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.

Win-Win for the Governor: Win the Election and Lose the Lawsuit.

In my opinion, Governor Shumlin doesn't want to shut down Vermont Yankee.  He just wants to look as if he wants to shut down Vermont Yankee.

My reasoning is below.

Safety Regulation

In January, in federal court, Judge Murtha ruled that Vermont was attempting to shut down Vermont Yankee on the grounds of nuclear safety, and regulating nuclear safety is a federal prerogative.  Entergy had argued its case by showing many situations in which the state legislators spoke about nuclear safety, sometimes with the ironic comment that they couldn't say the "s-word" so they would have to call it "reliability."

Cavan Stone wrote a blog post on this "s-word" business The Control-H Defense. You use control-H to substitute one word for another. Do the substitution, and you aren't regulating safety at all. You changed the word.

(You can read Judge Murtha's decision and related material on this page of the Energy Education Project. )

Cherry-picking safety statements

In the Vermont brief that appealed Murtha's ruling, Vermont claimed that the judge had cherry-picked a few things a couple of legislators had said.  From those few statements, Murtha had decided Vermont was attempting to regulate nuclear safety. Vermont claimed it wasn't interested in regulating nuclear safety.  A few legislators were out of hand...said things they shouldn't have said, maybe...no big deal.  Vermont wasn't attempting to regulate nuclear safety. Nothing could be further from the truth.

Governor Peter Shumlin

Vermont claims that it wants to shut down Vermont Yankee in order to build renewables (yes, you read that right).  The desire to shut down Vermont Yankee is all about renewables, and nothing about safety. That is the main message in Vermont's appeal brief. I discuss this in my post: It's the Renewables, Stupid. Vermont Files a Brief.

Clearly, with the federal appeal coming up, Vermont is being extra-careful.  The state wants to be sure that nothing it does could give the impression that that the state is trying to regulate on the basis of nuclear safety.  Right?

Nothing could be further from the truth.

After all, the election is coming up faster than the court case, and the election is more important to Governor Shumlin.

The Department of Public Service and the NRC

Vermont is trying its hardest to look as if it is regulating nuclear safety.

Liz Miller, the Shumlin-appointed head of the Department of Public Service (DPS), recently joined a lawsuit by an intervenor.  The DPS and the intervenor sued the NRC, claiming that NRC had granted Vermont Yankee's license extension improperly, because of a water quality permit issue.  DPS and the intervenor lost the suit.

After they lost the suit, Miller asked the NRC to increase their oversight of Vermont Yankee until the NRC begins to regulate nuclear safety to DPS standards.  DPS thinks Vermont Yankee needs more oversight.

The NRC turned her down, though someone from NRC came to Vermont to explain to her how the NRC does business. You can read about this in my blog post about VSNAP, in the section on the Panel and the Plant, and in the Brattleboro Reformer article: NRC says Vermont Yankee doesn't need increased oversight.


I really tried.  I did.  I tried.  Now, vote for me.

A victory for Vermont in court will depend on Vermont proving that it had no intention of regulating nuclear safety.  It seems absurd to me that Vermont would join lawsuits against the NRC, insist the NRC isn't doing enough oversight, and so forth...while simultaneously trying to prove in court that the state has no interest in controlling or regulating nuclear safety.  If they want to win in court, the state's actions can most simply be described as "counter-productive."

In my opinion, however, Shumlin is going for his own kind of win-win.  Win the election by appealing to the part of his party that wants Vermont Yankee shut down.  Win the election by keeping the Progressive Party on his side, by showing how hard he is trying to shut down Vermont Yankee.  Every time you look around, there is his DPS, trying to protect everyone from the inadequate federal regulation of nuclear safety.

At the same time, the DPS is taking actions that will probably assure the state will lose in court, or at least, these actions will increase the probability it will lose.

 So Shumlin will have his cake and eat it too.  Win-win.  He wins the election.  He convinces everyone he is trying to shut down Vermont Yankee. But Vermont Yankee keeps operating!  Not his fault, he tried, but in the meantime, it stays as a source of tax revenue for the state, and a source of employment in Windham County and neighboring regions.  Win-win for Shumlin.

He tried.  He may succeed. Win the election, lose the court case. Win-win for Shumlin. In my opinion, at least.

Tax Revenue

This will another blog post.  Vermont Yankee recently sued the state again, this time because the state increased its generation tax by about seven million dollars a year.  I will cover this later, it's another subject.  But I couldn't write "a source of tax revenue for the state" without mentioning this.  Vermont Digger has an excellent article on the tax and the lawsuit.

The Vermont Yankee versus Vermont-Shumlin Trial: What's Next, and What Happened

What's Next

What is next is basically--a long wait. The trial at the Brattleboro Courthouse took three days, and was over on Wednesday. However, Smallheer at the Rutland Herald reports that the judge asked the attorneys to file briefs on the legal issues of waiver, estoppel and laches, as well as Act 248, the state law that regulates utilities. The attorneys have until September 26 to file answers to Judge Murtha's questions. (The Smallheer article is behind a paywall.)

