Revision of Fee Schedules; 100% Fee Recovery, FY 1994

SUMMARY: The Nuclear Regulatory Commission (NRC) is amending the

licensing, inspection, and annual fees charged to its applicants and

licensees. The amendments are necessary to implement Public Law 101-

508, enacted November 5, 1990, which mandates that the NRC recover

approximately 100 percent of its budget authority in Fiscal Year (FY)

1994 less amounts appropriated from the Nuclear Waste Fund (NWF). The

amount to be recovered for FY 1994 is approximately $513 million.

EFFECTIVE DATE: August 19, 1994.

ADDRESSES: Copies of comments received and the agency workpapers that

support these final changes to 10 CFR Parts 170 and 171 may be examined

at the NRC Public Document Room at 2120 L Street, NW. (Lower Level),

Washington, DC 20555.

FOR FURTHER INFORMATION CONTACT: C. James Holloway, Jr., Office of the

Controller, U.S. Nuclear Regulatory Commission, Washington, DC 20555,

Telephone 301-415-6213.

SUPPLEMENTARY INFORMATION:

I. Background.

II. Responses to Comments.

III. Final Action--Changes Included In The Final Rule.

IV. Section-by-Section Analysis.

V. Environmental Impact: Categorical Exclusion.

VI. Paperwork Reduction Act Statement.

VII. Regulatory Analysis.

VIII. Regulatory Flexibility Analysis.

IX. Backfit Analysis.

I. Background

Public Law 101-508, the Omnibus Budget Reconciliation Act of 1990

(OBRA-90), enacted November 5, 1990, requires that the NRC recover

approximately 100 percent of its budget authority less the amount

appropriated from the Department of Energy (DOE) administered NWF for

FYs 1991 through 1995 by assessing fees. OBRA-90 was amended in 1993 to

extend the NRC's 100 percent fee recovery requirement through 1998.

The NRC assesses two types of fees to recover its budget authority.

First, license and inspection fees, established in 10 CFR Part 170

under the authority of the Independent Offices Appropriation Act

(IOAA), 31 U.S.C. 9701, recover the NRC's costs of providing

individually identifiable services to specific applicants and

licensees. The services provided by the NRC for which these fees are

assessed include the review of applications for the issuance of new

licenses or approvals, amendments to or renewal of licenses or

approvals, and inspections of licensed activities. Second, annual fees,

established in 10 CFR Part 171 under the authority of OBRA-90, recover

generic and other regulatory costs not recovered through 10 CFR Part

170 fees.

Subsequent to enactment of OBRA-90, the NRC published six final fee

rules after evaluation of public comments. On July 10, 1991 (56 FR

31472), the NRC published a final rule in the Federal Register that

established the Part 170 professional hourly rate and the materials

licensing and inspection fees, as well as the Part 171 annual fees, to

be assessed to recover approximately 100 percent of the FY 1991 budget.

In addition to establishing the FY 1991 fees, the final rule

established the underlying basis and methodology for determining both

the 10 CFR Part 170 hourly rate and fees and the 10 CFR Part 171 annual

fees. The FY 1991 rule was challenged in Federal court by several

parties. The U.S. Court of Appeals for the District of Columbia Circuit

rendered its decision on those challenges on March 16, 1993, in Allied-

Signal v. NRC, remanding two issues to the NRC for further

consideration (988 F.2d 146 (D.C. Cir. 1993)). The court decision was

also extended to cover the FY 1992 fee rule by court order dated April

30, 1993.

On April 17, 1992 (57 FR 13625), the NRC published in the Federal

Register two limited changes to 10 CFR Parts 170 and 171. The limited

changes became effective May 18, 1992. The limited change to 10 CFR

Part 170 allowed the NRC to bill quarterly for those license fees that

were previously billed every six months. The limited change to 10 CFR

Part 171 lowered in some cases the maximum annual fee of $1,800

assessed a materials licensee who qualifies as a small entity under the

NRC's size standards. A lower tier small entity fee of $400 per

licensed category was established for small business and non-profit

organizations with gross annual receipts of less than $250,000 and

small governmental jurisdictions with a population of less than 20,000.

On July 23, 1992 (57 FR 32691), and July 20, 1993 (58 FR 38666),

the NRC published final rules in the Federal Register that established

the licensing, inspection, and annual fees necessary for the NRC to

recover approximately 100 percent of its budget authority for FY 1992

and FY 1993 respectively. The basic methodology used in the FY 1992 and

FY 1993 final rules was unchanged from that used to calculate the 10

CFR Part 170 professional hourly rate, the specific materials licensing

and inspection fees in 10 CFR Part 170, and the 10 CFR Part 171 annual

fees in the final rule published July 10, 1991 (56 FR 31472). The

methodology for assessing low-level waste (LLW) costs was changed in FY

1993 in response to the judicial decision mentioned earlier. This

change was explained in detail in the FY 1993 final rule published July

20, 1993 (58 FR 38669-72). In brief, the NRC created two groups--large

waste generators and small waste generators. Licensees within each

group are charged a uniform flat fee.

On March 17, 1994 (59 FR 12539), the NRC reinstated the annual fee

exemption for nonprofit educational institutions after notice and

comment. In response to the March 16, 1993, judicial decision, the

exemption had been eliminated in the final rule published by NRC on

July 20, 1993 (58 FR 38666).

The American College of Nuclear Physicians and the Society of

Nuclear Medicine filed a Petition for Rulemaking which included a

request that the Commission exempt medical licensees from fees for

services provided in nonprofit institutions. The Commission denied that

request on March 17, 1994 (59 FR 12555).

Section 2903(c) of the Energy Policy Act of 1992 required the NRC

to undertake a broad review of its annual fee policies under Section

6101(c) of OBRA-90, solicit public comment on the need for policy

changes, and recommend changes in existing law to the Congress that the

NRC found were needed to prevent the placement of an unfair burden on

certain NRC licensees. To comply with the Energy Policy Act

requirements, the NRC reviewed more than 500 public comments submitted

in response to the request for comment published in the Federal

Register on April 19, 1993 (58 FR 21116), and sent its report to

Congress on February 23, 1994. A copy of this report has been placed in

the Public Document Room.

On May 10, 1994 (59 FR 24065), the NRC published its proposed rule

for FY 1994 establishing the licensing, inspection, and annual fees

necessary for the NRC to recover approximately 100 percent of its

budget authority for FY 1994, less the appropriation received from the

NWF. The basic approach, policies, and methodology used in the proposed

rule were unchanged from those used to calculate the 10 CFR part 170

professional hourly rate, the specific materials licensing and

inspection fees in 10 CFR part 170, and the 10 CFR part 171 annual fees

set forth in the final rules published July 10, 1991 (56 FR 31477),

July 23, 1992 (57 FR 322691), and July 20, 1993 (58 FR 38666), with the

following exceptions: (1) The Commission has reinstated the annual fee

exemption for nonprofit educational institutions; and (2) in this final

rule, the NRC has directly assigned additional effort to the reactor

and materials programs for the Office of Investigations, the Office of

Enforcement, the Advisory Committee on Reactor Safeguards, and the

Advisory Committee on Nuclear Waste. Resources for these activities had

previously been included in overhead, but are now assigned directly to

the class of licensees that they support. Because this direct

assignment results in a reduction of overhead costs allocated to each

FTE, the cost per FTE is about 3 percent less than it would have been

without the additional direct assignment.

On May 19, 1994 (59 FR 26097) the NRC amended its fee regulations

in 10 CFR part 171 to establish revised FY 1991 and FY 1992 surcharges

for NRC licensees. The revised surcharges reflect the revised method of

allocating low-level waste (LLW) costs adopted by the Commission in the

FY 1993 final fee rule published July 20, 1993 (58 FR 38666). Refunds/

credits totalling $2.2 million will be given to certain NRC materials

licensees as a result of the revised surcharges for FY 1991 and FY

1992.

II. Responses to Comments

The NRC received thirty-three comments on the proposed rule.

Although the comment period ended on June 9, 1994, the NRC has reviewed

and evaluated all comments received. Copies of all comment letters

received are available for inspection in the NRC Public Document room,

2120 L Street, NW (lower level) Washington, DC.

Many of the comments were similar in nature. For evaluation

purposes, these comments have been grouped, as appropriate, and

addressed as single issues in this final rule. The comments are as

follows:

A. Fee Legislation

1. Comment. Several commenters noted that NRC had completed its

report on fee policy mandated by the Energy Policy Act of 1992 and had

sent a report to Congress with legislative recommendations. They

expressed their agreement with the legislative recommendation in the

report that OBRA-90 be amended to relax the requirement to recover 100

percent of its budget and remove certain costs from the fee base,

thereby eliminating many of the burdens they deem to be inequitable.

They urged the NRC to work with Congress to modify OBRA-90 to make the

assessment of fees more equitable across the board.

Response. The need for legislation is beyond the scope of this

rulemaking proceeding. The NRC will continue to work with Congress on

fee issues.

2. Comment. Several commenters stated that it is very important for

the NRC to control its internal costs in order for the nuclear industry

to be successful in reducing overall program costs. One commenter

suggested that the NRC consider staff reductions and other management

improvements to reduce budget needs based on a decline in the number of

materials licensees.

Another commenter commended the NRC on its willingness and ability

to hold the line on, and indeed reduce, its recoverable budget for FY

1994. While noting that the proposed FY 1994 annual fees for power

reactors are lower than those assessed in FY 1993, commenters from

utility licensees or their representatives believe that further

reductions are possible, especially in the areas where power reactor

licensees are required to unfairly subsidize cost recovery for

activities that benefit all licensees or for activities that are

unrelated to the power reactor class of licensees. While encouraged by

the recent recommendations for legislative changes made by the NRC to

Congress in the report required by the Energy Policy Act of 1992,

commenters recommended that NRC consider the following actions it can

take now without waiting for legislative changes:

(1) Reduce costs by eliminating or deferring lower priority

research and generic rulemaking activity;

(2) Reduce the amount to be collected under part 171 by increasing

part 170 licensing and inspection fees;

(3) Raise the lower tier small entity fee; and

(4) Use an annual escalation, e.g., CPI or some equivalent index,

of small entity fee limits which have stayed at $400 and $1,800 since

they were set two years ago.

Response. The NRC is working to improve the internal efficiency and

effectiveness of its program as a means of controlling operating costs

and, therefore, keeping fees billed to licensees as low as practicable.

Economies have been achieved through the elimination of the NRC's

uranium recovery field office in Denver, Colorado and consolidating the

agency's two smallest regional offices--Regions IV and V. The NRC is

tightening its financial operations by increasing the effectiveness and

efficiency of its program financing. As a result of these efforts, the

NRC proposed and Congress approved a $12.7 million recision (reduction)

to the original appropriation enacted for FY 1994. Therefore, the total

amount to be recovered from fees from all classes of licensees in FY

1994 is about $6 million less than the amount to be recovered in FY

1993.

The Chief Financial Officers Act (CFO) requires that the NRC

conduct a biennial review of fees and other charges imposed by the

Agency for its services and revise these charges to reflect the costs

incurred in providing those services. The 10 CFR Part 170 licensing and

inspection fees were increased significantly for some materials

licenses in FY 1993 as a result of the first CFO biennial review. The

10 CFR Part 170 fees for FY 1995 will be revised to reflect the results

of the second CFO review.

On April 7, 1994 (59 FR 16513), the Small Business Administration

(SBA) issued a final rule changing its size standards. This rule

increased the receipts-based SBA size standards due to inflation. The

NRC is considering proposing amendments to the NRC size standards that

would reflect the SBA action. Any amendments to the NRC size standards

will be submitted to SBA for approval and published in the Federal

Register for public notice and comment as required by the Small

Business Credit and Business Opportunity Enhancement Act of 1992 (Pub.

L. 102-366). The NRC will reexamine the annual fees assessed for small

entities once the NRC completes its evaluation of the NRC size

standards, which is expected to be done in FY 1995.

The NRC in this final FY 1994 fee rule is continuing a maximum

annual fee of $1,800 and $400 per licensed category, respectively, for

those licensees who can qualify as small entities under NRC size

standards. The impact of the fees for FY 1994 on small entities has

been evaluated in the Regulatory Flexibility Analysis (see Appendix A

of this final rule). The small entity subsidy in this final fee rule

has been calculated on that basis.

B. Fee Methodology

1. Hourly Rate

Comment. Several commenters indicated that the hourly rate of $133

is excessive and cannot be justified. These commenters noted that the

rate is considerably higher than the typical industry charge-out rate

for direct employees and equals or exceeds the hourly charges for

senior consultants at major national consulting organizations. Other

commenters supported the proposed removal of costs for the Office of

Investigations, the Office of Enforcement, the Advisory Committee on

Reactor Safeguards, and the Advisory Committee on Nuclear Waste from

overhead and their direct assignment to the reactor and materials

programs. Commenters stated that this is an improvement in that it

better defines the beneficiaries of certain regulatory activities and

more equitably allocates the fees for services provided.

Response. As indicated in previous final rules, the NRC

professional hourly rate is established to recover approximately 100

percent of the agency's Congressionally approved budget, less the

appropriation from the NWF, as required by OBRA-90. Both the method and

budgeted costs used by the NRC in the development of the hourly rate of

$133 for FY 1994 are discussed in detail in Part III, Section-by-

Section Analysis, for Sec. 170.20 of the proposed rule (59 FR 24069;

May 10, 1994) and the same section of this final rule. For example,

Table II shows the direct FTEs (full time equivalents) by major program

for FY 1994 and Table III shows the budgeted costs (salaries and

benefits, administrative support, travel and other G&A contractual

support) that must be recovered through fees assessed for the hours

expended by the direct FTEs. As indicated in the proposed rule and

supported by the commenters, the NRC has directly assigned additional

effort to the reactor and materials programs for the Office of

Investigations, the Office of Enforcement, the Advisory Committee on

Reactor Safeguards, and the Advisory Committee on Nuclear Waste.

Resources for these activities had previously been included in overhead

but are now directly assigned to the class of licensees they support.

This change results in the increase in the hourly rate being less than

it would have been otherwise. Given the increase in the costs to be

recovered through the hourly rate, including increases in the cost of

doing business (e.g., inflation), it is necessary to increase the 1994

hourly rate by less than one percent to recover 100 percent of the

budget as required by OBRA-90. The specific details regarding the

budget for FY 1994 are documented in the NRC's publication ``Budget

Estimates, Fiscal Year 1994'' (NUREG-1100, Volume 9). Copies of NUREG-

1100, Vol. 9 may be purchased from the Superintendent of Documents,

U.S. Government Printing Office, Mail Stop SSOP, Washington, DC 20402-

9328. Copies are also available from the National Technical Information

Service, 5285 Port Royal Road, Springfield, VA 22161. A copy is also

available for inspection and copying for a fee in the NRC Public

Document Room, 2120 L Street, NW (Lower Level), Washington, DC 20555-

0001.

2. Fees Based on Other Factors

Comment. As in FYs 1991-1993, commenters indicated that NRC should

assess fees based on the amount or type of material possessed, the

number of radioactive sources, the sales generated by the licensed

location, the competitive condition of certain markets and the effect

of fees on domestic and foreign competition.

