Northwest. The principal differences between the two proposals are as follows: First, the 1961 proposal required the appropriation of $95 million for the construction of generating facilities by the Federal Government. The expenditure of these funds was criticized in the House of Representatives as a "sheer waste of $95 million of otherwise urgently needed Federal funds which the Nation's taxpayers have to provide" (Congressional Record, June 28, 1961, p. A4923). In the minority's separate views contained in the report on the AEC authorization bill it was similarly argued that "the expenditure of the proposed $95 million would be far more effective in advancing the art of nuclear power if applied to the development of new techniques and processes" (H. Rept. 562, 87th Cong., 1st sess.). On the floor of the House, Representative Van Zandt, floor manager for the minority, stated (Congressional Record, July 13, 1961, p. 11557): "The expenditure of $95 million being sought today is not only unnecessary but unwise." There was thus serious congressional concern that the addition of electric generating facilities involved the unnecessary expenditure of Federal funds, which might be better expended in more promising areas of atomic energy development. Perhaps the most striking difference in the WPPSS proposal is that no expenditure of Federal funds is involved. There can thus be no argument as to the propriety of Federal expenditures. Any benefit which may accrue to the Federal Government as a result of this project will be without a corresponding outlay of Federal funds. Second, a very important argument in 1961 was that the project would not produce power economically. This was perhaps the most strenuously argued point of the minority views in the committee report on the AEC authorization bill. On the floor of the House, Representative Hosmer argued (Congressional Record, Aug. 8, 1961. p. 13903): The issue is simply this, whether you can take $95 million, put in some machinery at Hanford *** generate kilowatts, transmit the kilowatts, sell the kilowatts, and get your $95 million back. This has not been established. The argument over the economics of this arrangement, as it affects the Federal Government, is not pertinent to a discussion of the current WPPSS proposal which involves no risk and no expenditure on the part of the Government. In fact it is possible that substantial economic benefits could accrue to the Government from the sale of waste NPR steam as authorized in section 44 of the Atomic Energy Act of 1954. The risk, if any, lies with the participating utility companies and the customers in the Pacific Northwest. It is a risk which they have investigated thoroughly and have determined to be acceptable. The economics of the WPPSS proposal are thus wholly unrelated to the debate before the Congress last year. Finally, in 1961 there was considerable congressional concern over the fact that the Atomic Energy Commission, in operating the NPR electric generating facilities, would "take its place alongside the Department of Interior and TVA as a major producer of Governmentgenerated electric power." The minority views in the committee report regarded this as "A crucial question of national policy which must be debated and resolved by this Congress." On the floor, Representative Van Zandt described the issue as "whether the Government should expand its position in the electric power industry and whether or not the AEC is an appropriate agency for such expansion" (Congressional Record, July 13, 1961, p. 11558). The facts of the situation are, of course, completely changed this year. Under the WPPSS proposal, neither the Atomic Energy Commission nor the Bonneville Power Administration will be responsible for the construction or operation of the electric generating facilities, in sharp contrast to last year's plans for Federal ownership and operation. These changed facts not only remove any parallel between the 1961 and 1962 proposals; they moreover remove the basis for the ideological argument which was perhaps decisive in the 1961 debate. The AEC will be selling steam "incident to the operation" of its production facility under the clear statutory authority of section 44 of the Atomic Energy Act of 1954, a practice which it has followed with respect to the disposition of energy from other Commission facilities. such as the sodium reactor experiment at Santa Susana, Calif., and the submarine intermediate reactor at West Milton, N.Y. However, the electric energy will be generated and trasmitted by a wholly private entity-the Washington Public Power Supply System. Clearly, therefor, there is no parallel between the WPPSS arrangement and TVA-type operations. Far from being an encroachment on private enterprise, it is an encouragement to private companies to come forth, venture risk capital, and gather such benefits as may accrue to the customers in their immediate area-the Pacific Northwest. The WPPSS arrangement is moreover in accord with the suggestion expressed many times during the NPR debate that private bodies should be willing to come forward and construct the proposed electric generating facilities. Senator Hickenlooper, for instance, argued: *** So far as I know, no private or public body is willing to buy the steam or build the generator to generate the electricity ***. If it were economic, then I think there would be a scramble on the part of private and public bodies to take over the steam and to build the generators themsevles. Significantly, they will not do it *** (Congressional Record, Sept. 5, 