ML19289D944

Transcript of 790308 Meeting in Washington,Dc.Pp 1-30

ML19289D944
Person / Time
Issue date:	03/08/1979
From:	Gilinsky V, Hendrie J, Kennedy R NRC COMMISSION (OCM)
To:
Shared Package
ML19289D945	List: ML19289D944 ML19289D946 ML19289D947
References
REF-10CFR9.7 NUDOCS 7903200559
Download: ML19289D944 (30)

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<, NUCLEAR REGULA. TORY COhiMISSION W 4%'.m [f 4

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DISCUSSIO:: OF DP.OPCSED CIVIL PENALTIEG LEGISLATION (Open to Public Attendance)

March 8, 1979 20/5 151 i

i i

Pages 1 - 30 Pre;:sred by:

C. H. Br:wn Office of the Secretary 1

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e-This is an unofficial transcript of a neating of the Uni ted States liuclear Regulatory Cocaission neid on March 3, 1979 in the Cc mission's offices at 1717 H Street, N.

'.l., '.!asnington, D. C.

The meeting was open to public attendance and observation.

This transcript has not been reviewed, corrected, or edited, and it may contain inaccuracies.

The transcript is intended solely for general informational purposes.

As provided by 10 C. R 9.103, it is not part of the fornal or informal record of decision of the catters discussed.

Expressions of opinion in this transcript do not necessarily reflect final determinaticas ce beliefs.

Ma pleading or other paper may be filed with the Co.cnission in any proceeding as the result of or addressed to any statement or argument con tained herein, except as the Commission may authorize.

2075 152

1 1

UNITED STATES CF AMERICA NUCLEAR rig'JLATORY COMMISSION 1

Discussion of Proposed Civil Penalties Legislation O "

(Open to Public Attendance) t 1

6 l

Commissioners' Conference Roca l

0 1717 H Street, N.W.

Washington, D.

C.

Thursday, March 8, 1979 10 The Commission met, pursuant to notice at 1:55 p.m.,

,,ac Joseph Hendrie, Chairman of the Commission, presiding.

14 PRESENT:

15 Chairman Hendrie Commissioner Gilinsky 6

Commissioner Kennedy Ccmmissioner Bradford 17 Commissioner Ahearne 20/5 153

_5 ALSO PRESENT:

19 L.

Gossick J.

Davis 20 J.

Hoyle C.

Stoiber

1 L.

Slaggie J.

Murray S.

Bryan J.

Aron 23 E.

Rothschild

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• I.

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CHAIRMAN HENDRIE:

The Commission T.eets this afterncon, 3

first of all, on a discussion of proposed civil penalties 4

legislation.

This meeting follows from a request of mine i."

5 that we consider the matter further.

It has been before the u

t 6 ;) Commission at a previous meeting and a majority of the Commission determined that the draft proposal should have remcVed from c

l it the cao on total cenalties to be levied in a 30-day ceriod.

9 As I re-read it, I de:cided I did not understand, in 10 addition to disagreeing with that point, but more particularly, 11 { I decided I did not understand the changes that were proposed 13 in the adm!1istrative procedures for imposing penalties.

It seemed to me that the nature of the proposed new 4

procedure left whatever judicial appeal to the courts that might be available to penalize parties, left it to a review of agency action on the basis of whether we had abused our discretion which

_o is a fairly husky threshold, I think, to make a case.

As I read the discussien that went with the propcsed legislaticn, it

,3 seemed 00 me that we were proposing an adminiscrative imposition g

of penalties because the present system may just require us 1,

-a to go into a federal district court and go through the basis on which we set the penalty, that is, and the reascns for it, that is, a review cf the penalty action, including the factual findings made by the agency as well as the setting of the dollar penalty itself.

,0/5 154 2

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If we are goi.:g to rencve the cap, it would seem to be m

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2 lj fair to question.;hether, indeed, if I was correct about I

1. ]theassumptionofthewaythead..:inistrativeprocedure change was going, whether that was really where we wanted 5

to go.

So that brings us to this meeting.

6

]

Commissioner Kennedy has recently sent CGC a memc-o 7 ll randum asking a number of questions related to the matter.

8 Why don't, as a way of getting started, why don't I ask 9

the Counsel to discuss those.

They have written a memorandum 10,

back -- discuss those questions and in the course of that 11 you will also inevitably work in some discussion of the i

12 points I raised.

13 MR. STOIBER:

I'm going to quickly turn this 4

14 l over to my colleague, Mr. Slaggie, to run through the 15,:

resconses to the questions.

I 16 However, I think, Mr. Chairman, with respect to I

17 your fundamental question which you brought earlier, and l

13 :l that is the standard of any sort of judicial review that 19 we might expect on a penalty to be levied by the Commission 20 under the administrative approach, we have done some further i

21 legcl research on that question and under the response to i

i 22,

Cuestion 3, which Mr. Slaggie will be discussing, we tried i;

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22 to outline, and I will review it quickly, I think the short answer is that lawyers will possibly argue about the 24 25 '

applicable standard of the review here, however, we think 1

20/5 155 n

i l

I f

4

i i

I 1

acclicable decisien was the Eut / Glover 1973 case wnich 2

talked about the need to find that the agency's l

3 l remedy bears a reasonable relationship to the fact this 1

) ought to be eliminated.

So let the court call a reasonable 4

1 5 d relation test, not very precise language to be sure, but i

6 draft lecislation to cut a little more light on that.

