ML20081B760

Submits Revised Proposal for Providing Completion Svcs for Facility.Rev to Proposal,Originally Submitted on 821108, Responds to Commission 821122 Order to Show Cause.List of Independent Review Team Members Encl

ML20081B760
Person / Time
Site:	Zimmer
Issue date:	11/23/1982
From:	Reinsch H BECHTEL GROUP, INC.
To:	Dickhoner W CINCINNATI GAS & ELECTRIC CO.
Shared Package
ML20081B738	List: ML20081B760 ML20081B765 ML20081B768
References
FOIA-83-77, FOIA-83-A-13 NUDOCS 8310280224
Download: ML20081B760 (7)

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. Bechtel Power Corporation Engineers-Constructors Fdly Beale Street San Francoco. Caktorne .

Mall Address: P.o. Box 3965. San Francisco. CA 94119 November 23, 1982 Mr. W.H. Dickhoner, President Cincinnati Gas and Electric Company 139 East Fourth Street Cincinnati, Ohio 45202

Dear Mr. Dickhoner:

Bechtel submits this revised proposal for providing completion services for your W.H'. Zimmer plant. This revision to our. proposal, originally submitted on November 8, 1982, respor.ds to the Nuclear Regulatory Commission's Order to Show Cause dated November 12, 1982, and incorporates the requirements of the Independent Review of the Management of the Zimmer Project as outlined in section IV B (1) of that order. As requested, we have provided information regarding. _.

. Bechtel's independence from Cincinnati Gas and Electric (Appendix D) and our qualifications and experience in QA/QCsmatters which has been appropriately added to Appendix C.

Our proposal is organized as follows:

Appendix A describes the objectives and approach to the Independent Review of the project which is proposed for accomplishment under the Technical Services Agreement submitted on November 8, 1982. This review which we have designated as Phase i is currently in progress.

. Appendix B includes the resumes; of the Independe.nt Review Team members. _

Appendix C includes summaries of Bechtel's nuclear experience which, as'you know, is approached by no other company. We have added additional information describing Bechtel's capabilities and approach to managing p'roject quality. (pp C-4 through C-13) l Appendix D includes information affirming Bechtel's indppendence i from Cincinnati Gas and Electric and the Zimmer project.

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' tir.w.n.nickhoner Bechtel Power Corporation

, , Cincinnati Gas cnd Electric Company ,

November 23, 1982 Page 2 We are prepared to mobilize a' Quality ~ Assurance Audit Team to verify

. the adequacy of the quality of ' construction of the Zimmer project in accordance with Section IV B (2) of the above mentioned Order to

. Show Cabse. It is proposed that the team be headed by Mr. J.A.

Amaral who is Bechtel Power Corporation's Corporate Quality Assurance Manager. Mr. Amaral is on my staff and is responsible to me for overseeing and coordinating all bf Bechtel Power Corporation's Quality Assurance Programs. The team will include other Bechtel Senior Quality Assurance personnel selected from our various. divisions.. The Quality Assurance Audit Team will be -

separate from our Independent Review team. A more detailed,

.de.s.c.rin ion _o,f our_ plan and approach for such audit _yill.be forthcoming under separate cover.

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During 1982, fuel was loaded on six of our units. Work was deferred or cancelled on four additional units. With these completions and cancellations, Bechtel.is prepared to staff the Zimmer' project with nuclear experienced personnel in all aspects of project completion <

management. -

Bechtel remains committed to assisting Cincinnati Gas and Electric in the successful completion of the W.H. Zimmer Nuclear Station Project.

Sincerely, _ _ _

E'.O. Reinsch President 50R/lsw Enclosures' . .;

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- . . Appendix B

. Indeoendent Review Team Division Management -

W. G. Henry Project Operations -

G. 3. Jones

• R. K. Vassar (part-time)

Construction -

D. M. Stover

• C. Turbow Project Controls- -

R. Soderholm

. QA/QC -

R. L. Scott

• G. W. Stanley

• Code - Welding Inspection -

L. L. Campbell Startup Turnovers -

J. G. Walker (part-time)

. . Engineering -

R. L. Loos (part-time)

Document Control -

C. Rixford (part-time)

The survey team will be headed up by G. 3. Jones and'will report to W. G. Henry, Vice-President and Deputy General Manager of _the _.

Ann Arbor Power Division. '

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The resumes of full time team members follow.

, *Av'ailable for permanent Zimmer Project Team.

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%. Damonstration of Independence

,i In'the meeting of November 17, 1982, between Cincinnati Gas and Electric (CG&E), the Nuclear Regulatory Commission (NRC), and Bechtel, the NRC requested .that Bechtel demonstrate its independence

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from CGEE and the Zimmer project, utilizing the criteria established for the design verification program for Diablo Canyon.

The criteria to test the independence of the proposed companies for Diablo Canyon were listed in Chairman Palladino's response to Congressmen Dingell and Ottinger dated February 1, 1982. The most important consideration is the technical competence of the companies or individuals involved. Further, these parties were not to have had any direct previous involvement with the activities at Diablo Canyon that they we're to review. In addition, five factors would be e considered in evaluating their independence. These factors as appropriate to'CGEE and the Zimmer project are as follows:

1.* Whether the individuals or company had been previously, hired by CGLE to do similar work;

2. Whether any individual involved had been previously employed by CGLE (and the nature of empicyment); -

3 Whether the individual owns or controls significant amounts of CG&E stock; j 4. Whether members of the present household of individuals

' ' involved are employed by CGEE; and

5. Whether any relatives are employed by CG&E in a - -

management capacity.

