ML20214L079
| ML20214L079 | |
| Person / Time | |
|---|---|
| Issue date: | 08/27/1986 |
| From: | Stello V NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | |
| Shared Package | |
| ML20214H074 | List: |
| References | |
| FOIA-86-799, TASK-RIA, TASK-SE AC30-2-57, SECY-86-258, NUDOCS 8609050418 | |
| Download: ML20214L079 (18) | |
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RULEMAKING ISSUE August 27, 1986 (AffirrTiatiori)
SECY-86-258 For:
The Comissioners From:
Victor Stello, Jr.
I Executive Director for Operations
Subject:
PROMULGATIONOFFINALFEERULEREQUIRhDBYTHE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985
Purpose:
To obtain Comission approval of a final notice of rule-making that would result in the collection of fees approxi-mating one-third of the NRC budget.
l Category:
This paper covers major policy issues requiring Comission consideration.
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Background:
Proposed Rule History (SECY-86-173)
On July 1,1986 (51 FR 24078), the Comission published for public comment a proposed rule implementing the Consolidated OmnibusBudgetReconciliationActof1985(COBRA).
The proposed rule would have required each person who had an operating license application under review by the NRC, each person who possessed a license to operate a nuclear power reactor, and each person who held a major materials license (such as fuel processors and uranium mills) to pay an annual fee (see discussion of Alternative 1).
It would have also suspended collection of fees under the existing 10 CFR Part l
170.
Small materials licensees would not have paid fees.
The Comission also sought coment on an alternative ap-proach under which all applicants and licensees would continue to pay fees.
Public Comments Sixty-one public coments were received. They are sun-marized in Enclosure 1.
They are addressed in detail in the proposed final rule (Enclosure 2).
CONTACTS:
C. J. Holloway, ADM 492-7225 R. Scroggins, RM 492-4750
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Executive Directo,r or Operations Enclosures-1.
List and Sumary of Comments 2.
Proposed Final Part 171 3.
Draft Congressional Letter 1
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Draft Public Announcement
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In order to meet the September 18, 1986 publication date, Commissioners comments should be provided directly to the Office of the Secretary by c.o.b. Tuesday, September 9, 1986.
Commission Staff Office comments, if any, should be submitted
!to the Commissioners NLT Wednesday, Se;)tember 3, 1986, with
!an information copy to the Office of the Secretary.
If the paper is of such a nature that it requires additional time for analytical review and comment, the Commissioners and the Secretariat should be apprised of when comments may be expected.
This paper is tentatively scheduled for affirmation at an Open Meeting on Thursday, September 11, 1986.
Please refer to the appropriate Weekly Commission Schedule, when published, for a specific time.
DISTRIBUTION:
Commissioners OGC (H Street)
OI OCA OIA OPA REGIONAL OFFICES EDO OGC (MNBB)
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Lists and Summaries of Comments Broken Down By the Following Categories:
Group 1 - Reactor Facilities Group 2 - States Group 3 - Materials a
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Group 1 List of Reactor Facility Licensees, Licensee Representatives, Consultants and Private Citizen Commenters and Summary of the Comments Atomic Industrial Forum, Inc.
Baltimore Gas and Electric Company Bishop, Liberman, Cook, Purcell & Reynolds Carolina Power & Light Company Commonwealth Edison Conner & Wetterhahn, P.C.
Consolidated Edison Company of New York, Inc.
Consolidated Edison Company of New York, Inc.
Consumers Power Ccmpany Dairyland Power Cooperative Edison Electric Institute Goodman, Lynne KMC, Inc.
Louisiana Power & Light Mississippi Power & Light Company National Rural Electric Cooperation Association Newman & Holtzinger, P.C.
Pacific Gas and Electric Company Pennsylvania Power and Light Company Philadelphia Electric Company Portland General Electric Company l
Public Service Company of Colorado f
Scientists and Engineers for Secure Energy, Inc.
Shaw, Pittman, Potts & Trowbridge
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Facilities Coments 1.
Barton Z. Cowan Atomic Industrial Forum, Inc.
