By any measure, regulation of CO2 and other “Greenhouse Gases” (GHGs) in the United States is in its infancy. The federal Environmental Protection Agency did not regulate GHGs at all until the United States Supreme Court, in Massachusetts v. Environmental Protection Agency, 549 U.S. 497 (2007), basically forced it to. And the regulations EPA has gradually passed in response to Massachusetts—most recently GHG Performance Standards for new power plants—are essentially brand new. These regulations have been, and continue to be, tested by legal challenges that will shape how these laws are applied and interpreted.

Numerous states have also passed climate change legislation in recent years, and like their federal counterparts, these laws are being tested in the courts. Case in point: Minnesota’s Next Generation Energy Act of 2007, which was the subject of two recent Minnesota court decisions issued back-to-back on September 30 and October 1, 2012. One claimed the Act goes too far, by extending its reach to out-of-state power plants; the other claimed it doesn’t go far enough, by setting CO2 reduction goals that are inadequate to address climate change.

Minnesota’s Next Generation Energy Act

Signed into law on May 25, 2007, by former Minnesota Governor Tim Pawlenty, the Act, primarily set forth in chapter 216H of the Minnesota Statutes, establishes targets for statewide reductions of anthropogenic GHGs:

It is the goal of the state to reduce statewide greenhouse gas emissions across all sectors producing those emissions to a level at least 15 percent below 2005 levels by 2015, to a level at least 30 percent below 2005 levels by 2025, and to a level at least 80 percent below 2005 levels by 2050. The levels shall be reviewed based on the climate change action plan study. (Minn. Stat. 216H.02, subd. 1.)

One of the principal means by which the Act attempts to meet these targets is by limiting increases in GHGs from power plants, which account for 35% of Minnesota’s GHG emissions. (See the 2008 Minnesota Climate Change Advisory Group Report). The Act prohibits construction of new power plants that would increase statewide power sector GHG emissions. In addition, because Minnesota obtains over 30 percent of its electrical power from North Dakota and other neighboring states, the Act also prohibits importing power from new out-of-state power plants if the import would increase statewide power sector GHG emissions. Minn. Stat. § 216H.03, subd. 3. Power plants can overcome these prohibitions if they offset any increase in GHG emissions pursuant to specific requirements in the Act.

Case #1: North Dakota Is Not Pleased

The state of North Dakota, and various electrical power providers and associations, saw the Act as an unreasonable interference with their ability to sell power, and sued the Commissioners of the Minnesota Public Utilities Commission, Pollution Control Agency, and Department of Commerce (who have authority to enforce the Act), as well as the Minnesota Attorney General, claiming the Act was preempted by federal law. North Dakota v. Swanson, No. 11–3232, slip op. (D. Minn. Sept. 30, 2012). The court denied the defendants’ motion to dismiss, holding that the plaintiffs had stated claims that the Federal Power Act, 16 U.S.C. §§ 791a et seq. (“FPA”), and the Clean Air Act, 42 U.S.C. §§ 7410 et seq. (“CAA”), preempted sections of the Act.

Regarding the FPA, the plaintiffs alleged that the Act would interfere with the Federal Energy Regulatory Commission’s (“FERC”) exclusive jurisdiction to regulate the interstate transmission and wholesale sale of electric energy. For example, the plaintiffs alleged that if an out-of-state generator would contribute to Minnesota CO2 emissions, but chose not to purchase offsets, FERC would have to reconfigure the transmission grid to ensure that power from that generator does not enter Minnesota. Regarding the CAA, plaintiffs alleged that the Act’s limitations on power-plant CO2 emissions intruded on the exclusive federal regulatory framework under the CAA for addressing interstate air pollution. Plaintiffs alleged that Minnesota could adequately address its concerns about out-of-state power-plant CO2 emissions within the CAA framework. In denying the motion to dismiss, the court also noted the Supreme Court’s recent holding that Congress has “delegated to the EPA the decision of whether and how to regulate carbon-dioxide emissions from power plants.” American Elec. Power Co., Inc. v. Connecticut, 131 S. Ct. 2527, 2538 (2011).

Case #2: Minnesota’s GHG Reduction Targets Are Not Sufficient

The second Minnesota decision regarding the Act came from the Minnesota Court of Appeals. In an unpublished opinion, the court held that the “public trust doctrine” does not apply to the atmosphere—only to water. Aronow v. State, No. A12-0585, slip op. (Minn. Ct. App. Oct. 1, 2012). The plaintiff alleged that the State and the Minnesota Pollution Control Agency, in enacting and enforcing the Next Generation Energy Act, failed to establish GHG emissions reduction goals sufficient to protect the atmosphere from climate change. In so doing, the plaintiff claimed, the State and MPCA had not adequately discharged their public trust duty to protect the atmosphere. The Court of Appeals didn’t buy it.  The public trust doctrine, the court held, only applies to the state’s management of waterways and not to the atmosphere.

What’s Next?

What happens next for the Next Generation Act is not exactly clear. If the North Dakota plaintiffs succeed on the merits of their case, this could force Minnesota to significantly amend the Act. And the plaintiff in Aronow can certainly request an appeal in the Minnesota Supreme Court. What is clear, however, is the Act, along with other federal and state climate-change laws, is undergoing some growing pains, not unlike those endured almost 40 years ago by the “new” environmental laws passed in the wake of the Cuyahoga River fire