ML12235A895

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SECY-78-402: NRC Classification Review Committee Decisions Regarding the Classification of Information Concerning the Status of Investigations of Inventory Differences
ML12235A895
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Issue date: 07/24/1978
From: Dircks W
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SECY-78-402
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{{#Wiki_filter:Ju'ly 24, 1978 SECY-78-402 UNITID 3T A T!S IUCLEAA REGULATORY COMMISSION IN Ft:>RM*A Tl ON REPORT For: rfie Cammi ssioners From: ÅIi 11 i am J. Dircks, Chai nnan, Cl ass i fi ca ti on Review Cammi ttee Thr!:_

Subject:

. Lee V. Gossi ck, Executive Director for OperatioÇ NRC CLASSIFICATION REVIEW COMMITTEE DECISIONS REGARDING Dis,:ussion: Con*:act: John W. Clark, MPA 492--7721 THE CLASSIFICATION OF INFORMATION CONCERNING THE STATUS OF INVESTIGATIONS OF INVENTORY DIFFERENCES ro report to the Commission recent decisions on the c:lassification of inventory difference events. On May 2, 1978 the Classification Review Committee held ct meeting to decide whether the reporting of a nuclear material inventory difference such as the recent event cl t the Babcock and Wilcox, Nuc 1 ear Ma teri a 1 Divis ion, Apollo and Lynchburg, Pennsylvania, should be classi-fied. Enclosure A ( 4/23/78) is the memo that scheduled the meeting and provided background infonnation on this issue. ,a,fter considerable debate and discussion, the Committee made the following decisions. 1. In the case of the recent Babcock and Wilcox inventory difference, reporting of the existence . of the event should not be classified.

2:. Generically speaking, reporting of the occurrence of subsequent events of this nature should also not be classified, although the actual amounts of inventory differences will remain classified. This. decision is the same whether or not the event is categorized as an abnonnal occurrence *

.3:. The Cammi ttee action should take the fonn of a decision, subject to EDO concurrence, which would be transmitted to the Commission in an Infonnation Report. The Cammi ttee votes on the ri rst two decisions were 6-1, with the Division of Security casting the dissenting vote in each case. The third decision was unanimous. Enclosure 13 (Z/J/781, which contains the minutes of the Committee meeting, provides additional details. The dissenting views of the Division of Security are discussed in Enclosure C (7 /17 /78). Pur:>ose.:

The Commissioners Coordination: The paper has been concurred in by all members of the Committee. /4_tftJ. Willia. Dircks, Chairman Classification Review Committee

Enclosures:

A.. Memo to Classification Review Committee from Robert Whipp dtd. 4/23/78 B. Minutes of Classification Review Committee dtcl.. 7 /13/78 C.. Separate View:s of the Division of Security dtd. 7/17/78

Enclosure A MemQ to Cl1ss1f1cation Review Committee from Robert Whipp dtd. 4/23/78

NUCLEAR REGULATORY COMMISSION WASHINGTON, D. C. 20555 Enclosure **A MEMORANDUM FOR: NRC: Classification Review Committee Members (See attached list) FROM: Rol:,ert F. Whipp, Secretary NRC Cl ass i ff ca ti on Review Cammi ttee SUBJl:'.CT: NRC CLASSIFICATION REVIEW COMMITTEE MEETING A me,!ting of the NRi:: Classification Review Committee is scheduled for 2:00 p.m. in RC)om 6110, Maryland National Bank Building, on May 2, 1978. The purpose of this-meeting is to develop the basis for a recommendation to the Executive Oire,:tor for Operat*ions or to the Commission on the matter identified and dis-cusst!d below. The l)ivision of Security believes that information on the status of an investi-gation of an "Inventory Of fference," when the f nventory difference is cause for an investf gati on or cause for reportf ng ft to the Federa 1 Bureau of In-vest*i gatf on, should be classified as "National Security Infonnation. 11 This fnfo1~mation would rt!main classified until the NRC and the facility involved have positive evidence that the Special Nuclear Material has not been stolen or o*:herwise divertt!d for illicit purposes. The Division of Security also belftwes that reporting of the incident to the Congress can be accomplished through classified reporting if necessary. The Offices of Nuclear Material Sa fe*:y and Safeguards, Inspection and Enforcement, and Management and Program Analysis do not think this information should be classified. 1 s the 11genda for the May 2 meeting. is a report of a specific case {"PROPOSED ABNORMAL OCCURRENCE - NUCLl~AR MATERIAL INVENTORY ANOMALY") dated April 4, 1978, which was proposed for reporting to tht! Congress as an abnormal occurrence under Section 208 of the Energy Reorgani:?ation Act. is a copy of a memorandum from the Director, Dfvision of Security, to the Acting Director, Office of Management and Program Control. This memorandum expresse!; the opinions of the Division of Security as to why the proposed abnonna 1 occurrence report should be classified. Enclosures 4 and 5 are memorandums from the Di rectors of the Offices of Nuclear Material Safety and Safeguards and Inspection and Enforcement, which contain their views on the matter.

~- ~-

2.

