ML20126M325

Order LBP-85-19 Denying Citizens Concerned About Nuclear Power 850417 Motion to Reopen Phase I Record Re Competence of Util & Directing Util to Provide Records by 850703.Served on 850619

ML20126M325
Person / Time
Site:	South Texas
Issue date:	06/18/1985
From:	Bechhoefer C Atomic Safety and Licensing Board Panel
To:	Citizens Concerned About Nuclear Power, INC., HOUSTON LIGHTING & POWER CO.
References
CON-#285-507 79-421-07-OL, 79-421-7-OL, LBP-85-19, OL, NUDOCS 8506200294
Download: ML20126M325 (36)

Text

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LBP-85-19 UNITED STATES OF Af4 ERICA NUCLEAR REGULATORY COMMISS!0fl ATOMIC SAFETY AND LICENSING BOARD 000KETED Before Administrative Judges USNRc Charles Bechhoefer, Chairman edrIc n '85 JM 19 40:10 CFFICE CT SECin.'r 00CXETING A servi:I In the Matter of Docket flos. STN 50-MT[

STN 50-499 OL HOUSTON LIGHTING AND POWER COMPANY, ET AL. ASLBP No. 79-421-07 OL (SouthTexasProject Units 1 and 2) June 18, 1985 MEMORANDUM AND ORDER (ExplanationofRulingonCCANP Motion to Reopen Phase I Record)

Hearings in this operating license proceeding have been subdivided into three phases. Phase 1 included, inter alia, issues related to the charactor and competence of the Icad Applicant, Houston Lighting & Power Co.(HL&P). TheLicensingBoard'sPartialInitialDecision(PID)of March 14, 1984, LDP-84-13, 19 NRC 659, resolved most of the Phase !

issues (but Icf t open a number of questions bearing on those issues for furtherconsiderationinPhase!!orPhase!!!).

Citizens Concerned About fluclear Power, Inc. (CCAtlP), an Intervenor, appealed runy of the rulings in LDP 8413. In ALAB-799, 21NRC360(1985), the Appeal Board affirmed the legal standards which we adopte.1 in LOP 8413, together with a number of procedural rulings prw,ug.

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which CCAflP had appealed.I The Appeal Board declined, however, to rule on the factual questions raised by CCANP, citing the lack of finality of our rulings on many of those questions.

On April 17, 1985, CCANP filed with this Board a Motion To Reopen Phase ! Record (" Motion").2 The Applicants and NRC Staff each cpposed  ;

the Motion.3 In our Sixth Prehearing Conference Order, dated f!ay 17, 1985 (unpublished), as well as in our earlier Memorandum of May 10, 1985 (unpublished), we announ;ed our rulings on various aspects of the CCANP Motion. Specifically, we held that we were denying the ftotion in its i

entirety insofar es it seeks to reopen the Phase ! record but that i certain matters raised by one exhibit to the Motion will be litigable under the aegis of CCANP Contention 10, which is to be litigated during i Phase !!. We also announced our rulings on three procedural questions to which the fiotion gave rise, i

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CCAtlP is seekin Cornission review of ALAD-799. Petition for

! Review, dated A ril 30, 19C5. As of the date of this iterorandum I and Order, the Comiission has not acted upon CCANP's request. '

2 The Motion was dated April 15, 1985 but was not served until April 17, 1985.

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( plicants' Ap' Response Applicants' to CCANP Response"), Motion with together To Roopen Phase Applicants'  ! Record Menorandun Concerning Counsel's Continued Popresentation of Applicants

(" Applicants' Memorandum"),bothdatedApril 25, 1985; NRC Staff '

Opposition to CCANP Motion To Reopen Phase ! Record, dated Pay 9, 1985("StaffResponse"). (Duringtherecentprehearin9 conference, '

l we had granted the Staff's request for an extension to May 10, 1985 of the tire within which to file its response. Tr. 11012, 11071.) j l

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The Sixth Prehearing Conference Order noted that the reasons for

the foregoing determinations would be explained in a subsequent issuance. We here set forth our reasons for these rulings, i

4 A. General Description of Motion f

CCANP's Motion seeks to reopen the Phase I record concerning HL&P's l 1 l character and competence, as to which we made extensive findings in our l t

Phase ! Partial Initial Decision. In short, CCAfiP seeks to establish thatHL&PwasexperiencingdifficultieswithBrown& Root,Inc.(B&R), l its former contractor, far earlier than is reflected in the Phase !

i record, that the termination of B&R acdordingly was not timely, and that 4 HL&P's asserted delay in replacing 81R represents a deficiency in HL&P's

] character (ifnotinitscompetence). Furthermore, CCANP also points to I cur positive Phase I firidings concerning HL&P's candor (an element of '

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character) and claims that the material supporting the Motion

. establishes that the Applicants provided misleading testimony to the i

Board in 1981-82, assertedly representing a lack of candor which

! reflects adversely on HL&P's character. l The Motion is supported by 42 exhibits (designated as "A" through [

j "PP"). The first (Exhibit "A") represents portions of the transcript of  ;

l hearings in October,1984 (see Staff Response, at Si Tr. 11053,11054) [

before the Public Utilitics Conmission of Texas (PUCT). It is submitted t in support of CCAfiP's claims of lack of candor. The other 41 exhibits

! represent documents variously dated from 1972 to February, 1980 ard I

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introduced into evidence before the PUCT, (14 of these exhibits- "H" through "T" and "00"--predate the award of construction permits to the Applicants.) They are submitted primarily to establish a lack of timeliness of the replacement of B&R and only incidentally as bearing upon HL&P's candor (i.e., less than full disclosure of HL&P's dif-ficulties with B&R).

Prior to discussing our rulings on each aspect of the Motion, we <

turn to several related procedural questions.

1 B. Procedural Questions j Following our receipt of the CCANP Motion, we requested the parties to address at the recent prehearing conference three procedutal questions which we believed to inhere in the Motion. Order dated April 18, 1985 (unpublished). The parties responded to our request.4 l l

We provide an explanation for our previously announced rulings on these l questions seriatim.

