View source for IA-86-568, Partially Withheld SECY-77-125 Providing Info in Response to Gf Murphy 770128 Request for Info Re Jul/Aug 1976 Shutdown of Highly Enriched U Operations at B&W Facilities in State of PA

{{Adams
| number = ML20216B695
| issue date = 03/11/1977
| title = Partially Withheld SECY-77-125 Providing Info in Response to Gf Murphy 770128 Request for Info Re Jul/Aug 1976 Shutdown of Highly Enriched U Operations at B&W Facilities in State of PA
| author name = Chapman K
| author affiliation = NRC OFFICE OF NUCLEAR MATERIAL SAFETY &amp; SAFEGUARDS (NMSS)
| addressee name = 
| addressee affiliation = 
| docket = 
| license number = 
| contact person = 
| case reference number = FOIA-86-568, TASK-IR, TASK-SE
| document report number = SECY-77-125, NUDOCS 8706300136
| package number = ML20216B591
| document type = COMMISSION PAPER, TEXT-SAFETY REPORT
| page count = 16
}}

=Text=
{{#Wiki_filter:p                                             -
MM SS O                                                 I WASHINGTON, o. c. 2osss March 11, 1977                                                       SECY-77-125 g, < A 3iW.
INFORMATlON REPOJtT                                                dp ,se               '
la -/S                 nuwun g i::
FOR:                  The Commissioners                                                  7. 2/ .-(/
I FROM:                 Kenneth R. Chapman, Director, Office of Nuclear                          g      'j Material Safety and Safeguards THRU:                 Executive Director for Operations                  M                              l
,                    SUBJEC,T;:_           INFORMATION SUPPLIED TO MR. GEORGE F. MURPHY CONCERNING THE AUGUST 1976 SHUTDOWN OF THE HIGHLY                                  f ENRICHED URANIUM OPERATIONS AT BABC0CK & WILC0X-PENNSYLVANIA FACILITIES
                                                                                                      ,                     a PURPOSE:              To provide the Commission with the same information supplied to the Executive' Director of the Joint Committee on Atomic Energy DISCUSSION:           On January 28, 1977, Mr. George F. Murphy, Jr.,
k Executive Director of the Joint Committee on Atomic Energy requested information' pertinent to the July / August 1976 shutdown of the Highly , Enriched y,                                       Uranium Operations at Babcock and Wilcox, Pennsylvania -
N        s                               Facilities.                                                                       l The following information was.provided'to Mr. Murphy:                              '
y      +
e                                        1. Correspondence between NRC and B&W concerning                                l
  .8 w                                          actions to be taken, and E ci i
: 2. Summary of the events surrounding the shutdown.-
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                                                          ~.
                                                        /    Kenneth R. C1apman.. Director OfficeofNu)clearMsterialSafety h         h                                        /'
and Safeguards-g        M
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==Enclosures:==
: 1. Ltr to Murphy im chapman
   -Eg                                                             DISTRIBUTION-7}
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: 2. Ltr fm Murphy to Chapman Commissioners 6

==Contact:==
Commission Staff Offices 2                                                       Exec. Dir. for Opers.
    .E E JT,s          Donald Th'urman, SG 42-74177 Secretariat Information in this record was deleted
                                                                       . in accordance with th freedom of Information Ek                     8%
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1 Mr. George F. Murphy, Jr.                                                                                                 l Executive Director                                                                                                      1 Joint Committee on Atomic Energy Congress of the United States Washington, D.C.         20510                                                                                        'i d

==Dear fir. Murphy:==
d The information requested in your letter of January 28, 1977                                                  '
is enclosed.         This information consists of:                 (1) three letters                                    j which provide the chronology of' actions planned or taken, and                                                         i.
(2) a summary describing the activities associated with the July 29, 1976 shutdown.
Sincerely,
                                                                ~~enneth    . mR. Chapman, s
                                                                                     , . yf. Director
                                                                                                    - 7.-.              ,..
Office of N6 clear Material. . Safety and Safeguards

==Enclosures:==
: 1. Letter to NRC fm B&W                                                                                             I dated 7/30/76                                                                                               !
