ML20238E600
| ML20238E600 | |
| Person / Time | |
|---|---|
| Site: | Three Mile Island  |
| Issue date: | 09/04/1987 |
| From: | Berry G, Reis E NRC OFFICE OF THE GENERAL COUNSEL (OGC) |
| To: | NRC COMMISSION (OCM) |
| References | |
| CON-#387-4330 CIV-PEN, EA-84-137, NUDOCS 8709150090 | |
| Download: ML20238E600 (28) | |
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION '87 SEP -9 P2 :43 BEFORE THE ADMINISTRATIVE LAW JUDGE in the Matter of )
I GPU NUCLEAR CORPORATION ) Docket No. 50-320
) (Civil Penalty)
(Three Mile Island Nuclear Station ) License No. DPR-73 Unit No. 2) ) EA 84-137 I
NRC STAFF MOTION TO RESClND PROTECTIVE ORDER I. INTRODUCTION AND BACKGROUND On August 12, 1987, the Presiding Officer issued an " Order Regarding Disclosure and Protection of Certain Documents" (hereinafter
" Protective Order") which required CPUN to .make available to the NRC Staff a. document relating "to the methodology of the internal audit group
[of Bechtel Power Corporation) in conducting confidential investigations."
Protective Order at 1 (Attechment 1, hereto). Counsel for GPUN and Bechtel claimed that the Protective Order was necessary because
" unlimited disclosure of the document" would have a " potential adverse impact 'on the conduct of future investigations." Id. As explained below , subsequent events confirm that the representation made by counsel for GPUN and Bechtel which led the Staff and the Board to approve the Protective Order was inaccurate. According to the uncontroverted sworn testimony of the Chief Auditor of Bechtel's internal Audit Department, the document in question does not relate to the methodology by which l Bechtel's Internal Audit Department conducts special investigations. Had counsel for Bechtel and GPUN disclosed this information in its response to h[ h a
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- Ve the Staff counsel's request for the document, the Staff would have
- c opposed the request for a protective order as unwarranted and it is a
' unlikely . that the Protective Order would have been issued. The Presiding O fficer should remedy the effect of this inaccurate representation by rescinding the Protective Order and taking such other action as is deemed appropriate.
7, II. DISCUSSION The Protective Order was issued to resolve a discovery dispute between the Staff and GPUN which arose in connection with the deposition of H. Lee Hofmann, the Chief Auditor for Bechtel's Internal Audit Group.
Mr. Hofmann was the individual dispatched from Bechtel headquarters in San Francisco to investigate Quiltec, Inc. and to determine whether Mr.
Richard Parks had violated Bechtel's " conflict of interest" rules because of his alleged " involvement" with Quiltec. In Count 11 of the Notice of Violation issued to CPUN, the Staff alleged that this " investigation" was conducted against Mr. Parks because he had engaged in activity protected by 10 C.F.R. 5 50.7. The Staff sought to depose Mr. Hofmann on this and other relevant subjects. II
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1/ Mr. Hofmann's deposition had been scheduled for April 28, 1987.
See Notice of Deposition of H. Lee Hofmann (March 25, 1987).
E Hofmann left the country, without consulting other parties, after receiving the Notice of Deposition, and the Staff unwillingly rescheduled the deposition for June 25 and 26, 1987. At the conclusion of the June 25, 1987 deposition session, Mr. Hofmann's counsel announced that Mr. Hofmann would not appear to continue his deposition the following day. Tr. at 206. Continuation of the deposition was then rescheduled for August 20 and 21,1987. See (FOOTNOTE CONTINUED ON NEXT PAGE)
Minutes before the deposition began on June 25, 1987, Mr.
Richardson, counsel for GPUN and Bechtel advised counsel for the Staff that during a meeting with Mr. Hofmann the previous day four documents responsive to a long-standing Staff discovery request had been discovered. See Deposition of H. Lee Hofmann at Tr. 52 ( Attachment 2 hereto). 2_/ According to M r .. Richardson, these documents "had previously been overlooked." Id. Mr. Richardson further advised Staff counsel that due to the " confidential nature" of the documents he was unwilling to make them available to the Staff in the absence of "a stipulated protective order." Id. The Staff disagreed that the documents in question were privileged and requested Mr. Richardson to reconsider his basis for withholding the documents. See Tr. 52-53.
Upon further reflection, Mr. Richardson agreed to produce three of the documents without a protective order. Tr. 53. 3,/
(FOOTNOTE CONTINUED FROM PREVIOUS PAGE)
Notice of Deposition of H. Lee Hofmann (August 4, 1987). In the l course of the first day of that deposition session, counsel for GPUN and Bechtel, in a repetition of the conduct of June 25, 1987, announced that Mr. Hofmann might not appear for continued examination the following day. Tr. at 424. ]
j 2_/ Pages 472 through 488 of the Hofmann deposition relate to matters covered by the Protective Order and thus are appended to this Motion as in camera Attachment 3, and submitted to the Board by separate letter.
