ML20214A403

Forwards Fr Notice of Proposed Rules 10CFR51 & 10CFR171 Re Annual Fees for Persons Applying for or Holding OL for Nuclear Power Reactor & Major Matls Licensees.Comments Requested Re Alternative Approach to Charge Assessment

ML20214A403
Person / Time
Issue date:	06/27/1986
From:	Norry P NRC OFFICE OF ADMINISTRATION (ADM)
To:	AFFILIATION NOT ASSIGNED
Shared Package
ML19303E476	List: ML20213H143 ML20213H167 ML20213H176 ML20213H188 ML20214A006 ML20214A021 ML20214A059 ML20214A403
References
FRN-51FR24078, RULE-PR-171 AC30-1-25, NUDOCS 8611200064
Download: ML20214A403 (2)

Text

. . . __ _

IMPORTANT NOTICE June 27, 1986

. TO ALL PARTS 30, 40, 50, 70, 71 AND 72 LICENSEES AND APPLICANTS AND REACTOR VEND 0RS, SEALED SOURCE DEVICE REGISTRANTS

SUBJECT:

PROPOSED NEW PART 171 (ANNUAL FEES)

SUSPENSION OF FEES UNDER PART 170 Gentlemen:

Within a few days, the U.S. Nuclear Regulatory Commission will publish in the Federal Register for public comment the enclosed Notice of Proposed Rulemaking. This notice proposes to add a new Part 171 to Title 10, Chapter I of the Code of Federal Regulations.

The proposed rule prescribes an annual fee for all persons who have applied for a license or who hold a license to operate a nuclear power reactor and for major materials licensees. The annual fee would recover allowable NRC budgeted costs for reactor-related and certain materials-related regulatory services. The notice is being published to comply with the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L.99-272). The law, which became effective April 7, 1986, requires the Nuclear Regulatory Commission to assess and collect annual charges not to exceed thirty-three percent of the Commission's estimated fiscal year budgeted costs. The proposed rule is scheduled to become effective on October 1,1986.

The major provisions of the proposed Part 171 are:

1. Annual fees are proposed for applications for operating licenses i for nuclear power reactors, licensed power reactors and major materials licenses. For FY 1987, the estimated annual fees to be collected from the various applicants and licensees for each application / license would be as follows:

j a. Licensed Nuclear Power Reactor and Operating License Applications Under Review $1,010,000 t b. Uranium Fuel Fabrication License 45,000

c. Uranium Recovery - Mill License 23,000 i d. Uranium Hexafluoride Production License 14,500

e. Uranium Fuel R&D License 7,000 l f. Advanced Fuel R&D License 7,000 8611200064 861117

$h$ Obga407F W k9k

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2. Separate fees currently will not be collected for the following areas:

a. Construction permit reviews (none active)

b. Preliminary and final design approval reviews

c. Part 55 examinations and certifications

d. Test and research reactors

e. Topical and other report reviews

f. Materials licenses other than those listed in the above items identified as 1.b. through 1.f.

3. Collection of fees under Part 170 will be suspended on the effective date of Part 171.

4. Once 10 CFR 171 becomes effective, each operating license applicant and licensee required to pay fees based on full costs under Part 170 will be billed for applications and services to the effective date of Part 171.

5. Should for any reason 67601, Public Law 99-272, any provision within it, or an implementing rule (s) be overturned by a court of competent jurisdiction, appropriate collections under Part 170 will be resumed after notice to that effect by the Commission.

I In addition to the above, the notice being published solicits your coments on an alternative approach to assessing charges pursuant to Public Law 99-272. This alternative provides that applicants for, and holders of, operating licenses for power reactors would pay an annual charge similar to that proposed in Part 171, and that Part 170 would be t retained for all other beneficiaries of Commission services, such as all materials licensees. Under this alternative, power reactor operating f license applicants and holders of power reactor licenses would pay those fees prescribed in the proposed Part 171 which would be modified slightly to reflect the additional revenue that would be received from other licensees under the alternative approach.

All interested parties who desire to submit written comments for consideration in connection with the proposed rule or the alternative approach, or to suggest a different approach to implementing this statutory requirement, should send them to the Secretary, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555, Attention: Docketing and Service Branch, within fifteen (15) days from the date of publication in the Federal Register.

M atricia G. Norry, Di ector Office of Administration

Enclosure:

Proposed 10 CFR 171

[7590-01]

NUCLEAR REGULATORY COMMISSION 10 CFR Parts 51 and 171 Annual Fee for Nuclear Power Reactors Operating Licenses or Applications and Major Materials Licenses and Conforming Amendment AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

SUMMARY

The Nuclear Regulatory Commission (NRC) is issuing a proposed rule that would add a new part to its regulations to prescribe an annual fee for all persons who have applied for a license or who hold a license to operate a nuclear power reactor and for major materials licensees. The annual fee would recover allowable NRC budgeted costs for reactor-related and certain materials-related regulatory services. The annual fee is necessary to comply with the recent Congressional mandate concerning Nuclear Regulatory Commission Annual Charges in the Consolidated Omnibus Budget Reconciliation Act.

DATES: Comment period expires July 16, 1986. No late comments will be con-sidered and no requests for extensions of the comment period will be entertained.

ADDRESSES: Submit written comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555, ATTN: Docketing and Service Branch.

Hand deliver comments to: Room 1121, 1717 H Street, NW., Washington, D.C.,

between 8:15 a.m. and 5:00 p.m.

Examine comments received at: The NRC Public Document Room, 1717 H Street, NW., Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Robert L. Fonner, Office of the Executive Legal Director, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555, Telephone: 301-492-8692.

Contents I. Background A. Authority for the Rule B. Effect on Existing Fee Schedule C. Alternative Approach to Proposed Rule II. Introduction III. Cost Basis: Nuclear Power Reactor Regulation A. Office of Nuclear Regulatory Research B. Office of Nuclear Materials Safety and Safeguards C. Office of Nuclear Reactor Regulation D. Office of Inspection and Enforcement E. Office of Analysis and Evaluation of Operational Data IV. Cost Basis: Nuclear Materials Regulation V. Alternatives Considered for the Proposed Rule

. I) f, 1

VI. Summary of Proposed Rule (Alternative 3)

A. Reactor Licensees B. Operating License Applicants C. Material Licensees D. Billing of Fees E. Fees Payable Under 10 CFR Part 170 and 10 CFR Part 171 VII. Section-by-Section Analysis VIII. Conforming Amendment SUPPLEMENTARY INFORMATION:

I. Background A. Authority for the Rule.

• The Consolidated Omnibus Budget Reconciliation Act (Budget Reconciliation Act) of 1985 (H.R. 3128), passed by Congress on March 20, 1986, and signed into law on April 7,1986, requires the Nuclear Regulatory Commission to assess and collect annual charges from persons licensed by the Comission pursuant to the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.) in an amount to approximate, but not exceed, thirty-three percent of the Commission's estimated budgeted costs.

Section 7601 of the Budget Reconciliation Act states, that the charges assessed shall be established by rule, and, specifically, in paragraph (b)(I) that:

...the Nuclear Regulatory Commission shall assess and collect annual charges from its licensees on a fiscal year basic, except that--

(A) the maximum amount of the aggregate charges assessed pursuant to this paragraph in any fiscal year may not exceed an amount that, when added to other amounts collected by the Commission for such fiscal year under other provisions of law, is estimated to be equal to 33 percent of the costs incurred by the Comission with respect to such fiscal year; and (B) any such charge assessed pursuant to this paragraph shall be reasonably related to the regulatory service provided by the Commission and shall fairly reflect the cost to the Commission of providing such service.

The legislative history shows that Congress intended the authority of this mandate to go beyond that contained in the Independent Offices Appropriation Act of 1952 (65 Stat. 290; 31 U.S.C. 9701)(10AA). The Congressional Managers of the Budget Reconciliation Act in describing this legislative provision asserted:

The charges assessed pursuant to this authority shall be reasonably related to the regulatory service provided by the Commission and fairly reflect the cost to the Commission of providing such service. This is intended by the conferees to establish a standard separate and distinct from the Commission's 2

existing authority under the Independent Offices Appropriation Act of 1952 in order to permit the Commission to more fully recover the costs associated with regulating various categories of Commission licensees.

(See 132 Cong. Rec. H879 (Daily Ed. March 6,1986);132 Cong. Rec. S2725 (Daily Ed. March 14,1986).)

The NRC is construing this legislation to permit it to charge licensees not only for special benefits provided to individual licensees, as that term has been used in construing the 10AA, but also to recover the cost of any Commission activity reasonably related to regulating the possession and use of facilities or materials.

