Federal court rejects TVA move to cancel sale of Bellefonte Nuclear Power Plant to developer Franklin Haney

Federal court rejects TVA move to cancel sale of Bellefonte Nuclear Power Plant to developer Franklin Haney

May 17th, 2019 by Dave Flessner in Business Around the Region

Bellefonte Nuclear Plant is pictured Monday, July 30, 2018, in Hollywood, Alabama. Nuclear Development LLC successfully bid $111 million for the Bellefonte site, with its two partially-built pressurized water reactors plus infrastructure, including switchyards, office buildings, warehouses, cooling towers, water pumping stations and railroad spurs.

Photo by Erin O. Smith /Times Free Press.

A federal judge has refused to cancel an agreement by the Tennessee Valley Authority to sell its unfinished Bellefonte Nuclear Power Plant to developer Franklin L. Haney — at least for now.

In a 17-page legal opinion issued after a hearing this week in a federal court in Huntsville, Alabama, U.S. District Court Judge Liles C. Burke declined to dismiss a lawsuit Haney brought last November against TVA for breach of contract for not completing the sale of Bellefonte.

Haney, a former Chattanooga developer who agreed in 2016 to pay $111 million to buy the assets of the twin-reactor plant site, sued TVA when the federal utility said it couldn't sell the nuclear plant without prior approval of the license transfer by U.S. Nuclear Regulator Commission. TVA asked the court to dismiss Haney's lawsuit, claiming that federal regulations require any nuclear plant sale to be authorized first by the NRC so TVA couldn't legally sell Bellefonte to Haney.

In arguments before the court on Monday, Haney's attorneys said the developer was the top bidder for the Bellefonte assets at a November 2016 public auction. TVA gave the buyer two years from the date of the auction to consummate the sale.

Haney estimates he has spent more than $30 million, including a $22.2 million down payment and other regulatory and legal costs associated with the proposed purchase of Bellefonte. Haney's attorneys said TVA did not previously indicate any problems with the sale or need for prior NRC approval. Haney met with regulators last year and submitted a request for a license transfer last fall.

"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 said in his decision.

TVA has until May 29 to respond to the court ruling, and Burke did not rule out the possibility that he may still side with TVA once the case comes to trial.

Document: Judge's opinion

Read the judge's opinion about the lawsuit over Bellefonte Nuclear Power Plant.

In the meantime, TVA must maintain Bellefonte's deferred construction permit for possible transfer to Haney once the case is decided.

Haney is trying to become the first individual to own a nuclear power plant. The developer contends he could buy and finish Bellefonte for a price that would still make its power competitive for sale on the electric grid.

But in a letter to Haney's Nuclear Development last month, NRC's senior licensing project manager, Billy Gleaves, said additional information is needed from Nuclear Development before any license transfer is approved.

"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.

Haney also has yet to identify any utility or customer that would buy the power generated by Bellefonte, and Haney has yet to gain approval of the requested federal loan guarantees for the cost of finishing Bellefonte.

TVA projects it won't need extra baseload generation like what Bellefonte produces for at least the next couple of decades and finishing Bellefonte would be too expensive, even after TVA has spent over $6 billion on construction and interest expenses on the Alabama plant since construction began there nearly 45 years ago.

If the sale to Haney is dismissed as TVA is urging, Bellefonte would again be put up for sale, TVA spokesman Jim Hopson said

"Our goal remains to return the Bellefonte property to productive use as soon as possible," Hopson said. "The case is in its early stages and we believe the facts will support our decision to adhere to the requirements of the Atomic Energy Act, which prevents the transfer of licensed nuclear facilities to organizations that do not have the necessary permissions from the Nuclear Regulatory Commission."

Contact Dave Flessner at 423-757-6340 or dflessner@timesfreepress.com.