Allied-Signal, Inc. v. U.S. Nuclear Regulatory Com'n
| Decision Date | 16 March 1993 |
| Docket Number | INC,91-1435,92-1019,Nos. 91-1407,ALLIED-SIGNA,92-1001,s. 91-1407 |
| Citation | 988 F.2d 146 |
| Parties | Nuclear Reg. Rep. P 20,561, 300 U.S.App.D.C. 198 , Petitioner, v. U.S. NUCLEAR REGULATORY COMMISSION and the United States of America, Respondents, COMBUSTION ENGINEERING, INC., Petitioner, v. U.S. NUCLEAR REGULATORY COMMISSION and the UNITED STATES of America, Respondents, COMBUSTION ENGINEERING, INC., Petitioner, v. U.S. NUCLEAR REGULATORY COMMISSION and the United States of America, Respondents,, Petitioner, v. U.S. NUCLEAR REGULATORY COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of An Order of the U.S. Nuclear Regulatory Commission.
John Hoff, with whom Leonard A. Miller, Washington, DC, was on the brief, for petitioner Allied Signal, Inc. in Nos. 91-1407 and 92-1019.
Harold F. Reis, with whom Michael F. Healy, Washington, DC, was on the brief, for petitioner Combustion Engineering, Inc. in Nos. 91-1435 and 92-1001.
L. Michael Rafky, with whom William C. Parler, General Counsel, John F. Cordes, Sr., Sol., and E. Leo Slaggie, Deputy Sol., U.S. Nuclear Regulatory Com'n, Rockville, MD, and Katherine Adams, Atty., Dept. of Justice, Washington, DC, were on the brief, for respondents.
Before: SILBERMAN, WILLIAMS and D.H. GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.
Congress has directed the Nuclear Regulatory Commission to recover 100% of its costs from those who receive its regulatory "services" and to allocate the costs "fairly and equitably" among those recipients. Petitioners Allied Signal and Combustion Engineering challenge an NRC rule making that allocation; they also attack the NRC's denial of various requested exemptions from the fees. They allege that the Commission's actions did not satisfy Congress's "fair[ ] and equitabl[e]" standard and also were arbitrary and capricious. We agree in part and remand the case to the Commission.
Under authority granted in the Independent Offices Appropriation Act of 1952 ("IOAA"), 31 U.S.C. § 9701, the Commission has long charged fees to any person who received a "service or thing of value" from the Commission. (That term includes, perhaps oxymoronically, "regulatory services" such as permit processing.) In 1986, Congress expanded the NRC's recovery authority in the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), Pub.L. No. 99-272, 100 Stat. 82, 147, and authorized it to recover 33% of its total annual budget through fees. Because IOAA fees could not generate that sum, Congress allowed the NRC to assess fees not only for the service-specific costs covered by IOAA but also for the Commission's generic costs of operation (e.g., costs associated with rulemaking proceedings or safety research). Later acts raised the budget recovery level to 45% for the years 1988 through 1990. 1 In carrying out the 33% and 45% recovery mandates, the Commission imposed fees for generic costs only on licensees who operated nuclear power reactors, reasoning that they absorbed the most regulatory resources. See Florida Power and Light Co. v. United States, 846 F.2d 765 (D.C.Cir.1988).
In the 1990 Omnibus Reconciliation Act ("1990 OBRA"), Pub.L. No. 101-508, 104 Stat. 1388-299, Congress raised the recovery mandate for 1991-95 to 100% of the Commission's budget, see Pub.L. No. 101-508, § 6101 (codified at 42 U.S.C. § 2214), and told the Commission to promulgate a rule apportioning the generic fees "fairly and equitably" among licensees. Id. at § 6101(c)(3) (codified at 42 U.S.C. § 2214(c)(3)). The legislation further said that "[t]o the maximum extent practicable, the charges [assessed by the rule] shall have a reasonable relationship to the cost of providing regulatory services and may be based on the allocation of the Commission's resources among licensees or classes of licensees." Id. After notice and comment, the Commission issued a rule purporting to carry out these directions. In doing so, it imposed fees on virtually all licensees. See Revision of Fee Schedules; 100% Fee Recovery (the "Final Rule"), 56 Fed.Reg. 31,472 (July 10, 1991) (codified at 10 CFR §§ 52, 71, 170, and 171).
Allied, a uranium hexafluoride (UF sub6 ) converter, first complains about the Commission's failure to consider the inability of UF sub6 converters to "pass through" OBRA fees to customers--i.e., to recoup them in whole or in part by raising prices. Allied asserts that the Commission's treatment of the issue was inconsistent with OBRA and also with the NRC's treatment of other licensees' passthrough capability.
