Kreis: An inconvenient truth — Entergy might win

Donald M. Kreis is associate director, and an assistant professor of law, at the Institute for Energy and the Environment at Vermont Law School. He is the former general counsel of the New Hampshire Public Utilities Commission and a member of the Board of Trustees of the Vermont Journalism Trust, the publisher of VTDigger.org.

What a bizarre world it is, in which a giant energy conglomerate from the region that gave us the Gulf of Mexico oil spill disaster files a pleading with a federal court to deride Vermont for its allegedly secret desire to promote the safety of its citizens.

But that is what it has come to, as the Louisiana-based owner of the Vermont Yankee nuclear power plant seeks an injunction in U.S. District Court to stop Vermont from shutting down the facility.

Quoting statements Governor Shumlin has made, both before and after his election, about tritium leaks and other safety issues at Vermont Yankee, the Entergy Corporation argues that if Vermont now attempts to justify its position based on economics, or energy policy, or waste disposal concerns, “any such rationale is unsupportable and thus should be viewed as a pretext for Vermont’s true safety motivation.”

Wow.

But an even more bizarre reality is that Entergy might just have a point. In other words, Vermont should consider the possibility that Entergy will prevail in its lawsuit and that nothing can stop Vermont Yankee from continuing to operate now that the federal Nuclear Regulatory Commission (NRC) has given the plant an operating license good for another 20 years.

I am no fan of Vermont Yankee, particularly in the post-Fukushima era. And I do not rise to defend Entergy and its wholly owned subsidiaries that own and operate Vermont Yankee. They are more than sufficiently lawyered up to do that themselves.

But I cannot help but notice that, among those in Vermont with an enlightened perspective on energy policy, the talking points on the Entergy lawsuit seem to run along these lines: Just as the recent tritium leaks at Vermont Yankee prove that Entergy has been cavalier about plant safety and was then willing to mislead regulators about the leaks, so too is the company now willing to file a frivolous lawsuit and, in the process, blatantly violate a commitment it made when it bought the plant in 2002 not to do precisely what it is now doing.

Admittedly, it’s possible that Justice Scalia could cut-and-paste the preceding sentence and use it as the introduction of his majority opinion of the U.S. Supreme Court declaring Vermont the winner of Entergy Nuclear Vermont Yankee v. Shumlin. Any copyright-based impediments to that eventuality are hereby waived.

Meanwhile, those who hope Vermont Yankee’s days are numbered should read Justice White’s majority opinion, and Justice Blackmun’s concurring opinion, in the 1983 case of Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Commission. At issue there, as here, was the Supremacy Clause of the U.S. Constitution. In relevant part, this provision is quite straightforward: “The laws of the United States,” by which is meant federal law as enacted by Congress, “shall be the supreme law of the land . . . [anything in the] laws of any State to the contrary notwithstanding.”

One of those “laws of the United States” is the Atomic Energy Act, which, as Justice White made clear, reserves to the NRC (known at the time as the Atomic Energy Commission) the task of regulating the safety and operation of nuclear power plants. A potential “law of any State to the contrary notwithstanding” was a California statute precluding the construction of new nuclear power plants until there is a means of disposing of their high-level radioactive waste. Was this limitation superseded on Supremacy Clause grounds – or, in legal parlance, preempted – by the Atomic Energy Act?

No, ruled Justice White, because the law in question was a form of economic regulation that did not concern the safety and operation of nuclear plants. Rather, California was at least ostensibly concerned with the financial implications, for electricity customers, of radioactive waste that had no permanent home. This, of course, explains why Entergy is so keen on proving that Vermont’s assertion of veto power over the continued operation of Vermont Yankee is all about safety and nothing else.

Although Entergy’s injunction request is riddled with campaign quotes from Governor Shumlin about how unsafe Vermont Yankee is, the state certainly has a colorable argument that the assertion of a right to shut down the plant is, like the California statute, not at all concerned with plant operations or safety and thus not preempted. But those who hold that view should note that the majority in the 1983 case pointedly did not embrace the expansive view of state authority adopted by Justice Blackmun in his concurrence.

Here is what Justice Blackmun wrote: “Congress has occupied not the broad field of ‘nuclear safety concerns,’ but only the narrower area of how a nuclear plant should be constructed and operated to protect against radiation hazards. States traditionally have possessed the authority to choose which technologies to rely on in meeting their energy needs. Nothing in the Atomic Energy Act limits this authority, or intimates that a State, in exercising this authority, may not consider the features that distinguish nuclear plants from other power sources.” That view would be awfully favorable to Vermont, if only the full Court had actually adopted it.

