NEW YORK, Jan 14 (Reuters) - A lawyer for Vermont on Monday urged a U.S. appeals court to reverse a ruling preventing the state from shutting down a nuclear power plant owned by Entergy Corp.
Last year, a U.S. district court judge ruled that the state could not close the 620-megawatt Vermont Yankee plant because federal regulators, not the state, had authority over safety concerns.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York is considering whether to uphold that order.
The case has been closely watched as a test of states' rights to regulate nuclear power utilities at a time of heightened concern about safety following the Fukushima disaster in Japan in 2011.
David Frederick, an attorney for Vermont, urged the appeals court to overrule the lower court's finding that federal law preempted a Vermont law that would have shut the facility, the state's only nuclear plant.
"There's clearly a role for the federal government to play, but states have the final say in whether to allow nuclear energy in their boundaries," he told the court, which handles appeals of federal cases in New York, Connecticut and Vermont.
Kathleen Sullivan, a lawyer for Entergy, argued that the federal Atomic Energy Act gives the federal government sole authority to regulate safety at nuclear plants.
In January 2010, Entergy identified a radioactive tritium leak at the plant. Shortly after that, the Vermont state Senate voted down a proposal to let the plant keep operating.
Despite the state's action, the U.S. Nuclear Regulatory Commission in March 2011 approved a license for Vermont Yankee through 2032.
In April 2011, Entergy sued Vermont, seeking an injunction to keep operating after the plant's certificate was set to expire in March 2012.
In January 2012, U.S. District Judge J. Garvan Murtha in Vermont ruled in favor of Entergy and blocked the state from forcing the company to shut the reactor.
The judge held that the U.S. Atomic Energy Act superseded two state laws that were enacted based on radiological safety concerns. Murtha also blocked enforcement of a state regulation requiring Entergy to enter into power purchase deals with Vermont retail utilities at below-market prices.
During Monday's arguments, Frederick contended the state had non-safety economic reasons to want to close the plant, such as to encourage moves to renewable sources of energy.
Vermont has garnered considerable support on appeal from other states. New York, Connecticut, Iowa, Maryland, Missouri, New Hampshire and Utah, along with the National Conference of State Legislatures, filed briefs supporting Vermont.
Several environmental groups have also filed friend-of-the-court briefs supporting the state.
Entergy has the support of business groups including the U.S. Chamber of Commerce and the Nuclear Energy Institute Inc.
The case is Entergy Nuclear Vermont Yankee, LLC et al v. Shumlin et al, 2nd U.S. Circuit Court of Appeals, 12-707.