ML20058P902
| ML20058P902 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Crane P, Flippo R, Schulze R HOUSE OF REP. |
| Shared Package | |
| ML20058P907 | List: |
| References | |
| NUDOCS 9008210011 | |
| Download: ML20058P902 (6) | |
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August 15, 1990 CHAIRMAN The Honorable Philip.M. Crane U.S. HouseHof Representatives.
Washington, D.C.
20515 4
Dear Congressman Crane:
I am responding to your" letter of JulyJ13, 1990, in>which you Commission's (NRC's) final Pegulatory Guide, " Assuring theexpressed Availability.of Funds for Decommissioning" Nuclear Reactors."
While I cannot comment on the intent of Congress.in revising the Internal Revenue Code in 1984, lican explain the basistfor the-NRC: position on reliance on estimated tax' deductions to fund decommissioning.
Before.the Commission promulgated its decommissioning regulations in 1988, it carefully considered the: optio'ns to ensure that funds
-would be available.
z decommissioning. the Commission concluded.that:In the preamble to :lts fina1L rulema the internal reserve.does not provide reasonable assurance that funds will be.availabile when needed to pay the' costs of decommissioning and hence-does not provide rensanable assurance.that' decommissioning will be carried out -in a manner which protects public health and safety.
Accordingly,-thelproposeo' rule has-been modified to. eliminate the= interna 1' reserve as a possible method of providing funds'for decommissioning.
In reaching this conclusion, the CommissionEnoted that:
although the Atomic Energy Act and! Energy.
Reorganization Act do not permit thelNRC to regulate rates or-to: supersede the' decisions of'StateLor Federal agencies respecting the economics of nuclear
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+ hay an an+ker4:e the "or te tat: "v:. t re re regulatory actions may be necessary to protect.the public healthiand safety, including the promulgation of rules' prescribing allowable funding methods for meeting decommissioning costs.
53 FR 24018 at p. 24033,' June 27, 1988 Sections 50.75(e)(1)(ii) and 50.82(c)(1)- of.10 CFR also -provide that funds needed for decommissioning are to be accumulated by the
' time of permanent shutdown.
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The Commission believes that relying on future tax deductions which may become available at the time the plant is decommissioned is a form of internal reserve and thus prohibited by.the NRC's decommissioning rule.
Funds generated by tax deductions would flow directly to a company and thus, by definition, are internal rather than external reserves.
In addition, such tax-deductions would not accrue until after decommissioning work was completed-7.
for a particular tax year.
Thus, such tax deductions could not be used to satisfy the regulatory requirement that necessary decommissioning fundsLbe accumulated before the. start of the decommissioning process.
We also note that decommissioning activities will not commence until well into the next century.
I t' is difficult to predict both future tax rates and a utility's financial ability to convert tax deductions into actual funds that the utility could use to finance decommissioning activities if, for example, it did not have sufficient income from which to deduct decommissioning expenses.
We believe that the value of tax deductions so far in the future is subject to considerable uncertainty, thereby further reducing the assurance that funds may be available for decommissioning.
It should be noted that our decommissioning funding regulations in Part 30 impose requirements with regard to funds needed for the saf e removal of a nuclear f acility ' f rom service and the-reduction of residual radioactivity to a level that permits release of the property for unrestricted use and termination of the license.
Those regulations do not impose requirements-on funding such activities as demolition-of non radioactive structures,' site restoration, and removal of spent-fuel from-the reactor.
These latter activities have been estimated to cost as much as $50 million to $60 million at some sites.
Utilities would net be restricted by the NRC in using funds generated from tax deductions for these types of activities.
In conclusion, we believe that the staff guideline currecdy interprets the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act'of 1974, as amended, and the' Commission's existing decommissioning funding regulations.
I trust that this explains the basis for the NRC position in this matter.
Sincerely, AW.
Kenneth M. Carr i
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August-15,.1990 CHAIRMAN I
The-Honorable Ronnie G. Flippo U.S. House of_ Representative
' Washington, D.C.
20515
Dear Congressman Flippo:
1 'am-responding to your-letter of July 13,.1990, in which you expressed concern about a statement i n the U.S. Nuclear Regulatory a
-Commission's (NRC's) final RegLlatory Guide, " Assuring the 4
Availability of Funds for Decommissioning Nuclear Reactors."
4 While'l cannot comment on the intent of Congress in revising the l
Internal Revenue Code in 1984, I can explain =the-basis for the NRC position on reliance on estimated tax deductions to-fund decommissioning.
Before the Commission promulgated its decommissioning-regulations in 1988, it carefully considered the options to ensure that. funds l
would be available.
In: the preamble to' its final rulema king on i-decommissioning, the Commission concluded that:
the internal reserve does not provide reasonable assurance that funds will be available when'needed.
j to pay the costs of decommissioning and hence.does not provide reasonable assurance that decommissioning will be carried out in a manner which protects public l
health and safety.. Accordingly,. the proposed ~ rule has L
been modified to eliminate the internal reserve as a possiblemethodof}providingfundsfordecommissioning..
In reaching this conclusion, the' Commission noted that:.
1 i
although the Atomic Energy Act and-Energy l
Reorganization A'ct ;do not permit the NRC 'tcr regulate rates or to supersade the decisions of State or r
L Federal agencies respecting the economics ~of nuclear.
nnwar; tboy an m y + k e r d :e + 5 e *!PC-t e :: Me wh: t e.f er regulatory actions:may be necessary-to-protect the-public health and safety,; including the promulgation..
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of rules prescribing allowab.le. funding methods for L
meeting decommissioning costs.
