ML23151A482

PR-050 - 54FR46624 - Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements

ML23151A482
Person / Time
Issue date:	11/06/1989
From:	Chilk S NRC/SECY
To:
References
PR-050, 54FR46624
Download: ML23151A482 (1)

Text

DOCUMENT DATE:

TITLE:

CASE

REFERENCE:

KEYWORD:

ADAMS Template: SECY-067 11/06/1989 PR-050 - 54FR46624 - STABILIZATION AND DECONTAMINATION PRIORITY,TRUSTEESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANCE REQUIREMENTS PR-050 54FR46624 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

PAGE 1 OF 2 STATUS OF RULEMAKING RECORD 1 OF 1

PROPOSED RULE:

PR-050 OPEN ITEM (Y/N) N RULE NAME:

STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTEESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANCE REQUIREMENTS PROPOSED RULE FED REG CITE:

54FR46624 PROPOSED RULE PUBLICATION DATE:

11/06/89 ORIGINAL DATE FOR~COMMENTS: 01/05/90 NUMBER OF COMMENTS:

EXTENSION DATE:

I I

9 FINAL RULE FED. REG. CITE: 55FR12163 FINAL RULE PUBLICATION DATE: 04/02/90 OTES".-ON: FINAL RULE SIGNED BY EDO.

FILE LOCATED ON P-1.

TATUS OF RULE:

PRESS PAGE DOWN OR ENTER TO SEE RULE HISTORY OR STAFF CONTACT PRESS ESC TO SEE ADDITIONAL RULES, (E) TO EDIT OR (S) TO STOP DISPLAY PAGE 2 OF 2 HISTORY OF THE RULE PART AFFECTED: PR-0.5Q_ __

RULE TIT~:

• • ROPOSED RULE STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTEESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANCE REQUIREMENTS PROPOSED RULE SECY PAPER: 89-258 SRM DATE:

09/27/89 DATE PROPOSED RULE SIGNED BY SECRETARY:

FINAL RULE SECY PAPER: 90-059 FINAL RULE SRM DATE:

03/21/90

\

DATE FINAL RULE SIGNED BY SECRETARY:

STAFF CONTACTS ON THE RULE 10/27/89 03/23/90 CONTACT1: ROBERT WOOD MAIL STOP: 12 E4 PHONE: 492-1280

DOCKET NO. PR-050

( 54FR46624)

In the Matter of STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTEESHlP PROVISIONS, AND AMOUNT OF PROPERTY INSURANCE REQUIREMENTS DATE DATE OF TITLE OR DOCKETED DOCUMENT DESCRIPTION OF DOCUMENT 10/27/89 10/27/89 FEDERAL REGISTER NOT~CE - PROPOSED RULE 01/05/90 01/05/90 COMMENT OF ARIZONA PUBLIC SERVICE COMPANY (WILLIAM CONWAY, VICE PRESIPENT) (

1)

COMMENT OF EDISON ELECTRIC INSTITUTE AND NUMARC (JOSEPH KNOTTS, ESQUIRE) (

2)"

01/05/90. 01/05/90 01/09/90 01/05/90 COMMENT OF COMMONWEALTH EDISON COMPANY (M. S. TURBAK, PERFORMANCE MANAGER) (

3)

_01/10/90 01/05/90 COMMENT OF VIRGINIA ELECTRIC AND POWER COMPANY 01/10/90 01/08/90 01/12/90 01/23/90 01/29/90 04/23/90 01/04/90, 01/08/90 01/15/90 03/23/90 (W. L. STEWART., VICE-PRESIDENT) (

4)

COMMENT OF COMMITTEE ON NUC. TECH./LAW OF ASSOC. NY (JAY SILBERG, CHAIR) (

5)

COMMENT OF SOUTH CAROLINA ELECTRIC & GAS COMPANY (0. S. BRADHAM, VICE PRESIDENT) (

6)

COMMENT OF SYSTEMS ENERGY RESOURCES, INC.

(WILLIAM COTTLE, VICE PRESIDENT) (

7)

COMMENT OF ARKANSAS POWER & LIGHT COMPANY (JAMES J. FISICARO) (

8)

FEDERAL REGISTER NOTICE - FINAL RULE 07/02/90 06/22/90 COMMENT OF EEi, NUMARC, ET AL.

(JOSEPH B. KNOTTS, JR.) (

9)

\_

'12163 Rules. an<:1 Reg_u~_atlons *-*./\-t,t, ~ ~:\~~*~::/~~-;~;:_, :~~t I

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VoL 55. No: 63

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REGISTER contains I rvv*..........,. having. *.'

general effect, most of which codfied In the Code wl'llch Is ptbllshad pursuant lo -44.

u.s.c. 15 The Regulations Is ~

by the ~,Arlr,ll9nl'l9rrt of Documents.

Prices are listed In the

. flm.

G~R ~

of_ each

-week.

Anlnial and p Service 9CFRPst78

[Docketl()-()41 AGRICULTURE Acm<<:Y:

d Plant Health Inspecti USDA.

ACTION: n_uuu.a:ition of interim rule.

/

affirming without change an inte rule that amended the brucellosis lations concerning the

, interstate niov ment of swine by adding West Virginia the list of validated brucellosls-fre States. We have

~

determined th t West Virginia meets-the criteria for cl sificatlon as a validated

, brucellosis-State.

May 2, 1990.

FOR MATION CONTACT:

Dr. Willi art, Chief Staff

• Officer, eases*Staff, VS.

APHIS, m 736, Federal

Building, t Road, Hyatts

• (301) 436-7787.

In an hlle published in the Federal er and effective on January (55 FR 419-420, Docket

• Number

), we amended the brucello ations in 9 CFR part 78 conce e interstate movement of swine by ad ng West Virginia to the list of valida ed brucellosis-free States in I 78.43.

mmenta on the interim rule to be received on or 6, 1990. We did not receive The facts presented in still provide a basis for

~

. t,

-.. - ~-s...

, Monday, AFf] 2,'"1990 ~*;.;,- __ ; -~~:. -.

• l-.

'.. *.,~ -.

Executive * - :imi and Regula\&y*; ii;.it 1-:~(~ 7 CFR part

~ty A;Cl.

. _:' :} '*_*:J ~>->~.-,;

3015, V.)__., *.. -- * ; - *

. We are rule In-:-_:~_.,.,_._,_. _ I.ht of in 8 CFR.Part 78 conforman ecutive Order -.. *,. *.,..___

12291 and determined that-it fa.

Brucellosa, Cattle, not a '.'ma

- ed on* -.,_

H~.

Transportation.

information by the * ->

Acco we are adopting as a Department, determined that : *. final role, out change, the interim this rule will ect on the. - - *.

rule that ded 9 CFR 78.43 and that economy ofl 00 milijon; will'*

-waa publi at 55 FR 419-420 on not cause a se In costs or. _. January 5, prices for dlvidual Aullbositt:

.S.C.1tt-114a-t, 114g, 115, industries, F te. or local

111, 128, _l34b. 1341; 1 CFR 2.11, government geographic z.at.

regions; and a afgniflcant*

-.-,. nci this 28th day of adverse effect on....,. _._

MJl,rch employment.

roductlvity,

• Jamu innovation, or' of United -.*

A

• Sta tea-based*

HITJ,.,...,..

compete. -*.

Ins with forelgn-b In.

[FR domestic or *

s.

f' *

~

COOE 1410-M-a

. For*thia act!

of

• _..

Management

~ waived the review process y Executive NUCLEAR REGULATORY

~:rrd~

_irginia are COMMISSION affected by this t allows *.

breeding swine ved intentate 10 CFR Part 60 from West V out being teated Mt 1150-ADtt for brucellosis.

tely nine

--...-- and...___.__.__.._..

• swine are tested osis in Weat o....,._...""

~-,,.,.""

Virginia each ye average cost to Priority and~ Provlslol1e the seller of $11 resulting in a potential sa for West*

Virginia s Of the approximat herd owners nationwide

• p breeding swine inters five regularly sh!

e Interstate from West v*

herd, :.

owners, four idered s~

entities.

Under th clnimnill the Aclministrato al and Plant *

• Health Inspec s

determined the n will not have a significant act on a

_ substantial E ll entities.

Paperwork RedulCtim ormatlon requirements aperwork Reduction Act of U.8.C. 3501 et seq.).

Executive Order This program/a tivlty is listed In the Catalog of Federa Domestic Assistance under No. 10.025 a d Is subject to Executive Order 1 2, which requlrea

• intergovernmenta consultation with *

• AUNCY:Nuclear Regulatory :*

Commission.

ACTION: Final rule.

SUMIIARY: The Nuclear Regulatory Commission (NRq is amending the provisions of its property/ accident recovery insurance regulations applicable to commercial power reactor lice~ The changes (1) clarify the

-scope and timing of the stabilization and decontamination processes after an accident at a covered reactor; (2) specify that the insurance* is required to ensure that commercial power reactor licensees will have sufficient funds to carry out their obligation to clean up and

- decontaminate after an accident; and (3) eliminate the requirement that insurance proceeds after an accident are paid to an independent trustee. This rule responds to issues raised In three petitions for rulemaldng.

• __.

&FECnva DATE: April 2, 19!_90.

POii l'VIITHEI INl"ORIIATION CONTACT:

Robert S. Wood, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington.*

DC 20555, Telephone (301) 4~1280.

Federal Register / Vol 55, No. 63 / Monday, April 2, 1990 / Rules and Regulations

-~:-::-

- \

~ *-.

1:.,...

~

8UPPLDIENTAIIY 1NPORMA11011: ;:.,-.:-~-;

• 50.M{w). The rule waa developed ln*.\;'J ;* apedflc etudiea usingthm-c:ammt'. ;,:""r L Background response to the three petitions for

~ * * ~techiiology. One commenter:'°* -

rulemal<lng discussed above. Al of

-recommended using a simple formula After the receipt of three peti~ for January 18, 1990, the NRC received based on the Consumer Price Index to rulemaldng assigned Docket Nos.

seven comments on the proposed~~- _.. ~tima!eJuture_cle~up costa..:_ __, __..

• ~1) from Linda S. Stein. Steptoe Six comments came from electric * *.

, Since publication of the proposed.rule,

-1: Johnson. counsel to Am~ N1:1cle~

uttlltiea or th~ represanta~vea. Ona 7

tbe NRC'* contractor has updated: <

0, *

. Insurers and MAERP Re~. *.. -

comment came from the Aasocla~ ~. NUREG~ '.{hereinafter cHed u

_Association (ANI/MAERP~ ~

the Bar of the City of New Yori. All.

Addendum 1) which...... "~ th ham 51A) from J.B. Knotts, Jr., Bishop. Cook.

oommenters essentially eupported the

.for th -

,.. bill

!u"auo,u_

~ *.

Purcell & Reynolds, counsel to the Commlaslon~, rulemaklng. althouglt -.**,

e *.......,

l~n ~_IDSUJ'ance 8dlson Electric Institute cm;n. the._.;,-

some took iasue with spec1fic provisions.* 'currently~ The report found that Nuclear Utility Management and~ *

• Two aspect. of the propoeed rule, in _ _.

In 1989 dollars, approx_Imately $1.03 _

, Resources Council ~CJ and particular, were opposed by 98¥81'al. :.*-

~n would be needed for cleanup

~

• aeveral power =

licensees: and

-._ ~ is the in after a.evere accident at a reference, -

l'DDu_i:n_c Peter D. w -1__

commenter&. aue m~t atatement J.,.1t.1~ water reactor In addition.

=-

,.. ~~18)

~.

the preamble of the proposed role that

""&UUtS Baker I: McKenzie, counsel~ Nuclear.

the NRC retains the authority to require depen~ on whether a 4 percent or_an Mutual Limited and Nuclear FJectrio an hu:lependentlrulltee to hold and to 8 percent inflation rate is assumed,~-.

Insurance Limited (NML and ~II),

disburse insurance proceeds in. _ *'..,.- s:-.

.additional $186.5 mtllJon to $409.9 the Commission publlahed a D!)tlce of individual ca9e9, If warranted. Fm1her,,

million would be needed lo-jX>ver *. :.,

receipt requesting public comment on.

the NRC expresaed lta,Intention that if lncrem_ental cost escalation during the the petitions in the Federal Register of the NRC obtains authority to recem; cleanup p~ In eval1;18tlng these, :,_

September 19, 1988 (53 FR 36335}. The.

and retain Insurance proceed& lt&e1f, It

• costs, the contractor considered 'labor.

petitions were filed in responae to a

-will consider whether to exerclse thn

• energy, waste 4isposal, and nuclear

• final rule on changes in pro~..

authority and the beet method of Insurance.as those cost oompoombl.

Insurance requirements pub by the Implementing the. authority (M FR 46624, with the greatest poten~I-eff~ on oost Commission on August 5, 1987 52 FR at p. 46827}.

...J escalation...,.

28963). These petitions sought (1)

In support of their qbjectlons. 1he, --.

• Except for nu~ l.n$urance, these

• clarification of the scope and timing of..

commenter& refer to the case cited in 1he

• factors me the same as those used in the the stabilization process after an -

proposed rule-In re Smith-Doug}MS,

Commiuioo's deco~i.oning rule._

cl~i:~~a oflhe~ t which (Nos. 87-1683, -1684 {4th Circui~ *

• alfathctoo~ the (rela 53 FRtive2401 we8,ightaJ of,!11819881 th NRC d "'t I

d September 6, 1968)}-and talce issue

• rs vary une,,.,,

e

-. e erm nes an appro¥eS with the Commlasfon's conclusion that (See 10 CPR 50.75{c}{Z)). The.., - "' :

expenditures of funds necessary far th d clai

. this,

justlfle future

'Comminion notea, however. that decontamination and cleanup. and*

-ie~~mof

~

hip'.~ _-

cominenters had ample,opportun' th. to-..._

clarification of how such procedurea

• .,....ru01uuu a bustees

• ~1 affect both Insurer's needs to secure reqmrement. The Commission continoea evaluate and comment upon the

• appropriate proofs of toes and when to be11eve that tmcertainties remain with technical studies that the _NRC used as payments may be made for non-cleanup respect to Interpretation of this and 1he basis for its decommissioning

-purposes; (3) a change in the similar declsto:ns-Consequently, ff the requirements. No such opportunity bas terminology of the required insuranoe Commimon concludes that future OOJl1l av!lllable heretofore,for Addendum from "property" Insurance to conditions warrant reinstitution of the

. t. Consequently, the Commlsston "decontamination liability" inaurm trusteeship requirement. it will reopen concludes that the public iµterest would sou to better forestaH claims on this issue for reconsideration. If the best be served If the issue of whether Insurance proceeds by 8 licensee's Commission does make such a decision.

and to what extent the amount of * * ' '

bondholders; and (4) re9clssion of the however, It will provide ample accident cleanup insurance IBOUld provision that proceeds of the required opportunity for public comment at that lncreaae la deferred pendiqg public insurance are to be paid to an ti.me. Because no provision of this final comment on Addendum t. A.a pert of iu Independent trustee, who wlH disburse rule is affected by these qoncems, the conclusion. the Commission further the proceeds for decontamination and

'Commission propos1:9 no further notes that most liceDi88I already aury cleanup of the facility before any other discussion or action at this ~e. *,

accident cleanup insurance in amounts.

purpose.

