ML20078N600

Ga Power Company Proposed Findings of Fact & Conclusions of Law W/Respect to Intervenor Illegal License Transfer Allegation.* W/Certificate of Svc

ML20078N600
Person / Time
Site:	Vogtle
Issue date:	02/13/1995
From:	Lamberski J GEORGIA POWER CO., TROUTMANSANDERS (FORMERLY TROUTMAN, SANDERS, LOCKERMA
To:
References
CON-#195-16355 93-671-01-OLA-3, 93-671-1-OLA-3, OLA-3, NUDOCS 9502160036
Download: ML20078N600 (188)

Text

__

f355 DCCKETED USHRC i

UNITED STATES OF AMERICA

'95 FEB 14 Ali :21 Nb;'uEAR REGULATORY COMMISSIO"

)

l Before the Atomic Safety and Licensina B6&ird O , [,6ii- [,

ggUtkilth. -

BHraEli

)

In the Matter of ) Docket Nos. 50-424-OLA-3

) 50-425-OLA-3 GEORGIA POWER COMPANY, )

et al. ) Re: License Amendment

) (Transfer to Southern (Vogtle Electric Generating ) Nuclear)

Plant, Units 1 and 2) )

) ABLBP No. 93-671-01-OLA-3 GEORGIA POWER COMPANY'S PROPOSED FINDINGS OF FACT AND CVNCLUSIONS OF LAW WITH RESPECT TO INTERVENOR'S ILLEGAL LICENSE TRANSFER ALLEGATION 1

l TROUTMAN SANDERS SHAW, PITTMAN, POTTS & TRO'JdRIDGE Counsel for Georgia Power Company February 13, 1995 9502160036 950213 PDR O

ADOCK 05000424 PDR )3 o3

TABLE OF CONTENTS I. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . 2 II. PROCEDURAL HISTORY. . . . . . . . . . . . . . . . . . . 4 III. OVERVIEW AND CONCLUSION. . . . . . . . . . . . . . . . . 11 IV. FINDINGS OF FACT. . . . . . . . . . . . . . . . . . . . 22 A. BACKGROUND. 22

1. The Southern System Companies and the Provision of Services by SCS to Its Affiliates. . . . . . . . . . . . . . . . . . 22 ,

2. The Decision to Proceed With the Formation of a Nuclear Operating Company. . . . . . . . . . 24

3. The Three Phases of Formation of Southern  ;

Nuclear. . . . . . . . . . . . . . . . . . . . 30

4. Implementation of the Three-Phased Approach and the Role of Mr. Farley. . . . . . . . . . 32 B. GEORGIA POWER HAS MAINTAINED CONTROL OVER LICENSED ACTIVITIES AT PLANT VOGTLE. . . . . . . . . . . . . 42

1. Legal Standards. . . . . . . . . . . . . . . . 42

2. Intervenor's Contention. . . . . . . . . . . . 47

a. Georgia Power Has Retained Legal Control . . . . . . . . . . . . . . . . . 48

b. Georgia Power Has Retained Actual Control . . . . . . . . . . . . . . . . . 51 (1) Control of Daily Operations. . . . . 51 (ii) Ability to Determine and Carry Out Nuclear Policy Decisions (Including Preparation and Filing of NRC Applications). . . . . . . . . . . . 56 (iii) Employment, Supervision and Dismissal of Nuclear P6rsonnel. . . 58 (iv) Responsibility for Nuclear Costs. . 66 i

(v) Use of the Nuclear Plants and Receipt of their benefits. . . . . . 70

c. Activities of the Southern Company Do Not Evidence Transfer of Control . . . . . . 71

d. The NRC Staff Concluded No Illegal License Transfer occurred . . . . . . . . 77 i

C. GEORGIA POWER'S PROPOSAL FOR, AND IMPLEMENTATION OF, A SEPARATE NUCLEAR OPERATING COMPANY HAS BEEN OPEN AND HONEST. . . . . . . . . . . . . . . . . . 81

1. Georgia Power Made a Considerable Effort to Keep the NRC Fully Informed. . . . . . . . . . 81

2. Mr. Farley's Role Was Opealy Discussed and Known to the NRC. . . . . . . . . . . . . . . 94

3. Georgia Power and Its Agents and Employees Acted in Good Fal %. . . . . . . . . . . . . . 98 ,

D. INTERVENOR'S PREHEARI.,e STATEMENT OF ISSUES. . . . 105

1. Intervanor's Issue 1 . . . . . . , . . . . . . 105

2. Intervanor's Issue 2 . . . . . . . . . . . . . 118

3. Intervenor's Issue 3 . . . . . . . . . . . . . 119

4. Intervenor's Issue 4 . . . . . . . . . . . . . 121

5. Intervenor's Issue 5 . . . . . . . . . . . . . 124

6. Intervenor's Issue 6 . . , . . . . . . . . . . 127 '

7. Intervenor's Issue 7 . . . . . . . . . . . . . 128

8. Intervenor's Issue 8 . . . . . . . . . . . . . 130

9. Intervenor's Issue 9 . . . . . . . . . . . . . 134

10. Intervenor's Issue 10 . . . . . . . . . . . . 137

11. Intervenor's Issue 11 . . . . . . . . . . . . 138

12. Intervanor's Issue 12 . . . . . . . . . . . . 139

13. Intervenor's Issue 13 . . . . . . . . . . . . 140

14. Intervenor's Issue 14.A . . . . . . . . . . . 141 ii

15. Intervenor's Issue 14.B .. . ... . . . . . 142

16. Intervenor's Issue 15 . . . .. .. . . . . . 143

17. Intervanor's Issue 16 ... .. .. . . . . . 148

18. Intervenor's Issue 17 ... .. . . . . . . . 149

19. Intervenor's Issue 18 . . . . . . . . . . . . 151

20. Intervanor's Issue 19 . . . .. ... . . . . 152

21. Intervenor's Issue 20 ...... . . . . . . 155

22. Intervenor's Issue 21 ... ... . . . . . . 158

23. Intervanor's Issue 22 . .. . . . .. . . . . 16 *z'

24. Intervenor's Issue 23 .. . . .. .. . . . 163

25. Intervenor's Issue 24 .. .. . . . . . . . . 164

26. Intervenor's Issue 26 . ., . . . . . . . . . 168

27. Intervanor's Issue 27 .. . ..... . . . . 168

28. Intervanor's Issue 28 ... ... . . . .. . 170 V. CONCLUSIONS OF IAW. . . . . .... . ... .. . . . . 171 f

VI. ORDER. . . . . . . . . . . . ..... ... . . . . . . 172 APPENDIX 1: Chronology of Events Rela: ting to the Illegal Transfer Allegation APPENDIX 2: Principal Players lii

February 13, 1995 UNITED STATES OF AMERICA r NUCLEAR REGULATORY COMMISSION Pafore the Atomic Safety and Licensina Board

) .

In the Matter of ) Docket Nos. 50-424-OLA-3

) 50-425-OLA-3 GEORGIA POWER COMPANY, )

et al. ) Rs: License Amendment

) (Transfer to Southern (Vogtle Electric Generating ) Nuclear)

Plant, Units 1 and 2) )

) ASLBP No. 93-671-01-OLA-3 GEORGIA POWER COMPANY'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH RESPECT TO  ;

INTERVENOR'S ILLEGAL LICENSE TRANSFER ALLEGATION '

Georgia Power Company (" Georgia Power" or " Company") hereby submits its proposed findings of fact and conclusions of law related to the first hearing of this proceeding, addressing i

Intervanor's illegal license transfer allegation. As requested in the Board's January 18, 1995 Memorandum and Order, at p. 2, Georgia Power has endeavored to prepara its proposed findings and conclusions in the form of a decision that could be issued by the l

Board. '

The proposed Partial Initial Decision is organized as follows. After a brief introduction (Section I),Section II summarizes the procedural history of the license transfer issue, and Section III provides an overview and the conclusions of the decision, including a discussion of the weight attributed to testimony. Section IV then presents Findings of Facts.

Subsection'A of the Findings provides background information l necessary to understand the issues, based in part upon 7

stipulations and in part upon the testimony of Georgia Power and 1

the NRC Staff, which Georgia Power proposes that the Board accept. Subsections B and C provide the Findings that Georgia r

Power has not transferred control and has acted honestly and  ;

subsection D then addresses Intervanor's issues and arguments. i Two appendices are also included. Appendix 1 is the Chronology of Events Relating to the Illegal Transfer Allegation, j which was attached to Mr. Hairston's Profiled Testimony as ,

t Exhibit B (GPC Exh. 11). The Chronology was not admitted into j evidence and Georgia Power has been unsuccessful in obtaining the parties' stipulation to the Chronology. Appendix 2 is a list of (

Principal Players which identifies, in a general manner, the f i

names of Georgia Power, as well as selected Intervenor, witnesses (

and the positions they held during the relevant time frame.  !

i I. INTRODUCTION.

t This Partial Initial Decision addresses whether Georgia Power misled the Nuclear Regulatory Commission ("NRC") .regarding who was in control of licensed activities at the Vogtle Electric  ;

Generating Plant (" Plant Vogtle" or "Vogtle") after formation of j the EONOPCO Project in 1988. This issue is one of the bases for a ceintention by Allen L. Mosbaugh ("Intervanor") that Georgia Power should not be permitted to transfer its operating licenses for Plant Vogtle to a new entity, Southern Nuclear Operating 2

Company, Inc. (" Southern Nuclear"), which like Georgia Power is a f subsidiary of The Southern Company, because Southern Nuclear 'i lacks the requisite character. In this Partial Initial Decision, we conclude that Georgia Power has not transferred control of the l Vogtle licensa and did not mislead the NRC.  !

Our conclusion is based on testimony from the senior I management of Georgia Power and Southern Nuclear during the l relevant time period, and testimony from the NRC Staff. These witnesses provided direct evidence that Georgia Power proceeded in good faith with a phased approach to the formation of Southern Nuclear, based on a similar approach which had been previously approved by the NRC, that Georgia Power kept the NRC fully l informed of the plans to form Southern Nuclear using a phased  ;

approach, and that Georgia Power has remained in control of the  !

operation of Plant Vogtle pending NRC approval of the license  !

transfer.

Intervenor, on the other hand, presented no direct or i

probative evidence that Georgia Power relinquished control of l l

licensed activities at Plant Vogtle, or that Georgia Power misled [

the NRC in any material respect. Intervenor's case is largely  !

l based on rumor and innuendo, and the inferences drawn by 4

Intervenor's witnesses, Allen Mosbaugh and Marvin Hobby, both of I

whom are embittered ex-employees of Georgia Power Company who  ;

have been embroiled in litigation with their ex-employer for nearly five years.  :

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II. PROCEDURAL IISTORY. [

This is a license amendment proceeding concerning an l application submitted by Georgia Power to the NRC on September 18, 1992 to amend the operating licenses of Plant Vogtle Units 1 and 2. The amendment would add Southern Nuclear to the Vogtle licenses as the exclusive licensed operator, although Southern Nuclear would have no ownership interest in the plant. The  ;

owners of Plant Vogtle, Georgia Power, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and The City of Dalton, Georgia, would remain on the licenses retaining l the right to possess, but not operate, the Vogtle units.

A petition to intervene in this license amendment proceeding was filed on October 22, 1992, by Messrs. Mosbaugh and Hobby. By Memorandum and Order (Admitting a Party), dated February 18, 1993, we admitted Mr. Mosbaugh as a party to tis case, dismissed j Mr. Hobby for lack of standing, and admitted.the following  :

reconstituted contention:

The license to operate the Vogtle Electric ,

tGenerating Plant, Units 1 and 2, should not '

be transferred to Southern Nuclear Operating Company, Inc., because it lacks the requisite -,

' character, competence, and integrity, as well as the necessary candor, truthfulness, and willingness to abide by regulatory requirements.

Georaia Power Connany (Vogtle Electric Generating Plant, Units 1 and 2), LBP-93-5, 37 N.R.C. 96, 110 (1993). One of the admitted bases for this contention alleged that Southern Nuclear's relationship to Vogtle violated NRC regulations, evidencing a 4

v e,-- -

,e --- - . , - . - , , - - - - - - - - - . - - - . - - - - - - - - -

lack of trustworthy character in Southern Nuclear.I' Id. at 103.

In this regard, Intervenor alleged that 10 C.F.R. S 50.54(c) (a >

"non-alienation" requirement) and S 50.34(b) (6) (i) (an operating license application requirement) were violated, in essence, because during the time in question Mr. Joseph Farley (at one time Executive Vice President-Nuclear of Southern Company Services, Inc. and The Southern Company, and later President and ,

CEO of Southern Nuclear), was in control of operations at Plant Vogtle, rather than Georgia Power's CEO, Mr. Dahlberg.2/

The evidence cited in support of this illegal license transfer allegation was similar to that incorporated into a i petition earlier filed with the NRC on September 11, 1990, and later supplemented, by Intervenor and Mr. Hobby, and treated by the NRC as a Section 2.206 petition. Egg Stipulation 55.I' This l'

This factual basis is referred to as the " illegal license  ;

transfer allegation. " The other factual basis is Intervenor's allegation that Georgia Power made false statements to the NRC in 1990 concerning the Vogtle diesel generators. ,

2/

More specifically, Intervenor alleged the establishment of a da facto Board of Directors called the SONOPCO Project; Mr. i Farley is alleged have been the Chairman of that Board, reporting directly to the Board of The Southern Company about Georgia Power's nuclear units. LBP-93-5, 37 N.R.C. at 103. Intervenor further alleged that Mr. Farley jointly served, with Mr. R. Patrick Mcdonald, then Georgia Power's Executive Vice President of Nuclear Operations, as chief executive of the Project. Mr. Mcdonald is alleged to have given contradictory and misleading testimony about the management structure and formation of SONOPCO. Id.

2/ 2/

During the course of discovery in this proceeding, the parties reached agreement on certain stipulations which are included in a document entitled Stipulations Relating to Allegations of Illegal License Transfer (hereinafter " Stipulations" or "Stips."), filed with the Board by Georgia Power on August 1, 1994. GPC Exh. 1 (att Tr. 1250-52). A few of those Stipulations ,

(continued...)

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evidence was primarily based on selected portions of transcripts of deposition and trial testimony and certain trial exhibits from the Department of Labor proceeding brought by Mr. Hobby against Georgia Power in early 1990 (hereinafter cited as " Hobby v.

GEQ").V '

Discovery on the alleged illegal license transfer issue began in May 1993 and ended in May 1994. During this period, Intervenor submitted one document production request and one set of interrogatories to Georgia Power, Georgia Power submitted two document production requests and two sets of interrogatories to Intervenor, Georgia Power submitted two document production requests and one set of interrogatories to the NRC Staff, and 25 depositions were conducted related to the transfer allegation.F Following the close of discovery, Georgia Power filed a Motion for Summary Disposition of Intervenor's Illegal Transfer of License Allegations (August 24, 1994). The NRC Staff filed a response in support of summary disposition on October 3, 1994, and the Intervenor filed a response opposing summary disposition F(... continued) were not agreed to by all parties (those stipulations with asterisks in the August 1 document) and they are not relied upon in this decision.

F The Licensing Board's Memorandum and Order (Georgia Power Motion to Reconsider Scope of Proceeding), LBP-93-21, 38 N.R.C.

143, dated September 24, 1993, ruled that Intervenor had incorporated into his Amended Petition by reference only those portions of his section 2.206 petition which "were relevant to

[Intervenor's) discussions of his contention in his Amended Petition." LBP-93-21, 38 N.R.C. at 150.

F Intervenor took 23 of these depositions. Subsequently, 20 of the 23 depositions were transcribed.

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l on October 4, 1994. The Board issued its decision on November 8, 1994 granting in part Georgia Power's Motion for Summary Disposition. Georaia Power connany (Vogtle Electric Generating Plant, Units 1 and 2), LBP-94-37, 40 N.R.C. (1994).  !

l In our decision, we ruled that even if Intervanor was able j to prove that an illegal transfer of control occurred, that alone was not enough to prove his contention. LBP-94-37, slip op. at 3.  !

l Rather, to succeed on his contention that the licensee lacks l l

character and integrity, Intervenor must show culpability on the- )

part of the Licensee. Thus, we ruled that Intervenor had to show that Georgia Power had misled the NRC about who was in control of .

1 Plant Vogtle. Id. In holding that the hearing would be limited to this issue, we cautioned Intervanor to be meticulous in presenting evidence about alleged omissions and misrepresentations because they are hard to prove even when they have occurred. Id. at 26. We explained that it was important to provide the context to reach a conclusion concerning the falseness and the materiality of any statements or omissions and to provide evidence permitting us to assess the degree of culpability involved. Id. at 5, 26. We required that the proof make some allowance for inaccuracies in expression, understanding and memory. Id. at 26-27.

We further explained to Intervenor that it was important to place communications by Georgia Power in the full context of its relationship with the NRC which involved extensive communications.

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We are aware from our study of the record that there were extensive communications between Georgia Power and the NRC. The NRC also amassed substantial knowledge of Georgia Power through its resident inspector program <

and its inspection program. For Intervenor to demonstrate material misrepresentations or omissions, it must place communications by Georgia Power in the full context of its relationship with the NRC. In this section of our Memorandum and Order, the Board sets ,

forth some of the facts that show to our satisfaction  :

that communications were complete and above board. The purpose of this presentation of facts is to inform the Intervenor of part of the context within which it must prove its case:  ;

On July 25, 1988, the NRC was informed by GPC that a >

project organization had been established for each ,

plant. Stip. Ex. 9, enclosure 1. The NRC also was furnished with separata organization charts for

" Nuclear Operations -- Transition Organization" and for Vogtle Project Transition Organization. Stipulations, Ex. 9, enclosure 3. We find that NRC was duly informed of GPC's plans for reorganization at this meeting. "It is our opinion that this meeting was beneficial and has kept us apprised of your nuclear operations organization." (Aug. 11, 1988 Letter from Region II Administrator to GPC; Stip. 9.)

The following material fact presented by GPC has not been opposed by Intervenor and is therefore admitted:  ;

6. GPC and SONOPCO Project personnel met  !

repeatedly with representatives of the NRC to keep them abreast of all events pertaining to l the phased formation of SONOPCO. NRC  !

representatives also conducted site '

inspections of the offices in Birmingham to ensure compliance with NRC regulatory requirements. Stip. 1 1 5, 6, 10, 14, 15, 16, 21, 25 and 29; Hairston Aff. 1 7.

LBP-94-37, slip op. at 28-29.

Finally, we granted Georgia Power's Motion for Summary Disposition in part by holding that there was no genuine issue of fact concerning the following issues:

(1) whether or not Georgia Power improperly withheld information from the Securities and Exchange Commis-sion, 8

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(2) whether or not Georgia Power' improperly delayed informing the NRC that its corporate offices were being moved to Birmingham, and ,

(3) whether or not Georgia Power has violated the Public Utilit[y] Holding Company Act. This third issue (was) excluded from the hearing because it (was) beyond the scope of the admitted contention.

LBP-94-37, slip op. at 32.

On December 5, 1994, Intervenor submitted his prefiled testimony of Messrs. Mosba; ugh and Hobby and for Mr. Michael D.

F.arker, and Mr. Thomas J. McHenry. Because Intervenor had failed to adequately comply with the guidance of our ruling on summary disposition (LBP-94-37), by Memorandum and Order, dated December 7, 1994, we directed Intervanor to file his " Statement of Issues"  !

to provide adequate notice to the other parties of the facts 4

4 Intervenor intended to prove. Subsequently, Intervenor filed his i l

Prehearing Statement of Issues, which identified 28 instances j where Georgia Power allegedly misled the NRC concerning who was in control of Plant Vogtle.F The Statement of Issues included, I

at the Board's direction, an explanation of why Intervanor j believed each statement to be false. Intervenor also provided a l list of 63 witnesses and six categories of other witnesses he intended to call at the hearing along with a list of 133 l exhibits.

Georgia Power and the NRC Staff opposed Intervenor's list of witnesses as unreasonable. Following discussions among the parties and rulings by the Board, in addition to the witnesses F One of those issues (No. 25) was stricken by the Board )

during the December 14, 1994 prehearing conference. Tr. 872.

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f sponsored by Georgia Power and the NRC Staff with profiled written testimony, only Messrs. Mosbaugh, Hobby, and a Georgia Power manager, Bill Shipman, testified in person at the hearing l l

and Georgia Power Senior Vice President, Mr. Fred Williams, testified live by telephone.2' In lieu of live testimony from Intervenor's other witnesses, a collection of excerpts of prior testimony of a number of those witnesses was admitted into evidence.I'  !

On December 27, 1994, Georgia Power submitted profiled testimony for its witnesses: Messrs. A. W. Dahlberg, R. P.

Mcdonald, C. K. McCoy, W. G. Hairston, and J. M. Farley.I' On December 28, the NRC Staff submitted profiled testimony for its l 2' Mr. Mosbaugh's profiled testimony, bound into the record at Tr. 1899, is hereinafter cited as "Mosbaugh at .

" Mr. Hobby's pr iled testimony, ff. Tr. 2277, is hereinafter cTted as " Hobby at l'

The excerpts and associated exhibits agreed upon by the ,

parties were from depositions in this proceeding and depositions and trial transcripts from the Department of Labor' proceedings of Hobby v. GPC and Yunker and Fuchko v. GPC. A description of the excerpts was set forth on the record on January 7 (Tr. 10134-66) and January 9 (Tr. 10170-99), as corrected on January 13 (Tr. 2757- ,

58). A copy of the excerpts was provided to the Board by letters i from David R. Lewis (January 25, 1995) and John Lamberski (February )

9, 1995). j 2/ Mr. Dahlberg's prefiled testimony, which is bound into the  !

record at Tr. 1061, is hereinafter cited as "Dahlberg at .

" Mr.  !

Mcdonald's profiled testimony, ff. Tr. 1249, is hereinafter cited l as " Mcdonald at _. " Mr. McCoy's prefiled testimony and supplemental profiled testimony, ff. Tr.1560, is hereinaf ter cited as "McCoy at " and "McCoy Supp. at _, " respectively. Mr.

Hairston's prefTled testimony, ff. Tr. less, is hereinafter cited as "Hairston at _. " Mr. Farley's profiled testimony, ff. Tr.

1749, is hereinafter cited as "Farley at _. " Mr. McCoy also provided written rebuttal testimony which was bound into the record at Tr. 2532 and is hereinafter cited as "McCoy Rebuttal at _."

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witnesses: Messrs. Frederick R. Allenspach, Darl S. Hood, and John F. Rogge.F At the hearing, an additional witness, Mr. F.

W. Williams, provided oral testimony for Georgia Power.

III. OVERVIEW AND CONCLUSION.

The Board's task in this phase of the proceeding is a serious one: to determine whether thero is any truth to allegations that Georgia Power, a power reactor licensee, misled the NRC concerning who was in control of the Plant Vogtle operating licenses. An affirmative finding would require us to r

consider whether, as a result, Intervanor had proved his contention that Southern Nuclear lacked the requisite character and integrity to operate Plant Vogtle. Were there a lack of character and integrity, we would further consider whether the proposed license amendment, to add Southern Nuclear to the Plant Vogtle licenses as the exclusive operating licensee, should be denied, or conditioned with appropriate restrictions. We do not reach these latter considerations, however, because we find that Georgia Power did not mislead the NRC as Intervenor alleged.

Further, contrary to Intervenor's assertion, we find that there has been no illegal transfer of control of the Vogtle operating licenses.

Given the importance of our task, we took careful steps in the course of this proceeding, which began in late 1992, to MV The NRC Staff's profiled testimony, bound into the recard at Tr. 2620, is hereinafter cited as "NRC Staff at __."

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ensure that Intervenor was given wide latitude to provide the Board with all relevant and material information which might aid the Board in its task. We wish to recognize that, as a result, Georgia Power has been subject to a rather lengthy proceeding during which serious allegations against it have remained unresolved. This, no doubt, has had a detrimental effect on the morale of its personnel, especially those who were specifically identified in Intervenor's allegations. We trust that, by our decision, they will now be relieved of this very real burden and excel in the continued safe operation of Plant Vogtle.

In our ruling on Georgia Power's Motion for Summary Disposition (LBP-94-37), we limited this phase of the proceeding to the question of whether Georgia Power had misled the NRC concerning who was in control of Plant Vogtle. While Intervenor presented some 28 issues respecting various communications Georgia Power had with the NRC, he failed to place these contacts in the full context of Georgia Power's relationship with the NRC.

Intervencr has identified a couple of statements that Georgia Power admits were not strictly accurate, but even here Intervenor failed to show any culpability with respect to his alleged misrepresentations and omissions, i.e., that they were anything other than a few innocent missteps among a voluminous amount of l information. In sum, Intervenor failed to present any evidence i

to controvert the Board's finding in its ruling on summary disposition (LBP-94-37, slip op. at 28-29) that Georgia Power's 12 i

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extensive communications with the NRC were complete and above l l

board.

Georgia Power's considerable efforts to keep the NRC informed concerning organizational changes associated with the formation and implementation of Southern Nuclear (333 Findings 114-44) were very persuasive in convincing this Board that Georgia Power took every reasonable and necessary step to keep the NRC informsd. There were at least two occasions when Mr.

Farley was himself involved in discussions with the NRC Commissioners and the Executive Director for operations. In the l first meeting in 1988, the plans to form a separate oper;ating company were discussed. In another meeting, which toak place in May of 1990, the status of formation of Southern Maclear was I discussed and Mr. Farley explained his support role as an Executive Vice President of The Southern company. Therefore, there is evidence, which was not contested, that the NRC was aware of Mr. Farley's activities, at least in a general way.  !

We also find that Georgia Power acted in good faith in the steps it took to form a separate nuclear operating company. Egg I

Findings 156-66. Georgia Power followed the General Public Utilities model in establishing its phased approach to the formation of Southern Nuclear -- a model which it reasonably '

believed had the approval of the NRC. Findings 6,7,15. We are convinced that Georgia Power believed Mr. Farley's activities did not infringe on Georgia Power's control of licensed activities at Plant Vogtle. In view of this belief, which is supported by the t

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i record, it is also reasonable to conclude that Georgia Power did not perceive any need to advise'the NRC of the details of Mr.

Farley's supporting role. The testimony of Georgia Power's {

witnesses that it was their policy to keep the NRC fully informed of matters that might be of interest to the NRC was ,

uncontroverted. .

Mr. Mosbaugh testified that a tape recording he made of the .l Vogtle Vice President, Mr. Ken McCoy, giving a pop-talk to Plant '

vogtle personnel during the August 1990 NRC Operational Safety Inspection establishes that Georgia Power had a policy of 3 deception towards the NRC. We reject Mr. Mosbaugh's testimony -

based on our assessment of Mr. McCoy during his extended appearance before us and based on the fact that the tape recording itself does not support this assertion. Findings 164-66.

There was no evidence presented that Georgia Power concealed the role of Mr. Farley. To the contrary, Mr. Farley's activities appear to have been very much out in the open. We have concluded that it would have been virtually impossible to conceal Mr.

Farley's activities given his high profile and frequent involvement in industry meetings and other. gatherings.

Furthermore, the NRC was advised in early 1990 of Mr. Hobby's concern that Mr. Mcdonald received his management direction from Mr. Farley rather than Mr. Dahlberg. Findings 145-55.

The principal factual basis for Intervenor's allegations that the NRC was misled was his assertion that, beginning in 14

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1988, Georgia Power had transferred control of the Plant Vogtle ,

l licenses, without the NRC's knowledge or consent, to Mr. Farley j i

(then President of Alabama Power and shortly thereafter_ Executive j Vice President, Nuclear, of The Southern Company and SCS) or to Southern Nuclear. Georgia Power denies that such a transfer has j taken place but freely admits that it did not inform the NRC that I Mr. Farley or Southern Nuclear was in control of the Plant Vogtle l licenses. l The concept of control of a license involves both' legal and actual control. Legal control is a relatively straightforward matter. Actual control, on the other hand, is not. There is little NRC case law to guide us. We have looked to'other sources of authority, namely the case law of the Federal Communications  ;

Commission. Based on our analysis we hold that where legal  :

control of the license is clearly established, a rebuttable f

presumption is created that actual control is exercised by that ,

same entity. Further, in order to rebut this presumption, it must be established that an unauthorized person or entity influenced the licensed activities of the license holder so '

I extensively that the influence " determined" the policies and  !

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procedures for the licensed activities in question. Findings 41-49.

In the case at hand, we find it is undisputed that the legal control of the Plant Vogtle license was vested with Georgia Power and its officials. Findings 52-57. Therefore, a rebuttable presumption is created that actual control of the licenses 15 mr } w --

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' remains with Georgia Power. 7.ntervanor has not-rrebutted this i

. presumption. Intervenor failed to show that the influence of an i I

unauthorized individual or entity, in this case Mr. Farley and Southern Nuclear, was so extensive that it determined the .

policies and procedures for the licensed activities of Plant l Vogtle. Findings 58-94. I i

We examined five indicia in determining who was in actual control of Plant Vogtle. We found:

1. Georgia Power controlled the daily operations of Plant Vogtle with a clear chain of command from the Plant Vogtle General Manager, through the Vice President of Plant Vogtle, through the Senior Vice President - Nuclear Operations, through the Executive Vice President - Nuclear Operations, to the President and CEO of Georgia Power. A Nuclear  ;

Operations Overview Committee of the Georgia Power Board of l Directors also conducted periodic, detailed reviews of the I regulatory and operational performance of Georgia Power's l

nuclear plants. Mr. Farley, on the other hand, did not <

perform any sort of oversight of Plant Vogtle licensed activities. Findings 59-66.

2. Georgia Power determined and carried-out nuclear policy decisions, including the preparation and filing of applications with the NRC. Intervenor asserted that Mr.

Farley established the outage philosophy for Plant Vogtle.

16

~

"Y T- - -- t a

?

x >

While there was evidence that Mr. Farley was involved in discussions about the outage philosophy, the record does not support a finding that he determined or established that philosophy or any other operational policies for Plant Vogtle. Findings 67-69.

3. Georgia Power was in charge of and exercised decisions l concerning the employment, supervision and dismissal of its nuclear personnel. For example, the Georgia Power Board of ,

Directors elected each of Georgia Power's nuclear officers.

Mr. Farley had some limited involvement in the selection of l

Mr. McCoy for his position as Vice President of Plant Vogtle, in the annual review of Mr. Mcdonald, and in l discussions with nuclear plant personnel concerning system-wide pay-for-performance program changes. However, the evidence fell far short of showing that it was Mr. Farley l, who determined any of these Georgia Power personnel actions which were taken, in the final analysis, by Georgia Power  !

officers and employees. Mr. Farley's involvement in decisions concerning Alabama Power and SCS personnel was i

~

appropriate given the positions he held with those companies at the time. Findings 70-85.

4. Georgia Power was responsible for the costs of Plant I

Vogtle. Following review by Georgia Power's Management Council, Georgia Power's President and CEO approved the l

17 l

i operating and capital budgets, the latter of which was also approved by the Georgia Power Board of Directors. l Intervanor alleged that Mr. Farley and Mr. Addison, CEO of 1

The Southern Company, approved Georgia Power's nuclear l budgets. As an Executive Vice President of The Southern Company, Mr. Farley had some involvement in reviewing the nuclear budgets as part of the normal process for preparing annual budgets in the Southern system. Given The Southern company's holding company status, Mr. Addison's involvement in reviewing and providing guidelines and requirements for adequate earnings and reasonable capital needs was expected and appropriate. Findings 86-93.

5. Georgia Power and the other co-owners of Plant Vogtle have the exclusive use, and the right to the power output, of Plant Vogtle. Finding 94.

We asked the parties to address in their findings of fact and conclusions of law, the extent to which it is appropriate for holding companies to be involved in the activities of their subsidiaries who are NRC licensees. We are. persuaded by the brief of Georgia Power which explained that NRC does not require holding companies to be licensed by the NRC even though they exercise some control over the electric utilities they own. In fact, come involvement in budget and safety matters is not only expected but is desirable. Egg Metrooolitan Edison Co. (Three 18 4

l Mile Island Nuclear Station, Unit No. 1), CLI-85-9, 21 N.R.C.

