ML19225A075
| ML19225A075 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 05/14/1979 |
| From: | Hanes J DOW CHEMICAL CO. |
| To: | |
| References | |
| NUDOCS 7907180247 | |
| Download: ML19225A075 (77) | |
Text
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NUCLEAR REGUL ATORY COMMISSION IN THE MATTER OF:
s i
i DEPOSITION OF JAMES F.
HANES
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Place.
Midt.and, Michigan Date.
Monday, 14 May L979 I-70 Pages 9
9 T.enor.:
(2001 L'370C i
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1 UNITED STATES OF AMERICA i
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j NUCLEAR REGULATORY COMMISSION i
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4 i
5 DEPOSITION CF JM1ES F.
HANES I
6 Dow Center l
Pitrick Rcad and Abbot Street 7 '
Building 2030 Executive Wing 8
Midland, Michigan Monday, 14 May 1979 9
j Deposition of JMiES F. HANES, called for examination 10 '
i at 9:15 a.m., before Helen M.
Ra,..
- ?, a notary public in j
and for the County of Midland, State of Michigan, when were 12 I l
present on behalf of the respective parties:
13
'g WILLIAM J. OLMSTEAD, Esq., Office of Executive Legal l
Director, U.
S. Nuclear Regulatory Commission, l
Washington, D.
C., on behalf of the NRC Regulatory
- Staff, 15 i
16
.,ILLIAM C. POTTER, Jr., Esq., Fischer, Franklin, Ford, 1
Simon & Hogg, 1700 Guardian Building, Detroit, 17 Michigan; R.
L.
DAVIS, Esq., Michigan Division, Legal Department, 18 j
i 47 Building, Midland, Michigan 48640; and LESLIE F. NUTE, Esq., Dew Chemical Company, Midland, 18 l
Michigan 48640, on behalf of Dow Chemical Company.
20 GERALD CHARNOFF, Esq., and ALLEN WEISEARD, Esq.,
Shaw, Pittman, Potts & Trowbridge, 1800 M Street, 21 N.W., Washingten, D.
C.,
20036, on behalf of Censumers Power Company.
RCNALD G.
IAMARIN, Esq., Isham, Lincoln & Beale, 23 One Firsc National Plaza, Chicago, Illinois 60633, on behalf cf Cons =.ers Pcwer Companf.
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WITNESS:
DIRECT CROSS REDIRECT RECROSS t
i 3 !
James F.
Hanes 4
33 66 71 61 4 !
5 EXIIIBITS :
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2 i MR. OLMSTEAD:
We'11 go on the record.
I 3
Whereupon, a
JAMES F. HANES 4
j 5
was called as a witness and, having been first duly sworn, was examined and testified as follows:
i 6
7 MR. OLMSTEAD:
All right, Mr. Hanes, I'm William J. Olmstead, counsel for the Nuclear Regulatory Commission 8
9 Staff.
We are taking this deposition as part of the 10 i Staff's discovery proceedings leading to hearings in July 11 on the issues set forth in the Licensing Board's prehearing 12 i
conference order of *
- 3, 1979, on the issues of whether 13
(
1 there was an attempt by parties er attorneys to prevent r.
(f 14 full disclosure of or to withhold relevant information from 15 the Lic2nsing Board in the suspension hearing; whether there 16 was a failure to make affirmative full disclosure on the 17 record of material facts relating to Dew's intentions regard.
la
}
ing performance under its contract with Consumers; whether f
19 there was an attempt to present misleading testimony to the l
I 20 Licensing Scard concerning Dew's intentions; whether any 21
! of the parties or attorneys attempted to mislead the 77 l Licensing Scar ccncerning preparation and presentation of and the fifth issue, which we will the Te-le testi=cnv;
! net be dealing with here, is wha sanctions shculd be
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imposed, if any.
2 j Staff has requested you: deposition because the x
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minutes of some meetings indicated that you had a role on i
behalf of Dow Chemical Company with regard to the Cow-4 i
5 Consumers steam contract from the Midland nuclear unit.
DIRECT EXAMINATION 6
'7 BY MR. OLM3TEAD:
t f
Q As a preliminary matter, I'd like you to state 8
I g
your full name, address and current employment.
10 A
I'm James F. Hanes.
I live at 4455 Arbor Drive, Mic' land, Micnigan.
My present title is Associate General ij i
l Counsel of Dow.
I'm a vice president of Dow Ch mim 1, USA, 12 I
33 which is not a separate corporation but an operating entity.
l g.
O Is this the same position you held during the Q,'
period July 1, 1976 --
15 16 l A
Well, no, not really.
We had two different 17 l legal departments at that time, and I was General Counsel of Dow, USA, but I was also vice president then.
We have 18 39 now put the two legal departments together, ard I'm Asscciate General Counsel of the corporate legal department.
20 Q
Did you have any role for Cow Chemical Company g
with regard to the nuclear steam contract prior to July 1,
1976?
A No.
N j Q
When did you first beccme aware of the decisicn
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1 of the District of Columbia Court of Appeals involving the i
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Midland fac, ty and the Dow Midland nuclear steam contract?
i I
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1 3
A Well, I heard about it just shortly after the l
l 4
decision came down, was told about it.
I, in fact, read i
5 it.
6 Q
Who told you about it?
I 7 l A
Lee Nute, I believe, called and told me about it.
8 ;
Q Did that necessitate your taking any action at g
the time?
l 10 A
No.
ii Q
When did you first become aware that as a result f
of that court decisien you were going to have to prepare 12 any information for Dow Chemical Company with regard to 13 l
l 14 i the nuclear steam contract, or to advise with regard to
.('
i i
the nuclear steam contract?
15 i
16 A
You're talking about me, personally?
17
-Q Yes.
18 A
I guess my first real involvement was when Mr.
tg Oreffice appointed me to a review team to review what Dow's posture shculd be..
20 Q
When was that?
,3 i
A That was, I guess, in early Septemrer, 1976.
O Was that before er after the Midland Division's 3
l recc=mendations relevant to the contract?
4 A
That was after.
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I Q
What activities did yta undertake as a result of 1
2 that assignment?
I A
The first thing I did was I got out the Consumers
~
3 i.
4 contract with Dow and read it.
I had never really read it 5 l before.
I had read bits and pieces of it.
6 Then I met with this special group.
I don't 7 l think we had a name -- sort of a task force that Mr.
8 Oreffice had appointad.
And we divided up the responsibil-9 ities.
And my area or portion was the legal area.
l We met several tines on that, as to what more_
10 l
11 information did we need, where should we get it, how should i
12 !
we go about this review.
13 Q
Do you recall the members of that task force?
14 A
Well, Al Klomparens was the chairman of it.
_/
15 Roger Gohrband was on it.
16 MR. CHAPliOFF:
How do you spell that?
17 THE WITNESS:
G-o-h-r-b-a-n-d.
I Jerry Decker -- I don't know whethar Jerry was 18 1
19 a full member, but he did advise us some.
Mac Whiting was on it.
20 21 EY MR. OLMSTEAD:
O Ecw many.cetings did the task force have befcre 22 they came up with a Cow task force positien to the Scard l
of Directors?
24 I
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A Ch, I would guess half a dozen.
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Q Over what period of time?
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A Something like, well, a month probably, or ess l
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3 maybe.
4 MR. POTTER:
May I interrupt just a minute, Mr.
5 Olmstead?
l 6
I'm not sure Mr. Hanes had completed delineating i
i l
7 !
who the members of the team were.
I don't want to leave the j l
8 ;
question if he may have forgotten some.
9 THE WITNESS:
I guess without looking at some i
l minutes or something, I kind of ran out of names.
I'm sure 10 11 there were one or two more.
I was trying to think who was t
12 involved in what.
13 But that was most of them I think.
It wasn't 1
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14 a large group.
15 '
BY MR. OIliSTEAD:
16 Q
I'd like to get the time period down a little i
a
- closer, la Consumers Power was notified of the Dow Midland 19 gosition somewhere around September 13.
Was the task force i
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meeting be.' re that time?
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t 21.
A Probably, but not much.
Maybe a week.
I" net 1
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sure.
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ccmmunicated, I believe, before Cctober l?
- s A
Right.
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Q So the task force essentially met over a two r
2 l w
week pericd, is that correct?
3 A
It seemed like it was a little longer than that l
i i
4 to me.
Probably three weeks, anyway.
We had quito a lot I,
5 to do, so that's why we broke dcwn '.nto subcommittees, if 6 !
you will, to look at different pieces of it.
i f
7 l Q
How much of your time were you devoted to the i
8 '
task torce?
~
9 A
Oh, probably more than half my time.
10 Q
What persons did the task force primarily have
~
l 11 contact with?
I 12 A
Well, we had contact with the Michigan Division 13 people.
Several different people had contact with Consumers (u.,'
l people.
We did some independent -- I didn't, but others 14 15 made independent contacts to determine costs of such things le,
as nuclear fuel, inflationary impact.
I 17 I'm sure they Contacted a lot of people within is Dow.
19 Q
Did you personally have contacts with Consumers 20 people?
- 1 A
No, not until the meeting on September 21 when l
22 Mr. Falahee came to town.
i l
A Did you perscnally have contact with the M.idland 23 24 i Divisien, Dow Chemical?
i 1
- s O
I visited with Lee Nute several times.
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I Q
Did you meet with Mr. Temple?
2 A
I don' t believe so.
I don't recall.
I may have i
3 been in meetings he was in, but I certainly didn't meet 4
with him on my part of the study, review.
i i
5 Q
You indicated that one of the first things you did was to read the Dow-Consumers steam contract as it e
7 existed at that time?
i 8
A Yes.
t This was af'er the 1974 modifications?
9 Q
10 A
Yes.
Q Did you communicate any legal advice with regard 11.!
12 to that contract?
13 MR. POTTER:
To whom?
.s l
x 14 MR. ODISTEAD:
To anybody.
THE WITNESS:
I did ulti;aately, yes.
I had 15 l
16 seme reactions to various parts of that.
17 FY MR. OLMSTEAD:
18 Q
To whom did you --
19 A
I talked with Lee Nute.
I talked with Paul 20 Creffice.
I talked with Al K1cmparens, who was chairman 21 l cf that group.
I talked with a number of pecple.
23 0
Did you speak to these people individually er
- 4 i in groups?
I 25 A
Primarily individually.
It was a rather ccmple:<
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i contract.
It went into a lot of different things.
I 2
Q Do yu recall any discussions concerning material or positions which should be ~ included in Dow's testimony 3
concerning the contract reittions with Consumers?
4 4
A I didn't really get into the testimony aspect, 5
the preparation of testimony.
My main job was really to G
7 !
review what Dow's position should be with respect to that contract, as part of that group.
8 9
Q In the task force were there differences of 10 opinion on what the position should be?
l i
A Not really, no.
11 I
12 Q
Did the task force take more than one position 13 during.the course of the review?
Did they have a tentative
^
t-14 conclusion, or.
t 15 Let me clarify that.
Did the task force have
^
16 a tentative position which they recommended to Dow, USA 17 prior to the September 21 meeting with Consumers Power?
i 18 A
No, not that I was aware of.
They were still 19 in the investigatory stage, and that meeting was part of 20 cur investigation.
l 21 Q
What would you describe as the general attitude i
towards the forthec=ing hearings before the Nuclear
~
- 2 !
Regulatory Commissien?
MR. PCTTE.0. :
Excuse me, Mr. Olmstead, I'm not
- s ;
clear.
Are you asking for his perscnal feelings, cr is he I
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1 2
MR. OLMSTEAD:
His feelingt of what the group's I,
3 position was towards these hearings.
4 THE WITNESS:
I guess we felt these hearings I
5 s.
very important, that these were critical as to whether or not there was going to be a nuclear power plant here in 6
7 Midland.
And if the license got held up, that it was going to create major problems of many kinds for the 8
9 company.
