ML20028G209
| ML20028G209 | |
| Person / Time | |
|---|---|
| Site: | Zimmer |
| Issue date: | 01/31/1983 |
| From: | Bernabei L, Devine T GOVERNMENT ACCOUNTABILITY PROJECT, MIAMI VALLEY POWER PROJECT |
| To: | Palladino N NRC COMMISSION (OCM) |
| References | |
| NUDOCS 8302070522 | |
| Download: ML20028G209 (11) | |
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GOVERNMENT ACCOUNTABILITY PROJECT 00gJc G Institute for Policy' Studies u (202)234-9382 1901 Que Street, N.W., Washington, D.C. 20009
\ ' '83 FEB -2 h10 :53 1' ,
January 31, 1983 i ru:w: rr .
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r The Honorable Nunzio J. Palladino - !
Chairman I occtTrNUMBER U. S. Nuclear Regulatory Commission PROD.& UTIL1.:wo- FAC. ..g, """' j[ f[='&
Washington, D. C. 20555
Dear Chairman Palladino:
On behalf of the Miami Valley Power Project ("MVPP"), the Government Accountability Project (" GAP") submits this protest to ,
the manner in which Region III is reviewing Cincinnati Gas and s Electric's ("CG&E") proposal of the Bechtel Corporation's proposal to conduct the third-party program at Zimmer. The NRC Staff has repeatedly failed to incorporate mechanisms for effective public participation in its review process. Of greater importance, how-ever, is Region III's intention at this time to make a decision on Bechtel's proposal,without adequately investigating a number of serious matters. GAP believes it is essential that the Commission itself assume a guiding role in determining whether or not CG&E's proposals satisfy the requirements laid out in the Commission's Order of November 12, 1982, since the NRC Staff has demonstrated g it lacks either the will or the competence to do the job.
GAP's concerns lie in four areas. The order in which these concerns are presented does not indicate any hierarchy of im-portance. _
' First, in a January 27, 1983 conversation with GAP, Region III Counsel Stephen Lewis stated that the Staff is not concerned with
' the contractual arrangement between CG&E and Bechtel that existed prior to the November 12 Order Suspending Construction. In ad-dition, Mr. Lewis,has stated he does not know and is not concerned with whatever contractual relationship exists today between CG&E and Bechtel. m-.
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On January 27, 1983, I telephoned Mr. Lewis to request a ' copy of any contract or arrangement currently in effect between CG&E and Bechtel, or.in e'ffect between the two companies prior to Novem-ber 12, 1983. It is obvious from the correspondence between CG&E and Bechtel that some type of agreement, either. oral or written, exists. On November 8, 1982, Bechtel Power Corporation's Presi-dent H. O. Reinsch wrote to Mr. Dickhonerlthat it was prepared to help CG&E " complete the project." Mr. Reinsch attached copies of two contracts to his letter, one of which_was a technical services agreement (Exhibit 1). Apparently this technical services agree-ment was for Phas'e 1 of Bechtel's work, which is intended to identify the organizational, procedural and other actions needed 8302070522 030131 DRADOCK05000g l }
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The Honorable Nunzio J. Palladino
-January 31, 1983 ;
Page Two $
dj td complete the Zimmer project., In a November 23, 1982 letter to Mr. Dickhoner, Bechtel laid out its proposal to conduct a management 'j review required by the Commission in its November 12 Order. In the .
letter Mr. Reinsch states, " Appendix A describes the objectives and J approach to the Independent Review of the project which is proposed y
for accomplishment under the Technical Services Agreement submitted {
on November 8, 1982. This review which we have designated as Phase. t 1 is currently in progress." (Emphasis added.) h GAP and other commenters on the Bechtel proposal questioned whether '
Bechtel could be independent if it already had established a working relationship with,CG&E and had already worked on the project. In
- response to Region III Administrator James Koppler's letter, CG&E, l on January 3, 1983, wrote the following about the contractual agree-ment between CG&E and Bechtel: "The only document we have related '
to our plans to utilize Bechtel as outlined in my letter of Novem-ber 10, 1982, to the NRC Commissioners, is a proposal submitted by Bechtel with a transmittal letter dated November 8, 1982. A copy of this original submittal, less contract terms and conditions which we and Bechtel deem proprietary...is enclosed." (Emphasis added.) Mr. Dickhoner proceeded to state that Bechte'l is currently completing a management review at its own risk, and that CG&E in-tends for this assessment to. satisfy the Commission's November 12 -
Order. If approved by the NRC "a final _ agreement will be signed concerning these services...." .
