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Dr. TAPE. That is correct, Mr. Chairman. Representative HOLIFIELD. Your statements place heavy emphasis on words such as “technological transition,” “incomplete understanding," bevolution,” “early stages of development,” and so forth, which would seem to indicate that the Commission perhaps has not made as much cess toward the commercial development of Plowshare as some of us may have been led to believe.

If that is the case, do you believe that this legislation is premature? Dr. Tape. No, Mr. Chairman, I do not believe it is premature. There are, of course, several considerations that one must take into account in responding to such a question.

The proposed legislation is very timely with respect to indicating to the world our willingness to fulfill our obligations which are set forth under article V of the Nonproliferation Treaty.

I emphasize the technological developments and the evolutionary phases because in a truly commercial type of application, one would look for much more standardization of devices, standardization of procedures, and the involvement of many more service organizations than we see actually in operation today.

I think that the advent of legislation of this kind will indeed assist us in moving more rapidly toward the ultimate goal which we have.

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Representative HOLIFIELD. Now, in the President's statement on the Nonproliferation Treaty there is the phrase that these peaceful nuclear explosion benefits would be made available "without delay." That would lead the reader to believe that they were available immediately and ready to be offered without delay.

I would like to have such qualification as you may want to that phrase, because I think it is important that it be understood in relation to the technology.

Dr. Tape. As far as the technology itself is concerned, Mr. Chairman, I believe that there are certain applications that we would anticipate certainly within the next 5 years that would fulfill this expressed intention.

As the chairman observed earlier this morning, there are a number of steps which are still required before the treaty comes into force; for example, its adoption by many more nations.

You also noted the need for first things first. You also noted that in certain of the applications we will need waiver of the requirement of the Limited Test Ban Treaty.

All of these things will have to come in time. I think the technology, however, will proceed apace with these developments, so that I do not anticipate delays in the technology application.

Furthermore, I believe I have already emphasized that while we would have devices available at a relatively early date which would be useful for certain applications, they would not necessarily be the optimum type of device which one would want for certain other applications. T'herefore I still would like to consider this as an evolutionary situation from our present status to one of fuller commercial utilization in the future.

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Representative HOLIFIELD. Would it be fair, then, to say for the benefit of the reader of this record that the interpretation of "without delay" would have to be made in relation to the advent of the technology, and that it would be made in fairness to all concerned, and that any delay that would occur would not be a discriminatory delay, but it would be a delay which would be measured in regard to these factors which have yet to be factored into the problem?

Dr. TAPE. That is correct.

For example, if someone came in early and asked for an excavationtype canal-digging experiment, and we didn't have the other factors under control, I would not call that a delay on the technology basis. I would call that a delay based on the other factors which you have indicated.

Representative HOLIFIELD. But if we do have a device that is available for a specific purpose, we would follow through on the terms of the treaty without discrimination, provided the device was available and we were using it, ourselves; is that correct?

Dr. TAPE. If we had used such a device ourselves, we would certainly talk to the potential customer and tell him what application we could make of the device at that stage. We would also indicate to him what we might do 2 years from now.

Representative HOLIFIELD. That is right. We would also indicate that any such test would have to be made under the terms of the Test Ban Treaty.

Dr. TAPE. That is correct.
Representative HOLIFIELD. And other international obligations.
Dr. TAPE. That is right.

In the course of the NPT deliberations in Geneva, as I recollect, it was said that this will be made available to the parties when the technology is available, so that there is a recognition here that technological developments have to proceed.

CHARGES FOR EXPLOSION SERVICES

Representative HOLIFIELD. In article V of the Nuclear Nonproliferation Treaty, we provide that charges made for peaceful nuclear explosive services made available to nonnuclear weapon states shall exclude any charge for the research and development of the explosive device.

Under your interpretation of this bill, would that same provision apply to fees for domestic users?

Dr. TAPE. Yes, Mr. Chairman.
There are several considerations here.

Our own Commission policy with respect to nondiscrimination between domestic and international customers in other areas takes into consideration the nondiscriminatory characteristics of such charges.

The interpretation I would like to put on the R. & D. as stated here is that the R. & D. which has gone on in the past and will go on in the future as general R. & D. related to the development of the nuclear explosive devices would not be construed to be a part of the charge.

However, I can visualize a particular application in which that application is a bit different from others we have done in the past, and there might be some developmental aspects for that particular application which I think one ought to consider as appropriately chargeable.

It would encompass special work to transform what is available in a standard device to one which is more applicable to the new specialized application.

Representative HOLIFIELD. The research and development which you will have made will not be charged for?

Dr. TAPE. That is clear.

Representative HOLIFIELD. But if a specific use of a device requires research and development by the user, then this would be a logical and normal way of doing business, to charge him for something that would be specific, make some kind of arrangement for either sharing the expense that was necessary, or charging him for that.

Dr. TAPE. I think this would have to be looked at on a case-by-case basis.

Representative HOSMER. May I ask in that connection, Mr. Chairman, when you speak of pricing, we can visualize the actual emplacing and firing of the device, itself, as part of the operation, but do we not also consider the cost of evaluating beforehand safety, health considerations, and other factors involved preliminary to an actual emplacement for firing, and things subsequent to the firing, such as monitoring and other services which might have to come and be provided by the AEC?

Dr. TAPE. That is correct, Mr. Hosmer. The charges would have to be complete in the sense that they would cover all of the services provided by the AEC, including those aspects that you have delineated, which go beyond the charge for the device itself, and the emplacement and firing

Representative HOSMER. Incidentally, my delineation was intended as an example, and not to be conclusive, because the expression “nuclear explosive services” should, I think, be understood in the context of a rather comprehensive operation to be carried on by the AEC, and not limited just to the device itself.

