Eminent domain suggested as “end-run” to close Vermont Yankee

Vermont Yankee on the banks of the Connecticut River

Nuclear power is a rigged game that lets the federal government preempt state and local governments on most issues, according to Karl Grossman, professor at the State University of New York and author of a book on the subject, Power Crazy: Is LILCO Turning Shoreham Into America’s Chernobyl.

But he thinks that there is a way around the problem: using the power of eminent domain, a legal principle that allows states to condemn property if the owner refuses to sell. In the area of nuclear power, the approach was pioneered in New York during the 1980s to stop the completed Shoreham nuclear plant from opening. At the time advocates of nuclear power were hoping to create a “nuclear park” with seven to 11 plants.

The Long Island Power Act was passed by New York in 1985, creating a Long Island Power Authority (LIPA) with the power to seize the assets and stock of the utility behind the plan, the Long Island Lighting Company (LILCO), writes Grossman on Counterpunch, a website edited by Alexander Cockburn and Jeffrey St. Clair.

The federal government wanted Shoreham and the NRC had approved start-up operations. However, Grossman notes that by enacting the Long Island Power Act, which applied the power of eminent domain, New York was saying that if Long Island Lighting persisted the state would step in.

The NRC has never denied a construction or operating license for a nuclear plant in the United States. No new U.S. plants were ordered after the 1970s, but since then federal regulators have approved 20-year license “renewals” to more than half of the 104 US nuclear plants. It is currently considering the possibility of expanding that extension period to 80 years.

The Long Island Power Act “set forth a mechanism for getting rid of the utility by giving the public authority which it created the power to condemn the utility’s assets and stock,” explains Irving Like, a co-author of the law.

“With this we had the ability to tell LILCO: either you shut down the Shoreham plant or we will condemn you,” he said. Grossman believes a similar strategy could be used by Vermont.

Steve Liss, another co-author who served as counsel to the state legislature’s Environmental Conservation Committee, says eminent domain gives a state the power to act “in the public interest for a lawful purpose.” However, it must pay “fair market value” for what it condemns.

After enacting a legal foundation similar to the Long Island Power Act, Vermont could move against the assets of Entergy in Vermont, Liss argued last week. Another possible but extremely costly and complex strategy he mentioned would be for the state to acquire the utilities that distribute electricity from Vermont Yankee and own the transmission lines through which it runs, then refuse the energy and prohibit its transmission.

In 1989, LILCO abandoned Shoreham largely because of New York’s innovative legislative strategy and sold it for one dollar. It was subsequently decommissioned.

A combination of legal and grassroots strategies played a part in the victory; among them were anti-nuclear demonstrations, legal action by Suffolk County under the Racketeer Influenced and Corrupt Organizations (RICO) Act, and refusal of Suffolk and New York State to adopt a federally-required evacuation plan for the plant. Local governments meanwhile determined that evacuation of Long Island was impossible if a major nuclear accident occurred.

At the time, U.S. Energy Secretary John Herrington warned that if Shoreham didn’t open “the signals will be the low point in this [nuclear] industry’s history.” The closing of Vermont Yankee would have an equally significant impact.

In his ruling, US District Court Judge J. Garvan Murtha said that Vermont’s demand that Yankee be shut down was “grounded in radiological concerns,” an issue on which the federal government has “pre-empted” state and local governments.

Despite this setback, Grossman says an “end-run can be made around the would-be mandate of federal nuclear officials.”

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Greg Guma

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  • Wendy Ireland

    Perhaps in the interest of smaller government we should try to pressure our President to get rid of the NRC. What sort of useful work does the NRC do anyway?

  • Sally Shaw

    Once the “assets”: a decrepit power plant AT THE END OF ITS DESIGNED LIFE with radioactively contaminated turbine and piping, a swimming pool of indisposable radioactive waste the equivalent of more than 20,000 Hiroshima bombs, a legacy of soil and groundwater contamination, and an enormous decommissioning and clean-up bill (nearly $1 billion, est., with known site contamination) are accounted for by an INDEPENDENT investigation, it will be seen that it is far cheaper for the state to take and close VT Yankee than to allow it to double it’s toxic waste stockpile, continue it’s poison manufacturing and spewing operation (which believe me Entergy has no intention of sticking around to clean up and guard for millennia, and no NRC employee has ever had to get their hands dirty helping to remediate). Judge Murdtha’s decision only buys them more time to get out from under this mess and stick it to the taxpayers.

    • Nathanael Nerode

      Indeed, the fair market value of the “Vermont Yankee” plant is less than zero.

      Eminent domain would be cheap and trivial for Vermont, apart from legal fees.

  • John Greenberg

    To be blunt, this is a lousy idea. The State of Vermont would be buying –even for $1 — a potential liability in the billions of dollars. Why would we want to do that? Shoreham was a brand new, minimally contaminated plant. VY is a 40-year hunkajunk at the end of its useful life with boatloads of spent fuel and decommissioning waste. Entergy would like nothing better than to unload it, which they’ve already tried to do in the Enexus deal.

    This game is far from over, however, and there are a plethora of better strategies left on the table.

  • Barry Kade

    Only problem with this idea is that when the state condemns property it must pay the owner the market value. The market value of VY with a 20 year license extension is about a bazillion dollars.

  • That’s a common misconception. When taking property by eminent domain the evaluation sensibly includes its assets AND the liabilities. The cleanup is definitely a liability, and it is counted AGAINST the owner. Entergy might even end up owing money to the state. See EMDOVY resolution.

