Text

Forwards Portions of 791214 Closed Meeting Re NFS-Erwin That Should Be Released to Public.Lists Portions Withheld Per Sunshine Act
	ML19296D560
Person / Time
Site:	Erwin
Issue date:	02/22/1980
From:	Chilk S; NRC OFFICE OF THE SECRETARY (SECY)
To:	; NRC OFFICE OF THE SECRETARY (SECY)
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References
	REF-10CFR9.7 NUDOCS 8003050244
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UNITED STATES NUCLEAR REGULATORY COMMISSION

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n qE W ASHINGToN D.C. 20555 o, $

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,o' February 22, 1980 OFFICE OF THE SECRETARY CO:01ISSION DETERMINATION REGARDING PUBLIC DISCLOSURE UNDER THE GOVER DiENT IN THE SUNSHINE ACT OF:

Transcript of Discussion Of NFS-ERWIN December 14, 1979 Pursuant to 10 CFR 9.108 (c), the Commission has determined that the attached portions of the subject transcript should be released to the public.

The remaining portions of the transcript are being with. eld from public disclosure pursuant to 10 CFR 9.104, as noted h

below:

+

e...

Samuel J. h f

ScretaryofthyCommission

O

... s, Transcript of Proceedings f

s f'yAD(l/ NUCLEAR REGULATORY GOM wi)

BRIEFING ON NFS ERWIN (Closed to Public Attendance)

Friday, December 14, 1979 Pages 1 - 71 Prepared by:

C. H. Brown Office of the Secretary Q O 09 0 e: ON h

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I 1

1 UNITZD STATES OF AMERICA 2

NUCLEAR REGULATORY COMMISSION 3

4 BRIEFING ON NFS ERWIN 5 'l (Closed to Public Attendance) l 6

,1 li 7 ;.

.I I

8 0 1717 H Street, N.W.

Il Commissioner's Conference Room l

9 i!

Washington, D.

C.

10 Friday, December 14, 1979

!i ll )f The Commission met, pursuant to notice at 9:30 a.m.,

12l

{

John Ahearne, Chairman of the Commission, presiding.

13 l

b COMMISSIONERS PRESENT:

14 1

15 Chairman Ahearne f

y Commissioner Gilinsky 16 '

Commissioner Kennedy Commissioner Hendrie 17 j Commissioner Bradford i

18 ll ALSO PRESENT:

19 W.

Dircks R.

Burnett 20 J.

Partlow H.

Shapar 21 j!

R.

Fonner L.

Bickwit p

22 i S.

Chilk E. Hanrahan 23 J. O'Reilly, Region II W.

Kenna, Region II 24 F.

Gillespie, Region II D.

Leighton, DOE 25 W.

Engel, DOE G.

Prudom, DOE T.

Rodehaver, DOE l

B.

Rich, DOE R.

Tinney, DOE L.

Gossick

t l

1.

h 2

l l

1 ;

PROCEEDINGS 2

CHAIRMAN AHEARNE:

We are meeting this morning in a closed meeting, and I assume there is someone who is 3

b:

4 responsible for gt; $.ranteeing that it is appropriate.

5 Prior to the meeting it is necessary to vote to 6

close.

I have a note from the General Counsel saying he i

[4 has determined it was appropriate to close,he recommends 7

l1 voting to close under Exemptions 1, classified information, l

8 a

P 9

7, investigatory reports, and 9, frustration of proposed I

10 action.

I l

11; Anyone

-- can we vote on that?

l l

12 (A Chorus of " ayes".)

13l CHAIRMAN AHEARNE:

We are all in favor.

The i,

14 ll meeting is closed appropriately.

15l We are here this morning to hear another saga i

16 l in the NFS-Erwin tale, and I guess that, as at least I i

17 understand from the papers we received that there may be 18 a number of various opinions on what to do.

It appears yg we may not have too many differences of opinions as to what we now know at the present time.

We look forward to 20 hearing it.

I do not, myself, propose to reach any 21 1

decision today, but that is obviously subject to the wishes 22 l

f the other Commissioners.

