A federal judge heard arguments Thursday in North Dakota's lawsuit against Minnesota's Next Generation Energy Act.
The law, passed in 2007 with bipartisan support in the legislature and championed by then-Gov. Tim Pawlenty, has an ambitious goal of reducing Minnesota's contribution to global warming. Among many provisions, it stipulates utilities may not build new coal plants in Minnesota or import additional coal-generated electricity unless they offset the carbon emissions that contribute to global warming.
The law does not affect current arrangements in which coal-fired power plants in North Dakota supply electricity to many Minnesota residents. The Great Recession and conservation measures dampened demand for electricity in Minnesota. But North Dakota coal interests worry about losing business in the long run.
Attorney Thomas Boyd, representing North Dakota and its coal-based businesses, told the judge that Minnesota overstepped its bounds. He said the federal government has the sole right to regulate the wholesale energy market.
Minnesota Assistant Attorney General Jeanne Cochran countered that the law does not regulate wholesale electricity; it merely regulates the types of electricity that can be sold at retail in Minnesota.
Cochran asked Judge Susan Richard Nelson to dismiss North Dakota's arguments.
A separate hearing will examine the question of whether the law violates the interstate commerce clause of the U.S. Constitution. North Dakota Attorney General Wayne Stenehjem said that aspect of the case is not unique.
"There are lots of cases that implicate the commerce clause and make it clear that one state cannot impose restrictions on importation of a good or service in commerce to the detriment of another state, and that's what we in North Dakota claim Minnesota has done with its Next Gen Act."
But as it was in 2007 when it embraced the idea of reducing greenhouse gas emissions, Minnesota is again in the forefront on this legal terrain. Many states have renewable energy standards which have not been challenged in court. A judge has ruled that the California Low Carbon Fuel Standard violates the interstate commerce clause. And observers expect legal challenges eventually to California's cap and trade program, but so far they have not materialized.
At least one lawmaker who helped write the landmark law says the North Dakota lawsuit seems "frivolous." Rep. Bill Hilty, D-Finlayson said the lawsuit appears to be a "gesture" to show support for the coal industry. But he says the demand for electricity has been flat in recent years.
"We (lawmakers) made an exception for a coal plant in North Dakota in the legislation that we passed in 2007 and you know what? They abandoned that plant," Hilty said.
The Legislature granted Great River Energy's Spiritwood plant in North Dakota an exemption from the law. It was built but has not yet been used. Another plant exempted from the requirement, Big Stone II in South Dakota, was never built.
EDITOR'S NOTE: An earlier version of this story incorrectly stated the proposed location of the Big Stone II plant. The current version is correct.