]

a 7 0, So Leo why don't you start with the memorandum.

o d

8 "

MR. SLAGGIE:

Okay.

9 On the general subject of the general standards ilr 10 of review and the way this administrative imposition system 11 might change that, I think I might point out that the h

,~

12,

point of the administrative in.cosition system in part is to i

13 get the review of civil penalties in the same procedural 14 '

framework that is applied generally to other Commission t

15 actions.

i.

1 16.h If one considers what we often say is the most I

17 i stringent penalty, a shutdcwn order, that would be review-13 able for abuse of discretion and on that standard and in i

19 a court of appeals, I might add that a factual determination i

20 i that the Commission made on which it based a shutdcwn ~rder o

-.1 '

would be reviewable only for abuse of discretion in a

9 1

92 court of ac.ceals.

a 23 '

Now, under the proposed civil penalties adminis-

.s

a c tu a _, cetermination trative incosition tn,e Commission,s _

9-would be reviewable for substantial evidence, if it would be o

2075 156

i i,

5 I

1 easier to overturn a Commission's factual determination 2

- that some violation had taken place, if that were being I.

3

put forth as the basis for a civil penalty, rather than 4

i if that were being put forth as a basic for a shutdcwn order.

5 i

So here we have what is often said to be a lesser 6 j penalty with easier standards for the violater to overcome.

i 7 j So in that sense, I don't think that this administrative 1

8 imposition proposal is weakening the rights of people who 9

might have penalties imposed on them.

They live with a 10 l stricter standard when it ccmes to ordinary Commission 11 '

action.

t 12 !

CHAIRMAN HENDRIE: But how does it compare to the 13 :

present arrangement, things as they stand now?

i 14 MR. SLAGGIE:

Okay, under the present arrangement, i

15' first of all, we have very limited experience with the i

16 / collection action procedure.

17:l The way it works now is that the Commission would

.i la ll finc nat a violation has taken place and would impose a a

l i

~9'l penalty based on the Commission's factual determination.

1 20 Now, lest the violator pays everything,is fine, no punt 1

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21 -

intended.

If the violator says, I won't pay and we go i

22 into a collection action, all right, in the collection action, u

before the District Court the Commission would have to

,3 24 establish de novo, the facts of the violation.

There 25 ' wculd not be a question of "here's in the reccrf" if there 2075 157

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i 1

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is substantial evidence the court would fine; if the <: cur

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2

! would take this "no evidence" on it.

3 Now, suppose the court fcand that the Cctmission 4

was, in fact, right and that all our factual assertions were 5

correct, were supported by the evidence and the Cctmission u

1 a

says, I agree, these people did tuck a sock in a crack in o

7 the ECCS and that's a terrible thing.

Now that the e

8 j

Commission hac proposed to fine them a certain amoun: ---

t 9

COMMISSIONER KENNEDY:

A basketball.

i i

i 10 ;

(Laughter)

I 11i MR. SLAGGIE:

Yes. -- The Commission has proposed I

12.

to. fine them a certain amount of money, it is not entirely

\\

13 '

clear how the District Court would acproach that.

i 14 l If the District Court -- you are saying -- all right, 15 have agreed with the Commission's factual detemination and 16 l now I am going to review the fine they picpose, the only i

17 i real standard available for the the District Court to review i

la j that is abuse of discretion.

It is not really meaniagful to l

19 talk about substantial evidence for the fine.

I 20 Moreover, the Supreme Court

-- and we cited some 21 cases here in Commissioner Kennedy's questions -- the u

Supreme Court has 9enerally held that there is a very fine 97 e

~

23 latitude for the agency to use its discretion in this 1

sort of thing, and the District Court would say, Well, I 24 acree they did do this awful thing, cnd I'm no: ceing to 9-3 2075 158

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i 1

secondguess the agency when the agency says that really

]isanawfulthingandthusandsuch,

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2 certain fines shoull 3

be Imr.osea.

t 4

i If the fine, of course, is all out of proportion,

't 5 -'

beyond a range and reason of whatever the numbers we have

-D i here, a District Court would he free to hold that the 7

agency had abuscd its discretion.

1 i

3 i

In my view, that's about the same thing that a 1

9 court of appeals would do.

r 10 Now, we've never had a collection action that went 11 all the way through.

As I understand it there has only 12 been one time we had to go to a collection action.

Is that j

13 correct?

14 MR. MURRAY: Twice.

15; MR. SLAGGIE:

Twice.

Did either one cf them 16 ever go through the courts?

17 MR. MURRAY:

Yes, two of them went through the 18 ;

courts.

i 19 MR. SLAGGIE:

I thought one was settled.

That was 20 h the famous X-Ray Engineering case.?

9 21 i MR. MUPRAY:

Well, that went to court but that 22 was settled for 50 cents on the dollar.

Another case was settled for paying over a 12-month 23 1

24 period rather than paying the whole sum at one time.

25 MR. SLAGGII:

So we never did get to the pcin 2075 159 t

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I 3

a d

where a judge said, I now review the Commission's fine i

2 and either uphold it or knock it down, did we?

MR. MURRAY:

Unless you count the VEFO case which J

4 u is an aberration.

5 i

COMMISSIONER KENNEDY: What did it do?