23 Lee, I guess this is part of your bailiwick, 24 so

~~~

25 i

f i

il I

3 f

l l

1 i

MR. GOSSICK: You are right, we do have differing l

2 opiniens on the subject.

I will let Mr. Dircks go ahead I

3 with the briefing and you will hear from the Inspection and 4

h Enforcement staff, I guess.

They are represented here this a

5 !

morning.

6 l

CHAIRMAN AHEARNE: Is I&E ---

il 7

ll MR. GOSSICK:

Here.

'l 8 i, CHAIRMAN AHEARNE:

Very good.

H j

9 MR. DIRCKS:

I will keep it very brief, Mr. Chairman.

1 10 i' I do want to call your attention to the fact

!\\

11 l that we have representatives here from DOE's Naval Reactor 12 P program lined up in the second row, Mr. Leighton.

And some 13 i, representatives from the Division of Safeguards or the 11 14 ]

Office of Safeguards in the DOE, and'there they are, back 15 there.

I 16 i I do, also want to mention that a full and

!t 17 -l comprehensive report on the investigation and studies 18 that have been done down there e.t Erwin are on their way i

19 to the Commission.

They are quite thick and heavy and 20 what we wanted to do, in this meeting, at least get into 21 the beginnings of the problem, because I think the urgency 22 of the problem is the production of that plant, and get 23 some decisions made.

24 Bob Burnett talked to you in the beginning of 25 N vember and gave you a status report on.the inventory

d 4

i I

1 difference.

As the result of the inventory, the plant and 2

the clean-up and the clean-out and close-out inventory.

L l

The inventory difference,as of today,is 3

b; ll As you know, we started off with an inventory 4

.s 5 l difference of

,in the initial report, and that 6

has been narrowed down to, This has probably been one of the most complete,

.7 pl 8

l comprehensive inventories done in that plant, so we are 444% u M M 9

fairly sure of this number

f assure you of any number we 10: i get out of that system.

I I

11 CHAIRMAN AHEARNE: To be zeally sure of the number, 12 that means that you have some contidence on the base line?

13 l MR. DIRCKS: That's right, which many of us don't 14li have.

15 The investigations have looked at both the i

material control and accounting systems and ite physical 16,

i 17 l-security system.

As the paper pointed out, the material control on the~ investigations, the results fully take into 18 account the random uncertainties and the measurements, the 19 b okkeeping errors, any significant bias in measurements of 20 21 l

material, and the inventory, any overlooked material in the i

6s ^^^'

inventory am -et holdup.

22 I

I We have done a rather thorough job of the physical 23 security system, and we have verified that the systems 24 l

functioned as designed.

25 i

i

s i

5 I

I i

1 You have to keep in mind + hat though, that this 2

system was not designed to protect against an internal l

i t

3 l.

conspiracy.

So with that caveat, the system functioned.

l-4

]

The FBI has completed its -- whatever investigations 5

they had underway, and they have come up with no particular 6

reason for the inventory difference.

They have stopped,

[

essentially, their investigations.

7 8

CHAIRMAN AHEARNE: Did they give you a completed Ij report?

They submitted something?

9 10 MR. DIRCKS: They gave us a one-pager which, I 11 i don't know whether you have -- We just got it in.

12' MR. BURNETT:

And also, a complete copy of all the 13 1 interviews, so we have both.

1 14 I CHAIRMAN AHEARNE:

My concern was whether they 15' had officially given you a statement, and what is the l

l 16 substance of the statement?

l 17 MR. DIRCKS:

The basic line, the last paragraph i

i 18 of'their report, and I will circulate this, is:

"Their 19 loss reported for Nuclear Fuel Services during the 20 accounting period June 18, 1979 through August 14, 1979 21 does not appear to be significantly higher than losses l

22 rep rted by the plant in the past.

Other logical areas i

23 l for investigation by the FBI exist in this matter, and ll in the absence of any additional information, no further 24 I

investigation is being conducted regarding this inventory 5

r l

'lr l

6 l

l' I

loss at Nuclear Fuel Services."

2 CHAIRMAN AHEARNE: There wasn't any statement 3

[

that said that they had reached -- finished their li 4

investigation and found "x" or found "y" or did not find 5

"x" or did not find "y" that ---

6 MR. DIRCKS: They mentioned several factors that 7

might have contributed to.the loss.

I 8

l They cited the employees working long hours --

l 9 j management and employees working long hours, they were 10 ll l

fatigued, there was a drop in total production efficiency f

a 11 d at the plant during the accounting period, they have talked h

12 '

about the -- that some of the material might be in the i

13 (

scrap, it'aight have been buried -- excessive burials of a

14 Y the scrap --

They listed a various n' umber of things, and 15 h I think, that we all were aware of and took into account il 16 ]

with our investigation.

I 17 j MR. BURNETT:

Bill, I think this first sentence I

h 18 l

is the statement that you are looking for.

19 MR. DIRCKS:

Oh.

"No information was developed 20 suggesting any theft or diversion of nuclear materials."

21 CHAIRMAN AHEARNE: That's the one.

i 22 l

MR. DIRCKS :

But that's the one we started off i

23,

with as our basic feeling.

24 When we say that, I think that our conclusions 25 are, which is a line we have been using -- a story we have I

I I

i i

[

7 i

i 1

l i

1 been using, we can't rule out a theft or diversion, we l

2 can't say that there hasn't been one.

The only thing that 3

we say is that we have no real explanation for the inventory tb 4

difference.

And as the FBI pointed out, tnere-is one g

5 'j additional large inventory difference added to the many 6

l differences that we have had at that plant over these past

!i 7

several years.

q 11 8 e The next step in this process is to decide or ll 9 i!

to advance some tentative ideas of where we go from here.

J 10,!

The staff -- NMSS had been asked to develop a list of H

11 license conditions that could be imposed on that facility l;

12 l' that would allow the plant to reoperate with some 13 improvement in the accounting of the material.

il 14 0 Appendices A and B and C to the paper describe i

15 '

those improvements.

"B" is a system with a series of hl tJ P S steps, I think, recommended by the "2v 1 Ccmpany, is that 16 l!

17 l right, Bob?

N I

18 MR. BURNETT:

(Nods in the af firmative. )

19 MR. DIRCKS:

So combined -- we have Appendices l

20 ab& A, B,

and C that could be looked at as improvements in 21 the process or improvements in licensing conditions that would give us a better hand over ca-the control of the 22 l

23 material in that facility.

24 The basis question is ---

25 COMMISSIONER KENNEDY: To what extent does that

t i

I 4

s 8

l reach?

l 2

MR. DIRCKS:

It does not, in my view, give us l

3 the assurance that material can be accuratel, accounted h

for in the facility or controlled.

4 5

COMMISSIONER KENNEDY:

And what is the basic reason 1

6 l

for that?

4 7 h MR. DIRCES:

My own view is that it lies within

'l 8

the process.

It is a difficult process to control.

ii 9

1 MR. BURNETT:

Mr. Kennedy, if I could just

l 10 supplement that slightly.

11.!

We have not been able to determine the exact 12 reason for the accounting loss.

Therefore, these license 13 ]

conditions are general, they are broad-based.

They are a

14 3 not directed at the specific problem, because we don't know l

15 the specific problem, therefore, it is very hard to guarantee' I

i 16 you that this will cover it.

17 j COMMISSIONER KENNEDY:

Is the facility so designed i Y

18 ]

an'd its process so designed and operated as to make possible I i

19 l

the application of kinds of accounting controls which would b

20 f give a high assurance?

21,!

MR. DIRCKS:

In our view, it is not designed in h

d that way.

22 23,!

MR. BURNETT:

I looked at DYMAC Particularly, because of this process monitoring capability and DYMAC 24 250, won'tfunctioninthisfacility.

Now some portions ofDYMb

,i I

I i

l l

6' 1:

l 9

1 and that being the paperwork,Xor the station reporting 2

would, but the NDA portion, because of the background 3

examinations just won't work.

b CHAIRMAN AHEARNE: What was the total output of 4

a 5 ll the plant during that period?

I 6 d MR. DIRCKS: During the account period?

li 7

CHAIRMAN AHEARNE:

Yes.

'i 8 P MR. BURNETT:

il 9

l

~

10 i 4

11 h CHAIRMAN AHEARNE:

So you are at about a

'lI, 12 pl l

13 }

MR. BURNETT:

Yes, sir.

14 !!

i 15 'l COMMISSIONER GILINSKY:

I e

I 16 l 17 l' MR. BURNETT:

No, per accounting period.

18 COMMISSIONER GILINSKY:

Per accounting period?

19 FUt. BURNETT:

Yes.

20 COMMISSIONER GILINSKY:

Per two months.

I 21 1

MR. BURNETT:

Now, it varies, but that is just I

l 22 i

a cood averace to use.

l 23 l 2 4.L 25 CHAIRMAN AHEARNE:

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I i

10 Ir f

b 1

2 COMMISSIONER KENNEDY:

l!

l 3

I l

4 MR. BURNETT:

Yes, sir.

This particular MUF is 5

6 MR. DIRCKS:

Well, I guess what we are saying is l

that we can't diagnose the illness, and therefore it is 7

8 difficult to prescribe the medicine.

I 9

l The essential fact is, we are faced with a large 10 unexplained apparent loss.

We have had a history of these 11 incidents at the plant.

We have a system that has not i

12 responded to past attempts to correct the problems.

13,

CHAIRMAN AHEARNE:

By "a system" you are speaking i

14,

of the mechanical system or the management system?

I 15 MR. DIRCKS:

The combination of material control 16,

and accounting system, and the managementh attempts to I

17 '

implement the system of change.

18 CHAIRMAN AHEARNE:

Are you saying -- is there 19 a sense of criticism of the management for not being willing 20 to implement, or is it a sense of given the way that the 21 plant is designed, the inability to be able to identify l-what to implement?

22 23 MR. DIRCKS: Well, I think it is the way the 24 plant has been designed, the processes, and I think in a 25 commercial enterprise, what happens is that management waits 6

E 4

11 1

for the regulator to come up with the solutions.

Whether l

2 that would be always the case in another type of process, 3

I don't know.

But each time we recommend a change or a i

4 ji regulatory change, of course it costs something at the 5 !!

facility.

And the role, I guess, is to resist change and I;

6 ll then implement them begrudgingly once they go along.

That's ii 7

}

my own theory, and it is not substantiated.

il 8

[

CEAIRMAN AHEARNE:

Well, I'm not sure I understand, b

Bill.

9 10 Are you saying that this is a general theory u

11 j that you are applying to a commercial operation or a h

i 12 l specific ---

1 13,

MR. DIRCKS:

I think it is a general -- it is a d.

i 14 "

theory that we can apply to this f acility.

15,

CHAIRMAN AHEARNE: So you are saying that at this 16 -

facility there has been a begrudging ---

17 l MR. DIRCKS: Well, it is an attitude or -- Tell la us what the problem is and tell us what your solution is 19 and we will do it, if you really want us to.

20 Bob, you made a similar ---

21 COMMISSIONER KENNEDY:

May I ask a question before 22 you do that.

23 MR. BURNETT:

Yes, sir.

24 COMMISSIONER KENNEDY:

Is this a cost-plus i

25 operation?

Y, I,

l l

12 i

i l'

MR. BURNETT:

Yes, it is.

2 MR. DIRCKS:

Wait a minute.

No.

I don't think

[

1:

3 E so.

No it is not.

!i P

4 COMMISSIONER KENNEDY: What is it, a fixed fee I

l 5 I contract?

6 MR. LEIGHTON:

A fixed prige for ---

l COMMISSIONER KENNEDY: A fixed price contract 7

8 for a given ---

9 j CHAIRMAN AHEARNE: Dave?

i 10l MR. LEIGHTON:

They have changed it. The current 11 contracts that are effected by what you are doing right 12 now are fixed price and they are sub-contracts.

The new 13l work is something else.

14 f MR. SHAPAR:

Who pays for these losses?

15 MR. LEIGHTON:

However, when you make a change in l

16 license, that's a pass-through.

So it isn't as if they l

have to just follow that.

17 {

18 CHAIRMAN AHEARNE: So if we make a license change 19 which imposes additional requirements, that additional 20 cost is a pass-through.

21 COMMISSIONER KENNEDY:

Okay, I wanted to be sure 22 that was the case.

If that's true, then I have difficulty 23 in comprehending why they would begrudgingly pursue ---

24 MR. DIRCKS:

That was my choice of words, 25 egru g ng y.

s not a ---

0 V

i 13 I,

1 MR. BURNETT:

Let me see if I can take a shot at 2

it.

3 MR. DIRCKS:

You take a shot at it, yes.

4 MR. BURNETT:

Over the past three years, we have 5

had a better management acceptance, but sometime ago, I 6

