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RETAIN U.S. LEADERSHIP IN ADVANCED TECHNOLOGY

The U.S. currently enjoys a commanding lead in developing the world's most advanced enrichment technology, the AVLIS process. We plan to maintain that lead to assure that, even when other countries decide to deploy AVLIS, the U.S. will have a more advanced, lower cost process on line.

The figures of merit that favored the selection of AVLIS over the Advanced Gas Centrifuge for further development clearly showed its greater potential for low cost and reliable production for the future. The AVLIS technology is less capital intensive, requires significantly less investment prior to a decision to deploy, hasi a lower estimated SWU cost, has greater potential for cost reductions through technology improvements, and is more adaptable to deployment in increments that can match the evolving needs of the enrichment marketplace.

In FY 1985, the one-half scale MARS separator was successfully integrated with the first phase of the Laser Demonstration Facility for enrichment tests. Test results will establish an experience base in the operation of large scale integrated

hardware as well as calibrate the consistency between model

prediction and measured enrichment performance.

The near full

scale Materials Handling Demonstration Module was operated

continuously for over 100 hours, thereby establishing the initial key segment of materials handling technology for design and operation of a full-scale separator pod.

In FY 1986, these facilities will be used to demonstrate enrichment for extended periods of time and to demonstrate the materials handling capability of this subsystem. Attention will focus on resolution of issues identified by the Process Evaluation Board as being technically critical or having high

economic leverage.

Ultimately, the successful deployment of AVLIS will depend in large measure on the existence of qualified industrial capability to carry the AVLIS technology out of the laboratory and into commercial operation. Accordingly, we will be instituting an industrial access program for AVLIS this year in an attempt to develop a knowledgeable industrial base for deployment.

RECOVERY OF PRIOR GOVERNMENT COSTS

The Government's outstanding investment will be recovered in a manner that will assure that commercial and military customers will continue to obtain competitively priced enrichment services.

The Administration is committed to the recovery of appropriate

Government costs over a reasonable period of time as required by

the Atomic Energy Act. DOE will return to the U.S. Treasury,

over a reasonable period of time, previously unrecouped and unrecovered costs associated with the provision of enrichment services to civilian customers. The outstanding Government investment will be reduced from $7.5 billion to approximately $3.5 billion by an amount equivalent to 60 percent of the GDP's that are no longer an earning asset and the entire GCEP, which never was and never will be an earning asset. These assets are not being used to provide enrichment services for the benefit of commercial customers. In addition, the outstanding investment will also be reduced by amounts equal to imputed interest charges after these assets were deemed to be "nonearning." These amounts

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Imputed interest on the outstanding investment made prior to October 1, 1986, will be computed at an interest rate of 6.319 percent--the average of Treasury rates applicable in the years in which net increases in Government investment occurred, weighted by the dollar amount of these annual increases.

Payments to Treasury will be set for each fiscal year and the
subsequent year through the annual budget process. The
Department plans payments to the Treasury of $110 million in
FY 1986 and $235 million in FY 1987.

MODIFICATION OF THE URANIUM ENRICHMENT SERVICES CRITERIA

One key action recently initiated by DOE is the proposed modification of the Uranium Enrichment Services Criteria. A

Notice of Proposed Rulemaking was published in the Federal

Register on January 29, 1986. The proposed Criteria modification addresses: (1) items that were questioned in the miners' lawsuit; (2) other aspects of the enterprise, including flexibility for future competitive actions; and (3) reiteration of the Administration's position opposing restrictions on the enrichment of foreign natural uranium.

We hope to complete the rulemaking process by the end of summer. All interested parties will have an opportunity to comment on the proposed Uranium Enrichment Services Criteria, both in writing and at a public hearing.

Subsequent to the review and consideration of public comments,

DOE will submit the revised Uranium Enrichment Services Criteria to Congress at least 45 days prior to their actual effective date pursuant to Section 161 (v) of the Atomic Energy Act. ·

This completes my statement. I would be pleased to respond to any questions you may have at this time.

BIOGRAPHICAL SKETCH

JAMES W. VAUGHAN, JR.

