ML20077A550

Amicus Curiae Brief Re NRC Refusal to Provide Info Re Allegations Which Are Subj of Ongoing Investigations.Nrc Has No Valid Legal Excuse to Withhold Evidence in Dispute.Nrc Violated Legal Duty to Disclose Info.W/Certificate of Svc

ML20077A550
Person / Time
Site:	Byron
Issue date:	07/19/1983
From:	Devine T, Garde B GOVERNMENT ACCOUNTABILITY PROJECT
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
Shared Package
ML20077A547	List: ML20077A544 ML20077A550
References
NUDOCS 8307220355
Download: ML20077A550 (22)

Text

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INI'IED SINIES T A> ERICA 4 "

(V NUCLEAR REGUUGORY C(3 MISSION @

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.i BEFORE THE AKNIC SAFEIY AND LICENSING APPEALT"J Dj

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I" th' "****" # N9c<3s g# l l g fp COM2 MEAL'IH EDISON 03!PANY ) Docket Nos. 50$ , e

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(Byron Station, Units 1 and 2) )

\Q a 1 50-455 BPJ17 KR AMICUS CURIAE THE GOVEJtPE!7f ACOD(NIABILITY PfnTECT OF M INSTIT'JIE FOR ICLICY SIUDIES ON M A'ICMIC FAFETY AND LICENSING BOARD'S OR[ER 'IO M NUCLEAR REGULA'KE COINISSION STAFF 'IO DIWTN REZEVANT INFORMATICN IN LICENSING PRXEEDINGS AT BYBON I. STATEMENT T M CASE On April 25, 1983 the Ibdcford Imague of Rmin Voters and DAARE/ SAFE

(" Joint Intervenors") made an oral request to present the testinony of Mr. John Hughes cn matters pertaining to Quality Assurance and Quality Ccntrol (QA/QC) at the Byron Ntriear Ibwer Plant under ocnstruction near Rockford, Illinois by the Ccmtonwealth Edison Ocmpany.M On April 28, 1983 the Joint Intervenors subnitted a "2 tion to Allow Testinony of Jonn Hughes and Motion to Shorten Time for Respcnses" whidi incitzled a handwritten, sworn statement of Mr. Hughes. Both the NRC Staff and the Applicant submitted Resparises to the Joint Intervenors request, dated May 9, 1983. In stmmary, both Parties opposed the 2 tion to allow the testimony of Mr. Hughes on various grounds.M On May 12, 1983 the ASLB Board ordered that there be further inquiry into the allegations raised by Mr. Hughes.

In considering the matters before it the ASLB reviewed the laMirig

{ C Cartmission decisions (May 12, 1983 Merorandun and Order Setting l

Special Deposition Session, p. 3) and determined that the Quality Cbntrol/

Quality Assurance issues raised by Mr. Hughes were-(l) submitted in a tinely fashion by the Joint Intervenors, (2) had " obvious safety significance"; and (3) "might affect the outcome of the proceeding." (supra, at 4-5) .

k. John Hughes was a Quality Assurance (QA) inspector ertployed by l Pittsburgh Testing Laboratories at the Byron plant fran October 1,1982 to January 7,1983. Pittsburg Testing provides Quality Assurance work for

' Ccmtonwealth Edison at tM Byron Station. Mr. Hughes' experience and back-ground at other nuclear power plants is set forth in his handwritten 0307220355 830719

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'Ihe Board determined that the "Intervenors ramt demonstrate that a J triable issm rerrains either by a factual response or by showing that no factual response can be unde." 10 CFE 2.749 (c); Verntnt Yankee Nuclear '

s Power Corporation (Vernont[Yankse Station)'," ALAB-138, 6 AEC 524 (1983) .

~In order "to provide the Intervences tlwjyAtmity to answer the factual response of the Applicant and Staff," and "to pro'/ide all parties " .+;

and the Board a' n %pu tunity to explcre the cignificanoe of Mr. Hughes '

statement "

with the leest delay, the Board ust forth the following procedure:

First, the Board Sculd preside over the depositions.

of Mr. Hughes.

Secor41, the parties would exa. tine the three witnesses for the purpose of diterunning whether there is a, triable issue of safety significance.

The Board announced that at the conclusion of the deposi-t3cns it would determine whether or not there was a triable issue or a -

significant safety issue and would either reopen or not reopen the Incord accordingly. (Id. , p. 7) . c '

On May 26, 1983 the Board heard the oral deposition of Jchn Hu4hes and received stipulaticns executed by the Applicant, Intervenorsland Staff per' h g to the testimony of Irvin Souders and Junius Ogsbury. f

. . 3. +M On June 21, 1983 the Board issued two orders. The first, Euling on; - "

Intervenors' Motion to Mmit Test-imny of John Hughes, analynd the

- y testinony presented by Mr. Hughes in his written statement, his deposi-tion, and the stipulated testimonies of the two other witnessesi It :.oncludes that es y

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statement.

His. allegations about ntmerous problens at the Byron s, i

s facility are also outlined in his statement.

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The response briefs of the Applicant and the NRC Staff both contained 5tffi-davits fmn errployees which atte:tpted to di5 credit Mr. Htribes' allegations - , ;- \

.on various grounds of unspecificity or the lack'of safety significance. '

The Briefs further argue against the Joint Intervenors position that it is ~~

appropriate for tM Board to reopen the record because it meets the legal tests for reopening a record.

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.g _3 j'O Mr. Hughes' stataments and testimony as it related to the Hatfield Ckspany. training and certification p w.dures for

QA inegss and' the 5=ible use of styplied answers on insMws testing has significant safety inplications. The re%tw portion of Intervenors' motion to a& nit Mr. H1x3hes

+a*inmy and any related exhibits is granted. The Board

_" is reopening the evidentiary record m these and other issues today in a separate order.... - The balance of Intervenors' notion is &W. . (M. , p. 18) .

