After four years of threatening to sue Minnesota over its climate change policies, North Dakota finally did.
First thing you should notice: it’s North Dakota’s lignite coal industry, electric companies, and their trade association who are suing Minnesota, and the state is the front man. You see, John Dwyer, the president of North Dakota’s coal industry council for the past 30 years, is more powerful than any governor or attorney general. He’s outlasted a bunch of them, and according to long-time observers of Bismarck politics, he calls the shots on utility matters.
The coal industry’s argument is very simple: by placing restrictions on the burning or importing of additional coal in the electric sector, Minnesota is both discriminating against North Dakota and violating the Commerce Clause of the U.S. Constitution. The North Dakota litany of grievances is outlined in this fact sheet.
Immediately, the Dayton Administration claimed the lawsuit is without merit, and truth is, everyone I have spoken to about this over the past four years—including industry insiders—agrees. The coal industry’s got nothing, and the lawsuit is a waste of taxpayers’ money.
Here’s why: there are two Minnesota laws that North Dakota is mad about (well, a lot more than that actually, but only two are cited in the lawsuit). In the 2007 Next Generation Energy Act, Tim Pawlenty’s landmark bill, Minnesota legislators agreed that we should start reducing our emissions that drive climate change: 15 percent by 2015, 30 percent by 2025 and 80 percent by 2050.
The heart of the lawsuit is the provision I call the “anti-backsliding provision.” Since coal-fired power plants are Minnesota’s number one source of climate-changing pollution, no new coal can be added to Minnesota’s electric mix unless there are equal reductions in carbon dioxide elsewhere. Think of it as the first rule of holes: when you’re down in one, the first rule is to stop digging.
But wait a minute, North Dakota argues, some projects got an exemption! That proves the law is discriminatory against out-of-state interests, right?
Nope. Projects that were exempted in 2007 and 2011 were coal plant projects that were already in the regulatory pipeline and politicians gave them a pass, not wanting to change the rules in the middle of the process. One was in Minnesota, a boondoggle that never got built; one was in South Dakota and investors pulled the plug on it because its costs were too uncertain; and one, the Spiritwood plant, was financed, built and is ready to operate in (get this) North Dakota!
This is the part that North Dakota coal guys hate most—that Minnesota has agreed to reduce the emissions that drive climate change, and politicians agreed that (starting in 2007) any future coal-fired power that’s added to our electric mix would only be allowed if there are not additional emissions.
The other Minnesota law cited in the lawsuit is our so-called “de facto carbon tax” that discriminates against North Dakota coal. You think you might have heard about it if Minnesota had a carbon tax, right? Especially if it was only levied on imports from the Dakotas?
Well, you haven’t heard about it because Minnesota doesn’t have one. What we do have is a law that says Minnesota utilities must submit long-term plans for power supply (or integrated resource plans, for my wonkier readers). When they do their plans, utilities need to consider the risk that a national or international system to reduce and price carbon will eventually be in place. So, Minnesota utilities weigh various options for new power as if there was a carbon dioxide penalty of $9 to $34 per ton. You can’t call it a tax, as no money changes hands. It’s just one consideration among many to make prudent judgments about an affordable and reliable electric system.
I know it’s hard to remember, but in 2007, all major presidential candidates (and certain vice-presidential bidders) agreed that a price on carbon is necessary and inevitable. All that’s required of Minnesota utilities is that they consider possible future carbon costs so consumers don’t get caught holding the bag of a more expensive plan. Our utilities weigh all energy supply options from all states based on up-front costs and estimated future operating costs.
Are you seeing the pattern yet? Again, there is no discrimination against North Dakota.
In fact, with its wide open plains and vast wind energy resources, you’d be right to argue that North Dakota is the best-positioned of any state to supply low-carbon energy to its eastern neighbor.
So, in review, the case simply has no merit. Nothing in Minnesota law violates the U.S. Constitution or discriminates against North Dakota. The only power plant exempted from this law that was actually built is in North Dakota, and North Dakota has an abundance of what Minnesota policymakers want: affordable power without pollution.
So why would a state attorney general waste public money to sue his state’s closest neighbor and best customer for electricity? The answer, I believe, is John Dwyer—Mr. Lignite Coal and the most powerful man in North Dakota—who says “the future of the lignite industry is at stake.”
Photo: Jen SFO-BCN under the Creative Commons license