ML20055C466

Informs of Amend to Regulation That Requires Util Owners of Nuclear Power Plants to Have Sufficient Funds to Clean Up & Decontaminate Facilities in Event of Accident

ML20055C466
Person / Time
Issue date:	04/04/1990
From:	Murley T Office of Nuclear Reactor Regulation
To:	Breaux J, Sharp P, Udall M HOUSE OF REP., ENERGY & COMMERCE, HOUSE OF REP., INTERIOR & INSULAR AFFAIRS, SENATE, ENVIRONMENT & PUBLIC WORKS
Shared Package
ML19330E582	List: ML20055C466 ML20055H406 ML20055H433
References
FRN-54FR46624, RULE-PR-50 AD19-2-04, AD19-2-4, NUDOCS 9004180251
Download: ML20055C466 (3)

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The Honoreble John B. Creaux, Chairman Subcontaittee on Nuclear Regulation comraittee on Environment and Public Works United States Senate Washington, D.C.

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Dear Mr. Chairman:

The !!uclear Regulatory Comission is amending its regulation that requires utility owners of nuclear power plants to have sufficient funds to clean up and decentaminate their facilities in the event of an cccident.

The amendrents: (1) clarify the scope and timing of the steps necessary to bring a power reactor to and maintain it in a safe and stable condition following an accident; (2) clarify the procedures by which the I:RC determines and approves expenditures of funds necessary for decontamination and cleanup and clarify how such procedures affect an insurer's needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes; (3) change the terminology of the required insurance from " property" insurance to " decontamination liability" insurance to better forestall claims to insurance proceeds by a licensee's bondholders; and (4) rescind a requirement that required insurance be paid to an independent trustee who would disburse the proceeds for decontamination and cleanup before any other purpose.

At a later date, the Commission will consider a separate rulemaking to determine if these utilities should be required to maintain more than the

$1.06 billion in liability / contamination insurance currently required and, if so, how much.

The amendments to Part 50 of the Comission's regulations will become effective upon publication in the Federal Register.

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Office of Nuclear Recctor Regulation cc: Senator Alan K. Simpson I

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Dear Mr. Chairman:

The l'uclear Regulatory Comission is amending its regulation that requires utility owners of nuclear power plants to have sufficient funds to clean up and decontaminate their facilities in the event of an accident.

The amendments: (1) clerify the scope and timing of the steps necessary to bring a power reactor to and maintain it in a safe and stable condition following an accident; (2) citrify the procedures by which the NRC determines and approves expenditures of funds necessary for decontamination and cleanup and clarify how such procedures affect an insurer's needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes; (3) cher.ge the termir.elogy of the required insurance from

• property" insuranco to "d:: contamination liability

• insurance to better forestall claims to innrp.ce proceeds by :. licensee's bondholders; and (4) rescind a requirement thn required insurance be paid to an independent trustee who would disburse the proceeds for decontanination and cleanup before any other purpose.

At a later date, the Comission will consider a separate rulemakirg to determine if these utilities should be required to maintain more than the 11.06 billion in liability / contamination insurance currently required and, if so, how much.

The amendnents to part 50 of the Comission's regulations will become effective upon publication in the Federal Register.

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e April 4, 1990 The Honorable Philip R. Sharp Chairmt.n Subcommittee on Energy and Power Conmittee on Energy and Cornerce United States House of Representatives J

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Dear I;r. Chairman:

The Nuclear Regult. tory Comission is amending its regulation that requires utility owners of nuclear power plants to have sufficient funds to clean up and r

decontaminate their facilities in the event of an accident.

The amendments: (1) clarify the scope and timing of the steps necessary to bring a pow,!r reactor to and maintain it in a safe and stable condition following an accident; (2) clarify the procedurcs by which the NRC determines and approves expenditures of funds necessary for decontamination and cleanup and clarify how such procedures affect an insurer's needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes; (3) change the terminology of the required insurance from " property" insurance to " decontamination liability" insurance to better forestall claims to insurance proceeds by a licensee's bondholters; and (4) rescind a requirement that required insurance be paid to an independent trustee who would disburse the proceeds for decontamination and cleanup before any other purpose.

At a later date, the Commission will consider a separate rulemaking to determine if these utilities should be required to maintain more than the

$1.06 billion in liability / contamination insurance currently required and, if so, how much.

The amendments to Part 50 of the Comission's regulations will become effective upon publication in the Federal Register.

Sincerely,

&g Wyth 'v o s E. Murley, Director Office of Nuclear Reactor Regulation ec:

Representative Carlos J. Moorhead Distribution Central Files PMAS:PTSB Rdg (SUFTICIENTFUNDS)

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Robert S. Wood Senior Financial Policy Analyst Policy Development in Technical Support Branch office of Nuclear Reactor Regulation U. S. Nuclear Regulatory Commission Washington, D.

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Re:

Amendments to NRC Regulation 10 CFR 550.54(w)

Regarding " Stabilization and Decontamination Priority and Trusteeship Provisions" (55 Fed. Reg. 12163, April 2, 1990)

Dear Mr. Wood:

on April 2, 1990, the Nuclear Regulatory Commission published in the Federal Register the above-captioned final rule.

