Revision of Fee Schedules; Fee Recovery for FY 2005, 30526-30556 [05-10062]

Agencies

• NUCLEAR REGULATORY COMMISSION

[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Rules and Regulations]
[Pages 30526-30556]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-10062]



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Part II





Nuclear Regulatory Commission





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10 CFR Parts 170 and 171



Revision of Fee Schedules; Fee Recovery for FY 2005; Final Rule

Federal Register / Vol. 70, No. 101 / Thursday, May 26, 2005 / Rules 
and Regulations

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NUCLEAR REGULATORY COMMISSION

10 CFR Parts 170 and 171

RIN 3150-AH61


Revision of Fee Schedules; Fee Recovery for FY 2005

AGENCY: Nuclear Regulatory Commission.

ACTION: Final rule.

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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 the Omnibus Budget 
Reconciliation Act of 1990 (OBRA-90), as amended, which requires that 
the NRC recover approximately 90 percent of its budget authority in 
fiscal year (FY) 2005, less the amounts appropriated from the Nuclear 
Waste Fund (NWF). The total amount to be recovered for FY 2005 is 
approximately $540.7 million. After accounting for carryover and 
billing adjustments, the net amount to be recovered through fees is 
approximately $538 million.

DATES: Effective July 25, 2005.

ADDRESSES: The comments received and the NRC's work papers that support 
these final changes to 10 CFR parts 170 and 171 are available 
electronically at the NRC's Public Electronic Reading Room on the 
Internet at https://www.nrc.gov/reading-rm/adams.html. From this site, 
the public can gain entry into the NRC's Agencywide Documents Access 
and Management System (ADAMS), which provides text and image files of 
NRC's public documents. For more information, contact the NRC Public 
Document Room (PDR) Reference staff at 1-800-397-4209, or 301-415-4737, 
or by e-mail to pdr@nrc.gov. If you do not have access to ADAMS or if 
there are problems in accessing the documents located in ADAMS, contact 
the PDR.
    Comments received may also be viewed via the NRC's interactive 
rulemaking Web site (https://ruleforum.llnl.gov). This site provides the 
ability to upload comments as files (any format), if your Web browser 
supports that function. For information about the interactive 
rulemaking site, contact Ms. Carol Gallagher, 301-415-5905; e-mail 
CAG@nrc.gov.
    For a period of 90 days after the effective date of this final 
rule, the work papers may also be examined at the NRC Public Document 
Room, Room O-1F22, One White Flint North, 11555 Rockville Pike, 
Rockville, MD 20852-2738. The PDR reproduction contractor will copy 
documents for a fee.

FOR FURTHER INFORMATION CONTACT: Tammy Croote, telephone 301-415-6041; 
Office of the Chief Financial Officer, U.S. Nuclear Regulatory 
Commission, Washington, DC 20555-0001.

SUPPLEMENTARY INFORMATION:

I. Background
II. Response to Comments
III. Final Action
IV. Voluntary Consensus Standards
V. Environmental Impact: Categorical Exclusion
VI. Paperwork Reduction Act Statement
VII. Regulatory Analysis
VIII. Regulatory Flexibility Analysis
IX. Backfit Analysis
X. Small Business Regulatory Enforcement Fairness Act

I. Background

    For FYs 1991 through 2000, OBRA-90, as amended, required that the 
NRC recover approximately 100 percent of its budget authority, less the 
amount appropriated from the U.S. Department of Energy (DOE) 
administered NWF, by assessing fees. To address fairness and equity 
concerns related to charging NRC license holders for agency budgeted 
costs that do not provide a direct benefit to the licensee, the FY 2001 
Energy and Water Development Appropriations Act amended OBRA-90 to 
decrease the NRC's fee recovery amount by two percent per year 
beginning in FY 2001, until the fee recovery amount is 90 percent in FY 
2005. As a result, the NRC is required to recover approximately 90 
percent of its FY 2005 budget authority, less the amounts appropriated 
from the NWF, through fees. In the Consolidated Appropriations Act of 
2005 (Pub. L. 108-447), as adjusted by the rescission discussed in 
Section 122(a), Congress appropriated $669.3 million to the NRC for FY 
2005. This sum includes $68.5 million appropriated from the NWF. The 
total amount NRC is required to recover in fees for FY 2005 is 
approximately $540.7 million. After accounting for carryover and 
billing adjustments, the net amount to be recovered through fees is 
approximately $538 million.
    The NRC assesses two types of fees to meet the requirements of 
OBRA-90, as amended. First, license and inspection fees, established in 
10 CFR part 170 under the authority of the Independent Offices 
Appropriation Act of 1952 (IOAA), 31 U.S.C. 9701, recover the NRC's 
costs of providing special benefits to identifiable applicants and 
licensees. Examples of the services provided by the NRC for which these 
fees are assessed are the review of applications for new licenses and, 
for certain types of existing licenses, the review of renewal 
applications, the review of amendment requests, and inspections. 
Second, annual fees established in 10 CFR part 171 under the authority 
of OBRA-90, recover generic and other regulatory costs not otherwise 
recovered through 10 CFR part 170 fees.

II. Response to Comments

    The NRC published the FY 2005 proposed fee rule on February 22, 
2005 (70 FR 8677) to solicit public comment on its proposed revisions 
to 10 CFR parts 170 and 171. The NRC received 13 comments dated on or 
before the close of the comment period (March 24, 2005) and 3 
additional comments thereafter, for a total of 16 comments that were 
considered in this fee rulemaking. The comments have been grouped by 
issues and are addressed in a collective response.

A. Legal Issues

Information Provided by NRC in Support of Proposed Rule
    Comment. Several commenters urged the NRC to provide licensees and 
the public with a more detailed explanation of the activities and 
associated costs that form the basis for NRC's fees. These commenters 
stated that the NRC should inform stakeholders of the costs associated 
with each component of reactor regulation and all other generic costs 
in sufficient detail to enable them to provide meaningful comment on 
the proposed fee rule. The commenters stated that the NRC should 
provide an itemized accounting of the major elements that comprise the 
annual fee, including detailed information on the outstanding major 
contracts, their purpose, and their costs.
    These commenters further stated that industry's ability to evaluate 
the NRC's application of resources and priorities is impeded because 
the NRC allocated 72 percent of its recoverable budget to the generic 
assessment under part 171, while only 28 percent is recovered under the 
discrete fee provisions of part 170.
    Response. Consistent with the requirements of OBRA-90, as amended, 
the purpose of this rulemaking is to establish fees necessary to 
recover 90 percent of the NRC's FY 2005 budget authority, less the 
amounts appropriated from the NWF, from applicants and the various 
classes of NRC licensees. The proposed rule described the types of 
activities included in the proposed fees and explained how the fees 
were calculated to recover the budgeted costs

