Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
1515967
label
Uranium Enrichment - Meeting with House Republicans, August 4, 1976
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
1515967
sourceUrl
contentType
document
title
Uranium Enrichment - Meeting with House Republicans, August 4, 1976
citationUrl
collections
James M. Cannon Files (Ford Administration)
James Cannon's Issues Files
subjects
U.S. House of Representatives. 3/4/1789-
Legislation
Uranium enrichment
iiifBase
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
1515967
coverageEndDate
logicalDate
1976-08-31
month
8
year
1976
coverageStartDate
logicalDate
1976-08-01
month
8
year
1976
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
url
mediaId
cbe260db0fc5a59e
ocrText
The original documents are located in Box 38, folder "Uranium Enrichment - Meeting with
House Republicans, August 4, 1976" of the James M. Cannon 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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
energy
NFAA
MEETING WITH PRESIDENT AND HOUSE
REPUBLICANS ON NFAA
Wednesday, August 4, 1976
8:30 - 9:00
Cabinet Room
Digitized from Box 38 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
7/26/76
FACT SHEET
NUCLEAR FUEL ASSURANCE ACT (H.R. 8401 AND S. 2035)
What the Bill Provides
Authorizes ERDA to enter into cooperative arrangements with
private firms wishing to finance, build, own and operate
uranium enrichment facilities -- subject to:
- passage of the necessary appropriations act; and
- congressional review and approval of each cooperative
arrangement.
Arrangements can provide for temporary assurances and
cooperation such as:
- making Government-owned technology available and warranting
that it will work -- for which industry pays royalties to
the Federal Treasury.
- selling and providing warranties on certain materials
and equipment available only from the Government -- on
a full cost recovery basis.
- technology assistance -- on a full cost recovery basis.
-
purchase of enrichment services from private producers or
selling such services to producers from the Government
stockpile to accommodate plant start up and loading problems.
- assumption of domestic assets and project liabilities in the
unlikely event a project falters -- up to a limit of
$8 billion for all covered projects. (Expenditure of any
of the $8 billion to assume assets and liabilities is
unlikely.)
Authorizes and directs ERDA to initiate construction planning
and design, construction and operation for expansion of an
existing Government-owned uranium enrichment facility; and
authorizes the appropriation of $255 million to begin work on
such a project.
Why Legislation is Needed
To increase the United States' capacity to produce enriched
uranium to fuel domestic and foreign nuclear power plants.
Existing capacity (including current expansion) has been
fully committed since July 1974.
To retain U.S. leadership as a world supplier of uranium
enrichment services and technology for the peaceful uses of
nuclear power -- and thus strengthen the U.S. ability to
require rigid safeguards to control proliferation.
To begin the transition to a private competitive uranium
enrichment industry -- ending the Government monopoly and
avoiding the need for Federal expenditures for capacity that
can be provided by the private sector. (It would cost the
FORD
ALD R.
ALD
-2-
Federal Government between $10 and $12 billion (in 1976 dollars)
to build the four plants which could be provided by the private
sector under the NFAA.)
To overcome -- through limited and temporary Government
assurances and cooperation -- present obstacles to obtaining
financing from normal commercial sources (e.g., banks,
insurance companies, retirement funds). Principal obstacles
are:
- lack of commercial experience with the classified technology,
- large size of the capital investment required for each
plant,
- long time before investment is paid back.
To provide a complementary expansion of existing Government-
owned uranium enrichment capacity -- which will help conserve
limited natural uranium resources and supplement the national
stockpile of enriched uranium.
How the Bill Would Be Implemented
ERDA would -- subject to congressional approval of each
contract --- enter into cooperative arrangements with
private firms wishing to finance, build, own and operate
enrichment plants. (Four private firms have submitted
proposals and negotiations are underway.)
ERDA would simultaneously proceed with planning and other
activity necessary to the construction of an add-on
Government plant.
Foreign investment in private U.S. projects would be permitted
only under conditions which insure U.S. control of projects.
No foreign access to enrichment technology would be permitted.
Owners of private projects will take substantial equity risks
in order to participate in the program.
No Government guarantee of profit.
