decisions on requirements which, at the same time, fixes their ability to recycle plutonium. The Commission indicates that the June 30, 1973, date for establishing these factors in the contract might be extended. It seems to me that the freeze date for this aspect of the requirements contracts will have to be extended and that it should be determined by the status of technology and the role of the associated economics at that future time.

DISPOSAL OF AEC URANIUM INVENTORY

The Joint Committee also has indicated that it would be willing to receive comments on the AEC's post-1968 policies on supply of uranium. According to Chairman Seaborg's testimony, one of the principal features of the post-1968 AEC policy concerns the disposal of the Government stockpile of feed materials. We find the AEC statement entirely reasonable and do not expect that the existence of the AEC stockpile will have a deleterious effect on either the growth of nuclear power or the development of a viable, competitive uranium mining and milling industry. The second noteworthy statement in the Chairman's remarks to the committee concerns the renewed interest of the uranium mining industry in exploration. That a uranium shortage could conceivably develop in the United States has been apparent for some time. The ability and willingness of the uranium mining industry to undertake exploration at a time when the demand for uranium for the domestic power industry has not had a significant economic impact is admirable. It should receive encouragement and support from the AEC in all appropriate ways.

With respect to uranium reserves and requirements, I gave testimony in April of 1963 to this committee on that subject. There has been no material change except that if a crisis in supply were to develop it would be at an earlier date than we predicted in the 1963 testimony. This is because the rate of growth of nuclear power now exceeds by a considerable factor the projection given in the 1962 AEC Report to the President. We need not only a discovery of further uranium reserves but also we need the development of reactor types which have better utilization for fissionable material.

SAFEGUARDS FOR FISSIONABLE MATERIAL

With respect to domestic safeguards for diversion of fissionable material, this is essentially a matter of accounting for fissionable material in the total fuel cycle. Probably the sensitive points for control in the commercial operations all lie beyond the point of enrichment, although control over natural uranium should not be neglected. The problem is formidable because the amounts of material used are very large and the amount which must be prevented from escaping into illegal channels is quite small. There is built-in protection, however. While the diffusion process for a number of years may all be in one set of hands; namely, the Federal Government, the further use of enriched uranium is divided among fuel processors, numerous reactors, and possibly a few fuel reprocessing facilities. This means that there is no one point in the commercial chain at which the very large quantities exist or pass and where a very small, steady illegal diversion could be built up into a significant quantity. Í am familiar with the accounting prac

tices which a licensee handling feed or enriched material must comply with under AEC regulations. These are based essentially on careful accounting for material which has a high monetary value. They also require stringent control of all processes in the plant in order to keep unaccounted losses to a minimum value and to minimize personnel exposure. The cost of such procedures is not now a burden to the nuclear fuel cycle. In my judgment, to make a substantial improvement in accountability might impose a significant cost with some doubt that, in a practical sense, it could be accomplished. The generation of plutonium in a power reactor is a significant part of the problem of domestic control of fissionable material. Here, we need further refinements of calculational and assay techniques before the accuracy with which plutonium is generated achieves the same level as the accuracy with which we can measure the U235 which is put into the fuel cycle chain.

In concluding my remarks, I wish to state that the AEC has obviously devoted a great deal of care and attention to establishing its proposed criteria and form of contracts. It has responded to suggestions from industry on various points and has produced a plan which includes sufficient flexibility to permit the industry to go forward in an orderly fashion. A transition period always is difficult, and I hope we can look forward to a time, perhaps early in the 1970's, when contracts for enrichment services will be a routine part of our business. The AEC is to be commended for the care with which it has approached this complicated but important task.

I wish to express my thanks to the Joint Committee for the opportunity to appear here today and express our views.

Representative PRICE. Thank you, Doctor, for your presentation.

ENRICHMENT OF FOREIGN URANIUM

Doctor, in your opinion do you feel that we should permit foreign uranium to be enriched for domestic use? I know you treated on it in your paper but I would like to have a more direct statement from you on that point.

