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District Court Judge Overturns Louisiana Public Service Commission Order Regulating Corporate Practices of Electric Cooperatives

February 12, 2020

In a rare judicial check on its plenary authority, a Louisiana district court judge issued a Ruling vacating a Louisiana Public Service Commission (the “Commission”) Order regulating multiple corporate functions of electric cooperatives (co-ops).

The Order, which was issued by the Commission in April 2019, prescribed term limits for co-op board members, required the salaries of co-op directors to be approved by the individual members of the co-ops, mandated that the procedures and ballots utilized in co-op elections be approved by the Commission and the results certified by a Commission-appointed accountant, and limited the amount of insurance co-op directors may be provided.

This past May, several electric co-ops regulated by the Commission filed a Petition for Judicial Review, Declaratory Judgment, Temporary Restraining Order, and Preliminary and Permanent Injunctive Relief, urging that the Commission’s Order exceeds the Commission’s constitutional authority.

In a ruling made public yesterday, Judge Richard “Chip” Moore, III of the 19th Judicial District Court for the Parish of East Baton Rouge issued a Ruling setting aside the Order, noting that “[t]he historical development of the Commission reveals, and jurisprudence confirms, that it has never sought to micro manage public utility companies as it now attempt to do in its Order.”

In its ruling, the Court held that the Commission “lacks constitutional and statutory authority by which it can regulate corporate governance and board structure” of Louisiana utilities. The Court rejected the Commission’s position that it is constitutionally vested with the authority to regulate electric co-ops just as it regulates common carriers and public utilities. The Court opined that the Louisiana Constitution “reasonably interpreted does not include a right of the Commission to limit the term a board member may serve or abolish quorum requirements that a company had set for its own board of director elections.” In explaining its decision to vacate the Commission’s Order, the Court states that “when the Commission has sought to overreach its authority, the courts have stepped in to stop its advance.”

The Commission has the option of seeking a new trial before the district court or appealing the ruling directly to the Louisiana Supreme Court. We will advise of any further developments in this matter.