Sierra Club v. Entergy Arkansas LLC

          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 NO_x, 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, ...