ML20247B866
| ML20247B866 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 09/08/1989 |
| From: | Staffieri V LONG ISLAND LIGHTING CO. |
| To: | Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML20247B815 | List: |
| References | |
| NUDOCS 8909130169 | |
| Download: ML20247B866 (11) | |
Text
{{#Wiki_filter:{ y ,j K m y f 3 m; n s?[fh. nN /! ,g 't- [l' k. _ l ; > ,, Mc, UNITED STATES OF AMERIC'A. [,, ' NUCLEAR REGULATORY COMMISSION p h+, [ ~Be'fbre 'the Directs. Office of Nuclear Reactor Regulation. -) -) - In the Matter of ) ) - LONG ISL; JD LIGHTING COMPANY ) ) Docket No. 50-322 . Shoreham Nuclear Power Station, ) ( Lif
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) ) ) Long Island Lighting Company's Renewed Request for an. . Exemption from the Requirements of 10 C.F.R. S 50.54(w) ~ L Introduction Long Island Lighting Company..(LILCO or the Company) hereby renews its re-quest for an exemption from the onsite property damage insurance requirements of 10 C.F.R. S 50.54(w). - The ontire basis for maintaining the regulation's specified minimum level ($ 1.06 billion)'of property insurance, LL, to ensure the decontamination of a nu-clear facility: af ter - a: nuclear-related accident, does not presently exist for the Shoreham Nuclear Power Station. The facility is now completely defueled, and the fuel has been placed in the spent fuel pool. The decay heat from the removed fuel is suffi-ciently low that passive cooling in the fuel pool is adequate to preserve fuel cladding integrity. In-short, the risk of an accident which would require extensive decontamination does not now exist. Given these conditions, an exemption from the property insurance requirements is appropriate under 10 C.F.R. S 50.12. Indeed, the NRC has in the past granted similar exemptions to other utilities in analogous circumstances. LILCO therefore respectfully ~ 'spo9130169 890908 PDR ADOCK 05000322 4. PDC q' g.
1' 4 p requests that the NRC grant LILCO an exemption from the requirements of S 50.54(w) l. and permit the Company to carry $ 337 million in property insurance coverage, until such time as the NRC should approve the transfer of Shoreham to the Long Island Power Authority (LIPA) or some other en'ity of New York State. II. Background On May 22,1989. LILCO applied to the NRC for an exemption from the insur-ance requirements of S 50.54(w).W Citing the fact that the Company had agreed not to operate Shoreham under a Settlement Agreement between itself and the State of New York, the Company contended that the imposition of the full coverage requirement of $ 1.06 billion On Shoreham was not necessary to meet the underlying purpose of the reg-ulation and that compliance with the regulation would place an undue economic burden on the Company. As an alternative to the full coverage, at that time LILCO proposed to carry $ 337 million in property insurance coverage for Shoreham.W On July 7,1989, the NRC Staff denied LILCO's exemption request. In rejecting the request, the Staff stated that "LILCO's current non-operating restriction [is] self-imposed and for the convenience of LILCO" and that "LILCO f ailed to demonstrate that 1/ Letter from John D. Leonard, Jr., LILCO Vice President-Nuclear Operations, to Nuclear Regulatory Commission (May 22,1989) (SN RC-1596). F Previously, the NRC Staff, in a Safety Evaluation Report dated May 31, 1988 ("SE R"), had granted LILCO an exemption from the insurance requirements of 5 50.54(w), authorizing a lower insurance requirement for Shoreham of $ 337 million. The exemption was based on the fact that operation of Shoreham was then restricted to 5% of rated power and that the 5% restriction resulted in reduced risk and consequences of an accident. In the SER, the Staff found that the $ 1.06 billion insur-ance requirement "results in costs significantly in excess of those contemplated when 10 CFR 50.54(w) was adopted based on SNPS current operational limits and plant spe-cific safety enhancements." SER at 9. The Staff went on to find that "the 337 million dollars... on-site property damage insurance coverage [is] adequate to provide finan-cial security to support stabilizing cleanup or decontaminating activities following a postulated accident" occurring at 5% power. Id.
