ML20212K347

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Forwards Draft 1 of Proposed Fy 1999 Fee Rule,Minus Regulation
ML20212K347
Person / Time
Issue date: 03/12/1999
From: Gerard Jackson
NRC
To: Meyer D, Rothschild T, Turdici J
NRC
Shared Package
ML20138F537 List:
References
FRN-64FR15876, RULE-PR-170, RULE-PR-171 AG08-1-002, NUDOCS 9910060227
Download: ML20212K347 (70)
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~Da, %2 3 March 12,1999 -

/ i Note to: Jim Turdici dt ai Di e

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From: Glenda Jackson y-j l

Attached is Draft #1 of the proposed FY 1999 fee rule, minus the regulation itself. I will complete the tables in the statement of considerations and the fee schedules, etc. early next week, but wanted to get early cominents from you on the discussion portions. I will also work on improving the formatting. I would also like to eliminate some or all of the discussion of the the administrative changes. David -is that permissible??

Thanks!

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be recovered in fees for FY 1999 is $5.2 million less than the amount estimated for recovery for

' FY 1998.

The NRC has been successful in its efforts to seek reimbursement for NRC's intemational cooperation activities for FY .1999. Therefore, licensees are not required to pay for these costs. LANGUAGE TO BE PROVIDED BY DBA The NRC estimates that approximately $107.3 million will be recovered in FY 1999 from fees assessed under 10 CFR Part 170 and other receipts, compared to $94.6 million in FY 1998. The remaining $342.3 million would be recovered in FY 1999 through the 10 CFR Part 171 annual fees, which is approximately $17.9 million less than in FY 1998.

Because the final FY 1999 fee rule will be a " major" final action as defined by the Small i

Business. Regulatory Enforcement Faimess Act of 1996, the NRC's fees for FY 1999 would become effective 60 days after publication of the final rule in the Federal Register.

The NRC announced in the FY 1998 proposed rule that the final rule would no longer be mailed to all licensees. However, because the NRC is soliciting public comments on o annaul fee options for FY 1999, the FY 1999 final rule will be mailed to all licensees. As a cost-saving measure, the LRC does not plan to mail future final fee rules to all licensees, but will continue, as a matter of courtesy, to send the proposed fee rules.

In addition to publication in the rederal Register, the final rule will be available on the intemet at http://ruleforu.llnl. gov /. Copies of the final rule will also be mailed upon request. To request a 5

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l l copy, contact the License Fee and Accounts Receivable Branch, Division of Accounting and  ;

Finance, Office of the Chief Financial Officer, at 301-415-7554, n e-O * ## [' .

l The NRC is proposing to make changes to 10 CFR Parts 170 and 171 as discussed in Sections A. and B. below:

A. Amendments to 10 CFR Part 170: Fees for Facilities. Materials. Imoort end ExD011 ,

Ljcenses. and Other Raoulatorv Services, l i

1 The NRC is proposing five major amendments to 10 CFR Part 170. These amendments would not change the underlying basis for the regulation - that fees be assessed 4 i

to applicants, persons, and licenseet for specific identifiable services rendered. The i

amendments also comply with the guidance in the Conference Committee Report on OBRA-90 4

that fees assessed under the Independent Offices Appropriation Act (IOAA) recover the full cost to the NRC of identifiable regulatory services that each applicant or licensee receives.

The major changes to 10 CFR Part 170 proposed by the NRC are:

1. Include additional activities for cost recovery under Part 170. The NRC is proposing  ;

to expand the scope of Part 170 to include incident investigations, performance assessments and evaluations (except those for which the licensee volunteers at NRC's request), reviews of reports and other submittals, such as responses to Confirmatory Action Letters, and full cost recovery for Project Maragem.

l Part 170 fees are based on Title V of the Independent Offices Appropriation Act of 1952 (IOAA), interpretations of that legislation by the Federal courts, and Commission guidance.

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through Part 171 annual fees, not through Part 170 fees assessed to the licensee. These proposed Part 170 fees would not apply to materials licenses for which no inspection fee is specified in Part 170 because the inspection costs are included in the Part 171 annual fee for those fee categories.

. The NRC is also proposing to expand the scope of Part 170 to include reviews of documents submitted to the NRC that do not require formal or legal approvals or amendments to the technical specifications or license. Examples are certain financial assurance reviews, reviews of responses to Confirmatory Action Letters, reviews of uranium recovery licensees' land-use . survey reports, and reviews of 10 CFR 50.71(e) final safety analysis reports (FSARs).

Part 170 fees are currently not assessed for these reviews because they do not result in an approval or amendment, and the costs are recovered through Part 171 annual fees. Although no specific approval is issued, reviews of these submittals are services provided by the NRC to i identified recipients that assist them in complying with NRC regulations.

Additionally, the NRC is proposing that all project manager time, except time spent on  ;

7 generic activities, such as rulemaking, and leave time, be recovered through Part 170 fees y .

assessed to the specific applicant or licensee to which the project manager is assigned. This I change would be applicable to all licensees subject to full cost fees under Part 170 and to which project managers are assigned. Currently, only project manager time spent on a specific licensing action or inspection is billed under Part 170, and the costs for the remaining project manager activities are recovered in the Part 171 annual fees; However, there are other project manager activities that also support and provide a direct benefit to the assigned licensee / site.

Examples of project manager activities which would be included in the Part 170 fee m'ssessment are . Examples of project manager generic activities that  ;

would not be subject to fee recovery under Part 170 are rulemaking and development of regulatory guides, generic licensing guides, standard review plans, and generic letters and bulletins. In those cases where a project manager is assigned to more than one license or site, costs for activities other than licensee-specific licensing or inspection activities would be  !

prorated to each of the licenses or sites to which the project manager is assigned. The concept of full cost recovery for project managers is similar to the concept of full cost recovery for resident inspectors, which was added to Part 170 in the FY 1998 final fee rule.

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1 administrative changes to clarify the aglicability of Part 170 fees to these Certificates.

2. Revise the definition of" Application"in $170.3, Definitions, to specifically include reports and other documents submitted to NRC for review that do not require an NRC approval, and revise the definition of " Inspection", to specifically include performance assessments, evaluations, and incident investigations. These changes would accomodate NRC's proposal to include these activities in Part 170.

LANGUAGE ON PROJECT MANAGERS TO BE ADDED (GLENDA)

3. Revise $170.5, Communications, to indicate that all communications concerning Part 170 should be addressed to the Office of the Chief Financial Officer rather than the <

Executive Director for Operations. Effective with the January 5,1997, NRC reorganization, the Executive Director for Operations no longer serves as the Chief Financial Officer. The Chief Financial Officer has delegated authority to exercise all authority vested in the Commission under 10 CFR Pads 170 and 171.

4. Revise $170.8 to reflect revise anguage on the applicability of the information collection requirements of the Paperw rK duction Act to this proposed rule.
5. Delete the current exemption in $170.11(a)(11) for amendmsnts to portable gauge licenses issued in accordance with NUREG-1556, Volume 1, to change the name of the Radiation Safety Officer. This proposed rule would eliminate the requirement for amendment fees for these licenses and include the costs in the Part 171 annual fees. Therefore, the exemption would no longer be needed.
6. Add 170.11(a)(12) to provide an exemption from Part 170 fees for those licensee-specific performance assessments or evaluations for which the licensee volunteers at NRC's request. This change would accomodate NRC's proposal to include performance assessments and evaluations in Part 170, except those for which the licensee volunteers at NRC's request.
7. Revise $170.12, Payment of Fees, to reflect the NRC's proposals to expand Part 170 to include performance assessments, evaluations, and incident investigations, and full cost 15 L . . . . .

recovery for project managers. This Section t-:ould also be revised to delete references to amendment fees that are not based on full cost to reflect the NRC's proposal to eliminate these fees from Part 170 and include the costs in the Part 171 annual fee for these materials licensees. Section 170.12(h), Method of Payment, would also be revised to specify the in' =-t "- NRC needs in order to issue refunds. This change is necessitated by new requ ents he Department of the Treasu ich go into effect April 1,1999.

, in summary, the NRC is proposing to:

Ne (1) icenses *@d to Rart170_ full cost fees).ssess Part 170 fees to recover costs for all plant or licensee-specific inspections, including performance reviews, assessments, evaluations, and incioent investigations, and all of the project managers time excluding time spent on generic activities and leave time; (2) Eliminate " flat" amendment fees for materials licenses and recover the amendment costs through Part 171 annual fees assessed to materials licensees; (3) Revise the two 10 CFR Part 170 hourly rates. )

l (4) Revise the licensing fees assessed under 10 CFR Part 170 in order to comply with the

. CFO Act's requirement that fees be revised to reflect the cost to the agency, and to reflect the revised hourly rates.

B. Amendments to 10 CFR Part 171: Annual Fees for Reador OOOT0 ting Licenses.

and Fuel Cvele Licenses and Materials Licenses. Includina Holders of Certificates of Comoliance. Reaistrations. and Quality Assurance Proaram Anorovals and Govemment Aaencies Licensed bv NRC.

The NRC proposes major amendments to 10 CFR Part 171. These major changes would result in annual fees being assessed to licensees previously exempted from

( . annual fees, increased annual fees for some licensees, and decreased annual fees for other 16

to reactor licensees in decommissioning or possess lon-only status. Power reactor licensees who a decommissioning or possession only status would, for the first time, be subject to art 71 a Ifees for their Part 50 license; however, these licensees currently pay an annual any Part 72 license they hold. )

The NRC announced in the FY 1998 fee rulemaking (_ FR and _ FR )

that it planned to reexamine the current annual fee exemption policy for licensees in decommissioning or holding possession only licenses and the annual fee policy for reactors' storage of spent fuel, and include any changes to the current fee policies in the FY 1999 fee i rulemaking. One purpose of the study was ~ to assure consistent fee treatment for both wet storage (i.e., spent fuel pool) and dry storage (i.e., independent spent fuel storage installations, j or ISFSis) of spent fuel. The Commission previously determined that both storage options are l considered safe and acceptable forms of storage for spent fuel. Under current fee regulations,

. Part 50 licensees in decommissioning who store spent fuel in the spent fuel pool are not assessed an annual fee, but licensees who store spent fuel in an ISFSI under Part 72 are assessed an annual fee. The NRC reviewed this policy as part of the overall study of the issues related to annual fees for licensees in decommissioning.

I As indicated previously, currently Part 171 annual fees are not assessed to reactor licensees who have notitified the NRC that they no longer want an NRC license and have permanently ceased operations.- This policy is based on the premise that the benefit the NRC provides a licensee is the authority to use licensed facilities or material. Although NRC's  !

. generic decommissioning activities support both licer a authorizing operations and those limited to decommissioning or possession only, only licensees with an operating license bear these costs. This becomes a larger problem for operating licensees because as the number of operating licensees declines, the financial burden on the remaining active licensees increases.

However, the preponderance of the activities that are covered by the annual fee assessed to operating reactors are not applicable to decommissioning reactors.

With regard to spent fuel storage, holders of licenses issued under Part 72 for independent spent fuel storage installations (ISFSis) are currer#y assessed annual fees for each Part 72 license they hold. Part 72 covers both general and specific licenses. The Part 72 18 I

i licensees. To address concerns about potential significant fee increases for certain licensees, the NRC is presenting two annual fee options for public comment, as describer! in 2. below, I

The proposed changes do not change the underlying basis for Part 171; that is, charging a class of licensees for NRC costs attributable to that class of licensees. The changes are )

consistent with the Congressional guidance in the Conference Committee Report on OBRA-90, which states that the " conferees contemplate that the NRC will continue to allocate generic costs that are attributable to a given class of licensees to such class" and the " conferees intend that the NRC assess the annual charge under the principle that licensees who require the l greatest expenditures of the agency's resources should pay the greatest annual fee" (136 Cong. Rec. at H12692-93). Costs not attributable to to a class of licensees would be allocated following the conferees' guidance whlch ;tc;c; that "the Commission should assess the  !

I charges for these costs as broadly as practicable in order to minimize the burden for these I costs on any licensee or class of licensees so as to establish as fair and equitable a system as is feasible.' (136 Cong. Rec. at H12692-3). The Conference Report guidance also provides that: "These expenses may be recovered from such licensees as the Commission, in its discretion, determines can fairly, equitably and practicably contribute to their payment " As in the past, these costs would be allocated to the entire population of NRC licem ees that pay annual fees, based on the amount of the budget directly attributable to a class of licensees.

This results in, for instance, a higher percentage of these costs being allocated to operating power reactor licensees as opposed to other classes of licensees.

The major changes to Part 171 proposed by the NRC are:

1. Revise 10 CFR Part 171.15 to eastablish a spent fuel storage / reactor decommissioning annual fee to be assessed to all Part 50 power reactor licensees, regardless l of their operating status, and to those Part 72 licensees who do not hold a Part 50 license. The current annual fees in 10 CFR 171.16 for Part 72 licenses for independent spent fuel storage would be eliminated. This proposed change would affect two existing NRC annual fee policies:
1) currently, costs for generic and other activities related to dry storage of spent fuel that are not l ecover rough Part 170 licensing and inspection fees are recovered through Part 171 anwal fees assessed to all Part 72 licensees; and 2) currently, Part 71 annual fees are not assessed l 17 l

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l general licenses are granted to licensees who hold a Part 50 license; the Part 72 specific l

licenses must be appfeed for and their issuance is not contingent upon the licensee holding a Part 50 license. Because the Part 72 general licenses are issued by regulation to all Part 50 licensees, these licenses are subject to annual fees only when they have been used; i.e, once

- spent fuel has been loaded into the generally-licensed ISFSI. If a licensee holds more than one Part 72 license, for example, a Part 72 general license and a Part 72 specific license for two different designs, they are assessed an annual fee for each license. I I

Costs for generic activities associated with storage of spent fuel in the spent fuel pool f (wet storage) are currently included in the annual fee assessed to operating power reactors because the Part 50 licenses cover such storage. Thus, if a Part 50 licensee is in i decommissioning and stores spent fuel in the spent fuel pool, it is not assessed an annual fee. i On the other hand, if a Part 50 licensee is in decommissioning and stores spent fuel in an ISFSI, it is assessed an annual fee for each Part 72 ISFSI license used.

The current policy has raised two concems: (1) the fee structure could create a

. disincentive for licensees to pursue dry storage; and (2) the falmess of assessing multiple annual fees if a licensee holds multiple ISFSI licenses for different designs.

i NRC's proposal to recover all generic costs related to both methods of spent fuel  !

storage and to reactor decommissioning through a spent fuel storage / decommissioning annual fee would address these concems. Section 171.15 of Part 171 would be revised to include the spent fuel storage / reactor decommissioning annual fee to be assessed to Part 50 power reactor licensees and those Part 72 specific licensees who do not hold a Part 50 license. The annual fees in $171.16 for fee categories 1B and 13B would be eliminated. This chane would not affect the manner in which licensing and inspection costs are recovered; i.e., Part 170 fees would still be assessed to Part 72 licensees and to Part 50 licensees in decommissioning or possession only status for licensing and inspection services. The NRC would continue to include the costs for generic decommissioning / reclamation costs for n eactors, fuel l

- facilities, materials, and uranium recovery licensees in the surchar ass operating j licensees, including operating power reactors.

