ML20213E140

Requests NRC Consent or Notice That Consent Unnecessary for Proposed Transaction W/Kraftwerk Union Ag/Siemens Ag. Licenses SNM-1227,XSNM-2053,XSNM-2097,XSNM-2138 & XSNM-2161 Should Be Included in Consent.Siemens 1985 Annual Rept Encl

ML20213E140
Person / Time
Site:	Framatome ANP Richland
Issue date:	10/10/1986
From:	Beard S SIEMENS POWER CORP. (FORMERLY SIEMENS NUCLEAR POWER
To:	Jennifer Davis NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS)
Shared Package
ML20213E143	List: ML20213E140 ML20213E160
References
27490, NUDOCS 8611130030
Download: ML20213E140 (5)

Text

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v=a ERON NUCLEAR COMPANYINC. 9}M OCT1 bi986]M2 NMSS 600108TH AVENUE NE. FC box 90777. BELLEVUE, WA 980094777 ya sgqng S J. BEARD a06) 453-4300 g

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Q Office of Nuclear Material OCT161986 )1 Safety and Safeguards

g. U.MiUMAR REGUtAIggy 'I U.S. Nuclear Regulatory Commission Washington, D.C. 20555 i

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Re: Exxon Nuclear Company, Inc.

NRC License No. SNM-1227 gg.

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Dear Mr. Davis :

The purpose of this letter is to advise, and if required, to seek the consent of the Nuclear Regulatory Commission (NRC) regarding a contem-plated business arrangement in the nuclear fuel technology and related services areas between Exxon Nuclear Company, Inc. (Exxon Nuclear), a wholly owned af filiate of Exxon Corporation (Exxon) and the holder of NRC License No. SNM-1227, and Kraf twerk Union AG (KWU), which is incorporated in the Federal Republic of Germany and is a wholly owned subsidiary of Siemens AG.

Although no definitive agreement has been reached as yet, under the contemplated arrangement currently being discussed KWU would acquire a controlling interest in Exxon Nuclear through the purchase of a substantial share of the capital stock of Exxon Nuclear.

The parties intend to sign a definitive stock purchase agreement on or about November 30, 1986.

Should the agreement be consummated, under the contemplated stock purchase Exxon Nuclear will remain intact as a separate entity and there will not thereby be any trans fer of the above-referenced NRC license.

However, as noted, KWU would thereaf ter own a sufficient share of the capital stock of Exxon Nuclear to exercise e f fec tive control over Exxon Nuclear.

We understand from our September 4, 1986 meeting, that the NRC prefers to view the proposed transaction as one calling for the NRC's consent under Section 184 of the Atomic Energy Act of 1954, as amended (the AEA), 42 U.S.C.

5 2234, and 10 C.F.R. $ 70.36. If the NRC considers that consummation of the proposed transaction calls for the NRC's written consent, it should find on the basis of the following information that the proposed stock purchase is in accordance with the provisions of the AEA, as required by Section 184.

However, this information is submitted without prejudice to the position of Exxon, Exxon Nuclear, or KWU that the NRC's written consent is not required for the proposed stock purchase.

For the following reasons, control of Exxon Nuclear by KWU would not be inimical to the common defense and security.

Exxon Nuclear currently wholly owns all the shares of Exxon Nuclear Idaho Company, Inc.

(ENICO),

which is a Department of Energy contractor whose present operations give it access to Restricted Data and/or other classified,informaticm BExxon

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Mr. John G. Davis October 10, 1986 Page 2 Nuclear is also currently a majority (some 88%) shareowner of Jersey Nuclear-Avco Isotopes, Inc. (JNAI), which formerly conducted research on laser isotope separation.

However, it is planned that prior to the closing date of the transaction with KWU, Exxon Nuclear will have divested itself of all ownership interests in ENICO and JNAI by transferring its share-holdings therein to Exxon or another U.S.

affiliate of Exxon.

Such transfer would carry with it all, technology, documents and records of ENICO and JNAI.

In any event, ENICO's contract with DOE is due to expire later j

this year.

Moreover, to the extent that Exxon Nuclear itself is currently the owner of any intellectual property rights in the fields of centrifuge and laser enrichment, chemical reprocessing and mixed-oxide fuel fabrica-tion, Exxon Nuclear will transfer such rights and any associated records to Exxon or to another U.S. affiliate of Exxon prior to the closing date for the stock purchase transaction. Exxon Nuclear has not been active in any of these fields for a number of years, but does still own certain patents 1

and technology rights which it would plan to divest. Thus, basically, the technology that would remain with Exxon Nuclear at the time of closing the transaction with KWU will relate to Exxon Nuclear's two current business lines, namely, uranium-oxide fuel f abrication and uranium (U 0 ) sales.

38 Accordingly, KWU will not acquire either Restricted Data and/or other classified information or sensitive nuclear technology by virtue of its ownership interest in Exxon Nuclear.

KWU manufactures and markets both pressurized water and boiling water nuclear reactors as well as fossil fuel electric generating plants.

