ML030410166

M030204-Briefing on NRC Lessons Learned: Davis-Besse Reactor Vessel Head Degradation

ML030410166
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Site:	Davis Besse
Issue date:	02/04/2003
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M030204
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1 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

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BRIEFING ON LESSONS LEARNED DAVIS-BESSE REACTOR VESSEL HEAD DEGRADATION

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ROCKVILLE, MARYLAND

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TUESDAY, FEBRUARY 4, 2003

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The Commission met in open session at 2:00 p.m., at the Nuclear Regulatory Commission, One White Flint North, Rockville, Maryland, the Honorable Richard A. Meserve, Chairman of the Commission, presiding.

COMMISSIONERS PRESENT:

RICHARD A. MESERVE Chairman of the Commission NILS DIAZ Member of the Commission GRETA J. DICUS Member of the Commission EDWARD McGAFFIGAN Member of the Commission JEFFREY S. MERRIFIELD Member of the Commission

(This transcript produced from electronic caption media and audio and video media provided by the Nuclear Regulatory Commission.)

2 STAFF AND PRESENTERS:

H. PETER BURG Chairman & CEO, FirstEnergy GARY LEIDICH Executive VP, FirstEnergy LEW MYERS COO, FirstEnergy L. WILLIAM PEARCE VP Oversight, FirstEnergy ROBERT SAUNDERS Pres. & CNO, FirstEnergy JOHN "JACK" GROBE NRC IMO 0350 Panel, Chairman BILL DEAN NRC IMO 0350 Panel, Vice Chair JIM DYER NRC Region III Administrator WILLIAM KANE DEDO WILLIAM TRAVERS EDO PAUL GUNTER Director, Reactor Watchdog Project, NIRS ALEX MARION Director, Engineering Nuclear Energy Institute JERE WITT County Administrator, Ottawa County, State of Ohio

3 1 P-R-O-C-E-E-D-I-N-G-S 2 (10:29 a.m.)

3 CHAIRMAN MESERVE: Good afternoon. The 4 head corrosion at the Davis-Besse reactor in Ohio is 5 one of the most serious recent events in the NRCs 6 history. A few weeks ago the Commission heard from 7 the NRC staff concerning the work of the NRCs own 8 lessons learned task force.

9 The focus of that meeting was on the 10 actions that the NRC should take as a result of this 11 incident to improve its own processes and procedures.

12 The Commission has endorsed the implementation of over 13 50 recommendations arising from the task forces work.

14 Todays meeting will focus on the actions 15 by the licensee and the industry. The Commission will 16 hear first from FirstEnergy, the licensed operator of 17 Davis-Besse. The second panel will consist of staff 18 involved in the inspection of Davis-Besse in 19 connection with resumed operation. The third panel 20 will consist of various stakeholders with an interest 21 in the Davis-Besse incident.

22 We are not here today to address whether 23 or when operation of the Davis-Besse reactor should be 24 allowed to resume. That is a matter that is the 25 subject of continuing work by the licensee and

4 1 inspection by the staff. Our aim is to examine the 2 progress in the resolution of the various issues 3 raised by the Davis-Besse event.

4 This meeting is part of the NRCs 5 aggressive efforts to ensure that the Davis-Besse 6 event is carefully evaluated and that the 7 circumstances that gave cause to it are not repeated.

8 This will be the second public Commission meeting on 9 the subject, and, of course, all of the Commission 10 have been actively following the efforts by the staff 11 and the licensee very carefully.

12 The staff, in turn, has been actively 13 engaged in examining every aspect of the event, and at 14 last count has held over 40 public meetings to address 15 the issues. The NRC is taking this event very 16 seriously.

17 At the table as our first panel are 18 various representatives of FirstEnergy. They include 19 Mr. Peter Burg, Chairman and Chief Executive Officer; 20 Mr. Robert Saunders, President and Chief Nuclear 21 Officer of the FirstEnergy Nuclear Operating Company; 22 Mr. Gary Leidich, Executive Vice President of FENOC; 23 Mr. Lew Myers, Chief Operating Officer; and Mr.

24 William Pearce, Vice President of Oversight.

25 We are interested in the actions that

5 1 FirstEnergy has taken since the identification of the 2 vessel head degradation to restore the facility, to 3 address the issues identified in the root cause 4 evaluation, and to demonstrate compliance with NRC 5 requirements.

6 Mr. Burg, you may proceed.

7 MR. BURG: Thank you, Chairman. Chairman 8 Meserve and members of the Commission, as the Chairman 9 already indicated, I am Pete Burg, Chairman and Chief 10 Executive Officer of FirstEnergy, and we do want to 11 thank you for the opportunity to be here today.

12 Obviously, were disappointed by the 13 problems that have occurred at Davis-Besse, but were 14 here to tell you that were encouraged by the -- in 15 the improvements that we have made that we believe 16 will help ensure a safe and reliable return to service 17 of the facility.

18 Weve already introduced our senior 19 management team in place, so I dont do that. We will 20 try to share today with you some perspectives on the 21 lessons that we think weve learned at Davis-Besse, as 22 well as lessons that we think can help others in the 23 industry. And well discuss the principal 24 improvements that weve been making to address the 25 technical and human performance issues at our plant.

6 1 As you may know, FirstEnergy gained full 2 ownership and operational control of Davis-Besse, as 3 well as Perry, in November of 1997 following the 4 merger between Centurion Energy and Ohio Edison that 5 formed our company. We had a number of challenges to 6 overcome in our nuclear operations as we saw it, 7 including making much needed improvements at the 8 Beaver Valley facility after gaining full operational 9 control of that unit in 1999.

10 We believed that Davis-Besse, from all 11 indicators, was a strong performer. The plants 12 material condition and overall performance was solid 13 on paper. Clearly, that turned out not to be the 14 case.

15 While safety has always been a top 16 priority at our company, the Davis-Besse situation 17 underscored the fact that safe nuclear operations 18 require an unrelenting, uncompromising commitment to 19 safety throughout our nuclear program. The highest 20 levels of productivity are meaningless if theyre not 21 achieved with a strong focus on safety.

22 And as our management root cause analysis 23 report indicated on what happened -- concluded what 24 happened at Davis-Besse, former management at the 25 plant became complacent and isolated and were living

7 1 off past successes and did not have the right safety 2 focus.

3 So what are we doing to help ensure that 4 this does not happen again? I think you know weve 5 made some fundamental changes in the personnel and key 6 systems and programs. We added a new senior executive 7 team, completed upgrades to safety-related systems, 8 well be adding a new leak detection monitoring system 9 prior to restart, and implemented extensive changes to 10 policies and programs that affect operation of these 11 systems.

12 As Bob Saunders will discuss in more 13 detail in a minute, these changes include enhancements 14 to the FENOC and site management structure and a 15 revised safety policy and safety conscious work 16 environment policy.

17 It was never our intent that performance 18 goals set for Davis-Besse be achieved without a focus 19 on safe operations. Now more than ever we recognize 20 the critical role our safety culture plays in our 21 nuclear program.

22 To ensure that we maintain priority of 23 safety over production, weve learned that it is 24 absolutely essential to have a thorough system of 25 checks and balances, from the control room to the

8 1 board room. It is clear to us now that this was not 2 the case when it came to Davis-Besse.

3 Under the original structure of FENOC, 4 which was formed in 1998, site vice presidents 5 reported directly to the President of FENOC, who was, 6 in turn, the direct and really only link, you might 7 say, to corporate, and to the FirstEnergy Board of 8 Directors. Oversight and self-regulation standards at 9 all of our plants must be consistent, and in hindsight 10 the original structure of FENOC was not sufficient.

11 Obviously, weve made some significant 12 changes. Among the most important I think is the 13 addition of our Vice President of Oversight, Bill 14 Pearce, who brings 35 years of experience from our 15 Beaver Valley plant and other nuclear facilities 16 around the country. Bill reports directly now to 17 FENOC President Bob Saunders, and importantly I think, 18 and maybe uniquely, to our Boards Nuclear Committee.

19 So he meets directly with them.

20 The Board Committee, by the way, continues 21 to be fully engaged in our efforts to prepare Davis-22 Besse for a return to service and in monitoring the 23 performance of our other units, Perry and Beaver 24 Valley. Nuclear committee members, including Bill 25 Conway, who is with us today, are now meeting monthly

9 1 and have been onsite to meet with plant management and 2 observe restoration efforts underway at Davis-Besse.

3 They are also continuing to closely 4 monitor the changes that were making throughout FENOC 5 as we work to restore confidence in our nuclear 6 program. And theyre doing so with the full support 7 of our Board of Directors, which has reiterated that 8 safety is the top priority of the companys nuclear 9 operations through passage of a recent formal board 10 resolution.

11 However, we also recognize that actions 12 are going to speak louder than words, and weve taken 13 many steps to help ensure the safe and reliable 14 operation of all of our nuclear units, including the 15 restructuring of FENOC. Its new structure will play 16 a key role in our future success.

17 In addition to our new oversight 18 capabilities, FENOC has also named Lew Myers as Chief 19 Operating Officer. As you know, Lew is a seasoned 20 nuclear professional with more than 35 years of 21 experience in the nuclear industry, including stints 22 at Perry and Beaver Valley, as well as other 23 facilities.

24 Weve also added Gary Leidich as Executive 25 Vice President, who brings a unique industry

10 1 perspective with him from his years at INPO. These 2 and other new management positions have brought depth, 3 experience, and talent that we need, and also provide 4 the strong, centralized oversight of nuclear 5 operations that was lacking before. And our new 6 organizational structure is helping address the many 7 management and human performance issues that 8 contributed to the problems at Davis-Besse.

9 Davis-Besse management had become 10 complacent and lost their sense of accountability and 11 ownership. And with our imperfect system of checks 12 and balances, we didnt really recognize the cultural 13 issue or understand just how powerful a force it was 14 in leading to the challenges that were overcoming 15 today, including instilling a keen sense of 16 accountability and ownership in all of our nuclear 17 plant employees.

18 Today were continually driving home the 19 message that safety is our top priority and that the 20 corporation never expects it to be compromised for the 21 sake of production. I personally delivered this 22 message at recent meetings with every one of our 23 nuclear employees at all three sites, and we continue 24 to reinforce that as nuclear operators we must 25 remember the extraordinary responsibility that we have

11 1 and recognize that responsibility every single minute 2 that were on the job.

3 We now have a greater appreciation for the 4 fact that we must get the job done right the first 5 time to regain the confidence of our customers, 6 regulators, employees, investors, neighbors, in our 7 nuclear program.

8 Thats an overview of what were about to 9 tell you, Chairman. Now Id like to turn it over to 10 Bob Saunders, who will give you, really, an update on 11 our new safety policy and related procedures.

12 Thank you.

13 MR. SAUNDERS: Thank you, Pete.

14 Mr. Chairman, members of the Commission, 15 I am Bob Saunders, President and Chief Nuclear Officer 16 of FirstEnergy Nuclear Operating Company.

17 What Id like to provide more detail on is 18 the changes that we have made at the corporate level 19 to make sure an event like this never happens again at 20 any of our FENOC facilities.

21 First, as Pete has already mentioned, our 22 new organization. Gary Leidich, as Executive Vice 23 President, will develop and control all of the 24 processes and programs we use to operate our plants.

25 Gary will ensure that these programs and processes

12 1 meet high industry standards and that they are updated 2 and maintained current as appropriate.

3 Lew Myers, as our Chief Operating Officer, 4 will implement these programs and processes and drive 5 improvements at our plants. Lew will also continually 6 assess these programs to make sure theyre effective 7 and properly implemented, and that there is ownership 8 at the facilities for these programs and processes.

9 Just one example of these programs, and a 10 good one, is our much improved boric acid control 11 program. We view this as being the best in the 12 industry currently, and it is well implemented at both 13 of our sites that use boric acid. And we recently 14 successfully used it for a head inspection at Beaver 15 Valley Unit 1.

16 Finally, Bill Pearce, our independent Vice 17 President of Oversight, will ensure that all of this 18 happens.

19 I also sponsored an independent root cause 20 team to investigate the management issues, to be 21 certain that they were properly identified and 22 resolved. The report was completed last August, and 23 it found that we had a less than adequate safety 24 focus. To correct this weve issued a new nuclear 25 safety policy, and we have trained all of our

13 1 employees on it.

2 The policy is focused on commitment of the 3 corporation, of management, and the individuals at the 4 facilities. Each of those levels has attributes which 5 we can assess for effectiveness and sensitivity for 6 nuclear safety.

7 As Pete said, the highest levels of 8 productivity are meaningless if they are not achieved 9 safely, and were committed to never allowing 10 productivity considerations to prevail over safety.

11 In fact, weve revised our incentive compensation 12 program for all nuclear employees, including myself, 13 linking it directly to safety measures.

14 Now more than ever we recognize the 15 importance of a strong safety conscious work 16 environment. We have just recently completed training 17 with all of our supervisors on this very important 18 topic to help them ensure employees feel free to raise 19 concern. And thats not to say our employees didnt 20 raise concerns before, because they did. Through our 21 corrective action program, our employees identified 22 boric acid on the head.

23 However, the former plant management 24 failed to recognize the significance of these reports, 25 and, therefore, did not take appropriate corrective

14 1 actions. But I think the important thing here is to 2 recognize that our employees have always raised safety 3 concerns.

4 In the human resource area, weve named an 5 experienced corporate human resource professional as 6 our FENOC HR manager, with just a total focus towards 7 the nuclear organization. We have strengthened our 8 Leadership in Action training program, which develops 9 all of our supervision, to have a much stronger focus 10 on nuclear safety, including a profound respect for 11 protecting the reactor core.

