Entergy Corporation announced that two of its subsidiaries, Entergy Nuclear Vermont Yankee, LLC (“ENVY”) and Entergy Nuclear Operations, Inc. (“ENOI”) have filed a complaint in U.S. District Court for the District of Vermont seeking a judgment to prevent the state of Vermont from forcing the Vermont Yankee Nuclear Power Plant to cease operation on March 21, 2012.

The April 18, 2011 request for declaratory and injunctive relief follows the federal Nuclear Regulatory Commission’s (“NRC”) March 21, 2011, renewal of Vermont Yankee’s operating license authorizing the plant’s operation through March 21, 2032. The NRC’s action came after a thorough and exhaustive five-year safety and environmental review of the plant.

The lawsuit is primarily based on the following legal principles:

  • “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.“ Entergy Press Release

This battle between Entergy and the State of Vermont can be traced back to the 2002 Memorandum of Understanding (“MOU”) that settled the litigation related to Entergy’s purchase of Vermont Yankee from Vermont Yankee Nuclear Power Corporation. Paragraph 12 of the MOU will no doubt be analyzed at least a hundred times before this litigation is resolved. Part of it states the parties, “expressly and irrevocably agree[s]: (a) that the Board has jurisdiction under current law to grant or deny approval of operation of the VYNPS beyond March 21, 2012 and (b) to waive any claim each may have that federal law preempts the jurisdiction of the Board to take the actions and impose the conditions agreed upon in this paragraph to renew, amend or extend the ENVY CPG and ENO CPG to allow operation of the VYNPS after March 21, 2012, or to decline to so renew, amend or extend.”

The world has changed since the 2002 agreement and Entergy believes political maneuvers by the state legislature has now voided the provision Entergy agreed to in good faith. For starters, in 2006, a law was passed prohibiting the Public Service Board from issuing a Certificate of Public Good without express approval from the General Assembly. In an open letter to Vermonters, Entergy provides further details. Given the NRC’s approval, which addresses the safety issue, Vermonters stand to lose 650 jobs and $16,484,000 in state and local taxes based on a 2008 benefits statement.