Private plants will be subject to licensing by the
independent Nuclear Regulatory Commission (NRC) which must
consider safety, environmental, safeguards and anti-trust
matters and must also assure that projects are and will
remain under the control of U.S. citizens.
7/27/76
RESPONSES TO COMMON CRITICISMS OF THE
NUCLEAR FUEL ASSURANCE ACT (NFAA) S. 2035; H.R. 8401
CRITICISM
RESPONSE
Need for Capacity
New capacity to enrich
All available capacity in the U.S.
uranium for nuclear
(Government-owned plants) including
power plants is not
current expansion, has been fully
needed.
committed for the life of the plants
since July 1974. Commitments to new
capacity are needed now so that fuel
will be available in the mid-1980s for
nuclear power hear and abroad
No
new
capacity
is
needed
Capacity provided by an add-on plant
beyond the Government-
would permit ERDA to reduce the drain
owned add-on plant
on U.S. natural uranium supplies when
provided for in NFAA.
meeting its enrichment service contracts,
and contributes to the national stockpile.
Additional uranium enrichment capacity
is needed to serve customers who are now
or will be seeking to place orders.
Construction of privately Privately-financed plants will come into
financed plants will
being only if there are sufficient firmly-
result in excess
committed customers for each plant to
capacity.
justify its construction. The necessity
for private firms to have firmly committed
contracts before risking their capital
and other resources will preclude building
of excess capacity.
Operation of Government
Government-owned plants will continue to
plants will be curtailed
operate at full capacity to meet commit-
due to availability of
ments aready made. Operation will not
private capacity.
be cut back.
Costs to Consumers
Enrichment services
The price of service from any new
from private plants
capacity will be higher than from
will be more costly
existing capacity, most of which
than from Government-
were built years ago. Costs of
owned plants.
producing enriched fuel from new
Government-owned capacity will be as
costly and possibly more costly than
from new privately-financed capacity.
Competition permitted under the NFAA
should reduce future costs from private
enrichment plants.
2
CRITICISM
RESPONSE
Government Rather than Private
The Government should
From 9 to 12 plants roughly equivalent
provide all needed new
in capacity to each of the 3 existing
capacity.
Government-owned plants must be committed
to over the next 15-20 years. If the
Government financed them, the taxpayers
will have to put up between $20-50 billion -
which would not be recovered for many years.
Uranium enrichment is the type of
commercial/industrial process normally
performed by private industry. There is
no need for Government to do so when
the private sector is ready and willing
to do it - with only limited, temporary
assurances and cooperation from the
Government.
The private sector can provide the
required financing - making it un-
necessary for the Government to spend
the required $25-50 billion.
Control of Technology
Privately-financed plants
Government controls over technology will
will mean loss of
be maintained. No foreign access to
Government control over
technology is provided under NFAA. In
sensitive technology.
fact, under existing law and NFAA,
projects must remain under the control
of U.S. citizens.
Proliferation
Building additional
The opposite is true. Maintaining its
uranium enrichment
position as a leading and competitive
capacity will contri-
supplier of nuclear fuel and equipment
bute to proliferation.
for peaceful purposes will permit the
U.S. to require stringent safeguards,
thus furthering our non-proliferation
objectives. Availability of reliable
fuel supplies from the U.S. reduces the
need for other nations to develop
uranium enrichment technology and build
plants.
Enactment of NFAA would
Government control of U.S. nuclear exports
yield responsibility for
will not be affected by the NFAA. Firms
U.S. nuclear export
that finance, build, own and operate
policies to multi-
plants under the provisions of NFAA and
national corporations
Congressionally approved contracts will
and encourage mass
still be subject to export controls.
nuclear exports.
Exports will be subject to stringent
safeguards requirements provided for in
3
CRITICISM
RESPONSE
Bilateral Agreements for Cooperation
between the U.S. Government and
Governments of foreign customers (such
agreements also require Congressional
approval).
Private Sector Risk
Private projects will
Private equity, representing hundreds of
assume no risk and be
millions of dollars for each project,
guaranteed a substantial
will be at substantial risk. The
profit.
Government will not guarantee any profit.
The extent of private risk will be
made clear for each project in contracts
between ERDA and private firms. Under
NFAA, such contracts cannot be signed
unless they are approved by the Congress,
so there will be additional opportunity
to evaluate the risks.
