'· _ COPY H0 ___ 1_3_ _ MARCH213 196G ITCMIC ElIT F GYcc -nssION y y 107 ' W s11 n G 1 s r GU ' RDS f'JlD DG STIC l·1 T1 1 ti 1 L 1 c c'J · - rrLJY 1 'Jonc1 2Y P l i'unrv b 111 l JS6 11 30 a m C • Li°i'i ·- r c Room 1113-B stnrr G1enn 'I' S8nbcr John G Palfr y William Chal m m James T R2 m8y Ger·uld C Bartels Edmircl J Bloch Howar6 C Dro 'm Irvin P Tape Arnold C Bupp n r - Fritsch DOUGJ as E George Thomas J Haycock c L Henderson P T Hobbs John C Hc y1e Dwight A In' - L till E Jc 1nson J Antionette Joseph Myron B Kratzer Allan N Labo 1tz L S Lenderma 1 Lawrence D Lew Samuel C McDm ell Ragmiald Muller Eber R Price JLtUus H Rubin Wilbur A Strauser John V Vinciguerra William L Woodard James R Yore I I I L l l · I - '· Brierin Cl ' i on SafcGuard5 and Dc cstic Mr nro m beGan with the general obscrv tion Commission should approach the Nuclear ment Corporation present extent system or domestic material boy demonstrated requirement special fulfillme t mic ht not really -nuclear remained valid criterion presumption safe3uards terized criterion of honesty and material or honasty of a financial satiGfy responsibility the AEC1 s interest ror an accountability was par1 Jl2 In this good light ' system b sed also based on a frc rr v orlc the Com '1'lission' s system could be ch rac- ho· 1cver the presumption This l as a policy which the Commission mi l'l' dcr 1re Bro m revie·1 ed the NlWJ Cc ituation in Although the were rerr oved tha s ster i did not present in the most credible Hr case had convincingly the accountability as reasonably To an in the sense that good SN ·1manage- ment was also good busines ·1hol1y on this and Equip- to mal e the firm a unaccounted materials the to features of that were tracc blc Neverthelcsi that Materials accountability system for which it uould be unfair whipping that in the - ontext of the mTl·U C oituaticn the lnJ ·IBClosses Accountnbilitv nntcrial in detcil itself question to address the specific He noted the follo ing features of data - ' -------· ------------- •• r · Total Total Totnl Plant 8 Ycar l Losses known losses lflllL Cont kgi 178 84 2 kgs Received ro i · ' NL 1012 kr s u 713 kcs u Product returned 206 kgs u Scrap 32 kr s u Inventory 951 kgs u Tot'iil u u 93 8 kr s u Unknown kgs u 149 29 178 Reported losses Additional Total kgs u 1012 -951 I 32 kgs u $1 1348 million In explaining this materials loss in Novenbcr 1965 AECMaterials a further detailed mechanisws of 149 kgs the loss restitution of uranium lost 84 2 kgs of operation known loss M na cmcntstaff Durin or much of it could be accounted thls peric 1 Following had lost 29 kcs over the 8 year the losses figures ascribed there Commicsioners of unaccounted-for in inventory He reiterated under the W JIT contract loss or 178 kgs the relationship raccive d total included matsrial that $1 1348 for plus the 32 kgs clthouch the 61 kilo rarn 0 was p rt of tl c total prcci ly between th two s0tn an· plant revic d tbe · Jtl L· data for the it was i ossiblc from W JIT ho d to relate to the total not l ng the ccr ipany 'had been billed the 61 kgs which by m w EC was no way specifically He loss llU ·' SC period not rc clized to the WAI contract over the period 19G5 and the April 1-iad dcter - ir ed that and possibl r reported fD1ancial tl' C staff Mr Brown stressed for through J 1T -'EC h d November 1965 surveys had not been reported hc d deter- over the company's and hc d made cppropri tc an additional had performed of lHI' c· nnd as a result of the 178 kgs mined that 8 years survey Mr Brown noted that been pJ 2 nt to eato blish or dJ 3 93 rccnt li··235 The material Tbe 178 lc 1 r 1 tcrio i oi' vo rioc c' rce o · cn dchrr E nt -3- flf Mr Brown noted on this matter the Commission from the Joint ·J uthori ntion had info ned him he planned tive devoted