ML20214J488

Annual Fee for Power Reactor OLs & Conforming Amend, 10CFR51 & 171 Final Rules.Annual Fee Will Recover Allowable NRC Budgeted Costs for Providing Regulatory Svcs to Power Reactors W/Ols.Fee Schedule Under 10CFR170 Unaltered

ML20214J488
Person / Time
Issue date:	09/16/1986
From:	Chilk S NRC OFFICE OF THE SECRETARY (SECY)
To:
Shared Package
ML20214A282	List: IA-87-196, Annual Fee for Power Reactor OLs & Conforming Amend, 10CFR51 & 171 Final Rules.Annual Fee Will Recover Allowable NRC Budgeted Costs for Providing Regulatory Svcs to Power Reactors W/Ols.Fee Schedule Under 10CFR170 Unaltered ML20214A280 ML20214A292 ML20214A298 ML20214J460 ML20214J488 ML20214T241
References
FOIA-87-196, FRN-51FR24078, RULE-PR-171, RULE-PR-51 AC30-2-32, NUDOCS 8612010329
Download: ML20214J488 (39)

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A NUCLEAR REGULATORY COMMISSION 10 CFR Parts 51 and 171 Annual Fee for Power Reactor Operating Licenses and Conforming Amendment AGENCY: Nuclear Regulatory Commission.

ACTION: Final rule.

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SUMMARY

The Nuclear Regulatory Commission is adding to its regulations a new l

regulation that will impose an annual fee on power reactors with operating licenses.

This annual fee will recover allowable NRC budgeted costs for provid-l ing regulatory services to power reactors with operating licenses and will not I alter the existing fee schedule under 10 CFR Part 170. The annual fee is '

e necessary to comply with the statutory mandate of the Consolidated Onnibus

Budget Reconciliation Act of 1985.

In lO EFFECTIVE DATE: October 20, 1986 t

FOR FURTHER INFORMATION CONTACT:Robert L. Fonner, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555, Telephone: 301-492-8692.

W SUPPLEMENTARY INFORMATION:

Contents I. Background P

A. Authority for the Rule B. Revisions and Effect on Existing Fee Schedule

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II. Sumary of Comments III. Resolution of Coments IV. Section-by-Section Revision I. BACKGROUND A. Authority for the Rule The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (P. L.

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99-272,1986), requires the Nuclear Regulatory Comission to assess and collect annual charges from persons licensed by the Commission pursuant to the Atomic

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Energy Act of 1954 (42 U.S.C. 2011 et seq.) in an amount to approximate 33 per-cent of the Commission's estimated budget.

Section 7601 of the Budget Reconciliation Act states that the charges assessed shall be established by rule and, specifically, in paragraph (b)(I) tha't:

...the Nuclear Regulatory Comission shall assess and collect I annual charges from its licensees on a fiscal year basis, 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 I

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

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4 O-r (8) any such charge assessed pursuant to .this paragraph shall be reasonably related to the regulatory service provided by the Comission and shall fairly reflect the cost to the Comission of

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providing such service.

i The legislative history shows that Congress intended the authority of this

mandate to go beyond that contained in the Independent Offices Appropriation Act l (I0AA) of 1952 (65 Stat. 290; 31 U.S.C. 9701). The Congressional Managers of ,

COBRA, in describing this legislative provision, asserted:

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.The charges assessed pursuant to this authority shall be reasonably i

' related to the regulatory service provided by the Comission and fairly reflect the cost to the Comission of providing such service.

This is intended by the conferees to establish a standard separate and distinct from the Comission's existing authority under the Independent Offices Appropriation Act of 1952 in order to permit the Comission to more fully recover the costs associated with

! I regulating various categories of Comission licensees. >

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

The NRC is construing this legislation to permit it to charge licens'es e not only i

! for special benefits provided to individual licensees, as that term has been used in construing the IOAA, but also to recover the cost of any Comission activity reasonably related to regulating power reactors licensed to operate.

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. 5 B. Revisions and Effect on Existing Fee Schedule The proposed rule (July 1,1986; 51 FR 24078) provided that applicants for power reactor operating ifcenses or holders of power reactor operating licenses and major materials licensees would pay an annual fee in lieu of all other fees.

The final rule will impose an annual fee on power reactors with operating licenses. The annual fee under 10 CFR Part 171 will be based on NRC budgeted costs for providing the following regulatory services to power reactors with operating licenses: (1) research activities directly related to the regulation of power reactors on a generic basis, (2) power reactor plant regulation (except licensing and inspection activities, and Part 55 operator licensing and instructor certification), and (3) safeguards activities for power reactors (other than those activities directly associated with plant-specific licensing and amendments).

This fee will include costs for many operating reactor-related regulatory costs ,

not recovered under NRC's existing fee schedule,10 CFR Part 170 (49 FR 21293; May 21, 1984), which established fees for some regulatory services that NRC l

provides its licensees.

The proposed rule provided that Part 170 would be suspended and, therefore, no fees would be collected under the 10AA. This proposal also relieved small materials licensees of all fees. The final rule provides that Part 171 will not affect the existing 10 CFR Part 170 fee schedule. This means that all fees currently collected under 10 CFR Part 170 will continue to be collected, includ-I ing those from small materials licensees. Thus, under the final rule, holders of power reactor operating licenses will pay an annual charge (COBRA) under Part 171 and 10AA fees under Part 170. Other applicants and licensees will pay fees only under Part 170.

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The Commission has placed in its Public Document Room at 1717 H Street, NW.,

Washington, D.C., data used in developing the proposed 10 CFR Part 171, copies  :

of the comments received, and a separate document that categorizes and summarizes these comments by facilities, Agreement States, and materials licensees.

II.

SUMMARY

OF COMMENTS Only three commenters supported the proposed rule; the majority of the sixty-one comments discussed eleven common concerns:

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1. Constitutionality of the Annual Fee'

2. Exclusion of Some Licenses from Fees

3. Collection of One-Third of the NRC Budget

4. Inclusion of Research Costs in Fee Base

5. Fines, Penalties, Interest, and Reimbursements

6. Basing the Fee on Size of Reactor

7. High-Level Waste Fund

8. Exemption Provision

9. Quarterly Assessments

10. Adjustments

11. Comment Period Twelve commenters thought the proposed fees to be unconstitutional, and four commenters said no annual fees should be assessed to recover NRC costs for providing regulatory services, but, rather that the public, as the real bene- )

1 ficiary of NRC regulatory services, should support the regulatory costs of the NRC. Thirty-four commenters, in opposition to the proposed rule, requested that small materials licenses be subject to fees charged by the NRC.

b Two comenters stated that relief should be given from the proposed fees for uranium mills licenses. One commenter thoJght that suspended license applications, with minimal activity, should not be subject to the proposed annual fee because the fee would be disproportionately large in relation to the profit realized in that circumstance. One comenter also thought that operating license (0L) applicants would not be receiving a benefit from the activities upon which the proposed fee was based and would, in effect, have a double fee burden because they would pay the annual fee in addition to fees previously paid under Part 170.

One comenter asserted that " Architect-Engineers, vendors, test reactors, waste i '

repositories and others..." should pay annual fees.

