ML20198Q898
| ML20198Q898 | |
| Person / Time | |
|---|---|
| Site: | Portsmouth Gaseous Diffusion Plant, 07007001 |
| Issue date: | 11/07/1997 |
| From: | Gerard Jackson NRC OFFICE OF THE CONTROLLER |
| To: | Rifakes G UNITED STATES ENRICHMENT CORP. (USEC) |
| References | |
| NUDOCS 9711130079 | |
| Download: ML20198Q898 (1) | |
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United States Enrichment Corporation Noyetaberv 7, 1997--
.. JATfN: . George P. Rifakes Executive Vice President, Operations 2 Democracy Center 6903 Rockledge Drive Bethesda, MD -20817 ~
Dear Mr. Rifakes:
This is to ackno'wledge receipt of your October 21,1997, request for an exemption from -
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the FY 1997 annual fees for the Paducah and Portsmouth Gaseous Diffusion Plants (Docket
. Nos. 070-07001 and 070-07002, respectively). We are considering the issues raised in your letter and will respond to your request as quickly as possible, in the meantime, if you have any questions concerning this matter, you may contact me at 301 415-6057, or Diane Dandois at
-301-415-7544.
Sincerely, 4ty-n yr7-ik-nJt.r Glenda C. Jackson Assistant for Fee Policy and Rules License Fee and. Accounts Receivable Branch Division ofAccounting and Finance Office of the Chief Financial Officer Distribution:
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, 2 Democracy Center 6903 Rockledge Dove Bethesda MD 20817 k- Tel. (301) 564 3200 Fax:(301)564 3201 George P. Rifakes Dir. (301) 564 3301 Executive Vice President. Operations Fax: (301) 5713208 October 21,1997 U.S. Nuclear Regulatory Commission SERIAL: GDP 97 0183 Attention: Document Control Desk Washington, D.C. 20555 0001 Paducah Gaseous Diffusior Plant (PGDP)
Portsmouth Gaseous Di'Tusion Plant (polus)
Docket Nos, 70-7001 and 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 annual fee regulations for the Paducah and Portsmouth Gaseous Diffusion Plants.
For the reasons discussed within, USEC respectfully requests that the NRC grant exemptions from its heal year 1997 anr.ual fee rule as follows:
(1) the annual fee of $2,606,000 for the GDPs should be reduced to $1,21,000 commensurate with the fee for LEU f:.1 facilities, (2) a single fee should be assessed covering both of the GDPs operated by USEC, rathe. than s separate fee for each facility. $ '
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U.S.- Nuclear Regulatory Commission:
- October 21,1997
. GDP 97-0183 Page 2 There are no new commitments made in this letter. Any questions related to this subject should-be directed to Ms; Lisa Janiel at (301) 564 3247.
Sincerely, ,
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George P. Rifakes ,
Executive Vice President, Operations
Enclosure:
As stated cc (w/o enclosures):
NRC Region 111 Office NRC Resident Inspector - PGDP
- NRC Resident inspector - PORTS
.5 6 .- _ _ _ _
- UNITED STATES ENRICHMENT CORPORATION REQUEST FOR EXEMPTION FROM NRC ANNUAL FEE REGULATIONS PURSUANT TO 10 CFR 6171.11(d)
I. latroduction On February 27,1997, the Nuclear Regulatory Commission (NRC) published a proposed rule establishing mnual fees for fiscal year 1997 (62 Fed. Reg. 8885). The rule proposed annual fees for each of the gaseous diffusion uranium enrichment plants (GDPs) operated by the United States Enrichment Corporation (USEC) at $2,606,000 per GDP. USEC commented on the proposed rule in a letter dated March 31,1997 and recommended, among oth:r things, that:
(1) the proposed annual fees of $2,606,000 for the GDPs be reduced to $1,276,000, commensurate with the proposed fee for low-enriched uranium (LEU) fuel fabrication facilities, and (2) a single fee be assessed covering both of the GDPs operated by USEC, rather than duplicate fees for each GDP facDiW.
In its final fee rule published on May 29,1997 (62 Fed. Reg. 29194), the NRC rejected USEC's comments ard maintained the 1997 annual fees at $2,606,000 per GDP facility. As a result, USEC will be required to pay total annual fees for fiscal year 1997 of $5,212,000. The NRC also stated that USEC could submit a request for exemption from the annual fee rule ifit desired.