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L Establish new baseline annual fees for FY 1999. The annual fees in 99171.15 and 171.16 would be revised for FY 1999 to recover approximately 100 percent of the FY 1999 budget authority, less fees collected under 10 CFR Part 170 and funds appropriated from the Nuclear Waste Fund and the General Fund. The total amount to be recovered through fees for l

. FY 1999 is approximately $449.6 million, which is $5.2 million less than in FY 1998. The  !

estimated amount to be recovered through Part 170 fees and other receipts for FY 1999 is l $107.3 million, compared to $94.6 million for FY 1998. The remaining $342.3 million would be recovered in FY 1999 through Part 171 annual fees, compared to $360.2 for FY 1998.

I in the FY 1995 final fes rule, the NRC stated that it would stabilize annual fees as follows. For FY 1996 through FY 1999, the NRC would adjust the annual fees only by the i percentage change (plus or minus) in NRC's total budget authority unless there was a j substantial change in the total NRC budget authority or the magnitude of the budget allocated i j to a specific class of licensees. If either case occurred, the annual fee base would be

- recalculated (60 FR 32225; June 20,1995). The NRC also indicated that the percentage '

change would be adjusted based on changes in 10 CFR Part 170 fees and other adjustments i j . as'well as on the number of licensees paying the fees. This method of determining annual fees I is the " percent change"[ method. The FY 1996, FY 1997 and FY 1998 annual fe6s were based  !

on the percent change rnethod.

l In the FY 1996 final rule, the NRC stabilized the annual fees by establishing the annual fees for all licensees at a level of 6.5 percent below the FY 1995 annual fees. For FY 1997, the L NRC followed the same method as used in FY 1996. Because the amount to be recovered j through fees for FY 1997 was identical to the amount to be recovered in FY 1996, establishing new baseline fees was not warranted for FY 1997 Based on a change in the distribution between Parts 170 and 171 fees, a reduction in the amount of the budget recovered for 10 CFR Part 170 fees, a reduction in other offsetting adjustments, and a reduction in the' number of licensees paying annual fees, the FY 1997 annual fees for all licensees increased 8.4 percent compared to the FY 1996 annual fees, in addition, beginning in FY 1997, the NRC made an adjustment to recognize that all fees billed in a fiscal year are not collected in that year.

Because there had not been a substantial change in the NRC budget or in the magnituds of a 20 t

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[ Thus, increases in the average professional time for inspections and reviews of new license

applications results in increased annual or the affected fee categories, if all else remains the same. In addition, rebaselini lects t iiewal and amendment costs that would be L included in the annualfee for the rials licensees, which were not included in FY 1995.

l Option B, rebaselining with a cap, would also rer. ult in annual fee decreases for FY L 1999 for operating power reactor licensees and certain materials licensees, and increases for other licensees, but the increases would not exceed 50 percent. However, the decreases under Option B would be slightly less than under Option A because the 50 percent cap on annual fee increases would result in approximately $800,000 ben.g added to the annual fee surcharge assessed to other licensees who pay annual fees. Because approximately 80 percent of the FY 1999 surcharge would be assessed to operating power reactors, the net result of Option B (rebaselining with a cap) would be a 6.6 percent reduction in annual fees for FY 1999 for operating power reactors compared to a 6.8 percent reduction under Option A (rebaselining without a cap). The decreases under both options include the new spent fuel I storage and reactor decommissioning annual fee to be assessed to operating power reactor licensees. Other licensees whose rebaselined annual fees do not increase by 50 percent or more would also pay slightly more under Option B (rebaselining with a cap) than they would under Option A (rebaselining without a cap).

The calculation of the rebaselined fees for each fee class are described in Tables  ;

through ' below, and the proposed annual fees under both options are shown in $$ 171.15 and 171,16.

In addition to comments on the rebaselining method for determining FY 1999 annual fees, public comments are also being sought on whether the NRC sho in .ureyee j

continue to use the percent change method and rebaseline fees every knreral years a l established in the FY 1995 fee rule, or return to a policy of rebaselining annual fees every year, or every few years as circumstances require.

3. Use revised matrixes in the determination of annual fees for fuel facility and uranium recovery licensees. As part of the rebaselining efforts, the NRC is proposing to use a revised

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- matrix depicting the categorization of fuel facility and uranium recovery licenses by authorized material and use/ activity and the relative programmatic effort associated with each category.

l (LANGUAGE ON REVISED MATRIX FOR FUEL FACILITIES AND URANIUM RECOVERY LICENSES TO BE PROVIDED BY NMSS) -

TABLEI Calculation of (Dollars in Millions) l FY97 FY98 I Total Budget $ $

Less NWF Less General Fund (Hanford Tanks, Pilot for _ _

Regulation of DOE)

Total Fee Base $ $

t l Less Part 170 Fees j Less other receipts 1

l Part 171 Fee Collections l

Required 5 $ I Part 171 Billing Adiustment' Small Ent' l

Un FY 1 invoi Payments from prior yearinvoices - -

Subtotal _ _

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!- Part 70 - Low enriched fuel facility l

Part 40 - UF.

conversion facility Part 40 - Uranium $ - to $

l recovery facilities Part 30 - Byproduct $to$'

Material Licenses Part 71 -Transportation 5 to 5 of Radioactive Material Part 72 -Independent $

Storage of Spent Nuclear Fuel 1

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' Excludes the annual fee for a few military " master" materials licenses of broad-scope issued to Govemment agencies, which ig

b. Footnote 1 of 10 CFR 171.16(d) would be amended to provide a waiver of the annual I fees for materials licensees, and holders of certificates, registrations, and approvals, who either filed for termination of their licenses or approvals or filed for possession only/ storage only licenses before October 1,1998, and permanently ceased licensed activities entirely by September 30,1998. All other licensees and approval holders who held a license or approval on October 1,1998, are subject to the FY 1999 annual fees.

Holders of new licenses issued during FY 1999 would be subject to a prorated annual fee in accordance with the current proration provision of $171.17. For example, those new materials licenses issued during the period October 1 through March 31 of the FY will be f~ 27 l

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. assessed one-half the annual fee in effect on the anniversary date of the license. New materials licenses issued on or after April 1,1999, will not be assessed an annual fee for FY 1999. Thereafter, the full annual fee is due and payable each subsequent fiscal year on the

. anniversary date of the license. Beginning June 11,1996, (the effective date of the FY 1996 final rule), affected materials licensees are subject to the annual fee in effect on the anniversary date of the license. . The anniversary date of the materials license for annual fee purposes is the f : first day of the month in which the original license was issued.

3. Section 171.19 Payment, would be revised as follows:

a, aragraph (b) would be revised to update the fiscal year references and to give ,

credit f r partial payments made by certain licensees in FY 1999 toward their FY 1999 annual fees. The NRC anticipates that the first, second, and third quarterly payments for FY 1999 will have been made by operating power reactor licensees and some large materials licensees before the final rule becomes effective. Therefore, the NRC would credit payments received for

.those quarterly annual fee assessments toward the total annual fee to be assessed. The NRC would adjust the fourth quarterly invoice to recover the full amount of the revised annual fee or

- to make refunds, as necessary. Payment of the annual fee is due on the date of the invoice and interest accrues from the invoice date. However, interest will be waived if payment is received within 30 days from the invoice date.

b. Paragraph (c) would be revised to update fiscal year references.

As in FY 1998, the NRC would continue to bill annual fees for most materials licenses l on the anniversary date of the license (licensees whose annual fees are $100,000 or more will continue to be assessed quarterly). The annual fee assessed will be tne fee in effect on the license anniversary date. This proposed rule applies to those materials licenses in the following fee categories: 1.C. and 1.D; 2.A. (2) through 2.C.; 3.A. through 3.P.; 4.A. through 9.D., and l 10.B.. For annual fee purposes, the anniversary date of the materials license is considered to be the first day of the month in which the original materials license was issued. For example, if the original materials license was issued on June 17 then, for annual fee purposes, the anniversary date of the materials license is June 1 and the licensee would continue to be billed 28

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NUCLEAR REGULATORY COMMISSION t.

10 CFR Parts 170 and 171

, RIN: 3150-AG08 l Revision of Fee Schedules; 100% Fee Recovery, FY 1999 AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

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SUMMARY

The Nuclear Regulatory Commission (NRC) is proposing to amend the licensing, inspection, and annual fees charged to its applicants and licensees. The proposed amendments are necessary to implement the Omnibus Budget Reconciliation Act of 1990 l (OBRA-90), as amended, which mandates that the NRC recover approximately 100 percent of its budget authority in Fiscal Year (FY) 1999, less amounts appropriated from the Nuclear Waste Fund (NWF The amount to be recovered for FY 1999 is approximately $449.6 million.

J e,J-tco(ess ,/ Q DATES: The comment period expires (30 days after publication). Comments received after this date will be considered if it is practical to do so, but the NRC is able to ensure only that comments received on or before this date will be considered. Because OBRA-90 requires that

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3 SUPPLEMENTARY INFORMATION:

1. Back9round, ll. ' Proposed Action.

Ill. - Environmental impact: Categorical Exclusion.

IV. Paperwork Reduction Act Statement.

V. Regulatory Analysis.

. VI. Regulatory Flexibility Analysis.

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Vll. Backfit Analysis.

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l. Background hublic Law 101-508, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90),

enacted November 5,1990, requires that the NRC recover approximately 100 percent of its budget authority, less the amount appropriated from the Department of Energy (DOE) .

dmir7s e h for FYs 1991 through 1995 by assessing fees. OBRA-90 was amended in

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1998 to extend the NRC's 100 percent fee recovery requirement through FY 1999.

The NRC assesses two types of fees to recover its budget authority. First, license and inspection fees, established at 10 CFR Part 170 under the au'hority of the Independent Offices g%v .

[ Appropriation Act (IDAA),31 U.S.C. 9701, recover the NRC's costs of providing individually identifiabk ' services to specific applicants and licensees. Examples of the services provided by the NRC for which these fees are assessed are the review of applications for the issuance of new licenses, approvals or renewals, and amendments to licenses or approvals. Second, annual fees, established in 10 CFR Part 171 under the authority of OBRA-90, recover generic m .. _.

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l and other regulatory costs not recovered through 10 CFR Part 170 fees.

1 On April 12,1996 1 FR 16203), NRC published its final rule establishing the licensing, inspection, and ann ifees cessary for the NRC to recover approximately 100 percent ofits budget authority for 1996, less the appropriation received from the Nuclear Waste Fund. Several changes to he s assessed for FY 1996 were adopted by the NRC. 7 These changes were highlight in this fin rule (61 FR 16203; April 12,1996) and bear on the approach for establishing ann al fees set forth this proposed rule.

11. Proposed Action The NRC is proposing to amend its licensing, inspection, and annual fees to recover approximately 100 percent of its FY 1999 budget authority, including the budget authority for its i

Office of the Inspector General, less the appropriations received from the NWF and the General x

p-r l Fun & For FY 1999, the NRC's budget authority is $469.8 million, of which $17.0 million has been appropriated from the NWF. In addition, $3.2 million has been appropriated from the j TWW '

General Fund for activities related to regulatory reviews and other assistance provided to the /

Department of Energy and other Federal agencies. The NRC's FY 1999hpropriations ~

inggBege states that this $3.2 appropriation shall be excluded from license fee revenues, ,  !

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Cepedic.;at ;' Cr.ergi. Th; FY '000 expreprbtba basc;:- ;';O; thet th; $0.2.T.;;;br, oppreprM'-i br re;rWi ;d;;; ;ad ;^ter ;;tMtb; per.;bbs t; ;;;;; ; bred ;t th; 1

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l Therefore, NRC is required to collect approximately $449.6 million in FY 1999 through 10 CFR l l

Part 170 licensing and inspection fees and 10 CFR Part 171 annual fees. The total amount to i

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( be recovered in fees for FY 1999 is $5.2 million less than the amount estimated for recovery for l- FY 1998.

The NRC has been successful in its efforts to seek reimbursement for NRC's intemational  !

cooperatibn activities for FY 1999. Therefore, licensees are not required to pay for these costs. LANGUAGE TO BE PROVIDED BY DBA )

The NRC estimates that approximately $107.3 million will be recovered in FY 1999 from fees assessed under 10 CFR Part 170 and other receipts, compared to $94.6 million in FY 1998. The remaining $342.3 million would be recovered in FY 1999 through the 10 CFR Part 171 annual fees, which is approximately $17.9 million less than in FY 1998.

Because the final FY 1999 fee rule will be a " major" final action as defined by the Small

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, Business Regulatory Enforcement Faimess Act of 1996, the NRC's fees for FY 1999 woul ,

/- J become effective 60 days after publication of the final rule in the Federal Regist & - )fv C' p,( -

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mailed to all licensees. However, because the NRC is soliciting public comments ' on~two asum, )

, -f-f g for FY 1999, the FY 19 will be mailed to alllicensees. As a cost-saving measure, the NRC does not plan to mail future final fee rules }o all licensees, but will continue, l

yL as a matter of courtesy, to send the proposed fee ruleg h pw% p,/ d fdA % h%ss- ur n y,t; }

in addition to publicatio in the Federal Register, the final rule will be available on the iptemet at

. To request a '

http://ruteforu.llnl.go

/"~ . C + _ _ m me Tiiisi Scf.4[sruis ... __ - e .T.;2= h:u-l f - ,- ,

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copy, contact the License Fee and Accounts Receivable Branch, Division of Accounting and l Finance, Office of the Chief Financial Officer, at 301415-7554.

The NRC is proposing to make changes to 10 CFR Parts 170 and 171 as discussed in 4 a

Sections A. and B. below:

l A. Amendments to 10 CFR Part 170: Fees for Feilities Materials. Imoort and 5:vnart Licenses. and Other Raoulatorv Services. ,

The NRC is pro sing five major amendments to 10 CFR Part 170. These  !

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g,,?:. d amendmentg-"" - "--]& <*7-he underlying basis for t'he regulation - that fees be assessed }

to applicants, persons, and licenwees for specific identifiable services rendered. The amendments also comply with the guidance in the Conference Committee Report on OBRA-90 l that fees assessed under the Independent Offices Appropriation Act (IOAA) recover the full cost cr~ 1 . l to the' NRC of identifiable regulatory services that, each applicant or licensee receives.

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J y The major changes to 10 CFR Part 170 proposed by the NRC are:

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' 1. Al nclude additional activities for cost recovery under Part 170. The NRC is proposing l to expand the scope of Part 170 to include incident investigations, performance assessments and evaluations (except those for which the licensee volunteers at NRC's request), reviews of

. reports and other submittals, such as responses to Confirmatory Action Letters, and full cost recovery for Project Managers.

