Minn. Energy Law Nixed Under Commerce Clause

(CN) - North Dakota is not bound by a Minnesota law that would restrict the importation of out-of-state electricity, a federal judge ruled.

Minnesota's Next Generation Energy Act prohibits the importation of power from outside Minnesota that would add to the emissions of carbon dioxide without a corresponding carbon-dioxide reduction project.

North Dakota, its Industrial Commission and six power companies had sued the Minnesota Public Utilities Commission three years ago in St. Paul to have the law declared unconstitutional. They alleged violations of the commerce clause, as well as pre-emption by the Clean Air Act and the Federal Power Act.

The Sierra Club, the Environmental Defense Fund, and other environmental groups filed briefs to support Minnesota's law. The Minnesota Chamber of Commerce and the National Mining Association chimed in on the plaintiffs' side.

U.S. District Judge Susan Richard Nelson granted the plaintiffs partial summary judgment Friday after finding that the law violates the dormant commerce clause.

The problem stems from a violation of the clause's extraterritoriality doctrine, which "precludes application of a state statute to commerce that takes place wholly outside of the state's borders," according to the ruling.

Minnesota's law "is a classic example of extraterritorial regulation because of the manner in which the electricity industry operates," Nelson wrote.

"The statute also requires out-of-state entities to seek regulatory approval in Minnesota before undertaking transactions in other states," Nelson added. "This statute overreaches and, if other states adopt similar legislation, it could lead to balkanization."

With that finding, the court declined to address the remaining pre-emption claims.

In finding that the state and the energy companies had standing to bring the lawsuit, Nelson cited complaints that the law has already affected businesses.

Missouri River Energy Services, for example, said it did not buy an interest in a coal-fired power facility in Wisconsin because of concerns that the purchase would be viewed as a violation of Minnesota law.

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