ML20090A683

Brief on Appeal from Partial Initial Decision Re Util Character & Competence.Certificate of Svc Encl

ML20090A683
Person / Time
Site:	South Texas
Issue date:	07/08/1984
From:	Sinkin L Citizens Concerned About Nuclear Power, INC.
To:	Atomic Safety and Licensing Board Panel
References
OL, NUDOCS 8407120077
Download: ML20090A683 (101)

Text

,

i (9' 00';KEIE0 UNITED S TATES OF AMERICA '

NUCLEAR REGULATORY COMMISSION ESEDEE_IHE_8IQUIC_S6EZIY_80Q_LICENSidG_6EEE834gQBGQj p0 :k7 In the Matter of (

)

HOUSTON LIGHTING AND ( Docket Nos. 50-498 OL POWER COMPANY, ET AL. ) 50-4(?9 CL (South Texas Project. (

Units 1 and 2) (

e r

CITIZENS CONCEPNED ABOUT NUCLEAR POWER, INC. (CCANP)

____BBIEE_GN_@EEE8L_EBOM_E8RIl6L_INIII6L_DECISigN____

Lanny Sinkin Craig Jordan, Michael Hall.

Margaret Burns Representatives for Intervenor, Citizens Ccncerned About Nuclcar Power, Inc.

114 W. 7th, Suite 220 Austin, Te::an 78701 (512) 478-7197 4

Of Cotin sel : Robert Hager, Esauire

$ Christic Institute 1324 North Capitol Street Washington, D.C. 20002 (202) 797-8106 July 9, 1CS4 8407120077 840708 PDR ADOCK 05000498 0 PDR

_b x_

IBELE DE CONIENIS INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . i I. ISSUES . . . . . . . . . . . . . . . . . . . . . . . 1

, A. The central issues in this proceeding arise at the direction of the Commission. . . . . . . 1

. B. The parties engaged in.a lengthy dispute as to the intent of the Commissioners expressed in 12 NRC 291 . . . . . . . . . . . . 3 C. The PID ignores the issues as presented by the Commission and initially formulated by the parties . . . . . . . . . . . . . . . . . . 4

1. Throughout the PID, the ASLB blurs the distinctions between the issues and the topics of concern, so that the Commission directive to consider whether there exist " independent and sufficient" grounds for license denial is avoided . . . . . . . . . . . . . . . . 4

a. The ASLB offers a confusino presentation of the issues . . . . . . 4

b. The confusion on the issues found in the PID results from an unwarranted and incorrect ASLB interpretation of both the law and the Commission's intent . . . . . . . 7

c. Having erred'in its interpretation a of the law and the Commission's intent, the ASLB proceeds to render an opinion and make

, findings of fact on issues defined for the first time in the PID itself . . . . . . . . . . . . . . . . 9

d. CCANP's understanding and formula-tion of the issues preserves the intent of the Commission, and is called for in this case . . . . . . 11 II. COMPETENCE . . . . . . . . . . . . . . . . . . . . . 12 A. The ASLB's formulation of comoetence is far broader than the Commission envisioned . . . . . 12

. TABLE OF CONTENTS continued B. Applicants violated the ASLB's own standard of competence far more pervasively than the ASLB concluded . . . . . . . . . . . . . . . . . 13

_, C. The ' level of incompetence demonstrated by Applicants is an " independent and sufficient basis" for denial of the operating license . . . 13 D. The record of Applicants' incompetenca reflects on their character . . . . . . . . . . 14

.III. INEXPERIENCE . . . ~ . . . . . . . . . . . . . . . . 16 A. Inexperience was a significant characteris-tic of the STNP effort from its inception . . . 16 B.1The ASLB uses " inexperience" too broadly and thereby fails to adequately explain Applicants' failures . . . . . . . . . . . . . . 17

1. At the time the NRC finall'y discovered what was really going on at STNP, the key personnel for HL&P had been in place.for years . . . . . . . . . . . . . . 17

2. Harassment of OC inspectors is not, contrary to the ASLB's position, explained by inexperience . . . . . . . . . 18

3. Contrary. to the ASLB's positLon, Applicants' long-term failure to take decisive action regarding the inability

~

of its prime :ontractor to perform is

= not explained ny inexperience . . . . . . . 18

4. The failure of HL&P to perform audits -

, 'of B&R is not explained by inexperience . . . . . . . . . . . . . . . 19 C. The ASLB f ailed to come to grips with the obvious implicatio.,s of the " inexperience" conclusion . . . . . . . . . . . . . . . . . . . 20 IV. CHARACTER . . . . . . . . . . . . . . . . . . . . . 22 A. The ASLB formulation of the character issue ignores the commonly understood definition of character . . . . . . . . . . . . . . . . . . 23 B. After the ASLB rejects of the commonly understood definition, the ASLB engages in an inappropriate search for relevant character traits . . . . . . . . . . . . . . . . 25

TABLE OF CONTENTS continued C. The ASLB distorted the carticular areas of character it selected for inquiry . . . . . . . 26

.D. The ASLB uses the four redefined areas of

_, inquiry in a generally unsuccessful attempt to identify character traits, measure them,

, and judge them by the ASLB's standard . . . . . 27

1. Honesty and candor are generally recognized character traits, but the

ASLB analysis of the evidence on these

! traits is inadequate and incorrect . . . . 27

a. The ASLB found that only q deliberate and known false statements can reflect on character . 28

b. The Bechtel study on OA alterna-tives was a deception . . . . . . . 28

c. In dealing with CCANP's allegation

of a false sworn statement by HL&P to the NRC, the ASLB distorts CCANP's position and ignores the evidence . . . . . . . . . . . . . . . 29

d. The ASLB analysis of the evidence supporting CCANP's final allegation in the integrity

- section is cursory and inadequate . . 29

. 2. Having altered t,he second subpart of Issue A to focus on the responses to

• 1 noncompliances rather than the

', noncompliances themselves, the ASLB

. fails to- render an opinion on the character traits revealed in the noncompliances themselves . . . . . . . . . 30

3. The ASLB's e::ami nat i on of

" responsibility" ignores the relevant testimony and evidence . . . . . . . . . . 32

4. In essence, the ASLB found that HLLP failed to keep informed, but that this failure was not a character defect . . . . 36 E. The ASLB disregarded CCANP's efforts to present a satisfactory model of character . . . 37

1. CCANP presented a model similar to the commonly understood definition . . . . . . 37

h L

P i

F i

TABLE OF CONTENTS continued

2. The ASLB erred by refusing to consider  ;

CCANP's analytical model . . . . . . . . . 39

{

F. Had the ASLB adopted an analytical framework truly relevant to the character decision in the nuclear context, the operating license would have been denied . . . . . . . . . . . . . 40 ,

i

1. The 'ASLB standard for character is too ,

low . . . . . . . . . . . . . . . . . . . . 40 ,

a. "HL&P has been open and candid with the NRC." PID at 45 . . . . . . . 40

b. Evaluating HL&P's responses _ to noncompliances and nonconfor-mances, the ASLB reveals how low its standard is for finding the requisite character . . . . . . . . . 41

c. For the issue of abdication of responsibility, the ASLB sets a ,

standard f ar below e:<cellence . . .. . 42  !

d. The ASLB found that HLLP failed to ,

keep informed but that they tried . . 43 '

! 2. A rigorous analysis of past acts as an  !

independent and sufficient basis for l license denial would produce a decision  !

to deny . . . . . . . . . . . . . . . . . . 44 i V. INTERVENOR CONTENTIONS . . . . . . . . . . . . . . . 49 A. Contention 1.1 . . . . . . . . . . . . . . . . . 49 t B. Contention 1. ' 51  !

C.. Contention 1.7(a) . . . . . . . . . . . . . . . 52  ;

D. Contention 1.7(e) . . . . . . . . . . . . . . . 52 E. Contention 1.8(a) and (b) . . . . . . . . . . . 5C F. Contention 1.8(c) . . . . . . . . . . . . . . . 54  !

G. Contention 1.8(d) . . . .. . . . . . . . . . . 54 ,

r

TABLE OF CONTENTS continued VI. ISSUE B . . . . . . . . . . . . . . . . . . . . . . 54 A. The ASLB erred in treating the ending of B&R's involvement in STNP as a remedial act that supported a conclusion that HLLP had remedied its character deficiencies . . . . . . 54

.B. The- key management figures responsible for the failures of HLLP remain in place . . . . . . 55 C. The remedial actions by top management indicate very little-real change in their attitudes or expertise . . . . . . . . . . . . . 56 VII. DUE PROCESS . . . . . . . . . . . . . . .. . . . . 56 A. In the opinion itself, the due process violations are evident . . . . . . . . . . . . . 57

1. The ASLB showed a clear bias toward HLLP . . . . . . . . . . . . . . . . . . . 57 2.'The ASLB demonstrated repeated hostility toward CCANP's efforts . . . . . 59

3. The ASLB committed numerous procedural errors in its opinion-and findings that denied CCANP's due process rights . . . . . 61 B. The ASLB failed to accord CCAMP its procedural rights under the Administrative Procedure Act, NRC regulations, and the Fifth Amendment of the' United States Consti '

• tution . . . . . . . . . . . . . . . . . . . . . 62

1. CCANP was entitled to the procedural rights granted by Section 554 of the Administrative Procedure Act . . . . . . . 62

a. The ASLB's bias in favor of the Applicants and hostility toward CCANP deprived CCANP of the impartial hearing required under the APA . . . . . . . . . . . . . . . 63

b. The ASLB used time pressures to prevent CCANP from completing sufficient cross-examination to fully disclose material evidence . . 64

c. The ASLB improcerly limited CCANP's cross-examination for reasons having no basis in law . . 65

, . . . _ . - _ _ - . __ - - - - . . - - . . - - _-~ .. . .

i i

TABLE OF CONTENTS continued r l

The ASLB

d. failed to take into  ;

account the convenience of CCANP in setting the time for hearings to begin . . . . . . . . . . . . . . . 67 l

e. The ASLB failed to make findinas i on all issues of fact and law as  !

required by the APA . . . . . . . . . 68 [

f. The ASLB restricted the scope .o f f cross-examination to matters [

raised in direct testimony in i violation of the APA . . 69 #

t 4 2.'The ASLB deprived CCANP of its procedural rights under the Due Process Clause of the Fifth Amendment . . 70  !

a. CCANP's interest in this '

proceeding is protected by the Due Process Clause . . . . . . . . . . . . 70 i

b. The ASLB erroneously permitted the j introduction of written testimony . . 71 i

c. The ASLB erroneously allowed the  ;

Applicants to' present their  !

testimony in panels . . . . . . . . . 73  !

t t

3. The ASLB failed to provide CCANP ample [

opportunity for discovery in violation l of NRC regulations . . . . . . . . . . . . 74 i

. 4. The ASLB's cumulative failures to respect CCANP's procedural rights under

i. .

the United States Constitution, the l

Administrative Procedure Act, and NRC regulations denied CCANP the fair ,

hearing to which it was entitled. . . . . . 75 [

VIII. RESPONSE TO FINDINGS OF FACT . . . . . . . . . . . 76 [

t IX. MOTION TO REOPEN PHASE I RECORD . . . . . . . . . . 89 i

X. CONCLUSION . . . . . . . . . . . . . . . . . . . . . S?

t APPENDIX 1 4

APPENDIX 2 j f

- APPENDIX 3  ;

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-. ,. , ._ . m . . _ _ _ . _ _ . , . . _ _ . _ . . _ _ _ . . - . _ - - _ _ . _ . - - _ , . _ _ , _ _ _ , . . - . , _ . _ _ . _ _ , _ _ . _ . . , . . .

18@LE DE QUIHOS[I{ES JUDICIAL PROCEEDINGS U.S. SUPREME COURT Mg(hews y. Eldt i dgg. 424 U.S. 319 (1976) . . . . . . 71. 74 099 C9tt90 MLLLs t 10G. Yt edeln1 P_9att of Lebgt, 312 U.S. 126, 155 (1941) . . . . . . . . . . . 69 E909C 89aGt9C Deyel3 Cgz y1 Elegt z, 367 U.S. 396 (1961) . . . . . . . . . . . . . . 47 U.S. COURT OF APPEALS Gity 9f West Gbicqgo v z N8G, 701 F2d. 632, (7th Cir 1983) . . . . . . . . . . . . . . '. . 63 Gghea yz Egtgles, 412 F 2d 44 (5th Cir 1969) . . . . 69 6909 IS100d BallC9ad C9s Yr UzSz, 318 FSupp 490 (E.D.N.Y. 1970) . . . . . . . . 63 ULBB v.. Butag, 207 F2d 434 (8th Cir 1953) . . . . . 64 SaGuel ds U95hs lQGL Yn EIG, 148 F2d 370 (2nd Cir 1945) . . . . . . . . . . . . . . . . 69 SeaC945$ 6011rE9119t190 Lggggg y1 Ggatig, 572 F2d 872 (1st Cir. 1978) . . . . . . . . . . 62 UO ll2d B C OBdGastLOg Cgts lagt yt ECC, 565 F2d 699 (1977) . . . . . . . . . . . . . 2, 7, 8 NUCLEAR REGULATORY COMMISSION PROCEEDINGS COMMISSION dQu5tOO L_1.9tltLOG EQd E9WGC Cai, (South Te::as Pro ject ,

Units 1 and 2), CL1-80-32, 12 NRC 281 (1980) . p 6 p s t_m

@tggtg S4f.gty and Ltcgggigg Oppgal Boatd Cargl.iO4 Eongt god Light Cpt (Shearon Harric Nuclear Power Plant, Un i t :s 1, 2, 3. and 4),

10 NRC 42 (1979) . . . . . . . . . . . . . . . 41 G9034GMC3 P9 Wet Company (Midland Plant.

Units 1 and 2), 6 AEC 182 (19/3) . . . . . 30, 31, 40

TABLE OF AUTHORITIES continued ATOMIC SAFETY AND LICENSING DOARD Cgggggweckt,h Edigga Cgt (Byron Nuclear Power Station.

Units 1 and 2), ASLBP-79-411-04 PE (January 13, 1994) . . . . . . . . . . . . . . 86 SIeIUIqe ADMINISTRATIVE PROCEDURE ACT, 5 U.S.C. Section 550 et seq. . . . . . . . . . Regsts ATOMIC ENERGY ACT, 42 U.S.C. Section 2011 et seg. . . . . 9, 14, 22, 62 EgouLeI1gus 10 C.F.R. Part 50, Appendi: B . . . . . . . . . . . 91 10 C.F.R. Section 0.02 . . . . . . . . . . . . . . 76, 77 10 C.F.R. Section 2.714 . . . . . . . . . . . . . . 70 to C.F.R. Section 2.740ta) . . . . . . . . . . . . . 63 10 C.F.R. Section 50.55(e) . . . . . . . . . . . . . 81 M.t@CELLGUEQUS SECY-84-124 (March 20. 1904), Nuclear Regulatory Commission . . . . . . . . . . . . . . . . . . 17 Gardner, Shrinking the Cano, 16 Ad.L.Rev. 5. . . . 71 Lord, M "A Plea for Corporate Conscience," Harper's, June 1904 at 13 . . . . . . . . . . . . . . . . 41

Introduction The Partial Initial Decision [ hereinafter "PID"3 under review in this appeal is the product of a very difficult and lengthy proceeding. Begun in 1978, ten years before the first unit of the South Texas Nuclear Project is due to go into service under the current schedule, this proceeding has become a trial by endurance for Intervenor Citizens Concerneo About Nuclear Power, Inc. (CCANP).

After reviewing the PID of the Atomic Safety and Licensing Board Chereinafter "ASLB"3 and considering whether to pursue this appeal, the main question was: Is it worth it?

That question was asked on a number of grounds. The first phase of this proceeding included hundreds of hours of preparation, 44 days of hearings, and hundreds of hours to do the findings and conclusions of law. The personal sacrifices required in terms of private life, career, income, and health were extracedinary.

In addition, there was never a feeling on CCANP's part that CCANP was getting a fair Hearing from the AGLD. CCANP was constantly forced to go forward without adequate preparation; to travel to other communities to participate in hearings; to be the old show worried to death from three sides by the Doard, the NRC attorneys, and the Applicants' attorneys (an image conveyed to CCANP's primary representativo by a court reporter who transcribed much of the Phasu ! procunding): and to contend with Daard rulings dumonutrating a bian toward the Applicants and hostility toward CCANP.

Thu PID 19 the culmination of that abuse. On first reading, i

it was clear that the Board distorted the issues to be litigated in order to avoid a serious consideration of license denial. It was also clear that the Board had ignored the hundreds of hours of work CCANP had put into defining the major issue of corporate character and into evaluating the record in the light of that definition. Finally, it was clear that the Board had simply

• ignored key pieces of evidence and crucial arguments which did not fit into the Board's preconceived idea of how the opinion should turn out.

In the light of such an opinion from the ASLB after four years of work by CCANP, it was difficult for CCANP to consider an appeal within the NRC worthwhile. The task would be a major work of clarifying the many points at which the ASLB opinion is in error while also reviewing the record for purposes of documenting the due process violations rampant in this proceeding. CCANP had no enthusiasm for the prospect of going through with the appeal.

Upon further reflection, however, CCANP did decide to pursue this appeal. First and foremost, the NRC predicts 18,000 people would die immediately if the' South Texas Nuclear Project were to have a core melt down and containment building rupture. For the sake of those 18,000 people, CCANP could not let the abusiveness of the NRC system to date prevent CCANP from taking every step to keep this poorly built plant from being turned on under the management of a clearty unqualified company.

CCANP was also shared up by the fact that the Appeal Daard unanimously removed a judge from our proceeding for hostility toward CCANP. He was, however, put back on by a 3-C vote of the Ccmmissionern.

11

There is also the fact that the ASLB is using the PID tc drastically limit the issues and concerns thk Board is willing to consider in the next phase of the licensing proceeding. See Memorandum and Order (Ruling on CCANP Motions for Additional Discovery and Applicants' Motion for Sanctions) dated May 22, 1984 and CCANP's Motion for Reconsideration of that Memorandum and Order dated June 5, 1984. Apparently even if CCANP could prove in Phase II of this proceeding that Houston Lighting and Power permitted a chaotic and life threatening design and engineering process at the South Texas Nuclear Project, the Board would not consider changing its ruling in Phase I that HLLP has the necessary character to receive an operating license for a nuclear power plant.

Finally, there are other decisions by NRC boards, such as the Byron license denial, that indicate that it is possible within the NRC prccess for an intervenor to occasionally prevail, even if only for a time.

Given these considerations, CCANP set out to answer the PID and to demonstrate to the App'eal Board that not only was the PID in error and the proceeding itself abusive, but also that the

, operating license should in fact be denied.

CCANP respectfully suggests that the Appeal Board read CCANP's Findings of Fact and Conclusions of Law in their entirety before reviewing this appeal in order to gain a clearer idea of how CCANP approached the fundamental questions involved.

111

i I. Issues A. The central issues in tisis proceeding arise at the ,

direction of the Commission.

As a direct result of an NRC Order to Show Cause (Staff Ex.

46) and Intervonors' response, the NRC Commissioners ordered a hearing on Houston Lighting and Power Company's ["HLLP"3 ,

character and competence. CLI-80-32, 12 NRC 281 (1980); Sgg alsg

$ PID at 3-4. The first major decision facing the ASLAB is what exactly CLI-80-32 directed the ASLB to determine. .

[

The Commission said:

o .  !

"Either abdication of responsibility or abdication of ,

knowledge ... could form an indgggedggi and suffigiggt basis for ... denying a license application on grounds of lack of competence (i . e. technical) or character qualification ...." (emphasis added) 12 NRC 281, 291. J CCANP contends the ASLB erred in its interpretation of what f the Commission meant by (1) " independent and sufficient"; (2) i

" competence"; and (3) " character". i 1). The Commission intended the term " independent and sufficient" to mean that a major failure by the Applicants could i a

I be the basis for license denial regardless of good performance in

. other areas, or any remedial measures Applicants might take after the major failure became known.