Neither Bechtel Power Corporation nor any of the individuals directly involved in the Independent Review of the Management of the Zimmer Nuclear Project (see Appendix B) e have been previously involved in the Zimmer project , ,

e have been previously hired by CG&E to do similar work e have been'previously employed by CGEE , ,

e own or control significant amounts of CGLE stock

. e have present household members employed by CGEE e have relatives employed by CGLE in a management capacity In 1977-78 Bechtel performed a steam system evaluation study for ,

Dayton Power and Light, one of the owncts of the Zimmer Project. .

A W. In 1977-79 Bechtel performed a study of replicating four existing power plants for American Electric Power, one of the owners of the Zimmer Project. . _

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GOVERNMENT ACCOWTABlu.lY PROJECT . . .

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1901 Que Sueet. N.V.. Weshbgton, D.C. 20009 ,

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Mr. James Xeppler' . .

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• Regional Adr.u.nstrator, Region III -

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799 Roosevelt Road . .

Glen Illyn, Illinois 50137 j

Dear Mr. Keppler:

l At the January S,$1983 public meeting on Cincinnati Gas and.

Ilectric's (CGCE) proposal of the Bechtel corporation to -

administer the third party program at .the Zimmer nuclear power station, Region III counsel-Stephen Lewis requested that publie .

critics produce evidence for two serious challenges to the .

Bechtel nomination. Od behalf of the Miami Valley Power Project

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(MVPP), the Government Accountability Project (CAP) presents this -

response, as well,as. supplemental com=ents.

'More specifically, Mr. Lewis' challenged critics to produce

. e'vidence that Bechtel first arrived on-site at Zi=mer to begin

+- verk before Nove=ber 15, 1982 -- the date specified by CGEE and. - -

Bechtel for the latter's arrival. Seeend, Mr. tewis suggested - -

that we present the full scope .of financial conflicts-of-interest .

due to underwriting purchases of Dayton Power and Light stock by

. Dillon, Read'and Co., Inc., an investment co=pany wholly-cvned by. .

Bechtel since June.1981. . . ,.

During the last 'two weeks GAP has resea:rhed these issues '

diligently. We have obtained evidence that Bechtel has been on-site continuously at Zi==er since August 1, and after August 15 operated out of a double wide trailor that served as headquarters '

for its site team. Turther, a review of records at the Securities

• and Exchange Com=ission reveals that from 1973-82 Dillon Read has purchased at least $49,415,000 in bonds from t'he three utilities ,

- that own Zimmer, as well as 571,000 shares of stock. Turther, l Dillon' Read co-managed the sale of $80,000,000 in bonds and -

7,100,000 shares of stock for Colu= bus and Southern Ohio Electric -

(C30tE) between 1973-76. -

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I. BECHTEL'S ACTIVITIES AT iIMMER SINCE AUGUST' A. 'Backtround In public comments os CGEE's Nove=ber 26, 1982 nomination of' -

Bechtel', critics suggested that the latter's work for CGEE before the Co==ission's November 12 Order compre=ised Bechtel's ability .to make an independent. assessment of the safety hazards at Zim=ar and theii causes. Most co=menters refer.,:d to November 1982 co==unications

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, , .l The MVPR .co=m2nts went a step further:

,: ' betwsen CGEE and Bechtel.

" GAP has received reports since August of Bechtel tec=s on-site '

- at Zi.=cer to prepare .its 'verkplan. There is no qu'estion that developing a progra= to f:Lnish the planet] constitutes direct involvement with the Zir=er project, =enths before the Co==ission acted." (Dece=ber

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• 5,1982 letter from GAP to James Xeppler, at,6.)

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As a result of the public co

:=ents, in a Decei:ber 28,1982 letter t'o CGEE and Bechtel you raised a series of key qu'estions

ab'out the no=ination. In particular, your first inquiry was as

. follows:

- Please provide 'all docu=ents and a discussion of any oral understanding related to CGCE's plans to utilize Bechtel as described in your Nove=ber 10, 1962 letter to the NEC Co==issioners and12, activities 1982

' conte = plated in response to the Nove=ber

- Co==ission Order.. Include with this response a

• chronology of =eetings between CGLE and Bechtel and -

site visits by Bechtel e:ployees in connection with this effort.

.On January 3, 1983 CdEE President Willia = Dickhoner answered -

' . that -- on Nove=ber 2,1982 the utility contacted Bechtel and other firms; on November 5 Bechtel r.ade an initial presentation off-site; and between Nove=ber 15, 1982 and Dece=ber Si=ilarly, a Dece=ber 22, 1982 29, 1982 e visited the site on 16 occasions.

- lette'r frc= Bechtel Power Corporation Vice President and General

. Manager 'Howard Wahl fails to mention any site visits before Nove=ber 15, 1982.

The subject was discussed at the' January 5,1983 public

=eeting. In response to an inquiry whether Bechtel's failure to disclose the August visits would. constitute a =aterial false state-

=ent, Mr. Lewis explained that the early activities would have been

' within 60.)

the scope of the Dece=ber 28 question. (Transcri

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in the following exchange: .

MR. DEVINE: 'siell, as you know, since the plant was shut down, a lot of the witnesses have scattered around Sors of the best quality assurance . personnel the country. If I .

at Zi==er were laid off when work was suspended.

a= going to fly around the country and gather If Bechtel these affidavita -

I want to know if it = ekes a difference. .-

gave caterial false statements in response to your l

Dece=ber 28 letter, are you going to trust the safety of -

this co== unity :to their- judgment for the rest 'of the Zi==er .

j project? -I think the answer to tha't question is, if -

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KR. KEPPLER:

Bechtel responded falsely,'it will be treated as e. serious.

