Opinion ID: 4289552
Heading Depth: 2
Heading Rank: 1

Heading: definition of decommissioning

Text: Under Section 172(f), the extended carryback period applies only when costs were incurred under a law requiring the “decommissioning of a nuclear power plant (or any unit thereof).” NextEra argues that disposing of spent nuclear fuel is “essential to commissioning and decommissioning a nuclear power plant.” Primarily, NextEra argues that because its plants cannot be fully decommissioned 9 Case: 17-12304 Date Filed: 06/28/2018 Page: 10 of 16 until all radioactive material is removed, the term “decommissioning” must encompass the removal of spent nuclear fuel. This argument is flawed. Spent nuclear fuel must be periodically disposed of, just as trash must be removed from a home. But the regular removal of household trash does not mean the occupants of the home are closing it down. In the same way, the ordinary disposal of spent nuclear fuel is an operational necessity for running a nuclear power plant. It is not an indication that the facility is being “remove[d] . . . safely from service.” See 10 C.F.R. § 50.2. Although the removal of radioactive material is a necessary step for decommissioning, every removal of spent nuclear fuel during the life of the facility is not itself an act of decommissioning. After all, if a nuclear plant operated in perpetuity—and never decommissioned—spent nuclear fuel would still need to be removed because the fuel “will remain dangerous for time spans seemingly beyond human comprehension.” New York, 681 F.3d at 474 (quotation omitted). NextEra points to various federal regulations to support its argument that “[d]ecommissioning a nuclear power plant is about ridding the site of radioactive waste and spent nuclear fuel so the license can be terminated.” The government answers with its own regulations, and in particular the parties have argued whether 26 C.F.R. § 1.468A-1 is instructive in answering this question. This regulation defines “nuclear decommissioning costs” to include “expenses to be incurred in 10 Case: 17-12304 Date Filed: 06/28/2018 Page: 11 of 16 connection with the entombment, decontamination, dismantlement, removal and disposal of the structures, systems and components of a nuclear power plant, whether that nuclear power plant will continue to produce electric energy or has permanently ceased to produce electric energy.” 26 C.F.R. § 1.468A-1(b)(6). However, that regulation expressly excludes “expenses to be incurred in connection with the disposal of spent nuclear fuel under the [NWPA].” Id. NextEra argues that the exclusionary language is insignificant because the NRC had already promulgated other regulations dealing with that issue and didn’t need to duplicate funding regulations. Parsing these definitions is unnecessary. Even if we accept these regulatory definitions as relevant, NextEra would have succeeded only in showing again that removing spent nuclear fuel is a necessary part of decommissioning. NextEra has yet to demonstrate that removing spent nuclear fuel is itself an act of removing a part of a nuclear power plant from service, i.e., “decommissioning.” In our view, disposing of spent nuclear fuel is best thought of as a periodic operational expense and does not qualify as “decommissioning” all or part of a nuclear power plant. NextEra also argues that the cost of permanent disposal of spent nuclear fuel should be treated the same as costs incurred to temporarily store spent nuclear fuel pending delivery of that fuel to the DOE for permanent disposal. Such temporary storage costs are considered “nuclear decommissioning costs” under 26 C.F.R. 11 Case: 17-12304 Date Filed: 06/28/2018 Page: 12 of 16 § 1.468A-1(b)(6). However, permanent storage costs have typically been treated differently than temporary storage costs. Permanent storage costs are funded on a collective basis through the payment of NWPA contract fees, and the amount of those fees is based on the amount of electricity produced each quarter. See 42 U.S.C. § 10222(a)(1)–(2); see also 10 C.F.R. § 961.11. In that sense, NWPA contract fees are akin to a tax on nuclear energy production for the purpose of funding the DOE’s total cost of permanently storing all civilian spent nuclear fuel. In contrast, temporary storage costs are borne on an individual basis by each power plant and are incurred not when energy is produced, but when spent fuel is removed from the reactor and stored in preparation for eventual removal from the plant. If the plant were decommissioned, it would still bear the costs of temporary on-site storage, even though it would no longer incur any costs for permanent storage. Given these differences, we are not convinced that permanent storage costs must be treated the same as temporary storage costs under Section 172(f).