ML13252A307

NRC Staff Answer to Joint Demand for Hearing on Denial of License Renewal Re Aerotest Radiography & Research Reactor Facility Operating License No. R-98

ML13252A307
Person / Time
Site:	Aerotest
Issue date:	09/09/2013
From:	Amitava Ghosh, Uttal S NRC/OGC
To:	NRC/OCM
SECY RAS
Shared Package
ML13252A303	List: ML13252A305 ML13252A306 ML13252A307
References
License Renewal-Lic Trans, RAS 25022, 50-228-LR
Download: ML13252A307 (6)

Text

September 9, 2013 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of )

)

AEROTEST OPERATIONS, INC. ) Docket No. 50-228-LR

)

(Aerotest Radiography and Research )

Reactor) )

NRC STAFF ANSWER TO JOINT DEMAND FOR HEARING ON DENIAL OF LICENSE RENEWAL REGARDING AEROTEST RADIOGRAPHY AND RESEARCH REACTOR FACILITY OPERATING LICENSE NO. R-98 INTRODUCTION By letter dated July 24, 2013, the U.S. Nuclear Regulatory Commission (NRC) staff (Staff) denied Aerotest Operations, Inc.s (Aerotest) application for the license renewal of the Aerotest Radiography and Research Reactor (ARRR) and denied Aerotests and Nuclear Labyrinth, LLCs (Nuclear Labyrinth) indirect license transfer application.1 On August 13, 2013, Aerotest and Nuclear Labyrinth filed a joint demand for hearing on the denial of the license renewal application and the denial of the license transfer application.2 On August 21, 2013, the NRC Staff moved to sever any hearing on the denial of the license renewal from any hearing on 1

Letter to Michael Anderson, President, Aerotest Operations, Inc. from Eric Leeds, NRC, Re:

Aerotest Operations, Inc. - Denial of License Renewal, Denial of License Transfer, and Issuance of Order to Modify License No. R-98 to Prohibit Operation of the Aerotest Radiography and Research Reactor, Facility Operating License No. R-98 (July 24, 2013) (Agencywide Documents Access and Management System (ADAMS) Accession No. ML13120A598) (Denial Letter).

2 Joint Demand for Hearing on Denial of License Renewal and Indirect License Transfer Regarding Aerotest Radiography and Research Reactor Facility Operating License No. R-98 (Aug. 13, 2013) (ADAMS Accession No. ML13226A407) (Joint Demand).

the denial of the indirect license transfer.3 The Staff hereby files its answer to the joint demand for hearing on the denial of the license renewal application.4 BACKGROUND This matter arises from the application by Aerotest to renew license number R-98, the operating license for the ARRR.5 The ARRR is a commercial non-power reactor located in northern California. On February 28, 2005, Aerotest applied for renewal of the ARRR operating license. Aerotest has been operating the ARRR under the timely renewal provisions of 10 C.F.R. § 2.109 since the expiration of the license on April 16, 2005.

Before Aerotest applied for license renewal, ownership of Aerotest changed when Autoliv, Inc. (Autoliv) acquired Aerotest in 2000. This indirect license transfer was not the subject of an application for prior consent of the NRC as required by 10 C.F.R. § 50.80;6 therefore, the transfer was neither reviewed nor approved by the NRC.

3 NRC Staff Motion to Sever the Demand for Hearing on Denial of License Renewal from the Demand for Hearing on Indirect License Transfer Regarding Aerotest Radiography and Research Reactor (Aug. 21, 2013) (ADAMS Accession No. ML13233A371) (Motion to Sever). In its Motion to Sever, the Staff noted that the basis for denial of the license renewal was founded on Foreign Ownership, Control, and Domination (FOCD), while the denial of the indirect license renewal is clearly separately based on Financial Qualifications. The indirect license transfer proceedings have traditionally been adjudicated under the unique regulatory Subpart M procedures for hearing (10 C.F.R. § 2.1300 provides that [t]his subpart provides the only mechanism for requesting hearings on license transfer requests, unless contrary case specific orders are issued by the Commission.). On the other hand, license renewal proceedings have been consistently adjudicated under the Subpart L hearing procedures.

4 Along with this Answer, the Staff is filing a separate answer to respond to the joint demand for hearing on the denial of the indirect license transfer application.

Additionally, on August 27, 2013, the NRC Staff filed a separate response to Aerotest and Nuclear Labyrinths Joint Answer and Demand for Hearing on the order prohibiting operation of Aerotest Radiography and Research Reactor. NRC Staff Response to Joint Answer to and Demand for Hearing on Order Prohibiting Operation of Aerotest Radiography and Research Reactor Facility Operating License No. R-98 (Aug. 27, 2013) (ADAMS Accession No. ML13239A225).

5 See ADAMS Accession No. ML050660109.

6 Section 50.80(a) states:

No license for a production or utilization facility . . . or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of (footnote continued)

Autoliv is a company headquartered in Sweden and incorporated in Delaware. The majority of its Board of Directors, Executive Officers, and stockholders are non-U.S. citizens.7 The Staff determined that it was and is a foreign corporation and is, therefore, prohibited by Section 104.d of the Atomic Energy Act of 1954, as amended (AEA), and 10 C.F.R. § 50.38 from ownership, control, or domination (FOCD) of a nuclear reactor. These provisions prohibit the issuance of a license for a utilization facility 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. Therefore, Aerotest could not be licensed to own and operate the ARRR, unless Autoliv partially or fully divested itself of ownership of Aerotest. On October 7, 2003, the Staff issued a letter to Autoliv instructing Autoliv to develop a full divestiture plan or partial divestiture and negation action plan and to report progress on the plan every six months thereafter.8 Autoliv developed a plan but was unable to divest Aerotest of FOCD.9 On July 24, 2013, the Staff denied Aerotests license renewal for failure to satisfy the requirements of section 104d. of the AEA and 10 C.F.R. § 50.38.10 On August 13, 2013, Aerotest and Nuclear Labyrinth filed a joint demand for hearing on the denial of the license (footnote continued) control of the license to any person, unless the Commission gives its consent in writing.

