ML20214P310

Petition of Gap.* Requests That NRC Initiate Special Investigative Unit Complying W/Nrc Chapter Manual 0517, Excluding Region IV & V Stello from Participation,To Investigate Employee Allegations.Supporting Matl Encl

ML20214P310
Person / Time
Site:	South Texas
Issue date:	05/29/1987
From:	Condit R, Garde B GOVERNMENT ACCOUNTABILITY PROJECT
To:	NRC COMMISSION (OCM)
References
CON-#287-3636 2.206, NUDOCS 8706030309
Download: ML20214P310 (165)

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C'hf,l? UNITED STATES OF AMERICA BEFORE THE NUCLEAR REGULATORY COMMISSION g yp.j A8 07 - g r e ! A n 't Ogg{;%g Spvict, ) BRANCH In the Matter of ) Petition Pursuant ) to 10 C.F.R. S2.206 South Texas Nuclear Project ) ) PETITION OF THE GOVERNMENT AC_C.QUNTABILITY PROJECT s Prepared by: Government Accountability Project 1555 Connecticut Avenue N.W.

1. 200 Washington, D.C.

20036 (202) 232-8550 Dated: May 29, 1987

TABLE OF CONTENTS Page I. INTRODUCTION........................................... 1 II. BACKGROUND............................................. 3 III. FACTS.................................................. 4 IV. LEGAL ANALYSIS......................................... 15 V. CONCLUSION............................................. 19 VI. RELIEF REQUESTED....................................... 20 i

I. INTRODUCTION j The purpose of this Petition, in conjunction with the Motion To Quash Subpoena filed on behalf of Billie Pirner Garde, Esq., is to protect the public health and safety by assuring that over 400 serious safety allegations raised by current and former i t cmployees of the South Texas Nuclear Plant (STNP) are properly investigated. In order to assure that these serious safety problems are properly investigated, the Commissioners are requested to establish special investigation unit which would comply with the spirit and letter of NRC Chapter Manual 0517 and which would be similar to those now operating out of the Special Projects Office or to those previously established for Waterford cnd Comanche Peak. In order to provide the assurance that this investigation is properly conducted, the Commission must prohibit the involvement of Region IV or Victor Stello in the investigation. As the following memorandum and attachments make clear, as well as the companion Motton To Quash and attachments to it, Region IV has had a long history of misfeasance and malfeasance with regard to investigation of worker safety allegations in j particular and safety inspections in general. Victor Stello has been an outspoken apologist for Region IV and its management, I oven to the point of seeking to reward and promote two of the i j principal targets of the recent OIA investigation of Region IV at the time the critical O!A conclusions were being issued. The l impropriety of the past practices of Region IV and Victor Stello l l are well documented and well known to each Commissioner. The i l l

failure of either Region IV or Victor Stello to repudiate their past conduct or discard pursuit of that conduct for the future is powerful evidence of the need for an independent special investigation. It is critical that there be a competent and i prompt investigation of the more than 400 safety allegations that concerned workers have presented to their CAP attorneys and which GAP personnel, working with and under the supervision of those attorneys and in pursuit at the attorneys' representation of their clients, have pursued. The illegal subpoena issued by Victor Stello in an attempt to force Billie Pirner Garde, Esq., to disclose the confidences of her clients is the last desperate act of a man who has been totally frustrated in his attempt to subvert the efforts of these concerned workers to have their concerns properly pursued. For six months Ms. Garde has attempted, on behal. of her clients, to convince Mr. Stello to establish the appropriate investigative mechanism to assure a proper consideration ot the safety ] allegations. Mr. Stello has refused and, because it became apparent that he would never on his own allow the independent investigation required, this Petition has been filed to assure i protection of the public health and safety. I By quashing the illegal subpoena and establishing the 1 independent investigation sought here the Commissioners will both i assure adequate protection of the public health and safety and expedite the process for resolution of these safety issues. i I 1 i --.=

i II. BACKGROUND The South Texas Nuclear Project, a two-unit reactor, was granted a construction permit by the NRC in 1975. The plant was supposed to be built in compliance with its construction permit, federal reg 21ations and industry standards. At that time Brown & Root, Inc., was the architect, engineer and builder for Houston Lighting and Power (HL&P), the applicant for license and STNP's principal owner. In April 1980, HL&P was fined $100,000 by NRC for failing to ensure that their contractor, Brown & Root, complied with federal safety standards and regulatory requirements. In September 1980, Brown & Root was removed as engineer and construction manager of the STNP. Later, in November 1981, Brown & Root withdrew as builder of the project and was replaced by Ebasco. Brown & Root was subsequently sued by HL&P and other partners involved in the STNP for damages resulting from mismanagement of the project. The suit was settled in 1985. In June 1986, the Atomic Safety and Licensing Board concluded that there would be reasonable assurance that the STNP would be completed in accordance with federal requirements. Currently, the contractors involved at STNP include HL&P, Bechtel, Ebasco and SAFETEAM. STNP is planned to begin fuel load on June 1, 1987, and Unit I is scheduled to start commercial operation in December, 1987. _ 3-

III. PACTS In January, 1987, GAP attorneys began a preliminary investigation into the concerns of workers and citizens pertaining to the STNP. Our investigation of the STNP was prompted by the concerns of STNP workers who came to us for help in dealing with problems at the plant. Due to the complexity and number of allegations raised by workers at STNP, GAP retained the assistance of an experienced nuclear investigator. Using the techniques and criteria employed by successful worker allegation j review programs, GAP has sought to carefully investigate and categorize each allegation received from STNP workers. To date, GAP has reviewed over 500 allegations. Of the allegations I reviewed, an overwhelming number (50%) pertain to the safety of the plant. Other categories of allegations include: wrongdoing I (37%), intimidation and threats (10%), and other concerns (3%). i Since beginning its investigation GAP has repeatedly requested that NRC provide an independent review and inspection team to address the allegations we were receiving (see attached l letters). We requested independent review because of our negative experience, over the last five years, with Region IV of the NRC concerning facilities throughout the' region. In a i January 20, 1987, letter to Mr. Stello and James Mattox (Attorney General for the State of Texas) we expressed our concern that i j i Region IV was " unable or unwilling to comply with regulatory requirements." In addition, we requested-that the NRC i i provide independent inspectors to compensate for Region IV's deficiencies. Appendix A. On February 18, 1987, Mr. Stello I -4_ I

~ l responded to our concerns about Region IV by stating: The South Texas Project is within the. jurisdiction of Region IV and that Region is the appropriate organization to review the concerns of your clients. I have confidence that Region IV will. properly pursue this. responsibility. I have been in-contact with Mr. Robert D. Martin, Regional Administrator for Region.IV, and he assures me that his staff is thoroughly prepared 7 to commit the resources required to appropriately resolve the issues which your clients might raise. Appendix B. On March 4th, we challenged Mr. Stello's assurances by articulating some of the instances of improper conduct;by i Region IV officials (including Mr.-Martin) that we had. - 1 f experienced. Again, we requested an independent review team. ) Mr. Stello's March 18th letter, once again, ignored the issue of i j Region IV's competence and asked that our clients turn over their. t information to Houston. Lighting and Power or the NRC. Appendix C. Our response was brief and consistent with out. previous i letters. Appendix D. Finally, in an April 8th letter,'Mr. l Stello clearly demonstrated that he was part of the problem and not part of the solution.1/ The letter reads as follows: i I have received your letter of March 23, 1987. - I-accept your characterization of the allegations you' l l have in hand as bearing on the safety of the S. Texas Nuclear Power Plant in a significant way. I urge you to bring these issues to NRC for our review. As to-where and how within NRC they will be addressed 4 is my responsibility. Assignment within NRC will be governed by the nature of the allegations. I can assure you they will be handled properly, both.in i regard to technical review and in regard to i confidentiality. By the nature of significant safety issues, they must be addressed promptly. Your letters imply that you ,{ have had this-information for some time..Therefore, if-1/ Interestingly enough, Mr. Stello's April 8th letter was written two days after a letter from HL&P to GAP which stated: (footnote continued) 4 1 1 e

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we do not receive full-information on the allegations within 30 days-we will be constrained to take steos to acquire it by other means. (emphasis added) Appendix F. Mr. Stello's refusal to address the Region IV problem made it impossible for GAP to comply with his request, and clearly showed his complicity with Region IV officials. As you are well aware, Region IV officials, frcm the top level to resident inspectors, have repeatedly demonstrated their complete disregard for NRC policy regarding premature disclosure of information to utility officials. This has resulted in the exposure of the iden ities of NRC informants to utility officials, and has compromised inspection and investigation activities. For example; 1. In 1980, Region IV management prematurely disclosed information regarding a pending enforcement action to officials of the Hayward-Tyler Pump Co. resulting in the withdrawl of the enforcement action. (See, OIA Report and Congressional hearings on the issue from 1982). 2. In 1981-1982, Region IV inspectors engaged in a variety of activities to prevent non-Region IV inspectors from completely (footnote continued) . we are taking steps to request appropriate government officials to obtain from you or your organization information which could potentially affect the safety of the South Texas Project." Appendix E. (See, GAP's response to HL&P's letter, also in Appendix E). It appears that Mr..Stello's letter was prompted by HL&P's request. Mr. Stello's sensitivity to the utility's needs, and insensitivity to the needs of STNP' workers end citizens of Texas, is further proof of the breakdown of the regulatory process and the need for independent review. assessing the condition of the STNP. (See, generally, record in lawsuit HL&P v. Brown & Root, and testimony of NRC inspectors contained therein). 3. -In 1982, it was confirmed that Comanche Peak resident inspector R.G. Taylor identified Charles Atchison to the Comanche Peak site manager as a long time NRC informant. (See, OIA Report: Review of concerns expressed by. Case about conduct of Region IV inspections / investigations, dated October 20, 1983). 4. In 1982, the NRC's Office of Inspector and Auditor (OIA) confirmed that Region IV inspector R.G. Taylor completed an inspection (at that point IER 50-445/82-14) by relying almost exclusively on utility provided documents. In fact, Mr. Taylor did not inspect any of the hardware components in question. Later, when deficiencies were identified in the same hardware by the Applicant, Mr. Taylor attempted to cover the inadequacy of his inspection effort by withdrawing the first version of the inspection report and issuing a second version. OIA l investigators concluded that Mr. Taylor's actions were, at a minimum, inappropriate. (See, id.). 5. In 1983, OIA investigated charges that Region IV did not adequately investigate, and mishandled, the technical. concerns of two Comanche Peak employees. OIA concluded that Region IV officials dismissed the workers' allegations solely on the basis of information provided by Texas Utilities, and did not even attempt to contact the workers to determine if they had any further concerns -- even after the workers complained to i l Congress, the intervenor and OIA that they had numerous concerns _

not investigated or addressed. (See, OIA Report: Markey letter Region IV investigations / inspections, October 20, 1983). _ re: 6. In 1983, ASLB Judge Marshall determined that a Region IV investigator deliberately withheld information from the Comanche Peak licensing board under the cloak of confidentialty agreements in an attempt to cover up their own inadequate investigation of worker allegations. (See, Memorandum and Order of the ASLB, September 30, 1982, " Denying Reconsideration of Staff Request"). 7. In 1983, at the Fort St. Vrain nuclear facility, Region IV inspectors apparently were not permitted to identify quality control and assurance issues at the plant. These allegations are now the subject of an OIA investigation. (See, Inside NRC, April 27, 1987). { l 8. In February, 1984, Region IV officials interviewed a key witness regarding the Comanche Peak document control system breakdown. Instead of keeping the interview confidential, Region IV docketed a transcript of the interview to all parties on the Comache Peak service list, thereby providing the information to the utility. Later, Region IV management refused to produce a copy of the transcript pursuant to a GAP Freedom of Information Act request, because they claimed the transcript was " Confidential". Apparently Region IV officials forgot they had publicly disclosed the transcript and already revealed the identity of the alleger. 9. Also, in March 1984, eight electrical QC inspectors were held against their will by Comanche Peak officials after identifying problems with the electrical system. When co-workers contacted the NRC, Region IV inspectors and managers refused to respond. Their refusal was based on discussions with the Texas Utilities' Vice-President. OIA concluded that Region IV's actions were insensitive to the workers' plight and that they failed to act when called for help. (See, Report of Investiga-tion - NRC Office of Inspector and Auditor, August 30, 1985). 10. In 1985, Region IV inspectors at the Wolf Creek nuclear facility were instructed not to write up identified deficiences at the plant on the eve of its licensing. The nature and extent of the deficiencies were misrepresented to NRC Commissioners at a licensing meeting. Aside from the incidents listed above, Region IV's total abdication of its inspection responsibilities at the Grand Gulf and Waterford nuclear plants has resulted in a financial crisis for Middle States Utilities. Failure to do proper inspections during the construction of these facilities resulted in reinspecticns, rework, and excessive costs at both plants. Both plants were substantially completed before non-Region IV personnel identified significant problems. Clearly, Region IV's improper practices can have an adverse effect on the health and safety of the public. For example, when a utility is given advance notice of allegations concerning its facility and/or notice that inspection will take place, the an utility is able to make repairs without doing the proper paper work. Worse, the utility may be able to cover up the problem. Under these circumstances proper inspection and investigation cannot take place. The result is that the NRC is not able to.

I determine how the problem slipped through the inspection and review process, and whether that process has broken down. Nor can the NRC determine whether the identified problem is symptomatic of more generic problems at the facility. Our worst fears about Region IV were realized when Senator John Glenn, Chairman of the Senate Committee on Governmental Affairs, conducted a hearing regarding NRC's ability to conduct investigations into wrongdoing by agency and utility officials. The hearing publicly revealed a number of startling facts about Region IV of the NRC. In his opening statement Senator Glenn was severely critical of the NRC's ability to investigate and properly regulate the nuclear industry. See, Opening Statement of Chairman John Glenn, April 9, 1987 (Appendix G). Senator Glenn's criticisms were directed at the NRC's national office as well as Region IV. Senator Glenn's statement was more than corroborated during the hearing. See, Statement of Julian Greenspun, Esquire, before the Senate Committee on Governmental Affairs, April 9, 1987 (Appendix H). NRC personnel also testified at the hearing. Of particular interest was the testimony of Ben B. Hayes (Director, NRC Office of Investigations). Mr. Hayes described the cover-up of an investigation into collusion between NRC personnel and Louisiana Power and Light (LP&L).1/ Statement of Ben B. Hayes, Director, 2/ See, newspaper articles, Appendix I. t

NRC Office of Investigations before the Ccmmittee on Governmental Affairs, April 9, 1987, at 2-5 (Appendix J). Mr. Hayes also testified about Mr. Stello's improper conduct in coaching a Tennessee Valley Authority (TVA) official on how to respond to an NRC letter asking if TVA was in compliance with quality assurance (QA) procedures under 10 C.F.R. 50, Appendix B. Id. at 5-7. Mr. Stello subsequently threatened Mr. Hayes over his investigation of the matter. Id. at 8. George A. Mulley, Jr. (Assistant Director for Investigations at the NRC Office of Inspector and Auditor) testified about an investigation he conducted into harassment of Region IV employees by Region IV management. The investigation focused on harassment resulting from Region IV inspectors' reports of safety problems. One inspector that Mr. Mulley talked to was H. Shannon Phillips.3/ Mr. Mulley's discussion with Mr. Phillips revealed the following: Mr. Phillips stated that he had been harassed, intimidated and pressured to remove proposed findings from draft inspection reports by downgrading them to a less serious issue or deleting them entirely from the report. Mr. Phillips provided evidence that when he and other inspectors resisted downgrading or deleting at least 30 proposed findings, the Director of the Comanche Peak Task Group, Thomas Westerman, and another manager, Eric Johnson, removed violations from the inspection reports or substantially changed the report without the inspectors' knowledge and other times without their concurrence. In one case the Region issued a final inspection report using the signature page from a draft version of the report. This made it appear that the inspection report was approved by the inspectors involved -- when actually the inspectors were neither informed of the changes nor told of the 3/ See, Statement of H. Shannon Phillips, NRC Senior Resident Inspector, before the Committee on Governmental Affairs, April 9, 1987. Appendix K. _

issuance of the report. I believe Mr. Phillips' allegations were exactly the types of concerns that should be thoroughly investigated by an independent investigator within the NRC without regard to the potential consequences of the investigation on the licensability of a nuclear power plant. Statement of George A. Mulley, Jr., before the Committee on Governmental Affairs, April 9, 1987, at 3 (Appendix L)..As his investigation unfolded Mr. Mulley became concerned with interference by other NRC personnel. Mr. Mulley testified that [A]fter having heard Mr. Phillips' evidence and interviewing other inspectors and consultants who raised similar allegations, I became concerned that if NRC managers, both in Washington and at the Region, learned the full scope of the management problems being raised in Region IV, my investigation would be interfered with. I did my best to see to it that no one connected with NRC headquarters or Region IV knew the extent of my probe into the allegations concerning Region IV's attitude toward regulating nuclear power plants within its jurisdiction. Id. at 4. After completing a draft of his investigative report Mr. Mulley concluded: (1) Region IV managers acted inappropriately to limit violations assessed at Comanche Peak; and that Phillips was harassed and intimidated by Region IV management in an effort to get him to downgrade or delete his inspection findings. (2) The Region IV Quality Assurance Inspection Program, as implemented at Comanche Peak, could not be relied on as evidence of the sfae construction of the plant. e (3) Because of the unreliability of the information entered on the automated inspection tracking forms (NRC Form 766) by Region IV inspection personnel concerning Comanche Peak, data obtained from these forms should not be used for any NRC licensing decision.. m

Id. at 6. When word of Mr. Mulley's investigative report spread throughout the NRC he began to receive pressure from Mr. Stello and other NRC officials. Id. at 6-10. The pressure placed Mr. Mulley came in the form of the following: OIA auditors were assigned to rewrite the report; e statements from Region IV managers were removed from e the report; other explanations and quotes which were not supportive e of the lax enforcement attitude of Region IV officals were removed; Mr. Stello had the OIA report distributed throughout e the NRC, thereby exposing those within the agency who had given testimony critical of some Region IV officials. Ultimately, his report was severely edited. The concerr.3 of Messrs. Hayes, Mulley and Phillips about Region IV's regulatory approach was confirmed by a former Region IV official in an investigative interview with Mr. Mulley. (See, NRC Investigative Interview of [ deleted) at the Ramada Inn in East Ridge, Tennessee, June 24, 1986, Appendix M). On the question of Region IV management's attitude toward enforcement, the witness indicated that some managers ". really didn't believe in enforcement." Id. at 11. Regarding inspections, the witness stated that inspectors would be undercut by management in two ways: (1) in failing to provide assistants for inspections, and (2) in discouraging inspectors from writing up violations by " worrying their work product to death and question it to a great extreme." Id. at 10. The witness's conclusions about Region IV can be summarized as follows: I don't think that Region Four could have been considered as having a strong orientiation to quality assurance programs from the programmatic viewpoint. Had they had such a strong orientation over the years, then the results later seen at South Texas and at Comanche Peak and at Waterford never would have arisen. Id. at 26. We have in Region Four organization a number of personalities and their relationships with each other and their way of thinking, and many times these are, these ways of thinking are similar and they support each other, which tends to frustrate the checks and balances so that the merits of the checks and balances are simply overcome by the attitudes and the personal relationships. Q And the mind, I'm getting back to Comanche Peak a and TUGCO, these three people would share would be one of leaning towards the utility. Do you feel that's true? A I think -- Q (Interposing) Taking the utility's side? A Yes. I think that's true Id. at 55-56. It is not surprising that a recent OIA report regarding the Comanche Peak facility was severely critical of Region IV. The report concluded that the historical regulatory record prior to January 19, 1985, is completely unreliable, and noted that inspectors who tried to identify quality problems at the plant were harassed and intimidated. Under the circumstances GAP attorneys, and the workers we represent, are convinced that any information regarding problems at the STNP will not be adequately investigated if put in the _ _ _ _ _ _ _ _ _

hands of Mr. Stello or anyone connected with Region IV. Workers are also fearful that their confidentiality will not be protected by Region IV or Mr. Stello. It is clear that nothing has been l done to correct the improper actions of Region IV officials. The Senate hearing and OI/OIA investigations have shed light on the inner workings of an arm of the NRC normally only known to insiders. The information revealed to date indicates that Mr. Stello has not been part of any effort by the NRC to improve conditions in Region IV. On the contrary, Mr. Stello has rewarded the wrongdoing of Region IV officials and has proven to I be more interested in the morale of the wrongdoers than the morale of responsible NRC employees. Consequently, we cannot { reveal any information to NRC until such time as an independent 'I and competent review team is assembled. IV. LEGAL ANALYSIS Initially, it is important for the Commissioners to understand why GAP attorneys have come to them for relief. It would be inappropriate to have Mr. Stello or anyone connected with Region IV decide the merits of this petition since they are the individuals we are seeking relief from. CAP seeks to ensure that a thorough and competent review of STNP workers' allegations are completed. The Commissioners have the power to ensure that the public health and safety is protected. At a minimum, the Commissioners must be accountable for the decisions and actions of those to whom they delegate authority. The NRC has broad discretion to revoke, suspend, or modify the construction permit of an NRC licensee. 42 U.S.C. S2236 states that: Any license may be revoked for any material false statement in the application or any statement of fact required under section 2232 of this title, or because of conditions revealed by such application or statement of fact or any report, record, or inspection or other means which would warrant the Commission to refuse to grant a license on an original application, or for failure to construct or operate a facility in accordance with the terms of the construction permit or license of the technical specifications on the application, or for violation of, or failure to observe any of the terms and provisions of this chapter or of any regulation of the Commission. Ste, also, 42 U.S.C. SS2133, 2134. The same criteria for the revocation, suspension, or modification of a construction permit exist under NRC rcgulations. See, 10 C.F.R. 50.100 (1987). "[P]ublic safety is the first, last, and permanent consideration in any decision on the issuance of a construction parmit or a license to operate a nuclear facility." Power RSActor Development Corp.

v. International Union of Electrical Rcdio and Machine Workers, 367 U.S. 396, 402 (1961).

