Preemption: Why The State Won't Appeal the Vermont Yankee Ruling

The Crystal Ball

Appeals Court Confirms that States Cannot Regulate Nuclear Safety

Recently, the Appeals Court ruled that the state of Vermont was trying to regulate nuclear safety. By federal law, nuclear safety is regulated at the federal level: therefore, regulating it at any other level is preempted by the  Constitution.  The Constitution says that when there is a conflict, Federal laws overrule state laws (Supremacy clause).

In this blog post, I give some of my reasons for believing that the state of Vermont will not appeal the Appellate Court ruling. I think Vermont will not appeal, and the case will not go to the Supreme Court.

Okay. Deep breath here. Every now and again, I look into my crystal ball while sticking my neck out.  It's a complicated maneuver, but hey--I blog. I make predictions.

Unlike the well-dressed lady in the painting, I usually need to give some reasons for my predictions.  If I gave all my reasons, this would be a terribly long blog post.  This post is only about my preemption reasons.  But first, an overview.

Five reasons the state won't appeal 

I am not a lawyer.  The appeals court ruling is written quite clearly, and I have reviewed it carefully. Within the ruling, I can reference five different parts of the ruling that convince me that the state will not appeal it. My reasons fall into two groups:

• Preemption: the first group  (three parts of the ruling) is about preemption,
• Money: the second group  (two parts of the ruling) is about money.  These reasons are NOT covered in this blog post, though I touch on one of them at the end.  I will write another blog post about this subject.

In this post, I am blogging about the preemption sections of the ruling. Here's a link to the ruling itself, for reference.

Preemption As Described in the Appeal Ruling


1) Vermont was Legislating on Nuclear Safety

It is a federal mandate to regulate nuclear safety through the NRC.  Both the district and the appeals court ruled that the Vermont legislature was trying to rule on nuclear safety, and preempting this federal mandate.

The appeals court more than upheld the district court ruling, it augmented it with more examples. For example, on page 10 of the appeals court ruling, it quotes a Vermont law in which the Vermont legislature required a certain arrangement of fuel bundles in the fuel pool.

On page 35 of the ruling, the court states explicitly that it agrees with the "district courts' careful analysis of the legislative intent."  On that same page, it notes the "remarkable consistency with which both state legislators and regulators expressed concern about radiological safety and expressed a desire to evade federal preemption."

The original ruling did not include the fuel-pool-arrangement quote,  or several other safety-related quotes that are included in the appeals court ruling.  Since the appeals court ruling confirms and extends the circuit court reasoning on legislating nuclear safety, this ruling means it would not be reasonable for the state to appeal on those grounds.  There's no judicial controversy here, so no rationale for an appeal.

2) The Footnote: Federal Rights Stay with the Federal Government

The right to rule on nuclear safety belongs to the federal government: nuclear safety is preempted to be a federal responsibility.  Neither Vermont nor Entergy can waive their rights about this preemption, because the power of the preemption does not rest with them.  Agreements in which Vermont and Entergy agree that Entergy shall "waive its rights" of federal preemption are meaningless:  the federal government has certain regulatory rights, no matter what agreements Entergy or Vermont sign.

In the Appellate ruling, the judges describe how the Vermont legislature attempted to put radiological safety issues into Memorandums of Understanding (MOUs) with Entergy instead of into the laws passed by the legislature. In these MOUs, Entergy supposedly "waived its rights" to preemption challenges.  This MOU strategy was Vermont's deliberate legal maneuver to avoid preemption challenges in the future.  On page 41 and 42 of the Appeals Court ruling includes several quotes from legislators explaining their "put it in the MOU" strategy.

And then, there's that footnote.

While not explicitly ruling on this "they waved preemption" strategy, the court wrote the following footnote (page 42 of the ruling):

33 We cite this provision of the 2005 MOU not for the purpose of ruling on whether a party may validly waive the right to bring a preemption challenge, but only to demonstrate the impermissible intent on the part of the Vermont Legislature. But see Olympic Pipe Line Co. v. City of Seattle, 437 F.3d 872, 883 (9th Cir. 2006) (“Preemption is a power of the federal government, not an individual right of a third party that the party can ‘waive.’ [The plaintiff] could not, therefore, waive a right that it did not possess.”

