The Nuclear Regulatory Commission (NRC) Staff has found the South Texas Project ineligible for a combined license due to the restrictions in section 103d of the Atomic Energy Act and 10 C.F.R. § 50.38 prohibiting a license from being issued to an entity that the Commission knows or has reason to believe is owned, controlled, or dominated by a foreign entity. The Staff determined that,  although Toshiba (a Japanese corporation) only owns about 10 percent of applicant Nuclear Innovation North American (NINA), it exercises impermissible control over NINA notwithstanding a negation plan designed to prevent such foreign control. Following guidance in its 1999 Standard Review Plan, the Staff concluded that because Toshiba provides sole financing for NINA, it exercises financial control over the applicant. 

The NRC Staff focused on Toshiba's unilateral financing of the project. The Staff cited three reasons for finding control: NINA's indebtedness to Toshiba's subsidiary, NINA's lack of cash, and NINA's inability to repay the debt. The NRC Staff concluded that "control over cash flow is the means by which Toshiba controls NINA" and that because Toshiba's subsidiary controls the budget over licensing work, "NINA cannot effectively function" without them. The Staff was not convinced that Toshiba's slim ten percent voting rights demonstrated a lack of control. Absent from this analysis, however, is an explanation of how financial support equates to "control," when mitigating measures would require that U.S. citizens have exclusive authority over nuclear safety and security decision-making. It remains unclear how the potential influence stemming from a foreign parent's financial support of an applicant amounts to actual control over relevant NRC matters. 

The South Texas issue is being explored in other venues. An Atomic Safety and Licensing Board for the South Texas application will hold a hearing on a contention related to foreign ownership, control, and domination. And the Commission itself has directed the Staff to provide a voting paper by December 31, 2013, after conducting a generic review of foreign ownership issues (SRM-SECY-12-0168). As part of this effort, the Staff has solicited comments on the issue (78 Fed. Reg. 33121, June 3, 2013) and will hold a public meeting on June 19, 2013.