maintained by our staff after we became aware of the dissatisfaction which existed and we fully subscribed to the report of the ad hoc committee as delivered on March 30, 1967.

3. What requirements does your Department impose with respect to the size of cooperatives?

Section 213 of the National Housing Act which authorizes insurance of cooperative mortgages imposes a minimum of five dwelling units. As a practical matter, the larger the cooperative, the more likelihood there is that it will be successful. In any event, the minimum size of five is a statutory requirement. 4. What requirements does your Department impose with respect to the management of cooperatives?

To qualify for FHA mortgage insurance under Section 213 of the National Housing Act, a cooperative must establish to the satisfaction of the FHA that it has a plan for competent management. In the case of a larger cooperative this, in effect, results in the hiring of professional management. This requirement is necessary to assure that the financial interest of the members will be protected and that the obligations of the cooperative will be met promptly out of funds collected from the members for that purpose.

5. Do you plan to offer apartment properties on an individual lot basis, if they are sold by competitive bids?

Any multi-family properties as to which no priority right has been conferred or as to which all priority rights have expired will be offered for sale and sold to the highest bidder by public advertising and sealed bid. This is the procedure prescribed by Section 53 of the Atomic Energy Community Act. The bid documents permit bidders to bid on one or more or all of the properties included in the offering. Under this arrangement, it is possible for an individual to bid on one building only. After the bids are opened and analyzed, we determine the acceptable bids and the properties are awarded on the basis of the best over-all return to the Government and in consideration of our obligation to complete the sale of properties as expeditiously as possible.

6. What kind of comments did you receive from Los Alamos residents in connection with the information program which you describe in your statement? The relatively few comments received up to the time we announced that the multi-family buildings would be offered for sale in October 1966 related primarily to the requirement for competent or professional management and to the amount of paper work involved in organizing a cooperative. These comments came mostly from people who felt they had the alternative of joining a large cooperative or not having the opportunity to purchase. The comments received from members of Los Alamos Community Homes, Inc. (this was a cooperative formed for the purpose of purchasing some Los Alamos multi-family dwellings), related to the lack of our authority to pay organization costs. In summary, the comments received can be categorized as evidence of reluctance on the part of many people in the community to purchase cooperatively.

APPENDIX 6

AEC LETTER TRANSMITTING PROPOSED OMNIBUS BILL FOR 1967 (MAY 11, 1967); S. 1901 [H.R. 10627 AN IDENTICAL BILL]; JOINT COMMITTEE PRESS RELEASE, AUGUST 9, 1967

ATOMIC ENERGY COMMISSION,
Washington, D.C., May 11, 1967.

Hon. HUBERT H. HUMPHREY,
President of the Senate.

DEAR MR. PRESIDENT: There is transmitted herewith a Commission proposal in the form of a draft bill "To amend the Atomic Energy Act of 1954, as amended. and the Euratom Cooperation Act of 1958, as amended, and for other purposes." The proposed legislation is attached as Appendix “A”; an analysis of the legislation is attached as Appendix "B"; and a comparative form of the bill is attached as Appendix "C".

Specifically, the proposed legislation would amend the Atomic Energy Act of 1954, as amended, to (a) delete the requirement for an annual determination by the President of the quantities of fissionable material to be produced and the amounts to be available for distribution pursuant to Sections 53 and 54 of the Atomic Energy Act; and (b) correct erroneous references in Sections 223 and 161 n. thereof. Because special nuclear materials and the source material from which they are produced are no longer scarce, it is not considered necessary to continue to burden the President with these annual determinations. It should be noted that with repeal of these determinations the amount of special nuclear material to be produced by the Commission would continue to be controlled by the Congress and the Executive Branch through the normal budgetary process. In addition, the proposed legislation would amend Section 5 of the Euratom Cooperation Act of 1958, as amended, to permit implementation with respect to the European Atomic Energy Community of the Commission's authority, provided in the Private Ownership of Special Nuclear Materials Act of 1964, to contract for toll enrichment services.

