ML19060A124

Public Meeting Fy 2019 Proposed Fee Rule Official Transcript

ML19060A124
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Issue date:	03/13/2019
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1 UNITED STATES OF AMERICA 1 NUCLEAR REGULATORY COMMISSION 2+ + + + +3 MEETING ON FISCAL YEAR 2019 PROPOSED FEE RULE 4+ + + + +5 WEDNESDAY, 6 FEBRUARY 13, 2019 7+ + + + +8 ROCKVILLE, MARYLAND 9+ + + + +10 The meeting convened in the Commissioners' 11 Hearing Room at the Nuclear Regulatory Commission, One 12 White Flint North, 11555 Rockville Pike, at 1:00 p.m., 13 Richard Rivera-Lugo, Facilitator, presiding.

14 15 NRC STAFF PRESENT:

16 RICHARD RIVERA-LUGO, Facilitator 17 MAUREEN WYLIE, Chief Financial Officer 18 ANNA BRADFORD, Deputy Director, DCSE/NRO 19 STEPHANIE COFFIN, Director of Budget and Planning 20 RUSSELL FELTS, Deputy Director, DRA/NRR 21 MICHELE KAPLAN, License Fee Policy Team Leader 22 MIKE KING, Director, FCSE/NMSS 23 JANE MARSHALL, Deputy Director, DSS/NRR 24 JOHN McKIRGAN, Chief, SFLB/NMSS 25 2 BO PHAM, DUWP/NMSS 1 KEVIN WILLIAMS, MSST/NMSS 2 3 ALSO PRESENT:

4 JOHN BUTLER, Nuclear Energy Institute 5 ERIC JEBSEN, Exelon (present via teleconference) 6 ANDREW MAUER, Nuclear Energy Institute 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 A-G-E-N-D-A 1 Opening Remarks.................3 2 Key Features of the NRC FY 2019 Budget.....7 3 2019 Budget for the Operating Reactors Business 4 Line...................25 5 2019 for the New Reactors Business Line.....32 6 Materials and Waste Programs..........40 7 Corporate Support................69 8 Question and Answer...............72 9 FY '19 Proposed Fee Rule............84 10 Nuclear Energy Innovation and Modernization 11Act....................96 12 Question and Answer...............98 13 Closing Remarks................101 14 15 16 17 18 19 20 21 22 23 24 25 4 P R O C E E D I N G S 1 1:00 p.m.2 FACILITATOR RIVERA-LUGO: All right, 3 welcome, everyone. Good afternoon. Thanks for 4 participating in this public meeting.

5 My name is Richard Rivera-Lugo. I will 6 be facilitating this public meeting to discuss the 7 proposed FY '19 Fee Rule and the related budget 8 items associated to this proposed fee rule.

9 My role is to help you to ensure that 10 this meeting is informative, productive and on time.

11 With that in mind this meeting is scheduled for 12 three hours with two Q&A sessions at a scheduled 13 time during the meeting. So please hold your 14 questions for those Q&A sessions.

15 Before we get started I would like to go 16 over some housekeeping items that are necessary.

17 With regards to getting around the building please 18 remember that unescorted access is available for the 19 first floor of this Two White Flint and One White 20 Flint complex.

21 Any other areas you will require an 22 escort to move around.

23 As I mentioned a little bit earlier 24 please remember to sign your name on the sheets 25 5 located at the doors of this commissioner's hearing 1 room.2 And in the event of an emergency if we 3 are asked to evacuate the building please do so in a 4 calmly manner. Go outside the building. Follow the 5 directions from the security personnel and follow 6 the staff outside. We will gather on the extreme 7 end of the plaza in front of the building and we 8 will need to take a head count so it's extremely 9 important that you sign up on the sheets at the door 10 so we can make sure that everybody is outside 11 safely.12 Today's meeting is a category 2 meeting 13 with participation from the NRC staff and external 14 stakeholders. And this meeting will be facilitated 15 to ensure that issues and concerns are presented, 16 understood and considered by the NRC staff.

17 The agenda for the meeting will be 18 discussed shortly by Maureen Wylie. And we invite 19 your comments and questions at the designated points 20 during the meeting. We will cue you when it's time 21 for those Q&A sessions.

22 For people in the room we ask that you 23 please turn off or mute all electronic devices. And 24 if you must answer a phone call please do so outside 25 6 to avoid any disruptions.

1 We ask that you allow the speakers to 2 present their information and hold any comments or 3 questions until the designated Q&A sessions, and 4 avoid any side conversations that may distract the 5 speakers or the audience listening to the meeting.

6 If you have any questions please use the 7 microphones located in both ends in the front of the 8 room. Speak clearly on the microphone and always 9 state your name and affiliation to make sure that we 10 have the correct record for this meeting.

11 The meeting will be transmitted via 12 webcast and the presentation is posted in the NRC 13 public website.

14 If you're participating remotely we 15 strongly encourage that you mute your phones and 16 computers. During the Q&A sessions if you have a 17 question that you would like to ask any of the 18 presenters please dial *1 and record your name and 19 our operator will facilitate the questions from the 20 phone.21 Any follow-up questions will be 22 addressed after the meeting and I will provide 23 information on how to submit those questions to the 24 participants so you can get a follow-up from them.

25 7 For the NRC staff in the audience I will 1 like to remind you that obviously our guests from 2 the industry and the public are here to participate 3 in this meeting. They have the priority when it 4 comes to questions and comments to the NRC staff.

5 So unless you find it imperative to have 6 any comments on the public record we ask that you 7 hold your comments or questions until the end of the 8 Q&A sessions.

9 With that I would like to turn it over 10 to Maureen Wylie, our chief financial officer.

11 MS. WYLIE: Thank you very much. It's 12 great to have our annual all fees, all the time 13 meeting. Thanks very much.

14 I'm very excited about presenting our 15 2019 proposed fee rule to our stakeholders. And I 16 hope to enhance our dialogue as we have over time 17 through meetings like this one.

18 I'm very happy to report that we 19 published the 2019 fee rule on the 31st of January, 20 only two days behind our original planned 21 publication date. We were impaired from the Federal 22 Register -- thank you, I wanted to say record, I 23 knew that was not right -- by the government 24 shutdown.

25 8 Unfortunately we were not able to make 1 an emergency justification for publishing the fee 2 rule. I do believe that this is the earliest we 3 have ever published the fee rule in any case so I'm 4 pretty excited about that.

5 The 2019 professional hourly rate will 6 be increasing this year from $275 to $278 due to a 7 decrease in the number of mission-related FTEs 8 primarily due to standardization and centralization 9 of some mission support functions and the transition 10 of Wyoming to a agreement state status for uranium 11 recovery.12 Michele will talk a little bit about 13 that more later.

14 Further, some of our flat license fees 15 have also increased. Some as usual do decrease 16 mostly as related to the professional hourly rate 17 but also because we do a biennial review of fees as 18 required by the administration.

19 So, you will continue to see that sort 20 of biennial adjustment in materials fees.

21 For annual fees they have increased for 22 some licensees and decreased for others. We're 23 going to go into more depth on that later in the 24 meeting.25 9 Could we have the agenda slide? All 1 right, well here we are.

2 As we have in some other years we're 3 going to do a comprehensive review of the FY '19 4 congressional budget justification.

5 And so my fellow panelists are Jane 6 Marshall who is the deputy director of the Division 7 of Safety Systems, Office of New Reactor Regulation, 8 Russell Felts, deputy director of the Division of 9 Risk Assessment. They're both from NRR.

10 Anna Bradford, the deputy director of 11 the Division of Licensing, Siting and Environmental 12 Analysis, Office of New Reactors. They'll be 13 talking about the business lines that make up the 14 operating reactor fee class.

15 When their presentation is finished we 16 will do a little bit of re-seating -- excuse me, 17 when Mike's done. Mike King is our new director of 18 the Division of Fuel Cycle Safety, Safeguards and 19 Environmental Review in the Office of Nuclear 20 Materials Safety and Safeguards.

21 When he's done we'll do some shifting of 22 the panelists so we'll all be able to see you and at 23 that point we'll hear from Kevin Williams, the 24 deputy director of the Division of Materials, 25 10 Safety, Security, State and Tribal Programs in NMSS.

1 John McKirgan will present on the budget 2 for the spent fuels business line and he's the chief 3 of that branch in NMSS.

4 Bo Pham is the deputy director of the 5 Division of Decommissioning, Uranium Recovery and 6 Waste Programs in NMSS.

7 Stephanie Coffin, the budget director 8 here. She will talk about corporate support 9 primarily.

10 Michele Kaplan who is the lead for our 11 license fee policy team will talk about the process 12 for developing fees and our success in fees 13 transformation.

14 All right, so I'm going to talk in 15 general terms about the budget and fees for '19. So 16 let's go to the next slide, please.

17 And honesty compels me to say though 18 most of you probably don't need the basics on fees, 19 but we're going to give you a quick overview anyway.

20 So, the Omnibus Budget Reconciliation 21 Act of 1990, also called OBRA '90 as adjusted 22 requires that we collect approximately 90 percent of 23 our current year's appropriation in that year.

24 As you're well aware we conduct a major 25 11 rulemaking throughout the year including data 1 gathering, preparing calculations, updating the rule 2 itself, and responding to public comments.

3 We have two parts of 10 CFR that cover 4 the collection of our fees. Part 170 which is fees 5 for service at an hourly rate and Part 171 which are 6 annual fees.

7 On January 14 of 2019 the President 8 signed the Nuclear Energy Innovation and 9 Modernization Act, or NEIMA. He signed it into law.

10 The act includes provisions affecting 11 budget formulation, creating a revised framework for 12 fee recovery, and requires the agency to conduct a 13 number of reports associated with advanced reactor 14 activities and some others.

15 The act specifies three objectives to 16 its purpose, to provide a revised framework for fee 17 recovery, to ensure the availability of resources to 18 meet industry needs without burdening existing 19 licensees unfairly for an accurate workload 20 projections or premature reactor closures.

21 Number two is to support the development 22 of expertise in regulatory infrastructure necessary 23 to support the development and commercialization of 24 advanced reactors.

25 12 And third, to foster a more efficient 1 regulation of uranium recovery. Stephanie will have 2 more on that later.

3 It's important to recognize that while 4 we are reacting to this rule it won't actually 5 become a requirement for us until the FY '21 fee 6 rule. But nonetheless we'll talk about it a little 7 bit later in the program.

8 All right, now my favorite part where I 9 talk to you about out of scope comments. Sometimes 10 we receive comments that are out of scope for the 11 fee rule.12 Over the last few years we notice and 13 appreciate that there's been a large decrease in the 14 number of out of scope comments. I hope that's 15 because of the outreach and dialogue that we conduct 16 with you over the course of a year and over the 17 years that we've worked on this together.

18 However, just to focus this these 19 comments that are typically ruled to be out of scope 20 are those that are not on the methodology for 21 calculating fees, changes to fee regulation, or the 22 schedules themselves.

23 We typically continue to hear about 24 needed efficiencies to achieve our mission goals, 25 13 changes in our overall regulatory practices such as 1 common prioritization of rulemaking, cumulative 2 effects of regulation, and risk-informed 3 performance-based licensing.

4 Even though this meeting on fees is not 5 the proper venue for those questions and concerns we 6 really do want to hear them. And we do urge you to 7 seek out the appropriate venue so that we can 8 address those concerns directly.

9 In closing, I do want just to emphasize 10 that we are continually evaluating how we approach 11 our fee-setting processes. And we are looking for 12 ways that we can enhance transparency, equitability 13 and timeliness.

14 Michele is going to go over our 15 successes in that area to date after the first 16 break.17 As always we welcome your questions and 18 your formal comments, and we look forward to a 19 continued dialogue with you, our stakeholders.

20 Again, thank you for participating and 21 let's go to the next slide.

22 Our new appropriation. So for the first 23 time since 1997 we have our appropriation before the 24 beginning of the fiscal year.

