B-149083, B-149016, JUL. 6, 1962

B-149016,B-149083: Jul 6, 1962

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OUR VIEWS HAVE BEEN REQUESTED ON THE AUTHORITY OF THE COMMISSION TO ENTER INTO A PROPOSED AGREEMENT WITH THE WASHINGTON PUBLIC POWER SUPPLY SYSTEM (WPPSS). - THERE IS HEREBY AUTHORIZED TO BE APPROPRIATED TO THE ATOMIC ENERGY COMMISSION. THE PRIMARY PURPOSE OF THE PROJECT IS THE ESTABLISHMENT OF A PLANT FOR THE PRODUCTION OF PLUTONIUM. THE PLANT IS TO BE SO CONSTRUCTED AS TO PERMIT ITS CONVERSION TO THE PRODUCTION OF ELECTRIC ENERGY EITHER IN LIEU OF. WAS DEFEATED ON JULY 15. THERE WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES H.R. 7576. WHICH IN ITS ORIGINAL FORM WOULD HAVE AUTHORIZED AN APPROPRIATION FOR. THAT PROJECT WAS DELETED BY AMENDMENT ON THE FLOOR OF THE HOUSE ON JULY 13. HAVE BEEN PROPOSED BY WPPSS AS A MEANS OF CONVERTING THE NPR TO DUAL PURPOSE OPERATION AND TO UTILIZE THE RESULTING ENERGY WITHOUT ANY ADDITIONAL APPROPRIATION OF FEDERAL FUNDS OR CONGRESSIONAL AUTHORIZATION.

B-149083, B-149016, JUL. 6, 1962

TO CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

BY LETTER OF JUNE 4, 1962, SIGNED BY THE GENERAL MANAGER, OUR VIEWS HAVE BEEN REQUESTED ON THE AUTHORITY OF THE COMMISSION TO ENTER INTO A PROPOSED AGREEMENT WITH THE WASHINGTON PUBLIC POWER SUPPLY SYSTEM (WPPSS), A PUBLIC AGENCY OF THE STATE OF WASHINGTON, WHEREBY STEAM TO BE PRODUCED AT THE NEW PRODUCTION REACTOR (NPR), AUTHORIZED FOR CONSTRUCTION AS PROJECT 59-A-5 UNDER PUBLIC LAW 85-590, WOULD BE UTILIZED FOR THE PRODUCTION OF ELECTRIC ENERGY IN A GENERATING PLANT TO BE CONSTRUCTED BY WPPSS. UNDER A PROPOSED AGREEMENT BETWEEN WPPSS AND THE BONNEVILLE POWER ADMINISTRATION (BPA) THE RESULTING ELECTRIC ENERGY WOULD BE DELIVERED TO BPA ON AN EXCHANGE BASIS.

SECTION 101 OF PUBLIC LAW 85-590 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"SEC. 101. PLANT OR FACILITY ACQUISITION OR CONSTRUCTION.--- THERE IS HEREBY AUTHORIZED TO BE APPROPRIATED TO THE ATOMIC ENERGY COMMISSION, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 261 A. (1) OF THE ATOMIC ENERGY ACT OF 1954, AS AMENDED, THE SUM OF $386,679,000 FOR ACQUISITION OR CONDEMNATION OF ANY REAL PROPERTY OR ANY FACILITY OR FOR PLANT OR FACILITY ACQUISITION, CONSTRUCTION, OR EXPANSION, AS FOLLOWS:

(A) SPECIAL NUCLEAR MATERIALS.--- * * *

5. PROJECT 59-A-5, PRODUCTION REACTOR FACILITY FOR SPECIAL NUCLEAR MATERIALS, CONVERTIBLE TYPE, HANFORD, WASHINGTON, $145,000,000.'

