United States District Court, E.D. Arkansas, Western Division
ORDER
Kristine G. Baker, United States District Judge
Before
the Court are motions to intervene filed by prospective
intervenors the State of Arkansas (the “State”),
ex rel. Arkansas Attorney General Leslie Rutledge
(“Attorney General”), by and through the Consumer
Utilities Rate Advocacy Division (“CURAD”), and
the Arkansas Affordable Energy Coalition
(“Coalition”) (Dkt. Nos. 17, 26). Plaintiffs
Sierra Club and the National Parks Conservation Association
(“NPCA”) oppose CURAD and the Coalition’s
motions to intervene (Dkt. No. 35). Defendants Entergy
Arkansas LLC (“Entergy Arkansas”), Entergy Power
LLC (“Entergy Power”), and Entergy Mississippi
LLC (“Entergy Mississippi”) also oppose CURAD and
the Coalition’s motions to intervene (Dkt. Nos. 34,
36). CURAD and the Coalition filed replies in further support
of their motions (Dkt. Nos. 41, 42).
The
Court acknowledges that time has passed since these motions,
as well as other pending motions, were filed (see
Dkt. Nos. 44, 45, 46). The Court is aware of a matter
involving the same parties instituted after this lawsuit at
the Arkansas Public Service Commission (“APSC”),
Docket No. 18-079-U. For the following reasons, the Court
directs the parties to brief further specific issues
identified in this Order. The Court will set a briefing
schedule and hearing on the pending motions, after
consultation with the parties. The Court has under advisement
the pending motions.
I.
Background
Plaintiffs
Sierra Club and the NPCA filed this action against Entergy
Arkansas, Entergy Power, and Entergy Mississippi under the
citizens suit provisions of the Clean Air Act
(“CAA”), 42 U.S.C. §§ 7401-7671q, to
enforce the national ambient air quality standards
(“NAAQS”) provisions of the CAA and its
implementing regulations (Dkt. No. 1). Plaintiffs allege that
defendants violated the CAA and its implementing regulations
because power plants located in Independence County, Arkansas
(the “Independence” plant), and Jefferson County,
Arkansas (the “White Bluff” plant), underwent
“major modifications” without obtaining
prevention of significant deterioration (“PSD”)
permits or modified Part 70 permits for such major
modifications (Dkt. No. 1, ¶¶ 81-104). Plaintiffs
assert that this Court has subject matter jurisdiction over
the claims pursuant to 42 U.S.C. § 7604(a) and 28 U.S.C.
§ 1331 (Dkt. No. 1, ¶ 2). Plaintiffs set forth
their claims in a 50-page complaint, explaining the
regulatory, legal, and factual basis for their claims. They
seek injunctive and declaratory relief and civil penalties
and, according to plaintiffs, all of which plaintiffs claim
are authorized pursuant to 28 U.S.C. §§ 2201 and
2202 and 42 U.S.C. §§ 7413, 7604(a) (Id.).
Plaintiffs maintain that, to the extent required by 42 U.S.C.
§ 7604(b), plaintiffs sent notices of intent to sue for
violations of the CAA on January 10, 2018, and February 8,
2018, to defendants and all government officers required to
receive such notice by 42 U.S.C. § 7604(b) and 40 C.F.R.
§ 54.2 (Id., ¶ 4).
A.
NAAQS Requirements
The
NAAQS are regulated and enforced by a variety of federal and
state statutes and regulations. As relevant here, each state
is required to classify areas within their boundaries as
attainment, nonattainment, or unclassifiable with respect to
certain pollutants, including SO2 and
NO2. Each state must adopt a state implementation
plan (“SIP”) that creates a prevention of
significant deterioration program (“PSD program”)
and submit that SIP to the Environmental Protection Agency
(“EPA”) for approval; if the EPA does not approve
the proposed SIP, then the EPA may propose a federal
implementation plan (“FIP”). Under the CAA, PSD
programs must prohibit the construction of a “major
emitting facility” in attainment or unclassifiable
areas unless such a facility has been issued a PSD permit and
employs the “Best Available Control Technology”
(“BACT”). Separately, Title V of the CAA, 42
U.S.C. §§ 7661-7661f, established an operating
permit program (“Part 70 Operating Permit
program”) for certain sources, including “major
sources” and any source required to have a permit under
a PSD program. 42 U.S.C. § 7661a(a). Title V is
implemented primarily by the states under EPA oversight.