25 14 Our proposed rule is based on the Energy 1 and Water, Legislative Branch, and Military 2 Construction and Veterans Affairs Appropriation Act 3 of 2019 enacted on the 21st of September 2018.

4 Because budgets and fees are linked we 5 will be providing to you an overview of the budget 6 related to that appropriation so that you can 7 further understand the appropriate relationship 8 between the fee schedules and that budget.

9 The act appropriated approximately $911 10 million to us which is a decrease of approximately 11$11 million from 2018.

12 The amount does not include the use of 13 carryover since we don't further charge fees on 14 carryover. Once we've charged you fees we only do 15 it that one time.

16 Let me explain what we mean by 17 carryover. The term "carryover" is used to describe 18 funds that were appropriated but not obligated from 19 a prior fiscal year, or were de-obligated because 20 the funds are no longer needed. Say a contract is 21 closed and the work has all been achieved. If there 22 are resources left on the contract we de-obligate 23 those resources.

24 Sometimes because it takes us usually 25 15 about a two-year period to formulate, receive an 1 appropriation for and execute our budget there's 2 often a change in the workload between the time that 3 we do that and the time that we actually bill you 4 for fees.

5 So there are often changes, and if we 6 don't need the money we don't spend it and we carry 7 it over and use it in other years.

8 In Fiscal Year '19 our appropriation was 9 reduced by our congressional appropriations 10 subcommittee to use $20 million in prior year 11 unobligated balances.

12 That follows a pattern that we've seen 13 over the last several years. In 2018 the amount we 14 were directed to use was $15 million.

15 So, on to how we develop the fee 16 schedule. We begin by excluding certain amounts 17 from fee recovery. And those areas are 18 international activities, advanced reactor 19 technologies, regulatory infrastructure, waste 20 incidental to reprocessing activities, the inspector 21 general's services for the Defense Nuclear 22 Frequencies Safety Board and generic homeland 23 security activities.

24 In Fiscal Year '19 the total for that 25 16 group is $43.4 million, a slight decrease from last 1 year.2 For 2019 after deducting these excluded 3 items and making some adjustments for when bills 4 which we have issued in previous years will actually 5 be paid we propose to collect approximately $781.9 6 million in fees, a decrease of $7.4 million from our 7 2018 collection target. Let's go to the next slide.

8 So we're going to talk a little bit next 9 about the professional hourly rate. And these 10 materials are available both on the web and in the 11 room. So this is a little bit hard to read.

12 So we have table 2 on the screen right 13 now from the fee rule which has the information 14 associated with our professional hourly rate 15 calculation.

16 This is germane specifically to our Part 17 170 fees for service billings.

18 In the table the first three line items 19 are those types of resources that are used to 20 critical that rate. Mission direct program salaries 21 and benefits, mission indirect program support and 22 agency support.

23 Just to refresh you, mission direct 24 program salaries and benefits resources fund the 25 17 core work activities committed to fulfilling the 1 agency's mission of protecting the public health, 2 safety and promoting the common defense and security 3 as well as protecting the environment.

4 These resources include the primary work 5 activities associated within the major program 6 business lines, operating reactors, new reactors, 7 fuel facilities, nuclear material users, 8 decommissioning and low level waste, and spent fuel 9 storage and transportation.

10 Mission indirect program resources fund 11 activities that support -- not a great leap -- those 12 activities.

13 These resources include supervisory and 14 non-supervisory support including administrative 15 assistance and mission travel and training.

16 Agency support is the combination of the 17 resources for corporate support and the Office of 18 the Inspector General.

19 These are the types of resources 20 associated with offices such as the chief 21 information officer, financial management under the 22 chief financial officer, human capital services, 23 administrative support. Standard across the 24 government, relatively standard with the private 25 18 sector as well.

1 Overall the budgeted resources to be 2 included in the professional hourly rate calculation 3 decreased by $9 million, or about 1.2 percent.

4 However, the mission direct program 5 salaries and benefits increased this year by $9 6 million or 2.8. I'll explain why next.

7 The FTE reductions that we took in the 8 2019 congressional budget request in response to the 9 decreased projected workload were not sufficient to 10 overcome the increases in salaries and benefits.

11 As in other federal agencies the NRC's 12 workforce is aging and associate benefit costs have 13 increased accordingly.

14 Primarily those concerns are associated 15 with healthcare costs and pension benefits.

16 This contributes to the rising cost of 17 salaries and benefits that we've experienced in the 18 last several years. Next slide, please.

19 Next I'd like to turn to our Part 171 or 20 annual fee billings generally. Those fees decreased 21 due to decreased budgets based on workload 22 reductions.

23 However, there were increases for some 24 licensees and I'd like to talk about the reasons 25 19 associated with those increases.

1 While budgetary resources remained 2 relatively stable from '18 to '19 particularly for 3 operating power reactors the annual fee increased 4 because our estimated Part 170 billings declined 5 from those that we had in 2018. So year over year 6 there was less Part 170 estimated in the proposed 7 fee rule.8 There are certain obvious drivers 9 associated with that. Specifically the shutdown of 10 the Oyster Creek Nuclear Generating Station at the 11 end of 2018 means that there were no licensing 12 activities included in the budget in '19.

13 Since there is the planned shutdown of 14 both Pilgrim and Three Mile Island we expect that 15 there will be less licensing activity, only the bare 16 minimum for those plants during Fiscal Year '19.

17 Within the new reactors area we have 18 completed the APR-1400 design certification for 19 Korea Hydro and Nuclear Power Company.

20 And then as a part of our fees 21 transformation and as a part of our dialogue with 22 stakeholders we have changed our methodology 23 associated with the overhead associated with program 24 managers and resident inspectors.

25 20 Instead of a 6 percent surcharge 1 effectively we have changed to a new methodology 2 where we're going to collect actual hourly costs.

3 Since we have just begun collecting that 4 there is a large delta between what we collected in 5'19 and the hourly efforts that we've collected so 6 far.7 What you see in the proposed rule in 8 this area is the maximum that you would see 9 associated with that. And as we move toward the 10 final rule there will be additional adjustments when 11 we get more actual data collected in those areas.

12 And then as is well known to everyone 13 the fee rule now includes 98 reactors instead of 99.

14 So that reduces the number of reactors across which 15 to spread those budgetary resources.

16 Let me just perhaps restate the obvious, 17 but we are an intellectual capital organization. We 18 provide engineering and scientific services through 19 government employees which are characterized in the 20 budget as full-time equivalents.

21 We do use some contract support but that 22 is perhaps one-third of our budget roughly, rather 23 than two-thirds associated with people.

24 So, some changes associated with 25 21 reductions don't always result in those total costs 1 being reduced as well. But we still need to 2 maintain the number of people with the skills that 3 we require in order to get the work done.

4 We've talked about increasing costs.

5 One of the challenges that we have is that we are 6 not assessing new workers. That has been happening 7 across the other federal agency. But over the last 8 almost five years we've been conducting efficiency 9 seeking associated with our Project Aim activities 10 and as a significant portion of that we have really 11 reduced the number of people that we hire from the 12 outside. So that's having a significant adjustment 13 on our costs associated with operating reactors.

14 For materials users some licensees saw 15 increases due to a realignment of resources. So, in 16 previous years we had certain resources that were 17 associated with the oversight of agreement states 18 that we had in fee relief.

19 We conducted a significant review of 20 that program and we determined that some of the 21 resources that we had in fee relief were more 22 accurately budgeted outside of fee relief. So 23 that's one of the reasons you'll see an adjustment.

24 And then for DOE transportation 25 22 licensees the increase is mainly due to an 1 additional certificate of compliance from 21 in 2018 2 to 22 in 2019.

3 You'll hear a little more detail about 4 these changes later on in the presentation. Next 5 slide.6 Not to belabor the point, but although 7 there isn't a 1 to 1 correspondence between our 8 budget structure and fees there is a very strong 9 correlation.

10 And so rather than cover this 11 information in each section we wanted to start off 12 with a description of how our budget is developed in 13 terms of its structure to be -- as a baseline for 14 all of the presentations you'll hear next.

15 So, this is a very high-level schematic 16 of our budget structure. We have eight business 17 lines. Two of those are within the reactor safety 18 program, operating reactors and new reactors. Five 19 are within the materials and waste safety program, 20 and one is corporate support which includes all of 21 those agency-wide administrative activities.

22 You'll also see that the Office of the 23 Inspector General, the budget for that office is 24 distributed proportionally. We don't treat them as 25 23 a separate business line.

1 Also, corporate support is also 2 distributed proportionally across the business lines 3 when we transition to fee classes.

4 The Integrated University Program which 5 is a program that we don't request but we've 6 received for many years now, this program is 7 embedded in our fee relief category and so no fee is 8 charged on that. Next slide, please.

9 Within each of the business lines we 10 have product lines. This slide shows an example of 11 the operating reactors business line.

12 Here, things are grouped under mission 13 direct and mission indirect which I've mentioned 14 previously and is part of how we do the calculation 15 for the hourly rate.

16 We also have resources in product lines 17 for which you do not pay fees. In this instance 18 that would be international activities and generic 19 homeland security activities.

20 Generic homeland security activities are 21 just that. These are activities that we have to 22 conduct as a part of our membership in the federal 23 family, but don't apply to any specific reactor.

24 That's why they are not charged to fees.

25 24 The titles are fairly self-explanatory.

1 I don't think that there's anything that's not 2 obvious here.

3 But if you do have questions I'm happy 4 to take them or Stephanie during our first question 5 and answer session. Next slide, please.

6 Okay, so numbers may not add due to 7 rounding which always happens to me when we do these 8 round number percentage charts. But this shows how 9 our business lines contribute to the total budget of 10 the agency. And this excludes the Office of the 11 Inspector General.

12 Operating reactors and corporate support 13 business lines, blue for operating reactors and 14 green for corporate support, are the two largest 15 percentage segments of our budget.

16 You'll be hearing about all of our 17 business lines during our presentation.

18 So let me transition to why we're going 19 through the process of talking about each of the 20 business lines.

21 Our purpose here is twofold. We want to 22 be as transparent as we can in our budget 23 development process so that you'll understand how we 24 go about calculating our budgetary requirements.

25 25 And we would like to share where you 1 could help us through greater input into our 2 workload setting process.

3 As I mentioned earlier it takes us about 4 two years to get through the process so recognizing 5 that any information that we collect has some risk 6 associated with it of not being accurate.

7 But we are working across our business 8 lines and within my office to try to continue to 9 enhance our budget estimating capability.

10 It's obvious to us that we need you to 11 be our partner in this regard. And because you have 12 a much better and more direct understanding of where 13 your organization or your companies will be going in 14 the future.

15 All right, with that plea which you will 16 hear echoes of through our presentation I'd like to 17 turn the discussion over to Jane Marshall and 18 Russell Felts who will be discussing the 2019 budget 19 for the operating reactors business line. Jane?

20 Oh, Russell, okay.

21 MR. FELTS: Thanks, Maureen, and good 22 afternoon everyone. I'm Russ Felts and my colleague 23 Jane Marshall and I will be presenting to you a 24 review of the operating reactors business line.

25 26 We'll provide information on how the 1 budget changed from Fiscal Year '18 to '19 and how 2 that impacted the reactor fee class.

3 We also want to share with you how we 4 developed our budgets in general and in particular 5 how you can help us improve by providing your plans 6 for specific engagements with us. Next slide, 7 please.8 MR. MARSHALL: The operating reactors 9 business line encompasses the regulation of 10 operating civilian nuclear power reactors, research 11 and test reactors and other non-power production 12 utilization facilities such as medical isotope 13 production facilities.

14 The table on this slide shows the 10 15 product lines within the operating reactors business 16 line which Maureen described in her introduction.

17 The operating reactors business line is 18 composed of mission direct resources, mission 19 indirect resources and some resources which are 20 excluded from the fee base.

21 We've included the percentages of our 22 business line budget for each of these groupings.

23 As we would expect, the majority of the business 24 line resources are mission direct and they fund the 25 27 NRC's core activities including event response, 1 licensing, oversight, rulemaking and research.

