The NRC Staff recently released SECY-16-0097, dated August 15, 2016, which addresses a number of possible changes to the way in which the NRC charges annual and licensing fees. The NRC Staff prepared the paper in response to Commission direction to consider ways to: (1) simplify how the NRC calculates fees, (2) improve transparency, and (3) improve the timeliness of communications about fee changes. In the abstract, these are laudable goals.

In concrete form, the NRC Staff identified four long-term potential improvements that it wishes to study further.

  1. Modify the calculation of the annual fee based on the size of the licensed facility (e.g., megawatt thermal, number of wellfields).
  2. Charge operating reactors a combined Part 170 and Part 171 fee, instead of hourly fees-for-services in addition to an annual fee.
  3. Charge a flat fee for each license amendment review and other similar routine activity for materials program licensees.
  4. Charge hourly fees for all contested hearings.

The first three suggestions, at least initially, appear to be worthy of further consideration in that they attempt to address significant concerns raised by stakeholders regarding the NRC’s current fee processes. The fourth suggestion, however, should be a non-starter.

Currently, the NRC charges reactor licensees the costs for uncontested (i.e., “mandatory”) hearings, which do not involve public participation, and contested hearings involving national security initiatives (e.g., the MOX facility), which benefit the government. However, the costs for contested hearings involving reactors and other NRC licensees are recovered through generic annual charges. According to SECY-16-0097, the NRC Staff will explore the ramifications of directly billing all hearings to applicants. The NRC Staff posited that fairness dictates that the applicant who initiated the licensing process should pay the full cost of the associated hearing. This runs directly contrary to the logic that prevailed when the fee rule was first adopted—that is, hearings at the request of public stakeholders were a public benefit rather than an activity requested by the applicant.

There would be potential negative impacts of charging applicants directly for hearings. The NRC Staff itself acknowledges that litigants may strategize to increase fees charged to industry entities to increase barriers to licensing. But, choices by the NRC Staff also have the potential to run up unnecessary fees. While the NRC Staff is permitted, under the rules, to decline to participate in most hearings, as a practical matter, they almost always play an active role in the litigation—even when their participation essentially duplicates that of applicants. The fee rule could create an odd incentive for applicants to discourage staff participation. If the NRC Staff participates, the applicants would in effect be required to pay for themselves and for the NRC Staff.

To the extent that litigation involves issues arising under either the National Environmental Policy Act (NEPA)—representing the majority of proposed and admitted contentions—or the National Historic Preservation Act, responsibility for complying with those statutes lies solely with the NRC, who already charges applicants for the cost of performing those reviews. Applicants should not have to pay to defend work that they already paid for, but had no role in drafting. Of course, the NRC is not even required by statute to conduct hearings on NEPA issues in the first instance, meaning that the bulk of hearing related costs charged to applicants would be for “voluntary” or discretionary NRC public participation processes. This supports the longstanding policy that hearing costs are public benefits, not for the benefit of the applicant, regardless of the fact that the application is a “but for” cause of the hearing request.

Finally, while the SECY paper suggests that the specific entities responsible for the NRC’s work should pay for that work, the reality is that many contested issues relate solely to NRC policies or generic issues, not to specific license applications. The adequacy of NRC regulations or procedures, the availability of a high-level waste repository, and the need for assessment of the environmental impacts of terrorism are generic or policy issues frequently raised in hearings. These issues are all outside the control of applicants and apply to all applicants and licensees. Unless applicants have a direct say in the litigation positions that the NRC Staff will take in agency adjudications—an inconceivable proposition—the costs for contested hearings should continue to be addressed as generic activities that benefit the public, rather than be charged to specific licensees.