P 170 fees are based on Title V of thek. dependent Offices Appropriation Act of 1952) Yj O , interpretations of that legislation by the Federal courts, and Commission guidance.

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1 These guidelines provide that Part 170 fees may be assessed to persons who are ident;fiable I recipients of "special benefits" conferred by specifically identified activities of the NRC. The i

term "special benefits" include services rendered at the request of a recipient and all services l necessary to the issuance of a required permit, license, approval, or amendment, or other services necessary to assist a recipient in complying with statutory obligations under the j l Commission's regulations.

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l Part 170 fees are currently assessed for: (1) the review of applications for and the  !

issuance of licensing actions or other approvals; (2) review and approval of topical reports; (3)

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preapplication consultations; (4) inspections; and (5) the costs of maintaining resident inspectors. The remainder of NRC's budp91 authority is recovered through annual fees  ;

assessed under Part 171.

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  • In the NRC's FY 1998 fee rulemaking, some steps were taken to shift costs from Part  !

- 171 to Part 170. The NRC's proposals to further expand Part 170 for FY 1999 would shift i additional costs from Part 171 to Part 170. 1 r

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Under this proposed change, Part 170 fees would be assessed for all inspections, ,

' including licensee-specific performance reviews, assessments, evaluations and incident investigations. Examples of activities that would be billable under Part 170 are performance assessments of fuel facilitiies, Diagnostic Evaluation Team assessments, and incident Investigation Team investigations. Those licensees who volunteer to participate in a performance review or assessment at NRC's request would be exempted from these Part 170

- fees. The inspections that are proposed to be included in Part 170 are "special benefits" provided to identifiable recipients, whether or not an inspection report is issued. For example, incident investigations are investigations of significant operational events involving power reactors and other facilities. Causes of the events are determined and corrective actions taken.

Incident Investigation Teams investigate events of a potentially major significance. Altnough the investigations may result in some generic lessons, the investigations are primarily a direct service provided to the specific licensee ano assist the licensee in complying with NRC regulations. The costs of any generic efforts that may result from the investigations, such as the development of new regulatory requirements and guidance, would continue to be recovered 7

through Part 171 annual fees, not through Part 170 fees assessed to the licensee. These proposed Part 170 fees would not apply to materials licenses for which no inspection fee is l specified in Part 170 because the inspection costs are included in the Part 171 annual fee for  !

those fee categories.

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The NRC is also proposing to expand the scope of Part 170 to include reviews of documents submitted to the NRC that do not require formal or legal approvals or amendments

, to the technical specifications or license. Examples are certain financial assurance reviews,

- reviews of responses to Confirmatory Action Letters, reviews of uranium recovery licenseca'  !

land-use survey reports, and reviews of 10 CFR 50.71(e) final safety analysis reports (FSARs).

Part 170 fees are currently not assessed for these reviews because they do not result in an  !

approval or amendment, and the costs are recovered through Part 171 annual fees. Although no specific approval is issued, reviews of these submittals are services provided by the NRC to identified recipients that assist them in complying with NRC regulations.

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Additionally, the NRC is proposing that all project manager time, except time spent on i generic activities, such as rulemaking, and leave time, be recovered through Part 170 fees

- assessed to the specific applicant or licensee to which the project manager is assigned. This

- change would be applicable to Lil licensees subject to full cost fees under Part 170 and to which project managers are assigned. Currently, only project manager time spent on a specific licensing action or inspection is billed under Part 170, and the costs for the remaining project manager activities are recovered in the Part 171 annual fees. Howe.ar, there are other project manager activities that also support and p rovide a direct benefit to the assigned licensee / site.

Examples of project manager activities which would be included in the Part 170 fee s'ssessment are- . Examples of projat manager generic activities that would not be subject to fee recovery under Part 170 are rulemaking and development of regulatory guides, generic licensing guides, standard review plans, and generic letters and bulletins.. In those cases where a project manager is assigned to more than one license or site,

.. costs for activities other than licensee-specific licensing or inspection activities would be prorated to each of the licenses or sites to which the project manager is assigned. The concept l of full cost recovery for project managers is similar to the concept of full cost recovery for i resident inspectors, which was added to Part 170 in the FY 1998 final fee rule.

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. The NRC is also soliciting public comment in this pro] posed rule on

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responses thereto and escalated enforcement actions .. in P ; q^ fd; If 2GG5) The p costs of  ;

these activities are currently recovered through Part 171 annual feesjCErrently, Part 170 fees are not assessed for the development of oiders issued pursuant to 10 CFR 2.202, or for j r, amendments specifically resulting from such orders. The primary basis for the current policy is i

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D 7 that such fees could be perceived as additional fines to the licensee, or in some cases, such as the case of a licensee requesting a hearing, such fees could be viewed as a penalty for the P licensee exercising its rights to disagree with the NRC. In addition, depending on the licensees' responses, orders may be withdrawn or modified. In cases of misconduct, an order may be issued to the individual rather than the licensee. On the other hand, the development of orders and the review of responses to orders are activities performed for specifically identifiable recipients. f g) &#su s u orr /k Twa s 7 Although the costs for enforcement actions are currently recovered through Part 170 3

fees assessed to the affected licensee, the costs for escalated enforcement actions (i.e., the

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processing and issuance of civil penalties) are not. Part 170 fees are not currently assessed for the escalated enforcement actions because in some cases the fee could be much greater l than the civil nonalty, which is intended to encourage or force a licensee to comply with the /

NRC requirements, in addition, some escalated enforcement actions are withdrawn. However, escalated enforcement actions are activities performed by the NRC for specific licensees. I The NRC is seeking public " m wnemir the costs of these activities should .

recovered through Part 1 4e than 1 annual fees in' order to further evaluate the current poli . ny resulting changes to the existing would be included in the FY

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! - 2.#R evise 10 CFR 170.31 to eliminate the amendment fees'tfiat a based on the average time to complete the reviews (" flat" fees) and include the costs in the Part 171 annual fees assessed to the licensees in the affected fee categories 3This proposal would continue the y -

, NRC's initiatives to streamline its fee program. In a similar action, the inspection and renewal fees for these licensees were eliminated in the FY 1995 and FY 1996 fee rulemakings,

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respectively, and the costs included in the annual fees for these categories of licensees.

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Although approximately 2500 requests for amendments to small materials licenses are received and processed each year for fee recovery purposes, less than $900,000 in Part 170 fees is collected annually for these amendments. The number of amendments as well as the Part 170 fee collections will decrease as more states become Agreement States.

The current approach for assessing materials license amendment fees is complex and labor intensive. Approximately 25 percent of the amendment requests are submitted with incorrect fee payments. In the case of underpayments, the licensee must be notified and the l

license amendmant held in abeyance until the correct fee is received. In the case of overpayments, refunds must be authorized and processed through the Department of the

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Treasury. Because of various Department of the Treasury requirements, information such as

' tax identification numbers must be obtained and recorded in order for a refund check to be issued. These administrative burdens would be eliminated by including the amendment costs in the Part 171 annual fee assessed to these licensees.

In addition to streamlining the NRc process, this proposed change would eliminate the steps licensees currently take to submit the payments for their amendment requests. It would also eliminate any delays in approving those amendments due to incorrect payments and would  !

provide an efficient means of recovering these costs. The NRC believes that the efficiencies to I be gained outweigh any inequities that may result because not all materials licenses are amended each fiscal year.

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3. Revise the two professional hourly rates established in $170.20. These proposed rates would be based on the FY 1999 direct FTE's and the FY 1999 budget, excluding direct program support costs and the appropriations from the NWF and the General Fund. These rates are used to determine the Part 170 fees. The proposed hourly rate for the reactor program is $141 per hour ($250,403 per direct FTE). This rate would be applicable to all activities for which fees are based on full cost under $170.21 of the fee regulations. The proposed hourly rate for the nuclear materials and nuclear waste program is $140 ($248,728 per direct FTE). This rate would be applicable to all activities for which fees are based on full cost under $170.31 of the fee regulations. In the FY 1998 final fee rule, these rates were $124 and $121, respectively. The FY 1998 rates represented a decrease from FY 1997 of $7 per 10 1

hour for the reactor program from fY 1997, and $4 per hour for the materials program .

f gwL w in calculating thef 1999 hourly rates, the staff discovered that an error in budget coding occurred for FY 1998, contributing to the hourly rate decreases for that year. Although the proposed FY 1999 hourly rates reflect an increase of $17 - $19 per hour compared to FY 1998, the error was in the reduced FY 1998 hourly rate, not in the increased FY 1999 hcurly rate. Specifically,134 FTE and approximately $10M in contract support for regional management and support were coded as direct resources for FY 1998 rather than as overhead.

The correction of that error in FY 1999 results in substantiai increases in the hourly rates compared to FY 1998, from $124 to $141 for the reactor program and from $121 to $140 per hour for the materials program. This is the result of the increased overhead costs to be allocated to the two programs, with fewer direct FTE to divide the costs among. In addition, the proportion of direct resources has shifted, resulting in the materials program having a larger share and therefore absorbing more of the overhead and management and support costs.

j ff Because of the error in FY 1998, the FY 1999 hourly rates are more appropriately compared to the FY 1997 hourly rates of $131 and $125 for the reactors and materials p

Ap' j programs, respectively. Applying only the salary and benefit increases of 4.4 percent from FY j 1997 to FY 1998, and 3.68 percent from FY 1998 to FY 1999, would result in FY 1999 hourly ,

rates of $142 for the reactor program and $135 for the materials program. This does not I fl consider the shift that has occurred in the proportion of direct resources, resulting in the materials program having a larger share and therefore absorbing more of the overhead and management and support costs.

The method used to determine the two professional hourly rates is as follows:

1. Direct program FTE levels are identified for both the reactor program and the nuclear material and waste program.
2. Direct contract support, which is the use of contract or other services in support of the line organization's direct program, is excluded from the calculation of the hourly rate because the costs for direct contract support are charged directly through the various 11

b program of $250,403 per FTE for FY 19M. Dividing the $69.5 million (rounded) budget for the nuclear materials and nuclear waste program by the program direct FTEs (279.7) results in a rate of $248,728 per FTE for FY 1999. The Direct FTE Hourly Rate for the reactor program would t*e $141 per hour (rounded to the nearest whole dollar). This rate is calculated by dividing the cost per direct FTE ($250,403) by the number of productive hours in one year l (1,776 hours0.00898 days <br />0.216 hours <br />0.00128 weeks <br />2.95268e-4 months <br />) as indicated in the revised OMB Circular A-76, " Performance of Commercial Activities." The Direct FTE Hourly Rate for the materials program would be $140 per hour I

(rounded to the nearest whole dollar). This rate is calculated by dividing the cost per direct FTE

($248 M)t>9The number of productive hours in one year (1,776 hours0.00898 days <br />0.216 hours <br />0.00128 weeks <br />2.95268e-4 months <br />

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As in FY 1998, the proposed hourly rates have been determined based on the prin:iple l Aat that surcharge costs are more appropriately included only in the Part 171 annual feedny professional hours expended on or after the effective date of the final rule would be assessed at the FY 1999 hourly rates.

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4. Adjust the current Part 170 fees in $$170.21 and 170.31 to reflect both the changes in thel sed urihand the results of the review required by the Chief Financial Officers l (CFO) Act. To comply with the requirements of the CFO Act, the NRC has evaluated historical professional sta# hours used to process a new license application for those materials licensees whose fees are based on the average cost method (flat fees). This review also included new license and amendment applications for import and export licenses. >

l l Evaluation of the historical data shows that the fees based on the average number of l professional staff hours needed to complete materials licensing actions should be increased in l some categories and decreased in others to reflect the costs incurred in completing the licensing actions. The data for the average number of professional staff hours needed to l

l complete licensing action were last updated in FY 1997 (62 FR 29194; May 29,1997). Thus, the revised average professKnal staff hours reflect the changes in the NRC licensing review program that have occurred since FY 1997. The proposed licensing fees are based on the revised average professional staff hours needed to process the k Snsing actions multiplied by the proposed nuclear materials professional hourly rate for FY 1999 of $140 per hour.

13 i

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.The proposed licensing fees reflect an increase in average time for new license applications for 20 of the 33 materials fee categories included in the biennial review, a decrease 1

in average time for 8 fee categories, and the same average time for the remaining 5 fee 1 categories. The average time for export / import new license applications and amendments did

! not change for 6 fee categories in 10 CFR 170.21 and 170.31, and decreased for 4 fee l categories.

l.

The amounts of the materials licensing " flat" fees were rounded so that the amounts would be de minimis and the resulting flat fee would be convenient to the user. Fees under L $1,000 are rounded to the nearest $10. Fees that are greater than $1,000 but less than l $100,000 are rounded to the nearest $100. Fees that are greater than $100,000 are rounded to the nearest $1,000.

The proposed licensing " flat" fees are applicable to fee categories 1.C and 1.D; 2.B and 2.C; 3.A through 3.P; 4.B through 9.D,10.B.15.A through 15.E and 16. Applications filed on or I

after the effective date of the final rule would be subject to the revised fees in this proposed rule

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l' 5. Adjust the current Part 170 licensing fees in $$170.21 and 170.31 to reflect the / ha '

l revised hourly rates.

In addition to the five major changes described above, several administrative changes would be included in the revision of Part 170. These proposed administrative changes, which are necessary to update information in certain sections and to accomodate the major changes to Part 170 proposed by the NRC, are as follows:

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  • 79 yp,M . Revise $170.2, Scope, and 9170.3, Definitione, to specifically inclu 1

Compliance (Certificates) issued pursuant to Part 76. The NRC issued two Certificates pursuant to Part 76 to the United States Ennchment Corporation for operation of the two gaseous' diffusion uranium enrichment plants located at Paducah, Kentucky, and Piketon, Ohio.

This proposal would add Part 76 to the definition of Materials License in $170.3 (Uranium enrichment facilities are already defined in $170.3). These proposed changes are 14

administrative changes to clarify the applicability of Part 170 fees to these Certificates.

I

2. Revise the definition of" Application"in 6170.3, Definitions, to specifically include reports and other documents submitted to NRC for review that do not require an NRC approval, and revise the definition of " Inspection", to specifically include performance assessments, evaluations, and incident investigations. These changes would accomodate NRC's proposal to include these activities in Part 170.

LANGUAGE ON PROJECT MANAGERS TO BE ADDED (GLENDA)

3. Revise 9170.5, Communications, to indicate that all communications conceming l Part 170 should be addressed to the Office of the Chief Financial Officer rather than the Executive Diredor for Operations. Effective with the January 5,1997, NRC reorganization, the  !

Executive Director for Operations no longer serves as the Chief Financial Officer. The Chief Financial Officer has delegated authority to exercise all authority vested in the Commission under 10 CFR Pads 170 and 171.