1961, p. 16926). It is true that in 1961 no private body came forward. However, we now have a proposal by a private group which, in the words of Senator Hickenlooper, is willing to "take over the steam and to build the generators themselves * It is a fine example of local action to meet local needs. The facts of the WPPSS proposal must thus be evaluated on their own merits and not on the basis of a debate which is no longer relevant. Considered in this light, it is my view that the WPPSS proposal in no way frustrates the intent of the Congress. Moreover, in a positive vein, the proposal will prevent the waste of a valuable national resource at no cost, and with every prospect for significant benefits, to the taxpayers of the United States. I believe it is imperative to evaluate the WPPSS proposal within the framework of these considerations. If I, or any of the staff of the Joint Committee on Atomic Energy, can be of assistance to you or your staff in the consideration of this project, we will be happy to do so and to arrange a meeting at a mutually convenient time. Sincerely yours, CHET HOLIFIELD, Chairman. B-149016. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. JOHN TABER, DEAR MR. TABER: We refer again to your letters of May 23 and June 13, 1962, raising questions concerning the legality of proposed agreements between the Atomic Energy Commission and the Washington Public Power Supply System (WPPSS), a public agency of the State of Washington, on one hand, and the Bonneville Power Administration (BPA) and the WPPSS on the other, whereby steam to be produced at the AEC's new production reactor (NPR), authorized for construction as Project 59-a-5 under Public Law 85-590, would be utilized for the production of electrical energy in a generating plant to be constructed by WPPSS, the output of which would be delivered to BPA on an exchange basis. Section 101 of Public Law 85-590 provides, in pertinent part, as follows: SEC. 101. PLANT OR FACILITY ACQUISITION OR CONSTRUCTION.-There is hereby authorized to be appropriated to the Atomic Energy Commission, in accordance with the provisions of section 261a(1) of the Atomic Energy Act of 1954, as amended, the sum of $386,679,000 for acquisition or condemnation of any real property or any facility or for plant or facility acquisition, construction, or expansion, as follows: (a) SPECIAL NUCLEAR MATERIALS. * * * 5. Project 59-a-5, production reactor facility for special nuclear materials, convertible type, Hanford, Washington, $145,000,000. The primary purpose of the project is the establishment of a plant for the production of plutonium. The plant is to be so constructed as to permit its conversion to the production of electric energy either in lieu of, or in addition to, the plutonium. An amendment introduced in the Senate to reduce the appropriation authorization to $120 million, having as its purpose the elimination of the convertibility feature, was defeated on July 15, 1958. On June 8, 1961, there was introduced in the House of Representatives H.R. 7576, 87th Congress, which in its original form would have authorized an appropriation for— Project 62-a-6, electric energy generating facilities for the new production reactor, Hanford, Washington, $95,000,000. That project was deleted by amendment on the floor of the House on July 13, 1961. The Senate reinstated the project at an authorization of $58 million but receded from its position and the resulting Public Law 87-315 excluded Project 62-a-6. Agreements between WPPSS and AEC and BPA, respectively, have been proposed by WPPSS as a means of converting the NPR to dual-purpose operation and to utilize the resulting energy without any additional appropriation of Federal funds or congressional authorization. By letter of November 28, 1961,7 WPPSS proposed certain basic terms and criteria for the agreements with the two Federal agencies. With respect to BPA these have ripened into a series of draft agreements, the latest of which, to our knowledge, is preliminary draft No. 6, dated June 5, 1962. As to AEC, we are not aware of the existence of any draft agreement. However, the basic terms and criteria have been reviewed by AEC and certain 7 Printed on p. 101; modifications have been suggested as a result in a letter of April 6, 1962. Our review of the legality of the AEC-WPPSS agreement is based on the assumption that the ultimate understanding would reflect the basic terms proposed by WPPSS as modified by AEC. Briefly, the agreement between AEC and WPPSS would provide that 1. AEC would lease to WPPSS land adjacent to the NPR for the construction and operation of the electric generating facilities. 2. WPPSS would design, construct, and operate the electric generating facilities. 3. Additions or changes in the NPR in connection with dual purpose operation would be performed by AEC with funds advanced by WPPSS. AEC would take title to and exercise complete control over the resulting equipment. 4. WPPSS would issue revenue bonds to defray the capital cost of the project. 