ML23151A478

PR-050 - 53FR36338 - Extension of Time for the Implementation of the Decontamination Priority and Trusteeship Provision of Property Insurance Requirements

ML23151A478
Person / Time
Issue date:	09/19/1988
From:	Stello V NRC/EDO
To:
References
PR-050, 53FR36338
Download: ML23151A478 (1)

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DOCUMENT DATE:

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CASE

REFERENCE:

KEYWORD:

ADAMS Template: SECY-067 09/19/1988 PR-050 - 53FR36338 - EXTENSION OF TIME FOR THE IMPLEMENTATION OF THE DECONTAMINATION PRIORITY AND TRUSTEESHIP PROVISION OF PROPERTY INSURANCE REQUIREMENTS PR-050 53FR36338 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

STATUS OF RULEMAKING PROPOSED RULE:

PR-050 RULE NAME:

EXTENSION OF TIME FOR THE IMPLEMENTATION OF THE DE CONTAMINATION PRIORITY AND TRUSTEESHIP PROVISION 0 F PROPERTY INSURANCE REQUIREMENTS PROPOSED RULE FED REG CITE:

53FR36338 PROPOSED RULE PUBLICATION DATE:

09/19/88 ORIGINAL DATE FOR COMMENTS: 10/19/88 NUMBER OF COMMENTS:

EXTENSION DATE:

I I

5 FINAL RULE FED. REG. CITE: 54FR11161 FINAL RULE PUBLICATION DATE: 03/17/89 OTES ON EDO SIGNED PROPOSED AND FINAL RULES.

TATUS OF RULE FILE LOCATED ON Pl.

TO FIND THE STAFF CONTACT OR VIEW THE RULEMAKING HISTORY PRESS PAGE DOWN KEY HISTORY OF THE RULE PART AFFECTED: PR-050 RULE TITLE:

EXTENSION OF TIME FOR THE IMPLEMENTATION OF THE DE

. -*coRTAMINATION PRIORITY AND TRUSTEESHIP PROVISION 0 F PROPERTY INSURANCE REQUIREMENTS PROPOSED RULE PROPOSED RULE DATE PROPOSED RULE SECY PAPER: 88-230 SRM DATE:

08/26/88 SIGNED BY SECRETARY:

10/12/88 FINAL RULE FINAL RULE DATE FINAL RULE SECY PAPER: 89-049 SRM DATE:

02/24/89 SIGNED BY SECRETARY:

03/10/89 STAFF CONTACTS ON THE RULE CONTACTl: ROBERTS. WOOD CONTACT2:

MAIL STOP: WFN/12E4 PHONE: 492-1280 MAIL STOP:

PHONE:

DOCKET NO. PR-050 (53FR36338)

DATE DOCKETED 09/14/88 09/21/88 09/29/88 10/04/88 10/20/88 10/24/88 03/22/89 In the Matter of EXTENSION OF TIME FOR THE IMPLEMENTATION OF THE DE CONTAMINATION PRIORITY AND TRUSTEESHIP PROVISION 0 F PROPERTY INSURANCE REQUIREMENTS DATE OF TITLE OR DOCUMENT DESCRIPTION OF DOCUMENT 09/07/88 FEDERAL REGISTER NOTICE - PROPOSED RULE 09/03/88 COMMENT OF CHARLES YOUNG (

l) 09/27/88 COMMENT OF WISCONSIN POWER & LIGHT COMPANY (EUGENE 0. GEHL, EXECUTIVE) (

2) 10/03/88 COMMENT OF PHILADELPHIA ELECTRIC COMPANY (RICHARD G. GILMORE) (

3) 10/17/88 COMMENT OF BISHOP, COOK, PURCELL & REYNOLDS (J. B. KNOTTS, JR.) (

4) 10/20/88 COMMENT OF WISCONSIN POWER & LIGHT COMPANY (EUGENE 0. GEHL) (

5) 03/10/89 FEDERAL REGISTER NOTICE - FINAL RULE

DOCKET NUMBER PR BROeOSED RU LE (5JFR Jb33 )

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NUCLEAR REGULATOR'f8 OMM\\f\\S~N A 9 :25 Extension of Time for the implementation of the Decontamination Priority and Trusteeship Provisions of Property Insurance Requirements AGENCY:

Nuclear Regulatory Commission.

ACTION:

Final rule.

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SOMMARt:

The Nuc,ear Regulatory Commission is amending the implementation schedule to change the effective date for the stabilization and decontamination priority and trusteeship provisions of its property insurance regulations.

This delay in implementation is necessary because the insurers that offer property insurance for power reactors have informed the Commission that they will be unable to include the stabilization and decontamination priority and trusteeship provisions in their insurance policies within the date required by current regulations.. Concurrently, the extension of the effective date of

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the ~r.ule allows--~

'tfflc to consider three petitions for rulemak1ng that propose changes to improve the efficacy of the NRC's stabilization and decontamination priority and trusteeship provisions.

EFFECTIVE DATE:

[Insert the date of publication of this rule.]

FOR FURTHER INFORMATION CONTACT:

Robert S. Wood, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory ColTfTlission, Washington, D.C.

20555, Telephone (301) 492-1280.

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2 SUPPLEMENTARY INFORMATION:

I. Background On September 19, 1988, the Comnission published a proposed rule in the Federal Register (53 FR 36338) that proposed to amend the implementation schedule for the stabilization and decontamination priority and trusteeship provisions of its property insurance regulations contained in 10 CFR 50.54{w}{5){i) to change the effective date from October 4, 1988 to April 4, 1990.

As explained in the proposed rule, this implementation schedule was part of a final ruleinaking published on August 5, 1987 (52 FR 28963) which, for the first tiine, explicitly required power reactor licensees to purchase on-site property damage insurance policies in which $1.6 billion of the proceeds from these policies are to be used first for stabilization of a reactor after an accident and then for decontamination of the facility before any other purpose. The 1987 final rule also required that these insurance proceeds be paid to an impartial trustee who would be required to disburse funds according to the stabilization and decon-ta~ination priority.

