ML20209H304

Intervenor Phase II Proposed Findings of Fact & Conclusions of Law in Form of Partial Initial Decision.Certificate of Svc Encl

ML20209H304
Person / Time
Site:	South Texas
Issue date:	11/05/1985
From:	Sinkin L Citizens Concerned About Nuclear Power, INC., SINKIN, L.A.
To:
Shared Package
ML20209H293	List: ML20209H287 ML20209H304
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OL, NUDOCS 8511110067
Download: ML20209H304 (184)

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BEFORE THE ATOMIC SAFETY ~AND LICENSING BOARD / l% g$y In the Matter of ( ,

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'HO'USTON. LIGHTING AND- ( Docket Nos. 50'-498 OL

~ POWER COMPANY, ET AL. ) 50-499 OL

'(SouthiTexas; Project,- (

Units 1 and 2) (

INTERVENOR*S PHASE II' PROPOSED FINDINGS OF FACT JAND CONCLUSIONS OF'. LAW IN THE FORM-OF A PARTIAL INITIAL DECISION Lanny Alan Sinkin

/ Representative for Intervenor, Citizens Concerned About.

Nuclear Power, Inc.

1324 North Capitol Street

. Washington, D.C. 20002 Dated:-November 5, 1985 8511110067 851107 PDR ADOCK 05000498 C PDR 7, .

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5 TABLE OF CONTENTS

SUMMARY

OF PHASE I PARTIAL INITIAL DECISION PHASE II PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW IN.THE FORM OF A PARTIAL INITIAL DECISION 4 I. INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . 1 II. OPINION ON INDIVIDUAL ISSUES . . . . . . . . . . . . . . 8 A.-THE QUADREX INVESTIGATION AND REPCRT . . . . . . . . 8 3

B..THE CHARACTER ISSUE . . . . . . . . . . . . . . .. 8

1. cot /TENTION 9 . . . . . . . . . . . . . . . . . 8

- .h Interpretation of 10 C.F.R. 50. 55 ( a) .

. . . 9

b. Applicants' communications with the NRC, or lack thereof, from initiatien of the Quadrex Corporation investigation until May 6, 1981 . . . . . . . . . . . . . 13 (1) Mr. Goldberg's communications with Mr. Sells . . . . . . . . . . . . . 13 k(2) HL&P knowledge of Quadre::

findings before delivery of the final Report . . . . . . . . . 13 5

(3) Findings analyzed fer reportability under 50.55(e) . . . . . . . . . . . 18

'a

c. Findings notified to the NRC . . . . . . . 19

d. Findings which should have been notified to NRC . . . . . . . . . . . . 20 (1)'The Generic Findings . . . . . . . . 20 (2) The Discipline Findings . . . . . . 22

e. Providing entire report to NRC . . . . . 23 i

f. The Applicants evaluation of the Quadrex Report'4cr reportability and the aftermath of that evaluation . . . . . . 23

g. Ccnclusions on Contention 9 . . . . . . . 25

2. CONTENTION 10 . . . . . . . . . . . . . . . . . 26 1

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3. CREDIBILITY OF APPLICANTS' SWORN TESTIMONY , . . 29 r a. Applicants' Phase I Testimony . . . . . . . 30

1. Failure to mentien Quadrex Report or the contemporaneous review of B&R's' role at STP . . . . . . . . . 30

b. Applicants' Phase II Testimony . . . . . . 36

4. CONCLUSIONS ON CHARACTER ISSUE . . . . . . . . 3S C. THE PHASE'II COMPETENCE ISSUES . . . . . . . - . . . . 45

1. THE EVALUATION OF THE QUADREX REPORT FCR 50.35(e) NOTIFICATIONS . . . . . . . . . 45

2. REMOVAL OF B&R - . . . . . . . . . . . . . . . . 50

3. CURRENT 50.55(e) COMPETENCE . . . . . . . . . . 50

4. TESTIMONY OF BECHTEL CA WITNESSES . . . . . . . 50

5. CONCLUSIONS ON COMPETENCE . . . . . . . . . . . 51 D. THE RESPONSIBILITY OF THE PARTNERS . . . . . . . . . 52 E. PHASE I ISSUES . . . . . . . . . . . . . . . . . . . 52

1. Issue A . . . . . . . . . . . . . . . . . . . . 52

2. Issue B . . . . . . . . . . . . . . . . . . . . 53

3. Issue C . . . . . . . . . . . . . . . . . . . . 55

4. Issue D . . . . . . . . . . . . . . . . . . . . 55

a. Management's response to and handling of the Quadrex Report and its findings . . . 56

b. The process of replacing Brcwn and Root . . 58 L c. The testimony of Dr. Sidney Bernsen, Corporate Manager of Quality Assurance, Bechtel Power Corporation, and Mr. Frank Lopez, Jr.,

STP Assistant Project Engineer, Bechtel' Energy Corporation . . . . . . . 59

5. Issue E . . . . . . . . . . . . . . . . . . . . 60 2 -

o I-TII. FINDINGS ON' INDIVIDUAL ISSUES . . . . . . . . . . . . . 61 A. THE QUADREX INVESTIGATICN AND REPORT . . . . . . . . 61 B. THE CHARACTER ISSUE . . . . . . . . . . . . . . . . 67

1. CONTENTION 9 . . . . . . . . . . . . . . . . . 47

a. Applicants' knowledge of 50.55(e) . . . . 67

b. Applicants' communications with the NRC, or lack thereof, from initiation of the Quadrex Corporation investigation until May 6, 1981 . . . . . . . . . . . . 68 (1) Mr. Goldberg's communications with Mr.-Sells . . . . . . . . . . . . . 68 (2) HL&P knowledge of Guadrex findings . . . . . . . . . . . . . 68 (3) Findings analyzed for reportability under 50.55(e) . . , . . . . . . . 72

c. Findings notified to the NRC . . . . . . . 7%

(1) HVAC . . . . . . . . . . . . . . . . 74 (2) Computer ccdes . . . . . . . . . . . 75 (3) Shielding ... . . . . . . . . . . . 76

d. Findings which should have been notified to NRC' . . . . . . . . . . . . 79 (1) Generic-findings . . . . . . . . . . SO (2) Discipline findings . . . . . . . . 91 (3) Work not yet perfcrmed . . . . . . . 101

e. Providing entire report to NRC . . . . . . 104 (1) 10 C.F.R. Section 50.55(e) . . . . . 104 (2) Other responsibilities . . . . . . . 110 (3) Known contemporaneous NRC concerns . 111

- (a) The Sells /Goldberg meeting in May 1981 . . . . . . . . . . . . 113 3

c . . - \_ n^

I-(5) NRC Regional Office August 27, 1981 request for~ unrestricted review and subsequent briefing of NRC

- by Applicants .. . . . . . . . . . 115

f. NRC evaluations contemporaneous with discovery of the Quadrex Report by the NRC. . . . . . . . . . . . . . . . . 118

g. The Applicants evaluation of the Quadrex Report for reportability and the aftermath of that' evaluation . . . . . . 119 (1) Deliberate effort to minimize number of findings potentially reportable to NRC . . . . . . . . . 119 (2) Abuse of authority . . . . . . . . . 136 (3) Abdication of reponsibility . . . . . 138 (4) Impact on Project . . . . . . . . . . 141

'(5) The appropriate NRC enforcement response . . . . . . . . . . . . , 144

h. Applicants current view of Quadrex Report handling . . . . . . . . 145

i. Applicants' treatment of those responsible . . . . . . . . . . . . . . . 145

2. CONTENTION 10 . . . . . . . . . . . . . . . . . 145

3. CREDIBILITY OF APFLICANTS' PHASE I TESTIMONY . . 149

a. Failure to mention Quadrex Report . . . . 149

b. Failure to mentien review of B&R's role at STP . . . . . . . . . . . 149

4. CREDIBILITY OF APPLICANTS' PHASE II TESTIMONY . 152

a. Statements which' appear to be knowingly false or misleading in prefiled testimony . . . . . . . . . 153

b. Statements which appear to be knowingly false, misleading, or deviating from the whole truth during cross examination . . . . . . . . 153

5. OTHER REVIEWS OF THE QUADREX REPORT . . . . . . 174 4

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l C. THE, PHASE II COMPETENCE ISSUES . . . . . . . . . . . 175

1. Current 50.55(e) Competence . . . . . . . . . . 176 2.-Testimony 35.Bechtel CA Witnesses . . . . .. . . 177 D. RESPONSIBILITY CF THE PARTNERS . . . . . . . . . . . 178.

-IV. MOTION TO REOPEN . . . . . . . . . . . . . . . . . . . . 17e V. CONCLUSIONS OF LAW . . . . . . . .. . . . . . . . . . . 179 VI. CRDER- . . . . . . . .-. . . . . . . . . . . . . . . . . 180 1

DEDICATIONS 5

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SUMMARY

OF PHASE II PARTIAL INITIAL DECISION

• • • ' The following summary provides an overview of the background, issues, findings, and opinions which comprise our Phase II Partial Initial Decision. The summary is provided as a convenience and is not part of.the Partial Initial Decision itself.***

This is the second Partial Ini ti al Deci sion involving ~ the STP operating licenae application. Much of the factual background of this proceeding is contained in our first Partial Initial

- Decision (Phase I) issued in March 1984.

In Phase I, we admitted two petitioners as Intervenors:

Citizens Conccrned About Nuclear Power, Inc. (CCANP) and Citi: ens for-Equitable Utilities, Inc. (CEU). In addition, we admitted the

-State of Texas as an interested State pursuant to our rules. CEU subsequently withdrew on June 15, 1982, subject to certain conditions, after major changes took~ place in the project. The

. State of Texas did not participate in the hearings which are the subject of our Partial Initial Decision (Phase I). The Phase I hearing commenced on May 12, 1981 and extended intermittently until-June 17, 1982.

On September 24, 1981, the Applicants informed us that they were replacing Brown & Root, Inc. (B&R) with Bechtel Power Corporation (Bechtel) in the roles of architect-engineer (A/E) and construction manager. Later we were advised.that B&R had withdrawn as constructor. Ebasco Constructors, Inc. and Ebasco Services, Inc. (Ebasco) subsequently replaced D&R as contructor.

On September 28, 1981, the Applicants transmitted to us a report on B&R engineering prepared by the Quadrex Corporation. On October 30, 1981, this Board, as previously constituted (Judge Ernest Hill in place of Judge Frederick Shon), issued an order scheduling a special evidentiary hearing to consider whether the concerns exprcssed in the Quadrex Report affected existing plans for irreversible safety-related construction. All three of the panel members . signed this order, something which we had never felt necessary before.

On November 10, Applicants informed us that all safety-rel ated work , except maintenance and materials handling, wculd be suspended. As a result of this decision, we cancelled the special evidentiary hearing.

On November 21, 1981, CCANP filed a 51 page motion requesting admission of new contentions related to, among other things, the Quadrex Report. The Quadrex contentions requested hearings on two major issues: the failure of Applicants to provide the Report to the NRC promptly after Applicants received it and.the significant safety-related issues raised by the Report itself.

As a result of these developments, we divided the hearing into three phases. We designated matters related to the Guadrex Report for hearing in Phase II. Subsequently, we specified the issues to be heard related to the Quadrex Report and added other Phase II issues based in part en concerns remaining from Phase I The . issues ultimately considered in Phase Il cr raised by testimony therein are:

1 1

(1) Contention 9, which alleged that Applicants' failed to' provide the NRC Staff with the Quadren Report or notify the Staff of many of the findings therein as required by 10 C.F.R.

50.55(e) and that said failure reflected adversely on Applicants' character:and competence and on Applicants' abilit/ to manage the construction and operation of a nuclear power plant. The scope of this contention was limited to the reportability of the repcrt as a whole and C6 specific findings in the Report.

(2) Contention 10, which alleged that Applicant:

failure to provide the Guadrex Report to this Board promptly and vcluntarily after .i t was received and Applicants failure to inform this Board promptly of HL&P's review of B&R's role on the Project adversely on Aoplicants' character and competence and Applicants' ability to manage and operated a nuclear power plant.

(3) The crecibility of Applicants' testimony in the 1981 portion of Phase I of this proceeding in that no mention was made of tte Quadrex Report or centemporaneous review of E&R's role on the Project.

'(4)- The credibility of Applicants' testimony in Phase II on.the above three issues.

(5) Issues related to the current competence cf Applicants' and their contractors, including the current adequacy of HL&P's system for evaluation of items which might be reportable to the NRC; an issue pertaining to the adequacy of backfill ~placed by Ebasco; and an update by the NRC Staff of its views concerning the current performance of Applicants' and their contractors.

Our decision resolves all these issues and also determines whether any changes are warranted in the favorable conclusions we reached in our Partial Initial Decision in Phase I regarding the various issues and Applicants' overall character and competence.

From our review of the record in this proceeding to date, we developed an understanding of the events that brought this application to the point of denial. What follows is a short synopsis of those events.

In November.1979, after continuous ccmplaints from inside the Project and entensive national publicity given to those complaints, the Washington, D.C. NRC Office of Inspection and Enforcement launched an in-depth investigation into STP.

Inspectors and investigators from around the nation were brought to the Project. They spent three months intervi2 wing, observing, reviewing documents, and otherwise evaluating the per-formance of Applicants and their contractors.

The investigation ended in February 1980. In April 1980, the NRC issued an Order to Show Cause as to why all szdety-related construction at STP should not be stopped. Accompanying this order was a Notice of Violation which cited the Applicants for numerous violations of NRC regulations.

The Applicants admitted to all the charges, thereby avoiding a hearing sought by the Intervenors. In response to the

.Intervenors' request for a hearing, however, the Commissicn did provide alternative relief in the form of direction to this Ecard to. broaden our inquiry to include Applicants' overall character and competence. We responded to that directive f r o.n the 2

Commission by adopting new iscues to be heard that encompassed character and competence.

After the Order to Show Cause, Applicants took steps to hire-a nuclear power expert to provide the project management with nuclear expertise, expertise which Houston Lighting and Power Company ~(HL&P) lacked throughout most of the time HL&P had served as managing partner of STP. Mr. Don Jordan, President and Chief 1 Executive . Officer of HL&P at the time, and Mr. George Oprea,

-Group Vice . President with primary responsibility fcr STP, commissioned a nation-wide search and chose Mr. Jerome Goldberg

-to be their new Vice President for Nuclear Engineering and Construction.

Within a week after assuming his new position in Octcber

-1980, Mr. Goldberg concluded that the source of the problems at STP' was BLR, particularly B&R engineering. He approached Mr.

Oprea and Mr. Jordan about conducting an independent review of B&R's engineering. They agreed to such a review.

In January 1981, Mr. Goldberg approached Mr. Jordan with the suggestion .1at HL&P begin making contacts to determine the availability of another architect-engineer to replace B&R. Mr.

1 Jordan refused to initiate such a search or even to consider such a suggestion.

Perhaps unknown to Mr. Goldberg, six months earlier anc also as a result of the Order to Show Cause, Mr. Jordan and Mr.- Oprea had ade.similar inquiries of other architect-engineers. At that time, the response they received was that other architect-engineers were not interested, that replacing B&R would be a difficult undertaking and set the project back substantially, and that HL&P was better off trying to improve BLR. Mr. Jordan had been trying to improve BLR for roughly a year and a half without significant results, but having a choice between significantly delaying er perhaps abandoning the project and continuing with B&R, he chose let B&R remain.

When Mr. Goldberg came to him so socn after Mr. Jordan's previous contacts and sought permission to make similar contacts, Mr. Jordan refused to even discuss the idea based on his earlier experience.

But Mr. Goldberg knew that B&R could not perform, was hostile to HL&P. and acted like they ran the project. He also

' knew that HL&P was incapable of exerting sufficient pressure to alter the long standing relationship which had developed on the project. He set about trying to prove to Mr. Jordan that a change was abs'olutely essential.

When Mr. Jordan and Mr. Oprea agreed to the independent engineering review, Mr. Goldberg assigned Dr. James Sumpter, Manager of HL&P's Nuclear Services division, to locate the consultant. Dr. Sumpter was a top manager at HL&P and Mr.

'Goldberg was his immediate superior. Mr. Goldberg gave Sumoter clear instructions that he wanted someone independent of the project, highly qualified in the engineering field, and capable of doing the job .n a hurry. The Quadrex Ccrporation was the perfect choice.

The Quadrex Corporation designed a study that was far more comprehensive that Mr. Goldberg had envisioned, but he saw the p ot enti al~ for this study to build an iron clad case against B&R.

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At the. same time, he knew that the study itself would be an explosive document out of the hands of the project. So instructions were given to Quadrex that their study and even the fact they had been hired was to be kept confidential.

As-the results began to come in, he saw his suspicions that B&R was in deep trouble increasingly confirmed. A briefing by Mr.

Loren Stanley, director of the Quadrex investigation, on March 18 was particularly strong and indicated to Goldberg that there might be a dozen or more significant reports of design deficiencies to the NRC as a result of the Ouadrex review. He avoided initiating any reportablitiy reviews earlier than the final report because that would bring the NRC into the picture too. soon. He still hoped to convince Mr. Jordan to be ready to make a change.

The -Quadrex investigation continued much longer than Mr.

Goldberg expected, but he still did not have Mr. Jordan s permission to seek out potential replacements. He began to take other steps to protect the Project from the potential impact of the final Quadrex Report.

In April 1981, Mr. Goldberg, with Mr. Jordan's prior agreement, F esented a meeting of executives representing the Project owners and B&R his view that B&R had to hire a senior nuclear executive reporting directly to the President and Chairman of the Board of BLR. While Mr. Jordan agreed to the approach, he did not consi d er the structure as important as getting the right people on the project - "the best pecple in the world" - to use his phrase. The structure at HL&P did not have Mr. .Goldberg reporting directly to Mr. Jordan, but Mr. Goldberg did have ear / access.

When his approach to B&R met with passive resistance, at best, Mr. -Goldberg returned to Mr. Jordan and tried to convince him that this refusal was the last straw and that the time to seek alternatives had come. Mr. Jordan again refused.

By this time, Mr. Goldberg was getting desparate. He.had started out building his case against B&R by hiring the Quadrex

- Corpcration. The Quadrex Corporation was about to deliver a report that he knew was going to cause bevoc cn the project and

- bring heavy NRC intervention in the project, if the report got to the NRC.

Faced with this situation, Mr. Goldberg took all the steps he could to minimize the chance that the Quadrex Report would reach the NRC. He set up a process for reviewing the specific Quadrex findings that eliminated the most significant (generic)

Quadrex concerns from the review, limited the review to BLR and an HL&P committee hand picked by Mr. Goldberg and including himself, limited the amount of time the review could take, and even assured that the wording cf the notifications that did go to the NRC did net mention tne existence of the Quadrex Report.

Mr. Goldberg did, however, have a problem in that he had notified Mr. Den Sells in the NRC Nuclear Reactor Regulaticn division in Washington, D.C. when he began the stQdy and told Mr.

Sells in April that some reports to the NRC would probably result. He addressed that problem by meeting privately with Mr.

Sells, giving Mr. Sells a limited briefing cn what the Quadrex Corporation had found, but not providing Mr. Sells with a ccpy of 4

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the Report tc review systematically.

In June, 1981, BLR presented a cost and schedule projection which . clearly indicated that they would be acccmplishing very little. werk of the next eighteen months. Faced with a project that might-take far too Icng to complete, Mr. Jordan finally agreed to act. Since replacing B&R might cost the project a year or so, such replacement became preferable to waiting many more years for BLR to complete the project, if complete it they ever could.

Unknown to Applicants, however, an anonymous telephone call

.to CCANP also in June 1981, brought sericus engineering deficiencies at STP to CCANP's attention. CCAMP contacted the NRC to' provide that information and request an investigation. In August 1981, the NRC conducted'their investigation during which the NRC . team saw the Quadrex Report. Subsequent events fcrced HL&P to deliver the Quadrex Report to this Board.

From that point cm, all HLLP could do was hope the project wculd survive the resultino crisis. To that end, everyone in HLLP tried to minimize the importance of the Quadren Report and their own roles in the entire affair.

In the case of Mr. Goldberg, who was obviously the key

-figure, all he. could do was attempt to justify his actions as best he could, knowing that he had made a terrible mistake.

Surely the stress of such an untenable position is what led to hin._providing so much imaginary and false testimcny in this proceeding.

Mr. Oprea retired before the Phase II hearings began.

Mr. Jordan began distancing himself from the Quadrex Corporation investigation and Report, claiming igncrance of both

.the conditions on the Project and the nature of Quadrex's wcrk.

Once we became aware of the Quadrex Repert, Applicanta' licensing attorneys began portraying the substance and handling of the Report in a manner designed to minimite their importance to our' deliberations.

In February 1985, we ruled that the McGgire rule, which has a separate and independent obligation for attceneys in our proceedings, had been violated by HL&P's failure to provide copies of the Guadrex Report to us voluntarily and promptly after its' receipt by HL&P. We also set forth the issues to be heard in the proceeding as noted above.

In July 1985, the Phase II hearings commenced. Almost from the beginning, we were shocked at the numerous false statements both in the testimony filed by Applicants before the hearings began and prcvided by Applicants' witnesses during cross examination. It soon became obvious that CCANP's allegaticn c4 a con ti nui ng . conspiracy to prevent the NRC from learning of the Quadrex findings were indeed true.

To.summarine our' rulings, we found:

(1)- that the NRC Staff should have been notified Lf numercus findings in the Quadrex Report and that the Report as a whole shculd have been turned over to the Staff; (2) That the failure of Applicants to provide the Quadrex Repcrt to the NRC Staff resulted from a deliberate attempt by Applicants' to prevent this damaging information from reaching the enforcement section of the NRC; 5

r (3) That the failure of Applicants to provide the

'Quadrex Report. to .this Board also. resulted from the same conspiracy; (4).

~

That Applicants' witnesses in Phase I of this proceeding, including senior -managment, deliberately did not mention the Quadrex Report during cross e::aminati on when mentioning the Report was appropriate or even mandatory; (5) That . Applicants' witnesses in Phase II of this proceeding, including senior management, made material false statement-in their prefiled testimony and gave false, misleading, or incomplete. testimony in response to cross examination;

-(6) That the handling of the Quadrex Report and .the nature of the testimony provided by Applicants in Phase I and Phase II of this proceeding disqualify Applicants from receiving an operating license for STP on.the grounds that Applicants lack the necessary character and competence; (7) That .the current procedures for evaluating potentially ' reportable deficiencies for notification to the NRC is itself seriously deficient; (8) That the implementation of the current Quality Assurance program at STP'is in serious questier.;

(9) That -pending radical change in the control of

, Houston Lighting and Power, a review of the qrtalifications and history of any new personnel brought in to manage this project (including a review of the role of the partners in the events which led to this decision) , and.pending a review of the quality Hof work and effectiveness of Quality Assurance oversight of work currently ' underway at STP, the operating license is hereby

' denied and all further safety related work on the project, other than maintenance ano material handling, should be halted in an.

orderly fashion.

This Decision takes'effect immediately and is subject to appeal to an NRC Atomic Safety and Licensing Appeal Board.

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I. INIBggyCIIgg esp gecggggggg I.l. From the perspective of the Nuclear Regulatory Commission (NRC), -the essential purpose of a nuclear power plant is two fold. First, to prevent an accident condition from arising. Second, to minimize the release of radioactivity into the environment should such an accident occur. To achieve this purpose, the NRC regulates the construction and operation cf

-nuclear power plants through the promulgation of rules and regulations, through provision of technical guidance, and through the~ inspection and enforcement process. The purpose cf all these activities is to ensure that any activity-conducted by those holding permits or licenses from the NRC are conducted in a manner to assure the quality of the structures, systems, and components which will be relied upon to minimi e the risk of accident and to mitigate to the greatest extent possible the results of such an accident.

I.2. " Quality assurance" is the term used to comprise all

, , , , those planned and systematic actions necessary to provide adequate confidence that a structure, system, or component will perform satisfactorily in service. The actions falling within the purview of the NRC and the quality assurance mandate include the management, performance, and inspection of design, construction, and operation of those structures, systems, and components of a nuclear facility which are part of the overall system in place to minimize the risk of sccident and mitigate to the greatest extent possible the results of an accident. Each NRC permit or license holder is required to have a program to achieve the goals of quality assurance and to effectively implement that 1

t i

n program. Requirements for various aspects of that quality essurance program are provided by the NRC. See gengrallv 10 C.F.R.,. Part 50, Appendix B CHereinafter " Appendix B"3. Appendix B is organized into 18 sections, each section having a specified quality. ~ assurance objective and specified requirements intended to achieve that objective.

LI.3. This Board is an NRC. Atomic Safety and Licensing Board (ASLB) established by the NRC to determine whether the

, Applicants for the license to operate.the South Te::as Project Electric Generating Station'(S.TP) should be granted that license.

See 10 C.F.R. Gection 2.721.

f' I.4. Generally in deciding whether to grant such an j application, an ASLB must make a number of specific findings. For l purposes of this hearing, the most relevant are: (1) construction of the facility has been substantially completed, in conformity with the_ construction permit and the application as amended, the I provisions of the Atomic Energy Act, 42 U.S.C. Section 2011 et r

seg. [ Hereinafter "Act"], and the rules and regulations of the Commission; (2) the facility will operate in conformity with the application as amended, the provisions of the Act, and the rules and regulations of the Commission; (3) There is a reasonable assurance (1 ) that the activities authorized by the operating license can be conducted without endangering the health and safety of the public, and (ii) that such activities will be conducted in compliance with the regulations set out in 10 C.F.R. Part 50; (4) the applicant is technically qualified to engage in the activities authorized by the operating license in accordance with the regulations in 10 C.F.R. Part 50; and (5) the issuance 2

a of the -license will not be inimical to the common defense and security or to the health and safety of the public. Seg-10 C.F.R.

Section 50.57(a). The NRC is not interested in matters affecting reliable operation, cost, or construction schedule, except in so far as these matters may raise a safety concern.

l I.5. The issues on which ASLBs make findings, such as those l

set out in Finding I.4 above,- usually develop from contentions  ;

raised by intervenors. Opinions are issued on those contentions which the ASLB accepts, takes evidence on, and resolves. Of particular note in this proceeding is the technical qualifications issue. The overall competence of the Applicants arose in this proceeding at the direction of the Commission based on an Order to Show Cause and Notice of Violation issued to Applicants in April 1980. Sgg CLI-80-32, 12 NRC 281, 291 (1980).

I.6. There is one additional issue in this proceeding - the character of the Applicants. This qualification is specifically required by the Act, 42 U.S.C. Section 2232(a), but is not usually an issue in NRC proceedings. This issue is also being considered at the direction of the Commission. CLI-80-32, sugtat I.7. This is the second Partial Initial Decision involving the STP application. Fluch of the factual background of this proceeding is contained in our first Partial Initial Decision (Phase I) issued in March 1984. Partial Initial Decision (Operating License) (Phase I), LBP-84-13, 19 NRC 659 (1984) CPID I3.

I.G. In Phase I, we admitted two petitioners as Intervenors:

Citizens Concerned About Nuclear Power, Inc. (CCANP) and Citi: ens for Equitable Utilities, Inc. (CEU). In addition, we admitted the 3

State of - Texas as an interested State pursuant to 10 C.F.R.

Section 2.715(c). CEU subsequently withdrew on June 15, 1982,

' cubject to certain conditions, after major changes took place in the project. -@eg our Memorandum dated June 24, 1982

-(unpublished). The State of Texas did not participate in the-hearings which are the subject of our Partial Initial Decision (Phase I). The Phase I hearing commenced on May 12, 1981 and extended intermittently until June 17, 1982.

I.9. -On September 24, 1981, the Applicants' informed us that they were~ replacing Brown & Root, Inc.- (B&R) with Bechtel Power Corporation (Bechtel) in the roles of architect-engineer (A/E) and . construction manager. Later we were advised that B&R had withdrawn as constructor. Ebasco Constructors, Inc. and Ebasco Services, Inc. (Ebasco) subsequently replaced B&R as constructor.

On September 28, 1981, the Applicants transmitted to us a report on B&R engineering prepared by the Quadren. Corporation.

I.10. On October 30, 1981, this Board, as previously constituted (Judge Ernest Hill in place of Judge Frederick Shon),

issued an order scheduling a special evidentiary hearing to consider whether the concerns expressed in the Quadrex Report affected existing plans for irreversible safety-related j construction and, theref ore, such construction should be stopped.

All_three of the panel members signed this order, something which we: had never felt necessary before. Sge Memorandum and Order dated October 30, 1981.

I.11. On November 10. Applicants informed us that all safety-related work, except maintenance and materials handling, 4

t

p; ,,

g cp 4

b 'would 'de suspended. -As a result of this decisioni we cancelled i

~ '

.the: .special. evidentiary hearing. Sgg Memorandum and Order j(Cancelling Evidentiary: Hearing on Transition. Period Construction Activities) . dated November 13,;1981. ,

, JI.12.. On November-21, 1981, CCANP filed _a 51 page motion requesting: admission offnew' contentions-related to, among other things,. .the Quadrex Report.1/ The Quadrex contentions requeste'd

. hearings on .two ' major issues: the failur'e of Applicants ~ to provide the Report to the NRC'promptly after Applicants.. received

[

Jit and the significant safety-related issues raised by the Report itself.

I.13. As: a result ofLthese developments, we divided. the p

i . . .

hearing ~ into three phases 'in . our Fourth Prehearing Conference i

Order, . dated December 16, . 1981 (unpublished). We designated r ,-

matters- related to..the Quadrex Report'for hearing in Phase I I'.

-Subsequently, we specified the issues to be heard related to the Quadrex' Report.and added other Phase II issues based in part on concerns remaining.from PhaseJI.

I.14. The overall issues for decision were the adequacy of

. Applicants' character and competence and their ability to manage

'and operate a nuclear power plant. We decided these broad issues on the basis-of specific subissues. As examined in detail below,

'the ;subissues ultimately considered in Phase II or raised by

_ testimony therein are:

(1) Contention 9, which alleged that Applicants' failed to provide the NRC Staff with the Quadrex Report or notify the 1/" Citizens Concerned About Nuclear Power Motion to File-

. Additional- Contentions Based on New Information and to Establish A1 Discovery and Hearing Schedule with Respect to New Contentions" l 5 m .

~,=- 7 TStaff of-'many of the findings therein.as' required by 10 C . F . R .'

50.55(e)? CHereinafter "50.55(e)"3 and that said failure reflects redversely:-on Applicants' character and competence and .on' their

~

-ebilityLlto managefthe construction and operation of a nuclear power. plant.- .The' scope of this contention was limited to the  ;

reportability- of'the report as a whole and 26 specific findings in,the Report.-

_ (2)- . Contention 10,- 'Which alleged ~ that Applicants failure.'to provide _the Quadrex Report-to this Board promptly and voluntarilyL after it was received and ' Applicants failure- to inform this Board of HL&P's on. going review of the continued' role of B&R in the. Project reflects adversely on Applicants' character and- competence 'and.on'their ability to manage-the construction and' operation of a nuclear power' plant.

(3) -The credibility of Applicants' testimony in .the 1981 portion of Phase I of this proceeding in that no mention was

.made of the Quadrex Report or the contemporaneous review of.B&R's role on the1 Project.

, . (4) . ~ The credibility of Applicants

• testimony in Phase

_II-on'the above three issues.

- ^( 5) Issues related to the current competence of Applicants' and their contractors, including the current adequacy-of HL&P's system for ascertaining 50.55(e) deficiencies; the_ testimony in this phase by Bechtel Quality Assurance

. personnel Issue B/D - 1 pertaining to the adequacy of backfill

-placed by Ebasco; and an update by the NRC Staff of its views

'concerning. the current performance of Applicants' and their

. contractors.

6

i I.15. Our' decision resolves all these issues and also changes. most of'the favorable conclusions we reached in' PID. I regarding thevarious issues and Applicants' overall character

~and competence.

.I.16. This' Decision is structured in a manner designed to focus on the two' central issues of character and ccmpetence.

-Those issues are examined through the testimony, evidence, and related documents on the various subissues set out in Finding I.14 which 'are in the record of this proceeding to date.

I.17. The next section contains our Opinion on the following: the Quadrex investigation and Report (Section II.A.);

Contention 9 and related matters (Section II.B.i.); Contention 10 (Secticn II.B.2.); the credibility of Applicants' Phase I testimony (Section II.B.3.a.); the credibility of- Applicants' Phase II testimony (Section II.B.3.b.); the Applicants' overall character (Section II.B.4.); issues 'related to the past and current competence of HLLP (Section II.C.1-4.); the Applicants' overall. ccmpetence (Section II.C.5); the responsibility of the partners in STP (Section II.D.); and issues carried over from Phase I-(Section II.E.1-5.).

I.15. These opinions are followed by Section III in whicn are found the findings which support the various cpinions rendered. These sections are our Findings of Fact on the Quadrex investigation and Report (Section III.A.); Contention 9 and related matters (Section III.B.1.a-i.); Contention 10 (Section II.G.2.); the credibility of Applicants' Phase I testincny (Section II.B.3.); the credibility of Applicantc' Phase II 7

L.

~ testimony (Section III.B.'4.); previous.evaluatiens of the Quadrex Report (Section.III.B.5.); issues related to the past.and current competence .of'HL&P (Section'III.C.); and the responsibility of the partners in STP (Section III.D. ) . -

Following these findings,

.the_ Decision addresses a CCANP motion to reopen -tne Phase II-

record. The Decision then'contains our Conclusions of Law and our Order.

-II. QPlulgN QN INDlylQU$L 1ESMEE A. IBE QU60EEE IUMESIl@ellRM 600 BEERSI II.l. The Quadrex investigation was a carefully structured study of the technical adequacy of B&R's design and engineering work. The overall approach reflected an understanding 'of the requirements for nuclear plant design analysis. The methodology was appropriate for testing an architect-engineer's understanding i

of those requirements. The Quadrex Corporation effectively implemented this methodology through the extensive involvement cf numerous expert reviewers. The resulting Report is a credible and perceptive document. Overall, the Guadrex investigatien and Report demonstrate a seriousness and professionalism which we commend.'Seg Finding III.1.

B. ISE GueEGRIES ISEYE

1. GGQtentigg 2 II.2. As formulated by the Poard, Contention 9 r eads as follows:-

"9. The Applicants' failure to notify the NRC (Region IV) of the Guadrex Report, and of many findings beyond those actually reported, within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> from the time HL&P became aware of the findings or prospective G

n .

findings of the Report (including draf ts) , violates 10 C.F.R. Section 50.55 (e) (2) and reflects adversely. on the character.and competence of the Applicants and on their ability to manage the construction and' operation of a nuclear power plant." February 26 Order at 24.

The contention has several parts. It first questions Applicants' compliance- with the requirements of 50.55(e). If Applicants did comply with those requirements, there was no violation, and the contention is disposed of at the threshold. If there was a

-violation, there still remains the question whether that violation reflects adversely on the Applicants' character and competence and on their ability to manage the construction and operation of a nuclear power plant.

a. IOIECDCRifli90 9f 19 CzEzBz Sgetige ggtygfg1 II.3. The central question in Contention 9 revolves around the application of 50.55(e) to the Quadrex investigation and its findings. 10 C.F.R. 50.55 reads in relevant part as follows:

"Each construction permit shall be subject to the following terms and conditions:

(e) (1) If the permit is for construction of a nuclear power plant, the holder of the permit shall notify the Commission of each deficiency found in design and construction, which, were it to have remained uncorrected, could have affected adversely the safety of operations of the nuclear plant at any time throughout the expected lifetime of the plant and which represents:

(i) A significant breakdown in any portion of the quality assurance program conducted in accordance with Appendix B to this part; or (ii) A significant deficiency in final design as approved and released for construction such that the design does not conform to the criteria and bases stated in the safety analysis report or construction permit; (2) The holder of a construction permit shall within 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />se notify the appropriate Nuclear Regulatory Commission Regional Office of each reportable deficiency.

(3) The holder of a construction permit shall also submit a written report on a reportable deficiency 9

• 0

withing thirty (30) days to the appropriate 'NRC Regional Office ... The report shall include a description of t deficiency, 'an analysis of the safety implication., and the corrective action. taken, and- sufficient information to permit analysis and evaluation of the deficiency and of the corrective action.

(4) Remedial action may be taken both prior to and after notification of the Division of Inspection and Enforcement subject to the risk of subsequent disapproval of such action by the Commission.

Since the NRC has a very limited staff available for inspections, notification requirements like 50.55(e) serve to enforce the Gssential self policing nature of the NRC regulatory framework.

The clear purpose of this regulation is to assure construction permit holders, like Applicants, put the NRC Regional Office on

. notice of significant problems which develop during the course of o

nuclear plant c'nstruction. That notice is to be given promptly, thereby putting the NRC into the evaluation and correct'.ve action process early. The NRC is then to-be kept informed as to the details of the problem and is authorized to disapprove the corrective measures taken.

II.4. To assist construction permit holders in achieving compliance with 50.55(e), the NRC issued guidance in how the regulation applies. Sgg NRC Exh. 137. This guidance reiterates the intent of this regulation as providing the NRC Staff with prompt notification and timely information regarding deficiencies encountered in the design or construction of a nuclear power plant. Id. at 1. This guidance makes it quite explicit that the construction permit holder is responsible for promptly reporting deficiencies to the NRC, even if the deficiency is in work performed'by a contractor, subcontractor, or consultant. Id. at y 10

n-2.