2 Mission indirect resources support the 3 execution of our core activities and include things 4 such as supervisors, administrative staff and 5 travel.6 I would like to note that while generic 7 homeland security and international activities are 8 important to the operating reactors business line 9 these resources are excluded from the fee base which 10 means that these items are not part of the 90 11 percent that the NRC recovers in fees.

12 So we aren't planning on speaking to 13 those particular areas. Next slide.

14 The mission direct product lines. The 15 four shown on this slide received the most 16 resources. Some of the specific activities within 17 each product line are shown.

18 We ensure the safety and security of 19 operating nuclear power reactors and research and 20 test reactors by putting regulatory requirements in 21 place mostly through rulemaking.

22 Licensing facilities to operate in 23 accordance with those regulations and then through 24 inspection overseeing facility operation in 25 28 accordance with the requirements.

1 We've seen an increase in applications 2 from licensees to implement risk-informed 3 operational programs which entails some front end 4 costs to make these changes to the licenses but 5 provide licensees increased operational flexibility 6 and should facilitate fewer licensing actions in the 7 future.8 For example, through implementation of a 9 risk-informed completion time program licensees may 10 risk-inform allowed outage times for some plant 11 equipment, possibly obviating the need to come into 12 the NRC with a one-time emergent license amendment 13 request if they experience an equipment outage that 14 extends past the existing outage time limits in 15 their license.

16 Another area of increasing work is in 17 subsequent license renewal which is the extension of 18 a plant's license to operate.

19 Oversight activities comprise the 20 largest portion of our budget. This includes onsite 21 resident inspectors and safety and security 22 inspections conducted from our four regional offices 23 and a few from headquarters. It also includes 24 allegations and event evaluation. Next slide, 25 29 please.1 MR. MARSHALL: Workload forecasting is 2 our first step when developing the operating 3 reactors business line budget. It's primarily 4 influenced by the number and type of licensing 5 action requests we anticipate which affect both 6 licensing and inspection workload.

7 As an example a subsequent license 8 renewal application requires multiple FTE at the 9 headquarters for review but also some operating 10 reactor resources in the regional offices to perform 11 the inspections that follow the review.

12 Most of our information on these 13 activities comes from the letters of intent sent to 14 us by licensees, but we also adjust our budget 15 forecast downward when we receive notifications of 16 planned plant closures.

17 Finally, we have our project managers 18 for each facility talk with their facility to get an 19 idea of what types and number of amendment requests 20 they plan to submit for the budget year that's 21 currently under development.

22 At the moment we are formulating our FY 23 2021 budget so calls will be made soon to ask for 24 plans for 2021.

25 30 The better information we can get during 1 budget development, the closer we can get our budget 2 estimate to actual needs. This keeps our staffing 3 levels on par with the workload and minimizes delays 4 in reviewing license amendment requests.

5 During budget development we also 6 consider the type and complexity of licensing 7 actions we are expecting. For some actions we may 8 need to have an engineering safety review and an 9 environmental review so knowing that action will be 10 requested allows us to ensure that we have adequate 11 resources for both of those activities.

12 The cost of completing our license 13 reviews varies depending on the level of complexity 14 with the licensing action. As an example, a 15 subsequent license renewal application takes 16 considerably more staff effort than a routine 17 license amendment request to make an administrative 18 change to a license.

19 Some other budget drivers that we 20 consider during the budget development include 21 potassium iodide replenishment schedules for 22 emergency preparedness in the states that have 23 requested potassium iodide.

24 New work such as the work in accident-25 31 tolerant fuels. We're currently reviewing technical 1 documents that are needed to support the first 2 planned batch loading and other budget drivers will 3 decrease the budget need such as plant closures and 4 completion of the Fukushima work.

5 We also continuously strive to be more 6 efficient which leads to lower budget needs as well.

7 We do consider historical information 8 when developing our budget and we review the level 9 of resources associated with past similar efforts 10 and past resource utilization. Next slide, please.

11 MR. FELTS: This slide shows how the 12 enacted budget change for the business line for 13 Fiscal Year '18 to '19. This is the starting point 14 for calculating fees.

15 The operating reactors budget decreased 16 by 18 FTE and $6 million in contract support and 17 travel. The $4.9 million total increase you see on 18 the slide is due to a $10.9 million increase in 19 salaries and benefits as Maureen mentioned.

20 A few examples on the slide. Under 21 event response you see an increase which was largely 22 driven by an increase in potassium iodide for nine 23 states, something Jane also touched on.

24 Under licensing you'll see an increase 25 32 which is largely driven by a few factors. One was 1 an increase in risk-informed licensing activities 2 and license amendment requests.

3 Another was an increase in budgeting for 4 subsequent license renewal, and also an increase for 5 the development of the ATF licensing process.

6 Also in that line is a pretty 7 substantial decrease for Fukushima work.

8 In oversight there was a pretty 9 substantial increase due to the higher salaries and 10 benefits rate.

11 We also had increases in research 12 largely due to research activities funded through 13 the use of -- for ATF, sorry.

14 Before we talk about how this budget 15 translates into annual fees I'd like to turn the 16 presentation over to Anna Bradford to share similar 17 information for the new reactors business line.

18 Both of these business lines feed into the operating 19 power reactor fee class so it's important to 20 understand how both have changed between Fiscal Year 21'18 and '19 in order to better understand the change 22 to the annual fee. Next slide, please.

23 MS. BRADFORD: Thanks, Russ. So as 24 Maureen stated my name is Anna Bradford. I'm the 25 33 division director of the Division of Licensing, 1 Siting and Environmental Analysis within the Office 2 of New Reactors. We can go to the next slide, 3 please.4 So within the new reactors business line 5 we budget against these product lines. Obviously 6 this table looks similar to the one that you just 7 saw from NRR with a few changes.

8 Our total budget within the new reactor 9 business line is about $94 million which equates to 10 386 FTE and about $21 million in contract resources.

11 You can see the percentage there for 12 mission direct is 68 percent which is about $64 13 million. Mission indirect is 20 percent and then 14 resources that are excluded from the fee base which 15 is 12 percent for us which is largely comprised of 16 the advanced reactor work that we're doing as well 17 as international activities. So next slide, please.

18 So this slide shows some activities that 19 the business line is working on in FY '19 20 specifically.

21 Under licensing we're working on the 22 NuScale Design Certification Review. We hope to 23 finish phase 2 of that review in April which would 24 mean completion of the -- I'll call it the first 25 34 draft of our safety evaluation report.

1 We're also working on the Clinch River 2 Early Site Permit which we hope to complete in FY 3'19 except for some hearing activities.

4 We're working on the ABWR design 5 certification renewal as well as the APWR design 6 certification which have both been budgeted at a low 7 rate while we worked on those higher priority items.

8 We've also been working on Vogtle 9 license amendments as they are doing construction at 10 their site. They find things that they need to 11 change from the design certification and they submit 12 license amendments and we review and disposition 13 those.14 In terms of oversight one of our larger 15 activities is construction oversight. Again that's 16 for the Vogtle construction site in Georgia.

17 We have resident inspectors down there 18 as well as some resources in Region 2 that's 19 providing that construction oversight.

20 And then as I mentioned advanced 21 reactors, we're doing a lot of work to prepare and 22 to work with industry specifically for non-light 23 water reactor activities. Next slide, please.

24 So we develop our budget similar to what 25 35 you heard from the operating reactor business line.

1 In terms of how we forecast our workload we depend 2 on letters of intent from proposed applicants or 3 potential applicants I should say going out several 4 years. We try to look out five years in advance and 5 we request that applicants let us know what their 6 plans are within that five-year window.

7 We also are in frequent communications 8 with industry and with potential applicants as well 9 as current licensees such as Vogtle to understand 10 what they're planning for the upcoming years that 11 might end up resulting in workload changes for our 12 staff.13 We also again as the operating reactor 14 business line go back and look at historical data.

15 How long did it typically take us to review a design 16 certification or COL so that we can then use it to 17 plan for future activities?

18 So the previous slide I talked about 19 some specific activities we're doing in FY '19 in 20 the new reactor business line.

21 This shows some generic activities that 22 we look at in general when we're planning our 23 budget. So we plan for design certifications, for 24 combined licenses, early site permits. And this is 25 36 for light water reactors, non-light water reactors 1 and small modular reactors.

2 Obviously we looked at the number and 3 the complexity of the licensing actions that the 4 industry tells us they're planning for.

5 We think about whether we need pre-6 application activities which are basically 7 interactions with the applicant before they even 8 submit the application to help prepare them and us 9 for the work.

10 We also have some rulemaking activities.

11 One of the main ones right now is a revision to Part 12 52 which is really kind of the backbone of the whole 13 new reactor licensing process. We're looking to 14 update it and make some changes based on lessons 15 learned.16 We also have research needs that we work 17 with the Office of Research on. We develop guidance 18 that supports these licensing activities and then as 19 I mentioned we have construction oversight. So next 20 slide, please.

21 This slide shows how the new reactor 22 business line enacted budget changed from FY '18 to 23 FY 2019.24 Overall there's a decrease of $4.5 25 37 million in our enacted budget compared with FY '18.

1 The key drivers for these reductions are the 2 completion as Maureen mentioned of the APR-1400 3 design certification which was a large effort for us 4 but which we did complete in FY '18.

5 We also completed a very large revision 6 of Reg Guide 1.206 which provides guidance to 7 applicants. And we've completed that.

8 The increase in the research product 9 line is to support the infrastructure development 10 for the advanced reactors which are again the non-11 light water reactors.

12 And as I mentioned the primary increases 13 in rulemaking are to support the part 5052 but also 14 we do design certification rulemakings for designs 15 when we've completed the safety review.

16 So right now, for example, we're working 17 on the rulemaking for the APR-1400 design 18 certification.

19 So now Stephanie will discuss how the 20 two business lines translate into fees.

21 MS. COFFIN: Thank you, Anna. So I am 22 jumping in here because there are factors driving 23 the increase in fees that's really beyond the budget 24 and so I wanted to lay those out for you.

25 38 Maureen touched on the vast majority of 1 them. Next slide, please, Aracelis.

2 So, the proposed annual fee is 3 increasing by 8.4 percent. So the total budgeted 4 resources essentially stayed flat from '18 to '19.

5 There was an increase in the overall for the 6 operating reactors business line. There was a 7 decrease, an offsetting decrease in the new reactors 8 business line so overall it's flat.

9 So you might ask yourself well, why 10 isn't my fee staying flat and there's a couple of 11 reasons for that.

12 One is that we have fewer number of 13 reactors paying into the fee class because Oyster 14 Creek moved away from this fee class in Fiscal Year 15'19.16 The other detail that plays into this is 17 in '18 the low-level waste surcharge and the fee 18 relief which was a credit in '18 turned into a debit 19 in '19. And so you're paying portions of that as 20 well in '19 which is a change in trajectory from 21'18.22 But really the biggest factor that's 23 playing into the increase in the annual fees is the 24 Part 170 decrease that Maureen talked about.

25 39 The removal of the project manager 1 resident inspector 6 percent surcharge. We did that 2 deliberately and based on feedback from our 3 stakeholders that that practice wasn't as 4 transparent as they would like and we agreed. And 5 we made that change and this is one of the impacts 6 of that change.

7 Oyster Creek in shutdown, now their 8 license amendments aren't being processed through 9 the operating reactors business line.

10 The completion of the APR-1400 design 11 certification. That was a big Part 170 billings 12 operation but that's completed and so that's 13 reduced.14 And then any plant that we see posting 15 into shutdown, they generally as Maureen alluded to, 16 they start being very selective on the license 17 amendments that they need to pursue and just start 18 paying a lot of attention to that. And so we 19 generally expect reduced licensing actions from 20 those sorts of plants.

21 And then staff efficiencies which 22 generally everybody is very happy about staff 23 efficiencies, but if we get the work done faster, 24 smarter, better that does mean that your 170 25 40 billings are decreased and so there's going to be an 1 offset that you're going to see in your annual fees 2 as a result of that.

