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I did want to comment on one thing. That was in refueling cost. Today when we have talked about refueling costs we largely have talked about them in the context of a layup condition so that when we have said the cost is $3 million or $5 million to refuel the ship we have talked about it in a layup condition and that means paying the crew costs, the facilities cost and all of these things all in one lump. Thus it sounds as if it is going to cost a tremendous amount of money to refuel the ship and this is really not true.
We have projected that perhaps the actual refueling phase might cost in itself perhaps $200,000 and this does not include preparation. We have talked that the actual defueling phase in terms of one of these layup conditions might itself only cost $170,000.
The rest of this money is associated with preparation, licensing, manning cold iron watches and disposing of the radioactive material and this sort of thing afterward.
The CHAIRMAN. Mr. Lennon.
Mr. LENNON. Mr. Hathway, I just wish your statement could have gotten into the hands of the Department of Commerce last September. Now, this servicing facility at Galveston, of which you are manager, that is where the technical support comes in and the cost figures that you have stated?
Mr. HATHWAY. That is right.
Mr. LENNON. That is a subsidiary of Todd Shipyards. Is it a contractual relationship that the Todd Shipyards has with the Federal Government to use this as a servicing facility and a potential servicing facility for nuclear merchant marine vessels?
Mr. HATHWAY. Our present contract with the Government is a contract to service and maintain the Savannah which we do under a service of work orders that are written during the year directing us to undertake certain activities. The facilities themselves in Galveston are a combination of Todd-owned and Government-owned facilities. These facilities we undertook to design and erect some of them at Government cost and some of them at our own. The Atomic Servant which is a servicing barge is maintained there. There is a facilities building that is really partly a newly designed building and partly an old building that was moved from North Carolina, torn down in North Carolina and moved down there and erected.
At any rate this building was erected down there and we have in there fuel storage capability, mock up capabilities of the Savannah reactor, and decontamination facilities.
We house the refueling equipment there and we have a fairly extensive electronic instrumentation shop.
Mr. LENNON. The plan now, if they go through as projected, is that the Savannah will be laid up there at the facility for all of fiscal 1968. Is that your understanding?
Mr. HATHWAY. That is my understanding although no one really has said that to me. I feel that it would be uneconomical or cost more to lay up anywhere else.
Mr. LENNON. You have projected the anticipated cost for fiscal 1968 in technical support at your facility at a million dollars.
Mr. HATHWAY. That is right and that is in an operating type program.
Mr. LENNON. Actually, it is going to cost more to keep it there on a lay up basis during fiscal 1968 according to their figures than it would be if you serviced it for 1 year?
Mr. HATHWAY. That is right.
Mr. LENNON. It is the difference between $1 million and $1,340,000 as I recall the Department's figures. I was interested in the fact that there is charged to the Savannah for training purposes $400,000. You have indicated that actually there was not but $250,000 allocated to the Savannah. I believe that they had a budget of $400,000 but you said there was only $250,000 spent in fiscal 1967.
Mr. HATHWAY. Of course fiscal 1967 is not quite over yet and the $250,000 is a projection but then in fiscal 1966 that cost was $282,000. Mr. LENNON. And you state that of the $250,000, 40 percent of that goes to the nuclear training at the Merchant Marine Academy at Kings Point?
Mr. HATHWAY. That is right.
Mr. LENNON. That is part of the training that would be stopped, I presume, at Kings Point if the vessel were laid up?
Mr. HATHWAY. I assume so. The training that Mr. Sullivan referred to in his testimony I think would be conducted in Galveston in connection with the lay up.
Mr. LENNON. Were your views solicited by the Department of Commerce? Were your views solicited by the Maritime Administration on the actual cost figures as actually developed and expended during fiscal 1966 and up through this period in fiscal 1967?
Mr. HATHWAY. Yes, they were by the Maritime Administration. Certainly I had no contact with the Department of Commerce as separate from the Maritime Administration.
Mr. LENNON. Apparently the Maritime Administration has little voice in the Department of Commerce. I know you won't object if this committee sent this to the Secretary of Transportation with our feelings on it because I sometimes feel he is calling the shots even though the Maritime Administration is under the Department of Commerce. Incidentally, who now in the Department of Commerce has authority above the level of the Maritime Administrator on transportation?
