ML20041C668
| ML20041C668 | |
| Person / Time | |
|---|---|
| Site: | Midland |
| Issue date: | 02/22/1982 |
| From: | Cherry M CHERRY, M.M./CHERRY, FLYNN & KANTER, INTERVENORS OTHER THAN DOW |
| To: | NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP) |
| References | |
| ISSUANCES-CP, NUDOCS 8203020444 | |
| Download: ML20041C668 (30) | |
Text
- - - - - - - - -
l
,c , . , ' .
[,t.. .
m , .
s
'?'M. --' t:
- Tr -
wrrED STATFs CF AMERICA 82 pgggg A!0 49 NUCLEAR REGUIA'IORY CCtHISSION N
AKMIC SAFETY AND LICESING APPFAL BOARD 7. ~ h
, >:. g -
g dlI l f., ,
W 'n i Q V
$7 WD fg In the Matter of ) MAR 1 Jgggh'i
) Docket Nos. 50-329 CP -
O NSUMERS POWER COMPANY ) 50-330 "#E"!CcxsyYtD fjfa E 4 l (Midland Plant, )
Units 1 & 2) )
4 Y gid l
I
)
BRIEP IN SUPPORT OF EXCEPTICNS 'IO PARPIAL INITIAL ' DECISION DATED 'DEGNBER 22, 1981 g
g I 1.
k n.,,.
. , ,-. , ,- : .9 *.m - a 1:r .
,, : c; r.',. . C'" " * ' !
i ,;,, u ,e .+
. ,; , {
Myron M. Cherry, p.c. ' .
~ ~ - '
Peter Flynn, p.c.
CHERRY &.:FLYIN - .
Three,First National Plaza Suite.3700._. .-- .-
Chicago, 'Illmois _60602 -- '
~~
(312) 372-2100 _..
8203020444 820222 -
{DRADOCK 05000329 PDR l
- - - - - - - - - - - - - - - - - - - - J
. 1 I
i TABLE OF CNIHTTS Page t
INTRODUCTICN .. ....................i... 1 STATEMENT OF F1CIS ....................... 4 ARGUMENf ......... ..... .............. 10 I. TIE LICENSIIU BOARD'S REASCNS FOR REFUSING 'IO IMPOSE SANCTICNS IN THIS CASE CCNTRADICT BCTfH ITS OWN FINDINGS AND SEITLED IAW .................... 10 II. SANCTICNS MUST BE IMPOSED ............... 23 CONCLUSICN .. .......................... 26 w .
TABLE OF CITATICNS
' Cases Dennis v. Thamson, 240 Ky. 727, 43 S.W.2d 18 (1931) ..........'.... 17 Duke Power Co. (Catawba Nuclear Station, ,
Units 1 & 2) , AIAB-355, 4 NRC .397 (1976) . . . . . . . .... 14-15 Duke Power Co. (William B. McGuire Nuclear ,
Plant, Units 1 & 2), AIAB-143, 6 AEC 623 (1973) ....... 14, 17, 24 Hess & Clarki Division of Rhodia, Inc.
- v. FDA, 495 F.2d 975 (D.C.Cir.1974) ............. 10 Matter of Hamlin Testing Iaboratoriese Inc.
2 AEC 423 (1964) .............,.......... 18, 25 M v. United States, 280 F.2d 555 (6th Cir. 1960) . . . . . . . ; . . . . . . . . . 22 i
s s
Page Minish v.' Huey, 482 F.2d 500 (6th Cir. 1973) ................. 17 Strong v. Repide, 213 U.S. 419 (1909) ..................... 17 Virginia Electric' Power'Co. (North Anna Power Station, Units 1 & 2), .
LBP-75-74, NRCI-75/9, 498 (1975) . . . . . . . . . . . . . . . 18 -
1 AIAB-324, 3 NRC 347 (1976) ................. 2, 3, 18-19, 20, 22 CLI-76-22, 4 NBC 480 (1976) ................. 3-4, 15, 16-17, i 18, 19, 20, 23, L 24 3 l
' Statutes i
42 USC 2236 .......................... 2, 18 j Other Materials NURH3/CR-1250, Three Mile Island, A Report .
I i
To The Comnissioners And '1b The Public ........... 3 i I
ii
UNITED STATES OF AMERICK NUCLEAR RB3UIRIORY CCMIISSION AICMIC SAFLTf AND LIGNSING APPEAL BOARD
)
In the Matter of )
)
CNSUMERS POWER CCNPANY ) Docket Nos. 50-329 CP
) 50-330 CP -
(Midland Plant, )
Units 1 and 2) )
)
BRIEF IN SUPPORT OF EXCEPTIONS IO PARTIAL INITIAL DECISICN DATED DECDIBER 22, 1981 The Saginaw Valley Nuclear Study Group, one of the Intervenors Other Than Dow (hereafter "Intervenor"), respectfully subnits this Brief in support of its Exceptions to the Decenber 22, 1981 Partial Decision (Remand Prmeding) of the Atanic Safehy and Licensing Board herein.
INTRODUCTICH In a nutshell: The Licensing Board here found in detail that Consumers Power Ctxupany had deliberately withheld highly material information fran this Cemnission - and refused to do anything about g. .
This appeal is taken fran that refusal. We have no quarrel with the Licensing Board's findings of fact (Decis. at 25-39) . Those findings were not only correct, but virtually ineluctable, given the documentary evidence (as another Board observed of part of that evidence, "(i]t seens to us beyond doubt that [the exhibit] relates what we have said that it
relates:" see Decis. at 7) and the testimony at the suspension hearings from which this matter arose. But we do quarrel, most profoundly, with the Licensing Board's decision - despite those findings - to terminate its incluiry here without so much as a wrist-slap.