=atter,.yes.

'B. GAP Investigation '

After the January 5 . eeting, GAP . contacted a series of for=er l

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. k Zimmar c=ployees to confirm and clarify their earlier informal reports of Bechtel visits on-site since. August. Six witnesses reported that Bechtel had comm0nicated with CGGE or arrived on-site before November 198'2. Tive of the witnesses were working at Zimmer when th'e Commission issued its November'12 Order suspending all safety--

related ' construction. ' one' witness provided an affidavit, whi'ch

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is enclosed as Exhibit 1. In his disclosure the witness reported that he had confirmed the accuracy of his statement with four other ex-Zimmer employees, who had agzwed to speak with the Federal Bureau of Investigation (TBI). Tour of the five witnesses contacted -

by GAP who did not pmvide affidavits stated that they would speak

. with the Tederal Bureau of Investigation or the NRC's Office of -

Investigations. , ,

i Taken in combi. nation, the Zimmer withesses pm vided the,following

, infomationr -

1) On August 1 a team of Bechtel employees .~ arrived on-site at Zinner. . They enteped through the north gate. The Bechtel '

team wore visitors passes the first day at the plant, although the passes were.not seen. subsequently. ,

2) The witnesses initially identified thf team with Bechtel,

- . - because the ma-kers wore suits emblar.oned with the Bechte.l. logo.

- Alth' ough the team members were CGEI hardhats the first dep, -

they later switched to Bechtel hardhats. One team member stated that the gmup was fmm Bechtel.

. 3) The 'Bechtel team was on-site continuously from August._1 . _.

- !at least thmugh the Co= mission's November 12 Order. Initially, there were six Bechtel representatives. The team later increased .

to eight, and eventually to at least .12 me=bers at the .-

ti.ce of the shutdown. '

• i) Tor the 'first two weeks the team worked out of the " head . .

shed" -- the main building for all construction managers. On Approximately August 15 a double wide trailor was installed for the

' team. The location of the trailor is circled on a copy of an aerial photo enclosed as Exhibit 2. . The team me=bers were seen entering and leaving this trailor, which was not marked with the corporate -

seal. -

l 5) A me=ber of the Bechtel team state'd that the group was l -

there to do a study of code co=plience and accountability, to see -

if the plant could be completed feasibly within normal quality assurance (QA) req'uirements. They were to sub=it a report to CGSE Vice President Earl Borgmann. The same representative stated that Bechtel had a team of 200 employees .on stand-by to come in for a largei- >

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pmject. A Bechtel . executive in charge of construction at Midland was

! slated to run the 2immer audi~t. .

6) Bechtel's work at zi=mer was widely known and. discussed among e=ployees on-site, who believed the fim was being eased in to' replace the Kaiser Corporation. Only two of six' GAP witnesses .

personally saw specific Sechtel identification, however. , ,

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7) One witness reported in an affidavit that in late . August or .

early September NRC Resident Inspector Fred Christiansen stood -

beside Bechtel representatives to observe work on a hanger. ,

In light of the NRC staff's previous failure to recognize the -

scope of Z M er quality assurance violations until pressed by whistle .  ;

. blowing disclosures, the last allegation is particularly disturbing. - .

Overall, yo6 have stated that if verified these charges are very. serious. In our opinion, these findings independently

, randate that you reject the Bechtel proposal, 'or at least .

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withhold appmval until pboper authorities can investigate what .

we believe are material false statement's in response to your

.Dece=ber 28, 1982' letter on the Bechtel nomination. Further, if CGSE

. provided misleading or inaccurate 'statenants to support the Bechtel nomination, it should be' disqualified from ' caking future nominations.

S,urely, an " independent" third . party cannot pmvide an " objective"

- evaluation of the same type issues that it has been working on secretly i for CGEI'since August -- over three months before the.NRC-imposed i

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shutdown. It is not likely that the public will have confidence .

'H in eventual third party conclusions, either,-if the initial selection process is tainted by deception. .

II. FINANCIAL CONTLICTS-0T-IhTEREST -

At the January 5 =eeting, Phil Amadon, Chair an of the Coalition for Affordable and Safe Energy -(CASE), reported that Dillon, Read -

and Co. , a wh'elly-owned Bechtel subsidiaiy, acquired $1.5 million in I bonds in 1982 from Dayton Power and Light (DPEL), one of the Zi=mer- '

owners. Mr. A=adon observed, "[I3f our city council people a'e r responsible enough to remove the=selves from voting after dealing with CGEI stocks, we think it right be reasonable to ask Bechtel., i

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which wholly owns Dillon and Reed [ sic 3, to remove the=selves from auditing a plant in which they have some financial interest...."

(Transcript, at 51".) Mr. Lewis requested that any more co=plete research  :

be sub=itte'd for the record. (Idt, at 51-2.) -

GAP has checked Standard and Poor's listings to confirm that

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I Dillon Read is a Bechtel subsidia:,r. In a January 19, 1983' tele- '

1 4 phone. conversation,- a 'Dillon Read representative informed Mr. -

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. A=adon that Bechtel acquired the investment firm in June 1981. l

.~ GAP has researched a wide sample of utility SEC disclosures back to 1973. Put sir. ply, the firm has an active history as an

. underwriter for all three utilities which own ZMer -- CGSE, DPEL- ,

and CESDE. On balance, Dillon Read participated in purchasing

$129,415,000 in bonds and 7,571,400- shares of stock between 1973-82. Included in this total are $80,000,000 in CESOE bonds and 7,100,000 shares of CESOE stock for which Dillon Read served. jointly with the Ohio Company as managing underwriters. Since June 1981 .

