oversight

Deferral of Appropriations for the Clinch River Breeder Reactor Project

Published by the Government Accountability Office on 1977-06-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                           DOCUMENT   RESUME

02778 - [   1933003]

[Deferral of Appropriations for the Clinch River Breeder Reactor
Project). OCC-77-21; B 115398. June 28, 1977. 1 pp. * enclosure
                      -

(17 pp.).

Report to the Congress; by Elmer B. Staats, Comptroller General.
Letter enclosed to Sen. Henry M. Jackson, Vice Chairman, Joint
Committee on Atomic Energy.

Issue Area: Energy: Making Nuclear Fission a Substantial Energy
    Source (1638).
Contact: Office of the General Counsel: Special Studies and
    Analysis.
Budget Function: Natural Resources, Environment, and Energy:
    Energy (305); Miscellaneous: Impoundment Control Act of 1974
     (1005).
Organization Concerned: Energy Research and Development
    Administration.
Congressional Relevance: Joint Committee on Atomic Energy;
    Congress.
Authority: Impoundment Control Act of 197a4  title X (P.L. 93-344
     ; 88 Stat. 332; 31 U.S.C. 1400 et seq.). P.L. 94-187. P.L.
    91-44, sec. 106. P.L. 91-273, sec. 106.

            The President's proposed deferral of $31.8 million in
bu,dget authority appropriated to the Energy Research and
Development Administration (ERDA) for the Clinch River Breeder
Ra=ctor Project (CRBRP) was reviewed to determine if the action
was properly classified and if proposed curtailment of CRBRP
exceeded statutory authority. The proposed deferral was
submitted for a required 45-day period during which the Joint
Committee on Atomic Energy was to consider plans to change the
CRBRP from a demonstration Flant program to one for systems
design. Before the recent executive branch actions, the CRBRP
was scheduled to be operational by 1984. Findings/Conclusions:
It was believed that terminating the project and then restarting
it would produce costs outweighing benefits. It was also felt
that the President lacked legal authority to implement plans for
curtailing the project- The withholding proposal was thought to
be properly submitted as a deferral of budget authority rather
than a rescission. (HTW)
                   COMPTROLLER .GENERAL OF THE UNTL.L_-   '...
                               WASHINGTON. D.C. 20


                                          June 28, 1977

      B-115398



      To the President of the Senate and the
P.s   Speaker of the House of Representatives

CJ         On May 18, 1977, in his twelfth special message for
0o    ficcal year 1977 sent pursuant tc the Impoundm.ent Control
      Act of 1974, the President proposed the deferral (D77-58)
      of $31.8 million in budget authority appropriated to the
      Energy Research and Devel(pment Administration for the
      Clinch River Breeder Reactcr Project (CRBRP). We have now
      completed our review of this deferral and have the fol-
      lowing comments to offer.

           The proposed deferral was submitted for the 45-day
      period prescribed by section 106(b) of Public Law 94-187,
      December 31, 1975, during which the Joint Committee on
      Atomic Energy was to consider the President's plans to
      change the CRBRP from a program for the construction and
      operation of a liquid metal fast breeder reactor demonstra-
      tion plant to one only for the systems design of such a
      reactor. In our view, the President lacks the legal author-
      ity under controlling law to implement his plans.

           In our letter of June 23, 1977, to Senators Jackson
      and Baker, a copy of which is enclosed, we addressed the
      issues of the impoundment action submitted by the President
      and the legal requirements of section 106(b). We conclude
      that the withholding proposed by the President was properly
      submitted as a deferral of budget authority, although, as
      we have stated, the rationale for the deferral is based on
      an erroneous view of his legal authority to implement his
      plans. This does not, however, invalidate the effect of
      the submitted deferral.

           We have included a copy of the June 23, 1977, letter
      as part of this report because it analyzes in detail the
      issues raised by the subject deferral.




