ML20083C376
| ML20083C376 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf  |
| Issue date: | 09/16/1983 |
| From: | Conner T CONNER & WETTERHAHN, MISSISSIPPI POWER & LIGHT CO. |
| To: | Case E Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8312230101 | |
| Download: ML20083C376 (32) | |
Text
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4 e LAW OFFICES GONNER & WETTERHAHN. P.G.
1747 PENNSYLVANT A AVENUE. N. W.
Aux J. E 7 H A IN WASIIINGTON. D. C. 20000
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September 16, 1983 suomg M.OLacM C C11 A. M OO R E. J R.
10B E NT M. PU N L
- r e cornest teoul ass osoo
^%r arwine s := re o CABLE ADDRESSU ATONLAW Mr. Edson G. Case Deputy Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission -
Washington, D.C. 20555 r
In the Matter of Mississippi Power and Light Company (Grand Gulf Nuclear Station, Unit 1)
- Docket No. 50-416
Dear Mr. Case:
The owners of the Grand Gulf Nuclear Station, Unit 1, and the Board of Supervisors of Claiborne County, Mississippi have entered into an agreement to finance certain portions of the facility designed, inter alia, for the abatement of water pollution and atmospheric pollutants and contaminants.
In order to satisfy the pertinent requirements of Section 1.103-8 (g) (2) (i) of the' Internal Revenue Income Tax Regulations, the NRC is requested to certify that the portions of the Station for which certification is sought, as designed, are in furtherance of the purpose of abating or controlling water pollution and atmospheric pollutants or contaminants.
In accordance with our conversation of September 13, 1983, I have attached for your convenience a suggested form of such a certificate which you may wish to use.
Also enclosed for your information is a copy of Section 1.103-8 (g) (2) of the IRS Regulations, the June 20, 1983 Resolution of the Board of Supervisors of Claiborne County, Mississippi authorizing the filing of a petition with the Mississippi Board of Economic Development for the issuance of pollution control revenue bonds, aicopy of the May 12, 1983 IRS ruling issued in connection with this financing, and various materials relating to your previous certification of pollution control facilities for Peach 49 Bottom Atomic Power Station, Units 2 and 3.
9'j 8312230101 FDR ADOCK 0 PDR P
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s LAW OFFICES 4
GONNER & WETTERHAIIN, P.G.
1747 PEN NSYLVANIA AVENU E. N. W.
t nu A E TE HAHw WASitINGTON. D. C. 2 0000
' ' "L" I " ' " * " " " September 16, 1983 f *6 0 s M.OLRON i.,EC s.3 A. M OO M E. J M.
C O D E NT H. Ptl M L rg cor p se t (9091533 3800 Not angstTsu sa n c.
CAGLE ADDRER9: A TO N LAW
. m Mr. Edson G. Case Deputy Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission -
Washington, D.C. 20555 In the Matter of Mississippi Power and Light Company (Grand Gulf Nuclear Station, Unit 1)
- Docket No. S0-416
Dear Mr. Case:
The owners of the Grand Gulf Nuclear Station, Unit 1, and the Board of Supervisors of Claiborne County, Mississippi have entered into an agreement to finance certain portions of the facility designed, inter alia, for the abatement of water pollution and atmospheric pollutants and contaminants.
In order to satisfy the pertinent requirements of Section 1.103-8 (g) (2) (i) of the' Internal Revenue Income Tax Regulations, the NRC is requested to certify that the portions of the Station for which certification is sought, as designed, are in furtherance of the purpose of abating or controlling water pollution and atmospheric pollutants or contaminants.
In accordance with our conversation of September 13, 1983, I have attached for your convenience a suggested form of such a certificate which you may wish to use.
Also encicsed for your information is a copy of Section 1.103-8 (g) (2) of the IRS Regulations, the June 20, 1983 Resolution of the Board of Supervisors of Claiborne County, Mississippi authorizing the filing of a petition with the Mississippi Board of Economic Development for the issuance of pollution control revenue bonds, a. copy of the May 12, 1983 IRS ruling issued in connection with this financing, and various materials relating to your previous certification of pollution control facilities for Peach Bottom Atomic Power Station, Units 2 and 3.
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We greatly appreciate the cooperation from you and your staff.
Sincerely,
- - ; , l. '
Troy B. onnat, Jr.
Counsel for Mississippi Power and Light Company TBC/ sis .
Enclosures l
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i Docket No. 50-416 Grand Gulf Nuclear' Station, Unit 1 CERTIFICATE I, Edson G. Case, Deputy Director, Office of Nuclear Reactor Regulation of the United States Nuclear Regulatory Commission, being duly authorized, certify as follows:
The closed loop 6ooling water system, the components of the radwaste and other waste cyctcms, and the Skyshine Shielding System described in the pro,iect description contained in the attached " Resolution Authorizing the Filing of Petition with the Mississippi Board of Economic Development for Approval of the Issuance of Pollution Control Revenue Bonds'in Principal Amount not to Exceed One Hundred Million Dollars ($100,000,000) and for Related Purposes" by the Board of Supervisors of Claiborne County, Mississippi, for the Mississippi Power and Light Company's Grand Gulf Nuclear Station, Unit 1, are, as designed, in i
- )
E furtherance of the purpose of controlling water pollution ,
and atmospheric pollutants, respectively.
FOR THE NUCLEAR REGULATORY COMMISSION Edson G. Case Dated at Bethesda, Maryland -
this day of , 1983 L
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1 150,243 Industrial Development Bonds I ment. In such a case, the ratio presenbed in i l.'103 the time the obligatio s. the proceeds of which are to be 8(3X3)(iii) would allocate 40 percent of the cost of the used to provide such facilities, are issued.
property to the function which res alts in an economic '
., bene 6t and the remaining 60 percent of the cost of the (ii) Property is described in this subdivision if it (A) is property would quahfy as an expenditure for a pollution either of a character subject to the allowance for deprecia.
control faciLty, tion provsded in section 167 or land, and (B) is used in
- whole or in part to abate or control water or atmosnhene The proposed amendm nt provides that the regulations pollution or contamination by removing. altenng, espos.
am as amended apply to obligatsons issued after August 20, ing, or storing pollutants, contammants, waste or heat
'
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1975. However, at the option ut the issuer. the status of (hereinafter individually and collectively referred to as a g
obligations issued before November 19. 1975, or obligauons pollutant). Property is not desenbed in the preceding issued with respect to facilities the constrvction. reconstrue. sentence unless it is a unit which is discrete and which tion, or acquisition (induding, in the case of an acquisition, performs in whole or in part one or more of the functans a binding contract to acquire such facility) of which com. referred to in such sentence and which cannot be further mences before November 19, 1975, may be determined reduced in size without losing one of such characteristics.
