United States Nuclear Regulatory Commission - Protecting People and the Environment

Information Notice No. 89-25, Rev. 1: Unauthorized Transfer of Ownership or Control of Licensed Activities

                                 UNITED STATES
                         NUCLEAR REGULATORY COMMISSION
               OFFICE OF NUCLEAR MATERIAL SAFETY AND SAFEGUARDS
                            WASHINGTON, D.C.  20555

                               December 7, 1994


NRC INFORMATION NOTICE 89-25, REV. 1:   UNAUTHORIZED TRANSFER OF OWNERSHIP
                                        OR CONTROL OF LICENSED ACTIVITIES


Addressees

All fuel cycle and material licensees.

Purpose  

NRC is issuing this revised information notice to clarify previous guidance
concerning the information to be submitted to NRC, prior to a change of
ownership or control.  The notice also incorporates recent information from
NRC's Office of the General Counsel (OGC) concerning the transferee's
liability for open inspection issues and potential enforcement actions from
past violations; and responsibility for decontamination activities and
decommissioning of the site.  It is expected that recipients will review this
notice, distribute it to responsible staff, and consider actions as
appropriate, to ensure compliance with NRC requirements concerning the
transfer of control of licensed activities.  However, suggestions contained in
this notice are not new NRC requirements; therefore, no written response is
required. 

Background

This information notice was originally issued to inform licensees of their
responsibility to provide timely notification to NRC before the planned
transfer of ownership or control of licensed activities and obtain prior
written consent to such action from NRC, as specified in Title 10 of the Code
of Federal Regulations, 10 CFR 30.34(b), 40.46, and 70.36.  Specific guidance
was also provided outlining the information to be submitted by licensees
concerning changes of ownership or control resulting from mergers, buy-outs,
or majority stock transfers.

Discussion

Section 3O.34(b) states:  "No license issued or granted pursuant to the
regulations in this part, Parts 31 through 36, and 39, nor any right under a
license shall be transferred, assigned or in any manner disposed of, either
voluntarily or involuntarily, directly or indirectly, through transfer of   






9412010024.                                                            IN 89-25, Rev. 1
                                                            December 7, 1994
                                                            Page 2 of 4 


control of any license to any person, unless the Commission shall, after
securing full information, find that the transfer is in accordance with the
provisions of the Act and shall give its consent in writing."  Similar
regulations are contained in 10 CFR 40.46 and 70.36.  Thus, the regulations
are very clear that control of licenses cannot be transferred without prior
written permission from the Commission.

Although it is not NRC's intent to interfere with the business decisions of
licensees, it is necessary for licensees to provide timely notification to NRC
whenever such decisions could involve changes in the corporate structure
responsible for management oversight, control, or radiological safety of
licensed materials.  Full information on changes of ownership or control of
licensed activities should be submitted to the appropriate NRC regional or
Headquarters office, 90 days prior to the proposed action.  The purpose of
such notification is to allow NRC to assure that:  (1) radioactive materials
are possessed, used, owned, or controlled only by persons who have valid NRC
licenses; (2) materials are properly handled and secured; (3) persons using
such materials are capable, competent, and committed to implement appropriate
radiological controls; (4) licensees provide adequate financial assurance for
compliance with NRC requirements; and (5) public health and safety are not
compromised by the use of such materials.  Although the burden of notification
is on the existing licensee, it may still be necessary for the transferee to
provide supporting information or to independently coordinate the change in
ownership or control with the appropriate NRC office.

NRC licensees planning to transfer ownership, to change the corporate status,
or to change control of licensed activities are required to provide sufficient
prior notice and full information about the change to NRC, and to obtain
written consent from the Commission before the transfer.  Failure to comply
with this requirement may adversely affect the public health and safety and
interfere with NRC's ability to inspect licensed activities.  Cases where
change of ownership or control has occurred without prior written consent from
NRC will be treated as noncompliance with the provisions of 10 CFR 30.34 (or
the similar provisions of 10 CFR 40.46, and 70.36), and will be referred to
the inspection staff and/or Office of Investigations, as appropriate.  The
failure to receive required NRC approval prior to a change in ownership or
control of licensed activities is considered to be a Severity Level III
violation and may warrant escalated enforcement action, to include civil
penalties and orders, .                                                            IN 89-25, Rev. 1
                                                            December 7, 1994
                                                            Page 3 of 4 


if indicated by the circumstances, against one or both of the parties
involved.  Willful failure to obtain prior NRC approval of the transfer may
result in referrals to the Department of Justice for consideration of criminal
prosecution. 

Licensees should note that a license cannot be sold or transferred by itself
to a transferee.  In situations where a licensed company is purchased in its
entirety, and the transferor will not continue in business as a separate
entity, the purchase can be approved if the license is amended to reflect any
name changes, compliance with financial assurance requirements, personnel
changes, or any other change that would normally require an amendment.  If
there are no changes, an amendment may not be necessary and the transferee and
transferor will be notified by letter that NRC has no objection to the sale,
based on written statements from the transferee/transferor confirming that no
changes in the licensed operation will occur as a result of the sale.  

In cases where a licensed operation is purchased from a transferor, who
continues in business as a separate entity (without the license), the
transferee must submit an application for an amendment to the license to
reflect the change in identity of the licensee, compliance with financial
assurance requirements, and any other pertinent changes in the operation.  
The transferee can use the transferor's docketed documents as a basis for
preparing the license amendment application.  Usually a new license will not
be issued.  However, the transferee can always apply for a new license by
providing a complete application.  If a new license is issued, the transferor
must request termination of its license as a separate action.  

