On January 29, 2015, the Nuclear Regulatory Commission heard from a number of experts with experience in the defense and aerospace industry on how the Department of Defense (DOD) deals with Foreign Ownership, Control or Influence (FOCI) issues. The Commissioners invited the discussion as part of their ongoing consideration of staff policy proposals on implementation of the Foreign Ownership, Control or Domination (FOCD) prohibition under the Atomic Energy Act (AEA) (a topic we have blogged about frequently). The consistent message from the experts was that the NRC, like DOD, needs to fulfill the security and non-proliferation goals of the Act without preventing or discouraging foreign investment. Just as foreign participation is crucial to innovation in the case of defense technology, foreign investment, operating experience, and technology are key to retaining U.S. competitiveness in the global nuclear energy industry.

The expert panel included John Hamre, President and Chief Executive Officer, Center for Strategic and International Studies; Stanley Sims, the current Director, Defense Security Service (DSS); and Sean O’Keefe, former Chief Executive Officer of Airbus Group and former Administrator of NASA. Mr. Sims in particular spoke to how his organization administers the FOCI responsibility to protect confidential classified technology without shutting out companies with indirect foreign ownership. DSS balances a number of considerations, including the nation where the contractor’s parent resides, the type of foreign interest, and mitigation measures that can be put in place (much like an NRC FOCD negation action plan). The FOCI restrictions, which are based on an Executive Order, are not read to exclude 100% indirect foreign ownership. The issue of indirect foreign ownership is one the NRC is specifically grappling with under the AEA.

Overall, there was recognition by panelists and some Commissioners that the Act’s FOCD provision is a Cold War relic and that the global nuclear industry today is very different from the bipolar world of the 1950s in which nuclear technology access was limited to just a few nations. Some panelists encouraged the NRC not to wait for uncertain legislation to update the Act, but to take leadership, exercise its discretion and expertise to apply its program in a way that better comports with current risks and realities, and explain the security bases for its actions. The panelists did not explicitly endorse any of the proposals on FOCD issues that have been submitted to the NRC by the Nuclear Energy Institute, but the views certainly appear to be compatible.