THE SUPPLEMENTAL APPROPRIATION BILL, 1959 TUESDAY, JULY 22, 1958 UNITED STATES SENATE, PUBLIC WORKS SUBCOMMITTEE OF THE The subcommittee met, pursuant to notice, at 2 p. m., in room F-82, the Capitol, Hon. Lister Hill, chairman of the subcommittee, presiding. Present: Senators Hill, Ellender, Robertson, Anderson, and Saltonstall. Also present: Senators Dworshak and Barrett. ATOMIC ENERGY COMMISSION OPERATING EXPENSES STATEMENTS OF JOHN F. FLOBERG, HAROLD S. VANCE AND JOHN S. GRAHAM, COMMISSIONERS; PAUL F. FOSTER, GENERAL MANAGER; A. A. WELLS, ACTING GENERAL COUNSEL; DON S. BURROWS, CONTROLLER; J. C. JOHNSON, DIRECTOR, DIVISION OF RAW MATERIALS; E. J. BLOCH, DIRECTOR, DIVISION OF PRODUCTION; BRIG. GEN. A. D. STARBIRD, DIRECTOR, DIVISION OF MILITARY APPLICATION; W. K. DAVIS, DIRECTOR, DIVISION OF REACTOR DEVELOPMENT; DR. J. H. WILLIAMS, DIRECTOR, DIVISION OF RESEARCH; DR. C. L. DUNHAM, DIRECTOR, DIVISION OF BIOLOGY AND MEDICINE; DR. A. J. VANDER WEYDEN, ACTING DIRECTOR, DIVISION OF INTERNATIONAL AFFAIRS; E. R. GARDNER, DIRECTOR, OFFICE OF SPECIAL PROJECTS; O. S. SMITH, DIRECTOR, DIVISION OF ORGANIZATION AND PERSONNEL; M. SALISBURY, DIRECTOR, DIVISION OF INFORMATION SERVICES; J. A. DERRY, DIRECTOR, DIVISION OF CONSTRUCTION AND SUPPLY; F. K. PITTMAN, DIRECTOR, OFFICE OF INDUSTRIAL DEVELOPMENT; F. J. MCCARTHY, Jr., ASSISTANT CONTROLLER FOR BUDGETS; AND J. A. MILLER, DEPUTY ASSISTANT CONTROLLER FOR BUDGETS OPENING STATEMENT BY CHAIRMAN Senator HILL. The committee will be in order. This year the appropriations for the Atomic Energy Commission are contained in the supplemental appropriation bill for 1959. The bill was reported last Friday and is presently being considered by the House. We are therefore hearing from you gentlemen of the Atomic Energy Commission on the basis of the bill as reported to the House. If any changes are made in the bill on the floor of the House, you will supplement your request in statements accordingly. If you see fit to make some change in your statements, we will have you do so. 1 As usual we will have the reporter take the proceedings in full and then the Commission will review the transcript for the classified material in order that we may print a hearing as fully as it is possible to release. SUMMARY STATEMENTS In that connection we will place in the record the summary statements from the budgetary documents and any additional information that may be helpful to the committee. (The information referred to follows:) GENERAL STATEMENT FOR OPERATING EXPENSES ESTIMATE OF APPROPRIATION This book contains the budget estimates for the appropriation "Operating expenses, Atomic Energy Commission" for fiscal year 1959. The estimates provide for total obligations of $2,467,594,000 to be funded by (1) a new appropriation of $2,418 million and (2) the reappropriation of $49,594,000 in unobligated balances remaining at the end of fiscal year 1958. ESTIMATES OF COSTS AND OBLIGATIONS The estimates for the appropriation, "Operating expenses,' are stated in terms of accrued costs for each of the AEC's 11 operating programs. "Accrued costs" denotes the actual application of labor, materials, equipment, and services to the program during the year, but excludes depreciation of facilities used in the operation. The AEC does, however, maintain accounts for depreciation for the purpose of determining total costs of production and for use in establishing prices for services rendered or products sold to others. Revenues are obtained from the operation of AEC-owned communities and housing, from the sale of products and services performed for others, and from other miscellaneous sources. These revenues are identified and summarized under the section titled, "Revenues applied." Revenues are deducted from the total of the accrued costs for the operating programs in determining the amount of the net costs to be financed by congressional appropriations. The net costs of operation are reconciled to the total obligations to be incurred during the year by estimating the buildup or decrease during the year of the resources that are to be applied to future years' operations. These estimates are included in the section titled, "Increase or decrease (-) in selected resources" and include inventories and undelivered orders. The table on the next page summarizes the accrued costs for each program and the total obligations for the fiscal years 1957, 1958, and 1959. The detailed justifications beginning on page 13 present the programs in the same order as they appear on this summary table. Summary of accrued operating costs by program reconciled to obligations FINANCING OF OBLIGATIONS The fiscal year 1959 budget estimate proposes that the obligations for fiscal year 1959 totaling $2,467,594,000 be financed (1) by new appropriations totaling $2,418 million and (2) by the reappropriation of $49,594,000 in unobligated balances remaining at the end of fiscal year 1958. Obligations in fiscal years 1957 and 1958 were financed in part by new appropriations, by transfers from other appropriations and by the reappropriation of unobligated balances of prior-year appropriations. The following table summarizes the financing of obligations for fiscal years 1957, 1958, and 1959: UNOBLIGATED BALANCE OF PRIOR-YEAR APPROPRIATION APPLIED TO FISCAL YEAR 1959 REQUIREMENTS The unobligated balance of $49,594,000 which has been applied to the fiscal year 1959 requirements includes a deferral of requirements amounting of $27,627,000 on the cooperative arrangements program for civilian power which were funded in fiscal year 1958 but on which obligations will not take place until fiscal year 1959 and $21,967,000 representing 1958 savings through cost