ML20155H389
| ML20155H389 | |
| Person / Time | |
|---|---|
| Site: | Portsmouth Gaseous Diffusion Plant, Paducah Gaseous Diffusion Plant |
| Issue date: | 11/06/1998 |
| From: | John Miller UNITED STATES ENRICHMENT CORP. (USEC) |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| GDP-98-0246, GDP-98-246, NUDOCS 9811100112 | |
| Download: ML20155H389 (13) | |
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4 USEC
. A Global Energy Company JAMES H. MILLER DIR: (301) 664-3309 VicE PRESIDENT, PRODUCTION fax: (301)571-8279 November 6,1998 GDP 98-0246 U.S. Nuclear Regulatory Commission Attention: Document Control Desk Washington, D.C. 20555-0001 Paducah Gaseous Diffusion Plant (PGDP)
Portsmouth Gaseous Diffusion Plant (PORTS)
Docket Nos. 70-7001 & 70-7002 Request for Exemption from Annual Fee Regulations Pursuant to 10 CFR 171.11(d)
Dear Sir:
In accordance with 10 CFR 171.11(d), the United States Enrichment Corporation (USEC) hereby submits the enclosed Request for Exemption from the fiscal year 1998 annual fee regulations for the Paducah and Portsmouth Gaseous Diffusion Plants (GDPs).
For the reasons discussed within, USEC believes that the NRC lacks statutory authority to assess the ~
annual fees under its 1998 annual fee regulations. Should the NRC be able to demonstrate such l
authority, USEC requests that the NRC grant exemptions from its 1998 annual fee regulations as
/
follows:
(1) the annual fee of $2,604,000 for the GDPs should be reduced to $1,278,000 Ml commensurate with the fee for Low Enriched Uranium (LEU) fuel facilities; (2) a single fee should be assessed covering both of the GDPs operated by USEC, rather than a separate fee for each facility.
Alternatively, and as discussed further in the attached Exemption Request, USEC requests an exemption from the 1998 annual fees which would substantially reduce the total fees to be paid by USEC by an amount commensurate with an NRC reevaluation of a fair and equitable allocation of the NRC's generic programmatic regulatory costs to USEC.
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Finally, USEC would appreciate the opportunity to meet with the NRC's Chief Financial Officer and L
appropriate NMSS staff to discuss this exemption request. Any questions regarding the exemption 9811100112 981106
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l PDR ADOCK 07007001 r I
'C PDR f
1U' WOJ Kockledge Unve, Bethesda, MD 20817-1818 Telephone 301-564-3200 Fax 301-564-3201 http://www.usec.com OMces in Livermore, CA Paducah, KY Ponsmouth, OH Washington, DC
r U. S. Nuclear Regulatory Commission Novembei 6,1998 GDP 98-0246, Page 2 -
- request and arrangements regarding USEC's request for a meeting should be directed to Ms.
Lisamarie Jarriel at (301) 564-3247. There are no new commitments made in this letter.
Sincerely, es H. Miller -
ice President, Production
Enclosure:
United States Enrichment Corporation Request for Exemption from NRC Annual Fee Regulations Pursuant to 10 CFR Q 171.11(d) cc: NRC Region III Office L NRC Resident Inspector - PORTS NRC Resident Inspector - PGDP l
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UNITED STATES ENRICIIMENT CORPORATION Request for Exemption from NRC Annual Fee Regulations PursuantJo 10 CFit _12LH(d).
L INTRODUCTION On April 1,1998, the Nuclear Regulatory Commission (NRC) published a proposed rule establishing annual fees for fiscal year 1998 (63 Fed. Reg.16046). The rule proposed annual fees for each of the gaseous diffusion uranium enrichment plants (GDPs) operated by the United States Enrichment Corporation (USEC) at $2,607,000 per GDP. USEC commented on the proposed rule in a letter dated May 1,1998, and recommended among other things, that:
(1) the proposed annual fees of $2,607,000 for the GDPs be reduced te r. value commensurate with the proposed fee for low-enriched uranium (LEU) fuel fabricatien facilities; and (2) a single fee be assessed covering the GDP complex operated by USEC, rather than duplicate fees for each GDP facility.