The proposed rule should be withdrawn and re-propose revisions which are legally permissible.
The proposed rule raises complex questions of constitutional law.
and policy and important questions of equity among licensees. The proposal will be viewed by the courts as an unconstitutional tax.
Neither the Budget Reconciliation Act nor the legislative history authorize the NRC to promulgate regulations in violation of the principal holding of the court cases that fees may be charged only for specific services rendered to identifiable recipients. At a minimum, the Comission's proposal to charge licensees for costs associated with research and generic licensing activities is clearly prohibited. To proceed with these revisions on a path clearly in conflict with applicable statutory and case law is a mistake.
The a'obreviated coment period is both unwise and unwarranted.
Urges the Comission to look favorably upon requests for more time 1
and to extend the due date for filing of public coments.
2.
Joseph A. Tiernan, Vice President Nuclear Energy Baltimore Gas and Electric Company Endorses coments of Shaw, Pittman, Potts and Trowbridge.
The proposed annual fees amount to a unconstitutional tax.
Congress did not grant such taxing authority to the NRC. Fees must be related to specific services provided to specific individuals or companies. Fees must reflect no more than the costs of providing such services.
Fees should not be used as a revenueraising device to finance services to the public at large or other groups broader than the particular individual paying the fee. The NRC should withdraw the Notice of Proposed Rulemaking.
3.
Joseph B. Knotts, Jr., Attorney Bishop, Libeman, Cook, Purcell & Reynolds (on behalf of 13 reactor licensees)
Requests an extension of the coment period to allow parties time to supplement their coments. Alternatively, requests the Comission stay the effective date of the rule to allow parties to seek judicial review.
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Favors the Alternative Approach if non-essential costs (i.e.,
research budget) are excluded.
5.
Dennis L. Farrar, Director of Nuclear Licensing Commonwealth Edison The proposed fees are not authorized by the Consolidated Omnibus Budget Reconciliation Act of 1985 because they do not fairly reflect the cost to the Commission of providing the regulatory service. The NRC can charge only for services provided. There is no doubt that NRC's research program does not provide services to licensees for the purpose of the Budget Act.
Research is to provide NRC a technical basis to support its regulatory program.
Even if the NRC would include research, the flat fee per reactor is not reasonably related to the service provided. The service provided does not increase in direct proportion to the number of reactors operated. This is because a research-related service can be provided only once to a licensee. A licensee which operates two similar units does not receive double the service realized by the operator of a single unit. Thus the flat fee structure is contrary to law. The proposal is also contrary to law as it assesses fees on only selected licensees.
It is also arbitrary and capricicus of NRC not to assess fees against materials licensees. Believes that 4 CFR 102 does not authorize the NRC to charge interest and penalties.
6.
Troy B. Conner, Jr., Attorney Conner & Wetterhahn, P.C. (on behalf of 3 licensees)
The proposed rule imposes charges without regard to specific benefits provided and constitutes illegal levy of taxes. Specific aspects of the proposal are arbitrary, capricious and discrimina-tory. The proposal charges for research, generic licensing activities, standards development and safeguards, which do not i
provide benefits to any licensee / applicant.
The rule would also impose charges for certain reactors which have very few if any services rendered by the NRC during the year for which the charge is assessed (e.g., a reactor outage for repairs, i
modification or refueling).
The proposed rule would exclude any charge for regulatory services rendered in conjunction with CP reviews and preliminary and final design reviews; violates rights under Due Process Clause of the Fifth Amendment. No rational basis is discussed for omitting l
charges for these services.
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Commission would not be carrying out the clear intent of BRA were it to terminate or suspend collections under Part 170. Congress made it clear that the annual charges were to be "added to other amounts collected" by the NRC.
It was the intent of Congress that NRC not abandon an in-place and effective method of fee collection which satisfied constitutional standards for fee collections.
1 To afford equal protection of the laws, the NRC must allocate fees on an equitable basis among all of its licensees.
Many of the NRC costs do not even satisfy the standard that charges be " reasonably related to the regulatory service provided". This is nowhere more evident than with the Office of Research.