[[Page 30527]]

for those activities. Therefore, the NRC believes that ample 
information was available on which to base constructive comments on the 
proposed revisions to parts 170 and 171 and that its fee schedule 
development is a transparent process.
    In addition to the information provided in the proposed rule, the 
supporting work papers were available for public examination in the 
NRC's Agencywide Documents Access and Management System (ADAMS) and, 
during the 30-day comment period, in the NRC Public Document Room at 
One White Flint North, 11555 Rockville Pike, Rockville, MD. The work 
papers show the total budgeted full time equivalent (FTE) and contract 
costs at the planned activity level for all agency activities. The work 
papers also include extensive information detailing the allocation of 
the budgeted costs for each planned activity within each program to the 
various classes of licenses, as well as information on categories of 
costs included in the hourly rate.
    To assist commenters, the NRC also made available in the Public 
Document Room NUREG-1100, Volume 20, ``Performance Budget: Fiscal year 
2005'' (February 2004), which discusses the NRC's budget for FY 2005, 
including the activities to be performed in each program. This document 
is also available on the NRC public Web site at https://www.nrc.gov/
reading-rm.html. The extensive information available provided the 
public with sufficient information on how NRC calculated the proposed 
fees. Additionally, the contact listed in the proposed fee rule was 
available during the public comment period to answer any questions that 
commenters had on the development of the proposed fees.
    Regarding the comments that expressed concern that too much of the 
NRC's budget was designated for recovery under part 171, the NRC is not 
at liberty to allocate fees indiscriminately between parts 170 and 171, 
because fee allocation is controlled by statute. (The NRC also notes 
its estimated fee recovery in FY 2005 from parts 171 and 170 fees is 71 
percent and 29 percent, respectively.) The NRC assesses part 170 fees 
under the IOAA, consistent with implementing Office of Management and 
Budget (OMB) Circular A-25, to recover the costs incurred from each 
identifiable recipient for special benefits derived from Federal 
activities beyond those received by the general public. Generic costs 
that do not provide special benefits to identifiable recipients cannot 
be recovered under part 170. Further, the NRC notes that, as required 
by OBRA-90, the part 171 annual fee recovery amounts are offset by the 
estimated part 170 fee collections. The NRC's work papers clearly set 
forth the components of these generic costs and how those costs are 
recovered through annual fees. Additionally, the NRC notes that it has 
taken action to maximize the amount recovered under part 170, 
consistent with existing law and agency policy. For example, in FY 1998 
the NRC began charging part 170 fees for all resident inspectors' time 
(63 FR 31840; June 10, 1998) and in FY 1999 the NRC started charging 
part 170 fees for all project manager activities associated with 
oversight of the assigned license or plant (64 FR 31448; June 10, 
1999). In FY 2003, the NRC amended its regulations to allow the NRC to 
recover costs associated with contested hearings on licensing actions 
involving U.S. Government national security initiatives through part 
170 fees assessed to the affected applicant or licensee (67 FR 64033; 
October 17, 2002). Included under this provision are activities 
involving the fabrication and use of mixed oxide fuel. Additionally, in 
this year's fee rule, the NRC is revising its hourly rate calculation 
formula to better reflect actual agency costs, resulting in higher 
hourly rates. Once implemented, the NRC estimates that the increased 
hourly rates will increase fee recovery under part 170 from 
approximately 29 percent in FY 2005 to more than 37 percent in FY 2006. 
The NRC strives, as a matter of policy, to maximize its fee collections 
under part 170.

B. Specific Part 170 Issues

1. Hourly Fees
    Comment. Several commenters expressed concerns about the large 
increases in the NRC's hourly rates associated with the proposed 
changes to 10 CFR 170.20. One commenter was concerned that these 
changes disproportionately shift NRC management and overhead costs to 
single unit licensees with an NRC project manager and two resident 
inspectors, as compared to multiple unit sites that may share project 
manager and resident inspector resources. This commenter stated that 
these overhead costs should more appropriately be included in 10 CFR 
Part 171 fees.
    Response. The NRC acknowledges that the increases to the part 170 
hourly rates are more significant this year than in previous years, and 
agrees that these increases will have a greater impact on the sites 
that receive more part 170 services (e.g., sites with more than one 
resident inspector). The NRC's hourly rates are based on budgeted costs 
and must be established each year to meet the NRC's fee recovery 
requirements. The primary reason for the increases in the hourly rates 
in FY 2005 is the NRC's use of a revised estimate of the number of 
direct hours per FTE in calculating these rates. The NRC's new hourly 
rates are justified because they more accurately reflect the full cost 
of providing services under part 170. The OMB's Circular A-25, ``User 
Charges,'' emphasizes that agency fees should reflect the full cost of 
providing services to identifiable beneficiaries. The higher hourly 
rates are consistent with this guidance. The increases also support 
industry comments that consistently recommend the NRC collect more of 
its budget through part 170 fees-for-services vs. part 171 annual fees. 
Therefore, the NRC is retaining the revised hourly rate formula as 
presented in the FY 2005 proposed fee rule. This results in hourly 
rates of $205 for the Nuclear Reactor Safety (reactor) program, and 
$197 for the Nuclear Materials and Waste Safety (materials) program. 
Although the higher hourly rates will have a greater impact on 
licensees that receive more part 170 services, the NRC believes this is 
appropriate because the new rates more accurately reflect the costs of 
providing these services.
2. Increase in the Category 9A Evaluation Fee
    Comment. One commenter objected to the increase in the fees for 
materials category 9A (device safety evaluations) in 10 CFR 170.31, 
stating the increases are well beyond the inflation rate and 
capricious.
    Response. The NRC recognizes that there was a large increase in the 
evaluation fee for materials category 9A. The change is a result of 
both the increase in the materials program hourly rate as well as a 
revised estimate of the average professional staff time required to 
process this type of application. As previously noted, the increase in 
the hourly rate is due to the revision of the NRC's hourly rate 
calculation formula to better reflect actual agency costs. The change 
in the average professional staff time estimate is based on the 
biennial review of fees performed for the FY 2005 fee rule, in 
compliance with the Chief Financial Officers (CFOs) Act of 1990 (Pub. 
L. 101-578, November 15, 1990, 104 Stat. 2838). During the biennial 
review, the NRC evaluates the historical professional staff hours used 
to process an application for those materials licensees whose fees are 
based on the average cost method, or ``flat'' fees. This evaluation 
indicated that

