Massive Tax Return on Radioactive Waste Denied

ATLANTA (CN) – The 11th Circuit shot down a novel request Thursday for NextEra Energy to get a tax refund on the $97 million it paid to dispose of nuclear waste.

Citing the net operating losses from fees it had paid pursuant to the 1982 federal law known as the Nuclear Waste Policy Act, NextEra sought a refund in June 2012 from tax payments made between 1969 and 1995.

During the years of its operating losses — 2003 to 2005 and 2008 to 2010 — NextEra paid approximately $200 million in fees to the U.S. Department of Energy’s Nuclear Waste Fund.

To claim a refund, NextEra pointed to a provision of the IRS code that lets taxpayers carry back 10 years of excess tax deductions for a limited number of circumstances

“Decommissioning a nuclear power plant (or any unit thereof)” is one such limited liability loss that the law covers, but tax officials deny that nuclear-waste-disposal fees should qualify.

NextEra appealed to the 11th Circuit after a federal judge ruled against it at summary judgment.

At oral arguments last month, the government insisted that NextEra was mischaracterizing operational costs as decomissioning costs.

“Not to be glib,” Justice Department attorney Ivan Dale said, “but if I rent an apartment, I have the obligation to get the waste out of the apartment before giving it over to the next renter. I may pay someone to move it out for me. But I can’t claim all of those fees I paid to the municipality every day I lived there as moving expenses.”

Thursday’s ruling from the three-judge panel in Atlanta echoes this point.

“Spent nuclear fuel must be periodically disposed of, just as trash must be removed from a home,” U.S. Circuit Judge Beverly Martin wrote for the court. “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.’”

Just because decommissioning encompasses the removal of radioactive material, “every removal of spent nuclear fuel during the life of the facility is not itself an act of decommissioning,” Martin added.

“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,’’ the ruling states.

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