POLICY ISSUE

NOTATION VOTE

September 29, 2004 SECY-04-0176

FOR: The Commissioners

FROM: Luis A. Reyes 

Executive Director for Operations

SUBJECT: EXEMPTION REQUESTS TO REDUCE LIABILITY INSURANCE

COVERAGE FOR DECOMMISSIONING REACTORS AFTER

TRANSFER OF ALL SPENT FUEL FROM A SPENT FUEL POOL TO

DRY CASK STORAGE

PURPOSE:

To obtain Commission approval of the staff’s recommendation concerning the level of

commercially purchased primary liability insurance coverage that should be maintained for

decommissioning reactor sites after transfer of all spent fuel from the spent fuel pool to a dry

cask storage independent spent fuel storage installation (ISFSI).

SUMMARY:

This paper recommends the denial of exemption requests to reduce the amount of

commercially purchased primary liability insurance coverage required under the Price-Anderson

Act (Public Law 85-256, 71 Stat. 576 amending the Atomic Energy Act of 1954 to include

Sec.170—hereafter referred to as Price-Anderson) for decommissioning reactors after all spent

fuel has been transferred from the spent fuel pool to an onsite dry cask storage ISFSI.

CONTACT: William Huffman, NMSS/DWMEP

(301) 415-1141
The Commissioners 2

Four decommissioning reactor licensees that have completed transfer of all spent fuel from

their spent fuel pools into ISFSIs are requesting reductions to the amount of commercial liability

insurance coverage they are required to carry as part of Price-Anderson. Three of the

licensees carry liability insurance coverage at a level of $100 million (as do most other

decommissioning reactor licensees). One of the licensees, however, only carries $44.4 million

in primary liability insurance due to its low design power level when originally licensed. All four

licensees have requested exemptions, as permitted under Price-Anderson regulations, to

reduce their liability insurance coverage to a level of $25 million. The licensees state that $25

million in commercial liability insurance is an adequate amount given the reduction in

radiological risk associated with moving the spent fuel to dry cask storage. The licensees also

state that the requested $25 million insurance level is consistent with previous Nuclear

Regulatory Commission (NRC) staff proposals related to insurance level coverage at

decommissioning reactors. However, the licensees provide no technical basis to support the

claimed risk reduction achieved in moving the spent fuel from the spent fuel pool to an ISFSI.

This paper describes Price-Anderson requirements as they relate to decommissioning reactor

sites and past Commission decisions on the appropriate level of liability insurance coverage for

decommissioning reactors, and provides options for proceeding with the current exemption

requests under consideration by the staff.

Five options are presented for responding to the exemption requests to reduce the required

liability insurance coverage: 1) Maintain the required liability insurance coverage at the current

levels and deny the exemption requests (staff’s preferred approach); 2) Grant the exemptions

at the level requested; 3) Grant exemptions, but at an intermediate coverage level; 4) Obtain

broad-based stakeholder input on the issue, and then revisit the issue with the Commission;

and 5) Develop a quantitative methodology for assessing financial risk that could be applied to

the storage of spent fuel in either a spent fuel pool or an ISFSI.

The primary bases for the staff’s preferred approach (Option 1) is that the proposed insurance

reduction would result in an reduction in overall insurance coverage for the public, may be

insufficient coverage regardless of how the spent fuel is stored onsite, appears to benefit the

licensees by transferring liability risk to the Federal Government, and that there is no current

technical basis to grant the exemption requests. Other considerations include that the savings

achieved because of a reduced insurance coverage level would not be a significant regulatory

burden reduction for the licensees, and granting the exemption request could result in a public

misunderstanding about the relative safety of an ISFSI versus a spent fuel pool.

BACKGROUND:

Price-Anderson has two basic objectives: (1) to ensure that adequate funds are available to

satisfy liability claims by members of the public for personal injury and property damage in the

event of an accident, and (2) to encourage private participation in commercial nuclear power by

providing a system of insurance coverage beyond the limits that private insurers would

underwrite. 