See, also, Patition for Emergency and Remedial Action, 7 NRC 400, 404 (1978). The NRC has a mandatory duty to exercise this authority when \\ n2cessary. The foremost priority for the NRC is to determine i { that there will be adequate protection of the health and safety of the public. The issue of safety must be resolved before the Commission issues a construction permit. Porter City Ch. of Iznak Walton League v. Atomic Energy Commission, 515 F.2d 513, 524 (7th Cir. 1975). 16 -

The NRC has a variety of powers it can exercise to protect the public's health and safety. The NRC has recognized its statutory authority to: (1) issue orders to promote or to protect health or minimize danger to life or property; (2) impose civil penalties for the violation of certain licensing provisions, rules, orders, and for violations for which licenses can be revoked; (3) seek injunctive or other equitable relief for violation of regulatory requirements, and to seek criminal penalties. (See, 10 C.P.R. Part 2, Appendix C, II (1987)). In addition, pursuant to regulation NRC can " institute a proceeding to modify, suspend, or revoke a license, or for such other action as may be proper." 10 C.F.R. 52.206 (1987). Suspension orders can be issued to stop facility i construction when further work would preclude or significantly hinder the identification and correction of safety-related or 'l other significant problems. In the Matter of Cincinnati Gas & Electric Co., 16 NRC 1489 (1982). In Cincinnati Gas & Electric the Commission ordered the utility to "show cause" why construction should not be halted. At the time the Zimmer plant, like the STNP, was nearing completion when numerous problems were brought to the attention of the NRC by workers through GAP. The problems identified at Zimmer turned out to be extremely significant, eventually causing the plant to shut down. While it is unclear to what extent the allegations of workers at the STNP will affect licensing or the continued operation of the STNP, it is clear that without the Commission's intervention there will not be an adequate investigation and review. Special task force and review team operations are not i unusual in Region IV. Both Waterford and Comanche Peak received-special reviews by NRC personnel who were not under the direction I or control.of Region IV. Similarly, the STNP was partially a reviewed by Region III personnel. In addition to special review teams the NRC has established an office of special cases to handle'particularly troubled nuclear facilities. r Given Region IV's inability to adequately enforce federal requirements and administer proper inspections it would be most appropriate for the STNP to be categorized by the Commission as a i special review facility. Without a special review the NRC will I. not have all the information necessary to make decisions regarding the future of the STNP. The STNP should not go on-line until such a review is completed. i l As mentioned earlier, GAP attorneys have reviewed over 500 allegations from the STNP workforce. The fact that 87% of those allegations involve matters of wrongdoing or safety raises l serious questions about the abilitites of Region IV and STNP management to ensure that the plant is being constructed safely and in accordance with federal lass and tegulations. Furthermore, the fact that workers are so severely harassed and intimidated that they will not talk to STNP management or Region IV of the NRC indicateJ that a complete breakdown of regulatory control and plant QA and QC procedures has occurred. Even if Region IV was competent to conduct an investigation and review of allegations 3 received by GAP attorneys, it is unlikely that Region IV would have personnel sufficient to investigate properly. l 18 -

Finally, the allegations of the workers which have been collected by GAP attorneys should not be considered " late filed". We have attempted to see that these allegations received appropriate review. However, Mr. Stello has refused to take action to see that the allegations being raised are reviewed in accordance with NRC procedures. In addition, no licensing issues are being raised in this petition nor are we requesting the Commission to delay licensing at this time. In the event that the Commission considers the allegations referred to in this petition as late filed, then only the priority of review should be affected. As we understand it NRC's late filed allegation policy does not exclude any allegation from thorough investigation. V. CONCLUSION Since the days of Brown & Root, it has been apparent that the STNP has not been a well managed nor a quality first-oriented project. In part, the corrupt and incompetent practices of Region IV and Mr. Stello are directly to blame. To date, Region IV management and Mr. Stello have steadfastly refused to l repudiate their policies and practices. The complex nuclear regulatory scheme as it relates to the STNP (and probably other Region IV regulated facilities) has completely broken down. Many workers and citizens of the State of Texas have no confidence g that the STNP can operate safely under current conditions. The members of the Commission must take strong and swift action to restore confidence in the nuclear regluatory process and protect the public health and safety. Immediate steps consistent with the relief requested in this petition must be taken to help ensure the safe operation of the STNP. VI. RELIEF REQUESTED GAP respectfully requests that the following relief be granted: (1) NRC Commissioners must establish an independent investigative unit or special projects review team to deal with the allegations concerning the STNP. (2) NRC Commissioners direct the staff to conduct interviews with all allegers pursuant to NRC Manual Chapter 0517. (3) Interviews and subsequent inspections, investigations and document reviews must be conducted by personnel who have had no previous involvement with the STNP and are not employees assigned to Region IV for purposes of their performance evaluations or work reviews and editing. (4) Supervision of independent inspection effort cannot in any way be reviewed or in control of Mr. Stello or his staff. (S) All such other relief as the Commissioners deem just and appropriate. 20 -

Respectfully submitted, BAA Ub4x a ec) Billie P. Garde Director - GAP Midwest 7xLwtE Cdk Richard E. Condit Staff Attorney Dated: May 29, 1987 079e04 ___

8 APPENDIX A se su

GOVERNMENT ACCOUNTABILITY PROJECT 1555 Connecncut Avenue. N W. Suite 202 Woihington. D.C. 20006 (202)2324550 January 20, 1987 Victor Stello, Executive Director U. S. Nuclear Regulatory C:mmission Washington, D.C. 20555 James Mattox Attorney General for the State Of Texas Supreme Court Building 14th & Colorado Austin, Texas 78711 Re: South Texas Nuclear Pro;ect

Dear Messrs. Stello and vattox:

This letter is to nform your respective agencies that the Government Accountabil: y Pro;ect (CAP) has formally begun preliminary investigat.on tnto worker allegations at the South Texas nuclear project. Since 1980, CAP nas p'ayed a significant role in advocating on behalf of whistlebl wers and concerned citizens on issues involving safety-related proolems at varicus nuclear power facilities. Our appecacn to nuclear power has been steadfastly the same: to ensure tra

ne government enforces the nuclear safety laws and reg.ilat.:ns.

As a result of ;AP's efforts (alone or in concert with otner cegan zations) to exoose safety-related problems, the construct.:n and/or cperat cn ci several nuclear power facilities - prev;;usly thought to be fit to operate -- were cancelled or postponed for furtner review. The cancelled facilities include :ne 99 percent comple ed Z;r.mer nuclear power plant and the 85 percent c:mpleted M.d'.and p' ant. Tncse whten were postponed for furtner rev ew : 9 c ' 2d e e C:rancne Peak, Three Mile Island, D;ao': Canyon, and aaterf::: fac;';;;es. GAP currently e :ner represents : ...:r<.ng w;;n approximately 36 curren and/or former emp':yees of tne South Texas project. The allegations fr:n the - r4ers range from grand theft of nuclear grade steel to engineer:ng defects in several major safety components. The allegations concern the f ailure of Houston Light & Power .3 guarantee subcontractor compliance with industry and federal safety requirements,.ncluding out not limited to: defects in .ne instrumentation and control division: defects and lack of ccepitance wt n federal regulations in the heating, ventilating, and a;r condttioning system; lack of compliance with quality standards in :ne area of soils compaction; failure to c:mplete requtred QA or QC documentation; falsification of required QA or QC documentation and harassment and intimidation of pers:nnel wno attempt to adhere to federal safety standards.

January 20, 1987 - Page Two Additionally, and of specific concern o the State og Texas, there are allegations that nc.ude de'iberate actions of c:me et the subcontractors at STP to overcharge Mc.ston Light 4 Power for goods and services by "cnarging off" ine:r

wn unacceptable work to Brown & Root, Inc.

Nere is a'so infctrat;on which suggests that subcontractors have fraudu'ent.'y charged STP for manhours worked, and for port.:ns :f t9e pro;ect which were not not completed as claimed. GAP is currently c:-1.c'; g ; terv;ews wtth both current and former workers who are c: cernec acout GAP investigators are accept;ng cas ft m workers at ourthe South Texas project. Washington, D.C. office and :ur vidwest office. Once our prelim: nary ;nvesttgation is ccmplete, we plan to issue a formal public report. L'nfortunately, in the interim, we cannot advise our clients or those we wor < wtth to provide tnetr concerns to the Region :'/ off;ce of the NRC. Our experience nas been (and recently released the Arlington offtce .nternal agency reports confirm) that its regulatory requirements as cutt.ned;s e..ner unacle or unwtiling to comply with procedures. .n governing agency Thus, unless the.NRC :s w:.'itng to prov.de independent inspectors to process - e a.'.'egations pursua t to internal N9C regulations, GAP will provide the al.egat'.: i directly to the state Attorney General off.ce, and/or to tne appropriate congressional committees, and/or to otner re :2.' atory or mun tcipal bodies which have an nterest .n ensur.ng t at tne South Texas plant is designed, constructed, and f. nance: :n a manner inat protects the public. Please ect any. qute:es acc.- ;AP 3:., Texas investigatic o Ricnard COnd.t, Star: A r e/ : vesttgator, 202-232-8550, or Bil'.e Carde, CAP

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O 8p %,,g W i~.d2.r.!q UNITED STATES !\\ NUCLEAR REGULATORY COMMISSION d .k WA$HINGTON. O C 20$M Cs a 'S / oo.e* q:- s ;ig7 Pockat No. 50-498 Ms. Rillie Pirner Garde Mr. Richard Condit Government Accountability Project Suite 202 1555 Connecticut Avenue, M.W. Washington. 0.C. 20036

Dear Ms. Garde and Mr. Condit:

I am in receipt of your.tanuary ?O.1987 letter directed to me and the Attorney General of Texas. Your letter describes investigative activities you plan to undertake relative to allegations you have received from approximately 36 current and/or former employees of the South Texas Project. Your letter also identified the general nature of some of these allegations which appear to fall within the safety and regulatory responsibilities of the Nuclear Regulatory Commission. Your letter also states that you cannot advise your clients to provide their concerns to the Region IV office of NRC. You assert that your experience has been that Peofon IV does not comply with its requirements as cutlined in agency procedures. Moreover, you demand ' hat unless NRC provides other inspection personnel to process these allegations, you plan to provide those allegations to other fedividuals or negantratter.s. The South Texas Pro.iect is within the jurisdiction of Region IV and that Pegion is the appropriate organization to review the concerns of your clients. I have confidence thet Pegion IV will preperly pursue thit responsibility. I have been in contact with Mr. Robert P. Martin, c gional Administrator for e D.;gion IV, and he assures r e that his staf f is thercuchly prapared to cemit the resources required to appropriately resolve the issues which your clients might raise. As you are aware, NRC is the responsible federat acency for ensuring that safety significant issues are addressed the e appropriate. Therefore, I urge you to bring forth promptly, or advise your clients to do 50, to NRC or Houston 1.ighting and Power, any irformation you have on deficiencies which would have a bearing on nuclear safety. To retain them until your own report is prepared and pubitshed would not be in the best interests of assuring the prompt resolution if leglu nate sa'ety concerns. 2 m

n Multiple Addressees Any further communications you may have regardino this matter should be directed 20 Mr. Martin in Region IV. Sincerely, ..r.,/,f,s, e Victor Stello, Jr., Executive Director for Operations cc: The Honorable James Mattox Attorney General State of Texas Austin, Texas 78711 .i I m

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GOVERNMENT ACCOUNTADILITY PROJECT 1555 Connecticut Avenue. NW. Suite 202 (202)232 8550 Washington. D.C. 20036 COVERNMENT ACCOUNTABILITY PROJECT MIDWEST OFFICE 4 } 3424 MARCOS LANE APPLETON, WISCONSIN 54911 March 4, 1987 Victor Stollo Executivo Director Operations U.S. Nuclear Regulatory Commission Washington, D.C. 20355 RE: South Texas Investigation

Dear Mr. Stello,

Your letter of February 18, 1987 regarding our South Texas 3 investigation states that any futhor communications regarding South Texas should be directed to Mr. Bob Martin, Regional Administrator. Your lotter also urgos us to bring forth any 1 issues regarding safety to Region IV promptly. Given the history of incompetence in R+11on IV regarding i issues of nucicar safety and the more recent evidence of impro-l priety in Region IV I am surprised that you would continue to advise us to take allegations of nucioar sa:aty to your present regional management. Your professed faith :n the Regional i management can only be bureaucratic posturino, as I seriously doubt whether even you can ignore the seriouness of the impro-prietics confirmed in the recent and continuning investigation by the Office of Inspector and Auditor. Mr. Stollo, at nome point you must assume responsibliity for the operation in Region IV to insure that the public health and cafety around the Region IV fact 11ttes in protected. You apparently cre willing to sacrifice that assurance in order to give tho public appearance of support for Mr. Martin ot.al. Your error in judgement is incredible. Within the past 18 months we have seen evidence and tostimony of the improper reloano of a draft inspection report on the Soquoyan Fuels Corporation fatal accident to Korr-McGee officals, the harassmont and intimidation of resident innpoctors, the dolotion items from inspection reports, th" improper manipulation and/or release of inspection report results to anchance the possibility of licensing, the destruction of documents, the failure to comply with statutory requirmonts under the Froodom of Information Act, the failure to properly investigato allegations of engineertno, technical or hardware deficienclos at reactors in Region IV, the ralease of confidentiality of site cmployees that have como forward with concerns, the cooperation i 1 i

with utility officals to discredit whistleblowers, and a total disregard for public accountability. For all of the above reasons we would be irresponsible if led more whistleblowers blindly to the slaughterhouse of we your Arlington office. At some point you must choose between protecting and defending the egos of your staff and protecting the public health and cafety. You are paid by the taxpayers and citizens to do the Lator. l the former. We will not participate in your doing I hope you are able to find an independent team to review the South Texas allegations. Sincerely, Billie Pirner Garde l 2 a i i d Cs cc James Mattox Attorney General i State of Texas w/end. OIA Report 86-10 I I

ff o,. UNITED STATES j NUCLEAR REGULATORY COMMISSION y ,e, "a f WASHINGTON, D. C. 20656 %,..../ MAR l 81987 f's. Billie Pirner riarde i Government Accountability Peniac* 1555 Connecticut Avenue, NW, Sui *e,T2 Washinoten. DC 20036

Dear Ms. Garde:

I have received your letter n' Parch 4, 1987 It prompts me to remind you that NRC is the responsible 'aderal agency 'or ensuring that safety significant views are appropria*ely addresseri. I therefore urge you to brino forth promptly any informatice "ou have on deficiencies which would have a I bearing on nuclear safety to EPC or to Houston Lichting and Power - or advise y:ur clients to do so. To witFbold such information would not be in the best interests of assuring the prompt resolution of legitimate safety concerns. Sincerely, p M ';Y $;) Victor Stp1h[, Jr. ^ Executive Diractor for Operations j i 1 i i 1 .m

m_ -m4 M '3 -o2-V. i k i i a APPENDIX D 1 .i a T f 1 A I I 1 i j 1 ) M } I I + I 4 i L 1 J 1 4 -4 i k i I. 4 s 6 1 9 a

sumo GOVERNMENT ACCOUNTADluTY PROJECT 1555 Connecticut Avenue. NW., Suire 202 (202)232-8550 l Washington. D.C. 20006 MIDWEST OFFICE 104 E. WISCONSIN AVENUE APPLETON, WISCONSIN 54915-8605 March 23, 1987 Victor Stello, Jr. Executive Director for Operations U.S. Nuclear Regulatory Commission Washington, D.C. 20555 RE: South Texas Investigation

Dear Mr. Stello,

Your letter of March 18, 1987 sidestepped the issue of whether or not you are going to appoint an individual or a task force from NRC's Washington office to accept and/or investigate allegations concerning the safety of the South Texas Project. We are very concerned about the safety allegations known to us. We are so concernedthat we intend to insure that they are properly investigated. We do not believe that Region IV is either capable or willing to do that type of investigation. Please advise. Sincerely, en G Q Billie Pirner Garde cc: Richard Condit Cs i

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The Light company ii_.. i ,mem... i.o is.. ii _. i _ = - m m..m March 18, 1987 Ms Bill'ie Garde Director of the Midwest Office Government Accountability Project 3424 N. Marcos Lane Appleton, Wisconsin 54911 i s.

Dear Ms Garde:

We have been in touch with you as a representative of GAP concerning allegations regarding the South Texas Project by you cnd Mr. William Condit since the first appearance of those cllegations in the press on January 21, 1987. In writing to you on January 26, 1987, I sought your cooperation in bringing these matters to our attention using the SAFETEAM program which has a proven record of success at the South Texas Project. To facilitate your cooperation I offered the services of Mr. James Geiger, one of my most seasoned and trusted managers and head of our Nuclear Assurance Department. ( Mr. Geiger contacted you immediately and conveyed repeatedly to you over the next several weeks our sincere interest in resolving the allegations which had allegedly been brought to your attention by employees at the STP site. Mr. Geiger considered carefully the reservations you expressed I concerning use of SAFETEAM and offered to modify these procedures in an effort to accommodate your concerns. His letters of February 11 and March 5, 1987, documented those conversations, including urgent requests that ytu submit at least one of the clingations of which you have knowledge for investigation using these modified SAFETEAM procedures on a " trial basis." You have been unresponsive to these suggestions and, in recent weeks, have not even returned Mr. Geiger's telephone calls. We must therefore regretfully conclude that GAP has no interest in proceeding further with'these discussions. We cannot, however, let matters rest at this point since this is not merely a disagreement between private parties. Larger matters of the public interest are potentially affected. Beyond the allegations of safety concerns, the implication of ctatements attributed to you in the press is that federal and ctate laws may have been violated in the construction of STP.

l Houston Lighting & Power Compans Ms Billie Garde March 18, 1987 i It is anomalous to us that an organization purporting to represent the public interest could show such little regard for that interest by withholding information of potential significance to the public health and safety. We will not be a party to such " games." We will urge federal and state officials to seek from you and your organization every scrap of information which could potentially relate to the safety of the South Texas Project. If any such information in fact exists and is made available to us, we will immediately pursue it to its resolution. We can then leave to the citizens of Texas the jtidgment as to which of us truly represents the public interest. Sincerely, Q.4.A J H Goldberg Group Vice-President, Nuclear JHG/am cc Chairman L W Zech (NRC) Commissioners K M Carr ( ) T M Roberts ( ) J K Asselstine ( ) F M Bernthal ( ) Exec. Dir. V Stello ( ) Reg. Admn. R D Martin ( ) Dir. I&E J M Taylor ( ") Owners T.V Shockley (CP&L) A vonRosenberg (CPSB) M B Lee (COA) I

O GOVERNMENT ACCOUNTADIUTY PROJECT 1555 Connecncut Avenue. N W. Suite 202 Washington. D.C. 20006 (202)232-8550 March 27, 1987 l l l Jerry H. Goldberg Group Vice President, Nuclear Houston Lighting & Power Corp. P. O. Box 1700 Houston, Texas 77001 RE: Investigation of the South Texas Project by-the Government Accountability Project Daar Mr. Goldberg: Your widely distributed letter of March 18, 1987 was a Gurprise to me. Please be assured that the Government Accountability Project (GAP) has not made any final decision rcgarding possible cooperation with HL&P on allegations. As Mr. Geiger and your counsel were well aware, I was in trial the week of March 9-14, 1987 in Houston, litigating a South Texas related Department of Labor case, Goldstein v. EBASCo, 86-ERA-36. The following week I was on a personal / professional break while moving both my home and my office to new. locations. I did call Mr. Geiger and specifically informed him that I was not working from March 15 :o 2'., 1987, and that I would contact him regarding_the proposuls during the following week. Th3refore, your conclusion that " GAP has no interest in-proceeding further" with negotiations is insincere and appears to b2 deliberately taking advantage of my one-week " working" vacation. I am uncertain whether HL&P is terminating negotiations on a potential working relationship. If so, please nctify us of that in writing. If you are not, let me summarize where the ncgotiations are apparently mired. HL&P, through Mr. Geiger, has informed us that allegation investigations would have to be done by the SAFETEAM, but has cgreed to a number of modified procedures to alleviate some of our concerns. He has indicated, however, that HL&P is not willing to make additional concessions which would assure us that our clients are legally protected from reprisals, that the investigation properly pursues the correct allegation, and that on adequate investigation was conducted once completed.

i I As I carefully explained to Mr. Geiger, the employees we represent have no faith in the_ credibility of the SAFETEAM. Their individual and collective experiences have demonstrated that the SAFETEAM is not independent, does not protect or defend employees from harassment and discrimination, is neither able nor willing to reach truthful conclusions, has no authority to rcquire or implement corrective actions, does not generate l deficiency paper in compliance with federal regulations, does not report allegations or findings of wrongdoing to the NRC, and is institutionally incapable of processing significant safety-related concerns. The employees' experiences were confirmed by the information wa recently obtained from HL&P in discovery in the Goldstein case. For example, one SAFETEAM investigation contained allegations of harassment and intimidation, violations of hold points, and significant defects in the quality of work in the* R2 actor Control Building (RCB). A comparison of the interview of the engineer making the serious allegations with the results of i that investigation prove that the SAFETEAM did not even understand the allegations, did not investigate the allegations given to the SAFETEAM of serious construction and quality defects in the RCB, and had no basis for its conclusions. In any event you should be aware that GAP understands its obligations to ensure that allegations of safety concerns are investigated. In that regard, we have a proven history of discovering massive safety problems and seeing that they are cddressed. We would gladly match our history of demonstrated concern for public health and safety with any other organization, and feel confident that the comparison would reflect quite favorably upon us. As for the South Texas Project, HL&P and/or EBASCo and/or Bschtel have been made aware of serious safety concerns through internal processes. We have also been in contact with the NRC and other appecpriate government bodies regarding processing of allegations about South Texas. Recently, Region IV of the_NRC received extraordinary criticism from the NRC Office of Inspector and Auditor (OIA) regarding the handling of allegations at the Comanche Peak facility. Therefore, it is not appropriate to cubmit allegations to Region IV until some adequate resolution of the concerns raised by the OIA has been completed. We have asked the NRC for guidance as to how to proceed, given Region IV's lack of credibility. To date, we have not received a response. So as you can tell, we are attempting to ensure that any information which comes to us about the South Texas plant is properly investigated, and that the appropriate corrective l

l l L l measures'will result. We are not "witnholding" information or i playing " games," as you suggest. proper forum to. ensure that We are merely seeking the the workers' complaints do not fall upon deaf ears. again Unless additional safeguards are provided we o will not turn over information to internal, site-based programs, i like SAFETEAM, which have already been proven to be ineffective. Our paramount concern is that the South Texas-plant, if and when. completed and, operational, will be safe and in compliance with state and federal law. We hope that you share that goal? However, public expressions of concern are hardly adequate. Our clients are waiting to see effective action before they will risk their careers and jobs by working within your " system". Ultimately, action not the public interest! words will determine who is representing Sincerely, .L (, CL by Billie P. Garde Director, GAP-Midwert BPG:079D01 cc: NRC Chairman L. W. Zech NRC Commissioners K. M. Carr T. M. Roberts J. K. Asselstine F. M. Bernthal NRC Executive Director V. Stello NRC Dir. I&E J. M. Taylor T. V. Shockley, CP&L A. vonRosenberg, CPSB M. B. Lee, COA l lu l l l l., ,m..- _,.1,..

