State to Entergy: You’re wrong and too slow to react

Google Earth image of the Vermont Yankee plant in Vernon, Vt.

Google Earth image of the Vermont Yankee plant in Vernon, Vt.

The Vermont Attorney General’s office filed its first response to Entergy Corporation’s lawsuit against the state on Monday. Entergy is suing the state in a bid to keep Vermont Yankee, the state’s sole nuclear power plant, operating beyond the March 21, 2012 scheduled shutdown date set in Vermont statute.

In its 68-page brief, the state told the court that Entergy is wrong on the merits of the case and that Entergy waited too long to file the lawsuit to claim an urgent need for an injunction now.

The “memorandum of law” was filed Monday by Attorney General William Sorrell and four assistant attorneys general, acting as lawyers for the defendants in the lawsuit — Gov. Peter Shumlin, Sorrell himself, and the three members of the Public Service Board.

Entergy’s suit argues that federal law pre-empts the state’s authority over the operation of nuclear power plants under the Atomic Energy Act, the Federal Power Act, and the Commerce Clause of the U.S. Constitution.

In March, just days after identical Mark 1 General Electric reactors at the Fukushima Daiichi plant in Japan were destroyed by an earthquake and tsunami, the Nuclear Regulatory Commission renewed Entergy’s license to operate Vermont Yankee until 2032.

In a 26-to-4 vote last year, the Vermont State Senate blocked the Public Service Board from renewing Vermont Yankee’s state license after it expires in March 2012.

Entergy’s lawsuit summed up the complaint as follows: “The question presented by this case is whether the State of Vermont, either through a state administrative agency (the PSB) and/or the state legislature (the General Assembly) may effectively veto the federal government’s authorization to operate the Vermont Yankee Station through March 21, 2032.”

In addition, Entergy asked the court for an injunction to prevent the state from shutting down Vermont Yankee in March. Entergy claims that it would suffer “irreparable harm” if it were forced to shut down the plant temporarily, even if the court later granted it the right to re-open. For example, it needs to order new fuel for an 18-month run cycle in July, and the new fuel would take it a year past the 2012 closing date. The state argues that Entergy could have filed the suit earlier, before it came close to deadlines for refueling decisions.

The state’s key arguments cite the same Supreme Court case that Entergy made central to their arguments, a 1983 case originating in California. Much has changed in the electrical utility world since then, and the composition of the courts has changed substantially, as well. The courts may find that the California case does not apply to Vermont Yankee or may overturn precedent.

Nominally, the “memorandum of law” that the state filed in federal district court targets only Entergy’s request for injunction. However, one of the standards Entergy must meet to secure the injunction is the likelihood it will win the case.

The state used most of its 68-page brief to tear down Entergy’s case and to show that the Public Service Board or the General Assembly may require the plant to shut down, even though the Nuclear Regulatory Commission has issued a license extension for the plant.

The pre-emption arguments

Both Entergy and Vermont cite the 1983 Supreme Court decision Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Commission (PG&E).

California found that its nuclear plants were becoming storage facilities for high-level nuclear waste, which the plant operators had assumed would be transported off site and reprocessed. In response, the California legislature required nuclear plant operators to apply for state certification and to prove that nuclear waste storage space was adequate. PG&E sued, arguing that by federal law, the NRC alone was entitled to make this sort of rule.

Vermont Yankee workers remove soils from the excavation near the Advance Off Gas building. Image from the Vermont Department of Health

Entergy has pinned its arguments to the case despite the Supreme Court’s ruling, which upheld the California law in a unanimous decision. The justices agreed that the federal Atomic Energy Act gave the Nuclear Regulatory Commission exclusive jurisdiction over “radiological safety” issues, but “states retain their traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost and other related state concerns.”

In the Vermont Yankee case, the state defends its authority over the nuclear power plant by citing the commission’s regulations and other information about the license renewal.

An open and shut case? Not exactly. The PG&E lawsuit involves state regulation of utilities. Since 1983, electricity markets have changed, and many generating facilities are owned by entities other than regulated utilities. Vermont Yankee was owned by local utilities until Entergy bought it in 2002; now it’s a so-called merchant plant that sells its electricity on the interstate market.

Donald Kreis, a law professor at Vermont Law School and former general counsel for the New Hampshire Public Utility Commission, has studied the Yankee lawsuit and the state’s response. He said, “If this were a utility-owned plant, the argument for economic regulation would be much more compelling.” As it is, after 2012, Vermont Yankee could operate without selling a single kilowatt hour of electricity to Vermont customers, at a high or low price, Kreis said. Under these circumstances, it is difficult for the state of Vermont argue a need to regulate the plant based on economic concerns.