L 53 FR 24018 at p. 24033/. June 27, 1988
-l Sections 50.75(e)(1)(li)land 50.82(c)(1) :f 10;CFR also provide-.
that funds needed'for decommissioning are to be accumulated'by the; l
time of permanent shutdown.
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The Commission believes that relying on future tax deductions l'
which may become available at the time the plant is decommissioned i
is a form of internal reserve and thus prohibited by the NRC's decommissioning rule.
Funds generated by tax deductions would flow directly to a company and -thus, by definition, are internal rather than external reserves.
In addition, such tax deductions would_ not accrue until af ter decommissioning work was completed for a particular tax year.
Thus, such tax deductions could not be used to satisfy the regulatory requirement that necessary decommissioning funds be accumulated before the start of the decommissioning process.
We also note that decommissioning-activities will not commence until well into'the next century..
It i
is difficult to predict both future tax rates and a utility's financial ability to convert tax deductions into actual-funds that the utility coulc use to finance decommissioning activities if, for example, it did not have sufficient income.from which to deduct decommissioning expenses.
We believe that the value of tax deductions so f ar in the future is subject to considerable uncertainty, thereby further reducing the assurance that funds may be available for decommissioning.
It should be noted that our decomn.issioning funding regulations in Part 50 impose requirements with. regard to funds needed for the safe removal of a nuclear facility from service and.the reduction of residual radioactivity to a level that permits release of the property for 41 restricted use and termination of the license.
Those regula0 ;ons do not impose requirements:on funding such activities as demolition of non-radioactive structures, site i
restoration, and removal of spent fuel from the reactor.
These latter activities have been estimated to cost as much as $50-million to $60 million at Lome sites.
Utilities wouid not be restricted by the NRC in using. funds generated from tax deductions for these types of activities.
In conclusion, we believe that the staff guideline currectly interprets the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and the Commission's existing decommissioning funding regulations.
I. trust that this-explains the basis for the NRC position in this matter.
Sincerely, 4
dmAw.L Kenneth M. Carr
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August 15,- 1990 CHAIRMAN The'Hanorable Richard T. Schulze U.S. House of' Representatives
. Washington, D.C.
20515 i
Dear Congressman Schulze:
1 I am responding to your letter of July 13. 1900, in which you expressed concern-about a statement in the U.S. Nuclear Regulatory Commission's (NRC's1 final Regulatory Guide, " Assuring the i
Availability of Funds for DecommissioningcNuclear Reactors."
While i c6nnot comment on the intent vi Congress in revising the Internal Revenue Code in 1984, I can explain the basis for the' NRC pcsition on reliance on estimated tax deductions to fund decommissioning.
i
.1 Before the Commission promulgated-its decommissioning regulations in 1988, it carefully considered the options to ensure-that funds would be available.
In the preamble to :its final rulemaking on decommissioning, the Commission concluded that:
the internal reserve does not provide reasonable assurance that funds will be available when needed to pay the costs of decommissioning and hence does not provide reasonable assurance that' decommissioning j
will be carried out in a manner which protects-public l
health and safety.
Accordingly..the' proposed rule has 1
been modified to eliminate Lthe internal reserve as er 1
possible method of providing funds for_ decommissioning.
In reaching this conclusion, the Commission noted that:
61though the Atomic Energy Act and Energy-Reorganization Act do not permit the NRC to regulate
(
rates or to supersede the decisions Lof State or Federal agencies respecting the-economics-of nuclear
- awar,
'tey c0 :utheri:n +": Snc :: ::he what:yer regulatory actions may be necessary to protectithe public health snd safety, including the promulgation-of rules prescribing allowable funding methods for meeting decommissioning costs.
53 FR 24018 at p. 24033, June 27, 1988 Sections 50.75(e)(1)(ii) and 50.82(c)(1) of 10 CFR also-provide-that funds'needed for decommissioning are to be accumulated by the time of permanent shutdown.
2 1
The Commission believes that relying on future tax deductions which may become available at the time the plant is decommissioned is a form of internal reserve and thus prohibited by the NRC's decommissioning rule.
Funds generated by tax deductions would-flow directly to a company and thus, by definition, are internai i
rather than external reserves.
In addition, such tax deductions would not accrue until after decommissioning work was completed for a particular tax year.
Thus, such tax deductlens could not be used to satisfy the regulatory requiremer.t thet ne:assary decommissioning funds be accumulated before the start of the decommissioning process..We also note that decommissioning activities will not commence until well into the next century.
I t-is difficult to predict-both future tax rates and a utility's financial. ability to convert tax deductions into actual funt:s that the utility could use to finance decommissioning activities it, for example, it did not have sufficient income from which to deduct decommissioning expenses.
We believe that the value of tax deductions so far in the future is subject to considerable uncertainty, thereby further reducing the assurance that funds may be available for decommissioning.
It should be acted that cur decommissioning funding regulations in Part 50 impose "equirements with regard to funds needed for the-safe removal of a nuclear facs'ity from service and the reduction of residual redioactivity to a level that permits release of the property for unrestricted use and termination of the license.
Those regulations do not impose requirements on funding such activities as demolition of non-radioactive structures, sste restoration, and removal of spent fuel from the reactor.
These satter activities have been estimated to cost 6s much at $50 million to $60 million at some sites.
Utilities would Wrt be restricted by the NRC in using funds generated from tax deductions f
for these types of activities.
In conclusion, we believe that the staff guidviine currectly interprets the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and the Commission's existing decommissioning funding regulations.
I trust that this explains the basis for the NRC position in this matter, i
Sincerely,
. +h.
t r,enneth M. Carr i
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