ML20207L215

Partial Withheld Secy Requesting Commission Decision on Methodology for Determining Fy 1998 Annual Fees.Paper Also Informs Commission of Staff Plans for Addressing Concerns Related to Annual Fees for Spent Fuel Storage

ML20207L215
Person / Time
Issue date:	02/27/1998
From:	Funches J NRC
To:
Shared Package
ML20207L203	List: ML20207L202 ML20207L215 ML20207L228
References
FOIA-99-31 SECY-98-034, SECY-98-034-01, SECY-98-034-R, SECY-98-34, SECY-98-34-1, SECY-98-34-R, NUDOCS 9903180038
Download: ML20207L215 (17)

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NOTE: SENSITIVE .

/, y,,'%, INFORMATION - LIMITED

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5. ] .. ,I COMMISSION DETsRMINES '

/ OTHERWISE POLICY ISSUE ce"* ""5 #*'

(Notation Vote) # #3 ~/

February 27, 1998 SECY-98-034 FOR: The Commissioners

- FROM: Jesse L. Funches o.

~ ~ '" ~ " s~ -~3' Chief Financial Officer , 5

SUBJECT:

FY 1998 PROPOSED FEE RULE f 2N' H 'Q'h -

j PURPOSE- I This paper requests Commission decision on the methodolcgy for determining the FY 1998 I annual fees. The Commission decision will be reflected in the FY 1998 proposed fee rule.

.This paper also informs the Commission of staff's plans for addressing concems related to annual fees for spent fuel storage.

SUMMARY

For the past two years', the NRC's annual fees have been determined by the ' percent change" method announced in the statement of considerations supporting the FY 1995 final fee rule as part of the agency's efforts to stabilize fees. Under the percent change method, annual fees have been annually adjusted upward or downward based on NRC's budget authority, changes in the number of licensees paying fees, and the amounts of licensing and inspection fees to be collected. The FY 1995 statement of considerations indicated that this method would be used in FY 1996 through FY 1999 (if the current annual fee legislative authority is extended), and fees would be rebaselined only if there was a substantial change in the NRC budget or in the magnitude of a specific budget allocation to a class of licensees.

Based on the program changes that have occurred since the baseline fees were established in FY 1995 and the Nuclear Energy institute's (NEI) concems about the 8 4 percent annual fee ,!

increase in FY 1997, the staff has calculated the FY 1998 annual fee The percent change method would result in a 0.1 percent increase in annual fees for all classes of licensees as compared to FY 1997.

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Contact:

Glenda C. Jackson, OCFO V

j 301 6 057 NOTE: SENSITIVE INFORMATION -- LIMITED

( TO THE NRC UNLESS THE 9903190038 990310 COMMISSION DETERMINES OH SE 99-31 PDR OTHERWISE

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-In addition to the proposed FY 1998 annual fees, we plan to include several administrative i changes to Parts 170 and 171 in the FY 1998 proposed rule for public comment. These administrative changes are summarized in Attachment 2.

1 This paper also provides information on planned efforts to address concems regarding annual l fees for licensees who are in decommissioning or hold possession only licenses, including l decommissioning reactors' storage of spent fuel.

BACKGROUND l A. Methods for Determining Annual Fees l

1 As required by Public Law 101-508, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90), as amended, the NRC establishes licensing, inspection and annual fees each fiscal year to j recover approximately 100 percent ofits budget authority, less the amount appropriated from '

the Nuclear Waste Fund. For FY 1991 through FY 1995, the first five years under OBRA-90, the annual fees were established by determining the regulatory costs attributable to each of the eight classes of licensees established for annual fee purposes. This method, rebaselining, resulted in wide fluctuations, both increases and decreases, in the annual fee rates by individual category from year to year. These fluctuations were caused primarily by decreases in the number of licensees paying annual fees, especially during the first few years of 100 percent 3 fee recovery, and changes in the resources allocated to the various programs.