In its final fee rule published on June 10,1998 (63 Fed. Reg. 31840), the NRC rejected USEC's comments and set the 1998 annual fees at $2,604,000 per GDP facility. As a result, USEC will be required to pay total annual fees for fiscal year 1998 of $5,208,000.
On July 28,1998, USEC was privatized through an initial public offering. As a private corporation, USEC believes that the NRC does not have the statutory authority to assess USEC annual fees for its Certificates of Compliance under the statutory authority cited in its final fee rule.' USEC, therefore, requests an exemption from the annual fees.
Should the NRC be able to demonstrate such authority, in accordance with 10 CFR 171.11(d), USEC hereby requests an exemption from the provisions of the annual fee rule setting fees for the GDPs at
$2,604,000 per facility. If granted in its entirety, the effect of the exemption would be an assessment of a single annual fee of $1,278,000, covering both GDPs. However, USEC is also requesting, as an alternative, that the NRC undertake a reevaluation of the amount ofits generic programmatic regulatory costs that is fairly I
Section 6101(c) of the Omnibus Budget Reconciliation Act (OBRA) of 1990, P.L. No.
101-508 (codified as 42 U.S.C.
2213 (1994)) authorizes the NRC to assess and collect annual charges "from its licensees." USEC is the holder of Certificates of Compliance issued under Section 1701 of the Atomic Energy Act and is not a licensee under the licensing provisions of that Act. Neither does Section 161(w) of the Atomic Energy Act give the NRC the authority to assess these fees. Thus the NRC lacks the statutory authority to assess annual fees, including the 1998 annual fees, against USEC, and USEC challerges the 1998 fees on these basis as well.
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l and equitably allocable to USEC and that the NRC reduce USEC's annual fees by a substantial amount
- commensurate with that reevaluation.
Section II.A below, briefly summarizes the applicable legal standards goveming this Exernption Request.
Section II.B discusses, in general terms, why USEC believes that the annual fee assessed by the NRC is unfair, arbitrary, and lacks an objective basis and that the NRC's refusal to grant any relief from the annual fees would be contrary to the statutory and regulatory requirements.Section II.C responds more specifically to the NRC position that USEC's annual fees are justified by the " generic programmatic regulatory effort" allocable to USEC Finally, section II.D explains why the GDPs should be treated as a single process for purposes of the NRC's annual fees.
II. BASISJOREXEMPlION A.
Applicable 1egal standards j
10 CFR { 171.11(d) states that the NRC may grant an exemption from the annual fee ifit determines that the fee is not based on "a fair and equitable allocation of the NRC costs...." In addition, the Omnibus Budget Reconciliation Act (OBRA) of 1990 mandates that the NRC assess only those fees which have a reasonable relationship to the cost of providing regulatory services. The relevant section of the statute states:
To the maximum extent practicable, the charges shall have a reasonable relationship to the cost of providing regulatory services and may be based on the allocation of the Commission's resources among licensees or classes oflicensees. (Section 6101(c)(3),
Omnibus Budget Reconciliation Act (OBRA) of 1990, Pub. L. No. 101-508).
In determining whether to grant an exemption under section 171.11(d), the NRC considers three factors:
1.
whether there are data specifically indicating that the annual fee will result in a significantly disproportionate allocation of costs for the licensee; L
2.
whether there is clear and convincing evidence that the budgeted generic costs attributable to the class of licensees are neither directly or indirectly related to the licensee nor explicitly allocated to the licensees by Commission policy decisions; or j
3.
any other relevant matter that the licensee believes shows that the annual fee was not based on a fair and equitable allocation of NRC costs.
t As discussed below, the criteria for the issuance of an exemption from the annual fee rule have been met.
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B.