The rule responos to the June 21, 1988 Petition for Rulemaking filed by the Ed1 son Electric Institute ("EEI") and the Nuclear Utility Managenent and Resources Council ("NUMARC") (and similar petitions filed by American Nuclear Insurers /MAERP Reinsurance Association and Nuclear Mutual Limited / Nuclear Electric Insurance Limited) to modify certain insurance requirements regarding post-accident decontamination adopted by the NRC in 1987 (52 Fed. Reg. 28963 August 5, 1987).

In a letter dated January 5, 1990, EEI and NUMARC commented favorably on the proposed rule (54 Fed. Reg. 46624, November 6, 1989), which was essentially identical to the final rule.

l The purposes of this letter are to record our disagreement l

with a possible misinterpretation of the rule that may arise from a statement in the explanatory material that accompanied the l

rule, to set forth what we believe to be the correct interpretation, and to ask that you confirm that the NRC Staff understands the concern and would intend to apply the rule in a manner consistent with our interpretation.

Specifically, the explanatory statement noted that the Commission was deferring action on the question of escalating the amount of insurance

($1.06 billion) currently required by the rule pending issuance for comment of an update of the contractor study (NUREG/CR-2601) which formed the basis for the currently-required amount.

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i Robert S. Wood June 22, 1990 Page 2 Beyond explaining that the deferral would afford an l

opportunity for public comment on the update, the Commission j

noted "that most licensees already carry accident cleanup insurance in amounts that exceed the maximum amount predicted by i

the formula in (the update)", so that there was no compelling reason "to increase the required amount of insurance in advance of public comment."

(55 Fed. Reg. 12164, col.3.)

We agree that prior notice and opportunity to comment on any proposal to increase the required enount of insurance would be appropriate.

We also agree that there is no urgency to update the required amount of insurance, but for reasons different from those given by the Commission.

That is, (1) any such increase based on the update would apparently be a small fraction of the present requirement, (2) the amount required will be of greater importance in April, 1991, when the substantive provisions of the rule regarding the terms of insurance policies go into effect, and (3) an event that would invoke the operative provisions of the rule has a very low probability of occurrence in the interim.

Not do we dispute the statement about the total amount of insurance maintained by many licensees.

Rather, we are troubled by a possible inference for interpretation of the rule that might be drawn fron the l

Commission's statement regarding the amount of insarance maintained by licensees.

That interpretation would read the statement as implying that, if insurance in excess of the required amount of insurance is maintained, the entire amount is, by force of the rule, " accident cleanup insurance", 1232, insurance that would be subject to the stabilization and decontamination priorities.

While it is true that the c;rrent NML and NEIL-2 policies are worded such that there is no restriction on the amount of proceeds within policy limits available for a licensee's post-accident on-site cleanup obligation, the ANI policy allocates the required amount, $1.06 billion for on-site cleanup.

However, the ANI policy does not preclude additional amounts being so used, subject to whatever consents might be required from any other loss payees.

In our view, both approaches are consistent with the rule.

That is, it has been our interpretation of Subsections 50.54 (w) (1), (2), and (4) that only the recuired amount of insurance (that is, $1.06 billion or such lesser amount as is generally available from private sources) is required to be subject to the priority.

Subsection 50. 54 (w) (1), for example, provides that policies must state that, to the extent provided in subparagraph (w) (4), they are subject to the priorities, and goes on to state that the required coverage may be included in policies that provide coverage for other risks, such as direct physical damage.

Subparagraph (w) (4) in turn provides that (only) the required

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Robert S. Wood i

June 22, 1990 i

Page 3 insurance (in excess of the specified threshold amount) must be dedicated to the specii'ied purposes.

We request that you clarify this matter by confirming that our interpretation set forth in the preceding paragraph (123, to the effort that only $1.06 billion of whatever larger amount a licensea.'sy choose to maintain, would, by force of the rule, be subject ts 'he priority provisions), is consistent with the NRC Staff's understanding an1 intended application of the rule.

We understand that such confirmation will not constitute a written interpretation by the General Counsel, and, under 10 CFR 550.3, I

will not be binding on the Commission.

Should you desire to discuss this matter, we would be pleased i

to meet with you at your convenience, c

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DOCKElWC ' SV'CL PRANCH January 15, 1990 BCANB19004 Mr. Samuel J. Chilk, Secretary U. S. Nuclear Regulatory Commission Document Control Desk Mail Station PI-137 i

Washington, D.C.

20555 ATTN:

Docketing and Service Branch Sub.iect:

Arkansas Nuclear One - Units 1 & 2 Docket Nos. 50-313 and 50-368 License Nos. DPR-51 and NPF-6 Proposed Rule 10CFR Part 50 Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements FR, Vol. 54, No. 213 (November 6, 1989)

Dear Mr. Chilk:

Arkansas Power & Light Company (AP&L) is submitting the following comments in response to the proposed rule change regarding stabilization and-decontamination priority, trusteeship provisions, and amount of property insurance requirements for nuclear power plants.

As delineated in the proposed rule, three petitions were submitted to the NRC subsequent to the publication of the final rule in 1987.

AP&L purchases all of the ANO property insurance from ANI/MAERP and NEIL, two of the petitioners, and is a member of the Edison Electric Institute serving on the Risk Management Committee, which is the third petitioner.