Research into optimal pressure vessel welds may be of great value to prospective NSSS vendors, but are of no value to licensees of existing plants whose vessels were welded years ago. Pipe cracking 1
research may benefit certain BWR licensees but is of little if any value to PWRs. Safety criteria for future plants benefit only future plants. The benefits, if any of seismic hazards will inure only to those sites actually studied. The internal NRC budgeting procedures do not lend themselves to a justifiable assessment of who receives what regulatory service.
The Comission should explicitly provide that units whose authority to operate have been permanently revoked (Indian Point 1) are not covered by the proposed rulemaking.
9.
Frederick W/ Buckman, Vice President Nuclear Operations Consumers Power Company Concurs with Comissioners Bernthal and Roberts regarding the basis j
for applying a user fee. Mandated annual fees will lead to burgeoning regulation.
Alternative 2, where the annual fee will be collected based on the
, power level in thermal megawatts, should be adopted. A single
' uniform annual charge as proposed would result in an economic penalty being imposed on older, smaller plants (e.g., Big Rock Plant, Lacrosse, etc.) such that it would become uneconomical for them to continue.
If Alternative 2 is not adopted, some other formuli, which accounts for the authorized power level should be used.
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1 The sharply increased fee collections would put an unfair burden on the nuclear industry. While nuclear power reactors may be an appealing " deep pocket" to some seeking budget / deficit relief, the extra $100 million per year in fees is simply inequitable.
- 12. Lynne Goodman Lacrosse, WI Strongly objects to the short comment period. Feels all licensees should pay for the NRC services they request. Licensees.should not have to pay for NRC-initiated work.
Proposed rule will have significant impact on those utilities that operate smaller reactors like Big Rock Point and Lacrosse. A study was performed in 1981 by Sandia Labs for the NRC.
It recommended that the NRC reduce the time spent on the five smallest reactors based on consequences of an accident. Thus small reactors should not have to pay the same fee as large reactors. Agrees with views of Commissioners Roberts and Bernthal and to some extent Commissioner Zech.
- 13. Donald F. Knuth, President KMC,Inc.(NuclearConsultant)
The NRC staff consumed 90 days in preparation of the proposed rule and has permitted no time for any meaningful review or comment by those impacted by the rule. This effort is indicative that the NRC will not seriously entertain meaningful comments, rather its only goal is to fulfill an administrative requirement. The manner in which this proposed rule has been managed appears to be extremely arbitrary. The proposed rule contains a uniform tax regardless of the benefit the utility receives from the NRC.
There is ample regulatory precedent for consideration of alternate non-uniform " tax" arrangements (e.g., highway taxes on trucks based onvehicleweightcarryingcapacity)if" taxing"utilityoperators is NRC's objective.
l Recommends extension of the comment period to a minimum of 30 days and that alternative approaches to determining fees are given serious consideration.
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14.
G. W. Muench, Acting Director Nuclear Operations Louisiana Power & Light Proposed rulemaking does not appropriately assess fees for services 2
rendered. Rulemaking should consider all licensees (e.g., vendors, AE's,testreactorsandwasterepositories). Agrees in part with 4
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9 The Commission has not analyzed the differing impact of some of its regulatory activities on different licensees. For example, PWR's and BWR's are two types of reactors in operation. They have different characteristics such as containment and much of the research benefits only one of the types. There are aspects of the research activity which bear mainly upon advanced reactors. Yet the NRC proposes to assess current licensees and applicants annual fees based on the costs of the entire research program.
The NRC requires that the annual fee be paid in advance.
It is difficult to comprehend how such advance payment for services could be characterized as a fee rather than a tax.
Agree with Commissioner.Bernthal that all entities which derive a benefit should share the cost.
The proposed rule invites comments on an Alternative Approach to assessment of fees. The alternative does no more than slightly reduce that tax.
- 18. James D. Shiffer, Vice President Nuclear Power Generation Pacific Gas and Electric Company l
l Endorses comments submitted by Bishop, Liberman, Cook, Purcell and Reynolds.
The Humboldt Bay reactor is permanently shut down and will be decommissioned once approval is issued by NRC.
