ML20024E350

Motion to Litigate Issues Raised by Dow Suit & to Open Discovery on Dow Issues.Allegations of Util Deliberate Misrepresentation Should Be Explored.Certificate of Svc Encl

ML20024E350
Person / Time
Site:	Midland
Issue date:	08/08/1983
From:	Barnabei L, Bernabei L GOVERNMENT ACCOUNTABILITY PROJECT, STAMIRIS, B.
To:	Atomic Safety and Licensing Board Panel
References
ISSUANCES-OL, ISSUANCES-OM, NUDOCS 8308100270
Download: ML20024E350 (14)

Text

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USNRC  !

UNITED STATES OF AMERICA

' NUCLEAR REGULATORY COMM!ggIggg9,

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BEFORE THE ATOMIC SAFETY AND LICENSING BOARD

' In the Matter of ) OFFICE 0F SECRGI' '

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' CONSUMERS POWER COMPANY )

Docket NFsf"50-329-0M 50-330-0M

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(Midland Plant, Units 1 50-329-OL

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and 2) 50-330-OL

)

5 MOTION TO LITIGATE ISSUES RAISED BY DOW

_ SUIT AND TO OPEN DISCOVERY ON THE DOW ISSUES Intervenor Barbara Stamiris, pursuant to 10 C.F.R. 2.730 and i

through undersigned counsel, hereby moves this Atomic Safety and Licensing Board (" Licensing Board") to allow litigation of three issue s raised by the Dow suit against Consumers Power Company

(" Consumers"). All three issues are probative of Mrs. Stamiris'

, management attitude contentions that Consumers is not and has not been hone st and forthright in providing information to the Nuclear Regulatory Commission ("NRC" or " Commission") . both the NRC Sta ff and this Licens ing Board. She requests the immed fate reopen ing of

discovery on these three i ssue s so- that the ir litiga tion will not

. unduly prolong these OM hearings.

A. BACKGROUND.

On July 14, 1983, the Dow Chemical Company sued Consumers for '

a decla ra tory judgment that Consumers had acted fradulently and in derogation of contractual and fiduciary duties and for $60 million 1/

in damages. The Dow Chemical Company v. Consumers Power Company, s

File No. 83-00-2332-CK-D (Mich. C ir . Ct. filed July 14, 1983).

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On July 18, 1983 Dow filed a first amended compla int.

Chemical Co. v. Consumers Power Co., The Dow C ir . Ct. filed July 19, 1983). File No. 83-002232-CK-D (Mich.

~ATl references in this mot ion are to the original compla int since it contains a more comprehensive

' sta tement of fact s. Both the original and the first amended complaint s were certified by a Dow Chemical Company official.

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Dow based its request for relief largely on three cla ims:

1) Con sumers made fraudulent misrepresentat ions and 1 .

fa iled to disclo se material facts in derogation of its contractual and fiduc iary obl igat ions to Dow;

2) Consumers mater ially breached its contractual and fiduc iary duties to Dow;

3) Dow is excused from performance under its contract with Con sumers due to a "fa ilure of fundamental a ssumptions."

Many of the allegations in the complaint are the same con-tention s intervenars have put forward in the se so il se t tl emen t procee d in g s.

Three issue s raised by the Dow Complaint, and evidently substa nt iated by documentat ion, pre sent new evidence on intervenor's management attitude contentions:

1) Consumers misrepresented its time schedule for completion of the Midland plants to the NRC, including the NRC Staff and this Licensing Board. See paragraphs 20, 37, 39-48.

i 2) Con sumers used and relied on U.S. Testing te st results to fulfill NRC regulatory re quirements while knowing that these test re sults were in val id. See par. 24, 35

3) Consumers knowingly represented to the NRC that the single te st boring taken near the die sel generator bu 11d ing demonstrated that unmixed cohe sive fill had been used as a foundation for sa fe ty-r el a te d structures at the site even l

though th'is test boring actually indicated that random fill had been improperly used in the se area s. See pa r. 27.

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All of the se issues are probative of Consumers' fa ilure to give full and accura te information to the NRC and to be totally honest and forthright in all communicat ions with the NRC.

