Federal appeals court upholds earlier ruling against Minnesota energy law

A Minnesota law that would have restricted some deliveries of electricity from North Dakota into Minnesota was dealt another blow June 15 as the Eighth Circuit Court of Appeals upheld an earlier ruling by a federal judge that ruled the law unconstitutional.

The State of North Dakota first sued the State of Minnesota in 2011, alleging that Minnesota’s Next Generation Energy Act (NGEA) violated the Commerce Clause of the U.S. Constitution by restricting transmission of electricity generated in North Dakota and consumed in Minnesota unless the generation of that electricity met Minnesota’s carbon dioxide emission requirements.

Missouri River Energy Services (MRES), Basin Electric Power Cooperative, and Minnkota Power Cooperative, Inc., along with others, joined North Dakota in the lawsuit.

MRES CEO Tom Heller said that MRES joined the lawsuit because “NGEA would have restricted MRES from considering all options when choosing the least-cost resources for meeting the needs of our 24 municipal electric utility members in Minnesota as well as our 36 other members in the states of Iowa, North Dakota, and South Dakota.”

In April 2014, U.S. District Court Judge Susan Richard Nelson of St. Paul agreed with North Dakota and ruled the NGEA unconstitutional. In her ruling, she said the law was “a classic example of extraterritorial regulation.” Minnesota appealed the decision to the Eighth Circuit and oral arguments were held in October 2015.

“I am extremely pleased to announce that North Dakota has once again prevailed in its lawsuit against Minnesota’s overreaching regulations,” said North Dakota Attorney General Wayne Stenehjem.

Heller noted that while much of the discussion regarding this case centered on how NGEA would restrict the building of new power plants, it also would have restricted agreements between Minnesota utilities and others regarding the term of such agreements and the amount of power Minnesota utilities could purchase from out-of-state coal-fired facilities. “The success of this case means we can consider purchase power agreements of longer than five years and for more than 50 megawatts of power from existing plants,” Heller said. “In many cases, we have found that buying power from these existing plants can be the least-cost option for our members.”

In its decision, the Eighth Circuit’s three-judge panel unanimously agreed that the law illegally sought to regulate activities taking place wholly in North Dakota, well beyond Minnesota’s borders. If left in place, the law would have prevented North Dakota utilities from selling power into the Midcontinent Independent Transmission System Operator market – hurting businesses and customers in both Minnesota and North Dakota.

Minnesota also will be required to pay attorney fees for the State of North Dakota and the other plaintiffs, now estimated at over $1 million.

 

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