Domestic Nuclear Power Plant Licensing and Foreign Ownership and Control: Heating Up Cold War Policies

Domestic Nuclear Power Plant Licensing and Foreign Ownership and Control: Heating Up Cold War Policies

By: Lindsay Hall, Notes Editor

Congress passed the Atomic Energy Act of 1954 (AEA) during the Cold War political climate, and it reflects an ideology of American nuclear supremacy and fear of nuclear catastrophe at the hands of foreign entities. In the wake of the Fukushima Daiichi nuclear disaster,[1] and in light of the tensions over Iran’s nuclear capacity,[2] the safety and non-proliferation concerns behind the AEA remain relevant today. However, the Nuclear Regulatory Commission (NRC) is facing pressure from the nuclear industry to change the NRC’s current “foreign ownership, control, or domination” (FOCD) requirements. Some industry members believe that modern corporate financial complexity and increasingly sophisticated nuclear industries abroad demand a change to current regulatory limitations that are stifling investment in the domestic nuclear energy industry.

The AEA establishes licensing requirements for the ownership and operation of nuclear power reactors in the United States, and the NRC has been tasked with implementing these requirements. Under the AEA, “no license may be issued to an alien or 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.”[3] Furthermore, the NRC has the discretion to refuse to license a person if it believes issuing such a license “would be inimical to the common defense and security or to the health and safety of the public.”[4] Therefore, U.S. companies wholly owned by a foreign corporation are ineligible to obtain a license for currently licensed plants undergoing a change in ownership or management, unless U.S. citizens “largely” own the foreign parent corporation’s stock.[5] If companies seeking to acquire an ownership interest are less than wholly owned by a foreign entity, the NRC would consider granting a permit if certain considerations are met. These elements include: the extent of ownership and operational control sought by the proposed partial owner; the corporate relationship and structure of the companies; and whether the applicant would have access to restricted data.[6]

Although the NRC has approved some degree of foreign ownership in the past,[7] changes in FOCD restrictions led the NRC to recently refuse to license two prominent proposals. First, the NRC’s Atomic Safety and Licensing Board denied an application to a company for a license to build and operate a nuclear energy facility at Calvert Cliffs in Maryland[8] due to the 100% indirect ownership in the applicants by the French utility company Electricité de France (EDF).[9] The NRC denied review of this decision in March of 2013.[10] EDF—supported by the French government, an American ally—jointly owns Constellation Energy Nuclear Group, which operates several East Coast power plants with five nuclear reactors capable of generating more than 3,900 megawatts of power.[11] EDF owns over fifty nuclear reactors in France and fifteen plants in the United Kingdom.[12] Secondly, the NRC denied an applicant’s request for two new reactors at the South Texas Project for failing to meet the FOCD requirements.[13] The applicant’s Japanese parent company, Toshiba, was found to have ten percent ownership and “significant financial control” over its nuclear energy-generating subsidiary, making it ineligible for submitting a license application.[14]

These decisions have spurred robust commentary from the nuclear energy industry. According to Ellen Ginsberg, the Nuclear Energy Institute’s General Counsel, the NRC staff has “departed significantly” from their precedent to impose “unnecessary prohibitions” on licensing.[15] This change in precedent has brought about concerns over the regulatory uncertainty created by the recent NRC staff decisions. Industry personnel warn that should NRC refuse to relax FOCD requirements, this regulatory hurdle to foreign investment will ostracize the U.S. from participating in the international growth of the nuclear energy industry in the future and will further reduce investment in its domestic infrastructure.

This summer, the NRC issued a request for comments on their current FOCD requirements for licensing commercial plants.[16] This sixty-day comment period, culminating at a public meeting in June of 2013, was intended to gather stakeholder input on the current FOCD policy and its implications for the domestic nuclear industry. The NRC plans to present the results of its public comment information gathering and its recommendations by the end of 2013.[17]

[1] John Bussey, If Nuclear Disaster Strikes, Steer Clear of Japan’s Playbook, Wall St. J. (September 12, 2013)
[2] David Sanger, William Broad, Iran Is Seen Advancing Nuclear Bid, N.Y. Times, (May 22, 2013)
[3] 42 U.S.C. § 2133(d).
[4] 42 U.S.C. § 2133(d).
[5] 64 Fed. Reg. at 52,358.
[6] 64 Fed. Reg. at 52,358.
[7] For example, the NRC approved the transfer of the TMI-1, 7 Clinton and Oyster Creek licenses to AmerGen Energy Company, LLC, which, at the time, was 50% owned by a U.S. subsidiary of British Energy, a U.K. Corporation. Order Approving Transfer of License and Conforming Amendment, 64 Fed. Reg. 19,202 (Apr. 19, 1999); Order Approving Transfer of License and Conforming Amendment, 64 Fed. Reg. 67,598 (Dec. 2, 1999); Order Approving Transfer of License and Conforming Agreement, 65 Fed. Reg. 37,417 (June 14, 2000).
[8] Industry Backs Graded Approach on Foreign Ownership, Nuclear Energy Institute, (Aug. 8, 2013)
[9] Calvert Cliffs 3 Nuclear Project, LLC and UniStar Nuclear Operating Services, LLC (Combined License Application for Calvert Cliffs Unit 3), LBP-12-19, 76 N.R.C. __ (Aug. 30, 2012), petition for review denied, CLI-13-04, 77 N.R.C. __ (Mar. 11, 2013).
[10] Id.
[11] Geraldine Amiel, EDF Begins Withdrawal From U.S. Nuclear, Wall St. J., (July 30, 2013)
[12] Id.
[13] Foreign Ownership Could Halt Licensing Of South Texas Project Nuclear Reactors, Reuters, (May 1, 2013)
[14] Letter from David B. Matthews, Director, Division of New Reactor Licensing, Office of New Reactors, U.S. NRC, to Mark McBurnett, Chief Executive Officer and Chief Nuclear Officer, Nuclear Innovation North America LLC (Apr. 29, 2013) (NRC ADAMS Accession Nol. ML13105A351).
[15] Letter from Ellen Ginsberg, Vice President, General Counsel and Secretary, National Energy Institute, to Cindy Bladey, Chief, Rules, Announcements and Directives Branch, Nuclear Regulatory Commission (August 2, 2013) (on file with NEI).
[16] 78 Fed. Reg. 33,121, 33,122 (June 3, 2013).
[17] James Glasgow, Stephen Markus, The NRC’s Foreign Ownership Policy, Pillsbury Law (July 12, 2013)

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