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Power companies wield influence through anonymous group


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Power companies wield influence through anonymous group

It has fought in federal legal proceedings, taken challenges all the way to the Supreme Court and even convinced the justices to strike down a regulation targeting greenhouse gas emissions from power plants.

And yet the Utility Air Regulatory Group, for all its influence, is little known outside its members and takes pains to protect its anonymity.

Run out of the law firm of Hunton & Williams, UARG is perhaps most well-known for bringing the 2014 Supreme Court case that bears its name, in which the justices slapped the EPA's hand for overreaching but generally reaffirmed the agency's authority to regulate carbon and other emissions. The decision in that case, Utility Air Regulatory Group v. EPA, has since been widely cited in legal battles against Clean Air Act rules.

UARG is involved in a number of pending court proceedings, the most prominent of which would be the legal challenge to the Clean Power Plan. In court documents from that case, West Virginia v. EPA (No. 15-1363), UARG described itself as "a not-for-profit association of individual electric generating companies and national trade associations that participates on behalf of its members collectively in administrative proceedings under the Clean Air Act, and in litigation arising from those proceedings, that affect electric generators."

The group in recent years has not made its membership roster public — the most recent list that could be located was attached to regulatory comments filed in 2006 — and requests to Hunton & Williams for that information were declined. UARG also does not have a public-facing website like other prominent trade groups such as the Edison Electric Institute or National Rural Electric Cooperative Association, both of which are also members of UARG.

Information gleaned from hundreds of court filings, Federal Register comments and other documents, as well as conversations with representatives from various utilities, trade associations and environmental groups, resulted in a far-from-exhaustive list of UARG members past and present — many of which confirmed that they currently belong to the association. Liberal think tank Center for American Progress in a June 24 paper pointed out that some of the nation's top coal generators are members. Indeed, 15 of the top 25 CO2-emitting utilities (based on S&P Global Market Intelligence data) are or recently were members of UARG, including the top three: Southern Co., American Electric Power Co. Inc. and Duke Energy Corp., each of which confirmed its membership via email or phone call.

Many utilities participate in lawsuits like the Clean Power Plan litigation through their memberships in EEI, NRECA or other associations. But some environmental groups are concerned about UARG's anonymity and customers' resulting ignorance regarding what their power companies might be doing behind the scenes.

"They are the dark matter of the electric energy industry, and one shouldn't really be able to take on the government's efforts to curb climate change or mercury pollution and do it anonymously," David Doniger, director of the Natural Resources Defense Council's Climate and Clean Air Program, said. "This is a way of having the law firm do their dirty work without taking any responsibility for it in public discourse."

Erin Auel, who authored the Center for American Progress paper, said in an interview that UARG has worked through a team of lawyers for years to block provisions of the Clean Air Act. "The fact of the matter is, there's just no way to determine a full, complete, current list of UARG members," Auel said.

Some UARG member utilities become directly involved in legal cases under their corporate banners as well — Southern and its subsidiaries, AEP and many individual electric cooperatives are just a handful of the companies taking part in the carbon rule litigation outside of UARG. Others limit their participation in the group or specify how their financial contributions may be used.

Such is the case with Dominion Resources Inc., which surprised Doniger and others in the industry when it filed a brief defending the Clean Power Plan.

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Dominion spokeswoman Bonita Harris confirmed that the company is a member of UARG but has specified that its dues may not be expended towards the Clean Power Plan challenge. Harris said regardless of the outcome of the litigation, Dominion believes carbon emissions from its power plants will need to be addressed. Virginia Gov. Terry McAuliffe recently created a work group to study ways to cut carbon from generators in his state, where Dominion is the largest utility.

Tennessee Valley Authority spokesman Scott Brooks said the federal power marketer is a "long time" UARG member, although its dues are not used to fund any court proceedings. "TVA participates to better understand and comply with complexities of the Clean Air Act. We do not participate in the litigation that UARG may undertake," Brooks said.

For 2015, TVA paid UARG $462,555 in membership fees, which are used to support work done by the group's technical committees, according to Brooks. He said membership provides the federal power marketer with the opportunity to share in the UARG's technical analyses of existing and new air pollution regulations along with the chance to interact with other electric generators facing similar challenges in environmental compliance and better understand their views.

Most recently, TVA participated on the UARG committees that examined the Clean Power Plan and Mercury and Air Toxics Standards, much as it participates on most of the group's technical committees, Brooks said. He asserted that TVA's interactions with UARG have helped the federal power marketer develop its plans for complying with environmental regulations, and Doniger noted that TVA is moving its power generation portfolio in the direction that the Clean Power Plan would require.

Another example of a UARG member that has supported the EPA is the Los Angeles Department of Water and Power, which Auel found had authorized up to $175,000 in membership dues for 2014 to go to UARG through EEI as administrator of the funds. Yet the City of Los Angeles in 2015 filed an amicus brief in support of the Clean Power Plan.

A resolution adopted at the Aug. 27, 2013, LADWP board meeting said UARG was "organized for the purpose of coordinating with the EPA the development of suitable guidelines and regulations" relating to the Clean Air Act. The LADWP sought membership in the group in an effort to exchange ideas, conduct research and establish methods of operations with respect to air quality regulatory issues, "as will inure to the benefit of the nation's environment," according to the resolution. The board members also wanted to learn about how air regulations would be applied to LADWP's existing and planned generation resources.

