ML20057F729

Proposed Rule 10CFR171, Restoration of Generic Exemption from Annual Fees for Nonprofit Educational Institutions. Rule Would Establish Annual Fee Schedules for Licensees for FY93

ML20057F729
Person / Time
Issue date:	09/23/1993
From:	Chilk S NRC COMMISSION (OCM)
To:
References
FRN-58FR50859, RULE-PR-171 PR-930923, NUDOCS 9310190035
Download: ML20057F729 (16)

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NUCLF.AR REGULATORY COMMISSION 10 CFR Part 171 RIN 3150-AE83 Restoration of the Generic Exemption from Annual Fees 7%

for Nonprofit Educational Institutions

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,3 AGENCY:

Nuclear Regulatory Commission.

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ACTION:

Proposed rule.

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.- -V SUMP.ARY:

On July 20, 1993, the Nuclear Regulatory Commission

("NRC" or " Commission") published a final rule establishing annual fee schedules for its licensees for fiscal year 1993.

The final rule eliminated a generic exemption from annual fees previously applicable to nonprofit educational institutions (educational exemption).

Following publication of this rule, the Commission received a petition for reconsideration requesting reinstatement of the educational exemption.

The Com=ission views the petition as a request to conduct a new rulemaking to amend the final rule by restoring the exemption.

The Commission grants the request for a new rulemaking.

The new rulemaking reconsiders whether nonprofit educational institutions should receive a generic exemption from annual fees.

The commission requests public comment on that question.

The rulemaking proceeding will address no other annual fee question.

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/),l[Q 9310190035 930923 PDR PR 171 5BFR50859 PDR f

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DATE:

Comment period expires (30 days _after publication).

l Comments received after this date will be considered if-it is practical to do so, but the Commission'is able to assure i

consideration only for comments received on or before this date.

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ADDRESSES:

Submit written comments to:

Secretary, U.S.

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Nuclear Regulatory Commission, Washington, DC 20555, Attn:

i Docketing and Service Branch.

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Deliver comments to:

11555 Rockville Pike, Rockville, Maryland 20852, between 7:45 an and 4:15 pm Federal workdays.

i (Telephone 301-504-1966.)

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Copies of comments received may be examined and copied for a i

fee at the NRC Public Document Room, 2120 L Street NW, (Lower Level) Washington, DC 20555.

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FOR FURTHER INFORMATION CONTACT:

L. Michael Rafky, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone 301-504-1606.

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SUPPLEMENTARY INFORMATION:

t I.

Background.

i II.

Section-by-section analysis.

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III. Environmental impact:

categorical exclusion.

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IV.

Paperwork reduction act statement.

l V.

Regulatory analysis.

VI.

Regulatory flexibility analysis.

VII. Backfit analysis.

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l I.

Background

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On July 20, 1993 the Commission published its final annual i

t fee rule for FY 1993 (58 FR 38666).

The final rule principally i-l set out the Commission's fee schedules for FY 1993, but it also discussed in some detail the 3-2 Commission decision to revoke a generic exemption previously applicable to nonprofit educational institutions.

A court of appeals decision, issued in March 1993, f

t had necessitated the Commission's rethinking of the educational exemption.

See Allied-Sicnal, Inc.

v.

NRC, 988 F.2d 146 (D.C.

a j

Cir. 1993).

That decision cast doubt on the NRC's stated f

j rationale -- which included a purported inability to " pass l

through" costs -- for exempting nonprofit educational l

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institutione from annual fees.

In reaction to the court decision, the Commission initially

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proposed to retain the educational exemption, but with a fresh j

4 rationale.

In its proposed FY 1993 annual fee rule, the

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commission requested comments on retaining the exemption, and t

I asked specifically for comments on the court's suggestion that l

perhaps the exemption could be justified if " education yields 4

i exceptionally large externalized benefits that cannot be captured j

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in tuition or other market prices."

988 F.2d at 151.

The Commission also requested comments on whether the exemption j

i should be revoked.

Following the close of the comment period, the commission i

4 faced a dilemma.

It remained committed to the value of nuclear education and related research as a policy matter, but it had i

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4 received only a few comments, and cursory ones at that, supporting a continued generic exemption.

Additionally, some IIRC licensees had submitted comments requesting abandonment of the exemption altogether or a more equitable spread of its costs to all licensees.

Still other commenters urged that the exemption i

be retained, but that it be expanded to include various other licensed activities.

After considering the material before it, a split j

Commission, by a 3-2 vote, " reluctantly concluded that in view of j

l the court decision and the administrative record developed during l

the comment period it cannot justify a generic ' educational' exemption for FY 1993" (58 FR 38668-69).

Therefore, the commission informed formerly exempt nonprofit educational institutions that they would have to pay annual fees beginning in FY 1993.

The Commission did point out that many of these institutions might be able to make individualized showings of financial hardship and externalized benefits sufficient to justify a "public interest" exemption under 10 CFR 171.11(b)

(58 FR 38669).

The two dissenting Commissioners took the view that the Commission should continue in force the generic educational exemption (58 FR 36875).

Almost immediately the Commission began receiving letters from many colleges and universities protesting the change in its longstanding policy.

Many of these letters were sent as comments regarding the Commission's concurrent fee policy study now being conducted as required by the Energy Policy Act of'1992 (58 FR 21116).

In these letters and comments (available in the NRC i

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Public Document Room ("PDR")), educational institutions described the " externalized benefits" derived from their programs and the problems created by the new annual fees, including the prospect l

of major cutbacks in nuclear education.

Some licensees also pointed out that their programs were already heavily subsidized j

i by the Federal government (in particular by the Department of Energy), precisely because the programs were not sustainable I

absent public sector support.

The Commission also received'a formal petition for f

reconsideration of the FY 1993 final rule with the aim of t

i restoring the nonprofit educational exemption.

See Petition for i

Reconsideration of Final Rule (July 30, 1993). In this petition for reconsideration (which is being published as an appendix to i

this proposed rule), a number of formerly exempt colleges and universities asserted with some specificity a number of benefits that educational institution research reactors provide to both i

the nuclear industry and the public at large.

Prominent was the

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continued training of nuclear scientists and engineers (Petition at 3-4).