Mr. SULLIVAN. Dr. Holman, Acting Secretary of Transportation. The CHAIRMAN. Mr. Pelly.
Mr. PELLY. Mr. Chairman, I have just one or two short questions for clarification. On page 3, Mr. Hathway, you refer to the NUS Corporation. Would you spell that out?
Mr. HATHWAY. That is N-U-S.
Mr. PELLY. What do those initials mean?
Mr. HATHWAY. I believe the company went by the title of Nuclear Utilities Services and not too long ago they changed their name to NUS and that is now their name.
Mr. PELLY. Is this corporation capable of making a clearly objective study? Is it a private enterprise organization having no connection with any shipping company or any drydock or shipbuilding company or related business?
Mr. HATHWAY. That is right. This is a company of nuclear consultants really and I think that would best describe them, and they
have on their staff several people who are very familiar with the Savannah program and particularly knowledgeable about it.
We have made available to them our files, our drawings, this sort of information so that they have been able to make an objective analysis of this phase of the program.
Mr. PELLY. One other question. On page 7 of your testimony you used the term "scrams." You said, and I quote, the Savannah already has had more scrams and load changes. . . ." Would you describe what a "scram" is?
Mr. HATHWAY. Yes. Scram is a rapid insertion of the control rods into the core to shut down the reactor.
Mr. PELLY. When you refer on page 9 of your statement to your estimate of actual costs through February, are these cost estimates for a fiscal year or for a calendar year?
Mr. HATHWAY. They are on a fiscal year basis.
Mr. PELLY. In other words, that is 8 months?
Mr. HATHWAY. That is right.
Mr. PELLY. Then the figure you gave of $402,800 is for 75 percent of your fiscal year?
Mr. HATHWAY. This is about two-thirds of the
Mr. PELLY. Two-thirds of the year. Then it is running below the $1.003,000 budgeted in your planned costs for 1967.
Mr. HATHWAY. Yes. This number represents actual expenses. There is in addition some number of dollars which we might think of as obligated for which we have placed work in hand but it has not been completed and therefore we have not paid for it and it is not yet an expense. As you noticed, our expenses at the moment are roughly 40 percent of the budget in about 60 percent of the time, and I think it more properly reflects along with the obligations numbers such that we will spend about $900,000 in fiscal 1967, thus giving us the $100,000 underrun.
I must admit that it is somewhat dependent upon what turn the Savannah programs takes in these next 4 months.
Mr. PELLY. Well, if the Savannah is but part of the program, and your facilities can handle 10 Savannahs, then to allocate the entire cost to one vessel distorts the picture. Perhaps we really should figure that in the future the per vessel cost of this operation will be a onetenth of what it is running today. Although there may be more labor and work involved, generally speaking and looking to the future, your facilities are anticipating the construction of more nuclear-propelled vessels so as to enable you to distribute the overhead cost among more ships. Is this a valid assumption?
Mr. HATHWAY. Yes, it certainly is and I think it is unfair to hold it totally against a Savannah operation cost.
One of the things that I think is sometimes unclear is that we really have talked about two kinds of costs here today. One of them is the Savannah operating cost and the other is the Savannah program cost. There is a distinctive difference between them. ⠀
It is unfair to compare the Savannah program cost with a conventional ship, for example. It is only fair to compare the Savannah operating cost.
Mr. PELLY. Well, I am a member of the Science and Astronautics Commiteee. Year after year I watch billions of dollars go into research
and development in the program to explore outer space. Therefore, when I compare the attitude of Government toward expenditures for our scientific endeavors in outer space with something closer to home like the Savannah which probably means more to those of us who are alive today. I find it pretty hard to figure out why, for a couple of million dollars, we want to call off this one maritime research program.
I certainly think your statement is a very fine one. I hope that through the proposed submission by my colleague, Mr. Lennon, your statement will get to certain high officials in the Department of Commerce who apparently cut this program off.
I want to join with the other members in thinking you for the contribution you made here today. I think it is a very significant one. Mr. HATHWAY. Thank you.
The CHAIRMAN. Mr. Drewery, the counsel, has a couple of questions, Mr. Hathway.
Mr. DREWRY. Mr. Hathaway, just for the record to clear up a point, on page 5 you state it is possible that we may want to qualify under the Brussels Indemnification Agreement for port entries. Would you briefly explain that-what that is?
