Vermont Can’t Shut Entergy Nuclear Plant, Court Rules

Vermont doesn’t have the authority to shut down its only nuclear power plant, operated by Entergy Corp. (ETR), an appeals court said in affirming a lower-court ruling.

U.S. District Judge J. Garvan Murtha in Brattleboro, Vermont, was correct in saying the decision on closing a reactor for safety reasons resides with the federal government, not the state, the U.S. Court of Appeals in Manhattan said today. Murtha ruled in January 2012 that state legislators lacked the authority to deny Entergy a license to operate the Vermont Yankee reactor after March 2012.

“Vermont legislators have undertaken a sustained effort to shut down Vermont Yankee based on this impermissible reason,” the appeals judges said in their opinion. “Vermont legislators repeatedly demonstrated awareness of the potential for a preemption problem and disguised their comments accordingly.”

Entergy, based in New Orleans, sued Vermont Governor Peter Shumlin, Attorney General William Sorrell and members of the state’s Public Service Board in April 2011, claiming the state didn’t have the right to overrule the U.S. Nuclear Regulatory Commission.

The federal agency renewed Entergy’s license to operate the power station until 2032. State action is preempted by the federal Atomic Energy Act, the company said.

“We have felt strongly for a long time now that the state of Vermont’s Acts 74 and 160 were preempted by federal law and are very pleased with today’s decision,” Entergy said in an e-mailed statement.

State’s Role

Vermont countered that nuclear plants present health hazards other than radiation, against which the state has the right to protect its citizens. Those hazards include storm runoff, thermal discharges to rivers and the potential release of diesel fuel and other pollutants.

Sorrell said in a phone interview that his office is reviewing options, which include appealing today’s ruling to the U.S. Supreme Court.

“We’re disappointed the two Vermont statutes giving the legislature a continued say in the operations of the plant are struck down,” Sorrell said in the interview. “We argued that you can’t take the statements of relatively few legislators concerned about radiological safety and then impute those concerns to all legislators who enacted the statutes.”

More Oversight

Sorrell ordered more oversight of the Vermont Yankee plant in 2010 after the discovery of the radioactive hydrogen isotope tritium in monitoring wells, according to court papers. Entergy said it undertook “extensive remediation” to remove soil and water containing the element.

“Entergy has over the years not been a good partner with Vermont, preferring to focus on multiple lawsuits against the state,” Shumlin said in a statement. “I remain steadfast in my belief that Entergy’s continued operation of this facility is not in the best interest of Vermont.”

The appeals judges said the state has “other avenues available to air its concerns. Vermont and its residents are free to pursue any of these routes to express their concerns regarding the public safety hazards posed by Vermont Yankee. The legislation passed here, however, was not the way to resolve those concerns.”

Sorrell said the state still has a say in whether the plant remains open.

‘Viable Option’

“The district court judge upheld the authority of the Public Service Board to continue proceedings and determine whether to issue a certificate of public good for the continued operation,” Sorrell said. “That process is ongoing. Our Public Service Board remains a very viable option to make a binding decision on the continued operation of the plant.” The decision could come in the fall or early next year, he said.

Vermont won a favorable ruling from the appeals court on one issue.

Entergy claimed in its appeal that the Commerce Clause of the U.S. Constitution preempts Vermont from requiring that the company sell power to state utilities at below-market prices in order to remain open. The district court agreed and prevented the state from doing so.

Vermont said in a court filing that the court’s injunction on a purchase agreement “cannot stand” because the Public Service Board had made no such decision.

Licensing Condition

“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 brief.

The appeals court agreed and vacated the lower court’s order.

Sorrell said that ruling saved the state of Vermont from having to pay more than $5 million of Entergy’s legal bills.

Vermont Yankee is in Vernon, on the Connecticut River in the southeastern corner of the state. It employs about 650 people and pays almost $15 million a year to the state in taxes and other payments, Entergy said on its website.

Entergy rose 52 cents to $66.23 in New York Stock Exchange composite trading.

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

To contact the reporter on this story: Don Jeffrey in New York at djeffrey1@bloomberg.net.

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

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