10 BY MR. OLMSTEAD:
11 Q
Would you say that there was an attitude' commun-icated -- and I don't care about what source -- about the 12 :
13,
likelihood of suspension of these hearings?
14 A
Not really, until we talked with the Consumers
(
15 people.
16 See, at that time we didn't even consider i
17 ourselves a party.
We had asked to be let out.
There was is no ruling on that.
We were neat included in the conmunica-t 19 tiens.
About the only information we got as to what was going en was what Lee Nute learned on the telephcne either l
20 I
frem the Consumers people or from the NRC people.
We were 21 i
really cutside of the ccmmunications.
We didn't knew what 3
was going cn.
i 4
Q Did anycne with whom you deale regarding the i
- s i sceam centract express the belief that Consumers' license l
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was in serious jeopardy?
l 1
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A Consumers expressed.that cpinion, yes.
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3 Q
Anybody from Dow Chemical?
I r
4 A
I guess we had no basis to disagree with l
s Consumers.
I'm sure that we felt that this was very serious.
6 Q
Do you recall u.,'f conversations during this period of time concerning aLy of the parties other than 7
Consumers Power to the licensing proceeding, which would 8 i i
9 he intervenors other than Dow, Myron Cherry, Mary Sinclair, 10 the NRC Staff?
11 A
I had no contact with any such people.
I never 12 met Myron Cherry.
I've never seen him.
I didn't go to any i
of the hearings.
13 :
i 14 Q
Several of the meeting notes supplied by Dow is Chemical during the course of the remanded hearing indicate
{
16 that you were present at meetings on September 21, 1976 i
i 17 and September 24, 1976, with Consumers Power Ccmpany.
18 Do you recall being at those meetings?
^
to A
Yes, I was.
- o Q
Were you at any of those other meetings with 2;
Consumers Pcwer Ccapany?
A No.
l C
On the Septem c: 24 meeting, have you read Mr.
24 Kic=parens' notes of that meeting?
i
- 5 A
I wasn't even aware he took any notes.
No, I i
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have not.
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2 Q
If you don't mind, I'd like to have you take a l
3 minute and look at it.
4 MR. CIS. STEAD :
I'm handing him a copy of some 5
handwritten notes dated September 21, 1976, entitle 1, 6 !
"Meeti: g with Consumers Power Attorneys."
I l
THE WITNESS:
You asked me about the 24th meeting.,
7 1
8 Yes, I have seen the minutes of the 21st meeting.
i 9 -
BY MR. OLMSTEAD:
i 10 Q
I asked you if you were at both meetings, and 11 you said yes.
And then I asked you if you had read the I
12 l meeting notes of Sectember 21.
13 i A
That isn't the way I heard the question.
I j
Q I'm sorry.
N. _.
14 13 MR. CHARNOFF:
Mor did I.
I heard it in terms 10 of the 24th.
l I
17 BY MR. OUiSTEAD:
18 Q
I'm sorry.
I = cant the 21st.
19.
MR. POWER:
Excuse me.
Just so the record is 20 clear en that point, you have tendered to Mr. Hanes the t
21 September 21, 1976 notes of M. Klemparens and asked him I
a whether he had ever read those before, is that correct?
That's correct.
2.:
MR. PCOTER:
And Mr. Hanes, your answer was?
i THE U!TNESS:
I had seen the notes of the 21st l
25 l
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I thought he asked about the 24th.
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" P.. C'IARNOFF :
Excuse me.
Off the record, i
2 I.
3.
(Discussion off the record.)
l l
f 4
MR. OLMSTEAD:
Back on the reccrd.
I' 5
We have all agreed that we are looking at the 6 l September 21, 1976 meeting notes of Mr. Al Klomparens.
i I
I 7 l MR. CFARNOFF:
Mr. Olmstead, those are the notes 8,
that are in handwritten form on lined paper that were 9 '
attached to Consumers Power Company's --
10 l MR. OLMSTEAD:
That's correct.
i 11 BY MR. OLMSTEAD:
i 12 l Q
Would you look at Mr. Klomparens' notes, at the 13 sentence on the first page that states, in parentheses, I
i 14 !
Rex... no, it's on the third page -- the centence that L'
l 15 states, "(Rex)'If Dow takes its position, the NRC will 16 suspend construction of the plant.'" " (Jim) 'We may ultimately 1
i 17 lose its entire construction license.'"
18 Is the reference to Jim, there, identifiable?
15, A
I think it was Jim Falahee, F-a-1-a-h-e-e.
- o There's just one "1"
I think.
It's probably not spelled 21 right here.
I t
- l MR. CHAR'iOFF :
Off the record, i
(Discussion off the reccrd.)
22 j "R.
C'liSTEAO :
On the record.
i 3Y MR. C'JISTCAD :
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I Q
Do you recall anything else that Mr. Falahce l
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might have said about that matter?
s 3
A I'm trying to get the context, where we were 4
here.
5 (Pause.)
6 !
I think all of these statements following that 7
one were scme of the things Mr. Falahee said.
He revsewed 8
{
the various positions that Dow might take and how he would 9
feel that they would impact on the license, his evaluation 10 of how different Dow postures would affect the licensing i
i 11
' procedure.
12 l 0
As a result of those communications, did you I
13 have any comment in that meeting?
I 14 A
I remember my parcicipation in that meeting was
\\
15 mostly listening.
I can remember reacting strongly twice 16 i ' in that meeting.
The first one was when a comment was made 17 by Rex Renfrow that perhaps we should have a witness who 18 was not familiar with positions Joe Temple had taken.
And 19 the other was when Jim Falahee said he was going to sue 20 us for 5600 million if we didn't support Consumers' i
t 21 position.
1 I
There was quite a ' it of discuccicn as to what c
ccnstituted support of Censumers' position, ann I think
- 3 '
- 4 these notes just reflect parts of those converca:icas.
25 l But we did explcre quite a few things.
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Q Did you have occasion to communicate to any other I
2 l person who was not in attendance at that meeting any of the l
l 3
substance of that meeting?
I i
4 j
A I talked to Paul oreffice and brought him up to i
i 5
i date on what had happened, yes.
6 Q
And what did you tell him with regard to Mr.
7 Falahee's remarks?
i I
a 8
A I told him, on the question of a witness -- I 9 l guess t5 7t was one point when I really came up strong -- that' i
10 was the first point where I came up strong, that may Dow 11 witness would be a knowledgeable witness and that he would 12.
testify fully and completely as to the facts as he saw them, I
13 that there weren't going to be any questions about any Dow
_s l
14 witness that was presented.
(;
15 The other thing, on the lawsuit --
16 Q
Let me stop you there.
17 Why did you feel that it was necessary at that 18 time?
19 A
Because of the suggestion that was made, and I 20 guess in hindsight I guess probably that was not intended i
21 to be made when we came in, but the_e was discussion --
i scme discussicn as to the Ccw witness question about Jce r
Temple, because of his publicized statement.
.bd then this
- t
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came cut that maybe the Ocv witness shculd be semeene not familiar with Jce Temele's resition.
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Q What publici cd statemi_nt are you referring to?
1 2
A Joe Temple's statement that he felt that the I
I 3
Consumers' arrangement wa. not in the best interests of i
4 Dow, or not good for Dow.
l 5
Q Which had be n made when?
6 A
I don't know the date.
It was before this task r
7 force was convened.
In fact, Joe had suggested that some-8 !
body review the position he had taken.
9 Q
Was his position publicly known before July 1976?
10 A
I don't believe so.
11 Q
You started to antion you also ccmmunica -ing 12 to Mr. Oreffice some contract information.
13 A
Well, we discussed some parts of the contract
(
14 and my review of the contract, and some of the obligations 15 that Dew had.
We talked about possible -- well, we talked 16 about the possibilities, well, maybe Dow had a case that may-17 be we could get out of the contract, based either on a is frustration of the original intent, because of all of these 19 endless delays, and we also talked abcut the question of whether or not Censumers had used its best ef forts.
- g Q
Had Dow censidered attempting to get cut of the p
n concract, to use ycur words, before the Court of Appeals
- 3 decisien, do you kncw?
MR. PDTTER:
Would you repeat the cuestion?
3 M2. CLMSTIAD:
Had Ocw considered attempting to
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i t
1 !
get out of the contract -- to use Mr. Hanes' words -- before l
2 the Court of Appeals decision?
j
/
i i'
3 THE WITNESS:
I'm not aware of it.
I don't know l
l whether -- I don't know what the answer to that is.
l 4
t 5
I know that there were concerns about the pro-l 6
visions of that contract, there were attempts to renegotiate ;
i I
7 parts of it, and it hadn't got very far.
But I don't know i
i 8
whether we had seriously considered the possibilities of i
9 getting out legally.
I 10 BY MR. ODiSTEAD:
11 0
Was it the generally held opinion that Dow could 12 be relieved of its responsibilities under the contract 1
4 13 l because of a breach by Consumers?
g l
w 14 -
MR. POTTER:
I have an objection to the shraseol-15 ogy of the question.
16 I don't see how Mr. Hanes can testify to the 17 generally held opinion.
He could testify what he understood.
18 BY MR. ODISTEAD:
19 i Q
Was it your view that Dow Could get out of
- o the contract because of a breach by Censumers?
i I
A My opinion at this *4me was that we did not have 21 a gced encugh case that we should take this on, that the cen :act was binding and that we would have to live up tc
- 4 it.
- =
0 Were there other opinicns a.ong legal counsel for l
7 r l l
c1::
- cs:~ 1 c'Q\\ tyc~t::1, [<:::
444 NOR?N
- APtTO3 STMEET 7
(
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)
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W A S mlNG TO N. O C.
20001
( 2C 21 347-3700
a 19 1 l Dow to the contrary?
2 MR. POTTER:
Are you confining that to in-house I
i l
3 '
counsel?
4 i
MR. OLMSTEAD:
Either retained counsel or in-house 4
i i
c counsel.
i MR. POTTER:
I'm going to object to any c
_aica-6 I
t i
tion vith outside counsel relating to the contract,'but I 7
8 have no objections to testimony relating to in-house counsel.
9 MR. OLMSTEAD:
I think there already is some i
?
10 privilege with regard to that sort of thing made by Mr.-
i 11 Wessel, at least, and --
Well, I will concede that you can I
13 inquire into questions with Mr. Wessel.
As to any other s
C 14 outside counsel, we are going to object on the specific 15 issue of advice relating to the Consumers Power contract.
16 MR. OLMSTEAD:
Okay.
I think the deposition lists 17 your objection, but the question can be answered.
18 MR. POTTER:
Nou to the privileged -- again, we i
1
~
19 have no objection to your inquiring into conversations with 1
20 counsel in house relating to the question you just asked, I
or to questions involving Mr. Wessel.
But beyond that, we're 21 i
22 raising the privilege.
And obviously the privilege is of no use or benefit if we answer the question.
So I assert the privilege as to outside counsel, i
l and advicc relating to the Censumers Pcwer contract and the
- S i
1 F i q
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20 l
l I
relationship between Dow and Consumers on the contract, m
2 i
MR. ORISTEAD:
Okay.
I think the privilege has I
l 3
been waived.
But if you'll answer the question with those 4
restrictions, and if I find it necessary to come back I will 5 I do that.
i 6
TIIE WITNESS:
Will you repeat the question?
7 !
MR. CIIARNOFF :
Off the record.
I 8
i (Discussion off the record.)
9 MR. ODISTEAD:
,On the record.
10 BY MR ODiSTEAD:
11 Q
I will rephrase the question now, in light of the t
l objection.
12 l
13 i Mr. Wessel was outside counsel to Dow Chemical l
(/
14 i
at the' time, and there was a legal staff, Midland Division, i
1 15 i to Dow, USA.
16 Was there legal advice or legal opinions, other 17 than your own, which were contrary to your own concerning 18 Dow's case for breach uf contract against Consumers at this 19 p2 e?