                                               Comptroller General
                                               of the United States
      Enclo;:ure

                                                                 OGC-77-21
COf    A   ,:      COMPTROLLER GENERAL OF THE UNITED STATES
:..'   /                      WASHINGTON. D.C. 2058



                                                       "N
                                                       ftTY   B-115398
                                  June 23, 1977



   The Honorable Henry M. Jackson
   Vice Chairman, Joint Committee
      on ..omic Energy
   Congress of the United States

   Dear Mr. Vice Chairman:

       This replies to your letter of May 26, 1977, in which you
  and Senator Baker asked that we review deferral number D77-58
  transmitted by the President to the Congress on May 18, 1977.
  By this action the President proposed to defer $31.8 millio-
  in budget authority appropriated for the Clinch River Breeder
  Reactor Project (CRBRP). Because you believe the action taken
  by the President should have been proposed as a rescission
  rather than as a deferral of budget authority, you asked that
  we review this matter to see if it has been correctly classi-
  fied. You also asked if any actions currently undertaken or
  proposed by the executive branch toward significant curtail-
  ment of the CRBRP exceed or will exceed controlling statutory
  authorities.

        Based on the facts currently available, we conclude that
   the action proposed to the Congress was correctly classified--
   it is a deferral of budget authority. However, we will monitor
   the situation and will promptly report to the Congress any
   future actions constituting a rescission or deferral under the
   Impoundment Control Act of 1974.

       With respect to the second question, we believe that
  the Administration's proposed curtailment of CRBRP objective
  is substantially inconsistent with that set forth in the
  CRBRP program criteria that were approved, as required by
  law, by the Joint Committee on Atomic Erergy (JCAE). We also
  believe the curtailed program is not in accord with the stat-
  ute authorizing the CRBRP. In our view, for these reasons the
  Energy Research and Development Administration (ERDA) lacks
  the legal authority to implement the President's plan.

       Accordingly, expenditures of Federal funds to fully imple-
  ment the revised CRBRP program would be improper unless ERDA
  first obtains the necessary authority to undertake such actions.
B-115398



Should ERDA proceed to use CRBRP funds to implement the Presi-
dent's proposed plan without having secured such authority,
this Office will review the specific actions taken with the
objective of taking formal ex.eption to such expenditures.

     There follows a detailed discussion of our findings and
conclusions.

I.   BACKGROUND:

     A.    Progress'to'Date,

     Before discussing the legal irssues raised by your letter,
it is appropriate to discuss the history and facts surrounding
the project and the effects of the most recent executive branch
actions on the CRBRP. In reviewing the President's actions, we
met with ERDA and contractor officials both at headquarters
and at the project office site.

     Prior to the recent executive branch actiors, the Cl nch
River Breeder Reactor Demonstration Plant was scheduled to be
operational by early 1984 and was to be the nation's first
large-scale liquid metal fast breeder reactor (LMFBR) demon-
stration plant with a 380 megawatt capacity. Presently, design,
procurement, and component fabrication for the project are
about 25 percent complete, although no site preparation or
actual plant construction has yet begun. According to ERDA
estimates, the project, if completed, will cost about $2 bil-
lion, $270 million of which will be contributed by industry
participants. As of May 31, 1977, ERDA had spent about $254
million and industry participants a little over $99 million.

      B.    Origins-and-Statutory-Basis-of-the-CRBRP.

     The CRBRP had its origins in 1969.  In that year the Atomic
Energy Commission (AEC) was specifically authorized to study
the ways in which an LMFBR demonstration project could be
designed. Section 106 of Public Law 91-44, approved July 11,
1969, stated:

                "Sec. 106: Liquid Metal Fast Breeder
             Reactor Demonstration Program--Project
             Definition Phase.--(a) The Commission is



                               - 2 -
B-115398



           hereby authorized to conduct the Project
           Definition Phase of a Liquid Metal Fast
           Breeder Reactor Demonstration Program,
           under cooperative arrangements with reactor
           manufacturers and others, in accordance
           with the criteria heretofore submitted to
           the Joint Commit.':ee on Atomic Energy,
           without regard to the provisions of
           section 169 of the Atomic Energy Act tf
           1954, as amended, and authorization of
           appropriations therefor in the amount of
           $7,000,000 is included in section 101 of
           this Act."