The Annual Fee Assessed by the NRC is Unfair, Arbitrary, and Lacks an Objective Basis and the NRC's Refusal to Grant Any Relief from the Annual Fees Would Be Contrary to the Statutory and Regulatorylequirements USEC now has submitted comments on the 1997 and 1998 proposed annual fee rules,2 and requested an exemption from the 1997 annual fee rule.3 In the course ofits unsuccessful effort to obtain some measure of relief from the annual fee structure, USEC has provided a number of grounds in support ofits position, only to have each of these unduly dismissed by the NRC with no accommodation made at all in the NRC's fee structure as it applies to USEC. Throughout the various correspondence, the NRC has justified denying USEC's requests by citing " differences" between the GDPs and LEU fuel fabrication facilities, regardless of whether or not those differences bear any real relationship to the NRC's generic programmatic regulatory costs, and without any effort to quantify such costs.
There are differences between the GDPs arid other NRC-licensed facilities,just as there are differences among any group of NRC-regulated facilities. In our view, however, those differences simply do not justify the magnitude of the differential between the fees to be paid by USEC and those paid by other licensees. The following table compares USEC's annual fees to those of uranium conversion facilities, LEU fuel fabrication facilities, Ifigh Enriched Uranium (IIEU) fuel fabrication facilities, and power reactors:
Comparison of 1998 Annual Fees *
$ Millions per Year 6
Uranium Conversion 5
LEU Fabrication HEU Fabrication 3
2 Power Reactor 1
Uranium Enrichment 0
Facility Type
- fismts: 63 Fed. Reg. 31840,31858 2
USEC's comments on the proposed 1997 annual fee regulations were submitted on March 31,1997 (GDP 97-0048) and its comments on the proposed 1998 annual fee regulations were submitted on May 1,1998 (GDP 98-0087).
3 USEC's Request for Exemption from the 1997 annual fee regulations was submitted on October 21,1997 (GDP 97-0183). In USEC's May 1,1998 letter, it also responded further to the NRC's denial of this exemption request.
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L Fees of this magnitude represent an excessive burden on USEC, which now has been privatized and must operate in a highly competitive commercial environment. Unlike electric utilities, USEC does not recover its expenses in guaranteed rates. Furthermore, excessive annual fees jeopardize USEC's ability to achieve one of the important public policy objectives set for it by Congresn to maintain a reliable and economical domestic source of uranium enrichment services. See U.S.C.S.
2243(f)(1996);
4 The NRC's methodology for determining annual fees for fuel cycle licensees was described in the June i
20,1995 Federal Register notice and was reiterated in the statements accompanying the 1997 fmal fee rule
-(62 Fed; Reg. 29197). The methodology involves the placement of facilities into a particular fee category based on various parameters such as enrichment and form of radioactive material used, and a determination of fees for facilities in that category based upon a judgment as to the level of" generic programmatic regulatory effort" allocable to those facilities. ' On its face, that methodology appears to be highly subjective and not susceptible to precise quantification. As a result, the refusal to moderate USEC's fees has the appearance of being arbitrary.
-Ilased on the NRC's various statements and correspondence, it appears that the annual fees for the GDPs l
have been set largely on the basis that those facilities simply are " bigger".than LEU fuel facilities, and that j
therefore dramatically larger fees are appropriate. It does not appear, based on the information presently available, that any careful, reasoned consideration of the relative generic regulatory programmatic effort j
l expended on the GDPs, versus other fuel cycle facilities, was employed in the NRC's fee determination.
j It may be that the NRC has a more precise and quantitative approach to setting annual fees than is apparent from its public statements to date, and which precludes it from any reasonable accommodation of USEC's position. To determine if that is the case, USEC has submitted a Freedom ofInformation Act (FOIA) request in an effort to understand more precisely the NRC's base.s for repeatedly denying USEC's requests l
in their entirety. It is USEC's intent to review the infornuii,r, received through its FOIA request and to supplement this Exemption Request as appropriate. Accordingly, USEC is also requesting that the NRC hold j
in abeyance any final determination on this Exemption Request pending receipt of such supplemental
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mformation, and reasonable opportunity for USEC to respond further.4 l
4 10 CFR f 171.ll(b) requires that requests for exemption from the annual fee regulations be submitted within 90 days of the effective date of the final regulations. This Exemption Request is being submitted before the expiration of the 90-day period in l
accordance with the rule. To the extent, however, that the NRC concludes that USEC's submittal of supplemental information after the NRC's response to our FOIA request itself requires an exemption from the 90-day filing provision, this letter should be construed as such an exemption request under 10 CFR 171.11(b).
