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Federal appeals court: State does not have authority to shut down Vermont Yankee

But Entergy’s contention that state officials violated federal Commerce Clause is denied

Commons News Editor Randolph T. Holhut contributed to this report.

Three justices from the U.S. Court of Appeals in New York City have decided that the Vermont Legislature is federally preempted from shutting down the Vermont Yankee nuclear plant.

After U.S. District Court Judge J. Garvan Murtha made the same preemption ruling in January 2012, Vermont Attorney General Bill Sorrell appealed to the higher court. In a 56-page decision, the appellate judges upheld the crux of Murtha’s ruling in favor of Entergy Corp., Vermont Yankee’s parent company.

On Aug. 14, the judges agreed that the Legislature was chiefly motivated by concerns of radiological safety when it created two laws aimed at regulating Vermont Yankee. Safety falls under the purview of the U.S. Nuclear Regulatory Commission — not state legislatures.

The judges did, however, reverse Murtha’s determination that the state had violated the Constitution’s dormant Commerce Clause when it attempted to work out an advantageous power-pricing agreement for state entities. This ruling means that Vermonters do not have to foot the bill for Entergy’s legal expenses, which are estimated at more than $5 million.

“It’s a big win for Entergy and a little win for Vermont,” said Cheryl Hanna, a constitutional law professor at Vermont Law School, who has closely followed this case.

Sorrell said his office has 90 days to decide whether to seek a review of the ruling by the U.S. Supreme Court.

“This is clearly a good one for Vermont taxpayers. We saved many millions of dollars for having to pay attorneys’ fees because we prevailed on the constitutional issue,” Sorrell said. “We didn’t prevail on the validity of the two legislative enactments, so we’re sorry about that.”

Gov. Peter Shumlin said that while he is disappointed the appeals court ruled against the Legislature, he is hopeful that Vermont’s quasi-judicial Public Service Board will deny the 41-year-old plant a new 20-year operating permit, or certificate of public good, this year.

Shumlin, a leading proponent of closing the plant, voted against its continued operation when he was president pro tempore of the Vermont Senate.

“The Vermont Public Service Board’s role in reviewing Entergy’s request for a state certificate of public good is preserved and will continue,” Shumlin said in a statement. “The decision does not change the simple fact that Entergy has over the years not been a good partner with Vermont, preferring to focus on multiple lawsuits against the state. I remain steadfast in my belief that Entergy’s continued operation of this facility is not in the best interest of Vermont. Our state’s energy future should be charted by Vermonters, and I am committed to increasing Vermont’s reliance on renewable, sustainable, and responsibly managed sources of energy.”

Entergy spokesman Jim Sinclair released this statement to the Vermont media on Wednesday: “We have felt strongly for a long time now that the state of Vermont’s Acts 74 and 160 were pre-empted by federal law, and are very pleased with today’s decision.”

How safety preempted the Legislature’s authority

At the core of the dispute between the state of Vermont and Louisiana-based Entergy are two bills enacted by the Vermont Legislature in 2005 and 2006: Acts 74 and 160.

Act 74, now part of Title 10, required Entergy to first obtain legislative approval before storing spent fuel at the plant’s site in Vernon after March 21, 2012, which is when the plant’s initial state operating permit expired.

Vermont Yankee is operating under an extension of that permit, as the Public Service Board considers its application for a new permit.

Act 160, which became part of Title 30 of Vermont’s statutes, states that a nuclear plant cannot operate beyond the end of its permit without approval from the Vermont General Assembly.

Entergy sued Vermont in 2011 on the grounds that the state was attempting to preempt federal authority. The Nuclear Regulatory Commission had just extended Vermont Yankee’s original 40-year federal operating license for another 20 years, but the Vermont Senate voted against re-permitting the plant. Murtha sided with Entergy, and the plant has continued to operate.

Eight months after hearing oral arguments on the appeal, federal judges Christopher Droney, Susan Carney and Paul Gardaphe ruled that the Legislature does not have the authority to regulate based on safety. Although neither state law expressly gives the Legislature power over safety, the judges said this was the driving motivation behind the laws.

The Supreme Court decision that teed up this ruling stems from a 1983 lawsuit between the state of California and Pacific Gas and Electric Co. The U.S. Supreme Court held that California was not preempted by the Atomic Energy Act and could impose a suspension on the licensing of nuclear plants within its boundaries for economic reasons.

Vermont’s attorneys took language from that case to argue that the court should not dip into the legislative record and should consider the laws at face value.

But the appellate justices drew from a range of other cases that used legislative history, and they said it was necessary in this case.

The judges looked back at Murtha’s findings, where he concluded that the legislative record included “references, almost too numerous to count, (which) reveal legislators’ radiological safety motivations and reflect their wish to empower the Legislature to address their constituents’ fear of radiological risk.”

The judges pulled from the record an example when Washington County Sen. Ann Cummings, then chair of the Senate Committee on Finance, was told that regulating based on safety was preempted.

“OK, let’s find another word for safety,” she said.

The judges decided that legislators worked around the language of the Pacific Gas case for the purpose of regulating the plant on grounds outside of their power.

“These are not merely isolated comments by a few legislators, but rather a part of a consistent effort by those responsible for drafting and passing Act 160 to obfuscate the record through the use of misleading statements that they thought would pass muster under Pacific Gas,” Judge Droney wrote.

In a separate opinion, Judge Carney wrote she was reluctant to rule against Vermont on the two laws.

“I concur, reluctantly, in the majority’s detailed and carefully reasoned opinion striking down Vermont Acts 74 and 160,” she wrote. “My reluctance stems not from any flaw in the majority’s analysis, but rather from my concern that Congress, in enacting the Atomic Energy Act ... did not intend the result we reach.”

The Atomic Energy Act gives the NRC the power to regulate radiological safety. In the end, it was the case the state used in an attempt to excuse the legislative record that led to its poor result. The Pacific Gas decision expressly prohibited California from creating laws “grounded in safety concerns.”

“No reader of this record can fairly claim that the statutes at issue were not ‘grounded in safety concerns,’” Carney wrote. “I write separately to emphasize that it is principally the judicial phrase ‘grounded in safety concerns,’ and not the Court’s holdings or the text of the Atomic Energy Act, that compels us to strike down Vermont’s statutes.”

In April 2011, Entergy sued Shumlin, Sorrell, and members of the PSB, claiming that the state didn’t have the right to overrule the NRC, which had just renewed Entergy’s operating license for Vermont Yankee for an additional 20 years.

In arguments before Murtha in U.S. District Court in Brattleboro in 2011, the state made its case that it had the right to protect its citizens from non-radiological hazards, such as thermal pollution of the Connecticut River and discharges of diesel fuel and other pollutants.

Vermont Yankee opened in 1972. It once provided up to a third of the state’s electricity, but now nearly all of its power is sold on the spot market to neighboring states. No Vermont utility currently has a contract to buy power from the Vernon plant.

Last week, the NRC agreed to accept a petition by a coalition of anti-nuclear groups calling for an investigation into Entergy’s finances, claiming the corporation’s financial woes may compromise safety at its nuclear plants.

Entergy has reported significant losses in its recent earnings reports and recently announced plans to lay off hundreds of its employees around the country, including 30 at Vermont Yankee.

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Originally published in The Commons issue #217 (Wednesday, August 21, 2013).

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