See Sierra Club v. Otter Tail Power Co., 615 F.3d
1008, 1012 (8th Cir. 2010). “In states with EPA
approved programs, Title V permits are issued by the state
permitting authority but are subject to EPA review and
veto.” Id. The EPA has approved a SIP
submitted by Arkansas containing a PSD program and a Part 70
Operating Permit program. 40 C.F.R. § 52.172.
B.
Regional Haze Requirements
In
1999, the EPA promulgated the Regional Haze Rule, which calls
for state and federal agencies to work together to improve
visibility in national parks and wilderness areas. 40 C.F.R.
pt. 51. To implement the Regional Haze Rule, the EPA directed
the states to submit a Regional Haze SIP meeting the
requirements of the Regional Haze Rule. 40 C.F.R. §
51.308(b). Arkansas submitted a Regional Haze SIP to the EPA
on September 23, 2008, and August 3, 2010, along with
supplementation on September 27, 2011. 40 C.F.R. §
52.173(a). In March 2012, the EPA partially approved and
partially disapproved of the proposed Regional Haze SIP.
Id. In response, the EPA then finalized a Regional
Haze FIP for Arkansas. Promulgation of Air Quality
Implementation Plans; State of Arkansas; Regional Haze and
Interstate Visibility Transport Federal
Implementation Plan, 81 FR 66332-01 (September 27,
2016). Public utilities filed a petition for review of the
Regional Haze FIP at the Eighth Circuit Court of Appeals,
where certain portions of the Regional Haze FIP remain
stayed. State of Arkansas, et al. v. EPA, et al.,
No. 16-4270 (8th Cir. 2016).
The
stakeholders-including plaintiffs and defendants-then began
negotiating the content of a revised Regional Haze SIP that
would replace the contested Regional Haze FIP. During this
process, defendants filed comments indicating that they
intend to cease combusting coal at White Bluff by the end of
2028 and that they “anticipated ceasing to combust coal
at the Independence units by the end of 2030.” (Dkt.
No. 34-1, at 66). The comments also explained that the
“Lake Catherine Unit 4 will retire by the end of 2025 .
. . .” (Id., at 68).
As part
of the Regional Haze SIP replacement process, Entergy
Arkansas entered into an Administrative Order with the
Arkansas Department of Environmental Quality
(“ADEQ”) in August 2018. This Order requires
Entergy Arkansas to, among other things, permanently cease
coal-fired operation at White Bluff no later than the end of
2028 (Id., at 79). The Administrative Order also
requires Entergy Arkansas to meet certain SO2
emission requirements at Independence and White Bluff
(Id.). On August 8, 2018, Governor Hutchinson
transmitted a Revised Regional Haze SIP to the EPA, in which
the SIP recognizes the “planned retirement of Entergy
Lake Catherine, the planned cessation of coal-fired
operations at Entergy White Bluff by the end of 2028, and the
planned cessation of coal-fired operations at Entergy
Independence by the end of 2030.” (Id., at
146).
C.
Claims And Proposed Settlement Agreement
Plaintiffs
allege that, at the times relevant to this complaint,
Independence County and Jefferson County have both been
classified as attainment or unclassifiable for SO2
and NO2 (Dkt. No. 1, ¶¶ 30-31).