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USEC is entitled to such an exemption (permitting it to supplement this submittal after t
receipt of the information provided under FOI A) because such exemption is: (1) authorized by law; and (2) in the public interest. It is authorized by law because the regulations permit the NRC to delay its decision pending receipt of an additional USEC j
submittal. It is in the public interest because it will afford USEC a full and fair opportunity to understand the application of the NRC's fee methodology to USEC and will enable the NRC to consider all of USEC's arguments at once, rather than in a
}
(continued...)
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Furthermore, it also appears that the NRC has dismissed any information that might suggest that a fee reduction is warranted, and accepted any information that suggests that the existing fee structure should be retained. For example, despite the fact that USEC has stated and the NRC has acknowledged that the GDPs "have been certified as low enriched uranium facilities with corresponding safeguards measures," this critical fact is dismissed with the statement that: "this information" is not "the determining factor" for assigning the appropriate fee category. 63 Fed. Reg. at 29197. While it may be correct that no single factor should be the determinant, the fact that the GDPs possess and process only LEU should be a fundamental consideration in the fee determination and should not be so easily dismissed. The nature of the radioactive material possessed and processed at the facilities, including its level of enrichment and chemictd form, should be a critical factor in determining the relative potential safety hazards and security and safeguards considerations that apparently drive tLe NRC's determination as to the level of pneric programmatic regulatory effort which is allocable to USEC. This factor should dominate and should innuence the outcome of the fee determination to a much larger degree than many of the other factors cited by the NRC.
The GDPs have over 90 years of operating experience. During that time, no incidents at the complex have caused death or serious injuries to plant personnel from exposure to radioactive materials or radiation. Nor have there been any incidents that have resulted in off-site releases of radiation or radioactive materials that could cause committed doses to the general public in excess of established limits. The GDPs are certified as LEU facilities commensurate with the hazards associated with LEU fuel facilities. The GDPs are categorized as Category Ill facilities for safeguards and security purposes because it is recognized that they require considerably less stringent safeguards than their HEU counterparts. USEC, therefore, can not discern the disparity between the annual fees for other LEU facilities and the GDPs. The differences sited by the NRC as their rationalization, which, USEC notes, have shifted, wavering from " hazards" to " risks" and from "a large inventory of UF " to "a large inventory oflube oil," simply do notjustify the disparity, because they do 6
not translate into increased generic programmatic regulatory costs.
For the reasons discussed above, USEC continues to believe that the 1998 annual fee regulations, as they apply to USEC, are not based on a " fair and equitable allocation of the NRC costs" and do not bear a
" reasonable relationship to the cost of providing regulatory services...." As such, an exemption should be granted from the 1998 annual fee regulations in accordance with USEC's request.
C.
The 1998 Annual Fees Exceed the Generic Programmatic Regulatory Effort Fairly Allocable to USEC The NRC has described its methodology for setting annual fees for fuel cycle licensees as follows:
This.. methodology results in the creation of five fuel facility license fee categories.
Licenses are grouped into these categories according to their license (nuclear material type, enrichment, form, quantity and use/ associated activity) and_according_to_the d(... continued) piecemeal manner, if the documents produced provide the information sought by USEC.
USEC has already paid and intends to continue to pay the required fees and the NRC will not be prejudiced by the delay.
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scope _ depth of coycrage._.andJigor_of_ generic _ regulatory _ programmatic effort
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- applicable _tomach category (emphasis added in original).