underruns and programatic changes in fiscal year 1958. EXPENDITURES FOR OPERATING EXPENSES Expenditures for operating expenses for fiscal year 1959 are estimated at $2,390 million an increase of $330 million over the estimate of $2,060 million in fiscal year 1958. Actual expenditures for operating expenses in fiscal year 1957 totaled $1,726,039,909. Unexpended balances are expected to increase from $685,328,399 at the beginning of fiscal year 1957 to an estimated $921,847,489 at the end of fiscal year 1959 as shown in the following table which depicts the amounts available for expenditure, the expenditures for each year, and the unexpended balances at the end of each year. 1 Includes $27,188,999 for unpaid obligations as of June 30, 1956, for equipment not included in construction projects transferred under authority contained in the 1957 appropriation act, and $11,500,000 to finance contracts for procurement of feed materials from contractor-owned plants in lieu of construction of plants by the Government. HIGHLIGHTS OF OPERATING PROGRAMS As shown in the table on page 2, estimates are prepared and presented for (1) each of the Commission's major operating programs, (2) revenues, and (3) change in selected resources. The highlights of each of these estimates are: Operating costs 1. Raw materials program.-Operating costs for the raw-materials program are estimated at $680.0 million in 1959, compared with the estimated 1958 costs of $596.9 million and actual 1957 costs of $397.8 million. The raw-materials program includes the procurement of uranium concentrates and ores from foreign and domestic sources and related costs for resource evaluation and process development. The substantially increased quantities of uranium concentrates to be procured in fiscal year 1959 will come principally from the United States and Canada. 2. Special nuclear materials program.—Operating costs for the special nuclear materials program are estimated at $580.4 million in 1959, compared with the estimated 1958 costs of $569.8 million and actual 1957 costs of $581.6 million. The production of special nuclear materials begins with the refinement of uranium concentrates for diffusion plants or reactors. The isotope uranium 235 is extracted in gaseous diffusion plants at Oak Ridge, Tenn., Paducah, Ky., and Portsmouth, Ohio. Plutonium is synthesized in the reactors at Hanford, Wash., and Savannah River, S. C. As production of special nuclear materials increases this output will be accompanied by lower unit processing costs. Improvements in processes for each manufacturing step are aimed at further decreases in unit costs, increases in yield and improvements in the quality of products. 3. Weapons program.-Operating costs for the weapons program are estimated at $547.6 million in 1959, compared with estimated 1958 costs of $448.0 million and actual 1957 costs of $323.3 million. The weapons program includes the production of atomic weapons, the development, design, and testing of new weapons types, and the maintenance of stockpiled weapons in a state of constant readiness. Weapons testing will continue at the test sites in Nevada and the Pacific Islands, as developments may warrant. A program for nonmilitary uses of nuclear explosives is also included in the estimate of $0.4 million in 1958 and $3.0 million in 1959. 4. Reactor development program.-Operating costs for the reactor development program are estimated at $420.3 million in fiscal year 1959 compared to estimated fiscal year 1958 costs of $329.3 million and actual fiscal year 1957 costs of $266.6 million. Emphasis will continue to be placed on advancing power reactor technology including fuel cycle development in order to assist industry to achieve large-scale generation of economic electrical energy from atomic reactors. Cooperative endeavors between the Commission and industrial groups will be stressed. Work will also be continued on reactors to propel naval and maritime vessels, military aircraft missiles and satellites, and also to meet military needs for power in remote areas. This research also provides information useful in the development of civilian power reactors. Efforts will be accelerated on research and development work for the controlled thermonuclear project to eventually achieve production of power through the fusion process. The estimates also cover generalized reactor systems research and development applicable to many reactor designs, a program of reactor safety, a program for development of reprocessing and waste-disposal methods, and operation of experimental facilities at the National Reactor Testing Station in Idaho. 5. Physical research program.-Operating costs for physical research are estimated at $90.0 million in 1959 compared with estimated 1958 costs of $71.5 million and actual 1957 costs of $59.3 million. The physical research program consists of theoretical and experimental investiagtions required to support both the Commission's immediate and longer-range objectives for utilizing nuclear energy. Every advance achieved in the past can be traced back to similar laboratory investigations. In the atomic-energy program, research plays a relatively more important role than in other industrial operations of comparable size. The phenomena dealt with are close to the frontiers of science. Unusual materials are employed, and their nuclear as well as their chemical and physical properties must be determined. The temperatures and radiation densities at which these materials are used are outside the range of previous experience in industrial technology. Research is carried on both by Commission laboratories and by some 100 universities and other independent institutes. |