The injunction hearings were June 23 and 24th in Brattleboro, and the judge ruled on July 18. That was about three weeks. The injunction ruling was a smaller ruling, and one that would not be tested by any sort of appeal process.

Most judges don't want to see their rulings overturned. In this case, both parties have said: "Whichever way it goes, we will appeal!" With that background, I suspect this will be a very carefully-written opinion. Everyone expects this ruling to take at least two months, if not longer. Early November? Thanksgiving? Christmas? Sometime in January?

What's next is....we wait.

What Happened: The Legal Points

Entergy basically had three major points within the court case.

1. Breach of contract. By passing Act 160, the legislature inserted itself into the Memorandum of Understanding between the state Public Service Board and Entergy. This changed and breached the contract, and basically invalidated it.
2. Pre-emption. Whatever the heck the legislature said about reliability, the only thing they looked at was safety, safety, safety. They never mentioned the plant's capacity factor, for example, but rather talked about the dangers of leaking tritium. Radiological safety is the legal business of the NRC and the federal government, not the state. The state was attempting to pre-empt an area reserved for federal rule-making.
3. Commerce clause. Legislators stated that they were not going to give a Certificate of Public Good to Vermont Yankee unless the plant sold power within Vermont at below-market rates. Since the plant sells power to three states (Vermont, New Hampshire, Massachusetts), a requirement for better rates in-state violates the interstate commerce clause of the Constitution.

What Happened: What Was Said

Discussing what was said about these three areas is clearly more than one blog post worth of discussion! So, here's my quick summary, to be expanded in future days.

The State pounded on the Breach of contract issue. It claimed that Entergy had agreed to abide by Act 160, even though it now objects to the act. The State claims that Entergy should have sued immediately, or something like that. As a matter of fact, the words waiver, estoppel and laches are all about this. I heard that the State played a video of a forty-minute deposition by a former Entergy vice-president. In the video he talked about how Entergy needed to mend fences with the legislature. The State contended that this video shows that Entergy accepted their authority and the legislature's role in the Certificate process. The State also pushed the question of whether Entergy had brought the suit at the right time. (I blogged about this several months ago. I link to my blog post on the subject, which includes very interesting comments by Donald Kreis of Vermont Law School.)

Entergy stressed the Pre-Emption issue, pointing out all the times the legislature talked about radiological safety and then added the word "reliability" like some kind of fairy dust that would keep them safe from accusations of pre-emption. Entergy also noted the many things the state never considered: capacity factor, turbine and other non-safety inspections, etc. The state responded that they only mentioned safety to be sure they weren't mentioning safety, that they were still on appropriate state-controlled ground.

(Stepping out of reporter role here: Yeah, right. I sat in hearings where legislators said in a very jolly tone of voice "You know we can't use the s-word." So they used the r-word for s-word concepts. I saw Shumlin talking about how radioactive leaks from this aging plant would affect the teeth of children in Vermont. Gimme a break. It was safety, safety, safety.)

In early parts of the trial, the Entergy brought up the issue of the Commerce Clause. Entergy showed that the legislators told them that Entergy would not be granted Certificate of Public Good unless they sold power at below market rates to Vermont utilities. Trying to enforce a better deal for your own state (of a commodity that is sold to several states) violates the Commerce Clause of the Constitution. This was discussed by Entergy's attorney, but I don't think it went anywhere within the context of the trial. But I am not sure.

Conclusions

Oh, I know I should have some conclusions. I don't.

I think it is all very much still up in the air. For further information, I recommend Olga Peterson's articles in the Commons and Vermont Digger, and the relatively sparse articles in the Vermont Law School blog about the lawsuit. For a quick overview, Pat Bradley at WAMC in Plattsburgh New York did a great 4-minute radio segment on the trial. (Full disclosure: Bradley quotes many people, including me.)

At the end of the radio segment, you can hear Cheryl Hanna of Vermont Law School explaining that the outcome is still up in the air.

More analysis to come in the future!

About the pictures: This post has photos of the September 12 rally; the photos were taken by Milo Shaefer. The upper picture shows both sides of the street in Brattleboro, shortly before court convened. Plant supporters are mostly to the right, plant opponents to the left. The lower picture shows plant supporters, with one plant opponent (wearing black) in the middle. You can click on the pictures to make them larger.

In the earlier post about the rally, the photos were by Bob Hargraves. I am very grateful to Milo and Bob for participating in the rally and taking these great pictures!

The Silence of Governor Shumlin

Shumlin Speaks

Let's start with Governor Shumlin speaking at a press conference in April, the day after Entergy filed suit against Vermont.

In the video below, at the one-minute mark, a reporter asks Shumlin if he regrets his comments on nuclear safety. The reporter notes that the Entergy suit quotes some of Shumlin's comments (on Vermont Yankee safety) as examples of state pre-emption of federal regulatory powers.

Shumlin answers that he never talked about safety, just reliability. Shumlin then puts his foot firmly in his mouth, saying the plant is "leaking radon into the ground" and other radiological non-sequiturs. In other words, Shumlin talks about radiation safety.