4. Revise $170.8 to reflect revised language on the applicability of the information I collection requirements of the Paperwo Reduction Act to this proposed rule. -----

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5. Delete the current exemption in $170.11(a)(11) for amendments to portable gauge licenses issued in accordance with NUREG-1556, Volume 1, to change the name of the Radiation Safety Officer. This proposed rule would eliminate the requirement for amendment fees for these licenses and include the costs in the Part 171 annual fees. Therefore, the ,

exemption would no longer be needed.

6. Add 170.11(a)(12) to provide an exemption from Part 170 fees for those licensee-specific performance assessments or evaluations for which the licensee volunteers at NRC's request. This change would accomodate NRC's proposal to include performance assessments and evaluations in Part 170, except those for whicn the licensee volunteers at NRC's request.
7. Revise 9170.12, Payment of Fees, to reflect the NRC's proposals to expand Part 170 to include performance assessments, evaluations, sad incident investigations, and full cost 15

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! recovery for project managers. This Section would also be revised to delete references to )

amendment fees that are not based on full cost to reflect the NRC's proposal to eliminate these fees from Part 170 and include the costs in the Part 171 annual fee for these materials licensees. Section 170.12(h), Method of Payment, would also be revised to specify the t

info ation the NRC needs in order to issue refunds. This change is necessitated by new

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! gents of the Department of the Treasuwhichpb into effect April 1,1999.

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In summary, the NRC is proposing to:

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i (1) For licenses subject to Part 170 full cost fees, assess Part 170 fees to recover costs for

$A f[vb all plant or licensee-specific inspections, including performance reviews, assessments, evaluations, and incident investigations, and all of the project managers time excluding time spent on generic activities and leave time:

(2) Eliminate " flat" amendment fees for materials licenses and recover the amendment costs through Part 171 annual fees assessed to materials licensees; (3) Revise the two 10 CFR Part 170 hourly rates.

(4) Revise the licensing fees assessed under 10 CFR Part 170 in order to comply with the 1 CFO Act's requirement that fees be revised to reflect the cost to the agency, and to reflect the revised hourly rates.

B. AmendiTients to 10 CFR Part 171: Annual Fees for Reactor COOr0 tin 0 Licenses.

and Fuel Cvele Licenses and Materials Licenses. Includina Ho!dars of Certificates of Comoliance. Reaistrations. and Quality Assurance Proaram Anorovals and Govemment Aoencies Licensed by NRC.

The NRC proposes major amendments to 10 CFR Part 171. These major changes would result in annual fees being assessed to licensees previously exempted from I annual fees, increased annual fees for some licensees, and decreased annual fees for other l

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licensees. To address concems about potential significant fee increases for certain licensees, the NRC is presenting two annual fee options for public comment, as described in 2rbelow.-

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The proposed changesg(uyut w.nvey m%..., ... '.i M. ;7i; that is, charging a class of licensees for NRC costs attributable to that class of licensees. The changes are consistent with the Congressional guidance in the Conference Committee Report on OBRA-90, which states that the." conferees contemplate that the NRC will continue to allocate generic costs that are attrioutable to a given class of licensees to such class" and the " conferees intend that the NRC assess the annual charge ureder the principle that licensees who require the greatest evnenditures of the agency's resources should pay the greatest annual fee"(136 C Rec. at H12692-93). Costs not attributable topa class of licensees would be allocated 7 ong.

following the conferees' guidance whieh-states that "the Commission should assess the charges for these costs as broadly as practicable in order to minimize the burden for these costs on any licensee or class of licensees so as to establish as fair and equitable a system as is feasible." (136 Cong. Rec. at H12692-3). The Conference Report guidance also provides that: "These expenses may be recovered from such licensees as the Commission, in its discretion, determines can fairly, equitably and practicably contribute to their payment." As in the past, these costs would be allocated to he entire population of NRC licensees that pay annual fees, based on the amount of the budget directly attributable to a class of licensees.

This results in, for instance, a higher percentage of these costs being allocated to operating power reactor licensees as opposed to other classes of licensees.

gw%mh The%ajor changes to Part 171. proposed by Sc CC .m. -

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j 1.^ Revise 10 CFR Part 171.15 to edstablish a spent fuel storage / reactor decommissioning annual fee to be assessed to all Part 50 power reactor licensees, regardless of their operating status, and to those Part 72 licensees who do not hold a Part 50 license. The current annual fees in 10 CFR 171.16 for Part 72 licenses for independent spent fuel storage would be eliminated. This proposed change would affect two existing NRC annual fee policies:

1) currently, costs for generic and other activities related to dry storage of spent fuel that are not j recover'd through Part 170 licensing and inspection fees are jecovered through Part 1 fees assessed to all Part 72 licensees; and 2) currently, Part 71 annual fees are not assessed #

b 17

to reactorlicensees in decom 's g+ l ning or possession-only status #ower reactor licensees ywho are in a decommissyloning or posses i u Ni for the first time, be subject to Part 71 annual f r their Part 50 license; however, these licensees currently pay an annual fee for any Part 72 license they hold. -

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-y NRC announced in the FY 1998 fee rulemaking (_ FR and __. FR i that ' anned to reexamine the current annual fee exemption policy for licensees in mmissioning or holding possessignjnly licenses and the annual fee policy for reactors'

%[ orage of spent fuel, and include any changes to the current fee policies in the FY 1999 fee [

, /tlulemaking. ' One purpose of the study was to assure consistent fee treatment for both wet to, age (i.e., spent fuel pool) and dry storage (i.e., independent spent fuel storage installations, j[h r ISFSis) of spent fuel. The Commission previously determined that both storage options are g considered safe and acceptable forms of storage for spent fuel. Under current fee regulations,

[ tt 50 licensees in decommissioning who store spent fuel in the spent fuel pool are not k4 assessed an annual fee, but licensees who store spent fuel in an ISFSI under Part 72 are yk assessed an annual fee. TheoO rr;!::::d mi= naliev as part of the n-e!! dy of N -

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$ i ' As indicated previously, currently Part 171 annual fees are no Assessed P

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k licensees who have notitified the NRC that they no longer want an NRC licen and have s k ~pe anently ceased operations. This policy is based on the premisenefit thatthethe NRC pr des a licensee is the authority to use licensed facilities or material. Although NRC's

$g generic decommissioning activities support both licenses authorizing operations and those I

N $ limited to decommissioning or possession only, only licensees with an operating license bear ,-

[ ese costs. This becomes a larger problem for operating licensees because as the number of g 'pe ratingh clines, the financial burden on the remaining active licensees increases.

o ' ver, the prepondera of the acti s that are covered by the annual fe V opera g react 'ars noEIs' o deconypiss M 3 y & M AGk With regard to spent fuel storage, holders of licenses issued under Part 72 for independent spent fuel storage installations (ISFSis) are currently assessed annual fees for each Part 72 license they hold. Part 72 covars both general and specific licenses. The Part 72 18 i

general licenses are granted to licensees who hold a Part 50 license; the Part 72 specific licenses must be applied for and their issuance is not contingent upon the licensee holding a Part 50 license. Because the Part 72 general licenses are issued by regulation to all Part 50 l licensees, these licenses are subject to annual fees only when they have been used; i.e, once l

spent fuel has been loaded into the generally-licensed ISFSI. If a licer,see holds more than one l

! Part 72 license, for example, a Part 72 general license and a Part 72 specific license for two 1 l l different designs, they are assessed an annual fee for each license.

Costs for generic activities associated with storage of spent fuel in the spent fuel pool l (wet storage) are currently included in the annual fee assessed to operating power reactors because the Part 50 licenses cover such storage. Thus, if a Part 50 licensee is in decommissioning and stores spent fuel in the spent fuel pool, it is not assessed an annual fee.

On the other hand, if a Part 50 licensee is in decommissioning and stores spent fuel in an l ISFSI, it is assessed an annual fee for each Part 72 ISFSI license used.

WW The current policy has raised 4wo concems: (1) the fee structure could create a disincentive for licensees to pursue dry storage;and (2) the faimess of assessing multiple <

annual fees if a licensee holds multiple ISFSI licens for different designd m[ M N*

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l NRC's proposal to recover all generic costs related to both methods of spent fuel '

storage and to reactor decommissioning through a spent fuel storage / decommissioning annual l

fee would address these concems. Section 171.15 of Part 171 would be revised to include the

. spent fuel storage / reactor decommissioning annual fee to be assessed to Part 50 power reactor l licensees and those Part 72 specific licensees who do not hold a Part 50 license. The annual fees in $171.16 for fee categories 1B and 13B would be eliminated. This change would not affect the manner in which licensing and inspection costs are recovered; l.e., Part 170 fees would still be assessed to Part 72 licensees and to Part 50 licensees in decommissioning or possession only status for licensing and inspection services. The NRC would continue to include the costs for generic decommissioning / reclamation costs for nonpower reactors, fuel facilities, materials, and uranium recovery licensees in the surcharge assesed to operating licensees, including operating power reactors.

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A Establish new bea::!ine annual fees for FY 1999. The annual fees in $$171.15 and 171.16 would be revised for FY 1999 to recover approximately 100 percent of the FY 1999 budget authority, less fees collectedg FRgi70 and funds appropriated from the Nuclear Waste Fund and the r~' cund. The total amount to be recovered through fees for ~ l FY 1999 is approximately $449.6 million, which is $5.2 million less than in FY 1998. The estimated amount to be recovered through Part 170 fees and other receipts for FY 1999 is

$107.3 million, compared to $94.6 million for FY 1998. The remaining $342.3 million would be recovered in FY 1999 through Part 171 annual fees, compared to $360.2 fr r FY 1998.

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. Y' In the FY 1995 final fee rule, the NRC stated that it would stabilize annual fees as follows. For FY 1996 through FY 1999, the NRC would adjust the annual fees only'by the percentage change (plus or minus) in NRC's total budget authority unless there was a  ;

substantial change in the total NRC budget authority or the magnitude of the budget allocated to a specific class of licensees. If either case occurred, the annual fee base would be recalculated (60 FR 32225; June 20,1995). The NRC also indicated that the percentage change would be adjusted based on changes in 10 CFR Part 170 fees and other adjustments as well as on the number of licensees paying the fees. This method of determining annual fees

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t/ is the " percent change"/ method. The FY 1996, FY 1997 and FY 1998 annual fees were based V on the percent change method.

In the FY 1996 final rule, the NRC stabilized the annual fees by establishing the annual fees for all licensees at a level of 6.5 percent below the FY 1995 annual fees. For FY 1997, the NRC followed the same method as used in FY 1996. Because the amount to be recovered through fees for FY 1997 was identical to the amount to be recovered in FY 1996, establishing new baseline fees was not warranted for FY 1997. Based on e den;r !- th; CtC9a y ,

,,. ham::., F d.170.i,J * ':;r, a. reduction in the amount of the budget recovered for 10 CFR Part 170 fees, a reduction in other offsetting adjustments, and a reduction in the' number of licensees paying annual fees, the FY 1997 annual fees for all licensees increased 8.4 percent compared to the FY 1996 annual fees. In addition, beginning in FY 1997, the NRC made an adjustment to recognize that all fees billed in a fiscal year are not collected in that year.

Because there had not been a substantial change in the NRC budget or in the magnitude of a 20

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specific budget allocation to a class of licensees, the NRC continued to stabilize the annual l

fees for FY 1998 by establishing the FY 1998 annual fees based on the percent change method; annual fees were adjusted downward by 0.1 percent based on the percent change to )

i the NRC budget authority from FY 1997 and taking into consideration the estimate collections from Part 170 fees and the reduced number of licensees payin0 fees.

Lc base a M _

The'NRC believes that la is appropriate to establish new baseline s for FY 1999 based on the program changes that have taken place since the baseline fees were established

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in FY 1995, including those resulting from the agency's strategic planning efforts, downsizing,  ;

reorganization of agency resoures, end the proposed ition of a new annual fee class (spent ~ .

fuel storage / reactor decommissioning) as described I. ve. In addition, there have been x

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several fee policy changes since FY 1995. Fee policy changes include the elimination of .

s renewal fees in FY 1996 for most materials licensees, the proposed elimination of amendment fees for these licensees in FY 1999, and the inclusion of these costs in the materials licensees' annual fee'..

'.ne NRC is specifically seeking public comment on two optional rebaselining methods for establishing the FY 1999 annual fees: Option A, rebaselining without a cap, and Option B, rebaselining with a cap so that no licensee's annual fee increases more than 50 percent.

Option A, rebaselining without a cap, would result in a reduction in annual fees from FY 1998 of l

approximately 6.8 percent for each operating power reactor, which includes the proposed spent fuel storage / decommissioning annual fee to be assessed to these licensees, and reductions of approximately 7 to 49 percent fo cgomgrials licensees. However, angyogd

, increase dramatically for certain aller licensees. For example, rebaselining would result in an -

j l increase of approximately 238 percent for solution mi ' ' nsees,127 percent for i

. transportation _ cask users, and between approximate reent and 56 percent for certain other m ' terteIl consees. Factors contributing to the annual fees increases are changes in I g '

geted costs, the increased hourly rates, decreases in the numbers of licensees and, for the

' smaller materials licenses, the results of the biennial review required by the CFO Act as h described in above. The average time to conduct inspections and review new license applications for the smaller materials license fee categories are used to allocate the materials I budget for rebaselining the annual fees because they reflect the complexity of the license.

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l Thus, increases in the average professional time for inspections and reviews of new license

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applications results in increased ann.ual fees for the affected fee categories, if all else remains l g the same. In addition, rebaselini s the renewal and amendment costs that would be incis fed in the annual fee for these materials licensees, which were not included in FY 1995.

Option B, rebaselining with a cap, would also result in annual fee decreases for FY 1999 for operating power reactor licensees and certain materials licensees, and increases for k m p .s e other licensees, but the increases would notWeesd 50 percent. However, the decreases 7 j under Option B would be slightly less than under Option A because the 50 percent cap on annual fee increases would result in approximately $800,000 being added to the annual fee surcharge assessed to other licensees who pay annual fees. Because approximately 80 percent of the FY 1999 surcharge would be assessed to operating power reactors, the net result of Option B (rebaselining with a cap) would be a 6.6 percent reduction in annual fees for 1

FY 1999 for operating power reactors compared to a 6.8 pt~;.ent reduction under Option A l

(rebaselining without a cap). The decreases under both options include the new spent fuel l storage and reactor decommissioning annual fee to be assessed to operating power reactor licensees. Other licensees whose rebaselined annual fees do not increase by 50 percent or more would also pay slightly more under Option B (rebaselining with a cap) than they would under Option A (rebaselining without a cap).

l The calculation of the rebuelined fees for each fee class are described in Tables through below, and the proposed annual fees under both options are shown in $$ 171.15 l and 171.16.

in addition to comments on the rebaselining method for determining FY 1999 annual '

fees, public comments are also being sought on whether the NRC should in future years continue to use the percent change method and rebaseline fees every several years as established in the FY 1995 fee rule, or return to a policy of rebaselining annual fees every yearg

! e munrv faw yearn me riren=hm reW - '

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3. Use revised matrixes in the determination of annual fees for fuel facility and uranium recovery licensees. As part of the rebaselining efforts, the NRC is proposing to use a revised 22 i

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[ l G:\99prule.wpd l

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! [7590-01-P]

NUCLEAR REGULATORY COMMISSION l

l 10 CFR Pads 170 and 171 i RIN: 3150-AG08 I

Revision of Fee Schedules; 100% Fee Recovery, FY 1999 AGENCY; Nuclear Regulatory Commission.

