Court upholds Minn. transmission law opposed by feds
The U.S. District Court for the District of Minnesota on Thursday dismissed a lawsuit taking aim at a 2012 “right of first refusal” law giving utilities first dibs on building power lines that connect to their existing facilities.
Opponents of the statute, including the Trump administration, say it gives in-state companies an unfair advantage and erodes market competition.
But the court concluded last week “that any burden on interstate commerce is outweighed by the benefits of Minnesota’s right-of-first-refusal statute.”
The lawsuit arose in 2017 when out-of-state developer LSP Transmission Holdings LLC argued that the law violates the “dormant” Commerce Clause because it discriminates against interstate commerce.
The Justice Department weighed in two months ago, expressing concern that the Minnesota law and others like it could undermine competition in electricity markets (Energywire, April 17).
The state law was crafted in response to a 2011 Federal Energy Regulatory Commission rule aimed at reforming regional transmission planning and enhancing competition. The federal government’s decision to support LSP’s position in the lawsuit highlights ongoing tension between state and federal authorities overseeing the electric system.
Judge Donovan Frank, a Clinton appointee, sided with Minnesota. He rejected LSP’s claims and ruled that DOJ’s statement was untimely and, in any case, unpersuasive.
Frank concluded that the state law does not amount to discrimination against out-of-state companies because it draws a “neutral distinction” between incumbent utilities and others. He also found that it would be disruptive for the court to intervene in how the state regulates utilities.
“Under [the state law,] Minnesota not only gives existing owners a right of first refusal to build new transmission lines that will connect to their existing facilities, but in return Minnesota also places extensive regulatory burdens on those owners,” he wrote. “Any intervention by the Court could upset the balance between those burdens and regulation.”
A lawyer for LSP said the company is reviewing the decision. He did not comment on whether LSP plans to challenge the ruling at the 8th U.S. Circuit Court of Appeals.