                                                                                 %.w          '
                                                                                          ..u t r. . . c. .. u; j
: 2. Letter to B&W fm NRC                                H :nu.ith ';ontains dated 8/13/76                                  NATIONAL SECURITY INFORMATION                               l
: 3. Letter to B&W fm NRC                                                                                '
I dated 8/24/76                                      ,c,,n ,, u ,,,,n g   g,,,,,,,, n,no, p,( u,3, ,, , , .
                                  ^
: 4. Summary of Actions of                                   " h l-           -                  <>
August 1976 Shutdown of                                       Unart proper clusihrdon)-                      t Highly Enriched Uranium Operations at B&W, Penn.
Facilities F.nclosure 1'
                                                                               .5               .

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                                                                                       .           July 30,1976 t
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Hr. Jarres P. O'P.eilly                                                                                      '
U.S. t;uclear P.egula tory Comission Region 1 Office of Inspection and Enforcernent                                                                                    1 1
631 Pcrk Avenue King of Prussia. Pa. 19406                                         '
                                                                                                                 ,                            j

==Subject:==
y Hinh Enriched Uranium Inventory                                    ,

==Dear Mr. O'Reilly:==
1 The' final data has recently becone available for the high enriched orcnium physical _ inventories taken on June 29-30,1976 at the                                                         -
Apollo and Parks Toenship racilities.'                                                                                   '
As the msult of earlier Dabcock and Ifilcox and l'RC Task' force eff orts, it' was anticipated that the Apollo plant would experience                                                                I a nets tive P.llF for this inventory period. llo9ever, to the ccatrary, a positive MUT cpproxir.ately equal to the absolute value of the ey.pacted negative MUF was experienced. Inventory results point up the dry scrap recovery area. F3A-40, and the conversion crea.                                                                   '.
MBA-14, as the principal sources of this MUF.
The KJF in IDA-40 is of the order of msgnitude to require irxtodfate 1,hutde.m as per current tiRC guidelines.- Su:h is not the cose for -
the Conversion. Plant. Ho.1ever, since the condi tica is Lin . direct conflict with what was anticipated.' it represents a' rojor cc.icGrn and it. plies en ined:cuate control condition. It. should be. poir.ted out that'in retrosrect, the results rey not be that surprising'in -
view of the 'eccolcrated effort to resolve the' historical ICF site: tion and the ottendent effect on total operations.
Ho attmpt is being r:nde 'to rationalize this serious' problem.
Instead positive corrective action is dictated. As indicated to-_                                                           .
P.r. If. P.artin of your Staff on Julys 29. _ the folloning actions have been or shortly'will be taken:
: 1)      The dry conversion plant. F#MO,. les;been shut du.m and is h:Hig c!nau d out. It in)i nr . ; .v er e.nJr:. / ..n ' ca ti . :,r.                                                    i I '' t .*. ;, U'.11 ".' O l CC i1 G J E I W,'O e ; Ih r) , it)'J is,?ca .{. ;h Ur.i.20.         ;                            ,
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            ..        lir. . Jar.cs P. 'O'Reilly                  '
                      'Page 2 rye July 30, 1976 ggggp[D                                         l t              l
: 2)    A new incinerator has been ir. stalled and is undergoing pre-                    !
operational testing. As so:, as acceptable. perfortrance is -                    !
attained, all accuwla ted hich enrichid bur, noble waste will be co.mi tted. This task is projected to be completed by-                        l August 20,                                                                       !
: 3)  The high' enriched conversicn line is being shutdown in en                      1 orderly ranner. Effective July 29, no additional IJF6 has                       !
been co.raitted. .                                                               '
: 4)  llo additional noterial will be introduced to the finishing               .
area,IOA-19. It .is projected that operations will be terminated by August 4.                                                        J
: 5)   k'et scrap recovery, CP.P-3, will continu: to operate at 1001 until irnediately before thc inventory.            This is' necessary           4 n order for all scrap to b.e recover :d '.o a better treasurable s
Corro.              -
f                                                                               !'
: 6)   (ffective 12:00 P.H. July 30, all ship ~ents between Apollo and Parks Township, except for scrap fo recovery, have been termintrted.