Tna seemd order, Reopening The Evis-Winne Record, directed the parties

)p "present a full evidetiary showing and explanaticn of the pertinent investigations of Hatfield Electric's quality assurance program and the sub-

' sequent reinspections." 'Jhe Board further detailarl its directive to the staff' to include presentations of relevant Inspection and Enforcement firxlings, and explanations which led to the Staff conclusion that the reinspection program was adequate. The Board specifically noted that g

If any aspect of the cited IEE findings relate to the alle-f gations against Hatfield currently under investigat$cm by

' the NIC and'the ' subject of this order abovn, that infor-sSa .

mation should be presented in detail. (Id., p. 5).

The Board made an even more specific description of the information that

, ;1t sought fran the Staff on page two and three of the order. The Board

explained

i We have also focused nore s}2rply cn the previously r@ned fact that the Omnission's-Office of Investigations is in-quiring into the potentially criminal inplications of sme of Mr. Hughes' allegations and as recently as May 13, 1983 that office stated that it possessed (but would not release) confidential material relating to Mr. HtxJhes' allegation for use.in an "angoing NIC investigation". (M.)

The Board went on to state that it could not determine even the basic information frcm the record before it as to the nunber of investigaticns being ccnducted into allegations about work being performed cm the Byron Station L;y Hatfield Electric. The Board stated:

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\We Board canrot determine frcn the record before it whether i

oll_ of the abcve rep' orts are related to the see investigation or' set of inve'stigations. Collectively, the reports establish that it would be an inproper delegation of the Board's A adjudicating respnsibilities to leave the resolution of ,

the problems raised in the reports to the Staff's enforce-

ment program.

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Therefore the Board directs the parties to present a full A

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evidentiary showingind explanation of the pertinent i

ys investigations of Hatfield Electric's quality assurance

^^ program and the subsequent reinspections. For the

% guidan of the NBC Staff, we note that Messrs. Hayes and Connaughton distinguish between " wrongdoing" which iN[ is within the perview of the Office of Investigaticns, 7y g.s u '

'-h _ _ _ _ _ - , . _ _ _ _ . . _ _ - - _ _ . . . _ _ _ _ _ - . _ _ _ _ _ _ _ .

I and the detennination of "tacinical matters affecting plant safety" *ich falls within the anbit of Region III Office of Inspection and Enforcement. Mtile the distincticn might be useful, we deem " wrongdoing' in the area of CWQC to have a possible direct relevance to plant safety and would expect a amplete presen cm of all aspects of all NRC inquiries W1ere possible. .I,.5[. , at 3-4)

Pbilowh g the June 21,1983 Orders of nunber of conference calls between the parties ensued.

On July 1,1983 the Board issued a Menorandum and Order in respcnse to the Staff's refusal to omoly with the portions of the Board's directives, because of an overriding policy prohibiting the disclosure of information about allegations which are the subject of ongoing investigaticms.

The Staff's explanation to the Board, as cited in the July 1,1983 Order was that "such disclosure has the potential to unwuuise the inspection and investigation of the natters." 'Iha Staff failed, however, to provide -

, any analysis in support of this asserted conclusion. It also failed to f

consider available alternatives to protect its interest, such as in camera proceedings or protective orders. As a result, in the July 1 Order the Board directed the Staff to provide relevant doctrnents in advance of reopened QA hearings. (Id. , at 2-4) .

II. LEGAL ARGtmTr The Staff is defending a policy against which the lw is well-settled.

Far frts having any right to withhold evidence frczn the ASLB, the Staff has an affirmative duty to disclose evidence to the Board of significant safety cx:noerns.Y The Staff has no grounds not to seek official endorsement of its previous actions disregarding this duty.

5

' The recent Browns Ferry case / illustrates this long-standing principle.

In the parties failed to' expeditiously advise the Board of new evidentiary developements which prenci relevant and material to a decision in that case and which occurred while the case was pending before the Board. Because l

TVA purportedly was unaware that it should advise the parties and the Board of any significant new developents, it sutmitted the new information cnly position.

MHere the Staff's contradictory rationalizations undercut its own Although the Staff argued that Mr. Hughes' allegations do not have investigation that it also contended that disclosure would so inpede its safety significance, the Board must reain ignorant. In light of the Staff's assessment of the impact of the evidence the preducicial inpact of release would be simiciarcy insignificant. The Staff's position appeals pr a ised cn l

! a policy health andto safety.

avoid ASLB cversight, rather than a policy to protect ptblic f5 tennessee AIAB-677,15 Valley NFC 1387 Authority (1982) . (Browns Ferry Nuclear Plant, Units 1, 2, and 3)

(

( to the NIC Staff. Although NRC Staff counsel tranmitted the information to the Board as socn as it was readtved fran the NRC tednical staff, the Board had already made a decision during the ensuing delay. The Appeal Board adnonished 'IVA fcr failing to advise it of evidentiary changes that left the previous record outdated. The Appeal Board also found that the currbersczna process of review by the NIC's Staff's various internal bureaus had been inadequate to keep the Board properly informed. Citing Vernont Yankee b, the Appeal Board concluded with reference to this long-standing policy: "We nevertheless remind parties to rw-tssion prermadings of their absolute obligation to alert adjudicatory bodies directly regarding (1) new information that is relevant and naterial to t!be matters being adjudicated, ard (2) nodifications and recissions of inportant evidentiary stixnissions...." E The Browns Ferry decisial continues a long traditirat of NRC case law that establishes an unqualified duty by all parties 8/ to keep adjudicatory boards informed of rrajor develgatents. 'Ihe Staff has not been the recipient of any privileged status earrpting it fran this rule.9f Most significant for thIs proceeding, the Staff is not free to delay reporting until it has conpleted its own internal evaluation of the issues,10/ as sotght by Regien III in this case.

The policy basis for this rule is fundamental for decisions. In many cases, Staff inspections and investigations ocotinue alnost until the nuclear plants are ready to begin operations. 'Ib require licensing and appeal boards, to avnid exarnining the evidence for serious issues until the Staff were finished would either institutionalize significant delays, or ignorance in making decisions on operating licenses.

