ML20213F617

Forwards Draft Commission Paper Transmitting Draft Final Rule Establishing Procedures to Request Certain Info Be Protected from Public Disclosure in Pending Adjudicatory Proceedings

ML20213F617
Person / Time
Issue date:	11/06/1986
From:	Olmstead W NRC OFFICE OF THE GENERAL COUNSEL (OGC)
To:	Murley T NRC OFFICE OF INSPECTION & ENFORCEMENT (IE REGION I)
Shared Package
ML20213F620	List: ML20213F617 ML20214F982 ML20214F998 ML20214G048 ML20214G053 ML20214G060 ML20214G070 ML20214G082 ML20214G083 ML20214G087 ML20214G089 ML20214G093 ML20214G098 ML20214G110 ML20214G126 ML20214G133 ML20214G136 ML20214G142 ML20214G145 ML20214G151 ML20214G163 ML20214G176 ML20214G184 ML20214G187 ML20214G195 ML20214G200 ML20214G222 ML20214G228 ML20214G239 ML20214G253 ML20214G262 ML20214G264 ML20214G273 ML20214G275 ML20214G284 ML20215G093 ML20215G180 ML20215G185 ML20215G251 ML20215G294 ML20215H465
References
FRN-50FR21072, RULE-PR-2 AB78-1-090, AB78-1-90, NUDOCS 8611140346
Download: ML20213F617 (64)

Text

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.V-y( ' UNITED STATES y' 'g NUCLEAR REGULATORY COMMISSION

,a E W ASHINGToN, D. C. 20665

\ ..... p NOV 6 W IllEllORANDUM FOR: Thomas E. Murley, Regional Administrator Jay M. Gutierrez, Regional Counsel Region I J. Nelson Grace, Regional Administrator Bradley Jones, Regional Counsel Region if James G. Keppler, Regional Administrator Bruce A. Berson, Regional Counsel

Region TTI Robert D. Martin, Regional Administrator William L. Drown, Regional Counsel Region TV 4

John B. Martin, Regional Administrator Lewis Shollenberger, Jr. , Regional Counsel i

Pedon V FROM: William J. Olmstead Assistant General Counsel for i

, Rulemaking and Fuel Cycle Ofnce of the General Counsel i

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SUBJECT:

DELATIONSIITP BETWEEN INVESTIGATIONS /

INSPECTIONS AND ADJUDICATIONS - FINAL RULE ESTABLTSIISING PROCEDURES FOR RESOLVING CONFLICTS CONCERNING TIIE DISCLOSURE OR NONDISCLOSURE OF TNFORMATION i

! Attached for your review and comment is a draft Commission paper J

transmitting a draft final rule (Enclosure 1) . establishing special procedures which NEC offices and staff may use to request that certain information be

, protected from disclosure in pending adjudicatory proceedings. The draft

,' final rule implements certain provisions in the Commission's 1984 Statement of Policy on investigations, inspections end Adjudicatory Proceedings.

l Copies of the public comments (Enclosure 2) and a comparative text i

identifying the differences between the proposed and final rule (Enclosure

3) are also attached. Any questions or comments may be referred directly to Jane R. Mapes of my staff at 402-8695.

Please note that the text of I 2.781 used in the draft final rule and mentioned in the first full paragraph on page 3 of the draft Commission paper is the text used in the Commission's proposed rule to amend 10 CFR I

Parts 0 and 2 to revise the ex parte and separation of ' functions rules applicable to formal adjudicatory proceedings (51 FR 10393 at 10401, March rt,/H4f 34 Xk

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l 26, 1986.) It is our understanding that this text is likely to be retained in the final rule which is expected to be forwarded to the Commission for action by the end of November.

In order to keep final office review and concurrence on schedule, we would appreciate your response on or before c.o.b. November 21, 1986.

, Y ,

I?illiam .T. Olmstead i

Assistant General Counsel for Rulemaking and Fuel Cycle Office of the General Counsel

Enclosures:

Draft Commission paper with Enclosures 1, 2 and 3 i

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26, 1986.) it is our understanding that this text is likely to be retained in the final rule which is expected to be forwarded to the Commission for action by the end of November.

In order to keep final office review and concurrence on schedule, we would appreciate your response on or before c.o.b. November 21, 1986.

William J. Olmstead Assistant General Counsel for Rulemaking and Fuel Cycle Office of the General Counsel

Enclosures:

Draft Commission paper with Enclosures 1, 3 and 3 DISTRIBUTION JMapes WJOlmstead OGC S/F

, OGC R/F Central File Regs File I

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WJ. ad :  :  :  : l

______: ___________.___:______________.______________.______________.______________ ______ =___

IMIE :11/4 /86 :11/( /86  :  :  :  :

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i For: The Commissioners From: William C. Parler General Counsel

Subject:

RELATIONSHIP BETWEEN INVESTIGATIONS /

INSPECTIONS AND ADJUDICATIONS - FINAL RULE ESTABLISHING PROCEDURES FOR RESOLVING

CONFLICTS CONCERNING THE DISCLOSURE OR

! NONDISCLOSURE OF INFORh!ATION Related Documents: SECY-85-20, January 17, 1985, referencing SECY-84-276/276A j

Purpose:

Obtain Commission approval of a notice of final rulemakinF.

Summary: In accordance with the directives contained in the

. Commission's Statement of Policy on Investigations, Inspections and Adjudicatory Proceedings and after -

consideration of public comments, the staff proposes adoption of a final rule (Enclosure 1.) to provide special procedures which NRC offices and staff may use to request that certain information be protected from disclosure in pendinF adjudicatory proceedings. '

Except for some minor- editorial revisions, the j recommended final rule is substantially the same as j the proposed rule.

Background:

On September 12, 1984, the Commission directed the Executive Director for Operations to prepare a proposed rule which would implement those provisions of the Commission's Statement of Policy on Investigations, Inspectior.8, and Adjudicatory Proceedings (49 FR 36032, September 13, 1984) which call for the establishment of special procedures i for resolving conflicts respecting the obligation of

. NRC offices and staff under the Commission's board notification policy and procedures . to disclose I

information deemed relevant ' and. material to a pending adjudication and the need to withhold that information from disclosure because it would reveal the identity of a confidential informant or prejudice

Contact:

Jane R. hlapes, OGC 492-8695

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-, 1 an ongoing NRC investigation or inspection. The proposed rule was published for comment on May 22, 1985 (50 FR 21072.) The comment period expired on August 23, 1985 (50 FR 30446, July 26,1985). The r Commission received nine letters of comment express-ing the views of interested utilities, professional organizations, private counsel, intervenors and individual members of the public. A list of the commenters and the text of the comments are provided in Enclosure 2.

Discussion: As discussed more fully in the preamble of the draft final rule (see Enclosure 1., pp. 4-15) the com-menters objected to the proposed procedures as pub-lished for comment on the grounds that they were illegal, unnecessary, contrary to due process and unfelr. Although most of the commenters recognised the Commission's need to withhold or otherwise protect information in order to protect a confiden- l tial source or to avoid prejudicing an ongoing j investigation or inspection and the consequent

! necessity for in camera presentations, all of the

. commenters were opposed to using so-called er parte techniques to schieve this objective. The staff's response to the public comments is set out in the preamble of the final rule (see Enclosure 1. ,

pp . 16-27. )

i Since the receipt of the public comments, although not in direct response thereto, the Commission has made significant changes in the manner in which its board notification policy and procedures are to be implemented by NRC offices and staff. (See Com-mission Memorandum and Order of January T6,1986 in Louisiana Power & Light Company (Waterford

, Steam Electric Station , Unit 3) Docket No.

50-382-OL, CLI-86-1, 23 NRC 1; NRR Ofdce Letter No. 19, Rev. 3, May 29, 1986; June 3, 1986 directive of the Executive Director for Operations.

See also Enclosure 1. , pp. 16-19. ) In accordance

with these changes, the obligation of NRC offices 4

and staff to notify boards arises only when NRC offices or staff have information which is both  ;

relevant and material to the issues in controversy i in a pending adjudicatory proceeding. As a result of these changes, the occasions on which these special procedures would be used are quite limited.

For example , in general, in implementing the

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} Commission's board notification policy and pro-cedures, the staff need not . ordinarily concern itself with the investigative process until after a report of an inspection or investigation has been prepared and issued. Also, as a result of these

, changes , many of the chfections raised by the commente: s have now become moot.

Subject to certain minor editorial revisions, the recommended final rule is substantially similar to the proposed rule as published for comment. A com-parative text is provided in Enclosure 3. The principal change is replacement of an amendment to l

$ 2.780, Ex parte communications, by an amendment i to 5 2.781, Separation of functions, as set out in 4

SECY , Enclosure -

. ' As explained in the preamble of the final rule (see Enclosure 1. , p. 21, footnote 4) the new procedures present a separa-

tion of functions problem because they concern com-4 munications between NRC offices and staff and NRC decisionmakers, not communications between persons outside the agency and NRC decisionmakers.

The justification for the procedures in the' recommended final rule is that the benefits to be 2 gained from the standpoint of reaching well-grounded 1

decisions which will protect the radiological health -

and safety of the public while at the same time providing assurance that confidential sources of information are adequately protected far outweigh any temporary disadvantages which may result from the provisions of the proposed procedures which provide for in camera presentations by NRC offices j and staff witfiout other parties present.

Recommendation: That the Commission:

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1. Approve publication of amendments to 10 CFR Part 2 (Enclosure 1.) as a final rule.

2. Certify that this final rule will not have a significant economic impact on a substantial number

of small entities in order to satisfy the requirements of the Regulatory Flexibility Act, 5 U.S.C. 605(b).

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3. Note:

a. The amendments to 10 CFR Part 2 will be published in the Federal Register and will become effective 30 days after publication,

b. The final rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(1) therefore, pursuant to 10 CFR 51.22(b) no environmental impact statement or environmental assessment need be prepared in connection with the issuance of the final rule.

c. The final rule is not a backfit under 10 CFR 50.109. Preparation of a backfit analysis is not necessary because the final rule imposes no '

requirements on licensees.

d. The final rule is not subject to the requirements of the Paperwork Reduction Act of 1980 (44 U.S.C.

i 3501 et seq.) because it does not contain any information collection requirements within the meaning of 5 3502(4) of. that Act.

c. The appropriate Congressional committees will be informed.

f. The Office of Public Affairs agrees that a public announcement is not needed.

, g. Copies of the rederal Register notice containing the final rule will be distributed to the commenters on the proposed rule and to all persons currently listed in NRC service lists for all pending licensing proceedings. The notice will be sent to other interested persons upon request.

h. The final rule has been concurred in by the Executive Director for Operations, the Office of Investigations and the Atomic Safety and Licensing Board Panel. The final rule also incorporates or reflects comments received from the Chairman of the Atomic Safety and Licensing Appeal Panel.  !

l Scheduling: If scheduled on the Commission agenda, recommend this paper be considered at an open meeting. No i

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o specific circumstance is known to staff which would require Commission action by any particular date in the near term.

William C. Parler Ocneral Counsel

Enclosures:

1. Federal Register Notice of Final Rule

2. Public Comments

3. Comparative text identifying differences between proposed and final rule t

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///tyk Enclosure 1.

Federal Register Notice of Final Rule

1 1 NUCLEAR REGULATORY COMMISSION 10 CFR Part 2 Adjudications; Special Procedures for Resolving Conflicts Concerning the Disclosure or Nondisclosure of Information AGENCY: Nuclear Regrulatory Commission.

ACTION: Final rule.

SUMMARY

This final rule amends the Commission's rules of practice by providing special procedures which NRC offices and staff may use to request that certain information be protected from disclosure in pending adjudicatory proceedings. Available only to NRC offices and staff, the new j procedures were developed to resolve conflicts between the obligation of NRC offices and staff to notify licensing boards of information which is relevant l and material to the issues in controversy in a pending adjudicatory

) proceedin[r and the obligations to protect the identity of a confidential informant and avoid compromising an ongoing investigation or inspection. '

4 EFFECTIVE DATE: Intert date 30 days after date of publication in the FEDERAL REGISTER.

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FOR FURTHER INFORMATION CONTACT: Jane R. Mapes, Senior Attorney, Rulemaking and Fuel Cycle , Office of the General Counsel, U.S. Nuclear

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l Regulatory Commission, Washington, D.C. 20555; Telephone: (301) 492-8695.

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SUPPLEMENTARY INFORMATION:

, I. Background, f

i On May 22, 1985, the Nuclear Regulatory Commission published in the s Federal Register (50 FR 21072-21077) proposed amendments to its Rules of 1

j Practice (10 CFR Part 2) that would provide special ex parte in camera l

procedures for resolving conflicts concerning the disclosure or nondisclosure I of information deemed relevant and material to an adjudication and relating to i

l an NRC investigation or inspection not yet concluded or likely to reveal the 4

identity of a confidential informant. On May 31,1985 (50 FR 23138-23139) a i correction notice was published. On July 26, 1985, the date for submitting l

comments on the proposed amendments was extended to August 23, 1985 (50 FR 30446-30447.)

The proposed amendments were prepared at the express direction of the  ;

j Commission to implement certain provisions of the Commission's Statement of Policy on Investigations, Inspections and Adjudicatory Proceedings published September 13, 1984 (49 FR 36032-36034). The proposed procedures would apply to all NRC offices and staff that have information relevant and material l to an issue in controversy in a pending adjudication. They would not apply I

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to applicants, licensees or intervenors, being intended solely for use by NRC offices and staff. As drafted for comment, the proposed procedures provide a mechanism which presiding officers and boards may use to resolve conflicts f

between the need to make available to the boards and other parties all relevant and material information which may be necessary to allow full resolution of the issues in controversy in a proceeding and the need to protect confidential sources of information or to assure that an ongoing inspection or investigation would not be prejudiced by unrestricted disclo-sure of the information. As envisaged by the Commission, these special l procedures would allow the boards to determine the relevance and materiality of the information to the issues in controversy in an adjudicatory proceeding and whether or under what circumstances the information must be disclosed to the parties, llow these cuestions would be resolved in any given case would depend, in part, on the nature and the status of the proceeding. Consistent with the general rule in favor of full disclosure and subject to any app!! cable exemptions permitted by the Freedom of Information Act (FOJA) disclosure would be expected to be required in those circumstances in which withholding information might prejudice one or more parties to the proceeding, or in which a board would conclude that the release of information would not prejudice an ongoing inspection or investigation or reveal the identity of a confidential informant. Techniques which boards m!ght use to resolve this confilet could include deferral or rescheduling of issues for hearing, and limitations on the scope, manner, or persons to whom disclosure may be made by the issuance of protective orders, including orders withholding information from disclosure. l 1

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J II. Comments.

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The Commission received nine letters of comment expressing the views of interested utilities, professional organizations, private counsel, intervenors and individual members of the public. No commenter was satisfied with the text of the rule as proposed. Most of the commenters recognized the

! Commission's need to withhold or otherwise protect information in order to protect a confidential source or to avoid compromising an ongoing investigation or inspection and the consequent necessity for in camera presentations.  !!owever, the commenters uniformly opposed using ex parte techniques to achieve that objective. The principal objections voiced by the

! commenters were that the proposed procedures are illegal, unnecessary, contrary to due process and unfair. One commenter stated that if the

! i Commission's Rules of Practice were amended as proposed, decisions reached i

i in proceedings in which the proposed procedures were used would be subject 4

to a greatly increased risk of judicial reversal. The proposed amendments i

were also criticized on grounds of bad policy. Several commenters suggested I alternative methods of achieving the objectives sought by the Commission. A I

brief review of the commenters' reasons for each of these objections follows.

i A. The proposed amendments are !!!cgal.

1 Geveral commenters expressed the view that the proposed amendments are 1

l illega.', t,ecause they violate the provisions of the Administrative Procedure c

Act, which require decisions to be made on, not outside, the record. (See j

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i 5 7(d), 5 U.S.C. I 556(e); Goldberg v. Kelly, 397 U.S. 254, 271 (1970).)

j By permitting both oral and written ex parte presentations, the proposed f amendments would not only contravene the " exclusiveness of the record" doctrine but would also increase the likelihood that in proceedings in which I

the proposed procedures were used, the record for judicial review would be j inadequate and incomplete. This, in turn, would foreclose effective judicial review of final agency decisions.

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l In contravention of proposed 5 2.795k which explicitly precludes a Board from 1

relying on information received ex parte in camera "In making any decision in the pending adjudication unless all parties to the pending adjudication have

been accorded access to the information," the proposed procedures would permit a presiding officer to impose an ex parte stay of substantial duration j without informing the other parties, e.g., the license applicant and intervenors, of the reasons for the stay and without complying with the i

requirements in i 2.788 of the Commission's Rules of Practice. One commenter pointed out that the ability of a Board to make a reasoned deter-i j mination that certain information is or is not relevant to the issues in a 1

l proceeding, that disclosure of the information without a protective order i

would or would not impede an investigation or compromise a confidential  ;

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informant, and that protection of the information is or is not needed, and to l

) prescribe the requisite degree of protection for that information, whether I through imposition of a stay or by other means, would be significantly i

impaired if the Board were precluded from obtaining the views of all the l

parties on those issues. Another commenter remarked on the sharp contrast l

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between the standards prescribed in the proposed amendments for issuance of an order to protect information from disclosure in NRC proceedings and the standards applicable to issuance of an ex parte temporary restraining order in Federal judicial proceedings. The former are far more lenient. There are also significant differences in the scope and duration of the respective orders. Under existing practice, the Federal courts will only entertain ex parte motions for temporary restraining orders in extraordinary circum-stances. Any temporary restraining order which is granted is of brief dura-tion, and further proceedings involving all the parties usually resume within j a few days. Upon entry of the temporary restraining order, the factual basis

! for issuance of the order is immediately revealed to all the parties to the 4

proceeding.

The commenters considered the proposed amendments illegal because the amendments would contravene the provisions of the Freedom of Information Act (FOIA) by exempting a class of information from public disclosure which is considerably broader than the classes of information protected from public disclosure by the exemption provisions of that Act.

Under the proposed j amendments, information used by the NRC to determine whether to initiate an l

Inspection or investigation would be protected from public disclosure. Sec-tion 552(b)(7) of FOIA only accords this protection under certain conditions to investigatory records compiled for law enforcement purposes.

The commenters considered the proposed amendments illegal because the amendments would, when implemented, effectively deny applicants, licensees l 1

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and intervenors their statutory right to an adjudicatory hearing provided by 5189a of the Atomic Energy Act of 1954, as amended. In the opinion of the r commenters, the proposed amendments run counter to one of the basic tenets l

of the Act that a license shall not be granted until all relevant and material health and safety issues have been thoroughly reviewed and an adequate opportunity to litigate those issues has been provided.

Finally, the commenters considered the proposed amendments illegal because j they purport to protect information which has not been accorded protection i

by statute.

I B. The proposed amendments are contrary to basic principles of fairness and due process.

The commenters reiterated the fundamental obligation of every party to an adjudicatory proceeding, including an NRC adjudicatory proceeding, to dis-close to the presiding officer or Board and to all parties to the proceeding all information which may be relevant and material to the issues in controversy.

This obligation, they maintain, cannot be satisfied by disclosing information to

! the presiding officer or the Board alone. Noting that the proposed amendments are both contrary to the Commission's expressed position favoring full disclosure and to its existing policy and practice with respect to Board notification, the commenters pointed out that if this obligation is not scrupulously adhered to, parties w!U be deprived of their right to participate fully in the proceeding and will to that extent suffer an unfair disadvantage s

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! and be denied due process. The impropriety of receiving ex parte evidence -

from witnesses not under oath and not subject to cross-examination was also noted.

Parties have a right to participate in all aspects of an adjudicatory 4

proceeding. To the extent that relevant and material information is not disclosed, parties are denied an opportunity to know and therefore to respond to opposing claims and contentions, to present evidence in rebuttal and to cross examine. To the extent that relevant and material information may require protection for an extended period of time, the ability of Boards to make fully informed decisions will be significantly hampered and the possibility that proceedings will be concluded and decisions made on the basis of inadequate or incomplete information will be greatly increased. This practice would constitute a significant departure from the ideal of informed, reasoned public decison-making. Some commenters point out that the proposed amendments do nothing to alleviate the heavy burdens which must now be met to persuado a presiding officer or a Board to reopen the record or accept late-filed contentions. A related but somewhat different concern is that the presiding officer who is both privy to the protected information and responsible for rendering a decision in the proceeding will be influenced, at least to some degree, by the protected, but totally unchallenged, information.

In the opinion of the commenters, explicit directives to the presiding officer not to rely on the protected information provide insufficient protection against this hazard. One consequence of the proposed procedures may well be to

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l increase the number of decisions which can be successfully challenged in the

courts on grounds of prejudice and bias.

Two commenters claimed that the proposed amendments would cause excessive delay in the conduct of adjudicatory proceedings and would for that reason result in a denial of due process.