3 So, I am going to now -- we're going to 4 do a switch and move away from our reactor programs 5 to our materials programs. And I'll give you guys -

6- you guys want to have a chance. And so we're 7 going to get the whole materials and waste team up 8 here now.9 And first up is Mike King to my right 10 here.11 MR. KING: Good afternoon, everyone.

12 I'm Mike King. I'm the new division director, 13 Division of Fuel Cycle Safety, Safeguards and 14 Environmental Review. And I'll be walking you 15 through the Fiscal Year '19 budget and the 16 associated reduction in annual fees and a little bit 17 what's behind all that. Next slide, please.

18 You've seen this table multiple times 19 now so I'll try not to be too repetitive. But this 20 does show the nine product lines within the fuel 21 facilities business line which is composed of 22 mission direct, indirect and resources that are 23 excluded from the fee base.

24 In the '19 budget the majority of the 96 25 41 FTE of overall business lines in the fuel facility 1 area fund NRC core activities.

2 The mission indirect resources encompass 3 approximately 22 percent of those activities. And 4 while generic homeland security and international 5 activities are excluded from the fee base. Next 6 slide.7 The fuel facilities business line is 8 responsible for ensuring the safety and security of 9 fuel cycle facilities and greater than critical mass 10 facilities.

11 The business line leads the licensing 12 and oversight activities for these facilities as 13 well as the NRC's implementation of domestic 14 material control and accounting program and the 15 international safeguards program.

16 The fuel facilities business line also 17 provides licensing and oversight support for a 18 number of additional licensees that possess greater 19 than critical mass quantities of special nuclear 20 material such as universities and research and test 21 facilities.

22 Additional license activities that we 23 conduct includes the review of license amendments, 24 decommissioning funding plans, emergency plans and 25 42 security plans.

1 Additional oversight activities that we 2 conduct include inspections, force on force 3 exercises, and readiness reviews and collaborations 4 with headquarters and Region 2 in Atlanta.

5 The fuel facilities business line also 6 conducts rulemaking for fuel facilities. Next 7 slide, please.

8 Workload forecasting is the first thing 9 we do when developing the fuel facilities business 10 line budget. It's primarily influenced by the 11 number and type of facilities we anticipate and 12 their status which affect both licensing and 13 inspection workload.

14 We also factor in any information we 15 have regarding anticipated significant licensing 16 actions. For example, any letters of intent that 17 licensees send us regarding upcoming licensing 18 applications help to improve the quality of our 19 budget forecast.

20 So we maintain communications with our 21 stakeholders and encourage them to keep us informed 22 of any significant future licensing activities as 23 early as possible.

24 In developing our budget we also look at 25 43 the type of work that we anticipate will be before 1 us for review. Depending on the type of licensing 2 action we may need to have safety review and an 3 environmental review so we ensure we have the 4 necessary resources to conduct those reviews.

5 The cost of completing our licensing 6 reviews varies depending on the level of complexity 7 and the licensing action that might be before us.

8 For example, a new facility license 9 application or a license renewal are budgeted more 10 resources than a routine license amendment.

11 As far as budgeting for potential 12 hearings associated with licensing actions we budget 13 based on our best estimate of the hearings that we 14 might get based on the nature of the license action 15 we expect.

16 We try to gauge that based on the level 17 of public interest in a particular project.

18 The budgeted resources associated with 19 those hearings are based on a historical review of 20 the level of effort that we've expended supporting 21 similar efforts in the past.

22 The scope and frequency of inspection 23 activity vary by the type of facility. For example, 24 a category 1 facility receives more inspection than 25 44 a category 3 facility.

1 Inspection resources are budgeted 2 primarily based on the number and types of operating 3 facilities which we will see during the inspection 4 year. Next slide, please.

5 This slide shows how the enacted budget 6 changed for fuel facilities business line from '18 7 to '19. Overall there's a decrease of $1.9 million 8 which includes a reduction of 18 FTE in the '19 fuel 9 facilities enacted budget compared to '18. An 10 overall reduction of 7.8 percent.

11 There were significant reductions under 12 licensing and oversight product lines primarily due 13 to aligning resources with a smaller projected 14 workload.15 Resources decreased primarily as a 16 result of an expected decline in work associated 17 with license renewals, a decrease in the number and 18 complexity of anticipated license amendments, and 19 efficiencies gained as a result of changes to the 20 fuel facilities inspection program and workload 21 projections.

22 In addition, there was a reduction under 23 the rulemaking product line due to anticipated 24 decrease in workload associated with the Part 74 25 45 rulemaking and the proposed cybersecurity rule for 1 fuel facilities. Next slide, please.

2 In Fiscal Year '19 if you've read the 3 proposed fuel rule you'll see that the annual fee is 4 anticipated to decrease on average approximately 7.4 5 percent across the fuel facilities fee class for the 6 seven operating facilities which combined reflects a 7 10.5 percent reduction, overall reduction in 8 collected annual fees.

9 The decrease in annual fees is a result 10 of total budgeted fee class resources decreasing by 11$5.2 million or 15 percent in comparison to Fiscal 12 Year '18.13 A total of 18 FTE were cut from the fuel 14 facilities budget overall which translates to 15 FTE 15 decrease within the fee class.

16 The estimate of Part 170 collections 17 declined $2 million or 21.7 percent as a result of 18 the expected termination of MOX Fuel Fabrication 19 Facility construction authorization and license 20 application and the anticipated completion of 21 Honeywell's license renewal while plant operations 22 are idle.23 Some of the decrease in Part 170 24 collections is offset by increased work for 25 46 Westinghouse associated with emergency preparedness 1 exercise, confirmatory order items and its license 2 renewal.3 As discussed during last year's fee rule 4 public meeting the staff conducted a number of 5 public meetings over the past couple of years where 6 alternative methods for calculating annual fees were 7 explored.8 The staff received mixed feedback as to 9 whether the NRC should continue working on changes 10 to the methodology for calculating fees.

11 As reflected in the '19 fee rule the --

12 or the proposed '19 fee rule the NRC made the 13 decision to continue the existing methodology for 14 calculating annual fees for fuel facilities and 15 continue ongoing efforts to identify potential 16 reductions of budgeted resources.

17 Going forward we're focusing efforts to 18 align the agency's program of work in the fuel 19 facilities area to projected workloads and continue 20 to risk-inform the regulatory framework for these 21 activities.

22 In the coming months we will be sharing 23 opportunities for the public and industry to engage 24 us on our efforts in this area with a goal of 25 47 identifying and realizing additional efficiencies in 1 the licensing and oversight of fuel facilities while 2 maintaining adequate protection consistent with our 3 principles of good regulation.

4 Okay, so now I'll turn over the 5 discussion to nuclear material users business line.

6 MR. WILLIAMS: Thanks, Mike. Good 7 afternoon. My name is Kevin Williams. I'm the 8 deputy director of the Materials Safety, Security, 9 State and Tribal Programs in the Division of -- I 10 said that already, sorry.

11 I will cover the activities and budget 12 in the NMU business line and how these activities 13 impact the fees for materials users fee class.

14 This slide shows the 11 product lines 15 within the NMU business line and which products are 16 mission direct and mission indirect, both of which 17 contribute to the fees that are collected.

18 It is important to note that the nuclear 19 materials users business line is a small portion of 20 the NRC budget, approximately 7 percent.

21 And materials users pay approximately 3 22 percent of the fees recovered by the NRC.

23 As we would expect, excluding the 24 resources that are part of the fee base a large 25 48 portion, specifically 50 percent of the business 1 line resources are mission direct and that 2 represents $30.2 million including 143 FTE and $3.9 3 million in contract support resources.

4 And they fund the NRC's core activities 5 including licensing, oversight, rulemaking, research 6 activities. The largest portion of these mission 7 direct activities are inspection and licensing.

8 I would like to note that while generic 9 homeland security and international activities which 10 comprise approximately 32 percent of our activities 11 are including 29 FTE and $13.9 million in contract 12 support resources which are vitally important to the 13 mission of the business line, these resources are 14 excluded from the fee base which means these items 15 are not part of the 90 percent that the NRC recovers 16 in fees.17 We complete these activities in 18 collaboration with a broad range of partners which 19 are the four NRC regions, the Office of Nuclear 20 Security and Incident Response, the Office of the 21 General Counsel, the Office of Enforcement and the 22 Office of International Programs.

23 Nuclear material users business line 24 activities include licensing, oversight including 25 49 inspection and enforcement, security activities 1 including oversight of source security through 2 inspection and licensing activities such as pre-3 licensing inspections to ensure sources are used for 4 their intended purpose and operation of the 5 integrated source management portfolio which 6 includes the national registry to track radioactive 7 sources of concern.

8 Rulemaking and implementation of state, 9 tribal and federal liaison programs which includes 10 oversight of agreement states and a government 11 communication and coordination and implementation of 12 the tribal policy statement.

13 It is also important to note that 14 agreement state activities are in the fee relief 15 category which means while they are part of our 16 budget the resources associated with oversight of 17 agreement states is not collected through fees.

18 Agreement states are those states which 19 have signed an agreement with the NRC in accordance 20 with Section 274(b) of the Atomic Energy Act of 1954 21 as amended which authorizes the NRC to discontinue 22 and the state to assume regulatory authority over 23 certain materials cited in the Atomic Energy Act.

24 The most recent agreement is with the 25 50 state of Wyoming which was signed on September 25, 1 2018 and became effective on September 30, 2018.

2 The state of Vermont has indicated 3 interest in becoming an agreement state and is 4 undergoing the process of submitting an application 5 to become an agreement state.

6 If the Commission approves this 7 agreement the total number of agreement states would 8 be 39 by Fiscal Year 2020.

9 Some of the major activities in the 10 nuclear materials users business line for Fiscal 11 Year '19 and the changes in our budget in this area 12 include the support and completion of approximately 13 2,000 material licensing actions which include new 14 applications, amendments, renewals of applications 15 and license terminations.

16 While the number of licensing actions 17 has declined slightly over the last few years there 18 was a slight increase in the budget of Fiscal Year 19'19 to support guidance on emerging medical 20 technologies.

21 We also talk about the completion of 22 approximately 900 routine health and safety and 23 security inspections as well as reciprocity and 24 reactor inspections, inspections for certain general 25 51 licenses.1 The number of inspections has remained 2 fairly stable. However, there was a slight decrease 3 in budgeted resources in Fiscal Year '19 to adjust 4 for historical utilization.

5 We also talk about support and 6 coordination for liaison for homeland security 7 regulatory initiatives and the development and 8 implementation of the integrated source management 9 portfolio. And this area remains stable for Fiscal 10 Year '19.11 We talk about rulemaking activities in 12 Fiscal Year '19 such as Part 34 on radiographic 13 operations, Part 30 to address products that contain 14 radioactive material incident to production, and an 15 integrated source security rule or changes to Part 16 37.17 Resources in this area increase in 18 Fiscal Year '19 due to an expected increase in 19 workload associated with the integrated source 20 security rule.

21 We also oversee and support the 22 agreement states' regulation of approximately 17,000 23 specific and 150,000 general licensees, and conduct 24 9 integrated materials performance and evaluation 25 52 program reviews.

1 We also plan to review an agreement 2 state application for the state of Vermont in Fiscal 3 Year '19.4 Resources in this area declined in 5 Fiscal Year '19 due to historical utilization and 6 the completion of the Wyoming agreement state 7 application at the year end of Fiscal Year '18.

8 We're also working to implement the 9 agency's tribal policy statement including outreach, 10 guidance development, staff training on tribal 11 issues and resources in this area are expected to 12 decline in Fiscal Year '19.

13 We talk about how the budget is 14 developed and we look at our workload forecasting.

15 And when we do this in development with the business 16 line itself it is based on the number of materials 17 licensees expected -- we look at the expected number 18 of licensing actions and inspections, taking into 19 account the number of agreement states and any new 20 regulations that may require licensees or 21 inspection.

22 And we communicate with our stakeholders 23 and we look at an analysis of historical data based 24 on utilization and expenditures such as reviewing 25 53 the level of resources associated with past efforts 1 and reviewing historical resource utilization.