Contrary to the assumptiens in the Staff's position, NRC adjudicatory bodies are not mere interested citizens who abould wait for the governuent to N Vermont Yankee Nuclear Power Corp, (Vernont Yankee Nuclear Ibwer Station ALAB-138, 6 AEC 520, 533 (198 ) .

E rowns B Ferry, supra, at 1393-94.

82 Duke Power Co. (William B. McGuire Nuclear Station, Units 1 and 2),

ALAB-143, 6 AEC 623, 625-26 (1983); Ga. Power 6 . (Alvin V. Vogtle Nuclear Plant, Units 1 and 2), ALAB-291, 2 NBC 404, 408 (1975); Duke Power m., (Catawba Nuclear Station, Units 1 and 2), ALAB-355,4 NRC 397, 406 at n. 26 (1976) .

9

./ Consolidated Edison Cb. of N.Y. t (Indian Point Station, Units 1, 2 and'3),

CLI-77-2, 5 NRC 13 (1977) .

N/ Virginia Electric and Power Co. (North Anna Power Station, thits 1 and 2),

CLI-76-22,4 NRC 480,491 at n.11 (1978) .

E finish its business, as with requestors under the Freedom of Infounation Act ("POIA"). Rather, these boards must sake findings of fact on the ultimata issue of whether plants should cperate. 'Jhe NBC Staff does not have the option to apply POIA exenptions to the ASLB or ASEAB; to place-anjor licensing issues on hold; or to force adjudicatory boards to make significant decisions based en guesswork in order to conform litigation schedules to the pace of staff investigations.

IV.

NRC STAFF FAILURE: '!O PUBLICLY IMNTIFY AND DIWYnRR SIGi2FICANT QUA ASSURAN2 VIGATIDtG WI2HIN REGICN III.

In addition to its legal ricfit to obtain evidence fran the Staff of m violations at Byrcm, there is a ocupelling policy reason: the Region III Staff has distorted the public record by withholding significant evidence of QA violations. In this respect, Region III has mirrored a generic defect within the NRC on oversight of quality assurance.E The results of Region III's stperficial oversight are not surprising, Ch May 21,1981 Executive Director for Operations William Dircks testified in Congress that five nuclear plants under construction naticmally have suffered fra systematic qtality assurance breakdowns. Three of the five plants, --

Zimter, Midland and Marble Hill - are located in Region III.b thforttmately, there are indications that the situation has continued to deteriorate. For exanple, at Zimer this spring the oceporate partners sought arbitration to withdraw i'ran the project and seek damages due to quality assurance violations and the resulting econmic inpact. Just last week at Midland, the Dow Chemical Ccmpany filed suit to withdraw frcan its contract to purchase steam fr m Midland. The continuing m deficiencies convinced Dow that there is no i " reasonable assurance" the plant can ever be crmpleted.

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N or see August 20, 1982 a nore cxmplete illustration of this phencunencm at the Zinner station, ,

i E Comnission's Order of July 30 Miami Valley Power Project ("MVPP") PWtition to Recon Dismissing Eight @ality Amaurance ContenHrwis

( at n = =r; and an Ocu'_r 11, 1982 Stpplanental Petition in t.he same proceed 2ng.

' For an illustration of Region III's oversight of m at the Tahlle Nuclear i Power. Plant, see July 26, 1982 letter to Nunzio J. Palladino, Onirman, NRC '

t from Thomas Devine and Billie Garde, GAP attached and incorporated as Exhibit 1. .

I For an illustration of how licensing pcessures may have distorted Region III i investigations at la Salle, see also July 15, 1982 memorandtzn to William Dircks, Executive Director for Operations, NRC, from James Cunnings, Director Office of Inspector and Auditor, NRC, attached and incxarporated as Exhibit 2.

E estinony T of William J. Dircks before the SL*v==ittee on Energy and

4 V. CD4CI1EION frie Staff has no valid legal excuse to withhold the evidence in dispute fxun the Board in this czae. Rather, it has violated a legal duty to prcmptly Melm the developnents at issue. It is unfortunate that Intervenors in this case had to perform the Staff's obligation to develop a full record. Finally, it is essential for the P&lic interest that the NRC adjudicatory bodies fully aglore the poteritially significant GA issues in the Hughes allegations. Based on Region III's track record, this Board may represent the only forun where the facts are fully developed.

Respectfully subnitted,

%> LAG Gr THNAS IEVINE Iegal Director b C'-

BIILIE PIINER GARDE Citizens Clinic Director Of counsel: John Clewett July 19,1983 CDVERNMENT NIIXNTABILITY P103ECT Institute for Policy Studies 1901 Que Street, NW Washington, D.C. 20009 l

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1 E(cnntinued Affairs, May 21, from 1981. page 6) Envirment of the Comnittee on Interior and Insular I

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UNITED STATES OF AMERICA 4 NUCLEAR RF;?JIATORY COMMISSION

@ 4 BEFORE THE AIDMIC SAFETY AND LICENSING APPEAL BOA ' t In the Matter of )

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5 dg O d COMMONWEALTH EDISON COMPANY

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) Docket No. 50-454 q%(g ,g/

(Byron Station, Units 1 and 2) 50-455

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CERTIFICATE OF, SERVICE I hereby certify this 19th day of July 1983 that copies of MOTION FOR LEAVE *ID FILE AMICUS CURIAE BRIEF and BRIEF FOR AMICUS CURIAE ON TH SAFETY AND LICENSING BOARD 3 ORDER 3 THE NUCLEAR REGULATORY C.0M g DISCLOSE RELEVANT INFORMATION IN LICENSING _PROCEEDINCC AT BYRON in the above captioned proceeding were served on the following by deposit in the. United States Mail, first class, or as indicated by an asterisk, hand-delivered.