THE PRIMARY PURPOSE OF THE PROJECT IS THE ESTABLISHMENT OF A PLANT FOR THE PRODUCTION OF PLUTONIUM. THE PLANT IS TO BE SO CONSTRUCTED AS TO PERMIT ITS CONVERSION TO THE PRODUCTION OF ELECTRIC ENERGY EITHER IN LIEU OF, OR IN ADDITION TO, THE PLUTONIUM. AN AMENDMENT INTRODUCED IN THE SENATE TO REDUCE THE APPROPRIATION AUTHORIZATION TO $120,000,000, HAVING AS ITS PURPOSE THE ELIMINATION OF THE CONVERTIBILITY FEATURE, WAS DEFEATED ON JULY 15, 1958.

ON JUNE 8, 1961, THERE WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES H.R. 7576, 87TH CONGRESS, WHICH IN ITS ORIGINAL FORM WOULD HAVE AUTHORIZED AN APPROPRIATION FOR---

"PROJECT 62-A-6, ELECTRIC ENERGY GENERATING FACILITIES FOR THE NEW PRODUCTION REACTOR, HANFORD, WASHINGTON, $95,000,000.'

THAT PROJECT WAS DELETED BY AMENDMENT ON THE FLOOR OF THE HOUSE ON JULY 13, 1961. THE SENATE REINSTATED THE PROJECT AT AN AUTHORIZATION OF $58,000,000, BUT RECEDED FROM ITS POSITION AND THE RESULTING PUBLIC LAW 87 -315 EXCLUDED PROJECT 62-A-6.

AGREEMENTS BETWEEN WPPSS AND AEC AND BPA, RESPECTIVELY, HAVE BEEN PROPOSED BY WPPSS AS A MEANS OF CONVERTING THE NPR TO DUAL PURPOSE OPERATION AND TO UTILIZE THE RESULTING ENERGY WITHOUT ANY ADDITIONAL APPROPRIATION OF FEDERAL FUNDS OR CONGRESSIONAL AUTHORIZATION. BY LETTER OF NOVEMBER 28, 1961, WPPSS PROPOSED CERTAIN BASIC TERMS AND CRITERIA FOR THE AGREEMENTS WITH THE TWO FEDERAL AGENCIES. WITH RESPECT TO BPA THESE HAVE RIPENED INTO A SERIES OF DRAFT AGREEMENTS, THE LATEST OF WHICH, TO OUR KNOWLEDGE, IS PRELIMINARY DRAFT NO. 6, DATED JUNE 5, 1962. AS TO AEC WE ARE NOT AWARE OF THE EXISTENCE OF ANY DRAFT AGREEMENT. HOWEVER, THE BASIC TERMS AND CRITERIA HAVE BEEN REVIEWED BY AEC AND CERTAIN MODIFICATIONS HAVE BEEN SUGGESTED AS A RESULT IN A LETTER OF APRIL 6, 1962. OUR REVIEW OF THE LEGALITY OF THE AEC-WPPSS AGREEMENT IS BASED ON THE ASSUMPTION THAT THE ULTIMATE UNDERSTANDING WOULD REFLECT THE BASIC TERMS PROPOSED BY WPPSS AS MODIFIED BY AEC.

BRIEFLY, THE AGREEMENT BETWEEN AEC AND WPPSS WOULD PROVIDE THAT:

1. AEC WOULD LEASE TO WPPSS LAND ADJACENT TO THE NPR FOR THE CONSTRUCTION AND OPERATION OF THE ELECTRIC GENERATING FACILITIES.

2. WPPSS WOULD DESIGN, CONSTRUCT AND OPERATE THE ELECTRIC GENERATING FACILITIES.

3. ADDITIONS OR CHANGES IN THE NPR IN CONNECTION WITH DUAL PURPOSE OPERATION WOULD BE PERFORMED BY AEC WITH FUNDS ADVANCED BY WPPSS. AEC WOULD TAKE TITLE TO AND EXERCISE COMPLETE CONTROL OVER THE RESULTING EQUIPMENT.

4. WPPSS WOULD ISSUE REVENUE BONDS TO DEFRAY THE CAPITAL COST OF THE PROJECT.

5. WPPSS WOULD PURCHASE FROM AEC STEAM RESULTING FROM THE OPERATION OF THE NPR BY AEC. DURING PERIODS WHEN THE NPR WAS NOT BEING OPERATED BY AEC, WPPSS WOULD LEASE THE FACILITY FOR PRODUCTION OF STEAM, SUBJECT TO IMMEDIATE RECAPTURE AT THE OPTION OF AEC.