12 Weve added two new competencies to our 13 employee appraisal program -- nuclear professionalism 14 and nuclear safety consciousness.

15 What does all of this mean for us today 16 going forward? It means that every day when employees 17 come to the plant they will have a clear vision in 18 their minds of the unique nature of the technology and 19 the special respect that it demands of the 20 professionals who manage it. As long as we keep that 21 vision in our minds, we will have the safety culture 22 that we need.

23 Thank you for your attention. And with 24 that, I would like to turn it over to Gary Leidich.

25 MR. LEIDICH: Thank you very much, Bob.

15 1 Im Gary Leidich, Executive Vice 2 President, FirstEnergy Nuclear Operating Company.

3 Good afternoon.

4 As Bob indicated, FirstEnergy Nuclear, 5 FENOC, is moving forward by examining how we do 6 business in all areas. Id like to specifically 7 address how were implementing changes that centralize 8 and standardize our support functions at the FENOC 9 corporate level, but first lets step back.

10 One of the first things that we did -- and 11 this is late last summer -- was take a look at Davis-12 Besse engineering to ensure that we had strong 13 technical rigor and ownership. These were issues that 14 were contributors to the overall RPB head incident.

15 And to ensure that our engineering personnel were 16 approaching their work with the highest possible 17 standards.

18 At about that time, we issued Principles 19 and Expectations for Engineering, which is a handbook 20 which applies to all FENOC engineering personnel at 21 all three stations and the corporate office. And this 22 establishes strong and rigorous standards for the work 23 that we do every single day in the engineering 24 organization.

25 We have also implemented a new standard

16 1 engineering organization; again, one that applies to 2 all three of our facilities. We developed this 3 organizational template by benchmarking the industry.

4 This benchmarking included a high-level 5 review by industry engineering executives from the 6 major nuclear utilities, and the result of this effort 7 is essentially really an industry best practice 8 composite organization for engineering. We were able 9 to take the best practices from what we saw all over 10 the United States, collect it into one standard 11 template, and thats our approach for a common 12 organization in a design area, system engineering, and 13 plant support areas.

14 This standard template for organization 15 for engineering is now in place at all three FENOC 16 stations. And as we go forward, were working towards 17 standardizing other organizations in the fleet --

18 operations, maintenance, and so forth -- across our 19 three stations. This approach ensures that we have 20 well-defined responsibilities, very clear 21 accountabilities, and really it facilitates a fleet-22 wide cohesiveness, an approach that we didnt have 23 before.

24 In addition, as Bob indicated, weve 25 established a central corporate organization at FENOC.

17 1 The new organization here centralizes activities, 2 centralizes where it makes sense, areas such as 3 equipment support, component expertise, fuel design, 4 and so forth.

5 More importantly, this standardization 6 also provides across our fleet a standard approach for 7 programs and processes. Program managers in the 8 corporate office will direct program development, and 9 they will follow up -- again, part of the checks and 10 balances -- to ensure that were implementing our 11 programs in the field.

12 A recent example of the company standard 13 thats now in place across FENOC is our revised 14 problem-solving process. In fact, we were in a 15 meeting yesterday at Davis-Besse, and the operations 16 manager indicated that this was a watershed event, to 17 be able to rigorously approach problem-solving, to 18 ensure that problems are adequately handled at the 19 right level in the organization.

20 Like many nuclear utilities, we previously 21 had in place a consensus process for establishing 22 common processes across our fleet. We realized, as 23 others have realized, that a consensus process doesnt 24 always focus on the best industry practices. It has 25 not provided us with sufficient checks and balances

18 1 for implementation; were fixing that.

2 Industry best practices is our goal, and 3 implementation will be verified now at the FENOC 4 corporate level. An example of this approach is the 5 Engineering Assessment Board, which provides an in-6 line independent review of engineering products at 7 each of our facilities.

8 This board is really an industry 9 recognized best practice from our own Perry plant, and 10 weve now applied that practice to Davis-Besse and 11 Beaver Valley. It helps us assure that our 12 engineering products are the highest possible quality 13 in all cases.

14 Overall, our centralized approach at the 15 corporate FENOC level, which is well underway, will 16 help us achieve and sustain strong, safe, and reliable 17 operations at all of our facilities.

18 Thank you for your attention. Id like to 19 turn the program over to Lew Myers. Lew?

20 MR. MYERS: Thank you, Gary.

21 Im Lew Myers, the FENOC Chief Operating 22 Officer, and Acting Vice President of our Davis-Besse 23 power station.

24 As you know, in May of last year, we 25 initiated a seven-step return to service plan that was

19 1 designed to ensure safe, reliable return to service, 2 and then safe and reliable operation of our plant.

3 Under that plan, we have made -- we have 4 taken several key steps toward achievement of this 5 goal, pending the NRCs approval of restart. Today, 6 I would like to provide you several areas that we have 7 taken actions in.

8 The first action is improvement in material condition.

9 Next, actions to improve the management personnel 10 performance. And, finally, actions that we have taken 11 to improve the performance of several of our programs 12 and procedures.

13 First, we focused on the material 14 condition. We opened and then resealed our 15 containment building to install our new reactor vessel 16 head. A new reactor vessel head has been thoroughly 17 examined, and subsequently we installed a new service 18 structure on it. Finally, the reactor vessel head and 19 assembly were aligned to the reactor vessel flange to 20 ensure it is ready to operate.

21 Next, we performed a comprehensive 22 inspection on our safety-related systems to address 23 equipment problems and ensure that our systems will 24 operate as designed. Additionally, beyond these 25 requirements, we refurbished two of our reactor

20 1 coolant pumps, refurbished our high pressure feedwater 2 heaters, defueled our reactor, and then drained down, 3 so that we could perform preventive maintenance on the 4 first valves off the reactor coolant system, and then 5 inspected all of our fuel to ensure quality 6 performance.

7 Now, with the new reactor vessel leak 8 monitoring system, the containment sump strainer 9 thats new, and our new leak rate monitoring program, 10 Davis-Besse has safety margins that I believe are 11 truly unique.

12 Second, we recognize that those safe and 13 reliable operations of the Davis-Besse plant will 14 depend much on unit performance as much as good 15 equipment performance. To ensure that we have the 16 highest standards of performance in both areas, we 17 have taken a number of key steps, including 18 implementation of fundamental changes to our 19 organizational structure.

20 Obviously, the former Davis-Besse 21 management was both isolated and did not have the 22 proper safety focus. The new management team, the 23 implementation of our management development program, 24 and the oversight capabilities will ensure that we 25 have confidence to move forward in the future.

21 1 Our new senior team is strong, proven, and 2 technically competent. The management team has over 3 450 years of nuclear experience, and, more 4 importantly, they have proven leadership performance.

5 Fifteen of these managers are new to Davis-Besse. All 6 but one are new to their position. Nearly all have 7 senior reactor operator licenses or certification.

8 We have improved the operability 9 determination standards at our plant. More than 200 10 plant operators and engineers have completed our new 11 operability qualifications to help ensure that 12 operational issues are properly evaluated. We provide 13 your staff with our approach to ensuring our safety 14 culture commitments are being properly implemented.

15 We provided you with a management and 16 human performance root cause in August of 2002. We 17 have taken many actions there. We have revised our 18 business plan to strengthen our focus on safety. We 19 have revised our vision to show safety as the first 20 cornerstone. We have prepared a policy on safety and 21 trained all FENOC employees, not just Davis-Besse, all 22 FENOC employees. We have developed attributes for our 23 management team to assess our effectiveness.

24 Third, we have made fundamental 25 improvements to our programs and procedures designed

22 1 to help with human performance and ensure that 2 activities are performed as required. For example, we 3 have strengthened our corrective action program to 4 ensure an open line of communication with our 5 employees. This is the line management program that 6 allows employees to address their concerns on safety 7 and reliability issues.

8 We now provide an e-mail feedback to 9 employees that identifies a problem to ensure they 10 understand our corrective actions. We allow, through 11 our employee concerns program, anonymous condition 12 reports as a method of confidentiality.

13 Weve enhanced our corrective action 14 review group, which now includes the plant manager, 15 who serves as chairman, as well as the operations and 16 engineering managers. This group is critical, because 17 it monitors the programs to ensure that the condition 18 reports are properly classified and then evaluated.

19 We have retrained and recertified all of 20 our root cause evaluators -- every one. I believe 21 that if this program had been properly utilized we 22 would not be sitting here today.

23 A new nuclear operating procedure 24 formalizes our approach to problem-solving, and were 25 using it. This procedure implements a consistent and

23 1 comprehensive approach to addressing plant issues such 2 as degrade plant equipment.

3 Weve revised our boric acid program. It 4 now has the proper inspections, criteria for 5 identification and evaluation of any signs of boric 6 acid on plant equipment. We have implemented a 7 stringent qualification program for boric acid 8 inspectors -- our own program.

9 We have also completed the operations root 10 cause and have an improvement plan. This plan is 11 designed to ensure that operations is in a leadership 12 role. We have approved a new command and control 13 policy at all three of our plants that addresses the 14 role of our shift manager.

15 We have implemented a restart readiness 16 review program. Our managers formally sit down as a 17 group to assess our readiness to move forward as we 18 change plant operating conditions. We assessed the 19 implementation of our safety policies, our management 20 commitment to these policies, and the individual 21 implementation -- individuals implementations of our 22 programs and procedures. These are the basic 23 commitments of the safety culture model that we 24 provided your staff.

25 In summary, weve made solid progress to

24 1 return the plant to service. We are preparing now to 2 reload our reactor core and then pressurize our 3 reactor, to both test and inspect our equipment. As 4 we move forward, were benchmarking our efforts to the 5 industry to ensure that our approach to operating, 6 inspecting, and maintaining the plant meets high 7 industry standards.

8 We are proud of the progress weve made to 9 date, the actions we have taken to address plant 10 equipment, the actions we have taken to improve our 11 management and human performance. The actions we have 12 taken to anchor our changes and standards in our 13 procedures and programs will ensure that Davis-Besse 14 station is returned to service with sustained and 15 reliable operations. We wouldnt pursue its return to 16 service otherwise.

17 Thank you for your attention, and I will 18 turn it over to Bill Pearce, our Vice President of 19 Oversight.

20 Thank you.

21 MR. PEARCE: Thank you, Lew.

22 Good afternoon. I would like to review 23 some important initiatives in the area of oversight at 24 FENOC. First, we established new standards and 25 expectations for quality assurance. The objective was

25 1 to ensure that assessments are timely, intrusive, 2 performance-based, and add value to the organization.

3 The requirements of 10 CFR 50, Appendix B, 4 are at the heart of our work, of course, so our focus 5 must always be on nuclear safety, particularly as it 6 relates to fission product barrier control, reactivity 7 management, and the control of radioactive material 8 and radiation exposure.

9 In my newly-created position, I report 10 directly to the FENOC President and the Nuclear 11 Committee of the Board of Directors, assuring 12 independence from such pressures as cost and schedule.

13 While as a company we must pay attention to such 14 issues, they must not interfere with matters related 15 to nuclear safety.

16 So in terms of quality assurance, they are 17 not relevant. Intrusive and rigorous quality 18 assurance oversight is provided through our assessment 19 process. The independence of the quality assurance 20 organization allows quality assurance to reach 21 independent conclusions without influence of the line 22 organization.

23 We have reevaluated this process and are 24 making the appropriate improvements. These actions 25 validated our baseline activities, and we will anchor

26 1 them in our inspection processes. Like other 2 departments in the company, all quality assurance 3 personnel have been trained to establish, maintain, 4 and promote a work environment where safety concerns 5 are raised freely, without fear of retaliation.

6 Further, we have reaffirmed the authority 7 and responsibility of quality assessment to stop 8 unsatisfactory work, based on safety issues or other 9 reasons, within the quality assurance purview.

10 The independent company Nuclear Review 11 Board provides oversight of the quality assessment 12 function. We have strengthened this board by adding 13 new members with extensive experience in Babcock and 14 Wilcox reactors, like the Davis-Besse reactor.

15 Further, we refocused this board on reviewing elements 16 of nuclear safety, such as fuel integrity, reactor 17 coolant system integrity, and containment integrity.

18 Now Id like to address the most important 19 issue. That is, safety-conscious work environment.

20 We recognize that this area is key to long-term safe 21 operation of the plant. As part of our improvement 22 effort, we completely overhauled our process for 23 raising and addressing safety concerns.

24 Changes include bringing in an experienced 25 employee concerns manager and independent professional

27 1 investigators to resolve safety concerns identified by 2 our employees.

3 In summary, we have trained management on 4 this new process, emphasizing the importance of 5 recognizing and enforcing safety conscious work 6 environment expectations throughout the organization.

7 Thank you. And now Mr. Burg will close.

8 MR. BURG: Just for a second or two, if I 9 could, Mr. Chairman. I want to, again, thank you for 10 the opportunity to be here and share what we think are 11 lessons learned at Davis-Besse, and to discuss the 12 fundamental changes and improvements that we think 13 weve made to ensure return in a safe and reliable way 14 of the unit to service.

15 We recognize that the safe and reliable 16 operation of Davis-Besse will depend as much on human 17 performance as it will on equipment performance, and 18 were committed to never failing in either one of 19 these areas again. I will personally meet with all of 20 our shift managers at each of our units before we 21 restart to drive this point home.