Response. The issues of basing fees on the amount of material

possessed, the frequency of use of the material, the size of the

facilities, and market competitive positions, was addressed by the NRC

in previous rules and in the Regulatory Flexibility Analysis in

Appendix A to the final rule published July 10, 1991 (56 FR 31511-

31513). The NRC did not adopt that approach because it would require

licensees to submit large amounts of new data and would require

additional NRC staff to evaluate the data submitted and to develop and

administer even more complex fee schedules. The NRC continues to

believe that uniformly allocating the generic and other regulatory

costs to the specific licensee within a class to determine the amount

of the annual fee is a fair, equitable, and practical way to recover

those costs and that establishing reduced annual fees based on gross

receipts (size) is the most appropriate approach to minimize the impact

on small entities. Therefore, NRC finds no basis for altering its

approach at this time. This approach was upheld by the D.C. Circuit in

its March 16, 1993, decision in Allied-Signal.

3. High-Level Waste

Comment. One commenter stated that the Department of Energy (DOE)

should pay, through user fees, for NRC's costs related to DOE's high-

level waste (HLW) activities at Yucca Mountain.

Response. All of NRC's direct costs related to the disposal of

civilian high-level waste in DOE's geologic repository are paid for

with funds appropriated from the Nuclear Waste Fund (NWF). For FY 1994,

the budgeted amount appropriated to the NRC from the NWF is about $22

million. The amount appropriated from the NWF is subtracted from the

total NRC appropriation, and is therefore not included in the fee base.

This is shown in Table I. Thus, no NRC fees are assessed to recover the

direct HLW costs.

C. Specific Fee Issues--Part 170

1. Fees for Special Projects.

Comment. Several commenters supported the proposed change in 10 CFR

part 170 special project fees whereby the definition would be revised

to indicate that 10 CFR part 170 fees will not be assessed for certain

reports submitted to the NRC. Rather, commenters point out these costs

are more appropriately assessed as 10 CFR part 171 annual fees because

the related activities are in support of generic efforts such as

development of regulatory guidance applicable to a class of licensees.

One commenter, while supporting the proposed change, stated that the

terms ``alternate method'', ``reanalysis'', and ``unreviewed safety

issue'' are imprecise and should be further defined or explained.

Another commenter requested that the NRC reinstate a fee ceiling for

topical report reviews. The commenter indicated that a fee ceiling

would encourage the submittal of topical reports and contribute to the

advance of the state-of-the-art in the nuclear industry and resultant

improvement in nuclear plant safety.

Response. The NRC has revised the definition of special projects as

provided in Sec. 170.3 of the regulations to indicate that 10 CFR part

170 fees will not be assessed for certain requests/reports. Based on a

commenter's suggestion, the terms ``alternate method'', ``reanalysis'',

and ``unreviewed safety issue'' have been further explained in section

IV, Section-by-Section Analysis.

The NRC indicated in the FY 1991 final fee rule that it had decided

to eliminate the ceiling for topical report reviews based on the 100

percent recovery requirement and congressional guidance that each

licensee or applicant pay the full costs of all identifiable regulatory

services received from the NRC. Further, the NRC costs for topical

reports reviews vary significantly depending on the particular topical

report reviewed. This makes it impractical to establish an equitable

ceiling or flat fee (56 FR 31478; July 10, 1991). Recently, the

Commission revisited this issue as part of its review of fee policy

that was required by EPA-92. The policy of assessing 10 CFR part 170

fees, without a ceiling, for the review and approval of topical reports

was reconfirmed. For these reasons, the NRC is not establishing a fee

ceiling for topical reports in this final rule.

2. Fees for Reciprocity

Comment. The NRC charges Agreement State licensees who provide

services in non-Agreement States, ``reciprocity fees''. A few

commenters indicated that they were opposed to the fees for

reciprocity, particularly the proposed fees for revisions to

information submitted on the NRC Form-241 filed by 10 CFR 150.20

general licensees. They stated that fees are an unnecessary burden and

suggested that the NRC reconsider its decision to increase the current

fees and add additional charges for reciprocity licensees. They stated

that these costs would have to be included in proposals for work in

non-Agreement States and that, as small firms, they could not absorb

such costs and remain competitive with larger firms offering similar

services. One commenter suggested that the fee for revisions to NRC

Form 241 be established at $25 to $50 per revision rather than $200 as

proposed. Commenters questioned whether the establishment of the

reciprocity fees is an effort to restrict survey activities to the

home-State of the company because the additional costs do not make it

feasible to even consider bidding for projects out of the state.

Commenters claimed that this allows larger, wealthier companies the

opportunity to bid for and secure out-of-state work. Other commenters

supported the reciprocity fees, including the proposed fees for

revisions. They encouraged NRC to assess fees for services provided

specific classes of licensees and to reduce the costs classified as

overhead.

Response. The NRC is adopting the approach contained in the

proposed rule as this is consistent with the Congressional mandate

that, to the extent practicable, a class of licensees bear the costs of

providing regulatory services to them. Other approaches suggested by

commenters would have the effect of shifting the costs of reviewing

revisions to Form 241 to other classes of licensees. Agreement State

licensees requesting reciprocity for activities conducted in non-

Agreement States or in offshore waters are subject to 10 CFR 150.20.

The first time within a calendar year that an Agreement State licensee

conducts activities in non-Agreement States or in offshore waters, it

must file a completed NRC Form 241. Revisions to the initial NRC Form

241 are filed for review and authorization when persons using the 10

CFR part 150.20 general license either add locations of work, use

different radioactive material or perform additional work activities in

a non-Agreement State. Information submitted to the NRC by the 10 CFR

150.20 general licensee that clarifies or deletes specific locations or

work sites, work site contacts, or dates of work is considered by the

NRC to be a clarification, not a revision. Changes in the equipment to

be used under the 10 CFR 150.20 general license do not require a

revision if there is no change in (1) activity to be conducted, (2) the

radioactive material to be used, and (3) if the Agreement State license

authorizes the new equipment.

The fee of $700 for the initial filing of Form-241 is the same as

that assessed in FY 1993. The fee of $200 for revisions to the Form-241

has been added to this final rule. The reciprocity fees established by

the NRC are not intended to restrict companies from doing work in non-

Agreement States. The fees will allow the NRC to recover the costs it

expends in reviewing initial applications and revisions filed by 10 CFR

part 150.20 general licensees. That is, the fee is intended to recover

the cost of identifiable services to a specific applicant in accordance

with OBRA-90 and the IOAA. Fee Category 16 of 10 CFR part 170.31 has

been revised to add a fee of $200 for each revision filed by Agreement

State licensees. The revision fee will be due at the time the applicant

files a revision to information submitted on the initial Form-241 with

the NRC.

3. Fees for Irradiators

Comment. One commenter indicated that underwater irradiators should

not be placed, for fee purposes, in fee Categories 3F and 3G, the same

category as ``panoramic'' or ``cell'' type irradiators, because the

amount of regulation pertaining to unshielded source irradiators is

much greater than that which applies to underwater irradiators. The

commenter believes the license should be classified as Category 3E, a

self-shielded irradiator. The commenter states that the relative

complexity of the two designs dictates that this be the case.

Therefore, licensing, inspection, and other NRC activities dealing with

underwater irradiators must consume much less time and effort compared

to their ``cell'' or ``panoramic'' counterparts.

Response. The Commission will continue to place underwater

irradiators in fee Categories 3F and 3G. Although the sources are not

removed from their shielding for irradiator purposes, underwater

irradiators are not self-shielded as are the small irradiators in fee

Category 3E. The underwater irradiators are large irradiators and

possession limits of thousands of curies are authorized in the license.

As a result, more regulatory effort is required to regulate underwater

irradiators than is required to regulate the small irridiators in fee

Category 3E. For example, the provisions of 10 CFR part 36 apply the

same requirements to both the underwater irradiators where the source

is not exposed for irradiation and the exposed source irradiators. The

average cost of conducting license reviews and performing inspection of

the underwater irradiators where the source remains shielded during

irradiation are similar to the costs for irradiators where the source

is exposed during irradiation.

D. Specific Fee Issues--Part 171

1. Exemption From Fees for State-Owned Reactors.

Comment. Several commenters supported the proposed exemption from

annual fees for State-owned research reactors. These commenters

indicated that the reactors are used primarily for educational training

and academic research purposes and contribute significantly to the

national research effort and thereby provide significant externalized

benefits to society.

Response. The NRC, in this final rule, will amend both

Secs. 170.11(a) and 171.11(a)(2) to provide that State-owned research

reactors used primarily for educational training and academic research

purposes will be exempt from fees. The proposed rule would have amended

only 10 CFR part 171. The NRC believes that both of these changes are

consistent with the legislative intent of the Energy Policy Act of 1992

that government-owned research reactors be exempt from fees if they

meet the technical design criteria of the exemption and are used

primarily for educational training and academic research purposes.

2. Annual Fee for Uranium Recovery Facilities

Comment. While supporting the NRC's proposed first-time assessment

of a $1.5 million annual fee to the Department of Energy (DOE) for

Uranium Mill Tailing Control Act (UMTCA) activities, several commenters

strongly objected to the proposed annual fees for uranium recovery

licensees. They agree that the NRC should be reimbursed by the

collection of reasonable fees commensurate with services provided but

indicated that the proposed fees are not equitable or reasonable and

have not been implemented in a fair and equitable manner. They believe

that the Class I fees for mill licensees are entirely disproportionate

to the degree of NRC's involvement with the uranium recovery sites.

Commenters indicated that the large increases in fees for FY 1994

(approximately $36,000 per mill) demonstrate again the inconsistent and

fluctuating nature of the NRC fee system. These licensees asserted that

they have no means of anticipating or budgeting for the fees and

therefore large increases are unacceptable. One commenter stated that

the NRC's argument that the fees have increased because the initial

licensing of Envirocare's 11.e(2) facility is complete is irrelevant

and without merit because Envirocare's license is a Class 4D byproduct

disposal facility and not a uranium recovery license. Commenters note

that while the amount to be recovered from uranium recovery licenses

was $465,000 for FY 1993, the amount to be recovered for FY 1994

increased to $2.1 million--a 350 percent increase. Commenters state

that regulatory services to the industry have not increased from FY

1993 to FY 1994. Commenters find this situation particularly troubling

as they believe the costs for uranium recovery facilities should have

decreased with the closure of the Uranium Recovery Field Office (URFO)

in Denver, Colorado, which was described by NRC ``as a cost reduction

measure to uranium recovery licensees''.

One commenter argues that the annual fee of $8,700 for a Category

4D license is not justified when one considers the fee of $94,300 for a

mill license, a difference of $85,600. The commenter states that this

disparity is so great that it cannot be explained as anything short of

arbitrary and capricious. The commenter asserted that to be equitable,

Category 4D licenses should be assessed the same fees as a mill in fee

Category 2.A.(1), Class I, because commercial byproduct disposal sites

are analogous to uranium recovery tailings impoundments and essentially

require the same regulatory oversight.

One commenter was concerned that the new fees collected from DOE

will not be used to decrease the fees placed on other uranium recovery

licensees.

Response. Contrary to the commenter's claim, the total budget

authority to be recovered through fees from Title II uranium recovery

licensees has decreased over the past two years. The following table

shows the NRC budget authority for Title II uranium recovery licensees

for FY 1992, FY 1993, and FY 1994.

------------------------------------------------------------------------

Dollars in thousands

Title II facilities -----------------------------

FY 1992 FY 1993 FY 1994

------------------------------------------------------------------------

Total Budget Authority.................... $3,668 $3,065 $2,839

Less 10 CFR Part 170 Fees................. -1,700 -2,600 -2,200

-----------------------------

Total Annual Fees..................... 1,968 465 639

------------------------------------------------------------------------

As shown above, the NRC total budget authority for commercial

uranium recovery licensees has steadily decreased from $3,668,000 in FY

1992 to $2,839,000 in FY 1994, a 23 percent decrease since FY 1992.

However, because of the relatively large collection of 10 CFR Part 170

fees in FY 1993 as a result of the NRC licensing review efforts

associated with the Envirocare license application, the FY 1993 amount

of $465,000 to be collected through annual fees is $174,000 less than

the FY 1994 annual fee amount of $639,000. In FY 1993, the NRC

estimated that approximately $2.6 million would be collected from 10

CFR 170 fees, including fees for the major review work for the

Envirocare 11.e(2) license. The Envirocare license was issued on

November 19, 1993. Therefore, the 10 CFR Part 170 fees estimated to be

collected in FY 1994 have decreased.

Another reason for the increase in FY 1994 annual fees for

commercial uranium recovery licensees is a reduction in the number of

licensees. In FY 1993 there were 14 uranium recovery licensees subject

to annual fees, compared with 12 licensees in FY 1994. This is a

decrease of 2 licensees (or 14 percent). Because costs are allocated to

a class of licensees, any terminations that occur within the class will

raise the annual fees for the remaining licensees within that class in

order for the NRC to collect approximately 100 percent of its budget in

fees. The generic and other regulatory costs allocated to a class of

licensees under 10 CFR Part 171 are not dependent on the number of

licensees in a class.

While the total amount of annual fees to be recovered from all

uranium recovery licensees, commercial (Title II) and DOE (Title I) is

$2.1 million in FY 1994, $1.5 million of this amount is for DOE Uranium

Mill Tailing Control Act (UMTRCA) activities. The $1.5 million related

to DOE UMTRCA activities is being paid by DOE in FY 1994, leaving the

$0.6 million to be paid by the commercial Title II facilities. The

budget for DOE UMTRCA activities does not affect commercial uranium

recovery license fees in FY 1994, nor did it affect their fees prior to

FY 1994. As noted by the commenters, DOE is being assessed a $1.5

million annual fee in FY 1994 (10 CFR 171.16(d), fee Category 18b). For

FYs 1991-1993, the costs for DOE UMTRCA activities were assessed to

operating power reactors as a surcharge because DOE was not an NRC

licensee (10 CFR 171.15(c)(2)). In FY 1994, the costs for UMTRCA

activities were moved from the power reactor class of licensees to the

uranium recovery class because as of September 21, 1993, DOE became a

general licensee of the NRC (10 CFR 40.27) because post-reclamation

closure of the Spook, Wyoming site had been achieved. As a result, DOE

will be billed for the costs ($1.5 million in FY 1994) associated with

NRC's UMTRCA review and all activities associated with the facilities

assigned to DOE under UMTRCA.

The statement made by a commenter that fees collected from DOE will

not be used to decrease NRC's license fees is not correct. The $1.5

million to be collected from DOE will not be assessed to operating

power reactors who have paid these costs since FY 1991. Therefore, the

fees for operating power reactors will decrease as a result of the

reallocation of costs.

Based on the comments regarding the annual fee for licenses

authorizing the disposal of 11e.(2) byproduct material, the NRC has

reexamined its allocation of the budget for Title II uranium recovery

activities. Based on this reexamination and the comments received, the

NRC has concluded that the part of the budgeted costs for the uranium

recovery class of licensees should be allocated to licenses that

authorize receipt and disposal of 11e.(2) byproduct material, because

some of these budgeted resources are used to regulate these licensees.

