B 779,966
REVIEW OF PROPOSALS UNDER POWER
DEMONSTRATION PROGRAM
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1957 SUBCOMMITTEE ON LEGISLATION
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v JOINT COMMITTEE ON ATOMIC ENERGY
CONGRESS OE THE UNITED STATES
EIGHTY-FIFTH CONGRESS
FIRST SESSION
ON
REVIEW OF PROPOSALS UNDER POWER DEMONSTRATION
PROGRAM
SEPTEMBER 17, 1957
Printed for the use of the Joint Committee on Atomic Energy
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2? 1973

PHOENIX
LIBRARY
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1957
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JOINT COMMITTEE ON ATOMIC ENERGY
CARL T. DURHAM, North Carolina, Chairman
CLINTON P. ANDERSON, New Mexico, Vice Chairman
CHET HOLIFIELD, California
MELVIN PRICE, Illinois
PAUL J. KILDAY, Texas
JOHN J. DEMPSEY, New Mexico
STERLING COLE, New York
JAMES E. VAN ZANDT, Pennsylvania
JAMES T. PATTERSON, Connecticut
THOMAS A. JENKINS, Ohio
RICHARD B. RUSSELL, Georgia
JOHN O. PASTORE, Rhode Island
ALBERT GORE, Tennessee
HENRY M. JACKSON, Washington
BOURKE B. HICKENLOOPER, Iowa
WILLIAM F. KNOWLAND, California
JOHN W. BRICKER, Ohio
HENRY DWORSHAK, Idaho
James T. Ramey, Executive Director
Subcommittee on Legislation
CHET HOLIFIELD, California, Chairman
CARL T. DURHAM, North Carolina ALBERT GORE, Tennessee
PAUL J. KILDAY, Texas BOURKE B. HICKENLOOPER, Iowa
STERLING COLE, New York HENRY DWORSHAK, Idaho
David R. Toll, Staff Member
II
REVIEW OF PROPOSALS UNDER POWER
DEMONSTRATION PROGRAM
tuesday, september 17, 1957
Congress of the United States,
Subcommittee on Legislation of the
Joint Committee on Atomic Energy,
Washington, D. C<
The subcommittee met at 1:30 p. m., pursuant to notice, in the Old
Supreme Court Chamber of the Capitol, Representative Chet Holifield
(chairman of the subcommittee) presiding.
Present: Representatives Durham (chairman of the full commit-
tee) and Holifield (presiding).
Present also: James T. Ramey, executive director of the Joint Com-
mittee, George Norris, Jr., committee counsel, John T. Conway and
David R. Toll, professional staff members.
Representative Holifield. The hearing will be in order.
This is a hearing before the Subcommittee on Authorization Legis-
lation, and the purpose of this hearing today is to hear an explanation
of the basis of proposals under the power demonstration program nego-
tiated by AEC with three utilities which have been submitted by the
Commission for review by the Joint Committee by letters dated Sep-
tember 13 and September 16. The three proposed arrangements are
with the following organizations: Consumers Public Power of Colum-
bus, Nebr., Northern States Power Co., of Minnesota, and Rural Coop-
erative Association of Elk River, Minn.
It is the committee's intent as set forth in the legislative history of
section 111 b. of the Authorization Act to consider the bases of these
proposed arrangements with a view to determining whether the com-
mittee will waive the requirements that such arrangements be sub-
mitted while Congress is in session and to also waive the 45-day waiting
period.
(The text of a resolution approved by the Joint Committee on Sep-
tember 19, 1957, waiving the 45-day requirement for the Consumers
and Northern States proposals will be found on p. 63.)
Representative Holifield. We would like to have a status report
today on the other outstanding co-op arrangements if the Commission
is ready to give it.
The second purpose of the hearing is to obtain a status report from
the Commission on other items in the Authorization Act in which the
Joint Committee is particularly interested. This would include the
gas-cooled reactor development and design study and the plutonium
design study as well as the plutonium recycle reactor.
At this point I would like to pitt into the record a letter from Chair-
man Durham dated August 24, 1957, which explains the background
1
2
POWER DEMONSTRATION PROGRAM
of this hearing. Also I would like to put into the record the Commis-
sion's letters of September 13 and 16, together with the backup infor-
mation on the three cooperative agreements. Further, without objec-
tion, I would also put in the committee's letter to the AEC announcing
today's hearing together with the press release on it, dated September
14 and 16, respectively.
(The documents referred to follow:)
Congress of the United States,
Joint Committee on Atomic Energy,
August 24, 1957.
Hon. Lewis L. Strauss,
Chair man, Atomic Energy Commission,
Washington, D. C.
Dear Mr. Chairman : As you know, the AEC authorization bill has become law
and the Congress has completed the processes of appropriating funds for the
AEC thereunder.
I am sure you recognize that the members of the Joint Committee took an
active part on the floor and in the House and Senate Appropriations Committees
in obtaining and restoring necessary AEC funds.
In the Joint Committee's report on the authorization bill and during the floor
debate on the authorization bill, as well as the hearings and debate on the
appropriation measure, it was made clear that the Joint Committee would do
everything practicable to expedite consideration of the basis of arrangements
under section 111b, when they are submitted for committee review by the AEC.
In particular I believe it is the committee's intent to expedite review of those
arrangements which were in the final stage of consideration by the AEC at the
time of the authorization hearing. It was our understanding that the Elk River
project and possibly the Consumers Public Power project of Nebraska were
in this category. We also understand that the Northern States arrangement
may also be ready.
I am making arrangements with Congressman Melvin Price, chairman of the
Research and Development Subcommittee, for members of his subcommittee to
review the basis of any arrangement submitted to the Joint Committee during
the recess.
As you know, a number of the committee members are going abroad on official
business to the Vienna Conference, departing September 20. In order therefore
for the subcommittee to review the basis of any arrangements and for the staff
to obtain the necessary waiver, it would appear advisable for the Commission
to submit, any such basis on or before September 13, at the committee offices.
After a brief staff review, Mr. Price may decide to hold a short hearing on the
project in which AEC, the utility organization, and the equipment manufacturers
would be requested to appear. Following the hearing, if the project appeared
to represent, no substantial problems, I would plan to poll all members to waive
the remainder of the 45-day period.
The Joint Committee after the Vienna trip would also be in a position to
review the basis of additional arrangements beginning around October 20.
With respect to the projects in which the Joint Committee was especially
interested in the authorization bill it is of course expected that the Commission
will proceed with these projects in good faith in accordance with the intent
of the committee and the Congress. This would include project 58-D-8, Plu-
tonium production reactor design; project 58-e-14, natural uranium, graphite
moderated, gas cooled power reactor prototype design; project 5&-e-15, plu-
tonium recycle experimental reactor; section 107b (2), Brookhaven cosmotron
project; and section 111a (1), (2), and (3).
Sincerely yours,
Carl T. Durham, Chairman.
POWER DEMONSTRATION PROGRAM
3
Atomic Energy Commission,
Washington, D- 0., September 13,1951.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr. Durham: In accordance with the provisions of section 111 (b)
of Public Law 85-162, I am transmitting herewith for your approval the basis
of the arrangements which the Commission proposes to enter into covering
power reactor demonstration projects with the following organizations:
1. Consumers Public Power District of Columbus, Nebr.
2. Northern States Power Co., Minneapolis, Minn.
In connection with these projects, we have requested the views of the Comp-
troller General as to the authority of the Commission to enter into present
contractual undertakings to make payments during the period of operation.
We anticipate a reply in the very near future and will advise you as soon as
it has been received.
Your letter to me of August 24, 1957, indicated that, if submitted to you
by September 13, 1957, these arrangements would receive your early considera-
tion. We appreciate the cooperation you are extending in this matter.
Proposed arrangements with Rural Cooperative Power Association, Elk River,
Minn., are not being submitted, since agreement has not been reached, but
negotiations are still in progress and we hope to be able to make a separate
submission to you before the hearings take place.
Your letter of August 24 also expressed interest in our plans for other
projects which were included in the fiscal year 1958 Authorization Act. I am,
therefore, including in this letter a brief report on these projects:
(a) Project 58-e-14, natural uranium graphite moderated, gas cooled, power
reactor prototype; development, design, and engineering only; report on design
required by April 1, 1958: An invitation was issued on August 29, 1957, for
architect-engineers to submit proposals to develop design criteria and prepare
an engineering design and cost estimate of a gas-cooled civilian power reactor
of 40,000 kilowatts (electrical). It is expected that a selection of the contractor
will be made by mid-October.
(b) Project 58-e-15, plutonium recycle experimental reactor designed for the
production of 15,000 electrical kilowatt equivalent: Design work previously
initiated at Hanford is continuing on an accelerated basis. Current planning
includes the placing of procurement contracts for long lead delivery time items
in October-November 1957 with ground breaking and construction estimated
to begin about January 1958. Construction time is tentatively estimated at
18 to 24 months.
(c) Project 58-b-8, production reactor for special nuclear materials; develop-
ment, design, and engineering only; report on design required by April 1, 195S:
Our plans regarding this project were reported to you in our letter dated
September 4, 1957, from Mr. R. W. Cook, Acting General Manager.
(d) Project 57-h-5, cosmotron target area, Brookhaven National Laboratory:
Major procurement action and the award of a contract for architect-engineering
work are scheduled for October 1957, the project to include the second phase
of modifications contemplated by the authorization of $3,550,000. Award of
a contract for the construction of the building and installation of necessary
equipment is scheduled for May 1958.
Sincerely yours,
H. S. Vance, Chairman.
Atomic Energy Commission Program Justification Data for Cooperative
Arrangements
Submitted to the Joint Committee on Atomic Energy pursuant to section 111 (b)
of Public Law 162, 85th Congress, September 13, 1957, 58-111-1 Consumers
Public Power District of Nebraska; 5S-111-2 Northern States Power Co.,
Minneapolis, Minn.
ARRANGEMENT NO. 5 8-111-1
A. Name of contractors
1. Atomics International Division, North American Aviation Co., for research,
development, and nuclear design.
2. Architect engineer and construction contractors to be selected.
3. Consumers Public Power District of Nebraska for operation of reactor.
4
POWER DEMONSTRATION PROGRAM
B. Description of proposed project
1. Objective: The objective of the proposed contract with the Consumers Public
Power District of Nebraska is to encourage and accelerate effective development
of nuclear power technology and the achievement of commercially feasible nu-
clear power. A sodium-cooled, graphite-moderated reactor designed to produce
710,000 pounds of steam per hour and 75,000 net electric kilowatts of energy,
will be constructed by the Commission. Consumers will provide the site and
turbogenerating facilities and will operate the entire plant for 5 years. It is
the intent of the parties that the plant will be operated for the primary purpose
of producing the maximum amount of electric energy therefrom.
2. Location: Near Hallam, Lancaster County, Nebr.
3. Technical aspects (data are approximate):
Heat output: 245 megawatts.
Electrical output (net) : 75 megawatts.
Amount of fuel loading: 23,800 kilograms.
Enrichment percent U-235: 2.5 percent.
Moderator: graphite.
Coolant: sodium.
Reactor outlet temperature: 925° F.
Reactor pressure: 50 pounds per square inch.
Steam conditions: 800 pounds per square inch gage at 825° F.
Byproduct utilization to be investigated by consumers.
4. Estimated date of completion of reactor: Mid-1961.
C. Estimates of cost
[In thousands]
Element of cost
Allocation of estimated costs
Total
AEC
Consumers
1. Preconstmction research and development.
2. Plant construction:
(a) Reactor
(6) Turbo generating facilities. .^..^^
$18,165
$18,165
29, 233
11,350
24, 013
i $5,220
11,350
Subtotal construction.
~3. Postconstruction assistance
4. Waiver of fuel use charges
:5. Total value of AEC assistance.
40, 583
24, 013
2 8, 000
1,325
16, 570
51, 503
1 Fixed amount, subject to escalation within 25 percent.
* Euel and extraordinary maintenance costs.
D. General features of proposed arrangements
1. Architect-engineer and construction contractors (to be selected). It is
expected that the Commission will enter into prime contracts with the architect-
engineer and construction contractors under arrangements to be established.
2. Consumers Public Power District—
(a) Site.—Under the contract, Consumers will furnish the site for the plant,
comprising approximately 600 acres and located near Hallam, Nebr. Title and
control of the site will rest with Consumers. The area upon which the reactor
portion of the plant will be located will be made available to the Commission by
a 40-year rent-free lease.
(b) Construction.—Consumers will furnish the turbine generator facilities
without cost to the Commission. Consumers will also furnish materials, equip-
ment, facilities, and services for construction of the nuclear portion of the plant at
a cost of $5,220,000. Insofar as is feasible, title to the facilities so furnished by
Consumers will be retained by Consumers. The dollar amount of this assist-
ance will be subject to escalation with a limit of 25 percent above or below the
figure indicated.
The Commission will furnish the reactor facilities, except as noted above.
(c) Operations.—Consumers will utilize all the steam produced by the reactor
for the generation of electricity and will operate and maintain both the turbo-
generator and reactor facilities. Except for the first fuel loading Consumers
will pay for fuel cycle costs up to an amount per kilogram of uranium metal
POWEK DEMONSTRATION PROGRAM
5
which has been tentatively fixed at $36.40, such amount being subject to upward
and downward escalation based on the average cost of fossil fuels.
The Commission will pay for extraordinary repairs and maintenance required
in operation of the reactor facilities. AEC will furnish the initial fuel loading
and pay for subsequent fuel cycle costs in excess of the amount contemplated per
kilogram of uranium metal incorporated into the fuel. There will be no credits
to Consumers for plutonium recovered.
Consumers is assuming certain basic risks in the project, including the possi-
bility that the fuel life will be less than the 3,000-megawatt days per ton
objective, and the risk that operations, including ordinary maintenance and
repairs, will be in excess of the amount estimated. Consumers therefore has
every incentive to keep nuclear power costs to the minimum. However, in the
event that Consumers is able to pay more for fuel than the amount presently
contemplated because the cost of power generated in the nuclear plant falls
below that of power conventionally generated, negotiations will be held to reduce
the Commission's assistance on fuel costs.
(d) Term.—The contract will be effective upon execution and will continue
for a period of 5 years after the nuclear facilities become operable as a power
producer, with a maximum period of 6 years after sufficient steam is produced
to bring the turbine up to speed and to synchronize the generator.
(e) Indemnity.—The Commission will indemnify Consumers against losses or
damages arising out of the radioactive, toxic, explosive, or other hazardous
properties of special nuclear materials.
(/) Options to purchase.—After completion of construction of the nuclear
facilities, if Consumers fails to proceed with the project, the Commission
has the right to purchase all of Consumers' interests in the overall facilities at a
price to be agreed upon, but in no event to exceed the original acquisition cost
less appropriate depreciation and less other pertinent considerations. If the
Commission exercises its option to purchase, Consumers has agreed to purchase
the power generated by the facilities if requested to do so by the Commission.
After 3 years from completion of construction of the nuclear facilities, Con-
sumers have the right to purchase the Commission's interest in such facilities
at a price representing the value of such property in the future production of
power and other products.
(g) Termination.—The Commission may terminate for convenience of the
Government at any time upon 30 days' notice, in which case payment would be
made to Consumers in an amount equal to its capital investment in the reactor
facilities less depreciation plus reimbursable costs incurred in conformance with
the contract. Title to the facilities in question would then vest in AEC.
Consumers may terminate if it is unable to obtain satisfactory financing
within 12 months from the date of execution of the contract. No payments will
be made in the event of such termination.
(h) Patents.—In case an invention or discovery is made by Consumers in
connection with the work under the contract, the Commission will receive a
nonexclusive, irrevocable, royalty-free license for governmental purposes.
(t) Licenses.—The contract is considered one with and for the account of the
Commission, and no licenses will be required, except for any byproduct or
irradiation activities in which Consumers plans to engage.
(/) Information and records.—Consumers will provide the Commission with
full technical and economic information which can be used by the Commission
as it sees fit. The Commission and its representatives will have the right to in-
spect and audit the work, records, reports, information, data, and activities of
Consumers under the project. The contract also includes the statutory GAO
audit provision.
ARRANGEMENT NO. 58-111-2
A. Names of contractors
1, Prime contractor : Northern States Power Co., Minneapolis, Minn.
2. Principal subcontractor: Allis-Chalmers Manufacturing Co., West Allis,
Wis.—for development, design, and construction of the reactor.
B. Description of proposed project
1. Objective : The objective of the proposed contract is to encourage private par-
ticipation in the development of nuclear power technology and to accelerate the
achievement of commercially feasible nuclear power. Under the contract, a nu-
clear reactor of an advanced boiling water type, designated as the controlled re-
circulation boiling water reactor (CRBR) designed to produce 66,000 net electric
6
POWER DEMONSTRATION PROGRAM
kilowatts of energy will be constructed and operated by the Northern States
Power Co. as part of its system.
2. Location: Site to be selected within the N.SP service area (parts of Minne-
sota, North Dakota, and South Dakota).
3. Technical aspects (data are approximate):
Heat output: Reactor: 164 megawatts; superheater: 39 megawatts.
Electrical output: 66 megawatts.
Amount of fuel loading : 4,100 kilograms.
Enrichment percent, U-235 :1.6 percent.
Moderator: Water.
Coolant: Water.
Reactor outlet temperature : 489° F.
Reactor pressure : 600 psig.
Steam conditions: 500 psig, 825° F., exhausting at iy2 inches mercury
absolute.
Byproduct utilization : None presently contemplated.
4. Estimated date of completion : June 30,1962.
C. Estimates of cost
[In thousands]
Element of cost
Allocation of estimated costs
Total
AEC
NSP
1. Preconstruction research and development:
(a) Performed by contractor
(b) Performed in AEC facilities
2. Development, fabrication, and construction:
(a) Reactor system:
Research and development
Fabrication and construction
(b) Balance of plant:
Research and development
Fabrication and construction
$5,000
500
4,000
5, 600
200
11, 800
Subtotal, development, fabrication, and construc-
tion
3. Postconstruction, research and development
4. Waiver of fuel use charges
21,600
1,700
Total value of AEC assistance.
1 These are maximum amounts.
2 Irradiation work and consulting charges by AEC.
3 Research and development contributed in part by CUAPA members.
4 Operating tests and inspection of fuel elements, etc.
i $5,000
12 500
i * 500
i 1,000
$4,000
5,600
3 200
11,800
21,600
3 1, 200
i 7,000
D. General features of proposed arrangements
1. Site.—The site of the nuclear powerplant will be provided and selected by
NSP and approved by the Commission.
2. Construction.—The nuclear powerplant will be constructed by NSP. Pre-
construction research and development, design, fabrication, and construction will
be subcontracted to Allis-Chalmers Manufacturing Co.
3. Operation.—NSP will operate the nuclear powerplant for 5 years as part of
its interconnected system furnishing electric power service to parts of Minnesota,
North Dakota, and South Dakota.
4. Financial assistance.—The Commission undertakes to furnish the following
assistance:
Preconstruction research and development:
Costs actually incurred by contractor
Work and services furnished by AEC—
Postconstruction research and development
Waiver of fuel-use charge
$5, 000, 000
500, 000
500,000
1, 000, 000
Total AEC assistance
Note.—The above figures are maximum.
7, 000, 000
POWER DEMONSTRATION PROGRAM
7
NSP and 10 other electric utilities operating in the Midwest have formed a
nonprofit corporation known as Central Utilities Atomic Power Associates
(CUAPA). The 10 companies are to furnish a total of $3,650,000 to aid in the
research and development program on this project and will receive training and
technical information from the project. There will be no contractual relation-
ship between CUAPA and the Commission.
Allis-Chalmers is to perform under subcontract, the preconstruction research
and development, design, and construction of the nuclear powerplant. A sub-
stantial portion of its work will be on a fixed-price basis with NSP. To the
extent, if any, that Allis-Chalmers costs on the work covered by the fixed price
exceed the price Allis-Chaliners will be contributing financial assistance.
NSP will pay all costs associated with the project except as indicated above.
5. Title.—NSP will be the sole owner of the nuclear powerplant.
6. Term.—The term of the contract will extend until the expiration of 5 years
after the issuance by AEC of a license to operate the facility, or 5 years after
completion of construction of the nuclear powerplant, whichever is later.
7. Indemnity.—As a licensee of the Commission, NSP will be subject to the pro-
visions of Public Law 256, S5th Congress.
8. Option to pur chase.—In general, the Commission will have the right to
purchase the nuclear powerplant if NSP fails to proceed with the project.
9. Termination.—The contract may be terminated by mutual agreement. NSP
may terminate if it cannot obtain necessary licenses, regulatory agency ap-
provals, or satisfactory liability insurance coverage.
10. Patents.—Title and all rights to inventions originated in connection with
Commission-financed work will become the property of the Government with a
nonexclusive, irrevocable, royalty-free license for NSP. On inventions originated
under NSP-financed work, title will be in NSP, with a comparable license in
the Government for Government purposes. All subcontract patent provisions
will be subject to Commission approval.
11. Licenses.—NSP undertakes to obtain all necessary licenses from the Com-
mission, and such other necessary approvals from Federal, State, and local
regulatory agencies as are required to permit the construction and operation of
the plant and the sale or use of the energy produced therein.
12. Information and records.—NSP wTill keep, and require its subcontractors
to keep, records of technical, economic, and financial data developed in connec-
tion with the project and supply that information to the Commission for its
use and dissemination. The Commission and its representatives will have the
right to inspect and audit the work, records, reports, information, data, and
activities of NSP and its subcontractors under the project. The contract will
also include the statutory GAG audit provision.
Atomic Energy Commission,
Washington, D. C, September 16,1951.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr. Durham: In accordance with section 111 (b) of Public Law 162,
85th Congress, I am transmitting herewith proposed cooperative arrangements
with the Rural Cooperative Power Association, of Elk River, Minn., and the
American Machine & Foundry Co. It is requested that these arrangements be
considered by your committee along with those of the Consumers Public Power
District of Nebraska and Northern States Power Co., Minneapolis, Minn., which
were transmitted to you on September 13,1957.