20 MR. POTTER:
Again, I just want to caution you, 21 because I don't fully understand.
Now, are you limiting it 22 l to advice either frem Mr. Wessel or the in-house counscI?
23 : Is that correct?
24 MR. O LMSTIlC :
That's correct.
i
- 5 l T IE,'ITNESS :
I guess Mr. Wessel thought there I
cd::- 9ed::.:( depc::::
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20001 5 2C 2) J a?-J 700
21 1
1 was a better possibility of us prevailing in this kind of an action than I thought there was.
2
~
i 3
BY MR. OLMSTEAD:
1 i
1 Q
Had anyone among those people we're talking about 4
l 5
communicated that thought to Consumers, to your knowledge?
l l
l A
Not to my knowledge.
6 Q
Now, your discussions that you were having with 7
8 Mr. Oreffice as a result of the September 21 meeting I 9
assume were before the September 24 meeting?
I 10 A
Yes.
i 11 Q
Did you communicate the substance of he i
12 ;
September 21 meeting to anyone else?
13 A
Not that I recall, to anybody else who wasn't 14 there.
Just Lee Mute, Al Klomparens and I were there, tie
\\,
15 talked about it.
But they were there.
16 Q
- Okay,
)
i 17 So you had a meeting with Mr. Oreffice at which 18 Mr. Nute, Mr. Klomparens and yourself were present following 19 the September 21 meeting?
20 A
I don't know whether they were there when I l
21 talked with Paul or not.
We had so many interactions here that I don't recall whether they were there or not.
Q Co ycu recall the reaction of Mr. Oreffice?
A Well, he supporred my position with respect to l
- s i the witness, that any witness Dow provided would be i
.1
~ f A
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444 N c "w cmTot GT.rs.
I w a s ec ro s. a c. zoom f
l
,2c:i m.noo
'2 I
knowledgeable, and there wouldn't be any question about that.
l
-C 2
And I guess there was never any doubt in my mind.'
i 3
that that would be the case.
4 l Q
In regard to the witness which might be tendered
'l G j by Dow Chemical, did anyone suggest to you, or did you 6
suggest, that it might be advisable to avoid the full dis-l 7 '
closure of the extent of the Dow-Consumer contract to the i
8 NRC licensini Jreceeding?
9 MR. CHARNOFF:
Can I have the question back, 10 please?
11 (Whereupon, the reporter read from the record, i
12 as requested.)
13 THE WITNESS:
No, I don't recall us even 14 discussing contract relationships with Consumers.
15 BY MR. OLMSTEAD:
16 Q
With regard to providing a witness to Consumers?
17 A
No.
18 See, that meeting started out with Rex Renfrow l
19 bringing us up to date en where the whole licensing thing l
l
- g steed, what generally was going to be Consumers' approach i
l to it, and we were talking about such things as economic g
.i desirability from Ocw's standpcint, we s.ere talking abou 73 such things as Ccw's ase of the s: cam, was this even a l
I
- 2 scciall,. desirable 2se of steam, to make these terribl2 g
chemicals.
And the tale, was more alcng that line, to update i
l'
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1 A
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444 NCRTH O A P1TOL STMEET N A S kiln GTO N. 1 C.
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f202s 347-3700
23 l
h.1 us as to where the whole procedure stood.
1 2 :I We didn't get into any diiferenc's or try to l
i 3
renegotiate our contract with Consumers.
And we didn't talk about witnesses talking about those things.
4 5
Q You were in attendance at a meeting with i
6 Consumers Power again on September 24, 1976?
I l
7 A
Yes, I was.
a' Q
Are you aware of any notes of that meeting?
9 A
I took scme notes of that meeting.
10 Q
Have they been made available to us?
1 11 A
They were the typed notes, I think, of the i
12 meeting.
l 13 MR. POTTER:
They have been produced, i
14 '
BY MR. OLMSTEAD:
q) 15 Q
Do you recall Mr. Oreffice being at that 16 meeting?
.A Yes.
17 l
i 1a Q
Do you recall the position that he stated at 19 '
that meeting?
A Well, at the conclusion of the meeting -- let's 29 i
see
. the meetings kind of run together.
23 Q
don't happen te have his nctes right here, but MR. P O T". 2 2 :
Whose nctes are ycu Icchi.cc at?
24
- s MR. CLMSTCAD:
Well, the notes I have of that i
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i l
meeting are Mr. Nute's notes, Intervenor's Exhibit 2'.
But--
He has a set of notes.
They have i
3 been produced.
They're his own.
I 1
l l
4 l MR. OIllSTEAD :
All right, he can refer to tnose.
5 i THE WITNESS:
I guess what -- I don't re. ember i
6 6
whether it was at that meeting, or later, that we c".ficially' l
7 told Consumers what the Cow position was.
Mr. Oreffice 8
mostly listened at that meeting, as I recall.
9 MR. POTTER:
The record should reflect the 10 witness is presently reviewing the notes that he took at i
11 the 9-24-76 meeting.
12 THE WITNESS:
Hell, as the notes show, Paul 13 outlined what he'd asked the review panel to do, which is s
t the group I was a party on, and basically he told us he 14 V
15 wanted us to review the whole situation and to come up wich is '
what Cow's position was.
And we teo': that seriously.
17 We were starting from ground Zero,.and we were is to ccme in and recommend what Dew's position should bes is I guess where I'm troubled, I don't remember i
I
- o whether Paul came in at the end of that meeting -- I think j
l 3
it w7s at the end of that meeting he came in and said that Dew's -- I cuess he delaved that.
I'm not sure what the 22 timing was en when he decided what Ocw's positien was going
- 4 l to 'e.
I think that was a later meeting.
- s i 3Y MR. CLMSTEAO:
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i i
l 1
Q Do you recall an, remarks made by Mr. Falahee 2
at that meeting?
l
~
3 A
No, he didn't have much to say at that meet'ng l
4 either.
But Mr. Aymond pretty much covered the same ground 1
5 Mr. Falahee had taken :.t our earlier meeting.
l t
6 Q
Thet. you don't recall Mr. Falahee saying anything 7
about the contract between Consumers and Dow?
i I
8 A
About the legal -- lawsuits, and so on?
I don't t
9 know whether he or Aymond said it, but thay reviewed the 10 whole situation as to what they felt support of Dow as l
11 required in the contract was.
12 0
Uas there any discussion in that meeting concer:'-
n, ing what the result would be if the Board was aware of i
(.'
14 Dow's trouble with the Consumers contract?
15 MR. CHARNOFF:
Which Board are you referring to?
16 MR. OLMSTFAD:
The NRC Licensing Board.
17 THE WITNESS:
No.
As I recall the. meeting, it 18 was more aimed at what would the Licensing Board react to I
i 19 based on Dow test.T.ony.
I don' t think it was.
. as I i
l 20 recall, it wasn' t anything about our dif ferences in I
interpreta:'en cf the different provisions of the centracr.
21 BY MR. OLMSTEAO:
- 3 i C
And the different positions of the Ccw tesrimenj i
was reviewed?
- 5 1 A
Right.
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26 I
l Q
And what were those positions?
2 A
Well, one was that if Dow supported the project i
i 3
actively, wants to buy steam and electricity from the plant, 4
they felt that that would he very positive and they were 5
very confident of their ability to get a license.
+
I 6
If Dow tock the position that the attractiveness l 7
of the project has been impaired, further delays could tip 8
the balance on the project from positive to negative, they 9
felt this could increase the risks of suspending construction I
10 i but the odds would still be veiy good.
11 l If Dow gave lip ser ce to the contract between i
t 12 Dow and Consumers, but indicated it did not like the deal 13 any more, the odds would be reduced to 50-50, and this would s
i C
be a high-risk situation.
r 14 15 !
If Dow --
i 16 Q
Okay, stop with that option.
17 In your opinion, was that Dow's position at that I
18 l time?
13 A
No, that was not Dow's position.
I I
20 Q
Which of the options you've read so far most l
i 21 accurately reflected Ocw's position at that time?
Objection.
I thin % that's been asked and answered.
First of all, are you talking about Dcw, Michigan, Dcw, USA?
I think he has said there was l
- 5 no Dew ccrporace position during the course of this time.
.- i a
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27 Al l
i 1
THE WITNESS:
Oref fice ' ad not yet made Dow's l
2 positicn at that time.
Now, if you want to know what i
t i
i I
3 ultimately was Dow's position --
i l
4 BY MR. ODiSTEAD :
5 0
I don't want to know what ultimately was Dew's i
6.
position.
The review groap had made its reccmmendations i
and the corporate board vas to consider this matter within 7
four days of this meeting.
I'm interested in knowing if a
Dow, USA or the review group was generally leaning to one 9
i of those positions as set forth in the September 24 meeting 10 i
at that time.
11 l
A I guess as I recall the situation, the review 12 I
J l
board -- first of all, we did not feel bound in any way 13 t
qf by Joe Teraple's earlier conments and feelings.
We recognized, 34 Joe's posture and the pressures he was under, because of 15 delays and other problems, in connection with the future 33 of the Midland plant.
37 So we felt that we could take a more objective l
la 1
view, and it didn't. ever enter any of our minds that we i
39 6
weren't fully authorized, and felt free to come in with l
_g l
}
6 i
sene kind of a recc=mendation different than Jce Temple's.
2. '
l The review board generally felt positively abcut the plant.
Dur biggest cencerns were ore delays and the pcsitien that was going to put Ocw in with respect ::
1 25
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444 NCR'M O A P'?O L STREET I
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28 i
i I
The different pmrts of the review board, we came 1
2 in and the economic review indicated that it was still i
attractive economically.
l 3
j The safety people came in and felt that safety-l 4
5 wise it still was attractive.
i l
6 I felt that the contract was binding on us and j
7 l if we were going to rewrite it, we would certainly insist i
8 ~
on some different provisions, because nobody had foreseen 9
all the intervening things that had happened.
10 l There wasn't any question, I think, that our l
11 board felt that if, indeed, we could make Consumers aware 12 and devoted to keeping the current schedule, that this was 13 the best way to go.
14 Q
Okay, but there were some options presented to
(
15 Dow concerning the positions they could take in NRC 16 proceedings, the options which you were just reading.
17 Did Cow agree that those were viable options that 18 they could take?
13 MR. PCTTER:
Again, just to caution, are you I,
20 talking about the Cow Michigan Division, Cow, USA, or tne 21 :
Cow Chemical Ccmpany?
MR. CL"STEAO:
I'm talking ahout the Cow that
- i he was involved with as part of this review grcup.
MR. POTTEP:
Ckay, which is Daw, USA.
4 I
25 i THE WITNESS:
Cow, USA, right.
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29 1
My feeling was that this second one, that the i
2 attractiveness of the project.has been impaired, further delays could tip the balance from positive to negative, felt 3
I I
that this may increase the risk of suspension.
4 5
I think that probably that, clearly, of these 6
four listed, would describe the posture t hat we were in i
I t
7 as the review panel.
I i
8 MR. CHARNOFF:
Just to clear that up -- excuse i
9 me -- you said that was your feeling?
10 THE WITNESS:
Yes.
11 MR. CHARNOFF:
You weren't speakir.g for Dow at I
12 the moment in answering that question?
13 THE WITNESS:
As a member of this panel my
- i
.s i
s.
evaluation at that time would be this most closely approxi-14 l
15.
mated -- and the review panel really hadn't ccme out with 16 a positive recommendation and the U.S. Area board hadn't 17 really come to a conclusion.
18 BY MR. OLMSTEAD:
i Q
Follcwing the September 24 meeting, and before 19 20 the reccamendations of the review group that you were a 21 I member of to the Cow corporate beard, did you have further discussions with any efficials of the Cow Chemical Compcny cr crher empicyees of Ocw concerning the September 24 22 meeting?
l A
Yes.
The review panel certainly get ecgether.
- s 7
I 8
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i 62021 34 7.J 7C O
1 1
And then before the final decision was made, we all met with 2
the U.