Allied's claim rests on simple facts. It explains that domestic UF sub6 converters compete with foreign UF sub6 converters who are not subject to NRC licensing and thus are not required to pay NRC fees. Competition, it says, is stiff; success in bidding on UF sub6 conversion contracts often turns on differentials as small as one cent per pound. Fees imposed under the Final Rule, however, add up to almost five cents per pound of UF sub6 . Because adding the fee to their prices will drive customers to foreign converters, domestic UF sub6 converters cannot pass the costs forward. Allied draws a sharp contrast between UF sub6 converters and other NRC licensees such as electric utilities, which it says are readily able to pass the costs on to customers. The Commission disputes none of these assertions.
Allied's statutory theory rests both on the 1990 OBRA and on the legislative history of 1986 COBRA--the latter being explicitly linked to the 1990 OBRA via its legislative history. Section 6101(c)(3) of the 1990 OBRA (codified at 42 U.S.C. § 2214(c)(3)), provides that
[t]he Commission shall establish, by rule, a schedule of charges fairly and equitably allocating the aggregate amount of charges ... [necessary to recoup 100% of the Commission's budget].
(Emphasis added.) The Conference Report to the 1990 OBRA states that the Commission has "the discretion ... to assess annual charges against all of its licensees." H.R. Conf. Rep. No. 964, 101st Cong., 2d Sess. (1990), at 961, U.S.Code Cong. & Admin.News 1990 at 2017, 2666. At the same time, however, the Report expressly "reaffirm[s] the statement of the [floor] managers [of 1986 COBRA] on the present authority" of the NRC to assess fees. Id. That statement in turn declared that it was the "intention of the conferees that, because certain Commission licensees, such as universities, hospitals, research and medical institutions, and uranium producers have limited ability to pass through the costs of these charges to the ultimate consumer, the Commission should take this factor into account in determining whether to modify [its] current fee schedule for such licensees." 132 Cong. Rec. H3797/3 (March 6, 1986) (emphases added).
The statutory language and legislative history do not, in our view, add up to an inexorable mandate to protect classes of licensees with limited ability to pass fees forward. Even the 1986 legislative history, written in the context of COBRA's less-demanding 33% recovery mandate, only directed the Commission to "take ... account" of passthrough considerations, which would not necessarily entail that those considerations control. Moreover, the 1990 Conference Report explicitly said that Congress preserved NRC's discretion to impose fees on "one or more classes of non-power-reactor licensees if the Commission believes it can fairly, equitably, and practicably do so." H.R. Conf. Rep. No. 964, 101st Cong., 2d Sess. (1990), at 961, U.S.Code Cong. & Admin.News 1990 at 2666. Even if we were to give the legislative history great weight, we could not conclude that Congress has "directly spoken" to whether the Commission must spare licensees that cannot pass the fees forward. See Chevron v. Natural Resources Defense Council, 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). The question therefore is whether the Commission's interpretation is reasonable. See Id. at 845, 104 S.Ct. at 2783; Chemical Manufacturers Ass'n v. EPA, 919 F.2d 158, 162-63 (D.C.Cir.1990).
The Commission offered two justifications for its decision to disregard the passthrough concerns of UF sub6 converters. First, it argued that it could not adjust fees based on competitive impact because the 100% recovery mandate of 1990 OBRA would require any abatement of fees for one class of licensees to be recouped from others. See Final Rule, 56 Fed.Reg. at 31,476; Letter of NRC Denying Allied Exemption Request at 3-4. However, while one could argue that it is unfair to charge any regulatee more than its pro rata share of generic costs (and not unfair to excuse some regulatees from paying all of their pro rata share when less than 100 percent must be recovered), that potential explanation does not carry the day here. The Commission's willingness to make an exemption for nonprofit educational institutions belies the assertion that it will not charge any regulatee more than its pro rata share.
Nonetheless, the Commission also pointed to an entirely legitimate concern--the difficulty of assessing the ability of its 9000 licensees to pass through costs. See NRC Denial of Allied Exemption Request at 4. A firm's ability to pass through a burden to its customers depends on the price elasticities of supply and demand. "Inelastic suppliers and demanders pay taxes." Donald N. McCloskey, The Applied Theory of Price 324 (1982). (While the fees are technically not taxes, the same principle applies to costs generally.) Because these elasticities are typically hard to discover with much confidence, the Commission's refusal to read the statute as a rigid mandate to do so is not only understandable but reasonable.
It does not follow, however, that the Commission's application of the statute was in every respect reasonable. If capacity to pass the fees through can be...
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