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Vermont Law School professors weigh in on post-VY trial briefs

BRATTLEBORO—Who will win, Entergy or the state of Vermont?

That’s a common question being asked at water coolers across southern Vermont since Entergy filed suit in U.S. District Court in Brattleboro against Vermont in April.

One preliminary injunction hearing, a three-day trial, and two post-trial briefs later, U.S. District Judge J. Garvan Murtha announced that he expects to issue his ruling by November.

Both sides, however, may appeal his decision. The case would then go to the Second Circuit of the U.S. Court of Appeals in New York City.

Three law professors from the Vermont Law School recently spoke to The Commons and speculated about how Murtha might lean in the case, as well as the lawsuit’s possible long-term implications.

This is an activity that Professor Cheryl Hanna, who specializes in constitutional law, calls “reading the tea leaves.”

A messy process

Hanna said she didn’t see any “game changers” in the post-trial briefs.

What did stand out, she said, was that Entergy expressed a clearer stance that the state Public Service Board (PSB) maintained jurisdiction regarding the awarding of a state-issued Certificate of Public Good (CPG) for the state’s only nuclear plant.

Entergy, however, also made numerous arguments why denying a CPG fell into the realm of pre-emption. Essentially, she said, the company argued that the PSB couldn’t deny Entergy’s Vermont Yankee plant in Vernon a certificate.

From the beginning, said Hanna, Murtha has pointed out concerns with Vermont’s CPG process as it pertained to VY.

During the merits trial in September, Murtha asked Vermont Assistant Attorney General Bridget Asay if Act 160 allowed the General Assembly to deny a nuclear plant a CPG even if it took “no action.”

“He tends to be a stickler for process,” said Hanna.

Act 160, which Entergy has asked Murtha to overturn, authorizes the General Assembly to vote on whether the PSB can hear VY’s CPG case.

From a constitutional law standpoint, said Hanna, because Act 160 is a state law, it also gives the governor veto power.

The factual records surrounding the state’s processes in Act 74 and 160 are also “messy,” said Hanna.

Sending VY back to the PSB, as the company has requested (see main story), would create a “cleaner record,” allowing another court to view it during any appeals, Hanna said.

This move could have another messy downside, she said.

Either party can appeal PSB rulings. An appeal would send the CPG case to the Vermont Supreme Court. Further appeals would go to the U.S. Supreme Court.

Hanna felt the state made a good argument for Entergy’s less-than-stellar corporate citizenship. This argument, however, might not keep Murtha from kicking the case back to the PSB.

When asked how Entergy could request that Murtha send VY’s case back the the PSB while asking that the board not consider all relevant issues, Assistant Professor Donald M. Kreis answered, “An excellent question.”

Kreis, who specializes in energy law and regulation, also works as the associate director of the Institute for Energy and the Environment.

Kreis said Entergy is wrong when it claims the board can’t consider economic impacts on Vermont ratepayers.

The board can consider to what extent Vermont electric customers can benefit economically from a power utility.

“Entergy knows this,” guesses Kreis. “But litigation is a form of combat.”

Expanding Citizens United?

Another messy issue facing Murtha is the legislative record, Hanna said.

In Hanna’s opinion, nuclear safety motivated some legislators. But, she said, Entergy’s claim that legislatures can’t even talk about safety reaches beyond reasonable expectations.

Hanna thinks this is why Entergy’s lead attorney Kathleen Sullivan has focused a portion of her argument on “mixed motives.”

Mixed motives pertain to cases where a defendant, like an employer, has exercised a combination of legitimate and discriminatory reasons for acting against the plaintiff, like an employee. The instruction to the jury in mixed motive cases is to find for the plaintiff.

Mixed motives cases usually pertain to discrimination cases under the Civil Rights act, said Hanna.

If the court accepts Sullivan’s arguments, said Hanna, it would set a precedent placing corporations’ pre-emption cases on the same level as individuals’ Civil Rights cases.

“That’s pretty radical,” Hanna said.

Likewise in First Amendment cases, courts have set precedent for ruling against legislatures that have made bad comments against a particular group, said Hanna.

And in the Vermont Legislature, it’s clear that some people have expressed unfavorable comments about Entergy.

The mixed motives question may not go anywhere on this case but it could go somewhere in the future, said Hanna.

It’s only about Vermont

Kreis thinks the case will have little long-term impact outside Vermont.

