UNITED STATES OF AMERICA 

NUCLEAR REGULATORY COMMISSION 

COMMISSIONERS: 

Stephen G. Burns, Chairman 

Kristine L. Svinicki 

William C. Ostendorff 

Jeff Baran 

In the Matter of 

AEROTEST OPERATIONS, INC. 

(Aerotest Radiography and Research Reactor) 

Docket No. 50-228-LT 

CLI-15-26

MEMORANDUM AND ORDER 

Today we consider the 2012 application of Aerotest Operations, Inc. and Nuclear 

Labyrinth, LLC (together, the Companies) for an indirect transfer of Facility Operating License 

No. R-98 for the 250-kW Aerotest Radiography and Research Reactor (ARRR) to Nuclear 

Labyrinth, LLC.1 In 2013, the NRC Staff denied the application on the ground that the 

Companies had failed to satisfy the Commission’s financial qualifications requirements.2 The 

Companies have requested that we overturn the Staff’s determination.3 At our direction, a 

 

1 Ex. NRC-008P, “Application for Consent to Indirect Transfer of Control of Licenses” (May 30, 

2012) (ADAMS accession no. ML14229A047) (non-public) (Application). 

2 Ex. NRC-028, letter from Eric J. Leeds, NRC, to Michael Anderson, Aerotest (July 24, 2013) 

(ML14229A088) (Denial Letter) (denying the application for the license transfer). 

3 Joint Demand for Hearing on Denial of License Renewal and Indirect License Transfer 

Regarding Aerotest Radiography and Research Reactor Facility Operating License No. R-98

(Aug. 13, 2013). 
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Presiding Officer conducted a hearing and compiled an adjudicatory record.4 Based on our 

review of that record, we remand the license transfer application to the NRC Staff, without 

prejudice, for further consideration as discussed herein. 

I. BACKGROUND 

This is one of three interrelated proceedings, which separately address this license 

transfer application, a 2005 license renewal application, and an associated 2013 Staff 

enforcement action.5 The event giving rise to all three proceedings is the May 2000 purchase of 

Aerotest, which owns and operates the ARRR, by Autoliv ASP, Inc. (Autoliv), a wholly-owned 

subsidiary of Autoliv, Inc., which is headquartered in Sweden.6 At the time, Aerotest did not 

seek Commission approval for the transfer to Autoliv.7 Aerotest did, however, notify the NRC of 

the purchase, state that Aerotest “would remain under the direct control of U.S. Citizens,” and 

commit to keeping the Commission informed of “any significant changes inimical to the safety 

and security of the ARRR.”8 The following year, Aerotest began seeking buyers for the ARRR—

 

4 CLI-14-5, 79 NRC 254, 255 (2014). 

5 Ex. NRC-028, Denial Letter; see also Order Prohibiting Operation of Aerotest Radiography and 

Research Reactor, 78 Fed. Reg. 46,618 (Aug. 1, 2013) (Order Prohibiting Operation). 

6 See CLI-14-5, 79 NRC at 254-55; Ex. NRC-027P, “Safety Evaluation by the Office of Nuclear 

Reactor Regulation; Indirect License Transfer of Aerotest Radiography and Research Reactor 

Due to the Proposed Acquisition of Aerotest Operations, Inc. by Nuclear Labyrinth, LLC; Facility 

Operating License No. R-98; Docket No. 50-228” (July 24, 2013), at 2 (ML14229A049) (nonpublic) (SER); Ex. NRC-008P, Application, at 5-6. 

7 See Ex. AOI-112, memorandum from David B. Matthews, NRR, to John W. Craig, EDO, 

“Transfer of Ownership at Research Reactor” (Oct. 17, 2000), at 1 (ML14229A054) (non-public). 

The Staff undertook several actions to assess the acceptability of the transfer. Id. at 1-2 & att., 

“Action Plan.” 