Dr. ZINN. A question of timing is involved. It is important to the nuclear industry to have a strong competitive uranium milling and mining industry. I think we might not achieve that goal if foreign uranium were permitted to enter the country immediately.

But also I believe in the longer term that there may develop a rising cost, if that prohibition is maintained, because the supplies in this country may diminish.

At that time I think it would be appropriate to prevent the rising costs by having foreign uranium introduced into our supply.

Representative PRICE. What price or costs would you be thinking of and set?

Dr. ZINN. When the cost of the ore gets over $8 a pound, the impact on the fuel cycle cost for the developed reactors becomes noticeable. As it goes above $10 or $12 a pound it becomes a fairly severe penalty. Representative PRICE. Doctor, you devoted some time to the possible diversion of special nuclear material, and the procedures that were set up to try to exercise control over this. You indicated that you thought the cost of such procedure, while not now a burden, could possibly become a burden.

Do you not think it is almost essential that there be some tightening up in the checks on the possibility of diversion?

Dr. ZINN. I certainly believe we should do anything that is reasonable to do to prevent diversion. I do not believe we should spend money and not actually accomplish our goal.

Let me explain what I mean. In the commercial fabrication of fuel for instance we are dealing with uranium of low enrichment, not of high enrichment, probably an average of 22 percent.

As a matter of fact we are now trying to account for this uranium to 1 gram. Since the quantities involved are quite large this is a very difficult thing to do. Therefore, there has to be an error placed on that account. To tighten up on that error is not an easy matter.

SAFEGUARDS FOR PLUTONIUM

Representative PRICE. When you go into the breeder program would not your problem increase?

Dr. ZINN. I was going to follow with the matter of plutonium. When you consider the matter of producing plutonium in reactors our trouble is not really a matter of accounting practices. It is a matter of the fundamental knowledge of the reactor. We do not know with very great accuracy how much plutonium a reactor produces as the result of its operations. The accuracy is much less than we can measure the amount of enriched uranium we put into the reactor.

Until that improves it seems to me it is very difficult to determine what you put into the chemical reprocessing plant. You can measure the amount of plutonium which is produced by the chemical plant and the amount of plutonium used to fabricate fuel elements can be determined accurately, but the input to the reprocessing plant is very difficult. As I indicated, we have no real good way of knowing what the reactor produces; so until we have a lot of experience we will have this uncertainty for the diversion problem and we want to close down on this uncertainty.

AEC'S SAFEGUARDS STANDARDS

Mr. CONWAY. I would like to go back to your prepared statement, page 6, and follow up on your discussion when you say that they, meaning the AEC, require stringent control over all processors in the plant in order to keep unaccounted losses to a minimum value, and to minimize personnel exposure.

You are referring to material held subject to AEC license, and compliance with AEC's regulations. As a licensee, wherein are you required to account for every gram?

Dr. ZINN. I believe you are required under the proposed regulations to issue the usual accounting reports. I believe the period is monthly. Mr. CONWAY. What is the standard that AEC has set? Is there any specific standard that you have to meet, that is, to account for each gram or any particular amount?

Dr. ZINN. I think it would be premature on the basis of experience people have had in handling large quantities of slightly enriched uranium to set standards today.

Mr. CONWAY. What is your standard today? As I understand it, you say there is a stringent control.

Dr. ZINN. One is the monetary value which is considerable and second is reasonable care.

Mr. CONWAY. But there is no specific standard. Are you currently required by AEC's regulations, to stay within a 1-percent, 2-percent, or 3-percent loss?

Dr. ZINN. No, I don't believe so.

Mr. CONWAY. The penalty is that you will have to pay for the loss. Dr. ZINN. That is right.

Mr. CONWAY. However, there is no standard set.

Dr. ZINN. I think it is premature to set a standard because I don't think there is sufficient experience to know two things that I think are needed. One is how well you can determine your accounted losses. You know, in any process you are going to have losses but you have some way of measuring what they are. They are real losses in that the material is dispersed and it would not make any financial sense to try to recover the material. That is the accounted loss.

