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    "label": "Uranium Enrichment - Meeting with House Republicans, August 4, 1976",
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    "title": "Uranium Enrichment - Meeting with House Republicans, August 4, 1976",
    "citationUrl": "https://catalog.archives.gov/id/1515967",
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        "James M. Cannon Files (Ford Administration)",
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        "U.S. House of Representatives. 3/4/1789-",
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        "Uranium enrichment"
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    "ocrText": "The original documents are located in Box 38, folder \"Uranium Enrichment - Meeting with\nHouse Republicans, August 4, 1976\" of the James M. Cannon Files at the Gerald R. Ford\nPresidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nenergy\nNFAA\nMEETING WITH PRESIDENT AND HOUSE\nREPUBLICANS ON NFAA\nWednesday, August 4, 1976\n8:30 - 9:00\nCabinet Room\nDigitized from Box 38 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\n7/26/76\nFACT SHEET\nNUCLEAR FUEL ASSURANCE ACT (H.R. 8401 AND S. 2035)\nWhat the Bill Provides\nAuthorizes ERDA to enter into cooperative arrangements with\nprivate firms wishing to finance, build, own and operate\nuranium enrichment facilities -- subject to:\n- passage of the necessary appropriations act; and\n- congressional review and approval of each cooperative\narrangement.\nArrangements can provide for temporary assurances and\ncooperation such as:\n- making Government-owned technology available and warranting\nthat it will work -- for which industry pays royalties to\nthe Federal Treasury.\n- selling and providing warranties on certain materials\nand equipment available only from the Government -- on\na full cost recovery basis.\n- technology assistance -- on a full cost recovery basis.\n-\npurchase of enrichment services from private producers or\nselling such services to producers from the Government\nstockpile to accommodate plant start up and loading problems.\n- assumption of domestic assets and project liabilities in the\nunlikely event a project falters -- up to a limit of\n$8 billion for all covered projects. (Expenditure of any\nof the $8 billion to assume assets and liabilities is\nunlikely.)\nAuthorizes and directs ERDA to initiate construction planning\nand design, construction and operation for expansion of an\nexisting Government-owned uranium enrichment facility; and\nauthorizes the appropriation of $255 million to begin work on\nsuch a project.\nWhy Legislation is Needed\nTo increase the United States' capacity to produce enriched\nuranium to fuel domestic and foreign nuclear power plants.\nExisting capacity (including current expansion) has been\nfully committed since July 1974.\nTo retain U.S. leadership as a world supplier of uranium\nenrichment services and technology for the peaceful uses of\nnuclear power -- and thus strengthen the U.S. ability to\nrequire rigid safeguards to control proliferation.\nTo begin the transition to a private competitive uranium\nenrichment industry -- ending the Government monopoly and\navoiding the need for Federal expenditures for capacity that\ncan be provided by the private sector. (It would cost the\nFORD\nALD R.\nALD\n-2-\nFederal Government between $10 and $12 billion (in 1976 dollars)\nto build the four plants which could be provided by the private\nsector under the NFAA.)\nTo overcome -- through limited and temporary Government\nassurances and cooperation -- present obstacles to obtaining\nfinancing from normal commercial sources (e.g., banks,\ninsurance companies, retirement funds). Principal obstacles\nare:\n- lack of commercial experience with the classified technology,\n- large size of the capital investment required for each\nplant,\n- long time before investment is paid back.\nTo provide a complementary expansion of existing Government-\nowned uranium enrichment capacity -- which will help conserve\nlimited natural uranium resources and supplement the national\nstockpile of enriched uranium.\nHow the Bill Would Be Implemented\nERDA would -- subject to congressional approval of each\ncontract --- enter into cooperative arrangements with\nprivate firms wishing to finance, build, own and operate\nenrichment plants. (Four private firms have submitted\nproposals and negotiations are underway.)