Defending Utah’s Coal Hollow for $2 Million in Taxpayer Funds

Late Monday in Utah’s Natural Resources, Agriculture, and Environmental Quality Appropriations Subcommittee, Denise Dragoo, an attorney for Snell and Wilmer’s Salt Lake City office combined with administrators from Alton’s coal operations, asked for $2 million of Utah taxpayers’ monies to oversee a lawsuit with the State of California. The intended court fight would use yet an additional firm, Winthrop and Weinstine from the midwest, in an attempt to preserve Utah’s struggling coal industry. Representing the leaseholders of the Alton Coal Hollow mine, Dragoo’s law firm’s view (and Winthrop’s) is that the California law creating the effort to clear its skies is unconstitutional. In 2007, Thomas H. Boyd, a shareholder in Winthrop’s Litigation group, had filed in U.S. District Court in St. Paul to argue that Minnesota’s Next Generation Energy Act was unconstitutional under the Commerce Clause.

Sponsoring the Utah appropriations motion was Representative Mike Noel (Republican – Kanab) who spoke on behalf of the Alton coal mining company. Noel asserted that the time was right to protect Utah’s coal economy. Voices on the committee immediately wondered about the potential return on the possibility of Utah’s $2 million investment, with Representative Kay Christofferson (Republican – Lehi) wondering why Alton itself would be exempt from sponsoring some part of the litigation as well. Senator Jim Dabakis (Democrat – Salt Lake City) said, “I’m just afraid that we’ll end up spending the money and have nothing to show for it.”

After initial responses, a subsequent hearing took place in the suit brought by Boyd for the State of North Dakota. That suit combined with several utilities and other interests, challenged the constitutionality of the Minnesota “Next Gen” statute, which prohibited purchases of coal-generated electricity from other states. Boyd, who represented North Dakota and the utilities in the suit, argued the statute sought to regulate generation activities and transactions that occur entirely outside of Minnesota. He claimed that, “this [was] a resource-elimination statute.” He said that while many states have laws to encourage utilities’ use of clean energy, “the difference between Minnesota’s renewable energy law and laws in other states is that the other laws talk about diversifying electricity sources,” whereas the Minnesota law sought to entirely eliminate a form of generation from the interstate marketplace altogether. As such, Boyd argued that the statute violated the Commerce Clause of the federal constitution, and it was also preempted by the Federal Power Act and the Clean Air Act. That view ultimately prevailed in the Eighth Circuit.

Dragoo hopes to employ this same strategy for the Alton Coal Hollow Mine in a possible suit opposing California’s SB1368 that was enacted also in 2007 and mandated clean energy sources for California’s utilities. California has successfully cleared their air in many areas that once were choked with pollution and has been committed to a new energy future. Peripheral players to the controversial appropriations proposal by Noel and Dragoo wondered if Utah could have standing in such a suit brought against the California statute.

Dragoo indicated that the $2 million figure would cover the cost of a motion for summary judgment only, and that potential appeals could require additional funding. She had not responded to requests for clarification on the matter requested by Utah Political Capitol. Subsequent rulings in the Eighth Circuit ultimately sided with North Dakota, allowing the export of its coal generated electrons to Minnesota under retreating economic pressure, in much the same manner that Alton’s Coal Hollow mine may continue to find itself. Officials with the mine testified of lost jobs and sales in an industry some describe as outmoded in the 21st Century.

The $2M funding request is currently ranked #21 on this list generated Monday and is headed to Executive Appropriations for further consideration by Utah lawmakers.

(California’s SB1368 defined here).

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