ML20058P978
| ML20058P978 | |
| Person / Time | |
|---|---|
| Issue date: | 08/15/1990 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Donnelly B HOUSE OF REP. |
| Shared Package | |
| ML20058P980 | List: |
| References | |
| NUDOCS 9008210036 | |
| Download: ML20058P978 (2) | |
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UNITED $TATES NUCLEAR REGULATORY COMMISSION g
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August 15,j1990 CHAIRMAN I
l The-Honorable Brian Donnelly U.S. House of Representatives Washington, D.C. '20515
Dear Congressman'Donnelly:
i I am responding to your letter of July 18, 1990, in which you 4
exprested concern about a statement in the U.S. Nuclear Regulatory Commission?s (NRC's) final Regulatory Guide, " Assuring the Availability of Funds for Decommissioning Nuclear Reactors.
t While I cannot comment en the intent of' Congress-ir revising the Internal Revenue-Code in'1984 I can. explain the basis for the flRC position on reliance on estimated tax deductions to fund decommissioning..
Before the Commissinn promulgated it's decommissioning regulations,-
in 1988, it carefully considered the options to en:ure 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 wil1-be available when needed y
to pay the costs of decommissioning.and -hence-does j
not provide reasonable assurance that decommissioning; j
will be. carried out in a manner which protects public health and safety.
Accordingly, the proposed, rule has a
been modified to eliminate the internal reserve as a 1
possible method of providing funds-for' decommissioning.
In reaching this conclusion,_the-Commission noted,that:
although the Atcmic Energy Act and Energy I
Reorganization Act do not permit the NRC to regulate rates or to. supersede the decisions of State or 4
i Federal agencies respecting the. economics of nuclear nn.nr.
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regulatory actions may be necessary to protect the
.public health and. safety, including the p of rules prescribing allowable funding me.romulgation thoos 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 prov' ides that fundi needed for decommissioning are to be accumulated by the time of permanent shutdown.
D pO 9008210036 900815 IE PDR COMMS NRCC CORRESPONDENCE PDC
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2-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.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.
!t is dif ficult 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 H
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 facility from service and the reduction l
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 1
activities as demolition of non-radioactive structures, site restoration, and removal of spent fuel f rom the~ reactor.
These latter activities have been estimated to cost'as much as $50 million to-$60 million at some sites.
Utilities would nct be-restricted by the NRC in using f unds generated f rom ' tax deductions L
for these types of. activities.
In conclusion, we believe that the staf f 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, MW.
Kenneth M. Carr l
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