ML20207B450

Forwards Up Summary of 51 Comments on Proposed Rule 10CFR171,including Addl Seven Comments That Were Filed. W/O Stated Util s Re Concerns on Proposed Rule

ML20207B450
Person / Time
Issue date:	07/30/1986
From:	Holloway C NRC OFFICE OF ADMINISTRATION (ADM)
To:	Fonner R NRC OFFICE OF THE GENERAL COUNSEL (OGC)
Shared Package
ML19303E617	List: ML20197J319 ML20207B409 ML20207B422 ML20207B430 ML20207B437 ML20207B443 ML20207B450 ML20207B455 ML20207B460 ML20207B467 ML20207B472 ML20207B479 ML20207B484 ML20214H930
References
FRN-51FR24078, RULE-PR-171 AC30-2-10, NUDOCS 8612010034
Download: ML20207B450 (29)

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% , oo . . + ,o JUL 3 0 IN6 NEMORANDUM FOR: Robert L. Fonner Office of the General Counsel FROM: C. James Holloway, Jr., Acting Director License Fee Management Staff, ADM

SUMMARY

OF PUBLIC COMMENTS ON PROPOSED PART 171 On July 22, 1986, we forwarded to you a sumary of 51 of the 58 coments received on the proposed rule for your review and use as an attachment to the staff paper to the Comission on the final rule. We have now updated that sumary to include the additional seven coments that were filed. A copy of the updated sumary is enclosed for your review and use. If the original is needed for any reason (e.g., attachment to staff paper), call Reba Diggs.

Also enclosed are copies of letters dated July 25, 1986, from the Philadelphia Electric Company (PEC) and the Yankee Atomic Electric Company (YAEC). Since these letters were not filed until after the close of the coment deadline, they are not included in the above-referenced sumary. PEC's basic concerns are:

a. Notice period too short for meaningful analysis; delay adoption and renotice with a more extensive coment period; requests an extended comment period,

b. Inequitable fees among various categories of licensees are unfair and unreasonable. Not enough attention given to relationship between fee and size of individual reactor or level of regulatory services provided to licensees.

c. None of the alternatives provide for fees for recipients of "special" regulatory reviews (e.g., review of a new generic reactor concept). Such fees would reduce costs to " regular users" of NRC services while serving the national interest by assuring that the regulatory review necessary before the new concept can be developed comercially is funded.

YAEC is mainly reiterating some of their concerns in their July 15, 1986 coments. They are further stressing that fees should be charged in h20 034 861121 171 51FR24078 PDR D

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2 R 30 ME proportion to the licensed rating of the reactor. They state that Yankee, Big Rock Point and La Crosse are the three smallest reactors and have less than a 200-MWe rating.

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C;7James Hol oway, Jr.

A ting Director License Fee Management Staff Office of Administration

Enclosures:

1. Coment Sumary

2. Letters 7/25/86 from PEC & YAEC cc w/ Encl. 1:

P. Norry, ADM M. Springer, ADM P. Rowe, ADM R. Smith, OGC R. Scroggins, RM R. Shumway, RM S. Smith, RM N. Beeson, RM

SUMMARY

OF FACILITI'E'S Atomic Industrial Forum, Inc.

Baltinore Gas and Electric Company Bishop, Liberran, Cook, Purcell & Reynolds Carolina Power & Ligh+ Company Commonwealth Edison Conner & Wetterhahn, P.C.

Consolidated Edison Company of New York, Inc.

Consolidated Edison Company of New York, Inc.

Consumers Power Company Dairyland Power Cooperative Edison Electric Institute Goodman, Lynne KMC, Inc.

Louisiana Power & Light Mississippi Power & Light Company National Rural Electric Cooperation Association Newman & Holtzinger, P.C.

Pacific Gas and Electric Company Pennsylvania Power and Light Company Portland General Electric Company Public Service Company of Colorado Scientists and Engineers for Secure Energy, Inc.

Shaw, Pittman, Potts & Trowbridge

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. Scuthern California Edison Company Virginia Power

Washington Public Power Supply System Wisconsin Electric Power Company Wisconsin Public Service Corporation Yankee Atomic Electric Company 4

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Facilities Comments

1. Barton Z. Cowan Atomic Industrial Forum, Inc.

The proposed rule should be withdrawn and re-propose revisions which are legally permissible.

The proposed rule raises complex questions of constitutional law and policy and important questions of equity among licensees. The proposal will be viewed by the courts as an unconstitutional tax.

Neither the Budget Reconciliation Act nor the legislative history authorize the NRC to promulgate regulations in violation of the principal holding of the court cases that fees may be charged only for specific services rendered to identifiable recipients. At a minimum, the Commission's proposal to charge licensees for costs associated with research and generic licensing activities is clearly prohibited. To proceed with these revisions on a path clearly in conflict with applicable statutory and case law is a 4

mistake.

The abbreviated conment period is both unwise and unwarranted.

Urges the Commission to look favorably upon requests for more time and to extend the due date for filing of public comments.

2. Joseph A. Tiernan, Vice President Nuclear Energy Baltimore Gas and Electric Company Endorses connents of Shaw, Pittman, Potts and Trowbridge.

The proposed annual fees amount to alunconstitutional tax.

