Parenteau: Rule No. 1 in Vermont Yankee suit — just don’t bore the judge

Editor’s note: This op-ed by Pat Parenteau, a professor at Vermont Law School, first appeared on the VLS faculty commentary blog on the Vermont Yankee lawsuit: http://vtyankeelawsuit.vermontlaw.edu/.

My day one impressions of the two-day hearing in the Vermont Yankee lawsuit to consider Entergy’s request for a preliminary injunction in U.S. District Court:

1. If the contest was about who had best PowerPoint or the most high-priced lawyers in the courtroom, Entergy would win. There are advantages to having an unlimited litigation budget.

2. Entergy lawyer Kathleen Sullivan’s presentation was smooth and professional, but she spent most of it playing “gotcha” with the legislative history of Acts 74 and 160 (despite assuring Judge Murtha that was not her intent). She played snippets of audio tape from various people, many of whom were not legislators but witnesses and staff of the Vermont Public Service Department. Both sides cherry-picked excerpts from thousands of hours of legislative hearings and debates and over 2,500 pages of transcripts and documents. Neither side made much headway with this glimpse into the sausage-making process, and I doubt Judge Murtha is going to decide the case based on who picked the best sound bites. The most telling exchange occurred when Murtha got Sullivan to agree that there was more than one way to interpret the references to safety issues. If there is more than one way to interpret legislative intent, Entergy loses. The state pointed out that it was perfectly appropriate for the Legislature to get advice on where the line was between state and federal regulation of nuclear power plants. And in any case, the Atomic Energy Act does not forbid state legislators from being concerned about safety issues or pursuing additional safeguards through the NRC; it simply prohibits states from actually regulating radiological health and safety aspects of the plant.

3. Sullivan was quick to concede, as she probably had to, that this is a case of “field preemption” rather than an actual conflict between state and federal law. In other words, Entergy is betting its entire case on convincing the court to look behind the plain text of the challenged statutes, which say nothing about radiological health and safety concerns, and rule that “safety, safety, safety” (as Sullivan chanted throughout her two-hour presentation) was the only thing on the minds of the 180 members of the Vermont Legislature. To which my only comment is: Good luck with that. The specter of federal courts probing the thought processes of state legislatures looking for illicit motives is scary indeed. Contrary to Sullivan’s argument, that is not what the U.S. Supreme Court did in the California Pacific Gas and Electric Company case. Rather the Court, after noting that the legislative history was subject to varying interpretations, explicitly declined to “become embroiled in attempting to ascertain California’s true motive” and simply accepted the state’s stated economic rationale for placing a moratorium on new nuclear plants.

4. Entergy’s attempts to distinguish the Pacific Gas and Electric case on two different grounds were unpersuasive. First, Entergy argues that Vermont Yankee is a “wholesale plant” that is subject to the exclusive economic jurisdiction of the Federal Energy Regulatory Commission. The state countered this argument by pointing out that under the Federal Power Act, the Federal Energy Regulatory Commission’s jurisdiction is limited to regulating the wholesale rates, not the power plants themselves, and by citing a recent D.C. Circuit Court opinion that expressly recognizes the authority of states to regulate both the construction and retirement of “merchant plants like Vermont Yankee that sell in the wholesale market. Second, Entergy argues that Pacific Gas and Electric is distinguishable because it dealt with proposed new plants and Vermont Yankee is an existing plant. However, the state responded by citing several Nuclear Regulator Commission documents acknowledging that states have the same role at the license renewal stage as they do when the license is issued. Specifically, Nuclear Regulator Commission has repeatedly acknowledged that it only decides whether a plant is safe to operate, and that it is up to the state to determine whether, as matter of land use, economics, environment and other non-radiological matters, a plant should continue to operate.

5. Judge Murtha questioned whether Entergy had “clean hands.” This doctrine holds that anyone seeking injunctive relief must come to court with clean hands. The state argues that Entergy has dirty hands for several reasons. First, that it reneged on the commitments made in the 2002 memorandum of understanding that it would not raise preemption claims. Second, that Entergy was the one that requested Act 74, which it now seeks to declare unconstitutional. Third, that Entergy has testified a number of times that it recognized Vermont’s right to consider non-radiological issues in the context of reissuing the state’s certificate of public good, which is due to expire in March 2012. And finally, that Entergy could have brought this action years ago when Acts 74 and 160 were enacted if the company thought they were unconstitutional. So, whatever harm it now claims is self-inflicted.