-3/ A cursory review of these three documents confirms the Staff's position that none of them is privileged against disclosure. None of the documents was prepared by an attorney or his agent in j anticipation of litigation; none contains any trade secrets; and none i reflect any communication between an attorney and client, much less l a communication made for the purpose of obtaining legal advice. See l Attachments 4-6.
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-4 Vir. Richardson continued to withhold the fourth document, however, stating:
The fourth document -- which I am not at liberty to disclose without a stipulated protected order -- does set forth in considerable detail the methodology of the internal audit group with regard to how they conduct investigations, if that information was disclosed to people who do not have a legitimate interest in knowing -- outside Bechtel management; and indeed, managers within the internal audit [ department] -- we feel that could harm the efficacy and the integrity of the investigations carried out by the internal audit department. And, therefore, l primarily for the reason I just stated, this document is plainly confidential. We simply cannot produce it to you, absent a protective order or some other suitable mechanism which would preserve confidentiality.
Tr. at 54 ( Attachment 2). Staff counsel did not agree to accept the document under the terms suggested by Mr. Richardson but again stated his view that the withheld document was relevant, material, and not privileged. See Tr. 55-57 ( Attachment 2).
The controversy was not resolved until several weeks later when during a conference with Mr. Hickey, another of CPUN's counsel, Staff counsel indicated a willingness to entertain a suitable protective order.
Subsequently, Mr. Hickey drafted and submitted to the Staff the Protective Order which ultimately was approved and issued by the Presiding Officer. See Letter from J. Patrick Hickey to Gregory Berry at 1 (July 31,1987). Based upon the representations of counsel for GPUN and Bechtel regarding the sensitive nature of the document, the Staff joined with GPUN in requesting the Presiding Officer to issue the proposed protective order. See Letter from Gregory Berry to Hon. Ivan W. Smith at 1 (August 11,1987) ( Attachment 7).
! It is thus clear from the foregoing that counsel for GPUN and Bechtel intended for the Staff and the Presiding Officer to rely upon the l
1 8 I-l representations that: (i) the withheld document set forth the investigative l
l methodology of the Internal Audit Department; and (ii) disclosure of the contents of the document would prejudice the Internal Audit Department in the performance of future investigations. And in fact, the Staff and the Presiding Officer relied upon these representations in agreeing to the Protective Order. See Protective Order at 1 (Attachment 1).
It was not until August 19, 1987, tha day before Mr. Hofmann's deposition was scheduled to resume and a week after the Protective Order was issued, that counsel for GPUN and Bechtel finally produced a copy of the document to the Staff. SI The testimony given by Mr. Hofmann at his deposition the following day contradicted the representations of counsel for CPUN and Bechtel that the document represented Bechtel's investigative methodology.
Indeed, Mr. Hofmann, who is Bechtel's chief investigator, professed a surprising ignorance of the document in question. See e.g. Tr. at 477-79 (attachment 3, in camera). In fact, in those rare instances where Mr. Hofmann was willing tc take a position, his testimony conflicts with the representations made by his counsel to the Staff and the Presiding Officer regarding the nature of the document and its importance to Bechtel.
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4/ Further, the document made available to the Staff is not complete. {
The text of the document refers to an attachment which was not l Included in the document provided to the Staff. See Hofmann Dep. :
Ex. 24 at 1 (in camera). This is a very significant omission since I the missing attachment directly relates to one of the many violations of the Internal Audit Group's investigation procedure committed by Mr. Hofmann in the course of his investigation of Quiltec, Inc. )
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For example, Mr. Hofmann disclaimed familiarity with the contents of i
l the document, eg Tr. at 477-79 (Attachment 3, in camera), even though he is- Bechtel's chief investigator and, by his own account, more experienced in conducting investigations than any other Bechtel employee.
(Tr. at 80, Attachment 2)). If any Bechtel employee is in a position to state whether a document describes the investigation methodology of ,
1 the internal audit group, it is Mr. Hofmann. Additionally, on several !
occassions , Mr. Hofmann refused to confirm the representation made by i
bis counsel that the document reflected the investigation methodology of )
Bechtel's internal Audit Department. Eg, Tr. at 477, 479 (Attachment 3, in camera). Mr. Hofmann was emphatic that the document in question "is not a formal procedure or policy or guideline" of the Internal Audit Department of the Bechtel Power Corporation. Tr. at 481 ( Attachment 3, in camera). According to Mr. Hofmann, the document in question -- wh'ich becrs his initials and the initials of his subordinate and which was prepared two weeks before he commenced his investigation of Quiltec --
represent only the " perception" of his former subordinate "as to how a ]
I special investigation is to be done[ . ]" Tr. at 477 (Attachment 3, M i camera) (emphasis added). b This testimony, of course, cannot be squared ,
with the representation of Mr. Hofmann's counsel that the document was privi eged against disclosure because it " set forth in considerable detail i
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-5/ Mr. Hofmann's subordinate, Michael Cole, is no longer employed by the Bechtel Corporation. See Tr. at 477 (Attachment 3, in camera).
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., the methodology of the [Bechtel) internal audit group with regard to how they conduct investigations." Tr. at 54 (Attachment 2). Moreover, Mr.