It appears from both Bechtel and CG&E's responses to the NRC that some agreement already exists between the two, and that it is likely that this agreement conforms more or less to the Technical Services Agreement attached to Bechtel's November 8, 1982 letter. Moreover, it seems that if Bechtel is approved, the contractual relationship between CG&E and Bechtel whereby Bechtel is hired to do an indepen-dent management review will conform in general terms to this '
Technical Services Agreement.
Mr. Lewis sta*ad that he believes such contractual relationships are not relevant to the NRC's analysis of Bechtel's independence.
What was clear from the January 5, 1983 public meeting in Cincinnati was that the' Cincinnati community does not agree. Mayor Thomas B.
Brush summarized the concerns of many when he stated at that meeting:
"I think what you are asking is, do we feel that because CG&E retained Bechtel prior to the order that that per.
se is enough to disqualify Bechtel, and I think we are reluctant at this point to come out and say yes, be-cause we want these questions answered first.... Maybe they are in fact absolutely independent. Maybe these questions will ' reveal it. But at least at the outset it doesn't look as though they would be . "
I Transcript, at 19.
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The Honorable Nunzio J. Palladino
,1 January 31, 1983 Page Three ,
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City Councilman Guy C. Guckenberger concurred:
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'TW] hen you have prior communications between CGGE j[
and Bechtel prior--an apparent prior arrangement, it s ,
d-makes a number of us very concerned about whether lj!
there will be public confidence in a management re- 7.!!
view of the process, or will ihis be a joint venture 4-
{i to get the plaht completed."
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Transcript, at 15. .;
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Obviously Mr. Keppler originally thought that the question of any existing contractual relationship between CGEE and Bechtel important ~.
enough to ask.1/ M
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' Mr. Lewis should make sure that Mr. Keppler's questions are answered.
The Staff cannot accept CG&E's position that any contractual rela- "j tionship is proprietary information. In our opinion, such an ac-captance of CG&E's position makes the public safety a proprietary !
matter since the CGEE-Bechtel contract establishes the basic ground- f rules for quality verification of the plant. ,
Second, Region III may recommend the approval of Bechtel prior to ,
l a comprehensive investigation of alleged material false statements '1 I made by Bechtel and CG&E to the NRC about Bechtel's prior activities at the Zimmer site.
In January 27 and 28, 1983 conversations, Mr. Lewis stated that i although the NRC was investigating the alleged material false state- [
ments, its investigators did not intend to question CG&E directly l about the statements unless it was absolutely necessary. Further, l
Mr. Lewis stated that he believed this "in,vestigation" could be l completed within a week or even less time. GAP believes allegations j of material false statements by Bechtel and CG&E should be of seri-ous concern to the N RC . In fact, Mr. Keppler explicitly acknowledged ,
this at the January 5, 1983 public meeting: "[I] f Bechtel responded l falsely, it will be treated as a serious matter, yes." Transcript, j i
l at 60. ,
Certainly the NRC considered Bechtel site vt' sits in connection with l the CG&E letter of November 10, 1982 significant enough to ask about.
Mr. Keppler requested specifically "a chronology of meetings between :
CG&E and Bechtel, and site visits by Bechtel employees in connection I with this effort." Once again, Region III should be serious about l
.getting full and accurate answers to its questions. Any investi- !
i gation cannot be deemed complete until the NRC has spoken to those l allegedly responsible for making the statements -- CGEE and Bechtel
-- and returning with its findings to those who made the initial allegations -- GAP and the five witnesses with critical evidence about the alleged misrepresentations. We have learned that the
-1/Mr. Keppler specifically asked: "Please provide all documents and a discussion of any oral understanding related to CG&E's plans to utilize Bechtel as described in your November 10, 1982 letter to the NRC Commissioners and activities contemplated in response to the November 12, 1982 Commission order."
