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                                                       Calendar No. 433
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-223
_______________________________________________________________________


 
                  NRC FAIRNESS IN FUNDING ACT OF 1998

                                _______
                                

                 June 25, 1998.--Ordered to be printed

_______________________________________________________________________


    Mr. Chafee, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2090]

    The Committee on Environment and Public Works, to which was 
referred the bill (S. 2090) to extend the authority of the 
Nuclear Regulatory Commission to collect fees through 2003, and 
for other purposes, having considered the same, reports 
favorably thereon and recommends that the bill do pass.

                           General Statement

    This legislation provides for a 5-year extension of the 
Nuclear Regulatory Commission's (NRC) current authority to 
collect fees in an amount sufficient to constitute 100 percent 
of the NRC's fiscal year budget authority (less the amount 
appropriated for the Nuclear Waste Fund), with the addition of 
an exclusion for costs of those activities for which it would 
not be fair and equitable to assess charges. The legislation is 
necessary to prevent the NRC's authority to recover 100 percent 
of its costs from lapsing at the end of the current fiscal 
year, and to provide fairness and equity in fee collection.

                               Background

    In 1986, Congress enacted the Consolidated Omnibus Budget 
Reconciliation Act of 1985, or COBRA-85 (P.L. 99-272). Section 
7601 of this legislation directed the NRC to assess and collect 
annual fees from its licensees in an amount that, when added to 
other fees such as fees for service collected in the same 
fiscal year would not exceed 33 percent of NRC costs for that 
fiscal year. COBRA-85 directed that this annual charge should 
be ``reasonably related to the regulatory service provided by 
the Commission and [must] fairly reflect the cost to the 
Commission of providing such service.''
    In the late 1980's, Congress twice acted to increase the 
percentage of the NRC budget that was to be collected in fees. 
Congress enacted the Omnibus Budget Reconciliation Act of 1987 
(P.L. 100-203), which directed the NRC to collect up to 45 
percent of its budget in fees in each of fiscal years 1988 and 
1989. The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-
234) extended this requirement through fiscal year 1990.
    One year later, Congress approved the Omnibus Budget 
Reconciliation Act of 1990, known as OBRA-90 (P.L. 101-508). 
Section 6101 of that legislation required the NRC to collect 
fees-for-service from NRC applicants and annual fees from NRC 
licensees. With regard to fees-for-service, OBRA-90 required 
that pursuant to the Independent Offices Appropriations Act, 
the NRC continue to charge any applicant or other person 
receiving a service from the NRC a fee covering the cost to the 
NRC of providing the service. With regard to annual charges, 
the legislation directed the NRC to collect annual fees from 
licensees that ``[t]o the maximum extent practicable... have a 
reasonable relationship to the cost of providing regulatory 
services'' and in an amount that, when added to the amount 
collected in fees for service and the amount appropriated for 
the Nuclear Waste Fund, would approximate fully 100 percent of 
NRC budget authority for that fiscal year. To meet the new 
requirement, the NRC adopted a policy of collecting annual fees 
not only from reactor licensees, but materials licensees as 
well.
    OBRA-90 provided this ``100 percent'' fee authority for a 
period of 5 years, through fiscal year 1995. The authority was 
extended once, for an additional 3 years (through fiscal year 
1998) by the Omnibus Budget Reconciliation Act of 1993, or 
OBRA-93 (P.L. 103-66).
    The fees authorized by OBRA-90 went into effect for fiscal 
year 1991. Subsequently, however, concerns were raised 
regarding the fairness of the fee assessment structure. In the 
Energy Policy Act of 1992 (P.L. 102-486), Congress took steps 
to address one perceived inequity by statutorily excluding 
certain federally owned research reactors from the NRC annual 
fee requirement. In addition, the 1992 Act directed the NRC to 
undertake a review of its policy for assessing annual charges, 
solicit public comment on necessary changes to such policy, and 
make recommendations to Congress on possible changes to 
existing law that could prevent an unfair burden from being 
levied on certain NRC licensees.
    Accordingly, on February 23, 1994, the NRC submitted to 
Congress its ``Report to Congress on the U.S. Nuclear 