, without regard to the amendment. The term " pollutant" does not include any matenal or heat Proposed amendments to the regulations. To provide unless such matenal or heat is in a state or form such that rules defning facilities that qualify as air or water pollution its discharge or release would result in water or atmos-control facihties and to provide rules with respect to the phene pollution or contamination. Property is not de-use of bond proceeds for exempt facilities. the Income Tax scnbed in this subdivision to the extent that such property
' , Regulations (26 CFR Part 1) under sections 10XcX4) and arcias the creatica of pollutants. Property which is used 103(cX4XF) of the Internal Revenue Code of 1954 are solely for the processing or manufactunng of matenal or amended as follows: heat after such material or heat is no longer a poilutant is Section 1.103-8 is amended by adding two new sentences n t pr perty desenbed in this subdivision. Property is not a at the end of paragraph (aXIXi) and by revising paragraph Pollution control facility to the extent that such property .-
.- (g). The new and revised provisions read as follows: treat 8 r processes a matenal in such,a manner as to prevent the discharge or release of pollutants when such i1.103-8 Interest on bonds to finance certain exempt matenal is subsequently used. Property to be used in the facilities. control of water pollution includes the t ecessary intercept-(s) In general-(l) General rule. (i) (made 6nal by T.D. ing 5 ewers. pumping. power, and other equipment, and
/ 7511. 9/30/77] their appunenances. Such property is necessary if it re.
moves, alters, disposes of. or stores a pollutant or is functionally related and subordinate to property used to (g) Alt or water pollution control facilities-(l) General control water pollution. In the case of property which rule. Section 103(cX4XF) provides that section 103(c)(1) removes pollutants from fuel, see paragraph (gX2)(iv) of shall not apply to obligations issued by a State of local this section. For inclusion, as property descnbed in this governmental unit which are part of an issue substantially subdivision, of property functionally related and subordi-all of the proceeds of which are to be used to prov-de air or nate to an exempt pollution control facility see paragraph water pollution control facihties. Such facilities are in all (aX3) of this section.
events treated as serving the genert.! public and thus satisfy (iii) Property is not used for the control of pollution to the public use requirement of paragraph (aX2) of this the extent that it-
,-- r 1 section. Proceeds, are used to provide air or water pollution control facihties if they are used to provide preperty which (A) Is designed to prevent the release of pollutants in a major accident, satisfies the requirements of paragraph (gX2) and (3) of this section. Where property has a function other than to ab_are (B) Prevents the release of matenals or heat which would or control water or atmosphenc pollution or contamination endanger the employees of the trade or business in which (hereinafter referred to as " control of pollution"), only the suen property is used (as determined for example by .?
incremental cost of such property is taken into account as Federal. State, or local employee occupational health or -
an c::penditure to provide an air or water pollution control safety standards)*
facility. Rules to determine whether property has any (C) Is used to control materials or heat that traditionally function o.her thn the cont ol of pol!ucon are provided in have been comeolled because their release would constitute paragraph (gX2) and (3) of this section. Rules to determine a nuisance.
N. the incremental cost of such property are provided in paragraph (gX3) of t'e n tection.
that (D) Controls the release of hazardous matenals or heat h would cause an immediate risk of substantial damage /
f G Dednitions. (i) Property is a po!!ution control facility or injury to property or persons, or ,
if it ts property described in paragraph (gX2Xii) of this (E) Controls materials or heat in essentially the same '
section and if either (A) a Federal. State, or local agency manner as the user of such property has previously coa.
exercising junsdiction has certified that the facihty. as trolled such material or heat as a custornary pract.ce for de>igned, is in furtherance of the purpose of abating or reasons other than compliance with pollution control re- ,
controlling atmosphene po!!utants or contaminants, or quirements. If such user previously has not generated such water pollution. as the case may be, or (B) the facihty is matenal or heat at the location where such material or heat - )
' ' ~ " * * ' * * * * " " designed to meet or exceed applicable Federal, State, and is controlled, st.ch cm.omary practne shall be determined b
'*. tO" local reouirements for the control of atmosphene contami- by reference to the use of similar property by similarly nants, or water pollution. as the case may he, in efect at situated users.
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The follcwing resolu-ion was introduced in *.Ti-ing by Scpervisor JOHNSON , read and discussed:
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the Pr=lect to be n=t in excess Of Cne :4undred Milli:n Collars (51*0,0C0,000) and has ::ncurred in the finding Of the G-:verni.-
3cdy that because Of the par-icular nature of the Pr:!ec . it would no- be in the publi: interes- and w:uld less e f f e:-ively achieve .he purposes Of the Ac- to en er in. : . ra: s f:: the ac uisitien, pur:hase, c:cs ru::i:n and/:: insta11a-i:n Of
- facilities centemplated by the Act and by -he
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7 IIPeQssig MlOCLE ECUTH ENERGY. fNC / EEE EA ACNNE
- NEW ORLEANE. LA 7C11E/ C504) EEE.EEEE
.. June 10, 1923 p car c. c:. Supervisors .
Claiborne County, Mississippi Pc t Gibson, Mississippi 39150 Gentlemen: .
Pursuant to Title 49, Cha=.ter 17, Mississippi Ccde of 1972 (the "Act"), you have heretofore agreed to assis: Middle South Energy, Inc. in financing the accuisition and construction of c e. .* +. a _i .". " o l _l " _~. _# e9. C o r.'."_" o _1 4
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Nuclear Station in Claiborne Ccunty, Mississippi (the " Project")
which are generally described as follows: .-
A. A Closed Lccp Cooling Water System consisting cf a ecoling tower, a pumphouse, blowdown and make-up water facilities, sedium hypcchlorite and sulphuric acid removal systems, asscciated clumbing and electrical ec.ui.ement..
