Opinion

Alison Frankel

The danger to states’ rights in 2nd Circuit’s ruling on Vermont nukes

By Alison Frankel
August 16, 2013

On Wednesday, as my Reuters pal Nate Raymond ably reported, the 2nd Circuit Court of Appeals handed a big victory to the energy company Entergy and its lawyers at Quinn Emanuel Urquhart & Sullivan, upholding a Vermont federal court injunction that effectively bars the state from shutting down Entergy’s Vermont Yankee nuclear plant. A three-judge 2nd Circuit panel agreed with U.S. District Judge Garvan Murtha that Vermont state laws that would have had the effect of closing the plant are pre-empted by the federal Atomic Energy Act.

To reach that decision, the appeals court, like Murtha, looked beyond the plain language of the enacted laws to legislative history suggesting that the statutes were motivated by safety concerns about nuclear energy, which the U.S. Supreme Court has held to be the province of the federal government. Even though the laws on their face addressed economic and policy concerns that are within the state’s purview, the 2nd Circuit said the admittedly incomplete legislative record indicated that Vermont had engaged in statutory sleight of hand to hide its true intentions.

The appellate deep dive into the state legislative record should give pause to every state government within the 2nd Circuit. In fact, the panel’s ruling seems to confirm the worst fears of the National Conference of State Legislatures, as outlined in an amicus brief urging the appeals court to overturn Murtha. “Legislative record excerpts are neither an appropriate means of controlling legislative authority nor a reliable indicator of legislative motivation,” the brief said. “Left uncorrected, this type of misguided judicial inquiry will inevitably chill state legislatures’ willingness to debate policy issues robustly and to solicit a variety of viewpoints about proposed legislation openly. Accordingly, all state legislatures – and indeed all courts – should be concerned.”

The “historic freedom of legislative debate” is endangered by the 2nd Circuit’s decision, said William Sorrell, Vermont’s attorney general (and a defendant in Entergy’s original suit), in an interview with Nate Raymond on Wednesday. “You go to any issue with constitutional (overtones),” Sorrell said. “It would be unfortunate if state legislatures didn’t have open and free debate, if you take statements of a handful and the court says the legislature was (improperly) motivated…. The decision today is not great news for state legislative bodies.”

This issue of federal pre-emption and state legislative intent has some complicated wrinkles, but, as the amicus brief and the Vermont AG’s comments make clear, it’s important. The Supreme Court ruling at the heart of the debate is 1983′s Pacific Gas & Electric v. State Energy Resources Conservation and Development Commission. Like the 2nd Circuit’s Vermont case, PG&E addressed a state law, this one in California, that effectively restricted nuclear power plants. And like the Vermont laws, the California statute was challenged on the grounds that it was pre-empted by the federal Atomic Energy Act of 1954. The Supreme Court held that the Atomic Energy Act divides the authority to regulate nuclear power plants between state and federal governments. “As we view the issue,” the court said, “Congress, in passing the 1954 Act and in subsequently amending it, intended that the federal government should regulate the radiological safety aspects involved in the construction and operation of a nuclear plant, but that the States retain their traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost and other related state concerns.” The court said its job was to decide whether the California law was based on an economic or safety rationale. If it was motivated by safety, it would be federally pre-empted. If not, it would survive Supreme Court scrutiny.

The California law survived because, on its face, it avowed an economic rationale. And in the process of reaching that determination, the Supreme Court expressly cautioned against looking at legislation history to discern an ulterior motive for a law that is facially not pre-empted. “Although these specific indicia of California’s intent … are subject to varying interpretation, there are two further reasons why we should not become embroiled in attempting to ascertain California’s true motive,” the PG&E ruling said. “First, inquiry into legislative motive is often an unsatisfactory venture. What motivates one legislator to vote for a statute is not necessarily what motivates scores of others to enact it. Second, it would be particularly pointless for us to engage in such inquiry here when it is clear that the states have been allowed to retain authority over the need for electrical generating facilities easily sufficient to permit a state so inclined to halt the construction of new nuclear plants by refusing on economic grounds to issue certificates of public convenience in individual proceedings.”

