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VT vs. VY

Testimony in lawsuit centers on pre-emption, state’s rights

BRATTLEBORO—The state rested its case after two days of testimony in the Entergy v. Vermont trial in U.S. District Court on Tuesday, a case that could decide the fate of the Vermont Yankee nuclear power plant in Vernon.

The state’s primary witness, Peter Bradford, stood his ground on states’ roles in regulating nuclear plants in areas other than radiological safety under heavy cross examination late in the day.

The Nuclear Regulatory Commission (NRC) extended VY’s operating license for another 20 years in March.

Vermont, however, requires nuclear plants to obtain a Certificate of Public Good (CPG) from the Public Service Board (PSB) to operate.

In February 2010, the Vermont Senate voted 26-4 against awarding VY a CPG, citing its authority under Act 160, a 2006 law that effectively gives the Legislature veto power over the continued operation of the plant.

Without a new CPG, says the state, the Vernon plant must close when its current 40-year operating license expires in March 2012.

Entergy Corp., owner of Vermont’s only nuclear plant, filed suit against the state in April, claiming legislators had pre-empted the federal government’s authority by trying to regulate radiological safety.

Bradford, a former U.S. Nuclear Regulatory Commission member who later chaired a state legislative oversight panel examining Vermont Yankee’s operation, is currently vice-chair of the Union of Concerned Scientists. He also teaches at the Vermont Law School.

According to Bradford, the NRC has never held the point of view that states have no role to play in regulating nuclear plants.

Bradford added that the NRC and states’ roles sometimes “overlapped.”

“Well-run plants from a safety standpoint will be reliable,” he said.

States, he said, have many roles, such as certifying the need for a nuclear plant. They have financial responsibilities to ensure the plant does not become “unduly expensive,” and they have jurisdiction over water discharge permits and land use.

“The idea that the two communities growl at each other across a white line” is not a “sensible” description of the NRC and state’s relationship, Bradford said.

Entergy attorney Faith Gay questioned Bradford on whether his use of the word “legitimate” in his testimony was a “code word” for pre-emption.

Bradford repeatedly said, “no.”

Gay also asked Bradford multiple times and in may ways if he agreed that states can’t use other concerns like reliability as a pretext for radiological safety.

“Yes or no,” she said.

Gay pointed out that in his deposition, Bradford had said he would advise legislators, “Don’t do it.”

Bradford said he agreed that states shouldn’t resort to pretext, but he pointed out that in the 1982 Pacific Gas & Electric v. California case, the U.S. Supreme Court said the court had to look toward California’s “legitimate interests” even if the process began in the arena of radiological safety.

“Your question is like asking me, ‘Can rich people rob banks?,’” said Bradford to Gay. “Sure, in theory, rich people can rob banks. But why would they?”

Gay asked what Bradford would say if the state uses other language for a pretext for radiological safety “over and over.”

“I can’t answer [your] question, because the state isn’t a person,” Bradford responded.

Bradford explained that he had served on multiple panels in his career where members enter with specific agendas that change through discussion and process.

He added the legislative process doesn’t reflect “bad faith,” but “consensus.”

“Pre-emptive input and unpre-emptive output” means the process worked, Bradford said.

A case for a vote

Earlier Tuesday, House Speaker Shap Smith took the stand to talk about why the Vermont Legislature did not support giving the plant a CPG.

The Vermont House has not taken a vote on Vermont Yankee’s fate.

Smith said that he believed a vote by his chamber would be superfluous and would not change the Senate’s decision. At the same time, Smith said that he did not believe the House had enough information at the time to take a vote.

Smith said that Entergy made the case to him that a proposed power purchase agreement by Entergy would provide an economic benefit to the state, but the company did not provide the details on the agreement before the Senate voted.

Also testifying on Tuesday was Jay Thayer, former vice president of operations at Vermont Yankee.

Thayer is still employed by Entergy, but he was reassigned to another post in 2010 following revelations that tritium-laced water was leaking from underground pipes that Thayer and other company officials said did not exist in testimony to the PSB.

Thayer said that he wrote to state lawmakers nearly three years ago regarding the state’s role in VY’s relicensing. He said the letter acknowledged that Entergy needed the state’s blessing to keep operating past 2012.

He also said lawmakers brought up the question of legal action over pre-emption before Entergy did.

On the stand, Thayer named Rep. Sarah Edwards, P/D-Brattleboro, as one of the legislators who queried him on when Entergy planned to file a pre-emption suit.

Edwards was in the courthouse audience. In a separate interview, she said she planned to check the legislative record.

“I do not recall asking about pre-emption,” she said.

Audience member Ray Shadis, technical adviser to the anti-nuclear New England Coalition, disagreed with Thayer’s recollection, saying Entergy brought up the issue of pre-emption as early as 2005.

