Tennessee officials hailed a uranium enrichment facility deal for East Tennessee in 2024 but months later exempted the project from sales taxes, forcing local governments to forgo untold revenue from the multi-billion-dollar project in a move that caught some leaders off guard.
Oak Ridge City Manager Randy Hemann and Anderson County Mayor Terry Frank confirmed to the Lookout they didn’t find out about the state and local sales tax break for France-based Orano’s $4.5 billion project until this summer, even though the Tennessee legislature passed the exemption in April. Frank said the exemption wasn’t part of a nuclear advisory council’s recommendations, either.
Orano is nearing a contract for construction of the uranium enrichment project in the Roane County portion of Oak Ridge, a city made famous by the Manhattan Project and the race to develop a nuclear bomb during World War II.
Lawmakers passed Senate Bill 885/House Bill 1133 at the end of the 2025 session in April, expanding the definition of “certified green energy production” to give sales and use tax credits to nuclear facilities, such as the Orano uranium enrichment project.
In addition to the sales tax break, the company is receiving a $6 million grant from the state’s Economic and Community Development Department, part of $60 million Gov. Bill Lee put into a nuclear development fund over two years to bolster the industry.
Another $5 million is going to the SSP-2 site in Oak Ridge, depending on a land transfer from the U.S. Department of Energy to Orano USA and license approval for operations by the Nuclear Regulatory Commission.
Similarly, Type One Energy Group Inc. is using a $4.5 million state grant to repurpose the Bull Run nuclear facility in Clinton with a $233.5 million investment. Another grant for $715,000 is going to BWXT Enrichment Operations to manufacture centrifuge assemblies in Oak Ridge, part of a long-term plan to support fuel production for the National Nuclear Security Administration’s defense program.
Orano also announced in June it will open a business office in Oak Ridge for the uranium enrichment facility.
With those projects in the works, Oak Ridge officials aren’t overly concerned about forgoing sales tax connected to the facilities, Oak Ridge City Manager Randy Hemann said. He expects to make up any losses with future property taxes and economic recruiting.
“We consider that an incentive that will help us attract more industry,” Hemann said. He added that city leaders are “happy with the trajectory” of the nuclear industry, which is buoyed by the efforts of the governor and economic recruiters.
Tennessee officials aren’t certain, though, how much the state and local governments will forgo in sales taxes. The Fiscal Review Office, which determines the fiscal impact of legislation, couldn’t come up with a figure.
The slate of facilities receiving a total of $19.5 million worth of state grants are expected to serve the Tennessee Valley Authority as it seeks federal approval to build a small modular reactor at its Clinch River site in Oak Ridge. Despite questions about the technology and escalating costs at a similar Georgia facility, TVA President and CEO Don Moul told the Associated Press such a facility could enable America to lead the world in “the new technology.”
TVA’s Jeff Lyash has reportedly said the utility needs 20 small modular reactors to shift the direction of energy production away from coal-fired plants.
Tennessee isn’t providing state funds to the federally-owned power provider, which serves parts of seven states in the Tennessee Valley region. TVA makes payments in lieu of taxes to Tennessee for purchases at four nuclear plants in Sequoyah and Watts Bar.
According to the state’s financial analysis, components and construction costs for such a facility aren’t subject to sales and use taxes, and other portions are exempt as industrial machinery. Yet the bill passed this year also will apply to purchases of machinery and equipment for the small modular reactor, even those not made directly by TVA, a critical portion of the legislation.
In addition, the state’s financial impact analysis says future nuclear energy facilities will be exempt from “unknown amounts” of sales and use taxes. Oak Ridge officials also are uncertain how much tax revenue the city will forgo.
The political workingsRepublican Sen. Shane Reeves and Republican Rep. Clark Boyd sponsored the bill that reclassified nuclear projects as “green energy,” but an amendment that led to the sales tax exemption wasn’t tacked on until the end of the session in April.
The state’s nuclear advisory council made numerous recommendations when it wrapped up its work in October 2024, including reclassifying nuclear facilities to qualify as “green energy” for tax purposes.
Yet Anderson County Mayor Frank, who served on the panel, said the sales and use tax exemption wasn’t part of the group’s proposal.
Still, Republican leaders Lt. Gov. Randy McNally of Oak Ridge and Sen. Ken Yager of Kingston pushed the amendment through the Senate with relative ease. Only in the House did it run into opposition, mainly from Democrats.
McNally spokesman Adam Kleinheider said the lieutenant governor was aware of the bill’s tax breaks. He pointed out all four of TVA’s nuclear plants are exempt from state sales and use tax. Kleinheider also noted that parts and construction for small modular reactors are exempt as industrial machinery.
“Tennessee has made nuclear energy a priority for the state and will continue to strive to remain on the cutting edge of the industry. It is essential to have necessary incentives in place to ensure the industry sees our state as the committed partner that it is,” Kleinheider said.
He declined to say whether McNally consulted local officials.
Yager said in a statement the Senate bill provided nuclear energy the same tax breaks as other “clean energy sources” to help the state bolster production. Even though Orano announced its plan in 2024, eight months before the bill’s passage, Yager said it helped Roane County land the largest private investment in state history, which will bring “significant long-term economic benefits to the region.”
“It’s important to understand that the tax exemptions are forgone revenues – money the local governments weren’t receiving previously. Even so, the local governments’ concerns are well taken with me, and I am committed to ensuring the locals are whole,” Yager said. “I am working closely with local officials in Roane County, Oak Ridge and Anderson County to ensure the policy supports both our nuclear energy goals and the communities hosting these projects.”
Reeves, chairman of the Senate Energy, Agriculture and Natural Resources Committee, said the bill came to him from the Nuclear Energy Advisory Council to attract more facilities and supply chain activity. He said it was discussed several times in committee and on the Senate floor and added that he heard no concerns about tax revenue from Anderson County, Oak Ridge or Roane County officials.
The House initially voted 87-2 to pass the measure, but the Senate tacked on what Boyd referred to as the “Orano amendment.” Once McNally and Yager threw their weight behind the measure, Boyd didn’t try to stop them, even though the House at first voted not to concur with the Senate amendment.
The Senate refused to recede from its support for the amendment in mid-April and senators cheered the decision. Ultimately, the House voted 70-24 in favor of passage with supermajority Republicans controlling the outcome. The governor signed the bill into law and it took effect July 1.
Rep. John Ray Clemmons, chairman of the House Democratic Caucus, said most Democrats had “heartburn” from the outset about expanding the definition of “certified green energy production facility” for nuclear production without scientific basis, along with “creating a legal fiction” for sales and use credits.
Further, he believes the Trump administration is trying to privatize TVA as part of a long-term strategy.
“It was fiscally irresponsible for our state to forgo the significant state and local revenues that would have resulted from impending, significant private investments in nuclear energy production,” Clemmons said, calling the move another tax break for corporations instead of working-class families.
Clemmons said while TVA’s purchases are exempt from state sales and use taxes, the Senate amendment exempted any purchases not directly made by TVA, meaning any private entity enriching uranium materials, compounds or products could do the work tax free. Nor would private companies pay sales and use tax on industrial machinery and equipment used to enrich and convert uranium, he said.
If private nuclear investments continue to grow, Clemmons said the revenue Tennessee and local governments forgo through tax exemptions “will be truly significant sums.”
This story was originally published by the Tennessee Lookout.