     One year later the Congress went further in the area of
an LMFBR demonstration project and specifically authorized the
design, construction, and operation of such a reactor. Section
106 of Public Law 91-273, June 7, 1970, stated:

               "Sec. 106. Liquid Metal Fast Breeder
           Reactor Demonstration Program--Fourth
           Round.--(a) The-Commiss.ion-is-hereby
           anthorized-to-enter into a-cooperative
           arrangement- with-a- reactor -manufactnrer
           and-others-for-participation-in-the
           research-and'development;-design; con-
           strction ;- and- operation- of- a- igid
           Metat-Fast-Ere      reea ctor-powerpLPant,
           in-accordance -'Ththe-critia-eria      ereto-
           fore- sbmitte ' - to- the-Joint- Committ. e
           on-Atomic-Energy-and referred 'to'in
           section-T56-of-Pbitic-Law-lt.44, without
           regard to the provisions of section 169
           of the Atomic Energy Act of 1954, as
           amended, and the Commission is further
           authorized to continue to conduct the
           Project Definition Phase suosequent to
           the aforementioned cooperative arrange-
           ment. * * *
               '(b) Before the Commission enters
           into any arrangement or amendment there-
           to under the authority of subsection
            (a) of this section, the basis for the



                              - 3 -
B-115398



           arrangement or amendment thereto which
           the Crvmmission proposes to execute
           (including the name of the proposed
           participating party or parties with
           whom the arrangement is to be made, a
           general description of the proposed
           powerplant, the estimated amount of
           cost to b incurred b? the Commission
           and by the participating parties, and
           the general features of the proposed
           arrangement or amendment) shall be
           submitted to the Joint Committee on
           Atomic Energy, and a period of forty-
           five days shall elapse while Congress
           is in session (in computing such forty-
           five days, there shall be excluded the
           days on which either House is not in
           session because of adjournment for
           more than three days): Provided,
           hoiwever, That the Joint Committee,
           after having received the basis for
           a proposed arrangement or amendment
           thereto, may by resolution in writing
           waive the corditions of, or all or any
           protion of, ,such forty-five day period:
           Provided;-forther, That such arrangement
           or amendment shalI De entered into in
           accordance with the basis for the
           arrangement or amendment submitted as
           provided herein* * *." (Emphasis added.)

     This basic scheme was retained in 1975 when section 106 of
the 1970 act was amended by section 103(d) of Public Law 94-187,
December 31, 1975:

              "Sec. 106.  Liquid Metal Fast Breeder
           Reactor Demonstration Program--Fourth
           Round.--(a) The Energy-Research-and
           Development-Administration-(ERDA)-is
           hereby-authorized-to-enter-into-coopera-
           tive-arrangtiments-with-reactor-manofac-
           turers-and-others-for-participationh-n
           the-research-and-deveiopment;-design,
           construction;-anroperatiEon-of-aFLiquid


                             -4-
B-115398



           Metal-Fast-Breeder-Reactor-powerplant,
           in-accordance-with-cri'eria-approved-by
           the-Joint-Committee-on-Atomic-Energy,
           without regard to the provisions of sec-
           tion 169 of the Atomic Energy Act of
           1954, as amended. Appropriations are
           hereby authorized * * * for the afore-
           mentioned cooperative arranaements as
           shown in the basis for arrangements as
           submitted in accordance with subsection
           (b) hereof. * . *

                "(b)  Before-ERDA-enters-into'an
           arrangement-or'amendment-thereto- ~aner
           the-anthority of-subsection (a)-of-+.iis
           section; -the- basis- for the-arrangel,.ent
           or-amendment- tereto-which ERDA-proposes
           to-execate-incincluding-the-name-of-the
           proposed-participating- party-'orar ties
           with-which the-arrangemant-is- to-be
           made;-a-generai-descitrtion-of: the-pro-
           posed- powerplant; -the estimated -amont
           of-cost- to'be- incarred-by- ERDAan -by
           the-participating -P-ties;-and-the-gen-
           era -'eatures:of-the-proposed-arLangemernt
           or - amendment) - shall be submitted' to- the
           30int:ecommittee on-Atomic- Energy, and
           a period of forty-five days shall elapse
           while Congress is in session (in comput-
           ing such forty-five days, there shall be
           excluded the days on which either House
           is not in session because of adjourn-
           ment for more than three days): Provided,
           however, That the Joint Committee, after
           having received the basis for a proposed
           arrangement or amendment thereto, may by
           resolution in writing waive the conditions
           of all, or any portion of, such forty-five-
           day period: Provided;-further, That such
           arrangement or amendment shall be entered
           into in accordance with the basis for the
           arrangement or amendment submitted as pro-
           vided herein:* * *" (Emphasis added.)