6 1 MR. MURRAY:

In the VEPCO case the Commission 6

7 issued an order fining the compeay sone tens of thousands

.i 8

of dollars, I don't recall the exact amount, and the Fourth 9

Circuit upheld that fine.

10,i COMMISSIONER KENNEDY : And why was it an aberration?

.j 11 CHAIRMAN HENDRIE: Yes.

Hows come the Fourth 12 Circuit had it instead of a District Court?

MR. MURRAY:

The Fourth Circuit had it because f

13l i'

14 VEPO prosecuted the fine through the administrative 15 processes that we have established.

i 16 il We have a process of taking it to a hearing board i

17 !

or ---

d 13 j CHAIRMAN HENDRIE:

Okay, this was a review of n

19 our administrative proceeding on the fine?

t 20 [

MR. MURRAY:

That's correct, but VEPCO could 21 have chosen, as did X-Ray Engineering, to say:

"I'm not

't 22 going to pay your fine, sue me in District Court."

They 1l.

23 '

didn't do that.

They took it through the appeal process 24 which went to the Appeal Board and then to the Commission 25 itself, and eventually, since it went to the Commission itself, 2075 160

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9 i,

I i

1 the Fourth Circuit.

It went to the Fourth Circuit because 2

VEPCO brought it to the Fourth Circuit.

3 i

CHAIRMAN HENDRIE:

Okay, I see hcw that got there.

I l

COMMISSIONER 3RADFORD: What standard did the 1

3 i Fourth Circuit use?

I 6

MR. MURRAY:

I don't know, Commissioner Bradford.

n 7

I don' t recall.

I don't think it was reviewed on the 8

basis of abuse and discretion so much as it was on the i

9 ;

legal question of whether or not a material false statement i

10 l had to be willful or not.

If the conclusion was that a ll, material false statement, under Section 136 of the Atcmic t

12 Enerc.v Act, did not have to be willful, affirm the Commission's 3

13 judgment.

My recollection is that that was the issue in 1

14 this case.

I MR. SLAGGIE:

Yes, that is my recollection, 15 ;

j 16 COMMISSIONER BRADFCRD: So that they were not 17 ]

really reviewing the reasonableness of the fine.

1 13,

MR. MURRAY:

I think not.

19 MR. SLAGGIE:

No, that question was not reason 20 :

in the litigation.

2.1 But in any eventr the main point I wanted to T.ake 22 is that I think either a District Court judg-2 cr a Cour

.6 i

23 1 of ACteals judge, if confronted with a factual patterr that

_3,.

evervbcd.v had agreed on,was determinin~v whether or.c:

• l 0-a fine was reasonable, thev. would tend :: a c c. i ". this same 2

2075 I61 l

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standard.

t>

2 With regards to the specific questions that 3

Commissioner Kennedy asked, how many times in the past i

4 j was the maximum fine asked for by the staff, I called up a

5 the staff yesterday on that and off the top of my head, I 6

have been told that there were eight penalties in excess cf 1

$25,000.

i 9

Now, I can't say that those penalties were for o

9

~'

certain of the maximum that could have been charged, but at 10 least they are candidates for it.

Anything less than o

11 ]

$25,000 wouldn't have been a candidate for it, t

li 12 9 NIR. DAVIS:

There has been one case where the 1

i

l 13 1 staff developed a fine around $90,000 which was reduced 14 because of the statutory limitation.

15 hl COMMISSIONER KENNEDY:

Cniv one?

l i

i 16 '

MR. DAVIS:

Yes, sir.

17 !

CO.ND1ISSIONER KE:iNEDY:

In how manv v. ears?

1 13 MR. DAVIS:

Since 1971 ---

'69.

I 19 MR. MURRAY:

Well, '71 was prchably the first 2 0,h,

c. e n a l t v., '69 was the authority.

21 '

MR. DAVIS:

And we had to develop the regulations 22 and so forth.

'.i

23f, CCMMISSICNER' KENNEDY: So 3 years?

24 MR. DAVIS: Right.

25 COMMISSIONER KENNEDY:

One case in which the 2075 162

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a r

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1 cresent limit i.

2 MR. DAVIS:

Was bumped against.

l 3

was bumped agains.

COMMISSIONER KENNEDY:

4 ]

MR. DAVIS:

That's right.

5 CHAIRMAN HENDRIE:

In the cases in which the fines 6

were over $25,000, of which there have been several ---

h COMMISSIGNER KENNEDY: Eight.

An average of one 7

i 8 j a year.

I 9

CHAIRMAN HENDRIE:

-- how do -- what does the limit 1

10 mean, then?

'. l.

MR. SLAGGIE:

Well, those could have been cases 11.l i

it 12 l where the violations went beyond a 30-day period. For 13y example, if ---

l 14 MR. MURRAY: They had to have been.

15,

MR. SLAGGIE:

Right, they would had to have been i

16 !i in order to exceed $25,000.

J 17 "l i

CHAIRMAN HENDRIE:

Okay.

l 13 l M'.

SLAGGIE:

At 31 days, the maximum fine woul'd i

19 i have been $30,000.

i 20 As I understand it, of these cases I have l

21 il mentioned, a penalty imposed was slightly reduced three o

22 times out of eight, but most of those five out of them, I) 23 '

the people Just paid.

So that is the history on it, as I 9,4

-I understand it.