Please plan to atter1d this meeting or advise me of your designee. Enclcisures: As stated CONTACT: Robert F. Whipp INFOSEC 42-74476 f?~1.~ Robert F. Whipp, Secretary NRC Classification Review Committee

LIST OF ADDRESSEES Wi111arn J. Dircks, EOO Kennuth Pedersen, OPE Ernst Volgenau, I&E T. Englehardt, OELO J

  • FH, ton, ORR R. B1"ady, DOS N. Haller, MPA~ zr:n,~

R. Whipp, DOS R. B:Jrnett, NMSS Voting Voting Voting Voting Voting Voting Voting Non-Voting Non-Voting

ENCLOSURE 1 April 28, 1978 AGENnA FOR NRC CLASSIFICATION REVIEW COMMITTEE MEETING MAY 2, 1978 - 2:00 P.M. ROOM 6110, MARYLAND NATIONAL 9ANK BUILDING

      • I11troductory Remctrks by Chairman
      • B,ickground:

Orgatriization and Purpose of NRC Classification Review Com11ittee

      • Chronology of Evemts and Purpose of Meeting
      • R1!marks:

Office of Inspection and Enforcement (Norman Haller)

      • R1!marks:

Oivisfon of Security (Robert Whipp

      • o*rscussion by Chssification Review Committee Members
      • Formulation of R1~*commendati on to the Executive Di rE!ctcr for Operations

MEMOR~NOUM FOR: \\ FROM:

SUBJECT:

I INl 0 11 11 !. I/\\ 11 *; I NUCLE/\\11 Ill GULA TUIIY COMMISSION WASI IINC; I ON, IJ. C:. ;w!,!,!i /\\PR 4 1978 E. G. Case, Acting Director, NRR C. V. Smith, Director, NMSS S. Levine, Director, RES E. Volgenau, Dfrector, IE R. B. Minogue, Director, SD H. K. Shapar, Executive Legal Director S. H. Hanauer, Technical Advisor, EDO J. Fouchard, Director, PA R. A. Hartfield, Acting Director? Off-ice of Management Information and Program Control ENCLOSU1E 2 PROPOSED ABNORMAL OCCURRENCE - NUCLEAR MATERIAL INVENTORY ANOMALY Enclo~;ed is a Commission paper with a proposed Federal Register Notice in re~1ard to a nuclear material inventory anomaly at the Babcock and Wilco,: Company, Nuclear Materials Division, Apollo and Leechburg, Pennsylvania"" The event is under ccinsideration as an abnormal occurrence.since evidence to date indicates a substantiated inventory discrepancy which is judged to be significant relative to normally expected performance and wt, i ch may be causi:!d by substantial breakdown of the accountabi 1 i ty system or by theft or diversion. (Example I.C.3 of the abnormal occurrence policy statement.) The specific cause of the incident has not yet been determined. Corrective acti ans to be taken by the 1 i censee and the NRC wi 11 be determined after the incident has been more thoroughly investigated. It should be noted that a similar event at this facility was reported as an abnonna 1 occurrEmce in NUREG-0090-5, ""'Report to Congress on Abnormal Occurrences, July-September 1976. 11

( !IPR 11318 Perl.. V. Gossick's memorandum to you dated August 23, 1977, MIPC will set up an infonnal briefing with the Commission within 3 duys after the uvent is sent tel the Commission for review. The proposed attendees are lE, NMSS, MIPC cmd perhaps ADM/INFOSEC. It is suggested that IE will take the lead at the briefing. Your review, comments and written (or telephone) concurrence are requeisted by close-of-business Thursday, April 6, 1978. If you have questions or wish to discuss details, please contact J. Crooks or P. BobE~ of my office at 492-7735. Enclc,sure: Commission Paper cc w/encl: L. V. Gossick, EDO

0. Eisenhut, NRR (2)

E. Jc,rdan, IE (2) R. Fenner, ELD G. Gcwer, IE G. Beveridge, NMSS H. Scott, RES R. E. Alexander, SO M. Taylor, RES J.. F. Whipp, ADM/INFOS EC (__ ~ -~v ~\\ ~ R. A. Hartfield, Acting Director Office of Management Information and Program Control

FOR: FROM: PURP0:5E: DISCUSSION: Contai:t: The Cc,mmi ss i oners Lee V. Gossick Executive Director for Operations ABNORMAL OCCURRENCE RECOMMENDATION - NUCLEAR MATERIAL INVENTORY ANOMALY Approval of an abnormal occurrence determination. Enclosure l is a proposed determination of an abnormal occurrence involving a nuclear material inventory anomal.y at the Babcock & Wilcox Company, Nuclear Materials Division, Apollo and Leechburg, Pennsylvania. Example I.C.3 of the abnormal occurrence policy statement notes that any substantiated inventory discrepancy which is judged to be significant relative to normally expected performance and which is judged to be caused by substantial breakdown of the accountability system, can be considered an abnormal occurrence. It should be noted that the specific cause is still under investigation. When the cause has been identified and the corrective actions defined, the event will be updated either by a Federal Register Notice and/or the next quarterly report to Congress. It should be noted that a similar event at thi1 facilitv was re!ported as an abnorma 1 occurrence in tJUREG-0090-5 ;* 11Report to Congress on Abnormal Occurrences, July-September 1976. 11 Pending completion of the investigation, it cannot be concluded that the events arc related. No press rel~ase related to this event was issued. Following approval, the Office of Congressional Affairs

  • will notify the Congressional Committees of the intent to publish the Federal Register Notice.