Regulatory Commission's Licensee Fee Policy Review Required by 
the Energy Policy Act of 1992.'' The Report took into account 
not only the 566 public comments received during the 
compilation of the Report, but also the more than 1,000 public 
comments submitted during consideration of previous fee-related 
rules, the thousands of letters and phone calls received 
regarding fees, two petitions for rule-making, a court 
decision, and an NRC-requested review by the agency's Inspector 
General.
    The 1994 Report identified two key concerns regarding 
fairness and equity: first, that not all direct beneficiaries 
of NRC activities pay fees; and second, that fees are based on 
the NRC's cost of performance, rather than on the licensees' 
perception of benefits received. With regard to the question of 
fees that are not directly related to services to licensees, 
the Report acknowledged that the fee requirements inherently 
placed a burden on licensees when certain activities such as 
some international activities, oversight of and regulatory 
support to the Agreement State program, the statutory fee 
exemption for Federal agencies, and the NRC's fee exemptions or 
reductions for nonprofit educational institutions and small 
entities are considered. As for the issue of benefits 
perceived, the Report concluded that the concern had merit when 
considered with regard to the materials regulatory program.
    Finally, the Report included legislative recommendations to 
Congress to remove certain costs from the fee base, the net 
effect of which would be the recovery of 90 percent of the 
NRC's budget authority through fees. While the NRC initiated 
some changes in its fee structure, Congress did not act on the 
legislative recommendations.
    The Committee believes that concerns about fair and 
equitable assessment of fees continue to be relevant today, and 
should be addressed. The activities of the NRC that raise 
fairness and equity issues are important to the NRC's statutory 
health and safety mission. However, the Committee believes that 
the cost of such activities should not be recovered through fee 
collection, but rather through direct appropriation.
    Therefore, as the 100 percent fee authority will lapse at 
the end of the current fiscal year, and as concerns regarding 
fair and equitable fees remain valid, Congressional action 
prior to the expiration of the current authorization is 
necessary.
    On May 18, 1998, Environment and Public Works Committee 
Chairman Chafee introduced S. 2090, legislation to extend the 
authority of the Nuclear Regulatory Commission to collect fees 
and to exclude certain costs from the fee base. Joining him as 
original cosponsors were Subcommittee on Clean Air, Wetlands, 
Private Property, and Nuclear Safety Chairman Inhofe and 
Ranking Member Graham; Subcommittee on Superfund, Waste 
Control, and Risk Assessment Chairman Smith; and Senator 
Jeffords. S. 2090 was considered by the full Committee on May 
21, and reported favorably.
    As approved, the legislation authorizes an extension of the 
100 percent fee authority for an additional 5 years, through 
fiscal year 2003. Additionally, the bill directs the NRC to 
make a determination with regard to costs of activities for 
which it would not be fair and equitable to assess charges on 
licensees. A section-by-section analysis follows.

                      Section-By-Section Analysis

Section 1. Short title
    This section provides that the short title of the bill 
shall be the ``NRC Fairness in Funding Act of 1998.''
Section 2. Nuclear Regulatory Commission Annual Charges
    This section amends current law to extend the NRC's 100 
percent fee collection authority for 5 years, from September 
30, 1998, to September 30, 2003. This provision is necessary to 
prevent the NRC's authority to collect fees in order to cover 
its costs from dropping from 100 percent to a maximum of 33 
percent of its budget authority.
    The section also amends current law to require that the NRC 
exclude from the total amount collected in annual charges from 
licensees the costs of those activities for which the NRC 
determines that it would not be fair and equitable to assess on 
NRC licensees. It requires the NRC, in making this 
determination, to consider the extent to which NRC activities 
provide benefits to non-NRC licensees; the extent to which the 
NRC is unable to assess fees on the licensees that benefit from 
activities; and the extent to which NRC costs are commensurate 
with benefits provided to licensees. Finally, this section sets 
$30 million as the maximum amount that may be excluded from the 
fee base in any given fiscal year. This provision as a whole is 
intended to provide greater fairness and equity in the 
assessment of fees on licensees.