We show below that the " conclusions" on which the Board rested that inaction are directly contrary to the Board's own findings and to the very Ommission decisions the Board cited. That requires reversal.
The implications of the Board's refusal to act are grave - and gravely damaging. The Board's inaction here directly undermines both the integrity of, and public confidence in, the Ocmnission's regulatory process. It undercuts the entire structure on which that regulatory scheme rests.
In the complex world of nuclear power, we deal with activities costing billions of dollars and fraught with serious concerns involving the public health and safety. It is a truisn that the ocmnission's ability adequately to regulate those activities relies heavily upon candor and accuracy on the part of licensees and applicants. As the Appeal Board said in Virginia Electric & Power Co. (North Anna Power Station, Units 1 & 2), AIAB-324, 3 NRC 347, 356-57 (1976) :
"It is not open to question that those who would construct and operate a nuclear facility,... stand 'in responsible relation to a public darger.' Nor can
' - there be serious doubt respecting the vital importance which attaches to the accuracy and conpleteness of the representations made to this Ormission by the applicant for a nuclear license. Of necessity, those representations play a large role in the Ormission's -
discharge of its statutory responsibility to insure that the grant of the license would not be 'ini.mical***
to the health and. safety of the public.'"
Hence Section 186 of the Atanic Energy Act, 42 U.S.C. 2236, prohibiting
" material false statenents" on.the part of license applicants. The
- l Ctmnission has made it clear that that section is crucial to the Ctmnission's ' ability to do its job. As the Ctmnission held in North ' Anna,
'CLI-76-22, 4 NBC 480, 488-89 (1976), "... [T]he language and history of the Act make clear that the Ommission's primary duty is to protect the pnh1ic health and safety. Moreover, full disclosure by applicants and licensees of all relevant data is vital if the Ctmnission is to fulfill that duty.... We think...that ' material false statement' may appropriately .
be read to insure that the Ctmnission has access to true and full information so that it can perform its job."
That is hardly startling. As the Appeal Board observed in the same case, 3 NRC at 360, "the necessity that there be canplete disclosure of all infonnation pertinent to a thorough and sound Ocnnission appraisal of the particular application under review" is "so obvious that it needs no extended discussion." Here that disclosure requirement - fundamental in the law, in tha Ommission's decisions, and in ccurmon sense - was egregiously violated. The Board's findings, and the underlying documents, .
leave ro doubt that the violation was quite deliberate; indeed, it was planned arri discussed for months. To wave such conduct aside without
, sanctions - as the Board did here - is to establish a, precedent which l ' all but encourages future violations. That cannot be tolerated.
It is by now well doctanented that in the nuclear industry, a number of profound and powerful "disincentives" to accurate reporting operate to discourage the kind of candor upon which the armission must rely if it is to do its job. See, e_.g. , NUPE/CR-1250, Three Mile Island, A Report '1b The Ctmnissioners And To The Public (1980) at 161-64. Only
^
rigorous enforcement of the Ctmnission's right to "true and full
.. 3 information so that it can perform its job" - only strict adherence to the Ommission's " require [ ment]" of "a regime in which applicants and licensees have every incentive to...be as sure as they possibly can that all subnissions to this Ommission are accurate", North Anna, supra, 4 NBC at 486 - can counterweigh those "disincentives." Yet here the Licensing em rl did the exact opposite. The Board's inaction was denonstrably wrong in this case. In the broader context of the Ocmnission's regulatory responsibilities, the Board's inaction was not f
only wrong but dangerous. That is why we have appealed.
STATEMENT OF FACTS The central facts pertinent to this appeal are set forth at pages 25-39 of the Licensing Board's decision. Since we accept the facts as there stated -- and since they are drawn largely frcm documentary evidence cited by the Licensing Board and r maily available to this Board - we need not rehearse the facth again in full. But a brief sunmary of the Licensing Board's crucial findings is appropriate.
Frcm the inception of Opnsumers' Midland facility, it was understood that the "Dow connection" - that is,. the sale to Dow of process steam to be produced by the Midland facility - was a crucial f
, i aspect of the Midland proposal, both in terms of siting and in terms of econ:xnic feasibility. Indeed, the Final Environmental Impact t
,i Statement at the construction permit stage bluntly stated (at page XI-3) that if there were to be no sale of steam to Ibw, gne of the two Midland nuclear units would be cancelled and the gther w]uld probably be relocated.
- 1. This was very much'on Cbnsumers' mind before it began the process of suppressing Dow information described by the Licensing Board. See, e.g.,
Staff Ex. 3, Doc. 26 at 3, recording a Consumers' official's reference to the FES on this point and describing the Dow relationship as "one of basis 1
[ sic] for issuance of construction license."
As the construction pemit proceeding wended its way through the appeal process, continued cost escalations and construction delays -
as well as other things - produced considerable doubt on Dow's part as to whether in truth the Midland project reained beneficial frcm its standpoint. See Decis, at 26-27. Eventually the United States Court of Appeals for the District of Columbia, in r e anding the Midland construction pemit proceeding to the Ocmnission, directed the Ctanission to "take into account the changed circumstances regarding Dow's need for process steam, and the intended continued operation of Dow's fossil-fueled generating facilities." Decis. at 5. Thereafter, the Ocmnission convened a Licensing Board to canvass that iss.ne, as well as others raised by the Court of Appeals, in the context of determining whether Midland construction should be suspended pending the empletion of full hearings on the remanded issues. Decis. at 5.
By this time Dow's doubts about the Midland project had progressed to " deep u ted unhappiness." Decis. at 27. Dow's Michigan Division had ,
formally taken the position "that there was 'no longer the possibility or .
l prnb'hi1ity tihat the nuclear plant would be good for Dow's Midland plant,'"
i r
and the parties' disagreement had becme so intense "that Dow had seriously considered bringing suit against Consumers for breach of the [stearn purchase]
contract and had drafted complaints for declaratory judgment." Decis, at 27.