22 As youve heard today, were greatly 23 enhancing our safety culture with the new safety 24 policy and related programs and procedures, 25 strengthening our management team and oversight

28 1 capability, and implementing key programs and system 2 improvements. We are making solid progress.

3 In closing, let me stress that we will 4 only return the plant to service when we are convinced 5 that it will operate safely and reliably.

6 Thank you very much for your attention.

7 CHAIRMAN MESERVE: Thank you for a helpful 8 presentation.

9 The Commission alternates how we do our 10 questioning, and I think its -- today is Commissioner 11 McGaffigans turn to go first.

12 COMMISSIONER McGAFFIGAN: I didnt realize 13 that, Mr. Chairman, so Ill try to start out here.

14 Let me focus on the safety culture issue 15 and try to get you to tell me a little bit more. I 16 was not at the meeting last week where Dr. Haber, if 17 Im pronouncing her name right, presented what she was 18 planning to do there. But Ive seen some of the 19 accounts of the meeting.

20 How is her effort going to factor into 21 this -- your restart decisions?

22 MR. MYERS: Well, you know, we think its 23 up to our management to ensure that we have the right 24 safety culture. So were using her as an independent 25 consultant. We have her reporting through our human

29 1 resources group, so she can maintain her independence.

2 Now, we have a model that weve adopted.

3 It starts out with policy-level commitment, 4 management-level commitment, and then employee 5 commitment. And if you go look at the attributes we 6 have for each one of those, they are somewhat 7 subjective on the first two and very objective on the 8 third one, where we can actually measure performance.

9 Its our intention to take the methodology 10 that Dr. Haber provides us, look at that methodology 11 to help strengthen our model, and then take the 12 information that she provides us also, and what she 13 will provide us is areas where she thinks that she is 14 seeing improvements in safety culture and areas 15 needing improvement. So well take that information 16 and filter it into our plans for startup.

17 COMMISSIONER McGAFFIGAN: She has worked 18 at other nuclear facilities and has a methodology that 19 she is going to use at your facility that she has 20 tried out in other places?

21 MR. MYERS: Thats correct. Her 22 methodology is a proven, we think, methodology. Its 23 a five-step process. I believe its called convergent 24 validity. And what you do is theres -- you go 25 through like interviews, you go through questioning,

30 1 you set in meeting, and you look for common 2 attributes. And when you find those common 3 attributes, you have convergence of an issue. So the 4 model that she uses is the convergent validity 5 approach.

6 COMMISSIONER McGAFFIGAN: And shes going 7 to interview about 10 percent of your workforce.

8 Shes going to have surveys with the rest of the 9 workforce. I think somebody -- and she has -- she has 10 colors. Everybody has colors -- red, yellow, green, 11 presumably, or some variation thereof.

12 If she has red findings, youre going to 13 get her report in the March timeframe. How will you 14 deal with that? You know, its a hypothetical, but 15 how do you -- it is conceivable that she will find 16 some real problems.

17 That was the case at Millstone. We had a 18 group there Little Harbor, that, you know, had some 19 things in the red initially, and they were not red by 20 the time restart occurred. So --

21 MR. MYERS: Well, you know, actually her 22 findings -- thats -- the color code system is our 23 color code system. And her findings -- shell provide 24 findings or issues and areas, and that may cause us to 25 take one of the attributes, for instance in

31 1 maintenance or operations or chemistry or something, 2 and term one of those attributes red or yellow.

3 Now, our restart -- our process, you know, 4 if you have red findings it requires immediate 5 management attention with a plan to go look at that 6 issue and try to fix it. So no, I wouldnt anticipate 7 that we would start up with any areas that are red.

8 COMMISSIONER McGAFFIGAN: How do you 9 prevent a focus on getting things done dominating 10 safety? What incentives -- I mean, there has been 11 concern in the past I know that people felt they had 12 to get something done and didnt feel that they were 13 being given the time to do it.

14 Now, my advice to you is to not do that 15 because every one of these plants that have had 16 problems, in our experience, any sort of schedule has 17 proven to be optimistic. But, what 18 incentives are you putting in place, so that people do 19 not feel overly pressed to get a particular job done 20 that particular day, to check off an item on a 21 checklist?

22 MR. MYERS: You know, there is two or 23 three things. Bob talked about our incentive programs 24 that weve changed already. If you go look at --

25 were stressing in our 4Cs meetings, which Ive now

32 1 met with over 500 employees at the plant.

2 And I meet with those employees for about 3 two hours at a time, and we stress consistently, you 4 know, just stop -- you know, really, the fastest way 5 to get the job done and the best way to get the job 6 done is do it correct the first time. And if it takes 7 longer, then one of the attributes in our management 8 model that we look at is the resources. The resources 9 is the right people, right amount of time, and the 10 right equipment. You know? Youve got to have all of 11 those things to get the job done right.

12 And, you know, recently, you know, weve 13 been looking at fuel load. And as a management team, 14 one of the things we have to do consistently is 15 demonstrate our ability to stop and take corrective 16 actions. And, you know, we made a decision to go and 17 fix several things prior to this fuel load. We think 18 there was defense in depth by having two trains of 19 decay heat, so we waited to get two trains of decay 20 heat.

21 So over and over again we have to be 22 willing to demonstrate to our employees that were 23 willing to take the time to do the job right. And we 24 think weve demonstrated that on several occasions.

25 Weve talked about our refueling crane

33 1 that we have, and, you know, we didnt get the 2 performance there that we wanted. So we delayed our 3 activities for several weeks while we went back on the 4 overhead crane and made sure it was in excellent 5 material condition before we went forward.

6 COMMISSIONER McGAFFIGAN: That was 7 actually an example, initially, of the opposite, 8 though, wasnt it? There was some haste in that 9 initially that led you to that stop work situation.

10 MR. MYERS: Well, it was actually an 11 example of one of our employees that -- you know, in 12 his mind he was trying to get the job done, he said, 13 you know, and in our mind we want him to do it right.

14 So we -- when we did a management walkdown -- one of 15 the key things that weve implemented is a strong 16 management observation program. And when we did the 17 management walkdown of that job, it didnt meet our 18 standards, so we just stopped and --

19 COMMISSIONER McGAFFIGAN: I think those 20 are strong signals to send, and I urge you to continue 21 to send them to all of your workforce. I know in 22 turnaround situations youre -- it is hard to get the 23 entire workforce, and you have contractors in addition 24 to your permanent employees all on the same 25 wavelength. And everything you can do to do that I

34 1 think is very important.

2 One last question, and it goes to the 3 incentive structure that I think Mr. Burg or somebody 4 talked to that put safety much more prominently in the 5 incentives of the senior executives.

6 I wont name the executive, but one 7 company that was in to see me recently had a safety 8 gate for bonuses for various levels of the plant. And 9 unless you met the safety goals, all of the other 10 incentives, which tended to be production incentives 11 -- and those are fair incentives, youre in a business 12 -- but all of the other incentives werent achievable 13 if you didnt get through the safety gate first.

14 I dont know how youve structured your 15 incentives at the current time, but do you have -- do 16 you think you have enough focus? That sounded to me 17 like a best practice, at least from the point of view 18 of a safety regulator. And are you comfortable that 19 you really do have enough safety focus in your 20 incentive structure at all levels of the plant now 21 that people will, you know, get the word through their 22 paycheck as well as through whatever you say to them?

23 MR. BURG: Yes, Commissioner. I really 24 believe that we do. I mean, there are certain goals, 25 not significant really for most levels of management,

35 1 that are corporate-wide. But the --

2 COMMISSIONER McGAFFIGAN: Right.

3 MR. BURG: -- ones that are associated 4 specifically with the plant weve done a lot of work 5 to ensure ourselves that theres a significant amount 6 of safety-related, people-related, human performance 7 type issues embedded within those programs. And were 8 very confident that thats in place.

9 But Ill also tell you that as we go 10 forward well -- its not -- not cast in concrete 11 either. If we find a better way to do it, it will 12 evolve over time as well.

13 COMMISSIONER McGAFFIGAN: Thank you, Mr.

14 Chairman.

15 MR. MYERS: You know, Id like to add to 16 that also, were fairly unique as a company. So a lot 17 of our goals and incentive programs go all the way 18 down to our first-line employees. So, you know, they 19 have exactly the same goals that I do. So if theyre 20 aligned properly, thats a good message.

21 COMMISSIONER McGAFFIGAN: That is a good 22 way to do things. Thank you.

23 CHAIRMAN MESERVE: Commissioner 24 Merrifield?

25 COMMISSIONER MERRIFIELD: Mr. Chairman,

36 1 thank you. Ive got some questions I want to ask. I 2 would like to start off by making a couple of comments 3 and observations.

4 Here for our part at the NRC, over the 5 course of the last month, I think there has been a lot 6 of interaction internally as well as a dialogue with 7 some of our external stakeholders about the decisions 8 that led -- the events that led to the decision as to 9 allow FirstEnergy to have an additional 45-day 10 extension of the inspections of the control rod drive 11 mechanism.

12 I think some of the attention to that has 13 -- takes us away from the underlying issue. And I 14 think the underlying issue is, irrespective of that 15 decision or not, it is my view that we would still be 16 here today having a panel discussing the issues 17 relative to the head and the head degradation. That 18 degradation did not take place over 45 days. It took 19 place over a long period of time.

20 The issues associated with that weve 21 talked about a little bit already internally with the 22 Commission, and I think we recognize weve got some 23 changes to make here as well. And I need not go over 24 those with the panel today.

25 I appreciate the comments made by Mr. Burg

37 1 and the recommitment of FirstEnergy to having a high 2 level of safety consciousness in moving forward. I 3 think thats the right signal in the right direction.

4 In terms of moving forward, obviously 5 there are the mechanical issues -- getting the head 6 fixed, making sure that the internals are where they 7 need to be in meeting our requirements, and the notion 8 of having an inspection team go in and be assured that 9 that is, in fact, the case.

10 The second thing is more subtle and 11 underlying and does go I think to some of the comments 12 that youve made today, and that is the issue of a 13 safety culture and having a recognition among your 14 staff that, in fact, safety is first.

15 It also goes to an issue of trust. That 16 is something that obviously is something once lost 17 does take time to reestablish.

18 I want to go into -- you talked a little 19 bit about the management changes that you have made 20 relative to the site and to FENOC, and those have been 21 extensive. Clearly, it brings with it a higher level 22 of expectation of performance in terms of safety.

23 Id like to have you go into a little bit 24 more detail in terms of how these expectations, as 25 well as the programmatic changes that youre making,

38 1 are going to become institutionalized in such a way as 2 if we were to, in fact, move forward and allow the 3 plant to be restarted that were not slipping back 4 into old routines. Is this change made more permanent 5 within the company?

6 MR. SAUNDERS: Let me just lead off. We 7 certainly plan to institutionalize our ability to 8 monitor and measure our safety culture. Lew talked 9 briefly about all of the indicators we have there in 10 a program that -- its in its infancy now. Were 11 working our way through it, trying to understand it.

12 It does have a very large subjective piece to it, but 13 there are very good objective measures.

14 So this program will be institutionalized 15 within FENOC across all three sites, and well do the 16 things that other people do on a regular basis as well 17 -- the safety culture surveys that are done, so we can 18 see if were progressing and we have the proper trend, 19 and that kind of thing. So its definitely in our 20 plan to institutionalize it, and we think were a 21 little bit on the cutting edge with what were 22 developing here -- an ability to measure and monitor.

23 COMMISSIONER MERRIFIELD: Lew, do you want 24 to add anything?

25 MR. MYERS: Well, I think theres two

39 1 parts, or maybe three. Gary talked about the 2 corporate organization that we have now. Basically, 3 hes going to own the programs. Im going to make 4 sure that we do good self-assessments and we implement 5 them properly. And on top of that, we have the new 6 oversight group thats looking over me.

7 So from a standpoint of isolationism, and 8 Davis-Besse was pretty well ran as an isolated plant 9 a few years ago, that wont happen again. And that 10 way we can show that what we inspect is what we 11 expect.

12 MR. PEARCE: Let me add one example to 13 that. Commissioner McGaffigan asked about, you know, 14 made some mention of Little Harbor. One of the people 15 that weve just added to the company Nuclear Review 16 Board, independent board overseeing what were doing, 17 was heavily involved in that. And they will go on in 18 the future and make sure that we have a focus in both 19 safety culture and safety conscious work environment 20 and continue to give us feedback.

21 Thats a program that will go forward, and 22 we tried to go out and hire people that have expertise 23 in that to ensure that that carries forward for a 24 period of time, not just focused on restart, but 25 actually this is focused after restart. So we want to

40 1 make sure that we are anchoring these changes so that 2 they will continue post-restart.

3 COMMISSIONER MERRIFIELD: Identification 4 of safety concerns and having a workforce that 5 recognizes that those items need to get into the 6 corrective action program is clearly vital, and you 7 mentioned that today.

8 But Im wondering -- obviously, the second 9 key component to that is having a corrective action 10 program that works. Are you -- can you talk to me a 11 little bit about the changes that youve made in that 12 program, in your equipment training program, to give 13 you a better -- earlier indication of potential 14 problems that may exist rather than relying on it to 15 manifest itself in an operational circumstance.

16 MR. MYERS: The corrective action program 17 is really our line management program. On top of that 18 we have the employee concerns program. Several 19 changes weve made -- basically, the old program was 20 being managed at a very low level, and we found that 21 our employees -- they identified over 20 CRs, 22 condition reports, that should have led us to the 23 right answer along the way that we had some leakage.

24 They didnt get properly characterized, 25 and they didnt get properly evaluated. Weve now --

41 1 the charter has completely changed at all of our 2 plants, so that our plant manager is the chair now.