Dillon Read has purchased $15.440,000 in bonds and 130,000 shares of .

stock. Statistical su== aries.for relevant SEC reports are enclosed '

as Exhibits 3A-3C, respectively. .

This nsearch establishes a financial conflict-of-interest. ,

Mr. Xeppler Pcga 5

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• A subsidiary of the "independant" judga of Ziz:::nar traditionally has purchased and traded significant a: cunts of stock for uti.11 ties that ~own the Zim:mer plant. .In light of the potential ~ financial consequences fmm an,aggitssive audit and quality verification plan, Bechtel forfeited i'ts objectivity for a job' at Zi=mer when it purchased Dillon Read in 1981. . f. .

, The .research als'o is significant with: respect to the NRC's own finan'cial independence criteria. A literal reading of the Commis- ,

l sion's' independence criteria reveals .that conflicts due. to ownership or control of significant amounts of stock only apply to individuals, - ." <

not corporations. As the Bechtel case indicates, the omission create's:

a gaping loophole that could taint any third party review. I C. SUPPLEMEhTAL COMMEhTS 1 I

A. Competence. .  !

q At the January 5 meeting you were unicpressed that Bechtel . ~.  !

, had to lay off over 1,000 e=ployees at the Eidland site foy a ~

l quality assurance breakdown -- less than three weeks after the . l Zim=er' shutdown. Similarly, you were not impressed that Consuders Power ' Company previously had sued Bechtel for "gmss negligence" -

in constructing the Palisades plant in Michigan, or that Bechtel .!

settled the suit instead of contesting it. Reports of falsified .

- QA recor'ds and inti=idation of quality contm l inspectors during ..

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Bechtel's construction hf the Alaska pipeline. did not faze,you.,

Instead; you explained that "if you take a critical look at the _ ._

p'erfor=ance of almost anybody in the . nuclear industry, you can -

find there are jobs that have been done very well and there are jobs that have not been done so well." (Transcript, at 128.)

L GAP strongly believes that this evaluation' standard is .

. irresponsible. Tne third party chosen to, evaluate the Zir:er QA breakdown will have an enor=ous responsibility. Fundamental breakdowns in Bechtel's QA pn:>gra=s cannot be brushed aside ,

merely because. all organizanons have proble=s. That is precisely .

why a nuclear construction fir = should not be selected to evaluate construction at another nuclear plant, and why CGEE should be required to prove that any alternative. choice has an unsurpassed .

record for quality of its audits and other qualiti assurance / quality control work. Even if there is a five out of six chance that Zim:ner is one of the jobs that Bechtel does "very well," that is no better odds than playing Russian Roulette with public safety. .

B. Intolerance of Bissent . - -

After the history of retaliation, intimidation, and vindication

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of whistleblowers at Zimmer, it- is essential that any third party. '

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Mr. Kappler Page 6 has legitimacy with those who have challenged QA violations.

As stated at the Jan'uary This would not be possible with Bechtel.

• 5~ meeting, if the gag order in Bechtel's standard e= ploy =ent contract

. .had been enforced at timer, the problems at the plant would have -

- gone undetected._. ,

Second, the gag order reveals Bechtel's institutional int ance of dissent.

industry, any employee who works cooperatively with the third party'

. will ri sk pro fess ional suicide within the industry. ..

MVPP believes that the Bechtel nomination should be rejected due to a lack of independance, financial and f&nctional conflicts of interest, 'an insultingly deficient audit plan, an erratic track record and a history of internal repression. Even if you .

are not ::oyed by these deficie.ncies, we urge you tt leest to Withhold judpest until the allegations of misleading or false , ,

state.oents are resolyed. - ,

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Sevtibe- 2 , 1962 MEMORANDR TOR: Region III Files TROM: Stephen E.' Lewis, Regional Counsel, Region III

SUBJECT:

NOVEMBER 17, 1982 MEETING OF KEGION III VITH CINCINNATI GAS & ELECTRIC AND EECHTEL REGARDING CLI-82-33, "0RDER TO SHOV CAUSE AND' ORDER IMMEDIATILY SUSPINDING CONSTRUCTION".

To11owing the Commission's Neve ber 12, 1982 order suspending safety-related construction at the 21e.mer plant and directing Cincinnati Gas & Electric Co=pany (CG&E) to undertake certain actions p f or to NEC consideration of resumption of safety-rels ed construction, caetings were held on November 17, ~

1982 in Cincinnati between NEC Region III and CG&E and among Region III, CG&E s and the Iechtel Ann Arbor Pcver Division (AAPD). The purposes of the meetings ,

we're to expJain the order and discuss CGSE's planning for implementation. The Region met with CGSE alone in the morning and with CGSE and AAPD together in the afternoon. Participants in the morning meeting were:

CG&E Villiam Dickhoner, President

} Earl Borg= ann, Vice President _ _ _

Villiam Moran, General Counsel Mark Vetterhahn, Outside Counsel -s s

NRC, Region III -

James Keppler, Regional Administrator Robert Varnick, Director, Office of Special Cases l-

.Dorwin Hunter, Section Leader, Zimmer Section, Of fice of Special Cases Stephen Lewis, Regional Counsel N l .