Blogger note...footnotes are important. Several of the early Vermont Law School blogs on the case were ALL about the footnotes!  In this situation,  I translate the footnote above as:

"Yeah, we could rule based on this one, too,  if we had time. ("But see" this other case....) We could rule on the fact that only the federal government can "waive" preemption, because only the federal government HAS it.  But this court has plenty of other evidence of the illegal intents of the Vermont legislature, so we don't really need to go there in order to make a solid ruling.  But still, there it is...preemption is a power of the federal government, not the right of a third party.  Just sayin'. "

In this case, the appeals court is mentioning an area which the circuit court didn't even cover--that is--the inability of a third party (Entergy, the state) to "waive" the federal prerogative of preemption. In my view, when appeals court brought up this issue, they made it harder for the state to appeal the ruling.  The footnote says: "Vermont, your actions have loaded another legal gun and aimed it at yourself.  We aren't bothering to fire it yet, but we just want you to know it is there..."

3) A separate ruling confirms the fact that states cannot rule on nuclear safety. 

The appeal was heard by three judges: Susan L. Carney, Christopher F. Droney, and Paul G. Gardephe.  Judge Carney agreed with the ruling, but she wrote a separate opinion because she agreed with it on different grounds. Carney's nine-page ruling starts after page 53 (the end of the combined ruling) in the decision.

Basically, she concurs that the Atomic Energy Act was meant to prevent state legislatures from regulating nuclear safety.  She quotes the majority ruling that "the State legislative record before us is 'replete with references to radiological safety.' " She further notes that "no reader of this record can fairly claim that the statutes at issue were not "grounded in safety concerns."

But then she begs to differ.  She basically claims that the Supreme Court case (Pacific Gas, 1984) which is referenced throughout the rulings goes too far in its requirements that states avoid regulating nuclear safety.  As I read her ruling, she would prefer if states could consider nuclear safety along with other concerns in their deliberations about a power plant.

However, in the last two sentences, she acknowledges that "there is no avoiding the Supreme Court’s teachings in Pacific Gas. The statutes before us are preempted, and I therefore must concur. "

In my opinion, this separate concurrence means that this ruling is completely correct in terms of existing precedent.  In other words, the state should only appeal this ruling IF the state thinks the Supreme Court will overturn the Pacific Gas decision.

That's a pretty high bar.

Okay. While I think "Pacific Gas has to be overturned for Vermont to win" is a reason that Vermont won't appeal, I admit that it is the weakest of my set of preemption reasons.  Vermont is a state of about 600,000 people.  In other words, it doesn't really have a tax base to support mounting precedent-setting challenges at the Supreme Court level.   But it could decide to do this anyway.  As I said, it is the weakest of my reasons that the state won't appeal.

The Three Reasons Vermont Won't Appeal on Preemption Grounds  

1) Three opinions (District opinion and two opinions at the Appellate level) concur that the legislative record shows that Vermont was trying to legislate nuclear safety.  All three opinions agree that safety regulation is reserved to the federal government.

2) There's a whole separate legal argument that could be mustered about the Vermont legislature trying to hide the preempted concerns in "waivers" in Memorandums of Understanding.  The Supremacy Clause of the Constitution cannot be abrogated by third party "waivers." This legal comment was made by the judges in a mere footnote to the case.  In my opinion, that footnote was a warning to the state that they were on shaky ground in this case, eight ways from Sunday.

3) Even a judge who would have liked to rule for the state (as I read it) admitted that existing Supreme Court precedents meant she must rule against them. (Carney's separate opinion.)  If Vermont takes the case to the Supreme Court, it would not be arguing about the legislative intent any more (that is settled, see above) but about changing a major precedent. That's a harder argument to make.

Another Reason Vermont Won't Appeal

Follow the money.

This appellate ruling reversed a different section of the district court ruling--the section that was the basis for Vermont having to pay Entergy's legal fees.  The Vermont Attorney General is quite reasonably counting this as a win: By appealing Murtha's decision, I saved the state around five million dollars!

The preemption question is solid in all the courts, but the legal-fees part has gone back and forth. In other words, since the courts have already disagreed on the issue about legal fees, in a further appeal, the state risks the court reversing itself on this and making the state pay Entergy's legal fees.

I think the state will take the money, declare victory, and go home.

However, the financial implications of the ruling have to be a blog post for another day.

