May 7, 2011, Don Kreis: An Inconvenient Truth — Entergy Might Win

In a vtdigger.org commentary May 7, 2011, Assistant Professor Don Kreis wrote that Entergy may prevail in its lawsuit aimed at preventing the state of Vermont from closing Vermont Yankee.

What a bizarre world it is, in which a giant energy conglomerate from the region that gave us the Gulf of Mexico oil spill disaster files a pleading with a federal court to deride Vermont for its allegedly secret desire to promote the safety of its citizens.

But that is what it has come to, as the Louisiana-based owner of the Vermont Yankee nuclear power plant seeks an injunction in U.S. District Court to stop Vermont from shutting down the facility.

Quoting statements Governor Shumlin has made, both before and after his election, about tritium leaks and other safety issues at Vermont Yankee, the Entergy Corporation argues that if Vermont now attempts to justify its position based on economics, or energy policy, or waste disposal concerns, “any such rationale is unsupportable and thus should be viewed as a pretext for Vermont’s true safety motivation.”

Wow.

But an even more bizarre reality is that Entergy might just have a point. In other words, Vermont should consider the possibility that Entergy will prevail in its lawsuit and that nothing can stop Vermont Yankee from continuing to operate now that the federal Nuclear Regulatory Commission (NRC) has given the plant an operating license good for another 20 years.

I am no fan of Vermont Yankee, particularly in the post-Fukushima era. And I do not rise to defend Entergy and its wholly owned subsidiaries that own and operate Vermont Yankee. They are more than sufficiently lawyered up to do that themselves.

But I cannot help but notice that, among those in Vermont with an enlightened perspective on energy policy, the talking points on the Entergy lawsuit seem to run along these lines: Just as the recent tritium leaks at Vermont Yankee prove that Entergy has been cavalier about plant safety and was then willing to mislead regulators about the leaks, so too is the company now willing to file a frivolous lawsuit and, in the process, blatantly violate a commitment it made when it bought the plant in 2002 not to do precisely what it is now doing.

Admittedly, it’s possible that Justice Scalia could cut-and-paste the preceding sentence and use it as the introduction of his majority opinion of the U.S. Supreme Court declaring Vermont the winner of Entergy Nuclear Vermont Yankee v. Shumlin. Any copyright-based impediments to that eventuality are hereby waived.

Meanwhile, those who hope Vermont Yankee’s days are numbered should read Justice White’s majority opinion, and Justice Blackmun’s concurring opinion, in the 1983 case of Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Commission. At issue there, as here, was the Supremacy Clause of the U.S. Constitution. In relevant part, this provision is quite straightforward: “The laws of the United States,” by which is meant federal law as enacted by Congress, “shall be the supreme law of the land . . . [anything in the] laws of any State to the contrary notwithstanding.”

One of those “laws of the United States” is the Atomic Energy Act, which, as Justice White made clear, reserves to the NRC (known at the time as the Atomic Energy Commission) the task of regulating the safety and operation of nuclear power plants. A potential “law of any State to the contrary notwithstanding” was a California statute precluding the construction of new nuclear power plants until there is a means of disposing of their high-level radioactive waste. Was this limitation superseded on Supremacy Clause grounds – or, in legal parlance, preempted – by the Atomic Energy Act?

No, ruled Justice White, because the law in question was a form of economic regulation that did not concern the safety and operation of nuclear plants. Rather, California was at least ostensibly concerned with the financial implications, for electricity customers, of radioactive waste that had no permanent home. This, of course, explains why Entergy is so keen on proving that Vermont’s assertion of veto power over the continued operation of Vermont Yankee is all about safety and nothing else.

Although Entergy’s injunction request is riddled with campaign quotes from Governor Shumlin about how unsafe Vermont Yankee is, the state certainly has a colorable argument that the assertion of a right to shut down the plant is, like the California statute, not at all concerned with plant operations or safety and thus not preempted. But those who hold that view should note that the majority in the 1983 case pointedly did not embrace the expansive view of state authority adopted by Justice Blackmun in his concurrence.

Here is what Justice Blackmun wrote: “Congress has occupied not the broad field of ‘nuclear safety concerns,’ but only the narrower area of how a nuclear plant should be constructed and operated to protect against radiation hazards. States traditionally have possessed the authority to choose which technologies to rely on in meeting their energy needs. Nothing in the Atomic Energy Act limits this authority, or intimates that a State, in exercising this authority, may not consider the features that distinguish nuclear plants from other power sources.” That view would be awfully favorable to Vermont, if only the full Court had actually adopted it.

Blackmun and the only colleague who joined his concurrence, Justice Stevens, are no longer on the Court. To state the obvious, the Roberts Court of today is far friendlier to the interests of big corporations, and more skeptical about feisty states’ efforts to rein in such corporations, than was the Burger Court of 1983. In these circumstances, whoever argues this case for the State of Vermont should have a good answer to this oral argument question from Chief Justice Roberts: If the 2006 Vermont law, reserving to the Legislature the right to veto continued operation of Vermont Yankee, is not about safety, then what exactly is its purpose?