Several commenters expressed the view that the NRC was not required to collect a full 33 percent of its budget. Eleven commenters held the view that agency research costs should not be included in the cost basis for determining the annual fee. Two commenters asserted that fines, interest, and penalties should be included in the cost basis for the proposed fees. Ten commenters thought the annual fee should be assessed on the basis of power rating in thermal megawatts

! (one comenter opposed this suggestion). One comenter thought that the Depart-ment of Energy high-level waste program fund should be subject to fees. One commenter said that an exemption provision was needed for small and expensive-to-operate reactors because of the disproportionate burden that the proposed rule would impose on the resources generated from these reactors. Six comenters thought that fees should be collected on a quarterly or a monthly basis. j Commenters urged that, should excess fees be collected, a provision for refunds be included in the rule. Finally, several comenters thought that the comment l

, period for the proposed rule was too short. .

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• t No coments were received regarding the proposed amendment to 10 CFR Part 51, which provides that promulgation of Part 171, and future amendments thereto, does not require preparation of an environmental impact statement or assessment.

III. RESOLUTION OF COMMENTS

1. Constitutionality of the Annual Fee Comenti Many of the commenters argued that the Commission was imposing an i -

unconstitutional tax.

Response: The thrust of comenters' arguments was that the Commission's proposal violated constraints on user fees established by the Supreme Court in National Cable Television v. United States, 415 U.S. 336 (1974) and Federal Power Commission v. New England Power, 415 U.S. 345 (1974) and further developed in subsequent decisions by courts of appeals. In National Cable and New England Power, the Supreme Court examined agency authority to assess fees pursuant to a

! particular statute, the Independent Offices Appropriation Act of 1952. The Court there adopted a limiting construction of the 10AA to avoid a Constitu-tional question of whether certain language of the 10AA amounted to a delegation to assess " taxes" rather than " fees." The Court indicated that the legislative history of the 10AA did not reveal an intention on the part of Congress to dele-e '

gateitstaxingauthoritstoFederalagencies. In short, the Court's analysis was largely limited to tije 10AA itself. The comenters, however, appear to read

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these cases as e,stablishing general Constitutional limitations on an agency's power to assess fees. Accordingly, many of the comenters argued that because 6

the NRC was not only charging for "special benefits" provided to identifiable recipients of NRC services, but also recovering the costs of its generic rule-making and research activities, the NRC was imposing an unconstitutinnal tax.

The Commission finds these legal arguments to be unpersuasive. The commenters' arguments are based on the faulty premise that the only legally acceptable standard for assessing fees is that contained in the 10AA. In Section 7601(b)(B) of COBRA, Congress provided that annual charges assessed by the NRC "...shall be reasonably related to the regulatory service provided by the Commission 1 \

• and shall fairly reflect the cost to the Commission of providing such service."

The underlying legislative history makes clear that this provision is intended by the conferees to establish a standard separate and distinct f-rom the Connission's existing authority under 10AA in order to permit the Commission to more fully recover the costs associated with regulating various categories of Commission licensees. Statement of Managers Re NRC Fees,132 Cong. Rec. H.879 (Daily Ed.

March 6, 1986); 132 Cong. Rec. S. 2725 (Daily Ed. March 14,1986.). Corigress undeniably has the authority to provide a fee standard distinct from the 10AA, k provided that the standard satisfies Constitutional requirements.

In numerous cases the Supreme Court has addressed the issue of whether Congress

- has unconstitutionally delegated legislative power to administrative agencies.

A reading of those cases indicates that Congress may delegate its authority to administrative agencies provided that it sets forth intelligible standards for the agency to follow in carrying out the Congressionally prescribed policy.

Hampton, Jr. & Co. v. United States, 276 U.S. 394 (1928). A delegation is not unconstitutional simply because the determination of facts and the inferences to l i

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! be drawn from them in light of the statutory standards and declaration of i

policy call for the exercise of judgment and for the formulation of subsidiary administrative policy within the prescribed statutory framework. Yakus v. United States, 321 U.S. 414, 425 (1944).

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In COBRA, Congress has laid down an intelligible standard for the Commission to

-apply and has articulated'its policy objectives. Simply put, the NRC is to i

' recover approximately 33 percent of its budget from user fees (see Statement o'f Managers Re NRC Fees) and is to assess fees based on the standard articulated

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above. We believe this delegation of authority to the NRC satisfies all ,

Constitutional requirements.

The courts have previously considered the issue of whether a fee can be charged j for a service provided by the Government that benefits not only the licensee, but

! also the general public. The Courts have held that the mutual benefit of a Government service to the recipient and to the public is not a legal bar to the  ;

imposition of fees. Prorating of costs on the basis of benefit to the public is

( not required. Mississippi Power & Light Co. v. U.S. Nuclear Regulatory Comission, i

601 F.2d 223 (1979), cert, denied 444 U.S. 1102 (1980).

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! Thus the only question that remains is whether the fee schedule promulgated by j the NRC falls within the parameters authorized by Congress. We believe that it

clearly does. Following the Congressional mandate, we are attempting to collect i a third of our budget in fees and, as explained elsewhere in this notice, have carefully developed a schedule which ensures that fees assessed are reasonably i related to the NRC costs of providing regulatory services, i

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2. Exclusion of Some Licenses from Fees Comment: Agreement States and some other commenters asserted that the proposed rule, in eliminating fees for small materials licensees, would have a severe adverse effect on State fee programs and that 10 CFR Part 170 should be retained in order to maintain reasonable fees for materials licensees.

Many commenters asserted that the Comission had misconstrued Congressional intent by proposing the suspension of collections under the 10AA--the authority for the current Part 170. Comenters argued that the Congress contemplated that the NRC would continue to collect fees under the 10AA, as well as COBRA.

Specifically, many commenters vigorously argued that Congress contemplated that all licensees should pay fees and that the NRC lacked authority to exempt all small materials licenses from payment of fees, i

Response

The Commission believes it did not misread the Congressional intent, and that it

!( has the authority under COBRA to suspend collections under Part 170 and not charge fees to small materials licensees. The Commission, nonetheless, has j

decided to retain Part 170 as a means of more equitably distributing the agency costs among those receiving services. ,

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The final rule will not affect materials licensees; they will continue to pay only fees chargeable under Part 170. Major materials licensees will not be subject to an annual fee, as previously proposed. OL applicants similarly will remain subject only to fees under Part 170. With the issuance of an operating license, a former OL applicant will be subject to the annual fee required under

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l this final rule in addition to the other fees collected for services covered by Part 170. If an OL applicant receives its OL license during the year, it will pay only a prorated annual fee for that year, because, under the final rule, Part 170 will remain in effect, and fees will be collected under Part 170 up to the time of issuance of the OL. The applicants for licenses and holders of i

these licenses for test and research reactors and waste repositories will also continue to pay fees under that part. Vendors will also continue to pay fees under Part 170.

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3. Collection of One-Third of the NRC Budget Comment: The Commission is not required by Section 7601 of the COBRA to collect the full 33 percent of its budget.

Response: The Budget Reconciliation Act provides that the " maximum amount of the aggregate charges assessed may not exceed an amount that...is estimated to l

be equal to 33 percent of the costs incurred by the Commission with respect to k such fiscal year...." On its face, this is a ceiling, i.e., it would permit the Commission to charge user fees of less than 33 percent. However, the legislative history clearly indicates that Congress expected the NRC to charge the full amount authorized by the statute. The Statement of Managers, which was drafted to reflect the views of the Conference Committee that considered the legislation and was inserted into the Congressional Re:o-d as part of the floor debate on the measure, states:

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i i-The conferees agreed to require the NRC to assess and collect annual charges from its licensees in an amount that, when added to other amounts collected by the Commission shall not exceed 33 Y percent of the Commission's budget for each fiscal year. Assuming the current level of NRC expenditures, this is expected to result in the collection of additional fees in an amount up to approximately

$80 million per year for each fiscal year.