Yucca Mountain and Vermont: Scofflaws in High Places

Yucca Mountain

Last week saw two court decisions that favored the nuclear industry. Both were about groups (the Vermont legislature, the NRC) that had taken actions that were illegal for them to take.

 The first court decision was the appeals court victory for Vermont Yankee. The Vermont legislature cannot regulate nuclear safety.  This decision was discussed in my post Vermont Yankee Wins in Appeals Court.

The second decision was a Writ of Mandamus about Yucca Mountain. With this Writ, a federal Court required the NRC to continue the license review process for the Yucca Mountain repository.  Billions of dollars have been spent on building this repository for high-level nuclear  waste in Nevada. However, Senator Harry Reid of Nevada is determined to keep the repository from opening.  So far, he has managed keep it closed.

Jaczko in Brattleboro, 2010

Former NRC Commission Chairman Gregory Jaczko was appointed to his NRC position in order to please Senator Reid.  As Commissioner, Jaczko stopped the Yucca Mountain license review process when it was nearly complete.

Jaczko had no legal right to stop the review process, but he did it anyway.  Jaczko also refused to release the Safety Evaluation Reports which were due to be released to the public.

Winning the Lawsuit

 A consortium of groups brought a lawsuit against the NRC to force them to continue the Yucca Mountain review; the plaintiffs included the National Association of Regulatory Utility Commissioners.  They won. This week, the Circuit Court in the District of Columbia ruled in their favor, issuing the Writ on August 13.

The Wall Street Journal described the legal outcome in  Problems with Authority: Lawless Regulators and the White House earn a Judicial Rebuke.  A quote:  In a  major rebuke on Tuesday, the D.C. Circuit Court of Appeals issued an unusual writ of mandamus, which is a direct judicial order compelling the government to fulfill a legal obligation. This "extraordinary remedy"(was taken in a case that)..."raises significant questions about the scope of the Executive's authority to disregard federal statutes."

The Lawsuit Explained

ANS Nuclear Café has an excellent review of the case, written by one of the petitioners: Court Finally Rules on Yucca Mountain NRC License Review, by Robert L. Ferguson. Ferguson has also written a book on the subject.  Also, this video clip is short but clear.




And Yet, Scofflaws Are Still Scofflaws

Writ of Mandamus or no Writ of Mandamus, it doesn't look as if the license review will continue. Senator Harry Reid of Nevada, Yucca Mountain's chief foe, has kept the funding for the review at zero.   As Senator Reid said: “With no disrespect to the court, this decision means nothing,”

Well, to me, that sounds just a little disrespectful of the court.

The Reid quote comes from the Las Vegas Review Journal article: Federal court order NRC to restart licensing process for Yucca Mountain. The video clip above is from the same article. In the video, you can see Reid make a similar statement about the meaninglessness of the court decision.  You can also see Energy Secretary Ernest Moniz whine  about lack of funding for the license review process.

The Money is There, If They Want It

Lack of funding?  Oh Puh-leeze.

Moniz talking about "lack of funding" (a lack arranged by Harry Reid) is pretty funny, because the utilities pay $800 million dollars a year into the Nuclear Waste fund. They pay a tenth of a cent to the fund for every kilowatt-hour generated by nuclear energy.  This fund is supposed to provide a repository for spent nuclear fuel. In other words, they pay almost a billion dollars a year, and the fund has been growing for about thirty years.

While $10 billion was paid from this fund to develop Yucca Mountain, more than $20 billion remains in the fund. (Unspent balance of $25 billion according to Wikipedia.) In other words, if some of the money already paid by utilities..say, maybe $20 million of the $20 billion, was freed for the license process expenses, the license process could go ahead.

It might take a small amount of maneuvering to free this money from one federal pocket to another. But the government is good at moving money, when it wants to. (Sometimes it moves money to non-existent pockets, but let's not get into that.)  Apparently, the government doesn't want to move this money or use it.  So much for the court case, I guess.

Vermont and Yucca Mountain

U.S. Constitution
First page

Here in Vermont, we also have scofflaws in high places.  Last week, Vermont legislators were also given clear notice by the courts that they were breaking the law (attempting to regulate issues that are regulated at the federal level) and pretty close to violating the Constitution (though the commerce issue was not "ripe").