In onswer lt boo s to the results Co n rnissioncr eicht years but that it J C physiccll regard shipped to adjust that system abroad if did not collusion 1 aterial i or honesty material account2 bili'cy In addressing important to bear not a mindless Act provided bility it uould safe uards relied the pre- or require and a foreign possible of tl1e 2i 11otmts indicated it was based upon a pre- reveal r iaterial the EC 3 a delibe 'ate in this manner howe vcr Mr Brown J id it criminal the presumption Specifically penalties The deterrent fundamental value upon formal -4- the v as of honesty 11as the Atomic Energy ror violation of these to the entire Analo0ously indepen- in this responsibility to divert assumption severe the past He noted syster 1 mic ht not in mind that procedures GUards system on the te thec etically Because system had been co 1sidGrcd · domestic data thnt fpr a shipper c nd financial attempt the o'l' n did have such data provide abroc1d in excess sumption and sys'csmatic its by JRilEC during staff between in t 1e c npan r1 s records ·1 po3ses38d chcclrn of ship ents GOVcrn i ent · ore assumed to ship staff only on NUMEC records was based dent nnmey Mr Bro· m 1 Mr Brown indicated safec uards proc ram b Y Cc1mnissioner Ramey aslrnd if sent in the Execu- of the JIEC Novembe1 survey amount of material aid Mr Com ny f1r3t to the production oaid NUl·' ECmanai err ent had no '1 agreed question i in the forthcc nlni Manascr to raise to questions anticipnte Ccn mittee The General Hearin 3 session could penalties system international sovereign of accounta- guclrantees of safeor 111 r or foreign eovcrn cnts deterrence throuGh cevcre and the solcm n nature the basis provided penciHy fin inci l of intcrn tion il or - the concept Thcce princj_ples re ponsibill instruments ty -- had for the Cc n1 cion 1 s accountability ·systems There was general that relative small diccus io to other Westinghouse on shipments abro d and General of' slightly er that France and Australia Kratzer Hr tic and forei n most discussed successfully collusion necessarily sion Staff suspicion t -10 the Joint should had gone to point A though which to for dcLlestic indus ry n nbcrs of plant cover Jnt of the probnble Cor rr H tee 1 0 JGC had occu1·rcd that 2ld te l c ho d r o evidence r citl cr Ol' to sup ort its hild dctcr iincd lack the cc p ny l- nd consi tcntly losses suspi- hod not been diverted of NUFIZCthat proccas Cc · 1 i s- could the Conunis- staff actual of The basic 1 the Daterial have a theory line Specifically its More- firm · 1 ould also bet- ce 1 tl lc foreign be that diversion surveys estimated Commissioner ·1ould b vcto b deceived the matter say unequivocally did i order collusicn Mr Brown raised cion that cystc c mate ial subst tial management and the foreign sion position r 2 'ccrial bet ·1Ccn a U S an 1 a forcii n require questioning to conccntra c the mJ 'JECmaterial was that to divert tended tho d ffe rcnccn bct · een the doj' 'lcs- pre·sumz bly l_oyal citizens over Elcctrlc accountability him seemed important rather The Chairman observed enriched Ramey observed Japan which Mr Brown noted U S com - iz nicsJW ·iECshipped amounts of material that durinc during Additionally -5- IBM of its underthe · r J r1 difference between have been passed the losses tory sis of deferred J filter supported NU1·' iEC csti1 1ated were contained staff that in equipment which had been discarded with ye ar period in residue and on from physical in its inventory verified only an average Garr ma spectro- by chemical of about and various analy - is 12 g 2 ms per of U-235 co bustible grounds e cr 1l 1atio 1 or the buri2 l pit analyestimates more than 50 kilogrwns in burial included The book inven- hich resulted NUT-' 2C reflected to Tlrns probably