ML18100A507

03/27/2018 Fuel Facilities Budget Related Topics and Fee Matrix Category 3 Meeting, Pages 1-111

ML18100A507
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Issue date:	03/27/2018
From:	Kevin Ramsey Fuel Manufacturing Branch
To:	Rachel Johnson Fuel Manufacturing Branch
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1 UNITED STATES NUCLEAR REGULATORY COMMISSION 1 + + + + +

2 FUEL FACILITIES BUDGET RELATED TOPICS AND FEE MATRIX 3 + + + + +

4 CATEGORY 3 MEETING 5 + + + + +

6 TUESDAY 7 MARCH 27, 2018 8 + + + + +

9 10 The Category 3 meeting convened at the 11 Nuclear Regulatory Commission, Three White Flint 12 North, Room 01C03, 11601 Landsdown Street, North 13 Bethesda, Maryland, at 1:14 p.m., Sheila Ray, 14 facilitating.

15 16 STAFF PRESENT 17 SHEILA RAY, NRR, Facilitator 18 MICHELLE ALBERT, OGC 19 ANTHONY BARNES, OEDO 20 CRAIG ERLANGER, NMSS 21 BRIAN HARRIS, CFO 22 ROBERT JOHNSON, NMSS 23 MICHELE KAPLAN, OEDO 24 KEVIN RAMSEY, NMSS 25 2 JENNIFER SCRO, OGC 1 MAXINE SEGARNICK, OGC 2 OSIRIS SIURANO, NMSS 3 BRIAN SMITH, NMSS 4 5 ALSO PRESENT 6 JANA BERGMAN, Curtiss-Wright 7 BENJAMIN HOLLADAY, Naval Reactors 8 TIM KNOWLES, NFS 9 HILARY LANE, NEI 10 WYATT PADGETT, URENCO 11 MAX PIERCE, Naval Reactors 12 JANET SCHLUETER, NEI 13 TYSON SMITH, Winston & Strawn*

14 DAVID SPANGLER, BWXT NOG-L 15 MARK WOLF, Honeywell*

16 17 18

• Present via teleconference 19 20 21 22 23 24 25 3 1 4 TABLE OF CONTENTS 1 2 Welcome and Introductions..........................4 3 4 Overview of Fuel Facilities Business Line 5 Budget and Response to Stakeholders..........7 6 7 Questions and Answers.............................63 8 9 Adjourn..........................................111 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 P-R-O-C-E-E-D-I-N-G-S 1 1:14 p.m.

2 MS. RAY: Welcome to the Fuel Facilities 3 Budget Related Topics and Fee Matrix meeting. I'll 4 be serving as your facilitator, and my role is to 5 help the meeting go smoothly to achieve a common 6 objective. This is an NRC Category 3 public meeting, 7 and we welcome public participation to fully engage 8 the public in the discussion of regulatory issues.

9 Comments are welcome at any time, and there is a 10 specific allotted time for public comments, as well.

11 The purpose of this meeting is to respond 12 to stakeholder comments from the December public 13 meeting and to share some additional options for 14 improving the method of calculating annual fees for 15 fuel facilities.

16 On the counters, we have a sign-in sheet.

17 Please sign in. And also we have the feedback forms 18 and slides for this meeting.

19 The NRC --

20 MR. RAMSEY: Sheila, can you ask the 21 people on the phone to send me an email so I can make 22 sure I get a record of everybody?

23 MS. RAY: For those of you on the phone, 24 we would appreciate if you could send Kevin Ramsey an 25 6 email to indicate that you are participating in this 1 meeting, and that's Kevin, K-E-V-I-N, dot R-A-M-S-E-2 Y at NRC.gov. And that's kevin.ramsey, R-A-M-S-E-Y, 3 at NRC.gov. Thank you very much.

4 We also have feedback forms if you're 5 interested. We always strive to improve our public 6 meetings 7 Before we get started with introductions, 8 I'd like to cover safety, logistics, and the ground 9 rules. Restrooms, for those of you in the room are 10 out the door to the left and then take another left 11 at the hallway. If there's an emergency, we will 12 exit out the back of this room and to the left, to 13 the right when you exit.

14 In terms of logistics, we do have a 15 telephone line and also this meeting is being 16 recorded through transcription. So in terms of 17 ground rules, I would ask that we please have one 18 speaker at a time for an accurate transcription.

19 Please state your name before speaking. Let's all 20 follow the agenda and stay on topic. And I would ask 21 that we all mute or place on vibrate your electronic 22 devices. And, again, please feel free to ask 23 questions during the presentation.

24 I would like to ask that we take a moment 25 7 for introductions. As I mentioned, my name is Sheila 1 Ray. I'll be serving as facilitator. Let's go 2 around the room, yes.

3 MR. BARNES: I'm Tony Barnes from the 4 Office of the Executive Director of Operations.

5 MS. KAPLAN: Michele Kaplan, Office of 6 the Executive Director of Operations.

7 MR. HARRIS: Brian Harris from the CFO's 8 office. 9 MR. B. SMITH: Brian Smith, Deputy 10 Director of Division of Fuel Cycle Safety and 11 Safeguards.

12 MR. JOHNSON: Robert Johnson, Fuel 13 Manufacturer Branch Chief at NMSS.

14 MR. SIURANO: Osiris Siurano, Project 15 Manager at NMSS.

16 MR. PADGETT: Wyatt Padgett, the 17 Licensing Manager for URENCO USA.

18 MR. PIERCE: Max Pierce from Naval 19 Reactors.

20 MR. HOLLADAY: Ben Holladay also from 21 Naval Reactors.

22 MR. KNOWLES: Tim Knowles, Licensing 23 Manager, Nuclear Fuel Services.

24 MS. BERGMAN: Jana Bergman, Curtiss-25 8 Wright. 1 MS. LANE: Hilary Lane, NEI.

2 MS. SCHLUETER: Janet Schlueter, NEI.

3 MR. SPANGLER: David Spangler, NOG out 4 of Lynchburg.

5 MS. SCRO: Jen Scro, Office of General 6 Counsel. 7 MS. SEGARNICK: Maxine Segarnick, Office 8 of General Counsel.

9 MS. ALBERT: Michelle Albert, Office of 10 General Counsel.

11 MS. RAY: Thank you very much. Now I'll 12 turn the meeting over to Brian Harris.

13 MR. HARRIS: Thank you, everybody, for 14 coming here and for taking the time to meet with us 15 about the fuel facilities cycle. One of the things 16 I wanted to mention because I'm sure that you're all 17 aware that we recently got our appropriations, and 18 we're not going to be discussing those appropriations 19 and how those affect these here. So we're using in 20 this presentation what was in the proposed fee rule 21 in the congressional budget justification. It takes 22 us a fair amount of time to go through the 23 appropriations to be able to see how that will impact 24 these. So we're working on that, but we're going to 25 9 use the congressional budget justification and the 1 proposed fee rule to discuss this process here.

2 Next slide. So the NRC's budget 3 authority that we used for, the NRC's budget 4 authority that we used for this proposed fee rule was 5 $952 million. That represented the congressional 6 budget justification, and then for the proposed fee 7 rule we actually added $15 million more on top of 8 that to account for the integrated university program 9 which has been historically included in the 10 congressional final appropriations bill. And so that 11 brought the total budget authority used for our 12 proposed fee rule up to $967 million, which 13 represented an increase of $49.9 million from the 14 fiscal year 2017.

15 Moving to the next slide, please. Yes, 16 ma'am? 17 MS. SCHLUETER: Hi. I'm Janet at NEI.

18 Just process-wise, and I know you just got the CR so 19 you can't, you know, speak to that necessarily, but 20 timing-wise, can you give us some sense of when the 21 final fee rule will be issued?

22 MR. HARRIS: It will be issued probably 23 around the end of May, beginning of June.

24 MS. SCHLUETER: Okay. Thank you.

25 10 MR. HARRIS: When we do our proposed fee 1 rule, the two major calculations that we do that help 2 us to assign and move costs from the congressional 3 budget justification into the fee class budget, and 4 those are the full cost FTE methodology where we 5 determine both the fully costed FTE rate and the 6 professional hourly rate.

7 Up on the screen, this is slide three for 8 people on the phone, you start off with the mission 9 direct program salaries and benefits, and we add the 10 mission indirect program support and the agency 11 support costs, and that gives us a subtotal of budget 12 authority that's about $790.3 million. You'll see a 13 line that's talking about less offsetting received, 14 which represents zero, but that's just a rounding 15 issue. But that accounts for things like indemnity 16 and flare costs that we don't take into account in 17 the professional hourly rate. And that gives us the 18 total budget authority of 790.

19 Now, you may be asking why that is 20 different from what our total budget authority that 21 I just talked about on the previous slide. That is 22 to account for some things that are considered off 23 the fee base: nuclear waste funds, waste incidental 24 reprocessing, homeland security, and then IG services 25 11 that are provided to the Defense Nuclear Facilities 1 Safety Board.

2 We take that total budget authority --

3 and one other thing is that's the 90 percent, the 4 over 90 percent in terms of what we actually have to 5 recover. But we take that total budget authority 6 and, to figure out the professional hourly rate that 7 we're going to charge for direct billed services, 8 Part 170 services, we'll use the mission direct FTEs 9 that are assigned to the agency, this year it's 1,938 10 FTEs, and then the annual mission direct FTE 11 productive hours. So this is what they actually, 12 what we expect those mission direct FTEs to utilize 13 during the year, 1510 hours0.0175 days <br />0.419 hours <br />0.0025 weeks <br />5.74555e-4 months <br />.

14 You divide that total budget authority by 15 the mission direct times annual mission direct FTE 16 productive hours and that produces the $270 FTE rate, 17 which, compared to 2017, that's a $7 increase from 18 the 2017 rate.

19 Moving on to the fully-costed FTE rate.

20 That represents the full cost of an FTE, so when you 21 look at the congressional budget justification 22 business line, it doesn't account for corporate 23 support or the overhead. And corporate support can 24 include things like the rent, utilities, the mission, 25 12 the agency-wide IT infrastructure, OCHCO services.

1 And so those need to be moved back into the fee class 2 budget line in order to meet our over 90 requirements 3 to recover the correct amount. And so what that 4 $408,000 that you're seeing there, approximately 5 $408,000 you're seeing there is what it costs to 6 actually provide those services within the fee class 7 budget line for a mission direct FTE.

8 Moving on to the next slide, slide four.

9 This is a crosswalk of how the budget is allocated 10 for the major business lines to the License Fee class.

11 For what we're talking about here, I'll just draw 12 your attention to the fuel facilities, and with fuel 13 facilities the majority of the costs are actually 14 reflected in the licensee fee class of fuel 15 facilities.

16 But one of the things we have to do in 17 order to determine the fee class budget is we need to 18 reconcile both the CBJ budget to the fee class budget.

19 The things that we will take into account for when 20 we're doing that reconciling is, of course, the 21 budget resources that are excluded from the fee 22 calculation. This would be things like Generic 23 Homeland Security, you know. In our proposed fee 24 rule is the nuclear waste fund and the waste and those 25 13 issues that I talked about before.

1 We also will take away the mission 2 indirect FTEs that are in the business line, and we'll 3 get to that in a little more detail on the next slide.

4 Then we also have to account for FTEs 5 that are assigned to the fuel facilities business 6 line that are coming from a different business line.

7 And then, of course, the utilization of the fully 8 costed FTE rate to be able to assign the corporate 9 support overhead.

10 Yes, ma'am?

11 MS. SCHLUETER: Janet at NEI. I 12 probably don't understand this chart, so my question 13 might be off base. But because the fuel facilities 14 are assigned a low-level waste surcharge, should we 15 be reflected in the last box at the bottom under 16 licensee class for low-level waste?

17 MR. HARRIS: So I don't think this is 18 meant to actually cover that. There's actually a 19 slide that talks a little bit about the low-level 20 waste surcharge, and that may be a better place to 21 have that discussion. But this slide is really 22 trying to represent where the majority of the 23 business lines costs are assigned to fee class, 24 rather than all the places where the costs are 25 14 assigned. But there is a slide talking about low-1 level waste towards the end.

2 MS. SCHLUETER: Thank you.

3 MR. HARRIS: Moving on to slide five. So 4 this is the professional budget justification. Just 5 in the way of orientation, you'll see two columns 6 under the fuel facilities business line. The one on 7 the left represents the contract costs that are 8 assigned to fuel facilities business line in 9 thousands of dollars and then the column on the right 10 represents the FTEs that are assigned to the fuel 11 facilities business line.

12 Of course, you'll see in this some of the 13 things that are excluded from the fee-based Generic 14 Homeland Security, some of the international 15 activities that we get on or in fee relief. But this 16 gives you basically the numbers you would look at 17 when you're looking at the congressional budget 18 justification.

19 We take the FTEs there at the bottom, 20 114, use the average FTE rate for the CBJ numbers for 21 fuel facilities, and that produces that $19,952, add 22 up the contract costs, and then you'll see the $25 23 million represents the congressional budget 24 justification.

25 15 Moving on to the next slide, this is 1 where we're trying to crosswalk and reconcile the 2 congressional budget justification to the fee class.

3 We go through what we call puts and takes to take 4 away parts that shouldn't be included in the fee class 5 budget and then to add certain parts back into the 6 fee class budget that should be assigned.

7 You'll see on the first line Generic 8 Homeland Security. That's got a footnote one which 9 is it's a fee recovery exclusion. It's not included 10 in the fee base when calculating the fuel facilities 11 fee class fees.

12 For international activities, you'll see 13 that there are six FTEs that are taken away. One FTE 14 is left within the fuel facilities fee class, and the 15 other six are removed for both -- sorry -- for fee 16 relief and for assigned to other business classes.

17 Licensing and oversight, same thing, just 18 talking about the things that are going to be removed 19 for various purposes, mostly removing a lot of the 20 mission indirect resources out of it. That products 21 that $4 million, approximately $4 million and 32 FTEs 22 that are being taken away. And then we have to go 23 back through and assign resources back into the 24 business line that should be included. These are 25 16 coming from other business lines, so a little bit of 1 oversight for contracts that have an FTE for 2 state/tribal/federal programs and then some training 3 resources.

4 At the end of that, you end up with the 5 business line resources with the rule allocation, so 6 that's $1.4 million in contracts and about 82.7 FTEs.

7 Here, to figure out what an FTE is worth 8 because we need to account for the appropriate 9 overhead and all the mission indirect resources that 10 we have taken out of the business line during this 11 calculation, we use the approximately $408,000 to 12 figure out what an FTE is worth in the fee class. It 13 produces that $33.7 million plus the total fee class 14 budget, the contracts of $1.4 million, and you end up 15 with a $35 million fee class budget, and that's the 16 fees that we have to recover in this fee class.