8 Ex. NRC-012, letter from Sandra L. Warren, Aerotest, to Director of the Office of Nuclear 

Reactor Regulation, NRC (Apr. 14, 2000), at 1 (ML14229A076). 
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an effort that it would continue for the next decade and that has culminated in the proposed sale 

to Nuclear Labyrinth.9

In May 2012, Aerotest, joined by Nuclear Labyrinth, submitted its current application for 

an indirect license transfer.10 Nuclear Labyrinth proposed to operate the ARRR following the 

transfer to provide neutron radiography services along with nuclear science and engineering 

research and training.11 As part of the application, the Companies submitted five years of 

financial revenue-and-expense estimates, as required by 10 C.F.R. § 50.33(f)(2).12

Under the proposed transfer, Autoliv would sell its 100% interest in Aerotest to Nuclear 

Labyrinth and, upon the closing of the sale, would provide Nuclear Labyrinth with enough funds 

to operate the facility for approximately twelve months.13 Autoliv also agreed to fully fund a 

decommissioning trust, and to provide funds for spent fuel disposal and the purchase of fuel 

element storage canisters for the ARRR’s existing damaged fuel.14 

On July 24, 2013, the Staff denied the license transfer application on the ground that the 

Companies had not provided sufficient assurance that they had, or would have, funds to 

perform the activities authorized by the license.15 Specifically, the Staff concluded that the 

 

9 In the interim, Aerotest sought to transfer its license to another entity. That transfer, although 

approved by the NRC, did not take place. See Ex. AOI 119, Order Approving Indirect Transfer 

of Facility Operating License and Conforming Amendment (July 6, 2010), at 4 (ML14229A027) 

(non-public) (establishing deadline of September 13, 2010, to complete the transfer). 

10 Ex. NRC-008P, Application. 

11 Id. at 5, 10-11. 

12 See, e.g., id., att. 7, “5 Year Projected Income Statement for Aerotest Operations, Inc.” (May 

30, 2012), at 48. 

13 See id. at 4, 11. 

14 See id. at 5, 6, 12. In addition, Nuclear Labyrinth agreed to maintain a letter of credit for use 

in the event of a shortfall in the decommissioning fund. See, e.g., Ex. NRC-027P, SER, at 14. 

15 Ex. NRC-028, Denial Letter, at 2. 
- 4 - 

Companies had not shown that (i) they “possess or have reasonable assurance of obtaining the 

funds necessary to cover estimated operating costs for the period of the license” or (ii) there 

would be “sufficient funds to cover the annual cost of fuel storage until the DOE accepts the 

fuel, which is expected to occur in 2055 or later.”16 The Staff denied the license renewal 

application on the ground that Aerotest is owned, controlled, or dominated by a foreign 

company.17 At the same time, the Staff issued an order prohibiting operation of the alreadyshutdown ARRR because of the denials.18

The Companies sought hearings on all three actions. We granted the hearing request in 

the license transfer proceeding and held in abeyance the requests for hearings on the license 

renewal application and the enforcement order.19 We instructed the Chief Judge of the Atomic 

Safety and Licensing Board Panel to assign the license transfer case to a Presiding Officer, who 

would conduct an evidentiary hearing and then certify the record to us, consistent with our 

regulations governing license transfer proceedings.20 Chief Judge Hawkens conducted the 

hearing, including oral argument and the examination of five witnesses. Shortly thereafter, he 

certified the record to us for our decision.21

II. DISCUSSION 

The Atomic Energy Act of 1954, as amended, requires a licensee to obtain the NRC’s 

written consent prior to transferring an NRC license.22 To gain such approval, the licensee must 

 

16 Ex. NRC-027P, SER, at 9, 11, respectively. 

17 Ex. NRC-028, Denial Letter, at 2. 

18 See id.; see also Order Prohibiting Operation, 78 Fed. Reg. 46,618. 

19 CLI-14-5, 79 NRC at 263. 

20 Id. at 263-64; see 10 C.F.R. § 2.1319(a). 

21 LBP-14-10, 80 NRC 85 (2014). 

22 Atomic Energy Act of 1954 § 184, 42 U.S.C. § 2234; see 10 C.F.R. § 50.80(a). 
- 5 - 

demonstrate that the proposed transferee is qualified to hold the license.23 To qualify, the 

proposed transferee for an operating license must, among other things, satisfy the same 

financial qualification requirements that apply to an applicant for an initial operating license.24 

An applicant is required to show that the proposed transferee has the financial qualifications “to 

carry out ... the activities for which the ... license is sought.”25 For the ARRR, these activities 

include both the operation of the facility and the subsequent onsite storage of spent fuel. 