6. Sullivan argues that Entergy cannot waive federal preemption. But that misses the point. The 2002 memorandum of understanding is a contract that Entergy signed in which it waived its right to challenge the state’s decision not to reissue the certificate of public good. This provision is in the nature of a covenant not to sue and it is a standard clause in many government contracts. The memorandum of understanding does not purport to waive federal preemption or bind the Nuclear Regulatory Commission in any way; rather it binds Entergy to the promise it made in exchange for obtaining the certificate of public good. The state argues that it would be grossly unfair to allow Entergy to disavow its obligations under the memorandum of understanding now that it has enjoyed the financial benefits of the deal it struck in 2002.

7. The most interesting exchange of the day occurred between Judge Murtha and John Herron, the CEO of Entergy Nuclear. When Judge Murtha asked what Entergy would do if he issued a preliminary injunction, Herron perked right up and said he’d immediately place the order with General Electric for the new fuel rods that must be installed in October at a cost of about $60 million. Even when the judge reminded him that a preliminary injunction would not guarantee that the plant could continue operating beyond March 2012, Herron said Entergy would be willing to take that chance. Then Judge Murtha asked the flip side: What would Entergy do if he denied the preliminary injunction? After some hemming and hawing Herron said one option would be to decide not to order the new fuel rods and move forward with closing the plant permanently. Judge Murtha then suggested that there might be a middle ground that didn’t give either party all that it wanted. He gave no hint of what this middle ground might be or how he would ultimately rule on the motion.

8. I do not find the threat of a complete shutdown credible. It reminds me of the bank robber with a gun to his head muttering: “Don’t anyone move.” Herron testified that Vermont Yankee generates $50 million a month in gross revenues. Even though Herron testified that he was not sure that Entergy could recoup all of the costs of replacing the fuel rods, it seems highly unlikely that Entergy would simply fold its tent just because it loses this round. Presumably, the plant is a valuable asset that shareholders would not be too happy to see decommissioned. Another Entergy witness testified that giving up the 20-year renewal license and accelerating the costs of decommissioning would cause significant financial harm to the company. Looks like a bluff to me.

9. The only surprise of the day was Entergy’s announcement that it would not cross examine the state’s witnesses. Sullivan said that Entergy would prefer to use that time to expand on their legal arguments on the second day of the hearing, to which Murtha quipped, just don’t bore the judge. Might have been a hint.

10. Final thought: I see no reason for a trial. Rule 65 of the Federal Rules of Civil Procedure authorizes the court to consolidate the preliminary injunction hearing with the trial on the merits. The parties have produced a mountain of evidence and argument already; it’s hard to imagine what else needs be said. Though Judge Murtha has the discretion, after notice to the parties, to consolidate the hearings on his own, it is doubtful he would do so without the consent of the parties. The advantages of consolidation are that it avoids the necessity of deciding whether a preliminary injunction should be issued and how it should be framed, accelerates a final judgment and clears the way for the inevitable appeal.

Comments

  1. James Marc Leas :

    Exciting that Judge Murtha questioned whether Entergy had “clean hands.” And the state had four examples of how Entergy was not entitled to equitable relief. But among the excellent points made by the state’s attorneys in response, did they really omit mentioning that Entergy falsely testified to the Public Service Board concerning the underground pipes? Entergy’s announcement of the tritium leak from underground pipes exposed its testimony a few months earlier as false. Several Entergy officials were relieved of their positions.

    Environmental organizations filed a motion asking the PSB to deny Entergy’s petition for the 20 year extension because Entergy had testified falsely to the PSB.

    According to the decision issued by the PSB in response to that motion, Entergy successfully argued that the PSB could not approve the motion to deny Entergy’s petition for the 20 year extension based on the false testimony because Act 160–the very act Entergy now seeks to be declared unconstitutional–prevents the PSB from issuing a final decision before the legislature votes to approve.

    So Entergy was able to avoid the consequence of its bad act in the proceeding before the PSB by relying on the very provision of Act 160 that Entergy now asks the federal court to overturn. Entergy goes further asking the federal court not even to allow the PSB to consider the 20 year extension even if it removes the legislature from its role under Act 160. Avoiding the unclean hands problem could have contributed to Entergy’s desire to sell Vermont Yankee.

    A false statement under oath in a related proceeding and Entergy’s legal maneuver to avoid the consequences are the kind of acts that could lead to a finding of unclean hands and a denial of equitable relief. Without the court having even to reach the question of preemption.

  2. Townsend Peters :

    Very interesting and lucid article. Points 4 and 5 are especially critical to Entergy’s case for an injunction. Thank you Prof. Parenteau for elucidating them so clearly. Few in the media, including others writing on this site, have drawn attention to these critical points.

  3. Mike Kerin :

    Entergy is being dishonest.

  4. Appreciate reading this clear report, a nice combo of a lawyer’s expertise while using layman’s language (mostly).
    “Dirty hands”, hmm. Haven’t heard that one before except on the gardening or kids front…

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