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The original documents are located in Box 19, folder "Nuclear Fuel Assurance Act:
President's Message to Congress, 6/26/75" of the Loen and Leppert Files at the Gerald
R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 19 of the Loen & Leppert Files at the Gerald R. Ford Presidential Library
[6/26/75]
INFORMATION ON
THE PRESIDENT'S PLAN FOR A
COMPETITIVE NUCLEAR FUEL INDUSTRY
The President's Message to the Congress
Remarks upon Signing the Message
Summary Fact Sheet
Detailed Fact Sheet
Proposed Legislation
Questions and Answers
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON (EDT)
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
Every so often, a Nation finds itself at a crossroads.
Sometimes, it is fortunate and recognizes it has a choice.
Sometimes, it does not.
We are at such a crossroads in America today.
The course we select will touch the lives of most of us
before the end of this century and surely affect the lives
of generations of Americans yet to come.
Today, I am asking the Congress to join me in embarking
this Nation on an exciting new course which will help assure
the energy independence we seek and a significantly strengthened
economy at the same time.
I am referring to the establishment of an entirely new
private industry in America to provide the fuel for nuclear
power reactors -- the energy resource of the future. I am
referring to uranium enrichment which is presently a Federal
Government monopoly.
Without question, our energy future will become more
reliant on nuclear energy as the supplies of oil and natural
gas diminish.
The questions we must answer are (1) whether the major
capital requirements for constructing new uranium enrichment
facilities will be paid for by the Federal taxpayer or by
private enterprise, and (2) whether a major new and expanding
segment of our economy will be under the control of the Federal
Government or the private sector.
The private sector has already demonstrated its capability
to build and operate uranium enrichment facilities under
contracts with the Federal Government. Since it is also
willing to provide the capital needed to construct new
more
2
uranium enrichment plants, I am asking the Congress to enact
legislation to enable American industry -- with all its
financial resources, management capability and technical
ingenuity -- to provide the enriched uranium needed to fuel
nuclear power plants.
I believe this is the proper and correct course for
America to take. The alternative is continued Federal
monopoly of this service at a cost to the taxpayers of at
least $30 billion over the next 15 years.
The enrichment of uranium -- which means, in brief,
separating the fissionable U-235 in uranium from non-fissionable
parts to provide a more potent mixture to fuel nuclear
reactors -- is an essential step in nuclear power production.
For more than twenty years, the United States
Government has supplied the enrichment services for every
nuclear reactor in America and for many others throughout
the world. Our leadership in this important field has enabled
other nations to enjoy the benefits of nuclear power under
secure and prudent conditions. At the same time, this effort
has been helpful in persuading other nations to accept
international safeguards and forego development of nuclear
weapons. In addition, the sale of our enrichment services
in foreign countries has returned hundreds of millions
of dollars to the United States.
These enrichment services have been provided by plants --
owned by the Government and operated by private industry --
in Oak Ridge, Tennessee, Portsmouth, Ohio, and Paducah, Kentucky.
A $1-billion improvement program is now underway to increase
the production capacity of these plants by 60 percent. But
this expanded capacity cannot meet the anticipated needs of
the next 25 years.
The United States is now committed to supply the fuel
needs for several hundred nuclear power plants scheduled to
begin operation by the early 1980's. Since mid-1974, we
have been unable to accept new orders for enriched uranium
because our plant capacity -- including the $1-billion
improvement -- is fully committed.
In short, further increases in enrichment capacity depend
on construction of additional plants, with seven or eight years
required for each plant to become fully operational.
more
3
Clearly, decisions must be made and actions taken today
if we are to insure an adequate supply of enriched uranium for
the nuclear power needs of the future and if we are to retain
our position as a major supplier of enriched uranium to the
world.
It is my opinion that American private enterprise is best
suited to meet those needs. Already, private industry has
demonstrated its willingness to pursue the major responsibilities
involved in this effort.
With proper licensing,
safeguards, cooperation and limited assurances from the Federal
Government, the private sector can do the job effectively and
efficiently -- and at enormous savings to the American taxpayer.
In this way, direct public benefits will be provided on a
long-term basis by private capital, not by taxpayers.
Accordingly, I am proposing legislation to the Congress
to authorize Government assurances necessary for private
enterprise to enter into this vital field.
A number of compelling reasons argue for private ownership,
as well as operation, of uranium enrichment plants. The market
for nuclear fuel is predominantly in the private sector. The
process of uranium enrichment is clearly industrial in nature.
The uranium enrichment process has the making of a new
industry for the private sector in much the same tradition as
the process for synthetic rubber -- with early Government
development eventually being replaced by private enterprise.
One of the strengths of America's free enterprise system
is its ability to respond to unusual challenges and opportunities
with ingenuity, vigor and flexibility. A significant
opportunity may be in store for many firms -- old and new --
to participate in the growth of the uranium enrichment industry.
Just as coal and fuel oil are supplied to electric utilities
by private firms on a competitive basis, enriched uranium should
be supplied to them in the same fashion in the future.
The energy consumer also stands to benefit. The production
of nuclear power now costs between 25 and 50 percent less than
electricity produced from fossil fuels. It is not vulnerable
to the supply whims or unwarranted price decrees of foreign
energy suppliers. And based on the past fifteen years of
experience, commercial nuclear power has an unparalleled
record of safe operation.
The key technology of the uranium enrichment process is
secret and will remain subject to continued classification,
safeguards and export controls.
more
4
But for several years, a number of qualified American
companies have been granted access to the Government's technology
under carefully controlled conditions to enable them to assess
the commercial potential for private enriching plants.
The Government-owned gaseous diffusion enriching plants
have run reliably and with ever-improving efficiency for more
than a quarter of a century. One private group has chosen
this well-demonstrated process as part of its $3.5 billion
proposal to build an enrichment plant serving 90 nuclear
reactors here and abroad in the 1980's. Others are studying
the potential of the newer gas centrifuge process. Though not
yet in large-scale operation, the centrifuge process -- which
uses much less power than the older process -- is almost ready
for commercial application.
I believe we must move forward with both technologies
and encourage competitive private entry into the enrichment
business with both methods. A private gaseous diffusion
plant should be built first to provide the most urgently
needed increase in capacity, but we should proceed simul-
taneously with commercial development of the centrifuge
process.
With this comprehensive approach, the United States can
reopen its uranium enrichment "order book," reassert its
supremacy as the world's major supplier of enriched uranium,
and develop a strong private enrichment industry to help
bolster the national economy.
For a number of reasons, a certain amount of governmental
involvement is necessary to make private entry into the uranium
enrichment industry successful.
The initial investment requirements for such massive
projects are huge. The technology involved is presently owned
by the Government. There are safeguards that must be rigidly
enforced. The Government has a responsibility to help ensure
that these private ventures perform as expected, providing
timely and reliable service to both domestic and foreign
customers.
Under the legislation I am proposing today, the Energy
Research and Development Administration would be authorized
to negotiate and enter into contracts with private groups
interested in building, owning and operating a gaseous
diffusion uranium enrichment plant.
more
5
ERDA would also be authorized to negotiate for construction
of several centrifuge enrichment plants when more definitive
proposals for such projects are made by the private sector.
Contract authority in the amount of $8 billion will be
needed, but we expect almost no actual Government expenditures
to be involved. In fact, the creation of a private enrichment
industry will generate substantial revenues for the United States
Treasury through payment of Federal income taxes and com-
pensation for use of Government-owned technology.
Under the proposed arrangements, there will be an
opportunity for foreign investment in these plants, although
the plants will remain firmly under U.S. control. There will
be no sharing of U.S. technology and, there will be limitations
on the amount of capacity each plant can commit to foreign
customers.
In addition, all exports of plant products will continue
to be made pursuant to Governmental Agreements for Cooperation
with other Nations. All will be subject to appropriate safe-
guards to preclude use for other than agreed peaceful purposes.
Foreign investors and customers would not have access to
sensitive classified technology. Proposals from American
enrichers to share technology would be evaluated separately,
and would be subject to careful Government review and approval.
Finally, the plants proposed will be designed and built
to produce low enriched fuel which is suitable only for
commercial power reactors -- not for nuclear explosives.
In the remote event that a proposed private venture did
not succeed, this legislation would enable the Government
to take actions necessary to assure that plants will be
brought on line in time to supply domestic and foreign
customers when uranium enrichment services are needed.
I have instructed the Energy Research and Development
Administration to implement backup contingency measures,
including continuation of conceptual design activities,
research and development, and technology assistance to the
private sector on a cost-recovery basis.
ERDA would also be able to purchase from a private firm
design work on components that could be used in a Government
plant in the unlikely event that a venture fails.
Finally, I pledge to all customers -- domestic and
foreign -- who place orders with our private suppliers that
the United States Government will guarantee that these orders
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6
are filled as needed. Those who are first in line with our
private sources will be first in line to receive supplies
under this assurance. All contracted obligations will be
honored.
I also pledge that cooperative agreements made with
private firms under the proposed new authority will fully
reflect the public interest. In fact, all contracts will be
placed before the Congress in advance of their effectiveness.
The Congress will have full and complete review of each one.
In sum, the program I am proposing will take maximum
advantage of the strength and resourcefulness of industry and
Government.
It will reinforce the world leadership we now enjoy in
uranium enrichment technology. It will help insure the
continued availability of reliable energy for America. It
will move America one big step nearer energy independence.
Although the development of a competitive nuclear fuel
industry is an important part of our overall energy strategy,
we must continue our efforts to conserve the more traditional
energy resources on which we have relied for generations.
And we must accelerate our exploration of new sources of
energy for the future --- including solar power, the harnessing
of nuclear fusion and development of nuclear breeder reactors
which are safe, environmentally sound and reliable.
I ask the Congress for early authorization of this program.
GERALD R. FORD
THE WHITE HOUSE,
June 26, 1975.
#
#
#
#
FOR IMMEDIATE RELEASE
JUNE 26, 1975
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
PRESS CONFERENCE
OF
FRANK G. ZARB
ADMINISTRATOR OF THE
FEDERAL ENERGY ADMINISTRATION
ROBERT C. SEAMANS
ADMINISTRATOR OF THE
ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION
AND
ROBERT FRI
DEPUTY ADMINISTRATOR OF THE
ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION
THE BRIEFING ROOM
11:30 A.M. EDT
MR. NESSEN: I think you got the idea from
Jim's pool report of the importance with which the
President views this legislation.
In the conversations here about this legis-
lation, it is looked upon as something that 20 years
from now, when we look back on this legislation, this
proposal will seem to be one of the most important
proposals of these times. It is a subject that we
have not really talked about very much in these briefings.
To give you some background on what it means
and what the importance of it is, we have first of all
Frank Zarb, the head of the FEA; Dr. Robert Seamans,
who is the Administrator of the Energy Research and
Development Administration; and his deputy, Robert Fri.
They will explain to you what it is that the
President is proposing today, and will answer your
questions about it.
MR. ZARB: Just to open it with a general
statement, in this morning's meeting, when we met with
the Joint Committee, we pointed out that while this had
a great deal to do with uranium enrichment and our
ability to satisfy both domestic and export needs in
this category, it had farther reaching complications.
It is probably the first test of our commitment
to use the financial base, the management capability
and the technical skills of American industry in a way
which would have technology that was developed within
the framework of the Federal Government transferred in
some form from Government to the private sector.
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- 2 -
The most conservative calculations as to what
it is going to cost to achieve reasonable independence
or invulnerability by 1985 and lead toward the further
developments required in the 1990s, is a $600 billion
bill. I emphasize that that is a conservative number.
It certainly can and probably will grow larger
as we get closer to the 1980s. So the ability to tap
the broad base of private capital, plus their technical
capabilities and management abilities, is an important
factor here to recognize in that this particular step
is a move in that direction and one of many others
that could occur downstream.
