B 779,967
REVIEW OF PROPOSED POWER
DEMONSTRATION PROJECT
Phoenix
iii,
9690
lº HEARING
A595 -, - BEFORE THE
1960 SUBCOMMITTEE ON LEGISLATION
JOINT COMMITTEE ON ATOMIG ENERGY
(ONGRESS OF THE UNITED STATES
EIGHTY-SIXTH CONGRESS
SECOND SESSION
ON
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
JUNE 10, 1960
Printed for the use of the Joint Committee on Atomic Energy
' ' ' ... J v -r S /
CF ſ CH IGAN
APR 27 1973
PHOEN }}/
{ i tº FK ARY
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1960
* * > . . . .
- ???,.” - * * ~. *
* * ** f \, X -- .
* * * : , ; }
A 'r IHE UNIV ERSHY OF MICHIGAN LIBRARIES ºut 2" º'


Phoenix
2^\ , * *
| | | D
JOINT COMMITTEE ON ATOMIC ENERGY
CLINTON P. ANDERSON, New Mexico, Chairman
CARL T. DUREIAM, North Carolina, Vice Chairman
RICHARD B. RUSSELL, Georgia CHET HOLIFIELD, California
JOHN O. PASTORE, Rhode Island MELVIN PRICE, Illinois
ALBERT GO RE, Tennessee WAYNE N. ASPINALL, Colorado
HENRY M. JACKSON, Washington ALBERT THOMAS, Texas
BOURKE B. HICKENLO OPER, Iowa JAMES E. VAN ZANDT, Pennsylvania
HENRY DWORSHAK, Idaho CRAIG. HOSMER, California
GEORGE D. AIKEN, Vermont WILLIAM H. BATES, Massachusetts
WALLACE F. BENNETT, Utah JACK WESTLAND, Washington
JAMES T. RAMEY, Erecutive Director
DAVID R. TOLL, Staff Counsel
EDWARD J. BAUSER, Technical Adviser
SUBCOMMITTEE ON LEGISLATION
CHET HOLIFIELD, California, Chairman
CARL T. DURFIAM, North Carolina ALBERT GORE, Tennessee
WAYNE N. ASPINALL, Colorado BOUR KE B, HICKENLO OPER, Iowa
JAMES E. VAN ZANDT, Pennsylvania HENRY DWORSHAK, Idaho
II


C O N T E N T S
ATOMIC ENERGY COMMISSION WITNESSES
Floberg, John F., Commissioner-------------------------------------
Vander Weyden, Allen J., Deputy Director, Division of Reactor Develop-
Giambusso, A., Chief, Water Reactors Branch, Division of Reactor
Development---------------------------------------------------
Kunz, Earl, Chairman, Negotiating Committee------------------------
STATEMENTS OF OTHER WITNESSES
(By Organization or Affiliation)
Consumers Power Co., by James H. Campbell, president - - - - - - - - - - - - - - -
General Electric Co., by George White, general manager, atomic power
equipment department-------------------------------------------
MATERIAL SUBMITTED FOR THE RECORD
Chronology of Consumers high power density project - - - - - - - - - - - - - - - - - -
“Definition of New Safety Requirements,” furnished by counsel for Con-
sumers Power Co------------------------------------------------
Opinion of the General Counsel, AEC, concerning indemnity provisions
of the Atomic Energy Act of 1954 for property damage caused outside
§. United States by a nuclear incident occurring within the United
tates----------------------------------------------------------
CORRESPONDENCE SUBMITTED FOR THE RECORD
Campbell, James H., president, Consumers Power Co., to David Toll,
counsel, JCAE, dated June 14, 1960, clarifying the definition of “nuclear
incident” by amending the pertinent section of the Atomic Energy Act
of 1954---------------------------------------------------------
Staebler, U. M., Senior Assistant Director, Division of Reactor Develop-
ment, AEC, to James T. Ramey, Executive Director, JCAE, dated June
8, 1960, concerning the objectives of the high power density prototype
reactor------------------------------------------------------ * — —
White, George, general manager, atomic power equipment department,
General Electric Co., to Congressman Wayne N. Aspinall, dated June 21,
1960, concerning patent applications filed by GE on high power density
type of boiling Water reactor--------------------------------------
APPENDIX
Program justification data.------------------------------------------
III
16

REVIEW OF PROPOSED POWER DEMONSTRATION
PROJECT
FRIDAY, JUNE 10, 1960
CoNGRESS OF THE UNITED STATES,
SUBCOMMMITTEE ON LEGISLATION,
JoſNT COMMITTEE ON ATOMIC ENERGY,
Washington, D.C.
The subcommittee met, pursuant to call, at 10 a.m., in room 304,
Old House Office Building, Hon. Wayne N. Aspinall presiding.
Present: Representatives Aspinall, Price, and Bates.
Also present: James T. Ramey, executive director; David R. Toll,
staff counsel, and Edward J. Bauser, technical adviser, Joint Commit-
tee on Atomic Energy.
Representative AsPINALL. The Subcommittee on Legislation of the
Joint Committee on Atomic Energy will be in session for the con-
sideration of the business that is regularly scheduled to come before
it this morning.
The Subcommittee is meeting this morning in public Session to re-
view proposed arrangement No. 60–110–1 between the AEC and Con-
Sumers Power Co. of Jackson, Mich., and the General Electric Co.
Under this proposed arrangement, the proposers would construct
and operate a 75,000-kilowatt electrical boiling water reactor plant
at Big Rock Point, Charlevois County, Mich., while AEC would pro-
vide research and development assistance and waive charges for use
of nuclear fuels.
Section 111 (b) of Public Law 85–162 requires that the Commission
submit to the Joint Committee the basis of any proposed arrangement
and that a period of 45 days shall thereafter elapse while Congress is
in session, unless waived by the Joint Committee.
Section 110(c) of Public Law 86–50, the AEC Authorization Act,
for the current fiscal year 1960, authorized the AEC to use funds
not to exceed $5 million to provide research and development assist-
ance in support of “unsolicited proposals” from the utility industry
to construct nuclear powerplants.
Under this authority, Consumers Power Co. and General Electric
Co., jointly submitted a proposal to the AEC on December 18, 1959,
and the AEC submitted the basis of the proposed arrangement to the
Joint Committee on April 29, 1959.
Without objection, the program justification data submitted by the
AEC will be incorporated as an appendix to this hearing (p. 27).
I understand that the principal witness for the AEC this morning
will be Mr. John Floberg, AEC Commissioner.
1
2 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Representatives of Consumers Power Co. and General Electric Co.
have also been invited to be present and to add any comments later
this morning if they care to do so.
We are glad to have you with us this morning, Mr. Floberg. You
and the members of your staff whom you desire to have with you
may sit at the table and make the presentation.
STATEMENT OF COMMISSIONER JOHN F. FLOBERG, ATOMIC
ENERGY COMMISSION
Mr. FLOBERG. Thank you, Mr. Chairman.
Mr. Chairman and members of the committee, we appreciate your
providing us with an opportunity to discuss our proposed cooperative
arrangement with the Consumers Power Co. of Michigan, and the
General Electric Co., covering the high power density boiling water
reactor plant, to be built at Big Rock Point, Charlevoix County,
Mich.
The proposed arrangement, which was referred to your committee
on April 29, is based upon the unsolicited proposal submitted to AEC
jointly by Consumers Power Co. and General Electric on December
18, 1959, under the terms of the “Third Round, Power Demonstration
Reactor Program.”
Under the terms of subsection 110(c) of Public Law 86–50, the
fiscal year 1960 Authorization Act, AEC was authorized to use funds
up to $5 million to provide research and development assistance in
support of unsolicited proposals from the utility industry to con-
struct nuclear powerplants.
The nuclear powerplant to be constructed under the proposed ar-
rangement is a single cycle, forced circulation, light water cooled and
moderated, high power density boiling water reactor.
This reactor is equivalent to the boiling water prototype reactor
which the Commission proposed for construction as part of its basic
developmental program and which was authorized for construction
either under a cooperative arrangement or as a Commission project
under the fiscal year 1960 Authorization Act.
Representative AsPINALL. Mr. Floberg, at this point I would like
to ask one or two questions.
What is proposed here is part of a third round procedure; is that
right?
Mr. FLOBERG. That is right.
Representative AsPINALL. Will this reactor to which you have made
reference and for which the proposal has been made meet objectives
of the high power density boiling water reactor which the Commis-
sion originally proposed as part of its basic developmental program 8
Mr. FLOBERG. Yes, sir. I will enlarge more on that in my state-
ment.
Representative AsPINALL. As you proceed, you can advise us as to
what those objectives are even to a greater extent than you have in
your statement?
Mr. FLOBERG. Greater than in the prepared statement, Mr. Chair-
man?
Representative ASPINALL. Yes, sir.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 3
Mr. FLOBERG. Let me cover it in the prepared statement and then I
suggest any further questions you want to ask be asked or we can
enlarge on it without any further stimulation, if you like.
Representative AspINALL. One other question for the record.
The negotiations for this arrangement lasted more than 6 months
and held up decisions on other alternatives that were at least in the
minds of some people. Why did the negotiations take so long?
Mr. FLOBERG. It just took a long time to work out this arrangement,
Mr. Aspinall. I agree it took a long time, but it was a complicated
arrangement. A great many details had to be developed with the two
private parties to this arrangement; namely, the Consumers Power
Co. and the General Electric Co. ©
I have a chronology that I developed to show the Series of meetings
in connection with this because I asked the same question as you have
asked: Why did it take so long? - © tº
I am pretty well satisfied that there was not much slack time in there.
Representative ASPINALL. Would you be willing to submit for the
record at this point a copy of that chronology of events that took
lace?
Mr. FLOBERG. I shall be glad to. In fact, I will give it to you right
now and you can be looking it over during the rest of the hearing.
When I have finished with my prepared statement, you can ask any
questions with regard to it that you want to. º
Representative AsPINALL. Thank you very much. It will be placed
in the record at this point.
(The material referred to follows:)
CHRONOLOGY OF CONSUMERS HIGEI POWER DENSITY PROJECT
February 18, 1959: Chairman testified at 202 hearing that Commission planned
to construct advanced boiling water reactor prototype.
March 24, 1959: Chairman testified at authorization hearings that Consumers
Power Co. had informed him it planned to build and Operate high power density
prototype reactor which would be similar to the One the AEC planned. The
utility indicated it might want to talk to AEC about assistance. -
March 24 to June 19, 1959: Several Consumers Power Co. discussions with
AEC.
May 1959: ANL-Sargent & Lundy report on AEC high power density reactor
conceptual design.
June 19, 1959: Consumers press release announcing project. Stated they were
investigating possibility of applying for AEC assistance.
July 15, 1959 : Meeting between Consumers people and AEC staff. Consumers
informed as to status of fiscal year 1960 authorization and appropriations ; pro-
cedures used in evaluating proposals, referrals to JCAE and negotiation of Con-
tracts ; AEC conditions and criteria for proposals. Consumers said they were
still undecided as to requesting AEC assistance. -
July 31, 1959: Meeting between AEC staff and Consumers for general dis-
CuSSiOn Of proposed reactor design and development program. Tentative COn-
clusion was that they were similar to AEC plans for high power density.
August 1959: ANL-Sargent & Lundy report supplement issued.
September 3, 1959: Michigan Public Service Commission publishes order set-
ting forth terms On Which Consumers is authorized to account for R. & D.
expenditures.
September 10, 1959: Consumers informs AEC of Michigan Public Service Com-
mission order, and states that proposal will be forthcoming.