• Steven F. Eilperin, Chairman Ivan W. Smith, Chairman Administrative Judge Administrative Judge Atomic Safety and Licensing Atomic Safety and Appeal Board Licensing Board U.S. Nuclear Regulatory U.S. Nuclear ReFulatory Commission Commission Washington, D.C.

Washington, D.C. 20555 20555 Mhristine N. Kohl Dr. A. 'Dixon Callihan Administrative Judge Administrative Judge Atomic Safety and Licensing Union Carbide Corporation j- Appeal Board P. O. Box Y U.S. Nuclear Regulatory Oak Ridge, TN. 3783 Commission Washington, D.C. 20555

• Dr. Reginald L. Gotchy Dr. Richard F. Cole Administrative Judge Administrative Judge Atomic Safety and Licensing Atomic Safety and Appeal Board Licensing Board U.S. Nuclear Regulatory Washington, D.C 20555 Commission Washington, D.C. 20555 ' Alan F. Bielawski, Esq.

Region III Bruce Becker, Esq.

Isham Lincoln, and Beale U.S. Noelear Regulatory Commission Office of Inspection & Enforcement Three First National Pl.

Chicago, IL 60603 l 799 Roosevelt Road Glen Ellyn, IL 60137 I

l Stev n C. Goldberg, Esq. Office of the Secretary J

Office of the General Counsel of the Commission U.S. Nuclear Regulatory Commission ATIN: Docketing and Service Section

, Washington, D.C. 20555 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Joseph Callo, Esq. '

Isham Lincoln & Beale David 2homas, Esq.

1120 connecticut Ave. , NW Room 325 77 South Wacker Drive Washington, D.C.

Chicago, IL 60621 d- 0%

THOMAS DEVINE 9

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GOVERNMENT ACCOUNTADILITY PROJECT l- Exhibit 1 Institute for Policy Studies 1901 Que Street. N.W., Washington. D.C. 20009 (202)234 9382 July 26, 1982 The Honorable Nunzio J. Palladino Chairman U. S. Nuclear Regulatory Commission Washington, D. C. 20555

Dear Chairman Palladino:

On behalf of our clients, Mr. Albert T. Howard and Ms. Sharon Marello, the Government Accountability Project (" GAP") of the Institute for Policy Studies requests that the Nuclear Regulatory Commission ("NRC") conduct a full investigation of the enclosed evidence before permitting full power operation of the LaSalle Nuclear Power Station (Unit I) in LaSalle County, Illinois.

We request that the Commission's Office of Investigations ("OI") replace Region III ("RIII") in its ongoing *.nvestigation of LaSalle and the Zack Company, to which the enclosed evidence pertains.

We further request that the Commissioners direct the Office of Inspector and Auditor ("OIA") to investigate the performance of RIII's Office of Inspection and Enforcement. More specifically, we believe that RIII's oversight of LaSalle was inadequate in three areas--

(1) failure to act for three months on serious evidence of a Quality Assurance ("QA") breakdown and possible criminal falsification at LaSalle's Heating, Vontillating and Air Conditioning ("HVAC") contractor, the Zack Company, on the eve of full power operations at LaSalle despite urgent and then-independent requests from Mr. Howard and GAP; (2) failure to uncover the Zack QA breakdown during its ongoing regulatory program; and (3) failure to honor commitments made last November to correct RIII investigative deficiencies confirmed by OIA Report, Special Inquiry re Adequacy of IE Investigation 50-358/80-9 at the William H. Zimmer Nuclear Power Plant (August 7, 1981).

Our action is based on the investigation our organization has conducted over the past five months, from March 1982 to date, as well as on evidence Mr. Howard, Ms. Marello and other witnesses have presented to us regarding the Region III LaSalle investigation. Enclosed as Attachment 1-8 is a packet containing Mr. Howard's affidavit and 44 exhibits; Ms. Marello's affidavit; an affidavit from Mr. Charles Grant III; and six memoranda 4

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The Honorable Nunzio J. Palladino July 26,1982 summarizing verification interviews conducted by our staff. The interviews confirm the personal integrity of Mr. Howard and Ms. Marello, as well as the substance cf their allegations. All witnesses except for personal references are fon cr or cur **nt Zack employees. Our evidence directly challenges the credibility of Region III's July 19 recommendation for a full power license.

GAP is a non-profit, non-partisan public interest organization that assists federal and corporate employees who report illegal, wasteful or improper activities by their agencies or organizations. GAP also monitors govern-mental reforms, offers its expertise about personnel issues to Executive Branch offices and agencies, responds to Congressional requests for analysis of issues related to accountable government and disseminates significant information about problems to appropriate places within the government.

Our review of the recently issued LaSalle Report (Inspection Report No.

50-373/82-35 (July 19,1982)) reveals more deference to utility timetables than Region III has demonstrated in the past, particularly at the Zimmer station in Moscow, Ohio. Although we have had only one week to review, analyze and study Region III's report, it clearly suffers from serious on.lssions. This type of investigation leaves the public less realistically assured than if no investigation had been conducted at all.

Specifically, the report ignored the evidence on Zack presented by Mr. Howard nearly three months ago, on May 3,1982. Second, Region III totally ignored significant issues that dealt with the causes of the Quality Assurance deficiencies at LaSalle, such as retaliation and manipulation of the QA program through short-staffing, conflicts cf interest, and advance warning of QA inspections.

Our review of the allegations actually covered indicates that the LaSalle investigation relied far too heavily on the utility's paperwork, while foregoing witness interviews and independent hardware tests. We discovered that Region III investigators failed to take sworn statements from key witnesses who had not already provided affidavits to GAP or the Illinois State Attorney General's office. GAP had already worked closely with some of these witnesses. Our decision not to take affidavits from these employees was a gesture of good faith toward Region III; unfortunately, it was not returned.

We also found a disturbing manipulation of the allegations by omitting key facts, thus making it easier to reject the charges. Issues presented by conscientious workers were consistently rejected on the basis of suspect utility paperwork or " independent" tests that were, in fact, controlled by the utility, rurther, and most seriously, the NRC's Region III office has once again failed to independently explore the full extent of the problems at a nuclear power plant before dismissing the examples as insufficient by themselves to pose a public health and safety threat.