It should be clear that the proposed fees for plants which cannot operate are not reasonable or warranted. PG&E requests that the language of the rule specifically exclude such a plant from user fees. As proposed, the rule does not categorically exclude nuclear power reactors which are in the process of being deconmissioned.
Advance payment of the large annual fee at the beginning of the fiscal year is not justified, and quarterly installment payments should be considered.
19.
H. W. Keiser, Vice President l
Nuclear Operations Pennsylvania Power and Light Company Does not believe that the proposed fees will stand if challenged in i
the courts. The only scheme that equates fees with service provided is the one in the existing Part 170 where licensees are billed for actual hours expended by NRC. Thus PP&L favors l
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H. L. Brey, Manager Nuclear Licensing & Fuels Division Public Service Company of Colorado Supports Comissioner Bernthal's position that all beneficiaries should be required to contribute to the costs of NRC efforts. A simplistic method of collecting fees in lieu of a more equitable method of fee collection is arbitrary. Licensees should be assessed fees according to the services provided and not assessed arbitrary fees as proposed. However, endorses Alternative 2 which assesses a fee upon the reactors based on thermal megawatts.
- 23. James P. McGranery, Jr., Counsel Scientists and Engineers for Secure Energy, Inc.
The Budget Reconciliation Act does not permit the Comission to exclude any class of license from fees. Rule is in violation of law since it fails to consider other amounts collected by the NRC (e.g., fines, interest, penalties)inthe33% calculation. Feels that the "Act" requires NRC to impose additional charges upon licensees rather than the dismantlement of the current Part 170.
Proposed rule takes an overly simplistic and broad approach to the concept of costs " reasonably" related to the regulatory service provided.
- 24. Jay S11 berg, Attorney Shaw, Pittman, Potts & Trowbridge (on behalf of 18 utilities)
To comply with the Congressional mandate the Comission should withdraw the proposed rule.
It should recast its current fee system to involve annual charges without increasing the total amount of fee collections and providing for payment in installments. This is the only alternative consistent with all of
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the NRC's legal responsibilities, statutory and constitutional.
The proposed annual fees clearly amount to an unconstitutional tax 4
under prevailing Court rulings.
Apart from the constitutional problems, the proposed annual fees fail to comply with the express requirements of Section 7601.
While the~ statute requires that annual fees be assessed all licensees, many licensees are excluded from payment of any fees.
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1 licensees, while simplifying NRC accounting, may result in a j
significant discrepancy between actual costs incurred and fees assessed for a specific reactor unit. Suggests fees be based, in part, on licensed reactor power output. Shares the concerns of Comissioners Zech, Bernthal and Roberts in fairly allocating costs. The method used to allocate fees should be flexible enough i
to more fairly reflect actual costs. Fees should include non-power expenditures (e.g., waste disposal). Finds the alternative proposal only slightly more preferable.
27.
G. L. Sorensen, Manager Regulatory Program i
Washington Public Power Supply System Endorses comments submitted by Bishop, Liberman, Cook, Purcell and Reynolds.
Proposed rule is unconstitutional and would impose an extreme hardship on those OL applications that are inactive (e.g. WPPSS 1 and3).
Such a drastic increase in fees with no corresponding increase in level of effort or benefit to the projects would cause us to seriously consider the elimination of all NRC review in order to forego the user fee.
Rather than following the approach in the proposed rule, the Comission must allocate fees on a services-rendered basis to each recipient of the service.
Failure to do so is especially harmful in the case of relatively inactive deferred plants.
A more reasonable alternative approach to relatively inactive applications would be for the applicant and the NRC to agree upon a budget prior to the beginning of each fiscal year. Year-end adjustments could be made to reflect services actually requested and received.
28.
C. W. Fay, Vice President Nuclear Power Wisconsin Electric Pcwer Company Proposed rule is unfair and fails to treat all licensees on an equitable basis. Such a fee schedule does not recognize the i
l varying costs associated with regulating different types of licensees.