September 23, 1959: GE and Consumers met with AEC for technical discus-
sion ; proposed project found closely similar to AEC requirements.
September 30, 1959 : GE and Consumers met with AEC to discuss proposed for-
mula for postconstruction R. & D. assistance (to be based on kilowatt-hours
produced). AEC representatives expressed doubts as to acceptability.
4 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
November 4, 1959: Consumers met with AEC with new formula (based on
reactor downtime). AEC representatives expressed doubts as to acceptability.
December 22, 1959: Firm proposal delivered to AEC.
January 7, 1960: AEC accepts proposal as basis for negotiations, and AEC
reactor hazards Staff initiates investigation of adequacy of site.
January through April 1960: Negotiation of bases of arrangements with Con-
SumerS and GE.
sº January 25, 1960: RHEB findings: “Based on information available to date,
it is concluded that no adverse site condition is apparent that should inhibit
consideration of the Consumers Power Co. proposal.”
January 29, 1960: AEC authorizes start of R. & D. work on certain urgent
items, at GE’s risk.
April 1, 1960: AEC authorizes start of additional R. & D. work.
April 22, 1960: Commission approves proposed arrangements.
April 28, 1960: Letters of understanding with GE and Consumers executed.
April 29, 1960: Arrangements forwarded to JCAE.
May 3, 1960: Public announcement of agreement on arrangements.
May 31, 1960: Construction permit issued.
Representative ASPINALL. You may proceed.
Mr. FLOBERG. The initial core of the Consumers reactor will be
designed for an average power density of 45 kilowatts per liter capable
of delivering 50,000 gross electrical output at a reactor system pres-
Sure of 1,050 pounds per Square inch absolute.
The electrical generating equipment has been designed to permit
operation at 75,000 kilowatts gross electrical output coinciding with
the operation of the reactor at an average power density of 60 kilo-
watts per liter.
Operation at 60 kilowatts would represent an increase in power
density over the Dresden reactor by a factor of about 2.3. The fuel
will consist of slightly enriched uranium oxide pellets encased in
stainless steel or other metallic tubing.
Representative ASPINALL. Mr. Commissioner, may I interrupt you
at that place So that we can get another question in mind answered.
What are the advantages of high power density, and is less uranium
fuel required for this operation ?
Mr. FLOBERG. I will answer that in two ways:
First of all, one of the purposes of this reactor project is to find
out what the advantages are.
For the second half, I will ask one of the technical experts to give
you a more reliable answer than I can give you.
I would rather have Dr. Vander Weyden answer it.
STATEMENT OF ALLEN J. WANDER WEYDEN, DEPUTY DIRECTOR,
DIVISION OF REACTOR DEVELOPMENT
Mr. VANDER WEY DEN. Certainly one of the advantages is that you
can get more power out of each unit volume of the core of the reactor.
This, of course, could mean a smaller size reactor for the total power
Output.
This is one of the very key objectives in this whole program.
Representative ASPINALL. Now you have some answers, do you
not, with the operation that is taking place at the EBWR at Argonne?
What do you expect to find or what is your goal, let us put it that
way. © * , * * * * *
Mr. VANDER WEYDEN. One of the primary fº is this high power
density. To give a comparison, the EBWR which you mentioned had
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 5
a power density of 14.1 kilowatts per liter. The goal we are shooting
at in this reactor is 60 kilowatts per liter.
So you see it is a very substantial increase over the EBWR.
Representative AsPINALL. Of course, that brings up the next ques-
tion, which has been publicized, has it not, that you have already
operated the EBWR at Argonne at 60%
Mr. VANDER WEYDEN. Are you talking about 60 megawatts or in
terms of operation of the core?
Representative ASPINALL. The statement here is 60 kilowatts per
liter.
Mr. VANDER WEYDEN. For a very short period of time they have
demonstrated a high power density of this type.
What we want is a reactor that can operate reliably at a high power
density on a sustained basis for economic operation.
Representative ASPINALL. What you are saying is that your re-
Search. So far does not prove to you that it can be carried on success-
fully at that power density ?
Mr. VANDER WEYDEN. We do not know that we can have a sustained
large reactor operation at power density of that order.
i. FLOBERG. The EBWR has been very successful, but its high
power output has been on power excursions of relatively short
duration.
Representative ASPINALL. At this point I believe we should insert
in the record an AEC letter dated June 8, 1960, concerning the objec-
tives of the high power density prototype reactor.
(Letter referred to follows:)
U.S. ATOMIC ENERGY COMMISSION,
Washington, D.C., June 8, 1960.
Mr. JAMES T. RAMEY,
Eaſecutive Director, Joint Committee on Atomic Energy,
Comgress of the United States.
DEAR MR. RAMEY: In response to Commander Bauser's request for information
pertaining to the objectives established by the AEC for the 50-megawatt electric
high power density boiling water prototype reactor we submit the following:
An informal meeting was held on March 18, 19, and 20, 1959, attended by
representatives from—
1. Allis-Chalmers Manufacturing Co.
2. ACF Industries, Inc.
. Argonne National Laboratory
. Battelle Memorial Institute
. The Du Pont CO.
. General Nuclear Engineering Corp.
. General Electric CO.
The purpose of this meeting was to obtain from these organizations their
Opinions on the particular features which should be incorporated in a boiling
Water reactor prototype having a potential for reducing power cost in a 250- to
350-megaWatt electric plant. These opinions and other pertinent factors were
then considered by DRD and it was determined that high power density and
high Specific power were improvements of such significance as to warrant a
Construction of a prototype reactor for their demonstration.
Having made this determination, Argonne National Laboratory, in collabora-
tion With Sargent & Lundy, engineers, was directed to prepare a conceptual
design of a plant that would demonstrate these features, taking into account the
following criteria :
1. Direct cycle system ;
2. 50-megawatt electric ;
3. Average core power density, approximately 50 kilowatts per liter of
total core volume;
58509–60—2
i
6 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
4. UO2 fuel with stainless steel or zircalloy cladding ;
5. External steam separation ; -
6. Equilibrium fuel exposures of 12,000 to 15,000 megawatt-days per ton
eXposure. -
7. Operating pressure not less than 1,000 pounds per square inch absolute.
Sargent & Lundy engineers, with the assistance of Argonne National Labora-
tory, then completed their conceptual design, based on their interpretation of the
aforementioned criteria. The report summarizing their work, entitled “Con-
Ceptual Design Prototype Boiling Water Reactor,” SL–1647, is attached for your
information.
Upon receipt of the unsolicited proposal from the Consumers Power Co., we
examined the proposed design with reference to (1) the design criteria estab-
lished by the AEC and, (2) with reference to ANL and S. & L. Our conclusion,
based on this review, is that the design of the Consumers plant satisfies the AEC’s
Objectives for the high power density boiling water reactor prototype.
Sincerely yours,
U. M. STAEBLER,
Semior Assistant Director,
- Division of Reactor Development.
Representative Asp1NALL. You may proceed.
Mr. FLOBERG. Prior to the announcement by the Consumers Power
Co. of their intention to construct a high power density boiling water
reactor, the AEC, with the assistance of Argonne National Labora-
tory and Sargent & Lundy, prepared a conceptual design of a high
power density prototype reactor which was to be utilized in a third-
round invitation.
The Consumers’ design as submitted in their proposal, was com-
pared to the AEC design and it was concluded that the Consumers’
design was adequate to satisfy the AEC’s high power density
objectives.
The economic improvement attributable to high power density and
long fuel burnup is considered to be an essential part of the plant
developmental sequence for boiling water reactors.
The objective of the sequence is a boiling water target plant dem-
onstrating economic nuclear power in high cost areas of the United
States.
Now, I will invite you, Mr. Chairman, to ask further questions re-
garding the relationship between the conceptual design that the AEC
worked out, and this plant at this point. - e
If you would like us to go ahead and enlarge on it a little bit, Dr.
Vander Weyden and A. Giambusso are here and they can do so.
Representative AsPINALL. We accept your invitation. * >
Mr. VANDER WEYDEN. Perhaps you would like to have a comparison
between this concept and how this plant looks.
Representative ASPINALL. Yes.
STATEMENT OF A. GIAMBUSS0, CHIEF, WATER REACTORS BRANCH,
DIVISION OF REACTOR, DEVELOPMENT, ATOMIC ENERGY COM-
MISSION
Mr. GIAMBUsso. Sir, the conceptual design that we had considered
with the Argonne National Laboratory and Sargent & Lundy was
aimed at arriving at a plant design that would make it easy to explore
the high power density aspects and to try to eliminate other types
of improvements that could have a substantial effect on determining
the performance of a high power density core.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 7
Representative AsPINALL. Tried to eliminate an improvement that
might have a substantive influence 4 - . - -
Mr. GIAMBUsso. Yes, sir; in the test program, in trying to test the
high power density performance we looked at the conceptual design
to try not to put too many other factors in which would prohibit us
from exploring the performance limits.
The ANL and Sargent & Lundy design was based on a 50-megawatt
electrical plant. -
It had, as its objective, a 50 kilowatts per liter of core volume
power density. e
It utilized uranium oxide fuel and essentially it was a forced cir-
culation, direct cycle powerplant.
Our objective here was to try to develop a prototype which could
be extrapolated later to a large unit and here we wanted a forced cir-
culation system and a direct cycle system going directly from the
reactor into the turbine.
The enrichment anticipated for the Argonne study was 2.65. This
was the number that was arrived at on a preliminary study basis.
Now, the Consumers’ reactor design is basically similar to that
which was conceived at Argonne.
Here the power output will vary between 50,000 kilowatts electricity
to 75,000 kilowatts electricity. It is designed for a 75-megawatt out-
put.
The power density will vary between 45 and 60.
The plant here is to start out hopefully at a 45 kilowatt per liter
core volume power density and then raise the power density by intro-
duction of new fuels to 60 kilowatts per liter.
The burnup anticipated in the Argonne, Sargent & Lundy report
was about 12,000 megawatt-days per ton.
The objective in Consumers’ is 15,000.
Some of the first core elements will probably have burnups of
10,000 and then gradually increase to 15,000 hopefully.
The types of fuel considered were basically the same.
However, the enrichment at present is expected to range between
2.7 and 4.5 percent.
Representative ASPINALL. Is this with stainless steel, or zirconium
cladding 2
* GAMºusso. The cladding considered at this time is stainless
Steel.
Representative ASPINALL. Which calls for the use of more fuel 8
Mr. GIAMBUSSO. Which would raise the enrichment.
On the basis of stainless steel, we would have an enrichment of 2.9
percent. The test program for experimental fuel will include both
stainless steel and zirconium cladding.
The two designs varied very slightly in the anticipated operating
pressures. The conceptual design had anticipated a thousand pounds
pressure.
The Consumers' reactor anticipates a range of 1,000 to 1,500 pounds.
Here the question is to try to determine what is the optimum pres-
Sure to operate at under the higher power density conditions. It is
not clear which is the best combination.
Is it 50 kilowatts per liter at 1,000, or 55 at 1,200, or 60 at 1,500?
8 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Representative ASPINALL. Let me ask you this question at this
point: Are you sure, then, that you are ready for a round 3 project?
. Mr. GIAMBUsso. Yes, sir. The Consumers’ reactor is also a forced
circulation, direct cycle type of reactor, and the plant efficiency that
We are calculating in both cases are approximately the same, slightly
Over 31 percent.
Mr. ASPINALL. Thank you very much.
Mr. FLOBERG. Is that adequate comparison of the two plants?
