ML19088A271

Transcript: Holtec Pre-decisional Enforcement Conference (Pec) EA-18-151 Public Official Transcript

ML19088A271
Person / Time
Site:	Holtec
Issue date:	01/09/2019
From:	NRC/OCM
To:
Terry T
References
EA-18-151, NRC-0024
Download: ML19088A271 (110)

Text

Official Transcript of Proceedings NUCLEAR REGULATORY COMMISSION

Title:

Pre-decisional Enforcement Conference (PEC)

Between U.S. Nuclear Regulatory Commission and Holtec International Docket Number: EA-18-151 Location: Rockville, Maryland Date: January 9, 2019 Work Order No.: NRC-0024 Pages 1-109 NEAL R. GROSS AND CO., INC.

Court Reporters and Transcribers 1323 Rhode Island Avenue, N.W.

Washington, D.C. 20005 (202) 234-4433

1 1 UNITED STATES OF AMERICA 2 NUCLEAR REGULATORY COMMISSION 3 + + + + +

4 PUBLIC MEETING 5 + + + + +

6 PRE-DECISIONAL ENFORCEMENT CONFERENCE (PEC) BETWEEN 7 U.S. NUCLEAR REGULATORY COMMISSION AND HOLTEC 8 INTERNATIONAL (EA-18-151) 9 + + + + +

10 WEDNESDAY, 11 JANUARY 9, 2019 12 + + + + +

13 ROCKVILLE, MARYLAND 14 + + + + +

15 The meeting was held in the Commissioners' 16 Hearing Room at the Nuclear Regulatory Commission, One 17 White Flint North, 11555 Rockville Pike, at 1:00 p.m.

18 PRESENT FROM THE NRC:

19 MICHELE BURGESS, NMSS 20 MARLONE DAVIS, NMSS 21 MICHAEL LAYTON, NMSS 22 EARL LOVE, NMSS 23 PATRICIA SILVA, NMSS 24 25 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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2 1 ALSO PRESENT:

2 3 STEFAN ANTON, Holtec 4 CHUCK BULLARD, Holtec 5 KIM MANZIONE, Holtec 6 KRISHNA P. SINGH, Holtec 7 ROBERT TINDAL, Holtec 8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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3 1 T-A-B-L-E O-F C-O-N-T-E-N-T-S 2 Page 3 Introduction/Opening Remarks 4 Michael Layton, NRC 4 5 Overview of NRC's Enforcement Process 6 Michele Burgess, NRC 9 7 Preliminary Inspection Findings 8 Patricia Silva, NRC 17 9 Licensee Presentation 10 Dr. Krishna Singh 20 11 Question and Answer Session 73 12 Closing Remarks 80 13 Public Comment 81 14 Adjourned 109 15 16 17 18 19 20 21 22 23 24 25 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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4 1 P R O C E E D I N G S 2 (1:00 p.m.)

3 MR. LAYTON: Thank you, Fran. Good 4 afternoon, everyone. We are now on the record. This 5 meeting is being webcast and also transcribed.

6 I am Michael Layton, the Division Director 7 for the Division of Spent Fuel Management at the 8 Nuclear Regulatory Commission's Office of Nuclear 9 Materials Safety and Safeguards.

10 Today we will be conducting a pre-11 decisional enforcement conference to discuss apparent 12 violations of NRC requirements identified during our 13 announced routine inspection of your Holtec 14 International corporate offices in Camden, New Jersey.

15 Two apparent violations were identified 16 during this inspection. The details of the inspection 17 and the apparent violations are described in the NRC's 18 inspection report, which is available on the NRC 19 website, and I also believe that there is a link in 20 the meeting announcement.

21 In summary, the apparent violations 22 involve Holtec's failure to establish adequate design 23 control measures associated with the design change for 24 the shim stand-offs in its multi-purpose storage 25 canister, and, also, appropriate performance of design NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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5 1 change evaluations in accordance with the requirements 2 of 10 CFR 72.48.

3 Specifically, this design change involved 4 the use of stainless steel stand-off pins on the 5 bottom of the fuel basket assembly shims. The NRC 6 does not consider that there is an immediate safety 7 concern associated with the loaded canisters using the 8 steel stand-off pins, but some questions remain 9 regarding the potential safety significance if the 10 canisters with failed stand-off pins were loaded above 11 the prescribed thermal limits.

12 This conference is an opportunity for 13 Holtec International to provide any additional 14 information or evaluations associated with the two 15 apparent violations to inform the NRC's final 16 enforcement decision.

17 Before I go further I would like to 18 introduce the remaining NRC representatives at the 19 table and give Holtec an opportunity to introduce its 20 representatives at the table.

21 For the persons on the bridge line, there 22 will be an opportunity at the end of the conference to 23 identify yourselves and provide comments to the NRC 24 regarding this meeting. Earl, would you lead us off, 25 please?

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6 1 MR. LOVE: Yes, Mike. My name is Earl 2 Love. I am a Senior Transportation and Storage Safety 3 Inspector. I work for the Office of Nuclear Materials 4 Safety and Safeguards, Division of Spent Fuel 5 Management, Inspections and Operations Branch. I was 6 the lead inspector on the Holtec inspection.

7 MS. SILVA: Good afternoon. I am Patricia 8 Silva. I am the Chief of the Inspections and 9 Operations Branch in the Division of Spent Fuel 10 Management.

11 MS. BURGESS: Hi, I am Michele Burgess.

12 I am the Enforcement Coordinator for the office.

13 MR. DAVIS: Hello. I am Marlone Davis.

14 I was also on the inspection team, Senior Safety, 15 Storage, and Protection Inspector.

16 MR. LAYTON: Thank you. Dr. Singh?

17 DR. SINGH: Yes, thank you, Mr. Layton.

18 I think you gave a very concise and factual summary of 19 the situation. I will provide additional information 20 for Holtec in these proceedings.

21 I have with me some of the principle 22 people who work in our program. I will ask them to 23 introduce themselves to you before we proceed and then 24 I'll take over and go make the presentation, subject 25 to your concurrence from the podium.

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7 1 MR. LAYTON: Thank you.

2 DR. SINGH: Okay, thank you.

3 MR. LAYTON: Thank you.

4 DR. SINGH: Kim?

5 MS. MANZIONE: I am Kim Manzione. I am 6 the Licensing Manager for Holtec International.

7 MR. BULLARD: Hi, I am Chuck Bullard. I 8 am the Director of Engineering Mechanics at Holtec 9 International.

10 DR. ANTON: Hi, I am Stefan Anton and I am 11 VP of Engineering and Licensing at Holtec 12 International.

13 MR. TINDAL: Good afternoon. I am Rob 14 Tindal. I am the Senior Director of Projects at 15 Holtec.

16 MR. LAYTON: Thank you all and welcome.

17 I do want to emphasize that the NRC has not made a 18 final determination of the apparent violations 19 occurrence as they were described or that an 20 enforcement action will be taken.

21 This conference is an important step in 22 our deliberative process for making decisions. The 23 purpose of the conference is to afford Holtec the 24 opportunity to provide NRC with additional information 25 for the NRC to make an informed enforcement decision.

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8 1 However, no decisions will be reached or 2 discussed during this conference. For Holtec I 3 encourage you to be candid in providing your 4 perspectives on the apparent violations, their 5 significant circumstances surrounding the apparent 6 violations, corrective actions taken and planned, and 7 another information that you believe will be relevant 8 to the NRC's enforcement decision.

9 And as a reminder this is a public 10 meeting. Any sensitive and business propriety 11 information should not be presented in this meeting.

12 If such information is needed it may be provided to 13 the NRC in writing following this meeting.

14 Following my opening remarks Michele 15 Burgess, our Office Enforcement Coordinator, will 16 discuss the Agency's enforcement policy and process.

17 Then Patricia Silva, Chief of the Inspection and 18 Operations Branch, will describe the apparent 19 violations in more detail.

20 After that you will be given an 21 opportunity to respond and present any information 22 that you would like the NRC to consider as we make our 23 final decision.

24 I also want to note that the question and 25 answer session that is listed in the agenda includes NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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9 1 a 30-minute recess before the conference is concluded 2 so that the NRC participants can briefly review what 3 was presented and determine if there are any follow 4 questions that the NRC may have.

5 We'll take that recess and then address 6 any final questions we have and then proceed with 7 concluding remarks. Do you have any questions on what 8 I have described thus far?

9 DR. SINGH: No, we do not.

10 MR. LAYTON: Thank you. I will now ask 11 Ms. Burgess to discuss the Agency's enforcement policy 12 and process. Michele?

13 MS. BURGESS: Hello. I am Michele 14 Burgess. I am one of the Enforcement Coordinators for 15 the office, NMSS, and what I would like to do is give 16 a brief overview of the NRC enforcement process and 17 program, so it's the generic process, not the 18 specifics of the case.

19 There are some slides that are being 20 broadcast now. So on Slide 2 the NRC enforcement 21 process consists of a number of steps. The first step 22 is a record to review our inspection, an investigation 23 step where we are gathering information.

24 Then there is a NRC review of the 25 information on the issues that we have gathered and NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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10 1 then there is an exit meeting with the entity, that 2 could be a licensee, a certificate holder, non-3 licensee individual, whoever it is that is subject to 4 the inspection at that point, where we will discuss 5 whatever our apparent findings are, their apparent 6 findings at that point.

7 And then the next step would be a letter 8 to that entity that would be that formal documentation 9 of what our findings were, so that's the letter that 10 you received from the NRC.

11 The next step in the process is our pre-12 decisional enforcement conference, and you'll hear the 13 word PEC, that's our shorthand for that, and the 14 purpose of this step as Mike said was it's for the 15 entity to provide any additional information that you 16 want us to know before we make our final decision, 17 anything that you think that we don't already have.

18 There is no decision that is being made at 19 the PEC. This is just another step in the information 20 gathering stages, and this is the step that we are at 21 right now.

22 So after the PEC the step that follows we 23 are going to review all of the information, that is 24 everything that is provided to us in all the steps 25 above, so everything from the investigation, the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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11 1 inspection, exit meetings, conversations, emails that 2 have come through, as well as any information that you 3 provide to us at this PEC.

4 And all of that will -- We'll take that 5 together and then we'll make the final Agency decision 6 and then we will communicate that decision to you guys 7 in writing. So you can see that it is a series of 8 steps, it's a deliberative process to get to the end 9 point.

10 Slide 3. I want to focus on the step that 11 we are at today. Our enforcement manual and policy 12 are on the NRC website, so they are publicly 13 available, and it describes in great detail everything 14 that we have but I wanted to focus this on the stuff 15 that we are trying to accomplish today.

16 The NRC's PEC letter to Holtec provides 17 our basic understanding and our basic perceptions at 18 this point.

19 The PEC, again, is your opportunity, I 20 wanted to stress, for you to let us know anything that 21 you think we need to know, anything you want us to 22 take into consideration, your perspectives, including 23 whether the violation occurred, if there is any 24 information regarding the identification, how it was 25 identified, and your involvement in that.

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12 1 Corrective actions are very important in 2 this discussion. As part of final decision-making 3 process we need to hear that from you now so we can 4 take all things into consideration, and it could 5 include what are things that you have already done, 6 immediate things to address the immediate issues as 7 well as long-term things to address the underlying how 8 did the particular example we are dealing, how did 9 that occur, what's going to be put in place for long-10 term in corrective actions to be able to ensure that 11 it doesn't happen again to mitigate the possibility of 12 it happening again.

13 Another thing that you might be is are 14 able to provide us information about how you see the 15 characterization of both the significance, the events, 16 the specific events that played out, and you sent in 17 a presentation already that you are already addressing 18 some of these things it looks like.

19 So for Slide 4, after the PEC is when we 20 are actually going to make our decision in our process 21 and that is going to encompass a number of points.

22 Again, it's whether the violation occurred, the 23 significance of the violation, and then a final 24 decision on if any an what enforcement action we might 25 take.

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13 1 Slide Number 5. There is a number of 2 possible outcomes when we take action of we take 3 action. It can range all the way from no action at 4 all through a notice of violation, which is a written 5 documentation a violation occurred.

6 It could be that notice of violation along 7 with a civil penalty, which is a monetary fine. It 8 could encompass an order which is very specific to 9 this particular situation over and above just a 10 generic statement of a violation.

11 It could include specific actions that we 12 require you to take. Where we end up with which of 13 those things on the range depends on the specifics of 14 the particular case, and that's why, again, it's 15 really important for you to tell us everything that 16 you think we need to know so we can make our best 17 decision.

18 Slide Number 6. So as part of the NRC 19 final decision we are going to categorize any 20 violations with respect to their significance and the 21 chart that is up there now is Severity Level 1 through 22 4.

23 Severity Level 1 are our most significant 24 concerns through Severity Level 4 which is less 25 significant. It still is a concern, however, it's NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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14 1 just not as significant.

2 If it doesn't meet these then we classify 3 those as minor. You guys have used that term in your 4 presentation. I think 1 through 3 are considered 5 escalated.

6 So on Slide 7 there is four factors that 7 we consider when we are assigning severity level. We 8 look at the actual safety consequences, so the 9 particular example we have at hand.

10 We look at the potential safety 11 consequences both of the example at hand as well as 12 the underlying how did that happen, not even the 13 particular example at hand but what could have 14 happened if there is an underlying failure of a 15 process.

16 We look at the impact on the regulatory 17 process and we take into consideration any 18 willfulness.

19 Slide 8. So escalated violations have the 20 potential for a civil penalty and we use a methodical 21 way to determine whether or not, as a standard 22 process, whether or not we should have a civil penalty 23 and what that civil penalty might be, and it's based 24 on a number of actions.