17 Moving on to the next slide, this is 18 really just summing up what we did on that last page.

19 Hopefully, a little easier to see form, but you can 20 see the difference in the contracts from the budget 21 line to the fee class, about $4 million that's been 22 removed in terms of contracts, 31.3 FTEs. But that 23 FTE, because of the difference in the full cost FTE, 24 it's about $13.8 million more in terms of the cost of 25 17 the FTEs and about a $10 million difference in the 1 total budget.

2 Moving to the next slide, this is slide 3 eight for people on the phone. This is just an 4 overview of what's happened in the fee class from 5 fiscal year 2014 to the 2018 proposed fee rule.

6 You've seen in the budgetary resources allocated to 7 fuel facilities fee classes about $35.1 million is 8 about a 26 percent or a $12 million decline since 9 2014. But it's a slight increase from the 2017 10 budget by $1.2 million or 3.5 percent.

11 In order to get to the annual fee, we 12 have to go through the step of taking that total fee 13 class budget and estimating the amount of Part 170 14 billings that we're going to get within that fee 15 class. We do that by looking at, historically, sort 16 of the last four quarters of what has come in and 17 making estimates based on what we know about what's 18 going to come in to figure out how much in Part 170 19 billings we're going to get. Part 170 billings, of 20 course, are the direct things, license amendments, 21 inspections, those things that are billed directly to 22 a licensee.

23 What's left over from that estimate then 24 becomes what has to be recovered in the annual fees.

25 18 Those annual fees are then divided amongst the 1 licensees in terms of the fee class budget and fuel 2 facilities. That's also, you know, modified using 3 the fee matrix to assign how much effort is for each 4 of the types of licensees.

5 Okay. We'll move on to the allocation 6 of the low-level waste surcharge. We did receive 7 comments in the proposed fee rule in the low-level 8 waste surcharge, and we will, we are looking at those 9 comments in terms of, you know, processing it, some 10 questions on, you know, how we came to those numbers 11 and whether or not those numbers are correct. So 12 we're going back through that process to essentially 13 re-validate them to make sure that, you know, in 14 response to that comment.

15 But what I can speak to here, at least in 16 terms of the allocation of the low-level waste 17 surcharge, we use data from DOE's Manifest 18 Information Management System, the MIMS system. It 19 contains information on broad generator classes, ways 20 that are classified generally into academic, 21 industrial, medical, and utility. We look 22 historically over a rolling time period at the 23 utility waste volumes to estimate the allocation of 24 the surcharge to each of the different licensee 25 19 classes, and we account for the material users 1 licensed by agreement states.

2 Part of the reason that we have to do 3 this is that the low-level waste program itself, we 4 have no licensees that are licensed by the NRC. And 5 so this is how we're able to continue to pay for that 6 part of the program. And we have to allocate the 7 cost of that program to the licensees.

8 For this year in the FY 2018 proposed 9 rule, it ended up being 41 percent of the surcharge 10 was going to operating power reactors, 46 was to fuel 11 facilities, and 13 was to material users. Just by 12 way of comparison, the FY '17 rule, it was 24 percent 13 to operating power reactors, 62 percent to fuel 14 facilities, and then 14 to material users.

15 Yes, ma'am?

16 MS. SCHLUETER: Yes, I guess just for 17 completeness, I'll repeat the comment that I made a 18 bit earlier in the meeting, and that is I'm glad to 19 hear that you're going back and trying to verify, you 20 know, that information and da ta in MIMS because, 21 through the utilities, you know, that I work with, 22 I've learned that DOE has lacked some funding for 23 data entry into MIMS for at least two calendar years, 24 maybe longer ago than that. So there is a question 25 20 as to how up to date the data is in MIMS, and 1 utilities aren't even able to verify it because 2 there's a generator report that hasn't been activated 3 for quite a while in MIMS either. It was 4 inadvertently sort of defunded and not activated, so 5 we've been working with Jonathan Kang at DOE who's 6 really the forefront person, I think, on MIMS, so you 7 might start with him or something. But I'm not sure 8 how accurate, complete, and up to date MIMS is today.

9 So that might be probably a crux for potentially part 10 of the problem.

11 MR. HARRIS: I appreciate the comment, 12 and we'll definitely, you know, we're going through 13 that process to look at that and try to allocate that.

14 We do have to use information that is available, but 15 I do appreciate that and we'll look into it.

16 MS. SCHLUETER: Right. Just when we 17 talked amongst ourselves, it just looks a little 18 almost nonsensical, if you will, when we look at the 19 relationship between the number of fuel facilities 20 and the number of operating power reactors and, of 21 course, those that have announced, you know, 22 premature shutdown and closing, that the fuel 23 facilities would actually be based on this 24 information responsible for more generation of low-25 21 level waste than the operating power reactors.

1 That's what hits us as a little quirky.

2 MR. HARRIS: I understand. I can't give 3 you an answer directly to that. We do look at it 4 from sort of a rolling average, though, and that's 5 one of the things that we're looking at in terms of 6 responding to it in the fee rule.

7 MS. SCHLUETER: Yes. I'd just advise 8 that you talk to DOE.

9 MR. HARRIS: We will.

10 MS. LANE: So do fuel facilities fall 11 under just the industrial category? They're very 12 broad categories. I just want to be clear where they 13 fall. 14 MR. HARRIS: So I believe they mostly 15 fall under the industrial category.

16 MS. RAY: And your name, ma'am?

17 MS. LANE: Hilary Lane. Sorry.

18 MR. ERLANGER: Craig Erlanger, NRC. I 19 did have an opportunity after reading letters to talk 20 to the business line owner that is responsible for 21 pulling this information from DOE. The data that was 22 utilized for the proposed fee rule for FY 2018 was 23 accurate through 2016. We do expect DOE to update 24 their database in the spring time period. As Brian 25 22 mentioned, it's a five-year, I think it's a four or 1 five year, a couple of years rolling average to 2 eliminate if there are spikes and whatnot. So what 3 I'd ask is look back and think about changes within 4 the fuel facilities business line over that five-year 5 period, and there has been some decommissioning and 6 there has been some movement on material that may or 7 may not account for some of these changes. But we 8 are looking into it and we will respond to it as part 9 of the final fee rule, and it was one of the comments 10 we received. So I hope that helps.

11 MS. RAY: For those on the phone, do you 12 have a comment? Please press *6 to indicate you have 13 a comment. There will be another opportunity for 14 comments, but, at this time, we will --

15 MR. HARRIS: Turn it over. With no other 16 comments right now, I'll turn it over to Rob, Robert 17 Johnson.

18 MR. JOHNSON: Okay. Good afternoon. My 19 name is Robert Johnson. I'm the Fuel Manufacturing 20 Branch Chief in the Division of Fuel Cycle Safety, 21 Safeguards, and Environmental Review in the Office of 22 Nuclear Material, Safety, and Safeguards.

23 I want to thank Brian for providing an 24 overview of the fuel facilities budget. This meeting 25 23 is a continuation of an ongoing dialogue that we've 1 had here recently on or with industry on fuel 2 facilities budget and fees. Recent interactions, 3 just to recap, on the budget have been we've got an 4 industry letter September 15th of 2017. NRC provided 5 a written response on November 6th of 2017.

6 Since then, we had, on December 13th we 7 had a fee matrix public meeting to talk about 8 improvements to the fuel facilities fee matrix, how 9 the fees are allocated to the different facilities.

10 On February 12th, I believe, we also had an FY '18 11 fee rule public meeting at which time Craig had sort 12 of given an overview of the fuel facilities budget.

13 Next slide, please. So slide two 14 outlines key stakeholder concerns and highlights the 15 need for additional dialogue. So during the December 16 17th fee matrix public meeting, staff requested 17 feedback on the proposed improvements to the fee 18 matrix and stakeholders responded, and we appreciate 19 the feedback and actually the written feedback. So 20 we got eight letters from industry, various parts of 21 industry, with a number of questions. And the 22 questions were both on the proposed fee matrix 23 improvements, which is what we were looking for, and 24 then, in addition to that, we got a number of more 25 24 general comments on the fuel facilities.

1 So the key stakeholder feedback on fuel 2 facilities budget included comments on NRC fees and 3 fee increases; the ratio of Part 170 service fees to 4 Part 171 annual fees; the number of FTE and the need 5 for NRC to make more timely adjustments; staff to 6 operating facility ratio, there were questions there 7 or comments; and then there was another comment about 8 retrospective reviews.

9 So this presentation is going to step 10 through each of these areas, but, at a higher level, 11 these letters demonstrated the need to have 12 additional dialogue in a number of areas. So we 13 wanted to talk about the fuel facilities budget and 14 provide an overview, so there's an opportunity for 15 you to understand sort of how things go from the CBJ 16 down to the fuel facilities business line.

17 We wanted to take an opportunity to 18 provide some dialogue or some discussion on responses 19 to the stakeholder feedback that you all provided as 20 a result of the fee matrix meeting. And I think 21 that's it.

22 Now, I want to make an important note 23 here. I think there was a bunch of discussion. We 24 think that we can work on both. We can try and have 25 25 the dialogue and provide some insights on where the 1 fees are, what's in the budget to provide some 2 openness there. We also think that, at the same 3 time, we can be working on improvements to the fee 4 matrix and how the fees are allocated to different 5 facilities.

6 MR. ERLANGER: Robert, if I may, this is 7 Craig. One of the comments that was noted in many 8 of the letters we received was that the NRC needed to 9 address the industry's budget concerns and questions 10 prior to moving forward with any adjustments to the 11 fuel facilities' efforts factors matrix. What Robert 12 is referencing is we believe that both of those 13 activities, we can be responsive to your questions, 14 as well as approve the existing matrix at the same 15 time. 16 To that end, one of the thoughts behind 17 how we structured today's meeting was we'll hopefully 18 answer many of the questions that you've raised and 19 comments that we received as part of these eight 20 meetings, eight letters, which Kevin will provide the 21 ML numbers of if you're interested in during his 22 presentation, and four additional letters on the 18 23 proposed fee rule. We think we can address that in 24 the first half, take a break, but also talk about how 25 26 we move forward with the fee matrix.

1 So the design of today's meeting was 2 intentional to talk about the broader budget concerns 3 and questions and then move to the other part of it 4 on the matrix.

5 From our perspective, the reality is we 6 are going to have a matrix. That is how we allocate 7 fees, and we think there's opportunities to make it 8 better than it is today and we welcome your feedback 9 on that topic in the second hour.

10 MR. JOHNSON: Okay. Thanks, Craig.

11 Slide three. So we're on slide three now. This 12 slide addresses stakeholder questions on NRC fees and 13 fee increases. The first comment was the 14 stakeholders expressed a concern that a small, yet 15 diverse, fleet of seven currently-operating fuel 16 cycle licensees carries an enormous budgetary load 17 given the relatively low-risk profile. So NRC 18 recognizes that the operational fleet is relatively 19 small compared to operating power reactors and that 20 the regulatory load is being carried by a small number 21 of operating facilities. So that we understand.

22 While that's the case, NRC has the 23 mission. So the fuel facilities business line is 24 responsible for ensuring the safety and security of 25 27 fuel cycle facilities and greater than critical mass 1 facilities. The business line leads the licensing 2 and oversight of these facilities, as well as 3 domestic material control and accounting and 4 international safeguards implementation activities, 5 for the NRC. The business line also supports 6 rulemaking and environmental review activities.

7 Okay. This is priorities influence, the 8 work performed on a day-to-day basis, as well as our 9 interim and our long-term planning and the agency 10 budget and execution processes. Our current 11 priorities are: One, or first, ensuring safety and 12 security and environmental protection through 13 effective oversight of operating fuel facilities and 14 facilities under construction and through effective 15 management of licensing actions. This includes 16 maintaining a focus on nuclear safety culture with 17 outreach and education as directed by the Commission.

18 The second priority is supporting U.S.

19 non-proliferation activities through implementation 20 of international safeguards agreements and domestic 21 nuclear material control and accounting programs.

22 Our third priority is maintaining effective 23 communications with stakeholders on approaches to 24 emergent issues, rulemaking, guidance development, 25 28 and other regulatory activities specific to the fuel 1 facilities business line. This is one of those 2 opportunities for us to talk about fees for the 3 business line.

4 As discussed in the February 20 meeting, 5 FY '18 fee rule public meeting, the fuel facilities 6 budget increased between FY '17 and '18 by $1.2 7 million or 3.5 percent. This increase was primarily 8 due to one FTE increase as a result of a comparability 9 adjustment from the nuclear materials business line 10 to support an increase in fuel facility enforcement 11 activities. This change reflects where the work is 12 actually being done and who should be being charged 13 for that work. In addition to that, it also partly 14 increases due to an increase in the NRC fully-costed 15 FTE rate.

16 So with that said, it's important to note 17 that the overall fuel facilities budget has 18 decreased, on average, 6.9 or 7 percent over the last 19 four years. While the fuel facilities budget has 20 continued to shrink, the Part 171 annual fees have 21 essentially remained constant in that same four-year 22 time period with an average increase of 0.2 percent 23 on average.

24 NRC continues to address budget concerns 25 29 and evaluate resource requirements both in terms of 1 FTE and dollars to address fact-of-life changes that 2 are occurring between budget formulation and 3 execution. NRC will also continue to evaluate 4 programmatic efficiencies that have the potential to 5 result in further reductions or adjustments as 6 necessary.

7 The next slide, please, so slide four.

8 This slide outlines stakeholders' concerns related to 9 the ratio of the Part 170 service fees to the 171 10 annual fees, including concerns that the Part 170 11 service fees account for less than one-third of the 12 total fuel facilities budget and questions about the 13 two-thirds of the fuel facilities budget that's being 14 recovered through the Part 171 annual fees and the 15 services that are being provided by these funds.

16 So the following slides and descriptions 17 or discussion provide additional clarity on the fuel 18 facilities budget, the ratio of Part 170 service fees 19 to 171 annual fees, and prov ides some additional 20 clarity in this area.

21 Next slide, please. So we're on slide 22 five. Okay. This slide outlines the fuel facilities 23 budget breakdown. This pie chart and the following 24 charts are meant to be illustrative of the type of 25 30 activities that occur in fuel facilities business 1 line and the types of activities provided in the fee 2 class budget. The percentages are meant to be 3 illustrative and illustrate the ratio of activities 4 in the budget, and we've generally tried to indicate 5 where the fees for the particular activities would be 6 recovered.

7 So with that, now that I've sort of gone 8 over the caveats, I'd like to step through each of 9 the activities covered under the fuel facilities 10 budget. And I'm going to start out with 11 international activities, which I believe is the top 12 orange slice.