1118, 1147 (1985). The degree of control exercised by The i Southern Company over matters pertaining to Georgia Power's Plant r I

Vogtle appears to be a normal function of a holding company, which took place both before and after the formation of the f SONOPCO Project in 1988. Findings95-105.

Intervenor's Prehearing Statement of Issues (December 12, 1994) included a number of alleged misrepresentations or omissions other than the illegal license transfer allegation.

For all but a couple of these issues, the record evidence  :

supports Georgia Power's position that there were no misrepresentations or omissions. Findings 167-317. In a couple of cases, Georgia Power admitted that the statement it made to the NRC was inaccurate. However, in those cases, Georgia Power witnesses testified that the mistake was an innocent one and Intervenor presented no evidence to the contrary. Findings 240-l t

42, 317-18. We also note that many of Intervenor's issues or I subissues are redundant or lack materiality.

In reaching the above conclusions, we gave considerable ,

weight to the testimony of Georgia Power's witnesses who we found to be forthcoming, sincere and patient. Georgia Power has also l 1

been responsive to the Board's inquiries and has acted in a professional manner throughout this proceeding, which has had some trying moments. Georgia Power's witnesses had first-hand knowledge of every aspect of the control of Plant Vogtle operations.

19 a r -

~

We also gave considerable weight to the observations of the NRC Staff. The Staff previously considered the allegations of unlawful transfer of control, contained in a 2,206 petition filed by Messrs. Hobby and Mosbaugh in 1990. Following the receipt of i l

detailed responses from Georgia Power, the NRC Staff concluded that there was no illegal transfer. DD-93-08, 37 N.R.C. 314, 317-22, 345 (1993), vacated, CLI-93-15, 38 N.R.C. 1 (1993).

After reviewing the record of this proceeding and conducting l l

further inspections, the NRC Staff confirmed its prior conclusion. The Staff is not avara of any evidence that would indicate that the Vogtle license has been transferred to the SONOPCO Project or Southern Nuclear. Findings 106-13.

Intervenor's main witnesses, on the other hand, lacked the personal knowledge necessary to support their allegations. Mr.

Mosbaugh had no occasion to observe the day-to-day interaction between Mr. Mcdonald and Mr. Dahlberg, and likewise had no personal knowledge of the interactions between Mr. Farley and Mr.

Mcdonald, Mr. Hairston and Mr. Mcdonald, or between Mr. McCoy and Mr. Hairston. Mr. Mosbaugh has never been to the Birmingham offices. Tr. 2127-28, 2160 (Mosbaugh); Stip. 57. Likewise, he has no personal knowledge of Mr. Farley giving any instruction to Mr. Mcdonald, and was not involved in the communications between Mr. Farley and Mr. Mcdonald. Tr. 2159 (Mosbaugh); Stip. 57.

In fact, Mr. Mosbaugh testified in his Department of Labor proceeding in 1992 that Mr. Mcdonald reported to Mr. Dahlberg and no one else to his knowledge. He made no mention of Mr. Farley.

20

Tr. 2141-43 (Mosbaugh). Mr. Mosbaugh tried to explain the inconsistency of his prior tactimony with his current position by stating that his belief has been an evolutionary process, affected by what he has learned as the proceedings have progressed. Tr. 2144 (Mosbaugh). Again, this underscores the absence of personal knowledge supporting Mr. Mosbaugh's purported belief. But even his current explant. tion is difficult to understand. In his April 7, 1994 deposition in this proceeding, l Mr. Mosbaugh claimed that he first concluded in August 1990 (when he and Mr. Hobby filed their 2.206 petition) that an illegal license transfer had occurred. Tr. 2145 -47 (Mosbaugh). If his )

belief had already " evolved" to this point by August 1990, he presumably would not have provided the response he did in his 1992 testimony before the Department of Labor. Rather, it appears far more likely that Mr. Mosbaugh's straightforward response in the 1992 proceeding reflected his candid belief that Mr. Mcdonald reported to Mr. Dahlberg. In sum, his current attempts to justify his new belief and explain away prior inconsistent statements lack credibility.

Mr. Hobby readily acknowledged that he lacks any personal knowledge supporting Intervenor's contention. Although Mr. Hobby contends that Mr. Mcdonald was receiving management direction 1

from Mr. Farley, Mr. Hobby acknowledged that this contention is l

not based on any personal observation of the relationship between i Mr. Mcdonald and Mr. Farley. Tr. 2330-31 (Hobby). Mr. Hobby did not visit the vogtie site in 1988, 1989, or 1990 (i.e., after the 21 l

I formation of the SONOPCO Project). Tr. 2332 (Hobby). He cannot ,.

recall how many meetings he might have attended at the Birmingham j offices, but admitted that any such visits were infrequent. Tr.

2333 (Hobby); Stip. 39. In fact, Mr. Hobby testified that he e

does not have personal knowledge of a single instance in which Mr. Mcdonald received his management direction from Mr. Farley with respect to the operation of Plant Vogtle. Tr. 2333 (Hobby);

Stip. 41.d. He similarly has no knowledge, one way or the other, cor.carning whether Mr. Dahlberg received daily reports regarding operation of Plant Vogtle. Tr. 2338 (Hobby). I In sum, we find that Georgia Power has met its burden of persuasion on this issue and, subject to the hearing on the diesel generator statements issue, Georgia Power's license amendment application to add Southern Nuclear to the Plant Vogtle operating licenses as the exclusive licensed operator should be granted.

IV. FINDINGS OF FACT.

A. BACKGROUND.

1. The southern system companies and the Provision of services by scs to Its Affiliates.

1. The Southern company is the parent firm of several electric utilities, including Georgia Power and Alabama Power Company '

(" Alabama Power"). Georgia Power is the licensed operator of the Vogtle and Hatch nuclekr plants in Georgia, which are jointly owned by Georgia Power, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and The City of Dalton, 22  ;

Georgia. Alabama Power owns the Farley nuclear plant in Alabama and was its licensed operator.until December 1991. Hairston at 3-4; Stip. 1.

2. The Southern company is also the parent firm of Southern Company Services, Inc. ("SCS") , a service organization formed to provide support services to the Southern system operating companies, and Southern Nuclear, a corporation formed to operate the Farley, Hatch and Vogtle nuclear plants. Currently, Southern Nuclear is only operating Plant Farley. Hairston at 4; Stip. 2.

3. Where affiliated utilities operate a number of plants, i service companies are commonly formed to provide technical, financial, and planning services and share resources across corporate boundaries. SCS is such a service company within The Southern Company system. Prior to the incorporation of Southern Nuclear, SCS served as the architect-engineer (along with Bechtel Corporation) for the construction of the Farley, Hatch and Vogtle Plants, and similarly provided nuclear services (in support of licensing, engineering, maintenance, outage planning, fuel-related services, and administrative support) to the operators of these units. SCS's services and expertise were described in the Preliminary and Final Safety Analysis Reports for each unit and provided some of the technical qualifications supporting the licensing of each unit. Hairston at 4-5; man also Farley at 5-7, Dahlberg at 3-4.

23

1 l

4. The provision of nuclear services by a service company, such as SCS, is quite common in the industry. The provision of support services by an affiliate is also consistant with industry standards endorsed by the NRC. ANSI /ANS 3.1 - 1981, endorsed by Regulatory Guide 1.8, states that technical support services may be performed either by the owner organization (i.e. the l

organization with all legal, financial and technical f

I responsibility for the operation of the plant) or by individuals I l

or organizations providing consulting or contract services. The NRC does not require a supporting service company to be licensed.

Hairston at 5-6.

2. The Decision to Proceed With the Formation of a Nuclear Operatina company.

l l

S. In the 1980's, there was considerable discussion in the nuclear industry of the benefits of forming nuclear operating companies to consolidate nuclear expertise and responsibility in single dedicated organizations, and the formation of GPU Nuclear 1

Corporation had been well received by the NRC. A nuclear operating company consolidating the management of several nuclear j plants facilitates the sharing of expertise.and experience, l

allows an exclusive focus on nuclear operations and safety, and is more efficient. Hairston at 6-7.

6. The first formation of a nuclear operating company (a company formed to operate a unit or a number of nuclear units at l 24 l

i different sites) known to The Southern Company was at General Public Utilities ("GPU"). Following the Three Mile Island accident, GPU undertock to bring Unit 1, which was undamaged, back on line. After extens ive investigation, the NRC strongly recommended to GPU that it form a nuclear operating company to operate the remaining Three Mile Island unit and the Oyster Creek l unit in order to concentrate its nuclear talent in one enterprise rather than having Jersey Central Power & Light Company ("JCP&L")

and Metropolitan Edison Company (" Met. Ed.") be the separate operators of the two units within the holding company. In fact, it was understood that such a consolidation was a prerequisite for permission to restart Three-Mile Island Unit 1. Parley at 8-9.

7. Representatives of the Southern system discussed the formation of GPU Nuclear with its personnel 'and followed very closely the pattern that it had established, which was approved by the NRC and the SEC. The NRC was fully familiar with the GPU model and commended it to Southern system personnel. That 4

pattern also included an interim transition organization whereby officers were double-hatted. Farley at 9.

8. Georgia Power and Alabama Power were obvious candidates to form a nuclear operating company, because they oper6ted six nuclear units between them. Although SCS allowed a limited i

sharing of resources and experience, there were in essence 25

separate managements for each of the plants, and in fact separate support organizations for each of the plants within SCS.

Hairston at 7.

9. In 1987 and 1988, Mr. Joseph M. Farley was the President and CEO of Alabama Power Company, and a member of the Southern company Board of Directors. In this capacity, he was involved in

'l discussions of the potential benefits of forming a nuclear l l

operating company and agreed, along with the CEO of GPC (then Mr. l 1

Robert W. Scherer) and the CEO of The Southern Company (Mr.

I Edward L. Addison), that task forces should be formed to consider I this matter. Farley at 10.

10. In 1987, a task force of Georgia Power and Alabama Power '

personnel was established to consider whether such an operating  ;

i company should be formed for nuclear plants in The Southern  ;

I company system. Mr. W. George Hairston, III, then an employee of  :

Alabama Power, was a member of this task force, which recommended l t

the formation of a nuclear operating company. It was envisioned  ;

that the nuclear op-arating company would be the repository of the Southern systems's collective nuclear expertise and would thereby [

I i

maximize the safe and efficient operation of the system's plants.  !

That recommendation was tentatively accepted by Georgia Power and [

Alabama Power, and a second (" phase 2") task force was formed to [

consider how the operating company should be implemented.

Hairston at 7; Farley at 10; Stip. 3.

. 26 i

I

i

11. In this same time frame, Mr. Addison asked Mr. Farley to be ,

involved with, and serve, the project to form Southern Nuclear.

Mr. Farley's role in the formation of Southern Nuclear evolved, i but was mainly related to overseeing assembly of the Southe.rn i Nuclear organization, representing The Southern Company  !

externally on the project, and keep!.ng The Southern Company Board informed. Farley.at 10-11.

12. Mr. A. W. Dahlberg was President of SCS at the time that the Southern system was evaluating a separate nuclear operating' company. He was on the phase 2 task force steering committee ,

with a Georgia Power representative, Mr. Grady Baker, then Senior Executive Vice President, and an Alabama Power representative, Mr. Whitt. The task force itself was comprised of Mr. Mcdonald, as chairman, and Messrs. Bob Gilbert, Louis Long, Tom McHenry and John Meier. This task force determined the "how to" of forming the new operating company. Dahlberg at 3; Long 12/23/94 Dep. at 6-7.

13. The phase 2 task force began in October, 1987, when the concepts were being laid out for Southern Nuclear. A strong project accountability was recommended and ultimately implemented, with the Vice President of each project (i.e., each ,

nuclear station) as the primary responsible executive. Long 6/8/94 Dep. at 14-15; 29.  ;

27  ;

l

-ri -'- '--+4 e -Ty

• M am- -- w-s

14. The " phase 2" implementation task force identified many

" action items" which had to be accomplished or satisfied to form the prorsosed nuclear subsidiary. Initially, in late 1987 and early 1988, it was thought the necessary tasks could be completed quite quickly, with the incorporation of Southern Nuclear and tha simultaneous transfer of NRC licenses for the six nuclear units over the course of several months. A phased approach, however, was identified after issues were raised by the co-owners of the Georgia Power plants. The phased approach was refined as it evolved, taking into consideration the " double-hatting" of Mr.

Hairston and Mr. Mcdonald, a Senior Vice President of Alabama Power in 1987, as Georgia Power and Alabama Power officers in April and May, 1988. By June 1988, a three-phased plan was developed which was presented to the SEC.U' Hairston at 8.

15. The three-phased approach was based principally on the

" double-hatting" approach that was used by GPU when GPUN was i i

formed. Georgia Power also reviewed license amendment 8' At the time Southern system representatives met with the NRC on March 2,1988 to discuss licensing considerations related to the formation of Southern Nuclear (31g Finding 116, infra), a strategy for transferring the operational authority all at once was pres 6nted. That strategy was abandoned because, initially, Oglethorpe Power Corporation was unwilling to proceed. The concept of a SONOPCO Project phased approach came up after Oglethorpe Power and Georgia Power discussions about changes to existing agreements dragged on and on. Sometime between March and May of 1988 a five-phased approach was identified. Also, the task force initially thought that triple-hatting (Georgia Power, Alabama Power and SCS) was required for the Executive Vice President. It was later determined that such triple-hatting was not necessary.

Long 6/8/94 Dep. at 26-32; Long 12/23/94 Dep. at 19-20, 32-33.

28

s applications for other " transfers" of operating authority, including Wolf Creek and Grand Gulf, to identify technical issues of concern to the NRC. GPU's " double-hatting" precedent was important since it had been previously accepted by the NRC.

Prior to the transfer of licensed operating authority from Met.

Ed. and JCP&L to GPUN, GPU formed GPU Nuclear Group comprised of the nuclear personnel from Met. Ed., JCP&L, and the unlicensed GPU Service Corp. This transitional organization is discussed in i

the Atomic Safety and Licensing Board's decision in Metropolitan  :

}

Edison Co. (Three Mile Island Nuclear Station, Unit 1) , LBP '

32, 14 N.R.C. 381, 404-05 (1981). As reflected in this decision, during the transitional phase, the Senior Vice President of Met.

Ed. and JCP&L was also Vice President of GPU Service Corp., head of GPU Nuclear Group, and President of GPUN. This phased t approach appeared a sensible way to proceed. Hairston at 11; Long 6/8/94 Dep. at 32. '

16. " Double-hatting" (i.e., the existence of persons who are officers of more than one corporation) is fairly common in the nuclear industry, particularly as a means of reinforcing a licensed utility's authority and control over the activities of a supporting service company. Examples of other licensee organizations employing this " double-hatting" approach include l l

Maine Yankee (certain corporate officers of Yankee Atomic  !

Electric Co. Nuclear Services Division are also officers of Maine Yankee Atomic Power Co.), D.C. Cook (certain executive officers 29

._ . ~ ._ _ _ _ _ _ . _.

t of AEP Service Co. are also officers of Indiana Michigan Power  ;

Co.), and Millstone Unit 3 (certain executives of Northeast Utilities Service Co. are also executives in Northeast Nuclear Energy Co.). Hairston at 12.

3. The Three Phases of Formation of southern Nuclear.

17. The three phases of formation of the nuclear operating i

company are described as follows:

In Phase I, Southern system corporate nuclear support personnel from Georgia Power, Alabama Power and SCS were  !

consolidated into a project organization referred to as the "SONOPCO Project" and located in a single, central location. l All SONOPCO Project personnel were employees of (or i transferred among) Georgia Power, Alabama Power or SCS. [

Each officer who was responsible for both Georgia Power's and Alabama Power's nuclear facilities was employed by both Georgia Power and Alabama Power pursuant to a shared  !

employment agreement. Several of the items that had to be  ;

accomplished for this phase were implemented prior to the consolidation of Georgia Power, Alabama Power and SCS personnel in Birmingham. Hairston at 8-9; Hairston Exh. C (GPC Exh. 12).  ;

In Phase II, after approval by the Securities and Exchange Commission ("SEC"), Southern Nuclear was l incorporated as a wholly-owned subsidiary of The Southern Company and SONOPCO Project personnel were transferred from 30 l

1 Georgia Power, Alabama Power or SCS, as the case may be, to Southern Nuclear. However, Georgia Power and Alabama Power officers have retained their positions and responsibilities and all plant personnel performing licensed activities remain solely employees of Georgia Power or Alabama Power, as the case may be. All management personnel in the nuclear operations reporting chain above the plant General Managers are shared officers of Southern Nuclear and Georgia Power, Southern Nuclear and Alabama Power, or Southern Nuclear, Georgia Power and Alabama Power, such that the NRC operating license holder always has management control over licensed activities. The Georgia Power and Alabama Power executive ,

vice presidents for nuclear operations report directly to the presidents of Georgia Power and Alabama Power, respectively, on plant operations and all matters concerning Georgia Power and Alabama Power personnel, respectively.

The Southern Nuclear Executive Vice President reports to the Southern Nuclear CEO concerning Southern Nuclear matters only. In this phase, Southern Nuclear has no management authority with regard to Georgia Power or Alabama Power matters under the NRC operating licenses. Hairston at 9-10; Hairston Exh. D (GPC Exh. 13).

In Phase III, which is now in effect with respect to Plant Farley, and which is pending NRC approval with respect to Plants Hatch and Vogtle, the NRC operating licenses for Plants Hatch, Vogtle and Farley are amended to designate 31

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

Southern Nuclear as the exclusive operating licensee.

Georgia Power and Alabama Power remain on their respective licenses as licensed owners. No changes occur in the ownership of, or entitlement to power output from, the plants. All plant personnel are transferred from Georgia Power or Alabama Power, as the case may be, to Southern Nuclear. All Southern Nuclear management personnel are officers of Southern Nuclear only,W which has exclusive control over licensed activities under the direction of the Southern Nuclear CEO. Southern Nuclear operates the plants in accordance with the NRC operating licenses and pursuant to operating agreements entered into with Georgia Power or Alabama Power. Hairston at 10-11; Hairston Exh. E (GPC Exh.

14).

4. Implementation of the Three-Phased Approach and the Role of Mr. Farlev.

18. In March 1988, the CEOs of Georgia Power, Alabama Power and .

SCS decided to move forward expeditiously with the formation of a separate operating company. Thereafter, on April 25, 1988, Mr.

r Mcdonald (who was at the time an officer of Alabama Power),

having been elected a senior officer of Georgia Power by the i Georgia Power Board of Directors, became Executive Vice President

- Nuclear Operations. From that day forward, until his W Where, as is presently the case, the operating licenses of  ;

one plant are amended before the other plants, the Southern Nuclear ,

officers retain their positions with the company whose plants' .

operating licenses have not been amended.

l E

• l

l retirement on June 1, 1993, Mr. Mcdonald was the Georgia' Power senior executive directly responsible for nuclear operations.  :

t Mr. Mcdonald reported directly to Mr. Robert W. Scherer, Georgia Power's Chief Executive Officer, until December 1988, when Mr. l Mcdonald began reporting to Mr. Dahlberg, who succeeded Mr.

i Scherer as Georgia Power's CEO. Hairston at 14-15.

i

19. On May 18, 1988, The Southern Company Board of Directors, the Alabama Power Board of Directors and the Georgia Power Board of Directors passed resolutions authorizing eventual formation of f

a new subsidiary to operate the nuclear facilities owned by f

subsidiaries of The Southern Company. On that same date, the i

Georgia Power Board of Directors elected Mr. Hairston to the position of Senior Vice President - Nuclear Operations of Georgia i

Power and Mr. C. Kenneth McCoy to the position of Vice President l

- Nuclear of Georgia Power. Mr. McCoy reported to Mr. Hairston j who, in turn, reported to Mr. Mcdonald. Hairston at 15-16; Stip.  ;

8.

f r

20. In June 1988, The Southern Company filed a Form U-1 "Appli-  ;

cation or Declaration" with the SEC to form Southern Nuclear as a l wholly-owned subsidiary. Attached to that filing was a form of Agreement for Shared Employment which had been entered into by  !

Mr. Mcdonald and Mr. Hairston, respectively, with Georgia Power and Alabama Power on or about June 1, 1988. Also attached to  !

that Form U-1 was a copy of the Phase I, Phase II and Phase III 33 1

1

organizational structures, as they were then envisioned.

Hairston at 15-16; Stip. 9.

21. Phase I began in November 1988, when Georgia Power, Alabama Power, and SCS personnel who would be working within the SONOPCO Project (the off-site organizations) physically consolidated in the Birmingham, Alabama offices of SCS. The SCS personnel in the Project continued to provide support services to Georgia Power and Alabama Power as before, pursuant to preexisting service agreements between SCS and the respective companies. Hairston at 16; Stip. 12.

22. During Phase I, the SCS officers who were co-located with Georgia Power and Alabama Power personnel in the SONOPCO Project were Louis B. Long, Vice President of Technical Services, and Charles McCrary, Vice President of Administrative Services.

These SCS officers reported functionally to the Georgia Power and Alabama Power Executive Vice President - Nuclear Operations (Mr.

Mcdonald); for administrative matters they reported to SCS management.U' Tr. 1709-12 (Hairston); Meier 12/22/94 Dep. at l 40-41. This functional reporting was depicted on an organization chart provided to the NRC in December 1988. Egg "SONOPCO PROJECT ORGANIZATION" chart included in enclosure 2 of the February 7, ul In the case of Mr. Long, he reported to Mr. Mcdonald for day-to-day direction and administratively to Mr. Paul Rice, Vice President of Engineering at SCS. Long 6/8/94 Dep. at 57.

34

r t

1989 NRC Inspection Report No. 88-60 and 88-77, Exh. 11 to the  ;

r Stipulations.

23. When the SONOPCO Project was first formed, Mr. Farley was the CEO of Alabama Power, and Mr. Mcdonald reported to him with regard to the operation of the Farley nuclear plant. Because Mr.  !

Farley had also been asked by Mr. Addison to help guide the formation of Southern Nuclear, Mr. Mcdonald and Mr. Farley worked closely together in addressing the administrative matters ,

relating to the formation of Southern Nuclear. Farley at 18; Mcdonald at 3-4.

24. When the Georgia Power Nuclear Operations Department was relocated to the SONOPCO Project offices in Birmingham, Mr.

Mcdonald continued to report to Mr. Dahlberg regarding Georgia Power's nuclear plants as he did when their offices were both located in Atlanta. Tr. 1469 (Mcdonald).

25. Mr. Mcdonald worked with Mr. Farley, and consulted with him, in efforts to form the SONOPCO Project and Southern Nuclear.

However, until Southern Nuclear was incorporated, Mr. Mcdonald had no formal reporting responsibility or reporting relationship with Mr. Farley regarding the operation of Georgia Power's plants. Mcdonald at 3-4.

l 35 4

26. In February 1989, Mr. Farley was elected Executive Vice l President-Nuclear of The Southern company and of SCS (effective  ;

7 March 1, 1989). At the same time, it was announced that he would be recommended to serve as President and CEO of Southern Nuclear after the necessary regulatory approvals had been obtained to create that company. Farley at 11; Tr. 1723 (Hairston). When Mr. Mcdonald became aware that Mr. Farley was expected to become  !

the CEO of Southern Nuclear after its incorporation, he kept him )

1 l

informed, in a general sense, about plant conditions and related.

matters. Mcdonald at 4.

l

27. Once Mr. Farley became Executive Vice President-Nuclear of The Southern company and SCS, he no longer had any authority over licensed activities at Plant Farley or over personnel matters affecting Alabama Power employees. As an officer of The Southern .!

i Company, he represented The Southern company externally on the  !

formation of Southern Nuclear, which he continued to guide, and he reported to The Southern company Board of Directors and The Southern Company Management Council on matters pertaining to the formation of Southern Nuclear. Mr. Farley performed services for the SONOPCO Project pursuant to a letter agreement between Georgia Power and SCS dated April 24, 1989. Hairston Exh. G (GPC Exh. 16). The services he rendered related to the planning and preparation for the anticipated transfer of nuclear operating and support activities from Georgia Power to Southern Nuclear in compliance with applicable regulatcry requirements, and to 36 I

1 providing nuclear support on an industry basis. For example, Mr.

Farley advised the operating companies whether certain functions, such as procurement of equipment, should be performed by Southern Nuclear. Therefore, he was in a support role during that period, he had an oversight role in the assembling of the group, and he had some involvement in keeping the various parts of The Southern company informed about the progress toward forming an operating company. Farley at 15-16; Mcdonald at 4; SSR A182 Stip. 43.

28. After Mr. Farley became Executive Vice President of SCS and it was announced that he was expected to become the CEO of Southern Nuclear after its incorporation, he moved to the SONOPCO Project offices. Mr. Parley kept in close communication with Mr.

l l Mcdonald during this period in order to stay informed, and he I continued to work with Mr. Mcdonald on administrative matters pertaining to the Project. In a sense, Messrs. Farley and Mcdonald shared a set of joint responsibilities to administer the SONOPCO Project. These joint responsibilities, however, did not extend to licensed activities or responsibilities. Farley at 18-19; 33A also Stip. 43.

29. Phase I was not intended to remain in effect as long as it did. Georgia Power used a phased approach to expedite the eventual formation of Southern Nuclear while issues with co-owners, principally Oglethorpe Power Corporation, were addressed and resolved. In September 1988, following the June filing with 37

b the SEC to form Southern Nuclear, Oglethorpe Power intervened with respect to the SEC Application or Declaration discussed above, and requested that_the SEC delay its ruling until several of Oglethorpe Power's concerns were addressed. This considerably delayed the SEC's approval and ultimately the transition to Phase II, effectively stalling the formation of Southern Nuclear in Phase I. It was not until November 1990, that Oglethorpe Power withdrew its intervention. Hairston at 25-26.

30. On December 17, 1990, following receipt of approval from the SEC, Southern Nuclear was incorporated. Stip. 19. On January 1, 1991, Phase II of the formation of Southern Nuclear (as described in Finding 17 above) went into effect. Stip. 20. Mr. Farley was elected President and CEO of Southern Nuclear. Mr. Mcdonald was triple-hatted: while retaining his positions as Executive Vice President of both Georgia Power and Alabama Power, he was elected Executive Vice President of Southern Nuclear. Mr. Hairston was ,

also triple-hatted: while retaining his position as Senior Vice President of both Georgia Power and Alabama Power, he was elected Senior Vice President of Southern Nuclear. Mr. McCoy was double-hatted: while remaining Vice President of Georgia Power for Plant Vogtle, he became Vice President of Southern Nuclear - Plant Vogtle. Hairston at 37-38.

31. When Southern Nuclear was incrrporated, Georgia Power and Southern Nuclear entered into services agreements pursuant to 38 i

i

which Southern Nuclear provided support services to Georgia Power in connection with Plants Hatch and Vogtle. Hairston at 36; Hairston Exhs. K and L (GPC Exhs. 20 and 21) . Southern Nuclear has no management authority over Georgia Power matters, including rights under the NRC operating licenses for Georgia Power's plants. Hairston at 37-38.

t

32. Once Mr. Farley became President and CEO of Southern Nuclear, he was in the line of management over all Southern Nuclear personnel. However, there were recognized constraints on his authority and responsibilities. Mr. Farley still did not have or exercise any authority over licensed activities for Georgia Power's nuclear plants or over Georgia Power personnel.

Consequently, his main responsibility was administrative. Farley <

t at 17-18. I

33. After Southern Nuclear was incorporated, Mr. Farley's relationship with Mr. Mcdonald changed in the respect that their informal working relationship for administrative matters was formalized. After the incorporation, Mr. Mcdonald formally reported to Mr. Farley with respect to the administration of Southern :4uclear matters. Mr. Mcdonald continued to consult with Mr. Farley and keep him generally informed on plant matters.

However, with respect to licensed activities at Georgia Power's nuclear units, Mr. Mcdonald continued to report directly to Georgia Power's President and CEO, Mr. Dahlberg, and Mr. Mcdonald 1 39 l

l , ,- . . _ . . . . _ - _ . , - _ . - - - .- - _ - -

received no direction in this regard from Mr. Farley. Farley at 19; Mcdonald at 4-5. )

l

34. On November 22, 1991, the NRC issued an amendment to the l Plant Farley operating license designating Southern Nuclear as the exclusive operating licensee of Plant Farley. Phase III (as described in Finding 17 above) went into effect on December 23, 1991, for Plant Farley only, and Alabama Power employees at Plant Farley were transferred to Southern Nuclear. Stip. 26.

Effective December 23, 1991, Mr. Mcdonald and Mr. Hairston were no longer employed by Alabama Power; they were double-hatted officers of Southern Nuclear and Georgia Power. Southern Nuclear, which was approved by the NRC to operate Plant Farley, is the same entity which Georgia Power seeks to designate as the exclusive operator of Plants Hatch and Vogtle. Hairston at 40.

35. On September 18, 1992, Georgia Power submitted to the NRC an application to amend the Plant Vogtle Operating Licenses designating Southern Nuclear as the exclusive operating licensee of the plant (the " Application"). Stip. 28.

36. On October 23, 1992, Georgia Power amended its Application to reflect the retirement of Mr. Farley, effective November 1, 1992. Hairston at 41; Stip. 31.

9 40

37. Effective June 1, 1993, Mr. Mcdonald retired. Mr. Hairston l was elected President and Chief Operating Officer of Southern Nuclear as well as Executive Vice President of Georgia Power.

Mr. Allen Franklin was elected Chairman and CEO of Southern Nuclear. A copy of Georgia Power's May 21, 1993 letter notifying the NRC of these changes is attached as Exhibit 28 to the Stipulations. Hairston at 41.

38. Effective June 4, 1993, Mr. Jackie D. Woodard was elected to succeed Mr. Hairston as Senior Vice President of Georgia Power and Executive Vice President of Southern Nuclear. Hairston at 41-42; Stip. 33.

39. Effective January 1, 1994, Mr. Dahlberg was elected President of The Southern Company and Mr. Franklin was elected to succeed Mr. Dahlberg as President and CEO of Georgia Power.

Effective December 13, 1993, while remaining Prewident of Southern Nuclear and Executive Vice President of Georgia Power, Mr. Hairston was elected to succeed Mr. Franklin as CEO of Southern Nuclear. Hairston at 42; Stip. 34.

40. Phase III of the formation of Southern Nuclear has not begun, either officially of unofficially, with respect to Plant Vogtle. Hairston at 42.

41

t B. 03ORGIA POWER EAS MAINTAINED CONTROL OVER LICENSED ACTIVITIES AT PLANT V0GTLE.

1. Legral Standards.

41. Section 184 of the Atomic Energy Act is entitled

" Inalienability of Licenses" and provides in pertinent part, No license granted hereunder and no right to utilize or produce special nuclear material granted hereby shall be transferred, assigned or in any manner disposed of, either voluntarily or involuntarily, directly or  :

indirectly, through transfer of control of any license to any person, unless the Commission shall, after securing full information, find that the transfer is in  :

accordance with the provisions of this Act, and shall ,

give its consent in writing.

42 U.S.C. $ 2234. Similarly, the Commission's regulations at 10 C.F.R. S 50.80 provide: J No license for a production or utilization facility, or any right thereunder, shall be transferred, assigned, or in any manner disposed of, either voluntarily or involuntarily, directly or indirectly, through transfer of control of any license to any person, unless the Commission shall give its consent in writing.

42. Both section 184 of the Atomic Energy Act and 10 C.F.R. $

50.80 focus on transfer of control of a " license" rather than on  ;

control of the " licensee." This focus appears deliberate but is j unexplained in the legislative history of the Act.H' M' The initially proposed bills would have prohibited transfer l l of control of any " licensee." Rag H.R. 8862, 83d Cong., 2d Sess.