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- 3. A Solid P.adwaste system which will collect, process, ~~
package and store radioactive solid wastes for offsite shipmen:
and permanent disposal.
C. An Gily Waste System which will collect nonracicactive
- 3. zing sumps in severa_, cu _, d :..ngs.
ca_3y wastes : rem stac. _
D. A Chemical Waste System which will collect and neutralize chemical wastes contained in nonradioactive water frem a make-up water treatment system and blow-dewn facilities.
E. A Sewage System which will consist of facilities designed to treat and dispose of sewage.
F. A Sediment Recention System which will consist of a icw vo_,ume wastewater c sen. arge s ~asin and a chemical waste casin into . . . .
wnsen nonrac..:.oact:.ve waste waters resu_3 ting : rem was..acowns anc flushes of various components will be diverted. -
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- c. Supervisors Claiborne Ccuntv, Mis s is sip.ci June 10,.1983 Page Two .
G.- A Gasecus Radwaste Management System which is designed te control air .oc11ution and consis~ts 'of the Off-c.as S.ystem, the Kad' waste Building Filter System, and the Containment Suilding
... Filter System.
E. A Sky-shine Shielding System which will consist of structures that are designed to control air o.c11utYon by limitinc.
offsite emissions of direct radiatien. ( .
The estimated cost of the project,_ including net ' =-as:
during construction, an " insubstantial portion" contingency f acec:
cf 10% and-expenses relating to issuance and sale of the bcnds
'will not exceed 5100,000,000.
Because of and the particular nature of the facilities ccm-prising the Prcject, it would not be in the public interest and would in:c centrac s less effectivelv
--- .- achieve the cur oses of the Act to enter e acquisitica, purchase, consnruction anc./or installa:icn of facilities conte = plated by the Ac.t upon the basis of.public bidding pursuant to advertisement. Public bidding pursuan: ce advertisement-should be dispensed.with, and Middle
.Souch' Energy, Inc. shculd be authorized te encer into such cen-
. tracts' based upon negctiation and,~at its cption, to negotiate such centracts in the name of Claiborne County.
_ Yours verv trulv, . .
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By & ^ -9 - - -
Edwin Lupcerge~r
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revenue bonds in principal a= cent not to ex:eed Cne 9:n".sc Million Ocilars ($100,0C0,CC0) (the *3 cads") in :ne c : re s e. . des . '. . - .'. .e ,a u.-, e s e c .' .' e .' .* v. .d .. , .S.e . . c.s. ..' .'..e e..d, e . . .- . = * ..
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interest and redemption premic=s, if any, en -he 3:nds, the Issuer pr yeses := authorize the execution and de itery of :ne c j =cre Trus- :ndentures; the 3cnds will be payable as : ;;incipal, interest and rede=ptien premiu: (if any) sciely cut of and '<1*.1 i
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i be secured by an (i) irrevocable pledge of the revenue to be l g derived *::= the sale c' the 7:: ec , and (ii) any -her suas e
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.. - .S..e I 3c=ds vill be limited cbligations of the Issuer, s..d shall never 4
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t d any cor.sti- -icnal pr=visi:n er status: 7 11=itati:n cf the State cf Mississippi, and shall never cens 1 ute ner 7.re rise c any pecuniary liabili y of the :ssue: er a charge agains- its general credi- c taxing power, ac shall the :ssue; be Ob* . iga ed to pay
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Of the 7 'ec- and any cther rums- *ahich may be seeivad 3--- er in c=nnecti:n with -he pr ject as aforesaid; -he 3:nds shall
- mature at such ti=e :: times as the Issue and MSI may de armine, not to ex=eed f:r y (40) years I := their da e: the 3ceds shall l
be subjec- to such terns of redemption, shall be payable at such place c places, shall bear in eres- at su:h rate :: rates as the Issue: and MSI shall agree upon, may con ain such =ther previsi:ns not inconsisten with the A:- as the :ssue: =ay deternine, and shall be sold at public c private sale at su:h
- ice a..d in such canner and at such time
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=ay be deter =ined by the Issue: and MSI :: be ::s- advantapecus, a.. c a. .au...s..u.. s u..a ,.,....,<a..e.
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9 present such decuments as =ay be required.
t SIC'"!CN 3. hat the Clerk of the Gcverni.y 3cdy be and she l
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publi: *n erest and wculd less effective'y achieve the per;cses o .' ~.u. . e a' .- . .o e.. . e .- . ' . . . . .-....-=.-.s
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, adver-isemen , that publi: biddi.g pursuant = ad te r-isece .-
should be dispensed with, and -ha- MSE should be tush: i:ed enter inte such centrac s based upon negotiati:n and, a- is ep-ion, 0 .eg:tiate such ::.::a: s 1. the ..are = f -he :ssuer.
SE0':0N 5. ~ hat all erfers, resolutices Or pr:ceedings in 1
conflict with the pr:visi:ns of this resciu-icn shall be, and the r .
I same are hereby repealed, enseinded and se aside, but :nly =
the extent Of such conflict.
'"he adeptien of the ab:ve 2esciutien was ::ved by Sup'ervis :
+
JOHNSON see . fed by Supervis : EGGLESTO N
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and was put to a :011 =all ve a, -hi::h wa s as f=11:ws:
l Superviser ECCLESTO N ve ed: YES i, .
Supe:tiser VAUGHAN v: ed: YES 9
g Superviser BURRELL vc ed: YES l
/ Supe:tiser JOHNSON v ted: YES Superviso: ROSS veted: YES Said Resolution having receivsd the appreval =f all nenbers Of the 2:ard Of Su:ervisers .= resent, it was declared adop ed by the 3:ard Of Supervisers of Claiterne C:un y Mississippi, en
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A'ITEST:
JjR4 dr/ % JA& wo
/ CLERK
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r STATE OF AGSSISSIPPI COUNTY OF CLABORNE 1.