Therefore, in accordance with 10 CFR Q 171.11(d), USEC hereby requests an exemption from the provisions of the annual fee rule setting fees for the GDPs at $2,606,000 per facility. If granted in its entirety, the effect of the exemption would be an assessment of a single annual fee of $1,276,000, covering both GDPs.
II. Basis for the Exemption 10 CFR Q 171.ll(d) states that the NRC may grant an exemption from the annual fee ifit determines that the fce a 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 Comminion's allocation of the resources among licensees or classes oflicensees. (Section 6101(c)(3), Omnibus Budget Reconciliation Act (OBRA) of 1990, Pub. L. No. 101-508.)
USEC Request for Exemption from Enclosure to GDP 97183
. NRC Annual Fee Regulations Page 2 of 8 In determining whether to grant an exemption under section 171.11(d), the NRC considers three factors:'
(A) whether there are data specifically indicating that the annual fee will result in a significantly disproportionate allocation of costs to the licensee; (B) whether there is clear and convincing evidence Jut the budgeted generic costs attributable to the class of licensees are neither directly or indirectly related :o the licensee nor y explicitly allocated to the licensee by Commission policy decisions; or (C) any other relevant matter that the licensee believes shows that the annual fee was net based on a fair and equitable allocation of NRC costs.
As dismssed below, the criteria for the issuance of an exemption tro:_: the annual fee rule have been met.
A. The Annual Fee Will Result in a Significantly Disprog... ate Allocation of Costs to USEC _
There are two bases for concluding that the annual fees to be assessed agr. inst Ul2C will result in a "significantly disproportionate allocation of costs" to USEC. First, assessing two separate fees does not recognize that the two GDPs are, in fact, the operational equivalent of a single plant.
Second, the hazards associated with operating the GDPs are comparable to those at LEU fuel facilities, yet USEC's fees far exceed those set for such facilities. Each of these bases is discussed below.
- 1. The GDPs Are the Operational Eauivalent of a Sinnie Plant in Allied-Sienal v NRC, 988 F.2d 146 (D.C. Cir.1992), the United States Coun of Appeals for the District of Columbia Circuit directed the NRC to grant an exemption under Section 17111. In that case, the NRC had assessed fees for two LEU fuel fabrication ,
facilities owned by Combustion Engineering, based on the fact that each plant had its own, separate NRC license. The court recognized that both plants were, in the aggregate, part of one process and therefore the operational equivalent of a single plant. Furthermore it concluded that the NRC was not able to point to any greater regulatory costs associated with regulating a second plant. The ccurt held that the NRC had levied a doubic assessment against the licensee and directed the NRC to grant an exemption from the additional fees related to the second plaat.
In particular, the court stated:
The Commission's own criteria call for an exemption if the licensee can show tnat "the assessment of the annual fee w[ould] result in a significantly dispropoitionate allocation of costs to the licensee....Against this [ double assessment 8
These three factors are " independent considerations" any of which may support the granting of an exemption Allied-Sicnal Inc v NRC. 988 F.2d 146,154 at n.5 (D.C. Cir.1992). .
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USEC Requer:for Exemption from Enclosure to GDP 97183
. NRC Annual Fee Regulations Page 3 of 8 levied against Combustion Engineering) the Commission is able to point to almost nothing by way of greater costs _..The double barden for Combustion measured again:t de minimis additional burdus for the Commission, amply overcomes the hurdle established by 10 CFR { 171.11(d).
Allied Sienal 988 F.2d at 154.
The two GDPs are, like the Combustion Engineering plants, component parts of a single process -- in this case a process to produce enriched uranium product suitable for fabrication oflight water reactor fuel. The GDP located at Paducah, Kentucky, produces feed material for subsequent processing at the Portsmouth, Ohio GDP. (Paducah SAR at 3.1.3) This feed material enters the cascade feed of the Portsmouth plant as enriched stream assay. (Portsnruth SAR at 3.1.1 1.3) At the Ponsmouth GDP, this feed is further enriched and then the tails are sent to Paducah for funher stripping. As discussed more fully below, the two GDPs use the same technology and have the same design Thus, the two plants are operationally the equivalent of one plant and one process. ,
In Allied Sicnal, the court noted that the two Combustion Engineering plants had separate licenses rather than a single license due to " historical chance."2 Ld Sicnal,989 F. 2d at 153. Similarly,it was nc,t necessary to have two certificates of compliance for the GDPs.