\nERDA would simultaneously proceed with planning and other\nactivity necessary to the construction of an add-on\nGovernment plant.\nForeign investment in private U.S. projects would be permitted\nonly under conditions which insure U.S. control of projects.\nNo foreign access to enrichment technology would be permitted.\nOwners of private projects will take substantial equity risks\nin order to participate in the program.\nNo Government guarantee of profit.\nPrivate plants will be subject to licensing by the\nindependent Nuclear Regulatory Commission (NRC) which must\nconsider safety, environmental, safeguards and anti-trust\nmatters and must also assure that projects are and will\nremain under the control of U.S. citizens.\n7/27/76\nRESPONSES TO COMMON CRITICISMS OF THE\nNUCLEAR FUEL ASSURANCE ACT (NFAA) S. 2035; H.R. 8401\nCRITICISM\nRESPONSE\nNeed for Capacity\nNew capacity to enrich\nAll available capacity in the U.S.\nuranium for nuclear\n(Government-owned plants) including\npower plants is not\ncurrent expansion, has been fully\nneeded.\ncommitted for the life of the plants\nsince July 1974. Commitments to new\ncapacity are needed now so that fuel\nwill be available in the mid-1980s for\nnuclear power hear and abroad\nNo\nnew\ncapacity\nis\nneeded\nCapacity provided by an add-on plant\nbeyond the Government-\nwould permit ERDA to reduce the drain\nowned add-on plant\non U.S. natural uranium supplies when\nprovided for in NFAA.\nmeeting its enrichment service contracts,\nand contributes to the national stockpile.\nAdditional uranium enrichment capacity\nis needed to serve customers who are now\nor will be seeking to place orders.\nConstruction of privately Privately-financed plants will come into\nfinanced plants will\nbeing only if there are sufficient firmly-\nresult in excess\ncommitted customers for each plant to\ncapacity.\njustify its construction. The necessity\nfor private firms to have firmly committed\ncontracts before risking their capital\nand other resources will preclude building\nof excess capacity.\nOperation of Government\nGovernment-owned plants will continue to\nplants will be curtailed\noperate at full capacity to meet commit-\ndue to availability of\nments aready made. Operation will not\nprivate capacity.\nbe cut back.\nCosts to Consumers\nEnrichment services\nThe price of service from any new\nfrom private plants\ncapacity will be higher than from\nwill be more costly\nexisting capacity, most of which\nthan from Government-\nwere built years ago. Costs of\nowned plants.\nproducing enriched fuel from new\nGovernment-owned capacity will be as\ncostly and possibly more costly than\nfrom new privately-financed capacity.\nCompetition permitted under the NFAA\nshould reduce future costs from private\nenrichment plants.\n2\nCRITICISM\nRESPONSE\nGovernment Rather than Private\nThe Government should\nFrom 9 to 12 plants roughly equivalent\nprovide all needed new\nin capacity to each of the 3 existing\ncapacity.\nGovernment-owned plants must be committed\nto over the next 15-20 years. If the\nGovernment financed them, the taxpayers\nwill have to put up between $20-50 billion -\nwhich would not be recovered for many years.\nUranium enrichment is the type of\ncommercial/industrial process normally\nperformed by private industry. There is\nno need for Government to do so when\nthe private sector is ready and willing\nto do it - with only limited, temporary\nassurances and cooperation from the\nGovernment.\nThe private sector can provide the\nrequired financing - making it un-\nnecessary for the Government to spend\nthe required $25-50 billion.\nControl of Technology\nPrivately-financed plants\nGovernment controls over technology will\nwill mean loss of\nbe maintained. No foreign access to\nGovernment control over\ntechnology is provided under NFAA. In\nsensitive technology.\nfact, under existing law and NFAA,\nprojects must remain under the control\nof U.S. citizens.\nProliferation\nBuilding additional\nThe opposite is true. Maintaining its\nuranium enrichment\nposition as a leading and competitive\ncapacity will contri-\nsupplier of nuclear fuel and equipment\nbute to proliferation.