7/27/76
ADMINISTRATION POSITION ON PROPOSED AMENDMENTS TO THE
NUCLEAR FUEL ASSURANCE ACT (NFAA), R. 8401
Bingham amendment, to strike all provisions of the NFAA except
those relating to the add-on facility at Portsmouth.
ERDA opposes this amendment because the amendment would negate
the main thrust of the bill, which is to meet nuclear fuel
requirements by establishing a private, competitive enrichment
industry. Establishment of such an industry would serve the
national interest for the following reasons:
1. It would avoid unnecessary further expansion of the
public sector at the expense of the private sector in a situation
where the activity involved is essentially commercial/industrial,
not governmental in nature.
2. It would broaden and diversify the Nation's supply
base for uranium enrichment.
3. It would secure the advantages of a competitive private
industry, which could be expected over the long term to produce
technology improvements and cost savings to the consumer.
4. It would avoid additional burdens on the Federal budget,
particularly in a time of great budgetary stringency.
Specifically, it would cost the taxpayers between $10-12 billion
(in 1976 dollars) for just the four plants which could be built
by the private sector under the NFAA. In total, it would avoid
$25 to $50 billion (in 1976 dollars) in additional Federal
outlays over the next 15-20 years, and such outlays would be
recovered only after a lengthy period.
5. It would avoid the danger that continued Federal monopoly
in enrichment would lead to an unprecedented degree of Federal
control over the supply of electric energy as reliance on nuclear
power increases.
Bingham amendment, to preclude execution of any contracts under
the NFAA until March 20, 1977.
ERDA opposes this amendment for the following reasons:
1. The U.S. has not taken any additional orders for uranium
enrichment, domestic or foriegn, since the summer of 1974. A
commitment to additional capacity is urgently needed in order
to meet the needs which have emerged since that time, and to
permit domestic utilities to firmly commit to nuclear power
projects based on contracts with new domestic enrichers, A
delay until March 20, 1977, would not be in the national interest.
-2-
2. Due to long lead-times in the construction of uranium
enrichment facilities, commitments to build new capacity need
to be made far in advance (8-10 years) of project demand for
enrichment services.
3. The prospect of a delay until next spring would impair
the momentum of ERDA's current negotiations with four private
firms that wish to finance, build, own and operate enrichment
plants.
4. A delay until next spring is not needed to protect
congressional concerns. Under terms of the NFAA each proposed
contract with a private firm would have to be submitted to the
Congress by ERDA for review and approval before it could be
signed.
Congressman Moss amendment, to restrict foreign investment
participation under the NFAA.
ERDA opposes this amendment for the following reasons:
1. Investment restriction is not necessary to protect
the national interest because foreign control will be contractually
limited to 45% control regardless of extent of financial interest.
Moreover, NRC must, as a condition of granting and maintaining
a license for construction and operation of enrichment plants,
determine that each project is now owned, controlled or dominated
by an alien, foreign corporation or foreign government.
2. U.S. government guarantees provided by NFAA would be
confined to protection of domestic investment.
3. Foreign access to classified uranium enrichment technology
is not authorized by NFAA and is precluded by the Atomic Energy
Act of 1954.
4. Foreign investment in domestic enrichment projects is
beneficial because:
a. foreign capital reduces demands on domestic capital
market, and
b. foreign capital invested in domestic projects should
reduce the likelihood of investment of those funds for the
development of enrichment technology or the building of
enrichment plants in foreign countries.
-3-
Long amendment, to eliminate the $8 billion authorization and
the Congressional contract review procedure in NFAA, and to
require that contract authority for each contract not exceed such
sums as may from time to time be authorized and appropriated.
ERDA opposes the elimination of the $8 billion authorization
and the requirement that contract authority for each arrangement
may not exceed such sums as may from time to time be authorized
and appropriated, for the following reasons:
1. By eliminating the $8 billion authorization, the
amendment would impede or seriously impair ERDA's ability to bring
to a conculsion negotiations on several cooperative arrangements
with a view to establishing a competitive industry.