Hofmann did not agree that the document in fact was used by the Internal Audit Department in conducting special investigations as had been.
suggested by counsel for CPUN and Bechtei. Compare Tr. at 481 (Attachment 3, h camera), with, Tr. at 54 (Attachment 2). Instead, Mr.
- Hofmann ; stated ' that the document represented only "Mr. Cole's notes."
Id.
Assuming that Mr. Hofmann testified truthfully, it is clear that there is no basis in this record to Justify the continued confidential treatment of the document in question. According to the sworn testimony of the person most familiar with and knowledgeable about the conduct of investigations by Bechtel's Internal Audit Department, the document for which protective treatment was sought and obtained was not issued or .
adopted by the Internal Audit Department or by any other responsible -
organ of the company. According to Mr. Hofmann, at most this document reflects the views of a subordinate no longer employed by the company, not those of Dechtel's Internal Audit Department as had been represented by his counsel. b in view of Mr. Hofmann's testimony, it is impossible
~6/ Counsel knew or should have known that he was in error in
. representing that the document in question " set forth in considerable detail the methodology of the internal audit group with regard to how they conduct investigations." Tr. at 54 (Attachment 2).
Counsel for GPUN and Bechtel learned of the document during a meeting with Mr. Hofmann to prepare for the deposition. Tr. at 52
( Attachment 2). Counsel's representations concerning the nature and purpose of the document were presumably learned at that time immediately before it was claimed that the document was privileged.
(FOOTNOTE CONTINUED ON NEXT PAGE)
1 to' understand how Bechtel could be prejudiced by the disclosure of the contents of the document.
In light of the facts now known, it is hard to understand how counsel for GPUN and Bechtel could have made the representations in the first instance. But in any event, no matter what the explanation for The
]
(FOOTNOTE CONTINUED FROM PREVIOUS PAGE) ,
H These' representation were made a second time at Mr. Hofmann's deposition, with Mr. Hofmann present. See Tr. at 52-53 (Attachment 2). At no time has counsel for GPLTR and Bechtel taken any action to correct the false impression of the document which had been previously created. The representation that the document contained Bechtel's investigating methodology was again repeated five weeks later on July 31, 1987, this time to the Presiding Officer as well as to the Staff. On that date, counsel for CPUN prepared and submitted a proposed order which provided confidential treatment to a document relating "to the methodology of the internal audit group
[of Bechtel Power Corporation} in conducting confidential investigations." Protective Order at 1. l The Appeal Board has stated: l Counsel appearing before this Board (as well as other NRC adjudicatory tribunals) have a manifest and iron-clad obligation of candor. This obligation is hardly fulfilled when, as here, there is a failure to' call attention to facts of record which, at the very least, cast a quite different light upon the substance of arguments being advanced by counsel.
Public Service Company of Oklahoma (Black Fox Station, Units 1 and 2), A LA B-505, 8 NRC 527, 532, reconsideration denied, ALAB-508, 8 NRC 559 (1978) (emphasis added) (foonote omitted); accord Consumers Power Company (Midland Plant, Units 1 and 2),
LBP-BI-63,14 NRC 1768,1784-85 (1981). The failure of counsel for CPUN and Bechtel to bring to the Presiding Officer's attention the discrepancy between Mr. Hofmann's testimony and the prior representations made by counsel and relied upon by the Presiding Officer in issuing the Protective Order is regrettable. The Presiding Officer should therefore take such action as he deems appropriate to ensure that the " manifest and iron-clad obligation of candor" is fulfilled by counsel for CPUN and Bechtel in the future.
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e s: ,
4 Protective Order should be ' rescinded because It is based upon an erroneous representation.
111. CONCLUSION The Protective Order issued by the Presiding' Officer on August 12, 1987 should be. rescinded and. the Presiding Officer should take such further action as he deems appropriate.
Respectfully submitted,
'Y Gregor Alan Berry Counsel for NRC Staff Edwin J. eis Deputy ssistant General Counsel Dated at Bethesda, Maryland this 4th day of September' 1987
0 O' .
UNITED STATES OF AMERICA '87 ggp _p P2 :43 NUCLEAR REGULATORY COMMISSION BEFORE THE ADMINISTRATIVE LAW JUDCE y!- !
In the Matter of )
) Docket No. 50-320 CPU NUCLEAR CORPORATION ) (Civil Penalty)
) License No. D PR-73 (Three Mile Island Nuclear Station ) EA 84-137 Unit No. 2) )
CERTIFICATE OF SERVICE I hereby certify that copies of "NRC STAFF MOTION TO RESCIND PROTECTIVE ORDER" in the above-captioned proceeding have been served on. the following by deposit in the United States mall, first class, or, as indicated by an asterisk, by deposit in the Nuclear Regulatory Commission's internal mail system, this 4th day of September,1987.
- lvan W. Smith, Esq. Ernest L. Blake, Jr.
Administrative Law Judge Shaw, Pittman, Potts & Trowbridge Atomic Safety and Licensing Board 2300 N Street, NW U.S. Nuclear Regulatory Commission Washington, DC 20037 Washington, DC 20555
- Atomic Safety and Licensing Steven L. Hock, Esq.