't 132 Cong. Rec. H. 879 (Daily Ed.' March 6, 1986); 132 Cong. Rec. S. 2725 (Daily

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i Ed. March 14,1986).

We read this limited legislative history as indicating that Congress expected this legislation to result in approximately $80 million in collections each year above that already collected by the NRC under Part 170. To meet this target, collecting a full third of the NRC budget is required.

Such an interpretation is also consistent with the President's request to i k Congress that the NRC recover a far greater amount of its budget frem user fees.

The President in his proposed budget to Congress for fiscal year 1987 had suggested that 50 percent of the NRC budget be recovered through user fees, a 4

figure adopted by the House of Representatives, but reduced in Conference Committee.

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4. Inclusion of Research Costs in Fee Base Comment: Commenters argued that the NRC research costs should not be recovered through fees.

Response: Commenters argued for instance that a boiling water reactor (BWR) licensee under the proposed rule would be paying for research on a pressurized water rea: tor (PWR) and vice versa. This could result in one group of licensees j subsidizing another. It was also argued that other research costs may be rele-( '

vant only to future generations of reactors, but of no benefit to the current reactors. The Commission has reviewed again the research portion (as well as the Nuclear Materials Safety and Safeguards, Nuclear Reactor Regulation, Inspection and Enforcement, and Analysis and Evaluation of Operational Data portions) of the cost basis for the annual fee. The purpose of this review was to ensure that only generic costs associated with all power reactors, with operating licenses, regardless of type, were included in the cost basis. Costs for research rulemaking and other activities not relevant to all reactors will 5 not be recovered through fees. A detailed breakdown of costs to be recovered is available in the NRC Public Document Room in Washington, D.C. Based on this review, the cost basis for the annual fee has been revised as follows:

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FISCAL YEAR 1987 PROJECTIONS OF NRC COSTS FOR NUCLEAR POWER REACTOR REGULATORY GENERIC PROGRAMS (Dollars in thousands)

Costs for Programs Regulatory Services i

(~ $ 74,356 Research............................................ ,

Safeguards.......................................... 2,326 4

Reactor regulation.................................. - 24,346 Inspection and enforcement ......................... 15,482 Analysis and evaluation of operational data......... 7,720 a

Total..................................... $124,230

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I Because the costs listed above apply to all power reactors, the costs have been i

divided equally for purposes of calculatir.g the annual fee. This approach is l

! consistent with the Congressional directive that all fees be reasonably related 1

i to the cost of providing services.

1 5. Fines, Penalties, Interest, and Reimbursements Comment: Commenters said that fines, interest, penalties, and reimbursements should be included in the cost basis as collections under other laws.

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j Response: The comenters argued that COBRA provides that the maximum total of fees to be collected by the NRC may not exceed, when added to other amounts 1

l collected by the Commission, 33 percent of the Commission's budget. Accordingly,

! they believe the 33 percent total is to be derived by adding fees collected to l fines, interest, penalties, and reimbursements collected. The Commission rejects this argument. Fines and penalties are charged because of the failure of a licensee to adhere to prescribed standards or requirements. No public l

policy would be served by reducing a power reactor's annual fee because a utility

. violated NRC's requirements. We are unwilling to attribute such an intent to I

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I Congress. Nor do we believe Congress contemplated reducing fees to account for ,

interest paid to the NRC. Interest is assessed only for late payment of monies due the United States. Accordingly, interest is not included in.the cost base.

1 Finally, the NRC receives reimbursements from other Federal agencies of approxi-mately $50,000 per year. We have not included this sum in the fee base. The I

. purpose of COBRA was to generate additional Federal revenue as compensation for  :

services rendered by the NRC. The transfer of funds from one Federal agency to

!l another does not result in increased Federal revenue. Accordingly, Congress did not contemplate that reimbursements would be in the fee base.

I l 6. Basing the Fee on Size of Reactor

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Coment: The annual fee should be based upon the power rating in thermal megawatts for each reactor.

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4 Response: The Comission has considered calculating the annual fee on power reactors with operating licenses on the thermal megawatt ratings of those ,

! reactors. An argument can be made that the larger the reactor, the greater the licensee's ability to generate income to pay the annual fee. The COBRA, however, requires that the fees be reasonably related to the agency's costs of ,

1 j providing services to the licensee. As discussed in the proposed rule (51 FR 1 24078,24082-3), the Comission has examined the relationship between megawatt i rating and the costs of NRC regulation. The NRC finds no necessary relationship or predictive trend between the thermal megawatt rating of a reactor and NRC

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regulatory costs (see Memorandum to Files

• entitled " Reactor Inspection, Licensing and Part 55 Fees Assessed for One-Year Period," dated July 7,1986, from James Holloway, Acting Director, License Fee Management Staff, Office of Administra-4 l tion). Accordingly, the Comission has determined that fees should not be based

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on the size of the reactor. Nevertheless, in recognition of the problem that some licensees of smaller reactors may have in paying substantially increased fees, the Comission has provided for fee exemptions. This issue is discussed ,

i in item 8 Exemption Provision.

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7. High-Level Waste Fund 1

Coment: The Department of Energy (DOE) should be assessed fees, payable from  ;

the high-level waste fund, for NRC services provided toward high-level waste I management.

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• A copy of this memoradnum is available for review at the NRC Public Document

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Room, 1717 H Street, NW., Washington, D.C.

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Response: The Comission has no legal authority to charge the DOE fees for NRC staff work associated with high-level waste. The 10AA and the Atomic Energy Act of 1954, as amended, do not authorize the NRC to charge the DOE fees. The Commission does not construe COBRA as augmenting NRC authority in such a way as to permit the NRC to collect fees from the DCE.

8. Exemption Provision Coment: One commenter, a holder of a license for a small reactor, requested that provision for exemptions from the full annual fee be included in the final rule.

Response: While the Commission is concerned with recovering its costs, it is not the intent of the Comission to promulgate a fee schedule that would have the effect of imposing fees at such a level that the owners of the handful of small, older reactors would find it in their best economic interest to shut their reactors down. Therefore, the Commission has included an exemption provision that k takes reactor size and age and other factors into consideration in determining l whether a license should be exempted from the full annual fee.

9. Quarterly Assessments Coment: Several comenters were concerned with the size of the annual fee and its effect on their cash flow. The commenters also suggested that the NRC not l require payment of fees in a single lump sum.

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Response: In recognition of these concerns, the Commission will collect the annual fee under Part 171 in equal quarterly installments. Fees collected under Part 170 will continue to be collected under the payment schedule set forth under that part.

10. Adjustments ,

i Comment: Provision should be made for refunds if the total of fees collected J

exceeds 33 percent of the NRC budget enacted by Congress.

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Response: The Commission agrees with commenters that the possibility exists.

under both the proposed and final rules, that the aggregate of collections under

Parts 170 and 171 could exceed the statutory limit of 33 percent of the NRC budget in a given fiscal year. Therefore, a section has been added to the final 1 rule which requires that any such overpayment be returned on a prorata basis to those who pay fees under Part 171. Provision is also made for adjusting the refund to take into account any power reactors that were given an operating

( license during the course of the fiscal year and thus did not pay the full fee.

If the prorata share of the overpayment is $10,000 or less, it will be credited

i against the annual fee for the following fiscal year.

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Finally, if a final appropriation for the NRC has not been passed at the time the annual fee is set and if the final appropriation is greater or less than l l

the projection, the annual fee would be raised or reduced, as appropriate, and an adjustment to the remaining quarterly installments or a refund would be made, as appropriate.