Representative ASPINALL. I think that is adequate.
You may proceed, Mr. Commissioner.
Mr. FLOBERG. The research and development program associated
with the Consumers’ project will have as its objectives a demonstra-
tion of the feasibility of increasing power densities of boiling water
reactors, as well as determination of the effects of higher power
density operation upon fuel life exposure, and establishment of the
optimum combination of plant operating variables to achieve the
lowest total energy costs and the development of a low-cost, high-per-
formance fuel.
The contractual features of the proposed arrangement are set forth
tº. program justification data before you, and will be summarized
ruelly.
Under the proposed AEC-Consumers contract, Consumers will con-
struct the plant with its own funds at a cost of approximately $28 mil-
lion, and operate it for 5 years and cooperate with AEC and GE in
conducting a postconstruction research and development program
utilizing the plant.
AEC in turn will reimburse Consumers’ research and development
costs up to $500,000 and will waive fuel use charges up to $1,650,000.
The circumstances under which Consumers will have the right to
terminate the contract are set forth in paragraph E-6 of the pro-
gram justification data.
While the causes for termination are similar to those found in other
arrangements under the third round of the power demonstration re-
actor program, I would like to point out two details that have not ap-
peared in other arrangements.
Under all these arrangements, the utility has reserved the right to
terminate if, after exerting its “best efforts,” it is unable to obtain
necessary regulatory approvals. *
Under the proposed arrangement Consumers would have the right
to terminate if, after exerting its best efforts, it is unable to obtain a
necessary license or regulatory approval.
In this connection, Consumers would not be required, during the
period prior to issuance of the initial plant operating license, to make
plant changes or additions imposed by new. governmental safety re-
guirements as a condition to obtaining a license, where changes or
additions would cause additional expenditures aggregating in excess
of $3 million.
Representative PRICE. What are the new governmental safety re-
quirements? º ©
Mr. FLOBERG. That is the very point, Mr. Price, Consumers wants
to protect itself against possible safety requirements that nobody has
yet conceived.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 9
For example, if the permissible industrial radiation levels were
drastically reduced and thereby the reactor had to undergo substantial
redesign, if the shielding had to be substantially redesigned, it could
well be that the cost would exceed such a figure. º tº
Taking another case, if some new standard of the integrity of pres-
sure vessels that nobody has yet thought of should be promul-
gated
Representative PRICE. These are the things that may come as you
go along in the construction program, the development program'
Mr. FLOBERG. The point is that what Consumers wanted to protect
itself against here is some gross error in past history. -
Representative PRICE. You have not issued any new requirement at
this time, but as you go along there may be additional requirements
and you are taking into consideration what they may be?
Mr. FLOBERG. Consumers wanted to protect itself against a com-
pletely open ended requirement here. I think that is a reasonable
thing.
Representative AsPINALL. This is before construction starts?
Mr. FLOBERG. It could be after construction starts, but before they
get their license.
The next sentence will go to the next aspect of the right that the
Consumers has reserved in their contract.
After issuance of the initial operating license, Consumers would
not be obligated to make plant alterations to meet any governmental
safety requirement necessary to permit performance of postconstruc-
tion research and development in the plant, if such alteration costs,
together with those of the prelicense period, exceeded the $3 million.
The reference to a specific dollar amount in these contract, pro-
visions represents a novel feature which would serve to facilitate
resolution of disputes as to the meaning of the “best efforts” language
of the contract.
Representative AsPINALL. Mr. Commissioner, I understand that
the new safety requirements will be measured from December 18,
1959, the date when Consumers and General Electric submitted this
proposal.
Mr. FLOBERG. Yes, sir.
Representative PRICE. I wonder if it would not be more reasonable
to measure them as of the time that the construction permit issued
after the safety had been looked at by the Atomic Energy Commis-
sion and by the ACRS.
You would have a better starting point, it seems to me, and at the
time when the proposal was turned in and the AEC had made no
determination as to what its safety requirements were.
Mr. FLOBERG. I will ask Mr. Kunz, who undertook the detailed
negotiations on this, to explain the relationship of the dates to the
provision.
STATEMENT OF EARL KUNZ, CHAIRMAN, NEGOTIATING
COMMITTEE, ATOMIC ENERGY COMMISSION
Mr. KUNz. The proposal from Consumers and General Electric, as
Mr. Toll indicated, was dated December 18.
As of that date, many of the arrangements became fixed. The pro-
posing parties had at that time established the design of the plant
10 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Which they proposed to build. They had established at that time the
resºurch, and development program which they proposed to conduct.
They had also established an amount basically which would be paid
by the various participants in the program, General Electric on the
fuel and the nuclear assembly system; Bechtel on the rest of the plant,
and so forth. -
With all of these factors in the background it was decided by Con-
Sumers that this should be the base from which these things stem.
Mr. ToI.L. Is this satisfactory to AEC% I can see it is fine from
Consumers' point of view, but from the AEC point of view, did you
not know what your safety requirements were as of that date?
Mr. FLOBERG. I think I can satisfy you, Mr. Toll, by saying I be-
lieve this point is academic anyhow. There were no changes in safety
requirements from December 18 up to the date of the construction-
permit issuance to my knowledge.
I stand to be corrected on the record if I am wrong.
So I don’t believe the date has real significance.
Mr. ToDL. I was going to ask next: Did the ACRS or AEC in re-
viewing the proposal make any particular safety requirements that had
not been proposed by the proposers?
Mr. GLAMBUSSO. No, sir; no new safety requirements were imposed
on the plant.
Both the AEC and the ACRS had reviewed the design and hazard
analysis prior to issuing a construction permit and a construction per-
mit has been issued as of May 31.
Mr. ToI.L. From a technical point of view, how realistic is this
$3 million limitation? Is it possible that a safety requirement for spe-
cial waste disposal facilities could develop, for example, that would
very quickly eat up the $3 million and then the whole project goes out
the window %
Mr. GIAMBUsso. We have looked at this very question and tried to
analyze the possibilities that might occur. It is very similar to the
maximum credible accident conditions in the hazards analysis; that is,
if you consider some of the feasible things that might occur, we do
not see that you would eat into the $3 million readily at all.
Mr. Toll. I was not thinking of an accident So much as normal
operating conditions. There might be a requirement that you had to
install a special waste-disposal system, for example. tº e
I don’t know how much the waste-disposal system cost at Shipping-
port, but I think in excess of $3 million, perhaps more than $3 million
above the amount originally planned. ë. •
If you develop into this sort of situation, then this proviso would
allow this technical advance to stop?
Mr. GIAMBUsso. We do not believe that in particular a more severe
waste-disposal system or longer holdup or tank retention would con-
sume so much funds and to substantially eat into the $3 million or
exceed the $3 million. g e
Mr. Toll. I would like to ask Mr. Floberg if from a policy point
of view he thinks it is a good idea to allow proposers to put a limitation
on what they will spend for safety improvements. • º
Mr. FLOEFRG. I think there will have to be some relationship be-
tween the figure and reality.
HEVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 11.
I think you have asked a good question, but I think in this case
the relationship is a valid one. It seems to me though, that if a
safety requirement alone necessitates a $3 million additional expendi-
ture on a $28 million plant, it is time we backed off and took another
look at this plant. t - . . . . .
In other words, if it is just a safety reanalysis, if it is going to
cause more than a 10 percent increase in the cost of the plant, we
had better take another look at this.
If the figure were $1 million, I think you would have a much more
legitimate objection, but I do think that $3 million is a pretty Sub-
stantial figure. - - -
Mr. Toll. I would like the record to show that I am not registering
an objection. I am just trying to find out whether the $3 million
figure is a reliable figure and also, from a policy point of view, whether
this new feature is acceptable from the Commission's point of view,
to allow this idea to become a part of the proposals perhaps from
Il OW OI).
Mr. FLOBERG. We debated this extensively from the very point of
view you raised, and came to the conclusion that it was a legitimate
limitation.
We also debated what the figure would be. There were misgivings
that this figure was not adequate, but on the basis of the logic I ex-
plained to you we finally decided it was an acceptable figure.
Remember, this plant is going to have all the conventional safety
devices built into it already. The design contemplates it will be a
Safe plant.
The design contemplates that all present safety requirements will
be complied with.
This safety valve is for unforeseen and at present unknown con-
tingencies.
I think that from a policy standpoint the Commission is not mak-
ing any mistake in incorporating a relief valve of this kind of the
obligation of the contractor.
Representative AsPINALL. Without objection we will insert in the
record at this point some language furnished by counsel for Con-
sumers concerning “Definition of New Safety Requirements.”
(The matter referred to follows:)
DEFINITION OF NEW SAFETY REQUIREMENTS
Due to the wide variation in reactor types and characteristics and to the
many different locations and environments in which they may be located, there
are n0 COmpletely applicable reactor facility safety codes or requirements avail-
able for differentiating between “new” and “existing” safety requirements. At
the present time reactor design, construction, and operating safety require-
ments are determined on a case-by-case basis by a study of a specific proposed
reactor at a specific proposed site. The appropriateness of the safety require-
ments so determined are based on technical judgments, so that if the plant is
built and Operated to meet such requirements it will be reasonable to as-
Sume that the envisioned radioactive effluents resulting from normal opera-
tions or from the Occurrence of credible accidents will not create undue hazard
to the health and safety of the public, operating personnel, or others.
There are, however, some general safety criteria or practices which it has
been found prudent to observe in designing, constructing, and operating power
reactors. These include but are not limited to—
1. Parallel channels of instrumentation ;
2. Incore instrumentation or monitors;
3. Biological shielding requirements;
12
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
we t ºntainment Vessel to protect against a reactor system rupture ac-
Cldent ;
5. Proper handling of waste and effluents;
6. Provisions for reactor control and shutdown with secondary means of
shutdown ;
7. Appropriate backup cooling systems; and
8. Proper Operating procedures.
GENERAL CRITERIA
In the following it is understood that where safety requirements imposed on
the Consumers' plant are compared with safety requirements imposed on other
plants, the Comparison is with safety requirements imposed upon other boiling
Water reactor plants licensed for construction or operation prior to Decem-
ber 18, 1959.
The following general criteria will be used to determine whether a particular
AEC Safety requirement applicable to the Consumers' plant is an “existing”
Or “new” safety requirement :
1. If the safety requirements imposed on the Consumers' plant reflect
more rigorous safety criteria than imposed on other plants, as a result of
the Consumers' plant's unique characteristics and/or uses, such safety
requirements would not be considered “new.”
2. Conversely, if safety requirements imposed on the Consumers' plant
reflects more rigorous safety criteria than imposed on other plants, and
Such requirements are not a result of the Consumers' plant's unique char-
acteristics and/or uses, such safety requirement would be considered a
“new” requirement.
3. If a change or replacement of equipment in the Consumers' plant is
necessary SO that the equipment Will perform as described in the license
application on the basis of which a construction permit or operating license
is issued to Consumers, such change or replacement would not be considered
to arise Out of a “new” requirement.
4. If a safety requirement is imposed on the Consumers' plant as a re-
sult of the acquisition of new data or experience indicating the inadequacy
Of existing Safety criteria Or practices, such a requirement would be con-
sidered “new.”
5. If a Safety requirement is imposed On the Consumers’ plant as a re-
sult of a change in the standards for protection against radiation as set
forth in 10–CFR—Part 20, or in AEC’s current practice in the application
Of these standards, such a requirement Would be “new.”