You all know Dr. Bob Seamans, who is the
Administrator of ERDA, and he will give an overview
of this particular piece of legislation, which the
President said will be sent up today.
MR. SEAMANS: Thanks, Frank.
One of the most pressing issues that we faced
when ERDA was formed was what to do about the nuclear
industry, and particularly what to do about fuel for
our present electric generating plants. This, most of
you know, involves the enrichment of the uranium as
one of the very important steps because when you get
the ore from the ground the U-235 is only about seven-
tenths of one percent and you have to get up to three
or four percent in order to energize one of our reactors.
The problem that we faced was that we have in
this country three plants. Each one of these is a
large-scale operation. They exist at Oak Ridge; another
one is at Paducah, Kentucky; and another one is at
Portsmouth, Ohio. All three of these are fully committed
to the generating plants that are either now in operation
-- 55 in number -- or those that are under construction,
and are in the planning state, the total numbering
about 235.
On top of that, we have some foreign commit-
ments, and between the domestic and the foreign we have
not been able to take on additional orders for the
last year. It seemed to us extremely important, as
we looked ahead, as we must work more and more towards
independence, cut down our import of oil, that we
increase our capacity to generate electricity using a
nuclear fuel.
The next step in our thinking had to do
with what type of plant to build. As you know, the
technology moves on. The three plants that we have
involve gaseous diffusion. These are plants that
have been in operation in the order of 30 years. We
feel that the new technology that we have making use of
a centrifuge is just about ready to go, and that we
should avail ourselves of this capability and move ahead
and develop plants that will use less energy to drive
them, that can be built in smaller units, and will be
more attractive to industry in the longrun.
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- 3 -
Third, is the question of how are we going to
proceed with the financing and the management. Here
we felt very strongly that we ought to ease the taxpayer's
burden and have this a private venture, and also we liked
the idea of the competition, although if I do say so,
I think the Government has done a pretty good job with
its processing plants.
There is always room for innovation, and you
tend to get that when you go to competition. So the
plan in brief is to proceed down two courses: one, to
build modern gaseous diffusion plants, and at the same
time to go out in the competition for the centrifuge
type plant.
We have at least three companies or consortia
that are interested in bidding. There may be more.
As far as the gaseous diffusion plant, the
plan is to negotiate with the Uranium Enrichment
Associates. These Associates are made up of the Bechtel
Corporation and Goodyear. You will, undoubtedly, be
bringing in additional partners.
We have for the bold outline of what they
propose, but we obviously have to get into some hard
negotiation before we are certain that this is the
way to go. We believe it will. We believe it must
get started. We could discuss with you in any detail
you want what the plans entail.
I think one thing that is important is that
there are bound to be some risks involved at any private
operation coming in because they must rely on technology
and supply of certain of the classified materials, and
so on, from the Government, and in looking this over
we felt that the best way to proceed, and this has been
agreed to, would be to provide an arrangement whereby
either party -- the Government or the private company --
could, if they wish, back out and transfer the obligation
over to the Government.
We don't expect this will take place, but if
for any reason there should be on one extreme a moratorium
on nuclear energy, obviously the company could not then
go ahead. On the other hand, there could be some
management problems. Whatever it might be there would
be this clause that would permit reversion of the
operation to the Government.
If that should occur, the equity might be
made up to the company on the basis that it was not
anything over which they had any control. On the
other hand, if it were a matter over which we felt
they did have control, say mismanagement, then they
would not get their equity back.
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- 4 -
On this kind of basis, we feel that we have
built in what will be acceptable to the investor, and
will be acceptable to the buyer of the material, because
the main objective here, as the President said, is to
get going and open the order book.
I think with that maybe you have enough of
the background that we can go to any questions that you
might have.
Q
Sir, does this allow or make it easier
for terrorists, people who would endanger us, to
get hold of these supplies and misuse them?
MR. SEAMANS: It won't make any difference.
The same safeguards will be applied that are already
applied in our Government operation, and we will have
exactly the same type safeguards at home and abroad
in the case of the private operation.
Q
Sir, what about the royalty fees? What
level of royalty fees will the private companies have
to pay?
MR. SEAMANS: Of course, that is going to be
part of the negotiation. One of these plants is going
to cost on the order of $3.5 billion on that basis.
Looking at the probable returns, we can expect
that there will be of the order of $90 million to $100
million coming in each year to the Government, in part
for royalties and in part in the form of taxes on profit.
Q
What level, what percentage are you looking
at?
MR. FRI: The royalties on the percent of the
cost to the Government technology sold to the gaseous
diffusion operator -- we anticipate royalties in the
range of $30 million a year, but I really can't run
out the percentage in my head.
MR. ZARB: I think we ought to point out that
the legislation not only to accomplish this in a macro
form is going forward, but the legislation within it
requires the Government, the Executive Branch to put
before the Congress for 45 days any contract that they
are going to enter into so the Congress can look at the
individual details of any given contract at any given
time.
Q
Does this mean you are going to sell to
foreign countries, too, foreign nationals?
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- 5 -
MR. SEAMANS: Yes, we do now and that should
continue. That is a very important part of opening
up the order book.
We feel that not only do we welcome the
opportunity for foreign sale, just from the standpoint
of gold flow, but we also feel it is extremely important
that there be an opportunity for the potential foreign
buyer to come to this country where we are going to
insist on appropriate safeguards.
We think if we are not involved that then that
opens up all kinds of issues over which we will have
absolutely no control.
Q
Is that $3.5 billion you mentioned for
the gaseous diffusion plant?
MR. SEAMANS: Yes, that is the estimated cost
in present dollars.
Q
What do they figure the centrifuge plants
might run?
MR. SEAMANS: These are still rough estimates,
but they will cost of the same order of magnitude.
Q
Mr. Zarb, you said that Congress would
have an opportunity to look at individual contracts.
Could you explain? Does that relate to UEA alone? Does
it relate to centrifuge as well? Would Congress, under
this legislation, have the right to disapprove any such
contract in advance?
MR. ZARB: That is per the legislative process,
but they will look at each contract. They will have
an opportunity to review each contract and presumably
will have an opportunity to either modify or to dis-
approve it.
Q
Could you elaborate on that? What do you
mean by presumably? What would the legislation specify?
MR. FRI: Well, the contract would lie before
the Joint Committee for 45 days. Disapproval would
require action by the Congress. The form of disapproval
is a technical matter. It would probably take the form
of voting an authorization, and an appropriation bill,
to fund the contingent liability involved in the contract.
The Congress has a formal crack at it through
that process. It is legislatively kind of complicated,
but they get an up or down shot at it.
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- 6 -
Q
A technical matter to allow authorization
on an appropriation bill; is that what you said?
MR. FRI: This involves the concept of
contract authority which means they would have to
authorize and appropriate against a contingent liability
of the Government, which we hope and anticipate we will
never have to spend any money on it.
Procedurally, on the Hill, it is a little
complicated, but it is just as if you were voting on
an appropriation bill.
MR. SEAMANS: This would be the liability
that the Government might have to take over the operation,
which we don't anticipate, but you have to cover that
with a Congressional bill.
Q
Does that apply to centrifuge as well
as the UEA?
MR. SEAMANS: Yes, it would, of course.
Q
Mr. Zarb, the environmentalists have been
fighting the building of new nuclear power plants in
a number of areas around the country. Do you think
they will also fight construction of the new uranium
enrichment plants?
MR. ZARB: I really can't guess on what one
group will do or not in one area of the country or not.
I think the point that Dr. Seamans made a moment ago
is awfully critical.
The extent to which the United States Government
and the United States enterprise system can become a
factor here in the world marketplace, it will have an
opportunity to insure certain safeguards and certain
controls that it will not have if it is not a major
factor and a participant in the nuclear enrichment
program.
That is awfully clear. It is clear that other
nations are looking toward the development of their
own capacity to become exporters of this particular
service and product.
So I would think that those concerned with
some of the issues raised by the environmental group and
others would feel more comfortable with the United
States keeping a firm total in the overall marketplace,
and thereby being able to exert its influence.
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- 7 -
Q
Mr. Zarb, a couple of years ago there was
talk of the Japanese coming in and providing half the
capital to build a gaseous diffusion plant in the United
States somewhere. Is that still being discussed? Is
there still a possibility?
MR. SEAMANS: The Uranium Enrichment Associates
have been talking to a number of foreign countries. They
include Japan, Iran, West Germany and I guess a few others.
That is a real possibility, but that will have to be negotiated
by UEA and subject to our approval. The Japanese are
considered as a possible investor in this gaseous
diffusion plant.
Q
There is one thing on the financing I
don't understand. You say that if this thing falls
through so that the Government has to assume the total
financial obligation, it will be $8 billion, but on page
2 of the message, it says the alternative is continued
Federal monopoly of this service at a cost to the taxpayers
of at least $30 billion over the next 15 years.
Could you explain the difference there?
MR. FRI: We anticipate that something like
eight to ten additional enrichment plants, probably one
gaseous diffusion and the balance centrifuge, will be
built to meet demand for the balance of this century.
The total cost of those plants is in the order of $30 billion.
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- 8 -
The $8 billion figure you have is based on
an estimate that the gaseous diffusion plant of UEA
and three initial centrifuge plants would all enter
into this kind of an arrangement with the Government;
all would fall through simultaneously.
The maximum liability for those four plants,
to the Government, if they had to step in and take it
over, would be on the order of $8 billion.
Q
One other thing. Does not the Government
make money now by selling the enriched fuel that it
provides private industry, and how much does that amount
to?
MR. FRI: We receive revenue. There is some
debate over whether we make money. The revenue is on
the order of $750 million a year. We announced yesterday
we would probably ask the Joint Committee in Congress
to increase that price by another $10 or so per unit
of enriched uranium.
MR. ZARB: I just would like to make one point
in following up your first question. We spent an awful
lot of time in "what if" type contingencies, which
were designed to answer those questions, knowing that
they would be raised. What would happen if there
were a problem with financing or some other form of
delays in this particular industry?
None of us mean to emphasize that we anticipate
those occurrences, but they had to be a major part
of the legislation to be able to answer the obvious
questions that will be raised in this endeavor.
Q
What about cost overruns? That happens
all the time with this type of thing.
MR. SEAMANS: I think one of the important
features of the arrangement that we are contemplating
is that it is not done by committee, that either one
party or the other is fully responsible. As long as
UEA has that responsibility, which they would if they
raised the capital, it is up to them to take care of
their own overruns, and there is no commitment on the
part of the Government to help them out.
Q
Concurrently, is the Government expanding
its facility at Portsmouth?
MR. SEAMANS: No we are not. We are considering
this as a possibility and we will, according to plan,
continue with some backup design work in the eventuality
that everything does not proceed as we expect.
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- 9 -
Every expectation is that the UEA will proceed
and that we will then follow that with centrifuge plants.
Q
Dr. Seamans, what will this do to mining
of uranium? What will it do to production?
MR. SEAMANS: Because one of the issues the
country faces is the extent of our uranium reserves,
part of ERDA's responsibility is to come up with the
best estimate. We are actually increasing our exploration
for uranium to get the best possible fix that we can.
Our expectation is that with our uranium
reserves that we can keep going through this century,
and we have reserves sufficient to build up to the order
of 700 or 800 generating plants.
Q
Dr. Seamans, does the $3.5 billion
estimate include the building of power plants to supply
energy to the thing?
MR. SEAMANS: No, it does not.
Q
Dr. Seamans, I am puzzled about this
expansion of your enriched uranium. We seem to see
nothing but opposition to generation of power by nuclear
plants.