R. A. Hartfield, MIPC 492-7:334

COOIWINATION: SCHEDULING:

Enclosure:

The Offices of Nuclear Reactor RC!Jt1l,1tio11. !luclt~Jr Miltcr"ials Safety and Safeguards, Nuclear Hegulatory Rescurch, Inspection and Cnforccmcnt, Stau<l.ir<ls Development and Public Affairs concur. The Executive Legal Director has no legal objections. Staff review was completed in mid-1\\pril 1978. Publi-cation should be made by April 25, 1978 *. Lee V. Gossick Executive Director for Operations Proposed Federal Register Notice Note: Commissioner':s comments should be provided directly to the Office of the Secretary by close-of-business _______ _

  • --*-------------.r------

( ). ( NUCLEAR REGULATORY COMMISSION ABNORMAL OCCURRENCE EVENT NUCLEAR MATERIAL INVENTORY ANOMALY !iection 208 of the Energy Reorganization Act of 1974, as amended, requi1~ed the NRC to disseminate information on abnormal occurrences (i.e., unscheduled incidents or events which the Commission determines are s*ignificant from the standpoint of public health and safety). The fol101oJing incident w;3s determined to be an abnormal occurrence using the ci-iteria publish1::d in the FEDERAL REGISTER on February 24, 1977 (42 FR 10950). Appendix A (Example I.C.3) of the Policy Statement notes that a substantiated loss of special nucleir material or a sub-stantiated inventory discrepancy which is judged to be significant relative to normally expected performance and which is judged to be caused by substantial breakdown of the accountability system or by theft or diversion, c:an be considered an abnormal occurrence. Date and Place - On March 24, 1978, the Babcock and Wilcox Company, Nuclear Materials Division, Apollo and Leechburg, Pennsylvania, reported to the NRC an excessive inventory difference in their highly enriched uranium operations. This report was based on the results of their February 20, 1978 physical inventory covering the period December 20,

  • ------cmu-----...,,--r----~

\\ 2 - 1977 through February 20, 1978. Natur1~ and Probable 1;onseguences - The licensee notified the MRC that the inventory differ1:ince (a loss) for the highly enriched uranium opera*~ions significa1.11tly exceeded regulatory requirements for the Limit of Error of the Material Unaccounted For (LEMUF). Significant inventory differences are of concern because of nucle,:1.r materials safeguards considerations. Consistent with NRC polic_v, the licensee shutdown the plant on March 23, 1978 and initiated plans for a reinventc,ry scheduled for March 29, 1978. Since December 7977, the licensee has been in the process of terminating the hi gh"ly enriched uranium operations. All manufacturing operations have been completed and only scrap recovery operations will restart after the inventory. An NRC inspector was onsite at the time of the initial report. Additional inspectors were onsite beginning March 27, 1978 to monitor the licensee's review, to observe and test the reinventory, and to investigate indepenc.1:mtly the cause(s) of t,he event. Prelililinary findings indicate the causes of the excessive inventory difference

                            • n******************* **************************

\\. may be attributed to sJmpling and measurement problems cxpc:ricnccd in measuring process solutions and scrap residues. Results of the :reinventory should be available no later than April 28, 1978._ Thi:s event is actively being investigated both by the licensee and the NRC *. When a final NRC report covering the cause of tne event and any necessary corrective actions are completed, this notice will be updated. A similar event at this facility was reported as an abnormal occurTence in NUREG-0090-05, "Report to Congress on Abnormal Occurrences, July--September 1976." For the tluclear Regulatory Commission Samuel J. Chilk Secretary of the Commission Datecl at Washington 1, D.C. this day of Apr~l 1978.

ENCLOSURE 3 . b*- .~- '"- ~ ~~PR 1 C 1978 MEMORPJ!DUM FOR: Richard A. Hartfield, Acting Director FROM: Office of Management Infonnation and Program Control Raymond J. Brady, Director Division of Security, ADM

SUBJECT:

MEMORANDUM OF APRIL 4, 1978, ENTITLED "PROPOSED ABNORMAL OCCURRENCE - NUCLEAR MATERIAL INVENTORY ANOMALY" lhe Division of Security was recently placed on distribution for 11ab-11prmal occurrenc1! 11 reports and we received the aforementioned memorandlJTI to multiple addr*1!ssees dated April 4, 1978. After revi e\\-,ing *this memorandum we believe this report of an abnonnal occurrence relat:*lng to a significant inventory discrepancy should be classified CONFil)ENTIAL ** NATIONAL SECURili' INFORMATION. The menorandlJll suggests that ar,i investigation is underway and that it is not now known whether the loss. is due to a breakdown of the accountability system, or ty theft or by d:*f version. lt is our opinic,1ri that this matter should be classified for the following r-easons:

a. NRC canr11:>t evaluate the significance of a threat or determine that it *fs a hoax, due to lack of knowledge as to whether a theft or* diversion has occurred;
b. Terroris.ts or other malevolent groups could be encouraqed to carry out a hostage or ransom action against the facility or others u:sing the lack of infonnat1on on the part of NRC and the indu:stry as leverage to force accessions to their demands;
c. If the material has been stolen or diverted, we have advised any ter,**orist or adversary groups that we are now searching for the missing material.

