Kreis: Belly buttons and blarney in Brattleboro

Editor’s note: This op-ed by Don Kreis, a professor at Vermont Law School, first appeared on the VLS Vermont Yankee lawsuit blog http://vtyankeelawsuit.vermontlaw.edu/Kreis is a member of the Vermont Journalism Trust board, the parent organization for VTDigger.org.

John Herron, CEO of Entergy’s nuclear operations, seems affable enough. He drew a laugh in U.S. District Court in Brattleboro on Thursday when he referred to a “belly button count” as a folksy synonym for the number of people working at his company’s Vermont Yankee nuclear power plant.

But there was nothing affable about the implied threat that Herron delivered a few minutes later in the courtroom of Judge J. Garvan Murtha. The backdrop, of course, was the lawsuit Entergy has filed against Gov. Peter Shumlin and other high state officials seeking to block the state’s assertion of veto power over the Vernon plant’s continued operation after March 21, 2012.

Judge Murtha convened the parties in his courtroom last Thursday for a two-day hearing to consider Entergy’s request for a preliminary injunction—a pre-trial order that would keep Vermont Yankee in business past March 2012 while the case works its way toward a possible date with the U.S. Supreme Court. Sitting in the witness box just a few feet away from the judge, Herron noted that Vermont Yankee has plans for a refueling outage beginning in late October.

Then Herron explained that, in order to conduct the planned replacement of one-third of the fuel rods in the reactor, which is necessary to the facility’s continued operation at full power, he would have to commit, by July 23 at the latest, to buy the radioactive material from the supplier, General Electric. The price tag, according to Herron—a cool $60 million.

Herron looked Judge Murtha in the eye and testified that, unless Entergy gets its preliminary injunction, the New Orleans-based company just might close down Vermont Yankee—permanently. “Here’s the challenge I have,” Herron said. “I have to make a $60 million investment here that I may not ever be able to recover.”

Of course, the permanent shutdown of Vermont Yankee is precisely what Shumlin and lots of other Vermonters desire. But Judge Murtha is supposed to be—and by all appearances actually is—a neutral arbiter. As such, he could not have enjoyed being told by a high official of the plaintiff in an important lawsuit pending before him that unless he grants extraordinary and emergency relief—ruling along the way that the plaintiff is likely to win its case—the litigation will be pointless and hundreds of Vermonters (all those belly buttons) will lose their jobs.

So here’s what Judge Murtha did. He waited patiently until the lawyers were finished questioning Herron and then he posed some questions of his own.

First, Judge Murtha asked Herron whether he would commit to spending that $60 million in July given that even with a preliminary injunction, the case might still end in defeat for Entergy—a process that could take years. “I would release GE to manufacture those fuel assemblies based on that,” Herron testified.

Then Judge Murtha pounced. “What happens if I don’t?” he asked, meaning grant a preliminary injunction. Herron equivocated. “I don’t want to say we would agree to shut down,” he told the judge. “It’s a decision we have not really finalized yet.”

Meanwhile, the threat stands. And Judge Murtha will have to assess it in light of a notably unpersuasive argument by Entergy. One threshold Entergy must clear is demonstrating a likelihood of success on the merits. And it is here that Entergy has its strongest case. Although there are colorable arguments on both sides, what looms large is federal legislation that, under the Constitution’s supremacy clause, grants to the U.S. Nuclear Regulatory Commission the exclusive right to regulate radiological safety at nuclear power plants.

When the Vermont Legislature in 2005 and 2006 adopted the bills that claimed for the lawmakers themselves the right to veto Vermont Yankee’s continued operation, legislative leaders were careful to omit any mention of safety from the final draft of the bill. The second of the two contains formal legislative findings to the effect that everything but safety was the basis of the enactment.

Among other things, this yielded a theatrical morning on Thursday in U.S. District Court that featured Entergy lawyer Kathleen Sullivan playing a series of “gotcha” sound bites from the legislative record. These were designed to convince Judge Murtha that no matter what the Legislature declared formally, everyone knew that the stated reasons were pretextual and the law was grounded in, to quote Sullivan’s persistent refrain, “safety, safety, safety.”

“Okay . . . let’s find another word for safety,” Sen. Ann Cummings is heard saying during deliberations on the 2006 legislation. Attorney Sarah Hofmann, then the chief of public advocacy for the Vermont Department of Public Service, is likewise heard telling legislators that “we can help you come up with some language that you could put at the top (i.e., in the declaration of findings) to hopefully prevent preemption problems.” Sullivan showed Murtha successive versions of at least one legislative document suggesting that lawmakers simply deleted the word “safety” prior to final enactment.