The following examples are illustrative of “new” and “existing” safety
requirements :
1. Should turbine shielding be found necessary in the Consumers' plant
because of radiation levels at the turbine in excess of radiation levels at
Other plants, such a requirement would not constitute a “new” safety re-
Quirement, because the higher radiation levels would presumably be at-
tributable to the unique characteristics Or use of the Consumers' plant.
2. It has been found acceptable in Other plants for steam turbines to
be located outside of containment vessels provided appropriate stop valves
were installed in the steam lines. It is not anticipated that this practice
needs to be changed. Should experience dictate the necessity for con-
taining the turbine, this would constitute a “new” requirement.
3. It has been the practice in other plants to require a sufficient number
Of instruments, Of suitable types, and appropriately located, to furnish de-
pendable information on crucial temperature and neutron flux conditions
within the Core. It is not Considered that requirements for instrumenta-
tion of different patterns, numbers Or characteristics, although such had
not been required in other plants, would be “new” requirements where
these instruments would be necessary to accomplish the Objective Stated
above.
4. In determining the nature Of a possible metal-water reaction in a
reactor, the percentage of zirconium Considered to take part in the reaction
is significant. Based on present knowledge, it is considered that no more
than 50 percent of the zirconium cladding in a core would nelt in the usual
types of accidents considered (slow meltdown); in general only one-half
of this, or 25 percent of the total, would be likely to be involved in a metal-
water reaction. Present knowledge indicates that accident COnditions COuld
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 13
possibly exist in reactors such that one would predict that as much as 50
percent of the total zirconium might take part in a reaction. If such condi-
tions should be found in the Consumers' plant, this would not be collsidered
a “new” requirement. However, if further information or study should
reveal that safety requirements should be based on an assumption that more
than 50 percent of the zirconium reacts, such requirements would be “new.”
5. If a safety requirement reflects new or modified engineering design
codes or building codes, or a broader application of existing codes as they
relate to safety, such a requirement Would be Considered “new.”
6. One of the considerations upon which Safety requirements of a reactor
facility is based is the hazard to the public which would arise from what is
considered to be the “maximum credible accident.” If the practice should
change so that the plant would have to protect the public in case of a Inaxi-
mum “conceivable,” although not “credible” accident. this would constitute
a “new” requirement. For example, the effects of the maxiinuni ("redible
accident in the case of Other plants have been determined on the basis that
the containn lent vessel's (lischarge rate or leakage rate following such an
accident will be n0 greater than that conten]] lated in the design and Spe-
cified in the license application. Should Consumers be required to provide
equipment Or to meet Specifications resulting fron, an assumption of a
greater discharge or leakage rate of the confainment vessel. this would be
considered a “new” requirement.
7. It is possible to Conceive Of more el: ; borate nieasures for the protection
of the public in the event of a major nuclear incident than have been found
Inecessary for Other plants. For example, it would be DOSsible to fence the
entire exclusion area around the plant to keep the lyublic off the lylant site
rather than depend on Other measures of Control. It would alsº be possible
to build in the area Surrounding the plant Site a series of expensive lanete-
Orological towers to gage more accurately the Wind (lirections and weather
Conditions and hereby determine more precisely the distribution Of radioac-
tive materials following an incident. The requirement of such measures
WOuld COnstitute a “new” safety requirement.
8. If new data or new interpretations of existing data on radiation effects
indicate more Severe hardening or embrittlement of reactor components
than now anticipated, and additional thermal Shields or more expensive
equipment or designs are required, this would be a “new” requirement.
9. If the future results of ecological, meteorological, hydrological, or other
research regarding the concentration and dispersion of radioactive mate-
rials require different criteria in selecting and providing Onsite and offsite
monitoring, waste treating, or other equipment than used for other plants,
this requirement would be considered “new.”
Representative Asp1NALL. This is a more practical question : How
much could Consumers spend here of their own money if they run
up against something unforeseen, as suggested by you, that would
permit them to take advantage of this provision in this proposal and
get out from under'
Mr. FLOBERG. That is a pretty hypothetical question.
Conceivably they could spend almost the entire amount they com-
mitted themselves to and have the reactor pretty nearly complete
when somebody could, on the basis of a wholly new scientific theory,
come up with a gross error of calculation here that would require the
expenditure of more dollars than this and Consumers would have to
evaluate whether they wanted to abandon what money they had al-
ready invested or whether they wanted to, themselves, spend more
than $3 million on their own initiative.
Representative Asp1NALL. That is right.
How much would the liability of AEC be?
Mr. FLOBERG. I don’t think it would be anything.
Representative PRICE. While you are on that subject, Mr. Chair-
man, I would like to ask a question in regard to the stated goals that
you mentioned on page 2 in that first paragraph: If you should be
58509—60—3
14 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Successful in reaching your goal for the prototype, what would be the
power cost of a full-scale plant of about 250,000 kilowatts?
Mr. FLOBERG. I don't know if we have that answer at our fingertips,
Mr. Price. Could we do a little pencil work while the hearing is
going on and try to answerit this morning?
Representative PRICE. Yes. I know they understand the question.
It takes a little pencil work to figure it out.
Mr. FLOBERG. I know we understand the point of your question.
Representative PRICE. I know you do.
Representative ASPINALL. You may proceed.
Mr. FLOBERG. Consumers would also have the right to terminate, as
do, other third-round contractors, if it is unable to obtain adequate
liability insurance and indemnity coverage.
Due to the proximity of the proposed reactor site to the Canadian
border, Consumers has taken the position that it would not be ade.
quately protected against liability unless the available nuclear insur-
ance and indemnification covered damage caused in Canada as a re-
sult of a nuclear incident at the reactor site.
The NEIAIA, which means Nuclear Energy Liability Insurance As-
sociation, the NELIA liability insurance policy does provide this
protection.
. The general counsel of AEC has recently published a formal opin-
ion that an indemnity agreement entered into by AEC under the
Price–Anderson Act provides indemnification against public liability
for damaged caused outside the United States by a nuclear incident
occurring within the United States. A copy of that opinion was fur-
nished to your committee.
The Commission considers that this opinion provides the neces-
Sary, assurance to Consumers that adequate indemnity coverage is
available.
The arrangements will provide that, in the event of unilateral
abandonment of the project by Consumers or General Electric, the
AEC expenditures will be refunded under the circumstances and
conditions described in the program justification data.
Under a separate contract, AEC will reimburse General Electric
for a supporting research and development program having the ob-
jectives which I have already stated to you.
For this work ABC will reimburse General Electric up to a ceiling
of about $3.7 million, subject to escalation not to exceed 10 percent
if upward. General Electric will perform this work on a no-fee basis.
AEC will own all inventions arising under the contract with Gen-
eral Electric and will have other patent rights similar to those of other
third-round arrangements.
In addition, as described in the program justification data, AEC
will receive, for purposes of Government owned or operated civilian
power reactors, a royalty free license to General Electric's background
patents incorporated in the Consumers' plant or the fuel. e
All technical and economic data developed under the contracts will
be available to AEC for the purposes of the power demonstration
reactor program.
Members of the Atomic Energy Commission staff are present who
are prepared to respond to any questions the committee may have
concerning the technical and contractual aspects of the proposed
arrangements.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 15
Representative AsPINALL. Mr. Commissioner, could you tell us at
this time how many patent applications General Electric Co. has al-
ready filed on this type of reactor? -
Mr. FLOBERG. Could I answer that question? I could not answer
it, but I suggest that there are General Electric representatives here
in the room who may be able to answer it. º • * * * {T
Representative Asp1NALL. The information is not in your files' .
Mr. FLOBERG. Not in my personal files. I doubt whether we have it
in the Commission. It is General Electric's own information.
Representative AsPINALL. We will ask them later when we get to
them.
Mr. Price 2
Representative PRICE. Mr. Chairman, I would like to ask a question
regarding page 5, Mr. Floberg, and the reason I ask the question is
because the situation seems to be clear to your General Counsel, the
paper I see here from Mr. Campbell, of Consumers, raises some ques-
tion as to the indeterminate provisions.
As a matter of fact, the Consumers feel that possibly an amend-
ment is required to the Price-Anderson Act.
Does the Commission contemplate the suggestion of any amend-
ment to clarify this?
Mr. FLOBERG. Mr. Price, we thought that the act was clear enough
on this point. Mr. Campbell has consulted lawyers who have some
doubts about this.
The Commission has no objection to any clarifying legislation on
this point. It had not been our intent to submit any.
On the other hand, if the Joint Committee thinks that we should
draft some legislation, we shall be glad to cooperate in doing so.
Representative PRICE. But so far as the interpretation of the Gen-
eral Counsel's office of the AEC, they see no need for the amendment &
Mr. FLOBERG. That is correct.
But other lawyers have disputed this. Of course, it would be a
terrible situation if lawyers agreed on legal questions, Mr. Price. It
would undermine the whole profession.
Representative PRICE. We would not want any lawyers to agree.
Mr. FLOBERG. It would undermine the whole profession.
Representative PRICE. However, I think that possibly we should
explore it to make certain that the doubts can be resolved as closely
as possible.
Mr. FLOBERG. Yes, sir; I think that the contractor has the right
to ask for reassurance in this area. We had thought we had given
him adequate reassurance, but I suggest that the Joint Committee
can take a look at this.
Representative PRICE. This is not the same area that we covered in
the hearing a couple of weeks ago before the committee, one or two
amendments that the Commission did suggest ? This is not the same
area 3
Mr. FLOBERG. This particular amendment was not included in the
package at that time, I am sure of that.
I was not present at that hearing, but I know it was not included.
Representative PRICE. I am certain it was not, either.
Now, in the plant-operation contract, Mr. Floberg, the contract
with Bechtel and General Electric, are they cost contracts or fixed-
price contracts?
16 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Mr. FLOBERG. These are fixed-price contracts.
Representative PRICE. Who is the prime contractor, Bechtel .
Mr. FLOBERG. Bechtel is the prime contractor for the construction.
The Commission has no contract with Bechtel.
Representative PRICE. I know you do not, but in the setup of the
project who would be considered the prime contractor, Bechtel or
General Electric 2
Mr. FLOBERG. Consumers, I assume, looks on Bechtel as the prime
contractor, with General Electric doing the design on the nuclear
system.
Mr. Aspinall, we have an answer, at least an answer of sorts, to the
question you asked me.
Representative PRICE. In other words, your contracts are direct with
Consumers?
Mr. FLOBERG. Yes.
Representative PRICE. Do you not have a direct contract with Gen-
eral Electric on the research and development?
Mr. FLOBERG. We do on research and development. They have
prime contractor for that purpose with the Commission.
Mr. ToI.L. It is a little complicated, in that General Electric is
both a prime contractor with the Commission and a subcontractor
with Consumers, and I believe they also have a contract with Bechtel.
So that General Electric has about three different contracts on this
one arrangement.
Maybe this is the only way it can be done, or the way the parties
want it, but it certainly is not the simplest way.
Mr. FLOBERG. Sometimes the administrative arrangements are just
as complicated as the engineering and scientific problems in these
projects.
Mr. ToI.L. Mr. Chairman, it might be helpful to insert in the record
at this point the opinion of the General Counsel of AEC, which was
discussed and which, incidentally, I concur with, at least the conclu-
sion that the act should be interpreted to cover damage outside of
the United States if the incident occurred inside the United States.
Representative Asp1NALL. Unless there is objection, the statement
will be inserted in the record.
Hearing no objection, it is so ordered.