B. Effect on Existing Fee Schedule.

Costs for many reactor-related regulator existing fee schedule, 10 CFR Part 170 (y 49services areMay FR 21293, not21, recovered under NRC's 1984), which establishes fees for some regulatory services that NRC provides for facility and materials licensees. The Part 170 fee schedule implemented Title V of the Independent Offices Appropriation Act of 1952 (65 Stat. 290; 31 U.S.C. 9701).

Now, in response to the Budget Reconciliation Act, the proposed 10 CFR Part 171 annual fee would recover those costs and, in addition, generic costs for reactor-related and materials-related regulatory services not previously recovered under 10 CFR Part 170. Collection of fees that would be payable under 10 CFR Part 170 will be suspended when the new 10 CFR Part 171 becomes effective.

C. Alternative Approach to Proposed Rule -

In addition to the approach favored by the majority of the Commission that is set forth in this notice, the Commission is also interested in receiving views on an alternative approach under which all beneficiaries of Commission services would pay fees. Under that approach, the annual charge for reactors would be calculated by the method set forth in the proposed Part 171 (with a slight modification to account for increased fees charged materials licensees).

In addition, materials licensees, commercial test and research reactor licensees, and other recipients of regulatory services, apart from nuclear power reactor applicants and licensees, would pay the fees presently set forth in 10 CFR Part 170 pursuant to the Independent Offices Appropriations Act of 1952.

The amount collected under this alternative approach would also approximate one-third of the NRC budget. Power reactor applicants or licensees would pay approximately $20,000 less per year per unit under this alternative approach than they would pay under the proposal. Materials licensees collectively would pay approximately $2.7 million per year more.

II. Introduction The existing fee schedule, 10 CFR Part 170, sets out fees to recover agency costs for only some regulatory services that NRC provides for facility and materials licensees. The Part 170 fee schedule implements Title V of the 10AA. This act authorizes NRC to charge fees for special benefits rendered to identifiable persons measured by the cost to the agency of the agency service.

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The Budget Reconciliation Act authority is more comprehensive than existing authority under 10AA. It permits recovery of up to thirty-three percent of NRC estimated budgeted costs, including costs for generic services broadly related to regulation. Thirty-three percent of the fitcal year 1987 estimated budget of $405 million amounts to approximately $134 million and this sets the overall ceiling on annual fees. Therefore, under proposed Part 171, the NRC proposes to recover up to $134 million in costs. Under existing Part 170, the NRC would have expected to recover only an estimated $37 million in costs. It is anticipated that the fee program under Part 171 would require significantly

• fewer Government employees to administer, than under Part 170.

NRC estimates that, for fiscal year 1987, indisputably related budgeted costs for providing regulatory services to those charged an annual fee total $272.9 million. This figure includes $270 million in nuclear power reactor regula-I tion and operating license reviews and approximately $2.9 million in materials regulation for the major materials licensees covered by the proposed rule.

Approximately forty-five percent of the estimated related regulatory costs for fiscal year 1987 can be recovered within the thirty-three percent statutory ceiling. The formulas for equitably assessing affected licensees for forty-five percent of $272.9 million are prescribed in QQ 171.13 and 171.15 of this proposed rule. The cost basis sections discuss the programs and budgeted costs from which these figures are derived.

j III. Cost Basis: Nuclear Power Reactor Regulation The NRC, in response to the Budget Reconciliation Act mandate, has determined that at least five NRC programs provide regulatory services to persons applying for or holding operating licenses for nuclear power reactors: Nuclear Regulatory Research, Nuclear Material Safety and Safeguards, Nuclear Reactor Regulation, Inspection and Enforcement, and Analysis and Evaluation of Operational Data.

The annual fee will be based on the cost to the NRC for providing these program services, an estimated $270 million for fiscal year 1987.

A. Office of Nuclear Regulatory Research.

The Research Program contributes to many areas of nuclear regulation. The entire Research Program contributing to reactor regulation is estimated to cost, for fiscal year 1987, $104.2 million.

The Research Program, in the area of Reactor Engineering, identifies effects of aging and service on operating reactor structures and components that impact safety. Knowledge of these effects permits reactor licensees to perform cost-effective testing, maintenance, repair, and replacement; improve plant reliability; and extend effective plant life beyond that originally expected.

Some specific examples of research that contribute to more effective operation of a reactor follow. Experimental research on the effects of temperature, stresses, irradiation, and flaws on the reactor pressure vessel provides infor-mation pertinent to the type of steel and welds best suited for use in a pressure vessel. NRC, with international cooperation, has improved the esal-uation of the effects of operation on a pressure vessel by examining vessels 4

i from reactors that have been decommissioned. And, by analyzing the numerous instances of cracked piping that have occurred in nuclear power plants, the Reactor Engineering Research Program has led to a new method, Synthetic Aper-

, ture Focusing Technique for Ultrasonic Testing (SAFT-UT), for vastly improved detection and sizing of flaws. Improved leak detection and tests of the leak-before-break principle, i.e., that a pipe break will be preceded by a pipe leak, will help eliminate needless and costly repairs of uncracked pipes.

This Reactor Engineering Research Program is estimated to cost, for fiscal year 1987, $44.2 million.

The Thermal Hydraulic Transients Program provides verified computer codes to the NRC licensing staff for use in conducting safety evaluations of licensed nuclear plants for a wide range of possible transients and accidents such as small- and large-break loss-of-coolant accidents, feedwater-line and steam-line breaks, and overcooling and undercooling transients. Use of these verified computer codes enables NRC to assist licensees to develop operating procedures that prevent serious accidents. This research program is estimated to cost, for fiscal year 1987, $17.5 million.

The Accident Evaluation Research Program is required to complete the technical basis for the closure of severe-accident issues, in particular, the radioactive source term (i.e., the estimated amount of volatile radioactive material that could be released in an accident), in accordance with the provisions of the Commission's Severe Accident Policy Statement. The ability to predict how radioactive materials are transported and released during postulated reactor accidents lies at the very heart of the regulatory process. Closure of this issue requires, in part, the systematic safety evaluation of operating plants and the determination of criteria for future plants. Evaluation of operating plants, utilizing input from cooperating utilities, ensuies realistic and accurate representations of the plants. These representations ensure adequate, but not unnecessary, regulation. This research consists of an integrated program of both in-reactor and laboratory experiments and the develo3 ment and validation of accident-analysis models and codes. The program ensurbs safer plants and less burdensome regulation and is estimated to cost, for fiscal year 1987, $20.5 million.

Contributing to the Commission's decisionmaking process for safety regulations is the Research Reactor Operations and Risk Program. This program includes research in the areas of reliability and risk methodology, data and uncertainties, regulatory and inspection applications and severe accident risk.

Significant advances have been made in the development of probabilistic risk assessment (PRA) techniques in the last decade. However, those techniques still need improvement, particularly in analysis of the capability to adequately evaluate the risk contribution of many important accident initiators. Improve-ments in the ability to analyze these factors is contributing to improved methods for more comprehensive PRA: which will become available to the NRC staff and industry. These methods will provide NRC with an enhanced capability to fully evaluate licensee responses to the Severe Accident Policy, to resolve outstanding safety issues, and to revise the reactor design criteria.

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In addition to research to improve risk methodology, the research program 1 contributes to collecting and analyzing data on the performance and failure '

rate of plant systems and components. This activity helps ensure that the results of reactor risk assessments are as accurate and reliable as possible and can identify incipient safety problems in operating plants. Research in this area is being used by the Office for Analysis and Evaluation of Operational Data and is directed toward identifying the root causes of plant system and component failures.

The application of PRA techniques to major safety issues facing the Commission has, in many cases, provided a powerful tool for ensuring that Commission actions are cost effective in reducing the risk to the public. An integrated, computer-based risk information management system developed through this program provides staff with risk-based information to more effectively conduct inspection and licensing activities. It will also provide inspectors with real-time data on plant status and the impact of equipment outages on risk and, thus, will provide a more effective method for evaluating limiting conditions of operation. In addition, the system can be used by the NRC staff to identify and assess procedural changes and modest equipment modifications that may be effective in reducing risk. Further, through the Research Program, a risk assessment report is being prepared that provides a risk perspective on six reference reactor plants representing the major containment types. These plants were selected as being typical of the approximately 100 licensed and near-term reactors. These risk perspectives will be used as a basis for developing methodology to apply risk-based techniques to plants without PRAs as part of NRR's implementation of the severe accident policy and to assess the risk importance of existing and proposed regulatory requirements. For example, it will be used to reassess the NRC's emergency planning and siting regulations, further improving the decisionmaking for safety regulations for the nuclear industry. The Research Operations and Risk Program is estimated to cost, for fiscal year 1987, $15.1 million.

