Entergy Nuclear Vt. Yankee, LLC v. Shumlin

• Decision Date: 19 January 2012
• Docket Number: No. 1:11–cv–99 (jgm).,1:11–cv–99 (jgm).
• Citation: 838 F.Supp.2d 183
• Court: U.S. District Court — District of Vermont
• Parties: ENTERGY NUCLEAR VERMONT YANKEE, LLC and Entergy Nuclear Operations, Inc., Plaintiffs, v. Peter SHUMLIN, in his official capacity as Governor of the State of Vermont; William Sorrell, in his official capacity as the Attorney General of the State of Vermont; and James Volz, John Burke and David Coen, in their official capacities as Members of The Vermont Public Service Board, Defendants.

838 F.Supp.2d 183

ENTERGY NUCLEAR VERMONT YANKEE, LLC and Entergy Nuclear Operations, Inc., Plaintiffs,

v.Peter SHUMLIN, in his official capacity as Governor of the State of Vermont; William Sorrell, in his official capacity as the Attorney General of the State of Vermont; and James Volz, John Burke and David Coen, in their official capacities as Members of The Vermont Public Service Board, Defendants.

No. 1:11–cv–99 (jgm).

United States District Court, D. Vermont.

Jan. 19, 2012.

Preempted

10 V.S.A. § 6522(c)(4); 30 V.S.A. §§ 248(e)(2), (m), 254

Prior Version's Limitation Recognized

10 V.S.A. § 6501

Faith E. Gay, Esq., Kathleen M. Sullivan, Esq., Robert C. Juman, Esq., Sanford I. Weisburst, Esq., William B. Adams, Esq., Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, Matthew B. Byrne, Robert B. Hemley, Gravel and Shea, Burlington, VT, for Plaintiffs.

Scot L. Kline, Esq., Bridget C. Asay, Justin E. Kolber, Esq., Kyle H. Landis–Marinello, Esq., Michael N. Donofrio, Vermont Office of the Attorney General, Montpelier, VT, for Defendants.

DECISION¹AND ORDER ON THE MERITS OF PLAINTIFFS' COMPLAINT

(Doc. 1)

J. GARVAN MURTHA, District Judge.

Plaintiffs Entergy Nuclear Vermont Yankee, LLC (ENVY) and Entergy Nuclear Operations, Inc. (ENOI) (collectively “Entergy”) ² own and operate the Vermont Yankee Nuclear Power Station (Vermont Yankee), a merchant plant in Vernon, Vermont that sells electrical power wholesale on the interstate market. Plaintiffs' Complaint against Vermont's governor, its attorney general, and members of the Vermont Public Service Board, asserts three claims. Count One seeks a permanent injunction and declaration that three Vermont enactments governing Vermont Yankee, title 10, section 6522 of the Vermont Statutes³ (added by Act 74), Act 160, and Act 189, ⁴ are grounded in nuclear safety concerns and therefore invalid under the Supremacy Clause of the United States Constitution because they are preempted by the Atomic Energy Act. See U.S. Const. art. VI; Atomic Energy Act, 42 U.S.C. § 2011 et seq.

According to Act 160's provisions, when a nuclear plant petitions for continued operation, if the Vermont legislature declines to act, or is unable to pass, for any reason, affirmative legislation approving a certificate of public good (CPG) for continued operation, the plant's petition will remain pending and its current certificate will expire. Here, Vermont Yankee's current certificate expires March 21, 2012. By operation of a legislative pocket veto of legislation proposed in 2010, and if the legislature fails to take any further action before March 21, 2012, Vermont Yankee may be required to shut down after that date. Act 74 permitted Vermont Yankee to seek approval to construct spent nuclear fuel storage facilities from the Public Service Board (PSB or “the Board”) and created a Clean Energy Development Fund, funded by Entergy. Plaintiffs challenge only section 6522, which contains a provision requiring affirmative legislation to permit storage of spent fuel derived from operations after March 21, 2012. Act 189 called for a “Comprehensive Vertical Audit and Reliability Assessment” of the systems at Vermont Yankee, which resulted in an audit performed by Nuclear Safety Associates, independent consultants.

Count Two seeks a permanent injunction and declaration stating the Federal Power Act, 16 U.S.C. § 791a et seq., preempts Vermont state actors from conditioning Vermont Yankee's continued operation on the existence of a below-market power purchase agreement (PPA) between Vermont Yankee and Vermont's retail utilities, on grounds the Federal Energy Regulatory Commission is vested with exclusive jurisdiction to regulate the transmission and sale of wholesale power sold in the interstate market, and neither Vermont's Public Service Board,⁵ nor any other state actor, can dictate the wholesale rates, terms, or conditions of any sales between Vermont Yankee and a third party.

Count Three seeks a permanent injunction and declaration that Vermont may not under color of state law condition continued operation upon the existence of a satisfactory below-market power purchase agreement with Vermont retail electric utilities, because to do so is coercive and places substantial burdens on interstate commerce, in violation of the Commerce Clause, U.S. Const. art. I, § 8, cl. 3, and 42 U.S.C. § 1983.