C. The proposed amendments are unnecessary.

Several commenters objected to the proposed amendments on the grounds that the objectives which the amendments were designed to achieve could be accommodated equally well under the Commission's existing procedures and that therefore the proposed amendments were unnecessary.

i i D. Other objections.

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The proposed amendments were also faulted because they are based on unfounded assumptions, are self-defeating, have significant potential for 1

abuse and constitute bad public policy. Several commenters expressed the view that the proposed amendments are ill-grounded insofar as they rest on the unfounded assumption that the representatives of other parties to the proceeding are likely to be guilty of misconduct and to violate their ethical and moral obligations by failing to comply with the provisions of a protective 1

order, or on the assumption that an applicant or licensee will correct defects j 1 under investigation before the investigation can be completed. . In the opinion

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of the commenters, these situations are not only unlikely to occur but can also be adequately handled under the Commission's existing regulations, which prescribe sanctions for misconduct in Commission proceedings and require applicants and licensees to maintain detailed records and submit reports. The proposed amendments were criticized as being self-defeating because they prevent the presiding officer or the licensing board from taking any positive steps to resolve the problems which the proposed amendments purport to address. 1I Several commenters pointed out that the proposed amendments have significant potential for abuse. Noting that the standards for determining what constitutes an inspection or an investigation are more than a little vague, several commenters claimed that the proposed amendments could be used to shield information from the adjudicatory process. Other commenters were concerned that the proposed amendments would create inequities in that information would be disclosed to some parties to a proceeding but not to others. Finally, the proposed amendments were faulted on the grounds of bad public policy. Contrary to the Commission's general policy in favor of full disclosure and to the express purpose of the Commission's Board notification procedures, the proposed amendments would diminish rather than promote public confidence in the integrity and completeness of NRC licensing proceedings.

-1/ Licensing and appeal boards lack contempt powers and cannot themselves compel disclosure of the identity of a confidential source. However, the Commission itself may reveal the identity of a confidential source. See NEC Statement of Policy on Confidentiality, 50 FE 48506, November 25, 1985.

E. Alternative Approaches Suggested by Commenters The commenters suggested several alternative approaches to the problem addressed by the proposed amendments.

l A majority of the commenters expressed the view that the respective concerns of the NRC and of the parties to an NRC proceeding could best be accommodated by making sensitive information available to all parties to the proceeding under an appropriate protective order strictly prohibiting further dissemination of the information. Some commenters suggested that the protected information should only be ma'de available to selected representatives of the parties, e.g. , counsel, and that these representatives should be the only persons allowed to attend an in camera hearing. In cases in which the ,

NRC is a party, this would mean that the information would only be made available to NRC staff counsel, not to NRC staff, and that the latter would not be allowed to be present at the in camera hearing. One commenter suggested that NPC be given an opportunity in any proceeding in which there is a need to protect relevant and material information to indicate its willingness or unwillingness to release the information to the particular representatives selected by the parties. Another commenter recommended that the presiding officer or the Board be empowered to prohibit a party from attending an in camera hearing in extraordinary circumstances, such as when there is a reasonable basis for believing that a party may not abide by a protective order and that disclosure of investigatory information would

seriously hamper the Commission's regulatory responsibilities. One commenter l suggested that the proposed rule should require the NRC office seeking a protective order to demonstrate that allegations triggering an inspection or investigation are under active review in accordance with the Commission's procedures for the management of allegations. The NRC office seeking the protective order should also be required to demonstrate that all NRC offices having custody of the protected information have been consulted and that the information sought to be protected has not been disclosed to the applicant, licensee or any other party. One commenter suggested that all proceedings in which protective orders to withhold information have been granted should be suspended until such timo as the protected information can be released.

The commenter also sugFested that the standard which the presiding officer or the Iloard should apply in deciding whether to protect or disclose information should be the same as the Freedom of Information Act standard.

The advantages of the above approaches, as summarized by one of the commenters, are that they

1) satisfy due process requirements for administrative proceedings while doing a minimum of violence to the current, tested, traditional Rules of Practice; _.

2) fully comply with the obligation to inform not only the Board but also the other parties of new, material, relevant information;

3) actually provide the Board with a better factual and legal basis by allowing all the perties to raise additional facts and arguments, possibly precluding an unnecessary delay in the proceedings because of an easily clarified Staff misperception or error; and

4) promote greater public confidence in the NRC, its adjudicatory proceedings, and the ultimate safety of licensed facilities.

One commenter suggested that the task of reviewing sensitive information in camera to determine whether or not it should be disclosed should be carried out by an independent presiding officer not connected with the pending adjudication in any way. The commenter proposed that all parties to

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the proceeding be permitted to participate in this separate in camera review, but that the participation should be limited to filing on-the-record briefs in .

which the information sought to be protected would not be disclosed.

Under another suggested alternative approach, the NRC would be required to inform the presiding officer and all the parties to the proceeding that an inspection or investigation is being conducted. In making this notification, i

the NRC staff could indicate that further testimony and discovery updates would be provided. However, information respecting the nature of the inspection or investigation or likely to disclose the identity of a confidential source would not be revealed. In the absence of a showing warranting a stay, suspension or deferral of the adjudicatory proceeding pending the outcome of the inspection or investigation, the adjudicatory proceeding would

continue on schedule and the inspection or investigation would also go forward as planned. According to the commenter, this approach would be consistent with basic considerations of due process, the Atomic Energy Act and established NRC precedent and would not be prejudicial because the Commission's Rules of Practice provide a variety of techniques for assuring that any new determinative information discovered during the course of the inspection or investigation will - be properly considered. The particular technique selected depends in each case on the status of the adjudicatory proceeding and whether any licensing action has in fact been taken. If the adjudicatory proceeding is still pending and depending on the point to which it has progressed, the parties may pursue further discovery, supply ,

additional prefiled testimony, move for the summary disposition of contentions, submit late-filed contentions, request an additional hearing if the record is not yet closed, move to postpone an evidentiary hearing, move to reopen the record if the record is closed, or move to stay the issuance of a decision. If the adjudicatory proceeding has been concluded and the licensing action has been taken, a 5 2.206 petition may be filed. If the NRC has instituted an enforcement proceeding because of information obtained during an inspe"tfon or investigation, a petition to intervene in the enforcement proceeding may be filed.

J Although several commenters acknowledged the existence of these procedures, they seriously questioned their effectiveness. The proposed amendments were particularly criticized because they did nothing to lessen the current stringent requirements associated with the submission of late-filed contentions

or requests to reopen the record by intervenors, despite the fact that the intervenors could have no prior knowledge of the information or exercise any control over the timing of its release for use in a proceeding. These commenters recommended that the rule explicitly provide that new contentions based on recently released information previously held confidential be eval-unted under the standards applicable to the initial filing of contentions.

Several commenters recommended that the rule should prohibit licensing boards from closing the record or reaching a final decision in a proceeding 4 until all information relevant and material to any proposed action, including such actions as issuance of a license or license amendment, has been disclosed to the parties. The suggestion that matters addressed by the protected information chould be judged according to the Commission's standards for the initial filing of contentions was reiterated. '

One commenter stated that the procedures in 10 CFR I 2.744, which relates to the production of NRC records and documents, should apply to investigatory information in documentary form.

i One commenter expressed the view that a rule which would require the i Commission to review and approve the release of the name or other informa-tion identifying a confidential informant could be of use, but qualified the suggestion by stating that the best policy would be not to reveal the identity of confidential informants under any circumstances.

III. Response to Comments A. The Commission's Board Notification Policy Before responding to the comments in detail, an examination of certain recent decisions of the Commission relating to its hoard notification policy and procedures is warranted. These recent decisions are expected to reduce significantly the extent to which the proposed procedures will actually be used. For, as the Commission made clear when it promulgated its Statement of Policy on Investigations, Inspections and Adjudicatory Proceedings, the Statement and any implementing procedures only take over "once a determina-

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tion has been made, under established board notification procedures, that information should be disclosed to the boards and public but OI or staff believes that the information should be protected." (49 FR 36032 at 36033, September 13, 1984, emphasis supplied.)

The Commission's board notification policy and procedures have been in effect for many years and serve an important purpose - to keep the boards and the Commission advised of matters which may need to be considered in making 4

licensing and other regulatory decisions, particularly matters which present serious safety or environmental issues. Recently, the Commission directed significant changes in the manner in which its board notification policy and ,

procedures are implemented. These changes were first enunciated by the Commission in a Memorandum and Order issued January 30, 1986 in Louisiana Power & Light Company (Waterford Steam Electric Station, Unit 3)

Docket No. 50-382-OL, CLI-86-1, 23 NRC 1, affirmed sub. nom. Oystershell Alliance, et al. v. U.S. Nuclear Regulatory Commission, et al., No. 85-1182, U.S.C.A.D.C., September 9, 1986, F.2d . Subsequently, at the express direction of the Commission, the changes in the manner in which the Commission's board notification policy is being implemented were formally incorporated in NRR Office Letter No. 19, Revision 3, issued May 29, 1986 b On June 3, 1986, the Executive Director for Operations directed other NRC staff offices to revise the implementation of their board notification policy and procedures consistent with Revision 3 of NRR Office Letter 19.

Under the Commission's board notification policy and procedures as now implemented, NRC offices and staff0 I are only required to notify the boards when they are apprised of allegations and new information not previously submitted to the boards which are both relevant and material to the issues in ~

controversy in the proceeding. If the information is not relevant, the staff has no obligation to inform the boards. Nor is the staff obligated to inform the boards of all relevant information. The requirement to notify the boards only arises when the staff has relevant information which is also material to the issues in controversy in the proceeding, that is information which could make a difference in the resulting decision on those issues. The staff's duty

-2/ This document is available for inspection at the NRC Public Document Room,1717 H Street, N.W. , Washington, D.C.

-3/ As used in this preamble, the term " staff" is intended to refer to all NRC offices.

to inform the boards of new allegations is equally precise. The obligation does not arise until after the materiality of the allegation has been demonstrated. In other words, the facts on which the allegation is based must be substantiated and the implications drawn from those facts must be shown to be velid. As a result of this change in the implementation of the policy, NRC offices and staff are no longer required to inform the boards that an investigation relating to the subject matter of the proceeding has been initiated or is pending. Nor is the staff required to advise the boards of allegations which led to the initiation of an inspection or investigation or which are under examination in a pending inspection or investigation. Under the policy, the staff's obligation to notify the boards does not arise, in general, until after an inspection or investigation has been completed and the inspection or investigation report has been prepared because the materiality of the allegations addressed and the facts disclosed by the inspection or investigation cannot be demonstrated until these tasks have been completed.

The above-described changes in the implementation of the Commission's board notification policy are expected to have the effect of severely constraining the manner and circumstances in which the proposed procedures would be applicable. In general, as a result of these changes, the staff need not ordinarily concern itself with the investigative process until after a report of an inspection or investigation has been prepared and issued. (Inspection and investigation reports summarize the results of inspections and investigations and contain facts, conclusions and recommendations.) Prior to that time, it is '

unlikely that the nature and the significance of the information obtained as a

1 result of the inspection or investigation could be accurately evaluated and therefore the staff cannot know whether the information is reliable or whether l

it is both relevant to and will make a difference in the resultant decision on the issues in controversy in the proceeding.

Although the special procedures will be _ used primarily to protect the identity of a confidential informant, one cannot completely rule out the possibility that NRC offices , in carrying out their responsibilities under the Commission's board notification pclicy, might find it necessary in rare instances to inform the boards of relevant and material information associated with an ongoing inspection or investigation. The Commission intends these special procedures to be applicable in those circumstances'as well, thereby enabling NRC offices to withhold or otherwise protect information which , if disclosed, would prejudice an ongoing investigation or inspection. At the same time, the Commission reaffirms the position of the Policy Statement that "any limits on disclosure to the parties should be limited in both scope and duration to the minimum necessary to achieve the purposes of the non-disclosure policy . "

49 FR 36032 at 36033, September 13, 1984.

B. Detailed Response to Comments As a result of these recent changes in the manner in which the Commission's board notification policy is being implemented, many of the commenters' objections to the proposed procedures have now become moot. Since, in most

if not all cases, the obligation to notify the boards does not arise until after an inspection or investigation report has been completed, proceedings will not.

be subject to delays because an inspection or investigation is still in progress. Nor will presiding officers be called upon to impose stays of substantial duration so that an inspection or investigation which may yield useful information can be brought to a successful conclusion.

The objection of the commenters that the proposed amendments are illegal because they would deny applicants, licensees and intervenors their statutory i right to an adjudicatory hearing provided by 5189a of the Atomic Energy Act of 1954, as amended, and that the record for judicial review would be inadequate and incomplete if the proposed procedures were adopted is without foundation. The Commission is under no obligation to stay- proceedings and postpone decisions because an inspection or investigation .is in progress. In Oystershell Alliance, et al. v. U.S. Nuclear Regulatory Commission, et al. ,

No. 85-1182, decided September 9,1986, the United States Court of Appeals for the District of Columbia Circuit concluded that "the NRC's decision to authorize full-power operation [of the Waterford-3 nuclear power reactor]

notwithstanding the pendency of motions to reopen was fully consistent with the statutory and regulatory requirements under which the Commission operates, . . ." (Slip opinion at p. 3.) Agreeing with the Commission's assessment of the material proffered by the petitioners, namely the fact of an ongoing OI investigation, as "not ' tantamount to evidence,'. and . . . not the type of ' relevant, material, and reliable' new information reoutred to reopen a

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record," the Court also stated that "the mere fact of an investigation proves '

nothing about the matters under scrutiny." (Slip opinion at p.12.)

The objection that the proposed amendments are illegal because they violate the provisions of the Administrative Procedure Act which require decisions to ]

be made on, not outside, the record also lacks substance. The proposed procedures make clear that protected information cannot be used in reaching a decision until it has been formally introduced into evidence and all parties to the proceeding have had an opportunity to review and consider it (see proposed 5 2.795k.) Thus, they are in accord with a basic requirement of the Act that issues in controversy in an adjudicatory proceeding must be resolved on the basis of information contained in the adjudicatory record of the proceeding (see 5 U.S.C. I 556(d)).

All the commenters objected to the ex parte b aspects of the proposed procedures. In addition to stating that such procedures are unfair and

~4/ The proposed procedures present a separation of functions problem rather than a prohibited ex parte communications problem because they concern communications between NRC offices and staff and NRC decision-makers, not communications between persons outside the agency and NRC decisionmakers. In order to preserve the integrity of formal adjudicatory proceedings, the Administrative Procedure Act prohibits ex parte communications relevant to the merits of a proceeding between j interested persons outside the agency and agency decisionmakers, see 1 5 U.S.C. I 557(d)(1). Towards this same end, the Act also provides i that an agency's decisionmaking functions shall be kept separate from its  !

investigative or prosecuting functions. Under 5 U.S.C. 5 554(d), l agency employees engaged in decisionmaking may not "be responsible to (FOOTNOTE CONTINUED ON NEXT PAGE) l

)

contrary to due process, the commenters also claimed that the procedures would compromise the impartiality of presiding officers.

The Commission is sensitive to the views of the commenters respecting the ex parte aspects of the proposed procedures. The Commission is of the opinion , however, that the benefits to be gained from the proposed procedures from the standpoint of reaching well-grounded decisions while at the same time providing assurance that confidential sources of information are adequately protected far outweigh any temporary disadvantages which may result from using procedures which provide for in camera presentations without other parties present. In view of the changes in the implementation of the Commission's board notification policy, the Commission also believes that the impact of the proposed procedures will be minimal.

The Commission is convinced that the impartiality of its presiding officers will not be compromised by the proposed procedures. In many respects, the proposed procedures are not significantly different from other types of decisionmaking procedures in which presiding officers, judges and other (FOOTNOTE CONTINUED FROM PREVIOUS PAGE) or subject to the supervision or direction of an employee or agent engaged in the performance of investigative or prosecuting functions for an agency." Nor may an employee or agent engaged in the performance of investigative or prosecuting functions for an agency in a case or in any factually related case " participate or advise in the decision, recommended decision, or agency review pursuant to [5 U.S.C. I 557]

. . . , except as witness or counsel in public proceedings."

1

decisionmakers are called upon to disregard information which has been brought to their attention in reaching a decision. For example,' juries are often told that they must disregard certain evidence, which has in fact been heard, in reaching a decision. In a non-jury trial, the judge is frequently exposed to inadmissible evidence which the judge is required by law to disregard. In deciding questions of privilege, judges may become aware of information of extreme relevance and yet be precluded because the information is privileged, from relying on the information in reaching a decision.

With respect to the treatment of information, the proposed amendments do not depart markedly from existing NRC practice. Although they differ in certain respects, the new procedures are consistent with I 2.744 of the Commission's Rules of Practice, which relates to the production of NRC records and documents and has been in effect since 1972. Section 2.744 authorizes a presiding officer, in those cases in which the Executivo Director for Operations objects to the production of a record or document, to request that the record or document "be produced for the in camera inspection of the presiding officer, exclusively, . . . and only to the extent necessary to i

determine-- (emphesis supplied)

I

"(1) The relevancy of that record or document;

"(2) Whether the document is exempt from disclosure under 5 2.790; .

1 1

_. . _ _ . _~ .

"(3) Whether the disclosure is necessary to a proper decision in the proceeding;

"(4) Whether the document or the information therein is reasonably obtainable from another source."

Summarized in brief, the principal differences between 10 CFR S 2.744 and the new procedures in El 2.795a - 2.795k are as follows:

1. The procedures in i 2.744 are available to any party to an NRC adjudicatory proceeding. The new procedures may only be used by NRC presiding officers, offices and staff.

2. The procedures in 5 2.744 apply to information contained in records -

and documents. The new procedures place no constraints on the form or manner in which the information is presented. The new procedures accommodate this important difference by according NRC offices and staff an opportunity to make oral in camera presenta-tions concerning the need to protect or withhold particular types of information from disclosure.

3. The procedures in I 2.744 require the presiding officer to determine the relevancy of the record or document. The new procedures require a determination of materiality as well as relevancy.

1

4. The procedures in 6 2.744 provide that records and documents are to "be produced for the in camera inspection of the presiding officer, exclusively." As noted earlier, the new procedures permit the NRC office or staff seeking to protect or withhold the information from disclosure to make an oral in camera presentation to the presiding officer or the Commission without other parties being present.

5. Under the procedures in 9 2.744, the Executive Director for P

Operations may be compelled to produce a document, which may then be relied on in reaching a decision in the proceeding, if the presiding officer determines that the requesting party "has demon-strated the relevancy of the record or document and that its production is not exempt from disclosure under B .2.790 or that, if exempt, its disclosure is necessary to a proper decision in the proceeding, and the document or the information therein is not reasonably obtainable from another source , . . . " (10 CFR I 2.744(d)) Under the new procedures, the staff may be authorized to continue to protect instead of compelled to disclose relevant and material information. At the same time, the presiding officer is prohibited from using the protected information in making any decision in the rending adjudication unless all the parties have been accorded access to the information (see 9 2.795k.)

l

j In making the determinations required by 5 2.744, the presiding officer cannot help but be aware of the content of the document or record produced for inspection. Despite this, the Commission's 5 2.744 procedures are well accepted and have not been faulted on the ground that they must inevitably compromise the impartiality of the presiding officer. Moreover, under the i

prior implementation of the Commission's board notification policy, licensing boards were routinely advised of various matters which were relevant to the pending license application but which were not necessarily relevant or material

, to the issues in controversy. Despite their awareness of these matters, boards were, as a general proposition, precluded from considering them in the proceeding unless they were formally introduced into evidence. However, board decisions have not been subject to challenge because boards have been msde aware through the board notification process of relevant information i which has not been introduced into the proceeding as evidence. In light of these past practices, the Commission-is of the opinion that the integrity of its presiding officers will not be compromised in any way by the proposed

, procedures.

In light of the Commission's recent revision in the implementation of its board notification policy, discussed above, the comment that the new procedures are illegal because, contrary to the Freedom of Information Act , they would permit the staff to protect "information on the basis of which the NRC may 1 i l l determine whether to initiate an inspection or investigation" is now moot. At !

the same time, it should be clearly understood that the Commission does not i

intend the proposed procedures to be used to contravene the provisions of the Freedom of Information Act.

