ML20198Q780
| ML20198Q780 | |
| Person / Time | |
|---|---|
| Issue date: | 10/01/1997 |
| From: | Hoyle J NRC OFFICE OF THE SECRETARY (SECY) |
| To: | Bishop R NUCLEAR ENERGY INSTITUTE (FORMERLY NUCLEAR MGMT & |
| References | |
| FRN-62FR8885, RULE-PR-170, RULE-PR-171 NUDOCS 9711130041 | |
| Download: ML20198Q780 (5) | |
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l Mr. Robert W. Bishop, Vice President DOCKET NUMBER PROPOSED RULE IS /W PO and wral hnsel Nudear Energy institute 1776 l Street, N.W., Suite 400 G.1 FMr&Trf) i Vi3li G:s, D.C, 20006-3708 Door Mr. Bishop:
On behalf of the Commisskn, I am wnting in reply to the Nuclear Energy Institute's (NEl's)
July 26,1997, petition for < reconsideration of the final fee rule for fiscal year 1997, which became effective on the date of NEl's petition.- The Commission has considered carefully the arguments in NEl's petition letter and its attachment. For the reasons given below and in the -
enclosure. :,e Commission has decided to deny the petition.
l Prompted by the roughly 8% rise in annual fees, the petition asks essentially that the NRC undertake a full revision of the fiscal year 1997 (FY 97) fee rule. To justify this considerable undertaking, the petiion puts forward essentially two arguments, one in the letter and one in an attachment to the letter, The letter asserts that the agency must have shifted rescwrces to
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lower priority generic activities that are not necessary for protection of public health and safety, and that the agency should instead reduce its resources. The attachment asserts in general that the FY 97 fee rule does not fulfill the agency's statutory obligaton tc ansure that annual fece have a reasonable relationship to the costs of providing services, and in,
pesticular that the agency's method for stabikzing fee schedules is inconsistent with this statutory obligation. To the contrary, as is explained in nave detail below and in the enclosure to this letter, there has been no major shift of resources to generic activities, the FY 97 fee rule does ensure that annual fees have a reasonable C:stip to costs, and the agency's method for etabilbdng fees is legal:
Despite NEl's daim that the substance of the attachment appeared in Florida Power and f ;$t's (FPL's) comments on the proposed FY 97 ruis, the petition's esserdial arguments are new and, for no War reason, quite late, being dated abdy calender' days after the final FY 97 rule apperad in the Federal Register (82 Fed. Reg. 8885. February 27,19g7), and over hve months after the procooed FY 97 rule, which contained all the features NEl objods to and
< which gave notice of the percentage increases. Indeed, tre method used to stabilize the FY 97 fees,10 which NEl now objects for the first time, was first announced over two years Lgo (80 Tod. Reg. 14670,14672, March 20,1995, FY 95 proposed rule), and was used for the first time to construct the FY 96 fee rule, where the method produced roughly a 6%
reduction in annual fees for all NRC I;censees, and a reduction in fourth quarter annual fees of about 25% for operating power reactor licensees. At the time, NEl said that it was
" pleased that the annual fees for licensees em being lowered by slightly over 6%." (NEl l
February 28,1996 comments on FY 96 proposed rule, p. 2.)
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Further, NEl's July 28,1997, letter says that the ' final rule would have the effect of shifting the cost of resources not spent on services that could be recovered through user fees to generic activities,' and that the agency has provided "no evidence that an assessment was done of whether those generic activities were necessary to fulfill the NRC's statutory 1
obhgation to ensure adequate protection of public health and safety.' NEl believes that the-agency *should not merely shift resources to lower priority generic issues, but rather should j
l consider redudng its resources to the extent they are not necessary for the services the NRC needs to provide.-
- in reply R rauet be said first that, contrary to NEl's letter, there has been no signl6 cant shift to generic activities, let alone lower priority ones. NEl's behof to the contrary appears to be the result largely of not toldng into account the effect of inflation on the agency's resources. NEl i.
appears to argue that the agency's resources to be recovered from fees has remained cons. ant between FY 96 and FY 97, and therefore, any reduction between FYs 96 and 97 in the resources spent on specl6c services to specific licensees must necessarily have been shifted in FY 97 to regulatory services to classes of licensees. However, because of inflation, this nominally constant dollar figure represents a real decline in resources. For about the last five years, inflation, as measured by the Consumer Price Index, has been about 3% (see the l
U.S. Bureau of Labor Statistics' historical chart at http:// stats. bis. gov /
special. requests / cpl /cpibrief.htm). Assuming a 3% rate of inflation, $462.3 million in FY 97 is therefore worth only $448.8 million in FY 96 doHars, a dochne of $13.5 melhon in FY 96 dollars. Looked at in real terms - that is, with the FY 97 figures in Table 1 in the Fwderal Register notice of the FY 97 final rule restated in FY 96 dollars - the non Part 170 part of the fee base, which provides resources for more tnan just generic regulatory services to classes of licensees (see 10 CFR 171.15(c)), increased between FY 96 and Ff 97 by less than 2.5%..