However, it does not currently market either nuclear reactors or nuclear fuel in the United States.

Its parent corporation, Siemens AG, is an international high-technology firm.

Exxon Nuclear will remain a Delaware corporation fully subject to all applicable U.S. laws and regulations.

It is anticipated that Exxon Nuclear's current directors and principal operating officers, all of whom are United States citizens, will remain in office after the contemplated transaction.

Moreover, as you know, the Federal Republic of Germany is a signatory to the Nuclear Non-Proliferation Treaty and is a member of EURATOM, with which the United States has an Agreement for Cooperation. Finally, and as noted above, Exxon Nuclear, prior to the closing of the stock purchase, will be engaged only in the purchase and sale of uranium and in the fabrication of uranium-oxide nuclear fuel at its Richland, Washington facility.

Its fuel assembly facility in Lingen, Federal Republic of Germany, which is operated by Exxon Nuclear's wholly owned subsidiary, Exxon Nuclear GmbH, will also continue to operate.

The stock purchase is in accordance with the provisions of the AEA, as amended, and the regulations promulgated thereunder.

It will not change any of the substantive obligations or responsibilities of Exxon Nuclear

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Mr. John G. Davis October 10, 1986 Page 3 under its special nuclear material (SNM) license. All of the statements and representations contained in or referred to in the license application will continue to be applicable to and binding upon Exxon Nuclear. Moreover, the stock purchase will not cause a change in any of the substantive determinations made by the NRC under 10 C.F.R. 5 70.23(a) in connection with the issuance of the SNM license.

First, there will be no change in the activities conducted by Exxon Nuclear under its SNM license, as amended.

The NRC previously determined that these activities will be conducted for purposes authorized by the AEA.

10 C.F.R. 5 70.23(a)(1).

Second, there will be virtually no change in Exxon Nuclear's management direction or Exxon Nuclear's technical qualifications. The NRC previously determined that Exxon Nuclear is qualified by reason of its training and experience to use the special nuclear material for the purposes authorized by the license, as amended, in accordance with the AEA and the regulations promulgated thereunder.

10 C.F.R. 5 70.23(a)(2).

Third, Exxon Nuclear will maintain all of its physical assets, including its equipment and facilities.

The NRC previously determined that these assets are adequate to protect the public health and to minimize the danger to life and property.

10 C.F.R. 5 70.23 (a)(3).

Fourth, there will be no change to the procedures established by Exxon Nuclear to protect the public health and to minimize the danger to health and property.

The NRC previously determined that these procedures are adequate.

10 C.F.R. 5 70.23(a)(4).

Fifth, Exxon Nuclear will continue to have more than adequate financial qualifications.

The NRC previously determined that Exxon Nuclear is financially qualified to engage in the activities authorized by the SNM license, as amended.

10 C.F.R. 5 70.23(a)(5).

This determination presum-on the financial qualifications of Exxon, the ably was based in part current parent corporation of Exxon Nuclear.

KWU, as a new shareowner, can also provide adequate support for the financial qualifications of Exxon Nuclear.

We are enclosing herewith the most recent annual report of Siemens AG setting forth KWU's financial results for fiscal 1984/85.

Sixth, there will be no change in the fundamental material controls established by Exxon Nuclear for the control of and accounting for special nuclear material.

The NRC previously determined that these controls are adequate.

10 C.F.R. 5 70.23(a)(6).

Seventh, Exxon Nuclear will maintain its plans for the physical protection of special nuclear material in transit and for its physical security at Exxon Nuclear facilities. The NRC previously determined that these plans are adequate.

10 C.F.R. 5 70.23(a)(9)-(10).

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Mr. John G. Davis October 10, 1986 Page 4

-Eighth, there will be no change in the emergency plans at Exxon Nuclear facilities. The NRC previously determined that these plans are adequate.

10 C.F.R. 5 70.23(a)(ll).

Finally, there will be'no change in the environmental obligations or responsibilities of Exxon Nuclear under its SNM license nor in Exxon Nuclear's ability to carry them out.

As you know, Exxon Nuclear filed an application to renew its SNM license on September 12, 1986. This application will be prosecuted by Exxon Nuclear regardless of whether the contemplated sale of Exxon Nuclear's stock to KWU is consununated. In the event KWU acquires Exxon Nuclear's stock as antici-pated, appropriate pro forma amendments of NRC License No. SNM-1227 and of the renewal application are contemplated.

We request the NRC either to indicate that its written consent is un-necessary for the proposed transaction, or alternatively to give us such consent with respect to NRC License No. SNM-1227 before November 1, 1986 in view of the November 30, 1986 target date for reaching definitive agree-ment.

Because Exxon Nuclear is also the holder of NRC License Nos.

XSNM-2053, XSNM-2097, XSNM-2138, and XSNM-2161 authorizing Exxon Nuclear to export special nuclear material, we request that the NRC include these licenses in its consent, if the NRC deems this necessary.

In the meantime, if you have any questions or need any additional information, please contact me at (206) 453-4376.

Very truly yours, iM S. J. Beard SJB:jc Enclosure