6. THE TERM OF THE AGREEMENT WOULD BE NOT LESS THAN THE TIME NECESSARY TO AMORTIZE THE BONDS SOLD BY WPPSS TO FINANCE THE PROJECT. AT THE EXPIRATION OF THE AGREEMENT, OR WHEN THE BOND INDEBTEDNESS WAS RETIRED, THE GOVERNMENT COULD, AT ITS OPTION, TAKE TITLE TO THE ELECTRICAL GENERATING AND RELATED FACILITIES. IN ADDITION, THE GOVERNMENT COULD ACQUIRE TITLE TO THE FACILITIES AT ANY PRIOR TIME BY PAYMENT OF AN AMOUNT SUFFICIENT TO SATISFY THE OBLIGATIONS INCURRED UNDER THE PROJECT.

SECTION 261A OF THE ATOMIC ENERGY ACT OF 1954, AS AMENDED, 42 U.S.C. 2017, INCLUDES THE FOLLOWING:

"A. THERE ARE HEREBY AUTHORIZED TO BE APPROPRIATED SUCH SUMS AS MAY BE NECESSARY AND APPROPRIATE TO CARRY OUT THE PROVISIONS AND PURPOSES OF THIS ACT, EXCEPT---

"/1) SUCH AS MAY BE NECESSARY FOR ACQUISITION OR CONDEMNATION OF ANY REAL PROPERTY OR ANY FACILITY OR FOR PLANT OR FACILITY ACQUISITION, CONSTRUCTION OR EXPANSION: PROVIDED, THAT FOR THE PURPOSES OF THIS SUBSECTION A., ANY NONMILITARY EXPERIMENTAL REACTOR WHICH IS DESIGNED TO PRODUCE MORE THAN 10,000 THERMAL KILOWATTS OF HEAT (EXCEPT FOR INTERMITTENT EXCURSIONS) OR WHICH IS DESIGNED TO BE USED IN THE PRODUCTION OF ELECTRIC POWER SHALL BE DEEMED TO BE A FACILITY. * * *"

THE SECTION UP TO THE PROVISO IS IDENTICAL IN FORM WITH THE ENACTMENT IN 1954. AS ORIGINALLY INTRODUCED, H.R. 9757, 83RD CONGRESS, WHICH BECAME THE ATOMIC ENERGY ACT OF 1954, CONTAINED A SECTION 261, PROVIDING IN PERTINENT PART---

"SEC. 261. THERE ARE HEREBY AUTHORIZED TO BE APPROPRIATED SUCH SUMS AS MAY BE NECESSARY AND APPROPRIATE TO CARRY OUT THE PROVISIONS AND PURPOSES OF THIS ACT EXCEPT SUCH AS MAY BE NECESSARY FOR ACQUISITION OR CONDEMNATION OF REAL PROPERTY OR FOR PLANT CONSTRUCTION OF EXPANSION. * *

THE PURPOSE OF THE PROVISION IN ITS ORIGINAL FORM WAS STATED AT PAGE 31 OF HOUSE REPORT NO. 2181, 83RD CONGRESS, TO BE TO REQUIRE THE COMMISSION "TO OBTAIN CONGRESSIONAL APPROVAL OF NEW CONSTRUCTION, OR EXPANSION, OF ITS PLANTS.' THE SENATE AMENDED THAT PORTION OF SECTION 261 TO READ---

"SEC. 261. THERE ARE HEREBY AUTHORIZED TO BE APPROPRIATED SUCH SUMS AS MAY BE NECESSARY AND APPROPRIATE TO CARRY OUT THE PROVISIONS AND PURPOSES OF THIS ACT EXCEPT SUCH AS MAY BE NECESSARY FOR ACQUISITION OR CONDEMNATION OF REAL PROPERTY OR FOR PLANT CONSTRUCTION OR EXPANSION (OTHER THAN FOR SUCH ACQUISITION, CONDEMNATION, CONSTRUCTION, OR EXPANSION AS MAY BE UNDERTAKEN UNDER THE AUTHORITY OF SECTION 45 A. OF THIS ACT.