Second, not only did the NRC's real resources decline between FY 96 and FY 97, the nominal doter budgets for fee recovery in FYs 96 and 97 are the lowest since FY 1991.
Indeed, when inflation is taken into account, the NRC's overall FY 97 budget is the lowest in the history of the agency. Moreover, the FY 97 budget 16 in fact the result of the sort of aseeeement NEl believes that the agency should undertake.- The budget represents the Commiselon's considered judgment about what is necessary for protection of putdic health and essety and the common deswee and security, it was revowed by the ovince of Management and Budget, poseed by the Congrees, and signed into low by the Preeldent. As the recengy completed strategic reesessement and robeoogning demonstrates, the agency continues to analyze carefuey both its mission and the resources neccesary for canying out that miselon.
For these reasons, and the reasons s5ted in the enclosure, the Commission is denying NErs petition.
Sincerely, hn C.
Secretary of the Commission
Enclosure:
As stated -
h=y :W. W.
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n RESPONSE TO NEl'8 LEGAL ANALYSIS OF THE NRC'S FY 1997 FEE RULE The attachment to tha Nuclear l'nergy instituts's (NErs) letter argues that the Nucieer Regulatory Commies!on's (NRC's) flece I year 1997 (FY 97) final rule is contory to inw in %ur roepeds: First, the method the agener uses to stabilize fees from one flecal year to the 'next 1
is contrary to the mondete in 42 USC1214(c)(3) that the annual charges, "to the maximJm extent possado,... shal have a maeorable relationship to tw cost of provktn0 seguistwy services"; escond, e,e agency's decidon to aseems the previous year's fees in the overW the agency is unable to pubteh a new fee rule wthin the cupent Recal year le aino conbary to the esmo eletutory mandate; third, even F the method of stabEring ilmes from one year to ghe next is consistent wth tiis mandale, the agency did not fotow Rs own snetrad in consWucting tie FY 97 rule; and fourth, the agency did not desertie which services to Boonoces would be receiving incrossed fundne 'through the NRC's shlR of resources from Part 170 adMties,"
and thus denied the initustry an adequets opportunity tra comment att the proposed wie.
The practical aim of these argumenta is mornowhat difRcult to discem. They apportney are offered as fresh reasons, not considened.in tbs original nalomoedng, why the NRC shouki robeseline the FY 97 fee rule and adjust the feo schedule. But it is for from deer 1 hat the NRC is empowered to mtract and revise its FY 97 rule efter-the-fact, i.e., aRet this agency already has issued a final rule, sent out invoices, and begun receiving payments. Unlike some agencies, the NRC has no provision in its own rules or in its enabling legis'atien for reconsidering final decisions in tulomskings.
Even if one assumes an inherent NRC power to reconskler and alter already-iewed rules, such edion would be W and inequitable here. The reduced annual fees NEl seeks for roedor liconeses would require establishment of a complex new scheme for levying unexpected FY 97 surche'ges on some liooneeos and for leeuin0 refunds to chose. It would be unfair to participants in the r',' 57 fee rulemaidng for the NRC now to unerme the rule bened on new arguments, or reformulated old arguments, that could have been reised during the regular notice and comment process, but were not.
These are reasons enough to tum down NEl's petition for reconsideration /And SGirs boisted arguments against the FY 97 fee rule. Even on their own terms, however, NErs arguments are not persueelve and do not juollfy fWther agency ac6an on the FY 97 9ee rule.
NErs stechment argues Aret that om method the agency adopted in en PV 05'nde of aneuring some statsty in the annual fees tem yer< to year is RegeL JJe See Gnel nde for FY 95, the egency said that, stortn0 in FY 98, it Wdld aquet annuet teer) by the gemestege decrease or inemene in #m agency's totei tp Jost, unises them had taen a subetengel change in that total budget, or in to mapMule of a specEn budget eAmesSenD a specEc cleos of toonsees, and that every Avs pers the agency wouki estefaBeh 's nhw beisegno for the percentage changes (80 Fed. mg. 32225) (FY 96 was em trot such beestme). fEit new says that that method "vioielos Me NRC's] duty to reexamine Die retadonehlp between costs and fees on an annual beels." Attachment, p. 3. NEl finds this t'AJty in 42 USC 2214(ci)(3),
which says that,"tt)o the reaximum extent possible [ annual] chtsgos sheE have a raesonable relationship to to cost of providmg services...."
ENCLOSURE
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Legal Analysis.
2-The statuto does not require the agency to rebaseline every year, or any year for that matter.
- This is clear from the statute and the conference commsttee comments on it in 1990. After the words that NEl quotes, the statutti goes on to say that the annual charges 'may be based on the allocation of the Commission't, resources among licensees or classes of licensees '
)
(Emphasis added.) It is clear from tSe conference committee's report on the statute that 4
Congress recogn! zed that the allocation of fees would diverge from the allocation of resources in the budget. The committee said that the conferees ' recognize [d] that there are expenses that cannot be attnouted either to an individual licensee or a class of licensees."