S. Area board.
l f
1 3
Q Was the review panel's recommendation to the l
l 4
corporate board a unanimous recommendation?
5 A
I believe it was.
I don't recall any dissen l
6 Q
Cid you have any other meetings before you met 7
with the corporate board with people who were not members of 8
the review board?
9 A
I didn't.
I 10 '
Q Did you attend the corporate board meeting when 11 the recommendations of the review board were made?
12 A
We're talking about the U.
S. Area board?
13 Q
Right.
3 14 A
That's not a separate corporation to us.
The C
15 corporate board is the Dow Chemical Ccmpany.
is I did attend the presentation to the U. S. Area i
17 board.
ta Q
And approximately how long did that meeting last?
19 A
Ch, I would say an hour, maybe an hour and a half,
- o at the most.
I I
i 21 a Q
Was there any negative discussion in that meeting that you recall?
MR. CHARNCFF:
Z: cuse me --
24 MR. PCTTER:
What do fcu mean, " negative discussicn?"
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MR. OLMSTEAD:
Negative, opposing the review l
1 e
2 group's recommendations.
l 3
THE WITNESS:
I don't reca:
any.
We went through -- each of the subccmmittees 4
5 went through its evaluation, its activities, presented their views of their part of the job.
6 I guess I recall it very specifically, in that 7
g ;
I was the only one that didn't have any slides and numbers 9
and charts and graphs.
And I kind of wound it up, from the 10 legal review standpoint.
BY MR. OLMSTEAD:
11 12 Q
Okay.
Following the action of Dow, USA Area Board, 13 did you have any occasion to follow up with any further 14 discussions with Consumers' personnel?
15 A
NO' 16 i
37 l
.O Did you have any further role as to the matter of the Dow-Consumers steam contract?
is A
Well, I visited with Lee Nute from time to time.
ig He would bring me up to date on where they stccd.
- g But I didn't get actually involved in any of e
i the detail.
I didn't fellcw threugh en legalities with Lee and Milt Wessel and curside counsel.
_7 C
Did you have any centact with Mr. Nute er wit:.
3 i
3 {
other counsel involved in preparation for the NRC hearings S:-]:d: :I Sep:::cu,
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32 i
I '
concerning the form that the Temple testimony would be 2
presented to the Licensing Board in?
s 3 i MR. POTTER:
Let me caution the witness, there 4
should be no discussion of any communications between l
5 outside counsel, other than Mil' Wessel, in answering that 6
question.
I 7
THE WITNESS:
Lee brought me up to date a couple 8
of times in the course of these discussiens, and I was
~
9 !
aware that his testimony was going to go in in a question-10 and-answer form i
l 11 BY MR. OLMSTEAD:
12 Q
Okay.
13 D! ' you express an opinien on that?
i E
14 !
A I guess I concurred in their judgment.
As I
(. /
15 said earlier, --
16 Q
Their judgment?
i 17 A
That this was an appropriate way to do it, that i
18 dew, in our view, was not a party at that time and that 19 there was no withholding of information, or confusien in i
20 '
that etnnection.
l i
21 Q
After D:w was made a party by the Licensing 22 j
3 card, did you have further di;cussiens about the Tample 23 testi eny?
24 A
Only in a reperting i:ind of a way, because that
^5 was when the hearing was already on and they just reported l
c.5:'
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33 i
1 back to me what was going on from time to time.
I i,
i 2
Q Did Mr. Nute work under your sul.arvision?
l l
3 A
Yes, he did.
l Q
But he worked for Dow Midland Division and you 4
5 were the general counsel for Dow, USA?
6 A
Yes.
7 Q
Is there a general counsel for Dow, Midland?
i a
A No.
If there were, it would have been Lee Nute.
9 He was their lead attorney.
10 l MR. CRISTEAD:
That ccmpletes the questions I 11 have of Mr. Hanes.
MR. CHARNOFF: Could we take about a three-minute 12 13 i break?
i
,~
I 14 MR. OU1 STEAD:
Fine with nc.
15 (Recess.)
1 f
16 air. OUiSTEAD:
Back on the record.
17 CROSS-E:CD1INATICN 18 BY MR. CHARNOFF:
19 Q
Mr. Hanes, my name is Gerald Charnoff, and I'm i
20 here L.2ay as counsel for Consumers Fewer Company.
21 I think you indicated that at the time of the period of interest, which was 1976, in September, feu were 23 general counsel of Dow, USA.
I take it you've been wit'-
3 !
Ccw Chemical for many years?
.e.
A Thirtv vears.
1 8
a
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34 i
l 1
Q That's many.
2 An attorney during that whole pm iod of time?
l l
3 !
A No, I was a chemical engineer for the first two l
years, and I've been involved in labor relations and j
4 5
industrial relations, and I was general manager of a plant l
6 for awh14e.
I 7
So it's not all been as an attorney.
8 Q
Roughly how many of those years were as an 9
attorney, <an you remember, or estimate?
l 10 A
Oh, twenty-one.
11 Q
And as an attorney during that twenty-one year i
12 period you have attended, I take it, a lot of meetings 13 within the Dow Chemical framework and within Dow and with t
14.
other people representing other groups meeting with Dow, is
(
15 that right?
16 A
Yes, I have.
17 Q
And do you often take notes et those meetings?
18 A
Yes.
19 0
When you take those notes do you find that you 20 note down the significant statements that are made by the i
i i
21 parties at these particular meetings, or do you try to?
'I A
I usually trv to note the thincs t.:at are i
to me.
algni:1: ant
- 4 O
Nhen you were attending the meetings that Mr.
- 5 !
Cims cad identified whan you discussed with him the P
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35 September 21 and September 24 meetings, did you take notes 1
i I
2 of those meetings?
i 3
I took notes of the September 21 and the 24, yes. !
A l
Q I think we identified a document -- or you were i
4 l
l talking from a document that has Midland 64 on it -- on my 5
+
copy -- which is the minutes of September 24.
8 7
Am I correct, Bill, that the designation is 8
"Siidland-6 4 ? "
MR. OUiSTEAD:
Yes.
10 BY MR. CHARNOFF:
il Q
I'd like ta also show you a document that we 12 subnitted with the designation of record.
1
- a th vitness.)
13 (Document !. ndeA 14 We submitted that document as Att.2chment A, and
\\-
t 15 it bears the date of September 21, 1976.
We believe those 16 are your notes of that meeting.
Is that correct?
A These were typed, I believe, from my handwritten
'7 18 notes, yes.
19 MR. POTTER:
By way of further identificat. a, en '
l 20 the right-hand corner are those the notes that have the l
i 21 i names of Jim Falahee, Rex Renfrew and Judd Bacen in the
\\
apper right-hand corner?
23 THE W TNCSS:
Yas.
It 1ccks like I may have r.is-spelled Falahee tec, with two l's..
i i
25
!!R. CHA?;;CFF :
- c r, but two l's.
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36 1
i 1
BY MR. CHARNOFF:
2 Q
And that's a series of further pages of those i
j notes, is that right?
3 4
A Yes.
i 5
Q Now, when you had these notes reproduced, what t
6 did you do, you just took your notes after the meetina and I
7 gave them to the secretary to type up?
l l
8 A
I think I gave my notes to Lee Nute, and Lee g
had them typed.
I didn't have my secretary do it.
to Q
I sec.
n Is that basically the approach you used in 12 developing the notes of the September 24 meeting tec?
13 A
Yes.
I was, I think, more conscious of taking
^
detailed notes in the 24th meeting.
don't know whether 7
y N..
15 I was officially assigned that role or not, but my 24th is notes are more complete than the 21st.
But they're still far from being verbatim.
17 33 0
Was there someone who was assigned to develop the official notes of the September 21 meeting?
39 A
No.
,0 4
i Q
S, there weren't -- whereas your notes of I
21 September 24 might be considered te he the official 2cw netss Of that meeting, as far as you're cencerned there was 3
3 no such designation of the September 21?
A I don't think that I was the Official secretar.i
. c.
I I
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1 on the 24th, either.
I think that when we got through I I
i 2
hae. more comp-
..e'es than anybody else, so they were j
l 3 i adopted.
Q skay.
Insofa'. as Septerier 21 is concerned, your
{
3 notes are not an official set of notes?
l 1
6 A
No.
I just tcok these f'r my own edification, i
4 7
This dates way back to my law school days when I tried a l
8 case in mcot court and we won the case, but the jurors came t
9 in and they critici::ed me for not taking notes.
They f02t i
I to that I should have taken.ates to impress them with chat 11 I was doing.
12 i So ever since then I've taken notes.
l 13 Q
I wish everyone would have a colorful story like 14 l that for every set of notes they take.
Was there an official set of notes for the 15 16 Septerier 21 meeting, though, taken?
17 A
No, I think each person did their own thing.
18 Q
After the meeting was over on Septerier 21 you 19 just handed your notes to Mr. Nute, is that it?
20 A
It wasn't inrediately after then.
In fact, I think it was more than a month later.
I jurt put them in 2:,
the file, my personal file.
23 G
Oid you -- let's see, at the Septerier 21 24 ;
meeting you were there with Mr. Nute and --
A Mr. Kle=parens.
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1 Q
Mr. Klomparens.
The three of you.
Did you get i
t together after the meeting of the 21 and decide what the I
2 i
3 highlights of that meeting were?
l l
4 A
We discussed that really at quite some length, l
5 yes.
6 O
And did you work with Mr. Klomparens and Mr. Nute :
i 7
in terms of reducing the sense of those significant state-u I
si ments into some sort of written document, notes or otherwise?
I 9
A No.
10 l Q
So you didn't work with Mr. Klomparens or Mr.
1 11 Nr.te in terms of development of their notes?
I A
Mo.
12 l
Q Have you reviewed the notes of Mr. Klomparens and 13 i
_3s y ;
Mr. Nute?
i V
A I have not reviewed Mr. Nute's.
I've reviewed 15 Mr. Klomparens'.
16 i
Q Just this morning here?
17 18 q A
No, I reviewed them last week.
a 19 ;
Q I see.
I A
I was going to review Mr. Nute's, but I couldn't
,a I
find him.
,.1 l
t O
You mean for purpcscs of this depcsition?
3 i A
Yes.
Q Co ycu recall seeing Mr. :,ute's or Mr, gler 3 eng, 3
notes at any time before this?
c 7
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l A
I've seen Mr. Nute's, but it's been a couple of 1
2 '
I haven't icoked at t'. tem since then.
years ago.
Q That was after -- you would have seen his notes 3
1 1
after they were reduced to writing and circulated or filed, 4
1, i
5 rather than in the course of their preparation?
l t
I t
6 A
Right.
l Q
So you had nothing to do with the preparation of 7
a; his notes?
i 9
A That's correct.
+
10 0
What was the purpose of that September 21 meeting,{
11 l do you recall?
12 l A
From my standpoint as a merber of the review 13 panel, the purpose was to educate me as to what was involved
[
14 in the hearings, bring me up to date on anything that 15 Consumers wanted to input for our consideration.
They were is well aware of this review process, and it was mainly to 17 educate me and let me make a more informed report to my la group.
i i
19 Q
Now, educate you as to the likely outcome of l
l l
20 those then pending NRC hearings, or --
I A
Well, it was more basic than
- t. Mat.
It was -- I think if you'd icek at the.ctes here, what are the issues, 1
what is Ccw's role.
And they describe the differenec
- 2 between suspension hearing from a bic hearinc that was supposed :
ccme on later.
' r.d I really hadn't been close 7
c--
o a
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i I '
to this process at all, and they were trying to fill me in.
i 2
I had asked Lee Nute some of these questions, and Consumers i
hadn't been keeping him up to date, i
a i
4 So it was to update him too.
5 Q
Okay.
Now, on page 3 of the notes of the r
+
i I
6.