When the Commission wrote CL1-80-32, they were well aware that HLLP had undertaken remedial measures. Sgg gzgz 12 NRC at i

288. The Commission had read all the promises HL&P had made in response to the Order to Show Cause. Id. In demanding these .

promises, rather than suspending the construction permit outright, the Director of ILE soucht appropriate HLLP remedial action to correct the performance deficiencies. The Director made i f

1

no judgment on whether those deficiencies constituted an adequate basis for denial of the operatinq license.

Fully aware that HL&P was undertaking remedial measures, the Commission instructed the ASLB to consider whether the history of HL&P's past performance furnished " independent and sufficient" grounds to deny the operating license. Nowhere does the Commis-sion suggest that remedial measures are to be considered in evaluating whether the past performance constitutes a basis for license denial. To the contrary, the Commission points to the

" history of the South Te::as Project" as " relevant to the issue of the basic competence and character" of HL&P. 12 NRC at 291.

The Commission posited whether these violations constituted an unacceptable abdication cf responsibility or an unacceptable failure to remain informed on the part of HLLP. For the Commis-sion either of these failures is an " independent and sufficient" basis for denial. 12 NRC at 291. See Uni ted Btoadcasting Ggts Inct vt EsGzG3, 565 F2d 699 (1977) cited in 12 NRC 291 at 294.

The Commission, therefore, presented to the ASLB the ques-tion: Does the record of HLLP violations of NRC requirements up to and including the period of the Order to Show Cause investiga-tion (eventually e>: tended through mid-1982) disqualify HLLP from being considered for a license to operate a nuclear power plant?

This question the ASLB refused to address.

An answer to this question requires an evaluaticn of HLLP behavior which did not meet Commission requirements and a determination whether that behavior provides sufficient basis for denial of the operating license. This evaluation, which must be done without regard to what HLLP may have done later to remedy 2

its problems, was never made by the Board below.

2). The Commission intended the term " competence" to mean . technical skills ["competenco (i . e. technical)." 12 NRC at 2913. The plain meaning of the Commission's use and parenthetical e::pl anati on of this term is that the welders know how to weld, the concrete craftspeople know how to pour concrete, the engi-

• - neers know how to engineer, the architects know how to design, the managers know how to set up.a functional management struc-ture, i.e., competence is the effective manipulation of inani-mate objects to achieve particular coals of physical performance.

3). The Commission distinguished " character" as the qualities demonstrated by performance outside the area of technical skill. These qualities will emerge in the interrelationships among the people involved in the project and in the execution of tasks such as planning, communicating, and implementing programs. These qualities will also include the values held by the Applicants as shown by their performance of their duties.

B. The parties engaged in' a lengthy dispute as to the intent

. of the Commissioners expressed in 12 NRC 281.

The Board's refusal to clearly address the concerns of the Commission set off a vicorous dispute which ultimately led CCANP to file an interlocutory appeal. @eg CCANP F0F 1.41. Since the ASLAB denied the interlocutory appeal solely on the basis of its interlocutory nature, CCANP reasserts the same issues on this appeal from the ASLB's final order in Phase I. CCANP incorporates here by reference all of the concerns and supportive material presented in CCANP's Notice of Appeal and Request for Directed 3

Certification (March 22, 1981) and seeks the relief as set forth at 94-95, infra.

C. The PID ignores the issues as presented by the Commission and initially formulated by the parties.

CCANP's interlocutory appeal was prophetic. The issues pre-sented by the Commission were mi::ed by the ASLB into a soup of irrelevant and extraneous matters, producing an opinion that 1

provides no direct response to Issue A.

1. Throughout the PID, the ASLB blurs the distinctions between the issues and the topics of concern, so that the Commission directive to consider whether there exist " independent and sufficient" grounds for license denial is avoided.

a. The ASLB offers a confusing presentation of the issues.

The confusion of the issues begins early.

"The central focus of our inquiry in this first phase of the proceeding has been the ' character and competence' of HL&P to build and operate the facility."

(emphasis added) PID at 7.

In this operating license proceeding, the objective is to predict whether HL&P will ppetate the plant in conformance with NRC rules and regulations and in a manner designed to assure public health and safety. HL&P's character' and competence to build the plant was the inquiry in the construction permit phase. Issues A, B, and C say " operate," not " build" STNP.

Issue D, added by the Board, is the equivalent of a show cause hearing on why the construction permit should not be revoked. Nowhere in CLI-80-32 did the Commisuton instruct the Board to inquire as to the need to revoke the construction per-

1. Issue A states: "If viewed without regard to the remedial steps taken by HL&P, would the record of HL&P's compliance with NRC requiremants ... be sufficient to determine that HLLP does not have the necessary managerial competence or character to be granted licenses to operate the STP7" 4

mit. In fact, the Commission indicated to CCHNP that a motion to revoke the construction permit would likely be unavailing. 12 NRC at 290. Rather the Commission pointed to an operating license denial as the appropriate alternative. 12 NRC at 289. Including Issue D in Phase I and writing about HLLP's character and compe-tence of HL&P to build STNP reflects the broader problem of the a ASLB's failure to make clear distinctions among the issues.

A concern with the continued building of STNP naturally leads to a close look at cuttent conditions.

The purpose of the hearing was to examine past behavior revealing of character predictive of future operating performance. The ASLB, on the other hand, viewed the purpose as determining whether past acts have been remedied. Entrenched in the pursuit of the remedial approach, the Board refuses to consider the predictive value of past acts standing alone:

"Past incompetence is relevant, of course, to the extent it may be indicative of gcegeot incompetence.

Thus, if HLLP has improved its competence, it .s that improved state that is determinative." (emphasis added)

PID at 22.

But, Issue A asks whether the level of incompetence found to exist in the past is predictive of such irresponsible behavior in the +uture that HLLP is disqualified on grounds of character and competence. Under the Board's "How are they now?" standard, applicants could get away with almost anything as long as they cleaned up their act prior to the cloce of the licensing hearings. HLLP's current level of competence, on the record below, is only predictive of how HLLP will behave after others have exposed certous failures in HLLP's performance. Under this formulation, "past practices, in themselves." PID at 21, could 5

[

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• i I

not form a basis for denial. Thus, the Board effectively abolishes Issue A on competence.

I On the issue of character, the ASLB does the same:

"if an applicant, whose character may have been unsa- l tisfactory in the past, demonstrates a reformed and t adequate present character, then we may find that there h is reasonable assurance that it will observe the [

Commission's health and safety standards." PID at 23.  !

l

• If HL&P'-s character was unsatisfactory in the past, i.e. not good enough to satisfy NRC requirements, does it matter how it

[

t changed? Is there a point where the past demonstrated character [

i alone will be an independent and sufficient basis for denial? It does not appear that the ASLB considered Issue A in arriving at

, its decision.

As between predicting future performance by corrective a

measures taken after being caught, and using past performance i itself as.the predictor of future performance, the Board suggests that reformative acts are the better predictor. But this [

t suggestion defies common sense.

f The ASLB does glimpse momentarily the criqinal issues as

{

drawn when it notes that "CLI-80-32 contemplated a determination  !

. f whether past practices, in themselves, should result in a denial i of .the operating license application ...." PID at 21. The Board  ;

F grants that '

i

" Issue A questions whether HL&P's record of compliance with NRC requirements is so inadequate that we should determine that HLLP does not have the necessary managerial competence or character to be granted licenses to operate the STP." PID at 30.  ;

L i

While able to identify the question, the Daard was not ablo to [

address it. i i

' l 6

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b. The confusion on the issues found in the PID results from an unwarranted and incorroct ASLB interpretation of  ;

both the law and the Commission's intent. [

The ASLB takes the position that only (mmutabj.R charactor I

defects could possibly constitute a basis for denying a 11censo  !

without consideration of remedial measuros. That is, only if [

remedial measures were impossiblo would the ASLB truly ontortain [

an Issue A decision. PID at 21-24: ggg algg Third Prehoaring Conference Order (Including Summarios et Subsequunt Tolophono Conference Calls) (April 1, 1981) at 9, 10-11. l CCANP's position, consistent with the position of the t

Commission in CLI-80-32, in that failures of character or i i

competence, whether or not subject to remedy, can *urnish a predictivo basis for 11censo denial.

As the Commission stated: " decisions about licunnes aro predictive in nature." 12 NRC at 291. Which is more predictivo of  ;

futurn behaviors pant, primarily self-rugulated performance or correctivo activition underteken only after boino caught performino improporly? Violations of F.C.C. rulus of technical l operation are obviously subject to remedy, but the Commluuton citod precisely such violations as analcyoun to What would (

constituto an independent and sufficient ground for NRC licenso revocation or dental. W0l194 DC9Adggit100 Cgt.s Jcct ys EtCsCt, gypre, cited in CLI-80-32 at 274. Given the wido disparity between the recpectivo dangers in oporating a raJin station and j operating a nuclear power plant, tho standard of charactor for a broadcast licenen muut be markndly lowur than thu utandard for e i nuclear plant onorating Itcenso. If corructablo violations can bo l 4 basis for denytna a broadcast licence, theru i s no rational 7

i i

i basis f or sottina a lover Standard fer a nuclear plant Itcenna. ,

The ASLB's holding that only immutablo dofocts could constitute an indnpendent and sufficient basis for denial on character grounds is at odds with the position of the court in UQltW4 ECQadEAallGQ, cited favorably by the Commission, and also certainly at odds with the plain meaning of CLI-80-22.  ;

i Abdication of responsibility and failuro to keep informed can both be "remodied," after detection, under the ASLB approach to j the issues. Sinco those two defects can be "rumedied," the Board would not considor them "no serious that they are in fact uncorrectablo ...." P!D at 23. l The Board ignoros CCANP's contention that while certain l manifestations of inadequate corporato charactor may be rumodied 7 in responso to outside criticism, this doos not assure reform of the undorlying charactor dofocts thomuelvos. I Furthermore, the ASLB is not really certain thoru are l immutable charactor traits. "One of those Cuncorructable) defects t enight be evidenced by an intentional lack of truthfulness or '

r candor condannd by management." PID at 23. Givun the AGLD's I

• I position that remedial measurus can include " radical chanQo in '

control of Cthe] corporation," oven an "intuntional lack of truthfulnons or candor condoned by management" is in fact i I

corroctable by firing the manager who toleratud the dishonusty.

999 PID at 23. The Daard would oven conuidor the firing au f proof of rinod charactur. 1Q.

At tho same timo, in narrowing the lanuo A inquiry tu !

uncorenctablo defects and thnn indicattnq that only lack of !

truthfulness or candor would signal the pouniblu ultiotence of an U

I uncorrettable defect, the ASLD is hardly allowino room for the l

" broader ramifications" of HLLP's acts that the Commission said j should be cuamined as part of the charactor and computence l t

inquiry. 12 NRC 291. I If only uncorrect'able defucts in charactor found in the past l

record of HLLP are disqualifying, an'j the ASLB is unable to L identify what such a defect could bo, there is no quantion of f

denytnq the licanuo for lack of thu nocessary charactor. Issue A l on charactor is, accordingly, abolished by definition.  !

f Issuo A as originally accepted into these proceedinge roadst .

t "without regard to the remedial steps." Dut the PID says: "C!nnue l l

A) is derived from the Commission's inutructions in CLI-80-02 and f explicitly oncludes from conuideration $bM tifSGtLYQQ!!41 of any  ;

remedial stops taken by HLLP." (emphasis addadi PID at 30. Issuu t A, as tho ASLD has changod it, would road: "Taking into account f

any remedial stops takon, but not their offectivonuss ...." Thi s ,

I formulation romoves the distinction CCANP fought 50 hard to achiovo in the prohuaring conforenco.

Tho ASLAD will have to decide whether the position of CCANP  !

or the position of the ASLD on the definition and standard of ,

charactor required for an NRC licensco more completely fulfills the intent of Congress as oapronued in the Atomic Enorgv Act I

(AEA), and which moro clocoly tracta the Commission'n intent an (

mtprnound in 12 NRC 001.

c. Havino erred in its interpentation of the law and the Coinmi ns t on 's intent, the AGLt! procuodu to ronder tn t opinion and male findtnqs of fact on acuuuu duftnnd fnr the first i timo in the P!D itool f. l 1

After redofininq !snun A, the nStD peni:9eds tn altor the

?

f 4

f

l subparts of t h t* 1ssue. PID at 31. The necond subpart changes from

" instances of noncompliance not forth in the Natit:0 of Violation and Order to Ghow Cause" to "the mannur in which CHLOP3 tqa,q u q tg the noncompliancos or nonconformances which occurred." (ompha-2 3

, uts added) N. Dyg g[pg P!D at 30. lusue B swallows !ssuo A.

The ASLB has trouble keepina fusuo A and Issuo 1.4 apart. even in terms of the ASLB'n reformulations. An part of its opinion on Issue A. the ASLD looks at whethor the violations recurrod atter being addressed. The "0A009C in which HLOP r espon dorf" now includess how offactive the rosponco was -- provontion of r recurrence being one muasure of offectivenous, but thu ASLb uand consideration of Issuo A "unplicitly oNcludos tenm consideration  !

L the effectiveness of any remudial steps." P!D at 30.

There are ovan parts of the l as uuo A op t rit on which incorporato evidence related to the eventual hiring of bechtel l and Eba'sco. Qget qta, P!D at 47 citing Findings 264 and 260.

!!ven tua l l y , the AGLD returns to the " build" confusion, a confusion contributing to the mining of lasuon A and D. *

"Although lusuo A ctcludos consideration of correctivo  !

= actions, we do not believo we can fairly evaluato l HLbP's computence tg qgenLeht and operato STP without taking into account the cualifications and unportance -

, of the personnel who actually will be 2nuacud in thosu tasks." (emphasis added) P!D at 49.

i I

l

2. CCANP contenris that this untiro enction of the opinion (11).  !

+

P!D at 30-42. simply han no placo in !s'aun A tho way the DnJed I has treatud this subpart.

5. The Domed also transforms thu fourth Jubpart from "the uutt'nt ,

to whir:h HLSf' fattod to Loup ituult knowledcoablo" to "the doorno to which CHLtP1 M temne,td to stay in f or ned. " t ow'hase t u addt'd ) P!D I at 31. The question is no longur how sortcut their fatture to rnmain informed rodily was but rather how hard thov t,Clpg to hn informod whatovur the rusult in tures of 'succons f ul nuss.

to

In the ASLD's Findingu of Fact on Issuo A, the prosenco of Issue b material in so pervasive that there are in fact almost no j findings sololy on lusuo A. The findings within Issuo A that I include Issue D evidenco are set out in Appendix !.

By the time the Board fin 12hou with redefining the tunuou,

, thern is no meaninn left to the " independent and sufficiunt"

• inquiry nosed by the Comnission on Issue A.

d. CCANP's underut#9 ding and formulation of tho issues preserves thu intent of the Commission, and in called for in this case.

CCANP would first taku all the noncompliancob in the rucord a

cnd ovaluate thom both individually and as to thuir broader ramifications. Included in this analysis would be the questions regarding abdicating responsibility and staying informed. CCANP would specifically ruject the ASLD's positions that only ismyteb(q character defects can produco 11conso denial and that Issuo A includnu romedial acto.

CCANP would than answer !suuo A as it was originally formulated. If the answer was "yes" to otthur lack of charactor or lack of competence, CCANP would end the inquiry.

If the answor* was "no" to ugtb the lack of character and comontence, CCANP would then conuidor issuo D to neo if the violations found not to be disqualifying on thu wholo had in fact bn**n corrected and measures talon to provent rucurrocco.

CCAMP contends thin process should havo boon a two stop with 14suo A hoard first and dochdod boforo lumuo b process wJu i

i ovt'n Conmidornd.

1 The A9LD insistod the two a ctuvo be combinod into Ono not of hnerings, then orrod in not providing a c 10:4riv delinuated out-1 4

11

r l

l l

nion and findings of fact on u.,ch tusue as originally admitted.

!!. Competence t

A. The ASLB's formulation of competence is for broador than the Commission envisioned.

In the absence of a clear definition of "compotonce," either from the statuto or from provtous casos, the ASLD begins with the plain meaning of the term. PID at 1 ~10.

The ASLB unos throo linos of inquiry to evaluato Applicants' competence:

"(1) whethor the applicant's staff and managument have sufficiant technical and managorial exportito and experiences (2) whether that staff and management are organi:ationally structured so as to permit and encouraqe the unhincored application of their unportino and euportencot and (0) whether the applicant's programs and proceduros require the application of that expertise and unportance and are consistnnt with requiatory goals." PID at 46-47.

An immudiato problem arinos in the AGLD's inquiry. Whoreas the Comminnion said "comootence (i.e. tochnical)," the ACLD to using competence to includo "tochnical and managartal."

Dy use of the term "managnment competencu." PID at 10, to includo such issuou as the " quality of managemont" and the "ade-e quacy of organization of a utility," idt, the ASLD confuses the analysis. L'nlike the Three Milo Island caset, the Commission mado a digttnction in Gauth Tenas botween charactor and competence --

"t.e. technical" -- which nuqqosts that mandgoment computoncu in j not a useful term for the inquiry mandated 11 this proconding. l CCANP would suparato the tnchnical acts of managomont (o.g. l l

ntructuring an crqant:ation) trem the characteristics of manago-mitnt in action (o.y., foron10ht. porcoption. Judgmunt, ru1olvo, valuun, and in t. car t ty) . Thus, whether HLt P know how to set up an

'f

organi:ational chart f or a complo:t construction project would be a technical Question. Whether that organt:ation in fact achtoved l

}  !

its g ot.l s would be a character question answered by the I performance of the functioning croant:ation.

o D. App 1tcants violated the ASLB's own standards of ,

competence far more pervasively than the ASLD concluded.

The ASLB's moasurement of competence, FID at 46-47, divides t e

into seven parts: (1) Expertise (a) at tho staff lovel and (b) at the management levels (2) Euportanco (a) at the staff lovel and i i

( b,) at the manaqomont levolt (0) Appropriate organi:stional t l

structuros (4) Appropriato programs: and (5) Appropriate  !

I procedures. In its opinion and findings, the ASLB concludod that the staff lackea eHpersonco that management controls were not working at the field levolt that top manaqomont lacked both oupertine and experience in nucinar design, onaineering, and constructions that the organt:stional structure did not permit ,

l Information to reach thosn charqutt with acting to correct pr ob l e:mu t that evun if the information did reach the appropriato person, that person was incapablo of understandino the

• information and acting upon its and that proceduros on the I 4

project worn often inappropriato. So of the neven discroto items in the doftnition of compotence, the only one possibly natisfied at DTNP was "appropriatn pecoramn". j C. Thn lovel of incompetunce demonstrated by Applicants is l an " independent and sufficient basis" for donial of the operating (

licennu.

t 4 Contrary to the AHLD's runencantation that "Lnlo narty han ratmod any question with respoct to the third lines of innutry." ,

P1D at 47, the third lino inclurien procedurns which como undor c:t t etn 41 vo cuantioning, 1;p CCANP F0F 5.!!, with even HLtP doubtinq the officacy of thste procuduros.

13

The ASLB stated:

"We apply this definition [of competence] in accordance  !

with the statutory mandate of Section 103 of the Atomic  !

Energy Act, 42 U.S.C. Section 2133, that applicants be .

• equipped to observe' *** [the Commission's] safety standards." PID at 13. ,

.y There is no question that the Applicants were not equipped to achieve the safety standards set by the Commission. There is a i clear showing of widespread and in-depth incompetence on the part of HL&P and the contractor brought to the site by HLLP.

The question is the level of incompetence that will be ;

tolerated. The scale set out in Appendix 2, Figure 2, illustrates the options. CCANP would require a record of competence in the excellent range. Instead, the ASLB tolerates'a record in the. poor.

to fail range. -

The ASLB considered these deficiencies as possibly serious enough to warrant license denial, PID at 51, but refused to render an opinion on that issue without considering remedial steps taken by HL&P.

