North Dakota v. Swanson

Decision Date30 September 2012
Docket NumberCivil No. 11-3232 (SRN/SER)
PartiesState of North Dakota, et al., Plaintiffs, v. Lori Swanson, Attorney General of the State of Minnesota, et al., Defendants.
CourtU.S. District Court — District of Minnesota

John A. Knapp, Thomas H. Boyd, Daniel J. Kelly, and Brent A. Lorentz, Winthrop & Weinstein, P.A., for Plaintiffs.

Lisa A. Crum and John S. Garry, Office of the Attorney General, State of Minnesota, for Defendants.

SUSAN RICHARD NELSON, United States District Court Judge

Pending before the Court is Defendants' Motion for Partial Judgment on the Pleadings. (Doc. No. 11.) For the reasons set forth below, the motion is granted in part and denied in part.

A. Minnesota's Next Generation Energy Act

The Minnesota legislature passed the Next Generation Energy Act ("NGEA") in 2007, establishing energy and environmental standards related to carbon dioxide emissions. 2007 Minn. Laws Ch. 136, art. 5, § 3. Minn. Stat. § 216H.03, subd. 3 seeks to limit increases in "statewide power sector carbon dioxide emissions." The statute provides that "[u]nless preempted by federal law" or "until a comprehensive and enforceable state law or rule pertaining to greenhouse gases that directly limits and substantially reduces, over time, statewide power sector carbon dioxide emissions is enacted and in effect," no person shall:

(1) construct within the state a new large energy facility that would contribute to statewide power sector carbon dioxide emissions;
(2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or
(3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions. For purposes of this section, a long-term power purchase agreement means an agreement to purchase 50 megawatts of capacity or more for a term exceeding five years.

Id. "Statewide power sector carbon dioxide emissions" are defined in the statute as "the total annual emissions of carbon dioxide from the generation of electricity within the state and all emissions of carbon dioxide from the generation of electricity imported from outside the state and consumed in Minnesota." Id. subd. 2. A "new large energy facility" is defined as "any electric power generating plant or combination of plants at a single site with a combined capacity of 50,000 kilowatts or more and transmission lines directlyassociated with the plant that are necessary to interconnect the plant to the transmission system." Minn. Stat. § 216B. 2421, subd. 2(1).1

Certain persons are exempt from the prohibitions contained in Minn. Stat. § 216H.03, subd. 3. Minn. Stat. § 216H.03, subd. 4 provides that "[t]he prohibitions in subdivision 3 do not apply if the project proponent demonstrates to the Public Utilities Commission's satisfaction that it will offset the new contribution to statewide power sector carbon dioxide emissions with a carbon dioxide reduction project." The carbon dioxide reduction project must:

offset in an amount equal to or greater than the proposed new contribution to statewide power sector carbon dioxide emissions in either, or a combination of both, of the following ways:
(1) by reducing an existing facility's contribution to statewide power sector carbon dioxide emissions; or
(2) by purchasing carbon dioxide allowances from a state or group of states that has a carbon dioxide cap and trade system in place that produces verifiable emissions reductions.

Minn. Stat. 216H.03, subd. 4(b). The Minnesota Public Utilities Commission ("MPUC") must ensure that proposed carbon dioxide reduction projects are "permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred." Id. subd. 4(c).

The NGEA may be enforced by either the MPUC or the Minnesota Department of Commerce ("MDOC") if either entity "determines that any person is violating or about to violate this section." Id., subd. 8. The MPUC or MDOC may "refer the matter to the attorney general who shall take appropriate legal action." Id. The NGEA may also "be enforced by the attorney general." Id.

B. This Lawsuit

Plaintiffs are the State of North Dakota; the Industrial Commission of North Dakota; the Lignite Energy Council, a North Dakota trade association; Basin Electric Power Cooperative, a non-profit whose core business is generating and transmitting wholesale electric bulk power to customers; the North American Coal Corporation, the largest lignite coal producer in the United States; Great Northern Properties Limited Partnership, an owner of land in North Dakota containing surface mineral lignite; Missouri Basin Municipal Power Agency d/b/a Missouri River Energy Services, an electric utility; and Minnkota Power Cooperative, Inc., a nonprofit Minnesota cooperative wholesale power provider to member owned distributors and cooperatives. (Am. Compl., Doc. No. 9, ¶¶ 12-19.) Defendants are the Commissioners of the MPUC, the Commissioner of the MDOC, and the Minnesota Attorney General, each in their official capacities. (Id. ¶¶ 20-22.)

