June 19, 2013

foreign ownership, control or 

domination.

9: 00-12: 00

>> All right it's nine o'clock so we 

should be begin. Good morning and 

welcome to the nuclear regulatory I'm 

Joe Ann Simpson and I'm in the 

international project branch in the 

region of inspection and report. In 

the office of nuclear reactor 

regulation. On behalf of NRC I want 

to say thank you for taking the time 

to attend our meeting today and all of 

our presenters for being here. This 

public meeting is a discussion on 

foreign ownership and controller or 

domination of nuclear power plants. 

I have a few announcements before we 

begin. This is a category three 

public meeting. The public is 

invited to attend this meeting. We 

have a facilitator Sheila, thank you 

to help us with the Q and A portion of 
the meeting and to be sure we stay true 

to our agenda time. Please sign the 

attendance roster. The roster will 

be part of the official agency record 

all slides after meeting hand outs are 

all by the door as well. -- next to 

the attendance roster and please 

complete them during the meeting and 

take them with you and mail back later. 

There's a meeting summary and all hand 

outs will be available. In there are 

attendees on the line we can identify 

through the go to meeting progress for 

the purpose of meeting participants. 

For those of you who are on the bridge 

line, it is being recorded. If you 

hear fire alarms please exit the 

building through the emergency exits 

and restrooms are located outside this 

conference room and down the hall 

toward the cafeteria and an escort is 

not required. I would like to start 

out by having everyone at the table 

introduce themselves before I 
introduce our first presenter. I'm 

Jo Ann Simpson I'm a financial analyst 

at NRR

>> My name is Ho and I'm the Director 

of Division of Regional and Inspection 

Support at the NRC in the Office of 

Nuclear Reactor Regulation

>> I'm Chris Reagan I'm Chief of the 

Financial Analysis and International 

Projects Branch in the Division of 

Regional and Inspection Support at the 

NRC.

>> Good morning I'm Beth Mizuno. I'm 

in the Office of General Counsel 

operating reactors division.

>> John Matthews, Morgan, Lewis, & 

Bockius.

>> Paul Murphy Millbank, Tweed, Hadley 

and McCloy.

>> Ellen Ginsberg, NEI. I'm with NEI. 

Sheila Ray is serving as facilitator. 

Good morning Shawn Harwell financial 

analyst in NRR.

>> Now, an agenda has been provided 
that shows we are scheduled to begin 

at nine and end at 12 pm. The NRC will 

give a brief overview and the staff 

requirements and memorandum, and the 

existing regulatory framework. Up 

next we will hear from our five outside 

stakeholders and there will be two 

minute, two ten minute question and 

answer questions as well as the break 

after the first question answer 

session. To give the presenters time 

to complete their presentations 

please hold your questions until the 

open discussion period. When 

speaking please identify yourself and 

your affiliation and use the 

microphone so those on the bridge line 

can hear you. Lastly we have a 

transcription NIST present so a record 

of our discussion will be available 

for future reference. We will be 

asking the people on the bridge line 

if they have comments or questions you 

can talk to Jocelyn in the chat or go 
to meeting. I will turn to HO for his 

comments.

>> HO good morning to our guests at NRC 

headquarters. I appreciate you 

taking time to come to the meeting. I 

want to thank Chris, Shawn, and Beth 

and Jocelyn and their efforts to 

coordinate to t meeting. The purpose 

of the meeting today is to solicit 

input from the industry and other 

interested groups on the NRC foreign 

ownership control or domination or 

FOCD requirements. The purpose is to 

really support the staff in preparing 

a policy paper for the commission. 

This meeting will allow it to be a 

decision making meeting or an 

opportunity for them to set a diverse 

set of views for those who ask 

clarifying questions on different 

perspectives. Next slide please. 

As you may be aware that the commission 

issued a staff requirements 

memorandum on March 11, 2013 which 
directed the staff to provide a fresh 

assessment of FOCD. They requested a 

voting paper by the end of this year. 

Next slide. As a general overview we 

have a regulatory framework already in 

place for foreign ownership control or 

domination. That's derived from 

statutes in the atomic energy act 

particularly sections 103 and 104 and 

those are included of our code of 

regulations. There's also a standard 

review plan that the NRC staff 

utilizes in doing its reviews on FOCD 

and that was issued in June of 1999. 

Next slide please. I just want to 

give a brief overview of the NRC's 

activities to date in the development 

of this Commission voting paper. On

June 3, 2013 the NRC issued a Federal 

Register Notice to solicit broad 

comments on FOCD and the comment 

period closes on August 2, 2013. I do 

encourage all of you who have an 

interest in providing your views 
respond to the federal register notice 

and give us your thoughts on this 

particular issue by August 2. We are 

having a public meeting today as part 

of this effort. We plan to conduct 

further outreach on their processes 

related to foreign ownership. Just 

an example of some of the entities that 

we had discussion with are committee 

on foreign investment in the United 

States or we refer to them as CFIUS and 

we met with the Department of homeland 

security and defense security 

service. We met with the FCC and we 

are organizing further discussion 

with the federal aviation 

administration both have foreign 

ownership under their purview. That 

concludes our remarks.

>> Our first speaker will be Paul 

Murphy and his presentation is from a 

financing perspective. Paul?

>> First of all and personally and 

behalf of our firm I would like to 
thank the NRC for inviting me to come 

in and give these remarks today. As 

a disclaimer we are not representing 

anybody before the NRC right now 

that's pressing this issue. However, 

we have been asked by our clients about 

this issue and to advise them on what 

it means? So just the perspective we 

are coming from as an international 

law firm we work on nuclear projects 

all over the world both in the United 

States and abroad. Primarily from a 

transactional perspective or project 

developers or investors or lenders or 

contractor that is' kind of the 

perspective we bring, so in preparing 

these remarks in focusing on what to 

talk about I thought it would be 

helpful to give a financing 

perspective on what these rules mean. 

As a disclaimer U second disclaimer my 

mother’s side of the family is fully 

Italian so I grew up sitting at round 

tables and getting interrupted, so if 
any members of the panel have any 

questions or something I say isn't 

clear or they would like me to 

elaborate more. Please interrupt I'm 

used to it my whole life it's not a 

problem. Here's an overview of the 

things I am going to cover. A little 

bit of background and thoughts going 

forward as to how to maybe think about 

this issue. So start out you know 

what I did on the left hand side was 

put together the sort of classic list 

of what are the concerns of 

financiers. That's both lenders and 

investors I think we tend to think 

mostly advice. The top five is the 

classic top five for nuclear. I put 

them there for a reason. It doesn't 

mean to minimize the others on the 

list. We can talk about them but I 

think they are fairly well understood. 

The point here really is when we are 

talking about the rules on foreign 

ownership? It really brings into 
play two key issues. Now, it ties 

right back into what we believe is one 

of the toughest things about getting 

a nuclear project to commercial 

operation which is the financing 

question. It's one of the classic 

challenges. Whenever you start 

talking about ownership criteria, 

that starts to implicate financing 

issues. The second thing is the 

classic regulatory over site. 

Whenever you go before the regulatory 

body people are going to get a little 

bit nervous because the regulator has 

an important role to play so it sort 

of takes things out of the project 

developer’s hands a bit before they 

get that regulatory pronouncement 

which is critical to the success of the 

project. Next slide please. So from 

a financing perspective sort of taking 

it in pieces what the language policy 

is first of all. They want it to know 

it's a good project and on time and on 
budget. Very importantly all of the 

project risks have been identified and 

allocated so that somebody is managing 

those risks. They would like to see 

proven technology if at all possible. 

They want to see same government 

commitment and over the course of the 

history that can even flow depending 

on where you are. One of the big 

things is they want a clear regulatory 

process. Surprisingly for people 

that may not be thinking about this on 

a daily basis, lenders in particular, 

really want the regulator to do its 

job. They want to see a regulator 

that is capable, that's involved and 

is independent and has the authority 

to act and actually does exercise that 

authority when appropriate. That's a 

good thing because lenders can't 

monitor the job on a daily process. 

They actually do want it involved. 

They want is clarity. They want to 

know how long it's going to take. 
They want to know if A then B. If A 

then question mark that starts to make 

them nervous. Of course they want to 

see the classic economics that support 

financing. From an investor 

perspective it's all about and then 

some. For a lot of investors an maybe 

what we would call a classic equity 

investor. They are saying this looks 

like a good investment. Let me put my 

money into this and I want 12 or 15% 

rate of return. What they are looking 

for is I really don't want to be 

involved during this development 

period. It's long and no money is 

coming. This doesn't really attract 

it so much. What they really need to 

see when they look at the overall 

project they have the make sure 

lenders first get taken care of. On 

top of it all I need to make my equity 

return after that. I'm second in 

line. Anything that's going to make 

the process more difficult, create 
more uncertainty is going to make an 

equity investor nervous an looking at 

various opportunities and anything 

that thinks they can't quantify and 

predict are going to disfavor that 

investment. When we look at the 

history of nuclear power in the United 

States first of all we have to be 

honest, on time and on budget isn't one 

of the strengths of the industry. 

Nuclear power is kind of a price taker 

we know that. Right now because of 

natural gas we are not seeing a lot of 

nuclear plants built. Obviously we 

like to see more from the -- regulatory 

delay haves been an issue throughout 

our nuclear history and this country 

and other countries as well. So we 

have to look at these issues very 

carefully when people are looking at 

project development and financing 

because it has been a problem. It 

doesn't mean the regulator should go 

away. It's a particular area of 
scrutiny. So as lawyers were 

genetically preprogrammed to site 

things in any kind of presentation we 

give. So the next few slides are what 

we are talking about here. There's no 

need to read this. This is kind of you 

know some of the classic rules and the 

next slide what is the standard of 

review and here's some of the 

considerations. No need to go 

through those point by point but to put 

them in there for completeness. Next 

slide. Really when we look at what's 

on the table what things do we gleam 

from that especially from the finance 

perspective? The first thing is if 

you say anybody can do it or nobody can 

do it that's really smart. You don't 

need intelligence people to sit there. 

You can either say we have no 

restrictions on foreign ownership or 

you can say we prohibit foreign 

ownership. Not very interesting to 

talk about. It's everything in 
between as you read the regulations 

there's kind of this resumption 

foreign is bad. You know when you 

look at it there's a burden that has

to be overcome. That doesn't mean any 

of us agree with that but that's kind 

of when you interpret the regulations 

that say hurdle. Obviously there's a 

concern presumption. We would rather 

not have foreign ownership. That's 

how people interpret it. That's not 

the intent but that starts to become 

an interpretation. The rules are 

subjective. It depends on the 

situation. Lawyers like the use the 

answer it depends all the time. It's 

very convenient for us. That's why 

people hate us. At the same time when 

you are trying to advice the client it 

depends, people lose sleep over it. 

If I do this what will happen? The 

problem is that with these rules 

there's so fact dependent, and so 

situational that it's very hard to 
advise clients. We have been asked by 

people what does this mean? We can't 

give absolute which we would lining up 

to be able to do. It's 

understandable. It's sort of it is 

what it is. We understand why it's 

difficult and we wish it were 

different. It's not necessarily a 

criticism. It's an acknowledgment 

this is a difficult issue. It would 

be nice if it were clear and it would 

be nice if the rules were bright line 

rules. That's what we are here to 

talk about today. One of the 

questions we have to step back and ask 

ourselves a lot of the rules that have 

been written regarding our nuclear 

industry whether it applies to 

domestic industry and word who is are 

exports we were written a different 

period of time. If we go back to 1974 

where in the United States we can build 

a nuclear plant and not have any 

foreign suppliers and didn't need 
external financing. The nuclear 

industry was the center of the 

universe. A lot of this stuff made 

more sense. The reality is right now 

you know we can't build a plant totally 

with U.S. content. We need foreign 

content. We see that the industry has 

been much more globalized. We see 

that there's a challenge with 

financing. We see that when we 

deregulated our markets it's made it 

much harder to develop these projects. 

We have over a hundred nuclear power

plants so it's not like people years 

ago are that much smarter and we are 

stupid today an can't figure it out. 

It's that the circumstances have 

changed. When we evaluate rules we 

can't live in the past. We can't say 

well this worked 30 years ago so it 

should work today. We have to look at 

today and say what makes sense? When 

we think about that there's a number 

of question that is naturally flow 
from that. First is will an investor, 

will they spend the time to navigate 

this process or will they say this is 

too hard. As soon as we get that kind 

of an answer arguably our domestic 

industry is hurt. If those are 

sources of financing available to us 

more is better than less is the general 

rule. Does it limit our options? 

Possibly. Right? So do we need 

external financing? Maybe? Okay. 

And given market conditions does it 

matter? Is there a line at the door? 

There's a lot of people saying why do 

we talk about this? We are not really 

building live nuclear plants. Why 

consider changing these rules are ten 

nuclear plants going to start 

construction tomorrow if we change 

this rule? I don't know. If you are 

talking about rulemaking we have to 

think perspectively. You know we 

kind of don't know what the situation 

is until we examine it further and see
if we are opening these opportunities. 

While a critic might come in and say 

this is a complete waste of time 

because of shell gas after energy 

market, nothing is going to change if 

you make these rule changes why should 

you bother, and the reality that's

probably not the right way to approach 

rule making. Let's do the right thing 

and create the opportunity, and see if 

no one comes to the door that isn't 

that thing either. We may start 

getting people come to the table that 

we didn't have and that maybe a

benefit. That's kind of the 

analysis. When we look abroad I think 

we can take some points of reference 

from elsewhere. We have other 

country that is don't limit foreign 

ownership. The sale of Verizon in the 

UK not too long ago. There wasn't 

anything about foreign ownership 

rules in the UK. You have stories 

about the Russians and Chinese being 
potential investors on the project in 

UK. That starts to create a lot of 

interesting discussion points. Are 

all people create it had same in our 

view when it comes to nuclear. Do 

people start to get nervous if you 

might have a Chinese or Russian 

company come anything and saying we 

want to invest. Let's be honest in 

this country it might be the case. It 

certainly made the press in the UK and 

there were people in the press and in 

the public dialogue that were saying 

you know maybe we don't want to -- own 

a nuclear plant in the UK. Do you open 

the door for all comers or not as part 

of the consideration? Taking it to 

the extreme you see a project like in 

turkey where it's a build to own 

operate where they are coming in and 

doing everything and the Turks seem 

fine with that. There's precedence 

abroad for having a completely 

different position. Whether it's the 
Russians, Chinese, French or English 

or whoever. We have that and they 

chose this has been done elsewhere. 