S 184 (1954), renrinted in U.S. AEC, Legislative History of the Atomic Energy Act of 1954 at 164 (1955) (hereinafter " Legislative History"); S. 3323, 83d Cong., 2d Sess. $ 184, renrinted in ,

Legislative History at 240. After hearings, the bills reported out l of committee referred to transfer of control of any " license." 333 l l

H.R. 9757, 83d Cong., 2d Sess. $ 184 (1954), ranrinted in i Legislative History at 627-28; S. 3960, 83d Cong., 2d Sess. 5 184 (1954), reorinted in Legislative History at 731-32. The Committee (continued...)

42 i

i

4 3. . There is little case law interpreting section 184. Safety Liaht corn. (Bloomsburg Site Decontamination), ALAB-931, 31 N.R.C. 350 (1990), appears the only case to have considered the scope of this provision. There, the Appeal Board noted the absence of guidance in the legislative history and based its ]

1 decision on the plain meaning and practical application of the terms of section 184. 31 N.R.C. at 363-64. The Appeal Board opined that control of a license is in the hands of the person or persons who are empowered to decide when and how that license vill be used. 14 at 364-65 n.46. Applying these standards, the Appeal Board held that a sale of all of the licensee's stock constituted a transfer of control, because that sale vested the full right to direct " licensed activities" in the new owners.

Id. at 365.

]

44. The Appeal Board's decision in the Safety Liaht case is notable in several respects. First, its inquiry focuses on legal I control -- on who is " empowered" or has " vested rights" of control. Second, the inquiry focuses on control of " licensed {

activities," (i.e., who has the right to dictate how the licensed activities should be conducted, and when and how the license will be used). Egg 31 N.R.C. at 364-65 and n.46.  !

1 IF(... continued) reports do not explain the change. They merely paraphrase the language of section 184 without elaboration. 233 S. Rep. No. 1699, l 83d Cong., 2d Sess. 28 (1954), reorinted in Legislative History at i

776; H.R. Rep. No. 2181, 83d Cong., 2d Sess. 28 (1954), reorinted l

in Legislative History at 1024.

43

t

45. Intervenor, in his October 4,.1994 Response to Georgia Power

{

company's Motion for Summary Disposition, suggested application i of standards developed by the Federal Communications Commission

("FCC") -- standards that focus more on actual or da facto control than on legal or da dura control. Citing.a 1981 FCC decision, Intervanor asserted that the principle indicia of control used by the FCC are control of station finance, ,

personnel, and programming.M' Intervenor, therefore, argues by analogy that in this NRC proceeding, the indicia of transfer of control should include personnel matters, budgeting, and i operational policy. j

46. We observe at the outset that there are additional indicia of control considered by the FCC. In Telenhone and Data Syst===.

i Inc. v. FCC, 19 F.3d 42 (D.C. Cir. 1994), the Court listed six criteria considered by the FCC to evaluate the issue of control.  ;

, Those criteria are: i

1) Does the licensee have unfettered use of all facilities and equipment?

l

2) Who controls daily operations?

3) Who determines and carries out the policy decisions, including preparing and filing applications with the Commission;

4) Who is in charge of employment, supervision, and dismissal of personnel? ,

\

M' Intervenor Allen L. Mosbaugh's Response to Georgia Power company's Motion for Summary Disposition of Intervenor's Illegal Transfer of License Allegation (Oct. 4, 1994) at 40, citing Texas Public Broadcastina Council, 85 F.C.C. 2d 713, 716 (1981).

44

5) Who is in charge of the payment of financing obligations, including expenses arising out of operating?

6) Who receives monies and profits from the j operation of the facilities?

19 F.3d at 48. In a related case, the Court noted the FCC's statement that "there is no precise formula by which all factors can be evaluated when confronted with questions of transfer of control" but "that the chief factor to consider is a

' demonstration of . . . power to dominate the management of corporate affairs.'" Telenhone and Data Systems. Inc. v. FCC, 19 F.3d 655, 657 (D.C. Cir. 1994), anotina News International, 97 F.C.C. 2d 349, 355 (1984). The Court also noted that the FCC has emphasized that " influence and control are not the same. The influence must be to a degree that a minority shareholder is able to ' determine' the licensee's policies and operation, or

' dominate' corporate affairs." Idt, cuotina News International, 97 FCC 2d at 356.

47. The Board finds the FCC standards instructive, but not controlling, for several reasons. First, the Appeal Board decision in Safety Licht suggests that the primary inquiry is legal control. While we do not read Safety Licht as limiting our inquiry to legal control, we do believe that legal authorization and empowerment should be the threshold consideration, and that the retention of legal rights and responsibilities should create a strong presumption that there has been no transfer of control.

45

I l

48. Second, the pertinent provision in the Communications Act differs from section 184 of the Atomic Energy Act. Section 310 of the Communications Act, 47 U.S.C. 5 3lo(d), prohibits unauthorized transfer of control of "any corporation holding (the] license." This difference does not mean that section 184 is necessarily narrower in scope (333 Safety Liaht, 31 N.R.C. at 364), but it does suggest that there may be different I Under the Atomic Energy Act, the paramount considerations.

consideration is the safe operation of the nuclear facility, and consequently control over licensed activities. We see no basis to inquire into a utility's corporate decisions (finances, personnel matters, system planning, non-nuclear generation, and the like) if they are unrelated to licensed activities and safety. This view is consistent with the NRC Staff's regulatory perspective. Tr. 2658-59 (Hood).

]

49. Accordingly, in keeping with Safety Licht, the primary test that we employ to determine if there has been an unlawful transfer of control of the license is a legal control test: did Georgia Power retain the legal rights and responsibilities to control licensed activities? If the answer is yes, there is a presumption that control of the license has not been transferred.

That presumption may be rebutted by a convincing showing of an actual or da facto transfer of control, but such control must relate to licensed activities (i.e., the power to decide how and when the activities permitted by the license will be pursued).

46

Several indicia of control are suggested by and derived from Telechone and Data Systems. From our perspective, the most important indicium of such control is the ability to direct daily nuclear plant operations. Other indicia include the ability to determine and carry out nuclear policy decisions (including preparing and filing NRC applications), the ability to appoint or remove nuclear personnel, the responsibility for nuclear costs (including the ability to direct or prohibit expenditures required for licensed nuclear operations), and the entitlement to the use and benefits of the nuclear plants.

2. Intervenor's contention.

50. Intervenor contends that control of Georgia Power's nuclear plants was unlawfully transferred to the SONOPCO Project, and later to Southern Nuclear. The gravamen of this contention is Intervenor's allegation that the nuclear officers in SONOPCO Project reported to Mr. Farley and not to Georgia Power's CEO, Mr. Dahlberg.

51. As discussed below, the evidence in this proceeding does not support Intervenor's contention. At the outset, it is undeniable that Georgia Power retained at all times, and continues to maintain, all legal rights and responsibilities for the operation of its nuclear facilities. There has, therefore, been no da dura transfer. It is also evident that actual control over licensed activities never left Georgia Power. While Mr. Farley was ,

47

)

i

undoubtedly an influential officer in The Southern company system before his retirement, the record does not reveal a single instance where he directed, or even purported to direct, licensed activity. I

a. Georala Paarer Bam Jimf=4nM Leaal Control.

52. The record clearly establishes that Georgia Power has maintained its legal rights and responsibilities for its nuclear  !

plants. All plant personnelW performing licensed activities at Georgia Power's nuclear plants are solely employees of Georgia

)

Power.E' Hairston at 9. In both Phase I and Phase II, all management personnel in the nuclear operations reporting chain j above the plant General Manager remain officers of Georgia Power (though double hatted as previously described).W &

i organizationally, these officers report to Georgia Power's CEO. l Indeed, great care was taken to maintain an absolutely precise W This does not include the Safety Audit and Engineering  ;

Review ("SAER") group, who report to Mr. McCoy and not to the Plant Manager. The SAER group is comprised of Southern Nuclear employees. Tr. 1656 (McCoy). .

E' There was an eleven-day period in January 1991 when the acting plant General Manager, Mr. Shipman, was transferred by the administrative department from Georgia Power to Southern Nuclear due to administrative error. Tr. 1941-42, 1989 (Shipman). He was ,

! immediately transferred back to Georgia Power upon being >

t permanently designated the Plant Vogtle General Manager. &

This oversight, apparently caused by Me. Shipman's temporary assignment from the corporate office to Plant Vogtle at the time

. Southern Nuclear was incorporated, is insignificant.

W Intervanor's contention and evidence focuses on the 1988-  !

1990 time frame, prior to incorporation of Southern Nuclear on December 17, 1990. During this time, Mr. McCoy was an officer of i Georgia Power only. '

48 l

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

y l

l l

chain of responsibility and accountability for each individual i license, to protect those lines of responsibility and keep the i

chain of command for Plant Vogtle, within Georgia Power. Tr.

1354 (Mcdonald); Tr. 1211 (Dahlberg); Dahlberg at 7. Through Phase II, Southern Nuclear has no management authority with regard to Georgia Power matters under the NRC operating licenses.

1 Hairston at 10. l I

53. The Agreements for Shared Employment entered into by Mr.

Mcdonald, Mr. Hairston, Georgia Power, and Alabama Power on or about June 1, 1988, provided, in part, that as employees of I Georgia Power, Mr. Mcdonald and Mr. Hairston would each " devote his time, attention, and energies in the performance of the duties designated by Georgia Power, and will, during such time, be under the sole supervisien, direction and control of Georgia .

t Power." These Shared Employment Agreements were attached to the l Form U-1 Application or Declaration with the SEC to form Southern Nuclear. That application also stated that control over actual  !

plant operations remains with the licensed operators, i.e.,

Georgia Power and Alabama Power, until the operating licenses are  ;

amended by the NRC to designate Southern Nuclear as the sole licensed operator, i.e., until Phase III. Egg Stip. 9 and Stip. p Exh. 6; Hairston at 15-16.

54. The support that has been provided to Georgia Power by personnel not employed directly by Georgia Power has been 49

)

I

.. . . ~. - .- . -- - - .. -

furnished purruant to service agreements running to Georgia Power. Prior to and throughout Phase I, Georgia Power had a service agreement with SCS, under which SCS provided support to Georgia Power. Hairston at 16; McCoy at 8. These services were subject to quality assurance audits by Georgia Power. Tr. 1635-36 (McCoy).

55. Shortly after Mr. Farley was appointed Executive Vice President - Nuclear of The Southern Company and SCS, and moved to the SONOPCO Project Officers in early 1989, Mr. Mcdonald, as Executive Vice President of Georgia Power Company, executed an agreement with the President of SCS making clear Mr. Farley's responsibilities. Under this agreement, Mr. Farley provided support to Mr. Mcdonald and Georgia Power related to the anticipated license transfer and nuclear industry issues.

Mcdonald at 4, 8; Tr. 1358 (Mcdonald). Egg also Hairston at 27 and Exh. G (GPC Exh. 16).

56. After Southern Nuclear was incorporated, service agreements between Southern Nuclear and Georgia Power were executed. On December 27, 1990, an interim services agreement was executed between those companies, and on October 31, 1991, a comprehensive Nuclear Services Agreement was executed by the two companies. '

These agreements made clear that Southern Nuclear may not perform any activities in connection with the nuclear plants which are required by the NRC operating licenses to be performed by the 50 I

licensee, Georgia Power. Hairston at 36 and Exhs. K and L (GPC Exhs. 20 and 21); Tr. 1658 (McCoy). Again, services provided by Southern Nuclear are subject to quality assurance audit, and the Southern Nuclear personnel answer to Georgia Power. Tr. 1648-49 (McCoy). The contractual agreement between Georgia Power and Southern Nuclear has been reviewed by the NRC Staff. NRC Staff at 8; Tr. 2717 (Allenspach).

57. In sum, through an unbroken management chain of Georgia Power officers and employees, and through contracts, Georgia Power has retained legal control. Intervenor has offered no evidence to the contrary.

b. Georala Paarer Has Retsined Actual Control.

58. The record also shows that Georgia Power has retained actual control. The criteria derived from Telechone and Data Systems Inc.. (ggg Finding 46, suora) point convincingly to Georgia Power's control.

(i) Control of Daily Operations.

59. First and foremost, Georgia Power controls daily operations.

Again, all of the plant employees performing licensed operations are Georgia Power employees, and they report up to Georgia Power's CEO through a chain of command of Georgia Power officers.

Hairston at 9 (311 Finding 52, suora). Based on his personal observations at the site, the NRC's Resident Inspector at Plant 51

a Vogtle confirmed that the control and. direction of daily operations at Vogtle are performed by the on-site Georgia Power employees.under the direction of Mr. McCoy. NRC Staff at 6 (Rogge). The staff has observed no outside influence on the plant staff's decisions. Tr. 2664 (Hood).

60. Mr. Mcdonald or his subordinates reported to Mr. Dahlberg and his staff oc a daily basis. Mr. Mcdonald or another Georgia Power officer would report every weekday morning to Mr.

Dahlberg's office and frequently to him directly on the status of the plants and problems involved. Mr. Mcdonald further reported to Mr. Dahlberg whenever anything occurred worthy of note.

Mcdonald at 3, 22; Dahlberg at 7; Tr. 1154 (Dahlberg). Mr.

Dahlberg testified that in addition to daily calls, Mr. Mcdonald would call if there were an unplanned outage "whether it was night, weekend, or whenever it was." Similarly, if there were a delay in refueling, Mr. Mcdonald would call Mr. Dahlberg. Tr.

1154 (Dahlberg). Mr. Mcdonald also informed Mr. Dahlberg of fines, and Mr. Dahlberg would review the problem and the responsive action and ask enough questions to satisfy himself that a proper job was being done. Tr. 1155-56 (Dahlberg). Fred Williams observed this regular reporting by Mr. Mcdonald to Mr.

Dahlberg. Tr. 2471-72 (Williams).

• l l 61. When Mr. Mcdonald was unavailable to address operational matters concerning Plant Vogtle, Mr. Hairston would personally l

52 l

1 i

.._-___--_-__-_I

l 1

contact Nr. Dahlberg concerning those matters. Hairston at 47- j

48. Mr. Dahlberg holieves that Mr. Bockhold also called him a time or two. Tr. 1161 (Dahlberg). -

-i

' I

62. Mr. Dahlberg would visit one of the nuclear plants i i

periodically. Tr. 1157 (Dahlberg). Mr. Dahlberg's calendar }

indicates that he visited Plent Vogtle at least twice in 1989.

i Intervenor Exh. 32 at 4, 15; 333 Alag Tr. . 1159-60 (Dahlberg). l Mr. Dahlberg would periodically designate and publicize a time j 1

when anybody from the nuclear plants could telephone him. 4. -

1158 (Dahlberg).

63. Gecrgin Power also exercised oversight through its Nuclear Operat'.ons overview Committee, a subcommittee comprised of five  ;

i outside acabers of the Georgia Power Board. This Committee, ,

which not ten times from May 1988 through December 1990, reviewed i the saf.ety performance of Georgia Power's nuclear plants. This oversight included visits to each of the nuclear plants and  ;

i quarterly reports from Ge gia Power's senior nuclear officers.  ;

The nuclear officers kept the oversight censittee informed of a problems list, identifying the ten most significant problems and explaining how they were being addresJed. Dahlberg at 18; Tr.  !

1241-42 (Dahlberg).H' The oversight committee also received

]

l 3' 333 Alan Dahlberg at 7 (Mr. McDonalid reported to the Georgia Power Botrd of Directors and to the Board's Nuclear '

Operations Overview Committee on the performance of the nuclear plants).

l 53  :

1

- - - - ---g->

!t SALP and INPO reports, and other evaluations. The ratings would ,

be reviewed before the committee. Tr. 1245 (Dahlberg). Mr.

Dahlberg attended and participated in these meetings, and ensured' that any necessary follow-up action was done. Tr. 1244 i

(Dahlberg). Mr. McCoy confirmed that Mr. Dahlberg participated j actively and directed actions to be taken. Tr. 1637 (McCoy).P-  !

64. Mr. Mcdonald also made presentations at Georgia Power's I monthly Board of Directors' meetings. Tr. 1536 (Mcdonald);

Dahlberg at 7; Tr. 2472 (Williams).

65. Mr. Farley, on the other hand, did not perform oversight l functions for the Ceorgia Power nuclear plants. Mr. Farley  ;

testified he did not have any authority to centrol, nor did he l attempt to control, management decisions about licensed t activities or personnel matters concerning Georgia Power's Plant Vogtle. Farley at 17-18, 22; Tr. 1801-02 (Farley). Mr. Farley did not receive QA audits reports from the Vogtle project. Tr.

2039 (McCoy). Mr. Shipman testified that Mr. Farley never l 1

issued orders or instructions regarding the operation of the

]

Vogtle facility or any aspwets of the facility. Tr. 1976 (Shipman). Mr. McCoy is not aware of any instance when Mr.

Farley gave direction to any officer or employee of Georgia Power 8 At the Board's request, the parties provided a copy of the minutes of Nuclear Operations Overview Committee meetings for the period March 1988 through calendar year 1994. Letters from David R. Lewis (January 23, 1995) and John Lamberski (February 9, 1995).

54

with respect to Plant Vogtle's licensed activities, such as the l processes performed at the plant, the use of the plant or its ,

equipment, or the manner in which the plant would comply with NRC commitments. McCoy at 19. Mr. Hairston never observed Mr.

Farley giving management direction regarding the operation of Plant Vogtle to Mr. Mcdonald or to any other officer or employee of Georgia Power. Mr. Farley's activities never involved any management direction or control over the licenses for Plant Vogtle. Hairston at 47-48; Tr. 1726-28, 1740 (Hairston). Mr.

Farley did not control the operations of the Vogtle facilities ,

through Mr. Mcdonald. Mr. Mcdonald testified that Mr. Farley never even influenced him regarding operation of the Vogtle Plant. Tr. 1550-51 (Mcdonald); Mcdonald at 25.  !

66. Mr. Farley did attend staff meetings in the Birmingham corporate offices after he moved there in March 1989. However, he provided no management oversight or direction at those meetings. Mr. Mcdonald would determine who within the SONOPCO l Project attended these meetings. Mr. Farley attended those meetings to be kept informed of the developments concerning the threo nuclear plants on The Southern Company system. Mr. Farley was providing support services to the SONOPCO Project at the time. Further, he was the prospective CEO of Southern Nuclear and needed to keep relatively current on developments concerning the plants in order to be knowledgeable when the time came for him to take on responsibility for operation of the plants. In 55

addition, he provided reports to The Southern Company Board of Directors. McCoy at 17-18; Farley at 21; Mcdonald at 21; Tr.

1848-51 (Farley); Tr. 1341-42 (Mcdonald); Tr. 1989-90 (Shipman);

McCrary Dep. at 38. Simply being kept informed does not amount to control over daily operations.

(ii) .*.bility to Determine and carry out Wuclear Policy Decisions (Including Preparation and Filing of NRC Applications).

67. The record also indicates that Georgia Power determines and carries out the nuclear policy decisions, including preparing and filing applications with the Commission. Georgia Power submitted the application to transfer its license to Southern Nuclear.

Stip. 28. Indeed, all of the Vogtle licensing submittals introduced into evidence (FSAR Updates, responses to the 2.206 petition, and the like) were executed by Georgia Power officers.

E23 Stip. Exhs. 12, 15, 17, 20, 27, 31; Intervanor Exhs. 48 and 79; Tr. 1294-95, 1445-48 (Mcdonald); Tr. 1063-66 (Dahlberg). Mr.

Mosbaugh, who was Acting Assistant General Manager of Plant Support at Vogtle, admitted that Mr. Farley was not involved in operational procedures, and Mr. Mosbaugh had no knowledge of anything that Mr. Farley did that in any way affected whether or not plant procedures were followed. Tr. 2157-58 (Mosbaugh).

68. Intervanor claims, however, that Mr. Farley established the outage philosophy for Plant Vogtle. As a threshold matter, the subject of outage philosophy (i.e., scheduling) does not appear 56

I I

to be a licensed activity. Tr. 1517 (Mcdonald). In any event, this claim is unsupported and based on a mischaracterization of taped statements. EAR McCoy at 14-15; Findings 282-84, supra.

Mr. Mosbaugh acknowledged that he has no personal knowledge or valid basis to assert that the outage philosophy " cane" from Mr.  :

Farley, and such an assertion was based on his inference. Tr.

2129-35 (Mosbaugh). The undisputed testimony in this proceeding is that the outage philosophy for Plant Vogtle was established by Mr. Mcdonald and was in fact his idea. Mcdonald at 13; Tr. 1518-  ;

20 (Mcdonald); McCoy at 14.  ;

69. Mr. Farley testified he was never involved in overseeing the t

establishment of the cutage philosophy for any of Georgia Power's nuclear plants. The outage philosophy for Plant Vogtle was a  ;

matter for Mr. Mcdonald to determine, in consultation with the <

management of Georgia Power. Mr. Farley had no authority to exercise, and did not exercise, management control over such operational matters. Farley at 30. He does not recall discussing the specific subject of the appropriate outage philosophy to be apolied at Plant Vogtle with anyone.E' Farley at 30; att alag Tr. 1840-41 (Farley).

1 l

l E' Mr. Farley does recall having some discussions about outage  !

philosophy in general with kr. Mcdonald. This may have been discussed at SONOPCO management retreats, but his recollection is .

not clear. Farley at 30. Mr. Mcdonald testified that the outage  ;

philosophy did not originate at such retreats, but it was 4 reaffirmed there. Tr. 1519-20 (Mcdonald). )

l 57

)

i i

(iii) maployment, supervision and Dismissal of Nuolear Personnel.

70. The record establishes that Georgia Power is in charge of employment, supervision and dismissal of its nuclear personnel.

Only the Georgia Power Board of Directors has the authority to appoint corporate officers, and all of Georgia Power's officers making up the chain of command were so appointed. Tr. 1287 (Mcdonald); Hairston at 14-15. Sag also Stip. 8.

71. While Mr. Farley was involved in the selection of nuclear personnel, his involvement was minimal and not of a nature to suggest control over Georgia Power's nuclear operations. He did not select nor approve Georgia Power's nuclear management staff.

The decision to select the individual officers responsible for Georgia Power's nuclear operations was made by Georgia Power management, with the ultimate approval by the Board of Directors of Georgia Power. Farley at 25. Mr. Mcdonald testified that he was not aware of a single instance where Mr. Farley contro? led, or made, a Georgia Power staffing decision. Mcdonald at 10.

72. As the President and CEO of Alabama Power, Mr. Farley was, of course, involved in the selection of Mr. Mcdonald and Mr.

Hairston for their previous positions at Alabama Power. His involvement in Messrs. Mcdonald and Hairston becoming officers of Georgia Power, however, was limited to giving concurrence as President of Alabama Power Company that Messrs. Mcdonald and Hairston could take on the additional responsibilities of 58

managing Georgia Power's nuclear facilities. The recommendation 1 that Messrs. Mcdonald and Hairston become officers of Georgia Power was not made by Mr. Farley; it came from Georgia Power's Grady Baker. Farley at 26. Mr. Mcdonald was asked to become Georgia Power's senior nuclear officer by Mr'. Scherer and Mr.

Baker. Tr. 1271, 1287 (Mcdonald).

73. Mr. Farley's involvement in Mr. McCoy's appointrant is similarly not an indication of an exercise of control. The idea to offer Mr. McCoy a position was Mr. Mcdonald's, not Mr.

Farley's. Mcdonald at 10-11; Farley at 25-26. Mr. McCoy had served under Mr. Mcdonald in the Navy. Mcdonald at 11. Mr.

McCoy was interviewed by Georgia Power's CEO, Mr. Scherer, before he was appointed. McCoy at 5-6. Mr. McCoy was cubsequently appointed to his current position by Georgia Power's Board of Directors. McCoy at 1. Thereafter, Mr. Scherer met with Mr.

McCoy again to set out his expectations for Mr. McCoy's performance. McCoy at 5-6. In contrast, Mr. Farley's involvement in Mr. McCoy's hiring consisted of discussing Mr.

Mcdonald's proposal to hire Mr. McCoy after Mr. Farley learned of it. Mr. Mcdonald asked Mr. Farley about the proposal because Mr.

Farley had known Mr. McCoy at INPO. Mr. Farley expressed a favorable view. Farley at 25-26; Mcdonald at 10-11; 313 also Tr.

1349-50 (Mcdonald); Tr. 1727 (Hairston).

l 59 l

74. Mr. Farley was involved in the selection of Messrs. McCrary and Long as Vice Presidents in SCS. Mr. Farley was a member of a review committee that included representatives of both Georgia Power and Alabama Power to make recommendations for the Vice President of Administrative Services position. Mr. Mcdonald and Mr. Jack Causey of Georgia Power were also members. Tr. 1276 (Mcdonald). Mr. McCrary was the consensus choice. This recommendation was conveyed to SCS, and Mr. McCrary was later elected to his position by the SCS Board of Directors. It was not thought necessary to convene a selection committee for Mr.

Long, because Mr. Long's position in the SONOPCO Project was very similar to the position he already held in SCS, and in essence he continued to perform many of the same functions that he had performed before the reorganization. There was nothing unusual about the appointment of either of these individuals. The selection process was in fact quite typical of the way senior SCS personnel have always been selected. Farley at 22-24.

75. Mr. Farley had no other involvement in the selection of personnel in Georgia Power's nuclear organization. Tr. 1772-73 (Farley). In sum, Mr. Farley did not make the decision with respect to any of the officers reporting to Mr. Mcdonald and Hairston. Mr. Farley was consulted with respect to SCS officers within the SONOPCO Project (such as Messrs. McCrary and Long),

but such consultation was perfectly appropriate since Mr. Farley was at the time the President of Alabama Power, whose nuclear

~

60

I l

plants the SONOPCO Project and its SCS officers were also {i supporting. Hairston at 24.

76. Intervenor has also suggested that Mr. Farley decided that a Georgia Power employee, Mr. Michael Barker, could not be l I

transferred from the SONOPCO Project to the Nuclear Operations

]

Contract Administration ("NOCA") group in Atlanta. This i transfer, however, was opposed by Georgia Power's nuclear l t <

officers, Mr. Mcdonald and Mr. Hairston, because they believed  :

that the position in NOCA had been assigned too high a rating and l was inconsistent with the standardization they were trying to achieve. Tr. 1490-94 (Mcdonald); Tr. 1737-38 (Hairston). Mr.

Barker discussed his transfer directly with Mr. Dahlberg. Tr. i 1222-23 (Dahlberg). Mr. Farley did have a conversation with Mr. l Dahlberg on May 5, 1989, lasting a couple of minutes, where Mr.

Dahlberg discussed Mr. Hobby's proposal to add positions to the ,

NOCA staff and Mr. Farley expressed the opinion that NOCA was i

unnecessary. Tr. 1759-60, 1820-21 (Farley). Mr. Farley does not j recall any mention of Mr. Barker. Tr. 1820-21 (Farley). ,

i

77. Intervenor, on the other hand, believes that Mr. Farley made the decision concerning Mr. Barker's transfer based on Mr.

Hobby's recollection of a telephone conversation with Mr. William Evans, an employee in the Georgia Power Corporate Concerns I

department. According to Mr. Hobby, after the May 5, 1989 meeting, Mr. Evans told Mr. Hobby that Mr. Farley "would make the 61 s

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call." Hobby at 41. This statement, however, is multiple hearsay and, therefore, not reliable for the truth of the assertion. Mr. Evans did not attend the May 5 meeting; instead, his understanding that Mr. Farley would make the call on transfers from SONOPCO was based on a conversation with his ]

manager, Mr. Lee Glenn. W. Evans Dep. at 17-18. Mr. Glenn also did not attend the May 5 meeting. Mr. Glenn understood that Mr.

Grady Baker (Georgia Power's Senior Executive Vice President at the time) was going to discuss the transfer policy generally,P i and he has testified that Mr. Baker (who did attend the May 5 meeting) gave him " generic" feedback after the May 5 meeting.

Glenn Dep. at 16, 19-20. However, Mr. Glenn has also testified ,

that he did not discuss the Barker transfer with Mr. Baker (Hobby

v. GPC Tr. 522 (Glenn)), that Mr. Baker never told him what was said during the May 5 meeting (idt), and that he does not know what the resolution was regarding the Barker transfer (Glenn Dep.

at 17). Mr. Baker, who recalled the May 5, 1989 meeting quite well, does not recall any meeting where Mr. Barker's specific transfer was discussed and did not even know his name. Baker DOL Dep. at 41. He does not know who made the decision concerning Mr. Barker. Idz at 48.

E Mr. Glenn testified that his Corporate Concerns department was not addressing Mr. Barker's transfer. Rather, they were  !

considering a general concern over the transfer policy that had been raised by another employee, and were preparing a white paper for Mr. Baker to use in discussions with senior management and SONOPCO. The Corporate Concerns department solicited scue input  ;

from Mr. Hobby because Mr. Hobby had told Mr. Glenn that he was  !

affected by a similar issue. Glenn Dep. at 13-19. l 1

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78. Georgia Power's supervision of its nuclear personnel is evidenced by its control of daily operations. This supervision includes Mr. Dahlberg's daily communications with the nuclear management and the oversight performed by the Nuclear Operations overview Committee and the Georgia Power Board of Directors. Eng Findings 59-64 above.

79. Intervenor cross-examined Mr. Dahlberg on a 1989 company-wide review of management to suggest that Georgia Power did not supervise its nuclear division. Eng Tr. 1185-88 (Dahlberg). Mr.

Dahlberg explained, however, that the nuclear management was not included in this review because the SONOPCO Project had just been formed and the nuclear officers essentially had been reviewed at that time. Idt

80. Intervenor also claims that Mr. Farley had input into Mr.

Mcdonald's annual reviews. Statement of Issues at 6. Mr. Farley did not prepare that review. The review was prepared by Mr.

Dahlberg and Mr. Harris, the CEOs of Georgia Power and Alabama Power, respectively, for whom Mr. Mcdonald worked. Mr. Farley was merely asked by Mr. Dahlberg or Mr. Harris whether he had any input or comment. Tr. 1861-62 (Farley). There is no evidence that Mr. Farley had even the slightest involvement in any other reviews of nuclear officers. Mr. McCoy's performance reviews, for example, were done strictly by Mr. Hairston. Tr. 1639 (McCoy).

l 63

I

81. Intervanor also asserted that Mr. Farley implemented a change in personnel evaluation and pay at Plant Vogtle.

Intervenor's Prahaaring Statement of Issues at 6. Intervenor's l assertion overstates Mr. Farley's activity. Contrary to the assertion of Intervenor in this proceeding, Mr. Farley did not

]

implement changes to personnel evaluations or pay policy with respect to Plant Vogtle nuclear operations personnel.

Implementation of such changes was made by Georgia Power l

management. In the case of employees of other Southern system companies, such changes were likewise implemented by the management of these respective companies. Farley at 31. 1 I

l

82. As Executive Vice President of The Southern Company, Mr.

Farley attended meetings at Plants Hatch, Vogtle and Farley,

)

probably in 1989 or 1990, to discuss changes in policy relating to system-wide salary and incentive pay programs, as well as to participate in the overall employee concerns programs. Changes j to the incentive pay program were being instituted on a system-l wide basis for all subsidiaries of The Southern Company. Farley at 31. Mr. Farley's purpose was to explain and answer questions about Southern Company-wide new policies as a part of a system plan. His discussions with Georgia Power and Alabama Power employees regarding these matters did not relate to any operational matters. Farley at 31. System-wide activities such as these are typically performed by a representative of The i l

64  ;

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Southern Company.M' This had nothing to do with NRC licensed 1

activities. Mcdonald at 17-18.

83. Just as it has supervised its own nuclear personnel, Georgia Power has made and controlled its own termination decisions.

Georgia Power officere' made the recommendation to terminate Mr.