The proposed amendments to the Atomic Energy Act would have no budgetary effect.

The proposed Euratom Cooperation Act amendment would have no budgetary effect until January 1, 1969, when toll enrichment is authorized to begin under the Private Ownership of Special Nuclear Materials Act enacted in 1964. With the start of toll enrichment the amendment could have an effect on the revenues which the Commission might receive in connection with the sale of enriched uranium. Assuming that all major Community power project now in operation, under construction, or planned will request toll enriched material after January 1, 1969, there could be a reduction in the use of AEC feed material during CY 1969 and 1970 valued at as much as approximately $18 million, based on current AEC price schedules. However, it must be recognized that this estimate may be subject to substantial revision in view of the fact that (1) toll enriching arrangements for long term fuel supply may influence some utilities to decide in favor of enriched uranium power reactors over the natural uranium variety, thus increasing quantities of enriched uranium transferred abroad with an associated increase in revenues for toll enriching services, and (2) those projects which currently have long term deferred payment sale contracts may decide not to convert to toll enriching arrangements in 1969-70, depending upon the comparability of AEC feed component prices at that time to the world market price.

Enactment of the proposed legislation is not anticipated to result in additional man-years of employment during the first five years following its passage. The Bureau of the Budget has advised that it has no objection to the Commission submitting the proposed bill for consideration by the Congress.

Cordially,

S. M. NABRIT, Acting Chairman.

APPENDIX "A"

DRAFT BILL

To amend the Atomic Energy Act of 1954, as amended, and the Euratom Cooperation Act of 1958, as amended, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection 41 b. of the Atomic Energy Act of 1954, as amended, is amended by deleting the last sentence thereof.

SEC. 2. Subsection 53 f. of the Atomic Energy Act of 1954, as amended, is amended by deleting the remainder of the first sentence after the word "practicable" and inserting a period in lieu thereof.

SEC. 3. Subsection 161 n. of the Atomic Energy Act of 1954, as amended, is amended by deleting the reference to subsection 57 a. (3) and substituting therefor 57 b.

SEC. 4. Section 223 of the Atomic Energy Act of 1954, as amended, is amended by deleting the reference to subsection 161 p. and substituting therefor 161 o. SEC. 5. Section 5 of the Euratom Cooperation Act of 1958, as amended, is amended by adding at the end thereof the following sentence:

"The Commission may enter into contracts to provide, after December 31, 1968, for the producing or enriching of all, or part of, the above-mentioned contained Uranium-235 pursuant to the provisions of Section 161 v. (B) of the Atomic Energy Act of 1954, as amended, in lieu of sale or lease thereof."

APPENDIX "B"

ANALYSIS OF DRAFT BILL TO AMEND THE ATOMIC ENERGY ACT OF 1954, AS AMENDED, AND THE EURATOM COOPERATION ACT OF 1958, AS AMENDED, AND FOR OTHER PURPOSES

(1967 Omnibus Legislation)

Sections 1 and 2. Amendment of subsections 41 b. and 53 f. of the Atomic Energy Act of 1954, as amended, to eliminate the requirements for Presidential determinations regarding the production and distribution of special nuclear material.

