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Vermont Yankee nuke plant sues over new state tax

Vermont Yankee nuke plant sues over new state tax

September 12th, 2012 by DAVE GRAM, Associated Press in News

MONTPELIER, Vt. (AP) - The Vermont Yankee nuclear plant on Tuesday filed a lawsuit against the state over taxes on the plant that the Legislature passed this year.

Vermont Yankee had already won a round in federal court over the state's efforts to close the reactor in Vernon, 120 miles south of Montpelier. That case is now on appeal at the U.S. 2nd Circuit Court of Appeals in New York.

The new lawsuit, by New Orleans-based plant owner Entergy Corp., targets taxes that increase the reactor's annual state tax levy from about $5 million to about $12.8 million, according to a statement released by Entergy.

Supporters of the new taxes said they were designed to replace money the plant paid the state under agreements in 2003 and 2005 that saw the state drop its opposition to the plant boosting its power output by 20 percent and to the plant's plan for storage of more highly radioactive nuclear waste on its grounds.

Those agreements lasted until March 21, the end of the plant's initial 40-year operating license. The Nuclear Regulatory Commission approved a 20-year license extension last year.

Rep. Tony Klein, D-East Montpelier and chairman of the House Natural Resources and Energy Committee, said Tuesday the state's intent was for Vermont Yankee to shut down.

But Entergy, after winning its new federal license last year, sued the state in a bid to stay open, which the plant has succeeded in doing.

U.S. District Court Judge J. Garvan Murtha ruled in January that federal law pre-empted the state from trying to shut its lone reactor down, located in the southeast corner of the state, near Massachusetts and New Hampshire, which both receive power from it. Lawmakers responded by issuing the new tax to make up for the revenue lost when the earlier agreements expired.

"If they are continuing to operate then they ought to operate under the same conditions that they operated under before," Klein said Tuesday.

Vermont Yankee, in the lawsuit, argued that it had fulfilled its obligations under the power boost and waste storage agreements and should be free to operate without paying more to the state.

Gov. Peter Shumlin said Entergy's decision to challenge the tax was "disappointing."

"I firmly believe the tax is reasonable, it is less than the equivalent tax on wind projects, and it is comparable to the generating tax on nuclear plants in Connecticut," he said Tuesday night in a statement. "Nevertheless, Entergy clearly prefers to sue the state of Vermont, consistent with its history."

For the state to impose the new tax violates the U.S. Constitution in four ways, the plant argued:

- The supremacy clause makes the federal government supreme above the states, and the state was trying to interfere with a federally licensed nuclear plant's operations, it said. It also cited a federal law saying states should not interfere with out-of-state business operations. The new Vermont tax could make the plant's power more costly for out-of-state customers, it said.

- The commerce clause bars laws that interfere with interstate commerce. Since other Vermont laws are forcing the plant to sell its power out of state, the state's new action would interfere with that commerce, it said.

- The equal protection clause requires that people and companies be treated equally under the law. The law establishing the new tax was written so that it applied only to Vermont Yankee, the company said.

- The contract clause says states can't pass laws "impairing the obligations of contracts," the company said, arguing that Vermont's new tax law did so by interfering with the earlier agreements' March expiration date.