The petitioners also stated that nuclear technology was used in fields as varied as medicine, geology, archaeology, food science and textiles and that the public additionally benefitted from people who could provide knowledgeable opinions on nuclear topics, as well as from tours of research reactors (Petition r

at 4-5).

The petitioners went on to argue that education provides t

significant " externalized benefits" warranting public subsidy.

t They cited a letter from economist Alfred Kahn (also availabla in

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J the attached appendix) stating that the knowledge generated by university-related research is itself a public good that cannot i

be quantified using market indices (Petition at 6-7).

Mr. Kahn's letter argues that it is " inefficient" and " socially and economically undesirable" to charge people for access to pure knviledge, because the benefits of that knowledge "are largely unpredictable."

Letter from Alfred Kahn to Shirley Egan, I

Associate University Counsel, Cornell University (July 15, 1993).

l The petitioners also stressed the harm to university nuclear i

programs as a result of the newly imposed annual fees (Petition l

at 8-9).

Using Cornell University's nuclear program as an example, they asserted that Federal grants (in addition to those I

already provided) might be necessary to meet the additional costs of NRC annual fees (Petition at 9-10).

Finally, the petitioners I

argued that the Commission's longstanding exemption for nonprofit r

educational institutions was rooted in sound policy, and that reinstating the exemption would be consistent with the already extensive direct Federal funding provided many college and t

university licensees (Petition at 12-13).

In August, while the petition for reconsideration was under f

consideration, the Commission undertook an effort of its own to

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develop guidance for considering individual "public interest"

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t exemption requests by colleges and universities.

As part of this effort, the NRC staff visited a number of colleges and r

universities to learn more about their educational activities and l

the benefits of non-power reactors and the use of nuclear i

naterials in education programs.

The Commission concluded that i

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the new annual fees ($62,100 for each research reactor license; i

lesser amounts for each materials license) would jeopardize the educational and related research benefits provided by a number of colleges and universities.

As a result of the new and more detailed information and arguments developed in the petition for reconsideration and in 3

the other sources described above, and after careful reflection, the Commission now is inclined to. return to its previous practice of exempting nonprofit educational institutions from annual fees.

The Commission therefore grants the petition for reconsideration of the FY 1993 final rule and now proposes to exempt nonprofit i

educational institutions from annual fees.

The Commission does not intend to create any other generic exemption categories in i

this rulemaking.

The Commission does not propose lightly this further shift in a policy that has already gone through a major change in a short time.

The Commission was sharply divided from the outset on the wisdom of eliminating the generic educational exemption.

New information and fresh thinking have persuaded the entire Commission that restoration of the exemption reflects a sound policy choice that avoids placing in jeopardy valuable educational resources that are indispensable to the nuclear industry, to numerous other educationa] activities, to the NRC i

itself and to the public at large.

The Commission solicits public comment on its proposed rule that would restore the exemption.

Comments on other annual fee issues will not be entertained in connection with this proposed i

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8 rule.

The Commission already has received some information on

- the " externalized benefits" of non-power reacters and the use of i

licensed nuclear materials in various educational activities and related research at colleges and universities.

However, the Commission is interested in more data on the benefits of non-l power reactors and the use of licensed nuclear materials in education in its broadest sense, in the expectation that more data may well substantiate the ar'gument in-the petition for r

reconsideration that non-power reactors and the use of licensed nuclear materials in educational activities are prime examples of activities that provide " externalized benefits" warranting public support.

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The Commission expects commenters to address the I

" externalized benefits" question by providing data on (but not limited to) the size and subject areas of classes using licensed material in studies or research, the number of faculty and students using licensed material in their studies or research, the type and availability of work for graduates of nuclear programs and other programs in which licensed nuclear materials' are used, and the relation between education and research in institutions of higher learning.

The Commission has particular 3

interest in comments on the extent to which the benefits of t

nuclear education and other programs using licensed nuclear 3

materials (not simply education in general) are " externalized" i

and would not be produced by market forces.

The Commission would appreciate detailed information on the many non-nuclear fields of i

I study that use licensed nuclear material in the course of 6

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educating their students.

The commission has received some I

information in letters addressing the fee policy study required by the Energy Policy Act of 1992 described above, but more data is needed for the Commission's deliberations.

This notice, of course, does not represent a final Commission decision to reinstate the educational exemption, but simply the Commission's proposed resolution of the question based on its current best information and best thinking.

But, with the Commission proposing to restore a generic exemption, it is not necessary for formerly exempted educational licensees to apply for individual public interest exemptions.

Therefore, the Commission requests nonprofit educational licensees not to seek such exemptions at this time.

If after reconsideration, the commission decides that it cannot justify a generic exemption it l

will provide educational licensees ample time to seek individual exemptions.

The Commission will hold in abeyance all individual exemption requests it already has received from educational licensees.

The issue of refunds to nonprofit educational licensees who may have paid the FY 1993 annual fee will be addressed, if applicable, in the final rule.

Nonprofit educational licensees who have requested termination, downgrade, possession-only or combined licenses to avoid the FY 1993 annual fee will be advised accordingly what action, if any, is needed if they choose to rescind those applications as a result of this proposed rulemaking.

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i 10 There is one final point warranting clarification.

The j

i FY 1993 final rule eliminating the educational exemption j

indicated that, because of the remand from the court of appeals, I

the Commission would issue new fee schedules retracting the exemption for FY 1991-92 and offer appropriate refunds.

The Commission now proposes not to issue revised fee schedules l

reflecting retraction of the educational exemption because of its inclination to restore the exemption.

Commenters, if they 2

i choose, may address this point.

As the final rule made clear (58 FR 38669), the Commission did not intend retroactively to charge fees to nonprofit educational institutions for FYs 1991-92, but did intend to make l

l refunds to those licensees (power reactors) that made up the f

shortfall in 100 percent fee recovery created by the educational

'I exemption.

Should the Commission restore the exemption, however, no new fee schedule for FYs 1991-92 will be necessary and no l

i refunds will be made.

On the other hand, because of the timing of this reconsideration proceeding and if the Commission s

l reinstates the educational exemption, no licensee will be J

assessed additional fees to make up any shortfall created for FY 1993.

