Friday, March 4, 2011

In Vermont, Our Word is Our Bond, So We Don't Honor Contracts



The Memorandum of Understanding

I began blogging on January 1, 2010. With my first substantive post, on January 3, 2010, I began discussing and linking to the Memorandum of Understanding (MOU). The MOU is a key document in the story of Vermont Yankee. Only nine pages long, the MOU describes the terms of purchase when Entergy bought Vermont Yankee in 2002. It includes the cost of power, the decommissioning fund, decommissioning options, and other issues about the purchase. The MOU was signed by Entergy (the buyer), utility representatives (the sellers), and the State of Vermont, in the person of the Commissioner of the Department of Public Service. As far as I can tell, it is as binding as any other document the state has ever signed.

Shumlin doesn't like it. The MOU includes the option to use SAFSTOR (delayed decommissioning) for the plant. Well, fine, Shumlin doesn't have to like it. However, Shumlin goes further: he repudiates it as a binding document because "Here in Vermont, Your Word is Your Bond." He doesn't feel the SAFSTOR option was discussed enough in committee. Therefore, in his opinion, the contract does not have to be honored. In Shumlin's opinion, SAFSTOR was a matter of Entergy "sneaking" some words in among "thousands of pages" of documents.

In the video clip above, you can hear Shumlin answer Terri Hallenbeck, a veteran reporter for the Burlington Free Press. Shumlin said that SAFSTOR wasn't discussed enough in the committee. At around 2 minutes and 40 seconds into the video above, Hallenbeck asks Shumlin why the discussions in the committee rooms would matter more than the document the state signed. Shumlin's answer: "You working for Entergy today?"

There is almost nothing I can do to comment on such an outrageous statement. A reporter's question means she is working for Entergy. If you question me, you are against me!

Okay. So Shumlin is being outrageous. He is in a world of his own. If a person asks a question, and the question indicates that reality doesn't always fit Shumlin's plans---that person is in league with his enemies.

Nineteen Eighty Four

What makes this interchange so Orwellian ("War is Peace" from 1984) is Shumlin's constant use of the phrase "In Vermont, Our Word Is Our Bond" while he explains that the contract is not something he plans to honor. A contract isn't a contract, a contract is whatever Shumlin thought the contract was.

"Our Word Is Our Bond." I find this far more frightening than if Shumlin said: "Yeah, it's in the contract, but Vermont is going to do its best to break that thing down. I don't like it, and Vermont has lawyers on staff. We'll bust it." That would at least acknowledge the existence and validity of a signed contract.

War is Peace. Signed contracts are the work of sneaky people from Louisiana. Vermonters don't have to honor such things, because in Vermont, Your Word Is Your Bond. War is Peace.

Acknowledgements:

I need to thank two excellent reporters for the information in this post. First, Anne Galloway of Vermont Digger who posted the YouTube above in her article on Shumlin's press conference. Terri Hallenbeck of Burlington Free Press for her incisive follow-up blog post which includes links to the history of other power plants in New England that have had delayed decommissioning. I also want to thank Howard Shaffer, whose short comment on the Hallenbeck article gave me the crucial idea for this post. I believe that the other reporter whose voice you hear on the video is John Dillon of VPR.


The Big Brother Image from Wikimedia commons is not exactly right for this post, but I can't find a DoubleThink Image. I can't even imagine what a DoubleThink image would look like. Or perhaps the video is the illustration?

20 comments:

Rod Adams said...

Incredible.

Isn't the MOU exactly the same document in which Entergy agreed to give the state of Vermont some say in whether or not the plant continued to operate?

I guess in Schumlin's world, you get to pick and choose which words are your bond and which contract clauses are enforceable.

Maybe he was in the head when the word SAFESTOR came up as a decommissioning option. Maybe he has never bothered to do any independent reading on the subject that he thinks he has the right to decide.

He's right that America is a democracy, but he should also know that it is a place where contracts are honored and the rule of law gets enforced.

I have a sneaking suspicion that he thinks there is something in Vermont law that will force Entergy to pay the fees for both sides of the litigation.

Meredith Angwin said...

Rod.

Yes. This is the same document that says Entergy will get a Certificate of Public Good from the PSB in order to renew its license. The MOU is a pretty short document. As a matter of fact, it was too short. It didn't mention dry cask storage, so when Entergy had to put in some dry casks, they had to go back to the State for permission.

If Shumlin didn't read the MOU, he didn't read it. If you take the cheerful view, he's like a kid who didn't do his homework, and he's wiggling around to get out of it. "But we never discussed that in CLASS, or maybe I was ABSENT that day." In my less-cheerful view, Shumlin thinks his opinions should have the force of law, despite the existence of actual laws.

Joffan said...

Further - The PSB's Certificate of Public Good was something that, at the time of the MOU, it was free to consider and decide upon.

It was only later that the Vermont legislature decided to use this back door to take control of the process by handcuffing the PSB. And a reasonable interpretation of the MOU para 12 is that the PSB has jurisdiction - not the Senate - so this was also a bond-breaking action.

