ML20127N633

Forwards Pleading Entitled, Notification of Addl Evidence Supporting Petition to Intervene, Explicating Petitioners Position W/Respect to Comments in Rd Walker (as Amended on 921029)

ML20127N633
Person / Time
Site:	Comanche Peak
Issue date:	11/19/1992
From:	Kohn M NATIONAL WHISTLEBLOWER CENTER
To:	Murley T Office of Nuclear Reactor Regulation
References
NUDOCS 9212010327
Download: ML20127N633 (4)

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NATiosAi. Wiiivii.i:iii.owen Cnni:n 517 Florida Asenue, NW Washingion. DC 2(XX)l-lh50 (202) 667 7515

• Fax (202) 462-4145 November 19, 1992 Dr. Thomas E. Murley, Director Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555

-Ret Comanche Peak Steam Electric Station Docket

-Nos. 50-445 and 50-446, Texas Utilities Elec-tric company's correspondence of October 16th 1992 (as amended on October 29, 1992), Log Nos. TXX-92515 & TXX-92541).

Dear Dr. Murley I am writing in response to the letter dated October 16, 1992 (as amended on October 29, 1992) from Roger D. Walker, Manager Regulatory Af fairs, Texas Utilities Electric Company ("TUEC") . Mr.

Walker's response contains incorrect and misicading information.1/

TUEC asser'es in_its October 29, 1992 letter that: 10 C.F.R. 5 50. 7 ( f) "only applies . to ' employees,'" and that the minority owners are not " employees." TUEC then concludes that because the minority owners are not " employees," 10 C.F.R 550.7 (f) is not meant to the TUEC-minority owner agreements. This argument is defective.

On its face, 5 50. 7 ( f) encompasses the universe of all agree-ments pertaining to a licensee or a licensed facility (i.e., "no agreement"). Within this universe of agreements, 5 50. 7 ( f) prohibits incorporating provisions that may " discourage" --

let-alone prohibit - "an employee" from engaging in protected activi-ty. Because the TUEC-minority owner agreements specifically require the minority owners to " discourage" its emp'oyees from 1/ I am enclosing for your review and incorporate herein by reference, a pleading entitled " Notification of Additional Evidence supporting Petition to Intervene." This pleading further expli-cates petitioners' position with respect to comments contained-in Mr. Walker's October 16, 1992-letter.

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Page 2 Kohn to Dr. Murley November 19, 1992 contacting the NRC, these agreements are inconsistent with the meaning of 550.7(f).I' Moreover, TUEC's reading of $50.7 (f) flies in the face of the stated public policy of the NRC. As TUEC is well aware,3' the NRC publicly removed any doubt as to the ucope of the prohibition against restrictive settlement agreements:

To remove any possible uncertainty about the agency's position, let me state emphatically that an agreement whereby any nerson--not just an employee or former employee with pending claims under Section 210 of the Energy Reorganization Act, but any person--contracts to withhold safety-significant information from the Nuclear Regulatory Commission is not acceptable.

See Attachment 1 at p. 4 (emphasis added).

The TUEC-minority owner agreements were reviewed and signed by employeeb of the minority owners and, as such, these employees were directly made aware of the prohibition against contacting the NRC with safety. Moreover, as managers, these same employees would ultimately be responsible for taking ctops to impede other employees from contacting the NRC. In this respect, under the l'

The plain meaning of 550.7 (f) is to prohibit restrictive settlement provisions from interfering in any way with the right of every single individual employed by or utilized by a licensee during the construction or operation of a nuclear facility to provide the NRC with information. The TUEC-minority agreements are signed by individual employees of the minority owners acting as agents for the corporation. Under 9 50. 7 ( f) , it is just as impermissible for an individual employee of a corporation acting as at,ent for the corporation to sign an agreement which seeks to discourage that individual and every other employee of the corporation from freely contact the NRC with information as it would be for that same individual employee to sign an agreement that only prohibited him or her from going to the NRC. The fact remains that an employee's action on behalf of an entire corpora-tion which results in discouraging all of its employees from going to the NRC represents a far greater threat to the public safety than the gaging of an individual employee.

3' TUEC's highest levels of management were present when this policy statement was publicly announced before the Senate oversight committee.

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l terms of the agreements, in order f ar the minority owners to comply with the contractual obligations, they had to determine what documentation existed, locate that document 1 tion and make the individuals in control of that documentation aware of the prohibi-tion against releasing this information.

It is inherently improper for any member of senior management to take any action to discourage any person from contacting the NRC with safety-related information. Indeed, under 10 C.F.R. Appendix C, Supplement VII, action taken by senior management which results in the submission of " inaccurate or incomplete information to the NRC" and which would otherwise violate the spirit of 10 C.F.R. 50.7 are patently prohibited and subject to fine and revocation of the license.

1 Elsewhere in his letter, Mr. Walker asserta that the TUEC-minority owner agreements are proper because, in spirit, they are akin to the CASE-TUEC settlement which was approved by the NRC:

...there is nothing improper about a commercial party, such as Tex-La, promising not to bring an action before the NRC in exchange for settlement of a complaint. In fact, such a promise was at the heart of the settlement agreement between TU Electric and Citizens Association for Sound Energy (CASE) which resulted in termination of the CPSES operating license and construction permit amendment proceedings.

Walker letter at p. 3.

This statement is misleading to the point of being materially false. First, according to TUEC's own counsel, the CASE-TUEC settlement "would in no way limit the right of any individual or CASE to go to the NRC. " Sen In re Texas Utilities Electric Cou, et

al, July 13, 1988 ASLB Hearing Transcript at. p. 25268 (attachment L 2). If one believes TUEC's counsel, the CASE-TUEC agreement did not restrict in any way CASE's right to " bring an action before the NRC."

l Second, the Joint Stipulation ("JS") signed by TUEC, CASE and

( the NRC, specJlically states that CASE was absolutely free to file L petitions pursuant to 10 C.F.R. 2.206 (JS at p. 13); and was free L to notify "NRC Staff of any concerns" (JS at p. 8, $3). In

comparison, the TUEC-minority owner agreements directly prohibited the minority owners from filing 2.206 petitioners or from otherwise contacting the NRC.

Page 4 Kohn to Dr. Murley ,

November 19, 1992 Third, where CASE was not required to prohibit and impede its attorneys, employees and others from contacting the 11RC with information, the minority owner agreements do.

Fourth, and most troubling, is the provision in the TUEC-minority owner agreements requiring the minority owners to assist TUEC with the secreting of information and documentation in the control and possession of the minority owners. llothing in the CASE-TUEC agreement requires the secreting of information from the llRC .

At the conclusion of his letter, Mr. Walker claims that the Nation Whistleblower Center's position would "assentially prohibit any settlement involving a nuclear plant, because settlement depends upon such promises." The only prshibition the 11WC seeks is the prohibition or settling disputes on condition that informa-tion be directly or indirectly secreted from the NRC. A settlement motivated out of a party's desire to buy silence (such as TUEC's settlements with its minority owners) are, in all resp 3 cts, inconsistent with NRC policy. See Attachment 1. To be sure, every matter pertaining to a licensee can be settled without requiring a party to the setticuent f rom directly or indirectly contacting the NRC with information.

Respectfully submitted, ,

/)M .

Michael D. Kohn General Counsel ec: Martin J. Virgilio (w/o encl) 053\nrc.ltr

1ATEMEf4T SUEMITTED [3Y CCMMISSiCf; 1HE UNITED STATES 14UCLEAR REGULATOR)

TO THE SUBCCMM11 TEE Oft f.L' CLEAR REGULAT10f4 (CtJtlTTEE ON Et VIR0t< melit AllD PUBLIC WCRLS UtilTED ST ATES SEllATE CCNCERfilNG (1) AGREEPENTS RESTRICTlilG !!!f0RMAT10N FLOW TO THE f;EC Af40 (2) rat 4CHO SECO NUCLEAP GENERAllf4G STATION FOR THE f:UCLEAR REGULATORY CCf'P.!SS10N FFESENTED BY LAtiD0 W. ZECH, JR.

CHAIRMAN SUBillTTED: 14AY 4, 1989 p

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is pleased to Mr. Chairnan and renters of the Subcommittee, the Connission As you are aware, Cornissioner Carr is unable to be here appear bef ore you.

teday.

We are here to discuss legal and policy implications of settlemerit

l agreerents af fect1r.g the ability of persons to testify t.ef ore the ficc ear j Pegulatory Connission. We shall also address the recent restart of the Rancho l

Seco plant.

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With regard to the matter of settlement agreements, we woulo like to turn j i to directly to the two specific i!!Les the f.ubcommittee ested the Cono1ss on The first is whether current law permits NRC licenseos, license address. l 1

applicants, or centractors thereof to enter into agreementsl with emp oye forrer employees whereby, in exchange for financial considerMion, the erp o

l testify of or forcer employee agrees to restrictions upon his or her abi ity to the Atomic Energy Act. The second 1ssue is participate in proceedings under d public policy.

whether such agreements, even if they are legal, are goo l

i trat With regard to settlement agreements, the Commissien wishes to emphi?s re l f it circngly supports the widely-accepted general policy f avering settletent o Settlement disputes by the af fected parties in adjudicatory proceedings.

agreements that minimize or avoid the need for expensive and for tine-const litigaticn are in the interest of all parties ard, therefore, desirable.

In fact, iiEC this reason, such agreements are r.ormally to be encouraged.

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1 regulations encourage f air end reescr.at le tet tler,ents of contec' ge 10 CTR 5 2.7E9; see al o 10 CFR ( 2.203. Pcwever, to provide l

issues that s(ttlerent agreements will reet NRC standar ds, all :ettlert raist-d in NRC proceedings must be approved by the presiding of ficer. This wat done in a stipulation agrecrent agreed to by Texas Utilities Electric Company, in intervenor Citi: ens Association for Scund Energy (CASL), and the NRC stati which these parties as6ed the presicing licensirg board to cismiss the Conanche Peak opercting license proceedir.g. That agreement specifically provided that parties cculd bring any safety issue to the NRC, Neverthelets, not all agreements affecting the ability of an indivicual to provide saf ety information to the NRC would neccssarily ccme before the LRC for review anc approval. The settlement agreement between Joseph liacktal crd Brown

& Rcct is, of ccurse, an exanple. This confidential agreement was intended to settle a Section 210 proceeding tefore the Department of Labor. Since Mr.

Packtal was r.ot a party te or otherwise a participant in an kRC proceeding, his settlement agreement ir the Secticn 210 proceeding before the Departrent of Thert was, Labor proceedings did not ccte to the NRC for its r(view.

therefore, no opportunity for the NRC to ensure that ;1r. llacktal uncerstcod that he could come directly to the NEC stair or the Commissicn itselt w i t h a ny safety concern.

It should be noted, however, that the NRC has talen actions over approximately the last nine months to address the question of 14r.1 acktal's additicr.ai safety issues. In late September 1988, in spite of his numerous contacts with the NRC, we received information indicating that Mr. Macktal'had not provided NRC 4

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3 I t:d t inf ur ration care in the f orn of an with all his safety concerns.

i for iair af fidavit by Mr. MacLtal attached to a pleading filed t>y Cit zens To the extent tir. Macktal's af fidavit provided (r.cugh Utility Pegulation. de te r mine specificity, the technical staff began reviewing his alleq3tions On Decerter to d to address the allegatiens.

3f additional staff wort was neede 21, 1988, the Ccraission issued CL1-88-12, which clearly inoicated that the NRC did not view the setthment as prchibiting Mr. Macktal's raising saf ety Although Mr. Itacital's attorneys were aware of this concerns with fGC. i Mr.

decision, and in fact have filed pleadings adcressing that decis on, i i gave its Macktel cid not bring his concerns to the ftRC after the Comm ss on After attempts to cchtact Mr. Macktal view that he was grtaltted to do so.

ff was able to directly and through his attorreys, late last week the f6C sta Although he indicated that he did have safety concerns, te reach Mr. Macktal.

declined to provide the NRC with them at this tire, but instead referred the The f6C is currently working with Mr. Macktal's staff to his attorneys.

if any, additional safety concerns he atterneys in an atterpt to f10c out what, has.

C6,cusly, the (cr. mission is concerned with preserving its access to inf ormation bearing en its saf ety responsit ilities, and we have initiated l burden the actions to assure that settlement agreements do r.ct impermissib y Commission's access to information or a person's ability to communicate wi respresentatives of the Commission.

The staff has issued a generic letter to chief executive officers of the ma licensees of the Commission and their principal contractors cn the sub;,ect

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4 (ccpy attached as Enclosure). Among otter things, tt.is letter requests licenstes to examine current and previous settlement agreements mth l

employees, and contact those erployees as apprcpriate te cnsure the enp oyee any or f ormer employee understands that he or she may f reely certe to the NRC at in appropriate situations the time without f ear of a.iy form of retribution. '

staff will contact the individual involved to detcimine whether be or she has any unresolved safety ccccerns.

Additionally, we are considering changes in our regulations to specifically recuire that such settitrent agreeren'.s must provide an opportunity to the settling parties to bring safe *y issues directly to the attention of the The Commis51cn is writirg to the Secretary of Labor on this Ccrnission.

issue and we are attempting to determine if there are other settlement agreements under Secticn 210 of the Atomic Energy Act with potentially The Ceoartment of Labor is, of ccurse, respcns able unacceptable conditicns.

'or the acministration o' the employee protectico provis1cns of the Act arc possesses the ultimate authority to approve set tlements in cases brcught before it.

To remove any possible uncertainty about the agency's position, let me state emphatically that an agreement whereby any person--not just an employee or former employee with pending claims under Section 210 of the Energy Reorganization Act, but any person--contracts to withhold safety-significert information from the Nuclear Regulatory Commission is not acceptable.

The 11acktal settlement agreement did not appear to go this far, for on its f ace it did not preclude Hr. Macktal from bringing his safety concerns to the e,

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b Mr. l'acktal did agree, however, rot to appear attentien of the NRC. in licensing proceedings involv it.g tomand:e

.oluntarily as a witness or a party !r. an instarte ar;d to take reasonable steps to resist compulsory process.

Pea 6 i d al who has such as this, we at the Commission need to ensuretothat bringan ind vi u safety entered ir,to a settlerent agreement always has an opportunity Le think that the revised concerns to the attentiori of t' e Commission.

procedures that we are censiderine will address this concern.

to the The Com. mission believes that such agreements r.ust provide t ticn an opport settlir.g parties to bring health and saf ety concerns directly to the at enl  !

in order to be consistent with the policies underlying tre 1 of the Commis$ict The question of whether Atcmic Energy Act cnd the Energy Reorgari:ction Act.

depends largely on the specif ic such agreements are actual siolations of law circunstances surrcunding the agreements.

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t is difficult, hcwever, to talk entirely in the atstract abCut agreemen because a varlety of agreements restrictirg participation in NRC proceedings, not c1; of these are necessarily that meet that descript3cn can be imaginee.

For example, an agreement te settle litigation before tr.e cbjecticrable. t agency might reasonably involve a commitment by e party not to attemp If the f acts have been exhaustively reopening the supposedly settico issue.

..) actions that adequately address the explored and the setticrent is basco l safety concerns, such an agreement could be no more than a lawyer's r.

Atomic precaution, not prejudicial to the Commission's authority under the Energy Act.

At the other extreme, however, a paid-for confidential ccomitment

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is by an individual not to raise safety concerns with the NRC in any f ashion intolerable.

l their Shether or not restrictive agreerrents vio; ate a statute or regu etion on f ace, a corrpelling case can be made that such agruments must provide an opportunity to the settling parties to bring safety issues directly to the For erample, judicial decisions hold that a dttention of the Cortnission.

person may not waive rights to bring employment discrhination charges b EEOC v. Comsair, Inc. , 821 F.

the Equal Employment Opportunity Commission.

2c IC8! (5th Cir. 1987); EEOC v._U.S., Steel Corp. , 671 F. Supp. 351 (W.D.

Pa. 1987).

Precisely how '

ese matters might bear on the legality of the l'acktal agreement i ht and which way any balance of public interest versus private convenierce ra g f Labor 3 tip are matters which I understand are presently before the Department o As I noted earlier, the in Macktal v. Brown & Root [ Case No. 86-ERA-23),

end Departrnent of Labor is the responsible decider of claims under a Section 2!r:

settlements thereof, In pleadings filed in that proceeding i understard 4 t.t h

ose of the agrecrent ar.d rumber of issues liave been raised cor.cerning t e purp These factual considerations go well how it was perceived by the parties.

beyond an analysis which would focus solely on tue question cf the lega in view of the questions which are now the words of the agreement itself, before the Department of Labor in Section 210 proceedings, I do not believe i d that the Commission should express a view on how the case should be dec oe .

