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Representative PRICE. You have to anticipate improvement and modification of this plant year by year, perhaps on an annual basis. Who provides the funds for such improvements or modifications?

Mr. TOWNSEND. You are talking about the waste storage facilities or reprocessing facility!

Representative PRICE. I am talking about the waste storage facilities.

Mr. TOWNSEND. As additional facilities are required, it is provided in our arrangements with the company that the company may, if it wishes, provide these additional facilities and dedicate them to the Authority. The Authority has offered on 2 years' notice to proceed to provide additional facilities with its own resources.

Representative PRICE. Thank you very much, Mr. Townsend.
The committee will stand adjourned.

(Whereupon, at 4:20 p.m., Tuesday, May 14, 1963, the committee recessed subject to call.)





APRLL 30, 1963. Hon. GLENN T. SEABORG, Chairman, Atomic Energy Commission, Washington, D.C.

DEAR DR. SEABORG : During the executive meeting between the Joint Committee and the Commission on April 26, the question of the proposed contract between the AEC and Nuclear Fuel Services, Inc., was discussed.

At that time, the committee requested the Commission to provide a report covering the details of the proposed NFS arrangements. Although these arrangements had been discussed at an earlier informal meeting with the Commiş.. sion, it was brought out that the committee had not been furnished with detailed information on this project since the Commission's letter of December 3, 1962, which set out in very general terms the tentative plans for the project.

To date, the committee has not received the requested information. This letter is to confirm the committee's request for detailed information, which should include the latest draft of the proposed NFS contract.

The committee tentatively plans to hold hearings in public session on these arrangements on May 14. It therefore would be appreciated if we could be furnished with the requested documents at the earliest possible date in advance of these hearings. Your cooperation will be appreciated. Sincerely yours,


Washington, D.C., May 3, 1963, Mr. John T. CONWAY, Haecutive Director, Joint Committee on Atomic Energy, Congress of the United States.

DEAR MR. CONWAY: In accordance with Senator Pastore's request at his meeting with the Chairman on April 26, we have prepared a report on the Nuclear Fuel Services, Inc. (NFS), proposal to construct a commercial chemical reprocessing facility for irradiated nuclear fuels. Six: copies of this report are attached, along with three copies of the latest draft NFS-utility contract that we have received from NFS, and three copies of the latest draft AEC baseload contract with NFS.

The report reflects our current understanding of NFS's plans and its agreements with other parties, 'as obtained from NFS in discussions and contract negotiation meetings. Some changes may, therefore, develop in the course of finalizing these plans and agreements.

It is my understanding that further discussions have been held between NFS and its proposed utility customers, which discussions, I am told, will lead to some changes in the draft NFS-utility contract. Furthermore, we understand that the utilities, before signing their contract with NFS, will have the right to review the final AEC baseload contract and, with respect to articles affecting charges, to choose between the provisions incorporated in the utility draft and those of the baseload contract: Accordingly, there may be substantial changes in the utility contracts before they are signed.



With respect to the AEC baseload contract, the copy attached represents the most recent draft, but not necessarily the final contract terms. We expect to transmit copies to NFS today for its review ; AEC staff review is still being made. We are striving to complete discussions and drafting with NFS at the earliest practicable date; but several areas, such as patents and technical and cost information, are still not completely negotiated. The draft also lacks a statement of charges for perpetual waste care and an article providing for termination for the convenience of the Government. Both of these matters will be covered in the final contract.

I will be pleased to provide whatever further information on this subject that the Joint Committee may wish. Sincerely yours,


General Manager.



INDEX 1. Introduction.

A. AEC obligation to reprocess irradiated fuels.
B. ABC financial settlement based upon "conceptual plant."
C. NFS proposal.

D. Other possible industry interest.
II. Nuclear fuel services' proposal.

A. Corporate relationships.
B. Source and application of funds.
C. Location of project.
D. Schedule of the project
E. Basic features of project.
FARDA interest.

G. NFS charges toʻlicensees for services.
III. AEC relationship to project.

A, Government fuel load.
B. Scheduling flexibility,
C. Possible research and development,
D. Deferral of certain facilities.
E. AEC does not guarantee success of venture.

F. NFS as sole supplier of chemical processing services.
IV. Availability of load for NFS plant.

A. Assuming no capability for processing sodium bonded or SS cermet fuels.
B. Assuming NFS installs capability for processing sodium bonded fuels.
C. Assuming NFS installs capability for processing SS cermet fuels.
D. Assuming NFS installs capability for processing both sodium bonded and ss

cermet fuels.
V. Status of NFS negotiations with licensees.