It is, of course, abysmal public relations for a company that wishes to remain in Vermont to be heard trashing the state’s citizen-lawmakers. So, Sullivan kept praising as “conscientious” the state legislators who were talking about safety, maintaining that this was the issue constituents seemed to care about.

Vermont Assistant Attorney General Bridget Asay countered by playing a series of “anti-gotcha” sound bites on behalf of the defendants. “We are not looking at safety, we are looking at reliability,” the Court heard Sen. Ginny Lyons advise her colleagues from the Senate floor.

In any event, Murtha gave every indication that he regarded the sound bites as a waste of his time. He offered the very plausible theory that, by listening to those urging that references to safety be stricken from the measures, lawmakers were not being disingenuous but were, rather, simply following good legal advice to avoid the regulation of safety issues.

More persuasive—and quite possibly dispositive—was Sullivan’s comparison of this situation to the famous Sherlock Homes story in which the sleuth solved the case by noting the failure of a dog to bark one dark and dreary night on some moor. Here, the dog that didn’t bark was the lack of references during hearings and debates to other reasons for authorizing a legislative veto of continued Vermont Yankee operations.

Legislative history—all the stuff that gets said or written on the record as bills are considered—has fallen from favor in the federal courts, and for good reason. Anyone can say anything about any bill, and none of it really explains what was in the heart or head of any given legislator when he or she votes. But, in this case, the court will still want to assure itself that if the legislation in question is not about nuclear safety, it has some rational purpose. And, as was amply debated in court on Thursday, Vermont doesn’t have much to regulate about Vermont Yankee other than safety for the simple reason that the plant is no longer owned by any of the state’s regulated utilities. Thus, if the plant falters for some reason, the economic consequences do not inure to Vermont electric customers.

This is in sharp contrast to the situation the U.S. Supreme Court confronted in its 1983 Pacific Gas & Electric (PG&E) case, much debated in Vermont these days. California had banned the development of new nuclear power plants on the ground that dire economic consequences could befall the state’s citizenry given the lack of options for disposing of nuclear waste. The Supreme Court said this assertion was not preempted because it was not an effort to regulate safety but, rather, the economic aspects of nuclear power. But the unbuilt California plants would have been owned by regulated utilities that would have passed on those waste-related costs to their customers. Vermont Yankee is a merchant generator; if the plant goes broke over waste disposal, Entergy does not get to send the bill to Vermont electric customers. That was the whole reason for allowing Entergy to buy the plant from regulated utilities in Vermont (and elsewhere in New England) in the first place.

But forget Entergy’s likelihood of success on the merits for the moment. For it is Vermont Yankee’s status as a merchant generator that undermines its argument on another hurdle Entergy must clear to win a preliminary injunction. Entergy must demonstrate that without the injunction, it will suffer irreparable harm as the result of the state’s unconstitutional assertion of authority.

In fact, what Entergy has demonstrated is that it now confronts, in admittedly stark terms, adverse consequences of the very business risk it knowingly undertook when it bought Vermont Yankee in 2002. This became patently clear as Herron was explaining why Entergy could not simply shut Vermont Yankee down temporarily and await a hoped-for final victory in court. He agreed that other nuclear plants have closed temporarily in analogous circumstances, but then he described Vermont Yankee as a “merchant plant” that is a “separate business entity that has to survive on its own.” In other words, Vermont Yankee is a separate subsidiary of Entergy that has no guaranteed revenue stream from retail customers paying regulated rates. “I don’t have the option of going to the ratepayers to see if I can get recovery—that option’s not there for me,” Herron explained to Judge Murtha.

Precisely so. When Entergy bought Vermont Yankee in 2002, it did so knowing that the plant’s federal operating license expired on March 21, 2012, along with its state-law authority to operate. Indeed, Entergy explicitly agreed to seek permission from the state Public Service Board for permission to continue running after that date. And Entergy knew that it would have to eat any financial losses if further licenses and permits were not forthcoming—that’s what makes Vermont Yankee a merchant generator.

And then there is the longstanding legal principle that one who comes before a court seeking equitable relief—in this case, a preliminary injunction—must do so with “clean hands.” Entergy has a problem in this regard: It actively lobbied in favor of the first of the two bills it now challenges as unconstitutional.

“That should matter,” Asay argued. She has a point.