13 So under international activities, that 14 makes up about three percent of the fuel facilities 15 budget and is primarily recovered through fee relief.

16 Brian mentioned that six FTE are covered through fee 17 relief. There is one FTE that's covered under Part 18 171 under the annual fees.

19 The next slide is Generic Homeland 20 Security. That makes up about seven percent of the 21 fuel facilities budget, and it's important to note 22 that that is completely excluded from the fuel 23 facilities budget, meaning it's not recovered through 24 either Part 170 or Part 171 fees.

25 31 The next slice is event response. That 1 makes up about one percent of the fuel facilities 2 budget as recovered through Part 171 annual fees.

3 The next slice is corporate support. It 4 makes up about 28 percent of the fuel facilities 5 budget and is recovered through a combination of Part 6 170 service fees and 171 annual fees. I think it's 7 important to note some of the key corporate support 8 activities that are included in this slice of the 9 pie. That includes IT, security, facilities 10 management, rent, utilities, financial management, 11 acquisitions, human resources, the commission, and 12 the EDO. Oh, and the international university 13 program.

14 MR. HARRIS: Sorry. Integrated 15 university program.

16 MR. JOHNSON: Oh, integrated. Okay.

17 MS. SCHLUETER: Hey, Robert?

18 MR. JOHNSON: Yes, ma'am?

19 MS. SCHLUETER: Can you clarify what 20 portions of corporate support are actually under the 21 annual fee versus service fee? How is that 22 distinguished?

23 MR. HARRIS: This is Brian Harris from 24 the CFO office. Part of that is going back to the 25 32 way we calculate both the professional hourly rate 1 and the fully-costed FTE. So when you look at the 2 professional hourly rate that we calculated, that 3 takes the total budgetary authority, which includes 4 all that corporate support, and then what we use for 5 the mission direct FTEs and hours. So that's getting 6 to some of that corporate support there.

7 And then the same thing with the fully-8 costed FTE rate. That's taking in account that total 9 budgetary authority, and then you're using that to 10 multiply it by the mission direct FTEs to figure out 11 the fee class budget.

12 Based on those two things, once I have 13 the fee class budget and what I think I'm going to 14 estimate for what my 170 recovery is, everything that 15 remains becomes an annual fee. Does that help?

16 MS. SCHLUETER: That helps. Thank you.

17 MS. LANE: Robert? Hilary Lane at NEI.

18 Does this pie chart represent FY '17 breakdowns or FY 19 '18? 20 MR. HARRIS: So it's from both the '18 21 congressional budget justification and the fee class 22 budget that we're using for the proposed fee rule, 23 and that's why it's illustrative because it's very 24 hard to get a lot of this information in a way that's 25 33 easily, you know, represented.

1 But what's important to understand is, 2 especially when we're talking about the -- it's hard 3 to see from here -- the 170 fees, those are not fully-4 costed percentages. Those are representing 5 essentially the CBJ percentages, as opposed to the 6 fully-costed percentages, because you'll see that 7 corporate support isn't part of the business line 8 budget, you know, and Generic Homeland Security isn't 9 part of the fee class budget. So this was trying to 10 be able to put it all in one place so you could see 11 it. 12 MR. JOHNSON: So, Hilary, good question.

13 The short answer is it's '18.

14 MR. HARRIS: I'm sorry.

15 MR. JOHNSON: Just to recap. Okay. The 16 next slice is travel. Travel makes up about three 17 percent of the fuel facilities budget and it's 18 recovered through a combination of 170 service fees 19 and 170 annual fees, depending on the type of travel 20 it is. 21 The next slice is training. That makes 22 up about one percent of the fuel facilities budget 23 that was recovered through a combination of 170 24 service fees and 171 annual fees.

25 34 On the next slice is mission support and 1 supervisors. That's about 12 percent of the fuel 2 facilities budget, and it's recovered through a 3 combination of 170 service fees and 171 annual fees.

4 And that represents the fuel facilities business line 5 supervisors, support staff, and administrative staff 6 both here and in Region II.

7 The next slice is rulemaking. It makes 8 up about four percent of the fuel facilities budget 9 and is recovered through 171 annual fees. And then 10 we're going to go into more detail on the green and 11 the blue slices but at a high level. Oversight makes 12 up about 22 percent of the fuel facilities budget and 13 is recovered through a combination of 171 and 170 14 annual fees. The billable part of the 170, the 15 billable -- let me start over again. The billable 16 part of oversight is covered under 170 fees, and 17 that's about 13 percent of the overall budget. The 18 Part 171 annual fees account for about nine percent 19 of the oversight activities. And then, lastly, 20 licensing makes up about 18 percent of the fuel 21 facilities budget and is recovered through a 22 combination of Part 170 and 171 fees.

23 So billable Part 170 service fees account 24 for about 15 percent of the licensing activities.

25 35 And Part 171 annual fees cover about 3 percent of the 1 licensing activities.

2 MS. LANE: Question. Go ahead, Tim.

3 MR. KNOWLES: Tim Knowles, Nuclear Fuel 4 Services. Could you give me an idea, for the 5 corporate support, what type of activities would be 6 charged under Part 170?

7 MR. HARRIS: So this is Brian Harris. So 8 the way the 170 gets charged is, just like I discussed 9 earlier, is that so we figured out the fee class 10 budget based on the calculations that we just did.

11 So that's going to have the total amount that needs 12 to be recovered for all the fees charged in that fee 13 class. 14 Then we use essentially four quarters of 15 estimates for the Part 170 that we had seen up to 16 that point to estimate how much is going to be 17 recovered in 170. The remaining amount of the fee 18 class budget is charged as an annual fee. So it's 19 not a specific, you know, that it's this particular 20 expense, it's that what has to be recovered that isn't 21 going to be recovered under Part 170.

22 MR. B. SMITH: So, Tim, let me try to 23 answer, as well, in maybe a different way. The folks 24 that make up the corporate support, their hours are 25 36 billable to, say, your licensee. But part of the 1 hours1.157407e-5 days <br />2.777778e-4 hours <br />1.653439e-6 weeks <br />3.805e-7 months <br /> are billed to you, like through licensing.

2 Some of their fees that you pay for that cover some 3 of the expenses in corporate support.

4 MR. HARRIS: That's a better answer.

5 MR. KNOWLES: That's clear. Thank you.

6 MR. JOHNSON: Hilary?

7 MS. LANE: Hilary from NEI. The four 8 percent for rulemaking, is the majority of that right 9 now due to the cyber rule? And if not, what are the 10 other pieces of that?

11 MR. JOHNSON: That may be a little bit 12 more detailed question. I think there are other 13 activities going on that are incorporated into there, 14 I believe, Part 74, the SNM Part 73.

15 MR. B. SMITH: Yes, material 16 categorization.

17 MR. JOHNSON: Okay. So the intent here 18 was to show you sort of the bigger picture of how the 19 budget, the fuel facilities budget is broken down.

20 Identify the key components where they're being 21 recovered or where the fees for those different areas 22 are being recovered.

23 I want to take another couple of slides 24 to talk more specifically about the topics that are 25 37 a little near and dear to us on our everyday 1 activities. So with that, next slide, please.

2 Okay, slide six. This slide outlines the 3 fuel facilities budget breakdown for licensing. On 4 the left, you can see the pie chart which is the same 5 pie chart that was on Slide 5. The column on the 6 right side of the diagram outlines the licensing 7 activities performed under the fuel facilities 8 budget. These activities include -- okay. The 9 licensing activities include: Billable or emergency 10 preparedness, which is recovered through Part 170 11 service fees. That accounts for less than one 12 percent of the overall budget. Billable 13 environmental reviews recovered under Part 170 14 service fees. That's about one percent. Billable 15 licensing actions, the day-to-day licensing actions 16 that we get from the facilities, account for about 12 17 percent of the overall budget. And billable security 18 licensing are recovered by 170 service fees, and 19 that's about one percent.

20 So service fees represent about 15 21 percent of the overall fuel facilities budget, and 22 those are the general areas that are covered.

23 Now, non-billable licensing actions 24 which include project management activities not 25 38 directly associated with processing fuel facility 1 licensing actions, including coordination, routine 2 calls with facilities, pre-licensing application 3 support, public meetings, briefings, enforcement 4 support, LPR support, site visits, security issues, 5 and response to events. They account for about two 6 percent of the overall budget.

7 So the next category in the licensing 8 area is policy outreach and guidance development, and 9 that accounts for about one percent of the overall 10 budget. And the policy outreach piece is advice to 11 the Commission and staff on legislative matters 12 related to fuel facilities, congressional oversight.

13 Examples of that would be one-pagers, post-hearing 14 questions, questions for the records, responses to 15 congressional inquiries, responses on fee issues 16 related to fuel facilities like this, special 17 projects related to fuel facilities.

18 So, overall, the licensing accounts 19 represents about 18 percent of the overall fuel 20 facilities budget, and it's broken down as I just 21 listed.

22 Next slide, please, so slide seven. This 23 slide outlines the fuel facilities budget breakdown 24 for oversight. So, again, the pie chart on the left 25 39 should look familiar. The column on the right side 1 of the diagram outlines oversight activities 2 performed under the fuel facilities budget. These 3 oversight activities include billable inspection 4 activities. Those were recov ered under Part 170 5 service fees. That's about 11 percent of the overall 6 budget. Billable security inspections also 7 recovered under Part 170 service fees is about 2 8 percent. So 170 service fees represent about 13 9 percent of the overall fuel facilities budget for 10 oversight.

11 Non-billable enforcement activities in 12 case work. Okay. Let me -- so as far as the next 13 category there, the non-billable enforcement 14 activities in case work are recovered under Part 171 15 annual fees, and that accounts for about two percent 16 overall. The non-billable inspection activities, 17 that represents about four percent and is recovered 18 under annual fees. And the types of things that 19 you're going to see in the non-billable inspection 20 activities include programmatic management of fuel 21 cycle oversight program, providing and maintaining 22 infrastructure for inspecting and evaluating fuel 23 facility license compliance with regulatory 24 requirements, developing procedures and program 25 40 guidance, maintenance of the operational experience 1 programs for fuel cycle facilities, incorporation of 2 risk insights, risk and ISA insights into the fuel 3 cycle oversight process.

4 And the last category or the next 5 category there is non-billable security inspections.

6 That's maintenance of the program, and that's about 7 two percent of the overall budget. It's recovered 8 through 171 annual fees.

9 A better title for this would be non-10 billable security oversight, and it includes 11 activities like security-related enforcement and 12 allocations, foreign ownership control and influence 13 reviews, security inspection, program development, 14 maintenance, and regional support, and then 15 cybersecurity oversight.

16 The next category is inspection IT 17 infrastructure. It's recovered through annual fees 18 and it accounts for about one percent of the overall 19 budget. And I believe that that's related to, that's 20 the fuel facility business line portion of 21 maintaining the RPS system for inspections.

22 So, overall, when you put all of that 23 stuff together, oversight represents about 18 percent 24 of the overall fuel facilities budget. Hilary?

25 41 MS. LANE: Can you go back to slide six 1 for a minute? So the bottom, it says guidance, one 2 percent. So in another one of our public meetings, 3 I think it was Kevin, you explained the 250 guidance 4 documents that the NRC was working on updating or 5 revising. Is that where that would fall under that 6 piece? 7 MR. RAMSEY: Well, some of them. You 8 know, our fuel cycle division doesn't actually own 9 all those documents, so a lot of those documents are 10 owned by other groups in the NRC. Our involvement 11 may simply be here's a copy of the revision, please 12 review it and let us know if you have any comments.

13 So we may not spend that much time on a revision if 14 we're not actually coordinating it. If somebody else 15 is coordinating it and we're just giving comments, 16 that may only take a few hours.

17 MS. LANE: That one percent, that's where 18 your time is for those efforts?

19 MR. RAMSEY: That's how it's budgeted, 20 yes. 21 MR. JOHNSON: Yes. So, Hilary, a little 22 bit just to make sure, so all of our policy outreach 23 and guidance development are recovered through that 24 one person. So, I mean, the amount of effort, and 25 42 we've had a lot of discussions in the CER. We've 1 stepped way back on the actual development of 2 guidance, ISGs. There's things that have been, I 3 mean there are things that are out there, but we're 4 not spending a lot of time on it. So the guidance 5 development is pretty limited, and it does account 6 for review of updates to procedures. This is 7 specifically in a licensing space, and there's 8 another component in inspection, as well, oversight.

9 MR. RAMSEY: This is Kevin Ramsey. I 10 just want to make sure we're clear on something here.

11 There's a difference between what we budget and the 12 hours1.388889e-4 days <br />0.00333 hours <br />1.984127e-5 weeks <br />4.566e-6 months <br /> we charge in execution space. Your fees are 13 based on our budget, so what does or does not actually 14 get charged in the course of a year is not changing 15 your fees. Your fees are based on what was budgeted, 16 okay? 17 MR. HARRIS: The one caveat to that is 18 our use of the 170 for the prior four quarters to try 19 to figure out what the 170 fees are going to be.

20 MR. PADGETT: Wyatt Padgett, URENCO. So 21 determining what that one percent is, how do you --

22 based on last year's?

23 MR. RAMSEY: Well, I mean, the process, 24 there is a reconciliation, you know, say here's what 25 43 we budgeted, here's what was actually charged, and 1 we'll try to make adjustments to keep those 2 relatively close to each other. But I just want to 3 make sure you're clear on your fees are based on what 4 we budget. They're not based on whether we charged 5 more or less than that number. You know, your fees 6 are based on here's what the budget says. That's 7 primarily what's driving your fees.

8 MR. PADGETT: I understand, but that 9 value there isn't necessarily passed to an individual 10 facility, right? It's not Part 170, it's 171. How 11 do you determine what percentages you're applying for 12 the budget for the next year? Is it based upon your 13 efforts in the previous year? I don't know if I . .

14 . 15 MR. B. SMITH: This is Brian Smith, NRC.

16 We try to develop the budget based on the estimated 17 work we're going to do two years in advance. That's 18 the time line that we have to work on. And so we try 19 to set aside some amount of FTE or contract hours to 20 develop various guidance documents. Like, if we know 21 we're going to do a major revision to our standard 22 review plan, maybe we'll budget a little bit more 23 from one year to the next. But, generally, the 24 numbers stay about the same from the guidance 25 44 development standpoint and usually it's not a lot.