l think that MUFs were looked at in a slightly different

!i 7

light than they are now.

It was a more accepted part of 8

the process.

a 9

l Now, over the past three years, and particularly 10 e now, the level of management attention is at its highest lI 11 !!

point, and it is right now, at what I would describe as an 12 [

acceptable level.

That was not the case prior to the past

!l 13 y six months.

It was more, "Mr. Regulator, you are just F

14 ll go'7g to have to live with that.

Thi's is just the way it i

15 is."

It is not that way now. They are really, really workin:9 16 on it.

I So it is more a level of management attention.

17 i

f 18 l

MR. STELLO:

Let me tell you what I have 19 observed ---

20 CHAIRMAN AHEARNE: 'Vick, could you use the mic?

21 MR. STELLO:

Let me try to make a point, because i

1 22 I think it is one that'we have looked at, and there is a i

23 concern.

24 The way the contract is set up, if we come up with requirements and those requirements can be passed 25 l

i l

I 14 1

through, and the fellow who owns the plant doesn't have to i

2 pay for it, somebody else does, the concern that is there, 3

the bottom line concern is does this allow for the management S

4 of the facility, for it as managers, to look at what it needs 5

to do to improve the facility, and then get that done in 6

a way in which you would like it to be.

There seems to be 7

a barrier for having a good management concept to say, we 8

as managers believe we need to do all of these things in 9

the facility, and then have to go back in to DOE and get il 10 fl their agreement to do them.

So they don't really have that i

11 d freedom since they are in this fixed-fee kind of a contract.

I 12I So there is an incentive in the way the contract l

13 ;l is constructed that does frustrate having a layer of 14 l management, when a concept -- to look'at its facility and 15 ';

say what it needs to be done, and get it done.

That l

16.

process is frustrated in the way they are set up.

And 17 that, I think, was one of the points that we were concerned 18 about, and is there a way in which to get that fixed up in 19 negotiating a new contract.

I don't know if that's within our ability to 20 21 deal with, but there is a question that I think could 22 improve the situation if you had a different kind of a I

i 23 contractural arrangement.

I 2 4 -li MR. LEIGHTON:

May I make a comment, Mr. Chairman?

25 In relation to the specific thing that you are I

I i

i

'i i

I 15 i

i i

1 talking about, I think there are two factors you can l

2 take into consideration.

f 3

One is that the people there feel that they 4

are intimately familiar with the process and at times, l

5 'j when people make suggestions, they feel that those suggestions 6

will not, in fact, improve the accountability whereas, they i

7 do believe they will increase cost.

And so they are l

l 8

1 reluctant to do it.

Sometimes that reluctance can look 9

like the guy doesn't want to improve the accountability.

10 I know that happens on occasion.

11 l Another factor is that this is a very difficult 12 process technically, and we have very great demands upon 13 !

them technically.

Over a period of years, we have worked 0

14 ;

on a process that provides adequate quality.

There are 15,

very tight requirements on any technical changes, anything i

16 in the process that can change it, and change the product il 17 d quality, we have very tight qualification standards against.

18 This process is a cookbook process in a sense.

19 It has been worked out over many years of development, 20 where you get things just at the right 21 get things just at the right amounts and you 22 just the right way, and you come out with the right. product.

23 When you change that, something goes ka-flewey 24ll and you don't have a satisfactory product.

Theyworry)h4 i

about that. Whenever anything comes up that, and we do 244-25

n l

16 l

.i I

1 I

whatever comes ap that changes the physical handling of 2

the problem, we have got to worry what will the impact i

3 be on quality.

And that has to be reflected somewhat I

4 in reactions on the part of management of suggestions to 5

I l

change things.

6 So I think, in fairness to the contractor, we I

i 7

have to recognize that and realize that sometimes when 8

he may be appearing to resist changes, that he has that i

9 in the back of his mind also, which is legitimate.

10' When we make any technical changes in that plant, I

11 he has to go through a whole qualification procedure that l

12 !

we have to buy out, and if it is anything significant, I.

13 I we have to go through all of the regulations for that 14 !

program and everything else, to be sure that the quality 15 is satisfactory, because this is the h

16 "

I just think it is worth while f

17 !

bringing that up.

18 CEAIRMAN AHEARNE: Thank you Dave.

i i

19 MR. STELLO:

May I say something?

20 CHAIRMAN AHEARNE:

Let me try to get back to 21 Bill and let him finish, and then you guys can ccme back.

22 ll MR. DIRCKS:

Essentially, I'm about fir.ished.

i 23 I would like to reenforce the points of Mr.

24 Leighton.

It is a very difficult, complex proc ^ss. When 25 changes are imposed, you have to do a lot of weighing of l

t l

9 0

i i

d 17 L

i l

1 the effect, and there is a trade-off between accounting 2

and quality control in the plant.

3 I think in view of all of these factors and the 4

fact that we have had a large unexplained loss, had a 5 :

series of such losses, the fact that we have requirements, b

6 y but we are not even sure -- new requirements, but we are 7

not even sure of the effect of these requirements in e

8 P producing a better accuracy in the plant.

All of this li 9

'l has led us to the conclusion that we don't believe that i

10 l we can continue under a license any further.

O 11 d And that's essentially what we have come up with, d

12 That's I think, the point where I&E and NMSS part company.

h 13 i CHAIRMAN AHEARNE:

If I understood your paper 1

14 ]

correctly, where you had reached the ' conclusion it was that

i 15 1 even with the additional procedural changes, the accounting i

t 16 y system changes, and additional physical security requirements,,

b 17 but you still didn't believe that it was appropriate to 18 maintain an NRC license.

19 You, essentially, were leaving open the issue of 20 whether or not some mechanism could be made to transfer it 21 to DOE.

i 22 1,

MR. DIRCKS: That's an important point there.

I 23 l Our requirements are such that -- in the accounting area l

I 24 that we would have to get in there and make basic changes i

25 to the process.

DOE has other -- and the Defense Department

a 18 f

L I'

1 has other means of safeguards that might form another

i 2

system.

Il 3 i CHAIRMAN AHEARNE:

Are you saying other'means l

4 of safeguards, or other means of physical security?

.i 5

MR. BURNETT: The latter.

6 COMMISSIONER GILINSKY: Well, other means of i

justifying operations.

7 i 8

MR. DIRCKS:

Yes, which they would have to do.

9 l CHAIRMAN AHEARNE:

That wasn't the point they i

10 ;

were making, though.

I think what Bill is saying, if I understood him 11 12 correctly is that the transfer to DOE, it would leave DOE 13 to reach a conclusion based on your point, but his point i

14 l was that they could impose additional physical sec rity.

i 15 MR. BURNETT:

That is precluded by our 16 That being, automatic weaponry, certain forms of military 1

17 '

armament.

18 MR. DIRCKS: But it is that package that would 19 have to be put together by DOE, We wouldn't want to reach 20 a conclusion on it here, because we haven't seen the 21 Package.

22 CHAIRMAN AHEARNE:

Is that your ---

23 MR. DIRCKS:

Yes.

Bob, do you have anything?

l MR. BURNETT:

Yes, I would like to say something 24 before the floor goes up.

25

c k

i 19 i

i 1

CHAIRMAN AHEARNE:

Before the what?

l 2

MR. BURNETT:

Before the floor goes open for just l'

3 general discussion.

4 b

CHAIRMAN AHEARNE:

Well, no.

What I intended to 5 4 do is to ask the Commissioners whether they had any I

6 specific questions of you people.

I had wanted to hear more 1.l 7

[

from I&E and then I was going to ask the DOE people whether i

8 i

they had some points to bring up.

i:"

9 MR. BURNETT:

I don't know whether you want me 10 !

to -- a statement from me, but ---

l:

11 l CHAIR M AHEARNE:

Go ahead, yes.

d 1 2 ^;

MR. BURNETT:

Of course, I led the team down, h

13 '

the recovery team, so to speak, to look for the material l

14i' and I looked very closely at the DOE component -- field 15 '

components and the headquarter components.

16 The one disturbing fact that has bothered me g

ti 17 1 in the past two or three weeka, culminating our position, 18 and it was a new position to me, I did not go down thinking i

19 that we would be sitting here today recommending we could 20 not license this facility under our criteria.

21 The bottom line of all of the studies by the FBI, 22 the Region and Headquarters and the DOE /D0 team that 23 I

came in is that we are left with a residual amount of 24 material, which in this case is a significant quantity, r

1 25 '

in which no statement can be made for its whereabouts.

O i,l

i I!

i;

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20 J

f l

1 The facility itself is somewhat adamant in that 2

it did not go into the environment.

I can't help but i.

3 :

believe that that maybe is being colored a little bit b

4 by the environmental impacts of such a statement.

But if I

5 you take all of the uncertainties that yet remain, there i

are some uncertainties, that which went into burial, there 6

7 is an uncertainty around a stack release that is still being 8

studied.

Even if you credit those amounts to the fullest

[

extent, you are still left with a sizeable, true MUF, 9

10 l material which cannot be accounted for.

11

. CHAIRMAN AHEARNE: What size if you take those 12 l' into ---

13 MR. BURNETT :

If you pushed everything to the end, 14 l you would still end up with maybe i

15 which meets the classic definition of material unidentified.

16 I searched diligently for a technical lead that 17 I could come before you and say, we believe that it could I

18 have gone through this escape mechanism of which I could 19 study, throw research dollars onto, and to depict some 20 solution in the long run.

The statement from the licensee 21 is that the loss is through some mechanism yet to be 22 defined, but not diversion.

From a security point of view, 23 that disturbes me a great deal.

24 COMMISSIONER KENNEDY:

I want to be sure I understood what you said earlier.

The licensee is saying 25 4

h ii f

21

!q 1

by some mechanism yet to be identified, excluding 2

diversion ---

3 MR. BURNETT:

Correct.

2 4 ll COMMISSIONER KENNEDY: -- also released in the n

5 }l environment.

6 MR. BURNETT Yes. And that in itself bothers il 7

]

me.

8 COMMISSIONER KENNEDY:

That just about identifies 9 ti it.

N 10 H MR. BURNETT:

Well, that is what bothered me in ll ii the botton line of this paper.

I!

MR. DIRCKS: Well, the other point too is the 12 li 13 accounting system is, as John pointed out at the beginning, 4

14 I all of this presumes that the beginning numbers were 1

15 right.

l 16 !;

COMMISSIONER HENDRIE:

Just so.

Ir 17 N COMMISSIONER KENNEDY: Sure.

And we don't know il

'l 18 that.

19 MR. DIRCKS:

And we don't know that.

That's 20 the other troublesome aspect.

21 COMMISSIONER KENNEDY: But in any event, whatever 22 1 that amount is, it doesn't make any difference, if I I

23 understand the situation correctly, it doesn't make any 24 difference what we do now, that remains a fact.

MR. DIRCKS:

Yes.

25 l

I 22 I

i l

COMMISSIONER KENNEDY: And whatever option is 2

pursued, that remains a fact.

It isn't changed in any I

3

way.

o 4 jj MR. BURNETT:

Right.

r 5

Now, I would like to expound just one minute l

further, and that being, it still could be in the plant 6

l 7

and, of course, the licensee is inclined to go that way.

8 CHAIRMAN AHEARNE:

Given what they have excluded.

9 MR. BURNETT:

Some support along that line is 10 that in the dismantling of Apollo, we are reclaiming 11 significant amounts of material that were not anticipated I

l 12 to be there.

l a

13,

COMMISSIONER GILINSKY:

Is that still going on?

ii 14 l MR. BURNETT:

Yes, sir.

I 15 COMMISSIONER GILINSKY: And how large are these 16 amounts?

l 17 '

MR. BURNETT:

I want Jim to correct me, but 18 our estimated value in the beginning was 10 kilograms. We 19 have just passed the

' recovery point.

20 So in some defense of the licensee, you should 21 know that there is some possibility that it is still in 22 the plant.