For future fiscal years, however, the Commission will i

recover from other licensees the shortfall resulting from the educational exemption, pursuant to its current statutory mandate to recover 100 percent of its budget.

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11 II.

Section-by-Section Analysis l

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Section 171.11 Exemptions Paragraph (a) of this section is amended by adding nonprofit I

h educp.cional institutions, as defined in S 171.5, to the list of those entities exempted from annual fees by the Commission.

A discussion of this change in fee policy is found in Section I of this proposed rule.

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III.

Environmental Impact: Categorical Exclusion The NRC has determined that this proposed rule is the type of action described in categorical exclusion 10 CFR 51.22(c) (1).

Therefore, neither an environmental assessment nor an environmental impact statement has been prepared for the proposed regulation.

IV.

Paperwork Reduction Act Statement TL's proposed rule contains no information collection requirements and, therefore, is not subject to the requirements l

of the Paperwork Reduction Act of 1980 (44 U.S.C.

3501 et seq.).

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V.

Regulatory Analysis 1

j With respect to 10 CFR Part 171, on November 5, 1990, the i

1 Congress passed Public Law 101-508, the Omnibus Budget t

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Reconciliation Act of 1990 (OBRA-90).

For FYs 1991 through 1995, l

OBRA-90 requires that approximately 100 percent of the NRC budget

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i authority be recovered through the assessment of fees.

To accomplish this statutory requirement, on July 20, 1993 (58 FR 38666), the NRC, in accordance with 5 171.13, published in the I

Federal Recister the final amount of the FY 1993 annual fees for operating reactor licensees, fuel cycle licensees, materials licensees, and holders of Certificates of Compliance, i

registrations of sealed source an'd devices and QA program approvals, and Government agencies.

OBRA-90 and the Conference i

Committee Report specifically state that--

i (1) The annual fees be based on the Commission's FY 1993 budget of $540.0 million less the amounts collected from Part 170 fees and the funds directly appropriated from the NWF to cover the NRC's high level waste program; l

(2) The annual fees shall, to the maximum extent practicable, have a reasonable relationship to the cost of regulatory services provided by the Commission; and l

(3) The annual fees be assessed to those licensees that-the Commission, in its discretion, determines can fairly, equitably, and practicably contribute to their payment.

Therefore, when developing the annual fees for operating i

power reactors the NRC continued to consider the various reactor

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13 vendors, the types of containment, and the location of the operating power reactors.

The annual fees for fuel cycle licensees, materials licensees, and holders of certificates, registrations and approvals and for licenses issued to Government agencies take into account the type of facility or approval and the classes of the licensees.

4 10 CFR Part 171, which established annual fees for operating power reactors effective October 20, 1986 (51 FR 33224; September 18, 1986), was challenged and upheld in its entirety in Florida Power and Licht Company v.

United States, 846 F.2d 765 (D.C. Cir. 1988), cert. denied, 490 U.S. 1045 (1989).

i 10 CFR Part 171, which established fees based on the FY 1989 budget, were also legally challenged.

As a result of the Supreme Court decision in Skinner v. Mid-American Pipeline Co.,

109 S.

i Ct. 1726 (1989), and the denial of certiorari in Florida Power and Licht, all of the lawsuits were withdrawn.

The NRC's FY 1991 annual fee rule was largely upheld recently by the D.C.

Circuit Court of Appeals in Allied Sicnal v.

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NRC.

VI. Regulatory Flexibility Analysis As required by the Regulatory Flexibility Act, 5 U.S.C.

605(b), the Commission certifies that this proposed rule, if

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i adopred, will not have a significant economic impact en a substantial number of small entities.

The proposed rule affects about 110 operating power reactors which are not considered to be-l small entities.

j VII.

Backfit Analysis i

The_NRC has determined that the backfit rule, 10 CFR 50.109, j

does not apply to this proposed rule and that a backfit analysis l

is not required for this proposed rule.

The backfit analysis is-not required because these amendments do not require the modification of or additions to systems, structures, components, or design of a facility or the design approval or manufacturing license for a facility or the procedures or organization required to design, construct or operate a facility.

List of Subjects in 10 CFR Part 171 Annual charges, Byproduct material, Holders of certificates, registrations, and approvals, Intergovernmental relations, Non-payment penalties, Nuclear materials, Nuclear' power plants and

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reactors, Source material, Special nuclear material.

For the reasons set out in the preamble'and under the authority of the Atomic Energy Act of 1954, as amended, and 5 l

U.S.C.

553, the NRC is proposing to adopt the following amendments to 10 CFR part 171.

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15 PART 171 -- ANNUAL FEES FOR RFACTOR OPERATING LICENSES, AND FUEL t

CYCLE LICENSES AND MATERIALS LICENSES, INCLUDING HOLDERS OF

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CERTIFICATES OF COMPLIANCE, REGISTRATIONS, AND QUALITY ASSURANCE PROGRAM APPROVALS AND GOVERNMENT AGENCIES LICENSED BY THE NRC 1.

The authority citation for Part 171 is revised to read as follows:

Authority:

Sec. 7601, Pub.

L.99-272, 100 Stat. 146, as amended by sec. 5601, Pub.

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100-203, 101 Stat. 1330, as amended by Sec. 3201, Pub.

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101-239, 103 Stat. 2106 as amended by i

sec. 6101, Pub.

L.

101-508, 104 Stat. 1388, (42 U.S.C.

2213);

l sec. 301, Pub.

L.92-314, 86 Stat. 222 (42 U.S.C.

2201(w) ) ;

sec. 201, 88 Stat. 1242 as amended (42 U. S.C.

5841); sec. 2903, Pub.

L.

102-486, 106 Stat. 3125, (42 U.S.C. 2214 note).

2.

In 5 171.11, paragraph (a) is revised to read as follows:

S 171.11 Exemptions.

(a) An annual fee is not required for:

(1) A construction permit or license applied for by, or

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issued to, a nonprofit educational institution for a production or utilizatien tacility, other than a power reactor, or for the possession and use of byproduct material, source material, or special nuclear material.