If fees are to reflect the cost of the regulatory service, the NRC must provide a more realistic schedule than the l
proposed flat fee. Legal precedent suggests that the annual fees represent an unconstitutional tax. Fee structure under Part 171 or i
existing Part 170 should be abolished; the cost for regulating
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electric generation and transmission cooperatives that maintain minority ownership in nuclear plants. They own 15 percent in Fermi 2 and would be responsible for their ownership percentage of the approximately $1.1 million percent in user fees.
Proposed fee is a tax because there is no identifiable additional services provided under the proposed rule.
The rule is not in the best interest of rural customers receiving electricity through Wolverine's system because censumers are already paying electric rates that are approximately 15 percent higher than those of investor-owned utilities and they will have to be increased under the proposed rule.
- 31. ' Donald W. Edwards, Director Industry Affairs Yankee Atomic Electric Company Fees paid to a Government agency should be related to a specific
. service received. The proposed rule and the Alternative Approach stretches this concept beyond any reasonable interpretation and we are adamantly opposed to it.
The drastic increase proposed in this rulemaking is.not based on an increase in specific services to be provided nor does it correlate to specifically identifiable activities conducted primarily for our l
benefit. A ' system based on the size and complexity of reactors would be much more equitable.
As an absolute minimum, fees should be collected in monthly or quarterly installments.
The proposed rule perpetrates an arbitrary and capricious tax which raises serious constitutionality questions which could not survive i
a formal legal challenge.
- 32.. James E. Tribble, President and Chief Executive Officer j
Yankee Atomic Electric Company Fee rule should be revised to make the fee paid per unit proportional to the licensed rating.
Increased costs of meeting new requirements are escalating the costs of operating small reactors so high that it is rapidly becoming uneconomical.
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States Comments L
1.
Claude Earl Fox, M.D., State Health Officer Alabama Department of Public Health Supports Alternative 1.
It is the fairest since reactor and materials licensees pay their fair share.
It offers better enforcement in that problem licensees are charged for non-routine inspections.
2.
Charles F. Tedford, Director Arizona Radiation Regulatory Agency Strongly prefers the Alternative Approach where materials licensees continue to pay.
The removal of materials license fees establishes a nonviable i
precedent for many of the Agreement States that are firmly j
committed to the fee system.
3.
Greta J. Dicus, Acting Director Division of Radiation Control Arkansas Department of Health Supports Alternative 1 which would retain Part 170. Current proposal impacts on the Agreement States too heavily.
In a time of budgetary crisis, having Part 170 fees eliminated for the materials program could easily undercut the efforts of states to continue to collect fees.
In the case of Arkansas, this could prove to be an obstacle in trying to implement a fee schedule.
4.
Richard D. tamm, Governor Colorado State of Strongly opposes the proposed rule. With the adoption of the rule, Coloraco would be faced with the loss of base funding for its radiation control program. "The result of the Comission's proposal would be the termination of the NRC/ Colorado agreement of 18 years."
Strongly urges the Commission to act on the Alternative Approach in l
which all licensees and applicants pay fees.
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3 Agreement States. New Mexico has already returned mill tailings to the NRC for economic reasons.
The discontinuance of fees would drastically reduce Illinois' effectiveness in assuring the siting of needed new low-level radioactive waste disposal facilities in the State.
8.
Mary L. Ellis, Commissioner of Public Health Icwa Health Department Iowa, the newest Agreement State, strongly opposes the proposed fee schedule. Abolishment of the material license and inspection fees would seriously jeopardize the continuation of the Iowa-NRC agreement since Iowa has adopted a fee system identical to that of the NRC.
Iowa legislation does not permit charging fees in excess of the amounts charged by the NRC.
Concurs with the Alternative Approach where all beneficiaries of NRC services pay fees.
9.
David J. Romano, Manager Bureau of Air Quality and Radiation Control Kansas Department of Health and Environment Takes strong exception to the proposal.
It was not addressed to the Agreenent States.
Kansas is attempting to develop a fee system again, partly due to NRC's urging. The result is that an important aspect of the U.S. NRC Agreement State relationship has been reversed without adequate notice to the states or adequate time for response. NRC excuses a majority of its licensees from fees. The ability of Agreement States to have a fee program is likely to be seriously damaged by NRC's proposal. All licensees should pay fees.