Therefore, we have been monitoring each of the petitioner's activities closely.

We are in agreement with the petitioners' proposals to the final rule.

In substance, the NRC adopted the proposals but changed some of the proposed language and expande'd the scope of certain proposals "so that NRC responsibilities and concerns are more clearly presented."

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l Mr. Samuel J. Chilk Page 2 January 15, 1990 The four points of contention contained in the petitioners' proposals and AP&L comments regarding the NRC amendments are as follows:

4 Clarification of the scope and timing of the stabilization process af ter an accident at a covered reactor The NRC accepted the $100 million threshold, changed the petitioners' proposed 30-day stabilization period priority to a 60-day priority on insurance proceeds, and accepted the petitioners' examples of stabilization actions, modifying the language somewhat and adding maintenance and sub-criticality.

We are in agreement with this proposed amendment.

Clarification of procedures by which the NRC determines and approves expenditures of funds necessary for decontamination and cleanup Consistent with the petitioners' proposals, the NRC adopted language

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for post-accident cleanup plans, in order that unplanned insurance proceeds may be used for activities other than those defined as stabilization.and decontamination priority activities.

The most significant NRC modification to the language proposed by the petitioners is found in S50.54(w)(4)(ii) and (iii), "... to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor or to apply under 550.82 for authorit to decommission the reactor and to surrender the license voluntarily.y' The petitioners' proposals suggested "to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor.or to undertake measures leading to decommissioning'of the reactor, in a manner that is consistent with the Commission s occupational exposure limits in 10CFR Part 20."

We are in agreement with the currently proposed wording, A change in the terminology of the required insurance from " property" o

insurance to " decontamination liability" insurance l

In order to insulate decontamination priority insurance proceeds from L

indenture provisions and because all nuclear property insurers now are willing to offer hybrid policies, the NRC adopted the petitioners' proposals to require insurance that clearly states that any proceeds must be payable first for stabilization of the. reactor and next for decontamination of the reactor and the reactor station site.

We are in agreement with this proposed amendment.

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1 Mr. Samuel J. Chilk Page 3 January 15, 1990 Rescission of the provision that proceeds of the recuired insurance are to be paid to an independent trustee In the final rule of 1987, the NRC included the trusteeship provisions r

to assure that decontamination and cleanup expenses received priority i

over other post-accident activities.

The NRC states "... a combination of the hybrid policy, ex)1ici_t procedures for the payment of claims, t

and recent decisions in bankruptcy cases may more effectively protect decontamination and cleanup expenses from competing claims."

The NRC has reserved the right to implement the trusteeship requirements in individual cases, if warranted, and is apparently seeking legislative to receive and retain such funds itself.

The proposed rules contain no indication however, of whether the commission believes the proposed legislation would also authorize the NRC to direct insurers to pay the NRC rather than policy beneficiaries, or whether the agency thinks it already has such authority.

We are in agreement with this proposed amendment, as written.

One issue not proposed by the petitioners, but of which the NRC has taken advantage in its solicitation of comments of the proposed rules, is a solicitation of comments regarding the appropriate level and indexing of the required amount of insurance.

The NRC indicates that in the 1987 rulemaking, it had no effective means of determining future costs of accident stabilization, decontamination, and cleanup other than by periodic updates of the study from which the current $1.06 billion requirement was derived (NUREG/CR-2601).

The NRC solicitation for comments continues with suggestions that a mechanism similar to the one used in its final

' decommissioning regulations (53 FR 24018 June 27, 1988) may be appropriate for accident cleanup inflation, A significant component of the mechanism's formula would be reactor size and type.

Additionally, in its Regulatory Analysis, the NRC states "Although the effect of these formulas, if i

l developed and adopted, would increase the required amount of insurance for some licensees, there should be little impact on insurance costs to l

licensees because almost all licensees buy the maximum amount of insurance available."

l We believe that the $1.06 billion presently required is as appropriate as any calculation generated by formulas including reactor size and type.

To a

L' fully define decontamination and cleanup costs, many accident scenarios and L

consequences of those scenarios would have to be developed, costs assigned, l

and mit'igation plans produced, in addition to methods for inflation l

indexing.

Additionally, its quite probable that each reactor would require a different level of insurance, based on this assessment.

In our opinion, the present level required is appropriate and there is no need to create a mechanism for accident cleanup inflation.

The financial impact statement made in the Regulatory Analysis may presently be true, as most licensees do

Mr. Samuel J. Chilk Page 4 January 15, 1990 purchase all available capacity.

Presently AP&L does not purchase all available capacity.

If the rule were changed to require purchase of all capacity at this time, the cost to AP&L would be $846,000 per year, Additionally, this comment suggests that utilities will always purcha e all capacity offered by the insurers, which indicates the insurers would determine how much capacity is enough and directly impact utilities' budgets i

in the process.

In summary, we are in agreement with the proposed amendments, as written and feel that the present requirement of $1.06 billion is adequate.

Additionally, we do not believe there is a need for developing formulas for establishing base requirement amounts or escalation factors.

Should you have any questions or comments, I would be glad to provide whatever clarification necessary.

