Appendix — United States v. General Dynamics Corp.

Supreme Court brief1974

Ask Donna

What actually matters in this document.

Text

APPENDIX | oct 10 1578

(Pages 921-1380) 7 MICHAEL RODAK, JRC

Supreme Court of the United States

OCTOBER

No.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

JURISDICTIONAL STATEMENT FILED SEPTEMBER 8, 1972

PROBABLE JURISDICTION NOTED DECEMBER 11, 1972

UNITED STATES OF AMERICA,

—V.—

GENERAL DYNAMICS CORPORATION, THE UNITED

ELecTric CoaL COMPANIES, and FREEMAN

CoAL MINING CORPORATION

Appellant

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

Government Exhibits:

1— Annual Report of General Dynamics Corporation

S— Ansnal Revert Gd dehtent Bois Gataaiice

S— Anes Resort’ al Giceaat tipbcilbel ukiaaaics

4 Annual sport of General Dyianice Corporation

6 Annaal Report of General Dyasnice Corporation

€— Annual Report of General Dynemico Corporation

7— Auual Report of General Dynamics Corporation

24— Chart entitled “The United Electric Coal Com-

panies Fixed Assets,

35— City, Water, Light & Power (Springfield) letter to

Department of Justice dated March 21, 1968 ___

REROSSsA RE a SE

;

‘ft

That

uction of Coal in Illinois

g Companies and Their Subsidiaries re

pee

“4

{

}

sitar Collipeees Gar Skee ee

Their Subsidiari

Calendar Year” 2 ae

entitled “Production of Coal in Illinois by

Companies and Their Subsidiaries for

}

;

‘

;

Ey i

”

(From Mines Located in Eastern Interior Coal

Province)”

75— Chart of Illinois,

pany to Identical Customer Facilities by The

United Electric Coal Companies and Freeman Coal

Mining Corporation for the Year 1965-1967” ___

98— Central Illinois Public Service Company letter

to Department of Justice dated October 28, 1966_

101

107

111

114

117

118

INDEX

Government Exhibits :—Continued

GX 94— Illinois Power Company letter to Department of

Justice dated October 17, 1966

GX 104— Central Illinois Electric and Gas Company letter

to Department of Justice dated October 20, 1966_

GX 155 March 28, 1970 Petition of Commenwesith: Kdioos

to form

GX 200— United Electric Coal Companies, Board of Di-

rectors Minutes—1959

GX 201— United Electric Coal Companies, Board of Di-

GX 210— Testimony Jack Simon ‘ore Illinois Com-

Commission

merce

GX 219— Keystone Coal Buyers Manual 1967

GX 232— Article entitled “The Energy Outlook”, by Gerber

yee Netschert, entered in the IEEE Spectrum,

une 1969

GX 23 Article entitled “New Horizons for Coal—the

oa Comeback Industry”, by Robert E. Lee Hall,

} printed in The Commercial and Financial Chron-

GX 253— Article entitled “Nuclear Power Economics,” 1968-

1969 Report by Philip Sporn to the Joint Con-

KE ge ggg @ .

176

194

197

198

oan)

210

INDEX

Defense Exhibits:—Continued -

8— December 11,.1958 letter from Geo. Robert Boller

to F. F. Kolbe with one page attachment .._

9— February 5, 1959 letter from Frank Nugent to

F. F. Kolbe

1i— May 27, 1959 letter from R. J. Hepburn to F. F.

Kolbe

12— October 2, 1959 Paul Weir Co. report to F. F.

18— May 27, 1960 letter from T. H. Latimer to R. J.

Hepburn

14— August 23, 1960 letter from J. M. Morris to

C. Evans Parks, Iowa Southern Utilities Co.___

16— September 13, 1960 letter from H. L. Mann to

J. M. Morris

17— November 15, 1961 letter from J. M. Morris to

H. L. Mann

18— June 12, 1962 memorandum from R. J. Hepburn

to J. M. Morris re Preliminary Report Sunshine

Coal Property, Centerville, Iowa

19— November 30, 1962 letter from H. L. Mann to

Robert J. Hepburn

20— December 10, 1962 letter from Robert J. Hepburn

to H. L. Mann re Iowa Coal Field

21— March 8, 1963 letter from R. J. Hepburn to J. M.

Aiken

22— May 19, 1964 letter to Frank Nugent enclosing

one page draft letter to Arch Kraakevik of Illinois

Power Co.

23— June 16, 1964 memorandum from Irving Crown to

Frank Nugent with four page attachment

24— June 29, 1965 memorandum from J. M. Morris

to R. H. Inman et al. re Industry field __ =

25— October 27, 1965 letter from J. M. Morris to

Frank Nugent with one page attachment

26— January 5, 1966 letter from Q. W. Wéllington to

J. M. Morris

27— March 8, 1966 memorandum from Dale H. Emling

to J. M. Morris with two page attachment ___

28— March 14, 1966 letter from J. M. Morris to Frank

Nugent :

29— July 13, 1966 memorandum from D. H. Emling to

R. H. Inman

30— July 29, 1966 memorandum from R. H. Inman to

T. H. Latimer, et al.

31— August 9, 1966 memorandum from D. H. Emling

and B. C. Jensen to R. H. Inman re Star Lake

Field, McKinley County, New Mexico

Defense Exhibits :—Continued

Dx 82— September 12, 1966 letter from J. Morris to

Frank Nugent

30, 1969, Zeigler: Coke Company

BES 8§sg9 ge gee Fw

21, 23, 26, 27, 80, 37, 44-46, 50, 5l and 54. 295

DX 47— May 29, 1969 letter from John T. Cusack to

Reuben L. Hedlund __ 302

DX 48— December 15, 1954 letter by George P. Harring-

ton, President, Chicago, Wilmington and Franklin

Coal Company to its stockholders ___ iin? 2

DX 49a— Subpoena Questionnaire form and related court

orders 345

DX 49— Producer data exhibits, mine characteristics __ 397

DX 50— Producer data exhibits, comparison of leading

DX 651— Producer data exhibits, coal characteristics by

DX 52— Producer data exhibits, overburden of strip mines

and depth of deep mines “ 447

DX 53— Consumer data exhibits, boiler specifications .___—«- 458

Dx 54— Consumer data exhibits, types of sales by produc-

ing districts sek BE

DX 55— Consumer data exhibit, analysis of consumption

and production of coal by freight rate districts__ 462

R 332 3 SEGES SESS SE FEE SE

CH ee a aa

i : ae # i : f a : i

31 il ; ie pie age i aa: : : : i

noe [eli al gibt tail CRE dcds! ycbctige

di datlvapcdybcteliedy tment aye

; Lu Hua Ht engl fig 4

ih auhanal aH idea chi

idea TURP U UR

S ecrmarrerrrrrei rere

INDEX

Defense Exhibits :—Continued

DX 97—

8i— 1968 Annual Report of Standard Oil Company

(New Jersey)

82— Plaintiff's proposed findings of fact 5a, 5b, 5b(2),

5d(4) and 5e(3), United States v. Standard Oil

Company (New Jersey et al.), Civ. ma beeen

D. N.J. (1964)

83— Plaintiff's memorandum accompanying plaintiff's

90— 1969 Annual Report of Commonwealth Edison __

91— Letter of January 17, 1969 from Preston Kava-

nagh to Security Analysts

92— Letter Letter of December 4, 1969 from Preston Kava-

nagh to Security Analysts

98— Commonwealth Edison: Profile of No. 1, Nucle-

onics Week, April 4, 11, 18 (1968)

94— 1968 Annual] Report of Commonwealth Edison

95— “Edison Seek A-site Downstate,” Chicago Daily

News, March 9, 1970

96— Advertisement entitled “Nuclear Power for Chi-

cago,” Chicago Daily News, March 138, 1967

Advertisement entitled “Commonwealth Edison

Reports on Chicago’s Air Pollution Problem,”

Chicago Sun Times, July 11, 1969

98— Advertisement entitled “Commonwealth Edison

Reports on Progress Toward Cleaner Air,” Chi-

cago Sun Times, August 27,1969.

99— Advertisement entitled “No Smoke. ‘No Dirt.

No Fumes,” Chicago Tribune, February 8, 1970_

617

ees 78

x INDEX

Defense Exhibits :—Continued

DX 100— Advertisement entitled “You're Looking at 20,000

Tons of Smokeless, Fumeless ‘Coal’,” Chicago

Tribune, March 8, 1970

DX 101— “Coal Strip Mining—Is It Reaching a Peak?” by

Hubert E. Risser, Illinois Geological Survey

(September 18, 1968)

DX 102— Report of the National Fuels and Energy Study

Group to the Committee on Interior and Insular

Affairs, United States Senate, 87th Congress, 2d

Session (1962)

DX 103— Comparison of Coal-Fired and Nuclear Power

Plants for the TVA System, June, 1966

DX 104— Letter of October 17, 1962 from Elmer Hill to

Barton Gebhart

DX 105— Letter of October 18, 1962 from Barton Gebhart

to Elmer C. Hill with two page attachment _._.__

DX 107— Central Station Nuclear Plants, AEC Division of

Industrial Participation, March 80, 1970

DX 108— AEC Release N-2, January 13, 1970, re Status

on U.S. Civilian Nuclear Power Plants -

DX 110— Chart entitled “U.S. Utility Orders for Electric

Generating Equipment” ee os

DX 111— Letters of February 19 and 22, 1968 from Rich-

ard P. Ryan, General Counsel, Humble Oil and

Refining Company to John T. Cusack __-

DX 112— Excerpt from Minutes of Meeting of Board of

Directors of General Dynamics Corporation on

September 30, 1966 _

DX 1138— Excerpts from the Minutes of the Board of Di-

rectors of The United Electric Coal Companies

on October 9, 1959, May 18, 1960, July 15, 1960,

September 9, 1960, October 28, 1960, March 10,

1961, May 12, 1961, September 8, 1961, May 18,

1962, July 18, 1962, March 8, 1963, September 13,

1963, May 8, 1964, and August 12, 1966 _

DX 114— Proxy statement of The United Electric Coal

Companies 1954, 1955, 1956, 1957, 1958, 1959,

1960

DX 116— Nuclear Power Briefing For The Coal Industry,

September 29-30, 1966. USAEC......

DX 136— Advertisement entitled “Caution: Commonwealth

Edison is Hazardous to your Health”, Chicago

Sun Times, July 8, 1969 a

DX 187— Advertisement entitled “Before everyone ‘runs out

of breath talking about pollution, we’re doing

something to clear the air,” Chicago Sun Times,

December 12, 1969 _.

DX 188— 1969 Steam-Electric Plant Factor

Defense Exhibits :—Continued

DX 144— Map entitled “Investor-Owned Electric Utility

Service Areas”

DX 145— Map entitled “Service Area, Dairyland Power

Cooperative” ‘

DX 146— 1966 Annual Report, Union Electric Company __

DE 16 ae dena Eee eee

DX 153— Article entitled “Crackdown on Air Pollution!”

Chicago Sun Times, July 14, 1969

DX 154— Article entitled “Edison Cuts Use Of Coal, Re-

duces Air Pollution,” Chicago Sun Times, Novem-

ber 11, 1969

DX 155— Article entitled “8 Utilities Face Pollution Probe,”

DX 157— Article entitled “Mikva Bill Would Make Air

Pollution A Federal Offense,” Chicago Sun Times,

November 20, 1969

DX 158— Article entitled “Pollution Fight—Edison Tells

Coal Doubts,” Chicago Daily News, December 1,

1969

DX 159— Article entitled ““Black Diamond’ Boom: Kleen-

‘burn Coal Mines Enjoy Demand Surge,” The Wall

Street Journal, January 7, 1970

DX 160— Article entitled “Business Bulletin—A Special

Background Report On Trends In Industry And

Finance,” The Wall Street Journal, March 19,

1970

DX 161— Letter entitled “The News That Nobody Prints,”

Mid-West Coal Producers Institute, Inc.

DX 162— Article entitled “New Ruckus On Foreign-Oil

Imports To Pin Nixon Between Pollution Issue,

Coal Groups,” The Wall Street Journal, March

6, 1970

1130

1139

1141

xii INDEX

Defense Exhibits :—Continued

DX 1638— Article entitléd “Commonwealth Edison Is

Allowed To Import Low-Sulphur Fuel Oil—Hickel

Says One-Year License Doesn’t Establish New

Policy; Coal Industry Fought Action,” The Wall

Street Journal, March 26, 1970

DX 164— Article entitled “The Real Meaning Of Alaskan

Oil Finds,” U.S. News & World Report, March 8,

1969

DX 165— Article entitled “Petroleum Prize—Oil Firms At

North Slope Race For Data As Giant Lease Sale

Bidding Approaches,” The Wall Street Journal,

May 2, 1969

DX 166— Article entitled “Jersey Standard Unit To Send

Oil Tanker Through Northwest Passage In Test

Run,” The Wall Street Journal, June 4, 1969 ____.

DX 167— Article entitled “Three Oil.Companies To Study

Feasibility Of Building First Coast-To-Coast

Pipeline,” The Wall Street Journal, July 24, 1969_

Major Canada Pipeline—Cost Of System To

Transport Canadian Gas To The U.S. Put At

About $1.4 Billion—Government Approval Need-

ed,” The Wall Street Journal, April 1, 1969 ____

Ee ee eae eee 7

Midwest Area’s First Gas From Canada,”

Wall Street Journal, June 18, er,

DX 170— Article entitled “Alberta Agency Backs Northern

Natural On Bid To Export Gas To U.S. Midwest,”

The Wall Street Journal, December 17, 1969 __

DX 171— Article entitled “Consumers Power Announces

Plans For Atomic Plant—Dow Chemical Will Be

Chief Customer Of New Facility; Cost Put At

$267 Million—Completion Is Slated In 1975,”

The Wall Street Journal, December 15, 1967 ___

DX 172— Article entitled “Jersey Standard Joins List Of

Companies To Make Nuclear Fuel—Subsidiary To

Build Plant In 1970 In Washington State; Re-

search Assigned To Battelle Institute,” The Wall

Street Journal, March 20, 1969 _..... - __.-_-

DX 178— Article entitled “In 1970: 23 Utilities Will Ask

Bids On 29 Nuclear Units,” Nucleonics Week,

January 15, 1970 ____

DX 174— Article entitled “The Anti-Atom Nuts,” Chicago

Tribune, January 20, 1970

DX 175— Article entitled “Consumers Power Announces

Pians For New Plant—Pumped Storage Facility

Set For 1973: Detroit Edison To Share Cost And

Output—Outlay To Total $186 Million,” The Wall

Street Journal, November 28, 1967

INDEX

xiii

Defense Exhibits :—Continued Page

DX 176— Article entitled “FPC Aide Again Approves Con

Edison Bid To Build Power ; Protests

lately,” ‘The Wall Street Journal, August 7,

1158

Journal, January 19, 1970 1159

DX 178— Article entitled “Geophysics,” Time Magazine,

July 26, 1968 1160

DX 179— Article entitled “Earth’s Own Power Source,”

Chicago Daily News, January 9, 1969

DX 180— Article entitled “Burning Refuse To Be Used

In ‘Total Energy’ Concept,” The Wall Street

Journal, June 28, 1969 1162

Dx 181— Excerpt from transcript of Hearings before the

Joint Committee on Atomic Energy, 99th Con-

gress, 2d Session, on Participation by Small Elec-

trical Utilities in Nuclear Power.—(Part 1-April

30-May 3, 1968), “Affiliation Is Fast Becoming A

Necessity.” . 1163

DX 182— Article entitled “New England Affiliation Slated

—Utiilty Concerns Plan Affiliation,” New York

Times, June 12, 1968 1164

DX 183— Article entitled “Boards of Iowa P&L And Iowa-

Illinois G&E Approve Merger Plan—New Entity,

Towa Energy Corp., Plans To Retire The 2 Utili-

ties’ Outstanding Preferred Shares,” The Wall

Street Journal, July 22, 1969 1165

DX 184— Article entitled “Ayrshire Collieries Asks Bids of

5 Firms—Coal Concern Invites Offers To Pur-

chase Or Merge With It; Replies Expected Next

Month,” The Wall Street Journal, November 27,

1968 1166

DX 185— Article entitled “Ashland Oil Plans To Buy Or

Lease Ayrshire Assets—Boards Vote Proposal

That Includes The Sale Of Coal Royalties To

Third Firm—Pact Involves $125 Million,” The

Wall Street Journal, January 22, 1969 _______. , 1167

DX 186— Article entitled “Metal Climax, Ayrshire Sign

Merger Accord—Acquisition Of Coal Producer

By Metals Firm Valued At Minimum Of $62.6

Million—Boards And Holders To Vote,” The Wall

Street. Journal, April 24, 1969 1168

1161

May 16, 1967

DX 188— Advertisement entitled “1977 The Year Our City

Died.” Philadelphia Inquirer, December 4, 1967_

DX 189— Advertisement entitled “You Can Heat 2%

Houses With Modern Oil For What It Costs To

Caused By Burning Money. How Much Of It Was

Yours?” Fortune, March 1, 1968

DX 192— Advertisement entitled “What’s Gas Energy

Doing To Make Industry Nice To Be Near?”

American Gas Association, Inc.

DX 193— Advertisement entitled “How Nuclear Science

May Give America More Gas Energy.” American

An Apartment And The Service Staff Is Cut By

2/3.” American Gas Association, Inc...

DX 195— Advertisement entitled “Who Offers You 24-Hour

Plant Site Location Service On The 60-Mile Illi-

nois Shore? Peoples Gas, Of Course.” The Peoples

Gas Light And Coke Company And North Shore

Gas Company —__

DX 196— Advertisement entitled “The Not-So-Brief Case

For Complete Chicagoland Plant Site Informa-

tion,” The Peoples Gas Light And Coke Company

And North Shore Gas Company ~~...

DX 197— Advertisement entitled “The Perfect Salt Substi-

tute,” American Natural Gas Company

DX 198— Advertisement entitled “St. Louis’ Tallest Office

Building Will Be Total Energy All The Way,”

The Wall Street Journal, May 13, 1969 _.__...

DX 199— Advertisement entitled “The Savings And Loan

That Saves With Natural Gas,” American Gas

Association, Inc.

DX 200— Advertisement entitled “Natural Gas Energy .. .

The Electrifier—Pretty Soon You May Be Making

Your Own Electricity From Natural Gas.”___

1169

1170

1171

1172

1173

1174

1175

1176

1177

1178

1179

1180

1181

1182

INDEX

Defense Exhibits :—Continued

DX 201— Advertisement entitled “What Do You Call It?

aoe From Takes T Ca Beene hae More

atural — +

Lot More Coming From Natural Gas Energy.”

Northern Illinois Gas C.

ompany

DX 202— Advertisement entitled Another

DX 206— Advertisement entitled “This New School Uses

Gas Energy For Heating, Cooling And Electric

Power And Saves $1,000 a Month.” American

Gas Association, Inc. =

DX 208— Advertisement entitled “Williams Hardware Bu

All Of Its Electricity From The Gas Company.

And Saves $14,000 A Year In The Bargain,”

Fortune, November 1968 ties

DX 209— Advertisement entitled “Introducing The Gas

Guitar—The Switch To Gas Total Energy Is On,”

Fortune, May 15, 1969 dette a

DX 210— Advertisement entitled “Gas Air Conditioning Is

Like A Car That’s Better Than Good.” Northern

Illinois Gas Company Vmabuimeeee

DX 211— Advertisement entitled “Turn On A Party With A

Gas Grill And Gaslight—We Call It The Patio

Pair... By Charmgiow.” _—s__ i

DX 212— Advertisement entitled “Now. The Gas Self-

Cleaning Oven. For Builders Who Like To Build

Sales. Period. It’s The Biggest, Wildest, Most

Exciting Gas Industry Promotion Ever. Period.

