ML20203G103
| ML20203G103 | |
| Person / Time | |
|---|---|
| Issue date: | 11/13/1998 |
| From: | Mcgaffigan E NRC COMMISSION (OCM) |
| To: | Hoyle J NRC OFFICE OF THE SECRETARY (SECY) |
| Shared Package | |
| ML20203G072 | List: |
| References | |
| SECY-98-246-C, NUDOCS 9902190120 | |
| Download: ML20203G103 (4) | |
Text
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NOTATION VOTE l
l RESPONSE SHEET L
TO:
John C. Hoy!c, Secretary FROM:
COMMISSIONER MCGAFFIGAN
SUBJECT:
SECY-98-246 - STANDARD REVIEW PLAN REGARDING FOREIGN OWNERSHIP, CONTROL, OR DOMINATION OF APPLICANTS FOR REACTOR LICENSES Approved x
Disapproved -
Abstain Not Participating COMMENTS:
See attached comments.
- (
Edward McGaffigan, Jr.
?lGNATURE November 13, 1998
[ ATE l
Entered on "AS" Yes x
No 99o2190 tao 99o217 b
1 Commissioner McGaffigan's CommenM on SEGY on 26 l approve this draft SRP, subject to changes consistent with the following cc. ments:
The draft focuses too much on the percentage of ownership, even to the point of seeming inconsistency. For example, the draft says, "An applicant that is up to 50%
l owned by a foreign entity may still be eligible for a license...." (section 3.2 of the draft.)
This sentence comes too close to saying that an applicant 50% or more of which is owned by a foreign entity would not be eligible for a license. Yet section 4.2 of the draft rightly says, "The Commission has not determined a specific threshold above which it would be conclusive that an applicant is controlled by foreign interests."
It may be useful for us to know percentages, but the SRP should not suggest anything magical about 50%. As the staff knows, a mere 1% can control under majority rule when the remaining 99% is divided into two blocks neither of which has more than 50%.
And even, say,70% does not control under thinkable supermajority rules, or rules that assign different voting rights to different kinds of stocks. The percentages must be interpreted in the light of all the information that bears on who in the corporate structure exercises control over what issues. The statement in section 4.2 is consistent with this principle, but the remarks in section 3.2 do not seem to be.
I would therefore make the following changes to the SRP, to make it consistent with its better self:
The 4th paragraph of section 3.2 should begin as follows (new words are redlined): "Even though a foreign entity contributes 50%, or somewhat more, of the costs of constructing a reactor, i
The 5th paragraph of section 3.2 should begin as follows (new words are redlined): "An applicant that is ttp-fe 50%, or somewhat more, owned by a foreign entity may still be eligible for a license if certain conditions are imposed The SRP should also acknowledge the nere are practical limits to the extent to which we can determine these percentages. I would borrow from a sentence on page 33 of the draft final SRP on financial qualifications and decommissioning funding assurance and make the following sentence the next-to-last sentence in the second condition of section 4.2.
However, recognizing that shares change hands rapidly in the international equity markets, the staft 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.
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2 SECY-98-252: This information paper on AmerGen's proposed purchase of TMI-1 is now scheduled for release on Monday, November 16. I believe that'it is inconsistent with the draft SRP (as clarified above) in two ways, and should be modified before it is released.
First, the 3rd footnote (page 3) comes close to saying that greater than 50%
foreign ownership makes the applicant ineligible for a license. I would modify the 3rd sentence of the footnote to read: "This raises the issue of whether just how much of AmerGen's total foreign ownership is greatef4han 50 percent foreign as a result of even a small percentage of PECO's stock being owned by foreign investors." I would also change the next-to-last sentence of the footnote to read as follows (partly for reasons of syntax): "Until it receives any information to the contrary, the staff is working under the assumptions that AmerOen is nc more than 50 percent foreign owned sad that the Commission's previous decisions that foreign ownership, per se, is not prohibited by the AEA when it does not lead to foreign control or domination still hold." Finally, I would add to the end of the footnote the following sentence, again making use of material on page 33 of the draft final SRP for financial qualifications and decommissioning funding assurance:
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.
Second, the information SECY says (on page 5) that "the staff does not intend to use considerations of the home country of BE, plc, in its determinations of foreign ownership, control, or domination." However, section 3.2 of the draft SRP says, rightly, The Commission has stated that the foreign controllimitation 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.
The SRP does not draw the bright line that the information paper draws between the foreign control finding and the national security finding. I prefer the SRP's greater flexibility and attention to the realities of national security. I would therefore revise the last 4 sentences of the paragraph in the information paper i
that discusses this issue (the 2nd full paragraph on page 5):
... The staff believes that substant al weight should be given to these facts in making a non-inimicality firding with respect to protecting the
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i common defense and security of the U.S. llcwcvcc, Ssuch facts, though are not dispositive of the prohibition of foreign ownership, control, or domination under Section 104d of the AEA, are also relevant to a determination under that section, because, as the Commission has stated, i
the foreign control limitation should be given an orici:iation toward safeguarding the national defense and security. Ircvlcus Ocmm:seica declelcas v.ith rcapact to the fore lgn ov.nershlp, conticl, or dom la;;;cn dld
. nct dlstlnguish among the home counti;;; cf the u tlrnot; cv:ncr; cf the l
app llcanta. Thus, the sta"dec; not intcad to use consideratlcae of the l
home countri cf OC, plc, in lts dctcrminaticas of foreign ownershlp, conticl, or dem nation. The extent to which a foreign ownership is tolerable depends in part on the identity of the foreign ownership. For example, an applicant that may pose a risk to national security by reason of even limited foreign ownership would be ineligible for a license.
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