The Nuclear Regulatory Commission has often promised to improve the dependability and quality of its investigations; however, the flaws of the

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j The Honorable Nunzio J. Palladino July 26,1982 LaSalle probe confirm that NRC probes continue to rely on the utility's good faith and papcrwerk. It is very clear that whenever there was a conflict between eyewitnesses and utility paperwork, the paperwork won.

Unfortunately the affidavits and evidence provided by our clients reveal that the paperwork for the LaSalle site cannot be trusted.

The LaSalle investigation represents a major setback in the NRC's outreach effort to nuclear plant employees. No longer in good conscience can we recommend to nuclear workers that they speak to the NRC without counsel present. Mr. Howard, who was speaking for the fired Zack employees, had irreversible persor+al damage. Although as spokesman for the group Mr. Howard went to the Regional NRC office on the first work day after the entiro QA department was dismissed and talked to eight investigators, not one informed him that he and his colleagues had only 30 days to file an appeal for relief under 48 U.S.C. 35851 to the Department of Labor. As a result, their legal rights to administrative relief were sacrificed.

Region III also publicly misrepresented his disclosure in an attempt to justify its own initial inaction. This is intolerable.

I. ZACK ALLEGATIONS Bacxground In the fall of 1981 the Zack Company, a Heating, Ventillating and Air Conditioning ("HVAC") contractor, hired Ms. Marello, Mr. Howard, and a number of other individuals to establish a Quality Assurance Documentation Control office. Their assignment was to insure that the Zack Company had a Docu-mentation Department that complied with 10 C.F.R. 50, A. 'andix B, the American National Standards Institute (" ANSI") codes, arW the contract specifications of their various clients in nuclear business. Their specific assignment was to control the documentation -- purchase orders ("P.O. 's"),

material certifications ("certs"), material traceability records ("M.T.R.")

and certificates of conformance ("C.C.") . This involved the monitoring of over 3000 purchase order " packages." Each package represented the proof of quality for up to thousands of items used to construct the Clinton, LaSalle or Midland nuclear power stations.

Mr. Howard was hired as the Documentation Control Room Supervisor. Ms. Marello was a clerk. They, and the three or four other Documentation Control Room employees were allowed -- in fact assigned -- to investigate documents con-tained in Zack's ' files. Their task was to verify the accuracy, or identify the inaccuracies to the purchase order packages. This task gave them free access to the Zack files, and also placed them in a good position to observe the " paperwork trail" of Zack's nuclear documents.

In six and a half to sevcn months, Ms. Marello and Mr. Howard discovered and challenged a quality assurance breakdown that leaves reliability of HVAC l systems, and the overall QA programs at three nuclear plant sites in serious i

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The Honorable Nunzio J. Palladino July 26, 1982 question. Their experiences reflect a contractor operating for years without regard for the Atomic Energy Act, and consequently the public health and 4

safety.

They discovered documentation that had altered . specifications, some with

" white out," missing certifications, purchase orders with no ASTM specifi-cations,. purchase orders changed to reflect correct quality assurance approval, and adhesive stickers with questionable authenticity, used to modify documentation and reflect the correct standards. They also uncovered tcp-level Zack management attempts to convince vendors -- with some success --

to provide inaccurate quality and traceability certifications after-the-fact.

Both Mr. Howard and Ms. Marello worked in the Document Control Room at the Zack headquarters. Although they received no formalized Quality Assurance training, they, and the rest of the QA department, did become familiar with the various codes, contract specifications, and regulations that allegedly governed their work.

Unfortunately they suffered a pattern of harassment and attempted intimidation.

The pressure increased as Zack strove unsuccessfully to meet unrealistic time demands imposed by Commonwealth Edition ("Com Ed"), which wanted the paperwork resolved to avoid licensing delays at its LaSalle site. The tension became so severe that Ms. Marello was eventually hospitalized.

Last August Zack had notified the utilities of a potential nonconforming ,

condition under.10 C.F.R. 550.55(e), due to inadequate and inaccurate quality and identification records on vendor purchases. They also attached a Cor-rective Action Report (" CAR") plan which outlined Zack's intention to identify, analyze and correct all the paperwork problems at the company headquarters.

This CAR also outlined the steps Zack would take to insure that the proper individuals responsible for this were appropriately disciplined.

As pressure mounted to have the LaSalle nuclear plant load fuel, the QA department at Zack fell under greater pressure to close out nonconformance i reports ("NCRs") that detailed the Zack QA documentation deficiencies at LaSalle. Mr. Howard refused to provide a final report to Com Ed. On March 1, Zack suomitted 99 remaining NCRs to Com Ed. Zack warned it was unlikely that necessary documentation to correct deficiencies could be obtained.

This frank admission did not deter the utility and NRC rush to begin

- operations at LaSalle. Com Ed received permission to load fuel.

} On April 13 and 15,1982 Mr. Howard, acting as a spokesman for the entire j Zack Quality Assurance department, had contacted an individual in the Consumers Power Company's Midland Project Quality Assurance department.

This individual had represented to Mr. Howard and other members of the department that they should feel free to bring any allegations or problems j at Zack to Hidland's internal grievance system. He also guaranteed them l confidentiality and protection from losing their jobs.

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On April 18,19 and 20, an audit team from Consumers 'and the Bechtel Corpor-l ation arrived in the Chicago office. The QA department anticipated a complete ,

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g The Honorable Nunzio J. Palladino July 26, 1982 investigation and professional support for its effort. However, their anticipatien was belied as naive. On April 30 the entire department was dismissed, allegedly due to an office reorganization.

On May 3, 1982, the first working day following the purge, Mr. Howard began a series of contacts with Region III. He provided specific allegations about-LaSalle and to a lesser extent Midland and Clinton, evidence and his offer of full cooperation with an NRC investigation. However, nothing happened.