Mr. HATHWAY. There is a Brussels Indemnification Agreement which has been entered into as I understand it essentially by all the nonnuclear countries of the world and to which all the nuclear countries of the world have abstained and for very good reasons.
It occurs to me and to some of my safeguards people that at some point in the future we well might want to at least qualify under these agreements even though we do not subscribe to them. The reason is as I understand it that we did not subscribe to them that they would require, let's say, certain information on our other nuclear ships which means the Naval vessels and which we are unwilling to give them and so we have not joined but one of the provisions and I think the major difference in the Brussels agreement is the fact that they only require $100 million worth of indemnification instead of the $500 million provided by the Price-Anderson.
At the moment, for the Savannah at least, it is covered under PriceAnderson. There are no existing provisions for future nuclear ships and under Price-Anderson indemnification and in order to get the nuclear ship off the ground, some steps would have to be taken in that direction.
Mr. DREWRY. You say the nuclear countries have abstained from going along with the Brussels Agreement?
Mr. HATHWAY. That is my understanding. I must admit that I am less than an expert witness on matters concerning the Brussels Agreement.
Mr. DREWRY. I just wanted to get a little bit into the picture so that the record would show what it was about. I believe you mentioned that France had a one-hundred-million-dollar limit.
Mr. HATHWAY. I think Admiral Will mentioned that and that is certainly my understanding.
Mr. DREWRY. Just one other thing. On page 8 you state that it is expected that the Savannah's third year of commercial operations would be slightly lower and if operated on trade route 12 significantly lower.
Could you elaborate on that so just why trade-route-12 operations would result in a lower amount?
Mr. HATHWAY. Well, our studies to date have projected that the type of operation that trade route 12 represents is that type of operation most favorable to nuclear ships. It involves along a route where the speed of the ship can be most effectively utilized and it is, in fact, for that reason that we usually project our new ship program operating in that kind of service, longrun, high-speed, container-ship operation. It is my understanding that there have been cost projections made on revenues for Savannah voyages into that area.
They certainly are estimates and I do not know what the specific values are but I understand that they reflect more favorably than the cost to the Mediterranean area.
Mr. DREWRY. Could I ask Admiral Will to comment on that?
Admiral WILL. Mr. Drewry, I don't have the figures here but in our application to Maritime we-requesting that before the Savannah is laid up we make a voyage to the ports of the Far East, we did include a pro forma of what we could anticipate in the way of revenues on a Far East voyage and I would be very happy to furnish a copy of that for the record.
Mr. DREWRY. I had heard some question raised that while it certainly is true and generally accepted that nuclear power is more logical for the long trade routes that maybe that might not be so with the Savannah herself because of her size and cargo-handling equipment, and so on.
It would be interesting to have that for the record from you.
(The document referred to follows:)
PRO FORMA REVENUE OF "SAVANNAH" ON TRADE ROUTE 12 VOYAGE
The pro forma costs of Savannah assigned to Trade Route 12 have been analyzed in detail. This analysis indicates that the dollar performance for the ship would be improved by nearly a factor of two over that which she would be expected to earn in European-Mediterranean service.
"SAVANNAH" NUCLEAR POWER ON LONG TRADE ROUTE VERSUS SHIP SIZE
AND CARGO GEAR
The question of the usefulness of Savannah's nuclear power on long trade route (e.g. Trade Route 12) is really not directly related to the ship size or her cargo handling equipment. Rather the inherent advantage of nuclear power, namely the ability to accomplish long distances of steaming without the need for refueling, is fully realized by Savannah.
It is true that some alternate cargo gear would provide for greater versatility in the types and weights of individual pieces of cargo she could handle. However this is a function of the original design of the ship, which is not related to the nature of her power plant. A similar statement would apply insofar as the size of the ship is concerned. The basic advantage of Savannah's nuclear power plant would still be realized on a Trade Route 12 schedule, any limitations as to her inherent size or cargo gear notwithstanding.
Mr. DREWRY. That is all, Mr. Chairman.
The CHAIRMAN. Thank you very much, Mr. Hathway. You have been an excellent witness. We have a statement here from Mr. Farr who is the executive vice president of the Brotherhood of Marine Officers NWU-AFL-CIO which will be inserted in the record at this point.