As you might expect, that language is quoted at length in the state legislatures’ amicus brief and in Vermont’s final brief to the 2nd Circuit, which emphasizes (among other things) that the sketchy state records, based on untranscribed videos of some but not all proceedings of part-time citizen-legislators who are not professional politicians, don’t properly reflect legislative intent. Considering that Vermont’s laws explicitly stated a legitimate economic rationale, Vermont and its amici urged the 2nd Circuit to look only at the statutes themselves. “Courts do not rest preemption judgments on legislator statements precisely because of the inherent uncertainty in knowing under what standards to evaluate such statements,” wrote Vermont counsel David Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel in the state brief. “Those concerns are amplified in this case, where Entergy points to only five legislators (out of 156) who made statements about safety.”

But the 2nd Circuit, like the Vermont trial judge who first considered the case, said it was within its rights to look at the legislative record to discern whether Vermont legislators were simply well coached to cloak safety concerns about nuclear power in the laws’ stated economic rationales. The appeals court seemed troubled that the Vermont legislature had taken authority to review decisions about the Vermont Yankee plant away from the state Supreme Court, which previously had the power to overrule decisions of the state’s regulatory board. It said that under the Supreme Court’s PG&E ruling it was required to conduct a “searching review to determine whether a statute was enacted based upon radiological safety concerns,” and that review – despite Vermont’s argument to the contrary – may take legislative history into account. The panel (Judges Susan Carney and Christopher Droney and U.S. District Judge Paul Gardephe, sitting by designation) acknowledged in a footnote that the PG&E decision “does not explain with precision the role legislative history plays in the analysis of an Atomic Energy Act pre-emption claim.” But it said that several courts since PG&E have looked at the legislative record to decide pre-emption. “We therefore believe that legislative history is an important source for determining whether a particular statute was motivated by an impermissible motive in the pre-emption context,” the court said.

Vermont’s laws were based on just that, according to the 2nd Circuit. “We have observed that witnesses at committee meetings, legislators, executive officials and regulators were obviously coached to avoid making references to radiological safety to navigate the shoals of Pacific Gas,” the court said. “We have concluded that Vermont shifted decision-making responsibility for approving the continued operation of Vermont Yankee from the (regulatory) board, whose decisions were subject to review by the Vermont Supreme Court, to the Vermont Legislature, where no judicial review of its action – or inaction – would be available. Providing an inadequate and misleading legislative record, failing to provide plausible legislative rationales, and imposing impermissible safety-related obligations through non-statutory memoranda of understanding, do not and cannot shield (the laws) from this court’s review.”

In a separate concurrence, Judge Carney cited concerns about searching the legislative record for references to safety in order to invalidate laws restricting nuclear power plants. “To conclude that state legislative history reflecting concern – even a primary concern – about nuclear safety is enough to invalidate a statute, even absent an actual conflict with federal regulatory requirements or meaningful intrusion into the field, could effectively disable the states from enacting legislation in the realm of nuclear energy production,” she wrote. “I am aware of no basis for concluding that Congress made such a choice. Placing decisive emphasis on motivation to the exclusion of impact, as we do here, also creates an irresistible incentive for states to do their best to mask their concerns about safety.” But Carney laid responsibility for the conundrum on the Supreme Court’s PG&E ruling, thus diminishing the power of her protest.

Will the 2nd Circuit’s justification of forays into state legislative history stand? Vermont AG Sorrell told my colleague Nate Raymond that the state hasn’t determined its next move, and counsel for the state legislatures that appeared as amici, Steven Huefner of Ohio State’s Moritz College of Law, said he hadn’t yet studied the 2nd Circuit decision. I, for one, would like to see what the strict textualists of the Supreme Court make of a holding that requires district courts to watch videotapes of comments of individual state legislators.

(Reporting by Alison Frankel; additional reporting by Nate Raymond.)

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Comments
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This is a terrible ruling. Are states sovereign at all? Why even have a state level approval or licencing? Just to get some money in their pockets. We are in big trouble if the local government can not protect its own citizens. This plant has had many accidents and leaks in to the Connecticut River, it should be shut down ASAP. Plus it is the same type of reactor that blew up 3 time over in Japan.

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