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Backgrounder on Reactor License Transfers

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Background

The deregulation of the electric utility industry has led to increased competition in energy markets. This has resulted in a growing number of mergers and acquisitions in the industry. As a result, more requests have been filed with the NRC to transfer nuclear power reactor operating licenses.

Since 1999, the NRC has reviewed more than 100 license transfer applications. The first approval was the sale of Three Mile Island Unit 1 to a new owner in 1999. A list of current license transfer applications can be found on the NRC website.

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Regulations Governing License Transfers and Related Regulations

Reactor license transfer provisions are found in Title 10 to the Code of Federal Regulations (CFR), and Section 184 of the Atomic Energy Act. NRC written consent is required for a license transfer. Relevant regulations include:

  • 10 CFR Part 2, Subpart M  - Public Notification, Availability of Documents and Records, Hearing Requests and Procedures for Hearings on License Transfer Application
  • 10 CFR 50.33 - Contents of applications; general information
  • 10 CFR 50.38 - Ineligibility of certain applicants
  • 10 CFR 50.40 - Common standard
  • 10 CFR 50.75 - Reporting and recordkeeping for decommissioning planning
  • 10 CFR 50.80 - Transfer of licenses
  • 10 CFR Part 51 - Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions
  • 10 CFR Part 140 - Financial Protection Requirements and Indemnity Agreements

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Types of License Transfers and Breadth of Review

There are two types of license transfers: direct transfers and indirect transfers. Direct transfers are less common and result in changes to the owner licensee, and possibly to the operator licensee of a plant. The majority of transfers are indirect and generally occur as a result of a merger or acquisition at high levels within or among corporations. Indirect transfers typically result in corporate or subsidiary changes in ownership of the licensed facility, but do not result in changes to the immediate owner or operator licensee. An example of a direct transfer is the sale of a nuclear power plant that establishes a new power plant owner, thus resulting in a new power plant licensee. An example of an indirect transfer is the formation of a new parent holding company or subsidiary having an ownership interest in a licensee, with no change in licensee owner or operator at the immediate nuclear power plant level.

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Technical Qualifications

Before approving a license transfer, the NRC reviews both the technical and financial qualifications of the proposed owner. The technical review is based on agency regulations, the NRC Standard Review Plan for "Management and Technical Support Organization," and the American National Standards Institute standard on "Selection and Training of Nuclear Power Plant Personnel." The NRC's main focus in this review is to determine whether the proposed owner has the technical expertise needed to safely operate the plant. This is generally not an issue in reviewing indirect transfers, where the licensee remains the same. For direct transfers, particularly when the operator changes, the scope of the review will depend on how much the existing plant personnel and organization will change.

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Financial Qualifications and Decommissioning Funding Assurance

The NRC evaluates the finances of a proposed owner to check its ability to operate and decommission the nuclear plant(s). The NRC uses 10 CFR Part 50.33(f) to guide its financial qualifications review. If the proposed owner is an "electric utility" as defined in the NRC's regulations, no further review of financial qualifications for operations is generally required. If the proposed owner is not an "electric utility," the NRC evaluates revenue sources and the plant's projected 5-year operating costs. This helps the NRC determine whether the proposed owner can obtain the funds to operate the plant safely.

NRC uses 10 CFR Part 50.75 to determine if the proposed owner has access to funds to decommission the nuclear plant(s). NRC regulations provide several ways that owners can show they will be able to pay the full cost to decommission the plant.

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Foreign Ownership

The NRC reviews license transfer requests to determine whether a proposed licensee is "owned, controlled, or dominated" by a foreign individual or entity. This is required by the Atomic Energy Act, and NRC regulations under 10 CFR Part 50.38. The NRC review ensures there is no foreign control of safety-related activities under the license. In 1999 the license for Three Mile Island Unit 1 was transferred to AmerGen Energy Company. This company was 50% owned by British Energy, plc, a foreign company. As a result, the NRC required AmerGen to have a plan to ensure there would be no foreign control. Under this "negation action plan" AmerGen's other 50% owner, PECO, Inc., had to have control over safety-related decisions. The plan also required those decisions to be made by U.S. citizens. Exelon has since become the sole owner of AmerGen.

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Antitrust

The Atomic Energy Act does not require antitrust reviews of license transfer applications once a plant begins operating.

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Insurance and Indemnity

The Atomic Energy Act also requires reactor owners to have insurance and indemnity to cover off-site claims of personal injury or property damage. The NRC reviews license transfer applications to make sure that protection is in place. The NRC also ensures that proposed owners have on-site property damage insurance to help cover reactor cleanup costs after an accident.

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NRC Guidance Documents

The NRC has developed the following guidance for license transfers:

  • Antitrust Standard Review Plan (SRP), NUREG-1574, December 1997;
  • Power Reactor Licensee Financial Qualifications and Decommissioning Funding Assurance, NUREG-1577, Rev. 1, March 1999,
  • Management and Technical Support SRP, NUREG-0800, November 1999,
  • Integrated SRP on All Aspects of License Transfers, NUREG/BR-0276, April 2000,
  • Changes Concerning Foreign Ownership, Control, or Domination of Nuclear Reactor Licensees, Regulatory Information Summary (RIS)-00-001, February 1, 2000, and
  • Criteria for Triggering a Review Under 10 CFR 50.80 for Non-Owner Operator Service Companies, Regulatory Information Summary (RIS)-01-006, February 15, 2001.

April 2016

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Page Last Reviewed/Updated Monday, March 06, 2017