62 Fed. Reg. at 29197. If USEC understands this methodology correctly, it appears that first, various factors l
- (nuclear material type, enrichment, form, quantity and use/ associated activity) are used to " group" licenses into various categories. If the effect of this aspect of the methodology is simply to place the GDPs in their own designated fee " category," then USEC has no objection to such categorization. It is not the
- categorization itself, but rather the actual fees allocated to the GDP category, that are at issue. To determine those fees, it appears that the NRC considers the " scope, depth of coverage and rigor of generic regulatory programmatic effort applicable to [the] category." It is this aspect of the NRC methodology which USEC
- 4 does not believe has been fairly applied to USEC.
Originally, four reasons were cited by the NRC in rejecting for the first time USEC's request for relief
. from the NRC's 1997 fee rule. The NRC states that it is required to undertake a level of" generic regulatory programmatic effort" comparable to a HEU fuel facility'(rather than an LEU fuel facility) because:
The GDPs are subject to "a relatively large number of credible accidents" with " multiple initiating events";
The " potential onsite and offsite consequences posed by these accidents are significantly greater than those applicable to low enriched fuel facilities";
The "large size and scope of the GDP operations require substantially more effort for the development ofinspection procedures, guidance, and schedules;" and There are a " higher number of reportable events that NRC staff must review."
62 Fed. Reg. at 29197. Each of these reasons is discussed below. The NRC's most recent correspondence
.. on the subject shifts this reasoning somewhat and, at the end of this section, USEC responds to the new rationalizations.
1.
Number of Accidents With Multiple Initinting Events The NRC first states that the GDPs are subject to a "relatively large number of credible accidents" with
" multiple initiating events." In its 1997 annual fee rule exemption request, USEC responded to this statement as follows:
USEC is aware of no analysis which shows that the number of potential accidents at the GDPs exceeds that of an LEU fuel facility, or is comparable to that of an HEU facility. On the contrary, it appears that the number of accidents described in the application or license of other LEU fuel facilities does compare with the GDPs, with most ranging between 5 to 10 analyzed accident scenarios. The multiple initiating events for the 7 accidents described in the GDP SARs only reflect the comprehensive l.
hazard assessment performed for the GDPs. Other LEU licensees' accident analyses i
do not address such depth and are therefore, not analogous. Indeed, the NRC
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. recognizes that the risks associated with other LEU fuel facilities are not well defined and has initiated rulemaking to require performance of an integrated safety analysis
.(ISA) to address this concern. The GDPs have already performed this in-depth l
analysis.
1997 Exemption Request, p. 6.- In denying our 1997 exemption request, the NRC stated:
The safety analysis reports USEC submitted for the GDPs detail the analysis of a significantly larger number of accident scenarios than is typically done for other LEU fuel facilities.
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1997 Exemption Denial, p. 4 (emphasis added). This statement simply points out what USEC stated in seeking the exemption -- that it has submitted more detailed accident analyses than are typically submitted by fuel fabrication facilities -- but it does not demonstrate that there are indeed more potential types of accidents. Nor does it explain how those accidents translate into additional generic regulatory programmatic l
- effort. It is reasonable to assume that the NRC fees associated with the review of an application for a certificate of compliance or a license containing such detailed analyses could be higher, but the costs of those
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. licensing and review activities are captured by the NRC under its 10 CFR Part 170 fees for discrete regulatory services, and no nexus to the NRC's generic regulatory programmatic effort is evident.
In denying USEC's prior exemption request, the NRC then shifted from the " hazards" of the GDPs (i.e.,
s.