Appeal Board Thelen, Marrin, Johnson, Bridges U.S. Nuclear Regulatory Commission 2 Embarcadero Center Washington, DC 20555 San Francisco, CA 94111
- Docketing and Service Section Office of the Secretary U.S. Nuclear Regulatory Commission Washington, DC 20555 j M
Edwin J. 34is Deputy ptsistant General Counsel
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ALJ 8//,2/87 l
l '87 GG 13 A11:16 l
UNITED STATES OF AMERICA l NUCLEAR REGULATORY COMMISSION iP.
ue ADMINISTRATIVE LAW JUDGE Ivan W. Smith "
SERVED AUG 131987 l
)
In the Matter of ) Docket No. 50-320
) License No. DPR-73 !
General Public Utilities Nuclear ) EA 84-137 Corporation ) [ASLBP No. 86-534-01-OL)
) (Civil Penalty)
(Three Mile Island, Unit No. 2) )
) August 12 , 1987 ORDER REGARDING DISCLOSURE AND PROTECTION OF CERTAIN DOCUMENTS 1
Tnis matter has been brought before the Administrative Law Judge upon the j.o' int motion of the parties, which have concurred in the issuance.of this Order.
In connection with the deposition of H. Lee Hofmann, Chief Auditor of Bechtel Power Corporation, a document was identified which related to the methodology of the internal audit group in conducting confidential investigations. Unlimitad disclosure of the' document was claimed to have a potential adverse impact on the conduct of future investigations. To avoid the necessity for resolution of claims that the document is privileged and/or otherwise entitled to protection, the parties have agreed to re-solve the matter at th;s t;me 8.and without waiver by either party of the right to seek additional relief from the Presiding Offi-cer) by the disclosure of the document subject to this protective l
order.
TTM D KHT 1
c:
Disclosure ofLthe document may be made by NRC staff counsel-
! only to NRC attorneys.and staff as may be necessary.for trial, preparation and hearing. 'Any person receiving a copy of the document will take reasonable steps to insure it is not disclosed toEothers, will use it only for the purposes of this proceeding, and will destroy or return.to the NRC staff counsel all copies of such document at the completion of this proceeding. Identifica-tioh'or introduction of the document in a deposition or hearing of thi's matter shall be done in camera with the document kept:
under seal and~the portion of the transcript where it is dis-cussed also kept under' seal, unless otherwise agreed to by coun-sel for the parties. Disclosure of the contents of the document i in deposition or hearing shall be in camera only. Information obtained from the document may be used only for purposes of trial
. preparation'andh, earing in this proceeding.
Nothing contained herein shall be construed to apply to or limit the parties' right (1) to use information obtained apart from the covered document, or (2) to use copies of portions of the covered document obtained other than from Bechtel Power Cor-poration.
dA%1s/// in$o 24VaY M. Tm%tf ' '
ADMINISTRATIVE LAW JUDGE j l
August [$h1987 !
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2 1:00 p.m.
3- MR. BERRY: We are back on the record.
4 Mr. Richardson, do you have anything.
5 MR. RICHARDSON: Sure have.
6 During the break, I to o k a look at the 7 documents which I re f erred to this morning.
8 This morning, I advised Mr. 'Jo hn so n and Mr.
(
9 Berry that ye ste r da y, when m ee ting with Mr. Hofmann, we 10 discovered some documents whic h had pr e vio usly been 11 overlooked, b ut which we think are probably responsive to j 12 the NRC's previous request for documents concerning 13 documents which interpret Directive 2-1.
kO; / 14 This morning, before the deposition began, I 15 advised Mr. Johnson and Mr. Berry that we had discovered 16 these documents, b ut pointed out that they are of a 17 confidential nature; and, that, alt ho u g h we wo uld be :
l 18 willing to produce them to the NRC, we wished to do so on l 19 the basis of a stipula te d p ro t e c tiv e order, w hic h wo uld 20 ensure that these doc umen ts wo uld not be disclo se d to ;
21 people o utside the NRC attorneys, except on order of the 22 Court.
23 M#* B'##Y' after conferring with Mr.
24 Jo hn so n , said that a stipula te d p ro te c tiv e order was not 25 a c c e pt a ble . He asked us to re view more closely the I
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53 d I 1 documents in qu e stio n . W ell, during the break, we have i
I 2 done so.
3 As to three of the doc umen ts, although we 4 b elie v e that they are c o n fid e n ti al, they are in ter n al 1 l
5 Be c htel documents, that the in f o r ma tio n c on t ain e d in the i 6 documents is su f ficien tly g en er al that the in te re sts of 4 7 Bechtel will not be sig nific a n tly harmed if they are 8 disclosed wit ho ut a p ro tec tiv e order. So, right now, I 9 will hand these doc uments to Mr. Berry.
-10 MR. BERRY: Okay.
11 MR. RICHARDSON: The fir st is a one-page 12 document e n title d " N o tific a tio n Procedure Rela tiv e To f
13 Dir e c tiv e 2-1." At the bottom, it bears the date 1-11-83.
0 ;/ 14
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I will note that there was a second page 15 st a ple d to this doc ument, whic h we are not disclosin g 16 because we believe it is not respon sive to the re que st.
