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Nuclear Development LLC v. Tennessee Valley Authority

United States District Court, N.D. Alabama, Northeastern Division

May 15, 2019

NUCLEAR DEVELOPMENT, LLC, Plaintiff,
v.
TENNESSEE VALLEY AUTHORITY, Defendant.

          MEMORANDUM OPINION AND ORDER

          LILES C. BURKE, UNITED STATES DISTRICT JUDGE.

         Defendant Tennessee Valley Authority (“TVA”) has filed a Motion to Dismiss (doc. 22). Plaintiff Nuclear Development LLC (“ND”) has filed a response (doc. 28), and TVA has filed a reply (doc. 31). The Court also held a hearing on May 13, 2019. Therefore, the Motion to Dismiss is ready for review. For the reasons stated below, the Court denies the Motion to Dismiss.

         I. BACKGROUND

         The Bellefonte Nuclear Plant Site is an unfinished nuclear power plant site located in Jackson County, Alabama. (Doc. 1, p. 2). TVA currently owns the Bellefonte Nuclear Plant Site and has custody and control of it. (Id.). The Bellefonte Nuclear Plant Site is currently in deferred plant status pursuant to regulations promulgated by the Nuclear Regulatory Commission (“NRC”). (Id. at 3). In 2016, TVA declared the Bellefonte Nuclear Plant Site to be surplus property. (Id.). On November 14, 2016, TVA entered into an agreement for the sale of most of the Bellefonte Nuclear Plant Site, including the infrastructure and other assets located thereon, to ND. (Id.). The Court will refer to the portion of the Bellefonte Nuclear Plant Site subject to the agreement as “Bellefonte.” The purchase and sales agreement (otherwise referred to as the “Agreement” or the “Contract”) is attached as an exhibit to ND's complaint.

         Section 1 of the Agreement states, in part:

At the Closing (as defined in Section 5 below), TVA shall sell, transfer, convey, assign and deliver title and possession to [ND], and [ND] shall purchase and pay for, all of TVA's right, title and interest in each of the following . . .
(e) To the extent feasible and permitted by applicable law, all permits, licenses or authorizations issued or required by Governmental Authorities or third parties in connection with the operation of the Site and listed on Schedule 1(e) (the “Permits”); provided, however, that with regard to the transfer of the two permits issued to TVA by the Nuclear Regulatory Commission (“NRC”) to construct two B&W pressurized water nuclear reactors, this Section 1(e) shall not require TVA to certify that [ND] is qualified and fit to complete construction of and operate those reactors and, if [ND] informs TVA that it does not seek transfer of these NRC permits, TVA shall take whatever action is necessary to terminate those permits. Further, if, an applicable Governmental Authority has not accepted or otherwise allowed the transfer of a permit, license or authorization pursuant to this Section 1(e) by Closing, TVA's obligations under this Section 1(e) shall cease.

(Doc. 1, p. 4). Listed in Schedule 1(e) to the Agreement are certain facility permits, including the NRC Permits, CPPR-122 (Unit 1) and CPPR-123 (Unit 2) (the “NRC Permits”), both issued on December 24, 1974, and listed as “[r]einstated, currently deferred.” (Doc. 1-2, p. 47; Do c. 23-2).[1]

         Section 6(a)(v) addresses conditions to closing, stating that

[t]he obligations of TVA and [ND] to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or before Closing, of each of the following conditions . . .
(v) There shall not be in effect at the Closing any law, statute, rule, regulation, permit certificate or binding order, decree or decision of any Governmental Authority (as defined in Section 9(a)(ii) below) restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by this Agreement . . . .

(Doc. 1-1, p. 7).

         Section 7(a) of the Contract addresses TVA's representations and warranties. In particular, Section 7(a)(vii) states

TVA has full right, power and authority to execute and deliver this Agreement and to consummate the purchase and sale transactions provided for herein, and no authorization, consent or approval or other order or action of or filing with any Governmental Authority is required for the execution and delivery by the TVA of this Agreement or the consummation by the TVA of the transactions contemplated hereby.

(Doc. 1-1, p. 9).

         Section 8(a) addresses ND's representations and warranties. Section 8(a)(vi) states that, to induce TVA to enter into the Agreement, ND represents and warrants to TVA, among other things, that “[n]o authorization, consent or approval or other order or action of or filing with any Governmental Authority is required for the execution and delivery by [ND] of this Agreement or the consummation by [ND] of the transactions contemplated hereby.” (Id. at 10). Additionally, Section 15(c)(i) states that ND, “either alone or together with its representatives and agents, has knowledge and experience in transactions of this type and is therefore capable of evaluating the risks and merits of acquiring [Bellefonte].” (Id. at 15).

         Section 11(a) addresses the termination of the Agreement. Section 11(a)(iv) states that the Agreement may be terminated “[b]y either Party, upon written notice to the other Party, if . . . the closing conditions set forth in Section 6(a)(i) or 6(a)(v) [stating that nothing makes the consummation of the transactions illegal] are unfulfilled as of the Closing Date . . . .” (Id. at 13). Section 11(b) states, “Upon any termination of expiration or [sic] this Agreement, TVA shall be entitled to retain the Down Payment and any Compensated Costs paid by Buyer on or before termination or expiration, unless termination is under Section 11(a)(ii) or Section 11(a)(iv), in which event TVA shall return the Down Payment and any Compensated Costs paid by Buyer to Buyer within 30 days by check or electronically as directed by Buyer.” (Id.).

         Upon execution of the Agreement, ND paid TVA $22, 200, 000.00 as a 20% down payment toward the purchase price of 111 million, with the $88, 800, 000.00 balance to be paid at closing. (Doc. 1, p. 4; Doc. 1-1, p. 7). In addition, ND also paid TVA an additional $750, 000 upon execution of the contract to compensate TVA for certain sales and administrative costs. (Id.). Pursuant to the Agreement, ND has paid TVA $875, 000 every three months from the date of the Agreement through November 30, 2018, for TVA's continued maintenance of Bellefonte. (Doc. 1, p. 4).

         The Agreement originally provided for a November 14, 2018, closing date. (Id.; Doc. 1-1, p. 6). According to ND, it requested an extension of the closing date to May 14, 2019, “in order to complete certain activities for an orderly closing.” (Doc. 1, p. 5). TVA did not agree to this request. (Id.). ND alleges that on November 8, 2018, TVA raised, for the first time, a potential obstacle to closing. (Id.). Specifically, TVA advised ND that it would not, or could not, consummate the sale of Bellefonte without approval from the NRC for the transfer of the NRC Permits to ND. (Id. at 6). The parties agreed, in the First Amendment to the Agreement, to an extension of the ...


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