ACTION: Proposed rule.

SUMMARY

The Nuclear Regulatory Commission (NRC) is proposing to amend the licensing, inspection, and annual fees charged to its applicants and licensees. The proposed amendments are necessary to implement the Omnibus Budget Reconciliation Act of 1990 (OBRA-90), as amended, which mandates that the NRC recover approximately 100 percent of its budget authority in Fiscal Year (FY) 1999, less amounts appropriated from the Nuclear

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Waste Fund (NWF). The amount to be recovered for FY 1999 is approximately $449.6 million.

3 j DATES: The comment period expires (30 days after publication). Comments received after this date will be considered if it is practical to do so, but the NRC is able to ensure only that comments received on or before this date will be considered. Because OBRA-90 requires that

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l NRC collect the FY 1999 fees by September 30,1999, requests for extensions of the comment period will not be granted.

i ADDRESSES: Mail written comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff. Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland 20852, between 7:30 am and 4:15 pm I Federal workdays. (Telephone 301-415-1678). Comments may also be submitted via the NRC's interactive rulemaking website through the NRC home page (http://www.nrc. gov). From the NRC homepage, select "Rulemaking" from the tool bar. The interactive rulemaking website can then be accessed by selecting "Rulemaking Forum". This site provides the availability to upload comments as files (any format), if your web browser supports that function. For information about the interactive rulemaking site, contact Ms. Carol Gallagher,301-415-5905; e-mail CAG@nrc. gov.

Copies of comments received and the agency workpapers that support these proposed I i

changes to 10 CFR Parts 170 and 171 may be examined at the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC 20555-0001. Comments received may also be viewed and downloaded electronically via the interactive rulemaking website established by the NRC for this rulemaking.

FOR FURTHER INFORMATION CONTACT: Glenda Jackson, Office of the Chief Financial  !

Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Telephone 301-415-6057. .

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i' L 3 SUPPLEMENTARY INFORMATION:

I ' l. Background.

II. Proposed Action.

l l Ill. EnvironmentalImpact: Categorical Exclusion.

IVi Paperwork Reduction Act Statement.

V. Regulatory Analysis.

VI. Regulatory Flexibility Analysis.

Vll. Backfit Analysis.

I. Background Public Law 101-S08, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90),

enacted November 5,1990, requires that the NRC recover approximately 100 percent of its I

budget authority, less the amount appropriated from the Department of Energy (DOE)  !

sdministered NWF, for FYs 1991 through 1995 by assessing fees. OBRA-90 was amended in i

1998 to extend the NRC's 100 percent fee recovery requirement through FY 1999.

l The NRC assesses two types of fees to recover its budget authority. First, license and inspection fees, established at 10 CFR Part 170 under the authority of the Independent Offices

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Appropriation Act (IOAA),31 U.S.C. 9701, recover the NRC's costs of providing individually identifiable services to_ specific applicants and licensees. Examples of the services provided by the NRC for which these fees are assessed are the review of applications for the issuance of new licenses, approvals or renewals, and amendments to licenses or approvals. Second, annual fees, established in 10 CFR Part 171 under the authority of OBRA-90, recover generic

_.m o - -- - _ . _ _ _ 1 and other regulatory costs not recovered through 10 CFR Part 170 fees.

On April 12,1996 (61 FR 16203), the NRC published its final rule establishing the i

licensing, inspection, and annual fees necessary for the NRC to recover approximately 100 percent of its budget authority for FY 1996, less the appropriation received from the Nuclear l Waste Fund. Several changes to the fees assessed for FY 1996 were adopted by the NRC. l l .

i l These changes were highlighted in this final rule (61 FR 16203; April 12,1996) and bear on the l l

l approach for establishing annual fees set forth in this proposed rule. I l i

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lI. Proposed Action i l

The NRC is proposing to amend its licensing, inspection, and annual fees to recover l appror'nately 100 percent of)ts FY 1999 budget authority, including the budget authority for its  ;

llb0.V Office of the inspector General, less the appropriations received from the NWF and the General p.V 6

t Yb Fund. For FY 1999, the NRC's budget authority is $469.8 million, of which $17.0 million has been appropriated from the NWF. In addition, $3.2 million has been appropriated from the General Fund for activities related to regulatory reviews and other assistance provided to the Department of Energy and other Federal agencies. The NRC's FY 1999 appropriations language states that this $3.2 appropriation shall be excluded from license fee revenues, nothwithstanding 42 U.S.C. 2214. eemmereiel'..t.;T.ed!;n of v;;M; dued ;t th Cep;dment of I Caugy ll;nferd, '.".';;h ngten :::, ;,nd for the pil0t progr;m for th; ;;;;m;l r;gu::::en of th; l Cep;dment c' En rgy. The FY 1000 appropr::tlen :;ngs;;; dd;.;. th;; the $0.2 m;;;;;n '

epprepf.ded for rega!;tery r;v;;;;; nd ;;her ;div ;;; pede:n;ng to v;;;t; ;tered ;t th; llenfad,'.u hlngbn ; ; nd ;d!vn;;; ::::e:d;d v;;th th; p;;d pregram for ;; dun;' reguld:en Therefore, NRC is required to collect approximately $449.6 million in FY 1999 through 10 CFR Part 170 licensing and inspection fees and 10 CFR Part 171 annual fees. The total amount to 1-

be recovered in fees for FY 1999 is $5.2 million less than the amount estimated for recovery for FY 1998.

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The NRC has been successful in its efforts to seek reimbursement for NRC's intemational cooperation activities for FY 1999. Therefore, licensees are not required to pay for these costs. LANGUAGE TO BE PROVIDED BY DBA /

The NRC estimates that approximately $107.3 million will be recovered in FY 1999 from fees assessed under 10 CFR Part 170 and other receipts, compared to $94.6 million in FY 1998 The remaining $342.3 million would be recovered in FY 1999 through the 10 CFR Part 171 nnual fees, which is approximately $17.9 million less than in FY 1998.

%' & i, n $ $ dkk'u k 5 ' Y 'O@ # @\ Y '

Because the final FY 1999 fee rule will be a " major" final action as defined by the Small Business Regulatory Enforcement Faimess Act of 1W, the NRC's fees for FY 1999 would become effective 60 days after publication of the final rule in the Federal Register.

The NRC announced in the FY 1998 proposed rule that the final rule would no longer be mailed to all licensees. However, because the NRC is soliciting public comments on fee options for FY 1999, the FY 1999 final rule will be mailed to all licensees. As a cost saving measure, the NRC does not plan to mail future final fee rules to all licensees, but will continue, as a matter of courtesy, to send the proposed fee rules.

j in additin to publication in the Federal Register, the final rule will be available on the intemet at http://ruleforu.llnl. gov /. Copies of the final rule will also be mailed upon request. To request a 5

copy, contact the License Fee and Accounts Receivable Branch, Division of Accounting and Finance, Office of the Chief Financial Officer, at 301-415-7554.

The NRC is proposing to make changes to 10 CFR Parts 170 and 171 as discussed in Sechons A. and B. below:

A. Amendments to 10 CFR Part 170: Fees for Facilities. Meterials. Imoort and Exoort Licenses. and Other Reaulatorv Services.

The NRC is proposing five major amendments to 10 CFR Part 170.. These amendments would not change the underlying basis for the regulation - that fees be assessed i

to applicants, persons, and licensees for specific identifiable services rendered. The  !

l amendments also comply with the guidance in the Conference Committee Report on OBRA-90 that fees assessed under the Independent Offices Appropriation Act (IOAA) recover the full cost to the NRC of identifiable regulatory services that each applicant or licensee receives.

The major changes to 10 CFR Part 170 proposed by the NRC are:

1. Include additional activities for cost recovery under Part 170. The NRC is proposing to expand the scope of Part 170 to include incident investigations, performance assessments and evaluations (except those for which the licensee volunteers at NRC's request), reviews of reports and other submittals, such as responses to Confirmatory Action Letters, and full cost l recovery for Project Managers.

t Part 170 fees are based on Title V of the Independent Offices Appropriation Act of 1952

- (IOAA), interpretations of that legislation by the Federal courts, and Commission guidance.

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l These guidelines provide that Part 170 fees may be assessed to persons who are identifiable recipients of'special benefits" conferred by specifically identified activities of the NRC. The term "special benefits" include services rendered at the request of a recipient and all services necessary to the issuance of a required permit, license, approval, or amendment, or other services necessary to assist a recipient in complying with statutory obligations under the Commission's regulations.

Part 170 fees are currently assessed for: (1) the review of applications for and the issuance of licensing actions or other approvals; (2) review and approval of topical reports; (3) -

preapplication consultations; (4) inspections; and (5) the costs of maintaining resident inspectors. The remainder of NRC's budget authority is recovered through annual fees assessed under Part 171. l In the NRC's FY 1998 fee rulemaking, some steps were taken to shift costs from Part 171 to Part 170. The NRC's proposals to further expand Part 170 for FY 1999 would shift additional costs from Part 171 to Part 170.

' Under this proposed change, Part 170 fees would be assessed for all inspections, ,

includingiicensee-specific performance reviews, assessments, evaluations and incident investigations. Examples of activities that would be billable under Part 170 are performance assessments of fuel facilitiles, Diagnostic Evaluation Team assessments, and incident Investigation Team investigations. Those licensees who volunteer to participate in a

% performance review or assessment at NRC's request would be exempted from these Part 170 gq fees. The inspections that are proposed to be included in Part 170 are "special benefits" provided to identifiable recipients, whether or not an inspection report is issued. For example,

[) incident investigations are investigations of significant operational events involving power reactors and other facilities. Causes of the events are determined and corrective actions taken.

Incident Investigation Teams investigate events of a potentially major significance. Although the investigations may result in some generic lessons, the investigations are primarily a direct service provided to the specific licensee and assist the licensee in complying with NRC regulations. The costs of any generic efforts that may result from the investigations, such as the development of new regulatory requirements and guidance, would continue to be recovered 7

I

I' f,

through Part 171 annual fees, not through Part 170 fees assessed to the licensee. These proposed Part 170 fees would not apply to materials licenses for which no inspection fee is specified in Part 170 because the inspection costs are included in the Part 171 annual fee for I those fee categories.

I i

The NRC is also proposing to expand the scope of Part 170 to include reviews of documents submitted to the NRC that do no' require formal or legal approvals or amendments to the technical specifications or license. Examples are certain financial assurance reviews, reviews of responses to Confirmatory Action Letters, reviews of uranium recovery licensees' land-use survey reports, and reviews of 10 CFR 50.71(e) final safety analysis reports (FSARs).  !

Part 170 fees are currently not assessed for these reviews because they do not result in an l

1 approval or amendment, and the costs are recovered through Part 171 annual fees. Although  !

no specific approval is issued, reviews of these submittals are services provided by the NRC to  !

identified recipients that assist them in complying with NRC regulations. l p e(.

l Additionally, the NRC is proposing that all project mana me, except time spent on j generic activities, such as rulemaking, andhave timh be recovered through Part 170 fees assessed to the specific applicant or licensee to which the project manager is assigned. This change would be applicable to all licensees subject to full cost fees under Part 170 and to which j project managers are assigned. Currently, only project manager time spent on a specific  !

licensing action or inspection is billed under Part 170, and the costs for the remaining project manager activities are recovered in the Part 171 annual fees. However, there are other project manager activities that also support and provide a direct benefit to the assigned licensee / site. I Examples of project manager activities which would be included in the Part 170 fee a'ssessment L are . Examples of project manager generic activities that would not be subject to fee recovery under Part 170 are rulemaking and development of regulatory guides, generic licensing guides, standard review plans, and generic letters and bulletins, in those cases where a project manager is assigned to more than one license or site, costs for activities other than licensee-specific licensing or inspection activities would be prorated to each of the licenses or sites to which the project manager is assigned. The concept i of full cost recovery for project managers is similar to the concept of full cost recovery for resident inspectors, which was added to Part 170 in the FY 1998 final fee rule.

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i The NRC is also soliciting public comment in this proposed rule on including orders and responses thereto and escalated enforcement actions in Part 170 for FY 2000. The costs of these activities are currently recovered through Part 171 annual fees. Currently, Part 170 fees are not assessed for the development of orders issued pursuant to 10 CFR 2.202, or for amendments specifically resulting from such orders. The primary basis for the current policy is j that such fees could be perceived as additional fines to the licensee, or in some cases, such as the casa of a licensee requesting a hearing, such fees could be viewed as a penalty for the licensee exercising its rights to disagree with the NRC. In addition, depending on the licensees' responses, orders may be withdrawn or modified. In cases of misconduct, an order may be issued to the individual rather than the licensee. On the other hand, the development of orders I and the review of responses to orders are activities performed for specifically identifiable recipients.

Although the costs for enforcement actions are currently recovered through Part 170 fees assessed to the affected licensee, the costs for escalated enforcement actions (i.e., the processing and issuance of civil penalties) are not. Part 170 fees are not currently assessed j for the escalated enforcement actions because in some cases the fee could be much greater than the civil penalty, which is intended to encourage or force a licensee to comply with the NRC requirements. In addition, some escalated enforcement actions are withdrawn. However, escalated enforcement actions are activities performed by the NRC for specific licensees.

The NRC is seeking public comments on whether the costs of these activities should recovered through Part 170 fees rather than Part 171 annual fees in order to further evaluate the current policy. Any resulting changes to the existing policy would be included in the FY 2000 fee rulemaking.

2. Revise 10 CFR 170.31 to eliminate the amendment fees that are based on the average time to complete the reviews (" flat" fees) and include the costs in the Part 171 annual fees assessed to the licensees in the affected fee categories.- This proposal would continue the NRC's initiatives to streamline its fee program. In a similar action, the inspection and renewal fees for these licensees were eliminated in the FY 1995 and FY 1996 fee rulemakings, respectively, and the costs included in the annual fees for these categories of licensees.

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Although approximately 2500 requests for amendments to small materials licenses are l received and processed each year for fee recovery purposes, less than $900,000 in Part 170 fees is collected annually for these amendments. The number of amendments as well as the Part 170 fee collections will decrease as more states become Agreement States.

