CHAPTER 16 A HISTORICAL REVIEW OF THE RELATIONSHIP BETWEEN THE FEDERAL GOVERNMENT AND THE DOMESTIC URANIUM INDUSTRY AND CURRENT URANIUM ACTIVITIES AND ISSUES IN NEW MEXICO
| Jurisdiction | United States |
(Apr 2006)
A HISTORICAL REVIEW OF THE RELATIONSHIP BETWEEN THE FEDERAL GOVERNMENT AND THE DOMESTIC URANIUM INDUSTRY AND CURRENT URANIUM ACTIVITIES AND ISSUES IN NEW MEXICO
Comeau, Maldegen, Templeman & Indall, LLP
Santa Fe, New Mexico
JON J. INDALL
Jon J. Indall is a Member of Comeau, Maldegen, Templeman & Indall, L.L.P. in their Santa Fe, New Mexico office. His practice areas are Natural Resources; Environmental Law; and Legislative Practice.
Admissions: 1974, Kansas (inactive); 1979, New Mexico, U.S. District Court, District of New Mexico, U.S. District Court, District of Kansas, U.S. Court of Appeals, Tenth and Federal Circuits, U.S. Claims Court and U.S. Supreme Court. He is a member of the American Bar Association and the State Bar of New Mexico.
Education: University of Kansas, J.D., 1974; University of Kansas, B.A., 1971.
Jon Indall has been representing clients in the uranium business since 1978. His firm has been active in this representation since the 1950s. He has served as general counsel to the Uranium Producers of America since its inception in 1985. He authored the provisions of Title X of the 1992 Energy Policy Act.
Representative uranium cases include:
Bokum Resources v. Long Island Lighting Company (contract)
United Nuclear Corporation v. United States (takings)
Farley v. Kerr-McGee Corp. (toxic tort)
United Nuclear v. Travelers, et al. (insurance coverage)
Marchiondo v. Homestake Mining Company (partition)
Uranium Producers of America v. Department of Energy (application of 1996 Privatization Act)
The New Mexico Mining Asso. v. The New Mexico Water Quality Control Commission (regulatory)
In re Sohio L Bar Alternate Abatement Standards (regulatory)
Representative uranium clients include:
Homestake Mining Co.; United Nuclear Corp.; Uranium Resources Inc.; KerrMcGee Corp.; Strathmore Minerals; Rio Algom Mining Corp.; Sohio-Kennecott Mining
Reprinted with permission of the Northwest Mining Association and the author.
NWMA PAPER
I. A Historical Review of the Relationship between the Federal Government and the Domestic Uranium Industry. "The one duty we owe to history is to rewrite it." Oscar Wilde.
A. 1947-1979. The Atomic Energy Commission Procurement Program Creates the Domestic Uranium Industry.
The Atomic Energy Commission ("AEC") was established by the Atomic Energy Act ("AEA") of 1946 in recognition of a need to provide for a civilian Government agency which could assure the continued development of atomic energy for military purposes and also promote the research and development necessary to the utilization of atomic energy for peaceful applications.
During World War II the Manhattan Engineer District ("MED"), under the Army Corps of Engineers, had been charged with the development of atomic weapons. MED's activities included the acquisition of uranium, the basic raw material essential to the production of nuclear weapons. AEC assumed management of the Government uranium procurement program from MED in 1947. Up to this time, MED had purchased about 10,000 tons of U3O8 for use in developing atomic weapons. Only about 15 percent of that amount, obtained as a vanadium byproduct, was attributable to domestic production. Five vanadium processing plants operated on the Colorado Plateau during World War II, aided by a Government program offering incentive for vanadium production. The vanadium program was terminated in 1944. By the end of 1946, only one plant was still operating on the Colorado Plateau, and uranium production was practically nil.1 It was from this almost nonexistent resource base that AEC launched its Domestic Uranium Procurement Program in 1947.
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The overriding purpose of the Procurement Program was to develop uranium concentrates for use in military weapons programs. From 1947 to 1970 the AEC was the sole customer of these concentrates. Prior to April 1, 1962, the AEC Program purchased uranium concentrates and uranium ores as an incentive to the uranium mining industry to provide feed for mills. In 1956, the AEC announced the establishment of a new domestic uranium procurement program for the period April 1, 1962 through December 31, 1966. The action was taken because of the need for a continuing Government market to maintain a high rate of exploration and development. The program guaranteed a Government market for 500 tons of U3O8 in concentrate per year from any one mining property or operation at a flat price of $8 per pound. The 1956 announcement created an established price for concentrates rather than for ores.
By 1957, dramatic increases in reported ore reserves and milling capacity prompted an AEC announcement that "it no longer is in the interest of the Government to expand production of uranium concentrate."2 In order to prevent further expansion of production under its essentially unlimited purchase commitment, AEC redefined its 1962-1966 procurement program by withdrawing portions of the program announced in 1956. The Government stated it would buy, in the 1962-1966 period, only "appropriate quantities of concentrate derived from ore reserves developed prior to November 24, 1958, in reliance upon the May 24, 1956 announcement."3
In addition to its objective to procure uranium concentrates for the weapons program, the AEA also directed AEC to foster the utilization of atomic energy for peaceful purposes. AEC announced in 1958 that domestic producers could for the first time make private sales of uranium
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concentrates to domestic and foreign buyers for peaceful uses of atomic energy.4 No private sales of concentrates were made until 1966. It was apparent by 1962 that the private market for uranium concentrates would not be sufficient to sustain a viable domestic uranium industry by the end of the AEC procurement program in 1966. In November 1962, the AEC announced its "stretch-out" program for 1967 through 1970.5 Under the program, the milling companies could voluntarily defer delivery of a portion of their 1963-1966 contract commitments until 1967 and 1968 in return for an AEC commitment to purchase, in 1969 and 1970, an additional amount of U3O8 equal to the quantity so deferred. The "stretch-out" program was the last of the major policy changes made in the Procurement Program. The Program ended on December 31, 1970.
The Procurement Program was successful beyond the Government's highest expectations. As indicated by the numerous revisions in the program, private industry met AEC's challenge to create a production industry from scratch. The federal Government was intimately involved in the exploration, mining and milling of uranium as the sole market, basically establishing all operational criteria and the concentrate price. Approximately 348 million pounds of uranium concentrates were produced for the Government from 1947 to 1970. In hindsight, industry might have taken a stronger look at the vagaries in the market shown by AEC's constant program modifications, occasioned by the very success of the producing industry.
The AEC Procurement Program marked the initial boom in the industry and the federal Government's handling of nuclear utility fuel requirements would play an important role in the next chapter of the domestic uranium production industry.
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B. 1970-1990. Section 161v of the AEA Fails to Maintain a Viable Domestic Producing Industry.
The end of the AEC Procurement Program saw a large decline in the number of mines and mills. Most of the domestic production for the growing nuclear power industry was conducted by larger mining companies with the major production...
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