State Attorney General Leslie Rutledge announced last week that Arkansas would join a multistate lawsuit challenging the Environmental Protection Agency’s new rule on ozone, the sixth legal battle she has entered with the federal agency since taking office in January.
The legal fights center on her position that the EPA has exceeded its legal powers in three recently implemented rules: the Clean Power Plan, more stringent ground-level ozone standards and changes to the definition of the Waters of the United States.
The Clean Power Plan is designed to reduce carbon emissions nationwide from existing fossil-fuel-fired power plants by 32 percent from 2005 levels by the year 2030. Arkansas would have to reduce its emissions by even more, 36 percent, “because we’re kind of a coal-heavy state, and that’s where a lot of the emissions come from is a coal-fired power plant,” explained Glen Hooks, director of the Sierra Club of Arkansas.
“The plan gives the state of Arkansas a lot of flexibility on how we achieve this goal,” said Hooks, who is part of the state’s coalition to develop a plan to meet the goal. He said the state could achieve the goal by relying more on renewable energy, more natural gas or “shutting down dirty coal plants.”
But Rutledge said the EPA has overstepped its authority with its rules regarding the coal-fired plants. On Oct. 23, she joined the state of West Virginia and other attorneys general in challenging the Clean Power Plan in the U.S. District Court of Appeals for the District of Columbia Circuit.
“We did so to protect Arkansans from this EPA power grab,” Rutledge told Arkansas Business last week in a conference room at her office in downtown Little Rock.
“What this rule will do if implemented in Arkansas will skyrocket [electric] rates for Arkansans,” she said. “So we joined this lawsuit to protect the low utility rates that Arkansans have right now. We want to continue growing jobs in our state.”
But the impact of the EPA’s rules on utility rates is not clear.
Kathy Deck, director of the Sam M. Walton College’s Center for Business & Economic Research at the University of Arkansas, said trying to forecast energy prices can be tricky.
If it costs the utilities more to produce electricity because of the rules, then the cost would have to be absorbed either by the users of the electricity or the shareholders of the utility companies or shared by both groups, she said.
“Of course, it’s very, very complex,” Deck said. “It’s very difficult to say with any certainty how these kinds of effects play out in the economy.”
Sean Donahue, an attorney in Washington who represents the Environmental Defense Fund, which will intervene in the Clean Power Plan lawsuit, said he doesn’t think the utility rates will rise because of the EPA’s regulations.
“That kind of charge is very frequently made with new environmental regulations, and it easily proves to be overwrought or completely inaccurate,” Donahue said.
Still, Rutledge said that the rates would rise “because when you look at how much it will cost to implement, and put $1 billion for example into one coal-fired plant, … those costs will be passed on to the consumers.”
Rutledge told Arkansas Business that when she was running for attorney general in 2014, she had an eye on the EPA and its proposed Clean Power Plan, which was in the draft stage at that point. In February, less than two months after being sworn in as attorney general, Rutledge went to Washington to speak before a U.S. House of Representatives subcommittee in opposition to the Clean Power Plan, the ozone standards and the changes to the Waters of the United States definition.
“While each of these rules would cause great harm to Arkansas on its own, the cumulative effect cannot be overstated,” according to her statement at the hearing. “The Obama Administration is intent on following an agenda that ignores the plain language of the laws passed by Congress and has created a perfect storm of federal regulations that will result in economic disaster for a state like Arkansas.”
In February she asked to intervene in a lawsuit filed in 2014 in the U.S. Court of Appeals for the District of Columbia that challenged the EPA’s proposed Clean Power Plan. That case was tossed out in June because the states couldn’t challenge the plan because the EPA had not finalized it.
But Rutledge has moved ahead with other challenges to the EPA:
• On June 29, Arkansas and 11 other states sued the EPA over its rules defining Waters of the United States.
The EPA said on its website that the rule would ensure that waters protected under the Clean Water Act are more precisely defined, more predictably determined and easier for businesses to understand.
But Rutledge said in her statement before the U.S. House subcommittee that the EPA's clarification of the definition of the Waters of the United States under the Clean Water Act "is so expansive that it could likely control land use activities over most of the United States."
In that case, U.S. District Judge in North Dakota Ralph Erickson agreed to issue an injunction against the EPA in the 12 states that sued.
• On Aug. 11, Rutledge said she was joining a 17-state coalition to challenge the EPA "for illegally invalidating the individual air quality protection plans in those states," according to her news release. The states have asked the D.C. appellate court to review the EPA's final rule that requires Arkansas and 34 other states to revise their individual plans governing excess emissions during startup, shutdown or malfunction of power plants.
• Shortly after the EPA announced its final Clean Power Plan in August, Rutledge joined 14 other states asking the same D.C. appeals court to issue an emergency stay to postpone the deadlines built into the plan.
Those deadlines call for the states to develop their initial compliance plans by September 2016. The final plans then are due to the EPA in September 2018. But if a state doesn't have its plan approved or doesn't bother to do one, the EPA will develop one for the state.
• Rutledge then joined 23 other states filing a lawsuit on Oct. 23 against the EPA's Clean Power Plan itself. "The EPA is going far beyond its legal authority under the Clean Air Act," Rutledge said in a news release.
• On Oct. 28, Rutledge joined a multistate lawsuit challenging the Environmental Protection Agency's new rule on ozone. She said the rule would lower the current National Ambient Air Quality Standards of Ozone from 75 parts per billion to 70 parts per billion. "The current standard of 75 parts per billion was set in 2008 and continues to be protective of human health and the environment," she said in a news release.
The pattern is clear to the Sierra Clubs’ Hooks. “People like the Attorney General Rutledge have never met an environmental rule that they approve of,” he said. “Any attorney general that fights against clean air and clean water protection is really not representing the people of Arkansas.”
Rutledge told Arkansas Business that she is isn’t fighting against clean air and water. The problem, she said, is the EPA.
“Whether it’s a business — a bad business — or the federal government, when someone oversteps their authority and hurts Arkansans, I’m going to go after them,” she said.
Utilities Support Rutledge’s EPA Challenges
Rutledge’s challenge of the EPA’s Clean Power Plan has support from Arkansas’ largest electric utilities.
Sandra Byrd, a spokeswoman for the Arkansas Electric Cooperative Corp., which has an ownership interest in four coal-fired plants in Arkansas, said it has some legal concerns “with respect to the way the rule is drafted and the contents of the rule. … We believe the final rule does in fact exceed the EPA’s authority.”
Byrd said the EPA is essentially trying to take the place of states’ public service commissions and state-level regulators.
“That’s never happened in U.S. history,” she said. “It’s always been in the state’s purview to determine what’s the best resource mix for each individual state.”
She said rates for consumers could rise if a coal plant has to be shut down. “We’re a long ways off from knowing what the rate impact would be,” Byrd said. “It’s really hard to assess that at this point in time because the rules won’t even go into effect until 2020.”
Entergy Arkansas spokeswoman Julie Munsell said Entergy also has some concerns about the legality of the EPA’s approach. Some of those concerns include the timeline for compliance and the overall impact the rule could have on its customers, Munsell said in an email to Arkansas Business.
Entergy said in August that it plans to achieve early sulfur dioxide emission limitations at its White Bluff (Jefferson County) and Independence (Independence County) coal-fired power plants. Entergy said it plans to end coal-fired operations at the two units at White Bluff by 2027.