Septenher 21 meeting, the last page, in the middle of the i
i r
i 7
page there's some reference to G.
Decker.
Is that Jerry 8
Decker you mentioned 3arlier?
9 A
Yes.
to O
And he, you said, was either on or an adviser 11 to your little task force?
i A
I'm convinced he was not on that panel or task 4 i force, but he was an adviser.
Jerry was an expert in i
14 !
energy of all kinds, and we did call en him for input.
j 15 Q
Was he an employee of Dow at that point?
16 A
Yes, he was.
17 Q
Is he still an employee of Dcw?
18 A
No, he's vice president of Kaiser Aluminum
.19 Chemical, and he's responsible for their energy program.
i
- o Q
What was his role at Ccw at that point?
Was he l
21 a member -- was he eccleved bv Ccw, Michigan, Ocw, US?
t i
Ccw Chemical Corporaticn?
Cr all three?
23 l A
Je rry 's role changed, but I think he was always 3
Ccw Chemics. Cooperation.
He was an adviser tc Mac Whitin;,
25 _
and he was working en broad energy projects of cne kind or l
1
~ l A
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1 another.
Mining coal was an area he was very interested in, i
and we got quite a bit of publicity en that.
2 I
I 3
But I would say he was the Corporation, rather e
e 1
4 than U. S. Area, and he repcrted to Mac Whiting at that time,'
i 5
I believe.
I s
Q Could you identify for us just who Mac Whiting 7
is?
8 A
Mac Whiting was a member of the Dow Board of 9
Directors.
He was sort of an expert in long-range planning.,
l 10 He was very much involved.
And he retired from the Board, t
but he's still a consultant on energy matters for the 11 t
12 company.
{
Q Okay.
13 I
Now, you have a reference to Mr. Decker, with 14 15 a dash, and a statement, " contractual fight "
16 Now, Mr. Decker was not at the meeting on 17 September 21, correct?
18 A
Right.
O Could you tell me what that line item in your i
19 0.
mcot court notes there tell us?
i A
That was, I guess, a reflection of the fact that 3
- was kind of ut. set that 'tr.
Decker had ar.carentiv. been to m
Jackscn visiting with Censumers' peocle and he apparenti; made scme kind of a statement along the lines that, " Hey, 3
it would be terrible for ::ow and Consumers
- get into a c
i T
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contractual fight."
i i
I 2
And I was upset.
I made that note to follow up 3
on, number one, what was Mr. Decker doing talking about I
i 4.
contractual matters?
That was outside the scope of his i
t f
5 activities.
And I did get back to Mr. Cecker and told him i
6 that contractual matters were my province and suggested that 7
he stick -- he was being helpful, or trying to be helpful.
i 8
Q And that was -- he's now at Kaiser Engineering?
[
g A
That has no relation.
He got a nice promotion 10 when he took that job.
i 11 Q
So someone at the meeting on the 21 referred to i
12 :
Mr. Cecker's visit to Jackson?
i 13 l A
It must have been Mr. Falahee or Mr. Bacon, I
^
i4 would guess.
I don't remember the details.
I just remember v
15 my reaction.
O Now, just above that there is a statement that 16 reads:
37 "If live up to contract but no longer economically 18 viable.
ig A
I think it says, "will sue Dow for contract..."
,0 4
i Q
Yes, I assume it says, "will sue Dow for contract I l
~
]
viciation."
I assume those two sentences don't cuite ccnnect, I
do they?
A Well, I think this is
.y shorthand for what J
l
_I at cars :.a r. ore cetail in the 24 meeting which Mr. A g.cnd I
i l
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43 n
e t
approved.
But this was the first time that I realized I 1
2 was faced with a possible lawsuit for S600 million, and I l
I 3
was listening very carefully.
l 0
This was a statement iade by Mr. Falahee?
4 5
A Yes.
I 6
Q How was that statement made?
With some sort of I
7 emotion, or calm?
Was it a statement that that was a consequence of one position?
Was it an informative type 8 l
~
9 of statement?
What kind of statement was it?
i 10 A
I considered it rather emotional.
At least it 11 aroused my emotions.
12 Q
Well, it aroused your emotic.Ts, because of the i
13 size of the --
l l
A Yes, that's right.
And it was also said fairly 14
%. /
s 15 emotionally, rather intensively.
1e Q
Was it said because someone asked what happens 17 if these kinds of positions get taken, and therefore one 18 consequence might be a lawsuit?
19 A
Well, we were exploring testimony and general i
20 approaches, and what should a Cow witness be.
And I don't i
l 1
remember the i=ediate thing that triggered it, but Mr.
Falahee care forth and said that the centract rec.uired that 23 we support Cons =ers Pcwer, and we discussed at scme lencth wnat Support Censumers PCwer meant.
And at sCf"c pCint ir i
1 1
with tn,is Statement tnat 12,.
we CICn,t time ne Came Cut
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t I
I support Consumers Power as he interpreted supporting I
2 i Consumers Power, we were going to have a lawsuit.
l l
3 Q
Did you understand that to be his statement that I
4 these are the consequences that flow, or was it rome sort 5
of an intimidation?
I 6
A I don't know what his intention was, but I felt I
7 that somebody was trying to intimidate me.
That was my 8
reaction.
9 Q
Now, you said that there was some discussion of--
l 10 ~
and I think you attributed this to Mr. Renfrow -- that 11 perhaps there should be some witness other than Mr. Temple--
12 I believe that was you. statement to Mr. Olmstead this 13 morning--or perhaps a witness who was unaware of Joe Temple's
,m 14 position.
s 15 A
Unaware of Joe Temple's position I believe is 16 what I said.
17
.Q How did that statement -- what's the background 18 for that statement?
I think you said that you didn't to believe that that was a statement that was previously thought
)
20 out before the meeting by Mr. Renfrow, or.
. how did j
f 21 that discussion come up?
j l
I A
I believe it started with a discussion about i
Jce Temple's anncunced pcsture, and this was pretty 22 generally known by then.
And the question, well, having
- s !
anncunced that position, what kind of wisness is Joe gcing i
l
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45 i
1 to be?
2 Q
Was there anybody frcm Ocw who expressed some i
I 3
concern about what kind of --
d t
l A
I think Lee Ilute expressed some concerns along j
4 i
5 these lines, and I guess Joe was certainly the most i
6 knowledgeable person but he was so close to the details, and i
with his responsibilities being the operation of Michigan 7
8 Division, I guess I personally felt that he was emotionally 9
involved as well as logically involved.
10 0
Okay.
11 If we could step back for a minute, the issue of 12 Joe Temple's prior positions were put on the table, you 13 said, and that people were generally aware of it.
I guess 3
l 14 people within the Company and people outside the Company, s.
15 is that what you said?
16 A
Yes.
As far as I know.
I think it was in the 17 newspapers, as I recall.
18 Q
And you think Mr. Nute raised the question of m
19 Mr. Temple's capability to represent Scw?
l
~0 A
Yes, one of the basic questions was who is 21 i Cow's witness going to be, and Temple was the only name i
i mentiened.
And the concern was raised, ckay, with Jce already having been cucted the way he had, hcw effective a
- 4 witness is he going to be?
- s Q
And in the centent cf perhaps the Ocw testimeny, 7
f
.y
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46 I
would not be consistent with his earlier statements?
h 2
A No, I wasn't concerned about the testimony being 3
consistent.
l I
4 l
I guess I was on the panel, and I felt l
1 5 :
there was a very strong possibility the panel would not i
l 6
agree with Jce Temple's conclusions.
So here you have a i
i 7
man who maybe had committed or recommended in one way, and 8
here a panel is coming in and overruling him and saying, 9 l no, that's not the Company position.
I 10 i That was the only question.
Nobody ever had any 11 reservations about Jce being excellent and an honest 12 witness.
It was just a question of his having been involved i
13 '
and then overruled.
s I
14 i Q
So there was some conversation that you and Mr.
t D'
15 Nute participated in that reflected these aeries of prior 16 statements by Mr. Temple and what effect that would have on 17 his being a witness, is that right?
18 !
A Right.
19 Q
And I take it the people -- let's say Mr.
20 Klcmparens was with you too.
Was he discussing this subject:
i i
21 j at the time, or was it basically you and "r.
Nute' I
A I don't renember Klemparens getting into that 23 i discussicn.
He may have, but I don't renember it.
- Ie 24 l mostly listened.
1
- S Q
And en the other side it was T.cstly Mr. Fenfrew g
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i I
reacting, or Mr. Falahee, or Mr. Bacon?
2 A
I think it was mostly Mr. Renfrow.
Q Co you recall how or who first raised the 3
question of Temple's prior statements, saying his ability 4
5 to testify in light of that -- was it you, or Mr. Nute or I
6 Mr. Renfrow?
7 A
I don't remember.
It wasn't me.
8 Q
Okay.
So somewhere in the context of that 9
discussion, Mr. Renfrow said perhaps we should have a witness; l
10 who is not familiar with Mr. Temple's position, is that what you recall being said?
11 i'
Something along those lines.
A 12 I remember that when that came out my reaction 13 i
-s 1
i i
14 !
was rather violent.
I gave a short -- what I hoped was an g
15 impressive little speech about Dow's witness was going to 16 he knowledgeable, and he would fully disclose all the facts.
17 And the matter was dropped at that point.
18 Q
Mr. Renfrew, then, didn't say that he war.ts a 19 witness who was not knowledgeable about the facts?
That
- o wasn't his thrust, I take it?
His statement was, in light l
21 of the concern about Temple's earlier statements, that perhaps there ought to be someone ot'1r than Temple, is that
- 2 basically what he was saying?
A I think it was a little broader than that.
- s But, as I say, in retrospect I guess I don't I
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6 I
know just how broad it was.
3ut he felt there oucht to be I
2 scmeone divorced from Temple's earlier conclusions and i
l 3
maybe unaware of that.
4 At that point in time I don t think there was 4
anyone in Midland unaware f what Joe Temple said.
6 Q
Did you understand that to be an effort by Mr.
i 7
Renfrow to conceal the Temple position?
8 A
I guess I don't know what his motivations were, 9
but my reaction was we are not going to put on a Dow I
10 witness in that kind of centext.
And I got it out on the 11 table right now that we're not going to do that.
And that's 12 the way it's going to be.
And the thing was dropped.
It 13 wasn't pursued.
l
[
14 Q
So Renfrow didn't quarrel with that statement by 15 you at all?
16 A
No.
i i
17 Q
Nor did Mr. Bacon?
18 A
No.
13 Q
Nor Mr. Falahee?
20 A
No.
1 r
21 Q
Nor Mr. Nute?
i 22 A
No.
23 O
So it was, in effect a --
- 4 A
Ncr Mr. Oreffice when I later told him.
25 C
Well, I just want to fc.:ct in en the September 21 M
i 9
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f meeting.
l I
2 So it was effectively agreed by the six of you 3
present that there would be a knowledgeable Dow Ccmpany 4
witness presented, fully familiar with --
l i
5 A
No such agreement was expressed, but it wasn't l
i l
t 6
pursued.
I chopped off the discussion, and I intended that I 7
that was the end of it.
8 Q
Now, you said you didn't have the impression that 9 '
Renfrow had developed this line of thinking before the l
10 l meeting.
What was the basis for that sort of statement?
11 A
Well, it wasn't led up to in any kind of a i
I 12 logical way.
We just kind of dropped into it.
i i
13 Q
So you had no impression --
~
l Y
14 A
This was my reaction.
(.
15 Q
So you had no impression that Renfrow came into 16 that meeting with a design to exclude a knowledgeable Dow witness from this hearing?
17 i 18 A
I didn't have that feeling.
19 G
I see.
20 Now, this whole thing was characteri::ed in terms 73 of senebcdy being unaware of Temple's position.
Was there any discussicn of a persen unaware of or unfamiliar with
- 4 there be a review cf the contract?
i A
- don't recall any discussions of that nature.
