[Federal Register Volume 64, Number 40 (Tuesday, March 2, 1999)]
[Notices]
[Pages 10166-10169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5079]
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NUCLEAR REGULATORY COMMISSION
Standard Review Plan on Foreign Ownership, Control, or Domination
AGENCY: Nuclear Regulatory Commission.
ACTION: Standard Review Plan.
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SUMMARY: The NRC is seeking public comment on a Standard Review Plan
(SRP) on Foreign Ownership, Control, or Domination. The SRP documents
procedures and guidance to be used by the staff to analyze applications
for reactor licenses, or applications for the transfer of control of
such licenses, with respect to the statutory bar contained in sections
103 and 104 of the Atomic Energy Act of 1954, as amended, against
issuing a license to an entity that is owned, controlled, or dominated
by foreign interests. Because the SRP describes internal agency
procedures and is based on existing Commission guidance in this area,
the SRP is being published for interim use. However, the Commission is
inviting public comment on the SRP and is interested in possible
improvements to it. Public comments will be considered in evaluating
the NRC review process in this area.
DATES: The public is invited to submit comments on the SRP by April 1,
1999. Comments received after this date will be considered if it is
practical to do so, but assurance of consideration cannot be given
except as to comments received on or before this date. On the basis of
the submitted comments, the Commission will determine whether to modify
the SRP before issuing it in final form.
ADDRESSES: Mail comments to: Secretary, U.S. Nuclear Regulatory
Commission, Washington, D.C. 20555, Attention: Rulemakings and
Adjudications Staff.
Deliver comments to: 11555 Rockville Pike, Rockville, Maryland,
between 7:45 a.m. and 4:15 p.m., Federal workdays.
Examine copies of comments received at: The NRC Public Document
Room, 2120 L Street, N.W. (lower level), Washington, D.C.
[[Page 10167]]
FOR FURTHER INFORMATION CONTACT: Steven R. Hom, Office of the General
Counsel, U.S. Nuclear Regulatory Commission, Washington, D.C. 20555,
telephone (301) 415-1537, e-mail srh@nrc.gov.
SUPPLEMENTARY INFORMATION: The SRP on Foreign Ownership, Control, or
Domination, attached hereto, contains the review procedures to be used
by the staff to evaluate applications against the prohibitions in
sections 103d and 104d of the Atomic Energy Act against issuing reactor
licenses to entities that the Commission ``knows or has reason to
believe'' are owned, controlled, or dominated by foreign interests. The
procedures expressly provide for requests for additional information
and consideration of a negation action plan if the information
described in 10 C.F.R. Sec. 50.33(d) initially required to be provided
in an application indicates that there may be some degree of foreign
control of the applicant. The SRP also sets forth substantive guidance
consistent with existing Commission precedent on what may constitute
foreign control. This SRP supersedes Section III.3 of NUREG-1577,
Standard Review Plan on Power Reactor Licensee Financial Qualifications
and Decommissioning Funding Assurance (Draft Report for Comment)
(containing review procedure regarding foreign ownership) in its
entirety.
Dated at Rockville, Maryland, this 24th day of February, 1999.
For the Nuclear Regulatory Commission.
Annette L. Vietti-Cook,
Secretary of the Commission.
Standard Review Plan on Foreign Ownership, Control and Domination
1. Areas of Review
1.1 General
The NRC is issuing this Standard Review Plan (SRP) to describe the
process it uses to review the issue of whether an applicant for a
nuclear facility license under sections 103 or 104 of the Atomic Energy
Act of 1954, as amended (AEA or Act), is owned, controlled, or
dominated by an alien, a foreign corporation or a foreign government.
This SRP will be used as the basis for such reviews in connection with
license applications for new facilities, or applications for approval
of direct or indirect transfers of facility licenses.
Where there are co-applicants, each intending to own an interest in
a new facility as co-licensees, each applicant must be reviewed to
determine whether it is owned, controlled, or dominated by an alien,
foreign corporation or foreign government. If a co-licensee of an
existing facility owns a partial interest in the facility and is
transferring that interest, the acquirer must be reviewed to determine
whether it is owned, controlled, or dominated by an alien, foreign
corporation or foreign government.