theory or mat rial of over 700 such filt ers or samples to ne ' jobs 31 grams of U-235 per filt r of approxir 1ately metry appeared over an ei ht this values thun those For example jobs losses to support at NU1·ffiCcarried hir her louses to the WM contract attributable was evidence filters and eatimated on from completed nn nccumulation There actual wa tes In connection lflJ c lncincn•ated and analyzed representative 5 to 6 kilograms Independent did not take account compounded th1 m tl rcur h llUf ECno• appeared to generally of losses of the Division in greater detail contracts that rns c occurred Materials on the procedures lle agreed with Mr Brown I s conclusion had never tcicen the time and trouble • In short attention Ramey Mr McDm·1ell Management described that co - - 1cnted by Mr Bro m 1ro mcsimply to develop methods -6- I and management methods by Comr 1issioner of JJuclear pits on scrap from inadequate materials viollowini a question burial of return 2 s they successive tho t Qnl r lower estir 2 te to the theory to be suffering recoGnized this hicl1 rate contributed full from these by P SC ccnfi1 ned tl1e consistently contr2 cts recovery and concluded wo ld be recovered an2 lysis Additionally sn nples 3 o dcquatc lost to determine through fabricatinG In answer that fuel indicative had been for elc cnts a practice losses I1'ir Geore e of fuel difrlcult This of urnn lum- Procram He noted job and was GCnernlly of the nbout jobs for which lfil iEC averaged or tho co i p 2·ino 1 bot · ccn 1'llJ1·2CI s t p J cally In absolute loss fab icntic n the NlU over sr id- AEC proccsG elementG been tho Y-12 csl ed and losses inventory the to bid 'rhe Chairman total for of t 1e complexity made it bc ln procesGcs wns nn cxtr0mely this of matcrlnl to n quc tion by tho Chair i n Mr D1'own r nid the WANLcontract carbidc the nmounts 0xperienccd losses in tJ C plants d·clring tlrn fabricotlc n of between an ountn the lol'Gc t sin lc or uranium 1 ' ho· 1eve1· stl' l l rc wcser - c j loss had in one r cnth at both le2 3 'cllc n l of the material percent a throughp t 11 11 basis by Ilir Brovm nmsc percent period In other l1' ' ghcr had AG · n evlci nt 1 11 banlrn c 11 Mr Brown clrcul2 ad report ' 12 3 st2 for 1 the hiGh· Tl e perccntase or ccu · c f· ul tnntinlly tl oory th t thl contract otl- er los s to the Cc 1 0icncrs a S6curity on N1T · EC Mr Drovm next illC btid o ·er tlie ci 0ht yeoar wo ·ds l tJ c1 losge3 was ho1· ever beco r c the on tct 21 lo c cs · c1·c apr ·o - i - · atcly1 2 tl e ' 'ltJlL contract It than 1 porsent rro i t1 e d2 te noted but not e orbitantly were high under loss en hand nnd l0cs 11 permittcd turned 11 such to tr e ce r o· l a condiUcn c ue tion of v hy to pcr 1 t at NlJi U C -7- · -· ' A sati f-ictor r with nn cr or mntc1'ial of pe - coful oncl ab1'0 d pcaccful J i the time to deal Hith or U S element considera ion Il0 · evei' change un i veroaJ uckr o· · ' 1 c sorr e ntof the problcr 1 to have was for bson vital sic nificantly had not circum3tanccs exam le · ithin a poosible the even been c nn now practically seriousness cldi'cic 11ally tJ c at home latter capability both porsonnGl country There to the And most nuclear a plethora both co an important policy of a military proliferation Go isive foraicn hnd to nccc eratc enerc y rer ard nto - '1 ii 1 bucn seen 11 procedm'os desire uqes · of nuclear Pnrt ' cul lr2y or the 1EC hnd posr es ed The · ho cl t Jccn a real development appear An attempt · hlc ' 1 bad pcrt i inC d · hen the been e3 ibli iwd y e rny C Ue L Lonh id to be mnde in recoc nition tlw cil'CUmstnncc not ·1 - of t 1e the N h 11 11 AEC tl10 rc did misconception by staff or j the Co ·cn ssion I s i i i nt · 'itl1 regard bility criterion tbac f 'inc s l tention at the time sufficient ' ' 1 lGss Tho