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11. Coment Period coment: Some commenters argued that the Commission should have provided for more than a 15-day coment period on the proposed rule.

Response: The Commission was under a statutory mandate to promulgate final fee regulations 45 legislative days after submission of its July 7,1986, report to Congress on user fees. A longer comment period would have prevented the Comission from meeting the Congressionally mandated deadline. Under the I

circumstances, the coment period was reasonable, particularly because licensees were on notice in April when COBRA was enacted that the NRC would be proposing substantially higher fees. Moreover, based on the thoroughness-of the comments received and the numerous issues raised in them, the Comission is convinced that all relevant issues of importance to this rulemaking have been identified and that the comenters have not demonstrated that they have been prejudiced by the 15-day comment period.

( IV. SECTION-BY-SECTION REVISION

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Section 171.1 -- Purpose.  !

The purpose section is revised to state that Part 171 sets out the fee to be charged persons licensed to operate a power reactor as defined in the new part. ,

Section 171.3 -- Scope.

The scope is revised to state that Part 171 applies only to persons licensed to operate a power reactor.

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Section 171.5 -- Definitions.

In the final rule, the definitions for " Materials ifcense," " Source material,"

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and "Special nuclear material" have been deleted because ifcenses for these materials will remain subject to the appropriate fee schedules under 10 CFR Part 170. The definition for " Nuclear power reactor" has been mcdified to conform with the definition for " Power reactor" in 10 CFR Part 170.

Section 171.11 -- Exemption.

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As stated in the proposed rule (51 FR 24078, 24082), the Congress urged the Commission to consider the impact of its fee schedule on certain licensees.

! Based on comments received, the Commission has determined that it is appropriate to take a similar approach in setting the fee schedule for power reactors with operating licenses. Accordingly, the added Exemption section provides that the holder of a license to operate a power reactor who believes that the a'nnual fee is unfair or everly burdensome may apply to the Commission for partial relief I from the annual fee. The Comission may grant such relief, if it is persuaded by the licensee that factors such as age and size of the plant and size and impact on its customer rate base substantially reduce the NRC's regulatory costs

.for that plant and the benefits bestowed on that licensee below that of the ,

other power reactors. Nevertheless, the agency's intent is to grant exemptions I sparingly.

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Section 171.13 -- Notice.

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This section, which was section 171.11 in the proposed rule, is revised to

! reflect that only power reactors licensed to operate are covered by the final  !

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rule, f Section 171.15: Annual Fee: Power Reactor Operating Licenses, j

The proposed section 171.15, Annual Fee: Materials Licenses, has been deleted.

This renumbered ssction on computirg the annual fee is revised to reflect that only power reactors will be subject to the annual fee under Part 171. The ,

formula was also revised to deduct the e'stiit.ated fees to be collected under Part 170. The fees under Part 170 are estimated for fiscal year 1987 to be

$37 million. It is estimated that approximately $30 million of this amount will i come from power reactors with operating licenses. The annual fee will be charged I

to every power reactor unit licensed to operate as of October 1,1986 (assumed to be 101 reactors), and, on a prorata basis, to any power reactor licensed to operate during the fiscal year. If a power reactor licensee has only the I

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authority to possess nuclear material and the Comission has received a request from the licensee to amend its license to permanently withdraw its authority to operate the reactor, or the Comission has permanently revoked such authority, the licensee is not subject to the annual fee under this part for that power i reactor. Such reactors no longer benefit from the regulatory services that are the basis for the annual fee. Plants within this latter category, such as Dresden 1. Humboldt Bay, Peach Bottom 1, and Indian Point I will not be charged fees under this part (though they remain subject to any applicable fees pursuant toPart170ofthischapter).

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The annual fee is calculated as follows:

$405 million (NRC FY 87 budget) x .33 = $133 million (rounded down to the nearestmillion)

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! $133 million minus $37 million (est. fees Part 170, FY 87) = $96 millfon .

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$96 million divided by 101 licensed reactors = $950 thousand per license (roundeddowntothenearestthousand).

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i Section_171_.17 -- Proration.

I Section 171.17 in the proposed rule addressed the annual fee and its calculation for major materials licenses. As they will not be subject to fees under this i

part, that section is deleted and a new section 171.17 is added to the final rule for the purpose of addressing the issue of prorating fees for power reactors that are licensed to operate after the beginning of a fiscal year. No such f5 provision was necessary in the proposed rule. As revised, applications for j operating licenses under review will still be subject to fees chargeable under Part 170. It would not be fair to holders of new operating licenses to charge them the full annual fee in addition to fees which might have accrued under Part i 170 during a fiscal year but prior to issuance of an operating Itcense. The annual fee would be prorated by first dividing the annual fee by 365 and then t

l multiplying the quotient by the number of days remaining in the fiscal year after the operating license issuance date. For example, if an operating ifcense were issued on January 15 of fiscal year 1987, the annual fee for that fiscal year i

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. i, would be $950,000 divided by 365, which is $2,603, and then multiplied by 25P (the number of days remaining in FY), which is $671,574.

Section 171.19 -- Payment.

This section, which was i 171.17 in the proposed rule, is revised in the final rule to allow the NRC to prescribe only those collection mechanisms that are acceptable to the U.S. Treasury Department. At this time, such mechanisms include checks, drafts, money orders, or the Electronic Funds Transfer System.

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This section also has been revised in this final rule to provide for payment in quarterly installments of the Part 171 fee rather than payment in a single lump sum as proposed. .

Section 171.21 -- Refunds.

Section 171.21, in the proposed rule was Enforcement and is renumbered' 6171.23 in the final rule. This new section 171.21 is added to address the contingency I that by the end of a given fiscal year, the aggregate of collections under Parts 170 and 171 might exceed the statutory limit on collections of 33 percent of the NRC budget. For example, several plants could be licensed to operate durirg the fiscal year and thereby pay a prorata share of the annual fee, or the number of amendments, inspections, or other activities subject to fees under Part 170 could be greater than estimated at the beginning of the fiscal year.

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. i, The purpose of the annual fee pursuant to Part 171 is to collect that portion of costs to the agency of providing regulatory services to power reactors, but with a ceiling on those collections equal to the difference between collections under Part 170 and 33 percent of the NRC budget. Accordingly, any collection of fees exceeding this ceiling will be refunded under this part. Refunds will be adjusted ,

1 to allow for the fact that some licenses may only have been subject to a portion of the annual fee because the license to operate was issued during the fiscal year. However, it is anticipated that overpayments will arise under this provision rarely, if at all, and will probably not exceed $10,000 per license.

( Because of the administrative costs associated with making a refund from the U.S.

Treasury, any overpayment of $10,000 or less will be credited against the annual fee for the following year.

Section 171.25 -- Collection, Interest, Penalties, and Administrative Costs.

This renumbered section, which was 5 171.23 in the proposed rule, is modified slightly to reflect the requirement under 4 CFR Part 102 that, in addition to I interest and penalties, administrative costs of collection also are recoverable by the NRC. The section is also modified in recognition of the authority given under 5 171.19 to pay the annual fee in quarterly installments. If the quarterly installment is not paid on time in accordance with the schedule provided in i 171.19, then the full annual fee becomes imediately due and payable. Interest, 1

penalties (if applicable), and administrative costs of collecting the fee will be calculated from the date that the late quarterly installment was due.