After 2 months, when Mr. Howard and the others realized the NRC was not going to respond to their allegations, which had cost them their jobs, they took their information to the press and then to GAP.

Specific Allegations The three affidavits, exhibits and supporting verification memoranda evidence specific allegations about Zack's QA documentation and utility oversight.

Certain issues pertain to the fundamental of Zack's QA program--

1) Absence of any formal Quality Assurance Documentation Program--

Until Ms. Marello, Mr. Howard and othars were hired in the fall of 1981 to honor corrective action commitments tnere was no QA formal program for documents.

As a result, they were in an uncorjtrolled

• state, i.e. , a mess. Documents were piled on the floor. (Attachment 3, at 1-2; Att! 3, at 1; Att. 8, at 4-5) .

2) Inadequate qualifications of personnel performing significant roles-- Individuals without any previous nuclear experience were assigned to make decisions requiring engineering judgment, as well as detailed know-ledge of professional codes and legal requirments for QA documentation. They received these assignments despite protesting that they were not qualified to make such significant decisions. The qualifications deficiencies extended to the Zack auditors. (Att. 1, at 1-2, Att. 2, at 3-4; Att. 3, at 2-3; Att. 8, at 5, 11-19).

3) Missing documentation and discrepancies in welder qualifications reco rd s-- To illustrate, an October 23 Interim Report found 25 discrepancies in a partial review of welding qualifications records for the LaSalle site.

(Att. 2, at 7: Att. 8, at 13).

4) Inadequate training for QA personnel-- Despite repeated requests for comprehensive training, Zack only offered informal guidance and self-study materials. Tb illustrate the quality of the training, Zack President Christine DeZutel and her husband were trained "in accordance with the Zack Company Quality Assurance Training Program" on the basis of one hour's instruction from a Zack executive in NRC regulations and professional QA standards . The company finally proposed a formal training program shortly

• /"Att." All references to Attachment 8 incorporate the relevant accompanying exhibits.

The Honorable Nunzio J. Palladino July 26,1982 before it dismissed the entire QA documentation staff. (Att. 21, at 2; Att. 2, at 2-3; Att. 3, at 2-3; Att. 4, at 1; and Att. 8, at 5, 18-19, 24) .

A second category of allegations concern incomplete Zack QA documentation--

5) Missing records due to inadequate document contrul-- Both unauthorized management personnel, and even the owner's dog, had access to Zack QA records and Purchase Orders. As a result, records were lost or chewed up. (Att. 1, at 3; Att. 2, at 5; and Att. 3, at 1).

6) - Absence of required quality verification on documents that could be retrieved-- This ranged from missing signatures to missing required test data, specifications, and certifications to professional codes. (Att. 1, at 2-3; Att. 3, at 2 Att. 8, at 4-5, 18) .

7) Lack of proper identification through compliance with material traceability requirements-- This led to problems such as lack of required traceability for some 114,000 hexheads, bolts, nuts and similar items.

Similarly, certain steel beams could not be traced with certainty, although indications are that they come from Argentina. (Att. 8, at 17-18, 21-22).

A third category of allegation concerns widespread falsification and improper modifications of Zack QA documents during the corrective action program for deficient records--

8) Improper alteration of QA records through stickers containing signatures of questionable authenticity (Att. 2, at 3; Att. 3, at 2 Att. 8, at 14-15).

9) Improper alteration of QA records through whiting-out previous information in order to create the appearance of compliance with legal requirements (Att. 1, at 2; Att. 8, at 15) .

10) Improper requests by Zack management for vendors to supply unavail-able information or to inaccurately upgrade quality documentation-- Some vendors, such as U.S. Steel, refused to participate in the improprieties.

Other vendors cooperated to the letter of the request, even retyping the spelling errors in model certification letters supplied by Zack. Another vendor returned a blank form for Zack to fill in as needed. (Att. 2, at 7; Att. 3, at 2; Att. 8, at 16, 25-6).

l A fourth category of allegations involves deficiencies in Zack's program for purchases from its Approved Vendors List--

l 11) Failure to distinguish between commercial and nuclear purchases on

! Purchase Orders-- Since items purchased for nuclear use have much stricter j

quality verification requirements than those purchased for commercial use, this omission led to the improper upgrading program described above. (Att. 2, at 2; Att. 8, at 18).

i

The Honorable Nunzio J. Palladino July 26,1982

12) Unqualified vendors on the AVL-- This occurred due to the absence of necessary surveillance of vendor QA programs. (Att. 3, at 2-3; Att. 8, at 15-16).

13) Failure to remove unqualified vendors from the AVL-- Even if Zack determined a vendor .were unqualified, that did not guarantee the vendor's removal from the AVL. For exataple, back received approximately 38 Purchase Orders from the Delta screw Company during the period it was " removed" from the AVL. (Att. 8, at 18) .

A fif th area of allegations concerns the attitude of Zack management. It was incompatible with the Quality Assurance criteria of 10 C.F.R. Part 50, Appendix B--

14) Management awareness of QA breakdown-- Zack management was painfully aware of the problem. As the company conceded, "There has been a breakdown of the quality assurance program as related to criterions [ sic,/ VI - Documents Control, and VII - Control of purchased material, equipment and services...."

(Att. 8, at 6). The company promised reform and training to the QA staff.

But the commitments were not honored. Instead, Zack management scapegoated the staff for problems created by its own neglect. (Att. 2, at 6-7; Att. 3, at 3; Att. 8, at 10, 21-5).

15) Harassment, attempted intimidation and retaliation against OA staff--

All current and former Zack employees who were contacted ' confirmed this allegation. The tactics included dismissal threats, severe personal abuse, accusations of petty misconduct, and eventually dismissal of the entire QA documentation staff through a pretextual reorganization. (pge Att. 1-8, generally) .

