Minnesota Supreme Court weighs whether new natural gas plant in Wisconsin needs further review

DULUTH – The Minnesota Supreme Court will decide if state regulators must pursue a lengthy environmental review for a natural gas plant proposed in Wisconsin following arguments before the court Tuesday.

Duluth-based Minnesota Power intends to build the $700 million plant in Superior with Wisconsin's Dairyland Power Cooperative, which will split the cost and power generated. Wisconsin and Minnesota regulators have approved the plans, but in December the Minnesota Court of Appeals ruled further environmental review is needed.

Jason Marisam, an assistant attorney general representing the Minnesota Public Utilities Commission (PUC), said the state's environmental protection laws do not apply to the commission's decision to approve "affiliate-interest" agreements that allow Minnesota Power to draw power from the plant.

"We are arguing that the decision by the Court of Appeals was wrong," Marisam said during Tuesday's virtual hearing. "We are not authorizing the construction of this plant, we are not authorizing the operation of this plant."

Those decisions rest with Wisconsin regulators, and, the commission wrote in a filing, the Minnesota Environmental Protection Act "only applies to agency decisions that cause environmental effects."

Evan Mulholland, an attorney for the Minnesota Center for Environmental Advocacy, said justices have a "straightforward decision" on the need for an environmental review for the project. He argued a power plant built several miles from the state border that is owned in part by a Minnesota company, paid for by Minnesota ratepayers and will send electricity into the state will have localized environmental impacts that deserve a full review.

"It's remarkable in this case that the amount of carbon dioxide that Minnesota Power predicts will be emitted from this plant is a trade secret. The public doesn't know," Mulholland said.

In 2018 the PUC approved Minnesota Power's stake in the project over the objections of ratepayer and environmental groups, who appealed the decision. The Court of Appeals ordered the PUC to determine whether the plant "may have the potential for significant environmental effects and, if so, to prepare [a review] before reassessing whether to approve the affiliated interest agreements."

Minnesota utilities said requiring an environmental review of a project located in Wisconsin would create a burdensome precedent with major implications, and Supreme Court Justice Margaret Chutich raised the issue of whether requiring the review would "do something that's going to require maybe unnecessary environmental review in many decisions."

Marisam said that "we're very concerned" about a new standard, and groups representing rural and cooperative utilities filed a brief echoing those concerns.

"The principle preventing extraterritorial state regulation of energy generation or transmission is vital to the increasingly interconnected energy markets" members buy power from, wrote the Minnesota Rural Electric Association and National Rural Electric Cooperative Association. "If construction of new generation or transmission facilities … is hindered, all types of electric utilities can be harmed."

Mulholland countered that "upholding the Court of Appeals decision will not have these wild effects," he said. "Minnesota Power and the PUC both greatly exaggerate the effects of the appeals court ruling."

Minnesota Power, which has about 145,000 customers in northeast and central Minnesota, hopes to have the plant built by 2025. The company is phasing out coal-power generation and is on track to generate 50% of its electricity from renewable sources next year.

The Nemadji Trail Energy Center natural gas plant would produce between 525 and 625 megawatts of power and is needed when the sun isn't shining and wind isn't blowing, the utility contends.

Opponents of the plant have said utilities shouldn't be investing in more fossil fuel infrastructure and have pushed for years to have a full environmental review of the proposed plant that would examine its effects on climate change.

"The only way the public in Minnesota will understand the true effects of this proposed plant on our environment is for the PUC to conduct an [environmental review] on the project, and that will only happen if the Supreme Court justices affirm the Court of Appeals decision," said Sarah Horner, spokeswoman for the Minnesota Center for Environmental Advocacy.

A Supreme Court decision expected by the middle of next year.

Brooks Johnson • 218-491-6496