Subsequent to the publication of the 1987 final rule, the NRC was informed that the trusteeship provision and, to a lesser extent, the stabilization and decontamination priority provisions of that rule were sufficiently complex and problematic that the insurers were unable to incorporate such provisions in their policies by the required October 4, 1988 date.

As explained in the September 19, 1988 proposed rule, the insurers and

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their counsel gave two reasons why they were unable to comply with the date

3 '

specified in the final rule for adding the stabilization and decontamination priority and trusteeship provisions. First, with respect to the trusteeship provision, counsel for insurers assured the NRC staff that they had made a good-faith effort to obtain trustees, but were unsuccessful. They believed the reason for their lack of success was the potential trustees' conflicts of interest and reluctance to assume, on the one hand, responsibility for dis-bursing potentially over $1 billion in insurance proceeds and the resulting exposure to possible litigation for wrongful disbursement, while, on the other hand, being eligible for only modest fees for this service.

A second reason insurers gave for being unable to comply with the effec-tive date of the 1987 rule was essentially logistical.

As a contract, an in-surance policy can only be modified with the consent of all affected parties.

Because the Co11111ission's mandated stabilization and decontamination priority and trusteeship provisions adversely affect the current rights under the policy of the bondholders' trustee, it is unlikely that policies could be legally changed before the end of the policy years. Because of insurers' policy renewal procedures and the policy anniversaries, these dates would have fallen after the effective date specified in the rule.

II. Suntnary of Colllllents, NRC Response and Conclusions By the end of the corrment period on October 19, 1988, the NRC received five corrrnents.

One of these was misdirected to this rulemaking.

(Co1J111ent l was directed to rescinding §§5O.54(x) and (y) rather than §5O.54(w).) The remaining four either supported the proposed rulemaking (conrnent 4) or sought

4 clarification of the applicability of 10 CFR 50.54(w)(5)(i) to specific licensees while the rulemaking was being considered {comments 2, 3, and 5).

In addition, coU1T1ent 4 suggested that, rather than provide a date certain in the rule, the stabilization and decontamination priority and trusteeship provisions of

§§50.54{w){3) and (4) be suspended indefinitely pending completion of considera-tion of three petitions for rulemaking {PRM-50-51, PRM-50-51A, and PRM-50-51B; 53 FR 36335, September 19, 1988).

The only issue of any controversy raised by co11J11enters was whether the ex-tension of time for implementing the stabilization and decontamination priority and trusteeship provisions of §50.54{w) should be for a date certain (i.e.,

April 4, 1990) or inde~inite until consideration of the above-cited petitions for rulemaking has been completed.

The Commission continues to believe that an 18 month extension is more appropriate than an open-ended extension. First, as comnenter 4 acknowledged, 18 months should be sufficient to complete con-sideration of the issues raised in the three petitions for rulemakfng. Second, if 18 100nths is insufficient, the Convn1ssion can act to further extend the implementation date. Finally, the Coumission imposed the stabilization and decontamination priority and trusteeship provisions for valid health and safety reasons. Indefinitely deferring these provisions prior to a substantive reevaluation of their efficacy could conflict with the COD1Dission 1s mandate to protect health and safety. The proposed rule analyzed why an 18 month delay would have minimal health and safety impact.

The NRC believes that analysis remains valid.

5 For the foregoing reasons, the ColJ'lllission concludes that a delay from October 4, 1988 to April 4, 1990 1n the implementation schedule of the stabili-zation and decontamination priority and trusteeship provisions is justified and is amending 10 CFR 50.54{w)(5){i) accordingly.

Because the amendment to§ 50.54(w){5)(1) relates solely to extending the time for implementing the stabilization and decontamination priority and trusteeship provisions of the property insurance rule and therefore provides relief from restrictions under regulations currently in effect, the Corrmission has found that good cause exists for making the rule effective on the date of publication in the Federal Register without the customary 30 day waiting period.

III. Environmental Impact: Categorical Exclusion The NRC has detennined that this rule constitutes a minor corrective amendment that does not substantially modify existing regulations and, there-fore, is the type of action eligible for categorical exclusion under 10 CFR 51.22{c)(2). Accordingly, neither an environmental impact statement nor an environmental assessment is required.

IV.

Paperwork Reduction Act Statement This final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1980 {44 U.S.C. 3501 et seq.). Existing requirements were approved by the Office of Management and Budget approval nuimer 3150-0011.

6 Y.

Regulatory Analysis On August 5, 1987, the NRC published in the Federal Register a final rule amending 10 CFR 50.54(w). The rule increased the amount of on-site property da~age insurance required to be carried by NRC's power reactor licensees. The rule also required these licensees to obtai.n by October 4, 1988 insurance pol;cies that prioritized insurance proceeds for stabilization and decontami-nation after an accident and provided for payment of proceeds to an independent trustee who would disburse funds for decontamination and cleanup before any other purpose. Subsequent to publication of the August 5, 1987 rule, the NRC was informed by insurers who offer nuclear property insurance that the decontamina-tion priority and trusteeship provisions would not be able to be incorporated into the policies by the time required in the 1987 rule. In petitions for rule-making, insurers' representatives further stated that the trusteeship provi-sions might actually have an effect counter to their intended purpose by delaying claims payment and thus possibly the cleanup process.

By deferring implementation of these provisions by 18 months, the COl11llission is allowing sufficient time either to secure the required coverage or to reconsider the mechanism by which accident cleanup funds may be assured to be used for their intended purpose.

Even without fonnal stabilization and decontamination priority and trusteeship provisions, NRC has authority to take appropriate enforcement action to order cleanup in the unlikely event of an accident. Thus, this rule will not have a significant impact on public health and safety. Furthermore, this rule will not have significant impacts on state and local governments and geographical regions; on the environment; or, create substantial costs to

7 licensees, the NRC, or other Federal agencies.

The foregoing discussion constitutes the regulatory analysis for this rule.

YI.

Regulatory Flexibility Certification As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the CoBlllission certifies that this final rule does not have a significant economic impact on a substantial number of small entities. The final rule affects only those companies licensed to operate nuclear power plants. The companies that own these plants do not fall within the scope of the definition of nsmall entities* set forth in the Regulatory Flexibility Act or the Small Business Size Standards set out in regulations issued by the Small Business Administration at 13 CFR Part 121.