Premature disclosure of this inforrna1:1on could frustrate search and recovery operations. We realize that through nomal reporting reouirernents the infonnat1on in this merr.oranclum may already be publicly available. He believe, how-E!Ver, that frrrnecliate steps should be taken to detennine whether this 1nfon:iat1on is, in f3ct, publicly available and to recall it to the maximum extent p1ossi bl e. Additionally, action should be taken to ore-c:lude pr~ature disclosure, i~---~-~~-- f~_tu_'.~. '.; J.:;.1;~.;:;;:~~~~a-~~-~~-:1e&******* C!.ASSI?'.:;) ?.Y t71,,,-f /,,Yfa.'77"-~ .r'

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) I SUPNAME~ DATIi: H,a also recogniz1:! that all abnormal occurrences do not warrant security c'I assification a1i1d that reporting of such occurrences is required by S,!ct1on 208 of tbe Energy Reorqanization Act. We do believe, however, tl,at necessary r1:iporting can, in cases such as this one, be accomplished on an unclassifi1~*d basis, by advising Congress and the public without p1"0v1ding infonna.tion \\vhfch might assist a terrorist or adversary group in perpetrating a meaningful threat or hoax. The Division of Security will be glad to assist the offices involved in d,!velop1ng procedures to prevent premature disclosure of classified in-formation related to abnonnal occurrences. CONTACT: Robert IF. Whipp INFOSEC: 42-74471) be,:: Lee V. Goss*ick, EDO D. J. Donoghue, ADM RFHhipp:ech 4f7/78 Raymond J. Brady, Director Division of Security Office of Administration 'j)c;,-C~-. I h,t;.,). Pt,~ J:: *.l. *. G~o/****** . h;;J-{C Dl\\"'n"O l:.* ~2---il8 ***********************************-* ~~ Form A.EC-318 (R.e-T. 9-5:) AJ!CM 02*0 ,:!r "* ** eoY JtNM NT....,.. TINO o....,c.. **7****--*H ................................................................... ___ _ ::::=========--~-===--=---------- --*---*- -- --=-.;..;...:..----

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  • WASHINGTON. D. C. 20555 ErlCLOSURE 4 April 1~, 1978 MEMORANDUM FOR:

Lee V. Gossick, Executive Director for Operations F~OM: Ernst Volgenau, Director Office of ~nspection and Enforcement

SUBJECT:

MEMORANDUM OF APRIL 4, 1978, ENTITLED 11PROPOSED ABNORMAL OCCURRENCE - NUCLEAR MATERIAL INVENTORY ANOMALY 11 By annotation to Raymond J. Brady's memorandum ori this subject, dated April 10, 1978, addressed to Richard A. Hartfield, you asked if I agree

  • with the Divis*ion of Security's proposed classification of the Potential Abnonna l Occurrence report relating to an excessive inventory difference at a licensee facility. Mr. Brady 1s identified concerns involve the value of the information to terrorists or other malevolent groups, its potential use,:n a hoax, and its possible impact on search and recovery operations.

While I recognize the sensitivity of the inventory numbers, I do not agree that the event (less numbers) should be classified, and do not feel tha:t the stated reasons for classification of this information are accurate or compelling. Further, such chssification action will complicate communications between licensees, Regional Offices, and Headquarters el*~ments. Another germane consideration is the clearance status of some 'licensee facilities which may be affected by a future 1:!vent and the pE!rsonnel clearances of licensee employees who may know of i! inventory difference, and notice the required shutdown and re inventory.

r strongly recommend that the proposed classification not become effective.

However, should it become so, I request that (1) the items of information he declassified at the end of six months or upon completion of the 1nvestigation, whichever is later (in consonance with NSDM 347), and (2) the Division of Security issue specific and definitive guidelines on what items of information are classified to enable this office to review ctnd adjust our reporting and document control procedures. C... .... N. M. Haller / R. J. Brady.... R. A. Hartf-i e 1 d E. L. Jordan c~Cf;, ~ ~r 1:f-~~- - t" Ernst Vol genaU:,* Di rector Office of Inspection and Enforcement

UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D. C. 20555 ME~lCRANDUM FOR: l.ee V. Gossi ck Executive Director for Operations FROM: C:lifford V. Smith, Jr., Director Office of Nuclear Material Safety and Safeguards ENCLOSURE 5

SUBJECT:

R.J. BRADY MEMORANDUM TOR.A. HARTFIELD, [IATED APRIL l O, 1978 In the subject merworandum, the Division of Security recommends the .classification of,an April 4, *1978 memorandum, entitled "Proposed Abnormal Occurrenc:11? -. Nuclear Material Inventory Anomaly." The Office of Nuclear Material Safety and Safeguards does not agree for the following reasons. Classification of an event like this is pre:edent setting. These events have not been classified in the past and are usually generally known to the*public, particularly in the area of the facility in question. Furthermore, classification of this kind of in-Fonnation may be of relatively minor concern to the fuel cycle fac*ilities that have an in-place classification program in*:;upport of DOE and DOD requirements, *but to the other facilities it would have a major impact,*requiring an extensive effort and signi-ficant costs. Also, NMSS does not agree with the DOS arguments concerning hoaxes, hostages, and reCO\\'ery operat"i ons. There is no intention to rel ease the actual amount c1f the inventory differences (ID) in the description of the*"abnormal occurrences". There has been an extensive study of classification,c,f information of this kind. The rational given in the study, when it called for temporary declassification of IDs, was that the key to a* :s;uccessful hoax is knowledge of the amount of the ID,

  • not merely its occ1J:rrence.

IDs are almost never zero; they occur with every physical inv1eintory, and even a small ID is not an iron-clad gua1~ntee that no theft or diversion has occurred. Thus, the mere disc:losure of the occurrence of an ID, without giving its size, should not be viewed as foformation that would be helpful to a terrorist or to*t~e would be perpetrator of a hoax. Clifford V. Smith, Jr., Director Office of Nuclear Material Safety and Safeguards

Enclosure B Minut:es of Classification Review Committee dtd. 7/13/78

Enclosure B JULY 13, 1978 MINUTES OF THE NRC CLASS I FI CATION REV! EW COMMITTEE MEETING MAY 2, 1978 SUBJECT OF THE MEETING: PROPOSED CLASS I FI CATION OF STATUS OF INVESTIGATION Of II INVENTORY DIFFERENCE" WHEN SIGNIFICANT INVINTORY DIFFERENCES ARE INVOLVED ANO WHEN NRC DOES NOT KNOW WHETHER DIFFERENCE IS DUE TO ACCOUNTING ANOMALY OR TO THEFT OR DIVER-SION :>F SNM PROCE:JURAL MATTERS The f*irst meeting of the NRC Classification Review Committee was convened at 2:00 pm in Room 6110, of the Maryland National Bank Building, under the Chair-manship of Mr. William J. Dircks, Assistant Executive Director for Operations. Presef1t were: COMMI1"TEE MEMBERS William J. Dircks, AEDO (Voting) James Murray (Acting for T. Engelhardt, ELD) (Voting) John G.. Davis (Acting for E. Volgenau, I&E) (Voting) Joseph M. Felton, ORR (Voting) Raymond J. Brady, SEC (Voting) Kenneth Pedersen, OPE (Voting) Norman Haller, MPA (Voting) Robert F. Whipp, SEC (Non-Voting Member) - Secretary to Committee

I' __________________,_ OTHER ATTENDEES E. M. Howard, I&E Richard F. Blackmon, I&E Paul E. Bobe, MPA John W. Clark, MPA Fred Crane, NMSS The meeti-ng was openE!d by the Chairman who noted this to be the first meeting of the Committee. Mr. James Murray, ELD, noted that in those cases where the designated Commit-tee member was not present, the individual representing that member had to be in a designated acti_n!; capacity to register a qualified vote on the issue at hand. DISCUSSION At the request of the Chairman, the Secretary of the Committee discussed the background, organization and purpose of the Committee. In response to a question from the Chairman, it was noted that Committee actions can be in the form o-f a vote for or against classificat1on of a specific matter or in the form of a recommendat'ion to the Executive Director for Operations or the Commis~:ion as appropr*iate.. The sequence of events leading to this meeting were then briefly outlined by the Secretary who indicated that the Division of Security had received a copy of a proposed 11.Abnormal Occurrence Report to the Congress" regarding a significant invento~v difference at Babcock and Wilcox Company, Nuclear

3. Materials Division, Apollo, Pennsylvania. Upon review of. the report, the Division was of the opinion that it should be classified because of the un-certainty as to the cause of the inventory difference. The Chairman sug-gested that the Comm*ittee had three obligations in this case:

a. To consider the case at hand (whether the report of II Proposed Abnormal Occurrence - Nuclear Material Inventory Anomaly,"

dated April,q., 1978, should be classified while a reinventory and/or other investigation was under way to determine the cause of the inventory difference).

t. To consider the generic issue with respect to future cases.
c. To formulate,a recommendation to the EDO or the Cammi ssion.

A general discussion -followed with IE representatives indicating that a re-invent,:,ry of the B&W,L~pollo facility had been completed. This reinventory resolv1!d the inventory difference and there was no ongoing investigation into the ma,:ter. Therefor1~*, the issue *in this case was no longer a problem. Mr. Haller,, MPA, submitted a list of pros and cons entitled "CLASSIFICATION MUF EVENTS." A copy of this paper is appended to these Minutes. Also at-tached are memoranda from the Offices of Nuclear Material Safety and Safe-guards and Inspection and Enforcement noting their reasons against classifi-cation. The discussion then turned to the generic problem of classified vs. un-classified reporting of future significant inventory differences during

  • ,*:hi ch there is a peri o :I of time when NRC and the facility do not know whether theft or diversion has occurred.