2. The requirement for separate authorization and appropria-
tion action for each cooperative arrangement would inevitably
delay the process for selection by the Executive Branch and
approval (or rejection) by the Congress of particular cooperative
arrangements, thus further postponing the time at which new
private enterprises are established and placed in a position
to take orders and meet the ongoing demands, both domestic and
foreign, for enrichment services.
3. Such delays would have an adverse impact on the ability
of domestic utilities to commit to nuclear power to meet the
domestic energy crisis.
4. Such a delay would likewise have an adverse impact upon
meeting foreign policy objectives in the energy area.
5. The requirement that authorization and appropriation
for each cooperative arrangement be provided separately by the
Congress is not necessary because the NFAA as reported out
provides adequately for separate and specific congressional
review and approve each cooperative arrangement.
The pattern established by the NFAA, authorizing a lump sum
to cover a number of cooperative arrangements would provide a
more logical and balanced framework for launching a private
uranium enrichment industry than would be proposed requirement
for separate authorization and appropriation actions.
Myers amendment, to require all ERDA employees with duties under
NFAA to file an annual report of all financial interests in an
applicant for or recipient of financial assistance, which would
be available to the public.
ERDA favors the broad objectives of the Myers amendment and
has no objection to disclosure by ERDA employees of their
financial interests within the accepted framework for preventing
conflicts of interest within the Executive Branch. However,
ERDA is opposed to the Myers amendment as such for the following
reasons:
-4-
1. ERDA already has a comprehensive reporting and control
system regarding the financial interests of its employees,
established under E.O. 11222, to prevent conflicts. The Myers
reporting requirement would duplicate existing requirements
to a large extent.
2. The Myers amendment would single out particular ERDA
employees -- i.e., those involved in the administration of
the NFAA -- for special scrutiny and treatment. This could
create a false impression that those ERDA staff members involved
with NFAA have special conflict-of-interest problems and
cannot be trusted. Changes of the type covered by the Myers
amendment, if desired by the Congress, should be adopted
in a comprehensive way rather than single out particular
programs and thus potentially resulting in a piecemeal and
inconsistent approach.
3. No other Executive Branch agency (excluding regulatory
agencies) has specific conflict-of-interest reporting require-
ments imposed by statute.
4. Enactment of the Myers amendment would subject an
employee to criminal penalties for mere failure to report
a financial interest, even where the interest is in the amount
which has been exempted from the conflict-of-interest statutes
(18 USC 208) as inconsequential.
5. The public availability of the financial reports
under the Myers amendment is contrary to policy underlying
the Privacy Act, which protects the legitimate rights to
privacy of individuals.
THE WHITE HOUSE
WASHINGTON
August 3, 1976
MEETING WITH SELECTED HOUSE REPUBLICANS
ON THE NUCLEAR FUEL ASSURANCE ACT
Wednesday, August 4, 1976
8:30 a.m. (30 minutes)
The Cabinet Room
From: Jim Connor fl
I. PURPOSE
To obtain support for your Nuclear Fuel Assurance
Act from Republicans who either were not present
for the vote last Friday, or who voted against
our position.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background:
Last Friday, the Bingham amendment to strip the
NFAA of all provisions except the Portsmouth
add-on passed by a vote of 170-168. That vote
was in the committee of the whole. Further
action on the bill was deferred until 10:00 a.m.,
Wednesday, August 4 when the bill will be
brought to the floor and another vote taken on
the Bingham amendment.
The vote on the Bingham amendment was as follows:
For
Against
Not Voting
Democrat
148
69
71
Republican
22
99
24
The principal reasons for Republican votes against
the bill appear to be:
- Perception of a give-away; i.e., too much in
the way of guarantees to industry.
- The basic choice of Government versus private
industry is not understood. Some are approaching
the bill as if it is a choice between Government
assurances versus private industry proceeding
on its own. They have not recognized that the
-2-
real choice is between maintaining a Government
monopoly versus limited assurances to provide a
transition to a private industry.
- The fine distinction between loan guarantees
(as in the Syn Fuels Bill) and the guarantees
in the NFAA are not understood.
- Charges of special treatment for Bechtel
Corporation, and George Shultz and
Cap Weinberger.
- Environmentalists and anti-nuclear groups
are working against the bill.
The Speaker and Majority Leader are supporting
the bill. Support is also coming from the
nuclear industry, the Alabama and Ohio delegations,
and the construction craft unions. The UAW and
the UMW are opposing the bill.