- S I
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i 1
Q So the whole context of unawareness was in terms i.
2 of Joe Temple's prior statements, prior positions, rather l
l f
3 !
than the Dow Michigan recommendation, is that correct?
i I
4 A
I don't know how you separate those two.
5 Q
But it was focused in on the public statements 6 l that Joe Temple had made earlier?
t 7
A Well, it was talking about the facts that led up to Temple's statements, and then Temple's position.
I 8 !
I g l don't know how you separate that into little pieces.
It i.
was all kind of lumped together.
10 i
Q Now, as of September 21 there was no Dow USA 33 I.
12 position?
I i
A That's correct.
33 Q
There was a Dow Michigan recommendation that 34 N_.
i there be a Dow USA position developed?
15 i A
That's correct.
16
.0 And it was acccmpanied by some finding, if you 37 will, by the Dow Michigan group that perhaps the contract 18 1
was not in Dow's interest?
39 A
That's correct.
,0 l
O Was there any discussien at that meeting en the
,1
_i, 4
21 that you or the Consumers' people present wculd r.ct have
,7 I
wanted tc tell the Licensing 3 card er the Licensing prccess
_3 tha: there had been a Cow Michigan recommendati;n to review i
the Cow-CanCumers Centract?
i
. = -
l l
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1 A
I don't recall that being discussed.
j i
l 2,I o
Okay.
j i
i 3
Now, you then said that you met with !!r. Oref fice,
I I
between the 21 and the 24, and you weren't able to identify 4
5 the exact setting for that particular meeting.
I 6
I take ic Mr. Oreffice was located here in 7
Midland?
I 8
A Yes.
9 Q
And, therefore, you might have met him in the i
hall, or you might have met him in his office?
l 10 11 A
Probably in his office.
i l
12 !
Q
- Okay, i
1 13 At that time you told Mr. Oreffice of these two I'
14 matters that struck you strongly; namely, the question of f
g/
15 who the witness ought to be and the potential of a lawsuit?
i 16 A
Probably the second one first, the potential of 17 a $600 million lawsuit, which was something that doesn't 1a,
happen to us very often.
19 Q
And you can't recall whether that meeting with I
i 20 Mr. Creffice was alone or with seme other people in Ocw' i
21 A
If there had been anybody else along it probably would have been Lee Nute.
But I rather think it was alone.
C And Mr. Creffice also agreed with ycu that it 23
- 2 cugh to be a kncwledgeable witness presented by Cow?
- 5 A
Yes.
i l
l 1
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52 1
Q And that it was to be Temple or anyone else?
l 2
A (Pausc.)
1 3
Q Or did you focus in on that question?
j A
I believe he said it should be Joe Temple, at l
4 i
1 5 i that time.
But we didn't really seriously discuss anyone 6
e l.s e.
7 Q
I think in ans'.. tr to a question by Mr. Olmstead 8
ye.u said no one suggested the desirability of avoiding any I
9 d iscussion befo:.e the Licensing Board of the contract i
10 situation with Consumers Power Company, is that right?
j A
I don't recall any discussions.
11 i
12 Q
Okay.
So just to button up this last issue, the 13 witness question, then the strict discussion of the unaware r
witness was in the context of all of these prior statements r
14 !
s -
15 ;
Joe Temple had taken, and a discussion of let's have someone te who is unaware of Joe Temple's prior positien, rather than i
in the context of any attempt to withhold from the Licensing 17 i
18 Board a discussion of the Dow-Consumers contract situation?
19 A
I would agree with that.
20 ]
Q One of the statements you made about the task force -- you said t.he task force was ccmpcsed of people who 21 1
I were independent of Joe Temple in the sense that you said they would take an independent view, because Mr. Tenple, you said, was under certain other pressures, was your language to hr. Clmstead.
What were those othcr pressures?
25 i
i 7
F /
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1 :
A Well, Joc Temple was involved in, as I mentioned, 2
running the Midland plant.
That was his future.
That was 3
his responsibility.
4 We had Michigan State people here, quality 5
centrol people, on his back about using his fossil-fired 6
plants.
We had EPA in the background.
They were unhappy 7
with using those plants, those plants were getting old.
8 He was fast approaching a time where if he had to have some l
independent steam generating capacity, it had to be on the 9
i to drawing board and some commitments had to be made.
i So he was in a posture where he had to know 11 i
12 whether there was going to be a nuclear plant operating out i
13 here or not, because the timing was critical, the expenses s
s 14 :
were mounting.
He was under a lot of pressures from that i
s~
15 point of view, that if this plant is going to run we have is to have economical power and steam.
O So his view of the Consumers Power Company's 17,
la Midland project was primarily colored by his concern over is the reliability or availability -- the dates of the avail-20 ability of that particular plant?
21 MR. PCOTER:
Excuse me.
I have an objection at 1
22 this point.
l 23 I don't see hcw Mr. Hanes could really testify l
effectively on what the thcught processes were Of Mr. Temple 3
- 5 and what caused hir to conclufe what he did.
'Jith that S: 9e 'e::( =%c:t:: !!cc 1,
444 %;RTH CAPITCG STntti 7
Q
(; [, jg W A S HI N G?C N.
3.0, 20001 (202) 347-3700 8
r
54 objection on the record, go ahead and answer.
1 i l
2 THE WITNESS:
Well, I was aware of the pressures that he was unde., and I agree with Mr. Potter that I don't 3 '
4 knew all of his internal thought processes, but certainly 5
Jce was under a lot of pressures.
BY MR. CHARNOFF:
- i 7
Q And Mr. Oreffice set up this group of somewhat more ai objective people because you wanted to get a total objective l
look of the Dow-Consumers relationship, without its being in 9
10 the context of the specific needs of the Midland Division, I
ti and in the context of the other pressures that were beyond 12 the managerial division, is that right?
i 13 '
A I would say that is correct.
And I think as a matter of fact Joe Temple suggested this review himself, 14 !
\\
\\'
15 recognizing these very factors.
is,
O In fact, he had recommended -- I think it's reflected in Board Exhibit Number 1 in this caso, that was 17 is a letter to Mr. Oreffice where he recommended the establish-19 ment of the review group on a corporate basis, is that right?
20 A
I can't quc'.c exhibit numbers and so on, but 21 I'm sure that's right.
}
i Q
What was the purpose of the Sentenher 24 meetinc?
23 A
Well, I didn' t call that meeting.
It was, I 4 ;
guess, a higher-level version of.he September 21 meeting.
l
- s l The review panel, Iow management, needed to have a direct i
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55 l
l l
first-hand, unfiltered view of the Consumers Power posture 1
i l
2 of the status of the hearings, and they needed that direct l
i I
3 input from Consumers Power.
So it was called to give Consumers that direct chance to input to Dow.
4 I
5 Q
One of the inputs was tc discuss at a higher 6
level the nature of the forthcoming hearings?
7 A
Yes.
8 !
Q Another input was, in light of the September 21 9 {
meeting, to acquaint Mr. Orc.ffice and other senior manage-1 10 ment with he possibility of a lawsuit if the contract was i
terminated?
11 i
i 12 A
Give them a chance -- well, give Consumers a i
l 13 chance to do whatever they wanted to do.
We had already l
r, 14 told then. about the September 21 meeting, so that was known i
\\
~
15 at the time.
h 16 Q
Was tde f'tatement -- there were statements made 17 again about the possibility of a lawsuit by Consumers Power, 18 weren't ther??
19 A
- Yes, tere were.
- o Q
And that was made by Mr. Ay Ond, I think you i
{
said?
l 21 A
Yes.
J
- 3 !
Q
-- rather than ?ir. Falahec at that point?
l A
I think 31r. Apend cid.cs: cf the ralking.
- 'r.
25 Falance may have jcined in seme-i es.
f M
O dd*
EId7 O \\drd7 d7d, 0 00, I
444 ** C R T W Cass e TO 6 STREET C2 347-37 C
51 l
1 Q
And was that stated by Mr. Aymond as almost a i
2 natural consequence of what would happen if the contract i
3 were tarminated, or was it stated in soma sort of threatening 4
way, or what?
I i
5 A
I dcn't knew how you'd state a $600 million 6
lawsuit in a non-threatening way.
7 l We felt threatened, yes.
8 0
Well, you've been engaged with Dow for some time, 9
and Dow has had a lot of lawsuits, I take it, over your l
l 20-year period?
10 11 A
It's had a few.
i 12 O
And I take it in the course of those situations, l
there were events where you met with parties before a 13 i
-s t'
14 lawsuit was started, is that correct?
15 A
That's correct.
i is O
And you would want to know from a corporate i
17 l position whether that lawsuit potential was real or fancied, 1
18 ;
wouldn't you?
19 A
Yes.
- o Q
So, as a source of information from -- I mean 21 as a matter of information, Cow would want to knew in connecticn with any potential action it would take, wouldn't i
- 3 it?
24 i A
Correct.
25 Q
So it would seek cut chat informaticn as a A
r-I a
c'*ee
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57 l
1 '
matter of information, wouldn't it?
2 !
A I would say so, yes, i
3 I Q
Okay.
And if, in fact, whether it's a Consumers i
case or some other potential situation, if in fact the 4
1 i
5 contracting party or the person with when you had a contrac~
6 tual relationship wouldn't tell you that the potential consequences of some Dow action might lead to some litiga-7 tion, you would feel that you were missing some information S
9 at that point, wouldn't you?
i I
l A
That was the purpose of that meeting, is to get 10 11 !
direct information frcm Consuners and a chance to ask 12 questions.
i 13 O
About the potential for a lawsuit, as well as 14 at.' thing else, is that right?
L I
A Right.
15 16 l
Q At that meeting did Mr. Aymond or anyone else from Consumers Power Company urge Dow to present any testi-I 17 18 mony that would be less than truthful?
19 A
No.
20 Q
Incidentally,~at the September 21 meeting was j
i 21 there an" indication from Mr. Bacon, Mr. Aymond, Mr.
j
- 2 Falahee that the people should present any information that i
23 was less than truthful?
i l
A No.
24 i
I I
O Was there any discussiCn at the S6ptember 24 25 Scc- ]:N::.:[ c.S : cite:1, $nt.
f 444 NCRTM C A P'T i. STREET W A SHINGTO N.
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20001
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58 meeting about the choice of a Dow witness, whether it should 1 !
l be Mr. Temple or someone else?
2 3
A I don't recall that that was resolved at that i
4 time.
I think it was later.
1 5 l Q
I thought you said earlier --
6 A
Well, earlier than that Mr. oreffice had said i
7 l in his opinion it should be Joe Temple, but I don't know i
8 that that was finally agreed upon until sometime later.
i 9
Q You might wish to consult your notes.
I don't i
10 see any reference in those notes to discussion of witnesses, 11 do you?
12 i A
If you'll see in those notes, they obvicusly 13 weren't complete, because -- I don't even know where they I
1 14 are, but - -
15 Q
I'm talking about the September 24 meeting, where 16 you had indicated --
e, A
The meeting started out with a presentation.
I 18 think Joe Tenple had some fairly formal opening remarks, and Mr. Aymond had a fairly formal opening remarks, back-19 29 ground.
And my notes sort of picked up after all those 21 formal remarks had been made.
i Is there anything in my notes that suggect who I
23 :
the witness would be?
I don't recall that being discussed.
i i
O All right.
2ut this was -- as ccacarec witi-the
- s September 21.ee ting, these were more complete notes?
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l 59 I
A Right.
2 l Q
So it's not your recollection that there was any l I
I I
3 discussion at all about the Dow witness at the September 24 i
4 i
- aceting?
I 5
A I don't think there was any fismussion.
6 l Q
Was there any discussion at that meeting of i
7 withholding from the Licensing Board any information with i
8 '
regard to the Consumers power Company-Dow contract?
i
~
9 A
Not that I recall.
10 1
0 Was there any discussion at that. meeting of i
11 I withholding from the Licensing Board any discussion of the i
t 12 Dow Michigan recornendation?
