[Federal Register Volume 59, Number 52 (Thursday, March 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6232]
[[Page Unknown]]
[Federal Register: March 17, 1994]
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NUCLEAR REGULATORY COMMISSION
10 CFR Parts 170 and 171
[Docket No. PRM-170-3]
American College of Nuclear Physicians and the Society of Nuclear
Medicine; Denial of Petition for Rulemaking
AGENCY: Nuclear Regulatory Commission.
ACTION: Petition for rulemaking; denial.
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SUMMARY: The Nuclear Regulatory Commission (``NRC'' or ``Commission'')
received a petition for rulemaking submitted by the American College of
Nuclear Physicians (``ACNP'') and the Society of Nuclear Medicine
(``SNM'') (``petitioners''). The petitioners requested that the
Commission amend its regulations governing the user and annual fees
charged to their members due to increases in those fees. Among the
specific requests contained in the petition were to establish a generic
exemption for medical licensees who provide services in nonprofit
institutions and to allow NRC licensees a greater voice in the
development of new regulations by the NRC. After careful consideration,
the Commission has decided not to adopt the proposals made in the
petition.
ADDRESSES: Copies of the petition for rulemaking, the public comments
received, and the NRC's letter to the petitioner are available for
public inspection or copying in the NRC Public Document Room, 2120 L
Street, NW. (Lower Level), Washington, DC 20555.
FOR FURTHER INFORMATION CONTACT: L. Michael Rafky, Office of the
General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC
20555, telephone 301-504-1974.
SUPPLEMENTARY INFORMATION:
I. Background.
II. Responses to comments.
I. Background
On February 18, 1992, the NRC received a petition for rulemaking
submitted by petitioners ACNP and SNM. The petitioners requested that
the NRC amend 10 CFR parts 170 and 171 which govern the annual and user
fees imposed on most NRC materials licensees by the Commission since
the advent of 100 percent fee recovery in FY 1991. The petitioners
requested these amendments because of the substantial adverse impacts
experienced by their members following increases in the NRC's user and
annual fees.
On May 12, 1992 (57 FR 20211), the NRC published a notice in the
Federal Register announcing receipt of the petition. In that notice,
the NRC stated that it would consider the issues raised by petitioners
within the context of the review and evaluation of the fee program for
FY 1993 conducted as part of the NRC's continued implementation of
Public Law 101-508, the Omnibus Budget Reconciliation Act of 1990, as
amended (OBRA-90). On October 13, 1992 (57 FR 46818), the NRC published
a notice requesting public comment on the issues raised in the
petition.
The NRC received nearly 100 comments in response to this request,
with the vast majority in favor of granting the petition. After careful
consideration of the comments, the Commission has decided to deny the
petition for rulemaking, for reasons stated below.
II. Responses to Comments
1. Comment. The majority of commenters simply restated their
support for some or all of the requested changes in NRC policy detailed
in the petition. In their petition, ACNP and SNM stated that NRC fee
increases under the 100 percent recovery regime were adversely
affecting their members' practice of nuclear medicine, in the process
harming the societal benefits which stem from that field of medicine.
The petitioners claimed that they could not recoup the costs of NRC
fees because Medicare reimbursement levels are inadequate and because
competing nuclear medicine alternatives are not regulated (or charged
fees) by the NRC. Petitioners then compared their treatment under the
NRC's fee rules to that of nonprofit educational institutions, power
reactors and small entities, all of whom petitioners claimed receive
special treatment by the NRC, and argued that for exemption purposes
medical licensees should not be lumped together with all other
materials licensees.
For these reasons, ACNP and SNM requested that the Commission take
the following policy actions:
(1) Grant a generic exemption for medical services provided in
nonprofit institutions, such as hospitals, similar to that granted to
nonprofit educational institutions;
(2) Provide individualized exemption criteria for medical
licensees, by means of a ``simple template for structuring exemption
requests;''
(3) Adopt a sliding scale of minimum fees that grants nuclear
physicians more relief than the current small entity classification
(which grants relief to physicians in private practice with less than
$1,000,000 in gross receipts); and
(4) Give NRC licensees a greater voice in the NRC's decisionmaking
process for developing new regulatory programs.
In that regard, petitioners suggested that the criteria contained
in the NRC's backfit rule be applied to the development of all new
regulatory programs. That is, if a regulation is not necessary for the
adequate protection of the public health and safety, the NRC would be
required to show that the rule would substantially increase safety and
that its benefits outweigh its costs.
Response. The Commission does not believe that the analogy between
colleges and universities and medical services provided in a nonprofit
institution is a valid one. The Commission recently decided to
reinstate a longstanding (but temporarily withdrawn) fee exemption for
nonprofit educational institutions. The key to educational
institutions' singular treatment, however, is not their nonprofit
status, nor the fact that they provide valuable social benefits;
rather, it is the existence of certain structural market failures in
educational institutions' production of new knowledge. In other words,
colleges and universities produce new knowledge primarily through basic
research, and disseminate it (essentially for free) to all who want it,
without receiving compensation from those benefitting. In economic
terms, this new knowledge is often termed a ``public good.''1
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\1\The Commission's analysis of this aspect of the petition is
based in part on a memorandum prepared by an NRC consultant on the
topic of externalized benefits and public goods. This memorandum has
been placed in the NRC Public Document Room for examination by any
interested persons. See Memorandum to NRC Staff from Stephen J.K.