Several commenters expressed the view that the conflict between disclosure and non-disclosure of information which the proposed procedures are designed to resolve could be achieved by making the information available to all the parties to a proceeding under an appropriate protective order strictly pro-

) hibiting further dissemination of the information. This suggestion overlooks the fact that the purpose of the proposed procedures is to provide an addi-tional mechcnism which may be used to resolve those few hard cases which are not amenable to resolution by routine measures such as deferring or rescheduling of issues for hearing, limiting the scope of disclosure to parties or restricting disclosure by protective orders. 5_/

IV. Description of Special Procedures in 10 CTR 55 2.795a-2.795k.

As envisaged by the Commission, the special procedures in new $$ 2.795a-2.795k would only be available to and used by NRC offices and staff having information deemed relevant and material to issues in controversy in an ongoing adjudication which those offices and staff are under a duty to disclose in accordance with established board notification procedures. In most esses, it is expected that the conflict between the need to protect the 4

5_/ 49 FR 36030 at 36033, September 13, 1984.

information and the need to make the information available can be resolved by

, a protective order placing restrictions on the time and manner in which the information is disclosed. For example, such an order could change the sequence in which testimony on particular issues will be heard. Such an order could also specify the manner, time , place, or persons to whom the information may be disclosed. However, in some cases, expected to be relatively few , use of these special procedures to protect relevcnt and 4

material information from any disclosure may mean that it will not be possible to decide the issue to which the information relates.

Information which is protected from disclosure to avoid prejudicing an ongoing investigation or inspection becomes avullable when the investigation or inspection has been completed and a report prepared and issued. However, information which would reveal the identity of a confidential informant may only be made available by Commission order. (In accordance with the Commission's Statement of Policy on Confidentiality, the only persons entitled to protection would be those who have signed a standard NRC Confidentiality Agreement. ) In this connection it should be noted that before release to the

! public, whether in response to an FOIA request or similar inquiry or through

! admission as evidence in an adjudicatory proceeding, inspection and investigation reports are redacted to eliminate all information which might reveal the identity of a confidential source. (Information exempt from disclosure under the provisions of section 552(b) of the Freedom of Information Act may also be eliminated from these reports.) The remaining information , which in the usual case is principally technical in nature, may

. - , , , , _ , - . . r -

, - - , -- -. n-. -.---m-. . - - . - - - - . , -

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

l then be used in whatever way is appropriate, including use as relevant and material evidence in an NRC adjudicatory proceeding. The new procedures in Il 2.795a-2.795k provide a special mechanism for dealing with those hard cases where the technical information contained in the sanitized version of an inspection or investigation report, either by reason' of its nature and special characteristics or by reason of the fact that sponsoring witnesses must be called to attest to the validity of the report and the information it contains, 2

compromises or reveals the identities of the confidential sources responsible for providing the information, j

Under the special procedures, the appropriate NRC office may move the presiding officer of the pending adjudication to grant relief from the disclosure requirement either by ordering information disclosed subject to conditions or by ordering information withheld from disclosure. For the purposes of these procedures, the term " presiding officer" includes an administrative judge, an administrative law judge, an Atomic Safety and Licensing Board, and an Atomic Safety and Licensing Appeal Board. The j motion , which may be made orally or in writing, must contain a brief l description of the nature of the information subject to the request and explain the relevance and materiality of the information to the issues in controversy in the pending adjudication. The motion must also state why and to what extent disclosure of the information will reveal- the identity or otherwise compromise a confidential source, or will prejudice an -ongoing investigation or inspection. . At the time the motion is mede, the NRC office must notify all i

parties to the pending adjudication that the imposition of conditions on or the l

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

withholding of disclosure of information has been requested. However, the information subject to the motion shall not be revealed. The NEC office must also notify the Director, Division of Rules and Records , NRC Office of i

Administration, who is the agency official responsible for processing Freedom cf Information Act (FOIA) requests.

4 Upon receipt of a motion from an NRC office to impose conditions upon or to i withhold disclosure of information, the presiding officer, without other parties present, may either rule on the motion on the basis of the information provided, conduct an in camera oral presentation, or request further infor-l

! mation. Under these amendments, the presiding officer is authorized to conduct an in camera oral presentation without other parties present at any time on his or her own initiative. The presiding officer must notify all parties to the pending adjudication of the occurrence of any in camera oral presentation. The notice shall state the purpose of the in camera oral presentation and the approximate date a ruling concerning the disclosure or nondisclosure of the information subject to the presentation may be expected.

The identity of any witness and the substantive content of the information l shall not be disclosed. To provide a record, a verbatim transcript will be made of each in camera oral presentation. After consideration of the motion, l l

including any in camera oral presentation, and after finding that the '

information subject to the motion is both relevant and material to the pending adjudication, the presiding officer will rule on the motion. This ruling, f

which will be made with due regard for the Commission's policy favoring full disclosure, will determine whether disclosure of the information without a 1

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protective order could adversely affect the NR C's ability to protect the identity of a confidential informant or to complete an investigation or inspec-tion and whether and to what extent the information should be withheld from disclosure or only disclosed subject to certain conditions.

If the presiding officer grants the motion, the presiding officer shall issue an appropriate protective order. If the presiding officer determines that the motion should be denied in whole or in part, the presiding officer shall notify the NRC office submitting the request of the intent to order disclosure. The notice of intent to order disclosure shall specify the nature of the information to be disclosed, the terms and conditions of any proposed order and the basis for the conclusion that prompt disclosure is required. The notice of intent 4

shall state a reascnable time by which the NRC office must submit a statement of objection or concurrence. If the NRC office concurs in the disclosure specified in the notice of intent and if the disclosure does not reveal the identity of a confidential informant, the presiding officer shall issue the order proposed. If the NRC office objects to the disclosure specified in the notice of intent and any such objection is disallowed , the presiding officer shall promptly certify the matter to the Commission for review and notify the NRC office requesting the protective order. The presiding officer shall also notify all parties to the pending adjudication and the Director, Division of Rules and Records, NRC Office of Administration, whenever a ruling relating to the disclosure or nondisclosure of information has been issued or has been certified to the Commission for review. A notice of certification shall state the reason for the certification, the certification date, and that , in

^

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accordance with 5 2.795f, the NRC office or any other party to the adjudica-tion may file a timely brief with the Commission. The NRC office must notify all parties to the adjudication whenever an NRC brief is filed. However, the NRC brief need not be served on the parties if to do so would reveal any of the withheld information. Within seven days after service of the notice of filing of the NRC brief, any other party to the adjudication may file a brief with the Commission. The order of the presiding officer shall be stayed pending Commission review.

The Commission shall consider any matter certified to it for review under these procedures in camera without other parties present and may on its own

{ initiative or at the request of the affected NRC office conduct an in camera i

oral presentation. The record for Commission review shall consist of the i information provided to the presiding officer in camera, all documents filed with the prealding officer by the NRC office requesting a protective order,

including any statements of concurrence or objection, the transcript of any in camera oral presentation, the presiding officer's notice of intent to require disclosure, statement of reasons why the information should be disclosed, and inforection disclosure ruling. After completing its review, the Commission will decide whether to affirm, reverse or amend the ruling.

l Whenever the presiding officer or the Commission issues an order withholding information or imposing conditions upon the manner in which information may be released, the in camera record on which the order is based shall be i deemed sealed pending further order.

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The Commission does not intend these special procedures to be used to shield information properly subject to disclosure under the Freedom of Information A ct (FOIA). Upon receipt of an FOIA request for release of information deemed sealed by reason of a protective order, the presiding officer or the Commission, as appropriate, will again review the nature and status of the 3 information to determine whether ell or part of the information should continue to be protected or whether all or part of the information should be released.

The NRC office at whose request the presiding officer or the Commission- has issued a protective order respecting the disclosure of information shall notify the presiding officer or the Commission, as appropriate, and the Director, Division of Rules and Records, NRC Office of Administration, when its objection to disclosure to the parties to the pending adjudication of all or any portion of the information subject to the order is withdrawn, when an ongoing m investigation or inspection is completed , or when it learns of any other change in the status of the protected information. Unless the information '

relates to the identity of a confidential informant or unless the Commission orders otherwise, information which an NRC office has consented to release shall be disclosed to the parties and made avellable for inclusion in the public' record of the pending adjudication. The identity of a confidential informant may only be released by order of the Commission.

Under the special procedures, after notice that an objection to the disclosure of information has been withdrawn or that an investigation or inspection has been completed, and subject to the prohibition against inclusion in the public

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i record of the adjudication of any part of the in camera record containing information pertaining to the identity of a confidential informant except pursuant to Commission order, the presiding officer or the Commission, as appropriate, shall order the in camera record, including the verbatim transcript of any in camera oral presentation, unsealed. Subject to any other exemptions from mandatory public disclosure that may validly be claimed under the Commission's regulations, including any exemptions that may be available under 10 CFR II 2.700, 9.5, 9.61 or 9.95, the unsealed record and the information are then available for use in the pending adjudicatory proceeding.

Under the special procedures, a presiding officer may not use information

, subject to a protective order in making any decision in the pending adjudicatory proceeding unless all parties to the pending adjudication have r been accorded access to the information and given an appropriate opportunity L

to address that information. Once all parties to the pending adjudication have been given such an opportunity, either with or without conditions, the presiding officer may use the information in reaching a decision. When j information is made available only under specified conditions, a party may be unwilling to examine the information because the party does not wish to s

accept the conditions under which it is proffered. The fact that a party does l l

not choose to avail itself of information to which access is permitted but only j under specified conditions cannot be used to bar the presiding officer from relying on that information in reaching a decision. A prasiding officer is l under no obligation by reason of these special procedures to accord parties to w --erm-a- --e W v "**"T ' --'-7 - " * " ' " ' * *

- - TTT-~---*- ~T

a pending adjudication unconditional access to all information. Once the opportunity for conditional access has been provided and notwithstanding the fact that it may have been declined, the presiding officer may use the 4

information in making a decision in the pending adjudicatory proceeding.

Environmental Impact: Categorical Exclusion The NRC has determined that this final rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(1). Therefore, neither an environ-mentral impact statement nor an environmental Assessment has been prepared for this final rule.

Backfit Statement ,

~

The final rule is not a backfit under 10 CFR 50.109. Preparation of a backfit analysis is not necessary because the final rule imposes no requirements on licensees.

s Paperwork Reduction Act Statement This final rule contains no information collection requirements and therefore is not subject to the requirements of the Paperwork Reduction 'Act of 1980 (44 U.S. C. 3001 et seq. )

l Regulatory Flexibility Act Certification As required by the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the Commission certifies that this final rule will not have a significant economic impact upon a substantial number of small entities and that therefore a regulatory flexibility analysis need not be prepared. These procedural amendments provide a mechanism for the orderly resolution of conflicts respecting the obligation of NRC offices to disclose information deemed relevant ano material to a pending adjudication and the need by those same offices to protect information which would reveal the identity of a confidential informant. The final rvle does not impose any obligations on entities regulated by the NRC, including any regulated entities that may fall within the definition of "small entities ," as set forth in section 601(3) of the Regulatory Flexibility Act , or the NRC size standards (50 FR 50241, December 9, 1985) or within the definition of "small business" as found in section 3 of the Small Business Act , 15 U.S.C. 632, or within the Small Business Size Standards in regulations issued by the Small Business Administration and codified in 13 CFR Part 121. Since the impact of this rule is confined to the NRC, the rule does not fall within the purview of the Regulatory Flexibility Act.

List of Subjects in 10 CFR Part 2 Administrative practice and procedure, Antitrust, Byproduct material, Classi-fled information, Environmental protection, Nuclear materials, Nuclear power

i plants and reactors, Penalty, - Ser discrimination, Source material, Special nuclear material, Waste treatment and disposal.

For the reasons set out in the preamble and under . the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 552 and 553, the Nuclear Regulatory Commission is adopting the following amendments to 10 CFR Part 2.

PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS

1. The authority citation for Part 2 is revised to road as follows:

Authority: Sees. 161, 181, 08 Stat. 948, 953, as amended (42 U.S.C. 2201, 2231); sec. 191, as amended, Pub. L.87-615, 76 Stat. 409 (42 U.S.C.

2241); sec. 201, 86 Stat. 1242, as amended (42 U.S.C. 5841); 5 U.S.C.

552.

Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat.

930, 932, 933, 935, 936, 937, 938, as amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); sec.102, Pub. L.91-190, S3 Stat. 853, as amended (42 U.S.C. 4332); sec. 301, 88 Stat. 1248 (42 U.S.C. 5871). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183,189, 60 Stat. 936, 937, 938, 954, 955 as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2233, 2239). Section 2.105 also issued under Pub. L.97-415, 96 Stat. 2073 (42 U.S.C. 2239).

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Sections 2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat.

444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat.1246 (42 U.S.C.

5846). Sections 2.600-2.606 also issued under sec.102, Pub. = L.91-190, 83 Stat. 853, as amended (42 U.S.C. 4332). Sections 2.700a, 2.781, 2.795k also

i. issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U.S.C. 557. Sections 2.790, 2.795j also issued under sec.103, 68 Stat. 936, as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 cnd 2.808 also issued under 5 TT.S.C. 553. Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub. L.85-256, 71 Stat. 579, as amended, (42

, U.S.C. 2039). Subpart K also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec.134, Pub. L.07-425, 96 Stat. 2230 (42 U.S.C.10154).

Appendix A also issued under sec. 6, Pub. L.91-580, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued under sec. 10, Pub. L.99-240, 99 Stat.1859 (42 U.S.C. 2021J).

2. In i 2.730, a new paragraph (1) is added to read as follows:

5 2.730 Alotions.

e e e e e (i) The provisions of f 2.730(a) through (h) are not applicable to motions filed pursuant to Il 2.795a through 2.795k.

3. In 5 2.740, paragraph (b)(1) is revised to read as follows:

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I 2.740 General provisions gove:ning discovery.

e o e e e i

r (b) Scope of discovery. * * *

(1) In General. Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject - matter involved in the proceeding, whether it relates to the claim or defense of the party seeking i

discovery or to the claim or defense of any other' party, including the existence, description, nature, custody, condition, and location of any books, l documents, or other tangible things and the identity and location of persons

having knowledge of any discoverable matter. For the purposes of this section, privileged matter includes information subject to a protective order ,

s issued under the special procedures in 55 2.795a through 2.795k. In a 4

proceeding on an application for a construction permit or an operating license for a production or utilization facility, discovery shall begin only after the prehearing conference provided for in 5 2.751a and shall relate only to those riatters in controversy which have been identifled by the Commission or the presiding officer in the prehearing order entered at the conclusion of that )

prehearing conference. In such a proceeding, no discovery shall be had )

4 i after the beginning of the prehearing conference held pursuant to I 2.752 except upon leave of the presiding officer upon good cause shown. It is not ground for objection that the information sought will be inadmissible at the hearing if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

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e e e e e

4. In f 2.781, paragraph (a) is revised to read as follows:

5 2.781 Separation of functions.

(a) In any proceeding under this subpart, any NRC officer or employee engaged in- the performance of any investigative or litigating function in that proceeding or in a fcetually related proceeding may not participate in or advise a Commission adjudicatory employee about the initial or final decision on any disputed issue in that proceeding, except--

(1) In accordance with the special procedures in 55 2.795a through 2.795k of this part; (2) As witness or counsel in the proceeding; (3) Through a written communication served on all parties and made on the record of the proceeding; or (4) Through an oral communication made both with reasonable prior notice to all parties and with reasonable opportunity for all parties to respond.

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5. In Subpart G, immediately following i 2.790, a new center heading and new sections 2.705a through 2.795k are added to read as follows:

Special Procedurcs for Resolving Conflicts Concerning the Disclosure or Nondisclosure of Certain Sensitive Information in Licensing Proceedings 5 2.795a Applicability of special procedures; official file.

(a) Sections 2.795n through 2.795k specify procedures for resolving conflicts concerning the disclosure or nondisclosure of information relating to the identity of a confidential informant or obtained during an investigation or inspection and deemed relevant and material to a pending adjudication. These procedures apply to all NRC offices. The procedures are to be used when, in accordance with the Commission's board notification policy or pursucnt to a request from a presiding officer, an NRC office may be required to produce information in a pending adjudication, the disclosure of which, without a protective order, would reveal the identity of a confidential informant or prejudice an ongoing investigation or inspection.

(b) As used in $5 2.795a through 2.795k, the term " presiding officer" includes an administrative judge, an administrative law judge, an . Atomic 2

Safety and Licensing Board, and an Atomic Safety and Licensing Appeal Board.

(c) Unless and until publicly released, all documents required by or relating to the special procedures in 59 2.795a through 2.795k shall bear the docket number and title of the proceeding, he marked "Not For Public Disclosure--Protected Under 10 CFR 58 2.795a-2.795k," and be transmitted to the Secretary in sealed double envelopes for deposit in the protected section of the official docket file.

I 2.795b Pequirement to disclose relevant and material information.

1 In accordance with the Commission's board notification policy, information deemed relevant and material to a pending adjudication shall be disclosed to i the parties to the adjudication by the NRC office having the information unless the information would reveal the identity of a confidential informant or I

prejudice an ongoing investigation or inspection. When an NPC office has information which it deems relevant and material to a pending adjudication but which could reveal the identity of a confidential informant or prejudice an ongoing investigation or inspection, the NRC offico shall request the pre-siding officer by motion to issue a protective order imposing conditions upon the manner in which the information is disclosed or withholding the information from disclosure. ,

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! 2.795c Motion for protective order; notice of motion. l l

(a) A motion for a protective order to impose conditions on or to withhold disclosure of information shall be addressed to the presiding officer l

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by the NRC office having the information. At the time a motion is made and without revealing the substance of the information subject to the motion, the NRC office shall notify the parties to the adjudication and the Director, Division of Rules and Records , Office of Administration, U.S. Nuclear Regulatory Commission, that a protective order to impose conditions on or to withhold disclosure of information has been requested.

(b) A motion for a protective order may be made orally or in writing, mey include a request for an in camera oral presentation without other parties present, snd shall include the following information, as appropriate:

(1) A brief description of the nature of the information subject to the motion; a

(2) A brief er.planation why the information is relevant and material to the pending adjudication; l

(3) A brief statement whether the information was obtained from a confidential informant or during an ongoing investigation or inspection;

[

! (4) An explanation of the basis of the motion for a protective order to impose conditions on or to withhold disclosure of the information, including a l brief explanation why and to what extent disclosure of the information without a protective order will reveal the identity or otherwise compromise a conf!-

dential informant or will prejudice an ongoing investigation or inspection;

(5) The proposed relief requested.

5 2.795d Consideration of motion by presiding officer; procedure.

(a) A motion from an NRC office for a protective order to impose conditions on or to withhold disclosure of information shall be considered by the presiding officer in camera without other parties present.

(b) The presiding officer may require or permit the NRC office making the motion to make an in camera oral presentation. Attendance at an in camera oral presentation shall be limited exclusively to the presiding officer, to appropriate NRC personnel, to any witness appearing at the request of the NRC office or the presiding officer, and to a court reporter.

The presiding officer shall notify all parties to a pending adjudication of the occurrence of any in camera oral presentation. The notice shall state the purpose of the in camera oral presentation and the approximate date a ruling concerning the disclosure or nondisclosure of the information subject to the presentation may be expected. The identity of any witness and the substan-tive content of the information shall not be disclosed. If an in camera oral presentation is conducted, a verbatim transcript shall be made. ,

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5 2.795e Determination to grant or deny motion for protective order; requirement for Commission review.

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(a) After consideration of a motion from an NRC office for a protective order to impose conditions on or to withhold disclosure of information, including any in camera oral presentation, and after finding that the i.

Information subject to the motion is both relevant and material to the pending adjudication, the presiding officer shall determine, in light of the Commission policy favoring full disclosure, whether disclosure of the information without a protective order could adversely affect the ability of the NRC to protect the

identity of a confidential informant or to complete an investigation or i inspection and whether and to what extent the information should be withheld from disclosure or only disclosed subject to conditions.

(b) Every ruling requiring disclosure of the identity. of a confidential informant shall be certified to the Commission for review. Pending Commis-sion review, the order of the presiding officer shall be stayed.

( (c)(3) If the presiding officer grants the motion, the presiding officer shell issue a protective order withholding disclosure of the information or conditioning its release, as appropriate.

(2) If the presiding officer determines that the motion should be denied in whole or in part , the presiding officer shall notify the NRC office a submitting the motion of the intent to order disclosure. The notice of intent to order disclosure shall specify the nature of the information to be disclosed, the terms and conditions of any proposed order and the basis for the l conclusion that prompt disclosure is required. The notice of intent shall i

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state a reasonable time by which the NRC office must submit a statement of objection or concurrence.

(3) If the NRC office concurs in the disclosure specified in the notice of intent and if the disclosure does not reveal the identity of a confidential informant, the presiding officer shall issue the order proposed.

(4) If the NRC office objects to the disclosure specified in the notice of I

intent and any such objection is disallowed, the presiding officer shall promptly certify the objection, the ruling disallowing the objection and the accompanying record required by 5 2.795f to the Commission for in camera 1

review without other parties present. The order of the presiding officer

r

hall be stayed pending Commission review.

i (d) The presiding officer shall promptly notify all parties to the pending cdjudication and the Director, Division of Rules and . Records, Office of Administration, U.S. Nuclear Regulatory Commission that a rnling relating to the disclosure or nondisclosure of information has been issued or has been certified to the Commission for in camera review without other parties present. A notice of certification shall state the reason for the certification, the certification date, and that, in accordance with 5 2.795f, any party to the i

adjudication may file a timely brief with the Commission.