This exemption does not apply to those byproduct, source, or special nuclear material licenses which I

authorize:

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1 (i) Human use; (ii) Remunerated services to other persons; i

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16 (iii) Distribution of byproduct material, source material, or special nuclear material or products containing byproduct material, source material, or special nuclear material; or (iv) Activities performed under a Government contract.

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(2) Federally owned research reactors used primarily for educational training and academic research purposes.

For purposes of this exemption, the term research reactor means a l

nuclear reactor that -

(i) Is licensed by the Nuclear Regulatory Commission under Section 104 c.

of the Atomic Energy Act of 1954 (42 U.S.C.

t 2134(c)) for operation at a thermal power level of 10 megawatts or less; and (ii) If so licensed for operation at a thermal power level of more than 1 megawatt, does not contain -

(A) A circulating loop through the core in which the licensee conducts fuel experiments; (B) A liquid fuel loading; or (C) An experimental facility in the core in excess of 16 square inches in cross-section.

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Dated at Rockville, Maryland this 7.3 1 day of September 1993.

For the Nuclear Regulatory Commission.

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Chilh Secretary of thb, Commission.

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In Re FY 1991 and 1992 Final

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i Rule Implementing the U.S.

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Court of Appeals Decision

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RIN 3150-AE49 and Revision of Fee Schedules;

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100% Fee Recovery, FY 1993

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PETITION FOR RECONSIDERATION OF FINAL RULE I.

Introduction i

The Nuclear Regulatory Commissi)n ("NRC" or

" Commission") has long exempted nonprofit educational institutions from paying annual fees. 1/

Although the Commission traditionally justified this exemption on the i

grounds that colleges and universities could not readily i

pass the cost of the fees on to students through tuition and other charges, a recent federal court decision questioned this rationale. 2/

The court explained, however, that the externalized benefits of education potentially supported such an exemption. 2/

1/

Egg 10 C.F.R.

S 171.ll(a) (1993).

2/

Egg Allied-Sicnal. Inc.

v.

U.S.

Nuclear Reculatory Comm'n, I

988 F.2d 146 (D.C. Cir. 1993), discussed in section II infra.

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Id. at 151; section II infra.

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Although the Commission at first defended its educational exemption in a rulemaking proceeding prompted

'l by the court's decision, it abandoned the exemption in the final version of its annual fee rule. A/

petitioners contend that in so doing the Commission erred and l

respectfully request that the Comm!.ssion reconsider its ruling and reinstate the exemption for nonprofit t

educational licensees. 1/

II.

The Allied-Sicnal Court Clearly Invited the Commission to Grant an Exemption to Educational Institutions.

i Although the decision in Allied-Sicnal, Inc.

v.

U.S.

Nuclear Reculatory Comm'n, 988 F.2d 146 (D.C. Cir.

1993), compelled the Commission to reconsider its exemption of nonprofit educational facilities, the court suggested a valid reason for exempting educational reactor l

licensees from annual fees.

The court merely asked the NRC to marshal a rationale based on " externalized A/

FY 1991 and 1992 Final Rule Implementing the U.S. Court of Appeals Decision and Revision of Fee Schedules; 100% Fee Recovery, FY 1993, 58 Fed. Reg. 38666, 38668-69 (Nuclear Regulatory Comm*n, July 20, 1993) (" Final Rule").

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petitioner Cornell University has submitted similar comments supporting the exemption in response to the Commission's fee policy review.

San Letter from N.

Scott to Secretary and Commissioners in response to RIN 3150-AE54 (July 16, 1993).

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benefits" of education "that cannot be captured in tuition or other market prices."

Idi at 151.

Indeed, the Allied-Sicnal court explained that "there is at least a serious possibility" that the Commission can

" substantiate" such an exemption.

Idz In its Final Rule, however, the Commission " missed an opportunity to consider seriously the classic

• externalized benefits

• argument" proposed by the court. _1/

While Petitioners believe that the Commission j

should have decided to continue the exemption at issue and should have' based its decision on the court's discussion and on the many comments supporting the exemption, they i

seek in this petition to provide the Commission with additional information about the considerable externalized benefits of nuclear reactor programs at nonprofit educational institutions.

l III.

Nuclear Reactors at Nonprofit Educational j

Institutions Provide Significant Benefits to the Commercial Nuclear Industry and the General Public.

i Universities, including the Petitioners, train scientists and engineers who enter the commercial nuclear industry and government regulatory agencies such.as the E/

Differing Views of Commissioners Remick and DePlanque, Final Rule, 58 Fed. Reg. at 38675.

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l NRC itself.

Distinguished faculty, many of whom have I

worked in the field since its infancy, instruct the i

f students in basic research and new technologies.

Without study at educational reactors, these students would lack the knowledge and skill necessary to adequately maintain the efficiency and safety of the nuclear industry.

Nuclear engineering programs, which can thrive only by including hands-on laboratory study at a working reactor, assist the commercial nuclear industry directly through pure and applied science.

Cornell researchers, for example, have analyzed the behavior of reactors under

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severe accident conditions.

Universities contribute to i

the power reactor industry by developing concepts for j

better cooling systems, moderators, and other components of power reactors systems, i

University researchers also use reactors to develop new applications of nuclear technology in fields as varied as medicine, geology, archaeology, food science,

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and textiles.

These new research findings in turn provide opportunities for profitable commercial ventures.

By operating nuclear reactors, educational institutions assist industry and government in other 1

important ways.

They provide a source of respected, I

informed, and independent opinion on the benefits and burdens of nuclear technology for a society addressing its

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A implications.

Students and members of the public who tour the educational reactor facilities gain insight into the varied uses of nuclear technology and come to appreciate the contribution of nuclear industries to the quality of their lives.

The Commission itself has acknowledged its continued belief that " educational research provides an important benefit to the nuclear industry and the public at large and should not be discouraged." 2/

A " vibrant nuclear education sector also is important as a source of talent and ideas for-the NRC itself and for the whole government," the Commission avowed in the course of its rulemaking process.

Id.

The wide array of externalized benefits generated by nuclear reactor programs at nonprofit educational institutions is thus apparent from 4

the Commission's statements and from the many comments submitted in support of the contested exemption. H/

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2/

FY 1991 and 1992 Proposed Rule Implementing the U.S.