Will our legislators and governor find a way to ignore the courts and go on their merry way against Vermont Yankee? Nevada seems to be doing this. I know the situations are quite different.  Still,  I fear our legislators will use some methodology that will be illegal, but perhaps not stoppable in time, even by injunctions.

I hope not.  I think not.  I hope the rule of  law will prevail.

I'm basically an optimist.

Entergy Files Suit

This morning, Entergy filed suit to keep the plant open by requiring Vermont to honor its signed contracts. The State of Vermont signed a Memorandum of Understanding with Entergy in 2002. The State has attempted to amend that contract on a one-sided basis. Entergy's lawsuit was described in a Burlington Free Press article this morning. You can also download the filed lawsuit here.

According to the Memorandum of Understanding (page 6) the parties "espressly and irrevocably decree that the Board (Public Service Board) (1) has jurisdiction under current law to grant or deny approval of operation of VYNPS beyond March 12, 2011."

However, in 2006, the legislature voted that the PSB could not issue such a certificate without legislative approval (Act 160). This was basically a one-sided change to a written contract. There are tons of precedents that one side cannot change a contract without the other side's approval. Let's see the list of such precedents.

1. There's the Parol Evidence Rule for ordinary contracts. The written contract is the ruling document.
2. But this is a state, right? According to the Supreme Court, even states can't break contracts. This goes back to the Fletcher v Peck case of 1810, where a state attempted to pass a law that invalidated a contract the state had already signed. In 1810, the Supreme Court said the state could not do that. The precedent stands. (Last year, I noted this precedent in my blog post The Day After.)
3. Finally, there's the U.S. Constitution. According to Article 1, Section 10, no state shall pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts.

According the the Vermont Yankee press release, there are further precedents, not closely related to Act 160. (Note, the precedents cited above are my opinions, not taken from Entergy documents.) Here's a quote from the Entergy press release about some nuclear and interstate commerce law precedents.

• Atomic Energy Act Preemption. Under the Supremacy Clause of the U.S Constitution, the U.S. Supreme Court held in 1983 in a case involving Pacific Gas & Electric that a state has no authority over (1) nuclear power plant licensing and operations or (2) the radiological safety of a nuclear power plant. In violation of these legal principles, Vermont has asserted that it can shut down a federally licensed and operating nuclear power plant, and that it can regulate the plant based upon Vermont’s safety concerns.
• Federal Power Act Preemption and the Commerce Clause of the U.S. Constitution. Vermont is prohibited from conditioning post-March 2012 operation of the Vermont Yankee Station on the plant’s agreement to provide power to Vermont utilities at preferential wholesale rates. The Federal Power Act preempts any state interference with the Federal Energy Regulatory Commission’s exclusive regulation of rates in the wholesale power market. The Commerce Clause of the U.S. Constitution bars a state from discriminatory regulation of private markets that favors in-state over out-of-state residents.

The Governor

Not surprisingly, it comes down to Shumlin again.

Another quote from the press release:

In a meeting with Entergy representatives on March 30, 2011, the governor reiterated his firm opposition to the operation of Vermont Yankee after March 21, 2012.

Ah well. At least he's consistent, I suppose. He campaigned against Vermont Yankee, and he was losing. Then he began campaigning on reproductive rights and healthcare and sneaked to victory.

Was I Behind the Curve on This?

Sometimes, I think I am the last person to know these things. Do you remember this chart of Vermont's Committed Resources that I put in my blog about a week ago? The chart comes from a Department of Public Service presentation from March of this year. Note that Vermont Yankee electricity supply doesn't end on March 21, 2012, but continues for a while. If there's a lawsuit, the plant can almost certainly keep running while the suit continues. Why didn't I notice this aspect of the chart before?

Update: Joffan is quite right in his comment. This chart shows VY supplying similar amounts of power in 2010 and 2011, one-fourth that amount of power in 2012, and no power in 2013. I misread it. However, I am going to leave the chart in place because it shows how Vermont depends on Vermont Yankee (2000 out of 6000 GWh) and what a big gap would need to be filled.

The Day After the Vote

It's the day before the vote, of course, but many of the Anti-VY screeds start "The day after Vermont Yankee is shut down." They go on to say that "nothing will happen, your lights won't go out" etc etc etc. Okay. Here we go.

The Day After The Vote against Vermont Yankee, nothing will happen. The PSB will have the same instructions (none) that it had the day before the vote. Vermont Yankee will continue to make power and track down the tritium leak. Nothing will change. Don't worry about it. There will be some parties in the anti-VY camp, of course.