VII.

Backfit Analysis The NRC has detennined that the backfit rule, 10 CFR 50.109, does not apply to this rule because this rule would not impose a backfit as defined fn §50.109(a)(l). Therefore, a baclcfft analysis is not required for this rule.

List of Subjects in 10 CFR Part 50 Antitrust, Classified information, Fire prevention, Incorporation by ref-erence, Intergovernmental relations, Nuclear power plants and reactors, Penalty,

8 Radiation protection, Reactor siting criteria, Reporting and recordkeepfng requirements.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 552 and 553, the NRC is adopting the following amendment to 10 CFR Part 50.

PART SO-DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION FACILITIES

1. The authority citation for Part 50 continues to read as follows:

Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234, 83 Stat. 1224, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 2232, 2233, 2236, 2239, 2282};

secs. 201 as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 u.s.c. 5841, 5842, 5846}.

Section 50.7 also issued under Pub. L.95-601, sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). Section 50.10 also issued under secs. 101, 185, 68 Stat. 936, 955, as amended (42 U.S.C. 2131, 2235); sec. 102, Pub. L.91-190, 83 Stat. 853 (42 U.S.C. 4332). Sections 50.23 50.35, 50.55, and 50.56 also issued under sec. 185, 68 Stat. 955 (42 U.S.C. 2235). Sections 50.33a, 50.55a and Appendix Q also issued under sec. 102, Pub. L.91-190, 83 Stat. 853 (42 U.S.C. 4332).

9 Sections 50.34 and 50.54 also issued under sec. 204, 88 Stat. 1245 (42 u.s.c. 5844). Sections 50.58, 50.91, and 50.92 also issued under Pub. L.97-415, 96 Stat. 2073 {42 u.s.c. 2239).

Section 50.78 also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 2152).

Sections 50.80-50.81 also issued under sec. 184, 68 Stat. 954, as amended {42 U.S.C. 2234).

Section 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). Appendix Falso issued under sec. 187, 68 Stat. 955 (42 u.s.c. 2237).

For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273);

§§ 50.10 (a), (b), and (c), 50.44, 50.46, 50.48, 50.54 and 50.SO(a) are issued under sec. 161b, 68 Stat. 948, as amended (42 U.S.C. 2201 (b)); §§ 50.10 (b) and {c), and 50.54 are issued under sec. 1611, 68 Stat. 949, as amended (42 U.S.C. 2201(1)); and§§ 50.9, 50.55(e), 50.59(b), 50.70, 50.71, 50.72, 50.73, and 50.78 are issued under sec. 1610, 68 Stat. 950, as amended (42 u.s.c. 2201(0)).

2.

In §50.54, paragraph (w)(5)(1) is revised to read as follows:

§50.54 Conditions of licenses.

{w) *

(5)

The decontamination priorit~ and trust requirements paragraphs (w)(3) and (w)(4J of this section must:

set forth 1n (i) Be incorporated in onsite property damage insurance policies for nuclear power plants not later than April 4, 1990 and Dated at Rockville, Maryland this day of ~

1989.

For the Nuclear Regulatory C011111ission Victor Stell

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Executive Director for Operations

Wisconsin Power 6 Light Company Investor-Owned Energy Jl

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Docketing and Service Branch Washington, D.C.

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October 20, 1988

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Proposed Rule Extending Time for Implementation of Decontamination Priority and Trusteeship Provisions of the Property Insurance Requirements 10 CFR 50.54(w)

Gentlemen:

I would appreciate a response to my attached letter of September 27.

EOG:jb Attachment Very truly yours, s.,14'-6 Jlq Eugene 0. Gehl Executive Vice President and General Counsel ocr 2 7 1988 Acknowledged by carer

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Wisconsin Power 6 Light Company Investor-Owned Energy 222 West Washington Avenue P.O. Box 192 Madison WI 53701-0192 Phone 608/252-3311 EXECUTIVE OFFICES September 27, 1988 U.S. Nuclear Regulatory Commission ATTN:

Docketing and Service Branch Washington, D.C.

20555 RE:

Proposed Rule Extending Time for Implementation of Decontamination Priority and Trusteeship Provisions of the Property Insurance Requirements 10 CFR 50.54(w)

Gentlemen:

Wisconsin Power and Light Company is a co-owner and licensee of the Kewaunee Nuclear Power Plant located in the Town of Carlton, Wisconsin.

We are advised that the NRC intends to publish a proposed rule that will extend the October 4 deadline for the incorporation of requirements relative to the payment of property damage insurance proceeds into policies of property insurance.

We are further advised that it is intended that generic action will be taken prior to October 4 to relieve licensees from that requirement.

I would appreciate it if you would confirm that such action is contemplated.

If our information is incorrect, we would appreciate your advice as to what action a licensee should take relative to the application of the requirement.