Court of Appeals Decision and Revision of Fee Schedules; 100*5 Fee f

Recovery, FY 1993, 58 Fed. Reg. 21662, 21664 (Nuclear Regulatory Comm'n, April 23, 1993)

(" Proposed Rule") (citations omitted).

H/

Sag also descriptions of Petitioners' nuclear reactor I

programs attached as Exhibit B.

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l IV.

Economic Theory Supports the Nonprofit Educati 61 l

Exemption.

The Commission's long-standing exemption for I

nonprofit educational facilities is wholly consistent with

" externalized benefits" economic theory.

As Commissioners Remick and DePlanque explained in their opinion,

" education, like national defense, [and] the administration of justice

.. provides large and indispensable benefits to the whole society, not just to I

purchasers."

Final Rule, 58 Fed. Reg. at 38675.

Indeed, the " exceptionally large" benefits of nuclear reactor programs at universities are recounted in section III above and in the many comments submitted to the Commission during its rulemaking process. 2/

From ground-breaking discoveries to vital core data, university nuclear research is openly published and freely debated to ensure the highest academic standards and widest availability.

Such "[p]ure knowledge is the I

2/

Because the Allied-Sicnal court gave no explanation of what benchmark externalized benefits should be measured by, it is unclear what the court meant by " exceptionally large."

Allied-Sianal, 988 F.2d at 151.

Furthermore, it is practically impossible to quantify the contributions that university nuclear-science and engineering programs make to commercial users of nuclear energy.

This petition, together with the many comments submitted by educational licensees, does however illustrate the extent and variety of such benefits.,

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i archetypal "public good,'" -- once produced, it can be distributed widely at no incremental cost.

Letter from I

Alfred E.

Kahn to Shirley K.

Egan (July 15, 1993) ("Kahn Letter") at 1.

As Commissioners Remick and DePlanque I

reasoned, the free market may fail "to supply the necessary amount of education" and other public goods i

because the " buyers" or students lack information

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sufficient to set the "right price" or are unable to pay that price.

Final Rule, 58 Fed. Reg. at 38675.

The inefficiency of charging for access to nonproprietary research and education thus supports what noted economist Alfred Kahn calls "the strong and universally recognized case for public financing of pure research."

Kahn Letter at 1.

l Kahn explains that it would be " futile for universities to try to recover the cost by charging potential users" for research and education, as well as

" socially and economically undesirable for them to do so."

Id.

Instead, he reasons, "a flat charge on business beneficiaries is superior to a specific charge by the University for particular pieces of knowledge."

Id1 The Commission's relatively small costs associated with licensing educational reactors may easily be recovered from those licensees who benefit immeasurably from the activities of the distinguished teaching and research

l community at our nation's universities, and those who, in the Commission's discretion, can fairly, equitably, and practically make such payments.

V.

The Proposed Annual Fees Threaten Serious Injury to University Nuclear Procrams.

Not only is it economically inefficient to levy annual fees on university research reactors, it also places an undue financial burden on nuclear science education and threatens to chill nuclear research vital to industry and the general public alike. 12/

The situation at Cornell is illustrative of these potential problems. 11/

Cornell uses two reactors for teaching and research.

The larger, a 500-kilowatt TRIGA, is used most frequently.

A staff of four -- two engineers and two lab technicians -- maintains the reactors.

The annual 1D/ The Commission has also suggetted that it may in the future impose license and inspection fees, established under authority of the Independent Offices Appropriation Act ("IOAA"), on nonprofit educational licensees.

Egg Final Rule, 58 Fed. Reg.

at 38666; 10 C.F.R.

S 170.11 (a)(e) (1993) (exempting nonprofit educational institutions from IOAA fees).

Because these fees vary with the cost of inspecting particular reactor facilities, their precise impact on Cornell and other universities-is i

difficult to estimate.

The economic and public policy rationales for exempting colleges and universities from NRC annual _ fees apply with equal force to IOAA fees, however.

11/ Egg Nuclear Reactor Budgets, Use, and Federal Funding at petitioner Institutions attached as Exhibit A.. -

i

operating budget runs approximately $230,000. 12/

The L

proposed NRC annual fee for Cornell's reactors --

$124,200 -- thus represents over half of the entire reactor budget. 11/

Indeed, the federal government is the sole source of grant monies supporting Cornell's nuclear science and engineering programs, and federal research dollars i

comprise nearly half of the nuclear science and engineering department's annual research budget.

The Department of Energy not only contributes substantial grant monies but also donates all of the fuel for the reactors.

Cornell nuclear researchers receive grants from the National Science Foundation as well. 11/

12/ The reactors are used primarily by three nuclear science and engineering faculty and approximately twelve graduate students per year, with additional limited use by as many as ten faculty and fifteen graduate students from fields such as geology, chemistry, textiles, and archaeology.

Undergraduate teaching and demonstration, public tours, and incidental tests account for about a quarter of the reactor's total use.

11/ A 1991 study chaired by Dr. Marcus H. Voth found that of the 37 university reactors then operating, 15 incurred annual costs below $65,000.

Letter from Marcus H. Voth and Edward H.

Klevans to Samuel J. Chilk (July 12, 1993) at 2.

11/ Grants from the Atomic Energy Commission and the National Science Foundation first enabled Cornell to obtain its two reactors.

Egg David D.

Clark, The Nuclear Frontier:

Cornell's procram of Basic and Applied Research, Cornell Eng'g Q.,

Spring 1992, at 3 attached as Exhibit C.

_9_

i

)

If the Commission abandons the educational i

exemption, Cornell will be forced to seek increased federal grants to cover the NRC charges.

Rather than i

accomplishing the budgetary goals of the Omnibus Reconciliation Act, Pub.

L.

No. 101-508, 104 Stat. 1388 (1990), the Commission's action will merely shift monies i

from_one federal pocket to another.

As a federal court has logically noted, "[ilt is self-evident that a transfer of funds from one agency to another fails to-increase i

federal revenue."

Elorida Power & Licht Co.

v.

United i

States, 846 F.2d 765, 771 (D.C. Cir. 1988).