3 Its not at a low level. The operations manager is 4 there, and the engineering manager is there. And then 5 we have our corrective action review group thats also 6 monitoring the owners of the corrective action 7 program, our implementation of properly classifying 8 CRs.

9 Now, weve strengthened our evaluation 10 process also. All of our evaluators have been 11 requalified. Now, we would expect that the program 12 that we have now -- were also giving feedback to the 13 individuals when they identify a problem how we 14 resolve it. They need to know that. That wasnt 15 there before. So they would identify the problem, and 16 they never got feedback on what we did with it.

17 So we believe that weve put some changes 18 in this process thats going to help our employees 19 help us do a better job. And it will also assure that 20 we have the right ownership as a management team to 21 ensure that our problems get -- that are identified 22 get properly characterized, evaluated, and then fixed.

23 MR. PEARCE: Let me add about the 24 indicators that when you asked earlier about the red 25 and green windows and --

42 1 COMMISSIONER MERRIFIELD: Right.

2 MR. PEARCE: -- those indicators about how 3 the corrective action program is working, and how 4 effective it is, are the inputs into -- some of the 5 inputs into some areas in the red and green 6 indicators. So, you know, we see those as very 7 important, and I want to make sure that those -- that 8 that program is well implemented, well understood, and 9 well used by the employees prior to restart.

10 MR. MYERS: Let me give you one other 11 thing that you asked about culture a while ago and the 12 corrective action program. We have an employee of the 13 month program. It has not been as effective as Id 14 like. We now have that -- were changing that as we 15 speak to be based on condition reports.

16 So people -- were going to take good 17 catches on condition reports that are safety issues 18 and collect those over the month. And then us, as the 19 senior management team, will make the employee of the 20 month a -- well pick those from good condition 21 reports, which is a completely different message than 22 we used to say -- send.

23 COMMISSIONER MERRIFIELD: Noteworthy 24 condition reports?

25 MR. MYERS: Noteworthy condition reports.

43 1 The margin of safety --

2 (Laughter.)

3 COMMISSIONER MERRIFIELD: You want to set 4 up a system that rewards people that are going to find 5 your most significant problems.

6 MR. MYERS: Thats right. Thats exactly 7 right.

8 COMMISSIONER MERRIFIELD: As we dealt with 9 the issues at plants in the past, the issues that 10 frequently come up are sufficient review of the --

11 during the operational readiness review to make sure 12 that there was an understanding that -- as to the 13 condition of the plant and identify issues, like the 14 sump issue which you have mentioned, to make sure that 15 those can be corrected appropriately.

16 There is the parallel issue of making sure 17 the items arent deferred, that items are, in fact, 18 addressed so the plant is in the appropriate operation 19 and safety condition. How are you dealing with those 20 twin issues -- problem identification and problem 21 resolution?

22 MR. BURG: Gary, go ahead.

23 MR. LEIDICH: My turn? Okay. The problem 24 identification was one where we really have -- and I 25 wont say overnight, but over the past several months

44 1 -- substantially lowered the threshold for 2 identification problems.

3 So what that really looks like and what 4 Ive seen elsewhere in the industry is that there is 5 a low threshold, so that people identify very minor 6 issues. Those go into this system and theyre 7 properly evaluated, properly coded, so we really 8 understand, you know, what those are.

9 So thats the first thing is ensuring that 10 theres the right threshold thats out there. We 11 substantially lowered that, particularly at Davis-12 Besse. Other stations were fairly low, but weve improved 13 it across the fleet.

14 The issue on deferrals is really aback to 15 what actions we take, not what words we have. And the 16 actions that weve taken in conjunction with this 17 restart are to go after many issues at Davis-Besse 18 that, quite frankly, we wouldnt have to tackle, but 19 that we are tackling -- issues such as the redesign of 20 the containment sump. We have made modifications to 21 valves at the station. We are making modifications to 22 diesel generators.

23 So many of the modifications that were 24 doing are "optional," but we felt it was very 25 important to send a strong message not only internally

45 1 but externally that were going to make changes to 2 this plant that sends the right message in terms of 3 what does and does not get deferred. So whether its 4 maintenance, modification work, weve tackled a 5 tremendous amount of work during this particular 6 outage at Davis-Besse, and its not our intent to push 7 things off into tomorrow.

8 So thats a matter of actions, and thats 9 a matter of involvement at the management level to 10 send those signals. And I will tell you, this 11 management team, as well as the management team at the 12 station, is very much involved in day to day.

13 And regarding your earlier question about 14 what makes a difference, what makes a big difference 15 is management engagement, management involvement. In 16 fact, Bill Pearce has some buttons he says -- a button 17 that says, "I know because I looked."

18 (Laughter.)

19 And thats a motto that weve got in all 20 levels of the organization. I dont think thats a 21 motto that, really, many plants have, but particularly 22 Davis-Besse didnt have it before.

23 There was a reliance on the process. And 24 what this really takes in this industry -- and what I 25 have seen and the rest of us have seen -- is a

46 1 tremendous amount of involvement by management at all 2 levels in operational issues, those that get 3 identified, what youre going to solve now, if you are 4 going to defer something why, and challenge that at 5 the right level in the organization.

6 COMMISSIONER MERRIFIELD: Thanks, Mr.

7 Chairman.

8 CHAIRMAN MESERVE: I think that from your 9 presentation you have made clear that you face the 10 challenge of really reinventing as part of your 11 business, and you obviously have some very severe 12 challenges in accomplishing that effectively and 13 youve done a lot of work to do that already.

14 Some of Mr. Leidichs comments presented 15 me with an issue I think that you no doubt have 16 thought about, but maybe you could help me. Youve 17 indicated that one of the things that youre doing is 18 to strengthen the corporate level organization that --

19 I can appreciate that that gives you a capacity for 20 standardization, gives you bench strength and skills, 21 but that is sometimes a danger -- that the people who 22 are at the plants, then, have lost their skills 23 because theyve now been centralized.

24 And you made the point just now that "I 25 know because I looked" and --

47 1 MR. LEIDICH: Right.

2 CHAIRMAN MESERVE: -- for the people who 3 are at distant corporate headquarters, they may not 4 have the opportunity to look. Theres got to be some 5 balance between the skills which are centralized and 6 those -- and the capacities you have at the plant.

7 How would you assess that? And are you sure you 8 havent overreacted?

9 MR. LEIDICH: Well, certainly, within the 10 last four and a half years at the Institute of Nuclear 11 Power, Ive seen a lot of examples of a variety of 12 different utilities approaches to this centralization, 13 whether its a strong central organizational approach 14 or whether its a very strong autonomous approach at 15 the individual station.

16 So as we look from our perspective at our 17 experience of trying to find the right spot, were 18 really adopting some fundamental principles. The 19 first of those is you centralize what makes sense, and 20 you provide corporate oversight, where necessary, for 21 appropriate level of checks and balances. I think the 22 key phrase there is checks and balances.

23 And if an organization is on its own in 24 terms of -- again, to your point -- identification of 25 issues and resolution of issues, and theres no checks

48 1 and balances there, theres no questioning, this 2 industry requires a questioning attitude.

3 And if theres no questioning of that, 4 either at the station or from an independent 5 organization such as oversight, which is corporate, or 6 a corporate program office, then those checks and 7 balances may lead to the wrong conclusions and the 8 wrong answers.

9 So its centralize what makes sense, 10 and I will tell you we are approaching it one issue at 11 a time. Were not setting up a large organization at 12 corporate. Right now weve got about a dozen folks in 13 the corporate office, strong program management, 14 leadership-type folks, as opposed to a lot of 15 individual contributors and implementers. Theyll be 16 there to provide leadership and oversight.

17 So were taking it one step at a time as 18 well, to make sure that we dont take the pendulum too 19 far over in the centralization, if you will. Its 20 important that the site recognize that they have the 21 responsibility for the day-to-day operation of the 22 facility. Its critical.

23 MR. SAUNDERS: When it comes to human 24 resources -- excuse me, Pete -- we started with a very 25 strong bench when we entered into this Davis-Besse

49 1 situation. Since then, Beaver Valley just recently 2 graduated a class of 26 licenses. Our Perry facility 3 graduated a class with over 10 licenses. And were 4 also actively recruiting from outside the 5 organization. Gary is a fine example of that.

6 So we recognize the need to have a senior 7 management team well experienced. So we develop 8 within, and were recruiting from outside as well.

9 MR. BURG: Mr. Chairman, also, just in 10 terms of lessons learned, I mean, I asked myself this 11 many times. I was -- after we took over operations of 12 the nuclear facilities, I was always very reluctant to 13 have a "centralized staff." In my mind, it was going 14 to create a bureaucracy that wasnt needed in my view, 15 that I thought that the people at the plant, you know, 16 would really know best.

17 You know, honestly, in hindsight, I think 18 that is one of the lessons that I have learned, that 19 you find the right balance in terms of some things 20 that make sense, like probably oversight, that you 21 centralize, and maybe some engineering functions that 22 you centralize. But you still want the plant to 23 operate -- you know, theyre going to operate the 24 plant, but there is a balance and were -- I think 25 were finding that balance now. But it is a lesson I

50 1 think Ive learned.

2 MR. MYERS: Which you cant have. I want 3 to add to this, too. We had a corrective action 4 program that we would have told you was identical to 5 all three of our sites. And Ive worked at all three 6 of them now. I want to tell you, the corrective 7 action program was not the same at Davis-Besse as it 8 was at Perry and Beaver Valley.

9 And one good example of that is the 10 operability determinations. The program that weve 11 worked so hard on now at Davis-Besse was called 12 operability justifications. Thats not the case at 13 our other two sites.

14 So even though the program we thought was 15 the same, it wasnt. My new job -- and through self-16 assessment and oversight, were going to make sure 17 theyre implemented the same.

18 CHAIRMAN MESERVE: One of the outcomes of 19 the root -- your root cause evaluation and of our own 20 lessons learned was that there was not an adequate 21 integration of operating experience with basically 22 significance evaluation. As you know, the corrosion 23 products were clogging filters, and, for whatever 24 reason, nobody was asking why, saying, "Theyll be 25 corroding. What could it be?"

51 1 It seems sort of self-evident after the 2 fact, but obviously there was a problem there. How 3 are you addressing that problem?

4 MR. SAUNDERS: I think fundamentally it 5 begins with the right sensitivity in the workforce for 6 exactly what our industry is all about and what sets 7 us apart, and thats the reactor core, and the right 8 sensitivity to the reactor core.

9 We didnt have that. And to me, thats 10 like fundamental in the nuclear safety policy. The 11 new policy is driving at that. So I think thats a 12 good entry-level step.

13 And then, as we said here I guess a number 14 of times, how does management demonstrate its 15 interested in safe operation? And thats by the 16 things we do. Weve got to walk the talk, and we were 17 not doing that before at Davis-Besse. But I think we 18 are today, and I think were doing it quite well.

19 So I dont think its complicated. I just 20 think it takes total commitment, and that commitment 21 is here.

22 MR. PEARCE: And maybe another way to 23 address it with another level is from oversight.

24 Weve made oversight independent, and the purpose of 25 that is so that we dont get involved with the same

52 1 issues and rationalize to ourselves over time like the 2 plant can get into when theyre trying to get a lot of 3 things done.

4 And I truly believe that we can stay 5 independent enough and questioning enough to bring 6 those issues to the plant when they have -- if we see 7 things that dont seem to make sense to us, and we 8 dont believe theyre handling them properly.

9 And if they still refuse to acknowledge 10 the issue that we -- you know, we now report all the 11 way up through the top of the company, and we will 12 take that route if we have disagreement -- Im 13 perfectly willing to go there if we think were right 14 about it.

15 MR. MYERS: Theres really three parts to 16 your question, I think. One is the corrective action 17 program. If we had properly classified and then 18 properly evaluated the issues that we had, then we 19 would have taken the right actions. We didnt do 20 that. I think we fixed that with our new charters, 21 with our evaluation process, and our performance 22 monitoring tools we have in place.

23 And then, with the oversight that we have, 24 and self-assessment, they should also catch those 25 things. So we have barriers now to keep that from

53 1 happening.

2 So, you know, if we would have done the 3 right evaluations, or quality oversight had said, "You 4 didnt do the right evaluations, come to the right 5 conclusions," we wouldnt be sitting here.

6 CHAIRMAN MESERVE: Thank you.

7 Commissioner Dicus?

8 COMMISSIONER DICUS: Thank you, Mr.

9 Chairman. Ive got three questions, and hopefully 10 they can be answered rather quickly.

11 I go to slide 15, and you mention that you 12 brought in a strong and technically competent 13 management team, a new team. And I think if I heard 14 you correctly, you said you have 15 people in new 15 positions --

16 MR. MYERS: Right.

17 COMMISSIONER DICUS: -- or a certain 18 number in new positions.

19 MR. MYERS: All but one are in new 20 positions.

21 COMMISSIONER DICUS: Okay. My question 22 goes to sometimes when you bring people in to new --

23 I mean were they -- did they come from they outside or 24 were they promoted from within? And sometimes when 25 you have a whole new team that comes in to new

54 1 positions, they have a learning curve. So what are we 2 doing?

3 MR. MYERS: This is an excellent question.

4 Well, two things. When we developed our return to 5 service plan we had some options. Fortunately, for 6 us, we had the ability to go to our other plants and 7 bring in some managers that we know that are good 8 performers and bring them over to our Davis-Besse 9 plant. If you look at our engineering manager, he 10 came from Perry. So a large portion of those managers 11 came from other plants. Theres about three that came 12 from outside.