The Theme Is: The Gas Self-Cleaning Oven For

People Who Like To Cook. Period.” American

Gas Association, Inc.

1184

1187

1188

1189

1190

1191

1192

1194

1196

1197

1198

1199

xvi INDEX

ense Exhibits :—Continued

DX 218— Advertisement entitled “Texas Gas Invites You

To The Wireless House.”

DX 214— Advertisement entitled “Here’s The Story Of The

Gas Fuel Cell. It’s Electrifying.” American Gas

Association, Inc.

DX 215— “Nuclear Steam-Generation of Electricity: Its

Implication for the Future of Coal Transport by

DX 216— “The Story of Coal,” The

(October 27, 1969 and November 28, 1969) __._

DX 218— Chart entitled “The Prime Interest Rate, 1928-

1968,” Chicago Daily News, December 18, 1968 _

DX 219— Letter dated March 9, 1970 from V. H. Clark,

Secretary-Treasurer, Electric Energy, Inc., to

Reuben L. Hedlund

DX 220— Letter dated June 29, 1942 from Frank F. Kolbe

to B. L. Slack

DX 221— Letter dated July 23, 1954 from Frank F. Kolbe

to Herman G. Schenck -

DX 222— Letter dated June 11, 1956 from Frank F. Kolbe

to Nye F. Morehouse

DX 223— Brochure entitled “Taum Sauk, Union Electric’s

Pumped—Storage Hydro Plant.”

DX 224— Press release, University of Chicago, January 19,

1970

DX 225— Letter dated May 25, 1960 from Ward B. Cham-

t of Justice and exhibit C thereto. _

DX 227— November 1, 1963 Memorandum from R. H. In-

man to R. J. Hepburn re Freeman analysis of

Kerr Mine

DX 228— Excerpts from the Minutes of the Board of Di-

rectors of The United Electric Coal Companies

of September, 1966, pages 4386-4389...

DX 229— Form 250 Response to the Court-Ordered Sub-

poena Questionnaire for the Freeman Coal Mining

BR Gt a 2 RSS Ces BE Tine se ks a TAR

DX 230— April 18, 1970 letter from Mr. Allen Van Wyck,

Chairman of the Board of Illinois Power Company,

to Donald G. Kempf, Jr. -

DX 231— April 14, 1970 letter from K. E. Bowen, President

of Central Illinois Public Service Company, to

Donald G. Kempf, Jr.

DX 282— Brochure entitled “Low Cost Electric Power and

Dependability . . . Through MAPP” =. ss

DX 233— Brochure entitled “Mid-America Interpool Net-

_. Wwork—MAIN”

Page

Defense Exhibits :—Continued

DX 234— 1969 Annual of Illinois Power Company__

DX 235— Article entitled of Low-Sulphur Coal

Electric

forts,” The Wall Street Journal, April 6, 1970 __

DX 236— April 1, 1970 letter from Marvin 0. Young, Vice

Compan 1nd, Goneral Counsel for Peabody Coal

Company, to Reuben Hedlund re coal reserves

in McDonough, Schuyler, Adams, Brown and

Hancock Counties (Illinois)

DX 287— Series of four tables: (1) “Fraction of Total

Illinois Production of Leading Companies Other

_ Than Peabody”; (2) “Average Production Per

Company”; (3) “Changes in Concentration in

Illinois Coal Production Since 1959”; (4)

DX 257— West Central Region Power Survey 1970-1990,

A Report to the Federal Power Commission pre.

Page

1274

xviii INDEX

Annual Report of Wisconsin Power & Light Company__

Deposition

tion, Offer, and Award Contract GS05S-4945" insued

Fiain of sha dietben aber

Deposition Exhibit 3—Mineral Industry Surveys,

Bituminous Coal and Lignite Distribution, Calendar

United States entitled “Air Pollution by Federal Facili-

ties” and dated January 1968

Griswold Deposition Exhibit 4—Second Report of the Secre-

tary of Health, Education, and Welfare to the United

States Congress entitled “Air Pollution Abatement by

Federal Facilities” and dated January 1969...

Griswold Deposition Exhibit 5—Document entitled “Oper-

ating Experience with Wet-Dolomite Scrubbing” by

F. McLaughlin, Executive Assistant, Union Electric

neering, Inc., Windsor, Connecticut, presented at the Air

Pollution Control Association Annual Meeting in New

York City on June 22-26, 1969

Jensen Deposition Exhibit 12—Memorandum trom: Burl C.

Jensen to Mr. R. H. Inman dated June 7, 1965 _....___.

Jensen Deposition Exhibit 13—Memorandum from D. H.

Emling and B. C. Jensen to Mr. R. H. Inman dated June

7, 1966

Kolbe Deposition Exhibit 2—Annual Report of The United

Electric Coal Companies 1956

Kolbe Deposition Exhibit 4—Annual Report of The United

Electric Coal Companies 1958 >.

Kolbe Deposition Exhibit 7—Annual Report of The United

Electric Coal Companies 1961

Kolbe Deposition Exhibit 12—Letter to Mr. W. B. Hillery,

unsigned, by the President dated February 27, 1957 __-

Page

1409

1410

1411

1412

1413

1415

1416

1456

1470

1502

1519

1521

1526

1530

1582

1533

Kolbe Deposition Exhibit 57—Annual Report of The United

Electric Coal Companies 1954

Kolbe Deposition Exhibit 59—Paul Weir Company Valuation

of Physical Assets of UEC as of December 31, 1959

Kolbe Deposition Exhibit 60—Document entitled

Need For Additional Stripping Equipment at Fideli

Mine” dated June 17, 1966 and signed by J. M. Morris.

Kolbe Deposition Exhibit 61—Contract and agreement be-

tween Alcoa and UEC dated September 5, 1956

Kolbe Deposition Exhibit A—Comparison between Truax-

Traer Coal Company and The United Electric Coal Com-

panies

Kolbe Deposition Exhibit E—Notebook entitled “Report on

Proposed Merged Illinois

Kolbe Deposition Exhibit L—Letter dated September 12,

1960 from J. M. Morris to Mr. Frank Nugent...

Lawrence, Wilmington, Dela-

ware, assignor to Hercules Powder Company, Wilming-

ton, Delaware, a corporation of Delaware”.

Kolbe Deposition Exhibit T—Letter from Mr. LeRoy Keane,

Assistant -General Manager of Hercules Powder Com-

pany, to The United Electric Coal Companies dated

June 27, 1956

Kolbe Deposition Exhibit W-1—Letter from Frank Kolbe to

Harry LaViers dated February 25, 1958

x INDEX

Deposition Exhibits :—Continued

Kolbe Deposition Exhibit W-2—Letter from Harry LaViers

Latimer to/R. J. Hepburn dated November 25, 1957

Kolbe Deposi Exhibit Y—Memorandum from T. H. Lati-

mer to R. - Hepburn dated November 7, 1955 _..._____

Kurtz Deposition Exhibit 9—Bituminous Coal Facts 1966 __

Kurtz Deposition Exhibit 10—Bituminous Coal Facts 1968 __

Latimer Deposition Exhibit 25—Memorandum from T. H.

ee Pe oe

Latimer Deposition Exhibit 88—Memorandum from T. H.

Latimer to Mr. R. H. Inman dated July 19, 1966

Latimer Deposition Exhibit 48—Memorandum from T. H.

Latimer to Mr. R. J. Hepburn dated February 10, 1961_

Deposition Exhibit 1—General Dynamics Proxy

Statement and Agreement and Plan of Merger with

respect to Material Service Corporation dated November

of Health, Education and Welfare

Morris Deposition Exhibit 3—Memorandum dated December

17, 1959 from R. J. Hepburn to Mr. J. M. Morris _.__.

Morris Deposition Exhibit 4—Letter from Mr. John M.

Morris to Mr. Frank Nugent dated January 10, 1966 ___

Morris Deposition Exhibit 5—Letter from J. M. Morris to

Mr. Frank Nugent dated March 14, 1966 _.._ >>

Morris Deposition Exhibit 14—Letter dated May 8, 1965

from J. M. Morris to Mr. Frank Nugent _.. >

Morris Deposition Exhibit 31—Memorandum from R. J. Hep-

burtr to Mr. J. M. Morris dated January 24, 1961

Morris Deposition Exhibit 832—Memorandum from R. J.

Hepburn to Mr. T. J. Tarzy and Mr. J. M. Morris dated

February 24, 1960 .__._

1676

1678

1680

1682

1683

1686

1688

Morris Deposition Exhibit 85—-Memorandum ‘from R. J. Hep-

_ burn to Mr. J. M. Morris dated July 17, 1962

1689

INDEX

Deposition Exhibits :—Conitinued

Beg pag ay ey ary eae gaa

burn to Mr. John Davis dated February 8,

Tarzy to Mr. J. M. Morris dated February 15, 1961.

Nix Deposition Exhibit 1—Document entitled “Term Con-

tract Ordering Data for: FSC Group 91 Fuels, FSC

eterans Administration

for the effective period of the date of award through

June 30, 1968

Nugent Deposition Exhibit 1—Financial Reports: Freeman

1691

1695

1712

1718

1714

1715

Coal Mining Corporation; Year Ended December $1,~

1959

Nugent Deposition Exhibit 2—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December 31,

1960

Nugent Deposition Exhibit $—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December 81,

1961

Nugent Deposition Exhibit 4—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December 381,

1962

Nugent Deposition Exhibit 5—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December $1,

19638

Nugent Deposition Exhibit 6—Financial Reports: Freeman

Coal Mining Corporation; Year Ended December $1,

1964

1741

1744

1747

1750

1753

1756

xxii | INDEX

Deposition Exhibits :—Continued

Nugent Deposition Exhiibt 7—-Financial Reports: Freeman

pe DO Year Ended December 31,

Nugent Deposition Exhibit 8—Financial : Freeman

; a ante Year Ended December 31,

Nugent Deposition Exhibit 9—Financial Reports: Freeman

Coal Mining Corporaiton; Year Ended December 31,

1967

Nugent Exhibit 11—Annual Report of the Chi-

cago, ilmington and Franklin Coal Company for the

ear 1953

Nugent Deposition Exhibit 16—Advertisement of Freeman

eens Cee 1967 Keystone Coal Buyers

ual

Nugent Deposition Exhibit 17—Advertisement of The United

Electric Coal Companies in the 1967 Keystone Coal

Buyers Manual

Nugent Deposition Exhibit 19—Advertisement of The United

UEC, January 1, 1959 to December 27, 1967___.

Nugent Deposition Exhibit 29—Annual Report of The United

Companies 1964 _—

Nugent Exhibit for Tenders of

held October 28, 1960 re Capital Appropriation for

Nugent Deposition Exhibit A—Letter from Frank Kolbe to

Henry Crown dated October 9, 1956

— “1796

1797

INDEX

Deposition Exhibits :—Continued

Pedersen Deposition Exhibit 5—United Electric Coal Com-

panies Computation of Provision for Federal Income

Taxes, Month of October 1966 and Ten Months Ended

October 31, 1966

Redard Deposition Exhibit 1—Keystone Steel and Wire Com-

wens ‘stter to Department of Justice dated Apeil 36,

Simon Deposition Exhibit 1—Simon, J.A., An Evaluation of

Illinois Coal Reserve Estimates, 1968

7 Ree ee ee

Steiner Deposition Exhibit 2—U.S. v. General Dynamics,

et al., Memorandum of Expected Testimony of Peter O.

Deposition Exhibit

Institute, Inc. Report of Mine Performance, 1957-1958__

Deposition

Weir Deposition Exhibit 8—Memorandum from R. H. In-

man to Mr. R. J. Hepburn dated August 5, 1959

Weir Deposition Exhibit 19—Brochure entitied “Paul Weir

Company” f

Se ee een ee eeeees emeeseee

mS ge, Fa COrGIssLs Paw

921

LL th. th ee ee my

REPORT

o7 TH?

NATIONAL FUELS AND ENERGY

STUDY GROUP

AN A33ZSS CENT OF AVAILABLE INFORMATICI

a CNURCY NT THE UNITED STATTS

70 TE

COMAITTEE ON

INTERIOR AND INSULAR APFAIRA

UNITED SPATS SENATE

REPORT

Or THE

NATIONAL FUELS AND ENERGY

STUDY GROUP

AN ASSESSMENT OF AVAILABLE INFORMATION

ON ENERGY IN THE UNITED STATES

TO THE

COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

UNITED STATES SENATE

SEPTEMBER 21, 1962

Printed for the use of the Committee on Interior and Insular Affairs

US. GOVERNMENT PRINTING OFFICE

STs WASEINGTON : 1962

923

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

CLINTON P. ANDERSON, New Mexico, Chairman

HENRY M. JACKSON, Washington THOMAS H. KUCHEL, California

ALAN BIBLE, Nevada GORDON ALLOTT,

JOHN A. CARROLL, Colorado JACK R. MILLER, Iowa

FRANK CHURCH, Idaho JAMES B. PEARSON, Kansas

ERNEST GRUENING, Alaska JOE H. BOTTUM, South Dakota

FRANK E. MOSS, Utah LEN B. JORDAN, Idaho

OREN E. LONG, Hawaii

QUENTIN N. BURDICK, North Dakotas

LEE METCALF, Montana

J. J. HICKEY, Wyoming

Jenny T. VERELER, Chief Clerk

SrEwart Frencu, Chief Counsel

EX OFFICIO MEMBERS

CLAIR ENGLE, California ~ NORRIS COTTON, New Hempshire

JENNINGS RANDOLPH, West Virginis

924

_CHAIRMAN ANDERSON’S MEMORANDUM OF

TRANSMITTAL

Serresmser 21, 1962.

To the Senate Committee on Interior and Insular Affairs:

icy study, as well as to other interested parties a staff pre-

Lem fang Raptr x5 chy, assessment of available information

I want to commend these gentlemen individually and pete for

their cooperation during the conduct of thestudy. Asa t of thei

ili efforts, in less than a year our committee has before it in a

ingle volume pertinent information relating to fuels and energy

dings

oven athena est gan ego} algae |

be carefully considered in reac any decisions respecting recom-

i 4 When the Interior and Insular

Curvton P. ANDERSON

Chairman, Senate Committce on Interior and Insular Affairs.

REPORT

NATIONAL FUELS AND ENERGY STUDY GROUP

AN ASSESSMENT OF AVAILABLE INFORMATION

ON ENERGY IN THE UNITED STATES

US. Senate,

Comarn1ree on Interior anv Insutar Arras,

September 7, 1962.

Hon. Curxton P. Anprrson,

Chairman, Committee on Interior and Insular Affairs,

US. Senate, Washington, D.C.

Dear Mr. Cuirrmax: We are honored to present herewith to the

Senate Committee on Interior and Insular Affairs our assessment of

the available information on energy in the United States. The report

pairs nts “patho, =~ ip hegarne ignsbente suena work was started

ae 1961, the study group was not fully assembled until

November. More information could be included, and the analysis

made a little more penetrating, here and there, but the broad con-

clusions to be derived would remain and we do not think

the additional time and effort would be justi :

The report presents first a brief historical and economic perspective,

examines current opinion about future consumption of energy, con-

siders one by one the various déterminates of fear (reserves, plant

capacity, transportation, labor supply and productivity, technology,

marketing, competition, and like influences), and then compares the

ddientad future consumption with the Nation’s ability to supply it.

The years 1965 and 1980 were selected as check points. Emergency

as well as peacetime demand and supply are covered. A subsequent

chapter discusses the economic and social costs of various policy direc-

tions, and the last chapter of all presents the opinions of industry

and consumer groups as to what they think national fuels and energy

policy should be, in their own words.

Your instructions regarding the making of this study are presented

in the introduction to the report. In brief, the instructions were to

assemble the information that is currently available, to study it, and

to assess its worth. In doing so we found ourselves continuously dis-

mayed to learn how little positive information exists, how much is

impression and folklore, in subject area after subject area, in industry

after industry. Belief in this folklore is deep and it is held wi

passionate, though —— Too often, to our minds, have

we been forced to write: “No one knows * * *.” One result of this set

of circumstances is that our report contains occasional statements that

do not have the complete endorsement of one or another of the mem-

bers of the study ip. All this we have tried to d faith full

and objectively. Yet despite the imperfect fabric of fae thin

there has emerged from this study a reasonably good picture of energy

in the United States and of the policy, legal, and regulatory frame-

work within which it sets. It is our earnest hope and belief that we

have given you and your committee the information you want.

927

4 NATIONAL FUELS AND ENERGY STUDY

Through you we want to acknowledge the generous and expert co-

operation provided us by many agencies, trade associ-

— comps and inva in iding us with information

our draft report. The credit for whatever value this’

report muy havo mst be shared with them,

Bits Fema Eamcr Son Orc,

Samvrt G. Lasxy, Chairman.

928

CONTENTS

Page

Chairman Anderson’s memorandum of transmittal... ........-...------ 111

Rabter oF elated sis ob nove Sn eda b ecco cksedce desde decgbdacoest 3

DORNNOY gins. oases LEEhs cds cecocscspeccccbcscshs césidceceesue =

The OS int a gt aaa Ri 5 RR 17

Ricard oct 2 tg hc ldMusbescakacsMhictmiesere 90

Bow far inte the Gattte oi isin do ch vntctddccnscncecccncegecteces 18

Part I. Energy in the economy... -......----------------------------- 20

DUEER. « nc ce ccacececaccteccepcccscccncecesscccuqoueccces 4

Part II. UNM AARNE 5 sie cic hes ace doncaconbead od ansaapavetbinie 25a

EEE LED IAEA CRETE 26

ae ee 33

es Pe eed ewekbandegihbebabenesaed

eee ‘

General war without nuclear attack..............-.----------

. Limited ERR ELLIE SEES COLAO ERA

Mobilization short of war_......-.----------.---------------- =

Energy as a “free good” _--- Jubswbdonchabiedanmicteben

sagional problem. . . .. . 2.2... 22222222 - coco e oo ee icioack 48

Past B56. FeRRiavcvincscccawntcccncncccnccceccscceggorcecccosece 61

Snel sil aga TE ERE Ie a aa ee Cea E a. Rees near t nee pe =

Crude ofl and natural ges liquids...--.------.---.------- 62

ace Siememetamre re ae

ee.

ee I Ce cn ncdcewcocdsencucboedeccs 83

GR chaise and tat ebb. «5 ono icc ctccccccdcccciscs 85

ToS sctetaeromeeeceenoneminas :

5A nan it BRN Saat OEE ENE AN SEIS AIMEE Mt |

ue es Be he sane dbabeseatenenens 86

NN SN ee te edb wcebbonoubiobetmadbces 94

TN a i ideeendaneénine 94

‘ Remainder of the world. __..........-.----------------- 4

Domestic. 1 ipa E ese Etc 2 RR SUSE RI ees OTS 99

SONG Oe a ee bebenasbiusdsnauon 99

Coe naetn par nae ae? NR aD 104

sn and natural gas production............-.------

Crude oil and refined piedust Sic hascrnncanccngenin ts

Oil

RMI Rates stiieecicact oserieorsersensccssaeey

Raed

deel

ee ee

ied

deel

Oe ee OOO

a a aE ee EGR RE a RCE IES te te SB

Nuclear (radioactive) materials.

Residential and commercial

ee SRE E

930

ane

RSREEE cnc ekeEEee

& 56 50 60 60 30 60 60 00 00 60 60

and

EEE EEE EEE

laws,

V. Unconventional sources of

Part VI. Comparison between requirements and supply. ...........-...

Coal.

chs of macs doaain pipeline right-of-way. .-----

The

Hh!