Judge Murtha, for his part, seemed to be struggling with a coolness to injunctive relief on the one hand and a desire to find a middle ground on the other. He suggested during his colloquy with Herron that he might enter an injunction of limited duration and, despite previous references to trial in October, the judge also disclosed that he now plans to hear the merits of the case in September.

One question this raises is: Why have a trial at all? Trials are to resolve disputed issues of fact. Here, the dispute is purely one of law: Is Vermont’s assertion of authority over Energy preempted by the federal Atomic Energy Act or not? The question has been extensively briefed in connection with the request for preliminary injunction and, after this week’s courtroom proceedings, the issue has now been exhaustively argued.

Call me an omphaloskeptic if you want, but sometimes I think that if Entergy was really concerned with irreparable harm, it would stop talking about belly buttons and just get on with the case.

Comments

  1. Mike Kerin :

    In my opinion Entergy is just greedy!
    They want to continue running the old leaking plant 20 more years even after supporting the law that gives Vermont the right to issue a certificate of public good or NOT to issue it.

    I don’t believe Entergy is an honest corporation.

  2. John Greenberg :

    First, two related comments:
    1) The problem with the “Dog that didn’t bark” is that it DID, as a matter of fact, bark. “Here, the dog that didn’t bark was the lack of references during hearings and debates to other reasons for authorizing a legislative veto of continued Vermont Yankee operations.” The fact of the matter is that the record is REPLETE with other reasons. One need look no further than to the reports and testimony that Entergy itself brought into the courtroom.

    Entergy cited a myriad of studies on issues of reliability, job loss, tax revenues, etc. to argue that there was no merit to closing VY. Moreover, Entergy acknowledges that most if not all these issues are NOT preempted (and they’re wrong about the ones they say ARE preempted, but that’s for another day). By doing so, Energy has tacitly acknowledged that the legislature DID consider these same issues. It’s worth noting, in passing, that Act 160 requires the studies, but presumably legislators would not have commissioned studies about whose conclusions they were already fully convinced. The results of the studies may have some bearing on the reasoning behind the 2010 vote; the results can have NO bearing on the constitutionality of the Act which simply commissions them.

    But those are not the only other dogs in the barking kennel. As I have reminded Mr. Kreis before, the Enexus deal was pending at the time of the Senate vote, and the Senate Finance Committee (and maybe others) took significant testimony on the issue from a variety of sources, including, but not limited to Entergy (Jay Thayer) and DPS. This concern weighed heavily on the minds of Senators; I know: I discussed it with them myself. In particular, several of VY’s most ardent supporters voted against continued operations, at least partly because of the Enexus deal. Senator Illuzzi published an op-ed in the Rutland Herald to say just that.

    Which leads to my second point:

    2) As Mr. Kreis acknowledges, trials are needed to resolve matters of fact. What I have just stated is a matter of fact, and it remains UNRESOLVED in this case. Entergy alleges that there are no barking dogs. The State will, one hopes, present substantial testimony to show that there are many of them. If the judge buys this argument and grants an injunction, a trial WOULD be needed to determine whether the facts presented so far correctly represent what actually happened.

    There is a third problem with this “dog that didn’t bark argument. By definition, this argument tells us to look NOT at what the text DOES say, but what it does NOT say. Entergy backhandedly acknowledges that the legislature was well-schooled in preemption law (it took a great deal of time in courtroom and space in its briefs to enumerate instances of such schooling). Entergy is also tacitly acknowledging that the text of the laws they are challenging, as written, reflects little, or nothing (the words “public health” continue to pose about the only remaining issue) that is facially preempted. For just this reason, Entergy is telling us to look AWAY from the text for the “dog that didn’t bark,” i.e. for the preempted motivation that isn’t expressed in the text. The problem with this argument is that once one is untethered from textual interpretation, one can go just about anywhere.

    And that’s exactly what Entergy does. Unlike Sherlock Holmes, who, if memory serves me, merely deduces that the killer was NOT a dog (Hound of the Baskervilles), Ms. Sullivan unleashes a whole chain of deduction from her non-barking dog. Her argument is structured like this: if the text does not mean what it (only) SEEMS to say, then it must mean something else. This leads to the next (tacit) inference: if I present the whole universe of possible explanations for meaning, and then eliminate all those which are impossible, then I must be left with the “real” explanation.

    Anyone looking at that statement should smell a problem: it’s not easy to define whole universes, especially when, as here, they are universes of meaning in the minds of others. Failure to include ANY possible member of the universe can potentially lead to a false conclusion, since that possibility will NOT have been eliminated.