However, states are not restricted to regulating economic matters. The Supreme Court phrase “other related state concerns” leaves a lot of latitude. The state appeals to that latitude when it defends one of the laws Entergy most wants the court to overturn, Act 160. That is the 2006 law that blocked the Public Service Board from renewing Vermont Yankee’s license until the legislature gave the quasi-judicial board authority to do so — which the General Assembly declined to do in 2010.

Kreis wrote earlier this month that Entergy might win this case, and that the state needs a strong answer to the question that if Act 160 is not about safety, “what exactly is its purpose?” Having read the state’s brief, he commented that the most effective answer in the brief is its recitation of the explicit statement of purpose in Act 160.

Act 160’s statement of purpose includes allowing the state to base a decision on a “need for power, the economics and environmental impacts of long term storage of nuclear waste, and choice of power sources among various alternatives,” none of which are pre-empted by the Atomic Energy Act.

Entergy argues that legislators pretended to be concerned about state-controlled matters, but regardless of what they wrote in the bill, they were thinking forbidden thoughts about radiological safety. They point to quotes in the media from Gov. Peter Shumlin and others.

According to the state of Vermont’s brief, that won’t fly in court. The attorney general says that courts have declined to divine legislators’ motivations from anything other than what the legislators have themselves written or said in the course of writing and passing a bill. Kreis agreed, saying “I think that’s the only answer that can really count.”

Opponents of Vermont Yankee have argued that, regardless of what federal law says about pre-emption, Entergy signed a Memorandum of Understanding with the state when it bought the plant in 2002. In the agreement, Entergy “expressly and irrevocably agree[d]… to waive any claim…that federal law preempts the jurisdiction of the Board to take the actions and impose the conditions agreed upon,” including requiring a state license for operation after 2012.

Entergy contends that the state has “repudiated” the memorandum by, among other things, passing Act 160 and giving the legislature a say over the Public Service Board’s authority to renew the license.

In its reply, the state says that Entergy officials have, when it has suited them, touted both the agreement and Act 160 as being to their advantage. The legal principle of “estoppel” prevents parties from flip-flopping in this way, the state argues. In addition, the Public Service Board is “a creature of statute,” which the legislature can change at any time, the attorney general argues.

This is only a partial run-through of the arguments for and against pre-emption, and only those referring to the Atomic Energy Act. In addition, Entergy argues for pre-emption based on the Federal Power Act, which regulates interstate sales of electricity, and the clause of the U.S. Constitution that gives Congress authority to regulate interstate commerce.

Entergy will not comment on the lawsuit.

The injunction

Entergy wants the court to issue a preliminary injunction to the state before July, so that the corporation can order the fuel rods for the planned refueling this fall. They also cite a need to stem the loss of skilled personnel with a looming plant closure.

The state points out that Entergy is asking the court to overturn a 2002 MOU plus three statutes, the latest of which was enacted in 2008. Entergy could have challenged those laws previously, the state argues.

Legal briefs tend to dispute every point the other side makes; the state suggests that Entergy’s troubles aren’t so bad. Workers are leaving, the state acknowledges, but attrition is comparable to that at other nuclear plants. And the need to order fuel rods this summer is a business decision that Entergy knew about in 2002, when it bought a plant with only 10 years left on its license.

Shut the plant down this fall if you need to, the state tells Entergy; you can always open it again later if you win in court.

Ray Shadis, a nuclear consultant to the New England Coalition, says Entergy’s choices are even less stark. If it orders the fuel rods in July and the court later rules that the plant must close, it can sell the fuel rods to another facility — even if they have already been partially used. Or it can petition the NRC to go 24 months between refueling stoppages, as Seabrook nuclear power plant once did, which would take them about to March 2012. The fuel is still capable of heating water to generate electricity after 18 months, Shadis explains. The plant would operate less efficiently, he admits, because increasing levels of fission by-products buffer the nuclear chain reactions.

Shadis puts Entergy’s claim of a July deadline in the context of their other statements over the last year. In 2010, Entergy said it needed to decide on refueling in January or February. In January, they said April was the deadline.

“Now they tell the judge July 1,” Shadis said. “It’s a question of their credibility once again—they’re willing to say almost anything to get what they want.”

What happens next

The case is one that Kreis calls “almost pure law;” there are no major controversies between the two sides about any of the facts. For this reason, Kreis expects the court to rule on the case in the same way the injunction is ultimately decided, in whatever level of appellate court the injunction lands at. That is, if a court decides to grant the injunction because Entergy “is likely to succeed on the merits,” then Entergy almost certainly will succeed on the merits — there are few or no confounding questions of fact to obscure the legal case. That points, he says, to a quick resolution for the case.

On the other hand, some observers expect that the case may go all the way to the Supreme Court, and that process takes time. Immediately after Entergy filed its case, Sorrell commented, “Although we could get an initial read on the case in the relatively near future, it’s entirely possible that this case will be litigated for quite some time into the future.”