There's some, people are comfortable 

with it. At the same time we have 

industries that we have what do you 

call domestic control where it's the 

government on utility or in the UAE 

even though there's a heavy Korean 

presence. It's still within the 

control of ABU DAHBI control entity 

and that will never change, and as the 

Saudis put together their program they 

will have ultimate Saudi control. 

Again, a lot of these countries use 

them as strategic assets. Again 

another approach. There's a wide 

range out there and that needs to be 

part of the discussion. I think again 

when we are looking at what's going on 

abroad and look at the trends and 

especially the need for a strategic 

investor and a need for a lender this 

is a really hard issue. If we limit 
the ability of foreign -- it's a 

factual matter limiting our financing 

options. So you put this all together 

what can you maybe draw from some of

these points. I think you know within 

our own regulatory system you look at 

the 8-10 process as an example. Say 

we have to treat all country it is 

same, no we don't. We have lots of 

precedent for that in terms of our 

nuclear exports. You know we have 

countries on a restricted list. We 

have countries not on a restricted 

list and so on. In thinking about how 

we might view various sources of 

foreign investment, capitol, call it 

whatever you want. There is 

precedent within our structure that is 

distinguish among countries, so to say 

we are going to -- we already have. So 

this is just you know not really piling 

on at this point. It's consistent 

with what we have done. Similarly do 

we view people differently? I mean, 
as I said we are not representing 

anyone before the NRC so we have no 

stake in the EDF discussion on -- but 

let's EDF is the largest nuclear 

operator of plants in the world. Are 

we really worried that EDF isn't going 

to operate a plant in the United States 

well? From a capability perspective? 

From a reputational perspective? 

That stuff matters as opposed to Joe's 

donut shop and nuclear operator coming 

to the NRC saying we want to do this 

too? All operators and owners are not 

created equal. There's a lot of 

experience out there that we could 

benefit from. You look at that and 

you say should we distinguish 

depending on who it is. If we have 

someone from possibly a country that 

we will call friendly, possibly with 

a long history of nuclear experience, 

you know, what are we afraid of at that 

point? From a security perspective 

let's just say. You get into the 
classic criticisms of why you get 

nervous about foreign ownership. 

What about all the operators come from 

above and they decide not to support 

the project and all the operators go 

home. Is that a bad thing. You can 

impose requirements that over time the 

operators have to transition from 

foreign to domestic or they must start 

with a certain level of domestic 

operators. You can address this kind 

of stuff. Similarly you worry about 

what about the money going abroad. So 

if they have a decommissioning

responsibility and their accounts are 

held overseas or they don't put 

sufficient money in their operation 

and maintenance account to service the 

plant. We have this operating plant 

and we have to make sure it's operated 

and live up to the regulatory 

operations. Again you can put rules

in place to control how accounts are 

handled and project finance is done 
all the time. Remember project 

finance and nuclear plant. At the 

same time the idea of controlling the 

flow of capitol and how money comes in

from operations and how it gets parked 

into accounts. Again, we can create 

the rules to address some of these 

concerns if you are talking about 

foreign ownership and will they 

exercise the proper stewardship, 

operational financial et cetera for an 

asset they operate in the United 

States. Again, we can control these 

things. What about reciprocity. If 

someone walks in the door and say I 

want to be able to do this in my country 

in the U.S. With well, what does that 

country allow us to do. Do they allow 

foreign ownership or operation or 

investment in their units will not. 

You know maybe that becomes one of 

those distinguishing factors again, 

do we open a door to a particular 

country if they don't open the door to 
us. All of these things can be 

thought through. I think the 

approach needs to be let’s look at the 

various issues not lump them all 

together and create one rule. Let's 

address the various concerns whether 

it's national security, plant safety, 

operational issues, decommissions. 

They are all different issues they all 

have different answers. So as we 

think about the rules to create the 

right tool to apply to that situation 

it might be different answer depending 

on the subject. I think that in some 

of these examples that I have given 

there are ways to think about the 

issues to come up with some solutions. 

You know in closing I wanted to just 

address a little bit about financing, 

so if you could go to the next slide 

please. I am not going to go by the 

next two slides. As I mentioned 

before there's never been a project 

financing of a nuclear plant anywhere 
in the world. You talk about a 

classic export project financing. 

That being said a lot of principles and 

financing might apply such as controls 

of accounts. One of the things that 

if you can jump to the next slide as 

well. Here are some of the reasons 

why project financing may not work for 

nuclear. Next slide please. When 

you get to the lenders even if you are 

not going to do a classic project 

financing where the lenders take 

security over everything and if 

there's a default they can step in and 

take over the asset and that's one of 

the challenges with nuclear. You 

don't want a lending stepping in and 

running a nuclear plant. At the same 

time it's clear in the regulations 

that lenders can take security over 

the asset. In doing so they are 

subject to all the rules that would 

apply to the actual owner operator. 

The point I would just leave you with 
is there a question do the lenders ever 

need to take security over the asset 

and for people in project finance and 

you stop breathing for a second when 

you hear that. It's something that's 

almost unconscionable to say. At the 

same time we have done it abroad. If 

you have strong balance sheets and if 

you have government guarantees 

there's other tools to address that, 

so you know when you distinguish 

between investor and classic lender, 

lender activities sometimes starts to 

make people nervous because of the way 

lenders can exercise control over the 

project in terms of financial 

covenants an control over accounts. 

Even though they may not take over the 

asset they can limit what the owner 

operator does if that operator says I 

need to do this maintenance and the 

lenders say, you can have a problem 

there. The only thing we raise this 

presence for lenders to not have to do 
that. I want to leave you with that 

thought. One final thought and I 

think it's really important to 

remember when you are talking about as 

spent that is have with the newer 

technologies a 60 year operating life. 

Whenever you think about financing you 

need to think about it from the whole 

life cycle. There's a very difficult 

period at the beginning. This 

develop period where a lot of people 

aren't interested in playing. It's 

the most risky period. Once these 

aspects become operational and go 

through and come out of the first out 

age and it show that is the plant works 

and everything is running well. 

History shows in our country as we 

become very attractive aspects. If 

you want to think a life cycle approach 

and look at the debt load at the 

beginning and cost of capitol. Once 

I get into operation I can start 

refinancing. I can go out to capital
markets. I can do all of these things 

that lower my lifetime cost of capitol 

on the project. That only work ifs 

you have people to go to. We have as 

I said there's evidence that these are 

an attractive investment. Again, 

what you would like to do is as a 

developer of a project is have the 

widest set of opportunities available 

to you to create a competitive 

environment for financing and the more 

difficult we make that and the less 

options we are. Is that the natural 

consequence it's not natural 

consequence to make that statement. 

It's fairly obvious. In thinking 

through these issues these are the 

consequences of having an unclear sort 

of murky process. Understandably so. 

There's a lot that goes into this. 

There's a lot that a regulatory 

authority should be reasonably 

concerned about. At the same time I 

think sort of benchmarking the rules 
with current working conditions an 

acknowledging hey it's different than 

it was 30 years ago and understanding 

that all of these concerns can be 

addressed in different ways that may 

actually make it a complicated rule 

making. Looking at the facts and 

create more clarify I think it will be 

helpful from a lender perspective. 

With that thank you very much for your 

time. I am happy to answer your 

questions.

>> HO: Thank you Paul. I think you 

provided a lot of perspectives in your 

area of the world for us to consider. 

A couple questions what I heard in your 

presentation I heard you suggesting 

that rule making is the right thing to 

do. I know you had mentioned that at 

this point in time to really 

acknowledge what the current nuclear 

energy business environment is today 

which is very much in a multinational

venture. Is that what you are 
thinking is right now is that the staff 

should pursue rule making this area?

>> Paul: I think it's a point of 

discussion. I think we need to look 

at when these rules were originally 

written and say okay what were the 

conditions. Obviously we had a 

completely regulated electricity 

market that created a certain level of 

freedom of movement for these 

utilities to develop these projects 

with not only deregulation and much 

more active public utility commission 

that is crawl all over these projects 

the idea that you can pass everything 

through like the good ole days doesn't 

work anymore. It's harder to do these 

projects than it was years ago. That 

being said if there's a desire to 

facilitate nuclear development you 

have to look at what are the biggest 

roadblocks, financing is one of them. 

To the extent that we can source 

capital from more places you know 
again, creating more options is 

generally a good thing as a starting 

premise for financing. The question 

is will then what concerns does that 

raise and how can we address those 

particular concerns as opposed to sort 

of just this over arching rule right 

now that it's rather broad and 

unclear.

>> Ho: I appreciate that perspective. 

I know sort of stating the obvious. 

The NRC is not a promotional agency of 

course. Development wouldn't be the 

underlying basis for any option that 

we would consider with respect to rule 

making. I just had a question that 

also about your firm’s portfolio is it 

strictly nuclear or are there other 

project that is your firm is involved 

with related to foreign ownership? I 

know in the opening we talked about the 

FAA and FCC also having involvement 

there. I wonder to any extent I want

to know if you have other commentary 
are other frameworks might be working 

well?

>> Paul: We have a global power and 

energy practice. Project finance is 

one aspect of that. So more broadly 

it's power and energy. It's all forms 

of generation including nuclear. We 

representing foreign developers in 

the United States in a number of areas. 

I think that it's, the issues don't 

rise at the same level of concern 

regarding foreign ownership. There 

are foreign ownership issues when you 

look at tax issues and various things

that have to be managed as far as a 

project. Because nuclear is unique 

it comes with its own set of concerns. 

I think that the idea that foreigners 

are operating, power generation 

assets in the United States that seems 

to be handled okay for the most part. 

Again, it's a function of where the 

developers are and where the money is 

coming from. Doing the proper 
diligence of all of that. At the same 

time the concerns don't rise to the 

same level as they do nuclear.

>> Hi: Let me just make a general 

statement here. Obviously, NRC staff 

here please feel free to ask questions 

that you deem fit. We had designated 

talking time. I would like to keep it 

more fluid. I would invite all the 

participants to weigh in if there's an 

opportunities to do so in the 

dialogue, and not stay too structural 

we are on a time frame because I want 

to clear out of the room at noon. I 

want to offer that and perhaps Sheila 

you can help us in your facilitation 

there? 

>> I could comment on the rule making 

question. I think we have a 

fundamental issue here and that is 

that there's a statutory requirement. 

So a rule making can't change the 

statutory requirement, so if we want 

to change the statutory requirement we 
have to go to Congress. However, the 

commission has historically gone back 

into the 1960's has interpreted the 

statute as allowing the certain amount 

of flexibility, and the commission is 

in the position to do that. Short of 

pursuing the rule making I think the 

focus ought to be on the commission 

readdressing the meaning of the 

statute, the purpose of the statute 

and clarifying how the staff is going 

to administer it. The statute rather 

than we really can't change 50.38 it 

is what it is. It mimics the statute. 

So it's really the implementation and 

the guidance, and I think that's where 

the commission can help us. That's 

where the staff can help the 

commission by putting some options and 

issues before the commission to give 

some clearer guidance. We can get the 

kind of clarity that Paul is talking 

about that the marketplace really 

needs.
>> Thanks John. I agree with what you 

are saying with respect to the 

connective tissue between the 50.38 

words and the statute. I think 

there's a range of options including 

a legislative change and that again 

involved a number of different steps 

that go beyond our agency. Thank you 

for that. I appreciate your comment 

there.

>> I wanted to pick up on one or two 

of Paul's points with which we agree. 

I think it's an important point to 

which to begin. That is it does seem 

to the industry, and I will get to this 

in my presentation that there is a 

negative perspective with respect to 

foreign investment. Going to your 

promotional point it's important that 

the agency maintain its oversight

rule, but by the same token it 

shouldn't be picking winners and 

losers and if in effect coming up with 

an approach. Does that then I think 
the agency needs to look long and hard 

at whether it's perspective is 

unnecessarily negative in that 

regard, so that's a point I wanted to 

make. The other point is Paul made a 

point about decommissions funds and 

whether or not that would be subject 

to foreign ownership and where the 

money was coming from. I think we 

need to be very clear in today's 

discussion about where the FOCD 

restrictions run and how far they run. 

The agency has got extensive 

regulatory framework in place. It's 

not something that escapes notice when 

there's questions regarding 

decommissions funding. So that 

really I think is a separate issue. I 

just wanted to clarify. I think it's 

dangerous to mix those two and cloud 

the issue before the staff at this 

point.

>> Just to follow up on the first point 

that Ellen made. I think as we work 
overseas, and I do a lot 0f work at the 

IAEA as well. The NRC is viewed. I'm 

not sucking up here. (laughter) the 

NRC is viewed as the premier 

regulator. The biggest one and the 

longest one and the most experienced 

one. I think from an expert 

perspective that leadership is very 

important. You talk about the way NRC 

doesn't have a promotional. There's 

what the law says and what your mission 

is there's the practical reality of 

how people perceive things out there. 

And NRC guidance and NRC experience is 

valued through tout world. Now what 

does that mean? Well, if the rest of 

the world is doing something very 

different okay. We are the United 

States and we should do what's right 

for us. However, if we are out of 

touch with the entire rest of the 

nuclear industry elsewhere we should 

think about that. You know I'm not 

saying change anything but we should 
think about that. The NRC is a valued 

asset for our nuclear industry in 

terms of everything we are trying to 

do elsewhere. In terms of the 

leadership that as a foreign policy 

matter to the United States we want to 

see countries do this stuff the rights 

way. With the NRC outreach programs 

we can influence behavior elsewhere. 

At the same time if we are living in 

1974 does that start calling into 

question if I'm country XYZ am I going 

to start calling the Russians for help 

as opposed to the American's for help. 