Price-Anderson was enacted in 1957 to provide a system for the payment of claims by

members of the public for offsite personal injury and property damage resulting from a nuclear

incident. The scope of Price-Anderson coverage includes any nuclear incident that occurs
The Commissioners 3

during the transportation of nuclear fuel to a reactor site; the storage of nuclear fuel at a reactor

site; the operation of reactors, including discharge of radioactive emissions or effluents; the

storage of nuclear wastes at reactor sites; and the transportation of radioactive material from

reactors. Price-Anderson provides assurance that covered licensees can compensate those

harmed or injured. Other coverage provided by Price-Anderson includes costs associated with

incident response or precautionary evacuations, as well as the costs of investigating, defending,

and settling claims or suits for damages, up to the liability limit. Price-Anderson coverage would

compensate for damages up to a specified limit of liability no matter who or what causes the

accident (with certain specified exceptions, such as an act of war). The NRC regulations that

implement Price-Anderson are found in 10 CFR Part 140.

Price-Anderson requires reactor licensees to obtain commercially available liability insurance as

the first layer of financial protection from offsite damage claims. The amount of commercial

liability insurance coverage that must be purchased is based on the reactor design power

output. For large commercial reactor licensees (reactors designed for producing substantial

amounts of electricity and having rated capacities of 100,000 electrical kilowatts or more),

Price-Anderson establishes a two-layer insurance system for liability coverage. The first layer

requires large commercial reactors to purchase liability insurance equal to the maximum

amount of insurance available in the private market (currently $300 million), and the reactor

licensees pay a premium each year for this coverage. A secondary layer of insurance is also

established within the Price-Anderson system. In the event a nuclear incident causes damages

exceeding the primary coverage, each licensee participating in the secondary coverage would

be assessed an equal share of the damages that exceed the primary insurance coverage. This

secondary “deferred premium” is currently $95.8 million per reactor for all reactors currently

under the secondary system. With over 100 reactors participating, secondary insurance

coverage available is approximately $9.5 billion.

The Commission has previously recognized that neither Price-Anderson nor NRC regulations

address what amount of commercial liability insurance coverage is needed for

decommissioning reactors. However, the Commission is authorized by Price-Anderson to

establish a lesser amount of liability insurance coverage based on extenuating circumstances

such as factors pertaining to the hazard. It is under this authority that the Commission has

allowed reductions in Price-Anderson mandated insurance coverage for decommissioning

reactors. In SECY-93-127, “Financial Protection Required of Licensees of Large Nuclear

Power Plants During Decommissioning,” dated May 10, 1993, the staff outlined a policy for

reducing Price-Anderson required liability insurance coverage for decommissioning reactors. 

The discussions in SECY-93-127 centered primarily on the public health and safety risks

associated with storing fuel in spent fuel pools. In its Staff Requirements Memorandum dated

July 13, 1993, the Commission approved a policy that would permit reductions in commercial

liability insurance coverage when a licensee was able to demonstrate that the spent fuel could

be air-cooled if the spent fuel pool was drained of water. Upon demonstration of this technical

criterion, the Commission policy allows decommissioning licensees to withdraw from

participation in the secondary insurance protection layer, and permits reductions in the required

amount of commercial liability insurance coverage to $100 million. All decommissioning reactor

sites that meet this technical criterion and were required to have primary insurance levels

greater than $100 million have received exemptions that allow the primary insurance level to be

reduced to $100 million.
The Commissioners 4

1

 Several small power reactors that had design power ratings of less than 100 MWe

were required to carry minimum insurance amounts, when originally licensed, that were lower

than for large commercial reactors.

Several decommissioning reactor licensees have now reached a stage in the decommissioning

process where the policy in SECY-93-127 is no longer directly applicable, because the spent

fuel is no longer stored in the spent fuel pool. Four of these licensees (Trojan, Yankee Rowe,

Maine Yankee, and Big Rock Point) have submitted exemption requests to further reduce the

required minimum primary liability insurance coverage to $25 million. These licensees are

currently required to carry $100 million in primary liability insurance coverage, except Big Rock

Point (BRP) which is required to carry $44.4 million in primary liability insurance1

.

In support of the exemption requests, the licensees contend that the reduction is justified based

on lower risk following the transfer of all spent fuel from each licensee’s spent fuel pool to its

respective ISFSI. The licensees state that $25 million in commercial liability insurance is an

adequate amount given the reduction in radiological risk associated with moving the spent fuel

to dry cask storage.