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processing time for most fee categories decreased or remained the same; 
however, processing time for some fee categories, including 9A, 
increased because of the increased staff effort associated with 
processing these requests. The increased staff effort for these 
categories is due to the complexity of the submissions and the 
additional review required to assure the continued quality and adequacy 
of technical and regulatory determinations. The biennial review 
completed for the FY 2005 fee rule also reflected more substantial data 
(i.e., larger data sets) available for this assessment than in previous 
years. (The data on the average number of professional staff hours 
needed to complete new licensing actions was last updated in FY 2003 
[68 FR 36714; June 18, 2003]). The revised fees better reflect actual 
agency costs, and therefore the NRC believes the fee increases are 
justified.
3. Fees for Unlicensed Sites in Decommissioning
    Comment. One commenter expressed its opposition to the imposition 
of part 170 fees on unlicensed companies currently in site 
decommissioning, stating that these companies are not receiving a 
benefit from the NRC. The commenter disagreed with the NRC's policy of 
imposing fees on these companies because the costs are associated with 
revised government decommissioning standards and fees would discourage 
voluntary decommissioning. The commenter stated that if the NRC decides 
to impose these fees, the fees should not be applied to sites currently 
in decommissioning.
    Response. As a matter of policy, the NRC assesses part 170 fees 
under the IOAA, which allows Federal agencies to assess fees to recover 
costs incurred in providing special benefits to identifiable 
recipients. In addition, the Conference Committee Report accompanying 
OBRA-90 specifically states that the Conference Committee ``* * * 
expects the NRC to continue to assess fees under the IOAA to the end 
that each licensee or applicant pays the full cost to the NRC of all 
identifiable regulatory services such licensee or applicant receives'' 
(136 Cong. Rec. H12692-3, daily ed. October 26, 1990). The NRC has 
received additional direction on this issue in the OMB Circular A-25, 
``User Charges,'' in which OMB states it is Federal policy that a user 
charge will be assessed against each identifiable recipient for special 
benefits derived from Federal activities beyond those received by the 
general public. The NRC abides by this direction in charging part 170 
fees to recover the costs of providing special benefits to identifiable 
recipients. The NRC believes recovering the site-specific 
decommissioning costs associated with both licensed and unlicensed 
sites through part 170 fees is consistent with the full cost recovery 
provisions of IOAA and Circular A-25.
    While the NRC acknowledges that decommissioning standards have been 
revised over the years, regulatory standards sometimes change for 
operating licensees, as well, in light of new safety or security issues 
or information. The NRC does not believe this is sufficient rationale 
for not imposing fees in these circumstances. Additionally, while the 
NRC is not providing the benefit of an operating license to sites in 
decommissioning--whether licensed or unlicensed--the NRC is incurring 
costs to provide services to these sites, and believes this justifies 
the imposition of fees to recover these costs. As such, the NRC does 
not believe it is appropriate to enact this policy but not apply it to 
existing sites in decommissioning, as the commenter requested.
    However, NRC appreciates the concerns raised by this commenter. To 
address these concerns, NRC will delay the effective date of this 
requirement to one year after the effective date of the FY 2005 final 
fee rule. The NRC believes this later effective date will allow 
unlicensed sites to better plan for the imposition of these fees. This 
delayed effective date will also allow the owners/operators of 
unlicensed sites time to make as much progress as practicable in 
completing these decommissioning activities before the imposition of 
fees by the NRC. The NRC believes charging part 170 fees to unlicensed 
sites, but with sufficient notice before implementation, will 
appropriately implement the NRC's goal of enhancing the fairness and 
equity of its fee schedule while encouraging continued progress on 
meeting decommissioning standards.
4. Fees for Licensee-Specific Activities Resulting From Security 
Related Orders
    Comment. One commenter suggested not amending part 170 to allow 
fees to be assessed for any licensee-specific activity resulting from 
orders issued by the Commission not related to civil penalties or other 
civil sanctions. This commenter stated that licensees are required to 
implement additional security requirements at their own cost, and that 
adding additional homeland security costs to the fee base could 
discourage licensees from voluntary implementation of technological 
advances or additional security measures beyond the scope of the 
orders.
    Response. The NRC acknowledges the impact of these fees on the 
licensees. However, the NRC must comply with OBRA-90 and recover most 
of its budget, including homeland security costs, through fees to 
licensees. As such, the NRC must recover the costs of licensee-specific 
actions resulting from security-related orders through either parts 170 
or 171 fees. The NRC believes it is more fair and appropriate to 
recover these costs through part 170 fees because the activities are 
licensee-specific and serve an identifiable beneficiary. By recovering 
the costs of licensee-specific activities resulting from orders through 
part 170 fees, as opposed to part 171 annual fees, the NRC will more 
fairly allocate the cost recovery of these activities amongst 
licensees. This is because part 170 fees will be charged to a licensee 
based on the actual time NRC spends ensuring compliance for that 
licensee, rather than spreading total industry costs evenly to all 
licensees. This will allow the NRC to recover more fees from licensees 
that use more NRC resources in complying with these orders.
    The NRC also believes this change is important because the NRC's 
use of orders to impose additional requirements for safety or security 
reasons has recently increased. For example, subsequent to the 
September 11, 2001, terrorist attacks, the Commission has imposed 
security requirements on various classes of licensees through orders. 
These orders resulted in the NRC's review of licensee-specific 
amendments and other activities that normally would have been billable 
under part 170, except that they were associated with orders.
    Given the changing regulatory environment and the extent of 
licensee-specific activities that are resulting from orders unrelated 
to civil penalties or other civil sanctions, the NRC is revising its 
regulations to allow for full cost recovery of these activities under 
part 170 from NRC licensees. The NRC is not changing cost recovery for 
the development of these orders or for hearings requested on these 
orders; these costs will continue to be recovered under part 171 
(unless the hearing falls within the purview of 10 CFR 170.11(a)(2) 
addressing fees for Presidentially-directed national security 
programs).