- 10. Donald R. Hughes, Manager Radiation Control Branch Kentucky Cabinet for Human Resources NRC should seriously review their decision to eliminate the existing materials fee structure. Agreement State capability to establish and/or maintain its present fee structure could be placed in jeopardy.
- 11. William H. Spell, Administrator Nuclear Energy Division Louisiana Department of Environmental Quality The effect of the new Part 171 is most acute for existing Agreenent States and those seeking that status. Louisiana is facing a financial crisis.
If the NRC's fees for materials licenses
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- 16. Paul J. Merges, Ph.D.
Secretary, Coninittee on Licensing Programs New York State Department of Environmental Conservation Inappropriate for NRC to unilaterally reduce fees without considering the impact on Agreement State programs. This proposal weakens other Agreement State programs which could affect New York State.
- 17. Dana K. Mount, P.E., Director Division of Environmental Engineering North Dakota Department of Health They favor the Alternative Approach which provides that applicants for and holders of reactor operating licenses pay an annual charge similar to the one in Part 171 and that Part 170 is retained for all other beneficiaries of NRC services.
If the proposed Part 171 is adopted, Agreement State materials licensees will lobby against the Agreement States to suspend their fee systems.
Another consideration, Agreement State licensees may apply for NRC licenses at no cost thereby increasir.g NRC's workload and enticing business away from fee charging states.
- 18. Ray D. Paris, Manager Radiation Control Section Oregon Department of Hunan Resources Strongly opposes the proposed change. Change would set a precedent that Agreement States could not follow. Without fees, Agreement States could not carry out licensing and inspection programs.
Oregon is facing a depressed economy and General Fund monies are extremely limited.
- 19. Edgar D. Bailey, Chairman OrganizationofAgreementStates(28AgreementStates)
Opposes the adoption of the proposed schedule because:
(1) it is inequitable.
It places the entire financial burden of the fee system on reactors and fuel cycle facilities and allows the vast majority of the Commission's licensees to receive the benefits of the NRC regulatory program free.
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Favors adoption of Alternative 1 which is equitable to licensees and taxpayers. Agrees with Comissioner Bernthal that the only justification for this proposal is the potential administrative savings at the expense of an equitably administered program.
23.
T. R. Strong, Chief Office of Radiation Protection Washington Deoartment of Social and Health Services Alternative proposal to maintain materials license fees at their present level is far superior to elimination of the fees.
If NRC does not charge fees which fully recover costs in the material licensing area, at least do not reduce the current fees.
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i Materials Coments 1.
Louis Redmond, Corporate Radiation Protection Officer Chrysler Corporation Favors proposal that does not bill the small materials licensee.
2.
C. W. Malody, Manager Corporate Licensing Exxon Nuclear Company, Inc.
The levying of the annual fee along with removal of existing fee schedule has the appeal of simplicity for the NRC and the ease of budgeting for the licensee. Although the annual fee in any one year might not bear a direct relationship to cost or worth of services provided, over the tens of years most licensees will operate, any inequity would tend to disappear.
Favors the proposed simplification approach to fee calculation and collection. Supports either alternative which eliminates fee collection under Part 170.
3.
T. Preston Winslow, Manager Licensing & Nuclear Materials Management General Electric Company GE supports the proposed rule change as an interim measure in that it reduces the license fee administrative burden. A single annual fee for a uranium fuel fabrication license rather than the 25 payments made to the NRC during a year would save time and simplify management and administration of the fees.
GE believes that the Government should have a single fee policy for government activities; in every case where services are rendered, the policy should be the same.
It appears that the annual fee factor (51 F.R. 24085) should be.49 instead of.45.
If so, the proposed 171.15(d)(1) through (5) will need recalculation.
Agrees with Commissioner Roberts that for the regulated to fund the activities of the regulator is an inimical conflict of interest.
4.
Edwin T. Still, Vice President and Director Environment and Health Management Divisien Kerr-McGee Corporation Generally agrees with views of Comissioners Roberts, Bernthal and Zech.
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