A Lingering Lawsuit: The Generation Tax

Since I blog about Vermont Yankee, every now and again I have to update the legal issues.  So here we go...again.   The first lawsuit is about the Generation Tax.

The Generation Tax: The First Lingering Lawsuit

What it is: A tax law written so narrowly that only Vermont Yankee was affected by it. This tax was challenged by Entergy in federal court

History: The legislature passed a law which increased the "generation tax" on Vermont Yankee (fee to the state per kWh sold) to a total of about $12 million a year.  This tax was designed to force Vermont Yankee to continue to make payments to the state at the same level as it had been paying the state under Memorandums of Understanding (signed contracts with the state). However, these contracts ended in March 2012.

A federal court called some of those payments  "a form of blackmail (extorted by the state) for approval of construction (by Entergy)," but at least they were signed contracts.  The new twelve million dollar tax, however, is a tax imposed by the state on "power plants with a nameplate capacity of over 200 MW."  There's only one such plant in the state. When they passed this law, legislators were warned by lawyers that such a closely-directed law would probably be challenged in court. (See page 12 of this Entergy filing.)

What happened recently:  Entergy lost in federal court and in appeals court.  The tax continues in effect.

On the other hand, courts do not like to rule on constitutional issues if they can find another way to decide. Both federal courts ruled mostly on jurisdictional issues, claiming that Entergy should have filed suit in the state courts before coming to the federal court.  You can see these rulings on this page, maintained by the Attorney General of Vermont: Generating Tax Entergy Litigation.

In the sequence:

• the federal court dismissed the case,
• Entergy appealed the dismissal 
• the appeals court ruled against Entergy.  

The appeals courts said that that Entergy has to start the appeals process in state courts.

You can also read a review of the case by Gabriella Khoransanee at FindLaw, a website for legal professionals.

Calvin Coolidge tips hat

By the way, a big hat tip and kudo to William Sorrell, Vermont Attorney General, for keeping up these user-friendly and complete pages on the various lawsuits.

What's next:   Khoransanee expects the legal challenges to the tax will continue in other courts, as suggested by the federal court rulings.  To some extent, the whole thing is going to be moot pretty soon, because Vermont Yankee is planning to close.  At that point, Vermont Yankee will no longer pay a "generation" tax, because it won't be generating electricity.

However, twelve million dollars for a year's worth of tax is twelve million dollars.  I suspect both sides will consider it worthwhile to keep litigating about this sum of money.  I think Entergy will follow the guidance of the federal court, and begin the litigation process again in the state courts.

Vermont Yankee Gets Permission to Install Diesel

Late yesterday, the Vermont Public Service Board (PSB) issued a Certificate of Public Good for the diesel generator at Vermont Yankee.  I link to their order issuing the certificate here.  

It's a 42 page order, fairly evenly divided between the history of the docket, boilerplate, and snark.  

The snarky part is their insistence that they are issuing this order because Vermont Yankee needs the diesel generator even if it were "in compliance" with their previous orders and was shut down.  (They do not actually have such a previous order...it is just implied within other orders.  They could have issued an order to shut down, but then they would find themselves in court...) The last two pages of this order, by one of the commissioners, is definitely worth reading. The commissioner blames Vermont Yankee for the delay in issuing the order!  Amusing, in a sort of sick way. (I am a blogger.  I have opinions.) 

Still, the whole thing was a win-win.  And the winners were:

• Vermont Yankee got permission to put in their diesel generator. 
• The Public Service Board had an opportunity to write about "their previous  orders," which they love to reference.  Since an order to shut the plant does not exist, they can't quote the actual order, but that's nit-picking. 
• The Public Service Board avoided federal court judgment about the diesels.  With this PSB ruling, the on-going federal court case became moot. The federal court will not rule against the PSB on the basis of pre-emption about nuclear safety equipment, because the case is moot. Therefore, the PSB can consider their honor intact.  Also, if the federal court had ruled against the PSB on pre-emption about the diesels, the state would look pretty bad in terms of  the main federal case about pre-emption

In short, the PSB dodged a major federal court bullet by issuing the certificate, and everybody wins. 

Have a great weekend!

Diesel Case in Federal Court

Yesterday, Vermont Yankee appeared in federal court in order to get permission to put in a safety diesel.  The Public Service Board has been delaying even considering the diesel docket.  They delayed for months and wrote all sorts of complex opinions about whether they would consider the diesel docket: "compliance with other orders" and so forth.

Yes, the whole court case is a bit ridiculous...as I said in my blog post yesterday:   In my opinion, these court cases could have been avoided if the Public Service Board just knew how to spell "pre-empted." Emergency diesels are clearly safety equipment, and adding safety equipment is clearly the business of the Nuclear Regulatory Commission, not the state.  The state cannot regulate nuclear safety: it's pre-empted.

Summary of the Arguments in Court

Vermont Yankee arguments: Vermont Yankee argued that the state had no business interfering with nuclear safety.

State arguments: The state argued that Vermont Yankee could put in the diesel more quickly than they claimed they could put it in.  Therefore, there was no reason for them to be in court: they could  wait for the PSB to rule.

• The judge rejected this argument: what if the PSB rules the other way? We might as well hear the case now, actually. (from VPR report on the hearing)
• Cheryl Hanna (Vermont Law Professor) reported that the state spent two hours examining an Entergy witness about project scheduling for the diesel. She noted that this whole line of questioning was somewhat off the point. (from Vermont Digger report and WCAX video on the hearing)

Various intervenors: They now claim that Vermont Yankee is wasting court time, since the PSB is sure to rule in their favor anyway.  Of course, these intervenors themselves bring lawsuit after lawsuit against Vermont Yankee. (from VPR report on the hearing).