13 i A
Not that I recall.
l The whole world knew by then, anyway.
14 v
l 15 l Q
Of the Dow Michigan recommendation?
i 16 A
I think so, i
17 Q
Tell me about that, how --
i 18 A
It sas in the newspaper.
And there had been 19 phone discussions, and Consumers had talked about it.
And 20 I think it was generally pretty well publici::ed, what Jce j
~
l 21 Temple had said.
j 22 i G
Are we talking -- as : recall, and ccrrect
.e if I'n wrene --
22 there was a 1975 state..en
';. Mr. Tern. le 24 l that I're seen, but are you saying that there was a :tr.
25 Temple's state.enn in the period of September 1376 whien c~:r.:e::::t =<~erc:::::. !]x 444 NCRN C A PtTO L. ST*4EET
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60 t
lI reflected the Dow Michigan recommendation?
l A
I can't give you dates, but I think it was in 2
3 the newspapers that Joe Cemple had been quoted as saying i
4 that this was no longer a gcod situation for Dow.
5 MR. CHA?lIOFF:
Off the record for a minute, i
6 (Discussion off the record.)
i 7 !
MR. CHARNGFF:
Back on the record.
8 i
BY MR. CHAR';OFF :
9 l
Q At the September 21 meeting Mr. Falahee, you 10 said, discussed the Consumers contract and what he felt at 11 '
least the contract required in terms of Dow support of I
i I
12 l
Consumers at the Licensing hearing.
l 13 Could you sumnarize what the nature of that i
i 14 u >
support was that Mr. Falahee thought that contract ought to i
1G ;
require?
t 10 A
Well, he felt that that support requirement i
17 probably went beyond the Dow position that we felt support i
18 meant, that we would provide engineering type witnesses who 19 would come up with factual informatien, and that that 20 satisfied our requirements under that part of the centract.
l ii Mr. Falahee falt that that recuired further l
i 4
i 22 1 action en Dcw, that we 9.:ould actively ccre in and support i
23 l their pcsition :... :_1 ways, 0 try and help the licensi: c.
- 4 O
Did it mean that ycu had to take a acepcrate i
'D FCsitiCn witn regarO to tne cngCing prc]ect t.'.a t was CC? = ?!.:C".:l' C\\CIC:!C:
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61 consistent with theirs?
2 MR. POTTER:
Consistent with whose?
3 MR. CHARNOFF:
Consu~.crs.
4 !
THE WITNESS:
No, I don't recall him putting it 5 i in quite those terms.
He put it in the posture that if we 6
came out and took a position that resulted in their loss 7 i of the license because we were no longer supportive of the 8
project, and so on, that that, certainly he thought, would 9
be in violation of the contract.
i 1
I 10 -
l BY MR. CnARNOFF:
Q And that was the basis, among others, for his 12 statement that if the contract were teminated there might i
13 i be a lawsuit?
^.
\\
e j
14 I
(-
A Might be?
He said there would be.
There wasn't 15 any question about that whatsoever.
I 16 MR. CHARNOFF:
I think that's all the questions i
17 we have.
I MR. POTTER:
I'd like to have just about two 19 minutes to talk with Mr. Davis.
'O (Recess.)
3.7
.q.
- o. c _. r.,..
v C
"r.
Hanes, 2 just have a few quesuions.
42 l
Earlier in your testi~.ony when you were respend-U
-'-c.
abcut
. to c.uestions Cimstead v.ou we-o 1:
1 c i t
a pericd sf time apparently after these.eetings of 3-21-76
'~
i l
l
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62 1 i and 9-24-76 when the Temple testimony was being prepared f
2 l for submission to the Nuclear Regulatory Commission Board.
i 3 l I believe you said at some point that they a
4 reported back to you.
Can you tell me who the "they" you wete s
referring to rc :?
I, 6
A That would be Lee Mute and Milt Wessel.
i 7 !
Q Okay.
Now, as Mr. Charnoff pointed out in his I
8 examination of you, you took minutes -- not minutes, but i
rather notes, at both the 3-21-76 meeting and the 9-24-76 9
l 10 meeting, is that correct?
I 11 A
Yes.
i 12 Q
And it's your practice, I believe you testified,'
l 13 ~
to note down in notes that you take at meetings those
.s 14 subjects that you regard as significant, is that correct?
j-J i
I 15 A
That's correct.
=
t l
16 !
Q Would you take a moment and review your 9-21-76 l
17 meeting notes and tell me whether there's any reference to 18 the Renfrow statement in there?
19 A
Which Renfrow statement?
- o Q
The one that you testified to earlier, both to 21 Mr. Clastead's examination and also dur;.nq Mr. Charnoff's i
t
- 2 examination, relating to the.itness, the Ocw witness.
i t
"R.
C'OJC'OFF
- The witness who would 'ce unaware i
24 cf ".r.
Tem le's positicn?
l IG. POTT 22:
I'- talki.mg abcut whatever stancment
- s
?
P i Q
71
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I 444 NCR'M C A P?TCL STREET
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63 1
Mr. Renfrow made during the course of the 9-21-76 meeting 1 '
i i
l 2
regarding the use of the Dow witness.
I will subsequently 3
ask the question, what's his best recollection as to --
l
{
TIIE WITNESS :
No, there's no reference to that.
4 i
5 BY MR. POTTER:
i 1
6 i O
Is there any particular reason why that doesn't
(
7 l appear in your notes?
i 8 :
A Yes.
Because when that conversation started i
~
9 doun that line, I was starting to prepare mentally my other 10 speech that the Dow witness was going to be open and 11 l kncwledgeable, and candid.
I guess candid may not be a i
12 fair word, because nothing was suggested that they not be 13 i candid, but that the Dow witness would be knowledgeable and I
14 he would tell the whole story.
.Av 15 l Q
Now, as Mr. Charnoff brought out, before Mr.
t te ;
Renfrew said whatever he said there apparently was what I i
17 night call an antecedent discussion in which there was some 18 discussion made by a number of people regarding the use of 19 Mr. Temple as a witness, is that correct?
t 20 A
Yes.
2 Q
And then, hcwever that particular subject was resolved, Mr. Renfrew then made a statement to you regarding i
- I the use of a witness frcm the Oc. Chemical Ccmpany, is that 4
correct?
25 !
A Tc the '1hcle grcup,
.c t just tc me.
?
I
- c;e,:c ::::. 0:::.
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I c~:e.*cre.:t 444 NCR'M C A P'TO 6 STREIT W A SHINGTO N, D.C.
- 3 cot j[, >j UM,
64 i
l l
1 !
Q All right.
What is your best recollection of i
2 what Mr. Renfrow said?
3 A
It was along the lines of maybe we could have a t
4 witness who was unaware of Mr. Temple's recommendation.
5 I guess that's about all I recall.
But when he was 1
s suggesting this, I took it seriously enough that I felt s
I had to respond and straighten the record out at that 7 i i
I 8 ;
moment, that the Dow witness was going to be knowledgeable 9
and that he was going to testify fully, and that's how I i
I 10 ;
responded.
11 l Q
Does that mean that you interpreted whatever was l
12 {
said by Mr. Renfrow then to mean somebody who knew less i
13 than Mr. Temple did was to be called as a witness?
Or what did you understand him to mean?
14 x.
i 15 A
Well, I understood that his suggestion -- as I I
1e i say, the way it came out, it was sort of spontaneous.
The l
way it came out, I took it seriously enough that he was 17 is suggesting maybe that Dow should provide a witness that was 19 l not kncwledgeable, and that I wanted to clear the air right I
i'
- o then that any witness that Ocw supplied would be kncwledge-21 able end that he would testify fully and accurately as to the facts.
I 23 i And I intended that to cut off that conversaticn 24 alcng these lines, and it did in fact cut off the cenversa-
- s tien along these lines.
As I recall there wasn't anf more cSc - Jed:::I cRe:c::::
Oct.
1.
444 NCR*H CAM % ST4CET N A S HI N GTO N.
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20001 GQ2) 3474700
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h6j
65 i
1 I
discussion about it.
i O
Now, when you say you interpreted whatever was 2
3 said to mean that a Dow witness who was not knowledgeable i
4 !
was to be tendered as a witness, according to your under-5 l
standing, now, was he not to be knowledgeable on any specific 6 !
area, or on the subject matter generally, or what?
What I
l did you understand the meaning to imply?
7 I
8 l
A Fall, Mr. Potter, I didn't know quite where the 9
line of inquiry or suggestion was headed, and it was my to intention to chop it off, whichever direction it was headed 11 down.
And I, in fact, did do that, by my statement as to 12 the nature of who -- not who, but the qualifications of the i
13 Dow witness and the nature of his testimony.
14 Q
I'm going to refer you to page 3 of your notes
\\_
i 15 of the 9-21-76 meeting and again I'm going to call your 16 attention to the line in the middle of the page, just 17 :
above the reference to Mr. Decker, where it says -- I'm t
la quoting from the notes:
19 "If live up to K..." which I take it is your 20 abbreviation for contract?
21 A
Right.
22 O
"...but no longer ecencnicallf viable. '
And 23 there's a period there.
24 A
Right.
- s Q
Then the second sentence fclicws, "Will sue Ocw...'
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A
...will sue Dow for contract violation."
2 Q
Are those two sent;'.ces connected, or are they 3
independent thoughts?
4 A
I think they're independent thoughts.
The first 5
one is one sentence, if we live up to the contract but it's 6 '
no longer -- but if we testify that a nuclear power plant 7
here is no longer economically viable, then the following 8
is that they would then sue Dow for a contract violation.
i 9 l Q
Now, that's in the conjunctive then.
Am I 10 correct in understanding that the statement that was made 11 !
.that you wrote down is that if Dow lives up to the contract 12 I but then states that it's no longer economically viable --
l 13 A
Well, if we tescify along that line.
l l
Q That a lawsuit would follow?
14
\\
15 A
Yes.
l An.who did that statement come from?
a 16 Q
i 17 A
Mr. Falahee.
Again, that's not verbatim.
That 18 was my interpretation of what he was saying.
19 0
I understand.
20 MR. POTTER:
I haven't anything else.
Thank you.
21 MR. OLMSTEAD:
I would like to have a couple of i
redirect cuestiens, if I might.
t
~ e..,- r m- -... w:a. 4 A.
- m. s
-,-J a
v I
j
.. _y u....
o.o c -r.
4 I
25 O
I want to follow cp on the discussion that your i
n r~
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67
{
l l
1 counsel, Mr. Potter, and I had on the privilege question, i
2 !
in that I asked you questions as to whether there had been legal advice on Dow's position relative to the contract 3
i 4
and whether they could sue for breach or delay, and the i
{
5 objection was tendered that you could answer as to Mr.
6.
Wessel and in-house counsel, but there was an objection t
7 interposed as to any counsel from outside, other than Mr.
t t
l 8 :
- weggel, l
9 Tae question I'd like to ask you is if there i
10 l were any instances w'ere other counsel besides in-house 11 !
counsel and Mr. Wessel communicated with you or with any i
12 other Dow officials, to your knowledge, concerning Dow's l
legal liabilities, rights or responsibilities ander the 13 I
14 contract?
r I
sx.
I 15 '
MR. POTTER:
Excuse me.
Before the witness i
16 answers, I have no objection to him responding as to the i
l fact of yea or nay, whether there was :ommunication.
But 17 i
18 you're --
19 MR. ODISTEAD:
That's why I'm asking the question.
20 MR. POTTER:
All right.
21 THE WIT';ESS :
The answer is yes, we did Letain 22 outside counsel O write some lecal ccinicns for cur i
1 23 guidance, and we did neet in person and e:cp10re these
.' 4 -
cR3tiOns in detail tith them.
l
- s !
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68 l
1 i BY MR. OIJ1 STEAD :
2 Q
On the Dew-Consumers steam contract?