If Cornell attempted to recoup the NRC fees through general tuition increases rather than through grants, all students, many of whom receive extensive financial aid from the government and private funds, would be forced to subsidize a relatively small department-at I

the university.

Alternatively, a major increase in laboratory fees imposed on nuclear science and' engineering students alone.would place the program utterly beyond t

their financial reach.

Cost increases of such magnitude-would make any institution's nuclear program a prime i

target for elimination.

Since the Commission's Final Rule seeks to collect

[

i annual charges for fiscal year 1993, it also threatens to i

disrupt university budgets, which have already allocated i

e i

- ~

scarce resources for this year.

Because of the significant lag time required for approval of grant proposals, it may take as long as two years for universities to learn whether monies necessary to cover the major expense of NRC fees will even be available.

This financial stress comes as a shock to the educational community in the wake of the Commission's vigorous argument supporting the exemption in its Proposed Rule. 13/

Although the Commission proposes to alleviate the i

financial burden on colleges and universities by considering individual requests for exemption from annual fees and for installment payments, these suggestions provide small consolation.

Installment payment plans fail to address the real problem confronting universities --

how to pay for such annual fees at all.

Furthermore, any attempt by the Commission to examine numerous individual exemption requests could consume more NRC administrative 15/ San Final Rule, 58 Fed. Reg. at 38675; Proposed Rule, 58 Fed. Reg. at 21664 ("The Commission proposes to continue to exempt these (nonprofit educational] licensees from fees for FYs 1991, 1992 and 1993, as it has for many years in the past

[and] continues to believe that ' educational research provides an important benefit to the nuclear industry and the public at large and should not be discouraged.'")

(citations omitted).

t i l

t resources than a blanket educational exemption.

The sheer

[

number of universities joining in this petition underscores this concern.

VI.

The Educational Exemption Reflects Sound Public Policy and a Tradition of Support for Education.

Given the significant benefits realized by the nuclear industry from university research and education, any additional fees imposed on* commercial licensees to cover costs associated with nonprofit educational reactors are a bargain, not a burden.

Commercial power reactors have historically been the only NRC licensees asked to absorb the cost of supporting educational reactors.

The

$7.1 million in fiscal year 1993 costs associated with licensing nonprofit educational reactors, if divided equally among the 109 commercial power reactors now in operation, amounts to only $65,000 per commercial reactor and adds a mere 2% to the proposed average fee for commercial reactors.

Egg Proposed Rule, 58 Fed. Reg. at i

21674.

The costs borne by power reactor licensees could, in the Commission's discretion, be decreased somewhat by spreading them equitably among all commercial licensees.

~

That federal sources already support extensive nuclear research and education at both private and public institutions speaks to the national importance of this discipline.

The Commission's traditional exemption for,

i

t I

nonprofit educational facilities reflects a history of I

federal support for higher education rc flected in universities' nonprofit tax status and exemplified by the i

Morrill Act, which first established land-grant colleges such as many of the petitioners.

The efforts of Congress and the NRC to reduce the federal budget deficit are praiseworthy, but only if this' effort encourages growth by

[

strengthening tne nation's long-standing superiority in i

science and technology.

In the long term, the loss of the j

Commission's educational exemption will hinder the f

i advancement of nuclear science, the nuclear industry, the i

NRC itself, and the national interest.

[

t VII.

Conclusion For the foregoing reasons, petitioners request

{

i that the Commission reconsider its Final Rule and l

1 reinstate its annual fee exemption for nonprofit i

I educational institutions.

l t

Respectfully submitted, t

i By:

Xbj $ l aw IW)

CORNELL UIFIVERSITY

Shirley K.

Egan t

Associate Counsel Cornell University l

500 Day Hall l

Ithaca, NY 14853-2801 r

.nr-

- -., + - -

t By:

/

COUNFEL FOR CORNELL UNIVERSITY Joseph C. Bell Melissa R.

Jones l

Hogan & Hartson 555 Thirteenth Street, N.W.

i Washington, DC 20004-1109 i

nns 4

/ACd M(

By:

KANSAS STATE UNIVERSITY Jennifer Kassebaum Assistant University Attorney Kansas State University 111 Anerson Hall Manhattan, KS 66506-0115 b

!A Ydve By:

MANHATTAN COLLEGE

/

Walter Matystik Assistant Provost Manhattan College 4513 Manhattan College Pkwy.

Bronx, NY 10471 l

f By:

>>< t d MASSACHUSETTS INSTITUTE OF TECHNOLOGY George H. Dummer l

Director Office of Sponsored Programs Massachusetts Institute of Technology i

77 Massachusetts Avenue Room 4-110 Cambridge, PA 02139

. 3

P By:

N C z_r //

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NORTH CAdOLINA STATE UNIVERSITY Dr. Larry Monteith Chancellor North Carolina State University A Holladay Hall, Box 7001 Raleigh, NC 27695-7001 By:

bMO /

REED COLLEGE Steven Koblik President Reed College 3203 Southeast Woodstock Blvd.

Portland, OR 97202 By:

N'o 4 dC#

UNIVERSIT M F RHODE ISLAND Louis J.

Saccoccio Assistant Legal Counsel Carlotti Administration Bldg.

Office of the General Counsel University of Rhode Island Kingston, RI 02881 0Ma -

2 n"

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By:

THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS Donald A.

Henss Associate University Counsel University of Illinois Suite 258 Henry Administration Bldg.

506 South Wright Street i

Urbana, IL 81801 1

l 1

t N (h

/N4 [

A4 By:

THE CURATORS OF THE UNIVERSITY OF MISSOURI Phillip J.

Hoskins Counsel University of Missouri System 227 University Hall Columbia, MO 65211 i

By:

bAAbo Y.

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UNIVERSITY OF NEW MEXICO Charles N.

Estes, Jr.

University Counsel University of New Mexico 150 Scholes Hall Albuquerque, NM 87131 By:

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/ eda l k h THE UNIVERSITY OF TEXASgSYSTEM Robert Giddings Attorney The University of Texas System 201 West Seventh Street Austin, TX 78701 by:

l1 }///'W Y [t/Mo b b

UNIVERSITY OF UTAH William T.

Evans Education Division Chief Utah Attorney General's Office Beneficial Life Tower, lith Fl.