4. Genetally, all attendees, except the Division of Security, were in agree-ment that general knowledge of the fact that an inventory difference ex-is:ed \\*dthout specific details and without quantities should not be classi-fied. The Division of Security felt that the uncertainty concerning theft or diversion was the main issue in question as opposed to the knowledge that an inventory difference had occurred. It was noted that inventory balances are almost never zero. Attendees, except the Division of Security, felt that the more s'ignificant data from a safety and safeguards point of view is the specific inventory difference amounts commonly referred to as MUF data. In respons.e to a question from the Division of Security, Mr. John Davis, IE, indicated that the IE initial response to nuclear threats would be thE! same i rres pecti ve of whether an apparent inventory difference existed. The fc.ct that a nucl1~ar threat might subsequently be determined to be a hoax was net a significant factor in the initial response action. Other discussion note!d a number of factors which would argue against and re-strict NRC's ability to keep similar reports classified in the future. These included local knowledge that a problem exists when the facility is c1osed down fJr reinventory, local press coverage, unclassified telephone conver-sation::; between the facility, regional office and headquarters, uncleared personnel at the facility, 1 ack of secure telecommunications between a 11 instal'!ations involved, the need for reporting to the Congress and the public under Section :~oa of the Energy Reorganization Act, the fact that NRC is committed to openness and classification may severely hamper the flow of information in future cases and adversely effect resolution of the problem, and the general impracticality of implementing classified reporting under existing NRC regulations.

5.

In response to quest:ions from the attendees, the Division of Security re-iterated their opini<ln that reporting of significant inventory differences should be classified until NRC has reasonable assurance that theft or diversion has not occurred; that NRC is at a disadvantage due to lack of specific information for evaluating the credibility of a threat; that terro:--ists could use the lack of knowledge on the pa-rt of the NRC for hos-tage or other acti on:s. Al though NRC has not implemented NSDM 347, 1 anguage in support of classification was noted as contained in the National Security Decision Memorandum :347 and the National Security Study Memorandum 216. The following language was suggested as being indicative of the tone of NSSM-216 and re*l ated to the mc1tter under discussion. "There is a general agreement within the study group that a theft or nuclear mate!rial that is used to fabricate and detonate a nuclear weapon represents a clear threat to national security. However, the us1: of safeguards information to make a single threat of violence rather than to commit the act itself is more difficult to categorize as affecting the national security. If repeated threats disrupt the functioning of government, however, it can be assure!d that the national security is affected." "In the event of suspected theft or diversion, information con-cerning the MUF and the details of the investigation should be ~lithheld from the public until either the material is recovered or its apparent loss is reasonably explained." Opiniors were expresse!d that perhaps a reinventory following a significant inventory difference may not qualify as an investigation within the legal

6.

defir1ition of the t1!rm "investigation." The majority opinion was that a report such as the Proposed Abnormal Occurrence Report," containing no quantitative data was only a general description of this event, and did not represent the detailed information foreseen in the NSSM statement. COMMITTEE ACTION A vat~ was taken of the Committee with respect to classification for this and ~Jture cases, with the following results: RE COMM EN DA TI ON S AGAIN~T CLASSIFICATION John G. Davis, I&E (Acting for E. Volgenau) Kenneth Pedersen, OPE Norman Haller, MPA Joseph Felton, ORR James Murray, ELD (Acting for T. Engelhardt) William Dircks, AEDO FOR CU1SSI FI CATION Raymond Brady, SEC The Division of Secudty requested the Chairman to forward the matter to the Corr:mission through the Executive Director for Operations, noting the Division of Security's views and concerns, and to recommend a course of action. After further discussion, it was agreed that a paper would be prepared informing the Commission of the Committee's decision not to classify the status of an investigation, and indicating that this policy would be followed with respect t:o any future incident unless notified to the contrary

~---------------------- 7. by the Commission. This paper would include the minority views of the Divi-sion of Security. Mr. Haller, Director, MPA, was requested to prepare the paper-. The meeting was adjourned at 3:00 p.m. f),/4:71.,yf,? Robert F. Whipp, Secretary

MPA 4-28-78 CLASSIFICATION MUF EVENTS PROS CONS

1) Cannot evaluate significance 1 ) Can't protect because conmen of.hoax due to lack of knowledge in local area information
2)

Impractical to implement under

2)

Encourages malevolent groups existing regulations to create hoax or ac:t against facility or populace~

3) Insufficient information is
3) provided by report Premature disclosure! frustrates sear:h and recovery operations
  • Hoax can be evaluated; numbers and details not disclosed
4)

Del~vs Section 208 reports, does11 't pro hi bit it

  • No more encouraging than general information available
  • May expe'dite search and recovery
4) Counter to Section 208 intent of open and timely reporting