With respect to all three arrangements, the Commission requests that the
committee waive, pursuant to its authority under section 111 (b), the 45-day
period for which the bases of such cooperative arrangements are required to
lie before it. This is essential in the present instance, since the American
Machine & Foundry Co. agreement is contingent upon execution of a definitive
contract no later than October 18,1957.
Sincerely yours,
K. E. Fields, General Manager.
97670—57 2
8
POWER DEMONSTRATION PROGRAM
Pbogram Justification Data
ARRANGEMENT NO. 58-111-3
A. Name of contractors
1. Rural Cooperative Power Association, Elk River, Minn., for operation of
reactor.
2. American Machine & Foundry Co., for research, development, fabrication,
and construction.
B. Description of proposed project
1. Objective: The objective of the proposed contract is to bring new resources
into the development of engineering information on the performance of nuclear
power reactors and to advance the time when nuclear power becomes economically
feasible. A closed-cycle boiling water power reactor (CCBR) designed to pro-
duce 225,000 pounds of steam per hour and 22,000 electric kilowatts of energy
will be constructed by A. M. & F. under contract with the Commission. RCPA,
under separate contract with the Commission, will provide the site and turbo-
generating facilities and will operate the entire plant for 5 years as part of its
system.
2. Location: Elk River, Minn.
3. Technical aspects (data are approximate):
Heat output: 5S megawatts (excludes superheater, 17 megawatts).
Electrical output: 22 megawatts (nominal).
Amount of fuel: 1,320 kilograms U02; 3,050 kilograms Th02.
Enrichment percent U-235: 9.8 percent.
Moderator: H20.
Coolant: H20.
Reactor outlet temperature: 533° F.
Reactor pressure: 900 pounds per square inch.
Steam conditions at throttle ; 600 pounds per square inch at 825° F.
Byproduct production: None.
4. Estimated date of completion: August 1960.
C. Estimates of cost
[In thousands]
Element of cost
Allocation of estimated costs
Total AEC AMF RCPA
1. Preconstruction research and development:
(a) Performed in AEC facilities 1
(b) Fuel element development
Subtotal.,
Development, fabrication, and construction:
(a) Reactor:
Reactor plant (including superheater)
Fuel for 1st core (Including 15 percent spares).
Conversion UFe to UO2
(b) Turbo-generating facilities
Subtotal..
3. Operation:5 Estimated cost to AEC.
4. Waiver of fuel use charge
Total value of AEC assistance..
2 500
3 915
6,115
2 1, 400
300
1,750
565
« 1,640
125
2 500
3 915
3 5,115
21,400
300
< 1,000
1, 750
6,815
1,000
1,750
> 1, 640
125
9,995
1 May be performed in private facilities to extent feasible.
2 This is a maximum.
3 Subject to escalation not to exceed 5 percent.
* AMF retains as fee up to $300,000 of underruns on $5,115,000 total. AMF pays all overruns.
* Includes costs of training, RCPA consultations with A. M. & F., and other directly reimbursable work.
8 After sale of steam to RCPA (in the event of excellent reactor performance the cost would be reduced
or might even become a credit).
POWEE DEMONSTRATION PROGRAM
9
D. General "features of proposed arrangements
1. Direct contract ivith RCPA.—
(a) Site.—Under the contract, RCPA will furnish the reactor site, which will
be adjacent to RCPA's existing steam plant at Elk River, Minn. The Govern-
ment's right to use the site for the purposes of this project will be assured by
appropriate registration of the Government's interest, and by provision for rent-
free lease following expiration of the contract term.
(6) Construction.—RCPA will furnish the turbine generator facilities without
cost to AEC. AEC will provide the reactor plant.
(c) Fuel elements.—AEC will develop and furnish the fuel elements required
for the initial core loading. The fabrication of subsequent fuel elements will
be the responsibility of RCPA.
(d) Operations; sale of steam.—The basic principle of the arrangement is
one of assuring that RCPA as a consequence of the undertaking, will incur no
loss, and that it will make no profit while operating the reactor for AEC. The
contract will provide for operation of the entire plant by RCPA and for the sale
to RCPA of all steam produced by the reactor plant. The steam will be con-
sideration for operating costs and vice versa; however, because the value of the
two will not necessarily be equal, provision for adjustment to fulfill the "no loss-
no profit" concept will be made as described below.
Instead of reimbursing RCPA directly for the costs of operating the reactor
plant and receiving from RCPA specified prices for the steam it receives, the
contract will provide for AEC to pay RCPA for those costs actually incurred in
operating its system with the reactor plant in excess of the costs it would have
incurred in operating its system with a conventional boiler of the same capacity
at the same location. If RCPA's system costs with the reactor are less than its
system costs would have been with a conventional boiler, RCPA will pay the
difference to the AEC. The formula outlined will come into play once the
reactor has achieved criticality. In arriving at RCPA's costs of operating the
reactor as part of its system, costs incurred by it arising out of the nuclear
character of the entire project wTill be taken into consideration. Thus the ar-
rangement contemplates that RCPA will be made whole—that is, placed in the
financial position it would have occupied if it had constructed the conventional
plant it otherwise would have built. This arrangement permits the AEC to
eliminate RCPA's risk of loss, while avoiding any operating subsidy.
In addition, AEC will directly reimburse RCPA for all capital costs it incurs
for replacements and additions to the reactor plant, for the costs it incurs in
the preoperation training program, for the cost of the A. M. & F. subcontract it
had negotiated and prepared, and for services desired by AEC and performed
prior to achievement of criticality.
For these purposes, AEC will obligate $1,640,000 at this time. Any further
payment by AEC will be subject to the availability of funds.
(e) Training.—AEC will conduct, at the Government's expense, a program of
training for up to 12 qualified employees of RCPA.
(/) Term.—The term of the contract will commence on the date of execution
and will end 5 years after the acceptance of the reactor plant by AEC as being
completed, tested, and operable.
(g) Indemnity.—AEC will indemnify RCPA against losses or damages arising
out of nuclear incidents in a manner consistent with Public Law 256, 85th
Congress.
(h) Sale of the reactor plant.—At the expiration or termination of the con-
tract, the Government will, in accordance with law, offer to sell the reactor plant
to RCPA pursuant to the provisions of Public Law 162, 85th Congress. The
contract will provide that, if such offer is not accepted, AEC will have an option
to lease the site of the reactor plant.
(i) Termination.—The contract will be subject to termination at any time by
written agreement of the parties. Any such termination will be effective in the
manner, upon the terms, and on the date specified in said agreement.
The Commission will have the right to terminate the contract (1) if it deter-
mines that the construction or operation of the reactor cannot be undertaken or
continued without undue risk to the health or safety of the public (and the
parties have not agreed to mutual termination), or (2) if, after the Commission
has paid to the contractor the sum of $3,040,000 less costs incurred by the Com-
mission for fabrication of the initial core loading (including spares), termina-
tion is desired for the convenience of the Government. In the event of termina-
tion by the Commission, the Commission will pay to the contractor, as full
10
POWER DEMONSTRATION PROGRAM
termination costs, the costs for which the contractor is then entitled to direct
reimbursement plus the net incremental expenses incurred in the operation of its
.system for such time subsequent to February 1960 as may reasonably be re-
quired by the contractor for the installation of a boiler plant using conventional
fuels. The Commission has no present intention to exercise the right to termi-
nate for convenience unless it finds that the economic and technical promise of
the reactor for commercial utilization by RCPA or others is unfavorable.
(j) Patents.—In case an invention or discovery is made by RCPA in connec-
tion with the work under the contract, AEC will receive all rights.
(k) Licenses.—The contract will be considered one with and for the account
of the Commission and no licenses will be required.
(I) Information and records.—RCPA will maintain accounts showing all costs
of operating its system. RCPA will also provide the Commission with full tech-
nical, economic and financial information and reports and the Commission and
the Comptroller General will have the right to inspect the work, records, reports,
information, data and activities of RCPA under the project. AEC may use
the information as it sees fit.
(m) Approval by Rural Electrification Administration.—RCPA has contacted
the Administrator of Rural Electrification Administration and outlined the pro-
visions of this agreement. RCPA was advised by the Administrator that these
agreements, as he understands them, would not impair the feasibility of the
REA loan and would be satisfactory subject to review of the final draft.
2. Direct contract With A. M. d F.— (a) Construction and test operation.—
A. M. & F. will develop, design, fabricate, and construct the reactor plant (reac-
tor and superheater) and perform 6 months of test operation by not later than
August 1,1960.
(&) Training.—A. M. & F. will conduct a program of training for RCPA's
operators.
(c) Title.—Title to the entire reactor plant and the fuel elements, and super-
heater will be in the Government.
(d) Indemnification against nuclear hazards.—A. M. & F. will be indemnified
by the Commission in the same manner as other similarly situated Commission
contractors in accordance with the provisions of Public Law 256, 85th Congress.
(e) Termination.—The contract will be subject to termination at any time by
written agreement of the parties, any such termination to be effective in the
manner, upon the terms, and on the date specified in such agreement.
If construction of the reactor plant is made impossible by inability of A. M.
& F. to obtain necessary licenses or regulatory agency approvals, A. M. & F.
will have the right to terminate at any time, by written notice to AEC.
Neither the Government nor A. M. & F. will be required to reimburse the other
or pay directly for any costs or expenses by reason of termination of the contract,
other than costs, expenses, and commitments previously incurred by A. M. & F.
for which it is entitled to reimbursement under the provisions of the contract.
The Commission will have the right to terminate the contract at any time for
convenience of the Government. Upon such termination, A. M. & F. would be
entitled to reimbursement for those costs, expenses, and commitments previously
incurred by it for which it is entitled to reimbursement under the provisions
of the contract, plus reasonable costs of termination, plus A. M. & F.'s million-
dollar investment in the program, to the extent such investment has actually
been made to the effective date of termination.
(/) Patents.—Title to all inventions made or conceived in connection with
A. M. & F.'s portion of the project will become the property of the Government,
with a nonexclusive, irrevocable, royalty free license for A. M. & F.
(ft) Licenses.—This contract will be with and for the account of the Commis-
sion and no licenses Avill be required.
(h) Information and records.—A. M. & F. will keep, and require its subcon-
tractors to keep, records of technical, economic, and financial data developed in
connection with the project and supply that information to the Commission for
its use and dissemination. The Commission and its representatives will have
the right to inspect and audit the work, records, reports, information, data, and
activities of A. M. & F. and its subcontractors under the project. The contract
will also include the statutory GAO audit provision.
POWER DEMONSTRATION1 PROGRAM
11
September 14,1957.
Mr. K. E. Fields,
General Manager, Atomic Energy Commission,
Washington, D. C
Dear General Fields: This will confirm the information phoned to you this
morning to the effect that the Joint Committee will hold an open hearing on
Tuesday afternoon, September 17, at 1:30 p. m., in room P-63, Old Supreme
Court Chamber, in the Capitol, on the following subjects:
1. To consider the bases of the arragenments which the Commission proposes
to enter into with the Consumers Public Power District of Columbus, Nebr., and
the Northern States Power Co., submitted with the Commission's letter of
September 13 and the bases of such other arrangements as the Commission may
submit on or before the hearing date.
2. To obtain a status report on the Commission's other negotiations under the
power-reactor demonstration program.
3. To consider the status of the Commission's work on project 5S-e-14, gas-
cooled reactor prototype; project 58-e-15, plutonium recycle experimental re-
actor; project 58-0-8, production reactor for special nuclear materials.
It is understood that you will appear, together with the Assistant General
Manager for Research and Development and representatives of the Reactor
Development Division.
We are notifying representatives of the private and publicly owned utilities,
and equipment companies which are involved in the projects that they can
attend the hearings and be heard if they so desire.
Sincerely yours,
James T. Ramey, Executive Director.
No. 99
September 16,1957
For immediate release
From the Office of the Joint Committee on Atomic Energy:
Congressman Carl T. Durham, Democrat, of North Carolina, chairman of the
Joint Committee on Atomic Energy, announced today that an open hearing will
be held by the Subcommittee on Legislation on Tuesday, at 1: 30 p. m., in room
P-63, United States Capitol Building, September 17, 1957, to consider the bases
of arrangements between the Atomic Energy Commission and certain electric
utility companies for the construction and operation of nuclear-power reactors.
Specifically the subcommittee will consider a proposal of the Consumers
Public Power District of Columbus, Nebr., with regard to a 75,000 electrical
kilowatt sodium graphite reactor, and a proposal of Northern States Power Co.,
Minneapolis, Minn., for construction of a 66,000 electrical kilowatt boiling water
reactor. AEC advised they also may be ready to submit the bases of arrange-
ments with Rural Cooperative Power Association of Elk River, Minn., for a
22,000-kilowatt boiling water reactor in time for the hearing.
Chairman Durham stated that the bases of arrangements between the
Atomic Energy Commission and the first two companies were submitted by the
AEC to the Joint Committee on Atomic Energy Friday afternoon, September 13,
and the hearing was being held in order that consideration can be given to the
possibility of waiving the normal 45-day waiting period and thereby permitting
the signing of contracts as soon as possible. By law, unless waived by the
committee, these contracts cannot be signed by the AEC until the bases for
them have been submitted and lie with the committee for 45 days while Congress
is in session.
Representative Holifield. In terms of procedure today, I believe,
it will be helpful for the committee to lead off with an introductory
statement by General Fields, together with an explanation by Com-
mission representatives of the three agreements.
Following this explanation, if representatives of the utilities or the
equipment company involved wish to make any comments we will
be glad to hear from them. We understand that Mr. Schacht, of the
Consumers Public Power District of Columbus, Nebr., would like to
make a statement.
12 POWER DEMONSTRATION PROGRAM
We understand Mr. Connell, of Senator Humphrey's office, will
make a statement.
After these gentlemen have testified we would then expect that any
others who wish to comment on the matters might be heard.
In that connection, we understand that representatives of some of
the Nebraska cooperatives would like to be heard.
At this time, General Fields, we will ask you to proceed with such
statement as you wish to make to the committee.
STATEMENTS OF GEN. K. E. FIELDS, GENERAL MANAGER; LOUIS H.
EODDIS, JR., DEPUTY DIRECTOR, DIVISION OF REACTOR DEVEL-
OPMENT; DELMAR M. MORRIS, ASSISTANT DIRECTOR FOR AD-
MINISTRATION, DIVISION OF REACTOR DEVELOPMENT; E. J.
BLOCH, DIRECTOR, DIVISION OF PRODUCTION; DON S. BURROWS,
CONTROLLER, DIVISION OF FINANCE; EDWARD DIAMOND,
DEPUTY GENERAL COUNSEL; AND A. TAMMARO, ASSISTANT
GENERAL MANAGER FOR RESEARCH AND INDUSTRIAL DEVELOP-
MENT
General Fields. Thank you, Mr. Chairman.
As you will see, I have a brief opening statement I would like to
make. As you will see in this statement, I am modifying our one
request to you which is a request for a waiver in the instance of the
arrangements on the Eural Cooperative Power Association power
proposal, in view of some developments that occurred just this morn-
ing, and I will touch on them, sir, in my statement.
Representative Holifield. You may proceed.
General Fields. It is a pleasure to be here today to ask your com-
mittee to waive the 45-day requirement of section 111 (b) of Public
Law 162, 85th Congress, with regard to 2 cooperative arrangements
under the Commission's power demonstration reactor program. I
have a number of my staff with me who, I believe, will be able to
answer any questions you may have when I have completed by brief
introductory remarks.
As you well know, the Commission has issued three separate invita-
tions for participation in its power demonstration reactor program.
In connection with the first round invitation, three proposals were
initially submitted to the Commission. Two of the three proposals,
those made by Power Keactor Development Co. and Yankee Atomic
Electric Co., have resulted in executed, definitive contracts with the
Commission. The third proposal, that of the Consumers Public
Power District of Columbus, Nebr., is now before your committee
for consideration.
On January 7, 1957, the Commission issued the third invitation m
connection with its power demonstration reactor program. Three
proposals have been received to date, and the Commission has accepted
one of these, that of the Northern States Power Co., as a basis for
negotiation of a definite contract.
On September 13, 1957, in accordance with the requirements of
Public Law 162, the Commission transmitted to the joint committee
the bases for the proposed arrangements with Consumers Public
Power District and with Northern States Power Co. We believe that
POWER DEMONSTRATION1 PROGRAM
13
these submittals comply in every way with the requirements of sec-
tion 111 (b) of that act. With respect to Consumers, the arrange-
ment is confirmed by a certified copy of excerpts from minutes of
meeting of August 30, 1957, of the Consumers board of directors,
transmitted to the Commission on September 3,1957.
The arrangement with Northern States is confirmed by a letter
dated September 6, 1957, from Earl Ewald, vice president in charge
of operation, Northern States Power Co., to W. Kenneth Davis,
Director, Division of Reactor Development.
In the Commission's September 13, 1957, transmittal letter to the
Joint Committee, we informed you that we had not been able, as of
that date, to reach a final agreement with the Rural Cooperative
Power Association of Elk River, but that negotiations were contin-
uing and we were hopeful that we would be able to submit the basis
for the arrangement with RCPA to the committee prior to the date
of this hearing.
Yesterday, September 16, 1957, that basis of arrangement was
transmitted to your committee. It incorporated a description of the
arrangement which the Commission had with the American Machine
& Foundry Co., the prime design, development, fabrication, and con-
struction contractor for the Elk River reactor plant. The basis of
agreement with RCPA was confirmed by a letter dated September 14,
1957, from Edward Wolter, general manager, Rural Cooperative
Power Association of Elk River, Minn., and the basis of agreement
with AMF was confirmed by a letter dated September 15, 1957, from
Ro}^ Snapp, divisional vice president, American Machine & Foundry
Co.
The Commission had prepared telegrams to both RCPA and AMF
accepting the bases of the arrangements sets forth in their letters to
the Commission and was ready to transmit these last night, September
16, 1957, when a telephone call from Mr. Snapp, representing AMF,
informed us that the company was not prepared to proceed on the
basis of the ceiling price previously agreed to. We understand we
are being advised formally of this b}^ telegram. In view of this
development, and because the arrangements with RCPA and AMF are
necessarily interrelated, we were unable to transmit our telegram of
confirmation to RCPA.
Because of these circumstances, I called Mr. Durham and Mr.
Holifield, and I say "you" in my statement. I actually called Mr.
Durham, whom I thought was going to chair the meeting. I called
Mr. Durham this morning and also Mr. Ramey, to withdraw our
request to your committee to waive the 45-day waiting period with
regard to the proposed RCPA arrangement. This does not mean
that we are abandoning this project; it only means that the Commis-
sion needs an opportunity to consider what steps it will take next.
In no event will be be able to complete alternative arrangements
before the end of October, and in view of that, we see no need for
leaving the waiver request in effect at this time.
I doubt that we will be able to complete alternative arrangements
either with AMF or someone else before the end of October, and in
view of that, we see no need for leaving the waiver request in effect
at this time. As a matter of fact, we do need to review the project
in this light completely, as well as to consider other means to proceed.
14
POWER DEMONSTRATION PROGRAM
I would add to this statement that I received at 12: 30 today a copy
of what will be delivered in telegram form from Mr. Snapp confirm-
ing this, and in effect as being for a considerable increase in the
ceiling price that we had considered before,
Representative Holifield. Do you have that ready to submit for
the record?
General Fields. I have it in draft form. I have had a short time
to review it, I can tell you what it relates to, and I can submit it
for the record, yes, sir; but not right at the moment I don't believe.
I do have a rough draft of it here, It has come through in a dictated
form.
(The telegram referred to follows, together with a subsequent state-
ment by the American Machine & Foundry Co. requested on p. 62,
and a subsequent letter from AEC regarding developments since the
hearing:)
Copy of Telegram to AEC, Received 1: 26 p. m. September 17, 1057, From
American Machine & Foundry Co.
On September 14, 1957, AMF authorized transmittal to AEC of a letter out-
lining certain tentative understandings regarding construction of a boiling-water
reactor at Elk River, Minn., subject to later completion and execution of a
definitive contract. AMF has reconsidered and reappraised further the un-
limited financial liability which it will incur under the proposal in this pioneering
field and has concluded that the risk of losses to AMF stockholders will un-
doubtedly greatly exceed the $1 million investment which we have already
made in this project and have continuously offered to make for furtherance of
the power-reactor program in small reactors. Nevertheless our interest in
this program remains as great as it was at the time our initial proposal was
made. We, therefore, ask that the following change be made in the above letter
and request that you seek approval from the Joint Atomic Energy Committee
as part of our understanding. As you know, the contract is a cost-type contract
without fee, unless the final cost is less than the present, ceiling (as specified).
This wTe propose not to change. The contract should have a ceiling recaste in the
light of the most recent reactor cost "experience" which have emerged during
negotiations. We believe that reactor-cost experience (including research and
development) show ranges from $750 to $1,000 per kilowatt in reactors of
greater power than the E)k River reactor and that smaller powered reactors
range from $1,500 to $2,000 per kilowatt, we, therefore, feel that the present
ceiling at $562 per kilowatt is inadequate and inequitable in view of the "cost
without fee" type of contract. The figure of $562 per kilowatt is derived as
follows: Ceiling $8,930,000 less $500,000 for superheater (to produce 7,000
kilowatts out of total 22,000 kilowatts) equals $8,430,000 divided by 15,000
kilowatts, or $562 per kilowatt. (The present ceiling was arrived at 9 months
ago and we have been denied all requests for adequate revision.) We feel that
a fair ceiling wToulcl lie somewhere between the ranges but, in view of our
hope that a quick approval may be obtained, we have selected for this offer the
lowest figure in the range ($750 kilowatt). By the above formula we obtain a
ceiling of $11,750,000 as follows : $750 times 15,000 or $11,250,000 plus $500,000 for
superheater (7,000 kilowatts) or $11,750,000. We do not believe that the Joint
Atomic Energy Committee, in enjoining the AEC to "maintain existing economic
advantages" in second-round contracts, meant that ceilings should be maintained
which at the time of signing the contract are clearly so inadequate that the
contractor must lose money over and above his set "contribution."