In order to maintain their availability, records important to the safe and
effective decommissioning of the facility and all records concerning public
dose and waste disposal need to be transferred to the new licensee or to NRC
in cases of terminations.  Therefore, no transfers or changes of ownership or
license terminations will be authorized until all information or records
concerning decommissioning of the facility, radiation doses to the public and
waste disposal, such as releases to sewers, incineration, radioactive spills,
and on-site burials, have been transferred to the new licensee, if licensed
activities will continue at the same location, or to NRC for license
terminations.
.                                                            IN 89-25, Rev. 1
                                                            December 7, 1994
                                                            Page 4 of 4


Attachment 1 outlines the information needed by the NRC to approve changes of
ownership or control.  This information notice requires no specific action nor
written response.  If you have any questions about the information in this
notice, please contact the technical contact listed below or the appropriate
regional office.

                                    /s/'d by CJPaperiello


                                    Carl J. Paperiello, Director
                                    Division of Industrial and 
                                      Medical Nuclear Safety
                                    Office of Nuclear Material Safety 
                                      and Safeguards

Technical contact:  Susan L. Greene, NMSS
                    (301) 415-7843

Attachments:
1.  Information Needed for Change of Ownership 

.                                                      Attachment 1
                                                      IN 89-25, Rev. 1
                                                      December 7, 1994
                                                      Page 1 of 3       



            INFORMATION NEEDED FOR CHANGE OF OWNERSHIP APPLICATION 


The applicant should provide the following information concerning changes of
ownership or control by the applicant (transferor and/or transferee, as
appropriate):

1.    The new name of the licensed organization.  If there is no change, the
      licensee should so state.

2.    The new licensee contact and telephone number(s) to facilitate
      communications.

3.    Any changes in personnel having control over licensed activities (e.g.,
      officers of a corporation) and any changes in personnel named in the
      license such as radiation safety officer, authorized users, or any other
      persons identified in previous license applications as responsible for
      radiation safety or use of licensed material.  The licensee should
      include information concerning the qualifications, training, and
      responsibilities of new individuals.

4.    An indication of whether the transferor will remain in non-licensed
      business without the license.

5.    A complete, clear description of the transaction, including any transfer
      of stocks or assets, mergers, etc., so that legal counsel is able, when
      necessary, to differentiate between name changes and changes of
      ownership. 

6.    A complete description of any planned changes in organization, location,
      facility, equipment, or procedures (i.e., changes in operating or
      emergency procedures). 

7.    A detailed description of any changes in the use, possession, location
      or storage of the licensed materials.  

8.    Any changes in organization, location, facilities, equipment, procedures,
      or personnel that would require a license amendment even without the change
      of ownership.  
  
9.    An indication of whether all surveillance items and records (e.g.,
      calibrations, leak tests, surveys, inventories, and accountability
      requirements) will be current at the time of transfer.  A description of
      the status of all surveillance requirements and records should also be
      provided.
.                                                      Attachment 1
                                                      IN 89-25, Rev. 1
                                                      December 7, 1994
                                                      Page 2 of 3       



10.   Confirmation that all records concerning the safe and effective
      decommissioning of the facility, pursuant to 10 CFR 30.35(g), 40.36(f),
      70.25(g), and 72.30(d); public dose; and waste disposal by release to
      sewers, incineration, radioactive material spills, and on-site burials,
      have been transferred to the new licensee, if licensed activities will
      continue at the same location, or to the NRC for license terminations.

11.   A description of the status of the facility.  Specifically, the presence or
      absence of contamination should be documented.  If contamination is
      present, will decontamination occur before transfer?  If not, does the
      successor company agree to assume full liability for the decontamination of
      the facility or site?

12.   A description of any decontamination plans, including financial assurance
      arrangements of the transferee, as specified in 10 CFR 30.35, 40.36, and
      70.25.  This should include information about how the transferee and
      transferor propose to divide the transferor's assets, and responsibility
      for any cleanup needed at the time of transfer.

13.   Confirmation that the transferee agrees to abide by all commitments and
      representations previously made to NRC by the transferor.  These include,
      but are not limited to:  maintaining decommissioning records required by
      10 CFR 30.35(g); implementing decontamination activities and
      decommissioning of the site; and completing corrective actions for open
      inspection items and enforcement actions.  

      With regard to contamination of facilities and equipment, the transferee
      should confirm, in writing, that it accepts full liability for the site,
      and should provide evidence of adequate resources to fund decommissioning;
      or the transferor should provide a commitment to decontaminate the facility
      before change of control or ownership.  

      With regard to open inspection items, etc., the transferee should confirm,
      in writing, that it accepts full responsibility for open inspection items
      and/or any resulting enforcement actions; or the transferee proposes
      alternative measures for meeting the requirements; or the transferor
      provides a commitment to close out all such actions with NRC before license
      transfer.

14.   Documentation that the transferor and transferee agree to the change in
      ownership or control of the licensed material and activity, and the
      conditions of transfer; and the transferee is made aware of all open
      inspection items and its responsibility for possible resulting enforcement
      actions.  

.                                                      Attachment 1
                                                      IN 89-25, Rev. 1
                                                      December 7, 1994
                                                      Page 3 of 3 



15.   A commitment by the transferee to abide by all constraints, conditions,
      requirements, representations, and commitments identified in the existing
      license.  If not, the transferee must provide a description of its program,
      to ensure compliance with the license and regulations.     

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