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The Honorable Nunzio J. Palladino '
January 31, 1983 Page Four '
'l nl five witnesses have confirmed with federal investigators the specifics
- of GAP's January 20, 1983 letter'to Mr. Keppler. S u r e l~y , under those
, circumstances it is " absolutely necessary" to demand that CGEE foi - l' mally respond to the charges. j yl Third, Region III has received additional information from CG&E about allegations that Bechtel has a financial involvement in the three ,
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utilities which own Zimmer. Prior to GAP 's telephone calls to
- Mr. Lewis on January 27 and 28, 1983, none of this information was shared with the public. After conducting further research on the subject, GAP believes that Bechtel's past financial involvement in the three companies which own Zimmer necessitates a full investiga-tion of Bechtel's prior, and perhaps continuing, tole in underwriting CGGE, Dayton Power f4 Light, and Columbus and Southern Ohio Electric debt and equity. ,
According to Mr. Lewis, on January 10, 1983 CG&E forwarded a letter from Bechtel to the NRC in which Bechtel's chief counsel John F.
McGuinn states the followingt i
1)/ Dillon, Read has no present investment interest in'any of the three utilities owning Zimmer.
- 2) Dillon, Read formerly participated in underwriting
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< syndicates formed to raise debt or equity for theithree utilities.
. 3)' Sequoia Ventures, a privately-owned company whose share-holders include members of the Bechtel family, owns a "significant interest" in Dillon, Read.
- 4) Three of Dillon, Read's 22 directors were nominated by Sequoia.
G AP ' s subsequent research demonstrates the following:
- 1) According to Dillon, Read Vice-President Carl DeLucia, Sequoia Ventures purchased Dillon, Read in June, 1981.
- 2) Sequoia Ventures, Mr. DeLucia stated,'is owned by the '
Bechtel family and serves as an umbrella for the Bechtel family's business interests.
- 3) The Board of Directors of Dillon, Read consists of sub-stantially the same people today as before its purchase by Sequoia.
However, three new directors have been nominated by Sequoia. In e f fe ct , Bechtel's letter provided information irrelevant to the allegations made by GAP.
i See Cohen Affidavit, attached as Exhibit 2.
Mr. Lewis informed me thac he had asked CG&E to clarify a few statements in the Bechtel letter described above. ,
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.1 The' Honorable Nunzio J. Palladino _,
January 31, 1983 g -
Page Five .
.Considering'the past subst'antial involvement of Bechtel in Dillon, ]
i Road, and through Dillon, Read in underwriting debt and equity for the three utilities which own Zimmar, GAP believes it is imperative #
that the NF.C conduct a full investigation. Moreover, the NRC must ;
condition any approval of Bechtel on its and,Dillon, Read's commit- '
ment not to underwrite or to participate \in any underwriting syndi- ,
cates which raise ei,ther debt or equity .for any utility which owns any portion of Zimmer over the operating life of the plant. j i
Fourth, Bechtel's overall attitude towar'd its proposed independent review of Zimmer's management is not conducive to assuring that Zimmer is constructed in accordance with NRC regulations, and so as to protect the public health and safety. In Bechtel's letter of j November 8, 1982,. Mr. Reinsch reveals the company's perspectives t, 'j -
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- "The completion of your project is vital to your company as well as the future of the U. S. nuclear ;
utility industry." i v
In viewing Zimmer as the last stand for the nuclear industry in some imagined war game between pro-nuclear and anti-nuclear forces, Bechtel seems to miss'the point of the Commission-ordered independent audit. The overriding objective of both the management audi't and the independent verification of the quality of construction at Zimmer must be to ensure that Zimmer has been built and can be operated safely. Bechtel already has revealed its bias by' eliminating the possibility that it may not be feasible to finish the plant safely.
Bechtel's announced goal is speedy completion, which may conflict ,
with the findings of a truly objective review.
A secondary purpose of the program is to re-establish public
- confidence in CG&E and in the NRC. CG&E's and Bechtel's unwilling-ness to work with the public and those workers and whistleblowers who first brought the problems of Zimmer to the NRC's attention
, has only aggravated the already-anxious Cincinnati community. More-
' over, CG&E's failure to serve the intervenors or other interested parties with relevant letters and information on the third-party proposal, and the NRC's tolerance for and encouragement of such secrecy have further eroded public confidence in the dedication of the NRC to protection of the public health and safety.2_/
GAP requests today that the Commission itself reassume the power it delegated to Mr. Keppler to ensure that the entity chosen to conduct a management audit, of, Zimmer and a verification of the soundness and safety of Zimmer's construction be truly independent and competent, and have complete integrity.