Blackmun and the only colleague who joined his concurrence, Justice Stevens, are no longer on the Court. To state the obvious, the Roberts Court of today is far friendlier to the interests of big corporations, and more skeptical about feisty states’ efforts to rein in such corporations, than was the Burger Court of 1983. In these circumstances, whoever argues this case for the State of Vermont should have a good answer to this oral argument question from Chief Justice Roberts: If the 2006 Vermont law, reserving to the Legislature the right to veto continued operation of Vermont Yankee, is not about safety, then what exactly is its purpose?

In this regard, consider the structure of Vermont’s electric industries, which contrasts vividly with that which prevailed in California at the time of the Pacific Gas & Electric case. 1983 was within the good old days of vertically integrated electric utilities, in which the same companies serving retail electricity customers owned the nuclear power plants. Under that paradigm, the economic consequences of the plants’ circumstances inexorably flowed right into the bills of utility customers.

Vermont Yankee went on line in 1972 under this same paradigm, but everything changed when Vermont’s regulated utilities sold Vermont Yankee in 2002 to a subsidiary of Entergy. This made Vermont Yankee a so-called “merchant generator” that cannot pass the economic consequences of any misfortune onto retail electric customers. Thus, the Vermont of today will have a more difficult time than California did in 1983 in arguing that the state is just engaging in economic regulation.

Of course Vermont also has something that California didn’t – the so-called Memorandum of Understanding, or MOU, signed by Entergy and state officials and explicitly adopted by the Vermont Public Service Board (PSB) as a condition of approving the sale of Vermont Yankee. Paragraph 12 of the MOU clearly reflects that Entergy (a) agreed to let the PSB decide whether Vermont Yankee can continue to operate after March 21, 2012 and (b) waived any right to argue that federal law “preempts the jurisdiction of the Board” to make that decision.

As Entergy points out in its recent U.S. District Court pleadings, acceding to the jurisdiction of the PSB, which itself functions like a court, is one thing, but submitting to the approval of the Legislature is quite another. However, the state can marshal some compelling arguments in rebuttal: First, the PSB’s authority as a state agency is delegated to it by the Legislature; just because the Legislature has un-delegated some of that authority doesn’t necessarily mean that Entergy can renege on its agreement to be subject to that authority. Second, there’s evidence that Entergy made public statements in 2005-06 that could be understood as agreeing to the kind of legislative oversight to which it now objects as unconstitutional.

Moreover, there is plenty of blarney in Entergy’s written request for an injunction. My favorite is the reference to a study conducted by two professors of regional planning, concerning the shutdown of a nuclear power plant in Rowe, Mass. “Generally, there was a somewhat wistful feeling in Rowe that life wasn’t the same any more,” Entergy quotes the report as concluding. This is apparently among the irreparable harms that Entergy wants the U.S. District Court to prevent by issuing an injunction.

Entergy v. Shumlin will not turn on who is feeling wistful about Vermont Yankee. It will turn on cold, hard principles of constitutional law. These principles are likely to be applied by judges whose previous decisions suggest a heightened sensitivity to the concerns of giant corporations and little concern for upstart states that adopt progressive regulatory regimes. Vermont may well prevail nonetheless, as at least two of my distinguished colleagues at Vermont Law School have publicly predicted. I cannot prove them wrong, and I hope they are correct. But if we simply proceed on the assumption that Entergy will lose and Vermont Yankee will close in 2012, we do so at our peril.

Leave a Reply

17 Comments on "Kreis: An inconvenient truth — Entergy might win"

1000

Comment Policy

VTDigger.org requires that all commenters identify themselves by their authentic first and last names. Initials, pseudonyms or screen names are not permissible.

No personal harassment, abuse, or hate speech is permitted. Be succinct and to the point. If your comment is over 500 words, consider sending a commentary instead.

We personally review and moderate every comment that is posted here. This takes a lot of time; please consider donating to keep the conversation productive and informative.

The purpose of this policy is to encourage a civil discourse among readers who are willing to stand behind their identities and their comments. VTDigger has created a safe zone for readers who wish to engage in a thoughtful discussion on a range of subjects. We hope you join the conversation.

Privacy policy
Sort by:   newest | oldest | most voted
Howard Shaffer
5 years 7 months ago

How will Vermont answer the question,”If the Legilature wanted to be involved, why didn’t the MOU say so?”