Why are you so certain that you are going to
be able to expand this?
MR. SEAMANS: Why are we certain that we are
going to expand our nuclear capability in this country?
Q
The generating of power by nuclear plants.
It seems to be going very slowly. You are
anticipating quite a large expansion.
MR. SEAMANS: We currently have 55 plants
on operation, and they are operating very efficiently.
Those that are fortunate to be served by a nuclear
plant are getting their electricity at less cost than
they are if it is a fossil fuel plant. The reliability
is of the same order as other type plants.
We are obviously not satisfied and some of
our basic technological work in ERDA will be in
support of the kind of problems that actually do exist,
material type problems, and so on. None of these
affect safety, but some of these do cause increased
down time.
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- 10 -
Looking ahead, if we don't increase our
capacity to generate electricity, other than oil and
gas, we are going to be in deep trouble. The two
alternatives are coal and nuclear. We have got to
use both because, in addition, coal has got to be used
to develop a synthetic fuel, along with shale. So
we have to use the nuclear, in our view.
We have got to use coal and we have to work
as hard as we can on conservation. These are going to
be the keys, in my estimation, for the future of this
country.
MR. ZARB: In answer to your marketing question,
the orders for uranium enrichment are backed up in that
there is a harder demand for uranium enrichment worldwide
than there is capability to satisfy our own domestic
capability is sold out eight years hence.
Q
I remember reading four and five years
ago about projections of the number of plants we were
going to have. It is way beyond anything we have now.
The course has been very erratic in developing them, and
I don't understand how you are going to overcome this
opposition.
MR. ZARB: By answering legitimate and reasoned
questions and getting any technological issues solved,
such as the disposal of nuclear waste and the basic
safeguards question, which are both technical issues and
both can be solved as we continue to develop our nuclear
capability.
Q
Presumably, the production of enriched
uranium will be profitable or otherwise these companies
will not be interested. In fact, I think I saw one
estimate from revenues of foreign sales over the next
five years will reach $5 billion.
My question is this: Why should not the United
States as a whole enjoy the revenues from technology
developed at taxpayer expense? I think the royalties
he describes seem rather small compared to the potential
profit.
MR. ZARB: I will take the first shot at that
one, and then Bob may want to add to it.
When American industry gets involved in
constructing plants and making a product and a service
available worldwide, the American economy benefits.
American workers and American capital at work -- the
money stays here and it is to the benefit of all Americans.
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- 11 -
If you are asking why that should not be done
by Government, I will go back to what I said earlier.
We have, conservative, $600 billion required for invest-
ment in energy areas between now and 1985, if we are
going to achieve any real degree of independence.
We are going to have to rely on the capital-
based American industry to move us in that direction,
and we miss an awful lot of technological capability
and other management skills if we don't tap into that
great base of talent and financial resource.
MORE
- 12 -
Q
Except in this area there seems to be two
differences, and maybe you can explain it. One is that the
technology is developed by the Government, at taxpayer's
expense, and two that there is a Government guarantee
against loss of equity. You are not expected to do that
for all development of energy, are you?
MR. ZARB: I think the royalty question is
something that will be debated in the Congress, and not only
in terms of the basic legislation, but in the contract by
contract.
That issue may be raised and maybe there will be
some movements onthose numbers. I think that is an
area that should be looked at very carefully, but keep in
mind, when you look at what was developed at Government
expense, we are talking about rubber tires and all the
technological activity that has come out of the space
program that have moved from Government development into the
private sector to be more fully developed there.
Anyway, as we look at solar and shale and gas-
ification and liquefaction, we are looking also at
technologies which have been financed in their very
early stages by the Government, but have to make the
transition into the American industry or they are not going
to grow and we are not going to have them where they are
going to be needed in the late 1980s.
MR. SEAMANS: Just looking at enrichment alone,
we are talking about not one or two or three more plants.
We are talking about the possibility of eight to ten plants
by the year 2000. The question is, where is the capital
going to come from?
I think we often overlook the fact that you build
up your capital through your profit system. If you don't
have the profit, then the taxpayer is going to be burdened
directly with that capital cost.
In other words, there is going to have to be
financed as the first plants were financed. I think the
taxpayer is a lot better off to see this turned over to
a competitive system.
Q
Dr. Seamans, as you make this available to
foreign countries, how can you be assured that they will
follow safety precautions and keeping it out of the hands of
terrorists?
MR. SEAMANS: The way we are proceeding now.
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- 13 -
Q
How do you do it now?
MR. SEAMANS: With Government-to-Government
agreements, wtih the use of the nonproliferation
treaty, with inspection by the international Atomic
Energy Agency; all of these methods.
Q
That does not keep terrorists from
getting it, does it? Isn't that a real danger?
MR. SEAMANS: Sure, it is a matter of obvious
concern to us, and we have a variety of pro rams for safe-
guarding nuclear material in this country. We are making
this available to all those with whom we have agreements,
invite them in to show them what we are doing, encourage
them to increase their safeguards and have a method for
reviewing and inspecting on an international basis how well
they are doing.
Q
Mr. Seamans, since there are problems
currently with security and waste disposal at nuclear power
plants, why don't you solve those first before embarking
on a gigantic program like this that you may end up
having hundreds of power plants and still have not solved
the other problems?
MR. SEAMANS: These two have got to be done in
parallel. We have to move ahead and increase our
capability and not let the requirement for imports build
up and build up.
Q
Where are your proposals to improve the
waste problem and safety problems? Why aren't you proposing
something simultaneously?
MR. SEAMANS: We are about to present a plan
to the Congress next Monday and it will address itself
to these issues.
Q
Dr. Seamans, two questions, if I may. The
first is, would a collapse of the world enriched uranium
market be found for giving companies back their money?
The second one is, isn't there a contradiction between
what you are announcing today and your parallel efforts to
stop the spread and the export of enrichment in new
processing plants to third countries? In other words,
aren't you trying to create an American monopoly?
MR. SEAMANS: I don't think we are, and I think
this has been discussed, but I will re-emphasize it.
First, as to the terms, these have got to be carefully
worked out ahead of time on what conditions can the
equity be reimbursed to UEA.
MORE
- 14 -
This will be part of the negotiation that will
work that out. We can see in broad outline what the extremes
are, but there may be some middle ground that we want to
have worked out in advance.
As to your second question, it is no longer
possible to completely cap the situation. The Germans,
for example, we understand are going to sell a processing
capability to Brazil. This is one example. The only
way that this situation can be brought under control,
we believe, is to be participating in the market arena
at the same time we are participating country by country
and with agreements as well as jointly with the blocs
of countries.
MR. CARLSON: At 1 o'clock this afternoon at
the FEA, there will be a more detailed, more technical
briefing for those of you who are interested. We also
have a 22-page fact sheet we will now make available.
These gentlemen must leave. If we can cut if off
now, Ron Nessen will be down in about five minutes.
END (AT 11:57 A.M. EDT)
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON (EDT)
Office of the White House Press Secretary
THE WHITE HOUSE
TEXT OF LETTERS FROM THE PRESIDENT TO THE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
AND THE PRESIDENT OF THE SENATE
June 26, 1975
Dear Mr. Speaker: (Dear Mr. President:)
I have today sent to the Congress a message describing my
plan for securing the construction of additional uranium
enrichment plants in the United States by private industry
to meet the growing needs of the expanding nuclear power
industry.
A critical element of this plan is legislation to authorize
the Administrator of the Energy Research and Development
Administration to enter into cooperative agreements with
private firms to foster, through Government cooperation
and temporary assurances, the creation of a competitive
private uranium enrichment industry. I am enclosing a
proposed bill, the Nuclear Fuel Assurance Act of 1975,
which would provide the authority needed to achieve the
objectives described in my message. A brief analysis of
the bill is also enclosed.
I urge the Congress to pass this legislation at the earliest
possible date so that we can take a major step toward our
goal of energy independence.
Sincerely,
GERALD R. FORD
######
A BILL
To authorize cooperative arrangements with private
enterprise for the provision of facilities for
the production and enrichment of uranium en-
riched in the isotope 235, to provide for
authorization of contract authority therefor,
and for other purposes.
Be it enacted by the Senate and the House of
Representatives of the United States of America in
Congress assembled, That this Act may be cited as
the "Nuclear Fuel Assurance Act of 1975."
Sec. 2. Chapter 5. PRODUCTION OF SPECIAL NUCLEAR MATERIAL
of the Atomic Energy Act of 1954, as amended, is amended
by adding at the end thereof the following Section:
"Sec. 45 Cooperative Arrangements for Private
Projects to Provide Uranium Enrichment Services --
"a. The Energy Research and Development
Administration is authorized, without regard to the
provisions of Section 169 of this Act, to enter into
cooperative arrangements with any person or persons
for such periods of time as the Administrator of the
Energy Research and Development Administration may
deem necessary or desirable for the purpose of pro-
viding such Government cooperation and assurances
as the Administrator may deem appropriate and
necessary to encourage the development of a com-
petitive private uranium enrichment industry and
to facilitate the design, construction, ownership
and operation by private enterprise of facilities
for the production and enrichment of uranium en-
riched in the isotope 235 in such amounts as will
contribute to the common defense and security and
encourage development and utilization of atomic
energy to the maximum extent consistent with the
common defense and security and with the health
and safety of the public; including, inter alia,
in the discretion of the Administrator,
(1) furnishing technical assistance, in-
formation, inventions and discoveries, enriching
services, materials, and equipment on the basis of
recovery of costs and appropriate royalties for
the use thereof;
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2
(2) providing warranties for materials
and equipment furnished;
(3) providing facility performance
assurances;
(4) purchasing enriching services;
(5) undertaking to acquire the assets
or interest of such person, or any of such persons,
in an enrichment facility, and to assume obligations
and liabilities (including debt) of such person, or
any of such persons, arising out of the design, con-
struction, ownership, or operation for a defined
period of such enrichment facility in the event
such person or persons cannot complete that en-
richment facility or bring it into commercial
operation: Provided that any undertaking, pursuant
to this subsection 5, to acquire equity or pay off
debt, shall apply only to individuals who are
citizens of the United States, or to any corporation
of other entity organized for a common business
purpose, which is owned or effectively controlled
by citizens of the United States; and
(6) determining to modify, complete and
operate that enrichment facility as a Government
facility or to dispose of the facility at any time,
as the interest of the Government may appear, subject
to the other provisions of this Act.
"b. Before the Administrator enters into any
arrangement or amendment thereto under the authority
of this section, or before the Administrator deter-
mines to modify, or complete and operate any facility
or to dispose thereof, the basis for the proposed
arrangement or amendment thereto which the
Administrator proposes to execute (including the
name of the proposed participating person or
persons with whom the arrangement is to be made,
a general description of the proposed facility,
the estimated amount of cost to be incurred by
the participating person or persons, the incentives
imposed by the agreement on the person or persons
to complete the facility as planned and operate it
successfully for a defined period, and the general
features of the proposed arrangement or amendment),
or the plan for such modification, completion,
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3
operation or disposal by the Administrator, as
appropriate, shall be submitted to the Joint
Committee on Atomic Energy, and a period of forty-
five days shall elapse while Congress is in session
(in computing such forty-five days, there shall be
excluded the days on which either House 1s not in
session because of adjournment for more than three
days) unless the Joint Committee by resolution in
writing waives the conditions of, or all or any
portion of, such forty-five day period: Provided,
however, that any such arrangement or amendment
thereto, or such plan, shall be entered into in
accordance with the basis for the arrangement or
plan, as appropriate, submitted as provided herein."