Consumers had no doubt whatever that these facts, if disclosed to the Board in the suspension hearing, would seriously impair Consumers' position.
Indeed, i
l
" ...one counsel for Consumers explained to D u that
- he had not included in a draft of [the principal D3W witness'] direct testinony information that Dow was concerned about Consumers' reliability, or that Dow was seeking a date after which it would'be relieved of all
contractual obligations if steam was not forthecxning, because such information would cause Consuners to ' lose
~
the case.'" Decis. at 28. [Dnphasis added.]
Still in the process of evaluating the Michigan Division's
~
rewmerdation that Dow find the entire Midland project disadvantageous, and concerned about the obvious lack of candor in the draft testimony-described in the above quotation, Dow indicated reluctance to tailor its
' testimony to Consumers' wishes.- Consumers responded by threatening Dow with a $600,000,000.00 lawsuit unless Dow did what Consumers wanted -
focusing specifically upon providing " adequate support for Consuners" at ,
the suspension hearings. Decis. at 26, 32. Cbnsumers suggested that j 1
I absent searching cross-examination by Intervenors it might be posc:ih1e to " finesse" the Dow dispute, and - evidently in order to guard against
'any such cross-examination - also suggested that Du might present its testimony through a witness "who was not knowledgeable abcrat the Michigan Division position." Decis. at 29-30 .
Initially, at least, Consumers' tactics were successful. Tb be sure, the Dow witness was Joseph Tenple, head of Dow's Michigan Division.
But after repeated redrafting - and despite ccxnplaints by Dow that Cbnsumers' revisions in it were " misleading and disingenuous," Decis. at 37 - Mr. Tunple's direct testimony cxnitted any mention of the Michigan Division's position, cxditted any reference to Consumers' threatened lawsuit, and generally painted Dow as continuing to support the Midland project ,
(through " keep [ing] all of its options open") . Decis. at 27-28, 32, 37.
However, Intervenors' cross-examination at the suspension Iraring brcught to light the extraordinary lack of candor and accuracy in tlut testimony.
Mr. Teple admitted that the testinony was "not open, not honest, and not consisting of all of the relevant infonnation." Decis. at 33-34. Both Mr. Ternple and Mr. Paul Oreffice, then head of Dow USA, further testified that the final shape of the Tmple direct testimony - and the fact that Dow had not ultimately adopted the Michigan Division reccumendation -
resulted largely frcm consmers' coercion and threats of litigation.
Said Mr. Teple (Suspension Transcript, at 2311):
"Q. All right. Now just between you and me, Mr.
T mple, isn't it true that the only reason that Midland
[ sic] Division's findings and conclusions was not the corporate finding and conclusion was a lawsuit. h m't that the only significant reason?
"A. In my judgment that's true."
Said Mr. Oreffice, when asked what factors Dow USA considered significant in evaluating the Michigan Division reccmnendation: "Without the threat of litigation, I don't know what our conclusion would have been."
Suspension Transcript at 2699. As the Licensing Board found here, "Dow ,
conducted itself through the r e aining preparation and hearing with this perceived threat in mind." Decis. at 32-33.
3 This sordid tale having merged through cross-exam rr wu at the Midland suspension hearings, further inquiry into the pre m > on and presentation of Mr. Teple's "not open (and] not honest" dircet t.utimony was ordered. Decis. at 6-8. The Board below conducted that investigation.
The Board made three major findings. First, it found tint the preparation and presentation of the 'Itstple direct testinony resulted in giving seriously inaccurate information to the Suspension Hearing Board (Decis.
at 26-28):
. i s
4
.. i
" Events occurred in the preparation of written testimony concerning Dow's intention to buy process steam which denon-strate an incorrect view of a party's duty of affirmative .
disclosure to the Licensing Board. As the Appeal Board stated, !
the Licensing Board had to probe 'to determine what [Dow's] !
intention truly is' with respect to purchasing steam fran Consumers...." ;
j
" Failure to include the recanmendation of the Michigan Division of Dow in Tenple's direct testimony could have -
l created an unwarranted impression on.the part of the Licensing Board that there was very substantial, perhaps even unanimous, satisfaction within Dow with the purchase agreenent. In fact, the Michigan Division reconnendation that there was 'no 4 longer the possibility or probability that the nuclear plant I would be good for Dow's Midland plant' would have disclosed deepseated unhappiness with the arrangenent. Evidence that Dow had seriously considered bringing suit against Consumers for breach of the contract and had drafted mmlaints for declaratory judgment emphasized the extent of this unhappiness. j The strength of Dow's ccmnitment to buy steam under its contract with Consumers could be accurately evaluated only with knowledge of this substantial internal disagresnent."
Second, the Licensing Board found that Consumers and'Dow knew perfectly well that they were withholdiry highly material information.
Indeed, the facts we have sumarized.above - and which were found by the Licensing Board - leave no doubt that the withholding of material informa-tion was precisely the purpose of the repeated redrafting of Mr. 'Iunple's direct testimony, principally at Consuners' behest. The Board here found that "Dow and Consumers contemplated as little disclosure as possible."
Decis. at 29. For example (Decis. at 28):
" Consumers and Dow recognized the potential impact that knowledge of the disagreenent [i.e., the ongoing Consumers-
~
Dow dispute] might have on the LiEensing Board, but they a carefully constructed rationalizations for not including it.
Specifically, one counsel for Consuners explained to Dow that he had not included in a draft of Temple's direct testimony information that Dow was concerned about Consumers' reliability, or that Dow was seeking a date after which it would be relieval of all contractual obligations if steam was not forthcaning, because such infonnation would cause consuners g' lose the case.'" [anphasis added.]