II.5. The NRC Guidance also sets forth the criteria for reporting- a deficiency whose ultimate significance or ultimate reportability cannot be'promptly determined. Under the heading

" Notification Potentially Reportable Deficiency," the NRC Guidance provides the following:

"All of the reportability criteria of 50.55(e) may.not be satisfied when a deficiency is initially discovered.

It is not always possible for the licensee to decide promptly during an evaluation whether the identified deficiency is reportable. However, in most cases, significance can be partially satisfied, or sound judgment will indicate potential significance. In these cases, it should be considered that the deficiency is a 29tEQilallY CER9Ctable dgiiqlgqqy, and the Regional Office should be notified. The CP [ construction permit]

holder should specify that it is a potentially reportable deficiency.

The following IE [ Inspection and Enforcement] position has been established to alleviate the apparent conflict between prompt notification and necessary evaluation time for those cases where an extended period of time could lapse in completing a[n] adequate evaluation of the identified deficiency:

Notification by telephone to the Regional Office within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> after a cognizant licensee individual becomes aware of a potentially reportable deficiency is considered acceptable. A potenti al l y reportable deficiency is consider to exist when: (1) an initial prompt review of available information indicates that the problem could be significant (i . e. partial significance is established) but, for various reasons, additional time is required to complete the evaluation; and (2) the deficiency may be considered significant, but neither a prompt review or full evaluation can be completed within 14 days due to lack of specific information.

Consequently, some matters which require notification may not, subsequently, require a written recort.

In summary, the intent is to require prompt notification in cases where a potentially repcrtable deficiency has been identified but the formal evaluation required to confirm whether the item is reportable can[not] be completed immediately." Id. at 11

m.

6 -- 7 ; . (emphasis in original)

The clear intent of the Guidance is to create a separate category o' f. - potentially . reportable deficiencies and to require notifications to the NRC even when insufficient information exists- to determine ultimate reportability. The Guidance also makes clear.that some notifications will be made that later are found not to be necessary. This Guidance reinforces the overall purpose of 50.55(e) to put the NRC into the process early so evaluations and corrective actions by Applicants can in turn be

'ssessed by the NRC.

II.6. The- NRC Guidance notes that the requirement to make 50.55(e)- notifications is part of the requirements of Appendix B.

The procedures for making 50.55(e) reports and records of evaluations made of possible deficiencies are part of the Appendix B requirements. Any deviation from the specified procedure for determining reportability or failure to keep adequate records would itself be a violation of Appendix B. Id.

at 9.

'II.7. During the course of the Phase II hearings, the Applicants argued that the ultimate reportability of a given Quadrex finding was the appropriate determining factor on potential reportability and would be one measure of Applicants' character. Tr. 11472, L.0 - 18: Sqq algg Tr. 11474, L.23 - 11475, L.5. CCANP argued to the contrary that the ultimate reportability was not the issue raised by the contention and that the concept of potential reportability, as reinforced by the 24 hour deadline, specifically envisioned notifications of matters which did not turn out to be reportable. CCANP argued that items which 12

_ _ . _n

3 were- potentiall'y reportable on the date the Quadrex Report was received and for which notifications were not made would reflect adversely on Applicants character and competence whether or not

'the items . in question turned out ultimately to be reportable. Tr.

11471, L.4 - 23; 11474, L.10 - 19; 11475, L.14 - 21. The Board accepted both positions as relevant to the ultimate judgment we must make on the application of 50.55(e) to the Applicants' handling of the Quadrex Report and findings. Tr. 11476, L.6 - 22.

Given our opinion herein on the Report and its findings, the distinction between the parties is not material.

b. Aggliggetgi qqmmugiggtigngs gt Iggh thetegfz uttb UBG ftem inttletL9n of the Guadtea taxenttnettga untit ugy 65 ~1201 (1) dct 09Lgbetg;g Lettigt ggatagtg with bc._

E2115 II.8. On two separate occasions - at the beginning of the Quadrex review and after the April 13, 1981 Quadrex briefing -

Mr. Goldberg contacted the NRC's Project Manager for STP, Mr. Don Sells. During these contacts, Mr. Goldberg conveyed very little of the substance of the Quadrex findings.

(2) SLtB h09512d92 9f 992dCHE fiOdiO92 52f9c2 dn11vsty 9f tb2 final 82astt II.9. By mid-March 19G1, the Guadrex Corporation had informed HLLP that the B&R design process designed to achieve radiation exposures to plant personnel and the public which would be as low as reasonably achievable (ALARA) had suffered a breakdown sufficient to require a complete re-review of all ALARA work to date. As of that time, Quadrex was already actively cooperating with HLLP to convince B&R to make major improvements 13

in.their ALARA program. Finding III.17. The ALARA program is a significant NRC required program. Furthermore, achieving

.accesibility for inservice inspection, maintenance, and repair of the plant is a requirement in the design- control section of Appendix B. 10 F.R.R. Part 50, Appendix B, Criterion III.

Inadequate treatment of radiation exposure problems during such activities, which is a part of the ALARA design process, could prevent such~ activities from being effectively carried out once the plant was in operation. A breakdown in a program required by the NRC and subject to Appendix B is a significant breakdown in the quality assurance program reportable under 50. 55 (e) (1) (i ) .

Applicants did not report this Quadrex finding, either in March of 1981 or later. Since Applicants were well aware of both the extent of the problem and their regulatory obligations under 50.55(e), this failure to report must be viewed as a deliberate act. Rather than have the NRC become involved in the corrective action to be taken, Applicants chose to keep the information within their own organization and try to work with BLR to achieve an adequate program. This treatment of the Quadrex ALARA findings was a precursor of the ultimate treatment of the Quadrex Report as a whole.

II.10. By March 18, 1981, the Quadrex reviewers had found a very troubled design and engineering process at STP. At a briefing of HLLP on that date, Quadrex reported that there was very little evidence of a well thought out basis for design, that much of the plant design was based on undocumented engineering judgment, that key design verification questions were not being addressed, that BLR had virtually no nuclear analysis capability, 14

that hostility between HLLP and BLR personnel was extensive, and that the BLR engineering work situation was chaotic. Overall Quadrex had found a systematic, serious, and prolonged situation unacceptable in Quadrex*s view and calling into question HLLP's exercise of responsibility as Project Manager. Finding III.18.

This report to HLLP should have been sufficient for an internal stop work order on all engineering and a 50.55(e) report to the NRC on a breakdown in the design and engineering program.

II.ll. The absence of basic nuclear engineering skills is a fundamental deficiency, more serious than an error committed by a qualified engineer. The failure to ensure that the engineers designing and engineering a nuclear plant have the expertise to perform those functions is a violation of Criterion II of Appendix B in that the Applicants did not provide control over 1

acti vi ti es affecting the quality of identified structures, systems, and components, to an extent consistent with their importance to safety and did not assure that all prerequisites for the given activity had been satisfied. We most assuredly consider control of the engineering activities to include assuring that the engineers are qualified. Qualified engineers are the most fundamental prerequisite for engaging in design and .

engineering activities. Since the Quadrex Corporation informed HLLP in mid-March 1981 that BLR's engineers lacked the required expertise seven years into the Project, HLLP was under an obligation at that point to take decisive action internally and infcem the NRC pursuant to 50.55(e). Section (e) (1) (1) of 50.55(e) is specifically worded to capture conditions adverse to 15

s safety i r. the design process, whether unsafe designs have been released to construction CSection (e) (1) (ii) ] or not.

Furthermore, the existence of a chaotic work situation, whatever the qualifications of the engineers, was independently a basis for Applicants to notify the NRC pursuant to 50. 55 (e) (1) (i ) of their failure to adequately control engineering activities, to stop all engineering work, and instruct BLR to prepare to transfer their design and engineering responsibilities to a new architect-engineer.

II.12. The whole purpose of a nuclear power plant is to l

prevent chaos. In order to achieve that goal, the design and engineering process, indeed all processes at the plant, should be conducted in the context of a conerent understanding of the task at hand. in a planned, orderly, and controlled manner, and with the highest degree of expertise. Ggg e_gz Staff Exh. 138 at 2, Section 2.2. The Quadren Corporation told Applicants on March 18, 1981 that just the opposite of these conditions existed at STP. .

At that point, corrective action by Applicanta was mandatory. The failure to take such action demonstrates a lack of resolve on the part of management that is disqualifying on character grounds.

The failure to notify the NRC of these conditions is an extremely serious violation of both the spirit and the letter,of 50.55(e).

This latter failure constitutes a deliberate attempt to avoid the regulatory authority of the NRC and- as such, is also disqualifying on character grounds.

II.13. At their April 13, 1981 briefing of HLLP, the Quadren Corporation provided much more detail on their findinos. These findings included the discovery that BLR engineering was unaware 16

I' of_significant nuclear analyses that had to be performed, lacked

-a clear delineation of which disciplines were , responsible 'f o r conducting specific engineering tasks, and faced excessive productions pressures. Findings III.19 - 20. This briefing only reinforced the picture provided on March 18. B&R engineering was uninformed in the area of nuclear analysis, unorganized, and trapped in a cycle of low productivity and consequent increasing  ;

I

. production pressures. The absence of basic knowledge violated Criterion II of Appendix B in that the prerequisites for design and engineering (qualified engineers) had not been satisfied. The lack of clear definition as to responsibilities violated Criterion 'II in that engineering activities were not adequately controlled. The severe production pressures on engineering constituted a condition adverse to safety in that the release of.

incomplete drawings could produce quality defects in constructed items. Criterion XVI of Appendix B specifically requires the identification and prompt correction of conditions adverse to safety. Since by 1981 B&R had been on the job -for seven years and since their lack of productivity was a long standing problem. the quality assurance mandate of Criterion XVI clearly had not been met. When the criteria of Appendix B are violated in a significant manner, there exists a significant breakdown in quality assurance reportable under 50.55 (e) (1) (1) . The combination of the ALARA breakdown information, the March 18 briefing, and the April 15 briefing gave Applicants all the information they needed to conclude that BLR's engineering was in a state of collapse. A stop work order and a report to the NRC of 17

r_ _

i r

an engineering breakdown are steps Applicants should have taken .

1 no 'later,than March 18, but certainly ne later than April 10.

Applicants took no such steps, merel continuing to monitor the Quadrex investigation without taking any specific action regarding -BLR's continuing to perform as architect-engineer and without notifying the NRC of the conditions within BLR.

p engineering. This lack of action reflects a lack of- character which we-find disqualifying.

II.14. By the end of' April, the evidence of BLR's lack of ccmpetence was indisputable.

HL&P knew the basis for every specific finding Quadren was going to make. On April 30, Quadrex presented a still more comprehensive briefing that only reinforced the information in the earlier briefings indicating that BLR engineering had broken down. For reasons having no

)3 s relation to regulatqry responsibilities, Applicants still refused-to take action to shut down safety-related work at the project or notify the NRC. Finding III.22.

(3) ' dEE9ttability geglygis getigtmed arist 19 tb2 deilygty 91 tbn final ouggc2K Bea9tt

\

II.15. In the midst of the Quadrex review, there was one finding evaluated for potential reportability. Dr. Sumpter testified that S&R found there was no deficiency, even though they- had in fact used a value for stress in penetrations that exceeded the code allowable. BLR fcund no deficiency because the existing. calculations were below the- acceptable value. Clearly, the BLR determination that there was no deficiency was in error because had the value not been corrected, later analyses might have- been permitted excessive stress. HLLP engineering and the 18 L .. , _

s .

LHL&P IRC correctly analy:ed whether the deficiency was reportable by analyzing whether.use of the wrong value would have been a safety hara'rd. .HL&P engineering and the'HL&P IRC did find the item-fwas'not reportable because even at the higher stress there o

w'uld only be. local yielding, not failure of the component.

Nevertheless, .the. fact that B&R had' erroneously dismissed the error'as not even a deficiency should have served as a warning to HL&P that~'given the' opportunity to evaluate deficiencies for potential reportability, B&R would do.their best to find a way notito report. . Egg Findings III.23 - 24.

c. Etudinna 89ttfled tg the ugC II.16. On May 7., 1981, the Quadrex Corporation delivered

-their final report to the' Applicants. After'a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> review of

.the Report, .the Applicants finally notified the NRC of findings

" by Quadrex. Three notifications covered six separate findings.

The fir.st not'fication concerned B&R's failure to consider i other

'than - _ normal ' operating conditions when designing the Heating,

Ventilation, and Air Conditioning (HVAC) system for the plant. As a-  : result numerous cooling systems already installed were inadequate ~ to- deliver adequate cooling- to equipment during accidentEconditions. The cause of this error was the failure- of

'_o n e engineering' discipline to do needed analyses and the failure i-ofc .a:second-engineering; discipline to-realize they needed such c ; analyses to do their work. The-HVAC error was a clear case of p ~ incompetence. within B&R engineering that illuminated serious

.fundamenta'l- deficiencies iniboth the qualifications of personnel

~

and.the. design outputs..The second notification concerned the B&R verification process for the computer programs (codes) used on 19

the project. This process did not adequately insure that computer codes used for safety related work were verified appropriately.

After an extensive. evaluation by outside consultants, many of the completed calculations and the verification documentation were discarded. The third notification involved the shielding calculations which B&R chose not to classify as safety related.

This notification was eventually withdrawn. Of the three notifications, a later NRC investigation determined that

' Applicants had sufficient information to have notified the NRC of two deficiencies long before they did and noticed Applicants that i

this failure constituted a violation. Findings 25 - 32.

I II.17. Setting aside for the moment the question of whether more than six findings should have been notified to the NRC, the findings that were notified, taken as a group, represent

-significant evidence of fundamental deficiencies in the D&R engineering process. Many of the HVAC systems were already installed. The computer codes governed calculaticns used throughout the Project. The shielding calculations affected numerous areas of the plant. For one report to produce six findings potentially reportable under 50.55 (e) and for those findings to be of such a significant nature should have led Applicants to turn over the entire report to the NRC. Instead, the Report was not even mentioned to the NRC. CCANP Exh. 129.

d. Findings which sbguld bavg bgge egtifigg tg tbg NRG (1) The Generic Findings II.18. The most powerful section of the Quadrex Report is the 'section containing the generic findings. Here the Quadrex 20

Corporation has evaluated the hundreds of individual assessments of- particular BLR work done by Quadren reviewers and abstracted systematic, project wide, and extremely serious deficiencies in BLR's entire approach to the design and engineering of STP.

Simply by definition, the generic findings strongly suggest themselves as potentially reportable findings, both because they are project-wide concerns and because they .specifically communicate serious deficiencies for which support already exists, further investigation is called for, and the amount of investigation required to resolve the concerns is enormous.

II.19. The generic findings demonstrate graphically that the BLR design and engineering program was not planned, organized, controlled, or effective in achieving the stringent requirements of nuclear work. Activities basic to the design process had not b'een planned, let alone executed. Disciplines were unsure of their responsibilities, failed to coordinate their efforts, operated in a chaotic work situation, and repeatedly tried and failed.to complete significant design tasks. During this process, critical nuclear requirements were overlooked or improperly implemented. Incomplete, erroneous, and invalid design outputs resulted. The failure to produce usable outputs created scheduling pressures on engineering that only added to the problems created by a lack of nuclear engineering ability. B&R adopted a policy of using preliminary data up until fuel loading, rather than take the time to verify the preliminary work. From all of these conditions, the risk of defective design and engineering was immense. Such defects had already surfaced in significant areas. As the summary findings of the Quadrex i

21

' investigation, the generic findings display, for even the non-expert, conditions on a nuclear power plant that are totally unacceptable. As a group, these findings should have been turned over to the NRC immediately once Applicants became aware of them.

Applicants' failure to notify the NRC of even a single generic finding stands second only to their failure to turn over the entire Report as evidence of a serious lack of the character we consider necessary to manage the construction and operation of a nuclear power plant. Findings 35 - 55.

(2) Ibn Dissinline Eindiass II.20. There are hundreds of discipline findings in the Quadrex Report. We examined a very small sample of these findings in this proceeding. But from that examination it is clear to us that the Quadrex Corporation gave a great deal of thought to the

. meaning of the questions, answers, and assessments which form tho data base for both the generic findings and the discipline findings. There are dozens of discipline findings which on their face appear to be potentially reportable, but we restricted the findings for litigation to those identified by CCANP. Perhaps because CCANP's position was that the entire Report should have been turned over, CCANP did not propose many discipline findi.ngs for litigation. As it turns out, that is just as well. There is little need for us to spend a great deal of this Decision on the reportability of the discipline findings, given our conclusions on the generic findings and the Report as a whole. Nevertheless, we do herein examine some of the discipline findings, as much to demonstrate the analysis for reportability that should have been 1

j 22 l

4

performed by Applicants and was not, as for any other reason. Of course, having set out these findings for hearing and having received findings from the parties on most of them, we will address most of them. But we stress that our analysis of the discipline findings is secondary, given the import of the generic 5 findings and the importance of the Report taken as a whole. The discipline findings we do examine herein, all were either potentially reportable or reportable. Findings 56 - 66.

e. Pt gviding tbg goting Ogggtg3 Bgggtt tg tbg UBC II.21 Were there not in fact issues accepted into this proceeding 'concerning the reportability of the generic and l

discipline' findings, there would be little need to discuss either of these discrete topics. The Quadrex Report as a whole is such an overwhelming indictment of_the Brown and Root design and engineering. program and of the Applicants for failing to exercice adequate management control over that program that it should have been turned over to the NRC immediately upon receipt. In addition, Applicants knew the NRC was very concerned about the quality of work being performed at STP. This heightened NRC concern was even further reason not to exclude the NRC from involvement in the resolution of the Quadrex Report findings. See Findirgs III.73 - 90, III.98 - 99, (f) Ihe ARRli ceOtsi Evel9eti GO gf the Qugdten Beanti 19c tenettebllit'z eOd the eitetmetu II.22. Having looked in some detail at the process by which Applicants decided whether the Quadrex Report and its findings j would be provided to the NRC Staff, we conclude that there was in ,

fact a conspiracy to prevent the NRC from learning of the l 23

r1 substance of the' Report. Mr. Goldberg abused his authority and l I

ebdicated HL&P's responsibility in a deliberate attempt to I l

minimize the number of findings which would be reported. To summarize this process:

(1) Mr.- Goldberg attempted to minimi:e' the number of potentially reportable findings by giving the major responsibility for making reportability determinations to B&R. He took this sfep knowing B&R resented the review. Mr. Goldberg essentially gave B&R the last word. To assist them, he ruled out

-any evaluation of the generic findings and limited the discipline findings to only those in the Most Serious category. Mr. Goldberg also established a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> review process which limited the number of people who could be involved. Finally, Mr. Goldberg set about working with B&R to resolve the problems without outside intervention.

(2) Within HL&P, Mr. Goldberg set up a process of review

.that excluded the author of the Quadrex Report; exclude 1 the HL&P engineers who were familiar with BLR's work and had attended the B&R session evaluating the Quadrer Report; excluded the Incident Review Committee, on which sat an aggressive Quality Assurance Project Manager; relied almost exclusisely on B&Rs evaluations; limited the review to a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> period, rather thar, utilizing the 14 days provided in ILE guidance; restricted the HL&P review to only the discipline findings in the Most Serious category; structured the review to give Mr. Goldberg maximum centrol-over what the review produced; and controlled the wording on the notification which were made to ensure the Guadrex Report was not 24 9 P

, mentioned. The'many deliberate aspects of this process leave- us no room to conclude otherwise than that there was a conspiracy to

~

prevent the Quadrex Report from reaching the NRC and the public.

Sgg Findings 100 - 140.

II.23. In ceder to achieve his purpose, Mr. Goldberg had to abuse .his authority on the one hand and abdicate Applicant's responsibility en the other. He abused'hi:s authority by usurping the role of the Incident Review Committee and turning-the IRC's chairman into a messenger boy for the Goldberg committee. He abdicated Applicants' responsibilty because the evaluation for

.reportability was in essence a combination of the Quadrex Corporation putting the findings in categories and B&R deciding which findings' in the Most Serious discipline findings they thought were reportable. The Goldberg review team basically ratified those two decisions without doing any independent research. gee Findings 141 - 150.

-II.24. These actions by Applicant cnntinued to impact the Project long after the decision of May 8 were over end done with.

The Incident Review Committee started ' hiding the e::istence of the Guadrex Report. The Quality Assurance Department appears.to have tried to take appropriate action and been blocked. @gg Findings 151 - 154. Even today, there are visible signs that the problem continues.

'II.25. The perpetrators of these acts show nc remorse and admit to_ no mistakes. They have been well treated by the corporation, either being al l owed to retire gracefully or being

-promoted to still more authcrity. Findings III.157 - 158.

25

g- C90glusigg3 90 Qgetectigo 2 II.26. There is no doubt in our minds that the questions posed by the Contention are answered in the affirmative -

Applicants should have turned over the Quadrex Report to the NRC no later than 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> after its receipt, or, failing that, reported many more findings to the NRC than they did; Applicants did flagrantly violate 50.55(e) beginning during the first Quadrex briefing on in March 18, 1981 and continuing until September 1981; these violaticas trace directly to serious character and competence deficiencies that disqualify senior management at STP from continuing to be involved in the management of the construction and/or operation of this plant.

2. QONIENIlgN 1Q II.27. After the Applicants released the Guadrex Report.to the Board and parties and all parties had expressed their views as to the issues to be heard in Phase II, Seg suqta I.B.2, we issued a ruling which stated:

"The Quadrex Report was relevant and material to matters before the Board and, as a matter of law, should have been turned over under the MgGutte doctrine shortly after its receipt by HL&P." February 26th Order at 22.

As a result ~of this ruling, the Board adopted a new contention which raised the question whether Applicants' failure to provide the Quadrex Report to the Board

" reflects adversely en the character and competence of the Applicants and on their ability to manage the ccostruction and operation of a nuclear power plant."

Id. at 24 (Contention 10).

As Applicants ccrrectly perceive, our ruling on this matter prior to the hearing encompassed our ccnclusion that the Guadrex Report 26 s

w..~ .-

was relevant to Applicants' character and competence. Egg February 26th Order at 23: App. FOF III.1. 10 cdditige, we rejected 8pglicants' argument that the Quadrex Report dealt with design CA,.while the hearings dealt only with construction QA, as too narrow an interpretation of the issues in Phase I. Egg February 26th Order at 21-22 (Applicants' argument); at 22 (Board response). In their Proposed Findings of Fact and Conclusions of Law,- however, Applicants would have us characterine our ruling that the McGui te rule was violated as " predicated upon our view that design QA was the subject of the Report, and that

' construction and design QA are not so disparate as to be considered unrelated subjects.'" App. F0F III.3. Having so characterized our ruling, the Applicants would then have us revisit that ruling, Id, and reverse it on the basis that "the Quadrex Report did not pertain to design QA to any significant degree." App. FOF IX.16. We take exception to the Applicants' proposed findings on this point. The time for filing a motion to reconsider our ruling in the February 26 Order is long past. 10 C.F.R. Section 2.771. The Applicants did not file such a motion.

It now appears that Applicants entered the Phase II hearing process with a hidden agenda of building a record that our initial ruling was in error and of having us reverse that ruling in this Partial Initial Decision. This is obviously an

' inappropriate way for Applicants to seek reconsideration.

Furthermore, for us to even entertain such a reconsideration would prejudice the other parties, who were not on notice that such an issue was to be heard in Phase II. Centention 10 called upon the parties to present evidence to us on whether the failure 27

1 l

to. provide the Quadrex Report to this Board reflected adversely on the character and competence of the Applicants, not whether the Quadrex Report was material and relevant to Phase I. That the Applicants. chose to construct a straw man (design QA v.

construction OA) in their pre-hearing brief and then knock down their own creation in their proposed findings of fact is immaterial. We do not choose to revisit our earlier ruling on this ma'tter; we simply reiterate our earlier conclusion that the Quacrex Report was relevant to Applicants character and competence. Our opinion herein will confine itself to whether the failure to provide us with this report reflects adversely on Applicants character and competence and their ability to manage the construction and operation of a nuclear power plant.

II.28. Since we find herein that there was a conspiracy on the part of senior management to prevent the NRC from learning the substance of the Quadrex Report there is little question that the violation of-the McGyirg Rulg in not previoing us with the Quadrex Report reflects adversely on the character and competence of Applicants sufficiently to disqualify them from continuing to manage the construction of the South Texas Project.

II.29. In our Sixth Prehearing Conference Order, we included in Contention 10 Applicants failure to inform us-during the Phase I hearings of their ongoing review of B&R's f urther pa;-ticipation in' the Project. Sixth Prehearing Conference Order (Further Definition of Phase II Issues), dated May 17, 1985, at 3-4 Given the significance of this review and the circumstances surrounding it, we find the McGuire rule was violated by Applicants' failure 28

l to inform us of this review. While there may have been commercial

" reasons for the Applicants wishing to keep this review secret, there are appropriate orders we could have entered to take such information in a manner designed to protect it from publication.

The purpose of the McGuitg rule is to insure that we are aware of developments which could affect our decision. Had we known the review of BLR's role was underway, our entire approach to the Phase I hearings might have been altered and much of the hearing delayed until Applicants reached a final decision. The record in Phase I would also have contained significant informatien which Applicants' silence prevented us from hearing at that time. This second violation of McGui tg also reflects adversely on Applicants' character. Sgg Findings III.160 - 165.

3. Ctgdtbility gf 6gglicants Swgte Igstimgny II.30. We concluded in Phase I that in order to judge the character of an organi:ation through the individuals acting on behalf of the organization, se would have to look closely at the performance of particular individuals who may truly be regarded as exercising a sufficient degree of responsibility so as to be deemed to affect an organization's character. PID at 24 - 25. For purposes of this section of the Decision, we will evaluate the following individuals: Mr. Donley Duard Jordan, Chaiiman of the Board and Chief Executive Officer, HL&P; Mr. George W. Oprea, recently retired f rom his position as Executive Vice President -

Nuclear; Mr. Jerome H. Goldberg, Group Vice President - Nuclear; and Dr. James Sumpter, Manager, Litigaticn Technical Support, HLLP.

29

i l

II.31. The central issue in this proceeding is the character of the Applicants. In our Partial Initial Decision (Phase I), we stated that the most important measure of character would be "whether HLLP made material false statements or omissions and whether it addressed questions propounded by the Staff, the parties, and us with candor." PID at 20.

I Furthermore, the Board agreed with CCANP "that there may be ggmg character defects that are so serious that they are in fact uncorrectable, at least in the absence of a ' radical change in the control of Ethe] corporation.' Cfootnote omitted] One of these defects might be evidenced by an intentional lack of truthfulness or candor ccndoned by management. As we have observed, the Commission in CLI-80-32 emphasized the. importance of truthfulness and candor, and it explicitly pointed out that a lack of truthfulness or candor could prove disqualifying. Ccite omitted]

Further, the Commission cited cases suggesting that willful misrepresentations to the Commi ssi on , or representations made with disregard for their truth, could be grounds, without more, for license denial.

Cfootnote omitted]." PID at 23 (emphasis in original).

a. 6gglicantg Ebage 1 tegtiggay (1) Ecitute tg mentige the ougetet Beggtt et the centeeggtanegus teview gi sqE*g tgte at sIe II.32. During the 1981 portion of the Phase I hearings, none of Applicants' witnesses mentioned the Quadrex Report or the fact that Applicants were actively considering replacement of BLR in at least some of its major roles on the Project. Prior to the commencement of Phase II hearings, we had already given an indication that we were concerned about the credibility and candor of HL&P management witnesses who testified during Phase I.

Seg February 26 Order, at 19. We have revisited Applicants' Phase I testimony now that we are aware Applicants received the Quadrex Report just prior to the commencement of the Phase I hearings and that Applicants were reviewing the continued participation of B&R 30

l t

at STP during those hearings. Findings III.166 - 176. We conclude that Applicants demonstrated a lack of honesty and candor in not revealing either development to this Board.

i DONLEY DUARD JORDAN III.33. Mr. Jordan is Chairman of the Board of Directors and f

i _ Chief iExecutive Officer of Houston Lighting and Power Company L

(HL&D). Jordan, ff. Tr. 11908, at 1, L.13 - 15. Mr. Jordan I.

.previously testified' in this proceeding on May 14, 1981. Mr.

Jordan appeared in response to the Board February 26th Order in which'the Board stated at page 19 that we expected Applicants to address

"(1) the apparent inconsistency of,the Quadrex Report with testimony presented by HL&P during the spring and summer of 1981 concerning the adequacy of B&R's services and HL&P's satisfaction with B&R's services, and (2) the failure of HL&P witnesses to mention the c Quadrex Report, or the pendency of a far-reaching review of B&R's design engineering services, in response to questions where such a reference would have at least been appropriate if not specifically mandated.

[ Transcript cites omitted]."

t-II.34. In reviewing Mr. Jordan's Phase I testimony and his explanations in Phase II regarding why he did not mention the Quadrex Report, we are not persuaded that his omission in Phase I was based either on his understanding of the Quadrex Report as irrelevant to the Phase I issues or his understanding of the specific questions he was asked as not calling for naming the

'Quadrex Report in response. See Finding III.170. Mr. Jordan participated in the decision to hire the Guadrex Corporation,

. received progress reports during the course of the study, knew the study was being performed in order to answer questions in the Phase I hearings,- and received a briefing on the results of the 31

q

. 1 . - . .

$\

r etudy .four days after completion of the study and three days b'efore he testified in_this proceeding. Finding III.167. We speci f i cal'l y ' reject his attempt to portray his briefing. as misleading him as to the nature of the study, particularly since

. he did not_ change his supposed view of the-study up to the time

~

'of his testimony in; Phase II of this proceeding. Furthermore,'he admitted that Mr. Goldberg told him B&R lacked expertise in how to..do nuclear engineering, though he later changed his testimony.

.on'thisipoint, and consistently testified-that Mr. Goldberg told

~

,- ~him B&R lacked a sufficient number of experienced engineers to do the_ job._ Finding I'II.168. If Mr. ~Goldberg told Mr. Jordan that~ the - Quadrex Report showed.B&R engineering lacked nuclear expertise, then obviously there was a quality component to the briefing. Even if Mr. Goldberg only told Mr. Jordan that B&R facked a sufficient number of experienced engineers, there would 4

~ still- 'be the_ quality component of an understaffed engineering

' force. being overwhelmed or-excessively pressured to meet -the.

c demands of the schedule. Mr.; Jordan knew _that such pressures had existed :f or years. Tr. 12145, L.18 - 12146. L.14. For B&R to still be so_ understaffed would be-quality problem, both from'the g perspective- of potential errors created under too much pressure and the, perspective of a condition adversely affecting safety.

which had gone uncorrected for.many years. More importantly, we view Mr. Jordan's-testimony regarding this briefing as clearly trying) to create a situation wherein, if we were to find the

-Quadrex Report was a .significant QA related document and, therefore, a- matter which should have been brought to our t , ,- 32

~

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ _ _ _ . _ _ _ _ _ _ _ _ b

7 -- - - -

-,- =

attention in Phase I, then all blame for Mr. Jordan's failure to mention the report would fall' on Mr. Goldberg and his briefing.

Mr. . Jordan's: testimony .about Mr. Goldberg's briefing is an unseemly . attempt to avoid responsibility, not unlike other attempts. he has made in this proceeding to portray his inexperience, or lack of knowledge, or other remediable conditions as the. basis Ifor his inadequate response to significant quality related deficiencies at STP. The purpose of his attempt ~to shift the blame to Mr. Goldberg, in this instance, is undoubtedly. to. create a situation where, in the face of an adverse ruling from this Board, Mr. Goldberg could be removed from -his responsibilities, but Mr. Jorcan would remain as Chairman of-the Board and Chief Executive Officer.

-II.35. Even were we to accept Mr. Jordan's characterication of the perception created in his mind by Mr. Goldberg's briefing, we would still find hi s answers in Phase I to be incomplete -in not' mentioning the Quadrex Report. We would also find .their incompleteness intentional, since the May 11 briefing pertained to-a.very significant report whose results Mr. Jordan had awaited

.for months and occurred three days before the testimony in

question. When confronted with Phase I testimony that clearly

. called for mentioning the Quadrex Report, he gave conflicting and contradictory testimony as to why he had not mentioned Quadrex.

, Finding III.171. We conclude that Mr. Jordan deliberately did not

. mention the Quadrex Report because he wanted the existence and contentstof that Report kept from this Board. Such obstruction of the NRC regulatory process is disqualifying on character grounds.

33

JEROME H. GOLDBERG II.36. Mr. Jerome H. Goldberg is currently Group Vice President - Nuclear. Goldberg, ff, Tr. 11491,_at 1, L.12 - 14.

He appeared in response to our February 26 Order regarding the testimony given by Applicants in Phase I and to testify about the reportability of the Quadrex Report and its findings.

II.37. There,are numerous places in the transcript of Phase

~

I where Mr. Goldberg could have and should have mentioned the

[ Quadrex Report. Now that we are aware of the effort that Mr.

Goldberg was putting into keeping the Guadrex Report hidden, j

these gaps in his testimony become obvious attempts to avoid f

mentioning the Quadrex Report. As with Mr. Jordan, we conclude L

that failure to mention the Quadrex Report was part of an overall scheme to obstruct the NRC regulatory process.

II.38. Regarding the Phase I testimony of Mr. Oprea that he t

had not had discussions with any of his staff since the Order to Show Cause about the removal of B&R, we find Mr. Goldberg's testimony ample evidence that Mr. Oprea's Phase I testimony was false. . Finding III.173 - 176. We reject Applicants' later attempts to distinguish these discussions by characterizing them as not seriously considering removal of B&R. Since Mr. Goldberg obviously gave serious consideration to such replacement, his testimony is even less convincing on this point. _See gig.

Goldberg, ff. Tr. 11491 at 66, L.17 -25; at 67, L.11 - 17. Nor do we embrace Mr. Goldberg's position that action must be taken in order for a discussicn to have accurred. Tr. 12489. L.14 - 25.

The question asked in Phase I was whether any discussions had 34

, i

y; y' .;yl g-f- A. ,. 4 - .

m

- 1 a

~

3 been helde When Mr. Goldbergsapproached Mr. Oprea about the need to -explore:" alternatives for completing the project without B&R-

': as ' A-E,iC;that- was 'a discussion .about~ the removal of BLR.

. Goldberg,Tff. ,Tr.- 11491,-at 66, L.1 - 11.

III.39. A: !further measure of the misleading nature of Mr.

'Oprea'sEPhase I testimony is what ' would have likely come into the--

1981. Phase'I record, if Mr. Oprea had answered "Yes," instead of:

"No,'"ito'the' question-regarding discussions on removing B&R'. Some-testimonyL ~a bout- Mr. Goldberg's dissatisfaction with B&R engi'neering-:did come-into that part of the Phase I record, but-s the'thrustfof his t'estimony was the need for further. improvements-

'at_B&R. Goldberg, ff. Tr. 11491, at 60, L.23 - 61, L.19. Mr.

~Gol'dberg's -Phase I testimony certainly did not convey the fact that-Mr.. Goldberg considered it quite possible that B&R might1be-unablefto complete the project; that Mr. Goldberg had approached HL&PJtop management on more than one occasion about exploring the availability of alternative. contractors and been rebuffed; 'and

that t Mr. _Goldberg's ' primary area of concern- was engineering,.

particularly engineer'ing. management. These are major pieces of information highly relevant to HL&P's, views on the competence of B&R. at the time of ~the?1981._ Phase I hearings. Mr. Oprea's answering '"No" -foreclosed further cross examination that' could

~

well have brought this information into the record. Based on what Ewas/actually' discussed by Mr. Oprea and Mr. Goldberg between'the - .

Lt'i me' Mr .- ~Goldberg came to.HL&P and the time Mr. Oprea testified onJJune 2, 1981'and based.on the effect Mr. Oprea 's answer :had on the developmentLof a complete ~ record, we find that Mr. Oprea's t'estimony -was .indeed misleading and del ~i b er atel y- so. This 3s

m

, ~- _ . _ _ .

w . l*^ t .- s t) ** 4 s , +

A o m + . "-

r

. findings reflects . adversely on Mr.. Oprea's' honesty and candor jend,_ therefore,. adversely on the character of Applicants.

j III.40. Mr. Jordan testified that as far as he was concerned th'ere*were no d'iscussion prior to June 2, 1981. Mr. Jordan may welli have-insisted no such " discussions" took place because he

,wishedito protect Mr. Oprea's credibility. -We note that, while r 'Mr. ' Jordan- stated i n ., his 'prefiled. testimony that' he had l-

~

' discussions with Bechtel and-Ebasco in June 1980 about whether an

, ' experienced architect-engineer: might be- available as an.

~

,  ; alternative to B&R, Jordan, ff. Tr. 11908, at 7, L.10 - 18, under-s

-cross Lexamination. he testified that these approaches to other-

?

l- . - . .

E

~

architect-engineers' did. not mean that HL&P " considered,

~ discussed,-tor. planned the removal of Brown &' Root." Tr. 11985,- L.

l9 -: 11986,. L . 3 .'

Or Mr. Jordan may indeed'be telling the truth that<:he simply refused.to talk to Mr. Goldberg about- exp'.oring Ethis. option.

