JUDGE HEARS ORAL ARGUMENTS IN ND-MINN. COAL PLANT CASE

Tamar Hallerman
GHG Monitor
04/20/12

North Dakota, along with a group of area coal companies and electric utilities, argued in federal court late last week that a Minnesota law barring electricity generation from new coal plants that do not mitigate greenhouse gas emissions violates the interstate commerce clause of the Constitution. A federal judge in St. Paul, Minn., heard oral arguments surrounding the constitutionality of Minnesota’s 2007 Next Generation Energy Act, a law that bars the construction or importing of new coal-fired generation produced from units that do not offset their CO2 emissions. North Dakota, which heavily exports electricity generated from coal to Minnesota, and the other case petitioners argued that Minnesota overstepped its authority by regulating interstate energy electricity sales on the wholesale power market, barred under the interstate commerce clause of the Constitution. The oral arguments come nearly six months after North Dakota filed suit against Minnesota. North Dakota’s attorney general said that the Minnesota law has “direct and serious consequences” for North Dakota and that it sought for the federal court to invalidate the law.

‘Absolutely No Right or Authority’

The offices of the North Dakota and Minnesota attorneys general did not return calls for comment, but motions filed by both sides in court last month, as well as media reports, indicated that the lawyers for North Dakota and its co-petitioners argued that in addition to the interstate commerce clause, the Next Generation Energy Act attempts to preempt the Clean Air Act and the Federal Power Act and interfere with North Dakota’s energy production and market. “In enacting the Next Generation Energy Act of 2007, the Minnesota Legislature could not have more clearly expressed its intention to impose Minnesota’s policies and exert Minnesota’s control over transactions involving the generation, transmission, and sale at wholesale of electricity that originates outside of Minnesota,” North Dakota’s motion says, arguing that Minnesota has “absolutely no right or authority to regulate such activities.”

Meanwhile, a motion filed by the Minnesota Office of the Attorney General indicates the state argued that the law does not regulate wholesale electricity markets or the interstate sale of electricity, but instead only determines the type of electricity that can be sold on the Minnesota market. “[Several of the plaintiff’s arguments fail because the law] regulates generation resources, not the transmission of electricity in interstate commerce or transmission facilities as Plaintiffs erroneously contend,” the motion says. It says accusations that the state is violating the Clean Air Act is “without merit because Congress expressly preserved broad state authority to regulate air emissions, including carbon dioxide emissions from electric generating facilities.” The state also argued that the rule is legal because it does not discriminate exclusively against North Dakota.

‘Asleep at the Switch’

The Next Generation Energy Act passed the Minnesota state legislature with strong bipartisan support in 2007 and was signed by then-Gov. Tim Pawlenty (R) as a law that was meant to be complementary to the state’s renewable electricity standard of 25 percent by 2025, at the time the most aggressive in the country. Its provisions aimed to encourage the increased utilization of renewables and energy conservation, as well as greenhouse gas emissions mitigation. “The nation has been asleep at the switch, but here in Minnesota we are kick-starting the future by increasing our nation-leading per capita renewable fuel use, boosting cost saving measures and tackling greenhouse gas emissions,” Pawlenty said in a 2007 press release.

The portion of the law affecting coal plants is intended to only apply to electricity produced from new units, and includes a provision where the state legislature can grant exemptions for particular units and projects. It bars power produced from new coal facilities that would increase “statewide power sector carbon dioxide emissions.” In addition to adding emissions reduction technology like carbon capture and storage, operators could comply by reducing CO2 emissions at existing facilities to help offset overall emissions, or by purchasing allowances from a cap-and-trade system. A similar rule was recently proposed by the U.S. Environmental Protection Agency last month as part of court-ordered performance standards for new coal-fired units. Unit operators must now either install CCS or natural gas combined cycle technology to comply.

North Dakota is one of the country’s largest coal producing states, according to data from the Department of Energy’s Energy Information Administration, relying heavily on exporting its electricity to neighboring states. Meanwhile, Minnesota is a net importer of electricity due to its lack of fossil resources, relying on states like North Dakota, Montana and Wyoming for electricity. Coal comprises about 60 percent of its electricity generation mix, according to EIA. The rest is generated by nuclear, wind and ethanol.