16) Bad faith progress reports to the utilities--

Zack disguised its misconduct through f alse reassurances to its utility customers. To illustrate, the company reported to Midland on a

partial review of some 3,900 purchase orders. Although the review was less l than half complete, the Zack President characterized it as a " total document I audit." (Att. 1, at 2; Att. 2, at 3; Att. 3, at 2, Att. 8, at 6, 10, and l Exhibit 43S).

17) Failure to adequately discipline those responsible for records falsification-- The company promised its utility clients to identify and take apppropriate action against the guilty parties. Although the responsible executive was identified, the " appropriate disciplinary action" consisted of a paperwork demotion and additional training. (Att. 8, at 4, 6-7) .

18) Surrender to unrealistic utility deadlines-- Zack was under intense pressure f rom its utility clients, in particular Com Ed, to rush the quality

verification of its purchases. Rather than defend the integrity of its QA reform program, Zack succumbed and attempted to produce a " rush job." That is why the company. pressured employees to work overtime and perform tasks for which they weren't qualified. There wasn't time to do the job properly.

(When the QA staff refused to sign off on unacceptable records, management l personnel did it themselves.) (Att.1, at 3: Att. 2, at 4; Att. 3, at 1; l Att. 4, at 2; Att. 8, at 7-8, 22).

I l

"t:3 -

') The Honorable Nunzio J. Palladino July 26, 1982 A final category of allegations involves the utilities themselves. Zack could not have persisted for years in its misconduct without utility complicity--

20) Utility knowledge of the QA breakdown-- There can be no question that the utilities have been aware of the Zack breakdown. The company was the subject of previous requests to stop shipping nonconforming material, as well as previous severe enforcement action at Midland, whose cwner Consumers Power even loaned a contract employee to help straighten out Zack's QA records deficiencies. (See Att. 2 and 8, generally) . At LaSalle, Zack informed Commonwealth Edison that. it could not supply adequate information to properly correct 69 of 99 QA nonconformances. (Att. 8, Exhibit 43S).

21) Utility complicity with the ongoing breakdown-- When formally notified of Zack's miseries, the QA management for the utilities and their contractors failed to face up to their resporsibilities. Instead, Com Ed pressured for a rush job in the corrective action program. At Midland, the contractor Bechtel was satisfied if it were " highly probable" that Zack ordered the correct material. .The Midland QA program responded to Zack's QA effort with an effort to rewrite the QA rules. Even before the effort was completed, the Midland QA management decided that "in virtually all cases, material is acceptable or will be deemed acceptable." (Att. 8, Exhibit 29, at 3). That philosophy cannot coexist with the Atomic Energy Act. (Att. 1, at 4 ; Att. 2, at 4-5; Att. 3, at 2-3; Att. 8, at 9-12,14, 20) .

22) Utility complicity with retaliation-- In desperation, Mr. Howard and another Zack QA employee, Mr. Ronald Perry, disclosed the QA deficiencies to of ficials at LaSalle and Midland. In each case the discussions were sup-posed to be confidential. In each case, the Zack employees were soon subjected to recrimination and harassment, suggesting that the confidences were not honored. . In Mr. Howard's case, the entire QA staff was dismissed within two weeks of his disclosure to the Midland QA Manager.

23) Inaccurate public denials by utilities of the Zack deficiences--

Ib illustrate, a Commonwealth Edison spokesman stated in a Chicago television interview that the Zack records were reviewed thoroughly by its Architect /

Engineer Sargent and Lundy. In fact, an internal January 1982 Surveillance Report at LaSalle revealed Sargent and Lundy had--

... deleted the requirements for submitting on site contractor documentation (such as Zack's) to S & L for review. This review is now the responsibility of the Zack Company....

Based on this change, S & L's letter accepting Zack's docu-mentation is no longer required.

( Att. 8, at 11) .

Contrary to the conclusions of the implicated organizations, the deficiencies summarized.above are too serious to ignore or even to glance at superficially.

As a Zack report concluded, only 94 of 374 material packages sent to LaSalle were correct and acceptable. Nine were judged "No Good for LaSalle." (Em-phasis in original.) (Att. 8, at 7). In some cases, it is too late for the

The Honorable Nunzio J. Palladino July 26, 1982 vendors to supply verification information on purchases made in 1978 or earlier. The records simply aren't retained that long. (Att.1, at 2) .

Nor can the NRC accept Zack's work "as is" and permit any plant to operate with quality in an indeterminate state. As RIII Administrator James Keppler stated with respect to the Zimmer station, the utility would have to " rip out" and replace critical components that lack adequate quality records. ("On-Time Start-Up for Zimmer Plant Still Doubted by NRC Official," The Cincinnati Enquirer, p. D-5 (June 30, 1982). 7b illustrate the impact at LaSalle, it would magnify the danger and expense to rip out already installed items after the plant begins operations.

II. INADEQUATE NRC INVESTIGATIVE OVERSIGHT

Background

On December 8,1980, on behalf of Mr. Thomas Applegate, GAP charged that a RIII investigation violated basic investigative standards through failure to speak with relevant witnesses; failure to take affidavits from key witnesses; exces-sive reliance on utility paperwork to resolvi allegations instead of conducting necessary independent laboratory tests on the hardware; failure to investigate sufficiently to determine the causes of confirmed inadequacies; inaccurately summarizing employee allegations, with the effect of shrinking the allegations into insignificance; and on-balance exonerations despite confirmation of specific problems, before learning the full scope of the deficiencies.

Last November 18, OIA released its August 7 report, which backed GAP's charges.