- - _ _ _ _ _ . _ . ~_ _ _- - - - _ _- - - - - .-
l 1
1 In other words, Cons m ers regarded the information which it wanted to suppress as not only material, but potentially dispositive. Yet it :
deliberately suppressed that information, coercing Dow into abettirg its schse. And "even in the face of disclosures raising serious questions about the [ Temple) testimony's preparation," Consmers' counsel sought
~
to avoid presentirs the facts, on grounds the Board here found as i
fabricated as the original testimony itself: "This Board does not .
understand how Consumers could genuinely believe the materials were privileged." Decis, at 30, 32.
Third, the Licensing Board found that - as Mr. Teple had
. himself conceded - the upshot of this protracted schse was the subnission of materially inocmplete and misleading testimony (Decis. at 38):
"After counsels' repeated redraftirg of the testinony, the Licensing Board was not provided with canplete or cardid direct written testimony concerning Dow's intent to enable it to achieve ' sufficient probing to determine what that intention truly is,' as contsplated by the Appeal Board." .
In view of the testimony of Mr. Teple and Mr. Oreffice after matters were brought into'the open at the suspension hearing, and in view'of Dow's own cmplaint to Consumers that Consumers' draft of the 'mmple testimony was
" misleading and disingenuous" ~ (Decis at 37), . that finding can hardly be questioned.
Thus, the Licensing Board here found that Consumers and (largely as a result of Consumers' coercion) Dow prepared materially misleading testimony, in Mr. Tmple's words "not open, not honest, a'nd not consisting of all the relevant information;" that Consumers.and Dow fully recognized
the ma6riality ard importance of the information they deliberately suppressed; and that the result was the presentation of materially incmplete, mislmaing, and uncandid testimony to the Suspension Hearing Board. Yet the Licensing Board here chose to take no action. We.show below that its reasons for refusing to take action cannot withstand -
even cursory scrutiny.
ARGUMENT I. .
THE LICENSING BOARD'S REASCNS FOR leruw.rG 'IO
.JMPOSE SANCTIONS IN THIS CASE -
cot 7TRADICT BCfrH ITS ON FINDIhG 'AND ' SETTLED IAW .
i Following its detailed, docmented, ard damning findings of fact, sumarized above, the Licensing Board turned its attention to "the question of what sanctions, if any, should be imposed as a result of our findings." Decis. at 40. The Board advanced three terse reasons for concluding that sanctions would be "neither necessary nor appropriate."
Decis. at 40-41. Unfortunately, each of the reasons given by the Board is flatly contrary to its own findings, to settled law, or to both. In itself, and even without regard to the larger (and empellingly important) policy issues present in this case, that requires reversal. It is elmentary that the Board's conclusions - like those of a'ny other tribunal - ,
must follow frcm its findings, and equally elenentary that the Board's inaction must be justified - if at all -- on the basis of "its own findings and determinations, and not on subsequent legal arguments of counsel." See, e_.g., Hess & Clark, Division of Rhodia, Inc. v. FDA, 495 F.2d 975, 987-88 (D.C. Cir. 1974). Here the result below cannot survive those tests.
First. The Board's first reason for refusing to impose sanctions was as follows (Decis. at 40):
"In the first place, most of the deficiencies in disclosure identified above resulted frcxn counsels' excessive preoccupation with the supposed interests of their respective clients, and insufficient sensitivity to the high level of voluntary disclosure required in NRC cases. However, there was no conspiracy to -
countenance perjury or to ecnmit fratrl upon the Board.
There is no evidence that any attorney deliberately intended to engage in unethical conduct, or to wilfully deceive the Board."
That conclusion cannot possibly be squared with the Board's own detailed findings of fact - let alone the documentary evidence in this matter and the testinony ultimately elicited at the suspension hearings. The Board.'s own findings in this case reveal precisely a deliberate and knowing attempt - siwming a pericd of months - to ccumit fraud upon the Board by suppressing information known to be material. The Board's own findings, and the documentary evidence and testinony, establish beyond cavil that this scheme was engineered by .
both (bnsumers and its counsel.
Indeed, it is difficult to see how those facts can be doubted, on the basis of the documentary evidence alone. We discover frcm the documentary evidence that in Septenber 1976 Dow's Mr. Tetple enphasized to Consumers that testimony concerning Dow's position "can in no way be untrue, misleading or incomplete." Mr. Tenple then went on to explain the Michigan Division's reccmnendation, his intent to reaffirm that rurrmndation to Dx USA, and his intent to push for early adoption of that reccmmendation by Dow USA. Staff Ex. 3., Doc. 12. One of Dow's
- 2. We deal here with Intervenor's Exceptions 1, 2, 3, 10, and 11.
l counsel wrote to another of Dow's counsel two days :ater (Staff Ex. 3, Doc. 26, at 2) that:
"Whether or not Dow technically continues to be a party, the rule of reason mandates that any significant change in [Dow's] position be set forth, clearly, frankly and fully, espv in11y in view of the Court of Appeals reference to the importance of the Dow position to the project as a wh31e, and [ Consumers'] and the NRC's inquiries ih that regard."
Consumers' reaction was expressed at a meeting with Dow a week later, at which both a Consumers official and counsel for Consumers were P
present: " Consumers says suspension hearing nost critical,- they believe that since there is no discovery, and probably no intervenor cross-i examination - will be able g finesse Domnsumers continuing dispute."
Cbnsumers' counsel then " suggested that Dow witness might be someone... j who is unaware of Midland Division recomendation...." And the Consumer official present (Mr. Falahee) made it quite clear what would happen if Dow insisted on testifying frankly: -
"Falahee then made naked threat that if Dow testimony not supportive of Consumers (Note: no longer just if we go too far) and that results in suspension or cancellation of permit, then Consumers will file suit for breach and include as damages cost
. of delay, cost of project if cancelled... (Note:
pretty damn close g blackmail)." [ Emphasis added.]