PEP EEPEDEE DEE LEE ET

for coal... _.

law Oo ewer eee wereswceceesceceococcecoccoocoseccoe

Rehab iulccacuwnncnwhpesebenéneeannde

30} :

ee ee eee

Controlled end

Electric transmission intcrties.........-----------s-<0-+<+-0-----

Coal

SEE EEE ee te

NA hile Sikhs san cult totes lsh iehniepn buiatn gatos am

Pbstion BO OOO SENG WOON, 5 onic cocvticcdedecsicubbshcente

PR ee eee ee ee

policy

30s

367

365

370

38s

395,

399

402

403

405

425

457

47°

a ee te te ete te

paints 6 WOW en cccccccccowasetigpvace

Rs dpinnndbadiogmiipmnbwnasenhnibiie Sabie

DR hss citgcnbtedsanctunnottencahe

PE iinickkvddunsddiubrdoenneegldesscdddweos

Natural Gas Association of America................-.

eee ee ee eee eee ee eee

Conference and the National Coal Association...

RE EMER RTS a SEES SC AL: PEE

SEREGNND CURTIN. 5c ncctttthaonsedencorense

(CEA SSSTRGL ca AACR PS a lal

and consumer

Gas Associa

Petroleum Association of America_................--.

SE ids tsteichneninins reannvinencagushaiiinmidédistninnmd

Statistical and

Trade

Coal

National Co

The New

sinilar,

TNO. cn dccree iden tduleseedcometesévosodwesibaeccacebecdeokiheun

commercial

18. Canadian oil reserves, annual

ee ke sk ee et ee ee te

24. Historical record of

employed in coal mining in the United States.

BRSSSASSREARASS RUSRERKESERNEE

transmission lincs

line,

since

transmission lines and terminal equip-

ee ee eee ee eee eH ERO SER EH EH ee Ee eee

and

in bituminous coal mining... ....

research and development.........-

mileage

DSW OO... «nc cadiecoccccsdadcce

transmission

60. Relation between transmission

Emre ad steedtteccceconcceceepseconance

t on oil and gas

length of

spen'

by 1

tinued.

in electric transniission

54. Interconnected investor-owned electric

61. Relation

63. Investment cost for electric

RRRRAARRASAARRRERARCGARARAR

208

210

213

214

215

216

—eee ee

ieee

PO. iccciacdiebamaekednen

regions_

Gi cisco ctact

area”

akcac one oubee

ee ee ee ee eee eee

eee eee ee eee ee ee EE OR HE SE EEE See

the consumer... ..........

market,

uids and natural gas___.....

energy.

- Sooo cesooesoeseesoocoso rom

DEPEND. .costekitunannes*hengee

Pe icdnnccectuessbocecedns

gaseous reserves, in B.t.u.’s_......

eal

ig i

eto

L 3

i ah

— eee eee eee ee eee ee eee eRe Meee eee

gas

lines

tuminous cos!

—— ee ee ee ee ee eee eRe Ree ee eee

Boston.

electric

“coal

im the

concentration in ae energy industries _......-.-

electric

retail

coke and gas

grades of

ment

Lill ii nes

REPORT OF THE NATIONAL FUELS AND

ENERGY STUDY GROUP

SUMMARY.

ay of udienion, ack aeetconan assess an existi

body of in and hence the report does no Sei

to being in the usual sense. amet —.

here to condense = information and to indicate its in such

way as to give the reader a useful guide, so he may be able

slit sach prt of th content ase wishes for detailed eading

REQUIREMENTS

penjecell tigotmanis oat tam hel Faye ee

es re me ont uad-

‘illvem B.t.u.'s), that generation of electri will m ly by

rion BW), that gmeration of etic emery , and that con-

sumption of oil will increase by about two-thirds (to. say, 5 billion

barrels). The consensus for coal, gas, and nuclear is not so

—_ owe but the following deductions: have been as usable

policy-tailored of this report

framework

roughly to double 1980 (o 80 milion Lone or more), gu am

for wartime requirements—are . in relation to a near-

future contingency. For this and other we assume that the

nonmilitary part of wartime rt na wan will be within the margin

of error in fee inthe cetime figu for 1965: ie, 11

million barrels of oi! a day, 15 a cubic feet of gas a Sere, 500

These do net a pply to nuclear war, of course. In the period

—r y following an attack, the civilian tion have

—~ with quantities and kinds of as are at hand lo-

~ Whe presume (at the meistery atm ban petzelonn Seals in hand

toammnentt immediate retaliatory blow. The demand for petroleum

— would increase as military action mounts, and the demand

r all forms of energy would increase as national authority is restored

and industrial activity is resumed. The top limit of this increase is

conditioned by how long the war would last and the course it takes.

All energy Phen would remain high during the period of recon-

struction. :

33:- > NATIONAL FUELS AND ENERGY STUDY

reserves) is more than enough comfortably t rt a 1980 coal out -

pal page get pm tons. There i plenty of oil i in the

but one or more steps may be needed to realize it: rate of ex-

stepped recovery.

ratio of reserves to rate of output be established at some well

below the usual range of 12 to 14. The Nation has the ability to_be

self-sufficient in oil if it so wills. Imports could be called on if de-

sired, there being no dearth of foreign oil. and so could the oil in oil

shale. Oil shale may in fact actually be vielding oil well before 1980,

ption

ability to supply it yields the prompt and simple answer that there

_ ae ifficulties in that re While nuclear wer faces sev-

it is an accompli i ct.

Conventions! fossil fuels plus shale it and Actionable materials con-

tain recoverable energy equivalent to 800 years of usage at the current

ble

and mele oil beyond ~ _—

ort ential of unconventional sources.

There is ont

because

man-day, the 800 million tons of 1980 conceivably could be produced

by a labor force even smaller than the force presently at work.

ag) ~dpomceomanp been eee — in the

energy complex. concern appears exaggerated. Transportation

of off and gas is a matter of investment. An aggressive research on

extra-high vol transmission almost assures continued economic

transportation of electric power. The only real question relates to a

. Shortage of railroad cars for the movement of coal. Such shortages

great destruction of consuming equi and plants that the supply

would be generally gy =" ge - lable as

quickly as it is called for by restoration of the economy. For other

war or war-related emergency, the national capacity for producing

LTTE

HH :.

cdi

os br

. The coal the integral train, mine-mouth generation

coupled with extra-high-voltage transmission,

pipelines, and developments should hold jon coste

Use of coal has been going down in the face of an increasing national

ion of The three fuels—coal, il, and gue _compet

936

14 NATIONAL FUELS AND ENERGY STUDY

severe in ther areas havi Nitin ap no naive query suemeren, me

in New England et % ae NEES OSU SE

high, compared to the cost of moving oil or ituting on average

throughout the United States more than of the delivered

price of bituminous coal.

which has acted particularly to the detriment of coal. Prime examples

are the change from steam to diesel railroad locomotives and the sub-

stitution of oi] and gas for coal in home heating.

Fuel competition is related also to the propinquity of fuel source

to market. which is a shifting circumstance, and of course to the

common of consumer preference.

A final factor is the framework of policies, laws, and ione

within which the competition operates, summarized separately below.

ae pa vn be ep a In addition, the of for-

to tion. iti ici

Serreeenoee tee eaten Laien ee and demand.

_ Policies of foreign governments relate to their control over the

importation of American coal and to their reaction to U.S. restrictions

on importation of oil and oil products. pape soap eee Boe mage he

i both

i the outflow of both.

laws, or regulations tend to limit production and to

use.

}

to lower price; some specifically restrict end

;

have been identified as justifying discussion.

of natural gas to industrial consumers under

interruptible rate schedules, importation of fuel impor-

tation of crude oil and Sahar Gin cabbeed foal ot ee

tation of natural gas from Canada, development of a domestic shale

;

i -sponsored research,

sufficiency, whether action is necessa to insure that U.S. emergency

needs can be met from the Western Hemisphere alone, legislative or

regulatory control of the use to which a may be put, Government

policy relates to other policies either explicitly or

oo wo Laer rpg | — sa nena

The three policy issues that are currently of most intense interest

are: ’

Interruptible gas

pice iambalieimesacotmecigiontnic ont oan

this is sold in areas not ically

some is sold for noncompetitive uses. In all, about one-fourth (or

the equivalent of 22 million tons) is in direct tion with coal.

The price charged for int gas is less that charged for

firm service and at least covers cost of the gas itself plus the out-of-

pocket vosts of and di Thus this type of

service makes a toward fixed that would other-

The use of residual fuel oil in the United States has remained fairly

uniform over the past decade, but on the east coest, where most of it is

net imports for domestic consumption have been rising and

j it of about 40 million tons of coal. S: ch im-

Son EgSvenee Oe te nd es ee of atnte ant half

from im t in efficiency of production. For bituminous

coal the ions are about one-third due to loss of market and two-

a days; at the current work-

week at the output per man-day proj for 1965, each million

tons would represent the employment of 285 miners.

ints of view of 12 groups, each representing either a producer of

one or another form of energy or & consumer. These are included

_ precisely as received. It would be a disservice to these

marize their sta for interpretation ennveldisaty

sinuate itself, and therefore we have not done so.

939

INTRODUCTION

The scope of this report

Senate Resolution 105 (87th Cong.) instructs the Senate Committee ~

on Interior and Insular Affairs to undertake a study of the supply of

and demand for fuels and energy in the United States. The study is

praetor hat garvetad ante ibn s Are eer Fwy! in-

cluding the possibility of new legislation. The inquiry has thres

eg) (1) a study of the present and future energy requirements of

Nation and of its ability to meet those requirements; (2) a review

of existing laws and policies with respect to their effect upon energy

supply and demand ; and (3) consideration of policy.

The first two parts are factfinding operations and constitute the

subject of this report. The instructions given to the authors of it

the Senate Committee on Interior and Insular Affairs were simple

clear, as follows:

1. To p re for the committee, within the objective of Senate

Resolution 105, as accurate a story as possible, in simple and nontech-

nical language, about the economic and technical aspects of energy

Se ee emi mip

oing so, to deal with existing information only or new

information as can be assembled in short order.

.. . Andits purpose

The first instruction constitutes a direction to sift out the fact from

transmission, and use; in the potentials of atomic energy; in the pos-

sibility yee ae See getting energy from the sun, or wind, or the

tides, or of using heat brought up from deep in the earth.

t purports to be fact is not always indeed fact. The only bits

of information that everyone can agree on are the bald statistics them-

selves and even that circumstance does not always hold. Often the

so-called fact represents judgment, impression, informed guess, over-

statement, prejudice, or sometimes plain fiction. Professional judg-

ment and impression are invaluable when facts are short, but they

are not a substitute for fact itself.

The element of prejudice must be particularly su ~ In relation

to this study, there are two. kinds: the honest prejudice generated by

& person’s loyalty to his — or his firm, and the biases inherent

in professional ’ re are various schools of thought on how

to calculate mineral reserves, for example. Those who estimate re-

serves of coal, oil, and gas each believe that the occurrence and eco-

nomics of his commodity are unique and demand unique definitions

and criteria. <A figure on reserves is thus not an immutable fact, but,

ig eR)

may

ongress

ng the political and social factors that

e future rates of

icated also are alternative

How far into the future should one attem

—- an assortment of additional

are indicated. Indi

in order that Cc

y refers to

have concluded that 20

ted St

specifica

economic situati

pear

studies.

clari

wall

as to

il te dail Hay

: il; Bish we Lea

aia ai ih a ie

$ Be t ily il 7 Hie

eee aie ee Ti

Bebiiviyy gavel steiiee gor,

Ge a eeu

i :

must deal with in policy determination.

How far into the future?

authors of this

good compromise between impulse and reality. It is far enough

Senate Resolution 105

resources of the Uni ates—and

NATIONAL FUELS AND ENERGY STUDY 19

into the future s pputada neapeetiie eoeaiions ok Ate momead ood

distant as to ude reasonable assessment o: oan a

satisfactory j tas te thateuntinat dhe gectnetea

of production. We can judge within reasonable in imi fr example atin

oil, and gas

by 30d what maybe hn elo thi nog ology on costs of

roduction, whereas an: ey apap ally odin

deeper into unnecessary ion. At the same 20 years is

distant enough to permit necessary adjustments in icy if such

“<The your 1980, then, is as the terminal for this

rt. reader is a age to nigger wei geo ee ncypd

does not mean ic 0:

time clustered around it. TAS ontutal ball encibotiote eat eee ae

report is not clear enough for to predict what may in

any given year. A glance at economic ups and ¢ im any

sonjeslions ankatne maioes pay Pace ont ga ow

oy CR ESA YR ye (aca

fobeted. The new es and

as they then exist; 1960, the ape ar fon which statistics were avail-

able in preparing this 1961 and 1962 the years in which

neh study was made and the see written, will be history. Accord-

ingly, | the authors have striven to project economic and technological

tions to, say, 1964 or 1965 as a base year.

PART I. ENERGY IN THE ECONOMY

USE PATTERNS

The wa: Ae per Ph narra ore. A Santer se cer be her rer

of the fe begs re rere we of ong gy the

raw i i icity) to deliver to coli-

comet, oeisbitity of the raw forms, and preference o consumer.

the taking, it was used, and the of use was adapted to

the characteristics of wood. But when deposits were discovered

and developed, coal’s capabilities so far outstripped those of wood

that the use technology was modified to suit—and the modification

induced additional development of coal production. The growth of

ag dierent ees conoag tic pede cect Meee nen bi a

as di , petroleum automotive transportation. eum

gas with it, but use had to wait for a technology of trans-

portation to be developed. With gas, consumer preferences were and

are particularly ee Concurrently, gas was found to hare

unique = t make it liarly useful for some purposes.

the historical lopment of relative usage.

Tasiz 1.—Fuel consumption by sector, 1955

{Trillion Bio] |

te he

liquids

Industry. 72 11,815

Com: cial a 4 53 Sos 2.262

Households. ws 2,549 2 5,726

ae. rcs} 7,430 234 8,017

&21 233 1,114

Airs, 8 a] © ee

1,7 1,054 2, 848

Electric generation . 4.272 630 1,384 6, 256

Total “ 1,422 17,325 9, 908 38, 635

Total, 1961__ 1, 20, 412 13, 428 44, 4

1 Included in other

* Hydropower not As ~ a

Nore. Totals do not add due to rounding. i

Source: Schurr and Netschert with miror adjustments; 1951 Bureau of Mines.

Table 1 shows the pattern of use by consuming sector. Of this

pattern, a fifth to a fourth of coal use is nonfuel (for coke), some un-

certain but small use of gas (for carbon black and petrochemicals),

and an eighth of oil use Tostnathindinale, lubricants, wax, coke, road

oil t).

Goal is preeminent in the generation of electricity and is assumed

by students of the subject to continue preeminent for some time in

(

/ \

("8)Up RouyY JO NBO

Go poseq Son3y ONGT ‘30yIHVEN PUB zunyog Jay) ‘wondainsaos £820N2 1¥7}0) Jo U9010d ¥ SU BeDINOs AFa0UH ‘T wunorg

O96T OS6T OvGI O&6I OZ6I O16GI O06! O68l OCBst «cael O98 OS8I

' “i ' \ , ' ' ' ' ' '

sainoin svo

“VENLYN ONY 710

this usage over the Nation as a whole. Coal is in

the form of coke, as a chemical ies ane ‘The use of oil

lib

uli

“

[

Tih

‘

gee

pu EEE

Ti! re

ate

iat

ate

ifute

a ;

; > 1965: rng ta oa *

i rket, metallurgical coke, use at mines) ; oi

and air transportation, railroad ti

PSEEF

* ;

ed See oe y's energy demand is free of interfuel

iti is figure represents essentially motive energy now met

tively pe te it under preter ery A

At other extreme of competition lie those uses in which coal,

oil, and gas are immediately priegen orss when dual or three-way

equipment is maintained and the switch from one fuel to another can

accompli immediately on the decision to do so. About 45

t of the 802 utility stations ing detailed information to

the Federal Power Commission in 1960 were ipped to handle two

or three frels. In regions I, IT-A, and Til (as ignated by this

study), which constitute our “eastern seaboard,” 27 electric utility

The economy of the United States rests upon a small base of energy.

National income originating in the energy industries is only about 4

income. :

itures for energy may be classified as “internal”

and “transportation.” Internal energy is that used in day-to-day

household within the i confines of the home, in the

means

nate

as 3 4

feed

HINES

tile

def

946

24 NATIONAL FUELS AND ENERGY STUDY

Tame 2 Expenditures for verious formes of household energy

(Deltars in billtens}

Internal energy

pare tneorce Racetricty| Other fel ‘Total in- | gasoline mee

= =| = | si

1990. s70.8 a2 a3 as a5 ae

1040. te m7 Ls ‘4 29 21 se

a ot eS ee

1 Estimates by study group.

Nore.—Totals may not add due to roundin

os itures by the peers y rye, py household

transportation, represented 5.4 percent income in

1960, as compared with 5.2 percent in 1930. i

By manufacturers

ies

teed

Hin

1.5 percent of theitgrevenues in 1958 for fuel and eles-

percent. i from 3

process industries (chemicals, stone, clay,

metals) down to small fractions of a percent

other industries where major proportions

goto and materials.

By the Federal Government

: gd aged PRghktine the bei A sag user of energy for heat-

\ gt ildings it oceupies, to power its motor

fleet, per other oan In fiscal 1961, the General Soden Admin-

istration spent about $7 million for natural gas, oil, e>»!, and for steam

of Manufacturers’ reports show that manufacturing

This

947

NATIONAL FUELS. AND ENERGY STUDY 25

as such, and $16 million for electricity. The Post Office Department

spent an additional $22 million. The General Seryices Administra-

tion, the Post Office Department, and other agencies also lease or rent

buildings, the energy requirements for which, while for the use of the

a. fee in statistics on the private sector.

sry Thee urehases of gasoline are too spotty for meaningful sum-

mary. The Post Office t itself spent $13 million for gaso-

line and motor oils. In 1960 the Federal Government owned more

than 213,000 vehicles that used about 214 million gallons of fuel.

In the Government's construction program some of the work is by

private concerns so that there, too, energy requirements are in part

by the private sector.

on pact: = ry of et Gee relates to ™

- Government ® as a supplier o icity. steamplants o

the Tennessee Valley Authority in 1960 burned 18.6 million tons of

coal for which it — about $83 million, and the TVA operations as

a supplied Federal agencies with electricity bearing a price tag

A third category of Government en expenditures relates to the

military and atomic programs. “Military itures exceed

$1 billion a year for petetinae and its products and $20 million a year

for coal, but we have found no figures for outlays for and elec-

‘tricity. The Atomic Energy nisison spent million

for for fossil fuels, Te ras tho ch ational: but unknown

amount fuels. It was the principal reci ° m

the Tennessee Valle Authority, Scum

It appears that t MM sree of the Atomic Energy Commission’s

total expenditures in 1 , and 1 percent of the Post Office

’s expenditures, was for energy. The for the military

program, which is less tae than the AEC operation *

much more energy intensive than Post Office operations, woul

lie somewhere bet ween.

Since the remainder of Government probably falls between the mili-

and the Post Office in terms of intensity of energy use, One may

j that between 1 percent and, say, 3 pervent of the Government's

operating expenditures are spent for energy.

948

NATIONAL FUELS AND ENERGY STUDY 79.

6. The ultimate grand total of recoverable gas may be in the neigh-

borhood of, say, 1,250 trillion cubic feet. This amount is com

as follows:

Recoverable from proved parts of known reservoirs: 260 tril-

Recoverable from extendjions to present areas and from pools

to be discovered : wt weg vey an trillion cubic feet.

