In 2006 the Vermont legislature passed a new law directed at the state's controversial nuclear power plant, Vermont Yankee. The law held that the legislature had to approve any extension of the plant's operating license, which was then due to expire in March 2012. (The law didn't specifically reference Vermont Yankee, which was acquired by Entergy in 2002, but that's the only nuclear facility in the state.) Vermont's energy plan has long held that the state's reliance on nuclear energy is a weakness, and lawmakers considered Vermont Yankee's 2012 retirement to be "a rare opportunity to substantially increase our use of renewables."

But it's not an easy thing to shut down a nuclear plant, particularly when Entergy brings in U.S. Supreme Court maven Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan to turn Vermont law into a constitutional issue. In April 2011 Entergy sued state officials, seeking a declaration that the 2006 Vermont legislation, as well as a 2005 state law regarding storage of nuclear waste, is constitutionally invalid under the Supremacy Clause because it's pre-empted by the federal Atomic Energy Act. Entergy also asked for a permanent injunction barring Vermont from making below-market rates a condition of continued operation of the nuclear facility, arguing that such a condition violates the Commerce Clause.

The U.S. Supreme Court established in a 1983 case called Pacific Gas & Electric v. State Energy Resources that the Atomic Energy Act grants the federal government the right to regulate nuclear waste disposal and the radiological safety of nuclear energy plants but leaves "economic" regulatory questions like energy needs, rate-making and land use to the states. So a key question at a three-day hearing last September in Entergy's case was whether the Vermont laws were prompted by safety or economic concerns. If safety motivated the legislature to grant itself the power to license Vermont Yankee, the laws would run afoul of the Supremacy Clause.

Entergy's lawyers at Quinn Emanuel and Gravel & Shea argued that under the 1999 ruling by the 2nd Circuit Court of Appeals in Greater New York Metropolitan Food Council v. Giuliani, U.S. District Judge Garvan Murtha of federal court in Brattleboro, Vermont, had to consider the legislative record to decide the state legislature's motive. That was easier said than done. The Vermont legislature is not composed of professional politicians but 180 regular folk who serve, without staff, for a few months every winter. Committees don't produce formal reports, and their proceedings are recorded but not transcribed. Floor debates in the 30-member Senate are recorded; debates in the 150-member House are typically not. The legislative record, in other words, is not user-friendly.

Nevertheless, Murtha concluded in a 101-page decision in January that state lawmakers had, indeed, considered safety when they enacted the 2005 and 2006 laws, despite warnings about pre-emption under the Atomic Energy Act. "The legislative history," he wrote, "reflects that legislators' concerns regarding the radiological safety of Vermont Yankee were a primary motivating force for giving the legislature the power to take no action to approve a certificate of public good for continued operation." Even if radiological safety wasn't the only reason for the laws, the judge said, they were federally pre-empted.

Murtha also agreed with Entergy that any precondition on approval that called for Vermont Yankee to provide power to Vermont at below-market rates was not permitted under the Commerce Clause because states can't take actions to burden interstate commerce. (The injunction ruling allowed Entergy to request more than $4 million in legal fees.)

In the Brattleboro proceeding, Vermont was represented by state lawyers. When it appealed Murtha's ruling to the 2nd Circuit, it added its own constitutional firepower: David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, a pre-emption expert who persuaded the U.S. Supreme Court in the 2009 ruling Wyeth v. Levine that federal law does not bar product liability claims against drugmakers under state law. (That case also began in Vermont but Frederick didn't get involved until it reached the high court.)

This week, Vermont filed its opening brief at the 2nd Circuit. The state argued that Murtha was wrong to consider the legislative history rather than confining his analysis to the actual language of Vermont's laws. And even if the judge had the discretion to look at the history, he pulled comments about safety concerns out of context -- and out of a jumbled and incomplete record -- to reach the conclusion that they motivated the state laws, the brief said.

"The statute is a process statute," said Frederick, who explained that the legislature simply gave itself the power to review decisions of the state regulatory board previously entrusted with licensing Vermont Yankee. Frederick said the Vermont law is akin to the California moratorium on nuclear power plants the Supreme Court upheld in the 1983 Pacific Gas case. The state's brief also argued that the trial judge erred when he issued an injunction based on prospective conduct, not actions Vermont actually took.

"I would think that a number of states will be interested in this case and these questions," Frederick said. "States have an interest in power generation, and many have renewable energy policies like Vermont's."

Entergy's opening brief is due in August. Entergy counsel Kathleen Sullivan of Quinn Emanuel didn't return my call.

(Reporting by Alison Frankel)

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