Enclosures:

1. Proposed Revised Section of Authorization Bill. 2. Bill Analysis.

3. Amended Statutory Criteria.

4. Revised Program Justification Data.

[Enclosure 1]

PROPOSED REVISED SECTION OF AUTHORIZATION BILL

(e) Section 106 of Public Law 91-273, as amended, is further amended by deleting the present text of subsection (a) thereof and substituting therefor the following:

(a) The ERDA is hereby authorized, to enter into such arrangements as it may deem appropriate, including but not necessarily limited to cooperative arrangements with reactor manufacturers, utility organizations and others, for the design, construction, test, and operation of a Liquid Metal Fast Breeder Reactor power plant, and the performance of all research and development necessary and related thereto, in accordance with the criteria heretofore submitted to the Joint Committee on Atomic Energy and referred to in Section 106 of Public Law 91-44 as such criteria may be modified or amended from time to time, without regard to the provisions of Section 169 of the Atomic Energy Act of 1954, as amended; and, in addition to the sums hereinafter authorized, to utilize personnel, facilities and funds of such reactor manufacturers, utility organizations and others in furtherance of the objectives of any such arrangements in such manner as may be agreed upon, without regard to any contrary provisions of law; and the ERDA is further authorized to continue to conduct the Project Definition Phase subsequent to the aforementioned arrangement (s). In addition to the sums heretofore authorized for this Project, $181,500,000 is hereby authorized to be appropriated to the ERDA for continuing the research and development, engineering, design, construction and testing of this demonstration power plant during FY 1976 and the Transition Period (July 1, 1976-September 30, 1976), all of such sums, including those heretofore authorized, to be available for use in accordance with the hereinabove mentioned criteria as amended, together with such additional appropriations as may be necessary and sufficient for its operation for a period not to exceed 5 years. The ERDA is further authorized hereby, without regard to the provisions of section 3679 of the Revised Statutes, as amended, to agree under said arrangement (s) to participate up to the total amount authorized under this section, less the sums available to the ERDA and utilized for the Project Definition Phase: And provided, That said amounts shall not be deemed to include any waiver of use charges during the term of the arrangement(s), which the ERDA may agree to provide without regard to the provisions of section 53 of the Atomic Energy Act, as amended, in an amount not to exceed $10,000,000.

[Enclosure 2]

BILL ANALYSIS

The Clinch River Breeeder Reactor Project (CRBRP) is presently authorized under Public Law 91-273, as amended. Such authorization contains several restrictive features which have made it difficult to manage the Project in a manner commensurate with the huge investment of Government funds that it is becoming increasingly apparent will be necessary, and timely attainment of the program objectives. This proposed legislation would change the existing authorization for the CRBRP in essentially four major repects:

1. Appropriations would be authorized for fiscal year 1976 and the Transition Period (July 1, 1976-September 30, 1976) for continuing the research and development, engineering, design, construction and testing of the Plant in the amount of $181,500,000, in addition to the $100,000,000 previously authorized. 2. Appropriations would be authorized as necessary and sufficient for operation of the Plant for 5 years. Specific appropriations would be justified and requested each year in ERDA's annual budget submission to Congress for the operation of the Plant after it is built.

3. Present restrictions in the existing legislation on ERDA's use of direct funding and base program funds would be eliminated. Specific appropriations for this support would be justified and requested each year in ERDA's annual budget submission to the Congress.

4. Lastly, it would make clear that ERDA will have management responsibility for the Project commensurate with the large Government investment, but with

due recognition of the meaningful participation and involvement of the manufacturing and utility industries through the making available to the Project of policy guidance, technical and management expertise, personnel, facilities and funds.

The following are the salient features of the revised management arrangements:

RELATIONSHIP AND RESPONSIBILITIES OF THE PARTIES

1. Under the recent Government reorganization ERDA succeeded to the nuclear energy development functions formerly vested in the AEC. Accordingly, ERDA will be substituted for the Atomic Energy Commission in carrying out the government's role in the Project.

2. Breeder Reactor Corporation and Project Management Corporation would remain intact and would continue the present makeup of their respective boards of directors and membership. However, ERDA would no longer have a contractual right to membership on the PMC's Board of Directors.