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6 2.795f Record for Commission review; briefs.

(c) Every information disclosure ruling certified to the Commission for in camera review pursuant to 5 2 795e will be accompanied by a record which shall consist of the information provided to the presiding officer in camera, all documents filed with the presiding officer by the NRC office making the notion for a protective order, including any statements of concurrence or objection, the transcript of any in camera oral presentation, the presiding officer's notice of intent to require disclosure, statement of reasons why the information should be disclosed, and information disclosure ruling.

(b) Within ten days after the presiding officer issues an order certifying an information disclosure ruling to the Commission for in camera review, the NRC office may file a brief with the Commission in support of its objections to '

disclosure. The NRC office shall notify all parties to the adjudication that an NRC brief has been filed, but need not serve a copy of the NP.C brief on the parties to the pending adjudication. Within seven days after service of the NRC notice, any party to the pending adjudication may file a brief with the Commission.

5 2.795g Commission review.

(a) Every information disclosure ruling certified to the Commission for review under 5 2.795e, together with the accompanying record and any briefs, shall be considered by the Commission in camera without other parties present.

Upon its own initiative or upon request by the NRC office making the motion for a protective order, the Commission may conduct an in camera oral presentation without other parties present on any matter certified to it for review under i 2.795e.

(b) After review of the certified information disciosure ruling, the accompanying record and any briefs, the Commission shall decide whether to affirm, reverse, or amend the ruling. The Commission order may include any terns or conditions deemed necessary or appropriate.

i 2.795h Consent to disclose information; notice.

(a) The NRC office seeldng a protective order under 5 2.795c shall notify the presiding officer or the Commission, as appropriate, and the Director, Division of Rules and Records, Office of Administration, U.S. Nuclear Regulatory Commission when (1) the office no longer objects to the disclosure of all or part of the information; (2) the inspection or investigation to which the information subject to the order relates is completed; or (3) there is any other change in the status of the protected information.

(b) Information which an NRC office has consented to release shall be disclosed to the parties and made available for inclusion in the public record of the pending adjudication unless the information relates to the identity of a l l

confidential informant or unless the Commission has ordered otherwise. The

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

identity of a confidential informant may only be released by order of the a

! Commission.

I 2.7951 In camera record deemed sealed pending further order.

(a) k'henever the presiding officer under 9 2.795e, or the Commission under 9 2.795g, issues a protective order to impose conditions on or to withhold disclosure of information, the in camera record on which the order is based shcIl be deemed sealed pending further order.

(b) No part of any in camera record containing information pertaining to the identity of a confidential informant may be included in the public record of a pending adjudication or be made publicly available in any other way except pursuant to Commission order, t

(c) After notice by the appropriate NRC office that objection to the disclosure of information has been withdrawn, or that an investigation or inspection has been completed, and subject to the requirement in para-graph (b) of this section and to any other exemption from mandatory public i disclosure that may validly be claimed under the Commission's regulations, including any exemption that may be available under 9 2.790 or I$ 9.5, 9.61 or 9.95 of this chapter, the presiding officer or the Commission, as appropriate, shall order the in camera record unsealed and the information made available for inclusion in the public record of the pending adjudication.

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- i I 2.795) FOIA request for release of protected information; release deter-i mination review.

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(a) The Director, Division of Rules and Records, Office of ' Administration, U.S. Nuclear Regulatory Commission, upon notice by an NRC office that information subject to an FOIA -request is also subject to a protective order issued under 5 2.795e or I 2.795g, shall promptly notify the presiding officer -

3 or the Commission, as appropriate.

1 (b) Upon notification of an FOIA reonest for release of protected information, the presiding officer or the Commission, as appropriate, shall review the bases for issuance of the protective order and determine, in the

{ light of any exemptions that may validly be claimed under the provisions of ^

l the Freedom of Information Act and the Commission's regulations, whether the information in whole or in part should continue to be protected or whether and under what conditions it may be released.

i 8 2.795k Prohibition against use of information subject to protective order.

Information subject to a protective order to withhold disclosure may not be used by the presiding officer in making any decision in the pending I

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adjudication unless all parties to the pending adjudication have been accorded '

access to the information either with or without conditions.

Dated at Washington, D.C. , this day of , 19_.

For the Nuclear Regulatory Commission I

Samuel J. Chilk Secretary of the Commission 4

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> "/6)ff, Enclosure 2.

Public Comments i

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LIST OF COMMENTERS No. Nane Date

1. R.E. Helfrich, 7/10/85 Yankee Atomic Electric Co.

2. Bishop, Liberman, Cook, Purcell & Reynolds 7/22/85 on behalf of Duke Power Co., Mississippi Power & Light Co., Northeast Utilities, Pacific Gas & Electric Co., Southern California Edison Company, and Washington Public Power Supply System

3. Newman & Holtzinger, P.C. on behalf of 7/22/85 Florida Power & Light Company and Houston Lighting and Power Company

4. General Counsel, Atomic Industrial Forum, 7/23/85 Inc. on behalf of AIF Lawyers Committee

5. Wells Eddleman 8/21/85

6. Diane Curran, Harmon & Weiss and Nina 8/23/85 Bell, Nuclear Information and Resource Service on behalf of Union of Concerned Scientists and Nuclear Information and Resource Service

7. Susan L. Hiatt, Pepresentative of Ohio 8/23/85 Citizens for Responsible Energy Inc.,

(OCRE)

8. J.R. Thorpe, GPU Nuclear 8/21/85

9. Ken Bossong, Critical Mass Energy Project 9/16/85 of Public Citt2en 1

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$5.Ec" g jg-g 16 71 Worcester Road. Frainingharn, Massachusells 01701 1 T5 WL 15 A10:32 l

CFFdT.rI ~'l hit.EJO, 1985 00CKET hG ORANCH AK3lEI NuestR Secretary of the Ccrrdssion D -

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United States Nuclear Regulatory Ccrmission p:- g Washington, DC .20555 ATTC CION: Docketing ard Service Branch SNCT: Ccments pertaining 2 the proposed Rule on " Adjudications; Special procedures for Resolving Conflicts Concerning the Disclosure or Nondisclosure of Infornation", (50 TR 21072)

Dear Sir:

Ya9ee Ator-ic Electric Ccrpeny appreciates the opportunity to ccrrnent on the subject proposed Rule. Yankee Atcr-dc cvns ard operates a nuclear pcwer plant in Rowe, Massachusetts. Our Nuclear Services Division also provides engineering and licensing services for othe.r nuclear power plants in the tbrtheast including Vermnt Yankee, Maine Yankee and Seabrook.

WPdle Yadee Ato-ic endorses the adoptioo-of procedural rules which would properly protect ecnfidential inforraficn, we believe the proposed Rule contains two infirmities which could lead to denial of a licensee's due process rights, and which may violate the Administrative procedure Act.

We wish to su;; gest an alternate procedure which avoids these problens, yet achieves the Ccrrdssion's stated goals.

j The first problem we see with the proposed Rule is that it would permit IEC Staff, as a party to the pending adjudication, to participate in the in camera review, while excluding all other parties. 'Ib allow any party, even the agency itself, to bring ex-parte pressures to bear in a pending case violates notions of fundamental fairness and denies other parties the opportunity for ecnfrontation and rebuttal.1 % avoid this problem, we suggest that each party be limited to filing on-the-record briefs with the office ccnducting the in camera review. 'Ihe inferTnation 8 sought to be protected need not be disclosed in these briefs. .

The second, and perhaps nere significant problem, is that the proposed Rule would permit the very officer who will render a decision on the merits of the adjudication, to consider the confidential inforretion during an in camera review, and order that the information not be disclosed to the IS an a n Valley Television Corp. v. United States, 269 T.2d 221 (D.C. Cir.1959) and Jarrott v. Scrivener, 225 T.Supp. 827 (D.D.C.1964).

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Secretal'r of the Ccrr-ission July 10,1985 7

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parties. Althatgh Pre;csed Section 2.795k a&cnishes the presiding officer to not rely on withheld infornation in neking decisions in the adjudicaticr2, we believe the officer could not help but be influenced by the nondisclosed inferration. Such influence could violate the exclusiveness of the record doctrine codified in the A&inistrative Procedure Act.2 If a procedure for an in ca era review of confidential inforration is to be included in the Final Rule, we suggest that it require that such review is to be conducted by an independent officer - one who is not connected with the pending adjudication in any nenner.

Very truly yours, h 1 -

R. E. Helfrich, Esquire Manager, Generic Lice.ving YJWs.-v

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i 2Section 7(d), 5 U.S.C. 556(e); see also Goldbero v. Kelly, 397 U.S. 254, 271 (1970).

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(t ots Mr. Samuel J. Chilk Secretary of thh Commission U. S. Nuclear Regulatory Commission Wa sh i n g to n , D.C. 20555 Attn: Dacketing and Service Branch Re: Comments on Proposed Rule Regarding Ex Parte In Camera Presentations:

Special Procedures for Resolving Conflicts concerning the Disclosure or Nondisclosure of Information (50 Fed. Rec. 21072, May 22, 1985).

Dear Mr. Chilk:

~

On Wednesday, May 22, 1985, the Nuclear Regulatory Commission ("NRC") published in the Federal Register a proposed rule that would amend 10 C.F.R. Part 2 by adding new sections 2.795a through 2.795k, as well as making conforming modifications to 10 C.F.R. 552.730, 2.740(b)(1), and 2.780(a).

See 50 Fed. Reg. 21072 (May 22, 1985). On behalf of Duke Power Co. , Mississippi Power & Light Co., Northeast Utilities, Pacific Gas & Electric Co. , Southern California Edison Company, and, Washington Public Power Supply System, we respectfully submit the following comments.  :

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I. Introduction A. Background on August 10, 1983, the NRC published a Statement of Policy on Investigations and Adjudicatory Proceedings. See 48 Fed. Reg. 36358'(1983). This policy statement outlined a process which forms the backbone for the current proposed rule: the use of ex parte in camera presentations to the 1

Board that is presiding over the licensing hearings for a particular f acility whenever the Staf f or OI has confidential information that they believe to be relevant to a material issue in the licensing proceeding, but that they assert cannot be presently revealed to the public or the other parties without prejudice to an ongoing invest,isation or inspection.

See 48 Fed. Reg. 36359. At that time, the NRC sought public comment on the advisability of using this procedure or some alternative to resolve the conflict between a presiding of ficer's need to be informed of material developments relevant to the pending adjudication and the need for OI and the Staf f to maintain what was described as the integrity of ongoing inspections or investigations. See id.

The 1983 policy statement noted that an NRC task force

( " Ta s k Fo rc e'" ) was currently considering this matter. See 48 1/ The terms " Board" and " presiding of ficer" are used -

interchangeably in these comments. 1 e

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Fed. Reg. 36358. On December 30, 1983, the Task Force issued its reporp, entitled " Report of the Task Force on Investigations, Inspections and Adjudicatory Proceedings"

(" Task Force Report"). The final recommendations of the Task Force were subsequently embraced by the Commission in its September 13, 1984 Statement of Policy on Investigations, Inspections, and Adjudicatory Proceedings (49 Fed. Reg. 36032 (1984)), as well as the current proposed rule which is the subject of these comments. Compare Task Force Report at 3 with 49 Fed. Reg. 36033-34, and 50 Fed. Reg. 21073-74, 21075-i

77. The recommendations and observations of the Task Force, which were adopted in the 1984 policy statement and the current proposed rule were as follows:

1. Full disclosure of material idYormation to adjudicatory boards is the g4neral rule.

2. Some disclosure conflicts will be inevitable.

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3. Disclosure issues should initially be determined by the adjudicatory boards.

4. Procedures for the resolution of disclosure conflicts should be established by rule.

5. Appellate review cf Licensing Board decisions should be available on an expedited basis.

6. Current Board Notification procedures should not be changed in this rulemaking.

7. The disclosure / nondisclosure procedure should apply to information in the possession of all NRC offices. .

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See Task Force Report at 3, 4-14. )

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The proposed rule was published for comment on May 22, 1985. Set 50 Fed. Reg. 21072 (1985). The proposed procedures themselves, utilizing ex parte in camera presentations to the presiding of ficer (be it Licensing Board, Appeal Board, or Administrative Law Judge), are contained in the proposed 10

. i C.F.R. Il2.795a through 2.795k. See 50 Fed. Reg. 21075-77.

I Additionally, conforming amendments are proposed to 10 C.F.R. 52.730 (motions), 52.740(b) (scope of discovery), and 5 2.780 (ex parte communications) . See 50 Fed. Reg. 21075. These

! comments do not address in detail each section contained in

, the proposed rule; rather, they focus on the underlying 1

infirmities with the use of ex parte in camera presentations i

to a decision maker in an ongoing adjudicatory proceeding and l

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j propose a different approach. .

! B. An Alternative to the Proposed Rule f We conclude that a more traditional solution to this problem, as proposed herein, should be adopted. A preferable t J

scheme would consist of essentially two alternative courses of i action that may be pursued when an NRC of fice has information, i t j which it wishes to keep confidential, but that may be relevant to an ongoing adjudication:

! 1. Subject to an appropriate protective order prohibiting further dissemination of the i information, allow the Board and selected r i representatives of all parties ' to the i adjudication to have access to the information j and allow them to be present at any in camera ..

l hearing before the Boards or I

2. Publicly inform the Board and all parties that an inspection or investigation is ongoing, but ylthout revealing any details that could compromise that undertaking or unnecessarily reveal confidential sources. In the absence

, of a showing warranting a stay, a suspension, or a deferral of further proceedings, the Board would proceed. The inspection or investigation would then be completed in parallel and appropriate public reports issued. Based on any outcome-determinative new information contained in the NRC reports, the parties could then follow the conventional provisions of the NRC's Rules of Practice and move for summary disposition on contentions, submit late-filed contentions, request additional hearings (if the record is not yet closed), move to reopen the record (if the record has already been closed), or, in the event that final agency action has been taken on the license application, file a petition pursuant to 10 C.F.R. 52.206 or intervene in i

an enforcement proceeding that has been

instituted as a result 2 of the inspection or

investigation results i-As described below, use of this manner.'of proceeding instead of the procedures outlined in the proposed rule is more consistent with established NRC precedent, the Atomic Energy Act, and basic considerations of due process.

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l 2/ Naturally, even though the NRC office in possession of the undisclosed material information may have initially i decided to continue an investigation without informing i the board and parties of its substance, it may later i chose to reveal to the board and all parties any interim i findings under a suitable protective order. In J accordance with the suggested procedure outlined above, t the part,ies would then file appropriate motions for

reopening, stays, or other relief, or (in the case of i information meeting the Catawba standard) late-filed contentions as allowed under the Rules of Practice. See Duke Power Co. (Catawba Nuclear Station, Units 1 & 2), ,,

l ALAB-687, 16 NRC 460, 470, 470 n.17 (1982), as modified, CLI-83-19, 17 NRC 1041 (1983).

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II. Discussion ,

A. The Duty to Disclose The primary source of the conflict concerning disclosure ,

e or nondisclosure of information, which the proposed rule seeks i

i to resolve, is the case law doctrine that each party has a i

duty to inform the Board and other parties of material j developments relevant to a pending adjudicatory proceeding.

l See Duke Power Co. (William B. McGuire Nuclear Station, Units 1& 2), ALAB-143, 6 AEC 623, 625-26 (1973). As explained by '

? .

I the Appeal Board In all future proceedings, parties must i i nform the presiding board and other parties

of new information which is relevant and i material to the matters being adjudicated.

. . . .(T]his does not mean that the staff l' or applicant can be permitted ,te leave the presiding body and the other Darties to the

! proceeding in the dark about any change which

is relevant and material to the adjudication.

i Changes may take place but they must be i disclosed.

If the presiding board and other parties are not informed in a timely manner of such changes, the inescapable result will be that.

1 reasoned decision-making would suf fer.

{ Indeed, the adjudication could become meaningless, for adjudicatory boards would be l passing upon evidence which would not I accurately reflect existing facts. The disclosure requirement we impose is not the product of any overly procedural formalism on our part -- it ooes to the very heart of the adjudicatory process. Its sacrifice for the I sake of expediency cannot be justified and i will not be tolerated.

I Id. (emphasis added). -

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The NRC's proposed rule ignores the fact that the disclosurg requirement requires disclosure not only to the presiding board, but to the other parties to the proceeding as well. See id.3 Because the disclosure requirement emanates f rom "the very heart of the adjudicatory process," permitting disclosure to the board alone does not satisfy that disclosure requirement. See ALAB-143, 6 AEC at 626. That is because "the adjud'.catory process" is at its heart an adversary process, which cannot function properly when the decision-making board, but not all of the adversary parties, is made aware of information relevant to a material issue being adjudicated. This requirement to inform the Board and the parties can be satisfied by disclosure to selected party representatives under an appropriate p55tective order when the circumstances justify a departure from the Commission's general policy in f avor of public d. sclosure.

Other decisional precedent from the Commission justifies the approach suggested in these comments. Simply because new information relevant to an adjudicatory proceeding has arisen, 3/ Although the proposed rule and the most recent statement of policy quote the need for disclosure as applying to the other parties as well as the Board (see 50 Fed. Reg. 21072, c,ol. 3 (1985); 49 Fed. Reg. 36032, col. 3 (1984)),* the need for disclosure to the other parties is not treated in the same way as disclosure to the Board.

Perhaps this is an artifact from the NRC's original 1983 Statement of Policy, which spoke only in terms of a duty to inform the Board. See, e.g., 48 Fed. Reg. 36358, -

col. 3 (1983).

that does not necessarily mean that the information must be litigated, before the Board. See Cincinnati Gas & Electric Co.

(Wm. H. Zimmer Nuclear Power Plant, Unit No.1), CLI-82-20,16 NRC 109 (1982). Indeed, the Zimmer case provides ample precedent for following the NRC's accepted procedural rules, e.g. involving reopening the record, when new information becomes available through ongoing NRC investigations. See id.

at 110-11; see also Catawba, ALAB-687,16 NRC 460, 470, as mod i f i ed , CLI-8 3-19, 17 NRC 1041. These traditional procedural rules of the Commission have been enacted properly and applied f airly for a significant period of time; they are entitled to respect and deference on judicial review. See, e.c., Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 5,2'4-25 (1978); BPI v.

AEC, 502 F.2d 424, 428-29 ( D.C. Cir. 1974); see also Easton Utili ti es Commission v. AEC, 424 F.2d 847, 850-51 (D.C. Cir.

1970) (en bane) (late intervention rules in 10 C.F.R. 52.714 are a proper exercise of rulemaking power under the Atomic Energy Act). The Zimmer and Catawba cases recognize that simply because an issue is not litigated in hearings, the public health and safety,is still amply protected through the ,

inspection, investigation, and other regulatory functions of l >

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the NRO. Vermoat Yankee and BPI establish that 5189a of the Atomic Engrgy Act does not require otherwise.4 Thus, the first major source of difficulty with the NRC's proposed rule stems from the fact that the Commission has unnecessarily chosen to place a higher priority on following one half of the doctrine of ALAB-143 (by requiring only that the Board, but not the other parties, be informed of relevant and material new information), while placing a lower priority on (or disregarding) the other half of the doctrine of ALAB-14 3 (which requires that the other parties, as well as the Board, be informed of relevant and material new informatiori).5 4/ The recent Court of Appeals decision Union of Concerned Scientists v. NRC, 735 F.2d 1437 (DyC. Cir. 1984),

U.S. , 105 S. Ct. 815 (1985) does not limit the Commission's power to define what issues are material to the licensing decision, but it does require that once a particular issue is material to the licensing decision, then, under 5189a of the Atomic Energy Act, that issue must be available for litigation as part of the licensing hearings. Once it is apparent that the results of an NRC inspection or investigation will be material to the licensing decision, then 5189a, as interpreted in UCS, requires that the parties be made aware of the information, subject to a protective order if appropriate, and the matters are then available for litigation in accordance with the rules of practice concerning, e.o., reopening the record and late-filed contentions. See 735 F.2d at 1448-49.

5/ The proposed rule quotes the disclosure requirement as being applicable to the Board and all the parties, but does not articulate a justification for excluding parties other than one the conclusory assertion that this is necessary "to avoid compromising an NRC inspection or investigation or to protect a confidential .

Informant." See 50 Fed. Reg. 21072, col. 3.

10 This the C'ommission has chosen to do because of the countervailing interest in preserving the integrity of ongoing inspections or investigations and protecting the identity of confidential sources. Depending on the facts of each case, these may or may not be legiti' mate interests, but because the Commission's licensing process is governed by.the Atomic Energy Act, the Administrative Procedure Act, and considerations of-due process, the Commission is risking judicial reversal when it allows these policy interests in confidentiality of investigatory activities to take precedence over the rights of parties to the adjudicatory process. This is particularly true when there is an alternative set of procedures, such as is proposed in these comments, which can protect any legitimate confidentialitj-interests as well as the rights of the parties to licensing proceedings.