CCANP argues that a poor or failing record by NRC licensees l

cannot be excused or tolerated.

l  %

l .D. The record of Applicants' incompetence reflects on their t character.

i -. <

L In a root cause analysis, as this case calls for, if enough t -- -

l symptoms are found at one level of the analysis, the analysis moves to a higher more encompassing level. The ASLB appears to accept the idea that competence can be one element of measuring character. "[W3hether an applicant has developed technical

ability may be relevant to and indicative of both its character I and its competence." PID at 11.

r 14

i r

1 But shortly thereafter, the ASLB appears to separate the two. "[W]e do not believe that character can be inferred from I competence, or vice vetsa." Id. Here CCANP and the ASLB diverge.

CCANP would infer from a finding of excellent character that the i applicant had ensured that people with the available technical expertise and experience necessary to build a high quality nuclear power plant were in place at all times. Or, to put it another way, a finding that technical competence was missing would preclude a finding that the necessary excellent character was present.

For example, the ASLB finds:

f "What we fault them for is not their lack of awareness [

of details but their lack of understanding of the facts  !

which they had before them. This represents in our view  !

a defect in competence rather than character." PID at 4 43.

I The top management was receiving from the project all the inf or-mation necessary to know the project was in trouble, but the top  ;-

management did not have the ability to assimilate that informa- ..

tion into a coherent message. This is a clear example of CCANP's [

t perception category of character failures. The ASLB prefers to

' call this competence. The difference is that the ASLB looks at the carticular deficiency, e.g. a lack of perception, and calls the problem competence. CCANP looks at this particular lack of perception, finds numerous other perceptual problems, and ,

concludes that there'is a systematic character deficiency.

As the licensing decision is predictive, CCANP would find from this conclusion that when faced with a major complex task, HL&P will likely have in place people who lack the perception to .

know when something is going wrong. Fcr an applicant seeking to 15

r I

operate a nuclear reactor, that prediction is disqualifying.

III. Inexperience So much of the PID revolves around the ASLB's use of the t

term " inexperience" that a closer examination of the role this 5

term plays in the ASLB analysis is necessary.

f A. Inexperience was a significant characteristic of the  ;

STNP effort ftom its inception.

CCANP dealt with the inexperience concept in various ways in its Findings of Fact. Egg g.gz CCANP F0F 2.34, 2.44-2.47, 3.1-3.12, 4.1-4.20. CCANP's fundamental response to the discovery of i

widespread inexperience at STNP was to question the judgment, ,

commitment (resolve), and competence of the HL&P Board of ,

Directors and management.

The ASLB agrees that experience was a missing element of HL&P's technical competence, PID at 49. But it uses inexperience to build an argument that removes HL&P's abdication of responsi-bility and failure to remain informed as a basis for license )

denial. Inexperience can always be remedied, the ASLB found, so 6

no fatal defect could possibly be found in this deficiency.

- " Experience, by its very nature, however, is obtainable by several means, including the hiring of experienced personnel or even by the mere passage- of time (i ten,

. the more time one spends on a project, the more experisnce one acquires)." PID at 49.

_------- _ = = _ _ _ _ = - --

5. The Board does accept evidence wnich argues against the inexperience conclusion. Sge gsg1 PID F0F 118.

6. There is, however, the possibility that the management of HL&P in fact lied to the NRC about the qualifications of its personnel and its contractors. There must have been a showing of qualifications in order to receive a permit to construct STNP.

Inexperience could then be the indicator of a defect even the Board might entertain as disqualifying, See PID at 23. Had CCANP known the record on inexperience would be so extensive, that this

' finding would play such a central role in the PID, and that the i

• • • FOOTNOTE CONTINUED ON NEXT PAGE +++ .

I 16

B. The .ASLB uses " inexperience" too broadly and thereby f ails to -adequately explain Applicants ' failures.

The PID explains almost every Applicant failure as resulting from- i n e>:p er i enc e. But some of these failures do not fit so easily into this Procrustean mold.

1. At the time the NRC finally discovered what was -

really going on at STNP, the key personnel for HL&P had been in

- place for years.

By the time special investigation 79-19 began in November of 1979, 'HL&P had been on the job for four years. There had been essentially no turnover in the top two HLLP managerial positions (Jordan and Oprea) nor in the key person responsible for Quality Assurance (Fra:er). Hence, as far as becoming experienced by the

" mere passage of time," the HLLP personnel were at the peak of their experience during 79-19, with many years on the job.

The Board takes the position that experience can come from work over time. Yet the height of DC harassment apparently came after years of steadily increasing management involvement in nuclear DA/DC. See PID F0F 120.

---

------------ __ - - = - - - - - -

. *** FOOTNOTE CONTINUED FROM PREVIOUS PAGE ***

Board would adopt such a restrictive definition of disqualifying

i. character defects, CCANP would have explored the record of the construction permit application durina Phase I. As it is, the NRC commissioned such an exploration which concluded that inexperience was indeed a problem. SECY-84-124 (March 20, 1984) at A.21. The report concluded that the NRC failed to review the ability and experience of the Applicant and its contractor prior to the granting of the construction permit, Id. at A.23, but a full review of the construction permit application process might well find that HLLP presented its qualifications and the

- qualifications of its prime contractor in such a way that the NRC was misled as to the actual competence of the project team.

CCANP will file a motion to reopen the Phase I record to admit the report and the study upon which the report is based after CCANP receives the study. The report did not limit explanation of the problems at STNP to inexperience; " inadequate management suppnrt of quality" was also a major contributor. Id. at A.22 T

17

The implication is either that management is not capable of learning from doing, or that management never took the problems at the project seriously enough to actually do something about them. .Either conclusion supports license denial; neither is explained by inexperience.

2. Harassment of QC inspectors is not, contrary to the ASLB's position, explained by inexperience.

The ASLB's position is that:

"One of the most pointed reflections of HLLP's and B&R's lack of experience was the continuing reappearance of incidents of harassment of OC personnel by construction personnel. ... [T]he continued reappearance of clashes and the persistence of low morale reflects management's inadequate experience in constructing facilities subject to nuclear QA/DC requirements." PID 48-49 But HL&P knew from extensive experience that harassment of inspectors was one of the generic problems faced on large construction projects. The Board would distinguish between QA/QC on any large construction project and on a nuclear project, but that distinction is not self-evident. Inspecting concrete, welding, backfill, electrical conduit, etc. is commonplace activity on almost any large' construction project and certainly on a large power plant construction project. The standards are higher on nuclear construction and the inspection, therefore, stricter, but the problem of inspector / constructor friction remains the same generic problem.

3.- Contrary to the ASLB's position, Applicants' long-term failure to take decisive action regarding the inability of its prime contractor to perform is not explained by inexperience.

Early in the project, HL8 P discovered that Brown and Root was not accurately representing its achievements. PID at 40.

18

"Moreover, given this notice, HL&P should have taken steps earlier than it did to correct the problems which were apparent Ecite omitted]. Although this delay is perceived by CCANP as a product of deficient character

[ cite omitted], we find that it more credibly may reflect a facet of HL&P's inexperience. In our view, in the days prior to the Show-Cause Order, HL&P was not sufficiently knowledgeable to realize that major

~

corrective actions were needed or to ascertain what those corrective actions should be." PID at 40-41.

The last sentence of the quoted statement from the PID speaks volumes about HL&P's failures. That sentence alone could provide an adequate summary justification for license denial.

The Board would attribute HL&P's failure to get BLR off the job to inexperience. But HL&P is one of the largest utilities in the country. They have plenty of experience in having contractors design and engineer power plants.

Discovering that the engineering was only 8-9 percent com-plete may have been difficult for HL&P's inexperienced nuclear engineers. But once the knowledge of the incompleteness of the engineering became available, HL&P management could have taken appropriate action to get an architect-engineer who would know how complete the engineering was and who would then produce the

, - necessary competent engineering in a timel y f ashion. Instead, six years later B&R was still on the job and still suffering 7

engineering productivity problems.

4. The failure of HL&P to perform audits of BLR is not explained by inexperience.

The ASLB finds that

__________ -z ___________

7. The ASLB limits its finding of insufficient knowledge produced by inexperience to the period prior to the Order to Show Cause.

The implication is that after the Order to Show Cause, HL&P somehow knew there was a need for corrective action. But the fact is that the Order to Show Cause did not deal with engineering productivity at all, and B&R remained on the job as a-e for seventeen months after the issuance of the Order to Show Cause.

19

. _ . ~ . .

i I

"at lower levels, HL&P did not exercise effective con-trol prior to the Show-Cause Order in areas such as  ;

auditing (Finding 116). We attribute the lack of effec-tive control to inexperience and excessively long ,

chains of command rather than to abdication of respon-sibility." PID at 42-43.

As Finding 116 documents, the NRC discovered that HL&P had [

~

" failed to perform semi-annual audits of B&R site organizations [

and procedures and annual audits of B&R construction site  !

8  ;

activities, as required by the PSAR and HL&P procedures." A .

t complete failure by HL&P to perform a major activity is not f evidence- .of a " lack of effective control" but rather l

[

nonperformance of an obligation; it was HL&P, not B&R, that was j to perform the audits.

4 C. The ASLB failed to come to grips with the obvious implications of the " inexperience" conclusion. i Lack of experience is used throughout the Board's decision to shift the discussion away from character and toward the issue

of competence. Surely lack of experience leads to incompetence, [

l as the record shows it did in this case. But lack of experience [

is itself a problem which reflects upon the character of a company going forward with a' dangerous project without taking i compensatory precautions. See CCANP FOF 3.5-3.6, 3.10.

The Board refuses to consider a long term lack of technical  !

+

competence as representing a character failure. CCANP would cite a failure 'to put experienced people into critical jobs as evidence of a major character defect which can be analy:ed first  !

I l

as a lack of foresight (planning f or a job where in-house  ;

l

_ _ - -_==-- ----- p i 8. The failure to perform these audits may in fact be a f ar more serious material false statement than reporting that a certain '

number of roller, passes were made over backfill when in fact fewer passes were made. These audits were not performed at all. [

20

. , .a ._ -. . . - - - . , - .. - - - - . - . - , - - - - . . .

experience is lacking), second as a lack of judgment (hiring the necessary experience), third as a lack of perception (recognizing when the personnel in place do not have the necessary experience, ,

whether they appeared to when hired or not), fourth as a lack of resolve (removing people who are not performing for whatever reason, including inexperience), and fifth as a lack of values (going the extra mile in perf ormance at all- stages, whatever the i

cost, because the project is a nuclear power plant).

One of the reasons given for Applicants' lack of experience is the problem of excessive turnover. PID FOF 105, 111. This is a problem which every corporation must address if it occurs. No lack of experience with specifically nuclear projects can explain the failure of management to recognize high turnover rates as a problem.

More disturbing than one more instance where the ASLB improperly uses inexperience as an explanation for lack of competence, however, is the actual explanation provided by the PID, that cost and schedule considerations led to high turnover.

PID FOF 105.

The Board completely fails to assess these findings as reflecting a fundamental value judgment by HL&P to choose finan-ci al values over the values required to build a safe nuclear plant. This value judgment goes to the core element of character required of a commercial nuclear licensee. If the NRC has one paramount criteria in selecting its commercial licensees, it must be that the licensees consistently give safety priority over profit. The sinale finding that an inexperienced HL&P tolerated the loss of experienced personnel to "mor'e lucrative offers from 21

. . . . . = .__

L other ccmpanies" is a finding of a fatal failure of values I d,isqualifying HLLP from receiving a license. ,

IV. Character This proceeding is the first in NRC history to directly address the statutory issue of character, 42 U.S.C. Section 2232(a) -- the definition of character, the measurement of ,

f character, and the standard of character to be adopted by the l

NRC. PID at 12, note 13. '

The ASLB devoted a separate section to the legal standards [

f for determining character. See PID at 7-12, 15-25. The decision i in this case will have far reaching effects in setting forth for applicants, license-holders, and the general public just what

?

" character" means to the NRC, and in establishing how that r

meaning will manifest itself in regulatory decisions. All parties I r

in this proceeding agree character is a " fundamental" requirement for a license applicant, PID at 8, and one of the central foci of t

t this proceeding, PID at 7.

As an inquiry into a fundamental requirement, this inquiry e

should be both broad and in' depth. A particular failure of an applicant becomes a vehicle for a retrospective probe into the ,

nature of the failure, the importance of the failure, the unique or repeated nature of the failure, the failure as a symptom of a greater problem, and the greater problem as evidence of a failure to possess a critical component of character.

The question of whether the identified failure reaches back to the fundamental root needs to be asked. The root cause analysis is the major undertaking. Stopping too soon means that the fundamental inquiry never takes place. That is what the 22

licensing board did when it stopped its analysis at inexperience i and failed to ask whether the presence of porvasive inexperience reflected on character.

Once the issue becomes either character or competence, something fundamental is at issue and the approach changes. The cases examining a lesser concept or a subpart of the general

. concept are not appropriate precedents, as they do not call for the examination of the " broader ramifications." See gtg. PID at

19. If even one element of the fundamental requirements of [

character i s mi'ssi ng , the implications for licensing are great.

The ASLB formulation of the character issue ignores the !

A.

commonly understood definition of character.

The ASLB begins its analysis of character by ostensibly accepting CCANP's assertion that the character issue in this case should be approached based on the commonly understood definition of character. PID at 15.

" Character is defined as 'a composite of good moral qualities typically of moral excellence and firmness i blended with resolution, self-discipline, high ethics, force, and judgment.'" Id.

But after appearing to accept the various elements of that definition, the ASLB begins to carve most of them away. ,

"No trait should be considered, however, unless it is relevant to the contruction or operation of a nuclear plant. Therefore, a trait should only be considered if it evinces a willingness and propensity, or lack thereof, on the part of an applicant to observe the '

1 Commission's health and safety standards." PID at 15-16.

The ASLB's "therefore" is not self-evident. The Board gives a definition that includes " firmness," " resolution," and " force,"

but would have those equated with " willingness and propensity".

Being "willing" or being "more likely than not" or " inclining 23

toward" is already a weaker standard for character than firmness, resolution, and force.

"Moreover, we not believe it .is practical or necessary to attempt to enumerate all relevant traits. Were we to undertake such an exercise, we feel it would serve only to replace one label,

~

' character,' with many; it would leave unresolved the factors determinative of each trait." PID at 19.

First of all, if the trait is relevant and 't is not enumerated, there is a possibility that there would be no inquiry as to the presence or absence of that trait. The failure to make such an inquiry could result in granting a license to an applicant lacking one of the relevant traits of character. A potential for disaster would then e:tist.

Second, the definition quoted by the ASLB contains a finite number of traits to be considered. There is nothing impractical about using all of the elements in the definition.

Third, it is precisely by defining a word that we reach an understanding of the meaning of that word.

The ASLB is taking the position that there is no difference in treating character as one.undividable concept and in treating it as composed of elements such as " resolution," "self-discipline," and "high ethics." In order to understand, measure, and set a standard for character, CCANP contends that some attempt must be made to state its elements, before the factors determining those elements' can be established. The ASLB identified elements of the competence concept, See p. 13, gyp,r a,;

there is no reason to avoid that same task for character.

"What is necessary is a ne::us of a particular trait to particular performance standards contemplated by the Atomic Energy Act pr NEPA and NRC's implementing 24

regulations and guides." PID at 19 From this statement it appears that the ASLB meant it was not necessary to enumerate all traits relevant to the measure of character. as opposed to all traits relevant to character in the nuclear c on t ex t). But surely the measurement of character in the nuclear context will be the broadest possible measure; the higher

. the risk if character is not present, the more breadth and depth should be devoted to the character inquiry. The stakes can hardly be higher in any other activity. CCANP developed a definition empirically from the facts of this case. For each of its character traits, CCANP provided an analysis explaining the nexus of that trait to a character decision in the nuclear context. Sge CCANP F0F 3.1, 4.1, 5.1, 6.1, 7.1, 8.1. The ASLB does not explain why a single trait in its or CCANP's definition is irrelevant in the nuclear context.

Assuming atguendg that there are some traits in a general definition of character not relevant to character in the nuclear context, the ASLB gives no guidance as to which are to be excluded, and why.

B. After the ASLB rejects the commonly understood ,

cefinition, the ASLB engages in an inappropriate search for 4

relevant character traits.

i The ASLB stated:

"we adjudge HLLP's character by consideration of its

! past and present performance, and consider those

. traits, both positive and negative, that are naturally

, inferred therefrom." PID at 19.

The ASLB had earlier stated that what was necessary was a l

nexus between a trait and a particular performance standard.

Neither the trait nor the perfccmance standard is plant- or 25

I t

?

applicant-specific. The traits and the standards must be I applicable throughout the industry. Tying together character [

l

traits and performance standards is not the same as e::amining specific acts in order to generate traits. The ASLB's approach [

I.

suggests that there is no generalized standard of character possible in the nuclear context. If so, then it will be hard to f I

. demonstrate that the nuclear litsesing process is not capricious and arbitrary. [

i  :

If there are generalized traits of character relevant to the f

' nuclear content, then we must look to those traits and their ;

i definitions, measure HL&P's performance in the light of those i i .

L traits, and decide if the measurements indicate performance up to the standard demanded in the nuclear context.

An- inductive process can be used to identify character f

traits. CCANP derived its categories of character traits in part [

by examining the record. But the traits, their measure, and the ,

standard thereby developed are still generically applicable in

f. ,

the nuclear content. <

The refusal of the ASLB to accept any fixed definition of

[

character _ led it to ignore evidence that HL&P is wanting on f several important elements of character. l Because the character inquiry is unprecedented, the ASLB l

{

looked for guidance from the deliberations of other NRC licensing boards.- PID at 19. But in looking to other boards, the ASLB is depending on Issue B-type " remedial" inquiries as precedents for {

this Issue A " independent and sufficient" inquiry.  ;

C. .The ASLB distorted the particular areas of character it f selected for inquiry. L l

i l

I  !

26  ;

l

"In the present proceeding, the most significant character traits for us to evaluate are HL&P's truthfulness and candor, the manner in which it reacted to the noncompliances or nonconformances which occurred, its responsibility, and the degree to which it attempted to stay informed about STP." PID at 31.

These four elements are designed to track the four areas of

- particular inquiry in Issue A. See PID at 30-31. But the manner in which HL&P reacted to noncompliances or nonconformances is already part of the remedial measures taken by HL&P, i.e. Issue B. Furthermore, a failure to react would simply be another noncompliance. See Appendiv 1, Figure 1. HL&P's not committing this further violation should not be used as a key consideration in measuring its character.

As to attempts to stay informed, the Commission used a failure to keep informed standard, not a failure to attempt to keep informed standard. Fcrmulating the issue as " attempt" allows the ASLB to give HL&P credit for efforts made, no matter how unsuccessful.

The ASLB mistakenly refers to these four elements as

" character traits." Though HL&P responses to NRC enforcement actions and HL&P attempts to keep informed are conduct which might indicate some character traits, they are not in themselves character traits. ,

D. The ASLB uses the four redefined areas of inquiry in a generally unsuccessful attempt.to identify character traits, measure them, and judge them by the ASLB's standard.

1. Honesty and candor are generally recognized character traits, but the ASLB analysis of the evidence on these traits is inadequate and incorrect.

Honesty and candor are particularly appropriate in the nuclear context where a highly dangerous activity is regulated by 27

an agency heavily dependent on the self policing of the regulated industry. CCANP considered this element of character as

" integrity." ggg CCANP F0F 7.3-7.3.19.

a. The ASLB found that only deliberate and known false statements can reflect on character.

In their exploration of honesty and candor, the ASLB first looked at the alleged material false statements noted in the special investigation 79-19. PID at 32-33. In their analysis, the ASLB concluded that only if the false statements made were deliberately and knowingly made would their existence have implications for Applicants' character. The ASLB ignored the fact that unintentional and unknown false statements may well reflect on character by demonstrating carelessness.

One of- the Commission's two grounds for license denial specified in this case was failure to remain informed. 12 NRC at 291. Making false statements to the Commission unknowingly and carelessly is a serious example of such a failure.

b. The Bechtel study on QA alternatives was a deception.

Ironically, CCANP engaged in detailed examination of the Bechtel study in response to concerns of t h e- Chairman of the ASLB. Seg e.gt Tr. 2258 1. 9-12; 2259 1. 11-14: 2260 1. 10-18.

