Xcel updated map

A map of proposed Huntley-Wilmarth line routes as of December 2017.

MANKATO — The proposed power line project between Mankato and Winnebago is still moving forward, even as a New York company is challenging the way Xcel Energy and ITC Midwest laid the groundwork for it.

LSP Transmission Holdings is suing the state of Minnesota over a 2012 construction law that grants electric transmission companies priority on bids for power line projects, the Star Tribune reports. While several states have the so-called "right of first refusal" law on the books, this is reportedly the first time the law has been challenged in federal court.

LSP had sought to bid on the Huntley-Wilmarth project, which will connect Xcel and ITC substations. LSP owns 500 miles of transmission lines — but none in Minnesota, limiting its ability to bid under state law. The company claims the law violates the dormant commerce clause of the U.S. Constitution.

The Justice Department filed a brief Friday agreeing with LSP.

The lawsuit won't affect the project, which is now under review by the Minnesota Public Utilities Commission. An Xcel spokesperson confirmed Tuesday morning the Huntley-Wilmarth project is moving forward.

State officials are proceeding with planned informational hearings on the proposed line.

The project has been in the works since 2009, when energy experts saw a need for more power lines in the area as an increasing number of wind projects cleared state, national and international regulations. It would be more difficult to move energy from those projects to power stations without an additional line, which could help cut down on expenses for companies and consumers alike.

Xcel began public outreach efforts last summer through presentations to area governments and several open houses where residents could share their concerns.

The state Department of Commerce will hold more informational meetings later this year after a draft environmental impact report is issued. The PUC is expected to finalize a permit for the project next year.

McClatchy-Tribune News Service contributed to this report.

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