In re Minnesota Power’s Petition for Approval of the EnergyForward Resource Package

Reversing an intermediate appellate court’s decision, the Minnesota Supreme Court held that the Minnesota Public Utilities Commission’s consideration of affiliated-interest agreements governing construction and operation of a natural gas power plant in Wisconsin by a Minnesota utility’s affiliate did not require review under the Minnesota Environmental Policy Act (MEPA). Under the utility’s agreements with the affiliate—which owned half of the Wisconsin power plant and half of the power generated by the plant—the affiliate agreed to sell 48% of capacity produced by the plant to the utility. First, the Supreme Court concluded that the statute requiring Commission approval of affiliated-interest agreement did not require environmental review. The court acknowledged that the Commission’s determination of whether an affiliated-interest agreement was “reasonable and consistent with the public interest” could take environmental impacts into account, but the court found that this “focused consideration” was “narrower than the broad consideration of the environmental impact of a utility action” in an environmental review under MEPA. Second, the Supreme Court rejected the intermediate appellate court’s conclusion that the Commission’s approval of the agreements was an “indirect cause” of the physical activities of constructing and operating the power plant and therefore a “project” under MEPA. The Minnesota Supreme Court adopted the U.S. Supreme Court’s causation standard for the National Environmental Policy Act in Department of Transportation v. Public Citizen, 541 U.S. 752 (2004), and concluded that “in light of the informational role served by MEPA review, the line that must be drawn requires a ‘reasonably close causal relationship’ between the environmental effect and the alleged cause.” In this case, the Minnesota Supreme Court found that MEPA review did not apply to the Commission’s decision because it did not have the authority to permit construction and operation of the power plant, which the utility said would be built and run without the Commission’s approval. The court remanded for the Court of Appeals to determine whether the Commission’s approval of the affiliated-interest agreements was supported by substantial evidence because the Court of Appeals had not yet addressed that issue. A dissenting justice would have held that MEPA’s plain language encompassed the Commission’s approval of the agreements and that application of MEPA would not regulate interstate commerce in violation of the Commerce Clause.

The Minnesota Supreme Court granted a petition to review a Minnesota Court of Appeals decision that found that the Minnesota Public Utilities Commission should have complied with the Minnesota Environmental Protection Act (MEPA) when it approved agreements associated with construction of a new natural gas power plant in Wisconsin.