In this regard, consider the structure of Vermont’s electric industries, which contrasts vividly with that which prevailed in California at the time of the Pacific Gas & Electric case. 1983 was within the good old days of vertically integrated electric utilities, in which the same companies serving retail electricity customers owned the nuclear power plants. Under that paradigm, the economic consequences of the plants’ circumstances inexorably flowed right into the bills of utility customers.

Vermont Yankee went on line in 1972 under this same paradigm, but everything changed when Vermont’s regulated utilities sold Vermont Yankee in 2002 to a subsidiary of Entergy. This made Vermont Yankee a so-called “merchant generator” that cannot pass the economic consequences of any misfortune onto retail electric customers. Thus, the Vermont of today will have a more difficult time than California did in 1983 in arguing that the state is just engaging in economic regulation.

Of course Vermont also has something that California didn’t – the so-called Memorandum of Understanding, or MOU, signed by Entergy and state officials and explicitly adopted by the Vermont Public Service Board (PSB) as a condition of approving the sale of Vermont Yankee. Paragraph 12 of the MOU clearly reflects that Entergy (a) agreed to let the PSB decide whether Vermont Yankee can continue to operate after March 21, 2012 and (b) waived any right to argue that federal law “preempts the jurisdiction of the Board” to make that decision.

As Entergy points out in its recent U.S. District Court pleadings, acceding to the jurisdiction of the PSB, which itself functions like a court, is one thing, but submitting to the approval of the Legislature is quite another. However, the state can marshal some compelling arguments in rebuttal: First, the PSB’s authority as a state agency is delegated to it by the Legislature; just because the Legislature has un-delegated some of that authority doesn’t necessarily mean that Entergy can renege on its agreement to be subject to that authority. Second, there’s evidence that Entergy made public statements in 2005-06 that could be understood as agreeing to the kind of legislative oversight to which it now objects as unconstitutional.

Moreover, there is plenty of blarney in Entergy’s written request for an injunction. My favorite is the reference to a study conducted by two professors of regional planning, concerning the shutdown of a nuclear power plant in Rowe, Mass. “Generally, there was a somewhat wistful feeling in Rowe that life wasn’t the same any more,” Entergy quotes the report as concluding. This is apparently among the irreparable harms that Entergy wants the U.S. District Court to prevent by issuing an injunction.

Entergy v. Shumlin will not turn on who is feeling wistful about Vermont Yankee. It will turn on cold, hard principles of constitutional law. These principles are likely to be applied by judges whose previous decisions suggest a heightened sensitivity to the concerns of giant corporations and little concern for upstart states that adopt progressive regulatory regimes. Vermont may well prevail nonetheless, as at least two of my distinguished colleagues at Vermont Law School have publicly predicted. I cannot prove them wrong, and I hope they are correct. But if we simply proceed on the assumption that Entergy will lose and Vermont Yankee will close in 2012, we do so at our peril.

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One Response to May 7, 2011, Don Kreis: An Inconvenient Truth — Entergy Might Win

  1. John McClaughry says:

    In the 2002 MOU Entergy agreed to apply to the Public Service Board for a new certificate of public good for VY’s continued operation.
    But four years later the anti-nuclear Democratic general assembly unilaterally changed the 2002 deal, interposing itself between Entergy and the PSB. Furthermore, the general assembly has been unwilling to abide even by its unilaterally declared new deal.
    Sec. 1 of Act 160 of 2006, addressing both spent fuel storage and continued operation of the plant after March 21, 2012, says “the general assembly shall consider concurrently the issue of storage of spent nuclear fuel… and the operation of Vermont Yankee nuclear power station after March 21, 2012 ,… and shall grant the approval or deny approval of such activities concurrently”.
    A plain reading of this statute requires that the general assembly – House and Senate, in the same biennial session – must either grant or deny approval for spent fuel storage and continued operation of VYNPS.
    In 2007 Entergy duly filed its application with the PSB. Lengthy docket proceedings then ensued – but Act 160 prohibits the PSB from issuing any final order on Entergy’s application.
    Has the general assembly acted to either to grant or deny approval as required by Act 160? No. (The disapproval vote by the 2010 Senate is not an act of the general assembly).
    So who is breaking its word here? Entergy promised it would not raise a preemption challenge if it sought an extension, but would abide by the decision of the PSB under the statutes and procedures in force in 2002. But the state subsequently forbade the PSB from acting on Entergy’s application. That’s clearly a material breach of the agreement.
    Moreover, the general assembly deliberately and shamefully refused to abide by its own law requiring it to grant or deny approval. So who is in violation of the laws of this state?
    This general assembly’s failure to act is even more disgraceful because there was little doubt about the outcome: both House and Senate would have voted to disapprove continued operation of the plant. The only reason I can imagine for this refusal to have a vote was the legislative leadership’s perceived need to shield their anti-nuclear members from ever having to face the likely costly consequences of voting to shut Vermont Yankee down. So much for accountability to the people.
    Entergy’s brief didn’t raise this nonfeasance by the legislature, but that certainly excuses Entergy from continuing compliance with the 2002 MOU .