B. Legal Prohibitions Against Ex Parte In Camera Proceedings The most fundamental problem with the NRC's proposed rule is that it allows ex parte presentations of information to the presiding officer, presumably only to allow the Board somehow to satisfy itself that the decision it will be reaching is not incorrect, or to allow the Board to reschedule hearings on particular issues or otherwise delay issuance of a decision until all of the information has been l

collected (so as to allow subsequent litigation of the  !

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- l withheld information once the investigation is complete). See 50 Fed. Reg. 21072, col. 3. As discussed below, this can have t

the same ef fect as granting an ex parte stay of substantial duration without observing the accepted safeguards codified in 10 C.F.R. 52.788.

The board is explicitly precluded from relying on the information received ex parte in camera "in making any decision in the pending adjudication unless all parties to the pending adjudication have been accorded access to the information." See Proposed $2.795k, 50 Fed. Reg 21077.

However, in hearing an ex parte in camera presentation by the Staff, the Board will necessarily be impermissibly relying on a one-sided view of the situation to the extent that it withholds or otherwise delays issuance,iof a pending decision because the Staff has informed the Board in an ex parte in camera session of further information which will probably need to be litigated. This is the functional equivalent of allowing the Staff to request an ex parte stay of indeterminate length without consideration of the relevant legal standard incorporated in 10 C.F.R. 52.788. Furthermore, because the stay / delay application is heard ex parte in camera and the record is sealed, the license applicant and the intervenors:are not informed of the basis for the stay. They have no opportunity to rebut or propose alternative courses of action, and no record basis on which to argue on appeal. Such -

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l a procedure is foreign to Anglo-American jurisprudence. In federal pudicial proceedings, ex parte temporary restraining order ( "TRO") applications are only entertained in extraordinary circumstances; the TRO (if granted) is only of a brief duration; the factual basis for any such TRO is immediately re'vealed to the parties once the order is entered; and further proceedings involving all parties occur within a few days. See Fed. R. Civ. Pro. 65(b).

And what other purpose is there for presenting this information to the Board except to decide whether to delay a decision or hearing session? If the Staff's inquiries will reach a stage where they can be timely litigated without delaying the current hearing schedule, there is no need for i-J any ex_ parte in camera presentation. /It should suffice for the Staff to publicly inform the Board and the other parties that there is an undisclosed investigation or inspection effort currently ongoing and that the Staff will accordingly:

supplement at the first possible opportunity the list of witnesses it will call, provide additional prefiled testimony, and update outstanding discovery requests, all in conformity with the NRC's conventional Rules of Practice. If the Staff's developing information cannot be litigated under the current hearing schedule (or if the evidentiary record is already closed), then the Staff should file a motion for s stay or move to reopen the record. If the Staff is not prepared to i

reveal publicly the basis for .these motions, then the Board should rgceive briefs on these motions and hear arguments in 6

camera, but allow appropriate representatives of all the other parties to be present to present their positions and any relevant facts under a strict protective order preventing these represeEtatives from in any way revealing the information that the Staff presents in the in camera stay or reopening proceeding. This manner of proceeding has several advantages: 1) it satisfies due process requirements for administrative proceedings while doing a minimum of violence to the current, tested, traditional Rules of Practice; 2) it ,

fully complies with the obligation to inform not only the Ecard but also the other parties of new, material, relevant infornation: 3) it actuallyprovides.tNeBoardwithabetter factual and legal basis by allowing all the parties to raise additional facts and arguments, possibly precluding an unnecessary delay in the proceedings because of an easily clarified Staff misperception or error; and 4) it promotes

greater public confidence in the NRC, its adjudicatory proceedings, and the ultimate safety of licensed facilities.

These advantages are discussed in detail below. First, 6/ The Board should allow the presence (under protective order) of at least one or two legal and unimplicated technical representatives of each party, perhaps with the Staff's concurrence (in case a party representative "

is implicated in the investigation).

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hewever, we must address what appears to the only possible objectiog to the alternate procedure outlined _in these comments.

1. The Underlying Assumption of Party Representative Misconduct The NRC has ,as yet failed to make explicit in either of its two prior policy statements or in the proposed rule why all parties cannot have access to the information under strict protective orders.I Specifically, the NRC would allow ex parte in camera presentations in some (perhaps limited) circumstances, precluding even one representative from each party to be present, even under the most strict protective o rd e r . This presumes that the NRC does not trust even one representative of each party, sworn tg. confidentiality and subject to potentially severe sanctions for any breach of confidence, to be entrusted with material, relevant, new information which if revealed could compromise an inspection or investigation. Such a presumption of misconduct and violation of ethical and moral obligations by limited party representatives is an invalid and unacceptable basis for denying parties their due process rights in an adjudicatory process. See, e.g., Commonwealth Edison Co. (Byron Nuclear _

7/ The proposed rule simply states, "[t]here are, however, l certain situations in which any disclosure of i information, however restricted, could affect the "

conduct of an inspection or investigation." 50 Fed. Reg. 21072, col. 3; see Proposed 52.795a, 50 Fed. Reg. 21075.

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Power Station, Units 1 & 2), ALAB-735, 18 NRC 19, 23-25 (1983). gas explained by the Appeal Board:

Up to this point at least, licensing and appeal boards have acted on the assumption that protective orders will be obeyed.

Houston Lighting & Power Co. (Allens Creek Nuclear Generating Station, Unit 1), ALAB-535, 9 NRC 377, 400 (1979). On that assumption, boards have permitted the disclosure to parties of a wide variety of sensitive information -- including the details of plant security plans. See, e.g., Pacific Gas and Electric Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), ALAB-592, 11 NRC 744, 746, and ALAB-600,12 NRC 3 (1980);

Consolidated Edison Co. (Indian Point Station, Unit No. 2), ALAB-177, 7 AEC 153 (1974). But see Houston Lighting & Power Co. (South Texas Project, Units 1 and 2), ALAB-639, 13 NRC 469, 477 (majority), 484-85 (dissent) (1981). To our knowledge, there has never been a breach of an NRC protective order that seriously threatened the confidentiality of the information revealed under that order. If, nevertheless, the staff has.iome basis for believing that there is an actual, as opposed to purely theoretical, risk of such a breach here, it had the obligation to document that basis.

Id. at 25.

Indeed, the experience of some of those submitting these co.nents, who have participated in in camera NRC proceedings subject to protective order, does not justify any such presumption of illegal conduct by any party, whether the applicant, the Staff, or an intervenor. Should any such violation happen, there are full and severe sanctions available, for example: disbarment or suspension of attorney representatives; suspension of a party or its representative

under 10 C.F.R. 52.713; a judgment before the Department of Labor un(er 5210 of the Energy Reorganization Act of 1974, as arended (42 U.S.C. 55851) reinstating and compensating any informant who is discriminated against for providing information to the NRC; and a civil penalty against the licensee pursuant to 10 C.F.R. 550.7 for any such Department of Labor finding of a $210 violation.8 Accordingly, there is no legitimate reason for requiring the Staf'f's in camera presentations to be eonducted ex parte. If there is a fear that one of the party representatives may be implicated in the investigation, the rules could provide that the NRC Staff wculd have a veto as to who may b'e the one or two representatives (legal and technical) of each party who shall be allowed to participate under a prot' ctive order in the in camera hearings.

8/ Indeed, the essential purpose-evident in the statutory and regulatory language of $210 and 10 C.F.R. 550.7 is to protect from retaliation anyone who provides information to the NRC. See 5210(a) of the Energy Reorganization Act, 42 U.S.C. 55851(a) 10 C.F.R. 550.7(a); see also Brown & Root, Inc. v. Donovan, 747 F.2d 1029, 1036 (5th Cir. 1984). These provisions offer not only a powerful deterrent against any feared retaliation against confidential informants, but also I provide full remedies to anyone who has suffered retaliation for contacting the Commission or participating in a hearing, investigation, er other similar proceeding. Therefore, fear of retaliation ,

provides no basis for excluding party representatives (under 'a protective order, if necessary) frem any in .

camera hearing.

1

Perhaps there is an unstated fear that an applicant will correct khe defect or defects that are under investigation by the NRC before the investigation is completed. The Commission's inspection rights and strict requirements for maintaining documentation of all safety-related repairs should provide the Staff with anple means for documenting the as-found condition and each step of any repair or replacement.

In sum, there seems to be no reasonable basis for the Staff or other SRC offices to insist that no one who represents the applicant or intervenor (even under a protective order) may knew what the Board needs to be told about ongoing inspections or investigations. If there is no such reasonable basis, then this penchant for secrecy and this investigatorial mind-set are a wholly inadequate justification'for denying the basic rights of parties to adversarial litigation.'

As discussed supra, there is no need for the creation of special procedures as novel and elaborate as those in the propcsed rule: it is adequate for the Staff to file a motion for a stay of issuance of a decision, a motion to reopen the record, or a motion to delay an evidentiary hearing (any of chich may be conducted in camera, as necessary), or simply a 1 i

. l 9/ The fofmer Atomic Energy Commission Staff initially took .

a similar view of inspection reports, releasing only l

" sanitized" versions (if any) to the parties. Now, of

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j course, such reports (except for proprietary or security .

information) are routinely made public.

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notification that the Staff will soon be providing further testimogy and discovery updates. The advantages of proceeding as described in these comments, and for not adopting the proposed rule, are discussed below.

2. Due Process Limitations.

As demonstrated above, despite the proposed 52.795k (50 Fed. Reg. 21077), unless the Staff ex parte in camera presentation is made so early in the hearing process as to be essentially unnecessary and premature (e.g. in the same time frame as rulings on the admissibility of contentions), the Board could make a decision with the same impact as granting a stay -- a decision to delay hearings, reschedule hearings, or defer issuance of a decision -- based on the Staff's e

information, and without any of the fraditional safeguards involved in a stay application. Accordingly, as described below, fundamental tenets of due process are violated by the prcposed use of ex parte in camera presentations by the Staff to the Board.

The courts have often articulated the dangers associated with such ex parte communications. E.g., National Small Shipments Traffic Conference v. ICC, 590 F.2d 345, 350-51 (D.C. Cir. 1978).

Thus although (these particular ICC) hearings are not required to be conducted in accordance with Section 556 and 557 of the APA and the Commission " enjoys substantial flexibility to ..

structure the hearings, it must provide depending on the nature of the case . . .,

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i that freedom is not absolute." The statutory requirement of a hearing, like the requirement of comment in notice and comment rulemaking, I" imposes certain minimum constraints on the procedure followed by the agency." One of those constraints is the disallowance of recourse to ex parte communications. Such.

contacts are offensive in two fundamental respects: (1) they violate the basic fairness of a hearing which ostensibly assures the publi'c a right to participate in agency decisionmaking, and (2) they' foreclose effective judicial review of'the agency's final decision.

Id. at 351 (footnote omitted). Although the second concern identified by the court (the need for an adequate record for judicial review) is mitigated under the NRC's proposed rule due to the requirement to keep a verbatim, sealed transcript, the parties cannot argue to the court based on that transcript unless the NRC or the court opens it to them. Even this would' in no way alter the fundamental offen$1veness of the Commission's proposed rule for violating the basic right to i participate in the making of the record. Id.; see also National Wildlife Federation v. Marsh, 568 F. Supp. 985, 993 n.14 (D.D.C. 1983) (availability of. record of ex parte contacts for judicial review does not alter the impropriety of the ex parte contacts).

Denial of access to information presented ex parte in camera to the Licensing Board by the Staf f or OI regarding -

issues pending before tha.t tribunal can constitute a denial of administrative due process if and when the information is i

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relied on by the Board -- as it necessarily would be relied upon if khe Board delayed the proceeding or postponed decision and in effect granted an ex parte stay. An applicant would be unable to respond to that information in order to test its reliability or truthfulness or provide rebuttal, explanation, or extenuation, and the applicant is thus prejudiced thereby:

Certain principles have remained relatively immutable in our jurisprudence.

One of these is that where governmental action seriously injurec an individual, and the reasor. ableness of the action depends on fact-findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue. While this is important in the case of documentary evidence, it is even more important where the evidence consists of the testimony of individuals whose memory might be faulty or who, in fact, might be perjurers or persons motivated by malice, vindictiveness, intolerance,? prejudice, or jealousy. We have formalized these protecticns in the requirements of confrontation and cross-examination. They have ancient roots. They find expression in the Sixth Amendment which provides that in all criminal cases the accused shall enjoy the right "to be confronted with the witnesses against him." This Court has been zealous to protect these rights from erosion. It has spoken out not only in criminal cases, . . .

but also in all types of cases where administrative and regulatory actions were under scrutiny.

Greene v. McElrov, 360 U.S. 474, 496-97 (1959) (citations and footnote omitted).

At bottom, in camera ex parte exchanges of information between the~NRC Staff and a Licensing Board are' inconsistent -

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with fundamental notions of fairness implicit in due process and with,the ideal of reasoned, public decisionmaking on the merits which undergird all of our administrative law. See Hor.e Box Office, Inc. v. FCC, 567 F.2d 9, 56 (D.C. Cir.),

cert. denied, 434 U.S. 829 (1977). The Fifth Circuit has said:

(T]he parties must generally be allowed an opportunity to know the claims of the opposing party, . . . to present evidence to support their contentions, . . . and to cross-examine witnesses for the other side . . .. Thus, it is not proper to admit ex parte evidence, given by witnesses not under oath and not subject to cross-examination by the opposing party.

Ecrnsby v. Allen, 326 F.2d 605, 608 (5th Cir. 1964) (citations cmitted). Ex parte information cannot be relied upon in any manner by a Board. To do so would red ce the hearing to ser.ething less than the adversary proceeding that the Atomic Energy Act has been read to require for facility licensing.

Fundamental principles of fairness require that all parties be aware of the content of information presented to the Board and be given the opportunity to test its reliability or truthfulness, and be given the opportunity to present rebuttal testimony if deemed necessary. See Greene v. McElrov, 360

U.S. at 496-97. Even delaying adjudicatory hearings or issuance.'of a decision based on such ex parte information violates due process of law, as even one day's unnecessary delay in a facility's operation can cost the ratepayers and investors as much as a million dollars or even more.

Theexamp1bsofjudicialandadministrativeprecedent cited in the Commission's Task Force Report do not justify the ex parte in camera presentations outlined by the proposed rule. See Task Force Report at 7-8.

The Task Force cites in camera ex parte examination of documents as precedent. Such an examination of documents, usually to rule on claims of privilege warranting protection from discovery, is a far cry from hearing an oral presentation of new information which is i-as yet in a primordeal state, but whidh is material and relevant to the issues being adjudicated. In camera judicial examination of documents to rule on a claim of privilege involves no determination of the truth and accuracy of the documents' contents. The ex parte in camera testimony or other oral presentation from the Staff, with likely cuestioning by the Board (and perhaps later the Commission) is quite unli'<e this cloistered review of discovery documents.

The Board will be interested in the basis of the Staff's information#, and must necessarily rely on hearsay, Staff impressions, and other human observations and interpretations, particularly in the case of information from confidential

informants. In short, all of the risks' identified by the SupremegCourt in Greene v. McElroy that necessitate cross-examination in administrative and judicial proceedings are present when the Staff makes an ex parte in camera presentation to the Board. These problems are not present when examining documents in camera to resolve privilege claims or otherwise rule on their discoverability. Indeed, the ultimate issue for determination (discoverability) is altegether dif ferent than with the proposed rule (potential safety significance and accuracy of information).10 The Federal Communications Commission ("FCC") precedent cited by the Task Force Report (at p.8) similarly provides no.

support for the Ccmmission's proposed rule. See In Camera

^

Presentatien of Classified Informati.o'n, FCC 78-755, Docket No.

15975 (Oct. 26, 1978), reprinted in 44 Ad.L.2d (Pike &

Fischer) 502. That decision allowed ex parte in camera briefing of the FCC by the Department of Defense concerning national security information classified " Top Secret." See id. at 503. The FCC allowed this ex parte in camera briefing because the FCC is specifically authorized by statute to withhold material "containing secret information affecting the national defense." See id. at 505. It is significant that the 10/ Such in camera judicial review of documents frequently results in providing the other parties with "saniti zed " "

versions with the privileged, propriety, or security information deleted.

1 Atomic Energy Act similarly protects information which may compromise the national defense and. security, but there is no ecmparable statutory authority protecting information relating to ongoing inspections and investigations or confidential informants. Cf. 55141-48 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 552161-68.11 Absent any such comparable, explicit statutory basis in the Atomic Energy Act for cencealing investigatory matter from participants in ongoing hearings, the cited FCC decision provides no additional authority for the NRC's proposed rule, which would disallow even limited party representatives attending certain in camera sessior.s.

3. Policy Arcuments Against the Proposed Rule We note that the most recent NRC S't tement of Policy, the Task Force Report, and the Proposed Rule speak of "the Ccmmission policy favoring full disclosure." See Task Force 11/ The Freedom of Information Act ("FOIA") limits the release of investigatory information to members of the public who request such documents under the procedures

, in FOIA (see 5 U.S.C. 5552(b)(7)), but FOIA provides that that statute does not authorize any other withholding of information except as specifically provided in FOIA. See 5 U.S.C. 5552(c).

12/ The judicial precedent cited by the Task Force is similarly inapplicable, being grounded on protection-of the national defense and security and preservation of state secrets. See Task Force Report at 8, citing Bendix~ Aviation Corp. v. FCC, 272 F.2d 533, 544 (D.C.

Cir. 195'9), cert. denied, 361 U.S. 965 (1960); Heine v. -

Raus, 399 F.2d 785 (5th Cir. 1968).

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Report at 3, 4-5; 49 Fed. Reg. 36032, col. 2, 36033, :ol. 3 (1984); $0 Fed. Reg. 21073, col. 3 (1985). Yet the impact and design of the proposed rule obfuscates that general policy, burying it in a provision that provides no more than lip service to the policy favoring full disclosure. See Proposed 62.795e, 50 Fed. Reg. 21706. Proposed Section 2.795e is worded in such a way as to make disclosure of the information seem to be the exception and not the rule:

(a) After consideration of a motion from an NRC of fice for a protective order to impose conditions on or to withhold disclosure of information, including an ex parte in camera oral presentation, and after finding that the information subject to the motion is both relevant and material to'the pending adjudication, the presiding officer shall determine, in light of the Commission policy favoring full disclosure, whepher disclosure of the information without a/ protective order could adversely affect the ability of the NRC to conduct an investigation or inspection fully and adequately or to protect the identity of a confidential informant and whether and to what extent all or part of the information should be withheld from disclosure or only disclosed subject to conditions.

Proposed $2.795e(a), 50 Fed. Reg. 21706 (emphasis added). The NRC's asserted general policy in favor of full disclosure would be ..uch more effectively implemented if the last portion of the above quoted proposed section were rewritten as follows: ,

. . . the presiding officer shall determine, in light of the Commission policy favoring full disclosure, whether restricting "

disclosure of the information through a p otective order is necessary to preserve the i l

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integrity of an NRC investigation or inspection or to protect the confidentiality lof an informant (when it has found ample justification for such has been shown), and to what extent the information should be provided to representatives of the parties to the litigation under an appropriate protective agreement or with identifying details eliminated, if warranted.

Similarly, the Commission's asserted policy in favor of full disclosure is belied by the fact that the proposed rule Irys cut elaborate appellate procedures involving automatic stays of a licensing board decision disclosino information, with mandatory certification of such a disclosure decision to the Commission, and an accompanying discussion of the appellate procedure involved should the Licensing Board decide to disclose the i n f o rma ti on . See Proposed il2.795e-2.795h, 50 i~

Fed. Reg. 21076-77. Yet the proposed' rule provides no procedure for the applicant or intervenor to appeal a decision that prevents disclosure of the Staff's new information that is material and relevant to 'he adjudication. At least a cross-reference to one of the more conventional portions of the Rules of Practice (if not a sentence or two in one of the new proposed sections), explaining how an applicant or intervenor may appeal a Board's nondisclosure decision, would be in better keeping with the Commission's general policy in favor of fdll disclosure.

13/ We note that proposed sections 2.795e(d) and 2.795f(b) provide that the applicant and intervenors may file (Footnote 13 c'c.ntinued on next page) ,

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t Finally, we must emphasize the practical and procedural difficulties that would be presented by the proposed rule.

When a party is attempting to prepare for a hearing before a decision maker who is already aware of material, relevant information of which that party is unaware, it i's very 4

difficult to know how to structure and focus one's case.