A + r------ l APPENDIX'F i s

i [ps aacq l UNITED STATES l[' }o NUCLEAR REGULATORY COMMISSION '"J f W ASHINGTON. O C. 20555 o b.',,,. / April 8, 1987 Ms. Billie Pirnar Garde Government Accountability Project 1555 Connecticut Avenue, NW, Suite 202 Washington, DC 20036

Dear Ms. Garde:

I have received your letter of March 23, 1987. I accept your characterization of the allegations you have in hand as bearing on the safety of the S. Texas Nuclear Power Plant in a significant way. I urge you to bring these issues to NRC for our review. As to where and how within NRC they will be addressed is my responsibility. Assignment within NRC will be governed by the nature of the allegations. I can assure you they will be handled properly, both in regard to technical review and in regard to confidentiality. By the nature of significant safety issues, they must be addressed promptly. Your letters imply that you have had this information for some time. Therefore, if we do not receive full infomation on the allegations within 30 days we will be constrained to take steps to acquire it by other means. Sincerely, } n /;f fYc. Vi r Stello, Executive Director for Operations i l l l 1

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Senator John Glenn News Release For Immediate Release

Contact:

Dale Butland 202-224-9799 April 9, 1987 Leonard Weiss 202-224-4751 OPENING STATEMENT OF CHAIRMAN JOHN GLENN April 9. 1987 Today we continue our hearings on ways to fight waste. fraud and mismanagement in the federal government. Our earlier hearings reviewed and documented the success of the statutory Offices of Inspector General, of which there are presently 19. !!ost of these offices were created pursuant to the Inspector General Act of 1978, or amendments thereto. In the past five years. these offices have saved an esticated $71 billion in wasteful spending for the American taxpayer, and their invest;gations have resulted in over 16.000 criminal prosecutions and 15.000 administrative actions. On April 3. 1967. I introduced a bill. S. 908 which has been co-sponsored by every member of this Committee, to create four r.ew statutory Inspectors General for the Department cf the Treasury. the Federal Emergency Management Agency. the Office of Perscnnel Management, and the Nuclear Regulatory Commission t.*:EC). - MORE -

Today. our focus is on the NRC. the independent agency responsible for regulating the commercial use of nuclear power in the United States with the goal of preservint public health and. safety and protecting the env it c n.~.ent. To monitor the integrity of its activities, in 1975 the NRC created an Office of Inspector and Auditor (OIA) to provide the Commissioners with objective information on problems within the Commission. In 1982, as a result of a heightened awareness by the NRC that allegations of possible wrongdoing by licensees and applicants required a vigorous response. the'NRC created its Office of Investigations (OI). The existence of these offices within the agency have halped to lessen the public's doubts about the relative safety of commercial nuclear power. I am. however. now deeply disturbed about current NRC operat;one -- and particularly the impact of certa.in r..anagement actions on the mission and functions of these offices. First. I believe there are serious deficiencies in OIA's objectivity and investi6ative practices which have diminished the effectiveness of the office. Despite the Commission's assertions to the contrary, it does not appear that OIA has been allowed to perform the essential funct;-,e of a statutory inspector general office. I thira. there is a need to restore credibility to the internal "watendog" function at the NRC. The bill I-mentionec earlier. S. 906. _ t: e Inspector Gsneral Act Amendments of 1987. incorporates GAO's recommendation for establishing a new statutcry Cffice of Inspector General in the NRC. This change ;s.ntenced to create a more independent atmosphere fcr trcreugt internal audit and investigative activities. The Inspece.or General will repcrt t. t r.e ca.rran cf the Co: mission and Congress concerning sign:ficarl acuses or d3ficiencies and make recommendations for c rrective action. In my view, this change will benefit the NEC': c,anagement op0 rations and aid Congress' oversignt funct:cn. - MCRE - 1 i e

l As a practical matter, the bill " transfers" the Office of Inspector and Auditor (OIA) into the new Office. However, by law, Inspector General appointed by the President,the Inspector General must be with the advice and consent the Senate, and can be removed only by Presidential action. of With these protections, the new Inspector misconduct or mismanagement withoutable to thoroughly investiga fear of removal. This is no trivial matter. discovered evidence which suggestsThis Committee has improper communications between the NRC and the evidence further suggests thatlicensees concernin activities. And has been totally the NRC incapable of policing such misconduct on its own. One example illustrates the problem. problems at a nuclear power 1983 important NRC documents relating It appears that in Commissioner's office to the licensee. plant were leaked from a In fact. a representative of the licensee distributed distribution be limited. documents to his colleagues with the proviso that further the leaked end I quote. "to orotect the source within the NRC." Incredibly. when the Ccrrission was confronted with solid evidence of the possible leak from a Commissioner's office, the matter was not Commission level referred to OIA. Instead. officials made a decision that should be handled within the Commissioner's office,the matter minimal " investigation" followed with apparently little and a effort to make a record of such " investigation". That independentepisode alene demenstrates the reed for a truly inspector general with the authority and expertise to investigate potential wrongcoing wherever occurs, even if it it invc1ves a Commissioner's office. policies which have limitedMy second concern relates to recently adopted NRC of Investigations (OI) the effectiveness of the Office rofer potential criminal matters to the Departmentto investigate external wrongd Justice. More than anything else. of to strain the NRC's important such actions have served relationship with the Justice Department. and cirinish Ccngress' and the the regulation of ccamerc.at nuclear power.public's trust in NRC is supposed to be a watchdog. not a lapdog.After all. the -MORE-x

d l: l l S. protections for the Office of Investigations (OI).908 addresses th i contfnue to report to and be under the general supervis The bill i i the Commission. I believe. Commission, and apparently so does the for vigorous detection and disclosure of deliberatethat.this relations wrongdoing by NRC licensees and applicants. investigations to ensure thatThe bill also addresses the need for objectivity the Commission and, if. necessary, the Justice Department. To this end. potential criminal wrongdoing by. licensees andare fully informed of applicants. OI is given certain authorities which parallel those provided to independent inspectors general. These are intended to enhance OI's independence and improve the 1 - Commission's credibility as the regulator of health and safety in the commercial nuclear industry, i In closing. I will say that 3 is not to malign any individual the purpose of this hearing I rm concernedasscciated with the agency or create innuendo. Rather. abcut what I limitations on externalsee as timid' controls on internal affairs and investigations. troublesome My bill is intended to restore confidence in the NRC's i ability to achieve its regulatory mission. t I add that the Committee looks forward great deal of testimony this morning. - to hearing a from the five members of tne Commission. including test: mony Tr.e Committee had originally planned the hearing so that the testimony on 3 i current NRC operations would first be presented by other i witnesses. which would opportunity to include comments on suchprovide the Ccmmidstoners an testimony in their presentation to the Committee. However, because the Commissioners have insisted reluctantly assented to their request.on testifying first. I have P r , i i 1 I l

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l.f l STATEMENT OF JULIAN GREENSPUN, ESQ. BEFORE.THE SENATE COMMITTEE ON GOVERNIENTAL AFFAIRS APRIL 9, 1987 My name is Julian Greenspun. Although I am now in private practice, for the past fifteen years I have held a variety of federal prosecutor positions in the U.S. Department of Justice. From 1979 through 1986, I served as the Deputy Chief of Litigation in the General Litigation section of the Criminal Division. In this position-I supervised thirty attorneys who prosecuted criminal violations of regulations promulgated cy such ? agencies as the Nuclear Regulatory Commission.(NR'C), Mine Safety Health Administration-(MSHA), Occupational Safety and Health Administration (OSHA), and many others. I spent a significant portion of this period handling a supervising potential criminal cases related to the commercial nuclear industry, including certain aspects of the Three Mile Island crininal case. Based on my extensive experience with ne NRC, I can unequivocally state tnat i know of no other regulatory or investigative agency, where senior agency officials j have tr. ken as many bizarre and seemingly deliberate actions intended to hamper the investigation and prosecution i of individuals and companies in the incustry the agency regulates. l i i

l 9 i l i I would like to further explain this statement by giving the Committee two observations I have made about NRC. First, the NRC is in too many ways a captive of the industry it regulates. As a result, the agency has discouraged anyone inside the agency from' finding wrongdoing on the part of industry representatives. I also believe there has been continuous improper pressure on the office of Investigations (OI) by both industry and agency officials. Second, the NRC has a history of failed leadership in. the Office that handles internal investigations and audits. 't The Office of Inspector and Auditor (OIA) acts as if it is part of the management " team" rather than an independent " watchdog" for the agency. On more than one occasion, OIA has avoided identifying and recommending corrective w: tion for serious wrongdoing and mismanagement by senior agency officials, while focusing its attention on less important issues. In my view, S.908, the legislation recently introduced to amend the Inspector General Act of 1978 is absolutely necessary to combat these problems. The NRC would also benefit from additional Congressional oversight of its programs and activities. To assist the Committee, I am prepared to discuss several specific cases which I believe demonstrate the 1

F I NRC's unseemly protection of the industry from necessary investigations of deliberate wrongdoing. Unfortunately, I cannot reveal all of the details of.these cases because some of the information is protected by grand jury secrecy restrictions, and because I'have not been able to obtain copies of essential documents I left behind in my Department ) files to honor these restrictions. At the outset I can say that on more than one occasion when wrongdoing was under investigation by the Department, senior NRC officials, and perhaps even some Commissioners had ex parte meetings or discussions concerning the subject-j matter of the investigation with those under investigation. On at least one occasion, I personally requested that a senior NRC official not meet with the Itcensee under i investigation. Despite my importuning, shortly thereafter the official engaged in a lengthy discussion with the j target of the investigation. His action unnecessarily derailed criminal prosecution, a fact which I believe was known to those conducting the meetings. One example of the NRC's obfuscation of a major criminal violation occurred at the Three Mile Island plant. Furthermore, I believe this violation may have been a contributing factor to the eventual melt-down at that plant. NRC regulations required that if a reactor f. - -

i l was losing over one gallon of water per minute, the source of which was unknown, the source of the problem must j be found or the reactor shut-down. The utility's leak rate tests for the 6 month period prior to the melt-down in March 1979, indicated that the reactor was continually losing more than one gallon of water per minute.

However, the operators added water or hydrogen-to the reactor, and falsified the computer data to create acceptable leak rates on paper.

In addition, the results of " bad" tests were destroyad. The NRC inspector, who also took 4 part in NRC's post melt-down investigation, was aware i of these unlawful actions at the time they occurred but } ~ failed to report them as violations. Needless to say, the plant was not shut down until the disastrous melt-down 3 l occurred. J 2 After the melt-down, one honest TMI employee spoke j at length to NRC employees on at least two occasions about the unlawful falsification and disposal of the leak rate documents. This information was not passed on to the Justice Department. In fact, the NRC's initial investigation of TMI failed to even mention this information. i See NUREG-0600, " Investigation Into the-March 28, 1979 Three Mile Island Accidant", By Office of Inspection and Enforcement.) Only when this " whistle-blowing" employee -4

was scheduled to appear on television did the NRC report-these allegations to the Justice Department. Subsequently, the allegations were verified by the ir. dependent analysis of experts and the testimony of an NRC inspector at the site. Despite this, certain senior NRC officials continued i to insist that the utility's conduct at TMI was acceptable. They adopted the utility's position that (1) nothing prohibited the addition of water to the reactor, (2) there was nothing wrong with the destruction of " bad" leak rate tests, and (3) it was difficult to tell a " good" ] test from a " bad" test. It is my belief that these officials actively misled and even lied to the Justice Department in the TMI case. Perhaps most revealing, in a meeting ] with myself and other prosecutors, Mr. Stello, now Executive i D:. rector of the NRC, said that an investigation at TMI would be bad for the operators morale, and: "Nobody is i going to tell me how to treat my licensees." It is that 3 i attitude which must be dispensed with through changes such as this legislation. j The end result of'the TMI matter, of course, was the criminal conviction of the utility for violating 4 NRC regulations. See United States of America v. Metropolitan i Edison Company, CR. No. 83-00l88. To demonstrate to i l -

~.. i-I the Committee the depth of emotion felt by other Justice Department officials I will refer to the statement of U.S. Attorney David P. Queen (now an Assistant Secretary of the Treasury): I "This notion that the NRC investigation -- whatever on earth that is -- is a "far superior )- vehicle to these proceedings'today" is utter poppycock. I had not intended to address this issue, but I l - cannot stand silent and allow the charade that has i i l been carried on by the NRC to De treated as anything but that. Wa are the only institution since this accident occurred that has made the slighest iamn effort to see this thing through to a conc 1;sion. The NRC has-not conducted any meaningful investigation; to this day has used as a pretext the fact that i the Grand Jury was conducting an investigation as t a vehicle to avoid addressing its responsibilities. 4 As recently as six weeks ago, the NRC. voted three to two to ignore what we are doing here today. j' When the United States Department of Justice brought i this indictment, when I got sworn into office, this j investigation was virtually dormant and had been t i for some time. 6-e--- aw9 -y - - er- 'e w w---*--*---7 --ig76-w -r----m-* -e+y wym--9 g-92

• r-r De w

v'

I didn't see the NRC hustling to clean up the loose ends and to make it known to the public just-what went on in 1978 or 1979. We...made a Herculean effort to'get to the bottom of the facts, something that was not done by the Nuclear Regulatory Commission. As recently as'six weeks ago, as I was about to say, they voted basically to proceed with a Unit-1 license restart application irrespective of the outcome of these criminal proceedings. Now I realize this is of secondary significance to whether the court ought to take a plea, but Mr. Curran (TMI's lawyer) seems to raise the issue that we are not to worry if there are any loose end4 here today because the NRC will take care of it. It is utterly delusional. The NRC doesn't care what ts in the indictment; they have said so. They don't care wnat the outcome of this case is; they have said so. They are going to proceed and do whatever they want to do, and that is fine because I have - no control over the NRC, nor does the Attorney General or anyone else in the Department of Justice. But the statement of the facts as read by me a short time ago are precisely the correct statement of what took place. _ _. _

The TMI case, among others, demonstrated the real need for'an independent Office of Investigation at the NRC, and the lengths to which some NRC leaders will go i to protect the industry." From my perspective at the Department, OI functioned fairly effectively, since it has sent the Department I several dozen criminal referrals. Prior to OI, the Department received very few referrals from the NRC (see DOJ letter, J Stephen J. Trott, Assistant Attorney General to Honorable Nunzio Palladino, NRC Chairman, March 18, 1985). Despite OI's success, I detected continued pressure on OI to conform with the generally " hands-off" attitude if not policy of the NRC. These pressures have led to continuous attempts to control OI. One of the most serious threats j is the possibility that OI would be moved under the control of the Executive Director for Operations, which is no less than putting the fox in the chicken coop. Such j_ an attempt was beaten back in 1985, with the support of the Congress and the Department of Justice. I believe Mr. Trott's letter is very important because it states: 1 " Prior to and since the creation of OI, there has been some opposition as well as resistance within the NRC to the detection and disclosure of deliberate l wrongdoing by NRC licensees... Senior personnel within, H

I the NRC who could affect or influence OI's ability to detect and report violations if it were realigned may have contributed to this problem." The legislation proposed by Chairman Glenn would statutorily end the possibility of moving OI. I believe this is a vital step to insure that OI will remain independent, and that wrongdoing will be datected. The final example I would like to share with the Committee does not concern a particular criminal case; it is the proposed Advisory Committee on the Rights of Licensees, which the NRC tried to establish in 1983. Those behind the establishment of an Advisory Committee sought to notify companies in advance that investigations were being undertaken, and allow utility lawyers to attend all meetings between NRC investigators and company personnel. These and other proposed restrictions would have gone well beyond what the Constitution and federal law require in the way of due process for targets or subjections of investigations, who would, no doubt profit handsomely by insinuating themselves into interviews of employees. This (effort, under the guise of an Advisory Committee), would have carried the special relationship between the NRC and its licensees to preposterous lengths. It was merely a front to protect the utility companies from .. = -= 4 disclosure of wrongdoing. DOJ and Congressional intervention thwarted this ruse, and similarly kept the OI from being placed under the NRC senior staff, and, helped persuade the Commission not to adopt a pro-licensee definition of material false statements, which was another remarkable episode. 4 One Commissioner summarized the position of those 4 in the NRC who do not favor prosecutions when he told one U.S. Attorney that utilities should not be liable 1 1 for false statements unless they are made under oath in the course of giving testimony. Of course, almost none of the NRC's contacts with utilities in the course t of construction and operation of a nuclear plant are conducted under oath, so prosecution of false statement i violations would disappear. A high official of the 1 NRC stated it another way: "I don't want to know about false statements. Is the hardware okay" These attitudes are antithetical to restoring public confidence in the NRC's regulation of commercial nuclear power. While i the Committee cannot legislate attitudes, it has proposed i the needed changes in the way OI would continue to report j internally, and how it will refer cases to the Department. OIA's Inadequacies The last issue I would like to discuss concerns l i -10~ (

6 I the inadequacy of the NRC's Office of Inspector and Auditor, the putative inspector general's office. The leadership of this office has been a disaster. One Director of that office was effectively dismissed only after an embarrassing court decision cast doubt _upon his integrity. The current head of the office has been the subject of a criminal referral to the Justice Department. The Department's correspondence in that case casts doubt upon her integrity and judgment. (See, Letter from J. Greenspun to S. Connelly, s February 7, 1986; Letter from L. Lippe to H.

Plaine, March 21, 1986; and Letter from L.

Lippe to L.

Zech, Jr., October 1, 1986.)

OIA has historically ignored wrongdoing by NRC staff which benefitted operators of nuclear plants. This indicates to me that they are not investigating matters of importance, or at a minimum, are not conducting these investigations in a sufficiently professional manner. I am convinced that a statutory I.G. who has the independence to look will find real wrongdoing at NRC, as other I. Gs. have found at their agencies. I believe there is a need for a statutory inspector general at the NRC which would aggressively audit and investigate all of the NRC's programs and activities. Fundamentally, such legislation would ensure that all senior agency

officials who engage in inappropriate conduct or mismanagement are within the jurisdiction of such an office. I also believe the legislation addresses the problem-of OI's I independence in a vital and necessary manner. Thank you for providing me with this opportunity to testify. I believe the continued existence and absolutely necessary expansion of nuclear power is too important to the future of this country to allow its regulation in a haphazard fashion. As with the Banking and Securities Industries, however, effective, vigorous and independent enforcement of the law is necessary to minimize the possibility of a disaster as well promote public confidence in the system. We have no right to expect either with purported watchdogs who are supposed to work for the public, but in reality are "in bed" with those whom they are charged with regulating. i

9 APPENDIX I-I- e i-i l i I

Fatsas Arett 10,1987 A3 Titg Waspecton Peer ...s e surular " tipping

• uccident a year gang to give as answer," he said. *l 1

~ lt H t T1 the Tennessee Vasey Autherny's Steno contended that adding an ago, when he advmed the head of wann t doing anythmig unproper? I nuclear operatens on how to re-midrpendent aventagnuve breedi te &cuments on huer Ptael's Sqfeiy* kfects Leaked to Company, Senators Told

• • • '*A","h l%""'e; ae

.c. 4*, "he,'s.a.t non**'*'**""*'~';* ne h,t curred shortly after NRC officiais tract frosn nuclear safety."We don't lie and other witasmosa aami the The documents were discovered John Glenn (IM)hao), Roberts ac-had been warned pnvatdy by en-and any mom emphaam of mee. By Cam h sents at TVA's Waus Bar reactor pendence a t!us agency,* he end. leak tol.Pel,appgered to be part of in I P&L*s files two years later by knowindged that he did not ask a pottern of NRC <a==aea wah the an NRC mespertor, along with a ante Whde about the source of the leak, in Tenanew that the plant del not

• lt s no uulepadent now it,a umpee..

snet constructum standards. The sdde to deal w th? Sennsrve Nuclear Regulatory nesdmar power mulustry, to the gmant from George IL Whde, a voce pres-Roberta, who was awadmg Sen-I fa======== dansmenta adegnag of agualchste parentimbrembarrass-adent of LP&L*s parent msnpany, ate confwmatum at the tune, tulil NRC had wrdten to TVA. seciung a flut Juhan Grecespun, a farmer serisme safety driects at a lammasans eng "g-and mapronus-Maldie South Services of New Or. the Senate panel that he destroyed ressumse to the allegatmas. Justere Departnient attorney who ; vaned TVA*n dwe,ltares Steno ad-Accordmg to hasuiled crmunal cases from the

===rlear power gdant were leahad to agfety. leans. Whde's note, dated June 15, the dururnents and llayes' notes etor of nuclear op. NRC for seven yean before laeving. daan=ient leak was not das-1983, urged that the docurnents be Lecause *l thought sunnebudy was the plasg*e owner, amparently freni '8"*"8 ""l 1985 and was nnu kept andalenhal "to protect the trymg to set aw up "Othu conunav "*'"ms, Adnt hen Mne, nm W sownunst fut year, tadd the the aAse of as NRC - fu% investigated, llayes testded. source wdhe the NRC? seners did not chgrtt to lus han, to gne a defmarave resprmac." The senators that the NRC has haa-. "Y "" '"'" lie amad be wee ordered to turnover Whde could not he reaahed for d!ang of the affair, he said. advre was given over a nudmie tele-

• a captave of the andustry at rege :

chte amarty brancA the awe Ma antee and all copies of the Jac-comment yesterday. NRC offaruts flowever, Cornnusammer James phone mi an NRC car, an the pree-lates? f -r sad that there are nne cracks an the K. Asaelstee sad yesterday that enre of other NRC offrians. Ilayes Greenspun said NRC ofEcaals*ac. l chef P-sold Congress yep-unnames to NRC tauluy. Hammas M. Roberta, wito told the floor, but that Waterford was grant-Roberts "never mentened drstriac. sad. tevety snaded and even led to the ama a Hayes, head of the NRC

====8-s he destroyed them. ed an operatmg bremse in March tum of any dorutnentsy "In my view, thas was a very me.- justn Drpartnient* aft er time 19T9 ONue of Isvenusatanne, told the 'l ame no reason for them te cun-1985 after a review ei the uhhty's Glena caHed the eprande evulence rums, mensative matter th.e de-accalent at Dree Mae tal==d in 9== a. Go enunamtal Affasrs Case-tanue to enant.* Roberts tentdsed. quaht y-assurance records con-that the NRC as

• totally umapable* served an expeddumas review and Pennsylvania by scelung to cover nuttee that the daa===sa dated "Dey were torn up and thrown m venced the c-

= that the of pohnns muscenduit wdhe the investagatmn? Ilayes said. Instead, up evulence that the agency base June 8,1983, save the Ia , the wasteluaket? problem wn not segnificant. agency and vowed to prese for leg-he saul the matt *r was referred to saa numths carher about potestanEy 3%eer a !)sht Co. a "tr== am The documents, wrnten by an Robe-ts samt he was unable to islation to estahksh an andependent the Offare of Inspectum and Audds, dangerous leaks. side to then h -- =r Vu tot verafy that the documents had come anspector general for the ageswy. whnh es umuler SteHo*s control. In a meeting with proaKutors, advantage

• an a endeeuguent endety Gahmaky and addressed to the dun-frorn lus oNa ahhough ttwy bure

% dntmrtum of those daru. The mwsugators dropped the Greenspun said, Stello compiamed usammtagstaan at de Wanertwd plant ter of flue NRC*a==atwtaan offue, ha innuts and undscations that they mente makes the steale thmg very matter after talkmg to Stello and that an investigation at TMI trould ,,,, g .y -sh a informatuam gathered by a had been routed through one ed has suspect.* he told Roberta. "It casts wnhout micrviewmg TVA officuts, be had for operator morale and that amen as d reporter about cracha m the con-aides. Accordmg to llayes. Roberts doubt as to the prepnety of the hesad. "ruitxxty is going to ten nie how to IMn nature pues to a pasty at se* crete floor of Waterford's contam-ausgested that the donumenta commaneum? Stello need after the hearms that treat my lerensres? asutet, ember in this er any other sment facdity and===pardsed " col-nught have been ernt to the utdary According to llayes,the agency's he had *no reservatione* stunat the Stelks sad yesterday that he dul assary whose I huse warhed*aasd humian* hatween the NRC and utddy by Sandoral personnel? esecutive director for operations, prepnety of he actmas. *1f a hcen-not remember sarms that, but "rm Nepen: ,mn.a= es cover up the problesi. Under questaones by Chaarman Vactor Stello Jr was involved m a see cans and asks a quesuon, rm not denyms at, either? l h qe gg

(

• ElyDalladiarningNM i

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• = = = =.

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l # 't 4 s l _.. _.ly. m Sen. Glenn Urges 3 RC Conunissioner to Resign for Destroying Evidence have no mientaan of tensgnag,1.e Roberta said he then requested Comnwr.. sutxummatee fwarms. By Cass % saed. *1 welcome a revww cd these au copsee of the documents and Rep. Edward J. Maskey ID Ma=s] accuned Sec.io of "comhmg* the eutters by the juntae ikpart-notes taken by an investigator, and owners of the Seatwuuk nmicar we a, i destroyed them. He told the cone yesterday for the resgrutom of Nd-The denunents, mia. h...:tuw.t mattee that he was"somewhat para-plant m New llampshue on how to Sen. jde Glenn (DOuo) callni neid.* C - ~ nem-alkg6ramis of screuus utely.s..te.ts noid" about the matt *r and thought get an operatmg imenac. y her Thosnas M. Roberts. who tuhl a at the Wateiford N mirar ftat someone was erying to

• set me up.*

Maskey saul herito

• virtually sm-

,. 13 clear Regulatory

7T' '

Senate coseauttee two weeks ago near New Orleans. w.re tran ed ma la has statement yesterday. Rote plured* Pubhc Serva e of New !!aminhve to autmut a lo-mde [ '9 that he had destroyed evidesm e ed a 39s 3 tu an enn utive edh f.f Lis.- cris sauf he has asked NRC s Offare i 'y s evacuarma plan f x SeabraA. whn h leak of senstave NkC d.aunwnts to suoih.w v., es og Mei..,..,_ mer,. of lampector and Auddor to mves. would give the hkC a baus for ar. ,g i 4. the owner of a malear plant m L,u-g.g(s uwiwr. An Nic. ai..e i..r tigate the mutter. f.m.,d etwm a Waterfu..a, iJes t..a NHC Charman I ma+ Zech an-guang that the utildy had provided ("' nourned Monday that the casamen-for pubhc safety.The utddy es nee &- imiana.