EOG:jb Very truly yours,

~~~o.3/4 Eugene 0. Gehl Executive Vice President and General Counsel cc:

Wisconsin Public Service Corp~ration ATTN:

Linus A. Stoll Madison Gas and Electric Company ATTN:

Donald J. Helfrecht Wisconsin Power and Light Company ATTN:

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WRITER'S DIRECT DIAL Secretary L AW O FFICES B I S H O P, COOK, PU R CELL & REYNOLDS 140 0 L STREET, N.W.

WASHINGTON, D.C. 20005 -3502 (202) 371-5700 October 17, 1988 ~

U. s. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch "88 OCT 20 P 1 :55 uF

- QC,,,T EL EX, 440574 INTLAW UI UI L T~1~<?_.CJPIER (202) 371-5950 Re: Extension of Time for the Implementation of the Decontamination Priority and Trusteeship Provisions of Property Insurance Requirements (53 Fed. Reg. 36338, September 19, 1988)

Dear Mr. Chilk:

On September 19, 1988, the Nuclear Regulatory Commission published in the Federal Register a notice of proposed rulemaking, captioned as above.

The Commission proposes to amend the implementation schedule for the stabilization and decontamination priority and trusteeship provisions of its property insurance regulations in 10 CFR §50.54(w) (5) (i) to change the effective date from October 4, 1988 to April 4, 1990.

On behalf of the Edison Electric Institute ("EEI) and the Nuclear Utility Management and Resources Council ("NUMARC"), we submit the following comments on the Commission's proposal.

As reflected in the subject notice, EEI and NUMARC (along with a number of NRC licensees listed in the petition) have filed a petition for rulemaking (PRM-50-51A, notice of which was published in the same edition of the Federal Register at p.

36335).

The EEI/NUMARC petition seeks, among other things, relief of licensees from the independent trustee and related priority requirements pending consideration of modifications to the Commission's property insurance rule (10 CFR §50.54(w)).

We continue to believe that the independent trustee provisions are unworkable and potentially counterproductive to the NRC's goal of assuring the prompt availability of funds for on-site cleanup following an accident at a facility.

Accordingly, we would take this opportunity to urge that the changes in the regulations proposed in our petition be made.

This would include deletion of the independent trustee requirement and the substitution of a requirement to maintain liability-type coverage for the on-site

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cleanup obligation, which coverage may be combined in a single policy with property insurance.

Consistent with our petition for rulemaking, EEI and NUMARC support the concept of extending the October 4, 1988 deadline for obtaining insurance that complies with the independent trustee and priority requirements to afford time for the Commission to consider their petition for rulemaking (and the other filings to the same or similar effect, viz: PRM-50-51 and PRM-50-51B).

We note, however, that the proposed rule would extend the implementation date to a date certain.

As noted above, EEI and NUMARC had requested suspension of the pertinent requirements or that licensees be otherwise relieved from them pending completion of the rulemaking.

While the additional eighteen months now appears adequate for the Commission to complete its consideration of the pending petitions, the Commission should be prepared to grant any such further extension that may reasonably be required as the new deadline approaches for it to carry this process to its conclusion.

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RICHARD G. GILMORE SENIOR VICE PRESIDENT "INANCE 2301 MARKET STREET P.O. BOX 8699 PHILADELPHIA, PA 19101 (Z15) 841 -4800 Mr. Samuel J. Chilk, Secretary

u. S. Nuclear Regulatory Commission Washington, DC 20555 Attention:

Docketing and Service Branch Re:

Notice of Proposed Rule 10 CFR §50.54(w)(5)(i)

Dear Mr. Chilk:

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' '. *( 'l!. t 5RANL" October 3, 1988 Docket Nos. 50-277 50-278 50-352 On September 19, 1988, the NRC published a proposed rule in the Federal Register (53 Fed. Reg. 36338) that would amend the implementation schedule for the stabilization and decontamination priority and trusteeship provisions of its property insurance regulations.

(10 CFR §50.54(w)(5)(i).

The effective date of those provisions would be changed from October 4, 1988 to April 4, 1990.

This action responds to concerns about the present rule, adopted on August 5, 1987 (52 Fed. Reg. 28963), that have been expressed to the NRC by power reactor licensees, industry groups, and nuclear property insurers and which are recited in the NRC's Notice of Rulemaking.

As the NRC is aware, insurance policies fully satisfying the decontamination priority payment and independent trustee requirements are not available and trust arrangements cannot be established by October 4, 1988.

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Mr. Samuel J. Chilk, Secretary October 3, 1988 Since the comment period for this proposed rule will not expire until after the October 4, 1988 deadline, the proposed rulemaking does not provide licensees with timely relief from the deadline.

It is Philadelphia Electric Company's under-standing that NRC will issue exemptions from the October 4, 1988 deadline on its own initiative in each docket and is discouraging the filing of individual exemption requests.

The purpose of this letter is to set forth our understanding of actions that are intended by the NRC and our reliance on the assurance that we will be relieved from the October 4, 1988 deadline.

While no further action is anticipated at this time, we will contact the NRC Staff to determine the appropriateness of submitting a utility specific exemption application if our understanding of the NRC's intentions in this matter proves erroneous.

cc:

w. T. Russell, Regional Administrator T. J. Kenny, Senior Resident Inspector T. P. Johnson, Resident Inspector

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3.t J t2J Wisconsin Power 6 Investor-Owned Energy 222 West Washington Avenue P.O. Box 192 Light Company Madison WI 53701-0192 Phone 608/252-3"f)3 SEP 29 p 2 :25 EXECUTIVE OFFICES U.S. Nuclear Regulatory Commission ATTN:

Docketing and Service Branch Washington, D.C.

20555 September 27, 1988 RE:

Proposed Rule Extending Time for Implementation of Decontamination Priority and Trusteeship Provisions of the Property Insurance Requirements 10 CFR 50.54(w)

Gentlemen:

Wisconsin Power and Light Company is a co-owner and licensee of the Kewaunee Nuclear Power Plant located in the Town of Carlton, Wisconsin.

We are advised that the NRG intends to publish a proposed rule that will extend the October 4 deadline for the incorporation of requirements relative to the payment of property damage insurance proceeds into policies of property insurance.

We are further advised that it is intended that generic action will be taken prior to October 4 to relieve licensees from that requirement.

I would appreciate it if you would confirm that such action is contemplated.