September 18, 1957.
Hon. Chet Holifield,
Chairman, Subcommittee on Legislation,
Joint Committee on Atomic Energy,
The Capitol, Washington, D. C.
Dear Mr Holifield: This letter is in response to your invitation yesterday to
Mi Roy B Snapp, vice president and group executive for the atomic-energy group
of American Machine & Foundry Co. to submit a statement for the record of the
POWEK DEMONSTRATION PROGRAM
15
hearings before your subcommittee on the matter of the increase in cost estimates
for the boiling-water reactor to be built at Elk River, Minn.
First, I want to express our extreme regret that the decision on the ceiling
costs of the AMF proposal had not been reached in time to permit an adequate
presentation to the Atomic Energy Commission prior to the appearance of repre-
sentatives of the Commission in connection with the request for a waiver of the
45-day requirement under section 111 (b) of Public Law 162, 85th Congress.
Accordingly, the Commission felt it necessary to withdraw the request for the
waiver of the time requirement with regard to the nuclear powerplant for the
Rural Cooperative Power Association of Elk River, the initiating sponsor of the
project.
I trust the members of your subcommittee did not interpret this action as
indicating withdrawal of our proposal. We are seeking an immediate review
of the original cost estimates with the Commission staff and hope very much
that the proposed new philosophy reflected in our revised proposal can be ac-
cepted by the Commission as a sound basis for a definitive contract.
In brief, we asked that the Commission increase our cost estimate from
$8,930,000 to $11,750,000 for research and development, design, construction,
fuel-element manufacture, test operation, and operator training. We propose
to pay up to $1 million of this amount.
As you know, the proposal is for a cost-type contract without fee. We seek
no change in this arrangement.
We have consistently opposed the principle of cost ceilings for this type of
developmental project. We believe that the manufacturer's contributions should
be straightforward, as in the case of our million-dollar offer, and that the true
nature of forward cost estimates for research and development work be recog-
nized as not properly applicable for fixed limitations.
But whenever the so-called ceiling limitation is imposed, it should be deter-
mined from the most recent cost experience available. As far as we have been
able to determine, the actual power reactor cost experience to date, including
research and development, shows ranges from $750 to $1,000 per kilowatt of
electrical output in reactors of greater power than the Elk River reactor, and
from $1,500 to $2,000 per kilowatt for reactors smaller than Elk River.
If one excludes the nonnuclear energy input from the superheater, the per
kilowatt cost of the Elk River reactor is $562 under the original estimate and
$750 under the new estimate. We actually arrived at our new estimate by
selecting the lowest figure in the range of actual recorded experience with power
reactor costs.
This seems to be a very reasonable procedure, inasmuch as no data is avail-
able to us indicating that anybody has been able to build a power reactor at
lower cost. We have asked the Commission to sit down with us and help us to
come to a determination of the proper estimates through a complete analysis of
the mass of cost data accumulating throughout the atomic power development
program.
We understand the very serious concern with which the members of the Joint
Committee may be expected to view the inevitable delay in the start of con-
struction of this project, we share the Commission's determination to have a
test demonstration of this reactor system at the earliest practicable time, and
we understand the disappointment of the members of the Elk River Cooperative.
In the face of these urgencies we were forced to recognize that no other course
was open to us.
As indicated in the testimony of Mr. Kenneth E. Fields, General Manager of
the Commission, the change in our position was made abruptly, between the
time of delivery of a letter outlining our general understandings on Saturday,
September 14, and the morning of the 17th, when we notified the Commission of
our reconsideration and reappraisal of the project and asked that changes be
made in the cost ceilings.
We felt compelled to make this sudden change on the basis of three major
factors. Perhaps none would have been compelling alone, but taken together
they constitute adequate justification for the submission of new cost figures.
In view of the almost national interest in the project, the clearly demonstrated
desire of the Joint Committee to speed the project, and the basic objectives of
the Atomic Energy Commission for small reactors in the power demonstration
reactor program, we decided to ask for an increase in the prices only after the
most thorough and thoughtful consideration at the highest corporate level.
97670—57 3
16
POWER DEMONSTRATION PROGRAM
The three major factors were—
1. The risk of losses to the company threatens to exceed substantially
the million-dollar contribution which we propose to make to this project
and, in fact, have already invested.
2. The cumulative cost experience with other power reactors already
built and operating, or nearing completion, is the most dependable cost
data available to us and we cannot, in conscience and responsibility ignore it.
3. We determined that the policy objectives of the national atomic energy
program as defined in the Atomic Energy Act of 1954 and as expressed by
the Commission for the establishment of an atomic power industry on a
sound economic basis, could be best served by a forthright acknowledgment
of the economic facts which confront us and a determined effort to conduct
all developmental operations on the most realistic cost basis possible.
As we told the Commission on September 17, our interest in this project
remains as great as it was at the time our initial proposal was made. We
believe it is important to the Nation's atomic power development program that
the system designed for Elk River should be carried through to full scale test.
This will be the first thorium-fueled boiling water power reactor and is of
unique technological interest. We believe that this reactor concept should be
pursued without regard as to who may be selected as the contractor.
In response to your direct question as to whether the assignment to the
Commission under Public Law 162 of new contracting responsibilities for this
and other projects has anything to do with our cost changes, the answer is no.
As a matter of fact, we see the new contracting arrangement as decidedly
advantageous from the standpoint of the cost to the Government, as well as
from the standpoint of the Elk River Co-op as sponsor. From our own stand-
point, the direct contract relationship with the Commission is simpler and con-
sequentiy should mean lower eosls and more expeditions conduct of the project.
The underlying reasons for my feelings on this point had been fully brought
out during the course of the negotiations. In part, our final decision to change
the ceiling figures was a result of the refusal by the Commission to give ade-
quate consideration to what your committee has described as "some protection
of the equipment manufacturer for increases in cost arising out. of develop-
mental problems beyond its control * * * provided on a cost-sharing basis."
Since assuming its new role under Fublic Law 102, the Commission has had
no occasion to reappraise our proposal from the perspective from which we
now seek to have it considered.
The reappraisal which we have made, and which Ave now ask the Commission
to make, is from the perspective that it simply does not make sense—for the
Commission, for the public, nor for the concerned contractor—regardless of
high motives in patriotism and public service, to carry out an important develop-
mental project such as this one under any conditions other than those which will
preserve and strengthen the capabilities of the contractor for future work in
the field.
One of the declared purposes of the basic atomic energy law of the Nation
is to strengthen free competition in private enterprise. "Buying in" to a
developmental project through a cost-absorbing proposal impossible for com-
petitors of lesser resources, with a view to future recovery of losses, is not
in keeping with the spirit of the law, and we do not believe it makes sense
from any standpoint. It is my firm belief that, the Congress, the Commission,
and the American people want the national atomic power development program
to go forward on the soundest possible basis, with full recognition and dis-
closure of the cost facts.
I believe it is of the utmost importance to the progress of the Commission's
program that all of the developmental projects be financed on a basis of full
consideration of the requirement for a sustained effort over a period of many
years. Otherwise, it will not be possible for American industry, perhaps with
the exception of a few of its giants, to continue at high levels the developmental
effort that is clearly called for if America is to maintain its position in the field
of atomic energy.
Please accept my apologies if the circumstances of this change have in any
way inconvenienced the Committee. I am aware of the extent to which our
action has affected the Commission's plans, and I would like to assure both the
Joint Committee and the Commission that we will do everything in our power
to make up for the lost time.
POWER DEMONSTRATION PROGRAM
17
Thank you for this opportunity to submit a statement of our position. If
there is any additional information which the members of the Committee or
its staff may desire, we will be happy to supply it.
Yours very truly,
Moeehead Patterson, Chairman.
Atomic Energy Commission,
October S, 1957.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr, Durham: The purpose of this letter is to inform you of the develop-
ments which have taken place on the Elk River situation subsequent to our last
meeting with your Committee on September 17, 1957. You will recall that just
prior to that meeting, I received word from Morehead Patterson, chairman of
the American Machine & Foundry Co., which nullified the previous AEC-AMF
understanding and proposed a new ceiling cost to the Commission of $10,750,000
for the development and construction of the demonstration power reactor for
the Rural Cooperative Power Association. I am sure that this action has
proved as disappointing t;> the Joint Committee as it has been to the Commis-
sion. Had AMF adhered to their agreement, we fully expected to execute a
contract within short order, subject to the waiver by the Joint Committee of
the 45-day waiting period.
During the past 3 weeks we have been in constant contact with AMF in an
attempt to reach agreement on a revised basis. In their most recent proposal,
AMF would assume, in addition to the previously agreed-to figure of $1 million
research and development cost, a 25-percent share of any cost overrun beyond
$8,930,000 up to a total AMF overrun liability of $1.2 million, with AEC to
assume any excess beyond that figure. The Commission has declined to accept
the open-ended responsibility which this proposal requires and has decided
to issue a general invitation for bids for a cost-type, maximum ceiling price,
contract for the RCPA power-reactor system. We plan to announce this
invitation very shortly, with the details of the invitation to be issued soon
thereafter.
In the general invitation for bids, we will ask the contractor to—
(a) Undertake design, development, fabrication, construction and initial
startup of a closed-cycle, boiling water reactor and its necessary appurte-
nances, including first core and separate fossil fuel-fired superheater, suitable
for installation in the RCPA system and capable of generating 22,000 kilo-
watts of net electricity.
(&) Test operate the plant,
(c) Train RCPA operator personnel.
The invitation will ask that bids indicate a maximum ceiling cost to the Com-
mission. A ceiling level will not be specified. Bids are to be submitted within
90 days of the invitation and the Commission is to be notified within 30 days
of intent to bid.
There has been no lessening of our conviction that the installation and opera-
tion of a low-power, closed-cycle boiling water reactor in a commercial system
would make an important contribution to the attainment of economic nuclear
power. We believe, however, that there is a reasonable probability of achieving
this goal at a lower cost to the Government than is represented by the AMF
proposals. To our knowledge, other equipment manufacturers are keenly
interested in developing a market for boiling water reactors and, through the
adoption of component design, fuel element configuration, or reactor structure
differing from those contemplated by AMF, may succeed in accomplishing the
objective at a lower cost.
We have been in touch with the Rural Cooperative Power Association on these
recent, developments. They have agreed to hold open their offer to participate
with the Commission in a demonstration project essentially on the same terms
as contained in our present agreement.
Sincerely yours,
R. W. Cook, Acting General Manager,
18
POWER DEMONSTRATION PROGRAM
General Fields. As you can see, I am still awaiting a formal de-
livery of the telegram. It does say that they will be unable to proceed
for reasons that they feel that the cost experiences to date are such that
the ceiling should be raised.
You se^, this arrangement was on a cost basis with AMF with a
ceiling price in it. If the cost of the construction went above that
ceiling price, this was to be a cost that they would then have to absorb.
They accepted the ceiling-price arrangement in a cost-type contract
but they feel that they need something like $3 million more in the
construction for this.
Eepresentative Holifield. What was the original estimated cost?
General Fields. The first proposal, I think we have that here, was
a little over $3 million. I will have to check that. I will have to
supply it for the record, sir. The first proposal is different than what
we submitted to you yesterday and it was less even than submitted
then.
(The information referred to follows:)
Mr. A. V. Peterson, vice president of AMF Atomics, Inc., in a letter to the
Rural Cooperative Power Association, dated November 17, 1955, quoted AMF's
estimated total price for design, construction and preliminary operations as
$2,985,000. He also quoted the guaranteed maximum price for the complete
engineering and construction of the reactor plant as $3,760,000.
Representative Holifield. On the second round I have a proposal
here dated June 19, that is, a staff memorandum dated June 19, with
analysis of all of the cooperative arrangements. This particular staff
submitted an estimated total plant cost of $8,136,000. The reactor
and superheater by AEC, at $5,686,000. There was a site and related
facilities value by RCPA, $700,000, and electrical generating facilities,
$1,750,000 by ECPA. That made a total of $8,136,000.
Now, I believe that is what you submitted to the committee during
the hearings; is it not?
General Fields. I believe it is; yes, sir.
Representative Holifield. That was raised over the original
estimate?
General Fields. Yes. You asked me to the original and I will have
to check that. The $3 million, as I recall it, for the reactor plant itself
was there, and there are other costs that total the $8 million figure you
are quoting.
Representative Holifield. The reactor as submitted here was $5
million?
General Fields. I think the $5 million figure is the one that relates
back to the original estimate which was $3 million to $3.5 million
against the $5 million, and I believe the other factors are approxi-
mately the same as in their original proposal.
I would like to confirm this for the record.
Representative Holifield. You tell the committee now that they
are asking for about $3 million increase over the $5,686,000?
General Flelds. Yes, sir.
Representative Holifield. Is that a firm price, or is that something
else?
General Fields. It is proposed that this would be a ceiling on a
cost-type contract with them. Thus, if they went over the total
amount of this new ceiling, that would be a fixed bid for that amount.
POWER DEMONSTRATION PROGRAM
19
If the costs were actually less, since it is a cost-type contract, then it
would be less to the Government than this ceiling price.
Representative Holifield. On page 203 of the hearings, the figure
of $3,760,000 was given for the reactor.
General Fields. I believe that is the one I referred to.
Representative Holifield. Later it was raised to $5,686,000, which
was presented to us also at that time as a raise. Currently it was the
estimated cost. Is it the $3 million figure that they now request, or
is it more?
General Fields. The total in the ceiling overall, you see there are
several items in this total for AMF to perform—as I understand it
on quick reading of this, it is that this new ceiling is something like
$3 million over the old ceiling that they would like in their contract.
Representative Holifield. That would bring it up in round figures
to around $11 million.
General Fields. That is true.
Representative Holifield. Are there any other differences in their
proposal?
General Fields. I haven't had time to analyze it, Mr. Chairman,
but that is the significant one. As I understand it, they do accept all
of the other provisions that we have negotiated with them on this.
Representative Holifield. We were told repeatedly during the de-
bate, and I remember Senator Thye, of Minnesota, saying on the floor
that this was lying on the desk of the AEC, and all it needed now
was a go-ahead signal, and they were ready to sign. Something has
happened in the meantime, apparently. What has happened in the
last 6 weeks? What would cause them to change their mind on that?
It is about 3 weeks, I guess it is. What has happened to change
the picture? Has there been any less advantageous terms offered to
the Elk River people or to the AMF than was offered to them before?
General Fields. I don't believe that there have been any changes
in these terms.
Representative Holifield. The Commission hasn't made any tighter
requirements on them, have they?
General Fields. Not that I am aware of. As a matter of fact we
went back to them on the basis required in the authorization act where
we would have the contract as between the Commission and AMF
rather than as between Elk River and AMF which was the basis
upon which we had been proceeding, as late as yesterday we thought
we had an agreement as between the three parties.
Representative Holifield. There was no objection on their part to
dealing directly with the Commission?
General Fields. I am not aware of any.
Representative Holifield. They didn't state any objection? This
change, then, of the amount has nothing to do with the legislation?
General Fields. Mr. Chairman, I cannot speculate as to what led
to this change in the last 24 hours, not having had the opportunity
to discuss it completely, to any extent, really, with the AMF repre-
sentatives.
Representative Holifield. In your opinion, this is going to be a
forerunner now of all of the rest of these cooperative arrangements?
Do you think this is the beginning of a pull-out on the part of the
manufacturers from going ahead on their contracts?
20
POWER DEMONSTRATION PROGRAM
General Fields. I hope it is not. We have had, of course, the
instance of the Wolverine contract.
Representative Holifield. Let us hear about that. What was that?
General Fields. This is somewhat similar, where the Foster-Wheeler
Co. found that they could not proceed on the basis of the costs that
they had estimated for the construction of the reactor for that purpose.
Representative Holifield. What was that?
General Fields. So they withdrew their offer.
Representative Molifield. What was the price that they had agreed
upon as presented to us?
General Fields. Roughly $5 million as I recall, Mr. Chairman.
They wished to increase this very substantially for this reactor to
the neighborhood of $14 million.
Representative Holifield. We have here, under the same date of
June 29, a reactor cost by the AEC of the original $2,835,000, and cur-
rently estimated cost at that time, on page 203 of the hearings was
$3,837,000. As I remember this, this was the Wolverine Cooperative
up in Michigan which showed a profit of $18,000 on their last year's
operations.
Now they are raising their estimate on that from $3,837,000 to how
much?
General Fields. I am not sure they are corresponding figures. The
comparable figures that I have, Mr. Chairman, on August 23 to the
joint committee were that the authorization for appropriations was
$5,472,000, and the company now states it is prepared to undertake
the work on a cost reimbursement basis only, and further estimates that
that would now total $14,426,000.
I would have to look through the records to find the compilation
of this $5,472,000 but it is substantially for all of the work that Foster-
Wheeler was to do under that proposal.
Representative Holifield. The first submission, did you say, was
$5,400,000?
General Fields. Yes; that was the authorization.
Representative Holifield. That was a flat price, wasn't it?
General Fields. It was a ceiling price arrangement, I believe, in that
instance, too.
Representative Holifield. That was a flat ceiling price?
General Fields. Yes, sir.
Representative Holifield. And I think it included some post-
construction research and development, didn't it?
General Fields. That was not in the $5 million, it was a separate
item and I would have to recheck the data sheets here.
Representative Holifield. I was trying to harmonize the figure of
$3 million with that,
General Fields. I cannot do that without additional records here,
sir.
Representative Holifield. It was $3,887,000, and I was trying to
reconcile that with the figure you used. I felt it was different in that
it was possibly construction development and research.
General Fields. It may be.
Representative Holifield. That has gone up three times and that
is no ceiling price, that is an open-end contract.
POWER DEMONSTRATION PROGRAM
21
General Fields. That is what they indicate would be the basis upon
which they would have to proceed, if they proceeded. We have now
under consideration some studies being performed of this by one of
our contractors, to determine what course of action we think we will
take with respect to Wolverine and we have not yet made such
determinations.
Chairman Durham. What do you attribute the increase of cost to,
on these items? Is it lack of experience in bidding on this sort of
thing?
General Fields. I think that had quite a bit to do with it, yes, Mr.
Chairman. We have had cost increases along the way quite a bit,
and some of this may be overoptimism at that stage, or inexperience,
and I don't know. 1 need to analyze this more carefully.
Chairman Durham. What are you doing with Wolverine at the
present time? Are you negotiating with them?
General Fields. We are not negotiating with them at the moment.
Chairman Durham. You are not?
General Fields. No, sir. We are taking a look at this, and deter-
mining on the basis upon which we think it would be technically an
attractive project, before we determine what course to take with
respect to it.
Chairman Durham. What type of reactor is that?
General Fields. This was a so-called homogeneous, but a so-called
burner upper, one region reactor which would burn uranium 235.
Chairman Durham. Is anybody else at the present time building
that type?
General Fields. I don't believe so. We have a reactor experiment
at Oak Ridge.
Chairman Durham. What about Elk River?
General Fields. That is a boiling water reactor.
Chairman Durham. You do have that type?
General Fields. There are several of those in various use stages and
types. There are actual reactors, powerplants.
Chairman Durham. But the Elk River is entirely a new concept?
General Fields. No, sir; it is not. It is a boiling water reactor, and
we have a boiling water powerplant at Argonne, General Electric has
one that is built at Vallecitos, which is slightly different. This has
a different cycle to it, an adaptation to it that has some attractive
features that we think on a basis that we originally proposed this in
conjunction with the authorization hearings, we felt it was a desirable
addition to the reactor program. We still do on that basis. I should
say that. Whether we will on a $3 million increase, I don't know. I
haven't had time, since I got this, to even form in my own mind what
1 would recommend to the Commission if it had to be on the addi-
tional $3 million basis.
Chairman Durham. Would that require new authorization in the
law?
General Fields. I am not sure. I am not sure whether this falls
within the 15 percent latitude or not. I haven't had time to even con-
sider that, Mr. Chairman.
Chairman Durham. I shouldn't think it would.
General Fields. Probably in the overall, it might fall within that
limitation. We would still have to submit it to the Joint Committee
22
POWER DEMONSTRATION PROGRAM
for the 45-day period or waiver but whether it requires additional
new authorization would depend upon the actual total amount, and
whether it fell within the latitude allowed there. But in the light of
this, Mr. Chairman, we regret it, and I am sure that the Rural Co-
operative Power Association whom we have been working with very
closely and who have been very cooperative in proceeding and at-
tempting to reach agreement here regrets it also. I think it has been
going along excellently, and it is unfortunate that this has developed.
I can understand that at the last minute there may be considerations
on the part of the AMF that overrule what they were proceeding on
in good faith before. But since it has come up at the last juncture, I
am not in a position, or the Commission is not, either, to come to you
and ask for a waiver of this at this time. I think that we need time
to review it and by the time that the committee can reconvene again, if
they can, say, late in October or something, I would hope we would
have this fairly clear in our mind as to how we wished to recommend
that we proceed on it.
Representative Holifield. Well, we are present here with two of
the cooperatives. How about the Piqua and Cugach? Have you
heard from them? Are the people doing that work ready to ask for
2 or 3 times increase in their estimate?
General Fields. Not that I know of, Mr. Chairman. We have sent
to Piqua and Cugach, a questionnaire designed to elicit more detailed
information concerning their conventional operating costs, and in
each of these cases, as you know, there is development work proceeding
with respect to the contracts rights now. We have not as yet heard
back from them in response to this questionnaire so that we haven't
moved forward any further than that with respect to them. But there
is development work on both of these going forward, as you know.
Representative Holieield. What is the date of the questionnaire
that you sent out?
General Fields. We have been in touch with them before, but it was
sent out on August 22, sir.
