In view of the foregoing, the Commission is proposing to adopt the amendments set forth below, to eliminate from Parts 50 and 70 provisions related to the allocation and distribution of special nuclear material. Proposed amendments to part 50 The proposed amendment of § 50.33 (f) would delete the requirement that applicants for facility licenses include in their applications, if they are also applying for a special nuclear material license, information as to their financial qualifications to pay Commission charges for special nuclear material. This requirement is no longer necessary since licensees may obtain special nuclear material from private sources. If the material is obtained from the Commission, the financial qualifications of the applicant to pay any charges can be considered in connection with the contractual arrangements for the material. The proposed amendment of § 50.60 would be the most significant of the changes now proposed for 10 CFR Part 50. This section would be revised to provide that facility construction permits and operating licenses issued after the effective date of the amendments would not contain any provision relating to the allocation of special nuclear material unless such a provision was incorporated in a construction permit issued prior to the effective date of the amendments in which case the provision could be incorporated in a license issued after the effective date. The revised § 50.60 would also provide that provisions relating to allocation of special nuclear material in construction permits or operating licenses issued prior to the effective date of the amendments would not be affected unless the Commission, in accordance with the procedures of 10 CFR Part 2, were to reduce the allocation upon the ground that the quantities of special nuclear material allocated exceeded those reasonably required, or estimated to be required, for the conduct of the activities authorized by the permit or license. Any allocation granted by the Commission would be deemed to be satisfied to the extent that (1) the Commission contracts to provide special nuclear material to a permittee or licensee under a contract for the supply of special nuclear material, whether by toll enrichment services, sale, lease, or otherwise, and/or (2) the Commission determines that special nuclear material is available, whether by toll enrichment services, sale, lease, or otherwise, from a source or sources other than the Commission on terms and conditions and at charges which are considered by the Commission to be reasonable and nondiscriminatory. The holder of a construction permit or operating license who desires to have reduced or eliminated any allocation included in his permit or license may request an amendment to the permit or license, pursuant to Subpart A of 10 CFR Part 2. The proposed amendments of §§ 50.55(a) and 50.103(a)(2) would delete certain words to bring these provisions into conformity with other proposed changes. Proposed amendments to part 70 The proposed amendment of § 70.1(a) would delete as one of the purposes of 10 CFR Part 70 the establishment of procedures for the distribution by the Commission of special nuclear material to licensees. The enactment of Public Law 88-489 eliminated the need for such regulatory procedures. The proposed amendment of § 70.22 (a)(5) would delete the requirement that an applicant for a special nuclear material license include in its application, when applicable, estimated schedules relating to delivery, consumption, production and transfers of special nuclear material, Section 7023 would be amended by deleting paragraph (f) which provides that special nuclear material be made available to an applicant substantially in accordance with an estimated schedule and, where applicable, in accordance with a specified priority system. The proposed amendment to the "Note" following § 70.22 (a) (8) would delete the requirement that the applicant furnish information relative to its financial qualifications to assume responsibility for the payment of Commission charges for special nuclear material. The proposed amendments of $70.23 (e) and § 70.43 would delete similar provisions. The proposed amendments of §§ 70.31(b)(1) and 70.31(b)(2) would delete provisions which provide a procedure for the allocation of special nuclear material to licensees. The proposed amendments of §§ 70.31(d) and 70.62 would delete references to the "distribution" of special nuclear material. The proposed amendment of § 70.38 sets forth changes consistent with those discussed above in connection with § 50.60. Pursuant to the Atomic Energy Act of 1954, as amended, and the Administrative Procedure Act of 1946, as amended, notice is hereby given that adoption of the following amendments of 10 CFR Parts 50 and 70 is contemplated. All interested persons who desire to submit written comments or suggestions in connection with the proposed amendments should send them to the Secretary, United States Atomic Energy Commission, Washington, D.C. 20545, within sixty (60) days after publication of this notice in the Federal Register. Comments received after that period will be considered if it is practicable to do so, but assurance of consideration cannot be given except as to comments filed within the period specified. 1. Paragraph (f) of § 50.33 of 10 CFR Part 50 is amended by deleting the last sentence. 