Indeed, the Atomic Energy Act, speaks in the singular, to "a certification process" and an
" Annual Application for Certificate of Compliance", and requires USEC to apply "for a certificate of compliance . " 42 U.S.C. Q 2297F(c)(1997). While separate certificates are permissible and may have been more practical under the circumstances, separate certificates were not required as a matter of statute Thus, because the GDPs are operationally equivalent to a single plant, the NRC's assessment of separate fees for both sites imposes a significantly disproportionate allocation of costs upon USEC. '
- 2. The GDP Hazards are Comparable to LEU Fuel Facilities But the Fees Far Exceed Those Imposed on Soch Facilities.
The GDPs contain hazards very comparable to those found at LEU fuel fabrication facilities. At an LEU fuel facility, the predominant chemical hazard is uranium hexafluoride (UF ) (NUREG-ll40 at 2.1.2) Similarly, at the GDPs, UFa is the predominant hazard. Sn, Portsmouth SAR at 5.6.13.2 (noting tnat "[u]ranium hexafluoride (UF,)is the most abundant hazardous material on site), see also Paducah S AR at 5.6.13.2 (same). In NUREG-ll40, the NRC concedes that the types of potential accidents at enrichment plants "are similar to those at conversion plants and fuel fabrication plants." For purposes of setting the annual fees, the GDPs should be treated timilarly to these comparable facilities.
2 Combustion explained that it had two licenses because it had purchased a company with a separate hecase almod 20 years before the htigation. Allied Sicnal. 988 F. 2d at 153.
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. Enclosure to GDP 97103 = ;
. USEC P.equest for Exernption from b .NRC Annual Fee Regulations Page 4 of 8 1
.r However, under the annual fee rule, USEC must pay over faut times what an LEU fuel licensee pays, and about sight times what a uranium conversion facility pays.' Indeed, "
even as compared to high enriched uraniu.a (HEU) fuel facilities, USEC will pay twice what those licensees pay. The very substantial differential between the fees assessed against USEC and those assessed against similar NRC licensees is not warranted by any comparable difference in generic, programmatic regulatory costs attributable to NRC -
1 regulation of the GDPs: Thus, contrary to OBRA and as discussed in section C, the NRC" fees do not bear a " reasonable relationship to the cost of providing regulatory servicesz.
4 This, coupled with the disproportionate allocation of costs to USEC, warrants granting the l requested exemption.
B, Budgeted Generic Costs Attributa'ile to USEC are Neither Directly or Indirectly Related to the Spect6c Class of Licensee Nor Explicitly Allocated to USEC by Commission Policy -
Decisions Under section 171J 1(d), an alternative and independently suaicient criterion for granting an exemptice is whether there is clear and convincing evidence that:
the budgeted generic costs attributable to the class oflicensees are neither directly or indirectly related to the specific class oflicensee nor explicitly allocated to the licensee by Commission policy decisions..10 CFR s 171.11(d)(2).
USEC is aware of no Commission policy decisio 1 that explicitly allocates any budgeted generic costs to USEC. As for the relationship between the NRC's budgeted generic costs and USEC's activities, the budgeted generic cost of regulating the two GDPs does not correspond to the actual generi: costs associated with regulating the GDPs. In particular, such generic costs are not markedly higher because there are two GDPs, as opposed to one.
The NRC has not provided any basis for concluding that the generic costs of regulating two GDPs are higher than for one plant. Furthermore, the GDPs have a highly uniform design. Both the i Paducah and l'ortsmouth plants employ the same gaseous diffusion technology. (Portsinouth SAR l_ -at 3.1) The UF, molecules are separated according to their isotopic forms by diffusing them through a repetitive series of porous barriers. Id As the overall design is effectively the same from plant to plant, the existence of a second plant and a second certificate does not significantly increase the NRC's generic regulatory burden. In effect, the generic, programmatic costs of regulating two plants should be about the same as the costs of regulating one. Notably, the annual i
fee rule does not explain which generic costs are significantly higher because USEC operates two facilities, and possesses two certificates.
3 '
edthough uranium conversion facilities do not use ennched uranium, they do possess substantial -
t l quantiues of UF -
USEC Request for Exemption from Enclosure to GDP 97183;3 j l, . Page 5 of f .