Licensees complained about the unpredictability of the annual fees, indicating ttist they did not have sufficient waming to adjust prices and contracts to recover the increases. In response to i these concems, in the statement of considerations supporting the FY 1995 proposed fee rule the NRC requested comments on a proposal that base annual fees be established in FY 1995, d

and for the next four years, if the 100 percent fee recovery requirement was extended, the

! annual fees be adjusted only by the percent change in the NRC's total budget and the amount

! to be collected under Part 170 (the percent change method). Commenters agread thsIt the i

proposed change represented a simpilfication and streamlining of the fee-setting procedures, was necessary to eliminate the large swings in annual fees that had occurred in past years and e allowed for greater predictability of fees. With this sVNs6rt from commentersrthe NRC adopted i the proposed methodology in the statement of considerations for the final FY 1995 fee rule, i stating that the percent change method would be used for the next four years unless there was j -

a substantial change in the NRC budget or in the magnitude of a specific budget allocation to a l class of licensees.

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{( Table I below summarizes the budgeted amounts to be recovered for FY 1995 through FY 1997, and the annual percent change in annual fees.

TABLEI Budgeted amount to Annual fee change.

E be recovered in fees from orevious vear 1995 $503.6 million Base year 1996 $462.3 million - 6.5 percent 1997 $462.3 million + 8.4 percent i

The decrease in FY 1996 annual fees was attributable primarily to the 5.7 percent reduction in the NRC's budgeted amount to be recovered through fees and a $6 million over-collection available from FY 1995.

Although the amount to be recovered through fees did not change from FY 1996, the FY 1997 annual fees increased oy 8.4 percent. This increase resulted from several factors: (1) a substantial reduction in projected Part 170 fees, largely from reductions in resources devoted to reviews of applications for standard plant and reactor operating licenses; (2) a reduction in the number of licensees paying annual fees, largely the result of one reactor permanently ceasing

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operations and the March 1997 relinquishment of regulatory authority to Massachusetts over some 425 materials licenses; (3) several million dollars less in collections received in the fiscal year as a result of billings from an earlier fiscal year; (4) a slight increase in the small entity subsidy; and (5) establishing an allowance for bad debt and unpaid bills, to help assure that the agency would meet its obligation to collect approximately 100 percent of its budget authority.

Because the amount for fee recovery in FY 1997 remais.ed the same as in FY 1996, it was  !

determined that rebaselining was not warranted for FY 1997.

I The FY 1997 final fee rule went into effect on July 28,1997, and on that date NEl filed a petition for reconsideration of the final rule due to the increased annual fees. The Commission denied NEl's petition on October 1,1997. However, NEl in its response to the Commission decision continued to express concems about the annual fees, particulariy the allocation of fees under Part 171 to compensate for a reduction in fees recovered under Part 170.

B. Annual Fees for Decommissioning Reactors The long-standing policy of not assessing annual fees to those licensees who are in '

decommissioning or hold a possession only license is based on the premise that annual fees should be assessed only when a licensee receives a benefit from the NRC. Under currai1t Commission policy, the benefit the NRC provides a li6ensee is the authority teuse licensed material. This policy is applied to all classes of licensees, not just power reactors.P ' ~

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- A DISCUSSION:

A. Method for Determining FY 1998 Annual Fees b

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For FY 1998, the total NRC budget to be recovered through Part 170 and Part 171 fees is $7.5 million less then in FY 1997. There also has been an insignificant change in the estimated amount to be . ?M cted in Part 170 fees and the amount of the billing adjustment for uncollected fees needed (6 assure 100 percent fee recovery. In addition, as in FY 1997, there is no over-collection from the prior fiscal year. Consequently, the total amount to be recovered in Part 171 annual fees is $8.4 million less in FY 1998 than in FY 1997. However, using the percent change method, the FY 1998 annual fees would increase slightly, by 0.1 percent, due largely to the decrease in the number (the equivalent of 2.5 reactors) of reactor licensees paying fees. _.

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9 i k- COORDINATION:

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C w SCHEDULING-I request a Commission decision on this paper within two weeks, in order to prowde sufficient time to incorporate the decision in the FY 1998 proposed rule, obtain public comments, and publish a final rule to recover approximately 100 percent of the budget in FY 1998. I further

, request,that this paper not be made available to the public because it is predecisional and addresses, in part, legal considerations.

