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1 O O.BAKUll & MGENZIE

Mr. James M. TaylorAugust 24,1992Page 2

1966-1986 and the most recent shipments from Teledyne Energy's facility to customers were in1985.

The standard pattern of usage of these RTGs is that they are shipped to the user and thenemplaced at the user's site requiring long-life, remote, unattended power. The RTGs remainin that same location for many years which in most cases is 1015 years. Reshipment of theseunits is extremely infrequent. These factors differentiate Teledyne Energy from other Category10,lt 1. licensees which regularly reship and reuse their transportation casks which are used fornuclear fuel, waste and irradiation sources. The resulting level of services and attention required -to be provided to Teledyne Energy by the NRC is practically none but for the initial liccasingactivity and 5-year renewal activity for its QA Plan and Certificates of Compliance, all of whichis of course paid for separately on an hourly rate basis.

Teledyne Energy does not maintain an ongoing active business in RTG production.RTGr are specialized and customized devices which are only manufactured to fill a particularcontract. Teledyne Energy has not manufactured a new strontium-90 fueled RTG since 1986and presently only provides spare parts and support services for existing generators. TeledyneEnergy's average annual receipts in this portion of its business are between approximately$250,000 and $300,000, well below the $3.5 million threshold for small entities which wouldotherwise qualify it for the lower annual fee of $1,800 if only the RTG portion of TeledyneEnergy's business were considered. In addition, but for the NRC's position that a Fabricatorsand Users QA Plan must support the Certificates of Compliance covering these RTGs, TeledyneEnergy would not need to maintain an approved QA Plan and pay the exorbitant annual feesbecause it no longer manufactures new strontium-90 fueled RTGs. Teledyne Energy hasdiscussed with NRC officials the matter of transferring their Certificates of Compliance to theircustomers / users and terminating their approved QA Plan, but the NRC claims that the Users QAPlans are not of sufficient scope to support the Certificates of Compliance.

Thus, Teledyne Energy is left with no options. It is forced to maintain an approved QAPlan and pay an excessive annual fee to cover products originally manufactured between 1966-1986, rarely reshipped and no longer manufactured by Teledyne _ Energy. Under thesecircumstances, the assessment of the proposed FY 1992 annual fee against Teledyne Energy isunfair and inequitable.

11. lxcal Analysis

As part of the Omnibus Budget Reconciliation Act of 1990, Pub. L.101-508, Title VI,Subtitle B, Section 6101, the NRC was required to recover approximately 100 percent of itsbudget nuthority less the amount appropriated from the Department of Energy administered

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Mr. James M. TaylorAugust 24,1992Page 3

Nuclear Waste Fund for FYs 1991 through 1995 by assessing license, inspection and annualfees. On July 10, 1991, the NRC published a final rule which established the part 170professional hourly rate and the materials licensing and inspection fees as well as the part 171annual fees to be assessed to recover approximately 100 percent of the FY 1991 budget. - Underthis rule, Teledyne Energy, as a Category 10.B.I. QA Program Approval Holder, was requiredto pay an annual fee of $29,000. On July 23,1992, the NRC issued a notice of a final rulewhich increases the annual required to be paid by Teledyne Energy for FY 1992 by more than100 percent, to $62,800. We respectfully submit that subjecting Teledyne Energy to theincreased fee is inconsistent with congressional intent.

A. Tcledyne Energy Should Ile Exempt From the Subject Annual Fee BecauseILIs An Unfnir and ineottilnble Allocation of NRC Costs.

Teledyne Energy should be exempt from the assessment of the 1992 annual fee and the100 percent increase because the proposed annual fee does not fairly and equitably reflect thecost of providing regulatory services to Teledyne Energy. The legislative history to theOmnibus Budget Reconciliation Act of 1990 is clear and provides, in relevant part, as follows:

The conference agreement preserves the NRC's discretion to impose annualcharges on one or more classes of non-power-reactor licensees if the Commissionbelieves it can fairly, equitably, and practicably do so.