: 7)   An ADP Security Plan is beino developer' to.pernitL use 'of a-                 l
      ..                      mini computer to handle process and rat:rtal control data for high enriched operatione,. This wil i' pernit t ore -
tirely control' and identification of it.ture problers.                        !
1 Conletion of the aforerentioned actions by.the. cornttted ttres will pernit perforrance of a physical inver.cory on-or before August 18.                   .
We will keep you advised of pre,qress. in resolving this ratter, and should you have any questions, please c.dvise.
Very..truly yours.
pk.C.1       b^=
R. A.1:i liians, l'.anaper-Technica 1 Control-
                   . it CA'.!/rac                                                            -
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m UNITED ST ATis p.f '*%,,%.
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  * *****                                                                          AUG 1 : si.:,
Babcock and Wilcox Company                                    . License Nos. SNM-145           i Nucicar Materials Difision                                                      SNM-414-Attention: Mr. J. S. Dzicvisz                                    Docket Nos. 70-135 General Manager                                   ,
70-364 P'. O. Box 1260 Lynchburg, Virginia 24505                                                             .
         . Gentlemen:
This refers to the telephone conversations between Mr. J. S. Dziewisz,-                        l General Manager, Nuclear Materials Division, Babcock and Wilcox Company, and Mr. J. P. O'Reilly of this of fice on August 11, 1976. This~also refers to the telephone conversation between Messrs. R. H. Ihde and W.
F. Hocr of your staf f and Mr. J. P. O'Reilly on August 13, 1976.                          .
It is our understanding, baced upon the above discussions, that your actions related to plant operations and security system performance are                        i as described in the enclosure to this letter.
In accordance i.?ith Sectinn 2.790(d) of the NRC's " Rules of Practice,"
Part 2, Titic 10, Code of Federal Regulations, documentation of findir.gs                     >
         'of your control and accounting procedures for' safeguarding special nucicar materials and your facility security procedures are exempt from disclosure; therefore, the enclosure to this letter will not be placed in the Public~ Document Room and will receive limited distribution.
If your planned actions are not in accordance with this ictter, please                       i contact this office immediately, Sincerely, Q     . o mes P. O'Reilly                       *
                     -                                    D1 ector.
                         .                                                                              1 i
Enclosure.
As Stated        ,
                                                                                                        .s f
cc:     W. F. Ecer, Manager, Materials Plants. (v cy of enc 1)                             1
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Huclear Safety Inforr.ation Couter (?:3IC) (w/o cy of encl)
Teclutical Tniorrution Center (TIC) (u/o cy of enc 1)'
ItI:G:I lteadine, floon (u/o cy of encl)
Corrotscalth of Penncylvmila (o/o cy of onel)
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* hk ENCLOSU
                                                                                            ~
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                                                                                            .. 13197G
  ,            Babcock and Wilcox Company                                '
Nuclear 1bterials Division License Nos. SNM-145 and Sh'!-414                                                                  i Docket Nos. 70-135 and 70-364                 "'
With regard to the matters discussed, and your letter of' July 30, 1976, it is our understanding that you have undertaken or will immediately undertake the following actions:                                                                   l 1.
4 All conver'cion, finishing, and Type II operations'on highly enriched uranium vill remain shutdown until the inventory discrepancy for the material ~ balance period ending June 28, 1976 has been satisfac-
            .'           torily resolved and written concurrence for startup is received                    -
from the NRC.
During the shutdown period, scrap' recovery and incinerator operations will be conducted only for the purpose.of reducing scrap to a more measurable. form in preparing for re-inventory.                                       *   {
: 2.
* The program for nucicar material control and accounting is being promptly upgraded through a reorganization and strengthening of the Materials Plants staff. Improvements in material control through emphasic on the use of safeguards-dedicated personnel in highly enriched uranium processing and transfer areas will be specifically included as a part of the program.
                                                                                                                -i Details covering the staffing plan and the schedule for implementa-tion vill be discussed with the NRC prior to the resumption of highly enriched uranium producti~on operations.
: 3.         k'he provisions of revised Sections 1.0 through 8.0 of Amendmen't No.