Mosbaugh's employment, and Georgia Power's CEO approved that recommendation. Tr. 1131-35 (Dahlberg). After Mr.'Mosbaugh's l suspension, Mr. Dahlberg received briefings on this situation.

Tr. 1135 (Dahlberg). Mr. Mcdonald, Mr. Hairston, and Mr. McCoy later made the recommendations to Mr. Dahlberg that led to the termination of Mr. Mosbaugh. Tr. 1133, 1135 (Dahlberg).

84. During cross-examination by Intervanor, Mr. Dahlberg stated that Mr. Farley may have expressed an opinion that Mr. Mosbaugh should be fired, but Mr. Dahlberg cannot recall any such conversations with Mr. Farley. In contrast, Mr. Dahlberg recalls specifically the recommendations of his nuclear officers in the Georgia Power chain of command. Mr. Farley was not a part of l that chain of command. Tr. 1135 (Dahlberg). Mr. Dahlberg's l

upacific recollection of the recommendation.of his officers and of the decisional process shows that the decision to terminate E' Mr. Mosbaugh admitted that it would have been perfectly appropriate if Mr. Addison had made the presentation, if this policy was something that was for everyone, because Mr. Addison represents everybody. Tr. 2169 (Mosbaugh). It is, therefore, difficult to understand Intervenor's position that Mr. Farley, who was a senior officer of The Southern Company, could not make the i presentation as a representative of The Southern Company.

65

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

t 9

Mr. Mosbaugh was made within the Georgia Power management ,

organization.

t

85. Mr. Mcdonald also recalls no discussion with Mr. Farley about whether.or not Mr. Mosbaugh should be retained. Tr. 1351-  !

52 (Mcdonald).  !

(iv) Responsibility for Nuclear costs.

86. Georgia Power is responsible for nuclear costs, including expenses arising out of operation. Tr. 1788-89 (Farley).N All work orders for SCS are authorized by the operating companies and ,

charged to them. Long 6/8/94 Dep. at 44-46.  !

87. Intervenor alleges that Georgia Power's 1990 budget was approved by Mr. Farley and later by Mr. Addison over Mr.

Dahlbarg's objection. This allegation is not supported by the )

evidence.

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88. The budgeting process employed by Georgia Power, for the 1990 nuclear budgets and later, included a review of the proposed budget by the Presidents of Alabama Power (Mr. Harris), Georgia Power (Mr. Dahlberg), SCS (Mr. Franklin), The Southern Company (Mr. Addison), The Southern company Executive Vice President -

N 133 alan the Nuclear Services Agreement between Georgia Power and Southern Nuclear (Hairston Exh. L, GPC Exh. 21) (Georgia Power must pay Southern Nuclear the cost of services provided by Southern Nuclear). l 66 1

I

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

Nuclear (Mr. Farley), the Executive Vice President - Nuclear Operations of Georgia and Alabama Power (Mr. Mcdonald), probably the Senior vice President - Nuclear Operations of Georgia and Alabama Power (Mr. Hairston), probably the nuclear plant project Vice Presidents (Messrs. McCoy, Beckham, and Woodard), and probably the SONOPCO Project Assistant Comptroller (Mr. Gilbert).

Dahlberg at 9. For the 1990 budget, the SONOPCO group made a presentation, in a December 1989 meeting in Birmingham, to Mr.

Addison and Mr. Addison's staff about the budgets that were being recommended by Mr. Mcdonald and Mr. Hairston for all three plants. Mr. Addison at that point, as he had for several years, i paid a visit to each of the operating groups to get a report on their budgeting. And rather than having the nuclear budgets  ;

simply as a part of Alabama's and Georgia's, the reports were given by Mr. Mcdonald and Mr. Hairston and the project vice presidents to Mr. Addison so that it would be a more specialized meeting. Farley at 28-29; Tr. 1392-94, 1405-06 (Mcdonald).

89. After this review, the proposed budget for the three Southern system nuclear plants were recommended to the operating companies, Georgia Power and Alabama Power. The portion reflecting Georgia Power's nuclear plants was forwarded to Mr.

Dahlberg, via the Georgia Power Management Council, for incorporation into the overall Georgia Power budget and for approval. The budget approval was then given by Georgia Power's CEO for the Georgia Power capital and operating budgets, and in j 67

addition by the-Georgia Power Board of Directors for the capital budget. Following approval by Georgia Power, the total Georgia Power budget is submitted to The Southern Company. Dahlberg at 9; Tr. 1240-41 (Dahlberg); Mcdonald at 14-15.

90. Contrary to Intervanor's claim, the Georgia Power Management Council reviewed the 1990 Georgia Power nuclear budgets, as part of the total Georgia Power budget, before they were approved by Mr. Dahlberg. The capital budget was also approved by the Georgia Power Board of Directors. Dahlberg at 10. Sam also Findings 245, 249, infra.

91. Mr. Farley's involvement was limited to reviewing the budgets as an Executive Vice President of The Southern Company and advising Mr. Addison, who was responsible to review all operating company budgets. Dahlberg at 10; Tr. 1779-83, 1795 (Farley). Although he reviewed and was satisfied with the 1990 budget (it had "his blessing"), Mr. Farley did not make the decision that a budget was acceptable; that decision belonged to Mr. Dahlberg. Farley at 27; g33 also Jobe Dep. at 39-40. Mr.

Farley neither prepared, proposed, nor managed the budget. Tr.

1779-82 (Farley).

92. The review of the budgets by The Southern Company is normal for holding companies and not indicative of any transfer of 68

control.M' The Southern Company, as a registered holding company under the Public Utility Holding Company Act of 1935, is the only entity which can sell common stock and raise equity capital for the subsidiaries. While the subsidiaries can sell, with SEC approval, bonds and preferred stock, they cannot do this without an appropriate level of common stock in their capital structure. Thus, both by capital marketplace requirements and SEC guidelines, they must rely on The Southern Company to supply them with adequate common stock to support their capital structurc. That is the major function of the holding company and its board of directors. As the representative of the common stockholders, the holding company must review and scrutinize capital budgets carefully. The need for capital and the earnings to support it must be justified to the holding company. Farley at 27; gas also Tr. 1784-93 (Farley).

93. Mr. Addison was, and still is, the CEO of The Southern company, which is the owner of the Southern system subsidiaries.

Therefore, he has a responsibility to review and scrutinize the budgets of the operating companies.M' Mr. Addison, as the representative of the common stockholders of The Southern l

M' The only change in practice appears to have been that beginning in 1989 'after the formation of the SONOPCO Project), the report to Mr. Addison was provided by Georgia Power's senior nuclear officers in the SONOPCO Project, in order to provide a more specialized meeting. Tr. 1392-93 (Mcdonald); Mcdonald at 14-15. '

M' As discussed in Section IV.B.2.c., infra, this review of Georgia Power's budget is appropriate.

69 i

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I company, must convey the necessary guidelines and requirements  !

for adequate earnings and reasonable capital needs, ensure that ,

the budgets of the operating companies are reasonable and appropriate, and hold the subsidiaries accountable for their I

performance. Dahlberg at 10-11; Farley at 28. The Southern company reviews these budgets because, as an and result, the combined earnings results from the subsidiaries make up the ,

earnings for Southern's common stockholders. These earnings must be adequate to support the value of existing stock and to support, when necessary, the issuance of new common stock.

Farley at 28. Mr. Addison has never, however, approved or disapproved Georgia Power's budget over Mr. Dahlberg's objection.

Dahlberg at 11.

(v) Use of the Nuclear Plants and Receipt of ,

their Benefits.

94. Georgia Power clearly has unfettered use of its nuclear plants. All of the plant employees performing licensed operations are Georgia Power employees, reporting up through a chain of command of Georgia Power officers. Hairston at 9.

Georgia Power, along with its co-owners, also clearly receive the benefits from operation of the facilities. Plant Vogtle remains jointly owned by Georgia Power, Oglethorpe Power Corporation, the Municipal Electric Authority of Georgia, and The City of Dalton, Georgia. Hairston at 3-4. The nuclear plants are a substantial part of Georgia Power's assets. Tr. 1554 (Mcdonald). The formation of Southern Nuclear does not involve any change in this 70

~

ownership or in'the entitlement of the owners to the power  :

generated. Hairston at 10.

a. Activities of t.he Southern Company Do Not svin=nm Tr===far of runtrol . .

i

95. As is evident from the discussion above, Mr. Farley's involvement in the SONOPCO Project does not amount to control

. . i over licensed activities. In fact, most of the activities to which Intervenor has alluded, such as guiding the formation of a t

new subsidiary and reviewing budgets, are general fiscal and system planning issues as well as high level oversight, I appropriate for a public utility holding company to perform.  ;

I b

96. The NRC's consistent practice for many years has been to license only the electric utilities directly owning and operating >

nuclear plants, and not their parent holding companies. A recent NRC study indicates that licensees of 56 reactor units are owned ,

by parent or holding companies, and in virtually all cases, the j t

parent or holding companies are not NRC licensees. SECY-94-280, j 1

" Response to Staff Requirements Memorandum of April 28, 1993,  ;

Which Disapproved Issuance of an Advance Notice of Proposed Rulemaking on Potential Impact on Safety of Power Reactor Licensee ownership Arrangements," (November 18, 1994) at 2. ,

L Attachment 2 to SECY-94-280 identifies the licensed operators and their unlicensed parent holding companies. ,

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97. The NRC's practice of not licensing holding companies is addressed only indirectly in the NRC regulations. In Appendix C to 10 C.F.R. Part 50, which describes the type of financial information which applicants who are newly formed entities must submit to the NRC, states:

With respect to each source (of funds for plant construction), the application should describe in detail the applicant's legal and financial relationships with its stockholders, corporate affiliates, or others (such as financial institutions) upon which the applicant is relying for financial assistance. If the sources of funds relied upon include parent companies or other corporate tffiliates, information to support the financial capability of each such company or affiliate to meet its commitments to the applicant should be set forth in the application. This information should be of the same kind and scope as would be reauired if the carent comoanies or affiliates were in '.

fact the anolicant. Ordinarily, it will be necessary that copies of agreements or contracts among the companies be submitted.

10 C.F.R. Part 50, App. C, 5 II.A.2 (emphasis added). If parent companies are not license applicants, then they would not become licensees. The information concerning the parent, however, is disclosed to the NRC when a utility applies for a license and is recognized and relied upon by the NRC. Tr. 1796-97 (Farley).

98. Another provision indirectly supporting the NRC's practice that holding companies need not be licensees appears in the regulations at 10 C.F.R. Part 50, App. L. To define the information that an applicant must submit for antitrust review, the regulation defines " applicant" as "the entity applying for 72

l authority to construct or operate subject unit and each corporate parent, subsidiary and affiliate." 10 C.F.R. Part 50, App. L, S I.1. This provision recognizes the distinction between the

" corporate parent" and the " entity applying for authority to construct or operate." It is also notable that the broader ,

definition of applicant for antitrust review is not used in any i

other regulation.

99. While the NRC does not require holding companies to be licensed, it does recognize that holding companies exercise some control over the electric utilities they own. SECY-94-280 states, for example, " licensees of nearly half the power reactors. ,

have parent or holding companies that have effective cornorate f control over them." SECY-94-280 at 5 (emphasis added). Indeed, l in this proceeding, the NRC Staff testified, "if a utility is  ;

part of a holding company, of course there's some type of  !

influence that a holding company is going to exert over a nuclear  ;

i utility." Tr. 2658-59 (Hood). Similarly, when an electric utility proposes to restructure its organization to create a holding company to own the utility's stock, the NRC performs a 1

" transfer of control" review. Egg 59 Fed. Reg. 48,944 (1994) (PP&L) ; 59 Fed. Reg. 13,515 (1994)(Commonwealth Edison); 59 ,

1 Fed. Reg. 3882 (1994) (Illinois Power); 52 Fed. Reg. 46,694 1

)

(1987) (Southern California Edison); 52 Fed. Reg. 18,300 (1987) l (Consumers Power Co.); 51 Fed. Reg. 35,312 (1536)3 (Wisconsin Electric); 51 Fed. Reg. 23,010 (1986) (Iowa Electric).

73 l

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100. The scope of the NRC's transfer of control review has been explained in several NRC letters. In a 1977 letter from the NRC Director of Inspection and Enforcement, the NRC stated: ,

our primary objective in enforcing our mandate under section 184-is to ensure that no person who could not obtain a license through the normal application procedure obtains a license by acquiring control of a licensee. Three of our major concerns in connection with both the grant of a license and a transfer of one are: (1) whether the-applicant has sufficient financial-responsibility to ensure sa.!e operation under the license; (2) whether the applicant will i employ sufficient technically competent f personnel to ensure safe operation under the license; and (3) whether the applicant is under foreign domination or control or whether the common defense and security might I

otherwise be harmed by issuance of the license.

l Letter from E. Volgenau, Director, NRC Office of Inspection and Enforcement, to G. Zipf, B&W Co. (May 9, 1977). Consistent with this objective, the NRC has articulated three factors that it considers in reviewing a proposed transfer of control to a r.ewly created holding company: whether the proposed action (1) will reduce funds available to the licensen to carry out activities under the license; (2) will adversely affect the management of the licensee's utility operations; and (3) will result in the licensee becoming owned, controlled or don'inated by an alien, a foreign corporation, or a foreign government. Letter from R.

Bernero, Director, Division of BWR Licensing, to L. Liu, Iowa Electric Light & Power Co., Docket No. 50-331 (June 30, 1986).

74

- _---_------___--_---__ __ _ . . . _ h

i 101. The NRC's recognition that holding companies exercise control over the electric utilities they_own is evidenced not only by the transfer of control reviews that are conducted when a I

new holding company is proposed but also by other NRC decisions.  !

In the Three Mlle Island restart proceeding, for example, the i l

Commission noted that the executive officers of the licensee (GPU Nuclear Corporation) would have direct access to the parent Board i of Directors for GPU for matters of safety and budget.

Metronolitan Edison Co. (Three Mile Island Nuclear Station, Unit No. 1), CLI-85-9, 21 N.R.C. 1118, 1147 (1985). Presumably, then, some involvement of a parent holding company in matters pertaining to safety and budget is appropriate. In addition, in ,

the construction permit proceeding for Plant Vogtle,'the Licensing Board recognized The Southern Company's responsibility for providing capital to Georgia Power Company. Georaia Power C2x (Alvin W. Vogtle Nuclear Plant, Units 1 and 2) , LBP-77-2, 5  !

N.R.C. 261, 268-69 (1977).

102. As Mr. Farley explained, the Southern Company vests in its Chief Executive Officer the proxy to vote the common stock of the subsidiaries, including Georgia Power, and thereby to elect its Board of Directors. Thus, The Southern Company has legal control. In addition, at a practical level, the Chief Executive i Officer of The Southern Company. influences the CEOs of each the subsidiaries because he makes recommendations on earnings, rate I of return, realistic capital budgets, and is a member of the i

75 l

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Board of-Directors of each of the subsidiaries. Therefore, he exercises a degree of management control through management of resources. Tr. 1784-85 (Farley). This'is a recognized function for holding companies under the Public Utility Holding Company Act. Tr. 1784-86 (Farley).

103. The continuation of this activity by The Southern Company after the formation of the SONOPCO Project is not a transfer a control. Activities such as the review of budgets is the normal ,

function of the holding company, both before and after the ,

formation of the SONOPCO Project. Tr. 1787 (Farley). Mr.

Farley's review of budgets, undertaken to advise Mr. Addison as the Chairman and CEO of The Southern Company (ama Dahlberg at 10; Tr. 1782-83 (Farley)), is therefore not sinister. It does not i indicate any transfer of authority away from Georgia Power Company.

i 104. That Intervenor is indeed complaining to a large extent about the normal and continuing management authority of the  !

parent holding company is well illustrated by Mr. Hobby's testimony concerning Admiral Wilkinson. Mr. Hobby contends that ,

in 1986 Mr. Scherer had approved a proposal for Admiral Wilkinson  ;

to take over the Vogtle Project, but the arrangements were  !

canceled after Mr. Addison objected. Hobby at 3-4; Intervanor Exh. 22. Although this assertion is not well established in the 76  :

- record,E' if it is to be believed, it merely demonstrates that ,

Mr. Addison exercised some degree of oversight long before the SONOPC0 Project was formed. There is no evidence that the creation of the SONOPCO Project in any way changed Mr. Addison's authority or the normal parent-subsidiary relationship between i The Southern Company and Georgia Power.

105. Mr. Farley's involvement in guiding the formation of.a new subsidiary (Southern Nuclear) must be viewed in the same light.

Southern Nuclear was being created as a subsidiary of The Southern Company, and The Southern Company obviously was interested in its successful formation. Further, Southern Nuclear was being formed to operate units owned by two sister utilities, and the influence and guidance of The Southern Company would clearly help address inter-corporate issues. In sum, Mr.

Farley's activities are not remarkable. ,

d. The NRC Statf Concluded No Illegal License Tr===fer Omwred.

106. On September 11, 1990, Intervenor and Mr. Hobby jointly filed a petition with the NRC, through their counsel, Kohn, Kohn, and Colapinto. The petition was treated as.a petition filed ,

under 10 C.F.R. $ 2.206 and alleged, among other things, that Georgin Power had illegally transferred the NRC operating licenses for Georgia Power's nuclear plants. Stip. 55. That l

E' Mr. Hobby's assertion is based on multiple hearsay and is  !

beyond the scope of the issues addressed by Georgia Power.

l 77

petition was supplemented by later filings of the petitioners, dated October ~1, 1990 and July 8, 1991. Hairston at 43.

107. On April 1, 1991, Georgia Power provided a detailed response to the Section 2.206 petition of Messrs. Hobby and Mosbaugh. Intervenor Exh. 48. Georgia Power provided a supplemental response on October 3, 1991, addressing petitioners' July 8, 1991 amendment to their petition. Intervanor Exh. 79. [

Georgia Power concluded that the allegation of an illegal transfer of licenses was without merit. Hairston at 43.

108. On April 23, 1993, the Director of NRC's Office of Nuclear Reactor Regulation issued a " Partial Director's Decision Under 10 C.F.R. 5 2.206." DD-93-8, 37 N.R.C. 314. After reviewing the  !

history and background of the formation of Southern Nuclear, the Director concluded that "there has been no illegal transfer of responsibility from Georgia Power to SONOPCO for the Vogtle or Hatch facilities." DD-93-8, 37 N.R.C. at 322. The Staff based its decision on information pertinent to the allegation, j including the DOL deposition testimony of key officials, the FSAR, and the results of the NRC inspection in December 1988 in Birmingham. The Staff found insufficient information to conclude that Mr. Farley exercised control over Vogtle. The Staff also concluded that the information established that responsibility j for decisions affecting the operation of Georgia Power plants i resided with Georgia Power's Senior Vice President - Nuclear 78 l

. . . . . - . - _ - - - -l

n' Operations, Mr. Hairston (who reported to Mr. Mcdonald, who reported to Mr. Dahlberg, President of Georgia Power) ; and, thus, i no illegal transfer occurred. NRC Staff at 10, citing 37 N.R.C.

at 317-22, 345. The Partial Director's Decision was subsequently vacated by the Commission without considering the merits of the Staff's analysis. CLI-93-15, 38 N.R.C. 1.

109. Since the issuance of the Partial Director's Decision, DD-93-8, the NRC Staff reviewed the 1994 summary disposition motions, deposition transcripts, the Stipulations, Georgia '

Power's Response to the Board's Questions Concerning the Illegal License Transfer Issue (August 24, 1994), and various responses  !

to discovery requests. More recently, the NRC Staff reviewed the filings submitted by Intervenor in December 1994.3' The NRC Staff witnesses are not aware of any information that alters their previous conclusion that Georgia Power controls nuclear operations at Vogtle, and they affirmed the conclusions of the Partial Director's Decision, DD-93-8. NRC Staff at 10-11 (Hood, Rogge and Allenspach).

110. In early September 1991, the NRC Resident Inspector for Plant Vogtle performed an inspection of Georgia Power's SONOPCO )

Project corporate offices in Birmingham for the purpose of ]

gaining a "more detailed working knowledge of the numerous Vogtle M' The NRC Staff witnesses also attended all of the hearings on the illegal license transfer allegation.

79

support activities and to learn more about how the support groups are organized, function, and interact."  !

Stip. 25.E' 111. NRC Staff witnesses, Messrs. Allenspach and Hood, inspected the Georgia Power Plant Vogtle organization in September, 1994 to determine if the Vogtle Updated FSAR accurately depicts the organization and to determine if Georgia Power continued to be in control of Vogtle operations. The inspectors visited the Vogtle site and the corporate offices and spoke to numerous managers of Georgia Power, Southern Nuclear, and SCS, as well as the NRC Resident Inspectors at Vogtle. The inspection confirmed that the reporting chain is as represented in Chapter 13 of the Updated FSAR and that Georgia Power is in control of Vogtle operations.

NRC Staff at 9.

112. NRC Staff witness, Mr. Hood, responded to questions from the Board at the hearing concerning the basis for his opinion that Georgia Power is in control of Vogtle operations, as follows:

I deal with the people at the ~- what I'm referring to is the working level. Mr. McCoy's level, at the Barney Beasley level. I visit the plant fairly frequently. I see how they all are working, and I draw from my own experience base. I attend their meetings -- these people are not -- in my view, they are not drawing from some estimate or some -- I don't see influence (on]  !

people's decisions coming from outside that I would care about.

E' 333 NRC Inspection Report No. 91-22, dated October 28, 1991, attached to the Stipulations as Exh. 22, report " Details" at 13.

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[ Plant Vogtle is) operating in accordance witn the organization as I understand it, as it was represented to me in the FSAR and that's what my opinion is in part based on. It's my own observations and the observations of my colleagues.

Tr. 2663-64 (Hood). With respect to this statement 'Jy Mr. Hood, Mr. Allenspach said he had nothing to add. Tr. 2664 (Allenspach).

113. Based on the amount of discussions and correspondence which occurred between Georgia Power and the NRC, we conclude that the NRC has received all the information it desired concerning Mr.

Farley's role. Further, Georgia Power is unaware of the NRC ever expressing a concern about who was providing management direction to Mr. M anald with respect to the operation of Plant Vogtle.

Hairston at 42-45.

C. GEORGIA POWER'S PROPOSAL FOR, AND IMPLEMENTATION OF, A BEPARATE NUCLEAR OPERATING COMPANY HA8 BEEN OPEN AND EONEST.

1. Georgia Power Nade a Considerable Effort to Keep the NRC Fully Informed.

114. Georgia Power took all reasonable and necessary steps to l

keep the NRC informed about planned organizational changes associated with the anticipated formation of the Southern Nuclear I Operating Company and transfer of operating license authority for Vogtle to this new entity. Intervenor producefa no evidence to the contrary notwithstanding that our ruling on Georgia. Power's Motion for Summary Disposition, LBP-94-37, at 28-29, stated:  !

i 81 4

i (f) rom our study of the record there were i extensive communications between Georgia Power and the NRC. Tht NRC also amassed substantial knowledge of Georgia Power

.through its resident inspector program and l its-inspection program. For Intervenor to demonstrate material misrepresentations or omissions, it must place communications by Georgia Power in the. full context of its >

relationship with the NRC. ,

i 115. On February 16, 1988, Messrs. Farley and Mcdonald, along with others, met separately with Commissioners Zech, Bernthal and Roberts as well as then NRC Executive Director for Operations, Mr. Victor Stallo. The purpose of the meetings was to brief these officials ebout The Southern company's tentative plans to form a separate nuclear operating company. They reviewed the several phases which would have to be involved pending SEC approval and ultimate license amendment. The Commissioners, who were familiar with GPU's previous action, endorsed the concept.

Farley at 11-12, Mcdonald at 5.8 116. On March 2, 1980, Georgia Power, Alabama Power and SCS personnel met with the M C t.0 discuss licensing considerations related to the formation of Southern Nuclear. Stip. 5.E' As reported in the NRC's March 9, 1988 meeting summary, the NRC I

N A copy of the meeting outline used in these meetings was attached to Mr. Mcdonald's direct testimony as Exhibit B (GPC Exh.

3).

E' Copies of the transparencies used during the meeting are attached to the March 9, 1988 meeting summary prepared by MRC (33E Stip. Exh. 1) and show that Georgia Power informsd the NRC of its intent to form a " project" organization.

82

1 indicated that it was willing to support the effort to form a i separate operating company. Hairston at 13, Mcdonald at 5, Long 6/8/94 Dep. at 26-30.

117. On March 18, 1988, representatives from Georgia Power, Alabama Power and SCS not again.with the NRC to discuss details i of the NRC operating license amendments which would be required ,

i to properly transfer control of the operation of the system's i l

nuclear plants to Southern Nuclear. Stip. 6.E The licensees l requested that the Staff advise them on the level of detail that  ;

should be included in the application to amend the licenses. )

- Mairston at 13.

l 118. On May 3, 1988, Mr. Mcdonald met separately with NRC Commissioners Roberts, Carr and Rogers as well as with Executive l

Dirwetor Stallo. The purpose of the meetings was to review the i companies' then-current plans for the formation of Southern Nuclear with the Commissioners who were not available during Messrs. Farley and Mcdonald's .bruary 16, 1988 visit to the commissioners' offices. Mcdonald at 5-6; AAA R182 Mr. Mcdonald's May 5, 1988 memorandum concerning these meetings (Mcdonald Exh. C (GPC Exh. 4)).

8 The transparencies used during the presentation are attached to the meeting summary prepared by the NRC, dated March 25, 1988 (353 Stip. Exh. 2).

83 l

119. Mr. Mcdonald, or Georgia Power officials reporting to him, also kept the NRC's Region II personnel informed on a frequent basis of new developments concerning Plant Vogtle. One such meeting, reported in a trade press article, was held by Mr.

Mcdonald with the NRC Region II Administrator at the time, Mr.

Nelson Grace, on March 10, 1988, during which they discussed plans for the proposed formation of Southern Nuclear. Mcdonald at 6.

120. Mr. Hairston also has a general recollection of periodic discussions with the NRC resident inspectors, NRC Region II personnel, and personnel from NRC's Office of Nuclear Reactor Regulation concerning the status of Plant Vogtle and the status of the formation of Southern Nuclear. Georgia Power's intent was to keep the NRC informed because any surprise to them could delay Georgia Power's plans. Hairston at 14.

121. Mr. McCoy, Georgia Power's Vice President-Nuclear in charge of Vogtle operations, had frequent contacts with NRC's Region II personnel, especially Mr. Ken Brockman. Mr. McCoy viewed Mr.

Brockman as his counterpart, having primary NRC " management" responsibility for Plant Vogtle. He attempted to keep Mr.

Brockman informed of developments affecting Plant Vogtle, with a concerted effort to avoid Mr. Brockman being " surprised" by information obtained by his co-workers in the NRC. If Mr.

Brockman had a question or concern, he would call Mr. McCoy, 84

l 1

including at his home. This communication facilitated l

Mr. McCoy's efforts to ensure that Georgia Power addressed issues l of concern to the agency. McCoy at 21.

1 122. Mr. McCoy testified that he would typically {

call (Mr. Brockman) maybe an average of once a week at-least. Any time anything occurred at our plant that I thought was of regulatory  ;

significance . . . I tried to keep him informed. He also was kept informed, of course, by the (NRC) resident inspectors who l were at the site who reported to him, but I felt that I had an obligation also to keep him informed. And I did that routinely. . .

. [s)pecifically regarding organizational changes . . . it's my recollection that every '

time we made an organizational change that ,

was significant, -- and by that I mean at higher levels in the organization that might be of interest to the regulator -- that I called him and told him that we were making  ;

that change.  !

Tr. 1652-53 (McCoy).

f 123. Mr. Hairston believes the NRC was orally notified of Georgia Power's appointment and double-hatting of Mr. Mcdonald i and himself soon after those appointments occurred in April and May of 1988, respectively. Mr. Hairston testified that the I normal practice was for him or Mr. Mcdonald to call the NRC Regional Administrator and inform him in advance of sending a letter announcing personnel changes involving high-level '

executives or high-level managers, such as a plant manager. Tr.

1687-88 (Hairston).

85  :

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

124. A letter advising the NRC of Mr. Mcdonald's election to the position of Executive Vice President of Georgia Power and Mr.

Hairston's election to the position of Senior Vice President of Georgia Power, was also provided on June 1, 1988, to make sure correspondence and communications fion the NRC were properly directed. Hairston at 17; Hairston Exh. F (GPC Exh. 15).

125. On July 25, 1988, Georgia Power personnel met with NRC Region II staff to discuss Georgia Power's nuclear plant operations organization and the planned " Phase I" reorganization.

Georgia Power provided the NRC with an organization chart depicting the " Nuclear Operations - Transition Organization,"

headed by Mr. Mcdonald as the Executive Vice President - Nuclear Operations. Stip. 10. The NRC's August 11, 1988 letter summarizing this meeting (Stip. Exh. 9) stated that "this meeting was beneficial and has kept us apprised of your nuclear ,

operations organization." Hairston at 17-18. We find that the NRC was duly informed of Georgia Power's plans for reorganization at this meeting. Egg LBP-94-37, slip. op, at 29. i l

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l 126. On August 12, 1988, Mr. Hairston wrote the NRC to inform them of the recent reorganization of the corporate office and to l request that NRC distribution lists be revised so that Mr. J. P.

Kane, rather than Mr. L. T. Gucwa, would receive copies of all correspondence related to Vogtle. Hairston at 18.

86

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

i l

127. On November 23, 1988, Georgia Power submitted to the NRC Amendment No. 39 to the Plant Vogtle Final Safety Analysis Report ,

I

("FSAR"). That amendment included changes to the Georgia Power  ;

organization and specifically described the Executive Vice President - Nuclear Operations position as "an officer of both l l

Georgia Power Company and Alabama Power Company (who) is l responsible to the chairman'and CEOs of each company for all aspects of operation of the nuclear generating plants in the l

Georgia Power and Alabama Power systems, as well as technical and 1 administrative support activities provided by SCS." Stip. 13; Hairston at 18-13.

I I

128. Amendment 39 of FSAR Chapter 13.1 laid out the changes in the corporate management for the Vogtle Project, such as the l officer positions of Mr. Mcdonald in both Georgia Power and i Alabama Power and the dedicated positions of the General Manager

- Nuclear Support, Manager - Nuclear Administration and Manager -

Engineering and Licensing for Vogtle. McCoy Exh. B (GPC Exh. 7). l l

l l

129. There was a meeting, and correspondence, with the NRC concerning an inspection of the Birmingham corporate offices in December 1988. Hairston at 19. Specifically, on December 19-21, 1988, NRC Region II personnel (including Messrs. M. Sinkule, J. '

l Rogge, J. Manning, F. Allenspach, L. Moore, H. Dance, and G. l Maxwell) conducted an inspection of the Georgia Power corporate i

offices in Birmingham to review areas of corporate organization, 87

A responsibilities, and functions. At this juncture, the SONOPCO l Project organization was in place. A management meeting was held ,

f on December 19, 1988 to discuss nuclear plant oversight responsi-  ;

bilities, technical support responsibilities, and activities of the corporate organization. Hairston at 21.

i 130. The NRC Staff witnesses provided testimony regarding their participation and observations during the December 1988 inspection as follows:

During the inspection (Mr. Rogge) talked to GPC management, including Messrs. Mcdonald, Hairston, and McCoy, about the operation of Vogtle and concluded that these GPC officers >

were knowledgeable about their _

responsibilities and that the organization was functioning. Messrs. Hairston and McCoy provided information describing the chain of command which extended from McCoy through Hairston to Mcdonald. Each of these individuals were corporate officers of GPC. l Mr. McCoy held the position of Vice President l Nuclear (Vogtle) and the Vogtle Plant General  :

Manager reported to him. Mr. Hairston was the Senior Vice President, Nuclear Operations, and was an officer of the Alabama Power Company with responsibilities for Plant Farley. Mr. Mcdonald was the Executive Vice President, Nuclear Operations, and similarly had responsibilities for Plant Farley as well r.s for Vogtle. The organizational structure and supporting role of the SONOPCO was also explained . . . .