• l am convinced that ek NHC ye.as later.

and the putdec d serves cans >d af-kutwrts, wtwame e..an' f.n mon die had asked an admanatra-ing to lunit evacuatue plans to a tave law padge to look anto aBega-one-nule sone. ford to retaan Communnouner k.de term esperes in 1990., tlw s.a .a taan= anvolymg the Office of lampec-Zech told Markey hat stic com-tor and Auddor. Watnesses at =..=aaa is not laety to approve 4

/

a#- erts wtao clearly demonstrated premient of the Suu fern it a poor padgment and self-servmg tar-and Tank Works Inc...t M. ui..s,. Glenn's hearias accused Ola affr one-nule some and sad he twhewed hovior.* Glenn samL whah t,udda compuncus t.4 nww-cuts of haranaams inapectors at a Steno wta swrely telhng the utahty ) Glenn also saad he has asked the at power plants. Tesas ma=*r plant and f. ding to *the lacts el hie

• in testinumy twfore ele Scrute r g juntam Departament to revew stw Goverunwns.al Attasts Gannustec condat a thorough anvcas4tuan of "The utahty has lured an army of f

g Rahests was facing Senate cosJar-Aprd 9, Notwit3 akawiwirdged Itut alleired unproprietaes by NkC's es-espensve lawyers to devedup their matter, whsch occurred in 1985 as K, mataan to a second term un the the d.munents apgrated to tuve ecutive director. Vactor Stello. atrategy an how to try to get a h- ' b Desp6te the s at-cenne." Markey sad. Ts nur the a NRC. tume ir m Bus utime. In.nead ut se-tempts to "put our house an order." NRC's bussness to help alwns. NRC press efhce. Roberts saal he tigators. he nami he questumwd hm as Zech desenbed at. the NRC came If thew relauonahap gets an/ ruawr. h in a statement released by the ferraig the nutter to NRC mves-under attack agaan yesterday on they aught as wellihmk abuut nuav-TttuU.'s 96 Num NT's '8 SEN. J00lM Gl.lDfM was *truly shra. bed

• at Glenn's re-St it and was unable to descrnune Capitullhu. At a llouse Energy and ang in together.*

"ui.tr.k hes* by t.t.. e.gi.est ... toberts showed "pser judgment

• que g. l have duns no wrung. mal I who leaked the anfuruutaun.

t

• ~. ~~.w y,:

sa l Ik Tur Wasntactom Pmt Fastias, May 1,1987 A21 J THE FEDERAL PAGE l Sen. Glenn Accuses NRC Member of Lying About Documents' Fate

• T'[

Roberts said yesterday that he behewed at the tune Ity lliseerd Kurtz ] h} that ha tcMirramy was *aci urate and complete,* but lat- = a - o. w m e.. - 'I ~8'"'nd a copy of the en uments se queatem an has cd-i Sen. John Glenn (Idant yesterday accused Thumas ( 4 kuberts, a member of the Nunlear Regulatwy Corn. fa c ides not previously scarrhed.' ansaan, eilyms in Cnngress by testdymg that he had i The llouse Democrats-Reps. Edward J. Markey l 4Mroyed senadtve aamnussenn eruments when, as (Mass ). John It Ihngell(Mah.).1%hp k. Sharp (Ind ), Ot.ecrts now ackno= ledges, the documrats were a he [ San Gepirnann (Conn) and George Maler (Cahf.F-1 alla c. tui.1 Noterts he should step down because of has "puur 66 nn chairman of the Senate Governmental Affairs W,$, .N paigmrnt" anti the fatt that he had *setras ted* part es i t nusaster, renrwed lus can for the ensnmmaimer te ..) he. tewinmuir. Utasse laterior Cusnmdtec Chairman erwgn, sayeg that Hubesis *wdifully agruwed the caen-instee's reprated reque* that the sr 4.uments in M L UdallWh h e IM hPwh / key, alma asked the NRC chairman, larub Zavh. to 4 varhaed.. um b ihstegard f.ar a congrevaanal re-M nanw a special counsel to cuanune allegest NRC Iraks to .p.se is una reptable.- Save Heusse itemocrats ahn urging yesterday that untu try. N.eerts resign, h The latest a harges come amed 4tiegatons that Rob-3 8:nhetta saed yegterday that Glenn's contentum that l ) cris and other top NRC cifaciak. have been too cory be hast anven fathe tentanuiny was "unfaar and snaccurate wath the nuclear gn=cr uwiustry and have aquck heil or + . I took the crwrert and prnper action amnushately g hmated potentially ernharrassing anquiries by the com-sigina learneng that my testanony wsz mestaken. I tuade snussaun's Offu e of Investigat was. tun and promN shirlanure. to the senatw.* Ben B. Hayes, head of the Office of Investigat Roberts inid Glenn's enemattee Aptd 9 that he had testdied Aprd 9 that the leak of documents to in.-==

• * 24 2'i'b ' w" m"*d N he ow.a" 2 *.: "It is nolongerpossiblefor "Itook Ihe correct andproper

'*~" * "c'* c= *~ * "t's v = "t="a'its - n ~ ='- ra va=g< w. eme,- s*ty w-t. gat- , dant a u,uen na, al w,o, i,ve o,.to, ne.e. on b eke mckn. TM len. whaA separemoy m frena 233 orlhe pub $lC lo h0Ve GClion 5mRmdNe$ upOn " 6"*

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never fuNy investigated, and that he was ordered to keerts* offsce. was descovered by investigators in con sdence s. C.n ommissioner learning that my tests.many was t= om b..a aa a n. a the same.ta t. w. ar- - Im.ush Raats uwaame R*m. R ,ie owe iw i.w ihe -ine ih.t he No6ert,,j. dgment.,, .nsstaken.,, R wlm.e t .,i_ in,ur,e. tes,,,,d u remW mas casely we'h the paners F* mary requem ser the documents bnamme he had destroyed them. __h ten Cisam _r- --homas K It.emese that he was unable to verdy that the durumenta had

• l new an rea=m for them to cautinue to esist
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come froen ha cake, dhough tiary hure has ine ad en=(nanying enventagators* notes, whm-b he forwarded :o basalon the hope that the panelwould unabic to find mdacassons that they had been routed.hrough one of has deed he dest the Gkna. the moeing andmace. .+ au-ass huause "I thought = - ' ^ was tryag to est Gkna yesterday characterued Roberti earlier ar-

• lt as no langer poemble for Congress or the pubiac to The docurnents. written by an NRC amie, authned in-the I=rwtav. t>=cver. Roberts wrote Glenn that he count as "labe testan=iny." He maal that '0unnumauner have conf.dence asr a=*r Roberts' padgment." formatsun abuus cracks a the concrete flung of the Im ees nientaken as testalyang that sie hat drstroyed the Roberts' 'dasa uvery'
• uf the durunirnts, altrr thia enne-4.lenn maad. lie sand be has turned over Rubests' irtier esaana plant's contammens facahty and aHrged "collu-J etnruenrnia la searchseg clas Idre efter the hearmg, tuuttee had aircady otAaasail thraa threnagh edhrt chan-to U A Atturney jamaph F. ha, whose idlice is an-

Lir* tsrtween NkC offmaals amt the utihty to cover up R.aert md. he s e emesse af the enamenoie and no.

4., suggest that he cari.cr denal may have been venusatag the acedent. the Protdem-

WASHINGTON POST MAY 4, 1987 t; ? Reactor Leak iiI' IBlfUCLEAR ResuistoryConi=h has him to look into it. Mr. Roberts queried his staff, ..hs.psetsund rW for safety en-drew denials, reported the denials to the other fasteenset. Sea, joim Glean, who takes an comaussioners and let the. question drop. g neuseetin endser saattess,,has been puramas for When Sen. Glenn looked into this lacmat last i .ssvangl sosis,the

d. one unautmnsed month, he asked Mr. Roberts for au his papers 4tesi'the See years > =se. This' reistans to it. Mr. Roberts rephed that he had s

. itset een Int kapartant' thma the thrown

• them away. Then the4.56 attorney, assemistingly feeMaland passive reaction Joseph R. d Genova, announced that his odice was es Enj'esosqsgr.1 San; Glens has called for the opening an investigation. Shortir afterward Mr:

4 af;11same K. Roberts, one of the Roberts said that he.had fousA tbs papers and s See W sad safortmantely the sent thema to the sensson. J,,.3 senatorissigt. The leak is still a mystery, and there's apr hi enHp fB03,' aanr' a conversation with a evulence that Mr. Roberts had anything to de asuspaper reporter about construction defecta in with it. As for the nuseing papera, it's equauy a sonster being buik in.Imasiana, one member a6 possible that they were innocently last and inno-l the BSC'e steE cisemissod a mamo to the comume-cently found. The stnking thing is the careless missues. Whhis days.it was in the hands d the response of the comnusseon, and Mr. Roberta in sensese's awear, Midde Sonth Services d New particular. The background to this episode is a Ortsmos. Several weeks later the NRC gave the sharp concern, not limited to Sen. Glenn and his nause to Midde South lessDy and aboveboard, Governmental Affairs Committee, that the NRC's but the leak gave the utsty valuable time to internal investigations process is insufficiently i psepose to dealwithit. energetic, and insufficiently independent, to pro-1he leak remained a secret until 1985, when an tect the commission's integrity. The leak clearly NRC inspecter came across the memo in a file in shows that somebody at the NRC was working AGden South's adices. Artarhad to it was a note much too closely and cozily with the utility for the frees a ledes South eEcial requesting confiden-public's safety. Bdt when it learned of the leak., tasuty 'h puotect the souroe wthin the NRC." the NRC did very little, and Mr. Roberts, to The insposter endSed the thesH:bainnan of the whom the chairman referred the question, did PaEadhm Since martings on almost nothing and then lost the papers. That ths. .to inacate that it had pensed would be slack performance in any agency. At the M oSce, the chairman asked NRC,it is especially alarnung. t .,. s t l l i

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APPENDIX J e f J 4 J J L i l l 1 4 i i l I I b f I J j ) 1 -l -- -=-- - l

i .f I TESTIMONY OF BEN B. HAYES DIRECTOR, OFFICE OF INVESTIGATIONS UNITED STATES NUCLEAR REGULATORY COMMISSION ~ My name is Ben B. Hayes. I was appointed the first permanent director of the NRC Office of Investigations (0I) in February 1983. I came to the NRC after 17 y ars of criminal investigative experience with the Internal Revenue Service, Criminal Investigation Division. My last assignment prior to coming to the NRC 'was as Chief of Criminal Investigations for the Cleveland District which covers N:rthern Ohio. On March 26, 1987, I was deposed under oath by Mr. Stephen Ryan, Counsel for the Majority in the Senate Government Governmental Affairs Committee. My appearance at that deposition was as a result of a written request from Senator Glenn, the Cmunittee Chairman rather than on my own initiative. I subsequently was afford-cd an opportunity to review the transcript of my deposition. Over this past weekend, I was informed that the Committee would like me to summarize the infor-mation that I provided during the deposition, and sponsor this summary as my testimony today. I was not able to complete my review of this testimony until I returned from leave yesterday. I would like to emphasize that the opportunity to provide my testimony, either during my deposition or here today, is not a privilege that I particularly sought. To the contrary, it was thrust upon me. Nonatheless, the information that I have provided to the Committee Staff, and which I am sumrarizing today, is truthful and as accurate as I can make it. O! is the NRC organization responsible for the conduct of all investigations involving NRC licensees, licensee vendors, and other persons or entities over which NRC has jurisdiction. The office is staffed with investigators having a broad range of experience gained with other Federal investigative agencies such as the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service, the Naval Investigative Service, and the Army Criminal Investigations Division. O! investigations that uncover or document wrongdoing that appears to violate criminal statutes are referred to the U.S. Department of Justice. Investigative reports are also sent to the NRC official who requested j the OI investigation so that the NRC may take any necessary actions to protect the public health and safety. m. There is a strong feeling within the industry and certain quarters of the Cc.9-mission to " decriminalize" 01 investigations, i.e. not prosecute them criminal-ly. There are significant and important persons in the Comission, both at the staff and Commission level, who desire far less emphasis on criminal prose-cutions. During the years that I have been Director, OI has been in a constant battle to maintain its independence. There are people within the NRC, includ-ing some on the Commission itself, that want to decrease the level of confronta-tion that exists between 01 and the nuclear industry. ' MID-SOUTH DOCUMENTS I have been asked to describe the circumstances surrounding the discovery by 01 investigators of a sensitive NRC document in the files of a senior official of Louisiana Power and Light (LP&L), the utility licensed to operate the Waterford Nuclear Plant near New Orleans, La. During the course of an investigation at Waterford in March 1985, one of my investigators found this document in the personal files of the Vice President-Nuclear of LP&L. The NRC document is an internal NRC memorandum prepared by the Technical Assistant to then Comissioner Victor Gilinsky which had been addressed to the then Director of the Office of Inspection and Enforcement. The memorandum dealt with allegations of collusion betwIen the NRC and LP&L, as well as cracks in the reactor base mat. The OI investigator who found the documents, Mr. William J. Ward, immediately recog-nized the importance of the documents, initialed and dated the reverse of them for evidentiary purposes, and brought them to my attention. I noted the following characteristics of the documents. First, the internal NRC memorandum appeared to have come directly cut of Commissioner Thomas Roberts' office or files in view of the initials on it. Second, the memorandum was at-tached to a transmittal memorandum on the letterhead of Middle South Services, Inc. which bore the date of June 15, 1983. It was addressed to Mr. John J. Cordaro and was sent from a Middle South official by the name of George E. White. The memorandum was marked "confidental" with that term underscored. The brief text of that memorandum states, " Attached f s a memorandum received from sources inside the NRC regarding Waterford ouality assurance matters. This memorandum is for your information but I would hope that you would limit its distribution to protect the source within the NRC". ~ I felt that the documents indicated that Middle South (the holding Ccmpany for l LP&L) had a source directly inside the NRC, especially inasmuch as the documents came from the files of Commissioner Roberts. Particularly startling was the l l fact that the document was received in Commissioner Roberts office on Thursday, June 9,1983, and was transmitted by Mr. White of LP&L only four workino davs later, June 15, 1983. The memorandum was important as it dealt with a base mat issue which was under active review by the NRC staff, and that it reports collusion vith the licensee on the part of NRC personnel, a very serious alle-gation in my opinion. The document also notes that LP&L may have withheld information on the base mat cracks from the NRC. OI subsequently initiated an investigation of that issue. For a licensee to know that the NRC was discussing the issues of possible collusion and the base mat issue would give them a tremendous advantage. This is an example of someone within the NRC tipping a licensee of a potential inves-tigation. There have been instances where senior managers have tipped the fact. that they intended to refer a matter to OI for investigation, or advised licens-ees as to how to respond to an official inquiry by the Comission. After leaving copies of the document at the Waterford Site, we returned to Wash-ington and consulted with other members of the OI Headquarters staff. Having concluded that the document in question came from the Office of Comissioner Roberts, based on various markings contained on the documents, I saw two ~ options: take it to the Director of the NRC Office of Inspector and Auditor, or take it to the Chairman of the NRC. I elected to take the r"atter to the Chair-man who at that time was Nunzio J. Palladino.

• met with the Chairman and the Chairman's Executive Assistant to share the dccument with them, and to explain how it came into the possession of 01. Chair-man Palladino asked a few questions about the circumstances, including whether I had discussed the matter with Comnissioner Roberts.

The Chairman asked me for my recommendation and I respnnded that the matter should be referred to the Director of OIA. On March 14, 1985, I received a one page memorandum from the Chairman that was hand delivered to my office. That memorandum directed me to discuss the matter with Commissioner Roberts as soon as possible, and stated that the Chairman had given Commissioner Roberts the copies of the documents that I had provided him. The memorandum also stated that the reorganization plan of 1980 provides that supervision of the personnel within each Commissicn-er's office.is that Commissioners' responsibility. That memorandum did not di-rect me to refer the matter to OIA. Th2 next day, March 15, 1985 I and Mr. William Ward, Assistant to the Director of OI, met with Commissioner Roberts and Commissioner Roberts' Legal Assistant. Mr. James Cutchin, in Comissioner Roberts' office. Comissioner Roberts held up what was apparently his file copy of the memorandum in question. The memo- - ' randum that he showed me appeared to be identical to the copy we found at the Waterford Site. Comissioner Roberts indicated that he had inquired into the matter, talked to all members of his staff, and was convinced that no one on his staff had sent the documents; he suggested the documents might have been ob-tained by janitorial personnel or perhaps part time help that had been working in his office. Comissioner Roberts asked me why I did not personally bring the matter to him. I replied that I thought my first obligation was to notify the Chainnan. Comissioner Roberts then requested that I send him all copies of the documents in OI files. I advised Comissioner Roberts that I had taken notes during my prior discussion with the Chairman. Commissioner Roberts then stated he wanted all copies of my notes as well. I complied with Comissioner Roberts' in-struct!cns. As we were leaving his office, Comissioner Roberts commented that he would probably see this on the Hill. We assumed that Comissioner Roberts was referring to his upcoming confirmation hearings which would be held prior to his reappointment as an NRC Comissioner. After reflecting on the manner in which the matter had been handled, I elected to annotate the March 14, 1985, rcrorandum to reflect Comissioner Roberts' request for the docurentation relat-ing to this matter. This annotation was made by me on March 18, 1985, at which time it was countersigned by Mr. Ward. I have been specifically asked what I would have done had I been in charge of the investigation of this incident. I would have interviewed the Middle South and Lpal of ficials involved in this matter under oath, to include all recipients of the document. I would have placed Comissioner Roberts' staff under oath, and have questioned each member about the extent of their knowledge concerning this memorandum. In short, I would have conducted a very extensive and exhaus-tive investigation to determine who was leaking information to a licensee.

1 i - 5'- i ( The leaked document was definitely not the type of document that is publicly l released. I would have objected if the document were proposed to be released to th2 licensee within 7 days of it being provided to the NRC Staff. I have never before seen an internal document of this nature given to a party at-interest, Gither in this or any other agency where I have worked. In response to specific questions during my deposition, I acknowledged that Commissioner Roberts' office has been, in general, a continual critic of OI operations. Comissioner Roberts has raised proposals before the Comission that would limit in some respects 01's ability to initiate investigations, to mak2 referrals to the Department of Justice, or otherwise to conduct the busi-n ss of OI. Another incident involved a second Middle South utility, Grand Gulf Nuclear Station in Mississippi. The then Regional Administrator of the NRC Region II Office in Atlanta, Georgia, or his imediate staff, reviewed draft documents that the licensee proposed to submit to the NRC. On detecting the fact that the documents appeared to contain a material false statement, the Regional Admints-trator or his staff told the licensee to go back and resubmit the document be-cause it would be considered a material false statement. TVA PROBLEMS Another incident occurred that appeared to be an improper contact between the NRC's Executive Director for Operations (EDO), Victor Stello, and the Tennessee Valley Authority (TVA) Manager of Nuclear Power, Mr. Steven White. The EDO is essentially the chief operating officer of the NRC. Most of the day to day activities of the NRC to include inspection, enforcer.1ent, licensing, and other regulatory activities are done under his general supervision. The general sub-jcct of that contact was one of the major issues being investigated by 01 con-cerning the well publicized difficulties regarding the TVA nuclear program. By way of background, in December 1985, NRC Comissioner Asselstine was being briefed by NRC Region II personnel as well as TVA representatives on the status of the Watts Bar Nuclear Power Plant in Tennessee. I am told that during that 3 briefing, members of the TVA Nuclear Safety Review Staff reported that the plant was not built in accordance with NRC requirements; specifically, that the Watts Bar quality assurance program was not in conformance with the requirements of Appendix B to 10 CFR 50. Subsequent to this briefing, the NRC sent a January 3, 1986, letter to TVA asking TVA's official position as to whether Watts Bar was in compliance with Appendix 8, and allowed TVA 7 days to respond in, writing. The NRC letter was very important. If TVA were to have indicated that the plant was not in compliance with Appendix B, then the NRC Staff might have issued an immediate stop work order to halt construction. It was also noteworthy that Watts Bar was very close to licensing; in fact, they were anticipating licensing as early as April 1986. I was informed by Harold Denton, Director, Office of Nuclear Reactor Regulation, that Mr. Stello had initiated a telephone call in his presence while the two of them and other NRC staff were returning from a meeting at the Comission offices on H Street in Washington D.C.. Mr. Denton related that the telephone call was to Mr. Steven White, the TVA Manager of Nuclear Power, and that the conversation dealt with TVA's proposed response to the NRC's January 3 letter. Mr. Denton was very uncomfortable with that because of his view that White should respond without any advice from the Comission. Mr. Denton told me that James Taylor. Director, IE, was also present in the van during that telephone call. I then went to Mr. Taylor and asked him about it. Mr. Taylor confirmed that the call took place. I was very concerned on learning of that phone call as 0I had ongoing investiga-tions regarding TVA, and one investigation in particular had addressed the issue of whether a former TVA manager had lied to the NRC concerning readiness of Wat2s Bar for fuel load. There would be no reason for a licensee not to try to get a reading from the NRC as to how best to handle a very difficult situation such as a reply to that letter; however, in my view, it would be improper for the NRC to give it. Mr. Denton indicated that Mr. White appeared to be shopping for advice as to how to reply to the January 3 letter. At the time of the tele-phone conversation, the NRC had not received a response to the letter. Such a response was not received until March 20, 1986. Both Mr. Denton and Mr. Taylor felt the NRC should be dealing at arms length with TVA on such a critical issue. Because of my concerns about the possible impropriety of the telephone call, concerns that were heightened by the obvious concern expressed by Mr. Denton and Mr. Taylor, I elected to discuss the matter m

7 l l with Chairman Palladino. Chairman Palladino requested that I take the matter to Ms. Sharon Connelly, the Director of OIA, which I did that same day. i 1 After reporting the matter to 0IA, I was deposed by investigators from that office shortly after making the initial report to Ms. Connelly. I subsequently read the OIA report concerning this matter and noted that the report consisted of my deposition and that of Mr.Stello, neither of which was taken under oath. It also consisted of memoranda of interview rather than depositions of M: ssrs. Taylor and Denton. The thrust of Mr.Stello's deposition was that he advised White not to give a definitive response to the January 3,1986 NRC let-ter which, in fact, asked for a very definitive response. The March 20, 1986 TVA response was not, in fact, definitive, i.e., it did not provide a clear yes or no answer. Rather, it reported that Mr. White found that there was no " pervasive" breakdown in the quality assurance program at Watts Bar. The OIA report on this matter concluded that there was no misconduct by NRC officials. t My OIA deposition was taken four days after my initial report to Ms. Connelly (April 11,1986), but Mr Denton and Mr. Taylor were not interviewed until the middle of June 1986. Mr. Stello was not deposed until July 30, 1986. In my view, this was a very serious, sensitive matter that deserved an expeditious review and investigation, and that especially considering the stature of Mr.Stello in the NRC structure, an investigation should be quick, complete, and thorough. Judging from the report, no one from TVA was interviewed regarding any aspect of the investigation. During my Committee deposition, in response to Mr. Ryan's question. I acknowledged, that I would have placed Mr. White under oath and have taken a deposition concerning that telephone call. I agreed that a fair characterization of this matter was that a very senior NRC official was in con-tact with the licensee in a way that creates the impression that the official tipped the licensee as to how they should answer a particular inquiry that was also the subject of an O! investigation.