For this reason, in its order of April 20,1989, the Comission went no fLrther than withdrawing its remarks made in a previous order about the accept 6bilit f,.

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{!n the Matt (r of Te>af. Utilities Electric Co.,

of the Macktal agt tement.

CL1-E9-06).

Finally, as I have said, the agency is now actively reviewing our directive The objective of this this ;rea and will make chatiges in then if necessary.

nts eff ort is to leave no uncertainty that parties to settlec:entdirectly agreene to i

understand that they tave the caportunity to provide inf orciat on I the Commission, 1

i 1 can assure you, and any persons who may be contemplatir,g such ag l h a r ra nger,-c nt s .

that the senmission will give cicte attertion to t ese f the 9

An ocw, with your permissicn, we would like to discuss the operations o Rancho Seco 'luclear Generatirg Station.

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. Concerns about Rancho Seco/SMUD

f Mr. Chairran, on April 12, 1989 you expressec your concern over the action i nstitute of Nuclear i

the NRC in response to the April 4, 1969 letter frcn the Power (JftPO) regarding the operation of the Rancho seco riuclear Gen First, let me explain the background o' the events bef ore and Station.

subsequent to that letter.

The Executive Ofrector for Operations (E00) and I first were rasce aw INP0's cancerns about the actions of the Sacrrmento Municipal Utili I notified my fellow Commissior.ers (SMUD) Board of Directors on April 3, 1969.

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j,i UNITED STATES F e3 NUCLEAR REGULATORY COMM1$SION In the Matter of:

TEXAS UTILITIES ELECTRIC COMPANY, et al.) Case No. 50-445-OL

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(Comanche Peak Ster.m Electric station, ) 50-445-OL Units 1 and 2) )

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• Pages: 25,187 through 25,295 g 8-Vi Place: Dallas, Texas ,

Datet July 13, 1988 .

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i s 1 spent literally hours each day, and every day since i

2 this agreement was made public on July'1, talking to l 3 citizen groups, many of whose spokespersons were up i 1

4 here today, to explain to them not only the Joint  !

5 Stipulation, but the broad outline of the settlement 6 agre ement , to assure them beyond any doubt, as everyone 7 here will know in a few minutes if the Board approves e thic dism!.ssal, and the settlement agreement is 9 relenoed, that no one -- no one -- is prohibited from 10 speaking out.

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{ </$IrieEsfir &T bs'iiic)Yaskhd it o fr'sisfTetME5feffEYibiili(v 14 c1'aiins?agafnsti;theicompsnydfd$7tNNIEiliiiEibng- 4,e2 M that' 15 t,theyAware%wr6Eif ully;di s char ge d;i 16 We've read the relevant portion of the 17 proposal that has gone to each of those workers to 18 anybody who would listen to it. And it says it in 19 crystal clear language.

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20 All the concerns that were raised this 21 morning, that allegedly the great secrets that were not 22 released, Juanita, Billie and myself have explained at 23 great length -- at grant length -- to al2ey the f ears 24 of the public and any person that g er g s g g j o

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order placed on anyone.

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2 Nor would anyone have been willing to cign 3 such an agreement.

4 What Juanite Ellis has done -- and I muct say 5

to me it's a stunner -- ten years of fighting this 6

plant has produced what we, have heard in some foruna --

7 not here today -- the suggestion that she's selling out s

by agreeing to spend five more years being involved 9 with this plant.

To Even for a woman as young as Juanita, 15 11 years of her lif e devoted to a single project is a 12' substantial piece of time.

13 There has been in the press and some innnando 14 in the pleadings before this Board that silence and 15 money were being exchanged. Not only is that angroso, 16 misrepresentation of what is clear in'the' doedment-

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17 itself, clear in the statements that Juanita and Eillic 1e and I have made, clear in what anybody -- I mean those 19 of you who know some of these whistle blowers who have 20 ever seen Chuck Atchison or Dobie Hatley or any of the 21 people who are involved as whistle blowers at thic 22 plant, silence is the 2ast thing on their mind, in the 23 last thing that they would ever bargain for.

24 These are the most articulate people you will 25 ever meet. They are not silent.

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• UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION l1 - ATOMIC SAFETY AND LICENSING BOARD i

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! In the Matter of )

I ) Docket No. 50-446-CPA.

TEXAS UTILITIES ELECTRIC COMPANY, ) ASLBP NO. 92-668-31-CPA

) (Construction Permit i (Comanche Peak Steam Electric ) ' Amendment)

Station, Unit 2) )

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1 i NOTIFICATION OF ADDITIONAL EVIDENCE I SUPPORTING PETITION TO INTERVENE FILED l BY B. ORR, D. ORR, J. MACKTAL, AND S. HASAN B. Irene Orr, D.I.; Orr, Joseph J. Macktal and S.M.A. Hasan f hereinafter " Petitioners") hereby submit to the Panel newly-I abtained evidence not available to Petitioners as of October 5, 1992.

I. NEWLY OBTAINED EVIDENCE On September 15,'1992, the staff of the Nuclear Regulatory Commission ("NRC") instructed Texas Utilities Electric Company l

h ("TUEC") to submitted for review-copies of agreements it executed i

with Brazos Electric Power Cooperative, Inc. ("BEPC"),'and Texas ,

l Municipal Power Agency ("TMPA").1/ On September 24, 1992, Petitioners requested through NRC staff that TUEC provide copies s-I of the TMPA and BEPC' Agreements to' Petitioners' counsel.I' f Thereafter, pursuant to the scheduling order of,this Panel, i Petitioners, on October-5,- 1992, filed a supplement =to their ,

1 original intervention petition, and note therein-that they were unable to secure cc as of'the BEPC and TMPA Agreements.as of i 1/ See Enclosure 1.

! I/- See Enclosure 2.

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October 5, 1992.F On October 13, 1992 NRC Staff notified Petitioners' counsel that copies of these agreements were now f

available for inspection at the NRC's Public Document Room.9 B6cause these agreements were not available to Petitleners prior to the filing of Petitioners' October 5, 1992 Supplement, Petitioners hereby submit excerpts of the BEPC and TMPA ,

Agreements to the Panel for consideration.1/ Argument related tc this newly obtained evidence follows.

l II. THE NEWLY RELEASED BEPC AND TMPA AGREEMENTS RESTRICT THE RIGHTS OF TFE PUBLIC, THE NRC AND CITIZEN

[

INTERVENORS Tn CBTAIN SAFETY RELATED INFORMATION Like other settlement agreements executed by TUEC, nuch as f

+ the agreement with Tex-La and the now disgraced Macktal and Polizzi settlements, the BEPC and TMPA agreements contain .

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restrictive clauses which interfere with the full and complete i disclosure of essential-information directly at issue before this f

Atontic Safety and Licensing Board ("ASLB") .

! The BEPC and TMPA agreements directly restrict the right of b the former minority owners (and their attorneys, employees, consultants and others) to disclose information to a vcriety of-i' ~

l persons, including the NRC, the public and citizen intervenors, i

J Additionally, these agreements turned over physical possession.

! and cont.rol-of'alA documents and other-information TMPA-and BEPC F See October 5, 1992 Supplement to Ir.tervention - Petition at p. 7.

9 See Enclosure 3.

k j l' . Excerpts of the.TMPA Agreement appear at " Enclosure 4".

I BEPC Agreement excerpts appear at " Enclosure 5",

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had amassed as co-owners of Comanche Peak Steam Electric Stations

("CPSES") and by virtue of extensive discovery conducted in the state court proceedings.

1. Information withheld directly pertains to Petitioners' Contentions The contention Petitioners seek for admission before this Board regarding the delay in the construction of Unit 2 of the CPSES is based on a former contention previously admitted by the NRC concerning the delay in the construction of Unit 1 of the CPSES plant. This contention considered TUEC's request to amend the construction permit for CPSES Unit 1 (Docket No. 50-445-CPA),

hereinafter referred to as the "CPA-1 proceeding".

During the pendency of the CPA-1 proceedings, CPSES's minority owners (i.e. BEPC, TMPA and Tex-La) initiated suit against TUEC seeking damages stemming from, inter alia, TUEC's

" willful misconduct," "mi, representation and non-disclosure of material facts," including TUEC's refusal to "promptly identify and correct design deficiencies," " develop a quality assurance / quality control program adequate to detect and correct design and construction defects," and, to " address the concerns of the NRC Licensing Board." See Plaintiff's Original Petition filed in Brazos Electric Power Cooperative. Inc. v. Texas Utilities Electric Company, et al., Case No. 399,482 (District Court of Travis County, Texas, 345th Judicial District) at pp.

13, 21, 25.

s BEPC specifically alleged that TUEC had willfully and intentionally deceived it, the U.S. Securities and Exchange 3

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i Commission, and the NRC'about_ delays inl construction-of both i

i Units of the CPSES, see, id., at pp. 14-15, 20-21, 25-26, 27-28 i

, and alleged that TUEC's misconduct resulted in the delays of

! construction of the CPSES, id., at pp. 21-22, and that TUEC l ' lacked the requisite character and competence to construct the '

, CPSES, id., at pp.13-28.

l Through formal discovery in state court, and by virtue _of i

their status as co-owners of the CPSES, both BEPC and TMPA were I in-a position and did gather extensive amounts of information concerning the reasons for the delay in construction of'both units'of the CPSES; TUEC's character, integrity and competence to construct a nuclear facility; what corporate polices TUEC l

practiced which resulted in violations of NRC requirements and l design and construction defects; which of TUEC's managers and q

i agents were most culpable and directly responsible for the design 1

I defects, delays and material-misrepresentations.F i.

I F The scope of documentary; evidence in the possession of-l BEPC and TMPA at the_ time they. settled with TUEC can be gleaned from answers to interrogatories BEPC filed with the ASLB during j the course of the CPA-1 proceeding. See, Objections andL l Responses'of Brazos Electric-Power-Cooperative,..Inc. to Consolidated'Intervenors' Interrogatories and' Request-for Production of Documents, dated August 14, 1987 (Exhibit-1 to Supplemental Petition). Therein, BEPC asserted that evidence in its possession demonstrates that TUEC had a. corporate policy of making " misrepresentations" and "non-disclosures" to the minority owner _and to the NRC; that'TUEC had " threat (ened]" its minority owners; and that TUEC had "not'been discarded or repudiated" this co: porate policy. Moreover, BEPC specifically alleged that TUEC i

I- had made_ scores of " misrepresentations" and-repeatedly " fail [ed)

I to disclose material information" concerning the " licensing" of j the CPSES, including:

}

P .(continued...)

f 4 1 s 4 j '

l' i- -l l

I

_ __ _ . . _ _ _ . . ~ , ._ _ . _ , , - _ , , _ _ _ a,w

8f The information obtained by TUEC's joint owners is essential Indeed, to the contention Petitioners herein scek admission.

Petitionero contend that the same managers responsible for the prior delays, material misrepresentations and other gross acts of omission and commission are responsible for the construction of U(... continued) lures to disclose material

• "Misreprecentations and f tien of CPSES and the adequacy information as to the constr thereof;"

• " Misrepresentations and failures to disclose material information as to TUEC's compliance with applicable regula-tions;"

= Misrepresentetions and f ailures to disclose material information as to TUEC's adherence to commitments made to the NRC;"

• " Misrepresentations and failures to disclose material information as to the competence of TU Electric to perform the duties of project manager;"

• " Misrepresentations and failures to disclose material information as to the competence of contractors and subcon-tractors;"

• " Misrepresentations and failures to disclose material information as to the competence of the archi-tect/ engineers;"

• " Misrepresentations and failures to disclose material information as to the viability of CPSES QA/QC programs;"

> " Misrepresentations and failures to disclose material information as to the competence of TU Electric and other Texas Utilities personnel;"

• " Misrepresentations and failures to disclose material information as to the accuracy of statements made by TU Electric to the NRC."

Exhibit 1 to Supplemental Petition at pp. 3-4z 5

i

4 the CPSES Unit 2 and the current _ delays of construction with respect to Unit 2.

2. The Agreements prohibit the release of safety related information to the NRC, Petitioners and_-ther covernmental agencies i TUEC concluded the TMPA Agreement on February 12, 1988 and thereafter concluded the BEPC Agreement on July 5, 1988.Z/

Therein, TUEC, through restrictive settlement terms, was able to l

ensure that information calling into question aspects of the I design and construction of the CPSES and information concerning the character, integrity and competence of TUEC to safely construct and operate the CPSES was withheld from the then convened ASLB panel, the NRC, citizen intervenor groups, the 4 public and all other governmental agencies. TUEC accomplished the secreting of information in three steps. First, by requiring BEPC and TMPA to given TUEC physical possession and control over all information. Second, TUEC then intentionally secreted this 1

information from the ASLB in violation of a standing order i Third, TUEC requiring TUEC to make such information public.

contra-tually bound TMPA and BEPC to never voluntarily release 4

this information; to actively impede others fron releasing this information; and to raise any and all defenses and take

' affirmative action as a surrogate of TUEC to pronibit the disclosure of any information related to the CPSES to the ASLB, the NRC, other governmental agencies, and to Petitioners.

I l

Il The CPA-1 proceedings were thereafter dissolved on July 13, 1992 by order of the ASLB.

I 6

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a) TUEC's Physical Secreting of Information from the ASLB Through the BEPC and TMPA Agreements, TUEC arranged to secret all information TMPA and BEPC had gained by virtue of their status as former co-owners and particularly gathered in discovery during the course of protracted state law proceedings which directly bare on all prior and current NRC proceedings related to CPSFS. This was accomplished by requiring BEPC and .

TMPA to gather all documentation in their control and possession, including documents in the control and possession of their i

agents, consultants and attorneys possession, and physically turn this documentation directly over to TUEC. See BEPC Agreement at p. 25, 55.2(c). In this respect, the TMPA Agreement snecifically provides that:

1

TMPA shall have delivered to TU Electric the

originals and all copies of all documents and other written material in its custody, control or possession (including without limitation those held by TMPA' agents, attorneys and consultantG) pertaining to or involving Comanche Peak or the Pending Litigation.

Agreement at p. 25, 5 5. 2 (c) .E/

4 E' This provision is particularly disturbing because TUEC's present licensing counsel were involved with its drafting.

Unquestionably, TUEC's counsel had full and complete knowledge that the secreting of information from the then convened ASLB panels violated standing orders of the ASLB. The intentional secreting of information from the NRC and willingness to mislead the ASLB about the existence of information in TUEC's possession is a manifestation of the corporate policy TUEC employed which caused extensive delays in construction and is responsible for current delay in construction of Unit 2.

7 i,

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BEPC and TMPA not only were required to give TUEC complete control and possession of all information, they remain obligated to function as a surrogate of TUEC and " cooperate" with TUEC's

~

ef forts to conceal this information from the ASLB, the NRC and 4

Petitioners. Under the heading " Covenant of Cooperation," the Agreements state:

The parties hereby covenant and agree to assist, cooperate with, and support each other (other than financial) on the event that a third party institutes 4

any action against either of them with respect to Comanche Peak and any incident or attribute thereof...

TMPA Agreement at p. 42, 59.5; BEPC Agreement at p. 46, 59.6.

The Agreements explicitly provided that, "to the full extent per:nitted by law," TMPA and BEPC must " exercise such privileges-and claims of confidentiality as may be available to prevent i disclosure thereof to any person-or entity, private or 4

governmental."2/ TMPA and BEPC Agreements at p. 25, 55.2(c).

As such, TMPA and BEPC are required to invoke any applicable 4

privilege or legal doctrine to protect TUEC's interest in the g

continued secreting of information from the NRC, ASLB, and j

Petitioners.E' Clearly, under the Agreements, TMPA and BEPC I 2' The BEPC duty of cooperation specifically addresses c

situations where statements " contrary to the truth" are made

before NRC proceedings. BEPC Agreement at p. 46, 59.6. Under the duty of cooperation, altnough TUEC cannot force BEPC to make a material false statement, TUEC is free to make material false statements on behalf of BEPC and, in such situations, BEPC is absolutely prohibited from alerting NRC to this fact. Indeed, i BEPC is actually required to take steps to prohibit the release of information to the NRC.

El BEPC and TMPA are specifically required to cooperate and assist TUEC, to the fullest extent possible, obtain "the 4 (continued...)