NRC Annual Fee ReFulations -
Even if there are certain increased costs, there is no basis for concluding that they warrant the dramatic differences in fees between USEC and comparable licensees which have been established
~ by the NRC; For this reason as well, the requested exemption should be granted.
1 C. There Are Other Factors Which Show that the Annual Fee is not Based on a Fair and Equitable Allocation ofNRC Costs _
The third alternative and independently sufficient basis for granting an exemption is the existence of any other factor that demonstrates that the annual fee is not based on a fair and equitable-allocation of NRC costs. 10 CFR Q 171.11(d)(3). A number of such factors exist in this case:
- 1. Weinhted Safeguards and Security Factors First, the GDPs employ safety and safeguards measures which are directly comparable to LEU fuel facilities, and, because of the absence of strategic special nuclear material, are much less stringent than those required at HEU fuel facilities. The NRC considers the relative weighted safety and safeguard factors at a facility when it places a facility in a particular fee category. The methodology used by the NRC was described in its Fiscal 1995 fmal fce rule and involves: (1) a categorization of facilities into a fee category based upon nuclear material type, enrichment, form, quantity and use/ associated activity; and (2) a determination of the " relative programmatic effort" associated with the fee category, This determination of relative programmatic effort is intended to reflec .he " safety and safeguards significance" of the licensee's authorized activities.. " 60 Fed. Reg. 32235.
Both the GDPs and the LEU fuel facilities are safeguards category III facilities and require considerably less stringent safeguards than their HEU counterparts. The NRC "does not dispute that the GDPs have been certified as low enric:ted uranium facilities with corresponding safeguards measures for category III facilities." 62 Fed: Reg. 29197.
Despite this recognition, however, the NRC states that this information is not "the determining factor"in setting fees. The fact that the GDPs are certified as, and possess only, category III special nuclear material should be a very significant factor in setting the appropriate fees ' From the NRC's final rulemaking notice, it appears that little or no weight was given to this fare x in setting the fees.
- 2. . Generic Reanlatory Pronrammatic Effect The NRC goes on to state that despite the less stringent requirements of USEC's certificates, other factors warrant placing the GDPs in a higher fee category than an LEU p fuel facihty In particular, the NRC states that the " scope, depth of coverage, and rigor of -
generic. regulatory programmatic effort applicable to the GDPs....is approximately equivalent to that of a high enriched fuel fabrication." It also states that "[t]his level of Although the Portsmouth facility has some HEU on site, the PRC has recogmzed that the Department of Energy is solely responsible for regulating the HEU that exists at the Portsmouth
. plant. 62 Fed. Reg. 29197.
USEC Request for Exempuon from Enclosure to GDP 97-183
- NRC Anrnal Fee Regulations Page 6 of 8 generic effon is the basis for assigning the two GDPs to the high enriched fuel facility category. " M (Emphasis added).
The NRC first states that this increased programmatic effort is necesdtated by the fact that the GDPs are " subject to a relatively large number of credible accidents, most of which have multiple initiating events." M USEC is aware of no analysis which shows that the number of pctential accidents at the GDPs exceeds that of an LEU fuel facility, or is comparable to that of an HEU facility. On the contrey, 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 hazard assessrnent performed for the GDPs. Other LEU licensees' accident analyses do not address such depth and are therefore, not analogous. Indeed, the NRC recognizes that the risks associated with other LEU fuel facilities are not well defined and has initiated rulemaking to require performance of an integrated :afety analysis (ISA) to address this concern. The GDPs have already performed this in-depth analysis.
Secondly, the NRC claims that the " potential onsite ari offsite consequences" of these accidents art "significantly greater" than for an LEU fuel facility. As described in the GDP SARs, there are few if any credible accidents that could produce any serious offsite consequences at the GDPs (Paducah SAR at 4.9; Ponsmouth SAR at 4.7) Furthermore, the potential accident scenarios at the GDPs are largely a function of the type of material and enrichment levels at the plants. LEU, in the form of UF., is the same predominant hazard present at both the GDPs and the LEU fuel facilities. HEU facilities, of course, possess more highly enriched materials that pose greater hazards. The NRC has prosided no basis for concluding that the potential consequences of accidents at the GDPs are comparable to lieu facilities.