17 The second document, whic h I am now 18 producing, is a two-page typewritten document. In the 19 upper right-hand corner it sa ys, " Audit Number: blan k, 20 Tile n umber: T-201. Over to the left, in the upper left-21 hand corner, there is the title, " VI, Gener al (contin ued.)"
22 Beneath that, there is a sub he a din g "D. C h e c klist on 23 Be c htel Dir e c ti v e 2-1: ' B usin e ss Ethics, Co n flic t of l
)
24 In te re st and Security of In formation.'"
25 The third document is either a printed or 1
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', 1 typewritten document. In the upper right-hand corner it 2 bears the he a din g " Or g ani z a tio n Man ual, Se c tio n IV, Page 3 102, July 22, 1983." The main heading of the document, 4 whic h is in the middle, top po r tio n of the page is 5 " De sc riptio n of Operations Internal A uditing . "
6 The fourth document -- whic h I am not at 7 liberty to disclose witho ut a stip ula te d p ro te c tiv e order 8 -- does set forth in c o n side r able detail the me t hod olog y 9 of the in te r n al a u dit group with regard to how they 10 conduct in v e stig a tio n s. If that in f o r m a tio n were 11 disclosed to peo ple who do not have a legitimate intere st 12 in kn o win g -- o utside Be c htel management, and, in d e e d ,
13 mangers within the in te r n al a udit --
we feel that co uld
.' 14 harm the efficacy and the integrity of the in ve stig a tio n s 15 carried out by the in te r n al a udit department. And, 16 therefore, primarily for the reason I just stated, this 17 document is plainly c o n f.id e n ti al. We simply cannot 18 produce it to you, absent a protective order or some other 19 suitable. mechanism W hic h would preserve its l 20 confidentiality.
21 Let me make it clear that we are prepared to 22 Produce this to you, right now, without a protective order 23 being entered, if we can agree on the record that the 24 parties will stipulate to the entry of a reasonable 25 pr otec tiv e order whic h will safeguard the c o n fid e n tialit y
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2 MR. BERRY: In response to Mr. Ric h a r d so n 's 3 remarks, the Staft is not prepared to stipula te to a 4 protec tive ' order c o v ering the Bechtel document at this 5 time.
6 Our po sitio n , as stated this morning, is:
7 we do not b elie v e that these documents are privile g ed.
8 So, at this point, we will agree to disa g r e e on the 9 privile g ed nature, or not, of the Bechtel document. We 10 can take that ' matter up after today, or some other time.
11 It is not necessary to re solve that matter now. However, 12 we state our position that we believe the document is not 13 privileged from the description provided by Mr. Richa rd son Y ... 14 of. t he d oc ument. It appears to be unquestionably relevant 15 and material to this proceeding.
16 The staff, at this time , is not re que sting 17 B e c h t el, GPUN to produce the document. We appreciate 18 their concerns and we don't find this necessary at this 19 point to pe solv e this matter.
20 MR. RICHARDSON: Let me e m p h a si z e that 21 whether it is a p ro te c tiv e order or some other s uit able 22 mechanism, what we are asking for not something whic h 23 wo uld impede your p r o se c utio n of this civil p e n alt y 24 Proceeding. You certainly sho uld be free to use this 25 document in question. You certainly should be free to use
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.g 56 i[ 1 the ' document in qu e stion - in any reasonable way to 2' ' pr o se c ute this case. But our concern is: we want so me 3 p ro t e c tion ag ain st this document being disclosed to the 4 o utside world, if you will, and peo ple who, if they obtain 5 k no wle dg e of the contents of the documents, then that 6 c o uld lead to a sit u a tio n where the purposes of Mr . .
-7 Hofmann's department cannot be ade quately f ulfilled.
8 MR. BERRY: I understand your po sitio n , Mr.
9 Ric ha rd son , and I don't want to belabor this point by 10 spending ' any additional time o n it .
11 I would j ust state, you know, b rie fly, to 12 that, that it.is g en e r ally the re g ula tio n of the- Nuclear 13 Re g ulato r y Commissio n pr o hibits authorizing unnec essar y '
[ 14 disclosure of and ma t e rial comes wit hin this in f o rma tion. )
1 15 Our r e g ula tio n s provide that certain documents, and l
16 describes the types of ma terials that are made a v ailable 17 to the p ublic . To the - extent that there is a privile g e 18 attaching to this document, that privile ge wo uld obtain
.19 and wo uld. bar the disclo sur e of that document to those 20 witho ut -- who should not be en titled to it.
21 It is for that reason that the Staff 22 g e n e r ally, as a matter of practice, very r ar ely enters-23 into protective orders. Certainly they do not enter into 24 t hem witho ut, you know, v olun t a rily. And, as a matter of 25 fact, that is my practice.
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1: I will' sta te that we believe - . certainly we. .