B. Participants. See TAB A.
C. Press Plan: White House Photographer
III. TALKING POINTS: See Tab B.
PARTICIPANTS
The President
The Vice President
The Administrator of FEA
HOUSE
Anderson, John
Biester, Pete
Cohen, Bill
Conte, Sil
Coughlin, Larry
Crane, Phio
du Pont, Pete
Fenwick, Millicent
Fish, Ham
Gilman, Ben
Heckler, Peggy
Heinz, John
Jeffords, Jim
Kasten, Bob
Kemp, Jack
REGRETS
Lujan, Manny
Peyser, Peter
Broyhill
Quie, Al
Gradison
Railsback, Tom
Mosher
Rhodes, John
Paul
Rinaldo
STAFF
Schulze
Whalen
Marsh, Jack
Steiger, Sam
Cheney, Dick
Frey
Cannon, Jim
Hansen
Seidman, Bill
Findley
Greenspan, Alan
Hillis
Friedersdorf, Max
Sebelius
Connor, Jim
Esch
Leppert, Charlie
Ruppe
Mitchell, Jim
Lott
Loeffler, Tom
Steelman
Rowland, Pat
Wampler
Wolthuis, Bob
Whitehurst
Conlan
Skubitz
Michel
Gude
Eshleman
McCollister
Cochran (says he will vote with us)
Clancy (says he will vote with us)
Schneebeli (says he will vote with us
Armstrong (says he made a mistake las
week)
TALKING POINTS - Meeting with Selected House Republicans on the
Nuclear Fuel Assurance Act
1. I am glad you could all come down to meet with me today. We
have an extremely important vote coming up on the Nuclear
Fuel Assurance Act. As you know, a vote was taken on Friday
in which we were defeated by 2 votes. I hope to persuade those
of you who felt it necessary to vote against this legislation that
there are some very strong reasons for supporting it.
2. Your votes on this issue will to a great extent determine the future
of the electrical utility industry in this country. If we don't establish
now a competitive private industry, we can be sure that the future
will be one in which one of the major fuel supplies of the utility
industry is a government monopoly. That is an expansion of the
government's role which is far greater than any of us I think wish
to see.
3. I know there are a number of problems that have been raised about
the bill, and I know that each of you who voted against it had some
concerns. Those concerns deal with the kinds of guarantees that will
be offered, with the question of whether this is real competition,
with why any guarantees are necessary. I think we can answer those
question for you and I have brought together several members of my
staff who can deal with the specific issue.
4. I would like, however, to make a number of initial points:
First, by voting for this legislation today as we have proposed it,
the Congress is not obligating itself to accept any or all of the proposed
contracts that would be negotiated between the government and the private
enrichers. Those contracts have not been completed yet, they will
not be completed until ERDA is satisfied that they are in the best
interest of the government and the taxpayers, and they will not be
transmitted to the Congress until I am satisfied that they are in the
public interest. Finally, the contracts will not go into effect until
the Congress has satisfied itself that each one does satisfy the public inte
Second, the real choice here is between proceeding ahead as we have
done in the past with a subsidized government owned industry on a piece
by piece basis. If we do that, we will commit ourselves inevitably to
- 2 -
expenditures between $30 to 50 million in the next 20 years.
We won't get out of debt in that situation until well into the
21st century. I believe that there are many better uses to which
we can put the taxpayers' money, in the nuclear area, in other
areas of energy, in other kinds of programs, and in just giving it
back to the taxpayers to spend as they see fit. But, make no
mistake about it, once the Congress , by action or inaction,
makes it the government's responsibility, we will have to lay out
that kind of money on a regular and predictable schedule.
Third, there has been a lot of talk about excessive guarantees.
The fact of the matter is that we are not talking about guarantees
here, and when you receive the contract for your scrutiny, you
will realize that what we are talking about primarily are warranties
for government technology, warranties for government supplied
technology which the private plant operators will purchase from
the government at a commercial rate. What we are really saying
is that we are willing to stand behind what we are selling. To me
that seems simple enough and fair enough.
Fourth, there are some circumstances that people can conceive of
when they lay awake at night which might result in the private
operators not being able to bring these plants into existence.