Congress did not grant such taxing authority to the NRC. Fees must be related to specific services provided to specific individuals or companies. Fees must reflect no more than the cost of providing such services. Fees should not be used as a revenue aising device to finance services to the public at large or other roups broader i

s than the particular individual paying the fee. The NRC should withdraw the Notice of Proposed Rulemaking, t

3. Joseph B. Knotts, Jr., Attorney  ;

Bishop, Liberman, Cook, Purcell & Reynolds (on behalf of 13 reactor licensees)

Requests an extension of the connent period to allow parties time to supplement their comments. Alternatively, requests the Commission stay the effective date of the rule to allow parties to seek judicial review.

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The Commission should withdraw the proposed rule and prepare a draft rule which assesses fees based upon individual licensee and applicant costs and the value.

The proposed rule is invalid on four bases:

1. It is unconstitutional. It would tax power reactor licensees on a per capita basis without showing that these charges are commensurate with the value of services rendered. This contradicts the Supreme Court's rendate that as a matter of consitutional law, user fees must reflect the value of services provided to the individual regulated industry.

2. The proposed rule is an unreasonable, discriminatory applica-tion of the Budget Reconciliation Act. The statute requires the NRC to charge fees that are reasonably related to specific regulatory services and fairly reflect the cost. There is no attempt to show how the costs relate to individual licensees or applicants. It will penalize utilities with good perfor-mance records and benefit those to whom disproportionate resources are devoted. The proposed fee structure shif ts many millions of dollars in research to and among licensees or applicants who do not receive corresponding value. This is not reasonable decision-making. If annual fees are charged, they should be collected on a quarterly basis. Agrees with Commissioner Bernthal that the good utilities will pay for the mistakes of the bad.

3. The Budget Act does not require recovery of one-third of the Agency's budget through fees; instead it caps any such feestia\

\ that level subject to the requirement that a fee reasonably

, relate to the service and fairly reflect the cost.

4. NRC failed to meet is obligation under the Administrative Procedures Act in issuing the rule. It failed to provide the data on which the proposed rule is premised and it has failed to provide notice sufficient to afford interested parties a reasonable opportunity to participate in the rulemaking process.

4. S. R. Zimmerman, Manager Nuclear Licensing Section Carolina Power & Light Company Opposes new rule. Proposed user charges resemble more of a tax than a fee. Fees are charged for specific services rendered to specific individuals or companies. The proposed charges would be used to raise revenue from selected users to finance services to the public at large. It does not appear that NRC has the legal authority to impose annual charges to recover 33% of its budget.

All licensees should be charged. Research costs should not be included in determining the fees.

3 Favors the Alternative Approach if non-essential costs (i.e.,

research budget) are excluded.

5. Dennis L. Farrar, Director of Nuclear Licensing Comonwealth Edison The proposed fees are not authorized by the Consolidated Omnibus Budget Reconciliation Act of 1985 because they do not fairly reflect the cost to the Comission of providing the regulatory service. The NRC can charge only for services provided. There is no doubt that NRC's research program does not provide services to licensees for the purpose of the Budget Act. Research is to provide NRC a technical basis to support its regulatory program.

Even if the NRC would include research, the flat fee per reactor is not reasonably related to the service provided. The service provided does not increase in direct proportion to the number of reactors operated. This is because a research-related service can '

be provided only once to a licensee. A licensee which operates two similar units does not receive double the service realized by the operator of a single unit. Thus the flat fee structure is contrary to law. The proposal is also contrary to law as it assesses fees on only selected licensees. It is also arbitrary and capricious of NRC not to assess fees against materials licensees. Believes that 4 CFR 102 does not authorize the NRC to charge interest and penalties. -

6. Troy B. Conner, Jr. , Attorney Conner & Wetterhahn, P.C. (on behalf of 3 licensees)

The proposed rule imposes charges without regard to specific benefits provided and constitutes illegal levy of taxes. Specific aspects of the proposal are arbitrary, capricious and discrimina-tory. The proposal charges for research, generic licensing activities, standards development and safeguards, which do not provide benefits to any licensee / applicant.

The rule would also impose charges for certain reactors which have very few if any services rendered by the NRC during the year for which the charge is assessed (e.g., a reactor outage for repairs,

, mcdification or refueling).

The proposed rule would exclude any charge for regulatory services i rendered in conjunction with CP reviews and preliminary and final design reviews; violates rights under Due Process Clause of the Fifth Amendment. No rational basis is discussed for omitting charges for these services.

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4 The proposed rule would eliminate the Commission's carefully itemized fee schedule under Part 170 which resulted from lengthy rulemaking and was judicially approved by the U.S. Court of Appeals. Statements in support of the proposed schedule do not justify jettisoning the present schedule which achieves at least a rough degree of equity among NRC licensees. Part 170 already meets the criteria of the Act.

Agrees with Conmissioner Roberts that charges may be made if the service performed is a condition of the license, the service must confer special benefits, and the service must have identified beneficiaries.

Does not support Part 171 or any of its alternatives.

7. John D. O'Toole, Vice President Consolidated Edison Company of New York, Inc.

The comment period of July 16, 1986, is inappropriate, unreasonable and unfair. The short comment period will effectively preclude Con-Ed from analyzing and commenting upon the factual, legal and policy issues underlying the proposed rule. Request the Commission to extend the comment period so that a minimum of 30 days is provided for comment.