Representative Holifield. The committee would like to know if the
change in the law has had anything at all to do with this revision of
price on the part of the manufacturers.
General Fields. I cannot answer that. I have no opinion on that at
this moment, sir.
Representative Holieield. Well, has it changed the power of the
Commission to make a less advantageous deal, you might say, for
the Government?
Has it caused this increase from $5 million to $14 million in the
estimated cost of the Wolverine plant?
General Fields. I don't believe that you could say that the law has
resulted in that change. At least that is my preliminary opinion, sir.
Representative Holifield. Would it be fair for the committee to
draw the inference that after negotiating for from 18 to 24 months,
that when you got to the point of actually putting the signature on the
line, that you found out that you weren't as near ready to go ahead
as you thought you were during the time of the consideration of the
legislation for authorization?
General Fields. I don't believe so, sir. It is not in the case of the
Elk River arrangements. Up to yesterday we were all ready to sign
contracts with the information we had.
POWER DEMONSTRATION1 PROGRAM
23
Eepresentative Holifield. There was no action on your part, then,
or no indication on your part to the machinery manufacturers that
caused them to take this action?
General Fields. I don't believe so.
Chairman Durham. You were ready to sign the contract at the
original cost?
General Fields. On the basis of the arrangement we had submitted
to you as of Monday, yes, sir.
Representative Holifield. There was no communication from the
Commission to the manufacturers in any way which caused them to
revise their prices?
General Fields. Oh, absolutely not, Mr. Chairman. We have had
negotiations with them, and we have been doing so on a basis of the
arrangements as described in that letter yesterday to you.
Eepresentative Holifield. So the decision of AMF Elk River came
as a surprise to you yesterday?
General Fields. Yes, sir.
Representative Holifield. All right. Will you finish your state-
ment, then.
General Fields. The two arrangements which now therefore lie
before your committee are the result of detailed discussions between
the respective parties and represent agreement of the parties to the
principles underlying each arrangement. Definitive contracts respect-
ing the two arrangements are in various stages of negotiation, and we
anticipate that they will be ready for execution in the near future.
Our letters of submittal dated September 13, 1957, and September 16,
1957, formally requested the joint committee to waive the 45-day period
for which section 111 (b) of Public Law 162, 85th Congress, requires
these cooperative undertakings to lie before it. We hope that our
appearance here today will enable the committee to grant such a waiver
with respect to the Consumers and Northern States, arrangements so
that the parties may proceed to execute definitive contracts as expedi-
tiously as possible.
The committee may recall that in the Commission's September 13,
1957, transmittal letter covering the arrangements with Consumers
and Northern States the Commission pointed out that a recent opinion
of the Comptroller General of the United States relating to materials
procurement contracts had raised some doubts about the Commission's
authority to enter into long-term contracts. Commission personnel
met with representatives of the General Accounting Office, and we have
on several occasions, but on September 12, 1957, specifically, we made
a formal submittal of the Consumers arrangement to the Comptroller
General on that day and of the Northern States arrangement on the
following day. We have not, as yet, had any opinion from the Comp-
troller General on either of these formal submittals, but the General
Accounting Office has them under consideration. If you so desire, I
shall ask Mr. Diamond, the Commission's Acting General Counsel, to
explain the nature of the problem to you.
Eepresentative Holifield. I think that would be in order, because
you are asking the committee to grant you a waiver on an arrangement
which the Comptroller General has not rendered an opinion on^as yet,
and when in fact such contacts as you have had with him have been of
the nature of questioning your right to make that contract. I think
we would like to hear from Mr. Diamond.
97670—57 4
24
POWER DEMONSTRATION PROGRAM
Mr. Diamond. As Mr. Fields just pointed out, we have submitted
formal letters to the Comptroller General, requesting his opinion as
to the validity of the proposed arrangements with Consumers and
Northern States.
Representative Holifield. Under what date did you submit that?
Mr. Diamond. These were submitted I believe oil September 13 and
14. I think those are the right dates.
Representative Holifield. September 13 and 14?
Mr. Diamond. One was sent on the 12th and the other on the 13th.
Representative Holifield. You were aware of this problem long-
before this. You were aware of this problem when Congress was in
session, weren't you?
Mr. Diamond. I might say the problem arose originally in connec-
tion with the proposed procurement of magnesium. The question
arose about 6 months ago when we submitted a letter to the Comp-
troller General in connection with that procurement. We received a
reply in which the Comptroller General stated we didn't have the
authority to enter into that arrangement. We then resubmitted the
question because of the broad implications of the opinion that he wrote.
We only received a reply to this resubmission from the Comptroller
General within the last month.
Representative Holifield. On the magnesium contract?
Mr. Diamond. Yes, sir. He confirmed his earlier opinion and made
some other statements that had implications that seemed to involve
the type of arrangements that we were contemplating here, at least
the principles were broad enough to raise some question.
Chairman Durham. Did you actually submit a draft of the con-
tract or just the arrangements to the Comptroller General?
Mr. Diamond. We submitted draft contracts, at least in one case
we submitted a draft contract.
Representative Holifield. How can you in good faith come before
the committee and ask us to waive an arrangement which is under
consideration by the Comptroller General and has not yet been
decided to be in order?
Mr. Diamond. It is my opinion that the arrangement is a valid
one, particularly in the light of the legislative history. Moreover,
we have had informal conferences with the Comptroller General's
office, and I think there has been general acceptance of this view in-
formally. But we don't have any formal opinion from the Comp-
troller General yet. There might be a change, but I think the indi-
cations are based on our informal discussions that there is a very
great likelihood that we will receive a favorable reply.
(Subsequent to the hearing the Joint Committee received a letter
from the AEC forwarding the report of the Comptroller General on
the proposed contract between the AEC and the Consumers Public
Power District of Nebraska. The correspondence will be found on
P- 64.)
Representative Holifield. Well, I am inclined to think that the
legislative history shows that Congress did contemplate some long-
time arrangements in these specific instances. But your opinion and
my opinion, I am afraid, doesn't carry the same weight as the Comp-
troller General^ may carry. It does put us in a rather peculiar
position. You have a procedure possibly under challenge and ask
us to waive the 45-day waiting period, where possibly during that
POWER DEMONSTRATION PROGRAM
25
45-day waiting period, the Comptroller General, realizing the urgency
of the decision of the committee, might be constrained to speed up
his decision a little bit.
Mr. Diamond. I think this is one of the hurdles we have to over-
come before we can finally enter into a contract.
Another requirement, that is the statutory requirements that wTe
submit these arrangements to the Joint Committee, is a second con-
dition we have to meet. We are trying to comply with these require-
ments concurrently.
Chairman Durham. Suppose he does rule that you don't have this
authority?
Mr. Diamond. Then we will not be able to enter into the contracts.
Representative Holifield. What would be your procedure for the
Commission under those circumstances?
Mr. Diamond. Depending upon what the opinion states, we might
attempt to revise or revamp our contracts, if this is possible, or else
perhaps ask for statutory authority in the next session of Congress.
Chairman Durham. How long has the question been before the
Comptroller General?
Mr. Diamond. The formal submissions have been before the Comp-
troller General since the 12th and 13th of September. It is just a
matter of days.
Chairman Durham. No lawyer can render a decision in that length
of time.
General Fields. We have had it under discussion for sometime as a
result of the previous submissions. I am under the impression that
the Comptroller General is giving this some active consideration right
at the moment.
Representative Holifield. All right, we will proceed with your
statement.
Chairman Durham. You have the committee in rather a bad posi-
tion, however. You should clear these things before you bring them
up here, if you can.
Mr. Diamond. I don't believe the w^aiver by the committee would
really go to the question of our authority to enter into the particular
contracts. I think the waiver would be assuming the AEC has the
legal authority to enter into these contracts. The Joint Committee
would merely waive the 45-day waiting period.
Representative Holifield. This applies to both Consumers and
Northeastern States, this pending opinion?
Mr. Diamond. Yes; there are two separate letters that have been
submitted to the Comptroller General.
General Fields. Mr. Delmar M. Morris, the Division of Reactor
Development's Assistant Director for Administration, has been the
principal negotiator for the two arrangements now before you, and I
believe that he will be able to answer an}^ detailed questions you may
have.
In a letter dated September 14, 1957 (see p. 11), to me, Mr. Ramey
indicated that your committee would like a status report on the Com-
mission's other negotiations under the power reactor demonstration
program.
In the second round, as the Joint Committee already knows, the
Wolverine, as well as the RCPA proposals are now in abeyance, pend-
ing further consideration by the Commission as to what action it deems
26
POWER DEMONSTRATION PROGRAM
appropriate regarding the making of substitute arrangements for
obtaining design-development undertakings for the reactor plants.
Our letter of August 23, 1957, explained the circumstances of the
Wolverine situation and we shall keep you informed of further de-
velopments on this and the ECPA undertaking.
^ Immediately following enactment of Public Law 162 the Commis-
sion forwarded to Piqua and Chugach a questionnaire designed to
elicit more detailed information concerning their conventional operat-
ing costs. We have not as yet had responses from them in this regard,
but as soon as we do, we plan to initiate negotiations as expeditiously
as possible.
In the third round, the Commission is awaiting a revised proposal
from the Florida group and the staif is in the process of giving detailed
consideration to the proposal submitted by the Carolinas-Virginia
group on August 29, 1957. No other third round proposals have as
yet been received.
Mr. Barney's letter also requested the status of the Commission's
work on the gas-cooled reactor prototype, the plutonium recycle ex-
perimental reactor, and the production reactor for special nuclear
materials. Mr. Vance's letter of September 13, 1957 (see p. 3), which
forwarded the Consumers and Northern States request, our re-
quest for their waiver, also included a status report on these projects.
I and members of my staff are prepared to answer any further ques-
tions you may have in connection with these projects.
Mr. Chairman, I have Mr. Morris here, and Mr. Boddis, the Deputy
Director of the Division of Beactor Development, and Mr. Tammaro,
Assistant General Manager for Research and Industrial Develop-
ment. They will endeavor to answer any questions you have.
Representative Holifield. Let us take a look at the Consumers
project first, as it was first in line. What are the changes that have
been made since your submission to the committee?
Mr. Morris. There are no significant changes, Mr. Holifield. It is
the same basic arrangement that we contemplated earlier.
Bepresentative Holifield. Your postconstruction assistance, I be-
lieve you had 'a $2 million item and then we received a letter right
toward the end of the session indicating that vou wanted to raise that
to $8 million.
Mr. Morris. Yes, sir.
Bepresentative Holifield. We didn't have time, of course, at that
time to go into that matter. I notice that this is listed as postcon-
struction assistance. Will you break that down and tell us what what
that item is for?
Mr. Morris. Under this arrangement Consumers will pay all of the
normal operation and maintenance costs, and receive the steam in re-
turn for paying these costs. The Commission has undertaken or will
undertake to pay the costs of extraordinary maintenance, and the costs
of the fuel above a certain amount.
Bepresentative Holifield. Is that the fabrication of the fuel? You
have a waiver of fuel use, $1,325,000, and so you must be talkingubout
the fabrication and processing of fuel.
Mr. Morris. The Commission will pay the cost of fabricating the
first core. Beyond that, consumers will pay all fuel costs up to $36.40
per kilogram of uranium fed to the reactor. The Commission will
pay the excess costs above $36.40 per kilogram. The estimated amount
POWER DEMONSTRATION PROGRAM
27
of this assistance in the fuel cost area and extraordinary maintenance
is estimated to be $8 million over the 5-year operating period.
Representative Holifield. How much is that?
Mr. Morris. $8 million over the 5-year operating period.
This is exclusive of the waiver which is shown separately in our
submission.
Representative Holifield. This will apply strictly to the fuel costs?
Mr. Morris. Yes, sir; and the extraordinary maintenance.
Representative Holifield. What would come under that? Is that
additional personnel to operate the reactor?
Mr. Morris. This would cover the cost of replacing certain compo-
nents which might fail which would be considered to be beyond the
expectations of normal maintenance.
Representative Holifield. This would in effect be a subsidiary for
operation.
Mr. Morris. It will be picking up the excess costs of extraordinary
maintenance and fuel costs, and I might say that this leaves Con-
sumers in a position where on an estimated basis they expect their
operating costs to be in the same range as conventional power costs.
Representative Holifield. Then does that mean that they will re-
ceive the steam at a conventional price?
Mr. Morris. They will receive the steam in consideration of paying
the normal operation and maintenance costs, and fuel costs up to this
point where we take over. This is estimated to be in the same range
as conventional prices; yes, sir.
Representative Holifield. Now, in the report on the Consumers
case, we didn't provide any item there for waiver of fuel-use charge.
Why was that? In the breakdown which you gave us, why was
that?
Mr. Morris. This will be a Government-owned reactor.
Representative Holifield. So this waiver of fuel-use charge here
is actually a computation of fuel-use in a Government-owned reactor?
Mr. Morris. Yes, and another way of looking at it would be that
if we don't charge ourselves fuel-use charges, it disappears.
Representative Holifield. Do you think that is consistent with
what the committee did?
Mr. Morris. Yes, sir; we do.
Mr. Ramey. Was that question considered, that the committee had
cut out any waiver for the Consumers project because it was a
Government-owned project and now you are putting in a waiver?
Is that consistent and has that been considered seriously?
Mr. Morris. Well, I can't say it has. But in the arrangement
which contemplates that the Commission will pay all costs of fuel
above $36.40 per kilogram, whether it is in or out it appears to me
to be insignificant in this arrangement.
Representative HoLiFrELD. Well, it is insignificant unless it estab-
lishes an important principle. I am not commenting on it one way
or the other, we are exploring the reason for you placing it in when
we did not have it or we didn't feel it was necessary to put it in the
cooperative arrangements where the Government owned the reactor.
Chairman Durham. How would that affect the request for appro-
priations? Do you request the item there?
28
POWER DEMONSTRATION PROGRAM
Mr. Morris. The fuel-use waiver is not out-of-pocket cost to the
AEC.
General Fields. It is a requirement that there be a consideration of
it. It is required in the act that there be waivers, and resting 45 days
before the committee. I would have to go back and search the record
but I think the waiver is not in there "because it is a Government-
owned reactor and this is true, I believe, in the case of the second-
round proposals that are there, But could we look the record over
and submit this for the record?
Representative Holifield. I think we ought to clear this up.
General Fields. I think that we should, too.
The reason it is in here is to show comparability in the total
assistance.
(The AEC subsequently informed the Joint Committee that uthe
waiver was a nonfund item and was not included in the appropria-
tions.")
Representative Holifield. I think it is all ri^ht as a matter of
keeping track of the amount that it is costing the Government, but
as I understand it this program justification under September 13
has it down there, Is that amount carried in the contract?
Mr. Morris. No, sir. The amount carried in the contract is $8 mil-
lion. The reason it was shown in this statement was to show com-
pletely and in comparison with previous statements the value of AEC
assistance.
Representative Holifield. The waiver fuel cost charges are added
to the $8 million and it is not part of the $8 million?
Mr. Morris. That is right. It is not part of the $8 million.
Representative Holifield. I can't see any sense in waiving the
fuel-use charges, where it is the Government's own reactor. I could
see it if it was private industries reactor.
Xow of course we naturally haven't time to look at this contem-
plated contract. TTe only received it I think within the last day or
two and part of the staff has been on vacation, and Mr. Durham and
I just arrived here this morning. But I did notice in going through
the program-justification data which you presented to us, on page -1,
under item aH," you have in case of an invention or discovery is made
by Consumers iii connection with the work under the contract, the
Commission will receive a nonexclusive irrevocable royalty-freo
license for governmental purposes. Is this some peculiar type of a
patent arrangement?
The Commission is entitled to patent rights on its own research and
development work, not only for governmental purposes but for release
to all other private industry. I don't have the language of the patent
provision before me in the contract so I am unaware as to what the
exact language is. Should you submit a copy of that draft? Could
we see one to look at?
Mr. Morris. The draft contract, you mean, sir?
Representative Holifield. Yes.
Mr. Morris. Yes, sir; we could.
Representative Holifield. I mean just to look at ri.Mit at this
moment so I can see what I am talking about on this matter.
Mr. Ramey. Does the Commission have different oaten* arrange-
ments with the equipment supplier where the Commission is putting
the money in?
POWER DEMONSTRATION PROGRAM
29
Mr. Diamond. We do. We have the right to make determinations
with respect to all inventions that are conceived during the fabrication
or construction of the reactor, with the equipment contractor retaining
a nonexclusive royalty-free license.
Mr. Eamet. That is a direct contract you have with North Ameri-
can; in that case?
Mr. Diamond. We do not have the contract yet, but it is contem-
plated it will be a direct contract.
Representative Holifield. Why do you have this in for the Con-
sumers? Where do they obtain any patent rights?
Mr. Diamond. This is in connection with operation of the reactor
itself. The likelihood of inventions being made during that period
I think are rather small compared to inventions that might be made
during the course of a fabrication or development work.
Representative Holifield. I think that is true. That is one reason
why I asked the question.
Mr. Morris. Consumers is bearing the normal operation and main-
tenance costs and taking the risks of these costs.
Representative Holifield. What did you say?
Mr. Morris. Consumers will bear the normal operation and main-
tenance costs, and take some risks in that respect, which led us to
give them this patent arrangement.
Representative Holifield. What risk will they take, if you are
going to give them a cushion for the first 5 years over and above con-
ventional costs of steam?
Mr. Morris. We are protecting them in two areas. That is the
extraordinary maintenance and the fuel. The other elements of cost
may vary from their estimates, and they will get no protection. Fur-
thermore, Consumers is putting $5,220,000 into the capital cost of this
reactor, which they may or may not receive return from.
Representative 'Holifield. Well, of course, any donation that they
put in is just like any other. There have been grants or donations
made by other companies. There was in the case of the Army package
power reactor also. There were some grants on that, but the Govern-
ment owned it.
Mr. Ramey. Is your theory there that the Commission is not putting
any money into the operation and therefore you do not take title to
patent rights?
Mr. Morris. The Commission is putting some money in.
Mr. Ramey. But you are still nevertheless not taking title, and you
are letting them take title and you are just picking up the other part?
Mr. Morris. As we pointed out the research and development and
construction will be under separate contracts where we will expect to
get title to patentable inventions.
Representative Holifield. How do you interpret the phrase "for
governmental purposes"?
Mr. Morris. In connection with such work as will be done.
Mr. Diamond. This would refer to the Commission's programmatic
activities, that is, reactors that we build in connection with our own
programs.
Representative Holifield. But it would not apply to granting the
right to use these patents to all other participants in industry?
Mr. Diamond. It would not.
30
POWEB DEMONSTRATION PROGRAM
Representative Holifield. Do you feel justified in deliberately
ruling yourself out from a sole governmental right to this patent to
do as they please not only for governmental purposes, but to make
known to industry itself, where you own the reactor and put in a high
percentage of the money involved—where you furnish the fuel, and
you fabricate the core, and you furnish an $8 million operating fund,
and yet you give away the patent rights?
# Mr. Diamond. I think this is a matter which results from negotia-
tions. I think that there are some equities on the side of Consumers
here. They are making a financial contribution to the project, and
they are assuming some risks with respect to operation. Furthermore,
as I pointed out earlier, the likelihood of any inventions occurring
during operations is rather slim, and so I do not think that there is
anything of real value that the Commission has given up.
Representative Holifield. But yet you have very carefully put
in something there so that if there is anything of value, Consumers
will have it.
Mr. Diamond. And the Government will have it for governmental
purposes.
Representative Holifield. The Government will have it for use in
its own reactor, but not to release to industry generally, although the
majority part of the cost has been paid by the Commission.
Mr. Ramey. Is this what you might say is a departure from normal
AEC policy, where the Commission puts money into any research and
development work or operation work, it has a right to pick up the
title?
Mr. Diamond. Generally the Commission would under such cir-
cumstances retain the right to dispose of patents as it saw fit. As I
say, this is the result of negotiations.
Representative Holifield. Did the Consumers require this, and
would the Consumers people be interested in patent rights? They are
distributors of electric current, and they are not manufacturers of
equipment, Isn't this a bit odd? I ask you again, did the Consumers
require this provision?
Mr. Diamond. May I consult with my colleagues for a moment? I
am told that they did insist on this.
Representative Holifield. Now, I had a talk this morning with
Mr. Schacht, and I got just exactly the opposite conclusion, and so
when Mr. Schacht comes to the stand, I am going to ask him the same
question—if the Consumers required this.
Mr. Diamond. My information may be wrong, but that is what I
am told.
Representative Holifield. All right.
Mr. Fields. Mr. Chairman, could I return to just one point? On
this waiver, I notice that the report of the committee does indicate
that in our submittal we had indicated this waiver amount to the
committee itself. However, in the action taken, although cognizance
I presume was taken, because here if the second round reactors were
Government-owned, it was not necessary to grant waivers. I should
not say "grant" but for the committee in its authorization to take
cognizance of this. But I wish the record to show that we did submit
thfs same amount, $1,325,000, to your authorization committee and
cognizance was taken of that fact in the report.
POWER DEMONSTRATION PROGRAM
31
Mr. Kamey. But the total authorization did not include this
amount, though, did it?
Mr. Fields. In your total authorization, you authorized $20 million,
as I recall, for the third round. There was no other authorization of
waivers other than those that were listed. You did not have to au-
thorize other waivers at that time.
Representative Holifield. There would not be any money in there
then, on that basis, would there?
Mr. Fields. There is no money in here for the second round, either,
but you take cognizance of that in your report, since it is a government-
owned reactor, and it seems to me that has taken care of the necessities
of the law.
Representative Holifield. In terms of money, in other words, they
authorize this amount of money, but not in the authorizing of it as a
basis for an actual waiver of use materials. That may be the way the
committee operated.
Mr. Fields. Well, that is a different construction than we have put
on it. It seems to me at the moment here that we have construed—that
it would be, since it is a Government-owned reactor, a part of total
cost of the project. It would be allowable.