Dr. TAPE. We understand that, Mr. Hosmer.

I personally think in time the interface between the AEC and others will be determined as all parties gain experience.

Representative HOLIFIELD. And those protections to the U.S. Treasury would be included in any contract that you would make to furnish such services.

The overall intent is that the furnishing of these services to others should not be at the cost of the taxpayer unless it would involve a valuable advance wherein the United States, the Commission in this instance as the representative, would be willing to contribute toward the research and development for the benefit, for the overall benefit of the advancement of the art.

It would be possible, if I may give an example, to say that the Gasbuggy experiment was considered to be of benefit to the advancement of the technology, wherein the AEC would contribute toward the experiment.

That could be possible.
Dr. TAPE. That is right.

Representative HOLIFIELD. We are doing this in many other fields. In building reactors, for instance, in the different “rounds"_second and third rounds we have contributed certain funds, because we thought it was not only of benefit to the user, but it was of benefit to the advancement of the art.

If that particular situation arose, that would be given consideration. Dr. TAPE. That is correct, Mr. Chairman.

We have been emphasizing this morning those projects which might be considered to be more in the nondevelopment areas.

Representative HOLIFIELD. That is right.

Dr. Tape. By that I mean those that are beyond the programmatic developments that we are involved in right now.

As you have indicated, the work which has been in progress and is going forward for the projects we have discussed with you from time to time is of direct programmatic interest to the Commission and to the Government, and there is a sharing in that respect.

Representative HOLIFIELD. If such a project did appear to be advisable, this committee would be informed about it, and we would have an opportunity to share with you the responsibility.

Dr. TAPE. That is correct.
Representative HOLIFIELD. Of that type of decision.
Representative HOSMER. May I just add to that question?

Do you regard that with the legislation before you amending the Atomic Energy Act that you would still be able to function in the R. & D. field in Plowshare, as you have in the past ?

Dr. TAPE. We have taken that interpretation, Mr. Hosmer.
Representative HOLIFIELD. Mr. Anderson.

PRICE-ANDERSON INDEMNIFICATION

Representative ANDERSON. Is the Commission presently authorized to extend Price-Anderson nuclear indemnification protection to a domestic user of so-called peaceful nuclear explosive devices?

Dr. TAPE. Although I think I could start an answer to that, Mr. Anderson, let me call on legal counsel to make sure we have it complete.

Mr. HENNESSEY. In the case of the domestic explosion services, we do have authority now under section 170(d) of the act to indemnify the AEC contractors who engage in performing this service, and we have in fact entered into indemnity agreements with all of those contractors.

Representative ANDERSON. Are you limiting that a little bit, then, in your answer, when you say "the contractor”?

Mr. HENNESSEY. I intended to carry it further, Mr. Anderson.

Under the Price-Anderson indemnity, the coverage is universal. That indemnity agreement to a single contractor will apply also to anyone, including any user of the service, who might be held liable because of an accident, so that in effect everyone engaged in the enterprise would be covered under this indemnity agreement that we are now authorized to enter into under the act.

Representative ANDERSON. Would you have any authority to extend similar protection and indemnification protection under the act to a foreign user?

Mr. HENNESSEY. The situation there is a bit different.

Again, we assume that these same contractors would be utilized in the performance of services for foreign nations or other contractors in similar circumstances, and that we could and would enter into indemnity agreements with those contractors.

The situation there is different, though, in two respects.

First, the coverage is only $100 million, where it is $500 million in the United States.

But more importantly, the indemnity in the case of a foreign accident applies only to our contractors.

Representative ANDERSON. In other words, if they had a foreign company as a subcontractor, they would not be indemnified in any way!

Mr. HENNESSEY. It does apply to subcontractors.
Representative ANDERSON. Even if it is a foreign company?

Mr. HENNESSEY. Subcontractors or suppliers, performing work or furnishing materials to our prime contractor, even though they are foreign.

Representative ANDERSON. You are making some exclusion, there, with respect to foreign users?

Mr. HENNESSEY. The point is that the coverage there is not universal. It does not cover a foreign person or organization that might cause an accident, but was not in a position of being a subcontractor or contractor.

Representative ANDERSON. If we were to assume that the Commission makes this protection under Price-Anderson available to all domestic users of these commercial nuclear explosion services, is it your thought that they would be required to furnish underlying financial protection in amounts available at reasonable rates, and so on, from the private insurance industry?

Mr. HENNESSEY. Certainly in the domestic case the underlying policy of the Price-Anderson amendments was that the indemnity should be provided only to the extent that private insurance capacity was not available.

The capacity, of course, has been limited in the case of the kinds of hazards that we are treating with, to nuclear reactor insurance.

Insurance companies have been studying for about 2 years now the possibility of providing insurance coverage for the new type of risk involved in the nuclear explosion.

We don't know yet what capacity may become available, but I would think, consistent with the original policy of Price-Anderson, that in the domestic use we would take advantage of the amount of private insurance that may become available.

Representative ANDERSON. If it is available, they would be expected to go out and secure that kind of coverage ?

Mr. Hennessey. That is right. That is the requirement of our act in the case of reactors.

Representative ANDERSON. I would ask the same question with respect to foreign users, since you say foreign subcontractors would be covered under Price-Anderson indemnification in a foreign accident.

Would they likewise be expected to go out and obtain coverage if it were available at reasonable rates ?

Mr. HENNESSEY. Here, again, in the existing provisions of the act, we have a different kind of congressional policy, as evidenced by the amendment extending Price-Anderson to foreign accidents.

The intent of the Congress, evidenced in those amendments, was that coverage should not be provided generally solely for the benefit of the

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