The foreign control determination is to be made with an orientation
toward the common defense and security. However, this SRP does not
address all matters relating to the determination of whether issuance
of a license to a person would be inimical to the common defense and
security.
This SRP reflects current NRC regulations and policy.
1.2 Relevant Statutory And Regulatory Provisions
Sections 103d and 104d of the Act provide, in relevant part, that
no license may be issued to:
any corporation or other entity if the Commission knows or has
reason to believe it is owned, controlled, or dominated by an alien,
a foreign corporation, or a foreign government. In any event, no
license may be issued to any person within the United States if, in
the opinion of the Commission, the issuance of a license to such
person would be inimical to the common defense and security or to
the health and safety of the public.
(Section 103d also states that no license may be issued to an
alien.)
Section 184 of the Act provides, in relevant part:
No license granted hereunder and no right to utilize or produce
special nuclear material granted hereby shall be transferred,
assigned or in any manner disposed of, either voluntarily or
involuntarily, directly or indirectly, through transfer of control
of any license to any person, unless the Commission shall, after
securing full information, find that the transfer is in accordance
with the provisions of this Act, and shall give its consent in
writing.
10 CFR Sec. 50.33(d), in relevant part, provides:
Each application shall state:
(d)(1) If applicant is an individual, state citizenship.
(2) If applicant is a partnership, state name, citizenship and
address of each partner and the principal location where the
partnership does business.
(3) If applicant is a corporation or an unincorporated
association, state:
(i) The state where it is incorporated or organized and the
principal location where it does business;
(ii) The names, addresses and citizenship of its directors and
of its principal officers;
(iii) Whether it is owned, controlled, or dominated by an alien,
a foreign corporation, or foreign government, and, if so, give
details.
(4) If the applicant is acting as agent or representative of
another person in filing the application, identify the principal and
furnish information required under this paragraph with respect to
such principal.
10 CFR Sec. 50.38 provides:
Any person who is a citizen, national, or agent of a foreign
country, or any corporation, or other entity which the Commission
knows or has reason to believe is owned, controlled, or dominated by
an alien, a foreign corporation, or a foreign government, shall be
ineligible to apply for and obtain a license.
10 CFR Sec. 50.80 provides, in pertinent part:
(a) No license for a production or utilization facility, or any
right thereunder, shall be transferred, assigned, or in any manner
disposed of, either voluntarily or involuntarily, directly or
indirectly, through transfer of control of the license to any
person, unless the Commission shall give its consent in writing.
* * *
(c) * * * [T]he Commission will approve an application for the
transfer of a license, if the Commission determines:
* * *
(2) That the transfer of the license is otherwise consistent
with applicable provisions of the law, regulations, and orders
issued by the Commission pursuant thereto.
2. Information to be Submitted by Applicant
2.1 Information Required By Regulation
At the time the applicant submits its application for a license or
for approval of the transfer of a license, the applicant must submit
information sufficient to comply with 10 CFR Sec. 50.33(d).
2.2 Additional Information
If the reviewer, based on the information required to be submitted
by 10 C.F.R. Sec. 50.33(d), has reason to believe that the applicant
may be owned, controlled, or dominated by foreign interests, the
reviewer should request and obtain the following additional
information:
1. If the applicant's equity securities are of a class which is
registered pursuant to the Securities Exchange Act of 1934, copies of
all current Securities and Exchange Commission Schedules 13D and 13G,
which are required to be filed by owners of more than 5% of such a
class with the Securities and Exchange Commission, the security issuer
(applicant), and the exchange on which the issuer's securities are
traded.
2. Management positions held by non-U.S. citizens.
3. The ability of foreign entities to control the appointment of
management personnel.
2.3 Negation Action Plan
If applicable under Section 4.4 infra, the applicant should also
submit a Negation Action Plan, which is described in detail in Section
4.4.
[[Page 10168]]
3. Acceptance Criteria
3.1 Basic Statutory and Regulatory Limitations
License applications for new facilities or applications for
approval of transfers of licenses required in the case of proposed new
ownership of existing facilities may involve foreign entities proposing
to own all or part of a reactor facility. Sections 103d and 104d of the
AEA prohibit the NRC from issuing a license to an applicant if the NRC
knows or has reason to believe that the applicant is owned, controlled,
or dominated by an alien, a foreign corporation, or a foreign
government (or is an alien, in the case of section 103d).