2 ' wo uld . like .to have possession of the document. .Certainly
'3 we b elie v e it is m a t e ri al, it is .~ r elevant. But we 4 . understand' and appreciate your concern, that you are
'S disin clin e d to make ,it a v aila ble witho ut some assur ance
.6- from the Sta f f, an assurance that the Staff, at this time, 7 is not pre pared . to give.
8 So, I think it is best that we just leave 9 the matter in abeyance for the present, and press . ahead.
10 If it becomes necessary to re visit the subject, co unsel 11 c an. ta ke this up.
12 MR.-RICHARDSON: Okay.
13 Brie fly, with re gard to the the sis f or our
- h. c< 14 withholding the document, I thin k I have, in a g en er al 15 way, described the basis reasons. And I use thec adjective 16 " c on fid en tial" as a g eneral descriptive of our concerns.
17 But I wo uld like to reserve the rig ht to contend that,
-18 apart from the c o m pan y's right to privacy, the 19 - c o n fid e n tiel se n sitiv e objectives of Mr. Hofmann's group, 20 there may very well be implie d privilege s under v ario us 21 statutes whic h wo uld also support the a c tual, or qu a si-22 privile g e d, c haracter of this particular doc ument.
23 MR. BERRY: That is understood. Thank you, 24 Mr. Ric hardson.
25 //
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[1 1 asking you what you mean by an " expert"?
2 A That they have experience in a certain field 3 of a c tivity.
4 Q All rig ht.
5 In applying that d e finitio n , do you consider 6 yourself an expert in investigations?
7 MR. RICHARDSON: I t hin k he has already 8 testified to that. Can't we move on?
9 MR. BERRY: That's the qu e stio n .
10 BY MR. BERRY:
11- 0 Applying yo ur definition, are you an expert 12 in .inve stig ations, Mr. Hofmann?
13 A I have e x perie n c e , probably more so than O
be' 14 anyone else in B e c h t el, r ela tiv e to in ve stig a tion s. And, 15 as a r e s ult, I would think that I have considerable amount 16 of e x p e r tise .
17 Q Are you Bechtel's chief expert investigator?
18 A I wo uld thin k I am.
19 0 . Okay.
20 A Now, wha t abo ut, also during the same period 21 that we have been discussing -- January 1977 to June 1978 22 -- you were also, ac c o rding to your resume, re spon sible 23 for Personnel administration. Did that that have an ything 24 to do with investig ations?
25 A No, sir.
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Audit No.: blZN87 -
File No.: T-201 f VI GENERAL (Cont'd) i B. Checklist on BECHTEL DIRECTIVE 2-1: " BUSINESS ETHICS, CONFLICT OF INTEREST and SECURITY OF INFORMATION" d
- 1. Review Directive 2-1 with the members of your audit team. Be aware of the intent and the various examples given in the directive. i l
- 2. As the auditors progress through the audits of their '
discipliran, have them be alert to the following:
- a. Media coverage.: ,
l Has there bect any local newspaper, radio or television sta. tion coverage recently? If so, why?
- b. Client concerpt Has a client 03 pressed any concern about:
- 1. Internal control weaknesses? If so, what are his specific concerns?
- 2. Security of his proprietary information?
- c. Client requests: .
Has the client requested that we act in a way which causes you concern from an ethical point of view?
- d. Rumors:
Have you heard any rumors about possible ethical irregularities? If so, who, what,when, where and why?
- e. Unfair treatment:
Have any of our people, any suppliers or sub-contractors / contractors commented on:
- 1. Favoritism?
- 2. Unfair treatment?
- 3. Unusual requests?
- 4. Unusual pressures?
- f. Unusual friendships:
Are any of our construction people unusually friendly with any of our subcontractors or suppliers?
How about our Procurement people? Accounting people?
Subcontract / Contract Administrators?
- g. (Ghosts:
Do-you think you have any ghosts as:
- 1. Suppliers?
- 2. Subcontractors / Contractors?
- 3. Employees?
ff
,f, J.
- h. Use of assets for personal purposes:
Have you heard of our employees using any project equipment, tools or materials for their own use?
- i. Private businesses:
Do any of our people have private businesses "on the side". Do you think there may be a ;
conflict of interest?
- j. Gifts:
Have you heard that our construction people received any gifts or loans from a subcontractor / j contractor or a supplier? How about any of our ~
Procurement people? Controller's people? Sub-contract / Contract Administrators? l
- k. Entertainment: l Any talk of entertainment provided by Suppliers / l Subcontractors / Contractors whic:h seems exorbitant l relative to our standards? j
- 1. Meetings:
)
Directive 2-1 reviewed in a staff meeting at i least once a year? When was the last time?
When is the next time?
- 3. If the auditors become aware of a possible concern: 1 a.
' Talk with the auditor and review the cause of his/her concern.
- b. Take no action with the auditee.
- c. Telephone Lee Hofmann or Steve Pace cs soon I as possible.
)
- 4. Comments:
- a. Audit name and number: 1 l
Have Concern?
Yes No N/A
- b. Discipline l
- 1. Controllers
- 2. Procurement l d
- 3. Contracts
- 4. Personnel !
l
- 5. Data Processing !