                                Hearings

    No hearings were held on S. 2090, although the issue of 
equity and fairness in fees has been the subject of discussion 
in previous Congresses.

                             Rollcall Votes

    Section 7(b) of rule XXVI of the Standing Rules of the 
Senate and the rules of the Committee on Environment and Public 
Works require that any rollcall votes taken during 
consideration of legislation be noted in the report.
    On May 21, the Committee met to consider S. 2090, and 
approved the legislation by unanimous consent. No rollcall 
votes occurred on the bill.

                           Regulatory Impact

    Section 11(b) of rule XXVI of the Standing Rules of the 
Senate requires publication in the report of the Committee's 
estimate of the regulatory impact of the bill as reported. S. 
2090, as reported, is expected to impose no new regulatory 
impact. This bill will not affect the personal privacy of 
individuals.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(P.L. 104-4), the Committee makes the following evaluation of 
the Federal mandates contained in the reported bill. S. 2090, 
as reported, imposes no Federal intergovernmental mandates on 
State, local, or tribal governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of a reported 
bill, prepared by the Congressional Budget Office, be included 
in the report. That statement follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 4, 1998.

Hon. John H. Chafee, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2090, the NRC 
Fairness in Funding Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kim Cawley 
(for Federal costs), whoc can be reached at 226-2860, Pepper 
Santalucia (for State and local impact), who can be reached at 
226-3220, and Jean Wooster (for private-sector impact), can be 
reached at 226-2960.

            Sincerely,
                                           June E. O'Neill,
                                                          Director.
                                ------                                