Thus, the $639,000 to be recovered in annual fees will be recovered

from fee category 2.A.(2) Class I facilities, Class II facilities and

Other facilities, plus licenses authorizing disposal of 11e.(2)

byproduct material. Additionally, the Commission has determined that

for licenses issued for the primary purpose of disposal of 11e.(2)

byproduct material (e.g., the license issued to Envirocare in FY 1994)

the annual fee should be 90 percent of the fee for a Class I mill. This

is based on a determination that an estimated 90 percent of the budget

for regulating Class I mills is related to the mill tailings and the

remaining 10 percent to the processing of the ore. Therefore, since

essentially the same regulations apply to the mill tailings generated

by a Class I mill and the 11e.(2) byproduct material received by a

licensee whose primary purpose is to dispose of 11e.(2) byproduct

material, the annual fee for a licensee whose primary purpose is the

disposal of 11e.(2) byproduct material should be the same as that

portion (90 percent) of the annual fee for a Class I facility that is

related to the mill tailings. The annual fee for non-operating mills

that accept 11e.(2) byproduct material for disposal in tailings piles

created by mill operations will not be changed, because such disposal

is incidental to the existing tailings that were generated prior to

elimination of the mill's authority to operate and the Commission's

policy is not to assess an annual fee to non-operating facilities. As a

result of the above changes the base annual fee for a Class I facility

will be reduced from $94,300 to $74,500 for FY 1994. The annual fee for

licenses with the primary purpose of disposal of 11e.(2) byproduct

material will be $67,000.

3. Annual Fee for Fuel Facilities

a. Comment. Two commenters objected to the proposed

reclassification of General Atomics' (GA) special nuclear material

license from one subclass to another. Commenters indicated that such a

reclassification, with the attendant increase in annual fees, would

have the further effect of forcing GA to shut down the manufacture of a

limited number of TRIGA research reactor fuel elements, thereby

eliminating any U.S. source for this type of reactor fuel. Commenters

argued that the licensee is not a ``fuel facility'' in the same sense

as other fee Category 1.A.(1) licensees, in that all of the licensees

in fee Category 1.A.(1) are large suppliers of light water reactor fuel

to the commercial power industry or the U.S. Navy. Commenters stated

that reclassifying the license is inconsistent with the NRC's stated

underlying basis of charging a class of licensees for NRC costs

attributable to that class of licensees particularly when one

considers, for comparison purposes, the special nuclear material (SNM)

throughput, facility size, employment numbers, complexity of processes,

chemical/physical forms of SNM, and number of process steps. Commenters

therefore concluded that the GA license should not be reclassified.

General Atomics, whose license is to be reclassified, commented

that after three years of being classified as a fee Category 1.A.(2)

licensee, there is no justification for suddenly reclassifying the

license as a fee Category 1.A.(1) fuel facility, because there has been

no change of any kind in the activities or licensing status since 1991

that would warrant reclassification of the facility. GA also contends

that it is unfair to reclassify the license after the beginning of the

fiscal year and to impose more than an eight-fold increase in the fee

associated with the new category without the licensee having the

opportunity to take licensing action to avoid the fee. GA states that

when the initial rule for 100 percent recovery was published in FY

1991, the NRC recognized that many licensees might wish to avoid or

minimize the fees by terminating or modifying their licenses, and for

that reason provided a 30-day period before the effective date of the

rule for a licensee to file a request to terminate the license or

request a possession-only license and thereby avoid paying the annual

fee. GA also stated that imposition of the proposed fee would force

them to significantly raise its unit fuel prices to recover the eight-

fold fee increase and that many of its customers for research reactor

fuel are typically low-budget research facilities such as university

research reactors, many of which are operated by nonprofit educational

institutions.

Response. The NRC established fuel facilities as a separate class

of licensees in FY 1991. Within the class, there are four subclasses of

licensees described in 10 CFR 171.16(d): high-enriched uranium (HEU)

fuel fabrication, low-enriched uranium (LEU) fuel fabrication, all

other materials licenses authorizing critical quantities of special

nuclear material, and UF6 converters. One of the questions raised

by the commenters is whether GA license SNM-696 should be placed in the

LEU fuel fabrication facility subclass (fee category 1.A.(1)) or the

other facility subclass authorizing critical quantities of special

nuclear material (fee category 1.A.(2)). Fee Category 1.A.(1) of 10 CFR

171.16(d) is intended to cover those licenses that authorize the

possession and use of uranium 235 or plutonium for fuel fabrication

activities. In the proposed rule for FY 1994, the NRC concluded that

license SNM-696, held by GA, would be reclassified from fee Category

1.A.(2) (all other materials licenses authorizing critical quantities

of special nuclear material) to fee Category 1.A.(1) (a low-enriched

fuel fabrication facility). This reclassification is based on the fact

that (1) the license authorizes the possession and use of uranium 235

for fuel fabrication activities and (2) GA manufactures TRIGA research

reactor fuel elements using low-enriched fuel. As a result, the proper

classification for license SNM-696 is fee category 1.A.(1) (low-

enriched fuel fabrication). In the past, this license was improperly

categorized by NRC and as a result, General Atomics was assessed

substantially lower fees over the past three years than it should have

been. Rather than continue using an incorrect fee classification for

this license, now that the NRC is aware of its administrative error,

this final rule places the license in its proper fee category. The NRC

recently addressed a similar classification issue in response to a

Babcock and Wilcox (B&W) request that their LEU fuel fabrication

facility be reclassified from fee category 1.A.(1) (LEU facility) to

fee category 1.A.(2) (all other materials licenses authorizing critical

quantities of special nuclear material). On January 7, 1994, the NRC

denied this request for reasons similar to those stated above for the

General Atomics license.

The other question raised by the commenter is whether the fee for

the GA license should be the same as the other LEU fuel fabrication

licenses because their fuel and process is different. That is, would

assessing GA the same fee as other LEU fuel fabrication licensees

represent a disproportionate allocation of costs to GA. B&W has also

raised similar questions relative to their LEU facility. The NRC is

considering B&W's request for a partial exemption from annual fees

under 10 CFR 171.11(d). This request is currently under review. Some of

the comments received concerning the GA fuel facility are similar to

the arguments presented by B&W for an exemption. GA states that

``Reclassifying GA as a Category 1.A.(1) licensee is inconsistent with

the NRC's stated underlying basis of `charging a class of licensees for

NRC costs attributable to that class of licensees.' It asserts that by

any measure of comparison, e.g., SNM * * * complexity of processes,

chemical/physical forms of SNM, number of process steps, etc., GA's

licensed activities are nowhere close to being in the same class as the

licensees listed in Category 1.A.(1). GA's * * * licensed processes are

simple small batch-wise operations, there are no processes involving

solutions or powders (the fuel is a uranium-zirconium metal alloy), * *

*''

The NRC believes that consideration of GA's comment as a request

for an exemption under 10 CFR 171.11(d) is appropriate and supported by

Allied-Signal v. NRC. The Court there indicated that they saw no reason

to require the Commission to address rare situations in the rule

itself, especially since 10 CFR Part 171 provides for exemptions in

unusual circumstances. Therefore, the NRC intends to treat the unusual

circumstances discussed in GA's comments as an exemption request, which

it will address in the near future. The Commission notes, however, that

the exemption determination will not be based on factors associated

with size, ability to pay, or other economic factors. As stated in the

decision to reinstate the exemption from annual fees for non-profit

educational institutions, ability to pay is not a basis for an

exemption (59 FR 12539). The NRC also addressed these issues in the

Regulatory Flexibility Analysis in Appendix A to the final rule

published July 10, 1991 (56 FR 31511). The Commission indicated these

generally are not factors it will consider in setting fees and finds no

basis for altering its approach at this time.

Given the questions raised by B&W, GA, and other fuel facilities

regarding exemptions from fees and proper fee category classification,

the NRC plans to reexamine the fuel facility subclass categorizations.

Any restructuring that results from this reexamination will be included

in the proposed FY 1995 fee rule for notice and comment.

The NRC adopts General Atomics' suggestion that the NRC consider a

waiver of the FY 1994 annual fees if, within the 30-day period after

the NRC acts on their exemption request, it notifies the NRC in

writing, in accordance with 10 CFR 70.38, that it wishes to relinquish

the portion of their license permitting fabrication of fuel elements or

to obtain a POL. In order to be considered for the waiver of the FY

1994 annual fee, General Atomics must permanently cease fuel

fabrication activities within the 30-day period after NRC acts on the

exemption request.

With respect to the argument that reclassifying the license is

inconsistent with the NRC's stated underlying basis of ``charging a

class of licensees for NRC costs attributable to that class of

licensees'', costs for providing an identifiable service related to a

specific application, license or approval are recovered under the fee

regulations in 10 CFR Part 170. For generic and other regulatory costs

not recovered under 10 CFR 170, the NRC, in compliance with the

requirements of OBRA-90, has allocated these costs to major classes of

licensees. The law permits, and the NRC has established, a schedule of

annual charges in 10 CFR Part 171 that assesses different annual

charges to different licensees or classes of licensees. To the extent

practicable, and where necessary for a more fair and equitable

allocation of costs, a major class of licensees is divided into

subclasses. Within a class or subclass of licensees, the costs are

uniformly allocated to each licensee in the class or subclass based on

the premise that there is no significant difference in the generic and

other regulatory services provided to each licensee within a class or

subclass. This approach and principle are used for all classes of

licensees (57 FR 32693; July 23, 1992). The Commission has carefully

reviewed the costs allocated to the LEU fuel fabrication subclass and

concluded that the budgeted costs have been properly assigned to those

licensees within the subclass.

b. Comment. Commenters also objected to the increases in annual

fees for Category 1.A.(1) (low-enriched fuel facilities) and Category

1.A.(2), (other materials licenses authorizing critical quantities of

special nuclear material). Commenters indicated that the base fee for

low-enriched fuel facilities has increased from about $700,000 in FY

1991 to $1.4 million in FY 1994, while Category 1.A.(2) increased from

about $175,000 to $304,000 (including surcharge). These increases,

commenters claimed, place an undue hardship on the profitable operation

of these facilities and are grossly out of proportion to any warranted

increase in the effort expended by the NRC in regulating these classes

of licensees. One commenter stated that the NRC's practice of

retroactively revising annual fees causes major corporate budgeting

problems, especially when large increases between the originally

invoiced quarterly payments and actual annual fees are the result.

Response. The amount of the NRC's fees are based on the budget

authority for a class of licensees and do not consider impact on a

company's profitability. The NRC budgeted costs for this class of

licensees have increased because the NRC budgeted and the Congress

appropriated greater resources to regulate the safety and safeguards of

fuel facilities. Under the 100 percent recovery statute of OBRA-90,

charging this class of licensees fees that fail to recover the full

budgeted amount, would mean that other licensees must pay additional

fees which provide no benefit to them. NRC promulgates its final rules

as early as it can subject to certain time-sensitive constraints: the

NRC must receive a Congressionally approved budget, calculate the

numerous fees in question, issue a proposed rule for comment, evaluate

the comments, and issue a final fee rule.

c. Comment. One commenter, Allied-Signal (A-S), believed that the

costs allocated to the UF6 conversion subclass should be divided

equally between two licensees rather than one, even though the second

licensee has a possession only license (POL). A-S argued that the NRC

has not provided a rational basis for exempting that licensee from the

annual fee. A-S noted the NRC's policy that it is the existence of a

license, not operations, that determines allocation of costs for

recovery through the annual fee. A-S believes that a licensee that has

a license to operate but does not do so is no different from a licensee

that has operated, stops doing so, and holds a POL. A-S believes that,

in each case, the NRC's regulations are equally applicable and the

licensee benefits from them. A-S pointed out that it is the only entity

in the U.S. engaging in UF6 conversion operations and although it

has attempted to pass the cost of fees on to its customers, it has not

been able to do so on a broad-scale basis. A-S claimed that the

proposed fee would raise its costs by 6 cents per pound and that

winning bids from Canadian and European UF6 converters are decided

by as little as 1 cent per pound of UF6.

A-S also argued that the UF6 conversion license should be

removed from the fuel facility class of licensees and included in the

uranium recovery class because the operations of the UF6 converter

are more similar to those of a uranium mill than to a fuel facility.

Additionally, there is now only one UF6 converter in the U.S. and

a subcategory of one does not accurately reflect the relevant amount of

NRC's resources devoted to the license and for that reason is

inappropriate. Therefore, according to Allied-Signal, the annual fee is

not fairly and equitably allocated as required by OBRA-90, and does not

bear a reasonable relationship to the cost of providing regulatory

services, also required by the statute. A-S, therefore, believes the

resulting fee for UF6 converters is disproportionately higher than

that charged to licensees in the uranium recovery category and

disproportionately close to what is assessed to operating reactors.

Response. The NRC has a long-standing policy of not assessing

annual fees to those licensees who have indicated to the NRC that they

wish to amend their license to permanently withdraw authority to

operate and have been issued a possession only license (POL) (51 FR

33228; September 18, 1986). In FY 1991, the NRC reconsidered and

reaffirmed its policy that licensees with POLs would not be subject to

the annual fees when it initially established fees to recover 100

percent of its budget authority under OBRA-90 (56 FR 14873; April 12,

1991). Recently, the Commission revisited this issue as part of its fee

policy review required by EPA-92, and affirmed its decision to continue

the policy of not assessing annual fees to licensees when the license

is amended to authorize possession only or decommissioning. This is

consistent with the concept that those who benefit from a license that

authorizes operation or use of material should pay annual fees.

Therefore, consistent with agency policy included in the past fee

rules, and the FY 1994 proposed fee rule, the NRC will not assess FY

1994 annual fees to Sequoyah Fuels Corporation, previously a UF6

converter but now is not authorized to operate as a UF6 converter.

However, the NRC recognizes that its fee rule including this policy

could result in a disproportionate allocation of costs to a licensee in

unusual situations. Exemptions for such unusual circumstances are

provided for in 10 CFR 171.11(d) and are supported by Allied-Signal v.

NRC. The NRC concludes that the issues raised by Allied-Signal

regarding a disproportionate allocation of the budgeted costs to them,

as a result of the elimination of Sequoyah Fuels from the fee base,

falls within the confines of an unusual situation. Therefore, the NRC

will consider Allied-Signal's comments regarding NRC's allocation of

costs to them as an exemption request under 10 CFR 171.11(d). The

Commission will issue a decision on this exemption request in the near

future.

As indicated in the response in item 3(a), the NRC recognized that

there will be adverse impacts on licensees as a result of implementing

OBRA-90. The NRC has concluded after notice and comment rulemaking that

it would not be appropriate to consider licensees' ability to pass

through costs in establishing its fee schedules, an approach now

recommended by Allied-Signal. As stated in the decision to reinstate

the exemption from annual fees for nonprofit educational institutions,

ability to pay is not a basis for an exemption (59 FR 12539). No one

sought judicial review of that decision.

The Commission disagrees with Allied-Signal's suggestion that it be

placed in the uranium recovery fee category rather than that reserved

for fuel facilities, where it is currently located. The NRC includes

the regulatory costs for UF6 conversion facilities in the fuel

facility class of licensees. In developing the FY 1994 annual fees the

NRC followed the established budget structure. This permitted the NRC

to more readily identify and allocate generic and other regulatory

costs to a class of licensees, and allowed the NRC to explain and to

show the origin of these costs upon public examination of the record.