3 A
Yes.
I Q
Subsequent to the Court of Appeals remand?
4 5
A Yes.
i Q
Subsequent to the Dow corporate review?
6 i
i A
I guess before and subsequent to that time.
7 l
8 !
Q Are you, on behalf of Dew Chemical Corporation, i
asserting attorney-client privilege with regard to those 9 I 10 l communications?
11 i A
Yes.
I 12 O
How many conversations took place with regard to 13 this subject or communications are there to which you assert i
14 I
a privilege?
~
is MR. POTTER: I'm going to object to any further 16 examination.
Mr. Hanes can make the decision, but --
17 MR. OLMSTEAD:
I'm not asking him for the 18 substance of the --
19 MR. POTTER:
I understand.
But I want this 20 record to be clear we're not waiving the privilege at this 21 point, and I think the fact of the contact has been made, 22 and : think that's enough.
And I think that any further i
23 ;
cc= ment runs the risk that crivilece ma.r well be waived, i
- 4 l and I don't -- we'll let Mr..Ianes make that decisicn.
1
_, m. _...,. _ S S :
- dec.,ine to answer.
, 5
- c..
s l
l
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69 1
BY MR. OLMSTEAD:
2 Q
What are the names of the attorneys who provided 3
such information?
i 4
AIR. POTTER:
Same objection.
1 i
5 MR. OIS. STEAD :
Privilege does not cover :he 6
nar.es of the attorneys, t
I 7.
MR. POTTER:
That's arguable, i
8 MR. ODISTEAD :
Well, I think it's fairly clear 9
j under the Federal Rules that privilege does not attach l
10 ;
to the names of the counsel who provide --
i
- 11 MR. POTTER:
If I'm wrong in my interpretation, j
i 12 then we'll subsequently have to supply the names of counsel, 13 but I object.
i i
14 ^
THE WITNESS:
I will follow my lawyer's advice.
v i
x 15 l MR. CRISTEAD:
Well, I could give you a number 1
i 16 of case cites of federal courts that --
17 I MR. POTTER:
',lell, Mr. Olmstead, I haven't had i
i 18 a chance to research th:.s question in depth, and I'm not 19 going to waive the point now.
If I'm wrong, you'11 20 certainly be supplied with the info mation later.
21 BY MR. ODISTEAD:
22 C
Was this inform tien which you assert was i
23 privileged cccmunicated to anyone else in the Dew corpora-24 tien?
25 A
Not that I'm aware of, other than legal staff.
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i Q
Have you discussed the matters with anyone 2 l besides your counsel?
3 MR. POTTER:
"These matters" refers to what, now?
4 i
MR. OUiSTEAD:
The matters that you assert are 5
privileged.
6 THE WISIESS:
The gene.ral subject matter, of 7
course, has been discussed all over.
But the legal advice 8
and interpretation, and so on.
9 BY MR. OUiSTEAD:
10 Q
Okay.
i i
The second question I'd like to ask is:
12 With regard to these conversations which you i
13 I attribute to fir. Renfrow concerning the lack of a knowledge-i
(
14 :
able witness being a possibility, what was your impression 15 of Mr. Renfrow?
16 Let me back up.
Had you met Mr. Renfrow r
'7 previous to this meeting?
18 A
No.
Q Were you familiar with the law firm that he 20 was a member of?
21 3
30, Q
Did you have an impression as to which atterney i
22 i for Censumers Pcwer was the lead at crne"?
24 MR. PCTTER:
At what point in time?
~-
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At that meeting, C:$ ~ $dr'd l.' 0\\dr:1?d 1, J CC.
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MR. POTTER:
The 9-21-76 meeting?
2 MR. ODISTEAD:
Yes.
t, 3 '
THE WITNESS:
Nell, Mr. Renfrow did most of the talking in that meeting.
But I guess if I had really l
5 wanted a discussion, I would have asked Mr. Falahee.
i f
6 Mr. Renfrow really was following the details of 7
the hearing.
He was very knowledgeable in that area.
He 8
s was educating us in that regard.
l I guess I felt that if a lead attorney is the 9
l 10 guy who makes the final decision, I thought Mr. Falahee i
11 i
- would, 12 MR. OLMSTEAD:
That's all I have.
MR. CHAPSOFF :
I have a couple of questions.
I4 RECROSS-EXAMINATION 15 i BY MR. CHARMOFF:
a 16 Q
Did Mr. Falahee express any opinions about i
having a witness unaware of Mr. Temple's prior statements 18 or positions?
19 A
No.
20 Q
Did ycu understand Mr. Renfrew's response to 21 the discussicn of Mr. Temple's suitability as a witness to I
22 be any kind of effort to present acrobcdy who would act be i
22 j
kncwledgeable abcut the Ocw ccrpcrate position?
24 MR. PCTTE3:
Ixcuse me.
At the peint of the 25 9-21-76 neeting, as I understand, there wasn't a :cw r
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l corporate position.
1 I
2 BY MR. CHARNOFF:
i 3 l Q
Whatever the Dow corporate position would be at i
l i
the time of the hearing.
4 t
5 A
No.
i 6
O So you're saying that there was no effort, or i,
there was not a suggestion that there be somebody not 7
i l
8 i knowledgeable about the Dow corporate position whenever l
9 l that hearing would be held, is that correct?
10 t A
There was no Dow corporate position, so the j
answer is we didn't get into that.
11 12 Q
But it was assumed that there'd be a Dow 13 corporate position to be articulated at the hearing 14 whenever it took place, is that correct?
15 '
A Right.
16 Q
has Mr. Renfrow's statement, as you understood l
17 i
it, addressed to the suggestion that there be scmebody who 18 would not be knowledgeable abcut that Dow position to be 19 presented at the hearing?
20 A
No..
21 0
Now, if I could ask you to turn to Exhibit 64, i
22 which are your notes of the Septerber 24 T.eeting, I believe 22 this was at page 2 -- do you have a copy of that, sir?
i
- 4 I'n not sure it's in that package --
- s A
I handed it back to somebody.
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I MR. POTTER:
I have it.
2 (Document handed to the witness. )
3 MR. POTTER:
The witness has been handed a copy i
I l
of the September 24, 1976 notes.
4 5 i' BY MR. CHARNOFF:
i 6
i Q
I ask you, Mr. Hanes, to turn to page 3.
Down i
7 in the second paragraph there's a statement that Mr. Aymond I
aI said that if these things happened they would sue Dow for I
9 l
losses alleging a breach of contract by Dow, on the theory i
to!
that repudiation is a breach, and said if Dow acts to 1
II frustrate Consumers Power is less clear, Consumers Power 12 I is entitled to Dou's support for the project.
13 Could you elaborate a little bit on the fine 14 point.between breach or repudiation and frustration, as you l
~
(
understcod it in that paragraph when you were quoting that?
15 16 l A
(Pause.)
17 i Q
This is not intended to be a test of law.
I'm i
18 just curious as to.
19 A
Well, I think repudiation clearly, if Dow takes 20 the pcsition that the contract is no longer in force, is 21 not ad'rantageous to Dow, this is back on page 2 -- to l
22 me that would be a repudiation.
t 23 l
Frustration gets into the other areas where we 24 give lip serrice to the contract, but didn't like the deal 25 any more, and by cur actions indicate that, yes, we are
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and l
bound by the contract whether it's a bad deal or not, i
2 i that would tend to frustrate it.
I guess 'that would be as close as I could come 3
{
at this late date, in distinguishing them.
Q And at that point what Mr. Aymond was saying 5 !
6 was that, while it's less clear there might still be a 7
lawsuit.
Is that what you --
8 A
Yes.
Q Now, turning back to page 3 of your notes of 9
10 the September 21 meeting, Mr. Potter discussed with you --
I 11 do you have that, sir?
I 12 i A
Yes.
l 13 l Q
You were talking about some sort of conjunctive
- s
{
relaticnship between those two sentences, that "If live l'8 up to contract, but no longer economically viable.
Will 15 16 sue Dow for contract violation" and so on.
i 17 l
Is that in a sense -- I think you attributed 18 this basic proposition in the shorthand notes to Mr.
'9 Falahee's statements at the September 21 meeting, is that 20 Correct?
1 21 A
That's correct.
22 a Q
Now, do you understand four statement with I
23 regard to Mr. Falahee's statement as it is reflected in 24 yocr shorthand notes there to be reflective of this concept I
cf frustration that Mr. Aymcnd was talking about?
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l l A
Well, my feeling was that in the initial meeting j
on September 21 that Mr. Falahee came on very strong to get 2
i 3 l our attention, and they had fine-tuned their position, and
{
4 that Mr. Aymond's breakdown was in more detail, with more l
5 variations, in the time between that meeting and the 24th 6
meeting that Consumers had clarified their position somewhat i
7 l over what Mr. Falahee had expressed to us, s
l 8
Q You don't know that in fact that was or was not i
9 what Mr. Falahee was thinking when he said whatever he said 19 on the 21?
11 A
I don't know, no.
This is my interpretation of i
l 12 I what he said, and it's not verbatim as to what he said.
I 13 Q
Okay.
,s l
g Now, the notes are admittedly shorthand, aren't I
thev?
18 i
16 :
A
- yes, i
17 Q
-- of the September 21?
18 A
- Yes, my own version of charthand.
19 Q
Your own version of shorthand.
Do you have any 20 idea, as the discussion was being presented by Mr. Falahee 21 at the time, if you were to write a cceplete paragraph j
22 i instead cf the shcrthand notes that you have there, whether I
22 there would be any sentences ycu would insert between those l
24 two sentences there, if feu had to reccliect that basic I
25 discussion?
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I We didn't explore in detail in that meeting to A
the extent we did in the next =ccting, as to just what the 2 I 1
i meanings were.
So I guess I would not inserc any sentences.
3 Q
But Mr. Falahee didn't talk -- I've met Mr.
l Falahee, and he doesn't talk the way these notes read, does 5
i 6
he?
7 A
I hope not.
i S !
Q Well, did he talk the way these notes read?
I A
No.
He in fact did not.
As I say, this is not 9
10 l what he said.
This is my understanding of what he said.
t i
11 l Q
So there was in effect a somewhat more elaborate l
oral statement?'
12 t
I 13 A
Yes.
m
~
14 MR. CHARNOFF:
I don't think I nave any more 15 t
questions.
l 16 MR. POTTER:
Nothing further.
I 17 MR. ODISTEAD :
Off the record.
1 18 1
(Discussion off the record.)
19 MR. ODiSTEAD:
All right, that concludes this 20 wirness.
21 We ' ll re ce s s un til 10 : 3 0.
22 (Whereupen, at 10:10 a.m.,
the taking of the 23 depcsitien was cencluded.)
I 24
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CERTIFICATE OF NOTARY PUBLIC I
1 I
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2i i
3f I, Yhwfh d j h a netary public, do l
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!l i
4l hereby certify that the witness whose testimony appearr-l l
5!
herein, appeared before me and was duly sworn by me.
6, hlJ 9%. lMJ 7'
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Notary public in and for the 8
WM
$nk, 9 l Mr commission expires 74 10 i
t* P L c N M. nA33AQ3 h MlI4 Midhnd County, Mid!g.3 I
II Efr Commusico Ir;(re, A.f,# h (gff
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13 14; CERTIFICATE OF COURT REPORTER I
I i
15i l
i 161 I,
William E.
Landon Court Repoet t do i
17 hereir' certify that the testimony contained herein is a true i
i 18.
record of i.ne testimony given by said witne;s, and I fu :her 19 certi fy that 1 am neither attorney nor counsel for. related I
- i 20 to or employed by any of the parties to the action in wh ;'
21 l this statement is taken; and, furtner, that I ca not a
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22 relative or an employee of an'.
nttorney or coun;,el emp' ayes 23 by the parties hereto, or financially interested in the 2 *, i i
aCTlon.
W - Feceral Re;oi tes.
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