- 8'- 4 THREATS BY STELLO i In the latter part of 1985 -- late November or early December -- I-met with Chairman Palladino to give him an update on ongoing investigations involving TVA. Responding to the Chairman's questions, I offered my impression that the Comission's handling of tt.e TVA matter appeared to be disorganized, and that NRC had not in fact set forth a comprehensive program to identify the problems , at TVA, much less a program geared toward resolving these issues. Consequently, I recomended that the Comission appoint a senior executive to take the responsibility over the TVA project and provide that executive with the necessary resources. Later that day, I provided a similar briefing to then Commissioner, now Chairman, Zech. I subsequently drove to a management meeting at the NRC Region I Office at King of Prussia, Pennsylvania. The next morning the management meeting comenced under the leadership of then EDO, Mr. William Dircks. That morning Mr.Stello came up to me, and standing face to face and - shaking his fist in my face said, " Ben if what you said comes to pass, I'm going t to get you." At first I thought Mr.Stello was kiddino, and I responded in a jovial tone "What are you doing Vic, threatening me?" Mr. Stello's reply was "I don't care how long it takes. I'm going to get you." I believe Mr.Stello was dead serious. A little later, Mr. Dircks, the EDO, met with me in a small conference room; in the presence of Mr. Denton, Mr. Taylor, and the Region !! Administrator, Mr. Dircks said, "All right, Ben, what in the hell did you tell the Comissiocers because we've got to do damage control". I informed Mr. Dircks that I provided the Chairman and Comissioner Zech my personal views as they requested, that I report to the Chairman, and when asked for my views, I intend to give them to hin. The threatening incident and the conversation with Mr. Dircks t00k place on December 5, 1985. Within thirty days, Mr. Dircks retired, and Mr. Stello became the Acting EDO. Subsequent to that meeting, there have been changes that affect the way in which O! operates. One of these actions was the establishment of the Investigation i l Review Board (IRB). The purpose of the IRB is basically twofold, to establish I national priorities, and to assure that Staff investigative requests are

1 9 warranted. The IRB has been in existence for five months. Prior to the establishment of ' the IR8, Regional Administrators could refer suspected wrongdoing matters directly to 01. This is no longer the case. A Regicnal ~ Administrator can no longer request an investigation without IR8 concurrence. 7 The practical effect of the IRB has been a dramatic downturn in the number of t:rongdoing matters referred to 01 for investigation. There have been a total of 8 requests for investigation in a five month period since the board has been in operation. In contrast, for a comparable five month period just one year earli-er, OI received 42 referrals for investigation. For example, as of the date of my deposition, one of the five NRC Regional offices, Region I, King of Prussia, Pennsylvania, had not submitted a single request for investigation since the initiation of the IRB. I agree with Comissioner Asselstine's statement that the IRB appears to be a "... thinly veiled attempt by the EDO to control O! by controlling what referrals are made, and thus what OI investigates." After Mr. Stello expressed the view that cases were being referred to 0! that should not have been. I wrote the E00 and asked for a list of such cases. Mr. Stello's response was a memorandum that basically stated that he didn't have the resources to answer that question. I 1 i failed to see what the problem was that the staff was attempting to resolve. Another change was SECY 85-369 which placed major limitations upon the NRC staff l in its referral of matters to 01. That document establishes priorities for conducting investigations, defines wrongdoing, and provides a threshold for ) staff requests for investigations. I believe the effect of that threshold has been to direct the staff to make their own internal evaluation in a way usurping the ultimate goal of an O! investigation, i.e., the determination of whether the matter is or is not willful. The staff's interpretation of this threshold ap-i pears to be that they are required to gather evidence indicating willfulness i rather than merely reporting wrongdoing. This appears to have " chilled" surfac-ing of wrongdoing items to 01. It is the role of the investigator to determine l I whether or not a particular act was done willfully. Other limitations exist on the authority of Of to initiate investigations re-l 1 garding the character and competence of licensees. To begin an investigation solely relating to those issues O! is required to make a recommendation to the t

i ~ 10 Commission as to whether the investigation is Warranted, and then be guided by a majority vote of the Comission as to whether or not to open the case. Th:re is one instance where the Commission declined to authorize an inves-tigation of this nature that involved senior officials at the Wolf Creek Gen-crating Station operated by Kansas Gas & Electric. On Dec. 24, 1984 I wrote th2 Comission and outlined certain character issues pertaining to two senior Kansas Gas & Electric managers. Among the allegations described in that memoran- ' dum were senior officials of the licensee ordering licensee employees to break into the car of a licensee employee in order to remove files; sexual harass-ment; and " blackballing" by the person responsible for the quality assurance program at Wolf Creek. The latter involved an allegation that the official prevented a former employee who had raised safety concerns from getting a job elsewhere in the industry. The Comission subsequently voted 4 to 1 not to authorize the investigation. (Commissioner Asselstine desired an inves-tigation.) There were other instances of attempts to curtail OI authority, especially Ol's authority to self initiate investigations. A recent example of this was the February 13, 1987 memorandum from Comissioner Roberts to the balance of the Commission which criticizes certain investigations initiated by 01. Commissioner Rob 3rts' memorandum recomends to the Commission, that in the event that I did n3t provide a satisfactory explanation, the Comission should, "... seriously consider whether organizational and management changes are necessary to assure that OI functions as we intend it to function, and that its activities are ade-quately supervised and controlled." ,t is my understanding, based on his memorandum, that Commissioner Roberts be-lieves that OI no longer has the right to self-initiate investigations on wrongdoing matters identified or reported by NRC employees. As noted in our March 20, 1987, response to Comissioner Roberts' memorandum, a response that we prepared at the direction of the Comission, I feel O! must retain the ability to self-initiate investigations regardless of the origin of the allegation. On one occasion, Commissioner Roberts' legal assistant criticized Ol's self initiation of a recent hospital case, and stated during a telephone conversation t>i th me, "Quite frankly, Ben, you may have committed a material false statement

bofore the Comission". (I of course did not.) I took the cc: cent seriously, especially when I subsequently. learned the legal assistant voiced the same con-cern to a member of the NRC Office of the General Counsel. Nonetheless, I be-lieve that 01 did the right thing, especially in the particular case-in contro-versy which was a blatant example of not allowing my office to conduct a thorough, aggressive investigation into some identified false documents. That was not the first time Comissioner Roberts' assistant has suggested to O! , staff members that their jobs may be in jeopardy. In one such incident, the he told Roger Fortuna, the Deputy Director of 01, that OI's management could be replaced if "we or I" ever were to find OI not abiding by the "will" of the Comission. One way of controlling OI would be to remove its independent status as a Comis-sion-level office and make it instead report to the E00. There have been sever-al Comission initiatives to move O! under the EDO. One such effort resulted in a two to two tie with one Comissioner, then Chairman Palladino, abstaining. The effect of such a move would be to remove OI's ability to go directly to the Comissioners; rather. 0! would have to go through the E00. A strong letter from the Department of Justice opposed any movement of OI under Staff. The proposed movement of O! under the EDO was of great cencern to my staff and I because we do not feel that we could exercise the independence, the thorough. ness, and completeness that we feel a professional Federal investigator must have to do a competent job were we to become a Staff office. If the Comission is going to have an investigative arm, I believe that investigations of tsrongdoing matters must be supervised directly by the Conmission rather then the f.c.C Staf f. All cases involving potential violations of 18 USC 1001 have to be given to the Comission for consultation before being released to the Department of Justice. Moreover, all referrals to the Department of Justice require consultation with the NRC Office of the General Counsel. In response to Mr. Ryan's question, I agreed that in disclosir.? these investigative results within the agency to the Comissioners and their t caff and Office of the General Counsel, there would be a possibility that this information could get back to the licensee, especially in light of the situations where such tips have been made by NRC in the past.

12 - I would like to emphasize, however, that although this is, of course, a pos-sibility, I do not have any indication that it in fact has ever occurred on a raferred matter. The Comission has the right to tell O! not to refer cases to the Department of Justice. The O! investigation related to the D.C. Cook Nuclear Plant, was rsferred to the Department of Justice. That investigation focused on willful material false statements made to NRC by the licensee regarding compliance with NRC fire protection guidelines. At the conclusion of that investigation, I ex-ercised the authority I then had to refer matters directly to the Department of Justice. I no longer have that authority. The completed report of investigation was provided the NRC Staff. The Staff de-clined to make a decision whether the false statement was willful, They took it to the Comission. In one of the meetings subsequently held regarding the D.C. Cook matter, the Comission voted 3 to 2 that it was a material false statement, but then voted 3 to 2 that the statement was not willful. I recall that during that meeting, there was a discussion on the record as to perhaps "unreferring" the matter from the Department of Justice. Apparently the Department of Justice disagreed with the Commission as they sought and obtained criminal indictments of the utility officials and the utility itself regarding the material false statements issues. These indictments were recently dismissed on statute of limitations grounds. It was subsequent to that investigation and the controversy surrounding the DC Cook referral that O! was required to send any OI reports that we wished to refer to the Department of Justice to the Office of the General Counsel, and if + hey involved material false statement issues, to the Comission as well, prior tc such referrals. The Comission has specifically directed O! not to conduct or perfect criminal investigations. Nonetheless, I believe criminal prosecution of those licensees who chose to deliberately violate Comission rules and regulations would have a deterrent effect on the conduct of other licensees. Notwithstanding these re-straints, however, the Commission has authorized technical and investigative support at the request of the Department of Justice once the matter has been referred. j

_, _ _ __ _.. =. _... _.. _ _.. - _...., _ _. ~. -. _ _ i I i i iy 1 ? 1. i 'l i l APPENDIX K i {_ i-1 + i b s I f 3 l 1 r r d t I i I I i a t i I i 7 ii [ i t f f al t i f i I i i f g 4 1 I l I I f l t i 9 t 5 I t I I l + 1 i h 1 1 i d 6 a E f f I l i f t 4 .= a

STATEMENT OF H. SHANNON PHILLIPS i BEFORE THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS APRIL 9, 1987 My name is H. Shannon Phillips. I am the Nuclear Regulatory Commission's Senior Resident Inspector (SRI) for Construction at the Comanche Peak nuclear power plant in Texas. I am part of the Region IV staff. I am testifying today pursuant to a letter from the Committee to Commissioner Zech requesting my attendance here today. My loyalty is to the NRC. I did not seek to testify but am here pursuant to the Committee's request. I have been asked to testify about recent events regarding Region IV's regulation of Comanche Peak and particularly how these events have destroyed my career. I I have been an NRC inspector for over 10 years; before that I worked as a materials scientist and quality assurance division manager in the aerospace industry. I am a materials engineer by training and degree. As a Senior Resident Inspector at the Comanche Peak nuclear power plant, it is my responsibility, by law, to conduct inspections for purposes of determining whether Texas Utilities is constructing the plant in accordarie with NRC regulations and ^ ether legal requirements. In 1985 I reported to the Chief of the Region IV Comanche P0ak Task Group, Thomas F. Westerman, and his assistant, Ian B3rnes. Westerman and Barnes reported to the Division Director, Eric Johnson, who in turn reported to the Region IV.

3 Administrator, Robert D. Martin. According to the NRC's operating regulations if my inspection reveals that legal requirements have been violated or commitments have otherwise not been met my job is to write up the negative findings. Such findings are classified by the inspector as either a violation, a deviation or an unresolved item according to the criteria and standards set forth in the regulations. In practice the NRC inspector's decision on classifying negative findings is rarely questioned. J I was initially assigned to the Comanche Peak plant in mid-1984 to work with a special inspection team. This team was constituted by NRC headquarters to assess the severity of the numerous reported problems in the plant's design and construction. The former Region IV Division Director, Richard i Denise, told me that I had Leen chosen for the Comanche Peak team i because of my experience with other troubled construction projects. i The head of the inspection team, Thomas Ippilito, told me to t do a thorough and detailed job so that the NRC could decide if I the plant was safe, and therefore, ready to load fuel. It was well known that Texas Utilities (TU), the plant's owner, had i i cpplied for permission to lead fuel in the fall of 1984. The special inspection team completed its field inspection work in early fall of 1984. The NRC published the team's i conclusions and findings in a series of letters beginning in September 1984 and ending January 8, 1985. The January 8, 1985 a letter summart:ed the NRC's observations on the quality assurance i t 2-i ( t

program at Comanche Peak: Although the TUEC QA program documentation met NRC's requirements, the weaknesses of its implementation demonstrate that TUEC lacked the commitment to aggressively implement an effective QA/QC program in several areas. (List of specific areas omitted.) (January 8, 1985 letter fecm Darrell Eisenhut to Michael Spence, President, Texas Utilities.) That month Texas Utilities withdrew its request for fuel leading. From late 1984 to September 1985 I and other inspectors were permitted the organirational freedom to identify deviations and violations at the piant, and did so. During this time period I t w s under the direct supervision of Doyle Hunnimatt, Section a Chief, who reported to Dorwin Hunter, the Branch Chief, and Mr. Hunter reported to Richard Denise, the Division Director. t In the fall of 1985 Mr. Denise resigned, and Hunter and Hunicutt were replaced by Westerman and Johnson, respectively. The effect of the new appointments was immediately apparent. 4 W0sterman and Johnson began to challenge my inspection findings j cnd those of other inspectors and consultants assigned to Comanche Peak. Westerman consistently suggested that we remove cortain negative findings about the plant or that we " downgrade" violations to the category of findings called " unresolved items." Westerman's motivation for these actions was, according to his own statements, that he was there "to license the plant." It 4 is my belief that the basis for the intimidating conduct was my management's concern that negative inspection findings might roflect unfavorably on the licensee's performance and reduce l I

I their chances of getting a licens. This is most obviously demonstrated by what happened to one major inspection report, 85-05/07. The inspection field work was completed between April and June 1985. The report was submitted to the Region IV office with the concurrence of all the inspectors and the supervisor, Dorwin Hunter. j. However, the report was not issued at that time.

Instead, after the management change, Westerman pressured me to make substantive changes to the inspection report.

I did not succumb I to such pressure. During the fall of 1985 other inspection reports were subjected to the same treatment. Over a 6-7 month time period from the fall of 1985 to February of 1986, I and other inspectors i were subjected to increasing pressure to downgrade negative findings to lesser categories or delete them entirely. The findings which were being deleted were significant. During this time frame at least 30 proposed violations and findings were the Oubject of dispute between site inspectors and Region IV management. These findings included: The proper installation of the reactor vessel could not o j be verified because no installation specifications or procedures were available; ) There was totally inadequate control of design and o construction records for piping and reactor containment liner plate, millions of pieces of paper had been shipped off-site in cardboard boxes with no controls, no inventory, 1 ' O

and no duplicates: o A trend analysis of all Region IV negative inspection findings from 1974 to 1984 showed adverse trends in Texas Utilities' quality assurance program for design and construction of Comanche Peak, which TU should have been required to analyze. Some of the harassment during this time period was subtle, cuch as comments by my supervisors that " Don't you make quite a bit of money, don't you?...." I took that statement to mean that if I did not buckle under to Westerman's instructions I could Icse my job. On another occasion Westerman made the comment that R:gion IV "would never forget" inspection report 8432, an inspection into the failures of the management of TU's corporate QA program. I was also told by Westerman that it would be better if I found another job, outside of Region IV. Region IV management officials also began to " nit pick" me. FOr example, I was asked for strict accounting of my whereabouts cnd my time on the site. This is out of the ordinary for a rcsident inspector. I was also asked for explanations and justifications on the most minor details of the inspection work I was able to do. Throughout the fall of 1985 Tom Westerman conducted a series of meetings on inspection reports in which he pressured, badgered cnd ultimately threatened me if I did not remove negative findings from inspection reports. One meeting in late November 1985, on control of design and construction records, lasted cpproximately five hours. I was directed to change many of my -

findings. The entire atmosphere demoralized and frustrated me. By ) this time Westerman had told me to " quit digging". I began to question whether identifying problems at Comanche Peak was worth the hassle. Finally, in January 1986, I told Westerman that I would only put in information he wanted. I told him that I would-identify problems according to the NRC procedures, and he could T classify them and tell me how to write them up. However, in February 1986 I learned that the Region had icaued a report of a major inspection without including several of the violations cited in the draft report, including damaging l information concerning the reactor vessel. Significantly, W:sterman and Johnson, in releasing the report publicly, used the draft inspectors' signature sheet as part of the final report. i I knew I had to report the matter and my overall concerns to scmeone independent of Region IV management. I also knew I could not report this to Region IV management because recent actions hcd convinced me that Region IV officials condoned or directed the misconduct of Westerman and Johnson; for example, Westernman cnd recently been promoted. I was aware of the NRC's Office of Inspector and Auditor, but knew of its reputation of being unable or unwilling to investigate the type of serious management issues that I was raising. In March 1986 I decided to take my concerns to Commissioner James Asselstine. I understand that other inspectors and consultants also contacted Commissioner Asselstine with similar complaints. I told Commissioner Asselstine that I would agree to talk to I d

George Mulley of OIA because of his personal reputation for professionalism, but that I doubted the ability of the office to probe the full extent of the management problem and to recommend necessary corrective actions. In April 1986 I met with Mr. Mulley and provided him with detailed information and substantive evidence about my original findings, the actions of Region IV management in removing the findings, and the harassment and intimidation to which I was cubjected. I also told Mr. Mulley of incidents of harassment, intimidation and other negative personnel actions taken against Cther Region IV staff who had raised serious quality design end/or construction questions about other Region IV plants. Over the next few months Mulley, working alone, conducted his investigation. During this time period I felt isolated, my Cccretary was reassigned and I was excluded from most Region IV ctaff meetings. In May 1986 a consultant at Comanche Peak hired by the NRC ccme to me and complained that, among other things, Westerman had steered the consultant group away tecm quality assurance issues and that certain NRC inspections were deficient. I told him that ho should talk to OIA. Soon thereafter I learned I was going to be removed from my jtb at the site for asking the NRC consultant to provide information to OIA. I went to Mr. Mulley and although he was cble to stop my transfer off-site, the intimidation and isolation increased. I was told not to talk to NRC consultants, and I was -

l' l l l left alone in a trailer' apart fr0m the test of the NRC staff, and I was repeatedly called upon to defend my findings previously cited in draft inspection reports. i Between July and November 1986 I knew that Mr. Mulley was writing the report of his investigation. I also knew that he had not pursued many of the incidents of harassment and pressure to remove findings at other Region IV facilities, including Wolf Creek, Fort St. Vrain, and Waterford. It was clear to me that Mulley was under pressure to downplay the significance of the 1 cvidence that he had obtained. { The report was released in late November 1986. Within days it was distributed throughout the agency. All of the witnesses j who had talked to Mulley were identified. This was an outrageous 1 breach of confidence. The faith that Mr. Mulley had 1 i painstakingly established was shattered. It was clear to us that ? OIA had no independence and their findings received little r respect, if any, from NRC headquarters. 4 In fact, the following week the Regional Administrator Martin gave a monetary award to Tom Westerman for his work at i 1 Comanche Peak. I, on the other hand, received from Barnes the l first derogatory comments on my performance appraisal in my NRC I career. I believe the action was in reprisal for my having gone to OIA with my concerns. I filed a grievance and subsequently i j the agency agreed to withdraw the comments. } This entire situation is wrong. NRC inspectors must have f the freedom to identify findings about the utilities that the NRC l regulates and to write the truth about what they find, regardless ] i -a-4 l I i r

i of the impact that tne truth will have on the licensing of a plant. Unfortunately, my experience is that OIA has very little, if cny, credibility among NRC employees, and that something must be done to give employees an avenue to bring up these types of concerns. I think an independent inspector general is necessary to monitor the NRC management system to assure the integrity of the regulatory process, including the protection of inspectors i like myself. This concludes my testimony. I am prepared to answer questions the Committee may have on my experience at Comanche Peak. 1 1 1 t 'd i ' I

I i l J l.I APPENDIX L i i t g s; s j. 4 f,. ~ 1 I t 4 f 11 i P ) i ) - t i 4 i ' + 1 t 1 l l l 4 1 i' I ' k r 3 f l t l 4 + g I 2 '^ ---- ~ ~ - - - - ' - - - - - -~ ~^-------__mg 8

p Qv-j N 1 STATEMENT OF GEORGE _A. MULLEY, JR. BEFORE THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS APRIL 9, 1987 My-name is George.A. Mulley, Jr. I_am the Assistant Director for Investigations at the Nuclear Regulatory Ccamission's Office of Inspector and Auditor (OIA). OIA investigates to ascertain the integrity of all NRC operations cnd, among other things, investigates allegations of NRC employee Disconduct. I am testifying today pursuant to a letter from the Committee to Commissioner Zech requesting my appearance at this h aring. On March 20, 1987 I was deposed under oath by counsel to the Committee. My presence at the deposition was a result of a written notice from the chairman. Subsequently, I had the opportunity to review the transcript of my deposition. This t tcstimony is a summary'of sworn statements made at the dsposition. I have been asked to testify today about.an investigation that I conducted last year concerning allegations of intimidation and harassment of NRC employees by their superiors in Region IV (Dallas) for reporting safety problems. The particular nuclear plant involved was Comanche Peak, which is owned by Texas Utilities Electric, has been under construction for 14 years. The Comanche Peak plant is not yet licensed to operate. I have also been asked to testify about the process by which the results of my investigation were reported to the Commission. < t '\\ i 'l<

As background information I have been an investigator for 17 Prior to coming to the NRC I worked as an investigator years. for the military. I have worked at the Office of Inspector and 1 Auditor since October of 1982, first as a criminal investigator and then, in April 1984, I was given the responsibility of overseeing all of the OIA investigations involving nuclear power plants. In April 1985 I made the Special Assistant to the Director, and in July 1986 I was promoted to my present position. I supervise six other investigators. In March 1986 OIA was contacted by Commissioner James Asselstine regarding allegations that he had received from a number of personnel working in Region IV, including Senior Resident Inspector Shannon Phillips, about harassment and intimidation from certain Region IV managemers for identifying cafety concerns. Gary Edles, then-Acting Director of OIA, told me that Commissioner Asselstine requested that I personally be assigned to conduct the investigation. Asselstine told Mr. Edles that Shannon Phillips had indicated a confidence in me personally, although he had no confidence in OIA. l The Commissioner instructed that during this investigation all interviews I conducted be transcribed. This was unusual for OIA, but I thought it was a good procedure because it would provide a complete and accurate record. Soon thereafter I interviewed Mr. Phillips and determined that the allegations he raised were significant. As the Senior Resident Inspector for Construction at Comanche Peak, it was his job to investigate Texas Utility's compliance with federal i {,

] l I l regulations in the construction of Comanche Peak. It was his belief that the condition of the Comanche Peak plant was indeterminate and that Region IV had not properly inspected the plant or enforced federal regulations over the plant's 14 year construction history. Additionally, Mr. Phillips stated that he had been harassed, intimidated and pressured to remove proposed findings from draft inspection reports by downgrading them to a less serious issue or daleting them entirely from the report. Mr. Phillips provided Gvidence that when he and other inspectors resisted downgrading or deleting at least 30 proposed findings, the Director of the Ccmanche Peak Task Group, Thomas Westerman, and another manager, Eric Johnson, removed violations from the inspection reports or cubstantially changed the report without the inspectors' knowledge and other times without their concurrence. In one case the Region issued a final inspection report using the signature p ge from a draft version of the report. This made it appear that the inspection report was approved by the inspectors involved --when actually the inspectors were neither informed of the changes nor told of the issuance of the report. I believe Mr. Phillips' allegations were exactly the types of concerns that should be thoroughly investigated by an independent investigator within the NRC without regard to the potential consequences of the investigation on the licensability of a nuclear power plant. The evidence showed that the attitude of Region IV mtnagenent was to create no further problems for Texas l ! l l

Utilities. The evidence also indicated that another Region IV manager, Dorwin Hunter, had been transferred off the Comanche Peak project.and later demoted as a result of his strong ecgulatory enforcement attitude toward Comanche Peak. In cddition, I learned of other instances of harassment and intimidation of NRC inspectors at other plants regulated by Ragion IV, such as Fort St. Vra:n and Wolf Creek. However, after having heard Mr. Phillips' evidence and interviewing other inspectors and consultants who raised similar cliegations, I became concerned that if NRC managers, both in Wnchington and at the Region, learned the full' scope of the m2ntgement problems being raised in Region IV, my investigation would be interfered with. I did my best to see to it that no one con,nected with NRC hacdquarters or Region IV knew the extent of my probe into the allsgations concerning Region IV's attitude tcward regulating nuclear power plants within its jurisdiction. Unfortunately, even my best attempts to assure an ind2 pendent investigation, including putting my personal credibility on the line, were not enougn :: Overcome the overall distrust of OIA. It was clear to me that :tner NRC employees and othat witnesses I wanted to interview did not believe that OIA could or would protect them from retaliation. I even had to use ShSnnon Phillips to get Individuals to talk to me because those individuals did not trust any representative of OIA. In June 1986, soon after I asked Mr. Phillips to help convince other witnesses to talk to me, I learned that the _4 i l i

Administrator of Region IV was going to remove Phillips from the plant site. Mr. Robert D. Martin, Regional Administrator, stated during a conference call with me and Sharon Connelly, the Director of OIA, that he was going to remove Phillips from the site because Phillips was getting other people to cooperate with the OIA investigation, and had therefore lost his objectivity. I b21ieved that this proposed action constituted a reprisal for Phillips initiating the OIA investigation.and I got NRC hsadquarters to stop the transfer. However, at that point the ccnfidentiality of the investigation was compromised. From that point forward I was under pressure from Victor Stello, the Executive Director of Operations, to complete the investigation and then to write the report. Given this pressure I felt that I had no choice but to limit this investigation to the specific concerns originally raised by Phillips and ignore, for the time being, the ;ther witnesses' complaints of Region IV's regulatory mismanagement of other plants and the evidence of harassment, intimidation, and pressure on other inspectors. The pressure came not only from tne Execat.ve Director of tha NRC staff, but also from my supervisor, Snaron Connelly. In lato July of 1986 I finished the field work. In September and October 1986, while I was trying to write the report, the procsure being put on me by Connelly was so great that I asked har for a meeting with Chairman Zech to determine if the pressure was actually coming from the Chairman's office, as she caid it was. Chairman Zecn assured me that there was no reason l l ?.