(The document referred to follows:)
Section, S.2–Interpretation of Price-Anderson Act, Section 170 of thc Atomic
Encrgy Act of 1954.—It is my opinion that an indemnity agreement entered
into by the Atomic Energy Commission under the authority of the Atomic
Energy Act of 1954 (42 U.S.C. 2011, et seq.), hereafter cited as “the act,” as
amended by Public Law S5–256 (the “Price-Anderson Act”) (42 U.S.C. 2210)
indemnifies persons indemnified against public liability for bodily injury, sick-
ness, disease, or death, or loss of or damage to property, Or for loss Of use of
property caused outside the United States by a nuclear incident occurring with-
in the United States.
Section 170 authorizes the Commission to indemnify against “public liability”
as defined in section 11 (u) of the act." Coverage under the act therefore is
1 Sec. 11 (u) : “The term ‘public liability' means any legal liability arising out of or
resulting from a nuclear incident, except claims under State or Federal Workmen's Com-
pensation Acts of employees of persons indemnified who are employed at the site of and in
connection with the activity where the nuclear incident occurs, and except for claims
arising out of an act of war. ‘Public Liability’ also includes damage to property of persons
indemnified : Pro rided, That such property is covered under the terms of the financial
protection required, except property which is located at the site of and used in connection
with the activity where the nuclear incident occurs.”
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 17
predicated upon “public liability,” and requires (1) “legal liability” for (2) 8.
“nuclear incident.” Determination of the act's coverage, therefore, necessitates
a finding that these two elements are present.
In the case of damage outside of the United States caused by a nuclear
facility based in the United States there would be a “nuclear incident” as de-
fined in section 11 (o) since there would be an “occurrence within the United
States causing * * * damage.” “ The “occurrence” would be “Within the
United States” since “occurrence” is intended by the act to be “that event at
the site of the licensed activity “ ” * which may cause damage rather than
the site where the damage may perhaps be caused.” (S. Rept. 296, 85th Cong.,
1st sess., p. 16 (1957) ; hereafter cited as “report.”) In Section 11 (O) an
“occurrence” is that which causes damage. It would be, therefore, an event
taking place at the site. This definition of “occurrence” is referred to in the
report at page 22 and is crucial to the act’s placing of venue under Section
170 (e).” In its definition of “nuclear incident,” the act makes no limitation
upon the place where the damage is received but states only that the “Occur
rence” must be within the United States.
Similarly, the requirements of “legal liability” would be met. The Words Of
the act impose no limitation that the liability be One for damage caused in the
United States but, on the contrary, are exceedingly broad permitting indemnifi-
cation for “any legal liability.” In the most exhaustive Study of the subject,
it is stated that the phrase “any legal liability” indicates that liability for
damage outside the United States is covered by the act (Atomic Industrial
Forum, “Financial Protection Against Atomic Hazards” 61 n. 355 (1957)).
Thus the precise language of the act provides coverage for damage ensuing
both within and without the United States arising Out of an Occurrence within
the United States. There would be no Occasion for doubt were it not for a
single statement contained in the report Of the Joint Committee on Atomic
Energy On the Price–Anderson Act. The report States, at page 16, that “[i]f
there is anything from a nuclear incident at the licensed activity which causes
injury abroad, Or if there is any activity abroad which causes further injury
in the United States the situation will require further investigation at that
time.” This sentence follows an explicit and lengthy statement that the “Occur-
rence” is an event at the Site Of the activity :
“* * * The Occurrence which is the Subject Of this definition is that event at
the site Of the licensed activity, Or activity for which the Commission has entered
into a contract, Which may cause damage, rather than the site where the dam-
age may perhaps be caused. This site must be within the United States. The
suggested exclusion of facilities under license for export was not accepted. This
is because the definition of “nuclear incident' limits the occurrence causing dam-
age to one within the United States. It does not matter what license may be
applicable if the occurrence is within the United States. If there is anything
from a nuclear incident at the licensed activity which causes injury abroad or
if there is any activity abroad Which causes further injury in the United States
the situation Will require further investigation by the Congress at that
time. * * *”
Read literally, the last sentence would seem inconsistent with the preceding
Statement. It is, however, possible to read the sentence as consistent with the
preceding Statement if it is taken as indicating a recognition by Congress of the
fact that the statutory limitation of liability to $500 million would probably not
limit claims by foreign residents to that amount in foreign courts and that
therefore the persons indemnified were not fully protected against bankrupting
claims, one of the primary purposes of the bill.”
The point in question received scant consideration during the hearings pre-
ceding adoption of the bill held by the Joint Committee on Atomic Energy. A
Summary of the study of the Atomic Industrial Forum, cited above, was intro-
* Sec. 11 (O) : “The term “nuclear incident’ means any occurrence within the United
States causing bodily injury, sickness, disease, or death, or loss of or damage to property,
or for loss of use of property, arising out of or resulting from the radioactive, toxic, explo-
sive, or other hazardous properties of source, special nuclear, or byproduct material : * * * *
* “In order to provide a framework for establishing the limitation of liability, the Com-
mission, or any person indemnified is permitted to apply to the appropriate district court of
the United States which has venue in bankruptcy matters over the site of the nuclear
Incident. Again it should be pointed out that the site is where the occurrence takes place
which gives rise to the liability, not the place where the damage may be caused 's ''
(report, p. 22), *- * -
* Atomic Industrial Forum, “Financial Protection Against Atomic Hazards, The Inter-
national Aspects,” p. 52 (1959). -
18 REVIEW OF PROPOSED Power DEMONSTRATION PROJECT
duced into the record of the hearing and included a conclusion that the pro-
Visions of the bill seemed to cover the situation.” That conclusion would seem
entitled to more than ordinary weight since the forum study received the careful
consideration of the Joint Committee," and the study referenced a statement
from the 1956 report very similar to the confusing statement in the 1957 report
noted above." r - ... '
There Was also a rather ambiguous colloquy in the hearings between Represent-
ative Cole and Mr. Charles Haugh in which Representative Cole indicated that
the Joint Committee “* * * will do pretty well if we successfully protect the
American people and property owners in this country without worrying about
those that live abroad.” ”
Congress, in enacting the Price–Anderson Indemnity Act added to section 2
of the Atomic Energy Act of 1954, a new subsection which stated, inter alia:
’’In order * * * to encourage the development of the atomic energy industry,
* * * the United States may make funds available for a portion of the damages
Suffered by the public from nuclear incidents, and may limit the liability of
those persons liable for such losses.”
This statutory purpose is frustrated if the atomic energy industry is not pro-
tected from bankrupting liabilities for damages caused abroad by an accident
Occurring in the United States.” In the report, the Joint Committee on Atomic
Energy made explicit mention of the fact that the private insurance to be pro-
Vided for reactor Operators included coverage for damage in Canada and Mexico
and, at another point, noted the committee's hope that the insurance contract in
its final form Would cover the same scope as the bill.”
It is my Opinion that since the language of the act draws no distinction be-
tWeen damage received in the United States and that received abroad, none can
properly be drawn. To read the act as imposing such a limitation in the ab-
Sence Of Statutory direction and in the light of an avowed congressional in-
tention to encourage the development of the atomic energy industry would be
unwarranted. The confusing sentence cited in the report must, therefore, be
read Consistently with the language of the act in the manner suggested above,
i.e., as recognizing congressional inability to limit foreign liability, or must be
ignored as inconsistent with the broad coverage of the statutory language.
L. K. OLSON,
General COunsel.
APRIL 26, 1960.
Representative ASPINALL. Now, Mr. Giambusso, if you will give
the answer to Mr. Price's question.
Mr. GIAMBUSSO. I will repeat the question to be sure I am answering
the right one.
5 Hearings before the Joint Committee on Atomic Energy, “Governmental Indemnity and
Reactor Safety,” 85th Cong., 1st sess., p. 181 (1957) ; hereinafter referred to as “hearings.”
* Hearings, p. 168.
7 Hearings, p. 182.
8 Hearings, p. 97. It is significant to note that Mr. Haugh stated at that point the
problem of the reactor operator who is concerned with any type of liability. He noted
that the insurance contracts would cover “* * * the instance where * * * something
happen [ed] out of the country and a suit is brought in the United States on that.”
9 The Atomic Industrial Forum study notes that “[T]o be adequate, the governmental
indemnity must cover industry's liability to residents of the countries who suffer as a
result of an accident at an installation based in the United States” (p. 61). This is cer-
tainly the case and One of the major congressional purposes is frustrated should the act
be said to be unclear on this point. The principal reason for the conclusion that there is
coverage reached in the forum study is the fact that Price-Anderson provides indemnity
for “any legal liability.” Arthur Murphy, director of the study, in a recent article, has
Stated that the confusing sentence in the report is “* * * inconsistent with the flat cov-
erage of any legal liability by the indemnity.” Murphy, “Liability for Atomic Accidents
a D. d Insurance, in Law and Administration in Nuclear Energy,” 75 (1959). In the testi-
mony before the Joint Committee last year, Prof. Samuel D. Estep, one of three authors
of the comprehensive study of “Atoms and the Law,” apparently relying upon the legisla-
tive history, stated that the problem of a reactor accident in the United States causing
damage in a foreign country was unclear, presumably since he considered the phrase “any
legal liability” directed at a different problem. Hearings before the Joint Committee on
Atomic Energy, “Indemnity and Reactor Safety,” S6th Cong... 1st sess., p. 77 (1959) ;
Stason, Estep, and Pierce, “Atoms and the Law,” 577 (1959). Professor Estep stated
that there “surely ought to be” coverage and suggested a clarifying amendment. His
statement that the phrase “any legal liability”, covers only the question of time restrictions
for claims seems to me erroneous since the language used, “any legal liability,” Seems
intentionally broad. Additionally, should this very narrow reading be given to admittedly
broad statutory language, the congressional purpose Would be frustrated.
10 Report, p. 11.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 19
I believe the question was, What was the effect on reducing cost
from utilizing a high power density core, in a large reactor?
Representative PRICE. I believe you said 250, which was indicated
as the goal. n - - -
Mr. GIAMBUsso. The gain we would get from utilizing high power
density core will be about six-tenths to 1 mill per kilowatt-hour.
This is the estimated gain from high power density effects alone.
We also hope through long burnup of the core that we will get
an additional gain from that, and from the lower fabrication cost,
but our previous studies have indicated this gain of about six-tenths
of 1 mill savings. -
Representative PRICE. What would be the total cost?
Mr. GIAMBUsso. I do not have the specific number, sir. I am trying
to recall our program analysis.
Mr. FLOBERG. That depends on so many variables, including loca-
tion in the country, it would be difficult to answer.
I think what Mr. Giambusso pointed out is that the fuel cycle which
makes up 3 mills plus or minus, of the cost of the kilowatt-hour,
can be substantially reduced by the success of this project.
Representative PRICE. Thank you.
Representative BATEs. Is this the only unsolicited bid you are
recommending?
Mr. FLOBERG. Yes, sir.
Representative BATEs. Are these funds continuing funds, or no-
year money?
You are pretty well up to the limit on this one, now—out of the
$5 million authorized
Mr. FLOBERG. I think this money is continuing money, Mr. Bates,
but I think for the reason you have mentioned, that that question
may be an academic one, too.
Representative BATEs. Of course, unless you get this committed by
the end of the month and it is not continuing money, then it reverts
to the Treasury.
Mr. FLOBERG. I am sure that it is continuing money.
Representative BATEs. But this is the only one that you have
recommended ?
Mr. FLOBERG. That is right.
Representative BATEs. Now, on all of the patent rights, whether
or not derived from this particular operation, the Government has
a license to utilize these particular ones?