25 MR. MURRAY:

It is also fair to say that we have ".ad 2075 163 o

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a i

12 1

a couple of situations where they had the head off their 2

reactor and they pulled the rods out la the wrong sequence, 3

that sort of thing, where we were oni, able to fine the.m 4

on the order of, say, $15,000 because that is the only 3

i 5

violation we could charge them with, where we would have i

6 i liked to charge them with more violations.

Vermont Yankee c

[,comestomind.

7 8 j MR. DAVIS:

Yes.

And what that relates to, I guess, l

9 we call the signal effect.

10 We had a study conducted by a contractor with the 11 licensees and one of the points that licensees raised 12 is that they get from our civil penalty actions, a signal l

13 of the degree of significance we give to their misacts, i

14 and consequently, if we have a f airly wide range of dollar 15 values at which we can select a penalty, we could select a i

16 ] larger penalty for those things that we have high concern p

17 l about which would signal to them that concern. But as it i

13 is now, on c single violation, the single act is $5,000 19 '

regardless of what it is.

2^

MR. SLAGGIE:

The next question that Commissioner 21 J Kennedv asked was whv did Congress ori-inally provife the v

s 22 de novo review in the District Court.

-)

23,

I have attached an excerpt frca a memo we wrote 4,.

before.

Basicallv., the answer to this seems to ius lie 25 the history of civil penalties and the tendency of 20/5 164

I l

13 1

lawyers to copy the statute that came before them.

The

'd 2

initial civil cenalty authority ---

i 3

l COMMISSICNER KENNEDY:

De novo.

4 l MR. SLAGGIE:

-- The initial civil nenaltv.

g I

5 statute we prorosed was essentially a copy of the Federal 6

Aviation Agency statute which ccntained provisions for 7 L de novo review.

8 q

Everybody has felt, at times, a little uneasy

.i 9

l with this whole notion of:

Why is a civil penalty not 10 a penalty? and from time to time litigation crops up in 11 which it is argued that you can't impose a penalty wichout 12 l going through the full procedures that you would be i

13,

required to have in the case of a criminal case.

14 '

So there has been this lingering feeling, at least 15,

at this time, at the time the first civil penal'y statute i

16 was proposed that perhaps a de novo review in a District l

ll 17 j Court was somehow constitutionally illegally required.

ll 13 ]

COMMISSIONER KENNEDY:

Or as contrasted with that, 1

l what about " desirable"?

I 20 i MR. SLAGGIE:

I'm sorry?

i 93 COMMISSIONER KENNEDY: As contrasted with recuired,

' ahrt about desirable, from a lawyer's coint of view?

~-

~

~

'i

,3 '

MR. MURRAY: As a scrt of footnote to history, I can tell vou that the Zuctice apartment in those f ays, 2nd 44 25 those days being 1963,'1969 was extremely raluctant to appro'ce 2075 165 1

t I

9,9 3

requests.

In those days, the Atcmic Energ-j Commission's o

legislative prcycsals had to ~o to the -- they called it w

i l

the Bureau of the Budget, I believe, in those days -- before 4

1 they could get cleared.

And that meant sending it 5

out to the other agencies.

And Juctice was reluctant to approve a statute or proposal for a statute which gave i

7 the agency so much authority.

o I

3 But you have now, the crie case which 9

involved CSHA, a Supreme Court case which specificallr I

a 10 approved civil penalties for these Federal agencies.

So 11 !

I think Justice's concerns in those days, which were 12 constitutional basically have been eliminated.

13 ;

MR. SLAGGIE:

I have no problem with that, l

14 i MR. STOIBER:

I think rather than constitutional, J

15 !

I hate to cast dis.cersicns on the motives of an a~e i

encv i

I

.i 16 l I once worked for, but the Civil Division is quite jealous 1

17 i of its prerogatives to centrol litigation of the Federal i

t 13 I Government, and their motives are not totally just zurf i

I 19 j bending, it is a matter of trying to maintain the uniformity l

20 l+

of application of the Federal law and the rest. But since l

n 21 I that time ---

i 22 COMMISSICMER KENSEDY:

From the point of view cf 23 a citizen, it is not a bad notion.

I 24 MR. MURRAY: It was never portrayed to us as 25 constitutional.

20/5 l66

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4.

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7 hat: 3 ene c5 the positive m

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2 l cclicy reasons one can surtort.

I 3 j On the other hand, we now see, I think, the ll r

4 development of a plot that perhaps an agency which has 5 il greater expetise in the administration of its cwn statute i

6 is a better place to make these kinds of judgments than 7 !!

the law has moved on since that point.

'l t

8 j MR. SLAGGIE: We are, of course, tracking the r

e 9.

Administrative Conference recommendation, which has urged i

10 l that agencies move over to this administrative imposition, 11 and so we are by no means breaking new gound or in any I

12; other way being legally original in that.

m.x

- z:

13 L Question 3, I have already discussed.

If there t,

14 aren't any other ---

1 i

1 CCMMISSICNER KENNEDY:

I like that phrase, 15 I

16

" illegally original."

That's very good.

I l

i 17,

MR. STOISER:

Legally original.

13 l COMMISSIONER KENNEDY:

-- or legally original.

i 19 '

We cught to be able to use that.

I 20,i MR. SLAGGIE:

I want to go on to question 4.

l 21 A more specific statutory guideline as to the apprcpriate 22 amount of the fine, and sc forth, desirable or necessary?

i 23 Our answer is that we feel that it is undesirable 24 to build into the statute any ind of thing that might 9-crove or influence our flexibility in the future in that the na 2075 167

16 1

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staff already has guidelines that they appl;.