2. Paragraph (a) of § 50.55 of 10 CFR Part 50 is amended by deleting the words in the second sentence "and any scheduled delivery of materials from the Commission". 3. Section 50.60 of 10 CFR Part 50 is revised to read as follows: § 50.60 Allocation of special nuclear material. 1 (a) The Commission will not incorporate in construction permits or licenses issued after provisions allocating quantities of special nuclear material, Provided, however, that such provisions may be incorporated in a license if they have been incorporated in the construction permit for the facility. Any allocation granted by the Commission shall be deemed to be satisfied to the extent that (1) the Commission contracts to provide special nuclear material to a permittee or licensee under a contract for the supply of special nuclear material, whether by toll enrichment services, sale, lease, or otherwise, and/or (2) the Commission determines that special nuclear material is available, whether by toll enrichment services, sale, lease, or otherwise, from a source or sources other than the Commission on terms and conditions and at charges which are considered by the Commission to be reasonable and nondiscriminatory. Subject to paragraph (b) of this section, provisions allocating quantities of special nuclear material in construction permits and licenses issued prior to 1 shall remain in effect in accordance with their terms. (b) The Commission may, in accordance with the procedures provided in Part 2 of this chapter, reduce the quantities of special nuclear material allocated to a permittee or licensee pursuant to this part, upon the ground that the quantities allocated exceed those reasonably required, or estimated to be required, for use by the facility. Except as provided in paragraph (a) of this section, the expiration, revocation or other termination of a construction permit or license shall terminate all allocations incorporated in such permit or license. NOTE. With respect to quantities of special nuclear material allocated to construction permittees and licensees prior to and pursuant to the provisions of this part, the Commission will continue its practice of not distributing the material to the permittee or licensee until the material is needed. 1 4. Section 50.103(a) (2) of 10 CFR Part 50 is amended by deleting the word "distributed". 5. Paragraph (a) of § 70.1 of 10 CFR Part 70 is revised to read as follows: 2 § 70.1 Purpose. (a) The regulations in this part establish procedures and criteria for the issuance of licenses to receive title to, own, acquire, deliver, receive, possess, use, transfer, import and export special nuclear material; and establish and provide for the terms and conditions upon which the Commission will issue such licenses. 6. Subparagraph (5) of § 70.22(a) of 10 CFR Part 70 is deleted. 7. The "Note" following § 70.22(a) (8) of 10 CFR Part 70 is revised to read as follows: NOTE. Where the nature of the proposed activities is such as to require consideration of the applicant's financial qualifications to engage in the proposed activities in accordance with the regulations in this chapter, the Commission may request the applicant to submit information with respect to his financial qualifications. 1 Effective date of the amendment. It is those 2 Proposed amendments of §§ 70.1(a), 70.22(a), the "Note” following § 70.22(a)(8) and § 70.23 (e) were published in the Federal Register on September 21, 1965. proposed amendments which are proposed for further revisión in this notice. 8. Paragraph (e) of § 70.23 of 10 CFR Part 70 is revised to read as follows: § 70.23 Requirements for the approval of applications. (e) Where the nature of the proposed activities is such as to require consideration by the Commission, that the applicant appears to be financially qualified to engage in the proposed activities in accordance with the regulations in this part. 9. Paragraph (f) of § 70.23 of 10 CFR Part 70 is deleted. 10. Paragraph (b) of § 70.31 of 10 CFR Part 70 is deleted. 11. Paragraph (d) of § 70.31 of 10 CFR Part 70 is revised to read as follows: $ 70.31 Issuance of licenses. (c) No license will be issued by the Commission to any person within the United States if the Commission finds that the issuance of such license would be inimical to the common defense and security or would constitute an unreasonable risk to the health and safety of the public. 12. Paragraph (a) of § 70.38 of 10 CFR Part 70 is revised to read as follows: $ 70.38 Reduction and termination of allocations. (a) The Commission may, in accordance with the procedures provided in Part 2 of this chapter, reduce the quantities of special nuclear material allocated to a licensee pursuant to this part, upon the ground that the quantities allocated exceed those reasonably required, or estimated to be required, for conduct of the activities authorized by the license. Any allocation granted by the Commission shall be deemed to be satisfied to the extent that (1) the Commission contracts to provide special nuclear material to a permittee or licensee under a contract for the supply of special nuclear material, whether by toll enrichment services, sale, lease, or otherwise, and/or (2) the Commission determines that special nuclear material is available, whether by toll enrichment services, sale, lease, or otherwise, from a source or sources other than the Commission on terms and conditions and at charges which are considered by the Commission to be reasonable and nondiscriminatory. 