3. ERDA would assume the responsibility of managing the Project, but would, under contract with PMC, obligate itself (a) to manage and carry out the Project in an efficient and effective manner consistent with Project objectives and (b) to design and build the plant substantially in conformance with the presently approved reference design and specifications. Should ERDA propose to proeced with a major deviation from the approved reference design or specifications with which PMC disagrees, the matter would be referred to the "heads" for resolution and, in the absence of agreement among the parties, ERDA would have final decisional authority and the right to proceed with the Project work. In this case PMC or any party now entitled to do so, would be entitled to invoke the Project termination procedures solely on the basis of the disagreement (i.e., this would become an additional termination criterion). In order to utilize the unique skills available within the utility industry, ERDA would establish a single integrated management organization comprised of both industry and government personnel, under ERDA direction, to manage the Project Key positions in the integrated Project management organization for individuals from PMC would administer the utilities' interests in the Project including (a) continuous the "lead role" concept in the present contracts would not be continued.

4. PMC, while no longer responsible for the direct management of the Project, would administer the utilities' interests in the Project including (a) continuous monitoring of the Project; (b) preparation and dissemination of Project information to BRC and the industry; (c) arranging for the participation of utility personnel in the Project; (d) investment and disbursement of utility funds; (e) exercising the various contractual rights designed to protect the utilities' interests, including (i) approving any proposed major changes in Project scope or deviation from the approved reference design or specifications; (ii) maintaining access to information and data, either in the possession of the government or any of the Project contractors; (iii) seeing that the conditions to the disbursement of utility funds are met, and; (iv) exercising the rights of termination of the Project in the event a contractually specified termination criterion exists.

5. The Projecting Steering Committee (comprised of one representative each from ERDA, CE and TVA) would no longer function as a vehicle for management decision but would continue as a tripartitie review mechanism and PSC would maintain its present responsibility to keep the PMC Board fully and currently informed.

6. CE and TVA would participate in the Project in the same manner as is provided in the existing Project arrangements with the exception of exercising direct management responsibility (which ERDA would now be contractually obliged to perform). This would include TVA's operation of the nuclear plant on the Clinch River site, which plant would become ERDA property. However, TVA's responsibilities and rights in respect to operation, and possible future ownership and disposition of the plant would be contained, substantially in their present form, in separate arrangements between TVA and ERDA which would continue all of the present rights of the utility industry to have its personnel participate in the Project at no cost during the operational period.

7. Existing contracts between PMC and Westinghouse and PMC and Burns & Roe and other outside contractors would be assigned to or re-executed with ERDA.

FINANCIAL

1. PMC would continue to receive the utility contributions from BRC and invest them. Annually, ERDA would be required to submit to PMC a Project

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budget and work plans against which PMC would commit an amount equal to the lesser of utility funds on hand (less reserves for PMC costs) or 50 percent of the annual budget. Utility funds would be disbursed by PMC upon a showing by ERDA of work performed or costs incurred in accordance with the annual work plans. Any PMC funds remaining after provisions for winding up PMC's affairs would be credited to the Project.

2. Utility contribution agreements would no longer be available for use as collateral for loans to the Project.

3. Existing provisions relating to the use of utility funds to satisfy Project obligations upon termination of the Project prior to completion would be changed to relieve PMC of any obligation to make payments of utility funds following such termination. Any PMC funds remaining after provision for winding up PMC's affairs would be credited to the Project.

4. ERDA would have a continuing obligation to seek and maintain such legislative authority and funding as may be required for the effective conduct of the Project and to meet Project objectives.

5. To enable PMC to finance its staff and other obligations an amount would annually be budgeted and spent by PMC from utility contributions. Salaries and related costs of PMC personnel would be paid from PMC funds. Existing allowable cost provisions would continue to apply to PMC and, in the event that claims within the allowable cost provisions were incurred by, or asserted against PMC, an appropriate hold-back of funds would be made. In addition, as the Project neared completion, an amount would be held-back to cover PMC's wind-up costs. 6. The new arrangement will be made in such a manner as not to endanger the tax exempt status of BRC and PMC, the tax deductible character of the utility contributions and any regulatory authorizations obtained by the Project participants.

PROTECTION OF BASIC INTERESTS

1. All of the utilities' current rights to information and royalty-free use of inventions and data developed in the course of the Project would be preserved together with the right of the utilities to assign qualified personnel to participate in the Project at no cost.

