Portion of NRC budget covered by licensee fees (90%) must be exempt from sequestration

It is time to remind Congress and the President that the Nuclear Regulatory Commission’s budget is, by law, almost 90% funded with fees assessed on licensees. The structure was put into place during the Reagan Administration at a time when David Stockman was selling the idea that the government could charge fees on users of its “services” instead of imposing taxes on people that might not use specific government services. For fiscal year 2013, the NRC fee total will be $924.8 million.

The other 10% or so of the NRC’s budget comes from appropriated money because the NRC does some things that cannot be counted as a service to its licensees. One example activity that would be instantly recognized as a special tax on nuclear operators if charged to licensees is the NRC’s support of international agencies. For FY 2013, the net appropriations number is $128.5 million, resulting in a total of $1,053 million.

For some unexplainable, politically inspired reason, the accountants at the Office of Management and Budget have forgotten where the NRC’s money comes from. They have announced to the agency that its share of the sequester that is commonly called the “fiscal cliff” that will happen if Congress and the President do not take action will be $85 million plus a $1 million reduction in the NRC Office of the Inspector General.

In other words, the 8.2% “across the board” reduction has been applied to the entire NRC budget (with a mark of $86 million), not just the portion that is appropriated from general tax revenues. If there is a sequester, it would make sense to apply a mark of $10.5 million against the appropriated portion of the budget.

I’ve written about the way the NRC’s budget has been used to constrain the nuclear industry and to add hidden costs of doing business. Reducing regulatory resources increases costs to licensees and license applicants by increasing the wait at the only “check-out lines” that the industry is allowed to use.

We must recognize that antinuclear accountants at OMB are once again using any excuse they can find to remove resources from the government established monopoly supplier of permission to to build and operate nuclear power plants in the United States. Tell the President, your Senator and your Congressman that it is wrong for the Administration think it move money paid by licensees in return for NRC licensing services into other budget lines and use it for unrelated general government functions.

About Rod Adams

7 Responses to “Portion of NRC budget covered by licensee fees (90%) must be exempt from sequestration”

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  1. pagely says:

    Testing a comment.

  2. Martin burkle says:

    Rod,
    Another action that could be taken would be to reduce NRC fees by 8.2%. Although, using the upside down government logic would have the fees raised because the government needs the money.
    On a more serious side, I really think the budget should only include money not raised by fees. Then the NRC could increase or decrease staff based on the work needed rather than the amount budgeted. Sort of like a real business.

    • Brian Mays says:

      Although, using the upside down government logic would have the fees raised because the government needs the money.

      Of course! I’m willing to bet that every one of these fee-payers has an operating income of over $250,000. They should be “paying their fair share.” ;-)

      Brother, can you spare 16 trillion?

  3. Rich Lentz says:

    What about the money they (the government) are collecting for Yucca?

    • Rod Adams says:

      @Rich Lentz

      The Nuclear Waste Fund is a different pot of money from the NRC license fees. They are additive. Each nuclear generating unit in the US pays between $6-10 million per year to the Nuclear Waste Fund based on the amount of electricity it generates (at a rate of 0.1 cents per kilowatt hour).

      The completely separate, additional license fees are assessed on a per unit basis, with no allowance for size of the unit. That fee is currently $4.766 million per year per reactor.

      In addition, the NRC charges hourly fees when it provides extra services or extra oversight. Those fees currently add up at $274 per professional staff hour.

      Unfortunately, the evil forces opposed to the use of nuclear energy figured out that it would be best if congress and the president could remain involved in determining the amount of resources devoted to reviewing applications and performing services like reviewing restart plans for San Onofre and Ft Calhoun. By selectively squeezing those resources, the opposition can slow the process and add cost while shifting the blame elsewhere.

      Therefore, the NRC does not receive fees directly. The fees go into the general fund and the NRC has to engage in the annual budget process. Their request has to be submitted about 2 years before the resources are actually needed, which adds another planning and commitment of resources burden on applicants.

  4. Bruce Behrhorst says:

    To the nuclear tribe of today it’s rather late in the day to raise concerns of sequestration on budgets.

    Partly because U.S. politicos will kick-the-can down the road to ruin. There is no escape the new normal is economic collapse. To take the NIMBY approach not for my fav Gov’t (NRC) agency budget sequestration is off limits is error.

    How did we get here?

    Try fat retirement & pension unfunded liabilities for public sector workers. Unfunded liabilities part of State and Local level pensions 2001-2008 at around $1 trillion & $3 trillion this has been going on for most of the 21st. century. In the Bush era (BLS stats) net employment increased by 1.08 million jobs but in the breakdown of numbers:
    Feds gained 50,000 jobs, State & Local Gov’ts gained 1.8 million jobs and the private sector lost 673,000 jobs.
    Weak private sector job creation ultimately done in by the recession. All that tax paying revenue to build infrastructure at Fed, State & local level dried up.

    Now, sequester is the ‘new normal’ and in nondiscretionary expenditure like defense in a major crucial rethink of say, the U.S. Navy.
    We have instead of the dreadnought style navy. The aircraft carrier (CVN) battle support group creating a big metal island target for DF-5 Dong Feng missiles.
    The status quo wants to nibble around the edges of a DOD naval budget never
    re-designing the U.S. Navy to remain relevant on the high seas.
    Never taking into consideration less expensive equally effective navy reflecting today’s geo-political realities for the USN with NUCLEAR drives on icebreakers, smaller Corvette & Littoral combat ships, modular fitted LST, LPD’s or electrical landing crafts etc.

    As the saying goes…The tragic comedy of politics is we pretty much get the ship-of-state we demand which is extremely bloated listing to ruin.

  5. Robert Steinhaus says:

    No real reduction of safety would occur if nuclear regulation was adjusted back to parity with the industrial competition (France, India, China, Russia). NRC regulation is now responsible for pricing up the cost of manufacturing nuclear power plants by 400% according to Professor Bernard Cohen [1].

    One of the most effective ways to reduce costs at NRC is to reduce the amount of regulation and the impact of regulation that resulting in the delay of projects caused by the licensing process. If the amount of code was reduced and the portions of the code that absorb the most NRC staff hours were streamlined, then fewer regulators would be required to handle the job and the agency budget could be trimmed.

    The David Stockman inspired way of funding NRC did not work. The current arrangements, put in place under the influence of Stockman, reduces the participation of nuclear innovators (like Adams Atomic Engines or Flibe Energy) by requiring licensing and design certification fees in the 100s of millions of dollars to evaluate new technology- this is more than nuclear startup companies can typically provide. Without fresh ideas that come from participation by small nuclear innovators, the US nuclear industry becomes stagnant and moribund, and a large number of valuable improved nuclear technology ideas just sit on the sidelines and go undeveloped.

    [1] – Dr. Bernard Cohen, “Cost of Nuclear Power Plants – What went wrong?” –
    http://bit.ly/eb9Y7M
    (Regulatory ratcheting, quite aside from the effects of inflation, quadrupled the cost of a nuclear power plant).

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