Likewise, under 10 CFR 50.38,
Any person who is a citizen, national, or agent of a foreign
country, or any corporation, or other entity which the Commission
knows or has reason to believe is owned, controlled or dominated by
an alien, a foreign corporation, or a foreign government, shall be
ineligible to apply for and obtain a license.
3.2 Guidance On Applying Basic Limitations
The Commission has not determined a specific threshold above which
it would be conclusive that an applicant is controlled by foreign
interests through ownership of a percentage of the applicant's stock.
Percentages held of outstanding shares must be interpreted in light of
all the information that bears on who in the corporate structure
exercises control over what issues and what rights may be associated
with certain types of shares.
An applicant is considered to be foreign owned, controlled, or
dominated whenever a foreign interest has the ``power,'' direct or
indirect, whether or not exercised, to direct or decide matters
affecting the management or operations of the applicant. The Commission
has stated that the words ``owned, controlled, or dominated'' mean
relationships where the will of one party is subjugated to the will of
another. General Electric Co., 3 AEC at 101.
A foreign interest is defined as any foreign government, agency of
a foreign government, or representative of a foreign government; any
form of business enterprise or legal entity organized, chartered, or
incorporated under the laws of any country other than the U.S. or its
possessions and trust territories; any person who is not a citizen or
national of the U.S.; and any U.S. interest effectively controlled by
one of the above foreign entities.
The Commission has stated that in context with the other provisions
of Section 104d, the foreign control limitation should be given an
orientation toward safeguarding the national defense and security.
Thus, an applicant that may pose a risk to national security by reason
of even limited foreign ownership would be ineligible for a license.
Even though a foreign entity contributes 50%, or more, of the costs
of constructing a reactor, participates in the project review, is
consulted on policy and cost issues, and is entitled to designate
personnel to design and construct the reactor, subject to the approval
and direction of the non-foreign applicant, these facts alone do not
require a finding that the applicant is under foreign control.
An applicant that is partially owned by a foreign entity, for
example, partial ownership of 50% or greater, may still be eligible for
a license if certain conditions are imposed, such as requiring that
officers and employees of the applicant responsible for special nuclear
material must be U.S. citizens.
Where an applicant that is seeking to acquire a 100% interest in
the facility is wholly owned by a U.S. company that is wholly owned by
a foreign corporation, the applicant will not be eligible for a
license, unless the Commission knows that the foreign parent's stock is
``largely'' owned by U.S. citizens. If the foreign parent's stock is
owned by U.S. citizens, and certain conditions are imposed, such as
requiring that only U.S. citizens within the applicant organization be
responsible for special nuclear material, the applicant may still be
eligible for a license, notwithstanding the foreign control limitation.
If the applicant is seeking to acquire less than a 100% interest,
further consideration is required.
4. Review Procedures
4.1 Threshold Review and Determination
The reviewer should first analyze all of the information submitted
by the applicant sufficient to comply with 10 C.F.R. Sec. 50.33(d), as
well as other relevant information of which the reviewer is aware, to
determine whether there is any reason to believe that the applicant is
an alien or citizen, national, or agent of a foreign country, or an
entity that is owned, controlled, or dominated by an alien, a foreign
corporation, or foreign government. If there is no such reason to
believe based on the foregoing information, no further review is
required and the reviewer should proceed to make a recommendation
regarding whether there is any foreign control obstacle to granting the
application. On the other hand, if there is any reason to believe that
the applicant may be owned, controlled, or dominated by foreign
interests, the reviewer should request and obtain the additional
information specified in Section 2.2.
4.2 Supplementary Review
If it is necessary to obtain the additional information specified
in Section 2.2, the reviewer should consider the acceptance criteria
above, and consult with the Office of the General Counsel on Commission
precedent. Information related to the items listed below may be sought
and may be taken into consideration in determining whether the
applicant is foreign owned, controlled, or dominated. The fact that
some of the below listed conditions may apply does not necessarily
render the applicant ineligible for a license.