2. All existing rights of the parties regarding access to informaiton and the rights of consultation would be maintained, including the rights of PMC, CE and TVA to consult directly with the reactor manufacturers and other major Project contractors. In addition, ERDA would specifically undertake to keep PMC fully and currently informed about the Project and insure that PMC is at all times fully advised of any information which could have a significant impact on the costs of Project objectives.

3. The criteria and mechanism for termination of the Project would (with the addition of provisions relating to disagreements over major changes in reference design and specifications) remain intact with clarification of contractual provisions to insure that any party could commence termination procedures if it believed that the Project objectives could no longer be achieved.

4. The present mechanism for reviewing disputed Project decisions would remain with the exception that ERDA would have final decisional authority in Project matters, provided that such decisions are consistent with Project objectives and the contractual rights and obligations of the parties, including the rights of PMC to approve any major change in Project scope or deviation from the reference design or specifications.

5. Present contractual conditions precedent to the start of plant construction would be maintained.

6. Present indemnity provisions would be maintained including payments by PMC to a trust or similar type account to secure the indemnity obligations to CE and TVA.

Complementing and implementing revisions would be made as proposed in the amended Statutory Criteria and Revised Program Justification Data, which are attached. These would include clarification of the ERDA's authority to pay fees on Project work directly funded by the ERDA and, as appropriate, to integrate ERDA and Contractor personnel into a single Project staff reporting on disciplinary lines without regard to the organizational affiliation of particular individuals or supervisors. It is believed that these changes in the Authorization, and in the Criteria, which by reference is incorporated into the Authorization statute, and Program Justification Data, for the CRBRP will give ERDA sufficient funding authorization and program flexibility to enable the Project to proceed in an expeditious manner toward a timely attainment of project objectives.

[Enclosure 3]

AMENDED STATUTORY CRITERIA FOR FOURTH ROUND ARRANGEMENTS UNDER THE ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION'S POWER REACTOR DEMONSTRATION PROGRAM (FEBRUARY, 1975)

1. ELIGIBLE PROPOSALS

Proposals may be submitted by reactor manufacturers who are associated with a utility or group of utilities. The proposer and associated utility or group of utilities must be in the United States, its territories and possessions, Puerto Rico or the Canal Zone. The utilities may be investor-owned, cooperatively owned or publicly owned electric utilities. The proposer may have other associates, including Architect-Engineers.

2. PROGRAM OBJECTIVES

The program has as its major objectives the demonstration of the technology pertaining to, and the reliability, safety, and economics of, Liquid Metal Fast Breeder Reactor power plants in the utility environment. Other ERDA purposes

are:

(a) To provide for meaningful identification of areas requiring emphasis in the LMBFR research and development program.

(b) To the extent practicable, to validate technical and economic data and information pertinent to the total LMFBR program.

(c) To assist in the development of an adequate industrial base.

(d) To provide for meaningful utility participation and experience in LMFBR plant development, acquisition and operation.

(e) To help assure overall program success.

(f) To demonstrate and maintain U.S. technological leadership.

3. TWO-PHASE APPROACH

a. Project Definition Phase Contract-This will be the only means for reactor manufacturers and utilities to become eligible for participation in a definitive cooperative arrangement for the development, design, construction, test operation, and operation of an LMFBR demonstration plant. The essential purpose of the first-phase contracts will be to help assure that a sufficiently well identified and realistically assessed basis exists for a definitive cooperative arrangement. AEC will carefully consider responsive proposals and will select as the basis for negotiation those proposals which it determines most desirable. Each of the selected reactor manufacturers, with the participation of its utility and other associates, will conduct the Project Definition Phase to perform any necessary design and analyses and develop further various aspects of the contemplated demonstration plant, including:

(i) the magnitude of the technical and economic risks associated with the proposed plant design; (ii) investigation of alternate sites so as to help insure meeting siting criteria, to help minimize the financial and technical risks and to help obtain regulatory approvals; (iii) the supporting research and development, component development, and prooftesting that will be required; (iv) trade-off studies constituting the basis for design decisions; (v) identification of codes and standards required for the second phase; (vi) site and safety analyses, and (vii) technical coupling between the project and the ongoing and planned development programs. The details of the scope of this portion of the Project Definition Phase, and the extent of the Commission's reimbursement for the performance of this work, will be negotiated by AEC and the selected proposers and specified in each contract. Each contract will also call for further identification of: (i) capabilities and resources of the contractor and of members or contemplated members of the demonstration plant team; (ii) project organization; (iii) top management participation; (iv) the extent and type of AEC assistance required and extent of assistance by others; and (v) training requirments. Such items would be carried out at no cost to AEC. Fee will not be paid by the AEC for work under the first-phase contracts.