HPP-1 to the Safeguards Amendments for SNM Licenses SNM-145 and SNM-414 vill be implemented prior to: the resumption of' highly.                          j enriched uranium production operations, or; September 7,1976,                   ,
1 whichever< occurs earlier.
: 4.          Equipment failures that relate to the security _of your facilitics shall be reported as required in paragraph 9.3.3 of Section 9.0 of Safeguards Amendment No. MPP-1, dated July 13, 1976.. In addi--
tion, include any information obtained from other sources which-indicate a reduction in th ee
                                                    ' ffectiveness of your security program.
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fJUCLEAR 'REGUt.9 TooY C..           '*
                                                                                        ;.. c;.;,0*;            fMg y ,           p'" l;'
nccior. i Babeid. c.d ''ilecx Conany License Hon. J '[.j4 M huclear Mataracit D wir. ten                           ,
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Att,tnticn:       Mr. J. ?. 021ccis::                              Docke t. Ne s .     .w'/* #F. ''
General Managar                                                       70- m P. O. Cox 1360                                                         .
Lynchburg, virt.ir.ia ?!.505 1
Centlemen:                                                                                                                           j This ref+r+ to the MRC li.tter o ~ August 13                       19 M :on.:r ::: in3 the shutdown of hi:21y e-'e!ched uraniu"- (p:rit. ens at the #nnsylvula                                                      ,
x Materialc Plantn. This also rsfer: te ; cur ic: tar ef Au2ust 20 %7c re ;uesting ;:amissi- :n cesma hit,hlf v.nrichd uranium up e n.t.1, .n.3 . This mise rehre I: the enting t.'.t . i.a W. F. Heer of ye,uc ataff ced J. G. Partlev cf this e ffice on August 21, 1976.
                                                                                                                                                              ]
Based upor. the rw.:lts of reinventerits cceducted t ri-.;; the                                                                      l perioo Au2ust 16-19, 1976, and y ur settsfactery f. pi;: cr.ta:ics                                                                   l of thces or3 utizaticaci mi rregr sc irpr.:varcets descri. bed in                                                                    !
cer letter of August 13, hi;hly ? richs.: t.raniun epers h ca:;, st the Apollo and I.ee:hburg heititles vare retum to rect a operation =. during the mee ting en August -21 betvaan                          .W. F.eer una                                        {
Hr. Partlov.                               .       .
As agreed Coring the Au;ust 21 Meting, opers.-icns e >'.: the ner.t.
air:ty day esterial b614nce ucrird ir. the urani'.: cen*?ersten arca (M.A-il,; till be co ttelled tnrcuyl' the use ci Jurch procesues and the dr.ta mination of a veckly sss ':slance cf cla iug ts',
product oi.:pu:s, scrap besed on recovered valets, and treuure; discards. The results ef these wahly balances 'v111 he reported to this cifice.                                                                                                                       l In accordr.nce with Secti n 2,790(O of the URO's "P.vlo ef Practice,"
Fart 2. T:.tle M, Code et rais::1 F.vyuletions, :::urotta:.. . cn of fir.dir.p of your control and scenuntir3 tre:ederes ice safe 3usreir; specisi r.uclect ma:eri.als ar.: yrur h:111ty :te? ri:y pr adtr::
are exempt fro n disclosur !; :Perafere, this lar:er vill ret be placed in the Public Document Ree . end vill ro..aive lici:od distribution.
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If yo.ir planned s.:t2 0ns are net i pleaac contact th.is of fice it-.edi.stely,n accordsnee with this letter, cro...ety,
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                                                                      ,                                amas T. O'Milly                                                  ,
a D rector cc:            W. T. Heer, Manager, Meteri a                                                                                                               !