Plaintiffs sued Defendants on November 2, 2011 and filed an amended complaint on December 1, 2011. (Doc. Nos. 1, 9.) In Count I, Plaintiffs assert that Minn. Stat. § 216H.03, subd. 3(2)-(3) violates the Commerce Clause of the United States Constitution. (Id. ¶¶ 85-98.) In Counts II and III, Plaintiffs claim that Minn. Stat. § 216H.03, subd. 3(2)-(3) violates the Supremacy Clause of the United States Constitution because the statute is preempted by the Clean Air Act, 42 U.S.C. §§ 7410 et seq. ("CAA") and the Federal Power Act, 16 U.S.C. §§ 791a et seq. ("FPA"). (Id. ¶¶ 99-118.) In Count IV, Plaintiffs allege that Minn. Stat. § 216H.03, subdivision 3(2)-(3) violates the Privileges and Immunities Clause of the United States Constitution. (Id. ¶¶ 119-127.) In Count V, Plaintiffs seek a declaratory judgment that the FPA preempts Minn. Stat. § 216H.03, subd. 3(2)-(3). (Id. ¶¶ 128-133.) In Count VI, Plaintiffs allege that Minn. Stat. § 216H.03, subd. 3(2)-(3) violates the Due Process Clause of the Fourteenth Amendment of the United States Constitution. (Id. ¶¶ 134-143.)

Plaintiffs further request a declaratory judgment adjudicating that Minn. Stat. § 216H.03, subd. 3(2)-(3) is unconstitutional and injunctive relief enjoining its enforcement. (Id. at pp. 39-40.) Plaintiffs also request an award of costs and expenses incurred in the litigation, including reasonable attorneys' fees pursuant to 42 U.S.C. § 1988(b). (Id)

On December 7, 2011, the Defendants moved for Judgment on the Pleadings on Counts II through VI of Plaintiffs' Amended Complaint. (Doc. No. 11.) Defendants also moved to dismiss the Attorney General as a party to this action. (Id.) Oral argument was held on April 12, 2012. (Doc. No. 20.) The Court then requested supplemental briefingaddressing the role of various entities related to the generation, transmission, and distribution of electric power in the electrical utility sector to enable the Court to assess the impact of this statute on the delivery of electric power in this state. (Doc. Nos. 24.)

On August 21, 2012, the Court sua sponte ordered the parties to submit supplemental briefing on whether the action should be stayed under the doctrine of primary jurisdiction so that the parties could petition the Federal Energy Regulatory Commission ("FERC") on the issue of whether Minn. Stat. § 216H.03, subd. 3(2)-(3) is preempted by the FPA. (Doc. No. 27.) The Court also requested that the parties address whether the entire action should be stayed or only the FPA preemption claim if the Court were to grant primary jurisdiction to FERC. (Id.) The parties filed supplemental briefs addressing those questions on August 31, 2012. (Doc. Nos. 28-29.)

A. Standard of Review

A court should grant judgment on the pleadings only if the moving party clearly establishes that there are no material issues of fact and that it is entitled to judgment as a matter of law. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). A court evaluates a motion for judgment on the pleadings brought under Rule 12(c) of the Federal Rules of Civil Procedure under the same standard as a motion brought under Rule 12(b)(6). See Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).

In deciding a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must accept the facts alleged in the complaint as true and grant all reasonable inferences in favor of the plaintiff. Crooksv. Lynch, 557 F.3d 846, 848 (8th Cir. 2009). Although a complaint is not required to contain detailed factual allegations, "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). A court may consider the complaint, matters of public record, orders, materials embraced by the complaint, and exhibits attached to the complaint in deciding a motion to dismiss under Rule 12(b)(6). Porous Media, 186 F.3d at 1079.

B. Federal Preemption

The Defendants first move to dismiss Counts II, III, and V of Plaintiffs' Amended Complaint, which allege that the FPA and CAA preempt Minn. Stat. § 216H.03, subd. 3(2)-(3), arguing that this Court should find no preemption as a matter of law.

Federal preemption...

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