~

For. purposes of: judging Mr. Oprea's credibility, r; .however, .such distinctions are not material. If Mr. Goldberg was

!-_ . going to bothlMr. Oprea and Mr. Jordan trying to convince them of the.  : need to-seek alternatives-to B&R, then we find there were discussions -in the' normal meaning of that word. The failure .to

~- mention'theseI discussions when asked was a deliberate withholding "of felevant- and material information from this Board which-

represents a-lack;ofLhonesty and candor.

L J

b. Aaglicantg' Phase 11 tegtimony

" II.41.. 'In itsEcpening statement, CCANP alleged a conspiracy within Applicants management to keep the substance of the Quadrex Report :and "inf ormation about the removal and replacement of B&R

^

36

.l'l. ~ _ h

w l.

away from the NRC Staff and this Board. Sgg ggngrglly Tr. 11281, L.21 - 11312, L.11. In response to these questions of credibility

and conspiracy, we granted.CCANP's request to sequester certain witnesses. Tr. 11456 - 11457.

II.42. Had there been such.a conspiracy, we would have

-expected. to see the indicia of same during the Phase II proceeding. Specifically, we would have expected to see false or contradictory testimony, a lack of candor in answering questions, attempts to tell a common story which fail, and other signs that a' group of people have in fact gotten together in an effort to hide the truth. Having reviewed the Phase II record very closely, particularly .in light of the findings of CCANP and the responses thereto. provided by Applicants, we conclude that Applicants' management _did make material false statements, omit material

.information, and make knowingly misleading statements in their-

.prefiled testimony. Furthermore, we conclude that Applicants management demonstrated an intentional lack of truthfulness and candor in responding to questions from the Staff, th? parties,.

and this Board. Given the pervasiveness and seriousness of the Applicants lack of honesty and candor, we have no choice but to find that Applicants senior management is disqualified on character grounds-from continuing to manage the construction of the South Texas Project and from operating the South Texas Project, should this project be completed under different management. Since we do not know at this time whether Applicants will take steps to radically change the centrol of the corporation, we have no choice but to deny the operating license pending further actions by Applicants. jeg Findings III.177 -

37 0

207.

4. . Qonclugigng gn thg Ghatactet Iggug II.43. From our review of the record in this proceeding to date,= we developed an understanding of the events that brought this-application to the point of denial. What follows is a short synopsis of those events.

II.44. In November 1979, after continuous complaints from inside the Project and extensive national publicity given to those' complaints, the Washington, D.C. NRC Office of Inspection and Enforcement launched an in-depth investigation into STP.

Inspectors and investigators from around the nation were brought to the Project. They spent three months interviewing, observing, reviewing documents, and otherwise evaluating the performance of Applicants and their contractors.

II.45. The investigation ended in February 1980. In April 1980, the NRC issued an Order to Show Cause as to why all safety-related construction at STP should not be stopped. Accompanying this crder was a Notice of Violation which cited the Applicants for numerous violations of NRC regulations.

II.46. The Applicants admitted to all the charges, thereby avoiding a hearing sought by the Intervenors. In response to the Intervenors' request for a hearing, however, the Commissicn did provide alternative relief in the form of direction to this Board

' to broaden our inquiry to include Applicants' overall character and competence. We responded to that directive from the Co .nission by adopting new issues to be heard that encompassed

~

c.wracter and competence.

38

II.47. After the Order to Show Cause, Applicants took steps to hire a nuclear power expert to provide the project management with- nuclear expertise, expertise which HL&P lacked throughout most of the time HL&P had served as managing partner of STP. Mr.

Don Jordan, President and Chief Executive Officer of HL&P at the time, and Mr. George Oprea, Group Vice President with primary responsibility for STP, commissioned a nation-wide search and chose Mr. Jerome Goldberg to be their new Vice President for Nuclear. Engineering and Construction.

II.~48. Within a week after assuming his new position in October 1980, Mr. Goldberg concluded that the source of the problems.-at STP was B&R, particularly B&R engineering. He approached Mr. Jordan and Mr. Oprea about conducting an independent review of B&R engineering. They agreed to such a review. At the time the review started in January 1981, Mr.

Goldberg approached Mr. Jordan with the suggestion that HL&P

-begin making contacts to determine the availability of another architect-engineer to replace BLR. Mr. Jordan ref used to initiate such a search or even to consider such a suggestion.

II.49. Perhaps unknown to Mr. Goldberg, six months earlier and also as a result of the Order to Show Cause, Mr. Jordan and Mr. Oprea had made similar inquiries of other architect-engineers. At that time, the response they received was that other architect-engineers were not interested, that replacing BLR ,

l would' be a difficult undertaking and set the project back l substantially, and that HL&P was better off trying to improve BLR. Mr. Jcrdan had been trying to improve B&R for roughly a year 39

and a half without significant'results, but having a choice betweenisignificantly delaying or perhaps abandoning the project

.and continuing with B&R,'he' chose let B&R remain.

II.50. 'When Mr. Goldberg- came to him so soon after Mr.

JJordan's, previous contacts and sought permission to make similar

~ contacts, Mr. ' Jordan: refused to even discuss the idea based.on shis earlier experience.

I I'. 5 1 . But Mr. Goldberg knew that B&R-could not perform, was hostile to HL&P, and acted like they ran the project. He also ihnew .that HL&P was incapable of exerting sufficient pressure to alter 'the.long standing relationship which had developed on- the project. He set about trying to prove to Mr. Jordan that ; . change

?was. absolutely essential.

II.52. When Mr. Jordan and Mr. Oprea agreed to- the independent engineering review, 11r . Goldberg. assigned Dr. James Sumpter, Manager of HL&P's Nuclear-Services division, to locate

'the consultant. .Dr. . Sumpter was a top manager at HL&P and Mr.

-Goldberg was his'immediate superior. Mr. Goldberg gave- Sumpter-clear-' instructions- that he wanted someone independent of the fproject, highly qualified in the engineering field,- and capable of doing :the jobs in a hurry. The Quadrex Corporation was the'

perfect choice.

[II.53. The Quadren Corporation ' designed a study that was f ar-more comprehensive that Mr. Goldberg had envisioned, but he saw the potential'for this-study to build an iron clad case 'against BLR. At the.same. time, he knew that the-study itself would be an e::pl osive document out of the. hands of the project. So

-instructions 'were given to Quadren that their study and even the 40 l

( . .

r ,.

fact.they.had been; hired was to be kept confidential.

c" II.54. oAs the results' began' to~ come -i n , he saw his suspicions'that STAR was in deep trouble increasingly confirmed. A briefing by _ Mr . . Loren Stanley, director of the Quadrex investigation, on March 18~was particularly strong and indicated to: Goldberg- that .there might be a dozen or <more significant reports ' iof design deficiencies to the NRC as a result of the

.Quadrex review. HHe avoided initiating any reportablitiy reviews

-earlier th'n-a the final report because that would bring the NRC into the picture-too soon.- He -still hoped to convince Mr. Jordan

~

to be ready to make a change.

-I I . 55. The Quadrex investigation continued much longer than Mr. Goldberg expected,' -but he still did not have Mr. Jordan's permission to seek out potential replacements.' He began to take

.otherl . steps to protect the Project from the potential. impact of the -- f i nal Quadrex Report.

II.56. In April 1981, Mr. Goldberg, with Mr. Jordan's prior

. agreement, pr'esented a meeting of executives rep' resenting tne g

Project. owners and B&R his view that B&R had to hire a senior inuclear~ executive . reporting directly to the President and e

Chairman of the board of.S&R. While Mr. Jordan agreed to the

' approach, he. did not consider the-structure as important as

getting the right people on the project - "the best people in the world" - to use his phrase. The structure at HL&P did not have

'Mr. Goldberg reporting directly to Mr. Jordan, but Mr. Goldberg

. did have 61sy. access.

'II.57. ' When his approach to B&R met with passive resistance, 41

.c ,

m P

w at 'best, Mr. Goldberg returned to Mr. Jordan and- tried to

.convi nce himLthat this refusal was the last straw and .

that the time to seek alternatives had come. Mr. Jordan again refused.

II.58. By this time, Mr. Goldberg was getting desparate. He ,

- had started out building his case against B&R by hiring the Quadrex Corporation. The Quadrex Corporation was about to deliver u J a report'that~he knew was going to cause havoc on the project and bring heavy NRC intervention-in the project, if the report got to

.t'he NRC.

.II.59. Faced with this situation, Mr. Goldberg took all'the

. steps. he 'could_t'o minimize-the chance that the Quadrex Report would reach .the NRC. He set up a process for reviewing the specific .Quadrex findings ~that eliminated 1the most significant L (generic) 1Ciuadrex L concerns f rom the review, limited the-review to-

.BLR- and: an 'HL&Pjcommittee hand picked by Mr. Goldberg and

-including .himsel f , . limited the amount of time the review could

, - take, and'even assured that:the wording of the notifications that fdid' go to.the NRC did not mention the existence of.the Guadrex Report..

II.60. Mr. Goldberg'did, however,'have a problem in that-he had notified Mr. Don Sells in the'NRC Nuclear Reactor Regulation

' division in Washington, D.C. when he began the study and told Mr.

Sells. in April that some reports to the NRC would probably

- result. 'I te addressed that problem by meeting privately with Mr.

LSells, Egiving Mr.- Sells a limited briefing on what the Quadren

. Corporation had found, but not providing Mr. Sells with a copy of

-.the Report to review systematically.

4- II.61. .In June, 1981, B&R presented a cost and schedule 42

_u- --

projection which clearly indicated that they would be accomplishing very little work of the next eighteen months. Faced with a project that might take far too long to complete, Mr.

Jordan finally agreed to act. Since replacing B&R might cost.the project a year or so, such replacement became preferable to waiting many more years for B&R to complete the project.

II.62. Unknown to Applicants, however, an anonymous telephone call to CCANP also in June 1981, brought serious engineering deficiencies at STP to CCANP's attention. CCANP contacted the NRC to provide that information and request an investigation. In August 1981, the NRC conducted their l

investigation during which the NRC team saw the Quadrex Report.

Subsequent events forced HLLP to deliver the Quadrex Report to this Board.

II.63. From that point on, all HL&P could do was hope the project would su r vive the resulting crisis. To that end, everyone in HL&P tried to minimize the importance of the Quadrex Report cnd their own roles in the entire affair.

II.64. In the case of Mr. Goldberg, who was obviously the key figure, all he could do was attempt tc justify his actions as best he .could, knowing that he had made a terrible mistake.

Surely the stress of such an untenable position is what led to his providing so much imaginary and false testimony in this proceeding.

.II.65. Mr. Oprea retired before the Phase II hearings began.

II.66. Mr. Jordan began distancing himself from the Quadrex I

Corporation investigation and Report, claiming ignorance of both 43

F i , .

'.. , 1 F,

. s _

t

- - r l s

the'condit' ions on the Project and the nature of'Quadrex's work.

5:

.II.67. In ' February,1ya5, we ruled that the'McGui te rule, s

which has.a separate and-independent obligation for. attorneys in-t cur . proceedings,, had been violated by HL&P's failure-to provide:

, copies of'the Quadrex Report to.us voluntarily and promptly after

its ' receipt by HL&P." We also set-forth the issues to be heard in the: proceeding'as noted'.above.; 1 .

!II.68. In July-1985'? the Phase Il hearings commenchit Almost.

~

.ffom -the- beginning, we. were shocked ht 'the numerdus' false statements. both in the testimony filed by Applicants before,the

'haarings/ began and provided by Applicants' witnesses during cross ,

. ex ami nat'i on. It soon became obvious that CCANP's allegation'cf a

~

L continuing' . conspiracy" to prevent the NRC from learning of the t..

'Quadrex findings were indeed:true. g y

II.69.2To summarine our rulings, we found:

.\J'

.(1) thats the NRC Staff chould have'been notified of -

numerous' findings'in'the Quadrex Report and that'the Report as.

~

~

2 a

whole should have been > turned over to the Staf f ;

(2) 'That the failure.of Applicants :to provide the fGuadrex. Report to. the NRC Staff resulted from' a deliberate attempt by Applicants' to prevent this damaging inf ormation' from i-reaching the enMorcement section of'the NRC; (3) ~That -the' failure of Applicants to provide the LQuadrex Report- to this Board also resulted from the same

conspiracy;L

• i (4) -That' Appl i can'ts ' witnesses in Phase I of this [

.a proceeding,.-including senior managment, deliberately did not

-mention' the Quadrex Report during cross examination when 44 y , ,

, - \-

ts -

r mentioning the Report was appropriate or even mandatory; (5) That Applicants' witnesses in Phase II of this proceeding, including senior management, made material false statements in their prefiled testimony and .gave false, misleading, or incomplete testimony in response tc cross examination; (6) That the handling of the Quadrex Report. and the nature of the tettimony provided by Applicants in Phase I and Phase II of this proceeding disqualify Applicants from receiving an operating license for STP cn the grounds that Applicants lack the necessary character; (7) That pending radical change in the control of Houston Lighting and Power and a review of the qualifications and history of any new personnel brought in to manage this project, including a review of the role of the partners in the events which led to this decision, the operating license is hereby denied and all further safety related work on the project, other than maintenance and material handling, should be halted in an orderly fashion.

II.C THE PHASE II GQMPETEUGE l@gUE@

1- Ih2 EYgluatigg gi the Quad tg'1 Sgggtt igt Sgagtigbility II.70. In May 1981, Mr. Goldberg set up an HL&P committee composed of himself; Dr. Sumpter, then HL&P's Manager, Nuclear Services; and Mr. Cloin Robertson, HL&P Licensing Manager, to review the Quadrex Report and its findings for repcrtacility.

While Mr. Goldberg testified that setting up such a group was not the usual practice at STP, Goldberg, ff. Tr. 11491, at 24, L.9 -

45 L

p.

y

~

k 4

, !c k

25, the establishment of

this group was-in-fact a violation of

- t,

.the-[ established- n*'bcedure pr at HL&P, a procedure- that did not Eprovide-for any exceptions. Sgg CCANP Exh. 71. Mr. Goldberg's decision: to bypass established procedures resulted in numerous 3

l deficiencies- in 'the review process. To summarize those deficiencies, Mr. Goldberg's. -method' for determining the r eport abi l'i ty of- the Quadrex Report and its : findings,- as contrasted with HL&P's established procedure.resulted'in no early-r.oti f i cati on - to the Project Quality Assurance Manager., Mr.

LOverstreet, or' Incident Review Committee totheCha{rmanof-the (IRC), Mr.- Powell,. of the ' potential for reportable findings in

!the' Quadrex : study; no involvement of Mr. Powell in the

~ determination of.wh,ich;Quadrex findings would receive IRC review;-

e i exclusion ,of z knowledgeable HL&P engineers from the technical eva'l'uation por' tion of the reportability' review; exclusion of the'

=IRC from 'the safety evaluation; exclusion of the IRC from the.

' reportability determination; failure to' identify the Quadrex Report;'as the source'of the'three findings notifiedg; and no.

formal records _ of ..t h e on reportability.

HL&P[ deliberations' t

Findings .III.100. .ldp. Judging simply f. rom the i esults of . Mr.

'Goldberg's decision'on how this'reportability review was to be conducted, we find a lack of managerial competence on the part of

Mr. .Goldberg. 3 II.71. There 'are other reasons associated with the Quadrex 3

reportability review process to find a lack of competence on Mr.

Goldberg's;part. The IRC was composed of the Team Leader, Nuclear

~

the Project Quality Assurance Manager;.and

~

Safety and Licensing;

-the. Supervising Project Engineer. CCANP Eyh. 71 at 11, Section 46 N ,

5.8.B. None of these individuals had supervisory authority over any offthe others; they were essentially a team of equals. The Goldberg team, however, brought together Mr. Goldberg and two organicational subordinates. We consider this distinction important because a disagreement by a subordinate creates a situation where authority is challenged, unlike a discussion among equals. In such a situation, a subordinate is likely to defer to the decision of his superior or otherwise take his cues from his superior. See e sgu Tr. 12886, L.8 - 16 (Sumpter);

Finding III.142. This process would, therefore, be less likely to produce as full an exploration and exchange of views as the IRC process would and, hence, is a less comprehensive and effective review method.

II.72. None of the members of the Goldberg team had specific responsibilities in the HL&P Quality Assurance Department. The IRC, on the other hand, akways had one member representing that department. Finding III.134. The absence of such a person whose sole responsibility was Quality Assurance, a person independent of cost and schedule censiderations, made it more likely that GA deficiencies would not be perceived. Furthermore, the exclusion of the Quality Assurance Department from the process demonstrates an inadequate concern for quality.

II.73. Mr. Goldberg testified that he decided to create the special team because the Quadrex Report raised a number of questions. that required an in-depth understanding of nuclear engineering design and design processes. He, therefore, selected the engineers he considered most experienced in the nuclear 47 L:

design process, rather than rely on the IRC. Goldberg, ff. Tr.

11491, at 25, L.1 - 25. Mr. Goldberg's rationale, however, does not withstand scrutiny.

II.74. First, all of HL&P engineering, including Mssrs.

Goldberg, Sumpter, and Robertson, were available to assist the IRC, so any lack of nuclear design experience on the part of the IRC members could easily be compensated for.

II.15. Second, this assistance to the IRC by more knowledgeable engineers was precisely the process called for by the established procedure. See CCANP Exh. 71, at 4, Section 5.2.

II.76. Third, just such a process had been used once prior to the delivery of the final Guadrex Report to evaluate a Quadrex finding for reportability. Finding III.149. The process f ollowed in this instance was equally available for the entire report.

Assuming atquendo that the entire report should not have simply been turned over to the NRC, we find that the appropriate procedure would have been for Mr. Goldberg to provide early notification to Nr. Overstreet or Mr. Powell of the possible reportable findings in the Quadrex study. Mr. Powell would then have had time to develop an orderly review process. The Applicants should then have used the 14 days process Mr. Goldberg knew was available; Tr. 12566, L.1 - 25, NRC Exh. 137, at 7: te have the various HL&P engineering disciplines, working with B&R engineering, develop a technical evaluation of every finding. The engineers should then have presented their tindings in an orderly way, e.g. discipline by discipline, to the IRC over the 14 day period. The IRC should then have made the reportability decisions and clearly documented them both in their reports to the NRC and l

48

[ in the IRC minutes. Throughout this process, Applicants should have retained the services of Mr. Stanley in order to assure themselves that they knew what Quadrex findings meant, knew the i basis for those findings, and were in fact resolving the problems Quadrex had identified.

II.77. Fourth, we specifically find that Mr. Goldberg's-decision not to use the 14 day period for evaluation of the i

-Quadrex findings reflects adversely on his competence. If Mr.

Goldberg really believed that an' assessment of this magnitude could be adequately performed in 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />, we must conclude he lacks the competence to construct and operate a nuclear power plant. Furthermore, given the major quality assurance

, implications of the Report, we find Mr. Goldberg's decision to represent an inadequate appreciaticn for the demands of Appendix B and 50.55(e).

II.78. Fifth, we do not find that the members of the Goldberg team were necescarily better equipped to evaluate the Quadrex Report and its findings for reportability than were the members of the'IRC. While we do not question that the members of the Goldberg team had extensive experience in nuclear engineering, that experience was not all encompassing. More importantly, we do question the level of their knowledge about the work performed by B&R as architect-engineer. We conclude that the Goldberg team in fact had a very limited knowledge of the ongoing activities in B&R engineering. Findings III.127 - 129.

The members of the IRC, on the other hand, were more informed about such activities and more directly experienced in the 49 l-

50.55(e) process. Findings III.137 - 140. The IRC was equally cquipped, and perhaps better equipped to do the review of the Quadrex Report for reportability than was the Goldberg team, particularly if the procedure which we conclude should have been followed had been followed. Finding II.76.

2..Remgval gf Btg 8 II.79. Mr. Jordan ignored the advice of his nuclear expert regarding the inability of B&R to perform and the need to find an

_ alternative. By the time Mr. Jordan decided to remove B&R, none of the partners believed B&R could do the job and no one in the nuclear industry did either. Tr. 12159, L.12 - 12162, L.11. The basic' problems with Mr. Jordan were his insistence on remaining ignorant of what was going on at STP, his unwillingness to take the -advice of a subordinate who knew more than he did, and his ineffective leadership. In summary, Mr. Jordan wanted the authority but _ refused to accept the responsibility that accompanied it.

3. guttent SQu551el ggmgetgntg II.dO. The biggest single problem in Applicants' current 50.55(e) competence is that Mr. Goldberg is still in authority.

To make matters worse, the new procedure for reportability reviews armits the creation of the type of committee Mr.

Goldberg created for the Quadrex review. Finding III.216.

4. Tgstimgnv gi Bgchtgl Q6 witnggsgs II.81. Given our opinion herein related to the reportability of_ the Quadrex Report and particularly the generic findings in the Guadrex Report, we cannot ignore the testimony of Dr. Sidney 50

A.'Bernsen, Corporate Manager of Quality Assurance, Bechtel Power Corporation, and Frank Lopez, Jr., STP Assistant Project Engineer, Bechtel Energy Corporation. Their testimony addressed whether any of the generic findings represented a significant breakdown in quality assurance reportable pursuant to 50.55(e).

- Dr. .Bernsen. and Mr. Lope did not find a single reportable generic. finding. Since Dr. Bernsen is Corporate Manager of Quality Assurance for the company now serving as architect-

- engineer-construction manager at STP and Mr.- Lope is Assistant Project engineer at STP, their testimony creates serious doubts as to the. efficacy of the current Quality Assurance Program at STP. Our recommendation to the NRC Staff is that a full investigation be conducted with personnel from other NRC regions,

- into the current implementation of the Quali&y Assurance Programs at STP. Since we assume Dr. Bernsen and Mr. Lope represent the philosophy of Bechtel and since we perceive their testimony as

~1ittle more than trying to give their client what the client wants, rather than adequately applying the requirements of Appendix B and 50.55(e), we cannot have a reasonable assurance that the activities being carried out at the Project now are

- acceptable.

5. Ggaglugigen gn Gemagtence

'II.62. Jerome Goldberg came to HLLP to provide badly needed technical competence. He put that competence to good use by hiring the Quadrex Corporation. But he found himself under the authority of someona who was not competent to effectively exercise authority. Rather than saving the Project, Mr. Goldberg fell victim to the long standing managerial inadequacics of 51 l__

n- .

\1 i

Houston Lighting and; Power. Since Mr.' Jordan is now elevated to

-Chairman of the Board and-Chief Executive Officer,- we find the icorporation. itself l'acks competence, pending radical change in ir ~the control of the-corporation. Should such radical change come cbout,J'We- will.. hold hearings on the new personnel and their background. . 'We may also wish to examine the role of the Board of-

~

EDirectors; of.zthe corporation in the events'which are the subject J of' this IDecision.

D.11ME'8ESEQNSIBILIIX.QE IHE E@BINEBS ,

II.83.;In'the NRC regulatory scheme, there is no distinction-c.batween-the managing' partner and the other partners when it comes

. to . 'ul timateL responsibility _for what takes place at a nuclear

. project. The co-owners of:STP are co-applicants.for the operating

.~1icense. Hence our. predominant-use of the term Gaglicantg. Euplic SECviGE IG9z 9f IOd120a2 IOg. (Marble Hill Nucler- G._nerating

. Station',' Units 1 and 2) ALAB-459, 7 NRC 179, 198-201 (1978). Our ruling: di squal i f ~yi ng - the senior management-of Houston Lighting Hand -Power Company stan's d as a clear impediment to. any other partners seeking to assume responsibility as managing partner.

Should. such an eventuality transpire, we will then inquire into L

the- role' played in the events documented in this proceeding by Sthose who held a majority share of this project. Sgg Finding J

III.220..

L l-

f. .

[ E. EH8@g i lEEUES

1. lggug 8

- II.84.. Issue A in this proceeding states:

52

"If viewed without regard to the remedial steps taken by HL&P, would the record of HL&P's compliance with NRC requirements ... be sufficient to determine that HL&P does not have the necessary managerial competence or character to be granted licenses to operate the STP?"

PIDI at A-1. The failure of Applicants to provide the Quadrex R1 port to the NRC Region IV Office and to this Board shortly efter its delivery. to Applicants is an extremely serious noncompliance with NRC requirements. The fact that this failure rGsulted from a deliberate effort to prevent the report from reaching NRC Inspection and Enforcement and from being considered in the licensing hearings makes this failure even more serious.

Taken as a whole, the Applicants handling of the Quadrex Report is sufficient to determine that HL&P does not have the necessary character or competence to be granted licenses to operate STP. In addition, the . Applicants failure to inform this Board of their ongoing evaluation of B&R's role on the Project during the Phase I hearings and to provide testimony truly portraying their

-dissatisfaction with B&R is also disqualifying. Finally, the material false statements in Applicants' prefiled testimony in

-Phase II and the false testimony during the Phase II hearings are an- ~ independent and . sufficient ground to deny the operating

~

licenses on the basis of a lack of character.

2. Issue B II.85. Issue B in this proceeding states:

"Has HL&P taken sufficient remedial steps to provide assurance that it now has the managerial competence and character to operate STP safely?"

PIDI at A-1. First of all, we note that the hiring of Mr.

Goldberg was i tself a remedial step on which our Phase I opinion relied very heavily. When he came to STP, Mr. Goldberg did take 53

I the appropriate step of hiring the Quadrex Corporation and giving Quadren the, freedom to inquire extensively into the B&R

ngineering process. He also took the appropriate step of approaching Mr. Jordan regarding the need to seek potential rrplacements for B&R. Mr. Goldberg's subsequent handling of the Quadrex Report was, however, seriously in error. Rather than the corporation taking remedial action concerning Mr. Goldberg's handling of the Quadrex Report and its findings, Mr. Goldberg was promoted to a position of more responsibility for STP. Since there were no remedial measure taken, Issue B must be answered in the negative.

II.86. When a new employee begins work by taking steps that are both correct and badly needed and then engages in radically different, unacceptable behavior, there is the suggestion that the corporation is partly at fault. In this case, we can trace that fault to Mr. Jordan. Mr. Jordan had failed over a long ptried of time to achieve significant improvements in B&R.

N7vertheless, he repeatedly rebuffed Mr. Goldberg's suggestion to seek possible replacements for B&R. HIs steadfast refusal to even discuss seeking alternatives to B&R put Mr. Goldberg in an untenable position. At the same time, Mr. Jordan appears to have placed himself in a position to claim ignorance and, there+ ore, blamelessness in terms of the problems at the STP. When the time came to make the actual decision on who would replace B&R, Mr.

Jcrdan made that decis2cn, although Mr. Goldberg wculd have liked to. See Findings 161 - 165. Mr. Jordan clearly sought to maintain his authority but to exercise that authority without 54 i

rcsponsibility. There can be no such bifurcation for the top officer of. a utilitylengaged in the construction and potential operation of a nuclear' power plant. All of the cbservations in this section regarding Mr. Jordan reflect a lack of competence on the part of Mr. Jordan for which no remedial measures have been, or probably can be, taken.

3- IEEMe C II.87. Issue C essentially asks the question whether there is a " reasonable assurance that HL&P will have the competence and character to safely operate the STP." PID at A-1. As long as M:srs. Jordan, Goldberg, Sumpter, and Robertson are in charge of the Applicants' nuclear program, we will have no assurance that Applicants have the competence and character to safely operate GTP.

4. Iggue D II.88. Issue D in this proceeding asked the question whether HL&P has taken suffient remedial steps to provide assurance that it non has the managerial competence and character to operate STP safely. In our Partial Initial Decision (Phase I) on this issue, we set out the appropriate inquiries to be conducted on ths issue of competence. The particular inquiry pertinent to this proceeding is whether Aoplicant's management has sufficient technical and managerial expertise and experience (i . e.

demonstrated knowledge, judgment, and skill) to construct the plant properly and operate it safely. PIDI at 14. In said decision, we found a defect in the competence of Mr. Jordan in his lack of understanding of the facts which he had before him, but found his efforts to imprcve his competence in OA matters, 55

the biring of Mr. Goldberg, and the replacement of B&R with B chtel and Ebasco as significantly improving our view of the competence (and character) of Applicants' management. Whether these improvements would be seen as effective would require further supplementation of- the- record in Phase II of this proceeding. PID at 43 - 44, 49, 55 - 57. Of particular note is our reliance on the changes brought about by the hiring of Mr.

Goldberg. We credited Applicants, not cnly with Mr. Goldberg's hiring, but also the fact that within three months of his employment,- Applicants "had commissioned the Quadrex Report and, at Mr. Goldberg's initiative, had begun consideration of alternatives to B&R (Finding 224)." PID at 44. We found the most significant deficiency in HL&P's competence to be a lack of adequate nuclear experience and viewed the employment of Mr.

Goldberg es the most noteworthy step taken to remedy that

~ deficiency. PID at 52. There are three matters of significance in Phase II of this proceeding which require us to revise our opinion of the competence of management and the effectiveness of the HL&P remedies in the area of competence: a). Management's response to and handling of the Quadrex Report and its findings; b). the information we now have on the HL&P process for replacing Brown & Root; and c). the testimony of Mr. Sidney Bernsen, Corporate Manager of Quality Assurance, Bechtel Power Corporation.

a. Ugagggmgelig tggggage tg gud hggdttog gi tbg Quadt;E Bea9th and i.ts findings DONLEY-DUARD JORDAN II.89. In Phase I of this proceeding, we credited 56 m-

Applicants' with taking steps to enhance the QA abilities and ottitudes towards quality of senior management responsible for STP. In particular, we noted the attendance of Mr. Jordan at a 1980 seminar on Quality Assurance. PID at.44, Finding 215. Given Mr . Jordan's performance in relation to the Quadrex Report, however, .we are forced to conclude that whatever enhancement in Mr. Jordan's .(B; abilities or attitude toward quality which may have taken place in 1980 did not improve Mr. Jordan sufficiently in either area. His inability to see th'e Quality Assurance-impl ;ations of the Quadrex Report, his lack of knowledge about-or participation in the 50.55(e) process, and his acceptance of Mr. Goldberg's review process for the Quadrex findings reflect an insensitivity to Quality Assurance and lack of a " quality first" attitude. Finding III.86. Since Mr. Jordan makes major quality related decisions, his lack of competence in this area is unacceptable and disqualifying. Finding III.86.

JEROME H. GOLDBERG II.90. Mr. Goldberg 's ccmmissioning of the Quadrex Report is a tribute- to his competence. In his handling of the results, however, he put his competence at the service of an unworthy goal

- hiding the Quadrex substance from the NRC. He out in olace a process for determining how much of the report would be sent to the NRC which excluded key personnel from the review and forced HL&P to rely on the leest reliable personnel available. He excluded the most important part of the study from any review at all. His personal reportability decicions ignored the letter, intent, and spirit of NRC regulations. His subsequent testimony 57

5

~

that_ he'sti11 doesLnot consider _theLQuadrex Report as a . Quality

! Assurance rel ated document =is'beyond belief.- .That Mr. Goldberg

~ tried .andTalmost~ succeeded in keeping -

the Quadrex Report ' .away-from ..the NRC enforcement 1 division and this Board ~ demonstrates

' competence, . but misguided. competence. There is no question that

,the': evidence'onfthis-point is far more relevant ~ to character.

-b. Ibg gtgge25 91 C2212GiOg Bt gwn L Sggt

.DONLEY DUARD JORDAN 1I1.91. LIn.PhaseEI~ofcthis pract .1g,-we were-left with-the distinct impression thatLMr. Goldberg initiated discussions with

HL&P ' management regarding the replacement of.B&R three months lafter. he came- to HL&P in October 1980 and that management consideration .of such . replacement began at the time of . Mr . -

~

-Goldberg's suggestion. PIDI at 44. From the Phase II record, we now know that our perception was based on an incomplete reccrd.

We.herein~ revisit our earlier-conclusion.

II.92.- From Mr. Jordan's testimony in Phase-II,- it is now iclearithat, while'Mr. Goldberg may have approached HL&P: senior management: about seeking alternatives to B&R in January 1981 and

. approached : again , even more concerned, in April 1981, Mr. Jordan refused 'to even consider such replacement until late June 1981.

~

-InfJune 1980, Mr. Jordan believed exploring alternatives to B&R 2

was the prudent business action to take, Tr. 11985, L.14 - 11986, LL.3, but between June 1980 and May 1981, Mr. Jordan gave no further consideration to the idea, despite Mr. Goldberg's repeated' suggestions to do so after January 1981. In the face of

'known, very serious, and long term engineering problems at STP, Mr ; . Jordan refused .to even discuss the perceptions and 58

_ _ _ _ -________-_____-__A

suggestions of the oerson hired to cure HL&P's lack of experience in nuclear design and construction. In light of this behavior, we are forced to conclude that Mr. Goldberg's hiring did not oflectively_ remedy Applicants' lack of technical competence because Mr. Goldberg's expertise was not utilized. Had we known the details of this interaction in Phase I, we would have so rule'd at that time.

II.93. Furthermore, Mr. Jordan testified that, even after June 1981, he did no more than intiate a process to see if someone might be available to replace B&R. Since licensing decisions are predictive by nature, we conclude that if a replacement for B&R had not been available, Mr. Jordan would have continued to employ B&R as architect-engineer, rather than shutting down the project (assuming, of course, that the Quadrex Report ~ had not come to the attention of the NRC Staff and this Board). To continue to employ B&R as architect-engineer after mid-1981 would. have been to perpetuate a condition clearly adverse to safety, a major quality assurance failure. Our conclusion leads us to predict that faced with major problems on the project in the future, either during ccnstruction or operation, Mr. Jordan will act in a similar fashion. He is, therefore, disqualified on the grounds of a lack of competence on this point as well.

c. Ihg tegttmggy gi Dct Sidney Bgtnggni Ggtagtate Managgt gi Quality enmutante z Enthtet Enwet Getnetetten and Utt Etank Leat: 1 acc EIE Baststant Etelect Ennitects Rechtel Enetez Getastettnas II.94. In the testimony of Dr. Bernsen and Mr. Loper, we were provided an insight into the attitude toward quality 59

aosurance of the current architect-engineer-construction manager for STP. Their testimony regarding the reportability the Quadrex Rcport and its findings demonstrated a total l'ack of respect for the mandates of NRC regulations, particularly Appendix B and 10 C.F.R. 50.55(e). Based on this testimony, we have no confidence in the current work being done on the Project or that the contruction of .STP will be completed in conformance with the construction permits and other applicable requirements.

5. Issue E II.95. Issue E asks whether there -is confidence that the current structures in place at STP are in conformity with the construction permits and the provisions of Commission regulations. Given the fact that the adequacy of the current design was determined by the Bechtu1 Power Corporation and the fact that Bechtel has continued to design the Project, we cannot have 4

.he necessary confidence in light of the testimony of Dr.

Burnsen and Mr. Loper.

60 l

=III. EINDIUgS gu INplyIpyB6 ISSyES A. ISE gyBDBEX INVESIIg811gd 800 BESQBI III.l.- The Quadrex Report is a three volume study titled

" Design ' Review- of B&R Engineering Work on the South Texas

-Project." App. Exh. 60. According to the report, the purpose of the review was to ascertain the overall technical adequacy of the STP design. Id., Vol. I, at 1-1. Rather than an exhaustive review of the design work accomplished by each B&R technical discipline, the Quadrex review was a carefully designed sampling program to determine- the B&R engineering response to known unique nuclear industry issues and problem areas. Id. The sampling process consisted ~ of a series of questions submitted to B&R by Quadrex, answers to those questions supplied by B&R, and meetings held to discuss answers and elicit further information. Id. at 2 2-

14. The questions sought to determine, inter alia, whether*the design criteria were selected to satisfy approprcpiate design basis requirement, such as safety needs or power production; whether the chosen design critoria and requirements were adequate; whether the chosen analysi s methods were adequate; whether the design assumptions used for design and analysis were reasonable; whether the design inputs used by the disciplines w2re correct in quantity and quality; whether the various plant operating states and environmental conditions were considered in the design and analysis, consistent among the technical disciplines, and adequately reflected in the STP design; whether accident and transient conditions had been considered in the design and analysis and adequately implemented in the STP design; and whether problems found were individual problems of limited 61

p scope cr. represented a generic problem. _Sgg Id at 2-13 14.

The Quadrex Corporation expected the answers to the questions to provide sufficient insight regarding the adequacy of the tcchnical work performed by each discipline examined. Id. Among the basic objectives and assumptions of this design review were the following: the technical adequacy or inadequacy of the B&R dssign- output was to be determined rather than whether or not an optimum design had been achieved; areas unique to nuclear plants w re to be investigated. based on the reasonable assumption that B&R engineering adequacy in conventional design areas was both cstablished and proven; the design basis and criteria chosen by each discipline, and evidence of their implementation in the STP design was to be' included; B&R engineering interfaces with other design organizations were to be examined; and work done 'y subcontractors to B&R engineering was to be evaluated. Id. 1-2.

In explaining their determination of " technical adequacy," the o

Quadrex Corporation stated this determination was accomplished through the sampling approach and based on the concerns surfaced during the sampling process. Id. at 1-3. Quadrex stated that there might be other concerns not detected in the review because a sampling process was used. Id. The identified concerns were to be regarded as " indicative" of the technical problems present in the design. Id.