13 COMMISSIONER DICUS: Mr. Saunders knows 14 where the next question is going because of that, 15 because he and I have discussed this. So whats going 16 to happen to Perry? I mean if youre grabbing people 17 from another plant and bringing them in, what might 18 happen at these other plants?

19 MR. MYERS: Okay. Do you want to answer 20 that?

21 MR. SAUNDERS: Yes, I do.

22 MR. MYERS: Go ahead.

23 MR. SAUNDERS: The luxury that we had is 24 that as we uncovered the Davis-Besse situation, we had 25 tremendous bench strength at the other two sites. And

55 1 as Lew just told you, we were able to draw heavily on 2 that. We still have more than adequate resources at 3 the other sites, but we also recognize the need to 4 build the bench strength back up, and we are actively 5 doing that. I think I mentioned 26 new licenses at 6 Beaver Valley, over ten new licenses at Perry. Were 7 getting ready to put in place a new license class at 8 Davis-Besse. And then also we have a very active 9 recruiting program going on, looking at trying to 10 attract some senior management down into the 11 organization. And we have actually added a couple of 12 people very recently here.

13 MR. BURG: But, Commissioner, its also 14 just right on point with respect to some of the 15 directives that we put out on day one that were more 16 than, and have been more than, reinforced by the 17 Nuclear Committee of our board, including Mr. Conway, 18 as well as our full board, and that is while were in 19 this situation, do not take your eyes off of Perry or 20 Beaver Valley. And believe me, we are working very 21 diligently to do that.

22 COMMISSIONER DICUS: Thats exactly where 23 Im going. You cant rob Peter to pay Paul.

24 MR. MYERS: Can I add on to that a little 25 bit?

56 1 COMMISSIONER DICUS: Yes, please.

2 MR. MYERS: Weve got the SOR classes 3 going on. Through our succession planning program, 4 and thats I think whats helped us at our other two 5 plants, the bench strength that we have, we dont just 6 promote people up through Operations to get a license.

7 The peoples thats in those licensing classes, the 26 8 and the 11, are people that a lot of them are hand 9 picked to be our managers in the future. And a lot of 10 the shift managers we have now we put them in as shift 11 managers to move them out into the organization. So 12 its real bench strength.

13 COMMISSIONER DICUS: Okay. Second 14 question: You said youve met with 500 employees for 15 two hours. Was that one big group meeting or, surely, 16 its not individual meetings.

17 MR. MYERS: Yes. Theres individual 18 meetings of -- theres two or three kinds of meetings.

19 We have all-hands meetings, we do those once a month.

20 I have a weekly, and I might miss a week every now and 21 then, but what I call four Cs meeting, and theyre 22 designed to sit down with employees and look at 23 compliments, complaints, concerns and changes and get 24 their feedback. We openly talk about managers or 25 whatever they want to talk about. And thats where

57 1 Ive met with about 500 employees now at --

2 CHAIRMAN MESERVE: Whats the size of each 3 of those?

4 MR. MYERS: About 20 to 15 people in a 5 meeting.

6 COMMISSIONER DICUS: Okay. Where Im 7 going with this is questions that youve already been 8 hearing to be sure if an employee really wants to talk 9 about something, theyre comfortable with doing it, 10 because some people wont speak out if its a large 11 group of people, and they speak out more in a smaller 12 group. And thats where I was going.

13 MR. BURG: Yes. I think thats totally 14 true, but Ill also tell you that, you know, I have 15 also held myself all-hands meetings at each of our 16 three plants to go over all the things that Ive 17 talked about here today. And I want to tell you, in 18 the question and answer sessions even there they 19 havent been shy about asking some of the kinds of 20 questions that youve been asking, honestly. So 21 thats been encouraging, actually.

22 COMMISSIONER DICUS: Good. Thats good.

23 MR. MYERS: I have an indicator that I use 24 on that. At the four Cs meetings, the first thing we 25 do is we pull the independent contractor initially --

58 1 now we use one of our communications people -- to sit 2 down with the employees and they develop all the 3 questions and concerns. So its independent. So I 4 dont know who came up with those. And whats 5 interesting is what I measure in that meeting is who 6 says this is my question. I write that down each and 7 every time. And almost every question and concern 8 that weve had on the list recently somebody in the 9 meetings will say, "I wrote that." And thats a real 10 good indicator.

11 MR. PEARCE: Let me explain that some, and 12 he knows what hes talking about.

13 COMMISSIONER DICUS: Well, maybe not if 14 you need to explain it.

15 MR. PEARCE: All right. What he does is 16 theres an independent group that meets with employees 17 first, and they get their questions down, and if the 18 employee chooses to have a question and not be 19 identified --

20 MR. MYERS: Thats fine.

21 MR. PEARCE: -- to get over the issue 22 exactly that you brought up, then they may do so. And 23 what hes saying is one of the things he looks at is 24 how many of them are willing to say, "Thats the 25 question I asked" and get further explanation.

59 1 COMMISSIONER DICUS: Okay. Well, thats 2 good. Final question, and I think it should be 3 answered yes or no simply. Of all of the lessons 4 learned in the get well issues that youve been 5 dealing with, had all of this been in place and 6 effective and being utilized, would we be sitting here 7 today?

8 MR. BURG: No.

9 MR. MYERS: No.

10 COMMISSIONER DICUS: Okay. Thats it.

11 Thank you, Mr. Chairman.

12 CHAIRMAN MESERVE: Commissioner Diaz.

13 COMMISSIONER DIAZ: Thank you, Mr.

14 Chairman. You know, sitting here and looking back, I 15 realize that we all have gotten used to performing 16 against a very high or maybe the highest standards of 17 performance regarding safety. The industry always 18 faces that, we face that, and the point is that this 19 highest standard of performance against safety is not 20 only on things that have happened or release already 21 activity, but we also have to abide by the fact that 22 we are being confronted with what could happen, and 23 this is essentially what happened with you. Its this 24 idea that we are really in this industry, in this 25 regulatory agency held to a higher standard, is that

60 1 permeated through your facilities, to your people, the 2 fact that people have to realize that we have to 3 perform on a higher level than what you normally 4 perform in any normal type of industry, because thats 5 the nature of where we are?

6 MR. BURG: I really believe it is, 7 Commissioner. I mean, again, hopefully people believe 8 many of the things that we tell them in the plants.

9 For example, at our all-hands meetings, I mean we 10 talk about the fact that Chairman Meserve is going to 11 an INPO CEO forum and telling every single CEO in the 12 country that has a nuclear power plant what has 13 happened here and what are the lessons learned and 14 what we all should have done. I think that kind of 15 information going back to employees its helpful to 16 them.

17 Or they are sometimes astounded that the 18 investment community wants to know every single thing 19 there is about the Davis-Besse facility. Well, in the 20 past, thats been kind of a non-event for them, thats 21 never entered their mind that someone outside of Oak 22 Harbor, Ohio had some interest in this facility.

23 Again, hopefully something we can draw 24 from all this in a positive is that that very lesson 25 that youre talking about has come home to our

61 1 employees in the sense that this is a global event, if 2 you will, and a global kind of community that we 3 operate in.

4 COMMISSIONER DIAZ: Because this high 5 level of safety performance is not going to go away; 6 its a fact. You guys might have contributed to make 7 it higher, you realize that.

8 PARTICIPANT: We understand that, sir.

9 MR. MYERS: I hope we have.

10 COMMISSIONER DIAZ: All right.

11 COMMISSIONER MERRIFIELD: But were not 12 seeking any more contributions like that in the 13 future, just so thats clear.

14 (Laughter.)

15 COMMISSIONER DIAZ: Thank you, 16 Commissioner Merrifield, your contribution is 17 appreciated.

18 When we went through another facility, 19 which everybody knows what Im talking about, and had 20 a lot of problems, safety cultures, and we went 21 through a long process, there was a Commission meeting 22 here that I clearly remember. They were going through 23 the list of things that they have done to improve the 24 plant, and then I asked a question, and what other 25 safety issues have you found during your reviews and

62 1 your processes? What other things that were not 2 related to the hole in the head at Davis-Besse, what 3 other things have you found out, and has there been 4 disposition? And so now that I have this opportunity, 5 and commissioners are infamous for using this 6 opportunity, did you find out any other safety 7 significant issue that you corrected or disposition?

8 MR. MYERS: The containment sumps would be 9 a good example.

10 COMMISSIONER DIAZ: All right.

11 MR. MYERS: Additionally, when we come out 12 of this outage, we will come out of the outage in a 13 situation where we had seven A1 systems, maintenance 14 related A1 systems requiring monitoring. We plan to come 15 out with all of that fixed. So weve built that into 16 the outage over and above what the issues were. Well 17 come out with new dryers on our diesel and some of the 18 line has been stainless steeled for the air start 19 system. Theres a lot of issues, design basis 20 improvements, well have some of those. I think our 21 system notebooks that we have now -- outside of my 22 office Ive got about 36 system notebooks, and from a 23 future standpoint weve walked all of our systems 24 down, and we have a really good list of all the things 25 we might want to work on in systems in the future.

63 1 Ill give you one example. We have a 2 relief valve, I think its one of our cooling water 3 systems, and evidently the design was fixed, and so at 4 7:30, eight oclock the night I came back to my office 5 from the Plant, and it was one of our engineers over 6 there, and he says, "You know, we have the design, but 7 its not a restart item. I would like to get this 8 added to a restart item, and its only $40,000 and 9 would you approve that?" "Absolutely." I said, "Its 10 been a long-standing problem." You know, weve got 11 the engineer coming forward wanting me to sign a TA to 12 fix that valve. It was a no-brainer.

13 COMMISSIONER DIAZ: Let me then go 14 forward. Will you say at this time that you are 15 reasonably confident that there are no other safety 16 issues that is pending fixing at Davis-Besse at the 17 present time?

18 MR. MYERS: Yes.

19 COMMISSIONER DIAZ: All right. I think 20 the Chairman -- thank you very much -- the Chairman 21 alluded something that I caught my eye, the issue of 22 centralized oversight versus decentralized oversight.

23 Of course, we are worried about that. I think you 24 explained that, Mr. Leidich, that in a certain way you 25 centralize some of the oversights and you distribute

64 1 the implementation. I turned out to read that Mr.

2 Myers is between a rock and a hard place, and I 3 appreciate that. I also believe that we constitute 4 another rock and a hard place in the process, and we 5 intend to fulfill that.

6 As you do this and continue to look at how 7 you come up with oversight and come up with some 8 implementations, when we had the other meetings I had 9 this comment that I dont know whether its -- I 10 didnt express it right. But when you have problems, 11 any time that a problem occurs, say, corrosion on a 12 head, and the problem is of a very large magnitude, 13 nobody misses it. You have a significant valve that 14 is malfunctioning and its leaking, its there. I 15 mean all of these things when they have the right 16 magnitude there are no issues. Of course, they might 17 attract attention but in fact those are less insidious 18 and easier to fix than the smaller problems that have 19 the frequency, that are repeated or that are 20 continued.

21 What are your efforts to make sure that a 22 slow developing, small magnitude problem that 23 continues with time or is repeated in time, because it 24 might not be continuous, it might just repeat itself, 25 will actually be able to be dispositioned and properly

65 1 put in the Corrective Action Program and taken care 2 of?

3 MR. LEIDICH: Obviously, the key is the 4 Corrective Action Program that has, first of all, the 5 right level of threshold, and then, secondly, that 6 weve got, as I indicated earlier, enough checks and 7 balances around that Corrective Action Program. So it 8 isnt just a matter of one item being identified and 9 being dealt with, its a matter of what scrutiny does 10 that item or accumulation of items related to it get 11 from other perspectives?

12 If its part of a program, for example, 13 then the program management in the corporate office 14 would be involved in understanding that issue and 15 helping deal with the disposition of that issue. And 16 then, again, as you noted, the oversight organization 17 looks at all of that. If its an operational issue, 18 then, for example, we are involved in day-to-day 19 operating status phone call every morning where we 20 understand what the key operational issues for the 21 station are, and we provide oversight from our level 22 on that.

23 COMMISSIONER DIAZ: Its small, I mean 24 its there.

25 MR. SAUNDERS: The repeats get trapped in

66 1 the Corrective Action Program.

2 MR. MYERS: Let me give you something that 3 Im proud of, though, and that is at our Perry and our 4 Beaver Valley plants, we didnt have this have this at 5 our Davis-Besse plants, but we think weve gained 6 substantial improvements in performance with what we 7 call our Latent Issues Program. And what we do every 8 year is we pick a couple systems, two, three, and 9 continuously every year go to a different system and 10 bring in an entire management team with engineers, 11 operators, whatever we need, EHC experts, and we walk 12 those systems down and we look for aging materials, we 13 look for improvements that people have done in the 14 industry, and we get a report, and that reports 15 presented to the senior management team.

16 And Bill was at our Beaver Valley Plant.

17 I mean if you go say what have we done to improve the 18 material condition at that Plant, thats how weve 19 identified, for instance, EHC problems at the Beaver 20 Valley Station that weve fixed now. So were 21 constantly looking for those.

22 MR. PEARCE: Thats exactly what that 23 program is all about is to delve into a specific 24 system with all the history, with a look at design 25 basis, physical condition, walk it down looking for

67 1 problems, bring all that together, and we named that 2 the latent issues, and I think latent issues kind of 3 describes what its about and probably what your 4 concern is about too.