Staff Ex. 5, Doc. 26, at 3.
Three days later, at still another meeting, the threat was.
reaffirmed by Consumers' Chairman, Mr. Aymond. Consumers Ex. 1, Doc. 8, at 3. Consumers then prepared a draft of the Temple testimony. One of
Dow's counsel cmplained that Consmers' draft testinony "sess to be disingenuous" and that it " leaves out all of our concerns about Consumers as a supplier and a cmpany." Staff Dc. 20. Consumers' counsel responded three days later by saying that the information had been deliberately omitted "because such information would cause Consumers to ' lose the case. '"
Decis. at 28. . Anci so matters proceedM until the final, mislmMng draft of Mr. Temple's testimony. Decis. at 35-38.
These facts, drawn fran the docunents and found gyjthe Board, simply do not admit of any doubt that both Consumers' senior officials and its counsel knew perfectly well what they were doing. -They were bludgeoning Dow into agreeing to suppress information, because Cbnsumers - both its officials and its counsel - regarded the information as so material and damaging that, were it to merge, Consumers might well " lose the case."
Unfortunately, the matter is that simple. If that deliberate doctoring of Mr. Temple's testinony, overeming Dow's objections by threats of multimillion dollar litigation, dca nct constitute a knowing attspt ,
"to comnit fraud upon the Board," then we do not know what would. Prm beginning to 'end, it was a deliberate attspt to " finesse" - in other words, to cover up p - facts which Consumers itself perceived to be not
~ cnly " material" but crucial, wncerning the Michigan Division's reccumenda-tions, Dow's disenchantment with the Midland project, and Icw's dispute with m nsumers.
The Board concluded that it saw "no evidence" of any deliberate intent to deceive. Decis. at 40. But what was the " fine'sse" of the Consumers-Du dispute, if not an attempt to deceive? How can Consuners' suggestion that Dow present a non-knowledgeable witness (so that he could
~
t be shielded from cross-examination) possibly be squared with candor?
How can Cbnsmers' reaction to Mr. 'Itrnple's desire to tell the whole truth with the " naked chrc.:t" of a lawsuit be considered a mere inadvertent lapse? The documents frc.m which we have quoted, a small sampling of those before the Board, leave no doubt that Cbnsuners' officials as well as its -
manel regarded the full truth as extraordinarily material and damaging, and were prepared to go to ahost any lengths to prevent it frm energing.
We need only look to the Board's own findings. As the Board itself found (Decis. at 28-29), "Dcw and Consumers contemplated as little disclosure r
as possible." Even though they " recognized the potential' impact that }
knowlecge of the disagreenent might have on the Licensing Board," they
" carefully constructed rationalizations for not including it." Again: if that is not on its face a wilful attempt to hoodwink the Board, then we do not know what is.
Nor, frm a legal standpoint, would the presentation of what Mr.
Temple conceded (and the Board found) was "not open and not honest" testimony be excused even if it had been inadvertent - a claim which cannot conceivably be made on the record here. As the Licensing Board here itself noted (Decis at 16-17), the Ocmnission has repeatedly " stressed that
. prmpt disclosures to Boards of changing circumstances are mandatory." The Appeal Board has long since held that this disclosure requirenent "is not the product of any overly procedural formalisn on [the Ormission's part -
it goes to the very heart of the adjudicatory process. Its sacrifice for the sake of_ expediency cannot be_ justified and will not M tolerated."
Duke Power Cb. (William B. McGuire Nuclear Plant, Units 1 & 2), AIAB-143, 6 AEC 623, 262 (1973) (erphasis added). "In Ctmnission proceed 2ngs as in l
l l
judicial ones, the tribunal must rely on counsel to present issues fully and fairly, and counsel have a_ oontinuing duty to inform the Court of g l.
develognent which mla conceivably affect an outcome' [ citation canitted] ."
Duke Power Co. (Catawba Naclear Station, Units 1 & 2), AIAB-355, 4 NFC 397, 406 n. 26 (1976). Even a lack of scienter, or the absence of any wilfull intent.to deceive, does not excuse a violation of that well-establ'ished requirenent. As the Ctxmtission held in Virginia Electric &
Power Co. (North Anna Power Station, Units 1 & 2), CLI-76-22, 4 NBC 480, (1976), any scienter requiranent would be:
" ... inconsistent with the Ocmnission's obligation to protect the public health and safety.... We require instead a regime in which applicants and licensees have every incentive to scrutinize their internal procedures to be as sure as they possibly can be that all subnissions E_ ~this Comnission are accurate." IEnphasisadded.]
Thus, the Board's first conclusory reason for refusing to impose sanctions - the asserted lack of any " deliberate" or " wilful intent'to deceive" - is' not only directly contrary to the Board's own detailed findings, as we have shown, but legally beside the point as well. Even .
were wilfulness absent here (plainly it is not), t: hat would not excuse the conduct set out in the Board's own findings. In North Anna, supra, for example, the Ocxmtission affirmed the imposition of sanctions for .