               Congressional Budget Office Cost Estimate

    S. 2090, NRC Fairness In Funding Act of 1998, as ordered 
reported by the Senate Committee on Environment and Public 
Works on May 21, 1998.
Summary
    S. 2090 would extend the authority of the Nuclear 
Regulatory Commission (NRC) to collect annual charges from its 
licensees to offset all of the agency's general fund 
appropriation. The bill does not authorize the appropriation of 
any funds to support the NRC mission in 1999 or subsequent 
years, but assuming that appropriations continue at 
approximately the 1998 level, additional annual income from 
these fees would be about $270 million a year. These would be 
recorded as offsetting collections to the NRC's appropriation. 
Because the bill would not affect direct spending or receipts, 
pay-as-you-go procedures would not apply.
    By extending the NRC's authority to collect fees from 
utilities, S. 2090 would impose both an intergovernmental and 
private-sector mandate as defined by the Unfunded Mandates 
Reform Act (UMRA). This mandate would not impose costs above 
the threshold established in UMRA for intergovernmental 
mandates ($50 million in 1996, adjusted for inflation). CBO 
cannot determine whether the direct costs of the mandate would 
exceed the annual threshold for private-sector mandates ($100 
million in 1996, adjusted for inflation), because UMRA does not 
clearly define how to determine the direct costs associated win 
an existing mandate that has not yet expired. Depending on how 
they are measured, the direct costs to the private sector could 
exceed the threshold.
Estimated Cost to the Federal Government
    Under current law, the NRC is directed to collect fees and 
annual charges sufficient to offset its entire general fund 
appropriation. This authority expires at the end of 1998; 
however, the agency has permanent authority to collect fees and 
annual charges sufficient to offset 33 percent of its annual 
appropriation (from the general fund or any special funds). S. 
2090 would extend the agency's authority to fully offset its 
general fund appropriation with fees and annual charges through 
2003, except that the bill would allow the NRC to exclude 
certain portions of its budget from annual charges that would 
not be fair and equitable to assess on its licensees or a class 
of its licensees. Under the bill, the portion of the NRC's 
general fund budget that could be excluded from annual charges 
could not exceed $30 million annually.
    In 1998, Congress appropriated $473 million for the NRC and 
the NRC Office of the Inspector General. That total includes 
$18 million from the Nuclear Waste Trust Fund and $455 million 
from the general fund of the Treasury. CBO estimates that the 
agency will collect $455 million in 1998 through fees and 
annual charges. If the NRC's 1999 appropriation were identical 
to its 1998 budget, and S. 2090 were enacted, we estimate that 
fees and annual charges would be $425 million. In contrast, if 
the agency's 1999 authority to collect fees and annual charges 
fell to 33 percent of its budget, CBO estimates the agency 
would collect only $156 million.
    Pay-As-You-Go Considerations: None.
    Intergovernmental and Private-Sector Impact: The 
requirement to pay additional annual fees to the NRC would be a 
mandate as defined in UMRA. The total amount of such fees would 
depend on the amount of future appropriations. Assuming that 
future appropriations would be at about the 1998 level and that 
the portion of the NRC's budget that could be excluded from 
annual charges would be $30 million annually (the maximum 
amount of excluded costs), CBO estimates that extending the 
fees would result in additional collections from industries 
regulated by the NRC (primarily electric utilities) of about 
$270 million annually beginning in fiscal year 1999, compared 
to what collections would be under current law. Most of the 
fees would be paid by private, investor-owned nuclear 
utilities. (Less than 5 percent would be paid by nonfederal, 
publicly owned utilities.)
    CBO cannot determine whether this mandate would impose any 
costs as defined in UMRA because the law is unclear as to how 
to measure costs associated with extending an existing mandate 
that has not yet expired. One approach would be to measure the 
costs imposed by the bill against those that would be incurred 
if current law remains in place and the annual fees decline. 
Measured that way, the total cost to the private sector of 
extending this mandate would be about $255 million annually, 
beginning in fiscal year 1999, and the cost of the mandate 
would exceed the annual threshold for the private sector as 
defined in UMRA. By contrast, measured against the fees paid 
for fiscal year 1998 ($455 million), the mandate would impose 
no additional costs on the private sector because the fees 
under S. 2090 would be lower than those currently in effect 
(because some of NRC's costs would be excluded from coverage by 
the fees). In either case, CBO estimates that the total costs 
to State, local, and tribal governments would be below the 
threshold for intergovernmental mandates established in UMRA.
    Estimate Prepared by: Federal Costs: Kim Cawley (226-2860); 
Impact on State, Local and Tribal Governments: Pepper 
Santalucia (225-3220); Impact on the Private Sector: Jean 
Wooster (226-2960).
    Estimate Approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill 
as reported are shown as follows: existing law as proposed to 
be omitted is enclosed in [bold brackets]; new matter proposed 
to be added to existing law is printed in italic; and existing 
law in which no change is proposed is shown in roman.