The second lssne'raised by several that exceed the maximum amount Four comments were received on the coDlDlflnters concerils bow the predicted by the formula In Addendum petitions for rulemaking, aU of which Commission might a~dres11 po8811>le *

1. Thus, there Is no compellfns health oc aupported the amendments Increases In accident cleanup costs safety reason to increase the required recommended in the petitiona. The resulting from lnfiatlon or other factors.

amount of insurance fn advance of Commission responded to the comments Commenters expressed the opinioo that public comment. Concurrently, the, :

• received on the petitions in a proposed there is Insufficient experience from Commimon believes that the public rule published on November 6, 1989 (54 which to develop an effective formula to comments on Addendum t will enable FR 46624}. This final rule, In effect.

estimate future accident cleanup coata.

the Commission to make more informed grants these petitions and completes Furthermore, sw:h a fp~ would not decisions in connection with any future NRC action In responae to PRMs so-st.

be able to account for dvances In... -

l 50-61A, and SC>-alB.

technology that might duce future tha ther 1* "Technology. Safety end Com or ll. Analysis of and Response to'~.-_

• __ '

s;;::ro:i:::=::ate ~r:u. *==~~

~>Wids cleanup cost and consequently hdflc NortbwNl Laboratory. to be publlal,ed. n.

On No~ber 8, 1* ~

Cnm;,,lulon establish future inaw'ance reg~.

• report wilt be 11wlleb\e by awroxJ,mately M.y ua>

publlahed in the Fadew Regkter (54 FR the NRC reevaluate sooldent cleanup, _ ~:

~u:~~ '::t~

466%4) a proposed ~e_ to amend 10 CFR costs.evary 3 to5years b_y-OOPductiDg -.

A notice el-availablUty will be publlahed...

\

f r

l

-j 1

Federal Register / Vol ~ No. 63 / Monday.* April 2, "1990 / Rules and Regulations

-1218S rulemalctng proceeding to increase the augsested changes to the prop08ed rule-Street. NW. (Lower Level}. Washington.

amoantofrequiredinsuranca. -,.. __ *_:,;;__-

arenotneeded.-

DC.,*

Individual commenters also haw *cL.:

One commenter takes-lsaue with tfie. : IV. Paperwork Reduction Act Statement raised speciflc.coocerna with the _, ~-~

followipg statement In the Regulatory __

proposed rule. These concems iDclode Analyal1 published in connectlOD wtth*

Thia final rule amends Information the stabilization priority threshold. the the propoaed rule: "Although the effect collection ~ulrements that a.re subject 60-day priority period. and the cleanup : of theae formulaa, If developed and to the Paperwork Reduction Act of 1~

plan. QnA com:menhtr indlcatu that.., adopted, would be to Increase the

- ~

(44 U.S.C. 3501 et seq.). The final rule pursuant to proposed to CPR

. required amount of inaurance for l0ID8 hat been referred to the Office of 50.54(w}{4)(i}. lnaurance proceeds would

• licensees, there should be little Impact

• Management and Budget for review and only be required to be dedicated to on insurance COila to l1cemees becaUH approval.

, stabilization and decontamination If the almoet aB licensees buy the maximum Public reporting burden for this estimated coetl mc:ceeded $100 million.

• amount of insurance available" (154 FR collection of informa lion is eatima ted to Further, this priority would Initially 46624, at P* 46628. November 6. 1989}.

average 2.00(} hours per respome.

apply to stabilization costaJor 60 clay.

This commenter states that. Th.ls may including time for reviewing and could be extended in tJO-day*,

'

• have been true in the peat, however we instructions, searching existing data

• increments. Within 30 days after the- * ; do not agree with this anesmenL In sources. gathering and maintaining the reactor is stabilized. the Hcensee ia fact. we did not automatically purchase

-data needed. and completing and required to subJnit a cleanup plan which the maximum amount of insurance reviewing the collection of information.

must be approved by the Director of the available thia year following an increae Send comments regarding this burden Office.of Nuclear Reactor Regulation. * -

in available coverage."

estimate or any other aspect of this This comment~ also suggestl that the Notwithstanding thla commenter's collection of information, including rule should~ (a) whether the NRC '

decialon not to buy additional Insurance, suggeatlQna for reducing this burden.-to or the licensee.provides the cost the Commission notes that the maximum the Information and Recorda estimate, and (b) how the Director of the' amount of insurance currently offered Management Branch ~7714). U.S. _-

Office of Nuclear Reactor Regulation

....::. exceeds by a significant margin the Nuclear Regulatory Commission., -

determinea the length of the amount that would be required if the.

Washington. DC 20656: end to the stabilization priority end the criteria for-

• maximum figure suggested in Addendmn Paperwork Reduction Project (st~.

approving the cleanup plan. --

- * *-.*.J 1 were adopted. MoSt licensees 0011}, Office of Management and The NRC believes that these and currently purchaae substantially more

-Budget. Washingt. on. DC 20SOS.

imll h

be dJ sed-than this maximum. Thua, the s

ar l.saues ave en scus to. -. Commlssi tends by the tatement in V. Regulatory Analysis" previous nilemakiog and that;addJtional question. on s s

specificity may be cumber&Qme and

'fliese amendments provide relief from On November 6, 1989, the Commission counterproductive. The Commisafon *.

restrictions under regulations due to -

. published in the Federal Register (51 FR clearly int~~ to rely on licensees to take effect on April' f, l990. Therefore,.

46624) a proposed nile to amend 10 CFR prepare initial cost estimates of pursuant to s u.s.C: 1 ssa{d)(l), the

_ 50.M{w}. The rule was developed in accidents, although iHa-concetvable that Commission ls making the-rule effective. response to three petitions fOl' the Commissi?11 could prepare its awn,-

on the date of publication in the Fedtial ruleijl8Xing. Notice of receipt of these confhmatory estimates If unllfWl}_ ' - :- - Register without the customary 3Cklay

• petitions was publiahed in the Federal circumstances warranted. FurtherJDO!e, waiting period.

Register on September 19, 1988 (53 FR a cut-off*figure of $100 million represents 1*

36335). These petitions so_ught a relatively minor accident where the III. Finding of No Slgnfflr.ant clarification of the stabilli:atlon and availabilitJ of funds w9Ukl not. a a- *. *, :Environmental Impact; AvallabiHty decon~tion priority proviaions and practical matter, be at iaaue. ThDB. it Ir '

Noting that the text of the final rule ls rescission of the trusteeship proviakma

~

very unlikely that the Commlasion'

, --, identical to that of the propoeed rule, the currently contained lb 10 CFR 50.54(w).

would dispute estimates unless they*,)-

_ Commlssion baa reviewed the * -- *.

The petitions further stated that the

. significantly*exceeded $180 miHJon. :*-,.. ;,; environmental assessment and finding trusteeship proviaions may actually Further, I 50.54{w)(4)(i) explicitly

• ; _ " of no slgnlficant environmental impact - -

have an effect counter to their intendeti- -

defines what constitutes stabilization.,

published ht the Fecleral Register on purpose by delaying the payment of Therefore, it is unlikely that.serious November o, 1989 ~

FR 46624, at 46627)*

• claims and thus possibly the cleanup

~ts would arue concerning

.:_*in connection with the proposed rule. _

process. The rule developed in response when a -reactor is stabilized.

- -;-...,.-_k-;,.,~ On the basis of that review, and after -'

to the pet!_tlons for rulema)dng should However, ff disput~ over -,, *.: '..'; :sr:;, -considering the pub11c comments and help clarify the mechapjsm by which stabilization should arise. the*- '.. *,~ '.- -; :

• determining that auoh comments do not accident cleanup funds may,be Commission's Rules of Practice" under 10,affect the conclusion 1'8ached in the

• guanlll_teed to be used for their intended,

CFR part 2 provide adequate procedure9 eadier finding or oo slgnlflcant impact, -

purpose. Even without formal to resolve them. Similarly, part z--

._*-1 the Commiasion has:concluded that this-

• stabill.zatlon and decontamination procedures ere also available to resolve arnerubnent to 10 CFR 50.54{w) is not Ii -' priority !llld trusteeship provisions. the

• disputes that may arise--'over the content.

major Federal action significantly*: -... : NRC has authority to take ap~te of cl88JlUI) plans. The Commission notes'* affecting the quallty of the human - - t_:*:: enforcement action to order cleanup in that the ~

-rule was drafted in: 0:,,'. environment. an4 therefore, an - * ', _ ;-~~ the ~ely event of an accident. By -: : :,

responseto.the-suggeat:ioos of_.,.*;, ~T<" en~impact tatementis not rescinding thelrust1!89hlP requirement._- -

petitlooera represen~ most power ! -;.f, required. -, *1 :~ 1; * ; * -1:, *

-* -.. -.-,~,. the Commission woi)ld be eliminating, -

• reactor llcemeea and their inlurera. The ~

The euviroliii+otel llSleaSmORf and' : *-:! 111:,enaees' COl!ts to obtain trustee petitioners dtd.not~theseapeclfic-,:, l finding ofno signiflcantbnpact-on-* *,:.,!) *se~. Th'Ull, the rule will notcieate, -

l88ues in thmr petlUons or in commenta _ _,

• whJch this determlnetloo 11 based are -'- :; 1111batantial _coats for licemees... :: -* __,,

on the prop098d rule. Oonsequently,. tbe -..i

• available for inspection and oopylng at 1 :

The rule will not have slgniBcant * *...,

Commission coadudes that the_ * :,*,.::~ :i-::i the NRC Pub~ Document Room, 2120 L -,-

impacta on Stal! and local govemm~

12168, Federal Register / Vol. 65, *No. -63 / Monday,* April 2, *199{l:/ Rules and ~ationii.

a!l(I geographical regions, on the *.. : *._,

under aec. 102, Pub. L 91-190. 83 Stat. 853 (~.

coverage for Qther risks, including, but

• environment. or create substBJ7.tial costs U.S.C. 4332). Sectlollll 150.34 and 50.54 alao * *,

not limited to, the risk of direct physical to the NRC or other Fe:deral agencies. _

_ luued under sac. 20t. 88 Stat. lffl (42 {!-;l?-C.. damage...,.. -;* _.

The foregoing diseuA"Bion constitutes the* =~ 8:1::u~r :!s,S: ~ =(~ 'i.

(2)(1) With.respect to-p;;licies issued regulatory_i:µialysis fof this _rule. ~ :. *,

u.s.c. 223!1), Section 50.7B alao ltsued under

_or annually ren_ewed on or-after April 2,

~

Regulatory Flexibility Certification. '

eec.122. 88 Stat. 939 (42 U.S.C. 2152). Sections

.1991, the proceeds of such required

'As required by the Regulatciry.,

50.80 through li0.81 eho isued under aec.184.

insurance must be dedicated. a11 and to Flexibility Act of 1980 (S U.S.C. 605(b)),

68 Stat. 954. 81 amended (42 U.S.C. 2234) ** -:;

the extent provided in this paragraph, to the Commission certifies that this finaI Appendix Falso issued under sec.187, _68 reimbursement or payment on behalf of rule does not have 8 significan* t Stat. 965 (42 u.s.c. 2237}. * * : * -* * ; *- - * '* ** _ ~ the insured of reasonable expenses For the purposes of sec. 223, 68 Stat. 968. u

. incurred or estimated to be incurred by econberomfcfimpallact upon a 8llb11tanrultial -

amanden~,(c42) areu.~_<:.~~dl! ~161a)b,and68(b)._

thli e _licensee, obinligtaldng action to fulfill the num o sm entities. The e only th affects licensees of nuclear power Stat. 948. u amended (42 U.S.C. 220t(b));

can.see 8 ation, in, e event of an plants. None of the holders of these..,

I I 50.7{a), 50.lO(aHc), 50.M(a) and (e)..

accident at the licensees reactor, to licenses fall within the IICOpe of the' 50.44(aHc), li0.46{~) and (b), 50.47(b), _

- _ensure thal the reactor is in, or is definJtion of "small entities" set forth in

• _50.48{a), (c), (d), and (e). 50.49(a), 50.M(a), (l).

• _ returned to, and maintained in, a safe the Regulato_ry Flexibility ~ct OJ'. the. - ~\t~H~t, ~ ~l8;t:1:{c~~ _

i:::;J:eC:~'!n

~t~moved 01 Small Business Size Stan~rds set out in 50.60(a), 50.62(c) 50.M(b), and 50.80{a} and (bf. controlled auch that personnel re~ations i~ued by the Small Business are issued under sec. 161i. 68 Stat. 949. as -..

exposures are consistent with the Admlnistration at 13 CFR pert 121. '

• amended (42 U.8.C. 2:201(1)); and I I S0.49(d),

occupational exposure limits in 10 CFR

• • vn.'Backflt &"al...la (h), and UJ, 50.M(w), (z), (bb), (cc), iµtd (dd),_

pert 20. These actions must be

.1 50.56(e), 50.li9(b), 50.61~). 50.62(b), 50.70(a),

• The NRC has determined that the II0.71{aHc) and (e), 50.72(a), 80.73 (a) and (b).

consistent with any other obligation the bacldit rule, 10 CFR 50.109, does nol * -

• 50.74. 50.78, and 50.90 are lallued under sec.

_ licensee ~y have under this chapter apply to this rule because this rule will 1610, 68 Stat. 950. u amended (42 U.S.C.

and must be subject to paragraph (w)(4) not impose a beckfit es d~fined in 2ffllo)~

, __ /'

of~ section. A.a U8ed in this section, I 50.109(e)(1). Therefore, a backfit

2. Seotion 50.54 is amended by

• -., an_ accident" means an event that analysis la not required fdr this rule.

revising paragraph (w) to read 88,

_ involves the release of radioactive

-T follows:

material from its intended place of list of Subjecta in 10 CFR Part l5lt confinement within the reeutor or on the Antitrust. Classified information. Fire

§ 50.54 ConclUonl of llceneN. :

reactor atation site such that there la a.

protection, Incorporation by reference, present danger of release off site in Intergovernmental relations. Nuclear *

• (w) Each electric utility licensee under amounts that would pose a.threat to the

• power plants end reactors, Penalty, * -

this pert for a production or utilization _ public health and safety,..

