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steam to the utility represented by the savings in fuel cost accruing to the utility. The Commission has determined, in connection with the WPPSS proposal, that a reasonable price would be based on the value of the steam for its intended use, giving appropriate recognition to the uncertainty in the duration of the period during which AEC will be operating the NPR and providing steam. The advice of the

. Federal Power Commission is again being obtained in arriving at a specific price.

It is my opinion that AEC has legal authority to dispose of steam energy produced in the NPR in accordance with the proposed arrangements. 2. Authority of AEC to lease to WPPSS approximately 13 acres of land

adjacent to NPR on which WPPSS would construct generating facilities Article IV, section 3, clause 2, of the U.S. Constitution provides thatThe Congress shall have power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States;

In U.S. v. Gratiot (14 Pet. 526, 539 (1840), the Supreme Court held that the power of Congress over the public lands extended to, and included, the leasing of such property, and that the words “dispose of found in article IV of the Constitution quoted above are not limited to sale. The Court held further that disposal of public lands is in the discretion of the Congress.

The courts, comptrollers general and attorneys general have held consistently through the years that specific legislative authority must be established by Congress before any particular Federal agency may dispose of Federal property. Congress has passed legislation from time to time granting to particular agencies special authority to take certain types of action with respect to Federal property.

Specific legislation has been enacted by the Congress granting to AEC authority "to * * * lease *** real and personal property as provided in this Act” (sec. 12(a)(7) of the Atomic Energy Act of 1946 and sec. 161 g. of the Atomic Energy Act of 1954, as amended). The Office of the General Counsel of AEC has consistently interpreted the words "as provided in this Act” not to mean "as expressly provided in this Act," but rather as intended to effectuate the policies and purposes specified elsewhere in the act. To have interpreted these words under the 1946 act as meaning "as expressly provided in this Act” would have rendered the words meaningless inasmuch as no such provisions were contained in the act. Although the 1954 act, as amended, contains certain special provisions concerning lease of materials or particular land, the language of section 12(a)(7) of the 1946 act was retained in section 161 g. of the 1954 act and in the legislative history of the 1954 act there is no indication of congressional intent to narrow the scope of the authority conferred by section 12(a)(7) of the 1946 act.

AEC has actually implemented the authority granted under these two sections, as interpreted above, in numerous instances since enactment of the 1946 act. Leases of land under AEC jurisdiction have been made for a variety of purposes in furtherance of the responsibilities of the Commission, as set forth in both acts. Examples of such leases are:

2 Secs. 67, 81, 161 e.

(a) Lease of land at Oak Ridge, Hanford, and Los Alamos for commercial purposes, e.g., lease of land at Oak Ridge to Abbot Laboratories as a site for a commercial isotope processing facility;

(6) Lease of a quarry site at Oak Ridge;

(c) Lease of land at Oak Ridge and Hanford for housing purposes;

(d) Lease of land for church sites at Oak Ridge. The Congress has been informed of AEC leasing activities and policies by virtue of direct communications from the Commission to the Joint Committee on Atomic Energy (JCAE) concerning particular leasing actions and as a result of hearings which the JCAE has held in connection with specific leasing activities, (see hearings before a subcommittee of the Joint Committee on Atomic Energy, 81st Cong., 2d sess., on “Department Store Lease at Oak Ridge, Tenn.,” 3/13 and 14/50). Furthermore, the Congress has specifically recognized the

) leasing activity of AEC in the enactment of the AEC Community Act of 1955 (secs. 36 a., 42 e. and 52 c.) and in the enactment of an amendment to section 161 e. of the 1954 act in 1956 (Public Law 84–722) to clarify a certain aspect of the leasing policy which AEC was pursuing in order to eliminate potential inequities under leases the Commission had already executed.

What policies and purposes of the Commission set forth in the Atomic Energy Act of 1954, as amended, would be furthered by a lease of land under AEC jurisdiction to WPPSS on which WPPSS would construct and operate generating facilities in conjunction with the operation of the NPR?