Consequently, the Companies must demonstrate financial qualifications by showing that they 

will have sufficient funds to pay both the facility’s expenses during the ARRR’s operation and 

the spent fuel storage expenses following the ARRR’s shutdown. 

The adjudicatory record in this case reflects a fundamental dispute about the evidence 

on the Companies’ financial qualifications. The evidence has come to the agency in two 

phases—during the Staff’s review of the license transfer application and later during the hearing 

to compile the adjudicatory record. The Staff asserts that the information submitted by the 

Companies after the Staff’s denial—that is, during the hearing—goes beyond the information 

provided to the Staff at the time of the denial.26 Therefore, the Staff argues, we should consider 

only the evidence that was before the Staff during its review of the license transfer application. 

On the other hand, the Companies assert that we should consider all of the evidence they have 

provided, regardless of when it was submitted. 

 

23 10 C.F.R. § 50.80(c)(1). 

24 Id. § 50.80(b)(1)(i). 

25 Id. § 50.33(f). 

26 See, e.g., NRC Staff Post-Hearing Statement of Position Regarding Denial of the Indirect 

License Transfer of the Aerotest Radiography and Research Reactor (Aug. 29, 2014), at 4, 24-

28 (non-public) (Staff Post-Hearing Statement). 
- 6 - 

Both parties argue that we should look to our Honeywell decision to determine the 

admissibility of the evidence submitted by the Companies after the Staff’s denial.27 The Staff 

argues that, in applying Honeywell, we should consider only the information that the Companies 

submitted during the Staff’s review of the application and that, at least in this proceeding, all 

subsequently submitted new information is inadmissible.28 According to the Staff, the new 

evidence that the Companies ask us to consider is “information that the Staff was neither aware 

of nor could have known at the time of its decision.”29 To the extent the Companies possessed 

new information prior to issuance of the Staff’s July 24, 2013 denial but failed to provide that 

information to the Staff, the Staff requests that we not consider it.30 

By contrast, the Companies argue that the disputed evidence “was available for the 

Staff’s review,” was mostly “identified within the application and responses to RAIs or could 

reasonably be determined to be available from information in the [a]pplication or RAI” 

responses, and “shed[s] additional light on the facts that existed and events that occurred during 

the relevant time period.”31 The Companies therefore argue that we should consider all of the 

information they submitted—including the disputed information submitted for the first time at the 

hearing—in reaching a decision on the license transfer application. 

 

27 Cf. Honeywell International, Inc. (Metropolitan Works Uranium Conversion Facility), CLI-13-1, 

77 NRC 1, 29 n.158 (2013) (referring to “the de novo standard applicable to [a review of] a Staff 

decision on a license amendment application”); see also id. at 31-32. 

28 See, e.g., Tr. at 59, 65, 208-09. The Staff clarifies that an “expla[nation of] something that 

was already in Aerotest’s application or [responses to requests for additional 

information] ... would be acceptable.” Id. at 67. 

29 Staff Post-Hearing Statement at 23. 

30 Id. at 31-32. 

31 Aerotest Operations, Inc. and Nuclear Labyrinth, LLC Post-Hearing Statement of Position on 

the Denial of Indirect License Transfer Application (Aug. 29, 2014), at 50 (non-public) (internal 

quotations omitted). 
- 7 - 

As a practical matter, the Staff evaluated much of the evidence now before us to reach 

its decision to deny the application. The Companies, however, submitted potentially significant 

additional information at the hearing. Further, we are cognizant of the length of time that has 

passed since the Staff’s denial and of the changing economic conditions that could have 

affected the Companies’ revenue projections related to the ARRR since the Staff completed its 

review in 2013. In view of these considerations, we decline to reach the admissibility question. 