Mr. FLOBERG. Any inventions that are the product of this par-
ticular project will accrue to the Commission.
In other words, the arrangement does not contemplate any depar-
ture from past policy.
, If the Commission pays for an invention, it belongs to the Commis-
‘SIOI).
| Representative BATES. That is standard under the atomic patent
3.W 6
Mr. FLOBERG. Yes, sir.
Representative BATEs. A little bit different than Department of
Defense or NASA that we had on yesterday.
Mr. FLOBERG. Yes, sir.
In fact, it is quite different from that. There are differences of
opinion on this whole subject, as you know.
20 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
I think this system is a better one, myself.
Representative BATEs. The reason I raise the question, on page 6,
maybe I misconstrued it, it says:
The AEC will receive, for purposes of Government owned or Operated civilian
99Wer reactors, a royalty free license to General Electric background patents
incorporated in the Consumers' plant or the fuel.
In other words, if they had been derived not from this particular
project, but in the course of other projects
Mr. FLOBERG. General Electric has invested some other money in
accruing a patent position in this field.
Representative BATEs. Yes. So anything that gets in this partic-
ular reactor, then, the Government will have for governmental pur-
poses or operating civilian power reactors, either one, a license to use
those; is that right?
Mr. FLOBERG. That means Government-owned or Government-oper-
ated civilian power reactors; yes. That is affirmative.
Representative BATEs. What is a Government-operated civilian
reactor?
Mr. FLOBERG. At Shippingport, well, I must qualify that. I can’t
think of one unless it is the Elk River.
Representative BATES. How does that become civilianº
Mr. FLOBERG. It could be a plant operated by the Federal Govern-
ment at a Federal installation, could put some power into a civilian
power line.
This is not a very likely contingency, but it is a protection for the
Government in case it were developed.
Representative BATES. In other words, if the Government operated
a civilian plant?
Mr. FLOBERG. In effect, that may be... If the Government operated
a plant which sold kilowatts to a civilian consumption system, this
would be a contingency.
Mr. Toll. Or if they were under contract with the Government?
Mr. FLOBERG. Elk River and Shippingport are two examples of
Government-owned reactors where the steam is sold to civilian con-
Sumption systems.
In both those cases the Government does not operate the reactor.
It could be on a Federal installation it would be Government-operated
and yet introduced into a civilian power net. tº $ -º º
Representative BATES. Yes; but you see, it says “or operated civilian
power reactors.” & #7 & . $ © tº
I would consider that if it is on a Government reservation it would
be Government-owned. *
Mr. FLOBERG. This is as distinguished from a military reactor like
a submarine reactor or other military power reactor, Army mobile
power reactor or something of that sort, like Fort Belvoir.
Representative BATEs. In other words, even though the Govern-
ment has contributed a minor portion of the cost it still would be a
private utility, it would not then be construed as Government in any
sense &
Mr. FLOBERG. That is correct. * *
Representative AsPINALL. Mr. Commissioner, would you consider
this particular proposal to be an indication of an outstanding suc-
cess of the program calling for unsolicited proposals and which you
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 21
have engaged in because of that particular appropriation and au-
thority that we granted? e
Mr. FLOBERG. I think those words are a little bigger words than I
would use to describe this whole situation, Mr. Aspinall.
Representative AsPINALL. You mean you think you could get more
out of those words than you would be willing
Mr. FLOBERG. Those are bigger words than I would use. It seems
to me that what this proposal illustrates more than anything else
is that we have to explore every available avenue for the exploitation
of utilities in nuclear power.
This is one avenue which has produced a satisfactory proposal
here. We have used other avenues in the past. There may be still
others that nobody has thought of.
It seems to me in an infant industry like this we have to take ad-
vantage of all who are in the electric-producing business and exploit
that interest wherever proper and in appropriate fashion.
Representative AsPINALL. I am not critical. I am just trying to
think out loud a little bit as to whether or not there may be some
criticism and this would be used, this drag in time and activity may
be used to publicize the fact that industry is not too willing to take
hold of this program.
Mr. FLOBERG. I think we will get other unsolicited proposals in
the future as particular technical features evolve to the point where
they are adequate to support a project on this scale.
I, for One, would certainly urge the Commission to take advantage
of them when they come along and I would urge the committee to
permit the Commission to take advantage of them.
It seems to me to be a good way to get things done.
It is true there has been some timelag as you have pointed out,
but part of this timelag has been attributable to the fact that the
regulatory arrangements with the State of Michigan had to be satis-
factorily resolved.
This was not achieved until September. It is true that the position
of the Federal Government vis-a-vis a State would be different from
the position of a utility company vis-a-vis the State, but we do get
the great advantage here obviously of having somebody who is in
the business of producing electricity for sale to consumers running
a nuclear powerplant.
This is an intangible, but a very valuable intangible.
I like this kind of arrangement and hope we have more.
I think in the time scale of the total development of nuclear power,
the few months that might be attributable to the particular nature
of this kind of arrangement are quickly lost. They are not much out
of a lifetime. *.
Representative ASPINALL. I am appreciative of that statement be-
cause I think it does go along with the statement you have made show-
ing the chronological order of the negotiations. I think you have
Substantiated your position. * ,
The next witness will be Mr. James H. Campbell, president of
Consumers Power Co.
Mr. Campbell, would you like to have representatives of General
Flºric sit with you so we can ask some questions of them at the same
time !
Mr. CAMPBELL. That will be very nice.
22 REVIEW OF PROPOSED. Power DEMONSTRATION PROJECT
STATEMENT OF JAMES H. CAMPBELL PRESIDENT, CONSUMERS
POWER CO., OF MICHIGAN, AND GEORGE WHITE, GENERAL
MANAGER, ATOMIC POWER EQUIPMENT DEPARTMENT, GEN-
ERAL ELECTRIC CO. .
Representative ASPINALL. Mr. Campbell, we will be glad to listen
to your statement.
Mr. CAMPBELL. Thank you, sir.
Mr. Chairman and gentlemen, I would like to express appreciation
for the opportunity to discuss briefly one aspect of this undertaking.
Mr. Aspinall, I think you are conversant with the text in general.
I will read it; it is very brief. -
Like every other arrangement under the power demonstration pro-
gram, Our proposal to the Commission is conditioned on the availabil-
ity of adequate liability insurance and Government indemnity pro-
tection.
Our contract with the Commission will contain the same condition.
In the course of contract negotiations with the Commission, we
raised the question whether damages which might occur in Canada as
a result of a nuclear incident at our site would be covered under the
Price-Anderson indemnity legislation and the Commission's indemnity
agreement.
We have been advised by the Commission that the legislation and
AEC indemnity agreement do cover this contingency, and the Gen-
eral Counsel of the Commission has published in the Federal Reg-
ister an opinion to this effect.
We agree with the Commission's interpretation of the Price-
Anderson legislation.
I should like to depart from the text just a moment to emphasize
this point, Mr. Chairman: that our counsel do completely concur in
the opinion expressed by the General Counsel of the Atomic Energy
Commission and the opinion as expressed here today by counsel for
the committee.
Our problem arises from the fact that other extraneous opinions
apparently in some cases do not agree. e
I understand that others have come to the same conclusion, that
is to say, that the Commission's interpretation of the Price-Anderson
legislation is what we think it to be.
I understand that others have come to the same conclusion, in-
cluding Mr. Arthur Murphy, who, I am told, was very active in the
formulation of the Price-Anderson bill and has since written an
article expressing his opinion on the point.
At the same time, I am told that other lawyers have expressed
doubt on the matter. Dean Stason in my own State of Michigan
has expressed this doubt in his recent book “Atoms and the Law,”
and I believe his associate, Professor Estep, testified before this com-
mittee last year that the law needed clarification. tº
Apparently, the doubt grows out of the Joint Committee report
which accompanied the indemnity legislation. e
We are proceeding with our project in reliance on the AEC opin-
ion and on the assumption that AEC has correctly interpreted the
intent of this committee and of the Congress in enacting the Price-
Anderson indemnity legislation.
REVIEW OF PROPOSED Power DEMONSTRATION PROJECT 23
But because doubts have been expressed about the intent of the
Price-Anderson legislation, and because we as a company attach So
much importance to the subject, we urge that the Congress act to
clarify the law as soon as possible.
We realize that it may be too late in this session of the Congress
to adopt clarifying legislation, but we certainly hope that such leg-
islation will be enacted before the Big Rock Point plant goes into
operation.
That is the conclusion of my prepared text.
Representative ASPINALL. Let me ask you this:
Do you think that under the proposal which has been submitted and
the procedure which will be followed and the contract which will be
signed, that action of the Congress in enacting new legislation more
thoroughly explaining what is involved or overriding the ambiguity
which is alleged to be present in the report would have any effect on
your relationship under your proposal.
Mr. CAMPBELL. Consumers Power Co., Mr. Chairman, proposes to
proceed with this project, relying on the expressed opinions which have
been rendered to it.
Our view is that not only Consumers Power Co., but the industry
as a whole, if I can express an opinion for the industry, has concern
about this alleged embiguity.
It would seem to me, speaking for myself, my own opinion would
be that the industry in genral, everyone, would benefit from brief
clarifying legislation. -
Yes, sir; I think it would be a constructive and good thing for
the whole industry.
Representative ASPINALL. Are there any questions?
Representative BATEs. I wonder if Mr. Toll can comment on the
language in the report.
Are you prepared to do that?
Mr. Toll. Yes, sir. The language in the 1957 report that causes
difficulty to the proposers here reads as follows:
If there is anything from a nuclear incident at the licensed activity which
Causes injury abroad Or if there is injury abroad which causes further injury in
the United States, the situation will require further investigation by the Con-
gress at that time.
It would seem to me that the second half of that sentence, after the
“or,” is not covered by Price-Anderson, and the first half is, under
the definition of nuclear incident in the act which pertains to any
incident in the United States.
One could read this sentence to say that it was at least half right
and the other half may be causing some people difficulty.
But in my opinion the language of the statute itself is so clear that
there is no reason to have too much concern about this particular part
of this sentence in the committee report.
I think that the General Counsel of the AEC has come to a similar
conclusion, although he refers to this sentence as being a confusing
sentence, which probably is a fair characterization, under the circum-
stances.
Mr. CAMPBELL. May I interject one thought on this score?
Representative AsPINALL. Certainly.
Mr. CAMPBELL. I don’t think I disagree with you, but since we all
agree that apparently we have proper grounds on which to proceed
24 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
and relying on opinions rendered, is it not reasonable to suppose that
it would be a constructive and good thing to relieve the industry of
any possible doubt as to ambiguity ?
It would be such a simple thing to do.
Mr. TopL. I will be glad to discuss it with your counsel or Counsel
of the AEC. I am not sure offhand what you would do to the statute
to make it any more clear than it is.
. Perhaps another committee report could have the effect of amend-
ing this committee report, but the statute itself is quite clear, in my
Opinion.
So just what amendment do you or your counsel have in mind?
Mr. CAMPBELL. May we make some suggestion on that score follow-
ing the hearing 2
Mr. TOLL. Yes, sir; if you wish to.
Representative ASPINALL. Yes, if you will submit your suggestions
it will be placed in the record at this point.
Hearing no objection, it is so ordered.
(The material referred to follows:)
CONSUMERS PoweR Co.,
Jackson, Mich., June 14, 1960.
Mr. DAVID TOLL,
Counsel, Joint Committee on Atomic Energy,
Washington, D.C.