Very truly yours, Y==

ON'=

s ames J. Fisicaro Manager, Licensing JJF/SAB/1w cc:

Mr. Robert Martin U. S. Nuclear Regulatory Commission Region IV 611 Ryan Plaza Drive, Suite 1000 Arlington, TX 76011 NRC Senior Resident Inspector Arkansas Nuclear One - ANO-1 & 2 Number 1. Nuclear Plant Road Russellville, AR 72801 Mr. C. Craig Harbuck NRR Project Manager, Region IV/ANO-1 U. S. Nuclear Regulatory Commission NRR Mail Stop 13-D-18 One White Flint North 11555 Rockville Pike Rockville, Maryland 20852 1

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Grand Gulf Nuclear Station Unit 1 Docket No. 50-416 License No. NpF It SERI Comments on NRC Proposed Amendmentto10CFRPart50.54(w) j AECM 90/0002 1

The fo1106e r.' u > 4e are being provided by System Energy Resources, Inc.

(SERI) resar40 o,,proposedarenomentto20CFRl0.54(w)providedbythe L

November 4 Ift. '.ederal Register, for Stabilisation and Decentesination i

priority, trutheship Provis< ons, and Amount of property Insurance i

Requirements.

These comments also include SERI's consideration on the appropriate level of required insurance in view of inflation of decontamination and cleanup costs.

COMMENTSRE4ARDINGTHEPROPOSEDAMEN0MENTTO10CFR50.54(w)-

The four points of contentien contained in the pet 9tioners' preposal and SERI's comments regarding tte proposed NRC amendment are as follows:.

o c'srificatton of the nrggg.E d timina ef the stabilisation neocens a"te* an accident at a covered eggg,gI We agree with the petitioners that the stabilization process should be defined and clarifie'd in the rule. It is thought that the existing priority on insurance proceeds, and because proceeds for the decontamination but not statilization are to be paid to an independent trustee, would cause confusion 46d unnecessary delays regarding when,hould be paid.to when, and in what amounts proceeds for stabilization s Along with the petitioners, we also believe that the stabiliaation s'riority should not be invoked untti the estimated cost of stabilt stion and decontamination exceeds a threshold of $100 million and this priority should only last for 30 1

days unless extended by the NRC.

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AECM-90/0004 Page t In the propped rule, the $100 eillion threshold was accepted; the proposed 30-dsy stabilisation perixl priority was estended to a 60-day priority on. insurance proceeds; and tie titleners' esemples of stabilisation action were modified somewhat adding maintenance of sub-triticality.

4 The modifications are appropriate and we are in agreement with this proposed amendment, o

Clattffcation af neocedures by which the NRC datormines and aanroves ennendituresoffundsnect,ugtry,Igt,jecontaminat'enandcleanue Consistent with the petitioners' proposal, language was adopted for post accident cleanup plans, in order that the unplanned insurance proceeds may be used for activities other than those defined as stabilization and decontamination priority activities.

Early access to these funds would help licensus to better cope with any adverse F

financial affects of the accident and would reduce the lik,elihood that a licensee's financial hardship would have an adverse impact er the protection of the public.

We are in agree.ent with this,,0,osed amendmoni.

e A channe in the terminole f tho requiroti insuranen from "cronerty" insurance toj Jgn.jg,,nati_on

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In order to insulate the decontamination priority insurance proceeds from indenture provisions and because 411 nuclear property insurers are now willing to offer hybrid policies, the proposal was adopted i

to require insurance that clearly states that any proceeds must be payable first for stabilitatfor of the reactor and next for 4

decontamination of the reactor and the reactor station site.

i We are in agreement with this proposed amendment.

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Rescission of the erovision that scoceeds of the reeu_tred insurance i

to be_ _Da' e to an f edeceree_nt__trustig i

W_ e agree with the petitioners that the trustee provision is unworkable, unnecessary and counterproductive. The requirement of a trustee added further burden to an already complex process.

Although the Commission retained the authority to impose such requirements in individual cases if warranted, the NRC proposal to I

oliminete, at least temporarily,,the trustee requirement is appropriate.

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Co m ENTS REGARDING THE APPROPRIATE LtVEL OF REQUIRED IN$URAN In additten to comments regarding the proposed amendment, the NRC also requested comments regarding the appropriate level of indexing of the required amount of insurante.

The NRC indicates that in the 1987 i

rulemaking, it had no effective means of determining future cost of accident stabilization, decontamination and cleanup other than ht pertedic updates of the pacific Northwe,t Laboratory study from wsich the s

current $1.06 billion requirement was derived.

The NRC solicitation for comments continues with suggestions that a mechantom similar to the one i

used in its final decommiss'oning reaulations may be appropriate for t

accident cleanup inflation.

formula would be reactor site and tyse.. A s' ent"tcant component of the mechanism's i

Addittonelly in its Resulnery Anai sis, the NRC states "Altiough the effect of the, formula if deve oped and adopted, wo,uld increase the required amount of Insurance cost to licensees, there should be little impact on insurance cost to i

licensees because almost all Itcensees buy the maximum amount of insurance available.' We believe that the 31.06 billion presently required is as appropriate as any calculation generated

formulas, t

including reactor size and type.