In an October 8,1981 memorandum to Chairman Palladino, Office of Inspector and Auditor (OIA) Director James Cummings observed that the probe Applegate and GAP challenged "did not satisfy... generally accepted investigative standards of other Government agencies.. .. Fundamentals basic to all in-vestigations were simply not observed in this instance." Cummings cited inadequate documentation highlighted by the total absence of interview reports, l

as well as the failure to pursue obvious leads. He surmised that serious l quality assurance welding problems the NRC uncovered last summer might have l been exposed years ago if IE probes had been "sufficiently comprehensive to l identify this issue in a timely manner."

l l In a November 16, 1981 letter to Congressman Morris K. Udall (D.- Ariz . ) ,

Chairman of the House Energy and Environment Subconmittee, you backed the OIA criticisms. You concluded that the shortcomings in the Zimmer investi-gation " reveal a generic problem" with IE oversight. You pledged to consider the "necessary internal reforms" for NRC probes to reach a level " consistent with fundamental standards that govern investigations by any agency."

i In November Congressional testimony, NRC Executive Director for Operations William Dircks reaffirmed the commitment and pledged to deemphasize reliance l

l

4 The Honorable Nunzio J. Palladino July 26,1982

\

on utility paperwork while increasing reliance on witnesses and even a new NRC mobile laboratory testing unit.

With respect to the LaSalle and Zack allegations, RI?.7 failed to honor this pledge.

Ib illustrate, the NRC response to the Zack allegations at LaSalle was reluctant, at best. On June 2,1982 GAP passed along the allegation of a vindicated Zack whistleblower from Midland that a Zack supervisor had confirmed the same abuses at LaSalle. The whistleblower, Mr. Dean Dartey, complained that RIII had refused to investigate his allegations due to lack of specificity. Had RIII followed its normal practice of cha: king deficient purchase orders at one site that had also been sent to other utilities (see, e.g., IE Rep. No. 50-358/81-13), the NRC would have learned that illegalities in Zack-supplied Midland parchases were repeated at LaSalle. (Att. 5).

Similarly, GAP made three attempts to convince RIII to pursue evidence of mis-conduct by Zack at LaSalle. Mr. Howard made another half dozen attempts to convince RIII to investigate his May 3,1982 disclosure, and evidence, all without success.

In a July 19, 1982 letter to Com Ed, Administrator James Keppler rationalized the omission by stating the Howard allegations applied primarily to LaSalle and had been deemed too general by the staff. As Mr. Howard rebutted:

The NRC description in its LaSalle report of our meeting is absolutely false. I spoke in great detail and said my findings applied to all three sites. I emphasized problems at LaSalle more than Midland. I left my records with the staff that day, and more the next day.

Similarly, the July 19, 1982 RIII investigative report on LaSalle (IE Report No. 50-373/82-35) bears striking similarities to the Zimmer effort rejected last year at OIA. The only major difference is that this year RIII is talking to more witnesses before it relies on utility paperwork to reject their charges out of hand. That is particularly inappropriate when the same investigative report found falsification of paperwork on-site, a finding further confirmed by massive amounts of falsified Zack records relied on at LaSalle.

Specifically, GAP charged that RIII--

• • failed to take sworn statements from witnesses who had not already provided affidavits to GAP;

• • totally ignored issues that dealt with the causes of QA deficiencies at LaSalle, such as retaliation, fear of which prevented almost half of witnesses contacted from speaking to the NRC; and manipulation of the QA program through short-staffing, conflicts of interest, and advance warnings of QA inspections;

o

'{ The Honorable Nunzio J. Palladino July 26, 1982

• • redefined the issues it did cover by omitting key facts, such as the location of alleged deficiencies, making it easier to reject the charges;

• • rejected witnesses' allegations on .the basis of " independent" tests in fact controlled by the utility, as well as suspect paperwork;

• • manipulated the evidence by failing to include key facts in the report -- such as its finding that approximately half of reinforce-ment bars were damaged -- while concluding the plant is safe;

• • looked at woefully inadequate test samples on site, such as reinforcement bars on 9 drawings out of over 7000 relevant documents, or three mortar cores when literally tens of thousands of mortar blocks were suspect; and

• • failed to independently learn the full extent of problems that were confirmed, before it dismissed those examples as insufficient by themselves to pose a public safety threat.

The differences between old and new NRC investigations are cosmetic, at best.

In short, the RIII investigative report on LaSalle was a final opportunity to clear up serious safety questions before the plant began operation. The report failed . ~ answer the questions adequately at a critical moment. We are not conten/ .ng - that the LaSalle plant is' unsafe. - On the basis of this report, howeve e, the Commission cannot reasonably assure the public that it is. As a result, Region III's Office of Inspection and Enforcement should be replaced in the ongoing investigative ef fort on LaSalle and Zack. _OIA should investigate RIII's actions in' permitting the situation to develop this far.

Most significantly, the rush to begin operations at LaSalle should be halted until all the safety issues can be investigated thoroughly and resolved with realistic confidence.-

Our request for this drastic action is not intended as an. attack on individual RIII investigators, or Regional Administrator James Keppler. Mr. Keppler has attempted to upgrade investigative techniques. He also has taken the lead in tough public statements to improve utility QA efforts. Unfortunately, the performance has not matched the promises or the rhetoric. - The Commission must take strong action to uphold its regulatory mandate and to honor its public commitments.

sincerely, THOMAS DEVINE BILLE GARDE Legal Director Director, Citizens Clinic for Accountable Government Enclosures TD/BG/my L:

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1 On June 30, 1982, Jim Keppler called me relative to internal comments Y being made in Region III to the effect that there was so much empha' sis / pressure W- to couplete the licensing process of the LaSalle plant that certain allegations relative to LaSalle, and currently under investigation by

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i Regios';lIII, were not being properly investigated, i.e., the investigation Ad would! result in a " white wash." The above conversation was via speaker

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phonesith Messrs. Bert Davis, Fred Maura, 'and Frank Reimann also partic_ipating' in the conversation. Based on this conversati,on it was T clearJto me that Messrs. Reimann and Maura had conplained to regional

• ~- managment about the manner in which the investigation had been handled.

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" OIA lo'ok into the matter.

, .m On July.7 and 8,1982, I discussed this matter in person with Keppler,

[ DavistNorelius, Jackiw, Reimann and Maura and reviewed a good deal of the Region III paperwork associated with the inspection / investigation of 1 the LaSalle allegations. I also reviewed the transcript of the closed Commission meeting on the subject.

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