                                -
                                5
 B-115398



      Pursuant to the 1975 law, ERDA propose' criteria to the
JCAE for its approval. On April 29, 1976, the JCAE approved
the most recently submitted criteria. Those project criteria
appear at page 63 of Modifications-in-the'Proposed-Arrangements
for'the'Clinch-River-Breuder-Reactor-Deonstration-Project,
Hearings Before the Joint Committee on Atomic Energy, 94th
Cr'g., 2d Sess., April 14 and 29, 1976 (1976 Hearings)

     C.     The Present-CRBRP-Criteria-and-Contract.

     As a result of the JCAE's action of April 29, 1976 (a
rollcall vote), the LMFBR demonstration program at tne
                                                        Clinch
River site is governed by criteria that call for the design,
construction, and operation of an LMFBR plant. These program
criteria state that the CRBRP's major objectives are to
                                                         demon-
strate the technology pertaining to, and the reliability,
safety, and economics of, LMFBR powerplants in the utility
environment. Other objectives are to:

     -- prcvide for meaningful identification of areas requiring
        emphasis in the LMFBR research and development p ogram;

     --validate, to the extent practicable, technical ind
       economic daLa and information pertinent to the total
       LMFBR program;

     -- assist in developing an adequate industrial base;

     -- provide for meaningful utility participation and
        experience in developing, acquiring, and operating LMFBR
        plants;

     -- help assure overall program success; and

     -- demonstrate and maintain U.S. technological leadership.

     The criteria also specifically set forth design require-
ments and plant objectives stating, among other things,
                                                        that
the plant's first core is to use mixed oxide fuel consisting
of uranium and plutonium and that it be designed, fabricated,
constructed, tested, operated, and maintained in conformance
with established engineering standards and high quality
                                                        assur-
ance practices.



                              - 6 -
B-115398



     Pursuant to the JCAE-approved criteria, ERDA entered into
a cooperative arrangement with the Project Management Corpoza-
tion (PMC), the Commonwealth Edison Company, and the Tennessee
Valley Authcrity (TVA) on May 4, 1976. That contract recognizes
the controlling statutory criteria for the LMEBR. For example,
the contract states, pertinently:

              A. Para. 1.1.9:   "'Project' means
           the cooperative effort to design,
           develop;-construc;-test-and-operate
           the-LMFBR-DemonstrationmPlant provided
           for in the Principal Project Agreements."
           [See para. 3.1] (Emphasis added.)

              B. Para. 3.1:    [Principal Project
           Agreemerts] "* * * TVA and ERDA will
           enter i;ito an agreement for-the-opera-
           tion-of-the-Demonstration-Plant, *,
           (Emphasis added.)

               C. Para. 4.1: "* * * ERDA shall,
            pursuant to this contract, manage and
            carry out the Project [see Para. 1.1.9,
            above] in an efficient, effective and
            timely manner consistent with the Princi-
            pal Project Objectives, and shall use
            its best efforts to design and build the
            Demonstration Plant substantially in con-
            formance with the Reference Design.* * *"

     D.    Recent-ERDA'Plans'and'GAO'Evaluation.

     On May 19, 1977, Mr. Robert W. Fri, Acting Administrator,
ERDA, sent to the JCAE notice of ERDA's plans to revise the
CRBRP. Mr. Fri stated, inter alia, ERDA's plans for the

              "cancellation of construction, component
            construction, licensing and commercializa-
            tion efforts for CRBRP, but completion of
            systems design;"

     This letter clearly recognized that the plan proposed
by the Pres-dent and reflected in the May 18, 1977, deferral
message would necessitate revision to the present JCAE-approved
CRBRP criteria, and acknowledged that an amendment to the


                              - 7 -
B-115398



statutory authorization may be in order if the President's
program revision is to be implemented. Mr. Fri stated:

           "At the direction of the President, and
           in compliance with Section 106(b) of
           Public Law 91-273, as amended, ERDA tere-
           with submits the cii,.osed amended program
           justification data reflecting-discontinu-
           ance-of-the-CRBRP Project;-except-for-com-
           pietion-of'sstemsdesn so as to help
           identify engineering problems that will
           have to be solved in developing alterna-
           tive types of reactors. The' statutory
           criteria will-likewise-eirgare-commen-
           sarate-revision.

           "Appropriate-negotiations-will; - of-corse,
           have-to-be- ndertaken-and-conctaded-with
           the-other-Project-participants;-with-the
           onjectivecft- implementing-the-proposed
           action-concerning-the-Project;-ano-the
           cooperative-arrangem!nt-amended-accord-
           inglvy%--In-addition;-amendatory-legis-
           lation-with-respect-to-the-basic-enabiing
           aothorization-for-the-CRBRP-Project-may
           be-in-order.