c . the granting of suah an exemption would not adversely affect either the public's health or safety in light of its possession of a f ull power operating license."El Two events have occurred since LILCO submitted its May 22 exemption request that make renewal of the request appropriate. First, on June 28,1989, LILCO's share-holders voted to approve the Settlement Agreement between the Company and New York State. Accordingly, the Settlement Agreement has now become ef fective and le-gally binding. Under the Settlement Agreement, LILCO is prohibited from operating Shoreham pursuant to any authorization that has been or may be granted by the NRC.W Under the Settlement Agreement, LILCO will apply to the NRC for permission to trans-fer Shoreham to LIPA or some other entity of New York State. Second, on July 14, 1989. LILCO began transferring the fuel from the Shoreham reactor to the spent fuel pool. The defueling was completed on August 9,1989. See Af-fidavit of William E. Steiger, Jr. ("Steiger Affidavit") at 14.W The Company will main-tain Shoreham in this defueled condition until it is allowed by the NRC to transfer the facility to LIPA or some other New York State entity. The fuel at Shoreham has ex-tremely low levels of decay heat because Shoreham has only operated the equivalent of 3/ Letter from Walter R. Butler, Director, Project Directorate I-2, Office of Nucle-ar Reactor Regulation to John D. Leonard, Jr., LILCO Vice President-Nuclear Op-erations (July 7,1989) at 2. 4/ Specifically, the Settlement Agreement provides that LILCO "will not operate Shoreham pursuant to any authorization to operate Shoreham that may or has been granted by the Nuclear Regulatory Commission...." The Company has also entered into an Amended and Restated Asset Transfer Agreement (the " Transfer Agreement") with LIPA concerning the operation and transf er of Shoreham. Similar to the Settle-ment Agreement, the Transfer Agreement provides that LILCO will not operate Shoreham pursuant to any authorization that may be or has been granted by the NRC. Transfer Agreement at 1 5.1. The Transfer Agreement further provides that "[n] notwithstanding the termination of [the Transfer Agreement], if the Settlement Effective Date has occurred... the covenants (regarding the non-operation of Shoreham] will survive and continue to be fully enforceable." Id. at 19.1. 5/ The Steiger Affidavit is Attachment I to this Request. L__-____________________.
7 i . two days at full power. Steiger Affidavit at 15. LILCO calculates that the decay heat is approximately 550 watts, or the equivalent of about five 100-watt light bulbs. Steiger Affidavit at 16. Based on this 'evel of decay heat. the Company has concluded that passive cooling in the fuel pool would be sufficient to preserve the integrity of the luel cladding. Steiger Affidavit at 17. III. Discussion: Shoreham's Non-operational Status Provides a Sufficient Basis for Granting an Exemption from the Insurance Requirements of 5 50.54(w) The legal standard for obtaining an exemption from specific NRC regulations is provided by 10 C.F.R. S 50.12. The rule uses a two tier test to determine if a licensee's request for an exemption should be granted. First, the regulation specifies that the NRC may grant exemptions which are authorized by law, will not present an undue risk to the public health and safety, and are consistent with the common defense and security. 10 C.F.R. S 50.12(a)(1). Second, the regulation provides that an exemption request will not be considered unless one or more of six "special circumstances" are present. 10 C.F.R. S 50.12(a)(2)(i)-(vi). Specifically, "special circumstances" are present whenever (1) Application of the regulation in the particular cir-cumstances conflicts with other rules or requirements of the Commission; or (2) Application of the regulation in the particular cir-cumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule; or (3) Compliance would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted, or that are significantly in excess of those incurred by others similarly situated; or (4) The exemption would result in benefit to the pub-lic health and safety that compensates for any