NRC Staff at 5 (Rogge and Allenspach).

131. Mr. Rogge further testified that as a result of this inspection he had no reason to believe there was any problem with l

i 4

88 I

i

l reporting relationships within the SONOPCO project organization in Birmingham. Tr. 2650-51 (Rogge).

l 132. In response to an NRC inquiry during the inspection, l 1

Georgia Power notified the NRC by letter dated December 29, 1988 (Stip. Exh. 13), that the nuclear support departments in the l corporate office were " organized as a staff function to support the plant operation and not as a line function to direct the operation of the plant." The letter further stated that line management direction for operation of the plant was provided by the Executive Vice President - Nuclear Operations, the Senior '

Vice President - Nuclear Operations, and the Vice President -

Nuclear, as shown on FSAR Figures 13.1.1-2 and 13.1.1-3. Stip.

14; Hairston at 21-22.

133. On February 7, 1989, the NRC issued an inspection report (No. 88-33) with respect to the December 1988 inspection, which states:

In preparation for combining the management of Vogtle, Hatch and Farley into one~ organization, GPC has ,

reorganized and moved the corporate nuclear operations to Birmingham. . . . Currently, the Executive Vice President and Senior Vice President for Nuclear '

Operations are officers of both GPC and APC.... The

. Vice Presidents for each of the three projects (Vogtle, Hatch and Farley) report to the Senior Vice President of Nuclear Operations.

Stip. 15; Hairston at 22.

f 89  :

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134. The inspection report also included the transparencies which were used in Georgia Power's presentation during the inspection. With respect to the December 19 management meeting, the inspection report (Stip. Exh. 11, Report Details at 2) stated i

that "[t]he meeting provided information to NRC management )

i regarding organizational changes that were made in anticipation of the formulation of the operating company for management of Vogtle, Hatch, and Parley and also assisted in providing the NRC an understanding of how the new organization functions."

Hairston at 22-23.

135. The inspection report concluded (Stip. Exh. 11, Report Details at 11) that the corporate organization was functioning as described in FSAR Amendment No. 39 and that "[t]he philosophy of operations of the corporate staff functioning in a support role as opposed to an overview role appears sound." Stip. 15; Hairston at 23.

l 1

136. On July 25, 1989, Georgia Power and SCS personnel met with NRC personnel (including NRR Project Managers, Region II personnel and NRC Resident Inspectors for Plants Hatch and Vogtle) in the Birmingham corporate offices to discuss the Southern Nuclear / Georgia Power organizations and generic activities. An overview of the then-current organization status was provided to NRC, including corporate structure, 90

responsibilities and interface with the plants. Stip. 16. The NRC's August 3, 1989 letter (Stip. Exh. 14) stated:

Subsequent meetings are expected to be held on a bi-monthly basis to discuss issues that have potential for impacting both the NRC and Georgia Power organizations.

The intent of these meetings is to foster an open communication and information exchange and in this regard the meeting was a success.... The next Georgia Power /NRC interface meeting is tentatively scheduled for October at Plant Vogtle.

Such Georgia Power /NRC Staff interface meetings have. occurred each year since 1989, although not with the frequency originally envisioned. Hairston at 30-31.

137. On March 28, 1990, Georgia Power submitted to NRC the

' initial Plant Vogtle Updated FSAR pursuant to 10 C.F.R.

S 50.71(e). That update included a revised organizational chart which showed that the Executive Vice President - Nuclear Operations, an officer of both Alabama Power and Georgia Power, ,

reported to the President and CEO of Georgia Power on Vogtle matters. Stip. 17 and Stip. Exh. 15; Hairston at 33.

138. On May 2, 1990, Messrs. Farley, Mcdonald and Hairston together met with Commissioners Roberts, Rogers, Curtiss, and Carr, separately, as well as with Executive Director Stallo and then NRC Project Director Steven Varga. The purpose of the meetings was to discuss the status of formation of Southern Nuclear. As memorialized in the memorandum prepared by Mr.

Mcdonald (Hairston Exh. M (GPC Exh. 22)), they described the three phases of formation, explaining that they were then in 91

Phase I and would remain there until the SEC approved the incorporation of Southern Nuclear. They described the Phase II organization that would be put in place upon incorporation. They also described Mr. Farley's role as Executive Vice President of The Southern Company and the services provided by the SCS Technical and Administrative groups. As with the 1988 Commission meetings, each Commissioner was supportive and expressed the desire that Georgia Power go forward with the transition as soon as possible. Farley at 12; Mcdonald at 7; Hairston at 36-37.

139. On December 6, 1990, Georgia Power wrote the NRC informing l

them of the imminent transition to Phase II. Hairston at 38; Stip. Exh. 17.  ;

140. On January 11, 1991, Mr. Hairston attended a meeting with  !

NRC, Alabama Power and Southern Nuclear personnel at NRC headquarters to discuss Phase II of the formation of Southern Nuclear. Stip. 21. Mr. Mcdonald gave the Company's presentation )

to the NRC. Mr. Mcdonald identified Mr. Farley as the President and CEO of Southern Nuclear (Stip. Exh. 19 at 8), and his authority was discussed at some length throughout the meeting.

As reflected in the transcript of the meeting (Stip. Exh. 19), .

Mr. Mcdonald stated that prior to Phase II (the incorporation of Southern Nuclear), Mr. Farley had been performing a job as a Vice President of The Southern Company and had been providing certain

)

92

services to Mr. Mcdonald under a contract with SCS. Hairston at 38; Mcdonald at 8.

141. On March 28, 1991, Georgia Power submitted to the NRC Revision 1 to the Plant Vogtle Updated FSAR, reflecting changes to the organization as of September 28, 1990.E' Hairston at 39.

142. In addition to the above, the role of the NRC Resident l Inspector at Vogtle, specifically regarding knowledge of organizational structure and authority, should not be overlooked.

The NRC Resident Inspectors are in the plant every day and routinely attend the General Manager's daily plant status meeting to stay abreast of new developments. The Resident Inspectors cbserve how the organization works and how authority is exercised. Hairston at 28. l i

143. NRC Staff witnesses acknowledged the success of Georgia ,

Power's efforts to keep the NRC informed of its organizational  ;

structure for Vogtle testifying that "GPC has kept the NRC informed about the management organization over Vogtle through numerous meetings, oral communications, and written submissions, including Final Safety Analysis Report (FSAR) updates." NRC  !

Staff at 7 (Hood and Allenspach). l l

n' A copy of the transmittal letter and selected pages  ;

relevant to the organizational structure are attached to the l Stipulations as Exh. 20. ~

93  ?

. ~ . -

l 144. Based on the foregoing, the Board concludes that Georgia l

Power took reasonable and necessary steps on an on-going basis to I

keep the NRC informed of the organizational changes associated l l

with the formation and implementation of the Southern Nuclear i operating Company as it related to Plant Vogtle. l l

i

2. Mr. Farley's Role was openly Discussed and Known to the MRc. l l

145. Mr. Farley's role in the SONOPCO Project, and the  !

I possibility of a greater role with Southern Nuclear, were not )

discussed in the written communications between Georgia Power and I

the NRC in 1988-1990. As discussed in Findings 160-62 infra, l Georgia Power did not perceive a need to describe Mr. Farley's l

activities in its written communications in this time frame because Mr. Farley was not part of the management structure over l i

Georgia Power's plants, and it was not usual to identify in 1

detail persons providing support. Egg Hairston at 19, 25, 29; Mcdonald at 6-7, 23-25; McCoy at 4-5, 8-9, 12-15.

146. While Mr. Farley's role was not documented in written communications, it may have been discussed with the NRC. Mr.

McCoy testified that he believed the NRC was generally aware of Mr. Farley's role. McCoy at 22. Mr. Hairston believes the NRC was advised that Mr. Farley was the prospective CEO of Southern Nuclear. Hairston at 45. Certainly, there was no attempt to conceal Mr. Farley's role, as evidenced by public announcements and meetings with the NRC in which he participated. l 94 i

.1 147. For example, Mr. Farley met with the Commissioners in February 1988. 333 Farley at 11-12. Mr. Farley's involvement in I

helping form Southern Nuclear was, therefore, apparent at the outset.

148. Prior to Phase I, Mr. Addison announced publicly, in a i memorandum to all employees in Georgia Power, Alabama Power, and '

SCS, that he had asked Mr. Farley to devote a portion of his time to guiding the formation of the new nuclear company. Mr. Addison  ;

added that Mr. Farley's leadership and insight will be of immeasurable value. Stip. Exh. 10. It is more than likely that the NRC resident inspectors or other Region II personnel would

'have become aware of this information. 333, gigt, Findings 122, 150-51. Certainly, the announcement to all employees in three companies is inconsistent with any attempt to conceal information from the NRC.

l 149. Because Mr. Farley held high-level positions within the nuclear industry, he frequently interacted with high-level NRC )

l personnel and others in senior positions in the industry. For example, as a board membe'r and as Chairman of INPO, Mr. Farley attended the INPO CEO Conferences. Those conferences were attended by high-level NRC personnel and other members of the nuclear industry. Mr. Farley talked freely with these individuals about the SONOPCO Project. He specifically recalled a luncheon that he attended in Washington D.C. during which he 95 I

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i

)

i sat next to NRC Chairman Salin and informed him of the progress made on the formation of Southern Nuclear. Mr. Farley also addressed a number of groups of people, such as local chapters of the American Nuclear Society, groups of Georgia Power, Alabama Power, and SCS employees, and civic clubs, such as rotary clubs in Dothan, Alabama and Birmingham, Alabama. Farley at 12-13.

I 150. A number of news releases and newsletter articles discussed the role of Mr. Farley and, in some cases, quoted Mr. Farley.

For example, an article in the March 7, 1989 issue of the SONOPCO

'r Project publication Synoosis (Hairston Exh. H (GPC Exh. 17))

reported The Southern Company's announcement that Mr. Farley was named Executive Vice President - Nuclear for The Southern Company. Among other things, the article reported that Mr.

Farley would ultimately be appointed to the position of President and Chief Executive Officer of Southern Nuclear once regulatory approvals were obtained and Southern Nuclear was incorporated.

In the March 30, 1989 issue of Synoosis (Hairston Exh. I (GPC Exh. 18)), an interview with Mr. Farley (at 2) regarding the SONOPCO formation status quoted him with respect to his role in SONOPCO at that time as "provid[ing) the leadership and support needed to get SONOPCO off on the right foot. For the past few years, I've worked part time on the concept and, more recently, on the organizational structure for this project. I'll continue to give much of my attention to organizational issues." Hairston at 27-28.

96 1

4 151. The Plant Vogtle service building, where the NRC Resident Inspectors have their offices, has a bulletin board in its lobby where the Company posts information of general interest to employees, including Company news releases. The Company also places copies of Georgia Power and Southern Nuclear employee newsletters (This Eggh and Synonsis, respectively) next to the bulletin board for anyone to take. Information contained in these publications likely came to the Resident Inspectors' l

attention. Hairston at 28.

152. As described in Finding 138 suora, Mr. Farley met with the NRC Commissioners and the Staff again in May 1990. Mr.

Mcdonald's May 3, 1990 memorandum (Mcdonald Exh. D (GPC Exh. 5)) 1 specifically states that Mr. Farley's role was discussed with the Commissioners. Mcdonald at 7; Tr. 1508-09 (Mcdonald).

153. On March 9, 1990, Mr. Hobby and his legal counsel, Michael Kohn, met with NRC representatives and discussed three issues:

(1) Mr. Hobby filed an action against Georgia Power with the Department of Labor (" DOL") pursuant to Section 210 (now 211) of the Energy Reorganization Act;M' (2) Mr. Hobby's DOL complaint charged that Georgia Power was in violation of its license conditions relative to the NRC approved organizational structure, M' As soon as Mr. Mcdonald learned that Mr. Hobby filed his complaint with DOL, he advised the NRC Region II Administrator, Mr.

Stewart Ebneter, that Mr. Hobby had filed a complaint alleging that he had been retaliated against by Georgia Power for raising a regulatory concern. Mcdonald at 25; Hairston at 32.

97 I

l i.e., Mr. Mcdonald reported to Mr. Farley and not Mr. Dahlberg; and (3) Mr. Mcdonald provided false and misleading information to Commissioner Carr during the March 30, 1989 full power hearing on Vogtle Unit 2, i.e., Mr. Mcdonald falsely stated that he reported  ;

to Mr. Dahlberg rather than Mr. Farley. Egg notes of NRC's Gregory Todd, as Hairston Exh. J (GPC Exh. 19).M' i

154. Intervener and Mr. Hobby restated Mr. Hobby's allegation in )

l their Section 2.206 petition filed on September 11, 1990 and later supplemented. Georgia Power provided the NRC with detailed responses to that petition and its supplements. Egg Findings 106-07, supra.

155. Mr. Farley's position as CEO of Southern Nuclear and his authority as such were discussed at some length in the transcribed meeting between Georgia Power and the NRC on January 1

11, 1991. Egg Finding 140, suora.

3. Georgia Power and Its Agents and Employees Acted in Good Faith.

156. In order to draw a conclusion on the character of a licensee where there are allegations that material misrepresentations and omissions were made to the NRC, we must judge not only whether there were misrepresentations or i

l M' Because Georgia Power's copy of Mr. Todd's notes was barely legible, the NRC Staff provided a better copy during the hearing.

Tr. 1996-99. i 98 l

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l

I F

omissions, but also the degree of culpability involved and the materiality, or significance,M' of the information. Aaa LBP 37, slip. op at 5. With respect to this inquiry, we have previously observed that " acts bearing on character generally a

should not be considered in isolation. The pattern of licensee's relevant behavior, including corrective actions, should be considered." ist at 11, nuotina Metropolitan Edison Co. (Three 1

Mile Island Nuclear Station, Unit No. 1), CLI-85-9, 21 N.R.C.

1118, 1136 (1985). We conclude that Georgia Power acted in good faith, i.e., without culpability, in its representations to the NRC concerning the formation of Southern Nuclear, and that whatever information was not provided to the NRC was not material to the operation of Plant Vogtle.

157. Georgia Power has always had a policy of keeping the NRC fully informed regarding any developments it believes would be of interest to the NRC. The company maintains an open dialogue with NRC Staff through periodic briefings, at both the Region II headquarters and NRR headquarters, regarding the status of licensed activities at Plant Vogtle. The Company also maintains an open dialogue with the NRC Staff through its daily interaction M' significantly, the NRC's regulation covering completeness and accuracy of information, 10 C.F.R. S 50.9, is violated only when the licensee recognizes, or reasonably should have recognized, that it has information which has significant health and safety implications and fails to provide that information to the NRC. 33a Statement of Consideration for 10 C.F.R. S 50.9 final and proposed rulemaking at 52 Fed. Reg. 49363 (December 31, 1987) and 52 Fed.

Reg. 7413 (March 11, 1987).

99

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with the Resident Inspectors, who attend daily plant status meetings. With respect to all of the organizational changes associated with the formation of Southern Nuclear, Georgia Power has acted openly and honestly with the NRC and kept them fully  :

I informed. Hairston at 48-49. l 158. Georgia Power believed its actions associated with the ,

phased implementation of Southern Nuclear as the eventual j operating licensee of the Vogtle facility to be consistent with  !

similar approaches taken by other licensees and acceptable to the appropriate NRC authorities. Hairston at 11; Farley at 8-9; Long 6/8/94 Dep. at 32; Long 12/23/94 Dep. at 15-16.

i 159. The discussions and correspondence cited in the testimony of Messrs. Farley, Mcdonald and Hairston demonstrate that the company took great pains to ensure that the NRC was fully informed of and comfortable with the plans to form Southern Nuclear. Georgia Power believes the statements of its witnesses, that Georgia Power remained in control of Plant Vogtle's operations, are accurate. Hairston at 44.

l 160. Georgia Power did not believe that the company was expected to advise the NRC, or that the NRC was interested in being advised, of the day-to-day activities of Mr. Farley. Georgia Power never considered Mr. Farley to have control over licensed ,

activities. Mcdonald at 23-24. Georgia Power believed that <

100

control over licensed activities at Plant Vogtle always remained with Georgia Power officials, and consequently, Georgia Power never perceived a legal obligation to report all of Mr. Farley's activities that might somehow relate to Plant Vogtle. Georgia )

Power, however, has never concealed Mr. Farley's involvement. In fact,HMr. Farley himself met with NRC Commissioners and Staff management to describe conceptual plans, and latr.r discussed his role with the NRC. Hairston at 45-46; Findings 118, 138, suora.

161. Mr. McCoy testified, based on his own observations of Mr.  ;

Farley's interaction with Messrs. Mcdonald and Hairston, that there was no attempt by Mr. Farley to control the operation of Plant Vogtle. The line management authority over licensed

< activities was very clear -- through Mr. McCoy to Mr. Hairston,  ;

then to Mr. Mcdonald and then to Mr. Dahlberg. Mr. McCoy recalled that Georgia Power nuclear operations employees were sensitive to the fact that Mr. Farley was not an officer of Georgia Power and, therefore, would not be involved in licensed activities. In Mr. McCoy's opinion, Georgia Power faithfully ,

complied with that requirement. He was not aware of any instance when Mr. Farley gave direction to any officer or employee of Georgia Power with respect to Plant Vogtle's licensed activities, such as the processes performed at the plant, the operating '

procedures employed at the plant, the use of the plant or its equipment, or the manner in which the plant would comply with its  !

i i

101

NRC commitments, including Technical Specifications. McCoy at 19.

162. As far as the activities of Mr. Farley are concerned, Mr.

McCoy believed that the NRC was' generally aware of Mr. Farley's role, even though he believed it was not material to the operation of Plant Vogtle. In Mr. McCoy's opinion, Mr. Farley's activities never constituted control over the licenses for Plant Vogtle or direction of licensed activities. McCoy at 22.

163. Mr. McCoy believes Georgia Power always has been responsive to the NRC's questions concerning the organization and who was in control of licensed activities at Vogtle. As far as Mr. McCoy is aware, the Company always provided information it believed was accurate at the time it was provided. In the event that the Company determined material communications were inaccurate, it t has taken appropriate action to promptly so inform the NRC and to [

correct the inaccuracies. McCoy at 22.

164. Mr. McCoy also testified regarding Mr. Mosbaugh's allegation that the SONOPCO Project fostered a corporate culture of deception in its relationship with the NRC. Mr. Mosbaugh based this allegation on a partial transcript he had prepared for his Tape No. 259. Mosbaugh at 9. Mr. McCoy's testimony demonstrated that the full discussion of the relevant <

conversation recorded on Tape 259 was quite different than 102

f portrayed by Mr. Mosbaugh. Mr. McCoy testified, "I was giving a pop talk on team work and support. I stressed several times during the talk the need to avoid divisiveness among ourselves l l

but at the same time to be open, and by that I was referring in particular to our relationship with the NRC. I have never advocated deceptiveness. In fact, I consistently practice and encourage openness and honesty." McCoy Rebuttal at 1; 333 also Tr. 1669 (McCoy).

165. Mr. McCoy's vivid description of the circumstances and emotional state of the Vogtle management team surrounding the discussion recorded on Tape 259 clarified the context of his remarks, as follows:  !

Shortly before this, like several weeks, I was notified that we were going to have a special team inspection at the site by the NRC, and that was pretty much out of the blue. That's very unusual. We had been really struggling at the plant, as I have described before. The plant had not been ,

performing well in the past. We had had some  :

significant problems occur, and so forth, and I was working very hard to bring together a competent team that could work together, support each other, and run that plant in a '

competent manner . . . . 'This was in August

• of 1990. And when this team came to the site, they told us at that time when they arrived what the purpose was, and we had all '

of our management team there, etcetera. And ,

the first thing they told us was, "We are here to investigate a set of allegations,"

which they gave us. They said, "We're also here because the NRC management is generally  :

concerned about the operations of the plant, and so we're going to look at the operations," and I'm talking specifically the operations department in the plant, as I recall. They did a very thorough look at our 103 i

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plant, including all of these allegations.  :

We went through, we spent many hours . . .  ?

working with the inspectors, and I say "we,"

I'm talking about all-of the people at the-plant, and I spent most of the time there i during this inspection myself, and trying to understand what these allegations were, did we'have real problems or not. And at the end of this inspection, which is when this occurred, and that's the context we're talking.about, after this has.all happened, I got the team of managers together at the site, and we were together for some other reason. I don't remember exactly what it was. But at the start of this conversation, I said, "I guess this is a good time," and that's where I started in. And I tried to tell the folks that in spite of the fact --

let me give you a feeling for this. When I '

looked around the room, we were in a large conference room, everybody's face was essentially on the table. They really were a beaten bunch. They knew because of the nature of the allegations and what had been alleged that some member of the group here that they were sitting there with had been i making allegations that the plant was I operated unsafely and that they were not doing their jobs properly, and they were afraid to speak up. The feeling I had was that the whole team was about to fall apart.

. . . So the context of this was kind of like a father talking to the family, and that's what those comments were saying. I think it's very clear in that context. I think it was clear to everybody there what that context'was. I made it clear that I was -

not talking about not being open and honest, '

but that we needed to support each other, not let this thing get us down, but pull together and learn from it, learn what our weaknesses were, acknowledge those, and get on with it.

And I think it was the right thing to say at that time.

Tr. 2597-2600 (McCoy).

l 166. We adopt as accurate Mr. McCoy's description of the nature and purpose of this discussion.

104

D. IIFFERVENOR'S PenenamINS STATEISIrf OF ISSUES.

167. In Intervanor's Prehearing Statement of Issues (Dec. 12, 1994) (" Statement of Issues"), Intervanor identified twenty-eight issues it intended to raise during the hearing. While the findings above either address or moot virtually all of them, Intervenor's issues and their resolution are set out below for completeness.

1. Intervenor's Issue 1.

168. In Issue 1, Intervenor alleges that Georgia Power provided misleading information about the corporate management structure over Plant Vogtle during the Vogtle Unit 2 full power license hearing on March 30, 1989. More specifically, Intervenor alleges that Mr. Mcdonald's description of the chain of command was inaccurate because it ignored "the role Mr. Parley played as chief executive over the Southern Company's nuclear division which commenced exercising operating responsibility over GPC's nuclear plants in November of 1988." Statement of Issues at 1-2.

169. As discussed above, Mr. Farley did not exercise " operating responsibility" over Georgia Power's nuclear plants at any time

during his involvement in the SONOPCO Project. He was not in the chain of command over Georgia Power's nuclear plants. Egg Findings 58-93 supra.

105

170. Intervenor makes a series of additional allegations to support its contention that Mr. Farley was "in the management structure over Plant Vogtle." statement of Issues at 3. As discussed below, none of the allegations supports Intervanor's thesis.

171. As his first basis for asserting that Mr. Farley was in_the management structure over Plant Vogtle, Intervenor alleges that in 1987,Mr. Addison met privately with Mr. Farley and they jointly agreed that Mr. Farley would emerge as the chief executive of a Southern Company nuclear operating subsidiary.

Statement of Issues at 3. Even if this were true, it would not i

establish that Mr. Farley exercised management control over Plant '

l Vogtle until transfer of the operating license from Georgia Power  !

to Southern Nuclear after its incorporation. It is uncontested i

that Mr. Farley did indeed become CEO of Southern Nuclear after l it was incorporated at the beginning of 1991, but even then he '

had no authority over the operation of Georgia Power's nuclear plants. ERR Finding 38, supra.

172. In any event, the assertion that there was an agreement in 1987 that Mr. Farley would become CEO is not supported by the record. The excerpts of Mr. Addison's deposition that.'were 'i admitted into evidence indicate that Mr. Addison had discussions with Mr. Farley about Mr. Farley heading up the Southern Nuclear i Operating Company, but Mr. Addison could not recall when. l 106

l Addison Dep. at 36-37. Mr. Addison believes that his discussion with Mr. Farley occurred "when the decision was made to go forward." Id at 67. There is also no support for Intervenor's suggestion that Mr. Addison made the decision unilaterally.

While Mr. Addison certainly discussed the possibility with Mr.

Farley, the record shows that Mr. Farley was elected to the l

l position of President and CEO of Southern Nuclear after its incorporation (Hairston at 37), and the Board of Directors at the j time included Mr. Dahlberg (Georgia Power's CEO) and Mr. Mcdonald l (Georgia Power's Executive Vice President-Nuclear Operations).

S,ag Stip. Exh. 18 at 2-3. Moreover, there is nothing unseemly 1'

about the CEO of the holding company exploring with a senior officer the possibility of that officer heading a new subsidiary.

I Intervenor did not question Mr. Farley on this issue.E' E' Intervenor did question Mr. Farley concerning when it was decided that Mr. Farley would become Executive Vice President of The Southern Company. The record establishes that Mr. Farley was elected to this position on February 24, 1989. Tr. 1890-91 (Farley). In response to Intervenor's suggestion that there might l have been a prior understanding, Mr. Farley testified: )

\

\

l The prediction of the future ... was not that l much in concrete. I was prepared to take a role in helping put together and formulate and help organize a nuclear operating company.

But it was indefinite as to when that role might expand further. (I did) not know for certain if I did assume that as a full time role who my successor would be at Alabama Power Company.

l l There was plenty of work to do at Alabama Power Company, and there was no use, as far as I was concerned, and I think this was shared by Mr. Addison who was CEO of Southern l Company, there was no use in prematurely (continued...)

107 1

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l i

173. Intervanor's second basis alleges that in 1987, Mr. Addison and Mr. Farley made a decision as to where SONOPCO would be i

located, and that Mr. scherer was never even asked where southern Nuclear should be located. Statement of Issues at 3. Again, l

even if this were true, it would not indicate that Mr. Farley was l "in the management structure" over Plant Vogtle as Intervanor  ;

contends. However, Intervenor stretches the truth. The record merely indicates that when Mr. Addison discussed with Mr. Farley 4

the possibility of Mr. Farley heading up Southern Nuclear, Mr.

Farley indicated that it would depend on the location being in Birmingham, because Mr. Farley did not wish to move at his age.

Addison Dep. at 80-81; Tr. 1821 (Farley). Mr. Addison has testified that he also discussed the merits of the location with Georgia Power, and that Southern Nuclear was eventually put in Birmingham because of proximity to the engineering support staff. ,

Addison Dep. at 81. Similarly, Mr. Farley testified that this issue was also examined by the task forces, who determined that Birmingham was the most economic location. Tr. 1821, 1823 (Farley). Georgia Power was represented on the implementation task force by Tom McHenry, and Grady Baker, Georgia Power's Senior Executive Vice President, was on the steering committee.

U(... continued) making decisions about -- with finality about roles until such time as we had a better feel i about time frames and for what would happen at Alabama Power Company if, indeed, I did leave that job as CEO. ,

Tr. 1751-52 (Farley). ,

108 1

1

Y Finding 12; Tr. 1331 (Mcdonald). In addition, Mr. Farley believes that the decision was made by the Boards of Directors in >

May 1988. Tr. 1822-23 (Farley).

174. As the next basis for contending that Mr. Farley was in the management structure over Plant Vogtle, Intervanor alleges that -

by 1989, the Southern Company Management Council began functioning as the SONOPCO Project board of directors. Statement  !

of Issues at 3. There was no Board of Directors for the SONOPCO Project and no Board of Directors for Southern Nuclear until it was duly incorporated at the and of 1990. Farley at 13-14; Tr. j 1774 (Farley); Dahlbera at 8. It is true that some of the individuals who later became marb?rs of the Board of Directors of Southern Nuclear met, and the status of efforts to form Southern I Nuclear and other issues of common interest were discussed. j Farley at 13-14; Dahlberg at 8; Tr. 1174-76 (Dahlberg). But these meetings were informal. Dahlberg at 8. There was no mission statement, no votes, no fixed schedule, and, to Mr.  !

Dahlberg's recollection, no minutes. Tr. 1174-75, 1178-79 i

(Dahlberg). Mr. Dahlberg's secretary referred to these meetings as SONOPCO Project board meetings, and Mr. Addison's secretary ,

made a similar calendar entry. Dahlberg at 8; Addison Dep. at

53. The individuals attending these meetings, however, met as representatives of their respective companies (e.g., as members l

of The Southern Company Management Council). Farley at 13-14.

l l

l 109 I

i 175. As another basis for asserting that Mr. Parley was in the management structure over Plant Vogtle, Intervenor alleges that j Mr. Farley received verbal reports from Mcdonald, Hairston, McCoy, Long and McCrary concerning the performance of Georgia Power's nuclear units. Similarly, Intervanor asserts that Mr.

Far3ey attended Staff meetings. Statement of Issues at 4. While the record does not establish that these individuals provided reports to Mr. Farley "concerning the performance of Georgia Power's nuclear units" specifically, Mr. Farley did attend staff meetings after he became Executive Vice President - Nuclear of The Southern Company and SCS, and Mr. Mcdonald and others in the SONOPCO Project did make an effort to keep Mr. Farley generally  :

informed. 333 Finding 66 gugIg; Mcdonald at 4. This was necessary because Mr. Farley was the prospective CEO of Southern Nuclear, was providing certain support services, and was periodically briefing The Southern Company Board. Finding 75 suora. The fact that Mr. Farley was kept informed in these i circumstances does not signify he was in the management structure over Plant Vogtle. He clearly did not have control over operations or licensed activities at the plants. 333 Finding 65 suora.

176. Intervenor alleges that Mr. Shipman stated that Mr. 1 I

Mcdonald and Mr. Hairston reported to Mr. Farley. Statement of j l

Issues at 4. Mr. Shipman testified in this proceeding that he j understood Mr. Mcdonald reported to Mr. Parley for certain things 110 I

1 I

l

)

and there were certain things that Mr. Mcdonald did not report to Mr. Farley on. Tr. 1966 (Shipman). This is not inconsistant with Mr. Farley's prior testimony that Mr. Mcdonald would report ]

to him in an informal sense with regard to governmental affairs (such as Congressional proceedings) and administrative matters unrelated to the operation of the plants. This statement does not indicate that Mr. Farley had line management responsibilities ,

or that Mr. Mcdonald reported to Mr. Farley with respect to any  ;

licensed activities with which the FSAR is concerned. Farley at 15-16, 18-19; Tr. 1865-67 (Farley); Hairston at 33-34.8 l

177. Intervenor alleges that Mr. Farley reported to The Southern l l

Company about the status of Georgia Power's nuclear plants. l Statement of Issues at 4.E' Mr. Farley did periodically brief j The Southern Company Board of Directors, but this was one of Mr.

Farley's responsibilities as Executive Vice President-Nuclear of The Southern Company. Farley at 11. Again, this function does not evidence any control over plant operations or licensed activities, or support Intervanor's assertion that Mr. Parley was in the management structure over Plant Vogtle.

178. Intervenor alleges that ogie. thorpe's management observed that Mr. Farley was the chief executive of the Vogtle project.

M/ Mr. Shipman also mistakenly Yhought thist Mr. Mcdonald might have been an officer of SCS. Tr. 15#66-67 (Shipman).

E' The portions of Mr. Farley's deposition that Intervanor cites are not in evidence in this proceeding.

111 I

h Statement of Issues at 5. Intervenor refers to a note that Mr.

Dan Smith wrote in the margin of the transcript of the March 30, -

1989 hearing on the full power license for Vogtle Unit 2. Ida Mr. Smith has testified, however, that he subsequently asked for l I

clarification of the reporting chain at an April 1989 meeting of ,

the Joint Committee for Power Gstneration (the co-owners' ,

committee), and Georgia Power provided a response. Smith Dep. at >

22-23. Mr. Smith testified that the response "really put to bed the question I had of what the reporting chain was." Idi at 36- l

37. ,

6 179. Intervenor also relies on Mr. Hobby's April 27, 1989 '

memorandum referring to Oglethorpe's concerns. Statement of Issues at 5. This memorandum was written after the March 30, 1989 hearing on the full power license for Vogtle Unit 2, and therefore, could not have influenced the discussions at that-hearing one way or another. In any event, as previously discussed, Mr. Hobby lacks any personal knowledge supporting this concern. Han Section III, suora, at 21-22.

i 180. Next, Intervanor alleges that "Mr. Farley implemented plant Vogtle changes in personnel evaluation and pay to Plant Vogtle nuclear operations." Statement of Issues at 5-6. This ,

allegation is inaccurate. Mr. Farley did not implement any such i

change. 333 Findings 81-82 supra.