Won’t Article I, Section 10 apply? This forbids states from “impairing the obligation of contracts.” Isn’t that precisely what the Legislature intended?

timothy k price
5 years 7 months ago
Comments about the Fukushima disaster often refer to the “aging nuclear plants”, failing with the onslaught of natural disaster, presumably due to their weakened condition, as being of the same type and age as Vermont Yankee. We can look at leaking pipes and collapsing cooling towers at Yankee to see some validity in this comparison.The facility is weakened from age and decay. Then too, push come to shove, the people of vermont, if they decide that Yankee will be shut down, then Yankee might have to figure out what to do without power lines to transmit the power, or what… Read more »
John Greenberg
5 years 7 months ago
First, I thank Donald Kreis for a thoughtful and intelligent analysis, even though I disagree with his main points. Frankly, Entergy should have hired HIM to make its case; they’d be far better off. Kreis correctly argues that this case will turn on the Court’s reading of PG&E, but he misrepresents the holding in the case. In it, a unanimous court found that the United States nuclear industry is under “dual regulation.” States have the right to regulate nuclear power in their areas of “traditional authority,” while the federal government (alone) regulates “safety” and the “nuclear aspects” of energy generation.”… Read more »
Howard Shaffer
5 years 7 months ago
Mr. Greenberg says that Entergy could have demanded a provison in the Memorandum of Understanding (MOU) preventing the Legislature from overiding the Public Service Board unilaterally. Whether or not Entergy agreed with Act 160 or not, doesn’t the issue turn on what the MOU is? If it is a contract, does it fall under the US Constitution, Article I, Section 10 that prohibits states from passing laws that “impair the obligations of contracts.” States have tried this before and lost before the US Supreme Court. Entergy may have thought that they didn’t need a provision in the MOU preventing the… Read more »
Howard Shaffer
5 years 7 months ago

Is the Memorandum of Understanding a contract or not? If it is, does the US Constitution, Article I, Section 10, that prohibits States from passing laws that “impair the obligations of contracts” apply?

Does Act 160 “impair the obligations of the MOU?” In the MOU isn’t the Public Service Board “obligated” to make and release its findings? Isn’t Entergy obligated to obey them? Doesn’t Act 160 “impair” the PSB’s obligation under the contract?

