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1976/04/05 - Senator Howard Baker
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1976/04/05 - Senator Howard Baker
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The original documents are located in Box 58, folder "1976/04/05 - Senator Howard Baker"
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States of America his copyrights in all of his unpublished writings in National Archives collections.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.
Digitized from Box 58 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE WHITE HOUSE
WASHINGTON
April 3, 1976
MEETING WITH SENATOR BAKER
Monday, April 5, 1976
12:15 p.m. (15 minutes)
The Oval Office
From:
Jim
Sathym
I.
PURPOSE
To seek Senator Baker's active support for your uranium
enrichment bill and make clear to him that his lack of
support and delayed actions are jeopardizing both the
expansion of uranium enrichment capacity and the creation
of a private competitive industry.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background: The Administration has provided all
witnesses requested, answered all questions asked,
and agreed to changes in legislation requested by the
Joint Committee on Atominc Energy (JCAE). However,
the JCAE has continued to delay action on the Nuclear
Fuel Assurance Act you submitted on June 26, 1975.
In early March, Senator Pastore indicated he would have
only one more day of hearings for industry witnesses
and then would act on the bill before the end of March.
The JCAE staff urged UEA to submit a written statement
for those hearings rather than appear in person,
presumably because of the emotion that has surrounded
the UEA proposal.
Senator Baker appeared at the hearings, criticized
the failure of UEA to appear in person and expressed
his views that the Committee could not act without
having testimony from UEA. The JCAE has since set
Tuesday, April 6 for UEA testimony.
In short, Senator Baker's opposition and delaying
tactics appear to be the principal cause of the
FORD is LIBRARY GERALD
-2-
continuing delay. Your staff believes that the
bill's chances in the committee are good if Baker
were neutral and excellent if he were helpful.
Senator Baker has stated that he would not vote
against your bill but neither would he actively
support it. He has stated that he would support
the bill if you made a firm commitment now to build
a government add-on plant regardless of the fate of
the private ventures. He has been unwilling to
accept the Administration position that an add-on
plant is a contingency measure -- to be built only
if one or more of the private ventures do not succeed.
Your staff believes that a firm commitment to another
government plant -- other than as a contingency
measure -- would have the effect of killing the
chances of achieving a private competitive uranium
enrichment industry because:
- It would represent at least partial capitulation
after a long period of Administration insistence
(actually since 1970) that industry must have the
opportunity to build the next increments of capacity.
- Both foreign and domestic customers would likely
lose interest in dealing with private uranium
enrichment suppliers if the government were again
in the position to sign orders.
- The added uncertainty would almost certainly lead
two of the four perspective private firms to
withdraw.
Probably the main reason for Senator Baker's insistence
on a commitment to another government add-on plant
-- even if located at Portsmouth, Ohio -- is that
OakRidge would continue to provide the intellectual
leadership (R&D, design, etc.) for ERDA's enrichment
enterprise. OakRidge would flourish even more if the
private enterprise approach failed and future full-
scale centrifuge plants were located there.
GERALD R. FORD
-3-
Even though Chairman Pastore has not been enthusiastic,
our current assessment is that he would move to report
the bill if Senator Baker would discontinue his
opposition and delaying actions. We also believe
that all other members of the Committee are likely
to support the bill except Senator Case and Congressman
Moss.
We have unconfirmed rumors that Senator Baker intends
to use the hearings on Tuesday to grill UEA witnesses
sharply, try to discourage UEA from continuing, and
discourage other members from supporting the bill if
UEA continues as a potential enrichment firm.
In view of the above, your advisers believe that
Senator Baker must be strongly urged to stop opposing
the bill and to drop any plans he has for forcing
withdrawal of UEA.
B. Participants. Senator Baker.
C. Press Plan. White House Photographer.
III. TALKING POINTS
We all agree that more uranium enrichment capacity
is needed. The only question is who will finance
and own the plants.
I sent up legislation nearly ten months ago to permit
industry to get involved. We have provided all the
witnesses requested, answered all the questions asked,
and agreed to changes in the bill to give the Congress
a full opportunity to accept or reject individual
contracts.