2 We also evaluate the complexity and type 3 of work we expect to be working on and any trends we 4 anticipate that will increase or decrease the 5 workload and accomplishing our safety, security and 6 outreach goals.

7 While the number of licensees has 8 remained fairly stable with a slight measured 9 decrease over time the area where we need additional 10 information from our stakeholders is in the area of 11 new technologies, specifically medical or industrial 12 type technologies.

13 So this slide shows how the enacted 14 budget changed for nuclear materials from Fiscal 15 Year 2018 to 2019.

16 Overall in Fiscal Year 2019 there is a 17 decrease of approximately $1.3 million including a 18 reduction of eight FTE in our enacted budget 19 compared with Fiscal Year 2018.

20 Resources decrease within international 21 activities, state and tribal and federal programs 22 product lines to align with historical resource 23 utilization.

24 Resources in the rulemaking product line 25 54 increased as a result of increase support for the 1 integrated source security rulemaking. Resources 2 decreased within the oversight and mission support 3 product lines largely as a result as Maureen talked, 4 re-basing the line of agency resources to align with 5 utilization.

6 Resources associated with licensing 7 increased slightly based on a realignment of 8 resources and to support guidance development for 9 emerging medical technologies.

10 In the proposed Fiscal Year 2019 fee 11 rule you will see that compared to Fiscal Year 2018 12 the Fiscal Year 2019 annual fees has decreased for 13 some and increased for others.

14 Annual fees are assessed from all 15 licensees. The cost which comprise of budget not 16 collected through hourly or the flat fees is divided 17 by all of the fee categories. A matrix is used to 18 assign portions of annual fees fairly and equitably 19 through the vastly different fee categories based on 20 the level of effort needed for licensing and 21 oversight of a particular category.

22 The NRC proposed to both increase and 23 decrease annual fees for licensees in this fee class 24 in Fiscal Year 2019 due to the results of the 25 55 biennial review of fees and a reallocation of budget 1 resources from the fee relief category to the fee 2 class.3 The majority of this reallocation was 4 from agreement states which is a fee relief category 5 to licensing which is a product for which we do 6 collect fees.

7 In taking this action we are ensuring 8 that fees are fair and equitable amongst all of our 9 stakeholders.

10 There are a number of increases and 11 decreases in this area, most notably in the fee 12 class as we talked about, as well as the 13 introduction of two new subcategories and a new 14 category.15 These changes are a result of the 16 reallocation of budgetary resources and a biennial 17 review of the level of effort required to oversee 18 different fee categories.

19 The Part 170 fees are the standard 20 applications fee paid by new material licensee's 21 application review and flat fees.

22 The fees are based on the average time 23 spent on new application reviews for material 24 licensees.

25 56 I'll now turn it over to John McKirgan.

1 MR. MCKIRGAN: Great. Thank you, Kevin.

2 Good afternoon, everyone. I'm John McKirgan. I'm 3 chief of the Spent Fuel Licensing Branch in the 4 Division of Spent Fuel Management in the Office of 5 Nuclear Materials Safety and Safeguards. Good to 6 see you all.

7 The table on this slide shows the 8 product lines within the business line which is 9 composed of mission direct resources and mission 10 indirect resources and some resources which are 11 excluded from the fee base.

12 The majority of the business line 13 resources are mission direct which are approximately 14 82 percent of the spent fuel storage and 15 transportation business line budget including 83 FTE 16 and $2.7 million in contract support dollars.

17 These resources fund the NRC's core 18 activities including licensing, oversight, 19 rulemaking and research.

20 Mission indirect resources make up about 21 15 percent of the business line budget including 15 22 FTE and approximately $600,000 in contract support 23 and travel costs.

24 These resources support the execution of 25 57 activities such as supervisory, non-supervisory 1 staff and travel. They include such staff as 2 supervisors and administrative assistants.

3 I would like to note that while 4 international activities are important to the spent 5 fuel storage and transportation business line these 6 resources make up only 3 percent of the business 7 line budget and are excluded from the fee base which 8 means they are not items that we collected under the 9 90 percent fees that NRC is required to collect.

10 Next slide.

11 The spent fuel storage and 12 transportation business line is responsible for 13 ensuring the safe and secure storage of spent 14 nuclear fuel and the safe transport of radioactive 15 materials.

16 This slide lists some of the key 17 activities in the business line. Processing 18 licensing applications is a significant part of the 19 work carried out.

20 Licensing activities include conducting 21 safety, security and environmental reviews of spent 22 nuclear fuel storage casks and independent spent 23 fuel storage installation license applications as 24 well as performing safety and security reviews of 25 58 radioactive material transportation packages.

1 This licensing work also includes 2 reviewing renewal applications for storage and 3 transportation certificates and facility license 4 renewal applications.

5 A significant effort is underway in the 6 business line is to review two consolidated interim 7 storage facility license applications. They're 8 listed separately there in the bullet.

9 In FY '19 both of these applications 10 reviews are proceeding full bore.

11 The business line also leads oversight 12 activities with safety and security inspection 13 efforts conducted by regional and headquarters 14 staff.15 Rulemaking is another important part of 16 the business line. The storage cask certificates 17 are completed through a rulemaking process so this 18 is a critical step in that process. And then there 19 are also rulemaking efforts in transportation 20 including revisions to the regulations under 10 CFR 21 Part 71 to harmonize with the standards of the 22 International Atomic Energy Agency.

23 And finally we have a few research 24 activities underway as well. Next slide, please.

25 59 So our first step in developing the 1 spent fuel storage and transportation business line 2 budget is to forecast the workload. This is based 3 on the number of facilities and certificates we have 4 under our purview, also letters of intent that we 5 might receive from upcoming license applications, 6 and we do this through continuous communication with 7 our licensees and our vendors.

8 In developing our budget we look at the 9 type of work that would be before us to review.

10 Referring back to the previous slide where I spoke 11 about licensing where we have a safety review and an 12 environmental review for many of the licensing 13 actions. So we ensure that we have adequate 14 resources to support these activities.

15 Some of the applications also have a 16 security component that we factor into our 17 forecasting.

18 The cost of completing our licensing 19 reviews varies depending on the level of complexity 20 that might be before us, whether it is for a new 21 facility or for a license renewal which require 22 different levels of effort and different resources.

23 In addition, we consider the potential 24 need for hearing related resources based on our best 25 60 estimate of the hearing requests that we may get 1 based on the licensing actions before us.

2 We try to gauge that based on the level 3 of public interest of a particular project. The 4 resources associated with those hearings are 5 budgeted based on historical figures and what it has 6 cost to support hearings in the past.

7 And the way we estimate our resources is 8 also based on historical information such as 9 reviewing the level of resources associated with 10 past efforts and reviewing historical resource 11 utilization.

12 The resulting information functions as a 13 benchmark from which resources would change. Next 14 slide, please.

15 So this slide shows how the enacted 16 budget changed for the spent fuel storage and 17 transportation business line from Fiscal Year 2018 18 to Fiscal Year 2019.

19 Overall there was a decrease of $1.8 20 million including a reduction of three FTE in our 21 enacted budget as compared to 2018. Next slide, 22 please.23 The spent fuel storage and 24 transportation business line budget feeds into two 25 61 fee classes, the spent fuel storage reactor 1 decommissioning fee class which the decommissioning 2 and low-level waste business line also shares, and 3 you'll hear more about that in a moment, and then 4 the transportation fee class.

5 So the question is where are the vectors 6 for our budget and why are the annual fees changing.

7 Compared to FY 2018 the FY 2019 budgeted 8 resources for spent fuel storage and reactor 9 decommissioning increased due to an increase in the 10 number of licensing actions associated with 11 operating reactors undergoing decommissioning, the 12 ongoing licensing reviews for the two consolidated 13 interim storage facility license applications 14 including the development of environmental impact 15 statements, and the independent spent fuel storage 16 installation license renewals for Three Mile Island 17 2, Trojan and Rancho Seco, and the associated 18 environmental assessments.

19 In the Fiscal Year 2019 if you've read 20 the proposed fee rule you'll see that the annual 21 fees are anticipated to decrease approximately 17.7 22 percent across the spent fuel storage reactor 23 decommissioning fee class for the 122 licensees.

24 The required annual fee recovery amount 25 62 is divided equally among the 122 licensees we have.

1 The 10 CFR Part 170 estimated billings 2 for FY 2019 are increasing due to increased 3 requested licensing actions and reactor 4 decommissioning, a resumption of the licensing work 5 on the Interim Storage Partners consolidated interim 6 storage facility, increasing work on Holtec 7 International's consolidated interim storage 8 facility, and the continued activities on the 9 storage license renewals. Next slide, please.

10 So next I'll discuss the change to the 11 transportation fees. In FY 2019 the total budgeted 12 resources for generic transportation activities 13 increased slightly.

14 Now in this case the Department of 15 Energy is the only transportation licensee that's 16 subject to an annual fee.

17 Consistent with the policy established 18 in the NRC's FY 2006 final fee rule the NRC recovers 19 generic transportation costs unrelated to DOE by 20 including those costs in the annual fees for 21 licensees in the fee classes which use those 22 transportation packages.

23 The NRC continues to assess a separate 24 annual fee under 171.16 the fee category 18(a) for 25 63 DOE transportation activities.

1 The NRC assesses an annual fee to DOE 2 based on the 10 CFR Part 71 certificates of 3 compliance it holds.

4 As Maureen mentioned, at the time of the 5 proposed fee rule that number was projected to go 6 up. Since that time one of those certificates of 7 compliance has expired. DOE chose not to renew it 8 and we'll make those reflection on those changes as 9 we go to the final fee rule.

10 So with respect to the 10 CFR Part 170 11 estimated billings we're anticipated an increase to 12 the expected -- I'm sorry. We are anticipating an 13 increase due to the expected increase in case work 14 on transportation packages including the review of 15 new applications.

16 So next I'll turn it over to Bo Pham and 17 he'll be discussing the decommissioning and low-18 level waste business line.

19 MR. PHAM: Thank you. Bear with me.

20 We're almost there.

21 So good afternoon. My name is Bo Pham 22 and I'm the deputy director for the Division of 23 Decommissioning, Uranium Recovery and Waste Programs 24 in the Office of Nuclear Materials, Safety and 25 64 Safeguards. Next slide, please.

1 The table in this slide shows the 2 product lines within decommissioning and low-level 3 waste business line which is composed of mission 4 direct resources, mission indirect resources and 5 some resources which are excluded from the fee base.

6 As you would expect most of the business 7 line resources are mission direct and they fund the 8 NRC's core activities including licensing, 9 oversight, training, rulemaking and research.

10 Mission indirect resources support the 11 execution of activities such as supervisory and non-12 supervisory staff and travel.

13 I note that while international 14 activities are important to the business line these 15 resources are excluded from the fee base which means 16 that these are not part of the 90 percent that the 17 NRC recovers in fees.

18 In addition, waste incidental to 19 reprocessing is a DOE funded activity and is also 20 excluded from the fee base. Next slide, please.

21 The business line provides licensing and 22 oversight for the decommissioning of complex 23 materials facilities, fuel cycle facilities, uranium 24 recovery facilities, decommissioning power reactors 25 65 and research and test reactors with the ultimate 1 goal of license termination for each of these.

2 In addition, the business line provides 3 licensing and oversight for uranium recovery 4 facilities that are licensed to operate, the 5 national low-level waste program and the military 6 and non-military radium programs.

7 These programmatic areas drive the 8 budgetary resources necessary to implement the NRC's 9 strategic goals, objectives and strategies.

10 Some of the major activities that the 11 business conducts includes the following -

12 decommissioning of 3 research reactors, licensing 13 reviews and decommissioning activities for 21 power 14 reactors with Humboldt Bay, Zion 1 and 2, and La 15 Crosse nearing license termination, oversight of the 16 military and non-military radium program, licensing 17 and oversight of 12 complex materials sites 18 undergoing decommissioning and depleted uranium 19 sites, licensing and oversight of 5 private uranium 20 mill sites undergoing decommissioning and 36 21 decommissioned uranium mill disposal and processing 22 facilities under long-term care with DOE, supporting 23 the national low-level waste program including 24 developing guidance and providing support for the 25 66 integrated materials performance evaluation program 1 evaluations in the low-level waste area.