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1 Unchanged Sections. ,

1 i i Sections 171.7, Interpretations, 171.9, Communications, and renumbered 171.23,

'. Enforcement, are in this final rule as they were in the proposed rule.

1 j 10 CFR 51.22 -- Categorical Exclusion.

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] The amendment to 10 CFR Part 51 to include Part 171 as a categorical exclusion i

is unchanged.

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L j Comissioner Thomas M. Roberts abstained. The separate views of Commissioner j Frederick M. Bernthal follow:  ;

l I While this final rule is a distinct improvement over the Commission's j earlier proposed rule, it still suffers from several technical deficiencies, i and more importantly, from fundamental infimities which I noted in my i previous views on this subject.

i Whether or not the user fee idea is conceptually sound, one cannot .iustify i I the assessment of one class of licensee to pay for " services" which benefit another. The user fee concept should be permitted to sink or swim in court  ;

? on its own merits, unburdened by questions of equity in implementation. .

The final rule advanced by the Commission is so burdened to the extent that 1

it (1) singles out one class of licensee for pa

! over and above the Part 170 fee schedule, and 2) (yment chargesof thethe same " extra fee"

" extra" _-

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li fee to all holders of operating licenses, despite the fact that good performers will be subsidizing poor performers on whose behalf the NRC must frequently put forth extraordinary efforts, i - ,

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Further, this final rule does not assess the Department of-Energy, via the  !

4 nuclear waste fund or other appropriate mechanism, for NRC services related 1

to the Nuclear Waste Policy Act. Absent extraordinary accountino precaution

by Congress in its annual appropriations, the rule would thus indirectly require utilities to suosidize the regulatory costs attendant to the ,

- geologic disposal of defense high level waste. If the user fee 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 NRC services

share equally the costs of providing that benefit. l 1 l l Technical deficiencies of this rule aside, however, there are elemental reasons for concern with all rules such as this. User fees have an

] ( undeniable philosophical and popular appeal -- after all, who can be

. against the benefactors of federal reculatory services paying the cost of

! such services? But the user fee principle must proceed from a single premise: namely, that such fees be required of all entities which are i subject to government regulatory activity -- in'Tiert, that there be a

! level playing field.

! The playing field is not level. Nuclear utilities are now to be sincled i out for payment of a user fee tax, while Congress has not seen fit to levy

corresponding charges on other utilities which are the " beneficiaries" of i similar Federal regulatory activity. I make no judgment on the merits of the many and diverse regulatory activities of the Federal Government. But l I fail to see how our licensees benefit more from regulatory services than

do the coal-burning utilities upon whom the EPA conferred the " benefit" of I requirements for scrubber installation to reduce stack emissions, or for

! that matter, than do the pharmaceutical houses regulated by the FDA, or

! than do a host of other industries now subject to the regulatory

requirements of the government.

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l Indeed, I question the theory Iand the Congress should be concerned, lest q the impression be created) that our licensees are the principal beneficiaries-of the services provided by this agency; the prime beneficiary is the public at large, whom we are mandated to protect. But if that is so, should our licensees then be reauired to pay not only for an NRC-mandated .

nuclear powerplant backfit, for example, but also for the costs of a '

belated agency decision to require the backfit (because earlier regulatory standards were found to be inadequate)?-

In passing the 1954 Atomic Energy Act, Congress found that:

[R3egulationbytheUnitedStatesoftheproductionand utilization of atomic energy and_of the facilities used in connection therewith is necessary... to protect the health and safety of the public. [ emphasis added]

In the Energy Reorganization Act of 1974, Congress declared that the

( promotional and regulatory functions of the Atomic Energy Comission should ,

be separated, because it was "in the public interest", that the purpose of the Act was, among other things, "to assure public health and' safety."

These Congressional findings and statements of purpose strongly suggest that the responsibilities of this agency are to be carried out for the benefit of the general public, and not for the benefit of any single enterprise, public or private. If there were any direct benefits to be conferred upon those whom we regulate, it seems clear that those vanished (and appropriately so) when the AEC was split and its promotional responsibilities assigned to agencies other than the NRC.

The American public,'through its elected representatives, has thu_s charged the NRC with regulating the nuclear industry to promote safety and security.

Yet the Comission is now required to implement legislation, the premise of which appears to be contrary to the stated purposes of this agency's enabling legislation.

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I therefore approve this final rule only to permit the Comission to promulgate implementing regulations in fulfillment of its Congressional mandate.

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- t, ENVIRONMENTAL IMPACT: CATEGORICAL EXCLUSION The action required under this final rule is administrative and would not impact the environment. The Commission has determined pursuant to 10 CFR 51.22(a) that this final 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

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This final 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.). -

1 REGULATORY ANALYSIS The NRC's predecessor, the Atomic Energy Commission, adopted its first license l fee schedule in the fall of 1968, as codified in 10 CFR Part 170. The authority to collect fees was based on Title V of the Independent Offices Appropriation Act k of 1952 (10AA) (31 U.S.C. 9701). That fee schedule covered 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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. t, 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 were excluded from the fee base were those associated with (1) research, (2) l generic licensing activities, (3) standards and code development, (4) contested hearings, (5) the Office of International and State programs, (6) the Office of

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Inspector and Auditor, (7) the Office of Congressional Affairs, and (8) the Office of Public Affairs.

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Section 7601 of the Consolidated Omnibus Budget Reconciliation Act of 1985 requires the NRC to establish by rule an annual charge for its licensees that, when added to other amounts collected, is estimated to be equal to 33 percent of the estimated costs incurred by the Commission. This section authorizes NRC to expand its fee base to recover costs previously excluded, such as research and

( generic licensing activities. This final rule reflects NRC's interpretation of l

the intent of Section 7601.

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l REGULATORY FLEXIBILITY CERTIFICATION l This rule is not a major rule for the purpose of Executive Order 12291 of February 17, 1981. As required by 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 final rule does not have a significant impact on small business entities. This rule affects only nuclear power plants licensed to operate. The companies that own these companies do not fall within the scope of the definition of "small entities" set forth in the Regulatory Flexibility Act.

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

10 CFR PART 171 Annual charges, Power plants and reactors, Penalty.

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 5 U.S.C. 553, the NRC is amending 10 CFR Chapter I as follows:

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1. A new Part 171 is added to read as follows:

Part 171 - Annual Fee for Power Reactor Operating Licenses Sec. 171.1 Purpose.

171.3 Scope.

171.5 Definitions.

171.7 Interpretations. . _ _ _ _ . . _-. -. .- ._ - - . - - - - , -

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~171.9 Communications..

171.11 Exemption.

171.13 Notice.

171.15 Annual Fee: Power Reactor Operating Licenses.

171.17 Proration.

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171.19 Payment.

. 171.21 Refunds.

171.23 Enforcement.

171.25 Collection, Interest, Penalties, and Administrative Costs.

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- Authority: Sec. 7601, Pub. L.99-272, 100 Stat. 146; sec. 301, Pub. L.92-314, 86 Stat.222,(42U.S.C.2201(W));sec.201,82 Stat.1242,asamended(42U.S.C.

5841).

i 171.1 Purpose.

l The regulations in this part set out the annual fee charged to persons licensed by the United States Nuclear Regulatory Ccmmission to operate a power reactor i

I as defined in this part. \

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6 171.3 Scope.

The regulations in this part apply to any person holding an operating license for a power reactor 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 is not passed on or before September 1 for that fiscal year, the funds most recently appropriated by Congress for the most recent fiscal year.