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15 1 whether or not there is any recent history on any 2 other escalated violations, whether it's the entity or 3 the NRC that identified the violation, and whether the 4 entity had timely and complete corrective actions.

5 And the purpose for that graded approach 6 is to give credit, give relief, give acknowledgment to 7 entities that are identifying their own problems, for 8 example through QA programs, as well as licensees that 9 are entities that once they identify the problem, 10 regardless of who identified it, they promptly and 11 timely and completely correct the situation and ensure 12 it's not going to happen. So the graded approach 13 allows for consideration of those factors.

14 Slide Number 9. The actual amount of the 15 CP is dependent on the type of entity or licensee and 16 the severity of the violation.

17 And, in short, entities that handle large 18 amounts of, or larger amounts of radioactive material, 19 or they could have a greater impact on the public or 20 the environment tend to have the larger amounts where 21 those entities having a smaller more limited scope 22 would have the smaller CP amounts as base values.

23 And then, also, the severity level, the 24 higher the severity level, are going to have the 25 higher civil penalties associated with it as a base NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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16 1 value as opposed to the lower severity levels.

2 For Slide Number 10, regardless of the 3 outcome of that standard process that I just described 4 the NRC can exercise discretion to either escalate or 5 mitigate civil penalty based on the particular 6 circumstances for that particular case, for example 7 where it is particular egregious what happened or 8 where there might be some significant exposures to 9 members of the public or an environment are some 10 examples.

11 Slide Number 11. If the NRC takes 12 enforcement action it's going to be publically 13 available. It will be in ADAMS, it will be on the 14 NRC's public website, and then in the event that there 15 is a civil penalty or we issue an order normally there 16 is also a press release associated with that.

17 Slide Number 12. There is also the 18 ability to challenge our finding. When we issue our 19 final action there are processes in place where if you 20 disagree with it that you can challenge the finding.

21 Depending upon what exactly the final 22 action turns out to be, it will tell you what the 23 processes are available for that. There will be 24 instructions in the final action that we give you. It 25 will have that instructions on there for how you can NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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17 1 follow through whatever options are open to you.

2 Slide 13. So just to summarize the steps 3 that are going to follow from this step forward, we 4 are going to review all of the information that we 5 have and then we are going to make our final decision.

6 That final decision is going to be 7 communicated to you guys. We strive to make our final 8 decision in a timely manner, that is normally 30 to 60 9 days.

10 However, of course, the length of time for 11 any particular case could also be dependent on, you 12 know, the volume of material that we are looking at, 13 how much you are going to give us today, but our 14 normal timeframe is about 30 to 60 days, and that's 15 going to be in writing to you guys and it would be 16 publicly available.

17 Slide Number 14. So this concludes the 18 presentation of the process, the details of the 19 process with the process that we are going to work 20 through, and if there weren't any particular questions 21 on the process then I would turn it over to Patti for 22 --

23 DR. SINGH: Yes, we have no questions.

24 MS. SILVA: Okay. Thank you, Michele.

25 Again, I am Patricia Silva, the Chief of the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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18 1 Inspections and Operations Branch. The apparent 2 violations that are subject to this conference were 3 described in the NRC's Choice Letter EA-18-151 issued 4 on November 29, 2018.

5 In brief, the apparent violations involve 6 1) failure to establish adequate design control 7 measures as part of the selection and review of 8 suitability of application of materials, parts, 9 equipment, and processes that are essential to the 10 functions of the structure, system, and components 11 which are important to safety in accordance with 10 12 CFR 72.146(a) Design Control, and, 2) failure to 13 perform a 10 CFR 72.48 evaluation, which is the change 14 process.

15 On or after August 2016 Holtec failed to 16 establish adequate design control measures as part of 17 selecting foreign stainless steel stand-off pins as an 18 alternative for supporting the fuel basket shims in 19 its multi-purpose canister.

20 The stand-off pins are essential to the 21 function of the fuel basket to maintain support and 22 ensure the shims stay elevated to allow helium gas to 23 circulate and cool the fuel assemblies within the 24 multi-purpose canister.

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19 1 Holtec failed to perform a written evaluation to 2 demonstrate that a design change for multi-purpose 3 canister stainless steel stand-off pins did not 4 require an amendment to the certificate of compliance.

5 Holtec completed the 72.48 screening and 6 incorrectly determined that a written evaluation was 7 not needed. During a November 26, 2018, telephonic 8 exit meeting you and Mr. Earl Love of the NRC 9 discussed these apparent violations, the potential 10 significance of the issues, and the need for lasting 11 and effective corrective actions.

12 This conference will provide an 13 opportunity for you to provide your perspective on 14 these matters and any other information you believe 15 the NRC should take into consideration in making an 16 enforcement decision.

17 In presenting any corrective actions you 18 should be aware that promptness and comprehensiveness 19 of your actions will be considered in assessing the 20 potential civil penalty for the apparent violations.

21 Unless there are any questions at this 22 time we now want to give you the opportunity to 23 provide any information that you would like us to 24 consider prior to the final decision in this matter.

25 DR. SINGH: Thank you. We have no NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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20 1 questions on your statements. If it is permissible 2 should I begin the presentation?

3 MR. LAYTON: Yes, please.

4 DR. SINGH: Okay. Thank you. Well thank 5 you all for giving us the opportunity to provide you 6 what I will characterize as the additional 7 information, and there is a substantial body of 8 additional information as you must have surmised from 9 the material we sent you yesterday.

10 We believe that the information that we 11 provided you, and I will articulate further in this 12 presentation, should help you make the right decision.

13 Just to deal with some housekeeping 14 material, yesterday we sent you all substantiating 15 documents that you might need to consult in making 16 your decision related to the shim stand-off episode.

17 Okay, we will use the term shim stand-off, 18 SSO, throughout this presentation. So I will later 19 explain to you what they look like and what their real 20 significance is, but we want to make sure that 21 information is provided to you as promptly as possible 22 if you have any follow-up questions.

23 This document, the presentation, which is 24 about 37 pages, will be shared with you and you may 25 treat this as an authoritative document on our NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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21 1 position.

2 There may be some minor edits based on 3 your questions and if we see that we are not 4 absolutely clear in our position we will edit it 5 appropriately and provide you the final draft for the 6 site.

7 But the intent is to reach out to you as 8 comprehensively as possible to provide you all the 9 necessary information. If we do that well then we 10 know you will come to the right decision.

11 Getting to Slide Number 3, the purpose of 12 this presentation, and they tell you up front what we 13 plan to present to you, but first with a whole lot of 14 data.

15 The first point that will provide you 16 additional information to show that the entire 17 population of SSOs plays no role, and the emphasis is 18 on no, no role in the safety function of any of the 19 MPCs that have been loaded across the country, and I 20 don't mean a minor role, no role, okay. We will prove 21 it to you later.

22 Stated differently, the loaded MPCs will 23 fulfill their intended function without exceeding any 24 regulatory limits under all applicable conditions of 25 storage and transport even if they had no SSOs.

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22 1 Because the SSOs play no role in the 2 safety performance of the loaded MPCs they can be 3 correctly characterized as not-important-to-safety, 4 meaning NITS, which is an item in our vernacular, so 5 I will start using the term NITS going forward.

6 Now I just want to make sure that we don't 7 get lost in terminology. We use the term basket shim 8 assembly, which consists of the basket shims 9 themselves and the short SSOs that you are so familiar 10 with.

11 Together they constitute the basket shim 12 assembly. Individually one is the basket, the upper 13 one, and the bottom one is the SSO, and we 14 differentiate them because they are two constituents 15 that are put together to make the assembly, okay.

16 Now I should also in the purpose of this 17 presentation is to inform you that learning from this 18 episode Holtec has performed a stem-to-stern 19 reappraisal of its processes and operating procedures 20 and made numerous improvements to prevent damage to 21 equipment during handling in manufacturing and 22 transport to the site and other similar activities 23 which are typically outside the scope of normal safety 24 analyses. This has been taken to heart and we will 25 show you what we have done in some detail.

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23 1 Going to the next slide. An additional 2 purpose of this presentation is to provide you 3 additional facts and insights to clarify and further 4 inform NRC's findings summarized in the inspection 5 report.

6 I would point out to you, to state 7 speaking in clearer jargon, I will point out to you 8 that there are some places in the inspection report 9 where one can misconstrue the information.

10 We will share that with you to the major 11 ones here and minor ones perhaps through email 12 correspondence that will help us make this document, 13 your inspection report, truly definitive.

14 No document is ever without NITS and minor 15 errors. We all know. Those of us who prepare 16 documents know it. We are all somewhat fallible.

17 Well, we will provide you the information so the final 18 document, your document, is equally free of any NITS 19 and discrepancies.

20 Now we will provide information to you and 21 safety analyses of the loaded MPC under the 22 hypothetical assumption, I emphasize hypothetical 23 assumption, that if no SSOs were installed, I mean 24 that's what determines whether they are of any value, 25 they provide and they serve any function.

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24 1 For the loaded MPCs we have determined, 2 and we will show you, that the thermal analyses 3 demonstrate that all regulatory limits are met without 4 any SSO present in any of the canisters that had been 5 loaded.

6 That is how, totally superfluous to the 7 function of the canister there. We will also show you 8 that the structural analyses demonstrate that 9 integrity of the stored fuel and the fuel basket is 10 fully preserved under bounding seismic loads for the 11 sites where they have been loaded, okay.

12 In other words, this, if you were to quote 13 Shakespeare, is much ado about nothing, at least that 14 is our perspective. The violations occurred because 15 of inadequate consideration of manufacturing 16 challenges in the design and human performance error 17 during manufacturing.

18 We concede that that has been a weakness 19 in our program and to that extent we have taken it to 20 heart to fix these weaknesses, but I should also 21 hasten to add that if you look at the documents that 22 guide us your NRC-approved NEI guidance document in 23 72.48, I did a search, word search, on the word 24 "manufacturing," not a single mention of the word.

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25 1 understand I am not defending what has happened here, 2 but the guidance documents do set the tone and our 3 program, of course, is heavily, heavily, influenced by 4 the guidance document, was not truly attuned to 5 looking at the consequences of manufacturing 6 operations on the design.

7 Now I will speak to it more later, but as 8 you said be candid, I am being absolutely candid. You 9 won't find any discussion of manufacturing in the 10 guidance documents and that is where the problem has 11 occurred here.

12 Thank goodness the problem, manufacturing 13 problem, occurred with an item that is not safety 14 significant for the canisters we have loaded and, 15 therefore, there is no consequence, but we like to 16 think deeper, what caused it, why is it that we did 17 not catch it in our design stage.

18 In looking deeper we found that there is, 19 indeed, in our industry there is the nexus between 20 manufacturing and design has been weak. It's actually 21 true in every industry, but certainly that's not an 22 excuse.

23 We need to fix it and we have made 24 numerous changes in our program to ensure that this 25 sort of thing will never happen again.

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26 1 Now that will be -- I will further, 2 further elaborate on it later, and as I said, this, 3 after I get your questions and items if I have to 4 change any verbiage we will change it so this becomes 5 a definitive document for you to reference, by "this" 6 I mean this presentation becomes a definitive document 7 for you to consider as additional information.

8 Now the violations they both pertain to 9 basket shim stand-offs. The first one it says "Holtec 10 failed to establish adequate design control measures 11 as part of the selection and review of suitability of 12 application of alternate four inch shim standoff 13 pins."

14 Well where we really failed is in looking 15 at potential fabrication errors and that could happen 16 and it did happen. Design control is, you can 17 consider it a part of design control, but the real 18 error lay in the fact that we did not consider the 19 consequences, the working that occurs to this 20 structure during manufacturing and how it might 21 influence the outcome of manufacturing.

22 That really is the problem here as we see 23 it. And, you know, you are familiar in the industry, 24 I mean there have been, you know, today the instances 25 of stress corrosion and cracking on reactor heads, NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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27 1 well it owes its origin to inadequate consideration of 2 manufacturing in the design.

3 There are numerous examples, very, very 4 significant examples in the industry, but that is not, 5 again, to ask for, to excuse ourselves. This is a 6 fact of life.

7 Today and at this point in time the 8 industry has been inadequately sensitive to the inter-9 relationship between manufacturing and design. At 10 Holtec we have fixed it. We have fixed it in spades, 11 and if you come back to visit us you will see what we 12 have done.

13 The other violation unfortunately is you 14 said "Holtec failed to perform a written evaluation to 15 demonstrate that a design change for multi-purpose 16 canister stainless steel standoff pin did not require 17 a CoC Amendment."

18 I will humbly submit that this statement 19 is not correct. We did perform a full evaluation when 20 we made the design change to the shim stand-off from 21 monolithic shim.

22 It was done. What we did not do is when 23 we received field notice of observed isolated failures 24 of the shim stand-off when we did the safety 25 evaluation for that, 72.48, we did not take it to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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28 1 final evaluation, okay.

2 So as stated, I think we understand what 3 you intended to say and we have taken it that way, but 4 I think the language in the violation should be, just 5 for the sake of posterity should be clarified we did 6 do a full evaluation of the original stand-off.

7 That does not take away from the fact that 8 we did not do, and it is a lesson for us to be 9 learned, we did not do the evaluation when the field 10 change information came to us, okay.

11 So, please, don't take it again as an 12 excuse. This is not a defense, this is only to 13 correct the record. The record should speak 14 correctly.

15 Now basket shims, I am going to give you 16 a brief, a very brief low down on the shims, what they 17 are, so when we have further discussion you are as 18 well informed as I am in talking about them.

19 The shims, they are shown in golden color 20 around the basket, these are made out of a high 21 temperature aluminum alloy. They are designed with 22 holes inside them, so they are hollow shims.