- 6. 1 Other
- 7. l Team Leader I Date l 2/8/82
l Inttrnal Auditing -
ORGANIZATION MANUAL j h, Section IV L }rIJky Page 1.of 2 ,
--r- July 22,1983 l
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D i
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, DESCRIPTIO ,OF OPERATIONS i i
INTERNAL' AUDITING Internal Auditing is responsible for ascertaining adherence torand evaluating the ef festiveness of policy, procedures and controls ; and for performing investigative, reporting and advisory functions worldwide. it is an independent Service that reports to Senior Management. Internal Auditing is also used as a means of training and developing Division, Special Operation, and other Service personnel through rotational assignments.
Internal Auditing is responsible for conducting financial audits which include :
e Determining the extent of compliance with prescribed Bechtel financial s; ttems, policies and procedures, and with legal and statutory re airements.
e Determ:ning the adequacy of internal checks and controls, including means fur detecting and preventing errors, fraud, and unlawful appropriation.
e Determining the propriety, reliability and proper documentation of the accounting records and reports. '
e Reviewing financial statements and reports to ascertain that a true and fair view is given of the financial position at a specified period.
e Reviewing the methods used to arrive at earned gross margin.
Internal Auditing also has responsibility for operational audits which incl 6de :
e Reviewing the degree of adherence to, and determining the adequacy of, Division, Special Operation and Service operating controls as set forth in Bechtel Directives, Management Instructions, division procedures, Personnnel Policies and similar documents, or, in their absence, with good business practice.
e Determining the extent Bechtel financial assets (or client-owned financial assets under Bechtel's custody) are properly used, maintained and safeguarded.
e Determining the extent Bechtel non-financial assets (or client-owned
. non-financial assets) are properly accounted for.
e Determining the degree of compliance with contractual terms and agreements, legal requirements, and local practices.
)$$
Replaces issue dated February 22,1982
( 03043 t _ _ _ _
[*. . ORG ANIZATION M ANUAL Intern 21 Auditing i Section IV 3, Page 2 of 2 July 22,1983
(
Iniernal Auditing will also conduct spe ial audits to :
e Determine comp!!ance with Bechtel's code of ethics, and determine that business relationships are free from conflict of interest (Directive 2-1).
- Determine compliance with the Export Administration Amendments of 1977 (Directive 5-6).
e Review other practices as requested by senior management.
Internal Auditing does not evaluste the efficiency or effectiveness of the Divisions, Special Operations or Services iri meeting management goals and objectives, nor does it comment on the perform.mce of individuals or organizational units.
Audit findings and relates recomraendations will be reviewed with project, department, Division /Spedal Operation / Service management, and senior management as appropriate, and thek comments will be incorporated in Internal Auditing's reports. Although correctiv= :nction based upon audit findings and recommendations is a line management responsibility, Internal Auditing will issue periodic reports, sumrnarizing recurring audit findings, to functional and senior management.
Internal Auditing maintains liaison and coordinates all its activities with the external audit agencies used by Bechtel to avoid unnecessary duplication and to provide efficient and effective audit control.
Internal Auditing will prepare an annual summary audit report for the Audit -
Committee, the cognizant Bechtel Committee overseeing audits, and will prepare supplementary reports as requested by the Audit Committee or the Finance Co mmittee. -
s
h "
/Wl/C+0{
NOTIFICATION PROCEDURE RELATIVE TO DIRECTIVE 2-1 zy 7 A. Division, Special Operation and/or Service Management becomes aware of a possible violation of Directive 2-1. Management conducts its own investigation and effects its own discipline as required.
- 1. Directive 2-1 does not require that notification be given except in a project and then a report of the impropriety should be made to the responsible:
- a. Supervisor.
- b. Division General, Special Operation or Service Manager and
- c. Counsel of the appropriate Bechtel company.
- 2. Senior Management in SFHO (Executive Sponsor, The Chairman, et al) may receive no formalized notification.
- 3. Manager of Internal Auditing is unaware in most instances of the action taken.
B. Division, Special Operation and/or Service Management becomes aware of a possible violation of Directive 2-1. Management requests the assistance of Internal Auditing. The current notification procedure is as follows:
- 1. Opening memo - statement of allegation (s):
- a. Addressed to - Executive Sponsor of Internal Auditing.
- b. Copies to - the Senior Manager of:
- 1) Concerned Division, Special Operation and/or Service.
- 2) Legal and Insurance Department. ,
- 2. Closing memo - statement of allegation (s), findings of the investigation and action taken by management:
- a. Addressed to - Executive Sponsor of Internal Auditing.
- b. Copies to - the the Senior Manager of:
- 1) Concerned Division, Special Operation and/or Service Manager.
- 2) Legal and Insurance Department.
- 3. If disciplinary action is taken against an employee, the senior manager sends a notification memorandum:
- a. Addressed to S. D. Bechtel, Jr.
- b. Copy to - Manager of Internal Auditing.
- 4. If a criminal offense has been committed, notification is given to legal and Insurance:
- a. Manager of the Insurance Department - so that a claim might be submitted if it is appropriate. -
- b. General Counsel - sn that if he approves, the matter might be referred to proper authorities for possible prosecution.