If our information is incorrect, we would appreciate your advice as to what action a licensee should take relativ e to the application of the requirement.

Very truly yours,

~~o.Ak4 Eugene 0. Gehl Executive Vice President and General Counsel

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Wisconsin Public Service Corporation ATTN :

Linus A. Stoll Madison Gas and Electric Company ATTN :

Donald J. Helfrecht Wisconsin Power and Light Company ATTN:

Steve Bohlman

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I Mr. Max J. Clausen Senior Technical Assistant to Chairman Zech U.S. Nuclea1:.__ Regulatory Commission Washington, b-....c.

20555

Dear Mr. Clausen:

I appreciate your sending me a copy of the petition which requests that the NRC rescind paragraphs (x) and (y) of Section 50.54 of Part 10 of the Code of Federal Regulations.

Paragraph II, Grounds for the Petition, reads:

"The petitioner cites several cases of hazardous practices where, the petitioner asserts, the licensee has violated Federal Regulations at the Dresden and Quad Cities Nuclear Power Plants, owned by Commonwealth Edison Company, Chicago, Illinois. The petitioner believes that these practices could lead to an accident similar to the one at Three Mile Island, Unit 2.

My April 18 letter describes how Commonwealth Edison's Policy for operating nuclear power plants can cause a nuclear fuel meltdown - an accident like Three Mile Island (page 2, next to last paragraph). It is this Policy that can lead to an accident like Three Mile Island.

Commonwealth Edison's Policy for operating nuclear power plants is published in a Vice President's Instruction. This Instruction authorizes a Senior Operator to turn off a safety system in an emergency before the system has finished its job. Turning off a nuclear plant safety system in an emergency before the system has finished it job, can lead to an accident similar to the one at Three Mile Island, Unit 2.

During Proceedings before the Illinois Commerce Commission on September 15, 1987, Commonwealth Edison's attorney cited 10 CFR 50.54 paragraphs (x) and (y), as authority for this Policy. The Policy applies to all of the Company's nuclear power plants. Thus Commonwealth Edison risks an accident like the accident at Three Mile Island Unit 2, at twelve nuclear power plants.

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DOCKETING & SiRVICE ~£CT ION OFflCE OF THE SF,-~ET *. :1Y OF THE COMMIS~I0N

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I am enclosing a copy of my February 24, 1988, letter to Mr.

Weil, Investigation and Compliance Specialist, in Region III.

This letter contains a copy of Commonwealth Edison's defective policy.

Thanks again for your letter.

Enclosure Sincerely yours, N ~ l --,

Charles Young 2

Mr. Charles H. Weil 262 Sheffield Lane Glen Ellyn, IL 60137 February 24, 1988 Investigation and Compliance Specialist U.S. Nuclear Regulatory Commission, Region III Post Office Box 2027 Glen Ellyn, Illinois 60138-2027

Dear Mr. Weil:

My letter of January 29, 1988, describes two safety problems at Commonwealth Edison nuclear power plants. The first -

working employees near a nuclear reactor producing power -

occurs at Dresden and Quad Cities Stations. Risking a fuel meltdown by turning off a safety system: can occur at ~ny Commonwealth Edison nuclear power plant.

The Energy Reorganization Act of 1974, places responsibility for safety on officers of companies operating nuclear power plants. Section 206 of the Act reads that an officer of a firm operating a nuclear plant who learns of a plant defect which could create a substantial safety hazard, shall immediately notify the Nuclear Regulatory Commission.

A Commonwealth Edison Company Policy authorizes operators to turn off a safety system in an emergency if core cooling is adequate. The Policy states that core cooling is adequate if reactor coolant system pressures, temperatures, and levels are stable. But stable reactor coolant system pressures, temperatures and levels do not mean that core cooling is adequate.

With reactor coolant system pressure stable but low, temperature stable but high, and level stable but low, the reactor's nuclear fuel can be burning up.

An operator at any commonwealth Edison nuclear power plant can cause serious damage by following instructions issued by Company officers. Turning off water being pumped into a nucle~r reactor by a safety system before the system has finished its job, can cause the meltdown of a reactor's nuclear fuel.

A copy of the defective Policy is enclosed. I have underlined one of the defects in the Policy.

Very respectfully, et. '"-,I_.

't -,

Charles Young Enclosure 1

Copy to:

Mary B. Bushnell, Chairman Illinois Commerce Commission Illinois Department of Nuclear Safety Lando Zech, Chairman U.S. Nuclear Regulatory Commission 2

(

(

.. *,e Commonwealth Edison Company VICE PRESIDENT'S INSTRUCTION NO. 1-0-17

SUBJECT:

Company Policy Regarding Safe Operations and Adherence to Nuclear Procedures and Technical Specifications Effective:

August 18, 1986 Cancels:

V.P. Instn 1-0-17 (5-23-83)

This Instruction reaffirms Company policy regarding adherence to nuclear procedures and technical specifications.

The primary concern of the Company with respect to the operation of its nuclear generating plants is to ensure the health and safety of the public as well as station personnel.

All personnel within the Company share this responsibility.

In particular, it is the primary responsibility of the Station Shift Engineer to maintain safe plant operation since it is he who has direct control over all plant operations during his shift.

In order to achieve this safety goal, plant operation is to be within the boundaries specified in our technical specifications and in adherence to procedures and operating orders.

Systems which could affect the public health and safety (including emergency core cooling system, rad-waste, etc.) are to remain operable as prescribed in the technical specifications.

It is recognized that circumstances may arise which were not foreseen in the preparation of technical specifications.

For example, a combination of events which were analyzed individually may, taken together, produce results which were not expected or analyzed during reviews leading to the technical specifications.

In these rare, unforeseen circumstances literal adherence to the technical specifications may cause, rather than prevent, problems.

If such circumstances should arise, prudence may require operation outside of the technical specifications, procedures, or operating orders.

This should be done only when necessary to solve an immediate problem and only after careful consideration and approval by the Station Shift Engineer or, if there is insufficient time to contact him, the licensed Senior Reactor Operator immediately available in order to prevent (1) injury to the public or Company personnel (2) releases off-site above technical specification limits, or (3) damage to equipment, if such damage is tied to a possible adverse effect on public health and safety.