Each contract will require utility association at the outset and will specify that continuing utility association will be necessary during the term of the contract; utility association will be a prerequisite for a definitive cooperative arrangement. The term of each first-phase contract will be the subject of mutual agreement during the negotiations. In any event, AEC would reserve the right to terminate for its convenience, and each contract would provide for possible

extension upon mutual agreement of the contracting parties. If and when a contractor or contractors and AEC mutually conclude that the results of a pertinent Project Definition Phase contract or contracts indicate that a sufficiently well identified and realistically assessed basis exists for a definitive cooperative arrangement, and the AEC concludes that budgetary and other considerations warrant, the contracts will permit the AEC to call for a proposal package from the reactor manufacturer-utility team or teams. Thus, proposals for a definitive cooperative arrangement may be submitted only by those Project Definition Phase contractors whose proposals are specifically sought by AEC.

b. Definitive Arrangements-Based on such proposal or proposals called for by AEC, negotiations will be undertaken only with such proposing reactor manufacturer-utility team or teams looking toward a mutually agreeable definitive contract or contracts for the development, design, construction, test operation and operation of an LMFBR demonstration plant. The details of a resulting contract, including those respecting ERDA's participation (including appropriate negotiated fees), need not be identical to those initially projected by the reactor manufacturer and associates in its original proposal or to those in the proposal package submitted subsequently by the reactor manufacturer-utility team. Should the LMFBR demonstration plant program eventually involve more than one demonstration plant, ERDA does not expect to enter into more than one definitive arrangement involving the same reactor manufacturer.

4. DESIGN REQUIREMENTS AND PLANT OBJECTIVES

(a) The design shall be for a central station, sodium-cooled, fast breeder nuclear plant of about 300 to 500 MWe capacity, reasonably practicable for scale-up to a commercial plant. The first core of the plant shall use a fuel consisting of mixed oxide of uranium and plutonium.

(b) The primary objectives of the plant are to operate safely, reliably, and with a high plant factor. These, plus the objectives of plant inspectability and maintainability, should be kept foremost in mind during the design of the plant.

(c) The design should require a minimum of component or system development, make maximum use of existing technology and facilities, and be consistent with the nature of the ongoing LMFBR R & D program; however, consideration should be given to the accommodation of future improvements in the technology which may be anticipated.

(d) The plant shall include sufficient instrumentation to demonstrate the design performance of all important plant components and systems, as well as to aid in special testing and in the prediction and diagnosis of any abnormal performance characteristics of a component or system.

(e) The inclusion of this instrumentation as well as the provision in (c) above should not compromise the primary objective that the plant operate reliably and safely.

(f) The plant should demonstrate the key technological design features and economic aspects which will contribute in as direct a manner as possible to the development, application and acceptance of future commercial plants on a utility system.

(g) The design shall be for a central station plant of the type and size described in (a), at a suitable site requiring no unusual design features or special considerations in licensing because of unfavorable local conditions, i.e., hydrology, seismology, meterology, etc.

(h) The plant shall be designed, fabricated, constructed, tested, operated and maintained in conformance with established engineering standards and also with high quality assurance practices. Systematic disciplined means of assuring application of these standards and practices shall be utilized and documented (in such form as to be available for use by others). These means will include quality assurance, engineering reviews, and sufficient prooftesting to establish a high level of confidence in the operational performance of plant components.

5. PREREQUISITES FOR ACCEPTANCE OF PROPOSALS

In order to be considered, the proposals should satisfy the following conditions: (a) Meet the requirements indicated in paragraph 1 above.

(b) Accept in principle the objectives and requirements stated in the Invitation for Proposals, as it may be amended.

(c) Demonstrate to the satisfaction of AEC the technical and financial competence and integrity of the proposer and principal associates.