He views the Entergy v. Vermont situation as a case of a unique corporation agreeing to a state’s unique laws.

This case has always centered on Vermont’s ability to shut down its only nuclear plant, he said adding, most states don’t regulate merchant plants like VY.

Another interesting aspect of the case to consider is to what extent Entergy should provide cheap power to Vermont ratepayers, said Kreis.

Wholesale power plants enter into power purchase agreements with utilities “all the time,” said Kreis.

“What is rare” is Entergy’s (potential) agreement to offer below-market rates to Vermont utilities, he said.

During the court case, Entergy witnesses said that Vermont utilities said they would buy power from VY under a different owner.

Asking Entergy to sell the plant was “an unusual request,” said Kreis.

Kreis also speculates that Murtha could kick VY’s CPG question back to the PSB.

It’s not an easy way out for Murtha, said Kreis.

But, Kreis said that Murtha could feel “queasy” about the 2002 memorandum of understanding Entergy signed with the state.

In his Sept. 20 blog post on the law school’s site covering the VY case http://vtyankeelawsuit.vermontlaw.edu, Kreis wrote that he thought Murtha may be searching for “some way to hold Entergy to certain commitments it made in the now-infamous MOU.”

Entergy signed the MOU as a condition for purchasing VY in 2002. The MOU contains the provision that VY would need to obtain a new CPG after March 2012. Entergy also waived its right to sue by signing this MOU.

“I think Judge Murtha is seeking a way to make this commitment meaningful, even though the Legislature has imposed an additional obstacle to Entergy gaining a new CPG – approval by the Legislature itself. It is, of course, that additional obstacle that Entergy is strenuously resisting in the case before Judge Murtha,” wrote Kreis in his blog post.

Extreme outcomes?

“This is not a case that will end in compromise,” Hanna said.

If Murtha rules for Entergy, then the state loses the authority it exercised through Acts 74, 160, and 189.

But, if Murtha rules for the state, then the state can shut a federally-licensed utility, which states don’t usually do.

“Both outcomes feel extreme,” said Hanna.

Kreis said he “never bought” the state’s argument that the state’s motivation focused on reliability.

“[The argument is] hard to take seriously,” he said.

He feels the state was working on nuclear safety concerns. Kreis bases this feeling on the fact that the state had no reason to regulate VY, because the utilities were “under no obligation to purchase power” from VY.

Kreis cautioned people following the case, specifically varying anti-nuclear organizations, to remember that “the rule of law is important, even if you don’t like nuclear power.”

People viewing grassroots efforts as influencing the process “should reconsider,” he said, adding this case is “not about democracy, or tritium, or if Entergy lied before the PSB.”

As much as people may not want the federal government to step in and rule in Entergy’s favor, Kreis said, the federal government steps in on issues also coming down on the side of civil rights or the environment.

Murtha federal judge = wild card

“[Remember] we don’t know Murtha’s mind,” said Professor Patrick A. Parenteau. “None of us have probably nailed it.”

Parenteau specializes in environmental law in addition to serving as Senior Counsel to Vermont Law School’s Environmental and Natural Resources Law Clinic. He has sat across the court room from Entergy lawyers before.

Federal judges brains “work differently,” he said. The judge may issue a ruling completely new and unsuspected.

Given Murtha’s track record said Parenteau, he will probably “split the baby” by holding Entergy to its commitments, while not completely giving the state all it wants.

“We should all be humble,” Parenteau said.

Still Parenteau thinks the state has a few legal arguments going for it.

According to legal precedent, Murtha should only look at the end statutes and not at “the sausage making” process of legislative history, said Parenteau.

Also, said Parenteau, Entergy is not “entitled” to relief in areas where it has broken its commitments.

He suspects Murtha won’t allow Entergy to “game the system.”

If Murtha does, said Parenteau, the precedent would give every utility free rein to break their commitments.

That said, the state’s case “turns negative if Murtha kicks [VY] back to the PSB,” or asks the state to justify its non-radiological safety motivations, said Parenteau.

Kreis said VY represents a “tiny piece of the New England electricity portfolio.”

“Sooner or later, VY will shut down and our minds and hearts should focus more on what comes next,” he said. “Because next is coming, one way or another.”

What do you think? Leave us a comment

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Originally published in The Commons issue #121 (Wednesday, October 5, 2011).

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