2,/MVPP has requested that the Commission prohibit any further ex parte contacts between CG&E and Region III Staff delegated the responsibility to review the third-party proposals of the utility and that MVPP be notified of all further meetings on the third party. Supplemental Brief in Support of Petition for Baconsideration, December 22, 1982. pg -
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The Honorable Nunzio J. Palladino ;
January 31, 1983 -
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s fg It is clear that'Mr. Keppler has shut out the public at every -j critical stage of the review process, in direct contradiction to j his professed desire for effective public participation, and his '
claim that Region III's review process would parallel the third- i}
party review process established at Diablo Canyon. .
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k GAP.further requests that the Commission itself ensure an adequate I review and -investigation of the four points outlined above-- 1 1).~That the Commission obtain and study the oral or written contractual relationship now existing be- j tween Bechtel and CG&E and existing prior to the - j November 10, 1982 CGEE letter to the NRC; j
- 2) That the Commission ensure a thcrough investigation of all allegations that Bechtel has a financial in-volvement in the.three utilities which own Zimmer and that Bechtel and CGEE have made material false statements to the NRC about Bechtel site visits prior to November 12, 1982; and
- 3) That the Commission ensure that whatever entity is chosen to cond'ct u a third-party audit 'of Zimmer is .
-dedicated to safe construction and operation of the plant and not to the future of the three owners of Zimmer or the nuclear industry.in general.
Today, GAP is also writing to Congressman Morris Udall to request that these matters be addressed at the February 22, 1982 NRC Autho-rization Hearing. The NRC has admitted tardiness in recognizing the quality assurance breakdown at Zimmer and even today to being ill-equipped to handle the many serious problems existing at the site. The Commission 's unprecedented actLon in suspending all safety-related construction at Zimmer on November 12, 1982 highlighted the extraordinary nature of the plant's deficiencies. Given this his-tory, and the total erosion of the public's confidence in CG&E and in the NRC Sta f f , GAP believes nothing less than direct and con-
- sistent attention by the full Commission to the third-party review process will re-establ,ish public confidence in the Zimmer plant.
Sincerely yours, ,
EA. .2^ ^
Lyn e Bernabei omas Devine Counsel for Intervenor Miami Valley s
Power Project e LB/TD/my f*-
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EXHIBIT 1 %
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Bechtel Power Cor,ooration
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US}iRC Fifty Beale Street .- / j
. San Francisco. California A 4Mress:
P.O.Bos 3965. San Franc:s:o.CA 939 N 83 FEB -2 ~
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BRANCH ,
%g Mr. W.H. Dickhoner, President s Cincinnati Gas and Electric Company 's ')3 139 East Fourth Street
- Cincinnati, Ohio 45202 . ~
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De'ar Mr. Dickhoner: ,
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We appreciated the ' opportunity, the f rankness , and the cooperation of your .
3 personnel in discussing the status of your project last Friday. We agree that
.this is a critical time in the schedule for the completion of the W.H. Zi=cer plant. The completion of your projec't is vital to your company as well as the
. future of the U.S. nuclear utility industry. Bechtel is prepared to mobilize our full capability and experience to help Cincinnati Gas and Electric complete the project. ,
We believe that our management experience at Fermi, WPPSS, South- Texas , and Diablo Canyon can provide you with the assistance your project organization -
needs to resolve the current problem areas and complete the Quality Confirmation Program. . -
Appendix A describes the immediate steps we would take to identify organizational, procedursl, and' actions that are needed. This Phase 1 of the initial work is expected to take three weeks, in which time our senior people ;
would further de' sign the approach and a staffing plan for the , completion of ;
the project. Generally, those same people, upon completion of this phase, ;
vould be available to. carry out the implementation of the plan. l i
Appendix B includes the resumes' of, the Phase I team members. You'll find them i
,.very experienced in' nuclear power " plan't['and particularly BWR, projects. In j salmeting these candidatesi ve have'empliasized the need for experience in: i
- 2. .' ' ~u.'h n;Bhq,*.~l :ifigf
,.1. ' ' . Project manag . at and con'struction management
- 2. Integrated project control I
- 3. QA/QC programs '
- 4. Construction completion, systems turnover, and startup Appe ndix C includes summaries of Bechtel's nuclear experience, which, as you know, is approached by no other company.
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Mr. W.H. Dickhonor, Prasident , _O
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Some of Bechtel's in-depth capabilities that we think are important to this f job'are: '
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- 3. Project control systems for integration of quality, , schedule and cost
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4 ' Reactor containment expertise '
- 5. Welding expertise and national code relationships l- 6.
Nuclear regulatory licensing expertise i
- 7. Labor relations
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- 8. Operating power plant services .