Lease to WPPSS of approximately 13 acres of land adjacent to the NPR must be considered in the context of the integrated proposal under which conversion of the NPR would permit utilization of excess steam for electric power generation purposes. For technical reasons, in order to maximize the effective use of the steam, it is necessary to have the generating facilities immediately adjacent to the reactor facility.

The Congress, in enacting the Atomic Energy Act of 1954, as amended, set forth (1) certain policies of the United States in the field of atomic energy and (2) certain methods by which these policies could be effectuated. Thus:

1. Section 1 of the act declares the policy of the United States to be that

a. the development, use, and control of atomic energy shall be directed so as to make the maximum contribution to the general welfare, subject at all times to the paramount objective of making the maximum contribution to the common defense and security; and

b. the development, use, and control of atomic energy shall be directed so as to promote world peace, improve the general welfare, increase the

standard of living, and strengthen free competition in private enterprise. 2. Section 3 of the act states that

[I]t is the purpose of this act to effectuate the policies set forth above by providing for

a. a program of conducting, assisting, and fostering research and development in order to encourage maximum scientific and industrial progress;

b. a program for the dissemination of unclassified scientific and technical information * * * so as to encourage scientific and industrial progress; * * *

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d. a program to encourage widespread participation in the development and utilization of atomic energy for peaceful purposes to the maximum extent consistent with the common defense and security and with the health and safety of the public; * * *. 3. Section 31a. of the act provides that in connection with the Commission's responsibilityto insure the continued conduct of research and development and training activities * * * by private or public institutions or persons, and to assist in the acquisition of an ever-expanding fund of theoretical and practical knowledge, *** the Commission is authorized and directed to make arrangements (including contracts, agreements, and loans) for the conduct of research and development activities relating to

(4) * * * the demonstration of the practical value of utilization or production facilities for industrial or commercial purposes

The Congress, by including the sections of the act quoted above, was establishing certain functions and responsibilities which the Federal Government should carry out. The Commission was given the responsibility to accomplish these objectives. Making the energy generated in the NPR available for electric power production would be in furtherance of the Commission's responsibility to promote the development and utilization of atomic energy for peaceful purposes and the demonstration of the practical value of a production facility for industrial or commercial purposes. The lease of land to WPPSS is

. an essential aspect of adapting the NPR to electric power production inasmuch as the Commission controls the land on which generating facilities must be constructed.

Specifically, operation of the NPR for the dual purposes of plutonium and power production would permit experience to be obtained with respect to the utilization of a large plutonium production reactor for the additional purpose of electric power generation. Information obtained from operating the NPR in such a manner would be useful in the general field of reactor technology development. The potentiality of the use of the NPR for electric power generation was contemplated by the Congress when an additional $25 million was authorized and appropriated for the inclusion of certain technical features in the NPR which would permit the use of its excess steam production for power generation.

It is my opinion that AEC has legal authority to lease to WPPSS a parcel of land adjacent to the NPR as a site for generating facilities to be constructed by WPPSS in accordance with the proposed arrangements. 3. Authority of AEC to lease the NPR to WPPSS during periods when

the NPR is not being operated by AEC The same considerations are pertinent here as those presented in section 2. above concerning the programmatic responsibilities of the Commission set forth in the Atomic Energy Act of 1954, as amended. However, it seems appropriate to reiterate that it is essential for the WPPSS proposal to be viewed in its entirety. The total project becomes economically feasible only if the NPR is available as a source of steam over a reasonably long period of time sufficient to permit amortization of the cost of construction of the generating facilities. The Commission will operate the NPR only as long as required to meet AEC production requirements. Therefore, if the Commission is to accomplish the programmatic objectives described in section 2. above, it would be necessary to lease the NPR to WPPSS in order to permit its continued operation by WPPSS for steam production.

Under any arrangement developed in connection with the WPPSS proposal, AĒC does not propose to commit itself to the expenditure of any Government funds. All actions for which funds might be necessary will be financed by WPPSS. Thus, the provisions of 31 U.S.C. 665, prohibiting an officer or employee of the Government from involving the Government in a contract or other obligation for the payment of money for any purpose in advance of appropriations made for such purpose unless such contract or obligation is authorized by law, will not have a bearing in this situation.