1 The current approach for assessing materials license amendment fees is complex and labor intensive. Approximately 25 percent of the amendment requests are submitted with incorrect fee payments. In the case of underpayments, the licensee must be notified and the 1 license amendment held in abeyance until the correct fee is received. In the case of overpayments, refunds must be authorized and processed through the Department of the Treasury. Because of various Department of the Treasury requirements, information such as tax identification numbers must be obtained and recorded in order for a refund check to be issued. These administrative burdens would be eliminated by including the amendment costs in the Part 171 annual fee assessed to these licensees.

l In addition to streamlining the NRC process, this proposed change would eliminate the steps licensees currently take to submit the payments for their amendment requests. It would also eliminate any delays in approving those amendments due to incorrect payments and would provide an efficient means of recovering these costs. The NRC believes that the efficiencies to  !

be gained outweigh any inequities that may result because not all materials licenses are amended each fiscal year.

! 3. Revise the two professional hourly rates established in $170.20. These proposed rates would be based on the FY 1999 direct FTE's and the FY 1999 budget, excluding direct program support costs and the appropriations from the NWF and the General Fund. These rates are used to determine the Part 170 fees. The proposed hourly rate for the reactor

! program is $141 per hour ($250,403 per direct FTE). This rate would be applicable to all activities for which fees are based on full cost under $170.21 of the fee regula ' ris. The~

l wW proposed hourly rate for the nuclear materials and nuclear waste program is $ 4043248,228 4

A i per direct FTE). This rate would be applicable to all activities for which fees are based on full cost under $170.31 of the fee' regulations. _ In the FY 1998 final fee rule, these rates were $124 and $121, respectively. The FY 1998 rates represented a decrease from FY 1997 of $7 per l 10

l hour for the reactor program from FY 1997, and $4 per hour for the materials program . l In calculating the FY 1999 hourly rates, the staff discovered that an error in t'udget coding occurred for FY 1998, contributing to the hourly rate decreases for that year. Although I the proposed FY 1999 hourly rates reflect an increase of $17 - $19 per hour compared to FY 1998, the error was in the reduced FY 1998 hourly rate, not in the increased FY 1999 hourly rate. Spacifically,134 FTE and approximately $10M in contract support for regional management and support were coded as direct resources for FY 1998 rather than as overhead.

The correction of that error in FY 1999 results in substantial increases in the hourly rates compared to FY 1998, from $124 to $141 for the reactor program and from $121 to $140 per hour for the materials program. This is the result of the increased overhead costs to be allocated to the two programs, with fewer direct FTE to divide the costs among. In addition, the l proportion of direct resources has shifted, resulting in the materials program having a larger share and therefore absorbing more of the overhead and management and support costs.

Because of the error in FY 1998, the FY 1999 hourly rates are more appropriately compared to the FY 1997 hourly rates of $131 and $125 for the reactors and materials programs, respectively. Applying only the salary and benefit increases of 4.4 percent from FY 1997 to FY 1998, and 3.68 percent from FY 1998 to FY 1999, would result in FY 1999 hourly rates of $142 for the reactor program and $135 for the materials program. This does not consider the shift that has occurred in the proportion of direct resources, resulting in the materials program having a larger share and therefore absorbing more of the overhead and management and support costs.

The method used to determine the two professional hourly rates is as follows:

1. Direct program FTE levels are identified for both the reactor program and the nuclear material and waste program.
2. Direct contract support, which is the use of contract or other services in support of the line organization's direct program, is excluded from the calculation of the hourly rate because the costs for direct contract support are charged directly through the various 11

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. categories of fees.

l l 3.' All other direct program costs (i.e., Salaries and Benefits, Travel) represent "in-house" costs and are to be allocated by dividing them uniformly by the total number of direct l FTEs for the program. In addition, salaries and benefits plus contracts for non-program direct planagement and Support. and.the Inspector, General are allocated to each program based on that program's seleN, direct costs. This method results in the following costs which are included in the hourly rates.

Table FY 1999 Budget Authority to be included in Hourly Rates (Dollars in millions)

Reactor Materials Proaram Proaram Direct Program Salaries & Benefits $ 99.2 $26.4 Overhead Salaries & Benefits, $54.1 $15.0 Program Travel and Other Support Allocated Agency Management and Support $104.2 $28.1 Subtotal $257.5 $69.5 Less effsetting receipts Total Budget included in Hourly Rate p/ $257.[ $69.5 Program Direct FTEs 1,028.0 279.7 Rate per Direct FTE 1

$250,403 $248,728 Professional Hourly Rate (Rate per direct $141 $140 l t

FTE divided by 1,776 hours0.00898 days <br />0.216 hours <br />0.00128 weeks <br />2.95268e-4 months <br />) l l

As shown in Table above, dividing t $257. million (rounded) budget for the reactor program by the reacter program direct FTEs (1,028.0) results in a rate for the reactor i

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l program of $250,403 per FTE for FY 19 Dividing the $69.5 million (rounded) budget for the nuclear materials and nuclear waste pr ram by_the program direct FTEs (279.7) results in a rate of $248,728 per FTE for FY 1999. The Direct FTE Hourly Rate for the reactor program) i-1 per hour (rounded to the nearest whole dollar). This rate is calculated by i

dividing the cost per direct FTE ($250,403) by the number of productive hours in one year (1,776 hours0.00898 days <br />0.216 hours <br />0.00128 weeks <br />2.95268e-4 months <br />) as indicated in the revised OMB Circular.AJ6,"Earformance_of_ Commercial, (Activities."M Direct FTE Hourly Rate for the materials program would be $140 per hour (rounded to the nearest whole dollar). This rate is calculated by dividing the cost per direct FTE '

($248,728) by the number of productive hours in one year (1,776 hours0.00898 days <br />0.216 hours <br />0.00128 weeks <br />2.95268e-4 months <br />),

i As in FY 1998, the proposed hourly rates have been determined based on the principle i

that the surcharge costs are more appropriately included only in the Part 171 annual fee. Any '

professional hours expended on or after the effective date of the final rule would be assessed at the FY 1999 hourly rates.

4. Adjust the current Part 170 fees in 99170.21 and 170.31 to reflect both the changes in the revised hourly rates and the results of the review required by the Chief Financial Officers (CFO) Act. To comply with the requirements of the CFO Act, the NRC has evaluated historical professional staff hours used to process a new license application for those materials licensees whose fees are based on the average cost method (flat fees). This review also included new 4

license and amendment applications for import and export licenses.

Evaluation of the historical data shows that the fees based on the average number of professional staff hours needed to complete materials licensing actions should be increased in some categories and decreased in others to reflect the costs incurred in completing the licensing actions. The data for the average number of professional staff hours needed to complete licensing action were last updated in FY 1997 (62 FR 29194; May 29,1997). Thus, the revised average professional staff hours reflect the changes in the NRC licensing review program that have occurred since FY 1997. The proposed licensing fees are based on the revised average professional staff hours needed to process the licensing actions multiplied by the proposed nuclear materials professional hourly rate for FY 1999 of $140 per hour.

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The proposed licensing fees reflect an increase in average time for new license applications for 20 of the 33 materials fee categories included in the biennial review, a decrease in average time for 8 fee categories, and the same average time for the remaining 5 fee categories. The average time for export / import new license applications and amendments did l not change for 6 fee categories in 10 CFR 170.21 and 170.31, and decreased for 4 fee categories.

1 The amounts of the materials licensing " flat" fees were rounded so that the amounts would be de minimis and the resulting flat fee would be convenient to the user. Fees under

$1,000 are rounded to the nearest $10. Fees that are greater than $1,000 but less than

$100,000 are rounded to the nearest $100. Fees that are greater than $100,000 are rounded to the nearest $1,000.  !

I The proposed licensing " flat" fees are applicable to fee categories 1.C and 1.D; 2.B and 2.C; 3.A through 3.P; 4.B through 9.D,10.B.15.A through 15.E and 16. Applications filed on or j after the effective date of the final rule would be subject to the revised fees in this proposed rule

5. ' Adjust the current Part 170 licensing fees in $$170.21 and 170.31 to reflect the revised hourly rates. 1 s

f, in addition to thmajor changes described above, several administrative changes

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would be included in the revision of Part 170.' These proposed administrative changes, which are necessary to update information in certain sections and to accomodate the major changes to Part 170 proposed by the NRC, are as follows:

1. ~ Revise $170.2, Scope, and $170.3, Definitions, to specifically include Certificates of Compliance (Certificates) issued pursuant to Part 76. The NRC issued two Certificates pursuant to Part 76 to the United States Enrichment Corporation for operation of the two gaseous diffusion uranium enrichment plants located at Paducah, Kentucky, and Piketon, Ohio.

This proposal would add Part 76 to the definition of Materials License in $170.3 (Uranium enrichment facilities are already defined in $170.3). These proposed changes are 14

administrative changes to clarify the applicability of Part 170 fees to these Cedificates.

2. Revise the definition of " Application" in $170.3, Definitions, to specifica3y include reports and other documents submitted to NRC for review that do not require an NRC approval, and revise the definition of "!aspection", to specifically include performance assessments, evaluations, and incident investigations. ' These changes would accomodate NRC's proposal to include these' activities in Part 170.

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LANGUAGE 0N PROJECT MANAGERS TO BE ADDED (GLENDA)

3. Revise 9170.5, Communications, to indicate that all communications conceming Part 170 should be addressed to the Office of the Chief Financial Officer rather than the l Executive Director for Operations. Effective with the January 5,1997, NRC reorganization, the Executive Director for Operations no longer serves as the Chief Financial Officer. The Chief Financial Officer has delegated authority to exercise all authority vested in the Commission under 10 CFR Pads 170 and 171.
4. Revise $170.8 to reflect revised language on the applicability of the information collection requirements of the Pape eduction Act to this proposed rule.
5. Delete the current exemption in $170.11(a)(11) for amendments to portable gauge licenses issued in accordance with NUREG-1556, Volume 1, to change the name of the Radiation Safety Officer. This proposed rule would eliminate the requirement for amendment fees for these licenses and include the costs in the Part 171 annual fees. Therefore, the

. exemption would no longer be needed.

6. Add 170.11(a)(12) to provide an exemption from Part 170 fees for those licensee-specific performance assessments or evaluations for which the licensee volunteers at NRC's request. This change would accomodate NRC's proposal to include performance assessments and evaluations in Part 170, except those for which the licensee volunteers at NRC's request.
7. Rev:ise $170.12, Payment of Fees, to reflect the NRC's proposals to expand Part 170

' to include performance assessments, evaluations, and incident investigations, and full cost 15

recovery for project managers. This Section would also be revised to delete references to amendment fees that are not based on full cost to reflect the NRC's proposal to eliminate these fees from Part 170 and include the costs in the Part 171 annual fee for these materials licensees. Section 170.12(h), Method of Payment, would also be revised to specify the

-information the NRC needs in order to issue refunds. This change is necessitated by new e

requirments of the Department of the Treasu .) hich go into ' ffect April 1,1999.

In summary, the NRC is proposing to:

'(1) For licenses subject to Part 170 full cost fees, assess Part 170 fees to recover costs for all plant or licensee-specific inspections, including performance reviews, assessments, l evaluations, and incident investigations, and all of the project managers time excluding time spent on generic activities and leave time; l

.(2) Eliminate " flat" amendment fees for materials licenses and recover the amendment costs through Part 171 annual fees assessed to materials licensees; (3)- . Revise the two 10 CFR Part 170 hourly rates.

(4) Revise the licensing fees assessed under 10 CFR Part 170 in order to comply with the CFO Act's requirement that fees be revised to reilect the cost to the agency, and to reflect the revised hourly rates.

B. Amendments to 10 CFR Part 171: Annual Fees for Reactor OOOratin Licenset and Fuel Cycle Licenses and Materials Licenses. Includina Holders of Certificates of Comoliance. Reaistrations; and Quality Assurance Prooram Anorovals and Government Aaencies Licensed by NRC.

The_ NRC proposes major amendments to 10 CFR Part 171. These major changes would result in annual fees being assessed to licensees previously exempted from  ;

annual fees,' increased annual fees for some licensees, and decreased annual fees for other 16 l

licensees. To address concerns about potential significant fee incres.ses for certain licensees, the NRC is presenting two annual fee options for public comment, as described in 2. below.

The proposed changes do not change the underlying basis for Part 171; that is, charging a class of licensees for NRC costs attributable to that class of licensees. The changes are consistent with the Congressional guidance in the Conference Committee Report on OBRA-90, which states that the " conferees contemplate that the NRC will continue to allocate generic costs that are attributable to a given class of licensees to such class" and the " conferees intend that the NRC assess the annual charge under the principle that licensees who require the greatest expenditures of the agency's resources should pay the greatest annual fee" (136 Cong. Rec. at H12692-93). Costs not attributable to to a class of licensees would be allocated following the conferees' guidance wh6elatetes that "the Commission should assess the charges for these costs as broadly as practicable in order to minimize the burden for these costs on any licensee or class of licensees so as to establish as fair and equitable a system as is feasible." (136 Cong Rec. at H12692-3). The Conference Report guidance also provides that: "These expenses may be recovered from such licensees as the Commission, in its discretion, determines can fairly, equitably and practicably contribute to their payment." As in the past, these costs would be a! located to the entire population of NRC licensees that pay annual fees, based on the amount of the budget directly attributable to a class of licensees.

l This results in, for instance, a higher percentage of these costs being allocated to operating j power reactor licensees as opposed to other classes of licensees.

The major changes to Part 171 proposed by the NRC are:

- 1. Revise 10 CFR Part 171.15 to eastablish a spent fuel storage / reactor decommissioning annual fee to be assessed to all Part 50 power reactor licensees, regardless of their operating status,' ar.d to those Part 72 licensees who do not hold a Part 50 license. The current annual fees in 10 CFR 171.16 for Part 72 licenses for independent spent fuel storage would be eliminated. This proposed change would affect two existing NRC annual fee policies:

1) currently, costs for generic and other activities related to dry storage of spent fuel that are not recoverd through Part 170 licensing and inspection fees are recovered through Part 171 annual

- fees assessed to all Part 72 licensees; and 2) currently, Part 71 annual fees are not assessed 17

to reactor licensees in decommissioning or possession-only status. Power reactor licensees wh in a decommissioning or possession only status would, for the first time, be subject to rt 71 nual fees for their Part 50 license; however, these licensees currently pay an annual fie or any Part 72 license they hole'.

The NRC announced in the FY 1998 fee rulemaking (_, FR and _,,, FR )

that it planned to reexamine the current annual fee exemption policy for licensees in decommissioning or holding possession only licenses and the annual fee policy for reactors' stozge of spent fuel, and include any changes to the current fee policies in the FY 1999 fee rulema>.ing. One purpose of the study was to assure consistent fee treatment for both wet storage (i.e., spent fuel pool) and dry storage (i.e., independent spent fuel storage installations, or ISFSis) of spent fuel. The Commission previously determined that both storage options are considered safe and acceptable forms of storage for spent fuel. Under current fee regulations, Part 50 licensees in decommissioning who store spent fuel in the spent fuel pool are not assessed an annual fee, but licensees who store spent fuel in an ISFSI under Part 72 are assessed an annual fee. The NRC reviewed this policy as part of the overall study of the issues related to annual fees for licensees in decommissioning.