2 Question 5:

A civil penalt-f proceeding in 224 (c) 3 is equivalent to the other na.~.ed proceedings in the sense 4 j that we want to make clear that a civil pertalty order would 1

5 1 be reviewed within the agency in the same fashicn as 6

ordinary licensing orders are.

A hearing beard has to be 7

appointed.

You don't have to hear it yourself, ycu can 8

delegate this in the manner prescri: _d by Section 191 of 9 '

the Atar.ic Energy Act.

10 Question 6 is just the same thing. We have this i

l 11 addizion in Section 234 (a) (3) which spells out that in the 2.- -_..

12 notice to a person who may have a penalty imposed on him, a

.i 13 1 you would tell him there will be no review at the collection i

14 action.

In short, if you do nothing, if you don't see i

t 15 agency review, if you just sit tight and wait for a collection i

l 16 ;

action, like they cou'.d do now under the present civil 17 penalty authority, fou wcn't get de novo review, you will just i

13 have to pay up once the fact is established in court that i

19 l a fine has been imposed.

That's sort of the notice require-7.9 ment.

Should there bc.linitations as to the district.in i

~~ 1 which ---

91

l' 2;

CCMMISSIONER KENNEDY: What would the court do a,

,,, in sucn case 7 We would'cin.civ. co in, request an order frca 24 the court recognizing the fact that t?.e fine had been lev;ad and then a court order requiring its ---

.o 20/5 168

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0 1

MR. SLAGGIE:

I think so.

The most they might I

s'i 2

] considerably review would 'c3 whether the procedures had been 1

3 j conplied with, out far as the factual determina-ion or

.o 4 / the Commission judgment in t?.e amount of the fine, that would --

5 j that's clearly out.

6 l

COMMISSIONER KENNEDY:

So this is essentially d

7 h an in-chambers operation, not an open court proceeding?

8 ;

MR. SLAGGIE:

I would not want to comment on hcw 9

that would gc, but it would certainly be a perfunctory kind 4

10l of thing.

lli MR. MURRAY:

No, I wouldn't call it "in-chambers,"

12 lI Commissioner Kennedy.

It is just a collection on a debt g,

mm n -- -

1 13 is basically what it would be.

You wouldn't go back to 1

14 !

see the legitimacy of the debt, you would just say, there's i

15:

the debt and here is the collection.

It is merely bringing I

16 P the marshal to the ccurt so you can get the money.

I 17,

COMMISSIONER KENSEDY:

Okay.

Yes, I see.

So it i

18,i is c.ot an open court he.aring?

\\>

19 l MR. MURRAY: It could be.

i 20 l COM31ISSIONER KENNEDY: Well, that's what I'm trying i

1 21,

to find out.

I h

MR. MURRAY:

But the issues are nCrrowed to whether 22 1

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2 2.' the debt is legitimate.

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25 involved?

2075 i69

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1 MR. MURRAY: Yes, sir, but it is a very narr w 2

proceeding as opposed to a proceeding on the merits o.

the i

3

! case.

i 1

4 d COMMISSIONER KENNEDY: Okav.

.I 5 fi MR. SLAGGIE:

As to the limitation as to the 6

district in which the action may be brought; that's e

7 provided for already in Title 23, 23 USC 1329 says for e

one of these proceedings:

" Collection action may be c

9 l

prosecuted in a District Court where it accrues or where 10 the defendant is found."

I suppose it would accrue in 11 the district in which the violation took place or if you 12i tracked the defendant down and catch him some place else, 13 }i you could sue him there.

14 One possible change you might want to say as well, i

15,

we could bring this action in Washington for our own 16 convenience, but I wouldn't recommend putting that in 17 '. I' because eartly the public relations aspect of it.

e i

13 MR. MURRAY:

Well, besides that, our reactor e

19 !'! hearings are required to be in the location or the proposed i

20 h reactor and it just follcws in concert with our statute.

o

.Io 21 MR. SLAGGIE: The last question, I found to be a 1

little tricky.

"Should Section 234(c) specify who c.a; 22 e

2' request a hearing?"

If I can fin: the language -- it 24 says:

"The Commission shall afford an opportunity for 25 hearing prior to the issuance of a final order imposing a 2075 I70 9

l

]

19 i

a al 4

1

! penalty.

i

)

Now, it doesn't say in so many words to when it e

2 a

3

! shall affort that accortunitv.

Obviousiv, we have to I

t o

P afford the cpportunity for a hearing to the person that we q

b il are c.oin9 to im ose the cenalty on and there as absolutelv.

q e

6 j no question that he gets a right to it. So the only real h

7 !! question in this is:

are we leaving the door open for cther l

8 [ people to request a hearing and, if we are, do we want to 9 f do this?

10 I have mentioned here the possibility that we 11 might, that other people, other than the potential finec I

12 l might very well want to intervene in a proceeding where the i

~

13 L person paying the fine just wouldn't ask for a hearing; and 14 that these people might, indeed, have some legitimate concern.

15 Rate payers in the -- if there are any pass-on stakes, rate i

16 !

payers may want to protest, or conversely, they just might 17 /l s a v. that even if fines are not cassed on, a rate r.av.er ti 13 l might say, I'm getting lousy service anyway, and if these i

19,

people have to pay a $6 million fine, it is going to get I

I 20 a even lousier, and therefore, I want to come in and comment 21 ]

in a hearing. So it is certainly conceivable.