That's reality. As we look at these 

things the one thing I would encourage 

is for the agency to look at what's 

being done elsewhere. Make the right 

decision for what's right for the 

United States but not in the vacuum of 

not looking at what's going on in the 

rest of the world.

>> I agree. One thing I made note of 

in your presentation of examples 
happening internationally. It 

doesn't appear to be consistent across 

the board. Some countries are more 

lean I can't and your countries as 

others want to have more exclusive 

national over site of their nuclear 

energy programs. I do think your 

comments is well taken it should be the 

commission should have a sense of 

what's happening as well. I do think 

one of the things that's happening and 

we are getting into foreign policy and 

discussion there it's not a decision 

that's reserved for the NRC by itself 

and it involved discussions with other 

Departments and agency z as well. 

What I sort of seen so far is other 

parts of government is doing quite a 

bit more and I think that may come up 

later on in our dialogue here. Any 

other questions before we move onto 

the next presenter?

>> Thank you.

>> All right. Keeping with our agenda 
our next presenter is Chris Brewster, 

and he will be discussing mitigation

of foreign ownership control and 

influence and the experience under the 

MNISPOM.

>> Thank you. I'm with the law firm 

of Strook, Strook and Levan. I have 

over 20 years of experience in working 

with litigation and the litigation of 

foreign ownership control, and 

foreign influence matters before and 

not only the Department of defense, 

but also the Department of Energy in 

the national nuclear administration 

and other members of our firm have 

experience going back 30 years 

including the creation of the first 

special security agreement with the 

Defense Department. Probably over a 

hundred, 150 transitions before the 

committee on foreign investment in the 

United States including several 

mitigation agreements. What I'm 

going to talk about today is really the 
experience before the Department of 

Defense and the experience of defense 

security service view from the 

perspective of the contractor. That 

is far and away the vast majority of 

cases considered in the national 

security sector. The taking off 

point for discussion I think -- and 

this is the first slide. In the 

national industrial security program 

operating manual is the statement the 

affirmative statement that foreign 

investment can play an important role 

in maintaining the vitality of the 

U.S. industrial base. It is the 

policy of the United States government 

to allow foreign investment 

consistent with the national security 

interests of the United States and the 

foreign ownership control and 

influence policy for U.S. companies

that hold facility security 

clearances is intended to facilitate 

foreign investment by ensuring that 
foreign firms cannot undermine U.S. 

security and export control to be an 

unauthorized access to critical 

technology, classified information, 

and special classes of classified 

information. So the purpose of the 

MNISPOM is to facility foreign 

investment based upon a finding by the 

defense Department and I think that 

encourages well by Congress that 

foreign investment is an important 

component in boosting the strength of 

the U.S. defense industrial base. 

This is taken, it's in determining 

whether a company is under foreign 

ownership or control it's worth 

reading. It's whenever a foreign 

interest has the power direct or 

indirect whether or not exercised or 

whether or not exercisable through the 

ownership of securities by 

contractual arrangements or other 

means to direct or decide matters 

effecting operations in that company 
in a manner that may result in 

unauthorized access to classified 

information or adversely affect the 

classified contracts. What the 

defense Department is looking at is 

how does the foreign ownership effect 

control and performance of classified 

contracts? How does it present the 

risk of unauthorized access to 

classified information or controlled 

information? This is reinforced 

throughout the N IDX O M where they 

note that the primary consideration is 

the safeguarding of classified 

information and that when a 

determination has been made that there 

is no need for a clearance, the 

requirement for mitigation goes away. 

Now, let's go to the next slide. It's 

fair to say as we evaluate FOCI cases 

we look at it as a risk based system. 

I know it's a term that the NRC uses. 

I am not speaking in the term of art 

that the NRC uses, but rather talking 
about a threat assess m. As I noted 

earlier first the requirement for 

mitigation is only when a facility 

security clearance is required. No 

mitigation is required unless they

require a facility security 

clearance. Again, all of this is tied 

back to the impact of foreign 

ownership on the performance of 

classified contracts and programs. 

You can turn to the next slide.

>> HO: I want to make a comment and 

I have a question buried in here as 

well. You can assume that the folks 

at the table here have at least a base 

understanding of the FOCI operations 

and you can peruse with the slides you 

have here. We met with FOCI division 

operation as couple weeks ago. They 

went through the detail there is. The 

one thing if you could include in your 

remarks would be any parallels you see 

with sort of what your experience is 

with FOCI and kind of what we are doing 
at FOCD. I know we are using a little 

bit of different terms here. As I was 

walking out of a meeting with the 

Department of defense. I am looking 

at it with the diagrams and

overlapping circles. It seems like 

we are talking about the same things. 

I mentioned earlier that I think the 

other Departments and agencies are 

perhaps doing a lot more in this area 

than the NRC is with respect to 

monitoring the activities of some of 

the mitigation. I think it would be 

very helpful for the NRC staff at the 

table to point out any major deltas

between your experience and sort of 

what we have in place here and also any 

similarities.

>> I will be happy to do that. Of 

course our experience is focused in 

the defense sectors and so you know 

what I'm going to be here is 

exclusively from that experience. My 

sense is that a lot because we have now 
decades of experience in the defense 

sectors with the programs. It's 

possible from this I think for that 

experience to inform how the NRC 

approaches these issues. One thing 

that is probably you know worth taking 

into account is that these cases 

involve majority control situations. 

I will talk about that in more detail 

in a moment. Right on through to one 

hundred percent ownership including 

foreign government ownership. 

There's no ownership situation that's 

taken off the table completely. 

There's never a situation. Put it 

aside there may be policy 

considerations that would lead the 

Defense Department to say for example 

that you know we know that a Chinese 

owned company is not going to get a 

facility security clearance. When 

you put aside those factor that is come 

into play you are going to find that 

what they are looking at is to the 
numerous factors taken into account to 

see how that can be mitigated as to 

allow for continued performance of the 

classified contracts without undue 

risks. This slide here talks about 

the factors in this DSS under scores. 

In evaluating not only what the 

company is under FOCI, but also what 

is the appropriate form of FOCI 

mitigation. They are looking at 

factors like what's the economics of 

government -- cyber security issues 

for example. Records for engagement 

and enforcement in unauthorized 

technology transfer. The 

sensitivity of the information which 

shall be accessed. They are more 

concerned as you might imagine if 

their company has a top secret 

clearance than it is as they have a 

secret clearance.

>> Thank you for your question and 

response. I would like to remind 

everyone to state your name for the 
transcription and also for the webinar 

and chat. Thank you.

>> In I event you can see what these 

issues are here. The point is that 

there's a matrix of issues, no one of 

which is controlling. These are 

considered in the aggregate as part of 

the evaluation. There is no 

entitlement to a security clearance I 

know you know this. There's no 

entitlement to a mitigation plan. 

It's impossible for the agency to say 

we don't see how FOCI can mitigate 

here. It is possible for the agency 

to consider a broad matrix and a wide 

range of options as they look at these 

cases. Let's move to the next slide. 

The majority control cases range we 

are talking here situations typically 

ownership over 50% running on through 

to one hundred percent ownership. 

This will say you read it the voting 

trust is one of the options. The 

voting trust is extra ordinarily rare. 
I think I have seen one of these in 20 

years. The proximity agreement is 

more common but is still uncommon. 

Control by independent proxy holders 

with the consent of the defense 

Department if that's the case. And 

they do still allow for a limited 

reservation of rights. They still do 

allow for consultation with the proxy 

holders. They still do allow for 

direct communication with management 

and the foreign owner under the over 

site of the proxy holders all of whom 

who also serve as directors of the 

company. The special security 

agreement which is the most common 

allow it is foreign owner direct 

representation on the board of the 

company. Provided there's outside 

director that is are also appointed 

who are independent, who are chosen by 

the shareholder with the consent of 

the United States government. There 

are restrictions on removal as you 
might imagine. I think the key factor 

in looking at the different forms of 

FOCI and mitigation in majority 

control cases is that special security 

agreements require national interest 

determinations for access to 

proscribed information. This is an 

access limitation that is imposed only 

in the SSA cases. It's not imposed on 

the voting trust or the proxy. It is 

a special determination and in this 

regard may depart from what the NRC 

practices. The NID's require the 

agency finding and by agency I mean the 

agency that is the contracting agency. 

The award is consistent with the U.S. 

national security. That standard has 

evolved over time. I have been 

talking to you back in 1996 for example 

we would have been talking about a 

multi part test that was applied in 

national interest determinations 

including an evaluation of the 

availabilities of U.S. controlled 
competition and why a U.S. controlled 

company should not be awarded the 

contract. That has changed over 

time. It's become more and more 

liberal if you will. So that today 

the standard that is supplied is a 

determination of the word is 

consistent with the U.S. national 

security. Let's move to the next 

slide. It's also worth noting that in 

cases where there's a minority. The 

defense security service does not go 

typically in all of some very rare 

cases will not go to the special 

security agreement. Rather they use 

the security controlled agreement. 

That can involve cases where there's 

10-12-15% minority ownership. The 

key factor is can they put someone on 

the board. If they can put someone on 

the board than DSS is going to want to 

counter balance that with an outside 

record. There's no access 

limitations in these minority control 
cases. If there's a significant 

minority interest that is either 

through ownership or through some 

contractual rights or whatever it 

might be. It does not translate to 

board representation, then FOCI will 

be mitigated through a simple board 

resolution which is an acknowledgment 

by the board that foreign ownership is 

present and restrictions on access by 

foreign persons. Finally, I will 

address this quickly there's also some 

called a limited facility security 

clearance. In this no formal FOCI 

mitigation is required. It is extra 

ordinarily rare. I have seen it used 

and I have used it in cases where there 

is a very strong interest on the part 

of the U.S. government and working 

with the company, but usually the 

level or the amount of foreign, I'm 

sorry of cleared work is too small to 

justify encumbering the entire 

company. All of these agreements 
require the establishment of a 

government security committee which 

is a board level committee. I think 

there's analogous features in the NRC 

world and safety committees and things 

of this character. The government 

security committee is comprised 

exclusively of cleared U.S. citizen 

directors. That's the outside 

directors plus the officer directors. 

It's important to know that the 

outside directors when they are chosen 

frequently are retired military, 

former senior government officials. 

If a company has extensive experience 

or contractors in the intelligence 

community it maybe someone out of the 

intelligence community. If it's the 

Navy retired admirals Navy officials, 

et cetera. The point being that the 

role of this GSC is to be the eyes and 

ears of the United States government 

at this company. These directors 

have a fiduciary obligation to the 
shareholder. They also have an 

obligation to the United States 

government to ensure that the security 

agreement is properly implemented, 

classified information is protected 

and that export controlled 

information is protected. They have 

to certify to that when they sign up, 

but as they sign a formal 

certification acknowledged to the 

U.S. government they have to renew 

that every year. Let's go to the next 

slide. I will just digress this 

quickly that when you have these 

programs in place what comes with it 

are a series of other procedures and 

requirements. Visitation plans that 

will require outside director 

approval for meetings with 

particularly senior officials of the 

foreign owner, communications plans 

involving correspondence with the 

affiliates. Shared administrative 

services are reviewed, technology 
control plan needs to be in place, U.S. 

government approval is required. All 

of these are require bid the virtue of 

security agreement which is tied to 

the protection classified programs 

and what's important to note is that 

the defense Department looks to the 

government security to implement 

these procedures and to administer 

these procedures on a case by case 

basis with direct reference to the 

risk profile for that company. So for 

example the company that does not 

possess classified information is 

going to have a much more liberal plan 

than a company that possesses top 

secret. We will move to the next 

slide. It's notable that some of the 

largest U.S. government contractors 

are parties to FOCI mitigation plans. 

We listed some here. Some of these 

companies are now such substantial 

government contractors I think they 

are foreign. Debt and equity has 
become less and less significant over 

time. Over to the next slide. All in 

all we think there are probably more 

than 300 companies that are operating 

under one or more of these plans. 

There's roughly 30 proxy agreements. 

100 special security agreements 25 

security control agreements and over 

150 board resolutions. Those board 

resolutions are almost always going to 

be in cases where we are talking about 

minority investment or more 

attenuated investment. We will move 

to the next slide. As we evaluate or 

look at the NIPSOM and how it's 

implemented. There are certain core 

values that are worth noting. I 

mentioned facilitating investments as 

one of them. The DSS and its

counterpart at the NSA, and at the 

Department of Energy will look to the 

service agencies as their clients. 

So they are trying to be responsive to 

their clients. They are not looking 
to be an impediment to the ability of 

intelligence community or the Air 

Force or whatever it is to work with 

these government contractors. They 

are looking to make it work by putting 

appropriate mitigation measures in 

place. I mentioned that they are 

looking to protect classified and 

export information. Protecting 

performance and ensuring transparency 

that is that they know what the level 

of foreign involvement is at the 

company. There is an awareness of 

that so that there are no surprises. 

As I mentioned that the government 

security committee is on hand to 

monitor that. And the government and 

the one value that is so integral that 

I didn't think to put on the slide is 

that U.S. citizen control is key to all 

of these programs. So the lessons 

from the NIPSOM experience is designed 

and intended to protect classified 

contracts and programs. It's not a 
perfect model for NRC. I do think it 

may help inform the review. The DSS 

is doing a case by case review. It's 

not a one size fits all program. We 

have now decades of experience if 

works and includes now some of the 

biggest defense Department 

contractors and what we here 

repeatedly from the auditors who come 

back is that because of the 

requirements that are imposed on these 

company's it enhances compliance 

across the board. There's a 

compliance culture that exists with 

these companies that frankly in many 

cases goes beyond even the U.S. 

controlled counter parts. The last 

note or the last slide please is that 

and I took this quote from bill snider 

who is then the chairman of the defense 

science board. A statement that 

foreign domicile firms are adding 

value to the U.S. defense program by 

bringing investment and advanced 
technology to the defense market that 

expands an strengthens the defense 

industrial base resident in the U.S. 

