MINNESOTA AWAKENS A SLEEPING GIANT...

MINNESOTA AWAKENS A SLEEPING GIANT... Summary Judgment - February 2015 The degree to which a state may interfere with commerce among its neighbors is now before the U.S. Court of Appeals for the Eighth Circuit in St. Louis, Missouri.  At issue is global cooling/global warming/climate change/greenhouse gas legislation adopted by Minnesota—one of the Nation’s most progressive, liberal, politically correct jurisdictions— ostensibly to save its constituents from the evils of coal and the carbon dioxide generated when creating electricity.  The constitutional doctrine upon which the suit—filed by Minnesota’s western neighbor North Dakota and others—turns is the “dormant Commerce Clause,” an expression that fails to convey completely the principle’s origin, vitality, or constitutional significance. As every school child once knew, because the Articles of Confederation vested power to regulate commerce in the States and not Congress, commercial warfare erupted as, in Justice Joseph Story’s words, “each state would legislate according to its own [economic and constituents’] interests ….”  The economic Balkanization that resulted was catastrophic, “threaten[ing] the peace and safety of the Union.”  Therefore, when drafting the Constitution, the Framers granted Congress the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes[.]”  Implicit in that grant—but dormant only as to inaction by Congress—were limits on state power to affect interstate commerce. The Supreme Court of the United States, however, did not slumber; thus, over the decades, while recognizing the right of states to engage in “novel social and economic experiments,” the Court interpreted the dormant Commerce Clause to bar state legislation that “discriminates against or unduly burdens interstate commerce and thereby ‘imped[es] free private trade in the national market place….’”  Therefore, when “legislation nominally of local concern is in point of fact aimed at interstate commerce, or by its necessary operation is a means of gaining a local benefit by throwing the attendant burdens on those without the state[,]” it runs afoul of the dormant Commerce Clause. In determining whether state legislation violates the Commerce Clause, the Supreme Court asks:  first, whether the law has the “practical effect of extraterritorial control of interstate commerce[;]” second, whether the law “clearly discriminates against interstate commerce in favor of in-state commerce[;]”  and third, whether the law “imposes a burden on interstate commerce that outweighs any benefits received[.]”   Enter Minnesota’s Next Generation Energy Act of 2007 (NGEA), which sets Draconian goals for greenhouse gas reductions; establishes one of the nation’s most aggressive array of renewable-energy standards; and provides that “no person” may contribute to or increase “statewide power sector carbon dioxide emissions.”  Thus, the law directly affects the electric power industry—including generation, transmission, and distribution of electricity outside Minnesota—that is regulated by the federal government and operated cooperatively to ensure hourly accuracy as to supply and demand in such a manner that neither the supplier nor the consumer knows the destination or origins of the electricity it generates or uses. Little wonder the Minnesota federal district court that heard the case had no difficulty, once it brushed aside assertions by Minnesota’s attorneys that the law did not mean what it said, ruling that NGEA’s “plain language applies to power and capacity transactions occurring wholly outside of Minnesota's borders[,]” and therefore is “a per se violation of the dormant Commerce Clause.”  Both sides filed cross appeals and, days ago, the Montana Coal Council, a nonprofit group whose members supply a large portion of the coal that generates 44 percent of Minnesota’s in-state electric power, filed a friend of the court brief in support of North Dakota urging that the federal district court’s ruling be upheld. Given the case’s significance especially in light of efforts by various states to adopt legislation similar to Minnesota’s NGEA, there is a strong likelihood the Supreme Court will hear the matter.  If not, however, another case draws near; Wyoming recently contested Oregon’s denial of a Columbia River terminal permit to export its coal to the Far East.