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==SUMMARY==
OF ACTIONS Or AUGUST 1976 SHUTDOWN OF HIGHLY ENRICHED URANIUM OPERATIONS j                        AT BABC0CK & WILC0X, PENNSYLVANIA FACILITIES
                                                                                                'l HEU Shutdown Due to MUF On July 29, 1976, the results of the highly enriched uranium physical            .
inventory taken on June 28 were reported to the NRC. The results indicated an overall MUF loss of 15.8 Kg U-235. This MUF was distributed -
over the three operating plants as follows:                                         q l                          Plant                               MUF (Kg U-235)
Conversion, Finishing and Wet                            9.6                         f Scrap Recovery                                                                        i Dry Scrap Recovery                                       6.2                         i Type 11 Facility                                         0.05                     j For the Dry Scrap Recovery Plant, this MUF exceeded the shutdown criteria of 1% of throughput contained in a Division of Safeguards policy letter              1 of December 6, 1974. The NRC was more concerned, however, about the MUF                l cssociated with the Conversion, Finishing and Wet Scrap. Recovery Plant.               j Although the MUF for this plant did not specifically require a shutdown                '
I as per the Division of Safeguards policy letter, both B&W and the NRC had expected that a MUF gain would be realized in this. plant. During the April-June inventory period, B&W had undertaken a special campaign to recover the pre-April 74 backlog of scrap in accordance with a commitment.
made to the NRC. As this program progressed through May and June, B&W records (both production and accountability) indicated that HEU gains were being realized in the wet scrap recovery process and that HEU losses              ;
were being realized in the dry scrap recovery process. The dry scrap                  j recovery losses were largely explainable by an earlier NRC findi             g a 0.94% high bias existed in the licensee's measurement of During this period, this material constituted the major in          to  y-ddF scrap recovery process. For the Conversion, Finishing, and Wet Scrap           4
                                                                                           ./
Recovery Plant, however, the overall MUF loss of 9.6.Kg included an 8.1 Kg loss in MBA-14 which houses the Conversion process'and the Wet Scrap i
Recovery Process. This implied that large losses were incurred in'the Conversion process. For the April-June period, B&W production. records indicated that approximately 11 Kg U-235 had been gained in the wet scrap             .
recovery process. The NBA-14 MUF of 8.1 Kg then implied that a MUF of'                '
approximately 17.7 Kg had occurred in the conversion ~ process.                       '
Classified by
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[    During telephone conversations with the NRC Region I- Office on July 29,            i B&W agreed to voluntarily shut down all highly enriched product produc-             f tion operations at both Apollo and Leechburg (Type 11 Facility) in order          '!
to investigate and reconcile the material balance.       In a letter dated July 30, B&W confirmed that all conversion, finishing, and Type II opera-tions were being shut down. -The Dry Scrap Recovery Plant was also shut down in order to further investigate the.MUF. Wet scrap. recovery opera-            [
tions would continue in order to reduce scrap materials to a more measur-           l able form in preparation for a re-inventory of all highly enriched uranium on about August 18.
In a letter to B&W dated August 13, the NRC confirmed certain agreements which had been reached during telephone' conversations with B&W management following the shutdown of operations. This letter confirmed that product operations would remain shutdown until written concurrence for startup              j was received from the NRC.      In addition, this letter also imposed the           j following pre-startup conditions:
                                                                                          ]
A requirement for upgrading of the material control.and accounting staff through the assignment of full time safeguards-dedicated personnel continuously located in HEU             ]
processing areas.
A requirement that all new procedures contained in the B&W               ;
Fundamental Nuclear Material Control Plan and in the recently          i issued Safeguards Amendments. to the two SNM licenses be imple-        I mented prior to startup. The new Safeguards Amendment in-     .       4 cluded License Conditions requiring that all scrap be recovered-during~ the accounting period in which it is generated, that-B&W establish a system of quarterly audits. of the control and accounting system by qualified personnel from other than the local organization, and that all HEU operations be considered as one plant for accounting purposes.
Allegation of Theft Investigated During Shutdown Period On August 5, during a conversation with the B&W, NMD SecuEity Officer,              ,
the NRC learned of an allegation of theft'of SNM from the' Apollo site.
During a recent conversation. in a local tavern, an ex-employee (janitor) told a member of the Nuclear Material Control Department staff that uranium was being taken from.the . plant by employees. The uranium was allegedly being hidden in.the crotch area by the employees.in-order to' avoid discovery by the guards or detection by SNM monitoring equipment,             t On August 6, a NRC representative flew to Florida toL interview the vacationing B&W employee who had received and reported the allegations.