Subsection 4(c) (2) of the Atomic Energy Act of 1946 contained the requirement that the President shall determine at least once each year the quantities of fissionable material to be produced under that section. This requirement was carried over into subsection 41 b. of the Atomic Energy Act of 1954 and appears to have been based in part upon assuring that military requirements for special nuclear materials would receive adequate attention even though the production of such materials was under civilian control. The further requirement of subsection 41 b. that the President "* ** shall specify in such determination the quantities of special nuclear material to be available for distribution by the Commission pursuant to section 53 or 54" appears to have been based on the desire of Congress to permit greater private participation in atomic power development while at the same time affording assurance that sufficient special nuclear material, which was still in short supply in 1954, would be available to meet military requirements. This end was furthered by authorizing the President to provide for military requirements and, also, to reserve from existing stocks of special nuclear material and from future production of such inaterials approved by the President for the ensuing year, quantities of special nuclear material to be available for distribution to domestic and foreign persons. At this point in time, over a decade later, when special nuclear materials and the source material from which they are produced are no longer scarce, it is not considered necessary or desirable to continue to burden the Chief Executive with the annual duty of making the foregoing determinations. In view of the present abundance of such materials, Congress passed the Private Ownership of Special Nuclear Materials Act, P.L. 88-489, which permits private ownership of special nuclear material and authorizes the Commission to enter into long-term contracts to sell special nuclear material to (subsection 53 c. (3)) and to perform enriching services for (subsection 161 v.) persons, both domestic and foreign. Such authority to commit future production of special nuclear material was considered essential to enable the atomic energy industry to plan its commitments for fuel for nuclear reactors on a long-term basis in the context of normally applicable economic factors. It will also encourage U.S. export of nuclear reactors and

equipment by providing assurance to foreign nations of the long-term supply of enriched uranium on economically attractive terms, and thereby improve the competitive position of enriched uranium reactors, the type offered by U.S. manufacturers. This should improve our balance of trade.

Actually the requirement for the foregoing Presidential determinations regarding the production and availability of special nuclear materials is inconsistent with the objectives of the foregoing authority to make long-term commitments regarding future production of such materials and elimination of this requirement would afford a better opportunity to meet the objectives of the Private Ownership of Special Nuclear Materials Act.

In the absence of statutory requirement for such Presidential determinations, it should be noted that the amount of special nuclear materials to be produced by the Commission would continue to be controlled by the Congress and the Executive branch of Government through the normal budgetary processes. Assurance that military requirements for special nuclear materials would receive adequate attention would continue to be afforded by the following provisions of Sections 27, 55, 91 b. (1), and 108 of the Act.

"SEC. 27. MILITARY LIAISON COMMITTEE. *** If the Department of Defense at any time concludes that any request, action, proposed action, or failure to act on the part of the Commission is adverse to the responsibilities of the Department of Defense, the Secretary of Defense shall refer the matter to the President whose decision shall be final.

"SEC. 55. ACQUISITION. The Commission is authorized, to the extent it deems necessary to effectuate the provisions of this Act, to purchase without regard to the limitations in section 54 or any guaranteed purchase prices established pursuant to section 56, and to take, requisition, condemn, or otherwise acquire any special nuclear material or any interest therein. ***

"b. The President from time to time may direct the Commission (1) to deliver such quantities of special nuclear materials or atomic weapons to the Department of Defense for such use as he deems necessary in the interest of national defense. **

"SEC. 108. WAR OR NATIONAL EMERGENCY. Whenever the Congress declares that a state of war or national emergency exists * * * The Commission is authorized during such period, if the Commission finds it necessary to the common defense and security, to order the recapture of any special nuclear material *** and is authorized to order the entry into any plant or facility in order to recapture such material * *

Section 3. Amendment of subsection 161 n. of the Atomic Energy Act of 1954, as amended, to delete the reference to subsection 57 a.(3) and substitute a reference to subsection 57 b.

The Private Ownership legislation, Pub. Law 88-489, amended Section 57. The provisions of the former subsection 57 a. (3) now appear in subsection 57 b. Subsection 161 n., which identifies certain functions as non-delegable, should be revised to reflect the change made in Section 57. This amendment would make the necessary change in subsection 161 n.

Section 4. Amendment of Section 223 of the Atomic Energy Act of 1954, as amended, to delete the reference to subsection 161 p. and substitute a reference to subsection 161 o.