8. John D. O'Toole, Vice President Consolidated Edison Company of New York, Inc.

Endorses comments submitted by Shaw, Pittman, Potts and Trowbridge, and Bishop, Liberman, Cook, Purcell and Reynolds.

The Comnission should withdraw and redraf t its proposed rule to comport to constitutional requirements and judicial precedent.

The proposed fees are taxes, not fees, and may only be imposed by Congress. The Commission may charge only for costs which provide specific, substantial and direct benefits to the licensees against whom the fees are assessed. The rule, by attempting to include generic costs, is far wide of the mark.

The Budget Reconciliation Act (BRA) provides that the Cornission assess fees which "may not exceed" 33 percent of the budget.

Commission should provide a reasoned justification for the aggre-gate amount of license fees assessed, rather than uncritically charging the maximum permitted.

5 Comission would not be carrying out the clear intent of BRA were it to terminate or suspend collections under Part 170. Congress made it clear that the annual charges were to be "added to other amounts collected" by the NRC. It was the intent of Congress that NRC not abandon an in-place and effective method of fee collection which satisfied constitutional standards for fee collections.

To afford equal protection of the laws, the NRC must allocate fees on an equitable basis among all of its licensees.

Many of the NRC costs do not even satisfy the standard that charges be " reasonably related to the regulatory service provided". This is nowhere more evident than with the Office of Research. Research into optimal pressure vessel welds may be of great value to prospective N555 vendors, but are of no value to licensees of existing plants whose vessels were welded years ago. Pipe cracking research may benefit certain BWR licensees but is of little if any value to PWRs. Safety criteria for future plants benefit only future plants. The benefits, if any of seismic hazards will inure only to those sites actually studied. The internal NRC budgeting procedures do not lend themselves to a justifiable assessnent of who receives what regulatory service.

The Comission should explicitly provide that units whose authority to operate have been pemanently revoked (Indian Point 1) are not covered by the proposed rulemaking.

9. Frederick W. Buckman, Vice President Nuclear Operations Consumers Power Company Concurs with Comissioners Bernthal and Roberts regarding the basis for applying a user fee. Mandated annual fees will lead to burgeoning regulation.

Alternative 2, where the annual fee will be collected based on the power level in themal megawatts, should be adopted. A single unifnm annual charge as proposed would result in an economic penalty being imposed on older, smaller plants (e.g., Big Rock Plant, Lacrosse, etc.) such that it would become uneconomical for them to continue. If Alternative 2 is not adopted, some other fomula which accounts for the authorized power level should be used.

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10. James W. Taylor, General Manager Dairyland Power Cooperative Opposes adoption of proposed rule and Alternative 3 because of the burden upon small comercial reactors. Smaller reactors might be grouped into a special category such as research and test reactors to recognize their uniqueness and need for special relief from generic and broad application of rules. A cost of $1 million in annual fees representing a ten-fold increase for regulatory services for a small, high cost production facility which contri-butes 8.5% of our total steam production, will further aggravate financial problems for our consumer members.

Favors Alternative 2 using installed electrical capacity rather than therinal capacity. Notes that no provision exists to pemit licensees having special circunstances to seek relief through exemptions. Because of inequitable assessment of fees which might result for the small reactors, licensees should have the oppor-tunity to seek an appropriate exempt status from the full require-ments of the rule.

11. John J. Kearney, Senior Vice President 1

Edison Electric Institute (members operate 85 reactors with 16 more under construction)

The NRC should withdraw the proposed annual fees and adopt one course of action which solves the problem of Part 171. The fees assessed under Part 170 should be recasted to an annual fee system without increasing total fee collections. Fees should be collected in installments over the year.

Proposed annual fees are an unconstitutional tax. Notwithstanding deficit-reduction pressures, the NRC cannot abdicate its responsibility to comply with constitutional obligations.

Apart from the constitutional requirements, the proposed annual fees fail to meet the language of Section 7601 which states that annual charges "shall be reasonably related to the regulatory service provided by the Comission and shall fairly reflect the cost to the Corsnission of providing such service". Basic equity and fairness demands that if some of those subject to NRC regulation are going to bear the cost of such regulation, all of those subject to that regulation should pay their fair share, including DOE for their low-level waste disposal facility. Agrees with Comissioner Bernthal that a flat fee provides the wrong incentives for licensees.

1 The sharply increased fee collections would put an unfair burden on the nuclear industry. While nuclear power reactors may be an appealing " deep pocket" to some seeking budget / deficit relief, the extra $100 million per year in fees is simply inequitable.

12. Lynne Goodman Lacrosse, WI Strongly objects to the short connent period. Feels all licensees should pay for the NRC services they request. Licensees should not have to pay for NRC-initiated work. Proposed rule will have significant impact on those utilities that operate smaller reactors like Big Rock Point and Lacrosse. A study was performed in 1981 by Sandia Labs for the NRC. It recomended that the NRC reduce the time spent on the five smallest reactors based on consequences of an accident. Thus small reactors should not have to pay the same fee as large reactors. Agrees with views of Comissioners Roberts and Bernthal and to some extent Comissioner Zech.

