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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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