record or the basis arr rsntly levels The rocor fonr cr h8ld · as tho hnd systemc V cally matcrinl quc3tiono was not In short hncl been understood sup ort for to have been the nl 'lnys con- thought been a It had neverthe- such at various diff'erence material under licensees for under licensee CorrJ 1 ssion' s accountability and even now were clear the that contractor a requircrn8nt a' 'lbi valent not had been bGen transported 1 s n result were alone signif icant by fi cd-prlcc Such an escort would responsi- support system to have sGcurl ty sta d ds adopted ancl that dures assu ed financial fully or the policy ro1' thG doi cstic Anot hGr anomaly tbe did not rc spo sibility ndoption bee to the between BC control The armed escort held pr-oce- not completely nns ·l rs to really searching obvious a au a if muz1aue I a r Conuni ioncr Hc r cyasked 1r starr desirnb tllty the pcr ionnel at Nur mc ·1ho 11 icl or intervic1 in been rcsronslblc hnd com lclcrccl the for materJ nl accountnbl ity durinG the past ciGht yenrs Mr Dro· n snid possibility performed left A nunbcr or individu ls this l13d ovnr the years H0 ·1evcr staff' the Co s rni isior cJccide it these in ividuals yield of such intervfows Ramey agreed ·to this funct l on for lr'Ji·1EC All but one or tl'lo had the Company's c ploy should had civcm some thour ht staff dcs l r2 bJ e to interview Vir Broi'ln 1 s personnl ut There was further was prepared probably belief was that wou ld be lov1 caid they might be marginally brief discussion of thls the Com nis ioner hel ful matter during wh ch Mr Jro 1 ind c 'ted he ·1ould v orl out a suitable procedure with Mr l 0llingsworth The Chairmnn ndicutld would bo info od his DGr ernent nottnG of the Co isslon The Cln ir ' 'tnalso that 1 no divor io 1 theory of additional JI the CorGnir sio 1 r ight 1w 3c to allm would give that diversion procedure was that An objection to this NUI•Ti C ik elf' and the nuclear say the least confidence industry be traumatic -9- of the at NUHSC The to examine the Com any1 s confidential Such an examination Co nittee or in support had talrnn place '1i h to coris de r 1·1ould be to request rcco ds the Joint s intention Mr D co· n e id a ' ccond procedt re mission the interviews co - Jnentcd on the dcsirabi 1 ity to the JC 3 staff' ntresnln belief to conduct I staff the Cor 1- financial some degree had not occurred t G impact in general on both Hould to r ' ' L1cco t cl th it Mr Dro1 n rnlGht Conuni iClncr I'illfrcy succc6t informnlly that if Comp ny orre1·cu the to IEC the nvnDable more favorab c said Mr be Eccountcd the r r for do it picture proc0dures lessons im Ec of the in u Mr Bro 'm 1 s opinion tho ir tter ln of the Co lsslon staff intenckd of our total credibility nppc2 1·cd tbe losses it experience mcn st i 'OSto t ' fjhten th2 sy3teu unnecessary With rcc ard 1 and a prior to s safeguards and on the of basis concern systems safcGuara3 could to about to study nd r 2 ' e recc r menda'cions to Commission the to hs ve been unc er'c c en by a committee be undo1°s'cood by Mr Lnbo1'1itz stac es of complcticn a factual not ' Y'1 l '·• Ink outline an evaluation atcd the st CJ ra ort of the cf the to tbe Co unis- be ore in the nature would than an analysis Eyst chaired as in advnnced and wot ld bs circ latd The final shortly sion J -Ln ic e 1o i'oed in Mr Bro n tl1c PDI fonnalJ y accounti lbility of rn lc ht be put S11 ll 'o · l ich L ncbr more general the records wn '7 orizccl t i ff' v e1· on the NUMEC situ 1- The theory to involve sitllc1tion 'l'hc General tclcp' onc DrO m tion to rn l c ltG flncincial entire lic 1t he ·lould P1· r l clcnt of l 'UFiEC to l·1r bap1l 'o systcr 1 1 s overnll dGfccts and and strengths The General substantial l-lano er said policy ' ere built burceon the proble s multiply added