           "For the prescribed statutory period
           during which this revised basis of
           arrangement is required to lie before
           the Joint Committee, new obligations for
           the Project will be kept to a minimum
           consistent with prudent Project manage-
           ment. A deferral (No. D77-58) is being
           reported for the $31.8 million of CRBRP
           Project budget authority that will not
           be available during this period. Fol-
           lowing'such-period-ERDA-will-proceed
           with-appropriate-implementing-actions."
           (Emphasis added.)

     In an attachment to his letter, Mr. Fri discussed the
existing four-party contractual agreement and those contract
amendments that would have to be made in order to limit



                             - 8 -
B-115398



LMFBR activities to systems design efforts. Systems design
(roughly 60 percent of the t?:al design work) would, under
the President's proposal, be completed. pursuant to thisrequest
proposal, ERDA has reduced its fiscal year 1978 budget
                                     The furnds requested  would
from $208.7 million to $162 million.
be used to continun systems design activities;  to terminate
detailed design, licensing, procurement, arid construction
activities; and to settle claims, primarily those anticipated
from the termination actions,
                                                               proj-
      Thus far, we have found no evidence indicating that
                                                                   of
ect activity has been significantly slowed down as a result
the executive branch's proposed   change  in pro-ram   objectives.
To date, we have found no procurement actions that      have been
                                           told  us  there  were none.
delayed or cancelled and ERDA officials
                                                      direction   of
However, the project office in Tennessee, at the
ERDA headquarters, recently submitted a list of 10       scheduled
                                                                  to
procurements to ERDA headquarters for approval. According
                                                             actions
an ERDA procurement official, the proposed procurement    manufacturer,
involve contracts by Westinghouse,   the  lead  reactor
                                                             procure-
with its subcontractors. The amount involved in these
mnents is about $9.8 million.  (Should  ERDA decide   to  prevent
                                                           further
award of any of the subcontracts it may develop that
                                       actions  in  light  of the
questions will exist regarding such
Impoundment Control Act of 1974, discussed     below.)

     We compared the proposed changes on the Clinch River
LMFBR project as submitted by ERDA to the JCAE on May 19,
1977, with the existing criteria. As part o. this ccmparison,
                                                         PMC
we discussed the criteria with the General Manager of
(the contract party that represents the utility participants
                                                           spe-
in the project) on a line-by-line basis to pinpoint the
cific program changes that would result from   the Presidznt's
actions. Based on our examination, we aconfirm  that ERDA's
proposal of May 19, 1977,  represents   notice  of its intention
                                                          a pro-
to proceed with the CRBRP in a way that will result in
gram that does not fulfill major objectives of the    existing
                         criteria; nor the object  of  the auth-
JCAE-approved statutory
orization itself--to operate an LMFBR demonstration plant.
                                                         of the
      We asked ERDA officials to give us their estimate termi-
 additional costs that would be incurred assuming ERDA
 nated the project, except for systems design, on or about
                                                        the
 July 26, 1977, and the Congress subsequently provided

                               -9
B-115398



funds to continue the project on December 1, 1977. We chose
a December 1, 1977, date because it allows the Congress an
opportunity to consider fully whether to go ahedd with LMFBR
efforts and the associated funding. Although it is uncertain
when the Congress will make its decision on the project, and
how quickly OL completely ERDA may implement the Froposed
discontinuance of the program, we believe that the December
date provides a good indication of the impact a project ter-
mination will have prior to Corgress hasting an opportunity
to fully consider the matter.

     ERDA provided us with cost and schedule information using
three assumptions:

     1. Assuming the licensing process could begin where it
     was stopped, project costs would increase by about
     $346 million and plant operations would be delayed between
     1 and 1-1/2 years.   .' restart the prcject where it was
     terminated in the licensing process, however, probably
     would require legislation that would, in effect, circum-
     vent some of the normal licensing processes.