5 COMMISSIONER DIAZ: All right. Okay.

6 Thank you, Mr. Chairman.

7 CHAIRMAN MESERVE: Thank you. Id like to 8 thank the panel. This has been very helpful. Weve 9 obviously been spending a lot of time, all of us, in 10 dealing with Davis-Besse issues and its good for us 11 to hear firsthand from you.

12 Our next panel is the NRC staff. We have 13 our Inspection Manual Chapter 0350 effort, and theyre 14 coming to the table now. We have Bill Travers, Bill 15 Kane, Jim Dyer, the Regional III Administrator, Jack 16 Grobe and Bill Dean who are the Chairman and Vice 17 Chairman of the Inspection Manual Chapter 0350 Panel.

18 Dr. Travers?

19 DR. TRAVERS: Thank you, Chairman, and 20 good afternoon. Since the shutdown of Davis-Besse in 21 February of 2002, problem discovery and resolution 22 activities on site are ongoing and are being carefully 23 evaluated by the NRC staff. As youve mentioned Jack 24 Grobe and Bill Dean have been leading the Agencys 25 response at Davis-Besse, as Chairman and Deputy

68 1 Chairman of the Davis-Besse Oversight Panel.

2 Although we have been keeping each member 3 of the Commission regularly informed about NRC staff 4 activities, this is the second time we have had an 5 opportunity to formally meet with you to discuss 6 Davis-Besse related activities. On January 14, we 7 discussed the results of the NRCs own self-8 evaluation, the Lessons Learned Task Force and 9 described our plans to address the Lessons Learned 10 Task Force recommendations.

11 Davis-Besse remains the only nuclear 12 facility warranting the staffs use of its procedures 13 for oversight of a plant in a prolonged shutdown with 14 performance problems. These procedures are detailed 15 in NRC Manual Chapter 0350. Under Manual Chapter 16 0350, the NRCs routine reactor oversight process is 17 suspended, and the Oversight Panel defines and directs 18 the NRCs activities regarding the facility.

19 The Oversight Panel process has been used 20 successfully by the NRC to assess the performance of 21 other plants which have had lengthy shutdowns because 22 of performance problems. The Panel for Davis-Besse is 23 composed of experienced managers and staff, including 24 some with considerable experience on earlier oversight 25 panels at other nuclear facilities. At this time, Id

69 1 like to turn over our presentation to Jim Dyer.

2 MR. DYER: Thank you, Dr. Travers. Good 3 afternoon, Chairman, Commissioners. The agenda for 4 the staffs presentation today is outlined in Slides 5 2 and 3. First, I will present a brief discussion of 6 the activities leading up to the formation of the 7 Manual Chapter 0350 Oversight Panel and then turn the 8 presentation over to the Panel Chairs for their 9 discussion of the specific activities of the Panel.

10 Slide 4, please.

11 The NRC was first informed of the cavity 12 in the reactor vessel at Davis-Besse on March 6, 2002.

13 The discovery was made by the Licensee during repair 14 activities on Nozzle 3 for cracks found during 15 inspections, pursuant to NRC Bulletin 2001-01.

16 Based on the initial reports from the 17 site, we really werent sure of the corrosion rate or 18 mechanism, the extent of condition or its generic 19 applicability. NRR took the lead for coordination 20 with the industrys Material Reliability Program and 21 issued NRC Bulletin 2002-01 to gather information on 22 the material condition, inspection and maintenance 23 programs for the vessel heads throughout the industry.

24 Region III took the lead for an Augmented 25 Inspection Team inspection, or AIT inspection, to

70 1 gather additional facts and technical information 2 concerning the Davis-Besse head degradation and issued 3 a confirmatory action letter to ensure effective 4 communications with the Licensee on our expectations 5 for resolution of this problem.

6 The specific expectations agreed to by the 7 Licensee and confirmed by our letter included their 8 quarantining of the vessel head materials and control 9 rod drive components for NRC review, determining the 10 root cause, extent of condition and safety 11 significance of the degradation around the vessel head 12 penetrations and obtaining NRC approval for any 13 repairs or modifications to the vessel head and 14 restart of the reactor.

15 On April 5, we conducted an AIT public 16 exit near the site. The AIT conclusions were that the 17 cavity was not the result of the new corrosion 18 mechanism but rather had occurred over several years, 19 and the Licensee had missed several opportunities to 20 identify the nozzle leakage and resultant wastage.

21 Slide 5, please.

22 The week following the AIT exit, I briefed 23 the NRC senior managers on the results of the AIT.

24 Continuing dialogue led to the initiation of enhanced 25 oversight under NRC Manual Chapter 0350. Manual

71 1 Chapter 0350 provides for a focused, centralized and 2 structured approach to the NRC regulatory oversight of 3 a plant and communication activities for shutdown 4 plants. After consultation with the Deputy EDO for 5 Reactor Programs and the Director of NRR, I appointed 6 Jack Grobe as the Chairman of the Oversight Panel and 7 directed him to form a team to manage the regulatory 8 oversight activities associated with the Davis-Besse 9 shutdown.

10 The Reactor Oversight Program was 11 suspended at the Site in favor of the Panels directed 12 activities, but I encouraged the use of the 13 significance determination process and action matrix 14 to determine the extent of follow-up of issues and the 15 use of existing inspection procedures to the maximum 16 extent practicable. Let me now turn the presentation 17 over to Mr. Grobe and the Manual Chapter 0350 Panel 18 Chairman.

19 MR. GROBE: Thanks, Jim. Slide 6, please.

20 Id like to start -- we have three additional members 21 of the Panel here in addition to Bill and myself.

22 Christine Lipa over here on the left is Branch Chief 23 in the Regional Office responsible for inspection 24 oversight; Tony Mendiola -- raise your hand, Tony --

25 is Section Chief in NRR, responsible for overseeing

72 1 licensing activities, and you cant see John Hopkins, 2 hes in the booth turning the slides, but hes the 3 Licensing Project Manager. Thats five of the eight 4 members of the Oversight Panel.

5 By the end of April, the NRC had 6 sufficient information to conclude that there was 7 significant performance deficiencies at the Davis-8 Besse facility. The depth and breadth of those 9 performance issues as well as the necessary extended 10 shutdown to repair the reactor pressure vessel head 11 necessitated the use of a different tool to provide 12 safety oversight than the routine reactor oversight 13 process.

14 Pursuant to Manual Chapter 0350, a charter 15 was established on May 3 for the Davis-Besse Oversight 16 Panel. The Panel supplants the routine reactor 17 oversight process and guides Agency activities 18 regarding the Davis-Besse facility. The Panel 19 includes experienced executives, managers and staff 20 from the NRC offices here in headquarters, in Region 21 III and at the Davis-Besse site. As was mentioned, 22 Bill Dean and I lead the Panel. Several of the Panel 23 members have prior experience with successful 24 implementation of the Manual Chapter 0350 process.

25 The Panel charter defines the goals and

73 1 responsibilities of the Panel. First, the Panel is 2 expected to establish a restart checklist containing 3 those issues that must be addressed before the Panel 4 can consider the question of restarting the facility.

5 In addition, a process plan has to be established 6 which guides the internal operation of the Panel and 7 a communications plan delineating the tools the Panel 8 will use to interface with our internal and external 9 stakeholders. Slide 7, please.

10 The Panel continually assesses Licensee 11 performance and establishes the scope and depth of 12 necessary NRC activities during the extended shutdown.

13 In addition, the Panel will continue to assess 14 Licensee performance and make restart recommendation 15 to John Dyer when it feels that the Licensee has 16 demonstrated it can restart and operate the Plant 17 safely.

18 The Panel will continue to provide 19 oversight and guide Agency actions following facility 20 restart until such time as the Panel makes a 21 determination and recommendation that NRC activities 22 at Davis-Besse can be effectively accomplished under 23 the routine reactor oversight process. And, finally, 24 the Panel is expected to establish a complete and 25 scrutable record of the activities of the NRC at

74 1 Davis-Besse. Slide 8, please.

2 The Oversight Panel issued a restart 3 checklist documenting those activities necessary to be 4 completed before the NRC could consider restart of the 5 facility. The checklist includes the adequacy of the 6 technical and organizational root cause assessments 7 that the Licensee has performed, the adequacy of 8 safety significant structures, systems and components, 9 of safety significant programs, the adequacy of 10 organizational and human performance, and this area 11 includes the reestablishment of an adequate safety 12 culture and safety conscious work environment, the 13 readiness of systems programs and the organization for 14 restart, resolution of licensing issues and the 15 completion of the confirmatory action letter 16 commitments. Slide 9, please.

17 In response to the Panels continuing 18 assessment of activities at Davis-Besse, the Panel 19 determined that there were additional necessary areas 20 of focus before restart and revised the restart 21 checklist appropriately. The Panel added an 22 evaluation of the design and installation of the 23 containment sump modification, a review of the 24 Radiation Protection Program and inspection of First 25 Energys process to assure complete and accurate

75 1 records of NRC submittals. Slide 10, please.

2 The Panel guided inspections early last 3 summer of Licensee activities to evaluate the effects 4 of the boric acid laden atmosphere inside containment 5 on equipment. Those NRC inspections identified 6 deficiencies in the training and qualifications of 7 Licensee staff, the procedures and processes being 8 used to accomplish those activities and the adequacy 9 of the Licensees evaluations of equipment.

10 First Energy stopped work, reestablished 11 the qualifications of its staff and improved its 12 processes and procedures before recommencing.

13 Continuing NRC inspections of these activities and 14 implementation of other aspects of the Licensees 15 return to service plan addressing the restart 16 checklist items have confirmed that the Licensee is 17 adequately implementing its plans.

18 The Oversight Panel continues to plan, 19 implement and oversee inspection activities, tracking 20 the Licensees progress in implementing its return to 21 service plan. At this point, Id like to turn it over 22 to Bill Dean. Bill will provide additional detail 23 regarding NRCs licensing activities and the Oversight 24 Panels initiatives to interface with our varied 25 stakeholders and provide public access to information

76 1 regarding the NRCs activities at Davis-Besse.

2 MR. DEAN: Thank you, Jack. Good 3 afternoon, Chairman, Commissioners. Slide 11, please.

4 Initially, Davis-Besse had considered repairing the 5 vessel head degradation instead of replacing it but 6 eventually came to the conclusion that replacing the 7 vessel head was the appropriate approach to take, and 8 they were able to obtain the vessel head from the 9 canceled Midland plant. While this eliminated a 10 potentially challenging review effort on the part of 11 our technical staff to evaluate the adequacy of a 12 repair methodology, it still caused both the staff and 13 the Licensee to assess the adequacy of the Midland 14 head for appropriate use at Davis-Besse.

15 During this effort, there were several 16 issues that were identified which required the 17 Licensee to seek relief from the ASME code 18 requirements. These reliefs dealt with the 19 unavailability of some of the original radiographic 20 tests that were done in the 60s and also the 21 inability of the Licensee because of some lifting lugs 22 that were on the vessel head to complete 100 percent 23 examination of the vessel head flange weld. So each 24 of these issues were evaluated by the staff and were 25 appropriately dispositioned. So at this point, there

77 1 are no other licensing issues that remain to be 2 resolved at Davis-Besse. Slide 12, please.

3 With respect to public access and 4 stakeholder involvement, over the past 11 months weve 5 made a substantial effort to provide access to the 6 public in our efforts to facilitate stakeholder 7 involvement. To date, we have conducted approximately 8 40 public meetings. At the centerpiece of these 9 meetings is our monthly meetings with the Licensee 10 where the 0350 Panel in the afternoon meets with 11 Davis-Besse Licensee Management to discuss current 12 issues, to discuss status on the return to service 13 plan, and those are publicly observed meetings, and we 14 provide opportunity at the end of those meetings for 15 public questions and answers.

16 In addition, that evening we have a 17 meeting with the public where we spend time explaining 18 to the public that could not attend the afternoon 19 meeting what transpired and then also to engage in a 20 question and answer session with the public in order 21 to establish a continuing dialogue with the local 22 community. So weve been quite proactive in that 23 regard.

24 In addition to conducting these frequent 25 public meetings, weve established a very informative

78 1 web page thats been devoted to Davis-Besse and 2 related issues, which has served as both a valuable 3 resource to the staff as well as to the public and 4 interested stakeholders. Slide 13, please.

5 While most of the meetings that weve had 6 -- public meetings that we have had have been at the 7 local vicinity in Oak Harbor, there have been several 8 meetings that have been conducted here in headquarters 9 as well as in the Region III Office. For these 10 meetings, weve established both phone and video 11 access, conferencing access to allow those 12 stakeholders who could not attend the meeting to be 13 able to participate, and thats after some initial 14 technical issues at some of the early meetings, and I 15 think its turned out to be a very appropriate 16 methodology for those that cant attend the meeting to 17 at least be able to participate and listen in.

18 Except for some of the initial meetings 19 that we conducted as an 0350 Panel, we have 20 transcribed a vast majority of the meetings and have 21 made those transcriptions available on the web for 22 those who are neither able to attend to the meeting or 23 participate by video or phone conference. They can at 24 least read the transcript and understand what took 25 place.

79 1 In addition to the public meetings, there 2 have been frequent opportunities for the NRC to meet 3 with congressional members and their staff as well as 4 state and local officials, and to date we have 5 conducted over 20 briefings of these officials.

6 Finally, with respect to public process, 7 we did have one 2206 petition that was filed by a 8 member of the public. This petition, as you know, 9 requested the NRC issue an order for the Licensee to 10 require a verification by an independent party for 11 issues related to the reactor vessel head degradation.