I, STELLA H.JENNDfGS, CHANCERY CLERK OF CLAIBORNE. COUNTY, MISSISSIPP!, CERTIFY THAT THE WITICN AND FOREGODiG ORDER IS
[ A TRUE AND CORRECT OF AN ORDER DULY ADOPTED BY THE Scard of Supervisors of Clalberne Countf, Mississippi, on the 20*.h day of June,1983 i
at a regular meeting thereof, and that a qucrum was duly present at said meeting
{
! and, further that all membe s of,the Board of Supervisors voted afflimatively .
{ in favor of the adoption of *he ceder, and that said order is now in full e
force and effect.
k
, SO CER*ITFIED, T!CS THE 20th DAY OF JUNE.1983.
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' 1 64ll4 Nr JAwjM M Clancery Clerv of Ciascorne Cocnty, Massimippi I
. Int:rnal Revanue S:rvice Department of the Treasury 01n3.06-03 washington. oC 20224
,Index Nos.:
- 0103.06-07
. Person to
Contact:
Edwin Lupbergtr E. J. Sheehan (
Senior Vice President - Chief Telepnene Number:
Financial officer (202) 565-4453 Middle South Energy, Inc. Refer Reply to:
?.0. 3 o:e 61000 CC:C:E:E:2 -
2D4807 New Orleans, LA 70151 Cate:
Attention: Treasure': MAY 121983 In re: Pollution Control Revenue Sonds.
- Grand Gulf Nuclear Station Project -
The Company: IIid dle Southknergy, Inc.
IIU: 72-075d777 The A f.f il ia t e : . lississippi Power & Light EIII : 54-020$030 The Parent: Middle South Utilities, Inc.
ZIH: 13-55'50175 The County: Claiborne County, 2:ississippi State A: The State o f !!is s is s ippi State 3: The State of Arkansas ,
State C: The State of Louisiana State D: The State of Florida The Station: The Grand Gulf Nuclear Statien x:. 07.52 "This docu:: ent~ cay no Date 1: December 1, 1983 usedorcitedasprech' dent. Section ello(j)
Date 2: !!ovember 1, 1933 of the Internal Revenu Code.'
Dear ;ir. Lupberger:
In a letter of April 26, 1982, and subsequent correspon-dence, submitted on behalf of the Company, a ruling is requested. The ruling requested is that substantially all of the proceeds of certain bonds (the " Bonds") will be used to provide sewage or solid waste disposal facilities, and air or water pollution control facilities (the " Facilities") within e
. t .. -
2 -
1
- r '. 2duin Lupbsr er l the meaning of sections 1.103-8(f) of the Income Tax Regulations l- and 1.103-8(g) of the regulations and proposed regulations.
1 The Facilities, currently under construction and to be con:tructed and acquired at the Station, are to be financed by the County for the benefit of the Company.
. .. ~
The pertinent facts are as follows:
The County is a political subdivision and governmental
/
unit of State A, duly existing under the Constitution and laws of that state. The County is authorized and empowered by the provisions of the laws of State A (the "Act") to issue revenue bonds for the purpose of defraying the cost of ac-quirin'g, purchasing, constructing, operating, maintaining and replacing the Facil'ities as air or water pollution control facilities, as defined in the Act-(including solid waste disposal facilities and sewage disposal facilities), and to sell the Facilities to the Company.
The - Company is a corporation of State B, having its princi 7a1 place of business in State C, and is qualified to
. do business as a foreign corporation in State A. The Affiliate, ~
an affiliate of the Company, is a corporation of State A having its principal place of business in that State. The Company and the Affiliate,are wholly-owned subsidiaries of the Parent, a corporation of State D having its princi~ pal place of business
-in St a t e C. The Company and the Affiliate file a consolidated federal income tax return with the Parent in State C.
The Company is currently constructing a nuclear powered electric generating station (the " Plant") tis a t will consist
.primarily of two boiling water reactor nuclear generating units (the " Units"), and that will be located in the County. Unit 1 is expected to be placed in service on Date 1 and Unit 2 is expected to be placed in service on Date 2.
The construction of the Plant has been undertaken as a part of the plans of the Parent and its principal operating subsidi'ary companies (the " System operating companies") to install new electric generating capacity. I n'i t i a ll y , the Affiliate undertook the engineering and related work in connection with the Plant; however, it was later determined that it was not feasible for the Affiliate to undertake the ownership and financing of the Plant.
. - _ -- J
3 -
Er. Edvin Lupberger The Company was organized as a wholly-owned subsidiary of the Parent for the purpose of financing, constructing and owning the Plant for the Parent's electric generating system.
To that end, the Company and the Parent entered into an
.. agreement pursuant to which the Parent undertook to furnish or cause to be furnished to the Company suffici,ent capital for construction of the Plant, to permit activation and commercial operation thereof and, at maturity, to pay in full certain notes issued by the Company under an agreement with certain banks.
Under federal construction permits, the Company was obligated to offer an opportunity to other eniities to participate in the Plant. The participation is through ownerghip of a portion of the Plant or a contractual right to purchase r. portion,of the output of the Plant. It is presently assumed that, as a result of certain agreements, the Company will own an x percent undivided interest in the Facilities. The estimated costs summari:ed below represent x percent of the estimated costs of the Facilities.
.The County proposes to issue the Bonds to finance the i cost of acquisition and construction of the Facilities that f
relate in whole or in part to each of the Units (the " Project").
The Bonds will be issued in two series. Each series will be issued in a principal amount necessary to pay those costs, l
including interest during. construction, .a n " insubstantial portion" of otner costs, and all expenses in connection with the authorization, issuance and sale of each series.
The proceeds of the sale of each series of the Bonds will
. be temporarily invested until applied to the payment of the costs of the Project. Anticipated earnings from the'se temporary investments also will be available for the payment of the costs that the County proposes to finance.
Original Bond proceeds and amounts resulting from the investment of those proceeds during the construction period will be applied to pay the costs of certain facilities as described below or will be requisitioned to reimburse the Company for such costs. Upon completion of the Project, if any portion of the funds remain on hand, having not been so applied or requisitioned, the requirements of Rev. Proc. 79-5, 1979-1 C.B. 485, will be complied with.