1 MR. PADGETT: Thank you.

2 MR. PIERCE: Max Pierce from Naval 3 Reactors. I just want to clarify something. So it's 4 slide 12 of the December meeting. It references 250 5 documents were identified, and I think that's where 6 your comment is coming from. Earlier, when you were 7 talking about slide seven of the current 8 presentation, under inspection you referenced 9 inspection procedures and guidance constitute four 10 percent of inspection. Then when you answered the 11 previous question, you referenced that all guidance 12 and documents were addressed in the one percent. So 13 I think the disconnect is are all 250 of these 14 documents really captured in that one percent?

15 Because it seems like, based on the earlier comments, 16 they're not.

17 MR. JOHNSON: Okay. So I think the short 18 answer to the question is the documents that were 19 represented, that's the whole list. We're not 20 updating all those documents every year. They're 21 cyclical, and I don't know specifics, but we'll be 22 looking at some subset of those documents 23 periodically.

24 And I may have introduced some additional 25 45 confusion here, but what I was trying to do was show, 1 from a licensing side, we're spending about one 2 percent of our effort on guidance development and 3 policy outreach. And then separately, there is also 4 effort that's being spent to address guidance 5 documents on inspection procedures and IMCs and 6 program and maintenance development there.

7 So there are two different elements.

8 When I was thinking about it, I already talked about 9 what NRC is doing and where fees are going. I tried 10 to make sure that we had at least a clear discussion 11 for licensing and then another discussion for 12 oversight.

13 MR. PIERCE: Okay.

14 MR. JOHNSON: Did that answer the 15 question?

16 MS. SCHLUETER: Yes. I mean, I think --

17 I'm sorry. Did you want to --

18 MR. PIERCE: Well, just, again, I take 19 from that that the 250 is not fully captured in the 20 one percent.

21 MR. B. SMITH: Yes, the additional 22 complexity -- this is Brian Smith again -- that Kevin 23 added is that we're not the owners of all of those 24 250 documents.

25 46 MR. PIERCE: I understand that. I think 1 I'm guessing, but the question is coming because was 2 used as one of the justifications for the proposed 3 changes to the fee rule, right? Am I kind of --

4 MS. SCHLUETER: Well, I think we all, in 5 our call before this meeting to look at the slides, 6 and thank you for getting them to us on Friday or 7 making them public on Friday, we looked at these pie 8 charts and found them useful and informative, and I 9 know there's a level of effort that went in to produce 10 them. So we appreciate that.

11 But I think the pieces we're having 12 trouble discerning is following on to the December 13 discussion where we learned that two-thirds of the 14 budget was dedicated to indirect services. And so 15 we're trying to figure out what's in that box exactly 16 because, when we talked about the 250 documents as 17 one example of what's in the box, we thought we should 18 have some further dialogue about how NRC prioritizes 19 their resources expended on guidance updates and so 20 forth. We also heard that in the box for indirect 21 services for things like maintaining the web page.

22 So we're not able, based on reviewing 23 these slides and listening to you, to discern what 24 other items are in the indirect service box which is 25 47 making up two-thirds of the budget which we're all 1 paying for. So that's what we're trying to pick out 2 of these Venn diagrams, and it's a little hard to do 3 because we don't know how the splits are in some of 4 those pieces of the pie when they say, well, Part 170 5 and 171, but what's the proportion of those?

6 MR. JOHNSON: What I tried to do here to 7 communicate, I think, exactly what you're looking for 8 in oversight and licensing, so on slide six and slide 9 seven, I kind of specifically identified where -- so, 10 for instance, in the right column on slide seven, the 11 first one is inspection, direct billable inspections 12 were covered under Part 170. I tried to give you 13 that breakdown for licensing and inspection because 14 those are the areas that I thought were important.

15 MR. RAMSEY: Well, I think -- this is 16 Kevin Ramsey. One of the reasons we have trouble 17 giving you a number, you know, some places you'll see 18 both 170 and 171, is some of this corporate stuff is 19 totaled into the hourly rate, which is great. Some 20 of the corporate support will be collected through 21 170 direct services if we bill time there. But 22 that's kind of an unknown, and we're estimating that.

23 So we'll grab what we can. But if we 24 don't have enough billable hours to cover the budget, 25 48 whatever remains of corporate support and that other 1 stuff is going to roll over to the annual fees.

2 That's why you're seeing those numbers there.

3 MS. SCHLUETER: Yes, that's the whole 4 balloon thing. We're squeezing on one end, but it 5 pops out on the other.

6 MR. ERLANGER: So this is Craig from the 7 NRC. Janet, one of your comments, we are trying to 8 be responsive to the letters in the last public 9 meeting to explain with an appreciable level of 10 detail what's in our budget. It sounds like, I even 11 see website and a review of 250 documents that are 12 agency-wide documents seem to have stuck with certain 13 members. But we also gave examples in the corporate 14 support area, mission support, in some appreciable 15 detail of what that accounts for.

16 So I guess my question is did we -- we 17 tried very hard to explain what made up the 100 18 percent of our budget to a level of detail. Is the 19 response that we, is the thought that we did not get 20 to the right level of detail? So we covered 21 everything from rent, salaries and benefits. Robert, 22 you can go back and read all the examples we provided.

23 And what I'm asking is we're open providing 24 continuing dialogue, but it would help us to really 25 49 specifically understand where you need the more 1 detail because this chart is our best attempt to 2 provide that detail and talk through all the examples 3 that Robert provided.

4 MR. SPANGLER: David Spangler. I might 5 be jumping ahead on something that will get clear 6 later, but we started getting the fee a few years ago 7 where our project manager is charging. And we said 8 so how is it when our project manager charges and 9 your prior project manager was in the licensing 10 aspect of the fee, and then we suddenly started 11 getting project manager direct charge? How does he 12 or you all or us forget what his portion is that's 13 not in here but comes out over there? That was one 14 of our questions two years ago, last year. It was 15 never really clear to us when we started pulling that 16 string to get more detail because that would be one 17 question we could say, aha, we never got the aha of 18 how it is the project manager now charges when he 19 didn't charge us and that will become clear in these 20 breakdowns that --

21 MR. JOHNSON: I think a quick response 22 to that is I think the CFO has heard that question 23 and they're working on --

24 MR. HARRIS: On that chart, I totally 25 50 understand the question. Are you talking about the 1 six-percent charge?

2 MR. SPANGLER: There's a six-percent 3 charge that was a change in the way things were billed 4 a number of years ago. How is that not billing twice 5 for the same person? And so, as I see it broken down 6 further, it still makes me ask that same question, 7 well, how is it that I get three hours and sometimes 8 six hours, and there's a whole version there. You 9 know, how is it that project managers charge and then 10 they don't charge and you get a licensing inspection 11 fee? So what changed a few years ago and then how 12 is my project manager get --

13 MR. HARRIS: So let me start off, and 14 this may take a little bit of back and forth. So I 15 think the first thing is, you know, in the proposed 16 rule, we've already said that that six percent is not 17 going to be there anymore. The project managers are 18 going to be billing all their time directly. For a 19 licensee project manager, they should be billing all 20 their time to -- well, it will be after October is 21 when that would go into effect, so it's really the 22 new rule.

23 If you look in the regulations and, for 24 being from OGC, I didn't bring my regulations with 25 51 me, but it's in 170 and I can send it to you. Part 1 of our regulations require us to recover all the time 2 for a project manager and a resident inspector that's 3 assigned to a licensee so all their time, except 4 vacation. So their indirect time, things that would 5 normally be billed, and that's essentially what that 6 six percent was trying to do before. They tried to 7 bill that, and I think they originally had some, you 8 know, issues with trying to do that before. We 9 looked at the cost of project managers and the time 10 that was really going to indirect time and worked out 11 that six percent represented about the amount of time 12 that was not being billed directly previously.

13 So that's where that six percent came in 14 from. Michele may be able to add a little bit more 15 detail just because I'm a little new to the CFO's 16 office, so my history is not as good as everybody 17 else's. But that is now being, you know, that six-18 percent charge will be going away.

19 MS. KAPLAN: So there was a table in our 20 billing system which had all of the costs you had if 21 there's resident inspectors assigned to billable 22 projects to our licensees. And it was not feasible 23 to update it going forward. So in 2015, there was a 24 decision made that they looked at all of those charges 25 52 and it was determined it was around six percent. And 1 so we just had this six percent across-the-board 2 charge. 3 MS. RAY: Ma'am, could you introduce 4 yourself?

5 MS. KAPLAN: I'm Michele Kaplan. I'm 6 the former license fee policy team. I'm on rotation 7 right now. So because of the concerns about 8 transparency, we decided, as one of our fees 9 transformation tasks, we were going to look at the 10 six percent charge and we were going to determine 11 that we wouldn't have this across the board six-12 percent charging and we were going to have the 13 resident inspectors and the project managers bill 14 their time directly to the projects that they were 15 working on. So that includes time, like training and 16 other administrative functions.

17 MR. HARRIS: Other than generic things.

18 And in some business lines, project managers get 19 pulled off to do generic work, so that wouldn't 20 necessarily be --

21 MR. SPANGLER: So the license fees will 22 be reduced in the future --

23 MS. KAPLAN: So the six-percent charge 24 will go away.

25 53 MR. SPANGLER: -- and we're going to be 1 getting inspector fees?

2 MS. KAPLAN: So you'll get specific 3 charges from specific resident inspectors, project 4 managers, for their time that they're spending on 5 these administrative functions directly.

6 MR. JOHNSON: So let me suggest, Dave, I 7 think the CFOs heard that question and they're 8 working on a response for it now, and I expect in the 9 final rule you'll see how that rolls out and it will 10 go into effect. What we can do is try and provide a 11 little more or as much illumination as we can now 12 before the final rule is published.

13 So the bottom line is I think we've heard 14 the question. We're trying to respond to it now, and 15 you should see a difference. Now, whether we're 16 moving that fee here, it may result in additional 17 hours1.967593e-4 days <br />0.00472 hours <br />2.810847e-5 weeks <br />6.4685e-6 months <br /> there for that project manager or the senior 18 resident. But we've heard the question.

19 MS. RAY: This is Sheila Ray. I would 20 like to continue on with the presentation. I really 21 appreciate all of the feedback. I would like to 22 leave some time for Q&A on this topic. Before we 23 move to the second topic, we will have a short break.

24 But if, Robert, you could finish in five to ten 25 54 minutes and we could have at least ten minutes for 1 Q&A. And, again, those on the phone, please press 2 *6 if you have a comment. Thank you.

3 MR. JOHNSON: Yes, ma'am, I'm on it.

4 Okay. So let's move to slide -- oh, okay, we're on 5 slide eight. This slide eight represents or outlines 6 stakeholder concerns with the number of FTE and the 7 need for more timely budgetary comments. Some of the 8 comments that had come in were stakeholders felt that 9 the number of FTE was high and not economical and 10 that additional reductions needed to be made.

11 Stakeholders also noted that the number of FTE in the 12 fuel facilities business line in the Division of Fuel 13 Cycle Safety and Safeguards and Environmental Review 14 has stayed relatively stagnant over the past several 15 years, despite sort of having a reduction or a 16 decrease in operating facilities from 11 to 7.

17 Stakeholders also highlighted the vital importance of 18 NRC's ability to make timely budget adjustments due 19 to anticipated workload and the economic environment.

20 So we recognize and we understand the 21 comments. What I'd like to do is, on the next slide, 22 so slide nine, we're going to try to provide some 23 additional clarity on the number of FTE and the 24 historical budget adjustments.

25 55 So this slide should look familiar. It 1 was discussed at the February fee rule meeting. I'll 2 step through it relatively quickly.

3 So as discussed at the February '18 fee 4 rule public meeting, the fuel facilities budget line 5 had significant adjustments over the last ten years, 6 and you can see from the diagram that there's been 7 significant adjustments both upward and down. We had 8 talked about in the last meeting about the reasons 9 for the increase and the step up, so I'm going to, 10 just for efficiency, I'm going to step through that.

11 But I would like to sort of note that the peak in the 12 2012 and '13 time frame, we were up, the business 13 line was up to about 184 FTE. So since then, we've 14 had a significant or experienced a period of 15 significant workload decrease and reductions both in 16 staff and contract hours from the FY '13 17 approximately to FY '18 time frame.

18 The reasons for this decrease include 19 reduce all fuel cycle facility licensing actions and 20 complexity, reduce construction inspection 21 activities, reduce the effort for major renewals --

22 they're mostly finished at this point -- a reduction 23 in the level of infrastructure development. So we 24 talked about the fact that the guidance development 25 56 process has stepped significantly back. And a 1 reduction in operating number of, the number of 2 operating fuel cycle facilities.

3 Since NRC formulates its budget two years 4 in advance, it takes time to adjust when work doesn't 5 materialize. However, the NRC continues to actively 6 evaluate resource requirements and evaluate 7 efficiencies that could reduce resource needs and 8 make corrections, as appropriate. So in that public 9 meeting, we had an opportunity to talk about a number 10 of activities that are going on to make the NRC a 11 little more, as efficient as possible.

12 The NRC recognizes that the Part 171 13 annual fees have increased significantly since --

14 what was the time frame you guys mentioned? Over the 15 last ten years. We continue to try to work to right 16 size the fuel facilities budget in the current year 17 and future years. As indicated by the right side of 18 this chart, our progress is trending down in a 19 direction that more accurately reflects the work in 20 the fuel facilities business line, and we expect the 21 trend to continue when the proposed FY 2019 budget 22 numbers are, actually they've been released, as well 23 as FY '20 time frame. And NRC continues to evaluate 24 the options to reduce this percentage of the budget 25 57 that is assigned to annual fees.

1 Next slide, please.

2 MS. SCHLUETER: Could we stop there and 3 just have a conversation there?

4 MR. JOHNSON: Can I? Should we try and 5 get through the presentation so that we can get into 6 the comment period, or do you . . .

7 MS. SCHLUETER: Your choice.

8 MR. JOHNSON: well, okay. Well, yes, 9 let's --

10 MR. ERLANGER: We have a second, Kevin's 11 presentation on the matrix.

12 MR. JOHNSON: So I believe it's 2:30.

13 MS. RAY: We'll say 2:35 because we were 14 slightly late.

15 MR. JOHNSON: Okay. So Janet, let's go 16 ahead -- or, Hilary, if there are questions, we can 17 . . . 18 MS. SCHLUETER: Yes. Well, I'll be 19 brief. It's not a new point. But, you know, if you 20 just took slide nine, you know, in and of itself, it 21 would just look like such a great story. But if we 22 look back at Brian's slide eight, which you had used, 23 you know, in the February 12 meeting, which is the 24 recovery on that over a period of 2014 to 2018, you 25 58 know, the FTE has gone way down and I give you credit 1 for that. But the budget is not going way down.