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'the number of accidents) to the " risk" associated with these facilities. It stated that while "[t]he predominant
^
hazard at the GDPs, as_well as other IE11 fuel fabrication facilities, is the presence of UF.... the risk of accidental release of UF or an inadvertent nuclear criticality, is higher at the GDPs.... " Id. at 2 (emphasis
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added). There are two areas of" risk" that are relevant to the NRC -- the risk of a security or safeguards breach,' and the risk of a health or safety problem The NRC acknowledges that security and safeguards concerns could not properly serve as the basis for the wide disparity between the GDP's fees and LEU fuel facility fees, by agreeing with USEC that."[b]oth the GDPs and LEU fuel facilities... require considerably less stringent safeguards than their HEU counterparts." Id. at 3. However, the NRC goes on to state that:
the less stringent safeguards requirement is offset by the increased regulatory effort in other areas necessitated by the higher public health and safety risk...
Id.
There is no basis for this conclusion regarding health and safety risk. Such a conclusion assumes that the NRC has been able to make a determination that the consequences and/or frequency of potential accidents at the GDPs exceeds those at LEU facilities. Ilowever, the NRC has specifically acknowledged that the j
consequences of potential accidents are not greater at the GDPs than at an LEU fuel facility, stating:
"the potential consequences of accidents at the GDPs may be comparable to those of other LEU fuel facilities...
-Id. at 4. If the NRC believes that the consequences of potential accidents appear to be comparable to LEU facilities, then the only way to conclude that the overall " risk" of accidents is substantially higher is to 7
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determine that there is a substantially higher frequency of potential accidents than at an LEU facility. This, in fact, appears to be the NRC's reasoning, because it states that despite these comparable consequences:
the total risk posed by these accidents is higher at the GDPs... [due to] the large total inventory of UF., the large volume ofliquid UF handled, and the complexity of 6
operations at the GDPs. There is a significantly higher risk to onsite workers posed by the large inventories and larger onsite population.
Id. at 4.
as stated earlier, the history of the GDPs' operation does not support this assumption. Furthermore, it does not logically follow that increased potential frequency would produce a significant increase in generic regulatory programmatic costs. The similarity in the designs of the GDPs and the repetitive, serial nature of the diffusion process translates directly into repetition in the potential types of failure mechanisms that could trigger accident sequences. For example, the handling of a liquid cylinder, either in a Tails or Sampling facility, involves the same potential types of failures, and little or no additional generic regulatory effort is needed to cither analyze the potential for an accident or to prepare for inspection activities. Clearly both operations necessitate separate inspection, but those activities are covered under the Part 170 fees. Similarly, one inspection procedure or technical analysis developed for a portion of the cascade or for an autoclave, is suitable for use throughout the cascade or at any autoclave.
2.
EntentiaL0nsite_and_OffsiteAccidenLConsequences The NRC's initial position in rejecting USEC's comments on the 1997 proposed fee rule was that the potential onsite and offsite consequences of accidents at the GDPs are "significantly greater" than those applicable to LEU facilities. 62 Fed. Reg. 29197. However, in later responding to USEC's exemption request, the NRC acknowledged that, as described earlier,"the potential consequences of accidents at the l
GDPs may be comparable to those of other LEU fue! facilities...." 1997 Exemption Denial, p. 4. These two statements are entirely inconsistent and suggest that no serious consideration of the relative consequences of accidents formed a part of the NRC's fee determination.
l 3.
The GDP Size and Scope Requires Substantially More Effort to Develop Inspection l
Procedures.Iluidancelmd. Schedules In seeking an exemption from the NRC's annual fees in 1991, Combustion Engineering, Inc. argued that l
due to the relatively small size and capacity ofits facilities, lower fees were warranted. See August 8,1991 letter from Richard Siudek to James M. Taylor. In denying Combustion Engineering's request, the NRC stated that "the NRC does not agree... that annual fees should be based on a licensee's size [or] production capacity...." and concluded that the " amount of [the NRC's generic regulatory] costs is not materially affected by a facility's LEU fuel fabrication capacity.
." See December 17,1991 letter from James M.
Taylor to Richard Siudek. If the relatively small size and capacity of the Combustion Engineering plants did not warrant a reduction in its fees, it is not clear why the relatively large size of the GDPs warrants a fee increase over and above the fees for LEU fuel fabricators. The NRC's reasoning in this regard appears inconsistent and arbitrary.