Temporary parties, I hope. He who laughs last, laughs best.

A few days from now, I expect the whole business will move to the courts. I am not a lawyer, nobody has talked to me about this, and this is just my opinion. But I see three routes for challenges.

1) Even states can't break contracts

Two hundred years ago, the State of Georgia legislature decided that it had made a mistake in selling some land. Actually, the legislators had been bribed and let the land be sold for peanuts, even by 1800 standards. Well, no problem, they thought. No problem whatsoever. We'll just pass a law which wipes out that little mistake, and says the land was never sold. However, in 1810, the Supreme Court ruled they couldn't do that. A state legislature that makes a contract is obligated to stick to the contract. A later legislature can't wipe it out by a new law. The Fletcher Versus Peck case of the Marshall court is one of the cornerstones of American law.

Which brings us to Vermont Yankee. The sale of Vermont Yankee to Entergy, and the rules under which Vermont Yankee had to operate and sell power, were set out in a contract called the Memorandum of Understanding. It was a contract with the state, signed in 2002 by the Public Service Board of the State. It says nothing about legislative approval being necessary for continued operation of the plant.

In 2006, however, the state passed a law, Act 160, saying the Public Service Board could not approve nuclear plant operation without a confirming vote from the legislature. As I read it (and I am not a lawyer) this ex post facto changing of a contract could be challenged in court according to a precedent that has stood for 200 years. This is a precedent that stood because it deserves to stand. Who would buy or sell with a state if the next legislative session could declare the contract null and void, or put new, onerous terms into the contract?

2) The State may declare, but the NRC rules

In general, the NRC, not the state, decides whether a nuclear plant can continue operation. The state legislature may declare that it has authority, but the federal courts may not approve. Whether people like this or not, I think it is necessary. The FERC has some types of regulatory powers over hydro plants, and the NRC has powers over nuclear plants. There are cases where actual expertise is more important than local politics.

After Vermont Act 160 was passed, nothing happened, so there were no NRC or court challenges to this act. Now it will almost certainly be challenged, and we will see what happens.

And it wouldn't be the first time somebody wasted their money trying to regulate Vermont Yankee in inappropriate ways. As I said before, I am not a lawyer, but the Vermont Yankee versus Natural Resources Defense Council case of 1978 may well be relevant. The Supreme Court settled that case in Vermont Yankee's favor.

3) The Department of Public Service and the Public Service Board might just ignore Act 160

The legislature passed Act 160, but I don't see any Public Service Board signatures anywhere on the document.

The Department of Public Service and the Public Service Board may choose to continue with their charters as originally defined, and issue (or not issue) a Certificate of Public Good to VY according to their own rules and procedures. After all, these agencies are set up to be different from the legislature precisely because they are supposed to make judgments based on safety and economics and all that good stuff, not on politics. If they decide to just follow their charters, this would obviously throw the whole matter into the court system.

A little personal note here, with some history. There used to be a group, chaired by the PSB Commissioner O'Brien, called VSNAP, Vermont State Nuclear Advisory Panel. I went to several of the hearings VSNAP held about VY.

Some of the senators and representatives on that panel were not exactly polite to Mr. O'Brien. In one memorable hearing, a representative wrestled the microphone out of his hands several times. In another hearing, a senator prevented O'Brien from starting the published agenda, basically by out-shouting O'Brien. My impression was that these legislators were trying to make it clear that they had no respect for O'Brien or for the PSB.

That is just my opinion. I know, I know. You hadda have been there. VSNAP stopped meeting because the meetings were such an unmanageable circus. Everyone, even the shouting senator, will acknowledge that. As he said to me recently: "I guess I was a bad boy." (Time to re-read the book Mau-Mauing the Flak Catchers?)

I don't think this was the best way for the legislators to win friends and influence people.

The worm may (or may not) turn at this point. The Public Service Board may just decide to ignore the legislature, just as the legislators disrespected the PSB. After all, PSB has a charter, and that is all it needs to issue a certificate.

Conclusion and an Appeal for Help

The day after the vote, nothing will happen.

This is my best guess, and I think the future will be interesting.

My appeal for help? I am not a lawyer, and I hope some lawyers will weigh in, comment, and make this a stronger post.