Radiation protection, Reactor siting facility of the type described in : * *.

(ii) The stabilisation end 1 -

criteria, Reporting and recordkeeping

• I 60.21(b) or I 50.22 shall take decontamination requirements set forth

• requirements.*

• reasonable steps to obtain Insurance *. in paragraph (w)(4) of this section m\lllt For the reasons set out in the.

• available at reasonable costs and on

apply uniformly to all insurance policies

. - preenible and under the authority of the reasonable terms from private aoutcea required under paragraph (w) of this

. Atomic Energy Act of 1954, a11 amended, or to demonstrate to the satisfaction of section.

• the ~ergy Reorganization Act of 1974.

the Commission that it possesses an

. (S) 'fbe licemee shall report to the A

as amended, end S U.S.C. 552 and 553, equivalent amount of protection

- NRC on April 1 of each year the current W. the NRC is adopting the following covering the licensee's obliscatioh, in the levels of this insurance or financial amendment to 10 CFR part 60.

event of an accident et the licensee's *

'-' security it maintains end the aources of reactor, to stabilize and decontaminate this insurance or financial security.

• PART ~ESTIC,LICENSING OF 0PRODUCTJON ANO UTILIZATION FACILITIES

1. The authority citation for pert 50 continues to read es follows:

Authority: Secs. 102, 103, lot, 105, 161. 182, 183. 186. 189. 68 Stat. 936. 937, 988. 1H8. 953, 954, 955, 956, 81 amended. ec. 234, 83 Stat.

122i, IU amended (42 U.S.C. 2132, 2133, 2134, 2135, 2201, 2232, 2233, 2236, 2239, 2282); RICI, 201 ae amended. 202, 206,,88 Stat.1242, u amended, 1.2H. 1246 (42 U.S.C. 5Ml, 5612, 58'6).

t Section 60.7 a1o iuued under Pub. L 95-601.. sec. 10. 92 Stat. 2951 (4Z U.S.C. 5851).

Section 50.10 also iuued under eca. 101, 185, 68 Stat. 936,955, u amended (42 u.s.c. 2131.,

2235); sec. 102, Pub. L 91-190. 83 Stat. 853 (42 U.S.C. 4332). Beotionll 50.13, IIO.M{dd) and

&0.103 alo iaaued under ec. 108. 68 Stat. 939.

u amended (42 U.S.C, 2138). Sectiom 50.23,

• 50.35, 50.M. and 50.56 alo Inned under 88C.

185, 88 Stat. 965 (42 U.S.C. 2235). 8eatiom * :.

50.33a, 50.55a and Appendix Q aleo iaaued..

the reactor and the reactor atetion site (4)(1) In the event of an accident at the at which the reactor experiencing the -

licensee's reactor, whenever the accident is located. provided Uiat estimated coats of stabilizing the (1) The insurance required by licensed reactor and of decontaminating paragraph (w) of this section 111ust have the reactor end the reactor station site a mfnJmum coverage limit for each -

exceed $100 million.' the proceeds of the reactor station site of either lb.OO billion insurance required by paragraph (w) of or w~tever amoun~inaurance la _

this section must be*dedlcated to and generally available private sources,* used, first. to ensure that the licensed whichever la leu. The l'8qUired - *

• reactor la in, or ls returned to, and can insurance must clearly state that. e11 and be maintained in, a safe and stable to the extent provided µi paragraph *,

condition so as to prevent any (w)(4) of this section, any*proceeds must significant risk to the public health end

~e payable first for 11tabilimtion of the safety and. second. to decontaminate reactor and next for de(:ontemination of the reactor and the reactor station site the reactor and the reao,tor ltation aite..

in accordance with the licensee's Ha licensee's coverage fell below the

• pleanup plan aa approved by order of

, required minimum. the licepaee shall,

the Director of the Office of Nuclear within 60 days_ take all ~UODable steps Reactor Regulation. This priority on to restore its coverage to 1the required insurance proceeda must remain in mlnlmum. The required ll\fW'1lDC8 may,

_ effect for 60 days or, upon order of the at the option of the llcensff9, be included Director, for such longer periods. in within policies that ~ ~- _.. _.

incrementa not to exceed 80 days except

CONTAC'.

the Gen alof1 pltolStre

{202) 3'.'

PkoPOSED RULE:

I RrE NAME:

STATUS OF RULEMAKING PR-050 STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTE EESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANC E REQUIREMENTS PROPOSED RULE FED REG CITE:

54FR46624

~ROPOSED RULE PUBLICATION DATE:

11/06/89 PRIGINAL DATE FOR COMMENTS: 01/05/90 I

I NUMBER OF COMMENTS:

EXTENSION DATE:

I I

9 fINAL RULE FED. REG. CITE: 55FR12163 FINAL RULE PUBLICATION DATE: 04/02/90 TES ON FINAL RULE SIGNED BY EDO.

FILE LOCATED ON Pl.

ATUS OF RULE T~ FIND THE STAFF CONTACT OR VIEW THE RULEMAKING HISTORY PRESS PAGE DOWN.KEY

'1

,.{

P~T AFFECTED: PR-050 HISTORY OF THE RULE RPLE TITLE:

e*

STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTE EESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANC E REQUIREMENTS PROPOSED RULE I

SECY PAPER: 89-258 I

i F[NAL RULE S~CY PAPER: 90-059 I

CONTACT!: ROBERT WOOD I

COfffACT2:

I PROPOSED RULE DATE PROPOSED RULE SRM DATE:

09/27/89 SIGNED BY SECRETARY:

10/27/89 FINAL RULE DATE FINAL RULE SRM DATE:

03/21/90 SIGNED BY SECRETARY:

03/23/90 STAFF CONTACTS ON THE RULE MAIL STOP: 12 E4 MAIL STOP:

PHONE: 492-1280 PHONE:

DOCKET NO. PR-050 (54FR46624)

In the Matter of STABILIZATION AND DECONTAMINATION PRIORITY, TRUSTE EESHIP PROVISIONS, AND AMOUNT OF PROPERTY INSURANC I

E REQUIREMENTS I DATE DATE OF TITLE OR I DOCKETED DOCUMENT DESCRIPTION OF DOCUMENT 10/27/89 10/27/89 FEDERAL REGISTER NOTICE - PROPOSED RULE 01/05/90 01/05/90 01/05/90 01/05/90 01/09/90 01/05/90 01/10/90 01/05/90 01/10/90 01/08/90 4' 01/12/90 01/04/90 01/23/90 01/08/90 I 01/29/90 01/15/90 04/23/90 03/23/90 07/02/90 06/22/90 COMMENT OF ARIZONA PUBLIC SERVICE COMPANY (WILLIAM CONWAY, VICE PRESIDENT) (

1)

COMMENT OF EDISON ELECTRIC INSTITUTE AND NUMARC (JOSEPH KNOTTS, ESQUIRE) (

2)

COMMENT OF COMMONWEALTH EDISON COMPANY (M. S. TURBAK, PERFORMANCE MANAGER) (

3)

COMMENT OF VIRGINIA ELECTRIC AND POWER COMPANY (W. L. STEWART, VICE-PRESIDENT) (

4)

COMMENT OF COMMITTEE ON NUC. TECH./LAW OF ASSOC. NY (JAY SILBERG, CHAIR) (

5)

COMMENT OF SOUTH CAROLINA ELECTRIC & GAS COMPANY (0. S. BRADHAM, VICE PRESIDENT) (

6)

COMMENT OF SYSTEMS ENERGY RESOURCES, INC.

(WILLIAM COTTLE, VICE PRESIDENT) (

7)

COMMENT OF ARKANSAS POWER & LIGHT COMPANY (JAMES J. FISICARO) (

8)

FEDERAL REGISTER NOTICE - FINAL RULE COMMENT OF EEI, NUMARC, ET AL.

(JOSEPH B. KNOTTS, JR.) (

9)

t;opy to Secy ** --...,,.

Original sent to the ',...._~

Office of the Federal Register for publication

-~

R'-'l'--"""Jl; ~ ;-fe.W\

DOCKET NUMBER PROPOSED RULE PR so d )

(_.s'/r~~G~Z~

D.OC.:KETEO L~Ol]

• 90 APR 23 A10 :23 NUCLEAR REGULATORY COMMISSION 10 CFR Part 50 RIN:

3150-AD19 Stabilization and Decontamination Priority and Trusteeship Provisions e AGENCY:

Nuclear Regulatory Cormnission.

ACTION:

Final rule.

SUMMARY

The Nuclear Regulatory Commission (NRC) is amending the provisions of its propertyj;att ident recovery insurance regulations applicable to commercial power lf'eactor licensees. The changes (1) clarify the scope and timing of the stabilization and decontamination processes after an accident at a covered e reactor; (2) specify that the insurance is required to ensure that cormnercial power reactor licensees will have sufficient funds to carry out their obligation

• to clean up and decontaminate after an accident; and (3) eliminate the require-ment that insurance proceeds after an accident are paid to an independent trustee. This rule responds to issues raised in three petitions for rulemaking.

EFFECTIVE DATE:

[Insert the date of publication in the Federal Register]

FOR FURTHER INFORMATION CONTACT:

Robert S. Wood, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Corrmission, Washington, DC

20555, Telephone (301) 492-1280.

SUPPLEMENTARY INFORMATION:

I.

Background

After the receipt of three petitions for rulemaking assigned Docket Nos. (PRM-50-51) from Linda S. Stein, Steptoe & Johnson, counsel to American Nuclear Insurers and MAERP Reinsurance Association (ANI/MAERP); (PRM-50-51A) from J.B. Knotts, Jr., Bishop, Cook, Purcell & Reynolds, counsel to the Edison Electric Institute (EEI), the Nuclear Utility Management and Resources Council (NUMARC) and several power plant licensees; and (PRM-50-51B) from Peter D. Lederer, Baker & McKenzie, counsel to Nuclear Mutual Limited and Nuclear Electric Insurance Limited (NML and NEIL-II), the CoIT111ission published a notice of receipt requesting public comment on the petitions in the Federal Register of September 19, 1988 (53 FR 36335).

The petitions were filed in response to a final rule on changes in property insurance requirements pub-lished by the Commission on August 5, 1987 (52 FR 28963). These petitions sought (1) clarification of the scope and timing of the stabilization process after an accident at a covered reactor; (2) clarification of the procedures by which the NRC determines and approves expenditures of funds necessary for decon-tamination and cleanup, and clarification of how such procedures affect both insurer's needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes; (3) a change in the terminology of the required insurance from "property" insurance to "decontamination liability" insurance so as to better forestall claims on insurance proceeds by a licensee's bond-holders; and (4) rescission of the provision that proceeds of the required insurance are to be paid to an independent trustee, who will disburse the pro-ceeds for decontamination and cleanup of the facility before any other purpose.

Four comments were received on the petitions for rulemaking, all of which supported the amendments reco1T111ended in the petitions. The Corranission responded to the comments received on the petitions in a proposed rule published on November 6, 1989 (54 FR 46624). This final rule, in effect, grants these petitions and completes NRC action in response to PRMs 50-51,50-51A, and 50-51B.

II. Analysis of and Response to Crnmnents On November 6, 1989, the Convnission published in the Federal Register (54 FR 46624) a proposed rule to amend 10 CFR 50.54(w).

The rule was developed in response to the three petitions for rulemaking discussed above.

As of January 18, 1990, the NRC received seven conunents on the proposed rule. Six co1T111ents came from electric utilities or their representatives.

One corrrnent came from the Association of the Bar of the City of New York.

All convnenters essentially supported the Co1T111ission 1s rulemaking, although some took issue with specific provisions.

Two aspects of the proposed rule, in particular, were opposed by several coR111enters.

The first is the statement in the preamble of the proposed rule that the NRC retains the authority to require an indepen-dent trustee to hold and to disburse insurance proceeds in individual cases, if warranted.

Further, the NRC expressed its intention that if the NRC obtains authority to receive and retain insurance proceeds itself, it will consider whether to exercise this authority and the best method of implementing the authority (54 FR 46624, at p. 46627).

In support of their objections, the corrmenters refer to the case cited in the proposed rule -- In re Smith-Douglass (Nos. 87-1683, -1684 (4th Circuit, September 6, 1988))

and take issue with the Corrmission's conclusion that the decision in this case justifies future reimposition of a trusteeship requirement.

The Commission continues to believe that uncertainties remain with respect to interpretation of this and similar decisions. Consequently, if the Convnission concludes that future conditions warrant reinstitution of the trus-teeship requirement, ft will reopen this issue for reconsideration. If the Commission does make such a decision, however, it will provide ample opportunity for public corrment at that time.

Because no provision of this final rule is affected by these concerns, the Co1T111ission proposes no further discussion or action at this time.

The second issue raised by several commenters concerns how the Corrmission might address possible increases in accident cleanup costs resulting from inflation or other factors. Corrmenters expressed the opinion that there is insufficient experience from which to develop an effective formula to estimate future accident cleanup costs. Furthennore, such a formula would not be able to account for advances in technology that might reduce future costs. Corrmenters suggest that rather than use a formula to estimate future cleanup costs and consequently establish future insurance requirements, the NRC reevaluate accident cleanup costs every 3 to 5 years by conducting specific studies using then-current technology.

One co1T1T1enter recommended using a simple formula based on the Consumer Price Index to estimate future cleanup costs.

Since publication of the proposed rule, the NRC's contractor has updated NUREG/CR-26011 (hereinafter cited as Addendum 1) which provided the basis for the $1.06 billion in insurance currently required.

The report found that in 1989 dollars, approximately $1.03 billion would be needed for cleanup after a severe accident at a reference boiling water reactor.

In addition, depending on whether a 4 percent or an 8 percent inflation rate is assumed, an additional

$186.5 million to $409.9 million would be needed to cover incremental cost escalation during the cleanup process.

In evaluating these costs, the con-tractor considered labor, energy, waste disposal, and nuclear insurance as those cost components with the greatest potential effect on cost escalation.

111Technology, Safety and Costs of DecolTITlissioning Reference Light Water Reactors Following Postulated Accidents -- Addendum 1,~ Pacific Northwest Laboratory, to be published. This report will be available by approximately May 1990 for purchase from the U.S. Government Printing Office, P.O. Box 37082, Washington, DC 20013-7082.

A notice of availability will be published.

Except for nuclear insurance, these factors are the same as those used in the Commission's decommissioning rule, although the relative weights of the factors vary (53 FR 24018, June 27, 1988)(See 10 CFR 50.75(c)(2)). The Commission notes, however, that corrnnenters had ample opportunity to evaluate and comment upon the technical studies that the NRC used as the basis for its decornmis-sioning requirements.

No such opportunity has been available heretofore for Addendum 1. Consequently, the Co1T111ission concludes that the public interest would best be served if the issue of whether and to what extent the amount of accident cleanup insurance should increase is deferred pending public comment on Addendum 1.