Another basis cited by the licensees to support the proposed insurance reduction is that it is

consistent with previous NRC staff positions on this matter. Specifically, following the

Commission’s endorsement of the policy in SECY-93-127, the staff attempted to codify the

regulations for decommissioning reactor liability insurance. In SECY-97-186, “Changes to the

Financial Protection Requirements for Permanently Shutdown Nuclear Reactors,” the staff

proposed a rule that would have reduced the minimum required commercial liability insurance

at decommissioning reactors where the spent fuel was moved into an ISFSI to $25 million. 

Efforts on this rulemaking were suspended based on new concerns related to zirconium fire

risks from spent fuel stored in spent fuel pools. In SECY-00-145, “Integrated Rulemaking Plan

for Nuclear Power Plant Decommissioning,” dated June 28, 2000, the staff proposed a riskinformed approach to certain decommissioning regulatory issues, including insurance

requirements. The paper also proposed to reduce the minimum required liability insurance to

$25 million when spent fuel is removed from the pool, but was returned to the staff without a

Commission vote to permit completion of a staff technical study on spent fuel pool risk. SECY01-0100, “Policy Issues Related to Safeguards, Insurance, and Emergency Preparedness

Regulations at Decommissioning Nuclear Power Plants Storing Fuel in Spent Fuel Pools,”

dated June 4, 2001, further addressed decommissioning reactor insurance levels but was

withdrawn by the staff because treatment of spent fuel pool vulnerability to radiological

sabotage had not been sufficiently considered. Because of the ongoing spent fuel pool risk

studies, reassessment of vulnerability to radiological sabotage, and overall reconsideration of

NRC safeguards policy as a result of the September 11, 2001 terrorist attacks, the staff is not

yet prepared to recommend new generic requirements related to decommissioning reactor

liability insurance coverage.

The insurance levels proposed in SECY-97-186 and SECY-00-145 for decommissioning reactor

sites with all spent fuel moved to an ISFSI were not based on a quantitative assessment or

evaluation of ISFSI risk, but rather, was a qualitative judgement recommended by the staff as a

reasonable starting point for public consideration at the beginning of a rulemaking process. 

Since the proposed decommissioning rulemakings never progressed, there has been no
The Commissioners 5

validation or endorsement of the proposed insurance levels by either the Commission or the

public. The staff also notes that the current exemption requests do not provide an analytical

basis or technically supported justification for the requested insurance reduction beyond what

was provided in the prior SECY papers.

DISCUSSION:

If an accident, incident, event, or other activity at a decommissioning reactor ISFSI resulted in

any liability claims under Price-Anderson, the first source of funds would come out of the $100

million private liability insurance coverage maintained by decommissioning reactor licensees. 

Should claims exceed $100 million, the Federal Government would provide any additional

indemnification protection funds. Price-Anderson mandates that the Federal Government’s

indemnification liability risk exposure not exceed $500 million for each nuclear incident. 

However, the $500 million Federal Government indemnification limit is reduced by the amount

that the licensee’s primary commercial insurance coverage exceeds $60 million. For most

decommissioning reactor sites, the Federal Government’s potential liability is $460 million [$500

million-($100 million-$60 million)], and total insurance protection to the public is $560 million

[$100 million commercial primary insurance + $460 million Federal Government

indemnification]. However, since BRP’s primary commercial insurance coverage does not

currently exceed $60 million, the Federal Government’s potential liability at BRP is $500 million,

and total insurance protection to the public is $544.4 million.

A reduction in the current required primary liability insurance coverage would result in an

increase in the Federal Government indemnification liability. However, overall public insurance

protection would not decrease unless the required primary liability insurance coverage was

reduced below $60 million. For example, if the NRC permitted a reduction in primary insurance

levels to $60 million, Federal Government indemnification liability risk exposure would increase

to $500 million, while total coverage would remain at $560 million. Reducing the required

private insurance coverage to $25 million would also result in Federal Government

indemnification liability risk exposure increasing to $500 million, but total coverage available

would decrease to $525 million. Furthermore, reducing the primary insurance requirements

would also increase the potential for Federal Government liability claims for lesser damage

because it would accelerate the stage at which the Government would have to pay. For

example, if damages were $40 million and the facility only had private insurance coverage of

$25 million, the Federal Government would be responsible for the remaining $15 million. In this

example, the Federal Government would have no liability if the private insurance coverage was

at the currently required level ($100 Million, or $44.4 Million for BRP). Therefore, reducing

commercial insurance coverage to the $25 million level requested by licensees would not only

reduce overall insurance protection of the public but would also increase the potential liability

risk for the Federal Government.