It is just that as Director of Safeguards, it 23 l is difficult for me to give a high level of assurance as to 24 where this material is or might be.

25 MR. PARTLOW:

Bob, I was wrong in telling you the

L F

I i

f 23 l

i i

1 10 estimate.

It was 30 kg, NDA made originally, but you 2

are right, they have already sold back _

. to the 3

government and there is 4

MR. BURNETT:

Please correct that; 30 estimated, ll 5

it is now

\\;

6 ll In either case, it is a significant quantity.

I!

7 il CHAIRMAN AHEARNE:

Joe?

fl!

8 COMMISSIONER HENDRIE:

I must say that I'm not i

9 surprised by the sort of MUF that would turn up here.

il 10 j!

It is a complex process.

It was not established 0

lli to have very fine control on the material balances, and 12 has been pointed out by representatives from Naval Reactors.

13 l 7^

The whole thing has been tuned to get a certain product, 14 '

and if you begin to fiddle with it in the interest of 15 improving the ability to do accounting, you will almost 16 ;

unquestionably perturb product quality and lead either to 17 a long line of perturbations of subsequent testing of the 18 l new material, the new product or just flat rejection of the l

19 new product for use.

20 At a percent and a half of through-put that is Wy 21 still, in terms of material control, on a fairly complex 22 piece of chemical processing is pretty good.

It seems to 23 me quite a straightforward matter.

The nation needs a 24 M certain product.

25 There is a process which gets you there, and in the

24

-7 1

course of that process you manage to 1, pose one way or 2

another K percent and a half of the highly enriched y

3.

material.

Does this make it unacceptable?

The United l

4 i

States now can't use this stuff anymore, right?

Garbage' 5 hl Clearly we can, it is in the national interest to do so.

I 6

The question now is what we do about the MUF.

7 What is -- The first question is:

What is intrinsic about l

8 the NRC's licensing regime, statutory responsibilities li 9 ll which makes it impossible for this situation to exist under

!i 10 l our regime.

Recognizing, when I say "this situation," that i

110 there is now, and there may very well be again in the future, f

12 i material unaccounted for quantities, which are above 5 I

1 13 'l kilograms and for which you have to make the statement:

14 'i "We don't know whether anybody swiped'it or not."

15' Now, is there anything in the statute that I

i 16 I Prevents that?

I must say, I don't think so.

It says l

l i

17 l we have to worry about what is inimical to the security l'

l 18 ;

of the United States. And if we decide that a MUF this 19 large is inimical, then we have to stand back and say, 20

" Good.

The solution for that is to shut down the 21 facility and what does that do to the security of the 22 '

United States?"

and I'm prepared to argue that that is i

23 a heavier blow to that security.

24 So I must say, it seems to me that recognition of the MUF situation is not an unendurable circumstance 25

I I

i O

[

25 i

4 e

1 under our own authorities and responsibilities, at least I

{

2 to the extent those are spelled out in the statute.

Our l

3 own regulations are more complex, and there, somebody will i

4 have to guide me.

I 5

We presumably could find a way to turn the whole l

6 j operation over to DOE, and I guess that's where you come l'

l I

7 out.

You would pull the portion of the license.that l

8 N Permits Erwin to have any substantial quantity of highly i

li 9

enriched uranium, and be prepared then to exempt the

.i 10 [

facility from licensing for that part of its operation under U

11ll one of the prcvisions of our regulations that says we can O

I do that, if it is in accordance with the law and the sub-12 13 contracts and so on.

Does it provide adequately for the 14 health and safety or does it say also' protect the national

?

15 security?

f 16 MR.'SHAPAR:

It just says health and safety, and b

l 17 the key words are "provice acequate assurance under the i

n 18 terms of the contract or the sub-contract."

The key l

19 i

words are "under the contract or sub-contract."

COMMISSIONER HENDRIE:

But for health and 20 21 l

safety?

MR. SHAPAR: Correct.

22 23 I

COMMISSIONER GILINSKY: This is what, a finding we have to make?

24 MR. SEAPAR:

Yes.

25

[

26 V

i f

l

COMMISSIONER HENDRIE:

So at least under the 2

l regulation, we wouldn't have to make a finding connected n

3 to t..e national security.

I don't see much in the health l!

4 and safety standpoint.

5 MR. SEAPAR: The two are not unrelated, though.

I I

6 COMMISSIONER HENDRIE: Well, no they are not 7 '

unrelated.

8 What we would have to do for health and safety 9

is say, "Well, we are confident enough that the MUF 10 ;l won't end up in unauthorized weaponry to be a health and i

11 ll safety problem."

i 12 I MR. SEAPAR:

You don't really have to say that.

f 13 [

Again, the key words are "under the contract l

il 1

14,

or sub-contract."

I I

15 You see, it comes from Section 110 of the 16,

Atomic Energy Act which allows you to not license materials i

17 under a contract with and for the account of the Commission. !

i 18 And that's all the statement says, "... under a contract i

19 with and for the Commission."

20 You all have gone through this exercise in 21 connection with the space program.

It is the same problem 22 in a different area.

The regulations we are talking about 23 is an implementation of that section of the Act. And the 24.

theory of the regulation that we have just discussed is i

25 that looking at the Atomic Energy Commission there were two

I 27 i.

1 ways you could control health and safety:

One was through j

2 a

licensing process, and one was through direct contract 3

controls, and they are considered, roughly, equivalent.

4 Two paths:

control it through contract, control it through 5 i:

licensing.

!I 6 !p CHAIRMAN AHEARNE: Contract with whom?

II 7

MR. SHAPAR:

Contract with a private enterprise, n

li 8 i-whose health and safety activities are controled by formally il 9

'l the AEC, now DOE or the NRC, by the way, if we have such

'i i

10 -

con tracts.

That's the theory.

ll 11 il COMMISSIONER HENDRIE:

I take it then that you il.

12j!

would read the Erwin situation so that it would be I

13 ;

perfectly within our authorities and the intent of the 14 )

regulation, to declare it exempt from licensing.

il 15 h MR. SHAPAR: That's my opinion.

il d

16 If -- one caveat.

If we take a look at the t

17 contract and in complying with the regulation find out that 18 l

DOE has sufficient health and safety controls under that 19 contract to compel the contractor to do health and safety-20 wise, whatever DOE wants them to do.

That's the theory 21 of the regulation.

22 COMMISSIONER HENDRIE:

I would presume that to 23 whatever DOE might have to be in a position to compel them 24 to do, would have to be something comparable for us to make 25 that finding, to the authority which we hold over Erwin

f I'

i 28 a

1 1 I through the licensing process.

2 That is, would you be able to make that finding 3 ?

and everybody keep a straight face over it if you D.

4 discovered the language of the contract seemed to yield I!

5 I substantially less control over the operation than now 6

exists through NRC's control of the license.

7 MR. SHAPAR:

I think the real world thing.is that 8

it is highly unlikely, the standard health and safety j

clause, unless it has changed in recent years, says the 9

i 10 i contractor will do whatever DOE says, period.

I 11!

CHAIRMIdi AHEARNE: Do we have any similar -- Do l

12 l we have any existing situation where rather than a license, l

13 :

we are holding people un03r the grounds of those contracts?

i i

14 l MR. SHAPAR:

Space.

The space contract is one l

15 that I can think of immediately. The launches.

16 COMMISSIONER GILINSKY: And where we are doing what?

i 17 '

MR. SHAPAR:

It is not licensed.

It is under 18 contract control. They have been exempted.

19 COMMISSIONER GILINSKY:

Now, what would it take 20 for this facility not to be subject to licensing at all?

21 MR. SHAPAR: A finding by the Commission that the 2.

exemption from licensing is one authorized by law, and that 23 under the. terms of the contract that with adequate 24 assurances, no unreasonable risk to the public health and l

25 safety.

l~

I g

l l

29 l

k 1

COMMISSIONER HENDRIE:

Just applying it to the j

t 2

whole operation, instead of the HEU part.

3 COMMISSIONER GILINSKY: What would it take without 4

an exemption?

Would it have to be under DOE's direct i

h control?

5 II 6

MR. SEAPAR: Without,an exemption it is illegal.

'I 7 !!

Nobody can possess or use material without a license unless h

8 they are exempt from licensing.

There are only two ways i

9,-

to go.

l 10 ll COMMISSIONER KENNEDY

Except DOE itself.

'l 11 3 COMMISSIONER GILINSKY:

Unless you Ere DOE.

12 ;j MR. SEAPAR: What was that?

Ii 13 p COMMISSIONER KENNEDY:

Except for DOE itself.

4 14 MR. SHAPAR:

Oh, if DOE -- -

15 COMMISSIONER KENNEDY:

If it was a government-16 Y owned plant.

k 17 ;j MR. SEAPAR:

If it was a direct operation, that h

I 18 would be exempt.

19 COMMISSIONER KENNEDY: It would have to be a 20 government-owned plant.

21 MR. SHAPAR:

Or a direct DOE operation.

We 22 don't license DOE.

COMMISSIONER GILINSKY: What is a " direct DOE 23,

Peration?"

Is there a distinction between that and a 24 25 government-owned plant?

I 1

l l

30 t

i l'

MR. SHAPAR: Well, there are certain other 2

exemptions for --

DOE does everything by contract, of n

3 [

this nature, as I understand it.

So there would be l-4 a contract involved some place.

5 This is a discretionary exemption.

There are 6

other exemptions for a prime DOE contract operating on 7

a government-owned base.

The same part of the regulations, I

8 y

70.11.

I 9 j COMMISSIONER HENDRIE: Yes.

That's right, things 10,

like the national laboratories operate under a ---

j 9

11 hl MR. SHAPAR: That's how Los Alamos is not ---

12 COMMISSIONER GILINSKY: But they are not exempt.

13 They are simply not subject to licensing.

t 14 !

MR. SHAPAR: That's right. They are not subject i

I to licensing.

15 I

16 COMMISSIONER HENDRIE: That's right.

They sort 17 :

of have their own one-liner in there that says:

"... and 18 not this activity."

19 MR. SHAPAR:

I'm sorry, I guess I have to correct 20 that.

They are exempt based on 70.11, because it is a 21 Prime contract with DOE at a government-owned facility.

22 COMMISSIONER GILINSKY: Right, they are exempted 23 by the law, but they are not exempt as the consequence of 24 a finding of this Commission.

25 MR. SHAPAR: That's correct, except that we made the t

I

!I l

31 i

i I

l finding in the regulation.

The statutory provision is 2

exactly the same.

A contract with and for the account 3

of the Commission.

It is a contractor who is doing it.

4 Now, interpreting that same statutory provision, 5 !!

we wrote the exemption, and there are two parts to the ll 6 ll exemption.

Those for which you don't need to make a 7

finding because they are described in the regulation.

And I!

8 t'

one of them is a prime contract with DOE at a government-

l 9 y owned facility.

There are three categories like that.

l 10 ;i

" Performance of work for the Administration and 11 U the United States Government-owned or controlled site, c

l' 12:

including the transportation,"

et cetera.

13 CHAIRMAN AHEARNE:

Government-owned or controlled?

O 14 ll MR. SHAPAR: Government-owne'd or controlled site.

1 15 ;

The second one is:

"Research in or development i

i 16 l and manufacture and storage, the testing and transportation n'l 17 i of atomic weapons components."

And the third is:

"The h

'l use or operation of nuclear reactors or other 18 i

19 nuclear devices in a United States Government owned 20 vehicle or vessel."

21 These are exempt under the regulations, under 22 the same statutory authority that I mentioned before.

23 CHAIRMAN AHEARNE:

But the first one, it need not i

24 be a government-owned site to be government-controlled.

I MR. SHAPAR: But this is a prime contractor, at 25

l!

l 1

i 32 l

1 least the way the words are now written.

We are dealing 2

with a sub here, as I recall.

3 Then beyond that, those are the three for which 4

you don't need to make a finding, because it is already 5

specificed in the Reg.

Then in addition to that, you can l

exempt ad hoc, others if you make the finding I have just 6

I e

described, q

[l.

8 COMMISSIONER GILINSKY:

Now, what is the Il 9 [

relation to the public health and safety finding-- of the 10 public health and safety finding to MUFs.

11;;i In other words, would the finding be that the i