Comments

  1. Tom Barker :

    Vermont will lose in this suit. Hopefully they will lose because Entergy wins. But what I fear is that VT wins the suit, shuts down VY and then Entergy abandons the property. There will be no taxes paid and no security or operations provided for the site. VT will see the town bankrupt for lack of taxes, the county having to hire operators at several million per month to keep it from overheating and the state having to assign 50 state police for security. But that won’t be for a 2 or 3 month interval, it will be for the next 100 years.

    But VT should expect no help, they asked for it.

    Tom

  2. Mike Kerin :

    Tom , Your post is foolishness. You are fear mongering.

    Entergy is bound by contract to decommission the plant They have no choice but to take care of the plant and secure it. They were supposed to have a fund set up to keep the place safe forever.
    Because Gov. Douglas vetoed the bill to make Entergy fully fund the decommissioning fund it will have to sit for a while waiting for the money to come in but there will be people working there for many years to come.

  3. John Greenberg :

    Various statements in this article deserve comment.

    First: “The PG&E lawsuit involves state regulation of utilities. Since 1983, electricity markets have changed, and many generating facilities are owned by entities other than regulated utilities. Vermont Yankee was owned by local utilities until Entergy bought it in 2002; now it’s a so-called merchant plant that sells its electricity on the interstate market.”

    Actually, Vermont Yankee has always been a merchant generator. Before Entergy bought it, the plant was owned by a corporation called the Vermont Yankee Nuclear Power Corporation. Vermont utilities along with several out-of-state utilities were shareholders, not partners, in this corporation. Wholesale rates were set by federal regulators (FERC) and passed through to retail customers in PSB cases (in VT). Under Entergy’s ownership, FERC continues to regulate VY’s rates, though the nature of the regulation has changed: rates are largely established through ISO-New England energy markets rather than in contested rate cases.

    None of this has much bearing on the PG&E decision: CA’s law was not based on rate regulation; neither is VT’s. The essence of PG&E boils down to this: the federal government, through the NRC, retains the exclusive right to regulate “safety and the “nuclear aspects” of energy generation,” but leaves EVERYTHING else to the States to regulate. The decision does NOT attempt to spell out in any detail what it means by “everything,” but to the extent it does, it’s clear that more than just ratemaking is meant, e.g.: “… States retain their traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost, and other related state concerns.” (p.205)

    This goes directly to the argument attributed to Donald Kreis as well: “He said, “If this were a utility-owned plant, the argument for economic regulation would be much more compelling.” As it is, after 2012, Vermont Yankee could operate without selling a single kilowatt hour of electricity to Vermont customers, at a high or low price, Kreis said.”

    But Vermont is NOT attempting to regulate the price at which VY sells power; there is no evidence of any kind to suggest otherwise. The only argument on the record which comes even close to this is the one made by various parties to the PSB in Docket 7440: namely, that without significant cost of power benefits to Vermonters (i.e. cheap rates), VY’s drawbacks outweigh its benefits. Such decisions are clearly not preempted either (although, officially, no such decision has actually been made in any case).

    Vermont IS attempting to require VY to obtain a CPG. In fact, ALL generators in Vermont are required to obtain one — I have one for the tiny windmill in my front yard — even though the rates at which what little power I put into the grid are sold were established by law long before I erected the windmill.

    It follows that 1) CPGs, which apply in EVERY other case to non-nuclear generators, have nothing to do with “safety and the “nuclear aspects” of energy generation,” and therefore are NOT preempted under PG&E and 2) CPG cases are not limited solely to the consideration of rates.

    Accordingly, Kreis’ conclusion that “it is difficult for the state of Vermont argue a need to regulate the plant based on economic concerns” should be reworded to say “on ratemaking concerns.” And thus limited, it’s apparent that Vermont is NOT arguing any need to regulate the plant’s rates.

    On another point, the article states: “The state points out that Entergy is asking the court to overturn a 2002 MOU plus three statutes, the latest of which was enacted in 2008. Entergy could have challenged those laws previously, the state argues.” Actually, the latest of these was enacted in 2006, meaning that Entergy has actually waited 5 years to contest it.

    Entergy’s arguments about the urgency of their needs in this case bear more than a passing resemblance to the classic story about chutzpah in which a man convicted of killing his parents pleads with the court to take mercy on a poor orphan.

    As to Tom Barker’s ridiculous suggestion, Entergy is in no position to “abandon the property,” assuming the company wants to protect its other $25 billion in plant assets or its 10 or so other nuclear plants.

Trackbacks

  1. [...] in the news recently? Gosh, maybe it’s not really happening! We checkout Vermont’s legal struggle with the Entergy corporados. And, this update on the struggle in Wendell to live off the grid [...]

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