A federal appeals court Tuesday rejected Entergy Corp.’s challenge to a generating tax imposed on power produced at the Vermont Yankee nuclear plant.
Entergy sued the state in federal court last year on four counts of allegedly violating the U.S. Constitution. The lawsuit sought to reverse a $0.0025 per kWh tax on electricity generation, which was passed during the 2012 legislative session and would raise roughly $12.5 million annually for the state, instead of the $5 million previously raised.
U.S. District Judge Christina Reiss dismissed the lawsuit in October 2012 and Entergy appealed. Reiss determined that the generation tax was covered under the Tax Injunction Act (28 U.S.C. § 1341), which prohibits federal courts from interfering with state taxation schemes so long as the state courts offer an adequate forum to litigate the validity of the tax.
The Second Circuit Court of Appeals court agreed with Reiss that Entergy had relief through the state’s tax appeals system and rejected the challenge in a decision issued Tuesday.
The appellate court, which sits in New York City, held that Entergy must pursue any challenge to the tax in a state forum. The court rejected Entergy’s argument that Vermont does not provide an adequate method for challenging the tax in a state forum.
Vermont Attorney General Bill Sorrell praised the decision, saying “the Second Circuit decision affirms that if Entergy wants to challenge the generating tax, it must go through the state tax appeal process, as we contended all along. The court found that Vermont provides a full and fair process for Entergy’s challenge,” he added.