1. Jurisdiction to Consider Motion _. The first procedural question was whether this Board or the Appeal Board has jurisdiction to l

4 Tr. 10869-10914; 10950-11074 The Applicants' written response to the mottun, as well as their Memorandum on the representation l matter, treated these questions. The Staff's response did so to a '

limited extent. CCANP's motion raised and discussed certain aspects of these questions. ,

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l rule on the CCANP Motion. The question arises because of the sorrewhat unusual appellate posture which attended this proceeding as of the time the Motion was filed.

Under normal circumstances, jurisdiction to consider a motion to reopen a record on which an initial decision (or PID) has been issued lies with the Licensing Board prior to the filing of an appeal frcm (or exceptions to) that decision. Philadelphia Electric Co. (Limerick Generating Station, Units 1 and 2), ALAB-726, 17 NRC 755 (1983). On the other hand, once an appeal from an initial decision (or PID) has been taken, jurisdiction passes to the Appeal Board. Metropolitan Edison Co.

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(Three Mile Island Nuclear Station, Unit 1), ALAB-699, 16 NRC 1324 (1982).5 flere we have a situation which, from a jurisdictional standpoint, does not fall precisely within the contours of either l Limerick _ or TMI. An appeal from our Phase ! PID has been filed by l

CCANP. The Appeal Board has ruled on certain legal and procedural questions raised by CCANP but has declined, for lack of finality, to l rule on the factual findings and ccnclusions on which an appeal had also 1

been taken. The Appeal Board reasoned that our rulings on various l

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5 From the standpoint of when jurisdiction passes from the Licensing Board to the Appeal Board, it makes no ditforence whether the Licensing Board's decision is an Initial Decision or a PID. l

!.irrorick. ALAB-699, supra,17 NRC at 757 n.d.

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substantive issues--including the character and competence issues to which the itotion to Reopen is directed--are subject to supplementation or change as a result of further consideration in Phase II and/or III of the proceeding. ALAB-799, supra, 21 NRC at 368-70.

All parties assert that we have jurisdiction to consider the Motion, although for somewhat differing reasons. CCANP claims that the Appeal Board, in ALAB-799, " essentially remanded" the various factual questions back to us (Motion, at 7). The Applicants regard the jurisdiction question as a "close one" (Response, at 28), pointing to several decisions which depart from the strict dichotomy discussed above and noting (correctly) that the situation in this proceeding differs from those which have been the subject of the Limerick and TMI decisions cited above. The Applicants clain that, given the conflicting authority, a prudent approach would be for this Board to rule on the Motion, given our likely greater familiarity with the Phase I record than would have been attained thus far by the Appeal Board (a general

approach endorsed by the Appeal Board in Limerick) (Response, at 30).

The Staff finds jurisdiction to lie with this Board "in view of the conclusion of proceedings before the Appeal Board and the Appeal Board's recognition that further proceedings would be conducted before the Licensing Board before an initial decision on HL&P's character and competence would issue" (Staff Response at 2, n.1).

Although we express no opinion as to whether the Appeal Board also has jurisdiction to consider'the Motion, we conclude that, in the f

circumstances of this proceeding, we do have such jurisdiction. The i

question is indeed a close one. The Appeal Board has'an appeal from our character and competence determinations pending before it; and, contrary to CCANP's position, it has not remanded those determinations for us to

- reconsider. In fact, the Appeal Board observed that its decision to defer appellate review of our substantive rulings on HL&P's character and competence "does not signal an oppor'tunity for cfjt novo relitigation of matters disposed of by the Licensing Board". ALAB-799, supra, 21 NRC at 385.

1 Nonetheless, the character and competence issues remain before us, and there is a " reasonable nexus" between those issues and the material upon which CCANP seeks to reopen the record. Virginia Electric and Power Co. (North Anna Nuclear Power Station, Units 1 and 2),

ALAB-551, 9 NRC 704, 707 (1979); cf. Pacific Gas & Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), ALAB-782, 20 NRC 838, 841-42 (1984). Indeed, much of the information in Exhibit "A" to the Motion is directly material to Phase II issues. Moreover, although the Appeal 4

Board in ALAB-799 did not sanction the relitigation of Phase I issues, neither did it preclude us from doing so in appropriate circumstances.

Furthermore, we have sufficient familiarity with the Phase I record to be able to evaluate the import of the documents which the Motion seeks to add to the record.

In these circumstances, we agree with all parties that we have jurisdiction to entertain the Motion . We are thus rrcceeding to consider it.

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2. Inclusion of certain aspects of Motion to Reopen within scope of CCANP Contention 10. The next procedural question was whether certain aspects of the Motion were comprehended by CCANP Contention 10, which is to be litigated in Phase II. If so, the standards for

! reopening a record would not be applicable to those aspects of the Motion.

3 Contention 10 questions whether, shortly after its release,

the Quadrex Report should have been reported to the Licensing Board pursuant to the McGuire rule, and whether HL&P's failure to do so reflects adversely on its character and/or competence. LBP-85-6, 21 NRC 447, 463 (1985). The Applicants agree with CCANP that issues regarding the termination of B&R in 1981 (as related to the candor of HL&P's testimony in the spring and summer of 1981) can be considered under issues framed for Phase II. The Applicants would include portions of Exhibit "A" but would exclude the remainder of "A" and all of Exhibits "B" "PP" of the Motion. Applicants' Response, at 31. The Staff would have us read Contention 10 strictly, limited to the reportability of the Quadrex Report itself (Tr. 10977-84). As set forth in our Prehearing Conference Order, however, we consider this contention as broad crough l to include not only the reportability of the Quadrex Report but also of the replacement of B&R as an outgrowth of the Quadrex Report.

We noted that we consider as relevant only the portion of the PUCT transcript (Exhibit "A" to the Motion) which may bear on the accuracy of the information previously supplied to this Board, together

with possible obligations to advise this Board under the McGuire rule of '

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the potential replacement of B&R. We here add that we see no necessary connection of Exhibits "B" "PP" to this contention (as amended)

(although we are not now so ruling as a matter of law). We also add that events which might constitute the basis for a claim that B&R was not replaced on a timely basis do not constitute in our view the type of information concerning the replacement or potential replacement of B&R which we view as potentially encompassed under McGuire rule obligations.

