Sept. 20, 2011, Don Kreis: The MOU Rises Again

Don KreisMy distinguished colleagues Cheryl Hanna and Pat Parenteau have, as usual, offered cogent insights into what might happen next in the Vermont Yankee litigation.  I respond to them with considerable reluctance – after all, they were able to attend at least some of last week’s trial, whereas I was unable to go to Brattleboro for these interesting proceedings.  And I can not pretend to know more about environmental and constitutional law than these excellent professors, except maybe in the field of utility law since I have practiced that specialty, while they have been busy elsewhere saving the planet and/or the rule of law.  Thus, it is on utility law that I focus here.

Like Cheryl and Pat, I think the most significant of Judge Murtha’s post-trial queries is the one that concerns 30 V.S.A. § 248, which is the statute tasking the Public Service Board with issuing (or refusing to issue) certificates of public good to energy facilities in Vermont.  Its criteria build on those in the Act 250 environmental statute, and section 248 review is, in effect, the equivalent of Act 250 review for utility facilities.

According to Pat, Judge Murtha “asked the parties to brief the issue of whether section 248 of Vermont’s energy facilities law was ‘severable’ from the other statues that Entergy has challenged (Acts 74, 160 and 189).”   John Greenberg, the Brattleboro activist and bookstore owner who has steeped himself in the case to pursue his principled opposition to Vermont Yankee, has a slightly different formulation of the judge’s question:  “What about the severability of Act 248?  If a section were invalid, does it leave the PSB with any jurisdiction over Vermont Yankee?”

I think what Judge Murtha is really asking is whether there is some way to hold Entergy to certain commitments it made in the now-infamous MOU (memorandum of understanding), into which it entered with state authorities as a condition of Entergy gaining permission to buy the plant from its former owners (a consortium of New England utilities) in 2002.

Ouch!  By writing the preceding paragraph, I am renouncing previous prognostications to the effect that the MOU would not loom large in the outcome of the proceedings in Judge Murtha’s courtroom or in subsequent appeals of his decision.

As readers of this blog presumably know all too well, the MOU provides in relevant part that if Entergy wished to operate Vermont Yankee after March 21, 2012, it would have to obtain a new CPG under section 248.  For every other electric facility in the state, this would be an absurdity; section 248, by its terms, is a mechanism for obtaining permission to build energy infrastructure, as distinct from continuing to use it post-construction.  But Energy agreed, in effect, to the expiration of its section 248 permit and the Legislature subsequently enshrined this agreement in section 248 itself. (This, I think, accounts for the way Judge Murtha put his query, as recounted by John Greenberg – the question, really, is whether certain provisions in section 248 are severable from other provisions of the same statute.)  Most significantly,  in the MOU Entergy also explicitly waived its right to sue the state to argue that this requirement to renew its CPG was illegal or unconstitutional.

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.

Especially given the judge’s other queries about the equitable defenses the state has raised – issues that go to the question of whether Entergy truly deserves to win anything significant, somewhat apart from the relevant, cold, hard principles of law – one wonders if Judge Murtha has decided it would be simply unfair to allow Entergy to use this case as a means of evading state relicensing scrutiny altogether after having explicitly agreed that at least some such scrutiny is appropriate.

Thus, as Cheryl has noted, Judge Murtha could rule based on equitable principles that Entergy is estopped from challenging those provisions of Vermont law that require Entergy to seek a new CPB from the Public Service Board. He could then rule that the rest of the law under challenge – i.e., the provisions reserving to the Legislature the power to relicense Vermont Yankee – is not ripe for review because the PSB has not yet ruled under its own, parallel section 248 authority.  Under this theory, if the PSB decided under section 248 that Entergy was not entitled to a new CPG, the rest of the case could ultimately be dismissed as moot.

It is an appealing route because it would have the salutary effect of holding Entergy to its bargain.  But, gosh, I hope it doesn’t turn out this way.

For one thing, requiring the PSB to conduct a section 248 case about Vermont Yankee in such a white-hot soup of legislative judgment and public opinion can only do damage to our system of utility regulation. Like its counterparts around the country, the PSB is constituted as an independent, quasi-judicial decision maker.  But there are limits.  Yes, Chairman James Volz and his two part-time commissioner-colleagues (David Coen and John Burke) are principled, knowledgeable and independent. Particularly with the assistance of their able staff, they have the chops to conduct a proceeding like this.  But it is unfair and unreasonable to put regulators in this position, since a “yes” from the PSB is so obviously at variance with the Legislature’s wishes and a “no” would be so derided by Vermont Yankee fans as a capitulation.  (It would also require a lengthy pause for an appeal to the Vermont Supreme Court, prior to the constitutionality of the ‘legislative veto’ statute presumably becoming ripe for review on preemption grounds.)

More importantly, the answer to Judge Murtha’s question about severability should be “no.”  It would be illogical to conclude that under current Vermont law, the PSB review can go forward even if the rest of the law (governing legislative review) is unconstitutional.  The convoluted mechanism adopted in the relevant enactments notwithstanding, Judge Murtha can and should focus on the actual effect of the statutes under review:  The Legislature has ordered Vermont Yankee to close on March 21, 2012, unless a subsequent Legislature decides otherwise and the PSB says yes.  As I have previously pointed out, legislatures are always free to repeal what their predecessors enact, so the legislative review provisions in Act 189 are properly regarded as surplusage.  (This would, by the way, logically lead to the helpful conclusion that the Senate’s deliberations in 2010 about whether to relicense Vermont Yankee, in the wake of the tritium leaks and Entergy’s misstatements before the Public Service Board, have absolutely no significance whatsoever – since the Legislature technically took no action.  How can you have legislative intent without legislation?)

Perhaps what would help here is a disquisition on severability from Cheryl Hanna, who is this blog’s hands-down expert on constitutional law issues.  As I recollect from my own more intermittent encounters with constitutional law, the question of severability goes to legislative intent.  Often, legislatures worried about constitutional challenges insert explicit severability clauses precisely to allow the kind of outcome that Judge Murtha is apparently contemplating here.  But there is no such clause on which to fall back in the Vermont Yankee case.  In these circumstances, the most reasonable and rational conclusion is that section 248, as applied to Vermont Yankee, rises and falls as one.




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