As part of its conclusion, the Commission further notes that most licensees already carry accident cleanup insurance in amounts that exceed the maximum amount predicted by the formula in Addendum 1. Thus, there is no compelling health or safety reason to increase the required amount of insurance in advance of public convnent.

Concurrently, the Commission believes that the public corrments on Addendum 1 will enable the Commission to make more informed decisions in conn~ction with any future rulemaking proceeding to increase the amount of required insurance.

Individual corrmenters also have raised specific concerns with the proposed rule.

These concerns inclu,de the stabilization priority threshold, the 60-day priority period, and the cleanup plan.

One commenter indicates that, pursuant to proposed 10 CFR 50.54(w)(4)(i), insurance proceeds would only be required to be dedicated to stabilization and decontamination if the estimated costs exceeded $100 million.

Further, this priority would initially apply to stabilization costs for 60 days and could be extended in 60-day increments. Within 30 days after the reactor is stabilized. the licensee is required to submit a cleanup plan which must be approved by the Director of the Office of Nuclear Reactor Regulation. This connnenter also suggests that the rule should clarify (a) whether the NRG or the licensee provides the cost estimate, and (b) how the Director of the Office of Nuclear Reactor Regulation determines the length of the stabilization priority and the criteria for approving the cleanup plan.

The NRC believes that these and similar issues have been discussed in previous rulemaking and that additional specificity_may be cumbersome and counterproductive.

The Corrmission clearly intends to rely on licensees to prepare initial cost estimates of accidents. although it is conceivable that the Commission could prepare its own confirmatory estimates if unusual circumstances warranted.

Furthermore. a cut-off figure of $100 million represents a relatively minor accident where the availability of funds would not, as a practical matter, be at issue. Thus, it is very unlikely that the Corrmission would dispute estimates unless they significantly exceeded $100 million. Further, section 50.54(w)(4)(i) explicitly defines what constitutes stabilization. Therefore, it is unlikely that serious disagreements would arise concerning when a reactor is stabilized.

However, if disputes over stabilization should arise, the Commission's Rules of Practice under 10 CFR Part 2 provide adequate procedures to resolve them.

Similarly, Part 2 procedures are also available to resolve disputes that may arise over the content of cleanup plans. The Conmission notes that the proposed

-rule was drafted in response to the suggestions of petitioners representing most power reactor licensees and their insurers. The petitioners did not raise these specific issues in their petitions or in comments on the proposed rule.

Consequently, the Corrunission concludes that the suggested changes to the proposed rule are not needed.

One commenter takes issue with the following statement in the Regulatory Analysis published in connection with the proposed rule: "Although the effect of these formulas, if developed and adopted, would be to increase the required amount of insurance for some licensees, there should be little impact on insurance costs to, licensees because almost all licensees buy the maximum amount of insurance available" (54 FR 46624, at p. 46628, November 6, 1989). This co1T111enter states that, wThis 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 ihsurance available this year following an increase in available coverage."

Notwithstanding this conmenter's decision not to buy additional insurance, the Commission notes that the maximum amount of insurance currently offered exceeds by a significant margin the amount that would be required if the maximum figure suggested in Addendum 1 were adopted.

Most licensees currently purchase substantially more than this maximum. Thus, the Commission stands by the statement in question.

These amendments provide relief from restrictions under regulations due to take effect on April 4, 1990. Therefore, pursuant to 5 U.S.C. §553(d)(l), the Commission is making the rule effective on the date of publication in the Federal Register without the customary 30-day waiting period.

III. Finding of No Significant Environmental Impact; Availability Noting that the text of the final rule is identical to that of the proposed rule, the Corrnnission has reviewed the environmental assessment and finding of no significant environmental impact published in the Federal Register on November 6, 1989 (54 FR 46624, at 46627) in connection with the proposed rule.

On the basis of that review, and after considering the public comments and determining that such comments do not affect the conclusion reached in the earlier finding of no significant impact, the Corrnnission has concluded that this amendment to 10 CFR 50.54(w) is not a major Federal action significantly affecting the quality of the human environment, and therefore, an environmental impact statement is not required.

The environmental assessment and finding of no significant impact on which this determination is based are available for inspection and copying at the NRC Public Document Room, 2120 L Street, NW. (Lower Level), Washington, DC.

IV.

Paperwork Reduction Act Statement This final rule amends information collection requirements that are subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). The final rule has been referred to the Office of Management and Budget for review and approval.

Public reporting burden for this collection of information is estimated to average 2,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Send contnents regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Information and Records Management Branch (MNBB-7714), U.S. Nuclear Regulatory Co111T1ission, Washington, D.C. 20555; and to the Paperwork Reduction Project (3150-0011), Office of Management and Budget, Washington, D.C. 20503.

V.

Regulatory Analysis On November 6, 1989, the Connnission published in the Federal Register (54 FR 46624) a proposed rule to amend 10 CFR 50.54(w).

The rule was developed in response to three petitions for rulemaking.

Notice of receipt of these petitions was published in the Federal Register on September 19, 1988 (53 FR 36335). These petitions sought clarification of the stabilization and e decontamination priority provisions and rescission of the trusteeship provisions currently contained in 10 CFR 50.54(w). The petitions further stated that the trusteeship provisions may actually have an effect counter to their intended purpose by delaying the payment of claims and thus possibly the cleanup process.

The rule developed in response to the petitions for rulemaking should help clarify the mechanism by which accident cleanup funds may be guaranteed to be used for their intended purpose.

Even without formal stabilization and decon-tamination priority and trusteeship provisions, the NRC has authority to take appropriate enforcement action to order cleanup in the unlikely event of an accident.

By rescinding the trusteeship requirement, the Conunission would be eliminating licensees' costs to obtain trustee services. Thus, the rule will not create substantial costs for licensees.

The rule will not have significant impacts on State and local governments and geographical regions, on the environment, or create substantial costs to the NRC or other Federal agencies. The foregoing discussion constitutes the regulatory analysis for this rule.

VI.

Regulatory Flexibility Certifi'cation As required by the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the Cormiission certifies that this final rule does not have a significant economic impact upon a substantial number of small entities. The rule only affects licensees of nuclear power plants.

None of the holders of these licenses fall within the scope of the definition of "small entities" set forth in the e 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 determined that the backfit rule, 10 CFR 50.109, does not apply to this rule because this rule will not impose a backfit as defined in §50.109(a)(l).

Therefore, a backfit analysis fs not required for this rule.

I I

I List of Subjects in 10 CFR Part 50 Antitrust, Classified information, Fire protection, Incorporation by reference, Intergovernmental relations, Nuclear power plants and reactors, Penalty, Radiation protection, Reactor siting criteria, Reporting and recordkeepi~g 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 50 - 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 50.13, 50.54(dd) and 50.103 also issued under sec. 108, 68

). ' Stat. 939, as amended (42 U.S.C. 2138).

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).

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 through 50.81 also issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 2234).

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);

§§50.46(a) and (b), and 50.54(c) are issued under sec. 161b, 68 Stat. 948, as amended (42 U.S.C. 2201(b)); §§50.7(a), 50.lO(a)-(c), 50.34(a) and (e),

50.44(a)-(c), 50.46(a) and (b), 50.47(b), 50.48(a), (c), (d), and (e), 50.49(a),

50.54(a), (i), (i)(l), (1)-(n), (p), (q), (t), (v), and (y), 50.55(f),

50.55a(a), (c)-(e), (g), and (h), 50.59(c), 50.60(a), 50.62(c) 50.64(b), and 50.80(a) and (b) are issued under sec. 161i, 68 Stat. 949, as amended (42 U.S.C. 2201(1)); and §§50.49(d), (h), and (j), 50.54(w), (z), (bb), (cc),

and (dd), 50.55(e), 50.59(b), 50.61(b), 50.62(b), 50.70(a), 50.71(a)-(c) and (e),

50.72(a), 50.73(a) and (b), 50.74, 50.78, and 50.90 are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

2.

Section 50.54 is amended by revising paragraph (w) to read as follows:

• §50.54 Conditions of licenses.

(w)

Each electric utility licensee under this part for a production or utilization facility of the type described in §50.21(b) or

§50.22 shall take reasonable steps to obtain insurance available at reasonable costs and on reasonable terms from private sources or to demonstrate to the satisfaction of the Co1TU11ission that it possesses an equivalent amount of protection covering the licensee's obligation, in the event of an accident at the licensee's reactor, to stabilize and decontaminate the reactor and the reactor station site at which the reactor experiencing the accident is located, provided that:

(1) The insurance required by paragraph (w) of this section must have a minimum coverage limit for each reactor station site of either $1.06 billion or whatever amount of insurance is generally available from private sources, whichever is less.

The required insurance must clearly state that, as and to the extent provided in paragraph (w)(4) of this section, any proceeds must be payable first for stabilization of the reactor and next for decontamination of the reactor and the reactor station site. If a licensee's coverage falls below the required minimum, the licensee shall within 60 days take all reasonable

• steps to restore its coverage to the required minimum.

The re-quired insurance mayt at the option of the licensee, be included within policies that also provide coverage for other ris~st in-cludingt but not limited tot the risk of direct physical damage.

(2)(i) With respect to policies issued or annually renewed on or after t [insert a date 1 year after the effec-tive date of the rule] the proceeds of such required insurance must be dedicated, as and to the extent provided in this para-grapht to reimbursement or payment on behalf of the insured of reasonable expenses incurred or estimated to be incurred by the licensee in taking action to fulfill the licensee's obligation, in the event of an accident at the 11 censee' s rea.ctor, to ensure that the reactor is int or is returned to, and maintained in, a safe and stable condition and that radioactive contamination is removed or controlled such that personnel exposures are consis-tent with the occupational exposure limits in 10 CFR Part 20.

These actions must be consistent with any other obligation the licensee may have under this chapter and must be subject to paragraph (w){4) of this section.

As used in this section, an 11accident 11 means an event that involves the release of radioactive material from its intended place of confinement within the reactor or on the reactor station site such that there is a present danger of release off site in amounts that would pose a threat to the public health and safety.

l l'

I (11)

The stabilization and decontamination requirements set forth in paragraph (w)(4) of this section must apply uniformly to all insurance policies required under paragraph (w) of this section.

(3)

The licensee shall report to the NRC on April 1 of each year the current levels of this insurance or financial security it main-tains and the sources of this insurance or financial security.

(4)(i) In the event of an accident at the licensee's reactor, when-ever the estimated costs of stabilizing the licenied reactor and of decontaminating the reactor and the reactor station site exceed $100 million, the proceeds of the insurance required by paragraph (w) of this section must be dedicated to and used, first, to ensure that the licensed reactor is in, or is returned to, and can be maintained in, a safe and stable condition so as to prevent any significant risk to the public health and safety and, second, to decontaminate the reactor and the reactor station site in accordance with the licensee's cleanup plan as approved by order of the Director of the Office of Nuclear Reactor Regulation. This priority on insurance proceeds must remain in effect for 60 days or, upon order of the Director, for such longer periods, in increments not to exceed 60 days except as provided for activities under the cleanup plan required in paragraphs (w)(4)(iii) and (iv) of this section, as the Director

I l

I I

• may find necessary to protect the public health and safety.

Actions needed to bring the reactor to and maintain the reactor in a safe and stable condition may include one or more of the following, as appropriate:

(A)

(B)

Shutdown of the reactor; Establishment and maintenance of long-term cooling with stable decay heat removal; (C)

Maintenance of sub-criticality; (D)

Control of radioactive releases; and (E)

Securing of structures, systems, or components to minimize radiation exposure to onsite personnel or to the offsite public or to facilitate later decontamination or both.

(ii) The licensee shall inform the Director of the Office of Nuclear Reactor Regulation in writing when the reactor is and can be maintained in a safe and stable condition so as to prevent any significant risk to the public health and safety.

Within 30 days after the licensee informs the Director that the reactor is in this condition, or at such earlier time as the licensee may elect or the Director may for good cause direct, the licensee shall prepare and submit a cleanup plan for the Director's approval.

The cleanup plan must identify and contain an estimate of the cost of each cleanup operation

• that will be required to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor or to apply to the CoITJTiission under §50.82 for authority to decormnission the reactor and to surrender the license volun-tarily. Cleanup operations may include one or more of the

(

following, as appropriate:

(A)

Processing any contaminated water generated by the accident and by decontamination operations to remove radioactive materials; (B)

Decontamination of surfaces inside the auxiliary and fuel-handling buildings and the reactor building to levels consistent with the COITillission's occupational exposure limits in 10 CFR Part 20, and decontamination or disposal of equipment; (C)

Decontamination or removal and disposal of internal parts and damaged fuel from the reactor vessel; and (D)

Cleanup of the reactor coolant system.

(iii) Following review of the licensee's cleanup plan, the Director will order the licensee to complete all operations that the Director finds are necessary to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor or to apply to the Conunission under §50.82 for authority to decommission the reactor and to surrender the

.t LIJ

• license voluntarily. The Director shall approve or disapprove, in whole or in part for stated reasons, the licensee's estimate of cleanup costs for such operations. Such order may not be effective for more than 1 year, at which time it may be renewed.

Each subsequent renewal order, if imposed, may be effective for not more than 6 months *

(iv) Of the balance of the proceeds of the required insurance not already expended to place the reactor in a safe and stable condition pursuant to paragraph (w)(2)(i) of this section, an amount sufficient to cover the expenses of completion of those decontamination operations that are the subject of the Director's order shall be dedicated to such use, provided that, upon certification to the Director of the amounts expended previously and from time to time for stabilization and decontamination and upon further certification to the Director as to the sufficiency of the dedicated amount remaining, policies of insurance may provide for payment to the licensee or other loss payees of amounts not so dedicated, and the licensee may proceed to use

• in parallel (and not in preference thereto) any insurance proceeds not so dedicated for other purposes.

Dated at Rockville, Maryland, this efl~ay of ;jJ1990.

For the Nuclear Regulatory Commission.

for Operations.

WRITER' S DIRECT DIAL DOCKET NUMBER p 60 PROPOSED RULE

"\

( 5 4 FR Lf &,tt,~ c.l-1 LAW OFFICES DOC:K£iED B ISHOP, COOK, PURC ELL & R EYN O LD5NRC 1400 L STREET, N.W.

WASHINGTON, D.C. 20005-3502 (202) 371-5700 "90 JUL -2 p 7 :Q6 June 22, 1990

,jff!C::. OF SECHETARV DOCK[! ING i, SfilVICfi:ux, 440574 INTLAW u1

?R /:,. NCH TELECOPIER (202) 371-5950 Roberts. W0od Senior Financial Policy Analyst Policy Development & Technical Support Branch Office of Nuclear Reactor Regulation

u. s. Nuclear Regulatory Commission Washington, D. c. 20555 Re:

Amendments to NRC Regulation 10 CFR §50.54(w)

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

Dear Mr. Wood:

On April *, 1990, the Nuclear Regulatory Commission published in ~he Federal Register the above-captioned final rule.

