July 19, 2011, Pat Parenteau: Calling Entergy’s Bluff

At the close of the preliminary injunction hearing on June 23, Entergy attorney Kathleen Sullivan gravely warned Judge Murtha that the company might have to close Vermont Yankee early unless he granted the preliminary injunction. Judge Murtha didn’t blink. In Monday’s memorandum and order denying the preliminary injunction, he said: “The Court is not persuaded any decision to shut down Vermont Yankee early is imminent. The risks associated with a decision to delay the outage are within Entergy’s control.”  In short, Entergy faces a difficult business decision, not the end of the world. Score one for the state.

Although Entergy could seek an emergency stay from the Second Circuit, the odds of success are slim to none. Judge Murtha carefully confined his ruling to the issue of irreparable harm, avoiding any ruling on the merits of the various arguments, and his conclusion is solidly grounded on the facts and law applicable to preliminary injunctions. In fact, he used Entergy’s own witness, John Herron, to show that a preliminary injunction, which would only be in effect for eight weeks (trial is scheduled for September 12), would provide Entergy with little more than psychic comfort as it faces a decision whether to re-fuel the plant. What Entergy really wants is a decision that it can continue to operate beyond March 21, 2012. And that can only happen if Judge Murtha rules in its favor on the merits. For what it’s worth, my guess is Entergy bites the bullet, orders the new fuel rods and soldiers on with the case.

As Vermont Attorney General William Sorrel has commented, this is just round one, and the final outcome is still in doubt. Judge Murtha gave very few clues to what he is thinking on the merits of the various issues presented.  The action now shifts to trial strategy and each side faces some tricky tactical decisions.  For the state, the issue is whether to stand pat with its argument that Act 160 represents final legislative action to close the plant based on non-radiological health and safety grounds, or consider a riskier strategy of convening a special session of the Legislature for an up or down vote on the plant. The upsides of this approach are that it would provide the kind of finality that Judge Murtha seems to be looking for and would also give the Legislature the opportunity to lay out precisely its reasons for closing the plant that are not related to radiation risks. In footnote 2 of his memorandum, Murtha says: “[I]t is unclear to this Court how a legislative scheme that does not require final determination of a renewal petition for a nuclear plant is compatible with the safe decommissioning of a plant.” At a later point, he refers to the possibility of a legislative amendment should the Court grant an injunction after trial.

These are scant tea leaves from which to glean any meaning, but it does suggest that Judge Murtha is not entirely satisfied with the case the state has presented thus far. At a minimum, it means that the state will have to introduce more evidence on the non-radiological reasons for its position that VY should close, and will have to justify its position that no further action from the Legislature is needed to close the plant in a safe and orderly fashion.

The state does have a fallback argument, which is that the Court needn’t reach the constitutional issues because Entergy’s lawsuit should be barred by the doctrine of collateral estoppel. This is based on the memorandum of agreement that Entergy signed in 2002 when it acquired VY. This was discussed in one of my earlier postings on this blog. Judge Murtha made no reference to this alternative argument, so it is hard to tell what he thinks of it. But the state’s opening brief does a nice job laying out the law and makes a compelling case that Entergy has enjoyed all of the benefits of the agreement and therefore has a responsibility to uphold its end of that agreement.

For Entergy, the question is: What more can it do to convince the Court that the challenged statutes were enacted for preempted reasons?  It has thrown everything but the kitchen sink at the Court and come up empty handed. Could we see Entergy engage in some hard ball tactics? For example, it might take some depositions of key legislators involved in crafting Acts 74, 160 and 189. This could even include Gov. Shumlin and U.S. Rep. Peter Welch, who both played a key role in the legislative process as president pro tem of the Senate. The state can be expected to vigorously oppose any such effort as being irrelevant and perhaps even a violation of separation of powers. But Entergy may argue that it is the only way for it to prove its case. The Federal Rules of Civil Procedure do grant parties the right to conduct discovery, so it will depend on how reasonable or unreasonable Entergy’s requests are deemed to be.

As Yogi Berra liked to say: “It ain’t over til it’s over.”

 

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