2 8

A i

d I prohibited from ever cooperating with any governmental i l

investigation of TUEC and the CPSES, and to the fullest extent permitted by law, must evade subpoena, invoke Fifth Amendment privileges, etc.

b) Prohibiting employees, concultants, Attorneys, Agents and others from iontactina the NRC. ASLD. and others The BEPC and TMPA Agreements prohibit BEPC and TMPA employees, consultants, attorneys and all other persons associated with BEPC and TMPA from assisting the NRC or any person bafore any proceeding concerning CPSES. The agreements specifically reference BEPC's and TMPA's " officers," " directors,"

" consultants," " attorneys," " agents," " servants" and I " representatives" (BEPC Agreement at p. 37, 59.2; TMPA Agreement ,

at p. 37, 59.2); and specifically seek to restrict their conduct and speech so as to prohibit them from doing or saying 0.nything i " involving, concerning, arising out of, or related to, the l

[ design, construction, management and licensing of, or any other l

matter relating to, Comanche Peak..." TMPA Agreement at p. 37, l

I S9.2. Accord BEPC Agreement at p. 41, 59.4. Moreover,-under the duty of cooperation provision, BEPC and TMPA must take action

aimed at impeding and otherwise prohibiting their employees, i

l attorneys, consultants and others from ever releasing safety-E/(... continued)

requisite licenses and approvals for Conanche Peak pending before

! the NRC and its Atomic Safety and Licensing Boards and Atomic Safety and Licensing Appeal Boards, including, without limitation, in NRC Dockets Nos. 50-445-OL, 50-446-OL and 50-445-

CPA." BEPC Agreement at p. 47, 59.7; TMPA Agreement at p. 43, 59.6.

9 n,

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related or other information concerning CPSES to the NRC_or from filing a safety related complaint against CPSES.

} In sum, under the express provisions set out in the f Agreements, TMPA and BEPC are required to act as the surrogates of TUEC. They must " fully cooperate with TU Electric," " provide all reasonable requested assictance," including "the assistane of [their) attorneys," and must otherwise refrain from doing j anything which could result in the release of information to "the

{ NRC." TMPA Agreement at pp. 43-44, 69.6; BEPC Agreement at p.

These provisions illegally prohibited the free flow of 48, 59.7.

information to the NRC, the ASLB and to Petitioners.

c) Ouid Pro Ouo of the Aareements (money for silence)

From the content of the TMPA and BEPC agreements, it is clear that TUEC paid both TMPA and BEPC money in exchange for their agreeing to secret information they had in their possession

, from the ASLB, NRC Citizen Intervonors, etc. This is plainly the j meaning of 55.2(c) of the respective Agreements. But, more I importantly, TUEC's intent is derived from the process employed i in-95.2(c) for the secreting of information. In this respect, TUEC constructed the agreements so that it obtained possession-i and control of all the information TMPA and BEPC had under their l control and possession and it was TUEC who thereafter secreted I I

this information from the ASLB in violation of a standing order to the contrary. Thus, it is not merely the language in the agreements but TUEC's conduct after it consummated the agceements which demonstrates that the cuid pro auo TUEC sought was the 1 I

10 i,

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secreting of information from the ASLB, the NRC and

. Petitioners.UI Explicit language cont.ained in the respective agreements further speaks to TUEC's intent. The BEPC Agreement states that BEPC could not reach settlement until it recognized TUEC's

" equitable" right to take steps to ensure that no one associated with BEPC ever released any infor~ation m to the NRC that was in any way damaging to TUEC or would effect TUEC's attempts to gains construction permits and operating licenses for the CPSES. In this respect, the BEPC Agreement expressly provides that it was understood between the parties that in order for BEPC to "obtain a final settlement with TUEC," BEPC " understood and agreed" that it would be " inequitable" for BEPC to allow its attorneys and consultants to " assist any third party in opposing TU Electric in

'i connection with any laatters relating to Comanche Peak" and, as such, BEPC must take "all such action as may be necessary or 11/ It is incredulous that TUEC would attempt to defend the language contained in the Macktal and Polizzi agreements based on Texas Utilities Electric Co. (Comanche Peak Steam Electric Stations, Units 1 and 2), CLI-88-12., 28 NRC 605 (1988). As TUEC is fully aware, this holding was withdrawn by the NRC on reconsideration when the NRC was, for the first time, fully briefed on the public policy and factual considerations k pertaining to the Macktal agreement. See Texas Utilities J' Electric Co. (Comanche Peak Steam Electric Stations, Units 1 and 2), C LI-8 9 - 6 , 29 NRC 348 (1989). In any event, on April 27, 1989, NRC Staff issued a letter to TUEC requiring that it contact parties to restrictive settlements and advise them-that the settlement did not preclude them from freely releasing infornation concerning licensing matters before the NRC. Sea April 27, 1989 letter from NRC Staff-to Licensees ("E;bilosura 6 hereto). The TMPA and BEPC agreements clearly -impede employees i from contacting the NRC with information and TUEC was required to l so notify TMPA's and BEPC's employees of this.

11 I ,

i

l i

4

! appropriate in order to prevent the consultants and l attorneys...from participating or assisting in any manner adverse f to Brazos' duty of cooperation" so as to prevent BEPC attorneys

! and consultants from assisting anyone iniany "NRO" proceeding related to " Comanche Peak." BEPC Agreement at $9.2, at p.35.

2 III. THE BEPC AND TMPA AGREEMENTS DEMONSTRATE THAT TUEC'S PAST CORPORATE POLICY WHICH RESULTED IN THE DELAY OF l

THE CONSTRUCTIO1.0F THE.CPSES HAS NOT BEEN DISCARDED i

! On there face, the TMPA and BEPC settlements indicate that I TUEC feared that the information in the possession of-its-joint I

f. owners mightfadversely effect the licensing of CPSES. It was 8

, precisely to prevent persons such as Petitioners from obtaining

! information which may be harmful to TUEC's pocition that TUEC-executed these restrictive agreements. The language of these 4

agreements demonstrates that TUEC knowingly and deliberately I

! entered into rertrictive settlement agreem.nts with its ; int i

owners and therein s2 cured a guarantee that this information f

i would never reach the, NRC, the CPSES intervenors, the CPA-1 h

l ASLB, the CPA-2 ASLB or Petitioners.

)

. This course of conduct b1 TUEC is orima facie evidence that l-it does not have the requisite character, competence or integrity f

to continue constructing the CPSES Unit-2. TUEC's concealing of i

information directly threatens 'that public's hea' th land safety. .

~

4 Worse, at the time the settlements were executed, TUEC concealed i

j. this information knowing that to do so constituted a gross and wanton violation of a standing.ASLB order requiring'TUEC to i

1

!- 12 l

t-t-

1

- .x - ... . . - - . . . - . =.

timely appraise the ASLB (and thereby appraise the public) of relevant jsformation that came to its attention.

1. TUEC Intentionally Violated a Standina ASLB Order ,

Unlike the settlement with Tex-La, the TMPA and BEPC settlements were both executed prior to the dissolution of the i ASLB whicn had been adjudicating the CPA-1 contention.HI Consequently, the TMPA and BEPC settlements were executed in violation of TUEC's fiduciary and legal obligations to the NRC.

During the course of the CPA-1 proceeding, the ASLB placed TUEC under an affirmative obligation to notify the ASLB (and consequently the public) of any and all relevant information TUEC obtained while the CPA-1 proceedings were on-going. See Exhibits 8 and 9 to Supplemental Petition. The provisions of the TMPA and BEPC outlined above violated the fiduciary and legal obligations of TUEC to the Board, the public, the former intervenors and Petitioners.

2. TUEC has not Repudiated its Corrupt Corporate Practices To date, TUEC continues to defend the secreting of information from the ASLB through settlement agreements which are carefully craf.ted to prohibit persons from contacting a convened ASLB with infornation, see, e.g., TUEC's Answer to the Supplemental Petition to Intervene at p. 24 (referring to the restrictive terms as "a standard provision in settlement M/ The final TMPA settlement agreement was reached on-February 12, 1988;-the final BEPC Agreement on July 5, 1988. .The CPA-1 proceedings were dissolved on July 13, 1992 by order of the ASLB.

3 3

$ I a

agreements between commercial entities"); also see Attachment B to TUEC's Answer to the Supplemental Petition at p. 5 (referring to the restrictive terms as being " consistent with the public t interest"). More troubling, at the time TUEC entered into these agreements it knew that not only was it illegal to conceal safety it. formation from the ASLB but that it had an af firmative duty to provide the ASLB with all relevant inforn.ation 't obtained concerning the then on-going CPA-1 and Operating License proceedings. Yet, TUEC entered into agreements with its co-owners (and with individual whistleblowers and other persons) intending to and, in fact, keeping relevant information from the hands of the ASLB.

TUEC's continued defense of its secreting information from the NRC demonstrates that TUEC has not repudiated the corporate policy responsible for the delays in construction (e.g., the

policy of secreting information from the NRC).

IV. THE BEPC AND TMPA AGREEMENTS VIOLATE THE ENERGY REORGANIZATION ACT AND IMPORTANT PUBLIC POLICIES

1. Restrictive Aareements Undermine the Reg.ulatory Process In hearings before the U.S. Senate Subcommittee on Nuclear Regulation, the adverse impact that' restrictive agreements have on the public trust and the regulatory process was fully discussed.

In regards to the appropriateness of restrictive settlements, such as the TMPA and BEPC agreements, in the area of 3

nuclear safety, the former Chair of the Subcommittee spoke for a bi-partisan consensus:

14

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It is shocking to me that we should even have to hold a hearing on such questions. It seems self-evident that it is wrong to pay witnesses mont to testify, regerdless of the content.- Any judicial procedure becomes-a sham if witnesses can be paid to withhold evidence. Yet we find that in the area of nuclear regulation the practice may be common. . . .

I am most surprised that legality of these payments could even be an issue in light of the substantial body of law what says that agreements of this type are, in fact, illegal . . .

U.S. Senate Subcc.maittee on Nuclear Regulation, The Secret Settlement Acreements Restrictina Testimony at Comanche Peak, etc., p. 2 (May 4, 1989).

Likewise, the relationship between restrictive settlements

! and the " integrity of the regulatory process" was explicated:

Because the NRC did not examine these linkage issues, and because they affect the integrity of the regulatory process, the subcommittee is conducting such an examination.

Secrecy breeds distrust. Throughout the history of nuclear regulation, the Congress has insisted upon an 1 open and public licensing process to promote trust and confidence. The public process we have today is a result of the belief that disclosure of all information will do more to advance public confidence in nuclear safety than suppression of selected information that the industry or the Commission may believe is harmful, or irrelevant, and costly to dispute.

Id., p. 3-4.

The regulatory process requires that the information obtained by TMPA and BEPC which relates, in any manner, to the licensing of CPSES (or the issues related to this proceeding) be fully disclosed to Petitioners. The fact that TUEC required that this information be suppressed as a condition of settlement constitutes strong evidence in support of this Board's acceptance

! of Petitioner's contention.

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2. Section 210 Section 210 of the Energy Reorganization Act, 42 U.S.C. S 5851 (and its implementing regulations, 29 C.F.R. Part 24 and 10 C.F.R. Part 50), protects the right of employees to use third persons to assist the employee raise safety concerns. For example, in the legislative history for Section 210, the right of employees to contact non-NRC sources with information (i.e. such as a labor union) was explicitly recognized: "Under this section, employees and union officials could help assure that employers do not violate requirements of the Atomic Energy Act.

S. Rep.95-848, reprinted in 1978 U.S. Code Cong. & Admin. News 7303-04 (emphasis added).

This recognition that persons covered under Section 210 may want to utilize third parties to engage in protected activity was codified by Congress in the statute itself. Section 210(a) f

' recognizes that employees may engage in protected activity directly or through third parties: " . . . the employee (or any person acting pursuant to a request of the employee) . . . . " 42 U.S.C. S 5851(a).

This statutory right to " assist" third parties engaged in protected activity is consistent with the overall definition of protected activity. For example, just as no Commission licensee i can bar an employee from " testify [ing)" in an NRC proceeding, a licensee cannot prohibit an employee form " assisting" third parties who are engaged in any type of NRC proceeding. 42 U.S.C.

S 5851(a) (2)-(3) . Consequently, if an employee wanted to provide 16 6,

h Ii

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

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testimony in support of a citizen intervenor or in support of a proceeding brought under 10 C.F.R. 52.206, such conduct is

[

statutorily protected. In this respect it is illegal for TUEC to either directly or indirectly through the use of restrictive settlement agreements to impede the right of persons to "tostify" or " assist" anyone intervening before an ASLB or any other proceeding before the NRC. It is not surprising that the j

Department of Labor has found that an employee's contact with an

1. intervenor in a NRC proceeding is statutorily protected conduct.U/

i Moreover, these Agreements violate 10 C.F.R. 5 50.?(f).

Section 50.7 (f) explicitly prohibits employers, such as TUEC, 1

a BEPC and TMPA (and Tex-La) from prohibiting or inhibiting

" employees," including attorneys and paid consultants, from engaging in protected activity. 10 C.F.R. S 50.7 incorporates by reference all cf the substantive protections afforded the public e by Section 210 and, in addition thereto, specifically prohibits i

utilities from entering into the restrictive settlements TUEC l

t

! entered into with its minority owners.

{

M/ The U.S. Department of Labor, in the case of Nunn v. ,

Duke Power Company, No. 84-ERA-27, D&O of Deputy Secretary of Labor, p. 13 (July 30, 1987), explicitly ruled that employee contact with citizen intervenors was protected as a matter of ,

law. This ruling under the Energy Reorganization Act was in

' accordance with the SOL's rulings in other cases under identical j employee protection laws also administered by the SOL. See, e.a.

4 Wedderspoon v. Milliaan,-No. 80-WPCA-1, D&O of ALJ at pp. 10-11 (July 11, 1980), adopted by the SOL (July 28, 1980)(employee's contact with an environmental organization and the news media constitutes protected activity).

17 i

Thus, the provisions contained in the BEPC and TMPA Agreements (and the Tex-La agreement) which artfully attempt to prohibit employees, attorneys, consultants and others from

" assisting" citizen intervenors are patently illegal. -

3. Public Policy a) Case Law Even without the statutory and regulatory precedent outlined above, restrictive settlements such as the Tex-La agreement have been voided on public policy grounds for years. See, e . c4 . EEoC

v. Cosmair, 821 F.2d 1085, 1090 (5th Cir.1987) ; Town of Newton

v. Rumerv, 480 U.S. 386, 392 (1987)("(a) promise is unenforceable if the interest in its enforcement is outweighed by a public policy harmed by enforcement of the agreement").

In case after case, the courts and the Department of Labor have found settlement provisions far less restrictive than the BEPC and TMPA agreements void against public policy. These

. provisions were voided even when, unlike the BEPC and TMPA agreements, the settlements contained explicit provisions which allowed avenues of disclosure to the NRC of safety related information.

For example, in Polizzi v. Gibbs and Hill, 87-ERA-38, D&O of SOL (July 18, 1989) (" Enclosure 7" hereto), the SOL reviewed the legality of an agreement which restricted certain rights of Mr.

Polizzi to participate in NRC ASLB proceedings, but explicitly allowed Mr. Polizzi to inform the " Nuclear Regulatory Commission of any and all safety concerns he may have relating to the 18 e

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Comanche Peak Steam Electric Station." Polizz.i, p 3-4 (citing

1' rom the settlement agreement). Despite this provision, the SOL 1 i

struck down the legality of the restrictive provisions of the Polizzi agreement as violative of the Energy Reorganization Act.

According to the SOL:

. . . the Settlement Agreement significantly restricts

access . . . to information (Polizzi) may be able to provide relevant to the administration and enforcement 1 of the ERA (i.e. Energy Reorganization Act) and many other laws. Its efiect, to a large degree, would be to

' dry up' channels of communication which are essential for government agencies to carry out their responsibilities. NLRB v. Scrivener, 405 U.S. 117, 122 i (1972). As such, I find it against public policy.

Polizzi, p. 5-6.

The public policy behind aggressively promoting tha filing of safety complaints or concerns with the NRC is monumental. As the U.S. Supreme Court recently recognized, the public policy behind Section 210 of the Energy Reorganization Act is not only t

f to protect persons from discrimination, but to " encourage" the I filing of safety complaints. Enalish v. General Electric, 496 i U.S. 72, 110 S.Ct. 2270. ]JO L. Ed . 2d 65 (1990). The BEPC, TMPA (and Tex-La agreement) thwart the very Congressional policies l behind the enactment of Section 210 and thwart the very NRC l policies behind the enactment of 10 C.F.R. 50.7.

i. b) NRC Policy d Moreover, the NRC has adopted pi"lic policy considerations 1

with respect to a licensee's conduct. All licensees are required to possess the requisite charactor and integrity necessary to  ;

l 19 1

safeguard the public. In this respect, the NRC has determined that:

The generally applicable standard to determine.licenseo character and integrity is whether there is reasonable assurance that the licensee has the character to operate the facility in a manner consistent with the public health a*.d safety, and with the NRC regulrements. To deice that issue, the Commission may consider evidence of licensee behavior having a rational connection to safe operation and some reasonable relationship to licensee's candor, truthfulness, and willingness to -hide by regulatory requirements and accept responsit..ity to protect pubic health and safety.