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

" 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 (e.g., fiscal year 1987 begins in 1986 and ends in 1987). j

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

" Operating license" means having a license issued pursuant to 9 50.57 cf this chapter. It does not include licenses that only authorize possession of special nuclear material after the Commission has received a request frcm the licensee i 1 l

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to amend its license to permanently withdraw its authority to operate or the Commission has permanently revoked such authority.

" Person" means (1) any individual, corporation, partnership, firm, association, trust, estate, public or private institution, group, Government agency othcr than the Commission; 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.

" Power reactor" means a nuclear reactor designed to proO ce electrical or heat energy and licensed by the Comission under the authority of section 103 or subsection 104b of the Atomic Energy Act of 1954, as amended, and pursuant to the provisions of 5 50.21(b) or 6 50.22 of this chapter.

6 171.7 Interpretations.

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

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Q 171.9 Comunications, j l

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

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t 9 171.11 Exemption.

The Commission may, upon application, grant an exemption, in part, from the annual fee required pursuant to this part. An exemption under this provision riay be granted by the Commission taking into consideration the following factors:

1 (a) Age of the reactor; (b) Size of the reactor; (c) Number of customers in rate base; (d) Net increase in KWh cost for each customer directly related to the annual fee assessed under this part; and (e) Any other relevant matter which the licensee believes justifies the reduction of the annual fee.

9 171.13 Notice.

The first installment of the annual fee for fiscal year 1987 will become due and

' k payable 30 days after the effective date of this final rule. Thereafter, the annual fee, applicable to a power reactor with a license to operate and calculated in accordance with 6 171.15 of this part, will be published in the Federal Register on or before September 1 each year. The fee will become due and payable to the NRC in accordance with 9 171.19 of this part, except as provided in 6 171.17 of this part. If the annual fee is based on the amount appropriated by the Congress for the prior fiscal year and Congress, during the fiscal year, enacts an appro-priation different from that used in setting the fee, the annual fee will be  ;

revised to reflect the actual amount appropriated by Congress for the fiscal year. Notice of this revision will be published in the Federal Register.

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, i, r 9 171.15 Annual Fee: Power Reactor Operating Licenses.

(a) Each person licensed to operate a power reactor shall pay an annual fee for each pcwer reactor unit for which the person holds an operating Ifcense at any time during the Federal Fiscal Year (FY) in which the fee is due.

(b) The basis for the annual fee shall be the sum of NRC costs budgeted for each FY for (1) research activities directly related to the regulation of power reactors, (2) power reactor regulation (except licensing and inspection activi-ties, and Part 55 operator licensing and instructor certification), and (3) safeguards activities for power reactors (other than those activities directly 4

associated with plant-specific licensing and amendments).

1 (c) If the basis for the annual fee is greater than 33 percent of the NRC budget less the' total estimated fees chargeable under Part 170 of this chapter, then the maximum annual fee for each nuclear power reactor that is ifcensed to operate shall be calculated as follows:

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(NRC FY Budget x .33) minus Est. Fees Part 170 = Fee per License No. of Operating Licenses for Power Reactors (d) If the basis for the annual fee is less than the total NRC budgeted costs l I

times 33 percent minus the estimated fees payable under Part 170, then the annual fee shall be calculated as follows:

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Basis for Annual Fee = Fee per License No. of Operating Licenses for Power Reactors (e) The annual fee for each power reactor licensed to operate as of October 1, 1986, is $950,000. Thereafter, annual fees will be assessed in accordance with i 171.13.

i 171.17 Proration.

l The annual fee for a power reactor granted its license to operate after October 1 l of a FY shall be prorated on the basis of the number of days remaining in that FY. Thereafter, the full fee would be due and payable each subs.equent FY.

Licenses revoked, suspended, or for which the licensee has requested amendment f

to permanently withdraw operating authority during the FY will not result in any refund of the annual fee or any portion thereof.

6 171.19 Payment.

Fee payments may be made in any manner allowed under U.S. Department of Treadury regulations and described in the Federal Register notice published pursuant to 5 171.13 of this part. The annual fee shall be paid in quarterly installments of 4

25 percent. A quarterly installment is due on October 1, January 1, April 1 and July 1 of each year.

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.a 9 171.21 Refunds.

If at the end of an FY, the aggregrate of collections under 10 CFR Part 170 and this part exceeds 33 percent of the NRC budget, the overpayment will be refunded on a prorata basis to those licensees who have paid fees under this part, but with an appropriate adjustment for any reduced payments pursuant to 9 171.17 of this part. Any overpayment of $10,000 or less (per license) will be credited against the annual fee for the following FY.

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Q 171.23 Enforcement. .

If any person required to pay the annual fee fails to pay when the fee is due, the Comission 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 held by the person.

Q 171.25 Collection, Interest, Penalties, and Administrative Costs.

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1 The annual fee will be collected pursuant to the procedures of 10 CFR Part 15. )

Interest, penalties, and administrative costs for late payments will be assessrc l in accordance with 10 CFR Part 15 of this chapter, 4 CFR Part 102, and other relevant regulations of the United States Government, as appropriate. In the I event a quarterly installment is not made by the appropriate due date specified in i 171.19, the full fee becomes due and payable, with interest, penalties, and I

administrative costs of collection calculated from the date that quarterly installment was due.

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

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

AUTHORITY: Sec. 161, 68 Stat. 948, as amended (42 U.S.C. 2201); secs. 201, 202, as amended, 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 i 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:

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,e, (1) Amendments to Parts 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 amendments.

6 Dated at Washington, D.C., this [ b day of September 1986. .

t For Regulatory Comission.

the Nuclef

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..m 15amuel J. Chilk N SecretaryofthgCommission.,

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e March 28, 1986 S"CY-8 6 -w 2 POLICY ISSUE (Notation Vote) l For: The Comissioners From: Victor Stello, Jr.

Acting Executive Director for Operations

Subject:

ALTERNATIVE FUNDING APPROACHES - USER FEES Purcose: To respond to a March 12, 1986 request from the Senate l Subcomittee on Nuclear Regulation (Enclosure 1) to provide a  !

comprehensive report on alternative approaches to funding the '

programs and activities of the Nuclear Regulatory Commission.

Category: This paper covers a significant policy and budget matter. ,

Background:

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'TnlirTriation in this record wat deleted in accordance with the Freedom of Information Act, 71-gr. exemphont

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Contact:

R. Scroggins, RM l 492-4750 l

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Discussion: The Senate Comittee on Environment and Public Works, Subcomittee on Nuclear Regulation's March 12, 1986 letter l requested the Comission to submit by April 1,1986, a compre-hensive report on alternative approaches to funding the programs and activities of the NRC. The report is to include an evalua-l tion of the various alternatives including the amount and source 1

of funds that will be generated by each alternative, a detailed  !

{ discussion of the advantages and disadvantages of each alterna-l tive, the Comission's recomendation on each, and draft legislative authority where the Commission recomends a given alternative. The Comittee requested the alternatives to include I the Administration's proposal that the NRC impose a fee of $500 '

per million watts of rated thermal capacity; the use of the Nuclear Waste Fund to pay for those Comission expenses related to implementation of the Nuclear Waste Policy Act of 1982; and the approach contained in Section 7601 of H.R. 3128, the Con-solidated Omnibus Budget Reconciliation Act. The Comittee  ;

specifically requested the Commission to structure each alternative in a manner that will emphasize three objectives:

(1) the funding mechanism should ensure that there is a reason-able and equitable relationship between the fee assessed and the '

benefits of service provided; (2) the funding mechanism should provide some form of budgetary " credit" to the Comission for i the fees assessed, so that such fees are applied to NRC i activities and programs for which the collection of such fees i can be justified, rather than simply applying the funds collected  ;

to reduction in the GeneralofFund the of federal the U.deficit by depositing)them S. Treasury; directly and (3 the funding mechanism should avoid or minimize any regulatory conflict of i interest.

