CHAPTER 1 URANIUM INDUSTRY 1976 AND ITS PROBLEMS
| Jurisdiction | United States |
(Nov 1976)
URANIUM INDUSTRY 1976 AND ITS PROBLEMS
Casper, Wyoming
When Rodney Knutson finally convinced me to participate in this program, and assigned me the topic "Uranium Industry 1976 and its Problems," he was kind enough to forward with the assignment a copy of the Subpoena Duces Tecum served June 22, 1976 on the industry companies captioned "The United States, In re Grand Jury Investigation of the Uranium Industry." Even a lawyer from Casper, Wyoming, could tell this was a problem. The Department of Justice mailed a letter in advance of the Subpoena which read in part:
"Enclosed is a copy of a Subpoena, the original of which will be served shortly by the United States Marshal. The Subpoena has been issued by a Grand Jury sitting in the District of Columbia.
The Grand Jury is investigating possible violation of antitrust laws in the mining, milling and sale of uranium and believes that your company may have information that will be of assistance in determining if such violations are occurring."
The letter goes on to suggest the procedure to be followed "to minimize your inconvenience in complying with the Subpoena" by forwarding all documents to the Department of Justice by date of appearance, the documents requested involving some 38 separate areas described in 14 legal sized pages.
Nearly every company involved in the uranium industry received this Subpoena, and the time and money involved to comply has been of major consequence. At this writing, the results of the Grand Jury investigations are not available, and I have not been involved except on the edges, but it would be an oversight not to mention the Grand Jury investigation in this paper involving the problems of the industry, as it has had a significant disruptive effect on an already up and down industry.
Another problem which is also of major significance, and some see some relation to the foregoing, is the Westinghouse litigation. This all started about a year ago when Westinghouse Electric Corporation notified 27 utilities that
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it did not have the 65 million pounds or more of uranium that the company had agreed to sell them over the next twenty years to supply the reactors which were also sold to the utilities by Westinghouse. Westinghouse explained that the only way it could get the uranium oxide, or yellow cake, for the utilities would be to buy it at prices so much higher than those in the utility contracts that it wouldn't make commercial sense, and it was excused under the commercially impracticable section of the Uniform Commercial Code.
The utilities haven't seen it quite that way and have gone to court (most of the cases being consolidated in the United States District Court, Richmond, Virginia), and if Westinghouse could be held to its contracts, it is estimated that it would cost Westinghouse $2 billion over the next two decades (based on the difference between today's spot market price of $40/pound for uranium and the average $9.50/pound specified in the contracts). Whatever the outcome of the suits, since disclosure by Westinghouse of its supply difficulties, the price of uranium has spurted and supplies remain tight — whether this is a problem or not depends on where you sit. It is a fact that Westinghouse is the biggest reactor supplier to the nuclear industry...Again, I have no firsthand knowledge of this litigation, but I have been involved with some purchase contracts where the price paid for yellow cake by utilities approaches the $40 spot price where the purchaser had thought it had prior valid contracts with Westinghouse for $8/pound.
The Wall Street Journal article of September 30, 1976, suggests a relationship between the Westinghouse dispute and the Justice Department Grand Jury investigation on price fixing in the industry by referring to investigations by Westinghouse lawyers of a cartel in Australia and France and stating:
"The revelations are especially meaningful for the fuel they could add to the Justice Department's previously announced investigation into possible uranium price fixing in this country. Westinghouse could use any convictions of uranium purchasers or brokers on price fixing charges as evidence that it was the unwitting victim of an illegal scheme that it couldn't have anticipated when it signed the sales contracts."
The Wall Street Journal article appears to have been clairvoyant in that on October 15, 1976, Westinghouse filed an antitrust suit in the U. S. District Court in Chicago naming 29 uranium supply companies as defendants. Westinghouse
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charged that the 29...
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