Sec. 3. The Administrator of the Energy Research
and Development Administration is hereby authorized
to enter into contracts for cooperative arrangements,
without fiscal year limitation, pursuant to Section 45
of the Atomic Energy Act of 1954, as amended, in an
amount not to exceed in the aggregate $8,000,000,000
as may be approved in an appropriation Act. In the
event that liquidation of part or all of any financial
obligations incurred under such cooperative arrange-
ments should become necessary, the Administrator of
the Energy Research and Development Administration is
authorized to issue to the Secretary of the Treasury
notes or other obligations up to the levels of contract
authority approved in an appropriation Act pur-
suant to the first sentence of this section in
such form and denomination, bearing such maturity
and subject to such terms and conditions as may
be prescribed by the Administrator with the approval
of the Secretary of the Treasury. Such notes or
other obligations shall bear interest at a rate
determined by the Secretary of the Treasury, tak-
ing into consideration the current average market
yield on outstanding marketable obligations of
the United States of comparable maturity at the
time of issuance of the notes or other obligations.
The Secretary of the Treasury shall purchase any
notes or other obligations issued hereunder and,
for that purpose, he is authorized to use as a
public debt transaction the proceeds from the sale
of any securities issued under the Second Liberty
Bond Act, as amended, and the purposes for which
securities may be issued under that Act, as
amended, are extended to include any purchase of
such notes and obligations. The Secretary of the
more
4
Treasury may at any time sell any of the notes cr
other obligations acquired by him under this
section. All redemptions, purchases and sales
by the Secretary of the Treasury of such notes
or other obligations shall be treated as public
debt transactions of the United States. There
are authorized to be appropriated to the
Administrator such sums as may be necessary to
pay the principal and interest on the notes or
obligations issued by him to the Secretary of
the Treasury.
Section 4. The Administrator of the Energy Research
and Development Administration is hereby authorized to
initiate construction planning and design activities
for expansion of an existing uranium enrichment facility.
There is hereby authorized to be appropriated such sums
as may be necessary for this purpose.
# # # #
more
Bill Analysis
Section 1 of the proposed bill cites the Act as
the "Nuclear Fuel Assurance Act of 1975. 11
Section 2 of the proposed bill would amend Chapter
5, Production of Special Nuclear Material, of the Atomic
Energy Act, as amended, by adding a new Section 45,
entitled "Cooperative Arrangements for Private Projects
to Provide Uranium Enrichment Services."
Subsection a. of the new Section 45 would authorize
the Administrator of the Energy Research and Development
Administration (ERDA) to enter into cooperative arrange--
ments with private enterprise to facilitate the development
of a competitive private industry for the enrichment of
uranium to make fuel for nuclear power plants. This
subsection would enable the Administrator to promote
private investment in the construction, ownership and
operation of uranium enrichment plants by providing such
Government cooperation and assurances as are determined
to be necessary and in the best interests of the Govern-
ment after detailed negotiation with selected individual
proposers of enrichment services. Such negotiations would
be directed toward obtaining arrangements most advan
tageous to the Government and the public interest and
with a degree of risk to the private entrepreneurs
consistent with the objective of creating a private
competitive uranium enrichment industry.
Cooperative arrangements authorized by Section 45a
could include such Government cooperation and assurances
as enumerated in the bill, including the specific
authority provided in subsection 45a(5), for the Govern
ment to acquire the assets or interests and assume the
liabilities (including debt) of a private enrichment firm
in the event - which is highly unlikely --- that private
industry could not complete a plant or bring it into
operation. It is intended that any undertaking by the
Government under subsection 45a(5) to acquire assets or
interest and to assume liabilities of a private venture
would terminate after approximately one year of commercial
operation of a plant. The precise period would be defined
during the negotiations of defined agreements. Any
obligations to pay off debt and to acquire equity interest
would be limited to citizens of the United States.
Subsection b. of the new Section 45 would provide
for review by the Joint Committee on Atomic Energy of
the basis for any cooperative arrangement, or
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2
thereof, which the Administrator proposes to undertake,
including the basis for acquiring assets or interests,
or assuming liabilities of any private venture, and any
plan the Administrator may have for modifying, completing.
operating, or disposing of any plant built under a
cooperative agreement.
Section 3 of the proposed Nuclear Fuel Assurance
Act would authorize the Administrator of ERDA to enter
into contracts, pursuant to the new subsection 45a, in
an amount not to exceed $8 billion, as may be provided
in appropriation Acts. This amount is an estimate of
the total potential cost to the Government in the
unexpected event that all private ventures covered by
cooperative arrangements were to fail and it was then
necessary for the Government to assume assets and
liabilities of the ventures, take over plants, and
compensate domestic investors. It is not expected that
any of these funds would be expended for the assump-
tion of private ventures, but the authorization is
necessary to provide assurance, to customers and sources
of debt financing for private producers, of the Federal
Government's commitment to create a competitive industry.
Section 3 would also provide that, in the event of
Government assumption of the debts, interests and lia
bilities of a private venture, the Administrator is
authorized to secure funds through the Secretary of
the Treasury to liquidate contract authority, up to
the levels previously provided in an appropriations
Act.
Section 4 of the proposed bill would authorize the
Administrator of ERDA to initiate preliminary engineering
design and planning for expansion of a Government-owned
uranium enrichment facility for contingency purposes.
#
#
#
#
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON (EDT)
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE CONGRESS OF THE UNITED STATES:
Every so often, a Nation finds itself at a crossroads.
Sometimes, it is fortunate and recognizes it has a choice.
Sometimes, it does not.
We are at such a crossroads in America today.
The course we select will touch the lives of most of us
before the end of this century and surely affect the lives
of generations of Americans yet to come.
Today, I am asking the Congress to join me in embarking
this Nation on an exciting new course which will help assure
the energy independence we seek and a significantly strengthened
economy at the same time.
I am referring to the establishment of an entirely new
private industry in America to provide the fuel for nuclear
power reactors - the energy resource of the future. I am
referring to uranium enrichment which is presently a Federal
Government monopoly.
Without question, our energy future will become more
reliant on nuclear energy as the supplies of oil and natural
gas diminish.
The questions we must answer are (1) whether the major
capital requirements for constructing new uranium enrichment
facilities will be paid for by the Federal taxpayer or by
private enterprise, and (2) whether a major new and expanding
segment of our economy will be under the control of the Federal
Government or the private sector.
The private sector has already demonstrated its capability
to build and operate uranium enrichment facilities under
contracts with the Federal Government. Since it is also
willing to provide the capital needed to construct new
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2
uranium enrichment plants, I am asking the Congress to enact
legislation to enable American industry -- with all its
financial resources, management capability and technical
ingenuity -- to provide the enriched uranium needed to fuel
nuclear power plants.
I believe this is the proper and correct course for
America to take. The alternative is continued Federal
monopoly of this service at a cost to the taxpayers of at
least $30 billion over the next 15 years.
The enrichment of uranium -- which means, in brief,
separating the fissionable U-235 in uranium from non-fissionable
parts to provide a more potent mixture to fuel nuclear
reactors -- is an essential step in nuclear power production.
For more than twenty years, the United States
Government has supplied the enrichment services for every
nuclear reactor in America and for many others throughout
the world. Our leadership in this important field has enabled
other nations to enjoy the benefits of nuclear power under
secure and prudent conditions. At the same time, this effort
has been helpful in persuading other nations to accept
international safeguards and forego development of nuclear
weapons. In addition, the sale of our enrichment services
in foreign countries has returned hundreds of millions
of dollars to the United States.
These enrichment services have been provided by plants --
owned by the Government and operated by private industry --
in Oak Ridge, Tennessee, Portsmouth, Ohio, and Paducah, Kentucky.
A $1-billion improvement program is now underway to increase
the production capacity of these plants by 60 percent. But
this expanded capacity cannot meet the anticipated needs of
the next 25 years.
The United States is now committed to supply the fuel
needs for several hundred nuclear power plants scheduled to
begin operation by the early 1980's. Since mid-1974, we
have been unable to accept new orders for enriched uranium
because our plant capacity -- including the $1-billion
improvement - is fully committed.
In short, further increases in enrichment capacity depend
on construction of additional plants, with seven or eight years
required for each plant to become fully operational.
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3
Clearly, decisions must be made and actions taken today
if we are to insure an adequate supply of enriched uranium for
the nuclear power needs of the future and if we are to retain
our position as a major supplier of enriched uranium to the
world.
It is my opinion that American private enterprise is best
suited to meet those needs. Already, private industry has
demonstrated its willingness to pursue the major responsibilities
involved in this effort.
With proper licensing,
safeguards, cooperation and limited assurances from the Federal
Government, the private sector can do the job effectively and
efficiently -- and at enormous savings to the American taxpayer.
In this way, direct public benefits will be provided on a
long-term basis by private capital, not by taxpayers.
Accordingly, I am proposing legislation to the Congress
to authorize Government assurances necessary for private
enterprise to enter into this vital field.
A number of compelling reasons argue for private ownership,
as well as operation, of uranium enrichment plants. The market
for nuclear fuel is predominantly in the private sector. The
process of uranium enrichment is clearly industrial in nature.
The uranium enrichment process has the making of a new
industry for the private sector in much the same tradition as
the process for synthetic rubber -- with early Government
development eventually being replaced by private enterprise.
One of the strengths of America's free enterprise system
is its ability to respond to unusual challenges and opportunities
with ingenuity, vigor and flexibility. A significant
opportunity may be in store for many firms -- old and new --
to participate in the growth of the uranium enrichment industry.
Just as coal and fuel oil are supplied to electric utilities
by private firms on a competitive basis, enriched uranium should
be supplied to them in the same fashion in the future.
The energy consumer also stands to benefit. The production
of nuclear power now costs between 25 and 50 percent less than
electricity produced from fossil fuels. It is not vulnerable
to the supply whims or unwarranted price decrees of foreign
energy suppliers. And based on the past fifteen years of
experience, commercial nuclear power has an unparalleled
record of safe operation.
The key technology of the uranium enrichment process is
secret and will remain subject to continued classification,
safeguards and export controls.
more
4
But for several years, a number of qualified American
companies have been granted access to the Government's technology
under carefully controlled conditions to enable them to assess
the commercial potential for private enriching plants.
The Government-owned gaseous diffusion enriching plants
have run reliably and with ever-improving efficiency for more
than a quarter of a century. One private group has chosen
this well-demonstrated process as part of its $3.5 billion
proposal to build an enrichment plant serving 90 nuclear
reactors here and abroad in the 1980's. Others are studying
the potential of the newer gas centrifuge process. Though not
yet in large-scale operation, the centrifuge process -- which
uses much less power than the older process -- is almost ready
for commercial application.
I believe we must move forward with both technologies
and encourage competitive private entry into the enrichment
business with both methods. A private gaseous diffusion
plant should be built first to provide the most urgently
needed increase in capacity, but we should proceed simul-
taneously with commercial development of the centrifuge
process.
With this comprehensive approach, the United States can
reopen its uranium enrichment "order book," reassert its
supremacy as the world's major supplier of enriched uranium,
and develop a strong private enrichment industry to help
bolster the national economy.
For a number of reasons, a certain amount of governmental
involvement is necessary to make private entry into the uranium
enrichment industry successful.
The initial investment requirements for such massive
projects are huge. The technology involved is presently owned
by the Government. There are safeguards that must be rigidly
enforced. The Government has a responsibility to help ensure
that these private ventures perform as expected, providing
timely and reliable service to both domestic and foreign
customers.
Under the legislation I am proposing today, the Energy
Research and Development Administration would be authorized
to negotiate and enter into contracts with private groups
interested in building, owning and operating a gaseous
diffusion uranium enrichment plant.
more
5
ERDA would also be authorized to negotiate for construction
of several centrifuge enrichment plants when more definitive
proposals for such projects are made by the private sector.