3. Representation of Applicants by their Present Counsel. In its Motion, CCANP asserts that several of the statements made and actions taken by Applicants' lead counsel, with respect to HL&P's eventual decision to replace 88R, were improper (Motion, at 4, 5, 6, 10, 43, 44, 46-47). The Motion alleges, inter alia, that " Applicants' counsel, involved directly in the replacement discussions, did not notify the Board of said discussions" _(id. at 43); and that he " participated in manipulating" and "apa rently t'ried to orchestrate the replacement.to have the minimum impact on the case Applicants had already prepared for the Board" (id., at 4, 43; see also Tr. 11041,11044-46). CCANP contends that in June,1981, HL&P had arrived at the decision to replace B&R but did not notify the Board of the proposed change until late September of that year (Motion, at 4; Tr. 11051). The Intervenor claims I that the lapse from June until September is evidence that Applicants' counsel purposefully withheld information from the Licensing Board and '

l misled the Board in an effort to encourage a less careful investigation into the licensing ramifications of replacing B&R (Motion, at 4, 46-47).

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O The Board was concerned that these allegations potentially raise factual questions which, if resolved through adjudicatory hearings, might require the testimony of Applicants' lead counsel.

CCANP's allegations portray the role of Applicants' lead counsel in the selection of the B&R replacement as involving other than legal advice.

As a result of the allegations, therefore, the Board in its April 18, 1985 Order asked the parties to provide their opinions on the " propriety of continued representation of a party by an attorney who may have participated other than as counsel in factual matters potentially at issue before an adjudicatory tribunal" (emphasis supplied).O The Applicants claim CCANP's assertions are meritless because (1) Applicants' counsel, Mr. Jack Newman, was acting in his legal capacity in advising HL&P of the'likely ramifications which would ensue if B&R were replaced (Applicants' Memorandum, at 8-9) and (2) Mr. Newman did not suggest an untimely or tardy announcement of the replacement decis. ion at all, much less for the reasons asserted by CCANP (id.,

at 6-7). The Applicants also claim that, even if Mr. Newman were to appear as a factual witness on the issues raised by CCANP, neither they nor CCANP would be prejudiced by such continued representation.

6 The parties were notified that oral argument would be heard on three procedural questions, including this one, at the April 30, 1985 prehearing conference. The Board also provided the parties with an opportunity to submit written responses. The Applicants filed their April 25, 1985 Memorandum (see n.3, supra) to address the Board's representation question.

Finally, they assert substantial hardship if Mr. New.an (and his firm) were not permitted to continue to represent the Applicants in this proceeding.

Our April 18, 1985 Order referenced the standards for judging l an attorney's conduct set out in the American Bar Association Model i

Rules of Professional Conduct, adopted by the ABA on August 2, 1983.

Those rules represent the evolutionary development of standards by which the conduct of attorneys is evaluated. However, the District of

? Columbia, where Mr. Newman is a member of the Bar, continues to adhere 1

l to the earlier Code of Professional Responsibility, as the Model Rules I

have not yet been ratified for adoption in the District.

Thus, Code l provisions DR-102(A) & (B) are the standards which are to be applied to j Mr. Newman. The ABA Code has been applied to attorneys appearing before aaministrative agencies generally, and the NRC specifically.7 In l

j evaluating the potent,ial disqualification of Mr. Newman, we will 1 consider the applicat' ion of both the Code and the Podel Rules, j DR 5-102(A) applies to the possibility of a client callirg its attorney as a witness on its behalf. That disciplinary rule states:

I If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness cn behalf j of his client, he shall withdraw from the conduct of the trial

and his firm, if any, shall not continue representation in the trial, except that he may continue the representation and he 4

f Consumers power Company (Midland Plant, Units 1 & 2), ALAB-691, 16 NRC 897, 916 (1982); id., at 916 n.26.

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or a lawyer in his firm may testify in the circumstances enumerated in DR 5-101(B) (1) thrcugh (4).

The exception applicable to the circumstances of this case is DR 5-101(B)(4). It pemits an attorney to continue representation even if he were to testify,

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• if refusal would work a substantial hardship on the client because of the distinctive value of the lawyer or his firm as counsel in the particular case.

Thus, the prohibitive portion of DR 102(A) makes prerequisite that Mr. Newman learn, or it beccmes obvious, that he or a lawyer in his firm will be called to testify as a witness for his. client. Although at this point Mr. Newman clearly is aware of the possibility that he could be called as a witness to explain his participation in and knowledge of the process of replacing B&R, HL&P, Mr. Newman's client, in both its written Menorandum and at the prehearing conference, unequivocally stated that the company would not call Mr. Newman as its witness 0 (Memorandum, at 11 and Tr. 10963-64).

If CCANP were to call Mr. Newman or a member of his firm to testify, DR 5-102(B) would ccme into play. That rule would allow him to

" continue the representation until it is apparent that his testimony is or may be prejudicial to his client." At this point we do not have 8

Mr. Newnan and his firm are represented on the continued representation question by Mr. William H. Allen, an attorney with the firm of Covington & Burling. It was Mr. Allen who signed the

Memorandum submitted on this issue and appeared at the prehearing conference on behalf of Mr. Newman.

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sufficient documentation to lead us to conclude that Mr. Newman's testimony would prejudice HL&P's case in any meaningful way.

The proposed ABA Model Rule relevant to the circumstances before us is 3.7(a)(3). That rule and its exception provide that A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness except where:

• * * (3) disqualification of the lawyer would work substantial hardship on the client.

We hold in abeyance the issue of whether Mr. Newman may be a witness "necessary" for a complete record. Mr. Newman could become a necessary witness to testify to factual matters if other evidence were to lead to a reasonable inference that Mr. Newman held some unique, factual and material information not known by others involved in the replacement discussions. The Applicants argue that this is not the case (Applicants' Memorandum, at 11). For now, we accept Applicants' representation of Mr. Newman's role during the replacement process as remaining within the boundaries of providing legal advice, althcugh there must necessarily have been issues, factual in nature, to which he was privy. We will not immediately leap, as CCANP would have us do, from the premise that because Mr. Newman was actively involved in a selection process which may be categorized as a corporate management decision, he was not providing legal advice or services. The demands upon a licensee in a highly regulated field such as nuclear power generation could well mean that a company views it as only prudent to confer with its attorneys on many diverse aspects of the licensing

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, process. Scme of these questions may be legal in nature, but not specifically related to pending litigation.