Then there is the unaccounted loss and presumably a proper accounting system would work very hard to get the unaccounted loss to a small number.

I have made a little back-of-the-envelope calculation on this which goes something this way: If at a time which will come in the 1970's, early in the 1970's when the orders for nuclear powerplants are running about 10,000 megawatts electrical per year, I calculate that the amount of natural uranium involved for refuel and for new inventory would be in the neighborhood of 10,000 metric tons per year.

This is used in slightly enriched form. If I impose on that amount the requirement that not more than one-tenth of 1 percent ever appear as an unaccounted loss, this turns out to be around 50 kilograms of uranium 235 per year.

Please remember this uranium 235 is in a slightly enriched form. It is not suitable for weapons use.

Mr. CONWAY. You are projecting yourself into the 1970's and you also will have plutonium separated at chemical separation plants.

Would you not consider or recognize a greater degree of safeguards necessary for plutonium and, as we get into the breeder program, for highly enriched uranium?

Dr. ZINN. Yes, I recognize if you are using highly enriched uranium you have to have a corresponding tightening up on this loss thing. How difficult this is going to be I am not in a position to judge. I have no experience in reprocessing or really handling plutonium.

SAFEGUARDS FOR CHEMICAL PROCESSING AND FABRICATION PLANTS

Mr. CONWAY. At the top of page 6 you say there is no one point in the commercial chain at which very large quantities exist or pass and where a very small, steady illegal diversion could be built up into a significant quantity.

I would suggest a chemical reprocessing plant could be such a point in the commercial chain.

Dr. ZINN. I would agree if all of the chemical processing is done in just one or two plants that would be one place. The enrichment plant is another. At present the enrichment plant is not a commercial operation.

Mr. CONWAY. Would you not agree also when you get into highly enriched material or recycling plutonium that a fabrication plant could also be such a point?

Dr. ZINN. It could very well be if you are using plutonium. But you do have a health hazard and this dictates the kind of protection you build around the equipment.

Mr. CONWAY. From a Government point of view I believe the safeguards come down to not only safeguards against diversion but also for health and safety purposes.

Dr. ZINN. Yes, and I believe the existing experience on plutonium handling indicates that the health and safety thing is in a pretty good shape. If it is in pretty good shape I think you have some assurance that the diversion is in pretty good shape also.

Mr. CONWAY. If it is, then you should require Government inspection in order to insure you continue to meet that test.

Dr. ZINN. You have to have a license to operate this facility and with the license comes supervision and inspection. I never thought otherwise.

Representative PRICE. Mr. Young, do you have any questions?
Mr. YOUNG. I have no questions, Mr. Chairman.

Representative PRICE. Does the staff have any further questions?

COMPETITION IN THE NUCLEAR INDUSTRY

Mr. CONWAY. Do you think special measures should be adopted by the utility industry to enhance competition in the reactor manufacturing and fuel fabrication business?

Dr. ZINN. I would not call them special measures but I think the utility industry has already done what you suggest. I point to the fact that one utility company has let a contract for reload fuel to someone else than the original supplier and also that the utility companies are adopting the nonturnkey approach which I think broadens the opportunity for companies to compete.

Representative PRICE. Thank you very much, Dr. Zinn.

The next witness will be Mr. George White, general manager of the atomic power equipment department of General Electric Co. We are glad to have you back with us.

STATEMENT OF GEORGE WHITE, GENERAL MANAGER OF THE ATOMIC POWER EQUIPMENT DEPARTMENT, GENERAL ELECTRIC CO.

Mr. WHITE. I have Mr. Eugene Maher, our division counsel, with

me.

My name is George White and I am general manager of the General Electric's atomic power equipment department. I am grateful for this opportunity to participate in these hearings concerning the Commission's toll enrichment criteria and contracts and the important related matters listed by Chairman Holified.

TOLL ENRICHMENT CRITERIA AND CONTRACTS

The AEC's proposed criteria and contracts for providing toll enrichment services have been the subject of extended Commission review