112

i 181. Intervenor also alleges that key negotiations between Georgia Power and Oglethorpe were conducted by Mr. Parley.

Statement of Issues at 6. Mr. Farley conducted certain negotiations with Mr. Stacey of Oglethorpe, but did so at Mr.

Dahlberg's request. Farley at 33; Dahlberg at 11-12. Mr. Farley testified that the major part of the negotiations were through Mr. Grady Baker and Mr. Fred Williams. Farley at 33. Mr.

Williams confirmed that he was in charge of negotiating the agreement, and his view is that Mr. Farley merely provided Oglethorpe information and comfort about setting up nuclear operating companies. Tr. 2482-83 (Williams).

182. Intervanor alleges that Mr. Farley had input into Mr. .

l Mcdonald's annual review. Statement of Issues at 6. This issue is addressed at Finding 80 above. Mr. Farley did not prepare that review. Idt 183. Intervanor alleges that Georgia Power's Management Council excluded nuclear personnel from its company-wide review. This issue is addressed at Finding 79 suora, and has nothing to do with Mr. Farley.

184. Intervenor alleges that after Mr. George Head reported to Mr. Dahlberg that the SONOPCO Project was refusing to cooperate with NOCA, Mr. Dahlberg advised Mr. Head that he could not resolve the matter until he met with Mr. Farley. Statement of 113

Issues at 6. Intervenor did not introduce into evidence the  ;

transcript page (from prior testimony before the Department of Labor) that Intervenor cited as purported support for this assertion. Mr. Dahlberg does not recall such a conversation with l l

Mr. Head. Tr. 1202 (Dahlberg). Mr. Dahlberg did have a very l brief discussion with Mr. Farley concerning a proposal to increase NOCA's staffing (ama Finding 76, aggra), but there is no -

evidence that Mr. Farley made or controlled the subsequent  !

decisions concerning NOCA. i 185. Intervenor alleges that Georgia Power's nuclear budgets  !

were reviewed by Mr. Farley. Statement of Issues at 6-7. The budget reviews in question occurred in late 1989 and 1990, well after the March 1989 full power hearing that is the subject of Intervenor's Issue Number 1. In any event, Mr. Farley's limited and entirely proper involvement in the budget review process is addressed at Findings 87-93, supra, and does not indicate that Mr. Farley controlled operations or licensed activities at Plant .

Vogtle.

i l

186. Next, Intervenor alleges that Mr. Farley discussed and approved the outage philosophy, and was involved in the establishment of that philosophy for the SONOPCO Project. *I i

Statement of Issues at 7. This allegation is inaccurate, as {

l discussed in Findings 68-69, suDra. Mr. Mcdonald established the outage philosophy. 14. I

)

114 l 1

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187. Intervenor also asserts that Mr. Farley's control over i

Georgia Power's nuclear operations extended to matters before the Georgia Public Service Commission. Intervenor asserts that Mr.

Farley reviewed data requests and testimony in Georgia Power's 1

1989 rate case. Statement of Issues at 7. Mr. Farley had no responsibility for Georgia Power's rate case. Tr. 1803 (Farley).

Mr. Farley testified that he may have received a copy of proposed i testimony, but he does not recall providing any comments and he ),

certainly never purported to approve or disapprove such testimony. He did not direct Mr. Mcdonald's activities related l

to the preparation of testimony; Mr. Mcdonald received his instructions in this regard from Mr. Dahlberg. Farley at 34-35.

Mr. Farley also testified that he did not " screen" data requests.

He would see them, and he did try to be helpful by monitoring to make sure that the SONOPCO Project was providing expeditious support. Tr. 1803-11 (Farley). This attempt to be helpful hardly amounts to control over licensed activities or evidences that Mr. Farley was in the " management structure" over Plant Vogtle as Intervenor alleges.

188. Last, Intervenor asserts that Mr. Farley was identified as the top executive to be contacted by the On-call Project Manager '

of Georgia Power's plants. Statement of Issues at 8. Intervenor '

misinterprets the notification procedure, which did not require Mr. Farley to be contacted. McCoy Supp, at 1-4; Tr. 1587-97, 1601-02 (McCoy).

115

189. Intervenor also alleges that Georgia Power's statements during the March 30, 1989 presentation to the Commission were false to the extent they asserted that "Mr. Dahlberg had ' a personal hands on' relationship with the management at the plant site." Statement of Issues at 2. Intervenor's quotation is inaccurate. The transcript reflects the following:

MR. DAHLBERG: I guess I should add something on that matter also. I guess one of the things we have done well is while Pat (Mcdonald) is an Executive Vice President of Nuclear, it does mean that he is available to the site. He visits the site. He is there.

He talks to the people and he looks at the equipment. We tried to use that philosophy for all our operations. It doesn't stop with Pat. I have the same type of relationship.

I guess we could go further than that. We do have a Board of Directors committee for oversight of nuclear. They even visit the site. So, its not removed.

I think we have established the kind of relationship and the kind of a personal hands on with managerent. George (Bockhold) has access to anytody he needs access to.

Intervanor Exh. 17 at 5 (Tr. 35). The clear import of this discussion is that Georgia Power's upper management was accessible.

190. Mr. Dahlberg's efforts to make himself available are clearly established in the record. Mr. Dahlberg would visit one of the nuclear plants periodically. Tr. 1157 (Dahlberg). Mr.

Dahlberg's calendar indicates that he visited Plant Vogtle at least twice in 1989. Intervenor Exh. 32 at 4, 15. Mr. Shipman, who became Plant General Manager in 1991, testified he had met 116 l

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Mr. Dahlberg a number of times at the plant, and many times in {

general. Tr. 1986 (Shipman). In addition, Mr. Dahlberg would periodically designate and publicize a time when anybody from the nuclear plants could telephone him. Tr. 1158 (Dahlberg).

I l

191. Mr. Dahlberg had Company-wide responsibilities, including i

matters related to the fossil and hydropower facilities, the Georgia Public Service Commission and co-owner relationships. As with nuclear matters, he delegated responsibility for various areas to dedicated officers. However, he kept abreast of nuclear matters, including the performance of the plants and the problems facing them. Mr. McCoy testified that based on his experience at  ;

l INPO, where he became familiar with the degree of involvement of j utility CEOs in their nuclear plants, he knew that the j information provided to Mr. Dahlberg and Mr. Dahlberg's input on nuclear operations matters was greater than the typical CEO j involvement. McCoy at 6-7. f 192. Intervenor cross-examined Mr. Dahlberg to attempt to show l that Mr. Dahlberg did not have detailed knowledge of nuclear  ;

design, certain licensing issues, and associated jargon. Has Tr. i 1147-53 (Dahlberg). Mr. Dahlberg, however, has never represented that he was a nuclear engineer or knew all of the technical aspects of the plant. He relies on his nuclear management for -

that. Rather, his statement that he had a " hands-on" management  ;

style referred to his oversight, his daily communications with ,

9 117 em -

the nuclear management, his plant visits, and the like. Tr.

1153-59 (Dahlberg).

2. Intervenor's Issue 2.

193. In his second issue, Intervanor alleges that Georgia Power failed to correct the false and misleading statements made during the Vogtle Unit 2 full power license hearing when Georgia Power filed hearing transcript corrections. Specifically, Intervenor alleges that a May 1, 1989 letter, which Mr. Hairston submitted to correct the transcript, was inaccurate because (1) the FSAR figare it included did not portray the actual functioning of the l nuclear organization, and (2) it excluded Mr. Farley's role.

1 Statement of Issues at 8-10.

194. The purpose of the May 1, 1989 letter was to correct an omission made during the March 30, 1989 meeting with the commission on the Vogtle Unit 2 full power operating license.

During that meeting, Mr. Mcdonald had been asked about the chain of command, and his response had inadvertently omitted Mr.

Hairston. Mr. Hairston submitted the May 1, 1989 letter to correct this omission; this was the only purpose of the letter.

He did not consider mentioning Mr. Farley, because he did not view Mr. Farley as being in the chain of command. Mr. Farley was not. Hairston at 29.

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- _ - _ _ - - _ - - - _ _ - - _ - - - - - _ - - _ )

195. Figure 13.1.1-1 of the FSAR, which was attached to the May 1, 1989 letter (along with Figure 13.1.1-2), showed the Executive Vice President-Nuclear Operations reporting to the " Chairman and CEO" position. The FSAR figures had been last amended in November of 1988, and did not yet reflect a change of title that occurred after the Chairman and CEO, Mr. Scherer, relinquished his position as CEO in December 1988. Mr. Dahlberg became CEO at this time, but not Chairman. Therefore, the Figure 13.1.1-1 should have shown the Executive Vice President-Nuclear reporting to the " President and CEO," which was Mr. Dahlberg's correct title. Mr. Hairston's objective in attaching the figures was to show the licensing documents reflected him position in the management chain, and he and others did not notice the outdated title in the CEO box. Hairston at 29-30.

196. That the label on one of the boxes on the attached figure contained an outdated title is immaterial. There is no showing that this information had significant health and safety implications or that anybody at the NRC relied on this information to their detriment. Egg, gxgt, Tr. 2678-80, 2698 (Rogge and Allenspach). There is also no evidence of any improper motive. It was nothing more than an innocent oversight.

3. Intervanor's Issue 3.

197. Intervenor's third issue alleges that 1988 amendments to Chapter 1 of the FSAR failed to state accurately the corporate 119

l l

. organization. Intervenor refers to FSAR section 1.4.1.2, headed

" Description of Corporate organization," which according to Intervenor stated that Georgia Power was a public utility incorporated in Georgia and a wholly owned subsidiary of The Southern Company. Intervenor asserts, "The fact that The Southern Company had newly established a nuclear division with responsibility for operating GPC's nuclear plants is omitted" and "Mr. Farley played a key role in the actual functioning corporate organization over Plant Vogtle." Statement of Issues at 10-11.

198. Intervenor did not introduce any evidence to support this issue. He did not provide FSAR section 1.4.1.2 as an exhibit or  ;

provide any testimony addressing it. Therefore, Intervenor has l

not sustained his burden of going forward on this issue. In any !

l event, Section 1 of the FSAR is a general section, and Section l l

1.4.1.2 is a very general description of the licensee's corporate structure. Specific information on the operating organization is found in Chapter 13. Further, on July 25, 1988, Georgia Power personnel had met with NRC Region II staff to discuss Georgia Power's nuclear plant operations organization and the planned reorganization. The NRC's August 11, 1988 letter summarizing the meeting indicated the NRC was being kept apprised of Georgia Power's nuclear operations organization and the proposed project concept. Stip. 10; ERR ale 2 LBP-94-37, slip op at 28-29. In light of these facts, Intervenor's suggestion that FSAR section 1.4.1.2 should have identified a new " nuclear division" 120

(Intervenor's apparent reference to the SONOPCO Project) is immaterial. McCoy at 4.

199. With respect to Mr. Farley, in 1988, he was President of Alabama Power Company. Although he had been asked by Mr. Addison to devote a portion of his time to guiding the formation of Southern Nuclear (113 Stip. Exh. 10), he had no authority or control over licensed activities at Plant Vogtle. Egg Finding 65, supra. Mr. Farley did not even move into the SONOPCO Project offices until March 1989. Hairston at 24. Mr. Farley's role was not discussed because it was not material to the focus of the FSAR, i.e., Plant Vogtle licensed activities. McCoy at 4-5.

4. Intervenor's Issue 4.

200. Intervanor's fourth issue alleges that the 1988 amendments to Chapter 13 of the FSAR failed to state accurately the organizational structure.8 Again, Intervenor alleges that this submission was inaccurate because it " fail [ed) to indicate that management control over Georgia Power's nuclear plants were reorganized such that Mr. Farley was functioning as chief 9 Georgia Power submitted to the NRC Amendment 39 to the Plant Vogtle FSAR on November 23, 1988. That amendment included changes to the Georgia Power organization and specifically described the Executive Vice President -

Nuclear Operations position as "an officer of both Georgia Power Company and Alabama Power company [who) is responsible to the chairman and CEO of each company for all aspects of operation of the nuclear generating plants in the Georgia Power and Alabama Power systems, as well as technical and administrative support activities provided by SCS."

Egg Stip. 13 and Stip. Exh. 12; Hairston at 18-19.

121

executive of a newly formed Southern Coupany nuclear division (SONOPCO project), and that in this capacity Mr. Farley exercised significant line management responsibility over Plant Vogtle."

Intervanor also alleges that the FSAR amendment was misleading because it stated that the Executive Vice President (Mr.

• Mcdonald) had full responsibility for technical and administrative support activities provided by SCS. Intervenor t claims that, in actuality, technical and administrative services reported to an executive office of the SONOPCO Project, with Mr.

Farley serving as chief executive officer. Statement of Issues at 12-14. We find that the statements were accurate.

201. The November 1988 amendment to Chapter 13 did not include Mr. Farley in the organization charts and descriptions because Chapter 13 described Vogtle management, including corporate line management. Mr. Farley was not part of that management.

Hairston at 19.

202. In November 1988, Mr. Farley was not even part of the f

SONOPCO Project. He did not have any involvement in SONOPCO Project staff meetings in this time frame. He did not move to the SONOPCO Project offices until March 1989. Hairston at 24.

He was still the President and CEO of Alabama Power Company.

203. Mr. Addison had asked Mr. Farley to be involved in the project to form Southern Nuclear. This was discussed in an 122

informational memorandum that Mr. Addison issued on September 21, 1988, to employees of Georgia Power, Alabama Power and SCS briefly describing the progress made on the phased formation of Southern Nuclear. Mr. Addison's memorandum stated that he had asked Alabama Power President Joseph M. Farley to devote a portion of his time to guiding the formation of the new company and stated that "[h]is leadership and insight will be of immeasurable value." That memorandum also stated that Mr.

Mcdonald was serving as Executive Vice President of both Georgia ,

1 Power and Alabama Power and was responsible for the operation of j Plants Hatch, Vogtle and Farley. 333 Stip. 11. Mr. Farley l l

exercised no line management responsibility over licensed activities at Plant Vogtle. Hairston at 19-20.

i 204. Similarly, neither the SCS Vice President, Technical Services nor the SCS Vice President, Administrative Services reported to Mr. Farley with respect to Plant Vogtle. These services, under the direction of Mr. Louis Long, Vice President of Technical Services, and Mr. Charles McCrary, Vice President of Administrative Services, were provided by SCS to Georgia Power pursuant to the January 1, 1984 services agreement between those companies. While Messrs. Long and McCrary had a nominal reporting responsibility within '4 to higher SCS officers concerning SCS administrative mat w s,E' they reported functionally to Mr. Mcdonald, Georgia Power's Executive Vice

- +,

n' Mr. Farley was not an SCS officer in 1988. Farley at 1.

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4 President - Nuclear Operations with respect to the particular i

services they were performing for Georgia Power. This arrangement was later formalized by a letter agreement between Mr. Mcdonald and Mr. Allen Franklin, then President of SCS, dated April 24, 1989. McCoy at 8; Hairston at 21 and Exh. G (GPC Exh.

16); Tr. 1712 (Hairston); 1RR ale 2 Meier Dep. at 40-41.

5. Intervenor's Issue 5.  ;

205. Intervenor's fifth issue alleges that the March 28, 1990 amendment to the FSAR failed to state accurately the organizational structure over Plant Vogtle. Intervanor claims that Figure 13.1.1-1 is inaccurate because it fails to depict Mr. I l

Mcdonald's reporting relationship with Mr. Farley and because it j shows the Administrative and Technical Services Vice Presidents  !

reporting to Mr. Mcdonald and then to Mr. Dahlberg. Statement of Issues at 15-16.

I 206. On March 28, 1990, Georgia Power submitted to NRC the {

l initial Plant Vogtle Updated FSAR pursuant to 10 C.F.R.

S 50.71(e). That update included a revised organizational chart which showed that the Executive Vice President - Nuclear Operations, an officer of both Alabama Power and Georgia Power, reported to the President and CEO of Georgia Power on Vogtle matters. Egg Stip. Exh. 15. The 1990 amendments to the FSAR were accurate in not showing Mr. Mcdonald reporting to Mr. I Farley, because Mr. Mcdonald did not report to Mr. Farley with 124

respect to-the operation of Plant Vogtle or any activities under the Vogtle licenses. Hairston at 33. Mr. Farley's role in the SONOPCO Project was to guide the formation of the new operating company and to provide support on an industry basis. McCoy at 11.

207. Mr. Farley testified in May, 1990, that Mr. Mcdonald would report to him in an informal sense with regard to governmental affairs (such as Congressional proceedings) and administrative matters unrelated to the operation of the plants. This statement  !

does not indicate that Mr. Farley had line management responsibilities or that Mr. Mcdonald reported to Mr. Farley with l

respect to any licensed activities with which the FSAR is concerned. Hairston at 33-34.

1 208. The 1990 amendments to the FSAR were also correct in  ;

showing the Administrative Services and Technical Services Vice Presidents reporting to Mr. Mcdonald and then to Mr. Dahlberg.

With respect to the nuclear support functions described in the FSAR, these individuals reported to Mr. Mcdonald, who in turn reported to Mr. Dahlberg. Hairston at 34; Mcdonald at 9. Mr. -

Dahlberg had the authority to direct the activities of those SCS officers with respect to the functions they were performing in support of plant operation pursuant to the services agreement l

between SCS and Georgia Power. Hairston at 35.

l l

125 f

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. . - . - - . ~ -, - - - , ~

209. Mr. Farley testified, in May 1990, that Mr. McCrary would report to him on some administrative matters. With respect to these sorts of administrative matters, unrelated to operations, Mr. Farley referred to an informal joint office of the chief executive.8 That Mr. McCrary may also have provided some services to Mr. Farley (such as support for Mr. Farley's efforts to guide the formation of Southern Nuclear and general industry i

activities, or support for the administration of SCS) was again not the sort of activity anyone considered needed to be described in the FSAR. Hairston at 34; McCoy at 12. This informal arrangement had nothing to do with the operation of Plant Vogtle, licensed activities, or any other of Mr. Mcdonald's responsibilities as Georgia Power Executive Vice President -

Nuclear Operations. McCoy at 12; Mcdonald at 9. f!SR B152 Meier Dep. at 41.

210. Intervanor alleges that the true reporting relationships of 1990 with respect to Vogtle are depicted in Attachment 1 of f ERR ALES Tr. 1864-67 (Farley). Mr. Farley testified in this proceeding that after he became Executive Vice~ President of SCS, he worked with the Administrative Services group and exercised some supervision over certain administrative matters. While the Administrative Services group. reported functionally to Mr.

Mcdonald, with respect to the support provided for the operation of Georgia Power's nuclear plants, there were certain other activities that Mr. McCrary performed for Mr. Parley and some administrative responsibilities where he reported to both Mr. Farley and Mr.

Mcdonald, jointly. . For example, governmental affairs relating to Congressional relations was under Mr. McCrary, but it was regarded as Mr. Farley's responsibility rather than Mr. Mcdonald's.

Administrative matters pertaining to the formation of Southern Nuclear were the responsibility of both Mr. Farley and Mr. i Mcdonald. Farley at 16. i 126 l

Statement of Issues. That attachment is not accurate. Mr.

Hairston reported to Mr. Mcdonald, not Mr. Farley; Messrs. Long and McCrary functionally reported to Mr. Mcdonald, not to Mr.

Farley; Mr. Mcdonald reported to Mr. Dahlberg, not to the Southern Company Management Council; and Mr. Dahlberg reported to the Georgia Power Board of Directors, not to the Southern Company Management Council. Hairston at 35.

6. Intervanor'a issue 6.

211. Intervenor claims that Georgia Power falsely stated in the March 28, 1991 amendment of the Plant Vogtle FSAR that the Georgia Power Executive Vice President - Nuclear Operations reports to Georgia Power's President and CEO with respect to all matters concerning budgets and personnel and that Southern Nuclear matters are currently limited to operational support activities. Intervenor claims these statements are falso because (1) Georgia Power's budget had been under the control of Southern Nuclear since November, 1988, at which point Georgia Power lost control of its nuclear operations, and (2) Mr. Parley implemented changes in personnel evaluations and pay for Plant Vogtle personnel and selected and approved Georgia Power's nuclear l management staff. Statement of Issues at 17-18. Intervanor's claims are not supported by the record.

212. Mr. McCoy testified that the 1991 amendment to Section 13.1.1.2.1.1 of the FSAR accurately depicted the reporting 127 l

b. >

relationship of Georgia Power's Executive Vice President -

Nuclear Operations with respect to all matters concerning Plant  ;

Vogtle budgets and Georgia Power personnel. McCoy at 12.

213. Contrary to Intervanor's assertion, the record demonstrates that Georgia Power has maintained control over its nuclear budget subject to traditional review and oversight by Southern Company managtment. 333 Findings 86-93, supra.

214. Mr. Farley did not implement changes in personnel evaluation or pay for Plant Vogtle employees. 333 Findings 81-82, supra. Further, the record is clear that Georgia Power management selected its nuclear management staff and that Georgia Power's nuclear officers were elected by the Georgia Power Board of Directors. Egg Findings 70-85, supra.

i

7. Intervenor's Issue 7.

215. Intervenor claims that the March 1991 amendment of FSAR Figure 13.1.1-1 is false in that it shows that the Executive Vice President - Nuclear Operations (Mr. Mcdonald) reported to the President and CEO of Southern Nuclear (Mr. Farley) with respect to Southern Nuclear matters only and that Mr. Mcdonald reported to the President and CEO of Georgia Power with respect to Georgf?

Power matters. Intervanor alleges that Mr. Mcdonald reported to Mr. Farley on matters pertaining to Plant Vogtle and that they both reported to the Southern Nuclear Board of Directors on i

128

matters pertaining to Georgia Power's nuclear operations. In support of this assertion, Intervanor alleges that Mr. Farley j reported to The Southern Company CEO (Mr. Addison) and to The Southern Company Management Council. Intervenor cross references Issue 1 for additional factual support. Statement of Issues at 18-19. AF Intervenor's assertions are unfounded.

216. During both Phase I and Phase II of the formation of Southern Nuclear, clear lines of authority and responsibility existed such that, as Georgia Power's Executive Vice President -

Nuclear Operations, Mr. Mcdonald always reported to the Georgia j

Power CEO, and not Mr. Farley, concerning the operation of Plant Vogtle. Eat Findings 52-66, supra.

217. Once Southern Nuclear was incorporated, Mr. Farley became its President and CEO. While retaining his positions as Executive Vice President of Georgia Power and Alabama Power, Mr.

Mcdonald became Executive Vice President of Southern Nuclear.  ;

1 Hairston at 37-38. Therefore, Mr. Mcdonald did report to Mr. l l

Farley, and they both reported to the Southern Nuclear Board of  :

1 Directors, regarding Southern Nuclear matters. However, those ]

matters were limited to the administration of Southern Nuclear.

With respect to licensed activities, Mr. Mcdonald continued to

&F The factual bases for Intervanor's Issue 1 are addressed by the Findings in Section IV.D.1, supra.

129 l l

l report directly to Georgia Power's President and CEO, Mr.

Dahlberg. Farley at 17-19; Mcdonald at 4; McCoy at 13.

218. The agreements entered into between Georgia Power and Southern Nuclear expressly provided that Southern Nuclear would not perform any activities in connection with the nuclear plants which were required by the NRC operating licenses to be performed by the licensee, Georgia Power. Hairston at 36; Hairston Exhs. K and L (GPC Exhs. 20 and 21).

219. Mr. Farley did brief The Southern Company Board and Mr.

Addison on nuclear developments. Farley at 21. This was part of Mr. Farley's responsibilities as Executive Vice President -

Nuclear of The Southern Company. 133 Findings 27-28, supra.

However, receiving and providing information is a far cry from control over the license. As described in Sections III.C.2.(a) and (b), supra, Georgia Power has always maintained legal and l actual control of licensed activities at Plant Vogtle.

I S. Intervenor's Issue s.

220. By Memorandum and Order dated May 25,.1994, the Board posed certain questions regarding the illegal license transfer issue.

Question Number 2 asked about oversight activity over the SONOPCO '

Project, such as " managerial control, audits, investigation, personnel, quality assurance or control, or root cause i assessments." In response, Georgia Power did not identify the l

130

NOCA group-as an organization within Georgia Power which had such '

oversight responsibilities. Intervenor contends that the failure to identify the existence of NOCA and its oversight function, and SONOPCO Project personnel's refusal to cooperate and interference l with NOCA's operation, was a material omission. Statement of l i

Issues at 19-21. '

221. We are convinced that NOCA never performed the sort of oversight suggested by the Board's question, and therefore, it should not have been identified as an organization having such responsibilities. SAR, arg&, Hairston at 47. The primary i

purpose for NOCA was the administration of the anticipated i operating contract between Georgia Power and Southern Nuclear.  !

The inability to incorporate Southern Nuclear and to obtain a transfer of the operating license to that company meant that the essential purpose for NOCA never materialized. Dahlberg at 12.

Although NOCA was also intended to monitor the performance of Georgia Power's nuclear plants, it soon became apparent that these data gathering / reporting functions were being duplicated by SONOPCO Project personnel, who were reporting directly to Mr.

Dahlberg and supplying him with this information. Dahlberg at 13; Tr. 1193 (Dahlberg).

222. Mr. George Head, who had consulted with Mr. Dahlberg regarding the formation of NOCA (Tr. 1193 (Dahlberg)), felt that the failure to incorporate Southern Nuclear had left NOCA's 1

131

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function largely undefined. "We were trying to determine what (Mr. Dahlberg) really wanted us to do in regard to (NOCA),

because the contract -- the SONOPCO offices had not been formed yet, and we were trying to find out what he wanted us to really do in regard to it and we were working out these details with him." Hobbv v. GPC Tr. 667-68 (Head). At the and of 1989 the NOCA group was assigned to Mr. Fred Williams, Senior Vice President of Bulk Power Markets at Georgia Power. After assessing the work AOCA had been doing, Mr. Williams expressed a similar sense of frustration. "We really didn't have anything for NOCA to do because we did not have the contracts." Tr. 2477 (Williams).

223. NOCA never performed any oversight function with respect to licensed activities. Tr. 2565-76, 2579, 2588-89, 2596 (McCoy);

Tr. 1238 (Dahlberg). In fact, the persons working in NOCA were not qualified to perform this type of oversight. McCoy Rebuttal at 3. While NOCA did perform some minor data collection and monitoring responsibilities, primarily in connection with the  ;

1989 rate case, it provided no reports that were unique or of added value. Hairston at 47; Dahlberg at 12-13; Tr. 1199 (Dahlberg). NOCA never issued any safety performance indicators.

Tr. 2375, 2377 (Hobby). Thus, the formation of NOCA had no )

effect upon the safe operation of Plant Vogtle. Id.

I l

132  !

I I

l l

l 224. Mr. Dahlberg, who formed NOCA, received no advice that an j

. oversight function for NOCA was necessary. Tr. 1199 (Dahlberg).

Mr. Baker, who consulted with Mr. Dahlberg regarding the formation of NOCA (Tr. 1193 (Dahlberg)), thought that NOCA was to l l

have no oversight function whatsoever. Baker 5/23/90 Dep. at 14- l l

17. i 1

225. Mr. Hobby complained that employees in the SONOPCO Project l did not cooperate in supplying him with necessary information ,

i regarding the plants, and also acted to " block" him from hiring the employees needed to perform NOCA's intended function. Mr.

Mcdonald admits to taking an uncooperative approach because Mr.

Hobby, in Mr. Mcdonald's view, was attempting to act as an intermediary between Mr. Mcdonald and Mr. Dahlberg. Mr. Mcdonald opposed this effort as "a threat to the veracity of the chain of command between we and Bill Dahlberg." Tr. 1483 (Mcdonald), 333 also Tr. 1485 (Mcdonald). Of course, Mr. Mcdonald acted in this regard as an officer of Georgia Power, and Mr. Hobby admits that he has no personal knowledge of any involvement by Mr. Farley in these matters. Tr. 2360-61 (Hobby). Similarly, Hobby admits that all the persons who attempted to " block" him from j l interviewing Michael Barker for the performance engineer position were also Georgia Power employees. Tr. 2352-57 (Hobby).

226. All staffing decisions regarding NOCA, as well as the decision to disband it, were made b/ Georgia Power officers.

133 l

l 1

Dahlberg at 14; Farley at 32-33; Tr. 2458, 2461, 2497-2504 (Williams). Mr. Hobby admits that he has no personal knowledge of Mr. Farley's involvement in NOCA matters, but relies upon a comment made to him by Mr. William Evans, an employee in Georgia Power's Corporate concerns Program, to the effect that Mr. Farley l

would "make the call" as to certain SONOPCO personnel mattcra. l Tr. 2337 (Hobby). As discussed in Finding'77, suora, Mr. Evans' statements are based on multiple hearsay and are not taliable.  ;

227. Mr. Farley shared his general view that organizations in The Southern Company system such as NOCA were duplicative. Tr.

1756 (Farley); Farley at 32-33. By the time that Mr. Farley shared this view with Mr. Dahlberg, however, Mr. Dahlberg had already come to the same conclusion. Tr. 1204, 1221 (Dahlberg).

This comment by Mr. Farley, which occurred on or about May 5, 1989, some 7 to 8 months before the final decision was made to eliminate NOCA, had no impact on the decision. Tr. 1228 (Dahlberg); Dahlberg at 13; Tr. 2461, 2497-2504 (Williams).

l

9. Intervenor's Issue 9.

228. Intervenor asserts that Georgia Power falsely represented to the NRC in its April 1, 1991 response to the 2.206 petition that the resolution of a dispute between Messrs. Dahlberg and  ;

Mcdonald regarding the presentation of performance indicators to the Georgia Public Service Commission ("PSC") was evidence of the  !

reporting relationship and who was in control of nuclear l l

134 l

operations. Intervenor focuses on the following language from Georgia Power's response:

.A' specific example demonstrating that Mr.

Dahlberg is, indeed, responsible for and in control of Georgia Power matters concerning Plants Hatch and Vogtle is reflected in Hobby

v. Georaia Power. In August 1989, Mr.

Mcdonald had a disagreement with Mr. Dwight Evans concerning testimony to be filed with the Georgia Public Service Commission on a subject of nuclear plant performance standards. (Trial Tr. 365-68, 380-81). That disagreement was resolved by Mr. Dahlberg in an August 10, 1989 meeting during which Mr.

Dahlberg directed Mr. Mcdonald to.take certain actions. See Trial Tr. 336-39, 365-68, 606-08; EAR Alge (1/11/91] NRC Mtg. Tr.

at 20-21.

Intervanor contends that this statement is falso because Mr.

Mcdonald, subsequent to the August 10 meeting, did not follow Mr.

Dahlberg's instructions, and Mr. Mcdonald and Mr. Farley reviewed and approved testimony which did not include alternative perfor-  :

mance indicators. In support of his contention, Intervenor relies upon the testimony of Mr. Michael D. Barker, which was stricken by the Board (Tr. 2030-32). Statement of Issues at 22-24.

229. Intervenor's assertion is not supported by the record. The limited evidence which was adduced at the hearing regarding this issue does not support the contention that Mr. Mcdonald defied Mr. Dahlberg's instructions. Both testified unequivocally that a decision was made at the August 10, 1989 meeting to be prepared to propose alternative performance standards, if necessary, and that this strategy was carried out in the handling of the 1989 135

rate case. Tr. 1102-22, 1137-41 (Dahlberg); Dahlberg at 17; Tr.