A fa ir reading of the Dow complaint and other sources in-dicate that the following documents exist which tend to support the management attitude issues:

1) Pa r. 30: Bechtel Forecast 5. June, 1978; Consumers ' Memo rev iewing Bechtel Forecast 5, June, 1978;

2) Par. 35: Consumers' investigat ion following August 23, 1978 suspension of con struct ion which showed negligence in placement and compaction of fill s ite-w ide; July, 1978 Bechtel Report stating "no rational mean s o f" de term in in g wh ich test result s are ,

va l id ... {

April,1979 Bechtel Letter to U.S. Test ing regarding test results; October 1,1979 U.S. Tes ting Response to Bechtel Letter; April 17, 1980 Bechtel Respon se to October 1, 1979 U.S. Testing Letter;

3) Par. 37: April, 1979 Bechtel Report concerning delays for Un its 1 and 2; July, 1979 Bechtel Report on Schedule; November, 1979 Consumers' Schedule; and Consumers' investigation of fill which indicated remedial measures it took were in a de qua te .

4) Pa r. 40: Bechtel Foreca st Six - January,1980;

5) Par. 41: Consumers' internal studies stating that it could not complete plants until 1985 and alternatives considered.

6) Par. 42: March 5,1980 Consumers ' Report and/or Plan to fabricate schedule; Consumers' May 5,1980 Memo and/or Position Paper on Schedul e(s ).

7) Par. 43: June 28, 1980 Meet in concerning ConsumersgBechtel Minutesmeeting or otherregarding documents new construction schedule;

8) Par. 44: July 10, 1980 Meeting Minutes and/or other documents concerning Con sumers-Bechtel a gree-ment to ma inta in dual schedules.

Intervenor also understands that the following "gener ic" corpora te document s exist which support the allegations in the Dow Compla int:

1) Documents Consumers submitted in the 1980 and 1981 time i

period to the Michigan Public Service Commission in d ica t in g Consumers knew that it could not complete the project by 1984 as it stated to the NRC;

2) Monthly Bechtel to Consumers Status Report s;

3) Monthly Co st Trend Reports; and

4) Bechtel Schedule Forecasts, issued every six mont hs and rev fewed by Consume rs.

Par.agraph 56 of the Dow Compla int indicates that Dow demanded and rece ived a "large number of Consumers' documents which demon-strate a " continuous and systemat ic practice of m isrepre sentat ion and nondisclosure ...." Apparently these documents form the ba si s for a port ion of the f actual all.egations of the compla int, e spec ially those having to do with whether Con sumers falsely repre sente'd the project's schedule to Dow and to the NRC.

NRC Project Manager Darl Hood, in response to que st ion s from Judge Bechhoefer, stated that Consumers transmitted in f o rma -

tion to the NRC on the scheduled completion of the two plants for the Yellow Book and for the Case Load Forecast Panel.

Tr. at

19353-55.

Intervenor's review of the schedule information Consumers transmitted to the NRC indicate s that Con sumers told the NRC the same completion dates as it commun icated to Dow, according to the Dow Complaint, that is, the "public con sumpt ion" sc he d ul e .

None of the three ~ issues listed above has been 1 itigated up to this point in the se OM hea r ings. The ev idence presen ted on the " soil boring" issue in these hearings did not ind ica te that soil bor in g D-4, taken near the diesel generator building s howed site-wide problems. Gilbert Keeley, Consumers Project Manager, testified in pre f ile d te st imony, July 7, 1981, following Tr. a t 1163, that the test boring taken in September, 1977, in the diesel generator building area ind icated no site-wide problems.

The intervenors did not challenge th is evalua tion in a ny wa y.

The NRC sta f f, pursuant to a stipulation entered into with Co ns umer s, presented no evidence for the time period preced ing 197 9.

Similarly, no party presented evidence in these pro-ceed ings that Consumers knowingly used false test re sul ts

, o f U. S. Te st in g . Eugene Gallagher testified that given the in-l volvement of U.S. Testing in soils testing at both the Admin istra-t ion Bu ilding and the Diesel Gene ra tor Building a rea s, Consumers should have been aware of potential problems with U.S. Te st in g results and that a site-wide problem ex isted. Neither Mr. Ga l l a ghe r nor any other witness testified, however, tha t Consumers had actual kno'wledge of the invalidity of U.S. Testing te st results at the time it used them. Tr. at 2573.

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NRC .Sta ff' Coun:el supports litigation of the issue of whether or not Con sume'rs misre; resented the scheduled completion dates for the Midland plants to the NRC. ~Tr. a t 19351-52, 19366, 19379. NRC Staff Counsel also supports re-opened discovery on i ssue s ra i sed by the Dow Compla int. Tr. a t 19369-71,19380, 19385.

B. THIS LICENSING BOARD HAS BROAD. INHERENT AUTHORITY TO SHAPE THE COURSE OF THESE PROCEEDINGS TO PERMIT LITIGATION Of THE DOW ISSUES.

