A federal judge in Minnesota on Sept. 30 ruled in part against a defendant request for judgment on the pleadings made so far in a lawsuit over a Minnesota anti-coal law, but said more facts are needed and that the lawsuit will continue.
Pending before the U.S. District Court for the District of Minnesota was a defendants’ motion for partial judgment on the pleadings. Judge Susan Richard Nelson granted the motion in part and denied it in part.
The Minnesota legislature passed the Next Generation Energy Act (NGEA) in 2007, establishing energy and environmental standards related to CO2 emissions. The statute provides that unless preempted by federal law or until a comprehensive and enforceable state law or rule pertaining to greenhouse gases that directly limits and substantially reduces, over time, statewide power sector CO2 emissions is enacted and in effect, no person or entity shall:
- construct within the state a new large energy facility that would contribute to statewide power sector CO2 emissions;
- import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector CO2 emissions; or
- enter into a new long-term power purchase agreement that would increase statewide power sector CO2 emissions.
A long-term power purchase agreement means an agreement to purchase 50 MW of capacity or more for a term exceeding five years. A “new large energy facility” is defined as “any electric power generating plant or combination of plants at a single site with a combined capacity of 50,000 kilowatts or more and transmission lines directly associated with the plant that are necessary to interconnect the plant to the transmission system.”
The plaintiffs in this lawsuit, filed in November 2011, are the state of North Dakota, the Industrial Commission of North Dakota, the Lignite Energy Council, Basin Electric Power Cooperative, lignite producer North American Coal Corp., coal landholder Great Northern Properties LP, Missouri Basin Municipal Power Agency d/b/a Missouri River Energy Services, and Minnkota Power Cooperative Inc. They assert that the law discriminates against coal-based power produced in North Dakota and wheeled into the Minnesota market.
Defendants are the commissioners of the Minnesota Public Utilities Commission, the commissioner of the Minnesota Department of Commerce and the Minnesota Attorney General.
Plaintiffs claim the law violates various parts of the U.S. Constitution
In Count I of the lawsuit, plaintiffs assert that the law violates the Commerce Clause of the U.S. Constitution. In Counts II and III, they claim that the law violates the Supremacy Clause of the U.S. Constitution because it is preempted by the Clean Air Act (CAA) and the Federal Power Act (FPA). In Count IV, plaintiffs allege that the law violates the Privileges and Immunities Clause of the U.S. Constitution. In Count V, plaintiffs seek a declaratory judgment that the FPA preempts the state law. In Count VI, they allege that the state law violates the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution. Plaintiffs further request a declaratory judgment adjudicating that the state law is unconstitutional and injunctive relief enjoining its enforcement.
In the arguments about the FPA, the judge wrote that a fuller factual record is necessary to determine whether the FPA preempts certain provisions of the NGEA. “It appears that, at a minimum, discovery is necessary on the following topics: (1) how coal generators in North Dakota and other states outside of Minnesota have complied with the NGEA since its inception; (2) whether it is possible to determine, once electricity is generated and introduced into the transmission grid, where that electricity travels; (3) whether the NGEA requires MISO to reconfigure the transmission grid to ensure that power from an electricity generator in another state, who does not purchase offsets or reduce carbon emissions, would not enter Minnesota; (4) whether the NGEA’s prohibition related to entering into a new long-term power purchase agreement interferes with FERC’s authority to set wholesale rates and regulate agreements; (5) whether, how, and against whom the NGEA has been enforced since enactment; and (6) the NGEA’s impact on RTOs’ abilities to ensure non-discriminatory access to the transmission grid,” the judge wrote.
The judge also ruled: “Defendants move for judgment on the pleadings on Counts III and V of Plaintiffs’ Amended Complaint, which allege that the FPA preempts certain provisions of the NGEA. For the reasons discussed below, the Court determines that at this stage of the proceedings, Plaintiffs have adequately pled FPA preemption such that this Court cannot, as a matter of law, enter judgment on Counts III and V of Plaintiffs’ Amended Complaint.”
At another point, the judge opined: “Since Congress delegated exclusive jurisdiction to FERC to regulate the transmission and sale of electric energy at wholesale in interstate commerce, Plaintiffs’ allegations plausibly demonstrate that certain provisions of the NGEA may invade the field of transmission of electricity or the sale of electricity at wholesale in interstate commerce. Plaintiffs have also sufficiently pled that certain provisions of the NGEA directly conflict with the FPA.”
As for the Clean Air Act preemption claim, the judge wrote: “While Defendants dispute whether the CAA’s regulatory mechanisms are so expansive as to create field or conflict preemption here, they have not shown that Plaintiffs’ allegations are implausible on their face. Accordingly, Defendants’ 12(c) motion for judgment on the pleadings fails as to Plaintiffs’ CAA preemption claim.”