April 19, 1978 '-1EMORANDUM FOR: Lee V. Gossi ck, Executive Di rector. for Operations =ROM: Ernst Vo1genau, Director Office of ~nspection and Enforcement

SUBJECT:

MEMORANDUM OF APRIL 4, 1978, ENTITLED "PROPOSED ABNORMAL OCCURRENCE - NUCLEAR MATERIAL INVENiORY ANOMALY" Ely annotation tc, Raymond J. Brady's memorandum.on this subject, dated ,~ril 10, 1978, addressed to Richard A. Hartfield, you asked if I agree .with the Divisi1:,n of Security's proposed classification of the Potential P.bnorma 1 Occurr1:nc2 report relating to an excessive inventory difference at a licensee fi!cility. Mr. Brady's identified concerns involve the value of the information to terrorists or other malevolent groups, its potential use in a hoax, and its possible impact on search and recovery operations. ~Jh~ile I recognize the sensitivitY. of the inventory numbers, I do not agree that the event (less numbers) should be classified, and do not fe.el that the stated reasons for classification of this information are accurate or compelling. Further, such cl.~ssification action will c1:,mplicate comm.mications between licensees, Regional Offices, and Hi!adquarters elements. Another germane consideration is the clearance s~:atus of some l"icensee facilities which,r,ay be affected by a future event and the personnel clearances of licensee employees 1,-1ho may know of a inventory difference, and notice the required shutdown and reinventory. I strongly recom,1end that.the proposed classification not become effective. Hc,wever, should it become so, I request that ( 1) the i terns of information be* declassified,9.t the end of six months or upon completion of the investigation, whichever is later (in consonance with NSDM 347), and (2) the Division of Security issue specific and definitive guidelines on what items of information are classified to enable this office to review and adjust our rE~porting and doc~ment control procedures. c--** N. M. R. J. R. A. E. L. Ha 11 er ~.,,/ Brady Ha rtfi *:~1 d Jordan C~fj/f. ~t ;olge~~~r~---- Di rector Office of Inspection and Enforcement l

UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D. C. 20555 MEMCIRANDUM FOR: Lee V. Gossi ck Executive Director for Operations FROM: C'Jifford V. Smith, Jr., Director 0-ffi ce of.Nuclear Material Safety and Safeguards

SUBJECT:

R.. J. BRADY MEMORANDUM TO R.A. HARTFIELD, DATED APRIL 10, 1978 In t.,e.subject memc1randum, the Division of Security recommends the .clas:sification of s.:n April 4, *1978 memorandum, entitled "Proposed Abno:--mal Occurrence: -.Nuclear Material Inventory Anomaly." The Offii:e of Nuclear r~;iaterial Safety and Safeguards does not agree for the following r1:asons. Classification of an event like this is prec1!dent setting. These events have not been classified in the past and are usually generally known to the*public, particularly in the area of the facility in question. Furthermore, classification of this kind of infcmnation may be of relatively minor concern to the fuel cy~le facil:ities that have an in-place classification program in*st1pport of DOE and DOD requirements,.-but to the other facilities it wc,uld have a maj,:,r impact, requiring an extensive effort and signi-fi ca~ t costs. Also, NMSS does not agree with the DOS arguments concerning hoaxes, hostages, and recov1:ry opera ti ens. There is no intention to rel ease the*actual amount Oi~ the inventory differences (ID) in the description of the "abnormal occ:urrences". There has been an extensive study of classification of information of this kind. The rational given in the study, when it c:alled for temporary declassification of IDs, was that the key to a* successful hoax is knowledge of the amount of the ID,

  • not merely its occurrence.

IDs are almost never zero; they occur with every physical inventory, and even a small ID is not an iron-c1ad guara;1tee that no theft or diversion has occurred. Thus, the mere discl1:isure of the occurrence of an ID, without giving its size, should not b1: viewed as inf,:n,nation that would be helpful to a terrorist er to* thi~ ~0u1 d be perp1:trator of a hoax. ... --~... ----* Clifford V. Smith, Jr., Director Office of Nuclear ~aterial Safety and Safeguards

  • --=*~.. --.. :......:,-:-;,.;;,.;;;-=~:~ ---... *: __ ~:~:.. - ::.-,~:..::~:-:;~ *..

Enclosure C Separ21te Views of the Div1 sion of Security dtd. 7/17/78

JULY 17, 1978 ENCLOSURE C TO MEMOl~NDUM TO THE COMMISSIONERS FROM NORMAN M. HALLER RE: COMMISSION INFORMA-TION REPORT REGARDING CLASSIFICATION REVIEW COMMITTEE DECISIONS, DATED MAY l 9i8 ------ SEPARATE VIE~IS OF THE DIVISION OF SECURITY ON STATUS OF AN INVESTIGATION OF INVENTORY DIFFERENCE

he -Division of SecLt
rity wishes to express its views on the "Status of an In-vestigation of an Inventory Difference" in relation to the Classification Re-view Committee's dec~ision of May 2, 1978, concerning the report entitled 11 Prop1)sed Abnormal Oc:currence - Nuclear Material Inventory Anomaly" on Babcock and W'ilcox, Nuclear Materials Division, dated April 4, 1978.

