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Refund denied, radioactive waste disposal payments not for nuclear decommissioning

Radioactive waste disposal payments

The U.S. Court of Appeals for the Eleventh Circuit today affirmed a federal district court’s decision to deny the taxpayer’s claim for a tax refund for net operating losses (NOLs) resulting from fees that the taxpayer paid to the Nuclear Waste Fund for the disposal of radioactive waste.


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The case is: NextEra Energy, Inc. v. United States, No. 17-12304 (11th Cir. June 28, 2018). Read the Eleventh Circuit’s decision [PDF 93 KB]


The taxpayer operated nuclear power plants in Florida and other states. At the time of this decision, all plants are currently in operation.

Pursuant to the rules governing the permanent disposal of radioactive waste, the taxpayer entered into agreements under the Nuclear Waste Policy Act of 1982 (NWPA) by which the taxpayer paid the Department of Energy about $200 million in contract fees to the Nuclear Waste Fund during the years 2003-2005 and 2008-2010. 

The taxpayer filed claims for tax refunds of approximately $97 million based on NOLs from the NWPA fees, and eventually initiated a tax refund suit.

Specifically, the taxpayer asserted that the fees paid under an NWPA contract qualify as specified liability losses under section 172(f)—the Code provision that allows a longer carryback period for NOLs for the “portion of a specified liability loss which is attributable to amounts incurred in the decommissioning of a nuclear power plan (or any unit thereof).”

The district court granted summary judgment for the government, finding that spent nuclear fuel was neither “commissioned” nor “decommissioned” and that the NWPA contract fees paid by the taxpayer did not qualify as specified liability losses under section 172(f). The federal district court noted that the NWPA contract fees did not go directly to the task of disposing of radioactive material, but instead those fees go to the Nuclear Waste Fund from which the Energy Department draws funds to support its obligation to dispose of civilian radioactive waste.

The Eleventh Circuit today affirmed. The appeals court held that the NWPA fee payments were not made for an act that qualified as nuclear decommissioning, were not done pursuant to a law that required nuclear decommissioning, and that the payments were made more than three years prior to the claimed loss.

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