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~ -S-o decrease in safety that may result from the grant of the exemption; or- -{ (5) The exemption would provide only temporary re-lief from the applicable regulation and the licensee or applicant has made good faith efforts to comply with } the regulation; or (6) There is present any other material circumstance not considered when the regulation was adopted for which it would be in the public interest to grant an exemption. At 'the threshold,'it is clear that two of the considerations in the first tier of the . S 50.12 standard present no bar to the exemption being sought by LILCO. First, the ac-tion being requested is plainly authorized by law. The NRC has the legal authority to modify insurance requirements for licensees and has exercised that authority in the past.0/ Second, granting LILCO's exemption request would have no impact on the common defense and security" of the United States.I Consequently, in determining whether an exemption from the minimum cover-age requirements of S 50.54(w) should be granted, the NRC must consider (1) whether there would be any undue risk to the public health and safety, and (2) whether special circumstances exist to justify the exemption. As shown below, LILCO's exemption re-quest satisfies each of these requirements. $/ As indicated in the SER, the NRC has previously granted exemptions from S 50.54(w) for six other nuclear plants. SER at 10-11. I/ The Commission has determinec. that the phrase " common defense and security," as used in 10 C.F.R. S 50.12(a), refers principally to "the safeguarding of special nuclear material; the absence of foreign control over the applicant; the protection of Restrict-ed Data; and the availability of special nuclear material for defense needs." SgLe Florida Power & Livht Co. (Turkey Point Nuclear Generating Station, Units 3 and 4), 4 AEC 9, 12 (1967).
E ' 7 ( I A. LILCO's Exemption Request Poses No Undue Risk to the Public Health and Safety The requirement that a licensee carry a specified minimum of onsite property damage insurance exists to ensure that the licensee will have sufficient funds to sup-l l port stabilization and decontamination activities necessitated by a severe radiological accident at a nuclear facility.W in light of Shoreham's present non-operational status, the risk addressed oy the cegulation does not now exist at Shoreham. The fuel has been removed from the reactor core and placed in the f uel pool. As has been noted, the amount of dncay heat associated with the fuel is negligible; passive cooling would be sufficient to preserve fuel cladding integrity. In short, it is now virtually impossible for an accident to occur at Shoreham that would be so severe as to necessitate a significant amount of decontamination, much less decontamination costing upwards of $ 1,06 bil-lion dollars. If LILCO is granted an exemption from the requirements of 5 50.54(w), the Company will continue to carry property insurance for Shoreham in the amount of 8/ This is made clear by the Supplementary Information accompanying the rule when it was first proposed. See 46 Fed. Reg. 41786, 41788 (Aug.18,1981)("Under its responsibilities to protect the public health and safety, the Commission is concerned about the ability of a nuclear power plant licensee to finance the clean-up costs result-ing from nuclear-related accidents"). The underlying reason for the insurance require-i ment is reiterated in the Supplementary Information for both the final version of rule, promulgated in 1982, and an amendment made to the rule in 1987. For instance, in re-viewing comments on the rule as proposed, the NRC stated that [s]ome commentators maintained that the proposed rule should apply only to insurance covering decon-tamination of a facility suffering an accident and not to "all risk" property damage insurance. Because decontamination insurance is the Commission's only 1 concern from the point of view of protecting the pub-lic health and safety, coverage to replace the existing facility on an "all risk" basis is beyond the scope of the Commission's authority. 47 Fed. Reg. 13750,13752 (Mar. 31,1982). See also 52 Fed. Reg. 28963, 28970-71 ( Aug. 5,1987)("This rule applies to decontamination af ter an accident; it does not encompass decommissioning"). ) E________________________ J