13. Donald F. Knuth, President KMC, Inc. (Nuclear Consultant)

The NRC staff consumed 90 days in preparation of the proposed rule and has pemitted no tine for any meaningful review or coment by those impacted by the rule. This effort is indicative that the NRC will not seriously entertain meaningful comments, rather its only goal is to fulfill an administrative requirement. The manner in which this proposed rule has been managed appears to be extremely a rbitrary. The proposed rule contains a unifom tax regardless of the benefit the utility receives from the NRC.

There is ample regulatory precedent for consideration of alternate non-uniform " tax" arrangements (e.g., highway taxes on trucks based on vehicle weight carrying capacity) if " taxing" utility operators is NRC's objective.

Recomends extension of the coment period to a minimum of 30 days and that alternative approaches to detemining fees are given serious consideration.

14. G. W. Muench, Acting Director i Nuclear Operations Louisiana Power & Light Proposed rulenaking does not appropriately assess fees for services rendered. Rulemaking should consider all licensees (e.g., vendors, AE's, test reactor and waste repositories). Agrees in part with I

8 Commissioner Bernthal that all recipients of NRC services should be assessed a fee.

A modified version of Alternative 3 is most desirable. The Comnission must show that setting a flat fee per reactor would be in accordance with the proportionate share of services received by each reactor.

15. O. D. Kingsley, Jr., Vice President Nuclear Operations Mississippi Power & Light Company Concurs with comments made by Bishop, Liberman, Cook, Purcell and Reynolds.

Endorses the provision in the proposed rule exempting from payment of annual fees those utilities who have requested suspension of NRC reviews (e.g., Grand Gulf 2). However, NRC should make clear that any costs associated with suspended OL applications are based on individual licensee and applicant costs and the value of NRC services to the individual licensee / applicant.

Objects to proposal of one lump sum at the start of the fiscal year i thus depriving licensees of needed assets. Suggests a quarterly assessment of annual fees.

16. Robert Bergland, Executive Vice President National Rural Electric Cooperation Association Endorses and supports the conments of Dairyland Power Cooperative and Atomic Industrial Forum.

Thr new charge is a tax, not a user fee and would impose a disproportionate financial burden upon a relatively small comnercial power reactor (Lacrosse). Also, the comment period should be extended.

17. Harold F. Reis, Attorney Newman & Holtzinger, P.C. (on behalf of Florida Power, Houston Lighting, Illinois Power and Iowa Electric)

Protests the abbreviated comment period.

Objects to the NRC having converted Congress' direction to collect annual charges which must be reasonably related to the regulatory service provided by the Commission into an unconstitutional tax upon licensees.

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The Commission has not analyzed the differing impact of some of its regulatory activities on different licensees. For example, PWR's and BWR's are two types of reactors in operation. They have different characteristics such as containment and much of the research benefits only one of the types. There are aspects of the research activity which bear mainly upon advanced reactors. Yet the NRC proposes to assess current licensees and applicants annual fees based on the costs of the entire research progran.

The NRC requires that the annual fee be paid in advance. It is difficult to comprehend how such advance payment for services could be characterized as a fee rather than a tax.

Agree with Con,issioner Bernthal that all entities which derive a benefit should share the cost.

The proposed rule invites comments on an Alternative Approach to assessment of fees. The alternative does no more than slightly reduce that tax.

18. James D. Shiffer, Vice President Nuclear Power Generation Pacific Gas and Electric Company Endorses comments submitted by Bishop, Liberman, Cook, Purcell and Reynolds.

The Humboldt Bay reactor is permanently shut down and will be decommissioned once approval is issued by NRC. It should be clear that the proposed fees for plants which cannot operate are not reasonable or warranted. PG&E requests that the language of the rule specifically exclude such a plant from user fees. As proposed, the rule does not categorically exclude nuclear power reactors which are in the process of being deconmissioned.

Advance payment of the large annual fee at the beginning of the fiscal year is not justified, and quarterly installment payments should be considered.

19. H. W. Keiser, Vice President Nuclear Operations 8 Pennsylvania Power and Light Company ,

i Does not believe that the proposed fees will stand if challenged in ,

the courts. The only scheme that equates fees with service provided is the one in the existing Part 170 where licensees are billed for actual hours expended by NRC. Thus PP&L favors

10 retention of Part 170 without additional fees since additional fees cannot be reasonably related to the regulatory services provided.

If additional fees are to be collected to recover 331 of the budget, PP&L believes fees should be equally assessed against all licensees and applicants.

20. Bart D. Withers, Vice President, Nuclear Portland General Electric Company An increase in fees under Part 170 would be more appropriate. Fees charged should be corrensurate with the services received. That does not necessarily mean that the fees should be proportionate to the size of the plant or the amount of electricity generated but should be proportional to the regulatory services received.

Payment of a standard flat fee does not allow for cost control by either the licensee or NRC. It would be more appropriate to establish a license fee scale which permits the NRC and the licensee to work together to control costs.

The proposal does not give equitable treatment to all licensees.

Certain materials licensees require regulatory support but would not be paying their fair share of NRC costs. NRC is required to collect annual charges from all licensees pursuant to the Atomic Energy Act.

Part 170 should continue to be implemented although specific fees should be updated to reflect current costs.

