On This Day: The 25 Year Battle Between North Dakota and Minnesota Over Energy Regulations

Earlier this year, American Experiment reported that North Dakota has an enormous war chest of $5 million on stand-by ready to sue Minnesota over regulations passed in our state regulating CO2 emissions.

North Dakota has argued in the past and will continue to make the case that any policy passed in Minnesota regulating emissions coming from electricity generation will directly impact North Dakota utilities, as well, in violation of the Commerce Clause in the Constitution.

As mentioned in the article above, Minnesota lost a recent court case in 2014 regarding provisions within the state’s Next Generation Energy Act (NGEA). These provisions would have restricted imports coming into Minnesota from power plants that increase greenhouse gases and would have hindered the ability of North Dakota utility companies to sell coal-fired electricity in Minnesota.

Before losing in court, then Governor Dayton vetoed legislation that would have exempted Spiritwood, a coal-fired power plant in North Dakota, from the provisions. Dayton called the suit “frivolous” and without merit.

However, U.S. District Court Judge Susan Richard overturned these provisions, ruling them as “extraterritorial regulation,” and the U.S. Court of Appeals 8^th Circuit upheld this ruling.

Minnesota taxpayers, as a result, must now pay $1.3 million to North Dakota in attorney fees, which will go directly into a legal-defense fund for later use to sue Minnesota again in the case that the state tries to enforce emissions regulations on North Dakota power facilities once more.

So, not only are Minnesota ratepayers and taxpayers paying for massive investments and subsidies for renewable energy sources, they must also pay for the irresponsible legislation that Minnesota lawmakers pass in clear violation of the Constitution to pursue their green energy policies even further.

Interestingly enough, this battle between North Dakota and Minnesota has been an ongoing cause for tension for more than 25 years.

On this day, June 21, in 1994, the Star Tribune reported the following:

The North Dakota attorney general will lead a delegation to Minnesota this month to argue against Minnesota regulations that some say could threaten North Dakota’s lignite coal industry.

Opponents of the environmental regulations say they are based on inconclusive evidence regarding how carbon dioxide from North Dakota’s lignite-powered electrical plants contributes to global warming.

Attorney General Heidi Heitkamp said the June 28 prehearing conference before the Minnesota Public Utilities Commission may prove to be only the first round in a long battle to eliminate the special assessments on electricity generated from coal. “I think this will go on for years,” she said.

Last year the Minnesota Legislature passed a law requiring the commission to establish environmental costs associated with each method of electricity generation. The interim assessments, which took effect on March 1, add about $8.50 to $19.35 to the cost of a ton of coal. But the assessments, which will expire when final values are established or the tax is eliminated, are being applied only to coal-fired electricity generation. That has angered lignite coal industry officials in North Dakota, which sells about half of the electricity produced from its lignite plants to Minnesota.

“It makes lignite noncompetitive,” said John Dwyer, president of the Lignite Energy Council in Bismarck.

He and Ken Ziegler, spokesman for Basin Electric Power Cooperative in Bismarck, say coal-fired power plants have been singled out.

But environmentalists who pushed for the assessments say Ziegler’s and Dwyer’s concerns are self-serving.

“We are noticing mercury from coal-fired power plants ending up in the atmosphere,” said Paul Hansen, director of the Izaak Walton League’s Midwest office in Minneapolis. “There is risk.” Dwyer and others said North Dakota electric consumption will suffer the most if Minnesota’s assessments are not changed. Ziegler said North Dakota’s seven coal-fired power plants will have to sell electricity elsewhere, perhaps at reduced rates, if they lose the Minnesota market.

Heitkamp predicted correctly.

Beginning in 1991, when Minnesota passed the first legislation imposing environmental costs on greenhouse gas emissions – which was later repealed and replaced by the 1993 legislation mentioned above – this battle didn’t end until 1997 when the Minnesota Public Utilities Commission (PUC) ruled the following:

The Commission believes it has the authority to require utilities to apply the adopted environmental cost values for C02 to facilities outside of the State of Minnesota in resource selection analyses submitted in Minnesota. However, the Commission also believes that the “to the extent practicable” standard established in Minn. Stat. 216B.2422 allows it to take into consideration the factors cited above. Having done so, the Commission will decline to apply the CO2 values to facilities located beyond the territorial boundaries of Minnesota. The Commission clarifies, however, that it will continue the qualitative evaluation of the CO2 associated with such generation.

[Emphasis added]

It wouldn’t be for another 17 years, during Governor Dayton’s administration, that the Minnesota PUC would find out their original assessment – that it “has the authority to require utilities to apply adopted environmental cost values for CO2 to facilities outside of the State of Minnesota” – flies in clear violation of the Commerce Clause of the Constitution.