The ASLB says it "need stress only that the study in question analyzed the five forms" suggested by the NRC Director of ILE. PID at 35. But this is not the issue; limitations on which alternative could be selected is CCANP's concern.

When the ASLB says HLLP qave Bechtel a " blank check" to perform the study, Id., the Board cites a finding (201) which correctly notes that the " blank check" was for a study of the 28

e:ii sti ng OA program undertaken in January 1980, not fcr the altecngtiygg study begun in April 1980.

c. In dealing with CCANP's allegation of a false sworn statement by HL&P to the NRC, the ASLB distorts CCANP's  ;

position and ignores the evidence.

CCANP alleges Mr. Oprea filed a false sworn statement with the NRC. CCANP F0F 7.3.17.

The ASLB's discussion, PID at 36-37, attacks a straw man while it ignores the three specific representations to which CCANP called attention. The ASLB acknowledges that "certain details ... set forth by the Applicants in the Show-Cause Order response may not have been completely accurate," Id t, but then chooses to ignore this serious breach on the ground that it was not pointed out earlier.

There is no reason for CCANP to call attention to everything being proven by the record while the record is being made. The evidence speaks for itself; the statements were false.

d. The ASLB analysis of the evidence supporting CCANP's final allegation in t.he integrity section is cursory and inadequate.

"The other claim by.CCANP regarding HL&P's truthfulness and candor consists of alleged inconsistencies in Mr.

Don D. Jordan's testimony concerning reasons for assigning Mr. Oproa full-time to the STP [ cite omitted]. We do not regard the statements- as

• necessarily inconsistent but only as elaborations of earlier statements." PID at 37 In fact, the statements are contradictory -- one statement is an assertion of a fact and the other is a denial of the same fact.

In other words, Jordan testified that the Order to Show Cause was not really serious (Jordan did not assign Oprea to STNP in response) but that HL&P is very responsive to NRC concerns 29

4 (Jordan did assign Oprea to STNP in reponse to the OSC).

Testimony which is mutable depending on its intended purpose provides evidence on the record in this case of a lack of candor or truthfulness.

2. Having altered the second subpart of Issue A to

focus on the responses to noncompliances rather than the noncompliances themselves, the ASLB fails to render an opinion on  !

the character traits revealed in the noncompliances themselves.  !

By redefining Issue A, the ASLB introduced confusion and misdirection: I "In terms of a character trait, the manner in which HL&P responded to noncompliances or nonconformances may  ;

be depicted as the willingness or desire of corporate ,

officials to carry out a OA program 'to the letter.'" ,

PID at 38 citing Gonsumets Pgwet ggmp_any (Midland i Plant, Units 1 and 2), 6 AEC 182, 184 (1973).

The ASLB finds that a mere " willingness" to respond to NRC [

notices of violations is probative of character. But willingness to respond to NRC violation notices is the minimum necessary to avoid having the project shut down involuntarily. I More importantly, the ASLB equates responding to findings of  ;

violations with showing a willingness to carry out a CA program

^

But the presence of a violation shows that the OA I to the letter.

^.- letter. Since a L

program was in fact not carried out to the refusal to correct a violation would itself be a flagrant i'

f j violation, there is no evidence of anything other than a desire not to be found in a further, obvious violation once caught.

The ASLB cite to Midland demonstrates the ASLB's mischaracterization of this type of evidence. The Midland Board l in fact said:

"The presence of police officers on the highways is, after all, not deemed to justify the issuance of a motor vehicle license to a person who does not offer a i

30

t i

reasonable assurance that he both can and will ccmply with the traffic laws which those officers are charged '

to enforce." Midignd, sugte,at 184, note 7.

In other words, we cannot depend, as a basis for granting a l

license, upon the likelihood the Applicants will get caught if I

.they commit violations of NRC requirements. Instead we must  ;

depend on them to carry out their program "to the letter" whether  ;

- there .i s an enforcement presence or not. The Midland Board ,

r rejects precisely the kind of misplaced attention the PID suffers from in this proceeding.

• A case cited by the ASLB, PID at 12 n. 13., states:

"It is significant that management motivation is not one of the seven factors listed by NRR as having been used in evaluating CP&L management capability, although it may be subsumed in some of them. [ cite omitted] NRR gCefers tg mggsutg mgtivgtige bsz ggtigtmggcez Moreover, while motivation is an important factor, it is not an overriding one. [ cite omitted]" (emphasis added) Gatg-liOg Pgwgt god Light Ggz (Shearon Harris Nuclear Power Plant, Units 1, 2, 3, and 4), 10 NRC 42, F0F 51 (1979)

CCANP would agree that motivation or willinaness are [

necessary and that their absence would be a sign of a very serious character deficiency. But finding the presence of f technical qualifications and a desire to perform barely begins the inquiry. The possession of character capable of performing must be demonstrated. CCANP would agree with the Midland and Shearon Harris Boards that actual performance is the proper starting point for the analysis and that willingness is not an overriding factor.

I Both Jordan and Oprea seem to feel that policy statements from top management will result in the successful implemention of a OA program and the of building a safe plant, or that having a BLR subordinate tell B&R to straighten up will result in t

31

-. ~ _

i straightening up because they have been told to. See PID F0F 122.

Willingness a r.d desire are measured by the amount of 7 resolve, i.e., follow-through. If there is little follow-through, r

then protestations of, or even the appearance of, willingness are superficial indications of character. The actual performance is  ;

a much more meaningful measure.

. An example from the PID highlights how pernicious the ASLB's I

constant search for any sign of willingness can be.

"Where necessary, HL&P and B&R were also willing to j hire consultants or subcontractors." PID at 47. t Yet, the most important focus of inquiry in this proceeding is j the Quality Assurance /Ouality Cnntrol program. In this area, HL&P t

e hired a consultant to draw up the original program but did not hire a consultant to review the implementation of the program until 1980. CCANP F0F 3.10 and 8.61. The ASLB chose to ignore  ;

this evidence.

At the same time, the ASLB does not apply the willingness concept evenhandedly. Since willingness carries such importance in the ASLB analysis and since experience is the most important area where the ASLB finds HL&P lacking, the ASLB should have found a major character defect in HL&P's unwillingness to spend the resources to attract and keep top flight, e::perienced nuclear personnel in'their own and their contractor's organization during the first five years of the project.

3. The ASLB's examination of " responsibility" ignores the relevant testimony and evidence.

The ASLB tries to portray HL&P as responsible at the top management level.

"We also agree with the witnesses for both the 32

Applicants and Staff that, at least at upper management levels, HL&P did not abdicate responsibility to B&R for the OA/QC program (Findings 114, 118-120)." PID at 42.

In Finding 114, it is the ASLB's position that top management was

" responsive and totally committed to quality assurance and quality control, but that their management controls down to the worker level were not working effectively."

. But the evidence of Jordan's commitment to Quality Assurance and Quality Control is the very limited training he saw fit to get years after he took the position as CEO. The evidence of Oprea's commitment is the book learning he gathered. These limited efforts to gain at least a superficial knowledge of what GA/QC is can hardly be characteri:ed as total commitment, particularly in light of all of the evidence to the contrary.

Putting Frazer in charge of Quality Assurance, and leaving him there long after his incompetence was manifest, even more clearly illuminates the attitude of HLLP top management. The treatment of Goldberg 's access and posi tion compared to Fra:er 's is evidence of the favored status of cost and schedule over quality. In response to the. Order to Show Cause revelations of widespread deficiencies in the QA/QC program, top management referred to those deficiencies as a "few kinks in our armor." Sgg P

CCANP FOF 5.33. Which is the better test of management's commitment to QA/DC -- the public relations ef f orts to please the NRC when concerns surfaced, or the realities of the day-to-day life of the plant where management failed to e::ercise effective control over the the actual program?

The fact that an NRC inspector "did not see any effort by the licensee or its contractors to orchestrate anything that 33

.. - - = - _ _ _ __ .

I would be anti-OA/DC", PID FOF 114, is cited by the Board as evidence of management's commitment; CCANP would point to evidence suggesting the need for an investigation into a possible .

conspiracy as proof of management's lack of commitment.

By ignoring abdication of responsibility at the top, the ASLB more easily finds that there was no disqualifying

. abdication.

"Furthermore, particularly with respect to character, only a limited group of corporate employees may truly ,

be regarded as exercising a sufficient degree of [

responsibility so as to be deemed to affect an  !

organization's character." PID at 24. [

l But, if nothing else, a continual stream of unacceptable actions from the lower levels of an organization demonstrates an inability of the upper management to elicit acceptable work and

• attitudes from those for whom management is responsible. )

There cannot be success at the top if there is failure at I

the bottom. When the Superintendent of the Quality Control force says that he operated within a system where quality was a "necessary evil," then the management of that system must be held  ;

responsible. Sgg CCANP F0F 8.6 - 8.7.6.

CCANP accepts the ASLB's description of the pyramidal structure of the Quality Assurance program. PID FOF 44. But the proper functioning of the lowest level of the pyramid is the most critical part of the program. If the detailed inspection program ,

l is functioning effectively, any failures in the upper part of the 1

pyramid are minimized in their impact; if the detailed inspecticn program is compromised, as by intimidation and harassment, the proper functioning of the upper levels will not necessarily ,

rectify the problem of defects not reported in the first place.  !

i 34 T -

,y- , , -_, -, . .,..y,- ,c--- , , , , - - , ,- .v_-----,., . - - -- m , w---

There is little credit for HL&P in having numerous OA personnel on the site, PID FOF 58, if at the same time B&P is understaffed with QC inspectors. PID F0F 59.

The biggest failures were clearly at the top, where the management system was breaking down at the time the NRC finally stepped in. PID F0F 150.

. The Board cites the testimony of Jordan that "HL&P had assigned highly qualified personnel in large numbers to manage STP." PID FOF 118. But if Mr. Jordan's testimony is good evidence to support a finding that HL&P did not abdicate responsibility, then that same testimony should be good evidence against a proposition that HL&P had a major problem of inexperience.

Otherwise, Mr. Jordan's testimony would have to be read as saying that " highly qualified" did not include " experienced."

The ASLB is al'so aware that the Applicants knew about and acted to cure their inexperience more than once. Sep CCANP F0F 3.5.

Finding 119 does not in fact support the ASLB's conclusion on responsibility because Amaral 's testimony addressed delegation of quthgtity, not tgsggngibility.

In Finding 120, the ASLB finds that HL&P became "more involved in the project and more sensitive to the importance of its OA program." HL&P forced BLR to take actions and involved itself in more D&R decisions. All of these activities might be commendable, but in two very real senses they condemn HL&P by their praise. If HL&P was in fact more involved as the voars went by and more sensitive to the importance of the OA program, then the totally unacceptable conditions found in 79-19 are mere 35

clearly the responsibility of HLLP and the OA deficiencies are even more serious in representing the best HLLP found necessary with its supposedly increased sensitivity. The violations documented in the Order to Show Cause, then, are not evidence of an abdication of responsibility but are instead the results of precisely what we can expect to happen if HLLP dges get involved

- and dggg take responsibility through " progressively closer supervision of the contractor ...." The failures in the building of STNP are then representative of what we can expect to happen with HLLP fully in charge of an operational STNP.

If, on the other hand, we return to the ASLB position that inexperience was widespread, we find that upper management assigned people without experience in OA/DC to head the HLLP program. Of necessity upper management would have to rely on the contractor to assure implementation of the OA/QC program. The very selection of unqualified people for the HLLP QA/DC program is ggt gg abdication of responsibility, and poor judgment.

However the analysis is made, the record clearly sunports a finding that HLLP either . abdicated its responsibility or conducted the project in a totally unacceptable manner. While the ASLB would have the deficiencies in this area reflect only on competence, PID at 44, CCANP contends the character defects demonstrated in the area of responsibility are so substantial and so severe as to constitute an abdication of responsibility and an independent and sufficient basis for license denial on grounds of both competence and character.

4. In essence, the ASLB found that HLLP failed to keep informed, but that this failure was not a character defect.

36

t "HL&P received a large quantity of information about the STP but was unable to assess the significanto of much of it." PID at 44.

This conclusion is, of course, a classic exampl e of what CCANP would call a lack of perception.

Once again the Board is giving credit for trying (" received

]

a large quantity of information") rather than focussing on

, character traits that lead to successful implementation ("Ca3ble to assess the significance"). This e

: ample highlights rather dramatically why CCANP objects so strongly to the extraordinary 4

emphasis the Board gives to willingness. Imagine company

' management with numerous reports from operators on a problem 1

1 which could lead to a catastrophic accident, but they are unable 4

to understand the reports and authorize action to be taken to 1

correct the problems and preve,nt the accident. Do we really care that much that the information reached the top, if the top is unable to assimilate and act upon that information?

The fact that the information reached the top may be to the i

credit of whoever designed the organizational structure but it has very little probative weight in deciding whether the company's management has the character needed to operate a t

nuclear facility.

E. The ASLB disregarded CCANP's efforts to present a satisfactory model of character.

! 1. CCANP presented a model similar to the commonly I understood definition.

CCANP proposed a set of character traits which are relevant 1,

i j to the operation of a nuclear power plant and which are relevant to an analysis of HL&P's conduct on the record here --

l

" foresight," " judgment," " perception," " resolve," " integrity,"

37

i I

I I

and " values." CCANP does not insist that these traits exhaust the list of relevant traits, but each item on the list is an j essential trait. Significant failure to possess any one of these

t.  !

traits raises serious questions about HL&P's or any NRC [

. i

, licensee's character.

The ASLB acknowledged that i 1

. "These traits are, of course, generally relevant to [

character. Indeed they clocely track the definition o .-  !

character which we have found appropriate." PID at 18.  !

! I The ASLB definition of character included some traits CCAMP used r

" firmness," " resolution," "self-discipline," and " force" all fall within CCANP's " resolve"; "high ethics" is within "valuos"; and  !

j " Judgment" is one of CCANP's traits. [

L All parties agree that " integrity," e.g. honesty and candor, [

k is an important character trait.

CCANP adds two other traits - " foresight" and " perception" l

-- which emphasize the quality of interactions inside the  !

l organization and with the outside world. While refusing to accept [

these categories, the ASLB .ppears to use them.  !

i "Or, put another way by the Staff, BLR's serving as '

construction manager, architect engineer and constructor was a 'very ambitious program, especially when you don't have much experience' Ccite omitted]."  :

PID at 48 (an" example of failed foresight). ,

. t "What we fault them for is not their lack of awareness of details but their lack of understanding of the facts ,.

which they had before them. This represents in our view j a defect in competence rather than character." PID at <

43 (understanding is a crucial element of perception).

i Lack of perception is certainly evidence of a character [

problem when. analysis shows lack of porception occurred in a  ;.

P

critical segment of the corporation, existed ove- for a long

. period of time, and caused major flaws in the cerformance of the l

+

38 t.

v. ~- - . - _ _ ._y e--,,_. .,,..m_..w..,_.cr.,,. .--_..,.,,.,,..,,-._,...,w,

, ,_. ,,y,,, . . - _ - - - - - - _ , . = _ . - - -

(

i-corporation. The severity of HL&P's lack of per eption clearly reached the level of a character defect.

As a predictor of future performance, this defect suqqests tnat HL&P will put people in critical places who lack the 1

perception to know what is going on, and will leave them there for a long time. The seriousness of this prediction in terms of f

, potential health and safety danger to the public is sufficient for the evidence of this defect to provide an independent and ,

i sufficient basis for denying the operating license. CCANP finds 1  :

the cause of the deficiency to be the Board of Directors' failure I i to put in place capable managers and to exercise their oversight i  !

responsibilities. ,

, For each of its character traits, CCANP provided an analysis f i

explaining the ne::us of that trait to a character decision in the [

{ nuclear context. See CCANP F0F 3.1, 4.1, 5.1, 6.1, 7.1, 8.i.

2. The ASLB erred by refusing to consider CCANP's analytical model. e i

The ASLB rejected CCANP's analysis of relevant character  ;

l traits as "so broad and ill-defined that analy:ing them would

. give little assistance in providing answers to the l questions raised by CLI-80-32." PID at 18. *

+

I As noted above and by the ASLB the traits selected by CCANP +

t closely parallel the definition quoted by the ASLB. To say that analyzing those traits would give the ASLB little assistance is to say eitner that we cannot define character with enough (

i specificity to reach a conclusion on whether the neenssary ,

character is present, and therefore that entire inquiry proposed by the Comraission and Congress is use cus, or that the Board has (

39 f

I i

4 i

I l I

,' in fact abdicated its responsibility to define, measure, and set [

f i a standard f r the AEA's character qualification.

. One reason that the ASLB rejected CCANP's analytical frame- l E

- work was that CCANP demonstrated more than one charactor trait by (

l a single incident. PID at 19. The position that one piece of }

evidence can be used to prove only one proposition is a j i

- ,. nonsensical ipse digit.  !

l CCANP having met the ASLB's criteria for identifying f character traits relevant to this inquiry and having demonstrated ,

• support in the record for the failures in those traits, the ASLB

! l was under an obligation to analyze any such trait brought to

[ ,

l their attention.

F. Had the ASLB adopted an analytical frameworl; truly i context, the I

! relevant to the character decision in the nuclear I operating license would have been denied.

1. The ASLB standard for character is too low.

i In summarizing the " facets of HLLP'r chtractor" which they find " pertinent" to the character inquiry, PID at 45, the ASLB [

i reveals the standard for charactor it intends to apply.

i'

a. "HL&P has been open and candid with the NRC."

PID at 45. t This one finding, if true, would have some probative value. {

r As noted above, p. 27-30, gygca, CCANP challenges the ASLB's (

r findings and conclusions on HL&P's honesty and candor. Sgg al29  !

' . ,t CCANP F0F 6.19-6.20. CCANP contends the ASLB should have looked carefully at this finding in the light of the other ASLB findings. For the ASLD, the key HLLP defect in competence was (

~

I

. inexperience, but HLLP denied in its testimony that inexperience t

was a problem. For the 896@, I&E Report 79-19 j L

1 I

t I

40 L i

i I

l

}

" indicated substantial deficiencies in HLLP's construction quality assurance / quality control (OA/QC) program and cast serious doubt on HLLP's ability to manage construction of the STP." PID at 3.  ;

But HLLP testified that these same findings were only minor problems. See e sgs CCANP F0F 5.33.

u

. The ASLB should have said, with Judge Miles Lord,  ;

"It is not enough to say, 'I did not know,' 'It was not ,

, me,' 'Look elsewhere.' Time and again, each of you has 7 used this kind of argument in refusing to acknowledge ,

your responsibility and in pretending to the world that i the chief officers and directors of your gigantic i multinational corporation have no responsibility for  :

its acts and omicsions." "A Plea for Corporate j j Conscience," Harper's, June 1984 at 13.

Instead, the ASLB turns to inappropriate sources to search j for evidence of honesty and candor.

"It demonstrated those same qualities in its

! relationship with CEU (which resulted in C$U's withdrawal from the proceeding)." PID at 45. ,

i But CEU's goal was the removal of Brown and Root. PID at 07. Once [

Brown and Root was off the project, CEU withdrew. Any openness and candor on the part of HLLP were irrelevant to the withdrawal of CEU.  :

b. Evaluating HLLP's responses to noncompliances and nonconformances, the ASLB reveals how low its standard is for-finding the requisite character.

The breakdowns in the OA/QC program stand a's perhaps tho ,

single most significant evidence of HLLP's failure to perform.

4 Ignoring the violations themsJ1ves in favor of HL&P attempts to reapond to those violations, the ASLB concludes:

"It has done its best -- although not always with  ;

success -- to deal with the many OA/OC problems it  !

faced." PID at 46.

3 The Board damns with faint praise. If the record of this t proceeding reflects the best HLLP can do. then clearly denial is 1

41

e t

l' warranted. But is doing your'best really a valid standard? In the  ;

future, will . the. character necessary to receive a license to operate a nuclear power plant be judged on the basis of the e

applicant corporation doing the best it can, whether that "best" is good enough or not?

