June 6, 2012, Don Kreis: State to Court of Appeals: Act 160 Just a “Process Statute”

‘Tis the season for bar exams, so here is a practice bar exam question from your friendly neighborhood energy law professor:

A Vermont utility enters into a favorable, long-term power purchase agreement with a non-utility generator of nuclear power.  The contract eventually expires, at which point the Vermont Legislature passes a bill ordering the nuclear power plant closed, noting that nuclear power is inconsistent with a longstanding state law goal of increasing reliance on renewable energy.  May Vermont take this action in light of relevant constitutional principles?

If you answered “yes,” then you have just decided that Vermont may order the closure of the Seabrook nuclear power plant in New Hampshire.  And you’re lucky because the bar exam doesn’t cover energy law or the Atomic Energy Act.

But the bar exam does cover the U.S. Constitution and its Supremacy Clause, which is the provision at issue in Entergy v. Vermont, now before the U.S. Second Circuit Court of Appeals in New York.  Having lost the case before the U.S. District Court in Brattleboro, the state of Vermont has just filed its initial brief in an effort to get the lower court’s ruling overturned.

The brief makes for very interesting reading.   Like a major league baseball team that gets to expand to a 40-man roster in September, the state has now augmented its in-house team of attorneys with a group of Washington, D.C., lawyers led by David C. Frederick, who has argued 30 cases before the U.S. Supreme Court (including Wyeth v. Levine, in which he beat the pharmaceutical industry on behalf of Vermont plaintiff Diana Levine).   Their influence is palpable.

Frederick and his colleagues have sought in this first appellate salvo to recast the story of the litigation from a he-said-she-said dispute (i.e., he said the state was regulating reliability; she said the state was regulating radiological safety, a constitutional no-no) to one in which Vermont was simply advancing a set of visionary energy goals that trace their roots all the way back to 1981. 

At the heart of the case is Act 160, a bill signed into law in 2006 that required Vermont Yankee to shut down by March 21, 2012 (the expiration date of the plant’s initial 40-year federal operating license) unless a subsequent Legislature approved a renewal of state-law operating authority after that date.  When no such renewal was forthcoming, and Vermont Yankee received a 20-year life extension from the federal Nuclear Regulatory Commission (NRC), Vermont Yankee’s owners, the Louisiana-based Energy Corporation, sued in U.S. District Court for the District of Vermont.  Judge J. Garvan Murtha ultimately ruled that Vermont had impermissibly sought to regulate radiological safety, an exclusive province of the NRC under the Atomic Energy Act and the Supremacy Clause of the U.S. Constitution.

The state would now like to convince the Court of Appeals that Act 160 was just a “process statute” and a “sunset provision” that simply advanced pre-existing public policy unrelated to nuclear safety.  According to the June 4 brief, “[c]onsistent with the State’s long-term energy goals, Vermont long planned for Vermont Yankee’s scheduled retirement.”  The brief adds that the 1988 edition of the official state energy plan, issued 18 years before Act 160, “cited the state’s ‘dependence on Vermont Yankee’ as a weakness in the State’s energy future and noted its scheduled retirement date.”  The written argument continues by pointing out that, a decade later, the 1998 edition “linked the retirement of Vermont Yankee to the State’s goal of promoting renewables:  transition to smaller, renewable sources of energy for those sources built and located in Vermont.”

Thus, the state wants the Court of Appeals to ignore the 2006 legislative record that Judge Murtha found so persuasive, with its talk of health effects, three-headed turtles and sterile sheep, and treat Act 160 as nothing more than a procedural mechanism for effectuating a decades-old objective of ending Vermonters’ dependence on nuclear power.

It is a compelling story.  But the state has omitted a key intermediate chapter.

When the Dean administration issued its statutorily-required energy plan in 1998 and called for a transition away from nuclear power, Vermont Yankee was a key element of the energy portfolio of the two utilities that were its lead owners:  Central Vermont Public Service (CVPS) and Green Mountain Power (GMP).  But five years later, with the required blessing of the Vermont Public Service Board, the utilities had sold Vermont Yankee to Entergy.

Once that happened, the reliance of Vermont utilities on nuclear power was no longer a function of their ownership commitments but, rather, a question of whether they bought nuclear power under wholesale contracts with merchant generators like Vermont Yankee and Seabrook (which was sold by its utility-owners to Florida Power & Light at roughly the same time Entergy was buying Vermont Yankee).  As things eventually worked out, all contracts between Vermont utilities and Vermont Yankee had expired on or before March 21, 2012.  So, all of Vermont Yankee’s power is being sold by Entergy to wholesale customers in other states and Vermont utilities have ended their reliance on Vermont Yankee as a part of their energy portfolios.  Therefore, if the true purpose of Act 160 is to take nuclear power out of Vermont’s electricity portfolio, the statute is arguably useless.

It is true, of course, that Vermont utilities have not all turned their backs on nuclear power.  GMP has replaced at least some of its Vermont Yankee power with a new long-term contract to purchase power from Seabrook. So, if Vermont’s defense of Act 160 is grounded in its right to seek a future in which Vermont utility customers do not use nuclear power, wouldn’t this logic justify an effort by the Vermont Legislature to order Seabrook closed as well, even though Seabrook is a two-hour drive from Vermont?

That, of course, would be absurd.  Which suggests there may be a flaw in the State’s argument that Act 160 is just a “process statute” and “sunset provision.”

Much more compelling are the State’s expressed concerns about the lower court’s reliance on legislative history to determine the true intent of Act 160.  As the State cogently points out, anyone can say anything and cause her thoughts to be inserted into the legislative record, especially at a citizen legislature like Vermont’s where there is generally no definitive account of who said what.  Here, the State complains that the legislative record relied upon by Judge Murtha was selective at best and misleading at worst.  Readily conceding that some legislators, and committee witnesses, expressed concerns about radiological safety during the deliberations on Act 160 (and its 2005 predecessor, Act 74), the State asks the Court of Appeals to assign precisely zero significance to these comments.

Here Vermont finds common ground with no less distinguished a jurist than Supreme Court Justice Antonin Scalia, who has long maintained that “the use of legislative history is illegitimate and ill advised in the interpretation of any statute” (to quote his concurring opinion in Zedner v. United States, a 2006 Supreme Court decision, in which he warned against “believing that what is said by a single person in a floor debate or by a committee report represents the view of [the legislature] as a whole”).

The Court of Appeals will rule on the meaning and intent of Act 160 de novo – which means the appellate court will take an entirely fresh look at these questions.   The State’s opening brief quite reasonably takes Judge Murtha to task for, in effect, requiring the State to prove that Act 160 was adopted with a permissible purpose, i.e., not regulating radiological safety, in mind.   But this begs the ultimate question, which is:  If Act 160 was not an effort to regulate radiological safety, then what was its purpose?  The idea that it was merely a “process statute” and a “sunset provision” is somewhat difficult to accept, at least on first read.  But the State’s reply brief, responding to whatever arguments Entergy makes, is yet to come.

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