Walters, Professor of Economics, Loyola College (Md.), dated January
4, 1994.
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Two defining characteristics of a public good are its
nondepletability and nonexcludability. That is, one person's
acquisition of knowledge does not reduce the amount available to
others; further, it is not efficient--and often is impossible, as a
practical matter--to prevent others from acquiring it at a zero price.
These characteristics make it difficult to recoup the costs of
producing new knowledge. Because the value of a public good may be very
great, but the costs of producing it impossible to recapture, public
subsidies may be necessary for production to occur at all. The
Commission has decided to exempt nonprofit educational institutions
from annual fees to advance continued production of new knowledge.
By contrast, medical practitioners have the capability of obtaining
compensation for the benefits they provide. Unlike new knowledge,
medical services are both depletable and excludable. The benefits of
medicine, while unquestionably significant, are therefore a private
rather than a public good, in economic terms. The Commission believes,
in sum, that the market failure considerations that apply to
educational institutions' attempts to produce new knowledge simply do
not apply to medical practitioners. There is no structural barrier to
the recovery of costs incurred in producing the benefits of medicine.
The situation of the medical practitioners is not fundamentally
different from that of the for-profit licensees whose claims for
exemption on grounds of inability to pass through costs the Commission
has rejected in the past. (See 58 FR 38666-68; July 20, 1993.)
In this regard, the Commission notes petitioners' claim that
Medicare may not account for NRC fees when reimbursing physicians and
hospitals. The Commission is also aware of pricing pressures caused by
competing nuclear medicine modalities not regulated (or charged fees)
by the NRC. However, as the Commission explained in its FY 1993 fee
rule, it is impracticable for this agency to evaluate the merits of
such empirical claims regarding the ability of licensees to pass
through fee costs to their customers. (See 58 FR 38666, 38667-68; July
20, 1993.) The Commission ``does not believe it has the expertise or
information needed to undertake the subtle and complex inquiry whether
in a market economy particular licensees can or cannot easily recapture
the costs of annual fees from their customers.'' (58 FR 38667; July 20,
1993.) This statement applies equally to medical licensees as it does
to all others whose products cannot be characterized as a ``public
good.''
Addressing the petition's second major point, the Commission
disagrees with those commenters who call for new individualized
exemption criteria for medical licensees. The Commission believes that
the current exemption process for materials licensees, as codified in
10 CFR 171.11(d), provides medical licensees with the opportunity to
request an exemption by means of detailing their particularized
circumstances.
Both exemption procedures (power reactor and materials licensee)
contained in Sec. 171.11 allow the requester to inform the Commission
of ``[a]ny * * * relevant matter that the licensee believes'' should
impact on the exemption decision. This allows the Commission
flexibility to consider each situation on its own merits. Were the
Commission to attempt to establish specific criteria for each type of
materials licensee, itself a daunting task, it might then be prevented
from considering factors which did not fall precisely within those
enumerated. And if the Commission retained the open-ended provision
quoted above, it would have expended considerable time and resources to
little purpose, as licensees could make the same claims under new
criteria that they can at this time.
Petitioners also complained that the NRC had established a high
threshold for granting materials exemption requests. In this regard,
the Commission explained in the first 100 percent fee recovery rule, in
FY 1991, that because it was statutorily required to collect 100
percent, it could not easily exempt licensees from fees. If one
licensee or class of licensees is exempted, those fees must then be
placed on other licensees, increasing their fee burden. It is for that
reason that the Commission only grants exemptions in exceptional
circumstances. (See 56 FR 31472, 31485; July 10, 1991.)
Petitioners' third request, that the Commission establish a sliding
scale of minimum fees based on the size of the licensee, which
``reflects the unique constraints on physicians'', also is denied. In
its FY 1991 fee rule, the Commission explained in great detail why it
devised its fee schedules in the manner it did, basing fees on classes
of licensees rather than licensee-by-licensee. (See FY 1991 Final Rule,
56 FR 31472, and Appendix A to the Final Rule; July 10, 1991.) There is
no information contained in either the petition or comments on the
petition which would lead the Commission to reconsider this approach,
and therefore the Commission must deny this aspect of the petition as
well.
However, the Commission intends to re-examine the size standards it
uses to define small entities within the context of compliance with the
Regulatory Flexibility Act. The Commission will conduct this review
within the context of revision of the small business size standards
proposed by the Small Business Administration (``SBA'') (58 FR 46573;
September 2, 1993). The Commission will not complete this review until
the SBA promulgates its final rule on this matter. These activities may
result in a revised definition of ``small entity'' more favorable to
petitioners.