In preliminary discussions among AEC, BPA, and WPPSS, consideration has been given to a provision which would be included in the AEC and BPA contracts with WPPSS respectively giving the Government an option to acquire the generating and related facilities under certain conditions. Such an option would be included in a contract between AEC and WPPSS solely on the basis that it would be advantageous to the Government to have it and its inclusion would not reflect any present intention on the part of AEC to exercise the option. AEC does not have existing authority to exercise such an option and, therefore, would need to obtain necessary authorization, and appropriations from the Congress before the option could be exercised.

Another consideration which should be borne in mind in evaluating the WPPSS proposal is that substantial economic benefits could result from the sale of steam which would otherwise be wasted. Although primary reliance should by no means be placed on the potential economic benefits to be achieved through arrangements with WPPSS as programmatic justification for such arrangements, nevertheless, these potential economic benefits should not be ignored.

In summary, from the analysis presented above, I conclude that AEC has adequate, existing legal authority to enter into the arrangements with WPPSS pursuant to its proposal to AEC and BPA, as modified by the letter of April 6, 1962 from Chairman Seaborg to Owen Hurd.




Portland Oreg., April 10, 1962. To: Bonneville Power Administrator. From: Regional solicitor, Portland. Subject: Authority to exchange power with owners of the electric

output of the new production reactor at Hanford, Wash. You have asked me to set forth in detail the reasons why, in

my opinion, the Administrator is legally authorized to enter into a contract or contracts providing for the exchange of electric power in the circumstances hereinafter described.


The Washington Public Power Supply System, a municipal corporation and joint operating agency organized under Revised Code


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of Washington (RCW), chapter 43.52 (Cum. Supp.), has proposed to construct and operate the electric power generating project in connection with the new production reactor at Hanford, Wash. This would be done under a contract or contracts with the Atomic Energy Commission, and pursuant to the provisions of the Atomic Energy Act of 1954. No doubt the supply system will assert its preference character under the provisions of this act.

Many public utility districts of the State of Washington are members of the supply system and each of these is a purchaser of power of the Columbia River power system under a power sales contract with BPA. These contracts obligate the Government to meet the electric energy requirements of the various member systems. In those instances where these agencies own generating facilities of their own, they also have exchange contracts with BPA.

A definite plan for integrating the power generated by the proposed electric generating facilities of the NPR with the power produced at the Federal hydroelectric plants has been discussed by the Administrator and his staff with representatives of the supply system. The interconnection of the various systems of the Pacific Northwest with the Federal system makes such integration the normal, natural, and businesslike method of distributing the benefits which will be derived by the Government.


The proposed plan contemplates that electric output of the plant constructed by the supply system will be purchased in established proportions by the several members thereof which participate in the financial arrangements for construction of the plant. In this respect the proposal resembles the financial arrangements for construction of the Priest Rapids hydroelectric project and the Packwood project. The total plant output will thus be distributed to the several participants and assigned to them in shares to be established in the contract.

Each member which thus owns a portion of the project output will then obligate itself to deliver its entire share to the Bonneville Power Administration, the purpose being to perfect a 100-percent integration of the plant and its power production with that of the Federal Government. Such deliveries of the plant power production will be made under schedules and directives given to the supply system by BPA. In return for this power, BPA will agree to deliver to each of the participants an equivalent amount of power and energy derived from the Federal power system. Under such an exchange arrangement, deliveries to the participants will not necessarily be coincident with deliveries of the Hanford output to the Government. Instead, the Government will make deliveries so as to follow the same pattern in demands, energy, load factor, and hourly deliveries, and at such delivery points as best to serve the needs and requirements of the respective customers under their respective power sales contracts.

The participating utilities will receive in exchange for the Hanford power output delivered to the Bonneville Power Administration the number of kilowatts and kilowatt-hours obtained by multiplying the total amounts of power and energy delivered to the respective participants, by the ratio which the cost to be paid by them as their annual share of Hanford costs bears to the aggregate billing for the total deliveries of power and energy to them for the corresponding period

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