22l;i COMMISSIONER AHEARNE:

Might not someone would i

23 i want to come in to argue the fine, without their argument i

I 24 the fine might not be big enoug' '

r 25 l MR. SLAGGIE:

It is certaini; a pcssibility.

I would 20/5 1/1 i

i,

i j

20 1

expect that would be cine of the ---

2 COMMISSIONER KENNEDY:

But is that a question

'l i

3 for argument?

4 MR. SLAGGIE:

Is that a question for argument?

5 I would not say that that's excluded.

We are having a 6

hearing before the agency on the fine, certainly if you I

c.ro.cose to fine somebody $100,000 and he doesn't even want i

3,l to pay that and he asks for a hearing, and intervenors 1

9 come in and say, not only should you fine him $100,000 you il 10 ;

ought to fine him ten times that ---

11 COMMISSIONER AHEARNE:

It is just a point that ll 12 you raised.

If a rate payer wants to come in and argue the l

i 13 fine is too high, it seems that some one else ---

..l 14 1 MR. SLAGGIE:

Some one else would come in and a

d 15 ? argue it is too lcw.

I 16 '

MR. MURRAY:

Of course, there is no known analogue 17 !

in the criminal law f or tha t kir.d o f a proce s s, but this 13 J.

is technically a civil fine, but there are a lot of il 19 -

patterns -- criminal type patterns to the fines.

i i

20 l MR. SLAGGIE:

One of the things we constantly i

t 21 say about civil penalties is that they are not really a

s 22 ' penalties for punishments, they are incentives for ---

J 23 :

MR. MURRAY:

We say that except for when we are i

24 writing briefs.

25 MR. SLAGGIE:

But it is true that cne of the 20/5 172

i l.

s il 21

.I, a

'l l

j objectives cf the crogram is to get people to shape up and 1

4

~>

2 do a better job in the future. So there is a prospective 3

aspect with regards to safety and any cther aspect of 4

nuclear power operacion when we impose a civil penalt.

5 In this sense, there is only some analogy to licensing 6

amendment which ceople who are not the licensee can call for i,

7 j a hearing on.

8 [

Now, my feeling en this is that the 'eay you would t

I 9

modify -- the only convenient way cc modify this language 10 l would be to close the door by saying the only person who 11 can request a hearing is the person that you are going to I

12-imposa the fine on.

I think that it is probably desirable

.me..

13 to retain some flexibility by leaving the language the 14,

wuy it is new.

If it ever should happen that somebcdv 15 l does come in and requests an opportunity for a hearing i

16 in a ractual circumstance, you will have a spec 1:1c ract i

i 17 l pattern that you can deal with then and the Commission will i

13 have considerable discretion to interpret its own statute I

19 i in a way that will be responsive to the perceived needs 20 at that time.

Now we are speculating rather narrowly 21 on what might or might not happen.

So our feeling is to 2 2 I; leave the language the way it is now.

il

....i 23 1 COMMISSIONER KENNEDY:

I notice the last small

.i i

24 paragraph cn page 4 cf your memcrandum which indicates n

25 - correctly that cur present civil penalty statutes do nct 4

2075 173 l

lI

s it

,0

.I A,

.1 1

.i provide a right to an agency hearing.

/

2 1

Now, can you explain to me in some detail precisely 3

what the effect of this new draft wou'.d be in this regard?

a, 4

MR. SLAGGIE:

Oh, the new draft definitely requires if h.i.

5 an agency hearing.

6 COMMISSIGNER KENNEDY:

Start at the bcginning cf 7

'l the process and explain how it works?

8 i MR. SLAGGIE: Okay.

I 9

Well, I have to go back and look at the statute 10 ll itself, but basically we send a notice to a person, exactly lli as we do under the present system in which we say, you did i

i 12l the following, we propose to impose the following fine on l

13' you.

We. u-this little additional part in which says that l

I 14 at a collection action you won't be able to do anything.

4 15l I presume the notice would say:

"You have an opportunity 1

l 16 '

to request a full agency hearing."

We have to offer tha:

17 ;

opportunity if the notice didn't say that.

i 18 l MR. MU RRAY :

You would provide by statute the I

19 i same hearing we give now by regulation.

t 20 COMMISSIONER KENNEDY: So that could go before a 21 licensing board?

J 22 MR. MURRAY:

Yes.

n 23 ]

COMMISSIONER KENNEDY:

It could be appealed to the i

.i 24 g appeal beard?

f, 9-i MR. SLAGGIE:

Yes.

os f!

lI Il 1

.i i

23 1

COMMISSIONER NENNEDY: And indeed, appealed then 2

to the Cc= mission.

e 3

MR. MURRAY: Yes, sir.

t

)

4 MR. SLAGGIE:

Just like a licensing board.

5 COMMISSIONER KENNEDY:

In each case a hearing?

i 6

MR. MURRAY:

Yes, sir.

That's the way it is l now.

i 5

MR. SLAGGIE: It would be as though we said we

.l 9 j understand you are conducting a dangerous operation and we ll 10 ;i propose to shut your plant down.

And that would go through

-l.

11 l the same 3

12 COMMISSIONER KENNEDY:

That is not just the way it I

I 13 is now, according to this statement.

a i

i 14 <

MR. MURRAY:

It is the way it is now as a matter I

I 151 of regulation.