The " manner in which Ethe Applicants] reacted to the

. . noncompliances" is not a character trait at all; it is simply a series of actions which require analysis in terms of character traits. This analysis the ASLB fails to do. Instead, the ASLB is satisfied to simply rely on the fact that HL&P made changes in response to problems that it did not identify (perception) and did not solve those problems (resolve) (e.g. " problems eventually ,

resurfaced." PID F0F 59). Sge alsg PID at 43.

c. For the issue of abdication of responsibility, the ASLB sets a standard far below excellence.

The ASLB finds HL&P's abdication of responsibility not disqualifying because HL&P later involved itself more.

"Although it perhaps at first left too much responsibility to BLR, it remedied that situation and became more involved with the project." PID at 46.

This is an Issue B finding, i.e., after being found lacking in the area of assuming responsibility, the ASLB finds that they

• have now assumed responsibility. The first part of the statement 1 is, however, relevant to an Issue A conclusion: HL&P clearly abdicated too much responsibility to BLR.

Again the ASLB has ignored the implications of the abdication standing alone. The essential problen was that there was no one to help. HL&P hired B&R and assumed B&R would do the job because HL&P had no idea how to do it. When B&R had trouble, 42

l 4

i i

there was no one they could turn to for assistance. .at good ,

would it do for.the blind to lead the blind? The ASLB ignores I

these issues in order to consider only the remedial acts.

" Responsibility" can be a character trait, but CCANP found i it more useful to break this trait into sevoral components

. including " perception" (the ability to stay informed), " judgment" ,

. (the ability- to make appropriate decisions on the basis of the j information received and the demands of the situation), and

" resolve" (the ability to follow through on decisions and make sure they are carried out). HL&P failed on all three counts.

The ASLB again relies upon " willingness to remedy," PID at 43, as a basis fcr now showing that HLLP teos responsibility. The i ASLB also attributes any problems here, as elsewhere, to [

f i " inexperience" without doing any analysis of whether inexperience l l

itself is evidence of irresponsibility and lack of character.

I The ASLB standard accepts an applicant willing but unable to 4

be responsible because of inexperience. Such a standard is set i far below the standard of performance CCANP contends is expected >

1 I

of a truly responsible applicant.

d. The ASLB found that HL&P failed to keep  ;

informed but that they tried.  !

"It also exposed itself to great quantities of project information, although it was not always sufficiently g

[ knowledgeable to react properly to that information."

4 PID at 46.

The quantity of information tells us nothing about the quality.

More importantly, the inability to understand the  !

a g i information says far more about character than does the amount of ,

t information that HL&P exposed itself to.

6 To summarize the ASLB's findinas on character: ,

. I 43

1 l

1). Was HL&P honest and forthright? ASLB: Yes 2). Did HL&P respond to nonconformances and noncompliances when they arose? ASLB: Yes, but not always successfully. l 3). Did HL&P abdicate too much responsibility to B&R?

ASLB: Yes, but they later acted more responsibly.

. 4). Did HL&P attempt to keep informed? Yes, but mainly .

without success.

t Even the ASLB findings on the issues as redefined by the l

'ASLB for purposes of the PID add up to what can be described at best. as a fair-to-poor record.

To even get HL&P that high on the scale requirs ignoring significant evidence and the implications of that evidence. A -

more realistic assessment using the ASLB-redefined issues is that ,

HL&P's record was poor and precludes them from being granted an operating license for STNP.

2. A rigorous analysis of past acts as an independent and sufficient basis for license denial would produce a decision to deny.

The nuclear power industry is unique in that it has been t developed from a technology created by the federal government, andHits authority is carved out of a government monopoly. It is

- unlawful to possess nuclear materials or equipment without a license from the federal government. The industry has been  ;

F

- subsidized by the government. The federal government insures the 1

industry and protects it against third party liability. Costs, even those which might result from the utility's negligence, are f

paid by utility ratepayers at regulated rates. The monopoly structure of the utility industry insulates the industry from 44

b e

I competition.

Moreover, the social costs of the industry, for example the a

generation of long-lived highly dangerous and toxic wastes, are ,

' l largely assumed by the government or are transferred to the victims exposed to these wastes. The virtual impossibility of ,

proving causation of individual radiation injuries by any

. particular emissions from a nuclear power plant precludes tort j liability from serving its traditional role of deterring health  !

and safety violations.

Since even losses of tne utility's own capital plant may be recovered through i ncreased utility rates in a monopoly market, this potential deterrent to careless construction or operation of a nuclear power plant is also weakened. j These broader realities of the nuclear industry provide the context for this - case. The- lack of any other deterrent to careless practices in the nuclear industry places the full burden of deterence upon the regulatory process presided over by the Nuclear Regulatory Commission. The ASLB in this proceeding has -

j. accurately described the fundamental objective of this regulation as follows:

i "our ultimate finding of fact must determine, i,ntet ,

- ~

alia, whether there is reasonable assurance that the  !

Applicants will (i z e., have the character to) observe j the Commission's health and safety standards." PID a I

16.

The adequacy of the Applicants' character was drawn into question by events and investigations leading up to the Order to Show Cause. These hearings were held to determine wheth,er there

}

should be an early decision to deny the license in light of the i

Applicants' failure to satisfy NRC requirements. The issue most 45 -

L

,. .r-,e,,-----_.----.-e.,- r, - - ~ . 1 -.,-.-.,_-r,m y, , , - .. s_ ---m .--,,,y --,y--,1 --weir-w+-e w+--- -

L cruci al to that determination was to be the Applicants' character. ,

t The ASLB in this case has attempted to define for the first time the nature of the character traits necessary to receive an NRC license, and has attempted to apply its definition to the record of Applicants' performance. Though much of its analysis is I

. useful, the ASLB ultimately failed to develop a model for analysis of corporate character sufficient to satisfy the Atomic Energy Act. The failure to develop such a model resulted from the I

ASLB's aversion to license denial. The ASLB views license denial i as punishment.

"Moreover, our role in this proceeding is not to punish  !

an applicant for past infractions." PID at 22.

Rather then " punish" HLLP, the ASLB looks for an 9:planation or reason (e.g. inexperience), as well as repentance (e.g.

remedial acts), in order to forgive (i . e. not deny the license).

l A natural result of this approach would be to focus on what happened after HL&P was caught, and not on the violations themselves. CCANP contends that this ASLB view of its task is contrary to fact and law and that it led the ASLB to conduct the wrong kind of inquiry, and sot the wrong standard. ,

• Treating denial of a license as punishment directly contradicts the basic principle that NRC licenses are not rights but privileges. p Denial is not a punishment. Denial of the license merely withholds a privilege to the applicant who falls short of the i

high standards required for an NRC license. CCANP's analysis starts from this assumption. The grant of an NRC license requires l

46

proof of good character, if that issue in first raised by suffi-cient facts. Once evidence shows the licensee's character to be

-questionable, a heavy burden falls upon the applicant to show that its character has not been so unsatisfactory that it is now disqualified. In making this analysis, past established facts must be given greater weight than future untested assertions and

. promises.

By " punishment," the Board must mean lost investment resulting from the plant not going on line. But It has been long established that no amount of investment in a nuclear power plant vests any right to a subsequent license. Pgtgt j Rgactgt pgyglggment Cgz yz glegitigians, 367 U.S. 396 (1961);Sgg alsg 12 NRC 289; CCANP F0F 2.10.

The Applicants risk denial of an operating license based on t

predictions drawn from their performance under the construction permit. The Applicants are given the opportunity to perform up to a certain standard and thereby to engender in the NRC confidence that their operating performance will be of an equally high character. If the Applicants' performance does not engender such O

confidence, then denying the privilege of an operating license is not a punishment; it is simply the Commission telling- the applicants that they have been found to lack the necessary qualities to be given the privilege of operating a nuclear reactor. Why else would they be called " Applicants?"

A license to operate a nuclear power plant conveys a tremendous responsibility. The seriousness called for by the

{

decision on licensing mirrors the seriousness of the danger if the decision is in error. In analyzing the question of whether i

4' I

the privilege should be granted, the ASLB took an extremely lenient approach with the Applicant, an approach that was unwarranted by law. The PID's findings amount to little more than a holding of law that the Applicants deserve a second chance.

Such acts of mercy may be appropriate in the criminal courts

.where judges are given broad discretion to adjust punishments to

- take into account certain factors, such as rehabilitation since the time of the crime and the victim's loss. But such balancing of equities is inappropriate in a nuclear power plant licensing

• proceeding, which is not about justice and mercy, but prediction.

The public who could be injured by an unqualified nuclear licensee is not given a second chance. If the privilege to opa-rate a nuclear power plant is given based on some misplaced sense of compassion for the Applicants, thousands of lives could be lost The only compassion that should be controlling here is that for potential victims of an unprecedented human-made catastrophe.

The ASLB's decision and its conduct of the hearings fully demonstrates the " promotional" attitude toward the nuclear industry for which the NRC has been repeatedly criticized. A record was presented to the ASLB which demonstrated a lack of character. With little analysis, the ASLB concluded that certain

" remedial" actions, some of which were not even tested through the adjudicatory hearings, were sufficient to warrant immunity from the consequences of inadequate character. In one sense the ASLB is correct. Its role is not to punish the Applicants, so neither is its role to consider mitigation to punishment.

In their findings of fact, CCANP has proposed a set of character traits which are relevant to the operation of a nuclear 48

power plant and which are relevant to an analysis of the Applicants' conduct shown on the record of this case. Had the ASLB conducted its inquiry in accordance with an appropriate legal analysis of " character," its decision could only have been to deny HL&P the license.

V. Intervenor Contentions In order to make maximum use of its limited resources in the areas of most importance, CCANP did concentrate on the central issue of character and did not present findings on most of the contenticns.

The Board takes the position that the contentions for which CCANP did not submit findings could be treated as abandoned but that the Board has the discretion to make findings and conclusions on those issues anyway. PID at 67. The Board proceeds to render an opinion on all the contentions, PID at 67 et seq.,

but " narrowly" on each deficiency standing alone, thus avoiding a decision on "whether the deficiencies when aqqregated, are indicative of an overall construction OA/DC program i

that is or was so defective that there can be no reasonable assurance that STNP has been constructed adequately and can be operated safely." PID at 66.

Though these findings "are pertinent to the CLI-80-32 issues on which the Board is charged with rendering an opinion by the Commi ssi.on , " the Board does not incorporate those findings and conclusions into the findings and conclusions on Issue A.

CCANP will address only those contentions which bear significantly on character and/or competence.

A. Contention 1.1 The Applicants constructed a major building one foot short 49

of its designed length. PID at 67. As the Board notes, the Applicants admitted that this error resulted from poor surveyino >

practices and that there was no procedure for or incoection of actual surveys at the time the error was made. PID at 68.

The Applicants denied that the lack of an inspection procedure or of actual inspection violated 10 C.F.R. Part 50.

. Appendix B. Id t The Board properly rejected this position. PID at 69-71. But having found that Applicants violated Criterion X of Appendix B, PID at 72, the Board immediately goes to the remedial measures adopted.

CCANP would go on to fit the contention findings and opinion into the issues. Under Issue A, CCANP wculd find that the total absence of any effort to verify a survey prior to construction is evidence of a negligent attitude. While this particular deficiency did not end up being safety-related, the Applicants still had to reengineer the penetrations into the building and design a new equipment layout. Such a negligent attitude is evidence of a lack of character.

Even accepting atguendg the Board's inexperience excuse, this deficiency has nothing to do with experience since BLR is one of the world's most experienced building contractors and HL&P is one of the largest utilities in the Uni ted States.

The insistence, as late as the hearings on the operating license, that no such inspections were required by Appendix B is an indication that Applicants interpreted Appendix B very narrowly and that no true remedy took place. Adopting a procedure simply to satisfy the NRC while denying the underlying rationale 50 1

for the procedure, i.e. the implementation of Appendix B, is evidence of a failure to truly remedy the problem.

B. Contention 1.2 The Board's findings and conclusions on the concrete voids are an excellent example of how the Board's use of the concept of experience is inappropriate. Sqq PID at 74-75. The volds detected

- in the concrete containment walls occurred primarily in the upper portions of those walls after numerous similar lower pours had been completed, providing experience in just such pours.

Furthermore, the factors contributing to such voids were not uniquely nuclear factors e.g., restricted access and visibility, insufficient vibration, equipment malfunctions, delays, fatigue, and inadequate lighting are potential problems of which management must be aware in any complex concrete pour.

The Board's inexperience excuse simply does not ring true in light of the evidence. A more logical explanation is that cost and schedule pressures produced conditions where actions were taken that would otherwise have been avoided and that these actions produced safety-related deficiencies in the work.

If Brown and Root was feeling cost and schedule pressures, those pressures were coming from the Applicants. That safety-f.

. related deficiencies resulted f rom such pressure is a reflection l-o f. the Applicants' lack of concern for safety compared to cost and schedule, a reflection on their values and therefore on their character.

Thus, the last two sentences of the opinion on this i

! contention, PID at 74, should read:

i I

i 51

s I

i i

l i

An experienced constructor like Brown and Root would I never have permitted a pour under the conditions reflected -in this record had there not been cost and schedule pressures brought by the Applicants. Moreover, ,

Brown and Root QC might well have prevented and/or

caught such deficiencies had it not been for the '

translation of the Applicants' cost and schedule r

, pressure through BLR construction to B&R QC in the form l of intimidation. t j

C. Contention 1.7(a)  :

CCANP disagrees with the Board's approach to the function of h i

DC inspectors.-CCANP contends that if an inspector has a question  !

about whether a revised design was in fact approved by an appro- I priate engineer, that concern may well arise from the OC inspec- .

l L tor's personal knowledge of other jobs or of previous work on

I i

the same job. If there is any doubt, the CC should be allowed to {

l eliminate that doubt. The Board saying that verifying design  !

changes is the function of Design Engineering and not OC ignores the fact -that what QC was trying to do was confirm that Design Engineering had in fact approved the design change. The evidence f in- the record supports that a memorandum was written to prevent DC inspectors from confirming that Appendix B had been complied with. This is a violation of. Criterion I (in that the authority

+

and organizational independence of QC was restricted) and Crito-  !

,* rien III -(in that when a question about design arose, HL&P denied i

<- the opportunity to assure proper design changes were being made.)

D. Contention 1.7(e) ,

l i

The Board correctly finds that the i

" incidents of harassment of DC inspectorn at STP were i frequent enough to represent a serious indictment of {

BLR's managerial competence." j The Board also finds correctly that:

"Although BLR (assisted by HL&P) took steps to  ;

52 [

eliminate the harassment, the record does not reflect whether, if it had remained on the project, B&R would likely have succeeded in doing so. The recurrence over the course of several years of incidents of harassment, notwithstanding attempts to eliminate them, create certain doubts in this regard."

The Board is concluding that all the corrective measure taken by B&R and HL&P te eliminate harassment and intimidation of inspec-tors were likely unsuccessful. CCANP considers this a devastating finding on Issue A, both for character and competence. The removal of BOR had nothing to do with the quality of their performance. HL&P's continued indulgence of B&R

• s violations of fundamental safety-related requirements is a character defect demonstrating a lack of values and a lack of resolve.

The fact that HL&P could not get Brown and Root to effectively control harassment and intimidation of inspectors is highly probative evidence of HL&P's lack of character and competence (assuming we are using the Board's concept of competence, not just technical competence as the Commission used the term in CLI-80-32). The chronic and widesoread intimidation and harassment violated not only Criterion II as the Board finds, PID at 82, but also Criterion I (failure to retain responsibility for the OA/DC program, failure to assure the establichment and implementation of an appropriate OA/OC program, and fa11ure to ensure the authority and organi:ational independenco of quality assuranca inspectors), Criterion X (fa11 urn to establish and execute a program for inspection of activitics affectino quality), and Criterion XVI (failure to take effective corrective action to prevent recurrence of intimidation and haractment.

E. Contentinn 1.G(a) and (b) 50

"Moreover, the Applicants' unimpeached and uncontroverted testimony demonstrates that HLLP acted decisively and promptly to correct the access engineering problem." PID at 84.

In fact, Just the reverse is true. The allegations in ISE Report 81-28 arose because HL&P QA wanted to stop work on all B&R work to force BLR to respond to this lono-standing concern.

F. Contention 1.8(c)

Contrary to the Daard's position, the evidence demonstrates that the HL&P OA director made a statement in conflict with NRC requirements and then issued a clarifying letter after an NRC investigation began. Sgp CCANP F0F 6.01.1.

G. Contention 1. 8 (d )

Contrary to the Board's position, the entire affair reoarding the inspection process reveals that HLLP did not have available the procedures necessary to implement their OA program effectively and refused to permit the QA inspectors to use higher tier documents to do the job.

VI. 1ssue D

!ssue D never belonged in this proceeding. In any event,

. HL&P has failed to prove that it has remedied its lack of character. HLLP's current competence is unknown. Sqq CCANP F0F 10.0-10.02 A. The ASLB erred in treating the ending of BLR's involvement in GTNP as a remedial act that supported a conclusion that HLLP had remedied its character deficiencies.

Repeatedly, the AGLD treats the removal of BLR as a dramatic remedial stop by HLLP having great probative weight for both character and competence. The ASLD says the removal wau the most significant response by HLLP to nonconformances and S4

noncompliances, PID at 40, an "imoortant step," Id., "the most extreme corrective action possible," Id., and "a testimony to CHL&P's] character." Id.

l A careful examination of the B&R removal leads to the opposite conclusion. If B&R had stayed on the job, the ASLB says O

it would have considered license denial on competency grounds.

. PID at 31. But HL&P took an inordinately long time to realize

'l that DLR could not succeed as architect, engineer, and construction manager. See CCANP FOF 6.33. It is important to note that HL&P fired B&R only from its position as architect.

engineer, and construction manager. HL&P wanted B&R to remain as constructor and QA/QC. See CCANP F0F 6.32. Most important, the par ti al firing of B&R did not result from concerns about the quality of BLR's work, PID at 40, but rather from lack of productivity, PID F0F 125.

Given these facts, the removal of BLR in no way demonstrates competence or good character.

B. The key management figures responsible for the failures of HL&P remain in place.

The problem for HL&P is at the top. Changing the prime contractor does nothing about the lack of ability at the top of HLhP. Those who failed to perceive the inability of their previous prime contractor to achieve a quality plant are not fit to continue au the superviscrs of construction.

More importantly, when the construction is finished, Bechtel and Ebasco will be gone. The decisions on continuing operation will be made by the same two top people who let the project got out of control in the first place. The selection of bechtel and 55

Ebasco to complete construction, after years of f ailure with BLR.

predicts nothing about operation when HLLP will be on its own.

To predict operations performance, we must look both at the performance of those who will be in charge of operation, i.e.

Jordan and Oprea, and at the performance of those responsible for those in charge holding their position, i.e. the Board of

- Directors. What we find is that Jordan and Oprea failed miserably when it came to ensuring a quality plant was being bailt and that the Board of Directors failed to discipline or remove these two officers even when their failure became a scandal. The failure to remove, discipline, or even give special instructions to Jordan and Oprea demonstrates the lack of any remedial action at all.

C. The remedial actions by top management indicate very little real change'in their attitudes or expertise.

"The circumstance that Messrs. Jordan and Oprea attempted to improve their competence in OA matters, as in attendino the Crosby College seminar (Finding 215),

reflects favorably upon their character (as well as that of HLLP)." PID at 43-44.

Were this proceeding not such a serious matter, this finding might be an attempt at humor. The seminar proffered as evidence that Mr. Jordan sought out training in OA to improve his competence lacted precisely one day. See CCANP F0F 8.7.2. That the ASLB would find this desultory swipe at gaining competence convincing evidence of even a remedial act is a clear indication of how an::ious the ASLB in to find something to excuse HL&P's dismal performance.

VII. Due Process CCANP contends that, both in the PID itself and in the

. conduct of the proceeding, the due process riohts of CCANP as an 56

4 i.

intervenor were systematically violated. These violations took the form of ASLB bias toward HLLP and hostility toward CCANP.

Procedtical errors systematically detracted from CCANP's right to a fair hearing and an opinion rendered on the issues as litigated I and the evidence as admitted.

I A. In the opinion itself, the due process violations are

evident.