" material canissions" even tleugh "it was stipulated that, at the time the alleged material false statanents were made, VEPCO thaught each of then was true." 4 NRC at 483, 492-93. The Board's refusal to act here muld be contrary to that holding even if the conduct at issue had in fact been inadvertent. htere (as we have shown) the conduct was quite deliberate,
i The Board's refusal to act is not only erroneous but an intolerable !
affront to the proper functioning of the Ocmnission's regulatory schane. j Second.3 The Board's second excuse for inaction was as follows (Decis. at 40-41): 1 I
l "Next, the high standards of testimony preparation and other conduct which the Board has described herein, have not previously been specifically addressed by the NRC Appeal Board or the Ocmnission. Such standards of conduct may not necessarily have been recognized or followed in other administrative proceedings. Fairness to the parties and counsel would require sane advance notice to thcm of the standards of conduct to be required in NRC proceedings."4 Bluntly, the Board's reasoning here strains credulity. It can hardly be argued that either Consuners Pcwer Canpany or its experienced counsel were unaware of the obligation to tell the truth in formal adjudicatory proceedings. Nor do we understand why " fairness" would require even parties - let alone members of the Bar - to be excused fran misrepresentation unless they h' ave been warned in advance that the deliberate suppression of material facts is not permissible. Since the earliest days of the Republic, witnesses have been sworn "to tell the whole truth." Surely if, as in North Anna, supra, a licensee may be subjected
- 3. We deal here with Intervenor's Exceptions 4, 5, and 6; and, of course, we deal further with Exceptions 1,10, arxi 11.
- 4. The Board went on to observe that in.its own inquiry, the witnesses .
testified " fairly and fully." We do not understand what that fact, pertaining to testimony given under canpnision in 1979, at a point after most of the facts had already been ferreted out through Intervenors' cross-examination at the suspension hearings, has to do with the violations in issue here. That one tells the truth in court would not, for example, excuse him fran previously lying to a grand jury. .
l
~
to sanctions even for inadvertent material anissions', one cannot escape punishnent for deliberate suppression of the truth on the ground that f one was not specifically warned beforehand.
Nor is the Board's apparent view that its decision here created s e e "new" standard defensible. As is obvious frcm the Board's own discussion, Decis. at 11-19, the basic legal duties to which consumers and it's counsel were subject in this case are in no sense new creations. .
It has long been established that "in order to find misrepresentation, it is not necessary that an affimative falsehood be shown. Misrepresentation includes the intentional cmission of a material fact." Minish v.'Huey, 482 F.2d 500, 505-06 (6th Cir.1973), citing inter alia Dennis v. Thmson, 240 Ky. 727, 739, 43 S.W.2d 18, 23 (1931), and Strong v.' Repide, 213 U.S.
/
419, 430 (1909). At least three years before Consmers began to doctor the Teple testimony in this case, this Canmission's Appeal Board had ruled that " parties must inform the presiding Board and other parties of new infomation which is relevant and material to the matters being .
adjudicated," adding that this requirment "is not the product of any overly procedural formalism on our part - it goes to the very heart of the adjudicatory process. Its sacrifice for the sake of expediency cannot be justified and will not be tolerated." Duke Power Co. (Willimn B.
McGuire Station, Units 1 & 2), AIAB-143, 6 AEC 623, 625-26 (1973) (anphasis added). And as the Ommission pointed out in the protracted North Anna litigation, the fundamental requirments of " candor" and " full disclosure" -
blatantly . violated here, as the Board's own findings tell' us - were articulated by the Chimission itself as long ago as 1964:
)
t
...[A] decade ago, the AEC noted the need for full disclosure if the public safety-is to be protected:
'We find in this licensee's past perfonnance inadegaate reason to believe that it would in the future meet the high standards of cmpliance which we must require, and respond to pweer inquiries with the simple andor on which we must insist, in order to discharg.,our own .
responsibility for public health and safety. -
Nothing less than candor ;is sufficient.' i
" Matter of Hamlin Testing Iaboratories, Inc., 2 AEC 423, i 428 (1964). (anphasis supplied [by the Cmmission]) ."
Virginia Electric & Power 00_. (North Anna Power Station, Units 1 & 2),
CLI-76-22, 4 NBC 480, 490-91 (1976). i Indeed, the North Anna litigation - widely reported, and finally decided by the Cmmission before Consumers caused the subnission of the doctored Temple testinony in this proceeding yielded numerous forceful and unequivocal reaffinnations of a licensee's duty to tell the' whole truth in comnission proceedings. Virginia Electric &' Power Co.
(North Anna Power Station, Units 1 & 2), LBP-75-74, NRCI-75f 9, 498 (1975);
Id. , ALAB-324, 3 NRC 347 (1976); fd_. , CLI-76-22, 4 NRC 480 (1976) . And as the Board's own decision here points out '(Decis. at 13-15), North Anna did little more- than to reconfirm for the Ocamission the same principles of what constitutes " materiality," " falsity," and culpable cmissions
-which have long guided the Courts. Surely it is too late in the' day to claim that those principles are rei novae, which might take parties or counsel by surprise. Even on the technical question of whether an cmission might be a "statment" for purposes of the disclosure statute, 42 U.S.C. 2236, the Appeal Board had no doubt as.to the basic principle (3 NRC at 360):
"One can scarcely take issue with the [ Licensing)
Board's observation respecting the necessity that there be ecmplete disclosure of all information pertinent to a thorotgh and sound Ocmnission appraisal of the particular application under review. Indeed, the point is so obrious that it needs no extended discussion."
TanTe asis addca.j s -
Even limiting ourselves to the Ccmnission's own jurisprudence, then - let alone the fundamental standards of fraud which have prevailed at camon law for centuries - there can be no doubt that both Constners and its cotmsel were well aware that their doctoring of the Tcmple testinony was wrongful. The Board's attmpt to justify its inaction here on the prcmise that the "high standard" it invokcd "had not previously been specifically addressed" (Decis. at 40) is simply inaccurate; and its attmpt to prescribe sme form of " advance notice" of wrongdoing as necessary to " fairness" (Decis. at 41) will not do. (bnsumers had that notice. The very decisions the Board itself cites so dcmonstrate, as we have discussed. -
But there is another point to be made. Here as with the Board's first excuse (pagces 11-16, supra), the Board's justification for its refusal to act
- 5. Similarly, the North Anna Appeal Ibard agreed with the Licensing Board in that case that "an cmission of a material fact in the course of making an affirmative statcment might well" - as undeniably it did in our case:
s'ee Decis. at 27-28, 33-34 " result in the conveyance of a totally false impression respecting the import of the statement." 3 NRC at 361. And the North Anna Appeal Board also agreed that such cxnissions are culpable.