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C. Specific Part 171 Issues

1. Annual Fees for Uranium Recovery Licensees
    Comment. The NRC received three comments objecting to the large 
increase in the annual fees for uranium recovery licensees. These 
commenters stated that there continues to be a lack of a reasonable 
relationship between the cost to uranium recovery licensees of NRC's 
regulatory program and the benefit derived from these services. 
Additionally, the commenters stated that the NRC needs to address the 
issue of decreasing numbers of uranium recovery licensees. 
Specifically, as more states become Agreement States and/or additional 
sites are decommissioned, the number of NRC regulated sites continues 
to decline, leaving fewer licensees to pay a larger share of the NRC's 
regulatory costs.
    The comments supported the continuation of the 2002 determination 
that the DOE must be assessed one-half of all NRC budgeted costs 
attributed to generic/other activities for the uranium recovery 
program. In addition, one commenter cited the dramatic recovery of the 
price of uranium and indicated that this may generate future requests 
for licensing actions. The commenter was concerned that the NRC may not 
possess sufficient experienced staff to process these requests. This 
commenter also noted a previous Commission comment which indicated the 
existence of a uranium recovery facility was in the public interest.
    Response. The NRC acknowledges that uranium recovery annual fees 
increased by a large percentage (90 percent to 115 percent) from FY 
2004 to FY 2005. However, the FY 2005 uranium recovery annual fee of 
$30,200 is still significantly lower than previous years. (For example, 
these fees ranged from approximately $82,000 to $132,000 in FY 2001, 
and $39,000 to $64,000 in FY 2003.) Annual fees fluctuate from year to 
year based on a number of factors, including the budgeted resources for 
a license fee class. Additionally, because annual fees must recover all 
fee class resources not recovered through part 170 fees, annual fees 
are impacted by the part 170 fees collected from that fee class.
    In response to concerns regarding decreasing numbers of NRC 
licensees in light of more states becoming Agreement States, the NRC 
notes that budgeted resources providing support to Agreement States or 
their licensees are included in total surcharge costs, which are offset 
by funding provided by Congress. For example, if the NRC develops a 
rule or guidance document, or even potentially a database or other 
tracking system, that is associated with or otherwise benefits 
Agreement State licensees, the costs of these activities are prorated 
to the surcharge according to the percentage of licensees in that fee 
class in Agreement States (e.g., if 50 percent of uranium recovery 
licensees are in Agreement States, 50 percent of these regulatory 
infrastructure costs would be included in the surcharge). Total 
surcharge costs are reduced by the fee relief (i.e., direct 
appropriations from the General Treasury) provided by Congress. To 
address fairness and equity concerns associated with licensees paying 
for the cost of activities that do not directly benefit them, as noted 
previously, the FY 2001 Energy and Water Development Appropriations Act 
amended OBRA-90 to decrease the NRC's fee recovery amount by two 
percent per year beginning in FY 2001, until the fee recovery amount is 
90 percent in FY 2005. However, to the extent that this fee relief is 
insufficient to cover all surcharge costs, these remaining surcharge 
costs are spread to all licensees based on their percentage of the 
budget.
    In FY 2005, $2.3 million of the $62.4 million in total surcharge 
costs was not covered by the 10 percent fee relief, and therefore is 
included in licensees' annual fees. Eighty-two percent (the percentage 
of the budget associated with reactors) of the $2.3 million in net 
surcharge costs is included in reactor annual fees, and the remainder 
is spread to all other licensees' annual fees. Accordingly, NRC's 
uranium recovery licensees are not generally burdened with the costs of 
regulating Agreement State licensees or any other costs not associated 
with uranium recovery licensees (only to the extent that a small 
portion of these costs are spread to all licensees through the net 
surcharge). In FY 2005, total surcharge costs allocated to the entire 
uranium recovery class are $8,600.
    However, the NRC acknowledges that license fee classes with fewer 
licensees are more impacted by changes to the budget and changes to 
part 170 collections. The uranium recovery fee class was reduced by 
four licensees (two of which paid annual fees) in FY 2005 because 
regulatory responsibility for these licensees was transferred to the 
State of Utah in accordance with an Agreement under section 274 of the 
Atomic Energy Act (AEA) of 1954, as amended, effective August 16, 2004. 
This resulted in fewer NRC uranium recovery licensees (now six in 
total, including a license for the DOE) paying for the FY 2005 generic 
and other regulatory costs associated with the regulation of the NRC's 
uranium recovery licensees. Accordingly, annual fees increased for the 
NRC's uranium recovery licensees in FY 2005 because the fee class now 
has fewer licensees; however, the higher annual fees are not the result 
of NRC licensees paying for activities that support Agreement State 
licensees, as previously discussed. Because annual fees must recover 
budgeted resources for a fee class not recovered through part 170 fees, 
to the extent that part 170 fees do not completely recover the costs of 
budgeted resources for part 170 activities, these costs are included in 
annual fees. The NRC does note that the increases to hourly rates 
enacted through this rulemaking will enable the agency to recover more 
of the budgeted resources for licensee-specific activities, and once 
implemented, will reduce costs that must be recovered through annual 
fees.
    With respect to the general comment that there is a lack of a 
reasonable relationship between the cost to uranium recovery licensees 
of NRC's regulatory program and the benefit derived from these 
services, the NRC notes that the uranium recovery fees reflect the 
budgeted resources associated with the regulation of NRC's uranium 
recovery licensees. As previously described, the fee relief of 10 
percent for FY 2005 covers almost all (with the exception of $2.3 
million) of the budgeted resources associated with activities that do 
not directly benefit NRC licensees, and the total surcharge cost 
allocated to the entire uranium recovery class is $8,600 in FY 2005. 
The NRC must by statute assess annual fees to uranium recovery 
licensees to recover their budgeted costs not recovered through part 
170 fees and other receipts. While the NRC acknowledges the previous 
Commission comment about the existence of a uranium recovery facility 
being in the public interest, this does not negate the NRC's legal 
obligation to collect fees to recover the costs of regulating uranium 
recovery facilities.
    In response to the comment that the NRC may not possess sufficient 
experienced staff to process future licensing actions for uranium 
recovery licensees, the issue raised is outside the scope of this 
rulemaking. However, the NRC does consider market forces and expected 
future licensing activities in formulating its budget, and has a human 
resources program in place to address future agency skill needs.
    Finally, the NRC notes that this final rule continues the policy of 
assessing the DOE one-half of all NRC budgeted costs attributed to 
generic/other

[[Page 30530]]