SECTION 45 A., REFERRED TO ABOVE, CONTAINED THE FOLLOWING:

"A. THE COMMISSION IS EMPOWERED TO PRODUCE OR PROVIDE FOR THE PRODUCTION OF ELECTRIC POWER AND OTHER USEFUL FORMS OF ENERGY DERIVED FROM NUCLEAR FISSION IN ITS OWN FACILITIES OR IN THE FACILITIES OF OTHER FEDERAL AGENCIES. * * *"

THE SENATE AMENDMENT WAS ELIMINATED IN CONFERENCE. THE CONFERENCE REPORT, HOUSE REPORT NO. 2666, 83RD CONGRESS, EXPLAINS THE DELETION AT PAGE 48 AS FOLLOWS:

"SINCE THERE WAS NO THOUGHT THAT THE COMMISSION, IN CARRYING OUT ITS OBLIGATIONS UNDER THIS ACT, SHOULD NOT BE REQUIRED TO GET CONGRESSIONAL APPROVAL FOR ITS OPERATIONS, THE AMENDMENT MADE BY THE SENATE TO SECTION 261 WHICH EXEMPTED THE COMMISSION FROM THE NECESSITY OF OBTAINING CONGRESSIONAL APPROVAL FOR CERTAIN CONSTRUCTION AND ACQUISITION PROJECTS WAS DELETED BY THE CONFERENCE SUBSTITUTE.'

FROM THE FOREGOING IT IS CLEAR THAT THE CONGRESS INTENDED THAT AN AUTHORIZATION BE FIRST OBTAINED FOR THE CONSTRUCTION OF ELECTRIC POWER GENERATING AS WELL AS OTHER FACILITIES. THE JOINT COMMITTEE ON ATOMIC ENERGY IN REPORTING OUT S. 4051, 85TH CONGRESS, WHICH BECAME PUBLIC LAW 85 -590 STATED IN SENATE REPORT 1793 (ALSO HOUSE REPORT NO. 2108) AT PAGE 8 WITH RESPECT TO THE PROJECT---

"PROJECT 59-A-5 WOULD AUTHORIZE THE EXPENDITURE OF $145,000,000 FOR A CONVERTIBLE TYPE OF PRODUCTION REACTOR WHICH WOULD PERMIT OPTIMUM PRODUCTION OF PLUTONIUM CONSISTENT WITH MINIMUM COST OF PRODUCT. THE REACTOR INITIALLY WOULD BE OPERATING SOLELY FOR PLUTONIUM PRODUCTION. WOULD BE DESIGNED IN SUCH A WAY, HOWEVER, THAT IT COULD BE CONVERTED WITH MODIFICATION TO PRODUCE ELECTRIC POWER; SUCH CONVERSION WOULD BE CONTINGENT UPON FUTURE CONGRESSIONAL AUTHORIZATION AND APPROPRIATIONS. THE CONVERSION OF THIS OTHERWISE WASTED HEAT TO ELECTRIC POWER WOULD SUBSTANTIALLY LOWER THE COST OF PRODUCTION OF PLUTONIUM. THIS CONVERSION CAPABILITY IS ALSO CONSIDERED PRUDENT TO PERMIT PRACTICAL UTILIZATION OF THE REACTOR IN THE FUTURE EVENT THAT ENFORCEABLE INTERNATIONAL DISARMAMENT AGREEMENTS ARE ENTERED INTO WHEREBY PRODUCTION OF REACTOR PRODUCTS FOR MILITARY USES ARE CURTAILED OR STOPPED. UNDER SUCH CONDITIONS THE REACTOR COULD BE CONVERTED TO PEACEFUL PURPOSES IN THE PRODUCTION OF ELECTRICITY. IN THE INTERIM, DURING CONSTRUCTION AND OPERATION, SUCH A CONVERTIBLE TYPE OF PRODUCTION REACTOR WILL ASSIST THE ADVANCEMENT OF THE ART OF REACTOR DEVELOPMENT.'