The rule responds to the June 21, 1988 Petition for Rulemaking filed by the Edison Electric Institute ("EEI") and the Nuclear Utility Management 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.

The purposes of this letter are to record our disagreement with a possible misinterpretation of the rule that may arise from a statement in the explanatory material that accompanied the 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.

" LEAR REGULATORY CO MISS\ON

" KETING & SERVICE SECTION

!=ICE OF THE SECRETAR OF THE COMMISSION Document stalistiCS

,ark Date

/J/!-f<..

<,es Received _ _,__ ____

I Copies Repr0duced....,,4

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Roberts. Wood June 22, 1990 Page 2 Beyond explaining that the deferral would afford an opportunity for public comment on the update, the Commission noted "that most licensees already carry accident cleanup insurance in amounts that exceed the maximum amount predicted by 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 amount 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.

Nor 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 from the Commission's statement regarding the amount of insurance 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", i.e.,

insurance that would be subject to the stabilization and decontamination priorities.

While it is true that the current 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 required 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

Roberts. Wood June 22, 1990 Page 3 insurance (in excess of the specified threshold amount) must be dedicated to the specified purposes.

We request that you clarify this matter by confirming that our interpretation set forth in the preceding paragraph (i.e., to the effect that only $1.06 billion of whatever larger amount a licensee may choose to maintain, would, by force of the rule, be subject to the priority provisions), is consistent with the NRC Staff's understanding and intended application of the rule.

We understand that such confirmation will not constitute a written interpretation by the General Counsel, and, under 10 CFR §50.3, will not be binding on the Commission.

Should you desire to discuss this matter, we would be pleased to meet with you at your convenience.

s

Knotts,

r.

Co nsel for EEI and NUMARC

-===-APul.

DOCKET NUMB.ER fl St"/)

P~OPOSJD RULE,,...-~

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(!5'1 F;r1/662 f DOCKETED USHRC January 15, 1990 0CAN019004 Mr. Samuel J. Chilk, Secretary U. S. Nuclear Regulatory Commission Document Control Desk Mail Station Pl-137 Washington, D. £.

20555 "90 JAN 29 P 2 :42 ATTN:

Docketing and Service Branch

Subject:

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. Chi l k:

Arkansas Power & Light Company Little Rock, AR 72203 (7

425 West Capitol ct)

P O Box 551 Tel 501 377 4000

()

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 t~e proposed language and expanded the scope of certain proposals 11 so that NRC responsibilities and concerns are more clearly presented.

11

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U. S. NUCLEAR REGULATORY COMMISSION DOCKETING & SERVICE BRANCH OFFICE OF THE SECRETARY OF THE COMMISSION

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:

Clarification of the scope and timing of the stabilization process after 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 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 §50.54(w)(4)(ii) and (iii),

11 *** to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor or to apply under §50.82 for authority to decommission the reactor and to surrender the license voluntarily.

11 The petitioners' proposals suggested 11 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.

11 We are in agreement with the currently proposed wording.

A change in the terminology of the required insurance from 11 property 11 insurance to 11 decontamination liability 11 insurance In order to insulate decontamination priority insurance proceeds from 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.

Mr. Samuel J. Chilk Page 3 January 15, 1990 Rescission of the prov1s1on that proceeds of the required insurance are to be paid to an independent trustee In the final rule of 1987, the NRC included the trusteeship prov1s1ons to assure that decontamination and cleanup expenses received priority over other post-accident activities.

The NRC states 11 *** a combination of the hybrid policy, explicit procedures for the payment of claims, and recent decisions in bankruptcy cases may more effectively protect decontamination and cleanup expenses from competing claims.

11 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 11Although the effect of these formulas, if developed and adopted, would increase the required amount of insurance for some licensees, there should be little impact on insurance costs to licensees because almost all licensees buy the maximum amount of insurance available.

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

To fully define decontamination and cleanup costs, many accident scenarios and consequences of those scenarios would have to be developed, costs assigned, and mitigation plans produced, in addition to methods for inflation 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 purchase all capacity offered by the insurers, which indicates the insurers would determine how much capacity is enough and directly impact utilities 1 budgets 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,

~,~~

James J. Fisicaro Manager, Licensing JJF/SAB/lw 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 - AN0-1 & 2 Number 1, Nuclear Plant Road Russellville, AR 72801 Mr. C. Craig Harbuck NRR Project Manager, Region IV/AN0-1 U. S. Nuclear Regulatory Commission NRR Mail Stop 13-0-18 One White Flint North 11555 Rockville Pike Rockville, Maryland 20852

Mr. Samuel J. Chilk Page 5 January 15, 1990 Mr. Chester Poslusny NRR Project Manager, Region IV/AN0-2 U. S. Nuclear Regulatory Commission NRR Mail Stop 13-0-18 One White Flint North 11555 Rockville Pike Rockville, Maryland 20852

oocKET NUMBER PR r

• 1~~1 PROPOSED RULE -

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( 5 I FR V( {)Y).~:=~:r WlLU~\1 l Come Vice ~resident NuclE!Or Operotions

,. !Aili~. 90ij!h U1i1li!II Comoany U.S. Nuclear Regul1tory Comm1siion Ma11 Station Pl-137 Washington, O.C.

2055S Attention:

Document Co trol Desk Gent1emen:

OOC:KETED USHRC "90 JAN 23 A 9 :39 OFFICE OF SECRETARY DOCKETING & S(HVIC[

ORA C'1

SUBJECT:

l:lr1u1d Gu1f Nuclear, St.at1on 1.1n *f *c :1 Docket No. 50*416 Lfc~n1e No. NPF-29

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SERI Comments on NRC Proposed Am1rndment to lOC:FR Part SO. S4(w)

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00!i0/0002 The following comments u-e being pr-ov1ded by System Energy Resources, Inc:.

(SERI) regarding the proposed rumendment to 10CF~5O.S4(w) provided by the November 6, 1989, Federa Register, for Stabi11iation and Decontamination Pri or1 ty, Trusteeshf p Prc,vh:1 ons, a1nd A.rr1ount 1o*f Property In!iurance Requirements.

w'".ue com~ e t.s :11ho incl ude SERI I s cons1dera1~1on on the appropriate 1evel of required

• niurance 1n v1~w of 1nf1at1on of decontamination and cleanup cost~.

C01MENTS REGARIJING THE Pl~OF'CISED AME:NOMHIT TO 10C:FR50. 54(w)*

The four points of co tenttcn cont11ned i the petitioners' proposal and SERI's comments regard1ng the proposed NRC am1ndment are as follows:

o Cl a.r:!.fJJ:~~...!2.f..J:he...!.S:2it!....!!l~L.t1 mii.n.q~f the stab*l 1 i zat 1 on process afte an accident at, covertd reactor We agree w1th the pet1t1onert that the stab11izat1on process shou1d be def1 1td and ctar1 1Eid 1n the 'ru1e.

It 1s thou!;ht that the ex1st1ng prior1ty on 1r,suranc:E! p-roceed5i, and bec11Jse proceeds for the dec:ontamin~t 'on but not ~tab111zat1on are to be paid to an inderpendent t,r s1:ee 1 v1c,u'ld c:m,u, c:onf1rn1on and un1,ec:essary delays regarding when, to whoITT 1 and 1n w at amounts proceeds for stab1111at1o sho1Jld bu paid. A1o g w th the petitioners, we also be11,eve that t e :~tab1'11ut1on pr1c1ri i~~, should no*t be invoked until th~ estimated cost of ~tabil t~at1o and decontamination exceeds a threshold of $100 mil 1on and th1 & pr1or1ty should only 1ast for 30 da)'S Lln1ess @i)(teni~ed bJ, the Ul~C.

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V *v l AECM-90/0002 Page 2 In the proposed ru1e, th! $100 m1111on thresho1d was accepted; the proposE!d 30-day s.tab111 u t 1 on perfod prfor1ty was extended to a 60-da_y pr1or1ty on 1ns1.1rance proce,ed-si,1nd the pet1t1oners' examples of stabil hat1o act1or, were modified :;1:i,mewhat by acld1ng ma1ntenanc:*

of sub-cr1t1cal1ty.

The mod1f1cat1ons are ~ppropr1ate ~nd ~! are 1n agreement w1th thts propos~d amendme t.

o C1ar1fi£;at!on 0L.2..!:2cec[~r:esk_~h!.~:h *~hit NRC determ1 nes and approves expendi_i~~!s of funds r1e~!J sary_ for:...~!t!:.9.!!tam1 nat 1 on and cleanup 0

Consistent w1th the pet1t1oners' proposa1, language was adopted for post*acc1dent cl~anup plans, 1n order that the unplanned insurance proceeds may be used fer act1v1t1es other than thoso defined as stab11 zat on ancl de*cor tam1nat1on pr1o 1ty act1v1t1u. Early access to these funds woul he1p licensees to better cope w1th any adverse f1nanc ial affect~ of the accident and wold reduce the 11kel1hood that a 11cunsee*s f1nanc1al hardsh1p wou1d have an adverse impact on the protection oft e public.

We are 1n agreement w1th th1s proposed amendment.

A chan<l! 1n the t.errr,inc,10~ oft.he reg; 1nd 1nsuranc:e from 110,ropii-t~-Trisurc1neetc:1"dEic'ont,l.mJ.iJA't'1 on-11ab111 tl' 1 n surance In order to insu ate the decontamination priority insurance proceeds from indenture prov1sicins 1nnd t,eca1Jse,al1 nue1ear property insurers are no,~ w1'1Hng to offmr h~1br1dl po'l1c1u, the proposa1 was adopted to require insurance that clear1y states that any p oceeds must be payable first for stab111zit1on of the reactor and next for decontamination of the r~actor and the reactor station site.

We are 1n agreement w1th this proposed amendment.

o Resc1!,sj_on_ of tbJLR.I:.2.Y..JJ.2!1 thaj':.J!_..9.f!:!ru; of the re,~u1 red 1 nsurance to be pJ,!g_ to a~ 1 dee~~~lent tT'..!!tst~!t.

We agr~e with tho pet1tion@rs that the trust11 provfs1on is unworkab1e. unnec:usar~, a1nd coLmteorproduct1ve.

The requirement of a trustH added fu,~ther bur*dErn tc1 an a11 ready comp1e,c process.

Although t e Comrnhs101 re1~a1nE1d t e authority to 1mpose sueh require e~ts in 1nd v1du~1 cas~s, if warranted, the NRC proposal to eliminate, at least temporar1lyt t, trustee requ1rement 1s apprc,p-r1 at.,a.

AEC90103/SNLICFLR - 2

U, JI COMMENTS REGAROHlG THE APPROPRIA 'E LEVEL F nEQIJI 1RED INSURANCE-AECM-g0/0002 Page 3 In add1t1on to comme ts regarding the propos~d amendment, the NRC also requested comments ragard1ng the appropriat e level of 1ndex1ng of the requ1red amou t of insurance.

The NRC 1nd1c~tes that 1n the 1987 rulemakfng, it had no effective means of d~tarm1n1ng future cost of accident s-tab*1Hzatfon, decc1ntam1nation,,rnd cleanup other than by periodic updla'te s, of the Pac1 ft c Northwut l.~1boratory stucly from wh1 ch the current $1.06 billion requirement was d1r1 ved.

The NRC sol1e1tat1on for comments cont1n1es with suggestions that a mechanism similar to the one used 1n it:s f'ln1~1 dec:omm1ss1on1ng regul;1t*lor11; ay be appr*opr1ate for accident cleanup 1nf1at1on.

A significant com~onent of the mechanism's formula would b~ reactor size and ty,e.

Add tionally, 1n 1ts ReQu1itorY Ana iy:;1s, the Nl~C states 1 "A 1 *tnough the ef 1et:t of the formu1 a, 1 f developed and adopted, w,:,uld *1 ncreas1! the rec1uf red amount of insurance cost to licensees, there should be little mpact on 1nsurance cost to licensees becau~e almost ~,1 11cense~s buy the maximum amount of insurance available."

We be11~ve that the $1.06 b1111on presently required is a~ appropriata as ~ny ca1cu1atf on generated by formulas, 1nc1uding reactor size and typ~.

Thij adeqLacy of the $1.06 b1111on wou1d have to be stlldhd b.v run1,in:; rnany ac:,:1der,t S',1:1tnarios and consequences of these would heve to be develop~d, cost ~ss1g ed and mitigation plans produced, in aidcl1 t 1 o to rnet C>ds for 1 nflclit, i l'I 1 ndex 1 ng.

It 1 s qu 1 te probable that each rea~tor would requir~ a d1fferent level of fnsuranc:e, based on this atsessment.

Add1t1ona ~1y, the question of whether the 1ndex1ng method should be simflar to tht method used in the decommissioning rule (10C:l!RS().75(c)(~()) appea1~!i arbitrary as decomm1ssionfng ~osts and accident clean p c:osts are not strictly 1!qu1va1ent.

The financial impact stateme1t made 1n the Regulatory Analys1s may presently be tru~, as Most 1tc~nsees do purchase all ava11ab1e capacity.

However, for various rc!ucins cc1mpanie-s m,1y not carry a11 *~hat 1s ava11able in the futurtL Th* s cc,mment. s1Jggests; that ut11'1t1es w111 always purchase all capacity offered by the insurers, which 1nd1cated the insurers wou'ld d1~termir1e how 1.1ch capacity is adequate.

ih1 s wou1d force ut111ties into tuking the maximum coverage offered and would no longer allow them to make the dec1s1on &s tc whethe 1ncreases 1n 11m1ts were economical, reasonable, etc.

~n sun,mary, our C(1mmer1ts are t hat we are 1n aure1e1n1ent w1th the proposed amendments as written, and believe that the prestnt requirement of $1.06 b1111on is appropriate and there 1s no need to c eate a mechan sm for establ1sh1ng base requireme t amounts or escalat1o factors, SERI appreciates thf ~pportun1ty to comment on tho proposed 10CFR50.54(w) amendment and request~ NRC cons1derat1on of t ~es~ comments in the f1na1 ru1emak1ng.

