State of North Dakota v. Beverly Heydinger
825 F.3d 912
| 8th Cir. | 2016Background
- Minnesota’s Next Generation Energy Act (NGEA) bars (1) constructing in-state new large energy facilities that increase statewide CO2 emissions, (2) importing or committing to import power from out-of-state new large facilities that would contribute to statewide CO2 emissions, and (3) entering into new long-term power purchase agreements that would increase statewide CO2 emissions. Enforcement is through the Minnesota Public Utilities Commission (MPUC) and the Minnesota Department of Commerce (MDOC).
- Regional wholesale electricity is organized through MISO (Midcontinent Independent System Operator), which centrally dispatches generation and operates interstate markets so electrons on the grid are undifferentiated and bids are accepted market-wide.
- Plaintiffs (State of North Dakota and three out-of-state generation/transmission cooperatives: Basin, Minnkota, MRES, etc.) sued, alleging the NGEA provisions violate the dormant Commerce Clause by regulating extraterritorially and burdening interstate commerce; they sought and obtained a permanent injunction in district court.
- The district court found plaintiffs had standing and ripeness, declined Pullman abstention, and held §216H.03(3)(2)-(3) unconstitutionally extraterritorial as a per se dormant Commerce Clause violation; it enjoined enforcement of those subsections.
- On appeal, the Eighth Circuit affirmed the district court’s judgment. Two concurrences agreed with the judgment but would resolve the case on federal preemption grounds (Federal Power Act and Clean Air Act) rather than on the extraterritoriality doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing | Plaintiffs (Basin/Minnkota/MRES) suffer probable economic injury because NGEA chills out-of-state transactions and investment | State says enforcement threat is speculative; agencies won’t apply statute to MISO short-term markets | Standing satisfied; at least one plaintiff (Basin) demonstrated injury-in-fact traceable to statute and redressable by injunction |
| Ripeness | Challenge is fit and withholding review forces costly business gambles and harms regional reliability | State urged ripeness abstention pending state interpretation | Claims are ripe; legal issues predominate and hardship from delay is substantial |
| Pullman abstention | Plaintiffs argued federal court should decide federal constitutional issue now | State urged abstention so MPUC/MDOC could interpret statute, possibly mooting federal question | Abstention declined: statute not plausibly ambiguous and State had years to clarify but did not; limiting construction unlikely to avoid federal question |
| Dormant Commerce Clause — Extraterritoriality | NGEA subsections (2)–(3) have the practical effect of controlling out-of-state conduct by forbidding out-of-state generators and contracts that may result in electricity consumed in Minnesota; per se invalid | State contended the law targets in-state consumption or only bilateral contracts and does not control commerce wholly outside Minnesota (and argued extraterritorial doctrine should be limited to price controls) | Court affirmed per se extraterritoriality violation: the prohibitions reach out-of-state transactions and compel out-of-state conduct to Minnesota’s terms; statute invalid as applied and enjoined |
Key Cases Cited
- Pub. Util. Comm’n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83 (describing Congress’s grant of interstate wholesale/transmission jurisdiction)
- New York v. FERC, 535 U.S. 1 (2002) (federal/state jurisdictional division under the Federal Power Act and limits on state regulation of interstate wholesale markets)
- Healy v. Beer Inst., 491 U.S. 324 (1989) (dormant Commerce Clause extraterritoriality doctrine; state law invalid if it controls conduct beyond state borders)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (balancing test for nondiscriminatory state laws that incidentally burden interstate commerce)
- Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986) (state regulation affecting interstate commerce may be invalid if it effectively regulates out-of-state actors)
- Edgar v. MITE Corp., 457 U.S. 624 (1982) (invalidating state statute in part for sweeping extraterritorial effects)
- Cotto Waxo Co. v. Williams, 46 F.3d 790 (8th Cir.) (explaining extraterritoriality: invalid when statute requires out-of-state commerce to be conducted on in-state terms)