2 Facilities aren't seeing a proportional change in the 3 budget that reflects the FTE drop. In fact, we're 4 seeing it stagnant and even bumped up two years and, 5 yet, your own chart recognizes what we all know and 6 what we've written in our letters and so forth that 7 the number of licensees has gone down. At one point, 8 we had 11 before 2014. Now we have 7.

9 So, yes, FTEs dropped down significantly, 10 but the budget hasn't. So, you know, when we see FTE 11 cut, people cut in private industry, your operating 12 budget goes down. You do with what you have left.

13 You make do. So this is the part that we're having 14 trouble understanding why is there not a proportional 15 decrease in the overall budget.

16 MR. JOHNSON: So I'll start off the 17 discussion. I understand the comment, and, I mean, 18 I think we've heard what you've said. I also want 19 to recognize that just in the last four years the 20 budget itself has decreased, on average, of 6.9 21 percent per year. And if you do -- you're correct.

22 The fuel facilities budget has continued to shrink 23 and the Part 171 annual fees have essentially 24 remained the same with about 0.2 percent increase 25 59 over those same four years.

1 So the number of facilities have dropped.

2 We understand that and we recognize that. We have a 3 certain level of resources that are necessary to 4 conduct the mission and the program, and we've tried 5 to outline what is being done with those resources 6 and where they're being expended. So we've heard --

7 MS. SCHLUETER: I guess it's just a 8 little frustrating, too, because we've seen it happen 9 in the uranium recovery program, you know, where a 10 majority of the sites are going to probably go to the 11 State of Wyoming come October 1. And so it's like, 12 you know, to what degree does NRC expect the remaining 13 licensees, which in that case is going to be three, 14 to carry the whole infrastructure of the NRC. I 15 mean, there has to be some, I realize there's a 16 minimum base, there's a foundation of infrastructure 17 that you have to have for a regulatory program. But 18 you can't expect the dwindling set to carry the burden 19 of that large program as it is reflected today.

20 There has to be some sort of proportional reductions.

21 And I don't know what the NRC is going to 22 do with the uranium recovery program. I know the 23 staff has been struggling with that and, you know, 24 they're consulting with the Commission. But you've 25 60 got a set of licensees there that are going to see 1 some unknown fee rule and fee structure come October 2 1 because they're going to be left holding the bag.

3 So how many fuel facilities are going to be left 4 holding the bag in two years, three years, four years?

5 MR. B. SMITH: So to try to address one 6 of your points, like you said, in 2014, the budget 7 was in the first block there $47.2 million with ten 8 licensees, so it's about $4.7 million per licensee.

9 Seven licensees in 2018, so that's three less. So 10 by my math, we're only off by a couple of million.

11 4.7 times three gets you to 14 million, subtract 14 12 from 47 gets you at 33. So we're only a couple of 13 million off from where we were per licensee in 2014.

14 If you take into account inflation, the cost of an 15 FTE going up, that puts you at about even.

16 MS. RAY: This is Sheila Ray. If we 17 could finish up the presentation, I'd like to leave 18 at least ten minutes for general Q&A.

19 MR. JOHNSON: Okay. So thank you, 20 Janet. We understand the question and we're trying 21 to be responsive. So with that, we'll move to slide 22 ten. Slide ten identifies stakeholder concerns with 23 staff, operating staff to operating facility ratio 24 and the question on the Environment Review Branch 25 61 staffing. Stakeholders noted that the fuel 1 facilities, fuel cycle facilities have a staff to 2 operating facility ratio of approximately 16 to 1, 3 while commercial nuclear reactors have a ratio of 4 approximately 15 to 1, yet the fuel cycle facilities 5 is substantially less.

6 NRC -- we have already sort of talked 7 about this. NRC continues focusing on our mission 8 and evaluating our priorities and looking for ways to 9 become more efficient and effective. The fuel 10 facilities budget has been reduced significantly 11 since the peak workload that was identified in the 12 2012 to 2013 time frame and continues to evaluate 13 changes to the budget as a result of changes in 14 workload.

15 It should be noted that, while the fuel 16 cycle facilities have a staff to operating ratio of 17 approximately 16.3 to 1, this ratio includes 18 operating facilities and facilities under 19 construction.

20 The 15.6 to 1 ratio that industry cited 21 in the quote above includes only the operating 22 reactor portion of the new reactor safety business 23 line. If you factor in both the operating reactors 24 assigned and the new reactor lines, the ratio is 25 62 closer to 20 to 1.

1 The next comment that was brought up, 2 stakeholders cited the Environmental Review Branch as 3 an example of where it's difficult to understand why 4 13 FTE are needed. So that's an opportunity just for 5 us to clarify how we're budgeted. NRC's 6 Environmental Review Branch provides a wide range of 7 environmental review services, guidance, and training 8 that's related to decommissioning and uranium 9 recovery and fuel cycle and spent fuel and rulemaking 10 activities. So for the Environmental Review Branch, 11 they are receiving two FTE and one supervisor from 12 the fuel facilities business line. The rest of the 13 FTE, the rest of the 13 FTE are funded by other 14 business lines.

15 MR. ERLANGER: The fuel facilities is not 16 at 13 FTE for environmental reviews in the nuclear 17 materials waste program.

18 MR. JOHNSON: Next slide, please, slide 19 11. This slide addresses stakeholder suggestions 20 that NRC conduct various types of retrospective 21 reviews. Stakeholders noted that the respective 22 reviews of agency initiatives could inform current 23 and future NRC activities and initiatives. And I'll 24 save us some time, the specific quotes that were 25 63 identified that came in as a part of public feedback 1 or stakeholder feedback are provided in the slide.

2 NRC agrees that retrospective reviews may 3 be beneficial. NRC puts careful thought into the 4 regulatory initiatives it pursues. FCSE and industry 5 conduct routine Cumulative Effects on Regulations 6 meetings, and we've used that process as an effective 7 forum for dialogue on regulatory initiatives, 8 guidance, rulemaking, current activities, industry 9 initiatives. I'll put a plug in. The next meeting 10 will be on April 11th and each of the topics that 11 were discussed in the second bullet, the Part 74 12 rulemaking, the Part 73 rulemaking, and the ANS 5711 13 standard will be topics that are going to be 14 discussed.

15 MR. ERLANGER: Robert, this is Craig 16 Erlanger, NRC. I would like to just take a moment 17 and mention for the ANS 5711 standard, in that 18 standard we get a lot comments that have been made in 19 letters regarding not moving forward with that. Just 20 to make it clear, the NRC is one voting member for 21 the standard. So the Department of Energy is 22 involved, licensees are involved, and we are just one 23 vote. So while we do, and I want to be clear we do 24 support the development of a standard, we're just one 25 64 vote. So we just have to be -- other things go into 1 whether we move forward or not. It's not solely an 2 NRC decision. Thank you, Robert.

3 MR. JOHNSON: Okay. And then the last 4 thing I'd like to say is we do, we understand the 5 benefit of retrospective reviews in a number of areas 6 and we do do those types of reviews. I would like 7 to point out that NRC rulemaking guidance development 8 is typically or almost always conducted through a 9 very deliberate and open process that invites input 10 and feedback from a broad range of stakeholders. So 11 we've had an opportunity to talk about those 12 rulemaking activities in various forms and had 13 dialogue and engagement and an opportunity to 14 understand industry feedback in each of those areas.

15 Next slide, please. So in conclusion, 16 we understand the stakeholder feedback. I appreciate 17 it. There was a lot of it. We know that industry 18 feels that the budget, fees, and the number of staff 19 are high. We understand that. We're trying to 20 maintain the program.

21 Through this presentation and the various 22 fuel facilities budget overview presentation that 23 Brian had provided earlier, we're trying to provide 24 additional information in response to the stakeholder 25 65 questions, feedback, and comments that had come in as 1 a part of that, I guess, from the fee matrix public 2 meeting. And I'll say it one more time: we're 3 continuing to evaluate ways that we can be more 4 efficient and effective in identifying where 5 resources can be more effectively employed. We 6 continue to engage stakeholders on regulatory 7 initiatives.

8 And with that, I'll hand it back over to 9 Sheila and see if there are any other additional 10 questions, see if there's anything from the 11 bridgeline, as well.

12 MS. RAY: Thank you. For those on the 13 phone, please press *6 to make a comment. Are there 14 any comments from the phone line? I'm just making 15 sure that they're not on the phone from the operator.

16 But are there any questions in the room?

17 MR. PADGETT: Yes, this is Wyatt Padgett 18 with URENCO again. I want to -- I do appreciate all 19 the pie charts that you put together and information.

20 It was very helpful. A lot of the questions that we 21 had I think were answered. But I think providing it 22 just simply isn't enough, you know, as far as the 23 two-thirds, for that number, to understand why, not 24 so much just what it is but why is two-thirds of this 25 66 something else?

1 MR. JOHNSON: Thank you for the comment.

2 MS. RAY: Let me just check are there any 3 folks on the phone who would like to make a comment?

4 Okay. 5 OPERATOR: All lines are open.

6 MS. RAY: Thank you. Any other comments 7 in the room?

8 MR. SPANGLER: So I guess what Wyatt 9 said, thank you for providing an additional 10 breakdown. Obviously, that's going to give us 11 another opportunity to go, oh, now I got another 12 question because you see a little more detail. So 13 we'll probably have to digest this a little more and 14 ask a few more questions.

15 But on one note, Robert, I would have to 16 take issue to bring in the additional FTE comparison 17 from commercial power plant construction to that 18 number. It's already tough enough for me to swallow 19 that we would compare FTEs for an operating nuclear 20 power plant and operating fuel cycle facilities. The 21 risk and INES scale, not my scale but the INES scale, 22 we're three orders of magnitude lower in risk. I 23 would say a starting point would be three orders of 24 magnitude lower in fees and FTEs since we are supposed 25 67 to be risk informed and performance based. That's 1 the basis of the NRC, not because I said that.

2 And so to be slightly higher is already 3 orders of magnitude too high, in my view, if it's 4 truly risk informed. Okay. Thank you.

5 MR. KNOWLES: Tim Knowles, NFS. Yes, 6 thank you. This is exactly the level of detail that 7 I was hoping for. But also I'd like to make a comment 8 again on corporate support, especially as we move 9 into Kevin's presentation on the fee factor matrix, 10 is that when it's determined overall what a 11 particular fuel cycle facility is going to pay on an 12 annual fee basis, why does one particular licensee 13 pay a larger portion for corporate support than 14 another? I think that absolutely should be taken 15 into consideration as we move into the discussions 16 relative to the fee factor matrix.

17 MS. LANE: I had a question for Brian.

18 This is Hilary Lane, NEI. On one of the slides, you 19 mentioned the professional hourly rate of 270, which 20 has gone up $6.00 - $7.00 from last year. And maybe 21 I missed this and I'm sorry if I did, but have you 22 benchmarked that number with other agencies to see 23 what their professional hourly rate is, you know, 24 maybe DFSB or other similar regulatory oversight 25 68 bodies?

1 MR. HARRIS: So I don't think that, you 2 know, we have, but the way we have to calculate it 3 for our OBRA-90 requirements is that we have to 4 actually recover this fixed amount of fees. And so 5 we have to account for all the overhead, you know, 6 costs in those fees when we get to that final recovery 7 of that 90 percent.

8 So one of the things that pops out, at 9 least as a difference between us and a lot of other 10 regulatory agencies is a lot of them don't have the 11 OBRA-90 requirement. So the y're working under a 12 different model for fee recovery than we are.

13 We also have the additional physical 14 security requirements that don't exist in a lot of 15 the other agencies. But we have to account for that 16 entire fee recovery amount and, basically, we have to 17 account for that in terms of who's actually going to 18 be a mission direct FTE which is what produces that 19 number, rather than trying to benchmark necessarily 20 against another regulatory agency.

21 MS. RAY: Any other comments? On the 22 phone? Any other comments on the phone? Hearing 23 none, I propose a five-minute break. If we could be 24 back here at 2:50, would that be okay? And we'll 25 69 continue on the fee matrix.

1 (Whereupon, the foregoing matter went off 2 the record at 2:44 p.m. and went back on the record 3 at 2:52 p.m.)

4 MR. RAMSEY: Okay, this a response 5 specifically to the comments on the fee matrix that 6 we got at the December meeting. If we'd go to slide 7 2. 8 So basically, in December, we had a 9 public meeting, we introduced three possible 10 approaches to calculating annual fees, and we're 11 going to go through and discuss the comments 12 received, at a very high level, on each of those 13 approaches. We will also introduce two additional 14 approaches that grew out of the comments that we 15 received, and then we'll discuss next steps. So if 16 we can go to slide 3.

17 Status quo, which is basically no change 18 at all, the feedback was mixed. Some supported, some 19 stakeholders supported no change because there was no 20 indication that the matrix is flawed or unreasonable.

21 That was their position.

22 Some stakeholders opposed it because they 23 noted that two high-enriched uranium licensees pay 24 over half the annual fee for the fee class, but the 25 70 available information shows the NRC does not spend 1 over half its resources on those two licensees. So 2 they felt like a change was reasonable.

3 In the uniform approach, again, feedback 4 was mixed. Some stakeholders supported the uniform 5 approach because the majority of the indirect 6 services are not facility-dependent, therefore it's 7 reasonable to split the cost evenly over the fee 8 class. Other stakeholders opposed it because they 9 believed the approach was not fair and equitable.

10 With the combination approach, which, to 11 refresh your memory, was a proposal to distribute 85%

12 of the cost uniformly and 15% of the cost 13 proportionally based on the billing data for the 14 direct services. Most of the feedback was negative.

15 The comments we received were that the approach was 16 subjective and not fair and equitable.

17 Some believed that there was no 18 information suggesting that the billing data captured 19 the same types of activities across different 20 facility types. Other stakeholders noted that using 21 the billing data could discourage licensees from 22 requesting amendments authorizing process 23 improvements. So that's our high-level summary of 24 the comments we got.

25 71 We go to slide 4. So where we are today, 1 we still have the three proposals from December are 2 on the table. But we're looking at introducing two 3 additional approaches. The current matrix with 4 revisions was mentioned briefly at the last meeting.

5 We decided to list it separately so we could consider 6 the impact of the changes while maintaining the 7 status quo approach. So we're going to look at that.

8 In addition, one commenter noted that the 9 sensitive information column in the existing matrix 10 technically isn't the license process, but they 11 thought it was appropriate to keep it. In addition, 12 it was suggested that we add a column for physical 13 security, which is also not a license process.

14 So in considering these comments, we 15 determined that another possible approach would be to 16 define the entire matrix in terms of the areas we 17 regulate, rather than the processes that we license.

18 So we're going to show you what that looks like.

19 So if we go to slide 5. So taking the 20 current matrix and making some changes to it. In 21 response to a comment that the factor of ten 22 difference between high effort and low effort is 23 unreasonable, to look at how we could change that.