. . . .

[T]he conferees intend that the NRC assess the annual charge under the principlethat licensees who require the greatest expenditures of the agency's resourcesshould pay the greatest annual charge. Thus, the conference agreement providesthat the NRC shall establish, by rule, a schedule of charges " fairly and equitably"allocating the total amount of charges to be recovered among its licensees, andthat ''[t]o the maximum extent practicable, the charges shall have a reasonablerelationship to the cost of providing regulatory services" to the licensees.

H. Conf. Rep. 101-964,101st Cong.,2d Sess. at 961-962, reprinted in,1990 U.S. Code Cong.& Admin. News at 2666-2667.

'The assessment of an annual fee against Teledyne Energy, particularly one in excess of100 percent of the 1991 fee, has no reasonable relationship to the cost of providing regulatoryservices to Tcledyne Energy. The services provided by the NRC are limited to an occasionalbrief discussion of generic issues. In 1991, Teledyne Energy received a total of approximately

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Mr, James M. TaylorAugust 24,1992 :!Page 4 )

4 hours of service from the NRC, Of the 4 hours, approximately 2.5 - 3 hours was devoted to - ;a meeting held with NRC officials to discuss the Certificates of Compliance transferral proposal. ;Prior to this, the last meetini; Teledyne Energy held with NRC officials was in approximately1984 to discuss the$ sign of a new RTG. Other than these two meetings, the services providedby the NRC to Teledyne Energy have been limited to an infrequent phone call to discussinterpretation of regulations and related issues. Teledyne Energy pays separately on an hourlyrate basis for all other services received from the NRC including new Certificates of Complianceand renewals of the QA Plan and existing certificates. As noted above, Teledyne Energy isunlike other licensees in Category 10.B.I. whose containers are regularly reshipped and reused,thus requiring greater attention by the NRC and, in turn, receiving greater benefit from NRCservices. The assessment of the proposed 1992 annual fee against Teledyne Energy is unfair andinequitable and contrary to congressional intent. In view of this, we request that the NRCexempt Teledyne Energy from the FY 1992 annual fee.

B. In the Alternative, Teledyne Energy Should Be Entitled to a PartialFaemption at the Level Applicable for Small Entitles.

In the alternative to a complete exemps.sn from the 1992 annual fee, Teledyne Energyshould be entitled to a partial exemption. Under principles of equity and fairness, a. partialexemption should be granted at the level applicable for small entities under scetion 171.16(c).Tcledyne Energy's average annual receipts in the RTG portion of its business (spare parts andsupport services for existing generators) are approximately $250,000 - $300,000 which wouldotherwise qualify it for the lower annual fee applicable to small entities of $1,800 if only theRTG portion of Tcledyne Energy's business were considered. Thus, in view of the uniquecircumstances presented in Teledyne Energy's case, it would not be inappropriate to grantTeledyne Energy a partial exemption from the annual fee to the amount of $1,800.

C. Teledyne Energy IIas Fully Cooperated With the NRC in Attempting toConstruct a Workable Plan Which Will Protect Public Health and Safety.

As we have discussed above, Teledyne Energy has been placed in the position ofmaintaining an approved Fabricators and Users QA Plan covering fabrication and paying anexcessive annual fee to cover products originally manufactured between 1966-1986, rarelyreshipped and no longer manufactured by Teledyne Energy. While we agree that the NRC hasthe responsibility to ensure that public health and safety is not endangered by the transportationof nuclear material, these policy considerations are simply not apparent in the case of TeledyneEnergy.;

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Mr. James M. TaylorAugust 24,1992Page 5

Teledyne Energy has proposed cancellation of its QA Plan and requested approval forthe transfer of its Certificates of Compliance to holders of Users QA Plans. The NRC,however, has claimed that the Users QA Plans are not of sufficient scope to support theCertificates of Compliance. Hence, termination of Teledyne Energy's QA Plan would have thenet result of terminating the underlying Certificates of Compliance. Tcledyne Energy'scustomers, specifically the Navy and the Air Force, rely on these Certificates of Compliance andcancellation of such is simply not a valid option for Teledyne Energy. Teledyne Energy hasbeen extremely diligent and reasonable in attempting to canstruct a workable plan which willprotect the public safety. We respectfully request that av exemption from the annual fee iswarranted in this case.

