737 F.3d 228
2d Cir.2013Background
- Entergy owns/operates Vermont Yankee, the state's largest electricity generator.
- In 2012 Vermont amended 32 V.S.A. § 8661 to impose a Generating Tax of $0.0025 per kWh on large plants.
- Entergy's Plant is the only facility in Vermont meeting the tax threshold.
- Entergy halted MOUs payments in March 2012 amid a broader dispute over regulatory approval.
- Entergy filed suit in September 2012 challenging the tax as unconstitutional and sought injunctive relief.
- The district court dismissed the case under the Tax Injunction Act; Entergy appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Generating Tax a tax under the TIA? | Entergy argues the measure is not a general tax. | Vermont contends the Generating Tax serves general revenue. | Yes, the Generating Tax is a tax. |
| Does Vermont provide a plain, speedy and efficient remedy for challenge to the tax? | Entergy claims state procedures are inadequate for constitutional challenges. | Vermont provides admin and judicial review with exhaustion. | Yes; Vermont procedures satisfy the TIA remedy requirement. |
| Must Entergy exhaust administrative remedies before seeking relief in court? | Entergy may raise constitutional claims in court even if admin lacks power to hear them. | Administrative exhaustion is required; Vermont courts can hear constitutional claims after exhaustion. | Administrative avenues exhausted, Vermont courts can adjudicate constitutional issues. |
Key Cases Cited
- Travelers Ins. Co. v. Cuomo, 14 F.3d 708 (2d Cir.1993) (principal test: revenue allocation determines tax status)
- Rosewell v. LaSalle Nat. Bank, 450 U.S. 503 (1981) (remedy must be plain, speedy and efficient; exhaustion allowed)
- California v. Grace Brethren Church, 457 U.S. 393 (1982) (state procedures can satisfy remedy requirement)
- San Juan Cellular Telephone Co. v. Pub. Serv. Comm'n, 967 F.2d 683 (1st Cir.1992) (three-factor approach sometimes used in tax vs. fee analysis)
- Cumberland Farms, Inc. v. Tax Assessor, 116 F.3d 943 (1st Cir.1997) (reaffirms focus on revenue allocation; separate tax vs. subsidy stat. not integrated)
- GenOn Mid-Atlantic, LLC v. Montgomery County, 650 F.3d 1021 (4th Cir.2011) (example where revenues earmarked for program; not a tax under TIA)
- Murray v. McDonald, 157 F.3d 147 (2d Cir.1998) (state courts can hear constitutional questions despite agency limitations)
- Hattem v. Schwarzenegger, 449 F.3d 423 (2d Cir.2006) (Travelers continues to govern TIA application post-Cuomo)