6 to be hasty in the course of either the investigation'or the k writing of~the report. He stated he wanted a thorough and complete investigative report. I then finished pulling together the-3,000-page investigative record into a draft report-length document which included what I knew to be negative conclusions about the management of Region IV in general, and certain individual managers in particular. I gave the draft portions of the report to Sharon Connelly in October 1986. .The conclusions that I reached were that: (1) Region IV managers acted inappropriately to limit violations assessed at Ccmanche Peak; and that Phillips was harassed and intimidated by Region IV management in an effort to get him to downgrade or delete his inspection findings. (2) The Region IV Quality Assurance Inspection Program, as implemented at Ccmanche Peak, could not be relied on as evidence of the safe construction 7f the plant. (3) Because of the unreliability of the information entered on the automated inspection tracking forms (NRC Form 766) by Region IV inspection personnel concerning Comanche Peak, data obtained from these forms should not be used for any NRC licensing decision. 1 Sharon Connelly personally participated in substantially l l modifying the draft report. Connelly removed the conclusions I had written. Connelly focused the report on the merits of the technical issues underlyino the violctions the inspectors had l found at Comanche Peak, which is an area outside the expertise of OIA. l

I do not recall any prior occasion where Sharon Connelly took'such an active role in the preparation of one of my reports. For the first time in my career as an OIA investigator, she ecsigned a group of OIA auditors to rewrite the report. She also rcmoved many of the statements from Region IV managers whom I had quoted. The statements substantiated the conclusions I had rocched and demonstrated the lax enforcement attitudes of ROgional management. For example, when I asked Eric Johnson how th2 agency would go about this late date trying to verify that at Comanche Peak was built safely absent all the necessary quality cacurance inspections and records, he responded, "We shouldn't worry about the past, and you just go out and kind of kick the tires and if it feels good, you go on from there." Another example was the removal of the explanations made by Thomas Westerman about why he was being very " tight" on issuing violations at Comanche Peak, more so than at other plants. He enid that proposed violations, unless " absolutely correct", would crGat a lot of " unnecessary paper work" and could lead to his crcdibility as a witness being questioned during NRC hearings. I thought that these quotations reflected, more accurately then my words could, a misconception of their responsibilities as rcgulators. Connelly removed the quotations because she said th0y were " inflammatory", and OIA could be criticized for taking things out of context. However, I had been very careful to put both the context and the references in my draft report. I b211 eve that by removing the conclusions and the quotations CannGlly downplayed the severity of the Region IV management 7-e

i problem. Her editing also prevented individual Region IV managers from being told that this type of lax enforcement attitude is not condoned by the NRC. Finally, it denied the l-Commissioners the opportunity to protect the integrity of the NRC's enforcement program. The report, or what was left of it, was finally completed and sent to the Commission and Executive Director Stello on November 26, 1986. It is my understanding that Mr. Stello then sought p]rmission from the Commissioners to distribute the OIA report throughout the agency and, as far as I know, permission was given. This was a very unusual way of dealing with an OIA rsport. It was also, in my opinion, a very unsatisfactory way of trGating the report because it disclosed throughout the agency tha testimony of the persons who had put their faith in the OIA office and in me personally. I was not consulted when'the intornal distribution was made so that I could comment on the d: cision and inform the individual witnesses. Within days of the release, I was contacted by witnesses who had given me testimony under oath and who were extremely distressed that their test: mony had been disclosed throughout the cgOncy. Most of these individuals felt that the distribution was t j dona purposely to expose them to possible future retaliation. It is my personal belief that the distribution of this rcport has destroyed the rapport that I had developed with these i witnesses and that it will be extremely difficult, if not i imponsible, to get any NRC employees or others to cooperate with 1 i i l

other ongoing investigations of Region IV management. l I am not aware of any corrective action the NRC has taken to dsal with the management problems in Region IV. On the other hand, within days of the report's release, Tom Westerman was awarded a monetary bonus for his work at Comanche Peak. I informed the EDO's office of my concerns about the inappropriateness of this action. It is my understanding that a stop payment was placed on the check. In conclusion, I would like to say that the problems brought to OIA by Shannon Phillips and others are extremely serious. The integrity of the regulatory process cannot-be assured if the rcgulators become the defenders and protectors.of the utility th3y are supposed to regulate. One former Division Director at Rsgion IV I interviewed stated: I did not consider that Region Four had a strong enforcement program, and I believe that a lack of a strong enforcement program has its roots in the attitudes of the senior managers. He confirmed that the lack of negative inspection findings could be seen as the attitude of trying to help TUGCO get their license. He said, ...I personally believe that the attitude of Region Four management was not to do more work wnten would cause-more

problems for the utility.

The Commissioners needed to be informed of this attitude and its alleged specific consequences at Comanche Peak and other nuclear plants regulated by Region IV. Shannon Phillips tried to do that and is now fighting to save his career. What happened to this investigation is an example ~that, y.

I-l points out the failure of CIA to bring serious management ~ problems to the attention of the Commissioners. In my personal ~ view OIA did not go far.enough in this investigation to ensure the-integrity.of Region IV's program. That is the end of:my prepared statement. I am now prepared to answer questions'from the Committee. l 1 i.-.

g wn. an..e nn i u m,m-s s, a -a. 2 a m.r e s u> --- + ~ ~- ~. ~... .a..-,~~ww APPENDIX M i h I 4 .t l [ 3 i f I i. I i i t t 4 d 1 'i i it t l; 1 I 4 i } 1 1 i 4 r 6 b a I f I ' i o l l l i f i i t t u Y l l l L-~- ~ = m ww.mw-w_n.7,--s,,,,,_,,,

U ORGINAL 0 t UN11ED STATES NUCLEAR REGULATORY COMMISSION i IN THE MATTER OF: DOCKET NO: INVESTIGATIVE INTERVIEW s ~. LOCATION: RAMADA INN PAGES: ~ 1 6h DATE: June 24, 1.986 t l l Aa-FEDERAL REPORTERS, INC. Offwul Reportm 444 North Capitol Strut Washmgton. D.C. 20001 (202)347 3700 NAnONWIDE COVMAGE

I

i MR. MUL*.EY:

The time is 2: 46 p.m. 2 [ and the date is j the 24th of June, 1986. We are in Room 171 3 L of the Ramada Inn, East Ridge, Tennessee. 4 Present is 8 h, g 5 l 6 etem h 6, myself, George Mulley, Special 6 Assistant to the Directot 's Of fice of t.ne Inspecto 7 k r and Auditor, NRC, and the Court Reporter, Mrs. Banks. 8 l We're here today to discuss with 9 S. 6 information he has concerning Region Four's 10 management of the Comanche Peak Nuclear Power Pl ant. 11 12 being first duly sworn, made the following answers to 13 the following questions: 14 EMAMINATION BY MR. MULLEY: 15 O 1 h W M, before we get started, would 16 you first briefly give us a resume of your experi 17 ences at Region Four? 18 A l Yes. I came to Region Four as the 6 19 @g 6 l' 20 W. g, Ig w 21 M with the l 22 where I i am currently employed. i 5 23 ) i When I came to Region Four, Mr. John Colli 24 ns was the Regional Administrator. Soon after I arrived i 25 it became apparent } that many of the projects underway u \\ l l I

1 in Region Four were not progress:.ng well in the regulatory 2 sense. These included the Cemanche Peak pro:ect, Wolf 3 Creek, Watcrford and River Bend. l l 4 Within a few months after I began work 5 in Region Four, an NRC task force was formed to handle 6 the completion of Inspections at the Waterford Plant. 7 At about the same time, but shortly afterward, an NRC 8 wide effort began on the Comanche Peak Plant. Neither i 9 of these efforts were under the direction and control 10 of Region Four, although there were personnel performing 11 in this group or in these groups. 12 M, later on in that first year, 13 pq ggM. 14 $ located in Kansas, andfspent much of my time during 15 the period of h at the W M N. 16 I believe personally that the necessity 17 for NRC task forces at Waterford and Comanche Peak were i 18 a direct result of the management resulting over a period 2 19 of time at these plants. That is, the Regional efforts j 20 were not sufficiently strong to manage the inspection 21 program and resolve the issues in a normal sense of 22 the regional responsibilities. 23 Part of these problems stemmed from 24 insuring that the licensee complied with the regulations. O one of the strong elements in insuring compliance with i i i {

g the regulations is enforcement. I did not consider that 2 Regicn Four had a strong enforcement program, and I believe 3 that & lack of a strong enforcement program has its roots 4 in the ' attitudes o f the senior managers. 5 Can we go off the record a minute? Because 6 I want to be sure I'm heading where you want to head. 7 IThereupon, there was a discussion off 3 the record.) g THE WITNESS: In my view, the attitudes 10 that existed were in three or four parts. First of all l was the attitude of the senior management about their 11 12 responsibilities. That is, did the senior managers evidence 13 strong commitment to insure conformance with the regulations, and take a tough attitude regarding enforcement? 14 In 15 my view, they were not doing this. 16 The second attitude related to the feeling 17 about the utilities themselves, and I believe that the 18 attitude about the utilities affected how middle and senior g, management conducted enforcement activities. If the senior g3 and middle managers felt good about the utility, friendly towards the utility and otherwise had confidence in the 21 c3 utility, there was a tendency to not take strong enforcement attitudes, even though there may be violations occurring. g3 24 The third attitude was the attitude towards g3 the individual inspectors, and this fundamentally affected t

d ]theirwork. When sen:cr management and middle management 1 2 let it be known that they had good feelings about the 3 utility, then the production of notices of violation because 4 of violations of regulations were disecuraged. All of 5 these attitudes come to bear on the individual inspectors 6 and how they perceive their Job as guided by their senter 7 management. 8 when Tom Westerman 8 was the enforcement officer, Mr. Check was the deputy 10 regional administrator, and h was the M 11 N h worked W reported i 12 t to the regional administrator, Mr. Collins. 13 It was clear to me that all of the attitudes 14 that I mentioned were in operation in making the decisions 15 on whether to take enforcement actica which started with 16 the notices of violation of conditions observed by 17 inspectors. 18 Overlaying all of the attitudes in the 18 inspection observations or findings was what I'll refer 20 to as the political climate, and that's the political 21 climate within the NRC and as influenced by congressional 21 perceptions which lead people to develop strong or lenient 25 attitudes, depending upon how ' he political climate within l t t 24 the NRC and outside the NRC viewed the licensee. And j 25 this view was not l strictly limited to whether or not he l l l

h was complying with the regulations. g O 2

got personally invcived in some of these 3

attitudes in at least one case where an inspector at the 4 Fort St. Vrain Plant, Mr. G.L. Plumlee told me that his 5 Job was not to focus on inspections and not to get in 6 the way of the licensee. He had received this guidance 7 from his section chief, Mr. Ireland, and M M 8 6 Thinking that he had misunderstood che 9 guidance, I asked Mr. Plumlee to meet with me in the presence-10 of Mr. Ireland and h In that meeting I 11 instructed Mr. Plumlee that his primary job was to inspect ut the licensee, and if his findings caused difficulty for g3 the licensee, that was a burden that the licensee had 14 to bear, and that his Job was not to be concerned about whether i 15 the licensee would tind violations or negative inspection 16 reports unpalatable and unwelcome. His job, rather, was 17 to do a good inspection Job and report the results. 18 Because of the serious nature of the attitude gg expressed by Mr. Plumlee and because I was convinced that rg he gained that attitude from his management, that is, i 21 Mr. Ireland and M I documented that conversation 22 as an instruction. Mr. Ireland and M never l E3 denied that they had, over the years, given Mr. Plumlee 24 a reascn to have the attitude that he had about his job E3 and how he should inspect and what priorities he should l 1

place cn his : me. 1 2 l EXAMINAT:CN SY MR. MULLEY: 3 Q And you had earlier discussed the attitude i l of senior and middle level management and with respect 4 5 to how they felt about a utility, and that this would 6 affect their enforcement posture. How did Region Four 7 feel about TUGCO specifically? 8 A 'In my view, Region Four felt that, and I'm speaking now of Region Four management, felt'that g t TUGC0 was either doing or trying to do a good job, and gg that they were tremendously burdened by the attacks on 11 12 their project by intervenor groups in that Region Four g3 did not wish to add to that burden. 14 Q Do you think this affected the attitudes of the nspectors and of the enforcement people? In other un I pg words, did you think they went out with the attitude of i l 17 trying to help TUGCO get their license? i up A I think that the lack of negative inspection,I up findings could be seen that way. That the lack of I i c) negatives is a help, and I personally believe that the 21 attitude of the Region Four management was not to do more work which would cause more problems for the utility. r3 c) This is difficult to establish firmly, 24 but when I looked at the facts, I found that the amount of inspection activities compared to the need at the c3

t i 1 plant was very small, and that for a considerable period 2 ! of time, almost all the inspections at the Comanche Peak j i 3 Plant were done by the resident inspector with very little 4 regional support. So there simply was a fact that the 5 inspections weren't being done. Whether this arose in 6 the minds of senior management because of personnel shortages, 7 because of other priorities or because of their attitude 8 about the utility would be difficult to segregate. g However, the same situation had occurred i to over a period of time at the Waterford Plant, and it was l 1 11 for these reasons that it was necessary to establish NRC 12 task forces at Waterford and at Comanche Peak. The root 13 cause for the task forces were, in my view, the lack of 14 over the years detailed, precise inspection and 05 identification of deficiencies and enforcement so the 16 corrective actions would be taken. We simply had a pile I g7 of things accumulate on each of those plants. ul 0 Region Four, would there be a higher priorityj gg than Comanche Peak that would Justifiably divert, you i o know, inspectors away from Comanche Peak to some other 21 Project? It would seem to me that Comanche Peak was a very important at that time. It still is. O A Comanche Peak was important at that time 24 and still is, but as I say, the t l g situation was taken out of the hands of Region Four and 1 l

1 placed on a higher level of management within the NRC. 2 l I can't tell ycu what ene cause was, out : can tell you 3 the fa'ct was that suff:cient inspection to ident:fy the 4 conditions, which obv:cusly there had not occurred, and 5 that the observatten of violations and notices of violations 6 which should have occurred didn't occur. I would not 7 have thought that tnere were pro;ects which had higher priority in Region Four other than the Arkansas Nuclear a s Units which were operating plants, and therefore, required to inspection to insure that the operational conditions were 11 being met. 12 I think this higher priority at Arkansas 13 would have been desired simply tuse the operating plants r.: 14 represented at the instant in c.me a greater risk to the I a 13 public health and safety than did plants under le construction. This was, however, a different kind of 17 inspection. The inspection of operations at Arkansas la was different than the inspection of operating, of plants 19 under construction, c3 Now, in addition to the Arkansas units, 21 there were the untes at Omaha and at, and the other unit [] in Nebraska were operating plants primarily covered by c3 operational inspectors. The problem with the plants 24 under construction is that deficiencies in construction c3 would eventually come to light and be more difficult to

? I 1 correct because of already completed construction. This 2 is different than operating plants where deficiencies 3 in operating people and operating procedures could be 4 remedied without significant rework in a constructed plant. 5 Nevertheless, Comanche Peak did not appear 6 in Region Four to have had 7 an aggressive inspection program for a period of years. 8 I had conversations with the former senior resident 9 inspector, Mr. Robert Taylor, who told me that he had to repeatedly appealed for assistance from the Region in 11 conducting construction inspections, and that these appeals 12 had not been responded to. The upshot of all this was 13 that the regional administrator had already given up t 14 regaining control of inspection activtties at Comanche 15 Peak and at Waterford, and this was simply implemented 16 soon after I arrived. 17 Q How would, I guess when we're talking 18 about regional management we're talking about e 19 and Check and N How would they pass on their j 20 attitudes concerning specifically TUCCO to the inspection, l 21 the resident inspector to let them know, you know, this 22 is, we think TUCCO does a pretty good Job. l They're being 23 1 unfairly criticized by intervening groups, therefore, i 24 let us help them along. How would that attitude get passed I 25 along to the inspectors? 4

) l 1 iq A well, first of all, the attitude was passed 2 on by lack of assistants to provide help to inspect the 3 plants. If you don't inspect you will not find any 4 violations. 5 secondly, one of the very favorite 6 approaches to discourage inspectors in writing violations 7 and writing reports on those violations is to worry their 8 work product to death and question it to a great extreme. 8 In dealing with the inspectors who worked 10 for me while I was in Region Four, I always conveyed to 11 them the attitude that if it looked like a violation and 12 smelled like a violation, then write it up as a violation 13 and let the utility defend itself againss that violation. 14 If the utility was able to show that it was not actually 15 in violation of the regulations, then I was perfectly 16 willing to retract the violation. 17 The attitude that led to worrying the 18 inspectors' report and the inspectors ' notice of violation 18 to death simply meant that the inspector would be [3 discouraged from writing notices of violation because s i 21 he had to jump through so many hoops to get it out. i j 22 Whether or not that attitude and those actions of worrying C3 the violations to death sprang from the attitude of wanting 24 to go easy on the utility or simply wanting to have an O airtight court case before any notice of violation was

g issued wculd be diff1; ult to tell. 2

n r, own view, the attitude of not 3

i regula' ting violations was the strongest force. I had I 4 a sufficient number of d:,scuss:,ons with h to 5 conclude that e. m really didn't believe in 6 enforcement. He didn't believe in enforcement as a means 7 of achieving compliance with the regulations, and so he 8 participated in worrying the paperwork to the point that g less than the number of violations that could have been to written were actually written. 11 I verwed the attitude of Mr. Check as 12 quite strongly anti-enforcement. Mr. Check on more than 13 one occasion told me that utilities had been licensed 14 by the NRC, had been found competent oy the NRC, and that 15 we should be extremely cautious in saying otherwise, 16 particularly in violations. So I considered Mr. Check 17 a very weak enforcement advocate. gg

n addition to that, I believe that gg Mr. Check was greatly influenced by the political aspects o

of any of the operations we conducted with the utilities 21 or against them in terms of enforcement. In fact, I believe g that Mr. Collins, who was a regional administrator, was g also very much swayed by the political environment within 24 the NRC and in conjunction with the licensee. O Q How did, how woul 6 go about

1 1 1 worry:ng inspection findings? Would he confront tne 2 inspectors head-on? Just drop violations from tne report? 3 ! How would he go about that? l 4 A While I was there I had no knowledge that 5 & 6 ever dropped a violation from I report from 6 l one of my inspectors. (El would have direct contact with 7 i the inspectors for the intended and correct purpose of 8 being sure that the notice of violation was written clearly 9 and well written with proper citations against the H) regulations. That was his primary Job. 11 In addition to that, of course,4BD had [ 12 t the job of keeping track of the violations so that we 13 could see that violations were answered and otherwise 14 responded to. I'm sure that he had T.any conversations 15 with inspectors, and some of them got back to me, and 16 I can't remember the specifics, where he would argue that 17 something really wasn't a violation, and as I say, that 18 wasn't my attitude. If it looks sufficiently like a 19 violation I would let the utility defend itself, rather 20 than have 6 defend the utility on violation. 21 I don't say that 22 contributions were all negative. He did call our attention 23 to the need for greater precision in our language a number 24 of times, and this was beneficial. But overall, 26 h attitude was anti-enforcement.

1 j In addition to direct contact with 2 inspectors, dIl nteracted with section enicfs and branch 3 chiefs on the production of inspection reports and any 4 accompanying notices of violation.

n ents interaction 5

I was told a number of times that h didn't think 6 that a violation was an appropriate vehicle to achieve 7 the corrected action. I can't recall any instance where 8 I agreed with that decision on his part. 9 Q How would he prefer to handle it? 10 A He would have preferred to handle it by 11 discussing the matter with the licensee and by having 12 any documented record be observations in the inspection j 13 reports, rather than clear violations. 14 0 How would E p handle a disagreement. 15 between himself and an Inspector? Fcr example, if he 16 didn't think something should be a vtolation, if he wanted 17 to downgrade it to an unresolved item or something like 18 that? Do you have any knowledge of

nspectors Just 19 agreeing with his call or how he handled that?