23 Now why are they hollow? They are hollow 24 because they allow the helium to circulate. They 25 become the downcomer for helium, flow comes up the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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29 1 basket cells, the storage cells, and then goes around 2 and comes down the downcomer and enters the bottom 3 plenum.

4 So there is a small contribution to heat 5 transfer from this helium circulation. Okay, that's 6 why they are there. There are a lot of them as you 7 can see pictorial, and later I will give you the 8 count, a lot of shims that surround the basket, okay, 9 and each shim has a number of shim stand-offs, okay, 10 so these things are important to remember as we go 11 forward.

12 Now let's talk about the shim stand-offs.

13 Next slide, which is Number 7. The shim stand-off are 14 the part of the basket shim assembly. They are as Mr.

15 Layton correctly described is made of stainless steel 16 and threaded bars.

17 There are typically three in number per 18 shim, and realize there are many shims. So, for 19 example, in our MPC-37, which is being used at SONGS, 20 there are 88 shim stand-offs and there are 32 shims, 21 so you realize there is a large population of them, 22 it's not just a single shim or two or three shims.

23 So when we say one shim was found failed, 24 one shim stand-off was found to have failed, meaning 25 one out of 88, not a widespread failure, okay. And, NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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30 1 by the way, when we designed these we designed that 2 out of three one has failed, in other words it's not 3 available.

4 That was the design basis. And we never 5 exceeded that in the observed data. So this is just 6 to give you a glimpse of what I am going to tell you 7 later, okay.

8 There is the failure that has occurred in 9 manufacturing, it occurred during manufacturing, is a 10 very, very small fraction of the number of shim 11 standoffs we have installed.

12 Now at the bottom you will see the new 13 design on the right which shows the little shim stand-14 offs, they are about four inches long in a shim column 15 which is about 160 to 180 inches long, so they are 16 very short when you look at them actually in what they 17 look like.

18 They are minuscule in their presence and 19 as it turns out minuscule in significance as well.

20 Now why do we have these shim stand-offs you must 21 wonder?

22 Well we install them for two things, one, 23 the fabricability is easier. It is easier to 24 fabricate with the shim stand-offs than the old design 25 which you see on the left with the monolithic shims.

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31 1 The second goal, and really the real 2 driver, was to open up the bottom flow area for helium 3 to flow more freely. Now you can call this technical 4 greed. We wanted to get a little more kilowatts out 5 of the same canister, not a lot, but a little more.

6 So these two factors motivated us to 7 introduce the shim stand-off. The shim stand-off 8 themselves as I will tell you, as I have said to you 9 already, are not important to safety.

10 The basket shims, which is, I will speak 11 to them later, their ID is Class C, okay, the lowest 12 grade of ITS. Let's go to Slide 8. As I said we have 13 the SSOs are multiple steel bars tapped into the 14 bottom face of each shim column to elevate them above 15 the MPC baseplate to further promote natural 16 convection of helium inside the MPC.

17 Now you know that there is no free lunch 18 in nature. When you do that, when you increase helium 19 convection by opening the area then you reduce 20 conduction because you have to make a hole in the 21 shim.

22 So the hole in the shim that I showed you 23 earlier, the hollow shims, they improve the thermal 24 circulation, the natural circulation of helium, but 25 they reduce the conduction because you don't have the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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32 1 solid shims there.

2 So in that effect it's a slight increase, 3 still a positive in the ledger of heat transfer. It 4 does give you more heat transfer, but not a whole lot, 5 and that's why today when we are defending the shim 6 stand-off we make the perverse assumption they have 7 all disappeared and still the canister performs, it 8 still delivers the heat duty that we have licensed it 9 to do.

10 So both MPC-68M for HI-STORM 100 that have 11 been deployed at a couple sites and MP-38 in UMAX, HI-12 STORM UMAX, which was being deployed at Southern 13 California SONGS.

14 But that's the reason, I am giving you the 15 physical reason why the statements I am making to you 16 with respect to the non-significance of the shim 17 stand-offs is founded in solid science.

18 Okay, now let's look at the bottom column 19 table here. MPC-37, which the only affected plant is 20 SONGS, has 32 basket shims, as I said earlier, and 21 it's got 88 shim stand-offs. There is a large 22 population of them at the bottom, it's not just one, 23 and BWR basket has 28 shim columns and 76 SSOs. In 24 both cases a large number of stand-offs and a large 25 number of shims.

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33 1 Now let's go through the history of what 2 happened and the timeline to show you how proactive we 3 have been and how unsparing we have been of self-4 criticism and acting on the weaknesses we have found.

5 First, the SSOs were introduced via an ECO 6 and 72.48 process which involved performing qualifying 7 safety analyses. They were all performed and the 8 analyses showed acceptable safety margins.

9 The 72.48 change through that process we 10 did not see and the reason why that could not be done 11 with a full screening and full evaluation. It's an 12 ITSC item and at every single predicate of safety, 13 criticality, shielding, thermal hydraulics, they were 14 all met. They were all met within the NRC guidelines.

15 So that's why we did 72.48 and we accepted 16 them in the system, and, frankly, although they have 17 been criticized badly, and if you see in the social 18 media, truly maligned, these SSOs are perfectly fine 19 for their intended function.

20 They will mate any canister made now or in 21 the future, although we have stopped making them 22 because of the industrial propaganda, but the shim 23 stand-offs are perfectly fine for their intended 24 function.

25 What happened is a manufacturing error, NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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34 1 and you can do that to anything and end up with a 2 problem with the product. So the 72.48 that was done 3 I respectfully submit was complete, adequate, and it 4 stands on its own.

5 Now during manufacturing we involve, we 6 perform repeated rolling of the MPC shell. During 7 this rolling process is primarily when the problems 8 occurred.

9 The shim stand-off, they are like little 10 cantilevers, and if there is a differential motion 11 between the rolling action of the baseplate, if it's 12 at an angle from horizontal, which it is for peening 13 purposes, then the cantilever tended to impose large 14 loads and bent them.

15 That is what happened. Now I will tell 16 you I was a witness to a manufacturing evolution.

17 Almost 40 years ago we were making a component cooling 18 water heat exchanger, it's a large heat exchanger, you 19 must see that.

20 It was for Watts Bar Nuclear Plant and it 21 had like 4000 tubes, a large 60-foot long unit.

22 Tested it, inspected it, it was fine. Then the last 23 step was to install saddles (phonetic) on the shell.

24 For that it had to be rolled and the rolling was done 25 a little too roughly, wasn't done slowly, and that NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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35 1 turned every single tube inside into a snake.

2 Nobody, including me, thought of it, but 3 it happened. The whole unit had to be junked.

4 Manufacturing can add in serious problems and if one 5 does not consider such things, potential problems 6 during manufacturing, you have loads that are far in 7 excess, in some cases loads that you see in actual 8 operation.

9 You know, you take an MPC shell, we take 10 a flat plate and we roll it, the amount of strain that 11 we put on that plate to roll it is enormous. You 12 don't see that in actual operation. So manufacturing 13 is not to be discounted.

14 The consequence of manufacturing to the 15 well-being of the equipment we under appreciate it.

16 We have under appreciated no more. We are now going 17 to look at it with a fine-tooth comb.

18 If you see our procedures on the checks we 19 do, manufacturing now looms large as consequence of 20 different evolutions. I would respectfully submit 21 that that is not so in the industry at this time, it's 22 not happening.

23 So basically the statement that I wanted 24 to make is that the SSOs, they are robust under design 25 basis loadings for the MPCs. These loadings are NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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36 1 diametrical.

2 The load during manufacturing were 3 circumferential and these things, these SSOs, are not 4 strong against those loads and that's why they bent, 5 okay.

6 That's the physical fact, that we did not 7 foresee it. We did not foresee that problem. I 8 readily admit to you that we showed our limitation, 9 our technical limitation of whether it is unique to us 10 or to the rest of the world, but I leave for you to 11 decide.

12 But there has been -- This was definitely, 13 definitely an eye-opener for us. We have learned big 14 time how to treat manufacturing evolutions more 15 respectfully.

16 Now our next item, Item 10, the basket 17 shim assembly. Page 10, I mean. The basket shim 18 assembly serves to position the fuel basket. What 19 does it do? I am explaining to you here.

20 It serves to position the fuel basket 21 inside the MPC. Its safety function is relatively 22 minor. What does it do? It plays no role in 23 reactivity control whatsoever.

24 Its contribution to radiation blockage is 25 negligible. It's assistance in heat rejection as I NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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37 1 said earlier is rather minor because the conduction 2 that we will have had from it if it were a solid shim 3 is significantly reduced because we make them hollow, 4 but it's still valuable.

5 It is not zero and, therefore, that's why 6 it's ITS-C. It does make some contribution. It also 7 serves to provide a conformal contact between the 8 shell and the basket profile because the basket 9 profile is zigzagged and the shell is round.

10 It provides the -- It acts truly as a shim 11 and joins the two. So that's the function of the 12 basket shim assembly.

13 Now why are the SSOs, which are part of 14 the basket shim assembly, their merit being classified 15 as NITS? Because they don't provide, as you see in 16 the middle of this slide, Page 11, they don't provide 17 any meaningful radiation shielding or criticality 18 control. Actually it provides zero shielding and 19 criticality control.

20 And the results of FSAR compliant, meaning 21 using the model approved in the SAR, using that model 22 we have found, we have done thermal analysis and 23 seismic analysis on loaded MPCs and we provide, the 24 analyses provided definitive evidence that the SSOs 25 lack a safety function and that's why the SSOs are not NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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38 1 important to safety.

2 Every loaded MPC meets the entire set of 3 regulatory safety criteria if all of its SSOs were 4 absent altogether. I can't make a stronger case for 5 a superfluous item.

6 Let's go to the next slide, 12. This 7 slide speaks to your question, Michele, who 8 identified. We identified this violation. It was 9 identified by Holtec's site services team at SONGS and 10 it was not an accidental finding either.

11 We have a program we call Site Acceptance 12 Testing and Inspection Examination where we look for 13 foreign materials before we load them and we found 14 this broken one, broken shim during that inspection.

15 So this was part of our quality assurance 16 program. It was not just a fortuitous act of God, we 17 actually found it, and after finding it, yes, just to 18 get you back, end of 2017 the SSO design has been 19 introduced to the Engineering Change Order.

20 In February 2018 is when our site 21 inspection team at SONGS found this broken SSO, one 22 broken SSO. The next thing we did speaks very much to 23 your criteria for enforcement action.

24 We asked all clients to perform focused 25 inspection of every SSO-bearing MPC to ensure that all NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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39 1 SSOs are intact prior to loading the canister. That 2 was done immediately.

3 We made the headquarters, NRC 4 headquarters, aware of the issue and provided regular 5 updates and copies of all safety evaluations and 6 answered questions from NRC staff. So this wasn't --

7 This was totally transparent with you from day one.

8 Next slide, 13. Of course, the first 9 thing you would do in a proper QA organization is to 10 do a root cause evaluation, and we did the root cause 11 evaluation immediately which included factory and site 12 inspections of manufactured MPCs that were in the shop 13 at the site.

14 We determined the statistical probability 15 of SSO failure based on the data we had. We collected 16 data on a large number of SSOs during manufacturing 17 evolutions, and we performed safety analyses to assess 18 the consequence of assuming a bounding assumption of 19 failed SSOs and a comprehensive reappraisal of the 20 procedures and practices.

21 All this was done working day and night 22 right after this issue was identified and we 23 identified numerous areas of improvement in our 24 program that we included in our root cause evaluation 25 report and we presented it to the NRC's inspection NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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40 1 team in May of 2018.

2 We didn't stop there. We did additional 3 corrective actions guided by NRC Information Notice-4 96-28. These corrective actions were defined purely 5 in pursuit of operational excellence subsequent to 6 NRC's visit and they have been, I inform you 7 unequivocally, they have all been implemented already.

8 This is not in a long-term program, the 9 implement. We have already implemented all the 10 corrective action, immediate corrective actions and 11 the ones that followed upon more thoughtful evaluation 12 and analysis.

13 And just to give you a quick information 14 on the statistics of the SSO-equipped MPCS, first of 15 all the affected models are MPC-37, which are 37 PWR 16 assemblies, and then MPC-68M, which are 68 BWR fuel 17 assemblies.

18 At the time of the self-identified issue 19 with the broken SSO 121 MPSs were equipped with SSOs.

20 The table below you will see MPC-68M BWR have 22 21 loaded, nine at Holtec's fabrication facility, and 28 22 delivered but not loaded. MPC-27 has four loaded at 23 SONGS and 26 at Holtec's fabrication facility and 32 24 delivered but not loaded.

25 We, the only plants where we continued NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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41 1 loading are the two BWR plants, correct me if I am 2 wrong, two BWR plants, and these plants we determined 3 that you don't need any of the SSOs. You can toss 4 them out and they still meet all the requirements.

5 They comply with the CoC, not with some 6 reduced thermal limit, which, by the way, your 7 inspection says, that is factually not right, okay.

8 Our MPCs could do fine indeed without these SSOs.

9 You can screw them off and they will be 10 fine. They perform -- They meet all of the 11 requirements of the certificate. Okay. So the SSO 12 inspection census is we checked and documented over 50 13 percent of all SSOs.

14 There were about 8400 of them. We checked 15 4200 and we documented it. With others we checked and 16 replaced as necessary, but based on the documented, if 17 you just consider the ones that we inspected and 18 documented, 0.12 percent were found broken, 0.12 19 percent.

20 And 1.22 percent were found to have a 21 slight bend and they were found both in peened MPCs, 22 which were only for SONGS, and in un-peened ones, 23 which were for everyone else.