On August 10, Investigators from the headquarters staff met in the Region I Office to develop a plan of investigation in which the FBI would take khh

h the lead role. The approved plan called for NRC security personnel to brief the FBI and then request that they conduct the investigation without the active participation of the NRC. 0n August 12, the briefings took place in the Pittsburgh FBI Office. On August 16',
FBI' investigators arrived on site at B&W.
The investigation was conducted throughout the week of August 16. The FBI presence at the site was generally explained as being a continuation of the announced Diversion Path Analysis which had recently been con-ducted by the NRC. Approximately twenty present and ex-employees (including the source of the allegations) were interviewed during the course of the investigation. The FBI investigation concluded that the allegation was not substantiated.
Other NRC Actions During the Shutdown Period                                   -l In early August, shortly after the plant shutdown, the NRC instituted a program of increased observation in the HEU operating areas. Until the plant was ultimately released for startup'on August 21, a NRC Inspector was stationed in the plant during all week-day operations and for portions of nearly all night and week-end shifts.
One of the main NRC projects during the shutdown period was to reconcile the overall Conversion, Finishing and Wet. Scrap Recovery Plant MUF loss with the apparent gains realized in the. wet scrap recovery process.
-This analysis was complicated by the fact that both the conversion pro-cess and the wet scrap recovery process were then located with the same Material Balance Area (MBA-14) for accounting purposes. The NRC under-took a complete reconstruction of all transfers of HEU into and out of-the MBA. Depending on the type of material involved in the transfer, the transaction.was assigned as an input or output for either the. con-version process or the wet scrap recovery process. Process records.were also utilized in reconstructing the two material, balances within the one MBA. This reconstruction of data eventually covered the fou'r month period between the physical inventory of April 28 and the re-inventory of August 18. Full reconstruction of all data required. that certain assump-tions be made concerning material types which are common to both processes.
For example, during the four month period approximately 28 Kg of burnable        i wastes were transferred from the MBA'for incineration.- Neither the account-ability records nor the process records contained data for use in assign-ing these removals to either the Conversion or the scrap recovery process.
Based upon general knowledge of the wastes created in'each area,.the 28 Kg removal was split equally between the two processes.
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i During these audits of' processing records, the NRC became~ aware of an l
    . operational practice which precluded any hope of accurately re-                 l constructing balances around the two p.rocesses. It was learned that            '
HEU scrap generated in the Conversion area as La result of spill clean-         :
   .ups and equipment clean-ups was being routinely transferred to the wet           l scrap recovery area for processing without the benefit of documentation-        l in either..the accounting or the process rec'ords. Since.the two processes       ;
were then located within the same MBA, accounting documentation was not-           :
specifically reoutred. In the processing records, these transfers were           !
not included in the formal records of batches of material added to the           I scrap recovery process. As a result of this practice, the Converation process suffered undocumented losses and the wet scrap recovery process           ,
was credited with false gains when batch' inputs were compared to re-covery values. Interviews with B&W management and production personnel          l indicated that as much as~5 Kg HEU per two month. period could be involved       l' in the transfers. In the judgement of the NRC, this practice was the major factor contributing to .the apparent large losses in the Conversion-process.                     ,
On August 12, B&W reported that the_ re-inventory of all highly enriched uranium would begin on Monday, August 16 and would progress through most          j of the ensuing week. NRC Inspectors arrived on site on Sunday, August 15,         '
and subsequently observed and tested all aspects of the taking of the in-      q ventory. Since July 30, essentially all HEU plant activity had been            q dedicated to the preparation of the plants for re-inventory. As a result,       ]'
processing areas were well cleaned and most inventory items had been cona.
tainerized, measured, tamper-safe sealed, and' stored in secure storage.
prior to the start of the re-inventory. The NRC' examination of-the in-ventory actually took place throughout the shutdown / preparation period as well as du' ring the actual taking of the physical inventory. This ex-amination included independent NDA measurements,. the taking of samples for laboratory verification, independent container weighing and seal checks, and accompaniment of each B&W two-man. inventory team.      By the evening of August 19, the NRC had concluded that a' satisfactory physical inventory had been taken.
