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Nextera Energy, Inc. v. United States

United States Court of Appeals, Eleventh Circuit

June 28, 2018

NEXTERA ENERGY, INC., and Affiliated Subsidiaries f.k.a. FPL Group, Inc., FLORIDA POWER & LIGHT COMPANY, separately and as parent of Florida Power & Light Company and Affiliated Subsidiaries, Plaintiffs - Appellants,
v.
UNITED STATES OF AMERICA, Defendant-Appellee.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 9:15-cv-80484-RLR

          Before MARTIN, JULIE CARNES, and GILMAN, [*] Circuit Judges.

          MARTIN, Circuit Judge

         Plaintiff NextEra Energy, Inc., and its subsidiaries Florida Power & Light Company and NextEra Energy Resources, LLC (collectively "NextEra") operate five nuclear power plants. NextEra seeks a sizeable tax refund for net operating losses resulting from fees it paid to the Nuclear Waste Fund for the disposal of radioactive waste. The District Court denied NextEra's claims and granted summary judgment in favor of the United States. After careful review, and with the benefit of oral argument, we affirm.

         I. BACKGROUND

         A. THE FACTS

         NextEra operates two nuclear power plants in Florida and one each in Iowa, New Hampshire, and Wisconsin. All five plants are now in operation.

         Nuclear reactors are generally powered by hundreds of "fuel assemblies" that contain rods of enriched uranium. In the core of the reactor, these rods undergo a sustained nuclear fission reaction. This fission reaction produces heat, which creates steam to rotate turbines. The rotation of the turbines generates electricity. Over time, fuel assemblies become less efficient in producing energy, so they need to be replaced.[1] Used fuel assemblies continue to emit dangerous radiation for thousands of years.

         Spent nuclear fuel can be stored on-site for years, but ultimately needs to be transferred to a permanent storage site. See Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190, 195-96, 103 S.Ct. 1713, 1717- 18 (1983) (detailing pileup of temporarily stored spent nuclear fuel and possibility that reactors will shut down due to lack of on-site storage space); New York v. Nuclear Regulatory Comm'n, 681 F.3d 471, 474 (D.C. Cir. 2012) ("[On-site] storage, optimistically labeled 'temporary storage,' has been used for decades longer than originally anticipated.").

         B. GOVERNING STATUTES AND REGULATIONS

         1. Commissioning and Decommissioning a Nuclear Power Plant

         The Atomic Energy Act authorizes the Nuclear Regulatory Commission ("NRC") to issue licenses for the operation of nuclear power plants. 42 U.S.C. § 2131. Those licensed to run nuclear power plants must adhere to strict regulatory guidelines promulgated by the NRC. See id. § 2133(a), (b). For example, the NRC will not terminate a license until a nuclear facility is free of radioactive contamination. See 10 C.F.R. § 50.2 ("Decommission means to remove a facility or site safely from service and reduce residual radioactivity to a level that permits . . . [r]elease of the property . . . and termination of the license.").

         Over time, our nation began to see a buildup of spent nuclear fuel. In response, Congress enacted the Nuclear Waste Policy Act of 1982 ("NWPA"), Pub. L. No. 97-425, 96 Stat. 2201 (1983), to provide for permanent disposal of the spent fuel. See 42 U.S.C. § 10131(b)(1). Under the NWPA, the Department of Energy ("DOE") is responsible for depositing spent nuclear fuel in a permanent disposal site. See Nat'l Ass'n of Regulatory Util. Comm'rs v. Dep't of Energy, 680 F.3d 819, 821 (D.C. Cir. 2012). However, even now, no such storage site exists in the United States. Id.

         To fund its disposal of spent nuclear fuel, the DOE enters into contracts with nuclear facilities that obligate the facilities to pay a fee of 1.0 mil[2] per kilowatt-hour of electricity generated.[3] 42 U.S.C. § 10222(a)(1)-(2); see also 10 C.F.R. § 961.11 (codifying standard NWPA contract). These fees do not go directly to the DOE, but instead are paid to the Treasury and placed into the Nuclear Waste Fund.

         42 U.S.C. § 10222(a)(3), (c). The DOE is then authorized to pay from the Nuclear Waste Fund for the disposal of radioactive waste. Id. § 10222(d). "In paying such a fee, the person delivering spent fuel . . . to the Federal Government shall have no further financial obligation to the Federal Government for the long-term storage and permanent disposal of such spent fuel . . . ." Id. § 10222(a)(3).

         NextEra entered into NWPA contracts with the DOE. It paid approximately $200 million in contract fees to the Nuclear Waste ...


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