.- )
' 'M r . Eduin Lupberger The two series, the " Series A Bonds" and the " Series B Bonds", will be used to provide portions of the Project as described below. Each series will be sold pursuant to
- , separate official statements, and there will be at least a 30 day interval between the issuance of each.
- The Coun:y and the Affiliate entered into an agreement (the " Agreement") pursuant to which the County agreed to authorize the issuance and sale of the Bonds to finance certain systems and facilities that include the Project. The a g r.e e -
ment also stated that it was anticipated that the Plant might be owned by the Affiliate, the Company, or some other System operating company and, to that end, the County agreed that the Affi,liate could assign all of its rights under the Agreement to the Company or such other companies.
As of the date of the Agree =ent, onsite construction or offsite fabrication relating to the Project had not commenced.
All amounts spent by the Affiliate, as of that date, with respect to the Plant consisted of expenditures relating generally to the acquisition,and construction of the Plant; none of those expenditures related directly to the construction or acquisition of the Project. However, construction of the portions of the
> Plant to be financed with the Seri.c B Bonds commenced prior to November 19, 1975.
The Company has ele'eted to have the provisions of the proposed regulations apply to-the Se. ries A Bonds, but not to the Series B Bonds. This election was made in accordance with section 1.103-8(g)(4) of the proposed regulations.
The cost of the Project includes the material.and labor costs associated with the construction and acquisition of the foregoing systems as well as a portion of the indirect costs for the entire Plant construction allocable to the Project.
For federal income tax purposes, all costs of the Project will be capitalized or could be chargeable to capital account.
Indirect costs vill be allocated to the material and labor costs of the Project on the basis of the ratio of the total estimated indirect costs of the Plant to the total estimated materist and labor costs related to the Plant.
I
'Jir . Eduin f.upberger The Series A Bonds will be used to provide Subproject A consisting of the following portions of the Project:
- 2. Solid Radwaste System
- 3. Oily Waste System
- 4. Chemical Waste System
- 5. Sewage System
- 6. Sediment Retention System The Series B Bonds will be used to provide subproject B consisting of the foflowing portions of the Project:
- 1. Gaseous Radwaste Management System
. 2. Skyshine Shielding System
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Circulating Water System. The system will be a closed loop cooling water system consisting of a cooling tower, pumphouse, blowdown and make-up water facilities, sodium hypochlorite and sulphuric acid systems, associated plumbing, and electrical equipment. . .
Included as a cost of constructing the Circulating Water System is direct material and labor costs incurred to repair tornado damage to the Unit 1 cooling tower during its
, construction. The Company received an insurance reimbursement
- of a portion of these additional construction costs. Although the' Company has instituted legal proceedings to recover from the contractor the unreimbursed construction costs incurred to repair the tornado damage,,plus substantial other amounts required to complete the cooling tower and correct other war-Tanty deficiencies, it is impossible at this time to predict the outcome of thosh proceedings. The Company's share of the estimated cost of constructing and acquiring the Circulating Water System has been reduced by the insurance reimbursement; no reduction in that cost has been made for any anticipated recovery in the legal proceedings.
Solid Radwaste System. The system will collect, process, ;
package,-and store radioactive solid wastes for offsite ship- j ment and permanent disposal. '
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, 'Mr. 2du'in Lupber3er The system will receive residue from a liquid radwaste system that is not included as part of the Facilities. The system will dewater the waste in holding tanks, mix it with solidification agents in mixer units, and place the mixture in 55 gallon drums. The filled containers will be remotely capped and moved within the fill area on remote controlled transfer carts. Movement from the fill area vill be dune by'a handling crane. The system will also provide washdown
, facilities, sample retrievers, and optical surveillance facilities. Additional miscellaneous equipment and structures include a portion of an inventory station, remote control panels, a radiation monitoring system, filter discharge chutes, and vent spray housings.
The system will also receive paper, rags, contaminated clothing, tools and eq u i pm e n t , laboratory waste, and solid material from. air filters.
Compressible solid wastes will be compacted, and non-compressible wastes will be packaged manually in appropriate containers.
Besides the equipment listed above, the Solid Radwaste System will have a hot water heater, pumps, fill ports used to fill the drums, piping, electrical equipment, and equipment pads.
Oily Waste System. The Oily Waste System will collect nonradioactive oily wastes from stabilizing sumps in several buildings. The sumps are collection points where the wastes that are directed from drain sumps are accumulated. The wastes will be pumped from the sumps to separators, and from the separators to tanks for temporary storage. The treated effluent will be discharged through a storm drainage system and will not be reused. After being packaged in druns, the oil will be disposed of offsite by a private contractor without payment to the Company.
Piping', valves, and electrical equipment are included in the Oily Waste System.
Chemical Waste System. The Chemical Waste System will collect and neutralize chemical wastes contained in nonradio-active water from a makeup water treatment system and blow-down facilities. The vastes will be collected and neutralized in a regeneration waste neutralizing tank. Also included in the system will be a sampling pump, acid dike sump and pump, piping that will carry the wastewater streams to the neutra-lising tank, valves, electrical facilities, and controls.
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' dr. Tdwin Lupberge:
Sewage System. The Sewage System will consist of facilities for the ~ Plant that are designed to treat and dispose of sewage. The components of the system are an
., activated sludge treatment unit including aeration, sludge storage and chlorine contact tanks, lift station, wetwell, chlorinator, valves, pipes, and pumps.
Part of the sludge will be recycled to the aeration tank for treating additional sludge; and the remainder will be transported offsite by a commercial contractor. Th e' -
treated effluent will be mixed with cooling water blowdown and other effluents from the. Plant, and discharged.
Sediment Retention System. The Sediment Retention Syst'em will consist of improvements at the Plant that are designed to control w'acer pollution. The system will consist of a low volume wastewater discharge basin and a chemical waste basin into which nonradioactive wastewaters resulting from washdowns and flushes of various Plant components will be diverted.