III.2. The Quadren Corporation considered the results of their investigation to be extremely significant to both BLR and HL&P. As a result the top five officials of the Quadrex Corporation participated in the program by reviewing the program 62 l L- J

e plan, othe= initial ;questio'n set provided to HL&P, technical adequacy? assessments provided by individual Quadrex . reviewers, "and th'e-Volume I executive' summary, report in bothEdraft and final ~

3 versions. .id.'at 2-15..

A III.3.'; The- Quadrex. Report'is approximately 500 pages long

'and contains'more than 300 individual' findings. The findings are

,7 -divided,into two= major categories: generic, findings and disipline

' findings.-

III.4. 'The generic findings were developed from an overview of- all-B&R engineering disciplines: reviewed. Id. at 1-3. . The

~

report explains- the generic findings as resulting from the

.extensivef exposure ~ of Quadrex reviewers to the various B&R

. engineering- disciplines over a six week period. Id. at 2-15.

-According';to ;the- report,- the generic findings were a. clear indication that certain practices, policies, and procedures

'1cdopted by B&R can'inued t to have a generic impact on.most, if not

-all, of1the technical disciplines. Id. 2-15.

~

-III.5. The generic findings are further broken down into Mast -

Serious Findings and Serious Findings. These are defined as follows:

"(1) .UGat SCClGMa ElGdings are those that pose a serious threat to plant 'licensability because either (a) the-findings would prevent the obtaining of a license, or (b)

. the' . findings could produce a significant delay in getting a license, or- (c) the finding addresses a matter of' serious concernLto the NRC at this time.

This catergory has been' further subdivided into those findings'that atg gggected to pose a serious threat to plant

.licensability, and those findings that may puse such a threat- at a f uture time ' or deserve -licensing attention.

(2) ' Serious Findingg are those that appear to impact on the generation of reliable power, but are not considered to be a serious threat to plant licensability." App. Exh. 60, Vol.

63

a e

I, at 3-1-(emphasis in original).

-There ~ are ten generic findings in the Most Serious category and caven in the Serious category, for a total of 17 findings. Id. at 3-i 17..

III.6.- .The discipline findings cover nine separate B&R cngineering disciplines: Civil / Structural / Geotechnic, Computer

. Code, Electrical /I&C, HVAC, Mechanical / Pipe Rupture /ASME III, Nuclear Analysis / Mechanical Analysis, Piping and Supports / Stress Analysis, Radiological Control, and In-Service-Inspection Aspects.

III.7. The discipline findings are further broken down into Most Serious Findings, Serious Findings, Noteworthy Findings, Potential Problem Findings, and Other Findings. These categories as defined as follows:

Most Serious and Serious as in Finding II.3.

"(3) U912W9CibY EiOdiOgs are those that contribute to project schedule and/or cost increases, but do not pose a concern for either plant licensability or reliability.

(4) Pgtential Ptgblgm Eindings are those that may or may not exist, and would require further investigation to determine.

Once confirmed, these findings would fall into one of the other categories.

(5) Qthet EindLQgs represent either relatively mincr items or items that are not amenable to corr active action. " App.

Exh. 60, Vol. I, at 4 4-2.

Many. of the numbered discipline findings in the report contain more than one discrete finding. A subsequent Bechtel Power Corporaticn evaluatien of the Quadrex Report set out the discrete findings as individual items. See App. Exh. 63. A subsequent NRC 64

r .]

{

r "

'evaluationoof the Quadrex Report adopted this classification.'See

NRC) HExh. - 136, - nat 7..

When so classified, the Quadrex Report

, l 7 discipline: findings.contain 120 Most' Serious findings, 19 Serious j

' findings, 34_ Noteworthy findings,-118' Potential Problem findings,

'end 19 Other findings, for a total of 310 findings. Id.

III.8. -The Director of the Quadrex' Study. was Mr. Loren Stanley, . who ' at ' the time was' -Group Manager, Plant Safety

'An al ysi s. - CCANP' Exh. 101. In January 1980, Mr. Stanley had participated in an earlier study by the Quadrex Corporation f o r.-

'HL&P. Tr. 13054, L.12 - 21. In:that earlier study, he recommended _ ,

that there be a greater depth and extent of system level design reviews 'by HL&P engineering. Tr. 13057, L.20 - 25. When he-returned a year- later, however, he found that no systems cngineering. function existed within HL&P. App. Exh. 60, Vol I, at 3-2.

III.9. The Quadrex investigation took between 2400 and-2600 hours--by Quadrex reviewers. This does not count.the time spent by

'HL&P or B&R partic'ipants. Tr. 13071, L.14 - 21 (Stanley). Quadrex

'had 13 reviewers involved 'n i the investigation, including Mr.

Stanley. App. Exh.- 60, Vol. I, at 2-3, 2-6. Work on the study began around January 18, 1981 and continued until delivery of the final Report to HL&P on May 7, 1981. Tr. . 13062, L.8 - 11; Goldberg, ff._Tr. 11491, at 17, L.20 - 22. The Quadrex study cost between $132,000 and $140,000. Tr. 13059, L. 15 - 17.

III.10. The ability of the Quadren Corporation to assess the technical adequacy of B&R's design and engineering was limited by B&R's inability to produce sufficient information in many areas 65

p of design work. When Quadrex did not have enough information on a particular design or engineering activity, for example when B&R had not made much progress on that activity, Guadrex so noted and did not assess the technical adequacy of that particular activity. See e.g. App. Exh. 60, Vol. I, Finding 4.7.3, at 4-77.

The . Quadrex Corporation did assess technical adequacy where enough information was present and the final Report is replete with such assessments.

III.11. The idea for the Quadrex investigation came from Mr.

Goldberg. Shortly after joining HL&P in October 1981, Mr.

Goldberg discussed B&R's capabilities and performance with HL&P's key managers for STNP and with various engineers familiar wi t'7 the Project. He was aware that STP was B&R's first nuclear cngineering job. He learned that there were many concerns among HL&P personnel regarding potential weaknesses in B&R's nuclear

. analysis capability and system design assurance. There were also concerns about the experience level of B&R engineering personnel and the limited number of B&R ongineering personnel. Combining this inf ormation with his own observations, Mr. Goldberg decided there was a need for an outside evaluation of D&R's nuclear design and engineering capabilities. Godberg, ff. Tr. 11491, at 4, L.3 - 5, L.S.

III.12. In addition, Mr. Goldberg had begun familiarizing himself with the issues to be heard in Phase I of this proceeding, including the April 1980 Order to Show Cause and the information prepared by HL&P for said hearings. CCANP 87 at 1. He expected the numerous B&R construction problems at issue in those hearings would raise questions about B&R's engineering, and he 66

w nted to be prepared.to answer those questions. Id.; CCANP _____

CCCANP Motion to Reopen the Phase II Record: II dated October 16, 1985,~ Exhibit 1 at 2052 5 Exhibit 3 at 2091]. Mr. Goldberg

-approached both Mr. Oprea and Mr. Jordan regarding such an

-evaluation. They agreed that the study should be made. Goldberg, ff. Tr.'11491, at 5, L.9 - 14.

III.13. The overall purpose of the Quadrex investigation was to determine if BLR understood how a nuclear power plant had to be designed-and engineered.. Quadrex was asked to look at areas unique to nuclear engineering, areas where B&R was known to be having difficulty, and areas where all nuclear architect-engineers have some difficulty. Goldberg, ff. Tr. 11491, at 6, L.14 -

7, L.5; ggg algg Tr. 11574, L.17 - 19; 11575, L.7 - 10 11575, L.21 - 11576,=L.2; 11576, L.23 - 11577, L.5.

B. ISE GU6E6GIEB ISSUE

t. ggNIguIION 2

a. Baaltsants' kn9uleden 91 20c551el III.14. Mr. Goldberg was experienced in the interpretation and application of 50.55(e) when he performed the review of the Guadrex Report and its findings on May 7, 1981. Goldberg, ff. Tr.

11491, at 2, L.11 -3, L.3. He knew there was a difference between a potentially reportable finding and a reportable findings which revolved around the amount of information available at the time the report was being made. Tr. 12515, L.6 -

16. To Mr. Goldberg, something was potentially reportable if it was safety-related, there was considerable uncertainty about the l

true state of affairs regarding the item, there was little 67

7 opportunity to put.the item in perspective, and the item was not the kind of item where all the answers were readily available Tr.

12518, L.11 - ~12519, L.21.

b. Aggli cantg; cgmmunicatigngx gt lack thetggiz wi th NBQ ftgm Lattigtiga gi the Qggdteg inyestigg[Lgg gatLL day 6 1 1281t (1) UCt GgLdhgtgig igLtigt cgatectg with Utz Sells III.15. In the January - February, 1981 period, Mr. Goldberg informed Mr.-Donald Sells, Pr'oject Manager f or STP, NRC Office of Nuclear. Reactor Regulation, that a consultant had been hired to review B&R's engineering. CCANP Exh. 138, at 2; CCANP Exh. 144, Enclosure 2, at 1.

III.16. On April 21, 1981, Mr. Goldberg called Mr. Sells to cay the final report was coming in soon and that there would be some 50.55(e) reports to NRC as a result. Goldberg, ff. Tr.

11491, at 49, L.5 - 19; CCANP 138, at 2; CCANP Exh. 144, Enclosure 2, at 1. Mr. Sells asked if Mr. Goldberg was going to send NRC a copy and discussed with him a briefing of both NRR and

'I&E. Goldberg, ff. Tr. 11491, at 49, L.5 - 19; Sells, ff. Tr.

15190, Statement, at 1. Mr. Goldberg talked Mr. Sells out of making that request. Tr. 12658, L.2 - 22; 12671, L.19 - 12672, L.4 (2) SLEP Lagulgdgg gi Qggdtgg fladiggg knigtg d311Msty 91 tbs final Ban 9tt III.17. By mid-march, the Quadrex review had identified enough problems in the B&R ALARA program and its implementation to cause Quadrox to add an expert reviewer in that area. Tr.

13066, L. 25 -

13067, L.17. These same identified problems 68

produced a conversation between Mr. Stanley and Dr. Sumpter on whether there was a breakdown in the ALARA review process. ,p.

=Exh. 71. Mr. Stanley wrote a letter to Dr. Sumpter terming the B&R ALARA program inadequate. App. Exh. 65. Dr. Sumpter convened a meeting specifically designed to get BLR committed to a complete _re-review .of their ALARA work and to improving their ALARA program. Tr. 12578, L.9 - 12759, L.21; CCANP 93. But the Quadrex rindings as of mid-March were not sufficient to cause Dr.

Sumpter to initiate a review for potential notification pursuant to 50.55(e). Tr. 12754. L.5 - 12756, L.5; cf. Tr. 13103, L.14 -

13106, L.6.

III.18. On March 18, Quadrex Corporation personnel briefed HL&P personnel on the results of the Quadrex investigation to date. Goldberg, ff. Tr. 11491, at 9, L.5 - 26. Mr. Stanley told the HL&P personnel that documents necessary to initiate the design process were missing, Tr. 13082. L.14 - 13083, L.22; that design work was out of sequence or work that should have been accomplished was incomplete. Tr. 13084, L.5 - 13086, L.10; that B&R had virtually no nuclear analysis capability, Tr. 13086, L.11

- 25; that B&R calculations had a high error rate even though they were rather simple, Tr. 13087, L.16 - 21; and that systems level integration was absent, Tr. 13088, L.2 - 13089, L.23. At the same briefing,- Mr. Stanley stated that, in the 1976 to 1980 period, B&R's engineering work was invisible in terms of results in the nuclear analysis area. Tr. 11624, L.17 - 22 (Goldberg). At this briefing, it was apparent to Mr. Goldberg that the Quadrex Corporation was already convinced that B&R was far behind where most architect-engineers would have accomplished and that B&R was 69

ym not performing some aspects of the design in an orderly way.

Goldberg, ff. Tr. 11491, at 9, L.21 - 26. By mid-March, Mr.

S t en t. g had informed HL&P management that the Quadrex reviewers had found a chaotic work situation in B&R engineering. Tr. 13084, L.5 - 22. See also CCANP Exh. 74.

III.19. The next Quadren briefing took place on April 13, 1981. At' this briefing, Quadrex reported that people they had talked to in BLR engineering did not seem to understand the necessity to perform analysis of pipe break outside containment, a long stending and important design issue in the nuclear industry. Tr. 14592, L.6 - 12. Quadrex said they could not find an overall plan identifying which groups had responsibility for particular analyses. Tr. 14592,. L.13 - 20; cf. 13218, L.11 -

13220, L.4; App. Exh. 60, Vol. I, at 3-2. Quadrex also brought up the problem of production pressures on engineering causing incomplete drawings to be sent to the field for use by construction. Tr. 14595, L.23 -

14596, L.17. In his sworn statement to the NRC in February 1982, Mr. Stanley recalled telling the HL&P personnel present on April 13, 1981 that he was aghast at the preliminary observations by Quadrex reviewers and recalled that HL&P personnel were not surprised.

III.20. In his prefiled testimony, Mr. Goldberg characterized the April 13 briefing as fairly general. Tr. 11646, L.2 ' - 7. But his notes of that briefing reflect a detailed presentation, which Mr. Goldberg testified lasted for several hours. Furthermore, Mr. Goldbcrg testifier that Quadrex summarized a large number of findings on a discipline by 70

disciplinei basis, that' there were a significant number 'of-

. findings, _and that he personally was impressed with several of the. findings as'being potentially reportable to the NRC. In his notes, Mr. Goldberg .placed . stars by 12 different items, indicating,the ones-he th'ought might produce notifications to the NRC. He also began- the development of categories he wanted

.Quadrex to place their findings in which would highlight those considered potentially reportable. App. Exh. 65; Goldberg, ff.

Tr._ 11491, at 9, L.27 - 12, L.6. From the same briefing, Mr.

Robertson .also.-concluded that the criticism of B&R's nuclear analysis could lead to 50.55(e) notifications. Tr. 14598, L.23 -

14600, L.-20.

III.21. By late April 1981, Dr. Sumpter was aware of. every Quadrex finding and its classification within the Quadrex categories. Tr. 13148, L.19 - 24; 13150, L.19 - 13151, L.21.

Before Quadrex delivered'their final report, Dr. Sumpter had made a .three oc/ visit to the Quadrex offices to review- preliminary drafts of what became Volumes II and III of the final Report. Dr..

Sumpter's role was to ensure the accuracy of the facts Quadrex relied on in their assessments. Subsequently, Dr. Sumpter provided the drafts to the lead HL&P engineers in each discipline, who, in turn, provided their comments to Quadrox. The purpose of .these comments was to ensure both that Quadrea was using accurate.information and that the information was adequate to support the assessments. @gg CCANP Exh. 98, at 3 - 4.

III.22. On April 30, Quadrex provided another briefing.

Still more information about D&R's lack of competence in nuclear design and engineering came to light. Mr. Goldberg found that 71

m this briefing supported'his earlier overall impression that' B&R

,i was having difficulty in completing the design, that B&R lacked cxperience -in the aspects of the design that are unique (i to f

nuclear plants, and that design work-in many areas was either in an early stage or not yet begun. Goldberg, ff. Tr$..'.ll471, at 12,

<' i L.20 - 13, L.3. By this time, it is clear to usy Mr.' Goldberg had

, s committed himself to not letting the Quadren Report reach the NRC or the public. Presented with overwhelming evidence that B&R cngineering simply could not perform their task g ,he chcse not to~

take action to stop their work or to notify the NRC of B&R's lack cf competence. There can be no question of needing further information at this poiny. t Each Quadrex briefing had presented a worse picture than the' previous one. The amou'nt of information daveloped by Quadrex to support their findings was immense. Mr.

Goldberg's failure to implement the HL&P process f.or making 50.55(e) notifications to the NRC was p, wi l,1 f ul act of concealment and disqualifying on character grounds.,: We will as explore later in this opinien the reasons f or' Mr. Goldberg's actions and place the respcnsibibity for that failure where it s .;

belongs.

(3) Bgggtteb,Llity geglysts ggtigtsgd QC19C ig thg dellygry of the final Quadrex Reggtt s '

III.23. In the midst of the Quadrex investigation, a reviewer found an item which he considered very serious. Mr.

Stanley took the information to Dr. Sumpter and alerted him that the Quadrex reviewer considered the item as potential reportable.

Dr. Sumpter notified B&R and Applicants

• licensing division of the Quadrex finding. BLR performed an internal review and 72

determined the finding was not potentially reportable because in their view there was no deficiency. An engineer who worked for Dr. Sumpter also reviewed the item for potential reportability and ' determined the item was not reportable. The engineer sent a summary of his review and determination to the Chairman of the Incident Review Committee (IRC), the HL&P entity charged with making 50.55(e) notification determinations. The IRC conducted its own review and concurred the item was not potentially reportable. Tr. 12793, L.6 - 12794, L. 5; CCANP Exhs. 94 and 95.

III.24. The particular problem that.Quadrex brought to the

' attention of HL&P was that BLR had used a value in their stress analysis that permitted greater stress than the relevant code of the American Society of Mechanical Engineers (ASME) permitted.

B&R had taken their value from a section of the code that was in error, although the main text of the code was correct. The concern expressed by Quadrex was that the B&R value oermitted excessive stress in penetrations which could permit considerable plastic ratcheting to occur during plant upset condi tions. App.

Exh. 60, Vol. III, Q:M-30, item C.1 and footnote. (This citation is to the the finding which appeared in the final report, which we assume from the testimony is the same concern expressed by Quadren earlier. B&R evaluated the item and concluded there was no deficiency because the actual stresses used in designs were below the acceptable value. Tr. 12784, L.10 - 12785, L.2. HL&P engineering and the HL&P IRC determined the error in the B&R value was not reportable because the actual stressas used were acceptable and because even the higher value would only have 73 k

produced local yielding, not failure. CCANP Exhs. 94 and 95.

C. E10d10ss Ustiilsd 19 the UBG III.25. The Quadrex Report was delivered to HL&P on May 7, 1981. During the next 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />, B&R and an HL&P committee rcviewed. the Most Serious Discipline findings for potential rcportability. Out of that review came three notifications to the NRC. Goldberg, ff. Tr. 11491, at 21, L.14 - 24, L.7.

III.26. The first three notifications concerned the Heating Vcntilating and Air Conditioning (HVAC) design, computer code vcrification, and the classification of shielding calculations as non-safety related. Goldberg, ff. Tr. 11491, at 23, L. 1 - 24, L.7.

(1) HVAQ III.27. The possibility of an HVAC deficiency first came to the attention of HL&P in April 1980. HL&P requested BLR to perform an analysis based upon a concern as to whether there was adequate cooling in the Radwakte Control Room in the Mechanical Electrical Building. During January 1981, B&R performed the calculations and confirmed the need for additional HVAC cooling ccpacity. On March 12, 1981, BLR issued a draf t report indicating that heat loads associated with all modes of plant operation, e.g. normal, accident, etc., had not been adequately considered in the HVAC design for both the Mechanical Electrical Auxiliary Building and the Fuel Handling Building. Sgg CCANP Exh. 130. The Quadrex Corporation confirmed the earlier BLR draft findings. Sgg App. Exh. 60, Vol. I, at 4 4-31, gsggcially Findings i 4.4.2.1(a) and 4. 4. 2.1 (b ) . On May 8, 1981, Applicants notified the NRC that "certain faulted condition heat loads may not have

, 74 r- - - -

bcen considered in the design of portions of the HVAC system which are designated as safety related." CCANP Exh. 128, at 1.

Eventually, Applicants made major modifications to the HVAC

.cystem, including additional chillers to maintain the necessary temperatures under all conditions and the identification of areas needing cooling where none had been provided be eore. See App.

Exh. 74. Final Report Concerning Heating, Ventilation and Air Conditioning Design dated October 20, 1982. The cause of this crror was, in part, a lack of interface between BLR engineering disciplines which resulted in a failure to exchange information across discipline lines. Id. at 6. The Nuclear Analysis discipline had failed to perform the required analyses. Tr.

11566, L.1 - 11. The engineers designing the HVAC system did not know that off-normal heat loads had to be taken into account. Tr.

11563, L.23 - 11564, L.2. A competent architect-engineer would know such loads had to be taken into account. Tr. 11564, L.3 -

15. A subsequent analysis not in evidence in this proceeding and not relied on in this opinion, but reviewed by the Board, found the HVAC problem to extend to numerous additional areas. See Sol Levy,-Inc. Report, Sections 2.1 - 2.11.

(2) Cgmagtqt cgdgs III.28 The second notification concerned the computer codes used by BLR. HLLP became aware of a possible problem in BLR*s treatment of computer codes in November 1980. NRC Exh. 140, at 8. The Quadren Corporation was specifically asked to examine this area and found numerous problems, particularly problems related to the verification of codes used in safety related wcrk.

75

Egg App. Exh. 60, Vol. I, at 4 4-15, gggggiglly Findings 4.4.2.1 (a), (b), and (c). Such verification is a quality cusurance requirement, so a notification was made to the NRC of a i

cignificant breakdown in quality assurance pursuant to

50. 55 (e) (1) (i ) . Goldberg, ff. Tr. 11491, at 28, L.7 - 14. The j notification to the NRC stated: "Concerning computer program (code) verification - that the verification prcgram lacks I visibility to the user whether or not the program versions in use i

have been verified." CCANP Exh. 128. There were at least three l specific concern. First, many B&R computer codes were not I

verified, and their use might result in an inadequate design.

[

Second, the documentation accompanying the computer codes did not provide the user with information as to whether they were varified or not. Third, there was a question whether B&R cppropriately assured that only verified computer codes were used for safety related work. CCANP Exh. 129. Outside consultants ovaluated the B&R codes and verification documentation.

f Eventually many of the codes and all of the verification i

documentation were replaced by Bechtel. See App. Exh. 73.

(3) Ebield109 III.29. The third notification involved B&R's decision not to classify-shielding calculations as safety related. The Quadrex Corporation apparently first brought this concern to Applicants attention. The specific concern was that, given B&R's position that such calculations were not safety related, the calculations themselves would not be subject to the verification required for safety related calculations. App. Exh. 60, Vol. I, at 4-86, engegial1y Finding 4.8.2.1(d); CCANP Exh. 131. Since safety 76

rolated calculations were involved, the possible failure to cdequately classify such calculations represented a significant quality assurance breakdown reportable under 50. 55 (e) (1) (i ) .

Goldberg, ff. Tr. 11491, at 28. L.7 - 14. The notification to the NRC stated: "Concerning shielding analysis - that certain shielding calculations affecting safety related considerations may not have been verified consistent with the requirements for vcrification of safety-related calculations." CCANP Exh. 128. The HL&P IRC eventually concluded that this finding was not rcportable . based on the fact that B&R did perform checks of such calculations which were the equivalent of a verification, even though the calculations were not classified as safety related.

CCANP Exh. 132, App. Exh. 75.

III.30. There is some question whether the shielding notification should not in fact have led to a report on different grounds. A subsequent evaluation of the Quadrex findings by a task force assembled by Bechtel appears to have accepted the B&R position that shielding calculations, in general, were not safety related, but indicated that some might be. .In the task force report, however, there is no specific concern expressed regarding any area that should have been classified safety-related but was not.-App. E:: . 63, at B-152, line item 270. Yet in a later Bechtel assessment, which we decided not to admit into evidence, Bechtel stated that the task force assessment was that "as a minimum those [ shielding calculations] associated with the control room shielding should be safety-related." App. Ex. 64, Vol. II,

_ Finding 4.8.2. l (d) CEN-619]. It appears from this entry that the l

1

[ 77  !

r' -

notification was in, fact correct in that the failure to classify chielding -calculations related to the control rocm as safety related represented a failure to adequately address the requirements for. safety related work, a quality assurance dsficiency separate from the presence or absence of verification.

The Chairman of.the HL&P IRC raised this same concern during the initial IRC review of this notification. CCANP Exh. 131. We can only surmise that HL&P.having made the notification and then filed-a report saying the item was not reportable led the Bechtel task force.to avoid including what apparently was their actual

' view in their report in order not to embarass HL&P, their client.

In addition, the fact that one notification made on May 8, 1981 later supposedly turned out not to be reportable gave Apnlicants' cn opportunity to argue that they were conservative in over reporting on that date. Sgg e zgz Tr. 11473, L.5 - 11 ( Ax el rad) .

That particular argument would be reversed, if they withdrew a report that should have been made. EN-619 was offered into cvidence by Applicants, and-counsel did not direct the witnesses

- attention to this point prior to seeking admission, so presumably Applicants do~not contest the accuracy of EN-619 representation as to the actual posi tion of the task force. Tr. 13463, L.8 - 25.

N2vertheless, having decided EN-619 not be admitted, we make no t

findings on this point and do not rely on these observations in our Opinion.

III.31. The three notifications involved mere than three Quadrex findings. The- HVAC notification included Findings 4.4.2.1(a) and-(b). App. Exh. 60, Vol. I, at 4-31; Tr. 14671, L.15 - 19 (Robertson). The computer codes notification included 78 L.m_ m

Findings 4.2.2.i(a), (b), and (c). App. Exh. 60, Vol. I, at 4-14; Tr. 14671, L.21 - 14672, L.13. Combined with the single shielding notification, App. Exh. 60, Vol. I, at 4-86, Finding 4.8.2.1(d),

there were actually six Quadrex Findings notified to the NRC on May 8, 1981. Applicants did not mention the Quadrex Report as the source of these notifications. CCANP Exh. 128.

III.32. Based on the fact the Applicants knew about the computer code and HVAC problems long before May 7, 1981, the NRC issued a notice of violation for failure to make timely 50.55(e) reports. NRC Exh. 141.

d. Findings Which Shguld Save Bgen Ngtified tg NRC III.33. In setting forth the issues to be heard in Phase II of this' proceeding, we ruled that CCANP had provided a sufficient basis under Contention 9 for litigating the reportability of the Quadrex Report as a whole and twenty-six specific findings in the Report. These twenty-six findings consisted of the ten generic findings in the Most Serious category, which are numbered 3.1(a) through 3.1(j), inclusive, and sixteen of the discipline findings in the Most Serious category, which are numbered 4.1.2.1sb), 4.3.2.1(a), 4.3.2.1(d),

4.3.2.1(n), 4.5.2.1(b). 4. 6. 2.1 (n ) , 4.7.3.1(a), 4. 7. 3.1 (b ) ,

4.7.3.1(k), and 4. 8. 2.1 ( a) through 4.8.2.1 (g), inclusive. LDP-85-6, 21 NRC at 455-56 and 462-63; Sixth Prehearing Conference Order, dated May 17, 1985 (unpublished) at 9-12; Memorandum and

-Order, dated May 24, 1985 (unpublished). In this section, we will discuss the generic findings, the discipline findings, and some broader ccncepts raised by either the findings or the Applicants' position cn why the findings were not potentially repcrtable. In 79

7 the next section we will discuss the reportability of the Quadrex Rnport in its entirety.

III.34. In part- what we are about to do is emphasize the obvious. The Quadrex Report is so clearly a quality assurance

-related ~ document and so many of the findings reveal serious, cystematic, and long standing deficiencies in the B&R engineering effort that there is no question the NRC should have been given this report immediately. At the same time, due process requires e

us to provide some detail to the ' Applicants as to the basis fer our Decision.

(1) The Generic Findings III.35. From the inception of the Quadrex investigation, there was an agreement between Aoplicants and the Quadrex Corporation that there would be a generic section. CCANP Exh.

103; Tr. 13070, L.4 - 25 (Stanley). Originally, there were to be

" generic observations" providing "an overall statement of STP design adequacy with summary highlights of strengths and weaknesses for each technical discipline" and " generic recommendations" which would " identify problem areas, subsequent in-depth review areas worthy of pursuit, and suggested improvements deemed necessary." CCANP Exh. 103. There would then be a " technical adequacy assessment for each discipline." Id.

A generic finding would be distinguished from " i n d i v'i d ual problems each- of limited scope." Id. Quadrex first began identifying generic findings in the March 18, 1C81 briefing of HLLP. Tr. 13119, L.' - 25; App. Exh. 57. The final definition of generic findings provided in the Quadrex Report states: "the 80

i extensive exposure of Guadrex reviewers to these varied B&R engineering disciplines over a six week period has provided a clear indication that certain practices, policies, and procedures adopted by B&R continue to have a generic impact on most, if not all, of the technical disciplines." App. Exh. 60, Vol. I, at 2-

15. Mr. Ctanley explained that there " clear indications" would be drawn from actual findings within more than one discipline and point the way for Applicants to do further study to see if indeed the suspected project wide deficiencies existed. Tr. 13178, L.11

- 13180, 'L.18. The generic findings pointed to " potential dsficiencies in both the Edesign and engineering] process and the output." Tr. 13182, L.23 - 13183, L.3.

III.36. The generic - findings were an attempt by the Quadrex Corporation to look at the sample they had taken of ELR's engineering activities and " identify common threads." Stanley, ff. Tr. 13047, at 6, L.5 - 12. Such a common thread is already visible in the findings actually notified to the NRC on May 8, which we discussed above. -The HVAC deficiencies resulted from a failure by the Nuclear Analysis discipline to perform necessary analyses and a lack of awareness on the part of another discipline that these analyses were necessary before they completed their. Work. Quadrex generic finding 3.1(i) summarizes the findings in nuclear-related analysis. One generic observation is that " insufficient work has been accomplished for the present state of STP design, procurement, and construction." App. Exh.

60, Vol. I, at 3-11. The HVAC failure is one example of this deficiency. Quadrex generic finding 3.1(d) cites the HVAC finding as one of many instances where BLR engineering simply did not En

know how to approach safety related design and engineering. @eg App. ~Exh. 60,-Vol. I,.at.3 3-6, gsggcially ats3-6, item (3).

Simply addressing the HVAC deficiency as a cooling problem would not adequately address the problem of an inability to prcduce on the' part, of 'the: Nuclear Analysis discipline -and a lack of

. awareness ~ of. nuclear- requirements on the part of the HVAC discipline.

III'.37. After completing the' investigation, Mr. Stanley read over all-the questions, -answers, and assessments and developed

~

the generic findings.~ He.then checked with each of the discipline reviewers to .be sure they agreed with the generic finding. He testifiedthat the process- took him about . forty hours to icomplete. Tr. 13183, L.20 - 13187, L.12. Prior to delivering these findings .to the. Applicants, all of the Quadrex Corporation's top officers reviewed them'in both-draft and final form. App. Exh. 60, Vol.' I, at 2-15; Tr. 13180, L.6 C14. '

III.38. The: generic findings are rather: lengthy, but we

' decided to set out significant sections of each_ generic finding

• at issue without comment for the moment. -We believe that anyone with -common: sense reading these findings and understanding that

they ,were based on ~ an investigation as' extensive and professional as the Quadrex . investigation would have no doubt that such findings should be suppliedito the NRC immediately.-

-III.39. "3.1(a) Eh8 @ystgmg Lgygt letggtatign There' tis'no indication that an effective systems integration and

' overview function exists within the B&R design process.

'PlantL arrangements and equipment layout that take into account such factors' as physical separation, system and equipment performance compatibility, access for maintenance and ISI, and 82

other similar aspects can be too easily overlooked or missed with the present design review process.

The technical disciplines are organized very tightly. A working interface relationship among the disciplines is not routine particularly regarding follow-through at the discipline input-output interface. Assigned responsibility for systems engineering is only a recent development. ... HLLP has indicated that their' organization structure is c!asely aligned with that of B&R, and that no systems engineering function exists within the utility ei ther .

A major concern is with the achievement of internal consistency among various design documents and the maintenance of that consistency over time with personnel turnover.

^Also, a multi-disciplinary interpretation of the single failure criterion does not exist in controlled documentation."

App. Exh. 60, Vol. I, at 3 3-2.

III.40. 3. l (b) "Bi<B Beview gf Engingggigg Data The generic concern is in three parts; namely, (1) Input data to a technical group does not appear to be consistently reviewed by that group for its reasonableness prior to use. ... Conversely, the technical groups do not consistently check to see that their output data is used correctly.

Proper control and use of input data from HL&P is also a concern.

'(2) Calculations containing errors are being reviewed and verified as correct with a higher frequency than should be encountered . ....

App. Exh. 60, Vol. I, at 3-3.

III.41. 3.1(c) " Plant Onegating Mgdes and Environmental Conditigns Gnalysis Thorough and consistent treatment of various plant operating modes and environmental conditions was not evident.

No written design bases are provided to guide the designer in what combinations of events and plant modes must be considered.

Consideration of degraded equipment performance was also not evident.

In many instances, the initiak conditions assumed for system design was stated to be ' normal plant operation;' however, this assumption by itself is simply not a sufficient basis for design.

Many analyses have been based solely on an assumption of normal plant operating conditions. There is little evidence that plant operating modes, such as partial power, load shifts, startup, shutdown, pre-op testing, startup testing, normal plant testing, 83

refueling, maintenance, trasients, and accidents have been considered. Furthermore, assumed ' worst case" conditions may not properly bound the set of anticipated plant conditions .... STP is the first plant to use the Westinghouse three train ECCS CEmergency Core Cooling System] configuration; consequently,. it is important that any worst case assumptions used to bound the plant analysis be both complete and accurate. .... "

App. Exh. 60, Vol. I, at 3 3-5.

III.42. 3.1 (d ) "Safgty-Rglatgd ys Ngg;Safgty-Relatgd DistiOGli905 It was observed on many occasions that B&R uses a very sharp distinction between S/R and non-S/R categorizationn for both equipment and calculations. A non-S/R designation results in the

~ design outputs not being subjected to design verification.

In. several instances, design activ ties that affected plant safety were designated non-S/R. ... "

App. Exh. 60, Vol. I, at 3 3-6.

III.43, 3.l(e) "EME6 and Stegle Eg(Lute Ctitetign Baalysis No written guidelines exist for the c'onduct of failure mode and effects analysis. The only FMEAs provided were those in the FSAR CFinal Safety Analysis Report] which is not a design document.

These FMEAs are too superficial, and are not adequate to assure a satisfactory design.

No guidelines exist on what types of failures should be considered for various types of equipment. There is no documented evidence that the single failure criterion has been satisfied.

A number of disciplines were bsked to provide a listing of postulated single failures considered in their design. None of these disciplines was able to provide such a list ....

App. Exh. 60, Vol. I, at 3-7.

III.44. 3. l (f ) "EE6B Cgemitment Icgghing There was no documented evidence for assuring that individual FSAR commitments for systems, equipment, or calculatiens were being systematically implemented into the design.

One Group conspicuous by its bbence during this design review program was Licensing. No evidence was found of an effective Licensing Group input to the various disciplines to assure consistency in understanding and implementation of NRC requirements.

A consistent and documentedBbRposition regarding Code and Standards interpretations was not evident. These interpretations 84

are left to' individuals or to vendor suppliers. The ASME Code interpretation area appears to be particularly weak ...."

App. Enh. 60, Vol. I, _at 3 3-8.

III.45. 3.l(g) "Blant Dggige Bggis There was very little evidence of a well-thought-out and consistent basis f or design. Much of the plant design basis is

-rooted solely in enoineering judgment, and the rationale for this judgement has not been documented in a retrievable manner.

EM3uch of the design is based on unverified preliminary data which could cause- problems if the data is later .shown to be inadeqcate. A possible cause for the extensive use of preliminary data may be that construction pressures controlled the Engineering schedule.

A number of key f ront-end documents are ~nissing f or STP. A plan to identify and develop these TRDs [ technical reference documents] on the project was not evident. Prior to mid-1980, it does not appear that B&R recognized that fact.

CF]undamental background information regarding the STP design is difficult to retrieve since many current B&R engineers are not sufficiently familiar with the STP design or its bases."

App. Exh. 60, Vol. I,-at 3 3-10.

III.46. 3.l(h) "Eggigeget Bgligbility Eggyingsgetg Specific reliability requirements ... have not been established The absence of specific reliability requirements in both mechanical and electrical equipment specifications, and the inability to produce a standard checklist of postulated failures to be considered casts doubt on the rigor of the safety-related evaluation process. .... "

App. Exh. 60, Vol. I, at 3-11.

III.47, 3. l (i ) "Nuciegt-Related Analysig The chosen analysis method demonstrates a sharp paradox between the more conventional engineering work and the uniquely nuclear engineering work required for portions of the STP design. In certain discipline, such as Civil / Structural and Electrical, technically adequate methods have been chosen. However, for the nuclear aspects of the project, Brown and Root has been much less adequate in its choice of analysis methods and assumptions. In addition, an abnormally high error rate was observed in these calculations. In many instances, insufficient work has been accomplished for the present state of STP design, procurement, and construction.

85

The amount of nuclear-related analysis that is subcontracted by B&R is higher' than a typical A/Es practice. The technical guidance provided by some of these Groups for subcontracted consultants ... does not appear to be adequate. Review of these subcontracted analyses does not appear to be sufficient. .... "

App. Exh. 60, Vol. I, at 3 3-12.

III.48. 3.1(j) "Einal Design Metiilcatige The BbR design verification process permits the use. of preliminary data up to the point of STP fuel loading.

In the Structural area, the final verification will likely occur after construction has been completed.

For equipment subject to qualification, final verification will likely occur after delivery has been made to the site.

There is evidence that error have not been detected by the design verifier ...."

App. Exh. 60, Vol. I, at 3-13.

