ML19340D957
| ML19340D957 | |
| Person / Time | |
|---|---|
| Site: | BWX Technologies, 07001201, 07000364, 07000824, 07000135 |
| Issue date: | 05/09/1977 |
| From: | Volgenau E NRC OFFICE OF INSPECTION & ENFORCEMENT (IE) |
| To: | Zipf G BABCOCK & WILCOX CO. |
| References | |
| NUDOCS 8101050630 | |
| Download: ML19340D957 (4) | |
Text
70-135 O
3/,'l MAY 91974 Mr. George G. Zipf Chairman and President The Babcock and Wilcox Company 161 East 42nd Street 11ew York, flew York 10017 Re: Request for Emergency Action Pursuant to 10 CFR 1 2.206 --
CX-10, Sil!!-778, SNM-1168, SilM-145, S!Cl-42, License flos. R-47,,T 37-7031-1, 37-04456-01, 37-04456-03 and Sti!!-41t, 45-00105-0 SNB-502 i
Dear fir. Zipf:
This further responds to your April 8,1977 letter in which you requested, on behalf of your cocpany, a holder of several fiRC licensees, that NRC institute certain emergency action pursuant to 10 CFR 12.206 with respect to the announced intent of the United Technology Corporation (UTC) to make a tender offer for the purchast. of the stock of The Babcock and Wilcox Company (D&W).
In brief, you requested that the !;RC seek injunctive relief to l
prohibit transfer of control of your licenses to UTC or in the i
alternative that UTC be required to file applications for~ transfer of control with IIRC.
Our initial response to your request was to prepare and publish in the Federal _ Reaister an appropriate notice, published on April 18, 1977, which was transmitted to you under cover of my letter of April 14, 1977.
We also informed UTC on April 14, 1977, of the receipt of your request, and requested it to respond by return mail as to its intentions with respect to this matter.
In a letter dated April 18, 1977, the Vice President and General Counsel of UTC responded. The letter confirmed the intent of UTC to make a tendt' offer for controlling shares of B&W stock, when certain legal problems l
have been resolved, and set forth its position regarding the assertions made in your request.
In addition UTC made clear that, in the event it succeeds in obtaining a majority of B&W's outstanding shares of stock, it will then seek necessary !4RC approvals.
In addition to various assertions regarding UTC's financial qualifications, UTC's intent with D**]D
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Mr. George G. Zipf 2-t respect to the prospective application for the transfer of the B&W licenses, and UTC's technical qualifications, the letter stated that nebc; UTC nor its subsidiary is owned, controlled or dominated by an alien, foreign corporation, or a foreign government.
Section 184 of the Atomic Energy Act of 1954, as amended ("Act"),
42 U.S.C. 2234, provides in pertinent part that no Comission license may be transferred voluntarily or "nvolc:.tarily, directly or indirectly, through transfer of control of any license unless the Comission finds that the transfer is ir, accordance with the provisions of the Act and gives its consent in writing. The dispute b tween B&W and UTC is almost entirely legal and reflects' differing interpretations of the purpose and effect of section 184 and of how the Comission t.Sould enforce it.
B&W asserts that the phrase
" control of any license" should be construed as including control of a corporation holding a license. Furthermore, B&W argues that the Comission should adopt an aggressive, prophylactic approach to enforcement of section 184 by seeking an injunction to prohibit j
the transfer of control of any licensee until the Commission approves of such transfe.
UTC has a more narrow view of section 184.
It argues that other statutes which have arguably similar purpose to section 184 have explicit language prohibiting unapproved transfers "of control of any corporation holding a permit or license," see 47 U.S.C. 301(b)
(FCC), and that the absence of such explicit language in the Act creates a negative inference against the Comission's possession I
of such authority.
Furthernore, UTC argues that any Commission action at this time would necessarily be premature and speculative since UTC has not yet begun to acquire any B&W shares, and may never do so in light of the efforts being made by B&W to thwart UTC.
We reject UTC's argument that the Comission is without authority to act if control of a licensee changes hands so long as the formal identity of the license holder is unchanged. That would be contrary to past Comission practice and would seriously impair the Comission's ability to carry out its primary mandate to protect the health and j
safety of the public and to promote the comon defense and security.