Return of HEU plants to Production Work On Friday, August 20, B&W reported that the results of the inventory had (with the exception of clean-out and scrap mate' rial being recovered and          j measured) been reconciled to the accounting records, and that a significant      !
and realistic MUF gain had been realized. By facsimile letter dated                l August 20, B&W requested permission to start-up highly enriched uranium         1 operations. >                                                                      l L
M UNCLASSIM O l

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On Saturday, August 21, HRC Inspectors met at Apollo with the Material Plants: Manager and his staff to review the overall results of.the re-                   j inventory. The preliminary MUF gain for the period June 28-August 18 was determined to be 10.6 Kg U-235. (After recovery of scrap material during the ensuing 30 day reconciliation period, the final MUF gain was determined to be 9.9 Kg.)                                                                j This review determi.ned that the overall ~results of the re-inventory were'              )
satisfactory. After a telephone conference call to NRC Management the                  i Materials Plant Manager was informed that the plants were released to resume normal operations. Written confirmation of the NRC. release was provided in a letter transmitted by facsimile the following Monday.
The decision to allow a return to operations was based upon the following major considerations:                                                                  l A satisfactory physical inventory, fairly representing holdings of HEU had been conducted.
The apparent loss of a large amount of HEU from the Conversion process was found to.have probably resulted from undocumented transfers from the Conversion process to the Wet Scrap Recovery Process.
i On July 30, when the HEU plants were shutdown, approximately                '
58 Kg U-235 of B&W scrap was being recovered at the United Nuclear Corporation facility in Rhode Island.         During the shutdown period, this recovery was completed and the results-indicated a gain of approximately 7.3 Kg U-235. Approximately 4.2 Kg of this _ gain is applicable to scrap generated pr.ior to April 28, 1976, and the remaining gain of 3.1 Kg is applicable to scrap generated during the April 28 - June 28 period. In the B&W accounting system, as in'all such systems, if .a scrap removal is understated, and if a physical inventory is taken                i prior to the receipt and booking of the larger recovery' values, an unexplained MUF loss will result. Thus, the'15.8 Kg MUF
                  -loss for the inventory of June 28 was -(after the . fact) . reduced -
by 3.1 Kg.
During the shutdown period, an additional 4 Kg of MUF realized during the first.six months of 1976 was explained when the in-sulation- from a 4" liquid extraction column in the Wet Scrap-R,ecovery Process was removed and the HEU recovered. 'This system had apparently been leaking for about six months.
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i Approximately 3 Kg of the Dry Scrap Recovery plant fiUF for                 i June 28 was explai         he NRC finding of a. high bias in
                                                                               .bf),
the measurement of             materials prior to April 1976.              !
           -   Duringtheshutdownperiod,the'flRCbecameawareofthe                           l allegation of thef t of SNM. As described in this report,                   !
the assistance of the FBI was solicited and an investigation               !
Was conducted. The NRC decision to release the plant on August 21 included consideration of the fact that the FBI had completed its investigation on the previous day and had concluded that there was no merit to the allegation.
           -   Finally, the NRC determined that -the NRC startup prerequisites had been satisfactorily met and that a system for improved
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accountability had been implemented.
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              -snacunvaainatoa                      W ASHINGTON, D.C. 20510 6
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January 28, 1977                                                      .a l
1 4
Mr..Kenneth R. Chapman Director                                                                                                  .l3 Office of Nuclear Material Safety ans Safeguards Nuclear-Regulatory Commission
                                                                                                                                  ]j Washington, D.C. 20555                                                                                      ;

==Dear Mr. Chapman:==
i d
This is in reference to a " Preliminary' Notification of                                                    '
Safeguards Event" (PNS-76-36A) dated August 5,'1976,; advising.                                             l the Joint Committee of the shutdown of. highly enriched uranium'                                         q operations at the. Nuclear Materials        Division'oftBabcock and' The shutdown reportedly.was                                           ;
Wilcox,Appo11o,. Pennsylvania.                                                                                1 caused by an unsatisfactory material balance at;this-facility.                                      '
2 It is requested that you furnish the Committee copies.of-any                                            u reports in the possession of the NRC which pertainLto this'                                             j unsatisfactory balance.                                                                                 n d.
                                                                                                ~
i Your cooperation in this matter is greatly appreciated...                                                  l Sincer       y-yours',                                                  l
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