24 So basically the conclusion based on as 25 found conditions is that none of the basket shims have NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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42 1 suffered failure of all of its SSOs, far from it.

2 It's in the order of 1.2 percent and that's not 3 failure, the bending is not failure.

4 We'll talk about it later. The real fail 5 was 0.12 percent, which I think we will all agree is 6 statistically insignificant where you have 88 of them 7 in the canister and you are assuming that one out of 8 three is not available in the design basis.

9 So clearly the failure was well, well 10 within what we had engineered it for. We performed 11 evaluation of a broken SSO in the MPC and we found 12 that it had no safety impact in storage.

13 Going to Slide 16. We performed an 14 immediate operability review and concluded that all 26 15 loaded systems were safe and could continue to render 16 their intended function without exceeding any 17 regulatory limits, I emphasize any regulatory limits, 18 under all applicable conditions of storage and 19 transport.

20 There isn't an MPC loaded, a Holtec MPC 21 loaded, anywhere that violates the CoC you have issued 22 to us. None. Zero.

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43 1 that every SSO has failed and become inoperative.

2 The seismic analyses used a bounding 3 earthquake that bounded the DBE of the plants which 4 were executing loadings. It showed that if only one 5 SSO remained functional out of three in each shim that 6 will not get damaged, the SSO will not be damaged by 7 the earthquake.

8 Now I am careful here, the language in 9 this transparency is rather ambiguous, I should be 10 clearer. The SSOs do nothing for earthquakes, 11 nothing. They are not needed for earthquakes.

12 The real loading is transferred form the 13 MPC basket through the shim, basket shim, and the 14 wall, but there is no, these little shim stand-offs 15 are, they are just spectators to the earthquake.

16 The don't really contribute anything and 17 if they failed there would be no consequence. As a 18 matter of fact if there were no SSOs the MPC 19 structural extent would not be changed one bit.

20 So they truly are, other than providing a 21 little oomph of thermal heat transfer they do nothing 22 of value. They do nothing. And that is critical for 23 all us to remember.

24 In all seismic analyses that we have done, 25 we have done so many of them, I mean you have the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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44 1 reports, all of that has been done to see does 2 anything happened to the fuel, does anything happen to 3 the basket walls.

4 Of course nothing happens, you can see 5 physically see in the return that it does not. So all 6 we have done is to evaluate if we assume a certain 7 number of SSOs have failed will the remaining ones 8 fail also, and the answer is they don't fail.

9 For normal earthquakes you can only assume 10 one available even for California's Coastal Commission 11 Earthquake, we call it most severe earthquake, by the 12 way it is the strongest earthquake.

13 It is stronger than this, too. It is 14 strongest earthquake recorded by mankind anywhere.

15 And even under that earthquake if you had the design 16 basis two shims, two SSOs, it does not fail. That's 17 the design basis, it does not fail.

18 So you can assume one, one has been lost, 19 and every single shim, all 32 shims and there is 20 still, shim stand-offs will not fail, and I must 21 emphasize they have no consequence to the seismic 22 performance for the vital elements in the MPC, which 23 is the fuel and the basket cell walls, because they do 24 participate in criticality in other activities.

25 So that is -- and I'm hoping, I hope, that NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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45 1 the additional information I'm providing you is useful 2 in reaching your conclusions. Because there is a lot 3 of information here.

4 And some of it you will need to verify 5 with your own experts, which we will greatly welcome.

6 But I think at the end of the day you will conclude 7 that you won't be in the sandbox, I am.

8 If we really have that problem, then I 9 will not have made this presentation, I'd have one of 10 the other guys do it.

11 But I see, I see that there is no problem 12 at all. None for our customers, those who are using 13 it or the system.

14 But we have replaced the design with what 15 I call a monolithic shim. So there is no more 16 standoffs. So, they will not be around, they are not 17 going to be for anyone to kick them around.

18 But while we say we don't have them, there 19 is no problem with them meeting the design basis 20 loads, folks. No problem.

21 Because I have personally evaluated, 22 checked people's, people's reports and calculations 23 before I stand here and tell you this. Okay.

24 Now we're at SONGS, going to slide, Page 25 17. SONGS MPCs. All four loaded MPCs at SONGS were NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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46 1 reconfirmed to meet all applicable regulatory criteria 2 for onsite storage and transport, under the assumption 3 that only one SSO has been damaged in every basket 4 shim.

5 Now, that by the way is, a statement could 6 be made more strongly, I'm sorry, a statement can be 7 made -- excuse me.

8 The statement can be made that the MPCs, 9 SSOs, survive the most severe earthquake postulated.

10 But if they failed, they don't have any consequence 11 through safety function of the MPC.

12 So, if the actual statement could be much 13 stronger than what's here. And in the revised draft, 14 we will state that because this kind of gives the 15 sense that perhaps they are necessary. They're not.

16 They're not necessary.

17 And, basically, the evaluations for the 18 SONGS MPC is summarized here on Page 17. It basically 19 states what I've said to you many times already in 20 this presentation.

21 Let's go on to the next one. There was a 22 supplemental seismic analysis that NRC inspection team 23 identified when they were there.

24 They said, hey, check it, if you assume 25 that there are only two shim standards and they're NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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47 1 both bent and evaluate whether the shims will survive.

2 Shim standards will survive.

3 So we performed that calculation. And, 4 again, found that they do survive. They remain 5 intact.

6 Again, if they didn't, wouldn't matter 7 that the MPC failed. It's just that they are not 8 important if safety item failed. Okay.

9 So we have, by May of 2018, we have 10 performed a large number of MPC seismic analyses to 11 basically evaluate the performance of the SSOs.

12 And they're all documented and available 13 to you. They were requested, both by our Holtec user 14 group members, which our user group, as you know, it 15 has about 60 members and they're not shy to ask 16 questions.

17 So, questions they asked. They were also 18 answered. And they are all in the documentation 19 packages here.

20 Now, let's go to Page 19. Now we'll talk 21 about thermal safety performance.

22 Again, the thermal analyses were performed 23 under the non-credible conservative assumption that 24 every SSO had vanished non-mechanistically. Somehow 25 disappeared causing every basket shim to drop down and NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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48 1 block the down-comer to bottom plenum flow.

2 Meaning, that the helium circulation has 3 been completely arrested. With that assumption and 4 using the licensing basis model that's approved by the 5 NRC and our FSAR, we find that the design basis heat 6 load of 36.9 kilowatt is met unconditionally. We meet 7 the temperature limits.

8 And, the other parameters, the less 9 important parameters, like MPC internal pressure 10 helium and all, they are meet also.

11 In other words, assuming that every MPC 12 SSO, and every MPC has completely disappeared, does 13 not affect thermal conclusion at all. There's still 14 plenty of margin.

15 Now, let's go to MPC-37 in UMAX. That's 16 on Page 20.

17 We performed calculation based on a heat 18 load. Again, assuming that every SSO has vanished.

19 So all these shims are sitting on top of the MPC 20 baseplate.

21 We found that at a heat load of 37.6 22 kilowatt we meet all the regulator limits. All the 23 limits. And by the way, they are permissible heat 24 load in the HI-STORM UMAX CoC at 37.06. So we 25 actually use a higher heat load than what is NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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49 1 authorized under the current CoC.

2 This was done, I think, our thermal 3 analyst became a little over exuberant. Took, used a 4 larger number than he had to.

5 But the answer remains the same. That we 6 meet the temperature limit and the pressure. And all 7 other height of parameters with good margins.

8 Therefore, we can go to the summary on 9 Page 21. Even though the inspections did not indicate 10 even one basket shim to have dropped down to the 11 baseplate because the failed SSOs supporting it, the 12 thermal analysis was carried out assuming that every 13 SSO and every shim has failed. Causing every shim to 14 drop down to the baseplate, blocking the flow from the 15 down-comer to the inlet plenum.

16 Even under this counterfactual assumption 17 that every SSO has failed, the peak fuel cladding 18 temperature, under the CoC limited heat load, remains 19 below the ISG-11 Rev 3 limits for MPC-68M in HI-STROM 20 100 and MPC-37 in HI-STROM UMAX.

21 In other words, the SSOs are irrelevant to 22 the regulatory thermal compliance of the MPCs in both 23 vertical ventilator modules involved here. They are 24 irrelevant.

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50 1 they're one category below NITS is in it. They are 2 totally irrelevant.

3 And I will request to you to reconsider, 4 this is one of the fundamental technical fillers that 5 I request to you. This is not the SSOs I have, the 6 MPCs have no use for them.

7 I mean, you know, for the ones -- now, if 8 you went to higher heat loads in the future and 9 needed, then it will be different. But right now, as 10 matters stand, and we did not send a letter to the 11 users as is stated in the inspection report asking 12 them to limit the heat load.

13 We did not because there was no need for 14 it, okay? So that also needs to be corrected. I will 15 give you all the changes that we think you should make 16 to align it with what actually has happened.

17 Now, Page 22, we say, SSO serve no role in 18 structure compliance of the MPC. We say that because 19 SSOs do not affect the seismic behavior of the MPCs.

20 They are an importance, thereby they are important as 21 a human fingernail is in the strength of the human 22 muscle. They really have no structural contribution.

23 So, with that, I'll move on the next 24 applicant. I'm not going to read every sentence here.

25 I think you know where I'm at.

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51 1 Now, Page 23 gives you the data on how the 2 SSOs perform, assuming a certain number of them has 3 been lost. Like one out of three lost. That would be 4 32 of them lost in a canister.

5 MPC-37, we find that they will still meet 6 the earthquake, the monstrous earthquake of California 7 postulated.

8 If two out of three were lost, just make 9 an empirical assumption, two out of three. Meaning, 10 64 out of 88 are lost.

11 Even then, the remainder of them will not 12 fail under the earthquake. And I said, even if they 13 failed, they have no consequence on safety performance 14 of the canister.

15 So that is the no MPC that is currently 16 loaded, needs to be modified. It meets the NRC CoC 17 and the regulations to the letter. There's no 18 violation at all.

19 Now, having said that, while I defend it 20 to you, I am sensitive to the fact that you may think 21 that we don't take it seriously. That is not true at 22 all. We take it very, very seriously.

23 Even though these things did not have a 24 safety consequence, they have a huge safety 25 consequence. They will have in the future, if we NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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52 1 don't learn from these.

2 If we don't make changes someday, 3 something actually safety significant will be 4 affected. So, it's in that spirit that we are making 5 a whole lot of changes, adding additional barriers, 6 doing things in that in the future, whether it's a 7 small and insidious matter or a significant matter, it 8 will be caught. Or changed.

9 Here, in this case, thank goodness it was 10 caught in our last barrier onsite inspection. We want 11 it caught in the first barrier, which is when we do 12 the initial design reviews. That's when we want it 13 caught.

14 Okay. Let's go on to Page 25. Yes, on 24 15 I just want to tell you, 16 additional MPCs were 16 loaded. Ten of them at VY and six of them at Columbia 17 Generating Station after they were reinspected, 18 checked that they are the original damaged SSO.

19 And then of course, margins are in 20 enormous. It is in the case of, there was no need to 21 replace the SSOs, they are huge margins.

22 But the others that were not being loaded, 23 if the client wanted them replaced, we replaced them.

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53 1 on the schedule, the immediate constraint, we replaced 2 them. We replaced them with monolithic shims.

3 Now, that is, we replaced them, but even 4 before replacing them, they met their CoC requirement 5 in full measure. We replaced them anyway.

6 You know, a ton of people shout and say 7 they see no good. You have to do things to basically 8 eliminate these attacks. And some of the attack, as 9 you know, in the social media has been vociferous. So 10 we replaced it.

11 But there was no real technical reason to 12 replace them. I guess that's important to make that 13 distinction here.

14 Now, let's go to, let's make an assay of 15 apparent Violation A. Violation A sites, Holtec fails 16 to establish adequate design control measures as part 17 of selection and review of suitability of application 18 of alternate four inch shim standoff pins.

19 We determine it to be a deficiency in the 20 design change process, which did not ensure 21 manufacturing operations were considered and 22 evaluated. I get back to the same point, the nexus 23 between manufacturing and design has not been, at 24 Holtec, as strong as it should be to ensure future 25 failure of failures.

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54 1 I would readily concede to that because 2 that is a fact. That will be the truthful thing to 3 say.

4 So we accept the Violation A, but we posit 5 that for the above reasons that we have given you so 6 far, that this should be considered a minor violation, 7 if you consider it a violation at all.

8 And the lifecycle of new design 9 implementation, from design to manufacturing to site 10 implementation, has three barriers, we know that. One 11 is design review process, the other one is factory 12 acceptance test. There's a typo here, we'll fix it 13 later. And the third is site acceptance test.

14 In this particular case, the deviation, 15 discrepancy or anomaly, call it what you will, was 16 found inside acceptance histories. We wish it 17 happened in the first design review phase.

18 That is, that's how we look at it as our 19 challenge going forward. That these things get 20 captured and fixed in the very beginning of the 21 lifecycle of the product, not towards the end.

22 Okay, let's go to the next one, 26. We 23 took a number of corrective actions. And that's one 24 of your enforcement questions. So, we thought that 25 we'd go to the slide to it, tell you what we did.

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55 1 The immediate corrective actions, while 2 the operating procedures and practices succeeded in 3 flagging the SSO anomaly, indicating the QA program 4 worked as a whole, the root core evaluation indicated 5 the pressing need to implement definitive corrective 6 action to preclude occurrence.

7 And the following activity were completed 8 as part of the corrective action. One, perform safety 9 analysis of loaded units to ensure their safety. You 10 have already heard this.

11 Two, we completed all applicable safety 12 analysis packages for archival reference. And they're 13 now available to you.