III.49. Mr. Goldberg was aware that if a specific deficiency suggested a more systematic design methodology deficiency, then a potentially reportable finding is more likely as a quality assurance breakdown. Tr. 11779, L.20 - 11780, L.14.

Given the depth and professionalism of the Quadrex Corporation's investigation and our own review of the Quadrex Report, we find

'that these generic findings are supported by the underlying questions, answer, and assessments. We find that each of these findings constitutes a deficiency in the design process and/or products which, had they not been corrected, could have adversely affected the safety of the plant and that each of' these findings represents a significant breakdown in quality assurance. We find that the generic findings set forth above each independently meet the test for reportability pursuant to 50.55(e).

III.50. Applicants had evidence of these generic problems prior to the delivery of the Quadrex Report. Earlier on the

I Project, the auxiliary feedwater pump was found not to meet requirements. Quadrex evaluated this deficiency and found that B&R's assumptions were " totally unrealistic." Tr. 13092, L.8 -

24. On another occasion, HL&P discovered that BLR had failed to consider thermal loads in the design of structural steel beam to column connections in the reactor containment building. Tr.

12043, L.12 - 12044, L.6. This error was not caught by the design verifier. Tr. 12044, L.7 - 14.

III.51. While a detailed examination of each generic finding is simply unnecessary given the study that stands behind the.n and the substance of what they state, we will examine various aspects of these findings simply to illustrate the analysis that could be perf ormed were a comprehensive analysis necessary.

III.52. Quadrex generic finding 3.1(a) finds a lack of interdisciplinary coordination. Criterion III of Appendix B specifically requires coordination among participating design

' org ani z ati ons. There were quite a few Quadrex findings which supported this generic finding. See e zgi Tr. 13092, L.25 - 13094, L.3. Yet Applicants tried to portray the Quadren finding as not reportable because Quadrex had not been exposed to the BLR System Design Assurance Group. Tr. 11539, L.4 - 11. In fact, Quadrex was j aware of this group, outputs from this group were examined,

-leaders of this group attended Quadrex meetings, and no effert was made to exclude this group from the review. Tr. 13199, L.17 -

1.2 2 0 2 , L.13.

III.53. Quadrex generic finding 3.1(g) includes a finding that calculation errors were being reviewed and verified as

- ___________________ _____ 2 07.

r , .,u .

y .' . , .

4

make Ith'ei r

~ , finding potentially reportable., .The Bechtel recommend'ation for afdetailedEaudit is just the type of activity

- which 1cannot. be carried out promptly and produces p ot'enti al l y reportableLnotifications.

III.54. Quadrex~ generic- findi ng ~ 3.1 (g) also' found .an - i

~

isbsence ,of. key 1 documents which should have been in~ place before is

' design; activities began. Mr. Stanley testified that the' absence-of.~ key;. front-end criteria would'be a safety problem, ih the

.. architect-engi neer did^ not have; strong technical leadership in .

Jeach'. oft the disciplines that could provide the classifications and .adequ'atel y address' .the requirements such that . documents Eproduced were lacking necessary safety related aspects. Tr . .

!13278,, L .' 20 - '13279, L.8. The absence-of these . fundamental

~

~ documents so . late in . the Project is itself' evidence of a lack of strong technical -leadership. The.Quadrex- investigation . f ound .'

further evidence of.both.a;1ack of strong technical. leadership Land documents: inadequatelyL dealing Lwith safety related requirements. 'ggg gzgz Tr. 13279,1 L.19 -- 13281, L.15; App. Enh.

e 60; Vol. -I, - at . 3-2 (discipline groups unaware of their

r'e sponsi bi l ti es) ; at'3-3, item (b) (1) (inadequate review of data

'-transmi tted - across disciplines); 3-4 (inadequate guidance 'to vendors); 3-4 -~3-5 (system design descriptions and technical

ref erence - documents inadequately addressing saf ety issues) ; 3-6,

. item" ll)  :.(l'ack of awareness of need to perform safety related analyses); 3-6, item (7) (f ailure to adequately consider systems

. interaction); 3-6 ~(no plan to review 'new NRC requirements); 3-7, finding. (e) (FMEA's inadequate to assure safe design); 3-7,

finding .(e) . (l ack of necessary design guidance in four 89

disciplines); and 3-11 12 (nuclear analysis grossly inadequate). The absence of strong technical leadership is glaringly obvious. The defective products that resulted are equally obvious. The absence of such leadership and the absence of necessary technical guidance were a long standing condition adver,se to safety which violated Criterion XVI and should have been reported to the NRC pursuant to 50.55(e) (1) (i) .

III.55. Perhaps the most striking generic finding i s 3.1 (i )

because this finding addresses the nuclear analysis group. When HL&P's Clain Robertson, Manager of Licensing, first read the ,

l nuclear ' analysis section of the Quadrex Report on May 7, he thought the Nuclear Analysis di sci p1'i ne as a whole was a potentially reportabla deficiency. His impression was that this

. group was out of control and producing defective design products.

After further review,, discussion with other HL&P personnel, and a review of the results of B&R's evaluation of the Quadrex Report, Mr. Robertson concluded that the Nuclear Analysis discipline design outputs were not that bad. He further concluded that,the real problem was that the Nuclear Analysis discipline engineers were not producing design outputs. Since he perceived the problem as productivity, not defective outputs, Mr. Robertson changed his mind about these findings being potentially reportable. Tr.

14639, L.13 - 14641, L.13. Yet, Mr. Robertson testified that lack of progress can many times be correlated very directly to the organization, capabilities, and experience of the people doing the work. Tr. 14636, L.10 - 12. Mr. Robertson characterized what he found on May 7-8, 1981, as a group " struggling unsuccessfully 90 1 .

.I . .

-to produce a product." Tr. 14640, L.10 - 14641, L.5. He described the struggle in_ graphic detail as follows:

"It seems like they would start an analysis, they would get_ either part way through it or they would. get it even preliminarily-done, someone else would take a look at it and say, hey, this isn't going to work, we can't live with that, go back and do it again and they would void that one out and start again."

Tr. 14641,-L.61- 11. Given this description of the group charged with doing the nuclear analysis, Mr. Robertson's first instinct was correct - the entire group should have been reported as in violation of Appendix B. An architect-engineer for a nuclear power plant having virtually no nuclear analysis capability is simply -unacceptable. Even if all nuclear analysis work were subcontracted, the architect-engineer would still be responsible for ensuring the adequacy of the subcontracted work. Sgg e ngt CCANP E::h. 72, at_11 of 12, item 3.10; Tr. 11821, L.S - 9.-The

~

absence of nuclear analysis capability on the part of B&R meant that Applicants had failed to assure that a prerequisite- for

' nuclear ~ design, i.e. competent engineers, had been satisfied and that Criterion II of Appendi:: S had been violated. Generic finding 3.1 (i) was reportable pursuant to 50.55 (e) (1) (i ) .

(2) Ibn D12s191109 EindiO92 III.56. Given our findings regarding the reportability of the generic findings, there is little reason for an extensive discourse of the reportability of the less important discipline findings, particularly since reporting of the generic findings would have resulted in revelation of the discipline findings.

There is also the prcblem that the Applicants' testimony

-regarding- the reportability of the discipline findings at issue 91 a .

p t

is characterized by a web of deception based on false and misleading testimony. We will address below a selection of the discipline findings to demonstrate the analysis which would be performed were a comprehensive evaluation of all the discipline findings necessary. and to illuminate the nature of the Applicants' testimony in this proceeding.

III.57. Quadrex Finding 4.1.2.1(b) concluded that the B&R Civil / Structural discipline had not done an evaluation of the reasonableness of postulated missiles and also concluded that

.there was no evidence that the criteria for internal missiles which existed in a technical reference document was actually being implemented in the design. App. Exh. 60, at 4-6. In their response to this finding, B&R agreed with the Quadrex assessment, except that B&R stated they did not believe the Civil / Structural discipline was required to do a reasonableness analysis. The Civil / Structural discipline did respond that the criteria for internal missiles was being implemented in conjunction with the

' hazards analysis program. App. Exh. 62, Enclosure (1), Item Number 4.1.2.1(b). Apparently, B&R had been unable to retrieve the information sought by Quadrex to demonstrate this implementation. An inability to retrieve quality related information is itself a deficiency which would be potentially reportable.

III.58. Of more importance to the analysis'of this finding, however, is the testimony of Applicants. Mr. Goldberg's prefiled testimony stated that Quadrex Finding 4.1.2.1(b) was not reportable because "the design activities associated with 92

?. . ,

protection 'against internal missiles had not yet commenced."

Goldberg, . f f . . Tr . - 11491, at-38, L.25 - 27. Mr. Goldberg stated he

- tgot. this information from Dr. Sumpter and. Mr. Robertson. Tr.

l'1783, L.15 20.- The . design activities associated with protection against internal missiles include both activities to prevent' the _productionf of missiles as well as activities to shield possible targets. Egg CCANP Exh. 75; Tr. 11791, L.24 -

^

.11794,. _L.11. As far_as activities to prevent the production of;

. missiles, Mr.'Goldberg, under cross examination, agreed that such

- ' activities had indeed commenced. Tr. 11794, L.22 - 11795, L.4; l

.ggg a[sg;Tr. 12023, L.22' 11025, L.6. Mr. Goldberg then modified his_prefiled, testimony (while. claiming not to) to say his answer

.was- ~ meant to. apply only to the second part of the internalz missile analysis.- the shielding of possible targets through the hazards analysis . program. We cannot accept Mr. Goldberg's

" explanation" that his testimony that " design activities' associated with protection against internal missiles had not. yet

' commenced" - was the equivalent of a statement- that design

activities "after- _you' basically have your plant' laid- out and Jyou've now got your sources and your targets well defined" were-the activities he.had in mind. Tr. 11795, L.20 - 22. Mr.

Goldberg's characterization of'the work done by B&R continued to evolve: under cross examination until he finally stated that "the.

design Lwork associated ~with missile protection had not been completed,. .theCre] were elements of it that had not been.

' undertaken .... Tr.-11806,.L.25 - 11807, L.3.

!III~.59. Quadrex Finding 4.3.2.1(a) notes a drawing that does not meet.the' single failure criterion and links this failure 93 r . ..  : .-

a .

V-J to other B&R responses to other single failure criterion questions. App. Exh. 60, Vol. I, at 4-21. Mr. Goldberg testified that this finding . was not reportable as a significant breakdcwn in quality assurance because "it addressed only a limited aspect of design and did not suggest the existence of a systemic deficiency." Goldberg, ff.'Tr. 11491, at 39 - 40. But the finding itself specifically states that:

"The occurence of this design error Ethe drawing] in the late 1970's in cgaggtt with tbg B&B tggggggg tg 9tb2E Si)912 fallutg gcitgtige guggliggg suggests that B&R is iot sufficiently_ experienced in the performance of a Failure Mode and Effects Analysis that crosses discipline lines. [ footnote omitted]"

App. Exh. 60, Vol. I, at 4-21. Obviously Quadrex was suggesting a systemic deficiency. Sgg Id. at 3-7, Finding 3.1(e). When the Bechtel~ Task Force assessed this finding later, they recommended a review to determine if there was a generic design error in the B&R application of the single failure criterion to designs similar to the drawing which failed to meet the criterion. Such a generic error would clearly be a significant quality assurance breakdown. It must be considered a measure of the Applicants honesty and candor.that the full finding would be set out in Mr.

Goldberg's prefiled testimony and the second part of the findir.g then be completed ignored. Goldberg, ff. Tr. 11491, at 39, L.8 -

21.

III.60. Quadrex Finding 4.3. 2.1 (d) states:

"No formal methodology or documentation axists to verify adequate separation or the single failure criterion (see Questions E-1, E-8, and E-19)."

App. Exh. 60, Vol. I. at 4-22. Examination of the questions cited 94

_\ .

E

.ir this finding reveals that the Oudarex reviewers found that disciplines, other than the Electrical discipline, did not have separation criteria documents. App Exh. 60, Vol. II, Q:E-1; that Lthe means used by B&R to demonstrate separation revealed an -ad hoc approach, rather than reliance on a formal methodology or Effects routine . documentation, Id.; and that Failure Mode and Analyses were not being performed despite an NRC requirement, Id., 0:E-8, E-19. Mr. Goldberg testified that this finding was not reportable because B&R did have a procedure for design verification and the type of formal documentation noted by Quadrex-was not an NRC requirement. Goldberg, ff. Tr. 11491, At 40, L.5 - 18. This testimony by Mr. Goldberg is one example of the repeated' attempt by Applicants to portray a Quadren finding of deficiency accompanied by a suggested remedy as nothing more that the Quadrex Corporation suggesting what might be a useful alternative to B&R's otherwise adequate methodology. The specific deficiencies mentioned by Quadrex in the questions supporting this discipline finding are ignored in Mr. Goldberg's answer. We find that the deficiencies documented in Quadrex Questions E-1, E-8, and E-19 required the notification of the NRC Staff pursuant to 90.55(e) (1) (i) of Quadrex di scipline finding 4.3. 2.1 (d) .

III.61. Quadrex Finding 4.3.2.1(n) states:

"It is planned that various types of isolation devices will be used. Actual devices are still under evaluation and qualification. There is no existing document that provides guidance to the designers on the circuit

. application of these various types (e.g. cptical couplers vs. fuses vs. relays, ect.) It is our opinion that lack of such a document (TRD) could result in design erros and licensing problems ....

App. Exh. 60, Vol. I, at 4-23. There were various grounds to 95

G report this finding. First, six years after the regulatory guide and seven years-after the IEEE standard were issued for isolation devices, B&R still was unable to answer what type of isolation devices were to be used. Tr. 13153, L.1 - 13154, L.10. An inability to interpret NRC regulatory guides and IEEE standards sufficiently to resolve a quality related question was a clear

-indication of a lack of the skills necessary to design and engineer a nuclear power plant. We consider this situation to be a violation of Criterion II of Appendix B which required Applicants to assure that all prerequisites for design and engineering activitiec had been satisfied and Criterien XVI which required Applicants to promptly detect and correct deficiencies.

The lack of engineering competence shown by this long term failure and the failure of the Quality Assurance Department to detect and/or correct this situation constitutes a significant br'eakdown in quality assurance reportable under 50.55(e) (1) (i) .

III.62. Second, procurement specifications had gone out to vendors which called for isolation devices. Tr. 13153, L.14 -

13155, L.5. In the absence of specific guidance from BbR, Mr.

Stanley expected vendors to select the particular isolation

-device. Tr. 13155, L.6 - 23. Consequently, the wrong type of isolation device might be selected. Id. The circumstances described by Mr. Stanley constitute a violation of Criterion IV of- Appendix B in that vendors selecting devices which might not meet NRC requirements would result from a failure to assure that regulatory requirements were suitably included in procurement documents. Tr. 1 3 1'5 6 , L.12 - 13157, L.4. Since pr -- rement specifications had been released to venders, this finding would 96

- ~

be reportable under 50.55(e) (1) (ii) .

III.63. Third, there was evidence from the Quadrex investigation of a systematic failure within the electrical discipline to provide adequate guidance to vendors. Seg e at t App.

Exh. 60, Vol. I, at 4-22, Finding 4.3.2.l(e), at 4-23, Firdirg

4. 3. 2.1 ( j ) , and a similar failure in other' disciplines. Id. at 3-4, Generic Finding 3.1(b) (continued) ; Sgg Tr. 13230, L.5 -

13231, L.11. The reason Quadrex brought a generic finding on this matter to HL&P's attention was that Quadrex had found B&R i

approving inadequate analysis methods in use by vendors, App.

Exh. 60, Vol. I, at 3-4, and found B&R to lack a formal procedure

-for the review of vender documentation. Id., Vol. II, 0:E-3. If B&R was going to leave the analysis up to the vendor, rather than providing specific technical guidance, and then approve inadequate analysis methods adopted by vendors, a potential for quality assurance problems clearly existed. As Quadrex pointed out, merely specifying a particular NRC regulatory guide to a vender does not guarantee the product will meet regulatory requirements. Id. at 3-6. Furthermore, an NRC regulatory guide and an industry standard can have technical differences. App. Ex.

60, Vol. I, at 4-25, Item (s), (last two sentences). Resolving those differences should not be left to a vendor told to apply both standards. Still more fundamental, of course, is the reinforcement this finding gives to the overall impression that BLR did not know how to answer nuclear engineering questions.

Citing someone else's regulatory guide or standard means B&R engineers did not have to demonstrate an understanding they 97

lacked.

'III.64. Quadrex Finding 4.7.3.1(k) states:

"B&R assumptions for seismic to nonseismic boundary anchors are probably unconservative and difficult to technically justify as adequate (See Questien P-29)"

App. Exh. 60, Vol. I, at 4-79. An examination of Question P-29 reveals that B&R engineering stated that as a practice the seismic loads would be multiplied by two to arrive at the value for the non-nuclear side. Quadrex Finding 4.7.3.l(k) considered this approach to be non-conservative. Mr. Goldberg agreed. Tr.

' 12255, L.5 - 16. Mr. Goldberg was unaware if any B&R engineers knew that the doubling was inappropriate. Tr. 12256, L.4 - 11. In their May 8, 1981 response to the Quadrex Report B&R disagreed with the finding and stated that their approach was consistent

- with. industry practice. Ap. Ex. 62, Item Number: 4.7.3.1(k). Mr.

Goldberg testified that this finding was not reportable because the technical re'erence document in question was still in draft

. status. This test t:L sy is neither responsive nor supported by the evidence. Mr. G -1 dberg also testified that he was convinced the problem would have been corrected because Quadrex had found it, and he was, therefore, aware of it. Tr. 12255, L.17 - 24. But the question is whether the Quadrex finding represented a significant

- breakdown in quality assurance. For B&R to unequivocably state to Quadrex and then confirm to HL&P that they intended to use a non-conservative method of calculating safety related loads represented a significant quality assurance breakdown reportable pursuant to 50.55 (e) (1) (i) . To say this finding is not reportable because the problem has been identified and will be corrected is not sufficient. Any potentially reportable or reportable finding 98 t e *

p. ,

has been found and will be corrected, if necessary. That fact has nothing to do with notification to the NRC of the finding.

III.65. Quadrex Findi ng 4. 8. 2.1 (b ) states:

"No procedures exist that define the minimum qualification requirements for ALARA reviewers. Some design drawings have been reviewed and signed off for ALARA. There is limited evidence that proper follcw-up has occurred to verify incorporation of ALARA specified designs (See Questien R-1) . "

App. Exh. 60, Vol. I, at 4-86. Mr. Goldberg's testimcny does not directly address the actual finding. He stated that the finding is not reportable because ALARA reviewers were selected in an appropriate way and there was an adequate precedure to control the ALARA implementation. Goldberg, ff. Tr. at 45, L 46, L.12. Mr. Goldberg's response ignores the actual findings of deficiency by Quadren. Question R-1 contains a Quadrex assessment that "the reviews performed by B&R to date of plant design from an.ALARA standpoint have not been adequate.." App. Exh. 60, Vol.

III, Q:R-1. In fact, Quadrex recommended a complete re-review of the current design from an ALARA standpoint. Id. HL&P agreed with the Quadrex assessment and recommendation. Tr. 12760, L.1 -

18. While HL&P may have been encouraging B&R to adopt a more comprehensive ALARA program, as Mr. Goldberg testified, B&R had not implemented such a program at the time of the Quadrex study, Mr. Goldberg agreed that if the ALARA review was not functioning that there would be a breakdown in quality assurance. Tr. 12271, L.7' - 21. He, hcwever, exaggerated 50.55(e) to require "a systematic. failure by the project team to deal with the ALARA requirements, and that Ewas] in direct defiance of project established procedural requirements, and as a result of that 99 l

s c

systematic failure we were not achieving the desired objective set forth in the ALARA program that that might well have been a reportable item. Tr. 12271, L.22 - 12272, L.10. We find no such l

requirement as a prerequisite to a 50.55(e) report. But we do l find in Question R-1 that there was little evidence the ALARA checklist was implemented, that the primary document providing guidelines for ALARA review was very general in nature and included lists of documents to be reviewed that failed to provide st'f ficient specificity to identif y the actual documentc, that no guidelines or procedures existed on how to develop the list of

- documents to be reviewed, that the minimum qualifications for ALARA reviewers were not identified in a procedure. App. Exh. 60, Vol. iii, Q:R-1. We also find that Mr. Goldberg had been aware of ALARA deficiencies as early.as December 1980 and considered these deficiencies an indicator of weakness in BLR's nuclear analysis capability. Tr. 11568, L.12 - 24; see alsg Tr. 11577, L.6 - 17.

We find the Quadrex Report identification of deficiencies in the implementation of the ALARA review to have been a potentially reportable finding pursuant to 50.55 (e) (1) (i) . Quadrex Findings 4.8.2.1(e) and (f), also at issue in this proceeding document further deficiencies in the ALARA work. App. Exh. 60, Vol. I, 4-86 - 87. As a whole the ALARA process and products constituted a

. arically reportable deficiency.

III.66. Quadrex Finding 4.8.2.1(g) states:

"A design basis governing removable ccncrete block walls was not evident (See Cuestion R-11)."

App. Exh. 60, Vol. I, at 4-87. The problem concerning removable concrete walls identified in Question R-11 is that "Ei]n cases 100 o

where removable concrete walls are preposed, tnere is no evidence that B&R has a basis for design of these walls regarding seismic ccnditions or shielding effectiveness." App. Exh. 60, Vol. III, 0:R-11. In their Ma/ 8 response to Quadren, BLR agreed with the Quadrex finding. App. Exh. 62, Item Number 4.8.2.1(g). Mr.

Goldberg testified that f i nd i ng 4. 9. 2.1 (g ) was not pctentially reportable because it did not identify a deficiency in a design or in Quality Assurance 3cr design but only involved an activity to be performed in the future by B&R as part of its remaining design work. Goldberg, ff. Tr. 11491, AT 48, L.6 - 17. The f

Cuadrex finding and the B&R reponse centradict Mr. Goldberg's testimony because Mr. Goldberg testified that the seismic and shielding considerations were indeed essential but that such analyses had been performed by BLR. Of perhaps greater importance to reportability is the position expressed by BLR in their May 8 response, sugtas, that since the finding impacted "ALARA, not the safe operation of the plant," the finding is not repcrtable. Mr.

Goldberg correctly testified that a dysfunctional ALARA program would constitute a breakdown in quality assurance. Tr. 12271, L.7

- 21. Given the failure of B&R to perform analyses Mr. Goldberg considered essential and the BLR position that such analyses were not safety-related, Mr. Goldberg should have reported this finding pursuant to 50. 55 (e) (1 ) (i i ) as a deficiency in final design released for construction and pursuant to 50. 55 (e) (1) (i )

as a breakdown in quality assurance.

(3) Mcth ngt ygt ggtiacogd III.67. The,e is one positicn taken by Applicants generally 101

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y to notification under 50.55(e). VHc.;-

III.68. Many of the findings of the Quadre>: investigation y.p[,pg 5- - . ; . T' k,;; l _

dealt with work which either had not commenced or was incomplete.

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were " engineering activities that in my view should have been iN ';,i ..

g~ started literally two or three years before the point in time K{.4hf.;;

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where the report had identified the work hadn't even started." .

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C Tr. 11740, L.15 - 23. When Mr. Goldberg first came to STP he E'.;

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{u thought there seemed to be a 1at of work avai1able for nuc1 ear

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K analysis to be performing but not much activity within the h , 'c uq discipline. Tr. 11569, L.24 - 11570, L.3. B&R was borrowina fVh

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. personnel from NUS to provide nuclear analysis capability. Tr. -

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- 11570, L.6 - 15. Much of the nuclear analysis work went to h ~. ;u. 3; '/; i

. E,- T g.c. l subcentractors. Tr. 11570, L.15 - 17. He found pipe support and K, t*', ..T, .

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-- ; ;gy. .g' j7 pipe stress analysis not being performed. Tr. 115756, L.6 - 9. 'yh;. 49 6 ". +

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g From the Quadren investigation, he learned there were other areas ylp ? ,

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of nonperfcrmam.e which he had not been aware of, such as pipe  ! kk..['X..

yM *j Q' ~ break outside containment. Tr. 11564, L.23 - 25; 11571, L.3 - 7. g. . . . .

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Mr. Goldberg repeatedly used the fact that work had n.2t commenced Q

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'I:- or not been completed as a basis for not reporting a Quadr e::

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4. y Q% l5 1s i s that something not dcne could hardly be called a violation of q.4,:j.gt L -; ' t .

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M g NRC requirements because "i f that were true then the whole

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?,7 plant's in violation the day it startec." Tr. 1 *. 6 5 2 , L.1 - 6. Mr.

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I Goldberg's position is too f acil e. There are obvicusly times when work not done is clearly not a violation of NRC requirements, such as when the project begins. But there are also times when work not done is a violation, such as when the f ailure to do the work results from a lack of competence or has an impact on the quality of the project.

l III.70. Mr. Goldberg recognized that a systematic failure to perform an activity, even if work had not reached the hardware stage, could constitute a potentially reportable deficiency because it might be a significant breakdown in quality assurance.

Tr. 11700, L.19 - 25. Quadre:: found that the ELR engineers in tne i

nuclear analysis discipline could not identify any high energy lines in the Mechanical Auxiliary Building and had no plans for their analysis. Furthermore, Quadrex found that work in this area, which should have been completed, not only had not been done, but had not even been planned and scoped. App. E:, h . 60, Vol. III, 0:N-3. Applicants were aware that the inability cf BLR engineering to keep pace with construction was a condition adverse to safety because specific quality deficiencies had resulted in finished work; specifically, construction was making design changes and then building to those changed designs withcut engineering approval because B&R engineering was not reviewing the proposed changes in a timely fashion. Tr. 12441-A, L.10 -

12444, L.S. We fird Mr. Goldberg's speculation that this condition arose as a simple oversight by an otherwise comptetent engineering organization to be unconvincing in the face of the ample evidence and Applicants' repeated position that B&R 103

G ,

engineering could not keep pace with construction. Egg Goldberg, ff. Tr. 11491, at 58, L.17 - 25; 12443, L.6 - 12444, L.S.

Acccrding to Applicants, BLR was replaced at STP for this very reason. @eg gzgz Goldberg, ff. Tr. 11491, at 57, L.20 - 24.

III.71. For Mr. Robertson, a report that a design group was having trouble producing design products raised a question in his mind as-to the quality of the work already done. Tr. 14600, L.15

- 20. In fact, significant. parts of the work already done by B&R before-Quadrex arrived had produced 50.55(e) reports. Applicants' considered a failure by the electrical discipline to update its calculations .in a timely fashicn thereby leaving in place undersized transformers to be a 50.55(e) deficiency. Tr. 11546, L.9 - 11558, L.1, gsggcially 11554, L.11 - 13. For that matter the HVAC report made to the NRC from the Quadrex Report was a report on work not done; specifically, off-normal conditions had not been considered in the design. We find that the Applicants placed undue emphasis on whether BLR work was comp 1gte, partial, or not commenced in ordt-r to provide an excuse fer not reporting matters that were clearly reportable.

III.72. There are hundreds of discipline findings in the

-Quadren Report. CCANP only sought to have a limited number litigated in Phase II, perhaps since CCANP considered the entire

. Report as subject to notification pursuant tn 50.55(e). We now turn our attention to the question of whether the entire report should have been turned over.

e..Prgviding thg gati tg Quedtg>l Eeggth tg t,hg NBC (1) ig C1 Emet gection agt551g1 104

I III.73. Criterion 'VII of Appendix B'is title " Control of Purchased Material, Equipment, and Services." While initially the Board was inclined to view Criterion VII of Appendix B as extending quality assurance to vendors and subcontractors, Tr.

12379, L.8 - 15, in retrospect we bel'ieve Criterion VII is meant

~

to appl'y to all contracted services. Mr. Goldberg did testify that Criterion VII could apply to the services purchased by 18L&P from B&R. Tr. 12387, L.17 - 12388, L.10. Dr. Sumpter agreed that Criterion VII applied to the relationship between the utility and its prime contractor. Tr. 12701, L.8 - 15. We would expect Criterion VII to be used commonly to cite violations by vendors and subcontractors, as it is the criterion most clearly aimed at extending the quality assurance requirements to these sectors of a nuclear = project. We would expect citation to this criterion would be quite rare when deficiencies in the work of the prime contractor were identified because it would indicte a major breakdown in the quality-related activities of the prime contractor. In this instance, however, we have just such a rare case and citation to this criterion would have been the appropriate basis for sending the entire Quadrex Report to the NRC as documenting a Criterion VII breakdown in the quality assurance program for engineering and the engineering effort itself.

III.74. The purpose of 10 C.F.R. 50.55(e), as discussed earlier, is to put the NRC on notice of a' deficiency, so the NRC, in turn, can assess the corrective action taken and disapprove that action if necessary. Ncemally, the role of the NRC would be to monitor- the Applicants' corrective action through the 105

i Applicants' thirty day reports. Egg gtgu App. Exh. 73 - 75. In

.the case of-the Quadrex Report, however, the NRC response is a real measure of whether the Repcrt itself should have been turned over to the NRC.

III.75. Once the NRC had seen the Quadrex Report, the NRC l

created a special team to work closely with HL&P and Bechtel to assure that every finding in the Quadrex Report was resolved. NRC Staff from the Office.cf Inspection and Enforcement, Nuclear i Reactor Regulation, and the Region IV Office reviewed the 351 separat'e Guadrex findings for reportability, safety-significance.

.and generic implications, and adequacy of resolution. The results of .this NRC effort was the "Special Inspection Report of the Quadrex Corporation Report en Design Review of Brown and Root Engineering Work for the South Texas Project Units 1 and 2,"

NUREG-0948, NRC Exh. 136. The report is roughly five hundred pages long.- The NRC approach to reportability will be discussed below. For' now, the point is that the NRC response to finally seeing the Quadrex Report was an unusual commitment of resources to evaluate the implications of the Report. Of particular note in the NRC inspection report is the classification of 258 of the 351 findings as " Safety-Significant." Id. at 25. This terms is defined in the NRC report as encompassing "a broad class of plant features (not necessarily explicitly) in the General Design Criteria, and that contribute' in .an important way to safe operation and protection of the public in all phases and aspects of facility operation (i . e. normal operation and transient control as well as accident mitigation). This also includes safety-grade (or safety-related) equipment and mat e:-i al . "

Id. .at 24, (Note). This NRC commitment of resources and the 106 i

l l

safety significance found in most of the findings, is a clear indicatien'the NRC should have been provided with the Report, so they could be involved in tha dispositioning of the findings. in the Report.

-III.76. There are many other reasons related to Appendix B

.that the Quadrex Report should have breen turned over pursuant to 50.55(e). What f ollows i s a list of such reasons.

III.77. The Quadrex Report documented the fact that B&R engineering lacked the skills to perform adequately, especially in the nuclear area. The absence of such skills is a fundamental deficiency . The failure to ensure that the engineers designing and engineering the plant had the expertise to perform those functions vio17tes Criterion II of Appendih B in that the Applicants did not " provide control over activities affecting the i

quality of the identified structures, systems, and components, to an extent consistent with their importance to safety" and did not asrare that "all prerequisites for'the given activity have been satisfied,."

~

III.78. The Quadrex Report found B&R engineering to be everwhelmed by the task ci designing and engineering STNP.

t Qualified or not, the inability of the B&R engineering department to keep control of the engineering process represents a violation of: 1) Criterion II in that control of the engineering process wah lost; 2). Criterion III in that the design process was not being conducted in an orderly fashion; 3) Criterion VAI in that Applicants did not ensure that the design and engineering services' purchased fecm B&R were being provided in an orderly 107 m . _ _

3 I

fashion; and 4) Criterion XVI in that the chaotic situation g within BLR engineering was a condition adverse to safety which Applicants failed to promptly identify and correct.

III.79. The Quadrex Report overall found serious technical

' inadequacies in B&R's engineering work, including inadequate interface between design disciplines, errors, a systematic f ailure to update work, and improperly performed work. The existence of these serious technical inadequacies represents a vi il ation - of: 1) Criterion I in that the Applicants did not effectively execute their quality assurance program; 2) Criterion III in that the design basis was not " correctly translated into specificationc, drawings, procedures, and instructions" and adequate measures were not " established fcr the identification and control of design. interfaces and for coordination among design organizations;" and 3) Criterion VII in that Applicants

. f'ai l ed to. ensure the quality of the design and engineering services purchased from B&R.

III.80. The Quadrex Report confirmed and expanded upon deficiencies known to exist over a long period of time or found in studies conducted just prior'to the Quadren study. This confirmation and expansion of known deficiencies cointed out a 9

more systematic problem which would be a violation of Criteria I, III, and VII- similar to those noted in item C above.

III.81. The Quadrex Report explained why engineering could not keep up with constructicn and highlighted the potential quality problems resulting from schedule pressurt en engineering.

These ccnditions violate Criterion, XVI in that excdssive production pressures on engineering is a condition adverse to 108

F -

safety which Applicants failed to promptly identify and correct.

III.82. The Quadrex Recort overall documented a serious quality assurance breakdown in the B&R engineering effort. The Quadrey Report, therefore, provided a strong indication that the

-Quality Assurance Departments of HL&P and B&R were not functioning effectively in the engineering area. Such disfunctional performance violates: 1) Criterion I in that the quality assurance program was-not effectively implemented; and 2)

'Criterian II in that the quality assurance program was not effectively controlling the design and engineering process.

III.83. The Quadrex Report is also a strong indication of a significant breakdown in the management of B&R engineering at

'STNP. This breakdown at the management level is a violation of:

1). Criterion II in that management lost control of the engineering process; and 2) Criterion VII in that Applicants did

'not ensure adequate management within B&R's design and engineering process.

III.84. The Quadrex Report called into question the entire engineering effort at STNP and the licensability of the plant.

Such a broad and significant challenge to the 7verall adequacy of B&R's design and engineering programs contains violations of:

1) Criterion I in that the quality assurance program was not effectively implemented;

2) Criterion II in that the quality assurance program was not effectively controlling design and engineering activities;

3) Criter:on III in that adequate design control measures i

were not.being effectively implemented; 109

+ >

< ..c ,

J

.) c r '

-4) -Criterion. IV?in-that equipment.was being procureo based.

, cc n erroneous, uncontrolled, and/or non-conservative -design

- ._ calculations;-

5): .Critecion-V-in that drawings were not adequate torensure-1the design 1woul'd, perform satisfactorily; 4

6') L . Criterion VI -in ~that drawings. were not properly-

controlled:

.7)LCriterion VII ~in that the' design and engineering services

- purchased-from,B&R were not of adequate quality; B ): Criterion, XVI in that adequate corrective' measures were

'not being<takenLwithin the-design and engineering process; and 9)LCriterion XVIII in-that-either-auditing requirements'were i not imp 1'emented effectively or audits did not result in effective

. performance.

>III.85.- As 'the most significant 2ndicator to date- of . ' a.

severely; deficient design and engineering process, the - Quadre::

' Report, asLarwhole, pointed. clearly to the necessity of removing -

-B.rown' and. Root-as architect-engineer. The NRC should certainly.

.have been provided such a report.

(2) Olb2C C25990gibililigg III.86.-Mr. :Goldberg testified that there was no regulatory i

requirementlthat'the Quadrex Report be sent.to the NRC. Goldberg, ,

>- ff f .f Tr.: 11491', at 52, L.11 ~12.'When questioned by this Board as'

-t'o ,whether his use oflthe term " regulatory requirement" included Idocuments other than regulations, such as Inspection and

' Enforcement-Guidance on reporting, Mr. Goldberg testified that he included all such documents in his statement'th't a there was no

~

requirement to-(send the-Quadrex Report to the NRC. We note, 110

'"c-.. -

however, that the record of Phase I contains Staff Exh. No. 52.

In- this NRC- investigative report, there is an account of - a meeting held by Region IV with Applicants' management personnel on March 11, 1980. See Staff Exh. 52, at 10 - 11. Part of the discussion was a presentation by the senior Region IV representative regarding matters other than 50.55(e) deficiencies which licenses should report to NRC. Id. These included

" deficiencies in design or construction which have the potential for' delay in the critical path for more than one mcnth." Id.

Assuming there were no 50.55(e) obligation to turn over- the Quadrex Report, the NRC guidance provided on March 11, 1980 by Region IV would seem to encompass the Quadrex Report since Mr.

Goldberg termed the impact of the Quadrex Report a " disaster" for HL&P in that construction of STP would probably be set back at least 12 months. CCANP Enh. 140, at 2.

(3) EO9w0 590temggtgaggys NBC ggageres III.87. In May 1981, STP was just emerging from the_ problems discovered in the special investigation in 1979-80 which produced the Order to Show Cause. NRC oversight of this project was intense. During the period from the Order to Show Cause through September 1981, when Region IV finally received the Guadrex

' Report, any plans fcr continued construction at the Project had to be approved.by the NRC Regional Office, geg Tr. 15305. L.15 -

21; 15306, L.16 - 18. 15312, L.7 - 23.

III.88. The Guadren Report provided information in some areas where the NRC already had a concern but in which thaydio' nct know the significance or depth of the problems as identified 111

i l

1 i

by the Quadrex Corporation. Tr. 15298, L.9 - 14.