12 This petition was denied in light of actions taken by 13 both the NRC and the Licensee which addressed all of 14 the actions and proposed tasks described by the 15 petitioners. These actions included conducting an 16 Augmented Inspection Team inspection and forming both 17 the 0350 Panel and the Lessons Learned Task Force, as 18 well as Licensees developments of a return to service 19 plan, a restart organization and several oversight 20 boards, which include non-Licensee personnel.

21 In summary, we believe weve made a 22 considerable effort to include and inform the public 23 relative to the 0350 Panel activities. That concludes 24 my part of the presentation. Id like to turn it over 25 to Jim Dyer for concluding remarks.

80 1 MR. DYER: Thank you. Slide 14, please.

2 In conclusion, the staff believes that First Energy is 3 making progress in improving the overall safety at the 4 Davis-Besse facility. The hardware improvements at 5 the Site are evident during facility tours, 6 engineering analyses are being conducted to verify 7 safety margins, and key programs responsible for 8 ensuring safety are being revised to improve their 9 quality.

10 The Manual Chapter 0350 Panel is closely 11 monitoring Licensee performance to ensure the proposed 12 safety improvements are adequately implemented. When 13 Licensee performance has not met acceptable standards, 14 as was found in the initial inspections of the 15 containment and some of the program reviews, we have 16 provided this feedback to the Licensee and rescheduled 17 inspections. When the new issues have been 18 identified, such as the Radiological Protection 19 Program and needed containment sump improvements, we 20 have added them to the restart list.

21 Overall, the Manual Chapter 0350 process 22 has served the NRC well during a very demanding 23 period. It has focused licensing and inspection 24 resources to identify and address key safety issues 25 and facilitate communications between internal and

81 1 external stakeholders. That concludes my 2 presentation.

3 DR. TRAVERS: Mr. Chairman, that completes 4 a relatively brief status of our efforts to evaluate 5 Licensee improvements at Davis-Besse. As you 6 indicated at the beginning of the meeting, we are 7 taking these matters very seriously. We have placed 8 some of our best staff in a position of helping to 9 evaluate those improvements, and we will continue to 10 keep the Commission advised on status of their efforts 11 and our efforts of oversight, and that completes our 12 presentation this afternoon.

13 CHAIRMAN MESERVE: Thank you. And I know 14 that the work of the Manual Chapter 0350 Panel still 15 continues and that theres more things to be done, but 16 on behalf of the Commission I do want to express our 17 appreciation for all the work that youve done to 18 date. We are following this all with great interest.

19 Its a very important activity for the Commission and 20 indeed for the American people. Commissioner 21 Merrifield?

22 COMMISSIONER MERRIFIELD: Thank you.

23 Thank you very much, Mr. Chairman. I echo the 24 comments you just made. I would also want to make a 25 note. I know in the previous meeting we had on

82 1 lessons learned I think all of us expressed our 2 gratitude to the staff for the amount of work that 3 theyve put into this. I would like to take a 4 particular note to thank John Grobe and Bill Dean and 5 the other members of the 0350 Panel for an exceedingly 6 large task, not only in going through the significant 7 safety issues relative to Davis-Besse but a real 8 challenge in terms of meeting the expectations of our 9 public in having appropriate public confidence in an 10 open and clear process.

11 I think the first question I would have 12 would go to Mr. Grobe and Mr. Dean, and I talked about 13 it a little bit in my first round of questions, and 14 thats the issue of a full and complete effort to 15 identify issues of concerns at the Plant and get those 16 into the Corrective Action Program in a way in which 17 they can be resolved. Jim Dyer talked about how First 18 Energy is making progress in that respect, and Im 19 wondering if you can go into a little bit more detail 20 about how that effort is being undertaken from your 21 perspective?

22 MR. GROBE: Certainly. First Energy has 23 separated their recovery activities into two phases:

24 discovery and recovery. And discovery activities are 25 nearing completion. As I mentioned earlier, our

83 1 inspections on the very first initiative to do 2 discovery activities, the Licensee performance was 3 lacking in several respects. That activity is 4 completed, the reactor head has been certified as 5 meeting the requirement of ASME Section 3. The design 6 engineering area, there are discovery activities 7 continuing today.

8 The vast majority of the discovery 9 activities have been completed. The Licensee has 10 generated several thousand condition reports as a 11 result of those discovery activities. Many of them 12 have been addressed. There are still several hundred 13 and probably over 1,000 that are yet to be closed out.

14 The number is not as important as is some of them are 15 very simple, some of them are more complex. But our 16 recent inspections have shown that their discovery 17 activities have been well focused, and the Oversight 18 Board, for example, the Engineering Oversight Board 19 and the Corrective Action Review Board have been doing 20 their jobs.

21 So our Panel is fairly satisfied with the 22 progress theyre making on discovery. As I mentioned, 23 engineering design is one area that continues. Bill, 24 did you have anything you wanted to add?

25 MR. DEAN: No. I think thats

84 1 substantial.

2 MR. GROBE: Thank you.

3 COMMISSIONER MERRIFIELD: On a related 4 issue, given the importance of the Corrective Action 5 Program, I wanted to get some sense of our plans for 6 monitoring the future performance of this Program at 7 the Plant and what we would be looking at as early 8 indicators as to whether that Program is being run 9 effectively?

10 MR. GROBE: One of the aspects of the 0350 11 Panel is that it doesnt go away at restart. There 12 will be a significant period of time, if the Plant 13 achieves restart, following restart where we will 14 continue to provide oversight. A key focus of that 15 oversight will begin to be on the performance 16 indicators that the NRC already has established.

17 During the course of the shutdown those performance 18 indicators have atrophied because many of them are 19 predicated on operation.

20 In addition to that, the Licensee has 21 established a set of performance metrics that address 22 all aspects of Plant operation, including a safety 23 conscious work environment and safety culture, and the 24 Panel will be validating that those are in fact valid 25 indicators and that they are demonstrating an

85 1 appropriate safety focus. And we will also be 2 validating those indicators with our independent 3 inspection effort.

4 COMMISSIONER MERRIFIELD: Part of that 5 answer goes to, I think, a broader issue beyond just 6 the 0350 Panel. Prior to the identification of the 7 head degradation, obviously Davis-Besse had been 8 characterized as a good performer, one in which had 9 all green performance indicators. Going forward as an 10 Agency, how can we ensure that the failures that 11 caused the degradation and the other issues that were 12 now dealing with are appropriately identified in our 13 reactor oversight process, not only through the 14 indicators but also through a more detailed risk-15 informed inspection program?

16 MR. GROBE: This is a very good question, 17 particularly for our effort at Davis-Besse. You have 18 heard from the Lessons Learned Task Force and the 19 Senior Management Review Team, and the Commission has 20 endorsed those recommendations. Those will fix areas 21 that we had an opportunity to improve our programs 22 over the long term at all facilities. But at Davis-23 Besse, for the Oversight Panel, we have to be 24 sensitive to those issues today.

25 Christine and Bill and I have been very

86 1 closely connected with the work of Art Howe and Ed 2 Hackett through the Lessons Learned Task Force to 3 ensure that we had a clear understanding of what they 4 were developing, both specific to the facility but 5 also programmatically, because we have to be 6 performing inspections at the site of concern in an 7 ongoing nature. So we are actively engaged in 8 providing oversight of our inspection program to make 9 sure that the aspects that where the Agency could have 10 done better in the past are being implemented today at 11 Davis-Besse.

12 COMMISSIONER MERRIFIELD: You mentioned, 13 and for those either here or viewing this through 14 televideo, obviously the Commission some weeks ago 15 with the staff had gone through a significant effort 16 to look at the lessons learned internally to the 17 Agency, and the Commission is certainly on board with, 18 as was mentioned, 49 of the 51 recommendations made by 19 that Panel. Im wondering, and I do want to give you 20 the opportunity, given the efforts of the 0350 Panel 21 to date, have you identified any additional issues 22 that the staff should consider in addition to what the 23 Lessons Learned Task Force report has provided or do 24 you feel comfortable that in fact that report 25 encompasses the recommendations necessary to avoid

87 1 this kind of event from happening in the future?

2 MR. GROBE: I personally thought the 3 recommendations from the Lessons Learned Task Force 4 were very comprehensive. The areas -- from a regional 5 perspective, the areas that really hit home with us 6 was the importance of passive components which are not 7 modeled in probablistic risk assessments. Theyre not 8 expected to fail, things like a reactor vessel head.

9 The importance of operating experience, not only for 10 the Licensees to learn from the operating experience 11 but for our staff to learn also and to ensure that we 12 incorporate those learnings into our programs and 13 procedures so that they may not be lost over time. So 14 those are the two areas that come forward to me right 15 now. But I thought the Lessons Learned Task Force had 16 a good set of recommendations.

17 MR. DEAN: Im sorry, Commissioner, if I 18 may add, you know, one of the things that you 19 mentioned earlier was we really dont want to have a 20 whole lot of opportunities like this to cause us to do 21 some self-introspection, but, as you know, the reactor 22 oversight process incorporates, as part of its ongoing 23 nature, a self-assessment, and certainly I think the 24 oversight process will garner a number of insights.

25 I think the one that is of most interest

88 1 to me or one that strikes closest to home, I think, is 2 the fact that we probably have not done a very good 3 job in terms of considering the breadth and the wealth 4 of operating experience that may exist in other forums 5 and how do we bring that to bear in helping design a 6 risk-informed inspection program that doesnt become 7 just a pure compliance approach but indeed extracts 8 those things that are important to look at?

9 COMMISSIONER MERRIFIELD: I think thats 10 a very important observation, and you give me an 11 opportunity to clarify my comment earlier. That in no 12 way underscores my own belief that I think is shared 13 by the staff that our oversight program is a living 14 program in that it will continue to evolve and 15 enhance. As you, I think, correctly point out, my 16 only attempt there was to recognize that hopefully 17 its not this type of an activity that will allow us 18 to learn lessons. I believe we can do so in more 19 normalized effort.

20 A last very brief question. I noted, and 21 there were comments in the earlier panel, about 22 experts and individuals being hired on by First Energy 23 to take a look at their safety culture, and obviously 24 were concerned about a safety conscious work 25 environment. Last week, I believe it was last

89 1 Wednesday, in a presentation that Im reading lasted 2 nearly six hours, the First Energy briefed that 3 particular program to the Panel.

4 In the intervening time, Im wondering if 5 you had any opportunity to think a little bit more 6 about that presentation and any expectations that you 7 may have about that or any observations youd like to 8 share relative to that presentation?

9 MR. GROBE: Two observations and then 10 maybe some discussion going forward. That meeting 11 covered two areas. One was an update on the 12 activities that the Licensee was implementing in what 13 it calls its management and human performance building 14 block, and thats the area that we were talking about 15 that includes safety culture and safety conscious work 16 environment. So several hours of that meeting were 17 statusing all of the corrective actions that they had 18 begun implementation on.

19 The second half of the meeting was their 20 presentation of a fairly broad set of metrics, and 21 this was our first opportunity to view those metrics.

22 They had not yet put them into place. And one of 23 those metrics involved the work of Dr. Haber and her 24 associates in evaluating or taking a snapshot of 25 safety culture. The metrics included probably, Im

90 1 estimating, maybe 30 other varied inputs, and Dr.

2 Habers was one of them.

3 We have not yet begun our inspection of 4 those metrics or Dr. Habers work, so I dont have any 5 further illumination there. But what I can say is 6 weve done some thorough thinking on what types of 7 inspection we want to do in that area, and were 8 seeking now some outside assistance for ourselves in 9 the area of how to design and evaluate a safety 10 culture evaluation tool and how we should evaluate the 11 safety conscious work environment and a safety culture 12 tool and someone with experience in recovering safety 13 culture to assist the Panel and the Inspection Team in 14 evaluations in this area.

15 DR. TRAVERS: If I can just add, this is 16 a subjective area, certainly, to assess, but we have 17 had experience in looking at this issue, as licensees 18 in other situations where plant performance has been 19 at issue have. Were going to continue to monitor it, 20 and we think that the development of metrics to 21 monitor the advancement of safety culture and safety 22 conscious work environment is the right way to go.

23 Even though our regulations dont speak specifically 24 to that, we can oversee their progress, and I think 25 the attitude that suggests that theyre going to

91 1 continue to establish a program that will monitor and 2 measure their own view of how well theyre advancing 3 their own safety culture is a good thing, and were 4 going to continue to take a look at how well theyre 5 doing in that area.

6 MR. GROBE: The Commission has -- the NRC 7 has provided a number of guideposts to assist us in 8 this area, and the Commission itself has a policy 9 statement that was published in 1996 that addresses 10 specifically expectations for the licensees in a 11 safety conscious work environment arena, and the Panel 12 is using that as a guiding light.

13 In addition, we have two regulations that 14 go directly to this issue, and that is 10 CFR 50 15 Appendix B, Criterion 16, Corrective Action 16 Requirements, as well as 10 CFR 50.7, which deal 17 directly with retaliation for raising safety concerns, 18 so that we have those foundational aspects, and well 19 be using those in our assessment of the Licensee going 20 forward.

21 COMMISSIONER MERRIFIELD: Thank you, Mr.

22 Chairman.

23 CHAIRMAN MESERVE: The last area you got 24 into I think takes away the focus of my questions, 25 which is it seems to me that you have a physical

92 1 system problems that you can expect and those are 2 something you can -- may be hard to do in some 3 circumstances, but you have a good idea about how to 4 do it and you can pursue things. The much harder 5 problem is dealing with the human issues, and a lot of 6 the presentation we heard from First Energy had to do 7 with their efforts to deal with safety culture, safety 8 conscious work environment, putting in processes and 9 procedures to try to create a -- reinvent their 10 workplace really in a fashion thats different than 11 before this whole incident occurred.

