The Federal District Court in Minneapolis ruled that Minnesota’s “Next Generation Act,” which sought to limit increases in statewide carbon dioxide emissions from power plants, including from power plants located outside the state, is unconstitutional.

In December of 2011, the State of North Dakota, along with several electric utilities and coal mining companies, sued Minnesota alleging that the Minnesota law violated the Commerce Clause of the U.S. Constitution. At issue was the Minnesota Next Generation Act passed in 2007 at the urging of then Governor Pawlenty.

Among other things, the law purported to prohibit the “importation” of electricity from power plants that contributed to the state’s “power sector carbon dioxide emissions,” which includes emissions from power plants located outside of Minnesota if the electric generation is consumed in Minnesota. This created problems for North Dakota because it has several coal-fired power plants that transfer electricity—through high voltage transmission lines between the two states – to consumers in Minnesota.

North Dakota asked the court to declare the law unconstitutional based on, among other things, a violation of the Commerce Clause. The Commerce Clause grants Congress the exclusive authority to regulate “interstate commerce.” The negative implication of that clause – known as the dormant Commerce Clause—is that states may not enact laws that discriminate against or unduly burden interstate commerce.

The court found that the Minnesota statute was a “classic example” of an attempt by a state to control conduct occurring wholly outside its borders. An important point to the court was the way in which the national electric grid operates: transmission of electric energy does not recognize state boundaries. That is, when a power plant in another state generates power, the power instantly becomes part of a vast “pool of electrons” and there is no way to prevent those electrons from being consumed in Minnesota—and in effect no way that the carbon dioxide emissions associated with the energy production could not be counted as contributing to Minnesota’s “statewide power sector” emissions the statute sought to prohibit.

Minnesota’s Governor Dayton indicated that the state will appeal the decision.