Auditors question TVA shoreline deals with wealthy

By Duncan Mansfield/The Associated Press

KNOXVILLE, Tenn. – Wealthy and influential people seeking private lakeshore access to the Tennessee Valley Authority’s 11,000 miles of shoreline on the Tennessee River system appeared to receive preferential treatment, according to an audit.

TVA Inspector General Richard Moore’s 85-page report released Monday found no evidence that rules were deliberately broken, but said the nation’s largest public utility managed its program “selectively and arbitrarily” often to the benefit of “the wealthy, the influential, or both.”

Among those receiving approval for waterfront access was U.S. Rep. Heath Shuler, D-N.C., who until recently served on a House subcommittee with oversight of TVA.

Shuler spokeswoman Julie Fishman said Tuesday the congressman was “pleased that they have completed the review and found … no evidence that he used his position to pressure the TVA.”

The audit, pushed by publicity over Shuler’s influence on a residential lake development near Knoxville in which he is an investor, focused on TVA’s “maintain and grow” program under which it grants private water-access rights to one piece of land in exchange for public rights on another chunk. The goal is to ensure no net loss of public shoreline.

Moore worried the program, as it was run, may undermine TVA lakeshore management reforms adopted in 2006. For the first time, residential development limits were set on TVA lakes and rivers, ensuring the public could use at least 68 percent of its managed shoreline.

His audit of nine deals since 1999 determined “TVA proceeded blindly with a process that gave rise to the appearance of preferential treatment, resulting in a reputational harm both to the applicants and to TVA.”

In some cases, public notices were waived, management review committees were bypassed and other agencies were not consulted, the audit said. With no program definition for what deals qualified as a “public benefit,” it became “whatever TVA employees want it to be.”

Others who were approved for private docks or water access were former TVA Chairman Bill Sansom and Charles Perry, the former general manager of the Paris (Tenn.) Board of Public Utilities — a TVA power distributor.

TVA President and CEO Tom Kilgore said Monday he would recommend the TVA board kill the program at its next meeting in August. It had been suspended since December awaiting the audit outcome.

Kilgore said the TVA would set up a clear protocol for shoreline access that would help identify potential conflicts of interest.

Moore’s report devoted most of its attention to a development on Watts Bar Lake in which Shuler is a partner. Shuler is a former University of Tennessee star quarterback who spent a few seasons in the NFL and was elected to Congress in 2006.

The development in which he is an investor, Shuler’s Cove at Blackberry Ridge, negotiated over several years with TVA to gain 145 feet of water-access rights in exchange for giving up another 150 feet of water access and other considerations. TVA ultimately approved the deal, but then suspended it in October before it could be closed.

The inspector general said it didn’t help that Shuler’s representatives kept “dropping Shuler’s name with TVA employees,” but the auditors found no evidence the congressman or his people used his political influence to pressure TVA to help Blackberry.

The auditors found no problems with the 2004 approval of a private boat dock for Sansom on Fort Loudoun Lake.

Auditors determined that Perry, the former distributor manager, built a personal dock without permission on Kentucky Lake in 2000 and refused to tear it down.

“Perry admitted hoping that his position as general manager of the utility that provided $25 million in revenue to TVA would influence TVA in his favor,” the auditors wrote.

Perry said it was a “mistake” to use his official letterhead stationary to make his case to TVA, the auditors said.

TVA approved Perry’s permit in 2006.