h 12 MUFs don't pose a danger to drinking water or is it a d

13 1 finding that the MUFs won't lead to explosions in the United 14 :!

States?

d l

15 ]

MR. SHAPAR: The finding is that under the terms I

li 16 y of the contract, which I emphasize again, will be adequate l i 17 l

assurance there won't be an unreasonable risk to the public l

18 health and safety.

19 CHAIRMAN AHEARNE: The inimicality provision 20 doesn't come in.

21 COMMISSIONER HENDRIE:

Apparently not.

22 MR. SRAPAR:

It does not.

23 Now, the way this was written, because I wrote ll 24 :!

it, and the way it has been ---

1 I

25 COMMISSIONER GILINSKY: What did you mean?

I I

I i

I a

r l

1 1

i 33 l

i i

1 MR. SHAPAR: Well, the reason this regulation l

2 was put into account, prior to that time all you had to j

3 go on was a contract with and for the account of the

.i 4

Commission.

And nobody knew what that meant.

And everytime 5 I!

an exemption came up, people would struggle and say, "What i

6 I

does a contract with and for the account of the Commission 7

y mean?"

There is no legislative history, just those 8 !!

bear words.

9 l So the Commission decided we had to put some meat i

10 ?

on the bones of a contract with and for the account of 11 d the Commission.

,i 12 'l CHAIRMAN AHEARNE:

You are now talking about the 13,

AEC commission?

ll 14 !I MR. SHAPAR:

I'm talking about the old Commission, l

It 15 1 yes.

t

'l 16 h CHAIRMAN AHEARNE:

Now, in the t.ransition, the il 17 ]

words that are in the statute, the contract you said, 18 could be either with DOE or with NRC.

Is this right?

l 19 MR. SEAPAR: When the split took place, these 20 same regulatory provisions were lifted, almost bodily, 21,

and the only change that was made, as I recall, was to have 22 h the exemption apply to both the Commission and the NRC, 23 which was perfectly proper, because it was ---

24 CHAIRMAN AHEARNE: To both ERDA and the rest.

I 25 MR. SEAPAR:

Yes.

N

\\

l N

l' ll 34 l

r i

But the answer to Commissioner Gilinsky's l

question was, I don't think I quite finished, is the I

3 way this thing was written, as far as the intent was g

l 4

concerned, and the way it has been implemented in the 5

past was to focus on the terms of the DOE contract to t

see if the DOE could adequately control, from the standpoint l 6

1 of health and safety, the activities under the contract.

7 l

8 The theory being that there are two ways of controlling 9

health and safety hazards.

One was the licensing route, 10 l and one was the contract route.

And this was true from l

11 {'

day one.

That principle has never been disturbed, as far 12 as I know.

13 :

CHAIRMAN AHEARNE: But seldom applied.

l 14 MR. SHAPAR:

On occasion ap' plied, not very l

15 '

frequently.

16 COMMISSIONER HENDRIE: Well, let me ---

i I

17 U CHAIRMAN AHEARNE:

I still want to get to these l

18 other guys, i

i 19 COMMISSIONER HENDRIE:

Yes.

Let me pursue just 20 a little bit.

21 It is not clear to me where the best configuration 22 from the standpoint of the government lies.

I suppose, 23 taking a selfish view from NRC's side, if we declare HEU 24 operations or the whole operation down there, something:

25

" Hell, no.

We are not going to license, but we are willing I

i

!i I

l 35 l

to exempt it under 70.11" is it?

l I

2 MR. SHAPAR:

70.11.

3 COMMISSIONER HENDRIE:

And so, if the Navy 4

wants to keep on having fuel, why then DOE and the Navy 5

ji somehow have to gather up this responsibility.

You know, l

that would be fine from our standpoint.

Look what a great 6

h 7 l job we did to save the nation from diversion and all those I

8 !

terrible perils.

h 9

ll We tore up the paper, dug a little hole and put 10 our heads in it and heaped the sand back up around it, and I

li 11 !'

by God we can't see a damned thing that upsets us now, right?

ll 12 !l And that solved the situation.

!l 13 'i CHAIRMAN AHEARNE: That's one view.

I 14 i COMMISSIONER HENDRIE:

To h' ell it did.

The i

15 !

government has still got exactly the problem it had 31 n

16 '

before, only now we brave employees of the taxpayers have 17 managed to pitch it into somebody else's back yard.

I 18 If we are going to do that, I would like to 19 I

understand that pitching it into the other guy's backyard, 20 that we do that not because we are unable to stand up 21 and take our share of the burden here, but because that is 22 I

a better backyard for it to be in.

And that the guy whose 23 backyard it is understands it is coming and can accommodate i

24 l it, now.

25 CHAIRMAN AHEARNE:

In whose backyard have we dug 6

I I:

il l

l!

36 I

l 1

our head under the sand?

2 COMMISSIONER HENDRIE:

I ' d like -- yee-know, 3

what is the comment from the DOE side, if I could have

!i 4

l something tolerably briefly.

J, 5

COMMISSIONER KENNEDY:

It is alleged in the 6

paper before us that DOE is not wildly enthusiastic.

ll 7

ti CHAIRMAN AHEARNE:

Dave, would you sit down a 8

minute.

I.!

i 9

p Joe, I really wanted to hear from Vick before 1

10l we got to DOE.

!i 11!'

COMMISSIONER HENDRIE:

Okay.

12 CHAIRMAN AHEARNE:

Anybody else have any other 13 questions from NMSS?

I 14 (No response) i 15 CHAIRMAN AHEARNE:

Okay, Vick.

16 i MR. STELLO:

After that presentation, I don't i

17 know whether I need to make the point I wanted to make, 18 and that's where I think I part company with NMSS is a 19 concept that somehow says that DOE can do this job better 20 than we can.

21 I don't know of any reason to believe that they 22 i really can.

Wehavesomelicense/conditionsthatwewould 23 like to pursue, as it says in the piece of paper we sent 24 down.

The thing that I see that bothers me, with the 25 numbers that are being thrown around in an absolute way is i

i

b l

l 37 i

l i

i 1

that if you look at the that we have been 2

talking about, supposing the through-put would have been l

3 well, you would admit that one half percent 4

that was in the license, and then you would still be stuck h

5 !l with So we are talking about i

1.

I 6 i COMMISSIONER GILINSKY:

You might have Il 7 h MR. STELLO: Excuse me?

8 b COMMISSIONER GILINSKY:

You might have h

9 MR. STELLO:

You may have but you could ii i

10 i!

have still had met the regulation ---

4, 11 p COMMISSIONER GILINSKY: You could have had zero.

Il II 12 li MR. STELLO:

My point being that you can' t deal 13:1 with absolute numbers and walk away from them.

!l 14 ll Now, the process, I understand everything that

i l

15 '

has been said.

It is difficult, the ability to measure it I

16,!j and whether the errors that are there are right or wrong, f

17 of the people I have talked to, I think there are some 18 sympathy and consensus that says:

"We don't know how to 19 tell you, but your ability to make some of these 20 measurements, you are not really estimating them correctly.

I Probably the errors are greater than you think they are. "

21 l

2 2 l' And that's significant.

If you ask, "what's the answer,"

23 we don't have an answer yet.

24 COMMISSIONER GILINSKY: Well, wait a minute.

Is 25 that better or worse?

l l

L I

l 38 I

l 1

MR. STELLO:

The errors are larger than you think 9

they are, and your ability to measure them?

3 COMMISSIONER GILINSKY: Yes.

4 l

MR. STELLO:

You have got errors that are smaller 5

than really are going on.

6 CHAIRMAN AHEARNE: Wait a minute.

7 MR. STELLO: Your ability to measure in this 8

process, some of the streams that come out and you have to 9

decide what the error is, that's part of the accounting i

10 system.

The errors are bigger than you are using.

They 11 are larger errors than you have assumed.

12 COMMISSIONER GILINSKY:

The uncertainties are 13 i greater in the measurements.

I 14 l MR. STELLO:

That's right, yes.

15 You can't get anybody to say it is this one and 16,

this one anc this one, but I think that -- The feeling I I

17 have is that's the consensus, that's the way people generally 18 feel.

There is something in there but they don't know how 19 to get to it.

20 If I can, then, get to my last point.

If we 21 really have to make a regulatory judgment, I think we, as 22 a Commission ought to be able to make the overall balance, 23 say not just the accounting system in dealing with the 24 numbers, but the overall process is adequate to assure that 25 the material isn' t being diverted.

And that is both

I I

I T

39 l

1 security and the control and accounting.

i I

2 If we need to have further assurance, there are L

I 3

things, perhaps even beyond those that are now in the 4

appendices to the paper that perhaps we can do, and I 5

think probably are well within our authority to do it.

6 l

Require a cleaning.

Make people change.

If you really y

want to concentrate on diversion, I don't think it is 7

8 0 a question of having a lot more guards with a lot of 9 3 different arms.

We don't have anybody assaulting the d

10 F plant and taking it away.

There ought to be things that 11 ]l we can do to give us further assurance to compensate h

12 1 for this clear inadequacy.

And I think it ought to be i

13 within our authority to do that.

14 '

I do not like the concept of walking away and 15 saying, somehow some other agency can do a better job than i

16 h we can, when we all have the same access to the technology P

a 17 p and the understanding.

So what I would like to do is I

J 18 to come to grips with the problem of how did we decide 19 l that, given that this process, we want it to go on, so 20 it can go on to provide the assurance we need.

21 End of speech.

22 COMMISSIONER GILINSKY: But you agree that we can't I

23 keep track of the material, I mean, in a satisfactory way.

24 MR. STELLO:

I say, even if we clearly recognize 25 we have a weakness there, we do the best we can, can we not l

I

f i

i!

40 I

i l' "

decide that we will compensate by further security in l

2 the plant, somehow, to assure further that diversion 3

isn't taking place.

4 Can't we strike the balance, so when we have 5

some weaknesses in accounting we make up.

I thinx we ought 6

to be able to come to grips with this problem.

7 COMMISSIONER GILINSKY: What would you do with 8

l this plant if it were not a f acility that was important 9

l to national security?

10 MR. STELLO:

I would make the same statements I

11 I have just made.

I have to assume that there was a need 12 to do this.

If there was no need, none, I don't think it i

13 l ever should have had a license.

But given, and I'm working li 14 i' that there is a need, then ---

~

i 15' CEAIRMMi AHEARNE:

You are assuming there is a 16,

need for the product?

i l

17 MR. STELLO:

Yes.

18 Now, in this case, and I think clearly the point 19 has already been made, that this need is Unportant to the 20 country, and I certainly recognize that and I certainly 21 endorse it.

But given we have a plant, how can we, in a 22 regulatory manner, balance where we know there is an i

23 inherent weakness in one part, to compensate for it by 24 other mechanisms.

I think we ought to be able to do that.

25 COMMISSIONER GILINSKY: I mean, is there any point t

I i

h I

l 41 1

in terms of MUFs or inventory differences at which you would 2

say "enough," if it were, say, not a national security 3

facility?

You are saying no matter how great the j

deficiency, it can be balanced?

4 5

MR. STELLO:

If, I say, it could meet the balance, j

then it is enough.

If I don't think that I can, through 6

7 the mechanism of providing security in the plant, make up 8

for my weaknesses, if I assume I had no material and 9

accounting program whatsoever, if I never knew what the h)reinthere, couldn't account for it ---

10 losses 11 'l COMMISSIONER GILINSKY:

Are you talking about some o

12 If small addition to what is going on now in terms of physical i

I 13.

security or something vastly more potent?

14 h MR. STELLO:

What I would prefer to try is to d

15 i try what we have here.

If we still need to do more, if it 16 ij continues to be a problem where we can' t make the findings

?

17 1 we need to make, then I do believe we could go back, and I 18 think there is more that could be done, clearly.

19 CHAIRMAN AHEARNE: Vick, which of these options 20 were you ending up supporting?

MR. STELLO:

"C".

21 l

CHAIRMAN AHEARNE: But "C" says that allow the 22 23 resumption, only under an interim basis.

And the -- in a sense he says, until one of two things happen.

Either 24 25 '

additional major, and as I gather from reading this, yet to

I i

i 42 1

be proposed modifications are designed, or l

Is that correct?

2 l

3 MR. STELLO:

Yes.

4 CHAIRMAN AHEARNE:

So it is not that you are i

5 saying that with these that are outlined in "A" and "B"

in 6

the appendices will meet the requirements.

You are saying 7

