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Many other decisions of the courts emphasize the broad discretion and freedom from judicial review allowed administrators who carry into execution the mandates of Federal statutes. The proposed exchange plan concerns the disposition of Government property entrusted to the Administrator, but this disposition would be supported by substantial consideration. Article IV, section 3, clause 2 of the Constitution confers on Congress exclusive jurisdiction to dispose of property of the United States. There is no power in the head of an executive department to dispose of such property without specific congressional sanction (22 Comp. Gen. 564, and cases cited therein). But, in the present instance, there is adequate express congressional sanction in section 5(b) of the Bonneville Project Act and section 14 of the Reclamation Act of 1939, if, in the broad discretion of the Administrator, he determines in good faith that the statutory standards for an exchange of property of the United States are adequately met.

It is accordingly my opinion that the Administrator has unquestionable authority to enter into the proposed exchange contract upon the necessary findings of economic feasibility recited hereinabove.


Regional Solicitor.


Washington, D.C., April 18, 1962. Dr. GLENN T. SEABORG, Chairman, Atomic Energy Commission, Washington, D.C.

DEAR DR. SEABORG: The Bonneville Power Administration budget request for fiscal year 1963 is currently being heard before the Public Works Subcommittee of the House Appropriations Committee. In this connection Bonneville has presented a proposal relative to construction by the Washington Public Power Supply System of a powerplant at the new production reactor at Hanford, Wash.

In the WPPSS proposal the claim is made that that non-Federal agency can construct the powerplant in question on Federal property by agreement with AEC without requiring additional or amendatory AEC legislation. With this hypothesis we cannot agree.

Congress, by the vote in the House of Representatives, rejected in no uncertain terms the proposal for constructing the powerplant at Hanford. For AEC now to become a party to an attempted subterfuge to negate congressional action is unthinkable. Furthermore, the proposal as presented raises several questions other than the one of lack of legal authority to enter into proposed contracts.

The convertibility feature of the new production reactor was sold to the Congress on the primary basis that it provide for reducing the cost of produring plutonium by 30 to 40 percent over that from a plutonium-only reactor. Under the present proposal, the cost of plutonium would not be reduced, nor would there be any recovery of the capital cost of the convertibility features, nor would there be provisions for repayment of any portion of the capital cost of the reactor itself.

Under the proposed contract as drafted, the Bonneville Power Administrator could, either through collusion or on his own determination, commit the Federal Government to take over and pay for the proposed electric generating plant at Hanford. To agree that BPA or AEC has authority to make contracts which would make this. possible is unbelievable.

There are many other adverse factors relative to this Hanford deal that should in themselves have precluded any consideration whatsoever of the proposal presented.

The undersigned reiterate that neither AEC nor Bonneville has any authority to enter into the proposed Hanford power contracts, and we request AEC to refrain from execution of any such contracts until this matter can be gone into at length by the Congress. Sincerely yours,


May 4, 1962. Hon. BEN F. JENSEN, House of Representatives.

DEAR MR. JENSEN: Reference is made to the letter of April 18, cosigned by you, regarding the proposal to the AEC and the Bonneville Power Administration (BPA) submitted by the Washington Public Power Supply System (WPPSS) to finance, construct, and operate electric power recovery facilities in association with the new production reactor (NPR) now under construction at AEC's Hanford Works in the State of Washington. The proposed undertaking would involve separate contracts between WPPSS and AEC on the one hand and between WPPSS and BPA on the other. A copy of the proposal is attached for your information.

At the present time, we are in the initial stages of negotiations with the WPPSS, and no contract has as yet been agreed upon.

In our evaluation of the WPPSS proposal, we studied carefully whether additional or amendatory legislation would be required to permit an organization other than the AEC to construct power generating facilities at the NPR. Apparently, no new legislation would be required for the AEC—in connection with its role in the matter—to enter into arrangements with WPPSS on the basis of its proposal, as modified by the comments contained in our reply to the WPPSS, a copy of which is also attached.

In replying to your letter, we can comment on only those aspects of the proposal related to AEC's proposed role, AEC's authority to undertake arrangements of the nature proposed, and the potential benefits of such a project to AEC.

Last year, Congress disapproved authorizing appropriations for the construction of NPR generating facilities by AEC with Federal funds. In our judgment, this action did not pertain to the possible construction of the generating facilities by other agencies such as the WPPSS. Thus, we do not believe that AEC's possible participation in the project, as now conceived, would conflict with the expressed will of Congress.

Lease of land to WPPSS is, of course, a part of the proposal. It also involves the sale to WPPSS of steam produced in the NPR for

use in generating facilities. With respect to making Federal property available to WPPSS in connection with this proposed project, the AEC has existing authority, under section 161 g. of the Atomic Energy Act of 1954, as amended, to lease property under its jurisdiction. In order to minimize serious energy losses in delivering steam, it is necessary for the generating facilities to be located in close proximity to the reactor. Inasmuch as the AEC has jurisdiction over land adjacent to the NPR, we might lease a parcel of land to WPPSS upon which the generating facilities may be constructed. We believe that the exercise of our authority in this instance would be in furtherance of our programmatic responsibility to encourage widespread participation in the development and utilization of atomic energy for peaceful purposes and to make arrangements under which the practical value of production facilities for industrial or commercial purposes may be demonstrated.

AEC's position with respect to the financial aspects of the proposal is that AEC must be fully reimbursed for all additional costs which may be brought about by the installation by WPPSS of electric power generating facilities at NPR. We do not plan to make any commitment to operate the reactor beyond the period required for AEC purposes, but would agree in that event to lease the facility to WPPSS — with the right reserved to AEC to recapture the reactor if it should be again required for AEC purposes.