Mr. Ramey. But the law as you have indicated merely authorizes
$20 million, and I think the legislative history was pretty clear that
that was intended for the third round.
Mr. Fields. That is right.
Mr. Ramey. So then how can you have a waiver for the first round?
Mr. Fields. How can we have a waiver for the second round, I ask
you, too, because we asked for it.
Mr. Ramey. And you could not have it for the second round, either.
Mr. Fields. I presume the record shows that the Joint Committee
was cognizant of this and felt because they were Government-owned
reactors that waiver action was not necessary in the authorization bill
itself. I think you have to proceed on that basis.
Mr. Ramey. I think that there—and again it is subject to review
here—there might be a contrary interpretation that since they were
Government-owned reactors there was no waiver necessary.
Mr. Fields. That is the interpretation we have put on it, but we are
indicating it here as a part of the whole package.
Representative Holifield. I notice in your cooperative presenta-
tions that you did not present them on the basis of a waiver of fuel.
You presented it on the basis of a fuel inventory; is that right?
Mr. Fields. The budget proposals had indicated the amounts of
materials, as I recall, in them but I think that our submittals also did
have an estimate of what would be involved in the use charges with
respect to materials that would be in the inventory or in the reactor in
the course of this.
Mr. Diamond. I might point out that the contract itself is silent with
respect to the waiver of use charges. This is consistent with the idea
that there is no waiver of use charges as such.
Representative Holifield. I have no objection to it as a bookkeep-
ing item. I think that we should know what it is. However, I think
that I take the same position Mr. Ramey takes; that the $20 million
authorization was for the third round. We took the position that the
cooperative arrangements were Government owned and therefore there
97670—57 5
32
POWER DEMONSTRATION PROGRAM
was no need from an authorization standpoint for you to have an
authorization to use fuel in the Government's own reactors. I think
that that ought to be pretty clearly understood. I just can't see the
implication. I don't know what it would be of setting a precedent for
doing that at the present moment.
Mr. Fields. I think it should be cleared up also.
Representative Holifield. Perhaps it is all right, but I think as a
principle the Government should not have to consider paying itself
for its own fuel in its own reactors.
Mr. Diamond. I do not believe there is any difference between the
Commission's and your views, and Mr. Ramey's views. I think that
we acted along those lines in writing the contract, because there is no
reference at all to the waiver of use charges.
Mr. Ramey. Then possibly this submittal might be amended, that
the waiver of use charge is not part of it, then, because it is a variance,
it seems to me, from what our understanding was.
Mr. Diamond. I believe this change could be made to show it is more
a matter of bookkeeping, rather than any formal waiver of use
charges.
Representative Holieield. Are there any other changes? We have
not had a chance yet to study this, and we are going to hold in abey-
ance our decision until we do have a chance to study it, but can you
call our attention at this time to any other change in the consumers
contract?
Mr. Morris. You are referring, I think, to these factors.
Representative Holifield. The Government is entitled to the plu-
tonium, per se.
Mr. Morris. That is right, and I can think of no other significent
changes as compared to the arrangement described to you in earlier
hearings.
Representative Holifield. Are there any further questions on that?
Are there any questions from members of the staff on the Consumers
case? If not, let us pass on to the next question, the Northern States
project.
This is the first time that we have had this before the subcommittee,
because it was not in condition to be put before us before. So I think
that we might give the specifics of this arrangement, Mr. Morris.
Mr. Morris. The Northern States Power Co. has undertaken to
build a boiling water type reactor plant of 66,000 kilowatts capacity
at an estimated cost for development, fabrication, and construction
of some $21,600,000. They have requested assistance from AEC in
the preconstruction and development period and for preconstruction
research and development work of $5,500,000, and for $500,000 of
research and development work during the postconstruction period,
and for waiver of fuel use charge up to a ceiling of $1 million, for a
total amount of AEC assistance of $7 million.
Northern States Power Co. contemplates that the design, research,
development, and construction will be performed by the Allis-
Clialmers Co.
Representative Holifield. What do the initials CUAPA refer to?
Mr. Morris. That is Central Utilities Atomic Power Associates.
That is a group of 10 utilities neighboring there who are furnishing
$3,650,000*to this project in return for certain information and experi-
POWER DEMONSTRATION PROGRAM
33
ence, There will be no contractual relationship between the AEC
and the Central Utilities Atomic Power Associates, but a portion of
the financing for the Northern States undertaking will be obtained
from this group of utilities.
Representative Holifield. That is $200,000, is it?
Mr. Morris. The amount of financing provided by tliese 10 neigh-
boring utilities is $3,(>:>0,000. That is shown on page 8 of our sub-
mission.
Eepresentative IIolifield. What is the total contribution in this
of the AEC?
Mr. Morris. Seven million dollars, including waiver of fuel use
charge in the amount of $1 million. The remainder of the AEC
financial assistance is entirety for research and development work.
Eepresentative IIolifield. What is, the postconstruction research
and development of $1,700,000? Is that furnished by the AEC?
Mr. Morris. $500,000 of that would be furnished by AEC for spe-
cific research and development work to be specifically defined in the
contract.
Chairman Durham. Why do you limit the operations to 5 years?
Mr. Morris. This is the duration of our contract period. Northern
States will continue to operate it indefinitely, and our feeling is that
we will obtain the information we are seeking within this 5-year
period.
Eepresentative Holifield. Will you please describe the postcon-
struction research and development? You mentioned $500,000 of the
$1,700,000 and what about the other $1,200,000?
Mr. Morris. The $1,200,000 is then to be provided by Northern
States, and this has not been defined.
Eepresentative IIolifield. That is not an AEC contribution?
Mr. Morris. No, AEC's assistance is $500,000. As I say, this is
to be defined in the definitive contract as specific research and develop-
ment work.
Eepresentative Holifield. Well, now, is that consistent with the
committee report which on page 20 and paragraph No. 3 states:
Provision is made in the third round for postconstruction research and de-
velopment assistance which if attempted to be applied as proposed in the second
round which involves only Government-owned reactors, could result in outright
subsidies to the operators of private reactors. ( The committee does not approve
the obligation of funds by the AEC for private research and development con-
tracts which are in effect a subsidy for operational costs of private licensees.
Such a proposal would raise grave questions as to violation of section 169.
Information and data accumulated as a result of postconstruction operations
should be available to the AEC as part of a privately owned reactor's obligation
for preoperation assistance from the AEC. The committee recognizes that AEC
may contract for special services from any private reactor owner on the basis
of commercial services rendered.
Leaving out that last sentence that I read there, which the committee
recognizes as an area, do you consider that your $1,200,000?
Mr. Morris. That is Northern States $1,200,000.
Eepresentative Holifield. I am talking about $500,000.
Mr. Morris. That will in no way be used to defray operating costs.
We do not yet have a definitive contract with Northern States^ but it
is the intention of both parties to specifically define research and
development work that will be outside of any consideration of paying
operating costs. to
34
POWER DEMONSTRATION PROGRAM
Representative Holifield. In other words, the information that you
get as a result of the operation of the reactor would come to you gratis.
Mr. Fields. As a part of the contract, yes, sir.
Representative Holifield. But if there was some specific work you
wanted done, outside of the ordinary operations, why, this amount
would not apply to that?
Mr. Fields. That is right.
Representative Holifield. So that would come within the meaning
of the last sentence in that paragraph.
Mr. Fields. This could be special work on looking at the fuel ele-
ment, and how they behaved and experimentation with respect to those
that had been in it for some time. That would be rather just the rou-
tine of the processing and recovery of the material in them. It is
looking at things that you would not ordinarily do. Once you get in
a power operation, they would not be a part of the operating cost.
But this is special things, what went wrong with this, and why did it
fail at 2,000 hours, instead of 3,000 hours.
Representative Holifield. The committee has no objection to that
type of thing.
Mr. Fields. It is that type of thing in the third round.
Representative Holifield. And clear-cut contracts. We do not
want it to be used as a subterfuge for possible construction operation,
of course, which is not in accord with the committee's ideas.
Mr. Fields. We understand that; yes, sir.
Mr. Ramey. On that postconstruction research and development,
would you pick up the patents like you would on your other construc-
tion?
Mr. Morris. All patent rights for research and development work
paid for by the Commission will reside in the AEC.
Representative Holifield. That applies to preconstruction as well
as postconstruction?
Mr. Morris. Yes, sir. I would like to call to your attention a mis-
take in arithmetic on page 7 of our submission.
Representative Holifield. All right.
Mr. Morris. Where the total is $21,600,000, in the first column. It
should be $27,100,000.
Representative Holifield. Is this contract consistent with the
Yankee Atomic Power contract?
Mr. Morris. Very similar to it.
Representative Holifield. There is no basic difference, is there?
Mr. Morris. There is no basic difference.
Mr. Fields. As I recall in the other two, there is no postconstruc-
tion research and development assistance.
Mr. Morris. That is right; yes.
Mr. Ramey. In terms of your rights to information, the GAO's
access?
Mr. Morris. That has been taken into consideration here, and such
rights will be fully spelled out. I might point out that in this case
the AEC is contracting directly with Northern States Power, and it
will be a direct two-party arrangement, and it will not be contracting
with a group or a newly organized company.
Representative Holifield. The Northern States, that is one cor-
poration, is it?
POWER DEMONSTRATION PROGRAM
35
Mr. Morris. That is right.
Representative Holifield. Has there been any difference in the cor-
porate setup of the Northern States since the original submission to
the committee of their proposal.
Mr. Morris. No, sir.
Mr. Fields. This proposal, as I understand it, is conformed to our
third-round invitations, from the very beginning, and there have been
no changes in it.
Representative Holifield. This group that is contributing toward
it, that is a separate contract between the CUAPA and the Northern
States?
Mr. Fields. Yes, sir; and there is no contractual relationship be-
tween the AEC and this group.
Mr. Ramey. Is it consistent with your other financial data and
information that was submitted during the authorization hearings on
Northern States?
Mr. Morris. Yes; nothing has changed.
Mr. Ramey. Is your patent arrangement similar to Yankee and
PRDC?
Mr. Morris. Yes; that is the patent rights with respect to the work
AEC is paying for will reside in AEC, and the other party will receive
a nonexclusive license with respect to the work they are paying for,
and it would be just the reverse.
Mr. Ramey. That is to say, they take title and the AEC
Mr. Morris. With respect to the work they are paying for; yes, sir.
Representative Holifield. Has the presentation of this arrangement
with the Northern States people in Minnesota had any effect upon
your consideration of the Elk River Cooperative group? Is your
situation in getting this the basis of disqualifying the other people
in any way?
Mr. Fields. In my mind, it is completely independent.
Representative Holifield. It is completely independent?
Mr. Fields. Yes, sir.
Representative Holifield. And the Commission is still of the opin-
ion that the type of reactor proposed by the Elk River people, which
they plan to build, is still desirable?
Mr. Fields. It was our opinion as of yesterday. It was desirable
on that basis as it was submitted, and if we had that same basis today,
I would say it would be desirable; yes, sir. With this increase in
costs that has come into the picture, I do think that we need time to
reconsider it, and see what our opinion is on that, sir.
Representative Holifield. Unless there are further questions on
that, the committee will excuse the Commission witnesses at this time,
and ask them to stand by, while we call to the witness table these
other witnesses. First we will give the courtesy of the witness table
to Mr. William J. Connell, Senator Humphrey's representative.
I understand you have a statement to make on the Elk River matter.
36
POWER DEMONSTRATION PROGRAM
STATEMENT OF WILLIAM CONNELL, ASSISTANT TO HON. HUBERT
H. HUMPHREY, A UNITED STATES SENATOR FROM THE STATE OF
MINNESOTA
Mr. Connell. Thank you very much, Mr. Chairman, and members
of the commit"ee. As soon as we were notified by the committee staff
this morning that the Atomic Energy Commission would not present
the Elk River proposal before the committee today
Representative Holifield. Will you pause just a moment and give
3-our full name and 3Tour official position?
Mr. Connell. I am William Connell. I am assistant to Senator
Hubert H. Humphrey.
As soon as we were notified hy the committee that the Commission
would not present the RCPA proposal at this meeting, I was in touch
with Senator Humphrey, who was out of the city, and he instructed
me to check with the Atomic Energy Commission and with the RCPA
people to determine just what the story was. The information Ave
received from the Atomic Energy Commission was rather vague.
There was some indication that perhaps the whole project was com-
pletely on the skids. Therefore, I know that Senator Humphrey will
be very gratified to hear from the Atomic Energy Commission that
the matter is still very much under consideration, and that there ma3^
be a possibility of working out something.
I had merely wanted to bring to the Joint Committee the Senator's
deep interest in this project, and to ask certain questions of the
Commission which I believe have now been answered.
Representative Holifield. We are aware, of coiirse, of Senator
Humphrey's deep interest in this matter. He has conferred with
members of the committee, and also with the staff on many occasions,
as has his office. Of course, this comes as a surprise to the committee,
as well as apparently to the Commission.
Mr. Connell. It comes as a surprise to everybody, and in fact,
the Elk River people did not know about it this morning until we
called them.
Representative Holifield. Is that so?
Mr. Connell. Yes, sir.
Representative Holifield. That is an amazing statement that their
supplier did not inform them, as people they were working with on
this matter. It appears to the chairman of the subcommittee that
this is a very abrupt decision on the part of the American Machine &
Foundry people. I hardly think the records will be clear unless we
get a statement from them as to what has caused this abrupt with-
drawal of their x^roffer to build this reactor.
Mr. Connell. Yes, sir. I tried to get in touch with the president,
who is in town, I understand. Pie is in town today, but I could not
reach him before the 1: 30 meeting today. It might still be possible
to reach him.
Chairman Durham. What kind of a contract did the Elk River
people have with the American Machine & Foundry Co.?
Mr. Connell. It was a contract for the construction of the reactor
and the superheater in the amount of approximately $5,868,000.
Chairman Durham. Was it a fixed-price contract?
POWER DEMONSTRATION" PROGRAM
37
Mr. Connell. It was a cost-plus contract with a ceiling I believe
of $5,868,000.
Representative Holifield. The committee sent a telegram under
date of September 14 to several people that are interested in this
matter, and among those was Mr. A. V. Peterson, vice president of
the American Machine & Foundry, and invited him to appear here
today. At this time the Chair would like to inquire if Mr. Peterson
is present in the audience, or if any other representative of the Ameri-
can Machine & Foundry Co. is present?
The Chair observes that no one rises, and so it is assumed that no
representative of the American Machine & Foundry Co. is present,
although the Chair is informed informally that there was a repre-
sentative present here at the beginning of the meeting.
The Chair is also informed that a member of the staff recognized
the American Machine & Foundry Co. representative in the audience
and asked him if he wanted to testify today, and apparently he did
not. The Chair, if he had known he was present, would personally
have advised him to testify.
Did you have anything further to say?
Mr. Connell. No; except to correct the record. I believe it was
Senator Humphrey who said on the floor that it was his understanding
that this contract was ready to be signed, on the desk of the Chairman
of the Atomic Energy Commission, and it could be signed in a matter
of weeks. I believe that was the story up until yesterday. He will
be glad to know that the Atomic Energy Commission apparently was
ready to sign this contract.
Thank you.
Representative Holifield. Thank you, Mr. Connell.
Mr. Robert Forsythe, administrative assistant to Senator Thye, is
present. Mr. Forsythe, would you like to make a statement on behalf
of Senator Thye?
STATEMENT OF ROBERT A. FORSYTHE, ADMINISTRATIVE ASSIST-
ANT TO HON. EDWARD J. THYE, A UNITED STATES SENATOR
FROM THE STATE OF MINNESOTA
Mr. Forsythe. My name is Robert A. Forsythe, administrative
assistant to Senator Thye of Minnesota.
Mr. Chairman, I just want the record to show that Senator Thye
wished to be represented at this hearing today, and to assure the com-
mittee that on this particular occasion the contract involving Elk River,
the feeling of the two Senators of Minnesota were most similar, and I
can assure you that both were shocked this morning when we heard at
9 : 30 or 10 o'clock that A. M. & F. was withdrawing temporarily from
this contract.
The Senator's surprise can be indicated best by reference to the letter
which you received in your files this morning in which he again brought
to the committee's attention the fact that this contract had been under
negotiation for many months and was ready for final negotiation and
signature by all parties concerned. We trust and hope that in the
interim period, between this meeting and the next meeting of the com-
mittee, negotiation will take place which will allow this very impor-
tant project in Minnesota to go forward. That is all I wish to say.
38
POWER DEMONSTRATION PROGRAM
Representative Holipield. Thank you, Mr. Forsythe.
The committee received a telegram under date of September 16 from
O. N. Gravgaard, president of RCPA, which reads as follows:
Elk River, Minn., September 16,1957.
James T. Ramey,
Capitol Building,
Washington, D. C:
Appreciate committee invitation to appear and wish to compliment the commit-
tee on their strong interest in respect legislation and activities expedition this
fine program. In view of our having reached complete agreement on major points
with the AEC and their agreement to request waiver of the 45 days it appears
that aU matters of this interest between our cooperative and the AEC have been
settled. We therefore see no advantage in taking up the committee's time further
and duplicating what the AEC will present. Further delays will seriously handi-
cap the cooperative supply position and the manufacturer cost problem. The
Joint Committee's interest in expediting conclusion of all these arrangements is
sincerely appreciated and our association urges in these interests that the
committee can find a basis for waiving the 45-day period.
Sincerely,
O. N. Gravgaard, President, RCPA.
Representative Holifield. That is the Elk River Association. That
was evidently before he received the news.
Mr. Kenneth M. Olds, attorney from Wayne, Nebr., representing
the Nebraska Generating & Transmission Cooperative. Mr. Olds, are
you present, sir? Would you like to make a statement?
STATEMENT OF KENNETH M. OLDS, ATTORNEY, REPRESENTING
THE NEBRASKA GENERATING & TRANSMISSION COOPERATIVE,
WAYNE, NEBR.
Mr. Olds. Yes, sir. I would. My name is Kenneth M. Olds, attor-
ney of Wayne, Nebr. I am representing the Nebraska Generating &
Transmission Cooperative, which is an organization of 22 rural public-
power districts in the State of Nebraska. The public-power districts
are what we commonly call the REA's, and they serve approximately
50,000 rural consumers in Nebraska. We are appearing here in con-
nection with the proposal of Consumers Public Power District.
We want to make it clear that we are not opposing the construction
of an atomic plant in Nebraska, and we also want to make it clear
that our organization has no plan or proposal to construct a plant of
its own. We are only raising the question that we feel we should
have an opportunity to review and consider the proposal that has
been submitted by Consumers, together with the AEC.
We in Nebraska first learned of this hearing, I believe Saturday,
in the newspapers in Nebraska, and we immediately took steps to
send a telegram, and copies of which I have here available to the
committee, and I would like to leave with the committee. I have extra
copies, and I believe the chairman perhaps has the original of that
telegram.
Representative Holipield. The Chair has the original and it will
be placed in the record at this point.
POWEE DEMONSTRATION PROGRAM
39
(The following telegram was sent to the Subcommittee on Legis-
lation of the Joint Committee on Atomic Energy by the Nebraska
Generating & Transmission Cooperative on September 15, 1957:)
Lincoln, Nebr., September 15,1951.
Re hearing on contract between Atomic Energy Commission and Consumers
Public Power District.
Our first notice of your Tuesday bearing was carried in tbe press yesterday.
We respectfully ask permission to intervene and be beard after studying tbe
contract. It was not until 2 days ago tbat we learned through the news services
that a contract bad been negotiated.
Representing 22 rural electric districts in Nebraska, we urgently request an
opportunity to study the Consumers District contract with AEC before it is
approved by Congress. We have had no chance to see this contract. Rural
electric users in Nebraska object to secrecy and haste. The 45-day waiting
period was intended by Congress to safeguard the public interest.
We support an atomic-fueled powerplant for Nebraska provided it does not
adversely affect our customers.
We must be assured that the construction of the proposed plant is timed and
coordinated into the State power program and that our users, including irrigators,
are not deprived of their fair share of low-cost power.
A. G. Sydon,
President, Nebraska Generating d- Transmission Cooperative.
Mr. Olds. I am informed that the proposal was submitted to the
committee or the subcommittee approximately on Friday. We arrived
here yesterday by plane and obviously we have had no opportunity
to examine the proposal of Consumers, although it was made available
to us at about 11: 45 this morning.
Since the copies of the telegram have been made available, perhaps
it is not necessary to take the time at this time to read it, but we do
want to emphasize the fact that we have no objection whatsoever
specifically to the proposal, but we have had no opportunity to examine
the proposal or apparently a draft of the contract that has been pre-
sented. We feel that it may affect the rural or REA's in Nebraska.
We have an unusual situation in Nebraska in that we have a public-
power State with the systems integrated so that at the present time
the REA's and Consumers Power District purchase all of their power
from one agency, or I should say substantially all of their power from
the Nebraska public-power system.
In view of that fact, the proposal here to construct this plant may
have a very definite effect on the operations of the REA's in Nebraska.
For the information of this subcommittee REA has loaned ap-
proximately $100 million to the REA's of Nebraska. In addition to
that, REA and GSA have advanced another $45 million to the organi-
zations that provide the generation and transmission lines of the
Nebraska public-power system, which is, in turn, carrying the power
to the rurals.
Chairman Durham. You generate your own power?
Mr. Olds. No; we buy it from the Nebraska public-power system.
It is just as Consumers does substantially all of its power at the
present time.
Representative Holifield. Total Federal investment there is how
much in the distribution system?
Mr. Olds. In the rural distribution system, about $100 million.
But there is an additional $45 million which REA and the GSA have
advanced to the Nebraska public-power system or other public agencies
to provide generation facilities.
40
POWER DEMONSTRATION PROGRAM
Representative Holifield. In other words, the Nebraska public
power; I understand there are three groups there in Nebraska, the
State-chartered groups?