We have had meetings sometimes with 

the defense security service where we 

have run into bumps or hurdles as we 

are trying to address regulatory 

concerns. They will say to us if you 

think that this is truly important go 

to your customer and get the customer 

to talk to us. Because we listen to 

the customer. And we do that. Very 

often the biggest advocate that we had 

within the defense Department is the 

intelligence community, the Navy, the 

Air Force because they want that 

technology. They want that ability 

to have access to the expertise and the 

experience that a lot of these foreign 

company's can bring to bear if they can 

be allowed to put these programs 

together which we have been able to do 

now for several decades. Thank you.

>> HO: Thank you very much Chris. I 
thought your remarks were 

enlightening for me. I think it 

brought more clarity to issues we 

discussed. I had a couple of general 

questions and maybe comments as well. 

I will say to the participants and also 

the members of the public that are with 

us you should not infer that any 

options are already identified or any 

things that we are asking are options 

we are thinking about. We haven't 

made up our minds yet. We are in the 

process of collecting information. 

So please as we ask this, the NRC asks 

questions you should not infer these 

are options we are perusing. We are 

in the information gathering phase. 

With respect to a couple of things you 

mentioned here on your slide you said 

the N IDX O M and the FOCI views are 

not the perfect model for the NRC. 

When I look at the framework as a place 

for doing these things and I 

understand the primary objective is to 
provide access to classified 

information and when you look at the 

NRC standard review plan for our 

foreign ownership control that's not 

our focus it's classified. It does 

say that the review should be done with 

an orientation toward national 

security. I will also say that I'm a 

lot more of an engineer. This is an 

area that's fairly new to me and it's 

a little bit hard to wrap my brain 

around it when I look at the NRC safety 

mission and one of the things we are 

interested in this standard review 

plan is to look for foreign ownership 

to the effect that it could impact the 

safe management operations of the 

facility, but I see those things kind 

of blur together quite frankly. This 

isn't just me talking with respect to 

national security interest and the 

ownership components and how that 

might influence not only the security 

perspective but also the safe 
operations of the facility. I guess 

I am going to put something out there 

with respect to this model if you will. 

I do see some elements from what I have 

heard in your discussion and in my 

meeting with DSS that you know to me 

it almost seems like we are sort of 

scratching the same itch here. So 

maybe I would ask you to elaborate more 

on that comment that it's not the 

perfect model.

>> Chris Brewster: The reason I said 

that is what you have to take into 

account is DSS as it is implementing 

these programs as I say, looking at it 

on a case by case basis. I think it's 

fair for the NRC to say what is the 

single most important consideration 

that we have. Let's say that it's 

safety that's most important 

consideration. That the policy, 

programs and procedure that is are put 

in place are oriented toward that. 

That you know there may well be lessons 
here and I think there are for having 

requirements for U.S. citizens over 

site of what is important to the NRC. 

What's important to the defense 

Department is classified information, 

classified contracts. So that 

government security committee is 

given a lot of latitude as to how they 

are going to oversee and administer 

these programs. Now, do you need at 

the same time the whole matrix of 

controls that are put in place? Maybe

not. I do think that there are 

definitely lessons here afford you can 

look at it as a menu as to which you 

can pick and choose.

>> I had a comment on that. I think 

one of the most important one of the 

important lessons you can draw from 

this experience is the risk based 

approach and threat assessment. I 

think the NRC needs to look at the FOCD 

restriction. What's the threat that 

it's trying to mitigate against? The 
threat is diversion of the nuclear 

technology, and diversion of special 

nuclear material that's why the 

statutory prohibition exists. That 

interpretation of that statutory 

prohibition with the atomic energy 

commission interpreting it. If you 

do a threat assessment and you look at 

what, who's the foreign investor. So 

central bank of North Korea is a 

foreign investor, there's a threat 

there. There's a diversion of 

Nuclear technology and an issue of 

diversion. And these kinds of 

mechanisms make sense. The foreign 

investor is British energy. British 

energy already has the nuclear 

technology. It already has access to 

special nuclear material. The amount 

of mitigation you need to do to comply 

with statute ought to be minimal 

because the threat is minimal. EDF 

does not need to come to America. It 

does not need to come to America to 
gain access to special nuclear 

material. The kind of mitigation 

measures ought to be minimal to 

combine with the statute. It's a 

threat assessment that's critical to 

that evaluation.

>> HO: Thanks for your perspective 

John. In embarking we got the 

commission memorandum. I think we 

had discussions amongst ourselves 

that there is a security component

here. As I can share with you in some 

of the discussions I had with our team 

here and the other agencies really the 

discussions are very much centered on 

the national security. It's 

interesting. The last question I had 

Chris is you mentioned that a 

transparency somewhere in your slide 

here. I think you know it's familiar 

to many people here and perhaps that 

the NRC wants to be as open as 

possible. When you are dealing with 

national security issue there is' 
limits on how open you can be. Can you 

give us a sense on how transparent this 

process is to a member of the public 

with respect to determination in this 

area?

>> The transparency that I speak to is 

a transparency from the company to the 

defense Department and not to the 

public at large. In fact the defense 

Department jealousy guards, a 

contractor for example is prohibited 

from marketing it's company based upon 

the fact that it has a special security 

agreement in place. It can't 

leverage that for market value. It 

certainly is a consideration in the 

contracting process. The 

transparency that I speak to is really 

the ability of the defense Department, 

and it's oversight function to know 

what's going on within the company and 

the relationship it has to the 

foreign --

>> That's what I thought you would say.
>> If I can remind everyone to state 

your name. I'm Sheila. I think we 

need to move onto public comments. 

Feel free to use the microphone if 

there's any public comments? 

>> Hello. Thank you for allowing me 

to come to speak today. I have had a 

few comments on what I have heard so 

far. My name is Mark Vosper private 

citizen. I am very concerned with 

what I hear so far. A very slippery 

slope we are going down here. I will 

comment on some of the comments that 

have been made by the gentleman here 

today. First, I am concerned with the 

fact that it sounds as though the NRC 

in some respect has made its mind up 

already on pursuing this and I would 

urge them not to do so. John Matthews 

I believe no one is stating their name 

so correct me if I'm wrong here. He 

made the comment that N NRC is in a 

position to enter a new rule making 

process. They are also in a position 
to not pursue a new rule making 

process. I believe that the rule that 

is are in place now were in place for 

a very good reason. They have been in 

place since 1954. They have kept this 

country safe since 1954. I believe 

that here in the wake of the FUKISHIMA 

disaster I am looking at the 

possibility of deregulation in a time 

when we should be regulating. We 

should be regulating more not less. I 

think that we are looking right now at 

a situation where a foreign owned nuke 

is in a disaster situation still not 

under control. We are looking to open 

up to foreign owned nukes on American 

soil. Very dangerous and a slippery 

slope. I would like to address 

something else that Chris Brewster

said, I believe. I don't quite 

understand why U.S. citizen control is 

key to this? Can you explain that for 

me?

>> Sure. All companies that have 
security clearances are required to 

have U.S. citizen chairman, and the 

CEO and key management personnel all 

need to be U.S. citizens. The board 

of directors of the company if it is 

a company that's controlled by a 

foreign shareholder has to be 

dominated by U.S. citizen directors. 

So the -- in the SSA situation the 

directors may include for example two 

foreign appointed directors who may or 

may not be foreign citizens. They may

be U.S. citizens from another 

affiliated company. The number of 

outside directors must exceed the 

number of the foreign directors, and 

then also there are officer directors 

of the company who are on the board who 

are U.S. citizens and cleared. If the 

company is operating under a proxy 

agreement then all of the directors 

are cleared U.S. citizens and there's 

no foreign participation on the board 

at all.
>> Thank you. I understand the way it 

sounds to me is that I'm going to be 

a straight talker here. It sounds 

like a numbers name. It sounds as 

though we are talking about a 

restructuring which I see many 

restructurings go bad. Apple is a 

good example recently. I have many 

issues to bring in. I want to also 

address Mr. HO's comment, is that 

correct? Mitigation efforts should 

be minimal. He stressed this. Is 

this gentleman?

>> I'm sorry that's -- HO: From the 

NRC. That's not my comment.

>> Mr. Matthews said that the 

mitigation efforts should be minimal, 

okay. It doesn't sound that way from 

what both of you have said today. 

This is coming from K street, so let's 

take that into consideration. 

Mitigation efforts on this will be 

huge. Security itself will be huge. 

Insurance issues will be huge. 
Sovereignty issues are a big issue 

here. In the time we are losing 

sovereignty to multinational

corporations through trade deals all 

the time, first and foremost I believe 

for this panel should be the safety and 

the security of the American people 

that should be number one. 

>> We appreciate your comments. I 

would like to provide the folks on the 

web chat.

>> 

>> If I may quickly go through a couple 

more things. Mr. Matthews made the 

question do we really think that EDF 

is someone that we need to be concerned 

about. I say yes. I point to the 

fire that is EDF has had. I point to 

the death ins EDF Facility in France. 

I think we need to be concerned about 

this. Now when I discuss this with 

industry people as I do the FUKISHIMA 

could never happen here? Because we 

are America we do things differently 
here in America. We have American 

technology. We have American know 

how and we have American workers that 

are concerned with safety. Okay. 

Well, let's not change that. We are 

doing good so far let's not change 

that. We don't need to change that. 

We don't need to take these risks, so 

I am urging this panel to consider to 

not reconsider this, and the last I 

would like to bring some other issues 

later up if I could. I want to ask was 

Calvert cliffs denied based on fort 

ownership control? That's my 

understanding that the Calvert cliffs 

numbers 3 was denied; is that correct? 

>> Beth from the office of general 

council. The atomic safety and 

licensing board had in front of it a 

contention with respect to foreign 

ownership. The board ruled on a 

motion for summary of judgment or 

summary disposition that the 

application was --
>> I was looking for a yes or no answer 

not to be rude. Is it denied in the 

eyes of

>> It could be denied in the NRC.

>> You designate all of your 

facilities

>> Excuse me, sir? We need to move on

>> It was a yes or no question.

>> I will be happy to talk to you 

afterwards.

>> We were told by the public it was 

denied. On your website it's listed 

under review. I want the public to 

know whether it's denied or whether 

it's under review

>> I think I understand the source of 

the confusion. The issue was denied 

by the three judge panel. It's my 

understanding there's a petition for 

review is that right that's currently?

>> The petition is review which is what 

led to this meeting.

>> The petition has not been yet 

determined.
>> Please state your name before 

speaking.

>> Can I try to clarify as the 

intervener of the Calvert cliffs case.

>> The license is denied for the 

current structure of the UniStar 

nuclear they cannot get a license. 

The application is technically under 

review in the event UniStar comes 

back.

>> You probably said that better than 

I would have said that. Thank you.

>> Okay. And I know we are trying to. 

We are a little bit behind schedule. 

Thank you. I think we need -- I did 

want to address a couple points you 

made by Mark. From my perspective 

safety is number one priority. I 

don't think we are compromise that in 

anyway. With respect to the NRC 

making its mind up. I don't believe 

we have. In fact we haven't even 

started really writing anything.

>> Thank you and I will hope you will 
consider my thoughts.

>> We will certainly consider your 

comments. I will also point out an 

option is to maintain the current 

regulatory framework. That's always 

an option. We are in the process of 

hearing what we can about what's done 

elsewhere and what other perspectives 

an issues are. The NRC has not made 

its mind up. This is an issue that the 

commission asked for and we are 

responding to its request to the staff 

to take a fresh look at foreign 

ownership and present any option that 

is we see could consider it's for 

policymaking decisions. Thank you.

>> Thank you Jocelyn is there a comment 

on the teleconference.

>> He should be on the bridge line, I'm 

not sure. I'm not sure if she can 

talk. Is there anyone on the 

conference before we take a break?

>> I'm here.

>> Did you have a comment. I didn't 
even know it was live. Okay. My name 

is Erica Gray I'm calling from 

Virginia. I have got an echo going. 

I wanted to go back to Paul Murphy's 

presentation I think the biggest 

challenge that comes across to the 

public such as myself is this is really 

all about financing. There's a lack 

of funds and it looks like the 

basically they like to change the laws 

and I agree with mark's statement that 

we need to continue the current 

regulations. Frankly I would like to 

know who would own the weight, the 

nuclear waste that's produced. I 

would also like to know the budget that 

taxpayers are going to have to pay for 

to set up all of these different 

Departments’s to have to oversee all 

of this foreign ownership or come 

nation. Frankly I think that the 

public in general would not want 

foreign ownership over our nuclear 

power plants. How do I get off the 
line so I can mute it?

>> The operator will help you or I 

believe star six will mute you. Thank 

you.

>> Thank you for your comment.

>> At this time I would like to take 

a break 15 minutes.

>> HO: Can we take a ten minute break 

I want to make sure we have enough time 

for dialogue. If we can ask the 

participants to come back in 10: 35.

>> Thank you.

>> welcome back everyone our next 

presentation is from Michael 

MARIOTTE. Thank you Michael.

>> Thank you. -- probably more to the 

point of this meeting I was the prose 

intervener with the Calvert cliffs 

licensing process which were the 

foreign ownership issue turned out to 

be a play a major role. I wrote the 

original contention and pursued it 

through the end. It's the GENTLEMAN 

brought up the licensing effort was 
unsuccessful for UniStar nuclear it's 

currently constituted which was a 

first and then in that sense although 

I have a lot of help from -- France. 

In winning that case it was the 

Commissioners -- that set in forth 

this meeting. I am as much to blame 

as anybody for this. You know just 

because a law worked in this case in 

presented ineligible applicant from 

get ago license is not a justification 

for changing the regulations or the 

law. Sometimes regulations work as 

they are meant to. And in this case 

they have and I have seen this before 

when Louisiana energy services was 

initially denied a license because it 

was financially unqualified, first 

movement from NRC was change the

financial qualification rule. Well, 

you know when they worked it doesn't 

mean you have to change them. It 

means you should take prior the fact 

they worked. Atomic energy act is the 
law and it's been stated here today. 