Joining the 'above participants for the af ternoon meeting were:

Howard Vahl, Vice President and General Manager, AAPD

! Sill Henry, Vice President and Deputy General Manager, AAPD George Jones, proposed Project Manager for APPD work at Zim=er Mr. Keppler opened the meeting with a discussion of the considerations which led'so the issuance'ci the Commission order. He noted that the Consission and staff were par.fcularly concerned about rework growing out of the Quality Ccnfirratier, Program (Q:P) being undertaken prior to cc=pletion of all of the reic.snt QCP Tr.sks. , ,

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Mr. Dickh'ener described steps : hat had been undertaken by CG&E, both before and af ter the crder, with res;ett i Jicser construction. He stated that perso .nel et the site had bee'n furtheY sut.back, and that there were now a.;;roxi=ately 700 people at the -site, of whom 200 were craftspersons. The Q P is, h vever, continuing. Ea advised that the CG&E Board of Directors c -tu:d be cesting on Nove=ber 18, 1982. He complained that CG&E has not

• always been provided copies of allegations sent by GAP to the NRC.

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.XRC participants stated that 'CGLE vould have to receive the Resfonal Ad=inistrator's approval of the independent entity selected to conduct the reviev of CG&E's hanagement sf the Zinner project (Paragraph IV.B(1) of the order). CGLE advised NRC'that prior to the order it had already arranged s

for AAPD to cenduct a reviev of CG&E's management of the project and that AAPD had'cosmenced its review. NRC advised CG&E that we would not prevent AAPD from continuing with this review, but that CG&E was proceeding at its own risk until the Regicnal Ad:inistrator has approved the selection of ~

AAPD. That approval determination vould be based upon a written submission fro:n CG&E'to the Regional Administrator setting forth: (1) AAPD's cap-abilities to perform the canagement ' review, (2) whether AAPD (and 3echtel, "

't generally) has the necessary independence of CG&E (e.g., whether Becht'el has perfer:ed verk, and if so .of what type, for CG&E), and (3) the nature*of the reviev 'that AAPD would undertake under Paragraph IV.B(1).

Paragraph IV.B(2) of the order was discussed. NRCe=phasizedthatthequalith-f, verif.f cation plan could'be sub=itted only after the Regional Administrator had

[approvedtheCG&Erecer.rendationsregardingetnagementoftheZicerproject

. .(Paragraph IV.3(1)(b)). NRC clarified that we vould expect CGLE to use -an - _.

outside entity (a, AAPD) in preparing the plan for verification of plant quality. That outside entity should be free' to conclude that the QCP is insufficient t.o verify the quality of construction of the plant. CG&E

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indicated that it was their present intention to use the services of AAPD in the.prepara' tion,of the comprehensive quality verification plan (and in the

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construction management of the facility). The staff stated that the order did i

.not preclude' the use of the saoe outside party to perform the canage=ent revied,

• and'to assist in the preparation of the qua)ity verification plan. CG&E also ~.' '

inquired whether the order would preclude the use of AAPD as the entity per- .. .

forming the adit to verify the quality of ccnstruction (Paragraph IV.3(2)(a)).

The NRC stated that the order vould not preclude the use of AAPD as the auditor, inasmuch as AAPD "did not perfore the activities being atidited." ,

% 3 The NRC ahee'd that the review under paragraph IV.3(1) was to be focused on caneremer.f of the Zicmer project inc3uding its QA program and quality verifi-cation program, and was not intended to be a review of the centent of the QCP.

Tn e - eview of the content of the QS was to be part of the preparation of the cceprehensive plan under Paragraph IV.5(2)(a).

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The NRC advised CGSE that the quality ver:fi:stien audit under ~ l

• aragraph 1,V.B(2)(a) was not to be confused with the independent verification j

. uf design adequacy (typically conducted .by reviewing.a " vertical slice" of the 1 plant), ,which would be required of CG&E at some later date prior. to any' issuance of an operating license for the f acility. .

paragraph IV.B(3) .of the order was discussed. NRC stated that if CGSE

~

sought to have the order " relaxed" to permit the resumption of certain safety-related construction activities, it would have to demonstrate to the Regional Administrator that any work sought to be permitted: (1) is not related to any quality verification concerns which have been raised -

and (2) will include adequate controls. .

The NRC state'd that if CG&E should determine that the facility will not be able to meet any applicable codes and standards, it should proceed promptly .

to propose to the NRC alt'ernative eng'ineering bases for demonstrating acceptability. Any consideration of deviations from the ASME Code would have to involve the cognizant Code Committees and the National Board of

- Boiler and Pressure Vessel Inspectors. ,

,r. Dichhoner requested that the NRC be prepared to act promptly on any request CGSE might file for permission to proceed with identified ccnstruction activities. Mr. Keppler indicated that NRC would give high priority to any such request and would seek to act on it as pro =ptly as -

pessible. .

t-CG&E asked for an early ceeting with Region III on the September 24, 1982,_ _

" Demand for Information" issued under 10 CFR 550.54(f) with respect to " Miami Valley Power Project's Petition to Suspend Construction of the Zimmer Station,"

dated August 20, 1982. The purpose of the meeting would .be. to clarify the

" Demand." [The requested meeting was held on Nove=ber 22, 1982.)

CG&E advised the NP.C that it will shortly send the NRC a letter advising of certain activities which it believes are not proscribed by the orde'r and asking for the Regional Ad=inistrator's concurrence that CGLE may continue

.with these activities. { A: letter was sent on November 18, 1982 and a revised le*ter on Nove=ber 22, 1982.]