Certain evidence, presented in good faith, could be unconsciously dismissed by the Board as based on " stale" information. The situation would be not unlike attempting to represent a criminal; defendant when the prosecutor h'as secretly told ehe judge that the police have an e9ewitness who saw the defendant commit the crime, but that the eyewitness is relvetant to testify in public. The potential for an unfair influence on the decision maker (cons 51ous or unconscious) is undeniable.14 (Foctnote 13 continued from previous page) briefs before the Commission when the Commission hears j an appeal of a decision granting disclosure. See 50 l

Fed. Reg. 21076-77. This is purely a hollow, formal I gesture, because the relevant facts are unknown to the other parties, the prior and subsequent arguments are ex parte in camera, and the Staff need not even serve its brief on the other parties. See Proposed 52.795f(b), 50 Fed. Reg. 21077; cf. Morgan v. United States, 304 U.S.

1, 16-20 (1938); United States Lines v. FMC, 584 F.2d 519, 537-41 (D.C. Cir. 1978).

1' 14/ Indeed, Appeal Panel Chairman Rosenthal has noted on

{ several occasions the unfairness inherent in Board notifications that present largely unscreened -

allegations.

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

-m- .vr

II. Conclusion In IJght of the Commission's ongoing concern with the public's perception of NRC activities, the Commissioners should be loath to engage in ex parte in camera proceedings.

Such secret hearings certainly do not promote the public's confidence in'the integrity and completeness of NRC licensing proceedings (in which public participation is encouraged under the Atomic Energy Act and the NRC's regulations), nor does it reinforce the public's awareness of the NRC's general policy in favor of full disclosure. Furthermore, public confidence in the safety of licensed facilities or the integrity of the utility applicant is not furthered by the inevitable media publicity surrounding " secret briefings" of NRC Licensing Ecards. Accordingly,theNRCshouldd'inimizetheuseofin ca era proceedings. When such in camera' proceedings must be held, due to concerns, determined to be well founded, about corpremising ongoing inspections or investigations or revealing confidential sources, then the NRC should at a minimun allow selected representatives of all parties, subject to an appropriate protective order, to participate in any in ca era proceeding. Such a practice would be consistent with that followed when dealing with highly sensitive plant security plans. Even if the public does not presently know the substance of the proceeding, public knowledge that all parties, including interested governmental entities and

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"public interest" intervenors, have representatives present, should enhance the public's appreciation of the integrity of the NRC'$ licensing process.

Most important, however, allowing representatives of all parties to be present for in camera proceedings satisfies the requirements of due process of law that are inherent in Anglo-American jurisprudence. Accordingly, we recommend that the NRC withdraw the proposed rule and enact in its place a much more traditional procedure: (1) recognizing the fact that Commission precedent.and due process requires informing not only the Board, but also the other parties of relevant new information; (2) allowing the Staff or other NRC offices to either (a) present preliminary new information in camera with selected representatives of all parties present subject to a protective order; or (b) inform the $ ard and parties that an investigation is ongoing, but refrain from presenting preliminary new information until the inspection or investigation can be made public, and then supplementing discovery responses, supplying additional prefiled testimony, moving to reopen the record, and moving for a stay, as necessary under the current Rules of Practice; (3) if the new information does not merit reopening the record or introducing new, late-filed contentions, the issues can be resolved through enforcement action or negotiation outside the hearing process in accordance with the Zimmer case and consistent with ..

l

. cases such as BPI v. AEC. With the . increased risk.of judicial reversal of lengthy licensing proceedings if the Commission in does adopt and employ the proposed rule, the Commissioners

.culd be well advised to follow the more traditional, effective, and credible process outlined in these comments.

We urge that the alternative described herein be given serious consideration as a preferable alternative to the preposed rule. We are grateful for the opportunity to comment on the Commission's proposal.

Si nces tely ,

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1 o 1 Joseph'B. Knotts,3Jr.

J. Michael McGarry, III Nicholas S. Reynolds Mark S. Calvert y

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...... .s July 22, 1985 Secretary of the Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Docketing and Service Branch

Dear Mr. Secretary:

By notice published on May 22, 198J, the Nuclear Regulatory Commission requested comments on proposed amendments to Part 2 of its regulations (50 Fed. Reg. 21,072). The proposed amendments would establish "special procedures for resolving conflicts concerning the disclosure or nondisclosure of information relating to an NRC investigation or inspection not yet concluded or which would reveal the identity of a confidential informant and deemed relevant and material to an adjudication." (50 Fed. Reg. 21,072.) These comments are filed on behalf of Florida Power & Light Company and Houston Lighting and Power Company.

The amendments would implement the Statement of Policy on Investigations, Inspections, and Adjudicatory Proceedings adopted by the NRC last year (49 Fed. Peg. 36,032 (September 13, 1984)). The purpose of that Statement of Policy is to establish a procedure by which to resolve conflicts between the NRC's duty to disclose information to licensing boards and parties.and the need to protect that information or its source. (49 Fed. Reg. 36,033.) The Statement of Policy records the Commission's decision to permit "in camera presenta-tions by the Staff or OI" to licensing boards while excluding all representatives of the applicant or licensee and intervenors. .

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

[, NzwxAx & Horiztwoza, P. C.

. j Secretary of the Commission ii '

July 22, 1985

Page 2 * .

e The amendments now_ proposed would incorporate that decision

, into NRC regulations. We respectfully submit that.the proposed i regulations and the Policy' Statement from which they stem l are an unsatisfactory--and, indeed, unfair--resolution of i the perceived conflict.

The parties to an NRC proceeding have a duty to advise  ;

boards and other parties of new information which is relevant i and material to issues in the proceeding. The NRC Staff shares this duty-but an investigating or inspecting office

! may conclude that it must avoid public disclosure of certain j i

2 "new information" either "to avoid compromising an ongoing investigation or inspection" or "to protect confidential L sources" (or both). ( 4 9 Fed . JIte . 3 6,0 3 3. ) The Commission has emphasized that ".it favors full disclosure to the boards and parties, that information should be protected only when necessary, and that any limits on disclosure to th~e parties should be limited in both scope and duration to the minimum-

, necessary to achieve the purposes of the non-disclosure 1

policy." (16.) Nevertheless, the Commission proposes to permit any.NRC office on an ex parte basis to advise a licensing board of information relating to an investigation or inspection and request a protective order "to impose conditions on

or to withhold disclosure of information." (Proposed 10 j C.F.R. 5 2.795c.) -

1 The notices published by the Commission.in connection with the Policy Statement and the proposed amendments both-2 fail utterly to justify the Commission's ex parte, in camera j approach. We will, of course, agree that there may be information

! which should not be made public but that fact cannot in i

and of itself justify the confiding of such information

to a licensing board on an ex parte basis.

1 The procedures which the Commission seeks to establish would come into play only if the NRC office possessing certain information concludes that it is relevant and material to the pending proceeding and that it must be protected from

public disclosure in some specific way. At least these questions are thus involved

_

Is the information relevant and material to the proceeding?

1 Would disclosure of the information without a protective order compromise or impede.an investi- ,,

gation or compromise a confidential informant?

/

i y -.. , , _ _ . _ . , _ , , . , _ , _ . . _ _ _ _ . - _ .,_._.m , , ., 4._,. . , , , , , , _ _ _ - . - , , , , , , , , , . , _. , o_ ,,,, -

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

Newx4x & HotTzzwozu,R C.

Secretary of the Commission July 22, 1985 Page 3 * .

Is protection of the information required?

What is the minimum protection needed?

l We believe it is essential for boards charged with resolving those questions to have the views of the parties. For example, how can a board make a reasoned determination that certain information is or is not relevant and material to issues in a proceeding unless it hears the views of those familiar-with the issues in the proceeding? Can a board make a reasoned decision as to the minimum protection required if it hears only from those who developed the information?

) In our view, considerations of fairness as well as

elemental due process require at least that counsel 'for j all parties be permitted to receive the information under i

protective orders which prohibit any transmittal of the I information to others than counsel. Counsel would then i assist the board in deciding the questions identified above i and any others which might be involved.- Please note that 1

we refer to counsel for the parties and mean thereby to include counsel for the NRC Staff who is presently being excluded from discussions before board.s in at least some i cases. (See attached Notice dated Jun'e 4, 1985, in Waterford. )

The procedure suggested above is not unprecedented in NRC practice. Boards regularly grant requests for orders protecting information for reasons of security, personal privacy, proprietary interest, etc. We know of nothing l'

inherent in the nature of information relating to an NRC investigation or inspection which could be said to render

our proposal unacceptable. Certainly the Commission has j stated no justification for the treatment it proposes for such information. There is an implied assumption that represen-tatives of parties would not comply with a protective order i but, again, there is no apparent basis for that assumption.

1 To the best of our knowledge, in the past NRC protective i orders have been honored and the Commission's 1984 and 1985 i' notices contain nothing to suggest that such orders would not be honored in the future.

j i In our* view, it is inherently contradictory for the

! Commission to state that it favors full disclosure while

adopting a procedure which must necessarily encourage its

own employees to seek to avoid full disclosure. We anticipate j the response that the regulation prohibits use by boards "

i

. . , - ,,n :- .-,,- -v -- ----.----n , - ,- , ., _,,,-.._--~,-,n, _ - . , , , . . , - . - - - , - - , -. -.

NEWMAN & HoLTz sora.R C.

Secretary of the Commission

, . July 22, 1985 Page 4 of inforhation subject to a protective order in making decisions unless all parties- have been _ accorded access to the information either with or without conditions._ The response to that is simple: No justification has been offered for routinely forcing board members to " segregate" unusable from usable information in the " records" of their minds.

The proposed regulation permits an NRC office to approach a licensing board with an oral motion for a protective order and to make oral presentations to the board ex parte in camera. In light of these provisions, we suggest that, if adopted, the regulation must make clear,that any NRC l office must reduce to writing the information for which it seeks protection. If that information is not in writing, the possibility of confusion and misunderstanding would be too great and subsequent review could be impossible..

We urge the Commission to revise its policy and proposed implementing procedures to require that an NRC office seeking to prevent public disclosure of information of these types first request the board to issue.a protective order requiring any counsel for other parties who receives the'information to refrain from disclosing it to anyone. Thereafter, counsel

for all parties would participate in the Board's efforts to determine whether the information should be disclosed I

and en what condition.

Very truly yours, /'

t UAA -

J.Lr Kathleen H. Shea KHS:pg n

i Attachment f

t I

4 I

l

i I

, . l

. UNITED STATES OF AMERICA

'. NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING APPEAL BOARD Administrative Judges: .

Christine N. Kohl, Chairman June 4, 1985 Dr. W. Reed Johnson '

Howard A. Wilber CE d?C~

wRC

)

In the Matter 5 of l E JN -4 P3 :59 LOUISIANA, POWER & LIGHT COMPANY ) Docket No. 50-382 OL

) C?iai :- 5:

(Waterford Steam Electric Station, ) 00C"EiiNG & SEr . -

BRANCH Unit 3) )

NOTICE On May 30, l985, we held an in camera hearing with only representatives of the Commission's Office of Investigations (OI) present. The purpose of the hearing was to determine if matters currently under investigation by OI are relevant to matters pending before us in this adjudicatory proceeding. See 49 Fed. Reg. 36,032 (1984).1 During the course of the hearing, we posed a number of questions that OI's representatives were not able to answer at the time.

In an in camera order issued today, we request that additional information, or reasonable access to it, from OI.

FOR THE APPEAL BOARD O MW:M C. Q an Shoemaker Secretary to the Appeal Board 1

A verbatim transcript of the hearing was made; OI has been provided one copy, and the original and three additional copies are being kept under seal.

l i

+

• MM A twiic Indu strial Forum, Inc. g -

- ~

71M Wesconsin Avenue

, Bethesda MD 20814 4805 Telephone 1301)654 9260 bd d/d7 TWX 71082496o2 ATOMIC FoR DC O8LKETED i

n

: 1 July 23, 1985

?5 JJL 25 A10 28 0"'CE OF 5Est .. '

03CXE T'N3 & SEC.":

BRANCH Secretary of the Commission U.S. Nuclear' Regulatory Commission Washington, D.C. 20555 Attention:

Docketing and Service Branch

Dear Sir:

On May 22, 1985, the Commission published for comment a proposed rule entitled " Adjudications; Special Procedures for Resolving Conflicts Concerning the Disclosure or Nondisclosure of Information." (50 F.R. 21072-77, May 22, 1985; corrected 50 F.R. 23138-39, May 31, 1985). The Atomic Industrial Forum's Lawyers Committee submits the following comments for the Commission's consideration.

In August of 1983, the Commission took the first regulatory step in this subject matter area when.it issued an interim Statement of Policy (4 8 F.R. 36358-55, August 10, 1983) which permitted in camera presentations to licensing boards by NRC staff of matters relating to pending investigations. Such presentations were to occur with notice to other parties but without disclosure of the substance of the ongoing investiga-tion. Subsequently, the Commission received the report of its internal Task Force on the use of in camera proceedings and promulgated a revised Statement of Policy. (49 F.R. 36032-34, September 13, 1984). The May 22, 1985 proposal is intended to impleme.n t the latter policy.

The Commission's Statement of Po', icy and proposed rule attempt to strike a b'alance between two,'sometimes conflicting, goals.

One goal is to assure that every party to an adjudicatory pro-ceeding is provided an opportunity to participate fully in the litigation of matters which may affect that party's interests.

Tne second is based on the recognized need to protect certain investigatory information from disclosure, where disclosure could hamper the regulatory responsibilities of the Commission and its staff. The Lawyers Committee believes that the balance struck by the Commission in the proposed rule gives far too j much weight to protecting investigatory information. The 1 proposal'does not appear to be consistent with basic principles -

l of fairness and due process. i l

l J'JL E t 5 55

( d e m v .5y es -1. .. .. .. ,

]

1 l

l Secretary July 23, 1985 s

It is our position that, as a matter of general policy, ex-parte in camera procedures should be utilized only when a board conclu3es that it must do so. The Commission should expressly instruct its boards that, to the maximum extent practicable, boards are to authorize representatives of other parties to participate m'eaningfully in the decision regarding whether investigatory information should be disclosed and under what conditions.

When investigatory information is in documentary form, essen-tially the same procedures as found in 10 CFR 2.744 should apply. The NRC Staff may seek a licensing board order that documents need not be disclosed, or that disclosure should be restricted. In making its decision, the board must consider whether the document is relevant and material, properly exempt from disclosure, necessary to a proper decision in the proceeding, and reasonably obtainable from another source. If the document is not relevant and material, it obviously need  ;

not be disclosed. On the other hand, if the document is relevant and material, and not exempt from disclosure, it should be disclosed. Finally, if the;, document is relevant and material and exempt from disclosure,cbut its disclosure is necessary to a proper decision in the proceeding, the document should ordinarily be disclosed. Of course, disclosure may be subject to an appropriate protective order which restricts its disclosure to avoid, or at least lessen, any adverse conse-quences which might flow frem such disclosure.-

Section 2.744 does not require that the licensing board review the documents in question without the benefit of the views and arguments of all of the parties to the proceeding. Rather, the regulation grants the board discretion to review the document l

j in camera without disclosing its contents to the other parties.

UIven the importance of protecting the right of a party to participate in all aspects of the adjudicatory process, it seems clear that if there is a close question regarding whether i the document should properly be disclosed, a board should re-quest the views of all parties to the proceeding who may be l affected b,y the board's decision. Obviously, any procedure selected by the board which permits such ?articipation should ensure, to the maximum extent possible, t. tat the information i

will not be disclosed to the general public.

l

. Secretary July 23, 1985 l

i l

It is also possible that NRC employees way wish to furnish to a board investigatory information which has not yet been reduced to writing. Such information would almost certainly be prelim-inary and incomplete and consequently, in our view, is unlikely to be relevant and material to the issues before the licensing board. Boards should be instructed that, except under the most extraordinary circumstances, representatives of the other parties should be permitted access to the information. This type of guidance from the Commission would be consistent with the general policies underlying the Commission's Rules of practice and would eliminate serious questions of fairness inherent in permitting NRC employees to communicate privately with a licensing board.

The Committee agrees that there may be extraordinary circum-stances which would justify preventing a party from attending in camera sessions. For example, if there-is a reasonable Fasis for believing a party may not abide by a protective order

and the disclosure of investigatory information would seriously hamper the Commission's regulatory responsibilities, it would be appropriate to refuse attendance by the party in question.

If there are sufficient grounds for r'~ e fusing to permit attend-ance by one or more parties, the boards should be instructed to have the session transcribed. In addition, the board should be careful to limit its inquiry to those facts which are necessary for the board to decide whether the information is relevant and material and whether it should be disclosed under appropriate conditions.

Sincerely, r

b GeneralCouffel LH:mm l

i c l l

l

W ,j)

Eg0906CD ftut.E 718-A Iredell St.

yd$2M/4 72) Durham, NC 27705 8-21-85 Secretary, USNRC, Attn Docketing and Service, Proposed Rule 50 PR 21072 Washington DC 20555 ocara", -

03Mc Comments of Wells Eddleman First, the proposed rule app %5rgh The Staff can always move for a protective order $gpe f6 eiymecessary.

3 m the identity of a confidential informatt or to pro .t other information which could reveal an informant's identity o A rule requiring Commission review an jy)@'4seaninvestigation. M of any release of a confidential informant's name or other $"q)talr 1dentifying information could be of use, but the best policy would simply be not to reveal the identity of confidential informants.

Of course, if the NRC really wants to protect those who give it information, it could be much more supportive of whistleblowers.

The Staff's typical attitude now does not tend to give confidential informants nuch confidence in the inves'tigation or their concerns.

The Staff seems to do as much as it possibly can to classify concerns "non-safety" related, to find exculpatory evidence for a utility or plant builder, and, e.g. in the case of Chan Van Vo, auparently does not follow up with intervf tws of persons identified by an informant as being able to confirm allegations.

Another eroblem is that this rule allows the staff and presiding officer to take action off the record without a record being ureserved.

Conversations, oral motions, and arguments other than a formal presentation are not required to be transcribed. Thus, even board members (other than the presiding offioir) won't know what is goinE on.

And there will not be any record, to review later, or there will be an inadequate record.

The rule also compromises the right et the public to a full hearing on safety-rslated issues and other issues material to a licensing decision. That right is guaranteed by the Atomic Energy Act, Section 189a, and the NRC does not have the authority to change tha t. Nothing in the proposal exempts intervenors from the extra burdens associated with late-filed contentions, even if the information resulting from an informant or confidential investigation is later made available in the record. Thus, intervenors get a " Catch-22" situation in which a decision made e x parte can prevent their access to facts, but they still bear the burden of lateness dues to that decision. I Obviously, the purpose of Board Notifications is to let licensing of boards know about material issues. It is therefore unreasonable to E:*

prevent boards from acting on those issues. A better solution here A is to preclude a licensing action until such issues have been made 9:

public and there has been a full opportunity to litigate them. This $i!

can be done while protecting confidentiality of informants.

• The attempt in this rule to shield information without an ongoing .! -

investigation seems to indicate administrative laxity by NRC in j its investigations. Obviously, any allegation by a confidential informant or anyone else, that would reasonably require a Board -g Notification, should be worthy of investigation (and a request for a protective order).

I l

Certainly there should not be disclosure to licensees or and not to other parties. By not requirin all NRC

}*

afolicants, o fices to hold information confidential when a proteekive order is j applied for, this rule invites abuse, errors, and a lack of confidence by informatts.

This rule should be bagkfittad4r ,sarnoued. Mf6 CA

maat mett esae m o tutt PR-e_ @

DQico UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION MS 23. g ,.

) . h ' -(,\M f Proposed Rule: 10 CFR Part 2 )  : .,

)

Adjudications; Special Prodecures )

for Resolving Conflicts )

Concerning the Disclosure or )

Nondisclosure of Information )

)

50 Fed. Reg. 21072 (May 22,1985) )

)

COMMENTS BY THE UNION OF CONCERNED SCIENTISTS AND NUCLEAR INFORMATION AND RESOURCE SERVICE The NRC has published a proposed rule designed to protect the identity of confidential informants and the contents of certain inspections and investigations during licensing hearings.

The proposed rule would allow the NRC staff to make special, confidential requests to Licensing Boards for protective orders where disclosure of the information would " prejudice an inspection or investigation" or " reveal the identity or otherwise compromise a confidential informant." Proposed S 2.795b. The other parties to the hearing would receive notice that such a request had been made, but would not be allowed to review the motion or to attend any sessions with the Licensing Board.

The proposed rule addresses a legitimate need to protect certain NRC investigations and the identity of whistleblowers.

As it is currently written, however, it seriously infringes on the public's right to be informed of and to liti, gate safety issues that bear on whether a license or amendment should be granted. The rule should strikes a better balance between AUG 2 7 Mi m 1.dpftic:d...... W.-' ,

1 l

O

. maintaining the confidentiality of investigations and protecting the public's right to participate in licensing proceedings. At a minimum, the rule should provide for disclosure of all information material to the issuance of a license before the license is granted.