1504 (Mcdonald); Mcdonald at 15-17. Intervenor apparently concedes the accuracy of Mr. Dahlberg's account of the meeting.

Mr. Hobby himself admits that he has no reason to doubt that the meeting ended with the resolution described by Mr. Dahlberg. Tr.

2335 (Hobby).

230. Some individuals have previously stated that an alternative performance standard was not presented to the PSC. Proctor Dep.

at 13; Johnson Dep. at 28. Mr. Dahlberg explained, however, that Georgia Power presented two pieces of rebuttal testimony -- one piece from a panel consisting of Mr. McCoy and Mr. Beckham still

, ' opposing performance standards, and a second piece from a consultant, Mr. Fitzpatrick, suggesting modification of the PSC Staff's proposed performance s.tandard. The stipulated exhibitsW show that Mr. Fitzpatrick's rebuttal testimony critiqued tne PSC's proposal and identified five areas where it needed to be changed.M' 231. Intervenor's misimpression about Georgia Power's position with respect to alternative performance standards is no doubt a function of the fact that Georgia Power publicly opposed such standards but, at the same time, proposed changes through the W Egg letter to the Board from David R. Lewis, dated January 25, 1995.

E' PSC Docket No. 3840U at 3523-64 (September 13, 1989).

136 t

1 I

testimony of a consultant, Mr. Fitzpatrick. Tr. 1112-13, 1121 (Dahlberg). Georgia Power remained philosophically opposed to performance standards, and this continuing opposition is clearly reflected in the rebuttal testimony. Tr. 1104-05, 1109, 1112-14 l (Dahlberg). However, when it became clear that the PSC was prepared to adopt such standards, Mr. Fitzpatrick's testimony provided the basis for Georgia Power to identify the necessary changes in its brieff submitted to the Public Service Commission. Tr. 1112, 1121-22 (Dahlberg).

232. This entire issue is irrelevant to whether Mr. Farley l controlled Georgia Power's nuclear activitjes. Mr. Farley received copies of the draft testimony to be submitted, but never purported to approve or disapprove such testimony. Farley at 34.

And Mr. Farley was in agreement with Mr. Dahlberg's decision that Georgia Power should be prepared to propose alternative performance standards, if necessary. Tr. at 1108-09 (Dahlberg).

10. Intervenor's Issue 10.

233. Intervanor contends that Georgia Power falsely stated to the WRC in its April 1, 1991 response to the 2.206 Response that ,

certain organizational charts accurately depicted the Georgia Power organization' structure prior to the incorporation of Southern Nuclear. Specifically, Intervenor focuses on a chart W Ram Initial Brief of Georgia Power submitted to the PSC on September 25, 1989, included as a stipulated exhibit with Mr.

Lewis' January 25 letter.

137

l l

l l

attached to the U-1 Application or Vt.claration filed with the i

Securities and Exchange Commission, as well as a chart attached to a meno dated May 15, 1989 from Fred Williams to Marvin Hobby I l

(Stip. Exh. 35). Intervanor contends that the charts are l inaccurate because they fail to disclose Mr. Mcdonald's reporting relationship with Mr. Parley and that Mr. Farley functioned as the da facto Chief Executive Officer of the SONOPCO Project.

Statement of Issues at 25"16.

234. The charts in question accurately depicted the Georgia Power organization. As discussed in Findings 68-75 above,,Mr.

McDonal6 did not report to Mr. Farley with respect to licensed activitics.

235. Intervenor's bases included under Issue 1, as well as his assertion that Mr. Farley functioned as the da facto Chief Executive Officer of the SONOPCO P:coject, are addressed in the Findings under Section IV.D.1, supra.

11. Intervenor's Issue 11.

236. Intervenor's eleventh issue claims that Georgia Power's April 1, 1991 response to Intervencr's 2.206 petition falsely asserted that Mr. Farley did not have management control over Georgia Power's licensed activities or over Georgia Power l personnel matters. Statement of Issues at 26-27.

138

l l

l 237. That Mr. Farley did not have management control over Georgia Power's licensed activities has already been extensively  ;

I addressed in Findings 59-66, aggra. Further, Mr. Mcdonald, who signed the April 1, 1991 response, honestly believes the  ;

statement in the response is accurate. He testified that Mr.

Farley did not exercise any management control over licensed activities. Mr. Mcdonald +.astified that he is not aware of a single instance where Mr. Farley controlled, or made, a Georgia j i

Power staffing decision. Mcdonald at 10. We find the statement i was accurate.

12. Intervenor's Issue 12.

238. Issue 12 alleges that Georgia Power's April 1, 1991 response to Intervanor's 2.206 petition misstated Mr. Farley's responsibilities as Executive Vice President-Nuclear. Statement of Issues at 28.

239. Georgia Power's response to the 2.206 petition described l Mr. Farley's duties in the capacity of " Executive Vice Presidenc- ,

Nuclear" as including (1) overseeing the formation of Southern l

Nuclear, (2) acting as spokesman for Southern Nuclear among chief executive officers of the other Southern Company affiliates,E' and (3) representing the Southern Company on the national scene concerning generic nuclear power issues. Intarvanor Exh. 48 at E' The response to the 2.206 petition noted that this function refers to Mr. Farley's membership on the Southern System Management Council. Intervenor Exh. 48 at 4.

139

. . . - . - . . - . . .- .. - ~. . .

t

4. Tt's description accurately reflects Mr. Farley's duties as i described in Mr. Mcdonald's letter agreement of April 24, 1989 with Mr. Franklin of SCS. Mcdonald at 13. i

13. Intervanor's Issue 13.

240. Georgia Power's April 1, 1991 response to the 2.206 petition stated that the Georgia Power Management Council "is f

made up of all the executive and senior vice presidents of Georgia Power." Intervanor contends that the statement was knowingly falso because Mr. Hairston, who in April 1991, was a i

Georgia Power Senior Vice President, had never been a member of 4

the Management Council. Statement of Issues at 29.

241. The raforanced statement is inaccurate insofar as it  ;

pertains to Mr. Hairston. However, this was simply an oversight  ;

and there was no intention to mislead the Commission.E ,

Mcdonald at 13-14; Tr. 1075-77 (Dahlberg). Intervenor presented  !

no evidence to the contrary.  ;

242. In context, the inaccuracy was immaterial since the statement was obviously intended as background for the i

1 W Mr. Mcdonald testified that, when he reviewed the April 1, 1991 response, he had in mind that the members of the Management Council included the executive vice presidents and some senior vice presidents who reported directly to Mr. Dahlberg. However, the membership of the Management Council was somewhat fluid (Mr.

Dahlberg invited whom he wanted). Tr. 1442-43 (Mcdonald).

140 l

..- _ - _ _ _ __-. -- - _______________-________1

proposition that Mr. Mcdonald was on the Management Council and Mr. Farley was not.

14. Intervenor's Issue 14.1.

243. Intervenor contends that Georgia Power falsely stated in its April 1, 1991 response to the 2.206 petition that Georgia Power's Management Council functioned as a policy setting body I and made corporate resource allocation decisions. Intervanor contends that this representation is false because, in late 1989, the Management Council did not review Georgia Power's nuclear management reporting to Mr. Mcdonald and the Management Council i did not participate in a review of Georgia Power's 1990 nuclear operating budget. Statement of Issues at 30.

244. Intervenor's allegation concerning the Management Council's review of nuclear personnel has been addressed in Finding 79, supra. We are not persuaded that the 2.206 response statement is inaccurate simply because nuclear personnel were not reviewed at that time.

I 245. Furthermore, the Georgia Power Management Council did i review the 1990 Georgia Power nuclear budget, as part of the total Georgia Power budget, before they were approved by Mr.

Dahlberg. Dahlberg at 10; Tr. 1396-98, 1403 (Mcdonald); 1RR R112 Finding 249, infra. Intervanor's reliance on the testimony of )

Mr. Johnson is misplaced. Mr. Johnson made it clear that his l l

141 l

l l

I information regarding the 1990 budget was based upon " rumor," and except for the 1990 nuclear budget, it was his understanding that.

all other budgets had been approved by the Management Council.

Johnson Dep. at 40-42.  ;

1

15. Intervenor's Issue 14.B.

246. Intervenor contends that Georgia Power's April 1, 1991 response to the 2.206 petition misrepresents that Mr. Mcdonald l periodically reported to Georgia Power's Management Council on matters pertaining to budgets and organizational goals.

Intervenor claims that this statement is false because the Management Council did not review nuclear operations personnel in

'1989 and did not review all nuclear budgets. Statement of Issues at 31-34.

)

l 247. Intervenor's allegations that the Management Council did not review nuclear personnel or nuclear budgets are addressed in Finding 79, suora. Additionally, we observe that even if the Management Council did not review nuclear personnel or the  ;

nuclear budget in late 1989, such an occurrence does not mean j that Mr. Mcdonald did not report to the Management Council l l

periodically about these matters. We believe the statement was  ;

substantially accurate.

248. Mr. Mcdonald testified that Georgia Power's April 1, 1991 response to the 2.206 petition was accurate in stating that he 142

l i'

reported to the Management Council on nuclear operating matters including budget matters, with the qualification that the term

" reported" in this statement was used in the sense of "provided budgets for their review" and not in the sense that organizationally, Mr. Mcdonald had a reporting responsibility to the Georgia Power Management Council. Organizational 1y, he reported only to the Georgia Power CEO. Mcdonald at 14.

249. Mr. Mcdonald participated in Management Council meetings ,

addressing the 1989 and 1990 budgets on September 23, 1988 and October 14, 1988, and presented organizational goals for Plants Vogtle and Hatch at a December 7, 1988 meeting. Exh. 135 at 27, 29-30, 42-43. Mr. Mcdonald attended another meeting on July 25, 1989, where the five-year capital budget targets were approved, and the schedule for budget reviews, including Management Council [

- review and a review by Mr. Addison, was agreed upon. Id. at 71-  !

73. Nuclear budgets were again considered by the Management f Council in meetings on November 6, 1989, November 14, 1989, and j December 4, 1989. Id. at 90, 93-96, 97 (capital budget), 98, j

)

104-116 (Nuclear Update).  !

16. Intervenor's Issue 15.

250. Intervanor asserts that during the NRC's December 1988 inspection of the Birmingham corporate offices, Georgia Power  ;

failed to advise the NRC of Mr. Farley's involvement with the  ;

SONOPCO Project, including his role as CEO of the SONOPCO 143  !

.- .= - - . -, _

l l

l Project, and the reporting relationr/ nip between Mr. Farley and Mr. Mcdonald. Intervenor alleges that Mr. Farley had implicit authority from Mr. Addison to staff SONOPCO; that they had agreed Mr. Farley would serve as " chief executive of Southern Company's l 1

nuclear division;" that Georgia Power's CEO (Mr. Scherer),

President (Mr. James H. Miller, Jr.), and Senior Executive Vice i President (Mr. Baker) were not privy to those discussions and "were not privy to the fact that Addison had select (sic) Mr.

l Farley to function as the CEO of a nuclear operating company nor were they told of the decision to locate Southern Nuclear in Birmingham;" that Farley reported to Addison and The Southern ,

l Company Management Council which served as a board of directors for the SONOPCO Project; that all senior officers of the SONOPCO Project were selected or approved by Farley without the NRC's ,

knowledge; that Mr. Farley was involved with the operation of and management of The Southern Company's nuclear plants; that Mr.

Farley presided over weekly staff meetings designated as "Farley Staff meetings" which were attended by numerous staff members; and that the Company's December 29, 1988 letter to NRC continued to mislead the NRC about Mr. Farley's role. Statement of Issues at 34-38. We do not find there was any material misrepresentation or omission.

251. Mr. Hairston testified that he did not recall whether the i NRC was advised of Mr. Farley's role in the SONOPCO Project during the NRC's December 1988 inspection of the SONOPCO Project 144

offices. The subject may have been discussed; Mr. Farley's role was certainly no secret. The NRC, however, was interested in the corporate management and organization responsible for Georgia i

Power's nuclear plants. Mr. Farley did not have any i responsibility for operation of Georgia Power's units, and his activities to help promote the formation of Southern Nuclear would simply have been beyond the focus of the discussions. No  !

one believed Mr. Farley had line management authority over Plant i

Vogtle. Hairston at 23.

t 252. NRC Staff witnesses participated in the December 1988 inspection of the SONOPCO Project offices. Mr. Rogge talked with Georgia Power management, including Messrs. Mcdonald, Hairston and McCoy and the management chain of command through Mr.

Mcdonald was explained along with the organizational structure and supporting role of the SONOPCO Project. Mr. Rogge concluded I

~

that Georgia Power was in control of Vogtle operations and that the changes in management personnel and organization beginning in 1988 did not affect Georgia Power's control over Vogtle. Mr.

I Rogge also concluded that the control and direction of daily operations at Vogtle were performed by the on-site Georgia Power employees.under the direction of Mr. McCoy. NRC Staff at 4-6 (Rogge and Allenspach); 331 ale 2 Findings 129-35, supra. Mr.

Rogge's conclusions were based on the Vogtle FSAR statements, the i Vogtle Technical Specifications, and his interviews of licensee personnel. Tr. 2716-17 (Rogge).

145

253. The NRC Staff witnesses attended all of the depositions and i

hearings on the illegal license transfer allegation. They ,

concluded that nothing they had learned during the hearing about Mr..Farley's role was surprising to them. Tr. 2728-29 (Hood, Rogge and Allenspach).

254. Mr. Farley's discussions with Mr. Addison concerning heading-up Southern Nuclear are addressed in Findings 171-72, [

supra. At the time of NRC's December 1988 inspection, Mr. Farley i

was still President of Alabama Power. He did not become Executive Vice President of The Southern Company and SCS until i l

March 1, 1989. Farley at 1. It was not until March 1989 that it was announced that Mr. Farley would be the CEO of Southern j Nuclear once it was incorporated. Farley at 11; Tr. 1723  !

(Hairston).

i 255. Contrary to Intervenor's assertion, the decision to locate l

Southern Nuclear in Birmingham (and move the Georgia Power '

Nuclear Operations Department there) was discussed with Georgia Power management. Addison Dep. at 80-81, 83; 333 also Finding 173, suora.

i 256.

The NRC's December 1988 inspection covered the organizational structure, not how individuals were selected. As the President and CEO of Alabama Power, Mr. Farley was, of course, involved in the selection of Mr. Mcdonald and Mr. j i

1 146 1

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Hairston for their positions at Alabama Power. However, although he was consulted, Mr. Farley did not make the decision with  ;

respect to any of the officers reporting to Mr. Mcdonald and Mr.

Hairston. Consultation with Mr. Farley was perfectly appropriate since he was the President of Alabama Power, whose nuclear plants the SONOPCO Project was also supporting. Hairston at 24.

257. Mr. Farley's involvement in the staffing of the SONOPCO

{

Project was minimal. He did not select or approve Georgia Power's nuclear officers. Mr. Farley's involvement in the ,

selection of SCS officers, Messrs. Long and McCrary, was appropriate since he was the President of Alabama Power at the time. Georgia Power's management had a similar role in their ,

selection. Aan Finding 74, suora.

258. Contrary to Intervenor's assertion, The Southern Company i

Management Council did not function as the Board of Directors for the SONOPCO Project. 333 Finding 174 under Section IV.D.1, l suora. ,

259. Although SONOPCO Project staff meetings were held beginning in November 1988, Mr. Farley did not attend such staff meetings until he moved his office to the SONOPCO Project offices, ^

following his election to Executive Vice President of The Southern Company and SCS, effective March 1, 1989. Farley at 21;  ;

Mcdonald at 21; 333 also Hairston at 24.

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l

260. Georgia Power's December 29, 1988 letter to the NRC was accurate and did not mislead the NRC about Mr. Farley's role.

Mr. Farley had no role in the operation of Plant Vogtle.

Further, the December 29 letter explained that the Nuclear support departments in the corporate office had been reorganized as a staff function to support plant operation, rather than as a line function directing plant operation. The context of these statements had nothing to do with Mr. Farley. Hairston at 25.

17. Intervenor's Issue 16.

261. Intervenor asserts that Georgia Power misled or failed to  ;

accurately portray to the NRC the actual configuration of the SONOPCO organization during the July 25, 1989 meeting with NRC.

Specifically, Intervenor states that Georgia Power did not advise the NRC that Mr. Farley had management responsibility over Plant Vogtle.f Statement of Issues at 38-39.  !

262. We adopt Mr. McCoy's testimony that the-July 25, 1989 presentation to the NRC was accurate. Mr. Farley had no management responsibility over Plant Vogtle. At that time Mr. ,

Farley had become Executive Vice President of The Southern Company and SCS. His role was one of support pursuant to the April 24, 1989 letter agreement between Mr. Mcdonald and Mr.

Franklin. The services Mr. Farley performed included guiding the l

E As additional support for his claim, Intervenor cites the l bases for Issue 1. Egg Statement of Issues at 3-8. These bases are addressed in the Findings under Section IV.D.1, suora. '

148 1

formation of the new operating company and providing generic  !

support on an industry-basis. These services were not material

. to the operation of Plant Vogtle or Plant Hatch (i.e., the performance of licensed activities); the NRC was aware of Mr.

Farley's role in guiding the formation of Southern Nuclear.

McCoy at 15.

18. Intervenor's Issue 17.

263. Intervanor alleges that Georgia Power's April 1, 1991 ,

response to Intervanor's 2.206 petition falsely states that The Southern Company Management Council was not involved in operating issues pertaining to Georgia Power's nuclear plants. Intervenor also claims that the functioning of the Management Council was omitted from the April 1 response and the FSAR. Statement of Issues at 39-40.

264. Messrs. Dahlberg, Farley and Addison testified that there was no board of directors for the SONOPCO Project and there was no board of directors for Southern Nuclear until Southern Nuclear was incorporated in December 1990. Dahlberg at 8; Farley at 13-t 14; Addison Dep. at 53; Mcdonald at 19; Tr. 1773-75 (Farley); 333 also Finding 174 under Section IV.D.1., sunra.

265. Mr. Dahlberg stated during his June 10, 1994 deposition that there was a board of directors of the SONOPCO Project.

However, he explained during the hearing that he was in error 149

)

when he made that statement, which he corrected on the errata sheet for his deposition. Tr. 1172-73 (Dahlberg). He believes he misinterpreted whether the question addressed the incorporated organization or the project. Tr. 1173 (Dahlberg).

266. Contrary to Intervenor's assertion, Georgia Power's April 1, 1991 response to the 2.206 petition did D2h state "the Southern System Management Council was not involved in operating issues pertaining to GPC's nuclear plants." Statement of Issues at 39. Rather, the response stated, at page 4:

The Southern System Management Council provides a forum for the exchange of information among subsidiary companies that will aid the companies' daily operations, it reviews system performance and it provides strategic and policy guidance to the system.

However, day-to-day management of policy and operating issues pertaining solely to an individual subsidiary company is the exclusive responsibility of that subsidiary company's CEO.

That statement was accurate. Mcdonald at 18.

267. The Southern Company Management Council is not described in the Vogtle FSAR because the Council is not the licensee of Plant Vogtle or an organization that had any responsibilities in connection with the operation of Plant Vogtle. Although the Southern Company Management Council reviewed Georgia Power's  !

budget in connection with The Southern Company's obligations I towards its stockholders, that activity is not one which should have been described in the Vogtle FSAR. McCoy at 16.

150 ,

19. Intervenor's Issue 18.

268. Intervenor alleges that, in a transcribed meeting with the NRC on January 11, 1991, Mr. Mcdonald falsely stated that Mr.

Farley had no responsibilities for the administrative matters related to the SONOPCO Project. Statement of Issues at 40-41.

269. During the January 11, 1991 meeting with the NRC, Mr.

Mcdonald did not state that Mr. Farley had "no responsibilities" for the " administrative matters" related to the SONOPCO Project prior to Phase II of the SONOPCO Project, as Intervenor asserts on page 41 of his Statement of Issues (referring to page 42 of the meeting transcript). As reflected in the transcript of the meeting, what Mr. Mcdonald stated was that prior to Phase II (the incorporation of Southern !!uclears , Mr. Farley had been performing a job as a Vice President of The Southern Company and had been providing certain services to Mr. Mcdonald under a contract with SCS. The contract Mr. Mcdonald was referring to was the April 24, 1989 letter agreement between Mr. Mcdonald and Mr. Franklin, then President of SCS. Mr. Mcdonald also stated that prior to Phase II, Mr. Farley had no responsibility for certain administrative support that was depicted on organization charts that were discussed during the meeting. The administrative support to which Mr. AcDonald was referring was the administrative support function that was being performed by Mr. McCrary for Mr. Mcdonald pursuant to the same April 24, 1989 151

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' agreement. Mr. Mcdonald's statement was accurate. Mcdonald at 8-9.

270. During Phase I of the formation of Southern Nuclear, Mr.

McCrary did not report to Mr. Farley with respet:t to the administrative support function that Mr. McCrary provided to Mr.  !

Mcdonald, pursuant to the April 24, 1989 agreement. Mr. McCrary did provide additional administrative services to Mr..Farley to assist Mr. Farley's responsibility to guide the formation of Southern Nuclear and Mr. Farley*s general industry activities.

Mcdonald at 9.

?

20. Intervenor's Issue 19. ,

I 271. Intervanor claims that Georgia Power's October 3, 1991 response to Intervenor's July 8, 1991 2.206 petition is false in  ;

stating that the selection process used in 1988 for the staffing of SONOPCO was not completed during the two-day meeting and that  ;

Mr. Mcdonald never purported to give an unqualified or rigid " top

, down" characterization of how the organization was staffed.

Intervenor asserts that the testimony of Mr. Thomas McHenry and of Mr. Mcdonald support his claim. Statement of Issues at 41-42.

l 272. The April 1, 1991 response to the 2.206 petition was I

. I accurate in stating that the selection process used for the staffing of the SONOPCO Project was not completed during a two-day meeting of SONOPCO Project executives in 1988. While a 152 y -rv-- y y e . , . - ,- -.c , , . ,

-~ - . - . - . - - .. .- .

number of individuals were identified as the most likely candidates for positions within the SONOPCO Project during that two, or maybe three, day meeting, the selection process actually continued for some period beyond that meeting, probably several weeks. McCoy at 16.

273. Mr. Mcdonald testified that although he did not participate in that portion of the meeting in which personnel below the top level of management were discussed, he understood that the selection process continued for several days, possibly a weak or more after the nesting. Mcdonald at 11; Tr. 1301 (Mcdonald).

274. The October 3, 1991 response to the July 8, 1991 supplement to the 2.206 petition stated that "Mr. Mcdonald did use or >

incorporate the words ' general' and ' generic' in describing his understanding of the staffing of the SONOPCO Project. He never purported to give an unqualified or rigid ' top down' characterization of how the organization was staffed."

Intervenor Exh. 79.

275. Intervanor asserts that the October 3, 1991 response is inaccurate on the basis of an affidavit prepared by Mr. Thomas J.

McHenry in 1990. Statement of Issues at 42. This assertion is not supported by the record. ,

i 153  !

276. Mr. McHenry understood that the deci71ons as to staffing were made by Messrs. Hairston, Beckham and McCoy who met for two days at the 270 Peachtree Street building and "took an organization chart, and filled in names from the top of the organization to the botton." McHenry 7/16/90 Aff. at 4-5.

277. Mr.-McHenry participated in the meeting at the 270 building for only about two hours for the purpose of briefing the meeting attendees about the Georgia Power employees with whom they were i not familiar. Other than this two-hour period, Mr. McHenry did not participate in the selection of personnel. McHenry 4/4/94 Aff. at 3; Hobby v. GPC Tr. 285, 295.

5 278. Mr. McHenry did not know whether Messrs. Hairston, Beckham or McCoy had discussions with prospective managers and f supervisors prior to the meeting at the 270 building concerning who those individuals would like to have in their groups. Mr.

McHenry was aware of one example of such a discussion and there could have been others. Hobby v. GPC Tr. 296-97; McHenry 4/4/94 Aff. at 3-4.

279. Mr. Mcdonald testified that the process involved Mr. McCoy  ;

and Mr. Beckham (Vice President of Plant Hatch) starting at the  :

top of the organization and, using a blank organization chart, i identifying prospective candidates who were most qualified for positions in the organization. Selected managers then 154

participated in selecting those individuals who would be working for them. However, Mr. Mcdonald did not witness the process and i

he recalled only that they settled on the top tier during the meeting, although they may have pencilled in other names, and the other_ candidates were shuffled around for a couple of weeks. Tr.

1301, 1304-08 (Mcdonald).8 I

21. Intervenor's Issue 20. l l

280. Intervanor alleges that Georgia Power's April 1, 1991 response to the 2.206 petition is inaccurate in describing the role that Mr. Farley played in establishing the Plant Vogtle I

outage philosophy. In support of this claim, Intervenor asserts that Mr. Farley was involved in the establishment of the Plant Vogtle outage philosophy and that Mr. McCoy did, in fact, make l statements referring to Mr. Farley's role in establishing the i same. Intervenor asserts that his claim is supported by Mr.

Mosbaugh's tape recording (Tape No. 236) made in August 1990; Mr.  !

Farley's testimony; that "Farley staff meetings" were held every -

week; and that SONOPCO Project managers obearved that Farley, rather than Dahlberg, was controlling Georgia Power's nuclear operations (citing Mr. Mosbaugh's Tape No. 259 regarding tstements by Mr. Steve Chesnut, and Mr. Shipman's August 1994 8 333 also NRC's February 7, 1989 inspection report (Stip.

Exh. 11, Report Details at 4) (at the time of the December 1988 inapection, "(s)taffing of the Vogtle Project corporate organization was approximately 80 percent complete with all key positions filled with well qualified individuals").

155

deposition testimony). Statement of Issues at 43-45. We conclude the statement was accurate.

281. As discussed earlier in Findings 68-69 above, the

,< undisputed testimony in this proceeding is that the outage a philosophy for. Plant Vogtle was established by Mr. Mcdonald; Mr.

.8

, Parley was never involved in overseeing the establishment of the outage philosophy for any of Georgia Power's nuclear plants.

282. Mr. McCoy and Mr. Mcdonald testified that Georgia Power's ,

April 1, 1991 response to the 2.206 was accurate. While they may have discussed the outage philosophy with Mr. Farley, Mr. Farley did not have any direct role in the establishment of the outage philosophy at Vogtle. McCoy at 13-14; Mcdonald at 13.

283. With respect to Mr. Mosbaugh's Tape No. 236, Mr. McCoy testified that Intervenor mischaracterized his statements and took them out of context. His statements on the tape referred  ;

only to " discussions" which took place that included Mr. Farley.

He did not say that Mr. Farley set, established, directed or created the outage philosophy for Vogtle. McCoy at 14.

284. Mr. Farley specifically testified that he did not direct the operating philosophy and other executive matters concerning 156

L the operation of Plant Vogtle in the weekly staff meetings.E' He did.not have any authority to control, nor did he attempt to i exercise any control, over management decisions affecting I licensed activities or personnel matters concerning Plant Vogtle. l Farley at 22.

285. Intervenor's assertion that "SONOPCO Project managers observed that [Mr.) Farley rather than [Mr.) Dahlberg war controlling GPC's nuclear operations" (Statement of Issues at 44-45), is not supported by the record. First, we accept as true Mr. Shipman's testimony that he never had any doubt about where ,

the responsibility for the licensing and operation of the nuclear

{

plants rested. In the case of the two Georgia Power nuclear i plants, he testified it rested with Mr. Dahlberg.E' Tr. 1982-83 (Shipman). Second, after Mr. Mosbaugh's testimony concerning the  ;

Mr. Chesnut's statements on Mosbaugh tape No. 260 was stricken by i

t 8' As discussed earlier in Finding 66, Mr. Farley did not provide management oversight or direction at the weekly meetings he attended.

E' Mr. Shipman was questioned about his August 5, 1994 deposition in which he stated that in April 1990 Mr. Hairston  !

reported to Mr. Farley through Mr. Mcdonald. Intervenor Exh. 10.

Mr. Shipman had corrected his deposition transcript at the time of his appearance to indicate that Mr. Hairston reported to Mr.  :

Dahlberg through Mr. Mcdonald. Licensee Exh. 25; Tr. 1992-95 l (Shipman). Mr. Shipman explained that his initial deposition statement was in the context of information that was customarily -

provided to Mr. Farley by the SONOPCO Project executives and that i he was under the misimpression at the time of his deposition that i Mr. Mcdonald and-Mr. Hairston were officers of SCS as well as Georgia Power and Alabama Power and, as such, reported to Mr.

Farley with respect to SCS matters. Tr. 1965-67, 1983-85, 1993-95 (Shipman).  !

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the Board, Intervenor withdrew the transcript exhibit (No. 4) of j those statements and announced he would not call Mr. Chesnut as a l witness. Tr. 1909-11, 2047.

1

22. Intervanor's Issue 21.

286. Intervanor alleges'that Georgia Power falsely asserted, in its April 1, 1991 response-to the 2.206 petition, (1) that Vogtle ,

project management does not assume that Mr. Farley (and not Mr. Dahlberg) controls Vogtle's operations, and (2) that Mr. Mcdonald reports to Mr. Dahlberg on all matters concerning the operation of Georgia Power's nuclear plants. Intervenor's bases for this allegation are (1) a conversation recorded on Tape 260 regarding telephone calls from the Vogtle duty manager to the corporate duty manager, (2) a conversation recorded on Tape 236 regarding the Vogtle outage philosophy, (3) meetings held at the Vogtle site where Mr. Farley discussed a new, system-wide remuneration policy called the " Performance Pay Plan," (4) a letter sent to all Vogtle personnel signed by Mr. Farley that discussed the " Performance Pay Plan" and distributed an employee opinion questionnaire, and (5) weekly staff meetings held in the SONOPCO Project offices referred to as "Farley staff meetings."

Statement of Issues at 45-46.

287. Mr. Mcdonald testified that, as a general matter, he was very confident that Vogtle managers understood that he, and all other GPC officers, managers, and employees, reported to Mr.

I 158 l

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Dahlberg. This reporting relationship was specified in the FSAR,  !

and Vogtle personnel knew that Georgia Power remained the licensee. In addition, he could not conceive of any reason why any member of Vogtle management might reasonably believe that Mr. ,

Farley controlled Vogtle's operation. Mcdonald at 20. -

i 288. Mr. Mcdonald further testified that in the April 1, 1991, response, he addressed the only two bases that were offered by Messrs. Hobby and Mosbaugh to support their allegation that Mr.

Farley was assumed to be in control. Both bases relied on -

statements by Mr. McCoy that had clearly been taken out of s

context. One of the bases related to a statement by Mr. McCoy about the outage philosophy. The other related to a statement by Mr. McCoy about the notification procedure. Neither statement  !

indicated that Mr. Farley controlled Vogtle's operation and, thus, Georgia Power's April 1, 1991 response was accurate. i l

Mcdonald at 20. I 289. Further, Georgia Power's April 1, 1991 response was accurate when it stated that Mr. Mcdonald reported to Mr.

Dahlberg on all matters related to the operation of Georgia Power's nuclear plants. Mcdonald at 21; AAA ALAS Findings 59-66, supra.

290. Mr. McCoy testified that he could unequivocally. state that the Vogtle Project management, which included himself, Mr.

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i Shipman, Mr. Hairston, and Mr. Mcdonald, did not assume that.Mr.

Farley controlled the operation of Plant Vogtle. "We were very much aware that Mr. Mcdonald was the senior nuclear executive in control of Plant Vogtle and that, in the case of licensed activities at Plant Vogtle and Georgia Power matters in general, he reported solely to Mr. Dahlberg, Georgia Power's President and CEO." McCoy at 17.

l 291. Intervenor's allegation that Mr. Farley established the Vogtle outage philosophy is addressed in Findings 68, 69, 281-84, supra.

