The real estate developer who has tried for more than two years to buy the assets of the canceled Bellefonte nuclear power plant project in Alabama has sued the Tennessee Valley Authority (TVA) after TVA last week pulled out of the deal to sell the plant.
Attorneys for Franklin Haney, whose Nuclear Development LLC (NDLLC) group submitted a winning $111 million offer for the plant’s assets at auction in November 2016, filed a lawsuit November 30 in U.S. District Court for the Northern District of Alabama in Huntsville, charging TVA with breach of contract.
TVA said the sale could not be finalized because the U.S. Nuclear Regulatory Commission (NRC) has not approved a transfer of the project’s construction permits from TVA to Bellefonte. Haney is asking for more than $60 million in damages if NDLLC’s purchase does not close.
“The Atomic Energy Act requires that the ownership of a nuclear facility be under the licensing of the Nuclear Regulatory Commission and that (license transfer) is required for us to complete the purchase agreement,” TVA spokesman Jim Hopson said in a statement Friday, the day the sale was supposed to close.
Haney’s group, in a 14-page federal lawsuit, said TVA should not apply provisions of the Atomic Energy Act to the sale of the Bellefonte site, calling it “erroneous.”
The NDLLC group had two years from the close of the 2016 auction to complete the purchase of the 1,400-acre Bellefonte site. TVA began construction of the nuclear plant in 1974 in Hollywood, Alabama, with the site slated to house four reactors. Two 1,256-MW pressurized water reactors were partly built before TVA halted construction in 1988, having spent an estimated $6 billion on the project.
Legal, Regulatory Issues
The sale of the plant to Haney’s group was supposed to be completed by November 14 of this year, but the two sides in early November agreed to extend the deadline to the end of the month. Haney at the time said legal and regulatory issues had delayed the deal’s closure. The project also has been dogged by allegations of payments to secure federal government support for resuming construction of the plant.
The plant also has not had success lining up potential customers for its electricity. Memphis Light, Gas and Water (MLGW) in late October said it was “premature” to negotiate a power purchase agreement (PPA) with Bellefonte. The utility in January 2018 signed a non-binding letter of intent to purchase power from the plant.
Larry D. Blust, an attorney for NDLLC, in a three-page letter to TVA officials on November 30, wrote about the “absurdity” of TVA’s position that the current state of the Bellefonte property, and the closure of the sale of the site, “would be unlawful pursuant to Section 101 of the Atomic Energy Act of 1954 … which provides that ‘It shall be unlawful … for any person … to transfer, acquire, purchase, [or] use … any utilization or production facility except under and in accordance with a license issued by the [NRC] pursuant to section 103 or section 104.’ ”
Blust wrote that, “The Bellefonte Site is years and billions of dollars away from being able to meet this definition” of a utilization or production facility.
Caine O’Rear III, a Mobile, Alabama-based attorney who filed the lawsuit on behalf of Haney, told the Chattanooga (Tennessee) Times Free Press that “the transfer of the Bellefonte site and its improvements in their current condition to Nuclear Development does not violate the NRC permits, the NRC regulations or the Atomic Energy Act. Moreover, the transfer of the NRC permits is not a prerequisite to closing under the contract.”
O’Rear asked the district court to order TVA to sell Bellefonte to NDLLC under the agreed-upon contract. Haney’s group also wants a preliminary injunction to ensure TVA maintains the property until the sale is closed.
The NRC said it has not previously transferred a construction permit for a nuclear plant. Scott Burnell, an NRC spokesman, said it is unusual to even discuss the possible transfer of a deferred construction permit. Burnell said operating licenses have been transferred between owners of nuclear plants, usually involving either regulated or merchant utilities.
Millions Already Spent on Project
The lawsuit says Haney’s group already has paid TVA a $22.2 million down payment for the plant’s assets, along with more than $7.1 million for maintenance at the facility over the past two years. Haney earlier said he had spent more than $30 million on consulting and engineering to resume the project, which includes regulatory fees.
Haney has said his group could finish building the plant in about five years, at a cost of about $7 billion. He said the project would generate 8,000 to 10,000 jobs in Northeast Alabama. Haney also has said nuclear power from Bellefonte would be cheaper to buy for utilities than other regional power resources.
Analysts have noted that Haney’s group could end up competing with TVA for power sales if the Bellefonte project is completed. Haney on Friday told media that, “I’m not trying to hurt TVA, but I’m sure they don’t like someone offering lower-cost electricity.”
Hopson said TVA has met its legal requirements for the sale of Bellefonte, and said it could find another buyer for the plant’s assets.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).