7. How much gas will in fact be discovered and recovered is any-

*s guess, depending in part on money invested. The above figures .

do, ver, give some & iation of future possibilities. Most of

the United States is favorable for discovery. :

GASIN COAL SEAMS -

Most coal seams contain methane of a quality—1,008 British thermal |

quite o cuhis tosh-—atuivalust to naturel gra. The gas is contained in

2 nae

is recovered commercially from coal seams in Belgium,

in coal mining, of course, mechan:

in recent years aggravated it. New faces of coal are exposed so

rapidly that the quantit yok p- ing fron? the coal] makes ventila-

tion increasingly di and thought is being given to

removing the tern Bureau of Mines has experi-

See ante Sele beret ar neny Ooo

out) contain as much as 2,000

300 billion tons of coal in Tass billion tank vecccerehite: axe sen-

tion on “Coal Reserves”), may contain 600 trillion cubic feet,

The U.S. Geological Survey has on what it

calls the “coal reserves of the United States,” but term is defined

as meaning estimated quantities within stated limits of bed thickness

and depth below the surface without direct economic connotation.

The total figure is said to include the in

coal in beds 14 inches or more

rface. The figure is obtained

coal originally in the ground

and then reducing this by production to date and by an estimate of

949

80 NATIONAL FUELS AND ENERGY STUDY

coal lost in mining, to yield an estimate of the coal still remaining.

The remainder is divided by 2 to give a fieure called “recoverable

reserves,” this ratio being based on an an ysis of a wide variety

of studies on individual mines, counties, States, and individual coal

seams.

stricted aneas around: oil and gas wells and under towns, railroads,

fying rock, in thin aaeeeet ana fe Pillars to support the over

areas of complex logic folding and faulti and thus too

waste. Actua recovery in individual mines has ranged from less

than 40 t to as much as 80 or 90

The Geological Survey’s estimate of recoverable coal, as of Jan-

uary 1, 1960, totals 830 billion tons* The distribution by regions

is as follows: ,

# | vue | sare

Region Ii ape. weer, New Eughad (see map) ee pihataeenenme

iv z AN 139, 300 [i

aie =e

Sip Be haa aay acs i

This be Dope rerable reserves has been, and is, quoted as being

sgbanet 000 of production at the current rate. The

arithematic is faultless but the calculation has little meaning, first be-

is no indication as to how much it would cost to get the coal produced.

more immediate importance is the amount of coal available to

support immediate and near-term peednation—the composite national

tonnage of coal held by individu producers upon which they have

or are willing to commmercial operations. Of even more

i concern is the part that has been prepared for mining, the

part, that is, into which entries have been drivan or equivalent work

a Lh ee a pacer eee a system and await-

introduction of labor an uipment roduction to begin.

Such information has to be nown foreach meohed oh oe

auger .

—— underground mi

The t of the Interior* re in 1960 that 20 billion

tons would be available at 1958 prices and costs over the next 40 years.

As indicated below, this estimate a high ~~ of expert

judgment, but still it does represent jndgment alone and docs not pro-

vide the kind of assured knowledge needed to assess the strengihs and

weaknesses of the coal industry, particularly its ability to meet a sus-

tained emergency. The n i ide \

files of industry, and the National Coal Policy Conference has circu-

larized the independent coal producers in order to get it for this study.

* Averitt <

* Joint Committee on Atomic Energy, Robert McKinney, vol. 4, p. 1520.

ee —_——

950

NATIONAL FUELS AND ENERGY STUDY

40}19}U] OY) JO JusUTJIUda(T “£oAING [GI}S0]Oef) 247

4g poivdes “BASULY Jo Gajenjoxe ‘sej¥Ig PeIjU) OY) JO Spiey [VOD— HI aunOIg

x SS

951

82 NATIONAL FUELS AND ENERGY STUDY

Response was received from producers representing, from district to

district, 25 to 100 percent of annual output but excluding captive

i polating the returns to 100 percent of coverage

gives the estimates shown in the accom table, with grand

totals of 20 billion tons at 1960 prices (of which 3.75 billion tons are

ip and ax coal) and 35 billion tons at a price 25 cents a ton

hi (of which 5 billion tons‘are strip and auger coal).

Estimated coal reserves of the United States, 1961

Total reserves Strip and euger reserves

At a price 25 cents At a price 25 cents

at At 1960

1900 prices . 3 Prices , a too beer

(millions of of of of

ttane) , total of tons) total ef tens) total | oftens) total

occ] "] ER] BS] RS] oss] ag] og:

Wisndiciuatclaunean $ e $ 0 3 a $ m |

ane 00 27 m0 “. sO 133 00 as

aesnccsecncanecee| 100 6 xO < oo 27 100 2e

oeunnnnncsnnnnnsn + @ ® © © © © © ©

‘Total (rounded).../ 20, 000 300; 35,000 300; a 750 100 5,000 100

1 Not reported.

We often hear the statement that the demands of World War II

exhausted the strippable reserves in the Appalachian region.

The sliowing table shows a breakdown of the strip and auger re-

serves in that region.

Reserves of strip and auger coal in the Appalachian region, 1961

At 1980 prices At 35 cents above 1969 prices

Ratio of of

tons to 1961 tons te 1962

Production Production

Pennsylvania, Miryland, northern Wi

Y _. _ EE IN — 100 4 xO u

Southern West Virginia, east Kentucky, Ten-

Bessee, ~ 1, 00 3 7 mS

anten me s L100 “

Western Ki x wo v RO vv

Total and average 210 3 Ra

The 4-year and 11-year “life indexes” shown for Pennsylvania.

Maryland, and northern West Virginia, which are the States whose

strip and auger mines have been feeding fuel into the Eastern States.

have no cgeicanee, however, as to whether reserves are running out

or not. We have no past estimates of reserves against which to com-

re them in order to see if a short life index is a characteristic of

at part of the coal industry or, if on the contrary, the index has

been progressively decreasing as an indication of approaching ex-

952

NATIONAL FUELS AND ENERGY STUDY 83

haustion. We can be certain that continued improvement in coal

~mining technology and uctivity (see cha on Bg

will have made most or all of the additional million tons minable,

at prices equivalent to those of the P gare, hax before the 4-year

uantity runs out, and will have made minable also several hun

million additional tons at a then moderate increase in price. At

about 1965, then, reserves of surface coal in the northern Appalachian

ion, minable at 25 cents above the then price, should be some 500

‘ million tons, with additional tonnages available if improving

technology can make possible the stripping of thicker overburden or

deeper extraction with a

any event, any possible exhaustion of strip reserves in the north-

ern Appalachian region might be made up nearby producing

areas. significance of strip reserves is not that they have any

special quality, but (@) that in ral they yield lower cost coal than

unde reserves and (5 t output from surface mines can be

expanded, in an emergency, faster than from underground mines.

FISSIONABLE MATERIALS

The Atomic Energy Commission has reported to the President that

reserves of uranium in the United States in June 1962 were 175,000

tons of U;,O, minable at the price of $8 a pound. A “significant but

undeterminable” additional tonnage would become available at $20

a pound, and perhaps as much as 5 million tons would be available

at $50 a pound. These figures compare with a 1961 U.S. production

of 18,000 tons U;0, and a total 1961 Free-World production of 36,000

tons.

The amount of applicable energy that these reserves represent de-

pends on the efficiency of the atomic reactors in which they may be

used. (See section on technology.) The 175,000 tons of reserves

mentioned above could be the equivalent of as little as 10 billion tons

- Of coal or as much as 500 billions tons.*% That - as raw energy mate-

rial $16,000 worth of U;O, (1 ton) is the equivalent of at least $200,-

000 worth of coal (some 40,000 tons at — U.S. mine price of

$4.85 a ton). The 5 million tons of U;O, available at a higher price

are equivalent to between 200 billion tons and 10,000 billion tons of

coal. The ag hee Remar Beg ge perhaps they can be brought

into perspective by noting that the minimum figure of 10 billion tons

of coal equivalent is more than the amount of coal used in the United

States in the past 20 years, whereas the top amount is six times as

much as al] the coal resources of the country. (See preceding

chapter on coal resources.)

Additional quantities of U,0O, could be found if sought, and there

are also quantities of thorium ore. “Considering the itude of

the above figures, however, for the purpose of this casart thate & ae

need to speculate on how much additional U,O, could in fact be found,

or to be concerned about the actual figures on thorium.

A related speculation comes to mind, namely, whether the money

and effort that would be needed to find more uranium might better

be spent in improving reactor efficiency, but the speculation tends to

answer itself. Human nature being what it is, improvement in reactor

® Joint Committee on Atomic Energy, Robert McKinney, p. 38.

are continuing official sets of statistics regarding coal

mine labor: (1) by the Bureau of Labor Statistics; (2) by the Bureau

of Mines; and as by the Buteau of Em loyment Security. The

Bureau of Labor istics’ figures are based on payroll information

and cover both all emplo and,

workers th the working foreman

are

unemployment insurance laws and cover everyone on > payeett

including top management but excluding the se f-employed offi-

cials of unincorporated firms. The first two tabulations are not clear

as to the extent to which they include working proprietors. There are

about 5,000 mines employing less than 10 men each and in which, pre-

ve the owner himself works, The three series differ one from

‘According tothe Bureau of Mice ast <n

CCO} tot ureau of Mi a hum employees

in bituminous coal mining in 190 goal 100,400, | This is the lowest

number for rs at. A Is tot per-

cent were employed at underground operations, 15 t in strip

mining, and 1 percent in auger mining. Regi uly 86 percent

worked in tthe II F4 this pry kl Ty Appalachian id), . —_

in on idwest coa percent in region an

lens than the other regions. °” oe 1

at underground operations and two-tenths in —_ mining.

The total coal mine labor force is thus about .3 of 1 percent of the

total U.S. labor force.

Three-fourths of the coal labor force, bituminous and anthracite

combined, is union-affiliated, one-fourth nonunion.

Fewer and fewer young men are applying for miner’s certificates,

and asa result the average age of coal miners has been news se

mated from 40 in 1951 to 45 in 1960.

There is also a substantial number of emp miners, In a

Survey made for this study by the bituminous industry, it was

reported that during June 1961, in the seven ranking coal Siates plus

954

NATIONAL FUELS AND ENERGY STUDY

130

‘OOGT-OGST ‘891719M} ON} DOTTIE FapHuasrop Udeq sUY saIw)Ig POIM() ON) Us DUjUyrT [Od Uy POO UOT Jo JoqaiNnN—'pr wNnNT AT

syjuow g %

096)

OS6I Ovsi O¢éi 026! Ol

6! 006! 068!

Ps |

—

T “T

O96I ‘S194 “Z IMA "HOOGUed SjesouIW :@0UN DS

s90440y ES __

[

9)1u61, puo snoujw wa \/ MS

‘ra

002

00v

009

008

955

NATIONAL FUELS AND ENERGY STUDY i 131 |

Tennessee (which eight States account for about 90 — of US.

roduction), there were 129,530 men employed and 32,760 a,

zor a total labor availability of 162,290 in those eight States. (These

figures include production workers and shopmen—i.e., hoistmen, car-

penters, machinists, electricians, and the like.) There is an additional

number of unemployed who do not appear on unemployment rolls and

for who pene oy the reporting neencane had no record. :

No parallel figures are available relating to the other coal-producing

States, but the State coal associations in six of them, including the

Western States, report an excess of available underground labor. A

few having os operations reported also an excess of strip-

——s employees, and a few reported surplus auger mining

employees.

The United Mine Workers of America estimate that throughout

the country unemployed coal miners (bituminous and anthracite)

number 100,000. : ‘

In addition to the production workers and shopmen, a substantial

number of persons are employed in professional capacities (survey-

ors, accountants, Jawyers. and the like) and on the clerical and sales

forces. According to some 1950 figures from the Bureau of the Cen-

sus—the latest presently (February 1962) available in this

these may total an additional 10 to 15 percent, or some 15,000 to 25,000

Very little information is available as to the skills of those em-

ployed. The 1950 census figures give a detailed breakdown among

workers but make no useful breakdown as to~production

Although there appears now to be about 25 t more labor

than is being used, it does not follow that this 25 percent is usable.

We do not where their skills lie. If, for example, expanded

production should be called for from strip mines, it may be found

that there is a shortage of dragline or shovel operators; if the ex-

led production is attempted from undergreund mines, there may

out to be a shortage of men who can operate a mechanical loader,

& continuous mining or cutting machine, or who know how to put in

roof bolts or to lay track.

One may assume that the unemployed workers represent all the

skills involved, and in representative proportions, but the assumption

1s not necessarily a safe one.

Opinions from coal people vary from 1 weck to 3 years as the time

! ry

complex machinery takes longer. On the other hand, a man who can

operate a dragline ought in short order to be able to operate a coal

cutter or any other piece of equipment; the avera nic should

not need much training to be able to repair oman mining machin-

ery. Admittedly, it may take a little extra time for a person to be-

956

132 NATIONAL FUELS AND ENERGY STUDY

tases Sieente naiites Seteng, ineh.sn Me alyondten of the vend ox «i

possible presence of gas. : ;

Relation to markets and productivity

Two 97 a or iG in the labor force sho::

in figure 36: (1) less uction an increased output per work,

(See chapter on productivity. eS

_ Production of bituminous coal ond Rees Sos Se pees Nee;

1960 than it was in the year of peak emplo t, 1923; assum;

no change in efficiency of production the 1960 output would ti..

have taken 27 percent fewer men, or 190,000 less than in 1923. Ti,

is the reduction in the labor force that may be attributed to smai!,

output. The 345,000 remainder of the total reduction of rougi.’

535,000 men (704,800 to 169,400) would be the part attributable :

increased output per man.

The vigorous efforts of the bituminus coal industry to improve ¢!

output per man reflects the intention to keep the cost of producti:

under control. In 1960, wages at $3.15 an hour were higher than ‘

any other American industry; the next highest were in petrole:

wor’ Beng at $3.02 an hour.” Despite the fact that bituminous co

miners worked on average a smaller part of the week than other labo

weekly earnings also were near the top. -

In anthracite mining increasing output per man has been less

a factor. The peak of employment was in 1914. Producti:

in 1960 is 79 percent less than in that year. Again, had efficiency «

jon remained constant, 1960 production would have requir:

percent, or about 140,000, fewer men. The total decline in e::

loyment been about 160,000, meaning that in anthracite mini.

employment has gone down about 20,000 use of improved out}

per man, and 140,000 because of reduced market.

OIL, GAS, AND ELECTRIC UTILITIES

. Gas pipeline companies and electric and gas utilities have deve!

oped comprehensive employment information, largely because of t):

stringent reporting a posed industries

ts on

For pireteun the information sls completa.

it of

Employees | U.S. bc:

force

Petroleum and natural gas P ductio 258, 000 ce

ape eee _ 182, 000 .

| Tah 205, 000

utilities. 340, 000 ‘

Total 1,015, 000 /....--.--

- Bource: Bureau of Labor Statistics, Sarnings end Unemploymcnt, Pebruary 1961.

The 470,000 employees shown in petroleum and natural gas p:”

duction and in ing do not include those engaged in various ph::*:

” U.S. Dept. of Labor Monthly Review, March 1962.

a 957

NATIONAL FUELS AND ENERGY STUDY 169

The economic advantages in the concept of “transporting coal by

wire”—the burning of the coal in utility plants located at or near the

mine and then moving the electricity to the point of use—lies in the

fact that the average utility plant has to a about 10,500 B.t.u.’s -

in the form of coal to generate only 3,400 usable B.t.u.’s in the form of

electric energy, as explained in the chapter on “Technology.”

CONCLUSIONS

The Syren pages on transportation contain largely descriptive

materi thek entcien for itself for the moment and that will take on

major meaning only when brought er with other material in

comparing the demand for energy with the supply available Pt VI

of this report) or in discussing specific policy issues (pt. VIII). A

few conclusions emerge, however, that are of direct icy relevance.

1. Except for a small amount used in the process of production, all

energy, of whatever kind—coal, gas, oil and its a or elec-

tricity—has to be transported from point of origin or production to

3. The ratemaking system used by railroads its adjust-

ments in some circumstances to allow coal to be marketed at a price

that can compete with oil or gas at the same destinatjon. ‘The cost of

producing coal—a nontransportation factor outside the control of the

railroads—is thus a factor in railroad freight rates, ‘

4. The ratemaking system used by the railroads considers also the

ability of different mines in the same region to compete in

common markets, and thus takes coal-mining costs into account to a

still further degree. Differential adjustment has aspects of pref-

erential adjustment.

5. On a US. avérage, railroad freight charges fpr at least 20 years

have constituted more than four-tenths of the delivered price of coal.

6. The shorta of cars to move coal, complained about from time

to time in the ipPalachian and midwestern coal regions, is ‘the re-

sult of business decision on ie of the railroads. The railroads

ir damaged cars only as > demands it, and a shortage results

when business pickup moves faster than the sang 4 to repair the cars.

A Whether or not such car shortages as there have been have im.

ired the total onret of coal to the country, or have caused users to

turn to competing is a matter of opinion—there are no statistics —

or other documented information on the subject. ;

8. While in peacetime barge transportation along the waterways of

the country is simply a competitive form of movement, truck haulage

is a necessary part of the transportation systems for coal and oil.

9. The low direct operating cost of pipeline transportation, and its

ability to deliver a product continuously, is directing attention to the

pipeline transportation of coal as a competitor of railroad transporta-_

tion. This development could materially influence the market outlook

for coal, but its ultimate success will depend not only on — tech-

7 but also on railroad technology and rates and on the political

problem of eminent domain for right-of-way.

958

NATIONAL FUELS AND ENERGY STUDY

if i HU iL BEEP GH ue 1 |

TL: ag ‘fs. aa 1M]

i ie | cia eae ‘ile

A a a ean Pa eh

fb | age tae Ae ait

Heal pall Ul deigee rt yi

A ice i ete ie

ce ks | fil “ HAL fla

Fe Ee

at i

He ea

HT i

ie Hl

fF Hil ee

aan

Eff 5

i ne eH

rH inet te Ut

i cn

ipa ie

welt ie rate

fl i

ili Hi

i ] | a H

top 5 companies

precisely

is mm

by percentage

ELECTRIC GENERATION

ies and systems

of total output,

systems account for nearly a fourth (23 percent in 1960)

d crude oil

lis a e

mk Bil

Hai

up to

gas

or integrated

thon in

961

gute

em eOrene

AH COree

sedessa

ereeoneon

United States

TasBE 24—Corporete concentration among energy industries in the

i q

AN@LNO WOd IWi0L ~———— 039NCOud S3NIW }

dO LN3OUSd SIHL dO IN30U3d SIHL 3533

' Producing 100 tons or more a day. Total number of companies is 7,500.

E a a 343s

i] ay

vil

; Ine Ce

Ha i

evil

basse =

HN,

cegsa3

nial é

Tye

producing company’s own sales

the following ways:

who acts

who may

ts.

y the producing

7 ones age cated

pany

prod

owned either

ucers.

the

the sales de

partmen

or in

& group of

2 sales = Re ay

orby

ues

‘® By a

folate

& Bs

964

212° _ NATIONAL FUELS AND ENERGY STUDY

ca ive mine direct! to the owner’s consuming plants.

Ai teehos Nenboas co seaaratiy relies on a in

ming ot of tei ba wn vary of in effecting

“Guna: a relatively few companies are large to

afford a “tak ated sales company. Most d it

more econom to us the aries of independent sale orgaizations

company.

Consumers who have a railroad s and are able to receive at

least a full carload of | ory Re are located on navi le

an ever-increasing volume of coal moving by truck and barge diet

from mine to consumer. eager! pas pom et |e ve

plants adjacent to coal mines whe can be delivered by belt con-

Se Ne a ee

There are other special situations, such as the coal pipeline in

ee ee ee ral marketing pattern.

The retail market includes, aside a relatively few home users,

houses, schools, and tnd office buildings here eonl-b ave ‘

w. - pmen

requires the smaller sizes of coal. 1560, fees than 18 percent of

the total bituminous coal and 70 0 percent of the anthracite consumed in

the United States was classified as retail deliveries.

