Judge raises questions about Minnesota's anti-coal law

A federal judge on Thursday pointedly questioned the constitutionality of a 2007 Minnesota energy law that North Dakota says unfairly bars that coal-rich state from exporting electricity from new, coal-burning power plants.

"It is unprecedented," said U.S. District Judge Susan Richard Nelson, interrupting Assistant Minnesota Attorney General Gary Cunningham in court as he defended Minnesota's Next Generation Energy Act.

A nearly two-year-old lawsuit filed by North Dakota and its coal and utility interests against Minnesota reached a showdown in federal court in St. Paul as attorneys for each side tried to blast holes in the other's legal case.

Nelson said she would rule later on the matter, which centers largely on whether restricting Minnesota utilities' purchases of coal-generated electricity from other states violates a clause of the U.S. Constitution protecting interstate commerce.

In a sign of the case's importance, North Dakota Attorney General Wayne Stenehjem showed up for the oral arguments, although another attorney handled them. Beverly Jones Heydinger, chairwoman of the Minnesota Public Utilities Commission (PUC) and a defendant in the lawsuit, also was there, but left early for a PUC vote on a electricity deal that, by coincidence, featured an unrelated contract by a Minnesota utility to buy wind power from North Dakota.

That sort of contract — when it involves purchasing coal-generated electricity — lies at the heart of the case. The Minnesota law, which also encourages renewable energy and conservation, effectively forbids state utilities from importing new coal-generated electricity under contract, or from building coal plants to serve Minnesota customers.

Cunningham argued that's a wise policy because coal plants are major emitters of carbon dioxide, a greenhouse gas linked to climate change. By limiting coal-generated power, the law helps protect Minnesota customers from potential future costs of carbon regulation, he said.

"When that occurs in North Dakota or Wyoming, then we have a problem," the judge said.

Thomas Boyd, a Twin Cities attorney who represented North Dakota and its coal and utility interests, said the law makes it difficult for utilities like Minnkota Power Cooperative, which serves customers in both states, to sell excess electricity from its coal plants.

"This is a resource-elimination statute," Boyd said. That comment later was repeated by the judge as she confronted Minnesota's Cunningham.

After the arguments, attorneys declined to handicap how it went. Stenehjem, the North Dakota attorney general, said he's learned not to predict the outcome of a case based on a judge's questioning. Even so, he said, "I wouldn't trade places with the other side on the legal argument."

Scott Strand, one of three environmental attorneys to appear as friends of the court in support of Minnesota's position, added: "She's got concerns, clearly, but I think they were adequately addressed."

Minnesota attorneys and allied environmental groups argued that North Dakota's concerns about the Next Generation Energy Act should first be addressed by the state PUC, which has authority to interpret how it's applied.

Sean Donahue, an Environmental Defense Fund attorney, argued that many states have laws to encourage utilities' use of clean energy and to discourage fossil fuels. If courts accept North Dakota's legal position, he said, "it could condemn laws in half the country."

Nelson said she would take the summary-judgment motions under advisement. If she doesn't throw out the suit or strike down the law at this stage, the case heads to trial.