The same way if we go to buy a car we have a certain basic model but then if we want a few other things we pay for them.

Senator PASTORE. By the same token, you have to see the industry's point of view, too. If you have a monopoly on this processing and you remain dogmatic and capricious, you may place him at a disadvantage, whether or not he stays conventional or nuclear. There you I think there has to be a certain amount of flexibility on the part of the Government, itself, if it has a monopoly in this area. Of course, if you are in a competitive field that will take care of itself. Dr. TAPE. That takes care of itself.

are.

Senator PASTORE. But if you are in a state of monopoly, I suppose if you remain dogmatic you could in some way hurt the industry. They might insist at that point on some kind of option. I think you have to move along with industry in this regard. I think that, of course, will happen.

Dr. SEABORG. That is our intention.

Senator PASTORE. I am not being critical.

Dr. SEABORG. We will continue to study this. If it looks like some flexibility there is feasible, even before we start we may introduce it or perhaps after we have operated a while, and learn what is entailed, we might introduce some additional flexibility.

Senator PASTORE. I think the interest of the industry in this regard is salutary.

ASSAY OF TAILS TO BE DELIVERED TO CUSTOMERS

Chairman HOLIFIELD. You could not state at this time what the assay of the tails actually delivered to the customers in 1969 will be then?

IMPACT OF TAILS ASSAY ON URANIUM REQUIREMENTS

Dr. SEABORG. No; that will depend on our operating plan.

Chairman HOLIFIELD. Could a decision to give the customer the right to specify tails assay have a substantial impact on the mining and milling industry?

Dr. SEABORG. Of course, if as Senator Pastore indicated, we run to a higher tails assay, there will be a larger consumption of uranium. We have a difference here. The difference in feed content for typical light water reactor charge assays could be about 20 percent in going from tails of two-tenths to tails of three-tenths as an example. So there would be some impact, of course.

LIMITATIONS ON AEC'S AUTHORITY TO CHANGE STANDARD TABLE OF ENRICHING SERVICES

Chairman HOLIFIELD. What limitations, if any, are there on AEC's authority to change the standard table of enriching services?

Dr. SEABORG. The charge established by the AEC must supply reasonable compensation to the Government. I guess there are no limitations contained in the criteria other than the ceiling price of $30 per kilogram of separative work and a notice period of 180 days is specified. Chairman HOLIFIELD. Should there be a concept analogous to the ceiling chart on enrichment services?

Dr. SEABORG. I don't know whether this is feasible. I don't think we have been able to think of anything that is reasonable and feasible there.

Chairman HOLIFIELD. When operating at full capacity, will it be possible to withdraw a number of different tails assays without influencing the overall efficiency and cost of operation?

COST OF PROVIDING CUSTOMERS FLEXIBILITY AS TO TAILS ASSAY

Mr. QUINN. As I mentioned earlier, Mr. Chairman, it is physically possible to remove uranium of any assay that exists within the cascade. In the context of supplying this flexibility to customers, it could have an effect on the economics, depending on whether the assay was available in the cascade or whether they wanted an assay that was even lower than that at the bottom of the cascade. These are factors that we are going to have to study in more detail in connection with our earlier discussion.

Chairman HOLIFIELD. Let us take the case of a customer who would be willing to go along with AEC's stipulated tails as "A" and let us say "B" and "C" customers would want different ones. Should "A" be penalized by higher cost because of the demands by "B" and "C" for different tails assays?

Mr. QUINN. If we decide to offer this kind of flexibility, Mr. Chairman, it would have to be on an economic basis, and which recovers any additional cost associated with it from the customer who has the advantage of the service.

Chairman HOLIFIELD. You feel from a technical standpoint you can make that separation?

Mr. QUINN. Yes, that can be done, the economics of it. In other words, we would be able to determine the extent to which there are additional costs associated with providing this extra service and that would probably be charged to the customer who elects the service. So we do not believe offering this kind of flexibility to one customer need affect the charge to other customers who do not want to take advantage of it.

