Monday, January 2, 2012

The Other Vermont Yankee Lawsuit: Reactor Operators Sue For Property Rights

Everyone expected Judge Murtha to rule on the main Vermont Yankee lawsuit by the end of the year in 2011. This lawsuit was brought by Entergy against Shumlin et al in their capacities as officials of the State of Vermont. Entergy claims that the state cannot force Vermont Yankee to close, since the NRC has extended its license.

The main lawsuit is complicated, and I have blogged about the overlapping issues, including state pre-emption of nuclear safety regulations. For this lawsuit, you can also connect to all the filed documents on the Vermont Attorney General's web site.

On this suit, newspapers reported last year that "a ruling is expected by the end of the year." I don't know where they obtained this information. I cannot find a quote from Judge Murtha saying that he would rule in that time-frame. 2011 is over, and the ruling didn't happen.

The Operator Lawsuit

However, the Entergy lawsuit is not the only Vermont Yankee case in front of Judge Murtha right now. In June, several licensed reactor operators brought suit against the state. They claimed that the state has denied them their jobs and taken their property without due process. The state wanted their case dismissed, of course. In December, the reactor operators asked Judge Murtha not to dismiss their case. The Brattleboro Reformer has a reasonably complete article on the operators' request to Judge Murtha.

Basically, the state claims that the operators have no legally protected right to their jobs, so their lawsuit should be dismissed. The operators claim that the state is attempting to shut down Vermont Yankee without a legally-valid reason, and therefore, it is inflicting harm on the operators without due process. Much of the argument depends on interpretation of various due-process clauses in the Constitution. For example, the Fifth Amendment includes the words: No person shall ... be deprived of life, liberty, or property, without due process of law...

Due process is a knotty concept in the legal world. If you read either the Wikipedia article on due process, or the Brattleboro Reformer on the operators' request to Judge Murtha, I can guarantee that your head will swim.

I'm not a lawyer, and we're not going there.

The German Experience

As far as I can tell, the operator's claims are very similar to the claims that Vattenfall, the big Swedish utility, is making in a lawsuit against Germany. Vattenfall owns several nuclear plants in Germany. As Spiegal On-Line reported in November: Nuclear Phase-Out Faces Billion-Euro Lawsuit.

From Vattenfall's point of view, the German government's decision to abandon nuclear power has destroyed the value of its assets....

The fact that Vattenfall is a Swedish company will help it in German courts, according to the Spiegel article.

According to Handelsblatt, Vattenfall has an advantage in seeking compensation because the company has its headquarters abroad. As a Swedish company, Vattenfall can invoke investment rules under the Energy Charter Treaty (ECT), which protect foreign investors in signatory nations from interference in property rights.

Last time Vattenfall challenged the German government, they settled out of court. Sounds likeVattenfall knows how to get compensated when the German government acts arbitrarily toward its power plants.

(By the way, nothing in the law seems to operate on time. The Spiegel article says that the Vattenfall lawsuit suit would be filed by Christmas. It wasn't. Newspapers said Judge Murtha would rule on Vermont Yankee by January 1. He didn't.)

A General Concept: Due Process

Following the individual twists and turns of due process is difficult, but the concept is easy. The government cannot deprive individuals or companies of their property without due process of law.

Civilized countries have tax laws in place (due process). Uncivilized areas have thugs who show up at the door and ask for "protection money." The thugs require arbitrary amounts, deriving people of their property according to the whim of the thugs.

Governments aren't supposed to do that. They aren't supposed to take your property or forbid you to operate your business, just because they feel like it. When governments act like thugs, they get themselves sued. The Magna Carta in Britain started the trend toward limiting the powers of government. Here and in Germany, recent lawsuits are forcing governments to acknowledge that their citizens also have rights.

I am no lawyer, so I can't even begin to predict how the current lawsuits will turn out. However, the principal is clear and straightforward. Even a government can't seize property or close down a business without due process.


Howard Shaffer said...

Nice post.

I know I am repeating myself, but there is something else limiting the power of States. The US Constitiution has a section specifically stating what Congress can't do. This is Article I Section 9. Then of course the Bill of Rights, Ammendments 1-10 further limits what all levels of government can do. In addition Article 1 Section 10 specifically says what States can't do.
One of the things States can't do is pass a law "Impairing the Obligation of Contracts." This has been tested and upheld by the Supreme Court.

Is the Memorandum of Understanding between Entergy and the State a contract? Did the Senate vote to prevent the Public Service Board from releasing its findings on Vermont Yankee's continuing operation "impair the Obligation" of the contract?

We'll see.

Meredith Angwin said...


You bring up a very important point about the Constitution and contract law. Some of the Vermont Law School professors have said that the Memorandum of Understanding wasn't a contract. To which I answer: "Really? Then why did Entergy sell its electricity at prices set strictly according to the Memorandum?"

In other words, the Memorandum is a contract when the State wants Entergy to honor it, and it's not a contract when the State wants to break it? I don't think so!

Note: Vermont Law School has often stated that its faculty advises the legislature about Vermont Yankee.