In the afternoon, AAPD joined.CGSE and the NRC for discussions. The focus of the meeting was on the following areas:

. 1. CGSE should be sensitive to NRC's - concerns with AAPD's performance at Midlend and should reflect in the document submitted with respect to approval of AAPD the c.apabilities of AAPD to assess ef f ectively CG&E's management.

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2. The NRC advised AAID that, if seier.ted to conduct the review of CG&E ma.nage=ent, it should feel free 'to discuss catt.ers eith respect to this review directly with NRC, pithout having to go through CG&E. -

3. The NRC e=phasized that AAPD, if selected, should consult with the Authorized Nuclear Inspector, the National Board of Boiler and Pressure Yessel Inspectors and other entities involved in assessing the adequacy of construction of the Zim:ner f acility.

'AAPD e=phasized to the NRC that it would strive for open ce==unication among itself, NRC, and CG&E. If AAPD is retained to assist CG&E in canagement of construction of the f acility, AAPD would normally . expect to discuss its findings with CGLE before bringing them to NRC's attention.

AAPD hopes to complete its initial assessment of CG5E's canagement and to , .

make recommendations to CG&E vithin three weeks. It is already on site and has begun its' review.

Mr. Keppler stated that the. NRC intends to hold meetings that would be open to the public at appropriate stages in the implementation of the order.

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Steph n H. Leeis

- Regional Ccunsel 1 ,

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9.ESTP l (fpp g Attention: Mr. J. G. Keppler Regional Administrator 5L  ! F .

GL -FILE Wj RE: Wm. H. Zimmer Nuclear Power Station Unit 1 "

Order to Show Cause and Order Immediately #

Suspending Construction, Docket No. 50-358, Construction Permit No. CPPR-88, W.O. 57300, Job E-5590

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. Gentlemen: ..

This letter responds to Section IV.B.'(1) (a) of the Order to show cause and Order Immediately Suspending Construction (CLI-82-33) in the captioned proceeding which requires that the independent organi-zati6n conducting the review of the CG&E ranagement of the Zirraer project be acceptable to the NRC Regional Administrator. Prior to the issuance of that Order by the NRC', it had become~ apparent to us~that -

arriving at solutions to the various problems on the Zimmer project had been a much slower and complicated process than we anticipated even after the IAL and NOV were issued and that a fresh approach was necessary.,

Accordingly, we had concluded that some additional project management and problem-solving expertise should be' brought to bear upon the Zimmer project.

- Several outstanding and experienced architect-engineering firms were,. contacted for providing these services. One management consulting firm who has significant experience in the nuclear field was also considered. One of the architect-engineering firms was eliminated from serious consideration because of its not being sufficiently indepen-dent from the Company, utilizing criteria similar to those set forth by ther NRC in its letter of February .1,1982, to Congressnian Ottinger.. We solicited proposals from the other three firms for providing the type of ' expertise needed to assess the status of the project and then toThese com.plete it in full compliance with all applicable requirements.

proposals were analyzed by us and a determination made that the Bechtel Power Corporation was best qualified to meet the needstof the Zimmer>

project. -

InmyletterofNove[nber 10, 1982, to the five Commissioners, I set forth a proposed program for improving our construction and quality assurance programs, utilizing the Bechtel Power Corporation as a manage- -

ment, quality assurance and construction consultant. _

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, , Attention Mr. J.,G. Keppler Page 2 -

November 26, 1982 On November 12,'1982;'dhe subject Order to Show Caus'e and Order Immediately Suspending Construction was issued, whi'ch set forth a program for the Company to. follow in order to resume safety-related construction activity at Zimmer. That program parallels the program set forth in my letter of November 10, 1982, and we believe that the selection'rocess p utilized in selecting Bechtel for our proposed -

program is also valid for selecting the independent organization to address the requirements of IV.B. (1) and (2) of the NRC Order of November 12, 1982.

Based on our review of'the proposals submitted to us and on the experience and qualifications of the companies involved, we have determined that Bechtel fully meets all NRC requirements while at the'same time is best qualified to meet our needs at Zimmer. The management consultant was eliminated from consideration because techni-cal expertise as well as management ability is needed in these final stages of completion. Each of the companies we interviewed had out-standing credentials in specific areas, but the Bechtel Power Corporation had outstanding credentials in all reviewed areas of expertise needed for the successful completion of Zimmer and had a pool of individuals having expertise in a number of areas who could be drawn upon as neces-sary, as well as having complete independence from our organization'.

~

Enclosed for your review is a proposal from the Bechtel Power Corporation dated November 23, 1982, which sets forth the mapner ~

- in which it meets the requirements of IV B (1) and (2) of the Neverber 12, 1982 Order. We believe that a review of Appendix B of the proposal attests to the quality and experience of the team that Bechtel brings to the Zimmer project. Appendix D demonstrates that Bechtel completely meets the independence requirements of a consultant as set forth in Chairman Palladino's response to Congressman Otting,er dated February 1, 1982.

I don't need to dwell on Bechtel's nuclear experience, which is a matter of~recorde but I would call your attention to Appendix C which reviews the Bechtel quality program. Bechtel admittedly has had

. some problem's with Region III oni the Midland Project, but we believe that the summary of quality program enhancements set forth in Appendix B will

indicate to you, as it does to us, that the present Bechtel program would

( preclude similar problems at Zimmer.

In summary, we believe that the Bechtel Power Corporation is ,the best qualified c'onsultant to solve the unique problems at Zimmer l .

