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Industry Backs Graded Approach on Foreign Ownership

Aug. 8, 2013—The increasingly global nature of the nuclear energy industry requires a rethinking of how federal restrictions on foreign ownership are interpreted, the Nuclear Energy Institute said last week in comments to the Nuclear Regulatory Commission.

The industry is concerned that recent NRC action disqualifying foreign entities from participating in U.S. nuclear plant development is based on an unnecessarily restrictive interpretation of the foreign ownership, control or domination restriction in the Atomic Energy Act.

The law prohibits the NRC from licensing any entity that is “owned, controlled or dominated” by a foreign entity, but it does not define these terms. When the act was passed, the Cold War was at its height and commercial nuclear technology was in early stages of its development. These circumstances raised concerns about diversion of nuclear material and transfer of reactor technology.

After a panel on the NRC’s Atomic Safety and Licensing Board last year prohibited an applicant owned by Electricit√© de France from going forward with a license to build and operate a nuclear energy facility at Calvert Cliffs in Maryland, the commission in March directed the NRC staff to conduct a “fresh assessment” of the issues related to foreign involvement in U.S. nuclear projects.

The NRC published a Federal Register notice in June requesting comments on these issues and held a public meeting June 19 (see Nuclear Energy Overview, June 20). In recent years, the agency said, it has seen an increase in the number of licensing actions that involve foreign ownership, probably because of “the increased globalization of economic activity and associated added complexity of the corporate arrangements.” As a result, the agency’s reviews of foreign ownership issues “have become more numerous and detailed.”

The industry believes that the NRC staff and licensing boards have departed significantly from commission precedent on foreign ownership decisions and are imposing unnecessary prohibitions and license conditions, said Ellen Ginsberg, NEI’s vice president and general counsel in an Aug. 2 letter to the NRC.

Ginsberg said NRC precedent supports the commission’s authority to interpret the statutory language to focus on whether the foreign entity has power to direct nuclear activities that would affect the national defense or security. NEI’s letter pointed out that the home country of the foreign entity—such as France, Sweden or Japan—should be heavily weighted in the NRC’s foreign ownership analysis. 

For example, in the case of the South Texas Project, the NRC said it could not permit Japan-based Toshiba to be involved in licensing new reactors at the site even though Toshiba’s subsidiary owned just 10 percent of the project. The same issues also recently resulted in the agency’s denial of a license renewal application for a research reactor because the licensee’s ultimate parent is a Swedish company.

Ginsberg said an effective “negation action plan” will specify governance provisions and other measures to ensure that operation of a facility remains under U.S. control. She recommended a graded approach to such plans, which takes into account whether the foreign entity is a direct or indirect owner and whether the nation is a member of the Nuclear Suppliers Group or on the NRC’s list of embargoed or restricted countries. 

The industry also recommended that the NRC revise its guidance to clarify that foreign debt financing is acceptable unless the foreign entity has special control rights or is from a country of concern, Ginsberg said. “Achieving greater regulatory certainty regarding [foreign ownership] is absolutely critical to enabling domestic nuclear projects to attract foreign investment and participation.”

The NRC is holding a webinar on foreign ownership, control and domination on Aug. 21.