Section 140.8 of 10 CFR states that exemptions may be granted to the requirements of PriceAnderson as implemented under Part 140, provided the exemptions are authorized by law and

are otherwise in the public interest. The staff agrees that reducing primary insurance coverage

levels is authorized by law. However, the staff does not believe the reduction of primary

insurance to $25 million is in the public interest, considering that this level of insurance

increases both the Federal Government’s liability risk and reduces overall insurance protection

of the public. The licensees’ requested insurance reduction is not based on any analysis or
The Commissioners 6

empirical data. The licensees’ primary justification for the reduction in insurance coverage is

based on prior staff proposals that never received public comment, or approval from the

Commission.

The staff notes that the licensees seeking this exemption have not provided any specific

information on the premium cost saving by reducing their current primary insurance coverage

to the requested $25 million coverage level. However, based on staff discussions with

decommissioning licensee representatives, the annual savings on insurance coverage premium

costs in going from $100 million coverage to $25 million coverage are estimated to be $50,000

for the Trojan site, $75,000 for Yankee Rowe, and $142,000 at Maine Yankee. Additionally, a

discussion with an industry legal representative estimated that, on average, the savings on

premium costs in going from $100 million coverage to $25 million coverage would be

approximately $75,000 per year. The staff notes that the private insurance industry’s credit

rating plan for licensees covered under Price-Anderson has provided an average

reimbursement to licensees of over 60% of premium costs after 10 years (based on the

reimbursement history since 1957). Therefore, the staff estimates that the actual cost

differential is less than $55,000/yr in the worst case and approximately $30,000/yr on average. 

For BRP, a licensee representative estimated the savings on premiums for reducing primary

liability insurance coverage from the current level of $44.4 million to $25 million to be less than

$3000 per year. The staff does not consider the additional premium costs for maintaining the

currently required $100 million ($44.4 million at BRP) in primary insurance coverage a

significant regulatory burden.

Another justification provided by the licensees for reducing primary insurance levels is that the

risk from spent fuel stored in a dry cask ISFSI is significantly less than the risk from the same

spent fuel stored in a spent fuel pool. Although the staff recognizes that the risks of dry storage

and wet storage of spent fuel are different, there is no indication that moving spent fuel from

wet storage to dry storage would result in a significant reduction in the overall risk of

radiological release. The staff believes that both methods of spent fuel storage are safe. An

independent assessment of wet and dry spent fuel storage has been performed by the National

Academy of Sciences, and was recently provided to the Commission by the staff. Because the

results of the study are classified, they are not be discussed in this paper. There is no

compelling reason for the staff to change insurance coverage requirements for such

circumstances under an exemption process. Furthermore, the staff believes that public health

and safety risk may not be the only appropriate measure for making a determination on an

appropriate level of liability insurance. Liability insurance covers financial and legal risks that

extend well beyond any radiological damages that may occur from an incident at a particular

site. The staff notes that the current primary insurance level of $100 million for most

decommissioning reactors was not based solely on public health and safety risk, but instead

was established considering claims resulting from the TMI-2 accident—both actual claims paid

and the cost of defending such claims. More than $70 million has been paid to date for the

TMI-2 accident, even though no significant offsite radiological release occurred.