Plaintiffs further allege that, from September 14, 2008, to
November 4, 2008, and from February 28, 2009, to April 17,
2009, defendants made modifications to the Independence plant
without obtaining a required PSD permit or a modified Part 70
permit (Id., ¶¶ 66-75). Plaintiffs also
allege that from September 14, 2007, to November 18, 2007,
Entergy Arkansas made modifications to the White Bluff plant
without obtaining a required PSD permit or a modified Part 70
permit (Id., ¶¶ 76-80).
In
their complaint, with respect to the Independence plant,
plaintiffs allege that physical changes and changes in the
method of operation at Unit 1 of the Independence plant
occurred during the 2009 Independence Unit 1 Outage
(Id., ¶¶ 66-67). Plaintiffs maintain that
these changes resulted in post-project significant emissions
increases and significant net emissions increases for
SO2, a major modification occurred for that
pollutant, that defendants did not obtain a PSD permit for
that major modification, and that defendants are operating
the Independence plant without completing a permit
application for such permit, without the permit itself, and
without complying with the conditions that would be imposed
by such permit, including but not limited to emission
limitations that would be imposed by that permit pursuant to
BACT requirements (Id., ¶¶ 68-69).
Plaintiffs also allege that defendants did not obtain a
modified Part 70 permit prior to commencing work on the
modification described, yet are still operating the
Independence plant without that modified Part 70 permit,
which plaintiffs allege would have incorporated terms and
conditions from a PSD permit, including emission limitations
that would be imposed by a PSD permit pursuant to BACT
requirements (Id., ¶ 70). Plaintiffs make these
same allegations with respect to a 2008 Independence Unit 2
Outage at the Independence plant with respect to a major
modification for SO2, a PSD permit for the major
modification, and a modified Part 70 permit (Id.,
¶¶ 71-75).
With
regard to the White Bluff plant, plaintiffs allege that
changes occurring during the 2007 White Bluff Unit 2 Outage
resulted in post-project significant emissions increases and
significant net emissions increases for NOx, a
major modification occurred for that pollutant, that
defendants did not obtain a PSD permit for that major
modification, and that defendants are operating the White
Bluff plant without completing a permit application for such
permit, without the permit itself, and without complying with
the conditions that would be imposed by such permit,
including but not limited to emission limitations that would
be imposed by that permit pursuant to BACT requirements
(Id., ¶¶ 76-79). Plaintiffs also allege
that defendants did not obtain a modified Part 70 permit
prior to commencing work on the modification described, yet
are still operating the White Bluff plant without that
modified Part 70 permit, which plaintiffs allege would have
incorporated terms and conditions from a PSD permit,
including emission limitations that would be imposed by a PSD
permit pursuant to BACT requirements (Id., ¶
80). For relief, plaintiffs seek, in part, a declaration that
defendants have violated the CAA and an injunction barring
defendants from operating the Independence and White Bluff
plants except in accordance with the CAA and the Arkansas SIP
(Id., ¶¶ 105-106).
The
Eighth Circuit Court of Appeals examined the background of
the CAA, its requirements, and the federal and Arkansas state
laws that provide avenues for various challenges to the
CAA’s regulatory scheme in Nucor Steel-Arkansas v.
Big River Steel, LLC, 825 F.3d 444 (8th Cir. 2016). The
Court notes that, here, plaintiffs allege ongoing violations
by defendants under 42 U.S.C. § 7604(a)(1) at the
Independence and White Bluff plants.
On the
face of their complaint, plaintiffs’ set forth the
relevant provisions of the Arkansas SIP, PSD program, and
Title V program (Dkt. No. 1, ¶¶ 43-54). The Eighth
Circuit recognizes that § 7604(f), which defines
“emissions standard or limitation, ” encompasses
the provisions of the Arkansas SIP. Nucor, 825 F.3d
at 449-50. As a result, plaintiffs assert multiple claims
against defendants for violating the CAA and its implementing
regulations (Dkt. No. 1, ¶¶ 81-104).
