North Dakota sues Minnesota over its renewable energy plan

November 4, 2011

Battleground StatesExhibiting a rivalry outside of college hockey, the state of North Dakota is suing neighboring Minnesota over the latter’s 2007 energy law.

The law, the Next Generation Energy Act (NGEA), is Minnesota’s renewable portfolio standard (RPS), which is a form of regulation that requires the increased production of energy from renewable energy sources.

With the lack of federal level activity on this issue, RPSs have become increasingly popular with states recently, with over half the states having one.

So what’s North Dakota so upset with Minnesota about?

In addition to prohibiting the construction of a new carbon dioxide-emitting power plant within the state, the section of NGEA in question bans the importation of power from similar sources outside of the state.

It also bans Minnesotans from entering into a new long-term power purchase agreement (a contract to purchase power from an electricity generator) that would increase statewide power sector carbon dioxide emissions.

North Dakota claims that these last two subsections have caused Minnesota individuals and companies to stop importing electricity from North Dakota’s lignite coal-burning power plants, in flagrant violation of the U.S. Constitution.

So, to sum up so far, North Dakota wants the federal government to tell Minnesota that it has to keep buying power from its neighbor.

Your next question may be about how, exactly, Minnesota’s law violates the Constitution.

After some lengthy discussion about how great North Dakota’s lignite coal industry is, the complaint lists five violations of the U.S. Constitution, and to add insult to injury, it accuses Minnesota of also violating its own state constitution.

The first constitutional violation the complaint gives is of the Commerce Clause, claiming the NGEA discriminates against interstate commerce.

Relying on anecdotal and circumstantial evidence, the complaint claims that the law, in purpose and effect, was designed to help Minnesota residents and corporations at the expense of foreign ones.

That would actually be a violation of the Dormant Commerce Clause, but either way, the claim doesn’t hold much water.

The law is completely neutral on its face, and the “evidence” the complaint provides is both incomplete and would probably be considered hearsay.

And, under the Pike test established in Pike v Bruce Church, there almost certainly isn’t a Commerce Clause violation.1

The next two are claims of Supremacy Clause violations, specifically related to the Clean Air Act (CAA) and the Federal Power Act (FPA).

The complaint claims that the feds completely occupy regulation of both fields to the exclusion of all state regulation, which just isn’t true.

In regards to the CAA, the areas that Minnesota is regulating seem to be clearly supported by Supreme Court precedent.2

The FPA claim is a little trickier because there is very little case law on point, but since Minnesota is not directly regulating interstate wholesale (as opposed to retail) transmission of electric energy and its price-setting,3 North Dakota has an uphill battle.

The last two claims are related to ones already discussed, and neither – including a Privileges and Immunities Clause claim4 – has any real weight.

Nor does the claim of a violation of Minnesota’s own state constitutional provision against nepotism (again relying on the weak evidence mentioned above).

The suit is, apparently, the “unfortunate” result of four years of failed lobbying efforts by North Dakota to repeal the law, but I doubt this route will yield any more success.

Aside from the glaring legal weaknesses in the complaint, the suit’s success wouldn’t be good policy for the reason mentioned earlier.

Namely, the suit represents one state trying to force another to purchase the former’s commodities to the detriment of the latter’s police powers.

1 The Pike test holds that “[where] a state regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits”

2 Pacific Gas and Elec. Co. v. State Energy Resources Conservation & Development Com’n holds that the “need for new power facilities, their economic feasibility, and rates and services, are areas that have been characteristically governed by the States.”

3 For more information, check here and here.

4The claim seems to be explicitly addressed by Baldwin v. Fish and Game Commission of Montana.