D A I can't recall any at the moment, and 21 by and largo I relied upon the people that worked for 22 i me to work through that process. But M normally l O would have interacted with the section chief or more likely i i 24 the @ h to gain his acceptance of h conclusions, and so you see, we have people O i' l l l l

1 lined up :n a rtw and an inspector who wants to write section chief who may have no streng feelings 2 a violation, a + l one way or the other, and

• N attempting to 3

make a call based on his attitudes, as well as the facts 4 5 available to him, and being influenced by N 6 who basically had an anti-enforcement attitude, and in 7 someway that I couldn't testify to influenced by the 8 regional administrator and deputy regional administrator. 9 I'd say at that time that, and I'm speaking 10 now of the time framo when the relationships 11 between regional administrator and the deputy regional 12 administrator were poor. They simply didn't like each I g3 other, and they didn't share office responsibilities. 14 In fact, you might say there were at least two camps in 15 Region Four. That camp who, that didn't like Mr. Collins, 16 and that camp that was more dedicated to doing their job 17 than deciding whether they liked him or not. That didn't 18 have anything to do with whether they did their Job or i not. gg 3D I forget the exact date, but Mr. Martin 21 replaced Mr. Collins as regional administrator. From j 22 the enforcement viewpoint I considered this an improvement, l 23 but my view on that was more influenced by what Mr. Martin i 24 said than by what I observed. Mr. Martin repeatedly said l l as in staff meetings and in briefings with the staff and i

l g interact; ns with tne staff that, to quote him, "I am 2 horse shit on en forcement. I am a strong enforcer." And 3 so he attempted to convey an attitude that : full, supported, i 4 that if it looked like a violation then write it up as 5 a violation. I dcn't believe that he was fully successful 6 in this anymore tnan some other managers who simply saw 7 the end product, not knowing that discouragement and change and downgrading had occurred during this process. 8 9 The one brightest spot in the lower levels u) of management supervision was a gentleman named John l I 11 Jaudon, whom I relied upon in an unofficial capacity to l 12 be sure that the violations were written at the highest i 13 justifiable severity level. 14 Mr. Jaudon had the training and ability i un to upgrade a violation to a higher level and upgrade an i 16 unresolved item to a violation, and in this sense he differed-17 from most of the other people in Region Four at the time 18 that I arrived. I don't believe, and I didn't observe gg that Mr. Jaudon's attitude was pervasive in the i 20 organization and over the period of time I was there, 21 I believe that the attitude weakened because of the 22 influence of 6 and Paul Check. 1 j I 1 23 Q WO NO 24 A D Q Okay. How involved was Mr. Martin based

1 on the short pericd cf time that you were at the Region, 2 he was regional administrator, how involved was he witn 3 l the actual working of inspectors, for example, at i 4 Comanche Peak? Did he have a fee' for what was go ng 5 on at all? 6 A I don't celeive that Mr. Martin had a 1 7 good feel for what was going on at all. 8 6, a s the NRC efforts on Wolf Creek through the commission decision fof full power g 10 licensing. When M to Region Four, Mr. Check 11 instructed me to pick up l 12 13 One of the first things that M in con] unction witn Mr. Martin was to 14 ~ 15 start to regain control of the inspection efforts at 16 Comanche Peak, and for that purpose we established a task 17 force at Comanche Peak of numerous inspectors. 18 And I'll back up a little bit and say 19 that when - -- " " was told titat the 20 division was undermanned and overworked, and W that i 21 there were numerous vacancies that simply weren't being l 1/B filled. I believe that the correct number at that time g g was 16 vacancies in the division. y one of the first actions that h after g h out that the vendor program was being transferred i

f 1 to headquarters was to determine whether there were good 0

l "

people 2n the vendor program branch who wanted to stay in Arlington and whether those people were capacle 3 of l carrying reactor inspection responstb111tles. One of e 4 1 I the attributes that h for was their attitude about 5 6 enforcement, particularly an attttude that I expressed 7 as holding the licensee's feet to the fire on the g regulations. g Because of that and because of the i background of the people and h with them, i 10 11 Mr. Ian Barnes, Mr. Lee Ellershaw out of the vendor program because of their very strong commitment 12 13 to enforcement. In addition to that, and I will say 14 against a lot of advice frcm Mr. Check and M h 15 Mr. Shannon Phillips to stay with the l 16 organization. The advice for not keeping Mr. Phillips 17 was based primartly on his performance at the South Texas is project where he had identified a num=er of deficiencies j gg in the licensee's operation and had participated with f 20 a special task group at South Texas which eventually led l 21 to rather momentous changes in the conduct of the South a Texas project. All of this occurred before (gggdEB, but y of all these events and the advice that i 24 6 for not selecting Mr. Phillips was that you g couldn't trust Mr. Phillips to be part of the team. t

j My own conclusion was that you could trust 1 [ him to do his work, and um and sent 2 3 i him down to Comanche Peak to carry one of the main loads ^ 4 on the construction inspection actieities. While heamuseek 5 that he was doing a good Job. 6 I don't know that I answered your question, because I had to start way back wit'h the people. 7 I a Q Yes, I think you did. But you brought g up another interesting point concerning Shannon Phillips to and the activities he was involved in in South Texas and it how that carried over. Some attitudes that were expressed 12 by 6 13 Do you know of any rtpercussions that g4 Phillips suffered at Region Four as a result of the findings 15 that he, you know, participated in at South Texas other than,! 16 you know, the advice not to keep him on, but during the g7 periods of time that you were at the Region was there gg any sort of ca.r.paign against Phillips? Was he, you kr v, gg blacklisted? j 20 A I can only say what I was OL.e to personally, I I 21 observe. Again, reflecting that muct C, qQlJ SASb was spent 22 out of town, I didn't see anything that I could call a 23 strong blacklist or campaign, but certainly on the part 24 of and h and a few others, there was a g continuing stream of comments about watching Mr. Phillips l l

ti I and not trusting.v.r. Phillips and watching your back with i 2 j Mr. Phillips. Most of that I concluded was based upon l 3 his perforniance at South Texas and his involvement with 4 Region Three personnel who did a special :,nspection on 5 South Texas and revealed many things that were apparent 6 to Mr. Phillips pr:,or to that, but hadn't been acted upon 7 by Region Four. So I think that there was some distrust, 8 some dislike and some apprehension about having a strong 8 willed, meticulous and capable person on the staff that to wasn't easily swayed to your point of view. 11 I regarded that as strengths not weakenesses.l i 12 Q You earlier spoke about the political 13 climate and how it affected Region Four management concerning 14 Comanche Peak and TUGCO. What was the political climate 15 at the Region? 16 A Well, the climate, whether it's political 17 or not, was one of good personal relationships between 18 top management and, top management at TUGCO and top 18 management at the Region. I say good personal relations O in the sense that people always acted more than civilly. 21 They acted friendly. They had a number of instances where 22 I would say that Mr. Check and others simply wished to 23 leave the utility alone to do its job, and to insure that 24 the NRC people didn't interfere with that job. O We even had, at least one instance that

.i e( ~ -1 .il. you're familiar with where there was a leaning over-backward 2 to not get involved in something that could have been 3 the business of the NCR, particu.'arly considering the 4 total climate on that pro:ect and all surrcunding 5-circumstances. I think that politically the NRC Region 6-Four management found it necessary, and I don't say it 7 was really necessary, but they found it necessary to choose 8 sides between TUCCO and the TUGCO adversary.so that there 9 was a choosing up sides in ct least the philosophical 10 sense and sometimes in the action sense between l i 11' intervenors and TUGCO. 12 Whereas I thought that-if there were sides, s 13 there were three sides. The NRC side, the utility side 14 and the intervenors' side, and we simply didn't have to 5 15 choose. This all gets evidenced in small ways and small 16 changes and attitudes which overall give a bigger _ picture, i 17 referring to people who alleged problems as alligators, 18 not being really interested to determine what the problems 19 are seen by the intervenors. Referring to them and thinking 30 about them as just a pain that has to be endured, I think i 6 21 tended to place the regional management on a side that 21 they didn't need to be on. i 23 I remember at least one instance where 24 a former TUGCO employee wished to discuss the various 03 allegations that she had against TUGCO and Mr. Check was f t ,-s.-- ,-,,m. .,n 7 ,.n,

l 'l I h given that assign.ent to 90 interview this person. He l 1 l 2 asked me to go with ner, with him, and we spent a :umcer i 1 3 of hours at her hcme understanding and having described i l 4 to us these allegations. From that point onward, 5 Mr. Check really didn't want anything to do with it, and 6 the follow-ups were left to me, and even after some of 7 the follow-up was assigned to 6, who's another 8 player in this game, W wanted me to continue 9 to follow that up. 10 I'd say, I don't know why that was except 11 to say that it seemed to me they had chosen up sides and l 12 they were in the etemy camp anytime they were doing that. i 4 13 But these are small indicators with the cumulative effect 14 of not having what Mr. Martin wanted, a very strong 15 enforcement program, what he said he wanted. And all 16 of these things or many of these things, I should say, 17 occurred before he ever arrived on the scene. But there's 18 a buildup of small actions and attitudes and words and gg actions regarding the inspecticn reports and no*1ces of 20 violations which have the cumulative effect of not 21 encouraging the findings and write-up of violations. 22 Q So even though Mr. Martin, when he arrived 23 at the Region and talked about a strong enforcement posture,j 24 you don't believe his actions or his involvement with f 25 the enforcement at the Region evidenced that type of l

i g attitude, t h e -i ' A

think he made good speeches and : think 2

\\ j he made, and he provided good polity, but he had so man-3 I 4 things to do that I would not have expected him to 5 personally be sure that the lower levels were pushing 6 up notices of vic'ations, nor would I have expected him to do detail checks on whether or not all the people in g the Region were following his guidance. I simpl/ think 9 he had too much to do in a short time to have expected 10 it to be effective, because the situation had existed 11 f r such a long time. With respect to any enforcement l l 12 actions that I took Mr. Martin was fully supportive, including civil penalties which I generated. 13 That is, I generated the notices of violations which led to the 14 15 civil penalties, and so he was supportive of those. 18 I would say that there was only one 17 instance where my ;udgment differed from his, on the 18 timeliness of issuing a report which contained a violation. gg And in that case he simply delayed it for a variety of 20 reasons, rather than issuing it in a more, what I i 21 considered to be more timely manner. I would say that Mr. Martin was supportive of a strong enforcement policy. 22 He just had not been able to achieve what he said he wanted 23 y to achieve M. g3 Q Getting to a more specific area, if we

.i ] ] could talk for a minute about, I don't know if this.s g 2 an accurate characterization, but the two differr.nt i 3 philosophies concerning the importance of cor. ducting 4 inspections of hardware versus the imporeance of quality 3 assurance type inspections. 6 From talking to some people at the Region 7 it seems to me there are two different camps. Some people g seem to feel that really what's important is looking at specific items of hardware and making sure they've been g constructed properly and some other people believe quality to i s 11 assurance is very important. Part of, you know, safety i 12 of a plant, and that we should be spending a lot of time I g3 with quality assurance. 14 Do you feel that either one of these two 15 Played a lesser role at the Region or did the Region emphasize one of the two more than the other, quality 16 g7 assurance over hardware type inspections? 11B A Well, I think that fr m the regional 19 viewpoint the emphasis seemed to be on hardware. I g considered that to be a fundamental mistake. It is true that if you've had an unreliable program over a period 21 23 of years you don't have any choice but to inspect the i O hardwarc to see if the correct hardware came about in 24 spite of the program. I did not see strong emphasis from the leadership in the Region on quality assurance programs, 0 l l i

t j but so.?e of tnis has to be looked at in what is truly 1 2 [. a mixed perspective. .i 3 l From a regulatory viewpoint the regulators l 4 rely upon the utility to do the right ;ob. They rely 5 on the utility to have good engineering, good organizations 6 and good construction. And they rely on the utility to have good quality assurance programs which help insure 7 8 that what should be done is done. 3 It's a common phrase that you don't inspect to quality in. You must put the quality in there during all these processes which you are relying upon to~ work. 11 Inspection can only tell you that your programs aren't 12 working because the hardware is not 13 right. I think that i t it's easier to inspect hardware than it is to inspect 14 i a quality assurance program and reach conclusions on that, 15 i i 18 and I think that in the past there must have been some 17 emphasis on hardware rather than on the program ytelding 18 the hardware. 13 From an NRC perspective, the man power o allocated to direct inspections was extremely small compared, to the items which could be inspected, so by'and large 21 } we never could have been expected to inspect more than 23 23 about one percent of the plant. Some inpsection was intended to determine whether the program was working correctly 34 to yield the right kind of hardware, and that's a good E3

1 1

I check on the program, but the probacility of uncovering 1

2 small defects in the program by direct hardware inspect;en I 3 l was extremely small. I 4 At the same time, the probability of 5 determining a program that's really gone awry through 6 direct inspection of hardware is quite good. We would 7 expect to see that. We would expect to see pervastve 8 hardware deficiencies because of pervasive breakdowns g in quality assurance, pervasive breakdowns in engineering to and design and construction processes. This is what you 11 would expect to see as a signal. l 12 But there was no way that the NRC could g3 inspect the plant to insure that all the components were 14 of quality. We simply had to rely ;pon the utility to ts do what they said they were going to do in program and H5 hardware and to inspect to see that they were doing that. g7 I think there is a general attitude that gg things can't be demanded to be perfect, but certainly gg we demanded at least reasonable assurance of public health 20 and safety protection. So I think it's mixed, a mixed 21 situation that we have. 4 22 You've got to inspect the program and g you've got to look at the procedures and you've got to i 24 look at the record keeping and you've got to look at the l l c3 hardware, and in order to achieve an across-the-board i 5 i

...e I c:n:l u s i c.- that tne utt.ity is comply:ng w tn all of 1 1:3 2 comniements and c:mplying with all of the Regulatory i 3 requirements, iu " ave to do it all.

f you emphasize i

k one versus the cener, 4 then you rely solely on the utility I 5 l to do a good ;ob w;th nc inspection or no good sampling 6 of its performance at all. 7

don't think that Region Four could have 8

been considered as naving a strong orientation to quality 9 assurance programs from the programatic viewpoint. Had to they had such a strong orientation over the years then I 11 the results later seen at South Texas and at Comanche 12 peak and at Waterford never would have arisen. 13 Q So you, in your opinion, had Region Four, 14 let's take Comanche Peak, had Region Fuur emphasized the 15 quality assurance aspect of the inspection program that 16 maybe some of the problems at Comanche Peak right now 17 may have been resolved at an earl:er stage by the utility '8 having a better pr: gram set up, identif;ed,,rograms? Am 19 I getting that right? E3 l A Yes. Yes. And I believe that is 21 fundamentally true. I think about this as a principle 22 of leverage. The program is going to yield hardware based E] cn two things. The strength of the program and its 24 correctness and the capabilities of the construction C forces from the craft on up through the supervision. If u

1 the program for. quality assurance is not strong, then 2 any~ deficiencies which occur in the construction ogant:ation 3 ~ will simply be magnified. 4 At the same time, if you have a strong 3 quality assurance program, then the tendencies of 6 construction to do a poor Job is overwhelmed by a good 7 strong quality assurance program. 8 But as I say, if you are, if you focus 8 on and give priority to inspection of hardware, you must to realize that your leverage is very, very small. You must 11 focus, you must give considerable focus to the program 12 and utilize inspections of hardward to insure that what 18 you think is being done in the program is actually showing 14 up in the field. It's more of a confirmation. g3 You want to be advised if you see bad 18 hardware and you want to have it recognized that it was 17 a real foul-up in the program which yielded that. l You 18 don't want to have bad hardware explained by an inadequate i 18 program, and so I think at Comanche Peak, TUGC0 did not i l E3 have a strong quality assurance program and the lack of l 21 a strong quality assurance program yielded a lot of hardware l i O that wasn't what was intended. And the Region didn't l C remedy that sitution over a period of years. 84 Q so if Region Four had not conducted an O l inspection of TUGCO's corporate QA program for the past l 1

1 ten years, tnen the Regicn itself could be at fault, feu 2 feel. for some of these problems that showed up in the 3 field at this late date? 4 A Yeah. I think that that would be a very 5 severe deficiency on the part of the Region to have not conducted an inspection of the quality assurance program a 7 and narrowed the effects of the field and taken corrective a action. 3 I don't believe that the NRC ought to up do the utility's job for them. I think if we're culpable, we're cuplable against our own regulations and it 12 our own job descriptions and our own responsibilities. 13 The fact that we didn't do something which would have 14 corrected a problem meant we didn't fulfill our obligations a ~ to the public and to the taxpayers and to our own oath 15 up of office, rather than that we didn't fulfill any obligations 17 to TUGCO. They were sufficiently staffed. They had sufficient ability to hire good people and to pay good un up people so that even if the NRC never inspected 'them, they r; should have been expected to have a good program. 11 It's simply that if we didn't do a good { n job and we didn't fulfill our obligations, and I don't i E3 think that the utility can lay off on the NRC their own 24 sins. Certainly, we would have well represented the public i i o both in terms of health and safety and in terms of expense w

I _to the public and in terms of public welfare had Region 2 Four demanded and obtained better quality assurance from 3 TUGCO. 4 Q Let me give you a hypcthetical scenario. 5 If an inspector during :,nspection of a piece of hardware i 6 finds no problem with that specific piece of hardware 7 but does find a problem with the record keeping and QA 8 aspects, do you feel that you would still have a valid 8 violation, even though that, you know, even though the 10 i end result or specific piece of hardware is, the one looked I II at is fine, do you think that the violation involving, 12 or the deficiency involving quality assurance would be 13 a valid violation? 14 A I certainly do. And a very important 18 violation, because now you have good hardware, that I is happened in spite of an inadequate program. And by the f 17 way, you think, or you are convinced that you have good 18 l hardware in spite of the program, but I must say that 18 if the records which document the hardware and all its O attributes and all its needs are deficient, you have i 21 some inherent doubt about whether what you see is what. O is actually there. O Q On that one specific you looked at? 24 A Even on that one specific thing, because O record keeping is important because it yields the pedigree i

s.' t and ;n thoroughbred horses a pedigree is an important f thing, and care is taken in those, in nuclear plants, 2 3 if you don't have a certified material test report, for 4 example, and if you don't have a documented material content 5 of a component as a pump or a valve and you don't have 6 the quality assurance records that demonstrate that what 7 was done was what should have been done, then you're simply relying upon surface observation on your part or even a g perhaps better, relying upon the operational experience to of the component, but all of these things go hand in hand and the quality assurance program is intended to help 11 12 insure that what is needed is built, and it is no g3 substitate for that program to simply do an inspection 4 of the surface attributes of the component or of the whole 14 15 plant. le By the same token, you cannot tell 17 whether a concrete wall six feet thick is well constructed gg by looking at the surface of it. You must rely upon the g, proper placement of re-enforcing bar, the inspection of so that re-encorcing bar, the documentation that says it 21 was put in accordance with design, the inspection of the 22 concrete that's poured. The samples that are taken to g insure that the picture is correct, and of the proper j strength and all of these things go in so that when you're 24 through if you don't have those records and you don't E3 i i

!'l I have that pr0 gram enat yields those reccrds, then you 2 simply are rely;ng upcn the surface Observations. 3 And at Comanche Peak there was a large program to determine whether, help determine whether what 4 5 was below the surface was what we thought was below tne 6 surface on concrete. These were referred to as Schmidt 7 Hammer tests, to s =pi-, determine or help determine if 8 we had good strong concrete, because you can only see g the surface. 10 Q During Region Four, did 11 you over have any occasion to discuss with Shannon Phillips 12 any concerns he may have with the way Regional Four management 13 was handling Comanche Peak? 34 A I can't recollect the details of any at 15 the moment, but M Comanche Peak rather routinely, 16 and if Shannon Phillips were on site I generally had a g7 conversatiors with him. He did, from time to time, express gg to me concerns that he had about what ".e was finding in gg his inspection, and in those : ;ust simply always encouraged 20 him to bring them forward, put them in reports and write i 21 violations and so forth when they were due. I 22 Shannon Phillips to some degree was in g3 an awkward position, unfortunately. He was the senior 24 resident inspector for construction and he had certain c3 responsibilities at the same time because of the enormous

1 1 1 amount of work that had to be done, we put down there 2 l 4 a task force with other people on it doing in a catch-up l 3 j mode what.1eeded to be done over a period of years. So 4 in order for Shannon Phillips to be fully effective in 5 the best interest of the NRC, and of course, the Region 8 as they're charged, he would have had to have close working 7 relationships and good interactions with all the other 8 people who were part of the team. I think that from time 8 to time he didn't feel a part of that full team. 10 The process which was set in motion in 11 the summer of 1980, simply hadn't progressed to the point i 12 that I would have said something significant has to be i 1 13 changed. We always encounter, in dealing with people, 14 personal preferences, personal emphasis and personal likes 15 and dislikes, but during the time that I was there when 16 we had this group going I didn't observe that there was 17 a condition which needed any significant correction. 18 I do think that Mr. Phailips would have 19 had and probably expressed to.?e, I don't recollect the 2/A 3D specific circumstances now, concern about whether we were 21 giving Comanche Peak a real good shakeout based upon things 22 that he would have perceived in people's attitude. I 23 don't think we had enough factual evidence to say one 24 way or the other that we were going to reach the end of 25 the road and do a solid job in the late sammer of 1985, l

I g 1 and into the early fall. simply didn't have enough 2 evidence. apon the operational inspectors 3 I to do their 3cb, the resident inspector in charge of l 4 construction to do his ;ob and to work closely with all 5 the other people involved in the task force to be sure 6 that the composite, we did the correct NRC Job. 7 I would not have been surprised if subsequent events yielded some disagreements between people 8 and perhaps caused some significant differences of opinion. g 10 Particularly because of the cast of characters that werc 11 involved. I may, if my memory were suf ficiently prompted, l recollect particul..r things that Shannon Phillips said l 12 i 13 to me s o me time. They just don't occur to me at this 34 moment, but if you have any that would help me, I'd be pleased to go ahead and deal with them. 15 16 Q I have one instance here that I'll discuss g7 in a little bit. Did you ever have any occasion to witness gg any confrontations, for lack of a better word, between 19 and Mr. Philit; s concerning disagreements over inspection reports or maybe even involving 20 involving what should be in an inspection 21 22 report? Whether a finding was a valid finding, anything i like that? n u A 24 I simply don't recall at the moment, but I'm trying to go back a couple of years, almost a couple g

t of years new : n.9 y.r,e m o r y, J.nd I may have. I Just don't 2 recall. 3 Q Okay. Let r e ask you a more detailed 4 question and that concerns the NRC Fern 766 which, :. f 5 M is, I guess computer input data form that's 6 prepared after inspections to show certain inspection 7 procedures and mcdules and whether the work was done on 8 that procedure during the inspection report. g 6, 2 M involvement to at all with this program? 11 A Well, yes, because 6 were i i l 12 required to provide input to that. The intended result 13 from the people who prescribe that program was to be able 14 to capture the data on inspection hours and to keep track I 15 of modules that were executed. 16 Region Four M 17 found that program to be highly unreltable. I didn't 18 believe the information that was tn there, and my 19 disbelief was vindicated by W Wolf Creek. 20 At Wolf Creek 6 the data on f 21 historical inspections that was in that system, was in 22 tnat system that uses 766's was so poor that h i g an inspector from Region Two named Kenneth Jennison and a he did a hand sort and data accumulation on the total i 26 file on Wolf Creek to determine from inspection reports

15 1 what was inspected, wnat nodule was executed, how much 2 inspection time was spent and so forth. And he accumulated h en Wolf Creek solely because S 3 ggES$b the system in place was a snameles. Strictly 4 5 unreliable. 6 Q What would cause the unreliability of l sometning that would seem to be so straightforward where, 7 a I know, from the way I understand the system to be set up you have an inspector who does an inspection. He then g 10 prepares a 766 form which outlines what he just did in i 11 the inspection, and then that form is put into the system. Do you have any indication as to why this system was 12 33 unreliable? 14 A n my view we had some major contributors 15 to that. The first starts at the point that you started 16 it with, and that's the input of the inspector. The system 17 results that h for Wolf Creek indicated gg inspections done in the 766 system which tne inspection gg report didn't support. Simply there was a discrepancy o between what was on the form and what was just filed in 21 the inspection report. I think that there's a variety g of reasons for that. Carelessness is one, and that's i o an unimportant aspect. I don't think it was a big 24 contributor. O The second is that there was an overall l i I t

I attitude that ;f you can think of something that would 2 have )ustiflod your saying that you've done something, 3 then mark it off, even though you didn't put anything 4 to justify that conclusion in the inspection report. It's, 5 I loc'ed at the reactor vessel as I was walking by. That 6 fulfill the obligations under this module, but I must 7 don't put in my inspection report that I looked at the 8 reactor vessel as I was walking by, because that really 8 isn't an inspection. And this is an example I Just dreamed to up to illustrate what I mean by the desire to fulfill 11 the module obligations separately from fulfilling the 12 inspection obligations. 13 And when I say that, I mean the module 14 obligations as relate to the record <eeping. 15 Second problem, of course, was correct it input into the system by the people that took the data 17 from the 766 forms and put them into the system, and then 18 the fact that the whole system was maintained by the 18 administrative organization to keep it up to date and 80 there were always enormous dif ficulties in getting data 21 out, and I shouldn't say enormous. There were more than 22 we thought were appropriate difficulties in getting data 23 out and doing sorts and so forth. But I would say that l 34 by and large the largest contributor to discrepancies l 25 between actual inspections and what's in the 766 was I

d l 1 !i a tendency to cal'. scmething an inspect:,cn :.n fu;f: ;;a; f 2 the requirements of the module wh:.ch rea;1y weren't. 3 0 Ncw, the way the syste.m was set up, did 4 you get cred:: for doing a port:.on of an inspection module 5 or procedure, there should have been some documentation 6 on the inspection report. Is that true? 7 A Yes, that's true, and that's my view. 8 If you did suff:.clent enough, a sufficient amount of work 8 to fulfill the requirements of the module you should have 10 written at least a few sentences in the inspection report 11 that says you did it. 12 Q Or at least to acknowledge the fact that 13 you looked at it? 14 A Yes. I don't work on :nat calibration, 15 you know. You either did it or you didn't do it. 16 Q So I guess the situation M at Wolf 17 Creek has been duplicated at Comanche Peak where we've 18 had examples of the 766, shows certa:,n inspection to procedures going from 10 percent to 100 percent complete O and given credit to an inspection report, we go back to 21 the inspection report that claims to have done 90 percent u 22 I of inspection procedures, not one word in that inspection O report that shows anything was done at all. That, to 84 me, is inappropriate. Would you agree to that? O A That, to me, is inappropriate, and that's