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Furthermore, USEC has identified a total of 45 inspection procedures used at the GDPs. Of these,38 are preexisting NMSS procedures and only 7 were specifically created for the GDPs. Those 7 were created for use by the NRC's Resident Inspectors. To the best of USEC's knowledge, most or all of the relevant inspection procedures have now been developed and are being used at the GDPs, and USEC is not aware of any significant effort to develop additional inspection procedures. Even if the need to generate such new procedures warranted an increase in annual fees in the year they were generated, no such continuation of that increase is warranted for the current fiscal year. Similarly, while the NRC has developed certain proposed revisions to Part 76 relating to certificate renewal and amendment procedures, those proposed revisions have already been published for comment and USEC does not believe that they are likely to be controversial or necessitate extensive additional Staff work. USEC notes that the Staff has been engaged since 1993 in an enormous effort to rewrite 10 CFR Part 70, an effort far more substantial than that under Part 76, and yet, this effort has not warranted an increase in annual fees for the Part 70 licensees.5 4.
TheERC's.Reconsiderationandle-DeniaLoLUSEC'sfxemptionRequest The most recent explanation of the NRC position that its generic programmatic regulatory effort warrants such high fees was provided in its August 25,1998 letter which reconsidered and again denied USEC's prior Exemption Request. That letter contains a litany of reasons why the NRC believes that the GDPs are not comparable to LEU facilities. Many of the reasons described do not appear to create the need for extensive additional programmatic efforts, as much as they point out the fact that there are more extensive inspection and certification amendment review activities at the GDPs that are separately reimbursed under 10 CFR Part 170.
For example, neither the GDPs' more extensive handling ofliquid UF, nor their calculation of radioactive material holdup without shutdown of the cascade, appear to result in substantial additional generic effort.
USEC recognizes that the NRC has engaged in various GDP specific generic regulatory efforts such as some revisions to Part 76, and coordination with DOE on DOE's regulation ofIIEU activities at Portsmouth, but it is hard to understand how these efforts warrant the dramatic differences in fees established by the NRC.
Many of these cfTorts do not difTer substantially, and borrow heavily, from fuel-cycle industry-wide initiatives undertaken by the NRC. Therefore, USEC does not believe that the NRC's August 25,1998 letterjustifies the dramatic disparity in annual fees between USEC and other fuel cycle facility licensees.
D.
IhellDEs_Shouldlle_Treateclas.aSingle_Eacility for Purposes of the Annual Fees USEC has urged the NRC to treat the two GDPs as a single process in accordance with the standards set by the D.C. Circuit in AlliedjSignallnc.xNRC,988 F. 2d 146 (D.C. Cir.1993). The NRC's first response to USEC's arguments in this regard was to simply state that the two GDPs are capable of independent operation and "do in some respects operate independently," citing the Portsmouth plant's ability to process 5
The NRC's fourth basis for rejecting USEC's requests for reliefis that there is a " higher number of reportable events that NRC Staff must review." 62 Fed. Reg. at 29197.
Although the NRC does not elaborate on this statement, since coming under the NRC's regulatory jurisdiction, USEC has reported a higher number of events to the NRC than the other fuel facility licensees. The extent to which these reports trigger additional generic regulatory effort allocable to USEC is not clear.
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. down blended HEU and to feed natural uranium to the process in addition to enriched uranium from Paducah.
1997 Exemption Denial p. l. USEC's response made clear that the plants are not independently capable of L
. performing their central and predominant purpose -- providing a product suitable for fabrication oflight water reactor fuel - and that physical modifications, administrative changes, and certificate amendments would be required to. permit such independent operation. May 1,1998 Comments, p.1. In the NRC's subsequent denial of USEC's request for reconsideration, it reiterated that the Portsmouth plant is " capable ofindependent production."
To permit the Paducah plant to operate independently and to provide enriched uranium suitable for use i as light water reactor fuel:
The Transfer Facility would need to be modified to add transfer stations, autoclaves and technetium-99 traps;.