This operation should only be done when no action consistent with license conditions and technical specifications is immediately apparent which can provide adequate or equivalent protection.

Further, it may be necessary upon occasion to temporarily withdraw a system er systems from operation by placing it in a manual or pull-to-lock mode, This should be done only when conditions ar e "stable and under control", or when it is apparent that continued operation would aggravate or worsen the plant condition.

The conditions of "stable and under control" are considered to exist (1) if the radiation levels and the pressure and temperature in the primary containment are stable, and (2) if there is adequate core cooling as indicated by stable reactor coolant system pressures, temperatures and levels.

In all instances such action should be taken only after careful consideration, and it must be reviewed and approved by the licensed Senior Reactor Operator immediately available.

• It is not expected that such operations will be conducted for prolonged periods.

Ill. C. C. Docket 87-0228 Exhibit A

~ r-.. 5'-

(8-18-A6)

Whenever a system is withdrawn from operation as outlined, continuing surveillance of the relevant parameters must be maintained by a licensed Reactor Operator to assure the safe operation of the plant until the system can be restored to normal operability or until it is no longer needed, as prescribed by the technical specifications.

In all cases noted above, when th~ technical specification boundaries are exceeded or when a system is withdrawn from operation:

The Station Shift Engineer shall be notified immediately.

The Shift Technical Advisor/Station Control Room Engineer shall be consulted to determine whether immediate shutdovn, orderly power reduction, or other course of action is appropriate.

The Station Manager or his designate shall be notified who in turn shall notify the Nuclear Duty Officer in accordance with established procedures.

The NRC Operations Center shall be notified by telephone.

When time permits, the notification must be made before the protective action is taken; otherwise, the notification must be made as soon as possible thereafter.

A report shall be promptly made to the Division Vice President -

Nuclear Stations.

A plant shutdown, immediate or by power reduction, shall be commenced unless prolonged operation under the circumstances is concurred in by the NRC in the case of operating outside the technical specifications.

In other cases the Station Manager or his designate may authorize prolonged operation if appropriate.

All station personnel shall be informed of this policy and it shall be included in our training program.

~~

Vice President

AGENCY:

ACTION:

DOCKET NUMBER~

P.ROPOSEO RULE ~ "! *~

tlUCLEAR REGULA TORY COMMISSION 10 CFR Pdrt 50

'88 SEP 14 A11 :QS

(.F r. !.-,.

ii.JC **.

Extension of Time for the Implementation uf the Decontamination Priority and Trusteeship Provisions of Property Insurance Requirements Nuclear Regulatory Commission.

Proposed Rule.

SUMMARY

The Nuclear Regulatory Commission proposes to amend the implementa-t ion schedule for the stabilization and decontamination priority and trusteeship provision5 of its property insurance regulations contained in 10 CFR 5G.54(w)(5)(i) to change the effective date from October 4, 1988 to April 4, 1990.

This delay in implementation is necessary because the insurers that offer property insurance for power reactors have informed the Conmission that they will be unable to include the stabilization and decontamination priority and trusteeship provisions in their insurance policies within the time currently provided by 10 CFR 50.54(w).

Concurrently, the extension of the effective date of the rule will allow the NRC to consider recently submitted petitions for rulemaking that propose changes to improve the efficacy of the NRC's stabilization and decontamination priority and trusteeship provisions.

DATES:

The comment period expires October 19, 1988 Comments received after this date will be considerea if it is practical to do so, but the Commission is able to as5ure consideration only for comments receiveri on or before this date.

2 ADDRESSEES:

Submit written comments to the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555.

ATTN:

Docketing and Service Branch.

Hana deliver cumments to: 11555 Rockville Pike, Rockville, ~ID, between

~ 7:30 a.m. and 4:15 p.m. (Telephone (301) ~60)

Copies uf comments received may be exao11 ned at the NRC Pub 1 i c Document Room, 2120 L Street, NW., Washirigton, DC.

FOR FURTHER llffORMATION CONTACT:

Robert S. Wood, Office ot Nuclear Reactor Regulation, U.S. Nuclear Regulatory Conunission, Washington, D.C.

20555, Telephone (301) 492-1280.

SUPPLEMENTARY INFORMATION:

I. Background On August 5, 1987, the Cormnssion published in the Federal Reoister (52 FR 28963) a final rule which amended 10 CFR 50.54(w).

The-rule increased the amount of on-site property damage insuranc~ thdt corrmercial power reactor licensees are required to carry for their facilities. The purpose of the rule was to provide an assured source of funds for 011-site decontamination and cleanup of a power redctor facility after an acciaent.

In that regara, the August 1987 amenaments required licensees to obtain insurance policies in which any proceeas from such polici~s are to be used for stabilization of a reactor after an accident and the11 for decontamination of the facility before any other purpose.

The rule also required that any insurance proceeds be paid to a trustee, who would be required to disburse funds according to the aecontamination

3 priority. The Cc11111ission believed that these provisions would effectively protect insurance proceeds from claims by bondholders or their representatives or, in the event of licensee def au 1t or bankruptcy, by other cred 1 tors. The

,;;.---:?:-

Commission based this belief on co11J11ents ~ted by the Association of the Bar of the City of New York (Co111T1ent number 12 in response to the 1984 proposed rule (49 FR 44645)).

Subsequent to publication of the final rule, the NRC has been informed, both orally and in writing, that the trusteeship provisions and, to a lesser extent, the stabilization and decontamillation priority provisiuns of the rule are sufficiently complex and problematic that the insurers will be unable to incorporate these provisions in their policies within the time mandated by the rule. See the following: (1) the letter ctated January 27, 1988 to Dr. Thomas E. Murley from Peter D. Lederer, Baker & McKenzie~ counsel to Nuclear Mutual Limited (NML) and Nuclear Electric Insurance Limitea II (NEIL-II); (2) the letter dated January 29, 1988 to Robert S. Wood from Peter D. Lederer, Bdker & McKenzie at p. 5; (3) Petition for Rul~mak1ng (PRN-50-51) dated June 3, 1988 from Linda S. Stein, Steptoe & Johoson, counsel to American Nuclear Insurers and MAERP Reinsurance Association (ANI/MAERP),