2i 1 why h the 766 to be an unreliable indicatte of the 2 inspections that had been done at Wolf Creek and 'why W i l M the person that J :.? C'Riley loaned W, see wna 3 4 the inspection report says, we'll rely on them to tell l 1 5 us what was done. 6 O So far as M Wolf Creek, then, 7 what was written down is what counted? If it wasn't written 8 down, it didn't count? g A That's correct. 10 Q You feel that attitude is pretty much the prevailing or the way it should be? 11 12 A I don't think that attitude prevails, 13 but I do think that's the way it should be. 14 Q Right. And if a person goes back to the 15 NRC and IE Manuals, you think that all procedures would 16 support that sort of attitude? 17 A Yes. 13 Q Getting back to Region Four's attitude concerning Comanche Peak, during one of my interviews 19 of a Region Four inspector the individual outlined frar 20 t 21 me an incident that he recalled involving 22 attending a meeting involving a cable tray hangers and also at the meeting was 24 and apparently 6 had said that there was nothing wrong at Comanche Peak and what was 26 I f j l l ~~ ~

j reported to me, $ ::ld h that as long as I didn't want to hear 2 g were that there was nothing 3 anybody at Region Four ever say again wrong with the Comanche Peak and that this person who 4 I interviewed said that you had heard this continually 5 6 from Region Four personnel inspectors and supervisors or whoever, M in a meeting and heard Mr. Counsel, 7 8 who was the head of TtGC0 at that time 6 they were 8 going to do a three million dollar rework in Unit 2 and to he didn't know how much it was going to do in Unit 1, 11 and that for Stone and Webster to go back and do a complete l 12 evaluation of all piping design and hanger work in both i 13 units, and that for somebody in Region four to say there's 14 nothing wrong with Comanche Peak, all this was ludicrous. 15 A I recall an instance, I can't give you 16 the date or time when N said that, but 17 was not alone. Mr. Collins expressed the 18 same attitude when h M 18 in on meetings where a Region four team said, "This plant i l D looks fine. Why is it still not licensed?" And that 21 was based on their inspection observations. 22 It would be difficult to me, for me to i say why inspectors or regional management had that attitude, j 23 i 24 but they did have a lot of input from people that, their 26 observations were valid and reliable. I personally heard l l

4. i. t j Region Three team say that based upon everything they'd 1 2 done, that the plant looked good. It looked better than 3 many that they had seen and so forth. And I believe these i 4 kinds of signals tended to affect the middle manacement 5 and top management attitudes. 6 As I've already said, the inspection results f aren't always extremely reliable indicators of the true 7 a situation, because the amount of things, the number of things inspected is small compared to the total. 3 We think to we've done a good Job, but if we inspect one percent of gg the plant, and that's across the board, one percent of 12 the concrete, one percent of the structural steel, one g3 percent of the primal system, piping and so on and so g4 forth, so the utility has hundreds of times as much inspection going into the plant as the NRC does, and this 15 is all controlled by the quality assurance program, pg g7 including training of personnel, the qualifications of un personnel, the documentation and all aspects of doing us their job. [3 That's why the program in quality assurance, 21 just from an inspection viewpoint, is an extremely i c3 important program, because they magnify our efforts or D their efforts are way beyond our capabilities, and if I 24 they do it right, then we can have a much higher level O of confidence than we could have based on our own

4 i t observations. 4 Sc fes, Mr. Counsel said, "We've gone 2 3 out and we've hired nundreds of pecple to 00me out and i 4 inspect, and we're finding things that need correct:en i 5 and we're finding tnings that we're unsure about, and 6 we have a large program to try to correct this." And 7 I didn't see why Regten Four snould be saying that the I g plant is all rignt and there's no problem if even the g utility couldn't say that. I don't believe we ought to u) get out ahead of the utility, telling him he didn't have i 11 a problem when he was saying he did. But this is an 12 attitude. i 13 It's not an unusual attitude to think g4 that the difficulttes that a plant u encountering are 15 all political. It's up a blatant untruth. If the problems weren't there, there g7 won't be any problem. If they weren't hardware problems, 18 record keeping problems, quality assurance problems, then gg the utility could stand up and say, 'Here is what I've O done and this proves that I've done it right and here 21 are my people and their qualifications and here are my a records, and you can look at them." And then you don't O have to raise the question of whether something is right. u You'll see a record that's a reliable record that O something was done. If you can't see that, then you

r I I don't have any right to beleive that the plant is built 2 in the way that :t was intended to be built. 3 And se, I didn't think that attitude that l 4 the plant was okay and that things were all political 5 and tied up in intervenors concerns and so forth was a 6 valid attitude at all. i 7 This is not to say that some of these 8 processes aren't painful. Not to say that some of the decisions and some of the statements made aren't ones to that we disagreed with. Simply to say, though, that we 11 weren't doing anything that wasn't involved in the t 12 l regulations and we had to take the pain along with the f 13 I joy. 14 Q Is there a difference between a violation 15 and an unresolved item? le A Yes. 1 17 Q What would the difference be? 4 18 A Well, a violation s sc.?ething that you l' contend to a regulation that says something has to be [3 done and that it wasn't done. That's a violation, and 21 you can cite chapter and verse. [] An unresolved item in its proper context E3 is an item upon which more information is needed in order to determine whether it's a violation or not. An E3 unresolved item is not an item that we don't know whether

4 1 5

t's a v clation or not.

It's not simply that.

t's 2

an item that we need more information on it and someone's 3 got the action. Either NRC has got tne action to get 4 the infor:.stion or the utility has the action to supply 5 the in f o rma t io n, and upon receipt of the information a 6 determination will be made. l 7 There was, and I'll say was, prior to I 8 Bob Martin some tendency to call a violation an unresolved 8 item. And upon the production of further information 10 to call the unresolved item resolved because now more 11 information is provided. That's incorrect. The correct 12 thing is that you get the additional information and 13 additional information will tell you whether or not a 14 violation has occurred. 15 But it's a trick, ;t's a trick to not is call a violation a violation. Mr. Martin was very clear 17 and very explicit on what is an unresolved item and what 18 is a violation, and they're not the same. And you can't 18 write a violation as an unresolved item and disposition 30 it as not a violation when te actually is. 21 We tried to practice, I believe 4dEppe 22 the principle that if it's a 23 violation it's a violation, and if it is an unresolved i l 24 itam, there's more information due and then we'll make l as the call when we've got more information. I don't

44 g think we were ent: rely successful in that. Mr. Martin ,i 2 reenforced that cncept strongly, ne 3 hadn't reached tne goal yet. 4 Q How capable were unresolved items tracked? 5 3 A

think unresolved items were tracked 6

quite well. Probably not in what I would refer to as 7 the most timely way tecause of workload, personnel shortages 8 and so forth. So when I say they were tracked, it was g our practice to give a number to an unresolved item Just like we give a number to the open item and just as we to give a number to the violation so that we could track 11 12 them. But, and this is the one of the consequences of i the sin of calling a violation an unresolved item. 13 14 A violation requires a timely response 15 and timely closure by the NRC. An unresolved item doesn't. Calling the violation an unresolved item can permit it 16 17 to remain in limbo for an extended pertad of time until 18 somebody gets around to it or opens up the book and says, tg " Hey, this unresolved Ltem has been around a long time. 20 Let's go do it.* I 21 So one of the sins of misnaming a violation 22 an unresolved item is like the timely corrective action. 23 The potential is now, and now you depend on the individual to put an emphasts on closure of an unresolved item, 24 whereas it's more automatic if you call it by it's proper as

45 1 1 t g name, a 'titlation-2 Q So is :: possible for unresolved items 3 to go away? 4 A It's possible for unresolved items to 5 be resolved by the octaining of addition information and 6 never be called a /tolation, yes. It's possible, I can't 7 think of an instance where it occurred, that an unresolved 8 item hung around so long until people got tired of it and just called it resolved without really resolving it, to Q This is another scenario, hypothetical. l 11 If, for example, h and an inspector had a disagreement over the interpretation of a code, let's 12 g3 say the code involved record keeping and records off the 14 site and you had an inspector and supervisor disagree f~ 15 over what the code intended, would it be appropriate, who would be the appropriate referee in a disagreement 16 g7 like this? Who do you go to? Could you go to the people 18 that wrote the code and try to get resolution that way? a g, You know, call up the people in ANSI and say, I' L i s t e n, O this is what you say. This is what you require. What l l 21 do you mean?" Is this appropriate? I O A Well, I think it would be appropriate. O I don'.t think it's the appropriate first step, but in y your first step if m was supervisor of the D inspector, then if the inspector disagrees his proper

1 l 4 1 role :.s to escalate :: to a level above h 2 If he doesn't get it resolved there, then he should 3 escalate it up another level and he should get to the ) regional admin strator for a decision, and of course, 4 I 5 in NRC there are, there's a process for differing ) 6 professional opinions which, because l it's so time consuming 7 and arduous it cught not to be exeretsed at will, but ought to be exercised when really needed. 8 g I would have expected an appeal process to on at least two levels to get a resolution of the it disagreement. And had h of the appeal officials, I certainly would have said if we don't, if the code really 12 isn't clear, why don't we ask the people that wrote it. is 14 Yes, I think that's an appropriate step, but not the first -~ 15 one. Not the first step. I think tne appeal official 16 ought to do that unless there was an agreement to do it { l'7 at the lower level. If the supervisor and inspector { disagreed on the proper interpretaticn but \\ g3 they did agree { they would seek another interpretat on and abide by it, gg 20 that would not give me any problem at all as long as the 21 matter got resolved. 22 0 So in a case like this, do you think it's O appropraite for some sort of an agreement to be reached between the inspector and supervisor in contrast to just 24 a saying forget it, it's not a violation, I'm taking it l l i i 1

4' i g i out, where tne inspector going out and did the work feels l strongly it is a violation, do you think there should 2 l be some sort of accord reached? 3 I 4 A Yes. I think there should be an accord 5 reached or it should be escalated. I don't agree with 6 the philosophy or the implementation that the supervisor 7 ought to make the final decision unless it's in an instance a where the relation says he will. You know, the easy things g that come to mind are if a selecting official who was selecting personnel to fill a job is the selecting official, 10 11 then he selects. It's his decision. If the inspector 12 who is at least as smart as the supervisor says that he g3 thinks that code is being violated, and I would be very 14 uncomfortable with the supervisor who says, "I don't care what you say, because I know better than you do and I've to i ul decided this now. Forget it." i g7 I think that's at least poor style, and e up certainly not something I consider in concert with the gg NRC's general posture on these things. I mean if we can I g3 have appeal boards for licensing decisions, certainly i 21 we can appeal for first line of inspection of hardware, g3 and I must say that I've been involved in a number of those open discussions and appeals and written papers O on it and things like that where we have inspectors say, 34 g3 "I don't think that this is right." And we have even l l

t I had instances where : wouldn't think the inspector did i 2 a good enough ::: and we'd have a discussion on that and 3 reenfo'rce it. 4 I always think it's my right to require 5 them to do more inspection. I don't feel it's my right 6 to tell them to do less than they think they ought to 7 do, absent some good fundamental reason. 8 Q iou feel the supervisors at the Region, 9 now we're talking about at the level that, you know, h and 6 and people like that, 10 do you feel they know what's going on in the field at 11 12 Comanche Peak? t 13 A If there's any weakness I can personally I I4 identify for NRC supervisors, is that they don't know 15 what's going on in the field because they don't get there 16 often enough. And the message is passed on to them or, 17 either intentionally or unintentionally ftltered, and UI there are a lot of things that are difficult to describe UI in words. The old cliche is a picture is worth a thousand { 2/B 20 words is magnified by an on-site visit where you can see 8 21 I what's being done and you can see the conditions in the I i 22 1 field which are very, very difficult to describe to a person from time to time unless things are really bad 24 and out of control, and I think that, I think that is i m" a generality. It's really a generality that most 1

l 1. 43 i l t 1 i people who con fine their workdays to swivel chairs don'

• 2 really know what's going on in the field.

I think it's l a wea! ness that I re cognize d 3 i and 6 eve ry opportunity N.he plants 4 5 and clirb around on the hardware ulth inspectors and shine 6 flashlights and neasure things and insert gauges and, 7 to see what we were really seeing and unscrew bolts and l t a things like that where you simply can' t understand that g from a description, particularly a description that's 10 constrained by time because you' re so busy. 11 So I would say by and large the regional 12 nanagement doesn' t know what's happening in the field 13 unless they take the time to observe it firsthand. And 14 I think that th at kind of attitude is certainly an attitude 15 that I see in comru.ssioners. That's why you see 16 commissioners visiting power plants, Asselstine and others 17 on inspections, so they could t ry to see. Now, they don't 18 see the nitty gritty. They see a lot r. ore than they can 19 in swivel chairs in 1.*ashington. 20 Q did you have 21 any knowledge of any of the Region Four nanagement asking to 22 go up to the site, especially one like Comanche Peak or some 23 of other sites that were being licensed and ask them to get 24 out all the closed and open items and various, you know, o IE Manual, capter 25 inspection, just get out there

t i and get them all clcsed, in other words, te facilitate i f getting everything done? 2 3 A Sure. Yeah. Always. I 4 Q What type of attitude was this instruction 5 given in? Was it ;ust get it done or was it actually 6 to go out there and do the inspections and come back with, k 7 l you know, their findings? Come back with the findings. 8 In other words, ;ust, you know, go out and look at these g things, Just get tt done or actually go out and do the to inspection, validly do the inspection? 11 A I never heard that much specificity put i i 12 on it, but I have h2ard many times, said go out there i 13 and close those open items. Close those unresolved items. 14 Close those inspection findings and get it done. I guess what was intended depends upon the speaker and the hearer 15 pg both, but I think you're dealing with a mixed situation 17 there. I know we had hundreds HB of items, maybe thousands of ttems that I think about up it to follow up on and close, and we simply recognized, tg our whole team, that we couldn't do that with a pencil. We had to do that with inspection, 21 so we demanded resources from all over the country that said in order to close 22 this item we have to do certain things. 23 We don't simply sit down and write our name on a piece of paper. 24 r3 So our job was to get out there and close,

5. ] disposition and otherwise 1 take care of those matters that 2 needed taking rare cf before we could say the plant was 3 ready to license, and I tnought we did it in the way that it should be done and everyone on 4

ne team understood 5

what we meant by go out there and close those items. 6 Inspect. Do what's necessary, justify, do it right. 7 There's no coubt in my mind there were a some players on the stage that meant get it done if you 9 can get it done right. If you can't get it done right, 10 do it anyway. Yeah, I think there are some of those on 11 that stage. 12 Q Do you think that attitude is proper 13 considering Comanche Peak, Just go out and get it done i whether it's done right 14 or wrong? 15 A I don't know at this time. When (tsme l t 16 it was a little too early to tell what 17 the real attitude was. I will say that I observed the NRC investing an enormous number of is resources in that 19 effort, and that would tell me that we expected to do 20 the right job and not to pencil whip the situation. But j 21 that's kind of almost empirical today. You can't get 22 inside the people's mind on it. 23 Q , were 24 you ever aware, did you ever pick up any indications that 23 Region Four consultants out at Comanche Peak had been i

52 I told to, had been steered away frco finding quality 2 l assurance issues and had been steered toward qual ty i 3 control hardua re type problens that were very easy to 4 fix? Did you ever pick up anything like that? 5 A

can't reco lle c t any at the moment, but as 6

they say, of 7 all those instances. The re 's no doubt that people coming in 8 and consultants coming in were given emphasis to look at 9 hardware. I think there was a perception at that time 1 to that the quality assurance program, no matter how much it 11 was inspected, might not yield suf ficient results to make 12 the plants licensable, so there was certainly an attitude 13 that was in Mr. Collins' mind and sore of the things he said 14 that said we re a l ly, it's the hardwa re on it there that 15 counts and we have to go out there, the re fore, and look { 16 at the harduare. But as I've said ea rlie r, the re 's 17 weaknesses in that, because your amtlity to look at the 18 hardware is on the surface. 19 tie did have sore consultants that focused 20 on hardware, whether it was concrete testing or hangers I 21 or electrical installations and so forth. I don' t recollect l 22 an instance where the consultant thought he ought to look I 23 at the program which led to the hardware as opposed to 24 hardware and was told don' t do that. I just don't O recollect one.

j g Oc you feel that the Region provides g a" 2 adequate training to their inspectors to go and look at i 3 quality assurance and procedures, and manual, Chapter 25, j f 4 twelve type inspections, you know, the quality assurance 5 type thing, do you feel like the Region inspectors are i 6 trained sufficiently to go out and do these type of 7 inspections? 8 A I think that training was an historical 9 area of weakness in Region Four. Mr, Martin started on to a rather disciplined program to improve training that 11 personally involved himself in it, because he saw that l 12 same weakness. And so he did something about it at the l I 13 top where it could be done. 14 I would say that there was not emphasis 15 on looking at the programatic quality assurance in training.1 i 16 Some people that, because of their experience and because 17 of their prior training, and that's why I mentioned 13 previously Mr. Barnes and Mr. Ellershaw and others that gg he knew had that ability and that understanding of D Programtic matters to assist 21 S to bring that strength to 6, and they did 22 that. 23 It was a weakness across the board. The 24 training, good cross training is okay as long as you can l i o afford it. I never thought that many of the inspectors l

l 54 l 1 h who were hardware or:ented had much training :n qualt:y d 2 ; assurance aspects. i l Q This is kind of a, 3 W, did you think that the 4 inspectors who went 5 out and found Just the, you know, small hardware problems 6 that could be easily fixed, do you think these are the 7 guys that got rewarded and got ahead in the Region? 8 A I don't know if I can answer th,at very 9 well. h didn't mako very many organizational changes 10 6 brought in 6 the Region. Mr. Jaudon had been promoted 11 12 by the time that' ~ Mr. Lawrence Martin was 13 made a section chief before, shortly before he lef t there, 14 left the Region. And I better not say shortly. It's 15 really not shortly, after I recollect the time scale. t None of those individuals were people that 16 I thought found 17 the easy-to-fix problems necessar:ly. 18 If we're talking about promotions from 19 grade to grade but not from position of inspector to j 20 position of supervisor, i' 1 I 21 would say that if there were instances of that they weren't 22 obvious they occurred because of that. 23 MR. MULLEY: Well, why don't we go off 24 the record a minute. O (Thereupon, there was a discussion off

J 55 1 I the reccid l 4 2 f EXAMINATION BY MR. M U ' *. E Y : i 3 Q Do you have anything you would like to i I 4 add to this interview or any statement by way of conclusion 5 that you would like to make? 6 } A Well, I think I've said a lot of things I 7 and it might be worthwhile to say something in summary a about what we've been talking about. g We have iri Region Tour organization a number of personalities and their relationships with each to i t other and their way of thinking, 11 and many times these these ways of thinking are similar and they support 12

are, 13 each other, which tends to frustrate the checkc and i

g4 balances so that the merits of the checks and balances t are simply overcome by the attitudes and un the personal 16 relationships. 17 I would consider that 6 and j 33 6 and Mr. Check are of like mind so that an y, appeal is not likely to be heard strtetly on its merits. They'll back each other up. 33 I think that close relationship between Mr. Check and W tends to frustrate any 21 appeals, make them rejected out of hand rather than on 22 i 23 the merits. Maybe an attitude of, " Hey, I want to listen 24 to this, if you can't work it out with them I don't want D to listen to it." I can see that occurring and you have l s

I: l l 1 l level after level lined up with the same mind, set in 2 the mind. It isn't based on the merits. It's :ust based i r 3 l on supporting the organization up and dcwn. The appeal 4 process and checks and balances simply aren't offered, 5 and I think in the current situation in Region Four I 6 would expect that to be in place and to be operating. 7 Q And the mind, I'm getting back to 8 Comanche Peak and TUGCO, these three people would share g would be one of leaning towards the utility. Do you feel to that's true? 11 A I think -- 12 Q (Interoosing) Taking the utility's side? 13 A Yes. I think that's true, but each one 14 of those personalities has its own mix that lead to that t s' 15 end result. Whether 6 has his mix because of 16 and his basic attitude about 17 enforcement, and h, his attitude about the gg utility is probably dctng good work and there's more smoke gg than there's fire, and Mr. Check about trusting the utility 20 and let's not get too deeply involved in the business 21 out there, all of these coming from different directions 22 come to the same re-enforcement attitude and the same zg result that issues aren't considered and ventilated and i 24 fully discussed and resolved en their merits. They're o done on another basis, and the attitudes and relationships

L1 - -andicitque ' relationships ' that. exist' in ' all those people, MR. MCLLEY: Okay. Thank you very.?.uch. 2 - 3 (Thereupon,.the interview:wa? Concluded 4 . at 5:10 p.m.) -5' 6-7 g. 9 10 11 12 13 14 t I 1s I i 16 -j i 17 t 18-19 {-. O 21' I E + C-N' O e -3per, -, w .w+,- +erve -.g+ t,-e- ---f ,,w=q=ry- >-y=, e- + y ,,,-**.----y g ~ -g-y --,,,, e--w-u, qv 4,, .y,- -rr- -*M--

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os. t NA".I CF PRCCIIO*';G: Comanche Peak AN INVESTIGATIVE INTERVIEW OF: 6 DOCKIT NO.: PI. ACE: Ramada Inn, ~ DATE: June 24, 1986 woro held as herein appears, and that th s is the original transcript thereof fer the *:.le of the U:.ited States Nuclear Rcquistory Cc:c.issic:. / s e, s 's

~1 kAJ }/:

( T'.*?I; ) Doro y D. Banks s . _ 5.g e n _. _... n.a s.a. _ 3._ =. o _ _. e. s c'. _'.' _' _' _' a..'... Smith Reporting Agency e

CERTIFICATE OF SERVICE US.NRC addressees listed below.I certify that a copy of the foregoing document was served upon th Service was accomplished by hand d@ ivg k dn M ' d e-W 1987.- 4 ,(% y# .}, r ~y 3 ^ 1nrpu < ;bk2AM <

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1. NRC Commissioners:

Da'Vid S. CW(ibistbM;@Es'q' ICE 9 a;, L.W. Zech, Jr., Chairmen Thomas M. Roberts James K. Asselstine Fredrick M. Bernthal Kenneth M. Carr U.S. Nuclear Regulatory Commission 1717 H Street, N.W. Washington, D.C.

2. Bill Paton, Esq.

U.S. NRC 1717 H Street, N.W. Washington, D.C.

3. Secretary, U.S. NRC 1717 H Street, N.W.

Washington, D.C.

4. Jack R. Goldberg, Esq.

U.S. NRC 1717 H Street, N.W. Washington, D.C. .1

' COPIES TO: -1. Hon.. John.Glenn U.S. Senate Committee on Governmental ~ Affairs 340 Dirksen Senate. Office ~ Bldg. Washington, D.C. 20510

2. Hon. Edward.J. Markey U.S. House of Rep'resentatives Washington, D.C.

20515

3. Hon. Lloyd Bentsen U.S. Senate-Hart Bldg.

Washington, D.C. 20515

4. Hon. Jake Pickle U.S. House of Representatives 242 Canon Office Bldg.

Washington, D.C. 20515

5. Hon. Mickey.Leland U.S. House of Representatives 4

4 2236 Canon Office Bldg. Washington, D.C. 20515-4318 4

6. Hon. Henry B. Gonzalez U.S. House of Representatives 2413 Rayburn Office-Bldg.

Washington, D.C. 20515-4320

7. Hon. James C. Wright, Jr.

U.S. House of Representatives 1236 Longworth Office Bldg. Washington, D.C. 20515

8. Hon.. John B.

Breaux U.S. House of Representatives Washington, D.C. 20515

9. James Mattox Attorney General of the State of Texas Supreme Court Bldg.

14th & Colorado Streets Austin, Texas 78711

10. Mayor Frank Cooksey Members of the Austin City Council

. City Hall 124 West 8th Street Austin, Texas 78701

11. Councilmember Maria Berriozabal San Antonio City Council P.O.

Box 9066 San Antonio, Texas 78285

12. Clarance Johnson Office of Public Utility Counsel 8140 Mopack

.Westpark 3, Suite 120 Austin, Texas 78759-

13. Lanny A.

Sinkin, Esq. C;'ristic-Institute 1324 No. Capitol St., N.W. Washington, D.C. 20002 j

14. Tom Smith, Director Texas Public Citizen 1611 E.

First St. Austin, Texas 78702-4455

15. Brian Baker Citizens for Consumers Rate Relief 401 West Drew Houston, Texas 77006

16. James Matz Assoc. of Local Control of Utility Rates 2601 Lazy Lake Dr.

Harlingen, Texas 78550

17. Nuclear Information & Resource Service 1616 P Street, N.W.

i Washington, D.C. 20036

18. Jim Drake, Director Valley Interfaith P.O.

Box 1616 Weslaco, Texas 78596 - 22061ist:RCdisk2 1 _...,.}}