result of this analysis. The Commission will no doubt also wish to give consideration to the testimony in connection with the post-1968 policies on lease and sale of uranium, and other pertinent matters. (See app. 18, p. 517, and app. 20 p. 520.)

The hearings are now adjourned.

(Whereupon, at 4:20 p.m., Wednesday, August 17, 1966, the hearings were adjourned.)

70-510-66- -19

DEAR CHET: Pursuant to section 161v of the Atomic Energy Act of 1954, as amended, the Atomic Energy Commission hereby submits to the Joint Committee on Atomic Energy proposed Criteria for uranium enrichment services.

Draft proposed Criteria were published in the Federal Register on October 1, 1965 and a 90-day period was set for receipt of public comments. In addition, draft contracts reflecting the method of implementing the Criteria were made available on request. Comments were received from eleven organizations and discussions were held with a number of industry representatives convened by the Atomic Industrial Forum. After consideration of all comments received, appropriate modifications have been made and the modified Criteria are submitted herewith.

In addition to the matters specifically set forth in the Criteria, AEC will agree generally to waive the 90-day period between feed and product delivery, as provided in item 5(a), for the 120-day period immediately following January 1, 1969. We intend to announce this waiver at, or prior to, the JCAE hearings on the Criteria.

We are separately providing to the JCAE staff, for the information of the Committee, copies of the draft contract forms which are planned for implementation of the Criteria. Copies of these draft contracts are also being made available for public comment and/or use in connection with the hearings on this matter.

Cordially,

GLENN T. SEABORG, Chairman.

ATOMIC ENERGY COMMISSION URANIUM ENRICHMENT SERVICES CRITERIA, JUNE 29, 1966

1. GENERAL

1

(a) The United States Atomic Energy Commission (AEC) hereby gives notice of the establishment of criteria setting forth the terms and conditions under which it offers, subject to available capability, to provide uranium enrichment services in facilities owned by AEC, as authorized by the Atomic Energy Act of 1954, as amended (the Act). Specifically, these criteria are established pursuant to section 161v of the Act, which was added by Public Law 88-489, the "Private Ownership of Special Nuclear Materials Act." As used in this notice, the term "enrichment services" or "enriching services" means the separative work necessary to enrich or further enrich uranium in the isotope 235. The enrichment services shall be provided pursuant to contracts to be entered into (1) with persons licensed under section 53, 63, 103 or 104 of the Act, and/or (2) in accordance with agreements for cooperation arranged pursuant to section 123 of the Act. (b) The contracts will provide for the furnishing of depleted, normal or enriched uranium by the customer and the delivery by the AEC of an appropriate 1 The work devoted to separating a quantity of uranium (feed material) into two fractions, one a Product fraction containing a higher concentration of U-235 than the Feed and the other a Tails fraction containing a lower concentration of U-235.

quantity of enriched or more highly enriched uranium. The quantity of material to be furnished by the customer in relationship to the quantity of enriched uranium to be delivered by the AEC and the related amount of separative work to be performed by the AEC normally will be determined in accordance with the then-current standard table of enriching services published by the AEC.2 In the event, however, that the AEC does not have available capability to undertake to perform requested enriching services on short notice in accordance with such standard table, the AEC may agree to perform such services in accordance with such other table as is within its capability. The general features of standard contracts, including the basis for AEC's charges for enriching services, are set forth herein.

(c) Except as specifically provided, nothing in this notice shall be deemed to affect the sale or leasing of special nuclear material by the AEC or the entering into of "barter" arrangements whereby special nuclear material is distributed pursuant to section 54 of the Act and source material is accepted in part payment therefor. Neither the execution of an agreement for the furnishing of uranium enrichment services nor the termination or expiration of such agreement will in itself alter or affect any rights and obligations of any AEC licensee under its license or construction permit other than those regarding any allocation of special nuclear material in connection therewith.3

(d) The criteria contained in this notice are subject to change by the AEC from time to time; however, any such changes shall be submitted to the Joint Committee on Atomic Energy for its review in accordance with the Act.

2. EFFECTIVE DATE

This notice shall become effective as of 1966.

3. PERIOD OF CONTRACT

Contracts with domestic licensees will be for specified periods of time up to 30 years. Contracts entered into in accordance with an international agreement for cooperation must be for a term within the period of such agreement. In either case, contracts may be entered into at any time after the effective date of this notice; however, no such contract shall provide for delivery of special nuclear material by AEC or delivery of uranium feed material to AEC before January 1, 1969.