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- Page 2 November _26, 1982 i

and to fulfill the requirements set forth in Sections IV.B. -(1) and IV.B. (2) of the NRC Order to the Company, dated November *12,1982.

- We hereby request your approval of Bechtel Power Corporation as the independent reviewer to fulfill the requirements of the Order.

Yours very truly THE CINCINNATI GAS & ELECTRIC COMPANY

- m By

- W. H. Dickhoner Enclosure e

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.I The Cincinnati Gas & Electric- ) Docket No. 50-358

=N Company, et al. ) Construction Permit-J ) No. CPPR-BB 9 (Wm. H. Zi=mer Nuclear Power )- '

,( Station) ) -

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.d APPLICANTS' ANSWER'TO SHOW CAUSE ORDER -

'N AND ORDER IMiEDIATELY SUSPENDING CONSTRUCTION

-Q .On November 12, 1982, the Nuclear Regulatory Co==ission N

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("NRC" or "Co-4 ssion") issued "An Order To Show Cause And I-D -

,y Order Immediately Suspending Construction" - (" Order , To Show

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g] Cause") in the captioned proceeding. The drder to Show d Cause reviewed matters relating to the construction of the

] Wm. E. Zirser' Nuclear Power Station ("Zirmer Statio'") n which "l

3 formed the basis for the NRC's action.

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In addition to immediately halting safety-related ne '

construction activities, including rework of identified

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l l- deficient construction, Section IV of the Order To Show 1'

l1 Cause required that a number of specific steps be taken 1

!? f 7 :. prior to authorization by the Regional Administrator for l

1.' resumntion of the halted work. These included an ih .

independent review of the management of the Zirmer projecr, lW i

' ,1 the submittal of an updated co=prehensive plan to. verify the A, .

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?covl 821207 PDR ADOCK 05000358 c Poa DEC 161982 -

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construction and the submission of a

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3 Section V of the Order to. Show Cause described the r.

alternatives for responding to the Comission's action. By e

.j this answer, Applicants state that, as provided for in 10 j

.i C . F .' R . 52.202 (d) , they are ' consenting to the requirements

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,,j proposed in Section IV of the Order To Show Cause, 7:;) recognizing that, upon such consent, the terms of Section q.,

IV.B'become effective.

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Thus, Applicants specifically state a

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that they are not requesting a hearing en the Order to Show w .

j Cause. Applicants have already taken the first step towards 5 compliance with the requirements of Section IV.B of the Y-4 Order To Show Cause. On Nove=ber 26, 1982, Applicants j' submitted documentation to the Regional Administrator in

'1

3'. support of their selection of Bechtel Power Corporation to O,k, e -w es .

9 -

act as the independent reviewer of the management of the d .

dj project. ,

%:i b'hile Applicants are now firmly co=itted to carry out

the requirements of the Commission's November 12, 1982 Order

.; and to take all other steps necessary to complete the l

l, construction of the Zim=er Station in a quality manner,

[.] ..

nothing herein should be taken as an admission that any of -

. the factual assertions or conclusions in the Order to Show -

i j Cause is true. Thus, Applicants do not agree that there has

.,- been a " widespread breakdown in CG&E's management of the n

!M Zirmer project . . . (page 1) or that "CG&E paid a civil t .i* -

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)./, penalty of S200,000 for the failure to i=plement an

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f. acceptable cuality assuranco program . . .

(page 2),

,cd ., Applicants also note their concurrence with the dissenting

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,[ views of Commissioner R,oberts, whose analysis of the r.

",j sitiuation parallels to a significant extent their own.

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Thus, actions which the Company had already taken to i= prove

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'the quality assurance program prior to issuance of the Order I-

. to Show Cause and matters which have been brought to li,ght a by the implementation of these efforts are seemingly cit'ed k(

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' J. , . by the Commission as a basis for its action ,- thereby

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m n .j . penalizing the Applicants, in effect, for such corrective

'1 .- actions. The mere determination that deficiencies have been e ~

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identified by the Applicants during the conduct of their

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',if,~; Quality Confir=ation Program and other quality reviews and

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..s.r reported to the NRC pursuant to 10 C.f.R. 5 5 0. 5 5.(e) were e

>f3 therefore inappropriately used to support the NRC's action.

h idy . Whether earlier i=plementation of a better quai-ity

g-a assurance program would have obviated the need for reporting

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3;;y such deficiencies is truly . irrelevant. The fact that such

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deficiencies are being reported shows the willingness of the h Company to comply with NRC regulations and to publicly

. identify their findings. Such identified deficiencies will e

be corrected through the mechanisms provided by the quality h.f assurance program and, of course, their resolution will be o.:y f reported to the NRC.

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It should also be noted that a number of the listed items on pages 4 through 6 of the Order To Show cause were

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abundancQ of caution', were identified to tha NRC as

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.c Dotentially reportable. Certain of these turned out to not

., ] be . reportable under that Commi ssion reculation. Of the 21 -

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s" items on those pages, 5 have been found to be "repcrt.able,"

d4 2 were ultimately determined to be "non-reportable" by the d -

f Applicants, 'and 14 are still presently categorized as only

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-4 "potentially reportable." .

el f,T Similarly, the fact that the confirmation program n

[z'j reviews have identified 4200 non-conformances shows that

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N quality programs are working, not that there is any

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.! continuing breakdown in the quality assurance program.