The patterns of coal competition, and transportation cha

pave Be woe Prenat “Th smirked Sates

Pennsylvania,

and northern West eat Virginia is marketed in the northeastern

of the United States (New Sond Middle Atlantic States,

including Maryland and the pies "of Columbia), whereas coal pro-

uced in southern West Vi +e and Kentucky is marketed

toa extent in the Midwest, area around the Great Lakes,

- and to tidewater for export.

Figure 66 shows the amount of coal sold to electric utilities and

the t of the total utility 1 eprom Ae, by nee for 1957 and

1960. year 1957 was selected because that is the

i of the statistical series Rea tage to this chapter and

@ to the regional breakdown we are using. The figures for

regions V to IX are ped in one total. Figure 67 shows the

distribution of coal sold through retail dealers, figu. » 68 the coal sold

to coke and gasmaking plants (only a few gas plan‘s are still operat-

), and figure 69 to “all others,” which category includes mainly

industrial users.

“TOGE doquieideg ‘cose ‘On ‘g'W'K 140d0y soqavIE [esoUI vous)¢ Jo Avesng ‘g'Q | sosn0g

‘OOGT DAY LOGT ‘07311190 91470010 03 pioR 1v09 SDOMUINI—gp aunoLg

213

966

NATIONAL FUELS AND ENERGY STUDY

214

“T9GT soqumerdeg ‘cose ON ‘s'A'H 140dey JoqIvA [vI0NT AE Cou; 30 NvOANg “gp : eoANDg

‘O06T PUB LOGT ‘s40]j¥I92 YFN0Ig) Pjos |voo snonjmNI;gT{— 29 aunoIg

cae

@u03 Jo suo TT. ess

+t. SUOFRwUNTGxg

“1OGT 4oquieideg “COEs ON ‘WIN t40dey 30X14 [vseUI TY SoU JO Nveing ‘g] ; eoun0g

‘O0GT PAB LEGT Uf ,S1o8D sHOVUIOH]Y,, VI PLOW [VOI BOUWNIYI—gg wUnOIY

NATIONAL FUELS AND ENERGY STUDY

216

larger sizes were sold in substantial smaller tonnages than

sly higher ""Thismnade hts Coe of marketing was consider.

-. This rice spread

between the larger sizes, such as lump and egg coal, and the i

of slack. As the market for ee sizes = rae pa ee coal declined—.

pene home esting, and some industria Plants—many mines

i market was demanding more recise sizing and cleaning, and all

told there may have been hundieds of wang. g- Peg

inations of sizes .nd

oil, natural gas, and hydropower. Thus the price pattern that had

devel under be pa of market conditions persisted even after

ial pricing situation developed in connection with coal for

mgical uss. The steel industry requires coals of special quality

for the production of coke. As the stecl indust: w, this require-

led to the opening of mines to produce coat he that particular

nse. High-quality coking coal commands a higher price than other

to keep the mines in o: ration and to minimize losses duri iods of

low steel production’ the coking-quality coal is sometimes di

into the general industrial market where it must meet the price of

the coal normally apts = sete bea. We .

and equip or the specific purpose o:

supplying electric generating plants. Many of these electric plants

are willing to run-of-mine coal, doing their own ing. The

avoidance of preparation at the mine makes it possible to quote lower

prices to the utilit companies able to use coal in this manner. This

petiti

three basic methods: S orders, annual contracts,

and long-term pA an Spot orders my specity delivery within

occasionally the time is extended. Annual

implies, provide for the delivery of coal over

ogre

Government purchases generally embod.

regex by ich the suppli satnives leet ie tex oe hic ask

a ity drops below that guaranteed in the bid;

rity contracts include both premium and pen-

clauses, as do also some commercial contracts.

i coal industry does not post formal price tions.

carriers subject to lation by the ICC. The hering lines

head chee are

971

PART IV—INTERFUEL COMPETITION

: Intropucrion

Competition among fuels is a complex of economic, technologic, and’

forces. The three fuels—coal, oil, and ae Meo

as described in the chapter on technology : Production, conversion

of raw fuels to energy, transportation, and use.

logic-economic complexity is compounded by atomic energy. The

subject is Politically complex because it is involved with problems

of trade, utility and transportation population, ‘conservation, public

versus peste power, and such socia’ problems as unemployment

and public fears regarding disposal of atomic wastes, -

omy), part of the saathes held by each of the fuels is noncompetitive

ith ther fuels. The following pages deal only with the interfuel

aspects.

-Hisrorican PERSPECTIVE

Prior to the Civil War, wood was the dominant fuel in this pantry

both for home heating and as industria] fuel; more than half of all

iron a Produced, for example, was smelted with charcoal. (See figs..

_ When coal to displace wood, it did so a$ a unique energy

source that provided services Wood could not. Its flame was found

to be more adaptable and controllable; its energy was found to be

more concentrated, so that it was more easily and cheaply trans-

ported ; it could be handled more readily than wood logs or c rcoal ;

and it was available in quantities that wood could never achieve. It

invited new and expanded uses. Between 1850 and 1890, consump-

tion roughly doubled eve decade, largely the result of increasing

use as a metallurgical and locomotive fuel. Then after 1900 came the

rapid growth of the electric power industry. None of these markets

could have developed with wood. Coal dominates the electric generat-

ing market to this day. ie

: Coal reached the peak of its growing share of the energy market

in 1910, having yielded to a new fuel—oil—unique and necessary to

the time in the same way that wood did when it ielded to coal. “Oil

initially had a small use for illumination, but after 1900 it began to

be used: more and more by railroads and naval vessels. Just as coal

d formed a long-lasting union with electric peneration, oil formed

a long-lasting union with transportation. The demand for motor

274

ed Sout Jo B¥eING OOGT ! SIO-TIe 4d .,GL6t-O08T ‘fmoucey Uvojseary oq) ul 4B29uq,, ‘I49qGeN0N POY 4anyeg 4978 o06t-s081 tounge

R woItIg PETE oy) BF LB49Ue LavaNjad Jo UH} }luNsUND eApfeduos Jo SPUL4L— 06 wUnurd

a | t¢§ &F & F&F S&F &F & F&F + & SK SF} FSF F&F HF CK fF a ”, . Lee 9

—— eee rer r

» ae a~7T

rs “J mt

A uk — ;

—— NY

/ wa

972

RATIONAL FUELS AND EXERGY STUDY

one By a

Hin Behl

a a if he

if itl Ee

973

NATIONAL FUELS AND ENERGY STUDY

iauelt i

Hea i ERE a Eh

i iat i Hu ip HE ui all

J Hitt sHieacTaled

Hi tub

eat

ois

PHL

Wat

spurs in

y be an appreciable factor

to use.

it to

i space and railroad

2 seme wei

Sia

mae

Hal hie

ies

tage.

now

its most distinct advan:

around this trait and are

constituted

ve been built

x, Seg

Small compact engines

theo a

Hie

SGSPesee Epi qi HEL al igs bigsas

“Heehale H au Hy Wie aati

i i Hit nial at Hie it BH

ag ea ta al

lien | aifaee Ha

Huimin ae all iH ie 4§

a Syageealidis subs ahaa inde in it HEH

su ae i if ak “itt figs HAE ati HH

Ae fae Ay Fe Hi HE i

adel Us A PEER

F2R4suauasasere

AGAIAAAA AAAS

48282e2n3207222

ek od el nh od od oh 0b ob 0h oh oh ob ob

Natural gas!

Adsbbrindddganiny

S83nR

Sgdud

977

At Aruba

isan

SSLesngssnescng

SE ESSrSniddiddd

Taste 40.—Prices et point of production

Ol—Bunker C—Posted prices

At gulf coast

NATIONAL FUELS AND ENERGY STUDY

by rail, but higher than the cost of moving oil (or coal)

ROVISLsReezZRa85

AA i cininirinichebotetoted

ocean transport.

coal or oil

280

geese sazsaes

igh

init

sel

4! ciiiiaesi7!

tae

gisizasts

sHEegs Be:

Hu #7

aia bE

a AH dl l

HPT

pha

derlegy

iH EE

PHT hey

978

NATIONAL FUELS AND ENERGY STUDY 281

In there is a degree'of similarity in the pricing of transpor-

tation srviocs for all three feake The sale of interru gas repre-

in this to the reductions ir rail rates covering the movement 0

eoal to New ¥ i

ork Harbor and of residual fuel oil into New Hampshire

if order to * a competition. (See Part VII: Policies, Laws, and

demand from the steel industry can and does send

Tan produced joi f d both are frequently

are of course, an are

produced from the same e proportions differ. ‘The etext

can shift its efforts somewhat between the two, it can never be

sure whet tion will result in oil or

with byproducts geu enh mannaes pins in its sale is an

smoaaly price required in |

would otherwise be ar Deer ary dey vig Seay 3 gio grain.

Natural gas pipelines sometimes find that they have i capacity in

ail bt i

deat ii fie He if He aes

3 i fy

Bailing Bubs) ee

abt; if jelile itl fail y

ie | Lh Hi ie sR

isi

Hint ee jut

eli TU a

980

NATIONAL FUELS AND ENERGY STUDY ~~ —-29SB

‘ Government policy has such pervasive influence that a special part

of this ay diew to it. It relates to competition in eahy

ways: Through its impact on supply, ranging from limitations on

production (oil and anthracite) to controls of imports (oil) and

control over construction of facilities (gas and electricity) ; through

direct competition between Government and industry in electric

of the end use of fuels, ie. “inferior use” of gas (the

Vil.

A point not previously discussed in detail is that different juris-

dlaticus of Guravennea unetinas poll te directions thet have op-

posite effects. Several different agencies regulate, control, or other-

wise influence com ger tlle: Hagges tg ef emane dhe onal hn

independently of others within its own interpretation of its

charter. We have made no attempt to itemize such occurrences, but

the following instance has been brought to our attention. While

the of the Interior maintains quotas against the import

State. Blocs of have been sold to the Waders Mohawk Power

Rochester & Electric Co., and New York State Electric &

Gas Co. These companies operate a number of lary coal-burning

981

284 NATIONAL FUELS AND ENERGY STUDY

generating stations. Through the distribution facilities of these three

etilities, the power authorit “3 arranged also to distribute electricit y

to 2.5 million tons while during the same period increasing its pur-

f hydropower in coal uivalent to 3.3 million tons.

Much public regulation initially had no intention influencing |

competition = fuels. islation was for of

rotect: i

ae prodsca or was related to some other aspect of national interest.

Some t actions thus now find t Ives in an environ-

sont for Re ma they sa not designed and Og —— ee renere

ve an influence not foreseen. or examp’ commodi: ause

of the Interstate Commerce Act (1906) prohibits railroate from

owni propection that produce the freight the railroads haul, 4

second ¢

— At a time coal ~~ } . = rail-

roa: rincipal carriers, and their competitive ition was not

ow Phat are Hee hone = additi

Aside from the circumstance that fuels are most widel consumed

ery ore f production, fuel gonsumption reflects also regional

in con

1 ia On hi and Michigan reported

vani i ino

than for 1958, while foun nian Feport

Consumer reference for a rticular fuel is such a common

MDespi that need besaida aie ing oi of

ite act t nat an t are more ve

than coal in some areas, they are preferred by to mock

In the industrial market it is technicall possible to conduct numer-

ous seeations with any fuel, but often t te user prefers one over the

use it makes his task easier, although, to be sure, the choice is

influenced also by technical considerstions. } As already indicated, the

heat of gas and electricity can be distributed more fp a the

tely.

heat of coal or oil, and the heat level can be maintained ind

the residential market. It is fairly small. In 1960 the market shares

verges 0 percent, oil 17 percent, coal 10 percent, and electricity 23

percen

The top space in 91 shows the postwar in the de-

terioration of the reta coal market ;retail deliveries (i.e., the resi-

dential, commercial, and some “offtrack” industrial in 1960

totaled only 30 million tons or 67 million tons less than in 1947. Most

of this decline was due to the switch to oil and gas for heating. The

use of electricity for residential heating may enable coal to recapture

some of this market.

oc eee rma amine sso

cent Is In west, prima in 18,

and Minnesota. Most’ retail coal has mined in the Sethe

Ap ian area in the States of Virginia, West Virginia, and Ken-

. Even the retail market decli mantis. 20 peasant

between 1957 and 1 rena ee Staten seit eapely shot bal of the

retail market and any further loss would be mainly by them.

The pri market for anthracite is Pennsylvania and in New

and adjacent States.

price relations involved in the residential market are shown

in figure 92, which shows indexes back to 1935 for added perspec-

tive. ing this 25 years the a i

they reached

the competitive ceiling i b Since that time the prices of

the cre kote reflected their competitive in lence. In 1948

and again in 1957 oil appears to have tried to push but each time

pulled back by the

local problem. Figure 93 shows price relationships in Boston, a

city for which there are data and tis in a hotly competite area

Until 1953 the gas used in Boston was manufactu made locally

and its price necessarily reflected the competitive

983

286 NATIONAL FUELS AND ENERGY STUDY

\\ ;

: YY \\ nf

f Z = ES

if Y \ rd i

e io; ‘ = a

“Be

WiYw "y

; Yj \X 3 i

Mh 1

| \Is ai

Z fi y @ F

° [| l o. Z \\ j

oS re) o °o S ° £

SNOL 13N SNOIT7IW

26)

8e6l

PP cmmare

NOuswNyIq 14S@WO

—_ |

Pe ea

ence be OU) HO

8seip puo Bujoe}

NATIONAL FUELS AND ENERGY STUDY

et rye)

ods 4103 $09

i $1014U00

891d

APIA PUY sTenZ 70 S224 T18I9Y,, ‘“s0quT Jo JWoUNIVde ‘g'f | eounog

“(OOT=8F-LFOT) O9-2E6T "823038 PETA O43) UE Jens Jo saojad (peieajlop) 1)¥}e1 Jo Xepul—ZE sunoIy

9v6)

o¢

985

NATIONAL FUELS AND ENERGY STUDY

096!

8S6i

*(00T=8-256T) 00-T56r ‘u0js0gq

2S6i

SS6I

«APT PUL wong 30 sIOIAE WHEY,

UF} Tenz Suyjveq Jo seojad zo Sexepul—g¢ aunorg

6v6!

9b6!

“20qUT 30 quounaudeg “g'p } eoanog

308

$09 |DINjoN ! sD

“J

9 Pesnjonsnuoy

O06

ef)

002

X3QNI

gored ely

gee on Ue OE RIS eT

(Cents per million B.t.0.)

wrnoen

xicad

He Bul

SN At IN \ \F

SAAN S\ .

SSS ara adiIi OAs

WS SWAY

NN ES > RQ \ WV| x

NX... ~‘

\ W

Ss \\

4 ©

‘006T PEP ‘eer ‘BOGT ‘S20I0N4 10mg D21001q-wWeEg ‘BOT TD0ESY [VOD [wAOTIEN | soANOg

‘86 Sandy [Rog [vaeUN on)

£4 pougen ,,'vese earpedincs-yeeo,, oq; "sy eopesouss 21479919 10} pown sud puv ‘jo ‘[woo Jo suoj}s0do1g—'gg aunolg

0961 6661 9561 $6 961 $561 W561 £861 7861 (S61 O64,

Setete *

+ + Oo"

2 o

: oe

} i or

- os

3 iit

o”

* £4 :

* ;? - 04

eee

sete

Hid {131082 cetiess teerpece:

i i i j lea iil ita HEL dll Le Ue ee

542 Big 25426. gees }¢. HHH

jie Hf fe iliinial Nain fa iil i Ha

& Z ag i ql : i vena futh ith 1a redteettiaa

! Seat leet

FU Be fad hiie ata

iach Che erp

3 1} en FUEL Lie rae A. jl sail ae :

ig1hs PH L Bitar HTL HHL

of Ohio,

on:

echoed

coal sold to customers in New York

price

same

cnt his

the

Pinal

Phan

Tlinois.

FUEL costs

process heat, boiler heat, or as

m thatthe average nur

~ — ——

nent emeanel mashes bee

General industrial

Froune 96.—Fuel prices paid by Consolidated Edison Co., 1950-60.

ite

. ”

Nig NOIT IW /> 1809

catbey 20a ene Oe

pen eam

en a ‘

Gh all ite

991

*ATIONAL FUELS AND ENERGY STUDY

294

coal’s share r<:> f #1 to 51 percent, ' In TV oil’s share rose

from 10 to 15 :2-sent, while tn Peon EX hte

ToGo. Wit byveet to sales alone, which is a poi

of common dis-szsj comparison are not available on

pe et Coal ard o with this type of sale (about

° iler fuel, and one-third for process

heat). However, in those coal is a significant factor

the average cust «f coal to-electrie is below the equivalent

average cost of in.t-rruptible

Since 1949, res'dual fue] oll imported into the east coast has ranged

between 17 million and

This enters jn,

and

Proportions. Any additional coa) produced would come

Pennsylvania, West Virginia, or Virginia, but its entry

be slow be: installations to burn onl

Jonata jos sould be borne by the Netkerieede Wes Bake

Venezuela. Any additional gas would probably come from Tan

TRANSPORTATION

rnapatle below: gives the latest reliable data on the use of fac! in

ton. According to it, oil accounts for over 90 percent of

of this \narket, from 110 million tons in 1947 to 2 million in 1960.

set ~~

market. The lectrification f railroads uification of coal both

provide potential three. ~ sey:

lum predate iss oRP peers an squrnbons m un-

wou

saiebintiliriintbenes wot teneeanenenechbndécnhnel aR w 387 8

wet RO 7,430 5 1.435

CT ge gore ce ee OO 2s b+ 6 H

Sr ereed aar7 n & as 100.0

992

PART V. UNCONVENTIONAL SOURCES OF ENERGY

Unconventional sources of energy are sources other than coal, oil,

gas, wood, ing water, and now atomic energy. They include the

sun’s heat and light (solar energy), the wind (windpower), the tides

(tidalpower), the heat within the ne deg tom lanr jon energy of the sca,

bacterial life processes, and new exotic of generating electricity.

The subject is included here for the sake of completeness, and the

treatment is brief.

SOLAR ENERGY

The traditional commercial uses of solar energy are in the evapora-

tion of brine in open pans for recovery of the salt, in the drying of

fruit, and to hasten plant growth in greenhouses. The attention to

unconventional uses is with the intent of trying to capture and app!

the heat to various other ends, depending on temperature desired, an

for direct conversion into electricity. Low-temperature uses are many,

including the heating of water (which then may be used for home

heating, for example) and in the conversion of saline to fresh water.

Solar conversion of saline water is one of the techniques being inves-

tigated by the Office of Saline Water of the Department of Interior.

At higher temperatures the heat may be applied to furnaces or to run

engines of various p poapg engines, for example—either for

direct transmission of power or for generation of electricity.

eT ee and focused where

wanted. The focused beam can achieve temperatures of thousands

rr high enough to melt metals, and solar heat already has

meron metallurgy.

Focused sunlight can be used in thermoelectric devices (creating

an electric current by heating the junction of two dissimilar conduc-

tors). (See below.) A number of satellites are powered by photo-

voltaic cells (the kind used_in photographic re meters), which

are solid-state electronic devices that convert light into electricity.

Other specialty uses are possible.

WINDPOWER

Windmills for pumping water are well-known devices, and the

reference to windpower as an unconventional source of energy is to its

widespread use, and mainly to produce electricity. Electric generators

run by windmills are in commercial production or operation in Den-

mark, Canada, France, Germany, South Africa, the Soviet Union, the

United States, the United Kingdom, and elsewhere. Interest is ex-

panding.

Thousands of generators of capacity of 3 to 4 kilowatts are in use

in different parts of the world. A 100-kilowatt wind-driven generator

has been operating successfully in Denmark for several years, and a

100-kilowatt generator has been installed also in the fale of Man.