We also wish to more -~ully explain our rationale as to why information as contained in the Propo~.ed Abnormal Occurrence Report, should be security cl ass i fi ed for a cer-tain period of time. It is not our intentfon to classify the fact of the event or the fact that an inventory difference 1:>ccurred. Rather, we believe that, when such an event does occur, and in th<)se instances where NRC does not know for a period of time, as in the Babcock and Wilcox case, whether the material has been stolen or otherwise diverted, either by insiders or by external forces, the fact of thi!i uncertainty a1~1d the status of an investigation into the matter should be cla!;sified at least at the Confidential level until the matter is satis-factor11y resolved. While it is recognized that most inventory differences, including those involving significant quantities of SNM, are normally resolved through re-inventory procedures, we believe immediate public disclosure strongly suggests. that a theft or diversion has not occurred. The fact is that NRC and the

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facility do not kno\\11 the circumstances causing the difference in the time frame immediately fallowing the event. Immediate disclosure of such informa-tion, in our opinion, tends to confirm an official opinion that the inventory difference is due on*ly to accounting errors. Becau:ie NRC does not know for a certain period of time, several days to per;. haps a week or longer, whether theft or diversion did occur, the Division of Secur*ity believes NRC is at a distinct disadvantage in evaluating nuclear threats, particularly where significant amounts of material may be involved. Significant inventory differences, known pub 1 i cly and resulting in press coverage, could causei the number of nuclear threats to reach proportions be-yond the ability of tlhe NRC and other agencies to appropriately respond to them. Additionally, we do not believe the NRC could properly evaluate numerous threats, which might be received in a very short period of time, when there is a significant inventory difference, from hoaxes. Numerous or continued threats received in relation to a given incident could in our view, divert valuab'le resources friJm other missions and disrupt the functioning of the government. With re*spect to threats, and as noted in the "Minutes of the May 2, 1978, Classification Review Committee Meeting," we believe the following quote from the National Security Study Memorandum 216 (NSSM-216) is relevant: 11 There is general agreell)ent within the study group that a theft of nuclear material that is used to fabricate or detonate a ni.1clear weapon r1:*presents a clear threat to national security. However, the use of safeguards information to make a single threat of violence rather than to commit the act itself is more

3.

difficult to categorize as affecting the national security. If repe~ted threats disrupt the functioning of the government, how-tver, it can bE! assured that the national security is affected." Given the unpredictable nature of malevolent group action, the Division of Secur*ity believes th,3.t a group even though not capable of fabricating an ex-plosi"e device, co~ld use the fact of uncertainty of an inventory difference for hostage or ransom action against a facility or an NRC official. Such acts c:ould range from the mischievious to those resulting in death of hos-tages. Of great concern is the effect of premature disclosure of such information on search and recovery operations. It is our opinion, as noted above, that immediate disclosure e>f such information tends to confirm an official opinion that the inventory difference is due to accounting errors, thus pro vi ding an advers,iry with a more or less guaranteed period of time for evasive planning and ac*:ion. Imrnedi,1te unclassified disclosure of information about significant inventory di fferE!nces serves to notify an adversary of when the discovery is made (or not macle) by the facility and the NRC. Subsequent unclassified reporting advises of the usual length of the reinventory period by facility. This in-formation could be of significant assistance and help the adversary group in formulating diversion tactics and other actions to frustrate search and recovery of SNM. It a'.!so aids the adversary with formulating advance plans _of how to use the SNM ~ithin a given time frame after it is stolen whether it be u:;ed for fabricating a device or for dispersal purposes.

4.

Essentially the Division of Security believes: (a) too much reliance is being placed on the possibilities of in-ventory differences being resolved through reinventory as opposed to consideration of the possibilities of theft or diversion; (b) premature d'iscl osure of i nforma::ion about the i nves ti gati on of inventory*d*ifferencescould be of significant assistance to adver- . sary groups;; 1'.c) the prematur*e disclosure of this information could reasonably be expected to adversely affect national security. In this connection, the National Security Study Memorandum NSSM-216 says: "In the event of suspected theft or diversion, information concerning ;he MUF and the details of the investigation should be withheld from the public until either the material is re-covered or fts apparent loss is reasonably explained." (d} any immediat,si reporting to the Congress deemed necessary under Section 208 iJf the Energy Reorganization Act could be accomplished on a classified reporting basis~ The question of the intent of NSSM-216 1 anguage quoted above was informally referred to the Chairman of the NSSM-216 Study Group. The Study Group Chairman confirmed the Division of Security's opinion as to its specific applicability to circumstances such as that under consideration in this instance. Informally the Division of Security queried the Office of '.~aval Nuclear Reactori; and the Department of Energy as to their opinion of the classifi-ability of such information under simi1ar circumstances. Both offices

I

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responded that the information should be cl assi fi ed pending some reasonable expl aria ti on of the ci rcums tances surrounding significant inventory differences.}}

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