UPDATE 2-US court rules Vermont nuclear plant can keep license

Tue Jun 26, 2012 3:57pm EDT

* Entergy can continue to operate Vermont Yankee

* State continues to seek reactor shutdown

* Vermont Yankee is the biggest plant in Vermont

By Scott DiSavino

June 26 (Reuters) - A U.S. appeals court on Tuesday ruled that the Vermont Yankee nuclear power plant can keep its new operating license, rejecting a challenge that the state of Vermont brought to the license granted by the U.S. Nuclear Regulatory Commission (NRC).

The D.C. Circuit Court of Appeals ruling means Entergy can keep operating the reactor. The government of Vermont and local and environmental groups were still trying to shut the plant in other legal and regulatory proceedings.

The state had challenged the validity of the plant's water permit. But the court determined the state failed to exhaust its administrative remedies and has waived the right to judicial review, the NRC said in an e-mail.

The NRC said the court found the Vermont Department of Public Service failed to take advantage of multiple earlier opportunities to raise its argument the water permit.

Vermont Yankee is the biggest plant in Vermont by far, representing over 50 percent of the state's total generating capacity.

New Orleans-based Entergy Corp, the second-biggest nuclear operator in the United States and owner of Vermont Yankee, wants to run the 620-megawatt reactor for another 20 years under its new license.

Vermont Governor Peter Shumlin, however, wants the 40-year old plant shut.

The court found that after the NRC's judicial arm, the Atomic Safety and Licensing Board (ASLB), ruled on Entergy's application to renew the license in 2008, the state "sat silent for two and one-half years  raising their objection only after the Commission issued the license renewal in March 2011," the NRC said.

Entergy filed with the NRC to renew the original 40-year operating license for Vermont Yankee in January 2006.

Even after the NRC renewed the license for another 20 years in March 2011, the state continued to say it could shut the reactor when its original license expired in March 2012.

When Entergy bought the reactor from New England utilities in 2002 for $180 million, the company agreed to seek a certificate of public good from state utility regulators before operating the plant beyond March 2012.

Entergy sought that certificate, but state legislators blocked the Vermont Public Service Board from issuing the certificate.

Entergy sued the state and in January 2012, a federal judge ruled in favor of Entergy. The state has appealed that lawsuit.

Entergy is now in the process of applying for the certificate of public good from the Public Service Board again, which may not make a decision until 2013 or 2014. The state, along with local and environmental groups, are urging the board to reject that application.

Entergy said in a statement it was "pleased with the decision." Vermont's department of public service said it was disappointed that "the court declined to address the substantive water quality issue" and would discuss a potential appeal of the decision with the New England Coalition, an environmental group that has opposed nuclear power in the region.

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