Licensing Boards have broad inherent authority to sha pe the course of the ' proceeding s over which they pre side. Offshore Power Systems (Floating Nuclea r Power Plants), ALAB-489, 8 NRC 194, 2-1-08 (1978); 10 C.F.R. 2.718(e); 5 U.S.C. 556(c),

Administra tive Procedure Act.

This authority includes the power to schedule the rece t of evidence into the hearing record to create a sound record for dec is ionma k in g. Of f shore Power Sy stems, 'su pra, 8 NRC at 205,

n. 36.

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f It is not ~ the conven fence of litigants but the " broader l

public interest" which a Licen sing Board or pre s id in g o f f ice r must ma intain a s paramount in all dec ision s a s 'to the course of l icen sing hearings. Id. at 208; Potomac Electric Power Co, (Dougla s Poin t, Units 1 and 2), ALAB .277,1 NRC 539, 552 (1975).

Mo re o ve r , a Licensing ; Board's authority to . shape the course

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of a proceed ing or determine the type. a' mount and schedule of l _

presenta t-ion. of ev'idence on contention s is distinct from it s limited authori ty- unde r 10 C.F. R. 2.700 to ' dete rm ine the issue s or content lon s to b'e l itigated. ' Texas Utilities Generating Co.

(Comanche Pea k 'St'eam Electr ic Stat ion, Un i t s 1 and 2 ), CLI ' 36, 14 NRC 1111- (1981). '

s

In this motion intervenor invokes the inherent authority of this Board to shape these OM proceedings and not its author ity 2/

to determ ine the content ion s to be adm itted for l it igat ion.-

Clearly, the three issues outlined above are relevant and important to th is Boa rd's decis ion on the " management attitude" content ion s. The issues of whether Consumers m isrepresented the schedule for completion of the two Midland plants to the NRC Staff and to this Licensing Boa rd and whether it misrepresented the validity of U.S. Te sting test results and its own evaluat ion of an impor ta nt te st boring are crucial to th is Board's decision. In fact, an I

a ppl icant s hone sty and int egr ity are important to ever y L icen sing Board's determination of whether the ut ility can be trusted to protect the public heal th a nd sa fety since the NRC sys tem is lar gely sel f-regul a tory. The Commission a nd the

, courts have always stringently in terpreted t he Atom ic En ergy Act 's re qu ireme nt tha t a ppl icants and l icensee s fully disclo se all l po tentiall y rel evan t informa tion to the Commission. V irg inia Electr ic and Power Company '. North Anna Power Station, Un its 1 a nd 2 ), 4 N RC 480, 491-92, n . 11 (1976), a ff'd, Virgin ia Electric Power Co. v. Nuclear Regula tory Commission, 571 f.2d 1289 (4th Cir. 1978). Matter of Hamlin Testing La bora tor ie s, Inc., 2 AEC 423, 428 (1964).

27 and l:fitthis iga teBoard den te s intervenor's mot ion to reo pen d iscovery

'the Dow issues under the "mana gement att itude" con-l tention s, Mr s. Stamir is will move to reopen the record a nd to e sta bl ish ~ the se is sue s a s con tent io ns in the OM hea r ing s.

Cer ta inl y litigat ion of these issues as " management attitude" is sues, analogous to the Boos' inve st i gat ion issues, will exped ite these proceed ings.

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Con sume rs ' past a nd continu ing fa ilures to commun icate a ccura te and hone st informat ion to the NRC is proba bl y the single most probative evidence as to whether or not Consumers s hould be allowed to proceed with the soils work at Midland.

Region III ha s sta ted that it cannot itself construct the M idland plan t s. Given that the NRC inspection sta f f is stra ined to its limit s, this Licensing Board's ba sic decision i s to de ter-mine whether Consumer s can be ~ trusted to ca rry out the com plex soil s remed ial work needed a t Midla nd. Certa inly the a llega t ion s of the Dow Compla int, if substa ntia ted, ca st doubt on Con sumers' a bility and willingness under any NRC-imposed condit ion s to complete the soil s work and other con struction of the Midland pl a n t s in a manner which guarantees the public health and sa fety.

C. DISCOVERY SHOULD BE REOPENED ON THE THREE DOW ISSUES.

Intervenor re que sts that discovery be reopened on the three Dow issues listed above. It is obvious from the fa ce of the Dow Complain t that Dow is relying on specific documents to demonstrate that Consumers submitted f al se in forma tion on the schedule for com pletion of the Midland pla nts to Dow a nd to the NRC. It is al so cl ea r tha t Dow is quoting from s pec ific documents in sta t in g that Con sumer s had knowledge that the U.S. Te st in g te 2 re sult s on which it wa s rel ying were f al se . See par. 35.