Enclosure 2 is the report the staff has prepared to respond to the Sqaata Subcomittee on Nuclear Regulation's March 12

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t Note: While finalizing this report, the Congress passed H.R.  ;

IT75 on March 20, 1986. The bill contains the requirement '

that NRC submit a report to Congress on the Commission's authority to collect annual charges prior to enactment of the provisions of H.R. 3128 including the authority provided ,

pursuant to the Independent Offices Appropriations Act of i 1952. This report must be submitted within 90 days of enactment of the bill. H.R. 3128 also requires that NRC assess and collect annual charges from its licensees beginnino .45 days after receipt by the Congress of said reporta l

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VJ tor Stello..Jr.

Acting Executive Director for Operations

Enclosures:

As stated

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Commissioners' comments or consent should be provided directly to the Office of the Secretary ASAP.

Commission Staff Office comments, if any, should be submitted to the Commissioners ASAP, 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.

DISTRIBUTION:

Commissioners OGC OPE OI OCA OIA OPA REGIONAL OF? ICES EDO ELD ACRS

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ENCLOSURE 1 -

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l March 12, 1986

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The Honorable mansio J. Palladino j

! Chairman -

l U.S. Nuclear Regulatory Counission '

Mashington, D.C. 20555

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Dear Jos i L on behalf of the Caunittee on Envirarssent and Public Works, I would I l like to thank you and your follow Cunnissioners for your testimon l the Caunittee at the February 19, 1986 hearing on the Caunission'y before s fiscal  !

year 1987 budget request. I very ansch apprestate the time and effort that  !

f you have devoted to preparing and presenting the cmunission's testimony, j

i particularly in view of the tight schedule that the Cunnittee and the i'

Congress are faced with under the new "Graun-mmbaarHlollings" law.

I an enclosing a copy of the committee's report to the Budget causittee )

j en the Caunission's fiscal year 1987 budget. I trust that you will find j l j

that the Omanittee's recommendation of $416 million for the Commission for  ;

fiscal year 1987 reflects a concerted effort on our part to ensure that the i Counission will have adequate resources in fiscal year 1987 to carry out its i 3

i statutory responsibilities. At the same time, however, we are faced with the prospoet of orippling federal deficits unless Congress acts to ti@tten i the belt on federal spending. Everyone, including the Caunission, wihl be

! es11ed upon to assist in this most urgent national priority by eliminating i

or deferring unnecessary programs and by using the funds appropriated by Congrees in the most offielent and effective manner possible.

j In this regard, I should like to reiterate my t for the initia-tives that the Camiission has undertaken to address I consider to be i some of the inefficiencies in the operations of the Cassission. Your of-

{ forts to consolidate the Commission's two le9e1 offices, paar progrees on j the vital issue of consolidating the Counisshon in a sing,e loosthon, the stape that you have taken with regard to the Office of policy Evaluation, 4

the cooperative efforts that you are pursuing with the Institute of Noelest Power operations, and the progress that you are making in eliminating un-i necessary regulatory overlap between the Caenission and the Environmental

} Protection Agoney by reasserting the Camnission's statutory mandate and i primary regulatory role in the regulation of consorcial nuclest power are l all to be comanded. l I

i In addition, I as most pleased with the progress that.the Cassission j has made toward resolving a manber of major policy issues in the past year j 1 or so, including a final resolution of the controversial TM1-1 restart '

! issue, substantial progress toward the resolution of the emergency planning

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! The Horiorable Nunzio J. Palladino March 12, 1986 j

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impasse at shorehse, issuance of the long-oweited backfitting regulation, I

and considerable progress on issuance of new sunshine Act regulations more in line with what the law requires, common sense dictates, and other agencies practice.

l While the caenission has made substantial progress in improving the f efficiency of its operations and in addressing many of the major policy j

issues that have been pending before the agency for years, further steps may need to be taken if we are to most our goal of a balanood budget by 1991.

In this regard, the cannittee is interested in omanining whether there are alternative funding approaches for the commission's programs and activities that should be pursued.

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Accordingly, as we discussed at the February 19th henting, I would appreciate it if the canaission would subunit to the subecastittee on Nuclear pegulation by April 1,1986 a comprehensive report on alternative funding.

/, ) approaches for the commission's programs and activities, including a detailed study of the alternatives, the advantages and disadvantages of l 1  :

end, the justification for each such alternative, including the amount and j l source of funds that would be generated under each su d approach, the i canaission's recommendation on each, and draft legislative authority where l j As part of the Coenission's t

j jthecanniasionreconnendsagivenapproach., report, please address the Ae

' ' per million ustts of rated theensi cepecity on all operating nuclear power j

plants, as well as the proposal to fund the canniasion's high-level wasta program out of the Nuclear unste pund. In addition, plasse subunit a .

detailed analysis, addressing these same issues, of section 7401 of N.R.

3128, the " consolidated Qunibus Budget Reconciliation Act of 1985." ,

i In reconnending specific approaches, you should know that the

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' cannittee, in its report to the audget cannittee, has unphasised the impor-j ' tance of three objectives (1) the funding mechanian should ensure that j there is a reasonable and equitable relationship between the fee aseeemed i

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' and the benefit or service provideos (2) the funding mechanian should

provide same foon of budgetary " credit" to the cannission for the fees

' assessed, so that such fees are applied to NRC activities and programs for lwhichthecollectionofsuchfeescanbejustified,ratherthanamyly

' applying the funds collected to reduction of the federal deficit by deposit-ing than directly in the General Pnnd of the U.S. Treasury; and (3) the

)  :

i funding mechanian should avoid or minimise any regulatory conflict of interest.

. Finally, I would ask that the report include a detailed swunsry of the

' canaission's current authority and practice with regard to license fees, user fees, or any other similar funding approaches, including the entent of j

the caenission's existing authority, the fees currently assessed, the ac=-

tivities for which such fees are assessed, and the justification for the conmission's assessments. In addition, the report should include a sannary j ,

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l 1he Honorable Wunzio J. Palladino f i March 12, 1986

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of the " user fee", " license fee", or other similar authorities and practions i 3

of other agencies and departments responsible for regulating the electriosi l l generating industry. i j s 1

In addition to submitting the alternative funding report, described I f

above, there were two additional matters discussed at the February 19thFirst, pl i

hosting that I would ask the Counission to address.  ;

j detailed analysis of the impact of the reduction by Congrees of the j Countasion's budget request for fiscal year 1986, fran $4l sillion.

tified by the Cannission, in your testimony to Congrees last year, that l 1

would have to be deferred or eliminated as a result of any reduction below  !

the Cassission's $429 million budget request, and describe the inpactI of the Second,

] 811 million reduction on each of these activities or progrues.  ;

i would like to ask each Counissioner, individually, to provide his views on i l dother the $405 million funding level requested by the cuentesion is ado- l i

i #

gaste to enable the Coonission to entry out its statutory responsibility to l protect the public health and safety; in that regard, I wou or decreased, based upon the programmatic needs of the agency, and if so, by what amount and for which specifue programs. '

i I

As usual, I appreciate your timely and thoughtful respones to these ,

requests. If you should have any questions, please contact Jim Curties of l the subcommittee staff, at 224-2991. '

l i

Most sincerely, l 1

l M .