! The exception to DR 5-102(A) of the Code, as well as to Model Rule 3.7(a), necessitates a discussion of whether a " substantial hardship" would be created for Applicants if Mr. Newman were precluded from continuing his role as lead counsel. While we do not inply that i

i another attorney familiar with the case could not replace Mr. Newman under extraordinary circumstances, a showing of substantial hardship is j the standard to be met under both the Code and the Model Rule. (Under the Code, such hardship must be premised upon the " distinctive value" of i

j the lawyer in the particular case.) The Board reviewed several of the

] factors Applicants highlighted in their Memorandum. We agree that the >

4 ongoing nature of a nuclear licensing proceeding gives intrinsic value

{ to an attorney (and his firm) con:istently involved since the litigation j began. Mr. Newman has mai.ntained the position of lead counsel for .

I HL&P's STP licensing activity for twelve years. We do not doubt that  !

I' the knowledge accumulated by Mr. Newman, of both technical matters ar.d administrative procedure in the unique administrative forum of the NRC,

nakes his counsel precious to Applicants. We were adequately convinced by the arguments propounded in their Memorandum and during the prehearing conference that Mr. Newman's services are of " distinctive value" to the Applicants and that the Applicants would endure substantial hardship if they were forced to seek new counsel at this i

i pointintheproceeding(Tr.10971; Applicants' Memorandum,at18-19).

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1 Further, the Applicants argue that the disqualification rules for an attorney / witness are not meant to encroach upon a client's right to the legal representative of its choice (Memorandum, at 13,15). We agree that once the possible prejudice which may accrue is highlighted to the client, the client is free to make the decision to continue with the same counsel in the face of such information. Particularly significant is the sophistication of the client where, as here, the client makes an informed decision with a complete understanding of the possible consequences and implications of retaining its counsel. The company has represented to the Board that it is completely at ease with the decision to waive counsel's possible disqualification (Memorandum, at 17-18).

Finally, the comment on Model Rule 3.7 indicates that 4

combining the roles of advocate and witness "can prejudice the opposing party" and "[t]he opposing party has proper objection where the combination of roles may prejudice that party's rights in the litigation."9 Upon specific inquiry from this Board, CCANP indicated that it would not be prejudiced by Mr. Newman's continued representation of the Applicants were Mr. Newman to appear as a witness (Tr. 11057-59, 11064-65).

9 The ABA Code does not appear to take into account prejudice to the opposing party. But the rationale for considering such prejudice (as expressed in the comment on the Model Rule) would appear as applicable to the Code as to the Model Rule, in evaluating the substantiality of claimed hardship,

For these reasons, we conclude that, even if Mr. Newman were to appear as a witness, his disqualification (and, per force, the disqualification of other members of his firm) frcm continuing to represent the Applicants would amcunt to a substantial hardship to the Applicants. Absent any shewing of prejudice to CCANP, we conclude that Mr. Newman (and members of his firm) should not be disqualified frem continued representation of the Applicants, even if it were necessary or appropriate for Mr. Newman to appear as a witness in this proceeding.10 C. Ruling on Motion

1. Legal Standards. The standards for reopening a record are well established and not disputed by any party here. As we have previously observed, the proponent of a motion to reopen a record bears a heavy burden. ra 19 NRC at 716; see also Kansas Gas LBP-84-13, supra, and Electric Co. (Wolf Creek Generating' Station, Unit 1), ALAB-462, 7NRC320,338(1978); Duke Power Co. (Catawba Nuclear Staticn, Units 1 and 2), ALAB-359, 4 NRC 619, 620 (1976). Three criteria must be satisfied:

1. The motion must be timely filed;

2. It must address a significant safety (or enviror, mental) issue; and 10 We previously anncunced this conclusion in cur Memorandum of May 10, 1985. Given the conclusion we have reached, we need not treat Applicants' argument that the lawyer-witness disqualificatien rule need not be applied, or need not be vigorously applied, in administrative proceedings such as this.

3. Where, as here, a decision has already been reached on the question for which reopening the record is sought, the motion must derconstrate that the information sought to be added to the record might alter the result previously reached.

LBP-85-13, supra, 19 NRC at 716; Metropolitan Edison Co. (Three Mile Islard Nuclear Station, Unit 1), ALAB-774, 19 NRC 1350, 1355 (1984);

Louisiana Power & Light Co. (Waterford Steam Electric Station, Unit 3),

ALAB-753, 18 hRC 1321, 1324 (1983); Pacific Gas and Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), ALAB-598, 11 NRC 876, 879 (1980).11 The criteria for reopening a record must be applied separately to each issue for which reopening is sought. Thus, the circumstance that one or more issues or questions remain to be heard or decided dces not alter the necessity for satisfying the reopening criteria for issues already decided. See Metropolitan Edison Co. (Three Mile Islend Nuclear Station, Unit 2), ALAB-486, 8 NRC 9, 22 (1978).

Finally, the criterion of timeliness, while important, riay be subsumed in circumstances where it is outweighed by the significance of 7

the information in question. ' Tire AppeJ1 Beard has long recognized that "a matter may be of such gravity that the motion to reopen should be II As the Staff points out, the Connission has proposed to codify these standards in its regulations. 49 Fed. Reg. 50189 (Cec. 27, 1984). The Conmission stressed that it was proposing to codify

" current reopening criteria" but that it was censidering adding certain documentation requirements. ~Id. We are not basing any of our conclusions on a failure to abide 6y such proposed documentation requirements ( g ., affidavits).

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granted notwithstanding that it might have been presented earlier."

Vermont Yankee Nuclear Power Corp. (Vermont Yankee Nuclear Power Station), ALAB-138, 6 AEC 520, 523 (1973).12

2. Positions of Parties. The CCANP fiotion is opposed by both the Applicants and Staff for failing to satisfy the criteria for reopening a '

record. No party disputes that the character and competence questions to which the l'otion is addressed are significant safety issues, although the' Applicants and Staff do challenge the relevance to those issues (and thus the significance) of much of the information proffered by the i

Motion. Nonetheless, there appears to be no dispute that the second reopening criterion has been satisfied.

