B-133750, SEP. 19, 1957

B-133750, SEP. 19, 1957

TO HONORABLE LEWIS L. STRAUSS, CHAIRMAN, UNITED STATES ATOMIC ENERGY COMMISSION:

REFERENCE IS MADE TO LETTER FROM THE DEPUTY GENERAL MANAGER DATED SEPTEMBER 12, 1957, REQUESTING DECISION WHETHER WE WOULD OBJECT TO CERTAIN PROVISIONS OF A PROPOSED CONTRACT BETWEEN THE COMMISSION AND CONSUMERS PUBLIC POWER DISTRICT OF NEBRASKA. THE PROPOSED CONTRACT IS THE THIRD UNDER THE FIRST ROUND OF THE COMMISSION'S POWER DEMONSTRATION REACTOR PROGRAM, AND PROVIDES, GENERALLY, FOR THE CONSTRUCTION AND OPERATION OF A SODIUM-GRAPHITE NUCLEAR REACTOR TO PRODUCE ELECTRICITY. BOTH THE COMMISSION AND CONSUMERS WILL PARTICIPATE IN THE COST OF NECESSARY RESEARCH AND CONSTRUCTION, AND CONSUMERS WILL FURNISH THE COMMISSION WITH ALL PERTINENT INFORMATION DEVELOPED PRIOR TO AND DURING A FIVE-YEAR OPERATING PERIOD.

THE PARTICULAR CONTRACT PROVISIONS WHICH HAVE RAISED THE QUESTION NOW PRESENTED TO US CALL FOR THE COMMISSION TO REIMBURSE CONSUMERS FOR CERTAIN FUEL CYCLE COSTS INCURRED DURING THE FIVE-YEAR PERIOD BEGINNING WITH THE COMMENCEMENT OF ACTUAL PLANT OPERATION. ESSENTIALLY, THE ARRANGEMENT PROPOSED IS THAT CONSUMERS WILL BEAR SUCH COSTS UP TO THE COST OF CONVENTIONAL FOSSIL FUELS AND THE COMMISSION WILL BEAR ANY EXCESS. THE DOUBT WHICH EXISTS AS TO THE PROPRIETY OF MAKING SUCH CONTRACTUAL COMMITMENTS ARISES FROM THE GENERAL RULE STATED IN DECISION B-130815, DATED SEPTEMBER 3, 1957, TO THE EFFECT THAT FUNDS APPROPRIATED TO THE COMMISSION FOR THE NEEDS OF A PARTICULAR FISCAL YEAR COULD NOT BE OBLIGATED FOR THE NEEDS OF FUTURE FISCAL YEARS. IN OUR OPINION, THE LEGISLATIVE HISTORY OF PUBLIC LAW 85 162, APPROVED AUGUST 21, 1957, WHICH AUTHORIZED APPROPRIATIONS FOR THE COMMISSION FOR ITS POWER DEMONSTRATION REACTOR PROGRAM FOR THE FISCAL YEAR 1958, AND THE ACTION OF THE CONGRESS IN APPROPRIATING FUNDS FOR THE COMMISSION IN ACCORDANCE WITH THAT AUTHORIZATION ACT, CLEARLY SHOW CONGRESSIONAL APPROVAL OF THE PROPOSED CONTRACTUAL ARRANGEMENTS.

AS REPORTED OUT BY THE JOINT COMMITTEE ON ATOMIC ENERGY, THE AUTHORIZATION ACT WOULD HAVE REQUIRED THE COMMISSION TO MAKE SOMEWHAT DIFFERENT CONTRACTUAL ARRANGEMENTS WITH CONSUMERS AND WITH THE SPONSORS OF PROJECTS UNDER THE SECOND ROUND OF THE POWER DEMONSTRATION REACTOR PROGRAM. AFTER CONSIDERABLE DISCUSSION ON THE FLOOR OF CONGRESS, THE AUTHORIZATION ACT WAS CHANGED TO PERMIT THE CONSUMERS PROJECT TO BE CARRIED OUT AS PREVIOUSLY CONTEMPLATED. THE JOINT COMMITTEE AND THE CONGRESS WERE FULLY APPRISED OF THE FACT THAT THE CONTEMPLATED ARRANGEMENTS WITH CONSUMERS INCLUDED PROVISION FOR THE COMMISSION TO BEAR A PART OF THE FUEL CYCLE COSTS DURING A FIVE-YEAR OPERATING PERIOD. SEE, FOR EXAMPLE, PAGES 13972-3, 14486, AND 14487, CONGRESSIONAL RECORD, AUGUST 20, 1957. THE AMOUNT INCLUDED IN THE AUTHORIZATION ACT INCLUDED$8,000,000 SPECIFICALLY JUSTIFIED TO THE JOINT COMMITTEE AS FUEL CYCLE COSTS UNDER THE CONSUMERS PROJECT.

IN VIEW OF THE LEGISLATIVE HISTORY, WE BELIEVE THAT THE COMMISSION IS AUTHORIZED TO ENTER INTO CONTRACTUAL ARRANGEMENTS OF THIS TYPE WITH CONSUMERS, AND WE WILL NOT BE REQUIRED TO OBJECT THERETO. IN VIEW OF THE NEED FOR EXPEDITIOUS DECISION ON THE MATTER, NO OTHER ASPECTS OF THE PROPOSED CONTRACT HAVE BEEN CONSIDERED.