Finally, the Commission denies petitioners' request that licensees
be provided more power over the development of NRC regulations, and
that a new backfit rule incorporating cost-benefit analysis be
instituted to evaluate the agency's regulatory programs. The Commission
denied similar requests in its FY 1991 fee rule, explaining that the
NRC is not exempt ``from the normal Government review and budgetmaking
process.'' The Commission at that time pointed out that ``the
Government is not subject to audit by outside parties,'' and that
``[a]udits are performed by the General Accounting Office or the
agency's Inspector General, as appropriate.'' (56 FR 31472, 31482; July
10, 1991.) Additionally, the NRC complies with Federal regulations such
as the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.) and the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) that require
agency analysis of the economic effects of new regulations on
licensees. The NRC Staff also prepares detailed cost-benefit analyses
to justify any new regulatory requirements; these analyses are
carefully reviewed by the Commission. The Commission has seen nothing
either in the petition or comments on the petition that would lead it
to change its approach in this area. The Commission would like to
emphasize, however, that licensees are always welcome and expected to
comment on proposed rulemakings, including the accompanying cost-
benefit analyses, and that such comments, along with petitions such as
the present one, workshops, meetings of the Advisory Committee on the
Medical Use of Isotopes, and the day-to-day interaction between
licensees and the agency, in the Commission's view provide an adequate
and successful method of keeping each group apprised of the other's
concerns.
2. Comment. The Commission received a potpourri of comments on
other aspects of the petition. A number of commenters disagreed with
the petition, arguing that medical licensees should not receive an
exemption, as the costs of such an exemption would be borne by other
licensees to whom the additional fees would have no relation, and that
every licensee should pay its fair share. Other commenters stated that
the fees should be abolished entirely, which would remove the dilemma
over granting exemptions. One commenter argued for basing an exemption
on the function for which the license is utilized, not the function of
the licensed organization. Some commenters argued that fees should be
based on factors such as the amount of radioactive sources possessed,
the number of procedures performed or the size of the nuclear
department within a hospital. Certain commenters suggested expanding
the number of exemptions to include Government agencies, along with
those licensees which provide products and services to medical and
educational entities. One commenter requested that the NRC take
Agreement State schedules into account when setting its own fee
schedule. Another commenter raised concerns as to the expense of NRC
contractors and the quality of NRC regulation. And a few commenters
urged the NRC to reevaluate or abolish its then-recently instituted
Quality Management (QM) Program.
Response. As the Commission stated above, it is denying this
petition for rulemaking, and therefore not exempting medical licensees
for services provided in a nonprofit institution.
The Commission cannot abolish its fees unilaterally, as the
requirement to collect 100 percent of the agency's annual budget
authority through user and annual fees is statutorily mandated by
Congress, see section 6101 of OBRA-90.
The Commission has explained in the past why it did not believe
that basing fees on factors such as number of sources or the size of
the facility would result in a fairer allocation of the 100 percent
recovery requirement. (See FY 1991 Final Rule, 56 FR 31472; July 10,
1991, and Appendix A to that Final Rule; and Limited Revision of Fee
Schedules, 57 FR 13625; April 17, 1992.) The Commission has seen no
evidence in the petition or comments on the petition which would lead
it to change its current approach of charging fees by class of
licensee. For reasons similar to those stated in the earlier rules
cited above, the Commission does not believe it would be feasible to
base an exemption on the function for which a license is utilized
rather than on the function of the licensed organization.
The Commission has also explained in prior rulemakings why it has
decided to charge Federal agencies annual fees, and has seen nothing in
comments on the petition which would cause it to change its position on
this policy matter. (See FY 1991 Final Rule, 56 FR 31472, 31474-45;
July 10, 1991.) The Commission also does not believe that the exemption
for nonprofit educational institutions should be expanded to cover
those private companies supplying services and products to medical or
educational licensees. The fact that the cost of these services and
products impacts upon exempt licensees is not sufficient reason to
exempt private for-profit licensees. By exempting nonprofit educational
institutions from fees, the Commission has addressed the direct impact
of its fees on those institutions. Additionally, the Commission has
discussed in both prior and current rulemakings the necessity of a high
threshold for exemption requests and the overarching requirement to
collect as close to 100 percent of its annual budget authority as
possible; these factors remain valid here.
While the Commission acknowledges that in many cases Agreement
States base their fee schedules in some measure on the NRC's fee
schedule, the NRC cannot do the reverse. The NRC must conform its fees
to the 100 percent recovery requirements mandated by OBRA-90,
independent of Agreement State fee schedules over which the agency has
no control.
Finally, the Commission believes that comments on the agency's QM
program, NRC contracting practices and the overall quality of NRC
regulation are beyond the scope of this notice. However, the Commission
notes that the agency's regulation codifying its QM program was
challenged and ultimately upheld in court. See American College of
Nuclear Physicians and Society of Nuclear Medicine v. United States
Nuclear Regulatory Commission and United States of America, No. 91-
1431, slip op. at 2 (DC Cir. May 22, 1992) (per curiam).
Because each of the issues raised in the petition has been
substantively resolved, the NRC has denied this petition.
Dated at Rockville, Maryland this 11th day of March, 1994.
For the Nuclear Regulatory Commission.
Samuel J. Chilk,
Secretary of the Commission.
[FR Doc. 94-6232 Filed 3-16-94; 8:45 am]
BILLING CODE 7590-01-P