In re Pipina Specialists. Inc, LBP 92-25 (September 8, 1992)(citing Metropolitan Edison Co. (Three. Mile Island Nuclear Station, Unit 1), CLI-85-9, 21 NRC 1118, 1136-37 (1985).

The secreting'of safety-related information by a licensee

' through the use of restrictive settlement agreements as well as a i licensee's intentional withholding of information from an ASLB 2

l knowing that to do so constituted a violation of an on-going duty to disclose such information to a sitting ASLB, is wholly inconsistent with the NRC's stated policy with respect to a licensee's integrity and character.

Additionally, the Chairman of the NRC in a prepared statement to a U.S. Senate Subcommittee stated:

...]et me state emphatically. that an agreement whereby any person--not just an employee or former employee with pending claims under Section 210 of the Energy Reorganization Act, but any person--contracts to withhold safety-significant information from the Nuclear Regulatory Commission is not acceptable... [A]

paid-for confidential commitment by an individual not to raise safety concerns with the NRC in any fachion is intolerable... The objective of this effort is to leave no uncertainty that parties to settlement agreement 1 '

20 i

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understand that they have the opportunity to provide information directly to the Commission."

May 4, 1989 Statement submitted by the NRC to Senato Subcommittee on Nuclea: Regulation, at pp. 4-7 (emphasis added) (" Enclosure 8" hernto).E' The plain meaning of the NRC's May 4, 1989 demonstrate that

' red'.rictive clauses executed with any person which restricts the i

flow of information to the NRC is unacceptable. The TMPA Agreement specifically requires TMPA to "take all such action as may be Lppropriate in order to prevent its consultants and

attorneys... from participatino or assisting in any manner adverse to TMPA's duty of cooperation" and must not assist or cooperate in any manner with "any current or future proceedings or matter before...the NRC involvina or relatina to Comanche Peak." TMPA Agreement at p. 39, s9.2 (E-phasis added). Accord

)

BEPC Agreement at p. 39, 59.2 (BEPC must " encourage and solicit" its attorneys and consultants and "take all such action as may be

! necessary or appropriate in order to prevent the consultants and

! attorneys...from participating or assisting in any manner adverse to Brazos' duty of cooperation," and specifically with respect j

I i

i 3/ Also see NRC Staff'F April 27, 1989 letter (" Attachment

l. 6"), which states:

\

Examples of restrictive-clauses include but are not limited'to prohibiting or in any way limiting an employee, or.an attorney for such employee, from coming-to and providing safety information to an NRC staff 1

member.

1 21 i

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to any proceeding before the "NRC"). 'These provisions are ner se restrictive and violative of NRC policy.E'

4. The Restrictions Against Filing Charges with the NRC and others regarding CPSES Contained in the TMPA and BEPC Acreements are Illecal and Void In addition to the problems outlined above, Section 9.2 of the BEPC agreement and its counterparts la the TMPA (and Tex La) agreements are void. These sections prevent the former minority owners (and their employees, agents, attorneys, consultants, etc.) from filing safety related complaints "in any manner involving, concerning, arising out of, or relating to, the design, construction, management and licensing of, or any other matter relating to, Comanche Peak . . . . " BEPC Agreement Section 9.2, p. 37. This provision bars filing, "directly or indirectly,"

"any complaint" concernhig 2Zt:y related matters in "any forum y whatsoever." BEPC Agreement, p. 37-38. Under this provision, BEPC and its " insures, agents, servants, employees, officers, directors, consultants, attorneys and representatives," are prohibited from filing complaints with the NRC, such as a M/ The BEPC and TMPA Agree nents specifically seek to restrain all of BEPC and TMPA's s olovees from contacting the NRC as well. See TMPA Agreement i s. 37-38; BEPC Agreement at p.

36-37. Pursuant to NRC Staff , letter of April 27, 1989, it was incumbent upon TUEC to insure that the minority owners, their attorneys and employees did not interpret the agreements in a manner which would restrict the free flow of safety related information to the NRC. TUEC never took this step-and never j

advised the NRC of the restrictive terms contained in these l agreements pursuant to the requirement to do so set out in NRC's i April 27, 1989 letter. TUEC's failure to comply with NRC Staff's April 27, 1989 memorandum is further indicia that TUEC continues to maintain a corporate policy of prohibiting the release of l relevant information to the NRC which resulted in the delay of

! construction of the CPSES.

4 22 A,

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petition under 10 C.P.R. 2.20G, or a safety related complaint to J

the ASLB. BEPC Agreement Section 9.2.

Because the provision also encompasses filing of " indirect" complaints, the restrictions would also prevent the abeve-listed 4

persons from giving information to Petitioners for Petitioners use in their various complaints against TUEC and CPSES.

Prohibitions on the right of employees to file charges have been voided by both the U.S. Secretary of Labor (in an Energy i

Reorganization Act case) and the U.S. Court of Appeals for the s

Fifth Circuit.

In Polizzi the sol found that prohibitions on the right to file a " charge" concerning matters made illegal under federal law was " void as against public policy." Polizzi, p.6. !n so holding, the SOL agreed with the Fifth Circuit's decision in EEOC

v. Cosmair, 821 F.2d 1085, 1090 (5th Cir. 1987):

4 i Allowing the filing of charges to be obstructed by enforcing l a waiver of the right to file a charge could impede [NRC)

! enforcement of the [ nuclear safety laws) . . . A charge not I only informs the [NRC] of (a potential safety concern) . . .

l but also may identify other unlawful company actions. . . .

I i- Pclizzi, at p. 6 (quoting Cosmair, 821 F.2d at 1090).

( Under the Polizzi and Cosmair precedents, the restrictions contained in the BEPC and TMPA agreements are illegal and void as against public policy.

CONCLUSION i

The TMPA and BEPC Agreements demonstrate that TUEC intended l

to and did secret information from the ASLB, NRC, citizen intervenors and the general public about-the impropriety of its l

l 23 l n

, - a v. .. . . . , - , --, , , . -- , . . , , . -

corporate policies, how these corporate policies resulted in delay, and information demonstrating that TUEC has not repudiated this corporate policy. This, taken together with TUEC's current willingness to argue that restrictive settlements which explicitly keep information from the NRC, intervenors and the public are acceptable, demonstrates that TUEC still maintains the same corporate policies which caused safety problems to be incorporated into the design and construction of the CPSES, resulting in extreme delays in construction which currently effect TUEC's ability to complete the construction of CPSES Unit

2. TUEC's execution of the TMPA and BEPC agreements supports Petitioners' request that their contention be accepted by this Board.

Respectfully submitted, y Q_ .J Michael D. Kohn Stephen M. Kohn.

Kohn, Kohn and Colapinto, P.C.

517 Florida Avenue, N.W.

Washington, D.C. 20001-1850 (202) 234-4663 Attorneys for Petitioners 053\ suppl.cpa 24 i

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• • / UNIT E D STATE S

!" D N NUCLE AR REGULATORY COI.iMISSION WASHWG1ON, D. C. 20555

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September 15. 1992 Docket Nos. 50-445 and 50-446 Mr. William J. Cahill, Jr.

Group Vice President, Nuclear TV Electric Company 400 North Olive Street, L.B. 81 Dallas, Texas 75201

SUBJECT:

COMANCHE PEAK STEAM ELECTRIC STATION - REQUEST FOR DOCUMENTS TO SUPPORT NRC STAFF REVIEW 0F 2.206 PETITION (TAC N0. M84073)

The NRC staff is conducting its review of materials related to'the

. 10 CFR 2.206 Petition filed by Michael D. Kohn on June 11, 1992, on behalf of the National Whistleblower Center and Messrs. Macktal and Hasan related to the Comanche Peak Steam Electric Station (CPSES). The staff has determined that i additional documents are necessary to complete the review. You are requested to provide Exhibits L through Q, inclusive, to the January 30, 1990, settlement agreement between TV Electric and Tex-La Electric Cooperative of Texas, Inc. (Tex-La). You are also requested to provide copies of settlement agreements with all other former co-owners of CPSES, and exhibits similar to those requested for TV Electric's January 30, 1990, settlement agreement with q Tex-La.

The reporting requirements contained in this letter affect-fewer than ten 4 respondents, therefore OMB clearance is not required under Public Law 96-511.

You are requested to provide these documents within 20 days of receipt of this letter.

Sincerely, LS S y Martin J. Virgilio, Assistant Director for Regions IV and V Reactors Division of Reactor Projects Ill/IV/V Office of Nuclear Reactor Regulation 5's u - / K /

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4 ADe44,9( O 4es 544 Septet .>er 2 4, 1992 Martin J. Virgilio, Assistant Director

for Regions IV and V Reactors Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20001 Re

comanche Peak Steam Electric Station 2.206 Petition Review (TAC No. M84073)

Dear Mr. Virgilio:

In a September 15, 1992 letter addressed to Mr. William J.

Cahill, you indicate that review of the 10 C.F.R., 2.206 petition filed by me required TU Electric to submit documentation related to settlements entered into between TU Electric and its former co-owners. I request that your office instruct TU Electric to serve a copy of their response to your September 15, 1992 letter upon petitioner.

Thank you for your assistance in this matter.

Sincerely yours,

/A W Michael D. Kohn 4

CC: William J. Cahill, Jr.

TU Electric 400 North Olive Street, L.B. 81 Dallas, Texas 75201 EN gh Ewelosanu x _

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%,,,,./ October 13, 1992 Michael D. Kohn, Esq.

Kohn, Kohn and Colapinto, P.C.

517 florida Avenue, it.W.

Washington, D.C. 20001

SUBJECT:

MATERIALS RELATED 10 C0f%f4CHE PEAK STEAM ELECTRIC STAT 10fl 2.200 PETIT 10ft REVILW (TAC f40. M84073) t This letter is in response to your September 24, 1992, letter requesting that TU Electric be instructed to provide you a copy o' materials related to the fluclear Regulatory Commission (f4RC) review of the 10 CfR 2.206 petition you filed on June 11, 1992.

In accordance with Section 50.4 of Title 10 of the code of rederal Regulations ,

TV Electric sent these materials to the fiRC Document Control Desk, These materials, which were provided by TV Electric letter dated September 21, 1992, are available for inspection at the Commission's Public Document Room, tue Gelman Building, 2120 L Street, fi.W., Washington, D.C. 20555.

, Sinterely, t L Martin J. Virgilio, Assistant Director for Region IV and V Reactors Division cf Reactor Projects lil/IV/V Office of fluclear Reactor Regulation cc: e next p:ge E Nm

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l AG REEMENT between l TEXM MUNICIPAL POWER AGEMCY l TWPA and TEIM UT!UT!P3 ELECTRIC COtf7AKY TU lueetrie l Dated as of Februuy it,1944 1

A 920921((((3 0300hp O i mm% '  %

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1

• (locluding without limitation its usumption obbgations with respect to the Joint Ownership Agreementi, r.nd TU Electric shall have deUvered to TMPA a

! certificate, dated as of such Closing Date. nf its Chairman of the Board, a Division President or a Ylec President to the foregohg effect 1

(c) Recept of tayment. TU Electric shau have delivered to TMPA the payments referenced in paragrapns (a) and (b) of Section 1.5 hereof in the case of the initis] Closing and the payment referenced in Se4 tion 1.5(c) hereof in the case of each Subsequent Closing: and (d) Reeelpt of Closing Docum nts TMP A shall have received the fully executed Closing doeurnents der.cribed la Article VII hereof to be delivered at that l

l particular Closing.

5.2 Conditions to Obligation of TU_ Electrie to Close. Tne obi',,m. n of TU Electric to consummate the treasactions contemplated by this Agreement C wh end every Closing is subject to the satisftetion of each of the following conditions at sa prior to each such Closing

(a) Representctireas and Warrantlet De representations and warrantles of

TMP A contained la this Agreemer" shall have been true and correct on and as j of the date hereof and s, all be true . torrect on and as of each Closing Date in all material respects as though such representations and warranties had been made on cnd as of such Closing Date, and TMPA shall have delivered to TU Electric a certificate, dated as of each Closing Date, of its President or Vloe PreMdent of its Board of Directors to the foregoing effect; (b) Compliance with Agreement. TMP A shall have fully performed and complied with all of the covenants, agreements and conditions to be performed or compUed with by it at or prior to the particular Closing, and TMP A shall have delivered to TU Electric a certificate, dated as of such Cloelng Dete, 'of its President or Vice President of its Board of Directors to the foregoing effect; w ,,,,.,,. m w .s n ,a i

,, (c) 03119ery of Pondmr Litigtgon Doeumentation. At the initial Closing, TMP A shall have delivered to TV Electric the originals and all copies of all documents and other written material in its custodj, control or pouession (including without limitation those held by TMPA's agents, attorneys and consultants) pertaining to or involving Comanche Peak or the 'Periding t.itigation, except those which ars privileged or which may be the product of TMPNs attorney's or con uitant's joint defense activities, if any, prepared in connection with the Pending Litigation. Such documents oc other written material which are essential to the conduct of TMPA's en-going busintss activities may be retained by TMP A except fo* one ec9y which will have teon delivered to TU Electric prior to the initial Cloring. As concerns priviltged or joint defense documents or written insterial TMPA shall, to the tvil ettent par mitted by law, exercise such pelvileges and ctalms of confidentiality a.s may be available to prevent disclosurt th2teof to any person or entity, private or governmental; (d)

Approval of the Cities. Prior to the Initial Closing, the various city council.s or o'.ner governing and approving bodlek or authwit!es of each of the Citics shall have duly and valldly adopted and approved (l) the ordjhaner. in the form attaened hereto as Exhibit D and (11) the release and covenant not to ice in the form attached hereto u Exhibit El any varlances from ths form of ordinance set forth in Eshibit D or any variances from the form of celease and covenant rnot to rue set forth in Exhibit E shall be s@ ject to TU Electric's reasonable satisfaction and eccepttnet, provided, however.

TU Etectric shall netlfy TMPA of any suets vart:.nces which ar e not satisfactory to TU Electric within ihree (3) Busineas Deys of TU Electric's receipt of said ordinanens and telems mod covmants not to sue, provided that TU Electric receives uma at least trees (3) But 3:ese T)eys prior to the inlual Closing Dates an<l 4

- 2! -

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j (e) Receipt of ClosinLDocu nents. TLJ Electric shall have received the C;osing documents described in Article VI hereof to be delivered at that particular 4

! Closing.

L3 Conditions to Obdgation of parties to Initia!!y Close,. The obligation of the parties to consummate the transactions contemplated by this Agreement at the Initial

) Closing Date is subject to the satisfaction of each of the following conditions at or prior to the initial Closing Date (a) No Adverse Proceeding. There shall not be pending any suit, action or other

]

proceeding by any person before any court or arbitrator or any governmental j department, commissim, board, bureau, agency or instrumentality in which it is sought to restrain or prohibit any of the transactions contemplated by this Agreement.

j (b) Waiv_ar of Right of First Ref tsal Immediately upon execution of this

, Agreement, TMP A will notify DEPC and Tex La of the execution of this Agreement by means of the notlee attached hereto as Exhibit F. Cy the

Initial Closing Date, BEPC and Tex La"will have executed an irrevocable J

caiver or other sufficient reUnquishment of any rights of first refu'al or cortsent to sole that BEPC and Tex-La may have ur. der the Joint Ownership Agreement (it being agreed that f ailure to axercise such right in accordance with the terms of the Joint Ownership Agreement by BEPC or Tex-La in

, response to the notice from TMP A within the time period specified in the Joint Ownership Agreement will constitute sufficient relinquishment of the rights of first refusal of BEPC or Tex-La as the case may be) with respect to any transaction provided for herein or such rights shall have been validly l exercised, in whole or in part, by either or both cf BEPC and Tex-La and the purchue which artses as a result of such exercise fully consummated, in the event that either or both of BEPC and Tex-La nll have exeretsed any such

! rights of first refusal to the extent that BEPC and/or Tex-La acquire att of g { '

4

insurers, agents, ser v ants, employees, officers, directors, shareholders, con *ultants.

attorneys and representatives, past and present, and any and all of their respective successors, subsidaries and affiliates and their respective agents, servants, employees, officers, directors, shareholders, consultants, attorneys and representatives, past and present, except Subject Claims arising out of or under this Agreement or any of the other agreements or instruments to be delivered by TU Electric cr TUC pursuant hereto. TMPA hereby covenants and warrants that it has not assigned any Subject Claims that are to be relJased at the initial Closing. At the initial Closing, TMP A will execute and deliver to TU Electric the form of Release attached hereto as Fxhibit 1.