\nfor peaceful purposes will permit the\nU.S. to require stringent safeguards,\nthus furthering our non-proliferation\nobjectives. Availability of reliable\nfuel supplies from the U.S. reduces the\nneed for other nations to develop\nuranium enrichment technology and build\nplants.\nEnactment of NFAA would\nGovernment control of U.S. nuclear exports\nyield responsibility for\nwill not be affected by the NFAA. Firms\nU.S. nuclear export\nthat finance, build, own and operate\npolicies to multi-\nplants under the provisions of NFAA and\nnational corporations\nCongressionally approved contracts will\nand encourage mass\nstill be subject to export controls.\nnuclear exports.\nExports will be subject to stringent\nsafeguards requirements provided for in\n3\nCRITICISM\nRESPONSE\nBilateral Agreements for Cooperation\nbetween the U.S. Government and\nGovernments of foreign customers (such\nagreements also require Congressional\napproval).\nPrivate Sector Risk\nPrivate projects will\nPrivate equity, representing hundreds of\nassume no risk and be\nmillions of dollars for each project,\nguaranteed a substantial\nwill be at substantial risk. The\nprofit.\nGovernment will not guarantee any profit.\nThe extent of private risk will be\nmade clear for each project in contracts\nbetween ERDA and private firms. Under\nNFAA, such contracts cannot be signed\nunless they are approved by the Congress,\nso there will be additional opportunity\nto evaluate the risks.\n7/27/76\nADMINISTRATION POSITION ON PROPOSED AMENDMENTS TO THE\nNUCLEAR FUEL ASSURANCE ACT (NFAA), R. 8401\nBingham amendment, to strike all provisions of the NFAA except\nthose relating to the add-on facility at Portsmouth.\nERDA opposes this amendment because the amendment would negate\nthe main thrust of the bill, which is to meet nuclear fuel\nrequirements by establishing a private, competitive enrichment\nindustry. Establishment of such an industry would serve the\nnational interest for the following reasons:\n1. It would avoid unnecessary further expansion of the\npublic sector at the expense of the private sector in a situation\nwhere the activity involved is essentially commercial/industrial,\nnot governmental in nature.\n2. It would broaden and diversify the Nation's supply\nbase for uranium enrichment.\n3. It would secure the advantages of a competitive private\nindustry, which could be expected over the long term to produce\ntechnology improvements and cost savings to the consumer.\n4. It would avoid additional burdens on the Federal budget,\nparticularly in a time of great budgetary stringency.\nSpecifically, it would cost the taxpayers between $10-12 billion\n(in 1976 dollars) for just the four plants which could be built\nby the private sector under the NFAA. In total, it would avoid\n$25 to $50 billion (in 1976 dollars) in additional Federal\noutlays over the next 15-20 years, and such outlays would be\nrecovered only after a lengthy period.\n5. It would avoid the danger that continued Federal monopoly\nin enrichment would lead to an unprecedented degree of Federal\ncontrol over the supply of electric energy as reliance on nuclear\npower increases.\nBingham amendment, to preclude execution of any contracts under\nthe NFAA until March 20, 1977.\nERDA opposes this amendment for the following reasons:\n1. The U.S. has not taken any additional orders for uranium\nenrichment, domestic or foriegn, since the summer of 1974. A\ncommitment to additional capacity is urgently needed in order\nto meet the needs which have emerged since that time, and to\npermit domestic utilities to firmly commit to nuclear power\nprojects based on contracts with new domestic enrichers, A\ndelay until March 20, 1977, would not be in the national interest.\n-2-\n2. Due to long lead-times in the construction of uranium\nenrichment facilities, commitments to build new capacity need\nto be made far in advance (8-10 years) of project demand for\nenrichment services.\n3. The prospect of a delay until next spring would impair\nthe momentum of ERDA's current negotiations with four private\nfirms that wish to finance, build, own and operate enrichment\nplants.\n4. A delay until next spring is not needed to protect\ncongressional concerns. Under terms of the NFAA each proposed\ncontract with a private firm would have to be submitted to the\nCongress by ERDA for review and approval before it could be\nsigned.