So, Mr Shumlin - let the Board decide.

(The current odd situation is that the PSB has neither granted nor denied permission to extend operation. This is not really covered by the MOU).

Jeff Schmidt said...

I have to agree with Merdith. Listening to that video, Shumlin's statement reminds me of the sort of bizarre statements I've been hearing in the media recently and in the past from autocratic strongmen.

Luckily, while Shumlin can say whatever he wants, that doesn't mean the courts here in the USA will 'rubber stamp' his desire to break the contract.

But seriously, I would, personally, NEVER vote for a politican who made a statement like that. It shows a blatant disregard for the law that I would never, never even consider remotely acceptable in an elected official.

I don't live in VT, or I'd be starting an impeachment campaign.

Atomikrabbit said...

Three months in office, and he’s already mad with power.

Rod Adams said...

As an aside - some of the most honest people I know and trust live in Louisiana.

Meredith Angwin said...

My aunt, who is a retired judge and is in her eighties, emailed me that the Parol Evidence Rule would be invoked in this situation.
http://en.wikipedia.org/wiki/Parol_evidence_rule
This rule basically says that the written contract trumps any discussions. Or, as Wikipedia puts it:

since the contracting parties have reduced their agreement to a single and final writing, the extrinsic evidence of past agreements or terms should not be considered when interpreting that writing, as the parties had decided to ultimately leave them out of the contract.

But we all knew this, right? "Be sure to read the fine print." "Don't sign anything you haven't read."

Mr. Shumlin's interpretation of contract law is unique. "Unique" is not a compliment.

Bob Stannard said...

Interesting. 11 people were either fired or reprimanded by Entergy for misleading, under oath, the PSB and other regulators.

If your word is your bond, then there is no reason on earth why Vermont would want to do business with Entergy for 20 more minutes; say nothing about 20 years.

On that note, Vermont is being asked to commit to VY for 20 years. How long will they agree to sell us power for? They could decide next month that the plant is not profitable and close down.

It's a one-way street with folks who can't tell us the truth. No thanks.

Bob Stannard said...

Oh, they also agreed to restore the site back to greenfield status, but now are saying that they'll abide by the NRC's criteria.

So much for the word is your bond deal.

Bob Stannard said...

RE: Joffan's "back door" statement. That is completely bunk. The legislature voted to weigh in on the issuance of the CPG. The representative from Vernon supported it. Gov. Douglas supported it. No one from Entergy objected to it. It was totally out in the open. To say it was a back room deal is disingenuous.

Finrod said...

That is truly chilling footage. I get the impression this guy could stand in front of the cameras and sleaze his way through explaining that all those people being escorted onto the cattle trucks in the railyard had been fully and openly engaged during the consultation process, and had actually been in support of this solution, but were now backing out of their prior agreement to be resettled. And he'd be speaking to a population in which the great majority had been trained for decades to accept that this agenda was good and right.

This is just plain evil. I do hope that enough people in Vermont can see through it in time to avert a travesty. Keep up the good work, Meredith.

Bill Rodgers said...

Okay after sitting down to watch the video, I am equally amazed as others on how an elected official could unilaterally declare that a signed contract is invalid because he didn't understand a technical concept or process.

All anyone can say is WOW! Every other business in the State of Vermont Mr. Shumlin doesn't like or understand has just been put on notice.

Plus the audacity of him accusing the one reporter of working for Entergy is beyond belief.
(As an aside, there was too much “polite” laughter after his comment for me. Everyone of those reporters in that room who take their profession seriously should have voiced their disapproval right then and there.)

However here is where I am confused.

Is Mr. Shumlin basically admitting he did not due his due diligence as an elected representative of the State of Vermont at the time he was a nominated member of the various committees assigned to oversee the sale?

SAFSTOR is not a new concept and someone as anti-nuclear as Mr. Shumlin has no excuse of not knowing about it.

IF VY goes to decom, they will not be the first nuclear plant to shut down. There were several plants such as Rancho Seco, Trojan, Maine Yankee that were fairly advanced in the decom process even in the 2002 timeframe. Even a basic review of the their decom process would have provided sufficient information to Mr. Shumlin for him to ask educated questions years ago.

Or Is Mr. Shumlin admitting that instead of carrying out his duties as an elected official by researching all aspects of a nuclear power plant decom process and what that would mean to his constituents he was instead focused only on how much money was in the decom fund? Is he admitting by default that he had his eye ONLY on all that money in the decom fund and was spending his time trying to figure out how to extract that money to pay for all those solar and windmill facilities he believes will magically power Vermont 24/7/365.

(He kept referring to the decom fund in the short video and he always seems to be trying to take money away from Entergy for those magic solar panels and windmills. )

Or is he admitting that he now realizes, through this PR stunt, the decom money he thought would be available for a windfall profit tax type of government action if a fast decom were to occur will not be available due to the long term costs associated with SAFSTOR .

Is Mr. Shumlin stating he now wants to renege on the agreement and wants to lock up the decom money for his purposes, not the safe shutdown of a nuclear plant?