III. Conclusion

For all of the foregoing reasons, we respectfully request that Tcledyne Energy be granteda specific exemption from the FY 1992 annual fee. Teledyne Energy is unique among thelicensees in Category 10.B. l. and does not receive the same level of services or benefits as otherlicensees. Under these circumstances, it is inappropriate to assess the exorbitant annual fee of$62,800 against Teledyne Energy and require it to bear costs for services which it does notreceive.

We would appreciate the opportunity to meet with you and further discuss this matter.After you have had the opportunity to review this submission, please contact the undersigned at(202) 452-7004 (Mr. Dyson) or (202) 452-7030 (Ms, Otruba) to schedu mutually convenienttime for such a meeting. /

jRespe f IIy sub itted,

Am vEdwar E. Dyson [

feresa A. Otruba

Attorneys forTeledyne Energy Systems

cc: Mr. Peter J. Vogelberger, Jr.David R. Francis, Esquire

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DISTRIBUTION: sflRC F/C PDRDEC 19 -1989RGN I SHO-LGordon GBenningtonMMessier HMSS/SGTB.AGre11a JCookERichardson CMacDonald

SGTB:LLG71-0397

Teledyne Energy SystemsATTN: Mr. W. A. Mcdonald110 West Timonium RoadTimoniun, MD 21093

Gentlemen:

Enclosed is Quality Assurance Program Approval for Radioactive MaterialPackages No. 0397, Revision 3. ,

Please note the conditions of the approval.

Sincerely,

Original Signed byCHARLES E. F.ACDONALD

Charles E. MacDonald, ChiefTransportation BranchDivision of Safeguards

and Transportation, NMSS

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SGTB:MGB71-4888 DEC 2 41991'

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Teledyne Energy SystemsATTH:- Mr. John F. Vogt110 W. Timonium RoadTimonium, MD 21093-3163 O ,7

%g@Dear Mr. Vogt: 17,1991, ,es, suppleniented,As requested by your application dated September ~ for theenclosed is Certificate of Compliance No. 4888, Revision No.

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CEMacDonald-- GGardes~ Teledyne Energy Systems CRChappellATTN: Mr. Fred Schumann ERZiegler110 West Timonium Road MMessier HTimonium, MD 21093 3163 McBedRCA . (5)

O!VIHLH IState" Health OfficalNMSS.r/f

Dear Mr.- Schumann: '91 19

As requested by your application da.ted' November-12 1990, as supplemented-February 1,1991, enclosed is Certificate of Compliance No. 9030, Revision No._5, for the Model Hos MW.3000 and Sentinel.8 packages. This certificate-supersedes, in its entirety, Certificate.of Compliance No. 9030, Revision No.4, dated October 22, 1985.

Changes made to the enclosed certificate are indicated by vertical lines in the amargin.

Those on the attached list have been registered as users of this package 'underthe general license provisions of 10 CFR $71.12 or 49 CFR $173.471..

This-approval constitutes authority to use this ?ackage for shipment ofradioactive material and for the package to be slipped-in accordance with.the .-provisions of 49 CFR 5173.471.

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Sincerely,.

pdpant !W' Y

Transportation Branch: ChiefCharles-E. MacDonald,

-

Division.of= Safeguards- -|,;. and Transpartation,.NMSS

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4- Enclosures:'

1. Certificate of ComplianceNo. 9030. Rev. 5:

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2. Approval: Record-, ,;

- cc w/ encl: _. -: Ms.- Kris: Smith- . .-

1, _Departnent of. Transportation-.

(RegisteredUsers4: Ats#MG1GVlf

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