By John Stang
Holtec International has sued the New Jersey Economic Development Authority (EDA) in an effort to force the state agency to resume providing $260 million in tax credits promised in 2014.
The Camden, N.J., energy technology company on Tuesday announced the lawsuit, filed March 20 in the Superior Court of New Jersey.
“In disregard of its contractual obligations, the EDA has stalled and failed to approve Holtec’s 2018 submission for its tax credits, which has caused Holtec tens of millions of dollars in damages,” according to the complaint. “Holtec was thus left with no choice but to file this Complaint and seek an order requiring the EDA to comply with its duties under the Incentive Agreement.”
On Wednesday, the EDA declined to comment on the lawsuit.
In 2014, Holtec secured a $260 million state tax credit to be stretched across 10 years starting in 2017. The credit agreement was predicated on Holtec investing at least $300 million in a new 47-acre manufacturing and research complex in Camden, which opened in 2017.
Under the 2014 agreement, the EDA is required to issue Holtec a letter of compliance each year for a decade if Holtec satisfies its contractual obligations. This letter is needed for Holtec to obtain a $26 million annual tax credit. The deal went smoothly for the 2017 tax credit, but the state agency to date has not signed off on the 2018 tax credit, the complaint says.
Throughout 2019, the EDA asked Holtec for access to documentation and witnesses that it did not request the year before for the 2017 tax credit. It did not specify its issues, according to the lawsuit, which says the EDA has not set up a meeting with Holtec to discuss the matter, even after saying it would do just that.
The lawsuit says Gov. Phil Murphy (D) has sought to reform the EDA tax credit program since taking office in January 2018, ordering an audit by the New Jersey State Comptroller’s Office and then establishing a task force to study the incentives. The task force was created due to concerns that the majority of the money was allocated to politically connected companies.
In a June 2019 report, the panel said the Economic Development Authority in 2014 failed to note that Holtec had been briefly barred from doing business with the federally owned Tennessee Valley Authority over a bribery case. The state froze Holtec’s tax break last year after determining the company had failed to acknowledge the TVA case in its application, according to press reports from the time.
Holtec in 2001 was awarded a contract to build a storage facility for spent nuclear fuel at TVA’s Browns Ferry Nuclear Plant in Alabama. The deal led to an investigation by the TVA’s Office of the Inspector General regarding Holtec interactions with John Symonds, a TVA supervisor. Symonds pleaded guilty 2007 to failing to disclose the receipt of tens of thousands of dollars in payments from a Holtec contractor. Ultimately, Holtec was banned from doing business with the TVA for two months in 2010.
In its lawsuit, Holtec said 2001 incident happened almost 20 years ago, and that the misstatement on the 2014 application was inadvertent. The company noted the TVA in 2012 awarded Holtec a 10-year contract worth $300 million.
The lawsuit also alleges that a 2009 Ohio case was improperly involved in the EDA’s attitude toward Holtec. In 2009, Holtec subsidiary Orrvilon received $475,000 in Ohio tax credits to create 200 new jobs by consolidating workers form other Ohio plants to a vacant factory to build rods to contain nuclear fuel assemblies. But by 2013, that plant’s workforce dropped from 102 to 98, news reports said, due to problems with manufacturing equipment and cheaper competition. Ohio revoked the tax credits.
Along with an order directing the Economic Development Authority to provide the letter of compliance for 2018, Holtec is asking the court to award damages and other relief.
The company said it has met every obligation in the 2014 agreement to invest in Camden, and that it has been the No.1 private investor in the city since 2014.
“The EDA wanted to convince Holtec to make a capital investment and locate in Camden, and as part of that process, knew that Holtec needed predictability regarding the timing of its annual tax credits so Holtec could securitize them accordingly,” the lawsuit says.
Holtec manufactures storage and transportation systems for spent fuel from commercial nuclear power plants. It is seeking a federal license for a temporary storage facility in New Mexico for as much as 170,000 metric tons of the radioactive material. The company is also moving aggressively into the business of decommissioning nuclear power plants, acquiring retired reactors in New Jersey and Massachusetts and planning purchases in New York state and Michigan.