In Appendix D, for your. convenience we have included copf es of two contract forms. The first is a technical services' agreement which is our nor=al cont ract for studies similar to the Phase I effort. The second is the form we normally use for more broad-based support of nuclear plant project completions. This Phase IL contract allows assignment of the, activities that [
we can foresee for successful completion of the project and allows Cincinnati Cas and Electric, at their discretion to utilize any of Bechtel's capabilities that may be required. -
In the event that additional support services are needed after project completion, commercial terms are included that' allow Cincinnati Cas and
' Electric to use our Operating Plant Services organizatioc af ter commercial operation for whatever help may be needed. ~
I have found it useful to personally intensively review our performance and
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overall project progress in periodic ?
executive review meetings with your counterparts in other, utilities. I I recommend a similar program on the Zimmer
'k Bechtel is prepared to provida.
h* k Cas and Electric in..the 'succe,, ssful expertise , and resources c,ompletion
' to assist Cincinnati
. of the W.H. Zimmer Nuclear Station project. We so have' sufficient experienced personnel to accomplish it in conjunction with the project's'. existing capable personnel. We look forward to working with you towards that end. -
Sincerely, H.O. Reinsch President-HOR /lsw - .
Enclosures
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-Mark Cohen, being duly sworn, deposes and says:
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- 1. My name is Mark Cohen. I am a legal intern with the Government
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...y'- -y Accountability Project of the Institute for Policy Studies. . , l 1.j g. n .
- 2. On Friday, January 28, 1983, I spoke by phone with a man who ~
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identified himself as Carl DeLucia. Mr. DeLucia said that he is z.,.
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- 3. Mr. DeLucia asked that he not be quoted. I told him 'I would [ !
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- 4. The following is based upon my notes and recollections of ,
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4 y 6. Upon questioning, Mr. DeLucia clarified his statement by f
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Inc., which he characterized as a privately-held company that is c, . .. .. 7 owned by the Bechtel family and serves as an umbrella for family
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. < 7. Mr. DeLucia said that the Dillon, Read Board of Directors is ; i
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M; I have read the above one-page affidavit and it is true, j j C..,.2. accurate and complete to the best of my knowledge and belief. i
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The Honorable Morris K. Udall '\. . 1l
' U.S. House of Repr'esentatives Df 235 Cannon House Office Building 1 Washington, D. C. 20515 ,
Dear Congressman Udalls,
3 hl Today the Government Accountability Project transmitted our serious 6. concerns to the Nuclear Regulatory Commission Chairman Nunzio J. ,', Palladino about the manner in which Region III Staff is conducting e its review of the proposed third-party independent program for the Zimmer Nuclear Power Plant near Cin,cinnati, Ohio. GAP requests that, in the course of the February 22, 1983 Authori-zation Hearings for Fiscal Years 1984 and 1985, you and your col-leagues impress on the Nuclear Regulatory Commission the need to enhance public participation and to increase public confidence in
- the integrity of the NRC review process. j 2 .
As yon and other Committee members are aware, the Commission was very slow to recognize the quality assurance breakdown at the Zimmer plant. Moreover, the November 12, 1982 Order of the Commission sus-pending construction at Zimmer was unprecedented. As Chairman Palladino admitted at that time, the Commission does not have the , situation at Zimmer under control. In ordering an independent s third-party review of management and an independent review of the quality of construction at Zimmer, the Commission took the first step necessary to restoring seriously erode'd public confidence in the safety of the plant's construction and in the NRC itself. Unfortunately, the NRC Staff is completely neutralizing the gains in legitimacy the Commission achieved on November 12. As GAP's letter to Chairman Palladino describes, the Region III Staff appears prepared to approve the Bechtel Corporation as the entity to complete the management review without adequately investigating a number of serious matters. In light of Region III's apparent inability to handle the task, GAP requests that the Crmmission reassert its commitment to oversee directly the reso ation of the Zimmer quality assurance breakdown. GAP further asks the Commission to ensure that a number of serious matters are investigated prior to final approval of a third party _ i to conduct a management audit or to submit a quality verification j plan for Zimmer. l l e i o. _._
W The Honorable Morris K. Udall - 2- January 31, 1983
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Thank you in advance for your consideration of our request. ,-]:..:I Sincerely lyours, , fhj c., a y
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.- J' L e Bernabei *E ,
Sta f Counsel *l -
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Thomas Devine
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