1. The ASLB showed a clear bias toward HLLP.

i

. -The ASLB severely narrowed the possible traits which could i

! produce license denial (for competence, none; for character, immutable defects). Then, the ASLB brought in remedial material at every opportunity while ostensibly making findings or 4 conclusions on Issue A. These ASLB actions directed attention i

j' away from the serious violations committed by HL&P and toward 1

l areas where HLLP looked better.

The ASLB also showed bias by using negative or neutral evidence as if it were favorable to HLLP. The ASLB gives i

favorable credit in the character inquiry to HLLP because i

! "Cd]uring NRC's 79-19 Investigation, after early I

preliminary reports.of numerous nonconformances in many l ,

areas, HL&P began corrective actions well before the i NRC had completed its investigation and issued its report." PID at 39.

i HLLP was fully aware the NRC was finding noncompliances. Their l actions were no more than an attempt to head off an enforcement l action they knew the NRC would take.

i The evidence surroundina the end of B&R's involvement in STNP is no credit to HLLP but the ASLB qives the event a major l

l role in showing HLLP's good character. 59g p. 54-55, gu p.t a .

l 4 When harassment becomes so bad that HL&P has to require BLR

?

$7

. - - - _ ~ .__ - __ -- - _ - .- .- - . . --

l '

a r

i i

to adopt a procedure not necessary at other nuclear plants for ,

resolving disputes, the adoption of the procedur e is f avorable in the ASLB view, rather than compensation for a breakdown more serious at STNP than at other plants. PID at 39. ,

Even though HL&P's failure to hire any consultants in the f I

! OA area over a five year period constituted a major falling, the {;

} - ASLB .can still find that "Ew]here necessary, HLSP and BLR were  ;

i i

also willing to hire consultants or subcontractors." PID at 47.

I There is a due process question involved in the ASLB's heavy reliance on inexperience for its opinion and findings. The Appli-  ;

t i cants, with the burden of proof, argued that they had highly .

t I

qualified people in charge of STNP. The Applicants in fact take that position throughout the proceeding. See gigt PID F0F 118. I i When the ASLB finds inexperience as a major cause of the problems f i

j at SThP, the ASLB is finding that HL&P did not meet its burden of -

> proof. But rather than follow a logical progrossion from a fai-I lure to meet the burden of proof, the ASLB turns this failure  ;

i i into a success, i.e. assumes the testimony of the Applicants was l I

I simply in error as to their capabilities and excuses their per-  !

i formance on the basis of inexperience.

CCANP was certainly not on notice that the ASLB intended to  !

use inexperience in this manner. In fact, the logic of the i

Board's position is that CCANP should have proven that HLLP did l

in fact have highly qualified people (experience being part at i

their qualifications) in place at all times when things were  :

r

going wrong at SINP. Reason dictates that CCANP could not l

bl.ve known that such proof was required by the intervenor. ,

f i -The ASLB takes all the ovidence on how HL&P resp'onded after '

'~

! O I 58 I e i

_ _. _ . ..._ _, _ ..- _ _._._ . _ . _ . , _ . . _ . . _ - - . . , _ _ , , - . . - _ _ . .i

. .~ _ ,. - -.- - - - .- _ . - _ . . - -

i L

?

t being caught violating NRC regulations and elevates that evidence f l

. into a major positive character trait. The ASLB treats this evidence as equally valuable to predict future performance. as is [

i  !

- the evidence of past acts not taken in response to an enforcement j J

action. But the remedial actions the ASLB concentrates on are the [

equivalent of coerced actions, coming as they do in response to

. enforcement action. As such, these actions say little about the character of - the actor. See Appendix 1, Figure 1.

4 .

F 2. The ASLB demonstrated repeated hostility toward CCANP's efforts.  ;

I l'

The ASLB dismissed CCANP's e:: tensive work on the definition of character as being "br cad , " "ill-defined." and of "little  ;

assistance." PID at 18. [

l j The ASLB criticized CCANP for using one piece of evidence or  !

! I one event to illuminate more than one character trait. t The ASLB repeatedly distorted CCANP's actual position. l I

! "But if by this claim CCANP means to assert -- as we j believe it does -- that attempts to achieve quality l should not be taken into account in evaluating [

character (irrespective of the degree of success of  ;

l those attempts), then we must demur from that position.  !

4 In our view, attempts to achieve quality are pertinent i to character." PID at 41. [

I j The CCANP findings cited by the ASLB Just before this statement I -- CCANP F0F 2.17, 2.19, 2.27, 2.29, and 2.42 -- do not support t 5 l the ASLB*s characteri:ation of CCANP's position. CCANP is [

answering a position asserted by the Staff, a very broad position  ;

i that trying manifests good character. CCANP never said " attempts  !

l to achieve quality should not be taken into account." The ASLB is l r I

merely discrediting a position CCANP did not take. This is part of an ASLB pattern of makina CCANP appear more doctrinaire and i

?

(

rigid in its positions than CCANP really is. CCANP agrees that attempts to achieve quality provide circumstantial evidence of values and'are therefore relevant to the character inquiry.

"For example, the record citations Eby CCANP3 which are said to demonstrate a lack of familiarity with details on the part of Messrs. Jordan and Opera do in fact

- reflect that neither office was aware of every single project detail. Nor would we enpect them to be. In our view, both of them have been exposed to a level of

, detail commensurate with their corporate posi ti ons

[ cite omittedl." PID at 43.

The " record ~ citations," i.e. CCANP FOF 5.24.Cl3 - 5.24.9, do not support the conclusion that CCANP's position was that Jordan and Oprea should have been " aware of every cingle project detail."

This is a deliberate distortion by the Board of CCANP's position; the ASLAB can look at the citations and decide whether CCANP has identified the type of information Jordan and Oprea should have known.

"The gist of CCANP's claim is that HL&P never really perceived the difference between building a nuclear and a fossil-fired plant and, for that reason, was unable to deal successfully with the OA/OC requirements inherent in constructing a nuclear plant." PID at 45.

j In fact, while spending some time on the lack of a nuclear versus i

i fossil fuel perception on the part of HL&P, CCANP stated:

I "While obviously of great importance, HL&P's failure to it adequately distinguish between fotsil and nuclear I - plants is only one in a long series of failed

j. perceptions." CCANP F0F 5.CO i

CCANP then proceeded to document many of those other failed perceptions, almost all of which are generic, i.e. not related to the fact that a nuclear plant was being built, such as the need to continually use strong words to get the attention of the contractor, the need for a special dispute resolution procedure, and the high turnover of contractor supervisces. CCANP pointed to

( 60 i

these as problems of HL&P unrelated to whether they knew thev were building a nuclear plant or not. For the ASLB's purpose of using inexperience to explain practically everything, it was useful to characterize this major finding of CCANP as the " gist" of CCANP's position, since HL&P is clearly e::perienced with large construction projects. The ASLB can thus credit CCANP's

_ observations as "well founded" but then sweep them away with the

" inexperience" broom.

T. The ASLB committed numerous procedural errors in its opinion and findings that denied CCANP's due process rights.

First and foremost, the ASLB approach to this proceeding as a " punish cr forgive" quession colored the entire PID and distorted the standard that would be used to judge character.

The ASLB decided that for purposes of the character analysis in this proceeding, the parties and ASLB would analy:e only character traits that have a ne::us to a particular nuclear performance standard and that are reasonably inferrable from the record. The ASLB should either have rendered an opinion and made findings on the CCANP traits or e::p l ai ned why any particular trait lacked the appropriate nexus or was not properly inferrable from the record, but they did not.

• The ASLB rejects a major analysis by CCANP regarding the preconditions set on the study of QA options. The ASLB states:

"They Cthe CCANP allegations] are based on statements out of context and, in fact, amount to a distortion of the record when viewed as a whole." PID at 35.

There is no explanation as to which statements are taken out of context or how the record as a whole is distorted. It is impossible for CCANP to appeal this attack when no specifics are 61

given.

CCANP spent a great deal of time piecing together the proof of this allegation. Just like CCANP's work on defining corporate character in the nuclear context, the ASLB ignores CCANP's work showing a deliberate deception by the Applicants.

B. The ASLB failed to accord CCANP its procedural rights under the Administrative Procedure Act, NRC regulations, and the

. Fifth Amendment of the United States Constituion.

1. CCANP was entitled to th,? procedural rights granted by Section 554 of the Administrative Pr ocedure Act.

Operating license proceedings are governed by Section 554 of the Administrative Procedure Act (APA). 5 U.S.C. Section 550 et seq. Section 554 governs any adjudication required to be "on the record." An operating license proceeding is an "on the record" hearing as that phrase is used in Section 554(a). Although Section 189(a) of the Atomic Energy Act does not use those e:: ac t words, straight-forward analysis compels this conclusion.

It is well settled that no great magic resides in the phrase "on the record." Instead, the applicability of Section 554(a) turns on the substantive nature of the hearing Congress intended to provide. Sgacgast Anti-Pgilut.i.gn Lgagug v 2 Cgglig, 572 F2d 872, 876 (1st Cir. 1978). Corgress certainly intended licensing hearings to be held pursuant to Section 554 of the APA. Since an operating license hearing is clearly adjudicatory, and since Section 554 is the sole APA provision concerning the procedures to be used in an adjudication, Congress could only have intended that operating license proceedings be governed by Section 554.

In any case, the NRC has, as a tratter of practico, contemporaneous with the enactment of the statute down to the 62

present, conducted its hearings as "on the record" hearinos. An "on the record" hearing has been defined as one in which the parties have the richt to know and to meet the evidence upon which the decision-maker will base its conciucions. Lgng Iglagd BailCggd Gomaggy v z ytS 1, 318 F.Supp 490 (E.D.N.Y. 1970). NRC regulations cicarly contemplate such a hearing. Parties have the

- right to introduce all relevant evidence, and all decisionu must be substantially supported by the record. 10 C.F.R. Section

2. 743 (a) . Having aircady conducted this hearing wtthout prtor notice that existing practice would not be +ollowed, the NRC would now be estopped from character 1:ing this hearing au not "on the record." QLty gi Wgst Ghigagg yt NEG, 7 F2d 632 (7th Cir.

1993).

a. The ASLB's bias in favor of the Applicants and hostility towerd CCANP deprived CCANP of the impartial hearing required under the APA.

The conduct of these hearings is further evidence of bias in the panel. APA Section 556(b) requires the employees participating in decisions cuch as this one to conduct their functione impartially. CCANP challenged Judge Hill for bias. The ASLAD voted to remove Judqo Hill from the panel in this case.

Although the Commission reverned that dec191on, CCANP contends that the presence of Judge Hill on this penol infected this proceeding with incurable bias. Only if CCANP prevails in its position, i.e., the license is denied, would thin taint bo harmless error.

It would be unwise to e:tamino the record in thin case j without being mindful of the relation 1htp betwnen bian and the i

manner in which there hearings were conducted. Many of thn 65

I panel's rulinns can be explained in no other way. i t

b. The ASLB used time pressures to prevent CCANP from completing sufficient cross-examination to fully disclose i material evidence.

Section 556(d) provides that parties are entitled to such cross-examination as may be required for a full and fair disclo-sure of the facts. This right is limited only to the extent that ,

4 1 + the cross-enamination becomes irrelevant, immaterial, or unduly repetitious. Failure to allow relevant, material, non-repetitious cross-examination is grounds for reversal, if the failure is ;

projudicial. See U(By v t Rutng, 207 F.2d 434 (8th Cir 1953). i At Tr. 5060, the ASLB required CCANP to supply a cross-examination plan. The ASLB announced that it would cut off c r o's s-examination at the end of what they considered to be reasonable time. Clearly, this is a purely arbitrary litnitation which has nothing to do with the only acceptable criteria for limiting cross-examinations i rr tsl ovancy , immateriality, or repetttousnesu.

Even if the ASLD was basing its decision to cut off cross-examination on those criteria, the proper uanctions would be to i

strike the improper questions,. rather than to enttroly deprive a party of its rights to proper crons-examination. i The ASLD actually enforced or threatened to enforce this method of timn Itmitations on nreveral occasions. Qeg fr. 6013, 9402, 9917. Even if it had not ever carrted out its threat, it would be genunds for reversal. Conducting cross-enamination in such an onpressivo atmosphere could only have abridged CCANP*n right to careful crouma examination. Haviny no permisetble bennfit, and imposino needlong burdene on enunen1, nven if novor actually enforcod, this measuru wnuld br. contrary to the APA 64

I i

policies of free admission of evidence.

On the occasions when the ASLB actually cut off cross-

! examination, CCANP was attempting to probe critical areas of l testimony. The ASLB's refusal to allow this probing prejudiced l

! CCANP's efforts to bring relevant material evidence into the t

record. CCANP contends that the attitude of the ASLB encnuraged l

. the Applicants to engage in delaying objections'in order to force l

CCANP to decide between introducing evidence and conducting cross-examination. See [CCANP3 Motion to Resume Cross Examination l (dated July 15, 1980).

Furthermore, the ASLB has threatened to use similar impermissible limitations on CCANP's cross-examination in the future.,PID at 100. The ASLB critici:ed CCANP for not filing many proposed findings on technical issues which were the subject of l

extensive cross-examination. Because CCANP did not file as many l

findings as the ASLB would have liked, the ASLB threatened to limit CCANP's future cross-examination. Id.

This threat is impermissible for > same reasons that the 1

i AGLB's previous threat, Tr. at 5060, was impermissible. It is all the more enerous since it was the ASLB that originally encouraged CCANP to concentrate its findings on those issues it felt were most important. Tr. at 10656-57; PID at 29.

The ASLB'u threat during the hearings, Tr. at 5060, and the i

I l resulting limitations on CCANP's cross-examination severely prejudiced CCANP's ability to build a complete record. The new throat made in the ASLB's PID indicates that the ASLB will continue to abridge CCANP's rights in the futuro,

c. The ASLB improperly limited CCANP's cross-65 L

examination for reasons having no basis in law.

The ASLD sustained objection <a to CCANP's questions because they made assumptions as to what the witnesses' testimony would be, Tr. at 9773-74, because the ASLB felt some questions were too broad, See e.gz Tr. at 9374, and because the ASLB did not like the wording of some questions, Tr. 9837-39, 9914. These errors

• were not isolated incidents but rather occurred between transcript pages 9326 and 9914, a period of roughly three days of hearings.

In this part of the hearing, members of the NRC Staff were on the stand. Among other things, they testified that HL&P had the character and the competence required to receive an operating license. In the PID, the ASLD relied heavily on this testimony.

CCANP's objectives in cross-examination were to determine the reliability and completeness of the information upon which the Staff based its testimony and to determine the NRC Staff's definitions of character and competence, as used in their t es t i r. ion y.

The ASLB thwarted CCANP's every attempt to accomplish these objectives. In addition to the examples of erroneous rulings cited, there are at least thirty five (35) errcneous rulings concerning CCANP's cross-examination while the NRC Staff witnesses were on the stand. The ASLD participated actively in the groundless and harassing objections and arguments made by the Applicants and NRC Staff attorneys. Given the space limitations imposed on this brief, it is impossible to f ully e::alicate the improper behavior of the ASLD during this crucial part of the hearing. Instead. CCANP can only direct the attention of the 66

ASLAB to the following sections of the transcript: 9403-9504, 9769-90, 9828-9919, 9974-81.

A reading of there pages compels the conclusion that the ASLB turned the hearing into a free-for-all, thereb/ depriving CCANP of its cross-examination rights during the most critical chase of the testimony. Incidentally, it shoulo be noted that

. this section of the transcript contains one of the instances where the ASLB decided to actually enforce its threat to arbitrarily cut off CCANP's cross-examination after a certain period of time. Sgg Tr. at 9482, 9917.

To account for the actions of the ASLB during this part of the hearing without ultimately finding substantial bias with the ASLB would be very difficult. The ASLB's failure to respect CCANP's cross-examination rights greatly prejudiced CCANP's ability to contribute to the record of this proceeding and amounted to a protection of the Applicants

• rom the rigors of the adversary process.

d. The ASLB failed to take into account the convenience of CCANP in setting the timo for the hearings to begin.

Section 554(b) of the APA requires the ASLB to consider the convenience of the parties in setting the time and place for the hearings. The ASLB set the hearings to begin on May 12, 1981, though CCANP's ptg gg representative was to tJke final examinations in his first year of law school that same e.n e k .

CCANP was forced to e: pend its limitad resources to bring in outside counsel, limited in his prior knowledce of the case, in order for CCANP to participate. CCAMP was unable to have the individual most familiar with the details of this case prcuent 67

durino an important phase of the hearinqs.

In making its decision not to postpone the hearings for a week, the ASLB cited the Comminulon's mandato that those hearings be expedited. The Commission's order encouraging an early hearing on issues raised by CCANP was made in 1900. Phaso I of thono hearings did not end until mid-1982. It is doubtful that

. postponing the start of the hearings by one weak would have seriously altered the completion dato of these precaudings.

Moreover, the ASLB misconstrued the Commission's order for expedited hearings, in that enpedition was solely for CCANP's benefit and to protect the public from a possibiv unworthy license applicant. 10 NRC 291.

e. The ASLD failed to make findings on all issues of fact and law as required by the'APA.

Section 557(c) of the APA requires that all decisionn in hearings conducted under Section 556 include findings of fact and conclusions 'of law on all material innuos of fact and law presented on the record. Zusuo A, as set forth in the pro-trial order, required a yes or no answer to the following fact and law question Apart from any remedial efforts, did the acts and omissions of HLLP demonstrate that thero can be no reasonable

• assurance that HLLP has the requisito charactor and computonce to operato a nuclear power plant? The ASLB purported to answer this question in the negative, but only after considoring HLLP's rumedial efforts. In doing so, the ASLB failud to answer lusuo A.

answorinq !ssuo D twice instead.

Tho AGLD did not find that lusun A was an incorrect statomont of the law. If i t had. purhoos it could havo avoided a ed

fact finding and a legal conclusion. At no point did it make any statement to that effect, nor did it supply any rationale for such a conclusier, as would have been required by Section 557(c).

Instead, the Board purported to make a finding on the issue, but erroneously considered HL&P's remedial actions in making that finding.

. Throughout the course of this proceeding, CCANP consistently arquod that Issuo A is the correct statement of the law and should be answered affirmatively. CCANP devoted the greatest part of its energios to this issue. By refusing to make a finding on the insuo, the ASLB arbitrarily denied CCANP the most important of its litigation objectives and left CCANP in the position of never having really boon on notice of what was being litigateo in this proceeding.

f. The ASLP restricted the scope of cross-examination to matters raised in direct testimony in violatten of the APA.

Section $56(d) of the APA sets down princip1os for admission of evidence and cross-examination in administrative hearingu, such as the one leading tc.this appnal. Unless specifically grinted statutory authority to do so, agenclos may not depart from those principles. Scc, Gphga vt Pgtg(gg, 412 F.2d 44 (5th Cir 1969). Eurentially, the APA seeks to ensure that a party's ufforts to bring probativo uvidenco into the record are not hindered by technical rules of evidence. Seq, Qpp Qqttgn tj((1,q,.

104t Yt Adml013tC4t9Cs 990tt gi Lat19t, 012 U.S. 126, 155 (1941),

$4M991 Ut dp4Ms luc.. Ys EIQ, 140 F.2d !78 (2d Cir. 1945) (per curtai., decision by Clark, A. Hand, L. Hand).

The fedoral rule of evidence limiting cross-onaminatten to 64

matters raised by direct testimonv, a controversial means to protect the plaintiff's order of testimony, has been criticized because it promotes too many technical arguments over the propriety of otherwise permissible cross-enamination. In enacting the APA, Congress sought to eliminate this type of technical hair-splitting. By reintroducing it into this proceeding, the

. ASLB unnecessarily complicated this hearing and erroneously refused to permit otherwise proper cross-enamination by CCANP.

See e s qs rulings at 2039-41, 2279-96, 3080, 5500, 5513, 5231, 5533, 7337, 8233, 8321-23, 9763, 10115, 10116. But the Board stretched the rules for the NRC when it permitted one witness to read a prepared speech into the record over counsel's objection on cross-enamination. Tr. 9847-63.