Contract authority in the amount of $8 billion will be
needed, but we expect almost no actual Government expenditures
to be involved. In fact, the creation of a private enrichment
industry will generate substantial revenues for the United States
Treasury through payment of Federal income taxes and com-
pensation for use of Government-owned technology.
Under the proposed arrangements, there will be an
opportunity for foreign investment in these plants, although
the plants will remain firmly under U.S. control. There will
be no sharing of U.S. technology and, there will be limitations
on the amount of capacity each plant can commit to foreign
customers.
In addition, all exports of plant products will continue
to be made pursuant to Governmental Agreements for Cooperation
with other Nations. All will be subject to appropriate safe-
guards to preclude use for other than agreed peaceful purposes.
Foreign investors and customers would not have access to
sensitive classified technology. Proposals from American
enrichers to share technology would be evaluated separately,
and would be subject to careful Government review and approval.
Finally, the plants proposed will be designed and built
to produce low enriched fuel which is suitable only for
commercial power reactors -- not for nuclear explosives.
In the remote event that a proposed private venture did
not succeed, this legislation would enable the Government
to take actions necessary to assure that plants will be
brought on line in time to supply domestic and foreign
customers when uranium enrichment services are needed.
I have instructed the Energy Research and Development
Administration to implement backup contingency measures,
including continuation of conceptual design activities,
research and development, and technology assistance to the
private sector on a cost-recovery basis.
ERDA would also be able to purchase from a private firm
design work on components that could be used in a Government
plant in the unlikely event that a venture fails.
Finally, I pledge to all customers -- domestic and
foreign -- who place orders with our private suppliers that
the United States Government will guarantee that these orders
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6
are filled as needed. Those who are first in line with our
private sources will be first in line to receive supplies
under this assurance. All contracted obligations will be
honored.
I also pledge that cooperative agreements made with
private firms under the proposed new authority will fully
reflect the public interest. In fact, all contracts will be
placed before the Congress in advance of their effectiveness.
The Congress will have full and complete review of each one.
In sum, the program I am proposing will take maximum
advantage of the strength and resourcefulness of industry and
Government.
It will reinforce the world leadership we now enjoy in
uranium enrichment technology. It will help insure the
continued availability of reliable energy for America. It
will move America one big step nearer energy independence.
Although the development of a competitive nuclear fuel
industry is an important part of our overall energy strategy,
we must continue our efforts to conserve the more traditional
energy resources on which we have relied for generations.
And we must accelerate our exploration of new sources of
energy for the future -- including solar power, the harnessing
of nuclear fusion and development of nuclear breeder reactors
which are safe, environmentally sound and reliable.
I ask the Congress for early authorization of this program.
GERALD R. FORD
THE WHITE HOUSE,
June 26, 1975.
#
#
#
#
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON (EDT)
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
THE PRESIDENT'S PLAN FOR A
COMPETITIVE NUCLEAR FUEL INDUSTRY
Page
The President's Announcement
3
Background
3
Plan Announced by the President
4
- Objectives
- Principal Elements of the Plan
Legislative Authority for Cooperative
Arrangements with Private Firms
Assurances for Customers
Controls and Safeguards
Preventing the Diversion of Nuclear
Materials and spread of sensitive
technology
Foreign Investment
Environmental Impact, Safety and
Anti-Trust
Implementing Actions
7
- Negotiations for a Diffusion Plant
- Request for Proposal for Centrifuge Plants
- Environmental Impact Statement
-- Contingency Planning
- Diffusion Plant Design Work
Specifics of the Legislative Proposal
8
- Authorizing Legislation
Cooperative Agreements
Congressional Review
- Appropriations Request
Developments Leading to the President's Plan
9
- U.S. Leadership in Uranium Enrichment
Technology
Gaseous Diffusion
more
(OVER)
2
Gas Centrifuge
Laser Separation
- Existing U.S. Capacity
- The Growing Market
- Potential Foreign Suppliers
- The Program to Develop a Competitive Industry
Diffusion Plant
Centrifuge Plant
- Obstacles to the Entry of Private Industry
- Alternatives to Private Entry
- The Proposal from Uranium Enrichment
Associates (UEA)
- Centrifuge Enriching Projects - Request for
Proposals
Other Actions Related to Uranium Enrichment
Capacity
13
- Increasing ERDA's Charge for Uranium
Enrichment Services
- Contract Relief for Current ERDA Enrichment
Customers
- ERDA Conditional Contracts for Enrichment
Services
Attachment:
#1 - Summary of UEA Plan and Proposal to ERDA
16
#2 - Uranium Enrichment as a Part of the Nuclear
20
Fuel Cycle
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THE PRESIDENT'S ANNOUNCEMENT
The President today announced administrative actions and
a legislative proposal to (a) increase the United States'
capacity to produce enriched uranium in order to meet the
needs of domestic and foreign nuclear power plants, (b)
retain U.S. leadership as a world supplier of uranium en-
richment services and nuclear power plants, (c) assure the
creation, under appropriate controls of a private, competitive
uranium enrichment industry in the U.S. -- ending the current
Government monopoly; and (d) accomplish these objectives
with little or no cost to taxpayers and with all necessary
controls and safeguards.
BACKGROUND
Natural uranium from U.S. and foreign mines must be refined
or "enriched" before it can be used to make fuel for nuclear
power plants which are used in the United States and in many
foreign nations to generate electricity.
U.S. capacity for enriching uranium which now supplies all
domestic and most foreign needs, consists of three Govern-
ment-owned plants, located at Oak Ridge, Tennessee; Paducah,
Kentucky; and Portsmouth, Ohio.
Since mid-1974, the entire capacity of the three plants has
been fully committed under long-term contracts. New enrich-
ment capacity must be on "on-line" beginning in about 1983
to meet the growing domestic and foreign demand for nuclear
fuel.
The potential U.S. market abroad has begun to erode as some
potential foreign customers have started looking to sources
such as the U.S.S.R., France and a West European consortium
for uranium enrichment.
Since 1971, the Executive Branch has followed policies and
programs directed toward assuring that private industry --
rather than the Federal Government -- builds the next
increments of U.S. uranium enrichment capacity.
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Several industrial firms have sought to enter the uranium
enrichment field but all have found that some forms of
Government cooperation and temporary assurances are needed
to overcome the initial obstacles to private industry
involvement.
THE PLAN
Objectives. The plan announced by the President is designed to
meet the objectives of assuring that:
The next increments of U.S. uranium enrichment capacity
will be available when needed to meet the growing demand
for fuel for nuclear powered generating plants in the U.S.
and in other nations.
The U.S. maintains its leadership role in enrichment
technology and its role as a major world supplier of
uranium enrichment services and nuclear power plants --
a role that is important to:
-
Our economy and our world trade position.
Our efforts to obtain the commitment of additional
nations to accept international safeguards and the
principle of nuclear non-proliferation.
-
Our cooperation with other major oil consuming nations
which are looking to nuclear power to help reduce their
dependence on foreign oil imports.
-
Our longer range goal of developing technology
and energy resources to supply a significant share
of the free world's energy needs.
All future increments of capacity will be built, financed
and operated by private industry -- rather than by the
Federal Government -- so that a competitive industry will
exist at the earliest possible date.
There will be little or no cost to the taxpayer and that
the Government will receive increased revenue in corporate
taxes and compensation for the use of its inventions and
discoveries.
All necessary domestic and international controls over
nuclear materials and classified technology will be main-
tained, as they would be if the Government were to own the
new plants.
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Principal Elements of the Plan.
Legislative Authority for Cooperative Arrangements with
Private Firms. The President is asking the Congress to
enact promptly the Nuclear Fuel Assurance Act to provide
the additional legislative authority needed to enable
the Energy Research and Development Administration
(ERDA) to negotiate and enter into cooperative arrange-
ments with private industrial organizations that wish
to build, own and operate uranium enrichment plants.
-
Negotiations would be directed toward the arrange-
ments most advantageous to the Government and the
public interest and with a degree of risk to the
private firm that is consistent with the objective
of creating a private, competitive uranium enrichment
industry.
These arrangements would provide for certain forms of
Government cooperation and temporary assurances found
to be necessary after detailed negotiations with firms
submitting proposals. Arrangements could include:
Supplying and warranting Government-owned inven-
tions and discoveries in enrichment technology --
for which the Government will be paid.
Selling certain materials and supplies on a full
cost recovery basis which are available only
from the Federal Government.
Buying enriching services from private producers
or selling enriching services to producers from
the Government stockpile to accommodate plant
start-up and loading problems.
Assuring the delivery of uranium enrichment services
to customers which have placed orders with private
enrichment firms.
Assuming the assets and liabilities (including debt)
of a private uranium enrichment project if the
venture threatened to fail -- at the call of the
private venture or the Government, and with com-
pensation to domestic investors in the private
ventures ranging from full reimbursement to total
loss of equity interest, depending upon the circum-
stances leading to the threat of failure.
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The arrangements would be spelled out in a detailed
contract, and the basis for arrangements would be
subject to Congressional review.
It is intended that any undertaking by the
Government to acquire assets or interest and
to assume liabilities of a private venture
would end after approximately one full year
of commercial operation of a plant. The precise
period would be determined in the negotiation
of definitive agreements.
I
The Government would monitor progress carefully so that
it can be sure that the plant will function properly
and will be completed on time and within cost estimates.
Assurances for Customers. The President announced his
pledge to domestic and foreign customers who place orders
with private U.S. suppliers that the Government will assure
that orders will be filled as services are needed. Those
first in line with private suppliers will be first in line
to receive services from the Government -- if it were
necessary for the Government to take over and complete
a private project.
Controls and Safeguards. The President announced that all
necessary controls and safeguards will be maintained in
all arrangements with private firms. Such controls and
safeguards include:
-
Preventing the Diversion of Nuclear Materials or
Un-Controlled Spread of Sensitive Technology. All
necessary measures will be taken to safeguard the
use of the products of plants and to protect sensitive
classified technology. These measures include:
Effective domestic safeguards and physical security
measures to the plants and their products.
Continued requirements that exports take place
pursuant to appropriate international agreements
for cooperation and be subjected to safeguards
to prevent diversions.
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Continued classification and protection of
sensitive enrichment technology.
Foreign Investment. Foreign investment in private
enrichment ventures will be encouraged, but control
will remain, as required by law, with U.S. interests.
Foreign investors would not require or have access
to classified information. Any proposals for
sharing technology would be considered separately
and would be subject to Governmental review and
approval.
Environmental Impact, Safety and Anti-Trust. Private
ventures wishing to build plants will have to obtain
from the Nuclear Regulatory Commission (NRC) a construc-
tion permit and operating license. As a part of its
review, the NRC must evaluate environmental, safety
and anti-trust considerations as well as assure that
control of the proposed new ventures remain in the
U.S. as now required by the Atomic Energy Act.
NRC also will have responsibility for assuring that
the plants are appropriately safeguarded. The Justice
Department participates in the review of anti-trust
considerations.
IMPLEMENTING ACTIONS
The President announced several administrative actions that are
being taken now:
Negotiations for a Diffusion Plant. ERDA is responding
formally to a proposal from the Uranium Enrichment Associates
(UEA) offering to enter into negotiations which could lead
to the construction by UEA of a $3.5 billion (1976 dollars)
plant which would make use of gaseous diffusion technology
and which would be on line by about 1983.
Request for Proposal for Centrifuge Plants. ERDA is
issuing today a new request for proposals from industrial
firms interested in constructing, owning and operating
enrichment facilities making use of centrifuge technology.
Environmental Impact Statement. ERDA will on June 30
issue for public review and comment a draft environ-
mental impact statement concerned with the expansion
of uranium enrichment capacity to be attained through
ERDA's implementation of this action.