2 We also support the rulemaking center of 3 expertise to coordinate rulemaking activities 4 related to the business line including rule 5 development and associated guidance development.

6 And we also conduct research activities 7 to support the application of new technologies at 8 complex sites and analytical tools used in 9 decommissioning reviews. Next slide, please.

10 Workload forecasting is the first thing 11 we do when developing the business line budget. It 12 is based on continuous communications with our 13 licensees and potential applicants, and based on 14 letters of intent for the upcoming license 15 applications.

16 In developing our budget we estimate the 17 necessary resources needed to complete licensing 18 activities such as safety and environmental reviews 19 as well as oversight through inspection activities 20 based on where in the licensing or decommissioning 21 process each facility currently stands.

22 The cost of completing our licensing 23 reviews and oversight activities varies depending on 24 the level of complexity that might be before us.

25 67 Whether it is for a power reactor in active 1 decommissioning or safe storage each one requires a 2 different level of effort and resources.

3 We also exemption our resources based on 4 historical information by reviewing the level of 5 resource budgeted and utilized for similar past 6 efforts.

7 The resulting information functions as a 8 benchmark during budget development. And in 9 addition we also budget for hearings associated with 10 licensing actions that we expect. Next slide, 11 please.12 This slide shows how the enacted budget 13 changed for the business line from Fiscal Year 2018 14 to 2019.

15 In 2019 overall resources decreased by 16$2.7 million including a reduction of 12 FTE 17 compared to 2018.

18 The decreases were primarily in the 19 licensing product line to reflect the expected 20 decline in workload stemming from Wyoming's 21 anticipated transition to an agreement state status 22 during the late Fiscal Year 2018 time frame as well 23 as decreases in non-military radium program.

24 The agreement with the state of Wyoming 25 68 was signed on September 25, 2018 and became 1 effective September 30. I note that approximately 2 70 percent of NRC licensed uranium recovery 3 facilities are located in the state of Wyoming.

4 These decreases are partially offset by 5 increases in international activities and support 6 for various rulemaking activities including the 7 greater-than-Class-C and transuranic waste 8 rulemaking. Next slide, please.

9 This slide summarizes the changes to the 10 uranium recovery fee annual class fees. As a result 11 of Wyoming becoming an agreement state there remain 12 only one NRC licensee in the uranium recovery fee 13 class.14 In order to stabilize the annual fees 15 that would impact this sole licensee the Commission 16 approved expanding the fee relief category to 17 include this fee class.

18 And in addition for Part 170 there's an 19 estimated increase in billings due to the UMTRCA 20 sites for DOE. And with that I'll turn it over to 21 Stephanie.

22 MS. COFFIN: Thank you, Bo. So I just 23 want to take a moment to pause so you heard from all 24 of our programmatic business lines and you heard 25 69 maybe a repetitive theme about how we do our 1 workload forecasting and how critical it is to 2 realistic budget formulation. They all do it, 3 approach it in the same manner.

4 Your input particularly in the product 5 lines of licensing and oversight are critical to us.

6 And that dialogue should be continuous. It's not 7 one and done, but continuous throughout the two 8 years we're in the formulation cycle. Please, 9 please talk to us when you have especially major 10 changes that have resource implications. That 11 really helps us do our job better.

12 All right, so I want to talk about the 13 corporate support. We treat this as a business 14 line. It is a little bit different in that it's 15 driven by federal law and executive orders and that 16 sort of thing and it's kind of secondary to being 17 driven by what we just heard from the program 18 business lines.

19 So up there are the product lines and 20 they of course are very different too. So corporate 21 support just to get us all on the same page, these 22 are centrally managed activities that support the 23 programs.24 Maureen mentioned them briefly. I'll 25 70 run through them.

1 Acquisitions. This is our contract 2 operations. Administrative services. So this is 3 where our rent, our utilities, our building 4 maintenance is captured.

5 Financial management. Obviously we have 6 financial systems and expertise to maintain them and 7 use them.8 Human resource management. Those are 9 our people who hire people and work out benefits.

10 Personnel changes.

11 Information technology and information 12 management. So this is our folks that have our 13 ADAMS and our websites and do our cybersecurity and 14 provide our computers and our phones and all the 15 wonderful infrastructure that you see in today's 16 meeting.17 We have outreach, policy support and 18 training product lines too. This is where you're 19 going to find our Commission operations, our Office 20 of Congressional Affairs, our Office of Public 21 Affairs are embedded in those product lines.

22 On average since 1995 corporate support 23 has made up about 32 percent of our budget. Next 24 slide, please.

25 71 So similar to what you heard from the 1 previous business lines this is our table showing 2 you the changes from '19 from '18. And the other 3 thing I want to point out on this table is you can 4 see the vast majority of our resources are in 5 administrative services. That's our rent and 6 utilities and building maintenance and information 7 technology and information management. That's 8 probably pretty intuitive to many of you to see it 9 that way.10 We did have an overall decrease from '18 11 to '19 of $3.4 million. That is mostly driven by 12 the reductions that we've been working on in terms 13 of reducing our real estate footprint. But it also 14 reflects a lot of investment in more efficient 15 building maintenance technologies to make us run a 16 little bit -- have our bills a little bit smaller.

17 Next slide, please.

18 So the impact on fees. So corporate 19 support is embedded in all of your fees, both in 20 Part 170 and 171 and it's done through fully costing 21 out the FTE rates.

22 We're very mindful of our overhead costs 23 and so we're always pressing for efficiencies in 24 this area.

25 72 Our near term focus does continue to be 1 on our real estate footprint and making smart 2 investments in IT and IM that we hope will pay off 3 in efficiencies in the future.

4 And so I'm going to close there and 5 we're going to move to Q&A which is going to be 6 facilitated by Richard, right?

7 FACILITATOR RIVERA-LUGO: Yes, that is 8 correct. So thank you to all the panelists for 9 covering the first topics and the bulk of the 10 meeting.11 With this we're going to initiate our 12 Q&A session. We have allotted 15 minutes for the 13 Q&As.14 We're going to start with the folks in 15 the room. Any questions in here. In the meantime 16 if the participants on the phone have any questions 17 please dial *1 and record your name and Sandy will 18 take care of the queue from those questions on the 19 line.20 While that is happening in the 21 background are there any questions in the room?

22 Please approach the microphones on either side of 23 the conference room and remember to state your name 24 and affiliation clearly so we can capture that on 25 73 the record.

1 MR. BUTLER: My name is John Butler with 2 NEI and I'd like to start off first by thanking 3 Maureen once again for conducting this meeting.

4 This is always very informative to me and I think 5 very welcomed by everyone.

6 MS. WYLIE: Thanks very much.

7 MR. BUTLER: I am going to start off 8 with like a personal request if I could. And if I 9 could get you to go to slide -- I apologize. Slide 10 15.11 I have been looking at budgets and 12 looking at the proposed fee rules and the work 13 papers for a number of years and I am slowly getting 14 to understand it a little bit more, but I still am 15 challenged. This is the one, yes.

16 So I'm challenged in getting out the 17 information that I need from the work papers. One 18 of the things that I think that would help me is if 19 we could add -- not change what's there now, but add 20 something that provided a little bit more detail for 21 the different business lines on what the budget is 22 going to cover and specifically what has changed 23 from the prior year along the business line 24 activities shown on this slide.

25 74 So that it would identify similar to 1 what is done in the CBJ to identify what specific 2 activities the budget is intended to cover. And 3 these may be specific license applications, or 4 whatever the activity is. But give a little bit 5 more detail than the current breakdown that's in the 6 work papers.

7 MS. WYLIE: So I think you will see in 8 the FY '20 congressional budget justification when 9 it rolls out that we are trying to give some 10 additional information.

11 And we'll make every effort to make that 12 change narrative also available in the work papers.

13 MR. BUTLER: That would be excellent.

14 MS. WYLIE: I can't guarantee we'll make 15 you happy, but we hear your message and we'll try to 16 include that.

17 MR. BUTLER: Well, transparency is like 18 perfection, you always try to achieve it but you 19 never quite reach it.

20 MS. WYLIE: Or you can go too far and 21 what looks like transparency is just a large data 22 dump that's meaningless. So it's all in the point 23 of view.24 MR. BUTLER: May I continue?

25 75 MS. WYLIE: Sure, please.

1 MR. BUTLER: I ask you to go to slide 2 23.3 MS. WYLIE: Oh, this is my favorite one.

4 MR. BUTLER: My favorite too. Probably 5 not too surprising there's some interest in the 6 increase in the annual fee for operating plants.

7 So we want to make sure that we 8 understand that as well as we can.

9 The reasons for the increase here I 10 think kind of -- I think it was mentioned in the 11 discussion. I'm not sure if it was Russell or Jane 12 that the main reason here appears to be that there's 13 been a significant drop in the Part 170 collections.

14 So I want to understand a little bit 15 better the budget formulation process. I mean, 16 there obviously have to be some projections of the 17 Part 170 collections going forward.

18 There's been a decrease in Part 170 19 collections for the last several years. This year 20 we saw a 10 percent decrease. Last previous year 21 was like a 6 percent decrease and prior to that like 22 an 11 percent decrease. So that is a continuing 23 trend.24 We already know that there's like a 25 76 dozen plants that have already stated their 1 intentions to close down in the next seven years.

2 So we can anticipate there's going to be a 3 continuing reduction in the Part 170 collections.

4 I'd like to understand better how that 5 is factored into the overall budget formulation 6 process.7 MS. WYLIE: So, we recognize very 8 significantly that the number of reactors that are 9 going to be closing in the future needs to have a 10 significant material impact on our budget.

11 So we have been working very hard to 12 understand what the difference would be not just for 13 the direct resources, say the four and a half FTE 14 associated with inspection for each plant, but what 15 the larger impact to both the mission direct and 16 mission indirect components of operating reactors in 17 that business line.

18 When the FY '20 budget rolls out you'll 19 see in that that we've taken our first steps in that 20 area. And we continue to affect budget formulation 21 going forward to continually refine that 22 information.

23 So, one of the things that we struggle 24 with is the cost associated with FTE. And so we are 25 77 effectively trying to be more risk-informed in how 1 we actually do the budget projection.

2 If you look solely at historical 3 information some activity might take you 10 FTE.

4 Well, can we assume there will be additional 5 efficiencies and perhaps budget nine FTE for that.

6 So there's that effort. There's do we 7 need to have a construct that says whenever we 8 eliminate a plant there's some -- at least at a 9 starting point a consistent projection of what the 10 mission indirect reduction would be. We're getting 11 to some of that.

12 And then as we go through the final 13 stages of planning for the NRR-NRO merger we're also 14 going to take some efficiencies during that.

15 So you should continue to see not just a 16 decline in Part 170 but a significant effort on our 17 part to reduce our programmatic overhead. So also a 18 reduction in mission indirect.

19 And that should help with -- it doesn't 20 just flow from Part 170 to Part 171, but that the 21 entire budget shrinks. And we continue to work on 22 that.23 MR. BUTLER: Thank you.

24 FACILITATOR RIVERA-LUGO: With that let 25 78 me proceed to see if there are any questions from 1 the phone lines.

2 OPERATOR: Yes, we have a question from 3 Eric Jebsen. Your line is open.

4 MR. JEBSEN: Thank you for taking my 5 question. Related to the question just asked about 6 the estimated decreases or the reasons for the 7 increases in the Part 170 decreases -- or in 171 8 decreases and 170, could you explain a little bit 9 more, try to tie the 6 percent PMRI, the surcharge 10 for lack of a better term. What fraction that might 11 have been in 170? Is that 1 to 1 to 171? Just 12 address how that 6 percent factors in. Thank you.

13 MS. WYLIE: All right. While Stephanie 14 is looking up the exact number because I know we 15 have that in the folder -- the exact estimate.