that you ought to do those, but you ought to go ahead and 8 l!

either or come up with some i

1 9 l better modi:. cations.

10 MR. STELLO:

Or try to fix up the process better l

11 l

than it is now, to enhance our abilities to account for where il 12 !!

the material is.

i 13 L CHAIRMAN AHEARNE: So you are saying, at least in 14 !

your judgment, that the "A" and "B" modificaticn would not be' 15 )!

enough?

16 l MR. STELLO:

They would not be.

17 But I was trying to raise a philosophical point --

18 CHAIRMAN AHEARNE:

No.

I understand that.

l 19 MR. STELLO:

-- Which is one -- The one that 20 bothers me most is for us to somehow decide that we can't 21 come to grips with the issue.

I think we ought to.

I think 22 we have to decide :if this cannot go on at all, then it ought 23 l

not to go on and we ought to decide that.

It doesn't matter 24-to me whether it is DOE or the NRC.

25 COMMISSIONER KENNEDY:

I don't think that's for this

g i!

I I

l 43 o

I a

1 Commission to decide, I'm sorry, Vick.

I don't think this 2

Commission is in the business, in any way, deciding what 3

is good for the national security of the United States.

4 And that's exactly the question that is before us.

j Commissioner Hendrie is absolutely right.

That's 5

6 the question that has got to be decided.

Dn we want to assurp e

7 that the security of the United States is p. atected, or A

1 8

H are we worried about this God damned plant?

I u

9 I

MR. STELLO:

I can only speak for the moment for

l 10 ll the plant.

l l!

i' 11 'i I believe this agency can properly come to grips 1

12 ]

with the basis for this plant to continue to operate.

13 >

CHAIRMA11 AHEARNE:

I have to step in, at least i!

14 1 at one point there.

I think it is e'ntirely appropriate 15 for Stello and for Dircks to be comming here and giving us l

16 jj their judgment, given the responsibilities they have.

F 17 l I think the balancing for the national security issue is 18 1 up to us.

I 19 I

COMMISSIONER KENNEDY:

It is precisely my view I

l 20 i

that that is not our business.

l They can come here and say anything they want and 21 j

they know it.

But what I'm trying to say is this side of the 22 23 l table has no damned business deciding national security 24 questions, j

Well, let's see, we are noql---

COMMISSIONER GILINSKY:

25

i:

i 44 l

1 COMMISSIONER KENNEDY:

We are not in the business t

2 of deciding whether there ought to be a naval reactor's 1

3 program. or whether there ought to be submarines at sea.

l 4

)

We are not in that business.

5 !

CHAIRMAN AHEARNE:

You are absolutely right.

6 COMMISSIONER KENNEDY:

And that 's exactly the d

7 i

issue that is here.

l 6i 8

h COMMISSIONER GILINSKY:

I don't really think so.

9 COMMISSIONER KENNEDY:

Well, all I can tell you li 10 j is what the Navy says.

And if you have had an opportunity i.

11 ]I to read Appendix D to the paper, you would read a note i

4 6

12 l that says:

I i

13

'l 14,

COMMISSIONER GILINSKY:

Well, we are not talking i

i i

15' here about whether NFS Erwin is going operate or not j

I 16 j Operate.

We are talking about whether or not they ought U

17 !!

to operate under a regulatory framework or whether they 18 ought to be exempted and not subject to licensing.

I 19 COMMISSIONER KENNEDY:

No, I just heard a whole 20 series -- The only reason for my comment was that I heard 21 a whole series of questions and answers, which led to the 22 fact that under certain conditions it ought to close.

And j

23 it is at that point that I get off the bandwagon.

I'm 24 Prepared to discuss the other thing all day.

Indeed, I I

have my own view.

25 I

i i

i d

I l

45 i

1 CHAIRMAN AHEARNE:

hope it won't take that long. l 2

COMMISSIONER GILINSKY: Well, there are conditions 3

under which we, under our regulations, close the facility.

4 It is closed now.

5 !!

COMIISSIONER KENNEDY:

It is precisely that point l

0

{

6 h

that we ought to be discussing.

That's the issue. That's i!

7 what I said.

i 8

I COMMISSIONER GILINSKY:

I think we are in agreement 9

COMMISSIONER KENNEDY:

Then why don' t we stop 10 j all of this nonsense, you know, this mickey-mouse business h

11 j about whether we put on two more guards and then paint the i

12 1:

valves green instead of blue, and come to that basic issue il

!I 13 ;

which is:

How do we get ourselves out of this business of

.I 14 [

deciding whether there shall be a Naval Reactors program.

J 15 j CHAIRMAN AHEARNE:

Well, we do have the business

\\l 1

16 h to decide whether or not we license the facility, and if we e

17,

license the facility, what are the requirements we place on t'li 18 l the facility in order to meet its license.

And the guys 19 that are in the business of doing that have just finished 20 telling us that they have a lot of problems.

21 l COMMISSIONER KENNEDY:

And I. read all of that 22 l' Very carefully.

I understand what they are saying perfectly.

23 But having said that, where does it take us?

24 l

CHAIRMAN AHEARNE: Vick, did yourhave any more?

MR. STELLO:

I think I have said enough.

25 i

I, i

t 1;

46 c

,i i

1 COMMISSIONER KENNEDY:

You did it well.

2 CHAIRMAN AHEARNE:

Did the Energy Department or I

3 did the Naval Reactors wish to comment, Bill, do you know?

4 4 I COMMISSIONER KENNEDY:

Could Naval Reactors I

5 I comment on two points for me, please?

l One, it is stated in~ the paper, and I will use 6

'l the paper's words:

" DOE is opposed to operating the plant 7

i 8

as an unlicensed facility."

I'd like to know why that is l

true, and secondly, I would like to know whether Naval 9

10 d Reactors finds this list in Appendix A, B,

and C to be so r

I ll i unimportant.is',as to its effect on the process,is to be l

12 whol1y acceptable.

~

13 h CHAIRMAN AHEARNE:

Dave, would you speak.foriDOE 14 on the first part?

15 MR. LEIGHTON:

I will try to answer your question 16 to the best of my knowledge.

17 l First, DOE has not had the opportunity to have L

i 18 !l a copy of the piece of paper.

I was given an opportunity l

19 to scan it just prior to the meeting, and I have not had the 20 time to give Appendices A, B,

and C, so I don't know what 21 is in them and therefore, I don't want to comment on them.

22 I can speak for Naval Reactors, not for DOE, i

depending on what the question is.

The Department of 23 Energy would like an opportunity to present its view on 24 l

25 this subject if the Commission is going to search and

k i:

47 l

p i

l 1

consider the proposal in "D", which is to basically 1

2 transfer the responsibility to the Department of Energy.

3 That goes beyond Naval Reactors.

I can speak for the

(

Naval Reactors recommendations by the Department of Energy, 4

5 l but that is a matter that would have to be handled at the 6

l Secretarial level, and I am not prepared to speak to that.

0 7 ;;

We were told prior to the meeting by staff that today was If 8 c the opportunity for staff te make their presentation to the t

il 9 h Commission, and that the Department of Energy would be 1

10 h given an opportunity, or at least the staff would recommend d

11 3 that the Department of Energy be given an opportunity to d

l 12 express it views to the Commission at a later date.

!i 13 1 There are a couple of points I would like to make, o

14 !i if I may.

One is historical fact.

Under the old Atomic i

15 !.

Energy Commission, Admiral Rickover, as the Director of 1

4 16 j the Division of Naval Reactors was delegated the authority P

17 )

by the former general manager of the commission to make a i

e i

18 ll!

determination for DOE prime and sub-contractors in the l

19 l Naval Reactors program as to whether or not they would be 20 exempt from licensing, or from the regulatory process that 21 the Atomic Energy Commission had in effect at that time, using that term rather than licensing.

22 j

23 The NFS facility came in that category.

Admiral Rickover had the authority to make the determination that 24-l today, you are talking about making, and that is to exempt 25 i

f

l I

g 4

48 I

1 that facility from the regulatory requirements.

He, in 2

order to do that, there was a legal process within the old r

3 Atomic Energy Commission, he would have had to have the i

4 j!

concurrence of Counsel, he would have had to consult with 4

5 I

the regulatory side of the Atomic Energy Commission, 6

et cetera.

I 7

Admiral Rickover chose not to do that.

He did not 8

want to exempt the naval fuel fabrication facilities from 9

the regulatory side of the Atomic Energy Commission.

10 Therefore, he did not exercise the authority he had at that lli time.

He went ;o the regulatory side of the Atomic Energy 12 Commission and said:

"I think you should provide your 13 ;

regulatory procedures on our fuel fabricators, h

14 y i

15 16 l

17 '

l 18 Therefore, those plants were brought j

i 19 under the same procedures as all other regulated facilities 20 in the Atomic Energy Commission."

21 When the NRC was formed, the authority that 22 Admiral Rickover had to make the decision was, of course, 23 taken away from him, as from the general manager, as.from 24 the whole Atomic Energy Commission.

That authority was 25 transferred to the NRC.

So the authority you are speaking

f j

i

~

l

[

49 l,

1 to was authority that Admiral Rickover, at one time had, j

i 2

and chose not to exercise it.

Therefore, when you got 3

the activities that were covered by the regulatory process, F

4 j!

NFS was one of them.

.I 5 j I think i; is important to know that history, 6

because I'm not aware of any case where the NRC has granted j

7 an exemption to a previously licensed facility.

There are

[

facilities that the Atomic Energy Commission, when they 8

il 4

had the authority, decided not to bring under the regulatory 9 a 1

10 0 And when they transferred the whole kit-and-process.

Il 11 kaboodle to NRC, they worked out with NRC which ones of 12 ;I those would stay under AEC, then ERDA, then DOE authority 13 and not be licensed.

5 14 Now, I'm not aware of any for which the 15.

determination made the licensing, that then it has i

16 l subsequently been determined, Oh, don't do tnat any more 17 l and transferred it back under the other authority.

That is

}

18 something that DOE is going to have to look at very care-19 fully in preparing comments to your Commission, if you are 20 going to make those determinations, because I believe it is 21 a precedent that we have not had before.

It is certainly 22 I

a precedent which is going to come on at great public l

23 scrutiny, because what we would have at this case is where 24 you say, "Oh, it is okay to operate it, we just don't want 25 to be the one to do it."

And now DOE gets it back, the whole

I.

I

]

i 50 Y,

i i

1 concept behind the creation of NRC in the first place was 3

2 to get the regulatory function away from the producer.

3 CHAIRMAN AHEARNE:

Certainly.

And the clear j

1 4

question would then be:

If we think it is not acceptable, l

5 why does DOE consider it acceptable.

6 MR. LEIGHTON:

Right.

And we suddenly are the 7

producer and are immediately going to be accused of sleeping 8

on the rug in order to run our plant.

And that is a great l

l il f

9 concern to us.

i 10 [f Now, from the Naval Reactors standpoint, I can j

ll ll say that we have and will continue to recommend that it be 1

12,

kept under the NRC, despite the fact that it is of considerable 13 problem to us, I mean, our factory has been shut down for 14 three months, and that's a real problem to us; 15!

i l

i g

16,!j l

e 1

17 j i

18 1

19 20 So it is a matter of importance to us.

21 On the other hand, we would rather live with that kind of a 22 Problem and have it under NRC as far as the Naval Reactors 23 is concerned.

24 Now, I crn't speak for the Department of Energy g

25 at this point, because it is a subject that the Department l

k l.

.I

'i

[

51 l

1 1

1 of Energy has not had an opportunity to address their I.

2 applications of, and there are many, as affect other l

l 3

things in this whole issue of which DOE activities on 4

licenses are involved, and I'm sure that a lot of people in n

5 l

DOE will have a great interest in how this is handled.

6 i

COMMISSIONER KENNEDY:

I appreciate your 7

comment.

Can I just ask:

How long and how often can you b

live with this problem?

8 E

9 j MR. LEIGHTON:

Well, there is ---

1 10 3 COMMISSIONER KENNEDY:

What I'm trying to suggest h

11 3 to you is, history suggests we are going to be doing this 12 every three or four months.

h 13 :!

MR. LEIGHTON: Of course, the problem we have

.I 14 /

here is we have a particularly high MUF this time.

And b

15 l unfortunately we have not been able to resolve it.