The Applicants and Staff each claim that the fiotion was not submitted in a timely fashion. Each also asserts that even if the 2

Motion were considered timely, the documents and transcript of testimony ,

scught to be included in the record would not have changed the result which we reached in our earlier Partial Initial Decision. They regard the documents as either cumulative or as not material. .

CCANP asserts that its Motion was timely. It claims that it became aware of these documents and testimony excerpts thrcuch the l

participation of its primary representative in the PUCT proceeding, and 12 The Conmission's proposed regulations would qualify the timeliness criterion to the extent that "an exceptionally grave issue may be considered in the discretion of the presiding officer even if

, untimely presented". 49 Fed. Reg. at 50190.

that it did not have the documents in its possession prior to October or November,1984, when they were admitted into evidence in that proceeding (Motion, at 40; Tr.10997). CCANP also states that the PUCT Final Order was entered on January 11, 1985 and was subject to rehearing until late i

Februa ry, 1985.

On the merits, CCANP spells out the relevance of some (although not all) of the documents proffered. It also specifies I

certain of our findings and conclusions which, it claims, would be altered by the "new" evidence. Most particularly, CCANP focuses on our conclusion that, prior to the 1980 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" (L8P-84-13, supra,19 NRC at 688). CCANP claims that the documents upon which the Motion is based demonstrate that "HL&P had extensive knowledge of B&R's failures" long before issuance of the Show-Cause Order--indeed, even prior to the award of construction permits to HL&P. It seeks to reopen the record "to determine whether the timing of HL&P's replacement of B&R was consistent with the character and competence necessary for operation of a nuclear power plant." Motion, at 3-4, 7-8, 25-39. CCANP also charges that counsel for the Applicants participated in

" manipulating" the replacement decision (and its announcement to us)

"with an eye toward minimizing its impact" on this proceeding, and this manipulation reflects upon HL&P's candor (one of the elements of character) (id, at 4-5). (See discussion, pp. 9-16, supra.) CCANP also seeks discovery on matters raised by its Motion.

3. Discussion. As described abcve, of the three criteria ~for reopening a record, no party appears to question the significance of the character and competence issues to which the Motion is directed. We agree and conclude that CCANP has satisfied the second criterion for reopening a record; hence we will limit our discussion to the other two criteria.

(a) As for the first of the criteria, timeliness, the latest time when CCANP became aware of all of the information comprehended by the Motion was October (or possibly November), 1984, when the documents and testimony covered by the Motion were entered into evidence in the PUCT proceeding.13 The Motion was not filed until April 17, 1985, almost six months later. That period in itself is excessive. We note that CCANP advised the Appeal Board in December, 1984 that it planned to file a motion covering at least some of the material which was incorporated in the Motion before es (12/13/84 App. Bd. Tr. 10, 36).

Not until four months later was the Motion in fact filed. -

Moreover, most of the information underlying the Motion was available much earlier--some of it, in fact, predating the award of construction permits. To the extent relevant to Phase I issues, such information could have been obtained through discovery. (NeitherCCANP 13 CCANP has not explained, and we fail to perceive, the relevance from a timeliness standpoint of the January,1985 date when the PUCT reached its decision or the February,1985 date within which the PUCT decision was subject to reconsideration.

• w nor the Applicants could state whether or not any of the documents, or at least certain key documents, had been obtained or at least requested by CCANP (or CEU, the other Intervenor in Phase I) as a part of Phase I discovery. Tr. 11001-02 (CCANP); Tr. 10891 (Applicants).)

CCANP asserts that it was afforded inadequate discovery j opportunities in Phase I (Tr. 11002) and that between October, 1984 and I

April,1985, it was faced with numerous filing deadlines in this proceeding which made it impossible for CCANP to have filed its Motion  !

I earlier (Motion, at 41). We do not view these grounds as legally adequate to justify filing the motion as late as April 17, 1985 (for information which became known no later than October or November,1984, and should have been available to CCANP earlier, either in this i proceeding or the PUCT proceeding). For, as another Licensing Board has held, it is the opportunity to gain access to information which is significant in determining whether a motion based on such information is timely filed. Cleveland Electric illuminating Co. (Perry Nuclear Power Plant, Units 1 and 2), LBP-83-52, 18 NRC 256, 258 (1983). See also Pacific Gas and Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), ALAB-775, 19 NRC 1361, 1369 (1984).14 i For the foregoing reasons, we find that CCANP's Motion was not timely filed. Nonetheless, because untimeliness is subsidiary 14 The numerous filing deadlines to which CCANP refers (Motion, at 41) might have been grounds for an extension of time within which to l file the motion. CCANP did not seek such an extension.

to the significance to the proceeding of the information sought to be added to the record, we are relying on untimeliness only for the limited purpose of ruling on CCANP's discovery request (see p. 33, infra). We are not basing our decision not to reopen the Phase I record on the Motion's untimely filing. Rather, we are denying the Motion to reopen on the ground that the documents and information proffered (to the

. extent not material to issues already being litigated in Phase II) are not susceptible of changing the conclusions which we earlier reached on character or competence.

(b) The final--and in our view most important--criterion for reopening a record is whether the new information is significant enough that it might change the result which we previously reached. For this evaluation, the information in Exhibit "A" to the Motion (the PUCT transcript excerpts) must be differentiated from the remainder of the information supporting the Motion.

To the extent that the Exhibit "A" PUCT transcript is utilized to support a claim that the Licensing Board should have been informed earlier than September 24, 1981 of the change or proposed change in project contractors, we have concluded that the information is relevant to CCANP Contention 10, which is to be litigated in Phase II.

See discussion supra, paragraph B.2, pp. 8-9. For that information, no motion to reopen a record is required, and the criteria for reopening do not apply. On the other hand, to the extent that the PUCT transcript relates to the selection of one contractor vis-a-vis another, it does

not appear relevant either to Contention 10 or to the Phase I issues sought to be reopened.

i The remaining documents are claimed mainly to support the proposition that HL&P's asserted delay in replacing B&R reflected adversely on HL&P's character and/or competence. In support of its thesis that our PID would be changed by the newly proffered evidence, CCANP provides several examples of findings or conclusions which it believes would be modified. We discuss them seriatim.

