Utilities, once represented by UARG, now part of the ‘Electric Generators for a Sensible Transition’ in their suit against the EPA

A new ad hoc coalition of electric utilities has sued the Environmental Protection Agency (EPA) over its newly proposed rules to reduce greenhouse gas emissions from existing coal and new gas plants.

The coalition, called the “Electric Generators for a Sensible Transition,” is represented by the same attorneys who represented a previous, seemingly similar ad hoc utility litigation coalition, the Utility Air Regulatory Group (UARG), which disbanded amid Congressional oversight investigations in 2019. 

“Electric Generators for a Sensible Transition” is the latest in a long line of ad hoc groups formed by utilities as vehicles for their efforts to legally challenge clean air and water rules. McGuireWoods lawyers Allison D. Wood, Makram B. Jaber, and Aaron M. Flynn are representing the Electric Generators for a Sensible Transition. Wood, Jaber and Flynn previously worked for years at the firm Hunton Andrews Kurth, formerly known as Hunton & Williams.

In the initial filing on May 10, the McGuireWoods attorneys disclosed that the Electric Generators for a Sensible Transition includes some of the country’s largest investor-owned utilities, including American Electric Power and its subsidiaries, Arizona Public Service, and Duke Energy.

Additional Electric Generators for a Sensible Transition members are Talen Generation and Talen Montana Holdings, Vistra, and the American Public Power Association (APPA). Talen Generation operates a portfolio mostly of coal, gas, and oil plants in the PJM grid region, covering Mid-Atlantic and some Midwestern states. Talen Montana Holdings includes the Colstrip Steam Electric Station in Colstrip, Montana. Vistra is the largest competitive power generator, with a fleet consisting mainly of coal and gas plants across several wholesale power markets. APPA is the trade association for community-owned utilities, such as the Salt River Project in Arizona, the Los Angeles Department of Water & Power, Austin Energy, the Nebraska Public Power District, and hundreds of others. 

Ohio Valley Electric Corporation (OVEC), which owns two coal plants in Indiana and Ohio, is also part of the Electric Generators for a Sensible Transition. OVEC is owned by a consortium of utilities that includes AEP, AES Corporation (owner of AES Indiana and AES Ohio), Buckeye Power, CenterPoint Energy, Duke Energy, FirstEnergy, PPL Corporation (owner of Louisville Gas & Electric, Kentucky Utilities, and Rhode Island Energy), and Wolverine Power Supply Cooperative. AEP holds the largest equity stake of OVEC, at 43%.

In its petition for a stay of the rules pending judicial review, the coalition disclosed additional members, including Ameren Missouri, Evergy, Louisville Gas & Electric, Kentucky Utilities, NRG Energy, NRG Texas Power, and Southern Company. 

Wood, Jaber and Flynn historically represented these same utilities as lawyers for the now-defunct UARG. 

Former Utility Air Regulatory Group attorneys involved

UARG was a coalition that represented utilities – but did not disclose its utility members – and which had been a party in over 200 lawsuits since 2001, according to federal court records, including challenges to EPA Clean Air Act regulations, such as the Clean Power Plan proposed by the Obama administration. 

The Energy and Policy Institute detailed in its 2017 report Paying For Utility Politics how utilities across the country forced their customers to pay for their dues to UARG and other trade associations out of their monthly bills. Utilities claimed the payments allowed the company to access timely information about environmental regulations and technical materials.

Documents obtained and published by Politico in February 2019 revealed UARG’s actions and full membership roster. The materials outlined goals for a meeting of the group’s policy committee to attack Obama-era clean air and public health rules. The documents also detailed that while UARG had various technical committees, its 2017 budget allocated at least $4.47 million to legal fees, while allocating only $265,721 to technical expenses. According to InsideEPA, a utility industry source said that one major complaint among the members in UARG was that it lacked a litigation advisory committee and would unilaterally pursue suits that the source describes as “litigation run amok.”

Two months after Politico published the materials, Democratic leaders of the House Energy and Commerce Committee sent letters to several utility CEOs asking for information about former UARG attorney and then-EPA official Bill Wehrum’s relationship with the group and its member companies. The Congressional letters also requested that the utilities state whether their UARG annual contributions came from customers or shareholders.

“This is about transparency. Ratepayers have a right to know if they’re involuntarily paying for a secret campaign to undermine critical public health protections,” Rep. Pallone told Politico.

Utilities began to flee from the ad hoc coalition, and weeks later, UARG announced that its remaining members had decided to disband the embattled project after more than 40 years.

UARG attorneys leave for McGuireWoods and create new coalitions; utility looked to recover costs from customers

Almost a year after Hunton’s UARG project disbanded, the three Hunton Andrews Kurth lawyers who had represented UARG – Wood, Flynn, and Jaber – began working at McGuireWoods. 

In April 2021, the Residential Utilities Division in the Minnesota Attorney General (AG)’s office uncovered how Otter Tail, a Minnesota electric utility, proposed to keep charging customers for UARG-related expenses.

In testimony, the AG’s office said, “Otter Tail claims that the test-year cost for UARG dues is actually for two subscription services provided by the McGuireWoods law firm: the “McGuireWoods Clean Air Act Monitoring Service” and the “McGuireWoods Climate Legal Group” … Otter Tail asserts that the McGuireWoods subscription group “takes no positions and does not advocate, file comments, or engage in litigation or lobbying.””

The Minnesota Public Utilities Commission ruled that Otter Tail cannot recover expenses for McGuireWoods’ services:

“Although the Company argues that these organizations provide valuable services and information, it is unclear how the membership dues connect to the provision or improvement of utility services … In future cases, if the Company wishes to seek recovery for McGuireWoods services, the Company must provide an accounting of the legal activities that are provided by McGuireWoods, the amount of subscription cost allocated to each of these activities, and McGuireWoods’ billing-hour details for the legal services under the subscriptions. This information would help the Commission evaluate the services’ value to ratepayers.” 

Since McGuireWoods and Otter Tail claimed that the expenses for the firms’ “Clean Air Act Monitoring Service” and the “Climate Legal Group” were explicitly not being used for litigation, it’s possible that the utilities and McGuireWoods may have needed to create a new ad hoc coalition to be used for direct litigation. 

The Energy and Policy Institute asked each investor-owned utility participating in the Electric Generators for a Sensible Transition if it would seek to recover the costs of any payments for the coalition from customers. None responded.

The same utilities do attempt to recover expenses for dues to other trade associations, like the Edison Electric Institute (EEI). But pushback to that practice has been increasing. Most recently, the Arizona Corporation Commission disallowed Arizona Public Service from recovering its EEI dues from customers, which meant an annual savings of over $1.1 million for customers. “The Commission does not support paying for APS’s membership in advocacy organizations such as EEI with ratepayer-derived funds, and thus is not including in APS’s operating expenses the … dues paid for APS’s EEI membership,” wrote Arizona Corporation Commission Chairman James O’Connor. EEI also filed a lawsuit against the EPA’s greenhouse gas rule. 

Image source: U.S. Environmental Protection Agency Headquarters, Flickr.