.III.89. NRC inspections in April and July of 1981 focussed on engineering related problems. Sge NRC Exhs. 84 and 85. The April inspection was tb a fourth NRC inspection in which Engineering and Quality Assurance training and qualification records were found not to be maintad7ed as per commitments to the NRC. To the Acting Regional Director of the NRC, this recurring problems suggested a breakdown in the effective implementation of the B&R Quality Assurance Program in this area. NRC Exh. .84, at 1.

III.90. In the July 1981 inspection, the NRC found major engineering problems. The model created to show the plant as engineere'd had 2600 physical interferences, 3500 drawings issued had a total of 5,000 holds (areas needing further attention before the drawing could be considered complete), vendors were manufacturing and shipping items from drawings which still had holds on them, and available B&R records did not permit identification of the current status of hold items. NRC Exh. 85, at 4 of 6. The NRC inspectors also gave further examination to items previously reported to NRC by the Applicants, some of which were related to Quadrex Report findings or became notifications after the delivery of the Quadrex Report. Id. at 5 cf 6. The inspection also concluded that there was need for future inspection concerning whether B&R adequately addressed recurring design errors for needed design ccrrective action. Id. at 6 cf 6.

All of this NRC activity was going on with no knowledge on the part of the NRC Staff that the Quadrex Report existed. Given the 112

+

. . .3 ,

s s l heightened; concern of!the NRC. Staff-after the Order to Show Cause

'and jparticularly the' increasing concern about B&R engineering in

-the April to ' July '1981 ' timef ra.ne', the Quadrex Report should have'

'been :provided' to;the NRC as addressing matters of current. NRC 1

concern,Tif forfno.other reascn.-

(4) Ihe'SeLLgdGgidhgtg meeting in May 12@l -

EIII.91~.' During the first week of the Phase I hearings,. Mr.-

Goldberg and Mr. Sells met to discuss the Quadrex Report. The I ' meeting: : lasted' only 15 or 20 minutes. There is confli.. ting evidence as to~whether Mr. Goldberg actually showed the Quadrex

-Report to Mr. Sells at that time. Ggmgatg NRC. Exh. 140, at 5

.Mith Id.- at17; sgg-algg Id.aat 13.--There is conflicting evidence I lasi to whether Mr. Goldberg offered Mr. Sells an opportunity to review the Quadrex-Report at the Project. Ggmgang Goldberg, ff.

.Tr . 11491, 'at 49, L. 5 - 50, L. 10.CGoldberg says he offered Sells the opportunity 3;with Sells, ff. Tr. 15190, Statement at 2

-:ESells says his reviewing the Report was not-discussed 3; but sgg algg'CCANP 138, entry on May 13-14, 1981, at 2 CSells recorded as

tell'ing'an NRC inspector on that date that HL&P was going to make the Ouadrex Report available to him3. Mr. Goldberg and Mr. Sells.

agree .that Mr. . Goldberg made.such an offer on April 21, 1981.

LGoldberg, ff. Tr. 11491, at 49, L.5 - 19; Sells. ff. Tr. 15190, Statement, at 1.

_'III'.92. We 'are' concerned as to just what happened between

Mr. Sells and Mr. Goldberg in May 1981. We could net help but observe Mr. Sells ' demeanor when the hearings opened. He was

extremely' nervous; his hands were shaking; and he listened very

,i nt entl y '. to ': Mr . Goldberg's testimony. Furthermore, in the midst

~113 w - _ _ _ _ _ _ _ - _ _ - _ _ _ . _ _ _ _

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'of.thefhearings,- but. prior to_his~testi'+ying, Mr. Sells entered

~

the -hospital. We cannot. help but suspect-that a great deal _more information . was. actually -communicated to Mr. Sells by Mr.

Goldbergit'han Mr.t ' Sells admitted'to in this proceeding. It is

.quite possible.that under the circumstances-Mr. ~Goldberg asked-Mr. -Sells'to let HL&P handle the:Quadrex findings, promised Mr.

Sells that he1could lookoat'the Report any time, refused to give hMr. . Sells the Report because giving the Report to Sells would cal most- force Sells to send it on-to this Board or take other

~

~

actions..that would bring attention to the Report, and probably idiscussed with-Mr. ' Sells how damaging it would be to the Project if- 'the Report were toLeome out just when licensing hearings were-

~

Lbeginning'with Applicants under heavy criticism already from two intervences, 'one of whom CCANP - was' seeking to deny the operating' license. We do not find the accounts of the May meeting  ;

between Mr. Sells'and Mr. Goldberg to be coiaplete or reliable, so

, . H we zhave not based our opinion on any particular-version of- what '

'went on-in that' meeting. The-fact that Mr. Goldberg discussed the

Quadrex' Report'with Mr. Seils in no way diminished Mr. Goldberg's responsibility' 'to inform Region IV of the Report. and/or its findings pursuant to 50.55(e). Mr. Sells was not the appropriate person to whom to make such notifications, and Mr. Goldberg knew thatLto be true. We also note that Mr. Goldberg did'not in fact

? -

provide Mr. Sells with-a copy of the Quadrex Report for Mr. Sells

, to review'in more detail. If, however, Mr. Goldberg did inform Mr. ~ Sell s' more: extensively about the Report than Mr. Sells 4

utestified, _then - Mr. Sells became a co-conspirator with Mr.

114 b '

~

r Goldberg in obstructing the NRC inspection and enforcement process. Suborning an NRC official would only make matters worse for . Applicants. Again, there is insufficient evidence in the record for us to know exactly'what went on between Mr. Sells and Mr. Goldberg,. so we are not relying on this contact between Applicants and NRC in our opinion.

(5) NBQ Begi gnal Qffiqq Bugggt 2Z2 1281 teguest ist tasittched tevieu and subgenuent btiefing gi NBQ by Gagligents III.93. The Quadrex Report in its entirety did finally come to the attention of the NRC on August 19, 1981, CCANP Exh. 138.

At that time, the Deputy Director of the NRC Region IV Office was Mr. John Collins.

III.94. Mr. John Collins served as Deputy Director for Region IV of the NRC from December 1980 until November 1981. Tr.

15286,. L.12- 14. In December 1981, Mr. Collins directed and supervised the preparation of an NRC chronology of events related to the Quadrex Report. See CCANP 138. CCANP also prepared a chronology of Quadren related events and submitted that chronology to the NR on December 16, 1981. The CCANP chronology al ?. eg ed that there was a deliberate attempt on the part of Houston Lighting and Power management personnel to withhold the Quadrex Report from the NRC and that, if the allegation were true, HLLP management would have engaged in a conspiracy to obstruct the NRC from conducting its lawful regulatory duties.

Seg NRC Exh. 140, at page numbered 2; CCANP Exh. 144, Enclosure 2.

III.95. There is one very significant difference in the two chronolog}es. The NRC chronology includes a telephone call on 115

y ;_. .

V t

E-

'l ' August 27, 1981 from Mr. Collins to Mr. George Oprea, then HL&P h

I Group Vice President, wherein Mr. Collins supposedly requested j unrestricted review of the Quadrex Report, that is a review not limited to the Project site. CCANP Exh. 138, at 2; Tr. 15344, L.7

- 10. Mr. Collins testified that his recollection of the substance of_this telephone call was the same as the substance of I

the call recorded in the 1981 chronology. Recalled to the stand 1

after Mr.- Collins testified, Mr. Oprea did not remember the call h from Mr. Collins at all. Mr. Oprea only remembered that he made a f

( call to Region IV to suggest a briefing by HL&P of NRC personnel 4

on the Quadrex Report to be neld on September 8. Tr. 15372, L.7 -

r 24.

III.96. On September 8, 1981, HL&P personnel, including Mr.

Oprea, came to the NRC Region IV Office to brief Region IV personnel on the Quadrex Report, but HL&P neither brought copies of the Quadrex Report for Region IV to review nor provided copies for later review, in spite of the supposed request on August 27 from .Mr. Collins. Tr. 15311, L.20 - 15312, L.6. In fact, Applicants never provided Region IV with a copy of the Guadrex Report; Region IV received the Report from Mr. Sells after it was sent to this Board in late September 1981. Tr. 15350, L. 19 -

15351, L.8.

III.97. Once again, we are not certain what the truth of this matter is. Mr. Collins did testify clearly that the entry in the NRC chronology for August 27 was true and correct. Tr. 15237, L.C - 10. At the same time, in December 1961, Mr. Collins faced possible criticism for failing to ensure HL&P provided the Report 116

2 to ther ' NRC (and to this Board) after he learned of the Report in August. It is possible that a cover story was created, so Mr.

Collins' inaction would instead appear to be Applicants' failure to respond to his advice. We do note that even if Mr. Collins did in fact make the call as recorded on August 27, he still took no

' action to insure the Report came to Region IV or this Board

- between August 27 and September 28. Mr. Oprea steadfastly maintained that he had no recollection of the telephone call from Mr. ' Collins. Much like the Sells /Goldberg meeting in May 1981,,

the events of August 27, 1981 are not a matter which would changa our . opinion one way or the other, whatever view we took as to what the actual events were. The obligation to give the Guadrex Report to the NRC Staff was quite clear, whether Mr. Collins requested Applicants to do so or not. If Mr. Collins did not in fact make such a request, the failure to provide the Quadrex ,

Report to Region IV is no less willful. Furthermore, it is quite r clear that, on September 8, Mr. Collins did suggest to the

Applicants that the Quadrex Report be filed with Region IV in its entirety as documenting a breakdcun in control of the engineering activities. Tr. 15292, L.20 - 23; 15345, L.12 - 21; CCANP 83, at

1. He testified that he did so because, even if no further issues turned cut to be reportable, the Quadrex Report should still be entered into the regulatory frame work as a potential 50. 55 (e) ,

an appropriate application of the general principle underlying 50.55(e) that the NRC should be informed about and 4. n vol ved promptly in possible safety related deficiency situations. Tr.

15345, L.21 - 25; 15346, L.17 - 19. The Applicants failure to ever provide a copy of the Report to Regicn IV reflects adversely 117 m_

on their character.

(f) UBC eyglygtigng ggatemggtaneggs wLib distgyety si tbg ouadC eu geggt; by NBC III.98. Once the NRC did see the Quadrex Report, they viewed it as centered around B&R's apparent GA deficiencies in design, not- as a productivity evaluation. Tr. 15349, L.11 -

15350, L.12. That perception was absolutely correct and stands as a primary reason the Quadrex Report as a whole should have been turned over to the NRC Staff immediately upon receipt by

" Applicants. Mr. William Dircks, the Executive Director- for Operations of the NRC, appeared under oath before Congress on November 19, 1981 and testified as follows:

"Breifly Csic], the Quadrex Report found that Brcwn &

Root apparently failed to properly implement an overall design process consistent with the needs for a nuclear power plant. As a result vertification of design information was apparently not performed in a timely manner, and regulatory commitments for safety did not appear to be fully or properly implemented to satisfy NRC requirements for licensability.

NRC inspection reports dating back to 1979 found problems at the South Texas plant similar to those identified in the Quadrex Repcrt. However, the agency's audits did not surface the number of problems suggested by the Quadrex Report. Though we were aware of QA problems at South Texas and had cited the licensee for a breakdown. in their QA program in April 1980, the magnitude of' potential problems was not fully appreciated until we first reviewed the Report in August of 1981."

CCANP Exh. 147-A at 94.

III.99. While Mr. Collins might today alter some of the wording of the Dircks testimcny to Congress, Tr. 15291', L.5 -8, the basis for such alteration would include the fact thar BLR was

.no longer on the job, that Bechtel made the Quadrex finding part of the transition prcgram, and that NRC has satisfied itself 118

!a

regarding the disposition of the Quadren findings. Id., L.12 -

4

21. - When asked if today he would consider the Quadrex Report to i.

e reflect a breakdown in quality assurance for design, Tr. 15291, L.22 - 24, Mr. Collins replied that he "wouldn't characterine it as- a total and complete breakdown of quality assurance." Tr.

15292, L.5 - 7. Of course, there is no need for the breakdown to be total and complete before NRC involvement is called fcr. At the time Mr. Dircks-made his s'tatement to Congress, Mr. Collins believed,his remarks to be true. Tr. 15316, L.11 - 15317, L.2. We

. find, based on a review of the entire record, that Mr. Dircks statement captures eloquently and accurately how very serious the Quadrex -Report was and why that Report should have been turned j over to the NRC upon receipt.

9 Ihe evaluetL9n of the Dundtet Eeastt int canottability (1) Deltbetate effect te einteire ibe numbet 91 flodians 99190113112 can9ttabl= 19 tbn UBc III.100. When Mr. Goldberg first saw the Quadrex Report, the magnitude of the problems identified was beyond his " wildest imagination or expectations." Tr. 11706, L.23 - 11707, L.2. Yet from a report containing more than 300 findings, the Applicants notified the NRC of only four to six of said findings. To understand why so few findings were reported is to uncover a carefully planned effort to minimize the number of findings the NRC would learn about, an effort that involved abuse of authority and abdication of responsibility at the highest levels of management. The effects of this conspiracy continua to manifest themselves on the Project to this day. We now turn to a close 119

m z look at the process used by Applicants to decide on which findings would be notified to the NRC.

III.101. At the April 13, 1931 briefing by Quadren, Mr. Goldberg concluded that potentially reportable findings were likely to result from the Quadrex review. Goldberg, ff. Tr. 11491, at 11, 1

L. 13 - 22. He proposed that the Quadrex Corporation categorize i their findings in such a way as to make review for reportability

' easier'and subsequently sent Dr. Sumpter a memorandum containing tF suggested categorizations. App. Exh. 58. Goldberg wanted Quadrex to put all potentially reportable findings in his Most Serious category. Tr. 13140, L.5 - 12.

III.102. When asked to identify 50.55(e) items by HLLP, however, Quadrex said they could not do so. Tr. 11645, L.14 - 22.

Mr. . Stanley had never had the responsibility to report deficiencies under 50.55(e) and was quite frank about his lack of p qualifications.in this area. Tr. 13094, L.12 - 18; 13159, L.6 -

9; 13159, L.23 - 13160, i 10; 13163, L.8 - 13.

III.103. Mr. Stanley did, nevertheless try to respond to Mr.

Goldberg's memorandum. It is clear from Mr. Goldberg's catergories that he-envisioned the Most Serious category to be composed of items where the BLR " Engineering Problem" was in fact a case of failing to satisfy MRC requirements. App. Exh. 58. Mr.

, Stanley's difficulty was that, in some instances, Guadrex found that the design activity was incomplete, but if complet2d at the current level of B&R expertise, the completed work would not meet NRC requirements. He resolved his dilemma by expanding the Most Serious ctegory to provide for inclusion of findings which 120

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pointed to a significant potential NRC requirements might not be met. Tr. 13137, L.1 - 13140, L.4. The ultimate Most Serious

. category contains a third component, which is items of serious concern to the NRC. Tr. 13142, L.2 - 7, App. Exh. 60, Vol. I, at 3-1. Mr. ' Stanley. also characterized these three components as

.potentially reportable, licensing matter, and safety issue. Tr.

13143, L.4 - 7. Quadrex further subdivided the Most Serious category into those findings that were expected to pose a serious threat to plant licensability and those that might pose a serious threat. Tr. 13149, L.22 - 25; App. Exh. 60, Vol I, at 3-1. If there was insufficient information to know whether there was a potential threat, the item went into the Potential Problem Finc_ngs. Tr. 13143, L.S - 13144, L.2; App. Exh. 60, Vol. I, at 4-2. The other categories were: Serious Findings, which were those that might impact generation of reliable power but not licensing; Noteworthy Findings, which were those that centributed to project schedule and/or cost increases but not licensing or reliability problems; and Other Findings, which were minor items.

App. Exh. 60, Vol I, at 4 4-2.

III.104. In early May, Mr. Goldberg discussed with Mr.

Robertson how the Quadrex Report would be reviewed for r ep or t ab,i l i ty. They decided that the two of them and Dr. Sumpter would perform the review for HL&P. Mr. Goldberg told Mr.

Robertson that the review was going to be performed in 24 hours.

Goldberg, ff. Tr. 11491, at 13 L. 18 - 14, 8. . 2. Mr. Goldberg then sent a letter to BLR informing them of his decision to do a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> review, requesting B&R to perform their own reportability review between the time the Quadrex Corporation delivered their 121

Report on May 7 and noon on May 8, and asking B&R to evaluate where stop work orders should be issued based on the Quadrex findings. App. Exh. 61.

III.105. The NRC Guidance on 50.55(e) reporting does provide- an alternative to the strict application of the 24 hour

' notification provision. Ggmaate NRC Exh. 137 at 6-7. with 10 C.F.R.. 50. 55 (e) (2) . A license or permit holder can take 14 days to review a given incident to determine whether it is potentially r ep or t abl e.. Mr. Goldberg chose to make the 50.55(e) decisions on a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> basis rather than utilizing the 14 day period provided in the I&E Guidance. He made Mr. Oprea aware of that choice. App.

Exh. 61 (See "c.c.")

III.106. On May 7, 1981, at a meeting of Quadrex, HL&P, and B&R,. Mr. Stanley delivered the final Report and began his presentation with the genaric findings. Goldberg, ff. Tr. 11491, L.10 - 11; Tr. 11669, L.11 - 17. But Mr. Stanley covered only one or two of the generic findings. Tr. 11669, L.7 - 10. Th'e presentation of the first generic findings set off a spirited discussion, Tr. 11670, L.8 - 11, with B&R taking strong exception to the Guadrex finding that B&R lacked effective sys t ern s level integration. Tr. 11671, L.3 - 18. The meeting was very disruptive during this discussion of the first generic findings. Tr. 11672, L.2 - 6. Concerned with the amount of time such discussion might take, Mr. Goldberg asked the Quadrex personnel to ccnfirm his understanding that the generic findings were based on the discipline findings. When Quadrex agreed that they were, Mr.

Goldberg decided not to discusc the generic findings. Insteed, 122 L. __

p ,

I he directed the discussion to only the Most Sericus discipline findings. Goldberg, ff. Tr. 11491, at 18, L.1 - 20.

III.107. The question about the relationship between the generic findings and the-discipline findings surfaced first at a Quadrex briefing on April 30. The distinction was whether the generic findings renresented additional independent findings of fact or were based on the discipline findings. Quadren respcnded on April 30 that the generic findingu were based on the discipiane findings. Goldberg, ff. Tr. 11491, at 13, L.12 - 16.

This answer was then repeated in the May 7 briefing. Mr. Stanley confirmed that the generic findings were based on the discipline findings and did not have an independent factual base. Stanley, ff. 13047, at 6, L.14 -18.

III.108. We find a great deal less significance in this distinction than Applicants apparently do. The only real meaning that can be given to the statement that the generic findings were based on the discipline findings is that both sets of findings had a common factual basis - the questions,  :.nswer s , and assessments in Volumes II and III of the Quadrex Report. Tr.

13332, L.12 - 19. The actual correlation is from the generic findings back to the original questions, answers and assessments, not back to the discipline findings. Tr. 13316, L.6 - 15. Cnly Mr. Stanley knew the exact correlatiens; he did not prepare a list for HLLP or BLR in May 1991 of such correlations. Tr. 13316, L.16 - 21; 13330, L.17 - 13334, L.25.

III.109. The May 7 meeting of Quadrex, HLLP, cnd BLR lasted through the morning. To the best of Dr. Sumpter's recollecticn, no one from the Quality Assurance Department was present at the 123 1

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l May 7 briefing. Tr. 12795, L.11 - 12796, L.2. At the end of the meeting, B&R asked if their repcrtability review should be limited- to only the Most Serious findings. Mr. Goldberg Linstructed them to so limit their review. The BLR personnel then left to perform their review. Goldberg, ff. Tr. 11491, at 18, L.1

~- 19, ,L.4; 11672, L.18 - 20; ggg algg Tr. 13194, L.16 - 13195, L.24.

III.110. The B&R meeting on May 7 lasted at most six hours.

Tr. 14719, L.9 - 10 (Robertson); But ggg Tr. 12798, L.19 -21; 12814, L.4 -6 (at most four hours) (Sumpter). The setting for this meeting struck Mr. Robertson as "being like a Navy court of inquiry, headed up by a ... prosecuting atterney, so to speak."

Tr. 14718, L.18 - 11719, L. 2. Senior B&R personnel sat in a

" board of review and called before them the various discipline chiefs." Tr. 14719, L. 2 -4.

III.111. As a result of their review, BLR notified HL&P that they considered two of the Most Serious Discipline findings to be potentially reportable, although they treated these two findings as a single problem. Goldberg, ff. Tr 11491, at 34;

' App. Exh. 62 at Enclosure 2.

III.112. In performing their review, B&R did not utilire the services of Mr. Stanley, even though he was standing by to be of assistance. Tr. ;3198, L.4 - 13199. L. 3.

III.113. Dr. Sumpter and Mr. Robertson did not actively participate in the B&R assessment meeting, except for one remark to the meeting by Mr. Robertson. Tr. 14610, L.4 - 14611, L.5.

III.113A. The BLR response to the Quadrea Most Sericus 124

r~ r  ;

s

. discipline- findings was apparently solely a product of the analysis B&R. was able to perform between the receipt of the Quadrex Report on the morning of May 7, 1981 and the delivery of the report to HL&P at noon on May 8. Tr. 11726, L 10. - 23 (Goldberg); App. Exh. 62.

III.114. The next morning, Goldberg, Sumpter, and Robertson

. met .either for four hours, Tr. 11734, L.23 - 11735, L.6 (Goldberg); an hour er less, Tr. 12798, L.19 - 21 (Sumpter); or not at all, Tr. 14614, L.11 -14615,L. 5; 14632, L.25 - 14633, L.9 j i

(Robertson).

III.115. Dr. Sumpter testified that even prior to the receipt of the Quadrex Report, Mr. Goldberg had decided the report would not be sent to the NRC. Sumpter, ff. Tr. 12699, at 14, L.1 - 3. Dr. Sumpter testified this referred to a decision not to turn the report over " gratuitously," Tr. 12E85, L.20 -

12886, L.4; 12889, L.3 - 15. Dr. Sumpter passed that information on to Mr. Robertson prior to their joining Mr. Goldberg for the review. Tr. 12881, L.13 - 12882, L.6 III.116. There is general agreement among the witnesses that the Goldberg team met on May 8 from roughly noon until 6:00 or 6:30. Tr. 11735, L.5 - 7 (Goldberg); Tr. 12826, L.21 - 12827, L.23 (Sumpter).

III.117. The meeting.of the Goldberg team took place in Mr. Goldberg's office. Mr. Goldberg sat behind his desk, while Dr. Sumpter and Mr. Robertson sat in chairs in front of the desk.

Mr. Goldberg had'a copy of the BLR assessment, App. Exh. 62, but had not provided one to Mr. Robertson. Tr. 14636. L.17 - 14637, L.3.

175 i

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_____A______

I-L III.118. When the Goldberg team set about making their

' determinations of reportability, they relied on the Quadrex Report, the Brown and Ro't May 8 reportability review, App. Exh.

62, the information gathered by Dr. Sumpter and Mr. Robertson, and the prior knowledge of team members. Tr. 11751, L.17 - 11752, L. 4. These limitations were necessitated by Mr. Goldberg's choice to do a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> review.

III.119. The Goldberg team saw the final Quadrex Report for the first time on the morning of May 7, 1981. The Quadrex Report is a complex, 500 page report containing more than 300 findings.

App. Exh. 60. The Goldberg team did review only the Most Serious discipline findings, Tr. 12523, L.3 - 8 (Goldberg). Even that decision, however, left 120 findings and their associated questions, responses, and assessments still to be reviewed. NRC Exh. 136 at 7.

III.120. In general, the task of tracing various generic and discipline findings to their source is complex. While the generic findings listed some of the questions supporting them, not necessarily all the questions supporting the particular generic finding were listed. Tr. 13177, L.8 - 12. At least one generic finding simply listed whole sections of discipline findings as support. App. Exh. 60, Vol. I, at 3-12, item (4). The discipline findings also referenced questions which supported them, but parts of the questions referenced might support other disciplino findings as well. A discipline finding might support a generic finding, but not all of that generic finding. Sqq ggngrglly App.

Exh. 60.

126 l

t .

III.121. Mr. Goldberg understood the generic findings as an attempt to distill from the discipline findings the common threads. Tr. 11673, L.20 - 23. But on May 7 - 9, Mr. Goldberg did not attempt to trace the generic findings to the discipline findings to see if there was a common thread. Tr. 11674, L.18 -

24. In the May Sth review, also, there was no attempt to test the validity of the generic findings. Tr. 11674, L.24 - 11675, L.13.

Instead, Mr. Goldberg claimed the review team was " sensitive to the generic issues as Cthey] proceeded to review the discipline findings." Tr. 11675, L.4 - 7. The generic findings were not specifically reviewed for reportability, even on May 8. Goldberg, ff. Tr. 11491, at 30, L.11 - 16.

III.122. The Goldberg team did not have the assistance of Mr. Stanley in their review because he had been allowed to return to California. Tr. 13199, L.9 - 19.

III.123. Mr. Goldberg apparently took no notes during the Quadrex briefing on May 7. Tr. 11664, L.19 - 24; 11668, L.16 -17.

III.124. The Goldberg team did not seek the assistance of the perhaps dozen HL&P engineers from many different disciplines who attended tne B&R meeting the evening before. Sgg Tr. 14749, L.6 - 23; 147E5, L.6 - 20 (Robertson).

III.125. While BLR had provided its response to each Most Scrious finding, that response consisted mostly of checking a box as to whether there was agreement or disagreement with the finding; checking a second box as tc whether the item was reportable, potentially reportable, provided insufficient evidence for assessment, or was not reportable; and giving mostly one sentence explanations for the reportability determination.

127 l I

~

r f App. Exh. 62 III.126. Dr. Sumpter and Mr. Robertson did not bring any notes on the B&R assessment meeting to the Goldberg tea:n meeting because they did not take any such notes. Tr. 12828, L.17 - 21 (Sumpter); 14611, L.6 - 9 (Robertson). l III.127. While Mssrs. Goldberg, Sumpter, and Robertson were experienced in nuclear engineering in May'1981, Goldberg, ff. Tr.

11491, at 25, L.11 - 22, that experience was not all encompassing. See e zg1 Tr. 12752, L.10 - 14; 12741, L.16 - 18 (Sumpter). More importantly, their knowledge of the work performed by B&R as architect-engineer was very limited. At the time the Quadrex Report was delivered in May 1991, Mr. Goldberg was relatively new to the project, having joined HL&P in October 1980. When he came to HL&P, Mr. Goldberg did not go back and review Quality Assurar,ce audits conducted by HL&P of the BLR design and engineering process. Te. 12471, L.4 - 10. Nor did he review prior 50.55(e) reports. Tr. 11754, L.13 - 19.

III.128. Dr. Sumpter was the only member of the Goldberg team to have been on the project for any length of time, having joined HL&P in August 1972. Sumpter, ff. Tr. 12699, at 2, L.G. In 1978, however, HL&P reorganized and Dr. Sumpter was no longer in as close contact with the day-to-day engineering activities as he had been previously. Tr. '2716, L.1 - 25; 12059, L.6 - 20 (Sumpter). At the time of the Quadrex study. besides additional responsibility for Nuclear Engineering, Dr. Sumpter had responsibility for Nuclear Fuel, Nuclear '.icensing, Health

-Physics, and Nuclear Securit/ for both STP and HLLP's Allens 128

~

i ,

' - - - - ~ - - - - ' - - - - - - - - - - - -

r' Creek nuclear project. Tr. Sumpter ff. Tr. 12699, at 2, L.12 -

20. .His primary responsibility was management of the engineers who were actually familiar with B&R work. Tr. 12704, L.2 - 12705, L.4; 12752, L.24 - 12753, L.6. By May 1981, he was no longer responsible for licensing and was neither primarily interested in nor working on licensing. Tr. 12854, L.7 - 14. Between 1978 and May 1981, Dr. Sumpter did not have 50.55(e) responsibilities. Tr.

12751, L.13 - 19. He was not f amiliar directly with the personnel and . changes in personnel taking place at B&R engineering. Tr.

12766, L.1 - 10. He was not familiar with many major B&R engineering problems and their causes. Tr. 12727, L.3 - 13; 12727, L.22 - 12728, L.4; 12730, L.10 - 21; 12735, L.16 - 21;

[_

k 12737, L.3 - 20 (Sumpter). He did not routinely review the HL&P Quality Assurance audits of B&R. Tr. 12753, L.7 -19. We recognize

.Dr. Sumpter's involvement in the Quadrex review and his attendance at many of the Quadrex meetings. Sumpter, ff. Tr.

12699, at 4, L.7 - 10, L.22; App. Exh. 60 at 2-3, 2-6. But we view his role as primarily that of an overall coordinatcr of the-study, assuring the orderly progress of the study, rather than performing as a technical participant in the study. Seg e ngt Goldberg, ff. Tr. 11491, at 7, L.21 - 24.

III.129. Mr. Robertson was even newer than Mr. Goldberg, having joined'HL&P on March 20, 1981. Tr. 145S5, L.16 - 17. Mr.

Robertson was heavily engaged in the licensing activities for HL&P's Allen's Creek nuclear plant (since cancelled) during the tire of the Quadrex investigation and may have missed the April 30 Quadrex briefing to fulfill his responsibilities on Allen's Creek. Tr. 14608, L.15 - 25. Mr. Robertson needed Dr. Sumptcr'e l

)

129

- - - _ _ _ _ _ _ _ _ _ _ _ _ _ J

entensive assistance even after May 8 in order to understand the Quadren findings and proceed to close them out. Sumpter, ff. Tr.

12699, at 13, L.16 - 23; Tr. 12822, L.25 - 12825, L.21 (Sumpter).

He also had to rely on his licensing staff to know if a Quadrox finding related to something Applicants had already reported to the NRC. Tr. 1461G, L.6 - 14631, L.20 (Robertson). Mr.

Robertson's contribution to the May 8 assessment, therefore, could not have been too substantial.

III.100. From the record, it appears clear that the Goldberg team relied very heavily on the information provided in the B&R assessment, App. Enh. 62, and the reportability determinations made by BLR engineers. See e g. Tr. 12582, L.9 -

12583, L.24.(Goldberg); Tr. 12876, L.18-21: Tr. 12915 3 L.1 - 13 (Sumpter).

III.131. When the Goldberg team review was complete, they had identified three potentially reportable items, one of which was the report suggested by BLR which encompassed two Quadren findings. The items picked by BLR were items B&R should have brought to HLLP as potentially reportable long before May 7, 1931, but did not. Tr . 12730, L.1 - 12735, L.7; NRC Enh. 141. The cnly two findings which were repcrted, besides the ELR identified findings, were agreed uoan by Dr. Sumpter and Mr. Robertson

-before they ever met with Mr. Goldberg. Tr. 14614. L.11 - 14616, L.14. Around 6:00 or 6: 30, Mr. Powell was called to come to the meeting. After the meeting, Mr. Powell telephoned the NRC to report the three items. Goldberg, ff. Tr. 11491, at 23, L.1 - 24, L.7.

130

III.132. Subsequently, -the IRC addressed the three items reports and proceeded to disposition them. CCANP Exh. 129, 130, 131, 132.

III.133. At no time did Mr. Jordan or Mr. Goldberg seek or receive legal advice concerning Applicants obligation to turn the Quadrex Report over to the NRC Staff or this Board. Tr. 11743, L.2 - 6 (Goldberg); Tr. 11o11, L.11 - 17 (Jordan).

III.134. The procedure at HL&P in May 1981 regarding determinations of reportability pursuant to 50.55(e) required the following:

(1). Once an individual became aware of an incident he or she expected would require 50.55(e) evaluation, that individual would notify the Project Quality Assurance Manager or the Team Leader, Nuclear Safety and Licensing (NS&L). CCANP Exh.

71 at 9, Section 5.6.2.

(2). If the incident was a home office event, the responsibility for an initial evaluation wculd rest with the Team Leader, NS&L. Id. at.2, Section 4.2. l (3). If the Team Leader, NS&L, determined that there was a need for further analysis, the-incident would be forwarded to the Incident Review Committee (IRC), Id., and the NRC would be notified. Id. at 4, Section 5.1.

'(4). The initial evaluation of the technical details of l the incident would be done by the cognizant engineering discipline, while the IRC would have responsibility fcr the safety evaluation. Id., Section 5.2.

~(5). The IRC would also be responsible for the reportability determination. Id. at 3, Section 4.4.

131 i_...... . . . . . . . ., .

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(6). The members of the IRC would be the Team Leader, NS&L, as chairman; the Project Quality Assurance Manager; and the

( Sapervising Project Engineer Manager (or their designees). Id. at 11,.Section 5.8.B.

(7). The incidents resulting in 50.55(e) notificaticns

.would require a follow up written report, ld. at 10, Section 5.7.

This report would include a description of the incident, which in turn would include the source and extent of the incident and the date and means by which the incident information was obtained.

Id.; id. at 17, items II.b and II.c. ,

(8). The evaluation of the IRC would be reccrded and maintained as the minutes of the IRC by the Team Leader, NS&L, and as a permanent record in the Record Management System File.

Id. at 15-16, Section 6.0.

The- HLLP reportability procedure did not provide for exceptions or alternatives to the process set ferth above. Seg ggegtglly CCANP Exh. 71.

III.135. Applying this procedure to the Quadrex Report incident and referencing the numbered segments of Finding III.134, we can compare what should have happened with what did happen.

(1). As soon as Mr Goldberg or anyone else attending briefings by Quadren during the course of the Quadrex study

-became aware that potentially reportable findings could be expected, they would have contacted Mr. Overstreet, Project Quality Assurance Manager, or Mr. Pcwell, Team Leader, NSLL.

Even though Mr. Goldberg judged it likely after the April 13, 132 l

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1991 Quadrex briefing that there would be potentially reportable matters resulting from the Quadrex review, he made no effort to notify Mr. Powell. Tr. 11757, L.19 - 11758, L.14. There is no evidence Mr. Goldberg attempted to contact Mr. Overstreet, either.

(2). Mr. Powell, in turn, would have taken charge of t h e'. reportability review. Mr. Powell, however, did .not participate in the reportability review of the Quadrex Report; he was simply asked to make the three notifications to the NRC that M

l r. Goldberg 's review team had decided to make. Tr. 11756, L.14 -

11757, L.10.

(3). Mr. Powell certainly would have forwarde.d the Quadren Report to the IRC as having numerous items where enough substance was provided to warrant further evaluation. Mr. Powell, however, never had that opportunity.

(4). The cognizant discipline engineers would have been involved in_ evaluating each Quadren finding. The engineers who attended the B&R review would have assisted within their own disciplines in doing a further technical evaluation of each finding. But the process set up by Mr. Goldberg did not include input from these engineers, either to the IRC, as procedure called for, or to the Goldberg review team. After these engineering evaluations, the IRC, with the assistance of these engineering evaluations and of the engineers involved in doing the evaluations, wculd have made a safety evaluation. Dut neither the cognizant engineers or the IRC participated in a safety evaluation of the Quadrex Report cr its findings.

^

(5/6). After the cognizant engineering disciplines had 133

performed their technical analysis and the IRC had performed a safety analysis, the IRC would have made the reportability determination. The IRC, however, did not make the reportability.

determinations on the Quadrex Report and its findings. Only Mr.

Goldberg's team participated in those determinations for HLLP.

(7). The follow up written reports to the NRC- would have had a section titled " Description of Deficiency" which would have identified the source (Cuadrex Report) and e:: tent (a 500 page evaluation of BLR's design and engineering process containing more than 300 findings) of the incident as well as the date (May 7, 1981) and means (delivered to HLLP) by which the information was obtained. No such information was included in either the telephone minutes of the initial report to the NRC,

~

CCANP Exh. 128, or in any of the follow up reports submitted to the NRC prior to the NRC receiving the Quadrex Repcrt in late September, 1981. Sge App. Exhs. 73, 74, and 75.

(8). The IRC would have produced minutes documenting the discussion and the reportability determinations for each Quadrex finding considered. These minutes would bave been kept by Mr. Powell and a copy filed in the permanent records of the project. The evaluation performed by Mr. Golcoerg's team, hcwever, was not recorded formally. Mr. Goldberg made notes on the B&R May 8 response, but that document is apparently lost.

III.136. In addition, Mr. Overstreet would have issued such order if sersious program deficiencies existed which, if not corrected, could have produced defects in design or constructicn.

Tr. 10212, L.1 - 10213, L.2; seg also 10213, L.19 - 10215, L.1.

134

But Mr. Overstreet never go that opportunity.

III.137. Throughout this process, the IRC would have brought to the review a greater knowledge of actual work being done by BLR than the Gcidberg team possessed and a broader perspective than. existed en the Goldberg team. The members of the IRC in-May 1981 were Mr. Michael Powell, Team Leader (NS&L); Mr.

Harry. G. Overstreet, Project Quality Assurance Manager; and Mr.

John L. Blau, Supervising Project Engineer. Tr. 11758, L.15 -

11759, L.17; 12527, L.2 - 9; 12528, L.3 - 5.

III.138. Mr. Powell is a nuclear engineer who joined HL&P in 1980 and .became Team Leader of the STP licensing group and IRC Chairman in that same year. Wisenburg, ff. Tr. 14514, at 6, L.7 -

20. As IRC Chairman, Mr. Powell had. extensive experience as of May 1981 in making reportability determinations. See e n gs Tr.