I won't reread it, but it's up on the 

screen. It's the law and if you go to 

the next slide the NRC has recognized 

that's the law, the final standard 

review law keep that is pretty clear. 

To the extent that the NRC makes any 

changes in its standard review plan or 

any other guidance it has to be in the 

context of the law. NRC is not the 

policymaking body. They are the 

implementing body and you don't have 

the authority to underline the law. 

You don't have the authority to try to 

get around the law. You do have the 

authority and the ability to implement 

the law and that's what you should be 

doing in this context and in fact all 

other context. Let's go to the next 

slide. A lot of what I have heard 

today would be quite appropriate on 

how subcommittee meeting. It's not 

appropriate for the NRC. The 

industry wants to change the law. The 
industry knows where to go to change 

the law. You have much better 

contacts there than I do. A hundred 

percent foreign ownership of a U.S. 

reactor is illegal and will remain so 

unless or until Congress change it is 

law. There's no distinction of the 

law and I bring this up specifically 

because it's in the federal register 

that NRC put out for this meeting. 

There's no distinction in the law 

between direct and indirect foreign 

ownership. You don't make that 

distinction the law doesn't. I don't 

see how the NRC possibly could. And 

there for NRC request for comments on 

these issues and I'm quoting from the 

Federal Register Notice here 

involving and up to indirect foreign 

ownership that's inappropriate. One

hundred percent is illegal in every 

case. That's the law. Actually I 

want to go to the next slide. I want 

to mention somebody I think Mr. Murphy 
has the presumption that foreign is 

bad. You know I am not a xenophobe. 

My grandfather was born in France. My 

father was born in Paris. The 

presumption is in fact the law. The 

law does presume that foreign 

ownership is bad otherwise the law 

wouldn't have been written. The law 

would instead state foreign ownership 

is fine and dandy. It says it's 

illegal as is control and compilation 

of a foreign company or a foreign 

government. You know in the Calvert 

cliffs case I want to remind people 

that we filed our initial contention 

at a time when UniStar was 50-50 owned 

by electric France and -- and when we 

looked into the application and 

started doing research into the 

corporate structure well we accepted

EDF a major shareholder in energy. 

The reactor was EDF is owned by the 

government of France. The reactor 

was to be built by AREVA. We started 
looking at not only at strict 

ownership, but also at the control or 

dominate features of the law, and it 

concluded that this was a case for 

foreign control and domination, and 

often it's the time on EDF ended up 

with a hundred percent ownership. 

And some of the more nuance issues 

never were litigated, but we were 

certainly repaired to litigate those.

>> If I may this is HO with the NRC. 

This is a natural time to ask a 

question on the last two slides you 

talked about. Going back to the one 

you said NRC does not have the 

authority to change the law. It would 

require an act of congress to change 

that. I think with respect to, I 

think Chris' presentation it's the 

United States government policy to 

allow foreign investment in the United 

States, and going back to your 

comments that you know states what's 

in the atomic energy act with respect 
to foreign ownership that the NRC 

should be proposing any changes in 

that to the law. I guess how do you 

reconcile that where you know on one 

hand you hear that the policy of the 

United States government to allow 

foreign -- now there's a delta between 

those things?

>> The question is not whether any 

foreign ownership is permissible 

because quite clear there is some. 

What is the appropriate line and what 

was the legislative intent, and I will 

get to some of those issues. I think 

I will also get to this. I think one 

of the key things of change that do 

need to be made is much clearer 

definitions of what control means or 

what dominate means because that is 

not clear in the standard review plan. 

It's not, as we all know the law 

doesn't get very explicit beyond the 

one sentence on that. I will talk 

somewhat about that.
>> I don't think it's to say the 

government allows foreign investment. 

The government approves foreign 

investment and at the same time to say 

well in this case the law says foreign 

investment has to be limited. It's 

not a conflict.

>> Is it correct for me to characterize 

your comment or at least the focus of 

your comment it's aimed at the 100% 

ownership case?

>> I think the 100% ownership case is 

clear. The NRC doesn't have any 

ability to change that. I would argue 

in going to argue that the actual level 

of ownership that is permissible is 

quite below that. I think what I was 

saying in the Calvert Cliffs case is 

we had one that was initially that was 

potentially accepted for hearing was 

in a factual situation where you have 

50-50 ownership but then in additional 

layer above that from French entities 

that you made it now 50-50 
proposition. I will say this. One 

of the problems in developing 

regulations and guidance in this kind 

of case is lawyers are really good at 

developing complex corporate 

structures. I think we are seeing 

this in the UniStar case. When I 

first looked at the UniStar

application there's 7 different 

limited liability corporations 

between the reactor itself and the 

parent company's. Corporate 

structures can get very complex and 

for that reason I think the NRC 

guidance does need to be very 

flexible. And the NRC has to be alert 

and on guard to be able to implement 

this law. You need to have 

flexibility and authority to meet the 

demand of this this law. I guess I'm 

arguing against a prescriptive 

approach that would say you know that 

would give an exact percentage of 

ownership or something that say this 
is level is always legal and this level 

is illegal because it's not too hard 

to think of corporate structures that 

will weasel around that. You need to 

really delve into these sometimes. 

Okay. We are on the right slide. 

Your federal register notice on this

meeting, and on the comment period I 

think inappropriately focuses on the 

ownership issues, and as I mentioned 

I think the control domination issues 

are equally important. We basically 

have a three legged stool here. 

Ownership control and dominate. 

That's the way the law is worded. 

It's not ownership control and 

dominate or dominate. Each one of 

those is an equal pillar. It's an 

equal leg of this stool and without all 

of them being taken into account the 

stool will fall over. So I think that 

you need to look at the control and 

dominate issues more closely. I 

think they are equally important. I 
know my first business college, my 

first business class in college and 

I'm sure everybody else who has taken 

business class in college already 

knows you can achieve control and you 

can achieve domination with much less 

than one hundred percent ownership 

especially in a publicly traded 

corporation as most utilities are. 

Not all, but most. We recently went 

through and have a legislative history 

of this provision of the atomic energy 

at dun forest. It was, you came very 

clear that the level of concern about 

foreign ownership and control was 

actually much greater than even I had 

realized at the time this was being 

passed. The original language of the 

act was presented in committee said no 

reactor could be owned by foreign 

interest and set the threshold of 

ownership at 5%. That was the 

maximum. Negotiations in the 

committee they dropped the five 
percent threshold and added the terms 

control or dominate. With the 

implication being they weren't happy 

with a strict numerical level of you 

know defining owner ship, but very 

clearly concerned that they did not 

want any significant foreign 

ownership. They did not want the 

possibility of a foreign entity owning 

or controlling a U.S. nuclear power 

plant. Witnesses argued that the 

witnesses I have a list. I didn't 

bring it with me. They were all 

business people and legal scholars. 

They argued with no, having a 

congressional dissent which the 

federal communication ability which 

is brought up here today and sets a 

maximum of 25% ownership, again 

recognizing it's possible to control 

a publicly traded corporation with a 

minority interest. Let's go to that. 

Okay. You are right with me. Okay 

the current guidance on the FOCD 
issues overly permissive. It does 

not have basis in the legislation. I 

think you bent over too far backwards 

to allow foreign owner involvement in 

the U.S. reactor project. I am 

thinking about the AMEGEN, and the 

50-50 ownership of British energy, and 

I think it was maybe Philadelphia 

electric. I probably would have 

intervened in that having known what 

I know now, but I didn't at the time. 

We believe foreign ownership above 50% 

is defacto. Once you get above 50% 

you own something. The burden which 

should be ton applicants to sort of why 

it isn't illegal. And it is clear to 

us that the intent of the atomic energy 

act and we are happy to show this in 

court that any significant or foreign 

involvement should be examined and 

probably rejected. The next slide on 

control and domination can get 

minority ownership. Certainly can be 

controlled for less than this. Why 
the FCC act was used as a model. Even 

for privately held corporations such 

as UniStar control and domination can 

be achieved by ownership or 50-50 

ownership and depending on factors an 

how the company is structured and 

who's putting how much money into it 

with regard to in this slide. In 

UniStar’s case EDF owned 50% plus a 

significant portion of its partner 

constellation energy. We believe 

that had was a FOCD violation even 

before EDF ended up the sole owner of 

that project. If you go to the next 

slide we do think your guidance needs 

more improvement in the standard 

review plan. We are thinking that 

these should provide. It does need to

provide as much clarity and 

transparency for applicants and the 

public alike. The public needs to be 

able to understand what the NRC is 

locking lacking. The definitions of 

control and dominate how the NRC 
determines that is not very clear. I 

think it can be clarified for both the 

public and applicants I think that can 

go far. We believe that the guidance 

can be clear that anything over 50% 

foreign ownership is illegal as some 

other absent mitigating factors. I 

don't know what those factors maybe. 

That should be part of your standard 

review plan, and the review plan 

should recognize that control or 

domination those two issues can occur 

with less ordinary reason ship. As I 

mentioned corporate structures are 

frequently not transparent and 

frequently very complex. For that 

reason the burden has to be on the 

applicants to demonstrate that they 

don't run afoul of the restrictions. 

The burden should not -- to make sense 

of these convoluted structures. 

Without you know having some 

transparency. Of course this is not 

a burden for those applicants that is 
are domestically owned which has been 

the case through tout history of the 

U.S. nuclear program to date. So why 

is this important? In some ways it 

doesn't matter if it's important over 

not it's the law. As I mentioned. 

Some of the remarks I am making here 

and the remarks I heard today. Like 

I said it would be more appropriate in 

a congressional hearing room rather 

than here. Some industry has argued 

it's increasing financially the 

nuclear industry. I don't deny it. 

NRC can't change the law. The other 

point we have to recognize is reactors 

are currently licensed for 40 years. 

They routinely receive license 

extension for 20 more years. That's 

60 years. There's talk in the 

building and we have additional 20 

year licensing periods. That's 80 

years. 08 years ago we were at war 

with Germany and Japan. We dropped 

nuclear bombs on Japan if we want to 
bring it back to nuclear technology. 

We don't know who our friends are going 

to be friends in 7 years. I would like 

to think we are always going to be 

friends with France, Germany and 

Japan. I am not a clairvoyant. I 

can't say that and history suggests 

strongly that things happen you know 

our best friend now may not be our best 

friend later. 40 years ago we were 

best friends with the Shah of Iran. 

We tried to sell them export of 

technology. Fortunately we didn't. 

I think I don't think anybody would be 

very happy if they are U.S. reactor ins 

Iran right now. Conversely if Iran 

had been in nuclear power back then and 

wanted to build a plant here in the 

U.S. I don't think we would be very 

happy with that either. The fact is 

that we don't know who our friends and 

allies are going to be. 50-60-70, 80 

years from now. Back in is the 85 I 

wrote a piece entitled nuclear 
reactors -- in fact nuclear reactors 

are a target for enemy. If they 

happen to be inside your country 

running that nuclear reactor it's a 

very tempting target let me tell you. 

As my friend Paul said it's a 

predeployed planned destruction. 

That has to be in the front of NRC's 

mind when you talk about this issue 

because you don't know what's going to 

happen 50-60-70 years from now. We 

all hope to be living in the garden of 

Eden, but that's not what we are 

repaired for. I would conclude that 

the A E A prohibition on FOCD still 

makes sense and it must be enforced. 

It makes sense today. I would argue 

against changing the law if it does 

come to that. You know more 

importantly is that the NRC has to 

follow the law. Thank you for the 

opportunity to speak here today.

>> 

>> This is Chris Reagan. I have one 
thought or question. You spoke to the 

three legged stool and one of the 

suggestions you made to improving our 

clarity and transparency and the 

definition of control and dominate. 

Can you elaborate a little bit more on 

what you see that definition or how you 

interpret that definition and it might 

help with subsequent presentations.

>> I didn't say it was easy to do. I 

just said it needs to be done. We will 

be submitting comments on that issue. 

I am not prepared today to provide you 

a detailed answer, but I think, my 

thinking is that it's you have to look 

at the total picture. So I go back to 

the UniStar case of where you have a 

U.S. company that has one level of 

ownership and foreign company with 

another level of ownership and then 

what other corporate, what other 

issues might include might make 

domination and UniStar case that was 

you had a French government company 
being a half partner. A French 

government company being the reactor 

supplier and the French government 

company owning a significant share of 

the U.S. utility. That brings up 

control and come nation issues we 

argue that would have been illegal had 

we litigated that. In fact the next 

step after that was that this -- France 

shortly after we file it had 

contention conservation energy is 

near bankruptcy. They ended up 

selling off 49.9% to electricity 

France. By the time the contention 

was admitted you also had this very 

significant investment. It was four 

and a half billion dollars from 

electricity de France into 

Constellation Energy. You know that 

very clearly to us made electricity 

France the dominant and controlling 

partner in that partnership. How you 

write rules or how you write a review 

plan to take into account all of these 
different things it's difficult. I 

think you need to layout at least the 

factors that you are going to look at 

to make that determination. That 

would be level of ownership and level 

of contract and other types of 

contracts and that kind of things, and

we will try to get you more detail 

answer in your written comments.

>> Thank you for your comment.

>> HO: We had one comment on the 

presentation if you don't have an on 

the spot answer today send us 

something in a response. In your 

slide you said that your views that you 

made clear anything over 50% is 

illegal absent any mitigating 

factors. I have seen a number of 

different mitigation factors in the 

process here at the NRC do you have any 

sense of what other mitigating factors 

you feel are appropriate?

>> I mentioned as I think as an aside 

I am not sure what those mitigating 
factors will be. I am not ruling out 

the possibility that there could be 

some.

>> HO: Thank you.

>> We are ready for our next speaker?

>> I actually had a similar question. 

This is Jo Ann Simpson. I wanted to 

make a clarifying comment. You 

talked about the federal register 

notice. Inappropriately focuses on 

the foreign ownership issue T. 

commission has specific aspects that 

they wanted to look at in as part of 

our fresh assessment which were the 

item that is were identified in the 

federal register notice. That's what 

we will provide to them and that's what 

we were trying to get input on is 

ownership and the totality of the 

facts of control and domination.

