Carlsbad Current-Argus Article on Termination of Holtec’s NM Agreement for CIS - Interesting Legal Aspects!

The company was recruited to the location by the Eddy Lea Energy Alliance, a consortium of local officials from the two counties and the cities of Carlsbad and Hobbs. The Alliance owns the 1,000-acre plot of land where the facility would have operated.

Company officials wrote in a July 28 letter to the Alliance that the project “was impossible” amid strong opposition from state lawmakers and current agreements in place with local leaders, stating the company was terminating an agreement to buy the land from the Alliance once the facility was operational.

Holtec spokesperson Patrick O’Brien confirmed Wednesday, Oct. 8, that the company and the Alliance agreed to part ways, allowing the Alliance to seek other companies to develop the site and Holtec to pursue projects in other states amid recent efforts by the U.S. Department of Energy to facilitate state consent.

“After discussions with our longtime partner in the HI-STORE project, the Eddy-Lea Energy Alliance, and due to the untenable path forward for used fuel storage in New Mexico, we mutually agreed upon canceling the agreement,” O’Brien wrote in an email.

“This allows for (the Alliance) to work to redevelop the property in a manner that fits their needs and allows Holtec to work with other states who are amenable to used fuel storage based on the recent DOE work on public education and outreach.”

During a Wednesday, Oct. 8, meeting of the Alliance held in a Carlsbad, Chair John Heaton said the Alliance offered to dissolve a noncompete clause, which would allow Holtec to pursue other projects in Colorado and Utah, while continuing to pursue the site in New Mexico.

He said the company’s president, Krishna Singh, responded that he “would not put another penny” into New Mexico after heavy state opposition was voiced and the project delayed.

The Alliance’s board voted unanimously to accept the letter and termination of the project.

“He is just so frustrated with the constant roadblocks from the state of New Mexico,” Heaton said of Singh. “They just said they’re through. They want to cancel it.”

Supreme Court favors nuclear storage

The company appeared ready to build the facility which would hold up to 100,000 metric tons of the refuse after a U.S. Supreme Court verdict in June reinstated a federal license to build and operate the site.

Justices ruled the project’s opponents who initially challenged the license for the site had no legal standing to enter the licensing process in the first place.

That left Holtec and its supporters claiming victory and expecting the project to move forward, after more than a decade of debate, public hearings, and negotiations between the company and the Alliance.

But Senate Bill 53, passed by state lawmakers in 2023 barred any state agency from issuing permits Holtec would need to operate the site, a problem noted in Holtec’s letter along with the overall “political climate” in New Mexico.

“Unfortunately, the passage of state legislation that effectively prohibits the construction of the (consolidated interim storage facility), combined with the continued public opposition expressed by New Mexico’s current administration, has made the project impossible in the near future,” read the letter signed by William F. Gill, Holtec vice president and senior counsel.

During the Wednesday meeting, Heaton made a motion for the Alliance to accept the July 28 letter from Holtec canceling the land sale and a revenue sharing agreement. The motion was supported by a unanimous vote.

Other nuclear options considered

Heaton said the site could still be used for a nuclear project developed by a different company to either store or repurpose the spent fuel, but that such a move would require a new license application process.

“Any other entity that would want to create an interim storage facility at the site would need to go through the (Nuclear Regulatory Commission). It (the license) is not assignable,” Heaton said.

Hobbs Mayor Sam Cobb said that if Holtec officially terminates its role in the project, the Alliance must seek another company to build and bring the facility into service.

He argued that the commission, the U.S. government’s main approval arm for nuclear facilities, already approved the project federally, meaning it could be viable with another willing participant.

“I think it’s incumbent on us to explain any possible forward movement at the site which the (Nuclear Regulatory Commission) has deemed suitable,” he said. “The nuclear industry is resurging and it’s going to keep expanding.”

But Heaton countered that the project as approved involved “proprietary” technology owned by Holtec, meaning a new company would need to pay Holtec for its use or seek approval for a new design.

He said Holtec has built but not operated storage facilities in other areas and could be open to doing so for a new operator of the facility with new federal approval.

“They will still have to go through the process,” Heaton said. “That is the big barrier.”

He did say Wisconsin-based Shine Technologies might be ideal for a different project at the site in lieu of Holtec’s participation.

In February, Shine Technologies announced it was selected by the U.S. Department of Energy to receive funding through its Advanced Research Projects Agency-Energy program to aid in developing technology to reprocess spent nuclear fuel.

That could involve the Alliance’s site, Heaton said. He said the fuel rods initially planned to be stored at Holtec’s facility could instead be reprocessed at the location, potentially by Shine Technologies or a similar company.

“Reprocessing has much more economic benefit than storage,” Cobb said. “We probably need to put together a plan to make those presentations.”