Future Energy Law Blog

The Debate Surrounding a Nuclear Waste Dump in Nevada Resumes

We will soon find out what will become of our nation’s nuclear waste, as The United States Court of Appeals, D.C. Circuit, has set March 22, 2011, to hear oral arguments in a lawsuit against the Department of Energy terminating the Yucca Mountain Project. This appeal arises out of President Obama’s elimination of funding for the proposed Yucca Mountain Project in the White House’s Fiscal Year 2011 budget and on the Department of Energy’s Motion to Withdraw, with prejudice, its license application for a nuclear waste repository at Yucca Mountain, Nevada filed on March 3, 2010.

Appellants include South Carolina, Washington State, Aiken County, South Carolina, and three Washington State business owners. They assert that the Obama administration overstepped its authority in cutting funding for the Yucca Mountain Project. Appellants also argue that the shutdown leaves states dealing with radioactive material that should be stored in the proposed repository.

The Department of Energy contends that its attempt to withdraw its license was within the Department’s legal authority and the Motion did not injure any party. The Department further contends that the Appellants lack standing because they have not suffered injury. Oral arguments will be heard on this matter, despite the Department’s argument that the federal appeals court lacks jurisdiction because under the primary jurisdiction doctrine a court allows an agency to rule first in a case in which the court and agency have concurrent jurisdiction. The State of Nevada supported the position of the Department of Energy, but is not a party to the appeal.

Plans to store waste in the proposed repository will continue should the Appellant’s prevail, resulting in several concerns for the Nevadans living near the area. Alternatively, if the Court sides with the Department, the federal government will have to consider alternative measures to provide for the permanent disposal of the nation’s spent nuclear fuel and high-level radioactive waste.

Renewable Energy Incentives for 2011

Federal and state incentives have driven the recent boom in renewable energy development. However, some of the important federal incentives were scheduled to expire at the end of 2010.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 which was signed into law by President Obama on December 17, 2010 (the “2010 Act”) extends and creates incentives to further stimulate investment in renewable energy projects in 2011. Two of the most important renewable energy incentives provided by the 2010 Act include the extension of the Section 1603 cash grant program and the creation of 100% bonus depreciation.

The Section 1603 cash grant program was originally established as part of the American Recovery and Reinvestment Act of 2009. It provides a cash grant in lieu of a tax credit for specified energy property placed in service by a certain date known as the credit termination date. The Section 1603 cash grant is generally equal to either 10% or 30% of the basis of the qualifying property, depending on the type of energy property.

The 2010 Act provides a one-year extension of the Section 1603 cash grant program. As a result of the extension, a renewable energy developer must either (1) place the qualifying energy property in service by December 31, 2011, or (2) begin construction of the qualifying energy property by December 31, 2011 and place the property into service by the applicable credit termination date (the credit termination date varies depending on the type of energy property). The Section 1603 cash grant provides much needed cash to stimulate energy projects, as opposed to tax credits which are only useful if the taxpayer has sufficient tax liability.

The 2010 Act also creates 100% bonus depreciation available for qualifying property, including renewable energy property, acquired and placed in service between September 8, 2010, and December 31, 2011. This incentive allows a renewable energy developer who places in service renewable energy property within the applicable time frame to take an immediate deduction for 100% of the cost of the property (or 85% of the cost of the property when combined with the Section 1603 cash grant or a tax credit).

Without this incentive, a renewable energy developer depreciating a solar photovoltaic installation, for example, would instead have to depreciation the cost of the solar property over a period of five years. Qualifying renewable energy property placed in service between January 1, 2012, and December 31, 2012, will be eligible for a reduced 50% first-year bonus depreciation.