>> Michael MAROTTE: I understand 

that. I wasn't trying to cast blame. 

This is a three legged stool. If you 

are going to look at one leg you have 
to look at all the legs. I mean you 

know if you are going to review the 

rules you will review the guidance and 

you will review it.

>> Thank you for your comment. We 

need to move onto our next speaker 

Ellen DINSBERG. This is Sheila.

>> Ellen: Thank you very much for the 

opportunity to present on this issue 

this morning. We are extremely 

interested in participating in these 

discussions and possibly offering 

some suggestions this morning for some 

opinions that could be included in 

your SECY as you prepare it for 

commission consideration. We think 

that this is an extremely important 

opportunity to express our views, and 

I would also like to offer that we are 

available and would encourage you to 

provide other opportunities for this 

public dialogue in the future. I 

think it's extremely valuable both to 

the staff and industry to expose these 
sorts of issues where the differences 

of opinion on differences of view 

early on so that the various 

stakeholders can provide their views. 

I am very mindful of the fact that you 

have a December 31 deadline by which 

to get a paper to the commission. 

Next. I wanted to provide a little 

bit of an overview here, and you will 

see that what I tried to do is offer 

some answers to questions that are 

posed here as because Joe Ann just 

mentioned many of them are subject of 

the SRM that was issued and the federal 

register notice. I think they are the 

core of the issues that we need to 

address. This issue about compliance 

with the atomic energy act obviously 

first and foremost and whether or not 

it would allow, and it would be elastic 

enough to allow indirect foreign 

ownership. Another ownership that's 

worthy of consideration is whether the 

agency has looked at the litigation 
action plans and whether there's room 

for improvement there. Further the 

commission specifically asked if 

there would be an opportunity to 

resolve FODC following issues and 

license and we will cover that as a 

relatively higher level. The limits 

on FOCD grounds and what would be left. 

I have already been addressed and turn 

to them in some second. We will be 

offering some suggestions and 

proposed modifications for the SRP 

this morning. We think there are 

areas whereas has been said earlier 

clarification would be appropriate. 

I am going to suggest that you go a 

little further and consider some new 

ideas here. Next slide. So in brief 

what are the answers to this? I am 

going to present my next set of 

comments in part because I'm in a rush 

to get through the comments in 25 

minutes. The question is already 

arisen to why this is important? 
Clearly, we, the FODC have the 

potential to unnecessarily --I will 

get to the notion that safety security 

and economic benefits are derived from 

participation by certain foreign 

entities. The second and third 

question we have answered both in the 

affirmative and negative you can 

comply with the atomic energy act and 

read it in the context of 2013, and you 

can also the atomic energy also admits 

of a hundred percent indirect 

ownership. Further I would say that 

the key here and we talked about it a 

little bit and I would like to delve 

into it a little bit more. When you 

look at the litigation plan and that's 

the action on the table. The question 

is whether the foreign owner would 

have the control over the nuclear 

safety or security operational 

decisions or the special nuclear 

material, and there's precedent for 

analyzing it in that fashion. I can 
will get into that in a second. We 

have answer it had last three question 

ins affirmative as you can see. Why 

is this issue important? It's 

important because at its heart failure 

by the NRC to appropriately interpret 

foreign ownership control and

domination restrictions could 

needlessly impair the both the 

development and the fundability of 

nuclear assets. This isn't strictly 

related. I wanted to make that point. 

I do not want to sound too much of an 

alarm, but I do want to note that 

there's a sense in the regulated 

community that the FOCD analysis as 

it's currently applied creates in our 

view what I would describe unnecessary 

and undermine hurdles for licensees 

and license transfers. There's a 

perception I think we have talked 

about a very high level here. To put 

a fine point on it there's a perception 

that the agency seems to be assuming 
that upstream foreign owners or 

lenders will observe direct or 

indirect influence that will 

circumvent even robust action plans 

that are designed to do exactly what 

the atomic energy act provision is 

intended to achieve. I think Paul 

pointed out and we would agree that 

investors where they are domestic or 

foreign they all need regulatory 

certainty. I would add to the comment 

that they need some measure of 

confidence if reasonable measures are 

adopted to address regulatory 

requirements that those reasonable 

measures will be reviewed in depth, 

but at some point will be determined 

to be acceptable. It won't be a 

constant one off. So what are the 

benefits? I think it's fair to say that 

many reactor vendors and nuclear 

service providers are already 

participating in the U.S. nuclear 

market. These are entities that are 
credible, they are experienced and I 

didn't list them above but certainly 

EDF and -- Westinghouse which is 

majority owned by Toshiba come to 

mind. The reactor technology for new 

build in the United States is now often 

a foreign origin. So it is in my mind 

I think perhaps a bit arrogant to 

describe the U.S. as the only player 

in town. We are not. It is a global 

market. There is something, in fact, 

there are significant gains to be made 

by the sharing of the sorts of 

information that will improve 

operation that can advanced safety. 

I think it's somewhat uninformed 

opinion to think that we are in fact 

living in a world where the U.S. has 

the sole license, if you will, the 

exclusive license on nuclear 

technology. Next slide please. We 

have gone over the Atomic Energy Act 

to some degree. I would make the 

point in the 1950's when this was 
enacted technology, as I just 

mentioned was the United States was 

exclusive to the United States. 

Further the FODC requirements and the 

provisions were adopted during the 

cold war. It's critical to this 

analysis when they were adopted there 

was concern about the transfer reactor 

technology, and the proliferation of 

special nuclear material, and the 

transfer of nuclear information, 

technological information. Today's 

global market that's just not, it's 

not the concern anymore and it 

shouldn't be. Those are greatly 

diminished issues. When you look at 

foreign involvement you are looking at 

enhancing safety. You are also 

looking at sharing and we often 

talking about sharing operating 

experience. You want that operating 

experience shared as a regulator the 

other point is a subsidiary point is 

that the nuclear industry and the 
public benefit from the inflow of 

foreign dollars was there's indirect 

and direct economic gains to be made. 

What has the commission asked you to 

do? It's asked you to take a fresh 

look. The commission was pretty 

clear in the SRM that it wasn't looking 

here to stop at the point in time. 

That having been said I think you have 

to go back to the legislative history 

in order to understand how this 

statutory enactment should be 

applied. Michael talked a little bit 

earlier about the 5%. He is correct. 

There was originally a 5% limitation 

on voting stock that was deleted. And 

the understanding was that it was 

responsive to that action, it was 

responsive to criticisms related to 

the fact that it's very hard to 

determine who owns the voting stock in 

a publicly traded company. I think we 

conclude, we reach a very different 

conclusion than Michael offered this 
morning in that we believe that it's 

clear or one could fairly conclude 

that the atomic direct intended no 

absolute bar solely on the percentage 

of foreign stock ownership. 

Historically I would say it's obvious 

that hasn't been the case. The 

commission has acted so as to allow 

foreign participation in U.S. 

projects. Returning to the early 

precedent just 12 years after the 

atomic energy act was enacted which 

would lead one to conclude that those 

interpreting at the AEC at the time 

were closest to the issue. They 

established the control and 

principle. They-- SEFOR. The 

commission actually said that the 

limitation on foreign ownership 

should be given an orientation toward 

safeguarding national defense and 

security, and the commission said that 

it believed quote that the words owned 

controlled or dominated refer to the 
relationships where the will of one 

party is subjugated. The other and 

congressional intent was to prohibit 

the relationships where an alien has 

the power to direct the action of the 

licensee. Going into your question 

about how do you define the control and 

domination and commissions already 

given us some help there. The next 

slide. The SEFOR given the SEFOR pres 

debt it's clear that the atomic energy 

is emphasizing and this remains good 

law is the need to take into 

consideration the many aspects of 

corporate experience an activity. 

The ability to restrict or inhibit 

with the security and other 

regulations now of the NRC and 

importantly the capacity to control 

the use of special nuclear fuel an it's 

disposal quote would be of greatest 

significant. I think it's critically 

important in this conversation. To 

the extent that the SEFOR precedent 
was issued by the commission it was 

also recognized in the NRC's SRP 

standard review plan and is allowed, 

it is recognized also with the use of 

action plans. Next slide. So today 

we join the issue with respect to how 

does one read the atomic energy act? 

Michael offers what I would describe 

somewhat of a literal reading. Where 

owned is in isolation. Even with that 

reading I would suggest that it is 

plausible to read that provision to 

refer solely to the ownership of the 

licensed of the licensee. It is 

possible to even with that sort of what 

I would describe of more restrictive 

approach allow foreign participation. 

More importantly the commission is 

already answered that question. The 

commission said that in analyzing the 

facts that SEFOR it's the effect of the 

contracts, the governance control 

that is would mitigate any ability of 

the foreign participant to 
compliance -- NRC regulation that is' 

relevant. It's not strictly 

ownership. In fact it's ultimately 

one of control. So the AEC and 

current precedence still hold that a 

unified reading of those terms is the 

appropriate way to read this. We 

think that should continue. So 

again, it's the potential to create 

security problems, the ability to 

control compliance with NRC 

regulations after control over 

nuclear fuel and disposal of that fuel 

that's relevant here. Next slide. 

So how do we view this 10% ownership 

question our view it's with the 

operative point. With that operative 

point. The agency already done that 

in certain other cases. The 

MCDERMOTT comes to mind. And also 

with respect to British energy with, 

sorry with also with respect to Trojan

nuclear plant next slide. Let me turn 

now to a practical suggestion that we 
have. We strongly believe that the 

nationality of the foreign 

participants in the status of the 

foreign nation from which they come 

are extremely important with respect 

to how foreign ownership control and

domination issues should be 

considered. In many ways those 

factors are more significant to 

protecting the security special 

nuclear material than are some of the 

others identified. The NRC has 

already identified a list of special, 

sorry a list of countries in section 

110.30. The nuclear suppliers group 

and section 810 of the DOE 

regulations. You have a list of 

countries, and it doesn't really 

matter whether you exclude some and 

allow others, but my view is it's 

always easier to identify those that 

are permissible but that's can be 

discussed later T. point is that there 

should be some list of countries from 
which the agency is able to make a 

decision that either less or more is 

necessary. And in particular if 

there are MPG treaties or you already 

agreed to the kind of safety 

obligations under the nuclear soup 

pliers group that should be a good 

starting point. The other thing I 

think is critical to consider and this 

goes to the fundamental philosophy of 

FOCD analysis. That is there's no 

basis to assume that necessary foreign 

entities are going to excerpt 

certain -- engage in action measure 

that is U.S. citizens are going to be 

in charge of safety and security are 

not going to abide by their obligation 

but are going to violate U.S. law an 

risk criminal penalty and that the 

over site for licensing an NRC will 

somehow not hold. Next slide. 

Another change to the SRP that we would 

like to see is to recognize very much 

more directly the context in which the 
FODC limitations would apply. We 

have gone through a number of these 

already. I think it's important to 

set for the NRC like other agencies and 

like the industry has turn over in its

staff. I think it's important to 

establish what the context is for 

these reviews and that would be 

helpful to do at this point. Next 

slide. The other approach that we 

would like to see a little more 

emphasis placed on is an analysis that 

considers the totality of the 

circumstances. In reviewing the 

facts the commission in SEFOR, 

concluded all of the facts should be 

given an orientation toward 

safeguarding national defense and 

security. You are not just talking 

about an analysis that hinges on 

whether the foreign entity is owned. 

It's whether they exercise influence 

or control over, and here's the 

important issue, over those security 
interests or safety interests that are 

relevant. It really shouldn't matter 

to the NRC whether a project, whether 

a foreign interest has some ability to 

influence decisions on whether to sell 

the project on accounting or on tax 

matters that are extraneous to the 

national security. So I suggested 

that I would offer some new ideas in 

addition to the list of countries that 

one might include in the SRP for those 

which less consideration on FOCD 

issues would be given. There's few 

other ideas here that we would like to 

float. The second dash relates to 

10%, less than 10% of a nuclear 

operator. I think Michael said with 

special voting rights there could be 

some influence or control exercise, so 

without special voting rights there 

should be a di minimis amount of 

ownership that would not have FOCD 

requirements associated with it. 

Further if you have a non-operating 
owner that owns less than 50% of the 

nuclear plant that should also be 

perhaps either a presumption that no 

action plan is necessary or a very 

limited one at best. Finally if in 

fact the foreign entity owns or 

finances a nuclear plant where the 

entity, foreign entity is also the 

reactor vendor that could also be 

basis for presumption. Next slide. 

So in term of clarifying the SRP 

another point is to go back to this 

question about ownership and whether 

or not ownership alone confers, 

control over nuclear safety matters. 

Our view I think is that unless there's 

some indication that the matters over 

which control is exercised relate to 

those two issues ownership alone 

should not be cause for concern. I 

would also like to mention that a 

little bit about funding. So in the 

case of loans to an applicant or I will 

sense see by a foreign participant. 
If the foreign lender only has normal 

creditor rights, again, the 

arrangement should be considered to be 

non-indicative of control. Thanks. 

And I think we could go into, John will 

probably go into this foreign lending 

and financing and how it should be 

viewed rather than a control issue if 

there is no real issue of initial 

control. The commission has asked 

whether or not there is a means of 

addressing foreign ownership control 

and domination issues in the post 

license con text and our answer is yes. 

As I noted at the outset there is an 

opportunity for the commission to 

issue a license condition. It can be 

verifiable. It's been used before 

and I think the criteria can be 

relatively easily set out such a 

license condition would make sense. 

So in sum our analysis of the relevant 

statutory language the legislative 

history and the applicable case law 
established a few baseline 

principles. Those are first that 

foreign ownership of a licensing 

parent is not prohibited per se. Up 

to a 100%. Secondly, the ordinary 

foreign control should be looked at by 

reasonable litigation plan 

arrangements. The negation action 

plan should only be really, one could 

go so far it should only apply to 

rights over safety or special nuclear 

material. Most of the other issues 

really aren't a function of foreign 

ownership control and domination. 

With that I simply would like to thank 

you for the opportunity to make this 

presentation this morning and to 

reemphasize our offer to continue to 

participate in the public forum on 

these issues which we consider to be 

very important 6789

>> Any questions to the staff here.