21. H. L. Brey, Manager Nuclear Licensing & Fuels Division Public Service Company of Colorado Supports Comissioner Bernthal's position that all beneficiaries should be required to contribute to the costs of NRC efforts. A simplistic method of collecting fees in lieu of a more equitable method of fee collection is arbitrary. Licensees should be assessed fees according to the services provided and not assessed arbitrary fees as proposed. However, endorses Alternative 2 which assesses a fee upon the reactors based on themal megawatts. -

22. James P. McGranery, Jr. , Counsel Scientists and Engineers for Secure Energy, Inc.

The Budget Reconciliation Act does not permit the Comission to exclude any class of license from fees. Rule is in violation of law since it fails to consider other amounts collected by the NRC i

(e.g., fines, interest, penalties) in the 33% calculation. Feels

n 11 that the "Act" requires NRC to impose additional charges upon licensees rather than the dismantlement of the current Part 170.

Proposed rule takes an overly simplistic and broad approach to the concept of costs " reasonably" related to the regulatory service provided.

23. Jay Silberg, Attorney -

Shaw, Pittman, Potts & Trowbridge (on behalf of 17 utilities)

To comply withdraw thewith the Congressional proposed mandate the Comission should L.q rule. It should recast its current fee .

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system to involve annual charges without increasing the total ,Ygg., .m -

amount of fee collections and providing for payment in " '3 ? "~ ' " ' '

installments. This is the only alternative consistent with all of the NRC's legal responsibilities, statutory and constitutional.

The proposed annual fees clearly amount to an unconstitutional tax under prevailing Court rulings.

Apart from the constitutional problems, the proposed annual fees fail to comply with the express requirements of Section 7601. .

While the statute requires that annual fees be assessed all licensees, many licensees are excluded from payment of any fees.

In determining the maximur. fees which can be charged, the NRC fails ,

to take into account ali the other anounts collected (e.g., civil penalties, work for other Federal agencies, etc.) as required by Section 7601. The proposed new fees will potentially exceed the statutory minimum with no provisions for refunds or interest.

The cost basis for the annual fees includes elements such as general research which are not reasonably related to the costs of regulating nuclear and materials licenses.

Agrees with Comissioner Roberts that certain costs should be excluded in any proposed fee schedule.

24. M. O. Medford, Manager Nuclear Licensing i i

Southern California Edison Company Endorses coments submitted by Bishop, Libeman, Cook, Purcell and l Reynolds, i Opposes proposed rule as it arbitrarily and i., equitably assesses fees without consideration of the use of the regulatory resources.

Based upon SALP ratings, a " good" licensee would be subsidizing NRC activities at a " poor" licensee facility. The current fee system assesses fees based on actual usage of regulatory resources. SCE suggests that the current fee schedules be reevaluated and applied to generate the NRC-required income.

Objects to research budget of $104 million included as chargeable regulatory services. The Thermal Hydraulics Transients research program with a budget of. $17.5 million is tasked with the development of accident analysis computer codes. The accident analyses for existing licensed plants and applicants have, in general, been perfonned, reviewed and licensed, and further reanalyses are not required.

Agrees with Comissioner Roberts' view that the regulated funding involves a conflict of interest.

The proposed rule represents a four-fold increase in fees which cannot be considered to be " modest" as suggested in the Notice.

25. W. L. Stewart Virginia Power Encourages NRC to seek a more equitable alternative to that proposed. The proposed fixed fee for power reactor applicants and licensees, while simplifying NRC accounting, may result in a significant discrepancy between actual costs incurred and fees assessed for a specific reactor unit. Suggests fees be based, in part, on licensed reactor power output. Shares the concerns of Comissioners Zech, Bernthal and Roberts in fairly allocating costs. The method used to allocate fees should be flexible enough to more fairly reflect actual costs. Fees should include non-power expenditures (e.g., waste disposal). Finds the alternative pronosal only slightly more preferable.

26. G. L. Sorensen, Manager Regulatory Program Washington Public Power Supply System Endorses coments submitted by Bishop, Libennan, Cook, Purcell and Reynolds.

Proposed rule is unconstitutional and would impose an extreme hardship on those OL applications that are inactive (e.g. WPPSS I and3). Such a drastic increase in fees with no corresponding -

increase in level of effort or benefit to the projects would cause '

us to seriously consider the elimination of all NRC review in order to forego the user fee.

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13 Rather than following the approach in the proposed rule, the Commission must allocate fees on a services-rendered basis to each recipient of the service. Failure to do so is especially harmful in the case of relatively inactive deferred plants.

A more reasonable alternative approach to relatively inactive applications would be for the applicant and the NRC to agree upon a budget prior to the beginning of each fiscal year. Year-end adjustments could be made to reflect services actually requested and received.

27. C. W. Fay, Vice President Nuclear Power Wisconsin Electric Power Company Proposed rule is unfair and fails to treat all licensees on an equitable basis. Such a fee schedule does not recognize the varying costs associated with regulating different ' types of licensees. If fees are to reflect the cost of the regulatory service, the NRC must provide a more realistic schedule than the proposed flat fee. Legal precedent suggests that the annual fees represent an unconstitutional tax. Fee structure under Part 171 or existing Part 170 should be abolished; the cost for regulating should be supported by the Federal budgetary and collection process. The benefit is to the NRC and general public in that regulations are to assure that licensed operations are being carried out in a manner that provides for protection of the public health and welfare. Coments on the proposal were reouested in an extraordinarily short tine.