14 Three, we inspected all non-loaded units 15 and identified necessary actions on a case-by-case 16 basis to make sure they were in full compliance.

17 Three, we replaced SSOs with monolithic 18 shim design in all applicable MPC's licensing and 19 fabrication drawings and reconciled all analysis 20 packages with the modified design.

21 We are no longer making shims with SSO, I 22 guess you can surmise. But we have replaced the 23 design and now we are using monolithic shim design.

24 Simply because they haven't identified so 25 much, even though they do the job, they meet the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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56 1 requirements. But there has been so much ink wasted 2 on them that we should, we simply got rid of it. So 3 now we have monolithic shim designs.

4 And we have been using it now for several 5 months. This is already in process.

6 Now, a strategy to preclude reoccurrence, 7 Page 27, we want to preclude reoccurrence.

8 Absolutely. I don't want to be here again talking 9 about another enforcement, I don't want to hear from 10 you in writing that we violated something, even if it 11 is below reinforcement.

12 You know, we have been doing, we have been 13 on NRC's triennial review going back over 30 years.

14 We never had most of our, virtually all of them, many 15 times you wrote complementary, NRC can only be only so 16 complementary, there is a line you draw, but you 17 certainly, certainly have been positive in your 18 comments.

19 And this time, to go from there to this is 20 very hurtful. And we have to take everything, adopt 21 every measure possible that it never happens again.

22 So this slide tells you what our strategy has been to 23 ensure that it doesn't happen.

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57 1 process, not just design control, to a critical 2 reappraisal. Which mean leveraging the large body of 3 condition reports, nonconformance reports, field 4 condition reports accumulated over the past 30 years.

5 And we wanted to coax out of the many 6 wisdom we can get to include in our review, our front 7 review process. Not just on design control, but the 8 interaction of design with manufacturing, interaction 9 of design, which transportation of the equipment, they 10 are heavy pieces of equipment, and you have to 11 consider transportation also. And of course, site 12 applications.

13 Every one of them we have looked at to see 14 how we can improve our operating processes. Processes 15 which, of course, are then embedded in procedures 16 which allow our people to follow through and check 17 every one of them.

18 Using, we have also worked to define 19 problems that have not happened but might happen in 20 the future. We are taking a, what I'll call a 21 holistic view. What can happen.

22 That is not yet discovered, in the 23 industry or by us. And we have implemented measures 24 that would, that will protect us from that.

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58 1 touched on this before. The manufacturing is far 2 more, far more complicated, an affair, that meets the 3 eye.

4 There is, in the past three years, we have 5 modified just a shell rolling process, and a butt-6 welding process, to significantly reduce residual 7 stresses in the welds that will protect the canister 8 down the road from stress corrosion and cracking.

9 And on the face of it, if you look at our 10 canister or any other canister, they look the same.

11 But we have reduced the surface stresses 12 significantly.

13 We'll share with you details, but we have 14 done it because we think, as a company that, among few 15 companies that actually design and manufacture, we 16 have an obligation to search across, across the entire 17 lifecycle of the project, product, and come up with 18 solutions so it does not happen.

19 You know, you take a simple operation like 20 drilling. You drill a tube sheet, the drilling 21 operation looks innocuous, it makes holes basically.

22 But the act of drilling, if you use the 23 wrong kind of drilling process, you will bend that 24 tube sheet. Because of compressive stresses exerted 25 during.

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59 1 And if that happens, and you have, for 2 example, a vertical unit, then your surface will no 3 longer be horizontal, and it may not perform as well 4 in service. And I took the simplest of operations 5 drilling.

6 So, manufacturing is the elephant in the 7 room. We need to consider it every single evolution 8 and check it against design. That is what we are 9 training our engineers to do. In other words, never 10 again.

11 Okay. The next item, we have established 12 a system in our place now where we have the design 13 team and we have the critic team.

14 The design team, we call them the Red 15 Team. I don't know why, they are not all Republicans, 16 but we call them the Red Team. They're job is to be 17 involved in the design development process.

18 And that includes manufacturing, experts, 19 site services experts. In other words, this team 20 ought to be able to develop designs that are free from 21 manufacturing or site service errors.

22 And then we have the Blue Team, whose job 23 is to critique. And they have to be only those people 24 who are not members of the original design team. So 25 they're not contaminated by the thought process.

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60 1 And we instituted that right after May.

2 Right after your visit. So now, everything goes 3 through. There is two, two independent teams and they 4 check.

5 And I can tell you a lot of good things 6 have come out of it. We have identified some very, 7 very good things.

8 And another item we are doing, is we do 9 more cross-discipline training. So, our people who 10 are in the fox holes of thermal analysis and structure 11 analysis, we try to cross train them more so they can 12 see. They can see how one discipline impacts the 13 other.

14 This is also important when you're doing 15 a product development. A good product development.

16 Page 28. There is now initial design 17 development, at least in the dry storage program, I 18 require that the concept is presented to me first 19 before it even goes to the Red Team process. To 20 basically see if there are, and I have been doing this 21 work for almost 50 years now, so I do make sure that 22 I check them myself. And before that, it goes into 23 Red Team and later Blue team reviews.

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61 1 to embed all the requirements for manufacturing 2 considerations. So they get checked.

3 Not only are the teams encouraged, but 4 they have to answer questionnaires that they have 5 actually done it.

6 We, and this process will continue as we, 7 from continuing operations to the wisdom we receive, 8 we will embed. It's going to be a continuous 9 feedback.

10 We are also, we have developed a formal 11 protocol to quantify risk associated with design and 12 process changes. If you're developing something new, 13 a great risk there then there is if you're doing 14 second or third of a kind.

15 So, if this is a new product, increased 16 risk, the number of barriers and checks have been 17 enormously increased.

18 And I keep repeating that it's not just 19 manufacturing, we have site services. Actual loadings 20 that are also part of the mix even though these, the 21 violation does not address it.

22 Now, the next one, apparently Violation B, 23 as I told you, we actually did do complete evaluation.

24 We did not stop our screening when we introduced the 25 shim standards.

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62 1 And later, by the way, when we do, we had 2 two additional, maybe this is what confused you folks, 3 we had two additional 72.48's that addressed the field 4 discrepancy that we found. The discrepancy of VY and 5 that SONGS, they were also put in the 72.48 process.

6 And there we didn't go to full completion, okay.

7 That is, that's the difference. And I 8 think we understood what you wanted to say we are 9 taking it that way, but it ought to be fixed in the 10 documents for future reference.

11 Because the item involved is not important 12 to safety, I respectfully submit that this violation 13 should be considered minor. Or sub-minor. Whatever 14 you will, it certainly does not merit, I think, to be 15 called a significant violation.

16 Now, next page, Page 30, the second bullet 17 is important. We have provided remedial training on 18 72.48 process implementation to our personnel. Those 19 we've provided. A couple of them are sitting in the 20 audience here.

21 We have also reinforced expectation to err 22 on the side of conservatism when determining whether 23 a 72.48 evolution, evaluation is needed versus 24 screening only. There will be far more 72.48 full 25 evaluation than screening in the future.

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63 1 Unless the change is so minor that they 2 evidentially, and consequential, we will do 72.48 full 3 evaluation in every case just to be not, get into this 4 unclear territory.

5 Okay. We did do extent of conditions, 6 Page 31. We did do extent of conditions and we found, 7 first, we did full evaluation and we found the 8 conclusions did not change for those two. They did 9 not change. They have no safety significance.

10 And then we did extent of conditions. And 11 we concluded that this was an isolated incident, it 12 was nonrecurring. We reviewed all 72.48's going back 13 three years. Give you the last previous clientele 14 inspection. We didn't find any.

15 So, we can tell you that this was an 16 isolated incident, if you call it a violation.

17 Although you may reconsider calling it a violation.

18 But if you do, there's an isolated event and it's 19 certainly by the smells, it looks minor. If at all.

20 Okay. I am on Page 32. Synopsis of 21 lessons learned. I'll go through it quickly.

22 We have made an intensive corporate effort 23 to include nuances of manufacturing and site services 24 in SSC's design development effort. And I have said 25 this before, this here is in written words committing NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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64 1 to you.

2 We intensify training the company 3 personnel on the symbiotic relationship between design 4 and manufacturing. Personnel must be given deep 5 immersion and real-life manufacturing.

6 Now, you know, some of you know, that we 7 put up a brand new manufacturing plant right next to 8 our design office. The problem we suffered before, 9 our people have to go 300 miles to Pittsburgh to 10 receive the hardware. And that problem has been 11 remedied. Now they can walk 200 feet and go see the 12 equipment being made.

13 The idea is to make them a stakeholder in 14 manufacturing. They don't know it yet, I want to 15 require them to know how to weld also. But it is, the 16 intention is to make our people full complete 17 engineers for the product, not just specialists who 18 are on the, focus in one area.

19 The third item is broaden this ECO 72.48 20 process to include in-depth consideration of 21 manufacturing and site operations. This has been 22 lacking in our 72.48 and ECO questionnaires. As I 23 have stated to you earlier, I think it's lacking 24 industrywide.

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65 1 review and critique of the following design decisions.

2 That's where we have red team/blue team, and these are 3 separate teams. One does not influence the other.

4 And, of course, continuously upgrade the 5 procedures using lessons learned from continuing 6 operations. Complacency is the enemy of quality. We 7 want to continue driving.

8 So, we get to the summary now that you 9 must be waiting for after my long monolog. As we have 10 discussed in detail, our analysis shows that, assuming 11 all SSOs fail and become inoperative, the loaded MPCs 12 fulfill their intended function without exceeding any 13 regulatory limits under all applicable conditions of 14 storage and transport.

15 Two, hence, the SSOs play no role in the 16 safety performance of loaded MPCs and can be correctly 17 characterized as Not-Important-to-Safety item in the 18 Basket Shim Assembly. And therefore, we accept the 19 violations. While we accept them with equanimity, we 20 believe that they entailed minor or no safety 21 significance.

22 To prevent recurrence, Holtec has 23 performed a stem-to-stern reappraisal of processes and 24 operating procedures and made numerous improvements to 25 prevent damage to equipment during handling in NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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66 1 manufacturing and transport to the site and other 2 similar activities outside the scope of normal safety 3 analysis.

4 Now, getting to your side of the equation, 5 we took a look at your Enforcement Manual, and it said 6 the following conditions under which NRC will most 7 likely not consider escalated enforcement actions. We 8 reproduce them here.

9 One, "safety significance of the issue 10 being minor". I would say it's either minor or sub-11 minor. It certainly is not more than minor.

12 Item 2, the "issue is self-identified by 13 the licensee and promptly placed in licensee's 14 Corrective Action Program". We have done that. It 15 was self-identified by us, and we had promptly put it, 16 immediately it in a root cause evaluation corrective 17 action program.

18 Three, "licensee promptly completes Root 19 Cause Analysis Report," which we did. This happened 20 in March. We arrived in May. It was done and 21 delivered to you to look at.

22 Item 4, "promptly completes all required 23 corrective actions". We have not only completed all 24 required corrective actions, we have gone way beyond 25 that and looked at all future events that can possibly NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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67 1 plague us and installed corrective actions. I think 2 you will give us an A+ if you come back and take a 3 look at it and what we have done.

4 And finally, the "issue was not caused by 5 any willful actions." Well, I don't have to comment 6 on that. You know it was not willful.

7 So, as the supplemental information 8 provided in this presentation indicates, we fully meet 9 every one of the above criteria in your Enforcement 10 Manual.

11 That's the summary. Now here, the next 12 slide, which is 35, this is as much for us as it is 13 for everybody else in the industry and you, as the 14 enforcer. We think the problem behind the SSO 15 malfunction is a pervasive lack of knowledge in the 16 industry regarding many collateral effects of 17 manufacturing on the hardware's performance. This is 18 pervasive. We own up to it. Yes, we have failed 19 here. But, then, your people who are versed in 20 manufacturing and know the industry I think will 21 collaborate my statement that there is a general lack 22 of expertise.

23 Okay. I would say with a slight 24 diffidence that in your regulatory literature, NEI's 25 guidance, and Holtec's own internal controls, the NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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68 1 attention paid to the complex role played by 2 fabrication processes has been inadequate. As I said, 3 your NEI guidance document, which you have endorsed, 4 doesn't even utter the word "manufacturing". So, this 5 is something more for a general knowledge.

6 I think industry, you folks, I recommend, 7 I request you lead in this area to try to look at the 8 equipment in an organic whole, not just design 9 control. It's manufacturing. It is site services.

10 It's transportation. It's all of it. They should get 11 their place in the sun, in the product development 12 process.

13 Now our step -- and we have taken it to 14 heart -- we are going to. I can promise you with as 15 much certitude as I can, because I can't tell the 16 future, but I can tell you that this kind of a problem 17 which deals with design not properly vetted for 18 manufacturing or site services will never happen 19 again.

20 At Holtec it will never happen again. But 21 it's a problem that can happen anywhere today. It is.

22 It is. I know our industry and I know even the 23 aerospace industry. It will happen because, overall, 24 there is lack of emphasis on the nexus between 25 manufacturing and design, not enough.

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69 1 Okay. At our place, we have begun a 2 personnel training program to emphasize this message 3 by examples, by showing how important it can be. We 4 have expanded our design change execution and 72.48 5 screening processes to integrate considerations to 6 design, manufacturing, and site operations and their 7 effect on each other. You will see that our ECO and 8 72.48 questionnaires have been substantially beefed-9 up, and they are all loaded with questions probing the 10 effect of manufacturing in the design, the backwards 11 effect.

12 And I said before we have placed our 13 engineers right next door to where the manufacturing 14 is done, so they can learn by osmosis and by actual 15 interaction with the shop people. This is part of our 16 training process.