Although the UF6 conversion facilities are included in the

same class as fuel fabrication facilities for budgeting purposes, the

annual fee is based on the NRC's costs attributable to the UF6

conversion facility subclass of licensees. For example, generic safety

and safeguards and other regulatory costs are included in the budgeted

costs for the fuel facilities class of licensees. However, none of the

safeguards costs are included in the annual fee for the UF6

conversion facility subclass since none of these costs are attributable

to this subclass. Thus, the costs included in the annual fee for the

UF6 subclass of licensees are those budgeted costs attributable to

the subclass. These costs, and the resulting annual fee, would be the

same independent of where they are included in the budget. Therefore,

even if the UF6 conversion facilities are more akin to uranium

recovery facilities, the budgeted costs attributable to them result in

a different annual fee.

The NRC further notes that the NRC's costs of promulgating

regulations for a type of licensee do not necessarily decrease when the

number of licenses in a class goes down. Whether a class of licensees

is comprised of one licensee or one hundred, generic safety concerns

may well remain the same, and the same research and regulations are

necessary. This is what distinguishes the annual fee from the 10 CFR

Part 170 fees, which are charged to recapture costs for specific

services such as inspections and license amendments. By its very nature

the annual fee is levied to recover the costs of providing services,

such as the development of new regulations, that cannot be attributed

to a specific licensee.

The NRC does recognize the strain this policy unavoidably places on

licensees who become, as Allied-Signal has, the single licensee in

their class or subclass. The NRC will be reviewing this problem along

with others associated with classification of fuel facilities. Any

changes resulting from this review will be included in the FY 1995

proposed rule for notice and public comment.

4. Fees for Independent Spent Fuel Storage Installations

Comment. One commenter, while noting that the willingness and

ability of the NRC to hold the line on, and indeed reduce, the

recoverable budget for FY 1994 is commendable, questioned the increase

in fees from $136,200 to $363,500 for Independent Spent Fuel Storage

Installations. As a minimum, the commenter believes NRC should identify

the additional resources to be expended in this area.

Response. The reasons for the increased fees for independent spent

fuel storage licensees are two-fold. First, the budgeted amount

necessary to regulate spent fuel activities which is recovered through

10 CFR Part 170 and 171 fees increased to provide regulatory oversight

for the increased number of facilities and to accomplish necessary

rulemaking activities for spent fuel facilities. Additionally, as the

licensing of these facilities are completed, the amount of fees from 10

CFR Part 170 decreased resulting in an increased amount of the budget

that must be recovered from 10 CFR Part 171.

5. Proration of Annual Fees

Comment. Several commenters concurred with the proposed proration

provisions and permitting a waiver of annual fees for those who either

filed for termination of their license prior to October 1, 1993, or

permanently ceased licensed activities by September 30, 1993 but had

not yet received necessary NRC approvals before the end of the fiscal

year.

Response. The NRC has amended 10 CFR 171.17 to revise the proration

provision for reactors and add a proration provision for materials

licenses. The proration provisions are effective for FY 1994. The NRC

proposed to prorate the annual fees for materials licenses upgraded or

downgraded during the fiscal year. However, based on lack of sufficient

data at this time on upgrades and downgrades of licenses and the

administrative burden to implement this part of the proposed proration

provision for FY 1994, the NRC will prorate the annual fees only for

those licenses for which a termination request or a request for a POL

has been filed during the fiscal year and for new licenses issued

during the fiscal year. This issue will be revisited in a future

rulemaking.

E. Other Issues

1. Impact of Fees on Licensees

Comment. Several commenters expressed concern about the impact of

fees, particularly on the practice of nuclear medicine. Some commenters

indicated that the increase in annual fees may indirectly limit access

to critical radiological care, particularly for small, rural, medical

practices. They suggest that the fees be reduced or that NRC freeze the

annual license fee for a five-year period in order for them to stay in

business.

Response. The NRC is concerned about the impact of its fees but has

concluded that significant changes can only come about through the

enactment of legislation. The Commission is satisfied that the fee

schedule being promulgated for FY 1994 satisfies all statutory

obligations. The Commission recently considered the effect of fees on

the medical community and decided that it would not provide the

significant fee relief requested by the medical commenters (59 FR

12555; March 17, 1994).

2. Deferral of Fees for Standardized Plants and Early Site Reviews

Comment. One commenter urged NRC to reestablish the NRC's previous

fee deferral policy for review of standardized plant designs and early

site reviews indicating that fee deferral for review of the

standardized designs is essential to encourage the development of such

designs.

Response. The Commission decided in the FY 1991 final fee rule that

the costs for standardized reactor design reviews, whether for domestic

or foreign applicants, should be assessed under 10 CFR Part 170 to

those filing an application with the NRC for approval or certification

of a standardized design (56 FR 31478; July 10, 1991). Recently, the

Commission revisited this issue as part of its review of fee policy

required by the EPA-92 and reconfirmed its FY 1991 decision. The NRC

continues to believe the costs of these reviews should be assessed to

advanced reactor applicants. The NRC finds no compelling justification

for singling out these classes of applications for special treatment

and shifting additional costs to operating power reactors or other NRC

licensees.

3. Revise 10 CFR 171.13 Notice

Comment. One commenter pointed out that 10 CFR 171.13 states that

the NRC will publish a notice concerning the annual fee in the Federal

Register during the first quarter of each fiscal year and that for the

past four years the NRC has not met the requirement stated in the

regulation. The commenter suggests that the NRC publish the proposed

annual fee and professional hourly rate as early as possible within

NRC's fiscal year to facilitate licensees' budget and planning

processes.

Response. The NRC agrees with the commenter and acknowledges the

realities of the situation that the proposed rule has been published

during the third quarter of each of the past four fiscal years. The

intent of the NRC is to publish the proposed rule as quickly as is

practicable but realizes and agrees that it is unlikely that

publication will occur during the first quarter of the fiscal year. To

permit appropriate notice and comments, however, 10 CFR 171.13 will not

be revised in this final rule but will be revised in a future

rulemaking.

III. Final Action--Changes Included in the Final Rule

The NRC is amending its licensing, inspection, and annual fees for

FY 1994. OBRA-90 requires that the NRC recover approximately 100

percent of its FY 1994 budget authority, including the budget authority

for its Office of the Inspector General, less the appropriations

received from the NWF, by assessing licensing, inspection, and annual

fees.

For FY 1994, the NRC's budget authority was originally $547.7

million. The Commission, in its effort to streamline operations,

proposed a $12.7 million rescission to its original appropriation for

FY 1994. Congress approved this NRC-proposed reduction. This resulted

in a revised budget authority of $535.0 million. Approximately $22.0

million of the revised budget was appropriated from the NWF. Therefore,

OBRA-90 requires that the NRC collect approximately $513.0 million in

FY 1994 through 10 CFR part 170 licensing and inspection fees and 10

CFR part 171 annual fees. This amount to be recovered for FY 1994 is

about $6 million less than the total amount to be recovered for FY

1993. The NRC estimates that approximately $120.1 million will be

recovered in FY 1994 from the fees assessed under 10 CFR part 170. The

remaining $392.9 million will be recovered through the 10 CFR part 171

annual fees established for FY 1994.

The NRC has not changed the basic approach, policies, or

methodology for calculating the 10 CFR part 170 professional hourly

rate, the specific materials licensing and inspection fees in 10 CFR

part 170, and the 10 CFR part 171 annual fees set forth in the final

rules published July 10, 1991 (56 FR 31472), July 23, 1992 (57 FR

32691), and July 20, 1993 (58 FR 38666), with the following exceptions:

(1) The Commission has reinstated the annual fee exemption for

nonprofit educational institutions and (2) in this final rule, the NRC

has directly assigned additional effort to the reactor and materials

programs for the Office of Investigations, the Office of Enforcement,

the Advisory Committee on Reactor Safeguards, and the Advisory

Committee on Nuclear Waste. Resources for these activities had

previously been included in overhead but are now assigned directly to

the class of licenses that they support. As a result of this direct

assignment, the cost per direct FTE is about 3 percent less than it

would have been without the additional direct assignment.

Under this final rule, fees for most materials and fuel cycle

licensees will increase because--

(1) The NRC professional rate has increased slightly from $132/hr

to $133/hr;

(2) The NRC has directly assigned additional effort to the reactor

and materials programs for the Office of Investigations, the Office of

Enforcement, the Advisory Committee on Reactor Safeguards, and the

Advisory Committee on Nuclear Waste. Resources for these activities had

previously been included in overhead, but are now assigned directly to

the class of licensees that they support;

(3) The number of licenses in some classes has decreased as

compared to FY 1993 due to license termination or consolidation,

resulting in fewer licensees to pay for the costs of regulatory

activities not recovered under 10 CFR Part 170; and

(4) The budget for some classes of licensees has increased.

The NRC contemplates that any fees to be collected as a result of

this final rule will be assessed on an expedited basis to ensure

collection of the required fees by September 30, 1994, as stipulated in

OBRA-90. Therefore, as in FY 1991, FY 1992, and FY 1993, the fees will

become effective 30 days after publication of the final rule. The NRC

will send a bill for the amount of the annual fee to the licensee or

certificate, registration, or approval holder upon publication of the

final rule. Payment is due on the effective date of the FY 1994 rule.

A. Amendments to 10 CFR Part 170: Fees for Facilities, Materials,

Import and Export Licenses, and Other Regulatory Services

Five amendments have been made to Part 170. These amendments do not

change the underlying basis for the regulation--that fees be assessed

to applicants, persons, and licensees for specific identifiable

services rendered. The revisions also comply with the guidance in the

Conference Committee Report on OBRA-90 that fees assessed under the

Independent Offices Appropriation Act (IOAA) recover the full cost to

the NRC of all identifiable regulatory services each applicant or

licensee receives.

First, the agency-wide professional hourly rate, which is used to

determine the Part 170 fees, is increased from $132 per hour to $133

per hour ($231,216 per direct FTE). The rate is based on the FY 1994

direct FTEs and that portion of the FY 1994 budget that does not

constitute direct program support (contractual services costs) and is

not recovered through the appropriation from the NWF. As indicated

earlier, the decrease in the FY 1994 budget as compared to the FY 1993

budget is primarily for direct program support, which is not included

in the hourly rate. Thus, the reduction in the budget has limited

impact on the hourly rate but will show up as a direct reduction to the

amount allocated to the various classes of licensees.

Second, the current Part 170 licensing and inspection fees in

Secs. 170.21 and 170.31 for all applicants and licensees are revised to

reflect the very small increase in the hourly rate.

Third, the definition of special projects as provided in Sec. 170.3

of the regulations is revised as a result of (1) the NRC's experience

in implementing the 100 percent fee recovery program during the past

three years and (2) the NRC's most recent fee policy review, required

by the Energy Policy Act of 1992. The NRC believes that the costs for

some requests or reports being filed with NRC are more appropriately

captured in the 10 CFR Part 171 annual fees rather than assessing

specific fees under 10 CFR Part 170. These reports, although submitted

by a specific organization, support NRC's development of generic

guidance and regulations (e.g., rules, regulatory guides, and policy

statements), and resolution of safety issues applicable to a class of

licensees, such as those addressed in generic letters. Therefore, the

applicable definition in Sec. 170.3 and the footnotes in Secs. 170.21

and 170.31 are revised to indicate that 10 CFR Part 170 fees will not

be assessed for requests/reports which have been submitted to the NRC:

(1) In response to a Generic Letter or NRC Bulletin that does not

result in an amendment to the license, does not result in the review of

an alternate method or reanalysis to meet the requirements of the

Generic Letter or does not involve an unreviewed safety issue;

(2) In response to an NRC request (at the Associate Office Director

level or above) to resolve an identified safety, safeguards, or

environmental issue, or to assist the NRC in developing a rule,

regulatory guide, policy statement, generic letter, or bulletin; or

(3) As a means of exchanging information between industry

organizations and the NRC for the purpose of supporting generic

regulatory improvements or efforts.

The terms ``alternate method'', ``reanalysis'' and ``unreviewed

safety issue'' are explained in more detail in Section IV, Section-By-

Section Analysis.

Fourth, Sec. 170.11(a) is amended to establish an exemption from

fees for State-owned research reactors if they meet the technical

design criteria for the exemption and are research reactors used

primarily for educational training and academic research purposes.

Fifth, Fee Category 2 is amended by establishing two additional fee

categories, 2.A.(2) and 2.A.(3), which cover licenses authorizing

receipt and disposal of Section 11e.(2) byproduct material as defined

by the Atomic Energy Act. The current 2.A. category has been amended to

read 2.A.(1). The current 4.D. fee category has been eliminated. This

action recognizes that: (1) Source material licenses are issued to

cover these licensed activities and therefore they are more

appropriately placed in the source material category; and (2) that a

further distinction should be made between those licenses whose primary

purpose is to authorize receipt and disposal of 11e.(2) material

requiring the establishment of a new tailings pile and those licenses

authorizing the receipt and disposal of 11e.(2) material incidental to

tailings piles created by mill operations.

In addition, Category 16 of Sec. 170.31, reciprocity, is amended to

include a fee to recover the NRC's costs of reviewing revisions to the

initial NRC Form 241 filed by 10 CFR 150.20 general licensees.

Agreement State licensees requesting reciprocity for activities

conducted in non-Agreement States or in offshore waters are subject to

10 CFR 150.20. The first time within a calendar year that an Agreement

State licensee conducts activities in non-Agreement States or in

offshore waters, it must file a completed NRC Form 241. Revisions to

the initial NRC Form 241 are filed for review and authorization when

persons using the 10 CFR Part 150.20 general license either add

locations of work, use different radioactive material or perform

additional work activities in a non-Agreement State.

B. Amendments to 10 CFR Part 171: Annual Fees for Reactor Operating

Licenses, and Fuel Cycle Licenses and Materials Licenses, Including

Holders of Certificates of Compliance, Registrations, and Quality

Assurance Program Approvals and Government Agencies Licensed by NRC

Six amendments have been made to 10 CFR Part 171. First,

Sec. 171.11(a)(2) is amended to provide that State-owned research

reactors used primarily for educational training and academic research

purposes will be exempt from the annual fee. The NRC believes that this

change is consistent with the legislative intent of the Energy Policy

Act of 1992 that government-owned research reactors be exempt from

annual fees if they meet the technical design criteria for the

exemption and are used primarily for educational training and academic

research purposes.

Second, Secs. 171.15 and 171.16 are amended to revise the annual

fees for FY 1994 to recover approximately 100 percent of the FY 1994

budget authority, less fees collected under 10 CFR Part 170 and funds

appropriated from the NWF.

Third, fee Category 2 of Sec. 171.16(d) is amended by establishing

two new fee categories, 2.A.(3) and 2.A.(4), relating to the disposal

of 11e.(2) byproduct material as defined by the Atomic Energy Act. The

current fee Category 4.D. has been eliminated. This action recognizes

that (1) part of the budgeted costs for the uranium recovery class of

licensees should be allocated to source material licenses that

authorize receipt and disposal of 11e.(2) material because some of

these budgeted resources are used to regulate these licensees and (2) a

further distinction should be made between those licenses whose primary

purpose is to authorize receipt and disposal of 11e.(2) byproduct

material requiring the establishment of a new mill tailings pile and

those non-operating mills that accept 11e.(2) byproduct material for

disposal incidental to tailings piles created by mill operations.