3 NRC at 362. The Ocmnission, of course, agreed on both points. 4 NRC at 488-89. The only question related to the technical propriety of proving "cmissions" in support of a charge of " false statcments"-(see 3 NRC at 361, 362-63); and the Oatmission settled that narrow question by holding VEPCP liable for both forms of impropriety.
was not only inaccurate but also irrelevant. In this case there is no doubt - there has been none since, at the latest, the Ctmnission's decision in North Anna, supra - that even the innocent withholding of material information constitutes a violation of a licensee's obligation to the Ctmnission. See 3 NRC at 356-57; 4 NRC at 486-87. But even were that premise newly announced in this case (as the Board seens to suggest),
it would avail Cbnsumers nothing. For in North Anna, there was sme doubt on the point, albeit limited to the technical question of whether a charge of making " material false statenents" could properly enempass proof of material cmissions. The doubt was genuine enough; the Appeal Board agreed with VEPCO on the point. But the Cmmission nevertheless did not hesitate to penalize VEPCO, in that very case, for tlose missions.
4 NRC at 485, 492-93. So here: Even were there sonething "new" fran the Ctanission's standpoint about the long-established standards Constrners violated here, that could not exculpate Consuners' de1Nrate suppression of material information. As the Licensing Board itself conceded here (Decis. at 12-15), at most the standards it applied to Consumers' conduct do no more than track settled judicial rules. The same was true in North Anna, as the Ocumission observed (4 NRC at 488, 490); and here as in that case, even if it were true that the Ocmnission has not itself previously articulated the rules, the violation is culpable nonetheless.
Third.6 The Board's final excuse for its' inaction here was as follows (Decis. at 14):
- 6. We deal here with Intervenor's Exceptions 7, 8 and 9, and further discuss Exceptions 1, 10 and 11.
" Finally, we observe that all of the factual information described above was ultimately included in the record of the suspension proceedings. That fact would not serve to c:endone deliharate misconduct, but it is a mitigating factor since we have found no such deliberate intent in this case. Accordingly, we conclude that the questions raised as to the conduct of parties and counsel in the original suspension proceedings have now been ' fully aired and resolved,' in cmpliance with
, the Appeal Board's mandate herein." .
As with the Board's first two excuses, this last excuse is neither factually nor legally supportable. The factual inaccuracy need not detain us long. We have already pointed out at see length (pages 4-9, 11-14, supra) that the Board's own specific findings in this case established beyond doubt that Consumers dn1iberately undertook to suppress what it knew perfectly well to be material information, and to coerce Dow into joining in that shabby exercise. By no stretch of the imagination can Consumers' explicit decision to withhold information because if it were brought forward Consumers might " lose the case" be fobbed off as a " minor p-M11o. By no stretch of the imagination can ,
the repeated doctoring of the 'arnple testimony, or Consumers' coercive threats of litigation if Dow declined to " play ball," or the conscious and' careful " finessing" of the Dow<bnsumers dispute, or Consmers' attenpt
- to induce Dow to present a witness unaware of the real facts (so that the truth could not be elicited on cross-examination), be characterized as anything other than a protracted and wilful schane to hide facts fran this' o ranission. The Board here expressly found that all of those things took place. Given th2 documents and the testimony, it could hardly have done otherwiso. In thanselves those findings canpletely negate the -
Board's extraordinary conclusion that there was "no... deliberate intent
in this case." No more need be said on that sm re.
Ard the balance of the Board's third excuse - the notion that because (despite Consumers' efforts) the Intervenors managed to unearth the truth, everything was therefore " fully aired" ard no further action l i
need be taken - is equally unavailing. It is obviously contrary to law. i For example, a perjury prosecution is by definition impossible unless th0 pcrjury has been discovered and the real truth elicitcd. Does that I
then excuse tha perjurer? The Board's argument secms to be the since Consumers' efforts ultimately failed, they were not s.'gnificant enough to warrant sanctions. But that flatly contradicts the Board's own definition of " materiality," rooted (as the Board itself painstakingly pointed out: Decis. at 13-17, 29) firmly in Camission decisions and long-settled law. It is well established that the " materiality" of suppressed information must be judged by what might have happened had the suppression succeeded, not by whether the ploy actually wrked:
"'The actual effect of a false statement has no bearing on its materiality, and the guilt of one who has falsely sworn does not depend upon the result of the ,
proceedings in which it occurred. It does not lie with the perjurer to say that if he had sworn the truth, the case for other reasons would have failed;*** Conversely, the fact that the case is won in spite of defendant's false testimony will not render the testimony imaterial. '"
M v. United States, 280 F.2d 555, 562 (6th Cir.1960) . In May, 290 F.2d at 563, the Court added that "'the test of materiality is whether a false statenent can influence the tribunal not whether it does.'" of.
course this Camission follows the same rule. Virninia Electric ~& Power Co.
(North Anna Power Station, Units 1 & 2) , CLI-76-22, 4 NRC 480, 487 (1976) .
Even the Board here recognized the weakness of its " fully aired" excuse, conceding that it could not thus slough off " deliberate misconduct". Decis. at 41. But that does not go far encrgh. The " fully aired" excuse cannot even exculpate urdntentional misconduct, as the Ocmnission ccmclusively held in North Anna, supra, by imposing a fine on the licensee notwithstanding an express stipulation that the licensee's -
misstatenents and cmissions were inadvertent. See page 15, supra. Hence, ,
i heie as with its first two excuses, even if the Board's conclusory factual ;
prenise were correct - even if it were not (as it is) contrary to the ,
Board's own express findings, Decis. at 25 the Board's extraordinary refusal to act still would not follow, as a matter of law.