If I were Shumlin's lawyer at that point, I would have told him to shut up. Instead, my attitude was: "Go, Shumlin! Keep talking! Keep that foot in place!"

(This is a video from the website of True North Reports, of a Shumlin press conference on April 22, the day after Entergy filed suit against the state. I also featured this video on an earlier blog post.)

Shumlin Stops Speaking

A few days later, on May 5, Shumlin was supposed to appear on a radio show about Vermont Yankee. He didn't appear. Shumlin claimed he needed to visit the Lake Champlain flood damage at that time. (I mentioned this in my post on the Vermont Law School blog.)

I don't believe that that was Shumlin's reason for canceling his appearance on the show. I think he had gotten the message from his lawyers: "The state is being sued. You are not doing the state's case any good with your comments!"

I am not as important a person as Governor Shumlin, and I can persuade radio programs to meet my scheduling needs when they want me to appear on their programs. If I can do this, so can Shumlin. If the Governor had wanted to talk about Vermont Yankee, the program would have been re-scheduled for when the Governor was available.

The program was not rescheduled.

Shumlin hasn't said a word about Vermont Yankee since then. Shumlin talks about health care, cigarette taxes, schools. But not about Vermont Yankee.

Relief

It's so nice and quiet nowadays. Shumlin is nice and quiet.

I don't miss Shumlin's rants about Entergy Louisiana and their thieving ways. I was tired of his endless statements about the dangers of strontium in the groundwater--no strontium had ever been detected in the groundwater. I was tired of hearing his nasty innuendo and his fractured facts--repeated over and over.

I think Shumlin has gone quiet for the duration of the lawsuit.

My peonies were spectacular, and Shumlin has shut up about Vermont Yankee. It is shaping up to be a lovely summer, despite all the rain. Great peonies; quiet Shumlin. Who could ask for anything more?

Peony picture from Wikipedia.

Widening the View: From Vermont to Iowa and England

Starting in Vermont

This morning, the Brattleboro Reformer had an interesting and controversial op-ed about Vermont Yankee. Since Howard Shaffer and I had visited the Reformer offices recently to have a background-style talk, I was interested in the editorial.

The op-ed claimed that Vermont Yankee is unlikely to close "on schedule." It pointed out that Entergy could bring several types of lawsuits against the state-ordered closing. Any of these lawsuits could extend the plant license for twenty years (if Entergy wins) or for a couple of years (while the lawsuits wend their way through the courts) even if Entergy doesn't win. The potential suits fall into three categories:

1. Federal pre-emption. What were all those Vermont Senators doing when they inveighed against the dangers of tritium and insisted the plant must close down? Weren't they aware that radiation safety is an NRC issue, and cannot be decided by a state? The Senators were giving grounds for a lawsuit on pre-emption of the NRC.
2. Contract violation. Entergy signed a Memorandum of Understanding that said it agreed that it would abide by a Public Service Board issuing (or not issuing) a Certificate of Public Good. After the contract was signed, the Legislature voted itself the privilege of telling the Public Service Board whether or not it could issue that Certificate. This legislative veto power was not in the original contract.
3. What is an MOU? A Memorandum of Understanding is a contract. On the other hand, with some lawyers getting into the act, an MOU could also be considered non-binding, or it could be considered more binding than the usual contract. Fun for all, I suppose.

I covered many of these topics in two February 2010 blog posts called The Day After the Vote and The Morning After. I discussed pre-emption, contract law, and the possibility of lawsuits. I would call myself a real fortune-teller, except that I expected the lawsuits to begin more-or-less immediately at that time. No lawsuits began. Entergy quite reasonably decided to find and remediate the tritium leak before getting lawyers involved.

There's still time in the future for a lawsuit. At this point, these lawsuit ideas are simply speculation.

Expanding to Iowa

A local blog, Vermont Tiger, discussed the Reformer op-ed in a post Drop Dead Date for Yankee? Vermont Tiger compared the fierce opposition to Vermont Yankee with the general acceptance of the license extension recently granted to Vermont Yankee's sister plant, Duane Arnold in Iowa. Duane Arnold is a 615 megawatt BWR: it even has a low bank of cooling towers, just like Vermont Yankee. (picture above). The Iowa paper describes Duane Arnold as an employer, a provider of taxes, a provider of energy, and a "valuable corporate neighbor."

I appreciate Vermont Tiger for widening my view of how people look at nuclear plants. Too many people in Vermont declare: "We are Vermont and we are very very special. Nothing is quite good enough for us." These people give Vermont a smug problem. Without Vermont Yankee, Vermont will have gas-fired generation, and we will also have a smog problem. Nice to know that Iowa has a different view of nuclear!

Britain

And now, looking across the seas, Centrica, a UK gas company, moved into the nuclear market in 2009. They made this video to educate their employees about their investment in the UK nuclear program. This video shows why Britain needs nuclear energy. It also shows why Iowa and Vermont need nuclear energy. Or basically, why the whole world needs nuclear energy.

Images from Wikipedia and NRC.