296 NATIONAL FUELS AND EXERGY STUDY

A 640-kilowatt generator has Le«:, tested i France. All these larger

sori” Uesigned to feed energy into existing allermatinys ses ee

TIDAL ENERGY

in temperature between two heat Sources. The temperature differen-

oced fs pees to head in a mare of the dif eeee aaat may be pro-

is i to reo i so even

differences ot eat tae be utilized. In certain

One 7 construction is in progress. Pacific Gas & Electric C

in 1959 placed a 12,500-kilowatt plant in operation at Sonoma, Calif.,

north of San Francisco, and has'sines ed the capacity.

The steam fields of Iecland have long bose used for heating purposes.

THE BACTERIAL FUEL CELL

994

NATIONAL FUELS AND ENERGY STUDY 297

the past 2 years of a bizarre cell fueled with a common and harmless

spetes of toner. The bacteria occur in and feed on almost any

kind of organi matter and generate electricity in doing so: corncobs,

peanut shells, the waste in polluted rivers, occur

nag otet in the sea. Cells 2 volts have been

model devices have been

EXOTIC WAYS OF GENERATING ELECTRICITY

Five unconventional conversion methods are attracting considerable

attention in scientific laboratories:

Thermionic converters, in which electrons “boiled out” of 2 hot

metal surface are used to generate electricity. The device may appear

soon in solar-power generators in satellites. One of the most

i ions, though at least a decade away, is in atomic v

the thermionic devices would use heat that is otherwise wast

stations, a ing the steam-turbine generator.

Thermosactre gnertore dete shove There is considerable talk

about specialty applications but not much optimism about the genera-

tion of amounts of economic power. Known materials do not

offer any of efficiency above 10 percent, but the operation is

simple vad - Smeg crials byenl _ indefinitely. pce og to the

i passage of an electric current

the conductor edly enough of the current in the

opposite direction — it. i ing devices are already

comme

hydrodynamic generators (MHD), which use a hot steam

of — (lonized gas) instead of a copper wire as the conductor.

trode material that can withstand the required tem tures for any-

ing like the period of time that would make pe gf economic

for :

usual] talked about. Few special tee have becn sug-

gested. The idea is to combine with conventional systems, to

achieve higher efficiencies. Most observers judge that is the

discussed here,

Fuel cells, batterylike devices in which a chemical reacts

ped one electricity without flame, or noise. In the fuel

one of t chemicals is oxygen (pure or in the form of air , the

Cereal een, an obganic material, = he-chemvtale are con-

is able therefore electric

continuously and bdednteal : — abd

al commercial applications. Experimental fuel-cell tractors and

Adit tormcks awe bacm tested A small number of fuel cells are

Hue

a Lidaediiei

Comparison of

Coal-Fired and Nuclear Power Plants

For the TVA System

998

Contract 41-73 0° =——=<C*«~*G0 27-2

Bart,

Enclosed is a dreft of e letter which

incorporates the basic information thet I

woulé like to have in your rejuest for

adding the Fidelity Mine as ae source under

this contract.

We will need *he original and one copy

of an executed Producer's Statement on the

Fidelity Mine. The information that I beve

filled in on the form enclosed came fron

the statements that are on file for this

source uncer Contract 38-T12.

You can probebly improve on the languege

that I have suggested for the letter, but the

idee is the thing I wanted to be sure wes

incorporated. coe

; I certainly appreciete your cooperation

in working with me to bring this matter to

its proper conclusion. I feel that the

coatract is good for both of us and that we

will cervainly reep m.tuel benefits fron it.

‘i /

WAGE et.

DX 104

999

DEFENDANT’S EXHIBIT 105

October 18, 1962

Mr. E. C. Hill, Chief

Coal Procurement Branch

TENNESSEE VALLEY AUTHORITY

1010 Georgia Avenue

Chattanooga, Tennessee

Subject: Contract 63P-41-T3—Coal for Shawnee

Steam Plant :

Dear Mr. Hill:

Confirming our telephone conversation on October 17,

1962, we would appreciate being authorized to begin

to 13,000 tons per week effective November 1, as now

provided under the agreement.

We also request that beginning with initial deliveries

and continuing until further notice, we be permitted to

deliver 50 per cent of the contract weekly schedule re-

quirements from the Fidelity Mine of our affiliated com-

1000

per ton on this Fidelity coal so as to minimize quarterly

adjustments for quality.

We will deeply appreciate your cooperation in the ar-

rangement of these matters.

Sincerely yours,

FREEMAN COAL MINING

CORPORATION

BARTON R. GEBHART

Vice President

BRG:AJ

1001

is ® ate VALLEY ada @ lor

Coal Procurement Branch

Chattanooga, Tennessoe-..

COAL SONIRACT SOPPLMIENT

Te Freezan Coal Mining Corporction Supplement Ne. 2

300 West Lashington Street : Date October 25, 1962

Chicago 6, Dlinois Contract Ne. 63P-/,1-T3

A®tention: Mr. Barton R. Gebhart

This confirms agreement reached between you end 3. C. Hill by telephone or. October 17,

1962, regarding the initial date of contract shiments and authorizetion of a

Initial deliveries shall begin under this contrect on October 22, 1962, and contime —

for a perioc of 120 months thereafter. ‘The Fidelity Hine is authorised as a

supplesental source for up to 50 percent of weekly schedule requirenents.

Inforcation pertinent to the supplenental source in accordance with the Producer's

Statenent furnished is as follows:

gga . United Electric Coal Companies

Seam - foe 6 COidinata)

Type of mine Strip

Size & preparation ¥

—— Ic Railroad

_ Consigned to Shawnee Steam Piant

2 M-1/4" x O Segs. allowance

ayy ayes Spt - e

6" x 1-1/4" or int. sises Cr. to 1-1/4" x 0 (moisture allowance

none). All crushing after washing. zo =

The guaranteed analysis for deliveries from the Fidelity Mine shall be as follows:

Total moisture 11.0%

ena one ee =

Btu/lb. i conn 12,653

a4 oo eee

. as

Btu/lb. ) 14,233 Y iS

Effective October 22, 1962, the billing price TVA will pay for deliveries fron

Fidelity Hine shall be $2.85 a ton f.0.b. rail cars, Du Quoin, Illinois. This change

zillion

TNINSSSIS VALLEY AUSMORASY

a Division 02 Lintevials

Coal Procurenca: Branch

Chuttanocza, Tennesses

COAL COoaks: Sessa

T° Preezan Coal icining Corporetion

Bix to the Shasmee Stean Plant (using a fraight rate of $0.99 a ton). Your invoices

shows retiess the new billing price on shipments fren the Fidelity xine.

be affected by subsequent changes plant

- (See contract Sxhibdit II for samples of calculations).

Al. other provisions of the contract remain unchanged.

Please complete the acceptance below and return the copy of this contract scpplezent to

’ this office. You showlée retain the original for your file.

Accepted_FREEMAN COAL MINING CORP, * TENNESSEE VALISY AUTHORITY

—

DX 107

ae ee

verseray E925

~neeeessa 3 Zz s 7 8

Cl hee ated 2 ss

170 (31/7) «5S

fat

MC Otwtsten of Industrie!

‘rch 1h, 1970

ecco © ec a ve$vu$vo +++ + elke eee |

aasja)® S918 ousegA 8 ciated aves} genzast } Lass y

adm e gag avaEn suGuURG| a eenmetsigngayen

iséldg dezedsy iseediieas

Rich.

Conn.

Wise.

Connecticut Yankee A. P. Co. (Comm. Yankee)

Qetryland Power Coaperetive (LaCrosse)

i ih i} st

1989 Consumers Per. Co. (Big Rock Pt.)

Seared = Sparating vtility & Plant

SEBSSESESSEEGESES OepaepesEEasE

ssraseatons HSESBSE § SEES “49

SSGRRR0R 0S ERagscREEE sasgggegey |

Ty be ie | ie i he

taace aeddealt cea deedetsdl

esl

obi

iat

ela |

++ S5S555 S85585

setesessusies tens

A135 8 SBESSERS fF Ay

- ome

BRE seasequysasseg |

(Seebrees )

= emits)

$+. 0188

SEERESS

Heasjyg

bgeeeas ©

Construction cost, tacluging land and land rights. Treasmisston plant, fuel, treteing, and

~ Construction Permit Pending

€ ~ Construction Permit, ¢/P

License

power 135 fee.

Superkes ter Electric power fram reactor ony: Indian Potnt - 15) fee;

AEC Division of Industrie)

Pertictpetion

eres tt. &.

Duquesne Lt. Co./Ohie Edisen Co.

Florida P. 8 L. Co. (Sanford 4)

Gulf Per. Co. (Crist 7)

Houston Ltg. & Per. Co.

Jersey Central P. 81. Co.

Cuate Sar. S. of Coterety Coumanste 2)

Public Ser. Co. of Indiana, Inc.

Public of New Hampshire

Seattle -~ L tgmt/Saonamt sh

Sevtnern Galit. Edison @.

* Units under 300 Mase and ges-turdine installations are not included.

Tota) Each

Total - =

Total Fossil & Nuclear

— Power

Fossil Qperetion

829 197s

1,300 .

1,300 ‘

1,300 ne

1,300 e

600 1972

800 :

720 1973

420 1972

600 1972

600 1973

32s 1974

600 1975

7s 1973

1,148 \974

1,168 1975

S78 1972

1,100 197?

1,100 1979

900 1975

800 1976

398 1972

1972

1973

400 1974

«2? 1974

380 1973

505 1973

750 1975

rt 1973

600 1972

Ad 1973

soo 1973

‘00 1975

600 1972

7] 1973

400 1975

$00 1974

S00 1975

soo 1978

400 1974

360 1973

600 1974

600 1975

400 1974

1,200 1975

1,100 1977

Seo wre

S00 1975

7 1974

7 1978

77 1976

1,000 vs79

m0 1973

790 19"

am 1973

$40 we

600 7s

60 1976

Do yore

‘00 :

‘$00 -

‘S00 -

—_m asiiaiione -

7,000 6,223

oss Ve

AEC Division of Industrial Participation

farch 3), 1970

thy

faa a ass soa aa |

SSG ESE ii

888 Sse sex «xz <=.

;

yoo

2 ye Oxrinw Si

. 2 AVOMR BUELESE COMM Sea

seid

\ G&S

WARE Ds, &E Aled?

No. N-2 FOR INMEDIATE RELEASE

Tel. 973-3446 (Info.) (Tuesday, January 13, 1970)

973-5371 (Copies) : JAN 14 170 4L-

NOTE TO EDITORS AND CORRESPONDENTS:

$ Following is a brief status report on U. S. civilian

nuclear power plants for the year 1969:

During the year, electric utilities made known plans

for six nuclear power plants. In this period, the utilities

ordered seven reactors (five for plants announced during the

year and two for plants previously announced) with a total

capacity of about 7,169,000 kilowatts.

In 1968, utilities made known plans for 17 nuclear

plants. They also ordered 17 reactors with a total

capacity of about 15,630,000 kilowatts.

Status of all nuclear power plants, as of December 31, 1969

4 silowatts

16 operable ah Re 4,272,700

48 being built 38,455,200

34 planned (reactors ordered) 30,883,000

8 planned (reactors fidt ordered) 7,645,000

Total 81,254,900

Attached for your information is a map of the United

States showing the location of all present and proposed

civilian nuclear power plants for which reactor suppliers

have been selected.

i ;

UOopywwed Mueug qumy's'n “Peseps0 Ueeq 8A JOU sasy 810)080, | envaw dunshpaaad oh dtondee Ateuin teen

WHY 40) paounouue used eney SUE; BLOW g, 18 IWi0L

(suvmown)

ALISVdV2 INVId YVZISNN

1009

: pa}dejes useq eAey S40jj0dNs 40}Dee4 YO|Ym JO) pue spi46 samod | | |

2143908 AyIHN 48A0 payjwsues} aq 0} pejnpeyos $} 40 peyjwsues bujeq

S| 4amod @soym Sauo ase dew sjy) U) pepnjou; $yue|d Jamod ueejonu ey)

SALVLS G3LINM 3H. NI SINWId Y3MOd YVITONN

MINNESOTA

Etk River

Menticetlo

Red Wing

NEBRASKA

Fort

Brownviile

* Site not selected.

PLANT NAME

Browns Ferry Nuciear Power Plant: Unit 1

Browns Ferry Nuciear Power Plant: Unit 2

Browns Ferry Nuctear Power Plant: Unit 3

Joseph M. Farley Nuctear Plant

Arkansas Nuclear One

Humbelt Bay Power Plant: Unit 3

San Onofre Nuctear Generating Station

Malibu Nuctear Plant: Unit!

Orablo Canyon Nucieas Power Plant: Unit 1

Diablo Canyon Nuclear Power Plant: Unit 2

Rancho Seco Nuclear Generating Station

Ft. St. Vrain Nuclear Generating Station

Conn. Yankee Atomic Power Piant

Calvert Cliffs Nuclear Power Plant: Unit 1

Calvert Cliffs Nuclear Power Plant: Unit 2

Yankee Nuctear Power Station

Pilgrim Station

Big Rock Point Nuclear Plant

Palisades Nuclear Power Station

Enrico Fermi Atomic Power Plant: Unit 1

Enrico Fermi Atomic Power Piant: Unit 2

Donald C. Cook Plant: Unit 1

Donald C. Cook Plant: Unit 2

Midland Nuclear Power Piant: Unit 1

Midiand Nuclear Power Plant: Unit 2

Eik River Nuclear Plant

Monticetlo Nuclear Generating Plant

Prairie Island Nuclear Generating Piant: Unit 1

Prairie island Nuclear Genersting Plant: Unit 2

Ft. Calhoun Station: Unit 1

Cooper Nucteer Staton

Comm. Ed. Co.—la.—tl. Gas & Elec. Co. 1970

Comm. Ed. Co.—ta.—il. Gas & Elec. Ca, 1971

Northern Indiana Public Service Co.

lowa Electric Light and Power Co.

Maine Yankee Atomic Power Co.

Baltimore Gas and Electric Co.

Indiana & Michigan Electric Co.

Indiana & Michigan Electric Ce.

Consumers Power Co.

Conswmers Power Co.

Rural Cooperative Power Assoc.

Northern States Power Co.

1972

1973

1974

1961

1971

1963

1970

1963

1974

1972

1973

1873

1974

1964

1970

« 1872

1974

1971

1972

Long Istand Lighting Co.

New York State Electric & Gas Ce.

Consolidated Edison Co.

Power Authority of State of N.Y.

Carolina Power and Light Co.

Carokna Power and Co.

Caroline Power and Light Ce.

Duke Power Co.

beg a ngage:

$3 $888 §35859S55

1011

seine f bend) based fossa] bee) bese

e*e*e*e |

oreseren Petatetenl — ptecerete OS |

. seteted —_— eee cee bers .

Ra SR HE SR

Peteset °

OO % 3 inte

ex eens -

seed betes S¥alIddNS “SN NO S¥3zQYO

aE ey

SuIIddNS NOIWOI NO $¥zIagYo fea

INIWdINOI ONILVYINIO >

DHULIZIZ YOs

Suzqguo ALNILN ‘S'N

o€

SLAVAAOTIN 10 SNOIMMMNW

OTT xa

1012

Humsie Om & Rerixinc ComPANY

Gere ve Ari

<p say

United States v. General Dynamics

Corporation et al., Civil Action

No. 67 C 1632 (N.D. I11.)

Your file: 60-0-37-920 -

Dear Sir:

Your letter of February 2, 1968, addressed to Standard Oil

Company (N.J.) has been forwarded to me for reply. °

; I have discussed your inquiry with our operating people

and reply to your numbered questions as follows:

1. Humble Oil & Refining Company or an affiliate has

acquired, directly or through a trustee, coal rights

in approximately 650,000 acres in Illinois, none of

which is suitable for strip mining.

The information requested is confidential, compet-

itive data which we do not wish to reveal. From

a@ competitive standpoint, the disclosure of this

information would be so injurious to Humble, I

deem it advisable to protect it as a business and

trade secret.

Yes. However, further evaluation will be required

on some of the coal rights to determine the extent

and quality of coal present.

Yes. Further geological testing and study will be

necessary before all the properties have been evalu-

ated. The results of these tests ere confidential,

competitive information which we do not wish to

disclose for the reasons mentioned above. -

ay | : » .

John T. Cusack; Esq. ; -2-. February 19, 1968

. f,

5. We do not have sufficient information to answer

this question with respect to all of the rights

acquired, However, it appears, based upon present

studies, that coal will occur below the surface of

some portions of the land and that some of this

coal is suitable for underground mining and. may be

suitable for liquefaction. | commercial feasi-

bility of liquefying the c has not yet been

determined. Information wi A respect to particular

tracts is confidential, competitive data which we

do not wish to disclose for reasons mentioned

above. ba

6. You may contact the unders if you wish to

discuss these matters further.

We hope this infdrmation will an 8 help to you, although

for the reasons stated, we are not in a position to comply fully with

your request,

Very truly yours,

1014

Humsaie Ou & Rerininc Company

Hovsrox, Texas 77001

February 22, 1968

RICHARD FP RYAN

BS 8 ze

Mr. Ron Futterman FES cc i968

Department of Justice

Room 2634 United States Courthouse

Chicago, Illinois 60604

Re: United States v. General Dynamics

Corporation et al., Civil Action

No. 67 C 1632 (N.D. I11.)

Your file: 60-0-37-920

Dear Sir:

Following your telephone call Tuesday afternoon

I asked our operating pédple for a statement of our purpose

in acquiring coal reserves in Illinois.

I found that they look upon these coal reserves as

@ long-range source of raw material that may be converted

into hydrocarbon products, such as gasoline. We are also

considering the possibility of making some sales of coal to

utilities tributary to our reserves.

“I trust this answers the question you raised in

our telephone conversation.

“very truly yours,

, “3 sa ifm

RPR/nb

1015

GENSRAL DYNAMICS CORPOR:TION

Excerpt from Minutes of Meeting of Board of Directors

Eeld on Septenber 30, 1966

Oe Semen se tt eee —

7. United Electric Coal Coxpanies ~ Purchase of Stock

The Chairman referred to the discussions at the

last Board mooting regarding the purchase of additional stock of

United Electric Co2zl Coapinies. He reported that, as euthorized

by the Board, the Corperation had acquired 48,400 shares of UEC.

froz Material Service Enplcyees Profit Sharing Trust et $50.50

. & share, which represented the cost to the Trust of acquiring

and carrying the stock.

The Chairman then stated that managenent tad con-

sicered further the sévissbility o2 acquiring the remaining ,

minority interest in VEC and, for various reasons, kad concluded

that the Corporation should proseed with a Plan of acquisition

" et this time. He asked ur. Sargent to present the management's

views. . a -

Mr. Sargent réviewed for the Directors the charts

containing fineneis) é@:ta er UEC which kad been presented at the

—————————

* 1016

PRIVATS Page No. &

“ BD 9/50/55

: 25

lest Boarc meoting, and noted the anounts that woulc be requires

on various cssunptions to aequire the reacinder of. the Use stock.

He stated that the management stili felt that the Bost airect

method of Segeerene the baiance of the UEC stock was through. a

combination of a tender oxfer for an accitions1 170,005 UEC

shares, which would bring the Corporation's holdings to slightly

more than 995, snc a “short for" merger, available uncer Delaware

law to a 90% holder, under which any remaining minority would

be paid the fair value ad thebt i shires. Ee stated that unge>

the “short fora" merger provisions, USC cculd be nergec directly

into the Corporation or into 2 new Delaware subsidiary’ to which

-the Corporation would Zirst transfer its UZC shares, in either

case by ection of the Board of the parent. Ke stated that if the

tender ofies were a success the merger would be _ettectse &s prenptly

as possible snd steps woule be taken to provics anasenent for

“UEC and to combine USC and Freomen mar keting and other administrative

functions and staiis where ef ficienc: es and cost reductions couie

be achieved. Ee stetecd, “hewever, that in the first instance the

UEC coal properties anc contracts would be held separately frou

those of Freeman, most pr ee in the new Deleware subsidiary.

