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    "label": "Letter, Assistant Director for Legislative Reference to President Dwight D. Eisenhower",
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    "title": "Letter, Assistant Director for Legislative Reference to President Dwight D. Eisenhower",
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    "seq": 5,
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    "ocrText": "approved\nLast Day\nEXECUTIVE OFFICE OF THE PRESIDENT\n8/30/54\nBUREAU OF THE budget\n9/1/54\nWASHINGTON 25, D.C.\nAUG2 4 1954\nMy dear Mr. President:\nThe Congress has enacted H. R. 9757, \"To amend the Atomic Energy\nAct of 1946, as amended, and for other purposes.\"\nThis legislation was passed in response to your message on atomic\nenergy, dated February 17, recommending amendments to the Atomic Energy\nAct of 1946, as amended, to provide for (1) widened cooperation with our\nallies in certain atomic energy matters, (2) improved procedures for con-\ntrol and dissemination of atomic energy information, and (3) broadened\nparticipation in the peacetime development of atomic energy in the United\nStates.\nThe specifics of your proposals were simultaneously transmitted by\nthe Atomic Energy Commission to the Joint Committee on Atomic Energy in\ntwo pieces of legislation drafted within the executive branch. The Joint\nCommittee did not introduce these bills, but rewrote entirely the existing\nAtomic Energy Act incorporating within their bill provisions intended to\naccomplish your recommendations as well as numerous other amendments.\nAlthough the bill in large measure accomplishes the purposes set\nforth in your recommendations, the specific provisions in many respects\ndiffer significantly from the draft legislation proposed by the executive\nbranch.\nAttached to this letter is a brief summary of the significant pro-\nvisions of the legislation compared with the existing Atomic Energy Act.\nSet forth below are comments on points of particular significance.\nInternational atomic cooperation\nThe bill provides the substance of most of the authority requested\nby you. However, the authority is qualified (e.g., proposed agreements\nwould have to be submitted to the Joint Committee on Atomic Energy for\na period of 30 days while Congress is in session) and may limit your\nfreedom of action in foreign relations and give rise to awkward adminis-\ntration. Although you did not request legislation to authorize an inter-\nnational atomic agency, the bill contains a provision on this subject.\nHowever, when taken in the context of the qualifications referred to above,\nit is unclear as to whether the provision helps or hinders you.\nWidened participation in atomic power development\nDRIBUE The D.\nThe bill authorizes the licensing of public and private groups to\nlease fissionable material from the Government, and to build and operate\n- 2 -\nfacilities for the utilization of such nuclear material for the development\nof and subsequently the routine production of atomic power.\nOne aspect of the atomic power provisions which gives the Bureau of\nthe Budget concern is the general question of pricing and procurement\npolicy for fissionable material (primarily plutonium) produced as a by-\nproduct in the generation of electric power.\nThe problem stems from the Congress' refusal to follow your recom-\nmendation that private ownership of fissionable material be allowed. The\nenrolled bill provides for retention of title by the Government to all\nfissionable material, the payment by AEC of a \"fair price\" to licensees\nfor fissionable material produced as byproducts of power reactor operation,\nand the making of \"reasonable charges\" for materials and services supplied\nto licensees. As a result, AEC is required to buy all plutonium offered to\nit by private licensees and has no authority to refuse to issue more and\nmore licenses, unless there occurs a shortage of atomic fuel. Altogether,\nthese provisions could result, over a period of time, in heavy commitments\nby and large costs to the Government, including indirect subsidies to\nlicensees, notwithstanding your announced desire that the atomic power\nindustry be a self-sufficient one.\nThe standards governing pricing (both \"fair prices\" and \"reasonable\ncharges\") leave great discretion to AEC; the \"fair price\" for byproduct\nplutonium can be established over a wide range and will be of critical\nimportance both for the new industry (since it will determine the alloca-\ntion of costs between plutonium and electric power) and for the Federal\nbudget.\nIn the area of procurement policy, the possibly adverse budgetary\neffects of the bill's provisions could probably be overcome by AEC's\nstrongly encouraging reactor designs which would maximize the production\nof power rather than of plutonium, to avoid the establishment of an industry\ndependent upon Government plutonium purchases.