16 ll We have -- there are just so many issues that i

n 17 0 have been raised.

I personally spent a week down there l

1 18 evaluating the whole situation, and my team came up with i

19 a number of suggestions on things, as we think we might 20 be able a tighter control on.

We don't know if they will i

21 work or not, because nobody knows where it has gone.

22 l

There are things being done that may help this i

23 confusion.

I'll just give you one simple example. In a MUF 24 you give no credit for stuff that is spilled out in absorbing n rete.

One of the things that NFS had proposed and is 25

il

[

52 l

1 (Commissioner Bradford arrived.

10:35) 2 doing during the shutdown period is to change the covering 3

on all that concrete that is underneath these e )-

i e

i 4

)

In so doing, they have been digging up concrete.

In l

9' 5

digging it up, can you tell me the current number, Mr.

I 6

Burnett as to how much they now credit is in the concrete?

l I

7 MR. BURNETT:

J 8

MR. LEIGHTON:

previously i

9 it would have been included in MUFs.

There is l

l 4

1 10 that digging up concrete, campling it, we find that in l

i 11:I the concrete parts they are digging up, they are putting l

12 epoxy in, that is less absorbant, that there is 13 n now found that was previously counted in some way or in 14 some MUFs.

You don't know when it was absorbed, et cetera, i

i i

15 but there it is.

It is something like where you are seeing t

16 _i back out of Apollo and still counting.

You have that il 17 kind of a problem.

i 18 One of the things we said, " Hey, for God sakes, 19 let's get this epoxy covering in there as it is less 20 l

absorbant and less likely to lopse stuff that way, because i

21 anything that goes that way counts as MUF until some day i

22 you tear the place down, rip it up and account for it.

23 Now, there are many things that have been 24 identified by both NRC people, consultants that NFS has 25 hired, our own people have hired, each of which may make l

I i

li 53 l

t 1

some contribution to reducing future MUFs, and it also may 1

2 not, since we don't know where it went at this tine.

3 Just as another simple example, the mathematicians 4

have been studying this problem.

NRC mathematicians, NFS 5 1 mathematiciens, our mathematicians.

And it is kind of 6 [

interesting if you take the big swings of a year and a i

7 half ago of big losses, big increases, big losses, big d

8 i' increases and the current loss, just on pure mathematics.

9 It is consistent with the mathematics, an ho,w, that if you 10 ]

are not measuring your intermediate. -il u...s, not the a

11 [

finished fuel, but stuff that is in the pipeline that is i!

12 !

in different forms.

If for some reason your sampling l

13,

technique is simply not representative of what is in the i:

14 :;

bottles, then it would be consistent ' hat in certain of t

d 15 j those products you would come up with this kind of a

'6 16 i situation.

17hI Now, in order to get at that NRC turned back and k

U 18 l

said, take a sample out of every bottle you have got in there.

Again, in measuring, and unfortunately it didn't 19 l 20 [

show up specific discrepancies, but again, you are taking i

23 '

a sample from a bottle.

You can't dissolve the whole 22 l bottle or you will lose the product.

23 COMMISSIONER GILINSKY: But what you seem to be 24.

saying, what Vick Stello was saying is that the uncertainties 25 are so great that we oughtn'.t to take any comfort from the

)

l' i

l 54 1

fact that MUFs are low, even when they are low.

i 2

MR. LEIGHTON: Well, he can say that, but I think 3 [

he would, at least be happier if they consistently ran I,

4 h

steady instead of swinging way up and swinging way down, 5

even though none of us ever know the absolute number, you 6

would certainly be happier if by our best measurement d[l i

processes they have these big -- if you have a big loss 7

I there is one thing h

and then you suddenly get a big gain, 8

F 9

you do know, it didn't leave the plant, you know, it's there.

10 '

What I am saying in relation to this uncertainty 11 l_

I just mentioned, NFS itself has come to the conclusion 1

I that the swinging up and down is perhaps it was limited 12 i

13' to what you measure in the end products.

So they established 14 a mode of operation wherein they tried at the end of i

i 15' each inventory period, to end up with the same amount of i

16 il each product that they had the last inventory period.

So i

17 l

if there was an error, it doesn't wash out, you couldn't i

b

,i L

18 j

have it.

In other words, if I thought I had of l

i 19 this particular product, I would end up with of that 20 product at this time, at least it is a common error and 21 it won't show up as an ID and you will eventually, with 22 your input and your output, those are pretty accurate measurements.

We have a damned good measurement of 23 I

what is, in fact, the delivered product.

That doesn't have 24 4

as big uq(ertainty.

We have our laboratories, completely 25 I

)i 55 l

i I

1 separate from them, but we have a pretty good handle on 2

the delivered product.

We have a good handle on the input 3

product.

The UF that comes from Goodrich out of the 6

f.

Portsmouth plant is analyzed by everybody in sight, and 4

l 5

l everybody believes it is a very accurate input, and we f

j think we have got a pretty accurate output, because we have 6

i to measurs what goes into our cores very carefully. It is 7

n II 8 i the intermediate things that there are questions about.

l i!

9 ll Now, we are trying to track that down.

For h

l 10 [!

example, if the next operation, if they are allowed to go 11 ahead operating as the staff has been thinking about, if h

12f, they are allowed to go, that the r. ext time, as I understand, 13 [

they will plan to go ong down the intermediate product and

!6 14 push it through at finished form, and then measure that.

W 15 Well, if that produces a plus ec return of material, if i

16 it does, it may not, but if it does that would be a very 1

17 strong substantiation for the fact that for some reason 18 '

we are unable to measure the intermediate product accurately, 19 if we could challenge that, then we can do something about 20 it.

But right now, we just don't know if that's so or not.

21 I'm not saying it is so, we just don't know.

What I'm 22 trying to reflect is that lots of issues have been 23 raised as the result of our looking at this, some of which l

24 I

may help somewhat, at least, in the future in terms of id2ntifying this MUF.

It is not as if somebody wasn't 25

l' i

l 4

h I

l.

p 56 b

1 trying hard, they are trying hard.

People have suggested 2

changes in the physical process.

Some of those may help.

3 NFS is currently evaluating what they would propose on 4

that.

Then we have to go look and see what that means in 5 i l terms of qualification and everything else. If it looks like l

that would help, then we will see how to institute it, but 6

il 7 i, you don't do that over night.

'l 8

Now, you asked me a question:

How long can you 9

go like this?

Obviously we can' t go a long time of running I

10 '

2 months and then shutting down for 3.

We have -- In the 11.

staff paper that you have and this is a paragraph that Naval ti 12 !

Reactors prepared on our needs, which says that, for example, h

13 :

14 1 15 l 16Nl l

c 17 3 li o

18 l

I 19 20 t

21 i

22 23 :l 24 l 25 i-I

i l

57 t

i 1

2 3

e ii 6 l I!

7 ;l CHAIRMAN AHEARNE: Dave, I think you mentioned I

l!

8 i' that you had not had a chance to look at the proposed changes 9 ;'.

to the material accounting system that was incorporated in

[

f 10 ;

here, that is, you hadn't gotten to the n

ll ;'

MR. LEIGHTON:

If that was in there, I have not i:

12 {;

seen that.

13 CHA12 MAN AHEARNE:

So that from the standpoint of v

14,l one of your earlier comments, you are*really not prepared 15 :,

to address the question of how significant an impact that

-l 0

L y

16 j is on the quality control problem.

h l

MR. LEIGHTON: That's correct.

17 q 18 I think, as was indicated to me, that possibly 19 af ter your hearing today you would be authorized to give i

20 l

us a copy of the paper so we can study that and ---

1 21 ll CHAIRMAN AHEARNE:

Yes.

i l'

22 i!

MR. BURNETT:

Plus, I was going to recommend 23 }b that they come before you and look at the other side.

i 24 !

COMMISSIONER GILINSKY: They seem to have done 25 pretty well.

,i t

l i

I I

58 l

i i

i 1

CHAIRMAN AHEARNE: Well, no.

I have heard from 2

l DOE, the Under Secretary's office, Deutch's office said 3

that they would like to be able to give us the DOE view I

4 i

towards the end of next week, which is the time that they 5 l felt they would -- Assuming that DOE was going to be given 6

a chance to then see what the staff came up with.

7 MR. LEIGHTON: This has great ramifications to 8

DOE.

If you literally did this and said, "Okay, DOE, this 9

l.

is your ball now, we have said it is public health and 10 safety,"

that has lots of ramifications over in DOE, because:

i I

11 all of us are going to be under great public scrutiny since I

12 you are now taking its biggest license facility, you are 13 now taking the producer to go and certify.

I 14 i CHAIRMAN AHEARNE:

But if I understand correctly, 15 Naval Reactors's view, at least, is that you would prefer f

16 l it to stay under NRC license?

l 17 '

MR. LEIGHTON: We prefer to stay under NRC license, l 18 work with NRC and the contractor to try and get this thing 19 under as tight a control as can reasonably be expected.

20 We recognize that the controls are needed, we 21 have worked in the past to pick up things that we can do 22 and we would prefer to stay under the existing system and 23 try and make it work as best we can, recognizing that you 24.

are, as Dr. Hendrie pointed out, going to have MUFs.

And 25 we have got to find a way to get through those, to keep the

I l

i l'

e p

59 l

1 pressure on the contractor and do everything we can think 2

of to solve them, both recognizing that we are going to 3

have them, and we will have them over in DOE, too.

But

]

we would rather have it where the regulatory Commission, at 4

f 5 1 least as an independent body to look at and not us the 6

producer, who is going to be immediately accused of i

7 sweeping it under the rug.

ll 8

i' COMMISSIONER GILINSKY:

Except that you are in il 9

a position to make the trade-off between national security 10[i in terms.of submarines and naval vessels operating and these a

11 d MUFs.

We are not in a position to cope with that trade-off.

12 ]

MR. LEIGHTON:

Well, of course, I guess I agree 13 9 with Dr. Hendrie's position that the plant has got to be l

14 operated.

It just has to be operated, 15 i

16 i

17 j in fact, there are new 18 ships being built all the time, unless a policy decision 19 were made by the President and the National Security 20 Council and the Congress that we are not going to build 21 and operate nuclear powered ships, we have to run the l

P ant.

22 23 i CHAIR N AHEARNE:

I don't think there is any 24 question about ---

25 COMMISSIONER GILINSKY:

But we are not talking

l' i

!l l.

f 60 1

here about whether or not the plant ought to operate.

The 2

question is whether it ought to operate under our regulatory 3

regime.

4 4

Now, th g only reason for allowing it to 5 I operate is that it is essential to the national security, 6

and I accept that, and we would otherwise not allow the y

~

7 plant to operate if it were purely a commercial operation

.I 8

ll for commercial purposes, then tha poses difficulties for l

9 this agency.

I, frankly, don't think it is a situation i

10 that we can cope with.

11 0 CHAIRMAN AHEARNE: Well, I'm not sure about that.

12 l dl MR. LEIGHTON: Well, I certainly understand what 13 you are saying, Commissioner, and it is a question there, 14 3 when you get to that, all I can speak'to is what Naval 15 Reactors would recommend to the DOE management, as a 16 !

position that they would say to DOE, DOE might or might not

,i 17 g accept that position and they would have to present that to 18 the Commission and then the Commission would have to decide 19 under your legal responsibilities what you do, and DOE is 20 going to have to do whatever it has to do as the result of 21 it.

22 COMMISSIONER KENNEDY:

It is precisely the issue l

23 so clearly formulated now, by Mr. Gilinsky, it seems to me 1

24 we have to deal with.

That is exactly the point I was I

25 l

making.

And we may even have different views about the n

I i

i 61 I

l 1

resolution to that question, but that is the question, i

2 it seems to me.

3.

CHAIRMAN AHEARNE:

I, at least, want to hear --get 4