The adequacy of the St. 6 billion would have to be studied by running many accident scenarios and consequences of these would have to be developed,for inflat'on indening produced in addition to methods cost assigned and mitigation plans probable,that each reactor would require a different level of insurance, It is quite based on this assessment.

Additione'4, the question of whether the indeutng method should be sintier to tM method used in the decomissioning rule (10CFR50.75(c)(2 appears arbitrary as decommisstoning costs and accident cle)a)rup costs are not strictly equivalent.

The financial impact statement made in the Regulatory Analysis may presently be true, as most lictnsees de purchase all available capacity.

However availableinthefuture.for various reasons compantes may not carry all that is This commert suggests that utt11 ties will

.always purchase all capacity offored by the insurers, which indicated the insurers would determine how mLch capacity is adequate. This would force utilities into taking the nximum coverage offered and would no longer allow them to make the decision as to whether increases in limits were L

economical, reasonable, etc.

Jn summary, our comments are that we are in agreement with the proposed amendments as written, and believe that the present requirement of $1.06 billion is appropriate and there is no need to create a mechanism for estabitshing base requirement amounts or escalation factors.

SER!appreciatestheopportunitytocommentontheproposed10CFR50.54(w amendment and requests NRC consideretten of these comments in the final )

rulemaking.

Yours truly, JGCines cci (SeeNextPage)

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8"A"C" Mr. Samuel J. Chilk Secretary of the Connission U. S. Nuclear Regulatory Commission

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20555 Attention: Docketing and Service Branch

Subject:

Virgil C. Summer Nuclear Station Docket No. 50/395 Operating License No. NPF-12 Coments on the Proposed Rule for Steb1112ation and Decontamination J

Dear Mr. Chilk:

l SouthCarolinaElectricandGasCompany(SCE&G)hasreviewedtheproposed rule, " Stabilization and Decontamination Priority. Trusteeship Provisions, promulgated in the Federal Register (54 FR 46624) of November 6).1989.

and Amount of Property Insurance Requirements " to 10CFR50.54(w which was SCE&G supports the rule change and endorses the coments provided by the Edison i

Electric Institute on this issue.

Very truly yours, J

0. S. Bradham ARR/OSB:dgw l

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D. A. Nauman/0. W. Dixon, Jr./T. C. Nichols, Jr.

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0CKLlygtkvlCE January 8, 1990 Secretary U.S. Nuclear Regulatory Commission Washington, D.C.

20555 Attention:

Docketing and Service Branch Re Proposed Rules Stabilization and Decontamination Priority, Trusteeship i

Provisions, and Amount of Property Insurance Requirements

?

Dear Sir:

The Committee on Nuclear Technology and Law of the Associa-tion of the Bar of the City of New York (the " Committee") submits these comments in response to the Nuclear Regulatory Commission's (the " Commission") notice of proposed rulemaking to amend the provisions of its property insurance regulations applicable to commercial power reactor licensees (54 Fed. Reg. 46624; November 6, 1989).

The Committee is one of the standing committees of the Asso-l ciation, a voluntary bar associction with more than 18,000 mem-bers.

In 1949, the Executive Committee of the Association l

adopted a resolution establishing a Committee on Atomic Energy, j

the predecessor to the Committee.

That resolution established a mandate for the Committee to report on all matters relating to atomic energy.

Since its inception the Committee has actively participated in the consideration, development and interpretation of much of the proposed legislation and regulation in the field of atomic energy.

The Committee has been an active participant in the Commission's development of commercial reactor property insurance requirements, providing comments dated September 22, 1982, February 5, 1985, and June 30, 1988, in connection with Commis-sion rulemaking initiatives.

The Committee's most recent com-ments expressed concern-that the rule did not adequately deal with the potential claims on insurance proceeds by an indenture

+

trustee, and that placing exclusive reliance on a special trust to avoid creditor claims in the event of a bankrupt licensee I

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Secretary U.S. Nucle:.u.' Regulatory Commission January 8, 1990 Page Twa might be unnecessarily restrictive and foreclose viable alternatives.

The Committee believes that these concerns have now been adequately addressed in the notice of proposed rulemaking and accordingly endorses the Commission's proposed amendments to 10 t

CFR S 50.54.

The Committee is confident that the Commission's efforts will provide adaquate assurance that sufficient funds will be available to stabilize and decontaminate a damaged reac-tor in the event of a serious accident.

The Committee is pleased to have had the opportunity to participate in this rulemaking

process, ya y truly

ours, Hf.

E Silberg ir 1

sA10Bjem995rl.90

OhN*1 10 CFR 50 VraGINLA Et.scTalC AND Powsa COMPANY 4

RICHMOND, VIRGINIA 23261 rou,Lito DOCKET NUMBER Bt1.k1 PROPOSED Rul.E U' ID

( py fR M O.y) 110 Jill 10 P3 $0 Secretary

[o'carnuc#eri hip. 89 799 gg United Statec Nuclear Regulatory Commission y.