another Sec J C 213 107 nuclear of accurate and efficient to the continued to accountability o· - nership 1 factor raised numbers or indcistry of p1 ivate Tbe prospect ABC 213 108 and as the cc plex Jru- ccxpe 'icnce As increasing questions reactors would the of SUM situation - Draft norort on Proccdu co nelating to lccoun ni ili ty nncl So fcr unrd of SW·l and - Corr n11G iun Pol · Y on the Control or Special Huo1co r Vi2l c ric 1ls __ -10RI F1 P ---- IF -- In ecneral that continued Af' C11c d three Mr HollinGsworth major interests The nGency had a dirzct health venting or material tute diversion a threat arcued and safety and an interest or ill-considered permit action The matter in pre- He believed GC I s present to the ·latter thoq h nn intcre t in s ch a manne as to consti- that responsivs sion must not alons intcres to t - e nat l ono 1 security could be fairly completely in nuclea1' mutcrlnls financial based upon public it wns clear system interest itself Vias not The Commis- to be forced on the basis 1t into hasty of the NU IBCsituation demanecd methodicul and detailed consid8ration Mr Henderson noted that Regulatory the procoss of developing or the accountability ii I rcpo tln of losses Hould l e submitted n0ar futu1 e fr n sole procedures system -· had been in to tighten A staff nnd transfe r believed Ho of privately financial o med mettc rlal responsibility in connP ction 1954 1wivate th2 t tr is Mr • Ink less expreos co m ented that an interest chec1cs of rn2te- 'ial in special the Joint concept Palfrey Hcndor 0 1 snid AEC las on record ALC 1 s interest in t 10 was moving a· ray by Co mnissioner O' ership toarinr s in theory ah1 1ys been part safc3uards system regard Vir with the ch2 r c e nuclea1 materials Cc r r iittee 1·1ould doubt- in a system which included In thio parts paper regarding Re ulator-J Staff on tte emphasis v1ould not lessen certa n for Commission consic eration In ans1·1er to a question Staff physical physical j_nspection had of the Commission I c intc1•nnticnal Even here however proble s Sc AEC-R 123 l nnd - C-R 123 2 and Minutes on Mnrch 7 1966 had developed of MectinG 232 held -11- ·o In p irticulnr completely the Eur itom rnfecuardo syotcm hacl never been co1rJnenr u1• itcHit h the cencral international parity sarccucrds conoiderationo the domestic criticism fronts that provisions practice accountability outside of direct possibility a premature between the and procedures of the attitude leak and probably The Chairman sugBcstcd ment for conti113ency discussion in various to talrn inaccurate use in the public ariae of the of the HUr-liCsltu t 1 on could the dcsir bility_cf should tlrn NUJ IBC matter to f ho A'ZCoperatio 1s There was also brief that and Cornmittce might be anticipated lead to sensational disp rity systems discussion members of the Joint on the matter ovcr idinG On both the international wao substantinl There was general aufficicntly the Conunissicn was vulnerable there of its Thiu dis- at the time and ucceptccl in tile of what were conoidered ·political um c1' ·l ich had been establi hed h id been rccocnized context theory pre3s reports a prepared authorization The General statehsarings Manager observed he had been inf 'or r ed by Mi' Conuay that the staff Comrr ittcc had placed on the correspc dence strict limitations rec anlinc u ' EC Mr Comiay intended in Executive Session but stressed of the Joint to b ing th0 m t' up that any Committee ffie bcr could if he desired The Ccr Jnission app opriutc of the points raise that in a public it v1ould be des rablc aireed contingency the matter statement should After be covered brief to hc c 2n discussion in such a statc cnt the Co 1' nissicn thc- nked Mr Brown for an infornative W B McCool Secretary -12- heari s p -ei cntation