The Comission undertakes a careful scrutiny of the background of any I
individual and the organization of any individual and the organization and structure of any corporation applying for a license. See, e.g.,
10 CFR 50.33; 10 CFR 50.34(b)(6); 10 CFR 50.38; 10 CFR 70.22. _If l
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fir. George G. Zipf -
UTC's argument were accepted, an otherwise unqualified person could acquire a license by simply acquiring control of an existing license holder. So long as the formal identity of the licensee remained unchanged, that unqualified person could then control the license and take obviously significant and deleterious actions such as siphoning needed funds from the licensee's operations, discharging needed technical or supervisory employees or failing to maintain proper safeguards over material or information. That is precisely the harm that section 184 is designed to prevent and we must reject any reading of section 184 that prevents us from guarding against it.
B&W argues, as we have stated above, that the Act is violated by trans-ferring effective control of a corporation holding a license without the consent of the Comission.
Therefore, B&W contends that section 232 of the Act requires us to go to court to prevent such a transfer.
But B&W's argument, like UTC's, miccenstrues the purpose of section 184 and section 232. The 10ngv ge of section 184 and past Commission practice show that the Comission's primary focus has been and j
must be the licenses and not other peripheral matters. Accordingly, it would not be appropriate in the circumstances here presented for i
the Comission to seek to employ section 232 -- a permissive and discretionary provision ("... may make application to the appropriate l
court...") -- either to help or to hinder the UTC tender offer.
Such an action would be purely speculative since as of this date no I
i NRC license has been transferred and UTC's tender offer remains i
subject to review. by concerned federal and state authorities.
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Furthermore, any such e" ort by the Comission would necessarily i
involve it in a whirlpool of corporate litigation raising matters i
not within the Comission's expertise and which Congress has not l
directed us to regulate.
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Our primary objective in enforcing our mandate under section 184 l
is to ensure that no person who could not obtain a license through f
the normal application procedure obtains a license by acquiring control of a licensee.
Three of our major concerns in connection with both the grant of a license or a transfer of one are:
(1) whether i
the applicant has sufficient financial responsibility to ensure safe l
operation under the license; (2) whether the applicant will ceploy sufficient technically competent personnel to ensure safe operation under the license; and (3) whether the applicant is under foreign domination or control or whether the comon defense and security l
l might othentise be. harmed by issuance of the license.
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While section 232 gives the Comission discretion to act at an early stage if any of those three or similarly vital interests appears to be threatened, no such showing has been made here. UTC already holds i
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I fiRC licenses so no question of possible foreign domination arises.
Furthermore, UTC has provided assurances that should it acquire control of B&W, it will not change any activities being conducted under B&U's licenses or change the existing licensee's equipment, facilities, personnel or technical qualifications without our approval. Consequently, we do not see the clear threat of an unacceptable person gaining control of a license that we believe would be necessary for us to attempt to employ section 232 to prevent or delay UTC's tender offer.
We will take all necessary steps to ensure our mandate under section -
184 is carried out.
If the Commission becomes aware either sua sponte or through 10 CFR 2.20C that a possible violation of section 184 has occurred, a show cause proceeding could be instituted. The ordar to show cause could be made imediately effective if warranted.
10 CFR 2.202( f). The show cause proceeding itself would determine whether effective control of any fiRC license had been transferred from one t
i person to another without the consent required by section 184 and, if so, what remedy including the possibility of license suspension and suspension of operations would be appropriate.
In deciding such matters, the Corr.ission could consider in an adjudicatory setting whether the new effective licensee would itseu be qualified to hold a license and also what the possible consequences to the public interest of a license suspension or suspension of operations would be.
Essentially the same issues would arise should UTC, after acquiring control of B&W, apply for a transfer of the licenses as provided by regulation.
' lith respect to your assertions regarding the possible anti-competitive effect of the action proposed by UTC, we note that the Departrent of Justice already has this matter under review so the Comrr.ission need not determino whether it has any obligation to report this matter to the Attorney General pursuant to section 105(b) of the Act.
It would be inappropriate for the Commission to inject itself into that matter at this time.
l Accordingly, for the reasons stated above, your request of April 18, 1977 for the Commission to take em rgency action, is denied.
hs#*((25!gnea ty' 1
. Imct Vc2 swan Ernst Volgenau Director Office of Inspection
__and Enforcement i
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