This Court held a three-day bench trial on the merits of Plaintiffs' Complaint from September 12 to 14, 2011. It has considered pre- and post-trial briefs filed by the parties, the evidence admitted at trial, and evidence from the preliminary injunction hearing of June 23 and 24, 2011, moved into the trial record. It has also reviewed and considered pre- and post-trial memoranda by amici curiae the Massachusetts Attorney General, New England Coalition, Inc., Vermont Natural Resources Council, and the Conservation Law Foundation together with the Vermont Public Interest Research Group, all in support of Defendants.

This Court's decision is based solely upon the relevant admissible facts and the governing law in this case, and it does not purport to resolve or pass judgment on the debate regarding the advantages or disadvantages of nuclear power generation, or its location in this state. Nor does it purport to define or restrict the State's ability to decline to renew a certificate of public good on any ground not preempted or not violative of federal law, to dictate how a state should choose to allocate its power among the branches of its government, or pass judgment on its choices. The Court has avoided addressing questions of state law and the scope of a state's regulatory authority that are unnecessary to the resolution of the federal claims presented here.

For the reasons that follow, Act 160 and a single provision in Act 74—requiring affirmative legislative approval for storage of spent nuclear fuel after March 21, 2012—are held to be preempted by the Atomic Energy Act. See infra Sections III.A–B. The challenge to Act 189 is moot. See infra Section III.C. Furthermore, Plaintiffs are entitled to injunctive relief on their Commerce Clause claim. See infra Section IV.B and Section VI (Conclusion).

I. BACKGROUND

The Vermont Yankee Nuclear Power Station, a boiling water reactor, began operating in 1972 under a federal forty-year Facility Operating License issued by the Atomic Energy Commission, the federal agency preceding the Nuclear Regulatory Commission (NRC). That current license extends to March 21, 2012, and the NRC in March 2011 renewed it through March 21, 2032. At its inception, Vermont Yankee was owned by Vermont Yankee Nuclear Power Corporation (VYNPC), a joint venture of eight New England retail utilities, including two Vermont utilities ⁶ that held a combined stake of 55 percent. Since 1972, Vermont Yankee has produced approximately one-third of the electricity consumed by Vermont. This consumption today represents approximately 55 percent of the station's output, with the remaining 45 percent purchased by utilities in neighboring states.

In 1999, VYNPC contemplated selling Vermont Yankee. In February 2001, the Public Service Board rejected an attempted sale to AmerGen Energy Co., LLC. In the summer of 2001, VYNPC invited further bids at auction. Entergy successfully bid to acquire the plant and participated in ten-month-long proceedings before the Board, requesting a Certificate of Public Good to own and operate the plant. During the time preceding the contemplated sale, VYNPC held a state-issued CPG under the authority of title 30, sections 101–103 of the Vermont Statutes. See June 13, 2002 PSB Order in Dkt. No. 6545, at 12 (approving sale), Pls.' Ex. 378 (Doc. 4–66).

VYNPC presented the proposed Entergy transaction to the Board, which included a Memorandum of Understanding signed on March 4, 2002 (2002 MOU) by VYNPC, the two Vermont electric utilities with a controlling stake in VYNPC, ENVY and ENOI, and the Vermont Department of Public Service (DPS or “the Department”), a state executive agency representing the public interest of Vermonters in energy-related matters. See 2002 MOU, Pls.' Ex. 361 (Doc. 4–49). The 2002 MOU provided its terms were subject to approval by the Public Service Board,⁷ provided for the Board's jurisdiction over a possible CPG renewal for continued operation after 2012, allowed the Vermont nuclear engineer increased inspection access to Vermont Yankee by virtue of a separate memorandum of understanding, called for ENVY to share fifty percent of “excess revenue” ⁸ with VYNPC for ten years should it operate beyond 2012, and offered Vermont utilities the first opportunity to negotiate contracts if Vermont Yankee increased its output or operated past 2012. Id.; see also June 13, 2002 PSB Order in Dkt. No. 6545, at 156, Pls.' Ex. 378 (Doc. 4–66) (describing the 2002 MOU).

Plaintiffs assert they were aware the Board had, on its own initiative, raised the possibility of ordering the immediate or future shutdown of Vermont Yankee, and therefore made substantial concessions regarding the power purchase price for Vermont utilities and commitments regarding future decommissioning, in exchange for the Department's promise to recommend to the Board that it approve the sale and issue a CPG. Compl. ¶ 53. In the application proceedings for the sale, ENVY informed the Board that it intended to pursue three projects ENVY identified “as fundamentals in Entergy's business model to make the power station a viable business,” namely, to secure an extended power uprate, construct a dry fuel storage facility, and renew the plant's operating license through 2032. See Entergy Nuclear Vt. Yankee, LLC v. United States, 95 Fed.Cl. 160, 173 (2010) (citing testimony by ENVY executive Jay Thayer in that case); see also Defs.' Ex. 1226 at JA 1035 (Thayer Test. before U.S. Court of Federal Claims (stating the three projects were identified to the Board in the proposed sale, and noting, “take away...