The proposed rule contains the following serious defects:

I. The proposed rule would allow the NRC to license nuclear plants without offering an opportunity for a hearing on all material safety issues.

The right to an adjudicatory hearing on all issues material to a licensing decision is guaranteed by Section 189a of the Atomic Energy Act. Union of Concerned Scientists v. NRC, 735 F.2d 14 37,14 4 4-5 (D.C. Cir. 1984 ) , cert. denied ,105 S .Ct. 815 (1985). In effect, this proposal would allow the NRC to foreclose intervenors from litigating some relevant and potentially serious safety issues by de'nying access to the information during the pendency of licensing hearings. The information potentially subject to nondisclosure encompasses virtually all issues relevant to licensing, ranging from manangement competence to the quality of individual safety systems.

Moreover, the proposed rule's loose standard for determining what constitutes inspections and investigations makes it easy for the NRC staff to avoid disclosure of troublesome or embarrassing

. , 3, k 1 information. The staff may obtain a protective order simply by

' 1 j- , /

3- ~ initiating an inspection, or even by stating toithe Licensing

.q -

. Board its intention to investigate a problem.1 Intervenors would have no opportunity to challenge such assertions. ,

While the Commission may have a legitimate need for confidentiality during an inspection or an investigation, that need does not override the Commission's obligation to offer an opportunity for a hearing on " protected" issues if they are material to the issuance of a license. Whether the Commission releases information publicly or discloses it under a protective agreement to the parties, it must provide some opportunity to litigate the issues before a license is granted. "The Commission is entitled to great freedom in its effcrts to structure its proceedings so as to maintain meaningful participation, but one of its goals must be to assure that there is meaningful public participation." Union of Concerned Scientists v. NRC, supra, 735 F.2d at 1446, quoting Bellotti v. NRC, 725 F.2d 1380,1389 (Wr ight, J. , dissenting) (emphasis in original).

In apparent recognition of this principle, proposed S 2.7951 requires the Licensing Board to place protected information (excluding names of confidential informants) in the public record of a "pending adjudication" once an investigation or inspection has concluded or the NRC staff withdraws its objection to disclosure. However, this provision does not l 1As the Commission states in the preamble, the rule would apply not only to pending investigations and inspections, "but may also determine include information whether to initiate on an the basis of which inspection the NRC m 50 Fed.

or investigation.gy Reg. at 21075, Col. 1 (emphasis added).

adequately guarantee that an investigation will actually be 1

concluded before a hearing record closes or even before a license is issued. Moreover, it doesn't assure that intervenors will not be precluded or discouraged from litigating the issues by having to meet heavy burdens for reopening the record or filing late contentions. The rule should state specifically that no l

licensing decision will be made, nor will the hearing record be closed, before all material information has been made available to the parties.2 Because intervenors are not responsible for the late availability of the information, the rule should also state that contentions on these issues will be judged according to the Commission's standards for initial filing of contentions.

II. The proposed rule prevents Licensing Boards from considering issues that are subject to protective orders.

r-We understand that one of the purposes of this proposal is to allow the staff to brief Licensing Boards on serious safety problems affecting licensing decisions without jeopardizing the confidentiality of the staff's investigations of the problems.

However, the proposed rule defeats this purpose by preventing the Licensing Board from doing anything with the information. The proposal provides that once a protective order has been issued, l

In most cases, the identity of a confidential informant would i not need to be disclosed in order to litigate technical issues  !

bearing on the safety finding required for issuance of a license I or amendment. In the event that the identity of an informant was l determined to be material to a licensing decision, however, the "

Board would be required to disclose the identity of the informant l under a protective agreement.

- no information subject to the order- can be used by the Licensing Board in making any decisions in the pending adjudication unless all parties have been given access to the information. Proposed i

j g 2.795k. Under this provision, a Licensing Board would have no

authority over the safety issues covered by a protective order I

j- until the inspection or investigation had concluded or the NRC i

staff had consented to disclosure. Thus, the Licensing Board I'

could not evaluate the adequacy of an NRC staff investigation during its progress, or even decide to postpone a decision on an issue related to the investigation.

I While this provision would protect an intervenor from illegal ex parte decisions by a Licensing Board, it would also hamper the Board's ability to make fully informed decisions. If, for example, the license was scheduled for issuance prior to completion of an investigation, the Boa'rd might never have the 'b# d'"I

z. , s r (

opportunity to weigh serious safety allegations in its decision. -rd, , ,

i And, no matter how relevant a pending, protected investigation ,

might be to issues under litigation in a licensing hearing, the Board would have na authority to consider the investigatory i

evidence as part of the whole case. The rule should preclude the l Licensing Board from making any final decisions until all information material to the issuance of the license has been i

disclosed for consideration by the Board and the parties.

i I

es 4

i I . .

1 III. The proposed rule conflicts with the Freedom of Information Act.

The Commission states that it does not intend to use these proposed procedures to shield information properly subject to disclosure under the Freedom of Information Act _(FOIA). 50 Fed.

Reg. at 21074, Col. 1. However, the proposed rule provides much broader protection for information relating to inspections and investigations than is conferrred by the FOIA. ,

f The Freedom of Information Act, 5 U.S.C. $52(b)(7)(A),

exempts f rom disclosure " investigatory records compiled for law enforcement purposes, but only to the extent that production of such records would interfere with enforcement proceedings." In interpreting this section, the courts have held that the I

government must demonstrate that the in(9tmation relates to a

" concrete prospective law enforcement roceeding." Carson v.

U.S. Department of Justice, 631 F.2d 1008,1018 (D.C..Cir. 1980).

(emphasis added).

In stark opposition to these holdings the Commission states that, in order to qualify for a protective order under the proposed rule, the information "need not relate solely to an ongoing inspection or investigation but may also include information on the basis of which the NRC ggy determine whether to initiate an inspection or investigation." 50 Fed. Reg. at 21073, Col.1 (emphasis added) . This language would allow ' he *d/4NI Commission to shield virtually any allegations based only on the speculation that they might lead to an inspection or an investigation. The proposed rule should require the NRC office

)

~7~

requesting a protective order to demonstrate that allegations are being reviewed actively under the Commission's procedures for management of allegations.  ;

! The proposed rule also contains a confusing provision which implies that the Licensing Board need not make the maximum disclosure required by the FOIA unless a FOIA request is made.

Proposed sec. 2.795j(b) provides that when a FOIA request is $b D#I

• w ev.M Cs L) j received for information that has been withheld under a NC!L+(~~e ,

j protective order, the presiding officer must review the record

) "and determine, in the light of any exemptions that may validly j be claimed under the provisions of the FOIA and the Commission's regulations, whether the information in whole or in part continues to be protected or whether and under what conditions it may be released." The rule should state clearly that from the I outset, the Licensing Board's standard Ior disclosure of information is at least as broad as the FOIA.

4 IV. The proposed rule does not provide adequate assurance

' that inconsistent disclosures will not take place.

j In the past, the NRC often hes made inconsistent decisions l

regarding disclosure of information. Requestors have been denied documents under the Freedom of Information Act, only to find that the withheld documents were released previously to the licensee

> or some other party. The problem seems to lie in a lack of i procedures for communication of disclosure decisions between I

l various NRC offices. .

f l

- , - . - . - , . - - . , . . . - - ---,-..,,,w.-,--..n _ . , - - , - - . - - , --_.,,_.___,,n_, , , . . - , , , , , , .---,.n- . ,. ,- ,- -- --,-,.n--.

-g-This proposed rule has the potential to compound the problem

! of inconsistent disclosures. Allegations may be in the custody

f ::::::1 fiffer:nt Un0 :ffi::: :t ;n;., 1.mludiny si= wilius.

4 of Nuclear Reactor Regulation, Inspection and Enforcement, and Investigations. These offices operate under a policy that all allegations should be disclosed to licensees and applicants unless the disclosure would jeopardize an inspection or investigation or compromise a confidential witness. " Proposed NRC Manual, Chapter 0517, Management of Allegations," 5 058.

Hence, these offices may disclose allegations to a licensee or applicant long before they become relevant to a licensing adjudication. Similarly, information may be released under the FOIA before it is raised in an adjudication. In order to ensure that Licensing Boards are not asked to shield information that is already in the possession of the licensee or applicant, the rule should require that any NRC office seeking a protective order must certify to the Licensing Board that it has consulted all other offices that have custody of the information, and i

determined that none of it has been disclosed to the licensee or any other party.

'~

,- Respectfully submitted, t 4.

Nina Bell

) iane Curran Nuclear Information and Harmon & Weiss-Resource Service 2001 S Street, N.W. "

, 1616 P Street, N.W. Suite 430 Suite 160 Washington, D.C. 20009 Washington, D.C. 20036 (202) 328-3500 (202) 328-0002 August 23, 1985

AJCfM EUm8Rg I mni l -

, august :, 1985 [M//d 7 --

DOU.ETED - -

. :-eents er.05se Citstens for Resconsible Energy. Inc. ( ' 0C R E ' )tSNRC c5 t*e c ;cesed rule *Aejuosrotsons: Special Procedures for -

1

e s : * . ; .; Conr110ts C:nceening the Disclosure er

r :,rcrestion. 5.Rg ;2c7; ency ;;. 1C85) c N3ndisc1%=5"reAs 26 fl.Q8 l

.+ pc-e,vo.

. m... .u.. .. i . ......-.%.

e. . . ornensni 4. w a m $ v .me n t e in thae se .-

-ivaleges rcr w

tmhcleing 2nrerrotien t o t h e NR C S t o r r o jd:md 6G A SEPVh'.".

te cther porties. Interveners, wne moy have eenridentiof {wtERANCH .(;

a r. ' 0

• r. G E t t or 1 *. V e s t i g G t i C n s Cr their own, will be reQuiree'to cas:10se t k e rc while the georr ecy mote es pcree in comero sutnattals ord EresentCtiCBs Just to recuest that inrormotion not te releases, ihsle ene neee for cretectacn er such matters is importont,

t r n. :t "O*e

tp: pts *t t*CS C ' Sir Ond 00mplete odjudicoticr.

cf issues roter131 te licensing cetions. As required by Section --

Ice er the etces: Energy Act. as interpreted by Union or Ocncernec S:ier.tists v. NPC. 735 F.2d 1437 (D.C..Cir, 1964).

T r.e r e neecs t; ce o better c o l o r.c e cetween tnese twc roctors.

• h;s ult te 0:::r: 1:ses ty h o * : r. g all it.rc--sts r dee*ed

• s eer; .: : :verti:* rr:r gene *-1 dis:1:sure mode CYoilotle te the es-ties v9:e* a c?ctective orde*, and hcldsng ,ony heorangs

: *.: e r r s n g ene p otectee infermotten gn comero, wath only the 52snoters tc the protectsve creer cresent. Tc cas: Curoge e s c i o t s t r. s cr p r : t e c t i .s e ciders. Stri~t censities shoule ce sucilchie or e-r *:ee, tr it is proven ceycnd c reasonctle erutt that a p e r s : r. ci pcrty was rescensible rer dasclosure and the ass-lossre resultes at n o r n. te o r, investagotten er conrider.tici i r, r c i n o r. t . The p e r.a l t i e s she'uld include denial or o license, dismsssol or o cotty, one discorment or ottorneys, s The NRC's own policies and octual personnel behavior indicote that the pecposed measures will selectively block the he.dO* riow or information. Intervenors will te denied access to information, while licensees are .routsnely inrcreed or allegotions and investagotsons. Thss is actually NRC colicy 05 writter in ' Proposed NRC Monuol, Cnopter c517, Monogement or Allegotsons.' It is ruether k r.o w n t: OCRE thoe on sndsviduol terreri: ver>ang out er NEC's Region III mode at his personal c:1::y er esseiose the identity er anrermonts to the licensees rc- wrc* they workes, U r. l e s s and until the NFC hos paoven its 5: Ists ec Ocndu:t roie o ". c tt: rough investigottens. it should

t te gi"er Fra lieges.

It cc va cusi. FS6es n: sense t- .st5F: 12 inrcrect: n er:-

i t. t e r .'e n c

• s that ncs teer released tc 12 ensees er tc the cuelt . The Stor' in :ts 9sserts:n *es: ts d es net ide-tir. .

1.*.c a v i d u a l s b y BCFE ever, w h e r. the) have moce cutli stotere"ts tc the mec14 Thst prcscrol wcuir give the starr eco muce power t: w:t.-cle i re rsti:n cirese.

• lessee encough other.econs fr*r t *. e oc.'we;;3terj pr: ess e, merely claiting thot the Bf:*"St :" is the sutsect cf Or investagataCn. This woulc cre e*e s e ce r ve..c e s Fece sde*ta's1*g wat* esses er lin61 79

sts**s 51 ' e .*a r . Fuel;: 1 6r".e t* speta rt: 0.legst;*rs-1*'eitig3et:r.s. C" er'c' eTeet 50ti"*s.

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r e t.1 ocportunsty to respone to the Storr's c1cims for the need 5 .

rcr c o r.f i c e n t i c i s t y os gg sc-re in comero proceedings are

: r t e fa c l a r e d . N: ene will be able tc refute the Storr's motions are orguments os thest centent will be unknown. This gives the ,

5:orr ur. oreonted gewer te chart the course of o proceeding, ahd p:ssibly t0 d e t e e r. i n e its outcome, by decloring informatiOn Oxe ct f*t oss:10sure os st moy be the subject cf.'an, inspection ,

c' t r v e s t a g o t t e r. . The potential for obuse here is axtreme. ;

I r:r!?!.ts - h o- . r ul t: o licensee moy never be reveoled if the StSff th::ses te cloan exemption on thss bosis. The pule'shouldD Drcnsbit 1scenssng boards from reaching o finol deession'until 011 inrctnotsen e.oterio; to the istuones of the license has.been' cssclosee te t e. e porties. A new contentsor based on recently-

• elenser. rite ar.1 c esicus1; 5 eld to te cenr sdential thculd te ev= gee o ce-eing to ete stancores fe" Fility iDstial c : n t e n t s c r. s . ee- if recpenir; cf the recerd is invcived.

Interveners should not have te meet heovy burdens for

s s e e r e t i e r. er cententsens based upon material previously ?

u.ovoslocle tc t5et.

Fino11: , tre prencsee rule is s n c e n s s s,t e n t with the Free:cm Of I-f:*motson art. T6.e Mc0 roy n:t h r.v e r e g ul a t i e r.s fronting the suelic less occess to infermotion than does FOIA. General Ele:tri: Cc. v. NRC, (7th Cir. 1984, Cose No. 94-2066). 4110 op.

ot 4 The p*ccesee rule would snield inrormotion 'on the tosis of which the Ncc toy determine w e.e t h e r to instsote on inspection or anvestsg::icn.' 50 FR 01072. This is incenststent uite Judiesol interpretation or FOIA Exemption 7 (investsgotory roceeds), wrien ocplies only to information concernitis o concrete e espective low enrorcement orceeeding, corson v. 00J',

631 F.0c 2005, 101B (D.C. Cir. 1960). The present pecrosol w uld shiele Vsttv511f any snfermotsch

. *. s c h the Stoff feels msght be the sut.ect of on inspectict or s . c s s t a p t. t s c r . Circst any rotter could foll into that cotegory.

t*vs : ET.tiry the potential fer abuse.

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BRAN.N August 21, 1985 t

Mr. Samuel J. Chilk Secretary of the Comission U. S. Nuclear Regulatory Comission Washington, DC 20555

Subject:

Request for Coments on Adjudications Proposed Rule (10 CFR Part 2)

The staff of GPU Nuclear Corporation herewith submits coments on the subject proposed rule. Coments were requested in a May 22, 1985 Federal Register notice (50 FR 21072).

As a general coment, we believe this proposed rule appears to achieve its purpose in providing shielding /confidentialitpfor informants, however we see specific problems with the proposal and these are listed below.

The proposed rule could provide some difficulties for licensees and other parties to investigations, inspections or adjudicatory procedures. The rule is not clear on how the basic constitutional right to be able to confront accusers will be maintained in these semi-judicial proceedings.

An additional requirement to maintain fairness in these proceedings is i also of concern. For example, if adverse material is revealed by a confidential informant, therefore unchallengable, how is a party to a proceeding protected and assured that this information is not used in the judgment of the presiding officer.

Although "under the proposed procedures, a presiding officer may not use j information subject to a protected order in making any decision in the pending adjudication unless all parties to the pending adjudication have been accorded access to the information and given appropriate opportunity to address the information", the ability to exclude information can be questioned. In addition, when "information is made available only under specified conditions" this may not allow an appropriate challenge or discrediting of adverse information in these proceedings.

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GPU Nuclear is a part of tne General Public Utihties System

f In addition, the delays resulting from processing and granting protection to an informant may arbitrarily affect the licensee or a carty to an adjudication.

We would request that the Comission attempt to clarify these points before finalizing this rule.

Sincerely, Wb J. R. Thorpe Director Licensing & Regulatory Affairs RPJ:nk:2238f y

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. A/0 7L) it.ize nw Publsic Congress Watch . Crrtcf Mass Energy Propet . Hea'tn Research Group . UDgation Group . Tax Reforrn Group September 16 19 19 P2:02 Jane R. Mapes C" C '#IECr-3 Senior Regulations Attorney jhC Regulations Division Office of the Executive legal Director U.S. Nuclear Regulatory Ccruission Washington, D.C. '20555

Dear Ms. Mapes:

We are writing to offer sme crmnents on the Nuclear Regulatory Ormission's proposed rule "Special Procedures for Resolving Conflicts Concerning the Disclo-sure or Ibndisclosure of Informtion" (Federal Register, Vol. 50, !b. 99, p.21072)

The procedures would restrict the disclosure of information in certain situations where the NRC staff felt that disclosure could " prejudice an inspection or inves-tigation" or " reveal the identity or otherwise wicaise a confidential informant."

While we understand the NRC's interests in protecting whistleblowers and passibly the confidentiality of scrne investigations, we believe the propsed rules pose a nmber of procedural and substantive problers. The wording of the proposal is so broad in parts that it invites excessive and possibly iw a.g.cr withholding of infomation. Additionally, it creates the possibility of infor-mation teing denied to are parties'in a proceeding while being made available to others. And, perhaps most importantly, it' risks decisions made by Licensing Boards to be based on inccrcplete and consequently inaccurate data.

The proposed rule would likely permit the shielding of nere information fran the public than is intended to be protected by the Freedcm of Infonnation Act.

The FVIA's seventh exanption permits an agency to withhold investigatory records related tn and ompiled for law enforcenent purposes - subject to a ntrnber of restrictions. Generally, withheld records must relate to actual enforcement proceedings or at least "a concrete prospect of enforement proceedings" must e.xist (FOIA's legislative history -- omments of Senator Hart,120 Cong. b::.

S9330 (daily ed. May 30, 1974)). 1 . .

t .

Ruever, the proposed rule provides that "the information (to be withheld) need not relate solely to an ongoing inspection or investigation but may also include informtion on the basis of which the NBC may detennine whether to ini-tiate an inspection or investigation." That is, to shield any documents that it may be uncomfortable revealing, the NBC need only claim that the requested 1.nformation may possibly lead to an investigation at same uncertain time in the future. 'Ihis provides a carpet under which the NBC could sweep a great deal of mterial it preferred not be exposed to public scrutiny - whether justified or rot.

Even if NPC maintains that it would release records in response to FVIA requests that might otherwise be withheld under the proposed rule, there is a significant risk of inconsistent disclosures. Interpretations will vary fran official to official of what m terials are properly withheld under the FVIA Craca' Mass Energy Propd . 215 Penr$au Avenue S E . Wasnington. D C 20003 (202) 5464790

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or any applicable withMiding statutes. Further, since officials considering a mIA request have scne discretion to release exenpt material, it is possible that one official could release records to one requester while another official denied similar or the same doctments to another. NRC does not now have in place g h dures that insure consistent disclosure practi s or which allow the tracking of prior disclosures.

Consequently if the NRC places further restrictions on the flow of infomation through the enactnent of the proposed rule, problems of inconsistent releases can be expected to worsen. And that raises the possibility that scrne parties, such as licensees or applicants, may be able to gain possession of materials that are simultaneously denied to other parties, such as intervenors. There is obviously no assurance that one party will ccrmunicate to another that it has acquired cer-tain records particularly if it is adverse to its own position.

Of greater concern than the proposed rule's impact on information disclosure procedures, is its likely impact on the substantive decision-making process. As proposed, the rule provides that any infomation for which a protective order is granted could not be considered by the Licensing Board or any of the affected parties in a given proceeding. Mareover, there is nothing to stop a Licensing Board frce issuing a final decision without having first seen and considered the protected infomation.