Shadis characterized Entergy’s usage of pre-emption as a “threat,” saying the company may just have to take the state to court.

According to Shadis, legislators in turn asked Entergy representatives, “so when?”

Lawyers in the audience

Cheryl Hanna, a professor of law at the Vermont Law School, illuminated one of the keys to Entergy’s argument.

As a merchant plant, VY’s economic health poses little risk to Vermont, but as a tradeoff, Vermont has less control, said Hanna.

According to Hanna, Vermont can’t claim the concern of economic reliability, because VY is a merchant plant. With such plants, the economic risks fall on the company and shareholders rather than Vermont ratepayers.

In the Vermont Law School’s Entergy v. Vermont blog, Hanna wrote on Tuesday about how Judge J. Garvan Murtha might rule on the case.

“One scenario — and I am just speculating now — is that the Judge simply splits the difference, finding that safety was among some other plausible reason for refusing to issue a Certificate of Public Good,” wrote Hanna.

“That would leave the state in a mixed motive position, having regulated for both permissible and impermissible reasons. That outcome seems increasingly plausible, given the testimony from both yesterday and today,” she continued.

Hanna also pointed out that lead Entergy attorney Kathleen Sullivan has argued that with mixed motive cases, the “burden is on the state to prove that it would have done the exact same thing had it not taken the impermissible [radiological safety] reason into account.”

“What is key to this argument is that often the party who bears the burden loses,” wrote Hanna.

Hanna noted that Sullivan has pulled from constitutional law to make her argument.

“Sullivan is essentially arguing that concerns over state infringement of pre-empted federal law are the equivalent of the state establishing religion or discriminating on the basis of race,” she wrote.

The curtain rises...

Opening arguments from the state and from Entergy attorneys on Monday morning focused on the central point of contention in this lawsuit.

Sullivan stressed the preemption angle in her presentation, calling the state’s concerns about reliability and economic impacts “pretexts for nuclear safety.”

Assistant Attorney General Scot Kline, who is leading the state’s legal team, contended that the case is really about whether Entergy will live up to the agreements it made with the state when it purchased VY in 2002 — mainly, not to challenge the Vermont’s authority regarding non-safety issues at the plant.

“This case is really about honoring commitments,” he said.

After opening arguments, Murtha heard from two of Entergy’s witnesses.

One of the witnesses, Vice President for Power Marketing Marc Potkin, said the state expected VY to offer a favorable price for electricity to Vermont’s utilities as a condition of getting a CPG.

Potkin said he based this statement on conversations he had with representatives from electric companies Green Mountain Power and Central Vermont Public Service.

Potkin said that the 2010 Senate vote influenced the power-purchase agreement talks. He also said that the electric utilities wouldn’t sign an agreement until Entergy sold the plant.

Also on the stand was President, CEO, and Chief Nuclear Officer John Herron.

Late in the day, the state introduced a video deposition with Entergy executive vice president Curtis L. Hébert.

In the video, the high-ranking employee responded to questions about why the company tasked him with repairing relations between Vermont and Vermont Yankee.

“[There was] such a distrust for Entergy that we were trying to turn around,” Hébert said.

In an e-mail to Entergy CEO J. Wayne Leonard, Hébert outlined the actions on the part of Entergy that had had a “corrosive effect” in Vermont.

Hébert informed Leonard of some of what he characterized as the reasons for Vermonters’ growing mistrust of Entergy: the January tritium leak, questions about the credibility of VY officials in PSB testimony on tritium, a “deep mistrust” of Vermonters for the company’s proposed Enexus spinoff, and the need for a purchase power agreement..

In the same e-mail, Hébert listed “rebuild confidence with stakeholders” as strategy number one for repairing the strained relationship.

Monday’s proceedings ended with testimony from one of the state’s witnesses, Bill Steinhurst, who has been involved with Vermont energy policy for more than two decades.

After the day’s proceedings, Vermont Attorney General William Sorrell said both parties had worked hard during the discovery process to put together their arguments.

“No real surprises today,” he said.

Sorrell also said he felt the state had “scored points” with Hébert’s testimony because it pointed to the fact that Vermont was not concerned about radiological safety.

Instead, he said, Hébert helped show that Vermont had concerns around the plant’s management and company’s trustworthiness.

“Not one thing [was said] about safety,” said Sorrell.

Dueling vigils

Before proceedings began on Monday morning, there were dueling vigils in support of, as well as opposition to, keeping Vermont Yankee open another 20 years.

Representatives from the Ethan Allen Institute’s Energy Education Project, the American Nuclear Society Vermont Pilot Project, and the Coalition for Energy Solutions organized a pro-VY vigil, while the Safe and Green Campaign sponsored what they called “a vigil to support the state of Vermont” in its legal fight against Entergy.

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Originally published in The Commons issue #118 (Wednesday, September 14, 2011).

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