2. The ASLB deprived CCANP of its procedural rights under the Due Process Clause of the Fifth Amendment.

a. CCANP's interest in this proceeding is protected by the Due Process Clause.

CCANP has two types of interests in this proceeding, both of which are protected by the Due Process Clause. First, CCANP seeks to preserve the lives and pr.operty of its members.

Second, CCANP stands as the representative of all the persons whose health and safety are affected by this project. NRC rules of practice deny the right to intervene to a party whose interests are identical to a party already admitted to the proceeding. 10 C.F.R. 2.714. Realistically then, all persons who are similarly cituated to the members of CCANP must look to CCANP to protect their interests. This broader public interest, being simply a conglomeration of all interests identical to those of CCANP's members, enjoys the same degree of protection.

70

b. The A5LB err on eousl y permitted the introduction of written testimony.

The United States Supreme Court uses a balancing approach to determine whether the Due Process Clause requires a given procedure. In Mathews v t Eldridge, 424 U.S. 319 (1976) the Court

. balanced the interest affected, the risk of erroneous deprivation of that interest, and the value of additional safeguards against the fiscal and administrative burdens that additional procedures would entail. The Court refused to require procedures which might have increased the accuracy or fairness of the hearing before it unless the procedures

• benefits outweighed their 7osts.

The use of written testimony, as it was used in this proceeding, has been criticized as an abomination leading to the withholding of the true facts from the hearing examiner 'and assuring that the case will be decided on grounds other than the evidence in the record. Gardner, Shrinking the Big Case, 16 Ad.L.Rev. 5. The primary reason for the problems associated with written testimony are: lessened ability to determine the credibility of the witnesses; no opportunity to police the manner in which the testimony is prepared; and the natural tendency of people to pay more attention to the " live" aspects of cross-e examination and unconsciously deemphasize the content of the written testimony.

In this operati ng license hearing, the benefits of oral testimony clearly outweighed its costs. Compared to most types of hearings where the use of written test;'7ny is proper, the value of the interests affected in a hearing to license a nuclear power plant is extremely high. Thousands of lives and billions of 71

i I

dollars worth of property are at risk if an erroneous result is reached in an operating license proceeding. The cost of substituting oral testimony for written in operating license j i

hearings would not be great since there are relatively few ,

i operating license hearings held by the NRC.

Written testimony is only appropriate for technical  !

. testimony. Generally, the credibility of this testimony rests on  ;

the qualifications of the expert and the technical merits of the  ;

4 testimony itself. Demeance evidence and the other indicia of l credibility observable in live testimony are less useful in this  ;

type o+ testimony.  !

l Testimony relevant to character, however, generally depends heavily on the credibility of the witness testifying. The use of written testimony makes it extremely difficult to judge a witness' credibility because demeanor evidence cannot be i

. observed.

Although cross-examination can be used to test credibility I to some degree, the use of written testimony substantially blunts the effectiveness of cross-examination. Prior to cross- i examination, the cross-examiner suffers the same disabilities as [

t

! the trier of fact in judging a witness' credibility -- not having h seen the witness testify yet. As a result, the cross examiner [

cannot effectively plan quections relating to credibility.

Finally, prefiled written testimony is a constantly available anchor to the witness while testifying, 1. . e . , the i I

' witness can always go back to check an answer already given to a l L

particular line of questioning under way by the cross-examiner i

and then conform live answers to the printed document. L I [

72 I

, , . . . . . _ - - _ - - ~ - . ._. . . - - .

r Thus, the constitutional cost-benefit analysis required the  ;

use of oral testimony in this operating license hearing.

I

c. The ASLB erroneously allowed the Applicants to present their testimony in panels. l The use of panel testimony, while perhaps not harmful for  !

e introducing technical expert testimony, is perhaps the worst way -

possible to introduce evidence concerning the acts and omissions i

of a corporation and its employees relevant to character.

The cost of eliminating panel testimony would be slight.

Rarely are questions addressed to the panel as a whole, f

J Generally, each member of the panel is questioned individually.

4 The main difference between panel testimony and individual testimony is the order of questioning. In panel testimony, all witnesses are questioned simulaneoulsy on each topic. When l individuals testify separately, questioning on each subject in

. split among the witnesses. Since the real difference between j panel testimony and individual testimony is the order of t

questions, not the number of questions, the additional cost of individual testimony would be slight. In the aggregate, the practice of using individual testimony in non-technical testimony L

would be very limited, since NRC proceedings are typically l-l -

dominated by technical testimony.

l The benefits from substituting individual testimony for l

panel testimony are great whenever non-technical issues are in question. Permitting panel testimony allows the witnesses to  ;

l educate each other, facilitating their efforts to corrobcrate i

each other's testimony. A prime e:: ample of the potential for abuse was the panel of OC inspectors being questiened about the i

73

= ,

, ~ . , - , . - , - - ~ - - - , . --+ ,.-,.,nn -,w m,,.,-m.n- _ , - - , , ,n. .-,-.,--,,n-.--,-.-

6 r I l

t i

i card game. Here was a group of witnesses, each being asked if he i had engaged in activities for which he could be discharged or held in violation of federal law, being allowed to listen to each other's testimony. It would be unrealistic to expect meaningful l

r testimony' in such a situation. Having each witness testify individually would have been a cost-effective way to gather (

. meaningful information about these events. Under the balancing i i

only I test of Mathetis v1 Eldtidgg, sugta, it is the i

. constitutionally permissible way. [

l

3. The ASLB failed to provide CCANP ample opportunity l for discovery in violation of NRC regulations.

NRC regulations require that all parties be given ample l

t opportunity for discovery. CCANP was unable to exercise its j b

discovery right due to the illness of outside counsel retained

{;

for that purpose.- Even if CCANP's attorney had attempted  !

t discovery, the time allotted was insufficient given the range of  ;

f issues covered in the hearing. The ASLB refused to permit additional discovery, forcing-CCANP to begin the hearings without {

sufficient preparation.  ;

When CCANP moved for discovery on matters which had come to light after the time for discovery was near, the ASLB denied the [

motion, even though it apparently felt the motion had some merit.

Instead of granting additional discovery time, the ASLB said it i 6

would. permit CCANP to expand the scope of its cross-enaminaticn.

As discussed earlier, the ASLB failed to permit CCANP to conduct the cross-examination it was entitled to. The promised entra L cross-examination was never granted. This failure to grant CCANP f i

adequate discovery and the subsequent failure to provide the l I

74

F-alternate remedy the ASLB had promised substantially prejudiced

'CCANP's ability.to contribute to the record in this proceeding.

4. The ASLB's cumulative failures to respect CCANP's procedural rights under the United States Constitution, the Administrative Procedure Act, and NRC regulations denied CCANP the fair hearing to which it was entitled.

.. While each of the procedural errors discussed above is an independent gr'ound for reversal, when the effects of each are examined cumulatively, reversal is the only possible result. For example, the failure of the ASLB to permit adequate discovery made it difficult for CCANP to conduct cross-examination. The combination of written testimony and the rule limiting the scope of cross-examination to- matters raised in direct testimony effectively precluded CCANP from calling the credibility of the

-direct testimony into question. The combination of written testimony and panel testimony on non-technical issues permitted Applicants to completely mask any inconsistencies which might have arisen if " live" individual testimony were used instead. The ASLB's excessive restrictions on CCANP's cross-examination rights made i t impossible to compensate f or these problems.

Finally, it should be noted that because CCANP is constrained in the length of this brief, many errors have been omitted. For the most part, these errors involve factual disputes over whether a particular question was relevant, material, or

• repetitious. While many of the ASLB's rulings foreclosed inquiry l

'into important areas, it would be impossible to argue all of these errors individually. The f ollowing citations are examples of these. kind of errors: Tr. at 1726-27, 1716-17, 7572, 7168, 7335, 2330-31, 1089, 2341, 2381-83, 4889-90, 6485-95, 7173-74, 75

t t

i f

1 8531-32, 8479-81, 8936-38, 8207-09, 3751, 4433, 4116, 3331, 3315- I 17, 2310-11, 3312-14, 9895-96, 9831-34, 3914, 1177-81, 6239-41, 9979, 9910, 9905, 9901, 9371, 7337, 8233, 8763, 10118, 10116, 8321-23, 5262, 5219-20, 9249, 9252, 9356, 9390, 9593, 9836, 9842, 9899,.9809, 9217. [

VIII. RESPONSE TO FINDINGS OF FACT  :

. CCANP's direct responses to the findings of the ASLB ,.

follows. The numbering corresponds to the numbering of the <

Findings in the PID.

FOF 6: The ASLB refused to let CCANP adopt the contentions [

of CEU, other than Contention 4. The ASLB should not dismiss issues on a procedural nicety. It is more important that the issue be subject to adversarial' proceedings than that the party- r I

issue alignmment be kept.in tidy arrangement. Since CCANP had the [

t right of cross-examination on the CEU contentions and trusted CEU to vigorously pursue them, CCANP saw no need to explicitly ,

1 embrace those contentions when CEU brought them up. Had CCANP known that CEU was going to leave the proceeding prior to i

litigation of the contentions, CCANP might well have asked to be joined on the contentions. As it is, there would be no prejudice to the Applicants from continuing the inquiry into issues they already knew were to be explored. There was prejudice to CCANP in removing issues CCANP thought it was going to have the right to 4

explore.

FOF 14 - 34: When the Order to Show Cause was issued, the ,

Applicants had the option of admitting or denying each allega-tion. 10 C.F.R. 2.202 (5) (b) . The Applicants admitted the allega-i tion of false statements in the FSAR. Once that admission was ,

76

- _.. _- .~-. -

E I

f i

made by the Applicants, 10 C.F.R. 2.202 provided that such admis-sion constituted a waiver of the Applicants rights to a hearing,

, findings of fact, conclusions of law, and of all right to seek  !

r

. I

' Commission review or to contest the validity of the order in any  :

. y i forum. In clear contradiction to this provision and ove- CCANP's

' objections, Applicants were allowed to contest the validity of

, - the false statement allegation in the licensing hearing. Only the seriousness of the admitted act should have been considered, not i

?

whether the act constituted a false statement. The Applicant's

[

- admission avoided the public hearing on the Order to Show Cause j which intervenors so vigorously sought and then the ASLB ignored  ;

i the legal consequences of that admission. The findings made in l PID: FOF 14-34 are made in contradiction of NRC regulations and I

are therefore without legal significance. L FOF 35: The ASLB says, starting on 118, that the evaluation f of HL&P's compliance record "must include ... prior knowledge and involvement of management in them . ..." In other words, if we

. find that management was aware of what was going on and involved e in what was going on, there.will be greater responsioility for what happened. But there is another arm of the same inquiry. If ,

i we- find that the management was not aware of what was going or. ,

L and not involved in what was going on, we then have a potential finding of lack of knowledge or abdication of responsibility. The i problem appears as a Catch 22 for the Aoplicants created by the j seriousness of their failures. Either (1) the deficiencius were not serious - the position of the Applicants - so that i' does

',- I-not matter whether HLLP knew about them nor whether hLLP was

• involved in the activities producing the deficiencies OR (2) the ,

77 i

i r wwr---s e 4:n w-n.&--m w 1* -tW-g-*--ed+M as +gSum-"'+**y- > "*-*-N-='---'wemappr m -w -yTtv-*vvv- wasmgr-we-e-ree w m--- g e - -g ------g-me+

,, v g-v%-=c

. ... . . =. _. - _., --_ __ . ___ .

4 f

I I

j I

deficiencies were serious and either HLLP's lack of knowledge and E involvement .or their possession of knowledge and their actual  :

?

I involvement constituted a serious failure. In an enforcement context, prior knowledge or involvement might show wilfulness and thereby increase the level of penalty and seriousness of the ,

t violation;- in the licensing context, wilfulness appears to raise (

. a more serious challenge to character than would lack of I

knowledge /involveme.1t. j But there is still another way to look at the problem. If the failure to keep informed or to retain responsibility resulted L from the deliberate decisions of HL&P, then there is a congruence  :

4 i

in 'the inquiry, i.e., did the management decisions of HL&P  ;

1

produce a system wherein HL&P abdicated its responsibilities to  !

,- B&R and/or failed to remain informed about B&R's' activities? The f i i

. possibilities then become:

l' . HL&P management set up a system which should have k

produced direct management involvement by HL&P in the STNP and an  !

I, 4

appropriate flow of information to appropriate decision makers, ,

+

. l

,but the system failed to perform, or l

.2. HL&P. management set up a system which mi n i mi z ed ,

direct management' involvement by HL&P in the STNP and which j 4 .  !

' shielded top management from receiving information about the f project, and the system performed as designed. l i

Possibility 2 seems to fit the ASLB's central findino of  ;

long lines of communication combined with HL&P's extensive prior ,

experience in large construction projects. Furthermore, given the inadequacies in upper management found by the ASLB, the '

motivation to set' up a- system minimizing upper management i i

78 f

involvement and knowledge was present.

F0F 36: As the ASLB notes, the record of this proceeding in Phase I covered the period from the beginning of the project through December 31, 1981, i.e., it did not stop with 79-19 as many of the ASLB 's findings seem to indicate. Finding 42 reflects the post-79-19 tastimony as well.

, FOF 44: See supra, at 34.

FOF 58: Harassment and intimidation of QA/QC perconnel need not amount to a coordinated plot on the part of management in order to consider license denial under any reasonable standard of character. See alsg CCANP's response to FOF 74, 170, and 177, 10fCd.

FDF 62: CCANP would agree with the essence of this finding but would accentuate the concept of " lack of project control by HLLP" to encompass the character and competence issues. What more damning prediction could there be of licensee performance than the predi cti on that the licensoe will lose control of the operating reactor, whether at the operatira level or the management level?

F0F 74: The recurring theme of production pressures driving events at the project is a commentary on HLLP's values. The finding that there were no " irreparable construc ti on deficiencies" is to ASLD's competence finding what its " immutable defects" is to its character finding. There must be a breakdown so severe as to be uncorrectable for the license application to be in any jeocardy. Regrettably, errors in operating a nuclear plant do not fit into such neat categories.

FOF 79: More is hardly needed to conclude the license should 79

be denied.

FDF 80: Some concerns arise in the findings with different conclusions f rei e finding to finding. One of these is "too little management involvement" in the project. It seems to appear and disappear as a conclusion depending on the point the AELB is trying to make. Seg e.g. PID F0F 118, 120, 127, 129, 182, 126.

. FOF 83: CCANP contends that all of HL&P's responses to the revelations of the NRC in January 1C80, F0F 69, were no more than efforts to avoid or mitiaate enforcement action known to be contemplated by the NRC.

FOF 84: The Brown and Root brochure is such a c:.assic case of abdication of responsibility and failure to keep informed that this finding deserves more attention than the ASLB gives it. The lecture forming the basis of the brochure was supposed to be a remedial measure to show management support for QA/OC. HL&P left all the the details of the lecture to B&R. The lecture in fact stressed cost and schedule over inspection. The NRC had to further discipline the project as a result of this " remedial measure." Such was HL&P's resolve in correcting problems.

F0F 85: The false sworn statement by Oprea alleged by CCANP was part of this response, a response which was suoposed to restore NRC confidence in HL&P.

FOF 86: The ASLB finds it sinnificant that there was no

" total breakdown of OA/DC." The ASLB seems to use this standard as the QA/OC equivalent of immutable defects in character and irreparable errors in construction. Only at the theoretical e::tremes of failure will licente denial be considered. Seje PID at

38. There is an ambiguity in how the word " breakdown" is used.

80

Mr. Oprea thought there was never a breakdown in the OA/DC program, even as documented in 79-19. F0F 140. The NRC Staff recognize the widespread violations but do not consider a total l breakdown to have occurred. F0F 155. CCANP rejects the position b

that only an immutable character defect, an irrecarable construction error, or a total OA/QC breakdown can lead to

. Itcense denial. In fact, such a standard is dangerous. Standards for acceptable character and competence should set narrcwer boundaries within which licensees operate and are constrained.

The immutable, irreparable, and total standard has no real limits. The Staff seems to make much of HL&P's record of reporting construction defects pursuant to 10 C.F.R. Section 50.55(e), but as the ASLB noted, the oblications under that regulation are very different from the obligation created by 10 C.F.R. Part 50 Appendix B. PID at 69. The major difference is that 50.55(e) creates an obligation to notify the NRC of a potentially safety-related defect and report such a defect if actually confirmed, while Appendin B requires an in-depth inspection effort on a continuous basis whether any defects are found or not. HL&P failed in the latter and far more important task.

F0F 87: The Staff's "not so poor" standard is one of the worst failures in the entire proceeding, i.e., worse than the failures of HLLP. If the regulators are satisfied with ocar performance, the public is in grave danger. CCANP rejects the concept that inexperience and irresponsibility are separate.

I alternative assessments: CCANP contends that use of inexperienced people in critical positions is irresponsible. HLLP's performance al

during construction is viewed by the Staff as " relevant to, and probative of, how HLLP would perform under an operating license,"

but this same behavior is "not considered by Staff reviewer: to be determinative." If a licensing proceeding is to be credictive, there is no better evi~dence available than the performance of the applicant under the construction permit. CCANP has the sense that

.. the NRC Staff would agree with this position were it not for the fact that HL&P's performance was so. substandard.

FOF 89: HLt:P 's perf ormance f rom April 1980, when the Order to Show Cause came out, to December 1981 remained about the same in terms .of the violations of NRC regulations. This evidence would seem to-argue for the failure of remedial measures to do any real-good.

FCF 94: Bechtel did not recommend either a third party DA/DC or the removal of SLR. The absence of any such recommendations reflects badly- on Bechtel's qualifications. The ASLB took no notice of this possibility.

FOF 96: An experienced corporation, HL&P set up a

. management network that 1shi.elded the top officers from the nuclear project. This was a deliberate abdication of responsibility by people who knew their knowledge and expertise in the nuclear- field was too limited to handle much responsibility. Having Frazer be the key to resolving the communications problem is like trying to put out a fire with

-gasoline.

F0F 97: This set-up was quaranteed to keep information and hence responsibility for action away from Oprea. The organization is also a commentary on the low priority given to GA/DC by top 82

HL&P management.

FOF 98: Again we have Amaral testifyina to too little management involvement.

F0F 99: It took Don Jordan three years to figure out how difficult it was to design, engineer, and construct a nuclear power plant. Perhaps it took so long because he paid little attention to the project, not having the skills or background to understand the project. For such a person to be the CEO of a nuclear utility is simply not acceptable.

FOF 99-102: Jordan, Oprea, Turner, and Frazer all lacked nuclear experience and HL&P failed to spend the resources to attract someone who had such experience.

FOF 103: When Warnick got overwhelmed by his responsibilities at the site, there wat no one in HL&P who could help him. Everywhere Amaral looked were people who could not perform the tasks aiven to them by HL&P and B&R.

F0F 107: This finding perfectly demonstrates the dangers involved in givina to much weight to willingness. Amaral is a quality assurance professional.. He concludes that HL&P simply did not make quality its first goal. Oprea disagrees. Perhaps Oprea honestly believed he put quality first and was willino to do whatever he could to encourage quality work, but his performance, and that of his lower managers, was so deficient that a profeccional like Amaral came to the conclusion that quality must not be the highest value of the corporation. In the nuclear context, such a conclusion by someone with timaral 's credentials is devastating.

F0F 108: The ASLB should alve no credibility to 0:

l

I t

f 5

l representations of quality concerns by Mr. Jordan. His " crafts build' in quality" view i s just another form of abdication; the I

construction crew is responsible for building it right the first I

time, so there is no real value in an inspection force. Since he ,

4 t

personally would not know how to inspect anything at STNP, it is '

not surprising for him to take the attitude that quality is the

.. responsibility of the crafts. Jordan says he did not get information he needed. This contrasts with the HL&P position that r

Jordan did receive the information appropriate to his position.

The ASLB found that the flow of information to Jordan and Oprea ,

was not the problem; instead i t was their inability to understand the information. If so neither Jordan nor Oprea ever admitted to .

a that deficiency. Jordan consistently refused to admit HL&P had r  :

abdicated any responsibility to B&R or failed to keep informed. t The ASLB.shows-mercy without any repentance from Mr. Jordan, i F0F 109: Oprea, too, says he lacked the information. i r

FOF 112: A different NRC panel concludes there was a lack of ,

detailed involvement in the project by HL&P. But now the i

conclusion is that they were involved in the details of the  ;

i i project, but the wrong ones. Production pressures surface again.