Attention: Docketing and Service Branch BRANC61 Washington, D. C. 20555 Gentlemen:-

VIRGINIA ELECTRIC AND POWER COMPANY COMMENTS CONCERNING PROPOSED RULE 10 CFR 50 Virginia Electric and Power Company has reviewed the proposed rule under 10 CFR 50, Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property insurance Requirements, which was published in the Federal Register Notice dated Novembwi 6,1989. In Section VI, Regulatory Analysis, the NRC y

states that "Although the effect of these formulas, if developed and adopted, would be impact on insurance costs to licensees because almost alllicens to increase the required amount of insurance for some licensees, there should be little 4

amount of insurance available." This may have been true in the past, however we do not agree with this assessment. In fact, we did not automatically purchase the maximum amount of insurance available this year following an increase in available coverage.

ohv in addition, the amount of insurance required of licensees should not be subjected to automatic indexing. Since there is no way to predict the limits of insurance coverage capacity that will be available in the nuclear property insurance marketplace, it would not be prudent to dictate in advance the amount of insurance to be carried by licensees in future years. Dolng so could create a situation in which the market for and pricing of nuclear property insurance would be artificially driven by governmental regulations. Rather, we recommend that the amount should be reviewed at five year 1

intervals to ensure that an appropriate amount of insurance is required for licensee coverage.

in the event that indexing is imposed, we would recommend use of the indexing method used in the Price Anderson Act. Thus, the escalating liability of owners of nuclear plants would be determined based on the aggregate change in the Consumer Price Index (CPI). This method offers consistency and simplicity despite the NRC's belief that the CPIis too general.

i Very truly yours, 6 ff ~

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W. L. Stewart l

Senior Vice President - Nuclear 9

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Mr. Samuel Chilk [,. $ t/ ff y f Ql/) 10 JW -9 Pl2:16

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Secretary Orrter or $gtprtApy U.S. Nuclear Regulatory Commission 00CMfilNG & $(RVICL 11555 Rockville Pike BRANCH Rockville, MD 20852

Subject:

Comments to Proposed Rule on Stabilisation and Decontamination Priority Trusteeship Provisions, and Amount of Property Insurance Requirements (Federal Register Vol. 54, No. 213, dated 11/6/89)

Dear Mr. Chilk:

I This letter provides Comenonwealth Edison Company's (Ceco's) cosunents on the proposed revision to 10 CFR 50.54(w), on the requirements for insurance for stabilisation and decontamination of a nuclear power plant in the event of a radiological accident, as published in the Federal Register on November 6, 1989 (46624).

In general, Ceco supports the proposed revisions beca"=? they eliminate previous concerns regarding the treatment of insurance proceeds.

However Ceco has the following specific comments.

Etabilisation Priority Threshold Pursuant to 10 CFR 50.54(w)(4)(1) as proposed, insurance proceeds would be

!k required to be dedicated to stabilization and decontamination if the estimated A

costs were to exceed $100 million. Clarification to the rule is needed to 7

specify whether the NRC nr the licensee will provide the estimate. CECO believes that the licensee should make the cost estimate since the licensee W

has the detailed knowledge of the facility and the impact that the accident may have had on it.

CECO also believes that this estimate should be binding on the N_R,C.

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j 60-Day Priority Period Pursuant to 10 CFR 50.54(w)(4)(1) as proposed, for accidents where stabilization and decontamination cost estimates exceed $100 million, the stabilization priority on insurance proceeds will apply initially for 60-days l

and may be extended in 60-day increments by the Director of Nuclear Reactor Regulation (Director). The proposed rule does not provide any criteria to guide the Director's determination, nor does it provide for any dispute resolution should the licensee disagree with the Director. Criteria and provis bus for dispute resolution should be provided in the rule.

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Pursuant to 10 CFR 50.54 (w)(4)(1) as proposed, for accidents where stabilisation and decontamination cost estimates exceed $100 million, a licensee is required to submit a cleanup plan to the Director no later than 30 days after the reactor has been stabilised. The licensee will be required to submit cost estimates for each activity included in the cleanup plan. The Director will be authorised to either approve or disapprove each activity.

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k The proposed rule does not provide any criteria to guide the Director's g

detemination for the approval of activities, nor dos it provide for any dispute resolution should the licensee disagree with the Director.

Such

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criteria and dispute resolution are important because troy will be critical to \\

the amount of excess insurance proceeds which will be available to the licensee for other activities after the acc';ent. Criteria and provisions for dispute resolution should be provided in the rule.

4 Hand for a Trustee The NRC has proposed to retain the authority to appoint a Trustee to receive insurance funds if the situation warrants. No criteria has been provided to indicate how the NRC will exercise such discretion. Criteria

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should be added to the rule if the NRC intends to retain this authority. Ceco would prefer that the NRC eschew any intention of appointing a Trustee. Ceco i

believes that a Trustee would not be necessary to accomplish the NRC's intent.

The NRC has also stated its intent to reconsider whether to reinstate a trusteeship requirement. Ceco believes that such a reconsideration is unwarranted in that the circumstances that have previously led to its

,y unworkability have act changed and that the current proposals adequately

,g implement the NRO Y intent. No further effort should be given on L/" N.

reconsidering a mandatory trusteeship provision.

The NRC has also stated its intent to seek authority essentially to act as l

Trustee.

Such an extension of NRC authority is unnecessary. The same considerations which showed that a private Trustee would not be needed, apply to the NRC as a governmental Trustee as well.

