Minnesota’s Next Generation Energy Act (NGEA) of 2007—a law that restricts carbon dioxide emissions produced by power generators who export electricity to the state—violates the Commerce Clause in the U.S. Constitution and interferes with North Dakota’s energy production, North Dakota argued in a lawsuit filed against Minnesota last week.

The suit, filed in U.S. District Court in Minneapolis, essentially contends that “Minnesota’s Next Generation Energy Act has direct and serious consequences for North Dakota,” said North Dakota’s Attorney General Wayne Stenehjem.

North Dakota is home to the largest single deposit of lignite coal in the world, which fuels seven power plants within the state. State numbers show that North Dakota’s lignite industry produces 30 million tons of lignite a year, which generates power for more than 2 million people and brings in more than $3 billion in annual business revenue.

Minnesota, a state that gets 57.2% of its power from coal-fired power plants, imports all of its coal from Illinois, Montana, Kentucky, and Wyoming—not North Dakota—according to the Energy Information Administration. About 24% of Minnesota’s power is produced by nuclear plants, 9% wind, and 5% natural gas. In 2009, Minnesota imported just slightly more than an eighth of its electricity.

Stenehjem said that the NGEA, which purportedly relates to “global warming” and “greenhouse gases,” imposes restrictions on carbon dioxide emissions from out-of-state energy sources as a “purely symbolic gesture that could only have negligible impact toward actually achieving the purpose of reducing greenhouse gases on a global scale.”

In the state’s complaint, Stenehjem alleges that, as implemented, the NGEA has had, and will continue to have, “a chilling effect” on the development of new large energy facilities and the expansion or refurbishing of existing power plants located outside of Minnesota, as well as such facilities that would utilize lignite supplied from North Dakota.

Moreover, he said, prohibitions on imported energy provide exemptions that favor Minnesota projects or businesses. The NGEA favors “new large energy projects in Minnesota or Minnesota-based businesses with new large energy projects to the detriment of North Dakota and other out-of-state interests and entities,” he said.

The act “unduly burdens” interstate commerce because the only exception to those prohibitions is governed by the Minnesota Public Utilities Commission, which is statutorily required to “maximize benefits to Minnesota citizens.”

Critically, “the effect of provisions of the NGEA is to control conduct beyond Minnesota’s borders,” he argued. “Electricity is an inherently interstate commodity and the NGEA’s attempt to regulate its import in a discriminatory manner is unconstitutional.” The law also disregards the Federal Power Act, which says only Congress has the power to regulate interstate transmission and wholesale of electricity.

“Over the last four years, we in North Dakota have made every effort to convince Minnesota officials to rescind this Act,” said Stenehjem. “Earlier this year, the Minnesota Legislature, in a bipartisan move, voted to repeal the law, but the Governor of Minnesota vetoed the legislation. But for the veto of the law by their Governor, we would not have had to take this step.”

Aside from the state of North Dakota, the lawsuit’s plaintiffs include Basin Electric Power Cooperative, of Bismarck; the North American Coal Corp., of Plano, Texas; Great Northern Properties LP, of Houston; Missouri River Energy Services, of Sioux Falls, S.D.; the Lignite Energy Council, of Bismarck; and Minnkota Power Cooperative Inc., of Grand Forks, N.D. The lawsuit was filed against Lori Swanson, Minnesota’s attorney general; the five members of Minnesota’s Public Utilities Commission; and Mike Rothman, the chief administrator of Minnesota’s Department of Commerce.

Sources: POWERnews, N.D. Attorney General Wayne Stenehjem