Academic journal article American University Business Law Review

Nuclear Intentions and Implied Preemption: How Entergy Nuclear Vermont Yankee, Llc V. Shumlin Gives Indian Point a Fighting Chance to Stay in Business

Academic journal article American University Business Law Review

Nuclear Intentions and Implied Preemption: How Entergy Nuclear Vermont Yankee, Llc V. Shumlin Gives Indian Point a Fighting Chance to Stay in Business

Article excerpt

Introduction

The State of New York and subsidiaries of the Entergy Corporation are currently engaged in a legal conflict over the future of the Indian Point Energy Center ("Indian Point") in Buchanan, New York.1 The New York State Department of Environmental Conservation ("NYSDEC") has denied Entergy's joint application for a renewal of the Water Quality Certificate ("WQC") for the cooling systems of Indian Point Unit 2 and Unit 3.2 The denial may force Entergy to close the nuclear power plant.3 However, NYSDEC's regulatory action might be preempted by the Atomic Energy Act of 1954, which grants federal agencies broad powers to regulate nuclear power production.4 Entergy appealed NYSDEC's denial of water quality certification on a number of claims, including preemption, to a NYSDEC administrative law judge.5 At the time of this writing, Entergy's appeal has not yet been fully adjudicated, though the administrative law judge has fully adjudicated the preemption claim.6

Indian Point consists of three Westinghouse pressurized water reactors: Indian Point Unit 1, Indian Point Unit 2, and Indian Point Unit 3.7 The two working units are operated by wholly-owned subsidiaries of the Entergy Corporation: Entergy Nuclear Indian Point 2, LLC and Entergy Nuclear Indian Point 3, LLC.8 Indian Point 2 has a maximum generating capacity of 1,022 megawatts, and Indian Point 3 has a maximum generating capacity of 1,040 megawatts.9 Indian Point 1 was shut down in 1974.10 Altogether, Indian Point generates approximately 30 percent of all electricity consumed in Westchester County and New York City.11

A nuclear reactor generates an enormous amount of excess heat, necessitating a cooling system to maintain a stable temperature.12 Indian Point Unit 2 and Unit 3 operate with once-through cooling systems that regulate the temperature of the nuclear generating systems with a continuously recharging supply of water.13 Every day, the Indian Point cooling systems draw about 2.5 billion gallons of water from the Hudson River, circulate the water past the condenser coils to transfer heat from the generation equipment, and then discharge the water back into the river.14

NYSDEC issued a WQC for Indian Point Unit 1 and Unit 2 in 1970, issued a WQC for Unit 3 in 1975, and last renewed a joint WQC for Unit 2 and Unit 3 in 1982.15 The 1982 WQC will expire for Indian Point Unit 2 and Unit 3's operating licenses in 2013 and 2015, respectively, prompting Entergy to submit a joint application to NYSDEC for a 20-year renewal.16 In 2010, NYSDEC denied Entergy's application for the WQC,17 explaining that Indian Point's cooling systems "do not and will not comply" with New York State water quality standards.18

Because NYSDEC denied a WQC for the cooling systems, Indian Point's future is in jeopardy. Without a WQC, Entergy may not renew its State Pollution Discharge Elimination System ("SPDES") permit for Indian Point; without the SPDES permit, Indian Point cannot legally discharge 2.5 billion gallons of hot water into the Hudson River each day.19 To continue operating Indian Point without a WQC, Entergy would need to close Unit 2 and Unit 3 for an estimated 42 weeks20 and retrofit the nuclear power plant with a closed-circuit cooling system (that is cooling towers) at a cost of approximately $1.19 billion.21 Entergy claims that retrofitting Indian Point's cooling systems is prohibitively expensive to the point that it would be economically unfeasible for the company to continue running Indian Point, thereby forcing the company to either sharply raise its consumer rates or close the power plant altogether.22

Whether Entergy can operate Indian Point Unit 2 and Unit 3 for another 20 years is of great importance to the corporation. If Entergy can operate Indian Point for an additional 20 years, its projected earnings total between $500 million and $1.4 billion in additional profits between 2013 and 2035.23 Decommissioning the nuclear power plant is also an expensive endeavor that will cost hundreds of millions of dollars, and whether Entergy must pay for decommissioning within a few years or in two decades can have great ramifications on the corporation's bottom line. …

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