36 South State Street Salt Lake City, UT 84111 i..-.

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SERVICE MAY BE MADE UPON Joseph C. Bell Melissa R. Jones Hogan & Hartson 3

555 Thirteenth Street, N.W.

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Washington, DC 20004-1109 COUNSEL FOR CORNELL UNIVERSITY i

6 Dated:

July 30, 1993 5434J/6817o l

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7:CVETE3 ew;C CERTIFICATE OF SERVICE

• 23."" ;Q 0 * ^7 I hereby certify that copies of the accompanying Petition for Reconsideration of Final Rule were served this 30th day of July 1993 upon the following:

i i

BY HAND DELIVERY William C. Parler General Counsel Nuclear Regulatory Commission One White Flint North Building 11555 Rockville Pike Rockville, Maryland 20852 BY FIRST CLASS MAIL C.

James Holloway, Jr.

Office of the Controller Nuclear Regulatory Commission 7735 Old Georgetown Road Bethesda, Maryland 20815 i

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Melifsa R. Jones

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EXHIBIT B t

l NUCLEAR REACTOR PROGRAMS AT PETITIONER INSTITUTIONS Cornell University In its 30 years of operation, the Cornell TRIGA has been used extensively in undergraduate and graduate courses and research by non-specialists.

In one project, neutron-induced autoradiography is used to map the location of specified pigments to reveal images in the successive layers painted by artists as a painting evolves from preliminary sketch ~to final version.

This non-destructive technique allows the art historian to infer the artist's developing intentions.

In another, neutron radiography is used to study the distribution of water between soils and the roots of living plants.

Neutron activation analysis is widely used in archaeology to characterize elemental compositions of articles such as pottery shards and obsidian and metallic artifacts.

Sufficient differences in elemental composition among clay sources distinguish local wares from imported ones.

The effectiveness of detergents hat; been studied by determining residues of labeled oils on treated specimens.

Nuclear methods of characterization for trace elements have been a key to i

resolving many materials quality issues for silicon semiconductor device fabrication.

r Cornell has the only cold neutron beam program at a university reactor in the United States.

t Additional nuclear methods that will shortly come into use at Cornell include prompt gamma-ray neutron activation analysis and neutron depth profiling based on monoenergetic conversion electrons produced by neutron reactions as well as the familiar method based on alpha particle or proton production.

l Kansas State University The program at Kansas State is valuable to institutions without research and teaching reactors.

The school's reactor, under the Department of Energy Reactor

(

Sharing program, is used by 13 different institutions, including Stanford, Louisiana State, the University of Southern l

California, and the National Transportation Safety Board.

Within the University, the reactor is used mostly by chemistry i

students, followed by nuclear engineering students.

Research is conducted in a wide range of fields including geology, biology, animal sciences, textiles, and grain sciences.

i i

l

MADhattan Collece The college's teaching and research reactor program is private and primarily undergraduate.

It is very small but economically run.

As the only teaching and research reactor in the metropolitan New York area available to educational institutions, it provides a significant resource for the area.

Three to four area institutions of higher learning regularly use it for teaching and research.

Colleges such as New York Maritime College would otherwise have no access to such a facility.

In addition, hundrtds of area high school and middle school students enjoy tours and demonstrations at the reactor each year as part of their science curriculum.

The school district in which the college is located has the highest proportion of minority students of any community school district in New York City, and among the highest in the nation.

Massachusetts Institute of Technolocy A large research program is carried on at the MIT Research Center.

In Nuclear Engineering there are studies in (1) Dose Reduction in which pressurized loops that stimulate both PWR and BWR environments have been constructed and j

operated in the core of the reactor for the purpose of identifying coolant chemistries that will minimize corrosion; t

(2) Irradiation-Assisted Stress Corrosion Crackino to investigate the formation and growth of cracks in reactor structural alloys; (3) testing the efficacy of in-core sensors, known as the SENSOR Proiect, involving in-core sensors that detect changes in electro-chemical potential (ECP) and the effect of water chemistry additives on the halting of crack growth; and (4) Dicital Control to develop and experimentally verify a generic methodology for the closed-loop digital control of neutronic power, core temperature, and other plant parameters.

In over a decade of work, results have included demonstration of signal validation, the development of a supervisory controller using reactivity constraints, a rule-based controller, closed-form laws for the time-optimal trajectory-tracking of reactor power, the on-line reconfiguration of control laws, automated power increases from suberitical, and the use of various forms of feedback.

Parallels between control strategios for reactors characterized by spatial dynamics and control of multi-modular reactors have also been studied.

Space Science also benefits from the Research Center with studies to determine the feasibility of low-temperature annealing of radiation-induced defects in electronic components such as will be used on a spacecraft for interplanetary missions of several years duration, and an upcoming study to i

investigate thermionic energy conversion in spacecraft reactors.

4 k

Neutron activation analysis and track-etch techniques are being used in Earth Sciences to investigate fundamental questions about the earth from meteorite composition, lava characteristics, and crack growth in granitic rock to i

continental drift.

Neutron activation is also being used to study the movements and trace the origins of atmospheric pollutants.

1 Forth Carolina State University Since 1973 the university's reactor has been used to support "Research Reactor Training" for local utilities

• training of licensed reactor operators.

Newly available in 1990 are training programs for individuals in the industrial community, such as engineers, supervisors, and maintenance personnel, to strengthen their understanding of how a power reactor operates.

Representative of the research uses of the university's reactor are the (1) Irradiation of Reactor vessel Steels Proiect for long term irradiation performed in specially designed baskets in the reactor, a project seeking a better understanding of degradation of the physical properties of steel in the reactor vessels at nuclear power plants; (2) Synercistic Ef_fects on Carbon Limiters Proiect to assess synergistic effects of both neutron exposure and ion bombardment to carbon limiters in fusion reactors by providing long term irradiation of carbon samples; (3) Neutron Activation Analysis in many quantitative analysis needs such as environmental monitoring, forensic and criminal work, certification of material purity, rare-earth tagging for study of marine larval dispersion, analysis of mercury in fish tissue, analysis of fossil power plant reservoirs for selenium, and industrial tagging; and (4) Neutron Depth Profilina Proiect i

consisting of characterization studies of borosilicate glass films on silicon wafers.