1 I
HLH:cac l 1/11/83 \ P
'.t ficTThCttMe>XI~ b T' 1
.. i.on c l, 'o,, UNITED STATES g NUCLEAR REGULATORY COMMISSION
-* p * ; . e. - t WASHINGTON, D. C. 20555
\ ..... p AUG 111337
- ~~
Ivan W. Smith, Esquire
. Administrative Law Judge Atomic Safety and Licensing' Board Panel U.S. Nuclear Regulatory Commission Washington, D.C. 20555 in the Matter of GPU' Nuclear Corporation (Three Mlle Island Nuclear Station, Unit No. 2)
Docket No. 50-320 License No. DPR-73 EA 84-137 (Civil Penalty) t
Dear Judge Smith:
I Enclosed for your approval and signature is the original of the proposed protective order agreed to by counsel for the NRC Staff and counsel for CPUN. ' Essentially , the proposed order provides that GPUN will make available to the Staff an unredacted copy of a document relating to the investigation methodology of Bechtel Power Corporation's Department of Internal Auditing and limits disclosure of that document to Staff counsel and such additional Staff- members "as may be necessary for trial preparation and j hearing." !
The- Staff is satisfied that' the attached proposed order provides the protection sought- by Bechtel without unduly hampering the Staff in the )
performance of its regulatory function to protect the public health and i safety. Accordingly, the Staff and GPUN request that the Presiding Officer approve the attached agreement and enter an order to that effect.
erely,
.n.. ,
Gregor Mlan Bhrry M -
Counsel 'or Nf.C Staff
Enclosure:
Y As stated ..
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t ALJ 8/ /87 UNITED STATES OF AMERICA -
NUCLEAR REGULATORY COMMISSION *
- ~~
ADMINISTRATIVE LAW JUDGE .
Ivan W. Smith
)
In the Matter of ) Docket No. 50-320
) License No. DPR-73 ,
General Public Utilities Nuclear ) EA 84-137 i Corporation ) [ASLBP No. 86-534-01
) (Civil Penalty)
(Three Mile Island, Unit No. 2) )
) August , 1987 JOINT GENERAL PUBLIC UTILITIES NUCLEAR CORPORATION AND NRC STAFF MOTION FOR PROTECTIVE ORDER at General Public Utilities Nuclear Corporation and the NRC Staff move the Administrative Law Judge to adopt and sign the attached proposed Order which will resolve a dis-covery dispute between the parties.
QtOA.O
', J. F 3 trick Hic ey, Counsel pn Gend al Public{ Utilities .u lear Corporation f
Gregor[' A.[ Berry Counsew foF NRC Staff
~ '
IIA J M8F l
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_ . _ . _ . _ _ _ _ _ _ _ _ _ .____________________________________J
t ALJ 8/ /87 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION :
ADMINISTRATIVE LAW JUDEE, Ivan W.-Smith
)
In the Matter of ) Docket No. 50-320
) License No. DPR-73 General Public Utilities Nuclear ) EA 84-137 Corporation ) [ASLBP No. 86-534-01-OL]
) (Civil Penalty)
(Three Mile Island, Unit No. 2) )
) August , 1987 ORDER REGARDING DISCLOSURE AND PROTECTION OF CERTAIN DOCUMENTS This matter has been brought before the Administrative Law Judge upon the joint motion of the parties, which have concurred in the issuance of this Order.
In connection with the deposition of H. Lee Hofmann, Chief Auditor of Bechtel Power Corporation, a document was identified
- .ich related to the methodology of the internal audit group in conducting confidential investigations. Unlimited disclosure of the document was claimed to have a potential adverse impact on the conduct of future investigations. To avoid the necessity for
. resolution of claims that the document is privileged and/or otherwise entitled to protection, the parties have agreed to re-solve the matter at this time (and without waiver by either party of the right to seek additional relief from the Presiding Offi-cer) by the disclosure of the document subject to this protective order.
1
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d' Disclosure of the document may be made by NRC staff counsel cnly to NRC attorneys and staff as may be necessary for trial I
preparation and hearing. Any person receiving a copy of the ,
~
document will take reasonable steps to insure it is not disclosed toothers,willuseit'onlyforthepurposeAofthisproceeding, ~
and will destroy or return to the NRC staff counsel all copies of such document at the completion of this proceeding. Identifica-tion or introduction of the document in a deposition or hearing of this matter shall be done in camera with the document kept under seal and the portion of the transcript where it is dis-cussed also kept under seal, unless otherwise agreed to by coun-sel for the parties. Disclosure of the contents of the document in deposition or hearing shall be in camera only. Information obtained from the document may be used only for purposes of trial preparation and hearing in this proceeding.
Nothing contained herein shall be construed to apply to or limit the parties' right (1) to use information obtained apart from the covered document, or (2) to use copies of portions of
.hc covered document obtained other than from Bechtel Power Cor-poration.
Ivan W. Smith ADMINISTRATIVE LAW JUDGE August __, 1987 l
_-__ - -__-_- _______ -__-______-__-___ ___________ ___ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ ___ . _ _ _ _ _ _ _ _ _ _