9a covenant Not to Sue. Except as provided for in Section 4.2(g) hereof, upon tne initial Closing TMP A, for itself and on behalf of any person or entity, private or governmental, claiming by, through or under TMPA, including without limitation its oc their respective insurers, agents, servants, employees, of ficers, directors, consultants, attorneys and representatives shall agree and covenant that it and they, individually, collectively or in any combination, will forebear from asserting against, and never sue for or look for satisf action with respect to, TU Electric and TUC and their respective insurers, agents, serv ants, employees, of ficers, directors, shareholders, consultants, attoineys and repre.sentatives, past and present, and any and all of their respective succe:. sors, subsidiaries and affiliates and their respective agents, servants, employees, officers, directors, shareholders, consultants, attorneys and representatives, past and present, any Subject Ctalm (including without limitation any Subject Ctalm asinst any contractor, subcontractor, supplier, consultant, vendor or other person, firm or entity in privity in any manner with any of them which may therefor or as a result thereof br're a right over y Subject Claim in subrogation) in any manner hvolving, concerning, arising out of, or relating to, the design, construction, management - - - -

and licensing of, or any other

. . ~ .

mT(TEr7etattnf 15~_ Comanche Peak, and the management, procurement, conversion, enrichment, fabricatlA5,lhlppith, transnortation and storage of the Puel, asceoG.-

etalms ailsing out of or under this Agreement or any of the other agreements or 8

i  !

- . - - - . . .. . _ _ - . _ _ = - _ - . - _. .. _ - - _ . . _ - - .- _ . .

M

, instruments to be delivered by TU Electric ;mtsuant hePoto; and TMP A, for itself tnd on

,, behalf of any person or entity, ."rivate or governmental, cle6 ming by, through or under TMI' A, including without limitation its or their respective insurers, agents, servants, employees, offleers, directors, consultants, attorneys and representatives hereby further

! agrees and covenants that, upon and af ter the Initist Closing, neither it nor they, andividually, collectively or in any combination,. will directly or indittetly, challenge, _ . - - -

q contest or assert any complaint in any court or before' any administrative -~

egency or body -

] or in any other forum whatsoever with respect to, or in any manner involving, concerning, j arising out of, or relating to Comanche Peak and the incidents and attributes thereof

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

including, without limitation, the_ -deegn, -- -

construction, management and licensing of Comanche Peak or any other aspect thereof, the costs and schedule of construction and i

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

, completion of Comanche Peak, and the reasonanteness, prudency or efficiency of the

plarning, design, cortstruction, management and licensing of Comanche Peak, the costs of -

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

j construction and the schedule of construction end completion of Comanche Peak, and the

) reasonableness, prudency or ef ficiency of tha management, procurement, conversion, 1

enrichment, fabrication, shipping, transportation and stnrage of the Puel, and the costs

incurred in connection with the management, procuremcat, conversion, enrichment, a'

fabrication, shipping, transportation and storage of the Puel, and the bre6ch of the Joint Ownership Agreement and any express or implied warrantles arising out of the Joint Ownership Agreement, and any representation, misrepressatation, disclosure or non-1 disclosure in connectlen with the negotiations or prece4Jng ths execution by TMP A of the i Joint Ownership Agreement, and in connection with the performance or nonperformance

by TU Electrio of its dutjes, responsibilities or obligations under the Joint Ownership Agreement as Project Manager or otherwise, and the failure of TU Electric to pursue any l

l remedies, either at law or otherwlse, that may be, or may have been, available egainst any and all contractors, subcontractors, supptlers, cortsultants, vendors or others with respect to C1manche Peak (including separately the Station, Puel or Transmission l Facilities) s'.d on account of anythlng that has occurred or may have occurTed, in whole or 6

i

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

~-

in par t, aith respeel to Comaaehe Penx, (incturJing separately the Station, Fuel er Transmission Peellities) and the incidents ar.) attributes thereof and any of the foregoing whether known or unknown, eteept with regard to Subject Claims arising cut of or under this Agreement or any of the other agreements or instruments to be delivered by TV Electric pursuant hereto. At the initial Closing, TMPA will execute and deliver to TU Electric the form of Covenant Not to Sue attached hereto as Exhibit J. Fur the r,

^ Y.'" "" 8

.agt? f a H enc 6urage and et b aporneys, uk \j fulbright & Jaworski, and TMP A's separately employed cunsultants, to cooperate and

~ -

assist TU Electric in connection with any matters relating to Comanche Peak; and, if necessary to prevent a confilet of interest, it being understood and agreed that TMP A's separately employed consultants and attorneys may have obtained or developed information regarding Comanche Peak in the course of the Pending Latigation that arguably could be inequitable for them to otherwise utilize in vie's of the consideration

. .. . . - . - - . - - - ~ ~ . - -

~

being rendered by TU Electric hereunder in order to obtain a fMtment.-4f-the m ,

matters referred to in this Agreement. TMPA covenants and agrees that it will take all suchsetl5Ii 5$a tie necessary or aphropriate in erder to prevent the conshhnts and attorneys, includ;ng Pu1 bright & Jaworski, separstely employed by it in connection with

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

the Pending Litigation from participating or assisting in any mar.ner adverse to TMP As duty of cooperation herein or to TU Electric in connection with the Pending Litigation, the Pending Houston Et or any current or future procIedlnts or matter before the PUC .

or the NRC involving or relating to Comanche Peak, or any current or future proceedings before any court or before any administrative agency or body or in any other forum whatsoever with respect to, or in any manner involving, concerning, arising :>ut of, or relating tos (l) the acts or omisa!ans of TU Electric or the Project Manager referred to or in question in the Pending Litigstion or whleh Tuld have been brought into question in the Pending Litige,tions or (ii) the acts oc omissions of TU Electric oc the Project Manager with respect to Comanche Peak that occur, in whole oc in part, pelor to the Date of Commercial Operation (as said term te defined in the Joint Ownership Agreement). The

_,,, , _ --.- , , w ,,,- ,. -- - --

or the customers of IMPA acting in such capacity or debt holders acting in such cepocity (including without ilmitation the holder of any revenue or other bond or other obligation) of TMPA re!ating to TMPA's execution of the Joint Ownership Agreement, TMPA's execution of this Agreement and participation in the transactions provided herein, and TMP A's activities as an Owner separate and apart from joint activities with all other l

Owners or activities by, through and under the Project Manager. Pursuant hereto, at the initial Closing TMP A will execute and deliver to TU Electric the form of Indemnity 4

Agreement attached hereto as Exhibit M.

, 9.5 Covenant of Cooperation. The parties hereby covenant and agree to assist, cooperate with, and support each other (other than. financial support) in the event that a third party institutes any action against either of them with respect to Comanche Peak and any incident or attribute thereof, by virtue of either of them being or hasing been an

Owner, except that TMPA shall not cooperate with or support any party in the Pending Litigation with regard to the Subject CLAlms being made therein by Tex-La and BEPC.

9.o Terrr instion of oartielr e tion. To the extent that TMPA can and not ce in violation of Section 210 cf the Energy Reorganiution Act, 42 USC Section 5851 (1983),

upon the execution of this Agreement, TMPA, for itself and on beh,u' of any person or entity, private or governmental, etsiming by, through or under TMP A, including without IJ mitation its oc their r esp 4c tiv e insurers, agents, Servants, employees, of ficers, directors, censultants, attorneys, representatives and customers (to the extent in the case of such customers of TMP A it has 1 gal right or standing to do m2) agrees and covenants to immediately abate any and all currently pending actions wha tsoever, dit ectly or indirectly, involving or relating to the prosecution or processing of any Subject Claims against TU Electric or TUC, or their espective directors, offleers, employees, agents, insurers, consultants or attocneys, past or present, and any and all of their respective successors, subsidiaries and aff!11stes and their respective agents, servants, employees, officers, directors, shareholders, consultants, attorneys and representatives, past and present, presently or hereafter pending in any court or befoce any administrative agency 4

p w . - . . , . - m e. - - -

or body (etcept Subject Claims being made in tho Ponding Litidation, hich shell do .

governed by the provisions of Article !Y of this Agreement). In such capacity and to the extent TMPA can and not be in violation of Section 210 of the Energy Reorganization Act.

42 USC Section 5851 (198 3)(TMP A hereby representing and warranting that it knows of no violation, t.etual or elleged, of Section 210 of _the Energy Reorgnitation Act. 42 USC Section 3851 (1983) which has not heretofore been disclosed to TU Electrie in writing),

TMP A agrees and covenants that TMP A for itself and on behalf any person or entity, private or governme nt al, claiming by, through or under TMPA, including without limitation its or their respective irtsurers, agents, servants, employees, officers, directort, consultants, attorneys, representatives and customers (to the extent in the case of such customers of TMP A at has legal right or standing to de so) shall not pro ecute, dltectly o-

~

indir e ctly, any Sutject Claims, obje ctions, motions or other actions advetse to TU Electrie in connection with applies,tions for granting the requisite Ucenses end approvals for Comanche Peak 'pending before the NRC and its Atomic Safety and Licensing Boards and Atomic Safety and Licensing Appeal Boards, including, without Limitation, in N RC Dockets Non 50 445-OL, 50-446-OL and 50-445-CP'ADh'e'oligbtng antitrust review relative to the licensing of Comanche Peak, and emy and blheels from rulings and orders of the NRC related to, or growing out of, said Dockets which are pending before any court. Within three (3) Business Days af ter the Initial Closing, TMP A shall cause the dismlasal, with prejudice to the refiling of Sama in any form whatsoever, of all of its Subject Ctalms against TU Electric, TUC and their subsidiaries and af filiates in the Pending Litigation, and shall withdraw all of its Subject Claims adverse to TU Electric in connection with the granting of the requisite tjeertses and approvals for Comanche Peak pending in the NRC Dockets Noa, 50 -4 45 -O L, 50 -4 46 -O L and 50-445-t;P A and any and all proceedings in any manner related to, oc aristrv' out of, said Dockets.

TMP A agrees and covenants, from and af ter the initial Closing, to fully cooperate with TU Eleettle and provide all reasonably requested assistance, including providing the e

0,

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ J

1 legal assistence of its attorneys .(including l'ulbright & Jaworski), in a timely manner 4n connection with any legal proceedings (excluding the Pending Litigatien) involving

.~ .. _ _ __ _ _

Comanche Peak, including the Ucensing of Comanche Peak by the N RC, including without bmitation the ongoing antitrust review in connecticn therewith, and all proceedings involving Cornanche Perk before the PUC. Except as specifically provided otherwise in this Agreement TU Electric shall promptly reimburse TMP A for any and all reasonable out-of-pocket expraes and any and all reasonable outside professional fees, including, .

l without Umitation, attorneys fees, incurred by TMP A in providing such cooperation.

9.7 TU Electrie Actions and Litigation Costs. Within three (3) Business Days after the initial Closing, TU Electrie shall c ause the dismissal, with prejudice to ti.e reflurg of same in any form whatsoever, of all of its Subject Claims against TMPA in the Pending Litigation: provided. however. that TU Electric shall have the right to retain ,

1 TMPA as a party to the Pending Dallas Suit, not for the purpose of seeking any affirmative relief' against or from TMP A, but for the purpose of defeating a possible contention on the part of t'lo other parties thereto with respect to the absence of a necessary party to TU Electric's Subject Claims against the other parties in said case (it being understood that TU Electric's position is that any such contention would not be v alid). TU Electric shed promptly reimburse TMP A for any and all expenses reasonably incurred because of any such retection of TMPA by TU Electric in the- Pending Dal&.

Suit. It is expressly understood that nothing herein shall in any manner affect, dimish or I

impair TU Electric's right to fully prosecute any and all of it.s Subject Claims against the otner parties in the Pending Litigation. Except as provided otherwise above, all costs and expenses relate >d to or incurred !r. connection with the Pending Litigation shall be borne end paid by the party by whom incurred or to which they are related.

9.8 Termination of Joint Ownership Arreement Rela tionship. Except as otherwise provided in Section 9.4 hereof with respect to TU Electric's assumpilon of TMP A's obugations under the Joint Ownership Agreement TMP A and TU Electric hereby agree that, upon the final Subsequent Closing, the Joint Ownersalp Agreement, as l 1 44

m____. _ - . . . _ _ _ _ . _ _ _ _ . _ . _ . _ _ _ _ _ _ . . _ . _ -

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AGREEMENT tutween

' BR AZO 6 El.8CTRIC POWER COOPER ATTVE, INC.

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' and TEX A5 UT1LTTTLS ELECTEIC COMPAMT I

/ TU Doctric I Dated as of Aaly 1,1998 l

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! under this Agreement to be consummated prior thereto not tie consummated

! on or t efore the Closing Date, TU Licetric hereby maives any such con (hei g of interest w hic h might otherwise exist because of any such effort or j('

b d-coopera tion; and d

+

(g) If it is neceuary to nonsuit the current Subject Claims, as set forth in q 1

paragraphs (d) and (e) above, then in such event upon or at any time af ter the

• fh 4

! Closing, if TU Llectric requests, IVatos and TU Liectric agree that their f

Subject Claims in the Pending Dallas Suit shall be refiled in the New Lawsuit j l ..

h t

in Dallas County snd that the New Lawsuit and all suen Subject Claims shall W

then Imraediately be dismissed with prejudice. e fd 4,3 Agreement to Obtain Approvals. Urr.tos shall use all reasonable efforts to obtain with respect to Drazos and TU Electric shall use all reasonable efforts to obtain N

i to TU Electric all necessary consents, appro' als, authorizations, permits, y j .ith respect certificates or orders of any court, tribunal or governmental agency or authority Federal.

state, county or .sicipal, or other er.tity which are required by kny applicable statute or Q other law or by any judgment, order or decree or any rule or reguit' 7y court, f tribunal or governmental agency or authority, Federal, state, county or municipal, or any {

agreement or other requirement to permit each of them, respectively, to execute, deliver or perfctm this Agreement and any agree tant oc instrument required hereby to be crecuted and deljvered by either of them at the Closing. f

^

I ARDCLE Y I

i CONDrT10K5 't'O ODI)C ADOKel TO CLOSE '

l 5.1 Cor>ditions to Obligation of Drazo.s to Cbse. 1he obligation of fratos to I

consummate and close the transactions contemplat*d by this Agreement at the Cloatng is I

i v:bject to the satisfaction of each of the following ennditions at e prior to the Closing:

1 (a's Representations and Wartunties. The representations and warranties of TU Dectric contained in this Agreement shall have been true and correct on and as of the date hereof and shall be true and correct on and es of the Closing Date in all material respects as though such representations and i

, , - , - ._ -.. , . - , , . + ,. ,..

warrantaes had been made on and as of the Closing Date, cod Tll Electrie '

shall have debyered to Brazos a certificate, dated as of the Closing Date, of its Chairman of the iloord, a Division Proie.ent or a Vice President to the foregoing effects (b) Compliance hith Agreement. TU Dectric shall hate fully performed and complied with all of the covenanti, agreen,ents and conditions to be performed or compued 'esth by it at or prior to the Closing (including without limitation its assumption obligations with respect to the Joint Ownership I

Agree men t), and TV Liectric shall have delivered to Drazos a certificate, I

l dated as of 'he Closing Date, of its Chairman of the Board, a Division

) President or a Vice President to the foregoing effect; (c) Receipt of Payment. TU Dectric shall have deUvered to Brazos the i

payments referenced in paragrApns (a) and (b) of Section 1.5 hereof; i (d) Receipt of Closing Documents. Drazos_ shall have received the fully executed Closing documents described in Article Vil hereof to be delivered at the

( Closingt and (e) Consent to Assign _m_ent Agreement. The REA shall have entered .into the

(

f Consent to Assignment Agreement attached to the Assignment Agreement, i

! thereby accepting assignment of the Note as a mechanism for paying the Drazos Comanche Peak Debt and assignrnent or the Mortgage and thr; vendors ben contained in the Special Warranty Deed with Vendors Uen ond D!!i of Sala as security for the payment of th9 Note. '

(O Rec ept of _1.R.S. Determina tion. Lirazos shall have received an acceptable internal Revenue Servlee determination oc 14tter Ruling that r>o payments to n

be mtade t nder this Agreement and the Note will, when added to other nonmember revenues of Dratos, adversely affect Brazoet tax-exampi status under $+ction $01(cX'2)of the Internal Revenue Code of 1986.