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Mr. 0. c. Hintz Mr. T. H. C1on nger Mr. R. B. McGehee Mr. N. s. Reync,lds Mr. H. L. Thc1mu Mr. H. o. Chr*1 sitennn Mr. Stewart 0. Ebneter Reg1ona1 Adm1n1strator U.S. Nuchiar Rtgulato'ry l:om1n11;g*fon Region II 101 Marietta St., N.W,, Su1 te 2900 Atlanta, Georgia 30323 Mr. L. L. K1ntnar, Project Ma~ager Office of Nuclear Reactor Rogu1nt1o~

U.S. Nucher Re1;ul atory Coffll1!11!;s on Ma11 Stop 11$920 Wa&h1ngton, 0.C, 20555 AEC90103/SNLICFLR - 4 AECH-90/0002 Page 4 I

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SCE&G A scnrm Company South Carolina Electric & Gas Company P.O. Box 88 Jenkinsville, SC 29065 (803) 345-4040 January 4, 1990 oocKn NUMBER PR ro_ _

PROPOSED RULE -

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Mr. Samuel J. Chilk

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Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D. C.

20555 Attention:

Docketing and Service Branch Vice President

/

Ollie S. Bradham ([J Nuclear Operations b COC.:KETEO USNRC "90 JAN 12 A 8 :1 7 vFF!C:: OF SECRETARY i)OCK[l ING t, SE ilVIC[

BRANCH

Subject:

Virgil C. Summer Nuclear Station Docket No. 50/395

Dear Mr. Chilk:

Operating License No. NPF-12 Comments on the Proposed Rule for Stabilization and Decontamination South Carolina Electric and Gas Company (SCE&G) has reviewed the proposed ru le, "Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements," to 10CFR50.54(w) which was promulgated in the Federal Register (54 FR 46624) of November 6, 1989.

SCE&G supports the rule change and endorses the comments provided by the Edi son Elect r ic Institute on t his issue.

Very truly yours,

0. S. Bradham ARR/OSB:dgw c:

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

E. C. Roberts W. A. Williams, Jr.

J. J. Hayes, Jr.

General Managers C. A. Price D. L. Abstance

. HI~ ~.j 1990 A. R. Rice NSRC NPCF RTS (PR 880029)

File (811.02, 50.016)

!>. Nu(ltt R prr*!_'l l.TC/'Y COMMISSIC:j DOCt<mt*!G /', ~~'.:Vii[ SECTION O*FIC'E c -; 1: r * '":PRY C*:.1 AJ 1*:

JAY E. SILBERG CHAIR 2300 N STREET, N.W.

WASHINGTON, D.C. 20037 (202) 663-8063 THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK 42 WEST 44TH STREET NEW YORK 10036-6690 COMMITTEE ON NUCLEAR TECHNOLOGY AND LAW DOC:KE iED USNi~C January 8, 1990

'90 JAN 10 P4 :12 DFF!C:: OF SECHETAR.X DOCKETING & SE.t1V!Cf

!3HANCH Secretary U.S. Nuclear Regulatory Commission Washington, D.C.

20555 Attention:

Docketing and Service Branch Re:

Proposed Rule:

Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements

Dear Sir:

JEFFREY L. RIBACK SECRETARY 4 IRVING PLACE NEW YORK, NY 10003 (212) 460-6677 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-ciation, a voluntary bar association with more than 18,000 mem-bers.

In 1949, the Executive Committee of the Association adopted a resolution establishing a Committee on Atomic Energy, 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

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Secretary U.S. Nuclear Regulatory Commission January 8, 1990 Page Two 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 CFR § 50.54.

The Committee is confident that the Commission's efforts will provide adequate 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.

s/008j:E9997.90

I VIRGINIA ELECTRIC AND POWER COMPANY R ICHMOND, VIRGINIA 23261 DOCKET NUMBER PR. 5J1.~-' '-i',~

January 5, 1990 e 1cKL r rn USNRC 10CFR50 PROPOSED RULE

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• 90 JAN 10 P 3 :50 Secretary United States Nuclear Regulatory Commission Attention: Docketing and Service Branch 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 November 6, 1989. In Section VI, Regulatory Analysis, the NRC states that "Although the effect of these formulas, if developed and adopted, would be to increase the required amount of insurance for some licensees, there should be little impact on insurance costs to licensees because almost all licensees buy the maximum 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.

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. Doing 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 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 CPI is too general.

Very truly yours, J ~

JAN 2 3 1990-

w. L. Stewart Acknowledged by card~~*... ;;:;1;;"~~*

Senior Vice President - Nuclear

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DOCKET NUMBER PR 50 PROPOSED RULE

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Secretary U.S. Nuclear Regulatory Commission 11555 Rockville Pike Rockville, MD 20852 DOCKEiEO January 54Stf~O

-SU JAN -9 Pl2 :16 OFF!C£" OF SECRFTARY DOCKET ING t. SEfiVICL BRANCH

Subject:

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

Dear Mr. Chilk:

This letter provides Commonwealth Edison Company's (CECo's) comments on the proposed revision to 10 CFR 50.54(w), on the requirements for insurance for stabilization 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 because they eliminate previous concerns regarding the treatment of insurance proceeds.

However CECo has the following specific comments.

Stabilization Priority Threshold Pursuant to 10 CFR 50.54(w)(4)(i) as proposed, insurance proceeds would be required to be dedicated to stabilization and decontamination if the estimated costs were to exceed $100 million. Clarification to the rule is needed to specify whether the NRC or the licensee will provide the estimate.

CECo believes that the licensee should make the cost estimate since the licensee 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 NRC.

60-Day Priority Period Pursuant to 10 CFR 50.54(w)(4)(i) as proposed, for accidents where stabilization and decontamination cost estimates exceed $100 million, the stabilization priority on insurance proceeds will apply init i a l ly for 60-days and may be extended in 60-day increments by the Direc t or of Nuclear Rea c t or Regulation (Director).

The proposed rule does not prov ide any criteria to guide the Director's determination, nor does it provide for a y dispute resolution should the licensee disagree with the Director.

Cri teria and provisions for dispute resolution should be provided in the rule.

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Cleanup Plan Pursuant to 10 CFR 50.54 (w)(4)(i) as proposed, for accidents where stabilization 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 stabilized.

The licensee will be required to submit cost estimates for each activity included in the cleanup plan.

The Director will be authorized to either approve or disapprove each activity.

The proposed rule does not provide any criteria to guide the Director's determination for the approval of activities, nor does it provide for any dispute resolution should the licensee disagree with the Director.

Such criteria and dispute resolution are important because they will be critical to the amount of excess insurance proceeds which will be available to the licensee for other activities after the accident.

Criteria and provisions for dispute resolution should be provided in the rule.

Need 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 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 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 unworkability have not changed and that the current proposals adequately implement the NRC's intent.

No further effort should be given on reconsidering a mandatory trusteeship provision.

The NRC has also stated its intent to seek authority essentially to act as 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 the NRC's authority to act as Trustee would place it in charge of any stabilization and decontamination efforts, which effectively may impede the licensee's ability to act judiciously.

CECo urges the NRC not to pursue such authority.

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

Such a formula would con t ain 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 fixed amount for cleanup insurance provides more than adequate coverage for any credible accident, and that the amount will remain adequate for the foreseeable future 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.

CECo also recognizes 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.

CECo believes however that much of the savings would be spent in the administrative costs of applying those formulas.

In conclusion, CECo believes that a case-by-case formula for determining the amount of insurance necessary for cleanup costs is not needed to ensure adequate funds, nor as an economic factor for licensees.

Commonwealth Edison appreciates this opportunity to comment.

M. S. Turbak Performance Improvement Manager 0050k

LAW OFFICES BISHOP, COOK, PURCELL & REYNOLDS t4f~

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PR POSED RULE

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Amendments to NRC Regulation Re gar'cring "Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements", 10 CFR §50.54(w),

54 Fed. Reg. 46624 (November 6, 1989)

Dear Mr. Chilk:

On November 6, 1989, the Nuclear Regulatory Commission published in the Federal Register the above-captioned notice of proposed rulemaking.

The proposed rule responds to the June 21, 1988 Petition for Rulemaking filed by the Edison Electric Institute ("EEI") and the Nuclear Utility Management 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 property insurance requirements adopted by the NRC in 1987 (52 Fed. Reg. 28963, August 5, 1987).

The proposed rule would (1) eliminate the requirement that post-accident insurance proceeds be paid to a special trustee, (2) require, instead of property insurance, "decontamination liability" coverage, which may be combined in the same policy with property coverage, to cover the licensee's obligation to decontaminate the reactor and reactor site following an accident, (3) clarify the scope and duration of the stabilization process immediately following an accident, (4) provide that the stabilization and decontamination priorities attach only above a $100 million threshold, and (5) clarify the NRC approval process and other mechanics of releasing for other purposes funds not needed for stabilization and cleanup.

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BISHOP, COOK, PURCELL & REYNOLDS Samuel J. Chilk January 5, 1990 Page 2 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 behind the rule than the current rule (as explained in our petition for rulemaking), we support the adoption of the proposed rule as a final rule.

We wish to note, however, our disagreement (for the reasons stated in our petition) with the notion reflected in the statement of considerations that reinstatement of the trustee requirem1nt 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 over unsecured claims.

It is obvious that the interposition of an independent trustee would in no way improve such a situation

-- a trustee without trust funds is still powerless to accomplish 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 the proposed rule), there will be unencumbered assets and a 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 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 use and the proportions in which they should apply to the base amount.

Moreover, we have been unable to identify any workable

.lJ In Re Smith Douglass, Inc. 856 F.2d 12 (4th Cir. 1988).

BISHOP, COOK, PURC E LL & REYNO L DS Samuel J. Chilk January 5, 1990 Page 3 alternative that would account for improvements in technology --

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 required by the rule.

We appreciate this opportunity to submit our views.

rely, iZj-B. Knot:.

el for EEI and NUMARC

l)OCKET NUMBER PR 5_0 __ _

PROPOSED RULE 1 ---) Arizona Public Service Company

( £ l/ Fr<. l/ 60 -;).LJ P.O. BOX 53999 PHOENIX, ARIZONA 85072-3999 WILLIAM F. CONWAY EXECUTIVE VICE PRESIDENT NUCLEAR Docket Nos. STN 50-528/529/530 Secretary U. S. Nuclear Regulatory Commission Washington, D. C.

20555 Attn:

Docketing and Service Branch

Reference:

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

Dear Sir :

Subject :

Palo Verde Nuclear Generating Station (PVNGS)

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 "NRG" or the "Commission") published the above Notice of Proposed Rulemaking (hereinafter referred to as the "Notice") in response to petitions for rulemaking filed to modify certain property insurance requirements adopted in 1987 (52 Fed. Reg. 28963, August 5, 1987).

The Arizona Public Service Company (hereinafter referred to as "APS"), as operating agent for the Arizona Nuclear Power Project, joined with the Edison 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 fil ed in thi s matter.

Adc!i tionally, i\PS holds NRC pcm~r

-eactor operating licenses for three nuclear plants (PVNGS 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 insurance proceeds be paid to and disbursed by a special trustee; CD

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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 NRG 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 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 Douglass, 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.

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 NRG review the issue of the amount of coverage required at three to five year intervals.

Secretary 161-02748-WFC/RACR/RAB January 5, 1990 U. S. Nuclear Regulatory Commission Page 3 Thank you for the opportunity to comment on the proposed rule.

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

Sincerely, WFC/ACR/RAB/jle

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• ' q Stabilization and Decontamination Priority, Trusteeship Provisions, and Amount of Property Insurance Requirements AGENCY:

Nuclear Regulatory Commission.

ACTION:

Proposed rule.

SUMMARY

The Nuclear Regulatory Comrnission proposes to amend the provisions of its property insurance regulations applicable to commercial power reactor licensees.

The changes are proposed to (1) clarify the scope and timing of the stabilization and decontamination processes after an accident at a covered reactor; (2) specify that the insurance is required to ensure that commercial power reactor licensees will have sufficient funds to carry out their obligation to clean up and decontaminate after an accident; and (3) eliminate the require-ment that insurance proceeds after an accident are paid to an independent trustee.

In addition, Chairman Carr and Corrmissioner Rogers support the staff proposal to solicit comments on the appropriate level of required insurance in view of inflation of decontamination and cleanup costs. This proposed rule responds to issues raised in three petitions for rulemaking.

DATES:

The corrment period expires [insert date 60 days after publication in the Federal Register].

Comments received after this date will be considered if it is practical to do so, but the Commission is able to assure consideration only for comments received on or before this date.

ADDRESSES:

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

ATTN: Docketing and Service Branch.

Hand deliver comments to: 11555 Rockville Pike, Rockville, MD, between 7:30 a.m. and 4:15 p.m. (Telephone (301) 492-1960).

Copies of comrnents received may be examined at the NRC Public Document Room, 2120 L Street, NW., Lower Level, Washington, DC.

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Robert S. Wood, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory ColTll'lission, Washington, DC 20555, Telephone (301) 492-1280.

SUPPLEMENTARY INFORMATION:

I.

Background

On August 5, 1987, the Co11111ission published in the Federal Register (52 FR 28963) a final rule that amended 10 CFR 50.54(w).

The rule increased the amount of onsite property damage insurance required of corrmercial power reactor licensees. The purpose of the rule was to provide an assured source of funds for onsite decontamination and cleanup of a power reactor facility after an accident.

In particular, the 1987 amendments required licensees to obtain insurance policies in which any proceeds from such policies are to be used for stabilization of a reactor after an accident and then 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 decontamination priority. The CoD1Dission believed that these provisions would effectively protect insurance proceeds from claims by bondholders or their representatives or, in the event of licensee default or bankruptcy, by other creditors. The Conmission based this belief on co1111Jents submitted by the Association of the Bar of the City of New York (hereinafter referred to as NYC Bar).

(See conment number 12 in response to the 1984 proposed rule (49 FR 44645, November 8, 1984)).

Subsequent to publication of the 1987 final rule, the NRC received three petitions for rulemaking that sought (1) clarification of the scope and timing of the stabilization process after an accident at a covered reactor; (2) clarification of the procedures by which the NRC determines and approves expenditures of funds necessary for decontamination and cleanup, and clarification of how such procedures affect both insurers' needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes; (3) a change in the terminology of the required insurance from 11 property 11 insurance to 11decontamination l iabi 1 fty" insurance so as to better forestall claims to insurance proceeds by a licensee's bondholders; and

3 (4) rescission of the provision that proceeds of the required insurance are to be paid to an independent trustee, who will disburse the proceeds for decontami-nation and cleanup of the facility before any other purpose.

Notice of receipt of the three petitions for rulemaking was published on September 19, 1988 (53 FR 36335). These petitions are (1) Petition for Rulemaking (PRM-50-51) dated June 3, 1988, from Linda S. Stein, Steptoe &

Johnson, counsel to American Nuclear Insurers and MAERP Reinsurance Association (ANI/MAERP); (2) Petition for Rulemaking (PRM-50-51A} dated June 21, 1988, from J. 8. Knotts, Jr., Bishop, Cook, Purcell & Reynolds, counsel to the Edison Electric Institute (EEI), the Nuclear Utility Management and Resources Council (NUMARC) and several power plant licensees; and (3) Petition for Rulemaking (PRM-50-51B), received July 18, 1988, from Peter D. Lederer, Baker & McKenzie, counsel to Nuclear Mutual Limited and Nuclear Electric Insurance Limited (NHL and NEIL-II).