The staff does not have an analytical method or empirical data (other than for TMI-2) for

performing a risk assessment in support of reducing insurance levels. Risk assessments, as

currently practiced by the NRC, primarily evaluate risk consequences in terms of man-rem

exposure and how that value translates to acute death or latent cancers. Financial risk

evaluations would need to consider a much broader range of consequences such as property
The Commissioners 7

2

 A licensee may be liable for damages from a terrorist attack up to the sum of the

licensee’s primary and secondary coverage limits provided the event is not determined to be an

act of war. The staff is currently evaluating potential consequences of various attacks on spent

fuel dry storage technologies as part of the ongoing vulnerability assessment work.

damage, loss of income, stress, and the legal costs associated with claims and lawsuits. For

example, legal defense costs represent the biggest financial risk associated with liability claims

against the nuclear industry to date. NUREG/CR-6617 documents historic claims data under

Price-Anderson that show the cost of defending against suits versus actual payout for damages

to be nearly 2 to 1. The staff believes that the risk of a lawsuit remains the same whether fuel

is stored in a spent fuel pool or an ISFSI. Significant staff effort would be necessary to evaluate

financial risk and consequences using the NRC’s current risk-informed regulatory approach. It

would be extremely difficult, if not impossible, for the staff to make a financial risk assessment

related to the damages from these subjective factors because of the uncertainties and legal

complexities associated with psychological or physical harm. Simply put, the staff believes that

regardless of the very low probability of any offsite radiological release from an actual event or

incident involving spent fuel stored in an ISFSI, monetary damages could be significant. For

instance, if a plane crashed near an ISFSI location or a terrorist attack occurred at or near an

ISFSI site, damages resulting from a precautionary or voluntary evacuation of the public - such

as costs related to car accidents, missed work income, temporary lodging, stress related health

effects, etc., could run into millions of dollars even with no radiological release.2

In support of the licensees’ request, the staff notes that ISFSI regulations in 10 CFR Part 72 do

not require any insurance or financial liability protection for ISFSIs. The staff acknowledges

that there is little technical difference between a generally-licensed ISFSI at a decommissioning

reactor under the requirements of Part 50 and a stand-alone, specifically-licensed ISFSI under

the requirements of Part 72. The staff notes that the Commission is allowed discretion in

applying the provisions of Price-Anderson to non-reactor licensees. In addition to Part 72

licensees, the Commission does not require liability insurance coverage for 10 CFR Part 30 or

Part 40 licensees, nor do licensees under these parts receive any Government indemnification

or limitation on liability. 

The fact that Part 72 does not require liability insurance or Government indemnification should

not be construed to imply that once decommissioning reactors have stored all their fuel in an

ISFSI, there is no longer any regulatory requirement to maintain Price-Anderson insurance

coverage. Although ISFSIs are regulated under Part 72, most ISFSIs are directly associated

with Part 50 licensees. By virtue of the Part 50 license, every decommissioning reactor must

carry some level of commercial liability insurance under Price-Anderson until all radioactive

material has been removed from the site. Each of the licensees requesting an exemption holds

a Part 50 license. 

ISFSIs not directly associated with a reactor licensee are not indemnified under Price-Anderson

and have no legislated insurance obligation. However, the only two facilities of this type [GE

Morris - currently licensed, and Private Fuel Storage (PFS) - applicant] have elected to carry

private insurance coverage well in excess of the exemption requests under consideration in this

paper. Specifically, GE Morris has $200 million in commercial liability insurance coverage, and

PFS has committed to obtain (if licensed) the maximum amount of liability insurance available

from the nuclear industry’s private insurance source (currently $300 million).

The business practices of GE Morris and PFS regarding liability insurance coverage exemplify

how financial risk associated with an ISFSI might be more appropriately determined by the
The Commissioners 8

financial community rather than the NRC. The NRC has currently established (via the

exemption process) a level of $100 million as the minimum amount of private insurance that

should be required by most decommissioning reactors—regardless of whether spent fuel is

stored on site in an ISFSI or a spent fuel pool (with the exception of BRP and several other

small power reactor sites that are in decommissioning, but were originally licensed with primary

insurance levels less than $100 million). If a licensee believes its specific risk situation is

reduced when spent fuel storage is transferred from the spent fuel pool to the ISFSI, it should

be able to obtain reduced premium charges from the private industry insurers. This is

analogous to car insurance where the State Government insurance regulators set minimum

insurance coverage levels. The premiums paid by any given individual are set by the insurance

company based on perceived risk. Premium reductions due to changes in circumstances are

negotiated with the insurance companies rather than requesting exemptions from the insurance

regulators to reduce car insurance coverage minimums. 