Reed Collece Reed College is the only educational institution in the United States to operate a reactor without a graduate or engineering program.

Although under the Chemistry Department, the reactor is used by six faculty for classes in physics, natural science, and art history, as well as chemistry.

Undergraduate and faculty research involves about 5 students each year, however, in the last 2 years approximately 20 faculty members from 11 additional colleges and universities have used the reactor facility for classes or research in the fields of biology, chemistry, physics, environmental science, forensic science and art history.

Each year as many as 20 high school students use the facility for classes and research.

A i

non-credit, semester seminar series on " reactor, radiation and the environment" is offered to the public.

Between 30 and 50 people attend it each year, two-thirds of them not affiliated with Reed College.

University of Illinois-Urbann The University of Illinois Nuclear Reactor Laboratory is a two-reactor facility, using the Advanced TRIGA and LOPRA reactors.

Neutron Activation Analysis, materials damage i

studies and nuclear pumped laser research are the research foci of the facility, in addition to its teaching goals.

j University of Missouri-Rolla The primary uses of the reactor at the Rolla campus of i

the University of Missouri are education and training of l

graduate and undergraduate students and nuclear-related research.

The reactor is used mostly by students from the fields of nuclear engineering, chemistry, life science, and physics.

In addition, about 540 students and instructors from i

other institutions use the reactor through the University Reactor Sharing Program.

l r

University of New Mexico Four research projects have been carried out using the AGN-201M reactor over the past seven years.

One of the major i

research projects involves measurement of basic physics l

parameters in a highly thermal system.

No other thermal

~

facility system has the flexibility and low intrinsic source strength required for this research.

This feature is unique to i

the university facilities.

A second project is a small sample reactivity measurement technique that is being applied to geologic samples to determine their thermal neutron cross sections and relative water content.

This work has application i

in both the oil well core logging industry and in the waste disposal area.

In a third project, foils of different materials are activated to determine their responses to thermal neutrons and to analyze content, particularly with respect to impurities that may be present.

A recent doctoral research project examined the role of fuzzy logic controllers in nuclear reactor control.

The conclusion was that fuzzy logic controllers appear to be feasible and useful when applied to rod positioning and timing.

1 l

l 4

i University of Rhode Island i

Rhode Island Nuclear Science Center has a long history of conducting environmental research.

The University of Rhode Island Graduate School of Oceanography uses the reactor to perform neutron activation analysis on environmental samples collected from locations all over the globe.

Important research discoveries in acid rain, geology, and environmental pollution have been achieved over the years because of the availability of the reactor.

The URI physics department conducts extensive neutron scattering experiments at the reactor and usually has several post-doctoral researchers at the facility on a full time basis.

As the only nuclear facility in the state, RINSC provides a significant number of tours to students from high schools and universities.

The positive uses of nuclear technolo'gy in environmental and materials research can be observed on a first hand basis.

University of Texas Research currently under way at the Nuclear Engineering Teaching Lab includes the (1) Texas Cold Neutron Source Proiect for the development of a neutron source with low neutron energies for research in prompt gamma activation and scattering; (2) Neutron Depth Profilina Proiect for the measurement of boron and other (n,a) reactions to determine depth concentrations in various materials such as glass and silicon; (3) Neutron Capture Theraov Proiect for measurements of the dose to head phantoms from the neutron activation of gadolinium; (4) various Neutron Activation Proiects in support of investigators, including irradiation of biological fluids, geological samples, and others; and (5) Dicital Reactor Control Project for the development of an artificial intelligence software tool to provide software functional diversity.

Ubiversity of Utah The program at the University of Utah is multidisciplinary in nature, allowing researchers in a variety of fields to discover the potential of reactor use.

The reactor is used mostly by nuclear engineers, mechanical engineers, chemical engineers, and electronic engineers.

l soua i

l

) l

i EXHIBIT 1

+-

ALRED E. KANN hr' j

Joe NORTH CATUGA STREET TTHACA, NDY VCRC N8M TEL: IMri 2rr-ECr

• % -- x ' ~/.

I**'

fAI: 1Mr)..*, r is41 July 15,1993 l

i l

Ms. Shirley K. Egan Associate University Counsel

~

500 Day Hall Corne!! t* iversity Ithaca, NY 14853

Dear Ms. Egan:

Your draft of a poss:ble submission to the NRC captures most of the argument that I and, I am sure, the Circuit Ccurt had in mind.

There is one observation you make, however, that I think can usefully be expanded, and i

it is an argument that anyone familiar with the literature on externalities would quickly appreciate.

i It has to do with the social benefits of the non-proprietary pure research to which you allude, and of the associsted practice of not charging possible users for access to the knowledge thatit produces.

i Pure knowledge is the archetypal "public. good," in economic terms, the essential' characteristic of which is that, once produced,it can be made available more and more widely at zero

.l incremental cost. This means that it is inerricient to charge people for access to it.

-l l

That fact, taken together with the difficulty of the producer 'of pure knowledge appropriating the benefits of it in charges to potential users--because those benefits are largely unpredictatle--together make the streng and universally recognized case for public financing of pure research. The University's policy, which you do correctly emphasiae, of cceducting research on a non-proprietary basis is therefore--as you c!r.arly imply but do not, I think, stress adequately--

sccially highly desirable, and it would be both futile for universities to try to recover the cost by chstging potential users and socially and economically undesirable for them to do so.

This does not answer the question of who should pay the charges in question: on this I have nothing to add to your statement, eacept to point out that recovery in the form of a Q31 charge l

on business beneficiaries is superior to a specific charge by the University for particular pieces of knowledge.

V h

I urge you to consider expanding the argument slightly along these lines, mainly because I think I can assure you that anyone who raises the possible consideration ci externalities will te receptsve to such an expansion to embrace the concept cf public goods.

h 1

i 4

t 2-

.g.

I've taken the liberty cf correcting a few minor errors on the draft you sent me and raising cne or two minor specifsc qcestacns.

Please call on me if you think I can be of any additional assistance.

With test regards, Sincerely, s

f L

AER:psb

achment cc: David Clark