Mr. Sargeat then reviewed the varicus cornsideraticns

in support of the manigerent view that the minority interest in

UEC should be acquired end that Freenan and USo sould be conbined

2S soon as possible, including a review of UEC's limited coal

reserves end the resulting probdlexs USC had encountered in ob-~

taining and keeping long tern contracts, the ebility of Freonan

to provice e back-up oz reserves over the lonz sera exé finally

1017

PRIVATE Page No. 9

BD 9/30/88, -,

O25

the requirement for 2 new chief executive etttees ane other key

personnel on which action should be tzken promptly. He also re-

ported that the New York Stock Exchange indicated kts intention to

celist UEC within the next few weeks. He stated thet, in Seneten,

the combination of the two operations made geod business and

operating sense and would insure the ability of the enterprise to

‘conpete more eiiectively in its marxst. He stated further that,

under all on circumstances, the Corporetioa's’ legal staf? was

not aware of any legal reascn why the Corporation should not pro-

ceed with the plan.

The Directors discussed the natter of a tender ofier

price, in the ccurse of which it -was pointed out that it is normal

in tenders of this kind to offer = presius over market of between

15% and 20%. Mr. Sargent then reviered the market action of

UEC stock over the last zew months in whick ke noted that in July,

when the possibility of a tender offer was #irst discussed, VEC _-

was sellirg at 39-1/2, and thet on August 3, the day befors the

meeting of the Board at whick the tender offer was to be considered,

the price of USC kad rissn to <9. Ee stated that subsecquert to

the August meeting she price of the stock Gropped sharply. The.

current market is shout 42. ur. Sargent thea stated that, in”

his opinion, the Corporation should mot, under present Sonditiocnas,

pay more than $50 a Share on the tencer offer, wkick proviced s

sufficient premium over tte market. The consensus of the _Directors

was Praca $50 2 share would be & proper offering price at this time.

ur. Sargent answered quésticns by various Directors

about the Corporation's cash — the status of bank loans,

1018

PRIVA T p9 Pege No. 10

. BD 9/30/85

the effective rate of interest Deinz paid, conpensating balances,

and all other fecters relating to the Corporation's ability to

finance the tencer offer and tke payout to. the minority stock-

holders on the “short form" merger. The remaining Directors were

polled and, in view of the business consicerations detailed by

managenent, all concursed in the reconnandation to proceed with

the tender coffer.

lr. Sargent stated that, as he had noted errlier, on

2 Delaware “short form" merger, the minority are entitled to be

paid the fair value o7 their shares, exclusive of any element

of value arising froa the merger. In the first instance the

Corporeticn or the Board of the new subsidiary would set.the price,

and any U=C share holder objecting to the price could seek

appraisal under Delaware las. He stated that management did not

have & final recomzoncation on the price te be offered on the

merger, but that he was certaiz that it would not onset $50 @

share and mizkt be less. —

Kr. Sargent stated trat it was proposed that Chase

Manhattan Bank be designated as Tender Agent, that Georgescr & Co.

be retained to assist on the tender offer and thet a fee of 50

ceats a share be paid to soliciting brokers. - He stien acbennbion

to the mesting the propesed Invitation for Texncer and Foran of

. Tender and Assigrrent.. Ee stated thet these Gocuments were sub- :

stantially as submitted and reviewed at the August Board meeting,

except that URC earnings date for the first nine months of the

year hed been included. Ee stated that the documents head also

been cleared with ‘the New York Stock a The Chairman

1019

PRIVATE Pege No. if

ve BD 9/30/66

Girected that. copies of the Prepessd Invitation for Tender Ja-

Form of Tonder and Assignaent bs filed with tke records of the

meeting.

: Hr. Sargeat stated that, in addition to authorizing

the tender offer and related ection, it would be 2porosriate at

this tine for tis BSozrd to tuthorize the meragenent, in its

@iscretion, to organize 2 nev Delaware sudsidiary, to transZer

the U=c stock to such sudsidiery end to take suck othe> action

2s vould be required to effect the "short form" merger on the -

basis proposed. Ee stated that it was expected that the defini-

tive Plen for the oombingitan of U=C and Freenan would: be

Geveloped in time to peraZt its cousimuation by tks end of the

year.

&fte> further Giscussion, cn motor eCaly mede,

secondec, anc unanincusly carried, it was :

RESOLYED, that the Corvoration makes cn offer

Chereinsiter in tress ~esoluticns called the

Sencer Giier) to purckass stares of Connon

Stock of The United Electric Co2zl Companies .

. Chereinatier in these resclutions called USC)

by taviting tenders for such shares at a prices -

of $50 per shore in the minzrer and cn the stker~

teres set forth in ths inztruments hereinafter

in these resolutions approved; and further

RESOLVED, that the forn, terms and provisions

of the proposed Invitation for Tenders and <he

proposec Form of Tende> end Assignment to be

usec in connection with the Tender Offer, copies

of which have been subcittec to this msetins,

’ Be, anc hereby cre, approved, with such changes

therein es the Presidext or the Vice Presiéen?t.

Finince cf the Corporaticn end Counsel for the

Corporation may Csen necessary cr ecvisable and

Spprove; ane furthes ia

ERESCLYSD, that The Chase Manhattan Bark, H.A.,

be, end hereby is, Gesignated as Tender Agent of

—”

PRIVATE Page No.

the Corgcraticn for the purposes of the

Tencor Offer; and furzher

RSSOLVYSD, that the President, the Vice Presi-

Cent-Finznce or the Secretary of the Corporation

be, anc esch of then iereby is, authovizedc to

(2) engage The Chase Manhattan Ban, X.4.,

@s Tencer Assent of the Corporation in connection

Ozter:

with the Tender

Cb) extend the terminstion dzte of the Tender

Offe> to such date {not later then Noverbder 2i,

1935S) es they o> fo. of them shall determine;

responsible for soliciting tenders of shares of

Common Stock of Uic;

Ce) retain solicitors to assist in connection

with the Tencer Oiler; . ae oS

€e) deliver to the Tender Avent such in-

structions ts they or zeny ef then shall deen neces-

Sary OF prover in connection with the Tencer Offer.

(which instructions skall Cesigzuate the persons

euthorized to act for and on beh2i2? of tze Corsora-

tion Sn connecticn therewith); and

(2) take alk ecch other action es they or

eny of then shall csen hecessiry, vrobve> or ad.

visadie in conneqticn with the Tender Offer ind

the implementation cf these resolutions or any oz

them; ana further aeey

RESOLVED, that the Presi¢srt, the Vice Presiéent-

Finance? cr the Secretiry of the Corpcration be, and

esch of them hereby it, autherized to take eli such

&ction, in the name anc on behalf of the Corporation,

@s shall be necessary or proper to :

(2) 2t such tine es the Corperstion shell

‘own not less than £O% of the outstanding steck of ‘2

USC, cause USC to be nergsd into the Cordoraticn =

and, in connection wsrewith, set the terms ene :

concitions of the rerger {provided that the con-

Siceration to be pzid for shares of UES shall rot

exceec $50 2 share) and execute and file e cer-

tificate of orzership end merger, 211 in eccorcéence.

with Section 253 of the. Delaware General Corporation

Law; ESE 5 :

Saenw

P RZ EASE. Page No. 13

D /2D/C4-.

2 “EO a3t

{b) forn 2 ney corporation uncer the laws of

the State of Delaware (heveinazter calicc Ney Coz.

cozvorstiens a suds ion agresnent with New

poration of E12 the eathoutse ec expitel stock of. -

New Corporation for not mete than $2000;

bat

teraztive to ‘the actions sutho>.

. ized < Geskeant to 5 tas 2, transte> to New Cor-

poration, s5 a canit ribution, 214 the shar

of Comacr Stock of USC cummed & by tee Corrorztion ..

(including, but not iinited to, the shares of Con-

moz Stock of USC to be surchered by the Corporation

pursuznt to the Terder Offer}; ard

(e) at szck tine es Kev Ceornoraticn sheil own

not less than $0% o2 the outste nding sicck cf USC,

Cause UEC to be ne exZed with end into New Cornereticn

,ihn accordance with Section 255 oF the Delaware

"Generat Corporation Ley Upson such terms end con.

Citiorzs as ssid cliicers or any of them sheli Geen

ecvisable, and in co mnecticn treresith te cause the

Corporation to sdvince to New Corpsritioxn such funcs

5 may be ee to exzble New Corporation to

erfect the tera of feic nerger.

1022

THE UNITED ELECTRIC COAL COMPANIES DX 113

Special Meeting. of the Board of Directors

October 9, 1959

A special meeting of the Board of Directors of

THE UNITED ELECIRIC COAL COMPANIES

was held at the office of the Company, 307 North Michigan Avenue,

Chicago, Tllinois, on the 9th day of October, 1959, at ten o'clock

Ae M., Central Daylight Saving Time, pursuant to waiver of notice,

The following directors were present: -

constituting a majority of the Board and a quorum.

Absent: Paul C. Clovis ‘

J. Sterling Rockefeller

Henry A. Rudkin

George Spatta

| The meeting was called to order by the President, ‘Mr. Frank

_ Fe Kolbe, who proastea throughout as Chairman of the meeting, and

the minutes were recorded by Mr. O. H. Utterback, Secretary of the

The Chairman suggested to the Board that a consideration of

the minutes of the meeting of the Board of Directors held on

September. 21, 1959, be postponed to a later date,

The President then stated that certain large stockholders of

the Company whose stock holdings aggregated approximately 50% of the

Company's shares were requesting representation on the Board of

Directors. He said that in the past he had offered representation

1023

to them but thet they hed declined. H® further stated that in

order to meet such current request it would be necessary to

eliminate five members of the present Board, He stated thet the

members of the present Poard hed agreed emong themselves that

Messrs. Frank F, Kolbe, J. M, Morris, John D. Ames and Dudley F,

Jessopp should renein on the present Board, and that Messrs. Frank

Nugent, Milton Felkoff, Reuben Thorson, Irvirg Crown and Barton R.

Gebhart should be the other five nominees to be suggested by the

management, and that a proxy statement should be issued by the

management to solicit proxies. for the election of such nine sugges

ed nominees,

Thereupon, on motion duly made by Mr, Jessopp, and duly

seconded by Mr. Ames, it was unanimously

RESOLVED, that the action taken by this Board

of Directors at its meeting held on July 10,

1959, authorizing the Secretary of this Company

to mail to stockholders of record on September 30,

1959, a notice and proxy statexent in the forns

adopted at said meeting and a proxy namirg Messrs.

Rudkin, Ames and Kolbe as proxies therein, be and

the same hereby is rescinded,

FURTHER RESOLVED, that the Secretary of this

Company be and he hereby is authorized and

directed to cause the Transfer Agent for the

common stock of this Company to mail as soon —

as reasonably possible after the date of this

meeting, in accordance with the By-laws of this

Company and the laws of the State of. Delaware,

to all stockholders of record as of the close of

business September 30, 1959, addressed to them at

their respective addresses as they appear on the

books of this Company, a notice and proxy state-

ment in substantially the following forms:

one 1024

-BXCERP'TS: FROM MINUTES

MEETINGS" of May. *13, 1960

Zhe Chairman brought up for discussion the Company's onner-

iran Sn Mconovgh and Schuyler. Counties. At July 32, 1959 the

Company owed or had contracts to privhios % $29.10 acres of coad

containing en estimated 8 916,117 tons and as of this date these

figures have bd3en desmogict. ‘to 3,30 acres of coal containing

11,530,000 tons. ‘Inasmuch as the evelopment of this field is

probably Sone ten oe in the future, Rd vas decided” not to purswe

en eperessive purchasing policy in that: arez, but ory to accuire

.eereago watch right becone avesdoboe. at rbot ‘to seaund normal £

dand Prices $n this arene :

murat: FROM MINUTES ‘OF,

MEET NG OF JULY 15 1960-

Mr. Hepburn was. Anvited into the necting and, referrirg to a

_ map that displayed the western paft of Illinois, expadned the Con-

pary's plan for acquiring #2 coal reserves in McDonough and Solewer :

‘Counties here some 10 ,000,000 tons are already held in reserve, He

stated that about a year ago a mining feasibility, study vas made of

“the property, £ study of County records discloses that coal lant

‘options’ are being teken by tio or “three other compantes, It was de- |

“cided to. review ana revise the feasibility study to re~exanine the

slivioabiasty of ping & moro activo ss tege program in the area...

1026

axdaet Fics NWI oF MCT BaD sePPran 9, 1950

than for any previous nonth. All minss were in good physical con-

dition, with Fidelity being particularly inproved ty "the new loce~

ton with lover ratio ant totter stripping conditions in general,

Tere Sones eth A i hangin Wie eiclig Via

art oAEII te pregreens nat .

* Increaced sales ‘are duc lntgely te greater purchases ty

power cexpenies, porttoularly Conom-cclth Biison and T1linoie Pocer.

Sone ecditions) strip coc) found at Rery Moore Mine, while

of higher stripping ratio, will make 4¢ possilile to keep the mine

in operation for another 6 or 8 months end this is being considered.

The President stated thet the Conpany is comiimiing to take

options and leases on coal in the Beaucoup Ficld, acting as egent for

the Aluninen Company of Anerica. At a recent necting officials of

Alcoa indicated they planned to make the next expansion so as to use

the coal reserve in Beaucoup Field. The total feserve is considerably

Greater than the 100 million tons allocated as a proper backlog for

alunimn production and the officials expressed an‘interest in the

possible developrent of « coal mine‘in the area prior to the need for

en aluximm plant, the coal so produced to be sold in the intustrial :

market vhen and if such a denand is forthocuing. Hr. Nugent stated

teat the engineers. for Prodan Goal Rining Gospery could make a feast

bility study for such « project when necessary. . :

There being no further business, on motion duly made by

Mr. Jescopp, and duly ecconied by Hr; Korris, the reetiig was adjourned.

-@uring that tine and which cannot be recouped by hin.’

The Chairman stated because of conversations in the past in

ecard to possible consolidation with another coal compamy in this

area it might be well to give some consideration to the subjects

ding, at was :

: RESCLY?FD, that Committee composed of Nossre, Kucent

as Chaireen, Pall Morris be and they hereby are

Kr. Morris reported that Kidvest Toving Co., Inc. for the

first nine months of 1960 had a net dincone of $71,5ib.00 as acainst

$k, 235.00 for the corresponding period in 2959. Reveme for this

in on, ommend

> 1028

Excerpt FROM MINUTES OF MEETING OF MARCH 0, sx

Upon motion duly made by Kr. Nugent, and Gly seconded by

Nr. ames, the following preambles and resolution were unanimously

adopted:

WHEREAS, this Company of January 1961 conveyed

Deed of Se Jeane C- tueed apprectnatety 3a

acres of land in Hopkins County, Kentucky, the total -

consideration being %2,500.00; and

WEEREAS, this Company ecap]etved its mininz operations in

this area scue years ago and has no further use for the

land; :

NOW, TEEREDO2RS, BE IT RESOLVD,. thet the action of the

officers of this Company, for and on its Behal?, in *

executing said Deed of Conveyance to James C. Sneed, upon

the terms as set forth above, be and the sane herety is

in all respects approved, ratified and confirmed.

Upon motion duly made by Mr. Nugent, and duly seconded by

Kr. Crom, the following preazbles and resolution were unanimously

the right to use the surface of approximately 22 acres of

land in Vermilion County, Illinois, containing an esti-

WHEREAS, at a stripping ratio of about 12 to 1 there is

an estinated mineable tonnage of 36,300 which at the

— royalty of $13,500.00 will cost 35.3¢ per ton;

Mr. Nugent raised the question of the Company's reserves of

mineable strip coal. After considerable discussion, upon motion duly

made and duly séconded, it was

FURTEER RESOLVED, that Kr. Frank Nugent be and he here-

by is delegated to serve as Chairman of such Committee, —

In view of the fact that March is the second month of the third

quarter of the fiscal year, Mr. Morris brought up for discussion the Nan-

agement. Incentive Bonus for said fiscal year, and it was decided to defer

discussion on this subject until the Board meeting scheduled for May 12th.

Mr. Morris also raised the question as to whether it would be

advisable to transfer to a Chicago bank the Trusteeship of The United

Electric Coal Companies Employees' Profit Sharing Trust. fund from The

Chase Manhattan Bank in New York. The question was referred to Messrs.

Falkof? and Jessopp to report back to the Board at its May 12th meeting.

Mr. Falkoff, Chairman of the Audit Committee, requested that, in

view of Mr. Thorson's absence, the report of Haskins & Sells detailed

audit for the year ended July 31, 1960 be deferred until the Board meet-

ing scheduled for May 12th. Mr. Falkoff further requested that the

appointment of auditors for the year ending July 31, 1961 be deferred

“until the Board meeting on May 12th,

Mr. Falkoff also recommended that in the future the detailed

audit report be made available to the Audit Committee before the anmal

statement is approved for printing.

There being no further business, on motion duly made by Mr. Anes,

and duly seconded by Mr. Morris, the meeting was adjourned.

Arabs baels

1030

EXCERPT FROM MINUTES OF MEETING ON MAY 12, 1961.

S$. When and if requested by United Electric, Central

Tlinois Light Company will use coal from this

storage pile and United Slectric may curtail ship-

ments to that extent, and when requested by United

Electric, Central Illinois Light Company will put

into storage additional coal, and by this arrange-

ment, United Electric will be able.to ship at timdés

most beneficial to production and sales commitments.

6. On coal withdrawn from storage at request of United

Electric, 7¢ per ton will be charged for such with-

drawal.

Previous contract provided for re-opening of price and

anmal tonnage each year and this new contract- gives firm

commitment on price and tonnage.

NOW, THEREFORE, BE IT RESOLVED, that the action of the

officers of this Company, for and on its behalf, in enter-

ing into such contract with Central Illinois light Company,

upon the terms and conditions as set forth above, be and

the same hereby is in all respects approved, ratified and

confirmed.

Mr. Hepburn was invited into the meeting and he and Mr. Nugent

made a report on the Company's stripping reserves, uging maps of Fulton

County and Perry County, showing the Company's reserve areas ta relation

to the reserve areas of other strip companies, Gnd At han boon deterained

that the present reserves provide tonnage for contimming and growing pro-

duction for about fifteen to twenty years. After discussion, upon motion

duly made by Mr. Nugent, and duly seconded by Mr. Thorson, it was unani-

mously :

RESOLVED, that the proper officers of this Company,

for and on its behalf, be and they hereby are author-

ized and directed to begin at once an aggressive pro-

gram to option for purchase and/or lease areas for

test drilling in the North Canton and South Buckheart

areas in Fulton County, and in the area in Perry

County and Jackson County immediately south of the

property .acquired from Union Colliery Company.