Finally, the staff believes that reducing the private insurance coverage requirements might

inadvertently send a message to the public that dry cask storage of spent fuel in an ISFSI is

significantly safer than storage of spent fuel in spent fuel pools. The current staff consensus is

that both methods of spent fuel storage are safe and provide adequate protection to public

health and safety. Taking a position that implies dry cask storage has significantly less risk

than spent fuel pool storage may have unintended policy implications for spent fuel storage at

operating reactors.

OPTIONS:

The staff developed several options for consideration by the Commission concerning an

appropriate minimum level of commercially available liability insurance coverage for

decommissioning reactor licensees that have transferred all the spent fuel from the spent fuel

pool to a dry cask storage system in an onsite ISFSI:

(1) Maintain commercial liability insurance coverage at the current levels for

decommissioning reactors after transfer of all spent fuel into an ISFSI and deny the

exemption requests to reduce the coverage.

Pros:

(a) Maintaining commercial liability insurance coverage at the current level will likely

avoid any financial burden on the Federal Government even under the most

unlikely of scenarios.

(b) Maintaining the current level of insurance will enhance public confidence by not

benefitting the licensee at potential expense of the public.

(c) The estimated cost savings in insurance premiums that might be obtained by

reducing the current $100 million liability insurance coverage carried by most

decommissioning reactors ($44.4 million for BRP) to a proposed level of $25

million does not appear to be significant (after insurance industry rebates).

(d) Leaving the insurance level unchanged could still allow licensees to save on

insurance costs based on the private insurance industry’s determination of the

appropriate premium reductions warranted for ISFSI spent fuel storage.
The Commissioners 9

(e) The current level of primary liability insurance maintained by decommissioning

reactors does not appear to be excessive based on greater commercial insurance

coverage levels at stand-alone ISFSI licensees (GE Morris and PFS).

(f) The staff has no technical basis for reducing the level of insurance.

(g) Maintaining the current level of insurance is consistent with the staff’s position that

storage of spent fuel in either a spent fuel pool or a dry cask storage ISFSI

provides adequate protection of public health and safety.

Cons:

(a) The licensees feel they are paying for higher levels of insurance coverage than is

warranted by the risk.

(b) Because the regulations in 10 CFR Part 72 do not require any liability insurance

coverage for ISFSIs, denying the exemption requests might be perceived as overly

burdensome. 

(2) Grant the requested exemptions to permit reductions in private primary liability

insurance coverage to $25 million.

Pros:

(a) The proposed reduction will save most decommissioning reactor licensees an

estimated $30/yr on average (up to 55K/yr in one case) after rebates on liability

insurance premium costs.

Cons:

(a) The proposed reduction decreases the total level of insurance available to protect the

public by $35 million for most decommissioning reactors ($19.4 million for BRP).

(b) The proposed reduction increases the financial exposure risk of the Federal

Government.

(c) The proposed reduction gives the appearance of benefitting licensees at the

potential expense of the public.

(d) The proposed reduction establishes a minimum insurance level without any

quantitative or empirical basis.

(e) The proposed reduction could send a message to the public that the NRC

considers ISFSI storage inherently safer than spent fuel storage. Such a message

might have unintended policy implications for spent fuel storage at operating

reactors.

(3) Consider granting an exemption for some intermediate insurance level between the

current $100 million level and the licensee-requested $25 million level using

qualitative justifications.

Pros:

(a) Same as Option 2 except the premium savings to the licensee would likely be less.
The Commissioners 10

Cons:

(a) The staff has no basis for reducing current insurance levels for decommissioning

reactors as a result of transferring fuel from the spent fuel pool to an ISFSI.

(b) The proposed reduction would decrease the total level of insurance available to

protect the public by an amount equal to the difference in required coverage and

$60 million.

(c) Similar to Option 2 Cons.

(4) Conduct meetings and/or workshops, as appropriate, with nuclear industry

representatives and public stakeholders to discuss liability insurance levels. Revisit this

issue with the Commission after having obtained a broad-based stakeholder perspective

on the issue.

Pros:

(a) Meetings would provide an open forum and maximum opportunity for licensees,

industry, and public stakeholder input into this policy issue.

Cons:

(a) Conducting stakeholder meetings along with the associated preparations would

likely be expensive in terms of staff time and effort, considering the minor potential

cost benefits to the affected licensees.