Earth Sciefices research and standards development encompasses seismology, geology, and geotechnical engineering, and the hazards that natural phenomena present to licensed facilities. The research program to determine seismic hazards (earthquake magnitude and occurrence intervals) for power plant sites and to predict the response of the site to the seismic hazard is closely coordinated with the seismic program to evaluate reactor design requirements.

Seismic Analysis improves NRC's understanding of geology and seismology. This research is used to reassess older operating plants and to determine whether active safety margins exist and quantify these margins. These more accurate reassessments ensure the reactor licensee that only sound regulatory decisions are imposed.

Various research programs provide technical information on the health effects of exposure to radiation and standards for public and occupational radiation exposure. The NRC cooperates in broad areas of radiation protection research with the Committee on Interagency Radiation Research and Policy Coordination, the National Council on Radiation Protection and Measurements, and interagency working groups established by the Environmental Protection Agency (EPA).

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Joint programs for specific research areas are coordinated with the Departments of Defanse and Energy, the EPA, the National Science Foundation, and the National Institutes of Health.

In one program, particular emphasis was given to quantification of health risks c,f exposure to internal alpha emitters. The results of these cooperative programs and ongoing research programs contributed to the development of the existing 10 CFR Part 20, which is used to protect nuclear power plant personnel, and its proposed revision, " Standards for Protection Against Radiation" (51 FR 1092, January 9,1986). The Earth Sciences and Health Research Programs are estimated to cost, for fiscal year 1987, $6.9 million.

B. Office of Nuclear Materials Safety and Safeguards.

The Safeguards Program is responsible for the technical safeguards review of all licensing applications for reactors. These safeguards reviews are to determine if the licensee's proposed safeguards programs are adequate to deter and protect against threats of radiological sabotage and theft or diversion of special nuclear material at nuclear power plant sites. All safeguards protective measures are designed so as not to interfere with the safe operation of a plant both during normal and off-normal situations.

Security requirements are designed to protect against the hypothetical design basis threat which is based on the current domestic threat envionment. Program implementation involves a large degree of professional judgment and is influenced by the security needs of contemporary society. Reactor security systems include sophisticated detection and alarm systems, barriers, onsite armed response personnel, employee screening programs, contingency plans for timely responses to threatening situations, and safeguards organizations staffed with trained and competent expert personnel.

The NRC compiles and analyzet licensee safeguards operational data that can provide early warning patterns and trends in safeguards events. Any generic issues identified are resolved through rulemaking and regulatory guidance.

The objective of the safeguards program is to provide adequate protection without compromising safe operation of a nuclear power plant. This program is estimated to cost, for fiscal year 1987, $3.7 million.

C. Office of Nuclear Reactor Regulation.

In its Nuclear Reactor Regulation Program (NRR), the NRC evaluates issues related to the safety of reactors to determine whether regulatory requirements should be modified, added, or deleted. The evaluation and subsequent actions are based on experience and the latest technology. Factoring the latest Safety Technology into regulatory decisions for operating reactors in a cost-effective manner improves safety and allows operating reactor licensees to achieve a safe and efficient operation.

NRC Safety Technology applications include (1) the results of the Severe Accident Research Program and source term research that are being incorporated into NRC regulatory practice and (2) technical guidance that is being developed for conducting probabilistic risk assessments, including the assessment of risks from external events.

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I NRC also continues to resolve, by establishing regulatory criteria, (1) matters that affect a number of plants and for which existing safety requirements may not be optimum, (2) matters that affect all plants and for which technical positions based on their safety contribution must be balanced against cost, and (3) matters that involve qualifications, training, and examination of nuclear power reactor personnel. This segment of the Nuclear Reactor Regulation Program is estimated to cost, for fiscal year 1987, $69.4 million.

Another segment of the NRR program includes the review of applications for licenses to operate nuclear power reactors. The reviews include all aspects of safety and environmental effects, as well as antitrust implications.

Evaluated as part of these reviews are technical reports submitted by industry organizations, primarily vendors, on subjects related to classes of nuclear reactors and their associated systems or operation. Currently, twenty-seven applications are under active review. This segment of the NRR program is estimated to cost, for fiscal year 1987, $6 million.

D. Office of Inspection and Enforcement.

The Inspection and Enforcement (IE) Programs provide increased assurance that reactors in operation will operate safely. Two resident agency inspectors will soon be assigned to almost all single unit operating reactor sites. This availability to the licensee of an NRC contact assists the licensee in communi-cating concerns and information to NRC.

The overall program is intended to ensure safety through compliance with agency regulations and is estimated to cost, for fiscal year 1987, $79 million. The systematic assessment of licensee performance seeks to improve both NRC regulatory efforts and licensee performance in the operation of nuclear power plants. The assessment program involves collecting information on a periodic basis about the overall performance of a licensee in a number of important areas, using specific evaluation criteria (e.g., management involve-ment in assuring quality, enforcement history, and responsiveness to NRC initiatives). Emphasis is placed on understanding the reasons for licensee performance in those areas assessed, sharing the understanding with the licensee, and then focusing agency inspection accordingly. Expertise is needed to assist in inspections and investigations. Facilities where major problems have been identified require additional staff months of inspection and additional technical assistance funds to resolve problems and allegations. Specialized inspections may be required as a result of investigations responding to allegations of safety and safeguards violations at nuclear facilities.

The analysis of licensee events enables the NRC to identify problems with potential safety significance that may be common to specific types of plants. I This information with recommendations for corrective action is then communicated to licensees for application in their respective plants through Bulletins and Information Notices. More than 10,000 event reports are reviewed and approxi-mately 100 communications are issued annually, l

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In addition to these communications, the new NRC Operations Center improves NRC's capability to respond to incidents at a licensee's plants. The NRC can now use licensee data already available in a computerized data system, such as a safety parameter display system, to assist a licensee. The Incident Response, Enforcement, and Technical Support IE Programs are estimated to cost, for fiscal year 1987, $15.7 million.

IE also provides a S)ecialized Technical Training Program. The Technical Training Center in Clattanooga, Tennessee, manages the program and offers approximately 185 course weeks of specialized training. These courses are designed to give NRC region-based and resident inspectors the appropriate background to perform inspections at commercial nuclear power plants. Courses are offered in design, technology, and operation of pressurized and boiling water reactors, and in other specialized areas of reactor construction, health physics, quality assurance, and operator license examiner training. Training is conducted in conventional classrooms, scientific laboratories, nuclear power plants, and reactor control room simulators. The availability to the licensee of well-trained examiners and inspectors to relay information and expedite NRC and plant decisions contributes to uninterrupted operation of a reactor. The training center further contributes to cooperation within the nuclear industry by opening some of its courses to NRC contractors and other government agencies. This IE training program is estimated to cost, for fiscal year 1987, $3.9 million.

IE's Vendor Inspection and Quality Assurance (QA) programs are complimentary and assist in precluding problems for the operating reactor licensee. These combined IE programs are estimated to cost, for fiscal year 1987, $7.1 million.

Approximately 120 vendor inspections of organizations that provide products and services for licensed activities are conducted annually. This provides assurance that their products or services meet applicable industry and NRC requirements. Vendors include architect-engineering firms, nuclear steam system suppliers, and companies that produce piping, valves, pumps, electrical equip-ment, and instrumentation for reactors and safety-related systems. The QA Program integrates agency activities for quality assurance licensing, inspection, standards, and research, recognizing that substantive improvements in quality must come from the nuclear industry itself, with NRC efforts oriented to the prevention and early detection of major quality problems.

A new QA Program Plan seeks to ensure that a plant's management focuses its energies on activities of safety significance and that management's responsi-bilities are clearly defined and those responsible clearly identified and accountable. Adhering to this plan creates a stable, predictable regulatory environment advantageous to the licensee. As more operating reactors come on line, more inspections are devoted to design changes related to routine or major modifications to reactors, performed both during operation and during outages, and to vendor services for operating reactors. These inspections particularly concentrate on the technical adequacy of the engineering products in the mechanical, electrical and instrumentation, and control areas of a reactor.