The bill (Nuclear Fuel Assurance Act) can be passed
by the Congress without committing to accept any
particular contract. Each proposed contract -- including
UEA -- will have to stand scrutiny by the JCAE and the
Congress on its merits.
Despite all this, we have had one delay after another.
&
FORD
CRALD
-4-
Howard, I understand, you will support this
legislation only if we commit ourselves to build
a Government add-on plant. We have looked at this
from all angles and there simply isn't any sound
economic or technical reason for building another
government plant. We don't need to spend more
government billions in this area. The time is here
to make the move toward private industry.
A commitment to another Government plant would
weaken, if not destroy, the chances of getting
industry involved.
I committed ten months ago to continue efforts
needed to permit building a Government-owned plant,
but only if private ventures failed. I intend to
keep that commitment. I do not intend to change
the contingency plan into a firm commitment to
build another government plant.
I understand that you have a number of reasons
for wanting more government plants, but I'm
asking you to drop your opposition to the bill
and to work with me to get this bill out of
committee and to the floor.
FROLD
B
TALKING POINTS FOR SENATOR BAKER
1. There cannot be an independent add-on. There is
no economic or technical reason for the U.S. Government
to spend $3 billion or more when private enterprise
is ready to spend the money.
2. Agreement must be before Congress before June 21
if it is to be considered this year.
is
FORD
THE WHITE HOUSE
WASHINGTON
For your 12:15 today.
j
THE WHITE HOUSE
WASHINGTON
April 5, 1976
MEMORANDUM FOR:
JIM CANNON
JIM CONNOR
FROM:
GLENN Glenn SCHLEEDE
SUBJECT:
Uranium Enrichment - Backup
Materials for Meeting with
Senator Baker
Just in case the issues should come up, there are
attached for your information:
-- Tab A - The latest wording of the legislation
agreed upon by the Administration
-- Tab B - Jim Lynn's letter to the Budget
Committees which explain:
- The three-step Congressional approval
process (NFAA, Appropriations Act,
individual contracts).
- The OMB view that the $8 billion in
contingent liability under the NFAA
is not budget authority.
Attachments
$100 FORD
FORD /
ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION
WASHINGTON, D.C. 20545
THE INIT
3/1/70
USA
February 23, 1976
/
copy
file PET
Honorable John O. Pastore, Chairman
Joint Committee on Atomic Energy
Dear Mr. Chairman:
During the course of the Joint Committee's recent hearings on the
President's proposed Nuclear Fuel Assurance Act of 1975 (S.2035),
you and other members of the Committee expressed concern that the
proposed Act did not provide sufficient opportunity for Congres-
sional oversight of cooperative agreements negotiated pursuant to
the Act. You proposed that additional Congressional review and
approval requirements be included in the Act which would be compa-
rable to those provided for in the case of Agreements for Cooperation
in Section 123(d) of the Atomic Energy Act, as amended.
Subsequently, ERDA staff met with JCAE staff to review language that
would accomplish this objective. We understand that the proposed
language would, in brief, provide that each unsigned cooperative
arrangement be submitted for a 60-day period of Congressional
consideration. The 60-day period would allow 30 days for JCAE
review and recommendations to each House of Congress and also
require action within an additional 30-day period by each House
in the form of a concurrent resolution of approval or disapproval.
A comparative draft of the original and the revised S.2035 showing
the revisions is attached.
I am pleased to advise you that the amendments you proposed are
acceptable. I would like to commend the JCAE staff for their
constructive approach to the development of the revised language.
They made an important contribution to the removal of the remaining
obstacle to action on this bill which is of great importance to the
Nation.
REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
LIBRARY GERALD R. FORD
Honorable John 0. Pastore
- 2 -
We are looking forward to favorable Committee action on the revised
bill at the earliest possible date.
Sincerely,
5/80
Robert C. Seamans, Jr.