Example "a" (Motion, at 26-27) questions our findings that the history of nonconforming or noncomplying conditions at STP l (including incidents of harassment of QC inspectors) reflected

inexperience rather than lack of corporate character. CCANP cites excerpts from 1977 and 1978 reports to HL&P by Management Analysis Corp.

, (MAC), a consultant, which state that HL&P management wat inexperienced; it argues that since HL&P knew it had inexperienced management, the

) noncompliances and nonconformances at STP were attributable to lack of character rather than experience.

The MAC reports on which CCANP relies for this example 1

(Exhibits "D," "F") were not themselves introduced into evidence in Phase I, but their general content was discussed (eg ., Tr. 1235-36, i

l 5119-20(0prea)). We considered evidence as to HL&P's knowledge of, and attempts to correct, its lack of experience in our PID. 19 NRC at i 687-88, 691-93; F0F 59-60,19 NRC at 740-41; F0F 99-104,19 NRC at l

752-53. Having now examined the reports, we do not perceive that they i

might change any conclusions which we reached.

l

Example "b" (Motion, at 27-28) relies en a draft of a 1979 MAC report concerning HL&P personnel (Exhibit "HH") and in effect claims that, since HL&P knew of the deficiencies of its personnel, its continued reliance on them demonstrated poor character, lie have already looked at the competence of the employees named by CCANP. 19 NRC at 689, 692-93; F0F 101-103, 19 NRC at 7ft. The new evidence would not significantly affect cur evaluation that at least certain of the employees (Messrs. Frazar and Turr.er) lacked nuclear experience. CCANP's claim that HL&P failed to implement the advice of its consultant is not supported by evidence. See, e.g., F0F 208-209, 211-213, 215-216,19 t;PC at 777-79. Perhaps HL&P did not act as quickly as CCANP (or we) might have preferred--i.e., prior to issuance of the Staff's Show-Cause Order. We specifically fcund that HL&P " tolerated deficiencies in personnel for too long a period of time." 19 NRC at 689-90. But changes eventua'ly occurred. The lack of timeliness of particular changes--if proved--w'ai.ld not cause us to find a character deficiency sufficient to disqualify HL&P from receiving operating licenses, indeed, we have already rejected this same clain of CCANP.

19.

Example "c" (Motion, at 28-29) asserts that several MAC reports or other documents (Exhibits "0", "E", "F", "G" and "Z")

undermine the Board's earlier conclusion concerning HL&P's asserted abdication of responsibility for the STP to B&R. But as the Staff and Applicants each point out, the Phase I record is replete with testimony concerning HL&P's assumption or lack of assumption of responsibility for

the project (Staff Response, at 14-15; Applicants' Response, at Appendix A, pp. 4-5). We concluded then that HL&P did abdicate some

responsibility for the STP to B&R at lower levels of responsibility but we attributed that failure to a lack of competence rather than character. The "new" documents proffered by CCANP are not identical to--but are largely cumulative of--evidence already in the record. They emphasize that HL&P management was advised by a consultant as early as i 1977 to 1979 that too much responsibility had been turned over to B&R (or, alternatively, that HL&P was not exercising responsibility 1

effectively). But these documents do not contradict any'of the findings l

l to which CCANP alludes.

Indeed, the "new" documents can as easily be read not as advocating replacement of B&R (as CCANP asserts) but rather as supporting a conclusion that HL&P should take steps to improve B&R's l performance--exactly the course of action which HL&P initially followed.

For exar.ple, Exhibit "F", a draft MAC report dated October 16, 1978, concludes (at 15) that There are many good people within the Brown & Root organization and the corporation has the capability of performing well on the South Texas Project from here on in.

Changes in attitude and organization at all levels are called for. At this stage of the project, MAC feels the only alternative is to make B&R a success [ emphasis in original].

Exhibit "G", a MAC report dated January, 1979, recognizes some of the management problems to which CCANP alludes but indicates MAC's then-current approbation of the corrective actions being undertaken by HL&P. The report states (at 1):

Prior to October, 1978, serious deficiencies in Project Management and Project Controls had been evidenced and major changes in organizaticn and operation of the STP were warranted. *** Several specific action items were recommended by NAC and implementation of those reccmaendations deemed appropriate have been in process since mid-November, 1978.

In short, we do not perceive any of the documents relied on by CCANP in example "c" (individually cr collectively) to be susceptible of significantly changing our findings or conclusions on HL&P's assumption of responsibility for the STP. See, ed ., 19 NRC at 688-90; F0F 115-116,19 NRC at 756; F0F 151-152,19 'IRC at 764-765; F0F 185-187, 19 NRC at 771-72.

Example "d" (Motion, at 29-30) also challenges the responsibility of HL&P management for not dismissing B&R earlier. It questions our conclusion that HL&P upper-level management did not abdicate responsibility to B&R for the QA/QC program, and that the lack of effective control at lower levels was attributable to inexperience as well as excessively long lines of communication. For its basis, CCANP cites Exhibits "F", "P", "Q", "Z" and "CC" to the effect that HL&P knew during 1977-78 that it was having QA/QC problems with B&R.

This information is not "new" but rather is cumulative.

We made specific findings on this very subject. The topics covered by the exhibits cited by CCANP were the subject of testimony or documents previously presented to the Board. See Staff Response at 15-16 and n.6.

Moreover, as set forth under example "c", the documents relied cr. by CCANP do not necessarily advocate the replacement of B&R at an earlier date, the result for which CCANP advances thcn.

1 In example "e" (Motion, at 30-32), CCANP claims that our conclusion that " friction between QC personnel and constructicn i personnel" was attributable to inexperience on the part of both HL&P and l D&Rratherthanacharacterdeficiency(19NRCat692,712) would be 1

modified by Exhibit "AA", as well as "D and "P", which are said to l

l demonstrate that HLLP knew of such friction as early as 1977 and i

continued to " tolerate" it for several years.