The inspection activity also includes resident inspectors, provided through IE's Resident Inspector Program, who serve operating reactor licensees and OL applicants by acting as a 11aTs'on among the licensee or applicant, region, 9

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headquarters, and offsite contacts. Resident inspectors are generalists who concentrate on day-to-day operations, event followup, licensee management, and staff performance. In addition, they coordinate on-site activities of the various agency offices and participate in emergency exercises. They also serve as the agency contact with local officials, the press, and the public. )

Routine and non-routine inspections of licensed nuclear power reactors and review of OL applications, including inspection activities performed under the Resident Inspector Program, are estimated to cost, for fiscal year 1987,

$52.3 million.

E. Office for Analysis and Evaluation of Operational Data.

The Analysis and Evaluation of Operational Data Program provides the NRC and nuclear industry a comprehensive review of information and experience gleaned from all NRC programs. The Office for Analysis and Evaluation of Operational Data (AE00) collects, screens, analyzes, and disseminates information about U.S. and foreign reactor operating experience to the agency, the nuclear indus-try, and the public. This program provides for storing and retrieving opera-tional data in several data bases and coordinating use of the data with the Institute of Nuclear Power Operations (an industry organization), which sup-ports and manages the Nuclear Plant Reliability Data System.

AE0D recommends for agency action resolution of safety issues detected through this program. The lessons of operating experience often cannot be derived from viewing a single event; they must be developed by associating events.

Through trends and patterns an evolving picture is developed that leads to appropriate corrective actions being identified and implemented before the situation becomes a serious incident. Thus, this program ensures improved safety of operations, plant personnel, and the public; for fiscal year 1987, estimated costs for this program are $7.7 million.

IV. Cost Basis: Nuclear Materials Regulation The proposed rule also imposes a modest annual fee on some materials licensees.

These are predominantly persons with licenses authorizing possession and use of significant quantities of special nuclear material in fuel processing and fabrication, or significant quantities of source material in the uranium fuel cycle. These licensees represent commercial operations, and fairness requires that they bear a fair share of their regulatory costs. Total estimated costs for regulation of these materials licensees for fiscal year 1987 are approxi-mately $2.9 million. As nuclear power reactor licensees under this proposal will pay only forty-five percent of the NRC costs associated with their regula-tion, the proposed rule provides comparable recovery of costs associated with materials licensees. Therefore, the NRC will recover no more than forty-five percent (approximately $1.3 million) of NRC costs associated with the regulation of these licensees.

No annual fee has been proposed for the bulk of small materials licensees. It is estimated that the NRC would recover approximately $4 million in fees under the current fee program in 10 CFR Part 170. However, most of these licensees, such as radiographers, doctors, hospitals, etc., are small in scope. The 10

expected collection under Part 170 would be due to the large number of licensees and not to significantly high costs to the NRC in regulating any one of them. Relieving small materials licensees of the fees presently charged them under Part 170 is consistent with the Budget Reconciliation Act. The Statement of Managers stated that "because certain Commission licensees, such as universities, hospitals, research and medical institutions, and uranium producers have limited ability to pass through the costs of these charges to the ultimate consumer, the Commission should take this factor into account in determining whether to modify the Commission's current fee schedule for such licensees." 132 Cong Rec. H879, S2725 (Daily Ed. March 6, 1986). Taking into consideration the Congressional view, the large number of small licensees, the relatively small fees which would be collected, and the administrative costs for administering such a collection program, the Commission has decided not to collect annual fees from small materials licensees. Annual charges will be collected only from major licensees in the uranium fuel cycle.

The following table reflects costs to NRC for providing reactor-related services and certain materials-related services, some portion of which would be recovered by the proposed Part 171 annual fee (the Budget Reconciliation Act limits the amount to be recovered to no greater than thirty-three percent of the Commission's total costs). The amount to be assessed, under proposed 10 CFR Part 171, will be computed in accordance with proposed SS 171.13 and 171.15.

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a Fiscal Year 1987 Projections .;

(Dollars in Thousands)

NRC Costs for Regulatory Programs Programs Costsfoy'Rggulatory Services i

Reactor-Related Research $ 104,237 Safeguards 3,742 -

Reactor Regulation 69,373 Operating License Application Review 6,045 j Inspection and Enforcement 78,972 l

Analysis and Evaluation of Operational Data 7,720 Subtotal $ 270,089 Materials-Related Uranium Fuel Fabrication 1,510 Uranium Hexafluoride Production 66 Uranium Fuel Research and Development 64 Advanced Fuel Research and Development 149 Uranfum Recovery--Mi11s 1,075 Subtotal $ 2,864 GRAND TOTAL $ 272,953 1

Cost recovery under proposed 10 CFR Part 171 is limited, by the Budget Recon-ciliation Act, to thirty-three percent of NRC's estimated budget. l 2

Limited to materials licensee regulatory services provided under 10 CFR Parts 40 and 70.

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V. Alternatives Considered for the Proposed Rule With respect to nuclear power reactors, three alternatives for implementing an annual charge have been considered. They are:

1. Continue to collect all fees under Part 170, together with an annual charge on nuclear power reactors with operating licenses in an amount to approximate thirty-three percent of the NRC badget.

2. Collect no charges under Part 170, and collect an annual charge per unit from persons with operating licenses based upon the power level in thermal megawatts authorized by the license, in addition to an annual charge on major materials licensees.

3. Collect no charges under Part 170, and collect a uniform annual charge for each nuclear power reactor with an operating license and for each unit under operating license review, in addition to an annual charge on major materials licensees.

Inspection of fee data indicates that under each option nuclear power reactor licensees would bear the greatest part of the fee burden. Currently materials licensees pay only about $4 million in fees, the remainder is paid by nuclear power reactor licensees and permit holders. Estimated reactor fees for fiscal year 1987 to be paid under 10 CFR Part 17C are $33.7 million. Alternative 1, therefore, would not substantially reduce the fee burden on nuclear power reactor licensees and OL applicants in meeting the thirty-three percent collec-tion target under the Budget Reconciliation Act. (For fiscal year 1987, the target amount is an estimated $134 million; under alternative 1 about ninety-seven percent would be paid by reactor licensees and OL applicants).

Alternative 1 does not offer any compensating benefits, either to the licensees or to the Commission. It simply adds another fee layer onto the existing program. However, continuation of charges to licensees other than nuclear power reactor licensees under part 170 imparts an element of equity to the Commission's fee collections, since all licensees would be bearing a fair share of the fee burden.

Alternatives 2 and 3 would add a modest amount over that under alternative 1 to the fee burden on reactor licensees and OL applicants (approximatel million less the materials licensees annual charges proposed in $171.15)y $4 Both would relieve licensees and the NRC of the burden of following each individual amendment application and 1nspection affort for the purpose of charging a fee. Billings would be reduced to ene per year. The NRC estimates significant agency savings in staff time now devoted to administering the fee program under Part 170. The relative insignificance of the added financial burden on licensees and the obvious positive benefits of a single annual charge persuade the Commission that either alternative 2 or 3 is more efficient and therefore preferable to alternative 1.

The difierence between alternatives 2 and 3 is in the manner of calculation of the fee with respect to individual licensed units. Alternative 2 relates the annual charge to the authorized power level in thermal megawatts. Thus, persons with smaller plants would pay a smaller fee. Alternative 3, on the other hand, 13

s .

i wouldsestablish a single uniform annual charge for all licensed units and applications for OL's under review unrelated to power level. The simple fact of requesting or posseising an operating license would call for payment of the charge. ,

Preliminary' statistical andlysis of limited agency cost data for regulating individual units, and multiple, unit station 5, in reference to authorized power levels shoss a positive correlation. However, the data dispersion about the regression line is' too large to offer a treaningful predictive equation. The analysis included amendment, operator lic'ensing, and inspection costs as billed to license'es for the period of June 1984 to June 1985. Accordingly, the Commission has selected alternative 3 for the proposed rule because there is no clear correlation between reactor size and NRC regulatory costs. Analysis of the available data is continuing. If idditional analysis shows a statistically significant relationship between power level and regulatory costs, the Commission will take that into account in determining the form of the final rul e.' )

VI. Summary of Proposed Rule (Alternative 3)

Under 10 CFR Part 171, each' person who has an operating license application under active review by the NRC, each person who possesses a license to operate a nuclear power reactor, and each person who holds a major materials license issue'd under 10 CFR Parts 40 or 70 will be assessed an annual fee. These fees in the aggregate will represent not more than thirty-three percent of the NRC's estimated budget pursuant to the Budget Reconciliation Act. For fiscal year 1987,,the estimated budget is $405 million. Thirty-three percent of $405 million sis approximately $134 million. Regulatory costs for the applications and licenses covered under this proposed rule are an estimated $272.9 million.