     2. Assuming the licensing process would have to begin
     with a new application, project cots would increase
     by about $546 million and plant operation would be
     delayed over 3 years. Neither this assumption nor the
     first acccount for the possibility that ER3A may De
     required by the Nuclear Regulatory Commission (NRC) to
     locate the plant at a different site if projected
     plant operation is delayed. Such a relocation appears
     to be a distinct possiblity based on past NRC proceed-
     ings on the Clinch River Project. In fact, the Deputy
     Director, Division of Site Safety and Environmental
     Analysis, NRC, told us that if the CRBRP is delayed for
     2 years or more, it would be very difficult, if not impos-
     sible, for the NRC staff, in its analysis, to conclude
     that it is cost beneficial to locate the demonstration
     reactor at the Clinch River site.

     3. Assuming the plant would have to be relocated, project
     costs would increase by about $1.1 to $1.3 billion and
     plant operation would be delayed 5 to 6 years.




                           -   10 -
B-115398



     Although we did not have the opportunity to evaluate
ERDA's estimates in detail, we believe they provide a reason-
able indication of the magnitude of the costs and extent of
schedule slippages that might occur if the project were ter-
minated on July 26, 1977, and the Congress decided to restart
it at a a later date. By comparison, if ERDA were to delay
project termination until DOecember 1, 1977, by honoring on-
going contracts but not entering into additional contracts.
not essential to ongoing work, the estimated costs would be
increased by about $61 million.

     Based on the information set out above, it would seem
that terminating the project prior to congressional delibera-
tions could make restarting the project so costly as to out-
weigh its benefit. Thus, in effect, the executive branch,
if it is successful in promptly implementing its present plan,
may well have made a major policy decision unilaterally through
administrative procedures which should have been made through
the legislative process.  The documentation we have examined
discloses no intention on the part of the executive branch to
proceed with completion of an LMFBR demonstration plant at
Clinch River in the future.

II.   THE IMPOUNDMENT CONTROL ACT OF 1974:

     Under the Impoundment Control Act of 1974 (Act), title X
of Public Law 93-344, 88 Stat. 332, July 12, 1974, 31 U.S.C.
1400, et seq., there are two types of impoundments--deferrals
and rescissions. The distinction between the two categories
is the duration of a proposed withholding of budget authority:
a deferral is a proposal to withdraw temporarily budget author-
ity from availability for obligation; a rescission is a request
to cancel, i.e., rescind, previously appropriated funds--in
other words, a permanent withdrawal of budget authority.

     In both categories of withholdings there exists a common
characteristic--impoundment.  While the term "impoundment"
is not defined by the Act, we have operated under the view
that an impoundment is any type of executive action or inac-
tion that effectively thwarts the obligation or expenditure
of budget authority. This does not mean, however, that
impoundments always exist when budget authority is not used
to implement all authorized activities.



                              -11-
B-115398



     The Act is concerned with the rescission or deferral of
budget authority, not the rescission or deferral of programs.
Thus, a lump-sum appropriation for programs A, B, and C used
to carry out only program C would not necessarily indicate
the existence of impoundments regarding programs A and B.
So long as all budgetary resources were used for program C, no
impoundment would occur even though activities A and B re-
mained unfunded.

     Consistent with this construction of the Act, sections
1012(b) and 1013(b) of the Act, 31 U.S.C. 1402(b) and 1403(b),
respectively, provide that when proposed rescissions and defer-
rals are rejected the impounded budget authority must be "made
available for obligation." If this is not done the Comptroller
General is authorized to bring suit to compel the cessation of
the withholding.  31 U.S.C. 1406.  In this connection, the
requirements of the Act clearly are to mandate the release of
withheld funds. Significantly, no mention is made in the Act
with respect to the uses to which the released funds are put.
The Comptroller General can only seek, and the court can only
grant, an order compelling the President to release the funds.
Neither the Comptroller General nor the courts are authorized
under the Act to constrain the executive branch in the way
the funds are to be used once released.

     Concerning the CRBRP, we have determined that, except
for the $31.8 million held in reserve for deferral D77-58,
all funds have been made available for obligation for either
incurring or liquidating obligations associated with the
project. Regarding the $31.8 million proposed for deferral,
these funds also are planned for use. That available funding
is being and will be used is the critical determination under
the Act. In this light, we must presently conclude that no
evidence suggests an intention not to utilize (i.e., a rescis-
sion) the $31.8 million in the future. Thus, we are satisfied
that the deferral has been properly classified. However,
should we later determine that the executive branch has
altered its plans for the use of the $31.8 million and has
decided that a portion of the funds will not be used at all,
we will, at that time, take the necessary action to reclas-
sify the impoundment to a rescission.