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Contingency Planning. ERDA will continue with backup
contingency measures to assure that capacity will be
ready in the unlikely event that industrial efforts
falter. These measures include continuation of
Government conceptual design activities, research and
development on enrichment technologies, and technologi-
cal assistance to the private sector on a cost recovery
basis.
Diffusion Plant Design Work. ERDA plans to purchase from
UEA design work on components for the private diffusion plant
that could be used in a Government plant -- if the private
venture were unable to proceed.
SPECIFICS OF THE LEGISLATIVE PROPOSAL
Authorizing legislation. The basic enabling legislation proposed
today by the President would:
Authorize Cooperative Agreements.
i
It would permit ERDA to negotiate and enter into
cooperative arrangements with firms wishing to build,
own and operate uranium enrichment facilities.
It would provide authorization for contract authority
for amounts up to $8 billion as may be approved in an
appropriation act -- which is an estimate of the to-
tal potential cost to the Government in the unexpected
event that all Government assured diffusion and cen-
trifuge ventures were to fail, and it was then
necessary for the Government to assume assets and
liabilities of these ventures, take over plants, and
compensate domestic investors. The Administration's
expectation is that none of these funds would have
to be appropriated or expended for the assumption
of private ventures, but the authorization is necessary
to provide assurance to customers and to potential
producers of the Federal Government's commitment to
create a competitive industry.
Provide for Congressional Review. Once contracts were
negotiated the Joint Committee on Atomic Energy (JCAE)
would be notified and a period of 45 days would have to
elapse before a contract would be executed -- to allow
an opportunity for Congressional review of the basis
for ERDA's arrangements with private firms.
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Appropriations Request. The President will later request
an appropriation of contract authority which is required by
the proposed bill before a contract can be executed, in
order to cover the estimated maximum Federal Government
exposure for specific projects in the event that it were
necessary to assume assets and liabilities. Again,
expenditure of these funds for assumption of any private
venture is not considered likely.
DEVELOPMENTS LEADING TO THE PRESIDENT'S PLAN
U.S. Leadership in Uranium Enrichment Technology. The United
States is the recognized world leader in technology for refining
or "enriching" natural uranium to a form that can be used to make
fuel for nuclear power reactors. Natural uranium contains only a
small amount (approximately .7%) of the fissionable isotope U-235.
In order to be useful to make fuel for most nuclear reactors, the
concentration of U-235 must be increased to about 2-4% through a
process of separating off other isotopes. The technology was
developed and is owned by the Federal Government. Certain parts
of the technology are classified. Principal U.S. technologies
are:
Gaseous Diffusion. This technology which is now used in the
three existing government-owned enrichment plants was developed
in the 1940's. Over 30 years of large scale operating experi-
ence and process improvement have made the technology the most
reliable and economical now available for commercial scale
operations. The next increment of capacity must make use of
this technology.
Gas centrifuge. The gas centrifuge process of uranium
enrichment provides an alternative to gaseous diffusion.
Full operation of a Government pilot plant is scheduled for
early 1976. If the projected economics of the process are
realized, gas centrifuge technology is expected to be used as
subsequent increments of commercial capacity are added.
Laser Separation. ERDA is conducting a basic research
program to determine whether this technology is technically
or commercially feasible. Even if successful, the technology
will not be available in time to be used for the next several
increments of needed enrichment capacity.
Existing U.S. Capacity. The three Government-owned uranium
enrichment plants will, when currently authorized expansion
is completed, have the capacity to produce enriched uranium
needed to fuel about 300 large nuclear-powered electric
generating plants in the U.S. and foreign countries.
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The Growing Market. Current estimates are that the U.S. will
require for domestic needs added enrichment capacity by 2000
equal to 6 to 9 plants the size of any one of the three existing
plants and that added capacity for the total market served by
the U.S. will equal 9 to 12 similar size plants.
Potential Foreign Suppliers. The principal existing capacity
for enriching uranium outside the U.S. is in the Soviet Union.
A French-led diffusion plant project (Eurodif) is expected to
begin production in 1979 and its capacity is reported to be
fully committed. A British-German-Dutch consortium (Urenco)
plant will also begin expanded operations in 1979. Plans for
additional plants are being discussed by France, Canada,
South Africa, Japan, Australia and Brazil.
The Program to Develop a Competitive Industry. The Atomic
Energy Act of 1954 provides that "the development, use and
control of atomic energy shall be directed so as to
strengthen free competition in private enterprise". An
Executive Branch policy to encourage private industry to build
the next increments of uranium enrichment capacity was announced
in June 1971. Beginning in 1973, the Atomic Energy Commission
(AEC) asked private firms to consider building, owning and
operating enrichment plants and granted qualified U.S. firms
access to classified aspects of the Government's work, under
carefully controlled security conditions, in order that they
might make their own assessment of the commercial potential
for private enriching plants. A number of firms responded to
the invitation from which several consortia have emerged which
are interested in pursuing the possibility of building enrich-
ment plants.
Diffusion Plant. One consortium -- the Uranium Enrichment
Associates (UEA) -- is interested in constructing a $3.5
billion gaseous diffusion plant equivalent to the expanded
capacity of one of the 3 existing Government-owned plants.
Centrifuge Plants. Other firms and consortia -- Centar,
Exxon Nuclear and Garrett Corporation -- have expressed
interest in cooperative arrangements with the Federal
Government which would lead to demonstration gas centrifuge
plants which could be expanded in the future to commercial
scale plants. The AEC (predecessor to ERDA) requested
proposals from industry to advance the demonstration of
centrifuge technology. A modified request for proposals
is being issued today by ERDA.
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Obstacles to the Entry of Private Industry. All firms interested
in building, owning and operating a private plant have concluded
that some form of Government cooperation and temporary assurances
are essential to begin the transition to a private competitive
industry. Among the factors that have contributed to this
conclusion are:
The complexity of the undertaking, including the Federal
ownership and the classification of the technology.
The large financial commitment required and the difficulty
encountered in trying to obtain private financing.
The inherent difficulties of ending a Government monopoly.
The recent adverse financial situation of U.S. electrical
utilities which are the customers for a plant. (Their long
term contracts for uranium enrichment services must provide
security for the long term financing required.)
Some uncertainty as to whether the Government would follow
through on its commitment to achieve privatization.
Alternatives to Private Entry. The principal alternatives to
an immediate effort to achieve privatization include:
All future additions to capacity financed, built and owned
by the Federal Government, thus continuing indefinitely the
existing monopoly.
Government financing and ownership of one or more additional
increments of capacity, followed by another attempt to achieve
privatization.
A thorough review indicated that, regardless of the alternative
selected:
The next increment of capacity can be on line when needed
(now estimated about 1983).
Controls and safeguards involving classified technology and
non-proliferation of nuclear materials can be maintained.
Customers for the next increment are expected to be largely
foreign.
Foreign investments in an enrichment plant can be accommodated.
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This review led to the conclusion that the task of explaining and
implementing the plan for achieving a private industry would be
difficult and that a substantial effort would be required by both
the Congress and the Executive Branch, but that the benefits of
privatization justified the effort. The benefits of privatization
include:
Avoiding a cost to taxpayers of $40 to $50 billion
for plants that should be on line by 2000, if the Federal
Government were to finance and own the plants. (These funds
would not be recovered to the Treasury for many years.)
Under the President's plan, revenue of about $90 to
$100 million per plant per year would flow to the Federal
Treasury from industry, principally from taxes and payments
for the use of Government inventions and discoveries.
An early end to the Government monopoly in a type of commercial
activity.
Avoiding expansion of the public sector when industry is
willing and able to do the job.
Competition which would provide incentives for lower costs
and additional improvements in technology.
The Proposal from Uranium Enrichment Associates (UEA). Uranium
Enrichment Associates is a consortium currently consisting of
Bechtel Corporation and the Goodyear Tire and Rubber Company. On
May 30, 1975, UEA submitted a revised proposal to ERDA calling for
cooperative arrangements with the Federal Government. The principal
features of the UEA proposals are summarized in Attachment #1. A
contract containing the details of a cooperative agreement would be
negotiated by UEA and ERDA.
Centrifuge Enriching Projects -- Request for Proposals.
In August of 1974 the Government announced a program expected
to lead to several relatively small industry constructed
demonstration projects.
Gas centrifuge technology has not yet been applied on a
production scale sufficient to permit full industry commit-
ment to large plants. At least three companies are interested
in undertaking private centrifuge enriching projects now which
would be scaled up progressively from small demonstration
modules to a capacity the economies of scale for centrifuge
enriching are expected to be largely realized. These are
expected to be 1/3 to 1/2 the capacity of the planned diffusion
plant.
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Government-industry cooperative arrangements similar to that
required for the UEA diffusion project may be required.
A Request for Proposals for this program which extends and
elaborates upon the earlier program is being issued today:
-
Proposals will be due on October 1, 1975 and it is the
Government expectation that several proposals could be
accepted to proceed more or less in parallel with each
other and with the UEA project.
Proposers will describe their proposed project in detail,
including plant design, size, location and schedules and
specify the type and magnitude of Government support
necessary to proceed.
Small initial modules, perhaps 200-300 thousand units
per year could be in operation in the early 1980's with
2-3 million unit commercial scale plants achieved in the
mid-1980's on a time frame consistent with the growth
of the market.
Centrifuge technology permits adding small capacity increments
as required to closely follow market needs.
Proceeding with several centrifuge demonstration projects in
the same time frame as the gaseous diffusion plant will furthe
the objective of developing a private, competitive enriching
industry and maintaining U.S. world leadership in this field.
OTHER ACTIONS RELATED TO URANIUM ENRICHMENT CAPACITY
Increasing ERDA's Charge for Uranium Enrichment Services.
The current price charged by ERDA for uranium enrichment is
based on a statutory formula which says that ERDA's charge
must be established on the basis of the recovery of the
Government's costs over a reasonable period of time. Appli-
cation of the formula has resulted in a present charge of
about $42 to $48 per separative work unit, depending on the
type of contract a customer has with ERDA. This price will
rise by the end of 1975 to about $53 and $60 per unit.
These prices reflect the low cost of construction during
the 1940's and 1950's for plants built primarily for military
purposes. These prices are much lower than the quoted world
market prices of enrichment services of between $75 to $100
per unit.
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The President announced in his 1976 Budget his intention to
propose legislation to the Congress to permit ERDA to raise
the price of enrichment services from its plants. The new
price would be established to recover the Government's costs
and place the pricing of Government enriching services on a
more business-like basis. This step would encourage private
sector interest in building enrichment facilities and end an
unjustifiable subsidy to both foreign and domestic customers.
The new price would include a rate of return on investment
more appropriate to the private sector than the Government's
rate of return, an allowance equivalent to corporate income
taxes and also include other costs typical of private operation
On this basis the new price per separative work unit will be
approximately $76.
This legislation has been submitted to the Congress by ERDA.
Contract Relief for Current ERDA Enrichment Customers.
Present ERDA enrichment contracts require customers to commit
to a fixed delivery schedule and to make prepayments amounting
to about $3 million per plant several years prior to the
first delivery of enriched fuel. Since these contracts were
signed, many nuclear power plants whose fuel was covered by
these contracts have been postponed or cancelled.
As a result, many utilities now face the prospect of having
to pay for uranium enrichment services well in advance of
the revised completion dates for the reactors.
In order to free both ERDA and the enrichment customers from
unrealistic commitment, ERDA, after notifying the Joint
Committee on Atomic Energy (JCAE), has announced that it will:
-
Grant customers the right within a 60-day period to
serve notice that they wish to terminate their contract
with no cancellation fee and with refund of any payments.