Therefore, the NRC is limited to recovering approximately forty-five percent cf these regulatory costs, 3

A. Reactor Licensees.

Eachpirsonwhopossessesal'icense'tooperateunder10CFRPart50,regardless of whether'the reactor is in service, is required to pay the fee. At this time, licensees possess 103 licenses to operate a nuclear power reactor. This does not include research and test, facility licensees who are not required to pay an annual fee. .The bulk of research and test facilities are operated by public institutions and have not been charged fees under Part 170. Approximately ten test or research reactors are operated commercially and collectively have paid approximately $20,000 annually un'derx Part 170. Consistent with our proposed treatment of small materials license'es, we would not impose a fee on commercial test and research reactor licensees.

Suspension of a lidense to-operate does not relieve the licensee of the obliga-tion to pay the ai.nual fee. The fee per operating reactor license basically will be computed by dividing each fiscal year's budgeted costs times thirty-three percent (less fees collected from major materials licensees) by the number of licensed nuclear power reactors and nuclear power reactors for which an operating license application. is being reviewed, or as further prescribed in i 171.13. i .

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B. Operating License Applicants Each person who has made application to the NRC for an Operating License (0L) will pay an annual fee while the OL application is under active review by the NRC. At this time, 27 applications for OLs are under review. No fee will be charged for the ensuing fiscal year if the applicant requests in writing that the NRC cease active review of the application. However, an applicant is liable for the entire annual fee if the NRC conducts review of an OL application during any part of the fiscal year. If ar, applicant receives an operating license during a period for which an annual fee has been paid under this provision, a second annual fee for the operating license will not be payable for theyear.

fiscal same fiscal year, but the fee for the OL will be payable the following The fee for operating license applicants and reactor licensees will be computed as prescribed in 6 171.13.

C. Materials Licensees.

Only major commercial materials licensees are required to pay the annual fee.

These licensees include only those associated with the uranium fuel cycle:

uranium fuel fabrication, uranium hexafluoride production, uranium fuel research and development, advanced fuel research and development, and uranium recovery--mills. All other materials licensees, whether under 10 CFR Parts 30, 40, 70, or 72, are excluded from paying an annual fee.

D. Billing of Fees.

The fees will the next be year.

fiscal based on the NRC budget appropriation enacted by Congress for If Congress has not acted en the NRC budget request or passed a continuing resolution by September 1 of a given fiscal year, the NRC budget proposed by the President to Congress will be used to calculate annual charges.

Each year's fee will be noticed in the Federal Register each September prior to billing. faymenttoNRCisdueonOctober1ofeachyear.

The fee for each reactor licensee who receives a license to operate or applicant who requests review of an operating license application subsequent to October 1 of the year is due upon receipt of the license or upon NRC's receipt be of the request for review of the application; the fee will not prorated.

E. Fees Payable Under 10 CFR Part 170 and 10 CFR Part 171.

Once 10 CFR Part 171 becomes effective, bills for each licensee required to pay fees under Part 170, authorized by the 10AA, will be paid for the period from the last billing under Part 170 up to the effective date of Part 171. Those bills will be sent out late this year or early next year.

Under Part 171, fees will not be collected for costs in the areas of (1) byproduct materials other than for major fuel cycle regulatory costs covered by Part 40; (2) construction permit reviews; (3) topical reports; (4) preliminary and final design approval reviews; and (5) 10 CFR Part 55 examinations and certifications. Fees are collected for regulation of these areas now under 10 CFR Part 170.

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However, if Part 171 is held illegal, the NRC will collect fees under Part 170  :

from each licensee who would have paid fees under that part even though these l licensees were not required to pay a fee under Part 171. If Part 171 is held illegal, in part, the NRC will collect fees under Part 170 from only those licensees affected by the invalidated portion of the regulation who would have otherwise paid fees under Part 170.

VII. Section-by-Section Analysis In light of the foregoing considerations, the Commission is proposing to establish annual fees for licensed nuclear power reactors licensed to operate or for which an operating license application is being reviewed and for certain materials license holders. The following section-by-section analysis provides additional explanatory information. All references are to Title 10, Chapter I, Code of Federal Regulations.

Section 171.5 -- Definitions.

The term " Budget" is defined in its Federal usage. It normally means the appropriation by Congress for the NRC for a given fiscal year. In addition, for the purposes of the proposed ru?e, the term also means the amounts allowed under a continuing resolution if the Congress has not passed an appropriation for the NRC by September 1 of each year. If, for any reason, Congress fails to pass either an appropriation or a continuing resolution for the NRC by September 1, fees will be calculated using the President's proposed budget for the coming fiscal year. If the resulting fees total more than thirty-three percent of the budget finally passed, the prorated difference would be refunded to the licensees subject to fees under this rule.

The term " Federal fiscal year" sets the period October 1 to September 30 as the base period for the annual fee, which is consistent with the Federal budgetary process.

The term " Lice %M tJ operate" is used to make it clear that possession of a license issued under the authority of 10 CFR Part 50, whether or not the plant is actually operated during the fiscal year, makes the holder of the license subject to the fees under this proposed rule.

The term " Materials license" has been modified, in contrast to its meaning within other parts of this chapter, to include only licenses for source material and byproduct material under Part 40, and Special Nuclear Material under Part 70. This decision is based, in part, on the Congressional mandate in Section 7601 to examine whether such fees should be charged to certain licensees.

The term " Nuclear power reactor" was added to make it clear that only large nuclear reactors with the capability to generate electricity will be subject '

to the annual fees promulgated under Part 171. Licensees for research and test reactors will not be subject to fees.

The terms " Commission," " nuclear reactor," " person," " source material," and "special nuclear material" are repeated as defined elsewhere in the chapter.

l l

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Section 171.11 -- Notice.

The purpose of this section is to provide a mechanism whereby the annual fees can be adjusted each fiscal year, using the formulas established by 66 171.13 and 171.15. Because the adjustment will represent a ministerial task of recal-culating, using the formulas established by this rulemaking, the Commission believes that a separate rulemaking each fiscal year to set the actual amount for each annual fee will not be required. Accordingly, once the calculations have been made, the notice in the Federal Register will serve to advise the affected licensees of the fees applicable to them for the following fiscal year. Under normal agency practice, affected licensees will receive a copy of this notice.

Section 171.13 -- Annual Fees: Nuclear Power Reactor Operating Licenses and Applications After examining and analyzing the historical data available, the Commission has determined that the bulk of its licensee-related activities have and will continue to be directly related to the regulation of large power reactors.

Paragraph (a)of 5 171.13 sets the Federal fiscal year as the base time period for which charges will accrue and makes those charges applicable to any nuclear power reactor licensed to operate or for which an operating license application is being reviewed during the fiscal year.

Paragraph (b) of 6 171.13 establishes the basis for which annual fees will be charged for licensed nuclear power reactors and Operating License (0L) applications. The research program develops and analyzes technical information on reactor safety, safeguards, and environmental protection, as a basis for licensing and other decisions in the regulatory process. This information directly relates to the licensing of such reactors. Licensing and inspection activities include both plant-specific and generic review of licensing or inspection matters for which costs cannot be identified as to an individual identifiable recipient. Safeguards activities include such activities as the development of contingency plans to deal with threats, thefts, and sabotage; assessment studies; and the monitoring, testing, and upgrading of safeguards systems. The remaining safeguards effort is concerned with processing license-related applications and inspection casework for nuclear power reactors.

Paragraph (c) of 9 171.13 sets out the formula to be used in calculating the annual fee when the basis for the annual fee is greater than the statutory ceiling of thirty-three percent of the NRC fiscal budget. Also included in the formula is a reduction in. that amount by the amount of fees expected to be collected from certain materials licensees as calculated under 5 171.15.

For fiscal year 1987, the President has requested Congress to appropriate

$405 million for the NRC. Assuming a Congressionally approved budget, or no amended request by the President, before September 1, 1986, the NRC's estimated costs for fiscal year 1987 will be $405 million. The formula for calculating the annual fee for nuclear power reactors and OL applications includes an offset for the annual fees charged to major materials licensees pursuant to 6 171.15.

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The total fees chargeable under 6 171.15 are anticipated to be $1,271,000. Applying the formula within i 171.13(c), the following result is obtained:

$405 million x .33 minus $1,271,000 = $1.01 million per license / application 130 licenses /0L applications Paragraph (d) of 9 171.13 modifies the formula in i 171.13(c) for those times when the basis is less than the total amount of fees which would otherwise be collectable under the formula in 5 171.13(c).

