A new form of the Utility Air Regulatory Group (UARG) appears to have sprouted up within the law firm McGuireWoods, according to testimony filed by the Office of the Minnesota Attorney General in Otter Tail Power’s rate case. Otter Tail operates in Minnesota, North Dakota, and South Dakota.
The Residential Utilities Division in the Minnesota Attorney General (AG)’s office submitted direct testimony in the docket on April 2 to contest Otter Tail’s request to have customers pay both the now-defunct UARG membership dues as well as the new expenses for McGuireWoods’ “Clean Air Act Monitoring Service” and “Climate Legal Group.” The services started this year.
Otter Tail stated that the new entities are “two different services to provide access to similar information that UARG provided,” according to the AG’s direct testimony.
UARG was a coalition that secretly represented utilities and had been a party in over 200 lawsuits since 2001, according to federal court records, including challenges to EPA Clean Air Act regulations. UARG existed within the law firm Hunton Andrews Kurth. Documents obtained and published by Politico in February 2019 revealed UARG’s actions and membership. 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 and only $265,721 to technical expenses. Many utilities claimed at the time that their membership in UARG allowed them to have access to interpretations and clarifications about Clean Air Act regulations. According to InsideEPA, a utility industry source said that one major complaint among the members in UARG was that it lacks a litigation advisory committee and would unilaterally pursue suits that the source describes as “litigation run amok.”
Newly released documents by EPI as a result of a 2019 Freedom of Information Act to the Tennessee Valley Authority, a corporate agency of the United States, sheds even more light on how UARG focused on legal issues compared to technical guidance expenses. At least one of UARG’s committees, called the Nonattainment Committee, spent over $3.4 million on legal fees and expenses between 2015 and the first half of 2018. This committee spent just $48,000 on technical fees during that same time.
The Nonattainment Committee was responsible for overseeing the industry’s participation in litigation concerning EPA’s Cross-State Air Pollution Rule (CSAPR) Update with respect to National Ambient Air Quality Standards for ozone (NAAQS). This EPA regulation specifically targets nitrogen oxides (NOX) from power plants, since NOX emissions react in the atmosphere to create ozone pollution, especially during the warm summer months. Ozone pollution causes asthma attacks and other respiratory problems, and is linked to premature death. Children are one of the groups most at risk to ozone exposure, according to the EPA.
The documents from the TVA FOIA also detail how UARG members participated in conversations regarding climate change regulations, including a call on November 16, 2016 to discuss the new Trump administration and the Clean Power Plan, as well as to discuss next steps after meeting with EPA officials and “the progress being made with regard to how a replacement rule for the Clean Power Plan might best work.” Then-Hunton/UARG attorney Allison Wood sent both meeting invitations.
In April 2019, U.S. House Energy and Commerce Chairman Frank Pallone, Jr., Environment and Climate Change Subcommittee Chair Paul Tonko, and Oversight and Investigations Subcommittee Chair Diana DeGette sent a series of letters to eight utility companies and Hunton Andrews Kurth requesting information and documents related to their relationship UARG. The Congressional investigation also requested that the utilities state whether their UARG annual contributions come from customers or shareholders.
UARG disbanded two months later.
Former UARG lawyers decamped to McGuireWoods last year
Three Hunton Andrews Kurth lawyers who had represented UARG – Allison Wood, Aaron Flynn, and Makram Jaber – went to McGuireWoods in April 2020. The Minnesota AG’s office argued that although it is unknown if the attorneys will provide environmental and air-quality litigation, these lawyers “are the same ones that represented UARG in its efforts to roll back environmental protections … these attorneys were and continue to be engaged in environmental and air-quality litigation at the federal level.”
Flynn sent the invoice from McGuireWoods to Otter Tail. McGuireWoods’ Clean Air Act Monitoring Service will cost Otter Tail $75,000 for the 2021 calendar year. The company is looking to have its Minnesota customers pay for part of that fee based on jurisdiction allocators. Otter Tail said in response to questions from the AG that it expected to receive an invoice from McGuireWoods’ Climate Legal Group sometime in March, and that invoice is not in the rate case docket.
Otter Tail has also included a request to have customers pay for the remaining UARG costs incurred in 2019, totaling $42,350, with the Minnesota ratepayers possibly on the hook for $23,076.
The AG’s office recommended that UARG dues be removed from the rate case since it no longer exists, and that the Minnesota Public Utility Commission also deny Otter Tail’s request to recover the cost of McGuireWoods’ services since “any doubt should be resolved in favor of ratepayers not funding these activities.” The testimony cites the recent Center for Biological Diversity (CBD) petition for rulemaking with the Federal Energy Regulatory Commission (FERC). CBD proposes that FERC change the Uniform System of Accounts to treat trade association dues as presumptively non-recoverable from customers to shift the burden of proof onto utilities to show in rate cases why customers should pay for the costs of membership in trade associations that work to influence policy.
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