      United States Code--Title 42--The Public Health and Welfare

          Chapter 23--Development and Control of Atomic Energy

Subchapter XIII--General Authority of the Commission

           *       *       *       *       *       *       *


Sec. 2214. NRC user fees and annual charges
    (a) Annual assessment.--
            (1) In general.--Except as provided in paragraph 
        (3), the Nuclear Regulatory Commission (in this section 
        referred to as the "Commission") shall annually assess 
        and collect such fees and charges as are described in 
        subsections (b) and (c)of this section.
            (2) First assessment.--The first assessment of fees 
        under subsection (b) of this section and annual charges 
        under subsection (c) of this section shall be made not 
        later than September 30, 1991.
            (3) Last assessment of annual charges.--The last 
        assessment of annual charges under subsection (c) of 
        this section shall be made not later than [September 
        30, 1998] September 30, 2003.
    (b) Fees for service or thing of value.--Pursuant to 
section 9701 of title 31, any person who receives a service or 
thing of value from the Commission shall pay fees to cover the 
Commission's costs in providing any such service or thing of 
value.
    (c) Annual charges.--
            (1) Persons subject to charge.--Except as provided 
        in paragraph (4), any licensee of the Commission may be 
        required to pay, in addition to the fees set forth in 
        subsection (b) of this section, an annual charge.
            [(2) Aggregate amount of charges.--The aggregate 
        amount of the annual charge collected from all 
        licensees shall equal an amount that approximates 100 
        percent of the budget authority of the Commission in 
        the fiscal year in which such charge is collected, less 
        any amount appropriated to the Commission from the 
        Nuclear Waste Fund and the amount of fees collected 
        under subsection (b) of this section in such fiscal 
        year.]
            (2) Aggregate amount of charges._The aggregate 
        amount of the annual charge collected from all 
        licensees shall equal an amount that approximates 100 
        percent of the budget authority of the Commission for 
        the fiscal year for which the charge is collected, 
        less, with respect to the fiscal year, the sum of--
                    (A) any amount appropriated to the 
                Commission from the Nuclear Waste Fund;
                    (B) the amount of fees collected under 
                subsection (b); and
                    (C) for fiscal year 1999 and each fiscal 
                year thereafter, to the extent provided in 
                paragraph (5), the costs of activities of the 
                Commission with respect to which a 
                determination is made under paragraph (5).
            (3) Amount per licensee.--The Commission shall 
        establish, by rule, a schedule of charges fairly and 
        equitably allocating the aggregate amount of charges 
        described in paragraph (2) among licensees. To the 
        maximum extent practicable, the charges shall have a 
        reasonable relationship to the cost of providing 
        regulatory services and may be based on the allocation 
        of the Commission's resources among licensees or 
        classes of licensees.
            (4) Exemption.--
                    (A) In general.--Paragraph (1) shall not 
                apply to the holder of any license for a 
                federally owned research reactor used primarily 
                for educational training and academic research 
                purposes.
                    (B) Research reactor.--For purposes of 
                subparagraph (A), the term "research reactor" 
                means a nuclear reactor that--
                            (i) is licensed by the Nuclear 
                        Regulatory Commission under section 
                        2134(c) of this title for operation at 
                        a thermal power level of 10 megawatts 
                        or less; and
                            (ii) if so licensed for operation 
                        at a thermal power level of more than 1 
                        megawatt, does not contain-- (I) a 
                        circulating loop through the core in 
                        which the licensee conducts fuel 
                        experiments; (II) a liquid fuel 
                        loading; or (III) an experimental 
                        facility in the core in excess of 16 
                        square inches in cross-section.
            (5) Excluded budget costs._
                    (A) In general._The rulemaking under 
                paragraph (3) shall include a determination of 
                the costs of activities of the Commission for 
                which it would not be fair and equitable to 
                assess annual charges on a Nuclear Regulatory 
                Commission licensee or class of licensee.
                    (B) Considerations._In making the 
                determination under subparagraph (A), the 
                Commission shall consider--
                            (i) the extent to which activities 
                        of the Commission provide benefits to 
                        persons that are not licensees of the 
                        Commission;
                            (ii) the extent to which the 
                        Commission is unable to assess fees or 
                        charges on a licensee or class of 
                        licensee that benefits from the 
                        activities; and
                            (iii) the extent to which the costs 
                        to the Nuclear Regulatory Commission of 
                        activities benefits provided to the 
                        licensees from the activities.
                    (C) Maximum excluded costs._The total 
                amount of costs excluded by the Commission 
                pursuant to the determination under 
                subparagraph (A) shall not exceed $30,000,000 
                for any fiscal year.
    (d) ``Nuclear Waste Fund'' defined.--As used in this 
section, the term "Nuclear Waste Fund" means the fund 
established pursuant to section 10222(c) of this title.