\nCongressman Moss amendment, to restrict foreign investment\nparticipation under the NFAA.\nERDA opposes this amendment for the following reasons:\n1. Investment restriction is not necessary to protect\nthe national interest because foreign control will be contractually\nlimited to 45% control regardless of extent of financial interest.\nMoreover, NRC must, as a condition of granting and maintaining\na license for construction and operation of enrichment plants,\ndetermine that each project is now owned, controlled or dominated\nby an alien, foreign corporation or foreign government.\n2. U.S. government guarantees provided by NFAA would be\nconfined to protection of domestic investment.\n3. Foreign access to classified uranium enrichment technology\nis not authorized by NFAA and is precluded by the Atomic Energy\nAct of 1954.\n4. Foreign investment in domestic enrichment projects is\nbeneficial because:\na. foreign capital reduces demands on domestic capital\nmarket, and\nb. foreign capital invested in domestic projects should\nreduce the likelihood of investment of those funds for the\ndevelopment of enrichment technology or the building of\nenrichment plants in foreign countries.\n-3-\nLong amendment, to eliminate the $8 billion authorization and\nthe Congressional contract review procedure in NFAA, and to\nrequire that contract authority for each contract not exceed such\nsums as may from time to time be authorized and appropriated.\nERDA opposes the elimination of the $8 billion authorization\nand the requirement that contract authority for each arrangement\nmay not exceed such sums as may from time to time be authorized\nand appropriated, for the following reasons:\n1. By eliminating the $8 billion authorization, the\namendment would impede or seriously impair ERDA's ability to bring\nto a conculsion negotiations on several cooperative arrangements\nwith a view to establishing a competitive industry.\n2. The requirement for separate authorization and appropria-\ntion action for each cooperative arrangement would inevitably\ndelay the process for selection by the Executive Branch and\napproval (or rejection) by the Congress of particular cooperative\narrangements, thus further postponing the time at which new\nprivate enterprises are established and placed in a position\nto take orders and meet the ongoing demands, both domestic and\nforeign, for enrichment services.\n3. Such delays would have an adverse impact on the ability\nof domestic utilities to commit to nuclear power to meet the\ndomestic energy crisis.\n4. Such a delay would likewise have an adverse impact upon\nmeeting foreign policy objectives in the energy area.\n5. The requirement that authorization and appropriation\nfor each cooperative arrangement be provided separately by the\nCongress is not necessary because the NFAA as reported out\nprovides adequately for separate and specific congressional\nreview and approve each cooperative arrangement.\nThe pattern established by the NFAA, authorizing a lump sum\nto cover a number of cooperative arrangements would provide a\nmore logical and balanced framework for launching a private\nuranium enrichment industry than would be proposed requirement\nfor separate authorization and appropriation actions.\nMyers amendment, to require all ERDA employees with duties under\nNFAA to file an annual report of all financial interests in an\napplicant for or recipient of financial assistance, which would\nbe available to the public.\nERDA favors the broad objectives of the Myers amendment and\nhas no objection to disclosure by ERDA employees of their\nfinancial interests within the accepted framework for preventing\nconflicts of interest within the Executive Branch. However,\nERDA is opposed to the Myers amendment as such for the following\nreasons:\n-4-\n1. ERDA already has a comprehensive reporting and control\nsystem regarding the financial interests of its employees,\nestablished under E.O. 11222, to prevent conflicts. The Myers\nreporting requirement would duplicate existing requirements\nto a large extent.\n2. The Myers amendment would single out particular ERDA\nemployees -- i.e., those involved in the administration of\nthe NFAA -- for special scrutiny and treatment. This could\ncreate a false impression that those ERDA staff members involved\nwith NFAA have special conflict-of-interest problems and\ncannot be trusted. Changes of the type covered by the Myers\namendment, if desired by the Congress, should be adopted\nin a comprehensive way rather than single out particular\nprograms and thus potentially resulting in a piecemeal and\ninconsistent approach.