Mr. Olds. They are all public-power districts.
Representative Holifield. There are three public-power districts?
Now, are you saying that they have borrowed $45 million from the
Government?
Mr. Olds. That is right, sir.
Representative Holifield. And yet they have bond-issue power; do
they not?
Mr. Olds. They have those in addition to the loans from the Gov-
ernment, Mr. Chairman.
Chairman Durham. Why would this affect you? Because you
would expect to get this, or are you satisfied with your present con-
tractual system with Consumers Public Power?
Mr. Olds. It would affect us in this way, in that the rurals have
recently entered into a 35-year contract to buy their power from the-
Nebraska public-power system. Up to the present time, Consumers
has also been purchasing its power there. We have what amounts
to a cost contract to purchase our power, and, obviously, if there is
the construction of a conventional plant or, I should say, a conven-
tional part of this plant, together with the atomic plant, it will have
an effect on our future operations.
Chairman Durham. How would that be? You have your 35-year
contract, and, if this power is integrated into the Consumers system,
your contract would still be valid.
Mr. Olds. Well, sir, for one thing, we have no assurance that it will
be integrated, and we have no inf ormation on that.
Chairman Durham. They have to integrate it into the system if
they are going to use it.
Mr. Olds. That is one of the problems that we want to be satisfied
on. All that we are asking, and we are not objecting to the form of
the contract, and we have not had an opportunity to examine it, but
all we 'are asking is that the committee give us 45 days in which to do
that. We are not asking for a period of time that Congress is in
session, but 45 calendar clays, we feel, will give us an opportunity to
consult with our engineers and see what effect, if >any, it would have on
our operations. We have a huge investment, and the Government has
a big investment in Nebraska, and we want to know where we are
going in the future to repay those funds.
Chairman Durham. Well, I do not understand how it could be
otherwise, if you have a 35-year contract, and I imagine it is on a
sliding-scale cost, I do not see how this would affect you. The power
will have to be integrated into that system. Otherwise, it will not be
any good to them.
Representative Holifield. Your thought is, if this power is expen-
sive power, and if it is offered for sale to you on the cost basis, not-
withstanding your 35-year contract, you will have to buy expensive
power.
Mr. Olds. That is right. That is one of the problems that we are
certainly confronted with.
Another problem that we have that is unique in Nebraska is that
we have a great amount of irrigation. There is a summer peak of
POWEB DEMONSTRATION PROGRAM
41
need for electric energy during those summer months. A generating
plant which is constructed to provide a year-round capacity can be
very expensive. What we need is Bureau of Reclamation power dur-
ing those summer months to meet our irrigation needs.
Representative Holifield. What you are 'asking for, then, is that
the committee do not waive the 45-day period but give you that time
to study the contract, and to ascertain whether this will mean an in-
crease in costs to the cooperatives of Nebraska, who have a total of
$145 million of Federal funds.
Mr. Olds. That is exactly it, sir.
Representative Holifield. That is your request.
Mr. Olds. That is all that we are requesting; that period of time.
Chairman Durham. How are you going to get an answer, because
they cannot determine what the power is going to cost them? At the
present time you could not determine it in 12 months.
Mr. Olds. At least we will know what their proposal is, and what
type of plant is to be constructed, and our engineers can at least give
us some better advice than we as lawyers or members of the REA'S
can see at the present time.
Representative Holifield. Of course, this is, to a certain extent, a
gamble. Any atomic-energy electrical plant is a speculation into the
future, because we are exploring unknown fields. Now, if this power
is integrated into the complete system, I suppose you would be
willing to bear your proportional share of it. The thing that you
worry about, you might be apprehensive that there might be a bloc
of high-cost power allocated to the rural co-ops, and on your cost
contract, and thereby put you in the position of having to pay more
for your power because of that particular bloc.
Mr. Olds. That is part of it, sir.
Representative Holifield. If it is high-priced power, and the
chances are that it would be higher priced than conventional power in
some way, either the Government will have to stand it or it will be a
mutual burden for the Consumers and the AEC. If the integration
of a higher potential cost was made into the full system, you would
not mind sharing your proportional costs, would you?
Mr. Olds. Well, I assume that if it is integrated we would have to,
but, of course, there is information that has come to us, and I don't
believe it is in the proposal, although I have looked at it just hastily,
that perhaps a conventional part of this plant will be constructed
immediately.
Chairman Durham. How much does your group consume of
kilowatt-hours?
Mr. Olds. I am not an engineer, and I could ask our consulting
engineer to give you that information, if you would desire it-
Chairman Durham. I was thinking this is only a 75,000-kilowatt
plant. It is not a big bloc of power.
Mr. Olds. Mr. McKinney, the consulting engineer, is here, if you
would like to have him testify.
Chairman Durham. If they integrated the whole thing into your
system, I imagine, with $145 million of investment, you" must have
a lot of power.
Mr. Olds. We do, sir.
Chairman Durham. Is Mr. Chantry with your same group? Do
you care to make any further statement on this matter?
42
POWER DEMONSTRATION PROGRAM
Mr. Chantry. I think Mr. Olds has covered our point very well.
Kepresentative Holifield. Mr. Vance E. Leininger, attorney,
representing the Loup River Public Power District, Columbus, Nebr.,
and Platte Valley Public Power and Irrigation District, North Platte,
Nebr. Mr. Leininger, do you have a statement you would like to
make to the committee?
STATEMENT OF VANCE E. LEININGEK, ATTORNEY, REPRESENTING
THE LOUP RIVER PUBLIC POWER DISTRICT, COLUMBUS, NEBR.,
AND PLATTE RIVER VALLEY PUBLIC POWER AND IRRIGATION
DISTRICT, NORTH PLATTE, NEBR.
Mr. Leininger. I do. My name is Vance E. Leininger, of Colum-
bus, Nebr., and I am an attorney representing the Loup Eiver Public
Power District of Columbus, Nebr., and Platte Valley Public Power
and Irrigation District of North Platte, Nebr., both publicly owned
and political subdivisions of the State, and joint operators of the
Nebraska Public Power system.
I have had no opportunity to prepare any written statement, but
the following telegram was sent to the secretary of this committee,
and I believe dispatched late yesterday afternoon. Again we have
had no opportunity to have sufficient copies of it prepared. With the
leave of the chairman, I would like to read it into the record at this
time.
As joint owners and operators of Nebraska Public Power System, Nebraska's
principal publicly owned electric generation and transmission agency we are
deeply concerned with the outcome of current contract negotiations between AEC
and Consumers Public Power District, and proposed large investments contem-
plated by Federal Government in Nebraska, as reported in the press.
We are not opposed to construction of atomic fueled powerplant in Nebraska,
provided we can be assured that our investments as well as those of the Federal
Government in existing generation, transmission, and distribution facilities are
not jeopardized. NPPS presently supplies substantially all of consumers dis-
trict's power requirements, in addition to 27 REA financed rural districts, 2
Government agencies and several municipalities with a combined peak load of
over 400,000 kilowatts. Investment in generation and transmission facilities
alone exceeds $90 million. Plans are underway to construct additional facilities
to bring in Nebraska's share of new allotment of Missouri Basin hydro power
pursuant to recent announcement by Bureau of Reclamation. Essential that pro-
posed atomic plant be properly integrated into existing high voltage system in
accordance with long standing plans and practice of public power agencies in
Nebraska, and that installation of new units be properly timed so as to avoid
duplicating and idling existing facilities and insure full utilization of low cost
source of power.
The above information was wired to the Atomic Energy Commission last week,
along with request for opportunity to review contract before negotiations were
consummated which to date has not been acknowledged or granted. Additional
data received since wiring Commission emphasizes importance of compliance
with above request. Press reports Saturday indicated contract has been for-
warded to your committee and hearing may be held Tuesday p. m. We respect-
fully ask permission to intervene and be heard if we deem it advisable after
receiving copy of contract and opportunity to review same.
Signed:
Lloyd Kain, president, Platte Valley Public Power and Irrigation District,
North Platte, Nebr., and Zack Howell, president, Loup River Public Power Dis-
trict, Columbus, Nebr.
I believe the committee or the staff has the original of that telegram.
POWER DEMONSTRATION PROGRAM
43
Chairman Durham. Why would this affect you in any way? How
would it affect you?
Mr. Leininger. I cannot answer that question because this is the
first time that we have seen the document. I cannot say it will affect
us. I say this is the first time, but we received it at the same time
Mr. Olds did, about 11: 30 or 11: 45, or something like that. I cannot
say it will affect us, or that it won't affect us. We merely feel as
though we should have an opportunity to review it and see whether
it will or not. I can appreciate that the members of the committee
might feel there has been some delay in indicating the interest of the
Nebraska Public Power System and'I can only explain that by saying
that I think it was the attitude of our people that the negotiations
between Consumers District and AEC were more properly and more
efficiently carried on by them directly without intervention or inter-
ference of any other agencies. They have been protracted and neces-
sarily complicated, I presume, and further complications during the
formative stage certainly would not have been helpful to the project.
I believe they felt that until something had been sufficiently finalized
so that it could be looked at and evaluated on paper, that their posi-
tion was not to interfere or try to take part or participate in those
negotiations.
Chairman Durham. Does your group generate all of the power that
you use or do you buy it from some other source?
Mr. Leininger. We purchase some power from the Bureau of Recla-
mation. That is the Missouri Basin projects. The balance of it I can
say is substantially all generated. There are occasional seasonal or
emergency purchases from neighboring utilities. The group that I
represent serves from the generational and high voltage transmission
standpoint the eastern two-thirds of Nebraska, except for the area
surrounding Omaha.
Chairman Durham. Do you serve rural electrification people?
Mr. Leininger. We serve the group that Mr. Olds represents, as
well as Consumers District, and some municipalities.
Now, as I say, we still do not know whether our clients will feel
it advisable to participate any further in this procedure. This request
is merely for an opportunity to review the proposals sufficiently prior
to the committee taking action on it.
Chairman Durham. Has your group ever considered a proposal for
the AEC, for a reactor?
Mr. Leininger. No, sir. We have no interest in constructing an
atomic plant at the present time; I would like to emphasize that. We
are wholeheartedly in support of the enterprise of Consumers District,
and we feel they are to be commended for it.
Chairman Durham. It looked like your interest would be served
on the contract that you have with the Consumers, and not with the
contract between AEC and Consumers. I do not get the point of that.
Mr. Leininger. That is entirely possible and that may be the con-
clusion after we have had an opportunity to look at this one. But
we recognize, of course, that this is a contract with an arm of the
Federal Government, and it may have some limitations, and some
qualifications in it which will govern the scheduling of developments
and methods of operating the plant and other things which vitally
affect costs in the unique situation that we have there" with our irriga-
44
POWER DEMONSTRATION PROGRAM
tion situation, which requires large blocs of power for only a short
period of time, and we are concerned vitally with every new power
supply in the area because of the scheduling "difficulties and the prob-
lems that come about in working it into the overall picture to the
best advantage of everyone.
I merely suggest that there was a waiting period set up by Congress,
and it is our understanding of this legislation that that called for 45
congressional days, which I assume could not elapse until the next
session is underway. Now, our clients are not asking for 45 con-
gressional days.
Chairman Durham. It is a very simple contract, and you could
make up your mind on that very quickly if you read it.
Mr. Leininger. That may be, and we may conclude that. In view
of the 45-day provision in the legislation, we think that a period of
45 calendar days might not be out of line. I am advised by our con-
sulting engineer that that would in all probability be sufficient tc
evaluate it and to determine how it would operate under varying
conditions and see what the results are in our Nebraska picture.
We think that the Federal Government generally has an interest in
this beyond the consideration of a single isolated atomic reactor plant.
We think that the fact that NPPS is a substantial borrower from
Federal agencies, and that the customers which it serves are substan-
tial borrowers of Federal agencies, lends a general interest from the
Federal point of view to the entire picture which justifies this oppor-
tunity to review the proposal and see whether we feel we should
participate further in that or not.
I certainly want to express the sincere appreciation of myself and
our group for the courtesy shown us on the part of the committee and
its staff.
Representative Holifield. Thank you, Mr. Leininger.
Now we have another name, Robert L. McKinney, consulting engi-
neer, that is with you people. Unless he has a statement to make, I
will pass over him.
Mr. McKinney. I have no statement.
Representative Holifield. At this time, I think that we should let
Mr. Schacht of the Consumers come to the table and explain their
desire on this waiver. Mr. Jones and Mr. Wilson accompany Mr.
Schacht. You gentlemen represent the Consumers Public Power of
Nebraska?
STATEMENT OF R. L. SCHACHT, GENERAL MANAGER, CONSUMERS
PUBLIC POWER DISTRICT
Mr. Schacht. I have prepared, Mr. Chairman, a statement which
I will read from, and there will be some additional comments, but if
you would like to have this perhaps it might be helpful to you.
My name is Eay L. Schacht, general manager of Consumers Public
Power District, Nebraska. I and my associates, Dr. Emerson Jones
and R. D. Wilson, our general counsel, came to Washington yester-
day to complete a few remaining language details on the contract
between Consumers Public Power District and the Atomic ^ Energy
Commission, and to be available to this committee if they desired any
information from Consumers on their project. We did not know
POWER DEMONSTRATION PROGRAM
45
until arriving here that representations had been made to the com-
mittee for a further delay in completing the contractual arrangements
between Consumers and AEC.
I regret that what is purely a local Nebraska matter has been in-
jected into the Nebraska atomic-power program before this committee,
and at literally the 11th hour and 59th minute.
Consumers has proceeded for the past 2 years with these atomic-
power negotiations on the assurance of cooperation we received in
September 1955, from the Loup and Platte districts, and which has
never been disclaimed by them. I have copies of that assurance and
would like to file one with the committee. That is a letter that was
written to us. We inquired as to this when we first entered into these
negotiations. We inquired as to whether we would have their coopera-
tion because we felt it was impossible to proceed unless the parties
were of the same mind that atomic power in Nebraska was a project
we should all work for.
On September 28, 1955, a letter was addressed to Earl Mead, presi-
dent of the Consumers Public Power District, Columbus—Subject:
Atomic Energy Plant.
Dear Mr. Mead: Your letter of September 16 has been received. You inquire
whether there will be cooperation from other public-power agencies in connec-
tion with your proposal to build an atomic powerplant.
May we hasten to state that months ago our boards thoroughly discussed the
possibility of such a plant being constructed in Nebraska. It has always been,
and still is, their desire to cooperate with any public-power agency that can
bring such a project to our State.
We know that you share our pride in the fact that we are supplying electricity
to the people of Nebraska at a lower rate than is available in any adjoining
State. It is our hope that all of us can work together to continue for the benefit
of Nebraska citizens this enviable record of accomplishment in the field of
electric power.
We congratulate you on your aggressive efforts to obtain an atomic plant.
We shall be happy to participate in this program by making the benefits of
atomic power available through our grid system to all of the people in the State.
Very truly yours,
P. N. McKinlet,
President, Platte Valley Public Power and Irrigation District.
Zack B. Howell,
President, Loup River Public Po wer District.
Neither the Loup nor Platte districts nor the Nebraska Generating
and Transmission Co-op, who have filed protests on Consumers' pro-
posal, are in any way parties to the contract between Consumers and
AEC, nor is the issue of whether or not Consumers shall build a
powerplant dependent upon the outcome of the atomic-power nego-
tiations. Almost a year ago Consumers made the decision to proceed
with construction of the Hall am plant, purchasing the turbogenerator
in March 1957, and the boiler in May 1957. Wide publicity was given
to this program, and there was general agreement among responsible
engineers for all of these power districts that the added capacity was
necessary to be in operation by the spring of 1960 to insure adequate
capacity for the loads in the area. Actually the capacity of the
atomic powerplant is only equal to approximately 1 year's load
growth for the eastern two-thirds of the State, That does not mean
only Consumers' load, but the rurais served by the hydrodistricts
there, and the Omaha district. As late as last week the Loup and
Platte districts reaffirmed the need of this capacity in their purported
telegram to the AEC. That was the Hallam plant.
46
POWER DEMONSTRATION PROGRAM
I might add at that point that the Consumers district has no con-
tract to either buy or sell power to the rural group represented by Mr.
Olds or are none contemplated. We do wheel power for them over
some of our transmission lines, and they wheel some power for us,
but we have no arrangements for buying or selling, and do not con-
template any.
In purchasing the turbogenerator and boiler, Consumers secured
the maximum delay possible for specifying the steam conditions, and
still obtaining delivery in time to insure the completion of construc-
tion and start of operation with conventional fuels by 1960. The time
delay for specifying the steam conditions was for the purpose of
securing additional time to bring our atomic-power negotiations to a
close, one way or the other. If the negotiations were successfully com-
pleted, the equipment would be built for the temperatures and pres-
sures contemplated by the reactor system, but if unsuccessful, higher
pressure and temperature equipment would be secured so as to obtain
greater efficiency in the use of conventional fuels.
The only open issue is whether this powerplant, for which approxi-
mately $8 million of equipment is on order under firm contracts, shall
have a reactor as a source of heat, or whether it shall not. Consumers
has until Saturday of this week (September 21) to secure a decision
on the atomic-power negotiations, and to notify the manufacturers of
the equipment as to the steam specifications.
These negotiations have been long and involved, it being approxi-
mately 2 years ago that Consumers' proposal was accepted by the
Commission as a basis for negotiation. During that time we have
made several appearances before the Joint Committee as you have
studied the various aspects of atomic power. The various new sources
in Nebraska have fully reported the progress (or lack of progress) of
our negotiations throughout the entire period.
This project has had the support of the American Public Power
Association through resolutions in 1955 and 1957. I would be glad
to file copies if they would be of any benefit to the committee. It
has had the support of the State, including the Governor, the Ne-
braska delegation in Congress, and responsible citizens throughout
the State.
We trust that the objectives of this committee in speeding up the
national development of atomic power will not be sacrificed by fur-
ther delays resulting in abandonment of this project. It is clear that
if the delay sought by these objectors occurs, Consumers' deadline
with its manufacturers will have passed and the hopes for early com-
pletion of this reactor concept will be gone.
Representative Holifield. In reference to the latter part of yoiir
statement there, the committee has been informed that Senator Curtis
and Senator Hruska and the Governor of Nebraska are very much in
favor of the proposed arrangements and the congressional delegation
also, and desire that the committee after appropriate review do waive
the 45-day period.
Mr. Schacht. Thank you. The Governor has wired me as late as
this morning further indicating that fact, if you do not have an
expression from him. I understand now you do have it.
Representative Holhteld. There is no ground for the fear of these
cooperative purchasing groups having their power rates raised as a
result of this venture?
POWEB DEMONSTRATION PROGRAM
47
Mr. Schacht. No, I cannot visualize that. We do not expect to
sell this power to them or expect them to underwrite any part of this
atomic-power venture. We have in the eastern two-thirds of the
State, approximately 100,000 customers of our own.
Representative Hollfield. It is your intention to integrate this
power, at whatever cost it may be, into your complete system and to
allocate its costs throughout the system rather than direct it to any
one group.
Mr. Schacht. Well, Mr. Chairman, our contract negotiations with
the Nebraska Public Power System are not yet complete, so the
amount of power that we may be buying from them, in the years
ahead, is not yet defined. It is our hope that we can tie this plant into
the existing transmission grid in the State of Nebraska, so that it is
utilized to the maximum extent.
We had not expected other public power districts to attempt to help
underwrite any of our obligations under this contract.
Chairman Durham. What is your generating capacity at the pres-
ent time?
Mr. Schacht. Our generating capacity at the present time in the
eastern system is quite limited because we have been buying most of
our power from the Nebraska Public Power System. We are pro-
posing to build this plant ourselves, and it has been the subject of
rather extended litigation in Nebraska, and the Supreme Court up-
held Consumers' right to build the plant, and the need of a plant of
this size in the spring of 1960, has been fully recognized. Up until
the last 3 or 4 days I had never heard of any indication that someone
felt it was not necessary in 1960.
Chairman Durham. Do you have to go through the courts to get
permission to build this plant?
Mr. Schacht. No, sir, that has been all cleared. Several years ago
that was done.
Representative Holifield. The fears of this group are unwarranted,
then, that they are in danger of having rate raises as a result of this
venture.
Mr. Schacht. I do not see why they have that fear at all. The
question is the inclusion of an atomic reactor in this plant, which is
really the only question before this committee. I do not think the
committee has any problem as to whether Consumers should build a
powerplant or not—that certainly is our problem.
Representative Holifield. But the group that has appeared indi-
cated that the Federal Government has $145 million invested in enter-
prises in Nebraska. That is $100 million is invested in these consumer
groups, these REA groups. As I understood the testimony, their
fear was that a disproportionate amount of the cost of this venture,
if the venture did prove to be a costly venture, on the part of the
generating company, might be allocated to them rather than spread
over the complete system. Of course, the committee would only be
interested if it did jeopardize the Government's investment in these
REA cooperatives.
Mr. Schacht. I cannot possibly see that. I can see no possible
foundation for the fears that this atomic powerplant is going to
do that.
48
POWER DEMONSTRATION PROGRAM
Representative Holifield. Can you assure the committee that this
power will be integrated and will be spread over the system, and not
sold in a bloc to these groups of REA co-ops depending upon you to
supply power? Can you give us that assurance?
Mr. Schacht. Well, Mr. Chairman, maybe I could explain it this
way. We propose to use the power generated by this plant to serve
Consumers 100,000 customers, or some part of them, and part of
our load. We are not expecting to sell this power or asking the rural
districts to buy part of this power at all.
Representative Holifield. Then there is no problem on their part
of having their rates raised as a result of the generation of this power,
if it happens to be more costly than conventional power.
Mr. Schacht. No; that is a problem which would fall only on
Consumers' own customers, and those customers served by Consumers
Public Power District.
Representative Holifield. You could not at this time serve these
people; is that right?