Chairman HOLIFIELD. Would the AEC fix a different tails assay on the economics of, let us say, $8 per pound fuel and $10 per pound fuel? Mr. QUINN. We will have to recognize the market price of UsO, in deciding what is the proper table of enriching service to adopt.

U235 BALANCE VERSUS TOTAL URANIUM BALANCE

Mr. CONWAY. Would you comment on the relative merits of providing to the customer among feed, product and tails a total balance of uranium atoms except for processing losses as compared to providing a balance of uranium 235 atoms? I think reference to this is on page 5 of the Atomic Industrial Forum's recent report commenting on the Commission criteria. (See app. 6, p. 325.)

Mr. QUINN. This is a new suggestion from the Forum. It really goes to the question of the purpose behind a customer's decision to request return of tails. It would be our thinking that customers exercising the tails return option would be doing so on the basis of the

potential future use of the material, possibly in breeder reactors as a blanket material.

Here it appears that the U235 content is not a sensitive factor. Now, if we agreed to provide a U235 balance rather than a total uranium balance and if the assay of the tails from the plant happen to be lower at any particular time than was specified in the table of enriching service, then AEC would be obligated to deliver more total uranium to the customer than he brought in.

Mr. CONWAY. In other words, the Government would have to take the loss each and every time on U235 ?

DIFFUSION PLANT TO OPERATE ON BASIS OF TAILS ASSAY EQUIVALENT TO THAT SET FORTH IN STANDARD TABLE OF ENRICHING SERVICES Mr. QUINN. We would have to find the uranium to meet this kind of commitment. Thus we believe that closing the balance on total uranium is a more equitable one than on U255 Now, I will say as far as our current planning is concerned, we would expect that the plant would operate at a tails assay equivalent to that set up in the table of enriching service. If this is done, then you will get a total U235 balance as well as the total uranium balance.

Mr. CONWAY. At the time he obtains the material he has to elect whether or not he wants to take the tails?

Mr. QUINN. That is right.

Mr. CONWAY. If he elects to take the tails, he is also responsible for paying shipping charges and any and all costs that would be incurred?

Mr. QUINN. That is right. He would pay our standard withdrawal and packaging charges. He would be responsible for carrying the material away and protecting his personnel and the public from any hazard associated with it.

Mr. CONWAY, Is it conceivable in the early days before the breeder program is actually developed that it will not pay the purchaser of the enriched material the costs that he will incur for shipping these tails?

Mr. QUINN. This seems to me quite likely. It is difficult to envision a breeder program large enough to soak up the quantity of depleted uranium that will be available within the foreseeable future.

Mr. CONWAY. The reason I raise that, is it not also conceivable that in the early days the relative value of the tails may not be too important as compared with later on in the years to come.

Mr. QUINN. I think that is right. Certainly there will be a use for depleted uranium as blanket material in breeders. It may have a specific value for that purpose. However, it is difficult to imagine that value applying to the thousands and thousands of tons that will be produced as tails from the diffusion plant.

Mr. ABBADESSA. In other words, Mr. Chairman, it eventually gets to the law of supply and demand. If the breeder program could sustain a thousand units and we had 2,000 units, it would have a high value. Even in those days, however, if the breeder program could sustain a thousand units and we have a million units, it still would not have too great a value.

Mr. CONWAY. Is it not also conceivable, even if the breeder program is long in its development, that if the cost of uranium went up significantly some of the tails could be reworked and have a value for enrichment purposes?

3

Mr. QUINN. This is possible. If the price of UsOs goes very high, then it may well be profitable to take such tails and strip them to lower U235 contents.

Dr. SEABORG. Provided they were stored as UF6.

Mr. CONWAY. That may raise a good question then. To the extent that the purchaser of enriched material elects not to take his tails, is it the Commission's intent to package and store the material for possible future use?

Mr. QUINN. Our current practice is to package and store our tails. It is source material and it must be controlled.

