Lawsuit launched as Bellefonte sale falters

03 December 2018

A lawsuit filed by Nuclear Development LLC (ND) alleging that the Tennessee Valley Authority (TVA) is in breach of contract following the authority's announcement that it will not complete the sale of the partially-built Bellefonte nuclear power plant is without merit, TVA said today.

Bellefonte (Image: TVA)

TVA decided in 2016 to sell Bellefonte, near Hollywood in Alabama, with its two partially built reactors and other infrastructure after determining that that it would not need to build any new large-scale baseload capacity for at least the next 20 years. ND was the successful bidder in a two-part auction held by TVA in November 2016, agreeing to buy Bellefonte for USD111 million.

The contract was originally due to close on 14 November this year. This was subsequently extended to 30 November. According to ND's attorneys, in a letter made public by the Times Free Press, TVA notified the company on 29 November that it would not close the sale.

TVA subsequently said the parties had been unable to complete the sale of the Bellefonte property after Nuclear Development's "lack of progress" in meeting its legal obligations related to future ownership of the site. "Nuclear Development did not complete the necessary Nuclear Regulatory Commission (NRC) licence transfer prior to the closing date as required by the Atomic Energy Act," the Authority said.

"TVA declined to provide a second contract extension beyond the nearly 25 months already provided due to Nuclear Development's lack of diligence in completing these required activities. We remain committed to returning the Bellefonte property to productive use to benefit the residents of northeastern Alabama as soon as possible," it said.

"The lawsuit filed by Nuclear Development seeking to force TVA to sell the plant in violation of the AEA is without merit," the Authority told World Nuclear News.

ND on 13 November filed an application with the NRC seeking to transfer the permits for the partially complete pressurised water reactors (PWRs) from TVA. However, the company's attorneys say the Atomic Energy Act does not require Bellefonte's construction permits - which are currently in a deferred status - to be transferred to ND before the transfer of the site can go ahead. They also said that TVA "never raised an issue" concerning NC's position on permit transfers until six days before the original 14 November closing date.

"ND has complied with all of its requirements under the Agreement … Consequently, it is TVA that is in breach here if it does not tender such documents and confirm it will close," ND attorney Larry Blust said.

ND's lawsuit says that as of the 30 November closing date, the company "stood ready, willing, and able to tender the full balance of the purchase price … subject only to TVA's execution and delivery of the transaction documents." The lawsuit seeks to compel TVA go ahead with the sale and "to specifically perform its obligations under the contract by accepting Nuclear Development's payment of the balance of the purchase price for the Bellefonte site".

Construction permits were issued for Bellefonte in 1974 and TVA began construction of the two PWR units in 1975. Construction was suspended in 1988, when unit 1 was about 90% complete and unit 2 58% complete. Since then, many of the units' components have been transferred or sold, while others would need to be upgraded or replaced. ND estimates that the units are currently about 55% and 35% "physically complete".

Nuclear Development is a special purpose entity set up by Franklin Haney in 2002. It has already obtained production tax credits from the US Internal Revenue Service for the Bellefonte units' output, and is negotiating with the US Department of Energy Loan Guarantee Office for a loan guarantee under the Energy Policy Act of 2005. Earlier this year the company engaged SNC-Lavalin Nuclear (USA) to provide engineering, procurement and construction management services to complete the first of the two Bellefonte units.

Researched and written by World Nuclear News