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107TH CONGRESS

1ST SESSION H. R. 1702

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

to deductions for decommissioning costs of nuclear powerplants.

IN THE HOUSE OF REPRESENTATIVES

MAY 3, 2001

Mr. WELLER (for himself, Mr. CARDIN, Mrs. JOHNSON of Connecticut, Mr.

CRANE, and Mr. FOLEY) introduced the following bill; which was referred

to the Committee on Ways and Means

A BILL

To amend section 468A of the Internal Revenue Code of

1986 with respect to deductions for decommissioning

costs of nuclear powerplants.

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.—
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1 Subsection (b) of section 468A of the Internal Revenue

2 Code of 1986 is amended to read as follows:

3 ‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.—

4 ‘‘(1) IN GENERAL.—The amount which a tax5 payer may pay into the Fund for any taxable year

6 during the funding period shall not exceed the level

7 funding amount determined pursuant to subsection

8 (d), except—

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

10 Federal or State law or regulation (including

11 authorization by a public service commission) to

12 charge customers a greater amount for nuclear

13 decommissioning costs, in which case the tax14 payer may pay into the Fund such greater

15 amount; or

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

17 nuclear powerplant, where the transferor or

18 transferee (or both) is required pursuant to the

19 terms of the transfer to contribute a greater

20 amount for nuclear decommissioning costs, in

21 which case the transferor or transferee (or

22 both) may pay into the Fund such greater

23 amount.

24 ‘‘(2) CONTRIBUTIONS AFTER FUNDING PE25 RIOD.—Notwithstanding any other provision of this
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1 section, a taxpayer may make deductible payments

2 to the Fund in any taxable year between the end of

3 the funding period and the termination of the license

4 issued by the Nuclear Regulatory Commission for

5 the nuclear powerplant to which the Fund relates

6 provided such payments do not cause the assets of

7 the Fund to exceed the nuclear decommissioning

8 costs allocable to the taxpayer’s current or former

9 interest in the nuclear powerplant to which the Fund

10 relates. The foregoing limitation shall be applied by

11 taking into account a reasonable rate of inflation for

12 the nuclear decommissioning costs and a reasonable

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

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

15 (b) DEDUCTION FOR NUCLEAR DECOMMISSIONING

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

17 of such Code is amended to read as follows:

18 ‘‘(2) DEDUCTION OF NUCLEAR DECOMMIS19 SIONING COSTS.—In addition to any deduction under

20 subsection (a), nuclear decommissioning costs paid

21 or incurred by the taxpayer during any taxable year

22 shall constitute ordinary and necessary expenses in

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

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

25 section 468A of such Code is amended to read as follows:
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1 ‘‘(d) LEVEL FUNDING AMOUNTS.—

2 ‘‘(1) ANNUAL AMOUNTS.—For purposes of this

3 section, the level funding amount for any taxable

4 year shall equal the annual amount required to be

5 contributed to the Fund in each year remaining in

6 the funding period in order for the Fund to accumu7 late the nuclear decommissioning costs allocable to

8 the taxpayer’s current or former interest in the nu9 clear powerplant to which the Fund relates. The an10 nual amount described in the foregoing sentence

11 shall be calculated by taking into account a reason12 able rate of inflation for the nuclear decommis13 sioning costs and a reasonable after-tax rate of re14 turn on the assets of the Fund until such assets are

15 anticipated to be expended.

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

17 for a Fund shall end on the last day of the last tax18 able year of the expected operating life of the nu19 clear powerplant.

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

21 purposes of this section, the term ‘nuclear decom22 missioning costs’ shall mean all costs to be incurred

23 in connection with entombing, decontaminating, dis24 mantling, removing, and disposing of a nuclear pow25 erplant, and shall include all associated preparation,
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1 security, fuel storage, and radiation monitoring

2 costs. The taxpayer may identify such costs by ref3 erence either to a site-specific engineering study or

4 to the financial assurance amount calculated pursu5 ant to section 50.75 of title 10 of the Code of Fed6 eral Regulations. The term shall include all such

7 costs which, outside of the decommissioning context,

8 might otherwise be capital expenditures.’’.

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

10 this section shall apply to amounts paid after May 3,

11 2001, in taxable years ending after such date.

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