A federal judge this week ruled the Tennessee Valley Authority (TVA) must continue to honor an agreement to sell the unfinished Bellefonte Nuclear Power Plant to a real estate developer who has said he would complete construction of the long-idled project.
U.S. District Court Judge Liles C. Burke, in a 17-page opinion issued after a hearing this week in Huntsville, Alabama, declined to dismiss a lawsuit brought by developer Franklin Haney, who sued TVA in November 2018 for breach of contract after TVA said it could not complete the sale of the Bellefonte site and its assets to Haney’s Nuclear Development LLC.
Haney in 2016 was the winning bidder in an auction for Bellefonte, agreeing to pay $111 million for the twin-reactor nuclear plant. He sued TVA last year after the federally owned utility said it needed approval from the Nuclear Regulatory Commission (NRC) to authorize the sale.
TVA at the 2016 auction said the winning bidder would have two years to complete the purchase. Haney has argued he was ready to take over Bellefonte last year, though the NRC was still reviewing his application to resume construction at the site. TVA asked the district court to dismiss Haney’s lawsuit, saying federal rules require the sale to be authorized by the NRC, and thus TVA cannot legally sell the plant to Haney.
Nuclear Development filed a license transfer application with the NRC on Nov. 13, 2018, a couple of weeks after the sale’s original closing date, and just more than two weeks before an extended deadline to complete the sale by Nov. 30. TVA told Haney on Nov. 29 that it could not complete the transaction without approval of the license transfer by the NRC. In the sales agreement with Haney, TVA said “federal law at all times govern the validity, interpretation and enforceability” of the sale.
Developer: $30 Million Spent on Project
Haney has said he has spent more than $30 million on the project, which includes a $22.2 million down payment. He said the sum also includes legal and regulatory costs associated with the purchase. His attorneys have said until late last year, TVA had not indicated any problems with the sale, and did not talk about the need for prior approval from the NRC.
“The Court finds that (Haney’s) Nuclear Development has sufficiently stated a claim for breach of contract, and it simply does not have enough information before it to determine the question of whether the remedy of specific performance would violate federal law,” Burke wrote in his decision.
Billy Gleaves, NRC’s senior licensing project manager, in an April letter to Nuclear Development said his agency needs more information about the project before it can approve a license transfer from TVA to Haney’s group.
“The NRC staff has reviewed your application and concluded that supplemental information is necessary to enable the staff to make an independent assessment regarding the acceptability of the proposed license transfer,” Gleaves said in the letter.
Construction Halted in 1988
The two-unit Bellefonte plant sits on about 1,400 acres on a peninsula in the Tennessee River near Hollywood, Alabama. TVA began construction in 1974 and halted the project in 1988, having spent an estimated $6 billion in the project. Substantial infrastructure remains on the site including the two, 1,256-MW partly constructed Babcock & Wilcox reactors, cooling towers, switchyards, office buildings, warehouses, a training center, parking lots, railroad spurs, and a helicopter landing pad. TVA debated for years over what to do with the plant before its board in 2016 voted to put the site and its assets up for auction.
TVA has until May 29 to respond to the court ruling. Burke has not ruled out that he could agree with TVA’s arguments if the case goes to trial. TVA, meanwhile, must maintain Bellefonte’s deferred construction permit for a possible transfer to Haney once a decision is reached in the case.
Haney has said his group can finish the nuclear plant, and sell its power for a competitive price. His group has not identified any utility or other customer that would buy Bellefonte’s electricity.
TVA has said that if the deal with Haney falls through, the utility would again put the site Bellefonte up for sale.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).