In addition, fee Category 18 of Sec. 171.16(d) is amended to assess

fees to the Department of Energy (DOE) for its general license in 10

CFR 40.27. The general license fulfills a requirement of the Uranium

Mill Tailings Radiation Control Act of 1978 (UMTRCA) (Public Law 95-

604) that the perpetual custodian of reclaimed uranium mill tailings

piles be licensed by the NRC. The general license provided for in the

regulation covers only post-reclamation closure custody and site

surveillance. Based on NRC's acceptance of DOE's Long Term Surveillance

Plan for the Spook, Wyoming, site on September 21, 1993, the site is

now subject to the general license in 10 CFR 40.27. Because DOE now

holds an NRC license, it is subject to annual fees. The NRC had

previously indicated its intent to bill DOE for UMTRCA costs once post-

closure was achieved and the sites were licensed by the Government (56

FR 31481; July 10, 1991). As a result, DOE will be billed for the costs

associated with NRC's UMTRCA review of all activities associated with

the facilities assigned to DOE under UMTRCA. As with other licensees,

the annual fee for this class of licensees (DOE UMTRCA facilities) will

recover the generic and other regulatory costs not recovered through 10

CFR Part 170 fees. Because DOE, as a Federal agency, cannot be assessed

Part 170 fees under the Independent Offices Appropriation Act of 1952

(IOAA), the result is that NRC will assess annual fees to DOE for the

total costs of DOE UMTRCA activities.

Fourth, 10 CFR 171.17 is amended to add a proration provision for

materials licenses and to revise the proration provision for reactors.

The annual fee for materials licensees is prorated based on

applications filed after October 1 of the fiscal year to terminate a

license or obtain a POL. Those materials licensees who file

applications between October 1 and March 31 of the fiscal year to

terminate the license or obtain a POL will be assessed one-half the

annual fee stated in Sec. 171.16(d) for the affected fee category(ies).

Those materials licensees filing applications on or after April 1 of

the fiscal year to terminate a license or obtain a POL will be assessed

the full annual fee for that fiscal year. Those licensees who file for

termination or POL must also permanently cease operations of relevant

licensed activities during the periods mentioned for the fees to be

reduced. Similarly, materials licensees who were issued new licenses

during the fiscal year will be charged a prorated annual fee based on

the date of issuance of the new license. New materials licenses issued

during the period October 1 through March 31 will be assessed one-half

of the annual fee stated in Sec. 171.16(d) for the applicable fee

category(ies) for that fiscal year. New licenses issued on or after

April 1 will not be assessed an annual fee for that fiscal year.

The proration provision in Sec. 171.17 applicable to reactors is

amended to provide that, for licensees who have requested an amendment

to withdraw operating authority permanently during the FY, the annual

fee will be prorated based on the number of days during the FY the

operating license was in effect before either the possession only

license was issued or the license was terminated.

Fifth, Footnote 1 of 10 CFR 171.16(d) is amended to provide for a

waiver of the FY 1994 annual fees for those materials licensees, and

holders of certificates, registrations, and approvals who either filed

for termination of their licenses or approvals or filed for possession

only/storage licenses prior to October 1, 1993, and permanently ceased

licensed activities entirely by September 30, 1993. All other licensees

and approval holders who held a license or approval on October 1, 1993,

are subject to FY 1994 annual fees. This change is in recognition of

the fact that since the final FY 1993 rule was published in July 1993,

licensees have continued to file requests for termination of their

licenses or certificates with the NRC. Other licensees have either

called or written to the NRC since the FY 1993 final rule became

effective requesting further clarification and information concerning

the annual fees assessed. The NRC is responding to these requests as

quickly as possible. However, the NRC was unable to respond and take

action on all of the requests before the end of the fiscal year on

September 30, 1993. Similar situations existed after the FY 1991 and FY

1992 rules were published, and in those cases NRC provided an exemption

from the requirement that the annual fee is waived only where a license

is terminated before October 1 of each fiscal year.

Sixth, Sec. 171.19 is amended to credit the quarterly partial

payments already made by certain licensees in FY 1994 either toward

their total annual fee to be assessed or to make refunds, if necessary.

The 10 CFR part 171 annual fees have been determined using the same

method used to determine the FY 1991, FY 1992, and FY 1993 annual fees.

The amounts to be collected through annual fees in the amendments to 10

CFR part 171 are based on the increased professional hourly rate. The

amendments to 10 CFR part 171 do not change the underlying basis for 10

CFR part 171; that is, charging a class of licensees for NRC costs

attributable to that class of licensees. The changes are consistent

with the Congressional guidance in the Conference Committee Report on

OBRA-90, which states that the ``conferees contemplate that the NRC

will continue to allocate generic costs that are attributable to a

given class of licensee to such class'' and the ``conferees intend that

the NRC assess the annual charge under the principle that licensees who

require the greatest expenditures of the agency's resources should pay

the greatest annual fee'' (136 Cong. Rec., at H12692-93).

During the past three years, many licensees have indicated that

although they held a valid NRC license authorizing the possession and

use of special nuclear, source, or byproduct material, they were in

fact either not using the material to conduct operations or had

disposed of the material and no longer needed the license. In

responding to licensees about this matter, the NRC has stated that

annual fees are assessed based on whether a licensee holds a valid NRC

license that authorizes possession and use of radioactive material.

Whether or not a licensee is actually conducting operations using the

material is a matter of licensee discretion. The NRC cannot control

whether a licensee elects to possess and use radioactive material once

it receives a license from the NRC. Therefore, the NRC reemphasizes

once again that annual fees will be assessed based on whether a

licensee holds a valid license with the NRC that authorizes possession

and use of radioactive material. To remove any uncertainties regarding

agency policy on this issue, the NRC amended 10 CFR 171.16, footnotes 1

and 7 on July 20, 1993 (58 FR 38666).

C. FY 1994 Budgeted Costs

The FY 1994 budgeted costs, by major activity, that will be

recovered through 10 CFR parts 170 and 171 fees are shown in Table I.

Table I.-- Recovery of NRC's FY 1994 Budget Authority

[Dollars in millions]

------------------------------------------------------------------------

Estimated

Recovery method amount

------------------------------------------------------------------------

Nuclear Waste Fund........................................... $22.0

Part 170 (license and inspection fees)....................... 120.1

Other receipts............................................... .1

Part 171 (annual fees):

Power Reactors............................................. 302.1

Nonpower Reactors.......................................... .4

Fuel Facilities............................................ 16.8

Spent Fuel Storage......................................... 2.2

Uranium Recovery........................................... 2.1

Transportation............................................. 4.0

Material Users............................................. \1\38.6

----------

Subtotal Part 171...................................... 366.2

Costs remaining to be recovered not identified above......... 26.6

==========

Total.................................................. 535.0

------------------------------------------------------------------------

\1\Includes $6.3 million that will not be recovered from small materials

licensees because of the reduced small entity fees.

The $26.6 million identified for those activities which are not

identified as either 10 CFR parts 170 or 171 or the NWF in Table I are

distributed among the classes of licensees as follows:

$24.4 million to operating power reactors;

$.7 million to fuel facilities; and

$1.5 million to other materials licensees.

In addition, approximately $6.3 million must be collected as a

result of continuing the $1,800 maximum fee for small entities and the

lower tier small entity fee of $400 for certain licensees. In order for

the NRC to recover 100 percent of its FY 1994 budget authority in

accordance with OBRA-90, the NRC will recover $5.3 million of the $6.3

million from operating power reactors and the remaining $1.0 million

from other nonreactor entities that do not meet NRC small entity size

standards.

This distribution results in an additional charge (surcharge) of

approximately $273,000 per operating power reactor; $55,770 for each

HEU, LEU, UF6, and each other fuel facility license; $1,670 for

each materials license in a category that generates a significant

amount of low level waste; and $170 for other materials licenses. When

added to the base annual fee of approximately $2.8 million per reactor,

this will result in an annual fee of approximately $3.1 million per

operating power reactor. The total fuel facility annual fee will be

between approximately $1.2 million and $3.2 million. The total annual

fee for materials licenses will vary depending on the fee category(ies)

assigned to the license.

The additional charges not directly or solely attributable to a

specific class of NRC licensees and costs not recovered from all NRC

licensees on the basis of previous Commission policy decisions will be

recovered from the designated classes of licensees previously

identified. A further discussion and breakdown of the specific costs by

major classes of licensees are shown in section IV of this final rule.

IV. Section-by-Section Analysis

The following analysis of those sections that are affected under

this final rule provides additional explanatory information. All

references are to title 10, chapter I, Code of Federal Regulations.

Part 170

Section 170.3 Definitions

This section is amended to revise the definition of special

projects. This change is based on NRC's experience during the past

three years in implementing the 100 percent fee recovery program and

the fee policy review required by the Energy Policy Act of 1992. The

NRC believes that the costs for some requests or reports being filed

with NRC are more appropriately captured in the 10 CFR part 171 annual

fees instead of assessing specific fees under 10 CFR part 170.

Therefore, the definition in Sec. 170.3, as well as the footnotes in

Secs. 170.21 and 170.31, are amended to indicate that 10 CFR part 170

fees will not be assessed for requests/reports which have been

submitted to the NRC:

1. In response to a Generic Letter or NRC Bulletin that does not

result in an amendment to the license, does not result in the review of

an alternate method or reanalysis to meet the requirements of the

Generic Letter, or does not involve an unreviewed safety issue;

2. In response to an NRC request (at the Associate Office Director

level or above) to resolve an identified safety, safeguards, or

environmental issue, or to assist the NRC in developing a rule,

regulatory guide, policy statement, generic letter, or bulletin; or

3. As a means of exchanging information between industry

organizations and the NRC for the purpose of supporting generic

regulatory improvements or efforts.

The terms ``alternate method'', ``reanalysis'', and ``unreviewed

safety issue'' as used in item 1 are further explained as follows:

``Alternate method'' is a method that deviates significantly (i.e.,

more than necessary for plant-specific or generic program development)

from the method proposed in the Generic Letter or NRC Bulletin;

``Reanalysis'' is an analysis of an alternate method but not a

review of changes to a method which is consistent with that proposed by

the Generic Letter or Bulletin. These types of ``consistent'' changes

could be revisions submitted pursuant to an NRC staff request for

additional information or modification, or changes necessary for plant-

specific or generic implementation; and

``Unreviewed safety issue'' is a safety issue unrelated to the

safety issue identified in the generic communication that arises from

proposal of an alternate method and will require reanalysis by the NRC

staff.

Section 170.11 Exemptions

Paragraph (a)(9) of this section is established to provide an

exemption from fees for State-owned research reactors that meet certain

technical design criteria and are used primarily for educational

training and academic research purposes. Currently, Federal agencies

are exempt from payment of 10 CFR part 170 fees under the Independent

Offices Appropriation Act (IOAA). The proposed rule would have amended

only 10 CFR part 171. The NRC believes however, that this change to 10

CFR part 170 is consistent with the legislative intent of the Energy

Policy Act of 1992 that government-owned research reactors be exempt

from fees if they meet the technical design criteria for the exemption

and are used primarily for educational training and academic research

purposes. There is currently one research reactor, owned by the Rhode

Island Atomic Energy Commission, that will be exempt under this

amendment to Sec. 170.11.

Section 170.20 Average Cost Per Professional Staff Hour

This section is amended to reflect an agency-wide, professional

staff-hour rate based on FY 1994 budgeted costs. Accordingly, the NRC

professional staff-hour rate for FY 1994 for all fee categories that

are based on full cost is $133 per hour, or $231,216 per direct FTE.

The rate is based on the FY 1994 direct FTEs and NRC budgeted costs

that are not recovered through the appropriation from the NWF. The rate

is calculated using the identical method established for FY 1991, FY

1992, and FY 1993. As noted earlier, in this final rule, the NRC has

directly assigned additional effort to the reactor and materials

programs for the Office of Investigations, the Office of Enforcement,

the Advisory Committee on Reactor Safeguards and the Advisory Committee

on Nuclear Waste. The method is as follows:

1. All direct FTEs are identified in Table II by major program. For

FY 1994 the NRC has traced additional direct effort to the reactor and

materials programs for the Office of Investigations, the Office of

Enforcement, the Advisory Committee on Reactor Safeguards, and the

Advisory Committee on Nuclear Waste. The budgeted costs for these

activities had previously been included in overhead but are now being

directly assigned to the class of licensees that they support.

Table II.--Allocation of Direct FTEs by Major Program

------------------------------------------------------------------------

No. of

Major program direct

FTEs\1\

------------------------------------------------------------------------

Reactor Safety and Safeguards Regulation................... 1,034.4

Reactor Safety Research.................................... 111.3

Nuclear Material and Low Level Waste Safety and Safeguards

Regulation................................................ 352.5

Reactor Special and Independent Reviews, Investigations,

and Enforcement........................................... 111.7

Nuclear Material Management and Support.................... 19.0

------------

Total direct FTE..................................... \2\1,628.9

------------------------------------------------------------------------

\1\FTE (full-time equivalent) is one person working for a full year.

Regional employees are counted in the office of the program each

supports.

\2\In FY 1994, 1,628.9 FTEs of the total 3,223 FTEs are considered to be

in direct support of NRC non-NWF programs. The remaining 1,594.1 FTEs

are considered overhead and general and administrative.

2. NRC FY 1994 budgeted costs are allocated, in Table III, to the

following four major categories:

(a) Salaries and benefits.

(b) Administrative support.

(c) Travel.

(d) Program support.

3. Direct program support, which is the use of contract or other

services in support of the line organization's direct program, is

excluded because these costs are charged directly through the various

categories of fees.

4. All other costs (i.e., Salaries and Benefits, Travel,

Administrative Support, and Program Support contracts/services for G&A

activities) represent ``in-house'' costs and are to be collected by

allocating them uniformly over the total number of direct FTEs.

Using this method, which was described in the final rules published

July 10, 1991 (56 FR 31472), July 23, 1992 (57 FR 32691), and July 20,

1993 (58 FR 38666), and excluding direct Program Support funds,

allocating the remaining $376.6 million uniformly to the direct FTEs

(1,628.9) results in a rate of $231,216 per FTE for FY 1994. The Direct

FTE Hourly Rate is $133 per hour (rounded to the nearest whole dollar).

This rate is calculated by dividing $376.6 million by the number of

direct FTEs (1,628.9 FTE) and the number of productive hours in one

year (1744 hours) as indicated in OMB Circular A-76, ``Performance of

Commercial Activities.''

Table III.--FY 1994 Budget Authority by Major Category

[Dollars in millions]

Salaries and

benefits.......... $259.5

Administrative

support........... 86.7

Travel............. 15.9

---------------------------------------------

Total

nonprogram

support

obligations. 362.1

Program support.... 150.9

=============================================

Total Budget

Authority... 513.0

Less direct program

support and

offsetting

receipts.......... 136.4

---------------------------------------------

Budget

Allocated to

Direct FTE.. 376.6

Professional Hourly

Rate.............. 133

Section 170.21 Schedule of Fees for Production and Utilization

Facilities, Review of Standard Reference Design Approvals, Special

Projects, Inspections and Import and Export Licenses.