24 We changed the definitions from high, medium, low, 25 72 from ten, five, and one to three, two, and one.

1 That's the most radical shift. We 2 understand that there are variations that we could 3 use, like one, three, and six, and one, four, and 4 eight. But you know, rather than doing a lot of 5 variations, we just decided to try three, two, and 6 one and see what it looked like.

7 In response to the comment that solid UF6 8 effort for an enrichment facility should be 9 consistent with the scores that are on the matrix for 10 the low-enriched fuel fab, we lowered the score from 11 high to medium for enrichment so that it matches low-12 enriched fuel fab.

13 And in response to the comment that there 14 should be a column for physical security, we added a 15 column. 16 So in slide 6, I apologize for the teeny, 17 tiny type, but it's a big matrix. That's what it 18 looks like. You probably have to pull it up on your 19 screen to see the specific numbers, but let's go to 20 slide 7. This is what the impact is of those changes.

21 So we're still using Fiscal Year '17 as 22 the case study because we have complete information 23 for that fiscal year. We get the following results.

24 High-enriched fuel fab fee decreases from 7.2 million 25 73 to 5.7. Low-enriched fuel fab fee increases from 2.6 1 to 3.6. The enrichment fee actually decreases from 2 3.5 to 3.1 million. And the conversion fee increases 3 from 1.5 to 1.9 million.

4 So that's how we implemented those 5 changes. So if you have comments on the actual 6 changes that we made, maybe that wasn't what you 7 intended. Maybe you, now that you're looking at it, 8 think, well maybe you should make some other changes.

9 Let us know what you think. But just playing with 10 the existing matrix, we could make some changes like 11 this, and that would change the results.

12 So on to slide 8. This is the other 13 option of how about we just redefine the columns in 14 terms of areas that we regulate rather than licenses 15 that we process. What would that look like? So 16 let's go to slide 9.

17 One thing, you'll notice that we 18 continued to use the definitions of three, two, one 19 for the high, medium, and low, so we carried that 20 forward. Now, we note that it's a little cleaner.

21 There's only one number in each column because the 22 safety areas have their own column and the safeguards 23 areas have their own column, so we don't need to have 24 two numbers in each column.

25 74 Please note that we have a cyber security 1 column, because for the effort spent on cyber 2 rulemaking. There's a teeny, tiny line at the top 3 there that you might not be able to read very well, 4 but it's basically a reminder that non-billable 5 services include rulemaking, guidance, implementing 6 procedures and training.

7 And this matrix is a pretty good 8 description of the non-billable services that we 9 recover through annual fees. Because in each of 10 these technical areas, we have to maintain a program 11 of rules, guidance, implementing procedures, and 12 trained staff in each one of these technical areas, 13 no matter how many billable actions we process in any 14 given year.

15 And that's kind of the, that's the 16 program that we have to maintain. I understand that, 17 you know, we can make cuts in staff, and I'm sure all 18 the licensees have done that in their own staff. But 19 you reach a point of diminishing returns where 20 there's a certain level that you have to maintain or 21 you're just not operating.

22 This is the program that we have to 23 maintain. So there's kind of a baseline there that 24 we're bumping up against. But so if we go to slide 25 75 10, so if we turn the crank, this is what this one 1 looks like. The high-enriched fuel fab fee, now 2 granted, this is, we scored all these numbers. So 3 if you have comments on how we scored it, let me know.

4 High-enriched fuel fab fee would decrease 5 from 7.2 to 4.4 million. The low-enriched fuel fab 6 fee would increase from 2.6 to 3.8. The enrichment 7 fee increases from 3.5 to 3.8, and the conversion fee 8 would increase from 1.5 to 3.3.

9 So that's the second new approach that we 10 developed. So if you go to slide 11. So here's 11 basically where we are. Questions that we would like 12 you to think about. Do you have any comments on the 13 revisions approach, you know, the first one that we 14 introduced?

15 Are there other revisions you think we 16 should make to the existing matrix? Is the matrix 17 of regulated areas better? Should the effort factors 18 that we assign to the regulated areas be different, 19 and if so, why? And of course, are there any other 20 approaches you think we should consider?

21 So in the final slide, next steps is 22 similar to the last meeting we had. We're requesting 23 comments in connection with this public meeting by 24 April 27, that's 30 days from now. What we'll do is 25 76 after we get those comments and we evaluate them, 1 from that point, we will be preparing any 2 recommendations on this entire issue of modifying the 3 method of calculating annual fees.

4 We'll be, you know, we'll be developing 5 those recommendations for the Commission paper for 6 the FY19 proposed fee rule. At that point, we'll be 7 back into the rulemaking process. So if the 8 Commission decides to propose a change to the annual 9 fee calculation, you'll get another chance to comment 10 on the Commission's decision when the fee rule comes 11 out for comment.

12 MS. RAY: So I guess at this time, let 13 me add that the comments, please send them to the 14 Document Control Desk, with copy to Kevin Ramsey. At 15 this time, we are open for any questions, comments 16 either in the room or on the phone. And if you are 17 on the phone, please press star six to unmute 18 yourself.

19 MR. PADGETT: Wyatt Padgett, URENCO.

20 You know, the two new proposals, something for us to 21 consider that I think what you'd find amongst the 22 seven new facilities is two would agree, five would 23 disagree, three would agree, four disagree. It just 24 depends on whether it's going up or down, right, and 25 77 for the most part.

1 As far as the existing matrix, we don't 2 feel that it's unfair. We don't feel the approach 3 is unfair, and if the NRC's going to consider a new 4 approach, you need to show why this approach --

5 MS. RAY: Thank you for your comment.

6 Other comments, in the room or on the phone. Yes, 7 sir. 8 MR. SPANGLER: Dave Spangler, BWXT. I'd 9 like to thank the NRC for having these meetings, 10 listening to some of our comments, and trying to 11 incorporate some new methods. And so we do support 12 the new approaches to, in the matrix, like they're 13 presented. That be my first blush on it. That, take 14 a look at efforts that we see are a little more 15 equitable.

16 Sans security and the actual I see where 17 security and accountability come out mostly in the 18 areas through inspection and resident and things like 19 drills and so forth. So we did a commensurate-level 20 and inspection-level effort that is deserved of a Cat 21 1. But in the effort on the upfront, we spent about 22 the same amount of time working with the regulators 23 and the regulators with us. Thank you.

24 MS. RAY: Thank you for your comment.

25 78 Are there comments on the phone or in the room? Yes.

1 MS. LANE: Hilary Lane, NEI. So when 2 you were calculating the numbers, you know, on the 3 various charts, can you give a little more detail on 4 how you arrived at the numbers for the different 5 licensees?

6 MR. HARRIS: Do you have a specific 7 example, do you want me to pull --

8 MS. LANE: Just in -- yes, yes, just in 9 general. 10 MR. RAMSEY: Well, the total amount in 11 that you'll see in the one that's on the screen now 12 that's, what is that, slide 10? The, basically, 13 we're tallying up the effort factors, and then for 14 any given licensee, we're taking that total, dividing 15 it by the total for all the effort factors to get a 16 percentage.

17 So for any given line, you'll see it's 18 somewhere between 12% and 16% of the total. The 19 total amount for FY17 for those seven licensees was 20 27 million and change. So I'm basically just 21 multiplying the percentage times that number to get 22 what comes out in that next-to-last column. It's --

23 MS. LANE: Right, I understand the math.

24 I think on slide 9, I was more interested in the 25 79 justification behind those numbers, on how staff 1 provides those.

2 MR. RAMSEY: Well, for three, two, one, 3 I did consult with the specialists in many of those 4 areas to say, you know, do you believe, can you --

5 when we're talking about rulemaking guidance, you 6 know, training, that type of thing, you know, 7 maintaining, training staff, is it pretty even across 8 the whole business line? Or is there some place 9 where we spend more effort?

10 And many of the general areas like 11 radiation safety, chem safety, it's pretty even 12 across the whole business line. So in a lot of 13 places, I just scored that as two for everybody. But 14 a few examples are, you know, for crit safety, for 15 criticality's safety, it's higher for the high-16 enriched than the low-enriched, and it's zero for the 17 conversion facility.

18 And also for things like physical 19 security, higher for the high-enriched than the 20 others. Now, for information security, I believe 21 that may actually be higher for the enrichment 22 facility than it is for the others, or maybe it was 23 the same. I don't recall exactly how I scored that.

24 But so there are places where I've scored 25 80 it equally across the whole business line, and there 1 are places where I tried to reflect that, yeah, we do 2 spend more time, because quite frankly, you know, if 3 we just have more requirements in the regulations, 4 we're going to be spending more time there.

5 But where the regulations are essentially 6 uniform for everybody, I just gave everybody the same 7 score. So again, if you disagree with how I've 8 scored that, if you think for your particular 9 facility it should be different, let us know, tell us 10 why, and we'll take another look at it.

11 MR. PADGETT: Kevin, Wyatt Padgett, 12 URENCO again. So is this, I mean this, these two new 13 approaches. We're still commenting on the current 14 matrix or the fee matrix you have is actually what 15 we're valuing against on these proposals.

16 MR. RAMSEY: Nobody proposed, at this 17 point, nobody proposed a change to the existing 18 matrix. You know, this is all things that maybe, you 19 know, we're going to take all your input and pass it 20 forward to the Commission and say, okay, Commission, 21 here's what we think, here's what the stakeholders 22 think. Do you want to propose any changes in the 23 FY19 fee rule?

24 And then at that point, it's the 25 81 Commission's call.

1 MR. JOHNSON: So the short answer is, 2 based on stakeholder feedback, we've got the three 3 initial options that we discussed in December. Based 4 on stakeholder feedback, we came up with two 5 additional options, so we're trying to factor, we're 6 trying to listen to the comments that have come in.

7 So now there are five options.

8 MR. RAMSEY: I mean, one thing I like 9 about this one with the technical areas is when we're 10 talking about license processes at the high-enriched 11 fuel fab facilities, their processes are classified.

12 So we always have to fumble around with surrogates, 13 and there's always some debate about whether those 14 are accurately reflecting what the high-enriched 15 licensees are doing.

16 But if you get into the technical areas 17 here, none of this is classified, because this is 18 what we do. So I'm free to talk about all this, and 19 I don't have to come up with weird terms, you know, 20 to try to hide classified information.

21 I can just be right up front and say, 22 This is what the NRC's doing, this is what you're 23 paying for. Personally, I think this is a little bit 24 more straightforward in terms of the services that 25 82 we're providing.

1 MR. PADGETT: Like I said, there are 2 going to be two facilities that like it and five that 3 don't. I mean, overall, you know, one of the things 4 that I think we, all the facilities would agree on, 5 it isn't so much about how we're splitting up the 6 total, more so than what the total cost is. We all 7 have the same sort of feedback on that total cost.

8 But when it comes to actually reassigning 9 the split, if you will, to different facilities, 10 everyone's going to have a different opinion because 11 it's going to impact their facility.

12 As a general policy issue I think, you 13 know, it's one of the comments that we had as far as 14 shifting costs from, and this is exactly what this 15 proposal would do, is shifting costs from a defense-16 related activity to a commercial facility, 17 essentially what is going on. And we take specific 18 exception to that.

19 MR. JOHNSON: So let me try and just 20 recap this. We understand that there are two issues 21 that are out here. The comment letters made it clear 22 that there are questions and concerns about the 23 amount of fees, so we've heard that. We try to take 24 the time to explain at a very detailed level what's 25 83 in those fees and where the effort and the resources 1 are going and how, what the proportions are.

2 So we also recognize that there could be 3 improvements to the way that the fees are allocated.

4 So the purpose of this meeting was to inform or 5 provide additional information on the budget and 6 what's included. So you get the overview, you got 7 the specific aspects of the budget, as wells as the 8 fee matrix pieces of it.

9 So we recognize that those two sort of 10 questions or topics are on the table, and we want to 11 continue to communicate and have dialog on what the 12 fees are and where they're going. And we want to 13 continue to work on a process to identify potential 14 improvements for the fee matrix. We're following up 15 on Commission direction to identify or engage 16 stakeholders.

17 So we got a lot of feedback on the last 18 round, and we're going to look forward to additional 19 feedback. And ultimately what'll happen, what Kevin 20 had identified, is we will identify options, 21 stakeholder feedback, and a recommendation, like 22 possibly for the FY19 fee rule.

23 So we've got some time to work on it, the 24 proposed fee rule. And we're trying to have the 25 84 discussion. But we recognize that we want to have 1 the discussion on both fee matrix improvements and on 2 the fees in general.

3 MR. PADGETT: I get that, I appreciate 4 that. As far as on the fee matrix piece, you know, 5 the five options that Kevin put together, the three 6 previous and these two here, all five of them are 7 moving the fees from the Cat 1 facility down to the 8 Cat 3 conversion enrichment facilities, is what 9 essentially what they are. And is that the general 10 path that the NRC is on at the moment?

11 MR. RAMSEY: Well, this is Kevin, Kevin 12 Ramsey. Keep in mind that those direct costs that 13 are billed under 170, the high-enriched fuel 14 licensees, you know, they have resident inspectors, 15 the rest of you don't, so that's a huge cost.

16 They get many more inspections than most 17 of the rest of the facilities do. They have all that 18 high security stuff and everything that they go 19 through, the get a lot more attention, in M, C and A.

20 So under Part 170, they're already paying 21 much higher fees from the other facilities. What 22 we're trying to address here is the non-billable 23 stuff. 24 And quite honestly, even though 25 85 historically the fees have been much higher for the 1 high-enriched licensees, when you start looking at 2 the non-billable effort, the non-billable things that 3 we're doing with rulemaking, guidance, procedures, 4 and maintaining and training staff, I don't know that 5 it is unreasonable to say that it should be more even 6 across the business line.

7 MR. B. SMITH: I think, this is Brian 8 Smith, I think it goes back to OBRA 90 where it says 9 we have to develop fair and equitable fees. So we're 10 looking at new methodologies that may be more fair 11 and more equitable. So that's what we're trying to 12 do, what we're trying to evaluate here and that's the 13 point. 14 MR. HARRIS: So for clarification, we're 15 hearing you say yes, but --

16 MS. ALBERT: Before we go back to the 17 industry, I just wanted to chime in. Right now we're 18 FY18 fee rule, we're asking any changes there. What 19 we're having this discussion about is having changes 20 down the road considering should we, should we not.

21 If we did, what would we do. Those types of 22 discussions.

23 So I don't want anybody inferring it as 24 a trend, that we're all deliberating how engaged 25 86 stakeholders get involved. I mean, there's not a 1 final sort of decision at this point, these aren't 2 necessarily all, we're just, you know, they're 3 illustrative, we're trying to get feedback.

