Appeals court rules against energy company seeking refund in federal nuclear waste tax dispute

By John Breslin | Jul 11, 2018

MIAMI – A federal appeals court recently ruled against a nuclear power plant operator over a claim that it is entitled to a nearly $100 million tax refund for losses caused by paying fees for the disposal of radioactive waste.

The 11th U.S. Circuit Court of Appeals in Miami, in its June 28 ruling, affirmed a decision by the U.S. District Court for the Southern District of Florida that granted summary judgment in favor of the U.S. and against NextEra Energy and its subsidiaries, including Florida Power and Light, which run five nuclear power stations in Florida, Iowa, New Hampshire and Wisconsin.

Spent fuel must be transferred to a permanent storage site under provisions of the 1982 Nuclear Waste Policy Act (NWPA), though no such site yet currently exists in the U.S. Nuclear power companies enter contracts and pay fees into the Nuclear Waste Fund, which is then charged with paying for waste disposal, with the Department of Energy (DoE) responsible for managing the disposal.

NextEra first asked for a refund of $97 million from its tax payments between 1969 and 1995. It argued that there is an ability to claw back a refund from the point a plant goes into operation if they are able to show that it relates to the "decommissioning" of a nuclear facility. The amount is based on $200 million in fees paid between 2003 and 2005 and between 2008 and 2010.

"By April 2015, when the IRS had still made no decision on the validity of its refund claims, NextEra brought this action in federal court," the appeals court wrote in the opinion authored by U.S. Appeals Judge Beverly Martin. "Each count of NextEra’s complaint makes the same argument – that fees paid under an NWPA contract qualify as specified liability losses."

But the appeals court, and the district court in Florida, did not buy the argument, essentially stating that spent nuclear fuel cannot come under the umbrella of decommissioning for tax purposes.

"The district court then considered the government’s alternative argument: that even if disposal of spent nuclear fuel qualified as 'decommissioning,' NextEra is still not entitled to a refund because federal law requires the DoE, not NextEra, to actually dispose of the spent nuclear fuel." Martin wrote. "The district court observed that the NWPA contract fees do not go directly to the task of disposing of radioactive material. Those fees instead go to the Nuclear Waste Fund, which the DOE draws from to support its obligation to permanently dispose of civilian radioactive waste nationwide."

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U.S. Court of Appeals for the Eleventh Circuit Miami Florida Division U.S. District Court for the Southern District of Florida

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