The licensing and inspection fees in this section, which are based

on full-cost recovery, are revised to reflect the FY 1994 budgeted

costs and to recover costs incurred by the NRC in providing licensing

and inspection services to indentifiable recipients. The fees asssessed

for services provided under the schedule are based on the professional

hourly rate as shown in Sec. 170.20 and any direct program support

(contractual services) costs expended by the NRC. Any professional

hours expended on or after the effective date of this rule will be

assessed at the FY 1994 rate shown in Sec. 170.20. Although the amounts

of the import and export licensing fees in Sec. 170.21, facility

Category K, have not changed from FY 1993 as a result of the very small

increase in the hourly rate from $132 per hour to $133 per hour, they

are being published for purposes of convenience.

For those applications currently on file and pending completion,

footnote 2 of Sec. 170.21 is revised to provide that the professional

hours expended up to the effective date of this rule will be assessed

at the professional rates established for the rules that became

effective on June 20, 1984, January 30, 1989, July 2, 1990, August 9,

1991. August 24, 1992, and August 19, 1993, as appropriate. For topical

report applications currently on file which are still pending

completion of the review and for which review costs have reached the

applicable fee ceiling established by the July 2, 1990, rule, the costs

incurred after any applicable ceiling was reached through August 8,

1991, will not be billed to the applicant. Any professional hours

expended for the review of topical report applications, amendments,

revisions, or supplements to a topical report on or after August 9,

1991, are assessed at the applicable rate established by Sec. 170.20.

Section 170.31 Schedule of Fees for Materials Licenses and Other

Regulatory Services, Including Inspections and Import and Export

Licenses.

The licensing and inspection fees in this section are modified to

recover the FY 1994 costs incurred by the Commission in providing

licensing and inspection services to identifiable recipients. Those

flat fees, which are based on the average time to review an application

or conduct an inspection, are adjusted to reflect the very small

increase in the professional hourly rate from $132 per hour in FY 1993

to $133 per hour in FY 1994. In many cases, the fees for FY 1994 are

the same as those assessed in FY 1993.

The amounts of the licensing and inspection flat fees were rounded

by applying standard rules of arithmetic so that the amounts rounded

would be de minimus and convenient to the user. Fees that are greater

than $1,000 are rounded to the nearest $100. Fees under $1,000 are

rounded to the nearest $10.

The revised flat fees are applicable to fee categories 1.C and 1.D;

2.B and 2.C; 3.A through 3.P; 4.B through 9.D, 10.B, 15A through 15E

and 16. The revised fees will be assessed for applications filed or

inspections conducted on or after the effective date of this rule.

Fee Category 2 is amended by establishing two additional fee

categories 2.A.(2) and 2.A.(3) which cover licenses authorizing receipt

and disposal of Section 11e.(2) byproduct material as defined by the

Atomic Energy Act. The current 2.A. category has been amended to read

2.A.(1). The current 4.D. fee category has been eliminated. This action

recognizes that (1) source material licenses are issued to cover these

licensed activities and they are more appropriately placed in the

source material category and (2) that a further distinction should be

made between those licenses whose primary purpose is to authorize

receipt and disposal of 11e.(2) material requiring the establishment of

a new tailings pile from those licenses authorizing the receipt and

disposal of 11e.(2) material incidental to tailings piles created by

mill operations.

Fee Category 16, reciprocity, is also amended to include a fee to

recover the costs incurred by the NRC for the review of revisions to

the information submitted on the initial NRC Form-241 filed by 10 CFR

150.20 general licensees during the remainder of the calendar year.

Agreement State licensees requesting reciprocity for activities

conducted in non-Agreement States or in offshore waters are subject to

10 CFR 150.20. The first time within a calendar year that an Agreement

State licensee conducts activities in non-Agreement States or in

offshore waters, it must file a completed NRC Form 241. Revisions to

the initial NRC Form 241 are filed for review and authorization when

persons using the 10 CFR Part 150.20 general license either add

locations of work, use different radioactive material or perform

additional work activities in a non-Agreement State.

For those licensing, inspection, and review fees assessed that are

based on full-cost recovery (cost for professional staff hours plus any

contractual services), the revised hourly rate of $133, as shown in

Sec. 170.20, applies to those professional staff hours expended on or

after the effective date of this rule.

Part 171

Section 171.11 Exemptions

Paragraph (a)(2) of this section is amended to exempt State-owned

reactors used primarily for educational training and academic research

purposes from annual fees. The NRC believes that this change is

consistent with the legislative intent of the Energy Policy Act of 1992

that government-owned research reactors be exempt from annual fees if

they meet the technical design criteria of the exemption and are used

primarily for educational training and academic research purposes.

There is currently one research reactor, owned by the Rhode Island

Atomic Energy Commission, that will be exempt under this amendment to

Sec. 171.11.

Section 171.15 Annual Fee: Reactor Operating Licenses

The annual fees in this section are revised to reflect FY 1994

budgeted costs. Paragraphs (a), (b)(3), (c)(2), (d), and (e) are

revised to comply with the requirement of OBRA-90 to recover

approximately 100 percent of the NRC budget for FY 1994. Table IV shows

the budgeted costs that have been allocated directly to operating power

reactors as part of the base fee. They have been expressed in terms of

the NRC's FY 1994 programs and program elements. The resulting total

base annual fee amount for power reactors is also shown.

Table IV.--Allocation of NRC FY 1994 Budget to Power Reactors' Base Fees\1\

----------------------------------------------------------------------------------------------------------------

Program element Allocated to power

total reactors

-------------------------------------------

Program Program

support Direct support Direct

($, K) FTE ($, K) FTE

----------------------------------------------------------------------------------------------------------------

Reactor Safety and Safeguards Regulation (RSSR)

Standard Reactor Designs............................................ $9,531 96.3 $9,361 92.8

Reactor License Renewal............................................. 600 33.9 600 33.9

Reactor and Site Licensing.......................................... 1,810 34.7 1,810 29.8

Resident Inspections................................................ ......... 207.0 ......... 207.0

Region-Based Inspections............................................ 2,780 235.0 2,780 229.8

Interns (HQ and Regions)............................................ ......... 23.0 ......... 23.0

Special Inspections................................................. 970 42.7 970 42.7

License Maintenance and Safety Evaluations.......................... 4,142 208.5 4,142 208.5

Plant Performance................................................... 927 52.1 927 52.1

Human Performance................................................... 4,760 54.7 4,403 51.1

Other Safety Reviews and Assistance................................. 3,443 46.5 3,213 38.8

---------------------

RSSR program total.............................................. ......... ......... $28,206 1,009.5

=====================

Reactor Safety Research (RSR)

Standard Reactor Designs............................................ $16,676 29.3 $16,676 29.3

Reactor Aging & License Renewal..................................... 23,273 13.7 22,573 13.6

Plant Performance................................................... 3,173 4.2 3,173 4.2

Human Reliability................................................... 4,428 7.0 4,428 7.0

Reactor Accident Analysis........................................... 20,284 26.7 20,284 26.7

Safety Issue Resolution and Regulatory Improvements................. 10,240 30.4 10,240 30.4

---------------------

RSR program total............................................... ......... ......... $77,374 111.2

=====================

Nuclear Material & Low Level (NMLL)

NMLL (NMSS):

Fuel Cycle Safety and Safeguards................................ $4,783 85.8 $1,494 2.8

LLW Licensing and Inspection.................................... 592 14.3 ......... 1.4

Uranium Recovery Licensing and Inspection....................... 265 14.4 21 0

Decommissioning................................................. 2,215 30.8 9 6.7

NMLL (RES):

Environmental Policy and Decommissioning........................ 2,410 9.0 964 3.6

---------------------

NMLL program total.......................................... ......... ......... $2,488 14.5

=====================

Reactor Special and Independent Reviews, Investigations, and

Enforcement

AEOD:

Diagnostic Evaluations.......................................... 288 5.0 288 5.0

Incident Investigations......................................... 26 1.0 26 1.0

NRC Incident Response........................................... 1,854 26.0 1,854 24.0

Operational Experience Evaluation............................... 5,447 30.0 5,447 29.0

---------------------

Committee to Review Generic Requirements........................ ......... 2.0 ......... 2.0

=====================

AEOD Subtotal............................................... ......... ......... $7,615 61.0

Advisory Committee on Reactor Safeguards............................ 181 20.5 181 20.5

Office of Investigations............................................ ......... 17.0 ......... 17.0

Office of Enforcement............................................... 10 7.2 10 7.0

---------------------

RSIRIE program total............................................ ......... ......... $7,806 105.5

=====================

Total base fee amount allocated to power reactors............... ......... ......... ......... $402.7

(million\

2\)

Less estimated part 170 power reactor fees (million)............ ......... ......... ......... $100.6

---------------------

Part 171 base fees for operating power reactors............... ......... ......... ......... $302.1

(million)

----------------------------------------------------------------------------------------------------------------

\1\Base annual fees include all costs attributable to the operating power reactor class of licensees. The base

fees do not include costs allocated to power reactors for policy reasons.

\2\Amount is obtained by multiplying the direct FTE times the rate per FTE and adding the program support funds.

Based on the information in Table IV, the base annual fees that

will be assessed for FY 1994 are the amounts shown in Table V below for

each nuclear power operating license.

Table V.--Base Annual Fees for Operating Power Reactors

----------------------------------------------------------------------------------------------------------------

Reactors Containment type Annual fee

----------------------------------------------------------------------------------------------------------------

Westinghouse:

1. Beaver Valley 1.................................... PWR Large Dry Containment............. $2,805,000

2. Beaver Valley 2.................................... ...... do............................. 2,805,000

3. Braidwood 1........................................ ...... do............................. 2,805,000

4. Braidwood 2........................................ ...... do............................. 2,805,000

5. Byron 1............................................ ...... do............................. 2,805,000

6. Bryon 2............................................ ...... do............................. 2,805,000

7. Callaway 1......................................... ...... do............................. 2,805,000

8. Comanche Peak 1.................................... ...... do............................. 2,805,000

9. Comanche Peak 2.................................... ...... do............................. 2,805,000

10. Diablo Canyon 1................................... ...... do............................. 2,803,000

11. Diablo Canyon 2................................... ...... do............................. 2,803,000

12. Farley 1.......................................... ...... do............................. 2,805,000

13. Farley 2.......................................... ...... do............................. 2,805,000

14. Ginna............................................. ...... do............................. 2,805,000

15. Haddam Neck....................................... ...... do............................. 2,805,000

16. Harris 1.......................................... ...... do............................. 2,805,000

17. Indian Point 2.................................... ...... do............................. 2,805,000

18. Indian Point 3.................................... ...... do............................. 2,805,000

19. Kewaunee.......................................... ...... do............................. 2,805,000

20. Millstone 3....................................... ...... do............................. 2,805,000

21. North Anna 1...................................... ...... do............................. 2,805,000

22. North Anna 2...................................... ...... do............................. 2,805,000

23. Point Beach 1..................................... ...... do............................. 2,805,000

24. Point Beach 2..................................... ...... do............................. 2,805,000

25. Prairie Island 1.................................. ...... do............................. 2,805,000

26. Prairie Island 2.................................. ...... do............................. 2,805,000

27. Robinson 2........................................ ...... do............................. 2,805,000

28. Salem 1........................................... ...... do............................. 2,805,000

29. Salem 2........................................... ...... do............................. 2,805,000

30. Seabrook 1........................................ ...... do............................. 2,805,000

31. South Texas 1..................................... ...... do............................. 2,805,000

32. South Texas 2..................................... ...... do............................. 2,805,000

33. Summer 1.......................................... ...... do............................. 2,805,000

34. Surry 1........................................... ...... do............................. 2,805,000

35. Surry 2........................................... ...... do............................. 2,805,000

36. Turkey Point 3.................................... ...... do............................. 2,805,000

37. Turkey Point 4.................................... ...... do............................. 2,805,000

38. Vogtle 1.......................................... ...... do............................. 2,805,000

39. Vogtle 2.......................................... ...... do............................. 2,805,000

40. Wolf Creek 1...................................... ...... do............................. 2,805,000

41. Zion 1............................................ ...... do............................. 2,805,000

42. Zion 2............................................ ...... do............................. 2,805,000

43. Catawba 1......................................... PWR--Ice Condenser.................... 2,804,000

44. Catawba 2......................................... ...... do............................. 2,804,000

45. Cook 1............................................ ...... do............................. 2,804,000

46. Cook 2............................................ ...... do............................. 2,804,000

47. McGuire 1......................................... ...... do............................. 2,804,000

48. McGuire 2......................................... ...... do............................. 2,804,000

49. Sequoyah 1........................................ ...... do............................. 2,804,000

50. Sequoyah 2........................................ ...... do............................. 2,804,000

Combustion Engineering:

1. Arkansas 2......................................... PWR Large Dry Containment............. 2,804,000

2. Calvert Cliffs 1................................... ...... do............................. 2,804,000

3. Calvert Cliffs 2................................... ...... do............................. 2,804,000

4. Ft. Calhoun 1...................................... ...... do............................. 2,804,000

5. Maine Yankee....................................... ...... do............................. 2,804,000

6. Millstone 2........................................ ...... do............................. 2,804,000

7. Palisades.......................................... ...... do............................. 2,804,000

8. Palo Verde 1....................................... ...... do............................. 2,801,000

9. Palo Verde 2....................................... ...... do............................. 2,801,000

10. Palo Verde 3...................................... ...... do............................. 2,801,000

11. San Onofre 2...................................... ...... do............................. 2,801,000

12. San Onofre 3...................................... ...... do............................. 2,801,000

13. St. Lucie 1....................................... ...... do............................. 2,804,000

14. St. Lucie 2....................................... ...... do............................. 2,804,000

15. Waterford 3....................................... ...... do............................. 2,804,000

Babcock & Wilcox:

1. Arkansas 1......................................... ...... do............................. 2,804,000

2. Crystal River 3.................................... ...... do............................. 2,804,000

3. Davis Besse 1...................................... ...... do............................. 2,804,000

4. Oconee 1........................................... ...... do............................. 2,804,000

5. Oconee 2........................................... ...... do............................. 2,804,000

6. Oconee 3........................................... ...... do............................. 2,804,000

7. Three Mile Island 1................................ ...... do............................. 2,804,000

General Electric:

1. Browns Ferry 1..................................... Mark I................................ 2,785,000

2. Browns Ferry 2..................................... ...... do............................. 2,785,000

3. Browns Ferry 3..................................... ...... do............................. 2,785,000

4. Brunswick 1........................................ ...... do............................. 2,785,000

5. Brunswick 2........................................ ...... do............................. 2,785,000

6. Clinton 1.......................................... Mark III.............................. 2,785,000

7. Cooper............................................. Mark I................................ 2,785,000

8. Dresden 2.......................................... ...... do............................. 2,785,000

9. Dresden 3.......................................... ...... do............................. 2,785,000

10. Duane Arnold...................................... ...... do............................. 2,785,000

11. Fermi 2........................................... ...... do............................. 2,785,000

12. Fitzpatrick....................................... ...... do............................. 2,785,000

13. Grand Gulf 1...................................... Mark III.............................. 2,785,000

14. Hatch 1........................................... Mark I................................ 2,785,000

15. Hatch 2........................................... ...... do............................. 2,785,000

16. Hope Creek 1...................................... ...... do............................. 2,785,000

17. LaSalle 1......................................... Mark II............................... 2,785,000

18. LaSalle 2......................................... ...... do............................. 2,785,000

19. Limerick 1........................................ ...... do............................. 2,785,000

20. Limerick 2........................................ ...... do............................. 2,785,000

21. Millstone 1....................................... Mark I................................ 2,785,000

22. Monticello........................................ ...... do............................. 2,785,000

23. Nine Mile Point 1................................. ...... do............................. 2,785,000

24. Nine Mile Point 2................................. Mark II............................... 2,785,000

25. Oyster Creek...................................... Mark I................................ 2,785,000

26. Peach Bottom 2.................................... ...... do............................. 2,785,000

27. Peach Bottom 3.................................... ...... do............................. 2,785,000

28. Perry 1........................................... Mark III.............................. 2,785,000

29. Pilgrim........................................... Mark I................................ 2,785,000

30. Quad Cities 1..................................... ...... do............................. 2,785,000

31. Quad Cities 2..................................... ...... do............................. 2,785,000

32. River Bend 1...................................... Mark III.............................. 2,785,000

33. Susquehanna 1..................................... Mark II............................... 2,785,000

34. Susquehanna 2..................................... ...... do............................. 2,785,000

35. Vermont Yankee.................................... Mark I................................ 2,785,000

36. Washington Nuclear 2.............................. Mark II............................... 2,782,000

Other Reactor:

1. Big Rock Point..................................... GE Dry Containment.................... 2,785,000

----------------------------------------------------------------------------------------------------------------

The ``Other Reactor'' listed in Table V was not included in the fee

base because historically Big Rock Point has been granted a partial

exemption from the annual fees. With respect to Big Rock Point, a

smaller older reactor, the NRC hereby grants a partial exemption from

the FY 1994 annual fees based on a request filed with the NRC in

accordance with Sec. 171.11. The total amount of $0.2 million to be

paid by Big Rock Point has been subtracted from the total amount

assessed operating reactors as a surcharge.