1 292. Mr. Mcdonald testified that as an Executive Vice President of The Southern Company, Mr. Farley did address nuclear plant employees to brief them on the system-wide changes being made to j the incentive pay programs of the operating companies. At that time, he also polled employees about any concerns they had with their employment situation. System-wide activities such as these are typically performed by a representative of The Southern Company. This had nothing to do with NRC licensed activities.

Mcdonald at 17-18.

293. Mr. Farley testified that as Executive Vice President of The Southern Company, he attended meetings at Plants Hatch, Vogtle and Farley, probably in 1989 or 1990, to discuss changes in policy relating to system-wide salary and incentive pay 160

programs, as well as to participate in the overall employee concerns programs. Changes to the incentive pay programs were being instituted on a system-wide basis for all subsidiaries of The Southern company. However, Mr. Farley's discussions with Georgia Power and Alabama Power employees regarding these matters ,

did not relate to any operational matters. Farley at 31; 333 also Finding 82, supra.

294. Contrary to the assertion of Intervenor in this proceeding, Mr. Farley did not implement changes to personnel evaluations or pay policy with respect to Plant Vogtle nuclear operations personnel. Eng Findings 81, suora.

, 295. The Southern Company system-wide employee opinion questionnaire, which was distributed to Vogtle personnel under i Mr. Farley's signature, included an optional comments section that listed the "SONOPCO Project" as one of the Southern System companies with which a questionnaire respondent could be affiliated. The SONOPCO Project was not a separate " company."

It was a consolidation of the Southern system's nuclear employees from Georgia Power, Alabama Power and SCS into a single location in Birmingham, as an interim step to eventual formation of a  :

separate nuclear operating company. It was appropriate, however, to consider the comments of those employees as a separate group from those of other Georgia Power, Alabama, and SCS employees.

The survey checklist's characterization of SONOPCO Project as a 161

" company" merely was'a convenient way to consider their responses separately. It was not intended to mean that the SONOPCO Project was a separate company. Identical questionnaires went to all Southern company employees. Fariey at 32.

296. Intervenor's allegation related to the so-called "Farley staff meetings," is addressed in Finding 66, aggra. Mr. Farley provided no management direction or oversight concerning Plant Vogtle operations in these weekly staff meetings. Mcdonald at 21; McCoy at 17.

23. Intervenor's Issue 22.

297. Intervenor alleges that Georgia Power falsely asserted, in its April 1, 1991 response to the 2.206 petition, that during

" Phase II" (after incorporation of Southern Nuclear) all Southern Nuclear management in the reporting chain above the Plant Vogtle General Manager were officers of Georgia Power. Intervenor's basis for this allegation is that Mr. Farley stated in a deposition taken in this proceeding that he was never an officer l of Georgia Power. Statement of Issues at 46-47. j i

298. The Southern Nuclear management chain above the Vogtle General Manager cor.sisted of Mr. McCoy, Mr. Hairston, and Mr.

Mcdonald, who were all GPC officers. Mr. Farley, who was CEO of Southern Nuclear during Phase II, was not part of the management chain for any of the nuclear plants. 333 Findings in Section 162 2

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IV.D.1., aggra. As explained in the 2.206 response, Southern Nuclear has no management authority during Phase II regarding Georgia Power matters, including rights and responsibilities under Georgia Power's NRC operating licenses. Mcdonald at 22.

24. Intervenor's Issue 23.

299. Intervenor alleges that Georgia Power falsely asserted, in its April 1, 1991 2.206 petition response, that Mr. Dahlberg is contacted on a daily basis by the Georgia Power nuclear operating officers concerning the status of Georgia Power's nuclear plants.

Intervenor claimed " phone records" as the basis for his claim.

Statement of Issues at 47-48. Intervenor's allegation is not supported by the record.

300. Mr. Dahlberg testified that each weekday, he received a report from a Georgia Power nuclear officer concerning the status of Georgia Power's nuclear plants. In his absence, the report was received by a member of his staff and passed on to him.

Also, in instances where some unusual or unexpected operational event occurred, for example an unplanned reactor trip, Mr.

Mcdonald would contact him at the earliest practical time, including over the weekend at his home. Dahlberg at 16-17; 333 also Tr. 1135, 1154 (Dahlberg).

301. Mr. Mcdonald testified that either he or another Georgia Power nuclear officer would report every weekday morning to Mr.

163

Dahlberg's office and frequently to Mr. Dahlberg directly on the status of the plants and problems involved. He would also report to him again whenever anything occurred worthy of note. Mcdonald at 3, 22.

302. Intervenor did not proffer any " phone records" or present any other evidence on this issue.

25. Intervenor's Issue 24.

303. Intervenor alleges that Georgia Power omitted from the Vogtle Emergency Plan any discussion of Mr. Farley's management functions and responsibilities as they related to the Corporate Emergency Plan described in Appendix 7 of the Vogtle Emergency  ;

Plan (Revision 12, effective April 1990). Intervanor's basis for this allegation is that (1) the Vogtle emergency procedures demonstrate that Mr. Farley had an emergency plan responsibility because he was listed in the On-Call Project Manager's telephone list as " Georgia Power Corporate Management," and (2) Messrs.

Mcdonald, Hairston, and McCoy as well as the rest of the corporate emergency organization were controlled from a practical standpoint by Mr. Farley. Statement of Issues at 48-50. Georgia Power's omission of Mr. Farley from the Vogtle emergency plan was l

appropriate.

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304. The Corporate Emergency Organization in effect in April 1990 is described in Section B, Revision 12, of the Corporate 164 l

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Emergency Plan for the Vogtle Electric Generating Plant. Mr.

Farley is not described in that section because he did not have a role in the Corporate Emergency Organization. In contrast, some of the support services provided by other SCS employees did fill positions within the Corporate Emergency Organization, such as the Radiological Assessment Manager, the back-up Emergency communications Director, and the Company Spokesperson.3/ Mecoy i

at 18-19; get AlER Tr. 1597 (McCoy).

305. Mr. Farley was not part of the " Senior Corporate Management" identified in the Corporate Emergency Notification Tree (Figure C-1 of the Corporate Emergency Plan for the Vogtle Electric Generating Plant, Revision 12). McCoy Supp. at 1.

306. Mr. Farley's listing under the heading " Georgia Power Corporate Management" in the on-Call Project Manager's telephone list, in Mr. McCoy's opinion, was a clerical error or inaccuracy.

Mr. McCoy observed that Mr. Farley was listed with his correct t$ tie, Executive Vice President - Nuclear of The Southern company. The telephone list is just a convenient way to organize telephone numbers. The telephone list given to the On-call

[z Project Managers (corporate) is approximately one-half inch thick b

and has everyone in it, including NRC people, co-owners, and emergency management people. Later revisions beginning with the I

E' fagg, S.db., Sections B.7, B.9 and B.10 of Revision 12 of the Corporate Emergency Plan. McCoy Exh. C (GPC Exh. 8).

165

I first quarter of 1991 are more accurate and the section simply refers to " Corporate Management" and contains designated titles for the individuals. McCoy supp. at 1; 33a A112 Tr. 1574-76, 1588-89 (McCoy). ,

307. The On-Call Project Managers' telephone list does not identify who was to be called in the case of a significant event at Plant Vogtle. It is not part of a procedure, and is not intended to be used by the On-call Project Manager (corporate) to j identify who is to be notified in the event of an emergency.

There is an administrative procedure entitled " Duties of the On-Call Project Manager" which identifies who is to be notified by the On-Call Project Manager and in what order.E' Mr. Farley was not required to be notified by the On-Call Project Manager as a part of the emergency call-out procedures. McCoy supp. at 2-3; 333 also Tr. 1580-92 (McCoy).

308. If a significant event occurred at Plant Vogtle, the Administrative Procedure VNS-EP-04 required that the appropriate Georgia Power Company corporate management be notified and briefed on the emergency. The site "Vogtle Duty Manager" would contact the On-Call Project Manager (corporate), as well as the l Director of Corporate Response. The On-Call Project Manager would notify his Georgia Power boss, who would notify his Georgia 8' Copies of that administrative procedure (No. VHS-EP-04) for  !

December, 1939 through January 10, 1991, are attached to Mr. l McCoy's Supplemental Testimony as Exhibit D (GPC Ex. 9). ,

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Power boss, etc., up the line in the Georgia Power management chain. If any one of those to be notified were not available, the on-call Project Manager would go to the next person up the line. Mr. McCoy testified that on several occasions, when he i could not reach Mr. Mcdonald or Mr. Hairston, he called Mr.

Dahlberg, including tracking him down at his home.

• McCoy Supp. at 3-4.

309. Moreover, from a practical standpoint, the corporate emergency organization was not controlled by Mr. Farley. Messrs.

Mcdonald and McCoy both testified based on their own experiences and observations that there was no attempt by Mr. Farley to control the operation of Plant Vogtle. Furthermore, the line management authority over licensed activities at the Southern Nuclear offices was very clear'-- through Mr. McCoy to Mr.

Hairston, Mr. Mcdonald and Mr. Dahlberg. McCoy at 19; Mcdonald ,

at 25; 333 Alan Findings 59-66, supra.

310. Mr. Farley testified regarding his activities associated with Georgia Power's response to the March 20, 1990 Vogtle Site Area Emergency. He stated that he did not participate in the response to the emergency, but rather stood outside the door, or possibly inside the door, of the corporate amergency operations  ;

center in the SONOPCO Project offices for perhaps half an hour to one hour listening to discussions regarding the event. Tr. 1825-29 (Farley).

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26. Intervenor's Issue 25.  !

311. Intervenor's Issue 26 states that Georgia Power's September  ;

4, 1992 license amendment application omitted facts pertaining to i the actual configuration and operation of Plant Vogtle. i I

Intervenor asserts that statements concerning the purpose and formation of Southern Nuclear are inaccurate because they fail to discuss the SONOPC0 Project prior to Southern Nuclear's  !

incorporation. Statement of Issues at 51-52.  !

312. Georgia Power's application was accurate in stating that, l l

"In January 1991, Southern Nuclear, under Georgia Power direction  ;

and approval, began to provide nuclear support services, technical services, and administrative services associated with j l

Georgia Power Company's operation of VEGP." Southern Nuclear was j incorporated on December 17, 1990, and effective January 1, 1991.

SONOPCO Project personnel were transferred into Southern Nuclear and Phase II began. Hairston at 46.  !

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313. Furtner, the NRC was well informed of the phased approach employed by Georgia Power to establish a nuclear operating company. Han Findings 114-44. Intervenor has offered no evidence that the license amendment application misled anyone.

27. Intervenor's Issue 27.

314. Intervenor claims that Georgia Power's October 3, 1991 response to Intervenor's 2.206 petition was inaccurate in stating 168 .

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that there was no inconsistency in Mr. Mcdonald's testimony concerning the selection of Messrs. McCrary and Long given in the Yunker and Puchko proceeding, on the one hand, and the H2h>E i proceeding on the other hand. '

l 315. In the Yunker/Fuchkg case, Mr. Mcdonald was asked who 1

selected Mr. McCrary and Mr. Long for their positions in the  ;

SONOPCO Project. Mr. Mcdonald understood this question to be asking who was ultimately responsible for referring these l individuals to the Board of Directors for election en officers. ,

Since these individuals would become SCS officers and Mr. l Mcdonald was not an SCS officer, he replied that he was not sure, but assumed it was the President of SCS. In the H2hhg case, Mr.

Mcdonald was asked if he was " involved" in the selection of Mr.

McCrary and Mr. Long. Since he had an advisory role in selecting both these individuals, i.e., recommending them, Mr. Mcdonald answered affirmatively. In light of his understanding that different questions were being asked in these two proceedings, Mr. Mcdonald did not believe that his answers were contradictory.H' Mcdonald at 11-12.

D' During cross examination, Mr. Mcdonald was not able to adequately explain why, during his December 1988 deposition in Yunker and Fuchko, he wasn't sure who had recommended Messrs. Long and McCrary to the SCS Board of Directors. Tr. 1275-90 (Mcdonald).

This, however, has no bearing on the accuracy of Georgia Power's ,

April 1, 1991 response provided to the NRC. The April 1 response focused on whether Mr. Mcdonald's statements were inconsistent with respect to his involvement in the selection process, and not with respect to anyone else's invclvement in that process.

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28. Intervenor's Issue 28.

316. Intervenor contends that Georgia Power's April 1, 1991 [

response to the 2.206 petition is false in stating that Mr.

Farley's role in the selection of personnel who would work within the SONOPCO Project was proper in that "Mr. Addison requested  ;

i such assistance from Mr. Farley and such assistance fell within ,

his duties as Executive Vice President - Nuclear of The Southern '

Company." Intervenor asserts that this statement is false j because the staffing selections were made in 1988 and Mr. Farley did not become Executive Vice President - Nuclear of The Southern Company until March 1, 1989. Statement of Issues at 54-55.

317. Georgia Power admitted that, technically, its April 1, 1991 response to the 2.206 petition was inaccurate in stating that  ;

staffing selections made in 1988 were within Mr. Farley's duties as Executive Vice President - Nuclear of The Southern Company.

1 Mr. Farley was not an Executive Vice President - Nuclear of The l l

Southern Company in 1988 (although he was a Vice President of The Southern Company). Mcdonald at 12. Intervenor presented no evidence of culpability on this issue. Given that the very same page of the 3.206 response (Intervanor Exh. 48 at 9) stated Mr.

Farley was President of Alabama Power in 1988, we do not believe the NRC was misled by the inaccuracy.

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V. CONCLUSIONS OF LhW.

Based on the foregoing Findings of Fact and upon  ;

consideration of the entire evidentiary record in this proceading, the Board makes the following conclusions of law, recognizing that certain of the conclusions may be subject to change based on the record of the remainder of the hearing.

1. Georgia Power Company has not transferred control of the operating licenses for Plant Vogtle.

2. Georgia Power has not misled the Nuclear Regulatory Commission in any material respect regarding control of the Plant ,

vogtle licenses.

3. There is no basis for concluding at this time that Southern Nuclear lacks the character and competence necessary to operate Plant Vogtle in conformity with the NRC's rules and regulations and consistent with protection of the public health and safety.

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b VI. ORDER.

f 1

For all the foregoing reasons, it is this day of

, 1995, ORDERED, in accordance with 10 C . F. R. $$

2.760 and 2.786:

1. That this Partial Initial Decision will constitute, with respect to the matters resolved herein, the final action of i the commission forty days after issuance hereof, unless an appeal is taken in accordance with $ 2.786 or the Commission directs that the record be certified to it for final decision. l t

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2. Within fifteen (15) days after service of this Partial ,

Initial Decision, a petition for review may be filed with the  ;

commission on the grounds specified in S 2.786(b) (4) . A petition for review is mandatory for a party to exhaust its administrative f remedies before seeking judicial review. Any other party to the proceeding may, within ten (10) days after service of a petition i for review, file an answer supporting or opposing commission  !

review.

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Dated: February 13, 1995 Respectfully submitted, '

l s/' s ames E.'Jdiner "

~

Willian N. Withrow, Jr.  ;

John Lamberski TROUTMAN SANDERS Suite 5200 l 600 Peachtree Street, N.E.

Atlanta, GA 30308-2216 (404) 885-3360 Ernest L. Blake David R. Lewis SHAW, PITTMAN, POTTS & TROWBRIDGE 2300 N Street, N.W.

Washington, D.C. 20337 (202) 663-8084 Counsel for Georgia Power Company i

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Appendix 1 Page 1 of 7 chronoloav of Events Relat4mm to the Illeaal Trammfer 111ecation February 16, 1988 J.- M. Farley, R. P. Mcdonald, Bob Edwards (Troutman) and Nick Reynolds (Bishop Cook) meet with Commissioners Roberts, Bernthal and Zack and with Victor Stallo of ' the NRC to discuss plan to form a separate operating company.

March 2, 1988 Meeting between NRC and representatives of l Georgia Power and Alabama Power "to discuss considerations for formation of a separate operating organization to operating Alabama Power and Georgia Power nuclear plants and to complete licensing proceedings for Vogtle Unit - i 2." Stipulation 5. l March 18, 1988 Meeting between NRC and representatives of j Georgia Power and Alabama Power "to discuss ,

the information that would be required in a l submittal for amendments to the licenses and construction permit held by Alabama Power and Georgia Power for Farley, Hatch and Vogtle Nuclear Plants." Stipulation 6. ,

April 20, 1988 Mcdonald elected Executive Vice President of Georgia Power.

May 3, 1988'1 R.P. Mcdonald u.eeting with Commissioners Roberts, Carr, and Rogers, and with Messrs.

Stallo, Varga and Cohen (Technical Assistant to Comm. Berenthal) of the NRC to brief Commissioners who were unavailable during the February 16 meeting.

l'This date was incorrectly identified as May 5, 1988 in Hairston Exh. B (GPC Exh. 11).

Appendix 1 Page 2 of 7 May 18, 1988 George Hairston elected Senior Vic.e President

- Nuclear Operations of Georgia Fower; Ken McCoy elected Vice President - Nuclear of Georgia Power ; Southern Company and Georgia Power Boards authorized nuclear subsidiary (see also Southern Company press release of same date). Stipulation 8.

June 1, 1988 Mcdonald letter to the NRC announcing appointments of Mcdonald and Hairston and requesting that Hairston be the addressee for NRC correspondence concerning Vogtle.

June 22, 1988 SEC Form U-1 filed, showing three phase development of SONOPCO. Stipulation 9.

Three phases contemplated (B-2, B-3, B-4)

Shared employment agreements (B-1)

Services Agreement for Phase II Operating Agreement for Phase Ii1 July 25, 1988 Georgia Power meeting with NRC Region II to discuss " Nuclear Operations - Transition Organization." Stipulation 10. j August 12, 1988 Hairston letter to NRC informing of Georgia Power's recent reorganization of corporate office "in order. to enhance support to its f power plants" and replacing.Gucwa with Kane on -

distribution list for NRC correspondence .

concerning Vogtle.

September, 1988 Oglethorpe Power Corporation intervenes at SEC.

September 21, 1988 Addison issues memorandum to Georgia Power, j Alabama Power and SCS describing progress in l forming a new subsidiary (SONOPCO). j

- Joe Farley (Alabama Power President) l asked to devote portion of his time in l guiding the formation of new nuclear j company j Mcdonald and Hairston are dual officers 1 Relocation to Building 40 of Inverness in Birmingham. Stipulation 11.

p Appendix 1 Page 3 of 7 November, 1988 Phase I consolidation of Georgia Power, Alabama Power and SCS emplo*/ses as "SONOPCO Project." Stipulation 12.

November 23, 1988 Amendment No. 39 to Vogtle FSAR. Stipulation 13.

Mcdonald reports to Georgia Power

" Chairman and CEO" (Scherer).

Mcdonald and Hairston are officers of Alabama Power and Georgia Power.

December, 1988 Dahlberg replaces Scherer as CEO of Georgia Power; Scherer continues as " Chairman of the Board."

December 19-20, 1988 NRC inspection of corporate office in Birmingham. Stipulations 14 and 15.

Dec. 27, 1988 Dahlberg memorandum forming " Nuclear Operations Contract Administration Group" (Int. Exhibit 13)

Dec. 29, 1988 Hairston letter to NRC confirming "the staff function to support the plant and not as a line function to direct the operations of the plant. Mcdonald, Hairston and McCoy "do provide line management direction for the operation of the plant,a as shown FSAR Figures 13.1.1.1-2 and -3 (November 23, 1988 FSAR).

Stipulation 14.

March 30, 1989 Vogtle Unit 2 Full Power License Meeting with NRC Commissioners. Attended by Messrs.

Dahlberg, Mcdonald, McCoy, Bailey and others.

March 1, 1989 Joe Farley becomes Executive Vice President -

Nuclear The Southern Company and SCS and moves his office to the SONOPCO Project offices.

April 27, 1989 Hobby memo to F. Williams complaining of SONOPCO/NOCA interface: co-owner responsibilities; communications; interfacing with regulatory affairs (PSC) efforts; staffing; cooperation

Appendix 1 Page 4 of 7 May 1, 1989 W.G. Hairston submits letter of correction to NRC concerning the omission of Hairston from the management chain during the March 30, 1989 presentation to the Commissioners.

July 25, 1989 Georgia Power and SCS personnel met with NRC and "provided an overview of the current SONOPCO (still pending SEC approval) corporate structure" which " essentially remains unchanged from previous presentations."

Stipulation 16.

August 10, 1989 Dahlberg and Mcdonald meeting in Atlanta during which Dahlberg instructs Mcdonald concerning PSC testimony.

August 17, 1989 Georgia PSC Consultant (GDS) files direct testimony on nuclear performance standards.

August 18, 1989 Meeting in Birmingham to discuss performance standard testimony of PSC consultant. -Farley, Mcdonald, Mary Brown, Gerald Johnson, Art Domby, and others in attendance.

August 31, 1989 GDS witnesses stand cross-examination at PSC.

September 6, 1989 Georgia Power ll'iles rebuttal testimony with PSC.

November, 1989 Georgia Power Management Council meeting in which performance of VPs and GMs, other than SONOPCO Project, was discussed.

March 9, 1990 Hobby meets with NRC (Messrs. Brockman, Hardt, Goddard, Robinson, and Todd) and submitted allegations including "Mr. Hobby maintains that Pat Mcdonald reports to Joe Parley of SONOPCO instead of Mr. Dahlberg of Georgia Power," and that Mcdonald lied about who he reports to at the 3-30-89 Full Power Hearing. ,

133 notes of Mr. Todd.

March 28, 1990 Updated FSAR submitted for Vogtle.

Stipulation 17. Shows Mcdonald as officer of Georgia Power and Alabama Power reporting to President and Chief Executive Officer of Georgia Power.

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i Appendix 1 '

Page 5 of 7 May 2, 1990 Messrs. Farley, Mcdonald and Hairston met with NRC Commissioners Roberts, Rogers, Curtis, and Carr and with Victor Stallo, to present the status of formation of Southern Nuclear. "We described the involvement of J.M. Farley as Executive Vice Presient of Southern Company and the services of the SCS Technical and Administrative groups."

September 12, 1990 Hobby /Mosbaugh filed 2.206 petition with NRC illegal license transfer allegation included among others December 17, 1990 Southern Nuclear was incorporated.

Stipulation 19.

December 27, 1990 Agreement for Services entered between Georgia Power and Southern Nuclear providing that

" Southern Nuclear shall not perform any activities which are required to be performed directly by Georgia Power as licensee; operating rarnansibilitiy for the plants shall remain under the direct management and control of GPC employees...."

January 1, 1991 Phase II began; all non-plant nuclear employees working within the SONOPCO Project became employees of Southern Nuclear. Farley became President and CEO of Southern Nuclear.

Mcdonald and Hairston were triple-hatted (Georgia Power, Alabama Power and Southern Nuclear); McCoy (Vogtle) and Beckham (Hatch) were double-hatted (Georgia Power and Southern Nuclear).

January 11, 1991 Georgia Power / Alabama Power and Gouthern Nuclear personnel wet- with NRC to discuss Phase II formation. Stipulation 20.

March 28, 1991 Georgia Power submitted to the NRC Revision No. 1 to the Plant Vogtle Updated FSAR, reflecting changes to the organization as of September 28, 1990. Stipulation 22.

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Appendix 1  :

Page 6 of 7 April 1, 1991 Georgia Power provided NRC a detailed response to the illegal license transfer allegation contained in the Hobby /Mosbaugh 5 2.206 ,

petition. (A preliminary response to the 2.206 petition was submitted on September'28, J 1990.) '

May 5, 1991 Alabama' Power submitted to the NRC an  ;

application to amend the Plant Farley l operating license to designate Southern l Nuclear as the exclusive operating licensee of i Plant Farley. Stipulation 23.

May 21, 1991 Southern Nuclear Board named Farley (who was President and CEO) Chairman and CE0; Southern l Nuclear Board named Mcdonald. (who was l Executive VP) President of Southern Nuclear. l Mcdonald and Hairston continued as Exec. VP and Senior VP, respectively, of Georgia Power.

Stipulation. 24.

July 8, 1991 Hobby /Mosbaugh filed a supplement to their 5 2.206 petition.

October 3, 1991 Georgia Power filed response to the Hobby /Mosbaugh supplemental petition.

October, 1991 Nuclear Services Agreement between Georgia Power and Southern Nuclear was executed.

November, 1991 Department of Labor AIJ in Hobby v. Georaia Power issued a Recommended Decision and Order in favor of Georgia Power AIJ found that Dahlberg exercised control over Georgia Power's nuclear plants.

November 22, 1991 NRC issued a license amendment for Plant Farley adding Southern Nuclear as the exclusive operating licensee. (All Alabama .

Power employees for Plant Farley were transferred to Southern Nuclear; Mcdonald and Hairston's Alabama Power hats were subsequently removed). Stipulation 26.

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l Appendix 1 l Page 7 of 7 1

May, 1992 Hairston was named Exec. VP of Southern Nuclear and Mcdonald replaced Farley as CEO i (Farley continued as Chairman of the Board;  ;

Mcdonald and Hairston continued as Exec. VP and Senior VP, respectively, of Georgia Power). Stipulation 27.

September 18, 1992 Georgia Power filed applications with NRC to amend Hatch and Vogtle licenses .to designate Southern Nuclear as exclusive operating licensee.

October, 1992 Hobby /Mosbaugh filed petition to intervene in Vogtle license amendment proceeding.

October 23, 1992 Georgia Power notified NRC that Mr. Farley  :

would retire efective November 1, 1992. '

April 23, 1993 In a decision on the Hobby /Mosbaugh 2.206 petition, with respect to the illegal transfer  ;

of licenses allegation, the Staff concluded that there has been no illegal transfer of responsibility from Georgia Power to SONOPCO for the Vogtle or Hatch facilities. The Director's decision was subsequently vacated by the Commission. Georaia Power Co. (Vogtle Electric Generating Plant, Units 1 and 2; Hatch Nuclear Plant, Units 1 and 2), DD-93-08, 37 N.R.C. 314, 322 (1993) , vacated, CLI-93-15, !

38 N.R.C. 1 (1993).

June 1, 1993 R.P. Mcdonald retired. Mr. Hairston was elected President and Chief Operating Officer of Southern Nuclear. Mr. Allen Franklin, President and CEO of SCS, was elected Chairman and CEO of Southern Nuclear. Stipulation 32.

Mr. Hairston was also elected Executive Vice '

President of GPC.

January 1, 1994 Mr. A. W. Dahlberg was elected President of The Southern Company; Mr. H. A. Franklin was elected to succeed Mr. Dahlberg as President and CEO of GPC; Mr. W. G. Hairston (while remaining President of Southern Nuclear and  :

Executive Vice President of GPC) was elected '

to succeed Mr. Franklin as CEO of Southern Nuclear. Stipulation 34.

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3 Appendix 2 Page 1 of 2 PRINCIPAL PLAYERS Kerry E. Adams: Senior Vice President / Fossil and Hydropower, GPC, succeeding George Head Edward L. Addison: President and CEO, The Southern Company E. Grady Baker Senior Executive Vice President, GPC Michael Barkers Performance Engineer /SONOPCO Project, GPC George Bookhold: General Manger of Plant Vogtle A.W. Dahlberg: President and CEO, GPC, succeeding Robert Scherer; Former President and CEO, SCS Dwight Evans: GPC Executive Vice President, External Affairs William R. Evans: Coordinating Investigator, Corporate Concerns Program, GPC E. Allen Franklins President and CEO of SCS Joseph M. Farley Executive Vice President / Nuclear, SCS and The Southern company; Former President, Alabama Power Company Lee Glenn Manager, Corporate concerns Program, GPC W. George Emirston Senior Vice President / Nuclear Operations, GPC George Head Senior Vice President / Fossil and Hydropower, GPC .

Jane Henry: Editor, Synoosis Marvin B. Bobby: Manager, Nuclear Operations Contract

• Administration Group, GPC Warren Y. Jober Executive Vice President / Treasurer and Chief Financial Officer, GPC

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Appendix 2 Page 2 of 2  ;

serald Johnson Employee in GPC's Nuclear Operations Contract Administration Group; assigned primary responsibility for handling data requests from the Georgia Public Service Commission during 1989 rate case l Louis B. Long: Vice President / Technical Services, SCS C. Kenneth McCoy: Vice President, GPC (Plant Vogtle) ,

Charles McCrary: Vice President / Administrative Services, SCS Thomas J. McBenry: Manager Nuclear Support, GPC R. P. Mcdonald Executive Vice President / Nuclear Operations, GPC Allen L. Mosbaught Acting Assistant General Manager of Plant Support / Plant Vogtle, GPC  ;

C. Don Procter Nuclear Operations Financial Administrator, Nuclear operations Contract Administration Group, GPC Jesse P. Schaudies: Partner, Troutman Sanders, counsel to GPC William B. shipman: General Manager / Plant Vogtle Support, then General Manager of Plant Vogt10 John O. Meier Manager Nuclear Fuel Services, SCS, Mton Director of Strategic Planning /SONCTCD 1 Project ,

i Robert W. scherer President and CEO, GPC Dan Boward smith Department Manager / Power Production, Oglethorpe Power Corporation Pred D. Williams: Senior Vice President / Bulk Power Markets, GPC l l l

, , , - - - r- - , ,- - , , m -

DOCKETED UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 95 FEB 14 AU :21 Before the Atomic Safety and Licensina Board 0FFi[r m ;i N TrV;Y 00Chli M N ; '# U

) Pk ACi4 In the Matter of ) Docket Nos. 50-424-OLA-3

) 50-425-OLA-3 GEORGIA POWER COMPANY, )

et al. ) Re: License Amendment

) (Transfer to Southern l (Vogtle Electric Generating ) Nuclear) ,

Plant, Units 1 and 2) )  !

) ASLBP No. 93-671-01-OLA-3 camTIFIcars Or saavIcz This is to certify that copies of the within and foregoing

" Georgia Power Company's Proposed Findings of Fact and Conclusions of Law with Respect to Intervanor's Illegal License l

Transfer Allegation" were served on all those listed on the attached service list by express mail delivery.

This is the 13th day of February, 1995.

oh'n LambefskT TROUTMAN SANDERS Suite 5200 600 Peachtree Street, N.E.

Atlanta, GA 30308-2216 (404) 885-3360 J

G

N r UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION ATOMIC SAFETY AND LICENSING BOARD In the Matter of GEORGIA POWER COMPANY,

• Docket Nos. 50-424-OLA-3 B1 Al.

• 50-425-OLA-3 (Vogtle Electric

• Re: License Amendment Generating Plant, * (Transfer to Southern '

Units 1 and 2)

• Nuclear)

• ASLBP No. 93-671-01-OLA-3 SERVICE LIST Administrative Judge Stewart D. Ebneter Peter B. Bloch, Chairman Regional Administrator Atomic Safety and Licensing USNRC, Region II ,

Board 101 Marietta Street, NW l U.S. Nuclear Regulatory Suite 2900 Commission Atlanta, Georgia 30303 Washington, D.C. 20555 Office of the Secretary Administrative Judge U.S. Nuclear Regulatory James H. Carpenter Commission ,

Atomic Safety and Licensing Washington, D. C. 20555 ,

Board ATTN: Docketing and  :

933 Green Point Drive Services Branch  !

Oyster Point Sunset Beach, NC 28468 Charles Barth, Esq. '

Mitzi Young, Esq.  !

Administrative Judge Office of General Counsel Thomas D. Murphy One White Flint North  ;

Atomic Safety and Licensing Stop 15B10  !

Board U.S. Nuclear Regulatory  ?

U.S. Nuclear Regulatory Commianion '

Commission Washington, D. C. 20555 i Washington, D.C. 20555 Director, Michael D. Kohn, Esq. Environmental Protection Stephen M. Kohn, Esq. Division Kohn, Kohn & Colapinto, P.C. Department of Natural 517 Florida Avenue, N.W. Resources Washington, D.C. 20001 205 Butler Street, S.E.

Suite 1252 Office of Commission Appellate Atlanta, Georgia 30334 Adjudication f One White Flint North ,

11555 Rockville Pike ,

Rockville, MD 20852 l