4 To be very clear about where we are in 5 the process, and that way industry's not sort of 6 trying to make data points about where we're going to 7 end up. We're still trying to figure that one out 8 ourselves.

9 MR. PADGETT: Well, I understand where 10 you all are. It's quite common that we're in the 11 start -- as the train starts going in that direction, 12 that's where it ends up.

13 MR. KNOWLES: So Tim Knowles, NFS, and I 14 also would like to reiterate that I think, and I 15 appreciate Kevin's comments about fair and equitable, 16 but I'll just be blunt, is I don't think a Cat 1 17 facility should pay any more for rent or for 18 maintaining the NRC's website, or any of the other 19 things that came under corporate support, than any 20 other facility. It just doesn't pass the straight 21 face test.

22 MR. B. SMITH: So to move that just a 23 little bit, this is Brian Smith. So it's the same 24 thing for the power reactors, but a little different.

25 87 They all pay the same. So would you say that you 1 should pay the same as a power reactor? Or less, 2 from a corporate share?

3 MR. KNOWLES: If I could --

4 MR. B. SMITH: He's saying they should 5 all be the same, everybody should pay the same amount 6 for this corporate support.

7 MR. KNOWLES: Well, yes. But you got 8 different, you've got the different business lines.

9 And the way you've set this structure up, it doesn't 10 lend itself to equity among all licensees. But since 11 you've segregated out these fuel cycle facilities 12 into the one particular business line with this one 13 particular budget, there's certain aspects of that 14 budget that should be shared equally among all seven 15 facilities.

16 MR. B. SMITH: So within the business 17 lines, you think all seven should pay the same share 18 of corporate support.

19 MR. SPANGLER: This is how I see it, this 20 regulatory effort. How much time do you all spend 21 regulatory-wise, really, with the people that are out 22 there? You should be applying regulatory risk with 23 your inspections and the document we use for ISA is 24 the same, the document for rad protection. We get a 25 88 bigger level of crit safety, bigger level of cyber 1 imposed sometimes.

2 But for the day-to-day stuff, we're 3 applying the same regulations and same documents.

4 And where it comes into is how many hours you're in 5 our facility, which comes out in the billing area.

6 That's just my two cents.

7 I can see a big effort in this one and 8 the other one versus the ten, five, one seems to be 9 fairly subjective and the manager's kind of hard to 10 stomach when it comes to the, Tim Sipple is my crit 11 guy, and he's the same crit guy for the others. And 12 Jeremy Munson, they might just spend a few more hours, 13 but they don't spend more regulatory time. So that'd 14 be my two cents, I think that echoes there Tim's.

15 And I know that's a, you know, so 16 unpopular. It's like Wyatt had said, it's kind of 17 like a two, five. But that's kind of how we got 18 here, is our fees have gotten so much higher than a 19 power plant's is, it must be noticed and we must 20 examine the process.

21 MR. PADGETT: Kevin, Wyatt Padgett, 22 URENCO again. My viewpoint on that is if that one 23 facility has, how many critical safety inspections do 24 you get per year? Two or three, or?

25 89 MR. SPANGLER: Just three.

1 MR. PADGETT: Three. And let's say we 2 get one, all right. Obviously we're charged for 3 those inspection hours.

4 And when it comes to the NRC and the 5 amount of overhead that they need to apply, what 6 you're trying to say is that it should be the same.

7 I need as much management support for those 8 inspections at mine, for that one inspection as you 9 do for three. And I'd go that's disproportionate.

10 I think it should be proportionate across the board.

11 And you know, like I said at the 12 beginning, not trying to push fees in their direction 13 at all. We really just want it to be fair. Most 14 facilities are going to state the opinions based upon 15 where they end up in the end result.

16 MR. KNOWLES: And that's exactly what 17 this chart has shown. For example, crit safety for 18 Cat 1 facilities is a three, and the others are one 19 and two. So I think that does accurately reflect the 20 level of regulatory effort for the differences in the 21 facilities.

22 MR. PADGETT: So Tim, all due respect on 23 that, the two Cat 1's at a Category of 31, and the 24 rest of the facilities are in the high 20s, if you 25 90 just simply looked at the number of inspection hours 1 and residents that we actually have, their facility 2 has something of the three to four thousand required 3 inspection hours, plus your resident, you know, 4 including your residents and whatnot.

5 Versus the Cat 3 facilities conversion in 6 Richmond, there, it just went straight off with the 7 inspection around 2600 said, with something less than 8 600 apiece.

9 MR. RAMSEY: Yeah, but that's just--

10 MR. PADGETT: It's significantly less.

11 MR. RAMSEY: That's our point, is that, 12 and they're billed for that, the current, under 170.

13 But under this, the question is are they using, are 14 they applying different rules, are they using 15 different procedures when they do those extra 16 inspections?

17 Or are they using the same procedures 18 that they use at the other sites? Because if they're 19 enforcing the same rules and using the same 20 procedures, that's essentially the same non-billable 21 service. 22 MR. PADGETT: Well, we can talk about a 23 specific item, but when it comes to those activities 24 that fall outside of that, you know, that, I'm trying 25 91 to go back to the chart as far as the percentage, so 1 everything outside of Part 170. It's going to just, 2 procedures. So Brian, there is more activity that 3 the NRC's, in their overhead, is providing for those 4 facilities than it is for the other five.

5 MR. JOHNSON: So I think this discussion 6 is sort of illustrative of the challenge in trying to 7 come up with a fair and equitable way to do this.

8 And we're open to comments and we appreciate it.

9 We're looking at what we've got now, and there were 10 questions about whether it was fair and equitable.

11 And we're trying to look for potential improvements.

12 So -- 13 MR. PADGETT: Robert, can I ask a 14 question?

15 MR. JOHNSON: You can, but Janet had, I 16 was trying to, Janet?

17 MS. SCHLUETER: Yeah, I was trying to let 18 the licensee speak, so I'm not sure I have my full 19 train of thought at this moment.

20 But well first of all, I guess I did want 21 to go back to what I think everyone has said here, 22 and that is that over the course of these three 23 meetings, we do sincerely really do appreciate the 24 level of effort that you guys have put in coming up 25 92 with the three options before today, and then these 1 two today.

2 And we did spend some time, you know, 3 looking over the two different approaches. It's back 4 to what Wyatt and others said, it just doesn't matter 5 how you slice and dice it, there are winners and 6 losers. 7 But this level-of-effort thing, the ten, 8 five, one versus three, two, one, as I was listening 9 to you speak, I think it might have been Robert, but 10 it made me wonder to what degree those level-of-11 effort factors should in fact be near 100% or 12 partially based on actual inspection hours, for 13 example.

14 I mean, you're giving us a description of 15 the level of effort that, you know, with all due 16 respect, seems somewhat qualitative and subjective.

17 And y'all have even used those terms in the past.

18 So when I see the fees going up and down 19 based on how you apply these level-of-effort factors, 20 it's not a good warm and fuzzy feeling to think, well, 21 some of the facilities, Cat 3s, Honeywell in 22 particular takes a big hit on the one chart. I mean 23 it's like double, double the fees.

24 So how do they go back and sort of justify 25 93 those types of increases to their own corporate 1 management? Because it's, for everybody, it's the 2 bottom line, it's the return on investment.

3 If they have a one million or a two 4 million or whatever increase in the fees, how do you 5 justify it when there's not been any, you know, change 6 in the license activities, major amendments and 7 processes, what have you. And I realize we're just 8 trying to find a solution, coming up with a new way 9 to slice and dice the pie, but it's critical that it 10 be an informed decision.

11 And when I get to this level-of-effort 12 thing on the three, two, one, it just feels a bit 13 squishy. But it has implications for everybody.

14 MR. JOHNSON: So I appreciate that. And 15 I think I understand exactly what you're saying. And 16 what we were doing is trying to react to some of the 17 feedback from --

18 PARTICIPANT: Right.

19 MR. JOHNSON: So there's an existing 20 algorithm structure fee matrix that has been in use 21 since '99. And it lays out the criteria, 10, 5, 1.

22 So it's not, I want to be really careful with 23 subjective, that we try to inform the existing 24 process using feedback from you guys as far as why is 25 94 there an order of magnitude difference between the 1 low and the high. Or consider this option or this 2 option. 3 So we considered the feedback and we 4 tried to take a look at what the impact of the 5 feedback, of the changes were and factor it in and 6 try and provide it for the discussion.

7 MS. SCHLUETER: Right, so we recognize 8 that. I'm glad, you know, you went to this level of 9 effort. But the outcome is so critical and so 10 important, and so I'm just looking for a little bit 11 more like data-driven, quantitatively driven level-12 of-effort numbers.

13 You know, is there any way that we can 14 get to the point where the level of effort is more 15 quantitatively based or inspection hour based. Or 16 have we thought about that at all? Is that another 17 way to get there, is that another way to apply the 18 matrix? 19 MR. B. SMITH: It goes back to something 20 that Kevin, this is Brian Smith, the combination 21 approach that Kevin, we had proposed originally. So, 22 which was part uniform, part direct hour billing-23 based. 24 MS. SCHLUETER: That's true, I can 25 95 remember that. So can you refresh my memory on why 1 it was a 85-15 split? How did you all come up with 2 that? 3 MR. RAMSEY: Well, I mean, that was just 4 the proposal that was made based on the fact that in 5 order to justify using direct billing data for non-6 direct purposes, you know, 170 data to distribute 171 7 fees, you have to make a case for correlation. You 8 know, what's the relationship between this data that 9 you could use it.

10 The 15% that we originally came up with 11 was that, for a reactive type, you know, for the 12 routine stuff, we're probably, so there probably 13 isn't a correlation there. But for special issues 14 where we have to do reactive inspections and it's 15 unplanned licensing actions and that type of thing, 16 that pulls in extra resources.

17 That pulls in, you know, resources you 18 don't normally use, like public affairs, 19 congressional affairs and things like that. And so 20 we said, well, how often do we have to react to 21 something unplanned. And our estimate was, well, 22 maybe 15% of the time, you know, we're working on 23 unplanned stuff. And so that's what we used.

24 If you can't make a correlation between 25 96 the direct billing hours and all this other stuff, 1 then it's, the argument falls apart.

2 MR. PADGETT: This is Wyatt Padgett, 3 URENCO again. When it's under direct billing fees, 4 you know, they're for two pieces, the inspections and 5 there's the licensing activities, right. The 6 inspection fees, to me, makes more sense. Okay, it 7 just seems like it's more fair to base it off that.

8 Maybe it's not, but I can somewhat understand that 9 perspective.

10 When it comes to the licensing fees, and 11 this, you know, for our facility district-wise, we 12 went through a significant number of changes over 13 many years. We're at the point of not making many 14 changes anymore, all right. So obviously today, the 15 number of direct billing for licensing activities 16 would be less.

17 But we certainly don't want to be 18 disincentivized to not work on improvement for the 19 facility because we recognize that that cost will 20 also now result in our annual fee to be increased as 21 well as a result of making a change.

22 For some facilities, Cat 1s and Cat 3 23 fabricators, they've got somebody in there to balance 24 it with. Right, if one of them works on their 25 97 improvement activity for a certain year. If you went 1 to that approach, then the other facility didn't, 2 then there's somebody to balance with.

3 For us, we're all out there by ourselves.

4 We've been converted, there's nobody to balance that 5 varying cost.

6 MR. B. SMITH: Yeah, that, this is Brian 7 Smith again, that was one comment that we did receive, 8 which was to treat ea ch licensee individually as 9 opposed to like the two Cat 1s where we averaged the 10 effort, or the three Cat 3 fuel fabs.

11 If we were to do that approach, we'd have 12 to modify the rule itself to create a separate fee 13 category for each licensee. So it'd be a licensee-14 specific fee, and we chose not to go down that route.

15 MR. PADGETT: But you get the point as 16 far as you're disincentivizing me --

17 MR. B. SMITH: Yes.

18 MR. PADGETT: From wanting to make an 19 improvement at my facility because of the fluctuating 20 cost in the future.

21 MR. JOHNSON: Any other comments?

22 MS. RAY: And if you're on the phone, 23 please press star six to unmute yourself.

24 MR. WOLF: This is Mark Wolf from 25 98 Honeywell. Am I unmuted?

1 MS. RAY: Yes, we -- go ahead.

2 Mw: Okay, a couple observations and 3 comments, I guess. I did hear the comment that 4 perhaps there should more equitable cost-sharing, 5 what might you consider traditional overhead, rents, 6 utilities, HR, IT, things like that.

7 And I would suggest to NRC perhaps do a 8 rather deep drill of your budget number and see what 9 those numbers look like, versus what you might call 10 direct overhead, you know, those licensing folks 11 doing specific activities. I think that might be an 12 interesting move towards some more equitable cost-13 sharing without just simply painting everything with 14 the same paintbrush. That's one comment.

15 The other comment is, particularly on 16 that slide 9, which is the one that obviously, there 17 already is a distinction in fee categories. Like all 18 these other guys are showing up as fee category 1 19 with a few extra letters behind it. You know, we're 20 down with a 2.

21 Part 40 does not equal Part 70, and 22 there's already a distinction, and yet, even this 23 chart's moving us more towards being on an equal basis 24 with Part 70 facilities, which may or may not be true, 25 99 depending on which of them you're talking about.

1 And then my third comment is just to 2 agree that the size of the balloon is still too big, 3 and regardless of how you move things around, it's 4 just too big. So those are my observations on this 5 particular part. Thanks.

6 MS. RAY: Thank you. Would anyone like 7 to respond? Thank you for your comment. Are there 8 any other comments, either on the phone or in the 9 room? 10 MS. SCHLUETER: All right, well, I was 11 going to ask that, the elephant in the room. Have 12 you considered anything very revolutionary at all 13 with this particular group of licensees with regard 14 to the Cat 1 facilities and removing them from the 15 fee-based and all that they encompass?

16 MR. B. SMITH: What would be a 17 justification for removing them from the fee-based?

18 MS. SCHLUETER: Or at least their non-19 commercial activities, their defense programs, naval?

20 MR. B. SMITH: We bill other government 21 licensees.

22 MS. SCHLUETER: Exactly.

23 MR. B. SMITH: I don't understand.

24 MR. RAMSEY: They're not a government 25 100 licensee.

1 MR. B. SMITH: Well --

2 MR. RAMSEY: Licensees performing 3 services for the government.

4 MR. B. SMITH: We bill government 5 agencies, like NIST, the Army, the Navy. I still 6 don't understand. Why should we think, why do you 7 think we should take them off the fee base?