17 In conclusion, all loaded canisters with 18 SSOs fully meet their CoC certifications, with no 19 exceptions.

20 The SSOs in the loaded MPCs can be 21 characterized as NITS. Their sole function is to add 22 thermal margin by enhancing the MPC's heat generation 23 rate. That's all they do.

24 That said, we accept your Notice of 25 Violation, but our assessments show that their NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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70 1 significance is not visible. They really don't in 2 this case. I make a differentiation between this 3 particular case and the weaknesses in our program that 4 it has revealed. The weaknesses is where we are 5 focusing to invest them for the future.

6 We accept the violation records of 7 changes, but our full 72.48 evaluation did not screen 8 to a higher significance. We went back and did the 9 full evaluation, and it did not screen to a higher 10 significance. So, even if we had done a full 11 evaluation of these field observations -- the initial 12 one was done, full evaluation -- if we had done it, 13 the conclusion would not have been any different, and 14 rightfully so.

15 And finally, Holtec has revamped and 16 upgraded the entire array of processes and procedures, 17 including those pertaining to project planning, design 18 control, 72.49 screening and screening regimen, and 19 this informed decisionmaking. We have revamped them 20 completely.

21 Now I'm going to give you a couple -- last 22 page, this is the very last slide -- I'm going to give 23 you a couple of little NITS. Look, anybody who 24 prepares a document like this with just so many 25 facets, there's going to be some discrepancies. Okay?

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71 1 We have not established yet that we are God or you are 2 God. You're going to have some errors, some 3 discrepancies. And I'm just going to point out a 4 couple to you, not to emphasize them, but it is 5 necessary.

6 I think I'll recommend that you amend your 7 document with the factual changes that's necessary to 8 them, just like we will amend this document, this 9 presentation, and give it to you, based on what we 10 learned from you that we may not have covered 11 completely. So, there is an official authoritative 12 detail for you and from us going forward.

13 Now pointing to Violation A, Enclosure 1 14 says SSOs support the Fuel Basket. They don't. They 15 don't support the Fuel Basket. They support the Shim.

16 Okay. So, that statement, you know, we understand 17 that it is not a vitally important statement, but it's 18 good to fix it, so it does not stand on its own.

19 Enclosure 2 says that Holtec informed 20 licensees to limit the heat load below NRC approved 21 limits. Not true. We did not and there was no need 22 for such a notification. And we did not make this 23 notification. This may have factored in your 24 enforcement action thought process. So, this is 25 important. Okay?

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72 1 On Violation B, Enclosure 1 states that, 2 for the design change for the SSOs, "Holtec completed 3 a 72.48 screening and incorrectly determined that a 4 written evaluation was not needed." As you know, as 5 I told you, we did do full evaluation.

6 And I should conclude by stating -- and 7 there are many other small NITS that we will give you; 8 we'll just mark it up and give it to you. You know, 9 this is not important to the discussion here.

10 But the loaded canisters, I want to tell 11 to you folks and anybody listening in, the loaded 12 canisters do not, and never have, posed any risk to 13 public health and safety, as is being incorrectly and 14 continuously alleged by certain activists in the 15 social media. We regret such canards because they are 16 without any facts and they're inflammatory.

17 Thank you.

18 MR. LAYTON: Thank you, Dr. Singh.

19 Is there a need for any broad clarifying 20 questions from the NRC panel/staff before we adjourn 21 for our caucus?

22 (No response.)

23 We thank you. And again, Dr. Singh, thank 24 you very much for the detailed explanation that you 25 provided in the presentation.

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73 1 We'll now go off the record and take a 2 short recess to allow NRC to briefly caucus.

3 For the folks that are on the conference 4 line, please stay on the conference line. As soon as 5 the NRC completes our caucus, we'll rejoin the 6 conference line and resume the predecisional 7 enforcement conference.

8 So, we'll now take a break for the caucus.

9 Thank you.

10 (Whereupon, the foregoing matter went off 11 the record at 2:43 p.m. and went back on the record at 12 3:28 p.m.)

13 MR. LAYTON: We are going to go back on 14 the record.

15 And the NRC staff has a couple of 16 clarifying questions that we would like to ask Holtec 17 as part of the predecisional enforcement conference.

18 THE OPERATOR: Thank you very much, Mr.

19 Layton.

20 And you are live. Your guests are in 21 conference with you at this time.

22 MR. LAYTON: Okay. Thank you.

23 THE OPERATOR: You're welcome.

24 MR. LAYTON: Okay. Again, thank you for 25 the presentation. There are a couple of NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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74 1 clarifications on things that we've seen in the slides 2 and, also, what we heard in your statements. And 3 recognize we're not requesting you submit information 4 to us, but if you think it's going to be helpful to 5 your explanations, we would encourage you to provide 6 additional information.

7 So, to make it a little bit easier, I'm 8 going to refer back, because I've put all my notes on 9 the pages of the presentations.

10 Early in the introduction to the 11 presentation, Dr. Singh -- and I want to make sure 12 that I heard correctly -- you said that yesterday 13 Holtec sent all pertinent information to NRC. And I 14 want to make sure I'm clear. Do you mean that the 15 presentation information was sent yesterday or was 16 there other information that was sent to us?

17 MS. MANZIONE: Yes, Mike, we went you a 18 letter with attached information on structural 19 analysis, thermal analysis, and 72.48s, and then, the 20 appropriate proprietary withholding information. I 21 have a copy, if you would like me to hand it to you.

22 But we sent it through your document control, through 23 the appropriate processes.

24 MR. LAYTON: Thank you. So, you confirmed 25 that I don't miss things when I'm listening. Thank NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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75 1 you. If you have a copy of the transmittal letter, if 2 you can give that to us now, that will be adequate, 3 and then, we can look for it. I do appreciate that.

4 Thank you.

5 Also, if you wish, can you provide the 6 Final Root Cause Analysis that you described in your 7 presentation that includes the corrective actions for 8 our consideration?

9 DR. SINGH: Of course we will. Of course 10 we will. Thank you.

11 We will also provide you this presentation 12 with some of the NITS that we found, you know, just 13 going through it.

14 MR. LAYTON: Okay.

15 DR. SINGH: So, it will be final, pure, 16 and pristine for your use.

17 MR. LAYTON: Okay. Thank you.

18 DR. SINGH: And we would, subject to your 19 approval, send you a marked-up copy of your Inspection 20 Report where we think some of the material may not be 21 quite --

22 MR. LAYTON: We'll accept that. We're not 23 requesting, or I'm not sure what action we'll take on 24 it, but we'll certainly accept it and we appreciate 25 it.

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76 1 DR. SINGH: Beside the revised draft, it 2 will be helpful.

3 MR. LAYTON: Yes. Thank you.

4 DR. SINGH: Okay.

5 MR. LAYTON: And throughout your 6 presentation, you refer to some analyses and, then, 7 also a report or two. And I reference, I think, slide 8 19. Let me get to that point. Slide 19 on thermal 9 analysis. And on slide 20, you reference a Holtec 10 HI2188123 report.

11 DR. SINGH: Uh-hum.

12 MR. LAYTON: And if you think those would 13 assist in consideration of our decision, if you would 14 provide those if you think they're appropriate?

15 MS. MANZIONE: The thermal report is an 16 attachment to the submittal letter we sent you 17 yesterday.

18 MR. LAYTON: Thank you.

19 DR. SINGH: And how about the other one, 20 the structural?

21 MS. MANZIONE: Yes, the structural report 22 is also there, and there's a couple of other things, 23 but that specific number that's referenced in the 24 presentation is an attachment.

25 MR. LAYTON: Very good. Thank you.

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77 1 DR. SINGH: And they will simply 2 substantiate the statements made here. They don't 3 provide new information by way of suitability of the 4 -- they basically provide the substantiating 5 calculations --

6 MR. LAYTON: Okay.

7 DR. SINGH: -- that stand behind the 8 statements made here.

9 MR. LAYTON: And then, many of us also 10 understood that in the early parts of the inspection 11 and evaluation, we understood that there was some 12 communication to licensees regarding the limit of 13 thermal loading, based on the shim analyses. And in 14 your presentation, I thought I heard that you said 15 that there was no such communication. Could you 16 clarify that for us, so we just have a clear 17 understanding?

18 MR. TINDAL: So, that's correct. We did 19 not limit the thermal capacity of the system.

20 Immediately upon discovery, we notified the users.

21 What we did do was an operability review for the 22 loaded systems with the current heat loads to perform 23 the safety, to validate the safety function of the 24 canisters for what was already in storage. But we did 25 not limit any heat capacity of the systems. And we NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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78 1 can provide that communication to the Users Group, to 2 you guys, as a supplemental information.

3 MR. LAYTON: Well, if you think it will be 4 helpful.

5 And I believe what Kim has already said, 6 evaluations on the 72.48 for our consideration have 7 already been included in the transmittal letter.

8 I'm going to look at our NRC staff. Is 9 there anything that I missed or mischaracterized or 10 something else that we should identify?

11 DR. SINGH: Yes, we should. We should 12 also tell you that we provided you a two-page memo 13 that we showed to Holtec User Group, that we sent to 14 our User Group giving our position in this matter.

15 We have also provided that to the NRC. Is 16 that right, Kim?

17 DR. ANTON: Yes, we have provided that, 18 but I don't think we have provided that formally. So, 19 we might do that.

20 DR. SINGH: We should share that with you.

21 DR. ANTON: We will surely share that, to 22 put that on the record. I think we did that just 23 informally, yes.

24 MR. LAYTON: Okay. Jorge, would you go to 25 the microphone, please?

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79 1 MR. SOLIS: You mentioned a thermal 2 analysis report. I mean, if they wish to provide the 3 analysis themselves, that would be very helpful.

4 DR. SINGH: Surely.

5 MR. SOLIS: Right.

6 DR. SINGH: Yes. I think we already have, 7 haven't we, Kim?

8 MR. LAYTON: Yes, I think Kim indicated 9 that that's part of the package that was just sent to 10 us.

11 MS. MANZIONE: You can see the attachment 12 is that. But just to clarify --

13 MR. SOLIS: That will probably not be 14 sufficient for me.

15 MS. MANZIONE: You're talking about input 16 and output-type analysis?

17 MR. SOLIS: Actual analysis. That's 18 right.

19 MS. MANZIONE: All right. Understood.

20 MR. LAYTON: Again, that's if you think it 21 would be helpful.

22 DR. SINGH: Give them everything.

23 MR. LAYTON: Well, hold on. Hold on.

24 (Laughter.)

25 Hold on. We're not requesting NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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80 1 everything --

2 DR. SINGH: Okay.

3 MR. LAYTON: -- because we have a time 4 goal for this evaluation, and we're not going to do a 5 complete re-review of the certificate. We're not 6 going to do a complete re-review of the inspection.

7 We're only providing you an opportunity to provide us 8 what information you think will help us to make an 9 informed enforcement decision.

10 DR. SINGH: Understand. I will not swamp 11 you with paper. Okay. Understand.

12 MR. LAYTON: Is there anything else to 13 include from NRC staff?

14 (No response.)

15 So, with that, I'll enter in my closing 16 remarks. In closing to this predecisional enforcement 17 conference, I note that the NRC will consider the 18 information we obtained here today in making the 19 enforcement decision and, also, information that you 20 provided under separate cover or will provide under 21 separate cover. And we'll notify you by telephone and 22 in writing when we are ready to announce our decision.

23 I remind everyone that the apparent 24 violations discussed at this conference are subject to 25 further review, and it may be revised prior to any NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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81 1 resulting enforcement action; and that the statements 2 or expressions of opinion made by NRC employees at 3 this conference, or the lack thereof, are not intended 4 to represent a final Agency position or determination.

5 With that, this conference is closed. We 6 are now off the record.

7 For the people on the phone, we'll open 8 the phone lines for comments very shortly.

9 (Whereupon, the foregoing matter went off 10 the record at 3:37 p.m. and went back on the record at 11 3:38 p.m.)

12 MR. LAYTON: Okay. We're going to move 13 into the comments from the public portion of today's 14 meeting. But, before I open the floor to any comments 15 from the public, I would like to clarify that the NRC 16 does not believe that there is an imminent safety 17 threat with the canisters that are currently loaded 18 with the standoff pins. Additional review of these 19 canisters may be warranted, based on the outcome of 20 NRC's review of these apparent violations and the 21 information that we receive.

22 Fran?

23 THE OPERATOR: Yes, sir, I understand 24 we're ready for Q&A from the public.

25 MR. LAYTON: We are.

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82 1 THE OPERATOR: If you'd like to ask a 2 question over the telephone, please press *1, unmute 3 your phone, and record your name clearly, please, when 4 prompted. Your name is needed to introduce your 5 question. If you decide to withdraw that request, 6 press *2. But, again, to ask a question, please press 7 *, then 1, and record your name.

8 One moment, please, for our first 9 question.

10 (Pause.)

11 Our first request is from Nana Vadiar.

12 Ma'am, your line is open now.

13 MS. VADIAR: Thank you.

14 According to the NRC's own Executive 15 Summary, Holtec is in violation of their NRC license 16 requirements. Therefore, the four buried cans at San 17 Onofre create, quote/unquote, "a possibility of a 18 malfunction of a different result than any previously 19 evaluated in the Final Safety Analysis Report, FSAR".

20 Unquote.

21 At San Onofre, this equates to three 22 possible malfunction results: (a) broken shims; (b) 23 broken shims that impede fuel assembly cooling; (c) 24 overheated fuel assemblies resulting in a radioactive 25 release.