In practice, the extension of l

l the NRC's authority to act as Trustee would place it in charge of any l

l stabilisation and decontamination efforts, which effectively may impede the licensee's ability to act judiciously. CECn urges the hRC not to pursue such authority.

l Insurance Formula The NRC has requested licensee's views on whether it should adopt a case-by-case fomula for estimating the amount of cleanup insurance which each licensee would be required to carry. Such a formula would contain an automatic escalation factor.

Even though no specific formula was proposed, the NRC already knows that such a formula would increase insurance requirements for some licensees.

Ceco believes that the current '.ixed amount i

for cleanup insurance provides more than adequate coverage for ely credible accident, and that the amount will remain adequate for the foreseeable future I

if the current low rate of inflation continues. Only if economic circumstances change significantly would the adequacy of the amount of insurance be questioned.

If this occurs, it would be appropriate for the NRC to address the concerns at that time.

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CBCo also recognises that in its unique situation, as the owner of four.

different types of plant, it could benefit from cost savings depending on the insurance' formula adopted.- CBCo believes however that much of the savings 7

would be spent in the administrative costs of applying those formulas.- In s.

conclusion, Ceco believes that a case-by-case formula for determining the -

J amount of insurance necessary for cleanup costs is not needed to ensure-l adequate funds, nor as an economic factor for licensees.

Cosanonwealth Edison appreciates this opportunity to comment.

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Re:

Amendments to NRC Regulation RTgaralng l-

" Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property l

Insurance Requirements", 10 CFR $50.54(w),

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54 Fed. Rea. 46624 (November 6.

1989)

Dear Mr. Chilk:

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l On November 6, 1989,.the Nuclear Regulatory Commission published je t'-

raderal Register the above-captioned notice of

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proposed rto

.The proposed rule responds to the June 21, a.

1988 Petition n r Rulemaking filed by the Edison Electric 1

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Institute EEI ) and the Nuclear Utility Management and j

Resources -.auncil ("' ' MARC" ) (and similar petitions filed by j

American 1l

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Nuclear Mtt s,.Juclear Electric Insurance Limited) to I

modify cert

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' insurance requirements adopted by the NRC t

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in 1987'(.

N, W~

8963, August 5, 1987).'

The proposed rule l

l would'(1) e4is r.. 's

.4e requirement that post-accident insurance L

proceeds be ; ?1 u a special trustee, (2) require, instead of~

oronerty insurance,." decontamination liability" coverage, which may be: combined in the same policy with property coverage, to i

cover the licsnsee's obligation to decontaminate the reactor and L

reactor site following an accident, i

duration of the stabilization process (3) clarify the scope and L

immediately following an i

L, accident, (4) provide that the stabilization and decontamination L

priorities attach only above a $100 million threshold, and (5) clarify the NRC approval process and other mechanics of releasing i

for.other purposes funds not needed for stabilization and cleanup.

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'1 OISHOP. COOK, PURCELL & REYNOLDS 4

. Samuel J. Chilk

-January 5, 1990 Page 2 i

The proposed rule incorporates the changes that we requested, with some variation in wording and minor changes in content.

Because the changes proposed would better accomplish the purposes L

benind the rule than the current rule (as explained in our

. petition for rulemaking), we sLpport the adoption of the proposed rule as a find rule.

Wo.wish 1.o nede, however, our disagreement (for the reasons stated in owd petition) with the notion reflected in the statement of considerations that reinstatement of the trustee reqwirem9nt-may still be warranted at some future date..The decision cited as a partial basis for this lingering attachment to the independent trustee concept involved (as the commission acknowledges) neither insurance proceeds nor a substantial risk to public health and safety.

There was simply not enough money to do the job.

Although the Court of Appeals upheld the district court on the issue of abandonment, it reversed the district court's conclusion that the availability of funds was irrelevant, and that'the only issue was the immediacy and certainty of the threat to public health and safety.

The court stated that, had there been unencumbered assets, environmental cleanup costs would have been treated as administrative expenses and given-priority I

over unsecured claims.

It is obvious that the interposition of

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an independent trustee would in no way improve-such a situation

-- a trustee without trust funds is still powerless to accomplish E

anything.- When insurance proceeds are not subject to secured claims and are payable if, and only if onsite cleanup work that the licensee is obligated to perform is done (as would be the case with insurance that is subject to the priority provisions of-l the proposed rule), there will be unencumbered assets and'a

.l trustee is not needed.

Commissioners Carr.and Rogers and the NRC Staff requested-comments on whether it would now be appropriate to provide some form of indexing of the amount of insurance required, perhaps along the lines of the indexing of the certification amount under the decommissioning rule, 10 CFR $50.75(c) (2).

EEI and NUMARC have considered the question posed, and recommend that the Commission not index decontamination costs for inflation, but l

rather revisit the' question of the amount of insurance required at three-to five-year intervals, taking into account then-current cost estimates based on then-current technologies.

There is still insufficient experience with post-accident decontamination to make an intelligent selection of indices to u

use and the proportions in which they should apply to the base amount.

Moreover we have been unable to identify any workable L

i if In Re Smith Doualass. Inc. 856 F.2d 12 (4th Cir. 1988).