4. ENRICHMENT OF URANIUM OF FOREIGN ORIGIN

There is no restriction on the provision of enrichment services to persons furnishing as feed material uranium of foreign origin where the enriched product is not intended to be used in a utilization facility (as defined in the Act) within or under the jurisdiction of the United States. Where the enriched material is intended to be used in a domestic utilization facility, however, the standard contracts will prohibit the furnishing of feed material of foreign origin. This prohibition is established, pursuant to section 161v of the Act, in order to assure the maintenance of a viable domestic uranium industry. From time to time, the AEC will review the condition of the domestic mining and milling industry to determine the need for continuing this restriction, modification or removal of which shall constitute a change in these criteria.

5. GENERAL FEATURES OF STANDARD DOMESTIC CONTRACTS

The following types of contracts have been developed in the light of the uncertainties necessarily attendant to contracts which may be for periods as great as 30 years. Accordingly such contracts will provide that, at the request of the customer, the AEC will negotiate and, to the extent mutually agreed, amend them, without additional consideration, in a manner consistent with the criteria then established by the Commission in accordance with the requirements of section 161v of the Act to eliminate or reduce restrictive provisions which the

The initial table, as presently contemplated, will not provide to the customer flexibility to select a quantity of feed and an amount of separative work other than those specified in the AEC table. However, the AEC is giving further study to the question of providing, at some date in the future, a form of contract under which flexibility would be available. In view of the authority granted to the AEC under the Act to execute long-term fuel supply agreements, the AEC is reviewing its existing regulations and procedures with respect to the need for allocations of special nuclear material in licenses.

AEC determines are inequitable, discriminatory or no longer required to protect the Government's interest. The AEC will use two standard types of uranium enrichment contracts to be entered into with domestic licensees. These are entitled (a) Agreement for Furnishing Uranium Enrichment Services (Domestic Customers-Firm Quantities), and (b) Agreement for Furnishing Uranium Enrichment Services (Domestic Customer's Requirements). The AEC may also offer a uranium enrichment contract combining features of the foregoing types of contract. The type of contract first mentioned, at the customer's option, will either (i) define the specific quantities and assays of enriched uranium to be delivered to the customer, the schedule for such deliveries, and the quantity and assay (or a range of quantities and assays within permitted amounts) or feed material other than natural uranium to be delivered by the customer, with the remainder of the required feed material to be delivered as natural uranium, or (ii) define the amount of enriching services to be performed by the AEC in terms of units of separative work as related to the AEC's standard table of enriching services in effect at the time the parties agree to such amounts and provide for the adjustment of such amounts in the event of a revision of the AEC's standard table of enriching services through the application of such revised standard table to the relevant portion of a reference schedule of feed material deliveries by the customer and enriched uranium deliveries by the AEC incorporated into the contract for this purpose. The second type would provide for

the furnishing of part or all of the customer's requirements for enriching services for a designated facility or facilities during the term of the contract.

In addition to the items discussed above, the more significant provisions of the standard domestic contracts are summarized below:

(a) Delivery schedules

Deliveries of specific quantities and U-235 assays of feed material to AEC and enriched uranium to the customer shall be in accordance with the agreement between the parties and (except as provided in 1(b) above) in accordance with the published AEC standard table of enriching services in effect at the time of the delivery of enriched uranium by the AEC. The schedule for delivering enriched uranium to the customer shall reflect an interval after receipt of feed material equivalent to the estimated average time which would be required to receive, handle, and process equivalent feed material to the desired enriched uranium. The AEC will not necessarily use the specific feed material furnished by the customer in producing the enriched uranium delivered to the customer. unless otherwise agreed, deliveries of feed material to AEC shall precede requested deliveries of the enriched uranium by at least ninety (90) days. The AEC may agree to perform enriching services in cases where the leadtime requirements for furnishing feed material are not satisfied; in such cases, an appropriate surcharge may also be imposed to provide for recovery of additional AEC costs and interest charges.

(b) Chemical form and specifications of material

Both feed material furnished to the AEC and enriched uranium delivered to the customer are required to be in the form of UF. and conform to the AEC's established specifications as published in the Federal Register and in effect on the date of delivery.

(c) Charge for enriching services

(1) The charge for enriching services, in accordance with the Act, will be established on a nondiscriminatory basis and provide reasonable compensation to the Government. Applicable charges for enriching services and related services will be those in effect at the time of delivery of enriched uranium to the customer as (i) published in the Federal Register, or (ii) in the absence of such publication, determined in accordance with the Commission's Pricing Policy. The charge per unit of separative work for enriching services will be the same as that employed in the Commission's published schedule of charges for sale or lease of enriched uranium. The AEC may impose an appropriate surcharge representing additional costs if any to the AEC for providing enriching services on short notice.

(2) The Act requires that such charges provide reasonable compensation to the Government. AEC's charge for enriching services will be established on a basis that will assure the recovery of appropriate Government costs projected over a reasonable period of time. The cost of separative work includes electric power and all other costs, direct and indirect, of operating the gaseous diffusion