Mr. James W. Vaughan, Jr. assumed the position of the Principal
Deputy Assistant Secretary for Nuclear Energy, Office of Nuclear
Energy, at the U. S. Department of Energy (DOE) in March 1984,
In this position, he oversees the technical management and
programmatic direction of all programs assigned to the Assistant
Secretary for Nuclear Energy.

Prior to his appointment as Principal Deputy, Mr. Vaughan had served since 1979 as Deputy Director of the Naval Nuclear Propulsion Program, a joint Department of Energy and Department of Navy effort currently headed by Admiral K. R. McKee, Deputy Assistant Secretary for Naval Reactors and Director, Naval

am. In that position he was the senior civilian in the organization, responsible for multiple aspects of management direction for the research, design, development, construction, testing, operation, and maintenance of over 170 operating naval nuclear propulsion plants and eight DOE naval reactor prototype plants.

From 1963 to 1979, Mr. Vaughan held various technical management positions within the Naval Nuclear Propulsion Program involving radiological controls, fuel materials development and testing, reactor plant mechanical components, and the Light Water Breeder Reactor.

Mr. Vaughan received a B.S. degree in electrical engineering
from Duke University in 1957. From 1957 to 1959 he attended
graduate level programs in nuclear reactor engineering at George
Washington University and the University of Maryland. From 1957
to 1963 he served in the U. S. Navy.

Mr. Vaughan is a charter member of the Senior Executive Service,
He was the recipient of a Meritorious Senior Executive Presidential
Rank Award in 1980, and a Distinguished Senior Executive Presidential
Rank Award in 1983. He also received a Meritorious Service Award
for service with the DOE in 1979.

Mr. Vaughan is a native of Durham, North Carolina, and has resided in northern Virginia since 1957. He is married to the former Frances Smith. They have two children; Kevin, who attends Duke University, and Keith, who attends West Potomac High School.

NOTE: Mr. Vaughan is currently also serving as Acting Assistant

Secretary for Nuclear Energy in addition to his assignment as Principal Deputy Assistant Secretary for Nuclear Energy This additional assignment was effective September 1, 1984.

January 1986

BIOGRAPHICAL SKETCH

JOHN R. LONGENECKER

John R. Longenecker is the Deputy Assistant Secretary for Oranium Enrichment, Office of Nuclear Energy, 0.. Department of Energy (DOE). In this position Mr. Longenecker is responsible for overall management and execution of the Uranium Enrichment Program including gaseous diffusion, atomic vapor laser isotope separation, and enrichment business operations.

The position involves the direction and administration of Government programs that provide uranium enrichment services to domestic and non0.s. customers. Mr. Longenecker is responsible to the Assistant Secretary for Nuclear Energy for directing the operation of the Government enrichment facilities in Oak Ridge Tennessee; Paducah, Kentucky; and Portsmouth, Ohio. He directs the development of advanced technologies for the enrichment of uranium.

Prior to this assignment, Mr. Longenecker served as Director of the Office of Breeder Demonstration Projects, where he was responsible for program management of the clinch River Breeder Reactor Plant (CRBRP) Project, licensing of breeder demonstration projects, and conceptual design of the Liquid Metal Fast Breeder Reactor (LMFBR) Large Scale Prototype Breeder.

Previously, Mr. Longenecker served as Director, Plant Development Division; Chief, Conceptual Design Study Division of Reactor Research and Technology: Technical Assistant to the Program Director, Nuclear Energy of DOE; and in various capacities in the Energy Research and Development Administration's (ERDA) Division of Reactor Research and Development, including Special Assistant to the Director, Acting Assistant Project Director for Procurement for CRBRP, Acting Chief of the CRBRP Mechanical Components Branch, and Reactor Engineer for various LMPBR projects. He joined the Atomic Energy Commission in 1973 and served in the Division of Reactor Development and Technology prior to the formation of ERDA in 1975, and DOE in 1977.

Prior to entering Government service, Mr. Longenecker was employed by the Ford Motor Company as a research engineer and by the firm of John Robinson and Associates as a structural engineer.

Mr. Longenecker received both his B.s. and M.S. degrees in engineering mechanics from the Pennsylvania State University.

Mr. Longenecker was born in Port Royal, Pennsylvania, on July 27, 1949, and resides in Monrovia, Maryland with his wife Bonnie and daughter Laura.

February 1986

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