Administrator
Attachment:
Revised Bill
LIBRARY GERALD R. FORD
COMPARATIVE DRAFT
S. 2035, REVISED
To authorize cooperative arrangements with private enterprise for the
provision of facilities for the production and enrichment of uranium
enriched in the isotope-235, to provide for authorization of contract
authority therefor, to provide a procedure for prior congressional
review and disapproval of proposed arrangements, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, J. 63-057 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 Administrator of Energy Research and Development Administration is
authorized, subject to the prior congressional review procedure set forth
in subsection b. of this section 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 providing such Government
TIBRACT GERALD R. FORD
-2-
cooperation and assurances as the Administrator may deem appropriate
and necessary to encourage the development of a competitive 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 enriched 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, information, inventions
and discoveries, enriching services, materials, and
equipment on the basis of recovery of costs and
appropriate royalties for the use thereof;
"(2) providing warranties for materials and equip-
ment 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,
construction, ownership, or operation for a
defined period of such enrichment facility in the
LIBRARY GERALD R. FORD
-3-
event such person or persons cannot complete that
enrichment- 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 investors or lenders who are.
citizens of the United States, or to any
are a corporation or 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 arrengement or amendment
thereto under the authority of this section, or before the
Administrator determines to modify, or complete end operate any
facility or to dispose thereof, the besis for the proposed
arrangement or amendment thereto whten the Administrator proposes
FORD & GERALD LIBRARY
-4-
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 estimate
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 23 planned and
operate it successfully fer a defined-period, and the general
features of the proposed arrengement or amendment), or the
plan for such modification, completion, operation, or disposal
by the Administrator, as appropriate, shall be submitted to
the Joint Committee on Atomic Energy, end a period of
forty five days shall elepse while Congress is in session
(in computing such forty five days; there shall be exeluded
the days on which either House is net in session because of
adjournment for more than three deys) 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 emendment therete, or such plan, shall be
entered into in accordance with the besis for the arrengement
or plan, A9 appropriate, submitted as provided herein".
FORD & GERALD LIBRARY
-5-
"b. The Administrator shall not enter into any arrangement or
amendment thereto under the authority of this section, modify,
or complete and operate any facility or dispose thereof, until
the proposed arrangement or amendment theretc which the
Administrator proposes to execute, or the plan for such
modification, completion, operation or disposal by the
Administrator, as appropriate, has been submitted to the
Joint Committee on Atomic Energy, and a period of sixty
days has elapsed while Congress is in session without passage
by the Congress of a concurrent resolution stating in sub-
stance that it does not favor such proposed arrangement or
amendment or plan for such modification, completion, opera-
tion, or disposal (in computing such sixty days, there shall
be excluded the days on which either House is not in session
because of adjournment for more than three days). Provided,
That prior to the elapse of the first thirty days of any such
sixty-day period the Joint Committee shall submit a report to
the Congress of its views and recommendations respecting the
proposed arrangement, amendment or plan and an accompanying
proposed concurrent resolution stating in substance that the
Congress favors, or does not favor, as the case may be, the
proposed arrangement, amendment or plan. Any such concurrent
GERALD R. FORD
-6-
resolution so reported shall become the pending business of the
House in question (in the case. of the Senate the time for debate
shall be equally divided between the proponents and the opponents)
within twenty-five days and shall be voted on within five
calendar days thereafter, unless such llouse shall otherwise
determine.
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 en appropriation Aet-
but in no event to exceed the amount provided therefor in 2 prior
appropriation Act: Provided, That the timing, interest rate,
and other terms and conditions of anv notes, bonds, or other similar
obligations secured by any such arrangements shall be subject to
the approval of the Administrator with the concurrence of the Secretary
of the Treasurv. In the event that liquidation of part or all of any
financial obligations incurred under such cooperative arrangements should
become necessary, the Administrator of the Energy Research end 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 pursuant 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
LIBRARY GERALD P. FORD
-7-
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, taking 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 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.
SEC. 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 are hereby authorized to be appropriated such sums as may be
necessary for this purpose.