Section 223 of the Act makes it a crime under certain circumstances for any person to violate, attempt to violate, or conspire to violate, among other things, any regulation or order prescribed or issued under subsections b., 1., or p. of Section 161. This reference to subsection p. is at present incorrect. What was subsection 161 n. when the Government Employees Training Act of 1957 (P.L. 85-507) was enacted was repealed by that Act, and subsequent subsections in Section 161 were relettered accordingly. This changed the original subsection 161 p. to subsection 161 o. But Section 223 was not amended at that time, and the references to subsection 161 p. should therefore be to subsection 161 o. In view of the strict construction ordinarily given criminal statutes by the judiciary, the present inaccurate reference to subsection 161 p. in Section 223 should be corrected in order to avoid technical challenges to the application of Section 223.

Section 5. Amendment of the Euratom Cooperation Act of 1958, as amended, to permit the Commission to perform toll enrichment services for the European Atomic Energy Community.

Section 5 of the Euratom Cooperation Act of 1958, as amended, authorizes the sale or lease of specified quantities of contained uranium-235, plutonium, and uranium-233 to the Euratom Community. In view of the fact that the terms "sale" or "lease" do not encompass performance of toll enrichment services, the proposed amendment has been drafted in order to permit the performance of such services. It is contemplated that toll enrichment will be sought by Euratom for the delivery of uranium-235 for the fueling of reactor projects both within and outside of the Joint Program. Section 5 was amended by Public Law 87-206 to permit the transfer of material for projects that are covered not only by the Joint Program Agreement for Cooperation but also by any other such agreement with Euratom. The Additional Agreement for Cooperation with Euratom contains wording broad enough to permit toll enrichment of uranium to fuel reactors within its scope. The Joint Program Agreement for Cooperation does not appear to be sufficiently broad to permit toll enrichment.

The proposed amendment of Section 5 of the Euratom Cooperation Act of 1958 would be the basis for providing toll enrichment services in connection with projects within the scope of the Additional Agreement for Cooperation including Joint Program projects to the extent that we and Euratom wish to resort to toll enrichment within the limits of the Additional Agreement and Section 5 of the Act.

APPENDIX "C"

COMPARATIVE DRAFT BILL

To amend the Atomic Energy Act of 1954, as amended, and the Euratom Cooperation Act of 1958. as amended, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection 41 b. of the Atomic Energy Act of 1954, as amended, is amended by deleting the last sentence thereof.

Sec. 1 (Atomic Energy Act of 1954, as amended)

"SEC. 41. OWNERSHIP AND OPERATION OF PRODUCTION FACILITIES.

"b. OPERATION OF THE COMMISSION'S PRODUCTION FACILITIES.--The Commission is authorized and directed to produce or to provide for the production of special nuclear material in its own production facilities. To the extent deemed necessary, the Commission is authorized to make, or to continue in effect, contracts with persons obligating them to produce special nuclear material in facilities owned by the Commission. The Commission is also authorized to enter into research and development contracts authorizing the contractor to produce special nuclear material in facilities owned by the Commission to the extent that the production of such special nuclear material may be incident to the conduct of research and development activities under such contracts. Any contract entered into under this section shall contain provisions (1) prohibiting the contractor from subcontracting any part of the work he is obligated to perform under the contract, except as authorized by the Commission; and (2) obligating the contractor (A) to make such reports pertaining to activities under the contract to the Commission as the Commission may require, (B) to submit to inspection by employees of the Commission of all such activities, and (C) to comply with all safety and security regulations which may be prescribed by the Commission. Any contract made under the provisions of this paragraph may be made without regard to the provisions of section 3709 of the Revised Statutes, as amended, upon certification by the Commission that such action is necessary in the interest of the common defense and security, or upon a showing by the Commission that advertising is not reasonably practicable. Partial and advance payments may be made under such contracts. [The President shall determine i writing at least once each year the quantities of special nuclear material to be produced under this section and shall specify in such determination the quantities of special nuclear material to be available for distribution by the Commission pursuant to section 53 or 54.1"

84-223-67-13