2

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M Again, many of the remaising matters discussed in Section III have been identified by the Applicants and, - in all 2 cases, the Applicants are working towards a solution

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if ' acceptable to the NRC. -

'.9 LN Further= ore, even if such matters watrant an order to -

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M show cause, there is little therein to support an immediate bS.

halt in construction. There is absolutiely no hazard to

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, .] public health and safety from continued construction of the

-; plant, particularly given the demonstrated effectiveness of i the Quality Control program and Quality Assurance Program.

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t Applicants believe that this action in stopping construction -

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l" shewing of an i==ediate threat to the public

. without any

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health and safety has set 'an unfortunate precedent which has 1%

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the potential for causing unintended results- in many areas d

( f; within the Co= mission's field of'egulation.

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- -] Nevertheless', inasmuch as the NRC's action of 1

2 i= mediately halting construction is such as to not leave

.2 Applicants an. adequate alternative and Applicants,. desire to

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{ move forward towards completion of the Station, Applicants 3

have c'onsented to the action required.by Section IV.S.

4 As

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• po:.nted out by Co==issioner Roberts, a' request for a hearing

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/,I by the Applicants is really not viable in terms of schedule g . . . ,

E. or expense. Applicants would expect that their assent to e .

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• 1 this Order will permit them to concentrate on completion of r4 .

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. .l. the Station and would not at some time in the future be Q.j cited as justification for reconvening an evidentiary ,

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Trl . proceuding on this =atter.

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Conclusion S

kj Applicants consent to the provisions proposed in d ~

j Section IV of the Order To Show Cause. . _.

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Respectfully submitted, n!.

'?, . CONNER & WETTEREAEN, P.C.

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, Mark J. Wetterhahn Counsel for Applicants M December 7, 1982

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UNITED STATES OF AMERICA

• 4 NUCLEAR REGULATORY COMMISSION c.

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, In the Matter of )

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1 The Cincinnati Gas & Electric ) Docket No. 50-358 -

,j Company, et al. )

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(Wm. E. Zimmer Nuclear Power )

.1 Station) . )

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,,] CsRTIFICATE OF SERVICE ,

I hereby certify that copies of " Applicants' Answer to

-.: Show Cause Order and Order Immediately suspending Q Construction,". dated December 7, 1982, in the captioned

.3 matter, have been served upon the following by deposit in

. the United States mail this 7th day of Dece=ber,1982:

.c j Alan S. Rosenthal, Chairman Dr. Frank F. Hooper J Atomic Safety and Licensing Chairman of Resource

,1 Appeal Board Ecology Program,-

'T U.S. Nuclear Regulatory School of Natural fj Co= mission Resources

'.,, Washington, D.C. 20555 University of Michigan - .

Ann Arbor, MI 48104 Stephen F. Eilperin y Atemic Safety and Dr. M. Stanley Livingston

.. Licensing Appeal Board Administrative Judge

..y .U.S. Nuclea.: Regulatory 1005 Calle Largo

Co= mission Sante Fe,*NM 87501

., Washington, D.C. 20555 Chairman, Atcmic Safety Howard A. Wilber. and. Licensing Appeal I Atomic Safety and Board Panel

} Licensing Appeal Board U.S. Nuclear Regulatory j U.S. Nuclear Regulatory Co==ission .

.) Co= mission Washington, D.C. 20555 4 Washington, D.C. 20555 i Chairman, Atomic Safety Judge John E. Fry e., III and Licensing Board

' .[ Chairman, Atomic, Safety and Panel j Licensing Board '

'7.S. Nuclear Regulatory y, U.S. Nuclear Regulatory Commission Corm 4 s sics Washington, D.C. 20555 C].z-Washington, D.C. 20555 s

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. . . Charlos A. Barth, Esq. David K. Martin, Esq.

d's Counsel for the NRC Staff Assistant Attorney General *

.j ., Office of the Executive Acting Director

'g. Legal Director Division of

. U.S. Nuclear Regulatory Environmental Law y/3 Co= mission Office.of Attorney Genera 2'

'I -. Washington, D.C. 20555 209 St. Clair Street y . Frankfort, Kentucky 40601

. Deborah Faber Webb, Esq.

,;] 7967 Alexandria Pike George E. Pattison, Esq.

a Alexandria, Kentucky 410.0.1 , Prosecuting Attorney of

• $8 Clermont County, Ohio

". Andrew B. Dennison, Esq. 462 Main Street j.) '

Attorney at Law Batavia, Ohio 45103 .

200 Main Street .

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-j Batavia, Ohio 45103 William J. Moran, Esq.

vice President and dj

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Lynne Bernahei, Esq. General Counsel Government Accountability The Cincinnati Gas &

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. Project /IPS Electric Company-1901 Q Street, N.W. P.O. Box 960 7]

'g Washington, D.C. 20009 Cincinnati, Ohio 45201

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John D. Woliver, Esq. Docketag anc Service

[Y Clermont County Branch Office of the

'f.] Com= unity Council Secretary U.S. Nuclear -

<a Box 181 Regulatory

.3 Batavia, Ohio ,45103 Co H ssion

T Washington, D.C. 20555 Brian Cassidy, Esq.

Stephen E. Lewis, Esq.

,: Regional Counsel fy Federal Emergency ,

U.S. Nuclear Regulatory Management Agency Commission

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Region I Region III ed John W. McCor=ick POCH 799 Roosevelt Road 02109 Glen Illyn, Illinois 60137

( Boston, MA 1

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Robert M. Rader l b f cc: Robert F. Warnick .

'] Director, Enforcement

and Investigation NRC Region III

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. T: Glen Ellyn, Illinois 60137 1

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