LIBRARY GERALD GERALD.R. FORD
TAB B
is
GERALD
FORD TIBRANA
P7-5/1
MAR 5 - 1976
Honorable Edmund S. Muskie
United States Senate
Chairman, Committee on the Budget
Washington, D. C. 20510
Dear Mr. Chairman:
The Administration intends shortly to propose to the Congress
additional FY 1976 appropriation language for the Energy Research
and Development Administration to implement the pending Nuclear
Fuel Assurance Act (the IFAA, H.R. 3401 and S. 2035). Action on
this appropriation language is the second vital step in a three-
step congressional review and approval process to make it possible
for private industrial firms to finance, build, own and operate
additional uranium enrichment plants needed by the Nation.
- The first step is enactment of the NFAA which provides ERDA
a basis for proceeding with the negotiation of cooperative
agreements with private firms that wish to build uranium
enrichment plants. (Under the proposed NFAA, cooperative
agreements could not be signed until steps 2 and 3 below
are completed.)
- The second step is the passage of appropriation language
which sets an upper limit on the U.S. Government's
liabilities in the unlikely event that it were necessary
for the Government to assume the domestic assets and
liabilities of firms covered by cooperative agreements.
The practical effect of this step is to provide a basis
for private firms to obtain necessary debt financing in
the commercial capital market. It would permit completion
of negotiations between ERDA and private firms.
- The third step is the submission of unsigned cooperative
agreements to the Congress for final review and approval.
When this three-step process 1s completed and cooperative agreements
are signed a contingent liability would be assumed by the U.S. Govern-
ment. This contingent liability could amount to $8 billion. Such an
amount would cover the domestic portion (40%) of a large gaseous
diffusion plant ($1.5 billion) and three smaller centrifuge plants
($3 billion) as well as provide for contingencies ($3.6 billion)
including escalation.
FORD & GERALD LIBRARY
2
I must emphasize that it is the Administration's firm expectation that
none of this contingent liability would result in Federal expenditures
for the assumption of private ventures because of the high degree of as-
surance discussed below, that commercial firms will be successful.
The purpose of this letter is to inform you of our plans and to
explain why we do not consider the $8 billion contingent liability
to be budget authority under provisions of the Congressional Budget
Act of 1974. We want to be sure that your Budget Committee accepts
this conclusion so that disagreements do not arise at a later date
when they might slow up the Congressional approval of the appropriation
language mandated by the iFAA.
By way of additional background, uranium enriching--a service essential
to the production of nuclear fuel--is now a fully developed production
activity carried out in the U.S. solely by ERDA. This large ERDA
production activity could be capable of supplying enrichment services
to as much as 329,000 We of nuclear generating capacity by the early
80's. This capacity, however, is now fully contracted to domestic and
foreign utilities. The pending Muclear Fuel Assurance Act and the
proposed appropriation language are intended to assure that: (1)
the next increments of uranium enrichment capacity will be built
and operating when needed to supply the growing demand for fuel for
nuclear powered electricity generating plants; (2) all future capacity
increments will be built, financed and operated by private industry, thus
ending the current Government monopoly and drain on the Federal Budget;
(3) the Government will receive appropriate compensation for the use of
its inventions and discoveries; and (4) all necessary domestic and inter-
national controls on nuclear materials and classified technologies will
be maintained as they would be if the Government itself were to own the
new plants.
The construction of new U.S. uranium enrichment plants required by the
year 2000 is estimated to cost $30-50 billion (in 1976 dollars). If
the Government had to build these plants, the capital costs of the new
plants would by 1935 exceed revenues for these plants by about $9
billion (in 1976 dollars, 1.e. escallation is not taken into consideration).
Even the construction by the Government of only the next increment of new
enrichment capacity would have a major budgetary impact for the next ten
years.
In contrast, this financial burden would, under the President's proposal
outlined above, be borne by the private sector which is ready and willing
to do SO. Ideally, industry would assume the entire responsibility for
building succeeding increments of capacity. without even the limited
assurances provided for in the President's Plan. However, it has not
been possible for private firms to obtain the necessary debt financing for
such ventures because of the special circumstances involving uranium
enrichment which are not commonly faced in the business environments
a.