Thus, it is possible that information concerning, for example, serious safety shortecrnings at a plant could be withheld frcrn the Licensing Board's considera-tion. The Board could nonetheless proceed to issue a final decision on a license application for the plant. The consequences of a Licensing Board being unable to make a fully informed decision in such ciretrnsitances could be dangerous at the least. /

Withholding information and related issues frcan an adjudicatory hearing would further seen to be in clear violation of the Atcrnic Energy Act (S 189a) which guarantees intervenors the right to a full review of all material issues in a licensing decision. By denying access to selected infonnation, intervenors would have no opportunity to frame issues or challenge the assertions of licensees.

All parties have a right to a hearing on the protected issues and to have an opport. unity to litigate tbse issues before a license is approved.

At the ninimum, the proposed rule should be amended to prcnide for the follow-ing safeguards:

(1) hhere a legitimate need exists to withhold any information via a protective order, then all affected licensing and other proceedings should be suspended until such time as it is possible to release the material. At the very least, no Licensing Board decisions should be regarded as " final" until all withheld infouration is disclosed to the interested parties.

(2) The standard emloyed by a Licensing Board for disclosing information should be at least as broad as that provided for by the MIA. Further, j there should be no new restrictions placed on access to information until )

NBC develops internal procedures to insure consistency in its disclosurs  ;

decisions. l These steps would help insure implementation of the Ormission's policy of disclosing all material information to all parties in NRC adjudicatory proceedings.

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We a'ppreciate this opportunity to provide ommer.ts on the NRC's pr_,-_ r

• rule. Please feel free to contact us if there are any questions regarding the points raised in this letter.

Sincerely,

/

i, s. 'n d-Mb/-

Ken Bossong, Direc W j j

i Critical Mass Energy P,toject of Public Citizen i

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4

4 O/6)?b Enclosure 3.

Comparative Text Identifying Differences Between Proposed and Final Rule

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Enclosure 3 I

g Comparative Text Identifying Difference _s 8etween Proposed and Final Rule 4

New text underlined. Deleted text lined through. (Note: The under-lined words "in camera" and the underlined subheadings in 6 2.740(b) are j notnewtext.)

1 4

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, 4 as amended and 5 U.S.C. 522 and 553, the Nuclear Regulatory Commission is pFepeS4Rg-te-adept adopting the following amendments to 10 CFR Part 2.

PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS.

1. The authority citation for Part 2 is revised to read as follows:

Authority: Sections 161, 181, 68 Stat. 948, 953, asamended(42U.S.C.

2201,2231);sec.191,asamended, Pub.L.87-615, 76 Stat. 409 (42 U.S.C.

2241);sec.201,88 Stat.1242,asamended(42U.S.C.5841);5U.S.C.552. .

Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105,

• 68 Stat. 930, 932, 933, 935, 936, 937, 938, as amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); sec. 102, Pub. L.91-190, 83 Stat.

853,asamended(42U.S.C.4332);sec.301,88 Stat.1248(42U.S.C.5871).

~

l Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955, asamended(42U.S.C.

2132,2133,2134,2135,2233,2239). Section 2.105 also issued under Pub. L.97-415, 96 Stat, 9073 (42 U.S.c. 9930) . ISectiens 2.200-2.205 :100 i: sued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282);sec.206,88 Stat.1246(42U.S.C.5846). Seetiens-2,399-2,399-alse 4ssued-under-pube 'e r-97-415,-96-State-2971-(42-W,S,G,-2133), Sections 2.600-2.606 also issued under sec. 102, Pub. L.91-190, 83 Stat. 853 as amended (42 U.S.C. 4332). Sections 2.700a, 2.719, and 2.795k also issued under 5 U.S.C. 554. Sections 2.754, 2.760. 2.7702 2.780 also issued under l 5 U.S.C. 557. Sections 2.790 and 2.795j also issued under sec. 103, 68 Stat.

936, as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also is>uad under 5 If.S.C. 553. Section 2.809 also issued under 5 U.S.C.

553 and sec. 29, Pub. L.85-256, 71 Stat. 579, as amended (42 U.S.C. 2039).

Subpart X also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub. L.97-425, 96 Stat. 2230 (42 U.S.C.10154). Appendix A also issued under sec. 6, Pub. L.91-580, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued under sec. 10, Pub. L.99-240, 99 Stat. 1859 (42 U.S.C. 2021j).

2. In i 2.730, a new paragraph (i) is added Lu read as follows:

$ 2.730 Hotions.

(1) The provisions of 5 2.730(a) through (h) are not applicable to motions filed pursuant to $$ 2.795a through 2.795k.

3. In 0 2.740, paragraph (b)(1) is revised to read as follows:

i 2.740 General provisions governing discovery.  ;

- 1 (b) Scepe of discovery. * * *

(1) In general. Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the proceeding, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable natter. For the purposes of this section, privileged matter includes information subject to a protective order issued under the special procedures in 95 2.795a through 2.795k. In a proceeding on an applica-tion for a construction permit or an operating license for a production or utilization facility, discovery shall begin only after the prehearing conference provided for in 6 2.751a and shall relate only to those matters in controversy which have been identified by the Commission or the presiding officer in the prehearing order entered at the conclusion of that prehearing conference. In such a proceeding, no discovery shall be had after the beginning of the prehearing conference held pursuant to s 2.752 except upon leave of the presiding officer upon good cause shown. It is not ground for objection that the information sought will be inadmissible at the hearing if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

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4. In-E-217803 -paragraph-fa)-4s-revised-te-read-as-fellews+

f-2r780--Ex-parte-eemmunfeat4 ens, fa)--Exeept-as-prev 4ded-under-the-speefal-precedures-in-55-21796a threugh-21795k-er-in-paragraph-(e)-ef-this-seetien,-neither-fi) i Gemmiss4eners,-members-ef-their-4mmediate-staffs,-er-ether-NRG effiefais-and-empleyees-whe-adv$se-the-Gemmiss40ners-4n-the-eMereise-ef thef r-quas 4-judie 4al-fu ne t4 ens-will-reques t-er-entertain-ef f-the-reeerd except-frem-eaeh-ether,-ner-f2)-any-party-te-a-preseeding-fer-the 1 issuanees-denial,-amendment,-transfer,-renewalv-med4ffeat4en,-suspen-s4en,-er-reveeat4en-ef-a-14eense-er-permits-er-any-eff4eers-employee, representative,-er-any-ether-persen-direetly-er-indireetly-aeting-in t

behalf-thereefs-skall-subm4t-eff-the-reserd-te-Gemmissieners-er-sveh staff-members,-eff4e4als,-and-empleyees,-any-evidenees-explanat4en, analysiss-er-advise,-whether-written cr-cral.-regarding-any-substantive matter-at-4sswe-in-a-preseeding-en-the-reserd-then-pending-befere-the NRG- fe r- the-4 s s ua ne e s-de n ia l,-ame ndmen t,-tra n s fe r,-re newal,-medi f f e a-44en,-suspens4en,-er-revesatien-ef-a-14eense-er-perm 4tv--Fer-the perpeses-ef-this-seetien s-the-term "preseeding-en-the-reserd-then pending-befere-the-NRC2-shall-inelude-any-app 14 eat 4en-er-matter-whfeh l has-been-met 4eed-fer-hearing-er-eeneerning-whieh-a-hearing-has-been requested-pursuant-te-this-party

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4. In 6 2.781, paragraph (a) is revised to read as follows:

$ 2.781 Separation of functions.

(a) In any proceeding under this subpart, any NRC officer or employee engaged in the performance of any investigative or litigating function in that proceeding or in a factually related proceeding may not participate in or advise a Commission adjudicatory employee about the initial or final decision on any-disputed issue in that proceeding, except--

(1) In accordance with the special procedures in 66 2.795a through 2.795k of this part; (2) As witness or counsel in the proceeding; (3) Through a written communication served on all parties and made on the record of the proceeding; or i

(4) Through an oral communication made both with reasonable prior i

notice to all parties and with reasonable opportunity for all parties to respond.

5. In Subpart G, immediately following i 2.790, a new center heading and new sections 2.795a through 2.795k are added to read as follows:

I

SPECIAL PROCEDURES FOR RESOLVING CONFLICTS CONCERNING THE DISCLOSURE OR NONDISCLOSURE OF CERTAIN SENSITIVE INFORMATION IN LICENSING PROCEEDINGS RELATING-TO-AN-NRG-INVESTIGATION-GR INSpEGTION-GR-TO-TWE-49ENTITV-GF-A-GONFIDENTIAL-INFORMANT -

AND-9EEME9-REhEVANT-AN9-MATERIA 6-TO-A-pfNBING-ABJWBIGATION 5 2.795e Applicability of special procedures; official file.

(a) Sections 2.795a through 2.795k specify procedures for resolving conflicts concerning the disclosure or nondisclosure of information relating te-an-4nvestigatien-er-inspeetien-sw to the identity of a confidential informant or obtained during an investigation or inspection and deemed relevant and material to a pending adjudication. These procedures apply to all NRC offices. The procedures are.to be used whenever-an-NRG-effice may-be-required when, in accordance with the Commission's board notification policy or pursuant to a request from a presiding officer, an NRC office may be required to produce information in a pending adjudication 2 the disclosure ,

of which aRd-the-NRG-effiee-hav4ng-the-infermatien-bel 40VeS-that-d49eleSWre

~

ef-the-infermatien without a protective order would 2 prejudiee-an-invest 4ga-44en-er-4nspeetien-er reveal the identity of a confidential informant or prejudice an ongoing investigation on inspection. ,

(b) As used in 55 2.795a through 2.795k, the term " presiding officer" includes an administrative judge, an administrative law judge, an Atomic i

Safety and Licensing Board, and an Atomic Safety and Licensing Appeal Board. ,

(c) Unless and until publicly released, all documents required by or i

relating to the special procedures in il 2.795a through 2.795k shall bear

the docket number end title of the proceeding, be marked "Not For Public Disclosure - Protected Under 10 CFR 59 2.795a - 2.795k," and h transmitted to the Secretary in sealed double envelopes for deposit in the protected section of the official docket file.

5 2.795b Requirement to disclose relevant and material information.

In accordance with the Commission's board notification policy, infor-mation relating-te-an-investigatien-er-4nspectien-er-te-the-4dentity-ef-a eenfidentfal-infomant-and deemed relevant and material to a pending adjudi-cation shall be disclosed to the parties to the adjudication by the NRC office having the information unless the information would reveal the identity of a confidential informant or prejudice an ongoing investigation or inspection. When an NRC office has information which it deems relevant and material _to a pending adjudication but which could reveal the identity of a confidential informant or prejudice an ongoing investigation or inspec-tion, the that NRC office shall reouests the presiding officer by motion to issue a protective order imposing conditions upon the manner in which the information is disclosed or withholding the information from disclosure. )

because-diselesare-witkeut-a-preteetive-erder-weeld-prejudiee-en-inspeetien e r-in ves tig a tien-e r-revea l-t he-4 de n ti ty-e f-a-een fide n tf al-in f o ma n te l i 2.795c Motion for protective order; notice of motion.

(a) A motion for a protective order to impose conditions on or to withhold disclosure of information shall be addressed to the presiding officer by the NRC office having the information. At the tin.e a motion is l

1 made and without revealing the substance of the information subject to the motion, the NRC office shall notify the parties to the adjudication and the Director, Division of Rules and Records, Office of Administration, U.S.

Nuclear Regulatory Commission, that a protective order to impose conditions on or to withhold disclosure of information has been requested.

(b) A motion for a protective order may be made orally or in writing, may include a request for an ex-parte 3 camera oral presentation, without other parties present, and shall include the folicwing information, as appropriate:

(1) A brief description of the nature of the information subject to the motion; (2) A brief explanation why the infunnation is relevant and material to the pending adjudication; (3) A brief statement 4adfeating-hew-the-informatien-relates te-am-inspeetien-er-invest 4 eat 4en-and-the-status-ef-the-inspeetien-er investigatient-ineluding-thn-est4 mated-t(ee-ef-eempletient whether the information was obtained,frem a confidential informant or during an cogoing investigation or inspection; (4)--A-statement-that-the-4mfermatien-reveals-the-4dentity-ef-a eenf4dentfal-4nfermantt (5) (4) An explanation of the basis of the motion for a protec-tive order to impose conditions on or to withhold disclosure of the information, including a brief explanation why and to what extent dis-closure of the ,information without a protective order will eempremise er-impede-the-eenduet-ef-an-investigatien-er-inspeettent-er reveal the l

l

-g-l identity or otherwise comprcmise a confidential informantt or will prejudice an ongoino investigation or inspection; (6) (5) The proposed relief requested.

9 2.795d Consideration of motion by presiding officer; procedure.

(a) A motion from an NRC office for a protective order to impose conditions on or to withhold disclosure of informattun shall be considered by the presiding officer _in camera without other parties ether-than-the-NRG staff present.

(b) The presiding officer may require or permit the NRC office makino the motion to make an ex-parte in camera oral presentation.

Attendance at an ex-parte in camera oral presentation shall be limited exclusively to the presiding officer, to appropriate NRC personnel 2 and to any witness appearing at the request of the NRC office or the presiding officerr2 and to a court reporter. The presiding officer shall promptly notify all parties to a pending adjudication of the occurrence of when any ex-parte in camera oral presentation. w444-be-held, The notice shall state the purposes-t4me,-and-Plase of the ex-parte in camera oral presentation and the approximate date a ruling concerning the disclosure or nondisclosure of the information subject to the presentation may be expected. The identity of any witness and the substantive content of the information shall not be dis-closed. If an ex-parte in camera oral presentation is conducted, a verbatim transcript shall be made.

1

• l I 2.795e Determination to grant or deny motion for protective order; requirement for Comission review.

(a) After consideration of a motion from an NRC office for a protective order to impose conditions on or'to withhold disclosure of information, including any g-parte i_nn camera oral presentation, and after finding that the information subject to the motion is both relevant and material to the pending adjudication, the presiding officer shall determine, in light of the Comission policy favoring full disclosure, whether disclosure of the information without a protective order could adversely affect the ability of the NRC te-eendwet-an-investigatien-er-4nspeetion fully-and-adequately-er to protect the identity of a confidential informant

) or to complete an investication or inspection and whether and to what extent l all-er-part-ef the information should be withheld from disclosure or only disclosed subiect to conditions.

(b) Every ruling requiring disclosure of the identity of a confidential informant shall be certified to the Comission for review.

Pending Comission review, the order of the presiding officer shall be  ;

stayed.

(c)(1) If the presiding officer grants the motion, the presiding officer shall issue a protective order withholding disclosure of the information or conditioning its release, as requested, appropriate.

(2) If the presiding officer determines that the motion should be denied in whole or in part, the presiding officer shall notify the NRC office submitting the motion of the intent to order disclosure. The notice of intent to order disclosure shall specify the nature of the

information to be disclosed, the terms and conditions of any proposed order and the basis for the conclusion that prompt disclosure is required. The notice of intent shall state a reasonable time by which the NRC office must submit a statement of objection or concurrence.

(3) If the NRC office concurs in the disclosure specified in the notice of intent and if the disclosure does not reveal the identity of a confidential informant, the presiding officer shall issue the order proposed.

(4) If the NRC office objects to the disclosure specified in the notice of intent and any such objection is disallowed, the presiding officer shall promptly certify the objection, the ruling disallowing the objection and the accompanying record required by Q 2.795f to the Commission for ex-parte in camera review, without other parties present.

The order of the presiding officer shall be stayed pending Comission review.

(d) The presiding officer shall promptly notify all parties to the pending adjudication and the Director, Division of Rules and Records, Office of Administration, U.S. Nuclear Regulatory Comission that a ruling relating to the disclosure or nondisclosure of information has been issued or has been certified to the Commission for ex-parte 3 camera reviewr without other parties present. A notice of certifica-tion shall state the reason for the certification, the certification date, and that, in accordance with 6 2.795f, any party to the adjudication may file a timely brief with the Commission.

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I 9 2.795f Record for Commission review; briefs.

(a) Every information disclosure rulina certified to the Commission for ex-parte in camera review pursuant to 5 2.795e will be accompanied by a record which shall consist of the information provided to the presiding officer ex-parte in camera, all documents filed with the presiding officer by the fSC office making the motion for a protective order, including any statements of concurrence or objection, the transcript of any ex-parte in camera oral presentation, the presiding officer's notice of intent to require disclosure 2statement of reasons why the information should be disclosed, and the-presiding-efficer-s-erderv information disclosure ruling.

(b) Within ten days after the presiding officer issues an order certifying an information disclosure ruling to the Commission for ex-parte

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in camera review, the NRC office may file a brief with the Commissfon in support of its objections to disclosure. The NRC office shall notify all parties to the adjudication that an NRC brief has been filed, but need not serve a copy of the NRC brief on the parties to the pending adjudication.

Within seven days after service of the NRC notice, any party to the pending adjudication may file a brief with the Commission.

$ 2.795g Commission review.

(a) Every information disclosure ruling certified to the Commission for review under % 2.795e, together with the accompanying record and any briefs, shall be considered by the Commission in camera without other parties ether-than-the-NRG-staff present. Upon its own initiative or upon request

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. 1 by the NRC office making the motion for a protective order, the Coninission may conduct an ex-parte in camera oral presentation without other parties present on any matter certified to it for review under 6 2.795e.

(b) After review of the certified information disclosure ruling, the accompanying record and any briefs, the Commission shall decide whether to  !

affinn, reverse, or amend the ruling. The Commission order may include any terms or conditions deemed necessary or appropriate.

6 2.795h Consent to disclose information; notice.

(a) The NRC office seeking upeR-whese-metfeR-the-presidiRg-effiser-er the-GemmissfeR-has-4ssued a protective order under 6 2.795c 4mpes4Rg-eeRdf-tiers-eR-eF-Withheld 4Rg-the-diselesWFe-ef-4RfePmatieR shall notify the pre-siding officer or the Cortnission, as appropriate, and the Director, Division of Rules and Records, Office of Administration, U.S. Nuclear Regulatory Commission when (1) the office no longer objects to the disclosure of all or part of the information; its-ebjeetieR-te-diselesure-te-the-parties-te-the peRd4Rg-adjudicatieR-ef-all-OF-aRy-peFtfeP-ef-the-4RfePma%4eR-subjeet-te-the l

eFdeF-4s-WithdF8WR T -WheR (2) the inspection or investigation to which all-eF aRy-pertieR-ef the information subject to the order relates is completed,1 or wheR-44-learRs-ef (3) there is any other change in the status of the protected inforn a tion. _

(b) Information which an NRC office has consented to release may shall l l

be disclosed to the parties and placed made available for inclusion in the l public record of the pending adjudication w4theut-further-erder unless the i

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l information relates to the identity of a confidential informant or unless the Commission has ordered otherwise. The identity of a confidential informant may only be released by order of the Commission.

5 2.7951 Ex-parte-in M camera record deemed sealed pending further order.

(a) Whenever the presiding officer under 6 2.795e, or the Commission under 9 2.7959, issues a protective order to impose conditions on or to withhold disclosure of information, the ex-parte in camera record on which the order is based shall be deemed sealed pendino further order.

(b) No part of any ex-parte in camera record containing information pertaining to the identity of a confidential informant may be included in the public record of a pending adjudication er be made publicly available in any other way except pursuant to Commission order.

(c) After notice by the appropriate NRC office that an-inspeetien-er -

investigaties-has-been-eempleted-er-that objection to the disclosure of information has been withdrawn, or that an investigation or inspection has been completed, wh4ehever-4s-earliery and subject to the requirement in paragraph (b) of this section and to any other exemption from mandatory public disclosure that may validly be claimed under the Commission's regu-lations, including any exemption that may be available under 5 2.790 or 55 9.5, 9.61 or 9.95 of this chapter, the presiding officer or the Commis-sion, as appropriate, shall order the ex-parte in camera record ineluded unsealed and the information made available for inclusion in the public record of the pending adjudication.

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4 5 2.795j F0IA request for release of protected information; release determination review.

(a) The Director, Division of Rules and Records, Office of Administration, U.S. Nuclear Regulatory Commission, upon notice by an NRC office that information subject to an FOIA request is also subject to a protective order issued under 5 2.795e or 5 2.795g, shall promptly notify the presiding officer or the Commission, as appropriate.

(b) Upon notification of an F0IA request for release of protected information, the presiding officer or the Commission, as appropriate, shall review the bases for issuance of the protective crder and determine, in the light of any exemptions that may validly be claimed under the provisions of the Freedom of Information Act and the Commission's regulations, whether the information in whole or in part should contirre to be protected or whether and under what conditions it may be released.

5 2.795k Prohibition against use of information subject to protective order.

Information subject to a protective order to withhold disclosure may not be used by the presiding officer in making any decision in the pending adjudication unless all parties to the pending adjudication have been accorded access to the information either with or without conditions.

Dated at Washington, D.C., this day of 19__.

For the Nuclear Regulatory Commission.

Samuel J. Chilk Secretary of the Commission l

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