     In addition we are monitoring the executive branch's
handling of the $9.8 million it.vclved in the award of sub-
contracts currently being reviewed by ERDA. If we decide


                          - 12 -
B-115398



that ERDA's actions regarding the use of these funds or any
other CRBRP funds indicate the existence of further budgetary
withholdings, *s will promptly report the matter to the
Congress.

III. PROPRIETY OF THE REVISED CRBRP PLANS:

     The President's plans to curtail substantially the scope
of the LFMBR program at the Clinch River site raise a number
of questions that focus upon the legislation that authorized
the project. Our analysis of the statutes setting forth the
LMFBR activities of AEC and later ERDA is that they authorize
the AEC (ERDA) to embark only on clearly delineated lines
of effort. In 1969 the effort was to define what ultimately
might comprise an LMFBR demonstration project cooperative
arrangement. With enactment of the 1970 and 1975 legislaticn,
AEC (ERDA) was authorized to enter into agreements for the
research and development, design, construction, and operation
of such a reactor.

     We conclude that ERDA's proposed expenditure of funds
for the curtailed LMFBR program is an intention to expend
funds for unauthorized purposes. The most recent (1975) revi-
sions of section 106 of the CRBRP authorization, quoted above,
introduced the requirement of JCAE approval of LMFBR program
criteria. We believe subsection 106(a) incorporates by refer-
ence into the statute itself the program criteria submitted
to and approved by the JCAE. In our view, and we know of
no other that contradicts it, the approved program criteria
and the major objectives set forth therein are as much a part
of subsection 106(a) as if they were explicitly stated in
the statutory language itself. Thus, the currently approved
program criteria, and of course the statute itself, establish
the CRBRP's ultimate objective--to successfully complete,
operate, and demonstrate the usefulness of an LMFBR powerplant.

     Subsection 106(b) provides for a 45-day period of waiting
during which time the basis or description of a proposed amend-
ment to the cooperative arrangement must lie before the JCAE.
This delay, prior to ERDA's executing the amendment it proposes,
affords the JCAE and others time to express views on the spe-
cific means by which ERDA would accomplish the statutory objec-
tive of the program. We believe the proposed amendments con-
templated by subsection 106(b) are only those the execution
of which lead to fulfilling this goal.
                          - 13 -
B-115398



     This construction of section 106 is supported both by the
language of the statute and by its legislative history. Sub-
section (b) of section 106 provides not only that the basis or
description of the amendment shall lie before the JCAE for 45
days, but also that the amended cooperative agreement ERDA is
authorized to execute after the 45-day period is to be entered
into "under the authority of subsection (a) of this section."
Subsection (a) authorized ERDA to enter into cooperative agree-
ments only in accordance with the statutorily approved program
criteria. Those criteria, effectively a part of the statute
itself, contemplate the eventual operation of an LMFBR power-
plant. Therefore, ERDA's authority to initiate the running of
the 45-day period after which it may proceed to implement its
plans to amend the cooperative agreement, is constrained to
offering to the JCAE a basis or description of amendments that
are compatible with the objectives of the program criteria
and of course the harmonious objective of the authorization
act--operating an LMFBR demonstration plant.

     Our construction of section .06 is supported as well by
discussions of the JCAE. For example, during debate on the most
recently submitted project criteria, the following exchange
took place between Representative Moss and Mr. William Parler,
Committee Counsel, JCAE:

              "Representative Moss. If there is
           a conflict between the contract [the
           cooperative arrangement] provisions and
           the criteria, which controls?

              "Mr. Parler. The criteria and the
           justification data which the committee
           [JCAE] approved.

              "Representative Moss. In other words,
           at all times that becomes the dominant
           factor in interpreting any contract [for
           the CRBRP]? It must be consistent at
           all times with the criteria?

               "Mr. Parler. That is my opinion,
           Mr. Moss; Yes, sir." 1976 Hearings,
           page 4.

    Moreover, on April 29, 1976, Mr. Parler said:

                           - 14 -
B-115398



              "* * * If the Committee [JCAE] dis-
           approves the criteria, ERDA cannot proceed
           with implementation of the modification to
           the contract." 1976 Hearings, page 521.

