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106TH CONGRESS

1ST SESSION S. 1308

To amend section 468A of the Internal Revenue Code of 1986 with respect

to deductions for decommissioning costs of nuclear power plants.

IN THE SENATE OF THE UNITED STATES

JUNE 30, 1999

Mr. MURKOWSKI (for himself and Mr. BREAUX) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend section 468A of the Internal Revenue Code of

1986 with respect to deductions for decommissioning

costs of nuclear power plants.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Nuclear Decommis5 sioning Funds Clarification Act’’.

6 SEC. 2. NUCLEAR DECOMMISSIONING RESERVE FUND.

7 (a) INCREASE IN AMOUNT PERMITTED TO BE PAID

8 INTO NUCLEAR DECOMMISSIONING RESERVE FUND.—

9 Subsection (b) of section 468A of the Internal Revenue

10 Code of 1986 is amended to read as follows:
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1 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

2 ‘‘(1) IN GENERAL.—The amount which a tax3 payer may pay into the Fund for any taxable year

4 during the funding period shall not exceed the level

5 funding amount determined pursuant to subsection

6 (d), except—

7 ‘‘(A) where the taxpayer is permitted by

8 Federal or State law or regulation (including

9 authorization by a public service commission) to

10 charge customers a greater amount for nuclear

11 decommissioning costs, in which case the tax12 payer may pay into the Fund such greater

13 amount; or

14 ‘‘(B) in connection with the transfer of a

15 nuclear powerplant, where the transferor or

16 transferee (or both) is required pursuant to the

17 terms of the transfer to contribute a greater

18 amount for nuclear decommissioning costs, in

19 which case the transferor or transferee (or

20 both) may pay into the Fund such greater

21 amount.

22 ‘‘(2) CONTRIBUTIONS AFTER FUNDING PE23 RIOD.—Notwithstanding any other provision of this

24 section, a taxpayer may make deductible payments

25 to the Fund in any taxable year between the end of
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1 the funding period and the termination of the license

2 issued by the Nuclear Regulatory Commission for

3 the nuclear powerplant to which the Fund relates

4 provided such payments do not cause the assets of

5 the Fund to exceed the nuclear decommissioning

6 costs allocable to the taxpayer’s current or former

7 interest in the nuclear powerplant to which the Fund

8 relates. The foregoing limitation shall be applied by

9 taking into account a reasonable rate of inflation for

10 the nuclear decommissioning costs and a reasonable

11 after-tax rate of return on the assets of the Fund

12 until such assets are anticipated to be expended.’’.

13 (b) DEDUCTION FOR NUCLEAR DECOMMISSIONING

14 COSTS WHEN PAID.—Paragraph (2) of section 468A(c)

15 of such Code is amended to read as follows:

16 ‘‘(2) DEDUCTION OF NUCLEAR DECOMMIS17 SIONING COSTS.—In addition to any deduction under

18 subsection (a), nuclear decommissioning costs paid

19 or incurred by the taxpayer during any taxable year

20 shall constitute ordinary and necessary expenses in

21 carrying on a trade or business under section 162.’’.

22 (c) LEVEL FUNDING AMOUNTS.—Subsection (d) of

23 section 468A of such Code is amended to read as follows:

24 ‘‘(d) LEVEL FUNDING AMOUNTS.—
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1 ‘‘(1) ANNUAL AMOUNTS.—For purposes of this

2 section, the level funding amount for any taxable

3 year shall equal the annual amount required to be

4 contributed to the Fund in each year remaining in

5 the funding period in order for the Fund to accumu6 late the nuclear decommissioning costs allocable to

7 the taxpayer’s current or former interest in the nu8 clear powerplant to which the Fund relates. The an9 nual amount described in the foregoing sentence

10 shall be calculated by taking into account a reason11 able rate of inflation for the nuclear decommis12 sioning costs and a reasonable after-tax rate of re13 turn on the assets of the Fund until such assets are

14 anticipated to be expended.

15 ‘‘(2) FUNDING PERIOD.—The funding period

16 for a Fund shall end on the last day of the last tax17 able year of the expected operating life of the nu18 clear powerplant.

19 ‘‘(3) NUCLEAR DECOMMISSIONING COSTS.—For

20 purposes of this section, the term ‘nuclear decom21 missioning costs’ shall mean all costs to be incurred

22 in connection with entombing, decontaminating, dis23 mantling, removing, and disposing of a nuclear pow24 erplant, and shall include all associated preparation,

25 security, fuel storage, and radiation monitoring
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1 costs. The taxpayer may identify such costs by ref2 erence either to a site-specific engineering study or

3 to the financial assurance amount calculated pursu4 ant to section 50.75 of title 10 of the Code of Fed5 eral Regulations. The term shall include all such

6 costs which, outside of the decommissioning context,

7 might otherwise be capital expenditures.’’.

8 (d) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to amounts paid after May 27,

10 1999, in taxable years ending after such date.

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