activities for the uranium recovery program.
2. Annual Fees for Fuel Facilities Licensees
    Comment. One commenter expressed concern over the increase in 
annual fees for fuel facilities licensees. The comments discussed the 
unpredictability of estimating proposed fee increases, as well as that 
the NRC did not mention in the FY 2004 fee rule a one-time adjustment 
it had made to account for part 170 fees received for prior year 
activities (which decreased annual fees in FY 2004 for fuel 
facilities).
    Response. The NRC appreciates the concerns raised about fee 
predictability and stability, and does strive to notify licensees as 
early as possible of proposed fee changes. While the one-time 
adjustment for the fuel facilities was discussed in the FY 2004 final 
fee rule (69 FR 22671; April 26, 2004), the NRC acknowledges that the 
rule did not fully explain the potential impacts of this adjustment. 
The NRC aims to more fully explain any such changes in the future.
    Although the NRC understands that large fluctuations in fees are 
undesirable, the NRC must recover most of its budget to comply with 
OBRA-90, as amended. To do so, the NRC annually promulgates a rule 
establishing licensee fees. Because of concerns about annual 
fluctuations in these fees, the NRC announced in FY 1995 that annual 
fees would be adjusted only by the percentage change (plus or minus) in 
NRC's total budget authority, adjusted for changes in estimated 
collections for part 170 fees, the number of licensees paying annual 
fees, and as otherwise needed to assure the billed amounts resulted in 
the required collections. The NRC indicated that if there were a 
substantial change in the total NRC budget authority or the magnitude 
of the budget allocated to a specific class of licenses, the annual fee 
base would be recalculated by rebaselining. Commission policy sets the 
maximum interval between rebaselined fee schedules at three years. 
Based on the change in the magnitude of the budget to be recovered 
through fees, the Commission determined that it was appropriate to 
rebaseline its part 171 annual fees in FY 2005. Rebaselining fees 
resulted in increased annual fees for fuel facilities compared to FY 
2004 due in part to an increase in budgeted resources for FTE for fuel 
facilities licensing and inspection activities. (These resources may 
not be entirely recovered under part 170 because of factors such as the 
existing hourly rates, which do not account for the time direct FTE 
spend on training and other administrative activities, and because 
licensing resources spent on contested hearings are not generally 
recovered under part 170, in accordance with 170.11(a)(2).) A decrease 
in part 170 fees from this class also contributed to the annual fee 
increase. As discussed in the FY 2004 proposed fee rule, this decrease 
in part 170 revenue results partly from the one-time $2.1 million 
adjustment (increase) to part 170 revenue in FY 2004 to account for 
fuel facilities fees that were improperly coded (i.e., costs associated 
with the Duke Cogema Stone and Webster application) and not factored 
into the fee calculations for FY 2001, FY 2002, and F 2003.
3. Increase in the Annual Fees for Some Materials Licensees
    Comment. Two commenters strongly objected to the increase in the 
annual fees for some of the categories of the materials licenses. One 
commenter stated that the increase will have to be passed on to their 
customers which will place the licensee at a cost disadvantage in a 
very competitive environment.
    Response. The NRC has addressed comments regarding the impact of 
fees on industry in previous fee rulemakings. The NRC has stated since 
FY 1991, when the 100 percent fee recovery requirement was first 
implemented, that it recognizes the assessment of fees to recover the 
agency's costs may result in a substantial financial hardship for some 
licensees. However, consistent with the OBRA-90 requirement that annual 
fees must have, to the maximum extent practicable, a reasonable 
relationship to the cost of providing regulatory services, the NRC's 
annual fees for each class of licensee reflect the NRC's budgeted cost 
of its regulatory services to the class. The NRC determines the 
budgeted costs to be allocated to each class of licensee through a 
comprehensive review of every planned activity in each of the agency's 
major program areas. Furthermore, a reduction in the fees assessed to 
one class of licensees would require a corresponding increase in the 
fees assessed to other classes. Accordingly, the NRC has not based its 
annual fees on licensees' economic status, market conditions, or the 
inability of licensees to pass the costs to its customers. Instead, the 
NRC has only considered the impacts that it is required to address by 
law.
    Annual fees for materials users increased for certain fee 
categories for two reasons. First, materials users' annual fees include 
more budgeted resources for activities such as licensing and inspection 
(including some homeland security activities) in FY 2005 than in FY 
2004. Second, the distribution of the materials users class resources 
to fee categories within this class was revised based on the biennial 
review of fees. As mentioned previously, the staff biennially reviews 
the average professional staff hours associated with processing 
applications and performing inspections. This review was performed in 
FY 2005, and indicated that processing time for most fee categories 
decreased or remained the same; however, processing time for some 
categories (e.g., categories 3H, 3I, 9A, and 9B) increased since the 
last biennial review of fees, based in large part on the increased 
complexity of the submissions for these fee categories and the 
additional review required to assure the continued quality and adequacy 
of technical and regulatory determinations. Because the total budgeted 
resources for the materials users class are distributed to fee 
categories within that class based on these average review times, this 
resulted in more significantly increased annual fees for these 
categories of licensees.

D. Other Issues

1. Recovery of Security Costs
    Comment. Several commenters strongly objected to the NRC collecting 
security-related costs from licensees. These commenters stated that 
homeland security issues related to nuclear power plants are part of 
the U.S. government's overall responsibility to protect its critical 
infrastructure, and hence these costs should be excluded from the fee 
structure and funded through the General Treasury. These commenters 
noted that the nuclear industry has already incurred significant 
security costs, and that these costs have not been reimbursed by the 
Federal government, unlike what has occurred for other industries. 
While the commenters stated that they recognized the public benefit of 
enhancing the already strong security at nuclear facilities, they 
thought it fundamentally unfair to require licensees to pay for the 
NRC's additional security-related oversight.
    Because of concerns raised regarding homeland security activities 
and their cost recovery, these commenters urged the NRC to continue to 
engage the Department of Homeland Security and Congressional leaders to 
achieve a more equitable outcome for NRC licensees.
    Response. The NRC appreciates the concerns raised by commenters 
regarding homeland security costs being funded through license fees. 
However, the NRC's required fee recovery is set by

[[Page 30531]]