What sets UARG apart from many other similar associations is its reluctance to release information on its membership, meetings and inner-workings. Utility trade groups such as the Electric Power Supply Association also participate in judicial and regulatory proceedings and are represented by law firms, but EPSA maintains a public website where its activities, membership roster and supporting law firms are openly acknowledged while UARG does not.

UARG's reticence has led some to question the group's true objectives. For instance, Doniger said he is skeptical of any company's claim to be a member of UARG that does not participate in the litigation. "UARG exists for no purpose, except, as far as we know, to be the vehicle through which the companies bring their lawsuits," Doniger said, noting that he found the fact that TVA, a federal entity, is a member to be particularly "distressing."

Others that have confirmed membership in UARG are Energy Future Holdings Corp. subsidiary Luminant Generation Co. LLC, Dynegy Inc., DTE Energy Co., FirstEnergy Corp., Ameren Corp. and PPL Corp. Several companies, including WEC Energy Group Inc., JEA, Salt River Project, CMS Energy Corp., and ALLETE Inc., disclosed their membership in public comments they filed in 2014 in the EPA's Clean Power Plan proceeding.

But UARG membership appears not to be limited to electric utilities and their trade groups alone; National Mining Association spokesman Luke Popovich confirmed that his group is a past member. He said, though, that the NMA now prefers to "take [its] own litigation path" and declined to comment further on NMA's previous membership in UARG.

How much each company pays for UARG membership, as well as the group's total budget, is unclear. However, documents obtained by S&P Global Market Intelligence from a business presentation made to EEI leadership in January show EEI spent $7.7 million in 2015 toward a UARG fund not controlled by EEI and accounted for as a separately funded activity.

EEI spokesman Jeff Ostermayer said his organization provides accounting services to groups such as UARG and participates in a number of coalitions covering a range of issues important to its members. He declined to comment specifically on the documents.

"UARG provides a variety of services including regulatory, technical and compliance advice and information," Ostermayer said. "EEI does not participate in any votes on UARG policy matter decisions."

A victory?

Despite its lack of a website, UARG does maintain a public presence through its lawyers, who regularly appear in court on the group's behalf. In some instances, those same attorneys also testify about energy issues on Capitol Hill, although they typically appear in their own personal capacity and not as representatives of UARG.

During a hearing before the Senate Environment and Public Works Committee in June, UARG attorney Allison Wood sparred with Richard Revesz, director of the New York University School of Law's Institute for Policy Integrity, over whether UARG v. EPA was a boon for the power industry. Wood noted that she was speaking in her own capacity, but said she represents several utility clients in the litigation involving the Clean Power Plan, including some that launched a successful bid for a stay of the rule from the Supreme Court.

Revesz defended the EPA's record before the Supreme Court, characterizing the UARG v. EPA ruling as a win for both sides. But Sen. Dan Sullivan, R-Alaska, said the EPA "lost that big time."

Wood agreed with Sullivan that the EPA's actions with respect to the Clean Power Plan are not based on the statute or the Constitution, and said she counted UARG v. EPA "as a victory for my client." In an email exchange with S&P Global Market Intelligence, Wood noted that the ruling is widely cited in the Clean Power Plan challengers' legal filings. "Petitioners' briefs in the case speak for themselves," Wood said.

In 2012, NRDC's John Walke, director of the group's Clean Air Project, Climate and Clean Air Program, called UARG a "front group of convenience" that allows utilities to "shield their names and anti-public health crusades from public awareness." In response to Walke's criticism, Wood said UARG simply operates to address areas of significant concern in an efficient manner and allows members to collectively participate in public rulemakings and judicial proceedings related to the Clean Air Act.

Wood said UARG does more for its "clients" than just litigate. The group participates in administrative and regulatory proceedings related to Clean Air Act rules that impact electric generators and provides its members with legal counsel, regulatory interpretation and compliance guidance, she explained. UARG submitted several filings during the Clean Power Plan comment period in 2014, expressing technical and legal concerns on behalf of its members; many companies, both confirmed UARG members and others, in turn cited UARG information in their own comments. Wood's colleague and fellow UARG attorney Henry Nickel even wrote to EPA Administrator Gina McCarthy in September 2014 asking her to withdraw the rule in its entirety.

"UARG's members direct the work we do for them," Wood said.

Other groups similarly operate largely outside the public domain, including the Utility Water Act Group and Americans for Affordable Climate Policy — both of which, like UARG, are represented by Hunton & Williams. And law firms Barnes & Thornburg and Baker Botts are associated with the Federal Water Quality Coalition and the Class of 85 Regulatory Response Group, respectively.

The Class of 85 group, however, is much more open about its membership and operations than UARG. The group released a list of supporting members as part of its December 2014 comments on the Clean Power Plan. Among the members were PPL Corp., AES Corp., Alliant Energy Corp., Entergy Corp. subsidiary Entergy Services Inc., JEA, National Grid USA, Tampa Electric Co. and Xcel Energy Inc.