DEAR MR. TOLL : In response to the request of the subcommittee on legislation
at last Friday's hearing on Our Big Rock Point project, I am submitting with
this letter a proposed amendment to clarify the definition of “nuclear incident”
COntained in Section 11 (O) of the Atomic Energy Act of 1954, as amended. The
proposed amendment Consists of the insertion of the parenthetical clause indi-
cated by italic in the following revision of section 11 (o) :
“O. The term “nuclear incident’ means any occurrence within the United
States causing (within or outside of the United States) bodily injury, sickness,
CliSease, Or death, Or loss Of Or damage to property, or for loss of use of property,
arising Out of Or resulting from the radioactive, toxic, explosive, or other haz-
ardous properties of source, special nuclear, or byproduct material : Provided,
however, That as the term is used in subsection 170 1., it shall mean any such
OCCurrence Outside Of the United States rather than within the United States.”
The proposed amendment WOuld make clear that while the Price–Anderson in-
demnity legislation COvers Only nuclear incidents occurring within the United
States (apart from the Savannah amendment), the indemnity protection af-
forded in the event of such an incident extends to damages caused outside of
as Well as Within the United States. It would put to rest doubts which have
been expressed in some quarters about the intent and effect of the present law
and which arise Out of the wording of the Joint Committee report which accom-
panied the Price-AnderSOn indemnity legislation.
While We are proceeding with Our project in reliance On the recent Opinion
of the General Counsel of the Atomic Energy Commission and on the assump-
tion that the Atomic Energy Commission has correctly interpreted the intent
of the Joint Committee on Atomic Energy and of the Congress in enacting the
Price–Anderson indemnity legislation, as I testified at the hearing, I believe
enactment Of the proposed Clarifying amendmºnt WOuld be a constructive step
in relieving the concern of others within industry about the effect of the present
law and WOuld encourage industrial participation in the development and COn-
struction of nuclear powerplants.
We hope that the proposed amendment to section 11 (O) will be considered by
the Joint Committee on Atomic Energy in connection With the Omnibus bill
(S. 3461) now pending before the committee.
Respectfully submitted.
JAMES H. CAMPBELL.
Representative ASPINALL. Is there anything further?
Representative BATEs. It seems to me that when the Congress en-
acted the legislation the information Supplied in the committee report
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 25
contained information on which they based a º and another
report by the committee would not have the effect of law.
I do not see how it would affect either an interpretation of a law
that is already passed, because the new report would not even be con-
sidered by the Congress.
Mr. Toll. It might be possible to have a clarifying amendment
right on this particular situation about damages caused outside the
United States from an incident in the United States and spell it out,
if in the opinion of the committee and the Congress it is necessary.
Representative AsPINALL. The acting chairman of the subcommit-
tee thinks that lawyers can disagree even on the definition of the word
“and.” It is only the future that may take care of the ambiguities
that are here.
Mr. White, you heard the question that I asked while Commissioner
Floberg was on the stand. How many patent applications has Gen-
eral Electric Co. already filed, on this type of reactor?
Mr. WHITE. By “this type,” do you mean a boiling-water reactor?
Representative AsPINALL. Yes.
Mr. WHITE. I will have to ask to have the opportunity to find out
and submit that answer to you. I cannot tell you right here.
We have filed a number of patent applications generally with respect
to reactors. I think it is fair to say that the bulk of them are for items
of equipment like control rod drives and instruments and things like
that.
I want to make sure I get your question right. Are you asking how
many applications we have for system-type patents?
Representative ASPINALL. I think that it goes to what has been
suggested here which is a high power density operation.
Mr. WHITE. To the best of my knowledge we have filed none with
respect to this specific operation.
Representative ASPINALL. Will you find out for us and give us that
information ? Just say so many or none.
Mr. WHITE. We will be very glad to; yes, sir.
Representative ASPINALL. When the information comes we will
place it in the record at this place, without objection.
Hearing no objection, it is so ordered.
(The material referred to follows:)
GENERAL ELECTRIC Co.,
Sam Jose, Calif., June 21, 1960.
Hon. WAYNE N. ASPINALL,
Joint Committee on Atomic Emergy,
Congress of the United States,
Washington, D.C.
DEAR MR. ASPINALL : At the June 10, 1960, hearings on the Consumers Power
Co., project before the Subcommittee on Legislation of the Joint Committee on
Atomic Energy, the question arose as to how many patent applications General
Electric Co., had already filed on the high power density type of boiling water re-
actor. In response to this question I indicated that to the best of my knowledge,
no such applications had been filed, and agreed to find out and advise you.
I have investigated this matter On my return to San Jose, and wish to advise
that although during the past several years we have filed a number of patent
applications COVering inventions applicable in general to boiling water and other
reactors, we have filed no patent applications specifically on high power density
boiling water reactors.
Very truly yours,
GEORGE WHITE.
26 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
Representative Asp1NALL. Mr. White, do you have anything you
Would like to add? We shall be glad to hear any statement you have
to make. -
Mr. WHITE. No, sir. I have no statement to make. I think I
would observe that from the point of view of General Electric counsel
We Would fully support the statement that Mr. Campbell has made
with respect to the liability legislation.
Representative ASPINALL. You would like to see the ambiguity
cleared up 2
Mr. WHITE. Yes; I would support Mr. Campbell’s statement that
the industry at large would rest easier with some clarification.
Representative ASPINALL. As far as this proposal and the proce-
dures that are to follow, you have no fears as far as your liabilities
are concerned 2
Mr. WHITE. No. Our counsel has given us an opinion that cor-
responds with the other one mentioned here. So we are at ease.
Representative AsPINALL. Thank you very much.
Is there anything further?
Thank you for your appearance.
That concludes the hearing this morning.
Representative BATEs. Mr. Chairman, I think it should be noted
that the distinguished member of the Atomic Energy Commission has
appeared today for his last time before this group.
I certainly would like to congratulate him on the remarkable work
which he has done in this particular capacity, as well as many others
in which he has served in Government.
I know that the Commission and all of us on the committee will
sorely miss his presence. He has been very much interested in his
work and very informed.
I know it will be a personal loss as well as a professional loss to see
John Floberg leave.
Representative AspINALL. The acting chairman joins in the state-
ment. He knows that all members of the Joint Committee on Atomic
Energy wish you, Mr. Floberg, all the success possible to a human
being in your new responsibilities and activities.
Mr. FLOBERG. Thank you, gentlemen.
Irepresentative Asp1NALL. The committee stands adjourned.
(Thereupon, at 11:10 a.m., the subcommittee was adjourned).
A P P E N DI X
APRIL 29, 1960.
PROGRAM JUSTIFICATION DATA
Arrangement 60–110–1
A. NAME OF CONTRACTORS
1. Prime contractors.— (a) Consumers Power Co., Jackson, Mich. (Con-
Sumers) : Contract is to build and Operate the nuclear powerplant and COOper-
ate in the research and development as described below.
(b) General Electric Co. (GE) : Contract is to perform research and de-
velopment work as described below.
NOTE.-Initial discussions were with Consumers who had selected GE as
a subcontractor. The proposal was later submitted as a joint proposal and
negotiations were conducted with Consumers and GE.
2. Principal subcontractors.-(a) Bechtel Corp., subcontractor to Consumers
for the design and construction of the plant.
(b) General Electric, subcontractor to Consumers for the supply Of fuel for
the reactor; subcontractor to Bechtel for the design and fabrication of the nu-
Clear Steam Supply System.
NoTE.—These subcontractors were selected by their respective prime con-
tractors prior to submission Of the joint proposal.
B. DESCRIPTION OF PROPOSED PROJECT
1. Objectives.—The objectives of the proposed project are to bring new re-
Sources into the development Of nuclear power technology, to advance the art,
and to accelerate the time When economically competitive nuclear power is
achieved. These Objectives are to be achieved by a proposed arrangement which,
under the terms given below, is directed to the construction and Operation of a
high power density, boiling Water nuclear power plant on Consumers’ system
and the demonstration of the technical and economic feasibility of high power
density therein.
2. Location.—The proposed plant will be located at Big Rock Point, Charlevoix,
County, Mich.
3. Technical aspects (data are approacimate).--Plant output: The plant is to
be sized so that it can produce a maximum expected 75,000 kW.-e. (240,000 kw.-t.)
gross assuming that the research and development program results in cores
capable of producing sufficient steam at 1,500 p.s.i.a.
Type of fuel: Slightly enriched UO, clad in either stainless steel or zircaloy
Or Other suitable metallic material mutually agreed upon.
Moderator and coolant : Light water.
Power density : 45 kW./l. anticipated for the first core.
Reactor Operating pressures: 1,050–1,500 p.s.i.a.
Steam pressure at turbine throttle : 1,000–1,450 p.s.i.g.
Cycle: Direct.
Circulation : FOrced.
4. Estimated date of completion.—Construction completion (earliest practical
date), September 30, 1962.
27
28 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
C. STU MMARY OF SOURCES AND PURPOSES OF FUNDS FOR PROJECT
Atomic Energy Consumers
Commission
£reºperatiºn R. & P. (GE)--------------------------------------------- Tºgº, Thousands
Waiver of fuel-use charges on special nuclear material required for pre- , ºv.” - - - - - - - - - - - - - - - -
operational experimental work (GP)----------------------------------- 25 ------------
Construction, including land and iand rights and interest during con: " T.I.
Struction--------------------------------------------------------------|---------------- $26,722
Plant Substation and tie-in with existing transmission lines of Consumers----------------- i.040
Postconstruction R. & D. (GE)--------------------------------------- 1 1, 179 y
Postconstruction R. & D. (Consumers).I.I.I.I.I.I.I. y …
Waiver of fuel-use charges on special nuclear material during operation
under AEC contract--------------------------------------------------- 3 1, 650 |_ _ _
Escalation on R. & D. (GE)-------------------------------------------- 3.37.1 ----------------
Total-------------------------------------------------------------- 6, 257 27, 762
Represents a ceiling, subject to escalation upward or downward, any overrun to be paid by GE.
2 Represents a ceiling; any overrun to be paid by Consumers.
3 Subject to adjustment upward or downward for changes in AEC prices or use charges.
* Represents a ceiling.
D. GENERAL FEATURES OF PROPOSED ARRANGEMENTS
º The proposed arrangement is based upon the proposal submitted to AEC
jointly by Consumers and GE on December 18, 1959, which established the Selec-
tion of the contractors and subcontractors and the general bases of contractual
arrangements. Consumers will be contractually responsible to AEC for the
design, construction, and operation of the plant and will cooperate in the
research and development program. Consumers will contract with Bechtel to
design and construct the plant. Bechtel will subcontract with GE for the
furnishing of the nuclear steam supply system of the plant, other conventional
powerplant equipment, and related services. Consumers and GE will enter into
a contract under which they will cooperate in the research and development
work and GE will supply the fuel required for operation of the plant during
the research and development program. AEC and GE will enter into a contract
providing for a research and development program the main features of
which will be the development and testing in the Consumers plant of advanced
fuel elements and cores designed to achieve high power density, long life, and
low fabrication COStS.
E. GENERAL FEATURES OF AEC-CONSUMERS ARRANGEMENT
1. Consumers undertakings.-Consumers will design, construct, and Operate
for a period of 5 years the nuclear powerplant described above. During the
period of operation, Consumers will cooperate with AEC and General Electic
in the performance of the postconstruction research and development Work,
including making the plant available for the conduct of such work for a period
of 41% years after initial criticality or for such longer period (not to exceed an
aggregate of 5 years after initial criticality) as may be necessary to complete
the research and development tasks. Consumers will operate the plant to Obtain
the maximum electric production consistent with (i) the requirements of
safety and of the research and development program, (ii) reasonable plant
operating limitations, and (iii) the ability of Consumers electric utility System
to transmit the energy produced.