>> I have a question. The NRC 

shouldn't have the ability to pick 
winners and losers. I think that's 

the exact term that was used to foreign 

ownership. One of your options was 

creating a safe list of nations. They 

seem counter intuitive because we are 

picking winner ifs we create a list.

>> Actually I don't think you are. 

The idea with the list is that you 

borrow from other parts of the 

government where concerns of the sort 

that otherwise would have to be 

confronted here. They have already 

been addressed. If other parts of the 

government the state Department, the 

Department of Energy have reached 

conclusions about whether or not these 

countries are credible and whether 

they are experience demonstrates they 

don't have proliferation risks. I 

don't see why the NRC wouldn't want to 

leverage that information. It also 

seems to me that it creates a 

reasonable basis for a lighter touch.

>> I know we need to move on. The 
license condition piece I saw that in 

your last slide is that something that 

you feel is something that we need to 

consider if we were to look at other 

means for looking at higher levels of 

ownership control or domination. I 

am not familiar enough with the 

licensing issue to determine whether 

or not there easterly sense condition 

in this area. This is the time where 

everybody heard it in this context.

>> My answer would be in this context 

if some of the suggestions are made are 

adopted it would be unlikely to meet 

a license condition.

>> Okay. I see what you are saying.

>> Thank you for your questions. 

Let's 3406 onto John Matthews from 

Morgan Lewis.

>> Go ahead and go to the first slide. 

Looking at the presentations on this 

topic before the regulatory 

conference last year in March of 2012. 

One of the things that occurred to me 
that I think is an important point to 

make up front is foreign investment in 

the U.S. nuclear industry is in the 

national interest. Foreign 

investment comes in and creates jobs 

in America and facilitates to 

infrastructure and important to the 

future of the United States. Foreign 

participation an increasingly 

availabilities of foreign 

participation improves liquidity of 

nuclear assets and enhances the value 

of nuclear assets. We saw a very 

beneficial effect on the nuclear 

industry when you know the nuclear 

assets always had to be in cost of 

service regulation and there were a 

lot of utility that is we’re not 

interested in operating nuclear 

plants. The NRC took an enlightened 

view about the future of the industry. 

If you look at the license transfer 

rules for example that said we are not 

going to stand in the way of commercial 
transactions we are going to 

facilitate them. Merchant 

generators came in and bought assets 

and we saw the value of nuclear assets. 

We saw increased acceptance of wall 

street. I think that had overall a 

very positive effect on the industry. 

It's also the policy of the United 

States government. Energy Policy Act 

encouraging the development of 

advanced nuclear reactors and so the 

extent they take a restrictive view of 

control an domination provisions in 

the act and limits investment and 

nuclear and whatnot. It's acting 

against that interest and against that 

national policy. I really believe 

that the restriction should be 

enforced as necessary to protect the 

national security in the United 

States. That means you look to what 

real credible threats are in terms of 

diversion of the nuclear technology 

and diversion of the nuclear material. 
When you have participants foreign, 

participants in the U.S. industry that 

are coming from countries that have 

track records and positive track 

records in the nuclear industry, and 

positive nonproliferation then it 

should be a very light touch. Go 

ahead and flash slide number three. I 

think we should move onto slide four. 

The statutory restrictions we 

mentioned this before. It's really 

up to Congress to change the statute. 

Where commission has flexibility is in 

interpreting, and how it enforces its 

statutory restrictions. I really 

believe that going back to the C four 

decision in 1966 is important because 

the commission there did take a narrow 

view as to the purpose of the FOCD 

restriction. That was a national 

security purpose. Let me go ahead and 

move onto slide five. The Ellen has 

already comments on this. Clearly 

the statement from SEFOR the 
restrictions should be given in 

orientation. That principle was 

adopted by the commission once again 

in the SRP that was issued in 1999. Go 

to slide six. I would like to go back 

again and revisit with SEFOR. The 

focus that the commission had was the 

ability of foreigners to restrict or 

inhibit compliance with security and 

other regulations of AEC and the 

capacity to dispose of special nuclear 

term. If you have U.S. citizen bees 

in control of security and being 

control of the special nuclear 

material. I mean, nuclear power 

plants are very secure facilities 

because of the physical threat that 

they have to defend against. The idea 

that a foreign participant is going to 

be successful or have a motive to try 

and access and divert special nuclear 

material from a U.S. nuclear reactor 

to me seems impossible. Unless you 

are dealing with a foreign investor 
from a country like north Korea I 

believe the agency can rely on fairly 

minimal negation step that is are 

taken by the U.S. company to ensure 

U.S. citizens are no control of the 

material. The commission once again 

in 1966 the atomic energy commissions 

said you know this is an issue of 

controller domination which would 

have special significance in view of 

the apparent objective of section 104. 

It's that capacity to control nuclear 

fuel, dispose of the material which is 

all controlled in the United States 

under U.S. law.

>> If I may this is HO. I am going to 

ask this question of you but I offer 

anybody at the table to address the 

question. I heard throughout 

conversation with you and Ellen and 

you emphasized minimal restrictions. 

Reflecting back on the kind of overlap 

at least I'm seeing with the FOCI 

review that is are done with the CSS 
and the Department of defense. Those 

mitigated measures didn't seem 

minimal to me. I kind of offer that 

up just as a point of discussion. I 

am hearing your comment about the 

minimal and the light touch and that 

the industry has evolved. What I'm 

looking at with other sectors in the 

federal government particularly in 

the defense area. That framework 

seems fairly robust for the FOCI 

reviews. Kind of what I heard. I'm 

not an expert in that area it didn't 

seem minimal to me. Anybody at the 

table if you can give me your view.

>> I will take a shot at that. I think 

slide 11 in my deck commission should 

establish a graded approach. We are 

not suggesting here as a blanket 

statement there be a light touch. If 

that was the implication it's not what 

I end r intended. There can be a light 

touch I believe for certain countries 

where you don't have proliferation 
concerned where they own the 

technology, where they are perhaps 

even selling to the U.S. the 

technology that's their national 

technology or the technology 

developed in that country. It's 

quite different I think when we are 

passing along classified information 

or some other important technological 

issue that where the outside country 

does not have it, where the foreign 

country is not in a possession of that. 

So I asked the question which is there 

anything left if you take some of our 

suggestions on FOCD. The answer is 

clearly yes. We are not asking the 

agency to create a blanket statement 

if this is no longer relevant. What 

I think is available to the agency is 

to look at this based on the risk posed 

by what the activity is and what the 

level of involvement is up to and 

including a hundred percent. If it's 

grandparent or great grandparent or 
great-great grandparent. I don't 

want to leave the impression it's a 

light touch.

>> I agree with that point. I think 

the perspective that one has to have 

that in 1966 and 1954 nuclear 

technology was restricted data. it was 

classified information. Okay. 

Nuclear reactor technology today is 

not restricted data. So you know if 

it were still restricted data or if you 

are dealing with restricted data, 

certainly the kinds of mitigation 

measure that is you have imposed in the 

N IDX O M would be appropriate. Here 

where the foreign investor has the 

technology where the technology is not 

itself classified you don't need those 

measures. Those measures are really 

should only come into play if you have 

a foreign investor that is coming from 

a country like north Korea where 

there's clearly you would one would 

reasonably have suspicions about what 
the motive is of this central bank 

north Korea invest anything a nuclear 

project in the United States. That 

motive may well be to gain access to 

nuclear information that the foreign 

participant wouldn't otherwise have. 

You don't have that Moe tiff when you 

have a foreign participant from the 

country that has access to it. Let me 

move to slide 7 because nuclear safety 

is very important. Everyone agree 

that is nuclear safety is important T. 

FOCD restriction is not the place to 

focus on nuclear safety in my opinion. 

Foreign companies are involved in 

designing and constructing plants in 

the United States. Foreign control 

companies are doing that. There for 

they have to have nuclear safety 

responsibility. The idea that they 

shouldn't have nuclear safety 

responsibility would be appalling to 

me. They are involved in the design 

and construction. We have foreign 
companies on foreign soil that 

manufacture safety critical equipment 

that goes into U.S. reactors. Those 

foreign citizens when they are 

manufacturing those critical 

components dam well better have safety 

responsibilities they have quality 

responsibilities. It should not be a 

core for this agency to have 

foreign -- it's about inhibiting this 

agencies jurisdiction over a U.S. 

entity that has nuclear safety 

responsibility. If the foreign 

company would inhibit the NRC's 

ability to exercise it's appropriate 

jurisdiction and inhibit the U.S. 

licensee to comply with NRC 

regulations. They are every day in 

this industry and wouldn't operate 

unless they were involved in safety 

decisions. More over if you are 

worried about influence and external 

stakeholder that is might impact 

safety look. We have that across this 
industry. There are co-owners, there 

are political stakeholders, and there

are state regulator that is have the 

potential to impact safety because 

they have the potential to influence 

how a nuclear power project is 

managed. We have systems in place to 

make sure that notwithstanding those 

stakeholders having the ability to 

influence or having the ability to 

have impact that we have U.S. citizen 

that is are responsible, personally 

responsible for compliance with the 

NRC requirements or safety. We also 

have robust programs, corrective 

action programs quality assurance 

programs the over active. The NRC 

inspection program that all act to 

identify to any inappropriate 

influence that might have an adverse 

effect in safety. We don't need to 

worry about foreign involvement in 

nuclear safety in the United States. 

In fact we need foreigners to be 
involved in nuclear safety in the 

United States in my opinion. Let me 

move onto the next slide. I think we 

should take a fresh look, a fresh 

assessment of the SRP and we should go 

back topics that the national security 

is the primary purpose. We need to 

recognize that national security 

realities are different than they were 

30 or 60 years ago. Our reactor 

technology is not restricted data. 

You no longer have that concern. We 

have now in 1966 or in the 1960's the 

focus was on potential export on 

American technology abroad. Today we 

are importing foreign technology in 

the United States. I think the 

commission has considerable 

flexibility on how it interpret it had 

FOCD restriction in light of that. 

Let me go to slide nine. I wanted to 

give some background. The country of 

origin should matter in 1998 with the 

staff sent the information out to the 
commission. I was at deco energy. 

We said look you ought to take account 

that the British energy is from the 

United Kingdom they have a great 

nonproliferation effort. The NRC 

staff said we looked at all the 

precedent, there's no indication that 

we ever taken into account of origin. 

Saying we are not going to take into 

account the country of origin. His 

voting sheet and I have shown it here 

struck those sentences. In fact, if 

we go ahead and turn to slide ten if 

you look at the safety evaluation, and 

you look at the discussion of foreign 

ownership and domination there is a 

taking into out that British energy is 

from the United Kingdom. It's not a 

new idea. It's an idea that the staff 

has been resistant to, and was 

resistant in 1998 and the commission 

gave different commission. I think 

the commission should get the same 

direction again that's the country of 
origin should matter. Let's go ahead 

and turn to slide 11 because my 

suggestion is that the best place the 

look for the countries that you can 

have confidence in, foreign 

participants from these countries are 

the nuclear suppliers group. The 

nuclear suppliers group is a largely 

U.S. effort. The U.S. right now is 

chairman of the U.S. suppliers group. 

They have guideline that is the member 

participants adhere to that include 

physical protection, safeguards, 

export controls, special controls for 

sensitive exports or enrichment 

technology for example. Control of 

the material. So here you have a 

group of countries that it's clear 

that the participants in these 

countries are sophisticated, global 

nuclear players that have a stake in 

nuclear safety. That have a stake in 

the nonproliferation goals of the 

United States and hearings. I think 
we can take a great deal of confidence 

from the fact that we have those 

countries. Let me go ahead and turn 

to slide 12. So how would we devise 

negation measures. As long as you 

have U.S. citizen that is have 

adequate authority that's not an in 

appropriation diversion of nuclear 

technology which isn't even an issue 

in most case where is you have foreign 

participation and that the foreign 

participation if they are seeing from 

global nuclear players already have 

the technology, so it's simply not a 

major risk. You need to have U.S. 

citizens in charge of national, in 

charge of the security programs. And 

if you know if you are dealing with an 

operator and operator that volunteers 

to obtain a security clearance so that 

the individuals in the operator can 

receive classified information 

regarding for example the incredible 

terrorist threat. Then they are 
going through the part 95 process. 

They are getting the FOCI clearance 

through the NRC, so those issues can 

be dealt with there and don't need to 

be dealt with in FODC space. If you 

go back, precedent on this is when 

under the U.S. enrichment 

prioritization act the restrictions 

on foreign ownership control and 

domination were extended to 

facilities. Part of getting issuing, 

and the certificate to UJEC was a 

finding on FOCC. They essentially 

say look as a policy security and 

security clearance that's more than we 

would ever do for FOCD compliance. 

We're going to rely on that. I think 

that is useful precedent to look to 

foreign if you finding? I don't 

believe that foreign funding should be 

problematic. Unless a foreign 

investor is given specific control 

rights what is the difference if money 

being loaned or a project is coming 
from a foreign bank or U.S. bank. 

