University of Iowa argues for dismissal of federal utilities lawsuit

IOWA CITY — Attorneys representing the University of Iowa want a federal judge to dismiss a lawsuit the campus’ new private utilities operator filed against it in January — ignoring, for now, the substance of the accusations and arguing its utilities operator made procedural and jurisdictional mistakes in filing the suit.

“The case cannot proceed in federal court,” according to the UI’s motion to dismiss the federal lawsuit accusing it of breaching the contract almost immediately, in the first year. “This litigation should instead proceed in Iowa state court.”

That, according to the motion, is where both sides agreed to settle disputes when in December 2019 they joined a 50-year, $1.165 billion public-private partnership for the operation of the university’s utilities system.

“Any action or proceeding against any party relating in any way to this agreement may be brought and enforced in the state courts in the State of Iowa in Johnson County,” according to the 1,800-page agreement.

The University of Iowa Energy Collaborative — a limited liability corporation made up of companies and donors who agreed to pay the UI the upfront $1.165 billion in exchange for its commitment to pay the collaborative tens of millions annually to operate its utilities system for the next 50 years — in its lawsuit said the UI “has refused to recognize or perform its contractual obligations.”

The collaborative outlined four primary ways it says the UI breached its contract: refusing to pay money it owes; rescinding approval to repair the utility system; failing to file casualty insurance claims; and demanding payment for “unplanned” utility outages “even though the university’s representatives participated in the very meetings and discussions planning for those events.”

UI officials have told The Gazette the university and its utilities partners “have a disagreement regarding some of the terms and conditions of the deal,” and they’re disappointed the collaborative “felt the need to file a lawsuit.”

But before addressing the case’s merits, attorneys representing the UI — none of whom come from the UI General Counsel’s Office or Iowa Attorney General’s Office but rather a private law firm in Omaha — are arguing both the federal court venue is wrong and the collaborative erred in suing only the university.

“The Board of Regents is a required party and dismissal is the appropriate remedy,” the UI said.

The issue is important — attorneys argued, pointing to the UI’s status as “an arm of the state” — in that “an adverse ruling here could thus subject the university to diversity actions in Iowa federal court and state court filings in 49 other states … effectively relegating the university to the status of an ordinary private litigant.”

A judge has given the energy collaborative until May 24 to file any resistance to the UI call for dismissal, indicating, “The parties are continuing their discussion about ways of resolving the issues raised by the university’s motion without requiring a ruling.”

New North Liberty utility plant

Given the public-private partnership pertains only to the main UI campus and its Oakdale campus in Coralville, the university in March went out for bids from potential operators for its new “Forevergreen Road Central Utility Plant” being built to service UI Health Care’s $525.6 million hospital being built in North Liberty.

The UI’s existing agreement notes the university — at its discretion — could expand its definition of “main campus and/or the Oakdale campus” and have the UI Energy Collaborative take on additional utility operator duties.

Bids for a 2.5-year contract to operate the North Liberty utilities are due Thursday.

“Utilities at the UIHC at Forevergreen Road site in North Liberty are not a part of the P3 agreement with ENGIE,” UI spokesman Steve Schmadeke told The Gazette. “The scope of ENGIE’s responsibility is limited by the contract to those utility systems within the boundary of the main and Oakdale campuses. The UIHC at Forevergreen Road site in North Liberty falls outside those contract boundaries.

“The intent of the RFP is to obtain competitive pricing from any qualified vendors, including Engie.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com