\n3. No other Executive Branch agency (excluding regulatory\nagencies) has specific conflict-of-interest reporting require-\nments imposed by statute.\n4. Enactment of the Myers amendment would subject an\nemployee to criminal penalties for mere failure to report\na financial interest, even where the interest is in the amount\nwhich has been exempted from the conflict-of-interest statutes\n(18 USC 208) as inconsequential.\n5. The public availability of the financial reports\nunder the Myers amendment is contrary to policy underlying\nthe Privacy Act, which protects the legitimate rights to\nprivacy of individuals.\nTHE WHITE HOUSE\nWASHINGTON\nAugust 3, 1976\nMEETING WITH SELECTED HOUSE REPUBLICANS\nON THE NUCLEAR FUEL ASSURANCE ACT\nWednesday, August 4, 1976\n8:30 a.m. (30 minutes)\nThe Cabinet Room\nFrom: Jim Connor fl\nI. PURPOSE\nTo obtain support for your Nuclear Fuel Assurance\nAct from Republicans who either were not present\nfor the vote last Friday, or who voted against\nour position.\nII. BACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background:\nLast Friday, the Bingham amendment to strip the\nNFAA of all provisions except the Portsmouth\nadd-on passed by a vote of 170-168. That vote\nwas in the committee of the whole. Further\naction on the bill was deferred until 10:00 a.m.,\nWednesday, August 4 when the bill will be\nbrought to the floor and another vote taken on\nthe Bingham amendment.\nThe vote on the Bingham amendment was as follows:\nFor\nAgainst\nNot Voting\nDemocrat\n148\n69\n71\nRepublican\n22\n99\n24\nThe principal reasons for Republican votes against\nthe bill appear to be:\n- Perception of a give-away; i.e., too much in\nthe way of guarantees to industry.\n- The basic choice of Government versus private\nindustry is not understood. Some are approaching\nthe bill as if it is a choice between Government\nassurances versus private industry proceeding\non its own. They have not recognized that the\n-2-\nreal choice is between maintaining a Government\nmonopoly versus limited assurances to provide a\ntransition to a private industry.\n- The fine distinction between loan guarantees\n(as in the Syn Fuels Bill) and the guarantees\nin the NFAA are not understood.\n- Charges of special treatment for Bechtel\nCorporation, and George Shultz and\nCap Weinberger.\n- Environmentalists and anti-nuclear groups\nare working against the bill.\nThe Speaker and Majority Leader are supporting\nthe bill. Support is also coming from the\nnuclear industry, the Alabama and Ohio delegations,\nand the construction craft unions. The UAW and\nthe UMW are opposing the bill.\nB. Participants. See TAB A.\nC. Press Plan: White House Photographer\nIII. TALKING POINTS: See Tab B.\nPARTICIPANTS\nThe President\nThe Vice President\nThe Administrator of FEA\nHOUSE\nAnderson, John\nBiester, Pete\nCohen, Bill\nConte, Sil\nCoughlin, Larry\nCrane, Phio\ndu Pont, Pete\nFenwick, Millicent\nFish, Ham\nGilman, Ben\nHeckler, Peggy\nHeinz, John\nJeffords, Jim\nKasten, Bob\nKemp, Jack\nREGRETS\nLujan, Manny\nPeyser, Peter\nBroyhill\nQuie, Al\nGradison\nRailsback, Tom\nMosher\nRhodes, John\nPaul\nRinaldo\nSTAFF\nSchulze\nWhalen\nMarsh, Jack\nSteiger, Sam\nCheney, Dick\nFrey\nCannon, Jim\nHansen\nSeidman, Bill\nFindley\nGreenspan, Alan\nHillis\nFriedersdorf, Max\nSebelius\nConnor, Jim\nEsch\nLeppert, Charlie\nRuppe\nMitchell, Jim\nLott\nLoeffler, Tom\nSteelman\nRowland, Pat\nWampler\nWolthuis, Bob\nWhitehurst\nConlan\nSkubitz\nMichel\nGude\nEshleman\nMcCollister\nCochran (says he will vote with us)\nClancy (says he will vote with us)\nSchneebeli (says he will vote with us\nArmstrong (says he made a mistake las\nweek)\nTALKING POINTS - Meeting with Selected House Republicans on the\nNuclear Fuel Assurance Act\n1. I am glad you could all come down to meet with me today. We\nhave an extremely important vote coming up on the Nuclear\nFuel Assurance Act. As you know, a vote was taken on Friday\nin which we were defeated by 2 votes. I hope to persuade those\nof you who felt it necessary to vote against this legislation that\nthere are some very strong reasons for supporting it.