28. D. C. Hintz, Manager huclear Power Wisconsin Public Service Corporatinn Cocnent period of 15 days precludes sound analysis and participation from the public. This seems unjustifiable considering the magnitude and speed with which this issue will impact.

Proposed rule is not equitable since not all entities share in the cost recovery. In addition, no distinction is made between reviews conducted for various reactor types (PWR, BWR, HTGR), NSSS suppliers or loop configuration (2 loop vs. 4 loop). Under Part 171, PWR owners would be required to pay for issues specific to BWR reactors; for example, the issue of BWR Mark 1 containment integrity. Monthly or quarterly payments should be considered rather than one lump sum payment. Both good and bad perfonners

14 would pay an equal amount in the area of inspection fees. Agrees with Comissioner Roberts' that all beneficiaries should share in NRC costs; vendor topical reports should not be exempt from charges.

Too Whilemuch of the research confirmatory research may budget is duplication be necessary, it is of industry desirable to efforts.bM"U minimize duplicate efforts. NRC could be just as effective as an independent reviewer of private research. The possibility exists that public utility comissions would disallow duplicate research from the rate structure.

Endorses Alternative 2 that fees be based on the size of the reactor. There is a definite correlation between reactor size and utility revenues received as a result of operation of the unit.

The equitableness of a fee schedule based on unit size has been recognized by the Waste Policy Act in the assessment of fees on a per kilowatt hour basis. The proposed rule is critically flawed by its unfairness and untimeliness and hence does not confonn to the Act.

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29. Donald W. Edwards, Director Industry Affairs Yankee Atomic Electric Company Fees paid to a Government agency should be related to a specific service received. The proposed rule and the Alternative Approach stretches this concept beyond any reasonable interpretation and we i

are adamantly opposed to it.

The drastic increase proposed in this rulemaking is not based on an increase in specific services to be provided nor does it correlate to specifically identifiable activities conducted primarily for our benefit. A system based on the size and complexity of reactors would be much more equitable.

As an absolute minimur, fees should be collected in monthly or quarterly installments.

The proposed rule perpetrates an arbitrary and capricious tax which raises serious constitutionality questions which could not survive a fomal legal challenge.

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SUMMARY

OF STATES Alabama Department of Public Health Arizona Radiation Regulatory Agency Arkansas Department of Health Colorado, State of Colorado Department of Health Conference of Radiation Control Program Directors Inc.

Illinois Department of Nuclear Safety Iowa Health Department Kansas Department of Health and Environnent Kentucky Cabinet for Human Resources Louisiana Department of Environmental Quality Maine Departnent of Human Services Massachusetts Department of Public Health Nebraska Department of Health hevada Department of Human Resources New York State Department of Environmental Conservation North Dakota Department of Health Oregon Department of Human Resources Organization of Agreement States Rhode Island Departnent of Health Tennessee Department of Health and Environment Utah Department of Health Washington Department of Social and Health Services

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States Comments

1. Claude Earl Fox, M.D., State Health Officer Alabama Departnent of Public Health Supports Alternative 1. It is the fairest since reactor and materials licensees pay their fair share. It offers better enforcement in that problem licensees are charged for non-routine inspections.

2. Charles F. Tedford, Director Arizona Radiation Regulatory Agency Strongly prefers the Alternative Approach where materials licensees continue to pay.

The removal of neterials license fees establishes a nonviable prectdent for many of the Agreement States that are firmly comitted to the fee system.

3. Grets J. Dieus, Acting Director Division of Radiation Control Arkag!ss Department of Health Supports Alternative 1 which would retain Part 170. Current proposal impac s on the Agreement States too heavily. In a tire of budgetary crisis, having Part 170 fees eliminated for the materials program could easily undercut the efforts of states to continue to collect fees. In the case of Arkansas, this could prove to be an obstacle in trying to implement a fee schedule.

4. Richard D. Lamn, Governor Colorado, State of Strongly opposes the proposed rule. With the adoption of the rule, Colorado would be faced with the loss of base funding for its radiation control program. "The result of the Commission's proposal would be the termination of the NRC/ Colorado agreement of 18 years."

Strongly urges the Conmission to act on the Alternative Approach in which all licensees and applicants pay fees.

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5. Thomas M. Vernon, M.D., Executive Director Colorado Department of Health The result of the adoption of this proposed rule by the NRC would undoubtably result in the termination of Agreement State status for the State of Colorado as well as a number of other Agreenent States.

Believes proposed rule is discriminatory and unjust.

A more appropriate approach is the Alternative Approach where all licensees would pay fees.

6. John Eure, Chairman Conference of Radiation Control Program Directors, Inc.

Supports the Alternative Apprpach where all beneficiaries of NRC licenses pay fees. Opposes the proposed rule because it is centrary to the intent of Section 274 of the Atomic Energy Act and the desire of Congress to allow states to assume certain regulatory authority for radioactive material under agreement with the Commission. Also, the proposed rule (1) is inequitable because it places the financial burden of the fee recovery program on about 181 licenses, and (2) will have a severe impact on Agreement States whose fees are tied to the Conmission's fee schedule for materials licenses. If states return their agreements to NRC, they would lose some or all of their abilities for emergency response. Such action affects power facilities since their licenses are tied to off-site energency planning and response programs which in turn require adequate state and local energency response capability.