This would enshrine that regulatien into the J

16 ll statutes, in fact.

I t

17 CCMMISSIONER KENNEDY, Okay.

13 i MR. SLAGGIE:

The difference now is that after i

P 19 ] you go through the hearings which we of fer by regulation, i

20 and the Commission affirms everything, the finee can s.ay, 1

l

+1 ; well,.chocev cn that, I don't want to pay; and then we are a

22 back in a collection action doing the whole thing ever.

^

COMMISSIONER XENNEDY.

Mcw many hearings have.

9,

-s 3,.

there been in the last five fears?

e-MR. MURRAY:

It depends ;pon hcw you define hearing.

a 2075 175 4

,{

.tI at 24 1

I would say roughl-five.

Some of them.: ave gotten tc 2

.i e

2

! various stages of the precess before te went.

Two of them 3

are now pending before the appeal board and ma"J 'itimately 4* 1 come before the Commission.

s 5 :l Of course, the vas majority don't go to hearing 6 I. a t all.

7 COM'!ISSIONER KENNEDY-I have another question 1;

I 8 ;l applicable to these; and I appreciate the answers to these,.---

i 9

CHAIRMAN H1'NDRIE :

Go ahead.

I 10 !

COMMISSIONER KENNEDY:

-- carticularl"2 the sceed i

11 with which they were done, I appreciate it.

12,

My other question is:

What about the limitations 13 :

or are there any on civil penalties as concerns materials i

14 ; licenses?

!I 15 >

MR. SLAGGIE:

No, I don't think ---

16 1 COMMISSIONER KENNEDY:

Do you mean there is a 4

4 17.l limitless ---

13 '

MR. SLAGGIE:

The same one that is here.

19 -

COMMISSIONER KENNEDY.

Then there are none?

20 MR. MURRAY-As a matter of colicv., we have

?

t 2, h'l established a schedule for cenalties which allows the l

impcsition the

..imum penalties on certain large licensees, 2 2 ~l, i

1 not necessarily reactors, including ---

? 3..'}

2,1 C " "'n m " ^ v'r'< r D v

""" "'- = a m '"

-- - -- a 2 5 '. such things as maximum penalties in this draft.

2075 l76

'l i

l i

4

, o-t 1

MR. MURRAY:

I'm talking about our administrative 2

i -cractices.

3 COMMISSIONER KENNEDY: Yes, I understand that, but I'm saying this draft -- those administrative practices are 4

5 within an already established limit in law.

.I 6.

MR. MURRAY:

Yes, sir.

0 1

7 COMMISSIONER KENNEDY: This would eliminate any 8

li such limits.

Let me just note, for whatever it is worth, 9

i that the materials licenseas, and I'm talking not abcut 10 the Exxons of this world, Lut the little guys who have a 11 j few source materials, who have some small laboratory 12 activities, who may be evet producers of relatively small i

i

~

I cuantities of source materials for diagnostic purposes and 13,

14 others, a limitless fine must have

-- a limitless penalty J.

Ic; l must have some sort of trat:-atic ef f ect upon their view of c

II their futures, because with no limit whatever, it is a fact 16 [I

.,i that whether that company remains in business will depend d

13 up n the size of the penalty which we might inflict.

9 ;l Now, I recognize that in practice one would hcpe, 3

t c

20 1 at least, no court would sustain such a penalty, but nonethe-a el,.j less, as a practical matter, the fact is that we could levy it whether we ever collect it or not.

And I must say, a-that troubles me greatly.

,2 MR. SLAGGII:

Well, a S25,000 fine which we could levy now wculd prchably 7

22

.I f

"O i!

l

,i 1

COMMISSIONER AHEARNE:

But there are instances n:..,

.i

'l 2 ", in the Federal Regulations, whe-o "ecessary fcu can close i'

!i J

3 j down someone, and I would expect that we have to bc responsible ---

I.

5 N COMMISSIONER KENNEDY: To what do you refer?

i i

6 )

COMMISSIONER AHEARNE: Some of EPA regulations il 7 F enable them to close down in the district if they absolutel; i,

8 !

retuse to ---

l 9

MR. STOIBER:

Well, you could suspend the license, i

l 10 l certainly.

I i

11:

COMMISSIONER AHEARNE:

Yes.

l 12i COMMISSIONER KENNEDY:

Of course.

l 13 '

COMMISSIONER AHEARNE: We have to be responsible in 14,

levying these kinds of penalties just as ---

i l

COMMISSICNER KENNEDY: But it is different.

It is 15 l 16 '

different to suspend the license er to close down a facility i

or a ciant until it is fixed and meets the requirements.

It 17 i

l 13 '

is another matter all together to have levied a penalty I

i 19 because of an infraction.

The other still has to be --

2 0,!

the infraction still has to be repaired.

The mere fact 21 l that it is conceivable, the mere fact of levying the penalty 22 might ma'<e repairing of the infraction impossible.