As indicated previously, currently Part 171 annual fees are not assessed to reactor licensees who have notitified the NRC that they no longer want an NRC license and have permanently ceased operations. This policy is based on the premise that the benefit the NRC provides a licensee is the authority te use licensed facilities or material. Although NRC's generic decommissioning activities support both licenses authorizing operations and those limited to decommissioning or possession only, only licensees with an operating license bear these costs. This becomes a larger problem for operating licensees because as the number of operating licensees declines, the financial burden on the remaining active licensees increases.

However, the preponderance of the activities that are covered by the annual fee assessed to operating reactors are not applicable to decommissioning reactors.

With regard to spent fuel storage, holders of licenses issued under Part 72 for independent spent fuel storage installations (ISFSis) are currently assessed annual fees for each Part 72 license they hold. Part 72 covers both general and specific licenses. The Part 72 18

n : ., ._ _ _ . _ _ -

i i

general licenses are granted to licensees who hold a Part 50 license; the Part 72 specific licenses must be applied for and their issuance is not cont l agent upon the licensee holding a Part 50 license. Because the Part 72 general licenses are issued by regulation to all Part 50 licensees, these licenses are subject to annual fees only when they have been used; i.e, once

- cpent fuel has been loaded into the generally-licensed ISFSI. If a licensee holds more than one Part 72 license, for example, a Part 72 general license and a Past 72 specific license for two different designs, they are assessed an annual fee for each license.

Costs for generic activities associated with storage of spent fuel in the spent fuel pool (wet storage) are currently included in the annual fee assessed to operating power reactors because the Part 50 licenses cover such storage. Thus, if a Part 50 licensee is in decommissioning and stores spent fuel in the 6 pent fuel pool, it is not assessed an annual fee.

On the other hand, if a Part 50 licensee is in decommissioning and stores spent fuel in an ISFSI, it is assessed an annual fee for each Part 72 ISFSI license used.

M The current policy has raised two concems: (1) the fee structure could create a disincentive for licensees to pursue dry storage; and (2) the faimess of assessing multiple annual fees if a licensee holds multiple ISFSI licenses for different designs.

, NRC's proposal to recover all generic costs related to both methods of spent fuel storage and to reactor decommissioning through a spent fuel storage / decommissioning annual fee would address these concems. Section 171.15 of Part 171 would be revised to include the spent fuel storage / reactor decommissioning annual f6e to be assessed to Part 50 power reactor licensees and those Part 72 specific licensees who do not hold a Part 50 license. The annual fees in $171.16 for fee categories 1B and 13B would be eliminated. This change would not affect the manner in which licensing and inspection costs are recovered; i.e., Part 170 fees would still be assessed to Part 72 licensees and to Part 50 licensees in decommissioning or possessiors only status for licensing and inspection services. The NRC would continue to include the costs for generic decommissioning / reclamation costs for nonpower reactors, fuel facilities, materials, and uranium recovery licensees in the surcharge assesed to operating licensees, including operating power reactors.

19

2.

Establish new baseline annual fees for FY 1999. The annual fees in $9171.15 and 171.16 would be revised for FY 1999 to recover approximately 100 percent of the FY 1999 budget authority, less fees collected under 10 CFR Part 170 and funds appropriated from the Nuclear Waste Fund and the General Fund. The total amount to be recovered through fees for FY 1999 is approximately $449.6 million, which is $5.2 million less than in FY 1998. The estimated amount to be recovered through Part 170 fees and other receipts for FY 1999 is

$107.3 million, compared to $94.6 million for FY 1998. The remaining $342.3 million would be recovered in FY 1999 thraugh Part 171 annual fees, compared to $360.2 for FY 1998.

In the FY 1995 final fee rule, the NRC stated that it would stabilize annual fees as l follows. For FY 1996 through FY 1999, the NRC would adjust the annual fees only by the ,

percentage change (plus or minus) in NRC's total budget authority unless there was a i substantial change in the total NRC budget authority or the magnitude of the budget allocated to a specific class of licensees. If either case ' occurred, the annual fee base would be recalculated (60 FR 32225; June 20,1995). The NRC also indicated that the percentage I change would be adjusted based on changes in 10 CFR Part 170 fees and other adjustments as well as on the num r of licensees paying the fees. This method of determining annual fees is the " percent chang "; ethod. The FY 1996, FY 1997 and FY 1998 annual fees were based l on the percent chang'e method.

In the FY 1996 final rule, the NRC stabilized the annual fees by establishing the annual fees for all licensees at a level of 6.5 percent below the FY 1995 annual fees. For FY 1997, the NRC followed the same method as used in FY 1996. Because the arnount to be recovered through fees for FY 1997 was identical to the amount to be recovered in FY 1996, establishing l new baseline fees was not warranted for FY 1997. Based on a change in the distribution between Parts 170 and 171 fees, a reduction in the amount of the budget recovered for 10 CFR Part 170 fees, a reduction in other offsetting adjustments, and a reduction in the' number of licensees paying annual fees, the FY 1997 annual fees for all licensees increased 8.4 percent compared to the FY 1996 annual fees. In addition, beginning in FY 1997, the NRC made an adjustment to recognize that all fees billed in a fiscal year are not collected in that year.

Because there had not been a substantial change in the NRC budget or in the magnitude of a 20

n L '

speci5c budget allocation to a class of licensees, the NRC continued to stabilize the annual i

fees for FY 1998 by establishing the FY 1998 annual fees based on the percent change method; annual fees were adjusted downward by 0.1 percent based on the percent change to the NRC budget authority from FY 1997 and taking into consideration the estimated collections from Part 170 fees and the reduced number of licensees paying fees.

The NRC believes that it is appropriate to establish new baseline fees for FY 1999 based oa the program changes that have taken place since the baseline fees were established in FY 1995, including those resulting from the agency's strategic planning efforts, downsizing, reorganization of agency resources, and the proposed addition of a new annual fee class (spent fuel storage / reactor decommissioning) as described in 1. above. In addition, there have been several fee policy changes since FY 1995. Fee policy changes include the elimination of renewal fees in FY 1996 for most materials licensees, the proposed elimination of amendment fees for these licensees in FY 1999, and the inclusion of these costs in the materials licensees' annual fees.

3-The NRC is specifically seeking public comment on two optional rebaselining methods for' establishing the FY 1999 annual fees: Option A, rebaselining without a cap, and Option B, j rebaselining with a cap so that no licensee's annual fee increases more than 50 percent / freat N

~ Option A, rebaselining without a cap, would result in a reduction in annual fees from FY 1998 of approximately 6.8 percent for each operating power reactor, which includes the proposed spent fuel storage / decommissioning annual fee to be assessed to these licensees, and reductions of approximately 7 to 49 percent for certain materials licensees. However, annual fees would increase dramatically for certain other licensees. For example, rebaselining would result in an increase of approximately 238 percent for solution mining licensees,127 percent for transportation cask users, and between approximately 5 percent and 56 percent for certain other materials licensees. Factors contributing to the annual fees increases are changes in budgeted costs, the' increased hourly rates, decreases in the numbers of licensees and, for the smaller materials ' licenses, the results of the biennial review required by the CFO Act as

' described in above. The average time to conduct inspections and review new license l applications for the smaller materials lic nse fee categories are used to allocate the materials budget for rebaselining the annual fees because they reflect the complexity of the license.

21 1

g. l' j.

r 7

. Thus, increases in the average professional time for inspections and reviews of new license l

applications results in increased annual fees for the affected fee categories, if all elsa remains the same. In addition, rebaselining relects the renewal and amendment costs that would be included in the annua l fee for these materials licensees, which were not included in FY 1995.

Option B, rebaselining with a cap, would also result in annual fee decreases for FY 1999 for operating power reactor licensees and certain materials licensees, and increases for other licensees, but the increases would not exceed 50 percent. However, the decreases under Option B would be slightly less than under Option A because the 50 percent cap on annual fee increases would result in approximately $800,000 being added to the annual fee surcharge assessed to other licensees who pay annual fees. Because approximately 80 percent of the FY 1999 surcharge would be assessed to operating power reactors, the net result of Option B (rebaselining with a cap) would be a 6.6 percent reduction in annual fees for FY 1999 for operating power reactors compared to a 6.8 percent reduction under Option A (rebaselining without a cap) The decreases under both options include the new spent fuel storage and reactor deco issioning annual fee to be assessed to operating power reactor licensees. .Other licen es whose rebaselined annual fees do not increase by 50 percent or more would also y slightly more under Option B (rebaselining with a cap) than they would g underOp (rebaselining without a cap).

l 9 The calculation of the rebaselined fees for each fee class are described in Tables k through below, and the proposed annual fees under both options are shown in $$ 171.15 f[ and 171.16.

l in addition to comments on the rebaselining method for determining FY 1999 annual fees, public comments are also being sought on whether the NRC should in future years continue to use the percent change method and rebaseline fees every several years as established in the FY 1995 fee rule, or return to a policy of rebaselining annual fees every year, or every few years as circumstances require.

3. Use revised matrixes in the determination of annual fees for fuel facility and uranium recovery licensees. As part of the rebaselining efforts, the NRC is proposing to use a revised 22

matrix depicting the categorization of fuel facility and uranium recovery licenses by authorized material and use/ activity and the relative programmatic effort associated with each category.

(LANGUAGE ON REVISED MATRIX FOR FUEL FACILITIES AND URANIUM RECOVERY LICENSES TO BE PROVIDED BY NMSS)

TABLEI Calculation of (Dollars in Millions) h l

FY97 FY98 Total Budget $ $

Less NWF Less General Fund .

(Hanford Tanks, Pilot for _ .

Regulation of DOE)

Total Fee Base $ $

Less Part 170 Fees )

Less other receipts __

l Part 171 Fee Collections Required $ $

Part 171 Billing Adiustment i l

Small Entity Allowance Unpaid FY 1997 invoices t Payments from prior yearinvoices ._: _:

Subtotal ._ _

23 l

i

l- i i

I' {

Total Part 171 Billing $ $ l i

l

'These adjustments are necessary to ensure that the ' billed' amount results in the required

' collections. Positive amounts indicate amounts billed that will not be collected in FY 1999, i i

Table shows the total budget and amounts of fees for FY 1999. l FY 1999 Class of Licensees Proposed Annual Fee Power Reactors '

Nonpower Reactors High Enriched Uranium Fuel Facility Low Enriched Uranium Fuel  !

Facility l UF, Conversion Facility Uranium Mills Tvolcal Materials Licenses Radiographers Well Loggers '

Gauge Users Broad Scope Medical Because the final FY 1999 fee rule will be a " major" final action as defined by the Small Business Regulatory Enforcement Faimess Act of 1996, the NRC's fees for FY 1999 would become effective 60 days after publication of the final rule in the Federal Register. The NRC will send an invoice for the amount of the annual fee upon publication of the FY 1999 final rule i to reactors and major fuel cycle facilities. For these licensees, payment would be due on the effective date of the FY 1999 rule. Those materials licensees whose license anniversary date during FY 1999 falls before the effective date of the final FY 1999 final rule would be billed 24

.s.

during the anniversary month of the license and continue to pay annual fees at the FY 1998 rate in FY 1999. Those materials licensees whose license anniversary date falls on or after the i

l effective date of the final FY 1999 final rule would be billed at the FY 1999 revised rates during l the anniversary month of the license and payment would be due on the date of the invoice.

F l

?

' in addition to the major proposed changes discussed above, the following administrative i changes would be included in Part 171 to accomodate the major changes and to update l information as appropriate:

i

1. Section 171.15 would be amended as follows:

l l' l

l a. Section 171.15 Annual Fee: would be revised to read:  !

l'  !

Section 171.15 Annual Fee: Reactor Licenses and independent Spent Fuel {

Storage Licenses  !

I i

l _ b. Paragraph (b) would be revised in its entirety to establish the FY 1999 annual fees for operating power reactors, power reactors in decommissioning or possession only status, and Part 72 licensees who do not hold Part 50 licenses. Fiscal year references l l would be changed from FY 1998 to FY 1999.The activities comprising the base FY 1999 annual fees and the FY 1999 additional charge (surcharge) are listed in paragraphs (b) and (c) for convenience purposes.

L j Each operating power reactor would pay an annual fee of $ in FY 1999, which includes an annual fee of for spent fuel storage / reactor decommissioning..

l Each power reactor in decommissioning or possession only status and each Part 72 licenaee '

l l

who does not hold a Part 50 license would pay the spent fuel storage / reactor decommissioning annualfee of 5 in FY 1999.

I

c. Paragraph (e) would be revised to show the amount of the FY 1999 annual fee for nonpower (test and research) reactors. The NRC will continue to grant exemptions from the annual fee to Federally-owned and State-owned research and test reactors that meet the 25 l

l r

. exemption criteria specified in $171.11(a)(2).

d. Paragraph (f) would be revised to change fiscal year date references.
2. Section 171.16 Annual fees: Materials Licensees, Holders of Certificates of Compliance, Holders of Sealed Source and Device Registrations, Holders of Quality Assurance Program' Approvals, and Govemment agencies licensed by the NRC would be revised as follows:

Section 171.16(c) covers the fees assessed for those licensees that can qualify as small entities under NRC size standards. A materials licensee may pay a reduced annual fee if the licensee qualifies as a small entity under the NRC's size standards and certifies that it is a small entity using NRC Form 526. The NRC will continue to assess two fees for licensees that qualify as small entities under the NRC's size standards. In general, licensees with gross annual receipts of $350,000 to $5 m'llion pay a maximum annual fee of $1,800. A second or lower-tier small entity fee of $400 is in place for small entities with gross annual receipts of less than

$350,000 and small govemmental jurisdictions with a population of less than 20,000. No change in the amount of the small entity fees is being proposed because the small entity fees are not based on budgeted costs but are established at a level to reduce the impact of fees on small entities. The small entity fees are shown in the proposed rule for convenience.

a. Section 171.16(d) would be revised to establish the FY 1999 annual fees for materials licensees, includMg Govemment agencies, licensed by the NRC. The amount or range of the proposed FY 1999 annual fees for materials licenses is summarized as follows:

Materials Licenses Annual Fee Ranoes Category of License Annual Fees Part 70 - High  !

enriched fuelfacility 26 4

rc f

Part 70 - Low enriched fuel facility Part 40 - UF.

conversion facility i

Part 40 - Uranium $ to S l l recovery facilities Part 30 - Byproduct $to$'

Material Licenses j

Part 71 - Transportation $ to $

of Radioactive Material Part 72 -Independent $

Storage of Spent Nuclear .