FORD
GERALD
LIBRARY
3
Specifically: (1) the very large size of an enrichment project; (2)
the use of technologies that are classified; (3) regulatory uncertainties
associated with a first of a kind venture; and (4) the current financial
difficulties of some of the utilities that would be the customers for
uranium enrichment services.
The limited cooperation and temporary assurances contemplated in
the HFAA are designed specifically to overcome these obstacles and
make the risk that is involved for potential lenders of debt money
more nearly comparable with the risk associated with other invest-
nent opportunities available to them.
Under the President's proposal outlined above, the Federal Govern-
ment would incur a contingent liablity when a cooperative arrangement
is entered into by ERDA pursuant to the Huclear Fuel Assurance Act.
The major Government contingent liability is based on the possible
need to acquire the domestic assets and assume liabilities (in-
cluding debt) of a private enrichment project in the unlikely event
that the venture were unable to proceed (Section 2 of the proposed
Nuclear Fuel Assurance Act). Again, it must be stressed that we do
not expect any expenditure of funds for the assumption of assets and
liabilities of a private uranium enrichment venture. We are con-
fident in this view because the technology has been thoroughly demon-
strated over the past 30 years and because of the oversight role ERDA
will play with respect to these private enrichment firms.
Since it is unlikely that future outlays will be incurred, we believe
that the $8 billion to be included in appropriation language should be
treated as financial assurances and that the limitation on cooperative
arrangements ($3 billion) made by ERDA pursuant to the Muclear Fuel
Assurance Act, should not be considered as new budget authority. We
base this interpretation on Section 3(a) (2) and 401(c)(2) of the
Congressional Budget Act of 1974 (P.L. 93-344).
Section 3(a) (2) of P.L. 93-344 states:
"The term budget authority" means authority provided
by law to enter into obligations which will result in
immediate or future outlays involving Government funds "
(emphasis added).
Since the $6 billion to be included in appropriation language pursuant
to the IIFAA in all likelihood will not result in immediate or future
outlays, we believe it does not conform to this definition of budget
authority.
In the unlikely event that conditions were to arise in the future where
it appeared that contingent liabilities would require liquidation, an
appropriate amount of budget authority and outlays would be estimated
LIBRARY GERALD R. FORD
in the President's budget for that year. Specifically, the estimate
of budget authority would be in the amount of the borrowing from
the Treasury needed to cover the necessary liquidation. This is
similar to other Federal Programs containing contingent liabilities
assumed by the Federal Government (e.g., government insurance programs).
I suggest that it might be desirable for my staff to meet with
yours to discuss further the Nuclear Fuel Assurance Act and the
appropriations language mandated by the Act. This can be arranged
through my office.
I would personally appreciate any comments you may have on this
matter.
With best personal regards,
Sincerely yours,
(Signed) Jim
James T. Lynn
Director
Distribution
Official File - DO Records
Director's Chron
Director
Deputy Director
Mr. Mitchell
Mr. Loweth
Mr. Taft
Mr. Kearney
Rtn. Room 8002
Chron
SSET/NP:MY:3/2/76
LIBRARY GERALD ? FORD
9161 is smony
CMB
THE WHITE HOUSE
WASHINGTON
April 3, 1976
MEETING WITH SENATOR BAKER
Monday, April 5, 1976
12:15 p.m. (15 minutes)
The Oval Office
From:
Jim
Sathy
I.
PURPOSE
To seek Senator Baker's active support for your uranium
enrichment bill and make clear to him that his lack of
support and delayed actions are jeopardizing both the
expansion of uranium enrichment capacity and the creation
of a private competitive industry.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background: The Administration has provided all
witnesses requested, answered all questions asked,
and agreed to changes in legislation requested by the
Joint Committee on Atominc Energy (JCAE). However,
the JCAE has continued to delay action on the Nuclear
Fuel Assurance Act you submitted on June 26, 1975.
In early March, Senator Pastore indicated he would have
only one more day of hearings for industry witnesses
and then would act on the bill before the end of March.