Most of this springs from the fact that, unlike other kinds of
technology, this technology has been and will remain very highly
classified. Financial institutions cannot get a broad range of
independent advice through which they can assure themselves that
they are abiding by their fiduciary duties when they invest other
people's money in such large scale projects. If these extremely
unlikely circumstances occur, the government is inclined to buy
out the private plants and operate them as they would government
plants. If that occurs, the equity of the investors is at risk.
If the investors abide by all of the requirements we impose on them,
if they are on schedule and on budget, they will be entitled to a full
return of their equity. The government then would operate the
plants and pay off the debt through the sales of material. If the
operators do not meet budgets or schedules, then their equity will
be reduced. Accordingly, there is no guarantee of the equity
except insofar as there is performance. Now, the chances of
some of these very unlikely events occurring are very, very slim--
1 in 100, 1 in 1000, perhaps even greater. If those situations occur,
- 3 -
then the government is no worse off essentially than it would
have been had it built the plants itself to start with. But, given
the odds I have talked about, we are a lot better off if we
get this obligation to continue to supply nuclear fuel off the
government's back.
5. Now, any questions that you might like to ask either of me
or my staff, we will be glad to answer.
THE WHITE HOUSE
WASHINGTON
August 3, 1976
MEETING WITH SELECTED HOUSE REPUBLICANS
ON THE NUCLEAR FUEL ASSURANCE ACT
Wednesday, August 4, 1976
8:30 a.m. (30 minutes)
The Cabinet Room
From: Jim Connor fl
I. PURPOSE
To obtain support for your Nuclear Fuel Assurance
Act from Republicans who either were not present
for the vote last Friday, or who voted against
our position.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background:
Last Friday, the Bingham amendment to strip the
NFAA of all provisions except the Portsmouth
add-on passed by a vote of 170-168. That vote
was in the committee of the whole. Further
action on the bill was deferred until 10:00 a.m.,
Wednesday, August 4 when the bill will be
brought to the floor and another vote taken on
the Bingham amendment.
The vote on the Bingham amendment was as follows:
For
Against
Not Voting
Democrat
148
69
71
Republican
22
99
24
The principal reasons for Republican votes against
the bill appear to be:
- Perception of a give-away; i.e., too much in
the way of guarantees to industry.
- The basic choice of Government versus private
industry is not understood. Some are approaching
the bill as if it is a choice between Government
assurances versus private industry proceeding
on its own. They have not recognized that the
-2-
real choice is between maintaining a Government
monopoly versus limited assurances to provide a
transition to a private industry.
- The fine distinction between loan guarantees
(as in the Syn Fuels Bill) and the guarantees
in the NFAA are not understood.
- Charges of special treatment for Bechtel
Corporation, and George Shultz and
Cap Weinberger.
- Environmentalists and anti-nuclear groups
are working against the bill.
The Speaker and Majority Leader are supporting
the bill. Support is also coming from the
nuclear industry, the Alabama and Ohio delegations,
and the construction craft unions. The UAW and
the UMW are opposing the bill.
B. Participants. See TAB A.
C. Press Plan: White House Photographer
III. TALKING POINTS: See Tab B.
PARTICIPANTS
The President
The Vice President
The Administrator of FEA
HOUSE
Anderson, John
Biester, Pete
Cohen, Bill
Conte, Sil
Coughlin, Larry
Crane, Phio
du Pont, Pete
Fenwick, Millicent
Fish, Ham
Gilman, Ben
Heckler, Peggy
Heinz, John
Jeffords, Jim
Kasten, Bob
Kemp, Jack
REGRETS
Lujan, Manny
Peyser, Peter
Broyhill
Quie, Al
Gradison
Railsback, Tom
Mosher
Rhodes, John
Paul
Rinaldo
STAFF
Schulze
Whalen
Marsh, Jack
Steiger, Sam
Cheney, Dick
Frey
Cannon, Jim
Hansen
Seidman, Bill
Findley
Greenspan, Alan
Hillis
Friedersdorf, Max
Sebelius
Connor, Jim
Esch
Leppert, Charlie
Ruppe
Mitchell, Jim
Lott
Loeffler, Tom
Steelman
Rowland, Pat
Wampler
Wolthuis, Bob
Whitehurst
Conlan
Skubitz
Michel
Gude
Eshleman
McCollister
Cochran (says he will vote with us)
Clancy (says he will vote with us)
Schneebeli (says he will vote with us
Armstrong (says he made a mistake las
week)
TALKING POINTS - Meeting with Selected House Republicans on the
Nuclear Fuel Assurance Act
1.