  • Sally,
    Hundreds of power plants in the US have 40-year licenses to operate. The 40-year period has nothing to do with the “design life”. It relates to the period of the license to operate. It is an arbitrary number. Google it and you will find out.
    Almost all power plants are designed based on very conservative assumptions and with much redundancy.
    How do I know this? I have designed them for about 30 years, including an 1,800 MW coal plant consisting of three 600 MW boilers on a 1,000 acre site.
    The plants usually perform at near-rated output for 60, 70 years, or more. Many plants are doing it.
    Power plants are constantly being refurbished. Almost all plants have an annual 3-4 week shutdown period for major maintenance.
    Hundreds of outside contractors coordinate their work so the plant can go on line again. The utility plans for such a shut down for 11 months to make sure all goes as planned.
    VY is no different. It operates at near-rated output for 500 days, shuts down for 4 weeks to refuel AND PERFORM MAJOR MAINTENANCE (more than 1,000 outside contractors were busy on the site) and runs again at near-rated output for 500 days.
    Only plants that are highly reliable can do this. The US nuclear industry has a capacity factor of 0.90 (VY 0.92), higher than all nations.

  • Townsend Peters

    Oh good. Condemn VY, shut it down, and pay ourselves and obtain to clean up the plant. That liability includes the unknown costs due to leaks from underground pipes that “surfaced” in recent years. Right. Great idea.

  • Steven Farnham

    The tax department measures asset value just the way Entergy does: capacity to generate revenue minus amortized costs. In this case, “costs” are defined as something actually paid, like the price of fuel, workers’ compensation, and of course, taxes. They tax what is actually happening, not what ought to be.

    From the standpoint of environmental concern, costs include a large item Entergy does not pay: decommissioning and clean up of contamination. From the standpoint of John Q. Vermonter, the cost of the latter far exceeds the value of the aggregate electricity produced at any conceivable price; hence the declaration of a value “less than zero.”

    From either viewpoint, given Entergy’s amoral behaviour, and truth-challenged modus operandi, I say tax them any way possible. We have to pay for the effects of their pernicious corruption and lies somehow. Why should Vermonters be stuck with that?

  • Grant Reynolds

    In the abstract, it would be nice to have Vermont Yankee shut down in March and promptly decommissioned by Entergy. The devil, as usual, is in some overwhelming details.
    Let us suppose Entergy bows to the might of the State of Vermont and sells it for $1, like Lilco. The two situations are totally different, but it’s an interesting starting point. But the state also buys the responsibility for decommisioning. Whether it could buy the decommissioning fund for that same dollar is not very likely, and it’s far too small anyway – especially for an immediate start. So the people of Vermont have bought a probably billion dollar liability, AND have made it a political issue. Will Chittenden County wish to pay significantly higher taxes or utility rates to decommision a plant 150 miles away? The northern counties have become a substantial part of the legislature. I don’t see how Vermont can afford to buy Yankee, whatever the price.
    In 1946 Congress clearly foresaw that people would be afraid of nuclear power, despite the “electricity too cheap to meter” fantasy of the time. So they pre-empted state jurisdiction over nukes to keep the neighbors from persuading state governments to block new plants. They probably thought the preemption was total, but the Supreme Court later found their work wanting and allowed California to stop construction of a nuclear power plant because it would cost too much (and there was no way to estimate the cost of disposal of spent fuel). Perhaps that would have been an avenue worth exploring – but it doesn’t do much good if Yankee isn’t selling power to Vermont. Our power companies, lacking contracts with Entergy and having to expect Yankee would close, have made alternate arrangements. So the cost of Yankee – such as decommisioning and spent fuel disposal – would have no direct effect on Vermont utility rates.

  • Kevin Jones

    This is not a workable solution. Greg does not explain that the state authority, LIPA, assumed LILCO’s multi billion dollar debt for Shoreham so the citizens of Long Island have been paying for a nuke that never operated and thus LIPA to this day has one of the highest electric rates in the country given that the customers had to pay the costs of the Shoreham mistake. Vermont purchasing Yankee through eminent domain would be a very bad idea.

  • Kevin,
    That’s a common misconception. When taking property by eminent domain, the evaluation sensibly includes its assets AND the liabilities. The cleanup is definitely a liability, and it is counted AGAINST the owner. Entergy might even end up owing money to the state. See EMDOVY resolution. It is also important to know that the eminent domain deal that Liss worked out through the LIPA did not go through. According to Mr. Liss, who spoke with me last week, the governor intervened at the last moment and offered a deal worth approximately 40 times what was about to be approved under the threat of eminent domain. Even so, it prevented the construction of a slew of nukes on Long Island.

  • victor ialeggio

    Let me expand on the Shoreham “solution” just a little bit:

    Three years before that famous “dollar” changed hands (in 1992, not 1989), Shoreham was still a clean, unused plant, never having been fired up. Under the terms of the deal between NYS, LILCO and LIPA, the plant was allowed to run at 5% for a little less than 24 hours. The $6 billion cost of construction, shutdown, decommissioning and cleanup was then off-loaded to Long Island ratepayers (rather than borne by LILCO shareholders) through a surcharge on use, to be paid over a period of thirty years. Making the last payment due sometime in 2019, for a nuclear plant that never produced a single megawatt of commercial power.

    Today, LIPA (the public authority with which NYS acquired LILCO by eminent domain) does not own any electric generation assets on Long Island. National Grid USA (UK), maintains LIPA’s transmission and distribution system under a management services agreement. In 2014, that agreement terminates and Public Service Enterprise of NJ (acquired by Excelon of Chicago/Phila in 2005) takes over.

    A cautionary tale.