A. Contracts with IRG.
B. Negotiations with other utilities.

C. Nature NFS-utility contracts.
VI. Benefits to AEC.

A. Growth of nuclear industry.
B. Commission contracts with utilities.
C. Perpetual waste care.
D. Reduce AEC capital investments.
9. Technical and economic information,

Appendix 1-Comparison of fuel reprocessing charges.
Appendix 2-Comparison of fuel reprocessing rates.
Appendix 3 Fuel processing, private reactors, fiscal year 1966 and fiscal year 1967.
Appendix 4-Fuel processing, private reactors, fiscal year 1966 to fiscal year 1970.
Appendix 5-Difference in costs to reactor operators, fiscal year 1966 and fiscal year 1967.
Appendix 6-Difference in costs to reactor operators, fiscal year 1966 to fiscal year 1970.
Appendix 7-NFS processing load.
Appendix 8-AEC public announcement, issuance of construction permit.
Appendix 9.-Opening remarks by chairman at meeting of February 15, 1963.
Appendix 10-Rey features of draft AEC base load contract.



4. ABC obligation to reprocess irradiated fuels
In March of 1957, a policy was announced under which AEC would-

1. accept irradiated nuclear fuel from licensees for financial settlement of lease accounts,

2. 'make payments for licensee produced plutonium and U23, and
3. provide for charges for chemical reprocessing of irradiated fuel.


In announcing this policy, the Commission made clear its continued desire to encourage the development of a commercial capability for irradiated fuel reprocessing by stating that contractual arrangements between AEC and licensees which implemented this policy would expire on June 30, 1967, or earlier if the Commission determined that the required reprocessing services would be commercially available at reasonable prices. Thus, in 1957, the Commission assured the industry that for at least 10 years fuel reprocessing services would be available to operators of nuclear reactors.

The Commission, in 1957, also undertook to discuss with the industry possible means of encouraging the development of industrial irradiated fuel reprocessing capability. As one element of encouragement to the industry, AEC made known its willingness to make available as a baseload to a private reprocessing venture certain quantities of spent fuels to be discharged from Government-owned nonproduction reactors. However, it soon became clear that industry considered the potential commercial load for such a facility as inadequate to justify its early construction.

Accordingly, authorization and funds were obtained from the Congress to modify existing Government facilities in order to reprocess the fuels AEC would receive from licensees under its 1957 announcement. However, on the basis of the industrial interest reflected by the IRG study,* the Commission deferred these modifications with the hope that they would never be necessary. B. AEC financial settlement based upon "conceptual plant"

As noted, the March 1957 Federal Register notice announced the policies under which AEC would enter into contracts to provide for the chemical reprocessing and recovery of irradiated nuclear reactor fuel. This action was taken to provide, on an interim basis, fixed charges for such services until the time when reprocessing would be available commercially at reasonable prices. A need existed for firm processing commitments to remove a potentially serious obstacle and uncertainty in the civilian nuclear power program.

The determination of charges for processing operations for which, in many cases, neither facilities nor demonstrated technology was available, necessarily involved the selection of design and criteria on the basis of judgment. This led to the conceptual design of a multipurpose chemical processing plant to allow consistent estimates to be determined for treating the types and quantities of fuel expected to be available in the period 1960–67. It was also the judgment, at that time, that, on the whole, the AEC costs would be covered by the conceptual plant charges should the AEC find it necessary to process the private fuels.

This "conceptual plant" is currently used to estimate and establish standard reprocessing charges, and any additional charges not included in the standard charges, for AEC spent fuel reprocessing services. 0. NFS proposal

In January of 1962, the Davison Chemical Co. outlined to the Commission its plans for constructing a private chemical reprocessing facility. This proposal evolved from the IRG study. In March, the Commission notified Davison that its proposal to provide the commercial service, which would include processing of a baseload of Government fuels to supplement the fuels that would be supplied by licensees and others, constituted a satisfactory basis for further negotiation and development of definitive plans. Soon thereafter, Nuclear Fuels Services, Inc., or NFS, replaced the Davison Chemical Co, as the entity to undertake the venture. Since that time negotiation of an AEC-NFS contract for the baseload of Government fuels has been underway, and at this point is nearing completion.

At the heart of the NFS proposal is the premise that AEC would cease receiving licensee irradiated fuels, so as not to compete with NFS for the available commercial business. This, of course, is as it should be. It is noted that the AEC's détermination as to whether it will continue to receive licensee fuels becomes significant only if voluntary arrangements cannot be agreed upon between the reactor operators and NFS. However, before determining to cease receiving irradiated fuels from licensees, the Commission must assure itself that the services are available as charges and under terms and conditions con


* A study of industrial chemical processing undertaken by the Davison Chemical Co. and the operators of five nuclear power reactors-Yankee, Dresden, Indian Point, Fermi, and Pathindéri:7!!

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