statute and, therefore, is outside the scope of this rulemaking. To 
implement OBRA-90, as amended, the NRC must recover approximately 90 
percent of its budget authority in FY 2005, less the amounts 
appropriated from the NWF. The total amount to be recovered for FY 2005 
is approximately $540.7 million. After accounting for carryover and 
billing adjustments, the net amount to be recovered through fees is 
approximately $538 million. This required fee recovery includes 
homeland security budgeted resources.
    Legislation has passed the House of Representatives which would 
remove some of the NRC's homeland security costs from the fee base. If 
Congress enacts such legislation, this would be reflected in future fee 
schedules.
2. NRC Budget
    Comment. Some commenters stated that NRC fees should reflect NRC 
efficiencies and provided suggestions for reducing NRC's budget and for 
more efficient/different use of NRC's resources. Many of these comments 
addressed expenditures on homeland security, while others suggested 
more generally that NRC reduce expenditures, streamline processes, or 
otherwise perform activities more efficiently, without impeding 
operational safety. Some commenters suggested that changes in NRC's 
regulatory approach, such as the reactor oversight process, as well as 
revised inspection, assessment and enforcement processes, should result 
in reduced fees. Some comments included suggestions to reallocate 
resources dedicated to the inspection of areas of plants that have 
little or no safety significance, to efforts to risk-inform 
regulations, review license renewal applications, and license new 
reactor designs.
    Response. The NRC appreciates the importance of identifying and 
implementing process efficiencies on an ongoing basis. Every year, NRC 
offices conduct process reviews and rely on risk-informed practices to 
develop cost-efficient budgets that will allow them to achieve the 
NRC's Strategic Plan mission objectives. Nonetheless, the NRC's budget 
and the manner in which the NRC carries out its activities are not 
within the scope of this rulemaking. Therefore, this final rule does 
not address the commenters? suggestions concerning the NRC's budget and 
the use of NRC resources. The NRC's budget is submitted to the Office 
of Management and Budget and to Congress for review and approval. The 
Congressional budget process affords stakeholders and the public 
opportunities to provide views, including meetings, testimony, press 
briefings, etc. The Congressionally-approved budget resulting from this 
process reflects the resources deemed necessary for NRC to carry out 
its statutory obligations. In compliance with OBRA-90, the fees are 
established to recover the required percentage of the approved budget. 
However, the NRC will continue efforts to ensure that the NRC carries 
out its statutory obligations in an efficient manner.
3. Fees Communication and Timing, Including Fee Increase Phase-Ins or 
Caps
    Comment. Several commenters raised concerns that the timing of 
issuance of the fee rule makes it difficult for licensees to plan for 
regulatory expenses within the framework of their normal budget cycles. 
To address this issue, commenters suggested that the NRC publish an 
estimate of fees for the following year, coincident with issuance of 
the proposed fee rule each year. The commenters recognized that while 
it would likely be impossible for the NRC to offer exact projections, 
the Commission should be able to develop reasonable estimates of the 
next year's fees. One commenter suggested phasing in fee increases over 
a longer period of time, and others similarly suggested the idea of a 
cap to fee increases. Another commenter requested that the proposed 
hourly rate increase be rescheduled until the offsetting annual fee 
reduction coincides with the increase.
    Response. The NRC acknowledges the concerns raised by these 
commenters. As a matter of law (OBRA-90, as amended), the NRC must 
collect the statutorily mandated level of fees by the end of the fiscal 
year to which they are attributed, in this case September 30, 2005. 
However, because the NRC does not know in advance what its future 
budgets will be (i.e., proposed budgets must be submitted to the OMB 
for its review before the President submits the budget to Congress for 
enactment), the NRC believes it is not practicable to project fees 
based on future estimated budgets. Even if the NRC were able to 
reasonably predict a future year total budget, the annual fee amounts 
are also highly sensitive to the allocation of these total resources to 
license fee classes, the numbers of licensees in a fee class, and the 
proportion of total class costs recovered from part 170. (Part 170 
revenue from a fee class is particularly difficult to predict in 
advance, and more so for fee classes with small numbers of licensees, 
whose annual fees are even more sensitive to part 170 revenue 
estimates.) Estimating these factors even further in advance than the 
NRC currently does would likely lead to inaccurate future fee 
projections, which would be misleading to licensees.
    With respect to the comment that requested that the proposed hourly 
rate increase be rescheduled until the offsetting annual fee reduction 
coincides with the increase, this is what will actually occur. While 
the higher hourly rates are being established in the FY 2005 final fee 
rule, licensees will not have to pay the bills reflecting these higher 
rates until FY 2006 (which begins October 1, 2005). The new hourly 
rates will not take effect until late in FY 2005, and licensees will 
not receive bills reflecting the new hourly rates until October 2005. 
The NRC will receive revenue from the higher hourly rates beginning 
approximately November 2005. The revenue from the higher hourly rates 
that the NRC receives in FY 2006 will be used to offset the required 
annual fee amount for licensees in FY 2006. Therefore, both the higher 
hourly rates and the annual fees reflecting the offset from the higher 
hourly rates will be paid by NRC applicants and licensees in the same 
fiscal year (FY 2006). During FY 2005, licensees paid part 170 fees 
reflecting the lower hourly rates, and hence the FY 2005 annual fees 
are offset by the lower hourly rates.
    The NRC has considered requests to cap fee increases or phase them 
in over a longer period of time. In the FY 1999 proposed fee rule, the 
NRC solicited comments on the idea of a cap to fee increases (64 FR 
15876; April 1, 1999). While some comments supported this proposal, 
others did not because they believed it would lead to some licensees 
subsidizing the costs of other licensees. The NRC did not adopt a fee 
increase cap in the FY 1999 final fee rule in light of fairness and 
equity concerns with this approach and a lack of overwhelming support 
from commenters (64 FR 31448; June 10, 1999). Upon subsequent 
evaluation, the NRC continues to believe that the legal and fairness 
concerns with these fee cap strategies or other phase-in approaches 
outweigh the benefits of enhanced fee stability. Given the requirements 
of OBRA-90, as amended, to collect most of NRC's budget authority 
through fees, failure to fully recover costs from certain classes of 
licensees due to caps or thresholds would result in other classes of 
licensees bearing these costs. The NRC's fees are based on the current 
year budgeted costs of activities benefitting the associated license 
fee classes, and hence reflect the best assessment of who should be 
paying for these costs. However, the NRC will continue to strive to 
issue its fee regulations as early in the fiscal year as is practicable 
to give

[[Page 30532]]

as much time as possible for licensees to plan for changes in fees.

III. Final Action

    The NRC is amending its licensing, inspection, and annual fees to 
recover approximately 90 percent of its FY 2005 budget authority less 
the appropriations received from the NWF. The NRC's total budget 
authority for FY 2005 is $669.3 million, of which approximately $68.5 
million has been appropriated from the NWF. Based on the 90 percent fee 
recovery requirement, the NRC must recover approximately $540.7 million 
in FY 2005 through part 170 licensing and inspection fees, part 171 
annual fees, and other offsetting receipts. The total amount to be 
recovered through fees and other offsetting receipts for FY 2005 is 
$4.6 million less than the amount estimated for recovery in FY 2004.
    The FY 2005 fee recovery amount is reduced by a $2.2 million 
carryover from additional collections in FY 2004 that were 
unanticipated at the time the final FY 2004 fee rule was published, and 
by an additional $0.5 million for billing adjustments (i.e., for FY 
2005 invoices that the NRC estimates will not be paid during the fiscal 
year, and for payments received in FY 2005 for FY 2004 invoices). This 
leaves approximately $538 million to be recovered in FY 2005 through 
part 170 licensing and inspection fees, part 171 annual fees, and other 
offsetting receipts.
    The NRC estimates that approximately $157.5 million will be 
recovered in FY 2005 from part 170 fees and other offsetting receipts. 
The NRC derived this estimate based on the previous four quarters of 
billing data for each license class, with adjustments to account for 
changes in the NRC's FY 2005 budget as appropriate. The remaining 
$380.5 million would be recovered through the part 171 annual fees, 
compared to $389.9 million for FY 2004.
    The primary reason for the decrease in total fees for FY 2005 is 
that the NRC's fee recovery is 90 percent in FY 2005, compared to 92 
percent in FY 2004. This fee recovery reduction is in accordance with 
the FY 2001 Energy and Water Development Appropriations Act. The 
decrease in the NRC's required fee recovery is sufficient to offset the 
increase of 1.5 percent in the NRC's non-NWF budget in FY 2005.
    Table I summarizes the budget and fee recovery amounts for FY 2005.