16 So, let me talk for a minute about how -

17- so the total amount reduced is $9 million. Why is 18 that important? Because it also reflects how over 19 the last couple of cycles we've changed how we do 20 our estimating for the proposed fee rule.

21 Until two years ago we were on a very 22 different cycle in timing for the proposed fee rule.

23 We were waiting not just for an appropriation, but 24 in order to have a larger number of quarters of 25 79 actual data from our workforce that charges to Part 1 170 CACs and so that was delaying when we could get 2 the proposed fee rule out.

3 So when we determined that in order to 4 meet industry's desires we would need to come out 5 more quickly that meant that the estimations in the 6 proposed fee rule would be less precise.

7 So we use one quarter of actual data, 8 the very first quarter, and three quarters of 9 estimated data.

10 So the very first quarter of 2019 shows 11 a very radical change from just a straight 6 percent 12 which we could calculate to just those hours that 13 project managers and resident inspectors charged to 14 overhead in the first quarter.

15 So the $9 million that we've estimated 16 as the change is actually the absolute high water 17 mark. 18 We believe that as we progress toward 19 the final fee rule we will get more quarters of 20 actual data. So how many overhead hours those 21 people actually charge.

22 So $9 million is the largest amount that 23 could be foregone. We think that the total will be 24 less than that.

25 80 So it's a challenge for us. In order to 1 come out more quickly we have to do -- we have to 2 take more risk in estimating.

3 We think that you would rather know the 4 largest amount you could be charged and so we've 5 skewed our estimating in that direction.

6 We would be happy to take feedback on 7 that during public comment. But that is a 8 consequence of moving our proposed fee rule so early 9 in the fiscal year.

10 For us we think it's worthwhile because 11 again we give you a worst case scenario, your annual 12 fee will be no greater than this, but we believe 13 that by the time we get the final fee rule out the 14 annual fee will go down slightly because we'll have 15 better data on the PM resident inspector overhead 16 specifically.

17 So it will be less than $9 million 18 reduction. We just don't know what the number will 19 be. 20 FACILITATOR RIVERA-LUGO: Are there any 21 other questions from the phone lines?

22 OPERATOR: Not at this time, sir.

23 FACILITATOR RIVERA-LUGO: Any other 24 questions from the participants in the room?

25 81 MR. MAUER: Hi, Andrew Mauer with NEI.

1 Again I wanted to appreciate the meeting and the 2 good discussion here.

3 To follow up on John Butler's remarks 4 around transparency there were -- as we go through 5 the work papers it would be nice if we had a key for 6 some of the things in here as far as what they 7 meant.8 But maybe a couple of specific questions 9 if we have the right folks here today, and if we 10 don't that's fine.

11 Within the products for the new reactors 12 we see something called Part 50 which it says was 13 not there in '18. It's there in '19 both in 14 licensing and oversight. And I was wondering if 15 someone can share what that is.

16 MS. WYLIE: I think we're going to need 17 to provide that to you in the meeting summary 18 afterward. I don't think we have somebody here that 19 can answer that.

20 MR. MAUER: Okay.

21 MS. WYLIE: Do I? I don't think so.

22 No. So we commit to putting that out to you as a 23 part of the meeting summary.

24 MR. MAUER: Okay. In the context of the 25 82 different presentations that were up, the event 1 response, can someone elaborate on event response 2 and sort of how that relates. What's included in 3 event response is the broader question?

4 MS. COFFIN: So that's largely like our 5 operations center here. So we run a 24/7 operations 6 center here to monitor activities across the world 7 and be ready to respond to an event. And all of the 8 regions have smaller event response capabilities too 9 so that the agency is prepared to respond to any 10 kind of event.

11 MR. MAUER: So all of the event response 12 in the budget is associated with that?

13 MS. COFFIN: There's probably other 14 aspects to it, but I would think that's the largest 15 portion of it. As we follow up the meeting summary 16 if there's more to put in there we can add it.

17 Actually, we have -- other people have 18 worked in that area.

19 MR. MARSHALL: Sorry, Jane Marshall, 20 NRC. There is more in the event response than just 21 the headquarters operations officers and operation 22 centers. I don't know what it is offhand. There is 23 a piece of materials as well, there's operating 24 reactors in there.

25 83 MS. COFFIN: But that's in event 1 response.2 MR. MARSHALL: Yes, it's event response.

3 MS. WYLIE: So, but there is a very 4 specific bifurcation -- I'll let you in just a 5 minute -- between what we do that's funded by 6 generic homeland security and what is funded by fee 7 dollars, fee-based resources.

8 And so better to give you an answer that 9 sort of charts that out by business line. Kevin, 10 did you want to add something?

11 MR. WILLIAMS: So the piece I wanted to 12 add is that we also have on the materials side if 13 there was something in regards to a source, if there 14 was something that was related to fuel facility type 15 response effort we do provide that for our regions 16 in order to be able to respond to those type of 17 activities.

18 MS. WYLIE: But it includes things like 19 time spent planning on site-specific events. So let 20 us get you a specific definition.

21 MR. MAUER: All right, that would be 22 good. Thanks.

23 FACILITATOR RIVERA-LUGO: Any other 24 questions from participants in the phone line?

25 84 OPERATOR: No, sir.

1 FACILITATOR RIVERA-LUGO: Are there any 2 other questions from the participants in the room at 3 this point? With no questions at this point we're 4 going to take a quick 10-minute break.

5 So it's now 2:30 -- let's round it up to 6 2:35. Let's please be back in the room at 2:45.

7 (Whereupon, the above-entitled matter 8 went off the record at 2:37 p.m. and resumed at 2:46 9 p.m.)10 MS. WYLIE: All right, if everybody on 11 the phone is ready to go we're going to get started 12 with the second half of our program.

13 Michele Kaplan who will be -- who is for 14 the next month or so our head, the team lead of our 15 license fee policy team. We want to thank Michele 16 for all of her work on fees. All of this progress 17 we contribute to you and your team. It's been a 18 great experience.

19 Michele is going to transition to be our 20 funds control team leader by mid-March. So this is 21 your last chance to be a star.

22 MS. KAPLAN: Thank you, Maureen.

23 MS. WYLIE: In this area. Absolutely.

24 MS. KAPLAN: All right. Well, good 25 85 afternoon, everyone. I'm Michele Kaplan, license 1 fee policy team leader.

2 And I wanted to start out -- next slide 3-- with our statutory and regulatory framework.

4 Maureen pretty much covered this during her 5 presentation so I don't think I'm going to go over 6 this particular slide.

7 The next slide though is kind of our 8 timeline for producing the fee rule. And so as 9 Maureen said we are appropriation early this year.

10 We got it before the actual year started.

11 So at the top where you see the Capitol 12 we have our -- it says congressional budget 13 justification or appropriations. So this year we 14 did get it in September.

15 And then if you move right we do our 16 budgetary analysis and the allocation of the budget 17 to the fee classes between August and November.

18 And then December and January if you 19 move down we prepare the Federal Register notice.

20 And then this year thankfully we were 21 able to publish by the end of January with only two 22 days later than our actual schedule. So we were 23 very happy about that because we want to be as 24 timely as we can in producing the fee rule for 25 86 everyone, for our licensees and stakeholders so that 1 they can use the information to plan their year.

2 And then we have our 90-day comment 3 period. We have our public meeting today.

4 And then we start on the Federal 5 Register notice for our final fee rule. And we hope 6 to publish at the end of May.

7 And then 60 days later it becomes 8 effective in July and it gives us enough time to be 9 able to collect all the fees that we need to by the 10 end of the year. All right, next slide.

11 So this is just kind of an overarching 12 view of our calculation to get down to Part 171 fees 13 and Part 170 fees to be collected.

14 So at the top in the top circle you can 15 see that we have our total budget authority as 16 Maureen stated of $911 million. And then we exclude 17 certain amounts for advanced reactors, the 18 international activities, generic homeland security, 19 and then the IG services for the Defense Nuclear 20 Facilities Safety Board.

21 And that totaled $43.4 million. So we 22 deduct that from the total. And that's our fee 23 recovery rate -- our balance, I'm sorry, that's the 24 balance.25 87 And then we apply the fee recovery rate 1 of 90 percent. And that's the total amount to be 2 recovered for 2019 is $780.8 million.

3 And then from there we have little 4 timing adjustments for our billing. And this year 5 we added in $1.1 million to get our adjusted 6 recovery amount of $781.9 million.

7 And then we calculate how much we 8 estimate to collect in Part 170 billings and that 9 was $246.7 million. So we arrive at our total 10 collections for Part 171 of the $535.2 million. So 11 next slide.

12 All right, so this pie chart shows in 13 total the amount to be -- the light green amount is 14 the amount to be recovered, 90 percent before 15 adjustments. That's the $780.8 million.

16 And then we have our fee relief of 10 17 percent. That's the $86.8 million. And then we 18 have that little beige pie piece is our non-fee 19 recoverable items which was the $43.4. Next slide.

20 So, fee relief. So what is fee relief?

21 That is 10 percent of the fee recoverable budget.

22 So it's two types of activities.

23 One would be activities not attributable 24 to an existing NRC license or class of licensee. So 25 88 things like agreement state oversight, scholarships 1 and fellowships, medical isotope production 2 infrastructure.

3 And then the other category is 4 activities not assessed under Part 170 licensing and 5 inspection fees, or Part 171 annual fees. And 6 that's based on existing law or Commission policy.

7 So that would be things like fee 8 exemption for non-profit educational institutions, 9 small entity costs not recovered, agreement state 10 regulatory support, generic decommissioning 11 reclamation, uranium recovery program and 12 unregistered general licenses, and then the 13 Department of Defense remediation program.

14 So at the bottom you see a little 15 calculation for total fee relief activities. From 16 the '19 proposed fee rule it was $86.6 million.

17 And then 10 percent of total NRC budget 18 less non fee items is $86.8. So we arrive at a fee 19 relief adjustment. So this year it was a credit of 20$0.2 million. And that gets allocated to all of the 21 licensees' annual fees proportionally. Next slide.

22 So here you can kind of see our license 23 fee classes and their percentage, the overall 24 percentage of budget resources. Of course operating 25 89 power reactors is our largest fee class and that one 1 is $86.6 million.

2 And then we have our smaller ones. I'm 3 sorry, percent. Sorry, 86.6 percent.

4 And then we have spent fuel storage of 5 4.7 percent, test and research reactors 0.2, fuel 6 facilities, that one is 4 percent. I'm sorry, 4.7.

7 Materials, 3.8, transportation is 0.6 and uranium 8 recovery.9 Now, the uranium recovery slice is very 10 small and it's actually just a line and that's why 11 it looks like there's two lines going to that one 12 little piece for transportation but there's actually 13 another one right next to it and that's uranium 14 recovery. And it's very small, it's 0.1 percent.

15 Sorry if I couldn't separate them out a little bit.

16 Okay, next slide.

17 So as Maureen presented before our 18 professional hourly rate methodology, we had three 19 different buckets of resources that we add together 20 to get the total amount for our numerator. And I'll 21 show you that calculation in just a second in the 22 next slide.

23 You have mission direct program salaries 24 and benefits, mission indirect and then agency 25 90 support.1 And then we deduct offsetting receipts 2 and -- offsetting receipts, our indemnity fees and 3 FOIA fees that we collect which shouldn't be 4 included in this calculation.

5 And another bucket of resources that's 6 not included in this calculation are direct 7 contracts that we bill to our licensees separately.

8 And then that would be our numerator, 9 that $759.8 million.

10 And then we have in our denominator 11 mission direct FTEs, that's the 1,810 times the 12 mission direct FTE productive hours which is the 13 15.10. And then we get our professional hourly rate 14 of 278.15 So if you go to the next slide you can 16 see the actual calculation. So the budget resources 17 which is the $759.8 and then mission direct FTE 18 converted to hours which is our 1,851 direct FTE 19 times each FTE's productive hours which is 15.10.