Representative HOSMER. Conversely, if the customer does not take the tails and they are a drug on the market, as Mr. Abbadessa indicates they may be, is the Government incurring for itself a lot of expense to take proper care of them for an indefinite period of time?

Mr. QUINN. We have tails that have resulted from prior operation of the diffusion plant that we do have to take care of and any future material produced would be just added to that inventory. The incremental cost should be very small.

Representative HOSMER. You might have to put it in containers of some kind?

Mr. QUINN. That is right. Our charges for the service will have to provide for containers for tails.

Representative HOSMER. But your containers are merely from a standpoint of holding it and not from the standpoint of protecting against radiation; is that right?

Mr. QUINN. That is basically right. The material is stored in the form of uranium hexafluoride. It needs to be kept contained.

Representative HOSMER. If you recover the cost of the container and all you have to do is keep them out on the lot, you can keep them there for 20 or 30 years, and then if the Government wants to run through the material again, take out the rest of the isotopes, there is no big capital charge assessed against this feed material?

Mr. QUINN. That is right.

Representative HOSMER. If, on the other hand, it was done by the purchaser, he would have those capital costs accumulated during this period of time?

Mr. QUINN. He would not be paying for the material as such. He would have to pay for his own container and whatever surveillance is needed for the material.

Chairman HOLIFIELD. And the transportation away and transportation back for further depletion. And you are talking about material that would go down from about seven to two; would it not?

Mr. QUINN. The present published tails assay is 0.25; yes, sir. Chairman HOLIFIELD. 0.25 in place of 0.7.

Mr. QUINN. So it is about two-thirds of the contained U235 removed. Senator PASTORE. You really don't see any interest on the part of industry to reclaim these tails until such time as we develop a use for them?

Mr. QUINN. In our discussions with the representatives of industry, they seemed to regard this as an important point. It is not quite clear

to me what they would intend to do with the material but it will be available to them on an option basis, and we will see how many of them elect this option.

Dr. SEABORG. I believe when we first went out with our criteria, we proposed retaining the tails.

Mr. QUINN. Our initial plan was not to make it available.

Senator PASTORE. I guess they are holding this in doubt in order to establish a better fee on your service.

Mr. CONWAY. They may open it up and find that it is less than they had hoped.

Mr. ABBADESSA. They might be surprised when they look into that container.

Chairman HOLIFIELD. I can't see from my limited knowledge of it where they could afford to take this material and crate it and transport it and then transport it back at some future date and come out ahead on it. It seems to me the tails would not be a good economic investment at all.

Dr. SEABORG. They clearly wanted this option. They probably have not yet decided what they are going to do with the option.

Chairman HOLIFIELD. In the event they do wish to leave it and not exercise the option to take it away, it would not cause the AEC any problems as far as quantity of storage space or anything like that? Dr. SEABORG. No; we won't charge them anything for leaving it with

us.

Representative HOSMER. I would not make that commitment off

hand.

Dr. SEABORG. I mean for taking it off their hands. I did not mean we would store it for them.

Mr. ABBADESSA. We would plan to recover our costs associated with handling it.

Representative HOSMER. Yes, containerizing it.

Mr. ABBADESSA. Yes.

NEED FOR RESUBMISSION OF AMENDMENTS TO CRITERIA TO THE

COMMITTEE

Mr. CONWAY. In the way the criteria are written, three factors of great significance are laid out as far as the fuel cycle costs are concerned. That is the charge for separative work, standard table for enriching services, and specification for feed and product material. These may be changed by the AEC without resubmission of the criteria to the Joint Committee. I am thinking now about the 45-day rule which is required for submission of amendments of the criteria to the committee.

In addition to those, are there any other factors of similar significance which could be changed or might be changed by the AEC without resubmitting the criteria to the committee for the 45-day waiting period?

Mr. QUINN. Outside of those, Mr. Conway, I believe the major items are identified in the criteria, and, of course, resubmission would be necessary if any changes were to be made there.

Mr. CONWAY. On these particular ones I have mentioned, you still, under the current rule, would furnish information on them and advise the committee prior to taking any action.