The JCAE staff urged UEA to submit a written statement
for those hearings rather than appear in person,
presumably because of the emotion that has surrounded
the UEA proposal.
Senator Baker appeared at the hearings, criticized
the failure of UEA to appear in person and expressed
his views that the Committee could not act without
having testimony from UEA. The JCAE has since set
Tuesday, April 6 for UEA testimony.
In short, Senator Baker's opposition and delaying
tactics appear to be the principal cause of the
-2-
continuing delay. Your staff believes that the
bill's chances in the committee are good if Baker
were neutral and excellent if he were helpful.
Senator Baker has stated that he would not vote
against your bill but neither would he actively
support it. He has stated that he would support
the bill if you made a firm commitment now to build
a government add-on plant regardless of the fate of
the private ventures. He has been unwilling to
accept the Administration position that an add-on
plant is a contingency measure -- to be built only
if one or more of the private ventures do not succeed.
Your staff believes that a firm commitment to another
government plant -- other than as a contingency
measure -- would have the effect of killing the
chances of achieving a private competitive uranium
enrichment industry because:
- It would represent at least partial capitulation
after a long period of Administration insistence
(actually since 1970) that industry must have the
opportunity to build the next increments of capacity.
- Both foreign and domestic customers would likely
lose interest in dealing with private uranium
enrichment suppliers if the government were again
in the position to sign orders.
- The added uncertainty would almost certainly lead
two of the four perspective private firms to
withdraw.
Probably the main reason for Senator Baker's insistence
on a commitment to another government add-on - plant
-- even if located at Portsmouth, Ohio -- is that
OakRidge would continue to provide the intellectual
leadership (R&D, design, etc.) for ERDA's enrichment
enterprise. OakRidge would flourish even more if the
private enterprise approach failed and future full-
scale centrifuge plants were located there.
FORD
-3-
Even though Chairman Pastore has not been enthusiastic,
our current assessment is that he would move to report
the bill if Senator Baker would discontinue his
opposition and delaying actions. We also believe
that all other members of the Committee are likely
to support the bill except Senator Case and Congressman
Moss.
We have unconfirmed rumors that Senator Baker intends
to use the hearings on Tuesday to grill UEA witnesses
sharply, try to discourage UEA from continuing, and
discourage other members from supporting the bill if
UEA continues as a potential enrichment firm.
In view of the above, your advisers believe that
Senator Baker must be strongly urged to stop opposing
the bill and to drop any plans he has for forcing
withdrawal of UEA.
B. Participants. Senator Baker.
C. Press Plan. White House Photographer.
III. TALKING POINTS
We all agree that more uranium enrichment capacity
is needed. The only question is who will finance
and own the plants.
I sent up legislation nearly ten months ago to permit
industry to get involved. We have provided all the
witnesses requested, answered all the questions asked,
and agreed to changes in the bill to give the Congress
a full opportunity to accept or reject individual
contracts.
The bill (Nuclear Fuel Assurance Act) can be passed
by the Congress without committing to accept any
particular contract. Each proposed contract -- including
UEA -- will have to stand scrutiny by the JCAE and the
Congress on its merits.
Despite all this, we have had one delay after another.
FORD
-4-
Howard, I understand, you will support this
legislation only if we commit ourselves to build
a Government add-on plant. We have looked at this
from all angles and there simply isn't any sound
economic or technical reason for building another
government plant. We don't need to spend more
government billions in this area. The time is here
to make the move toward private industry.
A commitment to another Government plant would
weaken, if not destroy, the chances of getting
industry involved.
I committed ten months ago to continue efforts
needed to permit building a Government-owned plant,
but only if private ventures failed. I intend to
keep that commitment. I do not intend to change
the contingency plan into a firm commitment to
build another government plant.
I understand that you have a number of reasons
for wanting more government plants, but I'm
asking you to drop your opposition to the bill
and to work with me to get this bill out of
committee and to the floor.
LUNCH WITH SENATOR BAKER
Monday, April 5, 1976
12:45 p.m.