House Conference Report 101-96 4, p. 960.
FY 97 is now the third fiscal year that the agency has said that it would try to achieve stability by such limited percentage changee. When the method was first proposed 'n FY 95, ne ther
- NEl nor any reactor licensee otipted to it, let alone claimed that it was illegal. To the contrary, the agency adopted the method in the,)rst place because of licensees' desires for more stability in the annual feas. NEl points to Florida Power and Light's (FPL's) comments on the FY 97 proposed rule, as the source of NEl's comments, but FPL did not explicitly raise -
this is;,ue in its comments, it is true that even this approach can produce big shifts in feurth quarter fees for operat%g power reactors, because, given the realities of the govemment's budget process, and the statutory requirement to establish fees each year through notice and comment rulemakMg, the full year's percentage change must be collected in the fourth quarter, This y9ar the fourth quarter bills for operating power reactors went up about 34%.
However, as acted above, last year, the first year this new method was appised fourth quarter payments went down about 25%, to general approval. The old scheme of redoing the entire fee structure each year would only produce wider percentage swings, at more expowe to the agency's dwindling resources, and with less notice to the licensees because the rebaselening would likely cause the proposed rule to be issued later than it has been since the new method was adopted.
The second argument in NEl's attachment is that the agency violated the same statutory L
mandale by putting a cieuse in tba FY 97 rule that says that, if for any reason the agency is I:
not able to promulgate a fee rule in a timely manner, the agency wlN assess fees on the basis of the provicus fiscal year's rule. No one commented on this change during the comment period, even though the proposed rule said clearly what the egency planned to do and why. The provision NEl attacks is one of necessity. Given the complexities of the budget process, the time it takes to promulgate a proposed rule is not entirely within the control of the agency, especiany since enactment of the C,,y:::':=,E Review Act, which has added 30 days to the effective date of the final fee. rules. The agency trust have a -
fauback position, because the agency must couect :.=eA:"i 00% of its budget authority 1
in or~ w to comply with law.
The third argument in NEl's attachment is that the agency should have rethaelined because, even assuming that the FY 95 methodology is legal, it calls for rebeeclining whenever there has boon a substantial change in the magnitude of a specific budget anocation to a specific
- class of licensees, and the 8% increase in fees charged to reactor licensees amounts to just such a substantial change. This is in fact one of FPL's comments (March 31,1997, comments on the FY 97 proposed mie, p. 3), and it was implicitly answered iri the statement of considerations for the final rule.
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Legal Analysis' ~
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>The comment is based largely on a misunderstanding of the.FY 95 methodology.) The statement of considerations for the FY 97 argued explicitly that the budget for fee recovery.
had not changed substantially, and so the agency would not_robaseline. - An unexpressed,.
but hardly surprising, thought behind the decision not to rebaseline wat that, because the overall budget for fee recovery in FY_97 was substantially the same as it had been in FY 96,-
3 1 major changes in the allocation of budgeted resources (not allocation of fees,' as NEl thinks):
to specsfic classes of licensees would probably not have changed substantially either.: The agency believes that a comparison of the FY 96 budget with the FY-97 budget would bear out this implicit judgment. Moreover, the more fact that annual fees have gone up for reactor licensees does not imply that there has been a major reallocation of fees, let alone resources, to different classes of licensees. To the contrary, all licensees' annual fees have gone up by the same percentage (62 Fed. Reg. 29201).
The fourth argument in_NEl's attachment is that the agency did not identify which generic services were going to receive increased funding. - This argument is a vafstion on the _
t argument in the letter. Both the letter and the attachment assume that there must have bsen a substantialincrease in generic activities as a result of the decline in collections of Part 170-feesJ That incorrect assumption has already been discussed in the reply to NEl's July 28, 1997, petition letter. To be noted here an three additional matters. First, FPl., cited at having made this argument in its comments on the proposed rule, understood that the increases in annual __ fees were largely unrelated to increases in the costs of regulating power--
reactors (March 31,1997, comm9nts on proposed rule, p. 4) Second, as earty as the statement of considerations for the FY 95 final rule, the agency made it clear that year-to-year adjustments in annual fees would sometimes be made to compensate for_ changes in fee collections under Part 170 and in the number of licensees paying annual fees (60 Fed. Reg.-
32219).' No commenter objected to this approach._ Such changes were made in both FY 96
- and FY 97. Third, the workpapers for the FY 97 rule have been available since publication of I L the proposed rule (62 Fed. Reg. 8885), and those, together with the various tables and
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- explanations in the statement of considerations for the proposed rule (see, e.g.; 62 Fed. Reg
- 8887), gave commenters more than adequeu notice of the reasons behind the fee increase, and ample information for providing comments to the Commission before promulgation _of the -
final rule.
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