          Table I.--Budget and Fee Recovery amounts for FY 2005
                          [Dollars in millions]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Budget Authority.......................................     $669.3
    Less NWF.................................................      -68.5
                                                              ----------
        Balance..............................................     $600.8
    Fee Recovery Rate for FY 2005............................      \1\ x
                                                                   90.0%
                                                              ----------
Total Amount To Be Recovered for FY 2005.....................     $540.7
    Less Carryover from FY 2004..............................       -2.2
                                                              ----------
    Less Part 171 Billing Adjustments
        Unpaid FY 2005 Invoices (estimated)..................        2.7
        Less Payments Received in FY 2005 for Prior Year            -3.2
         Invoices (estimated)................................
                                                              ----------
            Subtotal.........................................       -0.5
                                                              ==========
Amount To Be Recovered Through Parts 170 and 171 Fees........     $538.0
    Less Estimated Part 170 Fees.............................     -157.5
                                                              ----------
Part 171 Fee Collections Required............................    $380.5
------------------------------------------------------------------------
\1\ Percent.

    The FY 2005 final fee rule is a ``major rule'' as defined by the 
Small Business Regulatory Enforcement Fairness Act of 1996. Therefore, 
the NRC's fee schedules for FY 2005 will become effective 60 days after 
publication of the final rule in the Federal Register. The NRC will 
send an invoice for the amount of the annual fee to reactors and major 
fuel cycle facilities upon publication of the FY 2005 final rule. For 
these licensees, payment is due on the effective date of the FY 2005 
rule. Those materials licensees whose license anniversary date during 
FY 2005 falls before the effective date of the final FY 2005 rule will 
be billed for the annual fee during the anniversary month of the 
license at the FY 2004 annual fee rate. Those materials licensees whose 
license anniversary date falls on or after the effective date of the 
final FY 2005 rule will be billed for the annual fee at the FY 2005 
annual fee rate during the anniversary month of the license, and 
payment will be due on the date of the invoice.
    The NRC has discontinued mailing the final fee rule to all 
licensees as a cost saving measure, in accordance with its FY 1998 
announcement. Accordingly, the NRC does not plan to routinely mail the 
FY 2005 final fee rule or future final fee rules to licensees. However, 
the NRC will send the final rule to any licensee or other person upon 
specific request. To request a copy, contact the License Fee Team, 
Division of Financial Management, Office of the Chief Financial 
Officer, at 301-415-7554, or e-mail fees@nrc.gov. In addition to 
publication in the Federal Register, the final rule will be available 
on the Internet at https://ruleforum.llnl.gov for at least 90 days after 
the effective date of the final rule, and will permanently be available 
at https://www.access.gpo.gov.
    The NRC is amending 10 CFR parts 170 and 171 as discussed in 
Sections A and B below.

A. Amendments to 10 CFR Part 170: Fees for Facilities, Materials, 
Import and Export Licenses, and Other Regulatory Services Under the 
Atomic Energy Act of 1954, as Amended

    The NRC is revising the hourly rates used to calculate fees and to 
adjust the part 170 fees based on the revised hourly rates and the 
results of the agency's biennial review of fees required by the CFOs 
Act of 1990. Additionally, the NRC is revising part 170 to provide for 
the assessment of full cost fees for licensee-specific activities

[[Page 30533]]

resulting from most orders and decommissioning activities associated 
with unlicensed sites; clarify that part 170 fee waivers need to be 
requested from, and granted by, the CFO in writing in certain 
instances; notify licensees that the NRC intends to apply its existing 
full cost recovery policy for project managers to license renewal 
project managers; and make minor administrative changes, including 
those to enhance consistency between the fee categories used in part 
170 and part 171.
    The amendments are as follows:
1. Hourly Rates
    The NRC is revising the two professional hourly rates for NRC staff 
time established in Sec.  170.20. These rates are based on the number 
of FY 2005 direct program full time equivalents (FTEs) and the FY 2005 
NRC budget, excluding direct program support costs and NRC's 
appropriations from the NWF. These rates are used to determine the part 
170 fees. The rate for the reactor program is $205 per hour ($296,782 
per direct FTE). This rate is applicable to all activities for which 
fees are assessed under Sec.  170.21 of the fee regulations. The rate 
for the materials program is $197 per hour ($285,336 per direct FTE). 
This rate is applicable to all activities for which fees are assessed 
under Sec.  170.31 of the fee regulations. In the FY 2005 proposed fee 
rule, the reactor program rate was $205 and the materials program rate 
was $198. The materials program rate decreased by one dollar between 
the FY 2005 proposed and final rules due to the movement of some 
budgeted resources from the materials program to the surcharge. In the 
FY 2004 final fee rule, the reactor and materials program rates were 
$157 and $156, respectively. The increase to the reactor and the 
materials program rates from FY 2004 is primarily due to the NRC's use 
of a revised estimate of the number of direct hours per FTE in 
calculating these rates. The recent Government-wide pay raise is 
another reason for the proposed increase in the hourly rates.
    As described in further detail below, the NRC currently assumes 
1,776 hours per direct FTE are available for direct program work, while 
the new hourly rate assumes 1,446 hours per direct FTE are available 
for direct program work. Because the NRC's hourly rates are calculated 
by dividing the total annual costs of a direct FTE by average annual 
direct hours per FTE, the lower the number of direct hours per FTE used 
in the calculation, the higher the hourly rates.
    The NRC is revising its estimate of direct hours per FTE to more 
accurately reflect the NRC's costs of providing part 170 services, 
which will allow the NRC to more fully recover the costs of these 
services through part 170 fees, a result sought by several commenters 
as discussed earlier. Because costs not recovered under part 170 are 
recovered through part 171 annual fees, the increase in total part 170 
fees (caused by the hourly rate increase) will result in a reduction to 
total annual fees of the same amount. As such, this hourly rate 
increase will shift some fee recovery from part 171 annual fees to part 
170 fees for licensee-specific services. (As previously discussed, 
because the invoices reflecting these increased part 170 fees will not 
be paid by licensees until FY 2006--in light of the effective date of 
the final rule and the timing of the NRC's regular billing cycle--the 
reduction in annual fees from this change will not occur until FY 
2006.)
    Previously, the NRC used an estimate of 1,776 hours per FTE to 
calculate the reactor and materials program hourly rates, based on OMB 
Circular A-76, ``Performance of Commercial Activities.'' However, this 
Circular provides assumptions to be used to estimate personnel costs 
for the competition of commercial activities, and does not provide 
guidance about assumptions to be used for purposes of fee calculation. 
(OMB's Circular A-25, ``User Charges,'' also does not specifically 
address the number of hours to assume per FTE in calculating fees, but 
does emphasize that agency fees should reflect the full cost of 
providing services to identifiable beneficiaries.) The 1,776 estimate 
from Circular A-76 includes time for administrative, training, and 
other activities a direct program FTE may perform that, while relevant 
to consider for certain costing purposes, would more accurately be 
considered overhead. Therefore, this estimate should not be assumed to 
be ``direct'' time for purposes of calculating a rate per hour of 
direct activities, which is the intended purpose of the NRC's hourly 
rates. While the 1,776 estimate would be a useful fee calculation input 
were more detailed information not available, the NRC has been 
collecting more detailed information from its new time and labor system 
since November 2001, which is now the NRC's established source of data 
for employee work activities. The NRC has performed a review of its 
time and labor data, which indicates that 1,446 hours per FTE more 
accurately reflects the time expended by NRC program employees 
performing activities directly associated with the programmatic mission 
of the NRC. The 330 hours per year (1,776 minus 1,446) that a direct 
FTE performs in administrative activities will now be recovered in a 
similar manner to overhead, the costs of which are included in the 
hourly rate.
    The NRC recognizes that the increase to the hourly rates is more 
significant than those hourly rate changes that have occurred in 
previous years. However, the NRC believes that this increase is 
justified in light of the review of the NRC's time and labor data, 
which showed that NRC direct employees spend, on average, 1,446 hours 
per year on activities directly associated with the programmatic 
mission of the NRC. The NRC believes that the use of 1,446 hours per 
FTE is more appropriate for the purpose of the NRC's fee calculation 
than other estimates of hours per FTE used for different agency 
financial purposes. By using an estimate of hours per FTE that reflects 
only direct staff time, the resulting hourly rates more accurately 
reflect the full cost of providing services under part 170. For this 
reason, the NRC believes that this estimate of hours per FTE is 
consistent with guidance provided in OMB Circular A-25 on recovering 
the full cost of services provided to identifiable recipients. This 
change also supports industry comments that consistently recommend that 
the NRC collect more of its budget through part 170 fees-for-services 
vs. part 171 annual fees.
    Higher hourly rates will result in increased full cost fees for 
licensing and inspection activities, and increased materials flat fees 
for license applications. As previously noted, total part 171 annual 
fees will decrease by the same amount as the increase in total part 170 
fees. This shift from part 171 to part 170 will be greater for those 
fee classes with a higher proportion of part 170 to part 171 work 
activities (e.g., operating power reactors, uranium recovery and rare 
earth facilities). Because annual fees are adjusted to recover the 
remainder of the budgeted resources for a license fee class not 
recovered under part 170, the total estimated fees (parts 170 plus 171) 
recovered from a license fee class are the same regardless of the 
amount of the hourly rate, However, when implemented, higher hourly 
rates will result in some individual licensees paying less total fees 
than if this change were not enacted. This is true for those licensees 
for whom the NRC performs fewer hours of part 170 services than it 
does, on average, for a licensee in that class. Similarly, licensees 
for which the NRC performs more hours of part 170 services will pay 
more in total fees under the proposed higher hourly rates.