Defendants
did not answer the complaint. Instead, shortly after the
complaint was filed, the parties filed a proposed Settlement
Agreement with the Court (Dkt. No. 11). The proposed
Settlement Agreement includes the following commitments: (1)
Entergy Arkansas shall permanently cease the combustion of
coal at White Bluff by the end of 2028; (2) Entergy Arkansas
shall permanently cease the combustion of coal at
Independence by the end of 2030; (3) Entergy Arkansas shall
permanently cease all operations of existing units at Lake
Catherine; (4) defendants shall commence development of 800
megawatts of renewable energy projects by the end of 2027;
(5) none of the parties shall challenge the provision of any
Regional Haze plan regarding White Bluff, Independence, or
Lake Catherine; (6) and Sierra Club shall voluntarily dismiss
its administrative proceeding regarding Arkansas’
Regional Haze SIP (Id., ¶¶ 9, 12, 15-17,
21). Plaintiffs filed notice of a 45-day review and comment
period (Dkt. No. 16). That notice also stipulated that,
following the conclusion of the 45-day review and comment
period, plaintiffs intended to work with defendants to review
and take into account any comments submitted by the federal
government and thereafter move the Court to enter the
Settlement Agreement (Id.). Defendants then filed
notice of a letter from the United States Department of
Justice regarding the proposed Settlement Agreement (Dkt. No.
28). That letter notified the Court that the United States
had reviewed the proposed Settlement Agreement and Consent
Judgment in this action and did not object to its entry by
this Court (Id.).
D.
Proposed Intervenors
The
State of Arkansas, by and through the CURAD, filed a motion
to intervene in this action (Dkt. No. 17). The Coalition,
which is made up of “electric consumers, and
associations of consumers, that receive electric power from
the White Bluff and Independence plants, ” also moved
to intervene (Dkt. No. 26, at 3). The Coalition also includes
the Arkansas Natural Gas Consumers, Inc., “whose
members are large, industrial consumers of natural gas in
Arkansas.” (Id., at 4). According to the
Coalition, its purpose “is to advocate for and take
action to ensure an affordable and reliable energy supply in
the State of Arkansas.” (Id., at 5). The
proposed intervenors both move for intervention as a matter
of right pursuant to Federal Rule of Civil Procedure
24(a)(2). Both parties also seek permissive intervention
pursuant to Federal Rule of Civil Procedure 24(b)(1)(B).
In its
motion to intervene, CURAD states that it seeks
“intervention in this matter (a) to correct
misrepresentations present in the proposed Settlement
Agreement; (b) to inform the Court how and why the Settlement
Agreement usurps state regulatory authority over Entergy
Arkansas, Inc. . . . including its assets, and its rates; and
(c) to protect Arkansas utility ratepayers from the adverse
effects of the Settlement Agreement.” (Dkt. No. 17, at
3-4). In its motion to intervene, the Coalition also claims
that “[t]he Settlement Agreement will result in
significant economic harm to the members of the Coalition . .
. .” (Dkt. No. 26, at 5). Specifically, the Coalition
claims that “costs resulting from the early retirement
or fuel conversion of White Bluff and Independence will be
passed on directly to Arkansas ratepayers, including members
of the Coalition, ” “[t]he Coalition’s
electric consumers would be harmed if the White Bluff and
Independence plants are forced to cease operations or convert
to another fuel source before the end of their effective
operating life because electric service would become more
expensive and less reliable, ” “[t]he Settlement
Agreement would also reduce the demand for coal, and likely
would increase the demand for natural gas, since natural gas
currently is the least cost fuel to replace the firm
generation capacity of White Bluff and Independence, ”
and “large, industrial consumers of natural gas in
Arkansas” “would be harmed if White Bluff and
Independence switched their fuel source to natural gas,
because that would cause an increase in demand for natural
gas and gas transmission capacity in the state, putting
upward pressure on natural gas prices and transmission costs
to deliver natural gas.” (Dkt. No. 26, at 3-5). In
their replies, both CURAD and the Coalition assert that this
Court’s focus should be on the allegations in
plaintiffs’ complaint as it examines whether to permit
intervention (Dkt. Nos. 41, at 3; 42, at 2).