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Jesse L. Funches Chief Financial Officer Attachments: 1.~ Comparison of Annual Fees

2. Additional Changes to Parts 170 and 171

3. Estimated Schedule, FY 1998 Fee Rule

4. Factors Contributing to increases Under Rebaselining cc: SECY OGC OCA OPA OlP ClO EDO '

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SECY NOTE: Commissioners' complet3d vote sheets / comments should be provided directly-to the Office of the Secretary by c.o.b. Friday, March 6, 1998.

Commission staff office comments, if any, should be 4

submitted to the Commissioners NLT March 4, 1998, with an l informatwn copy to SECY. If the paper is of such a nature that it reqeires additional review and comment, the Com-issioners and the. Secretariat should be apprised of when comments may be expected.

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Comparison of Annual Fees (Per License)

For Representative License Fee Categories i (Accounts for Zion 1 and 2 out of Fee Base 2/15/98) -

FY 1998 -

Category FY 1997 ,

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P'ower Reactors $2,978,000 "" T-. !"//.i

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HEU Fuel Facility 2,606,000 -

Uranium, Enrichment 2,606,000 LEU Fuel Facility 1,279,000 i

UF, Conversion 648,000 Rare Earth Facilities 22,300 Jpent Fuel Storage 283,000 Unanium Mill 61,800

. Solution Mining 34,900 Disposal 11e(2) 45,300 (

Nonpower Reactor 57,300 Broad Scope Medical 23,500 Radiographer 14,100 Well Logger 8,200 ,

Other Medical 4,700

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Attachment 2 ADDITIONAL CHANGES TO PARTS 170 AND 171 The following administrative changes to 10 CFR Parts 170 and 171 wil. be included in the FY 1998 proposed rule for notice and comment. '

i The proposed changes would.

1. Revise the two professional hourly rates in 10 CFR 170.20 which are used to determine the 10 CFR 170 fees. The proposed FY 1998 hourly rate for the reactor program is

$125 per hour, compared to $131 per hour in FY 1997. The proposed FY 1998 hourly rate for the materials program is $121 per hour, compared to $125 per hour in FY 1997.

The materials license fees in 10 CFR 170.31, which are based on the average costs to perform application and amendment reviews, would also be adjusted downward to reflect the revised materials program hourly rate. ,

The decreases in the hourly rates are a result of excluding the total surcharge costs, including associated overhead and an allocation for management and support, from the FY 1998 hourly rate calculations. These costs are recovered through the 10 CFR 171 annual fees. The excluded amount is larger than the amount excluded in previous years, leading to a decrease in the hourly rate for both programs.

2. Include Section Chiefs as overhead in the calculation of the houriy rate, and any specific

. Section Chief effort expended for licensing reviews and inspections will not be billed.

This change is consistent with the current budget structure, which includes Section Chiefs in overhead.

3. Include the following activities for cost recovery under Part 170:

(a) Full cost recovery for resident inspectors.

Currently, resident inspectors' time is billed to the site only if the time is reported to a specific inspection report number. The remaining costs related to the resident inspector are recovered in the annual fees assessed to all licens.ees in

- the class. Under th premise that the assignment of a resident inspector to a site is an identifiabic service to a specific licensee, the proposed rule would provide that all of the resident inspector's official duty time would be billed to the specific plant under Part 170.

(b) Costs expended withm 30 days after the issuance of an inspection report.

10 CFR 170.12 provides that costs will be assessed for completed inspections.

Currently, for fee recovery purposes, an inspection is considered to be completed when the inspection report is issued. The result is that costs

, expended after the report is sent are recovered through the annual fees imposed

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3.5 Actnnties that occur after the inspection report is issued are identifiable services for specific licensees. However, in order to establish a clear interval during which accumulated costs would be billed to the applicant or licensee, the .

proposed change to Part 170 would recover costs from the specific licensee for l

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. activities that oc.,c_ur within 30 dayc after the issuance of the inspection report.q l

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(c) Overtime .

l The hourty rates in 10 CFR 170.20 include overtime costs; however, currently only work p_erformed during regular hours is billed to the applicants and licensees.[ ' k lP I

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To more fully recover licensing and inspection costs under3ai1f0, the proposed rule will indicate that compensated overtime hours expended for reviews of applications and for inspections would be billed to the Wik applicant or licensee, at the normal hourly rate.

