Disposal Site for Spent Nuclear Fuel Could Change the Insurance Picture for Nuclear Plant Owners

Erin L. Webb

A federal court of appeals and the Nuclear Regulatory Commission (NRC) recently made advances toward a national disposal site for spent nuclear fuel. My recent Law360 column analyzes the potential impact of an eventual spent nuclear fuel disposal site on insurance coverage for nuclear plant owners. Shipping spent nuclear fuel offsite for disposal presents very different risks from those associated with storing the spent fuel onsite, which is the situation at many nuclear power plants today.

The D.C. Circuit recently held that the U.S. government may not collect any more fees from nuclear plant owners under the Nuclear Waste Policy Act until it finalizes a disposal solution for spent fuel. Nat’l Ass’n of Regulatory Util. Comm’rs v. U.S. Dep’t of Energy, Nos. 11-1066, 11-1068, 2013 WL 6064021 (D.C. Cir. Nov. 19, 2013). Additionally, the NRC directed its staff last month to “complete and issue the Safety Evaluation Report” on the U.S. Department of Energy’s (DOE) application for consideration of the Yucca Mountain site as a disposal facility. In the Matter of U.S. Dep’t of Energy (High-Level Waste Repository), No. 63-001, __ N.R.C.___, slip op. at 23 (Nov. 18, 2013).

While none of these actions assure that Yucca Mountain will eventually be the national disposal facility, the progress toward such a facility raises interesting implications for the insurance coverage carried by nuclear plants. If plant owners begin shipping spent fuel to the Yucca Mountain site or another disposal site, the risks—and the insurance coverage— associated with a nuclear power plant could be very different.

Types of coverage that could be affected include:

  • decommissioning coverage, or the insurance a nuclear power plant owner carries to decommission a plant at the end of its licensed life;
  • first party property coverage, or insurance coverage for accidental property damage to the physical structure of the plant; and
  • liability coverage, which protects nuclear power plant owners against liability for accidents involving radioactive materials.

Policyholders should always carefully review the policy language and be familiar with its requirements. Experienced coverage counsel should be retained, and notice should be provided to the insurer immediately, in the event of a claim.

 

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