-
Permit those wishing to defer deliveries (rather than
terminate contracts) to have a one-time adjustment of
contract commitments without penalty.
Permit a similar one-time adjustment of the rate at
which uranium feed should be sent to the enriching
plants to coincide in part with the slipped enrichment
requirements.
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These actions would:
-
Result in a larger U.S. stockpile of enriched uranium
for use as an inventory to support the new private
uranium enrichment plants with backup supplies of
enriched material, should any delays occur in their
initial operation.
-
Establish a more realistic data base for evaluating
future domestic and foreign enrichment requirements.
-
Grant needed short-term financial relief to the utility
industry.
ERDA Conditional Contracts for Enrichment Services.
Some customers placing orders with AEC (predecessor to ERDA)
in mid-1974 were given conditional contracts; i.e., contracts
contingent upon the approval by U.S. regulatory authorities
(now the Nuclear Regulatory Commission) of the use of recycled
plutonium as a nuclear reactor fuel. These conditional contracts
were backed up by announcement that the U.S. would have expanded
capacity available that could fulfill requirements, if needed.
The expanded U.S. capacity that will result from the President's
plan will provide sources of supply that can be tapped by the
holders of conditional contracts.
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ATTACHMENT #1
SUMMARY OF THE URANIUM ENRICHMENT
ASSOCIATES (UEA) PLAN AND PROPOSAL TO ERDA FOR
A COOPERATIVE ARRANGEMENT
Physical Description of the Project.
A 9 million separative work unit per year gaseous
diffusion plant would be built near Dothan, Alabama
on a 1720 acre site on the Chattahoochee River.
When in full operation the plant could provide enriching
services for about 90 large nuclear power reactors.
The plant will require about 2500 megawatts of electrical
power which will be supplied from a dedicated nuclear
power facility located nearby.
Project cost estimate (exclusive of the power project)
has been estimated by UEA to be $3.5 billion in 1976
dollars.
UEA projects continuation of design work now underway
on the project during the next several years with
construction scheduled to commence in 1977.
Full production from the plant is projected in 1983
with limited production starting in 1981.
Nearly 50 million construction manhours are estimated
for the project. A peak construction labor force of
about 7000 workers will be reached in 1979-80 and the
permanent operating staff of the project is expected
to be about 1100.
The plant will be processing and upgrading natural
uranium and thus will have essentially no radiation
hazard. It will be similar to a large materials
handling plant except that the product material will
be much more valuable.
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Financial Structure of UEA Project.
UEA expects that two to six companies in addition to
Bechtel and Goodyear will comprise the consortium that
will undertake the project. These companies are ex-
pected to be identified within the next few months.
Based upon marketing efforts to date, UEA projects that
about 40 percent of plant capacity will be taken by U.S.
domestic utilities and the balance by non-U.S. organi-
zations in countries with which the United States has
Agreements for Cooperation permitting the transfer or
disposition of enriched uranium. (Under the Atomic
Energy Act voting control for such a project must
remain in the hands of the United States investors at
all times and the project is so structured. The secrecy
of the process will be protected and foreign customers
or investors will not have access to classified technology
or information.)
Project financing using an 85 percent debt, 15 percent
equity ratio is contemplated for the project.
The equity corresponding to the domestic portion of plant
output will be supplied by UEA and the debt financing
will be raised in the commercial market primarily on
the basis of the security of long-term (25 year) non-
cancelable enrichment service contracts with domestic
utilities.
Both equity and debt for the foreign share of plant
output is to be supplied from the foreign customers'
own sources of capital.
Pricing of product from the plant is based upon the
recovery of all operating costs, servicing of debt and
an after-tax return of approximately 15 percent on
equity.
A 3 percent payment, based on gross sales would be paid
to the Government for use of taxpayer-developed technology.
Customers.
A number of United States' utilities have executed
contingent letters of intent with UEA to purchase uranium
enriching services from the new plant and a number of
additional utilities are now evaluating their requirement
for services.
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UEA has made extensive marketing contacts overseas and
anticipates that foreign orders will be forthcoming.
Cooperative Arrangements.
Due to the unique nature of the project, the very large
capital requirements, and long payout periods, UEA has
concluded that it would not be possible to move ahead
without certain forms of Government backup assistance.
UEA has proposed that the Government:
-
Supply, at cost, essential components presently
produced exclusively by the Government.
-
Supply the Government's gaseous diffusion technology
and warrant its satisfactory operation.
-
Buy enriching services from UEA or sell enriching
services to UEA from the Government stockpile to
accommodate plant start-up and loading problems.
UEA has also proposed that:
-
The Government provide standby financial backup
assistance lasting for the critical construction
period plus approximately one additional year to
offset the current weak credit position of the
U.S. utility industry. The Government provide
financial backup if UEA cannot complete the plant
or bring it into commercial operation. A call on
this financial backup is made at the risk of loss
to UEA of its equity interest. In this event,
the Government has the right to acquire UEA's
domestic equity position and the obligation to
assume UEA's liabilities and debt.
-
The Government may also require UEA to release
the project to the Government if the Government's
interest so demands. In this event, the Government
would be obligated to assume UEA's liabilities
and debt.
-
The consideration for acquisition of UEA's domestic
equity position in either case can range from
loss of equity for uncorrected gross mismanagement
of UEA to full fair compensation for causative
events outside UEA's reasonable control.
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All of the above forms of backup assistance would be
subject to contract negotiations between ERDA and UEA.
UEA believes that the plant can be completed within the
private sector with no net expenditure of Government
funds.
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ATTACHMENT #2
Uranium Enrichment as Part of the Nuclear Fuel Cycle
The attached chart depicts the nuclear fuel cycle for Light
Water Reactors, (the type of reactors most commonly used
in the U.S.). About 97% of the reactors obtaining enrich-
ment services from the ERDA gaseous diffusion plants are
Light Water Reactors, a similar fuel cycle exists for the
other present reactor type the High Temperature Gas
Cooled Reactor.
Prior to the enrichment step, uranium ore is mined from
the earth's crust and sent to a mill where uranium concentrate
is produced. This concentrate is often referred to as
yellowcake or by the chemical symbol, U₂O₈. There are
14 mills presently operating in the U.S. The uranium
concentrate is then sent to a converter where it is con
verted to uranium hexafluoride, or UF6. This is the only
simple form of uranium that can be gaseous at conditions
near room temperatures and pressures. There are two
UF6 conversion plants operating in the U.S.
The uranium hexafluoride is then sent to a uranium enrichment
plant. There are two processes under consideration for
commercial use in the U.S. the established gaseous
diffusion process, used in the ERDA plants and the gas
centrifuge process. The UEA will use the gaseous diffusion
process. In the process, the uranium hexafluoride gas is
pumped through a semipermeable membrane. The desirable
fissionable isotope, U-235, diffuses through the membrane
more readily than the nonfissionable isotope U-238. A
stream depleted in U-235 is collected from the plant and
sent to storage. A stream enriched in U-235 is collected
from the plant and sent to a fuel fabrication plant. In
this plant, the uranium hexafluoride is converted to uranium
dioxide U.O₂, formed into pellets, and placed in zirconium
tubes. The tubes are assembled into bundles and sent to
nuclear power plants. Seven U.S. companies are involved
in the fabrication of nuclear fuel.
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After the fuel is used in the nuclear power plant, it is
discharged and allowed to cool in a large water basin at
the plant. The spent fuel will then be sent to a chemical
reprocessing plant. In this step, the uranium and reactor-
produced plutonium will be separated from the highly
radioactive fission products generated while the fuel is
in the nuclear power plant. The radioactive wastes in
proper form will be sent to a repository. The recovered
uranium will be converted again to the hexafluoride and
reinserted into the enrichment plants for reenrichment.
Plutonium is also a fissionable material that can be used
as fuel in a nuclear power plant. If use of the plutonium
is granted by the Nuclear Regulatory Commission, it would
be sent to the fuel fabrication plants; there it would be
mixed with the uranium and formed into pellets for nuclear
power plant fuel. There are currently no commercial chemical
reprocessing plants operating in the U.S.; one plant is shut
down for modification and another is under construction.
nt
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FEDERAL REPOSITORIES
REPROCESSING PLANT
SPENT FUEL STORAGE
HIGH LEVEL
SOLID WASTE
FOR IMMEDIATE RELEASE
JUNE 26, 1975
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON SIGNING
THE URANIUM ENRICHMENT MESSAGE
THE CABINET ROOM
11:23 A.M. EDT
I will read a statement before signing the
message or messages that will go to the Congress.
Because our oil and natural gas resources
are fast being depleted, we must rely more and more
on nuclear power as a major source of energy for the
future.
Today, I am asking the Congress to join me
in embarking the Nation on an exciting new course of
action which will help to assure the energy independence
that we need, and significantly strengthen our economy
at home, at the same time.
I am referring to the establishment of an
entirely new competitive industry to provide uranium
enrichment service for nuclear power reactors. The
legislation that I am seeking will reinforce the world
leadership we now enjoy in uranium enrichment technology.
It will help insure the continued availability
of reliable energy for America. It will move America
one big step nearer energy independence.
This legislation will insure that the billions
of dollars required for the construction of new enrich-
ment plants will be borne by the private sector, not by
the American taxpayer.
But all of us will benefit directly from the
service which private enterprise will provide.
I urge the Congress to act swiftly and favorably
on this important new energy initiative. With this
comprehensive approach, the United States can reopen
its uranium enrichment order book, reassert its supremacy
as the world's major supplier of enriched uranium, and
develop a strong private enrichment industry to help bolster
the national economy.
MORE
Page 2
So it is with pleasure and hope that I sign
the message to go to both the House and the Senate, and
ask the Congress to move as rapidly as possible in
order that we can achieve the objectives which are so
important.
Thank you very much.
END
(AT 11:25 A.M. EDT)
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON, EDT
Office of the White House Press Secretary
THE WHITE HOUSE
SUMMARY FACT SHEET
THE PRESIDENT'S PLAN FOR A COMPETITIVE
NUCLEAR FUEL INDUSTRY
The President's Action
The President today announced administrative actions and
a legislative proposal to:
Increase the United States' capacity to produce enriched
uranium to fuel domestic and foreign nuclear power
plants.
Retain U.S. leadership as a world supplier of uranium
enrichment services and technology for the peaceful
uses of nuclear power.
Assure the creation, under appropriate controls of a
private, competitive uranium enrichment industry in
the U.S. -- ending the current Government monopoly.
Accomplish these objectives with little or no cost to
taxpayers and with all necessary controls and safeguards.
Background
The U.S. capacity for refining or "enriching" uranium
to make fuel for nuclear electric generating plants
is now fully committed.
Work on constructing new capacity must begin soon so
that plants will be ready to meet domestic and
foreign requirements by about 1983.
Efforts to encourage the creation of a competitive
uranium enrichment industry have shown that certain
forms of Government cooperation and temporary
assurances are necessary to permit private firms
to enter the industry.
more
2
The need for added capacity provides the opportunity
for specific actions by the Government to encourage
private entry.
Highlights of the Plan
The President's plan includes:
A legislative proposal, the Nuclear Fuel Assurance
Act of 1975, which would authorize the Government
to enter into certain cooperative arrangements with
private industrial firms that wish to finance,
build, own and operate plants to provide uranium
enrichment services.
A pledge by the President to foreign and domestic
customers that the Government will assure that orders
placed with private producers will be fulfilled as
services are needed.
Opportunities for foreign investment, with control
of these plants remaining in U.S. hands.
All necessary controls and safeguards concerned with
(a) preventing the diversion of nuclear materials
and the spread of sensitive technology, (b) environ-
mental impact, (c) safety, and (d) antitrust.
