapolating from that conclusion, the judge applied
10                                                No. 20-1350

the presumption of adequacy and required the transmission
companies to satisfy the intermediate burden to overcome it.
That is, he required them to show an actual, concrete conflict
with the Commission’s representation and determined that
they had not done so.
    The transmission companies challenge the judge’s use of
the intermediate standard. They argue instead for the lenient
default standard, which involves no thumb on the scale and
requires only a minimal showing that the existing party’s
representation “may be” inadequate. Alternatively, they
argue that the judge misapplied the intermediate standard.
The plaintiffs, for their part, no longer advocate for the
gross-negligence/bad-faith standard. They adopt a more
moderate stance and simply defend the judge’s application
of the intermediate standard.
   Under a correct reading of Rule 24(a)(2) as glossed by our
three-tiered approach, the transmission companies are
entitled to intervene. The rule calls for a contextual, case-
specific analysis, and resolving questions about the adequa-
cy of existing representation requires a discerning compari-
son of interests. That did not occur here.
    To trigger the presumption of adequacy under the inter-
mediate standard, it’s not enough that a defense-side inter-
venor “shares the same goal” as the defendant in the brute
sense that they both want the case dismissed. The judge
seemed to think it was, but that mode of analysis operates at
too high a level of generality. Needless to say, a prospective
intervenor must intervene on one side of the “v.” or the
other and will have the same general goal as the party on
that side. If that’s all it takes to defeat intervention, then
intervention as of right will almost always fail. The judge’s
No. 20-1350                                                   11

analysis essentially boils down to this: The Commission
wants the case dismissed. The transmission companies do
too. Therefore, they share the same goal, and the presump-
tion of adequate representation applies. If that’s truly how
the presumption works, then the default standard will rarely
apply.
    That’s not how the presumption works. Rule 24(a)(2) re-
quires a more discriminating comparison of the absentee’s
interests and the interests of existing parties. When that kind
of contextual analysis is done here, it quickly becomes clear
that the transmission companies are entitled to participate as
parties to this litigation to protect their private investment in
this massive energy project. Their interests are independent
of and different from the Commission’s in several important
respects. To name a few: They own, finance, and will operate
the transmission line in question, and have obligations to
their investors in connection with its construction and
operation. They have substantial sunk and anticipated future
investments in the power line, and a valid expectation of a
return on their investment pursuant to the ratemaking
regulatory regime administered by the Federal Energy
Regulatory Commission. See 16 U.S.C. §§ 824(d), 824d(a),
824e(a). As public utilities, they have a legal obligation to
maintain the power grid and provide adequate and reliable
electricity services to the public. See WIS. STAT. § 196.03. (The
cooperative’s obligation to furnish electricity flows to its
members, not the general public.) And they hold the right to
use eminent domain as needed to construct the power line.
    The Commission’s interests and objectives overlap in cer-
tain respects but are importantly different. The Commission
is a regulatory body, and its obligations are to the general
12                                                 No. 20-1350

public, not to the transmission companies or their investors.
The Commission can be expected to defend the procedural
regularity of its proceedings, which is the focus of the due-
process challenge raised in count one. The other two counts,
however, attack the use of eminent domain, and that author-
ity belongs to the transmission companies.
     More broadly, the Commission regulates the transmission
companies, it does not advocate for them or represent their
interests. The transmission companies cannot be forced to
rely entirely on their regulators to protect their investment in
this enormous project, which they stand to lose if the plain-
tiffs are successful. For these reasons, their intervention
request is not controlled by the line of cases involving
intervention motions by individual members of the public,
citizen groups, or other units of government that hold
identical or closely aligned interests and objectives as exist-
ing governmental parties. See, e.g., Planned 
Parenthood, 942 F.3d at 810
(Sykes, J., concurring); 
WEAC, 705 F.3d at 658
–59; 
SWANCC, 101 F.3d at 508
.
    Instead, this case falls within a line of cases involving
permit holders that have successfully invoked Rule 24(a)(2)
to intervene in litigation challenging their permits. See, e.g.,
Sierra Club, Inc. v. EPA, 
358 F.3d 516
, 517–18 (7th Cir. 2004);
Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm’n,
834 F.3d 562
, 568–69 (5th Cir. 2016); WildEarth Guardians v.
U.S. Forest Serv., 
573 F.3d 992
, 996–97 (10th Cir. 2009); Sierra
Club v. EPA, 
995 F.2d 1478
, 1486 (9th Cir. 1993). The plaintiffs
cite no appellate case, and we know of none, that affirmed a
denial of intervention in similar circumstances.
    Because the transmission companies’ interests and objec-
tives are materially different than the Commission’s, the
No. 20-1350                                                 13

presumption of adequate representation does not apply.
Under the lenient default standard, they need only show
that the Commission’s representation “may be” inadequate,
“and the burden of making that showing should be treated
as minimal.” 
Trbovich, 404 U.S. at 538
n.10. They have satis-
fied this burden.
    As we’ve noted, the Commission can be expected to
mount a vigorous defense against the plaintiffs’ attack on the
integrity of the permitting process and the impartiality of the
commissioners. But the power-line project itself, and the
permit necessary to construct it, belong to the transmission
companies, as does the authority to use eminent domain,
which is the subject of counts two and three. The Commis-
sion may be content to move slowly in this litigation; but the
transmission companies want to move quickly, begin using
eminent domain as soon as possible, and otherwise keep the
construction project on schedule. Different defenses have
been raised. In their proposed motion to dismiss submitted
with the intervention motion, the transmission companies
argue that even if two commissioners had conflicts, the
permit was lawfully issued on the vote of the remaining
commissioner or would have issued as a matter of law
regardless. The Commission raised neither of these argu-
ments in its motion to dismiss. These are not mere “quibbles
with … litigation strategy.” 
WEAC, 705 F.3d at 659
. Rather,
they reflect very real differences in the interests at stake.
   Accordingly, the transmission companies cannot be kept
out of this case. The basic prerequisites for intervention
under Rule 24(a)(2) are unquestionably satisfied, and the
transmission companies have carried their burden to show
that the Commission’s representation may be inadequate to
14                                            No. 20-1350

protect their interests. We therefore reverse the district
court’s order and remand with instructions to permit the
transmission companies to intervene.
                                 REVERSED AND REMANDED
                                      WITH INSTRUCTIONS.

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