Who has final say over the fate of Vermont Yankee nuclear power plant?

Vermont has won the first round in its legal battle to shut down the Vermont Yankee nuclear power plant. On Monday, a federal judge denied the plant owners’ request for an injunction to keep it running until a legal decision is made.

While the Vermont Yankee case is unique in many respects, its outcome could have implications for other states. Dozens of older nuclear plants are seeking to renew operating licenses to extend their lifetimes another 20 years beyond their original 40-year licenses. The debate over whether to renew these licenses gained even more urgency after the Fukushima nuclear disaster in Japan earlier this year.

Last year, the Vermont Senate voted 26 to 4 to refuse the plant a new operating permit, citing unreported radioactive water leaks and the 2007 collapse of a Vermont Yankee cooling tower. Yet the federal Nuclear Regulatory Commission (NRC) moved to extend the plant's license for 20 more years just days after the Fukushima disaster began.

Observers say the case could easily be appealed all the way to the Supreme Court.

"There is the broad principle, upheld by the Supreme Court in 1983, that states have the right to regulate some aspects of nuclear power," says Diane Curran, a Washington attorney representing several groups seeking an NRC review of relicensing. "The ultimate decision in this case could impact that fundamental principle."

She also acknowledges, however, that "Vermont is in a unique position."

In 2002, Vermont negotiated a unique deal with Entergy Corp. of New Orleans, amended in 2006, giving the state authority to have the final say if the company sought to extend plant operations beyond its 40 year federal license.

In his decision Monday, US District Judge J. Garvan Murtha ruled the plant's owners, subsidiaries of Entergy, "failed to show that any irreparable harm" done to the company between now and the expected September trial date could be remedied merely by obtaining an injunction.

The company must now decide whether to order a new load of nuclear fuel – which could cost up to $65 million – and risk losing it if the plant has to shut down by the state's March 2012 deadline. The alternative: shutting the plant down early.

Although admitting the company was "disappointed in the outcome,” Vermont Yankee spokesman Larry Smith said in a statement that “our request for a preliminary injunction was about keeping the plant’s workers employed, the plant running safely, and the electric grid reliable until this case is resolved. In the upcoming days, we will be evaluating Judge Murtha’s opinion and assessing the company’s near-term options."

State politicians note that Vermont Yankee and Fukushima have the same design, and earlier this year they denounced the NRC's decision to extend the license for the plant. Their anger flared again after Monday’s ruling.

"Vermont has acted and will continue to act responsibly regarding our energy future, and we will continue to work hard to ensure that our laws are enforced and respected," Gov. Peter Shumlin said in a statement. "I believe strongly in the state's authority, and I believe that Entergy has not been an honest, fair, and responsible player for Vermont."

Experts say the legal decision Monday appears to fall under the precedent set by a 1983 Supreme Court case, in which California blocked Pacific Gas & Electric (PG&E) from building any more nuclear plants in the state, due to its lack of nuclear-waste storage. But the case also established "federal preemption" and federal supremacy and oversight over nuclear licensing and safety matters.

"If the court rules in the company's favor, it would signal that the federal government has complete supremacy over nuclear issues – overturning the PG&E decision," said Boris Mamlyuk, an assistant professor at Ohio Northern University College of Law, who has studied the case, in an April interview. "States would be powerless to block licensure of new permits, operating permits, relicensings, and other measures."

Others agree with him.

"A victory for the state of Vermont would pretty much preserve the status quo of states’ power," says Michael Dworkin, former chairman of the Vermont Public Service Board. "A victory for Entergy would radically alter 100 years of law in which states controlled the land use issues involving energy plants within the state."