. The low volume wastevater discharge basin will receive low volume wastewater from the regeneration vaste neutralizing tank, filter backwashes, and auxiliary boiler blowdown.
These wastewaters will be collected and diverted to this basin where the sediments and suspended solids,will settle, and the effluent will be discharged.
In preparation for the startup of Unit 1, various Plant components will be flushed and backwashed to remove contaminants
. that may have been introduced during construction. Temporary-piping vill be inrtalled to direct the resulting va'stewaters to the chemical waste basin. This temporary piping will be disassembled after the Unit is in, commercial operation.
Periodically t h e r e.a f t e r , during shutdowns for refueling and routine maintenance, temporary piping will again be installed
.to direct to the retention bacins the wastewaters fro = back-washings and flushes done during the shutdown periods. Only the estimated cost of the original temporary piping that will be installed prior to commercial operation is included in the cost of the Sediment Retention System. The chemical waste basin was placed in service on July 1, 1982 coincident and in conjunction with the initial fuel loading and associated testing of Unit 1.
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_;;r . Tduin Lupber~ger .
. Expenditures for the planning, construction, and installation of Subproject A are identified below:
- 1. Circulating Water System $ 88,6 49,429
- 2. Solid Radwaste System , ~3,321,033
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- 3. Oily Waste' System 709,545
- 4. Chemical Waste System 459,490 .
- 5. Sewage System 1,915,452
- 6. Sediment Retention System 541,841 Gaseous Radwaste Management System. This system is designed to control air pollution, and consists of the Offgas System, the Radwaste Building Filter System, and the Containment Building-Filter System.
The function of the Offgas System is to collect and is,olate' radioactive noble gases, airborne halogens, and particulates, and reduce their activity through decay. The Offgas System.will process radioactive gases and particulates that.will be pulled from the steam in the main condenser by steam jet ejectors that are not included in this system.
Steam will be added'to.the noncondensible gases that are removed from the main condenser'to dilute the hydrogen.
This steam gas mixture will then be superheated in a pre-heater and passed through a catalytic recombiner that will
-: reduce the volume of the gas by c o nv e r t in g . r a d ioly fic a lly disassociated hydrogen and onygen into water. The gases will then pass thrcugh a condensor and water separator to remove condensible moisture and will further reduce tha volume of the gases. The remaining nondensible gases will go through
.a holdup tank and piping that is designed to delay the flow I
of the gases. This- delay will allow the nitrogen and oxygen l isotopes and most of the xenon and krypton isotopes to decay.
The gases then will pass through a cooler-condenser, where the gases will be further cooled, a moisture separator, and a high efficiency particulate air ("HEPA") filter. The gases v'ill then pass through a dessicant dryer to improve the i performance of the charcoal adsorption beds into which the I gases will pass next. The beds will operate in~a refrigerated vault and absorb and delay the remaining readioactive noble k
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Mr. 2dwin Lupberger gases to allow additional time for decay. From the beds, the gases will pass through a HEPA after-filter that will trap charcoal particles and solid decay products. There-after, the gases will flow through an effluent monitoring
- system from which they will be discharged.
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The effluent monitoring system will include a sample panel that will have filters for particulate and halogen
- collection in parallel with gross radiation detection assemblies. This system will also include a shielded chamber, detector and check source, and radiation monitors. l Most of the facilities will be housed in the Offgas Building that will abut and share a common wall with two other structures. One of the buildings, the Radwaste Building will contain facilities for processing liquid and solid radwaste, and the other, the Water Treatment Building, will house nonradwaste water treatment facilities.
Radwaste Building Filter Svstems and Centainment Building
. Filter Svstems..It is anticipated that during the normal operation of the Plant the Radwaste Building ventilation exhaust will contain certain radioactivity in low concentrations from the various radioactive wastes that are treated in this building.
This. exhaust will be treated through " Filter Systems", each consisting of a HEPA Filter, ductwork, controls, wire, cable, cable tray.and conduit, and connectionsk In addition, tanks in the Radwaste Building that will be potential sources of radioactivity will be vented through othet Filter Systems, consisting of a demister, prefilter, HEPA filter, charcoal filter and fan. These Filter Syste=s will remove particulate contaminants from the exhaust air before passing through the effluent monitoring system described above in the Offgas Building and then released.
Also during normal operation, a small amount of the air in the Containment Building for Unit I will contain low levels of radioact.ivity that vill be continuously exhausted through charcoal Filter Systems located in the Unit 1 Auxiliary Building.
These Filter Systems will consist of a demister, heating coil, After the prefilter.,'HEPA filters and charcoal filter bank.
exhaust air passes through these Filter Systems it will pass through effluent monitoring systems that will continuously sample and monitor the Containment Building exhaust for gross radiation level and collect halogen and particulate samples. These monitoring systems will be identical to the ones described above G
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Mr. 2dwin Lupberger that are. located *in the 0ffgas Building. After passing through the monitoring system, the exhaust air will be released. ,
~~_ Skyshine Shielding System. The Skyshine Shielding System will consist of structures for Unit 1 that are m designed to control. air pollution by limiting offsite emissions of direct radiation from the Plant.
It is anticipated that when the Plant is completed and in operation the maximum offsite whole-body dose estimates of direct radiation will be due almost entirely to the direct radiation and atmospheric scattering of high energy gamma rays emitted from reactor steam in the main steam lines, turbines and moisture separators. The Skyshine Shielding System for Snit 1 will consist of a discrete concrete slab. This slab will be located in the Turbine 3uilding f o r -- Uni t 1 below the roof and above the moisture separators and reheaters and will reduce offsite doses of direct radiation by absorbing those radioactive gases and particulates, and reducing the activity of them through decay.
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The structures temprising the shielding system are being installed solely for the purpose of meeting federal regulations for offsite e=issions.
Expenditures for the planning, con'scruction, and install-ation of the Subproject 3 are-identified below.
- 1. Caseous Radwaste Management System $15,409,375
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- 2. Skyshine Shielding System '425,542 Under section 103(a)(1) of the Code gross income does not include interest on the obligation of a state or any of its political subdivisions.
S e c t i o.n 103(b)(1) of the Code provides that, with the exception as described below, an industrial development bond does not fall within the purview of section 103(a)(1).