13. Section 70.43 of 10 CFR Part 70 is deleted. 14. Paragraph (b) of § 70.62(b) of 10 CFR Part 70 is amended by deleting the word "distributed”. (Sec. 161, 68 Stat. 948, 42 U.S.C. 2201.) W. B. McCooL, Secretary (For the Atomic Energy Commission). DRAFT PUBLIC ANNOUNCEMENT-AEC PROPOSES TO DISCONTINUE REGULATORY PROCEDURE OF ALLOCATING AND DISTRIBUTING SPECIAL NUCLEAR MATERIAL 1. The Atomic Energy Commission is planning to discontinue its present regulatory procedure for allocating and distributing special nuclear (fissionable) material to nuclear reactor licensees and special nuclear material licensees. This procedure for assuring the availability of special nuclear material to AEC licensees is no longer considered necessary due to the enactment of legislation in 1964 permitting the private ownership of this material. 2. The term "special nuclear material" as used in the Commission's regulations refers to plutonium, uranium 233, and uranium enriched in the isotope 233 or the isotope 235. These materials are used as fuel in privately-owned nuclear reactors and for various industrial and research development purposes. 3. The procedure for allocating special nuclear material by license was adopted in 1956 as a means of assuring persons who are licensed to construct and operate nuclear reactors of the availability to them, for extended periods, of the special nuclear material required for operation of their facility. The Commission offered such assurance since it was the sole owner of special nuclear materials. 4. Legislation was enacted in 1964 to permit private ownership of special nuclear material. This law authorized the Commission to sell, lease or grant special nuclear material to licensees. It also authorized the Commission to enter into long-term contracts with licensees to provide them with uranium enrichment services. The law also permits AEC licensees to obtain the special nuclear materials required for their activities from private sources as well as from the Commission. 5. On October 5, 1965, the AEC published proposed criteria for uranium enrichment services. The proposed criteria provided for long-term contractual assurance of the availability of special nuclear material to licensees. It is expected that the effective criteria will be published soon. 6. The availability of long-term contracts for uranium enrichment services from the Commission, coupled with the future availability of special nuclear material from private sources, makes it unnecessary for the AEC to provide a regulatory procedure for the allocation or distribution of special nuclear material. Therefore, the Commission is proposing to discontinue this procedure. 7. Under the proposed amendments to Parts 50 and 70, allocations of special nuclear material made before the effective date of the amendments would remain in effect subject, however, to the continuing right of the Commission to reduce the quantities of special nuclear material allocated, if they exceed those quantities required or estimated to be required by AEC licensees. Any allocation granted would be deemed by the Commission to be satisfied to the extent (1) the AEC contracts to provide special nuclear material under a supply contract, and/or (2) the Commission determines that special nuclear material is available from sources other than the Commission on terms which are considered by the Commission to be reasonable. 8. Notice of these proposed amendments to AEC regulations, Parts 50 and 70, will be published in the Federal Register on allowing 60 days for public Interested persons may submit written comments or suggestions to the Secretary, U.S. Atomic Energy Commission, Washington, D.C. 20545. comment. APPENDIX 18 JOINT COMMITTEE-AEC CORRESPONDENCE ON MODIFICATIONS TO PROPOSED URANIUM ENRICHMENT SERVICES CRITERIA, DATED OCTOBER 18 AND DECEMBER 16, 1966 Hon. GLENN T. SEABORG, CONGRESS OF THE UNITED STATES, Chairman, U.S. Atomic Energy Commission, DEAR DR. SEABORG: The Joint Committee has reviewed the AEC's proposed Uranium Enrichment Services Criteria during the five days of hearings held on this subject. As indicated at the close of these hearings, the Committee believes the Commission has performed an outstanding task in developing these Criteria, and the related contracts and policy decisions. In general, the proposed Criteria are designed to permit the nuclear industry to continue its healthy growth, and at the same time assure that the Government is not subsidizing the industry or obtaining an undue margin over production costs. This assurance depends in large measure, of course, on the actual charges (rather than the ceiling charge) to be made for enriching services. On the basis of the testimony and other evidence presented at these hearings, the Committee believes the following actions should be taken by the Commission relative to the Criteria as submitted to the Committee on July 1, 1966: 1. A portion of the costs of depreciation and interest on investment attributable to gaseous diffusion plant capacity which is not in standby, but is in excess of presently utilized production capacity, should be assigned to the separative work costs charged to civilian customers. We recognize that accounting procedures