Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 78-352-C - William E. Steckler, Judge.
Before Fairchild, Chief Judge, and Sprecher and Tone, Circuit Judges.
This is an appeal from the granting of a preliminary injunction enjoining the Attorney General of Indiana from refusing to approve subgrants for financial assistance allocated by the Public Counselor of Indiana, in accordance with Section 205(a) of the Energy Conservation and Production Act of 1976, 42 U.S.C. § 6805(a), establishing state consumer protection offices, solely on the basis that the subgrantees retain lobbyists.
Enacted as part of the Energy Conservation and Production Act, Section 205(a) (hereafter referred to as 42 U.S.C. § 6085(a)) was intended to provide financial assistance to state offices of consumer services for the purpose of facilitating the presentation of consumer interests before utility regulatory commissions. 42 U.S.C. § 6801. A state office of consumer services so financed must "assist consumers in the presentation of their positions before utility regulatory commissions" and "advocate, on its own behalf, a position which it determines represents the position most advantageous to consumers." Section 6805(a).*fn1 Financial grants are now made by the Department of Energy.
An Indiana statute provides that the governor shall appoint a practicing attorney as public counselor to represent the public in utility rate hearings before the state Public Service Commission.*fn2 Ind.Code 8-1-1-4.
In September, 1977, the Public Counselor of Indiana had applied for and received from the Department of Energy (DOE) a $200,000 grant under § 6805(a), which was approved by the Indiana Attorney General as to "form and legality." Eighty-Four Thousand dollars of this grant was allocated for financial and technical assistance to consumer groups in order to facilitate participation in utility rate proceedings.
On December 21, 1977, the Public Counselor executed a proposed contract with the Citizens Energy Coalition, Inc. (Coalition), an Indiana private, not-for-profit organization, for services to be performed by the Coalition for $5,000 under § 6805(a). An Indiana statute provides that all contracts entered into by state agencies shall be approved as to form and legality by the Attorney General. Ind.Code 4-13-2-14.*fn3 On March 29, 1978, the Indiana Attorney General disapproved the proposed contract in part because the Coalition maintained a registered lobbyist and "a conflict may arise under the terms of IC 2-4-3 Et seq."*fn4
The district court held that to "disapprove the contract of December 21, 1977 on the grounds that the contract would be in conflict with Ind.Code 2-4-3-7 (prohibiting lobbying for pay by public officials) would be an erroneous disapproval."*fn5
After the Attorney General had disapproved the Coalition contract, the Coalition submitted to the Public Counselor three proposals seeking § 6805(a) financial assistance totaling $46,000. The Indiana Public Interest Research Group (Research Group), also an Indiana private, not-for-profit organization which maintained a registered lobbyist, submitted a proposal for financial assistance in the amount of $9,785 to the Public Counselor.
In the meantime the Public Counselor on April 5, 1978, wrote to the Attorney General with supporting affidavits, requesting reconsideration of the disapproval of the original $5,000 contract. Several days later the Attorney General returned the Public Counselor's letter with a notation that the "A.G. will not accept lobbyist or organization on contract."*fn6
On April 17, 1978, the Public Counselor by letter requested the advice of the Attorney General as to whether or not he could make grants under § 6805(a) to consumer groups who had lobbied in the preceding session of the Indiana General Assembly. No formal or informal written response was ever made to this request.
In letters of May 30 and 31, 1978, the Public Counselor advised the Coalition and the Research Group that he was unable to approve their requests for financial assistance "in view of the ruling of the Indiana Attorney General which prohibits my contracting with any organization or individual registered as a lobbyist during the most recent session of the Indiana General Assembly."*fn7
The Public Counselor did approve an application for financial assistance in the amount of $24,000 by the Consumer Center of Fort Wayne, Indiana, which ...