' Paragraph (4) provides that paragraph (1) does not apply to an-obligation that is issued as part of an issue substantially all of the proceeds of which are used to provide solid waste disposal facilities, or air er water pollution control facilities.
As~provided by section 1.103-8(a)(1) of the regulations, substantially all of the proceeds of an issue of governmental obligations are used to provide an exempt facility if 90 percent 8
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kir . 2duin'Lupberger t
[ or more of such proceeds are so used. For purposes of this
[ "substantially all" test two rules apply. First, proceeds are reduced by amounts properly allocable on a pro rata basis.between providing the exempt' facility and other uses
.of the proceeds. Second, amounts used to provide an exempt
~ facility include amounts paid or-incurred that are chargeable
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to~ the facility's capital account or would be so chargeable either with proper election by a taxpayer to deduct such amounts. ,
Under the provisions of section 1.103-8(a)(3) of the regulations, an exempt-facility includes any land, building, or.other property functionally related and subordinate to the facility provided the property is of a character and size commensurate with the. character and size of the facility.
Section 1.103-8(a)(5)(i) of the regulationis'provides that to qualify under section 103(b)(4) of the Code and section 1.103-8 as an exempt facility, the facility must be one described in subdivision (iv) of subparagraph (5) if construction, reconstruction, or acquisition of the facility commences on or after September 2, 1972.
Subdivision (iv) of section 1.103-8(a)(5) of the regulations provides that if the original use of a facility commences prior to the date of issue of the obligations issued to provide-that facili.ty, the facility will be des-cribed in subdivision (iv) if no nonexempt persons or a related person (a) who was a substantial user of the facility at any time during the 5 year period preceding the date of issue of the obligations, and (b) v.h o receives proceeds of.
the issue of obligations in an amount equal to 5 percent or more of the face amount of the issue (in payment for the non-exempt person's interest in the facility) will be a substantial user.of the facility at any time during the 5 year period following.the date of issue.
Subdivision ('v) of section 1.103-8(a)(5) of the regulations provides that a facility will not fail to be described in subdivision (iv) because the facility was used by the substantial user before the-date of issue of the obligations issued to provide the facility if a bond resolution or other similar official action was taken by the issuer before commencement of construction, reconstruction, or acquisition of the facility
.and the obligations are issued within 1 year after the entire
. facility was first placed in service or was acquired (whichever occurs last).
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iIr . 2duin Lupber"er ;
Section 1.103-8(f)(1)(i) of the regulations provides l that section 103(b)(1) of the code does not apply to obligations issued by a state or local governmental unit l that are part of an issue substantially all of the proceeds of which are used to provide solid waste disposal facilities.
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As defined by section 1.103-8(f)(2)(i) of the regulations, the term " sewage disposal facilities" is property used for the collection, storage, treatment, utilization, processing,.
or final disposal of sewage.
Section 1.103-8(f)(2)(ii)(a) of the. regulations provides that the term " solid waste disposal facilities" means any prcp*.rty or portion thereof used for the collection, storage, treatment, utilization, processing, or final disposal of solid waste. Only expenditures for that portion of property that is a solis waste disposal facility qualify as expenditures for solid waste disposal facilities. The fact that a facility that otherwise qualifies as a solid waste disposal facility -
operates at a profit will not, of itself, disqualify the f a c il,i t y as an exempt facility.
Section 1.103-8(f)(2)(ii)(b) of the regulations provides that material will not qualify as solid waste unless, on the date of issue of the obligations issued to provide the facility to dispose of such vaste caterial, it is property that is use-less, unused, unwanted, or discarded solid material that has no market or other value at the place where it is . located.
Thus, where any person is willing to purchase such property, at any price, the material is not waste.
Section 1.103-8(g)(1) of the proposed regulations provides that section 103(b)(1) of the Code does not apply to the obligations issued by a state or local gove:nmental unit that are part of an issue substantially all of the proceeds of which are used to provide air or water pollution control facilities.
' proceeds are used to provide air or water pollution control facilities if they a' re used to provide property that satisfies the requirements of paragraph (g)(2) and (3) of this section.
Where property has a function other than to abate or control water or atmospheric pollution or contamination, only the incremental cost of the property is taken into account as an expenditure to provide an air or water pollution control facility.
Rules to determine whether property has any function other than the control of pollution are provided in paragraph (g)(2) and (3) of this section. Rules to determine the incremental cost of the property are provided in paragraph (g)(3) of this section.
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- 1:r . 2duin Lu7berger In accordance with section 1.103-8(g)(2)(i) of the proposed regulations, property is a pollution control facility if it is property described in paragraph (g)(2)
(ii) of this section and if a federal, state, or local agency exercising j uris dic tion h'as certified that the facility, as designed, is in furcherance of the purpose
. of abating or controlling air or water pollution.
Section 1.103-8(g)(2)(ii) of the proposed regulationIs provides that property is pollution control property if it is either of a character subject to the allowance for depreciation, or land, and is used in whole or in part to abate or control water pollution or contamination.by removing, altering, disposing, or storing pollutants. To qualify, the property described above must be a unit that is discrete and
.that performs in'whole or in part one or more of the functions referred to above and that cannot be further reduced in size without losing one of the characteristics.
. Tection 1.103-8(g)(3)(i) of the proposed regulations provides that if property described in. paragraph (g)(2) of this section is used to control pollution and also has a function other than the control of pollution, only the incremental cost of the property is taken into account as an expenditure to provide air or water pollution control facilities. An example of a function of property other than the control of pollution is an economic benefit to the user resulting from the use of the property. The term " economic benefit" means gross income or cost savings resulting from any increase in production or capacity, production e f'f ic ie nc i e s ,
'the production of a by product, the extension of the useful life of nonpollution control property, and any other identifiable cost savings, suchas savings resulting from the use, reuse, or recycling of the items recovered.
Section ,1.103-8(g)(3)(iii) of the proposed regulations provides that in the. case of property that results in an economic benefit, only a portion of the cost of the property is allocable to pollution control. The method to determine the' qualifying portion is contained in this section, i+ . .. .... .