5.2 _ Conditions to Obgation of TU Doctric to Cbee. The obilgation of TU Deetric to consummate the transactions contemplated by this Agre.iment at the Cbting is subject to the satisfaction of each of the fotbwing conditions at oc prior to the Cbstng:

, -2 4 -

MM Mm1

y. . ,

ta) Efpresentations end Warranties, The representations e.nd warranties of Drazos contained in this Agreement stall have been true and correct on and as of the date hereof and shall be true and correct on and as of the Closing Date in all meteei.el respects as though such representations and warranties had beet made on and as of the Closing Date, and Drazos shallhave delivered to it; Licettic a certificate, dated as of the Closing Date, of its President or becutive Vice President and General Manages to the foregoing effects (b) Compliance with Agreement. Drazos shall hs te fully performed and complied with all of the covenants, agreements and conditions to be performed or compbed with by it at or prior to the Closing, and Drazos shall have delivered to TU Electric a certificate, dated as of the Closing Date, of its President or becutive hee I*esident and General Nhiager to the foregoing effects (c) Delivery of Pending Litigation Documentetion. At the Closing, Bratos shall have delivered to TU Deettie the originals and all copies of all documents

~

and other written material in its custody, control or possession hneluding without limitation those held by Draros' agents, attorneys and consultadsi

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

pertaining to or involving the Pending Litigation, other than copies of those

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

which are filed in the Pending Utigation or at the NRC or which are privileged or which may be the work product or the product of Brazos' sttorney's or consultant's joint defense activitie s, if any, prepared in connection with the Pending uttgation or correspondence to or from TU Doctrie ce its attorneys or other entrespondence or documents copies of which have been provided to TU Uectric or its attorneys. Such documents or othee wrf tten material whleh are essential to the conduct of Brazos' on-going bustnces activitics may be retained by Brazos ucept for one copy which will have been delivered to TU Deetric prior to thi Closing, As concerns privileged or jolnt defe.nse documants or wtitten materici, Brazos shall, to the full extent petmitted by law, esefelse such _ privileges and claims cf confidantiality u may be avallable _ to peevenidJjetosure thgeof to any m,

person or entity, private oc governmental end

( #

4,. ^ + \ *

._m__ _ _ _ _ . _ _ _ _ _ - - _ _ _ _ _ - - _ -

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

i "E I i '

h tc) _H'Cpt of Clostng Documen_ts. T U l'lectric shall have received the sing documents described in Article Vi hereof to be delivered at the Closang.

$,3 Conditions to Obtsgation of noth Parties * ? Cl.,:?. The obligation of the

'stties to consummt.te the transactions contemplated by this *,greement at the Closing I

pate is subject to the satisfaction of each of the following conditions at or prior to the 9

Closing Dates

.. a ta) No Aaverse Proceeding. There shall not be pending any suit, action or other l proceeding by any person before any court or arbitrator or any governmental I

department, commission, board, bureau, agency or instrutnentality in which it l

l is sought to restrain or prohibit any of the transactions contemplated by this i Agreement.

e (b) Waiver of Right of first Re fusal. Immediately upon execution of this Agreement, Brazos will notify TMPA and Tex-l> of the execution of this Agreernerit by means of the notice attached hereto as Exhibit G. Dy the Closing Date. TMPA and Tex-l.a will have executed an irrevoeuble waiver or other sufficient relinquishment of any rights of first refusal or cont,ent to sale that TMPA and Tex-14 may have under the Joint Ownership Agreement (it being agreed that failure to exercise such right in accordance with the terms of the Joint Ownership Agreement by TMPA or Tex-L4 in response to the notice from Brazos within the time - period specified in the Joint Ownership Agreement will constitute sufficient relinquishment of the rights of first refusal of TMPA or Tex-!A ts the case may be) with respect to any transactica provided for berein or such rights shall have been validly aseectaed, in whole or in ptet, t,y either or both of TMP A and Tex-la and the purchase which arises as a result of weh exercise fully consummated. In the event taat ellher or both of TMP A and Tex-La shall have exercised any such rights of first refusal to the extent that TMPA and/or Tex-la acquire all of Brazos' interest in the Purchased Assets, Brazos shall promptly refund to TU Electric the full amount of the Slgning Payment less $15,322,541 and Draxos shall. in consideration for retaining said $15,322,541 of the Signing 1

1, .*4 6 - I n .

.r.

4 3

[

• t hout timitation, to tht. catent it has the standing and right under law to do so, its

,, i bets and customers (includmg the customers of ilratos' Wmbers and otner wholesale pers) and .ts or their respective insurers, agents, servants, employees, officers,

) , ,,e t or t. consultants, attorneys and representatives, shall waive, release, discharge, l . -

l \ ,eneunee and rel<nquish any and all Subject Claims relating to Comanche Peak it has or i i '

l gey have, or mav have, whether known or unknown, contingent or absolute, sneluding, i  ! ithout limitation, those based on common law, whether contreet (expretsed or itnplied,

,neluding express or imphed warranty) or tort (including, without limitatit, intentional i

tart, negligence or gross negligence, sole, joint or concurrent) or strict liabibly or fraud, I and those based upon any federet, state or local statute, law, order or regulation, I l j ,netuding, without umitation, the Atomic Energy Act of 1954, as amended, the regulations of the NHC, the Securities Act of 1933, as amended, or the Securities Act of 1934, es I

rended, and any rule or regulation under either, the Texas Securities Act (Title 19..

l ArticleJ 5t)l-1, et seq., V. A.T.S.) and the Texas Deceptive Trade Practices and Consumer Prot ec tion Ac t, against TU Electric or T U C, or both, in any capacity, whether mdividually, as Project Manager of Comanche Peak or otherwise, and their respective insurers, agents, ser v e.n ts, employees, of ficer s, directors, shareholders, consultants, l sttorneys and representatives, past and present, aad any and all of their respective successors, subsidiaries and offluates and their respective insurers, agents, servants.

~

] ernployees officers, directors, shareholders, consultanta, attorneys and representatives, past end present, except Subject Claims arising out of (c under this Agreement or any of i l

] l tfn other agreements oc Instruments to be deuvered by TU Electric or TUC pursuant hereto Bratoe hereby covenants and warrants that it has not assigned any Subject Claims 4

that are to be released at the Closing. At the Closing, Dratos will anecute and deuver to TU Electric the form of Release attached hereto as Exhibit J.

9.2 Dratos Covenant Not to Sun. Except as provided for in Soction 4.2(g) bereof, upon the Closing, Brazoa, for itself and on behalf of any person or entity, privatA.ot .

IEarfmen_tal, ctalming,by, through or under Drazos, including without umitation, to the

- _. _..__ ~ _. .

_ ~

f

, -3 4 -

.. V

, extent it has the standing and right under law to do so, its \1 embers and customers Oneluding the customers of licazos' \1 embers and other wholesale customers) and its or l their re50'Cli 'nsurers, agents, servants, employees, of ficers, directors, consultants, t

I attorneys and representatives, shall agree and covenant that it and they, individually, collectively or in any combination, will furebear from asserting against, and never sue for or look for satisfaction with respect to, TU 1:lectric and TUC and their respective insurers, agents, servants, employees, of fic ers, directors, shareholder s, consultants, i

attorneys and representatives, past and present, and any and all of their respective successors, subsidiaries and afritiates and their respective insurers, agents, servants, I

employees, Officers, directors, shareholders, cor.sultants, attorneys and representatives,

}

past and present, any Subject Claim (including without limitation any Subject Claim agairst any contractor, subcontractor, supplier, consultant, vendor or other person, firm i

or entity in privity in any manner with any of them which may therefor or as a result thereof have a rigte over or Subject Claire in subrogation) in any manner involving, concerning, arising out of, or relating to, tne design, cons'netion, management and tacensing of, or any other matter relating to, Comanche Peak, and the management,

' ~'

procurement, conversion, enrichment, f abrication, shipping, transportation and storage of the Fuel, except for claims arising out of or under this Agreement or any of the other l agreements or instruments to be delivered by TV Ejeetric, or any of Tt' Electrifs I

affiliates, sutandiaries or parent compeny, pursuant heretot and Dratos, for itself and on behalf of any person or entity, private or governmental, etalming by, through or ander firazos, includirq telthout limitation, to the estent it I tis the standing and right under law to do so, its Members and customers ('Mluding the ecstomers of Brazos' Met. bers and other w holesala custom ers) and its or thelt respective insurera, agents, serv ants, employees, offleers, directors, consultants, attorneys and representatives hereby further agrees and covenants that, upon and af ter the Closingr,.neither it nor.?c, ladly.idually, collectively or in any combination, wit! directly or indirectly, challenge coettest or assert A  %

fny complaint in e.rsy court or oefore any administrative agency or t>ody or in any other i

e ,

D

, D 4l' forum whatsoever with respect to, nr in any manner involvmg, concerning, arising out of, or relatir.g to, Comanche Peak and the incidents and attributes thereof sneluding, without limitation, the design, construction, managehsent and beensing of Comanche Peak or any l other aspect thereof, the t;osts and schedule of construction and completion of Comanche j k pesk, and the reasonableness, prudency or efficiency of the planning, design, construction, o

management and beensing of Comanche Peak, and the reasonableness, prudency or i j - _ _ - - . . . - .

- - - - - l eff808cncy of the management, pr ocur e men t, conver sion, enrichment, f abric a tion,

,ngping, transportation and storage of the fuel, and the costs incurred in connection with the management, procur e men t, conversion, enrichment, f abric a tion, shipping, tratisportation and storage of the roet, at1 the breach of the Joint Ownership Agreement I

and any empress or implied warranties artsing out of the Joint Ownership Agreement, and any representation, misrepresentatic1, disclosure or non-disclosure in conntation with the I l

negotiations or preceding the esecution by Dratos of the Joint Ownctship Agreement, and 1

in connection with tr e performance or nonperformance by TU Electrie of its duties, I responsiNiities or obbgntions under the Joint Owr ership Agreement as Project Manager or otherwise, and the failure of TU E!*ctric to pursae any remedies, either at law or e

otherwise, that may be, or may h6.e been, available against any and all contractors, subcontractors, suppbers, consultants, vendors of others with respect to Comanche Peak kneluding separately the Station. Fuel or Transmission Faciuties) and on account of crything that has occurred or m9y have occurreu, in whole oc ir, part, with respect to Comanche Peak, (includng esaretely the Station, Fust or Transmission Facilities) and the I incidents and- attributes thereof and any of the foregoing whether known oc unknown, except with regard to Subject Claims L. sing out .f or under this Agreement oc any of the other agreements oc instruments to be delivered by TU Dectrie, or any of TU Electric's affiliates, subsidiaries oc parant company, pursuant hereto. At the Chaing, Brazos will vuecute and deliver to TU Doctric the form of Covenant Not to Sue attached hereto as Exhibit K. Further, Brazos covenants and agrees that it will cooperate and wJst L TU Doctric in connection with all necessary approvals of this Agreement and that it will 33 lW_ _

h5 4e encourage and sotient its attorneys, including Joseph Robert Riley, Spiegel & McDiarmid and locke Purne!! n,iin Herrell, and Drazes' separately employed consultants, not to oppose or assist any third party in opposing TV Electrie in connection with an) matters l relating to Comanche Peak (eseept that nothing herein shell be construed to prohibit Said ettorney' end consultants from representing Drazos in connection with proceedings in f

i .nich TU Electric's rates are being determined provided that no opposition, or assistance t

.o any third pa'ty opposition, to Comanche Peak related costs is made): and, if necessary l

to prevent a conflict of interest, it being understood and agreed that Drazos' separately e mploy ed consultants and attorneys may have obtained or developed in for *n a tion regarding Comanche Peak in the course of the Pending Litigation that arguably could be I

ine:p;itable fer them to otherwise utilize in view of the consideration beirig rendered by TU O*ctric hereunder in ceder to obtain a final settlement of the matters referred to in I

this Agreement, Drazos covenants and agrees that it will take sll such action as may be necessary or appropriate in order to prevent the consultants and attorneys, including hseph Robert "' ley, Spiegel & McDiarmid and toeke Purnell Rain liarrell, separately employed by it in connection with, the Pending IJtigation, from participating or assisting in any manner adverse to Drazos' duty of cooperation herein or to TU Deetrie in connection with the Penoing Litigation, the Pending Houston Suit, the Pending Somervell County Suit or any current or future proceedings os matter before the PUC (except that r.othing herein shall be construed to prohlblt said attorneys and consultats from representing &a2os in connection with proceedings in which TU Electric's rates art eing determined provided that no opposition, or assistance to any third party opposition, to Comanche Peak rotated costs is medel oc %e NRC involving or relating to Comanche Jak, oc ary current oc future proceedings (except that nothing herein shall oe construed I

to prohibit stid attorneys and consultants from representing Brazos in connection with proceedings in which TU uectric's rates are being determined provided that no opposition, or assistance to any third party oppositjon, to Comanche Peak related coets is mede) before any court or befoce any administrative agency or body oc in any other forum b -3 9-

,b, , ___. . __--- -

. _ . _ _ _ _ _ _ _ . _ . _ _ _ _ _ _ . . _ _ _ _ _ - _ . . _ . _ . _ _ _ _ ._=__ _ .- . _

.. whatsoes tr with re@ect to, or in any manner involving, enneerning, arisirg out of, or relating toi(i) the acts or omissions of it' Electric or the Projcet Manager referred to or

,n 4.aestion in the Pending Latigation or ahich could have been brought into question in the j pendict Latigation; or (ii) the acts or omissions of TU Elcetric or the Project Manager nith regeet to Comanche Peak that acur, in whole or in part, prior to the Date of Commercial Operstion (as said term is defined in the Joint Ownership Agreement). The i

covenant set forth in the prior sentence shall survive Closing hereunder and remaan in

force untal the expiration of any Subject Claim covered thereby.

3.) Tl* Electric Release. Upon the Closing, TU Elcettse, for itself and on behalf 4

I 3f its parent. TUC, and their subsidiaries and af filittes and on behalf of any person or i

I entity, private or governmental, claiming by, through or under TU Electric or TUC, includang without limitation, to the estent it has the standi9g and right under law to do so, I

their customers, and on behalf of their respective insurers, agents, servants, employees, of ficers, directors, consul' ants, attorneys and representatives stall waive, release, discharge, renounce and rehnquish any and all Subject Claims relating to Comanche Peak Oneluding separately the Station, Fuel or Transmission f actlaties) it has or they have, or may have, whether known or unkno w n, conting' nt or absolu t e, including, without f

limitation, those based on common law, whether contract (express or implied, including l empress oc implied warr an t y) or tort (including, without limitation, intentional tort, I .iegligence or gToss negligence, sole, joint or concurrent) or strict 11 ability or fraud, end those based on any rederal, State oc local statute, law, order or regulation, in luding, without limitation, the Atomic Energy Act of 1954, as amended, the regulations of the NRC, the Securities Act of 1933, as amended, or the Securities Act of 1934, as amended, and any rule oc regulation unds .,ither, the Texas Securities Act (T1tle 19, Articles $81-1, et seq., V. A.T.S.) and the Texas Deceptive Trade Practices and Consumec Protection Act, against Brazos, its Members and customers (including the customers of Wazos' Membeen and other whr. ess!e customtes) in any capacity, whether (ndividually or otherwise, and its and their respective insurers, egents, servants, employees, officers, directoes, consultants,

-40 6,

.we . . , - < *

• s.

y -- . ..w- - - - ,c - r 7 , - - - -

lf ggence, sole, ;vint er concurrent, of Il llectric t,.- the Project Manager; and till the

.. gts er omissions of TU Llectric or the Project Manager with respect to Comanche Peak th81 occur, in wh le or in part, prior to the Date of Commercial Operation (as said term is poned .n the Joint Ownership Agreement), including without limitation Subject Claims l 3,,ce upc.n it,e neghgence or gross neghgence, sole, joint or concurrent, of TU Electric or

! tM prey et Manager. Pursuant heretu, at the Closing Brazos mill execute end deliver to I

7t Electrie the form of tsdemnity Agreement attached hereto as Lxhitait O.

9.t; covenant of Cooperation. 11ie parties hereby covenant and agree to assist, coeperate with, and support each other (other then financial support) in the event that g third party institutes any action agmir.st either of them with respect 'a Comanche Pesk and any incihirit or attribute beiecf. except that neittar of them shall be required tee any position =hich it bebeves is contrary to its material pecuniary interests or contrary to the truths provided, however, that in any event, Brazos shall not cooperate nith or support any party in the Pending Litigation with regard to the Subject Clairns

~_

deing made therein by Tex-La and TMPA.