20 And so then you get the $278 hourly rate. It's a $3 21 increase from the previous year. Next slide.

22 So, for our Part 170 fees the 23 professional hourly rate for full cost services, 24 that's reactors and other major licensees are billed 25 91 for staff hours and specific contract costs incurred 1 for licensing and oversight services.

2 And then we have a flat rate for 3 licensing fees. So material users pay new license 4 application fees based on the average time to 5 process each type of license application times the 6 effective professional hourly rate.

7 And we look at the flat application fees 8 every other year. So we do a biennial review. We 9 did one in the odd years. So in 2019. We'll do 10 another one in 2021.

11 And we look at the amount of time it 12 takes to perform these services and then we times it 13 by the new hourly rate to get to a new flat rate.

14 Okay, so developing our Part 1 fee 15 estimate. So, as Maureen said before she said that 16 we use one quarter of actual data and three quarters 17 of projected data.

18 And what I have here in the slide is 19 that we use the billing data for four quarters. So 20 that's billed Part 170 fees and contract work. And 21 then we adjust for changes in the workload 22 projections and we adjust for changes in the 23 professional hourly rate.

24 And so in the slide it says we have the 25 92 proposed rule estimates four quarters of fees 1 collected and then the invoice data four quarters of 2 the prior year.

3 And what happens is we ask for this 4 information in estimate of our partners in the 5 offices and then we validate it as the actual 6 information comes in. During this process of 7 developing the estimate we validate it with the 8 actual data.

9 And so for the final rule we're going to 10 estimate two quarters and we have two quarters of 11 actual data. So next slide.

12 So for our annual fees we first 13 determine the budget resources by fee class and then 14 we deduct our Part 170 receipts. And then we add 15 allocated generic transportation costs.

16 And then as Stephanie was talking about 17 this net fee relief credit or surcharge and low-18 level waste surcharge.

19 And so then we allocate our billing 20 adjustments, very small billing adjustments, and 21 then the balance is the required Part 171 fee. Next 22 slide.23 So this table is just a representation 24 over the past eight years of the operating power 25 93 reactors calculation for annual fees.

1 And as you can see starting in 2012 we 2 had 104 reactors and now this year we're down to 98.

3 And so there was a slight uptick in the fee this 4 year as Maureen mentioned before and the reasons for 5 it.6 So the budgeted resources were $670.2 7 million and then we had Part 170 estimated billings 8 that we deducted of the $213.8. And then our 9 adjustments that I just mentioned, $3.9 million to 10 arrive at Part 171 annual fees of the $460.3 11 million.12 And then we divide that by the number of 13 reactors in the fleet and that came out to be the 14 4,697. So next slide.

15 So we have some policy changes this 16 year. So this will affect our Part 170 fees and 17 then our Part 171.

18 So we added subcategories to materials 19 user fees for locations of use for medical licenses.

20 So that's fee category 7C. So we added some 21 subcategories under that based on how many locations 22 that that particular category had.

23 And then we eliminated a fee category 2-24 A-5 and those were licenses that authorized the 25 94 possession of source material related to the removal 1 of contaminants from drinking water. And that 2 related to the petition for rulemaking that was also 3 included.4 And then our fees transformation 5 initiative. So this was actually started under 6 Project Aim and the goal was to increase 7 transparency, timeliness and equitability to the 8 fee-setting process.

9 And originally we developed over 40 10 process and policy improvement options approved by 11 the Commission to be completed between 2017 and 12 2020.13 And for 2017, 2018 and 2019 100 percent 14 of the improvements were completed.

15 So for 2020 we have six that remain.

16 And two of them have been completed.

17 So the first one was institute two 18 different hourly rates for flat application fees for 19 applicants to provide funds for infrastructure work.

20 That one was closed with no additional change but we 21 will revisit this if new applications surge.

22 And then the NRC has developed guidance 23 on the disclosure of information related to 24 contractor charges associated Part 170 invoices.

25 95 So, the notification was sent out to 1 licensees in January of 2019. So we are closing 2 this one.3 And then we have the remaining four that 4 are on track to complete for 2020. So the first 5 one, flat fees pilot for uranium recovery 6 activities, that one is on track to be completed by 7 the summer. And that one Stephanie will go over 8 when she talks about NEIMA and that we have a 9 reporting responsibility to Congress by the end of 10 the year to let the Congress know how that one was 11 completed.

12 And then electronic invoicing, that's e-13 billing. That one is also on track to be completed.

14 The third one, the analysis of a 15 proposal to issue one license for each uranium 16 recovery site instead of one license for multiple 17 sites, the analysis has been completed and it's 18 highly likely that that one will be closed with no 19 further action. But we need approval for that one 20 and then that one will be closed.

21 And then small entity size standard 22 rulemaking. So we are on track with that one.

23 And I think that's it. And so this 24 slide just has information resources, the regs for 25 96 Part 170 and 171 and then the fee rule.

1 And then also if you want to take a look 2 at our fee transformation accomplishments there's a 3 link there that you can go straight to that table.

4 So with that I'm going to turn things 5 over to Stephanie and she can go over NEIMA.

6 MS. COFFIN: So, I wanted -- this seemed 7 like the proper forum to preview the budget related 8 provisions that are in NEIMA. I want to reemphasize 9 that they're not in effect until Fiscal Year '21 but 10 we have work to do now in order to prepare and 11 implement the requirements that are in this act.

12 The big one of course is the first 13 bullet on there where we eliminate -- we essentially 14 go to 100 percent fee recovery. It's either 15 excluded, off the fee base, or it's on and we're 16 going to do some sort of recovery.

17 The law lists a number of excluded 18 activities and these are your usual suspects.

19 Nuclear waste fund, WIR, generic homeland security, 20 the integrated university program, advanced 21 reactors.22 The act also gives us the latitude to 23 propose additional activities to be placed in this 24 category.25 97 The third bullet on there caps the 1 annual fee per operating reactor licensee to the 2 Fiscal Year 2015 fee rule. We are allowed to adjust 3 that for inflation.

4 The fourth bullet talks about capping 5 corporate support at 30 percent beginning in Fiscal 6 Year '21 and stepping down to 28 in Fiscal Years '25 7 and beyond.

8 And you might recall from my 9 presentation we're hovering around 31-32 percent.

10 So this is going to be an area of focus for us in 11 the upcoming years to do our best to meet the 12 requirements in that law.

13 Bullets five and six on there are 14 related to invoicing. And this is work actually 15 that's been underway for a number of years already, 16 got codified in this act but we're progressing 17 nicely in this area and don't really see any --

18 don't see any impediments to achieving the 19 requirements of the act.

20 The second to last bullet, Michele 21 mentioned this about our voluntary pilot about a 22 flat fee structure for our remaining licensee in 23 uranium recovery fee class. And we're progressing 24 nicely on that. And don't see any impediment to 25 98 achieving the request and the requirements in the 1 act.2 And then the last one does give us an 3 opportunity to report back to Congress at the end of 4 the fiscal year on how all of this worked out in '21 5 and give them feedback on how this progressed and 6 what were some of the lessons learned and challenges 7 at the end of the implementation of the first year.

8 And next slide. So now I am again going 9 to turn it over to Richard to facilitate a second 10 Q&A session.

11 FACILITATOR RIVERA-LUGO: So with that 12 last portion of the presentation we would like to 13 open the floor for questions and comments from the 14 public or participants.

15 Again for those participating on the 16 phone lines dial *1 and record your name. And while 17 the operator takes a queue for any questions on the 18 lines we're going to start with the folks in the 19 room. Please approach the microphones and remember 20 to state your name and affiliation clearly.

21 MR. BUTLER: John Butler, NEI.

22 Stephanie, I wanted to kind of follow up with NEIMA.

23 I'm sure you've looked at it in a lot more detail 24 than I have.

25 99 In what you've seen of NEIMA so far and 1 your evaluation what's your expectation of what the 2 impact will be say on the exclusions versus 90 3 percent under OBRA '90? Would the exclusions in 4 NEIMA approach 10 percent of the budget?

5 MS. COFFIN: I don't know that we've --

6 I've done the actual calculation, but all of those 7 categories are what we've been doing for the past, 8 you know, 10 years so none of that was a particular 9 surprise to us.

10 So some of the items that are currently 11 in our fee relief Congress captured them as an 12 excluded activity. And again we need to make a 13 proposal to the Commission about what may be 14 additional activities to propose to Congress to our 15 appropriators.

16 One example might be international 17 activities. So our appropriators over the last two 18 years have asked us to treat international 19 activities off the fee base. That particular item 20 wasn't included in this act. So it might be 21 something the staff would propose to the Commission 22 to continue that practice and make that proposal to 23 Congress to continue to include international 24 activities. Does that make sense?

25 100 MR. BUTLER: It does. Thanks.

1 FACILITATOR RIVERA-LUGO: Let's go on to 2 the phone lines. Are there any questions from 3 participants on the phone?

4 OPERATOR: The first question comes from 5 Eric Jebsen. You may go ahead.

6 MR. JEBSEN: Thanks for taking my 7 question. And I apologize if I just missed this in 8 the presentation. It goes back to some extent to 9 what was presented before and I missed whether or 10 not the university support program was or was not 11 included in the fee recovery portion, especially for 12 operating reactors. Thank you.

13 MS. WYLIE: So the integrated university 14 program is not included. It is a part of -- it is 15 in the fee relief category.

16 So those who pay the operating reactor 17 annual fee do not pay for the integrated university 18 program. 19 FACILITATOR RIVERA-LUGO: Next question 20 from the phone lines if there are any?

21 OPERATOR: There are no further 22 questions at this time.

23 FACILITATOR RIVERA-LUGO: Any other 24 questions from the participants in the room? With 25 101 no questions in the room so far I leave it to 1 Maureen to proceed with the meeting.

2 MS. WYLIE: So I think this might be our 3 shortest question and answer session. I see that as 4 a sign that the work paper transparency is improving 5 so that's a good thing.

6 We take to heart the feedback that you 7 gave us earlier about increasing that transparency 8 and will continue to work on that.

9 One of the things that we need to 10 consider is perhaps taking the workload tables that 11 are in the CBJ of the appropriate year and including 12 them in the work papers so that people can see them 13 close to one another.

14 So that would give people an opportunity 15 to see an increase in a certain type of licensing 16 activity like subsequent license renewal, or a 17 decrease in some sort of consolidated interim 18 storage as an example.

19 Well, in summary we look forward to your 20 comments. Your comments are due for this rulemaking 21 on March 4 which is just around the corner.

22 And this is laid out fairly directly, 23 but we are particularly interested in your feedback 24 so please, please subject to the out of scope 25 102 comment from earlier in the presentation 1 notwithstanding we really do want to hear from you 2 about how we can make the fee rule more transparent 3 and our fee process greater, more fair.

4 Let's go to the last slide. Okay. As I 5 said, Michele Kaplan is ending her tenure with us in 6 this area. So her name is in the fee rule. You can 7 send requests for further information to her, or you 8 can send them to Stephanie Coffin who's the director 9 of budget.

10 So in summary I'd just like to say we do 11 understand that this is a collaborative effort. So 12 in particular if there are things that can make this 13 simpler and easier including around invoices I'm 14 very open to suggestions.

15 I would like to take this opportunity to 16 thank NEI and the nine licensees who are 17 participating in our e-billing project. This has 18 been a different process for us, but e-billing is 19 really for them.

20 So we want to make sure that their 21 requirements are heard throughout our process. And 22 we are on schedule to complete that and roll out our 23 first phase by October 1.

24 So, would anybody like to add anything?

25 103 Then I think we're adjourned. Thank you all very 1 much.2 FACILITATOR RIVERA-LUGO: Thank you very 3 much for everyone participating on the phone lines.

4 As a reminder please refer to the presentation for 5 information on submitting comments to the proposed 6 fee rule. They are due on March 4, 2019.

7 And the contact information for the 8 people responsible for this proposed fee rule are 9 also included in that slide. With that, thank you 10 very much for participating and have a good day.

11 (Whereupon, the above-entitled matter 12 went off the record at 3:12 p.m.)

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