It is anticipated that there would be revenues to AEC resulting from the sale of steam to WPPSS. Excess steam produced in the course of operation of the NPR by AEC would be disposed of under the authority set forth in section 44 of the Atomic Energy Act of 1954, as amended. Section 44 requires, in part, that such energy be sold at reasonable and nondiscriminatory prices. AEC has adopted the position that since the steam is available as a byproduct of plutonium production, the reasonable price should 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 would operate the NPR.

AEC is seeking the advice of the Federal Power Commission to assist in the determination of NPR power values. As FPC has only recently begun its analysis and as AEC is currently only in the earliest stages of negotiations with WPPSS, we are not able to provide quantitative information at this time regarding the price at which AEC would provide steam to the WPPSS. The price negotiated with WPPSS for the sale of the steam together with the duration of the period of AEC operation of NPR, would determine the extent to which the costs of convertibility might be recovered and the cost of plutonium reduced.

With respect to the provisions of the proposed agreements whereby the Government would be provided an option to acquire the plant by purchasing the outstanding bonds, I wish to make clear that AEC is making no commitment whatsoever to exercise this option. In order to exercise the option, it would be necessary for AEC to obtain specific authorization and appropriation of funds by the Congress.

In conclusion, I should like to State, again, that while we have the WPPSS proposal under consideration and are in the initial stages of negotiation, no final agreement has been reached between the Commission and WPPSS.

A similar reply has been forwarded to each of the cosigners of the April 18 letter. I am sure you recognize the difficulty of presenting, in a letter, all of the many aspects relating to this complex subject. Accordingly, I should appreciate the opportunity to meet with you and your colleagues, at your convenience, for the purpose of discussing the matter in detail. Sincerely yours,

GLENN T. SEABORG, Chairman. Note to the files: Letters identical to this sent to Hon. John R. Pillion, Hon. John Taber, and Hon. Ivor D. Fenton, House of Representatives, who were also cosigners of the April 18 letter along with Representative Jensen.




Now under construction at Hanford, Wash., is a new production reactor for the manufacture of plutonium. At an additional cost of $25 million or more, it has been designed and is being built for the dual purpose of producing plutonium and electricity. Last year the Atomic Energy Commission requested authority for the appropriations necessary to add the electrical generation facilities. The Senate approved AEC's request; the House of Representatives did not.

At the present session of Congress, AEC has not renewed its request for Federal construction of the generating facilities at Hanford. In an effort to save the Federal investment of $25 million or more, and to utilize the tremendous quantity of steam energy otherwise to be wasted, the Washington Public Power Supply System has proposed to AEC that it will provide the necessary funds to construct and operate the generating facilities at Hanford. WPPSS is a public agency of the State of Washington. Its members are 16 public utility districts of the State of Washington, all of which are customers of the Bonneville Power Administration. In 1961 they purchased $14,500,000 worth of power from Bonneville. In addition to the members comprising WPPSS, a number of other public agencies and cooperatives in the Pacific Northwest have shown interest in participating with the supply system in this project. We have been informed by the management of WPPSS that private utilities in the Pacific Northwest will be offered an opportunity to participate along with the public agencies and thereby secure a long-term power supply at BPA rates

something which they cannot now do. I have already discussed the general proposition of such long-term contracts with officers of several private utilities in our region.

The proposal of the Washington Public Power Supply System to add the generating facilities to Hanford contemplates that it would deliver the entire output of the plant into the Bonneville grid. No appropriations would be needed under this arrangement. WPPSS's proposal to Bonneville is that in return for supplying Bonneville with the energy output of Hanford, Bonneville would supply the participating utilities with an amount of firm power equivalent under Bonneville's rate schedules to the annual operating and capital costs of the Hanford generating plant. The Washington Public Power

. Supply System and other participating utilities do not stand to profit from the installation of the generating facilities inasmuch as WPPSS proposes to give the United States an option to acquire the generating facilities at any time for their unamortized cost. At such time as the generating facilities are fully amortized, the United States would have an option to acquire them without cost.

Our Solicitor's Office has ruled that, if certain criteria are met, we have legal authority to exchange power with Washington Public Power Supply System as outlined above. (I understand that AEC's legal staff has stated its opinion that AEC has authority to enter into the necessary contracts to permit WPPSS to install the generating facilities.)

Although our counsel believe that we have the legal authority to execute contracts with WPPSS along the lines above indicated, we do not propose to do so if the Appropriation Committees before whom we appear each year object. The scope of the project is so large, and its impact upon Bonneville's operations so great, that we do not propose to sign any contracts pending this review. For the information of the committee we are offering in the record a draft of proposed basic contract between Bonneville and WPPSS.

Whether BPA executes this type of contract will depend on what action the Appropriations Committees take. It will also depend upon the results of a final check on the feasibility of the project for non-Federal construction. All of the very considerable information we have received to date indicates feasibility, but there is no question that the year's delay in starting the project, and the interposition of a non-Federal construction agency, has taken some of the profit from the project. I can assure the committee that in no event will I sign any contracts unless I am convinced of economic feasibility.





AND OPERATION OF THE NPR ELECTRIC POWER FACILITIES (Prepared by Owen W. Hurd, WPPSS managing director, assisted by WPPSS

consultants and in cooperation with BPA staff, March 27, 1962) (Submitted during House Appropriations Committee hearing, April 16, 1962)


It is well known that the 87th Congress, 1961, refused to appropriate funds or provide the required authorization necessary for the addition of power generating facilities to the Hanford new production reactor now under construction near Richland, Wash. This refusal resulted in a proposal by the Washington State Department of Conservation for exploring the possibilities of the State of Washington or other qualified public agency to undertake the financing, construction, and operation of the proposed new production reactor power facilities. Subsequently, and with the endorsement of the Department of Con

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