Mr. Schacht. That is right, and we sell no power to these rural
districts, nor do we buy power from them, except maybe a little backup
some place, of a few dollars a month, but we do not sell them power,
and we do not buy from them, nor do we contemplate any such
arrangement.
Chairman Durham. Neither one of the groups; is that right? You
don't sell to either one of the groups?
Mr. Schacht. We are buying power at present from the Loup and
the Platte Districts, and we do not sell them any. We don't propose
to, except possibly in some kind of an interchange arrangement, where
there might be limited sales for a time, when one or the other has
excess capacity. But we are not asking any of these groups to share
any burdens that might develop in increased costs, because of this
nuclear venture.
There were 1 or 2 questions you raised, Mr. Chairman, with respect
to the contract or the negotiations which perhaps I might help clear
up, if 37ou would like.
Representative Holifield. We are glad to have your testimony.
Mr. Schacht. With regard to the matter of the patent rights, it is
difficult to remember all of the conversations and discussions over a
2-year period on all of the phases of this contract. To the best of my
recollection, and that of both Mr. Jones and Mr. Wilson, we had felt
that Consumers was entitled to some rights in patents if they de-
veloped them in connection with their work in this atomic plant. We
did not view it as anything of major consequence because as has been
indicated, and I think we indicated to you this morning, most of those
possibilities will develop out of the design and the construction of the
atomic plant, which Consumers will not do.
Now, I think that if this question of the patent rights that we may
retain is of any serious nature, I am sure that we are not adamant
at all. Certainly Ave are entitled to a right to use any patents that
we should develop but
Representative Holifield. There is a long-standing principle that
if the Government provides the money for a research and development
program, that it retains the patent rights and makes them available
not only to its Government facilities, but to other sections of the in-
POWER DEMONSTRATION PROGRAM
49
dust-ry, because the money originally came from other segments of the
industry in the form of taxes.
It is true that you are placing a $5 million contribution into this
overall venture of some $51 million, and we assume that you are doing
it for reasons which are based on good business principles. But we do
not feel or at least the chairman does not feel that a $5 million con-
tribution in a venture of this kind would justify a signing over the
Government's patent rights in a $50 million venture to the Consumers
of Nebraska. I don't think that you would contend that that would
be equitable either; would you?
Mr. Sciiacht. I don't think that we have any hard and fast feel-
ings. I think if we had a royalty free license to use what patents we
might be able to develop, that would be satisfactory with us. It is not
a major problem for us to the extent that it may be for the Government
in establishing a principle of some kind.
Chairman Durham. How could you use them? You are not a
manufacturer.
Mr. Sciiacht. I suppose the only way we could use them would be
to turn around and sell them, and I am sure we have no intent of
trying to get into that position, that we could go out and market some
patents.
Representative Holifield. You know Congress is frequently
charged with being give-away and some of us are sensitive when we
see something along that line.
Mr. Sen An it. We will be glad to adjust that clause.
With respect to the General Accounting Office approval, we realize
that that is an open problem yet. We have been assured that they
would give very early consideration and a prompt decision, and I am
sure if their decision would be adverse, the Consumers would never
consider signing the contract, and I don't know what AEC would do.
Representative Holtfleld. You speak of the date of the 21st as
being a deadline and I was just wondering about that. If you do
sign your contract as of the 21st for your specifications of your equip-
ment, and an adverse decision comes through, you will be in an em-
barrassing position.
Mr. Sciiacht. There are two things that are possible, sir. One of
them would be some type of a modification which would answer the
problem that GAO has ruled against, or if it is not possible to go into
this type of thing, then we would have to admit it and say that such
a contract is not possible.
Representative Holifield. As a matter of completing the record,
could you give us an estimate of what it would cost you to have a con-
ventional steam-producing plant to complement this generating equip-
ment which you are planning to install.
Mr. Sciiacht. You mean to replace it?
Representative Holifield. If you were going to build a conven-
tional set of boilers, and burners, at this time, what would it cost you
to build it and to bring your generating capacity to the full power?
Mr. Schacht. For this size plant it would be in the general neigh-
borhood of $20 million.
Representative Holifield. So by increasing $5 million in this plant,
you are to a certain extent obviating the necessity of investing $20
million in a steam-producing plant.
50
POWER DEMONSTRATION PROGRAM
Mr. Schacht. Well, no, I misunderstood your question, because the
$20 million is the complete plant, turbogenerator and all.
Representative Holifield. I wanted to differentiate between the
steam producing and the turbine.
Mr. Schacht. The boiler itself would be approximately $5 million,
and, in fact, that is how we arrived at the $5 million.
Now, we have done one thing in connection with this, that is not
apparent from the contract. Because of the need of conventional
power, and the fact that the reactor may have a couple of years of
operation before it can be depended upon as a firm source of heat—
we have ordered a conventional boiler, and propose to install it.
Representative Holifield. You are going ahead with a conven-
tional boiler in any event?
Mr. Schacht. Yes.
Representative Holifield. And this is a supplemental.
Mr. Schacht. Yes, sir, that boiler was ordered back in May of this
year. It is these specifications on it, for steam conditions, that we
are confronted with.
Representative Holifield. Are there further questions?
Thank you very much.
Mr. Fields, will you and your group come back to the stand
temporarily?
STATEMENTS OF GEN. K. E. EIELDS, GENERAL MANAGER; LOUIS H.
RODDIS, JR., DEPUTY DIRECTOR, DIVISION OF REACTOR DEVEL-
OPMENT; DELMAR M. MORRIS, ASSISTANT DIRECTOR FOR AD-
MINISTRATION, DIVISION OF REACTOR DEVELOPMENT; E. J.
BLOCH, DIRECTOR, DIVISION OF PRODUCTION; DON S. BURROWS,
CONTROLLER, DIVISION OF FINANCE; EDWARD DIAMOND,
DEPUTY GENERAL COUNSEL; AND A. TAMMARO, ASSISTANT
GENERAL MANAGER FOR RESEARCH AND INDUSTRIAL DEVELOP-
MENT—Resumed
Mr. Fields. Yes, sir.
Representative Holifield. The purpose of this part of the hearing
is to obtain a status report on items in the authorization bill in which
the committee is particularly interested. In this connection I would
like to put into the record certain excerpts, a letter to Mr. Durham
under date of August 29 from Mr. Fields.
A press release from the Atomic Energy Commission under date of
August 30, inviting industry proposals for the design of gas-cooled
power reactor.
An invitation for bids signed by Mr. W. Kenneth Davis, Director
of the Division of Reactor Development, and two appendixes, A and
B.
A letter from Senator Anderson to Chairman Carl T. Durham
under date of September 2.
POWER DEMONSTRATION PROGRAM
51
(The documents referred to follow:)
Atomic Energy Commission,
August 29, 1957.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr. Durham: The Commission is issuing a request for proposals from
architect-engineers for the design of, and a report on, a 40,000 electric kilowatt
natural uranium, graphite-moderated, gas-cooled, power reactor prototype as pro-
vided under project 58-e-14 of the recently enacted legislation authorizing ap-
propriations for this Commission.
The contractor selected will recommend development work necessary for his
design which can be carried out consistent with the desired schedules. Such
work may be done by a nuclear engineering subcontractor or by other Commis-
sion contractors depending upon the circumstances. This procedure which is
necessary to comply with the joint, committee's directive does not foreclose the
initiation of a more general development program or additional evaluation
studies on gas-cooled power reactors at such time as the Commission deems
appropriate.
Proposals are to be submitted not later than September 23, 1957, and award
of a contract is expected shortly thereafter. The contract will require a re-
port by March 1, 1958, which will serve as a basis for our report to your com-
mittee which is required not later than April 1, 1958.
A public release announcing our request for proposals will be issued tomor-
row. A copy of the release is attached.
Sincerely yours.
K. E. Fields, General Manager.
Atomic Energy Commission, Washington, D. C.
For immediate release
Friday, August 30, 1957
AEC Invites Industry Proposals To Design Gas-Cooled, Natural Uranium-
Fueled Power Reactor
The Atomic Energy Commission has invited United States architect-engineer-
ing firms experienced in reactor work to submit proposals for the engineering
design of a natural uranium, gas-cooled, graphite-moderated nuclear electric
powerplant of 40,000 electrical kilowatts capacity. September 23, 1957, has
been set as the closing date for receiving proposals.
Development, design, and engineering work on this prototype plant has been
authorized by the Congress. A report on the design, including cost estimates
and schedule of construction, is to be submitted by the Commission to the Joint
Committee on Atomic Energy of the Congress not later than April 1, 1958. Con-
struction of the prototype powerplant has not been authorized by the Congress.
No site for the plant has been selected.
Qualified firms interested in making such a proposal though not receiving a
specific invitation to submit a proposal should address the Division of Reactor
Development, United States Atomic Energy Commission, Washington 25, D. C.
Atomic Energy Commission,
Washington, D. C.
Gentlemen: The Commission proposes to award a cost-plus-fixed-fee type con-
tract for designing a natural uranium, graphite moderated, gas-cooled power re-
actor prototype. This project will comprise a nuclear reactor and powerplant.
including nuclear core, gas-cooling system, turbo-generating units, instrumenta-
tion, structures, utilities, and other appurtenances. Design must be completed
as soon as practicable. To this end, preliminary design must be completed and
the report thereon, required in appendix A, item IV attached, must be submitted
by March 1, 1958.
It is anticipated that an architect-engineering firm will have prime responsi-
bility for the work and that it will supplement its capabilities as necessary by
association with a firm of proven ability in the design of reactors and other
specialized nuclear components.
52
POWER DEMONSTRATION PROGRAM
If you are interested in being considered for the engineering work on this
project, you are invited to submit a proposal based on the requirements and data
in appendixes A and B.
A contractor selection board will evaluate the replies received as a result of
this inquiry. Selection will be based on an evaluation of proposals, supple-
mented to the extent, considered necessary by the Commission by personal con-
ference, in which all pertinent factors such as previous experience in similar
work, availability of qualified personnel, and overall ability to perform and get
underway with the job promptly upon award of contract will be taken into
account.
Your reply should be addressed to Allan C. Johnson, Manager, Idaho Opera-
tions, United States Atomic Energy Commission, Post Office Box 1221, Idaho
Falls, Idaho, and should be received not later than September 23, 1957.
Very truly yours,
W. Kenneth Davis,
Director, Division of Reactor Development.
Appendix A
ENGINEERING REQUIREMENTS
I. Develop design criteria and prepare an engineering design and cost estimate
of a complete natural uranium, gas-cooled, graphite-moderated civilian power
reactor and turbogenerator plant of 40,000 kilowatts (electrical) net. With
the exception of fuel fabrication and processing facilities, all things necessary
for the continued operation and maintenance of the plant shall be included
in the design. Only minimum laboratory and administrative facilities shall be
provided. Final site selection has not been made but the design and cost estimate
will be predicated on a site at the National Reactor Testing Station, Arco, Idaho.
II. In establishing the design criteria the following shall be considered:
(a) A reactor optimized for the production of power from natural uranium
is desired.
(&) The design shall be based on technology currently available to the United
States AEC, with such development work as may be undertaken on a schedule
consistent with initiation of a construction project in July 1958. Pertinent
information on military, gas-cooled reactor projects will be made available.
(c) All United Kingdom information relating to Calder Hall to January 1,
1957, can be assumed to be available to all contractors.
III. Overall layout drawings on the entire system and its major components
are required. Working drawings, details and specifications for construction,
including a detailed estimate of the cost of construction based on the completed
design, working drawings and specifications shall be provided. The require-
ments for the initial phase (title I) of the project are outlined below. Require-
ments and timing of the second phase will be developed in detail upon completion
of title I.
IV. Preliminary design must be completed and the report thereon must be
submitted by March 1, 195S. The report must include:
(a) Plans and outline specifications showing features and characteristics
of the design proposed to meet the Commission's requirements. Detailed
designs and specifications on unique components and systems shall be pro-
vided to the extent necessary to establish a realistic cost estimate for the
entire system.
(o) Estimates of cost and time schedules for:
1. Completion of the design and working drawings. (Bearing in
mind the need for expeditious completion.)
2. Construction. Separate cost and time schedules should be pre-
pared for performance of construction by fixed-price and by cost-plus-
fixed-fee contracts.
3. Developmental work.
(c) Operating cost estimate, including fuel element life estimates.
(d) Reactor hazards evaluation for the NRTS site, including possible
containment requirements. Additional studies for other sites may be re-
quested later.
(e) Outline procedures for startup, operation, and maintenance of plant
including the basis for decision between shutdown fuel loading and fuel
loading under power.
POWER DEMONSTRATION" PROGRAM
53
(/) Outline of fuel fabrication and processing requirements; and tech-
niques available for accomplishment.
(g) The contractor's evaluation of the following:
1. Performance limits with the proposed design utilizing available
technology and natural uranium.
2. The feasibility and effect on cost of future operation with slightly
enriched loading.
Appendix B
EXPERIENCE RECORD AN.D BACKGROUND OF FIRM
I. For each type of design listed under 1 through 6 below, supply the following
information:
(a) Location and name of project.
(b) Brief description of project.
(c) Client's name and address.
(d) Construction cost of the project related to your design.
(e) Total cost of your design work.
(/) Was design performed on a cost-plus-fixed-fee or firm-price basis?
1. The design of steam powerplants, both large and small, together with
a brief description of the steam cycles employed.
2. Design of high-temperature and high-pressure gaseous systems with
brief description of problems associated with thermal stresses, thermal shock,
and welding of high alloy steels.
3. Design of chemical and industrial processes, including brief description
of processes and methods of operation and control.
4. Design of ventilation and waste-disposal systems involving toxic mate-
rials, including brief description of toxic materials handled, problems of
ventilation control and disposal of waste byproducts.
5. The development of new or unique equipment and processes such as
original plant design evolved from laboratory and pilot-plant data.
6. Indicate specific examples where you have carried through the plant
or process design, and also conducted preliminary operation and the prepara-
tion of operating procedures. Indicate in what manner you have performed
these functions.
II. In connection with item I, indicate which, if any, of the above projects
involve nuclear reactors and the extent to which your personnel participated in
the nuclear design.
III. What part, if any, of of this proposed design work would you contemplate
subcontracting to others? If the proposed subcontracting involves nuclear reac-
tor design work, (a) list previous nuclear design work the subcontractor has
performed; and (b) indicate the type of subcontract arrangements. Include
statement on availability of subcontractor key personnel and staff similar to that
required below.
IV. (a) Indicae where you would perform the design work. State the number
of (1) engineers and (2) draftsmen you employ at that location on a full-time
basis. How many of these would be available for assignment to this project on
a full-time basis? State the extent to which staffing at this location can be sup-
plemented from other locations of your firm. Indicate the total number of engi-
neers and draftsmen employed by your company on a full-time basis if different
from that above.
(&) Indicate average workload of firm, in terms of related construction costs,
over the past 5 years. Indicate your current workload and percentage of com-
pletion.
V. (a) List names and brief experience record of key personnel available for
assignment to this project. This shall include names of personnel to be assigned
to head up the following functions:
1. Overall full-time project supervision (project manager).
2. Nuclear engineering.
3. Instrumentation engineering.
4. Structural engineering.
5. Electrical engineering.
6. Civil and sanitary engineering.
7. Mechanical engineering.
8. Field inspection of construction.
54
POWER DEMONSTRATION PROGRAM
(o) Submit a proposed organizational chart showing the names and positions
of company personnel, including those mentioned in (a ) above, which you propose
for assignment to this project from the project manager down through all key
positions. This chart, should be in sufficient detail to indicate chain of command
and workflow for all major aspects of the work.
September 2, 1907.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy.
Dear Mr. Chairman: This is with reference to the announcement on August
30 by the Atomic Energy Commission that it is soliciting bids from architect-
engineering firms to submit proposals for the engineering design of a natural
uranium, gas-cooled graphite-moderated nuclear electric powerplant.
As you know, this request for bids concerns a project which was recom-
mended by the Joint Committee and authorized by the Congress as being neces-
sary if the United States intends to maintain leadership in atomic technology.
Also, as you know, despite the testimony of experts as to our present, need for
advancing natural uranium gas-cooled reactor technology, the AEC did not
support such a project.
The AEC announcement is not clear that the contemplated design will be of
an advanced type of reactor and not simply a copy of the existing Calder Hall
reactor. The intended objective, of course, as shown by the committee's report
is an improved and advanced concept of what the British to date have accom-
plished. The committee's report also makes clear that the prototype should be
developed and designed in such a manner that enriched fuel elements can be
tried out in the reactor.
In view of the importance of this project and the Commission's lack of sup-
port in this field of reactor development, I believe it is imperative that in ac-
cordance with its duties by law, the Joint Committee closely follow the ad-
ministration of this project to insure compliance with legislative intent and
full implementation of congressional authorization. I think it important that
the Joint Committee be certain that it is kept fully and currently informed at
all times relative to this project.
Sincerely yours,
Clinton P. Anderson, Vice Chairman.
Representative Holifield. Now, Mr. Fields, we are going to try to
expedite this, in view of the appointment which we know the chair-
man has.
Mr. Fields. Could I make just one remark about the discussions
with respect to Consumers? That is, Mr. Leininger indicated there
had been a wire sent to the Commission last week, and I have asked
the representatives of the Commission who are here with me today,
and we are not aware that we have received a wire, and I would ap-
preciate receiving a copy from him, and I will check with him after
the meeting. But we are not aware that we have received such a
wire. It could be that it has been received. That is all I wanted
the record to indicate.
Representative Holifield. There are a few questions I would like
to go through as quickly as possible. That is on the gas-cooled re-
actor. Why was not the Joint Committee given a copy of the AEC
prospectus which was sent out to industry?
Mr. Fields. I thought it was. Mr. Ramey asked me about it, and
we forthwith gave him copies of it, and it was a complete oversight.
It was intended to be a part of the letter, I believe. There was no
intent not to forward this to you.
Mr. Roddis. It was to be an enclosure to the letter.
Representative Holifield. The staff informs me that they did not
receive it at the time that the letter went out, and they had to ask for it.
POWER DEMONSTRATION PROGRAM
55
Mr. Fields. Well, the only thing I can think of, Mr. Chairman, is
that, had we known that you wished it, it would have been there
forthwith. It was as soon as Mr. Eamey asked me about it, and there
are many proposals that we go out on, on any number of projects,
where I am sure that we advise the committe, but we do not send them
the proposals.
Representative Holifield. The committe is especially interested in
this particular proposal, and the Chair does not need to announce it.
The legislation of the last session of the Congress would indicate it.
My next question is: Why was not the committee given copies of
the North American reports on gas-cooled reactors while the pro-
posal on gas-cooled reactors was being considered by the committee?
Mr. Fields. You have me at a loss, Mr. Chairman. I do not know
the matter that you are referring to.
Representative Holifield. The committee was given large num-
bers of American Standards reports on gas-cooled reactors, but had
to obtain the North American reports from the contractor.
Mr. Roddis. Mr. Holifield, at least one copy, I believe, was sent up
under a date which I will have to verify. I gave Mr. Ramey two more
copies this morning, when I found out that he wanted more. But
there was certainly no intention to withhold copies from the Joint
Committee.
Representative HoLrFiELD. This report was available during the
time that legislation was under discussion. We did not have access
to it, however, until the last days of Congress.
Mr. Roddis. I will have to verify the dates on the letters, but it
was my understanding that a copy was sent up here early.
Mr. Ramey. The report was made available only by the contractor
and after a request by the committee staff. It was never sent up by
the Commission.
(With regard to this point, the AEC subsequently informed the
Joint Committee, as follows:)
Concerning AEO submission to the Joint Committee of copies of the North
American report evaluating the Calder Hall project, a check of our £les indicates
that no copies of this report were sent to the Joint Committee prior to September
17, when they were furnished to Mr. Ramey. (See also Appendix III, p. 65.)
Representative Holifield. The committee does feel that the Com-
mission should have presented that report, and at the time when the
matter was of serious consideration both from the standpoint of the
committee hearings and from the standpoint of legislative action on
the floor. It was available, and we feel that the Commission did not
fulfill its obligation to the committee of keeping the committee fully
informed.
Mr. Fields. I am sure, Mr. Chairman, I will have to disagree with
you on that point, insofar as any intent on our part was concerned.
As far as I know, we did not realize that this would be a part of the
considerations. The questions of proposals and reviews of the gas-
cooled reactor project—we had commented to the committee on "our
views on this at times by letter. I don't recall where the Commission
as such—we did testify with respect to our views on that, sir.
Eepresentative Holifield. The economics of the report would have
been valuable to the committee.
Mr. Fields. I am sure we regret it did not get to the committee.
I just do not know, and I will have to review the circumstances of it.
56
POWEE DEMONSTRATION PROGRAM
Representative Holifield. Have you, General Fields, or Mr. Tarn-
maro, read the committee report with respect to utilizing Westing-
house and Admiral Rickover, page 26:
The committee is of the opinion that the smallest practical prototype of a
natural uranium, gas-cooled reactor should be designed and constructed as soon
as practicable. It is believed that the reactor developed will represent an ad-
vance on the Calder Hall technology. It is understood that the gas-cooled,
prototype reactor contemplated in the bill can be so designed as to operate on
natural uranium fuel initially, but later can test out the feasibility of slightly
enriched fuel elements.
In view of the availability of the AEC installation at Bettis and Idaho, in-
cluding able designers and engineers of the Bettis group, and the willingness of
Admiral Rickover to undertake direction of the gas-cooled-reactor project, it
would appear essential that this project be assigned to the Naval Reactors
Branch under Admiral Rickover.
In the committee's view, the design and construction of a gas-cooled proto-
type under Government contract as outlined above would have the following
advantages—
And they are listed, and they will be included in the record at this
point—
(1) It would enable this country to obtain gas-cooled technology and know-
how rapidly by utilizing the well-rounded Westinghouse Bettis group and facili-
ties under Admiral Rickover's direction.