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83 1 Since this defective system is in 2 violation of 10 CFR 72.48, will NRC consider taking 3 decisive correction action to require Holtec to 4 retrieve and inspect those cans with the affected 5 shims at Vermont Yankee and, also, San Onofre?

6 Thank you.

7 MR. LAYTON: Yes, this is Mike Layton.

8 Thank you for the question and the 9 comments.

10 The purpose of this panel, the 11 predecisional enforcement panel, and the following 12 decisions that will happen based on what we determine 13 from the evaluation, the information that we get from 14 Holtec, is designed to provide the significance of the 15 safety issues and, also, whether there are any 16 followup actions that need to be taken.

17 The items that you identified in your 18 comment and questions are ones that we are very 19 interested in evaluating as part of our enforcement 20 process that we're currently in. So, I would offer 21 that the outcomes of our deliberation and our 22 enforcement decision will be made public, and if you 23 have any further comments after we finish our 24 enforcement process, to please let us know and bring 25 them forward.

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84 1 We had a question in the room?

2 MR. GUNTER: Thank you.

3 My name is Paul Gunter, and I'm with 4 Beyond Nuclear. We're a public interest group in 5 Takoma Park, Maryland.

6 So, the question I have for NRC has to do 7 with your deliberative process for escalated 8 enforcement action and how the Agency is factoring any 9 previous or subsequent violations by Holtec. And in 10 specific, I'm referencing EA 18.155, which has to do 11 with SONGS cask downloading, and the fact that there 12 were three Level IV violations involving frequent cask 13 loading incidents and the failure to identify adverse 14 conditions, failure to adequate program training, 15 failure for proficiency in training, and failures for 16 certifications of individuals involved in the cask 17 downloading operations. It also involved failure to 18 provide adequate procedures for dry cask downloading 19 operations and, in fact, disabling of important safety 20 procedures, and failure to timely report violations to 21 the NRC within the required 24-hour period.

22 So, how does the Agency incorporate in its 23 enforced action, you know, escalated enforcement 24 action, such things as how EA 18.151 and EA 18.155 are 25 related, possibly related, particularly in terms of a NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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85 1 pattern of behavior? So, I guess one of the 2 questions, if you would, please, just inform me where 3 the status of EA 18.155 is and how you could possibly 4 or if there's need to incorporate it in your current 5 decision?

6 MR. LAYTON: Okay. Thank you, Mr. Gunter.

7 Off the top of my head, the EA that you're 8 referring to is the misalignment at SONGS, is that 9 correct?

10 MR. GUNTER: Correct.

11 MR. LAYTON: There's one clarification 12 that needs to be made from what you read. The 13 inspection and the activities in that enforcement 14 action are directed at the licensee, Southern 15 California Edison, not Holtec.

16 So, from the standpoint of your question 17 about how that will be considered in this enforcement 18 action, we are focused on the two violations that were 19 cited in the inspection at Holtec's facility. The 20 enforcement action of which you're referencing is 21 going to occur on a separate path, where I believe 22 there will be a pre-enforcement conference associated 23 with that enforcement action. I don't know offhand 24 whether it's been scheduled or not, but I know that 25 they're very close to probably doing the press release NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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86 1 on the timing for that enforcement action.

2 MR. GUNTER: Okay. I did note in the 3 enforcement action from 18.155 that both the licensee 4 and Holtec were involved and related in the 5 downloading anomalies that resulted in these frequent 6 contacts between the silo wall and the cask 7 downloading. So, I appreciate your making its 8 distinction, but -- so, I'm to understand that only, 9 in what you're saying now, only the SONGS operator is 10 involved in that particular enforcement proceeding?

11 MR. LAYTON: Right. Just to be clear 12 again, the focus of that enforcement action is the 13 licensee, Southern California Edison. Holtec is an 14 operator contractor contracted to Southern California 15 Edison. The way that NRC views responsibility, is the 16 best way I can frame it, for actions that occur at a 17 licensed facility is the licensee is the one who is 18 responsible for that.

19 So, if there are corrective actions that 20 have to come, that result from that enforcement 21 action, it will be incumbent on Southern California 22 Edison to do those corrective actions. If there are 23 learnings or things that Southern California Edison, 24 in particular, would like Holtec to make adjustments 25 or improvements in how they are performing their NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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87 1 contract with Southern California Edison, that is at 2 the discretion and the decision of the licensee.

3 MR. GUNTER: Okay. Thank you.

4 MR. LAYTON: Are there any other questions 5 on the phone?

6 THE OPERATOR: We have right now six over 7 the phone line. So, I'll move on.

8 Our next is from Gary Headrick of San 9 Clemente Green.

10 Sir, your line is open.

11 MR. HEADRICK: Yes. Hello. Yes. I'm in 12 charge of San Clemente Green, which is representing 13 about 5,000 concerned citizens living near San Onofre.

14 And I just have to start by saying I'm 15 pretty offended by the remarks Dr. Singh ended his 16 comments with about the activists. And we're just 17 concerned citizens, first off. You know, we listen to 18 an admiral of the Navy who's pro-nuclear, and he's 19 concerned about the way nuclear waste is being 20 handled. We are listening to physicists and 21 engineers, and we don't claim to be experts, but we're 22 unpaid concerned citizens combating the efforts of a 23 for-profit corporation that's being reckless with our 24 lives and our livelihoods. So, you know, I think he 25 should back off on blaming us. This is not a social NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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88 1 media problem; it's incompetence on his part.

2 MR. LAYTON: So, Gary, I appreciate your 3 comment. Could you focus your comments to the NRC and 4 on this proceeding, please?

5 MR. HEADRICK: Sure. There is a 6 whistleblower or a concerned employee that contacted 7 us about contractual incentive built in for a 8 financial incentive for Holtec to complete the job 9 sooner rather than later. And I talked to Tom 10 Palmisano at Edison about this, and he could not 11 confirm or deny it. Will the NRC look into that?

12 Because it is not proprietary information, as Tom 13 Palmisano responded. But I'd like to know if there is 14 an incentive for them to rush through these things and 15 make the kind of mistakes they're making, if the NRC 16 will look into it and prohibit that kind of 17 contractual agreement.

18 MR. LAYTON: That's a very good question.

19 MR. HEADRICK: Well, that's how mistakes 20 like these faulty shim pins are created. I think it's 21 relevant to this topic.

22 MR. LAYTON: No, I appreciate your 23 pointing that out and your comment and concern. What 24 I need to do to clarify as to what the role of NRC is, 25 is really, as you're well aware, because we've had NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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89 1 many conversations in the past, that NRC is focused on 2 the safety of the operations. To the point where we, 3 as you suggest, that we would get involved in looking 4 at contractual arrangements between licensees and 5 their subcontractors or any contractual arrangement 6 with any licensee, that isn't something that NRC would 7 get involved in. Where we would be very interested is 8 if there turns out to be safety issues or safety 9 concerns that result from, I would say, poor 10 implementation of work habits or things like that that 11 have a result in a safety finding.

12 MR. HEADRICK: Well, this is only the 13 first incident that we're discussing about the pins.

14 You know, they almost dropped a canister. There's a 15 pattern of ineptness that's all design-based. It's 16 Holtec's issues. They're gouging canisters as they're 17 lowering. This is not a manufacturing problem. It's 18 a design problem. And I would expect the NRC to 19 protect the public. Even if it's a little bit out of 20 your jurisdiction, you should be concerned, as I am, 21 about contractual incentives that may create 22 opportunities for errors. So, I don't understand why 23 you're limiting yourself.

24 MR. LAYTON: No, I appreciate -- again, I 25 appreciate your view. And from the standpoint of NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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90 1 things that are within our view and what we are 2 concerned about in protecting the public, we are 3 concerned about protecting the public. That is the 4 DNA of our mission. We focus on the activities and 5 whether there is any safety risk or potential safety 6 risk to the public.

7 Going in, from our perspective, and trying 8 to regulate contracting is not part of what this 9 Agency does. If activities result in safety findings 10 and potential safety risks, we will evaluate those and 11 we will take actions.

12 From the standpoint, I think what you're 13 alluding to, of identification of several types of 14 activities that are now in enforcement, those are 15 things that do get the consideration -- and I'll defer 16 to our Office Enforcement Coordinator -- that they do 17 not necessarily go unviewed or undiscussed or 18 unevaluated within NRC.

19 MS. BURGESS: This is Michele Burgess.

20 I just want to make a general statement.

21 Mr. Layton's been speaking specifically of the Holtec 22 process, but I just wanted to raise just a general 23 thing. If there is a concern that is raised or you 24 have a concern, we do have processes within the NRC 25 for you to be able to put those on the table for NRC NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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91 1 evaluations. We have an allegations process, and you 2 can submit that to an allegations process and it would 3 be reviewed.

4 What Mr. Layton is talking about is 5 anything that we've identified and it's resulted in a 6 violation or an apparent violation, we handle it 7 through the enforcement process. And if it hasn't 8 resulted in a safety issue that is an actual violation 9 of NRC requirements, then we can enforce, we can take 10 on enforcement action. That's to disposition things 11 that have been determined to be violations.

12 So, the space that you perhaps might be 13 talking about is our allegations space, and there is 14 a process for that. On the NRC website, there on our 15 public website, there are mechanisms where you could 16 submit those concerns and they can be evaluated.

17 Did that address what you're asking for?

18 THE OPERATOR: I have removed him from 19 queue since we have another handful in queue.

20 MS. BURGESS: Okay.

21 THE OPERATOR: Do you want me to readdress 22 that?

23 MR. LAYTON: No. Just proceed with 24 additional folks that have questions, please.

25 THE OPERATOR: Our next up at bat here is NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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92 1 Donna Gilmore of San Onofre Safety.

2 Ma'am, your line is open.

3 MS. GILMORE: Okay. Thank you very much.

4 Hi, Kris.

5 One of the things the NRC said in their 6 presentation is that you look at this in line of other 7 violations, that type of thing. I think this is a 8 perfect time to do that.

9 Well, No. 1, the four canisters loaded at 10 San Onofre, Tom Palmisano admitted that the inside of 11 those, the inside bottom of those were not inspected.

12 They didn't have the tools to even do that inspection.

13 So, I raise this as an issue for the NRC. Were the 14 inside bottoms of all the canisters loaded with the 15 defective shims, were they inspected, the bottoms 16 inspected? Because they weren't at San Onofre. Tom 17 said he didn't have the tools to do it. And I know 18 that's a requirement of the NRC, that before you fill 19 a canister, you're supposed to inspect it thoroughly 20 inside and outside. So, that's one issue I think 21 that's related here.

22 Another issue is the NRC admitted every 23 single canister loaded at San Onofre is unavoidably 24 being gouged. There's only a quarter-inch clearance 25 between the canister wall and a steel guide ring NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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93 1 protruding out in the center. This is an engineering 2 design issue that should apply to Holtec, not just to 3 their design. You know, places where they deviated 4 from the design need to be considered in this, in what 5 you're looking at now because it's all related to an 6 endemic problem of Holtec of bad, inferior engineering 7 design and a flagrant disregard for NRC regulations, 8 where they do better to ask forgiveness than 9 permission.

10 And I have sympathy for the NRC's position 11 here. I know you have a lot of good engineers that 12 are doing the best they can, and Holtec does not make 13 that easy.

14 Thank you.

15 MR. LAYTON: Okay. Thanks for your 16 comments, Donna. And again, as I indicated to the 17 first caller, much of what you bring forward in 18 reference to SONGS is really more, pertains more to 19 the enforcement action on the misalignment. So, 20 again, that will be going through its own enforcement 21 process, and I believe there is going to be a 22 predecisional enforcement conference for that 23 enforcement. So, I would encourage you to watch the 24 press releases of when that's indicated that that's 25 going to occur.

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94 1 Are there any more questions?

2 THE OPERATOR: We have five more at this 3 time.

4 MR. LAYTON: Sure.

5 THE OPERATOR: Bill Weigel, your line is 6 open now. You may ask your question.

7 MR. WEIGEL: Thank you.

8 I have a question regarding the admission 9 today by Dr. Singh and Holtec on the record of their 10 manufacturing incompetence and subsequent equipment 11 failure, and the fact that the NRC Charter contains a 12 pledge to protect public safety. I'm curious how the 13 NRC can allow for the public to be exposed to Holtec's 14 real-time experiment of unproven design that at 15 anytime could potentially cause failures that would 16 lead to the potential loss of life or property of 17 millions of people.

18 And also, if the NRC is aware and 19 comfortable with the fact that they can become liable 20 as individuals for suits against public officials in 21 their individual capacity, per Title 42 USC, the 22 Public Health and Welfare, Subsection 1983, which 23 imposes liability without defense on state and local 24 officials who, acting under color of law in their 25 individual capacity, deprive plaintiffs. Plaintiffs NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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95 1 have rights created by the Constitution and federal 2 law, of which the 14th Amendment guarantees life, 3 liberty, and property. If there was an event that 4 would lead to the loss of any of these items, that's 5 what's on the line.

6 And as a Southern California resident, I 7 would like to know how we can file for an immediate 8 cease and desist on this criminally negligent project 9 and pursue the element of safety jurisdiction from the 10 California Coastal Commission permit that was issued 11 on 10/12/15, of which they rejected an attempt to have 12 the permit rejected because they are not in charge of 13 the jurisdiction of the safety element, which the NRC 14 is in charge of.

15 And if the NRC is not in charge of onsite 16 safety for contractor practices, who is and who can we 17 contact regarding these recent failures? Or are we 18 allowing the open air conflict of interest to have a 19 for-profit corporation police itself while it's 20 clearly demonstrating criminal negligence?

21 MR. LAYTON: I appreciate your prepared 22 comments, Bill. I'm going to turn -- I believe there 23 is one question in there on how you can intervene or 24 provide a question to the NRC. And I'm going to turn 25 it over to Michele Burgess to let you know.