The documentation of HL&P's knowledge of incidents of harassment during 1976-78 is not new information. We made specific findings and conclusions concerning such incidents, together with HL&P's attempts to deal with them. 19 NRC at 687, 710-13; F0F 62, 64, 19 NRC at 741-42; F0F 75, 19 NRC at 744; F0F 376-78, 19 NRC at 820-21; F0F 381-399, 19 NRC at 821-E6. No "new" evidence is provided which wculd significantly change the foregoing findings or conclusions. f toreover, i

the exhibits cited do not reflect that HL&P " tolerated" such incidents, as claimed by CCANP. Nor do they cast doubt on cur earlier conclusions concerning corrective action taken by HL&P to prevent such incidents.

19 NRC at 686-87, 692, 711-713. We note that the affidavits submitted by the Staff and Applicants in conjunction with the Phase II esamination of the competence of HL&P and its new contractors, as well as underlying l

l Staff inspection reports, appear essentially to support our earlier expectations of improvement in this area.

! Example "f" (Motion, at 32-36) concerns HL&P's kncwledge of the need for corrective action prior to the issuance of the Staff's Show-Cause Order in 1960. CCANP cites Exhibits "D", "F", "G", "P", "V",

L

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

"Z", "AA", "CC" and "JJ" to the effect that HL&P had early warnings concerning B&R deficiencies and accordingly should have taken steps earlier to remove B&R, None of these documents is inconsistent with our i previous conclusion that HL&P had early warning of B&R deficiencies but lacked the experience at that time to recognize the need for major corrective action. See 19 NRC at 687-88. 1 Moreover, the major thrust of most of those documents was I

not that B&R should be dismissed but rather that HL&P should take steps to improve both its owr. and B&R's performance--a course of action which HL&P attempted to follow. See,e.g., Exhibit"D"(atIV-2);"F"(at15, 4

quoted supra at p. 25); "G" (at 1 (quoted supra at pp. 25-26) and at 2

22-23);"P";and"Z". CCANP concludes that "Quadrex should have been hired in 1978, not 1981" (Motion, at 33). We do not necessarily

disagree. But HL&P's failure to act earlier than it did does not, in 4

our view, constitute such a significant character (or competence) 4 deficiency as to alter the general conclusions which we reached in our I j PID. 1

)

In example "g" (Motion, at 36), CCANP claims that l

I

Exhibits "0", "E", "F" and "G" (various i1AC reports) would cause us to e change F0F 93-112, 19 NRC at 750-55, concerning " Evaluation of Root l

Causes of Noncompliances". CCANP would have us conclude that HL&P was t

l knowledgeable of the root causes earlier than we found and should have undertaken corrective action earlier. However, although the reports

themselves were not in the record, testimony about them was earlier l I

provided to us and we in fact made findings very comparable to that  ;

t i

which CCANP now urges upon us--i.e., that HL&P should have taken earlier  !

action to correct problems at STP. 19 ARC at 687-90. We stress again that the documer.ts cited by CCAflP (particularly "F" and "G") did g conclude that B&R shculd have been replaced.

Example "h" (Motion, at 36-38) criticizes our F0F 125, 19NRCat758,forgivingcredittoHL&P(intermsofassumptionof responsibility) for the dismissal of BLR. CCANP relies on Exhibits "B",

Appendix 1 to "B", "C", "0", "H", "P", "Q", "U", "X", "BB" and "FF", to show that B&R was derrenstrating engineering inadequacies at an early date. CCANP wculd have us rewrite F0F 125 to give credit only to Mr. Goldberg (who became an HL&P employee late in 1980) but to fault HL&P for not taking action earlier. However, F0F 125 was predicated on the discharge of B&R as being an assumption of respcosibility by HL&P (for whom Mr. Goldberg was acting). The cited documents do not necessarily indicate that the discharge action should have been taken earlier. But to the extent they do, they would only derogate from--not eliminate--the responsibility we perceived HL&P to have undertaken.

Lack of timeliness on the part of HL&P--tu the extent not already proved--would not in our opinien be sufficient to cause us to modify our earlier conclusions and determine that HL&P was so lacking in character or competence that it should be denied operating licenses.

The final example, "i" (Motion, at 30-39) sune.arizes the varicus reasons why CCANP believes the record should be reopened but provides no additional exarrple of "new evidence" or findings which should be changed. As the Staff points out, the subjects listed were extensively dealt with in our PID, cn the basis of record evidence

t (StaffRespcnse,at18-19). We agree with the Staff that "all matters l which CCANP sets out in this example as a matter it wishes to add to the record are already in the record". Thus these matters could not be said to have even the potential for changing the results which we already reached.

1 We have reviewca the examples set forth by CCANP in its Motion in some detail and have concluded that none of them include new information which might change the result which we previously reached.

We have reached the same conclusion with respect to all material supporting the motion (other than portions of Exhibit "A"). This is not to say that, if offered in Phase I, some of the documents ("B" "PP")

l would not have been accepted into evidence or that some findings in our PID might not have been altered to some degrec--if only to reflect the presence of additional information in the record. Except with respect to "A", however, the documents either individually or collectively would not have changed the result which we reached. Even if we were to determine that B&R should hcve been discharged two or three years earlier than 1981, we would not judge HL&P's failure to take that action more expeditiously, to the extent indicated by the documents provided us, as significant enough to deprive HL&P of the opportunity to be j

awarded operating licenses.

As for Exhibit A", we view portions of that PUCT transcript as bearing importantly upon HL&P's obligations to keep the hRC (including this Board) informed of significant events and hence as potentially affecting cur earlier conclusions on HL&P's cardor--in cur

view, one of the most significant aspects of character. In any event, the transcript, insofar as it bears on those obligations to inform NRC of significant events on a timely basis, is relevant to an already admitted contention and hence need not be evaluated against the strict criteria for reopening a record.15

0. Discovery In its Motion (at 47-48), CCANP seeks additional discovery on "the precise role played by counsel for Applicants in the replacement process for B&R and in advising or otherwise influencing the decisien of Applicants not to inform the Board of tne replacement plans or to testify about such plans." CCANP also seeks broad discovery "on any matter where [ Phase !] testimony is questionable" (citing as precedent theMenorandumandOrder(ReopeningDiscovery;MisleadingStatement),

dated December 18, 1984, in Texas utilities Electric Co. (Comanche Peak Steam Electric Generating Station, Units 1 and 2), LDP-84-56, 20 NRC 1696). For the latter request, CCANP asks that an " independent special master" be appointed to reduce the workload of CCANP or the Board "in order to identify the possible areas where credibility is questionable and discovery is necessary" (Motion, at 48). Both the Applicants and 15 We do not presently believe that documents "B" "PP" bear on HL&P's obilgation to inform NRC of significant relevant infnrmation, but at this time we are not so ruling as a matter of law.