7. Terry R. Lash, Director Illinois Department of Nuclear Safety Strongly opposes NRC's adoption of such an unfair fee schedule.

The proposed fee schedule which assesses only power reactors and uranium fuel cycle facilities would have serious and far-reaching

! deleterious consequences for Illinois and other states as well as the NRC. Illinois, a potential Agreement State, probably could not propose to collect fees from licensees who would not be subject to fees under the NRC's proposed schedule. As a result, Illinois and other potential states would not be financially able to take on the responsibilities of regulating materials licenses. Illinois feels that each category of license should bear its fair share so that all licensees who benefit from the NRC's services are treated equitably. Urges the adoption of a more equitable and less disruptive schedule of fees such as reflected in the Alternative Approach. If the proposed rule is adopted, there undoubtedly would be pressure to return regulatory responsibility to NRC from

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3 Agreement States. New Mexico has already returned mill tailings to the NRC for economic reasons.

The discontinuance of fees would drastically reduce Illinois' effectiveness in assuring the siting of needed new low-level radioactive waste disposal facilities in the State.

8. Mary L. Ellis, Comissioner of Public Health Iowa Health Department Iowa, the newest Agreement State, strongly opposes the proposed fee schedule. Abolishment of the material license and inspection fees would seriously jeopardize the continuation of the Iowa-NRC agreement since Iowa has adopted a fee system identical to that of the NRC. Iowa legislation does not permit charging fees in excess of the amounts charged by the NRC.

Concurs with the Alternative Approach where all beneficiaries of NRC services pay fees.

9. David J. Rorano, Manager Bureau of Air Quality and Radiation Control Kansas Department of Health and Environment Takes strong exception to the proposal. It was not addressed to the Agreenent States. Kansas is attempting to develop a fee system again, partly due.to NRC's urging. The result is that an important aspect of the U.S. NRC Agreement State relationship has been reversed without adequate notice to the states or adequate time for response. NRC excuses a majority of its licersees from fees. The ability of Agreement States to have a fee program is likely to be seriously danaged by NRC's proposal. All licensees should pay fees.

10. Donald R. Hughes, Manager Radiation Control Branch Kentucky Cabinet for Human Resources NRC should seriously review their decision to eliminate the existing materials fee structure. Agreement State capability to establish and/or maintain its present fee structure could be placed in jeopardy.

11. William H. Spell, Administrator Nuclear Energy Division Louisiana Department of Environmental Quality

The effect of the new Part 171 is most acute for existing Agreement States and those seeking that status. Louisiana is facing a financial crisis. If the NRC's fees for materials licenses

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4 disappear there may be strong, local sentiment to return the agreement to NRC. If several states return their agreements, NRC could again be looking to charge fees for materials licenses.

Favors the alternative approach since it would minimize the effects on all states. Also, requests an extension of time to coment on the complex subject matter.

12. W. Clough Toppan, Manager Radiological Health Program Maine Department of Human Services Favors the Alternative Approach. Discontinuance of materials fees puts Agreement States in an awkward position.

13. Robert M. Hallisey, Director Radiation Control Program Massachusetts Department of Public Health Opposes the proposed Part 171. The elimination of fees for small licensees is contrary to the intent of the Budget Reconciliation Act. As a non-Agreement State which may soon seek agreement, the proposal to eliminate materials license fees concerns them greatly.

Strongly recomends adoption of the Alternative Approach which equitably distributes the cost of NRC services among all licensees.

14 Harold R. Borchert, Director Division of Radiological Health Nebraska Department of Health Absurd to propose the elimination of materials fees since certain Agreenent States use them as the basis for their fees.

Strongly urges Alternative Approach be implemented.

15. Stanley R. Harshall Supervisor Radiological Health Section Nevada Department of Human Resources Suspension of Part 170 could put some Agreement State programs in jeopardy and necessitate the relinquishing of some of the agreements.

Recomends Alternative 1 as Part 170 has been a primary justifi-cation for Nevada statutes and regulations for fee assessments.

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16. Paul J. Merges, Ph.D.

Secretary, Committee on Licensing Programs New York State Department of Environmental Conservation Inappropriate for NRC to unilaterally reduce fees without considering the impact on Agreement State programs. This proposal weakens other Agreement State programs which could affect New York State.

17. Dana K. Mount, P.E., Director Division of Environmental Engineering North Dakota Department of Health They favor the Alternative Approach which provides that applicants for and holders of reactor operating licenses pay an annual charge similar to the one in Part 171 and that Part 170 is retained for all other beneficiaries of NRC services. If the proposed Part 171 is adopted, Agreement State materials licensees will lobby against the Agreement States to suspend their fee systems.

Another consideration, Agreement State licensees may apply for NRC licenses at no cost thereby increasing NRC's workload and enticing business away from fee charging states.

18. Ray D. Paris, Manager Radiation Control Section P

Oregon Departrent of Hur.an Resources Strongly opposes the proposed change. Change would set a precedent that Agreement States could not follow. Without fees. Agreement States could not carry out licensing and inspection programs. .

Oregon is facing a depressed economy and General Fund monies are extrenely limited.

19. Edgar D. Bailey, Chairman Organization of Agreement States (28 Agreement States)

Opposes the adoption of the proposed schedule because: 1 (1) it is inequitable. It places the entire financial burden of the fee system on reactors and fuel cycle facilities and allows the vast majority of the Commission's licensees to receive the benefits of the NRC regulatory program free.