~. .- .. ___

9.7 Termination of Participation. To the extent that Brazos can, and not be in violation of Section 210 of the I'nergy lleorganization Act 42 USC Section 5851 (1983),

I upon the execution of this Agreement, Brazos, for itself and on behalf of any person or entity, private of governmental, claiming by, through or under Brazos, including without cmitation, to the eatent it has the standing and right under law to do so, its Members and customers (including the customers of Brazos' Members and other wholesale customers) and its or their respective insurers, agent.s, servants, employees, officers, directors, consultants, attorneys and representatives, agrees and covenants to immediately abate any and all currently pending s.c. ions whatsoever, directly or indirectly, involving or relating to the prosecution or processing of any Subject Ctalms in any way relating to Comanene Peak against TU Electric or TUC, oc their respective directors, officers, employees, agents, hsurers, consultants or attorneys, past or present, and any and all of their respective successors, subsidiaries and affilist'en and thelt respective insurers, 45-

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

_.. _ - . _ ~ ._._ _____ _ . _ . _ . _ . _ _ _ . _ _ _ - . _ _ - _ _ _ _ _ _ _ _ _ _ _.. _ ___- . _ _ _ _ _ . . _ _ _ . .

nti, Serventi, emplojces, of fwers, directors, shareholders, consultants, attorneys sind representatives, past and present, presently or hereaf ter pending in any court or before

,ny 4dmin85trative egency or body (etecpt Sub,cet Claims being made in the Pending gg4 tion. *h8eh shall be governed by the provtssons of Ariscle IV of this Agreement). In j ,.upacity snd ta the extent Dratos can and not be in violation of Section 210 of the l 7gj georgem stion Act, 42 USC Section $851 (1983) (tira'os hereby representing and j ,,re,nting that it knov-s of no violation, actual or sileged, of Section 210 of the Energy l l

georganitetion Act. 42 USC Section 5851 (1983) which has not heretofore been disclosed g r t Licetrie in ariting), tiraros agrees and covenants that Inrtaos for itself and on

. . . _ ...: l i 3,nelf cf any person or entity, privette or governmental, claiming by, through or under

! OraN5, including without limitettion, to the extent it has the standing and right under law y do o, its \1 embers and custo.; ices (includisq e customers of Ikalos' %1 embers niid I

ever a holeu le customers) and its or their respective insurers, agents, servants, empl)) *cs, officers, directors, consultants, r.ttorneys and representatives, shatt not 1

praecute, directly or indirectly, any Subject Claims, objections, motions or other actions ejvcese to Tt' Electric in connection with appbeations for granting the requisite licenses snd a;'provals for Comanche Peak pending before the NRC and its Atomic Safety and

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

t.,eensing Eberds and A omie Safety and Licensing Appeal Boards, including, without hmitation, in ~NRC~tE^ti'Nos. 5 0 -4 4 5 -01, 5 0 -4 4 6 -O L and 50 -4 4 5 -C P A, the ongoing