! Chainmen suboannittee on Nuclear Regulation i

r snelosure As stated i '

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l SrC tSet. cKA.%XM DEKEMOTREPORT. ender da3e to e day certess or an adjournment suse dsel follose-Nt later than 60 daye the date of the enact:nnent of this Act, rwerspt by the af the vrport requsted pursuant to.

the of Energy subnest to the Cannmitter one Energy su ion (at the Nuc Regulatory Comminions shan anness anda~~ Resources of the Senate and the Committeen on Energy and eeUect annual charges frans its licensees on aTsscal year and Cammerce and on Interior and Insular Affaire of the House of henis except that-l Representatwee e report the effecie of the Sepeember is. (A) the measimum amount of the aggrwgate chargue as.

1955, deessson of the Unit States Doetrset Caeart for the Doetrset of ====ct resre ment to this in any pscal year may Calorada A4Gg dat the utnisty serucee urunism enrockmeent con- not escued en amount t, when added to a: hor amounts tracts of the Departament of Energy are nun and ooid tweetern Nu- enneesed by the Conmieeian for such Fecal year under oder proeieione of kne, is eetimated to be equal to 33 per.

\ clearInc. a. F. Clark Huffman. Des! No. 34 C23151 To the atentthat it wiUcent notofcomprenesse the toene incurredthe by oppnels pow:een the Commineion or thetoconepetitss wsth respect

. poestaan of the Ibpartament of Energy aunth runard se eransuas en- sencA Decol 2 eacend rocknent,, the report shen identify- (B) any such charge eneeened pursuant to this pesugraph (1) t} e ofjects of the d=e=== on- sheH be Useeenably related to the :2:ory servsce provsd-(A) the operatson of the arm =i==e enrichneent facilities of ed by 2%e Consmineims and shan fa' y reflect the coat to the the Drportneens ofEnergy: and Connneseeien ofprocsding such service.

< IB) the tweenues e{ the armninas entschment progrum; it) Enrasusnusxr or Asootner sr at t.s.-ne amount of the and charges seeeeeed pursuant to this paragraph shan be eetab.

tt) Aome de reopenee of the Drpartneent of Energy amey antti- lished by rule.

• * ' ' * * ' N' TT112 YHI-OUTER CONTINENTA L SifELF AND RELA TED Sebsitie G-Necleer Regaineery Csemanieelen Anneel Chersee PROGRAMS Sebinese A-Ameendneente se the Outer ContinentalShelf Lands Act SEC ***t SJN*TM

em=rrament of this Act, the NucEnG~Reiklasary Canomission skan l s=.it ta t'e Connneitsee on Energy and Canemerew and the Conmasst. nse subtitle near be ..f a.1 ter con Interiar and I=== tar Affaste of the Hanner of Repreeentarum== Lande Act Aneendments o{1985_to as the " Outer Gmti sec sene. #4rmMAL retxtyea rar ocTra co.vrrvr.vrat. sartr.

end EAe th==rr== o== Environament and 1%blic Ferns ofIAe Senate o ' report e&"=: the fenesbelity and neceneity of eetablishiM e ne Onsser Continental Shelflande Act (43 US C 1331 et seq)is syelen for ehe =~ rand oenectson ofensuel chargee frene per' ameeded in paragrupk (41 of section 3 by deleting the word *"and" sone licensed by the Caseneieneen pursuant to the Asensic Energy Act et the end of su (At deleting the semscolon at the end of cf1954 (4211S C 2011 et set) se fund en or part of the actwitsee subversruph IB innerting in lieu thereof a persod; designating randmetad by the Cannmaneien parement to such Act. Such twport au (B) en subperegraph (Q and inserting aBer subperu-sheH include en anal 3 eis of- , . .

grupk foHosenng neen subparagraph (Bk (1) the essent to ekick the Comms.seson s unetsaq statutory or .

'TBJ the distribution of a portson of the receipts frans the leas-regulatary authernty se eneren and ecHect annual ss- ing of neineral sueources of the outer Cmtinental Shelf adjacent eiudsag the authority o{ the Canna" so eeeeen toH*ei no Seese lands, se provided under section Bigt win provide of-fees pursuant to title V.of the Independent'Uffiere Appropria- facted evental States and localities evith funds sehsch may be tion Act ofl152, is :_'; p to eneste the Cannaisesen to eserse need for the mitigation of adserse economic and environmental and esi!act fees consneeenorm;e with the selse of the bene 62 twn- effecte twlated to the des.elopment ofsuch resources; and" dared ta de liceneer and the cost to the Coneneineson of render- ,,e,,,,,,,,,,,,,,,,,,,,,,,,

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eg) the amoesste currentJr -- = - gnd conected by the Com- gym,g,,gy of theg,O\ ster , Cantinental y,y, Shelf Lands Act (23 USC

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, . . . STATEMENT OF MANAGERS RI. NRC FEES ,

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The House Budget Reconciliation legislation directs the  !

! Nuclear Regulatory Commission to collect user fees mad charges j that, when added to other amounts collected by the Commission, i total one-half of its budget. Under the Independent Offices 1 Appropriation Act of 1982 (31 U.S.C. Sec. 0701), the Commission  ;

I currently assesses fees which are expected to total SGC millica  !

i la FY 1984. The Rouse provision adds additional authority, which i j is expected to result in more than $150 millica per year la 1 1 additional revenues, assuming the current level of NRC expenditures.  !

! Discretion is*Ieft to the NRC to establish the details of the charges la the rulemaking. Iowever, under the House provision, the Commission '

must consider the costs of regulating various olassee of liosasees. l The Seaste Reconciliation legislation contained no such provision. j 4 I i

The conferees agreed to require the NRC to assess and colleet l assual charges from its licensees is as amount that, when added to tther amounts collected by the Commission, shall not exceed 33 per- l l

seat of the Commission's budget for each fiscal year. Assuming the  !

j outreat level of NRC expenditures, this is espected to result la j the sollection of additional fees is sa amount up to approziantely l i

j Sto million per year for each fiscal year. The sharges assessed l pursumat to this authority shall be reasonably related to the regalatory service provided by the Commission, and fairly refleet I the oost to the Commission of providing such service. This is intended  !

by the conferees to establish a standard separate and distiset from the )

Commission's esisting authority under the ladopendent Offices -

l Appropriation Act of 1982 is order to permit the Commission to I more fully recover the costs assoaisted with regulattag various  ;

estegories of Commission licensees. This authority is set intended,  !

J bowever, to authoriae the Commission to recover say oosts that i are not reasonably related to the regulatory servios provided by i the Commission, nor is it intended to authorise the Commission to i recover any costs beyond those that, is the judgment of the Coe- '

mission, fairly reflect the cost to the Commission of providing

. a regulatory servios.

The Commission may assess and colleet annual charges from its i licensees only after the expiration of 48 calendar days, as calculated la accordance with this provistoa, following receipt by the Congress j

j of a report by the Commissica regarding its authority to colleet annual charges prior to the enactment of this provision, including the authority provided pursuant to the Independent Offices Appropriation Act of 1982. This report must be completed by the

Commission and submitted to the Congress within 90 days af ter the essetment of this Act. In addittoa, the Commission must promulgate l

rules, af ter notice and opportunity for public comment, establishing the amoust of the charges to be assessed pursuant to this authority, before any such charges may be assessed. It is the latention of the conferees 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 secount in determintag whether to modify the Commission's current fee schedule for such licensees. '

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