How many lawyers are the citizens willing to pay for to fight for Mr. Shumlin's visions of a future powered by natural gas?

Just some questions that came to mind as I watched Mr. Shumlin's lastest performance.

Joffan said...

Bob Stannard's mischaracterization of my argument as a "back room deal" is a mere bait-and-switch. The Senate's arrogation of veto power on the PSB's activities was not secret - and indeed I never said it was. "Back door" is not "back room deal", even if they both start with "back".

Nevertheless it is not the plain reading of the MoU that the PSB would be prevented from doing its job. The MoU says the Board will decide, and the Senate has prevented this.

It really doesn't make any difference who voted for this - it still breaks the sense of the MoU. Legislation does not trump contracts.

Joffan said...

Here's my transcription of section 12:

12. Board Approval of Operating License Renewal: The signatories to this MOU agree that any order issued by the Board granting approval of the sale of VYNPS to ENVY and any Certificate of Public Good ("CPG") issued by the Board to ENVY and ENO will authorize operation of the VYNPS only until March 21, 2012 and thereafter will authorize ENVY and ENO only to decommission the VYNPS. Any such Board order approving the sale shall be so conditioned, and any Board order issuing a CPG to ENVY and ENO shall provide that operation of VYNPS beyond March21, 2012 shall be allowed only if application for renewal of authority under the CPG to operate the VYNPS is made and granted. Each of VYNPC, CVPS, GMP, ENVY and ENO expressly and irrevocably agrees: (a) that the Board has jurisdiction under current law to grant or deny approval of operation of the VYNPS beyond March 21, 2012 and (b) to waive any claim each may havve that federal law preempts the jurisdiction of the Board to take the actions and impose the conditions agreed upon in this paragraph to renew, amend or extend the ENVY CPG and ENO CPG to allow operation of the VYNPS after March 21, 2012, or to decline to so renew, amend or extend.

While it certainly attempts to lay down a hard line on the possibility of extension, it ties that very strongly to the decision of the Public Service Board. Which, as we all know, has not happened, being forbidden - at present - by the vote of the Senate, on highly dubious grounds.

Meredith Angwin said...

Bill and Finrod

Thank you for your posts. It is indeed a scary time to be in Vermont, with a governor who doesn't seem to recognize that he was merely elected for two years on a THIN margin, but rather thinks his ideas are law. Because he thought of them, of course.

Joffan. Legislation cannot trump contracts. Thank you for the confirmation! I noted this in a blog post over a year ago, where I quoted the Fletcher vs Peck case of the Marshall Court in 1810. An old and solid precedent! Here's my blog post on this.

http://yesvy.blogspot.com/2010/02/day-after-vote.html

Alas for Vermont, I fear with the kind of governance we have right now, we are going to end up in the U S Supreme Court. At great expense to the state, we will reaffirm the basics of contract law. You know, the "read the contract" thing and the "states can't change contracts by legislation" thing. Those basics. The very basic basics.

Tom said...

I would have to agree. To my reading of the MoU para 12. Which to my understand was a signed legal document. Completely states that the psb has the sole authority to grant or deny an extension. I also understand there was a legislation passed that says the psb needs approval for the state, which was passed after the signing of this document. Am I correct? If so shouldn't this signed contract fall under the laws at which the contract was signed or no?

Jack Gamble said...

Bob,

The difference between an Entergy Exec and an antinuke like Shumlin or yourself is that Entergy execs are held accountable and fired if they lie (meaning they are held accountable).

Antinukes derive their words from the orifice of their chosing and are paid $300/hr or elected governor for it.

Meredith Angwin said...

Tom and Joffan

Act 160 was passed in May 2006. It inserts the legislature into the process, in a way that was not included in the MOU. I read Act 160 as a clear change (legislatively imposed) to an existing contract. Here's the link

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/acts/ACT160.HTM

Jeff Schmidt said...

Rod mentioned how the MOU gives certain 'benefits' to Vermont (in Rod's particular case, he specifically said, "Isn't the MOU exactly the same document in which Entergy agreed to give the state of Vermont some say in whether or not the plant continued to operate?".

There was another article posted to this blog shortly after this article appeared, talking about the Clean Energy Development Fund, which Entergy paid into. Didn't Entergy agree to those payments as part of the MoU? (I might be a bit confused here, so if so, please correct me).

If that's said, if Shumlin wants to try to get a court to invalidate the contract, would Entergy have a case to sue the state to repay them all funds payed into the CEDF to date, since that was only done as a stipulation of the contract (unless, as I mentioned, I'm wrong and that's not part of the MoU)?

Meredith Angwin said...

Jeff.

The CEDF was not part of the MOU. The CEDF fund was put in as a tradeoff later. It was part of Entergy's agreements for the power uprate and spent fuel storage (dry casks).

The "certain benefits" to Vermont in the MOU was the requirement to have a Certificate of Public Good from the PSB. I am pretty sure that is what Rod is referring to.

Meredith