8 MS. SCHLUETER: I'm just asking if it's 9 an option that you've thought about at all, to 10 recognize that there's only a, and they should speak 11 for themselves as far as the small portion of their 12 activities that is commercial-related or R&D or 13 something that is not naval reactor-related.

14 But to potentially take those portions of 15 the corporate support, the training, the travel, all 16 those pieces that are attached to the Cat 1s, and 17 simply take them off of the fee base with the 18 proportionate amount of budget accordingly.

19 MR. HARRIS: So I'll -- finish and then.

20 MS. SCHLUETER: Okay, you get my idea.

21 MR. HARRIS: Yeah. So I think there's 22 probably two ideas there. There's what we call fee 23 relief, you know, and then there's not being part of 24 the fee basis, you know, and that's done by Congress, 25 101 you know, of what's on the fee base.

1 So to get something completely off the 2 fee base, that's Congress taking some action to do 3 that. 4 MS. SCHLUETER: Right.

5 MR. HARRIS: Fee relief, the problem is 6 that we only have so much amount of money that can go 7 into fee relief before you start basically adding a 8 surcharge in fact to everybody, you know. So once 9 you get beyond that ten percent, then everybody else 10 is going to be paying a surcharge.

11 So you know, that's power reactors, but 12 that's also the existing licensees in the fuel 13 facilities business line would be paying that 14 surcharge, to the extent you went over that ten 15 percent. 16 MR. SPANGLER: Add the, some recent fuel 17 relief. 18 MR. HARRIS: I'm sorry?

19 MR. SPANGLER: Congress, a law, fee 20 relief for advanced reactors.

21 MR. HARRIS: No, that was taken off.

22 That was excluded from the fee recovery. So that's, 23 you know, that was, yeah, the five million last year 24 was not part of the fee, what had to be recovered for 25 102 OBRA-90. So it was like the Nuclear Waste Fund.

1 MR. SPANGLER: I think that's what's 2 Janet's saying. A similar idea.

3 MR. HARRIS: Yeah, but those are two 4 different categories. So being off the fee budget, 5 that's the way Congress would appropriate, and it'd 6 be part of the net appropriations for us, and we 7 wouldn't have to recover that if they did that.

8 If they put it into where we'd have to 9 recover it, then you're talking about fee relief, 10 which at the over 90, the ten percent, as the Agency 11 budget gets smaller, that amount that can be put into 12 fee relief gets smaller before you need to actually 13 start charging all licensees to recover what's in 14 excess of that ten percent.

15 So they sound alike, and I know we often 16 probably interchange those words for those things at 17 times, but they operate in two different ways.

18 MR. SPANLGER: Can I just get back to the 19 question? They do operate in two different ways.

20 Has the NRC considered any application of either way 21 to address the Cat 1 facility?

22 MR. PADGETT: I think maybe you're --

23 both of you are really asking more about non-24 commercial, not necessarily this Cat -- this is non-25 103 commercial.

1 MR. SPANGLER: But it's, in our 2 particular case, our primary customers are 3 recognized. And so that would be revolutionary to 4 think of a different approach than the same approach 5 we've been doing, which has to date meant 6 significantly affecting, say our fee.

7 But to balance this discrepancy now is 8 potentially impactful or devastating to the existing 9 licensee. So it'd be a really revolutionary thought.

10 MR. PIERCE: So correct me if I'm wrong 11 but, Max Pierce, Naval Reactors, you would still have 12 to identify an amount in the budget that would come 13 out, correct? So you're still in the same exact 14 issue of identifying how much effort it takes to 15 regulate an issue, versus other facilities.

16 So I don't see how that gets away from 17 the fundamental problem of deciding what the correct 18 effort factor is. Is that, am I accurate with that 19 assessment?

20 MR. JOHNSON: I think he was right to use 21 the balloon analogy to figure out how much of that 22 would go away with the defense-related activities.

23 And I think that really, I understand and I appreciate 24 the comment.

25 104 It's, when you talk about transformative 1 changes, it's something that we should be thinking 2 about. But how we would effect a change like that, 3 that I think is maybe above.

4 MR. B. SMITH: Yeah, this is Brian Smith.

5 To answer your question, no, we have not considered 6 that. And to consider it going forward, what would 7 you propose would be a basis for us to doing that, 8 and why just these two licensees? Why not other NRC 9 licensees that are involved with other government 10 agencies?

11 MR. HARRIS: May I --

12 MR. SPANGLER: Have you considered these 13 things that are revolutionary to help tackle the 14 growing cost and the concern? If you were in 15 Congress trying to work this out across the table, 16 and you see a pretty significant impact to make, an 17 equitable adjustment to what we're working with 18 between Cat 1s and enrichments and Cat 3s.

19 MR. RAMSEY: Well, this is Kevin Ramsey.

20 I think with regard to anything that Congress may or 21 may not write into our budget, I think we as an 22 agency, if we're going to propose anything to 23 Congress, that all goes through the Commission, which 24 probably would require a lot of, you know.

25 105 MR. SPANGLER: I'm aware of that.

1 MR. RAMSEY: And some lobbying from you 2 guys. And of course, obviously you can call your own 3 congressional representatives. Now, if you want to 4 submit that as a comment, we'll certainly pass it 5 along to the Commission. But from the staff --

6 MR. SPANGLER: Do that, but it's just, I 7 wondered that --

8 MR. RAMSEY: Yeah.

9 MR. SPANGLER: Of just playing with this 10 same balloon.

11 MR. RAMSEY: Our ability to propose 12 changes to Congress is rather limited because we'd 13 have to get the Commission to buy in on it. It's 14 kind of tough. But if you want, I can send it in 15 with your comments. We'll certainly pass the comment 16 along. 17 MS. SCHLUETER: Well, I think we just 18 wanted to just, you know, it's kind of been spoken, 19 you know, sort of in sidebar conversations from time 20 to time, and we wanted to just know whether or not 21 you've given it any thought at all. And if so, how 22 would that work? Is it feasible at all?

23 We're not suggesting it necessarily. I 24 think it requires and awful lot of further insight 25 106 and dialog and conversation, even amongst the 1 industry. Obviously Naval Reactors I'm sure would 2 have an opinion one way or another. And maybe it's 3 not even realistic, feasible, or a desired outcome.

4 But we're just trying to get creative, if you will, 5 and turn over every rock.

6 MR. HARRIS: And I would encourage you 7 to submit those kind of ideas, because when they're 8 in writing committed like that, you know, even though 9 we have a transcript. I think former Commissioner 10 Ostendorff used to tell people coming into his office 11 that, you know, don't tell me, send in something. So 12 it helps us to respond to things when they're in 13 writing. 14 MS. RAY: Any other comments on the phone 15 or in the room?

16 MR. T. SMITH: Mine would be, this is 17 Tyson, can you all hear me?

18 MS. RAY: Yes, go ahead.

19 MR. T. SMITH: Hi, yes, sorry I'm 20 backtracking a little bit. I'm looking at the slide 21 9 again, which has the various columns for regulated 22 areas. And I'm just curious as to whether you had 23 done any comparison, you know, why each of these 24 columns was sort of treated equally in terms of their 25 107 relative contribution to the total.

1 Some of these might absorb much more or 2 much less time than the others than if you're just 3 treating them all the same, that that's going to skew 4 the results one way or the other.

5 MS. RAY: Sure. Before someone responds 6 to your comment, what was your name and affiliation 7 again? 8 MR. T. STRAWN: Sure, Tyson Smith, I'm 9 at the law firm of Winston & Strawn.

10 MS. RAY: Okay, thanks.

11 MR. RAMSEY: Yeah, this is Kevin Ramsey.

12 Well, basically anybody who's done an evaluation 13 report or a licensing action is going to recognize 14 that these are basically the chapters in our 15 evaluation report.

16 PARTICIPANT: Our standard review plan.

17 MR. RAMSEY: Yeah, I think our standard 18 review. These are the areas that, you know, we look 19 at, we review and we look for commitments and we 20 inspect against. You know, where there's uniform, 21 and I kind of, you know, scored them as a two, that 22 was just kind of an arbitrary decision on my part.

23 Just to say it's kind of a moderate effort and it's 24 uniform.

25 108 Again, if you have comments and you think 1 that they should all be ones and instead of twos and 2 you can, you know, provide a reasoning for that, you 3 know, we're certainly willing to consider making 4 changes. 5 MR. T. SMITH: I guess my question is 6 maybe a little bit different than that, which is, you 7 know, if you look, and I recognize these as you know, 8 review areas and chapters and the like. But I guess 9 when you look at, for instance, the review that you 10 do, do you have the same number, do you have 20 hours2.314815e-4 days <br />0.00556 hours <br />3.306878e-5 weeks <br />7.61e-6 months <br /> 11 for each of these chapters? Or do some of these 12 chapters take up a lot more time?

13 And if so, maybe the number for those 14 chapters ought be scored, you know, zero to five, 15 rather than one to three. And chapters that have 16 smaller time are scored one to two.

17 MR. RAMSEY: Well, the hours are 18 irrelevant. The hours are irrelevant. These hours 19 that we spend on any given action are billed under 20 170. This table, this matrix is not for 170. This 21 matrix --

22 MR. T. SMITH: No, I understand, I 23 understand. My point is that I assume that in terms 24 of the length of time or the constant rate of 25 109 contribution to the overall regulatory effort is not 1 the same for fire safety as it might be for 2 criticality safety.

3 And I guess my question is have you 4 looked at the data at that level of granularity to 5 look at which of these areas requires more level of 6 effort? 7 And those areas seem like they ought to 8 be weighted higher when coming up with a total than 9 some area like management organization, which I think 10 is relatively, you know, straightforward, compared to 11 some of the other areas in terms of developing 12 guidance or whatever else goes into the part.

13 MR. JOHNSON: So I think we, I understand 14 the question, and it sounds like that'd be a good 15 comment to factor into any possible suggestions that 16 come up. So maybe one of the topics is weighted a 17 little bit heavier because it's more complicated 18 technically or something to that effect. So that 19 sounds like a good comment to send in. With that --

20 MR. RAMSEY: Well, what I would caution 21 about when you're looking at the hours is that 22 sometimes we get a high quality application, 23 sometimes we don't. So you may get a lot of hours, 24 I don't know that that means that somebody's more 25 110 risk, one facility's riskier than the other, or.

1 MR. T. SMITH: Right? Because that 2 would be the billable stuff. I mean it's weird that 3 -- preparing the guidance, when you're preparing 4 guidance, you all prepared like a big list of 5 documents for the last set. And if you looked at 6 those, and even just at the raw numbers, I think there 7 are a lot more in certain areas than there are in 8 other areas.

9 And my point is I think that these 10 columns shouldn't be weighted equally overall, if all 11 the factors are going to the Part 170 fees.

12 MR. JOHNSON: I think that may be 13 beneficial, and we appreciate the comment. What I'd 14 like to do is have you provide it to Kevin or to the 15 NRC so we can factor it into the discussion, because 16 there could be differences between the level of 17 effort for reviews in the different columns.

18 We are now at about 3:50. What I wanted 19 to do just for a second is thank everybody for the 20 time today, the input on both the fee matrix and the 21 general questions on the budget. Trying to go 22 through and identify specific, give you another sort 23 of drill-down or level of detail on what's included 24 in the fuel facility budget, so the overview that 25 111 Brian had provided.

1 We tried to address the comments, the 2 budget-related, fee-related comments that were 3 provided. And tried to drill down into a significant 4 level of detail. We recognize that you, that 5 industry in general thinks that the fees are too high, 6 the budget is high, and the number of staff is high.

7 I also put in that the NRC has recognized 8 and identified that the budget, the business line 9 itself, has significantly stepped down as a result of 10 the workload that's there. I appreciate the 11 opportunity for this dialog, as well as the 12 discussion in December, the discussion in February on 13 the fee rule itself. And it sounds like we're going 14 to have an opportunity to have additional discussions 15 on it. 16 So as far as closing remarks, thank you 17 for the time and effort. And I'm going to turn to 18 Brian Smith or Craig, any last closing remarks?

19 MR. ERLANGER: Echo Robert's comments.

20 Appreciate the staff's preparation for the meeting, 21 and I appreciate everyone looking at the material 22 beforehand. It was evident you did review it, and I 23 think it led to a great conversation and some good 24 questions. So appreciate everyone being here.

25 112 MS. SCHLUETER: So this topic I think is 1 actually on the agenda for April 11. No?

2 MR. ERLANGER: What Janet is referring 3 to is there's a public meeting on April 11. The 4 staff, based upon how today went, they don't, we don't 5 know if we're going to get, we're not going to get 6 letters from members of the public and those in the 7 room by that time. It's about two work weeks to 8 react to the outcome of this meeting, it is not enough 9 time for the staff to hold another meeting during 10 that day.

11 When we originally looked at the agenda 12 for the April 11 public meeting, we were hoping to 13 have an hour or so dialog on this topic. Our leaving 14 this room position, or coming into this room position 15 is it's not enough time to reflect upon what we heard 16 today. 17 MS. SCHLUETER: But we did wonder about 18 that at the time, you know, considering the timing of 19 this one and the 11th. It seemed very close. I 20 wasn't sure what you were going to try to focus on on 21 the 11th. That's one reason why I was sort of 22 reiterating the question as to whether or not it was 23 on the docket for that day.

24 MR. ERLANGER: It is not, but we will 25 113 look for another opportunity to engage. And I think 1 Kevin, at the end of his presentation, had a day where 2 we were requesting comments by.

3 MS. RAY: April 27, please submit them 4 to the Document Control Desk and copy Kevin Ramsey.

5 I would also echo the remarks, thank you for your 6 time and attention. If you haven't signed the sign-7 in sheet, please do so. And for those on the phone, 8 please email Kevin Ramsey your information so we know 9 you've attended.

10 And also, there are feedback forms. We 11 would appreciate any feedback on the public meeting, 12 and also if you don't want to do it in writing, on 13 the public meeting website. This meeting is 2018-14 011. We would welcome any feedback. Craig.

15 MR. ERLANGER: Just a quick plug for the 16 April 27 comments. We're looking for comments on the 17 fee matrix options. We did receive your comments on 18 the '18 Proposed Fee Rule, and there is a rulemaking 19 process through which we will answer those comments.

20 Hopefully we were responsive today based on the 21 letters we received in December 22 We can't preclude you from talking about 23 other issues, but we're really interested in comments 24 related to the fuel facilities fee matrix. Thank 25 114 you. 1 MS. RAY: Thank you very much, I think 2 this meeting is concluded. Thank you for your time 3 and attention, and those on the phone, thank you very 4 much. 5 (Whereupon, the above-entitled matter 6 went off the record at 3:53 p.m.)

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