2, 4 EC assistance.—During the period of 5 years from initial criticality of the
reactor and the period of leadtime required for fabrication of fuel elementS
prior to initial criticality, the Commission will waive its use charges up to a
maximum of $1,650,000 (subject to adjustment upward or downward for changes
in AEC prices or use charges) with respect to special nuclear material required
for operation of the nuclear powerplant.
AEC will reimburse Consumers in an amount not to exceed $500,000 for those
costs actually incurred by Consumers in performance of the postconstruction
research and development work for salaries and wages (including payroll
burden) of personnel engaged directly in performance of such work and for
materials and equipment required in connection with such work, but excluding
normal costs of construction and operation of the plant, fixed charges, and
overhead.
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 29
3. Title.—Consumers will be the sole owner of the nuclear powerplant.
4. Term.—The term of the contract will extend until the expiration of 5
years after the date of initial criticality of the reactor.
5. Indemnity.—Consumers in its operation of the plant will be a licensee of
the AEC and will be subject to the indemnity provisions of Public Law 8.5–256.
6. Termination.—The contract may be terminated at any time by written
mutual agreement Of the parties.
AEC or Consumers may terminate the contract in the event the other party
is in default, or in the event the failure of General Electric to carry out its
obligations under the AEC–GE contract makes it impossible to perform the
AEC-Consumers contract, and neither AEC nor Consumers is able promptly
to find a qualified substitute to complete the research and development Within
the amount Of funds which may be made available by AEC within a reasonable
time.
Consumers will use its best efforts, subject to the limitations set forth below,
to obtain all necessary approvals from Federal, State, and local regulatory
agencies as are required to permit the COnStruction and Operation Of the nuclear
powerplant and its connection to the power System Of Consumers. In using its
“best efforts,” Consumers agrees to design, Construct, and Operate the plant SO
as to COmply with all necessary Safety requirements : Provided, however, Con-
Sumers will not be Obligated (i) prior to issuance Of the initial Operating license
for the plant, to expend funds for changes Or additions to the plant arising Out
of new safety requirements imposed by Federal, State, or local authorities, if
the estimated cost to Consumers and its contractors of such changes Or addi-
tions would exceed an aggregate Of $3 million, nor (ii) after issuance of the
initial operating license, to expend funds for plant alterations required, by
reason Of governmental safety requirements, to permit postconstruction research
and development Work to be performed in the plant, if the estimated Costs of
such alterations to Consumers and its contractors, together with the cost of pre-
vious changes of additions occasioned by new safety requirements prior to
issuance Of initial Operating license, WOuld in the aggregate cause an overrun
of the $3 million. Consumers may terminate the AEC-Consumers contract if the
performance Of any of its Obligations under the contract cannot be carried out be-
cause, after using said “best efforts,” Consumers is unable to obtain all nec-
essary regulatory approvals, except that, after issuance of the initial operating
license for the plant, if Consumers is unable to perform any part of the post-
construction research and development Work in the plant because the estimated
cost of plant alterations resulting from Safety requirements would Overrun
the $3 million limit, Consumers may terminate the contract only if such non-
performance makes unlikely Substantial achievement of any of the objectives
of the research and development program and, in such latter event, AEC also
may terminate the contract. Questions, not mutually agreed upon, which relate
to the likelihood of substantially achieving research and development objectives,
and the extent to Which the COSt Of proposed plant modifications should be
applied against the $3 million ceiling shall be submitted to arbitration.
Consumers shall have the right to terminate the AEC-Consumers contract
if the performance of any of its obligations under the contract cannot be carried
Out because after using its “best efforts,” Consumers is unable to obtain a de-
Quate liability insurance and indemnity COverage. It is understood that a de-
Quate liability insurance and indemnity COVerage include insurance and in-
demnity coverage against claims On account of damages occurring outside of
the United States as a result of a nuclear incident at the site of Consumers'
nuclear powerplant.
7. Information and records.-Consumers will keep available for AEC inspec-
tion and study and, in accordance with procedures approved by AEC, require
subcontractors of any tier to so keep such records of technical, economic, and
financial data first developed or produced in the design, construction, and oper-
ation of the plant as will enable AEC to carry out the purposes of the power
demonstration reactor program ; Consumers will also deliver and require such
subcontractors to deliver to AEC for such purposes such data as AEC may re-
Quest. AEC may use such data as it sees fit. AEC intends to require disclosure
of actual costs to fixed-price Vendors of plant components only as AEC finds neo-
essary to the purposes of the power demonstration reactor program. AEC will
have the right to inspect the WOrk under the Contract of Consumers and Subcon-
tractors and the contract will include the statutory GAO audit provisions with
equivalent rights to AEC.
30 REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT
8. Refunds.-Consumers agrees that, if it shall unilaterally abandon the con-
Struction Of the nuclear powerplant under the AEC-Consumers contract, or the
performance Of its Obligations under the AEC-Consumers contract with respect
to the research and development program approved under the AEC–GE contract,
for reasons Other than (a) a contract amendment under which AEC approves
such abandonment, Or (b) a Cause beyond the control Of COnsumers and with Out
its fault Or negligence (including inability to Obtain necessary licenses Or regu-
latory approvals Or adequate liability insurance coverage) AEC may at its Option
and in lieu of any Other remedies that may be available to it On account of such
abandonment, require Consumers to reimburse AEC for AEC’s expenditures un-
der the contracts between AEC and Consumers and AEC and GE except to the
extent that the AEC after Consultation with Consumers reasonably determines
that any such expenditures have resulted in the acquisition by the Government
Of property, patents, or Other Value.
9. Patents.—AEC will be entitled to all rights to inventions pertaining to
atomic energy and to inventions by Consumers’ employees in work paid for by
AEC or while assigned to Or utilizing AEC or AEC COntractor facilities Or per-
Sonnel, subject to Consumers receiving a nonexclusive, irrevocable, royalty-free
license. With respect to other non-atomic-energy inventions made by Consumers’
employees, AEC will retain a nonexclusive, irrevocable, royalty-free license. All
subcontract patent provisions will be subject to AEC approval. The GE sub-
contract with Consumers for the supply of fuel and the GE subcontract with
Bechtel for the nuclear steam generation portion Of the plant Will incorporate
patent provisions as described in paragraph F 8 (C) below.
F. GENERAL FEATURES OF AEC–GE ARRANGEMENT
1. Nature of contract.—The proposed contract will be cost-type, without fee.
2. AEC assistance.—AEC will reimburse the COSt Of research and development
work up to a ceiling of $3,710,916 plus waiver of use charges on special nuclear
material for preoperation research and development purposes, not to exceed
$25,300. The proposed research and development program is composed of pre-
operation research and development estimated to cost $2,531,648 and post-
construction research and development, estimated at $1,179,268; these amounts
are separate ceilings, subject to later adjustment by mutual agreement Within
the combined $3,710,916 ceiling. The above combined cost ceiling will be subject
to escalation, not to exceed 10 percent if upWard.
Research and development costs to be reimbursed by AEC will include Costs
incurred by GE on and after January 29, 1960.
3. Conduct of the work.--The AEC–GE contract will contain a statement of
the objectives of the development program. An appendix to the contract Will
describe the tasks which constitute a reasonable basis for accomplishing the
program objectives. Costs incurred in performing the tasks in excess of the
ceiling will be borne by GE. Agreement of AEC, GE, and Consumers will be
required for changes in the postconstruction R. & D. program and for the more
significant changes to the preoperation R. & D. program. Other preoperation
R. & D. changes may be made by agreement of AEC and GE.
4. Term. The term of the contract shall extend until 4% years after initial
criticality of the reactor, or for such longer period (not to exceed 5 years after
initial criticality) as may be necessary to complete the tasks included in the
research and development program.
5. Termination.—The contract may be terminated at any time by Written mu-
tual agreement of the parties. Either party may terminate the contract in the
event of the failure of the other to perform its obligations under Such COntract.
In the event Consumers fails to perform its obligations under its contract With
AEC for the construction and operation of the nuclear plant, Or if the AEC-
Consumers contract is terminated, AEC may terminate the AEC-GE Contract
in whole or in part and GE may terminate the postconstruction research and
development portion of the contract.
6. Refund.—GE agrees that, if it shall unilaterally abandon the performance
of its obligations under the AEC–GE contract for reasons other than (a) a con-
tract amendment under which AEC approves such abandonment, Or (b) a Cause
beyond the control of GE and without its fault or negligence (including inability
to obtain necessary licenses or regulatory approvals or adequate liability in-
surance coverage), AEC may, at its option and in lieu Of all other remedies that
may be available to it on account of such abandonment, require GE to reimburse
AEC for AEC's expenditures under the contracts between AEC and COnSumerS
||||||||
3 9015 00131 O500
|
REVIEW OF PROPOSED POWER DEMONSTRATION PROJECT 31
and AEC and GE except to the extent that the AEC, after consultation with GE,
reasonably determines that any such expenditures have resulted in the ac-
Quisition by the Government of property, patents, or other value.
7. Information and records.—GE will keep available for AEC inspection and
Study, and, in accordance with procedures approved by AEC, require subcon-
tractors of any tier to so keep such records of technical, economic, progress, and
financial data first developed or produced under the contract as will enable AEC
to carry out the purposes of the power demonstration reactor program ; GE
also Will deliver and require such subcontractors to deliver to AEC for such
purpose Such Of the foregoing data as AEC may request. AEC may use such
data as it sees fit. GE will also furnish background information as requested
for AEC’s use to the extent required to evaluate the results of the R. & D. work
for the purpose of determining the technical and economic feasibility of high
power density boiling water reactors; but GE background manufacturing in-
formation will not be disclosed to AEC except for variations in manufacturing
techniques if information on such variations is needed by AEC to evaluate
performance of the fuel. Proprietary information furnished by GE will be re-
tained by AEC as proprietary. AEC will have the right to inspect the work
under the contract of GE and Subcontractors and the contract will include the
Statutory GAO audit provisions with equivalent rights to AEC.
8. Patents.-- (a) AEC will receive all rights to inventions arising under the
Contract except that GE will retain a nonexclusive, irrevocable, royalty-free
license in the infield : GE also will receive exclusive Outfield rights On inven-
tions in Specified areas where it has an established patent position, Subject to a
license to the GOVernment.
(b) AEC will own all inventions pertaining to atomic energy arising Out Of
GE's work under the GE-Bechtel contract or under the GE-COnsumers contract
and which are actually embodied in the nuclear Steam Supply System. Or the re-
actor fuel with GE retaining a nonexclusive, irrevocable, royalty-free license.
(c) On U.S. patents owned by GE and embodied in the nuclear steam supply
system or fuel supplied by GE, GE will (1) grant the Government a royalty-
free license for use in Government-owned Or G.Overnment—Operated electric
power generating facilities incorporating nuclear boiling water reactors which are
part of AEC’s program for development of atomic power for civilian uses, (2)
grant the Government reasonable royalty-bearing licenses for Government pur-
poses in all other Government-owned or Government-operated reactor facilities,
and (3) negotiate with private parties for reasonable royalty-bearing licenses.
No license will be granted for GE instrumentation, electrical and electronic
components, and nonnuclear commercial items or materials to the extent that
equivalent items or materials are available from Other commercial Sources.
(d) GE's subcontracts will contain patent provisions approved by AEC.
X