} . . . -

- ~~~- .

l entatrust review relative to the licensing of Comanche Peak, and any and all appeats from ruhngs and orders of the NRC reta'ed to, or growing out of, uid Dockets which are pending befxe any court, Within three (3) Business Days alter the Closing, Ekatos shall et Jse the dismissal., v ith prejudl:e to the refiling of Sarr.e in any focum and in any ferm

=hatsoever, of att of its Subject Claims a2ainst TU Llectrie, TUC and their subsidiaries I

and affiljates in the Pending Litigation, and st.all withdraw all of its Subject Claims edverse to TU Electrit ... econection with the granting of the requisite lleenses and approvals for Comanche Peak pending in the NRC Dockets Nos, 50-445-OL, 50-446-OL and $0 445-CPA and any and all proceedings in any manner related to, or arising out of, said Dockets, ll

Yr j Brazos agrees and covenants, from and af ter the Closing, to fully cooperate with

- - - ~ ~ ~ - - - - - - -

TU Elcetrie and provide,all_rcQonably rcquested assistance, including providing the legal i

mi,tana of its attorneys (including Joseph Rober t Riley, Spiegel & \lc Diarmed and l l Ge'Le rurne 1 Rain 1.rr'eII), in a timely manner in connectT6rI';Uih~inM1 proceedings 1

(escluding the Pending Latigal;on) involving Comanche Peak, including the licensing of 5

comatiche Peak by the N RC, including without limitation the ongoing antitrust w review in connection thea ewith, and all proceedings involving Comant'he Peak before the PUC to the eatent of not opposing, or assis'ing any third party in opposing, the position being j ,

advocated by T U Electrie. Except as specifically provided otherwise in this Agreement, TU Electric shall promptly reimburse Drazos for any and all reasonable outef pocket

. cepenses and any and all reasonable outside professional fees, including, without hmitation, stivrneys fees, incurred by Brazos in providing such cooperation.

9.8 TU Electric Actions and Litigation Costs. Within three (3) Business Days

,ifter the Closing, TU Electric shall cause the dismissal, with prejudice to the refiling of I

same in any fcrum and in any form whatsoever, of all oi' .ts Subject Claims against Brazos in the Pending Litigation; provided, however, that TU Electric shall have the right to retain Brazos as a party to the Pending Dallas Suit, not for the purpuse of seeking any affirmative rebet against oc from Drazes. but for tne pu. pose of defeating a possible contention on the part of the other parties therito with respect to the absence of a

, necessary party to TU Electric's Subject Claims against the other part!*s in said case (it

being understood that TU Electric 4 position is that any such contention would not be v a hd). TU Electric shall promptly reimburse Drazos for any and all expenses reasonably incurred b+cause of any such retention of Drazo by TU Electric in the Pending Dallas

$uit. It is expressly understood that nothing nerein shallin any manner affect, diminish or i

impair TU Electric's right to fully prosecute any and all of its Subject Claims against the other parties in the Per> ding uttgation. Except as provided otherwise above, all costs and atpenses relatea to oc Incurred in connection with the Pending uttgation shall be borne and paid by the party by whom incurred oc to which they are related.

48" I,

, ..,w...,....., .-

s l [.bI.b*~~

I " [p onen%, UNITED ST ATES l, f  % NUCLE AR REGULATORY COMMIS$10N

.u snie.otoas.o.c,rasas

g l k April 27, 1989 4 IDENTICAL LETTER SENT TO ATTACHED Docket No. LIST AND DOCKET N0s.

ADDRESSEE list attached

Dear ,

4

SUBJECT:

NOTIFICATION OF THE XRC 0F EMPLOYEES' F0TENTIAL SAFETY ISSUES The purpose of this letter is to reer:phasize to licensees their responsibilities to assure that they, and their contractors and subcontractors persit their employees to contact, without restrictions, the hRC with concerns about potential safety issues. In particular, this letter notifies licensees that.'-

it is not acceptable to include in settlement agreements for discrimination matters arising under Section 210 of the Energy Reorganization Act of 1974, at amended, or in any labor Agreements or other agreement affecting compensation teris, conditions and privileges of emplopent, any restrictions on espicyees or former employees providing infonnation to any nenbers of the hRC includiig the staff, inspectors, investigators Administrative Law Judges Boards, or the Connission.

Information Notice 64-08 (February 14,1984) reminded licensees that the public hialth and safety requires that erployees be free to raise safety issues to licenses managennt and to the hRC. Failure to pemit esployees to do so violates 10 CFR 30.7,10 CFR 40.7,10 CFR 50.7,10 CFR 70.7 anu 10 CFR 72.10 regarding ' Employee Protection' and may subject licensees tc l

significant enforcement action by the NRC.

In addition to NRC action, employees who have been discriminated against for raising safety issues have the right to file cceplaints with the Department of Labor pursuant to Section 210 of the Energy Reorganization Act of 1974, as amended, for the purpose of remedying the hans caused by the discrimination.

Following the filing of a complaint, the Department of Laboi* perfonns an investigation. If either the esployee or the eeployer is not satisfied with the outcome of the investigation a hearing can be held before an Administrative Law Judge with review by the Secretary of Labor.

In many cases the employee and the employer reach settlement of the issues raised in the 00L proceeding before completion of the formal process and a  !

finding by the Secretary of Labor. NRC supports settlements as they provide remedies to employees without the need for litigation. Settlement agreements in Section 210 proceedings are matters within the jurisdiction of the Department ,

of Labor. Licensees and their contractors must not include clauses in these settlements which in any way r,estrict the ability of employees to provide amuuuuuuuuuummuumum assumumunusumumme um b 60$OO9 __2 ~ belobh h -

April 27, 1989 Examples of restrictive inforration about potential safety issues to NRC.

!' clauses include but are not limited to prohibiting or in any way limiting an employee, or an attorney for such employee, from coming to and providing safety information to an NRC staff member.

i Licensees should examine their current and previous agreecents to assure that  !

restrictive clauses are not present. If restrictive clauses are found. '

licensees should promptly inform the employee or former employee th6t the restriction should be disregarded, that he or she may freely come to NRC at l

any tir.e without fear of any form of retribution, a,nd that such a restriction will not be enforced.

31. 1989 ff any such restrictive clauses

. Please notify us no later than JulyYour response should be provided to your licens have been identified.

contact in headquarters.

This request for inforr.ation was approved by the Office of Management and l l

Budget under clearance number 3150-0011 which expire. December the Office of Management 31, 1989.  ;

Comnents on burden and dupitcation may be directed L and Budget. Reports Management Room 3208. New Executive Office Building.

- Washington. D.C. 20503.

Questions concerning this letter should be directed to the Director of the Office of Enforcecent.

sincerely, I . .

I y ctor 5 ell , Jr.

l Executive Director for Operations

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U $. del' ARTMEf4T OF L ADOR l F.rct4T ARY Or LAnoR W ASHff.GTON, D C.

DATE: July 18, 1989 i CASE 110. 87-ERA-38 i

I 111 THE MATTER OF s

3 LORE 11ZO MARIO POLIZZI,

• COMPIAIllAllT i

v.

GIBBS & HILL, INC.,

' RESPollDEllT.

I DEFORE: THE SECRETARY OF LABOR i

ORDER REJECTIliG Ill PART AND APPROVIllG j Ill FART SETTLE 11E!1!' SUB!!ITTED BY j

1 THE PARTIES AND 01StilSSING CASE i

' On July 13, 1988, the Administrative Law Judge ( AIJ) in this case arising under the empicyee protection provision of the r

as amended (ERA), 42 U.S.C.

j Energy Reorganization A w of 1974, and 5 5851 (1982), issued a Recommended Decision and Ordcr (R.D.

l 0.) dismissing this m'atter with prejudice on the grounds that the The parties hed parties had resolved the issues between them.

i made a joint motion to the ALJ requesting the entry of an order i

into a of dismissal on the grounds that the parties had ontored settlement agreement.

l, The record submitted to the Secretary with the AIJ 's R.D.

and O.

did not include a copy of the settlement agreement.

the Secretary issued an Order to Accordingly, on October 3, 1988, Submit Settlement Agreement ordering the partles to submit a copy ENNN m

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of the settlement agreement for review by the Secretary.

t November 3, 1988, the parties submitted a copy of the settlement

! agreement to the Secretary.

The ERA requires the Secretary to issue an order resolving l

the case "unicos the proceeding on the conplaint is terminated by f

the Secretary on the basis of a settlement ontored into by the Secretary and the person alleged to have committed such violation j

The Secretary has held a 1

" 42 U.S.C. $ 5851(b) (2) ( A) .

number of times in ERA cases that the casr cannot be dismissed the basis of a acttlement "unless the Secretary finds that the l Euchko and Yanker settlement is fair, adequate and reasonable."

v. Georqia_ Power Cot, Case Nos. 89-ERA-9, 10, Secr ,tary 's Order and l

to Submit Settlement Agreement issued March 23, 1989, at 2, the Secretary held that "it is cases cited thoroin. Furthermore, error for the ALJ to dismiss a case without reviewing the i

l l

settlement and making a recommendation of whether the settlement i

t is fair, adequate and reasonabic." Id. at 1-2.

I The Department of Labor does not simply provide a forum for private parties to litigate their private employment discrima-I.

tion suits. 1# Protected whistleblowing under the ERA may expose I

1/ I note that in ordinary lawsuits brought by one private party against another private party, where the rights of other persons" settlem will not be affected, hands of the partics." United aff'd States v. City of Miami, 614 F.2d in part and reversed in nartCiv. on 1322, 1330 (5th Cir. 1980),

(1981). Thus, under Fed.

R.

rehearina en banc, 41(a) (1) (ii) , 664 F.2d 435a stipulation signed by all parties iwho have t P.

Lppeared in the court action Gardiner is effective

v. A.H. automatically, Robins Co., Inc.,w 747 thou l

judicial involvement. The trial court judge must l F.2d 1180, 1189 (8th Cir. 1984).

"' stand [] indifferent,'" and not interfere with tne parties' l  %

l L _

3 not just private harma, but health and safety hazards to the in keeping {

public. The Secretary represents the public interest settlements channels of inforration open by assuring that -

pi, Vi ralp_iA_ E' ec t_r_i.g_ pad adequately protect whistleblowers.

Power Cot, 19 FERC 5 61,333 (Federal Energy Regulatory Commission 1982) ("[B]efore approving a settlement, regardless of k 'ther it the is contested or enjoys the unanAmous support of the parties, Commission is obliged to make e.n independent determination that {

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the settlement is just and reasonable and in the public interest.")

The settlement agreement in this case has been carefully _

reviewed. With the exception of two provisions, I find it fair, adequate and reasonable.

Paragraph 7 of the Settlement Agreemeht provides:

Polizzi agrees that he will not voluntarily cooperate with or testify on behalf of any entity or individual who has or may file charges of discrimination c" 'rongful

.bs & liill or employment practices agains TUGCO, or their respective .ts ,

affiliates, subsidiaries, successors or arTigns, under the Energy Reorganization Act, too Atomic Energy Act of 1954 as amended, or r

(

any other federal or state law, rule, regulation o'c theory, nor will he voluntarily testify in or otherwise participate in any-proceeding or investigation involving the Comanche Peak Steam Electric Station, before any state or federal court or administrative agency, including, but not limited to,

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footnote 1 (cont'd)

" unconditional right" to a dismissal by stipulation. Id. at See also Janus Filga;, Inc. v.

1189-1190 (citation omitted).

Miller, 801 F.2d 578, 582, 585 (2d Cir.1986) ; City of Miami, 614 F.2d at 1332. i t

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' .icensing or safety proceedings or investigations before the Nuclear Regulatory Commission and/or regulatory or rate the proceedings or investigations before Public Utility Commission of the State of Texas, except as required by lawful subpoena; that nothing in the provided, however, foregoing paragraph shall in any manner be informing interpreted to prevent Polizzi from the Nuclear Regulatory Commission of any and all safety concerns he may have relating to the Comache Peak Steam Electric Station.

among other things, This provision prohibits Complainant, 7tsting or cooperating with, f rom providing information to, or a

l tons of complaint; against i thel Department of Labor in inver r L

$ Respondent, the Texas Utilities Generating Company, or any related company under the ERA or any other environmental whistleblower protection statute. 29 G.F.R. 5 24.1 (1988).

Paragraph 7 also would prohibit Complainant from providing information or assisting or cooperating with the Department of investigation Labor or any other federal or state agency in the or prosecation of any charge of discrimination or wrongful P

employment practices, in violation of any federal or state law, This could include, for example, the Fair

' rule, or regulation.

Labor Standards Act, the Occupational Safety and Health Act, Executive Order No. 11,246, Section 503 of the Rehabilitation Act of 1964. This

' of 1973, and Title VII of the Civil Rights i.

provisi..i also prohibits Complainant from voluntarily testifying or otherwise participating in any proceeding or investigetion including I involving the Comancho Peak Steam Electric Station, buclear T.egulatory Commission licensing or safety proceedings or i

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5 investigations, and state regulatory or rate proceedings ur investigations.

This prohibition could include investigation or enforcement proceedings by the United States Environmental The only exception to these restrictions j

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Protection Agency.

would be where Complainant is under lawful subpoena.

On May 4, 1989, Complainant's counsel provided the i

Department's Of fice of Administrative Appeals a copy of a letter

! 1989, by which i

to him from Respondant's counsel dated May 3, f

Respondent " waives now and forever any rights it may have to

' enforce any restrictions that may be construed to be imposed upon 4

(Complainant) under paragraph 7 of the settlement agree-i ment . . . . (Complainant) may freely go to the Nuclear Regulatory Commission at any time without fear of any form of retribution from (Respondent)." Although the first sentence of in its entirety, the this letter appears to nullify paragraph 7 second sentence could be interpreted as limiting Respondent's waiver to the restriction on Complainant's right to go to the as well For that reason, I have rully reviewed paragraph 7, 4

NRC.

as all other provisions of the settlement.

Paragraph 7 of the Settlement Agreement significantly f

restricts access by the Department of Labor, as well as other agencies, to information Complainant may be able to provide relevant to the administration and enforcement of the ERA and many other laws. Its effect, to a large degree, would be to'" dry up" channels of communication which are' essential for government NLRB v. Scrivener, ;

' agencies to carry out their responsibilities.

$ I 6

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6 As such, I find it against public 405 U.S. 117, 122 (1972).

policy. E' 787), the In EEOC v. Cosmair. Inc._, 821 F.2d.1085 (Sth Cir.

with EEOC court held that waiver of the right to _ file a chargs vas void as against public policy. 53e court distinguished between waiver of the right to file a charge and waiver of the.

The court right' to recover personally on a cause of action. I explained:

Allowing the filing of charges to be obstructed by enforcing a valver of the right-to file a charge could impede EEOC enforce- A ment of the-civil rights laws. . ..

charge not only informs the EEOC of discrimi-nation against the employee who' files the charge . .

. but also may identify other

-unlawful company actions. When the EEOC acts en this information, "albeit at the behest of and for thu benefit of specific individuals,.

it also acts to vindicate the public interest-in preventing.cmployment discrimination."

We hold that an employer and_an employee cannot agree to deny to EEOC the information it needs to advance the public interest.

Following the Supreme.

821 F;2d at 1090 (citations _omitted..)

II A. settlement is a contract, and-its construction-and United enforcement are governed by principles of contract law.-

States v.

ITT Continential Bakinc Co.1, '420 U.S.'223, 2 38 E (1975) ;

Schwartz v. Florida Bd. of Recents,.807 Case No.F.2d85-ERA-6, 901, 905Secistary's (11th Cir.

1987) ; Orr v. Brown & Root; Inc,__,

The doctrine Decision and Order issued October 2, 1985,_at 2.

that a promise or term of an agreement is unenforceable Lif against public policy encompasses more than illegality; it- .

includes promises which are injurious 833, n.15to(3d theCir.

public Lintereut.

1982), cert._

Shadis v. Beal, 685 F.2d 824, " Contracts contrary to public denied 459 U.S. 970 (1982).

policy, that is those which tend _.to be injurious to the public or against the' public good, are ' illegal 17 and void, even C.J.S.

though 211; Contracts-5 actual injury'does not result' therefrom."

p. 1013.(1963),

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7 if the

' Court's guidelines that "(a) promise is unenforceable is outweighed by a public policy interest in its enforcement Town of Newton v._

harmed by enforcenent of the agreement,"

gumery, 480 U.S. 386, 392 (1987), the court in EEOC v._Cosmair,.

Inc., held that a " waiver of a right to file a charge is void as The restriction on 2

l against public policy." 821 F.2d at 1090.

access by government agencies to complainant's information here and I find is, if anything, greater than in EEOC v.Cosmair Inc.,

that it is unenforceable as against public policy.

l In addition, the settlement appears to encompass the i settlement of matters arising under various laws, only one of which is the ERA. As stated in Poulos v. Ambassado- Fuel Oil l

Co., Inc._, Case No. 86-CAA-1, Secretary's Order, issued 4

November 2, 1987, slip op, at 2:

i (The Secretary's) authority over settlement agreements is limited to such statutes as are is within (the Secretary's] jurisdiction and defined by the applicable statutes. _See j

Aurich v. Consolidated Edison Connany of New York. I . lc . , Case No. CAA-2, Secretary's Order Approving Settlement, issued July 29, 1987,.

N.C., Case No. 85-

{ Chase v. Buncombe County, SWD-4, Secretary's Decision and Order on

+

i Romand, issued November 3, 1986.

I have, therefore, limited my review of the agreement to l; fair, adequate and determining whether the terms thereof are a reasonable settlement of Complainant's allegation that Respondent violated the ERA.

Although I have found that one provision of the Settlement Agreement, paragraph 7, is unenforceable as against public e

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8 pclicy, the remainder of the agreement may be enforceable when

" performance as to which the agreement is unenforceable is not an Cosmain, Inc.,

essential part of the agreed exchange." EEOC v.

821 F.2d at 1091 (quoting the Restatement (Second) of Contracts, See also Nichols v. Anderson, 837 F.2d 1372, 5 184(1) (1981).)

1375 (5th Cir. 1988) ("(I]f less than all of a contract violates public policy, the rest of the contract may be enforced unless the unenforceable term is an essential part of the contract.")

839 F.2d 664 Thus, in McCall v. United Statec Postal Service, (Fed. Cir. 1988), an employee had settled an action challenging his removal by agreeing that, upon reinstatement for a one year he would not appeal any disciplinary action probationary period, taken against him and also waived his right to file a charge with EEOC.

The court held that "even if (the employce's) attempted i

waiver of his right to file EEOC charges is void, that would not i 839 af fect the validity of other portions of the agreement."

l F.2d 664, 666 at *.

l

' Here, the provisions of paragraph 7 of the Settlement

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i Agreement appear to be collateral to the central dispute which the agreement purported to settle, alleged retaliation by i

in Respondent against Complainant for protected activities, l

I have attached primary significance in l

violation of the ERA.

)

reaching this conclusion to the fact that Respondent has

expressly waived any right to enforce the rest 'ctions in i In addition, most, if not all, of the restrictions i paragraph 7.

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9 placed on complainant by paragraph 7 would apply in matters only remotely related, if at all, to tr.eir dispute under the ERA.

I also note that paragraph 2 of the agreement could be construed as a waiver by Complainant of any causes of action he As the Secretary has held in may have which arise in the future.

Transco Products, Inct, Case No. 85-prior cases, see Johnson v.

8, ERA-7, Secretary's Order Approving Settlement issued August 1985, such a provision must be interpreted as limited to the right to suo in the future on claims or causes of action arising out of tacts or any set of facts occurring before the date of the Gardner-Denver Co., 415 U.S.

agreement. See also llexander v.

General Electric Co.1, 781 F.2d 452, 36, 51-52 (1974 ) ; Rocers v.

454 (5th Cir. 1986).

With the exception of paragraph 7, and with the limitations discussed above, I find the terms of the agreement within the scope of my authority under the ERA to be fair, adequate and reasonable, and to that extent I approve it.

Accordingly, the complaint in this case is DISMISSED.

SO ORDERED.

5 Tk{, ~o ~~

Secreta ' of Labor Washington, D.C.

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t STATEMENT SUBMITTED BY THE UNITED STATES NUCLEAR REGULATORY COMMISSION TO THE SUBCOMMITTLE ON f.UCLEAR REGULATION CCNMITTEE ON EMVIRONMENT Ai10 PUBLIC WCRKS UNITED STATES SEilATE

.CONCERNING (1) AGREE 14ENTS RESTRICT:ttG INFOR14Al*0N FLO',' TO THE NRC AND FLN (2) RANCHO SECO NUCLEAR GEht.RATitiG STATION FOR THE t:UCLEAR REGULATORY CCPMISS10h FRESENTED BY LANDO W. ZECH, JR.

CHAIRMAN SUBillTTED: MAY 4, 1989 n

EN N m Euclof0 re y

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%e Mr. Chairman and members of the Subco.amittee, the Commission is pleased to As you are aware, Commissioner Carr is unable to be here appear before you.

today.

We are here to discuss legal and policy implications of settlement agreements af fect1r.g the ability of persons to testify before the Nuclear Regulatory Connission. We shall also address the recent restart of the Rancho Seco plant, With regard to the matter of settlement agreements, we woulc like to turn directly to the two specific issue - the Subcommittee esked the Concission to address.

The first is whether current law permits NRC licersees, license applicants, or centractors thereof to enter into agreements with employees ur former employe(s whereby, in exchange for financial consideration, the employee or former employee agrees to restrictions upon his or her ability to testify or h The second issue is participate in proceedings under t e Atomic Energy Act.

nhether such agreerents, even if they are legal, are good public policy,

' With regard to settlement agreements, the Commissien wishes to emphasize trat it strongly supports the widely-accepted general policy favoring settlement of Settlement disputes by the affected parties in adjudicatory proceedings.

agreements that minimize or avoid the need for expensive and time-consur;ng For litigation are in the interes+ of all parties ard, therefore, desiracle.

In fact, DEC this reason, such agreements are nor.ually to be encoura;ed.

1

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issues. Sea regulations encourage fair and reescnable settlements of contested However, to provide some assurance 10 CFR 6 2.759; see also 10 CFR 5 2.203.

that settlement agreements will meet NRC standards, all settlements of issues This was raised in NRC proceedings must be approved by the presiding officer.

done in a stipulation agreement agreed to by Texas Utilities Electric Company, intervenor Citizens Association for Scund Energy (CASE), and the NRC staff in which these parties asked the presioing licensing board to oismiss the Ccuancne That agreement specifically provided that Peak opercting license proceeding.

parties cculd bring any safety issue to the NRC.

f;evertheless, not all agreements affecting the ability of an individual to for provide saf ety information to the NRC would necessarily come before the fiRC The settlement agreement between Joseph Macktal and Brown review and approval.

This confidential agreement was intended to

& Rcct is, of course, an example.

Since Mr.

settle a Secticn 210 proceeding tefore the Department of Labor.

in an NRC proceeding, his l'acktal was not a party te or otherwise a participant settlement agreement in the Section 210 proceecing before the Departr.ent of There was, Labor proceedings did not come to the NRC for its re/iew.

therefore, no opportunity for the NRC to ensure that fir. !!acktal understcod that he could come directly to the NRC staff or the Commissicn itself with any safety concern.

It should be noted, however, that the NRC has taken actions over approximately the last nine months to address the question of Mr. !!acktal's additicnal safety issues. In late September 1988, in spite of his numerous contacts aith the l

NRC, we received information indicating that Mr. Macktal had not provided NRC l 1

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with all his safety concerns. That information cane in the forn of an affidavit by Mr. Macktal attached to a pleading filed by Citizens for Fair To the extent Mr. Macktal's affidavit provided cocogh Utility Regulation.

specificity, the technical staff began reviewing his allegations to deter llegations. On Decerter if additional staff work was needed to address the a the !!RC 21, 1988, the Commission issued CLI-88-12, which clearly indicated th6-did not view the settlement as prohibiting Mr. Macktal's raising saf ety Although Mr. Macktal's attorneys were aware of this concerns with NRC.

filed pleacings addressing that decision, Mr.

decision, and in fact havu Macktal did not bring his concerns to the NRC after the Commission gave its Af ter attempts to centact Mr. Macktal view that he was permitted to do so.

l directly and through his attorneys, late last week the NRC staff was ab e to Although he ir.dicated that he did have safety concerns, re reach Mr. Macktal.

declined to provide the NRC with them at this time, but instead referred the The NRC is currently working with Mr. Macktal's staf f to his attorrieys.

if any, edditional safety centerns he attorneys in an attempt to find out what, has.

Obsicusly, the Ccrnmission is concerned with preserving its access to information bearing on its safety responsibilities, and we have initiated actions to assure that settlement tgreements do r,ct impermissibly borden the Commission's access to information or a person's ability to communicate with respresentatives of the-Commission.

The staff has issued a generic letter to chief executive of ficers of the majo licensees of the Commission and their principal contractcrs cn the subject f .

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1 (copy attached as Encitsure). Among other things, this letter requests licensees to examine current and previous settlement agreements with i employees, and contact those employees as apprcpriate to ensure the employee IC at ary

! or former employee understands that he or she may freely cone to the In appropriate situat:ons the l

time without fear of any form of retribution.

d staff will contact the individual involved to determine whether he or she has

), any unresolved safety ccccerns.

l Additionally, we are considering changes in our regulatiors to specifically require that such settiement agreerents must provide an opportunity to the settling parties to bring safety issues directly to the attention of the Ccnnission.

The Commissicn is writic; to the Secretary of Labor on this I

' issue and we are attempting to determine if there are othcr settlement 1

greements under Secticn 210 of the Atomic Energy Act with potentially I unacceptabli conditions. The Cepartment of Labor is, of ccurse, responsible

'or the acministration of the employee protection provisions of the Act arc possesses the ultimate authority to approve settlements 'in cases brcught before l

it.

To remove any possible uncertainty about the agency's position, let me state 4

i emphatic ~ lly that an agreem(n+, wher eby any person--not just an employee or fornier employee with pending claims under Section 210 of the Energy Reorganization Act, but any person--contracts to withhold safety-significart information frcm the Nuclear Regulatory Commission is not acceptable.

4 The Macktal settlement agreement did not appear to go this far, for on its f ace it did not preclude Mr. Macktal from bringing his safety concarns to the 1

4

5 Mr. ifacktal did agree, i.owever, not to appear attention of the NRC. involving Comanche voluntarily as a witness or a party in licensing proceedings In an instance Peak and to take reasonable steps to resist compulsory process.

such as this, we at the Commission need to ensure that an individual who ha i ft entered into a settlement agreement always has an opportunity to br ng sa e y We think that the revised concerns to the attantion of the Commission.

procedures that we are ccnsiderine will address this concern.

h ihe Commission believes that such agreements must provide an opportunity to settling parties to bring health end safety concerns directly to the attentien be consistent with the policies underlying the of the Commission in or Atcmic Energy Act cnd th( ..roy Peorgari:ation Act. The question of whether such agreements are actual violations of law depends largely on the specifi circumstances surrcunding the cgreements.

t is difficult, however, to talk entirely in the abst.act abcut agreements f agreements

' restrictirg partic1Eation in NRC proceeoings, because a variety o Not all of these are necessarily that meet that description can be imagined.

i For exacole, an agreement tc settle litigation before tr.e objectioncole.

agency might reasonably involve ' commitment by a party not to attempt if the facts have been exhaustively reopening the supposedly settlea issue, i

explorcd and the settlemer.t is baseo on actions that adeqtately address th i

safety concerns, such an agreement could be no more than a lawyer's nor precaution, not prejudicial to the Commission's authority under the Atomic Energy Act.

At the other extreme, however, a paid-for confidential ccmmitment a,

6 by an individual not to raise safety concerns with the NRC in any fashion is y intolerable.

i Whether or not restrictive agreements violate a statute or regulation on the r face, a compelling case can be made that such agreements must provide an opportunity to the settling parties to bring safety issues directly to the '

For example, Judicial decisions hold that a attention of the Cc1 mission.

person may not waive rights to bring employment discrimination charges before EE0C v. Cogsair, Inc. , 821 F.

the Equal Employrent Opportunity Commissien.

2c 1Cb5 (5th Cir.1987); EEOC_v._U.S._ Steel, Corp. , 671 F. Supp. 351 (W.D.

Pa. 1987).

Precisely how ese matters might bear on the legality of the Macktal agreement and which way any balance of public interest versus private convenierce might tip are r.atters which I understand are presently before the Department of Labor As I noted earlier, the in Macktal v. Brown & Root [ Case No. 86-ERA-23),

Department of Labor is the responsible decider of claims under Section 210 and In pleadings filed in 'that proceeding i understard that a settlements thereof.

number of issues have been raised ccccerning tre purpose of the agreerent ar.d These f actual consideratiors go well hcw it was perceived by the parties.

beyond an analysis which would focus solely on tne question cf the legality of In view of the questions which are now the words of the agreoment itself.

' before the Department of Labor ir Section 210 proceedings, I do not believe that the Commission shculd express a view on b.w the case should be deciced.

y For this reason, in its order of April 20, 1989, the Commission went no fcrther than withdrawing its remarks inade in a previous order about the acceptability r

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7 of the Macktal agreement.. [In the Matter of Texas Utilities Electric Co.,

C L I-69 -06 ] .

Finally, as I have said, the agency is now actively reviewing our directives in The objective of this this area and will make changes in then if necessary.

effert it to lease r.o uncertainty that parties to settienent agreenents understar.d that they have the opportunity to provide information directly to the Commission.

I can assure you, and any persor.s who may be centemplating such agreer.ents, that the Connission will give clcse attertion to these arrangements.

An now, with your permissicr., we would like to discuss the operations of the .,

f Rancho Seco Nuclear Generating Station.

Concerns about Rancho Seco/SMUD Mr. Chairman, on April 12, 1989 you expressec jour concern over the actions of the NRC in response to the April 4, 1969 letter frco the Institute of Nuclear Fower (INPO) regarding the operation of the Rancho Seco nuclear Generating Station First, let me explain the background of the events before and subsequent to that letter, The Executive Director for Operations (E00) and I first were r.:ade aware of INP0's concerns about the actions of the Sacramento Municipal Utility Districts I notified my' fellow Commissior.er (SMUD) Board of Directors on April 3,-1989.

s, s

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