7 Autoliv is the ultimate parent company of Aerotest. There are several subsidiary companies in the corporate chain between Autoliv and Aerotest, some of which are U.S. companies.

8 Letter from D. Matthews, NRC to M. Anderson, Autoliv, Divestiture Plan Regarding Indirect Transfer of the Aerotest Radiography and Research Reactor (ARRR) to Autoliv Asp, Inc., and Autoliv, Inc.

(Oct. 7, 2003) (ADAMS Accession No. ML040430495).

9 Aerotest advised the Staff, by letter, in regular increments that they were unable to find a buyer for the ARRR. (See e.g. ADAMS Accession No.ML052790058). This continued for approximately six years, until 2009, when the Staff proposed to deny the license renewal. (ADAMS Accession No.

ML090830578). Aerotest then filed its first license transfer application with X-Ray Industries. (ADAMS Accession No. ML100490068). The Staff granted that application, but the transfer was never consummated. (ADAMS Accession No. ML101380218). Therefore, Aerotest remained under the FOCD of Autoliv.

10 Denial Letter at 1-2.

renewal application and the denial of the indirect license transfer application.11 The Staff hereby files its answer to the joint demand for hearing on the denial of the license renewal application.

DISCUSSION The Staff does not oppose Aerotests timely-filed demand for hearing on the denial of its license renewal application. As previously stated in the Motion to Sever, the Staff does not dispute that the provisions of 10 C.F.R. § 2.309 relating to a request for hearing do not apply to Aerotests demand for hearing regarding denial of the license renewal.12 However, section 2.309 does apply to Nuclear Labyrinth because it is not named on the license and is not a party to the license renewal application. Thus, to participate as a party in the license renewal matter, Nuclear Labyrinth must file a petition to intervene in which it demonstrates standing and proffers an admissible contention, as required by section 2.309.13 Additionally, for purposes of clarity and judicial economy, the Staff respectfully requests that Aerotest be granted an opportunity to provide a statement outlining its areas of controversy and/or concern regarding its demand for hearing on the license renewal.14 11 See generally Joint Demand.

12 Staff Motion to Sever at 1 n.1. As discussed in the Staffs Motion to Sever, the Staff requests that the Commission sever any hearing on the license renewal denial from any hearing on the license transfer denial. Id. at 3-6.

13 Id. at 1 n.1.

14 The Commission has previously recognized the importance of placing other parties in the proceeding on notice of the Petitioners' specific grievances and thus [giving] them a good idea of the claims they will be either supporting or opposing. Duke Energy Corp. (Oconee Nuclear Station, Units 1, 2, and 3), CLI-99-11, 49 NRC 328, 334 (1999). Similarly, the Appeal Board recognized the importance of assuring that other parties are sufficiently put on notice so that they will know at least generally what they will have to defend against or oppose. Texas Utilities Electric Co. (Comanche Peak Steam Electric Station, Unit 1), ALAB-868, 25 NRC 912, 931-33 (1987) (citing Philadelphia Electric Co. (Peach Bottom Atomic Power Station, Units 2 & 3), ALAB-216, 8 AEC 13, 20-21 (1974)). Aerotests briefly worded demand for hearing cites the Boards (LBP-13-03) holding in the pending Charlissa C. Smith proceeding as sufficient in demanding a hearing. Joint Demand at 2 n.2. However, in the Smith proceeding, both the Board and the Staff were able to determine several separate issues that had been raised by Ms. Smiths demand for a hearing and needed to be addressed in that proceeding. See Charlissa C. Smith (Denial of Senior Reactor Operator License), LBP-13-03, 77 NRC __ (slip op. at 4-5) (Feb. 19, 2013); NRC Staff Response to Ms. Charlissa C. Smiths Request for Hearing on Denial of Application for a Senior Reactor Operating License, at 5-6 (Dec. 31, 2013) (ADAMS Accession No. ML12366A259).

Respectfully submitted,

/Signed (electronically) by/

Anita Ghosh Counsel for NRC Staff U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop O15-D21 Washington, DC 20555 Telephone: (301) 415-4113 E-mail: Anita.Ghosh@nrc.gov Executed in Accord with 10 CFR 2.304(d)

Susan L. Uttal Counsel for NRC Staff U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop O15-D21 Washington, DC 20555 Telephone: (301) 415-1582 E-mail: Susan.Uttal@nrc.gov Executed at Rockville, Maryland this 9th day of September, 2013

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION In the Matter of )

)

AEROTEST OPERATIONS, INC. ) Docket No. 50-228-LR

)

(Aerotest Radiography and Research )

Reactor) )

CERTIFICATE OF SERVICE I hereby certify that copies of the foregoing NRC STAFF ANSWER TO JOINT DEMAND FOR HEARING ON DENIAL OF LICENSE RENEWAL REGARDING AEROTEST RADIOGRAPHY AND RESEARCH REACTOR OPERATING LICENSE NO. R-98, dated September 9, 2013, have been served upon the Electronic Information Exchange, in the above-captioned proceedings, this 9th day of September.

/Signed (electronically) by/

Anita Ghosh Counsel for NRC Staff U.S. Nuclear Regulatory Commission Office of the General Counsel Mail Stop O15-D21 Washington, DC 20555 Telephone: (301) 415-4113 E-mail: Anita.Ghosh@nrc.gov Dated at Rockville, Maryland this 9th day of September, 2013