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, (2) it will have a significant negative impact on the present Agreement States and could potentially eliminate other states from becoming Agreement States. The net result of eliminating materials license fees could be that some states would be forced to give up their Agreements and return their regulatory authority to the Commission. Tc have an Agreement State lose its Agreement through no fault in the quality of its program but through a fiat of a Commission's rule change is grossly unfair. The elimination of the Commission's materials license fees would certainly impede, if not totally halt, the development of new Agreement States programs. Alternative 1

is the one most nearly acceptable. As soon as practicable the Commission should adopt an annual fee schedule for all categories of licenses.

20. James E. Hickey, Chief Division of Occupational Health and Radiation Control Rhode Island Department of Health The elimination of fees for licensees regulated by the Agreement States could have an adverse effect on State Radiation Control Programs. An inequity would be created for those Agreement States licensees who are charged fees. Licensees will pressure the Agreement States to follow the NRC initiative. State programs which do not generate income are more vulnerable to budget reductions.

21.

Charles P. West, Assistant Director Division of Radiological Health

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{ Tennessee Departnent of liealth and Environment Appears that Part 171 is inequitable and does not fulfill the requirements and intent of the Budget Reconciliation Act. Amending

, Part 170 would be more equitable than proposed Part 171.

Alternative 1 is the only alternative that should be initiated.

22. Larry F. Anderson, Director Bureau of Radiation Control Utah Department of Health Proposed Part 171 is inequitable to licensees and creates problems for the Agreement State program. Most Agreenent State fees are based on the NRC fee schedule and if the Agreement States have to 90 to their legislatures for funds to support their programs, this

' will tend to reverse their decision to assune Agreement State status and return the programs to NRC.

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7 Favors adoption of Alternative 1twhich is equitable to ~ licensees and taxpayers. Agrees with Comissioner Bernthal that the only justification for this proposal is'the potential administrative savings at the expense of an equitably administered program.

23. T. R. Strong, Chief .

Office of Radiation Protection _

Washington Department of social and Health Services Alternative proposal to ma'intain materials license fees at their present level is far superior to elimination of the fees.

If NRC does not charge fees which fully recover costs in the material licensing area, at least do not reduce the current fees.

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SUMMARY

OF MATERIALS Chrysler Corporation Exxon Nuclear Company, Inc.

General Electric Company Kerr-McGee Corporation Rio Algom Mining Corporation Westinghouse Electric Corporation 1

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Materials Comments i

1. Louis Redmond, Corporate Radiation Protection Officer Chrysler Corporation Favors proposal that does not bill the small materials licensee.

2. C. W. Malody, Manager Corporate Licensing Exxon Nuclear Company, Inc.

The levying of the annual fee along with removal of existing fee schedule has the appeal of simplicity for the NRC and the ease of budgeting for the licensee. Although the annual fee in any one year might not bear a direct relationship to cost or worth of services provided, over the tens of years most licensees will operate, any inequity would tend to disappear. Favors the proposed simplification approach to fee calculation and collection. Supports either alternative which eliminates fee collection under Part 170.

3. T. Preston Winslow, Manager Licensing & Nuclear Materials Management General Electric Company GE supports the proposed rule change as an interim measure in that it reduces the license fee administrative burden. A single annual fee for a uranium fuel fabrication license rather than the 25 payments made to the NRC during a year would save time and simplify management p'd tdministration of the fees.

GE believes that the Government should have a single fee policy for government activities; in every case where services are rendered, the policy should be the same.

It appears that the annual fee factor (51 F.R. 24085) should be .49 instead of .45. If so, the proposed 171.15(d)(1) through (5) will need recalculation.

Agrees with Commissioner Roberts that for the regulated to fund the activities of the regulator is an inimical conflict of interest.

4. Edwin T. Still, Vice President and Director Environment and Health Management Division Kerr-McGee Corporation Generally agrees with views of Commissioners Roberts, Bernthal and Zech.

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• 6m The proposed fee structure presents major inequities and seemingly was selected only on the basis of ease and convenience rather than in consideration of the amount of effort expended on a licensee.

Believes fee should be comensurate with the effort expended and take into account the operating status of the facility. Sees no justification in requiring an operation on standby or in the decomissioning operation. stage to pay the same fee as an active or expanding of licensees There is no from any rationale for exempting the vast majority fee. Fails to understand why fees are not collected from test and research reactors.

Opposes the arbitrary fee assessment schedule and urges considera-tion of thefees.

equitable alternative where all beneficiaries of NRC services pay

5. M. D. Lawton, President Rio Algom Mining Corporation Supports the method of calculation of fees in the present schedule.

Experience indicates that fees under the present schedule would be less than the annual fee of $23,000 as proposed for a mill license.

Agrees with Comissioner Roberts that for the regulated to fund the activities of the regulator is an inimical conflict of interest.

Also agrees with Conriissioner Bernthal that the good will be penalized for the ineptitude of others.

6. A. J. Nardi, Manager License Administratior.

Westinghouse Electric Corporation Agrees with the Alternative Approach and Comissioner Bernthal's views that all NRC beneficiaries pay fees. There appears to be no logic in excluding the smaller materials licensees from the fee schedules.

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