Interested persons may examine and copy for a fee the above letters and petitions for rulemaking at the NRC Public Document Room, 2120 L Street, NW., Lower Level, Washington, DC.

Four comments were received on the petitions for rulemaking, all of which supported the amendments reconnended in the petitions.

In addition, NYC Bar submitted on June 30, 1988, a clarification and revision of its cormtents on the earlier property insurance rulemakings and called for rescinding the trusteeship provision that it had supported previously. The NYC Bar 1s submission was docketed as co11111ent nuDi>er 36 under the 1984 proposed rule (49 FR 44645, November 8, 1984).

II. Analysis of and Response to Issues Raised by Petitioners A.

Clarification of the scope and timing of the stabilization process after an accident at a covered reactor.

Petitioners* Concerns Petitioners believe that the stabilization process should be defined and clarified in the rule.

Insurers are concerned that, because the

4 existing rule requires a priority on insurance proceeds first for stabi-lizing a reactor after an accident and then for decontaminating the reactor, and because proceeds for decontamination but not stabilization are to be paid to an independent trustee. there could be confusion regard-ing when, to whom, and in what amount proceeds for stabilization should be paid.

In addition, petitioners believe that the stabilization priority should not be invoked until the estimated costs of stabilization and decontamination exceed a threshold of $100 million and that this priority should only last for 30 days unless extended by the NRC.

These changes would prioritize use of insurance proceeds for relatively more serious accidents in which there would be concern about the availability of adequate funds to protect public health and safety.

Petitioners believe that placing a threshold and time limit on the stabilization priority, when coupled with a procedure for estimating and authorizing expenditures for decontamination and cleanup after stabilization has been completed, would simplify the claims payment process and reduce the likelihood that insurance proceeds for cleanup would be tied up while claims by competing parties are being resolved.

NRC Response The NRC believes that petitioners* recorrmendations with respect to clar-ifying the stabilization priority generally merit incorporation in the rule.

During the process that culminated in the 1987 rulemaking, the Connission believed, and continues to believe, that stabilization is a relatively J

brief process occurring in the immediate aftermath of an accident where quick and effective response is necessary.

For that reason, the NRC chose not to make stabilization subject to the trusteeship provision. For the same reasons, the Commission did not define the stabilization process in the rule itself. However, petitioners believe that protection of public health and safety would be better served by more explicit treatment of the stabilization process in the NRC 1 s regulations.

5 The NRC has no reason to dispute petitioners* views and believes that petitioners* proposals in this area do not substantively change the Co11111ission 1 s policy as expressed in the preamble to the 1987 final rule. Consequently, the NRC proposes to accept in large measure petitioners* recoRl!lendations, but also proposes to further clarify the stabilization process beyond petitioners* reco11111ended wording.

Also, because in certain circumstances initial stabilization could take more than 30 days, the NRC proposes an initial stabilization period not to exceed 60 days, with extensions up to 60 days each, if necessary.

B.

Clarification of the procedures by which the NRC determines and approves estimates and expenditure of funds necessary for stabilization, decontamination and cleanup. Clarification of how such procedures affect both insurers* needs to secure appropriate proofs of loss and when payments may be made for non-cleanup purposes.

Petitioners* Concerns Petitioners expressed several related concerns with respect to the operation of the decontamination priority within the overall coverage of the policy. Petitioners are particularly concerned that the insurance proceeds not needed for stabilization, decontamination, or cleanup would be tied up until cleanup was completed. This could occur both for any coverage exceeding the $1.06 billion that NRC requires and for coverage falling within the $1.06 billion required but in excess of the amount needed for stabilization, decontamination, and cleanup after a particular accident. Thus, once it is determined that a particular accident will require, for example, $500 million for stabilization, decontamination and cleanup, licensees may need early access to the remaining insurance proceeds. Early access to these funds would help the licensee to better cope with any adverse financial effects of the accident and would

6 reduce the likelihood that a licensee's financial hardship would have an adverse impact on the protection of public health and safety. Addi-tionally, insurers believe that by specifically incorporating in the rule the flexible release of insurance proceeds not needed for accident cleanup without regard to whether such insurance is part of the primary or excess layers being offered1 they will avoid problems with timing of proof of loss required under the insurance policies and the potential adverse effect such timing could have on the payment of stabilization, decontamination, and cleanup costs.

By specifying a mechanism in the rule by which the NRC can approve stabilization, decontamination, and cleanup cost estimates, these problems can be avoided.

NRC Response Although the NRC is not convinced that petitioners' proposed amendments are essential to the efficient payment of stabilization, decontamination, and cleanup costs, petitioners' recoDJJ1endations in this area are being p~oposed by the NRC because they are consistent with NRC policy as expressed in the August 5, 1987 rulemaking.

As stated in that rulemaking, (52 FR 28963 at 28970.)

Obviously, the NRC would not interpret a priority in so rigid a manner as to preclude prudent practices necessary to an orderly decontamination, such as equipment purchases, st~bilization activ-ities, etc. The decontamination priority was not 1Primary insurance covering. the first $500 million in damages is offered by NML or ANI/MAERP.

Insurance in excess of the first $500 million in damages is offered by NEIL-II ($825 million) and ANI/MAERP ($400 million).

One of the primary policies and both excess policies may be combined for total coverage of $1.725 billion.

7 meant to be applied sequentially in that all expenditures on cleanup would have to be made before any others. The priority has been worded to allow licensee flexibility, particularly after a reactor h~s been stabilized after an accident. Despite possible utility reluctance, the priority should be compatible with the broadest range of actions necessary to protect public health and safety. Further, the decon-tamination priority is meant to be invoked only when there would be serious concern over the availability of funds for decontamination.

The NRC has proposed modifying petitioners' suggested amendatory language so that NRC responsibilities and concerns are more clearly presented.

C. A change in the terminology of the required insurance from "property insuranceu to adecontamination liabilityu insurance so as to better forestall claims to insurance proceeds by a licensee's bondholders and other possible creditors.

Petitioners' Concerns Petitioners continue to believe that the NRC decontamination priority directly conflicts with indenture language that requires 11property 11 insurance to be maintained for the benefit of those owning the indentures issued to finance the facility.

To effect this requirement, bondholders are to be named the II loss payee" of any property insurance held on the bonded property. Thus, NRC's requirement for 11 propertyn insurance directly conflicts with provisions to protect bondholders' interests in the mortgage indentures. The insurers believe that this conflict places them in a position of having to choose to whom to pay the proceeds with the result that they will likely make any insurance proceeds payable jointly to the independent trustee representing the NRC interest in protecting public health and safety and the trustee representing bond-holders' interests. Such action could result in extensive litigation and delay in cleanup.

8 Petitioners recommend a way out of this dilenuna.

They propose that NRC require "hybrid" insurance policies similar to those currently offered by NEIL-II. A hybrid policy combines a licensee's obligation to stabilize, decontaminate, and clean up its reactor facility with the physical damage loss coverage of traditional property insurance.

Because the hybrid policy would incorporate a stabilization and decontamination priority in the amount required by the NRC and because bondholders would not be entitled to proceeds under the stabilization and decontamination obligation portion of the coverage, petitioners believe that claims would be paid for stabilization and decontamination expenses without being challenged by bondholders.

Although this hybrid policy currently is in effect only for NEIL-II excess coverage, representatives for ANI/MAERP and NHL indicate that they would be willing to offer similar coverage.

NRC Response NRC has been aware that a hybrid policy similar to that offered by NEIL-II would eliminate the potential problem of claims by bondholders against the stabilization and decontamination portion of insurance proceeds.

NRC had been informed of this possibility in cements submitted in the 1984 rulemaking (see particularly comment number 12 from the NYC Bar, (49 FR 44645)).

However, the NRC 1s expressed policy has been not to mandate the terms and conditions of insurance poli,cies unless agreed to by insurers.

At the time of the 1987 rulemaking it was not clear that insurers other than NEIL-II and perhaps NML would be willing to offer a hybrid policy.

Further, NRC believed that the preamble of the 1987 rule made it clear that it was decontamination insurance that was being required, notwithstanding the general reference to "property" insurance. Thus, the NRC declined to require it explicitly.

However, because hybrid insurance polices now apparently will be available from all insurers and offer a reasonable likelihood of sheltering proceeds

9 for stabilization and decontamination expenses from bondholders' claims, the NRC proposes to clearly require insurance to cover stabilization and decontamination of the reactor and the reactor station site. Hybrid policies discussed above would satisfy this requirement.

D. Rescission of the requirement that proceeds of the required insurance are to be paid to an independent trustee, who will disburse the proceeds for decontamination and cleanup of the facility before any other purpose.

Petitioners' Concerns Petitioners believe that the trustee provision contained in 10 CFR 50.54(w)(4) is "unworkable, unnecessary, ineffective and will likely be counterpro-ductive" (PRM-50-51A, p. 5.) (Other petitioners expressed similar thoughts.)

According to petitioners, by requiring that insurance proceeds for decontami-nation and c1eanup be disbursed by a bondholders' trustee, NRC is adding a further burden to an already complex process.

As explained in II.C. above, because of mortgage indenture provisions and because petitioners construe NRC as requiring 11property 0 insurance, the independent trustee could be in conflict with the bondholders' trustee and might be reluctant to pay out funds for decontamination and cleanup until such conflict is resolved. Avoiding this conflict -- one primary purpose for the trustee (i.e., to protect against claims by bondholders)

-- would be accomplished by NRC's requiring a hybrid policy.

In its coD111ents, the NYC Bar indicated that it no longer recommends that NRC require an independent trustee.

(The NRC relied extensively on NYC Bar's coDlllents in the 1987 rulemaking.) Rather, a combination of the hybrid policy, explicit procedures for payment of claims, and recent decis1ons in bankruptcy cases may more effectively protect decontamination and cleanup expenses from competing claims. Short of bankruptcy, the hybrid insurance policy by itself will protect proceeds for use for stabilization, decontamination, and cleanup.

10 The NYC Bar believes, along with other petitioners, that insurance policy proceeds can be protected from claims of creditors in a bankruptcy or pre-bankruptcy situation if --

(1) the insurance policy contains a priority for the payment of decontamination expenses, (2) the policy provides covera9e for decontamination expenses only as they are incurred, and (3) the policy requires the utility to use the proceeds received for payment of the decontamination expenses it has incurred.

The utility would then have a contractual obligation to use the insurance proceeds for decontamination and not for other purposes. These restrictions should only apply to the extent necessary to protect public health and safety.

In a pre-bankruptcy situation, the licensee would be bound by the terms of its insurance contract. If the policy contains a decon-tamination priority, it will not be possible to divert the insurance proceeds to other purposes.

In addition, if the policy so provided the proceeds for decontamination would not be payable until decon-tamination expenses were actually incurred, thus the licensee would need to make suitable arrangements for the work to be done before submitting its claim for insurance.

Finally, once it were to receive the insurance proceeds, the licensee would be required by its contract to use the proceeds to pay the expenses which form the basis of its insurance claim.

In the post-bankruptcy situation, the trustee in bankruptcy or its equivalent may, subject to court approval, assume or reject executory contracts such as the insurance policy **** Once the trustee assumes the insurance contract (Since the trustee's right to receive up to

$1.06 billion of insurance proceeds would depend upon an assumption of the contract, we regard it as unlikely that any trustee would reject it), it too would be bound by the terms of the insurance agreement and would be required to use the insurance proceeds in a manner consistent with that agreement **** Creditors of the bankrupt licensee would have no claim on the insurance proceeds since the utility's right to the proceeds would be conditioned both on its incurring decontamination expenses and on its using the proceeds to pay the expenses which form the basis of its claim ****

(We do not think, particularly in the pre-bankruptcy situation, that it is likely third party contractors would be concerned about reimbursement for work undertaken by them.

As noted above, payment of the proceeds would be conditioned upon their use to pay the expenses on which the insurance claim is based. It is also likely that a licensee would assign its interest in the insurance proceeds to a contractor, in advance of the bankruptcy, in exchange for the contractor's agreement to perform the cleanup work.

The assignment should effectively remove the insurance proceeds from the estate of the bankrupt.) (See cormnent number 36, 49 FR 44645, pp. 11-13. Parenthetical statements are footnotes in the original text.)

11 Petitioners also cite recent decisions by bankruptcy courts that tend to support the view that, notwithstanding the procedural remedies outlined above, expenditures to protect public health and safety would take priority over many other types of claims.

In a memorandum attached to PRM-50-51A, petitioner argues that: uA debtor in possession or a trustee may make expenditures to co111ply with an agency's regulations or orders if the expenditure is necessary to comply with an action by the agency to enforce its police or regulatory power.*** Agency enforcement actions to protect public health and safety or the environment constitute valid police powers, and such actions are exempt from the automatic statutory stay of proceedings against the debtor.*** Moreover, the Supreme Court has made it clear that a debtor in possession or trustee may not abandon its obligations to comply with laws which are reasonably designed to protect public health or safety **** Proceeds of property insurance are normally part of the bankrupt estate and are treated 1 ike any other cash collateral."

(Memorandum, pp. 2-3.)

Finally, petitioners maintain that it may be impossible to find someone to act as trustee. Petitioners have assured the NRC that they have made a good-faith effort to obtain trustees but have been unsuccessful.

They believe that the reason for their lack of success is twofold. First, trustees with sufficient expertise and resources to manage over $1 billion in insurance proceeds are currently acting as bondholders' trustees. This situation results in a conflict of interest in which potential trustees would be ethically constrained from engaging. Second, trustees are apparently averse to assuming responsibility for disbursing potentially over $1 billion in insurance proceeds and the resulting exposure to possible litigation for wrongful disbursement.

Because the trust would only be funded in the event of an accident and because trustees' fees are usually based in part on the a~ount of assets under management, trustees would only be eligible for modest fees.

These fees apparently would be insufficient to compensate trustees for the risk they believe they would be assuming.

12 NRC Response The NRC has no evidence to contradict petitioners' assertions that they cannot find persons both willing and able to act as trustees. The NRC also acknowledges that in most, but perhaps not all, situations, the need for a trustee would be mitigated by using a hybrid insurance policy and by recent developments in bankruptcy case law.

At the same time, however, the NRC notes that, if the other proposed changes to 10 CFR 50.54(w) are adopted, some of the potential trustees' concerns should be reduced.

For example, the hybrid policy, if it operates as petitioners suggest, would largely eliminate questions of whom to pay and thus should lower the risk of wrongful disburse11ent.