John Greenberg
5 years 7 months ago
I answered Mr. Shaffer’s question about Article I, Section 10 before, so I’ll just quote the answer: The courts have interpreted Article I, section 10 as applying only to criminal cases. According, for example to The Congressional Research Service/Library of Congress’s “The Constitution of the United States of America: Analysis and Interpretation,” p. 380-1: “This clause, like the cognate restriction imposed on the Federal Government by section 9, relates only to penal and criminal legislation and not to civil laws which affect private rights adversely.” (A footnote provides a sampling of cases which justify that statement). So the short answer… Read more »
Don Kreis
5 years 7 months ago
I stand corrected in re John Greenberg’s having pointed out that when Vermont Yankee was owned by a consortium of utilities (with CVPS and Green Mountain Power collectively owning the majority interest) Vermont Yankee’s rates were regulated by the FERC rather than the Vermont Public Service Board. Although Mr. Greenberg mentions section 248, that’s not an issue here. The CPG (certificate of public good) that Entergy acquired was a section 231 CPG. Section 248 is the equivalent of Act 250 for utility facilities; section 231 concerns utility franchises. This might be relevant to the question of what ongoing PSB oversight… Read more »
John Greenberg
5 years 7 months ago
1) Mr. Kreis writes: “Although Mr. Greenberg mentions section 248, that’s not an issue here. The CPG (certificate of public good) that Entergy acquired was a section 231 CPG. Section 248 is the equivalent of Act 250 for utility facilities; section 231 concerns utility franchises. This might be relevant to the question of what ongoing PSB oversight Entergy agreed to in the MOU.” Probably because I’m not an attorney, I’m not sure what he’s talking about. According to the July 17, 2009 DPS brief in Docket 7440: “In order to obtain Board authorization for continued operation of VY, the Petitioners… Read more »
Don Kreis
5 years 6 months ago
I really appreciate this opportunity to engage in some open dialogue with folks who share my skepticism about Vermont Yankee as an ongoing enterprise but who are at least open to considering the possibility that Entergy may nonetheless prevail in the pending litigation. The section 248 vs. section 231 thing may be an example of Vermont utility law esoterica, and I haven’t come to a firm conclusion in my mind about whether it has any bearing on the outcome. But here’s my thinking at present. The referenced DPS brief notwithstanding, the Certificate of Public Good (CPG) issued to Entergy by… Read more »
Don Kreis
5 years 6 months ago
Here’s my effort to elaborate on why I think Entergy may have opted to eschew an argument that Act 160 is unconstitutional on Contracts Clause grounds: Essentially, I think Entergy wants the MOU to go away rather than to concede that when it signed the MOU it was binding itself in contract. I ran up against similar issues when I was at the Public Utilities Commission in New Hampshire. There, highly contentious federal litigation over the restructuring of the state’s electric industry was resolved via a settlement agreement entered into by the state’s largest utility (Public Service Co. of New… Read more »
Don Kreis
5 years 6 months ago
Regarding the never-consummated and putatively awful Enexus spin-off: I agree with Mr. Greenberg’s characterization of the state of the proposed transaction at the time it was abandoned – all that stood in the way were required approvals from utility regulators in New York and Vermont. I assume that the folks at the Vermont PSB are grateful to their New York counterparts for causing the issue to become moot in Vermont. In any event, I now understand why Mr. Greenberg was raising the issue here – it would indeed be relevant legislative history with respect to the issue of what motivated… Read more »
John Greenberg
5 years 6 months ago
Once again, my thanks to Don Kreis. I too find this dialogue very helpful. I’ll respond to his posts in the order presented. First, let me make sure I understand the argument being made about the CPGs: namely, that the original CPG granted to VY in 2002 was a section 231 CPG; that the MOU, by not specifying which kind it meant in section 12, COULD have meant a section 231 CPG as well, and that therefore Act 160 was changing not only the type of forum (political vs regulatory)but also the TYPE of CPG, thus invalidating the MOU. (This… Read more »
Townsend Peters
5 years 6 months ago
It is good for Vermont the Nuclear Regulatory Commission’s (NRC) interpretation of its jurisdiction – and apparent reading of the PG&E case – is different from that of Professor Kreis. Evidently Professor Kreis, like so many other commentators on this issue, has not read the NRC’s environmental impact statement (EIS) for continued operation of nuclear plants, which it supplemented and used in support of the license renewal of the Vermont Yankee plant. The NRC’s EIS clearly states that “the final decision” on continued operation of a nuke is up to other, non-NRC decision-makers _including_ the states. Check out volume 61… Read more »
Don Kreis
5 years 6 months ago
A couple of brief replies to the posts from messrs. Greenberg and Peters: 1. Unfortunately it is not the NRC but the courts that are tasked with interpreting the extent to which federal law preempts Vermont’s assertion of authority over the continued operation of Vermont Yankee. Courts will sometimes defer to an agency’s construction of its enabling statute but I doubt they would defer to a comment in an EIS that is, obviously, tangential to the purpose of the document. That said, I want to continue to make clear that in my opinion Vermont has a colorable argument and the… Read more »
Townsend Peters
5 years 6 months ago
Prof. Kreis: You really ought to read the Federal Register cite and know what you are talking about before you write. The comments in the EIS specifically formed part of the basis of the regulatory action, including how the NRC shaped its consideration of the environmental impacts of continued operation generically and specifically for the VY plant. This interpretation is in no way tangential: It formed a key basis for the approach that the NRC decided to take in how it goes about performing EIS analysis for _all_ nuclear plants. You are correct that courts decide preemption. But an official… Read more »
John Greenberg
5 years 6 months ago
Again, thanks to Don Kreis for his replies. Comments: 1) “…the case was arguably unripe until the NRC had issued VY its new operating license.” “Arguably,” certainly. But there are certainly ALSO reasonable arguments to suggest that it WAS ripe in 2006. Indeed, the cost of going through the NRC relicensing would have been one of them: I’m sure that relicensing cost Entergy millions of dollars. The legal argument about ripeness is especially thin when compared to the obvious political reality: namely, that it never occurred to Entergy in 2006 that it could lose the legislative vote (and surely, virtually… Read more »
Mike Kerin
5 years 6 months ago

I have a few questions. I would like to know why the NRC is asleep on the job? The NRC is the sole safety regulator, so why did they issue a relicense to VY a nuclear plant with ongoing leaks? Why is the NRC cheer leading the nuclear industry instead of regulating the safety of the nuclear industry?

Mike Kerin, Northfield VT.

wpDiscuz
Thanks for reporting an error with the story, "Kreis: An inconvenient truth — Entergy might win"