\nBecause of the substantial budgetary implications of AEC's price and\nprocurement policy, the Bureau of the Budget intends to discuss this prob-\nlem with the Commission during their development of the policy.\nAs a result of the lengthy Senate debate, several \"public power\"\namendments to the Joint Committee bill were adopted. Government agencies\nauthorized to produce, distribute, or market electric energy are explicitly\nnot precluded from obtaining commercial licenses. The Atomic Energy Com-\nmission is required, in selling byproduct electric energy, to give pref-\nerence to public bodies and cooperatives or to privately-owned utilities\nserving high-cost areas. Similarly, in granting commercial licenses, it\nmust, when opportunity is limited, give such preference to public bodies\nand cooperatives. This preference guaranteed public bodies and cooperatives\nis similar to that found in existing power legislation, but it was not in\nthe bill developed by the executive branch.\na 981 LIMITE\n- 3 -\nPatents\nThe bill contains the substance of the provision included in the\nexecutive branch bill requiring compulsory licensing for five years of\natomic patents declared affected with the public interest. It also con-\ntains a provision, originally intended by the House to be a substitute\nfor compulsory licensing, which gives to the Government ownership of\natomic patents conceived under any relationship with the AEC. These\nprovisions should adequately carry out your recommendation on atomic\npatent policy.\nJoint Committee on Atomic Energy scrutiny of executive branch actions\nUnder existing law, AEC is required to keep the Joint Committee on\nAtomic Energy fully informed with respect to its activities. In the\nenrolled bill the Joint Committee has inserted itself into numerous other\naspects of executive branch activities. Reference to 30-day Joint Com-\nmittee scrutiny of agreements for international cooperation has already\nbeen made. The Department of Defense is henceforth required to keep the\nJoint Committee fully informed of its atomic activities. Proposed AEC\nelectric power contracts and Presidential determinations regarding source\nand special nuclear materials are subject to 30-day Joint Committee scrutiny.\nThese provisions represent to a rather significant degree infringement by\nthe Joint Committee upon executive branch responsibilities.\nRequirement for construction authorization\nAt present AEC has basic authority to construct whatever facilities\nit may deem necessary to carry out the program, subject to appropriation\naction. Over AEC's protest, the bill now requires that AEC's construction\nprogram be specifically authorized by the Congress prior to appropriation\naction, generally in the military construction pattern. This will require\nthat funds for construction be requested in supplemental estimates each\nyear rather than in the January budget.\nAEC organization\nIt should be noted that the bill gives the Atomic Energy Commission\npotentially great new responsibilities in the regulatory and services\nfields, in addition to its substantial operating responsibilities. This\nposes a problem for future solution.\nIn the provision governing the relationships among the five Commis-\nsioners, the Chairman is designated \"official spokesman\" of the Commission\nand is required to see to the faithful execution of its decisions. This\nis all that remains of the controversial clause designating the Chairman\nthe principal officer of the Commission. In addition, there are provisions\nrequiring the establishment of certain specific divisions within AEC. Such\nrequirements have proved awkward in the past.\nDelight D.\nLIMIT\n- 4 -\nLong-term utility contracts\nThe Atomic Energy Commission's authority to enter into long-term\nelectric contracts has been expanded to permit such contracts to provide\nfor replacement of power supplied to AEC by TVA, subject to prior review\nby the Joint Committee on Atomic Energy as noted above. This authorizes\nthe Dixon-Yates contract.\nRecommendations\nThe Atomic Energy Commission and the Departments of State, Defense,\nand Agriculture recommend approval of the bill. The Departments of Commerce\nand Interior, the Federal Trade Commission, and the Federal Power Commission\nraise no objection. The Tennessee Valley Authority believes that replacement\npower contracts are likely to increase AEC's power costs significantly and\nto prove cumbersome for all concerned. The Department of Justice letter\nhas not been received, but Justice staff advise that Justice will probably\nhave no objection to the bill. Although there are several undesirable\nfeatures in the bill, the Bureau of the Budget recommends approval.\nRespectfully yours,\nRoges W. Pans\nAssistant Director for\nLegislative Reference\nThe President\nThe White House\nThe Deight D.\nEnclosures\nLibrary"
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