\n2. Your votes on this issue will to a great extent determine the future\nof the electrical utility industry in this country. If we don't establish\nnow a competitive private industry, we can be sure that the future\nwill be one in which one of the major fuel supplies of the utility\nindustry is a government monopoly. That is an expansion of the\ngovernment's role which is far greater than any of us I think wish\nto see.\n3. I know there are a number of problems that have been raised about\nthe bill, and I know that each of you who voted against it had some\nconcerns. Those concerns deal with the kinds of guarantees that will\nbe offered, with the question of whether this is real competition,\nwith why any guarantees are necessary. I think we can answer those\nquestion for you and I have brought together several members of my\nstaff who can deal with the specific issue.\n4. I would like, however, to make a number of initial points:\nFirst, by voting for this legislation today as we have proposed it,\nthe Congress is not obligating itself to accept any or all of the proposed\ncontracts that would be negotiated between the government and the private\nenrichers. Those contracts have not been completed yet, they will\nnot be completed until ERDA is satisfied that they are in the best\ninterest of the government and the taxpayers, and they will not be\ntransmitted to the Congress until I am satisfied that they are in the\npublic interest. Finally, the contracts will not go into effect until\nthe Congress has satisfied itself that each one does satisfy the public inte\nSecond, the real choice here is between proceeding ahead as we have\ndone in the past with a subsidized government owned industry on a piece\nby piece basis. If we do that, we will commit ourselves inevitably to\n- 2 -\nexpenditures between $30 to 50 million in the next 20 years.\nWe won't get out of debt in that situation until well into the\n21st century. I believe that there are many better uses to which\nwe can put the taxpayers' money, in the nuclear area, in other\nareas of energy, in other kinds of programs, and in just giving it\nback to the taxpayers to spend as they see fit. But, make no\nmistake about it, once the Congress , by action or inaction,\nmakes it the government's responsibility, we will have to lay out\nthat kind of money on a regular and predictable schedule.\nThird, there has been a lot of talk about excessive guarantees.\nThe fact of the matter is that we are not talking about guarantees\nhere, and when you receive the contract for your scrutiny, you\nwill realize that what we are talking about primarily are warranties\nfor government technology, warranties for government supplied\ntechnology which the private plant operators will purchase from\nthe government at a commercial rate. What we are really saying\nis that we are willing to stand behind what we are selling. To me\nthat seems simple enough and fair enough.\nFourth, there are some circumstances that people can conceive of\nwhen they lay awake at night which might result in the private\noperators not being able to bring these plants into existence.\nMost of this springs from the fact that, unlike other kinds of\ntechnology, this technology has been and will remain very highly\nclassified. Financial institutions cannot get a broad range of\nindependent advice through which they can assure themselves that\nthey are abiding by their fiduciary duties when they invest other\npeople's money in such large scale projects. If these extremely\nunlikely circumstances occur, the government is inclined to buy\nout the private plants and operate them as they would government\nplants. If that occurs, the equity of the investors is at risk.\nIf the investors abide by all of the requirements we impose on them,\nif they are on schedule and on budget, they will be entitled to a full\nreturn of their equity. The government then would operate the\nplants and pay off the debt through the sales of material. If the\noperators do not meet budgets or schedules, then their equity will\nbe reduced. Accordingly, there is no guarantee of the equity\nexcept insofar as there is performance. Now, the chances of\nsome of these very unlikely events occurring are very, very slim--\n1 in 100, 1 in 1000, perhaps even greater. If those situations occur,\n- 3 -\nthen the government is no worse off essentially than it would\nhave been had it built the plants itself to start with. But, given\nthe odds I have talked about, we are a lot better off if we\nget this obligation to continue to supply nuclear fuel off the\ngovernment's back.