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g; DisHOP, COOK, PURCELL & REYNOLDS Samuel J. Chilk o;~~

Januhry 5, 1990 3

page 3 alternative that would account for improvements.in technology --

s such as applications of robotics -- that may result in real cost savings that may offset the effects of inflation for the major decontamination events that drive the amount of insurance i

required by the rule.

We appreciate this opportunity to submit our views.

cerely, s

Josiph B. Knotts, 2.

sel for EEI i

and NUMARC t

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P.o. Box 6390e e PHOENIX. ARIZONA 95072 3999

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WILLIAM F. CONWAY sucutivt vicr earsen 161-02748-WFC M R/RAB

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January 5,1W(

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DOCQ7tp -

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OAN 0 51990(

Docket Nos. STN 50 528/529/530 Sta g

8 Secretary to

-U. S. Nuclear Regulatory Commission g

Washington, D. C.

'20555

' Attn: Docketing and Service Branch 5

Reference:

Proposed Rule, 10 CFR Part 50; 54 Federal Register 46624 l'

Dear Sir:

l' Subj ect:, Palo Verde Nuclear Generating Station (PVNCS)

Units 1, 2~, and 3 Comments on Proposed Rulemaking File:

90 056-026 On November 6,1989, the' Nuclear Regulatory Commission (hereinafter referred to as the "NRC" or the " Commission") published the above Notice of Proposed Rulemaking (hereinafter referred to as the " Notice") in response to petitions, L

for rulemaking filed to modify certain property insurance requirements. adopted-in 1987'(52 Fed., Reg.-28963, August 5, 1987).

.The Arizona Public - Service Company. (hereinaf ter referred to as "APS"), as 1

', operating agent for the' Arizona; Nuclear Power Project; ; joined with - the Edison

,j Electric Institute. (hereinafter referred to as "EEI"), the Nuclear ? Utility Management and Resources Council (hereinafter referred to as "NUMARC"), and certain other. power reactor licensees in one of the' petitions for rulemaking filed - in ' this matter.

Additionally, APS holds NRC power reactor operating

+

licenses for three nuclear plants-(PVNCS Units 1, 2, and 3), and is: subject to the-requirements of the-Property Insurance Rule,10 CFR 50.54(w). Accordingly, APS has an interest in the above proposed. rule.

APS supports the Commission's efforts in responding to the petitions for rulemaking, and revising 10 CFR 50.54(w). The proposed rule would:

(1)

Rescind the existing requirement that post accident i

insurance proceeds be paid to and disbursed by a special trustee;

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161-02748-WFC/ACR/RAB i

. Secretary January 5, 1990 U. S. Nuclear Regulatory Commission Page 2 (2)

Require, instead of property insurance, " decontamination liability" coverage, to cover the licensee's obligation to decontaminate the reactor and reactor site following an accident; (3)'

Provide that the stabilization and decontamination priorities attach only above a $100 million threshold; and (4)

Clarify the NRC approval process and other mechanics of releasing for other purposes funds not needed for stabilization and cleanup.

Although containing some variation in wording and minor changes in content than the changes proposed in the petitions, the proposed rule would better accomplish the purpose _ of the rule than the current rule.

Therefore, APS supports the I

adoption of the proposed rule as a final rule.

' APS continues to disagree, for the reasons stated in the petition for rulemaking, with NRC's statement in the Notice that reinstatement of the trustee requirement may still be warranted at some future date. In Re Smith Dourlass. Inc., 856 F.2d 12 (4th Cir.1988), cited as a partial basis for NRC's lingering interest in the independent trustee concept, involved neither insurance proceeds nor a substantial risk to public health and safety.

The money to do the job. simply was not available. The Court of Appeals stated that, had there been unencumbered assets,. environmental cleanup costs would have been treated as administrative expenses and given priority over unsecured claims.. An' independent trustee.would not have improved the situation.

Additionally, an independent trustee is not needed under the proposed rule.

Under this rule, there will be unencumbered assets to do the job because - the proceeds are not subject to secured claims and are payable only for onsite

- cleanup work that the licensee is obligated to perform.

1 In the Notice, Commissioners Carr and Rogers requested comments on establishing a methodology for estimating future accident cleanup costs. NRC Staff suggested adopting. a method similar to the methodology used in the decommissioning inflation. formula under 10 CFR 50.75(c)(2).

Having considered the suggested methodology, APS recommends that the Commission not adopt any method at this time. Fortunately, insufficient experience with post accident decontamination exists to intelligently select a method for estimating future accident cleanup costs.

Additionally, advances in technology and resulting changes to cleanup procedures make such estimates difficult. Rather than indexing decontamination costs for inflation, APS agrees with the comments of EEI and NUMARC, and recommends that the NRC review the issue of the amount of coverage required at three.to five year intervals.

l

1

.161-02748-WFC/RACR/RAB January 5,-1990

. secretary-1 1

.U. S. Nuclear Regulatory Commission

~Page=3 1

Thank you for.the opportunity to comment on the proposed rule... Should you wish~

further information, please contact N. L. Cocanour, Manager.. Risk Management Administration, at-(602) 250 2720.

- Sincerely-i

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WFC/ACR/RAB/jle a

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