#
#
#
#
FOR IMMEDIATE RELEASE
JUNE 26, 1975
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
UPON SIGNING
THE URANIUM ENRICHMENT MESSAGE
THE CABINET ROOM
11:23 A.M. EDT
I will read a statement before signing the
message or messages that will go to the Congress.
Because our oil and natural gas resources
are fast being depleted, we must rely more and more
on nuclear power as a major source of energy for the
future.
Today, I am asking the Congress to join me
in embarking the Nation on an exciting new course of
action which will help to assure the energy independence
that we need, and significantly strengthen our economy
at home, at the same time.
I am referring to the establishment of an
entirely new competitive industry to provide uranium
enrichment service for nuclear power reactors. The
legislation that I am seeking will reinforce the world
leadership we now enjoy in uranium enrichment technology.
It will help insure the continued availability
of reliable energy for America. It will move America
one big step nearer energy independence.
This legislation will insure that the billions
of dollars required for the construction of new enrich-
ment plants will be borne by the private sector, not by
the American taxpayer.
MORE
FORD in LIBRARY GERALD
Page 2
But all of us will benefit directly from the
service which private enterprise will provide.
I urge the Congress to act swiftly and favorably
on this important new energy initiative. With this
comprehensive approach, the United States can reopen
its uranium enrichment order book, reassert its supremacy
as the world's major supplier of enriched uranium, and
develop a strong private enrichment industry to help bolster
the national economy.
So it is with pleasure and hope that I sign
the message to go to both the House and the Senate, and
ask the Congress to move as rapidly as possible in
order that we can achieve the objectives which are so
important.
Thank you very much.
END (AT 11:25 A.M. EDT)
to
10 I
I
SW
Iflw JI
sideller to
10
ad
EMBARGOED FOR RELEASE
June 26, 1975
UNTIL 12:00 NOON (EDT)
Office of the White House Press Secretary
THE WHITE HOUSE
TEXT OF LETTERS FROM THE PRESIDENT TO THE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
AND THE PRESIDENT OF THE SENATE
June 26, 1975
Dear Mr. Speaker: (Dear Mr. President:)
I have today sent to the Congress a message describing my
plan for securing the construction of additional uranium
enrichment plants in the United States by private industry
to meet the growing needs of the expanding nuclear power
industry.
A critical element of this plan is legislation to authorize
the Administrator of the Energy Research and Development
Administration to enter into cooperative agreements with
private firms to foster, through Government cooperation
and temporary assurances, the creation of a competitive
private uranium enrichment industry. I am enclosing a
proposed bill, the Nuclear Fuel Assurance Act of 1975,
which would provide the authority needed to achieve the
objectives described in my message. A brief analysis of
the bill is also enclosed.
I urge the Congress to pass this legislation at the earliest
possible date so that we can take a major step toward our
goal of energy independence.
Sincerely,
GERALD R. FORD
######
A BILL
To authorize cooperative arrangements with private
enterprise for the provision of facilities for
the production and enrichment of uranium en-
riched in the isotope 235, to provide for
authorization of contract authority therefor,
and for other purposes.
Be it enacted by the Senate and the House of
Representatives of the United States of America in
Congress assembled, That this Act may be cited as
the "Nuclear Fuel Assurance Act of 1975."
Sec. 2. Chapter 5. PRODUCTION OF SPECIAL NUCLEAR MATERIAL
of the Atomic Energy Act of 1954, as amended, is amended
by adding at the end thereof the following Section:
"Sec. 45 Cooperative Arrangements for Private
Projects to Provide Uranium Enrichment Services --
"a. The Energy Research and Development
Administration is authorized, without regard to the
provisions of Section 169 of this Act, to enter into
cooperative arrangements with any person or persons
for such periods of time as the Administrator of the
Energy Research and Development Administration may
deem necessary or desirable for the purpose of pro-
viding such Government cooperation and assurances
as the Administrator may deem appropriate and
necessary to encourage the development of a com-
petitive private uranium enrichment industry and
to facilitate the design, construction, ownership
and operation by private enterprise of facilities
for the production and enrichment of uranium en-
riched in the isotope 235 in such amounts as will
contribute to the common defense and security and
encourage development and utilization of atomic
energy to the maximum extent consistent with the
common defense and security and with the health
and safety of the public; including, inter alia,
in the discretion of the Administrator,
(1) furnishing technical assistance, in-
formation, inventions and discoveries, enriching
services, materials, and equipment on the basis of
recovery of costs and appropriate royalties for
the use thereof;
more
2
(2) providing warranties for materials
and equipment furnished;
(3) providing facility performance
assurances;
(4) purchasing enriching services;
(5) undertaking to acquire the assets
or interest of such person, or any of such persons,
in an enrichment facility, and to assume obligations
and liabilities (including debt) of such person, or
any of such persons, arising out of the design, con-
struction, ownership, or operation for a defined
period of such enrichment facility in the event
such person or persons cannot complete that en-
richment facility or bring it into commercial
operation: Provided that any undertaking, pursuant
to this subsection 5, to acquire equity or pay off
debt, shall apply only to individuals who are
citizens of the United States, or to any corporation
of other entity organized for a common business
purpose, which is owned or effectively controlled
by citizens of the United States; and
(6) determining to modify, complete and
operate that enrichment facility as a Government
facility or to dispose of the facility at any time,
as the interest of the Government may appear, subject
to the other provisions of this Act.
"b. Before the Administrator enters into any
arrangement or amendment thereto under the authority
of this section, or before the Administrator deter-
mines to modify, or complete and operate any facility
or to dispose thereof, the basis for the proposed
arrangement or amendment thereto which the
Administrator proposes to execute (including the
name of the proposed participating person or
persons with whom the arrangement is to be made,
a general description of the proposed facility,
the estimated amount of cost to be incurred by
the participating person or persons, the incentives
imposed by the agreement on the person or persons
to complete the facility as planned and operate it
successfully for a defined period, and the general
features of the proposed arrangement or amendment),
or the plan for such modification, completion,
more
3
operation or disposal by the Administrator, as
appropriate, shall be submitted to the Joint
Committee on Atomic Energy, and a period of forty-
five days shall elapse while Congress is in session
(in computing such forty-five days, there shall be
excluded the days on which either House is not in
session because of adjournment for more than three
days) unless the Joint Committee by resolution in
writing waives the conditions of, or all or any
portion of, such forty-five day period: Provided,
however, that any such arrangement or amendment
thereto, or such plan, shall be entered into in
accordance with the basis for the arrangement or
plan, as appropriate, submitted as provided herein."
Sec. 3. The Administrator of the Energy Research
and Development Administration is hereby authorized
to enter into contracts for cooperative arrangements,
without fiscal year limitation, pursuant to Section 45
of the Atomic Energy Act of 1954, as amended, in an
amount not to exceed in the aggregate $8,000,000,000
as may be approved in an appropriation Act. In the
event that liquidation of part or all of any financial
obligations incurred under such cooperative arrange-
ments should become necessary, the Administrator of
the Energy Research and Development Administration is
authorized to issue to the Secretary of the Treasury
notes or other obligations up to the levels of contract
authority approved in an appropriation Act pur-
suant to the first sentence of this section in
such form and denomination, bearing such maturity
and subject to such terms and conditions as may
be prescribed by the Administrator with the approval
of the Secretary of the Treasury. Such notes or
other obligations shall bear interest at a rate
determined by the Secretary of the Treasury, tak-
ing into consideration the current average market
yield on outstanding marketable obligations of
the United States of comparable maturity at the
time of issuance of the notes or other obligations.
The Secretary of the Treasury shall purchase any
notes or other obligations issued hereunder and,
for that purpose, he is authorized to use as a
public debt transaction the proceeds from the sale
of any securities issued under the Second Liberty
Bond Act, as amended, and the purposes for which
securities may be issued under that Act, as
amended, are extended to include any purchase of
such notes and obligations. The Secretary of the
more
4
Treasury may at any time sell any of the notes or
other obligations acquired by him under this
section. All redemptions, purchases and sales
by the Secretary of the Treasury of such notes
or other obligations shall be treated as public
debt transactions of the United States. There
are authorized to be appropriated to the
Administrator such sums as may be necessary to
pay the principal and interest on the notes or
obligations issued by him to the Secretary of
the Treasury.
Section 4. The Administrator of the Energy Research
and Development Administration is hereby authorized to
initiate construction planning and design activities
for expansion of an existing uranium enrichment facility.
There is hereby authorized to be appropriated such sums
as may be necessary for this purpose.
# # # #
more
Bill Analysis
Section 1 of the proposed bill cites the Act as
the "Nuclear Fuel Assurance Act of 1975. 11
Section 2 of the proposed bill would amend Chapter
5, Production of Special Nuclear Material, of the Atomic
Energy Act, as amended, by adding a new Section 45,
entitled "Cooperative Arrangements for Private Projects
to Provide Uranium Enrichment Services."
Subsection a. of the new Section 45 would authorize
the Administrator of the Energy Research and Development
Administration (ERDA) to enter into cooperative arrange-
ments with private enterprise to facilitate the development
of a competitive private industry for the enrichment of
uranium to make fuel for nuclear power plants. This
subsection would enable the Administrator to promote
private investment in the construction, ownership and
operation of uranium enrichment plants by providing such
Government cooperation and assurances as are determined
to be necessary and in the best interests of the Govern-
ment after detailed negotiation with selected individual
proposers of enrichment services. Such negotiations would
be directed toward obtaining arrangements most advan
tageous to the Government and the public interest and
with a degree of risk to the private entrepreneurs
consistent with the objective of creating a private
competitive uranium enrichment industry.
Cooperative arrangements authorized by Section 45a
could include such Government cooperation and assurances
as enumerated in the bill, including the specific
authority provided in subsection 45a(5), for the Govern
ment to acquire the assets or interests and assume the
liabilities (including debt) of a private enrichment firm
in the event -- which is highly unlikely ---- that private
industry could not complete a plant or bring it into
operation. It is intended that any undertaking by the
Government under subsection 45a(5) to acquire assets or
interest and to assume liabilities of a private venture
would terminate after approximately one year of commercial
operation of a plant. The precise period would be defined
during the negotiations of defined agreements. Any
obligations to pay off debt and to acquire equity interest
would be limited to citizens of the United States.
Subsection b. of the new Section 45 would provide
for review by the Joint Committee on Atomic Energy of
the basis for any cooperative arrangement, or amendment
more
2
thereof, which the Administrator proposes to undertake,
including the basis for acquiring assets or interests,
or assuming liabilities of any private venture, and any
plan the Administrator may have for modifying, completing
operating, or disposing of any plant built under a
cooperative agreement.
Section 3 of the proposed Nuclear Fuel Assurance
Act would authorize the Administrator of ERDA to enter
into contracts, pursuant to the new subsection 45a, in
an amount not to exceed $8 billion, as may be provided
in appropriation Acts. This amount is an estimate of
the total potential cost to the Government in the
unexpected event that all private ventures covered by
cooperative arrangements were to fail and it was then
necessary for the Government to assume assets and
liabilities of the ventures, take over plants, and
compensate domestic investors. It is not expected that
any of these funds would be expended for the assump--
tion of private ventures, but the authorization is
necessary to provide assurance, to customers and sources
of debt financing for private producers, of the Federal
Government's commitment to create a competitive industry.
Section 3 would also provide that, in the event of
Government assumption of the debts, interests and lia
bilities of a private venture, the Administrator is
authorized to secure funds through the Secretary of
the Treasury to liquidate contract authority, up to
the levels previously provided in an appropriations
Act.
Section 4 of the proposed bill would authorize the
Administrator of ERDA to initiate preliminary engineering
design and planning for expansion of a Government-owned
uranium enrichment facility for contingency purposes.
#
#
#
#