CONCORD, N.H. — The town of Seabrook faced off against the New Hampshire Department of Environmental Services in the state's highest court recently in a dispute that could cost the community $2.2 million in taxes paid by its resident nuclear power plant.
Both sides of the costly disagreement had 15 minutes to make their cases before New Hampshire Supreme Court judges.
The town's lawyers argued DES overstepped its bounds when it increased the percentage of tax exemptions granted to NextEra Energy Seabrook for the nuclear power plant's pollution control devices. Seabrook's attorney, Robert Ciandella, said there was no legal justification for the increase in the tax break.
But the DEP's lawyers said the law concerning the tax exemption has changed since it was established in 1984.
According to Seabrook Town Manager Barry Brenner, the power plant previously received a 14.5 percent tax exemption on its property value under a state law that allows for such tax breaks to encourage pollution control in New Hampshire.
However, the power plant's exemption was increased to 26.5 percent after a request to DES by its owner was approved.
"That's a substantial increase," Brenner said yesterday. "It would take $200 million off the taxable value of the plant."
The reduced taxable value translates into a $2.2 million loss in taxes to Seabrook. If the town is unable to reverse DES' actions, it will have to either cut services to residents or raise the tax rate to make up the difference.
Currently, NextEra Energy Seabrook is valued at $1.498 billion, which represents about half of Seabrook's overall tax base, Brenner said.
But in the early 1990s when the plant first came on line, it was valued at well in excess of $3 billion, accounting for more than 85 percent of the town's then tax base. Over the decades, however, the worth of nuclear power plants dropped nationally, and Seabrook Station saw its value drop as low as $730 million in 2005.
After the energy shortage led to a rebounding of the nuclear industry, the worth of the plant steadily rose back up to its current valuation.
After the DES acted, Seabrook moved quickly, appealing directly to the environmental agency. The town was denied input by DES, and its appeal was rejected.
The town then challenged DES' ruling at Merrimack Superior Court — the jurisdiction where the Concord environmental agency is located — and then New Hampshire's Supreme Court. The cases are now pending in both courts, Brenner said.
Brenner agrees the law (RSA 72:12-a) surrounding the pollution control-related tax exemptions has changed, but the change isn't the issue.
"The law has changed, but you have to look at what the change is," Brenner said. "New Hampshire DES has erred in its application of the statute."
According to its legal brief for the Supreme Court appeal, the town is arguing that DES granted the tax exemption on the value of pollution-control equipment that is not in use, a violation of the legal intent of the law.
Ciandella wrote the statute provides that a pollution-control facility is "exempted from taxes levied under this chapter for the period of years in which the facility, device, appliance or installation is used ..."
"... If the facility is not used to treat pollution during the tax year, it does not qualify for the pollution-control exemption during the tax year," he continued.
Among the mistakes Ciandella said DES made was granting pollution-control exemptions on equipment meant for use only if or when there's a catastrophic accident at the plant, something that has never happened and most likely will never happen. Such equipment is for "safety purposes," to prevent the risk of explosion or the escape of radioactive materials, and not pollution-control equipment, he wrote.
A dangerous precedent will be set if DES is permitted to allow NextEra to receive tax exemption for its safety equipment, Ciandella argued.
"Following NextEra's and DES' logic, a homeowner is entitled to a pollution-control tax exemption under RSA 72:12-a for fire extinguishers, which operate to contain/control a fire and thus avoid contaminants such as smoke, oil or gas escaping from the home during a fire ... ," Ciandella wrote.
The Associated Press contributed to this report.
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