(b) There would be no assurance that the policy issue could be resolved even if

extensive meetings and workshops were conducted.

(5) Develop a quantitative methodology for assessing financial risk (evaluating such factors

as property damage, loss of use, loss of work, legal defense, etc.) that could be used to

determine the relative potential financial liabilities related to spent fuel storage in either

spent fuel pools or ISFSIs.

Pros:

(a) A financial risk methodology could be broadly applied in the agency’s risk-informed

regulatory approach to more realistically establish the financial consequences

related to actual or potential radiological releases.

Cons:

(a) Development of a financial risk methodology would be very expensive in terms of

staff time and effort, considering the minor potential cost benefits to the affected

licensees.

(b) There are no other obvious demands within the industry or NRC to develop such a

capability for determining financial risk.

(c) There would be no assurance that the policy issue could be resolved even if such

an approach were taken.

(d) Development of such a methodology could be problematic, as assigning risks to

the likelihood of insurance claims for events not involving radiological releases

seems highly speculative and beyond the staff’s current expertise.
The Commissioners 11

RESOURCES:

The resource implications of the above options are summarized below. Any resources needed

in support of the Commission’s policy decision have not been previously identified in the

FY 2005 - FY 2006 budget requests and would be identified by re-prioritizing work using the

Planning, Budgeting, and Performance Measurement (PBPM) process.

  Option 1: No significant additional resource implications.

  Option 2: Minor additional resources related to the processing of three current

exemption requests plus several future requests (less than five additional

requests in the next couple of years) estimated at 0.2 FTE in FY 2005

and 0.3 FTE in FY 2006.

  Option 3: Developing a qualitative rationale for an intermediate insurance level

would likely involve significant management interactions and

development of a follow-up policy SECY. In addition, the staff would

need to process the exemptions as in Option 2. Resources are estimated

at 0.8 FTE in FY 2005 and 0.7 FTE in FY 2006.

  Option 4: Conducting a series of workshops and meetings with stakeholders is

estimated at 1 FTE. A follow-up policy SECY factoring in the findings is

estimated at 0.3 FTE. Implementing any resulting Commission

instructions is unknown but estimated to be at least 0.5 FTE. Total effort

for this option would be at least 1.3 FTE in FY 2005 and 0.5 FTE in

FY 2006. 

  Option 5: Developing a new financial risk assessment methodology would be a

major initiative that would necessitate significant resources in terms of

both staffing and contracts extending over several years. No realistic

resource estimate would be meaningful at this time. For comparison

purposes, it can be stated with reasonable assurance that this option

would require significantly more FTE and contract resources than any

other option.

RECOMMENDATION:

The staff recommends the Commission endorse policy Option 1. The staff has reconsidered its

proposals in previous SECY papers related to decommissioning insurance coverage once all

spent fuel has been transferred out of the spent fuel pool and stored in an ISFSI. The staff now

recommends that the level of commercial primary liability insurance coverage for

decommissioning reactors not be changed based on the transfer of all spent fuel from the spent

fuel pool to an ISFSI. Upon the Commission’s approval of this option, the staff will deny the

requested exemptions to reduce the liability insurance coverage levels below currently

authorized levels for the subject licensees of this paper (Trojan, Yankee Rowe, Maine Yankee,

and Big Rock Point). The staff also will extend this policy to any future decommissioning

reactor requests for reductions in liability insurance coverage below the currently authorized

level upon the transfer of spent fuel from the spent fuel pool to an ISFSI.
The Commissioners 12

COORDINATION:

The Office of the General Counsel has reviewed this paper and has no legal objection. The

Office of the Chief Financial Officer has reviewed this paper for resource implications and has

no objections. 

/RA Martin J. Virgilio Acting For/

Luis A. Reyes

Executive Director

 for Operations
The Commissioners 12

COORDINATION:

The Office of the General Counsel has reviewed this paper and has no legal objection. The

Office of the Chief Financial Officer has reviewed this paper for resource implications and has

no objections. 

/RA Martin J. Virgilio Acting For/

Luis A. Reyes

Executive Director

 for Operations

ML041460146 *See Previous Concurrence 

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