Creditors have, creditor’s rights and 

we have a regulation and 50.81 is the 

commission manifestation of the 

authority under the atomic energy act 

by the security leans and mortgages et 

cetera. The commission has decided 

to do that on a general basis without 

individual application, provided that 

the lenders understand that they can't 

actually exercise their security 

rights and take control of the 

facility unless they come to the NRC 

and get a license approval. So those 

mechanisms are in place. I don't 

believe that there should be a focus 

on where the money is coming from. If 

you look at the SRP and look at the 

negation measures, and look at some of 

the negation actions that are taken a 

majority of them relate to funding. I 

don't understand the emphasis because 

the creditor doesn't have that kind of 

control over the project that needs to 
be, whether it needs to be much 

concern. And I think if you are 

talking about funding coming from N S 

G countries again, what motive do the 

foreign investors probably have to try 

and use their funding to use their 

influence. They don't need access to 

technology. They don't need access 

to material. They have a stake in the 

nuclear industry. They are 

compliance oriented. They recognize 

we have a requirement here in the 

United States that they have to abide 

by. They put measure ins place to 

assure that U.S. citizens exercise 

control. Why assume these companies

are going to try and circumvent those 

requirements? I think the assumption 

should be they are going to obey the 

law. That's a long standing 

principle. We assume in the absence 

of evidence to the contrary that folks 

are going to obey the law. Let me go 

ahead and turn to slide 14. My bottom 
line is we ought to have an NRC policy 

where you have foreign investment 

coming from N S G countries. So let 

me, I had a couple suggestions on slide 

15 for some safe harbors. You know 

these come up because I see this from 

time to time working on license 

transfers, existing publicly traded 

companies and we stumble on some 

financial institution that happens to 

have subsidiaries and owns you know 8% 

or 12% of the voting stock of publicly 

traded companies. I mean, these 

stockholders have no possibility of 

being involved in day-to-day nuclear 

operations. The practical reality is 

that you know some financial 

institution like or byes if anything 

they might be on a quarterly earning 

call where they ask management about 

the results of the company. It's just 

not plausible that they are going to 

be interfering with nuclear 

operations. It should be an easy 
issue to say look if we talk about 

ownership about less than ten percent 

of voting stock of publicly trading 

company. Unless the voting rights to 

control the key executive personnel or 

board members that there really 

shouldn't be a need to require any 

further. Secondly the securities and 

exchange commission has a -- -- if you 

file a schedule 13 G you have to 

certify that you have not acquired 

that interest for the purpose of 

exercising control or influencing 

control of the company. I think that 

ought to be good enough for the NRC. 

If a foreign investor is filing 13 G 

and so certifying this to the SCC there 

isn't a need for further assurances 

and negation measures or further 

review or inquiry by the NRC. I put 

in the back of my slides just a number 

of case studies of prior precedent for 

NRC has reviewed foreign ownership in 

the negation action plans. I am going 
to leave those ton slides. Folks can 

take a look at those precedence for 

what they are worth but I don't think 

I need to go over them. That 

concludes my remarks.

>> HO: I appreciate your moving 

quickly through your presentation. I 

don't have a question here but just 

sort of comments about thinking about 

your suggestions as well as Ellen's 

with respect to safe harbor 

provisions. This is just a very 

interesting area in the NRC regulatory 

framework. I agree the mosaic of 

safety FODC is one element as well as 

financial qualifications there's a 

number of safe going programs to help 

assure that the safety exists or one 

to be constructed. What's 

interesting to me when I'm thinking 

about your safe harbor provisions. 

There's one branch in the NRC that 

deals with these particular matters 

and financial obligations of foreign 
ownership. I took note in the SRP 

when I read it over the last year or 

so that I have been in this job. It 

talks about the limit less creativity 

with respect to ownership of the 

company. I guess it makes me look at 

the possibility and consider safe 

harbors that's an element in my mind 

and the creative operating 

arrangements. Again, there's just a 

hand full of people that deal with this 

type of work at the NRC. I think that 

it sort of something that is just new 

at least to me.

>> John: My suggestion there is it's 

very much a fair point but look at the 

threat. So if the foreign investor is 

the central bank of north Korea look 

at it. There may be some creative 

ways where they are trying to gain 

access to nuclear technology. If the 

foreign investor is an international 

global player ask yourself what Moe 

tiff would they have to create a 
complex structure in order to 

circumvent the NRC FOCD restriction. 

What motive do they have to gain an 

inappropriate access to nuclear 

technology to divert material. 

Toshiba owns Westinghouse. It's 

licenses for fuel fabrication 

facility in South Carolina. Toshiba 

controls that company. They can 

legally control the company and the 

transports and the nuclear fuel from 

that facility down the public highway 

to Texas. When it comes on site and 

onto a secure facility I got to protect 

against Toshiba access. Toshiba can 

control the truck before it get there 

is. What motive does Toshiba to use 

its investment to get access to that 

material. It has ever motive to 

comply. We are going to hand over 

responsibility to U.S. citizens. We 

won't touch it.

>> We need to move to the public 

comment period.
>> I should point out Westinghouse 

operating under a FOCI mitigation plan 

that's administered by the NSA. The 

operations that are carried out by 

Westinghouse are done through 

subsidiary west time which operated 

under the special security agreement 

at the Columbia Facility.

>> Can I ask a clarifying question?

>> Very quickly.

>> You said nuclear technology is no 

longer restricted. I am wondering if 

by that you mean classified data. I 

have been involved in several 

interventions where we have been asked 

to sign nondisclosure agreements and

daily I receive from the NRC notices 

about this utility or that manufacture 

where you can with hold information 

and I realize that's proprietary. 

It's certainly not open to the public 

when you say restricted you are 

classifying it?

>> John please provide an answer. 
Please state your name.

>> John Matthews: Yes that's 

proprietary data. Restricted data is 

restricted technology there's 

classified information that you would 

have to have a security clearance to 

access it.

>> I can see a company might be 

interested in getting restricted data 

for whatever reason.

>> Let's move to public comments. 

Please come to the microphone.

>> My name is Richard. I'm the 

general counsel of Toshiba nuclear 

energy corporation which is a U.S. 

corporation ultimately owned by 

Japan's Toshiba corporation. You 

know Toshiba as many people know is 

invested substantial time and money in 

the U.S. nuclear industry. You know 

it's committed to FOCD compliance and 

nuclear regulatory compliance in 

general. Just to underscore what 

John and Ellen have said the past 
Chairman of Toshiba used to give a 

famous speech no compliance no 

business. We will not allow you to do 

business out compliance, and you will 

not be able to sustain business 

without compliance and that's the 

Toshiba culture that the type of 

foreign entity, foreign owned entity 

that is you are talking about here. 

Internal processes and controls that 

apply in Toshiba corporation are 

probably as strict as those that apply 

here among NRC employees. The 

compliance culture is very strong a 

couple points. We would like to 

associate ourselves NEI's remarks as 

well as John's remarks. Brilliantly 

presented by both individuals. We 

believe that the safety and nuclear 

safety and security should be the 

focus of FOCD review and that 

mitigation action plans, and the other 

techniques mentioned are the way to 

achieve that. Secondly, the 
importance of certainty mentioned by 

Paul this morning and I cannot 

emphasize enough how important that is 

even for someone like Toshiba who is 

knee deep into the nuclear industry 

right now. We have been complying 

with FOCD as we understood it. It 

appears to be an evolving standard 

which tends to interject at a late hour 

issues that you try to comply with and 

so that certainty is very important. 

Finally, as John mentioned this 

morning you think in the first 

instance that certainty can be 

achieved through better approval, 

improvement of the guidance with any 

rule making action to be held at a 

bank. It's very important that this 

be fixed now and along the lines 

recommended.

>> Again, please state your name.

>> My name is Paul Gunter I'm with 

beyond nuclear. I would just like to 

state we need to talk about the 
800-pound gorilla in this room. 

Nuclear power is economically flat 

lining, and there's not a CEO or chief 

financial officer domestically that 

will touch these toxic aspects. That 

the NRC is now in the process of 

constructing a Trojan horse to drag 

these toxic assets from foreign 

investors into our economy and I think 

it's our chief reason and concern for 

opposing any changes to the atomic 

energy act in the prohibition of 

foreign ownership.

>> Thank you for your comment.

>> I am Jim with Greenpeace. I am glad

Ho reminded us of this promotion. The 

law is pretty clear. Otherwise you 

would have reactors being built right 

now in Maryland and probably south 

Texas as well. So you guys are in the 

wrong place, you belong on the Hill. 

The industry also has been very well 

represented at this table. I would 

suggest that this agency decide to 
move forward. I don't think it's good 

idea or I don't think we should be 

wasting our time. I think we should 

be looking at how to better ensure 

safety. I would suggest that you 

broaden the table if you move forward. 

I hope you use Homeland Security. 

Hopefully we can discuss other 

instances where there were diversions 

of special nuclear material from NRC 

or AEC licenses to our allies. At 

least one former NRC Commissioner is 

convinced that happened in this 

country. So let's broaden the field. 

I would also recommend that you 

broaden it to include the government's 

that are now suing many of these 

corporations represented at this

table. I think United States 

Attorney General's -- to allow 

foreign -- when agency won't 

adequately regulate them. Again, 

Michael has made a lot of good fine 

points about what the law says. This 
meeting is inappropriate. The 

Federal Register was inappropriate. 

Again, we are wasting good FTE that 

could be better spent that these 

reactors do not pose to the public 

health and safety. Thank you and if 

you are going to hold the next meeting 

we would like a better federal 

register notice.

>> Thank you for your comment. Are 

there any folks on phone or on the web 

chat?

>> Thank you my name is Steve Miller. 

I'm Senior Vice President of the 

Constellation Nuclear Energy Group. 

I'm one of the case studies that Gene 

referred to. I would like to provide 

an operation perspective and owner 

operator that is foreign owned. CENG 

is a fleet owner of five reactors 50% 

owned by Exelon and 49.99% by EDF. We 

have both NRC and CFIUS approval. We 

have been operating under a structure 

since 2009. The foreign investor 
brings to the table of having 

appropriate structures in place to 

guarantee U.S. control other safety 

and security and reliability. I take 

note too that most of our negation 

action plan that was approved by the 

NRC was already included in our 

operating agreements and our 

application. Make no mistake EDF is 

at the table at CENG through the board 

of representation, and the 

representation of nuclear safety and 

operating committee and their views, 

and their votes are also evaluated by 

our nuclear oversight committee 

called the Nuclear Advisory Committee 

that prepares an Annual Report. We 

have the effective oversight

structures that allows us to operate 

effectively. We do recognize the 

reality. I asked you to sift through 

the arrogance and the ignorance and 

focus on the actual experience anti 

global nuclear investment. We look 
forward to very much providing our 

further comments to you in both the 

local and practical aspects in 

recognizing the value of the foreign 

investment brings to operational 

effectiveness, safety and security 

and reliability. Thank you

>> Thank you for your comments. Are 

there any others?

>> Just a few brief comments.

>> Mark, private citizen.

>> I agree with the gentleman on one 

aspect. We need to focus on the 

reality of the situation at hand. I 

want to address Mr. Matthews comment 

that the assumption with these 

prescreened entities should be that 

they intend to abide by the law. 

Okay. I think we should look at the 

south Texas case in this matter. For 

those of you who are not aware of the 

south Texas case, the south Texas was 

denied on the basis of foreign 

ownership. So what happened? The 
only American entity in that 

enterprise sued the other foreign 

entities for fraud, okay. That is a 

fact. They were sued for fraud. 

Okay. So we really should start to 

question and let me add that the 

citizens groups that intervene in this 

case reiterated that they felt that 

they had been defrauded in this 

venture. This case has since been 

settled between the entities. 

However, the citizens group made a 

statement that they felt that 

regardless of whether the settlement 

was in place or not they felt they had 

been defrauded. They said that they 

felt that they, the NRG Toshiba 

section of NINA was had intentionally. 

They actually said that they admitted 

they had fraudulently represented 

their investments in that. So if the 

question I would raise here is if this 

is any truth to this and they actually 

been accused of this fraud who else 
would they fraud. They haven't even 

got their facility in yet?

>> I want to address another thing that 

Mr. Matthews said which was you 

discussed waste disposal issues. Yet 

he's saying that the mitigation will 

be minimal. Well, he asked us to 

consider who has had a strong track 

record on this. Well, I think we need 

to look at how are we going to solve 

all of these waste disposal issues. 

We have no permanent facility in the 

United States. EDF well, where do 

they dispose of their material? I 

believe it's in an extremely upheaval 

area in MALI at this time. It's one 

of the areas where waste is disposed. 

We can look at the violence and the 

political upheaval there and wonder 

are we going to be making new enemies 

in this area as well if we partner with 

these people? These are very serious 

issues they are not matters to be taken 

lightly.
>> Before you would continue. I will 

wrap it up.

>> I think that France is right in 

denying by insisting on domestic 

control. I think we should do the 

same thing. Lastly I would want to 

address the NEI speakers comment that 

light touch for some players is 

acceptable. No. We are dealing with 

nuclear reactors there can be no light 

touch. There has to be constant 

vigilance at all times with regards to 

these facilities and no light touch 

can be used in any case. Mitigation 

must be extremely in-depth. This 

would require a massive effort on 

NRC's part of probably an expansion 

which could still be taxed by an 

unprecedented regulatory over load. 

There for share the concerned voices 

by Mr. HO what are clearly daunting 

litigations here.

>> Are there any folks on the 

teleconference that have any 
comments?

>> No. Okay.

>> Phone: Hello? I would like to 

mention there's a long history of 

counterfeit and forced parts in 

nuclear power plants. I don't take it 

lightly that we can expect everybody 

to comply because of business. 

Again, I will stress that our 

government, the U.S. government seems 

to be the ones that's going to be 

responsible and taxpayers for the 

ultimate disposal of nuclear waste in 

which we have no place to put. I think 

this is actual a total waste of time 

to go over to talk about foreign 

interest ownership of nuclear power 

plants an really the new issue is cyber 

security and we have enough to deal 

with in our own country than have to 

worry about other countries and what 

vulnerabilities they have on their 

side. Thank you very much.

>> Thank you. Before Ho provides 
closing comments. Please sign the 

attendance sheet and please complete 

the feedback forms that are next to the 

door.

>> HO: Thank you for facilitating the 

meeting. I would like to thank the 

NRC staff and the members of public 

that are here and our speakers. 

There's a lot of aspects surrounding 

this issue. I think there's a number 

of different perspectives on either 

side. The NRC staff has not made any 

regulatory decisions on this matter 

with respect to what options that we 

are considering in proposing to the 

commission, and the papers they asked 

for by the end of this year. We will 

evaluate the information we receive 

today. I do appreciate the 

perspectives and your candor and 

providing your views to the NRC. We 

will consider the need for additional 

meeting. I think as we are really 

assessing the issues here that we will 
be able to consider. I urge and ask 

you to consider sending in comments in

response to the Federal Register 

Notice as well. Thank you and we are 

adjourned.