Intervenor believe s, therefore, that documents substa nt iat ing Dow's claims a re read ily available a nd ha ve been supplied to Dow by Con sumer s, a s s ta ted in para gra ph 56 of the com pla int.

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Therefore, intervenor request s that d iscovery be reopened on those issue s l isted a bove.

Intervenor a grees with NRC Sta ff coun sel tha t the issues dealing with Con sumer's ma terial mi sre pre senta tions on th e schedule may be dif f icul t to l it igate. Thu s, l it iga t ion of thi s issue would be best scheduled three to four month s a f ter the openi ng of d i xovery. Nevertheless, if this Board determines it canno t keep the record open in the OM proc eed ing s through December, 1983,intervenor respectfully re quests tha t discovery be opened immedia tel y a nd shor te ned r espon se t ime s be es ta bl ished for all par ties. A shortened d iscovery period would permit 1 it iga tion o f the Dow is sues in the October hea r ing s.

On July 31, 1983, in tervenors rev iewed with Con sume rs those specific documents de scr ibed in the Dow compla in t or of whose ex istence intervenor knew from other sources. Ma ny o f t he se document s Mr s. Stamiri s bel ieves were included wi thin the sc o pe o f her ea rl ier d iscovery re que sts. Con sumer s ha s no t s ta ted whether o r not it will no w pro duce any o f these document s o n the ba s;; that they should have been produced a t a n ea rlier t im e in re spo n se b Mr s. Stamiris' discovery re guests. In fact, Mr. Br u nne r indicated that he was not hopeful that Con sumers t

would voluntarily produce any o f the documents. The r e fo r e ,

in tervenor reque st s a t this t ime tha t this Board determine l

whether or na t a ny of the document s listed in Pa rt I, su pra ,

were in fact subject to her or iginal discovery requests and s ha ul d no w' be immed ia tely produced, l

The discovery requests which Mrs. Stamiris believes re quested documents rela ted to the Dow Complaint are the following:

December 41980 Discovery Request:

1. Documen t Re que st 2: " Any cost or schedule im pa c t da ta or projections made since tho se submitted in re s ponse to 50.54 f questions 21 a nd 22 rega rding so il se ttlement matters.

All " schedule" documents described in Part I, supra, which were issued at any time prior to Consumers re sponse on March 30, 1981, should have been produced. None of these documents wa s produced.

2. Discovery Request 5: Discussions o f all options ever considered (whether formal or in fo rmal , tenta tive or com pl e te) for correction o f the Admini stra tion Build ing se t tl eme n t.

Cer ta in of the documents described in the Dow Com pla int indica te tha t Co nsumers k new tha t its remedial mea sures were ina de qua t e a nd tha t o ther optio ns were co n sidered. None o f the se do cuments wa s produc ed.

3. Interro ga tory 2(a ): Did yo ur co nsul ta nt s ever d if fer in their recomme nda tio ns on so il settlement matters (including tenta tive o pinio n s) ?

Cer ta i n do cume nt s de scribed in the Dow Compla int ind ica te tha t Co nsumer s knew fill problems were s ite-wide bu t d id no t commu n ica te this informa tion to the NRC. None of these o pinio ns, whether of con mi tants, Bechtel or Consumers, was forwarded to Mrs. Sta mir is dur ing d iscovery.

Ja nua ry 14, 1981 Di sco very Re que st:

1. Discovery Request 2: Were any aud its conducted covering so il set tl ement ma tter s (includ ing QA QC a s pec ts) wh ich have no t

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been pre se nted to th e NRC. If so, provide the se find ings.

All documents demonstra ting that the diesel generator building soil bo rin g indica ted site-wide problems should have been produced. In a ddi tion, all documents rela ted to Co nsumer s' knowl edge a bou t the inval id ity o f U.S. Te s t ing te s t resul ts should have been produced, includ ing the corre sponde rm e between Bechtel a nd U.S. Te stin g descr ibed in Pa rt I, supra.

None o f th ese documents wa s pro d u c ed .

2. D isco very Reque st 5: Provide the Bechtel r e po r t s a s to the ca use o f the Administra tion Building settl ement a nd wh e th er it wa s a n isola ted pro bl em, o r a ny o the r r e po r ts r eco mm end ing proc edural cha nges stemming from th is event.

Documents described in the Dow Com pl a in t, including Bechtel's 1979 Re por t should have been produced a s they deal t spec if icall y with ca uses o f the so il set tl eme nt problem s a nd whether o r no t they were site-wide pro blems.

Ma rc h 2 7, 1981 Discovery R equest:

1. Interro ga tory 3 : Were any corrective actio ns recommended asa re sul t o f the Adm in istra tion Buil ding se ttl eme nt pro bl em s ?