A _7 $ 337 million. Sloce the Staff has already concluded that this amount is appropriate for operation at 5% p3wer,E such an amount is clearly adequate for Shoreham in its pres-ent defueled condition. The NRC addressed the relationship between a plant's operational status and the need for a minimum amount of coverage when it first adopted the property insurance rule. According to the Supplementary Information accompanying the rule. [s]everal persons _ commented that reactor licensees should not be required to maintain on-site property damage insurance until the operating license has been received. With fuel merely stored at a reactor the chance of an accident requirinv extensive decon-tamination is extremely remote. The Commission. agrees and has changed the rule accordingly, so that such insurance need be in force only when the utility is licensed to operate the reactor. 47 Fed. Reg.13752 (Mar. 31,1982)(emphasis added). At the present time, " fuel [is} merely stored" at Shoreham.W Moreover,it is significant that the NRC has previously granted exemptions from 5 50.54(w) to other utilities in situations analogous to LILCO's. For example, in 1982, the NRC granted an exemption to Pacific Gas & Electric Co. ("PG&E") for the Humboldt Bay, Unit 3 reactor. See Pacific Gas & Elec. Co. (Humboldt Bay Power Plant, Unit 3), Docket No. 50-133 (Nov. 3,1982)("PG&E Exemption"). There, the Humboldt Bay plant had been in cold shutdown for over six years and the fuel had decayed suffi-ciently that air cooling was adequate to protect the fuel cladding integrity. PG&E 9/ See note 2, supra. 1_0/ LTLCO, of course, is also " licensed to operate the reactor." In context, however, this passage from the Supplementary Information indicates that where, as with l Shoreham, the licensee has no intention of actually operating the plant and has re-moved the fuel from the reactor, there is no longer any health and safety based ratio-nale for the minimum property insurance requirement, and that an exemption from the requirement is appropriate. See page 8 and n.11, infra. l^
L - maintained $ 100 million worth of "all-risk" insurance, but soughi an exemption from the requirements of S 50.54(w). In granting PG&E the requested exemption, the NRC Staff note <.* that "the risk to public health and safety presented by the llumboldt unit in its present state of cold shutdown is very low compared to operating reactors." PG&E Exemption at 3. The Staff further noted that "it is reasonable to expect that whatever en-site decontamination costs that might arise from an accident at the Humboldt unit in its . current state would be covered by the $ 100,000,000 all-risk property damage insurance currently maintained by PG&E."Id. at 4. It is telling that the NRC granted the exemption for the liumboldt Bay facility notwithstanding the fact that PG&E was still licensed to operate the plant if it so de-sired.b This is significant, in light of the statement made by the Staff when it re-jected LILCO's previous exemption request, that the " staff views LILCO's current non-operating restriction as self-imposed and for the convenience of LILCO." The fact that - the non-operational status of the Humboldt Bay plant was apparently "self-imposed" and "for the convenience" of PG&E did not preclude the NRC from issuing PG&E an ex-emption from the requirements of S 50.54(w). Clearly, the situation at Shoreham is quite similar to that at Humboldt Bay. In-deed, the only significant difference between Shoreham and Humboldt Bay is that unlike PG&E, which could have operated the Humboldt Bay facility if it so desired, LILCO is bound under the terms of the Settlement Agreement not to operate Shoreham. 11/ For instance, the introduction to the exemption granted by the NRC indicates that PG&E was at the time the " holder of Facility Operating License No. DPR-7 which authorizes operation" of the Humboldt Bay facility. PG&E Exemption at 1.
- Further, the exemption was to apply "until such time as Humboldt Bay Power Plant, Unit No. 3 is removed f rom cold shutdown and resumes operation." IA at 4.
