United States District Court, S.D. Florida
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY
JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR PARTIAL
L. ROSENBERG UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiffs', Nextera
Energy, Inc., et al., Motion for Partial Summary Judgment [DE
56] and Defendant United States of America's Motion for
Summary Judgment [DE 57]. Both motions have been fully
briefed. For the reasons set forth below, Defendant's
Motion for Summary Judgment is granted and Plaintiffs'
Motion for Partial Summary Judgment is denied.
BACKGROUND AND INTRODUCTION
core facts of this case are not in dispute. Nextera Energy,
Inc. is a business entity that owns Florida power companies.
Those Florida power companies operate nuclear power plants.
Nuclear power plants utilize fuel in the form of rods of
enriched uranium. DE 56-2 at 5. Those rods are inserted into
a nuclear reactor core and, upon insertion, a nuclear fission
reaction occurs. Id. That nuclear reaction produces
heat, which produces steam, which rotates a turbine, which
creates electricity. Id. When the fuel reaches the
end of its useful life, the fuel is highly radioactive and
must be disposed of carefully. This suit is about the tax
treatment of the costs to dispose of spent nuclear
disposal of radioactive nuclear waste is costly and
difficult. To address this difficulty, Congress passed the
Nuclear Waste Policy Act in 1983 (“Act”). That
Act assigned the responsibility for nuclear waste disposal to
the Department of Energy (“DOE”). The DOE was
entrusted with the responsibility of taking possession of
nuclear waste, transporting it to a carefully prepared
location, and storing the waste. The Act also imposed fees on
nuclear power plant operators which those operators had to
pay to the DOE. This case is about those fees.
Nextera filed the instant suit on April 14, 2015,
seeking a tax refund in connection with payments it made to
the DOE over many years. Nextera's payments to the DOE
are the subject of each of Nextera's fourteen counts.
Each count corresponds to a different tax year and each count
is premised on the same section of the Internal Revenue Code:
26 U.S.C. § 172(f). After substantial discovery, the
parties filed cross motions for summary judgment on July 15,
2016. Both motions for summary judgment focus on the same
legal issue-the proper tax treatment of fees paid by Nextera
to the DOE for nuclear waste disposal under 26 U.S.C. §
172(f). Because each of Nextera's counts is premised on
Section 172(f), the motions before the Court-and the
Court's interpretation of Section 172(f)-are dispositive
of this case.
SUMMARY JUDGMENT STANDARD
judgment is appropriate if “the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). The existence of a factual dispute is not
by itself sufficient grounds to defeat a motion for summary
judgment; rather, “the requirement is that there be no
genuine issue of material fact.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986). A dispute is genuine if “a reasonable
trier of fact could return judgment for the non-moving
party.” Miccosukee Tribe of Indians of Fla. v.
United States, 516 F.3d 1235, 1243 (11th Cir. 2008)
(citing Anderson, 477 U.S. at 247-48). A fact is
material if “it would affect the outcome of the suit
under the governing law.” Id. (citing
Anderson, 477 U.S. at 247-48).
deciding a summary judgment motion, the Court views the facts
in the light most favorable to the non-moving party and draws
all reasonable inferences in that party's favor. See
Davis v. Williams, 451 F.3d 759, 763 (11th Cir. 2006).
The Court does not weigh conflicting evidence. See Skop
v. City of Atlanta, 485 F.3d 1130, 1140 (11th Cir.
2007). Thus, upon discovering a genuine dispute of material
fact, the Court must deny summary judgment. See id.
moving party bears the initial burden of showing the absence
of a genuine dispute of material fact. See Shiver v.
Chertoff, 549 F.3d 1342, 1343 (11th Cir. 2008). Once the
moving party satisfies this burden, “the nonmoving
party ‘must do more than simply show that there is some
metaphysical doubt as to the material facts.'”
Ray v. Equifax Info. Servs., LLC, 327 F. App'x
819, 825 (11th Cir. 2009) (quoting Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986)). Instead, “[t]he non-moving party must make
a sufficient showing on each essential element of the case
for which he has the burden of proof.” Id.
(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986)). Accordingly, the non-moving party must produce
evidence, going beyond the pleadings, to show that a
reasonable jury could find in favor of that party. See
Shiver, 549 F.3d at 1343.
suit is premised upon one provision of the Internal Revenue
Code: 26 U.S.C. § 172. Section 172 covers the tax
treatment of net operating losses. A net operating loss,
under the Code, is defined as an excess of deductions for any
given tax year. In other words, a net operating loss exists
when a taxpayer has more available deductions than the
taxpayer is permitted to take. 26 U.S.C. § 172(c). When
a taxpayer has excess deductions (net operating losses), the
taxpayer may “carryover” the deductions to a
future tax year or “carryback” the deductions to
a prior year, provided that the carryback is limited to the
two prior tax years. 26 U.S.C. § 172(b)(1)(A). Under
special circumstances, however, a taxpayer may carryback
losses further into the past than two years. For example, a
taxpayer may carryback a “specified liability
loss” to each of the ten tax years preceding the year
of the loss. 26 U.S.C. § 172(b)(1)(C). A
“specified liability loss” is defined in 26
U.S.C. § 172(f) and it is this provision that is at the
center of the matter before the Court.
specified liability loss includes the sum of any
“amount allocable as a deduction . . . which is in
satisfaction of a liability under Federal or State Law
requiring . . . the decommissioning of a nuclear power plant
(or any unit thereof).” 26 U.S.C. § 172(f)(1)(B).
Section 172(f) does not define “the decommissioning of
a nuclear power plant (or any unit thereof)” and the
parties disagree as to the meaning of this term. Nextera
argues that the fees it pays to the DOE for the DOE's
disposal of nuclear waste qualify as decommissioning expenses
under Section 172(f) and, because it is required to pay those
fees pursuant to the Nuclear Waste Policy Act, its payment of
fees to the DOE is required by federal law. Thus, Nextera
argues that its payments to the DOE qualify for Section
172(f) carryback treatment.
response, Defendant argues that Nextera's payments to the
DOE are not equivalent to decommissioning costs and, as a
result, Nextera is not entitled to Section 172(f) carryback
treatment. The Court therefore considers: (A) the meaning of
“decommissioning costs” under Section 172(f); (B)
whether Nextera's payments to the DOE qualify as
decommissioning expenses mandated by federal law; and (C)
other arguments raised by the parties in the motions before
the Court. The relevant portions of Section 172(f) are set
(f) Rules relating to specified liability loss.--For purposes
of this section--
(1) In general.--The term “specified liability
loss” means the sum of the following amounts to the
extent taken into account in computing the net operating loss
for the taxable year:
(A) Any amount allowable as a deduction under section 162 or
165 which is attributable to--
(i) product liability, or
(ii) expenses incurred in the investigation or settlement of,
or opposition to, claims against the taxpayer on account of
(i) Any amount allowable as a deduction under this chapter
(other than section 468(a)(1) or 468A(a)) which is in
satisfaction of a liability under a Federal or State law
(I) the reclamation of land,
(II) the decommissioning of a nuclear power plant (or any