Paragraph (e) of 5 171.13 establishes the annual fee for each nuclear power reactor licensed to operate and each OL application under active review by the NRC for fiscal year 1987. Whether a nuclear power reactor operates at all or only operates for a portion of the assessment period, possession of a license to operate itself requires payment of the annual fee. The same would be true for OL applications under active review. Finally, the paragraph makes it clear that annual fees for subsequent years will be assessed in accordance with the notice requirement of 6 171.11 and the procedures set out in Q 171.13.

Section 171.15 -- Annual Fee: Materials Licenses.

The annual fee is only applicable to major licensees under Parts 40 and 70 of this chapter engaged in uranium fuel cycle commercial activities. Paragraph (a) establishes a factor to be used in calculating materials license fees.

The rationale for this factor is the assumption that the basis (costs) used to determine the charges for each nuclear power reactor licensed to operate and for which an OL application is under review (see 9 171.13(b)) will exceed the amount which may be recovered because of the limitation (thirty-three percent of the NRC budget) placed by Congress on those charges. For example, based on the NRC budget for fiscal year 1987, the maximum fees that may be recovered for accrued charges is approximately $134 million. However, budgeted costs for services reasonably related to regulating these reactors and OL reviews will substantially exceed that amount. Therefore, nuclear power reactor licensees and OL applicants will pay only a portion of the costs the NRC will incur in providing regulatory services to them. Materials licensees will not pay any greater proportion of the regulatory services costs attributable to them.

Accordingly, this factor will be determined by the ratio of total fees which may be recovered under the statutory restriction of thirty-three percent of the NRC budget, to the total costs (basis) incurred by the NRC in providing the regulatory services to nuclear power reactor licensees. The resultant factor will then be applied to the calculation of the materials licensee fees.

Paragraph (b) establishes the formula to be utilized in calculating materials license fees. The five categories of fees coincide with the budgeted programs carried on by the NRC in providing regulatory services to the cited classes of licensees. It is the intent of the NRC to charge fees only to major licensees engaged in uranium fuel cycle activities. The formula equally apportions NRC costs among these licensees, reduced by the factor addressed in 5 171.15(a).

Paragraph (c) provides that if a person holds licenses under more than one category, the annual fee will be the cumulative total fees applicable to the licenses held by that person.

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Paragragh (d) sets the annual fees for the cited categories of materials licensees to be collected October 1, 1986, to insure that the NPC does not collect more than the statutory limit for total fees; the fees are rounded down to the nearest five hundred dollars. For example, for fiscal year 1987, the factor, rounded down, is 0.45 based on the following calculation:

$134 million = 0.45 5270 million The fees for the license categories are as follows:

Uranium Fuel Fabrication: $1,510,966 x 0.45 = $45,000/ License 15 Uranium Hexafluoride Production: $66,655 x 0.45 = $14,500/ License 2

Uranium Fuel R&D: $64,733 x 0.45 = $7,000/ License

• 4 Advanced Fuel R&D: $149,230 x 0.45 = $7,000/ License 9 ,

Uranium Recovery--Mills: $1,075,594 x 0.45 = $23,000/ License 21 Section 171.17 -- Payment.

This section adds the option of Electronic Funds Transfer to the methods of pay-ment already in existence under current fee schedules, Part 170 of this chapter.

Section 171.19 -- Savings.

This section makes it clear that collections of fees that would otherwise have been made under 10 CFR Part 170, will be suspended until the legality of Section 7601, Pub. L.99-272, and the implementing Commission rule have been sustained.

The Commission anticipates that once it adopts a final rule, the rule will be challenged in a United States Circuit Court of Appeals. Should Part 171 be overturned, in whole or in part, then collections under 10 CFR Part 170 would resume for fee categories struck down by the court retroactive to suspensions under Part 170, i.e., the effective date of Part 171. Resumption of collections under Part 170 would be noticed in the Federal Register, after which billings would be resumed.

• Fees will be assessed for only commercial licenses, i.e. three of four Uranium Fuel R&D Licenses.

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Section 171.21 -- Erforcement.

This section sets cut the sanctions that may be applied should a licensee fail to make timely payment of any annual fees charged.

Section 171.23 -- Collection, Interest, and Penalties.

This section reiterates that collection will be accomplished consistent with 10 CFR Part 15, as is currently the case for collections under 10 CFR Part 170; but, the section also makes it clear that the NRC will continue its practice of charging interest and penalties for late payments, where appropriate, under the provisions of 4 CFR Part 102.

VIII. Conforming Amendment The NRC implements under 10 CFR Part 51 its responsibilities under the National Environmental Policy Act (NEPA) of 1969 for the preparation and issuance of environmental impact statements on all major Commission actions which significantly affect the quality of the human environment.

Within the broad spectrum of Commission actions subject to 10 CFR Part 51, only those types of actions which have been determined by rule to be categorical exclusions are excluded from the NEPA process. The remaining types of actions are subject to NEPA review, requiring either an environmental impact statement or an environmental assessment leading in turn to a finding of no significant impact or to a decision to prepare an environmental impact statement. Sections 51.20, 51.21, and 51.22 of the Commission's regulations specify the criteria for determining which types of actions require environmental impact statements, or environmental assessments, or which qualify as categorical exclusions.

Licensing and regulatory actions that do not individually or cumulatively significantly affect the human environment are declared to be categorical exclusions. The assessment of an annual fee as proposed in the new 10 CFR Part 171 would not alter the environmental impact of licensed activities and, therefore, is determined to be a categorical exclusion. Section 51.22(c)(1) is being amended to add Part 171 to the list of parts subject to the categorical exclusion.

SEPARATE VIEWS OF COMMISSIONER THOMAS M. ROBERTS I do not support the idea of mandating an annual " user fee" to fund the NRC budget. I believe that for the regulated to fund the activities of the regulator is an inimical conflict of interest. In this regard, one needs to understand that the decisions we need to make ut the NRC to protect the public's health and safety are unique in their far-reaching consequences and should be made in an atmosphere free from actual or potential conflict of interest. This is not only a " nice to have" principle, but it is vital to the proper discharge of our responsibilities. All the " user fee" schemes I have heard discussed present conflict of interest problems.

In regard to another principle, it has been said that the " user fee" concept is based on the principle that the beneficiaries of government services should pay for these services. It is important to note that currently the NRC does 20

just that. Our current fee schedule imposes fees for power reactor licensing, amendments, routine inspections, reactive inspections, reactor operator examinations, material licenses, etc. The NRC may legally charge fees only if three conditions are met: the service performed must be a condition of license issuance or continued operation; the service must confer specific benefits; the service must have identified beneficiaries. Thus the NRC has excluded from fee assessment only those areas where there is difficulty in identifying the costs that are related to a specific applicant or group of applicants.

The Congress years ago determined that the production of electricity by nuclear power was in the national interest. The benefits of nuclear power generation accrue to all users of electricity. These benefits are many and varied; from the economic growth of our industrial base to our enhanced national security. Therefore, I believe that to tax individual rate payers (through their utilities) to support something of benefit to all is incompatible with our nation's philosophy of taxation.

Of the approaches set forth in the Federal Register notice, I favor the Alternative Approach. Congress has not adopted the " user fee" concept and the NRC is mandated to recover up to one-third of its budget of those we regulate. As stated above, the concept of " user fees" is based on the principle that the beneficiaries of governmcst services should pay for those services. Thus, I believe the proposed rulemaking should cover all entities that derive a " benefit" from the NRC.

SEPARATE VIEWS OF COMMISSIONER FREDERICK M. BERNTHAL User fees may well be the wave of the regulatory future, and they have an undeniable philosophical appeal -- after all, who can be against the benefactors of Federal regulatory activity paying the cost of that service?

But for now I am convinced that user fees are an idea whose time has not come, and may never come. Nor has the condition that I set down initially as the sine qua non for my support of the user fee principle been met; namely, that similar fees be required of other entities which benefit from government regulatory activity -- that there be, in short, a level playing field. But Congress has spoken, and recognizing the need for the Commission to put forth a best effort to comply with the Congressional directive, the Commission has gamely submitted a plan whose principal (if not only) virtue is simplicity, and whose principal vice is too much of a good thing.

Consider, for example, the next fiscal year: The Commission would require approximately one third of $405 million ($134 million) to be recovered by a

" tax" only on operating power reactors, applicants for operating licenses and major materials licensees. No fees would be imposed on non-power reactors and the multitude of small materials licensees. No fees would be charged for the extensive work done by the staff in reviewing applications for construction permits. Nor is there provision for the extraordinary effort which the staff l puts forth on occasion to straighten out the ineptitude of some licensees.

l Thus, good utilities will be " penalized" for the mistakes of their less capable sister utilities.