1 t

23 MR. SLAGGIE: Well, we are talking about a 01J0,000 1

24 penalty per violation, apart om any cuestier of whe:her I ima many small materials there is a cac on it, 2075 178 4

I i

27 t

1 licensees could be sufficiently jolted by a $100,000 penalty, 2

and that the problems you are thinking about new are in i

3

existence anyway, whether or not there is any upper limit on 4

i the total fine.

a

- d j

MR. STOIBER:

I would also draw your attention to 3

a 6

the Supreme Court lan~,uace at the bottcm of.oage 2, the 1

7 i, Butz v. Glover case where it talks about the fact that:

"so

'I l'l long as the remedy selected does not exceed the agency's 8

9 statutory power to impose and it bears a reasonable relation i

10 to the practice sought to be eliminated, a reviewing court I

11 4 may not interfer."

I would hope that that " reasonable 12 [l relation" language would be used to foreclose the ---

r 13 COMMIS3IONER KENNEDY: Yes.

It was that assumption l'

that prompted my comment that I doubted the court would i

15 l sustain such a thing, but so long as no limit is suggested

I

16 g or imposed, it is theoretically possible we would rely a

i 17 uppon a court to recover.

I just wanted to be sure that 18 my understanding was correct, hcwever horrifying.

MR. SLAGGIE:

That's correct.

19,I t

20 I CHAIRMAN HENCRIE:

Well, I guess I'm wiser but 1

21, not happier from the discussion this afternoon, and I

,2 ' don' t chanc.e av coinion that there ou9ht to be a cao in 23 this thing.

I recommend that we go ahead and count aeads 9,.

again and let the ma;"crity action guide the Commission.

25 CCMMISSIONER AHEARNE: Well, as I said, I think 20/5 1/9

a!

23 i

II i

1

)I in previous occasions, I think I reccmmended a cap cf 1

t

)

2 [l several millions of dollars and I would be willing to --

3 "

$5 to $10 million, I think, is what I said and I would 4 -

certainl"1 be willing to go for that as a fall-back for t

I 5 4 no-cap.

Either one.

a i

6 jj COMMISSIONER KENNEDY:

I recommend a cap of a

7

a half a million dollars.

l 8.

COMMISSIONER GILINSKY:

I would leave it the way I

9 i we had it.

I 10,

COMMISSIONER BRADFORD:

At $300,000 or do you mean 11 no cap?

_ ~

12 COMMISSIONER GILINSKY:

No, we had no cap. The 13 l reason we didn't agree on a cap is one couldn't find l

14 l a rationale for keeping one or another figure, and I think i

15!

one has to trust to that, to the sense of the agency to l

16; deal with the situation in the eense it woult.

17 CCMMISSIONER 3RADFORD:

I agree with the no cap, 13 I guess for a slightly different reason.

I thought what we 1

19 were really saying there was the t since the reason for a 20 cap was that Congress would be concerned about the likelinocd i

21 '

of our imposing a ridiculous fine.

It was really for them i

22 [

rather than for us to draw the line as to what they though I!

^ 3."' the ridiculous level would be.

So I guess in saying no cap, s

,,h I'm saying that that wouldn' t preclude my baing perf ect1/

.4

. the Conc.ress thc u c. h t ac. erc.e riate,

comfortable with whateter cac

,3 2075 i80 4

e

?

s o9

~

1 as long as it was high enough not to remove all meanin;

/

2 from cenalties.

But I an assuming that we will act 3

resconsibiv.

Certainly, if the ac.encv is.orcne tc act as 1a 4 j irresponsibly 3 the scrinarios might suggest, our first 5

worry isn't in the civil penalty area.

We do a lot of things, 6

and if we didn't have confidence that they were being done i

7 more or less the way 'le think they are and more or less 8

I reasonably, civil r nalti s wouldn't be the first area il 9

where we would start in first.

s l

10 f MR. GOSSICK:

Mr. Chairman, I don't know if this 11 will be helpful or not, but there is one thing that I think 12 'l we should point out here, regardless of whether you put a i

13 - cap on or not.

In order to administer this thing, as they a

l 14 -

are now with our current limits, the staff has to come up I

15 l' with a set of rather detailed criteria that would be their uidance on what they would propose to fine for a particular 16 :}i l.

.I 17 y offense.

We have got a full table here of numbers. So at l o,, some point thev. are coing to be back to you and, in effect, e

'l 19 l asking you, all right ---

20 ]

COMMISSIONER KENNEDY:

Within what limits are n

u i vou coinc to do that.

-(

MR. GCSSICK: Exactly, exactly.

22 e-r.

e v.

--,,n L O.u_s1 r S 7., v. _r R a _ u. v.m,s.. vt vv-uc-.

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.m.. u.n A u_ a. - t-n s.u m u.

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-ow--

sue s

un was understocd.

9 2075 181

i J

g 1

ti 30 1

i 1

COMMISSIONER 3RADFORD: That's fine.

2 CHAIRMAN HENDRIE.

All right, assuming that you,ill 3

go the no cap, why there is a majority there.

i CCMMISSIONER KENNEDi: I would like to write an

.l 5 il opinion, which I will.

6 CHAIRMAN HENDRIE:

I think ---

7 MR. STOIBER:

What we could do, is when le forward o

O this to the various committees, attach a statement of 9

positions.

I 10 l CHAIRMAN HENDRIE: Yes, additional views can go i

i 11' up with the forwarding letter.

12 All right, very good. Thank you very much.

13 l (Whereupon, the meeting in the above-entitled I

14,

matter was concluded at 2:35 a.m.

and the Commission moved 15l on to other.atters.)

1 o.

1 7l 2075 i82 18 19 !

i 20 i

i 21 22,

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23 [

9 4

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to l

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