    Yet we know that this is not only possible here; it’s exactly what occurred. The Enexus deal WAS examined by the Senate, but to the best of my knowledge, it has NOT been introduced to the court. So the universe in the court’s record is incomplete, which means that Sullivan’s inference does NOT follow.

    Please note. I am NOT arguing that, as a matter of FACT, Enexus determines the meaning of the vote. I am arguing that, as a matter of LOGIC, there is nothing which tells us it isn’t. (A factual inquiry could well determine that it’s completely irrelevant, but that needs to be done on the base of an evidential record; Sullivan’s logical universe is flawed, as is her argument as presented. This is one example: decommissioning issues are another. Issues surrounding the impacts of events at Vermont Yankee on the “Vermont brand” are a third. In fact, there’s much more to the universe of possibilities than Sullivan presents. Yet, her argument REQUIRES that the possibilities presented represent ALL the possibilities.

    The remaining problems concern not the definition of the possible universe of meanings, but rather the method used to eliminate possibilities. It too is flawed. Sullivan argues, in effect, the legislature commissioned studies, so they MUST agree with their results. This is pretty obviously absurd when put this way: a heavily Democratic legislature asks a very Republican administration to produce studies and therefore MUST believe every jot and tittle of the conclusions of the studies. If you believe that, we need to talk about this bridge I have for sale in Brooklyn.

    What Sullivan is really assuming is: We find these studies convincing, so EVERYBODY must have found these studies convincing, or more precisely, it is inconceivable that legislators still had doubts about these issues after reading the studies, and that their votes and enactments were — in part — determined by these issues.

    Two final points. First, we are perilously close here to asking a federal judge to determine NOT the constitutionality of a law, but rather the merits of a decision. In fact, Sullivan’s process of elimination proves less than what is required. Accepted at face value, it may well prove that legislators were WRONG in their concerns about the issues covered by the studies, but unless you believe that legislators ALWAYS make the right decisions and inferences, it does NOT prove that these issues were not of concern to them. It is worth pointing out that it is perfectly Constitutional for a legislature to pass wrongheaded or even silly laws. In other words, Sullivan’s argument only appears to get us where we need to go: namely, to the elimination of everything other than safety issues.

    Lastly, Sullivan’s process of elimination REQUIRES that the studies she cites 1) constitute the whole universe of consideration on these issues (they don’t), 2) that they be properly represented in her discussion of them (they aren’t), and 3) that they be correct (many are not). I know the first point is false, because I wrote on a number of these subjects myself, and sent my writing to almost every member of the legislature. I know the second point is incorrect, because I’ve read the studies. MANY of them are far more nuanced than she represents. Finally, I believe the third point is wrong, because I’ve critiqued a number of these studies personally (and again, shared the results with legislators), and the State produced compelling evidence that some of these studies are wrong, or out of date.

    To sum up, Mr. Kreis is absolutely correct that this is the nub of Entergy’s argument. Without demonstrating that a facially non-preemptable law means something entirely different from what it actually says, Entergy is left with a perfectly Constitutional set of enactments. In my estimation, this is exactly where we are.

    P.S. Kreis is also correct that the words “public health,” which appear in Act 160 appear problematic and seemed to trouble the judge. But the issue is, at best, exceedingly minor. The words appear, as best as I can determine, only once, in reference to the aforementioned studies: Section 254 (b) (2) says “The studies arranged by the department in consultation with the joint energy committee and the public engagement process, in general, shall… (B) ) identify, collect information on, and provide analysis of long term environmental, economic, and public health issues, including issues relating to dry cask storage of nuclear waste and decommissioning options.” The State pointed out that this is part of one item in a lengthy list of topics to be studied. In any case, whether the studies did or did not get into questions of radiological health is now a determinable matter of fact: we can look at the studies themselves. Since Entergy CITES the studies in defense of their argument, it’s pretty hard to believe that they do, in fact, cover preempted issues. In any case, they have not, to my knowledge, presented any argument anywhere suggesting that the studies, as written, do in fact discuss preempted issues of public health.

    Finally, the judge pointed out that the words also appear in — indeed, may be lifted from — Act 248 and that the process of ascertaining most CPGs has nothing whatever to do with radiological health and safety issues. I’m out of my water here, but I would guess that looking at the meaning of the phrase in Act 248 would give substantial comfort that this Act has not entered into any field preempted by the federal government. The State needs to do a better job of presenting that argument, however; the judge was clearly not convinced, nor frankly, was I.

    P.S. There is an interesting dialogue on this article on the VT Law School’s website where it also appears, including my comment here.

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