Information Notice No. 89-25: 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
March 7, 1989
Information Notice No. 89-25: UNAUTHORIZED TRANSFER OF OWNERSHIP OR
CONTROL OF LICENSED ACTIVITIES
Addressees:
All U.S. Nuclear Regulatory Commission (NRC) source, byproduct, and special
nuclear material licensees.
Purpose:
This notice is to inform licensees of their responsibility to provide timely
notification to NRC before the planned transfer of ownership or control of
licensed activities, and to obtain prior written consent to such action from
NRC, as specified in 10 CFR Sections 30.34(b), 40.46, and 70.36. In addition,
this notice provides guidance on the type of information that should be sub-
mitted to NRC, before a change of ownership or control. It is expected that
recipients will: review this notice for applicability to their licensed acti-
vities; distribute it to responsible licensee management and corporate staff,
radiation protection staff, and authorized users, as appropriate; and maintain
procedures to preclude problems from occurring as the result of the transfer
of control of licensed activities. However, suggestions contained in this
notice do not constitute any new NRC requirements, and no written response
is required.
Discussion:
Sections 81 and 184 of the Atomic Energy Act of 1954, as amended, require
that a license be possessed to conduct licensed activities, and 10 CFR Section
30.34(b) states that no NRC license 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 control of any
license to any person, unless the Commission shall, after securing full in-
formation, find that the transfer is in accordance with the provisions of
the Act and shall give its consent in writing. Similar wording is found in
Sections 40.46 and 70.36 of the regulations for source and special nuclear
material.
Recently, NRC has noticed an increasing trend to transfer ownership of
businesses that control the use of licensed materials. Such changes in
ownership are usually the results of mergers, buy-outs, or majority stock
transfers. These actions appear to be occurring at a greater frequency
because of the present economic environment. Although it is not the intent
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of NRC 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. The purpose
of such notification is to allow NRC to assure that: radioactive materials
are possessed, used, owned, or controlled only by persons who have valid NRC
licenses; materials are properly handled and secured; persons using such mate-
rials are capable, competent, and committed to implement appropriate
radiological controls; and public health and safety are not compromised by the
use of such materials.
In 1988, NRC identified several instances of businesses authorized to possess
and use licensed materials that were transferred to other owners, with a
consequent change in control, without any notification to the NRC. In such
cases, NRC has usually become aware of the change either when conducting a
routine inspection or when notified by the new controlling organization
(transferee).
Transfer of company ownership often results in the assumption of licensed
activities by a corporation not authorized to use or possess licensed
materials, and whose competence and ability to establish, implement, and
maintain radiological controls have not been previously evaluated by NRC.
In such cases, NRC usually determines that the transferee violated NRC
requirements on use and possession of radioactive materials (because of
its unauthorized use and possession), and that the predecessor entity
(transferor) failed to inform NRC of the planned transfer of ownership.
In specific cases, licensees have failed to inform NRC of changes in ownership
and changes in locations of licensed material from those specified on the
transferor's licenses. In one particular case, failure to notify NRC of
a change in ownership may have contributed to the inadvertent loss of two
nuclear weighing scales, containing several hundred millicuries of cesium-137.
This type of situation could result in the exposure or contamination of
individuals or the environment.
NRC licensees planning to transfer ownership, a change in corporate status,
or control of licensed activities are required by 10 CFR to provide sufficient
prior notice and full information about the change to NRC, in order to obtain
written consent from the Commission before the transfer. Although the burden
of adhering to this requirement is on the existing licensee, it will be neces-
sary for the transferee to provide supporting information or to independently
coordinate the change in ownership or control with the appropriate NRC
Regional Office. Failure to comply with this requirement may adversely affect
the public health and safety and interfere with NRC's ability to inspect
activities. There-fore, NRC may consider that a violation of this requirement
warrants escalated enforcement action, including civil penalties and orders,
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.
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March 7, 1989
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The following guidance is provided concerning notification of NRC of ownership
or control changes:
1. Full information on change in ownership or control of licensed
activities should be submitted to the appropriate NRC Regional
Office as early as possible, preferably at least 90 days before
the proposed action.
2. NRC approvals for change in ownership or control may be delayed or
denied if the following information, where relevant, is not included
in the submittal:
a. The name of the organization, if changed. Provide the new
name of the licensed organization and if there is no change,
so state.
b. Identification of any changes in personnel named in the license,
including any required information on personnel qualifications.
c. An indication of whether the seller will remain in business
without the license.
d. A complete, clear description of the transaction. The de-
scription should include any transfer of stocks or assets.
e. An indication of any planned changes in organization, location,
facilities, equipment, procedures, or personnel. If such
changes are to be made, they should be fully described.
f. An indication of any changes in the use, possession, or storage
of the licensed materials. If such changes are to be made,
they should be described.
g. An indication of whether all surveillance items and records,
including radioactive material inventory and accountability
requirements, will be current at the time of transfer. A
description of the status of all surveillance requirements
and records, e.g., calibrations, leak tests, surveys, etc.
should be provided.
h. 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?
i. A description of any decontamination plans, including financial
assurance arrangements of the transferee, should be provided,
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as specified in 10 CFR Sections 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.
j. An indication of whether the transferor and transferee agree
to the change in ownership or control of the licensed material
and activity. If so, documentation stating this should be
provided.
k. 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 assure compliance
with the license and regulations.
No specific action or written response is required by this information notice.
Questions on this matter should be directed to the appropriate NRC Regional
Office or to this office.
Richard E. Cunningham, Director
Division of Industrial and
Medical Nuclear Safety
Office of Nuclear Material
Safety and Safeguards
Technical Contact: Scott Moore, NMSS
(301) 492-0514
Attachments: 1. List of Recently Issued NMSS Information Notices
2. List of Recently Issued NRC Information Notices
. Attachment 2
IN 89-25
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Page 1 of 1
LIST OF RECENTLY ISSUED
NRC INFORMATION NOTICES
_____________________________________________________________________________
Information Date of
Notice No._____Subject_______________________Issuance_______Issued to________
89-24 Nuclear Criticality Safety 3/6/89 All fuel cycle
licensees and other
licensees
possessing more
than critical
mass quantities of
special nuclear
material.
89-23 Environmental Qualification 3/3/89 All holders of OLs
of Litton-Veam CIR Series or CPs for nuclear
Electrical Connectors power reactors.
89-22 Questionable Certification 3/3/89 All holders of OLs
of Fasteners or CPs for nuclear
power reactors.
89-21 Changes in Performance 2/27/89 All holders of OLs
Characteristics of Molded- or CPs for nuclear
Case Circuit Breakers power reactors.
88-73, Direction-Dependent Leak 2/27/89 All holders of OLs
Supplement 1 Characteristics of Contain- or CPs for nuclear
ment Purge Valves power reactors.
89-20 Weld Failures in a Pump 2/24/89 All holders of OLs
of Byron-Jackson Design or CPs for nuclear
power reactors.
89-19 Health Physics Network 2/23/89 All holders of OLs
or CPs for nuclear
power reactors, and
the following fuel
facilities:
Nuclear Fuel
Services of Erwin,
General Atomic, UNC
Montville, B&W LRC
Lynchburg, and B&W
Lynchburg.
89-18 Criminal Prosecution of 2/22/89 All holders of OLs
Wrongdoing Committed by or CPs for nuclear
Suppliers of Nuclear power reactors.
Products or Services
__________________________________________________________________________________
OL = Operating License
CP = Construction Permit
..
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