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Or consider the more distant future. One of the larger programs within NMSS over the coming decade will be the review and licensing of the high level waste (HLW) repository, the beneficiaries of which include defense nuclear programs.

The NWPA requires that DOE contribute a pro rata share (details of which are still under negotiation) to the waste fund to cover the costs of disposing of defense high level wastes. The Commission proposal for allocating user fees fails to tap the waste fund, and thus would indirectly require the utilities to subsidize the regulatory costs attendant to the disposal of defense HLW.

An equitable allocation of costs for the regulation of low-level waste disposal has also been overlooked under the current proposal. As a result of the low-level Radioactive Waste Policy Amendments Act of 1985, significant resources will be expended by the Commission to support the development of criteria for additional LLW disposal capacity. Between 6 and 10 disposal facilities will ultimately be licensed either directly by the Commission or by Agreement States for unsited compacts. All beneficiaries of these efforts (i.e. all generators of low-level radioactive wastes who would lose disposal I capacity should additional sites not be licensed) should be required to contribute to the true cost of these efforts. Recognizing the impracticality of billing every hospital, university, and radiopharmaceutical house separately, the Commission should have considered direct billing of States or compacts.

The only justification for the simplistic system set forth herein by the Commission appears to be the fact that substantial administrative savings (to the tune of approximately 20 FTEs) can be realized by doing it this way. But Congress told the Commission only that it must collect up to one-third of its budget by charging user fees; it did not require the Commission to eliminate FTEs to do it, especially at the expense of an equitably administered program.

Constituti.onal questions concerning user fees aside, the inequities in the current proposal arguably raise questions as to whether the Commission has been arbitrary and capricious in the way it has structured the collection of the Congressionally mandated fees.

The theory behind the legislation holds that those who benefit from the services provided by the Commission should pay, in part, for those services.

Accepting this premise (which may in itself have problems when applied to l regulation for the benefit of public health and safety), no one class of '

licensee should pay for " services" which benefit another. The user fee concept will ultimately sink or swim in court on its own merits. But it should be permitted to do so unburdened by arguments of inequity in its implementation.

My reservations about the concept of user fees applied to regulatory agencies ,

I notwithstanding,.if the concept is to be applied at all, it ought to be applied in a manner such that, insofar as possible, all entities which derive a " benefit" from the services we provide should share the cost of providing that " benefit." I therefore can only endorse the alternative approach identified in the Federal Register Notice.

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I SEPARATE VIEWS OF COMMISSIONER LAND 0 W. ZECH, JR.

I support the proposed rule only because the agency must move forward at this time to implement the statute. However for the future, given that annual charges are apparently contemplated under the statute for budgetary purposes on a continuing basis, I believe that the staff should prepare now to move toward an annual charge which would take into account, first, the amount of electricity produced by each licensee and, second, the resources which are expended by the Commission which fairly reflect the cost to the Commission of providing inspection and other services to the licensee. As I have been informed regarding the present situation, existing data are not adequate to permit a correlation between these two factors. Although, I understand that an annual charge across-the-board for all nuclear power plant applicants and licensees is the best the staff can do at this time, I am not satisfied with that.

To summarize, my position is that, since we should expect to be required to assess an annual charge in future years, we need to work toward an annual charge which takes into account practical realities of the benefit of the electricity produced and the differences in the resources we expend on licensees because of the varying quality of licensee performances. I expect the staff to take the necessary steps now to have in place a system which would provide the information needed for such an annual charge and to implement this procedure as soon as possible.

I also agree that in the rulemaking, consideration should be given to whether all materials licensees who now are assessed a licensee fee should continue to pay the fee if they are not covered by the new annual charge under the proposed rule.

ENVIRONMENTAL IMPACT: CATEGORICAL EXCLUSION The action required under this proposed rule is administrative and would not impact the environment. The Commission has determined pursuant to 10 CFR 51.22(a) that this proposed rule would be the type of action that is described in categorical exclusion 10 CFR 51.22(c)(1). Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this proposed rule.

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 1980 (44 U.S.C. 3501 et seq.).

REGULATORY ANALYSIS The NRC's predecessor, the Atomic Energy Commission, adopted its first license fee schedule in the fall 1968, as codified in 10 CFR Part 170. The authority to collect fees was based on Title V of the Independent Offices Appropriation Act of 1952 (10AA) (31 U.S.C. 9701). That fee schedule covered i power reactors, test and research reactors, fuel reprocessing plants and materials licenses. It was revised and updated in 1978 and 1984.

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The license fees were designed to recover a part of the costs of services attributable to identifiable recipients. Only those costs that were associated with the review of a license application and related to a specific identifiable beneficiary were used in the cost base for the establishment of the fee schedule.

Certain costs under the Commission's 1984 revised fee schedule in 10 CFR Part 170 (49 FR 21293), continued to be excluded from fees. Some of the costs that are excluded from the fee base are those associated with (1) research, (2) generic licensing activities, (3) standards and code development, (4) contested hearings, (5) International and State programs, (6) the Offices of Inspector and Auditor, (7) Congressional Affairs, and (8) Public Affairs.

Section 7601 of the Consolidated Omnibus Budget Reconciliation Act of 1985, enacted on March 20, 1986, would require NRC, by rule, to establish an annual charge for its licensees, that when added to other amounts collected, is estimated to be equal to thirty-three percent of the estimated costs incurred by the Commission. This section authorized NRC to expand its fee base to recover costs previously excluded such as research and generic licensing activities. This proposed rule reflects NRC's interpretation of the intent of Section 7601. The foregoing discussion constitutes the regulatory analysis for this proposed rule.

BACKFIT ANALYSIS This proposed rule does not modify or add to systems, structures, components, or design of a facility; the design approval or manufacturing license for a facility; or the procedures or organization required to design, construct, or operate a facility. The proposed rule is administrative and would assess fees to recover allowable NRC costs for regulatory services provided by the Commission to operating nuclear power reactor licensees and applicants and major materials licensees. Accordingly, no backfit analysis pursuant to 10 CFR 50.109(c) is required for this proposed rule.

REGULATORY FLEXIBILITY CERTIFICATION In accordance with the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b),

and NRC Size Standards (50 FR 50241, December 20,1985), the Commission hereby certifies that this proposed rule would not have a significant economic impact upon a substantial number of small entities. The proposed rule would affect only commercial operating power reactor licensees and applicants and major materials licensees, only a few of whom may constitute a "small entity." >

LIST OF SUBJECTS 10 CFR PART 171 - Annual charges, Nuclear material, Nuclear power plants and reactors, Penalties.

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I 10 CFR PART 51 - Administrative practice and procedure, Environmental impact statement, Nuclear materials, Nuclear power plants and reactors, Reporting and recordkeeping requirements.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and the Consolidated Omnibus Buget Reconciliation Act of 1985, the NRC is proposing to adopt a new 10 CFR Part 171.

1. A new Part 171 is added to Title 10, Chapter I, of the Code of Federal Regulations to read as follows:

Part 171- Annual Fee for Nuclear Power Reactor Operating Licenses or Appif-cations and Major Materials Licenses Sec. 171.1 Purpose 171.3 Scope 171.5 Definitions 171.7 Interpretations 171.9 Communications 171.11 Notice 171.13 Annual Fee: Nuclear Power Reactor Operating Licenses and Applications 171.15 Annual Fee: Materials Licenses 171.17 Payment 171.19 Savings Provision 171.21 Enforcement 171.23 Collection, Interest, and Penalties Authority: Sec. 7601, Pub. L.99-272, 100 Stat. 146; sec. 301, Pub. L.92-314, 86 Stat. 222, (42 U.S.C. 2201(w)); sec. 201, 82 Stat. 1242, as amended (42 U.S.C. 5841).

6 171.1 Purpose.

The regulations in this part set out the annual fee charged to persons with a major materials license and to persons licensed to operate a nuclear power reactor by the United States Nuclear Regulatory Commission or applying for an operating license for a nuclear power reactor.

6 171.3 Scope.

The regulations in this part apply to any person holding an operating license for a nuclear power reactor issued under Part 50 of this chapter, to any person applying for a license to operate a nuclear power reactor, and to any person holding a materials license as defined in this part.

6 171.5 Definitions.

" Budget" means the funds appropriated by Congress for the NRC for each fiscal year, and if that appropriation or a continuing resolution is not passed on September 1 for that fiscal year, the President's budget proposal to Congress.

" Commission" means the United States Nuclear Regulatory Commission or its duly authorized representatives.

