[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 [email protected].

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