\n5. Now, any questions that you might like to ask either of me\nor my staff, we will be glad to answer.\nTHE WHITE HOUSE\nWASHINGTON\nAugust 3, 1976\nMEETING WITH SELECTED HOUSE REPUBLICANS\nON THE NUCLEAR FUEL ASSURANCE ACT\nWednesday, August 4, 1976\n8:30 a.m. (30 minutes)\nThe Cabinet Room\nFrom: Jim Connor fl\nI. PURPOSE\nTo obtain support for your Nuclear Fuel Assurance\nAct from Republicans who either were not present\nfor the vote last Friday, or who voted against\nour position.\nII. BACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background:\nLast Friday, the Bingham amendment to strip the\nNFAA of all provisions except the Portsmouth\nadd-on passed by a vote of 170-168. That vote\nwas in the committee of the whole. Further\naction on the bill was deferred until 10:00 a.m.,\nWednesday, August 4 when the bill will be\nbrought to the floor and another vote taken on\nthe Bingham amendment.\nThe vote on the Bingham amendment was as follows:\nFor\nAgainst\nNot Voting\nDemocrat\n148\n69\n71\nRepublican\n22\n99\n24\nThe principal reasons for Republican votes against\nthe bill appear to be:\n- Perception of a give-away; i.e., too much in\nthe way of guarantees to industry.\n- The basic choice of Government versus private\nindustry is not understood. Some are approaching\nthe bill as if it is a choice between Government\nassurances versus private industry proceeding\non its own. They have not recognized that the\n-2-\nreal choice is between maintaining a Government\nmonopoly versus limited assurances to provide a\ntransition to a private industry.\n- The fine distinction between loan guarantees\n(as in the Syn Fuels Bill) and the guarantees\nin the NFAA are not understood.\n- Charges of special treatment for Bechtel\nCorporation, and George Shultz and\nCap Weinberger.\n- Environmentalists and anti-nuclear groups\nare working against the bill.\nThe Speaker and Majority Leader are supporting\nthe bill. Support is also coming from the\nnuclear industry, the Alabama and Ohio delegations,\nand the construction craft unions. The UAW and\nthe UMW are opposing the bill.\nB. Participants. See TAB A.\nC. Press Plan: White House Photographer\nIII. TALKING POINTS: See Tab B.\nPARTICIPANTS\nThe President\nThe Vice President\nThe Administrator of FEA\nHOUSE\nAnderson, John\nBiester, Pete\nCohen, Bill\nConte, Sil\nCoughlin, Larry\nCrane, Phio\ndu Pont, Pete\nFenwick, Millicent\nFish, Ham\nGilman, Ben\nHeckler, Peggy\nHeinz, John\nJeffords, Jim\nKasten, Bob\nKemp, Jack\nREGRETS\nLujan, Manny\nPeyser, Peter\nBroyhill\nQuie, Al\nGradison\nRailsback, Tom\nMosher\nRhodes, John\nPaul\nRinaldo\nSTAFF\nSchulze\nWhalen\nMarsh, Jack\nSteiger, Sam\nCheney, Dick\nFrey\nCannon, Jim\nHansen\nSeidman, Bill\nFindley\nGreenspan, Alan\nHillis\nFriedersdorf, Max\nSebelius\nConnor, Jim\nEsch\nLeppert, Charlie\nRuppe\nMitchell, Jim\nLott\nLoeffler, Tom\nSteelman\nRowland, Pat\nWampler\nWolthuis, Bob\nWhitehurst\nConlan\nSkubitz\nMichel\nGude\nEshleman\nMcCollister\nCochran (says he will vote with us)\nClancy (says he will vote with us)\nSchneebeli (says he will vote with us\nArmstrong (says he made a mistake las\nweek)\nTALKING POINTS - Meeting with Selected House Republicans on the\nNuclear Fuel Assurance Act\n1.\nI am glad you could all come down to meet with me today. We\nhave an extremely important vote coming up on the Nuclear\nFuel Assurance Act. As you know, a vote was taken on Friday\nin which we were defeated by 2 votes. I hope to persuade those\nof you who felt it necessary to vote against this legislation that\nthere are some very strong reasons for supporting it.\n2.\nYour votes on this issue will to a great extent determine the future\nof the electrical utility industry in this country. If we don't establish\nnow a competitive private industry, we can be sure that the future\nwill be one in which one of the major fuel supplies of the utility\nindustry is a government monopoly. That is an expansion of the\ngovernment's role which is far greater than any of us I think wish\nto see.