Paragraph (b)(3) is revised to change the fiscal year references

from FY 1993 to FY 1994. Paragraph (c)(2) is amended to show the amount

of the surcharge for FY 1994. This surcharge is added to the base

annual fee for each operating power reactor shown in Table V. The

purpose of this surcharge is to recover those NRC budgeted costs that

are not directly or solely attributable to operating power reactors but

nevertheless must be recovered to comply with the requirements of OBRA-

90. The NRC has continued its previous policy decision to recover these

costs from operating power reactors.

The FY 1994 budgeted costs related to the additional charge and the

amount of the charge are calculated as follows:

[Dollars in millions]

------------------------------------------------------------------------

FY 1994

Category of costs budgeted

costs

------------------------------------------------------------------------

1. Activities not attributable to an existing NRC licensee

or class of licensee:

a. Reviews for DOE/DOD reactor projects, and West

Valley Demonstration Project; $2.4

b. International cooperative safety program and

international safeguards activities; and 8.2

c. Low-level waste disposal generic activities; 6.0

2. Activities not assessed Part 170 licensing and

inspection fees or Part 171 annual fees based on

Commission policy:

a. Licensing and inspection activities associated with

nonprofit educational institutions; and 7.8

b. Costs not recovered from Part 171 for small

entities. 5.3

------------

Subtotal budgeted costs............................ $29.7

Less amount to be assessed to small older reactors. .2

------------

Total budgeted costs........................... $29.5

------------------------------------------------------------------------

The annual additional charge is determined as follows:

TR20JY94.009

On the basis of this calculation, an operating power reactor,

Beaver Valley 1, for example, would pay a base annual fee of $2,805,000

and an additional charge of $273,000 for a total annual fee of

$3,078,000 for FY 1994.

Paragraph (d) is revised to show, in summary form, the amount of

the total FY 1994 annual fee, including the surcharge, to be assessed

for each major type of operating power reactor.

Paragraph (e) is revised to show the amount of the FY 1994 annual

fee for nonpower (test and research) reactors. In FY 1994, $373,000 in

costs are attributable to those commercial and non-exempt Federal

government organizations that are licensed to operate test and research

reactors. Applying these costs uniformly to those nonpower reactors

subject to fees results in an annual fee of $62,200 per operating

license. The Energy Policy Act establishes an exemption for certain

Federally-owned research reactors that are used primarily for

educational training and academic research purposes where the design of

the reactor satisfies certain technical specifications set forth in the

legislation. Consistent with this legislative requirement, the NRC

granted an exemption from annual fees for FY 1992 and FY 1993 to the

Veterans Administration Medical Center in Omaha, Nebraska, the U.S.

Geological Survey for its reactor in Denver, Colorado, and the Armed

Forces Radiobiological Institute in Bethesda, Maryland for its research

reactor. This exemption was initially codified in the July 20, 1993 (58

FR 38695) final fee rule at Sec. 171.11(a) and more recently in the

March 17, 1994 (59 FR 12543) final rule at Sec. 171.11(a)(2). The NRC

intends to continue to grant exemptions from the annual fee to those

Federally owned research and test reactors who meet the exemption

criteria specified in Sec. 171.11. The NRC is amending

Sec. 171.11(a)(2) to exempt from annual fees the research reactor owned

by the Rhode Island Atomic Energy Commission.

Section 171.16 Annual fees: Materials Licensees, Holders of

Certificates of Compliance, Holders of Sealed Source and Device

Registrations, Holders of Quality Assurance Program Approvals, and

Government agencies licensed by the NRC.

Sec. 171.16(c) covers the fees assessed for those licensees that

can qualify as small entities under NRC size standards. Currently, the

NRC assesses two fees for licensees that qualify as small entities

under the NRC's size standards. In general, licensees with gross annual

receipts of $250,000 to $3.5 million pay a maximum annual fee of $1,800

per licensed category. A second or lower-tier small entity fee of $400

is in place for licensees with gross annual receipts of less than

$250,000 and small governmental jurisdictions with a population of less

than 20,000. Although the amounts of the small entity fees have not

changed for FY 1994, they are being published for purposes of

convenience.

Paragraph (d) is revised to reflect the FY 1994 budgeted costs for

materials licensees, including Government agencies, licensed by the

NRC. These fees are necessary to recover the FY 1994 generic costs

totalling $63.7 million that apply to fuel facilities, uranium recovery

facilities, spent fuel facilities, holders of transportation

certificates and QA program approvals, and other materials licensees,

including holders of sealed source and device registrations.

Fee Category 2 is amended by establishing two new fee categories

2.A.(3) and 2.A.(4) relating to the disposal of Section 11e.(2)

byproduct material as defined by the Atomic Energy Act. The current

4.D. category has been eliminated. This action recognizes that (1) part

of the budgeted costs for the uranium recovery class of licensees

should be allocated to source material licenses that authorize receipt

and disposal of 11e.(2) material because some of these budgeted

resources are used to regulate these licensees and (2) a further

distinction should be made between those licenses whose primary purpose

is to authorize disposal of 11e.(2) byproduct material requiring the

establishment of a new mill tailings pile for disposal of 11e.(2)

material and those non-operating mills that accept 11e.(2) byproduct

material for disposal incidental to tailings piles created by mill

operations.

In addition, Fee Category 18 is amended to assess fees to the

Department of Energy (DOE) for use of the general license provided

under 10 CFR 40.27. Currently, DOE is billed for the issuance of

transportation Certificates of Compliance. The general license fulfills

a requirement of the Uranium Mill Tailings Radiation Control Act of

1978 (UMTRCA) (Public Law 95-604) that the perpetual custodian of

reclaimed uranium mill tailings piles be licensed by the NRC. The

Sec. 40.27 general license covers only post-reclamation closure custody

and site surveillance. In September 1993, DOE became a general licensee

of the NRC because post-reclamation closure of the Spook, Wyoming site

had been achieved. Because DOE now holds an NRC license, it is subject

to annual fees. The NRC had previously indicated its intent in the FY

1991 final fee rule to bill DOE for UMTRCA costs once post-closure was

achieved and the sites were licensed by the Government (56 FR 31481;

July 10, 1991). As a result, DOE will be billed for the costs

associated with NRC's UMTRCA review of all activities associated with

the facilities assigned to DOE under UMTRCA. As with other licensees,

the annual fee for this class of licensees (DOE UMTRCA facilities) will

recover the generic and other regulatory costs not recovered through 10

CFR Part 170 fees. Because DOE, as a Federal agency, cannot be assessed

Part 170 fees under the IOAA, the NRC will assess annual fees for the

total costs of DOE UMTRCA activities to DOE.

Tables VI and VII show the NRC program elements and resources that

are attributable to fuel facilities and materials users, respectively.

The costs attributable to the uranium recovery class of licensees are

those associated with uranium recovery research, licensing and

inspection. For transportation, the costs are those budgeted for

transportation research, licensing, and inspection. Similarly, the

budgeted costs for spent fuel storage are those for spent fuel storage

research, licensing, and inspection.

Table VI.--Allocation of NRC FY 1994 Budget to Fuel Facility Base Fees\1\

----------------------------------------------------------------------------------------------------------------

Total program Allocated to fuel

element facility

-------------------------------------------

Program Program

support FTE support FTE

$, K $, K

----------------------------------------------------------------------------------------------------------------

NMLL (Research)

Radiation Protection/Health Effects................................. $1,575 5.3 $315 1.1

Environmental Policy and Decommissioning............................ 2,410 9.0 241 .9

-------------------------------------------

NMLL (RES) program total........................................ 556 2.0

===========================================

NMLL (NMSS)

Fuel Cycle Safety and Safeguards.................................... $4,783 85.8 $2,432 57.1

Event Evaluation.................................................... 0 14.9 0 4.2

Decommissioning..................................................... 2,215 30.8 309 10.5

Uranium Recovery (Dam Safety)....................................... 250 7.6 3 0

-------------------------------------------

NMLL (NMSS) program total....................................... 2,744 71.8

===========================================

NMLL (MSIRIE)

Incident Response................................................... 186 6.0 0 1.0

Enforcement......................................................... 10 6.8 0 1.2

-------------------------------------------

NMLL MSIRIE program total....................................... 0 2.2

===========================================

Total NMLL.................................................. $3,300 76.0

===========================================

Total base fee amount allocated to fuel facilities (million\2\). $20.8

Less part 170 fuel facility fees (million)...................... 4.0

-------------------------------------------

Part 171 base fees for fuel facilities (million)............ $16.8

----------------------------------------------------------------------------------------------------------------

\1\Base annual fee includes all costs attributable to the fuel facility class of licensees. The base fee does

not include costs allocated to fuel facilities for policy reasons.

\2\Amount is obtained by multiplying the direct FTE times the rate per FTE and adding the program support funds.

Table VII.--Allocation of FY 1994 Budget to Material Users' Base Fees\1\

----------------------------------------------------------------------------------------------------------------

Total program Allocated to

element materials users

-------------------------------------------

Program Program

support FTE support FTE

$, K $, K

----------------------------------------------------------------------------------------------------------------

NMLL (Research)

Materials licensee performance...................................... $450 1.2 $405 1.1

Materials regulatory standards...................................... 1,495 12.2 1,346 11.0

Radiation protection/health effects................................. 1,575 5.3 1,134 3.8

Environmental policy and decommissioning............................ 2,410 9.0 1,085 4.1

-------------------------------------------

Total NMLL (RES)................................................ 3,970 20.0

===========================================

NMLL (NMSS)

Licensing/inspection of materials users............................. $965 109.3 $869 99.5

Event evaluation.................................................... ......... 16.2 ......... 11.4

Information technology.............................................. 1,100 ......... 89 .........

Decommissioning..................................................... 2,215 30.8 1,707 12.0

Low level waste--on site disposal................................... 592 14.3 71 2.3

-------------------------------------------

Total NMLL (NMSS)............................................... 2,736 125.2

===========================================

NMLL (MSIRIE)

Analysis and evaluation of operational data......................... $186 6.0 $167 4.5

Office of Investigations............................................ ......... 7.0 ......... 6.3

Office of Enforcement............................................... 10 6.8 9 5.0

-------------------------------------------

Total NMLL Program.............................................. 6,882 161.0

===========================================

Base amount allocated to materials users (million\2\)........... $44.1

Less part 170 material users fees (million)..................... 5.5

-------------------------------------------

PART 171 base fees for material users (million)............. 38.6

----------------------------------------------------------------------------------------------------------------

\1\Base annual fee includes all costs attributable to the materials class of licensees. The base fee does not

include costs allocated to materials licensees for policy reasons.

\2\Amount is obtained by multiplying the direct FTE times the rate per FTE and adding the program support funds.

The allocation of the NRC's $16.8 million in budgeted costs to the

individual fuel facilities is based, as in FYs 1991-1993, primarily on

the OBRA-90 conferees' guidance that licensees who require the greatest

expenditure of NRC resources should pay the greatest annual fee.

Because the two high-enriched fuel manufacturing facilities possess

strategic quantities of nuclear materials, more NRC safeguards costs

(e.g., physical security) are attributable to these facilities.

Likewise, more of the safety licensing and inspection costs are

allocated to the HEU facilities because more of these resources are

used for HEU facilities as compared to other facilities. However,

safety program assessment and safety event evaluation costs for fuel

facilities are uniformly allocated to HEU and LEU facilities because

these activities apply equally to each of the HEU and LEU facilities.

Using this approach, the base annual fee for each facility is shown

below.

------------------------------------------------------------------------

Annual fee--

Type of facility safeguards and

safety

------------------------------------------------------------------------

High enriched fuel:

Nuclear Fuel Services.............................. $3,176,000

Babcock and Wilcox................................. 3,176,000

----------------

Subtotal......................................... 6,352,000

================

Low enriched fuel:

Siemens Nuclear Power.............................. $1,429,000

Babcock and Wilcox................................. 1,429,000

General Electric................................... 1,429,000

Westinghouse....................................... 1,429,000

Combustion Engineering (Hematite).................. 1,429,000

General Atomics.................................... 1,429,000

----------------

Subtotal......................................... 8,574,000

================

UF6 conversion:

Allied-Signal Corp................................. $1,114,000

Other fuel facilities (3 facilities at $254,000

each)............................................. 762,000

----------------

Total............................................ 16,802,000

------------------------------------------------------------------------

One of Combustion Engineering's (CE) low enriched fuel facilities

has not been included in the fee base because of the D.C. Circuit Court

of Appeals' decision of March 16, 1993, directing the NRC to grant an

exemption for FY 1991 to Combustion Engineering for one of its two

facilities. As a result of the Court's decision, the NRC granted an

exemption to one of CE's low enriched uranium fuel facilities for FY

1994. The NRC has therefore excluded this facility from the calculation

of the FY 1994 annual fees for the low enriched fuel category.