at p. 7; (4) Petition for Rulemaking (PRM-50-51A) dated June 21, 1988 from J. B. Knotts, Jr., Bishop, Cook, Purcell & Reynolds, counsel to the Edison Electric Institute, the Nuclear Utility Management and Resources Council and several power plant licensees, at pp. 10-11; and (5) Petition for Rulemaking (PRM-50-51B) undated, from Peter D. Lederer, Baker & McKenzie, tounsel to NML and NEIL-II.

l11terested persons may examine and copy for a fee the dbove letters dnd petitions for rulemaking at the NRC Public Document Room,

4 1717 H St., NW, Washington, D.C.

Single copies of the letters may be obtained from Robert S. Wood, Office 0f Nuclear Reactor Regulation, U.S. Nuclear Kegulatory Co111I1ission, Washington, DC 20555, Telephone (301) 492-1280.

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The insurers and their counsel prov~ reasons why they are unable to comply with the date specified in the final rule for adaing the stabilization and decontamination priority and trusteeship provisions. First, with respect to the trustee~hip pro~ision, counsel for insurers have assured the NRC staff that they have made a good-faith effort to obtain trustees but have been unsuccessful.

They beli~ve the reason for their lack of success is the potential trustees* conflicts of interest and reluctance to assume, on the one hand, respcr.sibility for disbursing potentially over $1 billion in insurance proceeds and the resulting exposure to possible litigation for wrongful disbursement, while, on the other hand, being eligible for only n~dest fees for thi~ service. The petition for rulemaking submitted by ~r. Knotts indicates that:

Any institution that serves as ~und trustee for the securit1e~

of any licensee as to which 1t might be asked to serve as independent trustee under the rult would have a conflict of interest. Such a conflict would undoubtedly be unacceptable to insurers, licensees and trustees alike.

More broadly, utilities and potential trustees may well conclude that such a trustee would have an institutional conflict if it serves as bond trustee with respect to the indenture of~ utility. Thus, though it obviously would be desirable to have a single form of trust ana a single trustee, no major corporate trustee has been identified that does not also serve as bondholders*

trustee unaer at least one nucledr utility 1 s indenture.

Just as importantly, any major corporate trustee would want to minimize its exposure to claims. Thus, several such companies have advised *** that, even if they were otherwise interested, they would insist on having only ministerial functions, as is the case under some state environmental laws that employ prefunded trusts for environmental cleanup (and the trustee makes payments only upcn certification by the state agency having jurisdiction).

5 Even with very limitEG aiscretion, potential trustees may well perceive a residual liability. Therefcre, such a trustee would seek indemnificatior., and probably would not be satisfiea w1th indemnifica-tion by the licensees that had the accident.

In ariaition, such a trustee would want tu have applicabl~ insurance to provide defense arid indemnity for tlaims arising out of its auties as trustee, as well as directors' and officers' liability and indemnity insurance coverage, which may well be unava1lable.

Finally, there is little incen~ trustees to seek the special trustee role.

In addition to the a1sincentive of raving to forego more attractive business because of conflicts of interest, we have been 1nforrr~d that the traditional financial incent1ves for trust management would be lacking. Normally, the trustee gains an opportunity to earn a foe for mar,aging the trust assets, c1 fee often measured by the value of those assets. There: would be no such opportu111ty under the arrangement env1sioned by the rule.

The trust would be 11dry 11, that is, an unfunded standby arrangement that may never be used.

Moreover, ~ven when funded, there w~uld be only a short time when the funcis dre actually under management -- in other woras, 1t would be merely a conduit.

A second reasor. 1nsurers give for being unable to comply with the effective date of the rule is essentially logistical.

As a contract, an insurance policy can only be modified with the consent of all affected part1es. Because the Commission's mandated stabilization and decontaminat1on priority and trusteeship provisions adversely affect the current rights under the policy of the bondholaers* trustee, it is unlikely that policies couid be legally changed until the ena of the policy ytar.

NEIL policies renew every November 15, NML policies every April 1, and ANI/MAERP polic,~s throughout the year.

II. NRC Response When the NRC selected the effective aate of October 4, 1988, it believed that one year plus 60 days from publication cf the rule would give insurers sufficient time to incorporate appropriate implementing language in their policies. However, given the complexity of the changes, the unexpected (by the insurers) aaaition of the trusteeship provisions of the rule, and the timing of

6 the rule I s pub 11 cation shortly after the fJEIL and NML annua 1 me1::ti ngs at which changes must be approved, insurers cannot make changes within the time required. Moreover, insurers have informally told staff that the process of

~~ getting approvals from state insurance r~rs for policy language changes ror both decontamination and trusteeship provisions will also cause delay.

The NRC dcknowledges that there appear to be seri~u~ practical difficulties in implementing the decontamination priority and tru5teeship provisions of the rule by the adte mandated in the rule. The NRC also recognizes that it has no regulatory authority over insurers and therefore cannot require that insurance having specific tenns and conditions be made dva1lable if insurers choose not to offer it. Apart from the practical problems in the implementing schedule, the Commission also notes the underlying substantive questions concerning the efficacy of the trusteeship provision5 of 10 CFR 50.54(w) in accomplishing its stated objective -- namely, safeguarding insurance proceeds so that they will be usea to clean up and decontaminate after a reactor accident and thus protect thE health and safety of the public. A sufficient extension of the time allowed for implementing these provisions not only would give insurers adequate time to dmend their policies, if it ultimately proves necessary to do so, but would also allow the Co1m1ission to consider on their merits the issues rai5eO in the petitions for rulemaking.

The NRC believEs for several reasons that delaying for a reasonable time the implementation of the stabilization and decontamination priority and trusteeship provisions of§ 50.54(w) will not adversely affect protection of public health and safety. First, the licensee still will be required to carry $1.06 billion insurance. This is a substantial amount of coverage that