Staff oppose any further discovery by CCAtlP (Applicants' Response, at 26-27; Staff Response, at 19-21).

At the outset, we must point out that, in a proceeding such as this one, discovery may relate only to " matters in controversy"--i.e.,

accepted issues or contentions. 10 C.F.R. 9 2.740(b)(1). We have declined to reopen the Phase I record on the character and competence issues. Moreover, there already has been extensive discovery on those issues. Thus, new discovery on the activities of B&R or HL&P covered by Exhibits "B" "PP" would not be appropriate or warranted. Nor, as applied to matters raised by those exhibits, would the broad discovery requested by CCANP be cognizable. We see no basis in the materials presented to us for invoking the type of far-reaching discovery permitted by the Comanche Peak Board. For as we have set forth, we do not regard Exhibits "B" "PP" as necessarily or even likely being inconsistent with testimony previously presented to us.16 With respect to Exhibit "A", however, we are permitting certain aspects of that exhibit relative to the status of B&R during the summer of 1981, and HL&P's advice to the NRC (including this Board) of that 16 For that reason, we need not consider CCAtlP's request for us to appoint an " independent special master". We question, however, whether an " independent special master" could be appointed to perform nany of the tasks outlined by CCANP, particularly conducting discovery on behalf of a party. See 10 C.F.R. I 2.722. As the Staff observes (Staff Response, at 20-21) the appointment of a "special master" for that purpose would constitute financial aid to an intervenor, which is prohibited.

status, to be litigated under CCANP Contention 10. When that contention l was strictly limited to the reporting of the Quadrex Report, we ruled l that CCANP had forfeited its right to further discovery on that question. LBP-85-6, supra, 21 NRC at 466. At the same time, however, we directed the Applicants to provide the Board and parties with copies of certain records relevant to that subject. Id., at 463-64 (The Applicants have complied with that direction.)

l We e rlier determined that CCANP was untimely in waiting until l April 17, 1985 to advise us of PUCT testimony presented in October, 1984 (see supra, pp. 20-22). To the extent that CCANP seeks further discovery on matters derived from the PUCT testimony, its request is similarly untimely. Although we did not deny CCANP's request to i

litigate matters derived from the PUCT testimony on untimeliness grounds, it is clear to us that further discovery on those questions could operate to delay the hearing, as to which testimony is scheduled to be filed in the near future. CCANP's untimeliness in filing the Motion in effect makes meaningful discovery on the matters from Exhibit "A" to be litigated inconsistent with following the schedule l which we generally adopted over three months ago, prior to the filing of theMotion(LBP-85-6, supra,21NRCat463). Since we do not believe that CCANP's untimeliness should be permitted to disrupt the hearing i

schedule, we are denying further discovery to CCANP.

l l Further, the only specifically identified topic of CCANP's discovery (the activities of Applicants' counsel) is not the primary focus of the matters to be litigated in Phase II and is likely to I

involve much privileged material. For reasons set forth earlier in this Memorandum and Order, we do not at this time perceive any " manipulation" efforts by Applicants' counsel sufficient to identify him as a "necessary" witness with respect to CCANP Contention 10. For this reason, that particular discovery requested by CCANP is not appropriate at this time.

Nonetheless, the development 5f an adequate record en CCANP Contention 10 (as modified) suggests that certain background information would be relevant. Thus, as in the case of LBP-85-6, we conclude that the Applicants should furnish the Board and parties (to the extent not already furnished) copies of internal documents or other records (in any form, including drafts), or correspondence or other communications with outside persons (including but not limited to consultants), concerning (1) the decisions to seek replacement of and, thereafter, to replace B&R, including the dates when those decisions were made; (2) the reportability of either of those decisions to NRC (including this 1 Board); and (3) discussion (if any) of the discharge or potential discharge of B&R between Mr. George Oprea and other corporate officers or officials. These records should cover the time frame from April 1, 1981 through September 24, 1981; except that, for topic (3), the documents may be limited to the period April 1, 1961-June 29, 1981. If the Applicants claim attorney-client privilege or work-product protection (as defined by 10 C.F.R. 5 2.740'(b)(2)) for any record, they should so advise us, setting forth an identificaticn of the particular record (sender, recipient, date, general subject matter).

O

'- ^

- 35'-

~ ~

The foregoing records or advice on privileged or protected documents should be in the hands of the Board and parties by Wedresday, July 3, 1985.17 For the reasons set forth above, and reaffirming conclusions set forth in our Sixth Prehearing Conference Order (Further Definition of Phase II Issues), dated May 17, 1985, it is, thi:; 18th day of June,1985 ORDERED

1. Thct CCANP's Motion to Reopen Phase I Record, dated April 15, 1985 (but filed April 17,1985), is denied.

2. That material included in Exhibit "A" to CCANP's Motion is accepted for litigation under CCANP Contention 10, to the extent described in our Sixth Prehearing Conference Order (at 3-4) and in this Memorandum and Order (at S-9).

3. Further discovery requested by CCANP in conjurction with its Motion is denied as untimely ar.d, in certain respects, cutside the scope of issues accepted for litigation in Phase II.

17 Dr. Lamb's copies need not reach him until Monday, July 8.

Through a telephone conference call on June 10, 1985, the parties were notified of this ruling on document production. Later that day, the Applicants advised that they would produce the specified documents on the schedule set forth herein.

/ .

4. The Applicants are directed to provide the Board and parties with records as described in this Memorandum and Order (at 3a). These r'ecords are to be provided by July 3, 1985 (except that Judge Lamb's copies need not reach him until July 8, 1985).

FOR THE ATOMIC SAFETY AND LICENSING BOARD f Jl .u b',s k ku b , /

Charles Bechhoefer, Chaifr,an ADMINISTRATIVE JUDGE '

l t