applying to facilities which were constructed for and devoted to military production, and now are used for civilian nuclear fuel production, necessarily cannot follow standard industrial or Government procedures in all respects. We commend the Commission for deciding to recover depreciation and interest on facilities transferred from military to civilian production but recognize that various common sense adjustments must be made. In connection with the above, we note that the AEC testified that it intends to recover its depreciation and interest on capacity not in standby but in excess of presently utilized capacity whenever its production rate exceeds 75% of total capacity of plant not in standby. While we recognize that the AEC has taken into account the principle of full cost recovery, we suggest that consideration be given to applying its intent to recover a portion of its depreciation and interest on excess capacity below the 75% production rate. 2. The AEC, as well as its customers, should be assured the right to request negotiation to amend existing enriching services contracts, in accordance with the second sentence of paragraph 5 of the Criteria. 3. Provisions for termination of enriching services contracts by customers should be so drafted as to provide reasonable assurance to the Government that the total probable costs of termination will be borne by the terminating customer, and not by the Government or civilian customers who do not terminate. It appears that more than a three-year notice period for termination without charge, and an assurance that only the probable costs of termination as determined by the AEC will be charged to the terminating customer, would be fair and equitable. In this connection, the Committee understands that the electric power contracts for the gaseous diffusion plants provide for termination notice periods without penalty which currently range up to approximately 52 months. Further, it has been estimated that a substantial percent of the uranium enriching services will be provided to foreign customers. Large foreign order cancellations without adequate notice could adversely affect the costs paid by U.S. customers. 4. The Commission should establish a mechanism for recording on a current basis (and reporting to the Joint Committee at least annually) its outstanding and anticipated commitments for providing uranium enriching services, and projected enrichment capability, so that at no time will commitments to civilian customers be in excess of "available capability” and that requests for increasing capability to meet future civilian and military requirements can be made to the Committee with sufficient lead time to provide for the anticipated need. I would appreciate receiving the Commission's comments on this matter at your earliest convenience. Sincerely yours, Hon. CHET HOLIFIELD, CHET HOLIFIELD, Chairman. U.S. ATOMIC ENERGY COMMISSION, Chairman, Joint Committee on Atomic Energy, DEAR MR. HOLIFIELD: The Atomic Energy Commission has reexamined its proposed Uranium Enrichment Services Criteria and the financial and contractual policies associated with implementation of the Criteria, taking into consideration the views of the Joint Committee as expressed in your letter of October 18, 1966. This examination has been assisted by the testimony and other evidence presented at the JCAE hearings of August 2, 3, 4, 16, and 17, 1966. We were pleased at the generally favorable response to the proposed Criteria and of course share the view expressed in your letter that the Criteria should permit the nuclear industry to continue its healthy growth, and at the same time assure that the Government is not subsidizing the industry or obtaining an undue margin over production costs. As a result of our reexamination, the Commission has concluded that the following changes will be made in the Criteria as submitted to the JCAE on July 1, 1966, and in the associated AEC policies: 1. The formulation to be used by AEC in recording costs to be charged to the separative work produced for civilian customers during the interim period when the operating plant is producing at less than capacity levels will be modified. The AEC had initially proposed to exclude those costs of depreciation and interest on investment allocable to excess capacity whenever its production rate was less than 75% of the practical capacity of plant not in standby. Under this proposal the amount to be assigned to current production was to be determined on the basis of the fraction of practical capacity actually used, with a floor on the amount to be charged equivalent to 30%. Your letter suggests that consideration be given to the intent to recover a portion of depreciation and interest on excess capacity when operating below the 75% level. We have discussed this matter with the Committee staff and examined the effect of charging an additional 10% at these operating levels to represent a portion of the excess capacity. On the basis of our long range projections, the results of charging the additional 10% would increase the total costs by about 2 percent. Accordingly, we will assign costs to current production on the basis suggested in your letter which will include an additional 10% when operating at less than 75% of practical capacity, retaining a floor on the amount to be charged equivalent to 30%. |