Dive Brief:

• A federal appeals court has upheld a ruling that Minnesota’s 2007 clean energy law illegally regulates out-of-state utilities, the latest and possibly final chapter in a five-year legal battle between the state and North Dakota.

• Minnesota’s Next Generation Energy Act seeks to restrict electricity imports from power plants, such as coal-fired stations, that increase greenhouse gases (GHG). North Dakota coal producers and generators argued the law illegally inhibited their ability to sell power and build new coal plants.

• The court’s decision does not affect the requirement under the Next Generation Energy Act that Minnesota utilities source 25% to 30% of their electricity from renewable sources such as wind and solar.

Dive Insight:

Cross border pollution has been a difficult problem for years, harkening back to the days of acid rain rules and other EPA regulations on sulphur and nitrogen oxides. 

Today, however, some of those worries can be exacerbated by conflicting concerns over global warming. 

Minnesota passed a law in 2007 seeking to restrict electricity imports from power plants that produce GHGs. That did not go over well in North Dakota, where there are many coal-fired plants. North Dakota protested the cross-border provisions of the law and now a three-judge panel of the U.S. Court of Appeals for the Eighth Circuit upheld the ruling of a lower court.

Appellate Judge James Loken found that the Minnesota law violated the U.S. Constitution’s Commerce Clause because it regulated transactions taking place “wholly outside” of Minnesota.

But two other judges, one supporting and the other dissenting from the decision, noted that the case is a wholesale power issue that falls under federal jurisdiction.

Minnesota Gov. Mark Dayton (D), in a press statement, said he “strongly disagreed” with the appeals court’s decision and he plans to review the ruling with Minnesota Attorney General Lori Swanson to consider how to proceed.

Minnesota can now petition the Eighth Circuit Court of Appeals for an en banc hearing, meaning all of the court’s judges — they number more than a dozen — would review the case. The state could also appeal directly to the U.S. Supreme Court.

“It’s unlikely the Supreme Court takes this case,” Ari Peskoe, an energy fellow at Harvard Law School’s Environmental Policy Initiative, told the Star Tribune. Still, Minnesota should be able to make solid legal arguments in any appeal, Peskoe said, adding that the Eighth Circuit court ruling surprised him.

Even if Minnesota's greenhouse gas rule is overturned, time may be running out for North Dakota's coal generation anyway. The EPA Clean Power Plan demands a 45% reduction in carbon emissions from the state's power sector by 2030, and low prices for natural gas and renewables make new goal generation a non-starter. The CPP will get a hearing from the full panel of D.C. Circuit Court in September, and is widely expected to be taken up by the Supreme Court after that.