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96 1 MS. BURGESS: This is Michele Burgess.

2 There were a number of questions in there.

3 One of them was how you could request us to take 4 action. And we do have a process. It's within 2.206, 5 10 CFR 2.206, and it provides a process for you to 6 make such requests.

7 MR. WEIGEL: I also was wanting a 8 clarification based upon the Charter for the Nuclear 9 Regulatory Commission and its pledge to protect public 10 safety, how they can be acting in good faith upon that 11 pledge, given the admissions on the record today by 12 Dr. Singh and Holtec of manufacturing incompetence, 13 and how there can be any trust given to them at this 14 point to not have a further lurking problem that could 15 be realized in real time which could cause a 16 disastrous event in Southern California, irreversibly 17 depriving people of life, liberty, and property.

18 MS. BURGESS: To recap some of the things 19 we've said before and our process, the stage that 20 we're at in our process is information gathering. Mr.

21 Layton specifically said that, at this point in time, 22 we don't see an immediate health and safety issue that 23 requires an immediate order. What that means is 24 that's not to say that there isn't a concern, but it's 25 just a concern that we can allow our due process to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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97 1 play itself out. That's what we're in the process of 2 right now.

3 So, as we're taking the information that 4 we've collected so far in inspection, the additional 5 information that's been provided today included the 6 statements that you've referenced. We're going to be 7 taking all of that into consideration for our final 8 action.

9 MR. LAYTON: Thank you.

10 Fran, can we have the next question, 11 please?

12 THE OPERATOR: Yes. Raymond Lutz with 13 Citizens' Oversight, your line is now open.

14 MR. LUTZ: Yes, thank you very much.

15 I have been following the San Onofre 16 situation here.

17 But, first, let me just say that I'm a 18 little bit disturbed that public comments are not 19 included in the official record of your meeting.

20 And also, I'd like to complain that your 21 notices for this meeting were very difficult to get 22 the information for when the meeting was going to be, 23 what number to call, and where to go, and that the 24 time on the webinar website does not have the time 25 zone. So, it's very hard to know what time that NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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98 1 actually represents. Apparently, it changes based on 2 where you are.

3 Now today, we heard, we learned about the 4 fact that Holtec had made this change and not notified 5 the NRC about it in advance. And this is the largest 6 concern here. And we also heard Mr. Singh admit that 7 there were, quote, "many other changes," unquote, made 8 to their process, such as the bottom plate, how it 9 mates with the shell, and I guess some of the welding 10 there.

11 And at this point, because they changed 12 the design so radically with regard to these shims by 13 changing completely the design and putting these pins 14 in the bottom, which obviously would bend over any 15 kind of handling, how many other things have been 16 changed in this design that Holtec is not telling us 17 about? I think this warrants a full review of these 18 various many other changes that Mr. Singh admits to.

19 We need to find out where we stand with regard to 20 these changes that were being made.

21 And we know this is also -- and I hate to 22 bring this up because you said the errors in loading 23 these into the holes is a separate thing, but I beg to 24 differ. This is the same dry cask storage system that 25 we're talking about. It's all one system. And you've NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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99 1 now decided to split it up and say that the shim issue 2 is not the same as the dropped canister issue. And 3 they, for some reason in the dropped canister issue 4 area, have decided that there's no design issues at 5 all, and it all has to do with handling of by SCE 6 rather than a design issue.

7 Well, how many design changes did Holtec 8 make to other aspects of this system, not just the 9 pins, but other things such as that retainer guide 10 ring, as they're calling it? Was that a change? And 11 did you guys approve that in advance or was it 12 something that they just did behind closed door?

13 So, I'm going to request that you make a 14 full review of this cask storage system and not 15 breaking it up amongst these various discrepancies 16 that you've found so far and putting those into 17 separate categories, but, instead, to unify this and 18 put it under one broader view and take a look at the 19 entire problem.

20 Now I also want to bring one other thing 21 up, and that is Mr. Singh did not deny that this was 22 intentional. He scoffed at it and said, oh, you know, 23 of course, who would ever ask that question, this sort 24 of thing. But he didn't say that it was not 25 intentional.

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100 1 And I request that the NRC turn this over 2 to the Federal Bureau of Investigation to find out if 3 this was intentional or not, if it's beyond the scope 4 of your abilities to do so within your own source.

5 So, again, please broaden the scope, 6 include these two categories, and I would definitely 7 demand a full review of this dry cask storage system, 8 including all of these various failures that are now 9 happening, and everything that Mr. Singh has said, 10 these many other changes, and make sure that you know 11 what those are.

12 Thank you.

13 MR. LAYTON: Yes, thank you, Mr. Lutz, for 14 your comments. What I would offer is I'm going to ask 15 Michele Burgess again to give you the information to 16 bring your concerns forward under the petition 17 process, the 2.206 petition process.

18 MS. BURGESS: Yes, this is Michele 19 Burgess.

20 One general comment, though, is regarding 21 design changes. Our process does allow those to be 22 made in some cases under certain parameters, and 23 that's actually the issue that we are dealing with 24 right now in this enforcement action. So, it's not 25 going unaddressed as a general issue. That's exactly NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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101 1 what we're here for in this particular enforcement 2 action.

3 Relative to your comments about requesting 4 a full review and action, that is, again, our 2.206 5 petition process.

6 And you also mentioned that you had some 7 specific information. Again, I'd just mention that we 8 do have a process called our allegation process, that 9 if you have specific information and concerns that you 10 need us or you're asking us to follow up on, that that 11 process is available to you as well. It gets it into 12 the processes that exist currently.

13 THE OPERATOR: Thank you very much.

14 Our next request now is from Rich Van 15 Every.

16 Sir, your line is open.

17 MR. VAN EVERY: Thank you. Yes, I 18 appreciate the opportunity to get to sharing. I'm a 19 concerned citizen in Southern California right near 20 San Onofre.

21 And my question is, given that you don't 22 see the shims or the canisters that are being gouged 23 upon loading as an immediate problem, at what time do 24 you foresee having a thorough inspection of the inside 25 of these canisters, given there's no practical way to NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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102 1 go about that?

2 I personally request that you consider 3 finding how the NRC can really stand for safety by 4 mandating thick-walled casks that can be, or any 5 supplement storage system that isn't a temporary 6 solution to this long-term issue that we're going to 7 have.

8 So, I'm really hoping that you can put 9 more pressure on Holtec or other manufacturers to make 10 sure that no compromise is being made for safety and 11 stop it by these major corporations.

12 Thank you.

13 MR. LAYTON: Thank you for your comment.

14 Is there another question, Fran?

15 THE OPERATOR: Yes, we have a few.

16 Raymond Shadis, New England Coalition.

17 Sir, your line is open.

18 MR. SHADIS: Thank you.

19 In short, we concur with Holtec's warnings 20 regarding the errors and defects at the 21 manufacturing/design interface. The unanalyzed 22 stresses introduced by metal forming, machining, and 23 plating are, in our opinion, a bad actor in operating 24 plant failures, not only in manufacturing, but in 25 repair, modification, and remediation.

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103 1 However, that said, quality control or 2 quality assurance has to remain primarily the 3 unassignable responsibility of the licensee. Holtec, 4 I thought rather glibly, passed off responsibility for 5 defective pins or pin sockets or pin placement on the 6 manufacturer or on their vendor. There is no way for 7 NRC to trace defects back to their source. Somebody 8 has to take responsibility at some weigh station in 9 the whole process, and I think that needs to be the 10 licensee.

11 In that same vein, downstream of Holtec's 12 administrative and materials failures was Entergy 13 Vermont Yankee. If Entergy Vermont Yankee was using 14 a modified canister, they should have filed an 15 amendment to their ISFSI license. As it happened, 16 they stopped loading canisters and inspected, decided 17 that what was fixable was fixed, and much didn't need 18 fixing. And they simply moved on to complete loading 19 a full array of canisters.

20 This should not have been allowed. NRC 21 should look into it. Many small errors at the end of 22 the day can equal a determinant one. So, these 23 formalities such as reporting and regulator review 24 must be meticulously observed. That's our comment on 25 that.

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104 1 And one final one on the pins, the locator 2 pins. The MPC, as it was termed many times in today's 3 discussion, means Multipurpose Canister. It is a 4 canister that is intended for transportation. You 5 know, it's in the name. We didn't see any analysis of 6 any potential isometric loading due to broken shim 7 pins during a transportation accident. It is unfair 8 to pass this on to the Department of Energy and to 9 other affected persons at the time this fuel is 10 transferred for transportation. I don't know how that 11 works in NRC's game plan, but it really needs to be 12 considered.

13 Thank you.

14 MR. LAYTON: Well, thank you for your 15 comments.

16 Is there someone else on the line?

17 THE OPERATOR: Yes. Charles Langley, 18 Public Watchdog, your line is open. Charles Langley, 19 could you check your mute button, please?

20 (No response.)

21 I'll move on. Chris Gorman, your line is 22 open, ma'am.

23 MS. GORMAN: Yes. I'm a concerned citizen 24 living within the 50-mile radius of San Onofre. I've 25 been following this for some time.

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105 1 My understanding is that the licensee is 2 planning to resume transferring these containers into 3 storage the middle of this month, and that's long 4 before you finish your evaluation on this issue.

5 And also, I'm very concerned about this 6 retainer guide ring. I think that is an accident 7 waiting to happen, and that is both a design and a 8 manufacturing problem which is being overlooked, 9 because your comment a little while ago was that 10 you're focusing, when it comes to that retainer guide 11 ring, you're focusing, you're looking at that as a 12 misalignment issue, which I believe you're relating 13 that just simply to lack of proper training and 14 operating procedures. But I really believe that that 15 is a definite both design and manufacturing problem.

16 It's an accident waiting to happen.

17 Right now, you have a container, a -- what 18 would you -- I guess the MPC sitting there above 19 ground waiting to be downloaded. I'm very concerned 20 about what's going to happen when they go to download 21 that, even if they do have better training, because of 22 the design.

23 And also, the thing that I think is 24 critically important, a lot of what Mr. Singh was 25 saying about these pins and them not being necessary, NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N.W.

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106 1 and that the cooling will happen in a, you know, 2 adequate way, that's all pretty much theoretical, as 3 far as I'm concerned, because unless you actually go 4 in there and look -- you need to go inside and 5 actually inspect. And my understanding is that, once 6 it's downloaded, they can't be inspected. That's a 7 real concern.

8 I think there's a huge, big issue here.

9 And if you just narrow it down to the fact that these 10 are just, oh, these unnecessary pins that don't matter 11 anyway, it's not a safety issue, and if you, then, 12 say, okay, well, we're just going to say this is okay 13 and move on and continue with the downloading, you're 14 really overlooking all the much bigger, major 15 problems.

16 And I would like you to address these and 17 specifically answer me back about this retainer guide 18 ring and the fact that the, you know, the design and 19 manufacturing is substandard and about inspecting 20 inside.

21 MR. LAYTON: Yes, thank you, Ms. Gorman.

22 What I would offer is that the issues that 23 you're bringing forward really have more relevance to 24 the enforcement action that is going to be proceeding 25 very shortly for the misalignment event at San Onofre.

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107 1 I think we have time for one more 2 question.

3 THE OPERATOR: Marvin Lewis of the public, 4 your line is open, sir.

5 MR. LEWIS: Thank you very much. I 6 appreciate that you're keeping it open for one more 7 question from the public. This is supposed to go on 8 until five o'clock. It's only 4:15 on my clock. I 9 sure would like to hear other questions from the 10 public.

11 My question is a simple one. First of 12 all, this Dr. Singh spoke for quite a while, over an 13 hour1.50463e-4 days <br />0.00361 hours <br />2.149471e-5 weeks <br />4.9465e-6 months <br /> from my watch, about various subjects. And one 14 of the subjects he brought up was very, very 15 interesting to me because I've been bringing it up a 16 lot, too; namely, the manufacturing stresses that 17 occur are not watched and not reported on.

18 I don't know if you have any idea what 19 manufacturing stresses are, but let me give you an 20 example. Many people leave their car out at night, 21 come back in the morning, and the window is broken.

22 And sure enough, nobody has threw rock; nobody touched 23 that window. The manufacturing stresses were enough 24 to break a window on a car.

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108 1 can do a heck of a lot. And since Dr. Singh brought 2 it up and pointed out how deficient the requirements 3 are on the guidances, namely, the books that the NRC 4 puts out to help manufacturers and licensees meet 5 these safety requirements. They're called "guidances" 6 or "guides". And Dr. Singh pointed out himself that 7 there was not even one mention of manufacturing or 8 manufacturing defects in the whole schmear.

9 I think that's a pretty important thing to 10 look at, and I hope you will before we have an 11 accident, and it shows that something we didn't even 12 worry about, namely, hanging maintenance tags, can 13 destroy an entire nuclear power plant. Well, residual 14 stresses can destroy a lot more than a simple 15 canister, and we're not looking at that. And I really 16 feel it's deficient. And so has Dr. Singh pointed out 17 it's deficient that you're not looking at the 18 manufacturing problems, the manufacturing stresses.

19 And I hope you will do so.

20 I'm not saying that's the only error, but 21 since that's an error that was pointed out by Dr.

22 Singh himself, I hope that you get after it and do 23 something about it.

24 Thank you.

25 MR. LAYTON: Thank you.

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109 1 And we have exceeded our 30-minute 2 timeframe for public comments. So, I would offer that 3 we are adjourning today.

4 Thank you.

5 (Whereupon, at 4:21 p.m., the proceedings 6 in the above-entitled matter were adjourned.)

7 8

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