If so, pl ea se descr ib e.

The Dow Compla in t ind ica tes tha t in ternal Consume rs ' o r B cc h t el invest iga tio ns demonstra ted that improper plac ement a nd compac tion of fill crea ted pro bl em s s ite-w id e. See par.35.

It is li kely tha t these documen ts al so recommend corrective a c t b n to the se site-wide settl eme nt pro bl ems, wh ich would includ e correc tiv e a c tio n fo r the Administra tiv e Bu ild ing probl em s a s well .

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Intervena r r eques ts that this Boa rd order Consumers to produce documents listed in Pa rt I, supra, which are obviously i ncl uded wi th in Mrs. Stam ir is' pr ior discovery requests and 3/

were not produced a t tha t time.-

D. CONCLUSION.

In considera tion of the above, this Licens ing Boa rd should grant interv enor's re quest s to l it iga te a s ma na gem ent a t t itude issues the three Dow issues ra ised fo r the first time in the Dow Com pla int fil ed July 14, 1983, a nd to reo pen discovery immediately o n these is su es.

Respectfully submitted, dw{ Lwb%

LYN BERNABEI G NMENT ACCOUNTABILITY PROJECT I st itute for Policy Stud ies 1901 Que Street, N.W.

Washington, D.C. 20009 (202) 234-9382 i August 8, 1983 Counsel for Intervenor Ba rba ra Stamiris i

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Intervenor has not submitted an a ffidavit swear ing to the fa e t tha t she ma d e the a bove-ment io ned. discovery re gue sts a nd tha t she did not receive the documents described in the Dow Com pl a i n t . If this Board deems filing of such an affidayit necessar y af ter r ev i ew o f the pub.licly ava ila bl e discov ery re qu e sts a nd re spo nses, she will f il e o ne.

e 00LKETEP USNRF, UNITED STATES OF AMERO AUG -9 All :39 NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Lk5fk)phkIhdrd BRAHEH In the Matter of: ) Docket Nos. 50-329-OL

) 50-330-OL CONSUMERS POWER COMPANY ) 50-329-OM

) 50-330-OM (Midland Plant, Units 1 and 2) )

)

CERTIFICATE OF SERVICE I HEREBY CERTIFY that copies o f the forego ing Motion To Litiga te Issues Raised by Dow Suit a nd To Open Discovery on the Dow Issues were mailed, pro per po sta ge prepa id, this 8th day o f August, 1983, to:

CCharles Bechfrefer, Esq. Frank J. Kelley Administrative Judge -

Attorney General State of Michigan Atcrnic Safety and Licensing Board Steward H. Presnan U.S. Nuclear Regulatory OcrTnission Assistant Attorney General Washington, D. C. 20555 Envircrrnental Protection Division

• Dr. Jerry Harbour 525 W. Ottawa Street, 720 Iaw Building Lansing, Michigan 48913 Administrative Jtdge Atomic Safety and Licensing Board Ms. Mary Sinclair U.S. Nuclear Regulatory Cmmission 5711 Struerset Street Washington, D. C. 20555 Midland, Michigan 48640 Dr. Frederick P. Cowan Ms. Barbara Stamiris Alministrative Judge 5795 N. River 6152 N. Verde Trail, Apt. B-125 Freeland, Michigan 48623 Boca Raton, Florida 33433 Wendell H. Marshall, President James E. Brunner, Esq. Mapletcn Intervmors Consumers Power Ccr:pany RFD 10 212 West Michigan Avenue Midland, Michigan 48640 Jackson, Michigan 49201

• Docketing and Service Section U.S. Nuclear Regulatory CcrTrission Washingtcm, D. C. 20555

a Mfrt:n M. Cherry, P.C.

Peter Flynn, P.C.

Cherry & Flynn Three First National Plaza Saite 3700 Chicago, Illinois 60602

• Atmic Safety and Licensing Board U.S. Nuclear Regulatory Ccmission Washington, D. C. 20555

• Atcmic Safety and Licensing Appeal Panel U.S. Nuclear Regulatory Ccrmiission Washington, D. C. 20555 Steve J. Gadler, P.C.

2120 Carter Avenue St. Paul, M4 55108

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• • Frederick C. Williams, Esq.

Isham, Lincoln & Beale 1120 Connecticut Avenue, N.W.

Washington, D.C. 20036

• William D. Paton, Esquire

, Office of Dcecutive Iagal Director U.S. Nuclear Regulatory Ccrmissicn Washington, D. C. 20555 ,

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• Delivered through the NRC internal mails.

. *** Hand-delivered only to Fred Williams.

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