NRC panel rejects Calvert Cliffs 3 for too much foreign ownership

A panel for the Nuclear Regulatory Commission (NRC) has ruled against issuing a construction and operating license for a proposed new nuclear reactor in Maryland because it would have too much foreign ownership.

A three-judge panel for the Atomic Safety and Licensing Board (ASLB) issued the ruling Aug. 30 in a case involving the proposed Calvert Cliffs 3 reactor in Lusby, Md., and UniStar Nuclear Operating. The company has been seeking to operate a U.S. Evolutionary Power Reactor that would be located alongside the existing two Calvert Cliffs units at the Calvert County location.

The ruling represents a victory for plant foes, including Public Citizen, Southern Maryland Cares, Beyond Nuclear and the Nuclear Information Resource Service (NIRS). All those organizations had intervened in the case.

The ASLB did give UniStar Nuclear Energy an additional 60 days to secure a new U.S. partner for the plant to replace Constellation Energy, which is now part of Exelon (NYSE: EXC).

License opponents argued that the project will be “owned, dominated and controlled by foreign interests,” which is contrary to the Atomic Energy Act.

Both UniStar Nuclear Operating and Calvert Cliffs 3 Nuclear Project, LLC are domestic subsidiaries of UniStar Nuclear Energy, which is a Delaware corporation. The sole owner of UniStar is Electricite de France, S.A. (EDF), a French limited company, the ASLB noted in a 29-page decision.

Constellation exit fueled ownership issue

The ownership of Calvert Cliffs 3 didn’t become an issue until November 2010. Until then, UniStar was owned in near-equal shares by Baltimore-based Constellation Energy Group and EDF. But in November 2010, applicants informed the NRC that EDF had acquired Constellation’s 50% interest in UniStar, thus making EDF the sole owner.

In January 2011, UniStar submitted a plan to NRC seeking to address foreign control issues by setting up a “security committee” of its board of directors, made up of U.S. citizens, who would have exclusive authority “over matters that are required to have U.S. control,” the ASLB said.

But in April NRC informed UniStar that this proposal would not solve the foreign control issue. During the past couple of years that UniStar tried without success to attract a new U.S. partner.

“Joint Intervenors caution that giving Applicants additional time to find a suitable American partner, and thus to meet the foreign ownership, control, or domination requirements, could lead to an open-ended proceeding,” according to the ASLB. Plant foes have also said that UniStar has been mostly mum about the status of its efforts or any timeframe when a partner might be expected to join up.

“Applicants reiterate that they are committed to obtaining a U.S. partner and recognize that a COL for Calvert Cliffs Unit 3 may not be issued until an appropriate U.S. partner is obtained,” the ASLB noted.

But the board agreed with the plant opponents in concluding that summary disposition was appropriate on foreign ownership. “The AEA clearly prohibits the NRC from issuing a reactor license to ‘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,” according to the board.

There is currently no action plan that UniStar could submit, regarding management structure, which would be sufficient to negate EDF’s 100% foreign ownership of UniStar.

Likewise, the ASLB said the cases UniStar cited to bolster its case involve only NRC approval of “minority owners transferring non-operating licenses to foreign companies through mergers in which the minority owners became wholly-owned subsidiaries of foreign companies.” That’s considerably different than allowing an operating nuclear plant to be wholly owned by a foreign company, ASLB said.

“Given the apparent lack of progress in finding potential U.S. partners, the amount of time that has elapsed since Applicants became 100 percent foreign owned, and the current economic climate, we are not willing to grant Applicants an indefinite amount of time to resolve this deficiency because doing so would be counter to the Commission’s policies and regulations,” the ASLB held.

“Although we cannot keep this proceeding open indefinitely, we do grant Applicants an additional 60 days from the issuance of this order to notify the Board of any change in the ownership situation sufficient to establish their qualifications to apply for a license from the NRC,” the ASLB said. The board added that ASLB has already had two years to find such a partner.

“That UniStar has been unable to find a single U.S. utility to partner with it in this extraordinarily expensive project speaks volumes about the lack of genuine interest in new nuclear reactors in the U.S.,” said NIRS Executive Director Michael Mariotte.

This is only the second time in history a reactor license has been denied by an Atomic Safety and Licensing Board, NIRS said. The first was the license application for the Byron reactor in Illinois in 1984, which was briefly denied because of quality assurance problems at the site. But that decision was quickly overturned on appeal as the utility already had initiated a program to correct the problems.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.