Vermont Fights Ruling It Can’t Shut Entergy Nuclear Plant

Entergy Corp. (ETR) and Vermont brought their dispute over whether the state has the authority to shut its only nuclear power plant before an appeals court.

Lawyers for Entergy, the operator of the Vermont Yankee plant, told a three-judge panel of the U.S. Court of Appeals in New York today that a district judge was correct in ruling that the decision to close a reactor for safety reasons belongs to the federal government and not the state.

The purpose behind a law allowing Vermont to deny a license renewal was safety, which falls under the exclusive jurisdiction of U.S. regulators, Kathleen Sullivan, an attorney for Entergy, told the panel. The reasons Vermont gave for its efforts to shut down the plant, including economic concerns, a desire to promote renewable energy and prevent pollution, aren’t plausible, she said.

“If safety is the primary purpose, we win,” said Sullivan, an attorney at Quinn Emanuel Urquhart & Sullivan LLP.

U.S. District Judge Garvan Murtha in Brattleboro, Vermont, ruled in January 2012 that state legislators lacked the authority to deny Entergy a license to operate the reactor after March 2012.

“Entergy way overstates the notion that states can’t be involved in any safety matters,” David Frederick argued on behalf of Vermont. He said if Entergy were to go bankrupt, the state could be stuck dealing with the plant’s nuclear waste.

State Problem

“The state is going to be left holding the bag for that,” said Frederick, of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC.

Entergy sued Vermont Governor Peter Shumlin, state Attorney General William Sorrell and members of Vermont’s Public Service Board in April 2011, arguing the state couldn’t overrule the U.S. Nuclear Regulatory Commission, which renewed Entergy’s license to operate the power station until 2032. The federal Atomic Energy Act pre-empted the state action, the New Orleans- based company said in the lawsuit.

Vermont “attempts to thwart the federal statutory scheme that places the radiological safety of nuclear power generation exclusively in the hands of the federal government,” Entergy said in its brief to the appeals court.

Health Risks

Nuclear plants can present public health risks that aren’t related to the radiation hazards within the federal government’s exclusive jurisdiction, Vermont said in its brief to the appeals court.

“The states, not the NRC, ultimately decide whether a nuclear plant will continue to operate,” the state said.

Non-radiological health issues include stormwater runoff, thermal discharges to rivers and the potential release of diesel fuel and other pollutants, according to the state.

Vermont’s attorney general ordered more oversight of the plant in 2010 after the discovery of the radioactive hydrogen isotope tritium in monitoring wells, according to court papers.

Entergy said in court filings that it undertook “extensive remediation” to remove the soil and water containing the chemical.

This month, Vermont’s attorney general called on the Nuclear Regulatory Commission to conduct an environmental review of the storage of spent nuclear fuel onsite at nuclear power plants.

Not Participating

“The Nuclear Regulatory Commission is not a participant in that case,” Scott Burnell, the agency’s spokesman, said of the Vermont lawsuit. “That is a matter between the state and the company.”

Entergy also contends federal law pre-empts Vermont from requiring the company to sell power to state utilities at below- market prices to remain open. The district judge agreed and prevented the state from doing so.

“Conditioning continued operation on the existence of a below-market power-purchase agreement would be prohibited under the commerce clause” of the U.S. Constitution, Murtha said in his opinion.

The state said in its brief that the court’s injunction on a purchase agreement “cannot stand” because the Vermont Public Service Board had taken no such action.

“There is no evidence or finding that the board has issued or contemplated issuing any order or ruling requiring Entergy to provide below-wholesale-market contracts as a condition of relicensing,” the state said in its filing.

The Vermont Yankee plant generates about 66 percent of the power consumed in the state, Entergy said. It employs 625 people and pays about $15 million a year in state fees and taxes, according to the company. The plant is in Vernon, on the Connecticut River in the southeast corner of the state.

The appeals case is Entergy Vermont Yankee v. Shumlin, 12- 00791, U.S. Court of Appeals for the Second Circuit (New York). The lower court case is Entergy Nuclear Vermont Yankee LLC v. Shumlin, 1:11-00099, U.S. District Court, District of Vermont (Brattleboro).

To contact the reporters on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net and; Bob Van Voris in the U.S. Court of Appeals for the Second Circuit in New York at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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