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" Federal fiscal year" means a year that begins on October 1 of each calendar year and ends on September 30 of the following calendar year. Federal fiscal years are identified by the year in which they end, for example, fiscal year 1987 begins in 1986 and ends in 1987.

" Licensed to operate" means having a license issued pursuant to 10 CFR 50.57.

" Materials license" means a source material (including byproduct material) license issued pursuant to Part 40 of this chapter, or a special nuclear material license issued pursuant to Part 70 of this chapter.

" Nuclear power reactor" means a nuclear reactor licensed by the NRC and designed to produce heat in excess of 50 megawatts for the purpose of generating electricity.

" Nuclear Reactor" means an apparatus, other than an atomic weapon, used to sustain nuclear fission in a self-supporting chain reaction.

" Person" means (1) any individual, corporation, partnership, firm, association, trust, estate, public or private institution, group, Government agency other than the Comission, any state or any political subdivision of or any political entity within a state, any foreign Government or nation or any political subdivision of any such government or nation, or other entity; and (2) any legal successor, representative, agent, or agency of the foregoing.

" Source material" means (1) Uranium or thorium, or any combination thereof, in any physical or chemical form; or (2) Ores which contain by

, weight one-twentieth of one percent (0.05%) or more of (i) uranium, (ii) thorium, or (iii) any combination thereof. Source material does not include special nuclear material.

"Special nuclear material" means (1) Plutonium, uranium-233, uranium enriched in the isotope 233 or in the isotope 235, and any other material which the Comission, pursuant to the provisions of section 51 of the Atomic Energy Act of 1954, as amended, determines to be special nuclear material but does not include source material; or (2) Any material artificially enriched by any of the foregoing, but does not include source material.

6 171.7 Interpretations.

Except as specifically authorized by the Comission in writing, no interpreta-tion of the regulatior.s in this part by an officer or employee of the Commission other than a written interpretation by the General Counsel will be recognized as binding on the Commission.

6 171.9 Communications.

All communication regarding the regulations in this part should be addressed to the Executive Director for Operations, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555. Communications may be delivered in person to the Commission's offices at 1717 H Street NW., Washington, D.C.

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j 171.11 Notice.

Annual fees, applicable to appropriate NRC license holders and applicants for Operating Licensees (0L) and calculated in accordance with SS 171.13 and 171.15 of this part, will be published in the Federal Register on or before September 1 each year. The fees will become due and payable to the NRC on October 1 of each year. A person licensed to operate a nuclear power reactor or a person issued a materials license subject to this part shall pay the annual fee in full for that year upon issuance of the license, excepting an applicant for an OL who has already paid an annual- fee in the year of license issuance.

l S 171.13 Annual Fee: Nuclear Power Reactor Operating Licenses and Applications

, (a) Each person licensed to operate a nuclear power reactor and each applicant for an operating license under review shall pay an annual fee for each nuclear power reactor unit for which the person holds an operating license or has an application under review at any time during the Federal fiscal year (FY) in which the fee is due. An application for an operating license is under review from the time the application is docketed until the operating license is issued or the applicant requests the Commission in writing to suspend review until further notice.

(b) The basis for the annual fee shall be the sum of NRC costs budgeted for each fiscal year for (1) research activities directly related to the regulation of nuclear power reactors; (2) nuclear power reactor plant licensing, regulation, and inspection activities; and, (3) safeguards activities for nuclear power reactors. -

(c) If the basis for the annual fee is greater than thirty-three percent of the NRC budget less total fees charged under s 171.15, then the maximum annual fee for each nuclear power reactor that is licensed to operate or for which an '

OL application is under active review shall be calculated as follows:

NRC Budcet for FY x .33 minus Fees charged under 6 171.15 Licensec Nuclear Power Reactors and OL Reactor Applications= Fee per License / Application (d) If the basis for the annual fee is less than the total NRC budgeted costs times thirty-three percent minus the total Materials Fees, then the annual fee 1

shall be calculated as follows:

Licensed Nuclear P r R ac r nd L Reactor Applications

= Fee per License / Application (e) The annual fee for each nuclear power reactor licensed to operate and each OL application under review due on October 1, 1986, is $1.01 million.

Thereafter, annual fees will be calculated and assessed in accordance with 9 171.11 of this part and this section.

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5 171.15 Annual Fee: Materials Licenses (a) In those instances when the basis for NRC costs under 6 171.13(b) exceeds the costs recoverable by the NRC under 6 171.13(c), the ratio of the costs recoverable as fees to the basis for those fees will be factored into the calculation of the materials license fees calculated under this section as follows: NRC budgeted costs x .33 Basis under 9 171.13(b) = Factor (b) Persons who conduct an activity licensed under (1) Part 70, for Uranium Fuel Fabrication, (2) Part 40 for Uranium Hexafluoride Production, (3) Part 70 for Uranium Fuel R&D and Pilot Plants, (4) Part 70 for Advanced Fuel R&D and Pilot Plants, and (5) Part 40 for Uranium Recovery--Conventional Mills will pay annual fees calculated as follows:

Budgeted costs NMSS & IE for the Category x Factor = Fee per License No. of Licenses (c) Holders of more than one materials license will pay an annual fee equal to the cumulative total of the fees applicable to the licenses held.

(d) The annual fees for materials licensees subject to fees under this section and due October 1, 1986, are as follows:

(1) Uranium Fuel Fabrication $45,000 (2) Uranium Hexafluoride Production $14,500 (3) Uranium Fuel R&D $ 7,000 (4) Advanced Fuel R&D $ 7,000 (5) Uranium Recovery - Mills $23,000 Thereafter, annual fees for these categories will be calculated and assessed in accordance with 9 171.11 of this part and this section.

6 171.17 Payment.

Fee payments shall be by check, draft, money order, or Electronic Funds Transfer System made payable to the U.S. Nuclear Regulatory Commission.

6 171.19 Savings Provision.

The annual fee required under the provisions of this part shall be in lieu of all fees due or amounts accrued under 10 CFR Part 170 of this chapter during the Federal fiscal year in which the annual fee is paid, provided however, that if any court of competent jurisdiction determines that any fee required by this part is unlawful for any reason, then any suspended fee or payment that otherwise would have been due under Part 170 of this chapter will become payable upon notice by the Commission.

@ 171.21 Enforcement.

If any person required to pay the annual fee fails to do so when due, the Commission may refuse to process any application submitted by or on behalf of the person with respect to any license issued to the person and may suspend or revoke any licenses.

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5 171.23 Collection, Interest, and Penalties.

All annual fees will be collected pursuant to the procedures of 10 CFR Part

15. Interest and penalties on late payments will be assessed in accordance with 10 CFR Part 15, 4 CFR Part 102, and other relevant regulations of the United States Government, as appropriate.

PART 51 -- ENVIRONMENTAL PROTECTION REGULATIONS FOR DOMESTIC LICENSING AND RELATED REGULATORY FUNCTIONS

2. The authority citation for Part 51 continues to read as follows

l AUTHORITY: Sec. 161, 68 Stat. 948, as amended (42 U.S.C. 2201); secs. 201, as amended, 202, 88 stat. 1242, as amended, 1244 (42 U.S.C. 5841, 5842).

Subpart A also issued under National Environmental Protection Act of 1969, secs. 102, 104, 105, 83 Stat. 853-854, as amended (42 U.S.C. 4332, 4334, 4335); and Pub. L.95-604, Title II, 92 Stat. 3033-3041. Section 51.22 also .

issued under sec. 274, 73 Stat. 688, as amended by 92 Stat. 3036-3038 (42 U.S.C. 2021).

3. In 5 51.22, the introductory text of paragraph (c) is republished and a reference to Part 171 is added to paragraph (c)(1), which is revised to read as follows:

5 51.22 Criterion for and identification of licensing and regulatory actions eligible for categorical exclusion.

(c) The following categories of actions are categorical exclusions:

(1) Amendments to Part 0, 1, 2, 4, 7, 8, 9, 10, 11, 14, 19, 21, 25, 55, 75, 95, 110, 140, 150, 170, or 171 of this chapter, and actions on petitions for rulemaking relating to these amendients.

l Dated at Washington, D.C., this o/ 7 day of dude 1986.

For he Nuclear Regulatory Commission.

S

$amuel J. Chilk, 0%

Secretary of thel Commission.

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UNITED STATES ,c , et,,, ,,,

NUCLEAR RECULATCRY COMMISSION Postus e rees pum WASHINGTON, D.C. M ofgje.

PERMIT he. G4F OFFICIAL BUSINESS PENALTY FOR PRIVATE USE. $300

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