Fuel i

' Excludes the annual fee for a few military " master" materials licenses of broad-scope issued to Govemment agencies, which is$ .

b. Footnote 1 of 10 CFR 171.16(d) would be amended to provide a waiver of the annual fees for materials licensees, and holders of certificates, registration.s, and approvals, who either filed for termination of their licenses or approvals or filed for possession only/ storage only licenses before October 1,1998, and permanently ceased licensed activities entirely by September 30,1998. All other licensees and approval holders who held a license or approval on October 1,1998, are subject to the FY 1999 annual fees.

Holoers of new licenses issued during FY 1999 would be subject to a prorated annual fee in accordance with the currer.t proration provision of $171.17. For example, those new l materials licenses issued during the period October 1 thraugh Mexch 31 of the FY will be l 27

m .. .. mmr---

- - - - ~~-n-_..-_ .

I assessed one-half the annual fee in effect on the anniversary date of the license. New materials licenses issued on or after April 1,1999, will not be assessed an annual fee for FY 1999. Thereafter, the full annual fee is due and payable each subsequent fiscal year on the anniversary date of the license. Beginning June'11,1996, (the effective date of the FY 1996 final rule), affected materials licensees are subject to the annual fee in effect on the anniversary date of the license. The anniversary date of the materials license for annual fee purposes is the first day of the month in which the original license was issued.

3. Section 171.19 Payment, would be revised as follows:

i a, aragraph (b) would be revised to update the fiscal year references and to give credit for partial payments made by certain licensees in FY 1999 toward their FY 1999 annual l fees. The NRC anticipates that the first, second, and third quarterly payments for FY 1999 will l have been made by operating power reactor licensees and some large materials licensees -

before the final rule becomet effective. Therefore, the NRC would credit payments received for those quarterly annual fee assessments toward the total annual fee to be assessed. The NRC would adjust the fourth quarterly invoice to recover the full amount of the revised annual fee or to make refunds, as necessary. Payment of the annual fee is due on the date of the invoice and interest accrues from the invoice date. However, interest will be waived if payment is received within 30 days from the invoice date,

b. Paragraph (c) would be revised to update fiscal year references.

l As in FY 1998, the NRC would continue to bill annual fees for most materials licenses on the ann!versary date of the license (licensees whose annual fees are $100,000 or more will continue to be assessed quarterly). The annual fee assessed will be the fee in effect on the license anniversary date. This proposed rule applies to those materials licenses in the following l fee categories: 1.C. and 1.D; 2.A. (2) through 2.C.; 3.A. through 3.P.; 4.A. through 9.D., and 10.B. For annual fee purposes, the anniversary date of the materials license is considered to be the first day of the month in which the original materials license was issued. For example, if the original materials license was issued on June 17 then, for annual fee purposes, the l anniversary date of the materials license is June 1 and the licensee would continue to be billed 28 L

l-n-

~

in June of each year for the annual fee in effect on June 1. Materials licensees with anniversary dates in FY 1999 before the eifective date of the FY 1999 final rule will be billed during the anniversary month of the license and continue to pay annual fees at the FY 1998 rate in FY 1999. Tnose materials licensees with license anniversary dates falling on or after the effective date of the FY 1999 final rule would be billed, at the FY 1999 revised rates, during the anniversay month of their license and payment would be due on the date of the invoice.

During the past eight_. years many licensees have indicated that, although they held a valid NRC license authorizing the possession and use of special nuclear, source, or byproduct material, they were either not using the material to conduct operations or had disposed of the material and no longer needed the license. In response, the NRC has consistently stated that annual fees are assessed based on whether a licensee holds a valid NRC license that authorizes possession and use of radioactive material. Whether or not a licensee is actually conducting operations using the materialis a matter of licensee discretion. The NRC cannot control whether a licensee elects to possess and use radioactive material once it receives a license from the NRC. Therefore, the NRC reemphasizes that the annual fee will be assessed based on whether a licensee holds a valid NRC license that authorizes possession and use of radioactive material. To remove any uncertainty, the NRC issued minor clarifying amendments to 10 CFR 171.16, footnotes 1 and 7 on July 20,1993 (58 FR 38700).

IV. EnvironmentalImpact: Categorical Exclusion The NRC has determined that this proposed rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(1). Therefora, neither an environmental impact statement nor an environmental impact assessment has been prepared for the proposed regulation. By its very nature, this regulatory action does not affect the environment, and therefore, no environmental justice issues are raised.

V. Paperwork Reduction Act Statement This proposed rule contains no information collection requirements and, therefore, is not subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C 3501 et seq.).

f l 29

w. - -

VI. Regulatory Analysis With respect to 10 CFR Part 170, this proposed rule was developed pursuant to Title V of the Indeperdent Officer Appropriation Act of 1952 (IOAA) (31 U.S.C. 9701) and the Commission's fee guidelines. When developing these guidelines the Commission took into account guidance provided by the U.S. Supreme Court on March 4,1974, in ite decision of National Cable Television Aeevidion. Inc. v. United States. 415 U.S. 36 (1974) and Federal Power Commission v. New Enaland Power Comoanv. 415 U.S. 345 (1974). In these decisions, the Court held that the IOAA authorizes an agency to charge fees for special benefits rendered to identifiable persons measured by the "value to the recipient" of the agency service. The meaning of the IOAA was further clarified on December 16,1976, by four decisions of the U.S.

Court of Appeals for the District of Columbia: National Cable Television Association v. Federal Communications Commission. 554 F.2d 1094 (D.C. Cir.1976); National Association of i Smadcasters v. Federal Communications Commiss!on. 554 F.2d 1118 (D.C. Cir.1976);

Electronic Industries Assonidion v Federal Communications Commies!on. 554 F.2d 1109 (D.C.

Cir.1976) and Caoital Cities Communication. Inc. v. Federal Communications Commission. 554 i F.2d 1135 (D.C. Cir.1976). These decisions of the Courts enabled the Commission to develop fee guidelines that are still used for cost recovery and fee development purposes.

The Commission's fee guidelines were upheld on August 24,1979, by the U.S. Court of Appeals for the Fifth Circuit in Mississlool Power and Liaht Co. v. U.S. Nudent Reaulatorv Commission. 601 F.2d 223 (5th Cir.1979), cad. denied,444 U.S.1102 (1980). The Court held that-(1) The NRC had the authority to recover the full cost of providing services to identifiable beneficiaries; I

l (2)The NRC could properly assess a fee for the costs of providing routine inspections ,

necessary to ensure a licensee's compliance with the Atomic Energy Act and with applicable regulations; (3) The NRC could charge for costs incurred in conducting environmental reviews

, 30 l

l 1

c- --_ ~ . - - . - - -- ...- - . . . -

l l

required by NEPA; I 1

I (4) The NRC properly included the costs of uncontested hearings and of administrative and technical support services in the fee schedule; 1

I (5) The NRC could assess a fee for renewing a license to operate a low-level radioactive waste burial site; and (6) The NRC's fees were not arbitrary or capricious.

With respect to 10 CFR Part 171, on November 5,1990, the Congress passed Public Law 101-508, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) which required that for FYs 1991 through 1995, approximately 100 percent of the NRC budget authority be recovered through the assessment of fees. OBRA 90 was amended in 1998 to extend the 100 percent fee recovery requirement for NRC through FY 1999. To accomplish this statutory requirement, the NRC, in accordance with $171.13, is publishing the proposed amount of the FY 1999 annual fees for operating reactor licensees, fuel cycle licensees, materials licensees, and holders of Certificates of Compliance, registrations of sealed source and devices and QA  :

program approvals, and Govemment agencies. OBRA-90 and the Conference Committee Report specifically state that-(1) The annual fees be based on the Commission's FY 1999 budget of $469.8 million less the amounts collected from Part 170 fees and the funds directly appropriated from the NWF to cover the NRC's high level waste program; and the gs;r;l fund r;:::cd i: ;;rnmere;;;

.. J.stl= ;f ;;;;;; ;t ths 0;p;4cc.= ;f Energy ";nferd, ",'nhingten ;t, ad the ph pr;;;;m p;-:;;n n;i;;r.; a; re.;f Ma ;'th; C;p;;;cc.at of En:rgy; (2) The annual fees shall, to the maximum extent practicable, have a reasonable relationship to the cost of regulatory services provided by the Commission; and i

(3) The annual fees be assessed to those licensees the Commission, in its discretion,

. determines can fairly, equitably, and practicably contribute to their payment.

31

l 1

M addllion, the NRC.'s FY.1999 appropriations . language provides that $3.2 million approprimod l Rom the General Fund for activities _related to regulatory reviews and other assistance provided 5 the Department of Energy ~end other Federal. agencies be excluded from fee recovery, L f l

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

]1

l. entirety in Florida Power and I laht Comnany v. United Sta'am. 846 F.2d 765 (D.C. Cir.1988),

cert. denied,490 U.S.1045 J 589).  ;

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

. Appeals in Allied Sianal v. NRC. 988 F.2d 146 (D.C. Cir.1993).

Vll. Regulatory Flexibility Analysis The NRC is required by the Omnibus Budget Reconciliation Act of 1990 to recover approximately 100 percent of its budget authority through the assessment of user fees. OBRA-h 90 further requires that the NRC establish a schedule of charges that fairly and equitably i allocates the aggregate amount of these charges among licensees.-

This proposed rule establishes the schedules of fees that are necessary to implement the Congressional mandate for FY 1999. The proposed rule would result in both, increases and '

decreases in the annual fees charged to licensees, and holders of certificates, registrations, and approvals. The Regulatory Flexibility Analysis, prepared in accordance with 5 U.S.C. 604, is included as Appenaix A to this proposed rule. The Small Business Regulatory Enforcement Faimess Act of 1996 (SBREFA) was signed into law on March 29,1996. The SBREFA requires all Federal agencies to prepare a written compliance guide for each rule for which the agency is

. requ rei d by 5 U.S.C. 604 to prepare a regulatory flexibility analysis. Therefore, in compliance L with the law, Attachment 1 to the Regulatory Flexibility Analysis (Appendix A to this document) 4 4

is the small entity compliance guide for FY 1999.

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l Vill. Backfit Analysis  !

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The NRC has determined that the backfit rule,10 CFR 50.109, does not apply to this proposed rule and that a backfit analysis is not required for this proposed rule. The backfit analysis is not required because these proposed amendments do not require the modification of or additions to systems, structures, components, or the design of a facility or the design approval or manufacturing license for a facility or th6 procedures or organization required to design, construct or operate a facility.

List of Subjects l

l 10 CFR Part 170 - Byproduct material, import and export licenses, Intergovemmental l

relations, Non-payment penalties, Nuclear materials, Nuclear power plants and reactors, l Source material, Special nuclear material.

10 CFR Part 171 - Annual charges, Byproduct material, Holders of certificates, registrations,' approvals, intergovernmental relations, Non-payment penalties, Nuclear

- materials, Nuclear power plants and reactors, Source material, Special nuclear material. )

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, and 5 U.S.C. 553, the NRC is proposing to adopt the following I amendments to 10 CFR Parts 170 and 171, PART 170 - FEES FOR FACILITIES, MATERIALS, IMPORT AND EXPORT LICENSES, AND OTHER REGULATORY SERVICES UNDER THE ATOMIC ENERGY ACT OF 1954, AS AMENDED J

1. _ The authority citation for Part 170 continues to read as follows:

l Authority:' 31 U.S.C. 9701, 96 Stat.1051; sec. 301, Pub. L.92-314, 86 Stat. 222 (42 i i

U.S.C. 2201w); sec. 201, Pub. L. 93-4381, 88 Stat.1242, as amended (42 U.S.C. 5841); sec. 205, Pub. L.'101-576,104 Stat. 2842, (31 U.S.C. 901).

4 33

l l

l The NRC has determined that the backfit rule,10 CFR 50.109, does not apply to this proposed rule and that a backfit analysis is not required for this proposed rule. The backfit i

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

List of Subjects 10 CFR Part 170 - Byproduct material, import and export licenses, intergovernmental relations, Non-payment penalties, Nuclear materials, Nuclear power plants and reactors, '

Source materie', Special nuclear material.

10 CFR Part 171 - Annual charges, Byproduct material, Holders of certificates, registrations, approvals, Intergovernmental relations, Non-payment penalties, Nuclear l materials, Nuclear power plants and reactors, Source material, Special nuclear material.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, and 5 U.S.C. 553, the NRC is proposing to adopt the following amendments to 10 CFR Parts 170 and 171.

PART 170 - FEES FOR FACILITIES, MATERIALS, IMPORT AND EXPORT LICENSES, AND OTHER REGULATORY SERVICES UNDER THE ATOMIC ENERGY ACT OF 1954, AS AMENDED

1. The authority citation for Part 170 continues to read as follows:

Authority: 31 U.'S.C. 9701. 96 Stat.1051; sec. 301, Pub. L.92-314,86 Stat. 222 (42 U.S.C. 2201w); sec. 201, Pub. L. 93-4381,88 Stat.1242, as amended (42 U.S.C. 5841); sec. 205, Pub. L.101-576,104 Stat. 2642, (31 U.S.C. 901).

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/)(SOP'/~

Ma INSERT FOR FY 1999 FEE RULE: Aw .T,e/

T0 eliminate the inequity of NRC licensees paying for work that is not directly attributable to individual licensees or classes of licensees, the Commission has implemented a more aggressive policy that other Federal agencies reimburse the costs NRC incurs in performing services that are not a required part of the agency's statutory mission._ For FY 1999, NRC has entered into an agreement with the U. S. Agency for International Development to fund NRC's staff costs associated with providing nuclear safety assistance to the countries of the former Soviet Union. These staff costs were previously funded by NRC's budget authority subject to fee recovery. As a result, licensees are not required to pay for approximately 50.9 million in costs for this activity for FY 1999.

DRAFT: 3/15/9911:30 A.M.

c:\wp\sp99\feerule.wpd t

1 The 9/98 FY 2000 Blue Book shows a $889K increase for FY 2000 for the AlD FTE.

- The 12/98 initial FY 1999 Base Table shows a $964K reduction for FY 1999 due to the AlD FTE reimbursement. The 2/99 FY 2000 Green Book shows a $909K increase for FY 2000 for the AlD FTE.- Actual reimbursement authority is limited to $990K by the interagency agreement.

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March 12,1999 j [j____ 1 Note to: Jim Turdici Trip Rothschild %1p NY3

- David Meyer \

Diane Dandois 3[fr['T7 From: Glenda Jackson .-

i Attached is Draft #1 of the proposed FY 1999 fee rule, minus the regulation itself. I will I complete the tables in the statement of considerations and the fee schedules, etc. early next week, but wanted to get early comments from you on the discussion portions. I will also work on improving the formatting. I would also like to eliminate some or all of the discussion of the the administrative changes. David -is that permissible?? l Thanksi 0 0 -* w q

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