14587, L.17 - 14588, L. 11 (Robertson).

III.139. Mr. Overstreet joined HL&P as a CA technician in 1975 and held successive assignments in HL&P's OA department up until becoming Project GA Manager. Overstreet, ff. Tr. 10123, at

3. As' Project GA Manager, Mr. Overstreet brought to the IRC the historical knowledge and perspective of the Quality Assurance Department, an element sorely lacking in the Goldberg team.

III.140. Mr. Blau joined HL&P in 1972, with an initial assignment as a member of the Electrical Engineering Division (Instrumentation and Controls) of the Power Plant Engineering Department. In June 1977, he was assigned as a Project Engineer responsible for multi-discipline engineering efforts. In March 1979, he joined the South Texas Project as Supervising Project Engineer (SPE) with responsibility for a group known as Special 135

s Engineering Support, concentrating in the areas of Piping, Pipe Supports, NSSS Interface, and HVAC. In August 1980, he became SPE, Houston Engineering with additional direct responsibilities for HLLP's total home office engineering effort. In March 1981, he was appointed Project Engineering Manager on an acting basis, assuming . direct responsibility for HL&P's total project engineering effort (home office and site engineering). He continued in that position through May 1981. According to Mr.

Goldberg, Mr. Blau was "One of the more knowledgeable engineers who had been on that project for a considerable period of time, and- he had considerable personal knowledge as to the status of engineerings activities on the project." Tr. 11760, L.2 -5 (Goldberg). In terms of day-to-day contact with the project and knowledge of activities, Mr. Blau had as much, if not mere, personal knowledge than Dr. Sumpter, who had responsibilities both on..and off the project and was located physically off the project. Tr. 11760, L.6 - 19 (Goldberg). Mr. Blau had attended the Quadren briefings on April 13; Goldberg, ff. Tr. 11491, at 9, L.27 - 10, L.4; and on April 30. Id. at 12, L.8 - 13. Thus, in terms of knowing whether the concerns expressed by Guadrex were realistic or unrealistic, extant over a long or short term, pervasive or isolated, the IRC had as much ability, perhaps even a better ability, to evaluate the Quadrex Report and its findings than did the Goldberg team.

(2) 6byse gi authgtity III.141. In May 1981, Mr. Goldberg's authority with respect to 50.55(e) reporting was limited to review and approval of 136

determinations made by the Incident Review Committee. Goldberg, ff. Tr. 491, at 2, L. 26 - 3, L.3. The procedures for such determinations did not provide f or any deviation from using the IRC as the' determining body. See generally CCANP Exh. 71. We find that Mr. Goldberg's decision to set up the separate review team constituted an abuse of his executive authority.

III.142. We find that when Mr. Goldberg told Dr. Sumpter that he had no intention of turning the Quadrex Report over to

-the NRC " gratuitously," he was in fact . indicating to his organizational subordinate that, if at all possible, he did not want the Report to go to the NRC. This signal, even before the review began, clouded the independence of Dr. Sumpter, and, since Dr. Sumpter told Mr. Robertson, the independence of Mr. Robertson-as;well..Using his executive position to limit the freedom of his organizational subordinates to urge turning over the entire Report' constituted an abuse of authority.

III.143. The actual Goldberg team review took place in Mr.

Goldberg's office with Mr. Goldberg sitting behind his desk and Dr. Sumpter and Mr. Robertson sitting in chairs in front of his desk. Tr. 14636, L.17. This arrangement emphasized the organizational power arrancement among the three people and thereby' strengthened the position of Mr. Goldberg. Mr. Goldberg's decision to have this review in such an arrangement. indicates a clear intent to emphasize his authority to overrule any decisicn j of his subordinatec and his intention to control the reportability decision, whatever his subordinates might think.

The supposed consensus that developed was little more than 137 -j

subordinates recognizing the wishes of an crganizational

, superior. Tr . - 12878, L.10 - 12879, L.10.

III.144.~When Mr. Powell came to the Goldberg team meeting to receive his instructions on what to report to the NRC, the question arose as to whether the source of 50.55(e) reports was included in the notification to the NRC. Mr. Robertson testified that someone- asked the question and someone replied in the negative, but he could not remember who either person was. Tr.

14669, L.19 - 14670, L.3. For the question to be raised was a  ;

signal to Mr. Powell about how his organizational superiors felt about mentioning the Report to the NRC.

III.145. When Mr. Golcberg usurped the authority of the IRC, he avoided the Quadrex Report going to Mr. Overstreet for review.

Mr. Overstreet was known on the project for getting very involved in Quality Assurance problems, even to resolving BLR problems himself or assigning HL&P QA personnel to do so. Fra:ar et al.,

ff. Tr. 10123, at 13, L.13 - 18.

(3) 6bdicatiga gi tggggngLb(Litg III.146. Mr. Goldberg decided to review- only the Most Serious discipline findings because he had asked the Quadre::

Corporation to place the potentially reportable items in that category. But the Quadrex Corpcration did not have the expertise to perform such a task. For Mr. Goldberg to rely on their classifications rather than performing a complete review for reportability was an abdication of responsibility to the Guadrex Corporation.

III.147. A far more serious abdication of responsibility appears in the role of BLR in the reportability review process.

i 13G

When the Quadrex. investigation began, B&R was already in trouble on the -Project as a result of the Order to Show Cause and the extensive work underway to respond to that order. B&R also knew

'they were'in trouble in the engineering area. We find that asking B&R to perform' the primary evaluation of the Quadrex Report findings was a deliberate abdication of responsibility to an organi:ation with the greatest incentive to minimize the number of reportable findings.

III.148. Mr. Goldberg was concerned about B&R's cooperation with the Quadrex study from the very beginning. Tr. 11617, L.1 -

19. The concern was based on Mr. Goldberg's experience that one engineer will resist another engineer looking over his or her shoulder. Tr. 11617, L.25 - 11620, L.7. Mr. Goldberg wrote to B&R's Mr. Salterelli characterizing the study as an HLLP study with the Quadrex Corporation as technical assistant to HL&P. This letter placed the study in the context of the contractual relationship between HL&P and B&R and thereby insured B&R cooperation. -CCANP Exh. 73; Tr. 11619, L.7 - 13. There is also evidence that Mr. Goldberg's letter to Mr. Salterelli was necessary because B&R was very hostile to HL&P oversight. CCANP

' Ex h .- 74, item 1; Tr. 11625, L.1 - 7. By mid-February, B&R was already in a posture of " bitter defense" regarding the Quadrex study and trying to do an end run around Quadrex to avoid the study altogether. CCANP __________ CCCANP Motion to Roopen the Phase II Record: II, dated October 16, 1995, Exhibit 2, at G10371. By the Spring of 1981, the hostility between B&R and HL&P had become so serious that HL&P conducted an organizational 137

-development- session to try to get to the heart of why there was so much bad feeling between the.two organi:ations. The heart of the' problem was B&R's management. Tr. 11625., L.12 - 11628, L.9.

Mr. Goldberg gave this same management the responsibility for carrying out. the primary review to determine which Quadrex findings would be reported to the NRC. We find this abdication of reponsibilty to BLR to be unacceptable, willful, and disqualifying on character grounds.

III.149. In the midst of the Quadrex review, BLR did have an opportunity to address a finding. We note that Dr. Sumpter testified that BLR did not find a deficiency in the fact they had used _a value for stress in penetrations that exceed the code allowable. BLR found no deficiency because the existing

. calculations were below the acceptable value. Clearly, the B&R determination that there was-no deficiency was in error because, had the- value not been corrected, later analyses might have permitted excessive stress. HL&P engineering and the HL&P IRC correctly analyzed whether this deficiency was reportable- by analyzing whether use of the wrong value would have been a safety hazard. HL&P thus had an early indication that B&R was not going to perform an adequate analysis of the reportability of Quadrex findings.

III.150. When Mr. Goldberg set up the B&R review of the Guadrex Report, he also gave B&R the authority to dedide on stop work orders. App. Exh. 61, at 2, item c; Tr. 11710, L.10 - 20; I 1

11712, L.6 - 11. Not surprisingly, there were no such orders issued by B&R. From the evidence, it does not appear that HLLP made any independent effeet to determine if such stop work ceders 140

i.

were warranted. HLLP- shoulo have done their own stop work analysis. Such orders'were used by HL&P if there was a potential for an irremediable defect or a need to get attention to problems too long unresolved. The latter use was particularly for situations where prudent management level contacts had been exhausted. Tr. 10150, L.7 - 10153, L.10.

(4) Iggggt gg tbg Ecgjggt III.151. The manner in which the Quadrex Report was handled continued to impact the Project. The IRC could have found other Quadrex items potentially reportable, but they never got the chance to conduct such a review. Furthermore, had they decided some additional. item was potentially reportable, that decision would then have gone to Mr. Robertson for agreement prior to notifying the NRC. If Mr. Robertson would not agree, the IRC would go to Mr. Goldberg. Tr. 14680, L.17 - 14681, L.15.

Obviously, there was little chance that the IRC would seek to.

independently review a Quadren finding since their decision would have to be agreed to by two of the three members of the Goldberg team, both higher in the authority structure of the organi:ation than any member of the'IRC.

II.152. Dr. Sumpter and Mr. Robertson were concerned enough about the reportability review process to revisit every finding in the Quadrex Report again after the May 8 evaluation. Sumpter, ff. Tr. 12699, at 13; Tr. 12822, L.25 - 12826, L.6.

III.153. After being reduced to a messenger boy en May 8, l

Mr. Powell got the message en how the Quadrex Repcrt was to be j handled. The Quadrex Report was specifically mentioned in the 141 1

.j

i

!. minutes of the IRC prier to the May 8 review. Sgg CCANP Exh. 95.

Subsequently, the IRC minutes simply referred to a "recent technical assessment." CCANP Exh. 129, 130, and 131. The formal.

f ollow up report required by 50.55(e) never mentioned the Quadrex Report' or even "a recent technical assessment" prior' to the release of the Quadrex Report in September 1981. Cemgacg App.

Exh. 73, First th. rough Fifth Interim Reports with Sixth Interim Report. While the IRC minutes reflect the HVAC problem as confirmed in "a recent technical assessment," CCANP 130, none of the formal reports to the NRC mention this fact, even when the history of the May 8 report is finally provided. App. Ex. 74, sgg gggggially Final Report at 2,Section II. ,

III.154. A month after HLLP received the Quadrex Report, Mr.

Overstreet helped prepare a stop work order regarding B&R engineering's failure to- take prompt corrective action on a problem related to access engineering. The draft document was prepared for Mr. Blau's signature. At a subsequent meeting which involved Mr. Overstreet, Mr. Blau, and Project Manager Barker, Project Manager, Mr. Barker decided that, rather than a stop work order being issued, he approach BLR engineering management to resolve the issue. The stop work order Mr. Overstreet brought to Mr. Blau for signature would have stopped all engineering werk on the project. Tr. 10206, L.20 - 10207, L.9. At the time, Mr.

Barker was only slightly familiar with the problem. Tr. 10211, L.11 - 19. The stop work order as suggested by Mr. Overstreet was not the customary procedure. Quality Assurance had its own ability to issue such orders, but Mr. Overstreet wanted Mr. Blau, Supervising Project Engineer, to sign the order. Mr. Overstreet 142

did plan to stay on top of-the problem and be sure Mr. Barker's approach worked. Tr. 10231, L.17 - 10232, L.22. At the time the stop work order was prepared, there were many QA personnel in favor of it. .Tr . 10233, L.11 - 10234, L.12; CCANP Exh. 58.

Apparently frustration over the Barker approach led to a call to CCANP which then led to the Guadrex Report being revealed in its entirety to the NRC. Sgg CCANP 144, Enclosure 1; NRC Exh. 124.

(5) The agetggtiatg NRG gnigccgment tggggggg III.155. In February and March of 1982, The NRC Region IV Office conducted an investigation of an allegation, supplied by CCANP, which suggested "that Houston Lighting and Power management personnel deliberately withheld the Quadrex Report from the Nuclear Regulatory Commission" and which further contended that "the allegation, if proven, would be a conspiracy to obstruct the Nuclear Regulatory Commission from conducting its lawful regulatory duties." NRC Exh. 140, at page numbered 2. This investigation concluded that there was not a conspiracy based on the fact Mr. Sells knew about the existence of the Report. But as we review the record, we now see the error of this NRC approach.

The conspiracy did not begin when the Quadrex investigaticn began. The real ccnspiracy began when Mr. Goldberg set up the review process we examined in great detail above. The conspiracy could not have as a purpose keeping the e::istence of the Quadre::

. Report from the NRC, since the NRC had known about the study since its inception. The purpose of the conspiracy was to limit the number of findings reported to the NRC and thereby also limit the possibility the Report would have to be turned over to the 143

NRC. Thus, the NRC investigation did not address the real conspiracy. We find that there was a conspiracy to prevent the entire Quadrex Report frcm being turned over to the NRC. The key figure in this conspiracy was Mr. Goldberg, but he was placed in

-the " position of having to g'ive serious consideration to such a drastic step by the lack of character and competence on the part of Mr. Jordan.

III.156. In a sense, CCANP made a mistake in bringing this allegation to the NRC Staff. Since the allegation was a conspiracy to obstruct the Nuclear Regulatory Commission's performance of its regulatory role, the allegation more appropriately should have been made to the Justice bepartment.-

The NRC primarily inspects to insure the implementation of the requirements of Appendi:: B. They are not . charged with investigating potentially criminal conspiracies. At the same time, the NRC compounded the error by proceeding to investigate

'the allegation, rather than immediatelv forwarding it to the Justice Department. Such forwarding was particularly called for since 'the allegation involved the role of at least one official with the NRC (Mr. Sells). If there were a conspiracy to keep the Quadrex Report from NRC Inspection and Enforcement and if Mr.

Goldberg somehow enlisted Mr. Sells in that plan, then Mr. Sells might well have faced indictment. The NRC, as an agency, would then face significant public criticism and perhaps Congressional investigaticns. With the participation of Mr. Galls part of the issue to be investigated, the NRC had a conflict of interect in even conducting this investigation.

144

r:

h. 8ggligantgi cuttggt vigw gf Quadtg:1 Rgggch bandliO9 III.157. At no time during the Phase II hearing did any of the -Applicants' witnesses indicate they would do anything differently today than was done in 1981. Sgg gtgt Tr. 12520, L.14

- 12521, L.10 (Goldberg); Tr. 12833, L.7 - 24 (Sumpter).

i. Gggliggetgi t tgatmget gi thggg tggggggibig III.158. Mr. Goldberg was elected to Group Vice President -

Nuclear and-assumed Mr. Oprea's responsibilities, which included Quality Assurance. Goldberg, ff. Tr. 11491, at 2, L.1 - 9; Jordaa, ff. Tr. 11990, at 2, L.1 - 5: Tr. 11913, L.17 - 11914, L.9. Mr. Oprea retired voluntarily after staying six months longer than he planned to because Mr. Jordan asked him to do so.

Tr. 11919, L.16 - 22. There was nothing punitive about Mr.

Oprea's retirement. Tr. 11920, L.22 - 25. Mr. Jordan was elected Chairman of the Board and relinquished his office as President but kept his position as Chief E::ecutive Of ficer. Mr. Jordan is, thus, the leading figure at HL&P in both matters of policy and the direction of the company's affairs.

2. GQUIEUIl0U 10 III.159. Given our conclusion that the process established by Applicants for review of the Quadrex Report and its findings constituted a conspiracy to limit the number of findings notified to ~ the NRC and given that this same conspiracy operated to

. prevent this Board from learning of the Report, there is little need for findings on this part of the contention. A conspiracy to prevent an NRC licensing board from learning of significant safety related information clearly reflects adversely on 145

o Applicants character, competence, and ability to manage the construction and operation of a nuclear power plant.

III.160. We turn our attention to the issue of the removal of B&R from the Project. The history of this event illuminates why Mr. Goldberg felt it necessary to hide the substance of the Quadrex Report.

III.161 When Mr. Goldberg first came to STP, he toured the site and saw a power plant that had been around for along time but that was not very far along. Tr. 12482, L.17 - 22. This tour r.ai sed in his mind the broader question of why the project had not progressed further in both engineering and construction. Tr.

12482, L.22 - 12483, L.2. Mr. Goldberg approached HL&P management about seeking alternatives to BLR in January 1981 and again in April 1981. In mid-April, Mr. Goldberg met with B&R executives and urged them to hire a senior nuclear executive responsible for engineering, design, construction, and Quality Assurance reporting directly to the President and Chairman of the Board of DLR. As.of late April, 1981, Mr. Goldberg considered the BLR refusal to pursue his suggestiona a critical failure on their part, the " Achilles heel," as he put it. CCANP 91, at 1375, L.3 -

25. Thus. by May 1981, Mr. Goldberg had been urging HLLP's upper management to explore alternatives to BLR for four months, particularly.in late April. Goldberg, ff. Tr. 11491, at 56, L.14

- 17; at 33, L.15 - 59, L.16; Tr. 10518 - 10520; 10413, L.13 -

10417, L.17. But Mr. Jcrdan testified that, when he appeared before us on May 14, 1981, replacement of D&R was not undar active consideration, in spite of Mr. Goldberg's approaches.

Jordan, ff. Tr. 11908, at 7, L.10 - 9, L.93 11999, L.24 - 12000, 146 1

1 .

i L.18. He. further explained t.h a t , since he was chief executive office of the corporation, there would be no research done on alternatives unless he agreed to have it done and that there were rua discussions at that time about seeking alternatives because he was not prepared to discuss it. Tr. 11974, L.3 - 22. Mr. Jordan did not consider -seeking alternatives until late June 1981, partly because he was not in the. mood to do so. Tr. 12000, L.7 -

18.

III.162. Mr. Jordan explained his refusal to consider seeking altcrnatives to B&R as based on his previous experience in exploring such a possibility in June 1980. At that time, Mr.

Jordan and Mr. Oprea approached other architect-engineers to discues possible replacement of BLR. The effort was abandoned because the architect-engineers approached would not take the job and, instead, urged HLLP to try to build up BLR to an acceptable level. Jordan, ff. Tr. 11908, at 7, L. 10 - 25; Tr. 11970, L.5 -

13. Even after Mr. Goldberg began urging an explcration of options in January 1981, Mr. Jordan chose to continue pursuing improvements in BLR. Jordan, ff. Tr. 11C08, at 8, L.13 - 25. Mr.

Jordan finally changed his mind when he saw from the new B&R forecast in June 1981 that BLR was not going to produce very much work, id., at 9, L.10 - 10, L.3.

III.162. HL&P efforts to improve B&R's engineering performance started long before Mr. Jordan approached Bechtel and Ebasco in 1980. In 1978, HL&P learned that BLR had sericusly overestimated the amount of engineering completed. Tr. 1224, L.1

- 1225, L.12. In explaining to B&R, and their parent company 147

Halliburton, .why HL&P had decided to seek alternatives to E&R, Mr. Jordan noted these long term HL&P efforts at improvement. _See CCANP 76, 77, and 80. One critical improvement sought by Mr.

Goldberg was the recruitment by BLR of a senior nuclear executive reporting directly to the top officials at B&R. t1r . Jordan viewed the corporate organi:ation as less important than the people. Tr.

11966, L.13 - 11967, L.21. But it was precisely B&R's failure to attract the best people in the world over a long period of time that Mr. Jordan pointed to as the improvement B&R had not made.

CCANP 76, 77, and 80. Furthermore, the people B&R had put in senior positions were not competent. Tr. 11960, L.4 - 11966, L.12 (Jordan)..

III.164. during the course of Phase II cross examination, we learned that Mr. Jordan was not aware of whether the Quadrex Report looked at all aspects of B&R's engineering. Tr. 12196, L.7

- 9. Mr. Jordan was aware that the project changed contractors in the HVAC area, but did not know the details of the HVAC problems.

Tr. 12205, L.2 - 10. He was unaware whether a significant amount of safety-related work had been performed by B&R between April-May 1981 and September 1981. Tr. 12215, L.1 - 12. He knew nothing about the people actually performing the design and engineering of the project in 1981. Tr. 11935, L.4 - 9. Mr. Jordan was generally unfamiliar with key HL?P staff on the project. Tr.

11938, L.2 - 17. He was unfamiliar with the Incident Review Committee or the normal procedure for deciding whether significant deficiencies are reported to the NRC. Tr. 11936, L.22

- 11923, L.1.He did not work on the request for proposals to rep 1Tce B&R sent out in July 1981. Tr. 11978, L.10 - 23. He was 140

- - 1 ,

1 unfami. liar with efforts made to subcontract B&R work. Tr. 12004, L. 14 -

22.. He had no opinion on whether the B&R engineering process in~May 1981 was being conducted in an orderly fashion.

Tr. 11945, L.19 - 22. He had no idea whether a lack of an ability to plan engineering activities was a cause for B&R's inability to accurately project a schedule for the project. Tr. 11947, L.7 -

12.

III~.165. When the time came to make the actual decision on who would replace B&R, Mr. Jordan made that decision, although Mr. Goldberg would have liked to, Tr. 12613, L.8 - 12616, L.1, and favored a different contractor. Tr. 12682, L.3 - 12693, L.5.

3. GCgdtbtLLty gi 6ggligantgi Ebegg 1 Iggtletty

a. Entlute te mentlen oundt gu agagtt III.166. In general, Applicants' senior management took the positien in Phase II that their failure to mention the Guadrex Report in Phase I resulted from their perception that the Quadrex Report did not relate to the matters at issua in Phase I.

While this position is irrelevant given our ruling that the Quadrex Report did relate to the issues in Phase I, we now examine . the credibility of the Applicants' position in order to determine in part whether their violation of the dgguitg rule reflects adversely on their character and competence end their ability to manage the construction and operation of a nuclear power plant.

DONLEY DUARD JORDAN III.167. Mr. Jordan participated in the decision to conduct the Quadrex investigation. During the conduct of the study, he 149

occasionally received progress reports. Mr. Jordan attended the February 20 Management Committee meeting at which Mr. Barker stated that an -independent review of BLR's engineering was needed, that the engineering review was being performed by

' Quadrea, 'and that HL&P needed "to have info [rmation3 to meet

' lic[ensing] hearting 3 OEuestion]s." CCANP Exh. ______ { Exhibit 3 to CCAMP Motion to Reopen the Phase II Record: II at 20911. Mr.

Jordan was briefed an the results of the Quadrex study on May 11, 1985. Jordan, ff. Tr. 11908, at 2,L. 17 - 3, L.21. Mr. Jordan testified in. Phase I of this proceeding on May 14, 1981. Tr. 1223 gt 99Gs III.168.. Regarding his May 11 briefing on the Quadrex Report, Mr. Jordan testified that Mr. Goldberg did not convey to him that the STP design was deficient or did not meet regulatory requirements, except fcr the rew items reported to the NRC on May G. Jordan, ff. Tr. 11980, at 3, L.23 - 27. He further testified that he had received no suggestien from Mr. Goldberg that the Quadrox Report er the concerns HL&P had about BLR's engineering were Quality Assurance concerns. Id. at 11, L. 13 - 17; Sgg 2 1 gg Tr. 11930, L.1 -

11933, L. 15. He characterized the discussion as providing- limited exposure during a quick briefing. Tr. 12140, L.16 - 20. Mr. Jordan did testify that Mr. Goldberg told him in the May 11 -briefing that B&R lacked expertise in how to do nuclear engineering and design, Tr. 11933, L.22 - 11934, L. 10, but then decided to change that answer. Tr. 11934, L.11 - 11935, L.3. He did' consistently testify that Mr. Goldberg told him B&R t

had an insufficient number of experienced nuclear design people.

150 u_

E ,

'lY =

III.169. In his testimony,- Mr. Jordan stated that the purpose of the Quadrex study and the substance of the final report pertained to the status of engineering at STNP and whether or not BLR was capable of completing the-job in a timely and cost-effective manner, matters which he did not consider relevant to the Phase I proceeding. Jordan, ff. 11903, at 10, L.10 - 11, L.21; Tr. 11921, L.8 - 11923, L.14; 12140, L.5 - 14; 12194, L.14 12197, L.G. (Jordan).

III.170. In explaining why he did not mention the Quadrex Report at particular points in his testimony, Mr. Jordan reiterated his view of the purpose and substance of the Report and testified that the Report did not relate to Quality Assurance, which fue perceived to be the topic he was being questioned on. Sgg ggngtally Jordan, ff. Tr. 11908, at 11, L.23 -

14, L. 5.

III.171. When asked about a part of the Phase I transcript not covered in bis prefiled testimony, Mr. Jordan first testified that. he did not mention the Quadren Report at that point because the questions seemed to go to the intergrity or truthfulness of BLR's reports to HL&P, particularly on engineering completion, which was not the subject of the Quadrex study. Tr. 12100, L.10 -

12141, L.20. He did later testify that one purpose of the Quadrex study was to assure the accuracy of the monthly reports HL&P received from BLR at that time, Tr. 12196, L.10 - 12197, L.3, but y

he quickly altered that testimony. Tr. 12197, L.3 - 9. When asked about a- consultant's report he did mention in the section of Phase I testimony at issue and whether that report was similar to 151

U , . .

r the Quadrex Report, Mr. Jordan stated the report mentioned was quite different because that report "was one produced to determine whether or not the project had an opportunity to meet the cost and schedule through construction and completion that had been set-for it" and "the Guadrex Report was not like that at

~

~ all." Tr. 12197, L.10 - 12199, L.19.

JEROME H. GOLDBERG III.172. There are numerous points in the Phase I transcript where Mr. Goldberg should have mentioned the Quadrex Report, but perhaps the most striking is Tr. 2386 - 2409. In this segment, Mr. Goldberg discusses B&R engineering, its management and its performance. It is very informative to read this segment knowing that Mr. .Goldberg had the Guadrex Report at the time. For example, he testifies about B&R "becoming very sensitive" to the proper implementation of design criteria in the designs, but makes no mention of the source of that sensitivity. Tr. 2391. He testifies about engineering reviews but makes no mention of the review just completed. Tr. 2404. When asked, "Now, as to design, what are the principal areas where you have found CBLR]

lacking?", Tr. 2405, L.4 - 5, Mr. Goldberg's entire answer to that question takes one page of the transcript. Tr. 2405 - 2406.

It is not surprising that he used the word vgcacity when he meant to use the word ygtifigattgg.

b. Egligtg tg eggtLgG tgylgu gi DLBig tglg ag atsbilast:sOciosat GEORGE W. OPREA l 1

l III.173. In Phase I of this proceeding, Mr. Oprea was asked on June 2, 19G1, whether he had had any discussions with any of 152

p. . _ .

l l

4 L

his staff or other individuals after the Order to Show Cause in

' April'1990 regarding removal of B&R from the project. His answer was ' simply "No," and the cross examinaticn proceeded to other topics. Tr. 3473. The record is clear that Mr. Goldberg began discussing the possible need to replace B&R with HL&P senior management shortly after he came to HL&P and continued to do so right up until the time Mr. Oprea testified in Phase I. Seg gtgz Goldberg, ff. Tr. 11491, at 59, L. 14 - 60, L.2; at 66, L.1 - 11; CCANP Eph. 91, at 1374, L.8 - 1376, L.17. In his sworn testimony before the Public Utility Commission of Texas, Mr. Goldberg testified that Mr. Oprea's response in Phase I of this proceeding was not in accord with Mr. Goldberg's recollection. CCANP Exh. 91 at 1378, L.6 - 23; at 1380, L.10 - 19.

4. GCsdibility 91 99911sants' Ebans 11 192t10902 III.174 . False, misleading, or incomplete statements in profiled testimony may constitute Material False Statements.

III.175. False, misleading, or incomplete statements in reponse to cross examination may constitute perjury.

III.176. In the following section, we examine the credibility of the Applicants' Phase II profiled testimony and testimony given in response to cross examination during the Phase II hearing.

a. EletGORQt2 hhlGb dEE20C 19 h2 hC9dllGQl2 10lE2 Oc etsleadLQG LG Rtefiled teattenez MR. DONLEY DUARD JORDAN:

III.177. Mr. Jordan participated in the general effort of Applicants

• witnesses to convince this Board that they always 153

(

perceived the Quadrex study as dealing primarily with matters related to cost and schedule, not quality. Jordan, ff. Tr. 11908, at 5, L.15 - 22.

, .1 JEROME H. GOLDBERG:

III.178. Mr. Goldberg testified that there were no instructions that the Quadrex Report be kept secret. Goldberg, ff. Tr. 11491, at 52, L.4 - 8; See al so Tr. .12404, L.11 - 24 (secret would be the same as confidential). But when requests from other utilities for copies of the Report came to Mr.

Stanley,' even after the Report had been released to this Board, Mr. . Stanley had to seek Mr. Goldberg's permission to provide copies. In response to one request, an engineer was permitted to review the report at Mr. Stanley 's home on Halloween night , while Mr. Stanley distributed candy to children. In the second case, Mr. Stanley was permitted to mail a copy on the pecmise that no copies would be made by the recipient, that only one individual would see the report, and that the copy would be returned promptly to Mr. Stanley. Tr. 13064, L.1 -

13065, L.3 (Stanley).

III.179. Mr. Goldberg testified that the Quadren Report was not a report on Quality Assurance. Goldberg, ff. Tr. 11491, at 55, L.6 - 23. When asked abcut this statement by the Doard, Mr.

Goldberg said his testimony meant that that Quadrex study did not have as its goal the identification of OA problems or comparing DLR engineering efforts to their licensing commitments. But Dr.

Gumpter testified that the Quadrex Ccrporation "always intended to look at the quality of the work" DLR was performing. Tr.

12339, L.1 - 10. There is a very close relationship between a 154

study which looks at the quality of engineering work and a study designed-. to identify QA problems; if the quality is not there, then OA is responsible. As to whether the Quadrex study had as its goal the comparing of B&R engineering efforts to their licensing commitments, it was Mr. Goldberg who directed Quadrex to create a Most Serious category that would centain problems which posed a serious threat to plant licensability in that NRC requirements applicable to STP had not been met. App. Exh. 58.

Quadrex responded to that direction by creating a Most Serious category defined as those problems that posed a serious threat to

-plant licensability. App. Exh. 60, Vol. I, at 3-1. Quadrex also provided a most serious generic finding on whether B&R engineering was meeting their FSAR commitments. Id. at 3 3-8.

The FSAR is indeed commitments to the NRC as to what will be done and how things will be designed. Tr. 13287. L.17 - 23; 13342, L.21 - 25 (Stanley). Mr. Goldberg, himself, viewed the worst possible outcome of the Quadrex Report to be that the plant would have to be scrapped as unlicensable. CCANP _______ (Exhibit 4 to CCANP Motion to Reopen the Phase II Record II, dated October 16, 1985, at 2106}

III.130. Mr. Goldberg testified that he " regarded the Quadrex Report as a consultant's review containing advisory opinions of the type often reflected in the many technical consultant reports commissioned during the long course of the construction and operation of a nuclear power plant." Goldbera, ff. Tr. 11491, at 21, L.1 - 5. But later in the same prefiled testimony, Mr. Goldberg states that, at the time the Quadrex 155 l

Report was commissioned. "there was little or no precedent for such reviews." Id. at 68 L.15 - 27. Indeed, he even asked this Board to credit Applicants with demonstrating good character and competence for undertaking such a unique review. Id. at 68, L. 15

- 20, at 70, L.6 - 9.

III.181. Mr. Goldberg testified that there were some design deficiencies mentioned by Quadrex, but that for the most part these deficiencies had been previously identified on the project and were being rasolved. Goldberg, ff. Tr. 11491, L.13 - 17.

Of course the inquiry in this proceeding is not whether HLLP knew about the Quadren findings, but whether the NRC knew about the Quadre: findings, so Mr. Goldberg's statement is irrelevant to the issues herein. Nevertheless, the truthfulness of Mr. Goldberg's testimony is relevant. Mr.

Stanley testified that if B&R had already identified a problem, Quadren tried not to duplicate their effcrts. Tr.

13266, L.2 - 13270, L.2 See alsg CCANP 104, at 4, Ccmment

15. When Qu adren did look at problems identified previously, they did so in an effcrt to understand the rcot cause of the problem. Sag e zg. Tr. 13252, L.3 - 13253, L.6.

III.102. Mr. Goldberg testified that the ccntacts to individual firms regarding replacement of DSR was done by Mr.

Oprea and himself and that he subsequently evaluated the pecpcsals received and interviewed the companies. Goldberg, ff.

Tr. 11491, at 50, L.14 - 57, L.4. His prefiled testimeny encludes Mr. Nowman from this process altogether. CGGG2C2 'dlib App. F0F IX.33.

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5 E-disision of the Quadrex finding; t

3. That DLR performed an internal review and determined the i fi.1 ding was not potentially reportable; 6

4. That an engineer who worked for Dr. Sumpter also reviewed the item for potential reportability;

5. That the same engineer determined the item was not reportable and sent a summary of his review and determination to the chairman of the IRC with a copy to Dr. Sumpter; and

{

6. that the IRC condacted its own review and concurr=ed the L

F item was not potentially reportable. Tr. 12783, L.6 - 12794, L.

g 5; CCANP E::hs. 94 and 95.

• III.184. The particular problem that Quadrex brought to the y attention of HL&P was that B&R had used a value in their stress 2 anal ysi s that permitted greater stress than the ASME BLPV code permitted. BLR had taken their value from a section of the code P

h that was in error, although the main text of the code was A correct. The concern e:: pressed by Quadrex was that the BLR value y permitted e:: cessi ve stress in penetrations which could permit i

during plant upset considerable plastic ratcheting to occur 5 conditions. App. Exh. 60, Vol. III, G:M-30, item C.1 and footnote. (While this citation is the finding which appeared in the final repcrt, the concern expressed by Quadrox in March was E the same concern they expressed in their final report.) B&R b

evaluated the item and concluded there was no deficiency because

- the actual stresses used in designs were below the acceptable value. Tr. 12784 L.10 - 12785, L.2. HL&P engineering and the

HL&P IRC determined the error in the B&R value was not reportable because the actual stresses used were acceptable and because even o

158 i

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h ..

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,l .,.p 4

. '9. . . ..

t.

1 V 6:u; Y c.1 L '- l 9 the higher value would only have produced local yielding, not f ,7; N.-'-

failure. CCANP Exhs. 94 and 9,.s . ._ y , . f g.Q> - 9 III.185. Dr. Sumpter sought to minimize his response to Mr. l2; .1 2

+

d '{

Stanley bringing him this item. Tr. 12783, L.22 - 12784. L. 3: 5 y,;'. x ^ , , .4 9 ? .;g ..,

12792, L.16 - 21. Mr. Stanley testified that not cnly was Dr. . . , ,;,s ..

t yg

. Sumpter personally notified, he brought together HLLP and B&R M( V' 2 :i. -,

U personnel with Quadrex personnel to discuss the si tuati on. Tr.

k. '. L ,;. ] . r. .  ;.

s.m x u. 4-13110, L.13 - 13112, L. 18. Furthermore, Quadrex treated this jl 'J

^

Q finding as very important and serious. They informed HL&P that 'Il~ ~ "A , -

-.- .,k w .c,;v m.

they were prepared to make a report to the NRC pursuant to 10 g " ' ti.' .

.': A 9--

C.F.R. Part prompt action was not taken HLLP 21, if by to f.T t " .I 3

. ! i .' f  ;.

evaluate the depth of the deficiency and resolve it. They e

' >y,. ,. ' Q considered the deficiency something BLR should have detected , 'f -

y.t.% 2 p", j.] j.

,- before Guadren found it. Tr. 13296, L.1 - 13298, L.12 (Stanley). 3; C T i-y ' " +~ .

Since Dr. Sumpter was the principle contact between HL&P and M ., l' "y '

..  ;. ?

Quadren on this finding, we assume this information was conveyed ' l. ; v b,_ - .

.- ' g :L

-; to Dr. Sumpter. Whether it was or not, however, is immaterial to .

. , y ,., - .*

the seriousness with which Quadrex treated this item. 1:i f 'd. J.

2 . .

• T

}'- e

• z :.

. III.186. Also relevant to the issue of possible initiation ;j< [ f ^

.$ ft f, _ . ' -

of reportability reviews prior to the receipt of the final ,: ~4 .. . 'f

.iv .> .. : .; r. . -.

. report, Dr. Sumpter testified that he received Volumes II and III

.[. , =.?e.':; f, :.  ;

.. N N -

I

~

of the Quadrex Report on April 29, 1981, but did not review thocse S c..fv.t,'i, } '"

d. "..<,,

volumes at that time. Sumpter, ff. Tr. 12699, at 11, L.18 - 2!;  ? -i v

?

.a - .. :

^ .

'L ~

See a1so Tr. 12794, L.17 - 12795, L.10. 3 > h.,; J'

.  ? y :. .w

. ,, " f,n. .. ( ' ' ' .

'e III.187. In his prefiled testimcny, Dr. Sumpter stated that '-

h.'y,A he had censiderable experience with 10 C.F.R. Section 50.55(e),

9 Lr,. . ,',cmg y ,4,[ .

.' including managerial responsibility for HLLP's reporting of 7- " o.s.g Vi 3 ,,.3*

}N[t J.-

. 9., .- s

34. ~ ,,

W 159 PD p((...). N V R .----.-, .