AS INDICATED EARLIER, A MEASURE TO SPECIFICALLY AUTHORIZE CONSTRUCTION OF ELECTRIC ENERGY GENERATING FACILITIES IN CONNECTION WITH THE NPR FAILED OF ENACTMENT IN PUBLIC LAW 87-315.

WE THINK THAT THE FOLLOWING SUMMARIZATION MAY FAIRLY BE DERIVED FROM THE FOREGOING:

1. THE LEGISLATIVE HISTORY OF THE ATOMIC ENERGY ACT OF 1954 SHOWS AN INTENT BY THE CONGRESS THAT NO ELECTRIC ENERGY GENERATING FACILITY SHOULD BE BUILT BY AEC WITHOUT CONGRESSIONAL AUTHORIZATION.

2. IN AUTHORIZING PROJECT 59-A-5 THE CONGRESS INTENDED THAT CONVERSION OF THE NPR TO DUAL PURPOSE OPERATION FOLLOW CONGRESSIONAL AUTHORIZATION AND APPROPRIATION.

3. THE CONGRESS, AFTER THOROUGH CONSIDERATION, REFUSED TO AUTHORIZE AEC TO CONSTRUCT AN ELECTRIC GENERATING PLANT AT HANFORD.

IT MAY BE ARGUED THAT THE ABOVE CONCLUSIONS ARE NOT RELEVANT TO THE PROPOSED AGREEMENTS BECAUSE THE CONSTRUCTION AND OPERATION WOULD NEITHER BE PERFORMED NOR PAID FOR BY THE GOVERNMENT. NEVERTHELESS PROJECT 29-A-5 IS BEING CONSTRUCTED BY AEC UNDER AN AUTHORIZATION CONTEMPLATING THE INCLUSION IN THE NPR OF A CONVERTIBILITY FACTOR WITHOUT ACTUAL CONVERSION EXCEPT PURSUANT TO CONGRESSIONAL AUTHORIZATION AND APPROPRIATION. UNDER THE PROPOSED WPPSS-AEC AGREEMENT THE NPR WOULD IN FACT BE CONVERTED TO DUAL PURPOSE CAPABILITY. WE DO NOT KNOW THE PRECISE EXTENT TO WHICH THE NPR WILL THUS DIFFER FROM THE PROJECT AUTHORIZED BY THE CONGRESS. APPEARS, HOWEVER, FROM THE CORRESPONDENCE BETWEEN AEC AND WPPSS AND FROM INFORMATION WE HAVE OBTAINED INFORMALLY THAT ADDITION TO THE NPR OF THE FEATURES AND EQUIPMENT NECESSARY TO CARRY OUT THE PROPOSED AGREEMENT WITH WPPSS WILL INVOLVE EXPENDITURES PRESENTLY ESTIMATED AT ABOUT $25,000,000, SUBJECT TO CHANGE PURSUANT TO ENGINEERING AND ECONOMIC DECISIONS YET TO BE MADE AND AGREED TO BY AEC AND WPPSS. (THIS AMOUNT IS ASIDE FROM THE SUBSTANTIALLY LARGER EXPENDITURES THAT WOULD BE MADE FOR THE MAIN GENERATING FACILITIES.) WE ARE THEREFORE OF THE VIEW THAT THE PROPOSED AGREEMENT WOULD RESULT IN MATERIALLY CHANGING THE FORM OF PROJECT 29-A-5 FROM THAT AUTHORIZED BY THE CONGRESS AND, THEREFORE, REQUIRED SPECIFIC CONGRESSIONAL APPROVAL, EVEN THOUGH THE ADDITIONAL AMOUNT WOULD BE PAID BY WPPSS AND THE COST TO THE GOVERNMENT WOULD NOT BE INCREASED. 34 COMP. GEN. 599.

OUR VIEWS ON THE MATTER ARE ALSO BEING FURNISHED THE CHAIRMAN OF THE JOINT COMMITTEE ON ATOMIC ENERGY AND CONGRESSMAN JOHN TABER AT THEIR REQUEST.