HL&P knew from the beginning that it either had to bring in top ,

management familiar with the nuclear undertaking or rely on its contractor. HL&P chose reliance / abdication.

FDF 115: The NRC Staff offers the findings the Commission requested in 12 NRC 281. HL&P did abdicate to B&R in the OA/DC area. That should be enough for license denial.

FDF 116: Abdication proceeded up and down the pyramid. There

! 'was no protection, no management backup for the DC in the field.

84 4

. . , _ . . . . _ - . . , _ . _ . . . _ . _ _ _ . . . .. ,_.,,..,g,m., , , _ . , . , . _ . _ . _ , - , . - . _ _ _ , _ _ _ . . , _ . . _ . . _ _ _ . - _ _ _ _ , ,. _ _ - _ _ . _ _

The mi Jdle level of the pyramid - auditing - did not function.

And the top of the pyramid was so far away that the mescaqes of trouble could not (ce would not) be heard.

FOF 118: Jordan testified that an abdication conclusion would be unfair to HL&P. Here is truth and candor at HL&P's best.

CCANP does not understand why the ASLB never pulled together findings like 115 and 116 with 118 to conclude that Jordan cculd not be trusted to perceive HL&P's failings or, alternatively, to admit to them if he did. Such a conclusion weighs in heavily on the side of character defects which should disqualify an applicant for a nuclear license. Without admission of fault, there can be no real change.

F0F 120: Oprea.too denies continuously that there are any real problems. The excessively long lines of communication argue against the premise that "Eo3ver the years, HL&P management had become more involved in the project." Placing decision-making and monitoring far from top management argues precisely the reverse.

F0F 122: It was not an exercise of responsibility to send l Frazer to tell B&R's managemen.t to shape up. Mr. Frazer did not

!

• have the stature or the confidence to pull B&R into line and keep them there. Relying on Frazer is just another form of abdicating responsibilty, not assuming it.

FDF 124: Similarly, sending a memorandum from a t ec h n i c.al consultant, rather than a high officer in the corporation, is not the way to get the attention of B&R. In e::cusi ng HL&P 's lengthy l

delay in removing B&R, the ASLB never e::cl ains why "substancard work" becoming the " norm" in mid-1979 was not sufficient basis l

l for definitive' action by HL&P.

es L

FOF 131: It is hard to know what to do with a top manager who claims to have been well-informed and then dumbfounded when he learned what was really going on. Mr. Oprea's competence and character are both called into question by his repeated representations that all was well between him and the project.

FDF 136: For Jordan, the whole problem was the competent people who had let the project down, not the incompetent people who were inexperienced and overwhelmed.

FOF 138: Notwithstanding the ASLB's opinion, Mr. Oprea certainly considered himself experienced.

FOF 139: Mr. Oprea's considering the hiring of a consultant had gone on for months and could best be described as procrastination.

F0F 141: While throughout this opinion much is made of e::perience and how different everything would have been had their been experienced people in charge, it is worth noting that the only operating license denial in NRC history was directed at one of the mont experienced nuclear utilities in the country.

Cgmmgewgalth Edisgo Cgt (Byron Nuclear Power Station, Units 1 and 2), ASLBP-79-411-04 PE, January 13, 1984.

FOF 146: While much is made of the communications problem in 1980, the evidence is that in 1978, HL!<P was warned by the NRC that communication between the top management and the field perscrnel, particularly the inspection force, was so limited that the inspector felt there was a lack of management support.

FOF 159: The ASLB deceptively portrays HLLP's corrective actions in late 1979 and early 1980 as if they were initiated by the company with no knowledge of pending NRC enforcement action.

86

NRC came on the site in early November and by the end of the year was making known its findings to HL&P. That HL&P took actions to mitigate the potential enforcement action is without import as character evidence.

FOF 161: There is simply nothing voluntary about moving to head off an enforcement action that is clearly pending.

FOF 162: In the face of his company's record, Mr. Oprea's

" expressions of intent" are certainly not weighty evidence of his character.

FOF 163: This is an important finding in its understated way. The ASLB finds it worth noting that HL&P did not fail in every area, again suggesting the total breakdcwn standard. But for a nuclear plant operator, a failure in only one area can destroy the entire project and threaten the lives of thousands of people. There is no balancing of uuccess stories against failures. The technology is too unforgiving to allow any failures. Yet in this finding the NRC concludes there were areas where HL&P failed completely. All the willingness and supposed commitment to quality could no.t prevent a total failure. F0F 157.

- The . weakness of the " willingness" argument could hardly be more clearly highlighted.

e FOF 170: If no one has found an irreparable defect, CCANP's burden ', achieve license denial then becomes to show that the absence of such a defect is "a matter of luck" or that there is no evidence of such a defect because irreparable defects are inherently difficult to find. Given the record of construction and inspection at STNP documented in this proceeding, the irreparable defects can be inferred, notwithstanding any G7

testimony to the contrarv.

F0F 172: Mr. Shewmaker of the NRC engages in another form of the balancing process. One element of a fundamental requirement can be missing -- in this instance a major component of compe-cence. His analysis then looks for positive elements to offset the missing one. This type of analysis is not acceptable. In

. CCANP's analysis, an applicant missing any one of the key ingre-dients of character or competence is missing something too impor-tant to be entrusted with a nuclear power plant. Furthermore, the positive example Mr. Shewmaker turns to is the bringing in of competent outside consultants to solve a orablem. The fact is that after using a consultant to write the QA program, HLLP waited six years before bringing in another QA consultant.

FOF 173: At least one NRC witness does not accept the inexperience explanation. He viewed HLLP management as professional people making occasional errors. The ASLB, at one point, appears to agree. FCF 180. Inconsistent rationalizations of this sort are common in the ASLB's opinion and findings.

FOF 177: The evidence available Just from 79-19 is sufficient for license denial. When combined with the pre-Order to Show Cause evidence and the April 1980 to December 1981 e

e vi dence , the case is open and shut.

FOF 179: Fer the ASLB to consider denial, a noncompliance must produce a construction defect which is " irreparable," cause the complete loss of the function or integrity of a safety system, result from deliberate acts of management, represent encouragement to evade regulation, or result from putting cost before safety. Some of these are in fact proven in the record.

88

.. _ ~. ._. - _ ._ . _ _

l 1

i I

But the important point here is that the standard is simply too I L

low. Rather than looking for extreme acts of wrongdoing, an applicant should be judged by an " excellence" standard (as opposed to a "not a complete failure" standard). Sge Appendix 2,  ;

i Figure 2. i F0F 180: Total incompetence is another form of the same low

, standard.

IX. MOTION TO REOPEN PHASE I RECORD  !

While denying CCANP's motion to reopen the Phase I record, i 4

i PID at 87 et seq., the Board states:

"Although the information might bolster our view of HLLP's former questionable managerial competence, it would not do so to a degree which would offset our view that HL&P has taken adequ' ate steps to improve its competence."  ;

Since the Board-has already indicated that the lack of competence 7

found in HL&P might have been sufficient to warrant license denial, PID at 51, CCANP was entitled to have the additional i

evidence included in the record as possibly leading the Board to ,

I a denial decision under Issue A (i . e. without regard to " steps i'

taken to improve its competence").

IX. CONCLUSION i

~

CCANP takes exception to both the conduct of this proceeding

, l and the resulting decision almost in their entirety. Further,- '

CCANP has no expectation that a remand to the same ASLB for additional consideration would be worthwhile. i l

CCANP, therefore, moves the ASLAB to correct the numerous  !

errors in the PID by rendering an opinion ab initic. Such an

! r action is within the authority of an ASLAB when an ASLB has erred f

! in defining its task and the record is sufficient for the ASLAB 89 .

to reach a decision. Consumers Pgwor Ggmp_any (Midland Plant, Units 1 and 2), 6 AEC 182 (1973).

CCANP would urge that the new opinion and findings encompass: Issue A only; all character traits reasonably related to operating a nuclear power plant and reasonably inferred by the record; all the evidence relevant to each trait; and use of evidence to its fullest material extent.

CCANP believes there is enough evidence in the record to support license denial despite the due process violations which limited CCANP's ability to make its case. Should the ASLAB find, however, that there is not sufficient evidence to warrant license denial, CCANP moves the ASLAB to remand the case to a new and different ASLB with instructions to cure the due process violations to the extent possible, that is, to permit improperly denied discovery, cross-examination questions, admission of evidence, and contentions.

The latter remedy is less than satisfactory in that most of the personnel at STNP during the initial discovery phase and the hearings are now gone.

Limitations of time and space have precluded discussion of

'every ruling by the ASLB which violated CCANP's rights. .CCANP e

urges the ASLAB to review the decisions made throughout this proceeding, especially in licht of "CCANP's Proposed Findings of Fact and Conclusions of Law," for a further view of the bias and errors committed below. If the ASLAB decides to remand to a new ASLB, the ASLAD should identify for the new ASLB where corrective relief is warranted.

90

Respectfully s bmitted, 1 '

/

[g Jftw W l

Lanny Sinkin Craig Jordan, Michael " Seed" Hall, and Margaret Burns Representatives for Citi: ens Concerned About Nuclear Power, Inc.

114 W. 7th, Suite 220 Austin, Texas 78701 (512) 478-7197 Of Counsel: Robert Hager, Esquire Christic Institute 1324 North Capitol Street Washington, D.C. 20002 (202) 797-8106 Dated: July 8, 1984 Austin, Texas O

91

O e

APPENDIX 1 O

FIGURE 1 COMPLIANCE WITH NRC REOulREMENTS VIOLATION (1) i i

. l I

l--------Applicant-------

---Applicant Detects (2) ---------! Documents  !

l l  !---:

l  !---Applicant Fails to --!  !

! Document l l (VIOLATION) l l

1 l l---NRC Detects and Informs Applicant (5) ---------- ---------l l  !

l l---Violation Undetected (6) l

____-_____-__:-= _______:

i l Applicant corrects Applicant f alls to violation (7) correct violation (8) l (VIOLATION) l l g________. - -- - ________

l l

l l Applicant prevents Applic).nt fails to rect erence (9) prevent recurrence (10)

(VIOLATION)

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APPENDIX 2 i

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.. _ , ___ , -_ m_._,_- . . . _ . . , _ - . _ . . , . . , ~ . - . , , -

FIGURE 2 THE STANDARD FOR CHARACTER /CCMPETENCE/ PERFORMANCE EXCELLENT GOOD FAIR POOR FAIL l l l l l 1 CCANP  :  : NRC STAFF  : ASLB l 100 80 60 40 20 0 i

i

_ _ - _ _ _ --.L __._ - ,

s i

I.

k 8

i i

1 i

(

APPENDIX ;

t i

r h

9

ISSUE A FINDINGS THAT INCLUDE ISSUE B EVIDENCE 35 (" ability of management to learn from Eviolations3, the willingness and attitude of HL&P officials in responding to NRC observations and enforcement actions, and the promptness and nature of those responses")

38 (The finding is an early indication that this section is going to include findings regarding " response to the Order to Show Cause," "the organization and function of the Task Force ... that reviewed I&E Report 79-19 and the Show-Cause Order and developed the HL&P reponses to it," " changes made in the STP administrative controls in response to the Show-Cause Order and changes in the STP OA program before and after issua.'.ce of the Show-Cause Order," etc.)

96 (Amaral's view of " steps to resolve the communications problem")

108 (Jordan's " sensitivity to the complexity of nuclear power plants has increased and Ogyj he spends more time on STP matters" and he "now spends more time reviewing various aspects of the STP Ccite omitted]") (emphasis added) 110 (the " intensity" of Oprea's sensitivity had " increased since Investigation 79-19"; now he had " increased the frequency [of his site visits] to about once per week"; he uses these visits to collect information and demonstrate management visibility; and

. "[ alt the time of his testimony," he was spending full time on nuclear matters) 117 ("After 79-19, HL&P revised its auditing procedures to require direct observation of the work being performed"; a subsequent NRC investigation " concluded that HL&P had developed a matrin to assure that all procedures would receive proper consideration in planning audits"; and a still later NRC i investigation found "HL&P actually was performing effective audits at the prescribed frequency.") Note: In the PID, the Board

(

• initially created the distinction that the taking of remedial measures would be examined in Issue A but their efigcti_vengss

, would be the subject of the Issue B inquiry. But Finding 117 in

! , Issue A includes an NRC investigation into whether the remedial measure was effective ("HL&P actually was performing").

120 ("The increasing HL&P involvement from late 1980 on was confirmed by Mr. Goldberg" Ccite omitted))

121 (The entire finding deals with the reporting of noncompliances and the timeliness of corrective actions taken, not the substance of the noncompliances themselves) t i

j 125 ("HL&P's discharge of BhR and its replacement of that contractor with Bechtel and Ebasco" relying on the testimony of

. Goldberg) l l

127 ("At the time of Mr. Jordan's testimony in May, 1981," Jordan was-involved in many meetings about STNP) 128 ("At the time of EJordan's] testimony," he got a lot more reports and was more involved in STNP and "will continue to attend significant hearings and proceedings related to the project")

129 (Amaral concluded that the communications problem was solved by "HL&P changes in organi ation")

134 (Jordan "was deeply disturbed by the findings of a Investigation 79-19, but felt that Company management appreciateg the magnitude of the task at STP and is equal to it") ( e.nph as i s added) 136 (Jordan " concluded that HL&P had had a substantial team all along, but that the present (May2 19@l) team was much larger and had more technical competence Ecite omitted]" (emphasis added) 137 (Subsequent to 79-19, Oprea " recognized that there was a need to examine the QA program thoroughly to make certain that the requirements of Appendix B were fully recognized, understood and embraced by all concerned"; "EiJn retrospect," he found the Order to Show Cause useful to HL&P) 139 (Oprea " testified that Bechtel and Mr. Amaral would have been brought in anyway" to investigate STNP and might have found what the NRC found only "at a slightly later date" [CCANP: conducting an investigation is itself remedial; the question is how bad are the things the investigation found, whoever conducted it?])

142 (After an outside audit recommended bringing in new personnel, "Et] hat was done"; this finding cites PID Finding 212 which is found in the section titled "Igggg 81 Odgguacy gi HL&Plg Bgggdiai Octiggs", PID at 184.) (emphasis in the original) 143 {"The modified program analyzed during a recent Bechtel audit did meet the requirements, including implementation, and could be classified' as about the same as programs of #

• ar successfully constructed plants": Amaral found some eleunta of the modified program " novel") Note: The Bocrd m .) . <

es evidence of effectiveness (" including implementation't to .,a le A}

144 ("HL&P instituted several changes in accordance with those recommendations, including transfers of some personnel to different positions and additional training of others" Ecites omitted3) 145 (Amaral was pleased with Oprea's " response to Bechtel input":

"Em3ost of Bechtel's recommendations had been implemented at thu time of the hearing")

152 ("HL&P had shown a willingness to implement corrective actions")

155 ("Further, assuming implementation of the r_emedial step _s ordered by the NRC and proposed by HLLP, the Staff believed that the STP would be in compliance with the NRC requirements for an operating license") (emphasis added) 156 (" Management had not been deceptive in any way during or after the inspection and was not unwilling to correct any deficiencies when pointed out")

158 (HL&P had a good attitude when being investigated by the NRC) 159 (After finding out that the NRC investigation was uncoverinq numerous serious deficiencies, HL&P asked for a meeting "In which it prcposed corrective actions" including a voluntary cessstion of complex concrete work) 160 (After being alerted to deficiencies by the NRC, HLLP hired consultants and made an unsuccessful attempt to investigate harassment of inspectors) 161 ("HLLP responses to essentially all NRC reports were responsible, good and cooperative, and were followed by corrective actions"; corrective actions were taken "voluntartilly" after pending enforcement action was known) 162 ("HL&P moved to improve the situation by shif tina key Houston management personnel to the STP site on a full-time basis":

" subsequently" Oprea would stop by NRC's office to see if there were problems) 164 (the entire finding is about the resolution of discovered problems) 176 (HLLP "was not unwilling to correct deficiencies when identified"; HLLP " initiated action to correct deficiencies" before the NRC formally filed its enforcement action) 177 ("Upon consideration of all of the evidence, the Board finds s that the instances of noncompliance set forth in the Notice of Violation and the Order to Show Cause are insufficient to determine that HLLP does not have the necessary character to be

, granted licenses to operate the STP," i.e. consideration of the evidence on remedial measures as well as evidence of past failures) 182 ("Moreover, where particular personnel proved inadequate to their assigned tasks, they were replaced or transferred to other tasks more cuited to their capabilities. To that extent, HLSP took steps to mitigate the prime area of competence in which it was weak")

104 ("As set forth in Findinq 96, HLLP recognized its lack of experience and the excessively long chain of command and took steps to remedy those deficiencies")

186 ("Through hiring of new personnel and organt:ational modification, however, HL Y_:P took steps to alleviate these deficiencies")

187 (" Based on that evidence. the Board finds that the instances i n. which Houston management did not keep itself adequately knowledgeable reflect a defect in competence which, if not remedied, would raise serious questions of HL&P's eligibility for operating license; but that, taking into account the fact that a corrective actions were taken (but without regard to the effectiveness of those corrective actions), the instances are insufficient in themselves to support a determination that HLLP does not have the necessary managerial competence or character to be granted licenses to operate STP")

s 9

UNITED STATES OF AMERICA L NUCLEAR REGULATORY COMMISSION DEEOBE IHE @IOMIG SOEEIX OUD LIGEN510G GEEE6L BO6BD In the Matter of (

)

HOUSTON LIGHTING AND ( Docket Nos. 50-498 OL POWER COMPANY,'ET.AL. ) 50-499 OL (South Texas Project, '

(

Units l.and 2) (

GE8I1ElGGIE QE SE8 MICE I hereby certify that copies of CITIZENS CONCERNED ABOUT NUCLEAR POWER, INC. (CCANP) BRIEF ON APPEAL FROM PARTIAL INITIAL DECISION were served by deposit in the U.S. Mail, first class postage paid to the following individuals and entities on the 9th day of July 1984.

Alan S. Rosenthal, Esquire Christine N. Kohl Chairman Administrative Judge Atomic Safety and Lic. Appeal Bd. Atomic Saf. & Lic. App. Bd.

U. S. Nuclear Regulatory Commissicn U. S. Nuclear Reg. Comm.

Washington, D.C. 20555 Washington, D.C. 20555 Dr. W. Reed Johnson Brian Berwick,. Esquire Administrative Judge- Asst. Atty. Gen.

Atomic Safety and Lic. Appeal Bd. State of Texas U. S. Nuclear Regulatory Commission Environmtl. Protection Washington, D.C. 20555 P. O. Bon 12548, Capitol Sta.

Austin, Tenas 78711 Robert G. Perlis, Esquire Office of the Enec. Leg. Dir. Jack R. Newman, Ecquire U.S. Nuclear Regulatory Comm. 1025 Connecticut Avenue, N.W.

Washington, D. C. 20555 Washington, D.C. 20036 Melbert Schwar:, Esquire Atomic Safety and Licensing Bd.

6 Baker and Botts U.S. Nuclear Regulatory Comm.

300 One Shell Plaza Washington, D.C. 20555 Houston, Texas 77002 e

Mrs. Peggy Duchorn Executive Director, C.E.U. Atomic Safety and Licensing Route 1, Bon 1684 Appeal Board Bra:oria, Texas 77422 U.S. Nuclear Regulatory Comm.

Washinoton, D.C. 20555 William S. Jordan, III, Esq.

Harmon, Weiss & Jordan Docketina and Service Section 2001 S Street, N.W., Suite 430 Office of the Secretary Washington, D.C. 20009 U.S. Nuclear Regulatory Comm.

Washington, D.C. 20535 Pat Coy 5106 Casa Oro _ (Cuf, i

['.

M __3 ____ _ ____,

-San Antonio, Tenas 79233 Lanny S nkin M