4. Introduce in-progress billing for inspections Currently, inspection costs are billed only after the inspection is completed, i.e, when tha) inspection report is issued. As a result, in some cases inspection costs accumulate over several billing cycles, and the licensee receives one bill for these accumulated costs rather than being billed as the costs are expended. The FY 1998 proposed rule would indicate that, in selected cases, inspection costs would be billed at the end Of the billing period in whid they accrue. The integrated financial system under development would accommodate in-progress billing for inspections; however, until the system is available

' ethatstaff plans such billing would be toin the in-progress bill and best interest of the agency forthe inspectionslicensee.l

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( The FY 1998 proposed fee rule will intlicate that inspection costs may be billed prior to

. issuance of the inspection repc4 after coordination with the licensees to establish a mutually-agreeable billing schedule. When the system is available to routinely bill for accumulated inspection costs at a specified interval, the staff intends to in-progress bill for all inspections. The staff is seeking early comment on the long-term policy in the FY 1998 proposed rule, and the necessary revisions to 10 CFR 170 would be made in future rulemaking when the system is available to accomplish this.

5. Provide additional methods of payments, such as Automated Clearing House (ACH) and credit cards.

Currently, payments may be made eledronically by Fedwire (a funds transfer system operated by the Federal Reserve System) or by check. ACH is a nationwide processing and d& livery facility that provides for the distribution and settlement of electronic financial transactions. Offering additional electronic payment methods will not only expedite the payment process, but w'!! also save licensees considerable time and money over a paper-based payment sistem. ACH offers several advantages over Fedwire, which most utilities currently use to pay NRC invoices. ACH is the least expensive of all electronic collection systems, one of the most secure networks in which to transmit payments, and is easy to use. Electronic funds transfer using ACH is quickly becoming the dominant, although not exclusive, method of conducting business with govemment agencies. Additionally, ACH provides NRC increased flexibility to electronically interact with the licensees. Our intermediate range plans are not only to send invoices electronically, but also to provide refunos electronically.

Credit card payments would be accepted for small dollar, large volume payments.

6. Propose to eliminate mailing of the final rule to alllicensees. The final rule would be available on the Intemet, and copies would be mailed to licensees upon request.

Licensees would continue to receive copies of the proposed rule, which would contain information on how to obtain copies of the final rule. This change would eliminate most

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of the costs associated with mailing approximately 8000 copies of the final rule. j i

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A ESTIMATED SCHEDULE FY 1998 FEE RULE 02/19/98 Forward Paper to Commission 1

Week of .

02/23/98 Meet with Commissioner Assistants 03/05/98 SRM on FY 1998 fee revisions 03/10/98 . Draft proposed rule for office comment and concurrence 03/17/98 Adjust proposed rule based on comments and forward to CFO 03/19/98 CFO signs proposed rule s

03/28/98 Federal Register publishes proposed rule 04/25/98 30 day comment period ends 94/29/98 Identify and meet with OGC, etc., on major comments / issues and staff recommendations 05/06/98 Prepare draft summary of comments, resolution of issues and staff recommendations for CFO consideration 05/13/98 Draft final rule for OGC, OlP and EDO comment and concurrence '

05/18/98 Receive OGC, OlP and EDO comments and concurrences  !

05/21/98 Adjust final rule based on comments 05/22/98 Final rule to CFO for signature 05/26/98 CFO si9ns final rule and transmits copy to Commission for 5 working days 06/02/98 Commission 5 working day period expires

' 06/09/98 Federa1 Register publishes final rule 08/08/98 Final rule effective / bills dated. Payments are due within thirty days. Schedule permits sending second notice for unpaid invoices prior to end of the FY.

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..o . 1 Attachment 4 FACTORS CONTRIBUTING TO INCREASES UNDER REBASELINING -

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