      In meeting with ERDA representatives on the President's
plans to revise the CRBRP objective, we discussed the agency's
reading of section 106.   ERDA views subsection 106(b) as a
requirement that it begin to implement its plans for proposed
amendments, after the .expiration of the 45-day period during
which the bases for those amendments will have laid before
the JCAE, irrespective of whether such action supports or
destroys the objective of the authorization act. And, because
subsection (a) of section 106 does not provide explicit time
periods for either ERDA's submitting or the JCAE's approving
new program criteria, subsection (a) "defers" to subsection
(b). Thus, ERDA believes that its letter of May 19, 1977,
was in compliance with the statutory mechanism of subsection
(b) and it will, at the end of the 45-day period that began
May 19, 1977, trigger both the necessary authority and the
obligation to implement its revised plans to curtail the CRBRP.
ERDA officials did not disagree that ERDA presently has no
authority to revise the document representing the cooperative
arrangement in ways that are inconsistent with existing statu-
tory criteria, but apparently believe ERDA may effectively
implement its plans without at the same time constructively
revising the cooperative arrangement, an arrangement that
calls for accomplishment, not termination, of the CRBRP.

     In sum, ERDA views section 106 as conferring authority
to begin implementing the cancellation of portions of the CRBRP
45 days after appropriate notice to the JCAE, but also requires
that before ERDA formally modifies its contractual document it
obtain from tne JCAE approval of ERDA's proposed new program.

     The practical consequences of ERDA's construction of the
law deny the JCAE oversight of the LMFBR so long as the agency
does not enter into a fully executed amendment of the formal
contractual document. Such construction disregards the wide-
ranging and very concrete changes that must be wrought upon
the operation of the approved LMFBR program before implementa-
tion of the President's plan. ERDA apparently professes to read
the relevant statutory language as indicative of congressional
disinterest in whether ERDA unilaterally proceeds to change the
statutory objective of the program. The simplest reading of

                          -   15   -
B-115398



that language is to the contrary--that Congress has a strong
interest in maintaining the program objective fully in accord
with criteria approved by a committee of Congress. ERDA assumes,
we think without a sound basis, that the actions it takes
preparatory to abandoning the program it has commenced will
not be tantamount to an amendment of the cooperative agreement
that represents the commitment to go forward with the original
program, and therefore that the actual changes, however dra-
matic, need not be of concern to the JCAE. This view limits
the Committee's role to deciding whether to acquiesce in ERDA's
subsequent recommendation to change the statutory criteria
after ERDA's actions to change the statutory objective are
already effectively accomplished, and apprcpriated funds are
already obligated for the purpose of discontinuing instead
of fulfilling the program objective of the statutory criteria.

     We cannot agree the law was intended to so operate. Our
view, as we have stated, is that before ERDA can invoke `.-e
authority of subsection (b) to implement new plans that depart
in any significant way from the major program objectives of
the statutorily approved criteria, it must first, under sub-
section (a), secure JCAE approval of new criteria. Since we
believe section 106(b) contemplates amendments the thrust
of which is to fulfill the major objectives of the statutory
criteria, we must also conclude that, because the May 19,
1977, proposal does not so accord with the criteria, it did
not trigger the 45-day mechanism of section 106(b).

     Moreover, while the JCAE's authority to approve criteria
is broad, the statute under which the President is acting
authorizes only efforts leading to the construction and opera-
tion of a reactor.   Thus, the President would be compelled to
obtain amendatcry  legislation to section 106 to authorize only
the limited and different  objective of LMFBR systems design,
and to repeal those parts of the statute that speak to efforts
beyond such activities.

     The legal effect of this conclusion is that the status
of the CRBRP remains unchanged, except for the current $31.8
million deferral now before the Congress. Federal funds may
not be expended to implement the President's plan of curtail-
ing the program, without appropriate change in the authori-
zation statute and the program criteria.



                          - 16 -
B-115398



     To implement the President's plan without such necessary
authority would be in violation of law since such expenditures
would be for purposes inconsistent with those for which the
appropriations were made. In this regard, 31 U.S.C. 628
provides:

              "Except as otherwise provided by law,
           sums-appropriated for the various branches
           of expenditure in the public service shall
           be-applied-solely'to-the-objects-for-wI-
           they are respectively-made;-and-for'no
           others."   Emphasis added.)

     We hope the foregoing responds to your questions.     A
similar letter today is being sent to Senator Baker.

                                    Sincerely yours,



                               (SIGNED)ELMER   B.STAATS
                                    Comptroller General
                                    of the United States




                           - 17 -