7 proviaes a significant financial cushion to licensees to decontaminate ana cleanup after an accident even without prioritization ana trusteeship provisions. Second, to obtain this level and more, most licensees carry the full $750 million coverage off~red b~II. Thus, a significant percentage of the required insuranc.e already is prioritizea under the decontamir,a ti on 1 i ability and excess property ; nsura nee 1 anguage of the NEIL-II policies. Finally, there is only an-extremely small probabi]ity of a serious accident occurring during the period or delay.

Even if a serious acciaent giving rise to substantial insurance claims were to occur, NRC would be able to take appropriate enforcement action to assure adequate cleanup to protect public health and safety.

For the foregoing reasons, the Commission concludes that an 18-month delay (from October 4, 1988 to April 4, 1990) in th~ implementation schedule of the decontamination priority and trusteeships provisions is justified and proposes to amend 10 CFR 50.54(w)(5)(i) accordingly.

III. Environmental Impact:

Categorical Exclusion The NRC has determined that this proposea rule constitutes a minor corrective amendment that does not substantially modify existing regulations and, therefore, is the type of action eligible for categorical exclusion under 10 CFR 51.22(c)(2). Accordingly, neither an environmental impact statement nor an environmental assessment is required.

8 IV. Paperwork Reduction Act Statement This proposed rule contains no information collection requirements and,

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therefore, is not subject to the require~f the Paperwork Reauction Act ot 1980 (44 U.S.C. 3501 et seq.)

V. Regulatory-Analysis On August 5, 1987, the NRC published in the Federal Register a final rule amenaing 10 CFR 50.54(w).

The rule increased the dmount of on-sitt property damage insurance required to be carriea by NRC's power reactor lic~nsees. The rule also required these licerise:es to obtain by October 4, 1988 ir,surance policies that prioritized insurance proceeds for stabilization dna aecon-tamination after an accident and provided for payment of proceeds to ~r. inae-pendent trustee who would disburse tunas for decontamination ar.d cleanup before any other purpose.

Subsequent to publication of the rule, the NRC has been informed by insurers who offer nuclear property insurance that the aecon-tamrna.tion priority and trusteeship provisions will not be able to be incor-pordtea into the policies by the time required in the rule.

In petitions for rulemaking, in~urers* representatives further state that the trusteeship provisions may actually have an effect counter to their intended purpose by delaying the claims payment ana thus possibly the cleanup process.

By defer-ring implementation of these provisions of the rule by ~ighteen months, the Commission is allowing sufficient time either to secure the required coverage

9 or to reconsider the mechanism by which acciGent cleanup funds may be assured to be used for their intenaea purpose.

Even without formal stabilization and decontamination priority and trusteeship provisions, NRC has authority to take

~ appropriate enforcement action to order c~

in the unlikely event of an accident. Thu~, the proposed rule will not have a significant impact on public health and safety. Furthermore, the proposed rule will not have significant impacts on state and loc~l governments and geographical __

regions; on the environment; or, create substantial costs to licensees, the NRC, or other Federal agencies.

The foregoing discussion constitutes the regulatory analysis for this proposed rule.

VI. Regulatory Flexibility Certification As required by the Regulat~ry Flexibility Act of 1980, 5 U.S.C. 605(b), the Commission certifies that this rule, if adoptea, will not have a significant impact upon d substantial r.umber of snaii entities. The proposed rule affects 112 power reactor licenses.

None of the holders of these licenses could be considcrea small entities.

VII. Backfit Analysis The NRG has determined that the backfit rule, 10 CFR 50.109, does not apply to this proposed rule because the proposed rule, if adopted, would not impose a

10 backfit dS defined in §50.109 (a)(l). Therefore, a backfit ana1ysis is not requirea for this proposed ru1e.

List of Subjects i~

Part 50 Antitrust, Classified information, Fire prevention, Incorporat1on by reference:,

Intergovernmental re1ations, Nuclear power plants ana reactors, Penalty, Raaiation prot~ction, Reactur siting criteria, Repurting a.nd recordkeeping requirements.

For the reasons set uut in the preamble and under the authority of the Atomic Energy Act of 1954, cts amended, the Energy Reorganization Act ot 1974, as amended, and 5 U.S.C. 553, the NRC is proposing to adopt the following amendment to 10 CFR Part 50.

PART 50-DOMESTIC LICENSING OF PRODUCTION AND UTILIZATION FACILITIES

1.

The authority citation for Part 50 contiraues to read as fol lows" Authority: Secs. 102, 103, 104, 105, 161, 182, 183, 186, 189, 68 Stat. 936, 937, 938, 948, 953, 954, 955, 956, as amended, sec. 234, 83 Stat. 1224, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 2232, 2233, 2236, 2239, 2282);

secs. 201 as an-~nded, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 u.s.c. 5841, 5842, 5846).

11 Section 50.7 also issued under Pub. L.95-601, sec. 10, 92 Stat. 2951 (42 U.S.C. 5851).

Section 50.10 also issued under secs. 101, 185, 68 Stat. 936, 955, dS amended (42 U.S.C. 2131, 2235); sec. 102, Pub. L.91-190, 83 Stat. 853

~>

(42 U.S.C. 4332).

Sections 50.23 50.35, ~5-and 50.56 also issued under sec. 185, 68 Stat. 955 (42 U.S.C. 2235).

Sections 50.33a, 50.55a and Appendix Q also issuea unoer sec. 102, Pub. L.91-190, 83 Stat. 853 (42 U.S.C. 4332).

e Sections 50.34 dnd 50.54 also issued under sec. 204, 88 Stat. 1245 (42 U.S.C.

5844). Sections 50.58, 50.91, and 50.92 also issued under Pub. L.97-415, 96 Stat. 2073 (42 U.S.C. 2239). Section 50.78 also issued under sec. 122, 68 Stat.

939 (42 U.S.C. 2152).

Sections 50.80-50.81 also issued under sec. 184, 68 Stat. 954, dS amended (42 U.S.C. 2234). Section 50.103 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). Appendix Falso issued under sec. 187, 68 Stat. 955 (42 U.S.C. 2237).

For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273);

§§ 50.10 (a), (b), and (c), 50.44, 50.46, 50.48, 50.54 ana 50.BO(a) are issued under sec. 161b, 68 Stat. 948, as amended (42 U.S.C. 22Gl(b)); §§ 50.10 (b) and (c), and 50.54 are issued unaer sec. 16li, 68 Stat. 949, as amended (42 U.S.C.

2201(i)); and§§ 50.9, 50.55(e), 50.59(b), 50.70, 50.71, 50.72, 50.73, and 50.78 are issued under sec. 1610, 68 Stat. 950, as amenaed (42 U.S.C. 2201(0)).

2.

In §50.54, paragraph (w)(5)(i) is revised to read as follows:

§50.54 Conditions of licenses.

12 (w) *

(5)

The decontamination priority and trust requirements set torth in paragraphs (w)(3) and (w)(4) of this section must:

(i)

Be incorporated in onsite property damage insurance poiicies for nuclear power plants not later than April 4, 1990 and

~,-:/

Dated at Rockville, Maryland this /

day

/------

For the tluclear Regulatury Corrmission.

1c or xecut1ve,rector ror pera 1ons