]
The Enrichment Cascade would require approximately 20 additional "00" cells on stream and seal
. exhaust traps would have to be modified for NCS purposes;
' New Cylinder Yards would be required to handle customer cylinders and Russian DEU, and additional tails cylinder yard storage capacity would be required;
. Modifications to the Purge Cascade would be needed to address the potential for explosive oxidants; Over 100 additional employees would likely be required; New procedures and training would be required; and i
1 Revisions would need to be made to the Paducah SAR and TSRs to address the higher assays and new operations. - Many of these changes would likely require prior NRC approval as Certificate amendments.
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The above changes would cost tens of millions of dollars.
The Portsmouth plant would not require as extensive changes as Paducah. Nonetheless, the enrichment plants were designed and are operated as a complex to max mize production efficiency. Independent plant i
operation would result in less efficient complex production. The Portsmouth plant was designed, with 1
- Paducah in mind, to produce higher assay uranium and is less efficient at producing lower assay enriched uranium. Paducah was designed to produce lower assay uranium. Besides reducing efficiency, independent operation also reduces the flexability available to optimize production. For example, Portsmouth is currently operating at a much higher tails assay than Paducah with Portsmouth tails being refed at Paducah and Paducah product, in tum, fed to Portsmouth. The higher tails assay at Portsmouth, for the current cell configuration, results in more efficient production. Operaimg independently, Portsmouth would not be able to operate at I
the higher tails assay and make customer product that conforms to the ASTM C996 specification tbr low l;
enriched uranium.
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In its August 25,1998 letter, the NRC listed several other reasons for refusing to treat the GDPs as a single facility for purposes of the annual fees, liowever, virtually every one of those reasons could have been l
. applied to the Combustion Engineering facilities -- yet the court directed the NRC to treat them as a single facility under Part 171. For example, like the GDPs, the Combustion Engineering plants: were " treated as independent facilities by the NRC," had " unique [ licensing] requirements" by virtue of the significant differences in their operations (one engaged in UF. conversion and pelletization and the other in fuel rod assembly); possess separate licenses; and are subject to separate amendment processes and enforcement actions. See Docket Nos. 70-1100 (SNM-1067) and 70-36 (SNM-33). The NRC states that USEC " business considerations" necessitate that the GDPs be operated together. But the plants were designed, built, and, in fact, have operated as a single process for well over 40 years. USEC's presumes that comparable " business considerations" also prompted Combustion Engineering to operate its two plants as a single process, prior to j
shutdown of the Windsor facility.
]
i To justify treating the GDPs as separate facilities for purposes of setting annual fees, the NRC also points to " unique regulatory effort" associated with the " fire protection system and classified material at Paducah, and the nuclear criticality safety program and the HEU program at Portsmouth." USEC is unaware of any unique generic regulatory effort expended by the NRC in these areas. In fact, the areas noted were the subject of NRC inspections which were paid for under 10 CFR Part 170. Furthermore, while the NRC also bases its decision to treat the plants separately in part on the existence of Resident Inspectors at each site, the 1998 fee rule was specifically modified to recover " full cost for each resident inspector" under 10 CFR Part 170, not j
Part 171. 63 Fed. Reg. at 31851.
Ill.
CONCLUSION -
l The NRC's assessment of well over $5 million in annual fees for the GDPs is excessive and does not represent a " fair and equitable" allocation of the NRC's generic programmatic regulatory costs. The statutory and regulatory criteria for the issuance of an exemption from the annual fee rule have been met. The'
]
methodology used and the manner in which it has been applied suggests that the NRC's fees and their refusal to substantially moderate USEC's annual fees are unfair, arbitrary and do not have a " reasonable relationship
" to the cost of providing regulatory services." As demonstrated above, the fees will result in a "significant disproportionate allocation ofcosts" for USEC. USEC's annual fees should be substantially reduced to more accurately and fairly reflect its appropriate share of the NRC's generic programmatic regulatory costs.
I i
11 I
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