The NRC next states that "the large size and scope of the GDP operations require substantially more effort for the development ofinspecticn procedures, guidance, and schedules.. ." In this regard, it should be noted that in initially rejecting Combustion Engineering's exemption request, the NRC stated that "the NRC does not agree....that annua' fees should be based on a licensee's size (or] production capacity. " and that the
" amount of[the NRC's] generic regulatory" costs is not materially affected by a facility's LEU fuel fabrication capacity.. "5 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, in and ofitself, warrants a fee increase over and above the fees for LEU ft:1 fabricators.
A review of NRC inspection procedures applicable to the GDPs reveals that almost all the procedures are existing procedures used for the inspection of fuel fabrication facilities '
8 Letter, James M Taylor to Richard S. Siudek, December 17,1991.
The remaining seven inspection procedures are related to the evastence of the NRC Resident i I
Inspector and denvc from existing reactor inspection procedures.
USEC Request for Exemption from Enclosure to GDP 9L 183
- . NRC Annual Fee Regulatons Page 7 of 8 According to the NRC, the "large size and scope (of the GDPs] is also expected to result in a higher number of reportable events that the NRC Staff must review." Such an NRC position terves to discourage a conservative approach to reporting events The NRC assumed iegulatory oversight of the GDPs only six months ago, and it is too early to deiermbic whether or not the GDPs will produce a substhtially larger number of reportable events than other comparable facilities. Indeed, as USEC contit. :s to gain experience in operating under NRC regulation, it is possible that the number of reportable events will decrease and will remaia comparable to that of the LEU fuel facilities. In any event, the NRC's rulemaking notice does not explain the cost or scope of effort required of the NRC Staff to review reportable events, and it does not appear that the potential burden involved justities an effective doubling of fees over and above those assessed against LEU fuel facilities.
- 3. Other Factors The NRC's rulemaking notice states that the " factors for placing a licensee into a fee category include " nuclear material type, enrichment, form, quantity, and use/ associated activity. ." 62 Fed. Reg. 29197. In reciting these factors, the NRC states that "[t]he nu: lear material and activity at the GDPs, authorized by the certificates, does not automatically place the facilities .nto the high enriched fuel category." 62 Fed Reg. 29197. There is, however, no further discussion of these factors as a basis for establishing the fees applicable to the GDPs.
USEC's review of these factors sug,;ests that they provide no basis for treating the GDPs like HEU fuel fac3ities, rather than like LEU facilities in assessing annual fees. The GDPs, as well as LEU fuel and HEU fuel facilities, possess and utilize special nuclear material in the form of UF, This similarity among all three types of facilities provides no basis for distinguishing among any of them in assessing fees. Furthermore, while the principal "use/ activity" at the GDPs is, of course, uranium enrichment rather than fuel fabrication, this factor provides no br,.,is for treating the GDPs like HEU, as opposed to, LEU fuel facilities. The principal determinant in assessing fees should be the presence of, and need for NRC regulation of HEU.' In this regard, of course, the GDPs are much more akin to LEU fuel facilities IH. Conclusion The GDPs should not be assessed separate annual fees, but should instead be assessed a single fee, commensitrate with the reasoning in Allied Sinnal as well as the requirements of the OBRA and 10 CFR 171.11(d). In addition, under the OBRA and section 171.11(d), the annual fee assessed should be comparable to that imposed upon LEU fuel facilities rather than on HEU fuel facilities. Accordingly, for the reasons discussed above, namely:
'- USEC presumes that this is the principal factor used by the NRC in decidmg 'o assess fees against HEU fuel fabricators that are more than double those applied to LEU fuel facilities.
- Enclosure to GDP 97 183_
. - USEC Request for Exemption from Pape 8 of F
. NRC Annual Fee ReFulations
- the two GDPs are the operational equivalent of a single plant;
- - USEC is appropriately licensed as an LEU facinty commensurate with the hazards associated with LEU fuel facilities, namely predominantly UF.;
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- the GDPs and the LEU fuel facilities are safeguards category 111 facilities and require considerably
.less stringent safeguards than their HEU counterparts; and
- - the NRC's programmatic effort is not increased in that the number of analy.ed accident scenarios for the GDPs is within the range of other LEU fuel facilities and the inspection procedures were pre-existing; USEC respectfully requests that the NRC grant exemptions from its fiscal year 1997 annual fee rule as
.- follows:
(1) the annual fee of $2.606,000 for the GDPs should be reduced to $1,276,000 commensurate with the fee for 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, i
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