[[Page 30534]]

    The method used to determine the two professional hourly rates is 
as follows:
    a. Direct program FTE levels are identified for the reactor program 
and the materials program. All program costs, except contract support, 
are included in the hourly rate for each program by allocating them 
uniformly based on the total number of direct FTEs for the program. 
Direct contract support, which is the use of contract or other services 
in support of the line organization's direct program, is excluded from 
the calculation of the hourly rates because the costs for direct 
contract support are recovered directly through either part 170 or 171 
fees.
    b. All non-program costs for management and support and the Office 
of the Inspector General, are allocated to each program based on that 
program's costs.
    This method results in the following costs, which are included in 
the hourly rates. Due to rounding, adding the individual numbers in the 
table may result in a total that is slightly different than the one 
shown.

   Table II.--FY 2005 Budget Authority To Be Included in Hourly Rates
------------------------------------------------------------------------
                                   Reactor  program    Materials program
------------------------------------------------------------------------
Direct Program Salaries &         $150.5M...........  $38.9M
 Benefits.
Overhead Salaries & Benefits,     77.5M.............  17.7M
 Program Travel and Other
 Support.
Allocated Agency Management and   125.9M............  31.3M
 Support.
                                 ---------------------
    Subtotal....................  353.9M............  87.9M
Less Offsetting Receipts........  -0.0M.............  -0.0M
                                 ---------------------
        Total Budget Included in  $353.9M...........  $87.9M
         Hourly Rate.
Program Direct FTEs.............  1,192.5...........  308.2
Rate per Direct FTE.............  $296,782..........  $285,336
Professional Hourly Rate (Rate    $205..............  $197
 per direct FTE divided by 1,446
 hours).
------------------------------------------------------------------------

    As shown in Table II, dividing the $353.9 million budgeted amount 
(rounded) included in the hourly rate for the reactor program by the 
reactor program direct FTEs (1,192.5) results in a rate for the reactor 
program of $296,782 per FTE for FY 2005. The Direct FTE Hourly Rate for 
the reactor program will be $205 per hour (rounded to the nearest whole 
dollar). This rate is calculated by dividing the cost per direct FTE 
($296,782) by the number of direct billable hours in one year (1,446 
hours). Similarly, dividing the $87.9 million budgeted amount (rounded) 
included in the hourly rate for the materials program by the program 
direct FTEs (308.2) results in a rate of $285,336 per FTE for FY 2005. 
The Direct FTE Hourly Rate for the materials program will be $197 per 
hour (rounded to the nearest whole dollar). This rate is calculated by 
dividing the cost per direct FTE ($285,336) by the number of direct 
billable hours in one year (1,446 hours).
2. Fee Adjustments
    The NRC is adjusting the current part 170 fees in Sec. Sec.  170.21 
and 170.31 to reflect the changes in the revised hourly rates and the 
results of the biennial review of part 170 fees required by the CFOs 
Act. To comply with the requirements of the CFOs Act, the NRC has 
evaluated historical professional staff hours used to process a new 
license application for those materials licensees whose fees are based 
on the average cost method, or ``flat'' fees. This review also included 
new license and amendment applications for import and export licenses.
    Evaluation of the historical data shows that fees based on the 
average number of professional staff hours required to complete 
licensing actions in the materials program should be increased in some 
fee categories and decreased in others to more accurately reflect 
current costs incurred in completing these licensing actions. The data 
for the average number of professional staff hours needed to complete 
new licensing actions was last updated in FY 2003 (68 FR 36714; June 
18, 2003). Thus, the revised average professional staff hours in this 
final fee rule reflect the changes in the NRC licensing review program 
that have occurred since FY 2003.
    As a result of the biennial review, the licensing fees are based on 
the average professional staff hours that reflect an increase in 
average time for new license applications for five of the 33 materials 
program fee categories, a decrease in average time for eight fee 
categories, and the same average time for the remaining 20 fee 
categories. The average time for new license applications and 
amendments for export and import licenses remained the same for each of 
the five fee categories in Sec. Sec.  170.21 and 170.31.
    Although the biennial review indicated that processing times for 
most fee categories remained the same or d