d DOE's reaction.

ll 5 ll COMMISSIONER KENNEDY:

So do I.

I also would like 1

6 l

to hear Naval Reactors' reaction --

l q

CHAIRMAN AHEARNE:

Oh, yes.

7 8

COMMISSIONER KENNEDY:

-- to all these proposals.

Il 9 ;l CHAIR N AHEARNE:

I believe that once these il 10,i are given to Naval Reactors, I think that DOE's response

!I 11 li will end up incorporated in that, I assume.

12 MR. LEIGHTON:

Well, Admiral Rickover will want 13 h that opportunity himself.

He didn't come today because L

14 'i I was advised by staff that this would not be the day for 15 l!

DOE.

I CHAIRMAN AHEARNE:

Right, right.

16 I!

17 COMMISSIONER HENDRIE:

I have a couple of comments i:

18 ]

I w uld like to make so they can lie there in the 19 transcript of the meeting, for whatever use they may be 20 for people in preparation for the next one.

i 21 l

I think, indeed, we ought to hear from the l

,2 j Department.

We heard a very complete and eloquent comment De 23 l

from Naval Reactors, but as et i says, he can't speak for the department, and it is a fairly significant policy 24 matter over there, I would think.

I agree with that.

25

la i

f t

r'l 62 i

t 1

Now, as we have all commented, whether this 2

remains an NRC licensed facility or whether it becomes an 3

exempt facility under 70.11, I think it has to continue j

l 4

]

to operate, and I'm sure it will.

And there will 5

continue to be difficulties with the material accouating.

6 And so what we are getting down to is:

Who is it that is 7

going to answer letters from purportedly outraged citizenry 8 l saying, how dare you allow Erwin to operate with material h

9 unaccounted for, quantities of so much and so much.

You j

\\

10 know, are we going to have to answer those letters or is l

i l

11l the Secretary of Energy going to have to answer those i

d i

12 l{

letters, or maybe the Secretary of the Navy, but more I

13,l likely the Secretary of Energy.

From our staf f standpoint,.the burden which they j

14 CA have sort of run out of patienes and tolerance for, at j

15 ]l 16 l least in NMSS, is the burden of having to stand up and 17 f say, we don't think the material was stolen and then people say, boy, you haven't gotten much reason to think l

18 that, have you?

And then the argument goes back and 19 forth,cand I think part of what is at hand here, perhaps, 20 l

21 l

is the need for some recognition.

I won't ask it on behalf of those people who are going to write us savage 22 letters anyway, about why we are not shutting everybody 23,

'l 24 !

down because of high enriched materials. But at least on 1

the part of our congressional oversight committees, I think 25 i

P I!

I I

63 l

1 we are going to come to a time when the Chairman is going 2

to have to go see the oversight committee chairman, and I

say, look, we are willing, perhaps, to stay in the business 3

4 p

of licensing this facility if you want us to, in order to 5 1 take the very best cut that we can by a group of people who 6

are outside of DOE, that is, our regulators and not people I

f 7

interested in the production.

But you have got to understand!

l (h

the nature of this operation.

And it is that we are not 8

9 h going to be able to come to you and say we can guarantee to il 10 you that nothing has been stolen.

We have a.MUF this period l f

l 11 yl of

'and it is just.as 7ick says, you could have V

12 p a MUF -- God, they could be finding extra material and that il n

13 y still doesn't give you any absolutely unambiguous n

14 ?

demonstration that no material has been diverted out of i

15!

the system.

All that the MUF tells you is for this particular l

16,;

accounting period, how the particular bookkeeping, additions M

17 l and subtractions came out, some days they will be good and I

l 18 some days 9ey will be bad.

We know that.

l 19 iow, it seems to me well within the Commission's 20 Powers, in dealing with the broad mandates to protect 21 the -- not to allow things inimical to the national security 22 or the health and safety to go on, to stand back and say, 23 I

we've got MUFs that come from this particular process which 24 are going to run above threshold amounts, simply by virtue 25 of the large throughput through the facility.

We are i

i

9 q

l l

I.

64 l

i e

l 1

exerting our best efforts and have asked the license 2

to implement, and he is implementing every measure we I

3 think reasonable to improve the accountability and to l

L 1

improve the physical security aspects.

And on that basis, 4

.i 1

5 1 we think we have done about as much as we can. And on 6

balance, it is desirable that this facility operate from 7

the standpoint of the interests of the United States. And

'l while we can't assure you that nothing is being stolen out 8

i 9

of it, we don't think it is, and that's good enough.

10 :

COMMISSIONER GILINSKY: But how do you come to the h

11 1 conclusion that NRC ought to be involved here.

Is i*

i 12 because it was formerly or presently a licensed facility or 13 on the basis of some other abstract notion that we ought 1

14 to be licensing DOE activities?

15:

COMMISSIONER HENDRIE:

No, I would.ome to it --

16 I would retain the responsibility on the proposition that l

I!

17 or be willing to retain it on the basis that if we make the j

18 70.11 finding exempt, then it simply means that DOE is 19 g ing to assume the burden of looking over the operation, 20 and that on balance it may be valuable for all that we 21 can't guarantee that nothing is being diverted, it may be 22 l valuable to have our crowd of safeguards people, the 23,

accountability people and the security people in there lo king hard at it.

24 COMMISSIONER GILINSKY:

It seems to me there are 25 i

i j

i 4

I i

l l

l lq 65 l

i i

some things that we just can't cope with.

For example, f

1 thereareairplanesthatflyaroundwithhighlyenrichM 2

3 uranium and plutonium cradled in high explosives, you know, a

4 we would find difficulty in approving something like that.

5 :

But it is done because it is important for other reasons.

6 It seems to me, to a lesser extent, that's the sort of l

7 l problem we face here.

A situation which would otherwise i

8

[

be unacceptable, but is important to the national security.

9 It just does not fit, it seems to me, with the way of doing 10 ll business that we have to continue an operation such as this i

11 under our umbrella.

12 l!

CHAIRMAN AHEARNE:

Well, I think there seems to 13 j be an especially broad spectrum of views, ranging from l'

14 shut the plant down to get congressional approval, to go 15 ahead ---

16 COMMISSIONR GILINSKY:

Now, wait a minute.

l 17 No one is talking about shutting the plant down.

l l

18 l CHAIRMAN AHEARNE:

Well, no.

One of the --

I'm l

19 not saying you, Vick.

20 COMMISSIONER BRADFORD: Even though that is one 21 of the points.

i 22 CHAIRMAN AHEARNE:

That is a spectrum.

23 What I'm about to say was that I don't -- unless 24 Peter has some new points, I don't think we are really going 25 to resolve it here by going any further.

There are a lot of

l jl.

j 66 0[l I

t I-l interesting issues, and I think we have to hear DOE's l

1 2

point of view.

I would suspect that we are going to reach a resolution that is not going to be satisfactory to 4

everybody.

5 MR. BURNETT:

Could I just say one final thing 6

that I think you should be aware of.

7 I In respect to finding the material in, particularly 8

those concrete dikes, Dave is 100 percent true, we are 9 l finding a lot of material there, but that should be more 10 properly thought of in light of the total MUF at the plant, 11 which is approximately since 19,67.

12 CHAIRMAN AHEARNE:

I don't think Dave meant to say 13 l that subtracts.

14 l MR. BURNETT:

No, I was jus't getting into the i

15 -

record.

16 Now, another point, from the staff's point of 17 view,1f we go with "C" we have to make it very clear that 18 they mc,c+. orobably cannot meet the kilogram rule.. As 19 you know, from a paper that was presented to you earlier 20 showing you the significance of the kilograms, the 21 Commission will have to pick some number that we can 22 regulate to.

23 COMMISSIONER HENDRIE:

Yes, I think, clearly.

24 CHAIRMAN AHEARNE:

That is certainly true, that if 25 we end up saying we are going to retain the licensing

l' l

I 68 i

i 1

authority of it, we have to be very clear on what that 2

license requirement is. And we are going to have to have 3

a clear understanding of both why we are doing it and 4

why those requirements are appropriate.

5 MR. SHAPAR:

And high assurance.

6 t

COMMISSIONER KENNEDY: Doesn't it follow that at If the moment, given what we know the probability is that we 7 -;

nl will have to -- if we are going to continue regulating this, 8

l!

9 H unless we wish to sit here and go through this every month 10 or two, we are going to have to change the criteria for 11 j this plant.

12 i COMMISSIONER GILINSKY: But what will we be doing?

I 13 ]

We will be setting a criteria that will assure that the P ant will pass so it can operate.

l 14 I

15 COMMISSIONER KENNEDY:

Certainly.

I!

16 !

COMMISSIONER GILINSKY:

Now, what sense is there F

i 17 ]

in that?

18 CHAIRMAN AHEARNE:

Depends on whether you think i

19 I

that that's an adequate set of criteria.

20 COMMISSIONER KENNEDY: That's the issue.

21 CHAIRMAN AHEARNE:

Yes.

22 You will give Naval Reactors a copy of the paper?

23 MR. BURNETT:

Yes, sir.

24 l.

CHAIRMAN AHEARNE: And we will be hearing back l

from them within the week, I have been told.

25 j

I i

6 I

i I

f l ~ I MR. BURNETT:

I just got reminded of one thing.

I 2

We have an extensive amount of press hitting the l

b 3

[l, staff.

We had prepared a press release which says that i

4 l

the investigative portion, as well as the technical portion 5

had been completed, that we nave succeeded in reducing the 6

MUF values, but still not within acceptable limits ---

I 7

. CHAIRMAN AHEARNE:

I would probably end up saying 8

myself, that the MUF or whatever term you are using these 9

l days, inventory difference has been reduced.

I wouldn't 10 say, " succeeded in reducing that."

11 MR. BURNETT:

Okay, ras been reduced.

And that l

12 staff has presented positions to the Commission.

13 ;

MR. FOUCHARD:

Mr. Chairman, we have already said 14 ll that two weeks ago, essentially what Bob said.

i 15' I wouldn't volunteer a piece of paper right now.

16 I would respond to inquiries which will arrive this l

17 afternoon, and allow us to say the investigation, indeed, 18 has been completed, that while it has been reduced we have j

i 19 not brought it below the 9 kilogram level, and that the 20 Commission is still discussing it.

21 CHAIRMAN AHEARNE:

Fine. That'" @k. ty.

22 MR. O'REILLY:

I don't lik:-

n? idea of saying 23 it is completed.

24 MR. FOUCHARD:

Well, if it is not completed, 25 then we will say it is almost completed.

a l

70 1

MR. O'REILLY:

Well, there are still other 2

things that we are doing.

3 MR. FOUCHARD:

All right, fine.

4 CHAIRMAN AHEARNE:

What -- I'm sorry, I never did 5 ti give you a chance to speak.

l 6

MR. O'REILLY:

Mr. Chairman, thank you.

I was h'

going to speak on some of the issues similar to those e

7 8 h of Mr. Leighton, and I don't think I should repeat them.

ii 9 :!

Some of the things that we are still doing, 10 ;l I mean, our support branch and everything else, but we l

11 q have some people coming in from Union Carbide down to 12 !;

NFS next week, they are DOE consultants or prime contractors, N

13 ]

I guess, to work on the scrubbers and the macer's and 14 ll everything else, because we do believe still that there

I 15 j is a good chance that during the strike period when these F

16d People were working that the releases were greater than b

17 j we could measure, and we are still very actively involved la in the area, r

19 CHAIRMAN AHEARNE:

So your point is that at least l

from your view the total investf.gation has not been completed 20 21 MR. O'REILLY:

We have a report prepared and 22 we are sending it today down for a preparatory review, 23 and portions of this we expect to make public, oh, probably 24 in about 10 to 20 days.

CHAIRMAN AHEARNE: Will that be a formal FBI 25 l

report?

i.

+;

I s

71 i

l

't t

1 MR. O'REILLY:

Oh, no. This is our own NRC, 2

I&E inspection report that says the types of things that t

3 j!

you have heard today.

lI 4

CHAIRMAN AI.EARNE: I see.

5 All right, thank you.

6 (Whereupon, the meeting was adjourned at 11:00 a.m.,

7 8

m i

9 l

i 10 11 i

.?

12 13 l, 14 l

.5!

l I

16 l, lI 17 j

18 19 20 21 22 23 24 25

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ML19296D560

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