Minnesota to appeal court ruling against a state law that harms coal

Minnesota Gov. Mark Dayton today announced June 22 his decision to appeal a recent ruling of a three-judge panel at the U.S. Eighth Circuit Court of Appeals which would struck down a CO-reducing part of Minnesota’s Next Generation Energy Act.

Said Dayton: “After consultation with the Attorney General, I have decided to appeal the recent decision from the Eighth Circuit Court of Appeals, which struck down an essential part of Minnesota’s Next Generation Energy Act. The State Statute does not prevent anyone from building and operating a new power-generating facility. It only requires that those new emissions must be offset by the same or greater reduction in emissions from existing plants. Minnesota’s law encourages the replacement of older, more-polluting power plants with more efficient, cleaner facilities. I will continue to do everything in my power to defend the State of Minnesota’s right to protect the quality of the air our citizens breathe.”

A three-judge panel at the U.S. Eighth Circuit Court of Appeals on June 15 ruled against the Minnesota law, which attempts to control power plant CO2 emissions through limits imposed on a power grid that spans a multi-state area. The 2007 Minnesota statute provides that “no person shall…import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions.”

The State of North Dakota, which has power plants fueled by locally-produced lignite that export power out of state, three non-profit cooperative entities that provide electric power to rural and municipal utilities in Minnesota, and others brought this action against the commissioners of the Minnesota Public Utilities Commission (MPUC) and the Minnesota Department of Commerce (MDOC), citing the law as a violation of the Commerce Clause of the U.S Constitution. The district court granted plaintiffs summary judgment and a permanent injunction, concluding that the above-quoted provisions are “impermissible extraterritorial legislation” and therefore “a per se violation of the dormant Commerce Clause.” Said the June 15 appeals court decision: “The State appeals. We affirm.”

The three cooperatives that are a principal focus in this case are Basin Electric Power CooperativeMinnkota Power Cooperative and Missouri River Energy Services (MRES). The Minnesota statute at issue is part of the Next Generation Energy Act (NGEA), a statute intended to reduce “statewide power sector carbon dioxide emissions” by prohibiting utilities from meeting Minnesota demand with electricity generated by a “new large energy facility” in a transaction that will contribute to or increase “statewide power sector carbon dioxide emissions.” The statute regulates “the total annual emissions of carbon dioxide from the generation of electricity within the state and all emissions of carbon dioxide from the generation of electricity imported from outside of the state and consumed in Minnesota.” The challenged prohibitions are enforced by MPUC and MDOC.

Since NGEA enactment, MDOC and MPUC have declined to clarify how these prohibitions apply to electricity transmitted under the Midcontinent ISO’s control.

In early 2012, Basin notified the state that it was transmitting electricity from Dry Forks, a Wyoming coal-fired plant, to meet increased demand in the booming North Dakota “oil patch,” which brought electric power into the Eastern Interconnection and subject to MISO’s control. MDOC asked Basin for analysis of whether that provision of power to MISO was a violation of the Minnesota law. After Basin responded, neither MPUC nor MDOC answered Basin’s request for confirmation whether this transmission violated the law. Plaintiffs submitted declarations by Basin officers that Basin is apprehensive about entering into long-term power purchase agreements to serve non-Minnesota load due to the law, which interferes with Basin’s ability to make investment decisions such as its planned development of a coal-fired plant in Selby, South Dakota.

Minnkota has increasing surplus capacity from its partially-owned, coal-fired plant in North Dakota. Concerned that this will trigger NGEA enforcement, two of its members in Minnesota have declined to enter into long-term purchase agreements with Minnkota.

MRES declined to purchase capacity from a coal-fired facility in Wisconsin after determining the transaction would be viewed by Minnesota as violating the NGEA.

“Overall, we’re very pleased with this decision,” said Paul Sukut, Basin Electric CEO and general manager, in a June 21 statement about the June 15 appeals court decision. “This law, which prohibited the interstate movement of electricity from new coal-based facilities outside of Minnesota, had detrimental impacts on power generators across the Midwest. To single out and ignore a reliable and increasingly clean source of energy based on individual state preferences was unlawful. This decision confirms that.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.