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

Heading: governing statutes and regulations

Text: 1. Commissioning and Decommissioning a Nuclear Power Plant The Atomic Energy Act authorizes the Nuclear Regulatory Commission (“NRC”) to issue licenses for the operation of nuclear power plants. 42 U.S.C. § 2131. Those licensed to run nuclear power plants must adhere to strict regulatory guidelines promulgated by the NRC. See id. § 2133(a), (b). For example, the NRC will not terminate a license until a nuclear facility is free of radioactive contamination. See 10 C.F.R. § 50.2 (“Decommission means to remove a facility 1 It was initially believed that spent nuclear fuel could be reprocessed and used again. However, “expectations for reprocessing remained unfulfilled,” and current operational plans require storage and disposal of spent nuclear fuel. See Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 195, 103 S. Ct. 1713, 1717–18 (1983). 3 Case: 17-12304 Date Filed: 06/28/2018 Page: 4 of 16 or site safely from service and reduce residual radioactivity to a level that permits . . . [r]elease of the property . . . and termination of the license.”). Over time, our nation began to see a buildup of spent nuclear fuel. In response, Congress enacted the Nuclear Waste Policy Act of 1982 (“NWPA”), Pub. L. No. 97-425, 96 Stat. 2201 (1983), to provide for permanent disposal of the spent fuel. See 42 U.S.C. § 10131(b)(1). Under the NWPA, the Department of Energy (“DOE”) is responsible for depositing spent nuclear fuel in a permanent disposal site. See Nat’l Ass’n of Regulatory Util. Comm’rs v. Dep’t of Energy, 680 F.3d 819, 821 (D.C. Cir. 2012). However, even now, no such storage site exists in the United States. Id. To fund its disposal of spent nuclear fuel, the DOE enters into contracts with nuclear facilities that obligate the facilities to pay a fee of 1.0 mil 2 per kilowatthour of electricity generated. 3 42 U.S.C. § 10222(a)(1)–(2); see also 10 C.F.R. § 961.11 (codifying standard NWPA contract). These fees do not go directly to the DOE, but instead are paid to the Treasury and placed into the Nuclear Waste Fund. 2 A “mil” is 1/10 of a cent. 3 The NWPA requires the DOE to periodically re-evaluate the fee amount to avoid collecting “either insufficient or excess revenues.” 42 U.S.C. § 10222(a)(4). The DOE has continuously maintained the fee at $1.0 mil per kilowatt-hour and has never suggested any alternatives. Ala. Power Co. v. U.S. Dep’t of Energy, 307 F.3d 1300, 1303–04 (11th Cir. 2002); see also Nat’l Ass’n of Regulatory Util. Comm’rs v. Dep’t of Energy, 851 F.2d 1424, 1426 (D.C. Cir. 1988) (“Each year since 1983, the Secretary has published an annual ‘Fee Adequacy Report’ concluding, not unlike Goldilocks, that the statutory fee is not too high, and not too low, but just right.”). 4 Case: 17-12304 Date Filed: 06/28/2018 Page: 5 of 16 42 U.S.C. § 10222(a)(3), (c). The DOE is then authorized to pay from the Nuclear Waste Fund for the disposal of radioactive waste. Id. § 10222(d). “In paying such a fee, the person delivering spent fuel . . . to the Federal Government shall have no further financial obligation to the Federal Government for the long-term storage and permanent disposal of such spent fuel . . . .” Id. § 10222(a)(3). NextEra entered into NWPA contracts with the DOE. It paid approximately $200 million in contract fees to the Nuclear Waste Fund during the years of 2003– 05 and 2008–10. 2. Net Operating Losses and Carryback Provisions NextEra makes its claims for a tax refund based on the tax code’s treatment of net operating losses. A net operating loss exists whenever a taxpayer has more available deductions in a given year than the taxpayer is allowed to take. See 26 U.S.C. § 172(c) (2012). The tax code allows a taxpayer to “carryover” those extra deductions to a future tax year, or to “carryback” the deductions to a previous tax year. See id. § 172(b)(1)(A). Ordinarily a carryback is limited to the two tax years preceding the year of the net operating loss. Id. § 172(b)(1)(A)(i). But certain types of net operating losses are allowed a longer carryback period. 5 Case: 17-12304 Date Filed: 06/28/2018 Page: 6 of 16 At all times relevant to this case, Section 172(f) of the tax code provided for one of the extended carryback periods.4 This section defined a “specified liability loss,” which had a carryback period of ten years. See id. § 172(b)(1)(C), (f). Section 172(f) allowed these longer carryback periods for certain liabilities, including “[a]ny amount allowable as a deduction under this chapter . . . which is in satisfaction of a liability under a Federal or State law requiring . . . the decommissioning of a nuclear power plant (or any unit thereof).” Id. § 172(f)(1)(B)(i)(II). This type of liability could be considered a specified liability loss only if “the act (or failure to act) giving rise to such liability occurs at least 3 years before the beginning of the taxable year.” Id. § 172(f)(1)(B)(ii)(I). Yet another provision of the Internal Revenue Code provided an even longer carryback period for “that portion of a specified liability loss which is attributable to amounts incurred in the decommissioning of a nuclear power plant (or any unit thereof).” Id. § 172(f)(3). This type of loss could be carried back to “the taxable year in which such plant (or unit thereof) was placed in service.” Id. § 172(f)(3)(A). Section 172 does not define the term “decommissioning of a nuclear power plant.” 4 In 2017, this provision was removed from the tax code. This change in the tax code has no bearing on how we decide this case. See Sorenson v. Sec’y of the Treasury, 475 U.S. 851, 855 & n.4, 106 S. Ct. 1600, 1604 & n.4 (1986) (evaluating refund claim under tax code in effect at time the tax was paid). 6 Case: 17-12304 Date Filed: 06/28/2018 Page: 7 of 16