My Opinion:

Snark opinion: Funny how the PSB issued threatening statements and ambiguous statements ("not in compliance with other orders" and "this order is narrow" and so forth) until Vermont Yankee sued.

Sad opinion: Cheryl Hanna of Vermont Law School talks about how polarized and angry the entire situation is, and how there are five on-going law suits about Vermont Yankee. (WCAX video clip below).   It didn't have to be this way.  It really didn't.

Governor Peter Shumlin vowed to close Vermont Yankee. In my opinion, he did this in order to retain his support with the Progressive Party. His political ambitions led pretty directly to all this hatred.  Yes, there were people opposed to nuclear power and Vermont Yankee before Shumlin ran for office, but Shumlin made it much worse.  He marginalized the people at Vermont Yankee (for example, his deliberate and planned use of the term "Entergy Louisiana") and he aimed at costing them their jobs. They are fighting back. There's a lot of anger there, and it didn't have to be this way.  (I encourage you to watch the Cheryl Hanna video below and listen to what she says about polarization.)



  WCAX.COM Local Vermont News, Weather and Sports-

Catching Up With the Diesels: Updated

A Diesel Deadline

Vermont Yankee needs new diesel generators as a safety back-up system. There will be two court hearings about this: today and tomorrow.

Basically, the Public Service Board (PSB) has been dragging their feet about granting permission to install the diesels.  Vermont Yankee must begin pouring the concrete for the diesel pad in mid-June to meet a Nuclear Regulatory Commission requirement to have the diesels in operation by mid-September.

The PSB has been seriously dragging their feet.  First the PSB took months to even set up the docket and open it (Vermont Yankee applied for the permit in August, the PSB issued a statement opening the docket in late December).  The PSB gave "intervenors" status in this matter, and plans to hold public hearings to hear what these groups have to say. (Hint to the PSB: the intervenors always say the same thing. If you want, you can ask me what they are going to say. I think I can tell you.) Recently, the hearing officer recommended that the diesel permit be granted, but the PSB did not amend the timing on its docket.

I blogged about the diesel time-line in two posts: The PSB, the Diesels and Sherlock Holmes about non-action also being action (like the famous "incident of the dog in the night-time") and A Court Case With A Deadline: The Black Start Diesels.  In that case, the deadline I was considering was Entergy's requirement to get the diesel pads ready.

Court Deadlines

Now, as the deadline approaches, two hearings are under way, today and tomorrow.

• Today, Entergy will be in federal court in Burlington, suing the state for interfering with nuclear safety by not granting permission to install safety diesels. 
• Tomorrow, in Montpelier, the PSB will hold an "oral argument" hearing on the diesels.

Andrew Stein of Vermont Digger has a post on these hearings: State, Entergy head to federal court Tuesday. Stein's article includes a quote from an intervenor's lawyer, Brice Jordan.  Jordan claims that since the state does not need Vermont Yankee, the diesel permit should not be granted. (Jordan also has said that he does not have to share information on hydro plants, but that was a different hearing.) In other words, in Jordan's opinion, the diesel hearings are a stand-in for the hearing on the certificate of public good for the whole plant. 

Jordan's opinion is not shared by the State Department of Public Service (DPS). The DPS makes a clear distinction between 

• the diesel permit, which they think should be approved
• the certificate of public good (CPG) for the plant operation, which they think should not be approved.

  In an earlier Vermont Digger article, the DPS commissioner, Chris Recchia, said: “This [the generator permit] has no relationship to the overall CPG for operation of the facility; it’s specific to the back-up generator, and we think they’ve done what they need to do."

Meanwhile, the state and Entergy are once again busy in court.  In my opinion, these court cases could have been avoided if the Public Service Board just knew how to spell "pre-empted." Court hearings are a very expensive way to learn to spell.  Yes. I'm a blogger, and I have opinions. 

Update: At the Federal Court hearing today, the state argued that Vermont Yankee didn't actually need all that time to put the diesels in place.  Meanwhile, nuclear opponents made statements implying: "Of course VY was going to get the diesels, why are we even in court about it?"

Well, let's see.  The long gap between when Entergy applied for the permit and when the PSB started working on the docket: that might be one reason they were in court.  The PSB's snarky "if Entergy is not in compliance with our earlier orders" comments: that might be another reason. I am sure you can think of more reasons.

Here's my link to John Dillon's VPR report on today's hearings.

Second Update: Andrew Stein's Vermont Digger article on the federal court hearing was just published.  It includes Cheryl Hanna's masterful description of the different possible outcomes of the diesel case before the PSB, and the implications of those outcomes for the federal hearings. Also, Hanna points out that the legal wrangling about "how many days does it take to install a diesel" isn't very relevant. Cheryl Hanna is a professor of constitutional law at Vermont Law School.   

Two links on other subjects

I was proud to be a participant in an important pod-cast on nuclear communication.  Peter Sandman Teaches Nuclear Communicators.   This was an Atomic Show podcast at Rod Adams blog, Atomic Insights.  Peter Sandman, Rod Adams, myself, Margaret Harding, and Suzy Hobbs-Baker participated. I expect to blog about this in a few days. 

I also recommend the 159th Carnival of Nuclear Energy at Next Big Future. Great posts, including updates from Japan and China, and an apology from a nuclear opponent for factual errors. This may be the first time in history such a thing has happened. Read about it!