5. WPPSS would purchase from AEC steam resulting from the operation of the NPR by AEC. During periods when the NPR was not being operated by AEC, WPPSS would lease the facility for production of steam, subject to immediate recapture at the option of AEC. 6. The term of the agreement would be not less than the time necessary to amortize the bonds sold by WPPSS to finance the project. At the expiration of the agreement, or when the bond indebtedness was retired, the Government could, at its option, take title to the electrical generating and related facilities. In addition, the Government could acquire title to the facilities at any prior time by payment of an amount sufficient to satisfy the obligation incurred under the project. Section 261a of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2017, includes the following: a. There are hereby authorized to be appropriated such sums as may be necessary and appropriate to carry out the provisions and purposes of this Act, except "(1) Such as may be necessary for acquisition or condemnation of any real property or any facility or for plant or facility acquisition, construction or expansion: Provided, That for the purposes of this subsection a, any nonmilitary experimental reactor which is designed to produce more than 10,000 thermal kilowatts of heat (except for intermittent excursions) or which is designed to be used in the production of electric power shall be deemed to be a facility. The section up to the proviso is identical in form with the enactment in 1954. As originally introduced, H.R. 9757, 83d Congress, which became the Atomic Energy Act of 1954, contained a section 261, providing in pertinent part― SEC. 261. There are hereby authorized to be appropriated such sums as may be necessary and appropriate to carry out the provisions and purposes of this Act except such as may be necessary for acquisition or condemnation of real property or for plant construction or expansion. * * * The purpose of the provision in its original form was stated at page 31 of House Report No. 2181, 83d Congress, to be to require the Commission "to obtain congressional approval of new construction, or expansion, of its plants. The Senate amended that portion of section 261 to read SEC. 261. There are hereby authorized to be appropriated such sums as may be necessary and appropriate to carry out the provisions and purposes of this Act Printed on p. 97. except such as may be necessary for acquisition or condemnation of real property or for plant construction or expansion (other than for such acquisition, condemnation, construction, or expansion as may be undertaken under the authority of section 45 a. of this Act. *** Section 45 a., referred to above, contained the following: a. The Commission is empowered to produce or provide for the production of electric power and other useful forms of energy derived from nuclear fission in its own facilities or in the facilities of other Federal agencies. * * * The Senate amendment was eliminated in conference. The conference report, House Report No. 2666, 83d Congress, explains the deletion at page 48 as follows: Since there was no thought that the Commission, in carrying out its obligations under this act, should not be required to get congressional approval for its operations, the amendment made by the Senate to section 261 which exempted the Commission from the necessity of obtaining congressional approval for certain construction and acquisition projects was deleted by the conference substitute. From the foregoing it is clear that the Congress intended that an authorization be first obtained for the construction of electric power generating as well as other facilities. The Joint Committee on Atomic Energy in reporting out S. 4051, 85th Congress, which became Public Law 85-590, stated in Senate Report 1793 (also H. Rept. 2108) at page 8 with respect to the project: Project 59-a-5 would authorize the expenditure of $145 million for a convertible type of production reactor which would permit optimum production of plutonium consistent with minimum cost of product. The reactor initially would be operating solely for plutonium production. It would be designed in such a way, however, that it could be converted with modification to produce electric power; such conversion would be contingent upon future congressional authorization and appropriations. The conversion of this otherwise wasted heat to electric power would substantially lower the cost of production of plutonium. This conversion capability is also considered prudent to permit practical utilization of the reactor in the future event that enforcible international disarmament agreements are entered into whereby production of reactor products for military uses are curtailed or stopped. Under such conditions the reactor could be converted to peaceful purposes in the production of electricity. In the interim, during construction and operation, such a convertible type of production reactor will assist the advancement of the art of reactor development. [Italic supplied.] As indicated earlier, a measure to specifically authorize construction of electric energy generating facilities in connection with the NPR failed of enactment in Public Law 87-315. We think that the following summarization may fairly be derived from the foregoing: 1. The legislative history of the Atomic Energy Act of 1954 shows an intent by the Congress that no electric energy generating facility should be built by AEC without congressional authorization. 2. In authorizing project 59-a-5 the Congress intended that conversion of the NPR to dual purpose operation follow congressional authorization and appropriation. 3. The Congress, after thorough consideration, refused to authorize AEC to construct an electric generating plant at Hanford. It may be argued that the above conclusions are not relevant to the proposed agreements because the construction and operation would neither be performed nor paid for by the Government. Nevertheless, project 59-a-5 is being constructed by AEC under an authorization contemplating the inclusion in the NPR of a convertibility factor |