ML20058P929
| ML20058P929 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Lent N HOUSE OF REP. |
| Shared Package | |
| ML20058P932 | List: |
| References | |
| NUDOCS 9008210021 | |
| Download: ML20058P929 (2) | |
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NUCLEAR REGULAYORY COMMISSION
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%,.....,o August 15, 1990 CHAIRMAN
.The Honorable Norman F. Lent i
.U.S. House of Representatives-Washington, D.C.
20515 4
Dear Congressm'an. Lent:
L l'am responding to your letter of June 27, 1990 'in which_you expressed concern about a statement in the U.S. Nuclear' Regulatory Commission's:(NRC's) final Regulatory Guide, " Assuring-the i
Availability of Funds for.Decommissionir.g, Nuclear. Reactors."
1 While I cannot comment on the intent of Congress:in revising the-y internal Revenue Code in 1984, 1 car explain the basis for,the' W
HRC position on reliance on estimatec tax 7 deductions to fund decommissioning.
f Before-the Commission promulgated.its decommissioning regulations.
in 1988, it carefully considered the options to ensure that funds would bt available.
In the' preamble to! its: final rulemaking 'on decommissioning, the Commi::fon. concluded that:
q the internal reserve do'es: not provide reasonable assurance that funds will becavailable'when needed to pay the costs'of decommissioning"and-hence does not provide reasonable-assurance that decommissioning will be carried out in a manner idiich: protects public l
health and safety; Accordingly; the proposed rule-has been modified to eliminate the internal reserveLas a possible method of providing funds for decommissioning.
j In reaching this conclusion, the Commission noted that:~
although the Atomic Energy Act and Energy Reorganization Act do not permit the NRC to regulate rates or to supersede the_ decisions ~of State:or.
federal agencies respecting the economics;of nuclear war-
"ey d e : u t h e r i : e N " r " ' :. n u c.d, t t a c,
re1ulatory actions may be necessary.to protect the j
putlic health and safety.; including.the pronulgation 1
of rules prescribing allowable fundin; methods for i
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 en future tax deductions which may become available at the time-the plant is decommissioned is a form of internal reserve and thus prohibited oy the NRC's decommissioning rule.
Funds generated by tax.d. eductions would flow directly to a company and thus, by defin'"on, are internal rather than external reserves.
In addition, such tax deductions i
i would not accrue until after decommissioning work was completed for a particular tax year. -Thus, such tax deductions could not bt.
used-to satisfy the regulatory requirement that necessary i
decommissioning funds be accumulated before the start of the decommissienu.S process.
We also note that decommissioning i
activities wr tot commence until well into the next century.
It is difficult tt :redict 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 50 impose requirements with regard to funds needed for.the safe removal of a nuclear f acility from service and the reduction of residual radioactivity to a level that permits release of_ the property for unrestricted use and termination of the license.
1 Those regulations do not imposefrequirements_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 not be restricted by the NRC in using funds generated from tax deductions for these types of activities.
In conclusion, we believe that the staf f guideline correctly 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, i
wAW.
Kenneth M. Carr
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