(2) Although the best way to get atomic technology is through actual ex-
perience, the cooperative arrangements between the British and the AEC Naval
Reactors Branch on naval reactor work, and United States rights to Calder
Hall technology under a direct-contract operation would assure that all appro-
priate technical information is brought to bear in developing an advanced gas-
cooled reactor prototype.
(3) Since the moderator would not be heavy water, the reactor and its develop-
ment would differ considerably from the gas-cooled, heavy-water reactor spon-
sored by the the Florida power group and Dr. Zinn. The size of the 2 reactors
also differs markedly, 40,000 to 140,000 kilowatts. However, information and
data developed on common problems in the gas-cooled field would be readily
available to Dr. Zinn and his associates.
I am sure you are aware of the committee's feelings on that point.
Mr. Fields. Yes, I am.
Representative Holifield. Has Westinghouse been contacted in
regard to making a study on this?
Mr. Fields. They have been given a copy of the proposal, as have
a number of other firms, and we understand that they—and this is
informally—are considering arrangements with several different
architect-engineers actually with respect to this.
Representative Holifield. You have had a number of contacts?
Mr. Fields. This is all informal, and the date for receipt of pro-
posals I believe is the 23d, next Monday; yes, sir.
Representative Holifield. You have had proposals in from the
Bettis group as well as others?
Mr. Fields. We have had discussions and we understand informally
what they are considering, and their proposals are not in from any
source that I am aware of at this point. There is considerable interest
in this, I might say.
Mr. Ramey. Would this be the Bettis group? Westinghouse has
two organizations. They have a private commercial outfit, and then
they have the Bettis government-financed group. Is it understood
that the Bettis group is submitting a proposal?
Mr. Fields. I am not aware that the Bettis group is submitting a
proposal.
POWER DEMONSTRATION PROGRAM
57
Mr. Eamey. Would they be permitted under your announcement?
Mr. Fields. Our proposal has gone out to architect-engineering
firms, and indications are that we would expect that they would asso-
ciate themselves with groups who had the capability to perform the
necessary nuclear studies and analysis here to come up with this
particular report. It is not proposed that if there is a large-scale
development to be undertaken here it could be undertaken in con-
junction with this $3 million authorization project. We have not
foreclosed what might be done on a full long-term development project
with respect to gas-cooled reactors. We are attempting to outline
the engineering aspects, cost schedules, and what would be involved
so that we could move quickly into construction, and also to outline a
development that would be necessary in conjunction with such a
project, and to have it in hand so that it can be submitted to Congress
as required by law on the 1st of April. That is the reason for moving
thus rapidly in this regard.
Representative Holifield. The committee, of course, appreciates
the fact that the Commission has moved into this and is taking
action on it.
Mr. Fields. The Bettis field group is not an architect-engineering
firm. They are a development firm and they do not even do the
architect-engineering for the PWR. They have done the develop-
ment work. So this is the problem that was posed to us. We have
considered all aspects of this, and I want to assure you as far as I
know, Mr. Chairman, we are moving as rapidly as we can on this,
and with a real effort to do this in a manner which will present to the
Congress all of the things that are necessary for there to be a decision
made next spring on whether or not this should be constructed full
scale.
Representative Holifield. Is it your concept that the report will
cover an advance on the Calder Hall concept, or does the language of
your proposal preclude an advance on the so-called Calder Hall con-
cept and confine it to technology which is now available to the AEC?
Either in your own files or from your agreement with Great Britain.
Mr. Fields. It is limited to basing it on present technology avail-
able, with such development and improvement as could be accom-
plished consistent with a time scale of starting construction on the 1st
of July of 1958, which is a requirement of the authorization. That
is, as we understand it.
Representative Holifield. I would like to clarify that. I was some-
what surprised when I read it and I appreciate the speed with which
you are moving, and in view of the fact it was realized that there was
a difference of opinion on going into this project. But where do you
get the July 1 date to initiate construction?
Mr. Fields. I thought that was in the report.
Representative Holifield. I am sure you will not find it in the
legislation. It seems to me that rather than being of value to the
project, this might impose such a rigid requirement that it would pre-
clude the study almost to a failure to begin with.
If you insist because the study was to be submitted on April 1 that
construction should start on July 1, I have not had a chance to talk
with any of the manufacturers, but I am wondering if in that particu-
lar requirement you are not processing in such a way that you would
eliminate some interest in the study.
58
POWER DEMONSTRATION PROGRAM
Mr. Eoddis. I think that remains to be seen, but from the indica-
tions we have at the moment that won't be true. Now, start of con-
struction on July 1 does not mean that you start building huge struc-
tures at that time, but you do start entering into contracts for the
construction by that time. That would be the way we anticipate it.
The project would be initiated.
Representative Holifield. This was so much faster than anything
that has occurred under any of your proposals that I become just a
little bit surprised. After using 27 months to negotiate with Con-
sumers, I am rather bewildered by this sudden show of speed on the
part of the Commission. I don't want to put you in the position of
complaining because you do hurry and complaining because you don't,
but I think that there is something there. I would like to read the
language of the act here. It says:
the Commission shall proceed with sufficient design work together with the
appropriate engineering work necessary for the Commission to begin construction
as soon as practicable after the authorization by the Congress, of a large-scale
natural uranium power reactor or prototype.
Mr. Fields. I am sure, if we had interpreted that to be July 1,1959,
we might be hearing in another vein with respect to this.
Mr. Hamey. Is it your determination that it is practicable to initiate
a construction project on July 1, 1958, after the submission of this
report on April 1? That language would require the Commission
to make this judgment as to practicality, and it seems that there could
be some judgment or some determination that that is a little hasty.
You could make a determination for September which might give
a little more time to get a design underway on a more advanced type
of reactor. You could also have made a determination that the Con-
gress would not authorize it before July 1. This year Congress did
not authorize these projects until August.
Mr. Fields. Well, the difficulty may be in our understanding each
other here. That is the description of what an advanced type is.
When you take other factors in the legislative history, then I think
that you must have a clearer definition of what an advanced type is,
and if advanced type is an enriched type reactor of a different sort
entirely, rather than just this type of an arrangement, then I would
not read that the legislative history says we have the latitude to do
this. But certainly we have, we believe, the belief that it is practical
to build one, if it is desired to, or if the feasibility shows it is attrac-
tive to clo so, and then this is within the region of practicality of when
you could begin construction. That is, to begin a construction project;
involved with that will be some development work that will be neces-
sary further to do.
It might have improvements, I would hope, over the Calder Hall
type of reactor itself, and it would not be a long 4- or 5-year develop-
ment project, and we have not thought of it in those terms, before you
build one of these, so that you get the most advanced type reactor,
say, 4 years from now, but you start construction. But it would be
certainly an improvement over the Calder Hall reactors that are now
in operation.
Mr. Eamey. Or the CEA reactor, the British-type reactor being
built for commercial purposes. As I understand it, the present
Calder Hall is a dual-purpose one.
POWER DEMONSTRATION PROGRAM
59
Mr. Eoddis. This depends upon what the definition of natural
uranium graphite moderated reactor is. If it is only a natural uranium
machine operated to low burnups, I don't think that there is any
question that one could be built. There is a question as to whether it
is an economic machine in that sense. This is Calder Hall. This CEA
unit which implies a high burnup fuel element involves a certain
amount of development, a substantial amount of development, we
believe.
I rather doubt that development could all be completed before you
started construction. But we have started construction of other reac-
tors before we had all of the development problems solved.
Mr. Eamey. Shouldn't it be made clear in your prospectus that you
would at least like to have it as far developed as the CEA type.
For example, your North American report, in certain cost estimates
assumed that you could reach the higher temperature fuel elements
of the CEA type, as I understand it. Should not your prospectus
make that clear to these people, so that when you come in with this
sort of thing you will be doing that?
A very short time schedule, or a limited amount of technology,
would require you just do it as a carbon copy.
Mr. Eoddis. That in part depends upon your definition of a natural
uranium graphite moderated reactor which is what the authorization
states. We have asked, if you will note the last page of appendix 1, of
the proposal or the invitation, for two items. Item (g) we ask for
the contractors- evaluation of the following:
(1) Performance limits with the proposed design, utilizing avail-
able technology and natural uranium; and (2) the feasibility and
effect on cost of future operations with slightly enriched loading.
Now, to my mind, a slightly enriched loading may be achieved
either through uniform slight enrichmnt of through the use of natural
uranium and what are called special ore seeds. Certainly the average
load of the machine is in that case a slightly enriched one, and that
has been our interpretation.
I do not know whether the CEA reactors are going to operate with
slightly enriched uranium or with natural uranium.
Representative Holifield. I only regret that we can't go into this
matter fully, because we are going to have to adjourn because of
other commitments. We have run over at the present time.
Before we adjourn I want to make this statement: The committee
does not desire hasty action or the imposition of impracticable and
impossible requirements on the study of this matter, nor the initiation
of the project under such rigorous terms that the Commission can
come up and say: "Well, we have not found it practicable, and we
rule against it because of the time limitation involved."
There is no July 1 initiation of construction in the act, and this
is a date of your own conception. The date for the presenting of a
study is April 1, in the act, and the words "as soon as practicable
after authorization by the Congress," certainly give you more latitude
than July 1. Personally, I think that the imposition of this type of a
rigorous demand that might contribute to a lack of interest on the
part of some people if they knew that they had to initiate construction
within 90 days after they submit it to you, and before you had a chance
to properly evaluate it or the Congress itself even had a chance to
60
POWER DEMONSTRATION PROGRAM
evaluate it and act upon it from the standpoint of authorizing the
money to do it.
So the committee is going to watch this very closely, and we expect
the Commission to act in good faith and to follow the legislative
history which has been written on the subject. We do not expect a
duplicate of the obsolete Calder Hall reactors. We believe that
there can be an advanced concept, and an improvement over the Calder
Hall, and personally I do not support any appropriation which would
be to build a duplicate of the Calder Hall reactor, I consider it is
obsolete, and I consider that the new natural uranium gas cooled
reactor in Britain are a great deal more advanced than the Calder Hall
design, and I think it is therefore up to American scientists and up
to the Commission to look at this thing in that light, rather than the
light of doing something which the committee did not ask to be done.
The committee specifically said it is "believed that the reactor de-
veloped should represent an advance on the Calder Hall technology,
with, for example, higher temperature fuel elements."
You are aware of the development of certain materials which does
allow higher temperature elements, and more evidence, and which is
being used in the new reactors in Britain.
You are also aware, no doubt, of a different type of enrichment
rather than the U-235 enrichment which is being experimented with.
My next question was going to be on your plutonium recycle. Are
you proceeding along the line of getting some real thinking done on
that, and planning done on that line?
Mr. Roddis. Mr. Holifield, in addition to this specific invitation, we
are doing four other things. In the gas-cooled machine, we are doing
other things than just this thing. We have asked Dr. Zinn's group to
conduct an evaluation, and our Oak Ridge Laboratory to do it in
addition to the Atomic International and American Radiator or
American Sanitary.
Dr. Zinn is in England this week with Mr. Davis, looking at this
very closely, and then they are going to France, because the French
have some different approaches to this problem.
On the plutonium recycle reactor project, as you know, work has
been under way at Hanford for approximately a year and a half on
this. Preliminary design has in fact been nearly completed on the
plutonium recycling reactor itself. Meanwhile, the development pro-
gram on the making of plutonium fuel elements, which is after all
the whole purpose of the plutonium recycling reactor, is to test such
elements, has been progressing at Hanford, at Los Alamos, and at
the Argonne National Laboratory. We are, of course, at each of these
sites posed some difficult problems on facilities, because to work with
plutonium requires a certain amount of, or rather a large amount of
special facilities.
The first of these facilities, especially devoted to the reactor pro-
gram, is being equipped at Argonne now. That is the building and
ventilation is finished, and the equipment is being placed in it. In
last year's authorization bill was contained the fuel technology center
there, and the addition to the Hanford fuel technology center. So
that we are doing what we can in existing facilities and we are trying
to build facilities which can be committed specifically to the reactor
program because at the present time we are always involved in inter-
POWER DEMONSTRATION PROGRAM
61
ference with weapons work where we just received a big setback last
week in one area.
The reactor itself, the people from Hanford are in fact in here
today, and we expect in that case to do the architect engineering work
on it at Hanford, with GE. You see both GE and Du Pont are the
two installations that have always done their own architect engineer-
ing work, and we expect to complete design of that shortly, and we
expect to actually start construction probably some time in the winter.
That is the actual digging of a hole. That reactor is going to be a
heavy water tube type reactor, vertical geometry, if you are interested
we have a considerable amount of design detail on it available.
Eepresentative Holifield. That is encouraging.
Mr. Eoddis. I hope I have made clear that the plutonium recycling
program is not only the plutonium recycle reactor, because the making
and testing of fuel elements to go into that is what is important, and
on that we have had to create these other facilities, and the whole
program is moving as well as could be expected.
Representative Holifield. That is encouraging.
We are going to have to call this meeting to a close at this time.
We will look forward to having a review of this in more detail in
January when we come back.
Mr. Fields. Could I have the record show that with respect to
the special-purpose reactor for production of plutonium, we advised
Mr. Durham as to what we were doing, and we have had representa-
tives of General Electric and of Du Pont in yesterday and today with
respect to preliminary studies as to the actual construction of such a
reactor and the design work for it in accordance with the $3 million
authorization in the bill.
(The communication referred to follows:)
Atomic Energy Commission,
September Jh 1951,
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr. Durham: Public Law 85-162, S5th Congress, includes authorization
for the expenditure of $3 million for development, design, and engineering on
a production reactor for special nuclear materials (project 58-b-S).
Within the next few weeks, we plan to discuss with personnel of the Hanford
and Savannah River offices and of the General Electric and du Pont Cos., their
proposed plans to undertake work on reactor types they believe feasible of
providing increased productive capacity in accordance with this authorization.
Upon completion of these preliminary discussions, we plan to initiate develop-
ment and design work on a specific reactor type or types so as to permit sub-
mission of a report to the Joint Committee on Atomic Energy by April 1, 1958.
Sincerely yours,
R. W. Cook, Acting General Manager.
Eepresentative Holifield. You are excused, and thank you very
much.
I want to ask the American Machine & Foundry man, Mr, Snapp,
who on my instructions, the staff contacted and requested to return
to this meeting, in view of this other appointment, will you file a
statement with the committee within the next 2 or 3 days, in regard
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POWER DEMONSTRATION PROGRAM
to the reasons for the changing of your position on the Elk River
reactor?
Mr. Snapp. We will be glad to do that, Mr. Chairman.
(The statement referred to will be found on p. 14.)
Representative Holifieux Do you have a prepared statement?
Mr. Snapp. No; we do not.
Representative Holhteld. Very well. We will adjourn now.
(Thereupon at 4:15 p. m., the hearing was concluded.)
APPENDIXES
APPENDIX 1
Resolution
Whereas section 111b of Public Law 162, 85th Congress, provides that before
the Commission enters into any arrangement the basis of which has not been
previously submitted to the Joint Committee on Atomic Energy and which in-
volves appropriations authorized by subsection a of section 111, the basis for
the arrangement which the Commission proposes to execute shall be submitted
to the Joint Committee, and a period of 45 days shall elapse while Congress is
in session: Provided, however, that the Joint Committee, after having received
the basis for a proposed arrangement may by resolution in writing waive the
conditions of or all or any portion of such 45-day period, and
Whereas the Commission by letter dated September 13, 1957, submitted to
the Joint Committee the bases of proposed arrangements with the Consumers
Public Power District, of Nebraska, and with the Northern States Power Co., of
Minneapolis, Minn.; and
Whereas the Commission requested waiver of the 45-day period by the Joint
Committee as to these two proposals ; and
Whereas the Subcommittee on Legislation of the Joint Committee considered
the Commission request at a public hearing on September 17, 1957, and
Whereas the members of the Joint Committee have been polled as to the request
of the Commission : Now, therefore, be it
Resolved, That, pursuant to section 111b of Public Law 162, 85th Congress,
the Joint Committee hereby waives requirements of the 45-day period while
Congress is in session as to the proposals of Consumers Public Power District
of Nebraska and the Northern States Power Co., of Minneapolis, Minn., as
requested by the Commission letter dated September 13, 1957, a copy of which
(with enclosures) is attached to this resolution.
Dated this 19th day of September, 1957.
(The letter and enclosures referred to will be found on p. 3.)
APPENDIX 2
Atomic Energy Commission,
Washington, D. C, September 20, 1957.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United States.
Dear Mr. Durham: In Mr. Vance's letter of September 13, 1957, to you trans-
mitting the bases for proposed cooperative arrangements with the Consumers
Public Power District and Northern States Power Co., we stated that we were
submitting to the Comproller General a question in connection with each pro-
posed contract as to our authority to enter into certain commitments for the
operating period.
We have been advised by the Comptroller General that "we believe that the
Commission is authorized to enter into contractual arrangements of this type
with Consumers, and we will not be required to object thereto." A copy of that
letter is attached for your information.
The obligations which the Commission proposed to undertake for the operat-
ing period included payments for excess fuel costs and for certain maintenance
and related expenses totaling an estimated $8 million. While the Comptroller
General's letter specifically refers only to the fuel cycle costs, it also refers to
63
64
POWER DEMONSTRATION PROGRAM
the total figure of $8 million and we have been assured by the General Counsel
of the General Accounting Office that the principles stated in the letter are
intended to be applicable to maintenance and related costs as well.
Sincerely yours,
K. C. Fields, General Manager.
Comptroller General of the United States,
Washington, September 19,1957.
Hon. Lewis L. Strauss,
Chairman, Atomic Energy Commission.
Dear Mr. Strauss: Reference is made to letter from the Deputy General
Manager dated September 12, 1957, requesting decision whether we would object
to certain provisions of a proposed contract between the Commission and Con-
sumers Public Power District of Nebraska. The proposed contract is the third
under the first round of the Commission's power demonstration reactor program,
and provides, generally, for the construction and operation of a sodium-graphite
nuclear reactor to produce electricity. Both the Commission and Consumers
will participate in the cost of necessary research and construction, and Consumers
will furnish the Commission with all pertinent information developed prior to
and during a 5-year operating period.
The particular contract provisions which have raised the question now pre-
sented to us call for the Commission to reimburse Consumers for certain fueL
cycle costs incurred during the 5-year period beginning with the commencement
of actual plant operation. Essentially, the arrangement proposed is that Con-
sumers will bear such costs up to the cost of conventional fossil fuels and the
Commission will bear any excess. The doubt which exists as to the propriety of
making such contractual commitments arises from the general rule stated in
decision B-130815, dated September 3, 1957, to the effect that funds appropriated
to the Commission for the needs of a particular fiscal year could not be obligated
for the needs of future fiscal years. In our opinion, the legislative history of
Public Law 85-162, approved August 21, 1957, which authorized appropriations
for the Commission for its power demonstration reactor program for the fiscal
year 1958, and the action of the Congress in appropriating funds for the Com-
mission in accordance with that authorization act, clearly show congressional
approval of the proposed contractual arrangements.
As reported out by the Joint Committee on Atomic Energy, the authorization
act would have required the Commission to make somewhat different contractual
arrangements with Consumers and with the sponsors of projects under the
second round of the power demonstration reactor program. After considerable
discussion on the floor of Congress, the authorization act was changed to permit
the Consumers project to be carried out as previously contemplated. The Joint
Committee and the Congress were fully apprised of the fact that the contem-
plated arrangements with Consumers included provision for the Commission to
bear a part of the fuel cycle costs during a 5-year operating period. See, for
example, pages 13972-13973, 14486, and 14487, Congressional Record, August 20,
1957. The amount included in the authorization act included $8 million spe-
cifically justified to the Joint Committee as fuel cycle costs under the Consumers
project.
In view of the legislative history, we believe that the Commission is authorized
to enter into contractual arrangements of this type with Consumers, and we will
not be required to object thereto. In view of the need for expeditious decision
on the matter, no other aspects of the proposed contract have been considered.
Sincerely yours,
Joseph Campbell,
Comptroller General of the United States.
APPENDIX 3
United States Atomic Enekgy Commission,
Washington D. C, November 21,1951.
Hon. Carl T. Durham,
Chairman, Joint Committee on Atomic Energy,
Congress of the United. States.
Dear Mr. Durham: You will recall that during the September 17, 1957, hear-
ings before your committee a question was raised regarding the circumstances
under which the North American Aviation, Inc., report on the Calder Hall
type nuclear powerplant was submitted to the JCAE. I have asked the Division.
POWER DEMONSTRATION PROGRAM
65
of Reactor Development to look into this matter and they have provided me with
the following information.
This report is actually contained in two parts. The first was sent to us on
January 25, 1957; the second was dated June 28, 1957. Thus, the complete
report giving a comprehensive evaluation of this type of reactor was first
available to us early in July.
Despite a delay in forwarding the reports it was certainly not our intention
to keep these reports from the JCAE. Our letter of May 16, 1957, reporting
on the status of the United Kingdom nuclear power program referred to the
conclusions reached in the January report. In early August, Mr. Hollister of the
JCAE staff called the Division of Reactor Development regarding the avail-
ability of these reports. He was advised that due to the shortage of copies
of the reports we could not supply him with copies at that particular time.
He was, however, invited to use the copies of the report on file in the Division
of Reactor Development. Subsequently, when the local NAA representative
furnished copies of the reports to the JCAE it was done with our approval.
We are, of course, very aware of our responsibility for keeping the JCAE
informed of all aspects of our program. We shall make every effort in the
future to provide the JCAE with copies of reports of this type as soon as
possible after they are received.
Sincerely yours,
(Editorial Note.—Compare with AEC statement on June 26, 1957, during
authorization hearings at page 563. Hearings before the Subcommittee on
Legislation of the Joint Committe on Atomic Energy, Congress of the United
States, 85th Congress, 1st session, on Authorizing Legislation for AEC's Fiscal
Year 1958 Construction Budget.)
R. W. Cook, General Manager.
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