II.
SANCTIONS MUST BE IhPOSED Plainly the Licensirg Board's result here must be reversed. As we have shown in' detail, its reasons for that result are at war with its .
own detailed findings, and with settled legal principles long since endorsed by the Ommission. We might stop there. But a further word is needed concerning Intervenor's Exceptions 1, 9, 10, and 11.
Plainly the shabby schene disclosed in painful detail by the Board's findings in this case cannot go unpunished. We are presented here not with a licensee which innocently misrepresented or cmitted factis - conduct held to warrant sanctions in Virginia Electric Power Co.
(North Anna Power Station, Units 1 & 2), CLI-76-22, 4 hE 480 (1976) -
but with the far worse picture of a licensee which deliberately undertook -
to suppress information it knew was material, coerced Dow into joining in its sch me with " blackmail threats" of litigation, and (see Decis. at 30, 32) tried to prevent the full story fran merging even after its ,
schee was exposed. Surely if innocent misrepresentations and cmissions 4
- 1:
I warrant the imposition of sanctions, the conduct delineated by the Board's findings in this case requires th m. -
We pointed out in the opening pages of this Brief (and we need not belabor the poirit) that sound policy, as well as the egregious nature of the violations in question, requires the imposition of sanctions in this case. Years ago the Appeal Board held that the avoidance of a licensee's obligation of full disclosure for the sake of expediency -
exactly what Consumers did here "cannot be justified and will not
_be tolerated." Duke Power 00. (William B. McGuire th2 clear Station, Units 1 & 2), AIAB-143, 6 AEC 623, 626 (1973) . The Board's extraordinary refusal to act on its own findings in this case not only tolerates, but as a practical matter is bourd to encourage, that very conduct.
What relief, however,-is appropriate here? Of course a wide .
I variety of sanctions is available, ranging fr m an imposition of a fine i
to the denial or revocation of a license and, in the case of a nonlicensee, the imposition of a bar against participation of.any kind in a nuclear facility. Of these, a fine is perhaps the easiest solution. But we i.
b respectfully subnit that a fine would not be adequate in the situation presented here. To begin with, in the ccritext of a nuclear facility whose cost approaches the $2.5 billion mark, no fine which this Ocmnission might f
levy is likely actually to deter Consumers frcm continuing to place expediency above honesty if it feels that the truth might injure i
t l
I its investznent. Moreover, while the imposition of a fine may adequately punish past conduct, it provides no assurance for the future - and in the context of the deliberate, carefully-thought-out suppression of the truth disclosed by the Board's findings in this case, one cannot help but fear for the future unless strong measures are taken. Cmpare Matter of Hamlin Testing Iaboratories, Inc., 2 AEC 423, 428 (1964),
]
quoted' by the Comnission in North Anna, supra, and quoted at page 18 ,
i of'this Brief.
No doubt the question of appropriate relief in this case ought properly to be decided by a Licensing Board after an opportunity for hearings on that issue - an issue which, of course, the Licensing Board's decision here did not reach. But this Appeal Board can and should provide sme guidelines. For the reasons already indicated, we subnit that the first guideline should be that a fine is unlikely to be adequate under the circumstances of this case. We further subnit that the second guideline should be consideration either of revoking Consumers' Midland license or ,
of expressly attaching -- and enforcing - conditions to the continued viability of 'that license such that any further violation of Cbnsumers' obligation of pruuyi., voluntary, honest, and ccinplete disclosure will
- autanatically result in license ternination. Only in this way can the Ctnmission provide itself (and the public) with any assurance that Constrners will not act in the future as it has in the past - an assurance which is vital not only to public confidence, bat also to the integrity of the Ccmnission's regulatory process, which depends heavily upon precisely the kind of licensee honesty Cbnsumers has denonstrated it possesses only when convenient. And given the Board's findings in this yvvv t-o y <
e -, ,-- . -,-- - . ,--.-,,,-.g-. .-- -
m----_ -.-
. i
. I case and the egregious misconduct they document, only in that way can the Ctmmission adequately ensure that licensees and others will realize that the decisions mean what they say in announcing that such misconduct "cannot be justified and will not be tolerated." Otherwise those pronouncements are mere Imllow words - as the Licensing Board's total -
refusal to act here would make of then. But if the Camtission's mission is to succeed, those words cannot be hollow. They must be enforced, and enforcal rigorously. For that reason, we urge the Appeal ,
Board to adopt the guidelines for relief which we have suggested. ,
CONCwSICN For the reasons set forth herein, the Decenber 22, 1981 Partial Initial Decision of the Licensing Board herein should be reversed, and this case remanded with instructions to imp 7se appropriate sanctions on the basis of the gniaalines recamended herein.
Respectfully subnitted, OE OF TIE INTEm/ENORS OHER EW DON p~ \
By: /Db1 u Attorney 5 ' ' '
Onelof I I
Myron M. Cherry, p.c.
Peter Flynn, p.c.
OERRY & FLYNN Three First National Plaza '
Suite 3700 Chicago, Illinois 60602 (312) 372-2100
_ _m___
m.. _
uauuicars a semrics
'82 FEB 26' 90:49 I certify that four copies of the foregoing,B.rief wer.e.;s..erved r,0cc,;.:d:G ?. SEte '
upon the Atomic Safety and Licensing Appeal Board by postage'pf @
mail on February 22, 1982, and that on the same date one copy of the ,
foregoing, postage pre-paid and properly addressed was also mailed to the Secretary of the Carunission, and counsel for the parties below.
Q.' 1 ,
I v
l $ 1 }
I i
e e
4 g
- - - a m-