\n3.\nI know there are a number of problems that have been raised about\nthe bill, and I know that each of you who voted against it had some\nconcerns. Those concerns deal with the kinds of guarantees that will\nbe offered, with the question of whether this is real competition,\nwith why any guarantees are necessary. I think we can answer those\nquestion for you and I have brought together several members of my\nstaff who can deal with the specific issue.\n4.\nI would like, however, to make a number of initial points:\nFirst, by voting for this legislation today as we have proposed it,\nthe Congress is not obligating itself to accept any or all of the proposed\ncontracts that would be negotiated between the government and the private\nenrichers. Those contracts have not been completed yet, they will\nnot be completed until ERDA is satisfied that they are in the best\ninterest of the government and the taxpayers, and they will not be\ntransmitted to the Congress until I am satisfied that they are in the\npublic interest. Finally, the contracts will not go into effect until\nthe Congress has satisfied itself that each one does satisfy the public inte\nSecond, the real choice here is between proceeding ahead as we have\ndone in the past with a subsidized government owned industry on a piece\nby piece basis. If we do that, we will commit ourselves inevitably to\n- 2 -\nexpenditures between $30 to 50 million in the next 20 years.\nWe won't get out of debt in that situation until well into the\n21st century. I believe that there are many better uses to which\nwe can put the taxpayers' money, in the nuclear area, in other\nareas of energy, in other kinds of programs, and in just giving it\nback to the taxpayers to spend as they see fit. But, make no\nmistake about it, once the Congress , by action or inaction,\nmakes it the government's responsibility, we will have to lay out\nthat kind of money on a regular and predictable schedule.\nThird, there has been a lot of talk about excessive guarantees.\nThe fact of the matter is that we are not talking about guarantees\nhere, and when you receive the contract for your scrutiny, you\nwill realize that what we are talking about primarily are warranties\nfor government technology, warranties for government supplied\ntechnology which the private plant operators will purchase from\nthe government at a commercial rate. What we are really saying\nis that we are willing to stand behind what we are selling. To me\nthat seems simple enough and fair enough.\nFourth, there are some circumstances that people can conceive of\nwhen they lay awake at night which might result in the private\noperators not being able to bring these plants into existence.\nMost of this springs from the fact that, unlike other kinds of\ntechnology, this technology has been and will remain very highly\nclassified. Financial institutions cannot get a broad range of\nindependent advice through which they can assure themselves that\nthey are abiding by their fiduciary duties when they invest other\npeople's money in such large scale projects. If these extremely\nunlikely circumstances occur, the government is inclined to buy\nout the private plants and operate them as they would government\nplants. If that occurs, the equity of the investors is at risk.\nIf the investors abide by all of the requirements we impose on them,\nif they are on schedule and on budget, they will be entitled to a full\nreturn of their equity. The government then would operate the\nplants and pay off the debt through the sales of material. If the\noperators do not meet budgets or schedules, then their equity will\nbe reduced. Accordingly, there is no guarantee of the equity\nexcept insofar as there is performance. Now, the chances of\nsome of these very unlikely events occurring are very, very slim--\n1 in 100, 1 in 1000, perhaps even greater. If those situations occur,\n- 3 -\nthen the government is no worse off essentially than it would\nhave been had it built the plants itself to start with. But, given\nthe odds I have talked about, we are a lot better off if we\nget this obligation to continue to supply nuclear fuel off the\ngovernment's back.\n5. Now, any questions that you might like to ask either of me\nor my staff, we will be glad to answer."
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