The President reported to the Board that the new Bucyrus-Erie

70-yard stripping shovel was expected to be delivered and in operation

at Fidelity Mine sometime late in the current year. This machine was

1031

XCERPT FROM MINUTES OF MEETING ON SEPTEMBER 8, 196)

cen RnB URaLT PORT Ta Wee Tey ME ot OO? secre held ou

Jely 1h, 1961, a resolution was acoptec authorizing the sale of a tract

of 17h acres at Mary Moore Mine, said euchorisation subject te appraise?

value deing obtaiaed. The President then reported that aa aporaisal was

obtained fro: bank in Danville, Illinots, the value being set at $50,002

cash, or possibly $79,200 if sola by contract, Ansther appraisal was

obtained from a Peoria anpreisal firs which established the market valce

at $55,000. Since the Prise offered by the geeepaclsve purchaser, Niels

C. Mielsen, vas $85,000, the sale will be made to hin, the purchase price

to be paid as follows: $25,920 on signing of contract, $20,000 on each of

the three next successive eaniversaries, with interest on the unpaid baler.

at 5% per annux. _ However, Kr. Mielsen has agreed to ‘purchase certair snal

tracts adjacent to the 17h acres that will eliminate the need for the

Coapany to renove @ haulage road and construct a private brides, thus sav-

ing the Company an estimated 312,000 to $15,000, and ad of the

sale is contingent on Er. _Melsea so doing.

In regard to the anaual report for the fiscal year ended July 32,

1961, a draft of the letter to stockholders and a review of the results

were. reag. It vas Pointed out by the President that in previous years

only the coal dedosits suitable for strip mining were included in our

annua? report. After considerable discussion it was decided that total,

coal deposits, both strip and underground, owed aad controled by the

Company be shoxn in the annual report. *

-Upoa notion duly made Sy Nr. meh, and duly seconded by

Mr. mae, the following Breanbvle and ‘eenet tien were unantnously

ad >pted:

MERA, the proper officers of this Conpaay expended

certain sunz for equicment for use at its various mines

as follows:

1032

EXCERPT PROM UEC BD. MEETING - SP. MIG. MAY 18, 1962

and °

WHEREAS, the resolutions authorizing and/or approvin,;:

- Said coal mining lenses dic not sitate that the acqui-

sition of minerals included also “the right to use the

surface" for such pursoses as may be necessary in carry-

ing.on the strip mining operations; and :

WFERSAS, such right is included in the coal mining

NOY, THEREFORE, BE IT RESOLV2D, that the wording of the

resolutions authorizing and/or apmroving the six coal

mining leases cited.in the foregoing preamble should

include the phrase "the richt to use the surface", and

that said phrase be and the same is hereby made a pari

of each of the cited resolutions the same as if it had

been included in thé Griginal resolutions.

Mr. Nugent, Chairman of the Land Committee, referred to the

coal land reserve position of the Company and the-need to add to the

operating life of present mines. The Company should continue to pur-

sue a vigorous land acquisition progren, not only at existing prozer-

ties but. at any location that might provide additional reserves and

extension of mining. activities. Management was again instructed to

pursue this policy in acquiring additional coal lands suitable either

' for strip or underground mining.

Upon motion duly made by Kr. Crown, and duly seconded by

Mr. Nugent, the following preamble and resolution were unanimously

adopted:

WHEREAS, the proper officers of this Company expenced

the sum of $66,331.20 for the purchase of 1 Northwest

80-D coal loading shovel for use at Banner. Kine;

.NCG#, THEREFORE, BE IT RESOLVED, that the action of the

officers of this Company, for and on its behalf, in

expending the sum of 366,331.20 for equinment as set

forth above, be and the same hereby is in all respects

approved, ratified and confirmed.

The Chairman advised that’ Midcontinent Barge Compeny, which

Company is owned jointly with Truax-Traer Coal Coxpany, desired to

1033

Perchase six 1,500 ton barges te take care of the increase in cos?

Shipmeats on the Mississippi River. The Chairman furtier stated

that Ingalls Ship Building Company has for sale six new barges,

Just recently coxpleted, and of the type now in use by Kidcontineat

Rarge Company. The purchase price of the Tngalls' barges is $60,000

Per darce as compared with 361,500 and $63,900 per barge quoted by

two other builders, neither of which could make imnediate delivery.

At a meeting held on Nay 15, 2962, the Executive Coxittee

authorized this Cmpeny, as a stockholder in Midcontinent Barge

Coanany, to approve the purchase of the six barges, and that this

Conpany purchase 1,000 shares of the no par valus capitel stock of

the Barge Company for £150,000, the proceeds of such stock to be used

toward completion of such purchase of barges. The 1,000 shares would

continue to represent this Company's 50% share of the caital stock

of such Berge Coxpany. ~ :

After discussion, on motion duly made by Mr. Anes, and duly

seconded by Kr. Thorson, the following preambles and resolution were

unanimously adopted:

WHEREAS, Midcontinent Barge Company has authori zed

the issuance of such shares to this Companys act

WEESRAS, ‘the Continental Illinois National Bank and

Trust Company of Chicago and The Chase Manhattan Rank

have agreed in writing that the exoenditure of such

money for the purchase of stock of Midcontinent Barge

EXCERPT FROM MINUTES OF MEETING ON JULY 13, 1962

The Chairman then presented a resolution approving this Company's

action in signing a coal lease with United States Steel Corporation under

which the Tite of Mary Moore Mine would be extended some four. years.

&fter discussion, upon motion duly made by Mr. Crown, and duly

seconded by Kr. Thorson, the follewing preamble and resolution were unani-

mously a2opted:

WHEREAS, the proper officers of this Company on June 28,

1962 entered into a lease with United States Steel Corpo-

ration covering the acquisition of all of the ccal of

’

: #7 vein and the right to mine the same

— Il ecres in Vermilion County, Illinois

WGij, THEREFORE, BE IT RESOLVED, that the action of the

efficers of this Company, for and on its behalf, in enter-

ing into the coal lease with United States Steel Corporation,

upen the terms and conditions as set forth above, be and

the same hereby is in all respects acproved, ratified and

confirmed.

Upon. motion duly made by Mr. Crown, and duly seconded by Mr. Thorson,

“the following preambles and resolution were unanimously adopted:

WHEREAS, the proper officers of this Company on June 28,

I962 entered into a lease with United States Steel Corpo-

ration under the terms of which this Company acquired the

right. to mine all of the coal contained in the #7 vein on

certain premises in Vermilion County, Tllinois; and

WHEREAS, Karl Zamberletti and Frances Zamberletti, co-

partners doing business as V-Day Coal Company, on

October 14, 1960 entered into a lease with United States

Steel Corporation under the terms of which V-Day Coal

Company acquired the right to mine all of the coal con-

tained in the #6 vein on certain premises in Verrilion

County, Dlinois; and .

WHEREAS, the premises containing the #6 vein leased to

V-Day Coal Company are identical with the premises con-

taining the #7 vein leased to this Company; and

‘WHEREAS, the #6 vein underlics the $7 vein, being separated

from same by scme hO fest; and

1035

Liss ey

EXCERPT FROM UEC BD. MEETING MARCH 8, 1963

VHEREAS, Midwest Towing Co. Inc., owned omnes by this

another @ decrease

KARSRAS, Midwest Towing Co. Inc. needs working cepite)

to cperate on the Mississippi River during the sumer

FURTHER RESOLVED, that should the exornt lent to Midwest

Opening a general discussion on the question of minecble re-

serves the President stated that at Buckheart the total possible in-

cluding present operating area, North’ Canton and South Buckheart would

amount to some 16,600,000 tons, most of which have been acquired or

optioned, .At Cuba Mine possibly 1,500,000 tons of #6 are avcileble

although not yet accuired; possibly 3,500,000 to 5,000,000 tons of 22,

sone of which is under option, and all of which is high ratio stripping;

. making a possible estizated total of 7,000,000 or 8,000,000 tons for the

Cuba plant, |

p In the northwest part of Fidelity field there are som estinated

‘p,000,000 additional tons that will be added, bringing the estinated

total to cbout 28,000,000 tons.

In the face of the obvious limits in strip tonnage available in

the vicinity of the Company's properties now being mined a stucy is being

Undertaken to detersine as nearly as possible all of the strippable re-

: serves in Illinois, Indjane, West PSI AO Biennale. a0 dap eae

method such reserves can be acquired,

1036

ROARD OF DIRECTORS MEETING HELD SEPTEMBER 13, 1953

* and arransexcnts have been made to do this,

After discussion, upon motion duly made by Mr. Gobhart, and

duly seconded by Mr. Falkoff, the following preamblo and resolution

“wore ‘naninously adopted:

WHEREAS, this Company plans to purchase from Truax-

Traer Coal Company approximately 83 acres of land in

Perry County, Illinois, containing an estimated “

* 600,090 tons of coal, the total consideration boing

*$16,191.05; : .

NOW, THEREFORE, BE IT RESOLVED, that tho propor officers

of this Company, for and on its behalf, be and they here-

by are authorized and directed to purchase said tract

- from Truax-Traer Coal Company, upon the terns as sct

forth above. . .

The Chairman reported on the Conpengte activities in cccuir-

: ing stripping reserves in Osherede. ‘On Prospecting permits accuired

from the Federal Governnont oettioloney drilling indicates sozo |

18,000,000 tons of strippable conl with perhaps additional tonnage

available whon a nore conplete drilling progran is undortaken. This

tonnaze is located in Routt County near Haydon whore Colorado Uto Zlectric

Acsociation is building @ stoan genorating plont, the initial capacity

te be 225 megawatts with additional units boing planned for future

expansion, this Company is also attempting to acquire both strip and

Underground reserves in west central Colorado near Grand Junction

where tho Public Service Company of Colorado operates a steam gonerat-

ing plant. nes 3a :

In Illinois thie Company's reserves incroased $,000,000 tons

over production for the year ended July 31, 1963.

The proposed Presidont's letter and a report (Review of the

Year) for the annual report for the yoar ended July 32, 1963, vere

_@iscusced end approved as to cubstanco as drafted.”

os Tho Chatrnan then atated thet the next ore ‘of business was

1037

ci dene tT

- BOARD OF DIRECTORS MEETING ELD tay 8

The Chairman informed the Beard that. tho Conpany had.

Seeufres s eption to purchaso 312 aeres of and in HeDaneuch

and Scheyler Counties, Illinois (Industry Field) at a price of

NO we Sore eetstnng an esisted600;00 tons of strigptte

coal. It was brought out in discussion Yhat recent changes in

transpor tation costs | and | inproverent: in underground Fining cost

Piso, tte Inactry Field in a smexict dubia peottion dn

Planning a stripping development on this acreage, Land acqui-

sitions in this ares havo becn Linited to purchases or leascs

Which can be nade at approxinatoly faraland prices, The land

“tn quostion 4s adjacent to the other acreage that makes up the 0 on

nein boty of the Industry Pichd avd will fit into: any future 4

requircrents for developncnt. Tho area is boing actively farsod

“and pasturod by the Conpany at present.

After tho above discussion, upon motion duly mado by

Mr. Nugent and duly seconded by Kr. Thorsoa, oe

amble and resolution wore unanizously adopted:

WHEREAS, the propor officers of this

on Decezber 2,°1963 entered into an Cption

with Contract to Purchase with John Cc. Stone-

king and’ Bessie M, Stoncking, coverings the

sas¢ of approximately 372 acres of land

wh and Schuyler Count

E20 fone ef 2

at a price of $63,210.00,

execution of contract, and

700,00 por vost Senn wtien of contract,

agreescat contains the usual provision that

this Compeny ray terninate it at any, tine by

forfciture of th tho payments previously made;

SSCRE; BE IT RESOLVED, that the pro-

this Coapany, for and on its

behalf, bo ard they horcky ate exthorteed sd

directed to exercise said o

“Stoncking and Dessie H. $ king upon the

terns and conditions as sct forth avovo,

1038

EXCERPT FROM USC BOARD MEETING AUGUST 12, 1966

Mr. Morris outlinsd the need for additional stripping equipment

at the Fidelity Mine. Present equipzent will maintain evrrent produe-

tion rate in the present pit for approximately eighteen months, at uhich

time, with deeper overburden, the 1650-B would nocd holp to maintain

production of approximately 180,000 tons per month.

After mining all of the coal in the present location (Grecn

Pit), the estimated reserves at Fidelity that can be stripped is

23,000,000 tons. This is located in threo difforent areas end shows

overburden depths, rock and surface material that would require a machine

to help the 1650-B to mine it all out economically. Without a helper,

monthly production would be reduced from its current rate of 180,000 tons

to approximately 125,000 tons, with resultant cost increase. Also, of

this 23,000,000 tons, approximately 10,000,000 could not be minod at all

with the one machine (1650-B). The noed for additional help is thus es-

tablished as necessary.

Mr. Morris stated that after thorough investigation, a wheel,

Properly designed for the particular areas involvod, seemed to be the

dest solution.

The following information and estimates have been developed.

1. Bucyrus-Erie has a standard design and has built a wheel

-for Peabody and one for Truax. It is high enough for us,

. but for our purpose certain modifications of design seen

necessary. They put a price on their standard sign of

- $2,500,000, and an estimate on transportation and ercction

of $400,000,

1039

While we don't know exactly what the change in design xs

would nsed would cost, they have indicated that the en-

gincering and other faciore involved would cost somo~

where in the noighborhocd of another $100,000. So it

appsers we aro thinling about somthing over $3,000,000

for a Bucyrus machine properly designed and in pleco,

ready to op-rate.

We Sry Wah Wate aasding, Soares OF satsh vs eee An

operation. The W-2 is at Buckheart, tho W-3 at Banner,

and the W-l at Cuba. The W-3 was originally at Fidelity

Mine but the design of this particular machine did not

Properly serve the need at that mins and it was not

successful there. It was redesigned and moved to Bannor

and our cost and profit rocord there will indicate ite

satisfactory performance. ;

Seiten eer eS ab Sie gre Seles

satisfactory job.

We have all of the engineering information end blus

prints necessary to build the type of whoel wo nocd

at Fidelity. This is quite a cost saving.

The machine would be built higher, the digging énd

longer, and tho stacker end some longer and higher to

place the dirt back far enough in decp overburden to

avoid slides. We would use tha basé, motors and quito

@-lot of other material from the 5561 Marion shovel

“which is now a stand-by at Fidclity. °

1040

kh. Utilising our enginecring knowledge, blvo prints, and

experience, and. bailding the machine on tho site,

would effect considerable savings. Tho ropair parts

"dn inventory for the 5561 end also ropaix parts in

inventory for Wheels 2, 3 and b would be availablo

for tho W-5 machins.

S. Our estimate of the total cost, using our om peoplo

for the enginecring end supervision, ard contracting

for the welding, erection and so forth, is $1,600,000.

We feel our estirates are within rossop.end have in-

‘cluded in the above ewe $200,009 for cunthaneshes

and uncxpectod difficultics.

In our five-year budget for capital. expenditures, vo

_ Aneludod $250,000 in 1965 and $1,750,000 in 1967.

We can build this machina and havo it in oporation :

within fourteen months. The best estimate from Bucyrus |

is eighteen months and guctehiy longer.

After discussion, upon mo¥jon duly made by Mr. Nugent, and

seconded by Mr. Thorson, the follo:ring resolution vas unani-

ascly adopted: in he

RESOLVED, that management bo authorized to procecd

with the necessary purchasing and contractual ar~

to build Wheel No. 5 for uso at the

Fidelity Mino at a cost of not to exccod $1,600,000.

1041

THE UNITED ELECTRIC COAL COMPANIES

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors has fixed the close of business on 29, 1954, as the record date for

the determination of stockholders entitled to notice of and to vote at Meeting.

If you do not expect to be present at the Meeting, please sign and mail the enclosed proxy in the return

envelope provided for that purpose. No postage is required if mailed in the United States.

PROXY STATEMENT ="

intends to present or knows will be presented by others. Should any other matter properly come before

the Meeting, it is the intention of the proxies named in the enclosed proxy to act upon it according to

their best judgment.

2. The sal vic Malka sik se anic clo wend

atint Gnd het Adee When the proxy in such form is properly

returned the shares represented thereby will be voted atthe Annual Meeting. Any stockholder giving a

Proxy in such form has the power to revoke it at any tine prior to its being voted.

of September 29, 1954, the

mon stock of $5 par value each authorized, of which 677,920 shares were issued and

stockholder has one vote for each share held. In the election of Directors, the holders of stock do not

have cumulative voting rights .

CONF-660930

DX 116

nuclear power briefing

for the COAL INDUSTRY

September 29-30, 1966

Oak Ridge, Tennessee

| ee LS

Z % 2 f: — ‘> \ # ayy

[ eee ray

See <<

—E

Division of

Techrical

Informetion

1043

Nuclear Fuel Fabrication

by James H. Hill

Vice President, United Nuclear Corporation

It is a pleasure for me to be in Oak Ridge to participate in the

nuclear power briefing for the Coal Industry. I notice that Dr, Weinberg

is speaking this evening on the subject "Uranium and Coal - Partners or

pnivals?". I suspect that he is going to suggest that we should be partners.

In any event it is in that spirit that I accepted the invitation to be here.

The. purpose of this paper is to present a brief account of the

various steps in taking uranium from the earth and converting it into a

finished reactor core for the production of central station electrical

power. The details involved in “burning” uranium are somewhat more complex

in comparison with the burning of coal. However, some of the complexity

of the subject can be attributed to the nuclear jargon, mathematical equa-

tions, and chemical formulae which are commonly used in the industry. As

far as fuel fabrication is concerned I thimk that it unfolds in fairly simple

steps for discussion as follows: 4

Mining and Milling -

Conversion of 308 to UF,

Enrichment of UF¢

Production of U0> ‘did Pellets

Fuel Tube Loading - Welding and Assembly

Fuel t

Market Development for Fuel Fabrication

Price Trends

I will limit my remarks to a brief discussion of each of these steps related

to the fabrication of nuclear fuel for commercial power reactors.

Mining and Milling

First the uranium ore must be located, the ore body developed and

then mined, A major portion of the mines and mills is located in New Mexico,

others are located in Wyoming and Colorado. The ore is usually hauled to

the mill in large trucks,

The purpose of the milling operation is to recover the U. from

the ore, The ore that is being mined today contains about four to five

pounds of U,0g. The mill that I will describe is designed to process about

3,000 tons of ore per day by the alkaline leach-caustic soda precipitation

¥ yy step in the milling operation is the crushing and screen-

ing of the in a closed circuit to produce a crushed product of less than

alf an inch in size, Some of the ores are wet and must be put through

* rotating kiln-type dryer between the crusher and the screens, Next the

ore is introduced into « ball mill grinding end classifier circuit in which

*t is reduced to the size of extremely fine sand, A slurry and solution of

‘nis finely ground ore is pumped to a large tank with slowly moving rakes

1044

in the bottom, The ore slurry settles to the botton and is t. _-umped to

a leaching circuit where the uranium goes into solution by reaction with

sodium carbonate. The uranium solution is separated from the worthless sands

md filtration and is then reacted with sodium hydroxide. It precipitates as

Og which we call “yellowcake". The “yellowcake" is filtered from the

pF and heated in a furnace. Heating at about 1600°F converts the

vanadium in the “yellowcake" to a water soluble compound. The hot material

drops into a tank of water and the vanadium dissolves. The vanadium is sold

as a by-product. Again the “yellowcake", now free of vanadium and assaying

86% uranium oxide, is filtered, dried, and packed in drums that contain 1,000

pounds of finished product ready for shipment. It takes about 4,000 to 5,000

tons of this material (U30g) to fuel an 800 Mwe reactor over its thirty-year

lifetime. The cost of the U30g is about 27% of the total cost of a reactor

core.

Conversion of U30g to UF,

The next step in fuel preparation is the conversion of U,0g into

UFg, the feed material for the gaseous diffusion enrichment plants, Two

conversion processes have been in general use in this country. The process

used in the Government plants involves the removal of impurities from the

U30g in nitric acid solution by an organic solvent extraction process. The

resultant uranium oxide is hydrofluorinated and converted to a green powder

called uranium tetrafluoride (UF4) -- additional treatment with fluorine

converts it to UF, The second method, used in industry, is more direct. It

eliminates the = gps extraction step and carries the impurities through

to the UF, phase where they are remove” hy distillation.

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.