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Zr. 2duin Lupbergar Example 4 of section 1.103-8(g)(5) of the proposed regulations provides a =achod to de:er=ine the allocation of cos:s :o be made under paragraph (g)(3)(iii).
Under section 1.103-8(g)(4) of the proposed regula:icas, the provisions of paragraph (g) apply, a: the opcion of :he
' issuer, to obligations ~ issued with respect :o facili:ies :ne construction of which commenced before November 19, 1975.
The provisions of section 1.103-8(g)(2)(i)(b) of the ions regarding certifica: ion that a facili:y is in regula{ance,of fur:he :he purpose of abating or controlling pollution, are thk same as in section 1.103-8(g)(2)(i) of :he proposed
- regula~tions.
I Under section 1.103-8(g)(2)(ii) of :he regula: ions, pro-perty is described in this subdivision if i: is property :o be used, in whole or in part, to aba:e or control water or atmospheric pollutants or contamina: ion by removing, altering, disposing, or s:oring pollutants, contamincats, wastes er hea:.
Section 1.103-8(g)(2)(iii) of the regula: ions provides that in the case of an expenditure for proper:y : hat is designed for no significant purpose other than the control of pollution, the total expendicure for such proper:y :scisfies :he tes: of
- his subdivision. Thus, where proper:y : hat is to serve no functica c:her than the control of pollution is to be added :o an exis:ing manufacturing or produe: ion facility, the to:a1 expendi:ure for that property satisfies the test of this subsdivision. Also, if an expenditure for property would no:
be made but for the purpose of controlling pollution, and if
- he expenditure has no significant ' purpose other chan the purpose of pollution control, :he total expenditure for tha:
property sa:isfies the test of this subdivision even though that property serves one or more func: ions in addition to its fupction as a pollution control facility.
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Our analysis of the represented f ac'ilities is as follows: ,
l
- 1. The projec: is described in sections 1.103-8 (a)(5)(iv) and (v) of the regulations al-chough the 3 cads nay not be issued within I
one year after :he ehemical waste basin of .,
the Sediment Re:en: ion Sys:e= was placed in service. This is valid only if the 3onds are issued as soon as prac:ical after this letter ruling is received by the Company.
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. - fir . 2duin Lupberger
- 2. The Company has made a proper election under section 1.103-8(g)(4) of the proposed regu- l 1ations as the elec' tion has been made with respect to each series of obligations.
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- 3. 'The Circulating. Water System, oily Waste System, Che.mical Waste System, and Sediment Retention System are water pollution control j facilities under section 1.103-8(g) of the i; proposed regulations. , ,
1
- 4. The Sewage System is a sewage disposal facility under section 1.103-8(f)(2)(i) of the regulations.
'5. The Solid Radwaste System is a solid waste disposal facility under section 1.10 3 -8 ( f ) ( 2 ) (i- ) ( a ) of the regulations.
- 6. The Gaseous Radwaste Management System and the Skyshine Shielding System are air pollution control facilities under section 1.103-8(g) of
.the regulations.
I In sun =ary, the following expenditures for Subproject A qualify as water pollution control facilities under section 1.103-8(g) of the proposed regulations or solid waste or sewage disposal facilities under^section 1.103-8(f) of the regulations.
The allocations pursuant to section 1.103-8(g)(3) are shown for
[
- 1. Circulating Water System 02-2,596,374 v
- 2. Solid Radwaste System 3,321,033
- 3. Oily Waste System 709,646 l.
- 4. Chemical Was te System 469,490
- 5. Sewage System 1,915,452 i
- 6. Sediment Retention System 541,G41 i
- 7. Interest During Construction 10,n74,7 , G 7 0 l
Subtotal 40,301,70a j i
- 8. Insubstantial Portion 4,477,937
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Mr. Edwin Lupberger Issuance and Sale Expenses 1,384,938
- 9. J Subtotal 46,164,611 Anticipated. Earnings from (118,626) .
- 10. Less !
Investment of Series A Proceeds Total S46,045,985 In summary, the following expenditures for Subproject B qualify as air pollution control facilities under section 1.10 3.- 8 ( g ) of the regulations.
$15,409,376
- 1. Gaseous Radwaste Management System 425,542
- 2. Skyshine Shielding System Interest During Construction 5.816,093 3.
' $21,651,011
- Subcotal 2,405,668 r 4 Insubstantial Portion 744,021
- 5. Issuance and Sale Expenses 24,800,700 Subtotal
- 6. Less Anticipated Earnings from (55,965)
Investment of Series B Proceeds ,
$24,744,735 Total Based upon the documents and information submitted, it is concluded that:
- 1. For purposes of sections 103(b)(4) of the Code and 1.103-8(a)(1) of the regulations, substan-tially all of the proceeds of the Series A Bonds, to be issued in the approximate amount ,
of $46,046,000, will be used to provide water pollution control facilities or sewage or solid waste disposal facilities under section'1.103-8 (g) of the proposed regulations and section 1.103-8(f) of the regulations.
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- - ir . Edwin Lupberger
- 2. For purposes of sections 103(b)(4) of the Code and 1.103-8(a)(1) of the regulations, substantially all of the proceeds of the Series 3 Bonds, to be issued in the approximate amount of $24,745,000 vill be
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used to provide air pollution control facilities under section 1.103-8(g) of the regulat.ons. i Ruling 1 is valid only if a federal, state, or local agency exercising jurisdiction has certified, in accorda.nce with section 1.103-8(g)(2)(i)(b) of the proposed regulations, that the Circulating Water, Oily Waste and Chemical Waste Systems, as designed, are in furtheranc. of the purpose of abating or controlling water p o l l. u t i o n .
A copy of this letter should be filed with the income tax return for the taxable year in which the transaction covered by this ruling is consummated.
This ruling is directed only to the taxpayer who requested it. Section 6110(j)(3) of the Code provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to Mr. Mark L.
Regante of Simpson Thacher and Bartlett.
Sinc.erely yours,
< 15) Geoffrey J. Taylor Geoffrey J. Taylor Chief, Engineering and Valuation Branch e
e
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