$ N"' A

design deficiencies from February 1975 unti! March, 1981. He

further testified that as part of his responsibility for STP

? licensing activities, he supervised the development of HL&P and F BLR reporting procedures, sponsored training seminars ear HL&P personnel on their reporting responsibilities both before and after issuance of the STP construction permits, and participated in the evaluation of design matters for reportability. Sumpter,

[ ff. Tr. 12699, at 3, L.5 - 19. Under cross examination. Dr.

i

$ Sumpter admitted that the organi:ational structure of HL&P f changed i n 1978. Tr.12716, L.6 - 25. After this matrixing took effect, he no longer had any responsibilities for evaluating w

I potential. 50.55(e) deficiencies or notificaticn of such

=

$ deficiencies to the NRC. He also no longer had responsibility for development of HL&P and B&R reporting procedures. Tr.12750, L.2 -

12752, L.2.

?

E III.188. In his prefiled testimony regarding his e familiarity with the BLR engineering and design process in May 5 1981, Dr. Sumpter testified that he had been involved in the

?

development of the STP design and with B&R's design effort since b the inception of the project and was generally familiar with the

. project design and the SLR design process. He further testified g that his responsibilities included review of BLR System Design Descriptions (GDDs), specifications, and selected drawings against code provisions and operational needs, and review of selected BLR engineering procedures, including ALARA review procedures. Sumpter, ff. Tr. 12699, at 3, L.21 -4, L.5. Under E

cross examination, however, Dr. Sumpter admitted that after 1973, E his responsibility was to manage the engineers who performed all r

=

f 160 E P' em -mens .-

E these activities, not to perform them himself. Tr. 12752, L. 20 -

12752, L.3.

III.189. Dr. Sumpter's sworn statement to NRC investigators in 1932 is in the record. geg CCANP Exh. 93. In his statement, Dr. Sumpter said that the "only comments of any significance [in E

the Quadrex briefing on April 13, 19813 were relating to ccmputer code verification." Id. at 4. But Mr. Goldberg's notes of that same meeting reflect an extensive exploration of problems with at least 12 items starred by Mr. Goldberg as areas where potentially b reportable findings could appear. @gg App. Exh. 57.

III.190. Also in his sworn statement to NRC investigators, Dr. Sumpter stated that "The Quadrex Report was not maintained as a confidential document within our offices and numerous copies of the report were available here and at BLR." CCANP Exh. 98 at 6.

e He further stated that he was " aware of no instructions being given which would limit access to the report." Id. at 7. But it was Dr. Sumpter who initially instructed the Guadrex Corporation that their review was " entirely confidential" and that "[a]lso P

confidential" was the fact Quadrex was under contract to HLLP.

CCANP Exh. 101; see algg Finding III.178.

= b. Statements which eggegt tg be gngwin2 1 Y isl ae s

- eisteaditos et dextating it9e the abgle ttutb duci O2 ctasa f TiaT i GGli O O DONLEY DUARD JORDAN s

{ III.191. During cross examination, Mr. Jordan continued to portray the Quadrex Report as simply a cost and scheduling document, not a document related to Quality Assurance. Tr. 11921, L.21 - 11923. L.4.

T 161 b _ _ _

III.192. Prior ta the initiation of hearings in this phase of the proceeding, a filing by CCANP created a question in the minds of the Board whether Mr. Jack R. Newman, Esquire, counsel for HL&P, may have participated other than as counsel in the process of removal and replacement of B&R. The Board ultimately decided to accept Applicants' portrayal of Mr. Newman's role as

" remaining within the boundaries of providing legal advice." See Memorandum and Order (Explanaticn of Ruling on CCANP Motion to F.eopen Phase I Record), LBP-85-19 dated June 18, 1985 at 13 - 14.

Applicants seek a Board finding confirming the Board's earlier decision. See App. FCF IX.33. During the Phase II hearings, Mr.

Jorden provided further testimony as to the HL&P decision making

~

process. When asked by CCANP who the decision making team for HL&P was, Mr. Jordan first answered that he, Mr. Oprea, and Mr.

Goldberg made the selection. Tr. 11981, L.2 - 9. When asked a second quite similar question, Mr. Jordan repeated that he made the decision in consultation with Mr. Oprea and Mr. Goldberg. Tr.

11981, L.14 - lo. When asked specifically if anyone else was part of the team, Mr. Jordan replied "No." Tr. 11981, L.17 -19. Mr.

Jordan further testified that Mr. Oprea and Mr. Goldberg, primarily Mr. Goldberg, made detailed analyses of the proposals received from the various contractors and that he met with the two of them to discuss those analyses. Tr. 110981, L.25 - 110982, $[,iy.

Qj.

L.7. Under the repeated questioning of CCANP, Mr. Jordan p.'f 4..

modified his testimony to say that "there was another member of fll?

yyg-s- 6:

j ,I

~ ~

the Goldberg/Oprea review" and that from the " standpoint of

.a contract terms and from the standpoint of regulatory advice, Mr. ibfl,.

p Newman assisted to that limited degree only Mr. Goldberg and Mr. A~hf n[Ql"1 1

.;' i

. h1

?

Oprea." Tr. 11982, L.8 - 17. The critical meeting in the process of selecting a r?clacement for B&R took place on the morning of g September 12, 1*951. HL&P senior management gathered to provide

=

their overall evaluations of the possible replacements and indicate their preferences. When asked about this meeting, Mr.

E

Jordan repeatedly named only Mr. Goldberg and Mr. Oprea as b attending and participating in the selection process. Tr. 11983, L. 7 - 10; 12163, L.25 - 12164, L.3. But even Applicants Proposed Findings of Fact and Conclusions of Law recogni

ed that r Mr. Newman was at least present at this meeting. See App. F0F h IX.28 at IX-17. This proposed finding states that "HL&P counsel" r

was present at the decision-making meeting on the morning cf i

September 12, 1981. Since there is no testimony in the reccrd that would suggest this " counsel" was anyone other than Mr.

Newman and since the proposed finding cites "Tr. 12613-14 (Goldberg)" wherein Mr. Goldberg testified that Mssrs. Jordan, L

E Oprea, Goldberg, gnd Newg30 met on the morning of September 12, f 1981, the proposed finding clearly conveys that Mr. Newman was g present at that meeting and impeaches the testimony of Mr.

[

Jordan. Finally, Mr. Goldberg's sworn testimony before the Public Utility Commission of Texas makes it quite clear Mr. Newman acted outside his role as counsel in this decision making process.

e b- CCANP 90, at 1357. L.1 - 1353, L.11.

E III.193. Mr. Jordan was unable to present a c on si st e-d

' Q picture of what the Quadrex Reportwas'aupposdalyall[1 bout. WMen 7 asked if a report produced earlier in the project by Gibbs and a

Hill was similar to the Guadren Report, Mr. Jordan testified that i

~

163

they were "quite different" because Gibbs and Hill "was produced to determine whether or not the project had an opportunity to meet the cost and schedule through construction and completion that had been set for it" and "the Quadrex report was not like that at all . " Tr. 12199, L.13 - 19. Yet Mr. Jordan also testified that Applicants "were concerned that engineering was not sufficient to support the construction schedule" and the Quadrex Report confirmed the legitimacy of that concern, Jordan, ff. Tr.

11908, at 5, L.15 - 19; and that the Quadrex study was initiated because Applicants suspected that engineering at BLR was perhaps behind schedule and such a study would either verify that or relieve some of the concern, Tr. 11921, L.8 - 11923, L.14.

JEROME H. GOLDEERG:

III.194. Mr. Goldberg testified that he learned Quadrex was going to have generic findings for the first time on May 7. Tr.

11673, L.7 - 13. Shortly thereafter, he testified that he may have seen the words but did not realize there would be separate items called generic findings. Tr. 11676, L.19 - 22. But Mr.

Goldberg's notes of the April 10 Quadrex briefing contain twelve observations separated from the rest under the heading " Generic Observations". App. Exh. 57, at 4 - 5. Additionally, Mr.

Goldberg 's direct prefiled testimony states that, at the April 30 briefing by Quadrex, the question was raised as to whether the Quadrox generic findings were based on the discipline findings or represented additional independent findings. Goldberg, ff. Tr.

11491, at 12, L.3 -13, L.16. Furthermore, Mr. Stanley testified that generic findings were intended from the beginning of the study, Eee CCANP Exh. 103, at 1, and it was his intent at the 164

April 13 meeting to have generic observations and so identify l them. Tr. 13119, L.7 - 25.

III.195. Under cross examination, Mr. Goldberg again attempted to characterize the Quadrex Repcrt as just another consultant's review which would, therefore, not be routinely turned over to the NRC. Tr. 12554, L.2 - 18. But he also testified that the commissioning of the Quadrex study was unique in the history of the nuclear industry at that time. Tr. 12583, L.17 - 12589, L.1; Sge alsg Finding III.180.

III.196. Under cross examination, Mr. Goldberg maintainea that there were no instructions that the Quadrex investigation or the final Report be kept secret or confidential. Tr. 12498, L.18

- 22; 12404 L.11 - 24. But from its inception, the Quadren investigation was considered confidential. Even the fact that Guadrex had been hired was confidential. CCANP Exh. 101; Tr.

13062, L.12 - 20. When Applicant personnel gave the report to NRC investigatcrs in August 1981, the investigators were told the report was confidential and strictly controlled. Phillips, ff.

Tr. 15192, at 4, A.9; see alsg Finding III.178.

III.197. Mr. Goldberg testified that after the Guadrex Corporation presented its report on May 7, he requested Mr.

Stanley and Dr. Sumpter to come to his office to discuss the repcrt while the BLR evaluati:n was in progress. According to t1r. .

1 Goldberg, the purpose of this meeting was to discuss with Mr.

Stanley Mr. Goldberg's first impressions of the Quadrex Report.

Mr. Goldberg testified that this first impression was that the magnitude of the problems was beycnd his wildest imagination or 165

2

[- expectations. Mr. Goldberg further testified that, during the ensuing discussion, Mr. Stanley said that things were not as bad as Mr. Goldberg thought. Mr. Goldberg remembered expressing his

=

0

- feeling to Mr. . Stanley at this meeting that Mr. Stanley had overdramatized the problems and remembared Mr. Stanley responding 1

E that he was attempting to get the attention of HLLP management.

Tr. 11705, L.25 - 11709, L.25. Later Mr. Goldberg testified that 7 perhaps this dialogue with Mr. Stanley had occurred on May 8 or on the morning of May 7, although Mr. Goldberg did not receive a I copy of the Quadrex Report until just before the May 7 briefing.

i Tr. 11745, L. 21 - 11749, L.18. Dr. Sumpter remembered a brief

@_ discussion, perhaps five or ten minutes, with Mr. Goldberg and J Mr. Stanley, immediately after the May 7 Quadrex briefing. Tr.

- 12796, L.17 - 12798, L.12. That is the cnly " meeting" involving .

Mr. Stanley and Mr. Goldberg that Dr. Sumpter was aware of on May b 7 or 8, 1981. Id. According to Mr. Stanley, this encounter took

=

place immediately after the Quadrex presentation to HL&P and B&R p on May 7, was a momentary encounter prior to everyone leaving the room, and consisted of Mr. Stanley telling Mr. Goldberg that the t

_ Quadrex Report was not as bad as it appeared because the problems

?

E identified could be corrected, as opposed to being irreversible.

E Mr. Goldberg neither initiated the observation by Mr. Stanley, nor responded to it. Tr. 13195, L.25 - 13198, L.2. Mr. Stanley left the presentation to take another Quadren official to the airport and then proceeded to Brown and Root to be available to

_ assist in their evaluation. He apparently remained alone at B&R

=-

e until he went to dinner and then to the airport to return to h California en a midnight flight. Tr. 13198, L.4 - 13199, L.C.

5 F

_ 166 h

III.198. Mr. Goldberg testified that on the morning of May 8, he met with Dr. Sumpter and Mr. Robertson to review the Quadrex Report beginning around 8:00 o' clock and lasting until the B&R response to the Quadrex Report came at noon. Tr. 11707, L.14 - 18; 11734, L.23 - 11735, L.6. Dr. Sumpter, who was present during much of Mr. Goldberg's testimony and who had access to the overnight transcripts, supported Mr. Goldberg's story regarding l l

this meeting taking place. Dr. Sumpter recalled that he and Mr. l Robertson met with Mr. Goldberg that morning but that the meeting did not start at 8:00 o' clock and last until noon, or anything l like that. He remembered the meeting as being an hour or less in length. Tr. 12826, L.11 - 20. Mr. Robertson, who had been i sequestered during the testimony of both Mr. Goldberg and Dr.

Sumpter, testified that there was no such meeting. Tr.14614, L.11

- 14615, L.5; 14632, L.25 - 14633, L.9. Mr. Goldberg's prefiled testimony supports Mr. Robertson's testimony. Goldberg, ff. Tr.

11491, at 22, L.4 - 11.

III.199. Mr. Goldberg testified that the B&R failure to perform an analysis of pipe break outside containment was simply a case of BLR engineering being late but not a case of a design activity out of sequence. Tr. 12234, L.8 - 12244, L.13. If design work is performed out of sequence, there is a potential for quality problems. In the case of the analysis of pipe break outside containment, Mr. Stanley testified that if BLR had performed the environmental analysis outside centainment in sequence, the error of the auxiliary feedwater pump purchased, installed, and reported as inadequate in a 50.55(e) report prior 167 r .a . ..

to the Quadrex study probably would not have happenec. Tr. 13252, t

l L.3 - 13253, L.6. The failure to perform this analysis was in fact a case of a design activity cut of sequence is confirmed in Mr. Goldberg's explanation of this event to the Management Committee on July 24, 1985, in which he stated that the design had been out of sequence, that the outside pipe should have been designed four years earlier, and that the functional environment of the engineered equipment which had been ordered would have to be restudied. CCANP 113, at 4673, next to the last paragraph.

III.2OO. In his sworn statement to the NRC on February 9, 1982, Mr. Goldberg stated that the B&R review of the Quadrex Report lasted "through the night." CCANP Enh. 87, at 2. The notes he prepared for his briefing of the NRC Regional Staff on September 8, 1981, reflect that he intended to tell them that the review lasted "all night." CCANP 89, at 2, item D.2. In fact, the B&R meeting on the night of May 7 lasted no longer than four hours. Tr. 12798, L.19 - 21 ; Tr. 12814, L.4 - 6 (Sumpter).

III.201. Mr. Goldberg testified that during the May 7 meeting of B&R to assess the Quadren Report, Dr. Sumpter and Mr.

Robertson worked "at great length with Brown and Root engineers in trying to establish such matters as the design status." Tr.

11783, L.3 - 12. In fact, Dr. Sumpter did not participate in that meeting at all. Mr. Robertsen contributed one insubstantial comment to the meeting. Tr. 14609, L.21 -14611, L.5 (Robertson).

III.202. In his notes of the Quadrex briefing cn April 13, Mr. Goldberg placed a star by the generic observation "use of preliminary data up to fuel loading." App. Enh. 57, at 4. Mr.

Goldberg acknowledged that such a finding wculd unquestionab1: be 1eS

i 5

F E

reportable, if this view were held by numerous people, because

{

[ the quality risks involved in such a policy were tco great. Tr.

L

12037, L.1 - 12008, L.3. Eut Mr. Goldberg testified that he did

+

reportable time not consider this item potentially at that u

because he understood it to be just a remark by some people, E probably in the ELR engineering department, which "very closely I bordered on irresponsible rumor." Tr. 12005, L.4 - 21; 12037, L.1 m - 10; 12039, L.1 - 10. Mr. Goldberg does testify that he was not b

L present at the April 13 meeting when this observaticn was l conveyed by Quadre:: , Tr. 12035, L.12 -13, but he admits the I

? information came to him from Guadren. Tr. 12037, L.11 - 12. The V

$ starred item in his notes is the eighth item in a list cf twelve I

in notes which clearly appear to be kept ccntemporanecusly with I the presentation. App. Exh. 57, at 4 - 5. Mr. Stanley testified j

s that he told the April 13 meeting that the observation about preliminary data being used up until fuel lead had been heard f

r throughout numerous disciplines, expressed at a number cf different meetings with B&R, and heard "many, many times." Tr.

K b

5 13120, L.10 - 24. This observation ended uo in the final report as part of generic finding 3.1(j). App. Exh. 60, Vol. I, at 3-13. I.2,@%9

( q .y-j III.203. We asked Mr. Goldberg why the follcw up reports to 4\U y g. . g h the NRC cn the three May 8 notifications did not supply the ip.)}. .(-;, .

[ scurce of the initial notificaticns, i.e. identify the G.uadren Mbfh..

, J ?.,-6:.s9 j Report. 3eg App. Exh. /e, <4, and 75. He responded that there g),y .;

1~

gr . ;-

[ were "certainly no instructions that would tell a man you should U* N-

~

T&,y w 2 .. . .

j cr shculdn't identify the source" of a potentially reccrtable -

4

=

W.'% s ..n c' i . , , - ,

7 finding when writing such a report. Tr. 12609, L.12 - 12610, if fe:,

f'.

.T.

' AN'

{ . :e.

1b9 q .4 : .' <

, .,j 4 y.,

' b' N.,y

L.20. But the procedure in place in May 1981 called for such reports -to identify the source and extent of the incident, as well as the date and means by which the information was obtained.

CCANP Exh. I'1 at 10, Section 5.7; Id. at 17, items II.b and II.c.

Since Mr. Goldberg testified that the procedure he adopted for i

reviewing the Quadrex Report was not the usual procedure at HL&P, Goldberg ff. Tr. 11491, at 24, L.9 - 25, since he recalled specific involvement in revising that procedure, Tr. 11516, L.4 -

[

l 10, and since he personally reviewed and approved HL&P's written I

reports to the NRC pursuant to 10 C.F.R. 55.55(e), Goldberg ff.

Tr. 11491, at 2, L.26 - 3, L.3, Mr. Goldberg obviously was i

familiar with the requirements of this procedure.

III.204. Mr. Goldberg testified that there was very little activity at the HL&P Incident Review Committee in 1981. Tr.

12647, L.16 -18. Mr. Robertson testified that there were between a dozen' and two dozen IRC meetings between the time he joined HL&P on March 20, 1981 and May 8, 1981, a period of less than two months. Tr. 14557, L.17 - 14588, L.11.

III.205. Mr. Goldberg testified that the purpose of the Quadrex Report was to get an cbjective and expeditious third party assessment of B&R's nuclear engineering and design activities. He expected the review to assist him in judging what improvements were needed to complete the Project successfully and

-to provide information he would find useful for discussions of the status.of the Project with HL&P management, the co-owners of STP'and " regulatory authorities." Goldberg, Ff. Tr. 11491, at 22, L.22 -5, L. 3. When asked what he meant by regulatory authorities, Mr. Goldberg testified he had no way of knowing, 170

that anybody from the NRC might ask him a question about engineering. Tr.'11582. L.18 - L.21. He was then asked whether he expected to be discussing the Guadren Report with this Board during the Phase I hearings. He replied that was a possibility because this Board had a wide latitude as to where they could ask questicns. Tr. 11582, L.22 - 11583, L.2. He was then asked l

l whether it was not in fact true that he sought the Quadren l

l investigation in part specifically to prepare himself for the Phase I hearings. He replied "No." He elaborated on that answer i

by explaining that the prcblems created by the Order to Show l

Cause were close to resolution, that the project was gcing to go forward rapidly once those problems were out of the way, and that he had a gut feeling that engineering might not be able to keep pace with the planned schedule. He testified that the only l

influence the pending Phase I hearings had on the Quadren 1

investigation was to create a time pressure to finish it, so Mr.

3c1dberg wculd not have to "fcol with Quadren" once the hearings b+gan. That he might be able to answer Phase I nearing questions on engineering based cn the Quadren Repcrt was a " side benefit" of tLe study. Tr. 11582, L.13 - 11584, L. 17. But in his sworn statement to the NEC in 1981, Mr. Goldberg stated that after he joined JL&P in October 1980, he reviewed the history of the -

project, the Order to Show Cause, and the information prepared for the Phase I hearings. He then stated that after reviewing the STP engineering program, he felt "there was a need to have a third party assessment conducted regarding the design and enginaering programs of Brown & Root, Inc. (91R) in order that I 171

would be able to respond to any question- regard 1r.g the status of these activities at STP." CCANP Enh. 87, at 1. The clear import of his statement is that he was preparing for the licensing hearingc and sought the Quadren investigation, so he could testify knowledgeably at the Phase I hearings. Subsequent to the close of the Phase II hearings, CCANP brought te our attention documents which demonstrate clearly that a primary purpose of the Quadrex study from its inception was to prepare Mr. Goldberg for the Phase I hearings. See CCANP ____,____,_____, and ______.

(Enhibits 1 through 4 to CCANP Motion to Reopen the Phase II Record: II, dated October 16, 1995}. CCANP _____ CEnhibit 1 at 2052} records that Mr. Goldberg told the December 4, 1980 Management Committee meeting that he expected ELR's constructicn errors to raise questions about BLR's engineering. Mr. Goldberg further told the meeting that outside engineers were being identified at that time to perform an engineering overvieu and that this overview would enable Applicants to " provide strong test [imony] at Ethe] OEperating] LEicense3 hearing." Id. Mr.

Goldberg was concerned that the questien might arise as to how HLLP knew that BLR's engineering work was correct. Id. Exhibit 3 at 2091 records that Mr. Barker told the February 20, 1921 Management Committee meeting, which Mr. Goldberg attended, that an independent review of SLR's engineering was neeced, that the engineering review was being performed by Quadrex, and that HLLP needed "to have infoCrmation] to meet lictensinqJ hearEing]

OEuestion]s." Exhibit 2 at page 31037 records that Mr. Goldberg, at the February 19, 1981 meeting of the Management Committee, responded to a question regarding the "effect on Ethe] OL 172

hearEings] of Can3 adverse [Quadrex] audit" by saying that __

Applicants could "only disclose Ethe Quadrex Report] & explain Ethe] solution." Id. In this same meeting, Mr. Goldberg stated that in the licensing hearings, the ASLB would not believe __

?

or D&R but would believe Quadrex. Exhibit 4 at Applicants Id. _

2106 records that Mr. Goldberg told the Management Committee _

meeting on March 19, 1981, also attended by Mr. Oprea, that if the Quadrex audit found significant fault with the B&R engineering effort, the worst case scenario would be the plant could not be licensed and further work on the project would be a waste of money.

III.206. In his sworn testimony to the Public Utility _

Commission of Texas, Mr. Goldberg testified that the review team involved in evaluating the possible replacement fer B&R ccnsisted of himself, Mr. Oprea, and Mr Newman; that each team member prepared rating sheets on all aspect of the competing ,

contractors; that the team then met to exchange their views; that -

-~ '

the team then met with Mr. Jordan; and that in effect the final deciding body became four - Mssrs. Jordan. Oprea, Newman, and Goldberg. CCANP Exh. 90, at 1357; See algo CCANP Exh. No. 78 at 6 .

- 7. Mr. Goldberg further recalled that Mr. Newman favored Stone and Webster. Id. at 1353, L.7- 11. Mr. Goldberg's testimcny at -

the PUC of Texas set off the controversy as to whether Mr. Newman acted strictly in his capacity as attorney in the replacement prcceus. When Mr. Newman's role became a matter of controversy, ,_

Mr. Goldberg began to change his story. Fincing III.192. Under _

ceces examination in this proceeding, Mr. Goldberg testified that i

173

, w

the evaluation of proposals to replace BLR was dcne by Mr.

Jordan, Mr. Oprea, and himself, with advice from Mr. Nowman solely on the licensing and contractual aspects of the replacement. Tr. 12464, L.20 - 12466, L.14. He further testified that while Mr. Newman was present at the meeting on the morning of September 12, 1981, he just happened to be present during a conversation about a management matter and his opinion did not really count. Tr. 12614, L.11 - 18; Tr. 12676, L.13 - 12677, L.25.

I III.207. Mr. Goldberg testified that B&R would not have any special reason to minimi:e the reportable findings identified in .

the Quadrex Report. Tr. 11751, L.2 - 16. B&R certainly had more of a motive than any other party in the Project to minimize reportable findings since the failures of BLR had gotten the Project into so much trouble with the NRC and the licensing hearings on those failures were about to begin.

5. Egvigwg gi ibg Ogadtgg Bggcch III.208. Over the years there have been various reviews of the Quadrex Report. Applicants rely on these reviews for support of their position that the Quadrex Report as a whole and its findings were not reportable (other than the findings Applicants did repcrt). We do not find these other reviews at all percuasive.

III.209. The Bechtel Task Force Report, App. Exh. 63, is a report based on oral information rather than an assessment of the actual documentation. CCANP Exh. 104, at 1. The Task Force Report relied on designs reflecting B&R changes long after the Goldberg 174

team had performed their reportability review in 1981. Id. The Task Force Repcrt contradicted itself between one finding assessment and another. Id. at 2, Comments 5, 6, 7, and 8. The Task Force Report did not address the generic findings in a responsive maneer. Id. at 5, Comment 20. We do not find the Task Force Report a persuasive document as to the potential reportability of the discipline findings and find the Report devoid of useful analysis concerning the generic findings.

III.210. The NRC analysis of the Quadrex Report and its findings is equally unpersuasive on the point of reportability.

Sg; gengtally NRC E::h. 136. All of the reportability decisions made in this report were based on whether the design was

" released for construction" as required by 50. 55 (e) ( 1) (i i ) but ignored the possibility that the findings individually and collectively could represent a significant breakdown in quality assurance reportable pursuant to 50. 55 (e) (1) (i ) . Id. at 20, 23.

III.211. On the whole, we find nothing in evidence in this proceeding which persuasively suggests that the Guadrex Report is not documentation of a breakdown in the BLR engineering process at STP.

C. ISE EM85E 11 CODEEIEUCE lE59E@

III.212. The reportability evaluation cf the Cuadrex Report and the review of B&R's position on the Project are the subject of findings in the Character section. Seg Findings III.100 - 154, 160 - 165. In this sectior., we deal with Applicants' current 50.55(e) competence, and the testimony of Eechtel witnesses regarding the Quadrex Report.

175

1- GWCC20t 50 55fg1 Cgoggtggcg III.210. It is difficult fer us to have any confidence in the current 50.55(e) ccmpetence of the Applicants given their handling of the Quadrex Report and the absence of any signs of willingness to admit that said handling was a mistake.

III.214. The Applicants, in their proposed findings, have taken the pcsition that it wculd have been inapprcpriate fcr this Board to examine Mr. Powell 's competence in 50.55 {e) reporting, App. F0F X.6, n.1, and taken the position that Mr. Goldberg's expertise in interpreting 50.55(e) is not necessarily probative of Applicants' competence. App. FOF X.7, n.2. If the Board was not to examine the competence of Mr. Powell regarding 50.55(e)

~

and not use the evidence developed in the Phase II hearing as to the competence of Mr. Goldberg in this area, the Board has s

difficulty understanding hcw Applicants would have the Beard judge Applicants' current competence in the 50.55(e) reporting area.

III.215 We chose to examine Mr. Goldberg's coopetence in 50.55(e) in detail, both because he is still in a positicn where he could take over the role normally played by the IRC; Wisenburg, ff. Tr. 14514, at 6; Tr. 14518 - 19 (Wi senburg ) ; App.

Enh. 66, at Section 4.3.4; because Mr. Goldberg could overrule an )'

t

(

IRC determination to report a oeficiency to the NRC, Tr. 122S3, L.e - 8; and because Mr. Goldberg routinely makes decisions on L

whether matters which come to his attention should be reviewed I for reportability. Tr. 11289. L.3 seg glsg Tr. 12294, L.3 -

12:00, L.7.

III.216. Mr. Goldberg's testimony on his undeistanding cf 176

. s

a . .

6 I

E

_ 50.55(e) does not provide this Board with reasonable assurance that Mr. Goldberg properly applies this regulation. While its

_ correctly distinguishing the term " final design" in terms of E __

11766, L.19 - 11774, L.17, meaning in the 50.55(e) c on t e:: t , Tr.

Mr. Goldberg incorrectly assumed the released design would have -

a potentially to be. actually constructed before 50.55(e) >

reportable condition could exist. Tr. 11676, L.25 - 11763, L.1.

Also, when presented with the hypothetical situation of an interference, Mr. Goldberg said the condition wculd not be k _

reportable under unless such failures were g 50. 55 (e) (1) (i )

_ systematic, Tr. 12316, L.20 - 12518, L.19; nor would it be reportable under 50. 55 (e) (1) (ii ) because it could not go -

b undetected and was physically impossible to install. We find, as E

a matter of law, that Mr. Goldberg's position is in error; the --

fact that an erroneous design cannot be installed does not p_er gg E.

E make the error in design not reportable pursuant to I

{r 50. 55 (e) (1) (ii ) . See NRC. Exh. 137, at 4.

2. Testimony of Ben;btel GA Witnesgen III.217. Applicants presented a panel of Dr Sidney Bernsen

?

w and Mr. Frank Lopen, Jr. to testify about the potenti al

=

~~~

reportability of the generic findings at issue in this _

m proceeding, particular as such 71ndings might represent a 7

I significant breakdown in quality assurance reportable pursuant to _

E

[ 50. 55 (e) (1) (i ) . Dr. Bernsen is Ccrporate Manager of Quality -

s E Assurance for Bechtel Power Corporation. i9r . Loper if the -

L Assistant Project Engineer at STP. Dr. Bernsen and Mr. Lopen did not find any of the generic findings potentially reportable.

177

= __

b -

K E

III.218. We are not gaing to lenthen this Decision with an attempt to unravel the complicated distortions end ccntortions the Bechtel panel went through to demonstrate that the generic findings at issue were not repcrtable. We remember quite vividly that Dr. Bernsen, when faced with difficult questiens about the quality implications of a given finding, would retreat to his ultimate defense that no one before him had found the item E reportable.

. D. EESEOUSIBILLIY OE ISE P6BIGESS III.219. The partners in the South Texas Project had representatives on a Management Ccmmittee who received regular

~

I reports on the progress of the Project. Their discussions ranged across a broad spectrum of quality, as well as cost and -

f schedule issues. Sgg g.gu CCANP Exhs. 108 - 114. The members of

_ the Management Committee also received infcrmation about the E problems on the Project. A major tasks lists highlighted such F

h problems. After HLLP received the Quadrex Report, this report f became an item on the major problems list. CCANP Exh. 111, at 4.

I j The Management Committee received information in the midst of the -

t Quadrex study indicating how serious the Guadren findings were.

.i n

"$ See g.gt CCANP Exh. 114.

E j

7 IV. M_ O_ T _I O_ N_ T_ O_ R_ E_ O_ P_ E_ N_

P i IV.1. After the close of the Phase II record, CCANP sought B

g to reopen the reccrd to admit a lengthy report on BLR y engineering, a report which hcd not been produced by Applicants

=

[_

between its completicn on Octcber 1, 1954 and the close of the ]ff;]-[.

..,.e= -

)

l

Phase II record en August 14, 1935. gge CCAMP Motion for 30ard -4 { ,(*; i; [

f ,if?:

l T. "C

.. .a :a

'e..

Ordered Production of Documents, To Reopen the Record, For New Contentions, Fcr Discovery, and For Extension of Time, dated September 30, 1985. We denied CCANP's motion in a summary order issued cn October 16, 1985. Order (Rulings on CCANP 9/30/85 Motion). Earlier, during the hearings, we denied admissicn of another lengthy study documenting the later dispositioning of Guadren findings by the Bechtel Power Corporation, e document l known as EN-619. We have nevertheless reviewed both of these documents to determine whether they might alter any of our findings in this Partial Initial Decision (Phase II). We find ncthing in either document which would significantly alter our findings and certainly nothing that would alter cur ultimate conclusions on the character and competence of Applicants' senior management.

v. GougtySIOUS OF 6eW Based upon the foregoing findings of fact and upcn censideration of the entire evidentiary record in this proceeding, the Board makes the following conclusions of law:

(1) Applicants lack the managerial competence and character.

as those terms are used in the Atomic Energy Act, as amended, and i

the Rules and Regulations of the Commission, necessary to receive operating licenses fcr STP.

(2) Given the Applicants lack of managerial competence and character and the very sericus questions raised as to the attitude toward quality assurance of Applicants' current architect-engineer-censtruction manager, we cannot make the findings required by 10 C.F.R. Section 50.57.

179

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v r

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bx 6

4 ORDER On the basis of the foregoing Findings of Fact, Conclusions of Law, Opinion, and on the entire record, it is this _____ day

of __________, 1986 ORDERED

1. CLI-80-32 Issues A-E, Intervenors' Contentions 9 and 10, and the issues relating to the current competence of HLLP and its h contractors, including issue B/D-1, are tesolvgd as set forth in this Decision and subject to the terms and conditions set forth ,

herein.

2. The NRC Staff is dirgctgd, and other parties are

ggrmittgd, to provide the Board during the Phase III evidentiary w

$ hearing, should such hearing be necessary, with the results of a thorough examination of the current Quality Assurance Pregram g implementation conducted by personnel who are not currently I associated with the Project, either in a regulatory role or a centractual role.

3. All further activity related to the Phase III hearing is L~ hereby suspended pending a determination by the Applicants as to L whether this Decision will be appealed within the Commission.

4. In accordance with 10 C.F.R. Sections 2.769, 2.762,

_ 2.764, 2.785, and 2.786, this Partial Initial Decision shall become effective immediately and will constitute, with respect to L the matters resolved herein, the final decision of the Commission thirty (30) days after issuance hereof, subject to any review b

Edt-o 180 P - - - - -

pursuant to the above-cited Rules of Practice. Any party may take an appeal from this decision by filing a Notice of Appeal within ten (10) days after service of this Partial Initial Decision.

THE ATOMIC SAFETY AND LICENSING EOARD Charles Bechhoefer, Chairman ADMINISTRATIVE JUDGE Dr. James C. Lamb ADMINISTRATIVE JUDGE

~~ ~ ~

Frederick J I~Shon'~~~~~~~~~~~

ADMINISTRATIVE JUDGE I

i l

l f

181

r DEDICATIONS These Citizens Concerned About Nuclear Power, Inc. Phase II Proposed Findings of Fact and Conclusions of Law in the Form of a Partial Initial Decision are dedicated to:

My wife, Charlene, whose love sustains and strengthens me.

My family for their love, generosity, and support during the seven long years of this Intervention.

Those close to me during those years who suffered from the inhuman demands of the intervention process on both me and them.

The many friends who have provided their love, advice, and financial support.

The other hard working people trying to bring this project to an end and encourage safe, environmentally sound, and reasonably priced energy.

, UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFOREfTHE A'TOMIC SAFETY.AND LICENSING' BOARD

.In the Matter of (

)

HOUSTON LIGHTING.AND . ( Docket Nos. 50-498 OL POWER COMPANY, ET AL. ) 50-499 OL (South. Texas Project, (

Units:1 and 2) (

GEBIIElG8IE QE EEBY1GE I. hereby11 certify-that copies of CCANP*S PHASE II PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW .IN THE FORM.0F A PARTIAL

' INITIAL. DECISION-were; served by hand delivery October 5 (*), hand

,. delivery October 6 (**), hand-delivery October 7 (***), Express Mail' October'7'(****), or deposit in the U.S. Mail, first class postage paid to'the following individuals and entities.

o** Charles Bechhoefer,' Esquire Brian Berwick, Esquire Chairman .

Asst. Atty. Gen.

Atomic-Safety and Licensing Board State of Texas U.S. Nuclear Regulatory Commission Environmtl. Protection 1 Washington, D.C. 20555 P. O. Box 12548, Capitol Sta.

Austin, Texas- 78711

• • • • Dr. James C. Lamb, III

. Administrative Judge l**0reste Russ Pirfo, Esquire

313 Woodhaven Road .

Office of the Exec. Leg. Dir.

Chapel Hill, North Carolina 27514 U.S. Nuclear Regulatory Comm.

Washington, D.C. 20555

'o** Frederick J. Shan l Administrative Judge

• Jack.R. Newman, Esquire U. S. -Nuclear : Regulatory Commission 1615 L Street, NW, Suite 1000

~ Washington,:D.C.20555. Washington, D.C. 20036 L.

Melbert Schwar , Esquire Baker and Botts-Mrs. Peggy Buchorn .

300 One Shell Plaza Executive Director, C.E.U. Houston, Texas 77002

' Route 1, Box 1684 Brazoria,-Texas. 77472 *** Atomic Safety and Lic. Bd.

U.S.-Nuclear Regulatory Comm.

. Diane. Curran,' Esquire Washington, D.C. 20555 Harman', Weiss & Jordan 2001 S Street,-N.W., Suite 430 *** Atomic Safety and Licensing Washington, D.C. 20009 Appeal Board U.S. Nuclear Regulatory Comm.

Pat-Coy Washington, D.C. 20535 5106-Casa Oro San Antonio, Texas .78233 *** Docketing and Service Section Office of the Secretary Ray-Ooldstein U.S. Nuclear Regulatory Comm.

Gray and-Becker Washington, D.C. 20555 901 Vaughn Bldg.

807 Bra:os

. Austin, Texas 73701 f.)it------

-- =

-Lanny ainkin

.\ L ,_

u_:. *2