CURAD
and the Coalition seek to intervene not as plaintiffs but
instead as defendants in this action. Essentially, CURAD and
the Coalition propose stepping into the shoes of defendants.
“[T]he Attorney General in her proposed answer raises
affirmative defenses to the Plaintiffs’ CAA claims and
seeks to prevent the Plaintiffs from obtaining the relief
they seek (i.e., imposition of additional controls
at White Bluff and Independence based on BACT and the costs
that will be incurred to install those controls).”
(Dkt. No. 41, at 8). Likewise, the Coalition seeks to raise
issues, “including but not limited to[] whether this
Court has subject matter jurisdiction over Plaintiffs [sic]
claims, whether the Plaintiffs have standing, whether the
Defendants have the authority to enter into the Settlement
Agreement with the Plaintiffs without approval of other
regulatory authorities, whether the Settlement Agreement is
in the best interest of the Coalition members who obtain
electric power from the White Bluff and Independence plants,
and whether the Plaintiffs have a proper factual or legal
basis for the claims asserted in the Complaint.” (Dkt.
No. 26, at 5-6).
II.
Discussion
For the
following reasons, the Court is skeptical of whether either
proposed intervenor has Article III standing to intervene
based on alleged rate increases or economic harms, but the
Court has not firmly resolved this issue and would like to
hear further from the parties, to the extent they wish to
brief further this issue. At this stage of the litigation,
the Court is less certain with respect to CURAD’s
Article III standing based on its allegations related to a
usurpation of the State’s regulatory authority.
Further, consideration of those issues results in the
Court’s raising on its own motion concerns about the
Court’s subject matter jurisdiction in this case. As a
result, the Court directs the parties to brief further
certain issues and declines to examine at this point the
factors that dictate permissive intervention or intervention
as a matter of right. Before reaching those issues, the Court
wants to satisfy itself as to its subject matter jurisdiction
and as to the proposed intervenors’ Article III
standing.
A.
Summary Of Standing Arguments
CURAD
argues that it has Article III standing because “[t]he
State has a recognized interest in protecting consumers from
unnecessary rate increases, ” and “[t]he State,
through CURAD . . . represents Arkansas ratepayers in front
of the [APSC] and the Federal Energy Regulatory Commission
(‘FERC’).” (Dkt. No. 18, at 5). CURAD also
states that “Arkansas seeks intervention as a sovereign
State with a duty to protect the interests of its utility
ratepayers.” (Id., at 3).
The
Coalition argues that it has Article III standing because its
members include entities who are “indirect members in a
cooperative association that co-owns the affected power
plants.” (Dkt. No. 27, at 11). The Coalition argues
that these members will suffer an adverse financial impact if
the power plants “prematurely cease operations or cease
the combustion of coal.” (Id.).
Defendants
argue that neither CURAD nor the Coalition have standing. As
to CURAD, defendants argue that the alleged economic injury
to Arkansas ratepayers is not a “concrete and
particularized” injury that is “actual or
imminent.” (Dkt. No. 34, at 7-8). Defendants also argue
that the alleged economic injury is not “fairly
traceable” to the defendants’ conduct
(Id., at 10-11). Defendants further argue that the
economic injury alleged by CURAD cannot be redressed by the
relief sought by CURAD (Id., at 11-12). Defendants
assert that CURAD cannot establish standing based upon
alleged misrepresentations in the proposed Settlement
Agreement or the alleged usurpation of the State’s
regulatory authority (Id., at 12-13). Finally,
defendants assert that CURAD does not have standing based
upon the parens patriae doctrine (Id., at
15).
Defendants
argue that the Coalition has failed to establish standing in
its own right or as an association (Dkt. No. 36, at 2).
Defendants further argue that none of the Coalition’s
members has demonstrated standing in his or her own right, ...