Rather, we find that judicial economy is best served by remanding the license transfer 

application to the Staff for further consideration.32 On remand, we direct the Staff to (1) consider 

the additional information submitted by the Companies at the hearing and (2) afford the 

Companies an opportunity to supplement the application and submit any additional relevant 

information within a time frame established by the Staff.33

Pending our resolution of the current license transfer application, we have held in 

abeyance the Companies’ requests for hearings on the license renewal application and the 

Staff’s related enforcement order.34 We will continue to hold these two requests in abeyance, 

pending the resolution of this license transfer matter. 

 

 

32 Neither party should interpret our decision today as prejudging the outcome of the Staff’s 

review. We expect the Staff to fully consider all information now on the record, along with any 

additional information submitted by the Companies consistent with this decision, in reaching a 

final decision on the application. 

33 Our decision today does not foreclose the Staff’s ability to request additional information on 

any part of the license transfer application. See 10 C.F.R. §§ 2.102(a), 50.33(f)(5). 

34 CLI-14-5, 79 NRC at 263. 
- 8 - 

III. CONCLUSION 

For the reasons set forth above, we remand the license transfer application to the Staff, 

without prejudice, for further consideration of all evidence submitted by the Companies at the 

evidentiary hearing. We further direct the Staff to provide the Companies with an opportunity to 

submit any additional relevant information, should they wish to do so, within a time frame 

established by the Staff. 

IT IS SO ORDERED. 

For the Commission 

NRC SEAL 

 /RA/ . 

 Annette L. Vietti-Cook 

Secretary of the Commission 

Dated at Rockville, Maryland, 

this 23rd day of December, 2015. 
UNITED STATES OF AMERICA 

NUCLEAR REGULATORY COMMISSION 

In the Matter of ) 

 ) 

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

 ) 

 ) 

(Aerotest Radiography Research Reactor) ) 

 ) 

CERTIFICATE OF SERVICE 

I hereby certify that copies of the foregoing COMMISSION MEMORANDUM AND ORDER CLI15-26 have been served upon the following persons by Electronic Information Exchange.

Office of Commission Appellate 

 Adjudication

U.S. Nuclear Regulatory Commission

Washington, DC 20555-0001

E-mail: ocaamail@nrc.gov

Atomic Safety and Licensing Board Panel

U.S. Nuclear Regulatory Commission

Mail Stop T-3F23

Washington, DC 20555-0001

E. Roy Hawkens 

E-mail: Roy.Hawkens@nrc.gov

U.S. Nuclear Regulatory Commission

Office of the Secretary of the Commission

Mail Stop O-16C1

Washington, DC 20555-0001

Hearing Docket

E-mail: hearingdocket@nrc.gov

Pillsbury Winthrop Shaw Pittman LLP 

1200 Seventeenth Street NW 

Washington, DC 20036 

Kimberly Harshaw, Esq. 

Jay Silberg, Esq. 

E-mail: Kimberly.Harshaw@pillsburylaw.com 

 Jay.Silberg@pillsburylaw.com 

 
Aerotest Operations, Inc., Docket No. 50-228-LT 

COMMISSION MEMORANDUM AND ORDER CLI-15-26

2 

U.S. Nuclear Regulatory Commission

Office of the General Counsel

Mail Stop O-15D21

Washington, DC 20555-0001

Anita Ghosh, Esq. 

Christina England, Esq.

Catherine Kanatas, Esq. 

Edward Williamson, Esq. 

Jeremy Wachutka, Esq. 

Sabrina Allen, Paralegal 

John Tibbetts, Paralegal 

E-mail:

Anita.Ghosh@nrc.gov; 

Christina.England@nrc.gov; 

Catherine.Kanatas@nrc.gov; 

Edward.Williamson@nrc.gov; 

Jeremy.Wachutka@nrc.gov

John.Tibbetts@nrc.gov 

OGC Mail Center : OGCMailCenter@nrc.gov

 

[Original signed by Brian Newell ] 

 Office of the Secretary of the Commission 

Dated at Rockville, Maryland 

this 23rd day of December, 2015