m- ~-= a e, i k r.. L m.. T _g. 1 -In sum, granting LILCO an exemption from the minimum insurance coverage re- 'quirements of 5 50.54(w) will not present an..tndue risk to the public health and safety. If granted the exemption, LILCO will continue to carry $ 337 million in insurance cov-erage, which the NRC has found to be appropriate for 5% operation and which is plainly adequate given Shoreham's delueled condition. B. Special Circumstances Exist Which Further Support LILCO's Exemption Request As explained' below, at least two of the "special circumstances" listed under . S 50.12(a)(2) apply to Shoreham's situation. (1) Application of the Regulation in the Particular Circumstances Would Not Serve the Underlying Purpose of the Rule and Is Not Necessary to Achieve its Unu'arlying Purpose Section 50.12(a)(2)(ii) applies to Shoreham's situation. Application of the NRC's minimum insurance requirements would neither serve the underlying purpose of 5 50.54(w), nor is it necessary in order to achieve the underlying purpose of the rule. As has already been noted, the purpose of requiring a utility to maintain a specified amount of onsite property damage insurance is to ensure that sufficient funds would be available to stabilize and decontaminate a facility in the event of an accident. Such a risk simply does not exist at Shoreham, now that the fuel has been removed from the reactor core and placed in the fuel pool. Given the plant's defueled condition, with the concomitant decreased likelihood and vastly reduced consequences of an accident, the $ 337 million of coverage that LILCO proposes to carry is clearly adequate. (2) Compliance Would Result in Undue Hardship or Other Casts that Are Significantly in Excess of Those Contemplated When the Regulation Was Adopted and that Are Significantly in Excess of Those incurred by Others Similarly Situated Section 50.12(a)(2)(iii) also applies to Shoreham's situation. Compliance with / W___-.__-.__----____.
S 50.54(w) would ' work a undue hardship on LILCO, given Shoreham's non-operating sta-tus. In addition, the costs to LILCO of complying with the minimum insurance require-ments are significantly in excess of those incurred by other utilities that have licensed, ( i non-operating nuclear f acilities. First, LILCO currently maintains $ 1.06 billion property insurance coverage on Shoreham. This coverage has been in effect for approximately one-half year at an av-erage yearly premium of approximately $ 3.76 million. The Company expects that the premium for $ 337 million in coverage would be approximately $ 2.1 million, or $ 1.66 million less than its current coverage. This is a significant difference. When the NRC adopted the property insurance rule, it found that the imposition of insurance costs on licensees was justified in order to assure the availability of funds for decontaminating the f acility af ter a radiological accident. The NRC has also recog-nized, however, the correlation between the appropriate level of property insurance coverage and the risk and consequences of a nuclear-related accident. Specifically, when the NRC Staff granted LILCO an exemption from the minimum coverage require-ments of 5 50.54(w), based on the Company only possessing a 5% power license,12/ the Staff stated that assigning an insurance coverage not commensurate with the risk and damage estimates realistically asso-clated with [Shoreham] as currently licensed coupled with the New York State required accounting proce-dures is imposing an undue hardship on LILCO. SER at 4. Given Shoreham's defueled condition, the risk and consequences of an acci-dent are no greater now than they were at 5% operation. Thus, requiring LILCO to carry insurance coverage in the amount of $ 1.06 billion would impose the very undue hardship that the NRC Staff had recognized previously and sought to avoid. 12/ ' See note 2, su_pra.
G 1 Second, requiring LILCO to carry the minimum insurance coverage of S 50.54(w) would be inconsistent with the NRC's treatment of PG&E's requested exemption for Humboldt Bay. In granting the exemption to PG&E, the Staff found that i the additional property insurance required to comply with 10 CFR 50.54(w) would require an additional an-nual premium of f rom $ 610,000 to $ 691,000. The Commission finds that this financial burden, if placed on the licensee and its customers, would not be war-ranted by the marginal additional benefit that would be obtained. PG&E Exemption at 4. The same reasoning applies to Shoreham. The imposition of the $ 1.06 billion insurance coverage requirements on LILCO would subject the Company and its ratepayers to expenses significantly in excess of those incurred by others simi-larly situated. IV. Conclusion For the reasons given above, LILCO respectfully requests that, pursuant to 10 C.F.R. S 50.12, the NRC grant the Company an exemption from the minimum onsite property insurance requirements of 10 C.F.R. S 50.54(w), until such time as the NRC should approve the transfer of Shoreham to LIPA or some other entity of New York State. In the meantime, LILCO proposes to carry $ 337 million in coverage for Shoreham, which is adequate given the plant's defueled condition. 1 l Respectf ully submitted, AN )y } f ~ l Victor A. Staffid( l General Courfsel l Long Island Lighting Company Long Island Lighting Company 175 East Old Country Road Hicksville, New York 11801 l l DATED: September 8,1989 iL________________.__._____}}