I am glad you could all come down to meet with me today. We
have an extremely important vote coming up on the Nuclear
Fuel Assurance Act. As you know, a vote was taken on Friday
in which we were defeated by 2 votes. I hope to persuade those
of you who felt it necessary to vote against this legislation that
there are some very strong reasons for supporting it.
2.
Your votes on this issue will to a great extent determine the future
of the electrical utility industry in this country. If we don't establish
now a competitive private industry, we can be sure that the future
will be one in which one of the major fuel supplies of the utility
industry is a government monopoly. That is an expansion of the
government's role which is far greater than any of us I think wish
to see.
3.
I know there are a number of problems that have been raised about
the bill, and I know that each of you who voted against it had some
concerns. Those concerns deal with the kinds of guarantees that will
be offered, with the question of whether this is real competition,
with why any guarantees are necessary. I think we can answer those
question for you and I have brought together several members of my
staff who can deal with the specific issue.
4.
I would like, however, to make a number of initial points:
First, by voting for this legislation today as we have proposed it,
the Congress is not obligating itself to accept any or all of the proposed
contracts that would be negotiated between the government and the private
enrichers. Those contracts have not been completed yet, they will
not be completed until ERDA is satisfied that they are in the best
interest of the government and the taxpayers, and they will not be
transmitted to the Congress until I am satisfied that they are in the
public interest. Finally, the contracts will not go into effect until
the Congress has satisfied itself that each one does satisfy the public inte
Second, the real choice here is between proceeding ahead as we have
done in the past with a subsidized government owned industry on a piece
by piece basis. If we do that, we will commit ourselves inevitably to
- 2 -
expenditures between $30 to 50 million in the next 20 years.
We won't get out of debt in that situation until well into the
21st century. I believe that there are many better uses to which
we can put the taxpayers' money, in the nuclear area, in other
areas of energy, in other kinds of programs, and in just giving it
back to the taxpayers to spend as they see fit. But, make no
mistake about it, once the Congress , by action or inaction,
makes it the government's responsibility, we will have to lay out
that kind of money on a regular and predictable schedule.
Third, there has been a lot of talk about excessive guarantees.
The fact of the matter is that we are not talking about guarantees
here, and when you receive the contract for your scrutiny, you
will realize that what we are talking about primarily are warranties
for government technology, warranties for government supplied
technology which the private plant operators will purchase from
the government at a commercial rate. What we are really saying
is that we are willing to stand behind what we are selling. To me
that seems simple enough and fair enough.
Fourth, there are some circumstances that people can conceive of
when they lay awake at night which might result in the private
operators not being able to bring these plants into existence.
Most of this springs from the fact that, unlike other kinds of
technology, this technology has been and will remain very highly
classified. Financial institutions cannot get a broad range of
independent advice through which they can assure themselves that
they are abiding by their fiduciary duties when they invest other
people's money in such large scale projects. If these extremely
unlikely circumstances occur, the government is inclined to buy
out the private plants and operate them as they would government
plants. If that occurs, the equity of the investors is at risk.
If the investors abide by all of the requirements we impose on them,
if they are on schedule and on budget, they will be entitled to a full
return of their equity. The government then would operate the
plants and pay off the debt through the sales of material. If the
operators do not meet budgets or schedules, then their equity will
be reduced. Accordingly, there is no guarantee of the equity
except insofar as there is performance. Now, the chances of
some of these very unlikely events occurring are very, very slim--
1 in 100, 1 in 1000, perhaps even greater. If those situations occur,
- 3 -
then the government is no worse off essentially than it would
have been had it built the plants itself to start with. But, given
the odds I have talked about, we are a lot better off if we
get this obligation to continue to supply nuclear fuel off the
government's back.
5. Now, any questions that you might like to ask either of me
or my staff, we will be glad to answer.