1. Whether any foreign interests have management positions such as
directors, officers, or executive personnel in the applicant's
organization.
2. Whether any foreign interest controls, or is in a position to
control the election, appointment, or tenure of any of the applicant's
directors, officers, or executive personnel. If the reviewer knows that
a domestic corporation applicant is held in part by foreign
stockholders, the percentage of outstanding voting stock so held should
be quantified. However, recognizing that shares change hands rapidly in
the international equity markets, the staff usually does not evaluate
power reactor licensees to determine the degree to which foreign
entities or individuals own relatively small numbers of shares of the
licensees' voting stock. The Commission has not determined a specific
threshold above which it would be conclusive that an applicant is
controlled by foreign interests.
3. Whether the applicant is indebted to foreign interests or has
contractual or other agreements with foreign entities that may affect
control of the applicant.
4. Whether the applicant has interlocking directors or officers
with foreign corporations.
5. Whether the applicant has foreign involvement not otherwise
covered by items 1-4 above.
4.3 Supplementary Determination
After reviewing the additional information specified in Section
2.2, if the reviewer continues to conclude that the applicant may be an
alien or owned, controlled, or dominated by foreign interests, or has
some reason to believe
[[Page 10169]]
that may be the case, the reviewer shall determine:
1. The nature and extent of foreign ownership, control, or
domination, to include whether a foreign interest has a controlling or
dominant minority position.
2. The source of foreign ownership, control, or domination, to
include identification of immediate, intermediate, and ultimate parent
organizations.
3. The type of actions, if any, that would be necessary to negate
the effects of foreign ownership, control, or domination to a level
consistent with the Atomic Energy Act and NRC regulations.
On the other hand, if the reviewer determines after reviewing the
additional information specified in Section 2.2 that there is no
further reason to believe that the applicant is an alien or owned,
controlled, or dominated by a foreign person or entity, no additional
review is necessary.
4.4 Negation Action Plan
If the reviewer continues to conclude following the Supplementary
Determination that an applicant may be considered to be foreign owned,
controlled, or dominated, or that additional action would be necessary
to negate the foreign ownership, control, or domination, the applicant
shall be promptly advised and requested to submit a negation action
plan. When factors not related to ownership are present, the plan shall
provide positive measures that assure that the foreign interest can be
effectively denied control or domination. Examples of such measures
that may be sufficient to negate foreign control or domination include:
1. Modification or termination of loan agreements, contracts, and
other understandings with foreign interests.
2. Diversification or reduction of foreign source income.
3. Demonstration of financial viability independent of foreign
interests.
4. Elimination or resolution of problem debt.
5. Assignment of specific oversight duties and responsibilities to
board members.
6. Adoption of special board resolutions.
5. Evaluation Findings
The reviewer should verify that sufficient information has been
provided to satisfy the regulations and this Standard Review Plan. In
consideration of the guidance of this Standard Review Plan, the
reviewer should then draft an analysis and recommendation, based on the
applicable information specified in Sections 2 and 4 above, concerning
whether the reviewer knows, or has reason to believe that the applicant
is an alien, or is a corporation or other entity that is owned,
controlled, or dominated by an alien, a foreign corporation, or foreign
government, and whether there are conditions that should be imposed
before granting the application so as to effectively deny foreign
control of the applicant.
6. References
1. Sections 103, 104, and 184 of the Atomic Energy Act of 1954,
as amended (42 USC 2133, 2134, and 2234).
2. Part 50 ``Domestic Licensing of Production and Utilization
Facilities'' of Title 10 of the Code of Federal Regulations (10 CFR
Part 50).
3. General Electric Co. and Southwest Atomic Energy Associates,
Docket No. 50-231, 3 AEC 99 (1966).
4. Letter from W. Dircks to J. MacMillan (Dec. 17, 1982) (Re:
Babcock & Wilcox/McDermott).
5. Letter from N. Palladino to A. Simpson (Sept. 22, 1983) w/
attachment (Re: Union Carbide/Cintichem).
[FR Doc. 99-5079 Filed 3-1-99; 8:45 am]
BILLING CODE 7590-01-P
