Trump’s Justice Department: Gov. Reynolds’ energy bill provision would squash competition

DES MOINES — President Donald Trump’s justice department has expressed reservations with an energy policy proposed by Iowa Gov. Kim Reynolds.

In a six-page letter, Assistant U.S. Attorney General and Trump appointee Abigail Slater wrote that a right of first refusal provision in Reynolds’ proposed energy legislation would stifle competition and potentially raise prices and lower the quality of service for Iowa electricity customers. Slater works in the Justice Department’s antitrust division.

The letter, dated March 24, was written in response to queries sent earlier that month from a pair of Republican state legislators, Sen. Jesse Green of Boone and Rep. Henry Stone of Forest City.

Included in the Republican governor’s sweeping energy legislation is a so-called right of first refusal provision, by which utility companies that already have facilities and transmission lines in the state have the right to construct expansion projects for electricity infrastructure in Iowa.

Slater’s letter lays out reasons why the federal justice department believes state right of first refusal laws squash competition and ultimately hurt customers.

“By restricting the construction of new power grid infrastructure to incumbent electrical transmission owners, the bill can harm consumers by reducing or eliminating competition,” Slater’s letter says. “The bill turns a ‘preference for further investment in Iowa transmission infrastructure by electric transmission owners’ into a legal grant that shields incumbents from competition.”

Slater says in some cases, nonincumbent utility companies may offer lower costs and better project designs, and that they should have the opportunity to compete for projects. Slater also says even when an incumbent utility company may be best leveraged to deliver a high-quality, cost-effective electric infrastructure project quickly, the threat of competition still could incentivize better outcomes like lower prices for consumers or more robust and innovative project designs.

“The Division urges the Iowa Legislature to consider whether the (right of first refusal) provisions in (Reynolds’ bill) would harm consumers by denying them the benefits of robust competition, especially given the critical energy infrastructure needs facing the country,” Slater’s letter says. “By protecting incumbents from competition, the bill creates risks for increased costs, reduced quality, and less reliable transmission infrastructure at a moment when the President has declared a national energy emergency.”

Reynolds’ office did not respond to a request for comment Tuesday.

Reynolds’ proposed energy legislation appears in the form of twin bills, one each in the Iowa Senate and House. Senate File 585 and House File 834 were each approved by the committees on commerce in their respective chambers. Another legislative hearing was held Monday on the Senate bill in that chamber’s budget committee.

One of the bills still must be approved by the full Iowa House and Senate before it could be sent to Reynolds for her approval.

The right of first refusal provision also was a hot topic during Monday’s legislative hearing. Lobbyists for energy utility companies and labor groups expressed support for the provision, while lobbyists for electric energy and infrastructure development and investment companies argued against it.

On Tuesday, the free-market advocacy organization Americans for Prosperity expressed its agreement with the Trump administration’s letter to Iowa lawmakers. In a news release, the state director of the group’s Iowa chapter called for state lawmakers to reject first right of refusal laws.

“We appreciate the DOJ’s leadership on reducing burdens facing Iowa taxpayers, families, and businesses. The DOJ is right; (right of first refusal) provides a lack of competition in the energy market and has the potential to cause substantial harm,” Tyler Raygor, state director of the Iowa chapter, said in a statement. “Lawmakers should follow the lead of the Trump administration to prioritize legislation that gets the government out of the way of the free market. …

“AFP-Iowa urges lawmakers to reject these anticompetitive policies and focus on policymaking that will focus on bringing energy costs down for hardworking Iowans.”

Comments: (515) 355-1300, erin.murphy@thegazette.com

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Download: Iowa DOJ Letter March 2025 (002).pdf