Although for some potential trustees the problems of conflict of interest and inadequate fees would remain, the proposed changes might encourage others to assume the duties of trustee.

The NRC is not as sanguine as petitioners that recent developments in bankruptcy law have eliminated all likelihood of competing claims to insurance proceeds.

For example, the recent decision of nrn re Smith-Douglass, Inc." (Nos. 87-1683, -1684 (4th Circuit, September 6, 1988))

allowed unconditional abandonment of a hazardous waste site that violated State environ~ental laws because the estate had no unencumbered assets and the site did not pose any serious public health and safety risks. The court did indicate that it would have found differently if unencumbered assets were available. But the decision does raise again the issues of whether insurance proceeds would be considered unencumbered assets and whether a court would take it upon itself to decide what level of accident cleanup constitutes a aless-than-serious" public health and safety risk.

The NRC concludes that requiring an independent trustee to hold and disburse insurance proceeds may still be warranted in some circumstances.

Nevertheless, given the reality of lack of trustee availability, the NRC

13 proposes to eliminate, at least temporarily, the trustee requirement.

The Cournission retains the authority to impose such requirements in individual cases, if warranted.

At the same time, the NRC will seek authority to receive and retain such funds itself. If the NRC obtains such authority, it will consider whether to exercise such authority and the best method of implementing such authority. The NRC may reinstitute the trusteeship requirement.

9 III. Level of Insurance Although not raised by petitioners, the NRC staff believes that this rule should also address the issue of how much insurance should be required.

Chairman Carr and CoDDDissioner Rogers agree with the staff proposal and consequently request public collllent on this issue.

In the 1987 rulemaking, the NRC concluded that it found no effective way to determine 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. 2 The COD111ission believed that a general index of inflation such as the Consumer Price Index or even the Handy-Whitman construction cost index was too general for escalating the cost of accident cleanup.

Subsequent to the 1987 amendments to 10 CFR 50.54(w), the Co1J111ission has issued its final deconnissioning regulations (53 FR 24018, June 27, 1988). Those regulations, in part, adopted foniulas for estimating decoDlllissioning cost based on. reactor size and type and future decoR111issioning costs based on a weighted index of three major decommissioning cost COlllJJOnents -- labor, energy, and waste burial costs. Inflation estimate~ for the labor and energy components will be derived from producer price indices published annually by the Bureau of Labor Statistics of the U.S. Department of Labor.

Waste burial charge estimates will be derived from an NRC-published report.

211Technology, Safety and Costs of Decouvnissioning Reference Light Water Reactors Following Postulated Accidents," (NUREG/CR-2601) Pacific Northwest Laboratory, November 1982. This report is available for purchase from the U.S. Government Printing Office, P.O. Box 37082, Washington, DC 20013-7082.

14 Although decoUDIJissioning costs and accident cleanup costs are not strictly equivalent, many activities are common to both.

The precise formula adopted for estimating future deco111T1issioning costs may not be appropriate for accident cleanup costs; nevertheless, the staff concludes that the methodology used in the deco11111issioning inflation formula may be appropriate for accident cleanup inflation. Although no specific formula is being proposed at this time, Chairman Carr and Corrmissioner Rogers are requesting corrments on the appropriate-ness of the methodology and any suggestions for the factors and weights that could be used.

IV.

Environmental Assessment and Finding of No Significant Environmental Impact If adopted, these proposed amendments.would (1) clarify the sequence of events covered by required accident cleanup insurance during the period of stabi-lization and decontamination after an accident; (2) make explicit the require-ment for a combined accident decontamination obligation and physical damage loss i~surance policy; and (3) rescind the existing requirement that insurance proceeds be paid to and disbursed by an independent trustee.

In addition, this notice of proposed rulemaking seeks comments on establishing a methodology for estimating future accident cleanup costs. This action is required to increase the effectiveness of the accident cleanup insurance required under 10 CFR 50.54(w) so that public health and safety is not adversely affected during the cleanup process.

The alternative to this action is to maintain the exist-ing rule without change.

Neither this action nor its alternative has any significant impact on the environment.

Although changes in insurance requirements may affect the financial arrangements of licensees and may have economic and social con-sequences, they will not, if adopted, alter the environmental impact of the licensed activities. The alternative to the proposed action likewise would not have any significant impact on the environment. Accordingly for the foregoing reasons, the Co1T11Jission has determined under the National Environmental Policy Act of 1969, as amended, and the Coumission's regulations in Subpart A of 10 CFR Part 51, that this rule, if adopted, would not be a

15 major Federal action significantly affecting the quality of the human environ-ment, and therefore an environmental impact statement is not required.

No other agencies or persons were contacted for this proposed action, and no other documents related to the environmental impact of this proposed action exist.

The foregoing constitutes the environmental assessment and finding of no significant impact for this proposed rule.

V.

Paperwork Reduction Act Statement This proposed rule amends information collection requirements that are subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). This rule will be submitted to the Office of Management and Budget for review and approval of the paperwork requirements.

VI.

Regulatory Analysis On August 5, 1987, the NRC published in the Federal Register (52 FR 28963) a final rule amending 10 CFR 50.54(w).

The rule increased the amount of onsite property damage insurance required to be carried by NRC's commercial power reactor licensees. The rule also required these licensees to obtain insurance policies that prioritized insurance proceeds for stabilization and decontamination 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 1987 rule, the NRC received three petitions for rulemaking that sought clari-fication of the stabilization and decontamination priority provisions and rescission of the trusteeship provision.

The petitions further stated that the trusteeship provisions may actually have an effect counter to their intended purpose by delaying the payment of claims and thus possibly the cleanup process.

The proposed rule developed in response to the petitions for rulemaking should help clarify the mechanism by which accident cleanup funds may be assured to be used for their intended purpose.

Even without

16 formal stabilization and decontamination priority and trusteeship provisions, NRC has authority to take appropriate enforcement action to oraer cleanup in the unlikely event of an accident.

Chairman Carr and Corrmissioner Rogers request public connent on the appropriate-ness and need for developing formulas that would both base the required aDtOunt of accident cleanup insurance on reactor size and type and establish a mechanism for changing future insurance amounts to reflect changes in major accident cleanup cost components. Although the effect of these formulas, if developed and adopted, would be to increase the required amount of insurance for some licensees, there should be little impact on insurance costs to licensees because almost all licensees buy the maximum amount of insurance available. Additionally, by rescinding the trusteeship requirement, the C011111ission would be eliminating licensees' costs to obtain trustee services. Thus, the proposed rule will not create substantial costs for licensees.

The prqposed rule will not have significant impacts on state and local governments and geographical regions, on the environment, or create substantial costs to the NRC or other Federal agencies.

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

VII. Regulatory Flexibility Certification As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b),

the Comnission certifies that this rule, if adopted, will not have a significant impact upon a substantial number of small entities. The proposed rule affects approximately 113 power reactor licenses.

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

VIII. Backfit Analysis The NRC 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 backfit as defined in §50.109 (a)(l). Therefore, a backfft analysis is not required for this proposed rule.

17 List of Subjects in 10 CFR Part 50 Antitrust, Classified information, Fire protection, Incorporation by reference, Intergovernmental relations, Nuclear power plants and reactors, Penalty, Radiation protection, Reactor siting criteria, Reporting and recordkeeping 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. 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 continues to read as follows:

Authori_ty: 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 50.13 and 50.54(dd) also issued under Sec. 108, 68 Stat. 939 as amended (42 U.S.C. 2138). 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). 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 through 50.81 also issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 2234).

18 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);

§§50.46(a) and (b), and 50.54(c) are issued under sec. 161b, 68 Stat. 948, as amended (42 U.S.C. 2201(b)); §§50.7(a), 50.lO(a)-(c), 50.34(a) and (e),

50.44(a)-(c), 50.46(a) and (b), 50.47(b), 50.48(a), (c), (d), and (e),

50.49(a), 50.54(a), (i), (i)(l), (1)-(n), (p), (q), (t), (v), and (y),

50.55(f), 50.55a(a),(c)-(e), (g), and (h), 50.59(c), 50.60(a), 50.62(c),

50.64(b), and 50.BO(a) and (b) are issued under sec. 1611, 68 Stat. 949, as amended (42 U.S.C. 2201(1)); and §§50.49(d), (h), and (j), 50.54(w), (z),

(bb), (cc), and (dd), 50.55(e), 50.59(b), 50.6l(b), 50.62(b), 50.70(a),

50.71(a)-lc) and (e), 50.72(a), 50.73(a) and (b), 50.74, 50.78, and 50.90 are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

2.

Se~tion 50.54 is amended by revising paragraph(w) to read as follows:

§50.54 Conditions of licenses.

(w)

Each electric utility licensee under this part for a production or utilization facility of the type described in §50.21(b) or

§50.22 shall take reasonable steps to obtain insurance avail-able at reasonable costs and on reasonable terms from private sources or to demonstrate to the satisfaction of the CoDlllission that it possesses an equivalent amount of protection covering the licensee's obligation, in the event of an accident at the licensee's reactor, to stabilize and decontaminate the reactor and the reactor station site at which the reactor experiencing the accident is located, Provided that:

19 (1)

The insurance required by paragraph (w) of this section must have a minimum coverage limit for each reactor station site of either $1.06 billion or whatever amount of insurance is generally available from private sources, whichever is less. The required insurance must clearly state that, as and to the extent provided in paragraph (w)(4) of this section, any proceeds must be payable first for stabilization of the reactor and next for decontamina-tion of the reactor and the reactor station site. If a licensee's coverage falls below the required minimum, the licensee shall within 60 days take all reasonable steps to restore its coverage to the required minimum.

The required insurance may, at the option of the licensee, be included within policies that also provide coverage for other risks, including, but not limited to, the risk of direct physical damage.

(2) (i)

With respect to policies issued or annually renewed on or after

,[insert a date one year after the effective date of the rule] the proceeds of such required insurance must be dedicated, as and to the extent provided in this paragraph, to reiDJbursement or payment on behalf of the insured of reasonable expenses incurred or estimated to be incurred by the licensee in taking action to ful-fill the licensee's obligation, in the event of an acci-dent at the licensee's reactor, to ensure that the reactor is in, or is returned to, and maintained in, a safe and

20 stable condition and that radioactive contamination is removed or controlled such that personnel exposures are consistent with the occupational exposure limits in 10 CFR Part 20.

These actions must be consistent with any other obligation the licensee may have under this chapter and must be subject to paragraph (w}(4} of this section.

As used in this section, an 11accident 11 means an event that involves the release of radioactive material from its intended place of confinement within the reactor or on the reactor station site such that there is a present danger of release offsite in amounts that would pose a threat to public health and safety.

(ii) The stabilization and decontamination requirements set forth in paragraph (w}(4) of this section must apply uniformly to all insurance policies required under paragraph (w) of this section.

(3)

The licensee shall report to the NRC on April 1 of each year the current levels of this insurance or financial security it maintains and the sources of this insurance or financial security.

(4)(i) In the event of an accident at the licensee 1 s reactor, whenever the estimated costs of stabilizing the licensed reactor and of decontaminating the reactor and the reactor station site exceed $100 million, the proceeds of the insurance required by paragraph {w) of this section nrust be dedicated to and used, first, to ensure that the licensed reactor is in, or is returned to, and can be maintained in, a safe and stable condition so as to prevent any significant risk to public health and safety and, second, to decontaminate the reactor and the reactor station site in accordance with the licensee's cleanup plan

21 as approved by order of the Director of the Office of Nuclear Reactor Regulation. This priority on insurance proceeds shall remain in effect for 60 days or, upon order of the Director, for such longer periods, in increments not to exceed 60 days except as provided for activities under the cleanup plan required in subparagraphs (w)(4)(1ii) and (iv), as the Director may find necessary to protect the public health and safety.

Actions needed to bring the reactor to and maintain the reactor in a safe and stable condition may include one or more of the following, as appropriate:

(A)

Shutdown of the reactor; (B) Establishment and maintenance of long-term cooling with stable decay heat removal; (C) Maintenance of sub-criticality;

{D) Control of radioactive releases; and (E) Securing of structures, systems, or components to minimize radiation exposure to onsite personnel or to the offsite public or to facilitate later decontamination or both.

{ii) The licensee shall inform the Director of the Office of Nuclear Reactor Regulation in writing when the reactor is and can be maintained in a safe and stable condition so as to prevent any significant risk to the public health and safety.

Within thirty (30) days after the licensee informs the Director that the reactor is in this condition, or at such earlier time as the licensee may elect or the Director may for good cause direct, the licensee shall prepare and submit a cleanup plan for the Director 1 s approval.

The cleanup plan must identify and contain an estimate of the cost of each cleanup operation that will be required to decontaminate the reactor sufficiently

22 to permit the licensee either to resume operation of the reactor or to apply to the Connission under §50.82 of this part for authority to decoD1111ission the reactor and to surrender the license voluntarily. Cleanup operations may include one or more of the following, as appropriate:

(A)

Processing any contaminated water generated by the accident and by decontamination operations to re1110ve radioactive materials; (B)

Decontamination of surfaces inside the auxiliary and fuel handling buildings and the reactor building to levels consistent with the ConDJission's occupational exposure limits in 10 CFR Part 20 1 and decontamination or disposal of equipment; (C)

Decontamination or removal and disposal of internal parts and damaged fuel from the reactor vessel; and (D)

Cleanup of the reactor coolant system.

(iii) Following review of the licensee's cleanup plan, the Director will order the licensee to complete all operations that the Director finds are necessary to decontaminate the reactor sufficiently to permit the licensee either to resume operation of the reactor or to apply to the CoD'lllission under §50.82 for authority to deconnission the reactor and to surrender the license voluntarily.

The Director shall approve or disapprove, in whole or in part for stated reasons, the licensee's estimate of cleanup costs for such operations.

Such order may not be effective for more than 1 year, at which time it may be renewed.

Each subsequent renewal order, if imposed, may be effec-tive for not more than 6 months.

23 (iv) Of the balance of the proceeds of the required insurance not already expended to place the reactor in a safe and stable condition pursuant to paragraph (w)(2)(i) of this section an a110unt sufficient to cover the expenses of completion of those decontamination operations that are the subject of the Director's order shall be dedicated to such use.

Provided that, upon certifi-cation to the Director of the amounts expended previously and from time to ti11e for stabilization and decontamination and upon further certification to the Director as to the sufficiency of the dedicated amount remaining, policies of insurance may provide for payment to the licensee or other loss payees of amounts not so dedicated, and the licensee may proceed to use in parallel (and not in preference thereto) any insurance proceeds not so dedicated for other purposes.

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Dated at Rockville, Maryland, this day 1989.

For the Nuclear Regulatory C011111ission.

Sa111el J. Chil Secretary of th Comnission.