Of the $2.1 million attributable to the uranium recovery class of

licensees, about $1.5 million will be assessed to the Department of

Energy (DOE) to recover the costs associated with DOE facilities under

the Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA). These

costs were previously recovered from operating power reactors because

DOE was not an NRC licensee prior to September 1993 and therefore could

not be billed under 10 CFR Part 171. In September 1993, DOE became a

general licensee of the NRC because post-reclamation closure of the

Spook, Wyoming site had been achieved. Approximately 44 percent of the

remaining costs of $639,000 for uranium recovery is attributable to

uranium mills (Class I facilities) and facilities that dispose of

11e.(2) byproduct materials, approximately 39 percent is attributable

to those solution mining licensees who do not generate uranium mill

tailings (Class II facilities), and the remaining 17 percent is

allocated to the other uranium recovery facilities (e.g., extraction of

metals and rare earths). The resulting annual fees for each class of

licensee are:

2.A.(2)--Class I facilities: $74,500

2.A.(2)--Class II facilities: $41,200

2.A.(2)--Other facilities: $36,200

2.A.(3)--11e.(2) disposal: $67,000

2.A.(4)--11e.(2) disposal incidental to existing tailings site: $8,700

The annual fees for FY 1994 for the uranium recovery class of

licensees are less than the FY 1992 fees and are higher than the FY

1993 annual fees. The total amount of fees that must be recovered from

uranium recovery commercial licensees has decreased by about 10 percent

compared to FY 1993; however, the annual fee per facility has increased

for two basic reasons. First, the amount that is expected to be

recovered through part 170 fees has decreased as a result of completing

the licensing of the Envirocare 11e.(2) byproduct disposal facility.

This requires relatively more costs to be recovered through annual

fees. The second cause of the increase is a decrease in the number of

licensees in the class to be assessed annual fees for FY 1994.

For spent fuel storage licenses, the generic costs of $2.2 million

have been spread uniformly among those licensees who hold specific or

general licenses for receipt and storage of spent fuel at an ISFSI.

This results in an annual fee of $363,500. This represents a fee

increase compared to FY 1993 in order to recover the increased budget

necessary to perform rulemakings and the regulatory oversight over the

increased number of licensees.

To equitably and fairly allocate the $38.6 million attributable to

the approximately 6,500 diverse material users and registrants, the NRC

has continued to base the annual fee on the Part 170 application and

inspection fees. Because the application and inspection fees are

indicative of the complexity of the license, this approach continues to

provide a proxy for allocating the costs to the diverse categories of

licensees based on how much it costs NRC to regulate each category. The

fee calculation also continues to consider the inspection frequency,

which is indicative of the safety risk and resulting regulatory costs

associated with the categories of licensees. In summary, the annual fee

for these categories of licenses is developed as follows:

Annual Fee=(Application Fee+Inspection Fee/Inspection

Priority)xConstant+(Unique Category Costs).

The constant is the multiple necessary to recover $38.6 million and

is 2.6 for FY 1994. The unique costs are any special costs that the NRC

has budgeted for a specific category of licensees. For FY 1994, unique

costs of approximately $2.6 million were identified for the medical

improvement program which is attributable to medical licensees.

Materials annual fees for FY 1994 are 13 to 17 percent higher compared

to the FY 1993 annual fees. There are two basic reasons for the changes

in the fees from FY 1993. First, the FY 1994 budgeted amount

attributable to materials licensees is about 10 percent higher than the

comparable FY 1993 to reflect the cost necessary to regulate this class

of licensees and the direct allocation of certain budgeted costs as

opposed to including them in the hourly rate. Second, the number of

licensees to be assessed annual fees in FY 1994 has decreased (from

about 6,800 to about 6,500), resulting in a 4 percent increase in fees.

The materials fees must be established at these levels in order to

comply with the mandate of OBRA-90 to recover approximately 100 percent

of the NRC's FY 1994 budget authority.

A materials licensee may pay a reduced annual fee if the licensee

qualifies as a small entity under the NRC's size standards and

certifies that it is a small entity using NRC Form 526.

To recover the $4.0 million attributable to the transportation

class of licensees, $923,000 will be assessed to the Department of

Energy (DOE) to cover all of its transportation casks under Category

18. The remaining transportation costs for generic activities ($3.1

million) are allocated to holders of approved QA plans. The annual fee

for approved QA plans is $64,700 for users and fabricators and $900 for

users only.

The amount or range of the FY 1994 base annual fees for all

materials licensees is summarized as follows:

Materials Licenses Base Annual Fee Ranges

------------------------------------------------------------------------

Category of license Annual fees

------------------------------------------------------------------------

Part 70--High enriched fuel........ $3.2 million.

Part 70--Low enriched fuel......... $1.4 million.

Part 40--UF6 conversion............ $1.1 million.

Part 40--Uranium recovery.......... $36,200 to $74,500.

Part 30--Byproduct material........ $970 to $30,900\1\.

Part 71--Transportation of $900 to $64,700.

radioactive material.

Part 72--Independent storage of $363,500.

spent nuclear fuel.

------------------------------------------------------------------------

\1\Excludes the annual fee for a few military ``master'' materials

licenses of broad-scope issued to Government agencies, which is

$430,500.

Paragraph (e) is amended to establish the additional charge to be

added to the base annual fees shown in paragraph (d) of this final

rule. The Commission is continuing the approach used in FY 1993 so as

to assess the budgeted low-level waste (LLW) costs to two broad

categories of licensees (large LLW generators and small LLW generators)

based on historical disposal data. This surcharge continues to be

shown, for convenience, with the applicable categories in paragraph

(d). Although these NRC LLW disposal regulatory activities are not

directly attributable to regulation of NRC materials licensees, the

costs nevertheless must be recovered in order to comply with the

requirements of OBRA-90. For FY 1994, the additional charge recovers

approximately 18 percent of the NRC budgeted costs of $8.1 million

relating to LLW disposal generic activities from small generators,

which are comprised of materials licensees that dispose of LLW. The

percentage distribution reflects the deletion of LLW disposed by

Agreement State licensees. The FY 1994 budgeted costs related to the

additional charge for LLW and the amount of the charge are calculated

as follows:

------------------------------------------------------------------------

FY 1994

budgeted

Category of costs costs ($ in

millions)

------------------------------------------------------------------------

1. Activities not attributable to an existing NRC licensee

or class of licensee, i.e., LLW disposal generic

activities................................................ $8.1

------------------------------------------------------------------------

Of the $8.1 million in budgeted costs shown above for LLW

activities, 82 percent of the amount ($6.7 million) are allocated to

the 120 large waste generators (reactors and fuel facilities) included

in 10 CFR Part 171. This results in an additional charge of $55,600 per

facility. Thus, the LLW charge will be $55,600 per HEU, LEU, UF6

facility, and each of the other 3 fuel facilities. The remaining $1.4

million is allocated to the material licensees in categories that

generate low level waste (965 licensees) as follows: $1,500 per

materials license except for those in Category 17. Those licensees that

generate a significant amount of low level waste for purposes of the

calculation of the $1,500 surcharge are in fee Categories 1.B, 1.D,

2.C, 3.A, 3.B, 3.C, 3.L, 3.M, 3.N, 4.A, 4.B, 4.C, 5.B, 6.A, and 7.B.

The surcharge for licenses in fee Category 17, which also generate and/

or dispose of low level waste, is $22,800.

Of the $6.3 million not recovered from small entities, $1.0 million

is allocated to fuel facilities and other materials licensees. This

results in a surcharge of $170 per category for each fuel facility and

materials licensee that is not eligible for the small entity fee.

On the basis of this calculation, a fuel facility (a high enriched

fuel fabrication licensee, for example) pays a base annual fee of

$3,176,000 and an additional charge of $55,770 for LLW activities and

small entity costs. A medical center with a broad-scope program pays a

base annual fee of $30,900 and an additional charge of $1,670, for a

total FY 1994 annual fee of $32,570.

Section 171.17 Proration

10 CFR 171.17 is amended to add a proration provision for materials

licenses and to revise the provision for reactors. The annual fee for

materials licenses would be prorated based on applications filed after

October 1 of the fiscal year either to terminate a license or obtain a

POL. Those materials licensees who file applications between October 1

and March 31 of the fiscal year to terminate the license or obtain a

POL will be assessed one-half the annual fee stated in Sec. 171.16(d)

for the affected fee category(ies). Those materials licensees who file

applications on or after April 1 of the fiscal year to terminate a

license or obtain a POL will be assessed the full annual fee for that

fiscal year. Those licensees who file for termination or a POL must

also permanently cease operations of those licensed activities during

the periods mentioned for the fee to be reduced. Similarly, materials

licensees who were issued new licenses during the fiscal year will be

charged a prorated annual fee based on the date of issuance of the new

license. New materials licenses issued during the period October 1

through March 31 will be assessed one-half of the annual fee stated in

Sec. 171.16(d) for the applicable fee categories for that fiscal year.

New licenses issued on or after April 1 of the fiscal year will not be

assessed the annual fee for that fiscal year.

The proration provision in Sec. 171.17 applicable to reactors is

amended to provide that for licensees who have requested a license

amendment to withdraw operating authority permanently during the FY the

annual fee will be prorated based on the number of days during the FY

the operating license was in effect before the possession-only license

was issued or the license was terminated.

Footnote 1 of 10 CFR 171.16(d) is amended to provide for waiver of

the annual fees for those materials licensees, and holders of

certificates, registrations, and approvals who either filed for

termination of their licenses or approvals or filed for possession

only/storage only licenses before October 1, 1993, and permanently

ceased licensed activities entirely by September 30, 1993. All other

licensees and approval holders who held a license or approval on

October 1, 1993 are subject to the FY 1994 annual fees.

Section 171.19 Payment

This section is revised to give credit for partial payments made by

certain licensees in FY 1994 toward their FY 1994 annual fees. The NRC

anticipates that the first, second, and third quarterly payments for FY

1994 will have been made by operating power reactor licensees and some

materials licensees before the final rule is effective. Therefore, NRC

will credit payments received for those three quarters toward the total

annual fee to be assessed. The NRC will adjust the fourth quarterly

bill in order to recover the full amount of the revised annual fee or

to make refunds, as necessary. As in FY 1993, payment of the annual fee

is due on the effective date of the rule and interest accrues from the

effective date of the rule. However, interest will be waived if payment

is received within 30 days from the effective date of the rule.

During the past three years many licensees have indicated that

although they held a valid NRC license authorizing the possession and

use of special nuclear, source, or byproduct material, they were in

fact either not using the material to conduct operations or had

disposed of the material and no longer needed the license. In

responding to licensees about this matter, the NRC has stated that

annual fees are assessed based on whether a licensee holds a valid NRC

license that authorizes possession and use of radioactive material.

Whether or not a licensee is actually conducting operations using the

material is a matter of licensee discretion. The NRC cannot control

whether a licensee elects to possess and use radioactive material once

it receives a license from the NRC. Therefore, the NRC reemphasizes

that the annual fee will be assessed based on whether a licensee holds

a valid NRC license that authorizes possession and use of radioactive

material. To remove any uncertainty, the NRC issued minor clarifying

amendments to 10 CFR 171.16, footnotes 1 and 7 on July 20, 1993 (58 FR

38700).

V. Environmental Impact: Categorical Exclusion

The NRC has determined that this final rule is the type of action

described in categorical exclusion 10 CFR 51.22(c)(1). Therefore,

neither an environmental impact statement nor an environmental impact

assessment has been prepared for the final regulation.

VI. Paperwork Reduction Act Statement

This final rule contains no information collection requirements

and, therefore, is not subject to the requirements of the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

VII. Regulatory Analysis

With respect to 10 CFR Part 170, this final rule was developed

pursuant to Title V of the Independent Offices Appropriation Act of

1952 (IOAA) (31 U.S.C. 9701) and the Commission's fee guidelines. When

developing these guidelines the Commission took into account guidance

provided by the U.S. Supreme Court on March 4, 1974, in its decision of

National Cable Television Association, Inc. v. United States, 415 U.S.

36 (1974) and Federal Power Commission v. New England Power Company,

415 U.S. 345 (1974). In these decisions, the Court held that the IOAA

authorizes an agency to charge fees for special benefits rendered to

identifiable persons measured by the ``value to the recipient'' of the

agency service. The meaning of the IOAA was further clarified on

December 16, 1976, by four decisions of the U.S. Court of Appeals for

the District of Columbia, National Cable Television Association v.

Federal Communications Commission, 554 F.2d 1094 (D.C. Cir. 1976);

National Association of Broadcasters v. Federal Communications

Commission, 554 F.2d 1118 (D.C. Cir. 1976); Electronic Industries

Association v. Federal Communications Commission, 554 F.2d 1109 (D.C.

Cir. 1976) and Capital Cities Communication, Inc. v. Federal

Communications Commission, 554 F.2d 1135 (D.C. Cir. 1976). These

decisions of the Courts enabled the Commission to develop fee

guidelines that are still used for cost recovery and fee development

purposes.

The Commission's fee guidelines were upheld on August 24, 1979, by

the U.S. Court of Appeals for the Fifth Circuit in Mississippi Power

and Light Co. v. U.S. Nuclear Regulatory Commission, 601 F.2d 223 (5th

Cir. 1979), cert. denied, 444 U.S. 1102 (1980). The Court held that--

(1) The NRC had the authority to recover the full cost of providing

services to identifiable beneficiaries;

(2) The NRC could properly assess a fee for the costs of providing

routine inspections necessary to ensure a licensee's compliance with

the Atomic Energy Act and with applicable regulations;

(3) The NRC could charge for costs incurred in conducting

environmental reviews required by NEPA;

(4) The NRC properly included the costs of uncontested hearings and

of administrative and technical support services in the fee schedule;

(5) The NRC could assess a fee for renewing a license to operate a

low-level radioactive waste burial site; and

(6) The NRC's fees were not arbitrary or capricious.

With respect to 10 CFR Part 171, on November 5, 1990, the Congress

passed Public Law 101-508, the Omnibus Budget Reconciliation Act of

1990 (OBRA-90) which required that for FYs 1991 through 1995,

approximately 100 percent of the NRC budget authority be recovered

through the assessment of fees. OBRA-90 was amended in 1993 to extend

the 100 percent fee recovery requirement for NRC through 1998. To

accomplish this statutory requirement, the NRC, in accordance with

Sec. 171.13, is publishing the final amount of the FY 1994 annual fees

for operating reactor licensees, fuel cycle licensees, materials

licensees, and holders of Certificates of Compliance, registrations of

sealed source and devices and QA program approvals, and Government

agencies. OBRA-90 and the Conference Committee Report specifically

state that--

(1) The annual fees be based on the Commission's FY 1994 budget of

$535.0 million less the amounts collected from Part 170 fees and the

funds directly appropriated from the NWF to cover the NRC's high level

waste program;

(2) The annual fees shall, to the maximum extent practicable, have

a reasonable relationship to the cost of regulatory services provided

by the Commission; and

(3) The annual fees be assessed to those licensees the Commission,

in its discretion, determines can fairly, equitably, and practicably

contribute to their payment.

Therefore, when developing the annual fees for operating power

reactors, the NRC continued to consider the various reactor vendors,

the types of containment, and the location of the operating power

reactors. The annual fees for fuel cycle licensees, materials

licensees, and holders of certificates, registrations and approvals and

for licenses issued to Government agencies take into account the type

of facility or approval and the classes of the licensees.

10 CFR Part 171, which established annual fees for operating power

reactors effective October 20, 1986 (51 FR 33224; September 18, 1986),

was challenged and upheld in its entirety in Florida Power and Light

Company v. United States, 846 F.2d 765 (D.C. Cir. 1988), cert. denied,

490 U.S. 1045 (1989).

10 CFR Parts 170 and 171, which established fees based on the FY

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