State sues federal regulators over Vermont Yankee trust fund

Dry cask storage
Dry casks for storing spent nuclear fuel rods at Vermont Yankee in Vernon. 2014 photo courtesy of Entergy

The state is suing federal regulators for telling the owners of Vermont Yankee they could use trust fund money for a purpose not allowed under federal law.

Vermont alleges that the Nuclear Regulatory Commission abused its power, broke three federal laws and “acted arbitrarily” when it decided in June to give the owner of Vermont Yankee legal exemptions on how it uses a $665 million fund created from ratepayer money.

Attorney General Bill Sorrell filed suit on behalf of Vermont, Green Mountain Power, and a subsidiary company against the Nuclear Regulatory Commission and the United States of America on Friday. Sorrell filed the case in federal appeals court in the District of Columbia.

The lawsuit is the latest step in an ongoing dispute over how Entergy Nuclear Operations, Inc. can spend money from a decommissioning trust fund, and Vermont regulators’ criticism of how the federal regulators oversee Entergy’s requests.

“Decisions that the Nuclear Regulatory Commission makes for Vermont Yankee could be precedents for all kinds of other plants going through decommissioning in the future,” Sorrell said Monday. “This is obviously an important issue here in Vermont, but it’s also a matter that’s of national significance.”

Marty Cohn, a spokesperson for Entergy, declined to comment on the merits of the case. In June, he said the company is following Nuclear Regulatory Commission procedure in order to keep the power plant safe.

“We are reviewing the petition and considering our options, given that Entergy Vermont Yankee was not named as a party in the proceeding,” he said Monday.

Sheehan, spokesperson for the nuclear commission, said the regulatory body would “respond to any lawsuit based on the deadline set out by the court.”

He also declined to comment on the merits of the case.

The Nuclear Regulatory Commission decided June 17 to let Entergy take up to $225 million over several years from its trust fund to manage spent nuclear fuel – which federal law prohibits. The commission also said Entergy doesn’t need permission, or to give 30 days’ notice to withdraw from the fund.

“Based on site-specific cost estimate and the cash-flow analysis, use of a portion of the (decommissioning fund) for irradiated fuel management will not adversely impact (Entergy’s) ability to complete radiological decommissioning within 60 years and terminate the (Vermont Yankee) license,” the Nuclear Regulatory Commission wrote in June.

The decommissioning fund had about $665 million in June. The cost of decommissioning Vermont Yankee has been pegged at around $1.2 billion, and would require the fund to nearly double through its investments. Spent nuclear fuel rods remain radioactive for hundreds of thousands of years and will eventually be stored in dry casks on the Vermont Yankee property.

The Nuclear Regulatory Commission (NRC) is considering Vermont Yankee’s decommissioning within a 60-year time frame. Fairewinds, a nuclear safety advocacy organization, wants it done within 15 years. The state is pushing for decommissioning to happen as soon as possible but has not set a deadline.

Cohn, of Entergy, said in June the company would use the $225 million to help pay for the management and operations to guard the radioactive waste. The money would be in addition to a $145 million line of credit that Vermont issued Entergy.

The case against the NRC

Vermont Attorney General Bill Sorrell. Photo by Roger Crowley
Vermont Attorney General Bill Sorrell. Photo by Roger Crowley

In February, Entergy took $12 million out of the decommissioning fund for decommissioning planning, and the state said it did not receive adequate notice to form a position on the withdrawal.

The company has not yet taken any money out of the decommissioning fund for the purposes it received exemptions for in June, largely management costs of storing spent fuel rods, which remain radioactive for hundreds of thousands of years.

In its lawsuit, the state says it wants the District of Columbia appeals court to review the NRC’s decision, vacate the decision, and send it back to the commission for resolution. The timing of the suit sets up the appeals court to prevent Entergy from making any fuel-management withdrawals from the fund.

“The Commission acted arbitrarily, abused its discretion, and violated the Atomic Energy Act, the Administrative Procedure Act, and the National Environmental Policy Act in approving the exemptions and failing to provide an opportunity for Petitioners to participate in the process,” the lawsuit says.

Vermont had 60 days since the June 17 decision to file suit, and the state filed suit Friday. Green Mountain Power and its subsidiary Vermont Yankee Nuclear Power Corp. have joined Vermont as plaintiffs in the lawsuit because the companies collected just over half the money in the decommissioning fund from ratepayers.

The plaintiffs argued that Vermont ratepayers “have an interest in excess funds remaining after decommissioning” and that Green Mountain Power and its subsidiary “have a 55 percent interest in all monies that remain in that fund following completion of decommissioning.”

“Every time the Commission allows an improper withdrawal from the Decommissioning Fund, it harms Vermont Yankee Nuclear Power Corporation, Green Mountain Power Corporation, and their Vermont ratepayers,” the lawsuit says.

Kristin Carlson, spokesperson for Green Mountain Power, said the two companies’ main focus is to “protect our customers and make sure that the money that was intended to be used for decommissioning Vermont Yankee is used to decommission Vermont Yankee.”

Sorrell used a cookie jar analogy to describe Entergy’s desire to circumvent federal law through a waiver and use the trust fund for spent fuel management.

“If Entergy continues to use the decommissioning fund as this sort of cookie jar, then our kids’ kids are going to be looking at the final decommissioning of the site,” Sorrell said.

He said the U.S. Department of Energy would eventually reimburse Entergy for the money at issue for spent fuel management, but the money used in the interim should not come from ratepayers.

“They’ll get it back from the federal government,” he said. “It’s just a question of whose money is going to be used in the interim and not earning returns.”

Calling for federal regulatory reform

Chris Recchia, commissioner of the Public Service Department, which is tasked with advocating for Vermont ratepayers, said the dispute “is really not between us and Entergy.”

Entergy is doing exactly what other nuclear plants across the country have been approved to do through the Nuclear Regulatory Commission, he said.

“We tried all of the manners of participating through the NRC to (explain) that this is not Entergy’s fund to decide how to use,” Recchia said. “That was unsuccessful, so we had to evaluate what our options are.”

On June 4, two weeks prior to the June 17 decision to grant exemptions to Entergy, Recchia and other parties sent a letter to the Nuclear Regulatory Commission opposing Entergy’s requests for exemptions to federal law.

Two months prior, according to a Nuclear Regulatory Commission letter, Recchia and others petitioned to intervene in the decision regarding Entergy’s requested legal exemptions and asked for a hearing on the issue.

“The NRC first and foremost looks at nuclear safety and says when anybody asks for an exemption or a waiver,” Recchia said Monday. “They’re not recognizing the fiduciary responsibility they have over trust funds.”

“There are still things that we need a Nuclear Regulatory Commission to do, and we feel like they’re just making it up as they go along,” Recchia said.

Arnie Gundersen, chief engineer for Fairewinds, said this is the first time to his knowledge that anyone has challenged the NRC for granting exemptions from federal law to companies.

“It’s a rubber-stamp at the NRC that’s never been challenged, and I give Recchia a lot of credit for challenging it,” Gundersen said. “Traditionally, when utilities ask for an exemption, they always get it.”

Gundersen says the company “thinks it’s in the best interest to hit the (decommissioning) fund rather than hit the corporate funds.” Entergy is publicly traded as “ETR” on the New York Stock Exchange, with a $12.6 billion market capitalization.

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