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Posted on: April 14, 2023

Decision Reached by Court of Appeals in Electric Franchise Case

Photo of a gavel in use

EAST LANSING, Mich. — The Michigan Court of Appeals (Court of Appeals) issued an opinion on April 13 in Heos v City of East Lansing, holding in favor of the City in the class-action lawsuit related to electric franchise fees.

The case arose in response to a franchise fee agreed upon between the City of East Lansing and the Lansing Board of Water and Light (LBWL), a utility provider, under City Ordinance 1406. The City began collecting the fee in 2017. 

The plaintiff filed a class-action lawsuit, challenging the franchise fee. His claim was that the franchise fee was an unlawful tax under the Headlee Amendment and the Foote Act.

In reaching its decision this week, the Court of Appeals said that the plaintiff’s claim under the Headlee Amendment was not timely because it was not filed within one year after the franchise ordinance was adopted. The Court of Appeals also said that the Foote Act only applies to electric utility providers, not electric customers. 

“We are grateful that the Michigan Court of Appeals has issued its ruling in favor of the City of East Lansing this week,” said Interim City Manager Randy Talifarro. “The collection of this franchise fee helps to ensure that the City continues to provide a high-level of service to our residents.”

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