12 And it does seem to me this is a very 13 challenging area and a very important one for the 14 Panel to be satisfied. Youve indicated that youre 15 going to be relying in part on the efforts that their 16 consultant is using, youre developing your own tools, 17 youre going to be monitoring the situation. I think 18 that this is an area where the Commission Im sure 19 would like to continue to be informed about progress 20 in that area.

21 I guess the only other question I would 22 ask -- or a question I would ask, having just made a 23 comment, where do you -- what areas do you think that 24 the slowest progress is being made by First Energy?

25 Where are the biggest problems that remain?

93 1 MR. GROBE: I think theres three areas of 2 challenge that remain. One is the one you just 3 mentioned, which is having clarity in how to monitor 4 safety culture and how to measure it and being able to 5 monitor progress over an extended period of time.

6 Safety culture doesnt change overnight. I think Dr.

7 Haber, when I asked her this question the other day, 8 indicated that she expected three to five years before 9 First Energy executives could sit back and say, "I 10 think were there," or, "All the indicators are 11 green," or whatever measure you might want to put on 12 it. So thats one of the challenge areas.

13 The second challenge area is what I call 14 bulk work. Theres still an amount of work to be done 15 and has to be done right, and were providing 16 inspection oversight. The third challenge area is 17 design engineering. During the course of the Licensee 18 performing their design reviews and then weve 19 performed independent design reviews on some 20 additional systems, there were some questions.

21 Whenever you do design reviews what you come up with 22 is a lot of questions. And there were some questions 23 that were difficult to answer and are still 24 challenging the organization to make sure that they 25 get the right answer.

94 1 As a result of that, they broadened their 2 look, both vertically and horizontally. Some specific 3 technical areas they found enough problems that they 4 wanted to look horizontally across all the systems, 5 and then they decided to look vertically and do 6 vertical reviews of design issues on the most risk-7 significant systems, the remainder of the most risk-8 significant systems. So that activity is ongoing, and 9 thats what I see as the third challenge area.

10 CHAIRMAN MESERVE: Thank you.

11 Commissioner Dicus?

12 COMMISSIONER DICUS: Thank you. The some 13 40 public meetings that youve had, how have those 14 gone? I mean how has the input been and the public 15 participation?

16 MR. GROBE: The meetings have gone long.

17 Theres just a lot to talk about. Its been kind of 18 interesting. I dont know of any predictor to 19 identify how many people were going to have at 20 meetings. We have anywhere from as few as 50 to as 21 many as several hundred. And weve had very engaging 22 dialogue with members of the public. Theres been a 23 wide diversity of viewpoints expressed at the 24 meetings. The evening meetings that Bill mentioned 25 typically run from seven to ten, 9:30 or ten in the

95 1 evening, so theres an extended dialogue with the 2 public in those evening meetings.

3 COMMISSIONER DICUS: Do you get a feeling 4 that the public comes away satisfied with the answers 5 that theyve gotten with our input? I mean I know 6 there will be a variable, but --

7 MR. GROBE: I think two ways to measure 8 that. One is personal interface with individuals 9 after the meetings. We always try to ask the person 10 if weve adequately answered their question. Some 11 people are not satisfied with the answers. Theyre 12 the answers we have. But we also have -- Ive gotten 13 good feedback from people that the meetings have been 14 valuable. We also have our feedback system where we 15 have a little card that you can mail in, and thats 16 been fairly positive. The most common criticism has 17 been our sound system quality, and we continue to work 18 on that.

19 COMMISSIONER DICUS: Yes. Ive had those 20 problems in some of my meetings. You heard my 21 question, Im sure, that I asked that theyre taking 22 people from Perry, for example, to help with Davis-23 Besse, and I asked the question of concern, do we now 24 start worrying in three years about Perry? Do you 25 have a response to that?

96 1 MR. GROBE: Yes, I do. Were worrying 2 now, and Jeff Grant, Director of Division Reactor 3 Projects in Region III and Randy Blau in Region I --

4 Beaver Valley is in Region I, Perrys in Region III --

5 have had conversations in areas where either Bill or 6 I or Christine or Tony develop a concern that 7 something might be going on that they should be 8 looking at at Beaver or Perry, and were handling that 9 through internal interface to make sure that were 10 closely connected on that.

11 MR. DYER: Commissioner, if I made, as the 12 Regional Administrator, thats one of the areas I 13 really worry about, and Ive had discussions with Lew 14 Myer on it and made a specific trip to the Perry 15 facility to discuss and see, talk firsthand what was 16 going on, and then subsequently they came in to make 17 a presentation as to what are they doing to make up 18 for the changes. So they do have a game plan, as 19 First Energy said, detailed specifically to the site 20 for addressing issues at the Perry facility.

21 COMMISSIONER MERRIFIELD: Mr. Chairman, if 22 I may interpose for a second, it may be the lawyer in 23 me but you both used the word, "worry." Can you 24 clarify -- define worry. Do you mean worry as in 25 youre keeping a close eye on it or worry as in youre

97 1 losing sleep at night over it?

2 MR. DYER: Keeping a close eye.

3 COMMISSIONER MERRIFIELD: Okay. I just 4 wanted to clarify that. Thank you, Mr. Chairman.

5 COMMISSIONER DICUS: And final question.

6 Weve been discussing safety culture and clearly you 7 had a lot of findings in the 0350 process that 8 identified both people issues and equipment issues.

9 And without going into any details on the people 10 issues, can you give me a feel about was it 50/50 11 people issues and equipment issues or can you really 12 zero in on that?

13 MR. GROBE: I dont know that I can give 14 you a number, but I would say I would not focus on 15 people as much. I would focus on the organization.

16 The organizational issues are what caused Davis-Besse.

17 It is the principal root cause, and First Energy was 18 here a minute ago describing how that manifested 19 itself. Its a common attribute in my experience of 20 plants that find themselves in this condition that the 21 plant has become isolated and complacent, and Davis-22 Besse took that one step further and got to the point 23 where it was clearly only dealing with symptoms and 24 not finding the source of the problem. So I think the 25 most significant root cause was the organizational

98 1 problems.

2 COMMISSIONER DICUS: Fair response. Thank 3 you, Mr. Chairman.

4 CHAIRMAN MESERVE: Commissioner Diaz?

5 COMMISSIONER DIAZ: Thank you, Mr.

6 Chairman. Let me ask a hard question. If there is 7 one thing that you, any of you, could recommend that 8 the NRC would do to prevent recurrence of an issue 9 like Davis-Besse, what would you recommend -- one 10 thing?

11 MR. DYER: Ill take the lead first. From 12 my perspective, and I relate back largely to a lot of 13 the comments in looking into the Davis-Besse Lessons 14 Learned Task Force. From my position as Regional 15 Administrator in 1999, when we had three 0350 sites 16 and three more senior management meeting watch list 17 sites and we werent asking for help, that personal 18 reflection is the area, as the Regional Administrator 19 when I came in in 1999, we were in over our heads, and 20 it took a lot of effort to get our way out, a lot of 21 very hard work on the part of the staff and the 22 managers in Region III.

23 But going back and doing it again, weve 24 learned our lesson, region III as well as the other 25 regions in this, for ROP 4 have asked to identify

99 1 where we think well have the needs in the rest of the 2 year to execute the Reactor Oversight Program during 3 this cycle. And so I think weve learned that lesson.

4 But looking back at it from a Regional Administrators 5 perspective is managing and forecasting the resource 6 needs more.

7 COMMISSIONER DIAZ: Thank you. I think 8 thats appreciated.

9 MR. KANE: I would echo Jims remarks. I 10 would add to that to have a robust program, we have to 11 have a really strong continuing self-assessment of our 12 program. I think weve provided for that with the new 13 Reactor Oversight Program. And I think communication 14 of our expectations to all of our employees, all of 15 our inspectors to take a hard look, we want to 16 understand if theres something out there that they 17 dont think is right, to elevate it and get it dealt 18 with promptly by Management.

19 COMMISSIONER DIAZ: Would you like to add 20 anything to that?

21 MR. GROBE: I was just going to say when 22 you ask five people for one thing, you usually get 23 five.

24 COMMISSIONER DIAZ: I understand that.

25 MR. GROBE: I would just say that --

100 1 COMMISSIONER MERRIFIELD: At the 2 Commission, we certainly know that.

3 (Laughter.)

4 MR. GROBE: I dont think we do as good a 5 job as we can in the area of -- weve done an 6 excellent job bringing risk focus to our activities, 7 both how we choose to look -- what activities we 8 choose to look at and how we evaluate the results of 9 our inspections. I think we need to make sure that 10 were adequately looking at the causal factors too and 11 rolling those up as -- it was your question, 12 Commissioner Diaz, on the many little things, making 13 sure that were capturing the many little things as we 14 look at plant performance.

15 COMMISSIONER DIAZ: You mean the little 16 things that are important when taken together.

17 MR. GROBE: Thats right.

18 DR. TRAVERS: I wouldnt disagree with 19 anything anyone here has said, I just -- one thing I 20 think the Lessons Learned Task Force found that 21 captured my imagination is this idea that we should 22 more systematically look at our own messages to the 23 industry and follow up on those in some appropriate 24 way. It may be graded, and it may be different in 25 each case, but we ought to make a deliberate judgment

101 1 about following up on boric acid, a bulletin, for 2 example, or any other one where were asking the 3 industry to self-assess their own situation and 4 perhaps take action as appropriate.

5 COMMISSIONER DIAZ: Okay. And leaving 6 Davis-Besse, which is, you know, something that I 7 really dont want to do but I have to do, looking, Mr.

8 Travers, during your tenure and especially starting 9 with Millstone, you have seen several 0350 Panels.

10 You also have seen the 0350 Panels dealing with 11 significant issues, including Millstone, Davis-Besse, 12 Indian Point, and you also saw the beginning 13 implementation of the oversight process, and 14 Commissioner Merrifield already alluded to that. But 15 is the 0350 Panel, the way that its constituted 16 today, is it state-of-the-art? Does it serve us well?

17 I know that Jim Dyer said its doing well. Is it --

18 have we looked at it? Is it the way it should be?

19 And, second part of the question, is the feedback from 20 the 0350 Panel being properly utilized for the reactor 21 oversight process?

22 DR. TRAVERS: Yes and yes, but it hasnt 23 been a stagnant process, its been an evolving one, 24 and in fact weve made some changes over the years to 25 the approach weve taken in carrying out 0350. O350

102 1 is really just a tool for focusing us in our oversight 2 activities, in our limited resource on those issues 3 that are most important to an assessment of the 4 readiness of a particular licensee thats in trouble 5 to restart the facility.

6 And over the years, we found that we can 7 better focus those efforts, and weve been doing that.

8 And I think in this case, in particular, weve limited 9 the scope of the activities that were keying in on to 10 those that are most important to our own assessment of 11 whether or not theyve completed the activities that 12 they need to to be in a position to restart the 13 facility.

14 The feedback question, are we learning 15 from the conduct of 0350, is a good one, and I think 16 we have always learned something in connection with 17 0350. Im sure were going to learn some more things 18 as we go through the process here. At Millstone, we 19 learned a lot about assessing safety culture and 20 safety conscious work environment. I think were 21 applying those lessons in our evaluation here at 22 Davis-Besse, so in that sense, you know, our 23 experience at Millstone was helpful. We learned a lot 24 about design basis issues in the conduct of the very 25 detailed design evaluations that were conducted at

103 1 Millstone. I think weve rolled those into an 2 occasional assessment of looking at design basis 3 issues associated with different plants in our ROP.

4 So I think were doing that, and I think we need to 5 continue to do it. Hopefully, we wont have these 6 opportunities all that often, but I think were 7 utilizing the information --

8 COMMISSIONER DIAZ: Well, systematically, 9 you would say that the Agency is focused in obtaining 10 valuable feedback information --

11 DR. TRAVERS: Yes.

12 COMMISSIONER DIAZ: -- from the 0350 13 Panels to improve their reactor oversight process.

14 DR. TRAVERS: Yes, sir. I think its part 15 of the sorts of self-assessment that we have done and 16 will continue to do.

17 COMMISSIONER DIAZ: Okay. Thank you, Mr.

18 Chairman.

19 CHAIRMAN MESERVE: Commissioner 20 McGaffigan.

21 COMMISSIONER McGAFFIGAN: Thank you, Mr.

22 Chairman. Let me briefly ask Mr. Dyer something I 23 didnt intend to ask but you brought it up in your 24 remarks with Commissioner Diaz. One of the lessons 25 learned, as you said, was you probably should have

104 1 cried for help, but you had a, in my recollection, a 2 vacant engineer position and another person who had 3 multiple sites, one of which, I think, was itself a 4 troubled site at the time. So you really had very 5 little regional focus on this facility. Today, do you 6 have all of these positions filled and people are not 7 being diverted into Davis-Besse and were not missing 8 something else somewhere else?

9 MR. DYER: Im concerned about that. To 10 answer your question, Commissioner, we still have a 11 lot of turnover in our staff and moving around. The 12 Resident Inspector at Davis-Besse has accepted a 13 promotion to another region, and he starts his 120-day 14 clock, and I think we went to extend it, and were 15 working on augmenting the site staff at Davis-Besse to 16 do that. I have other sites. Ive filled resident 17 senior -- excuse me, four branch chief positions.

18 Three were with senior residents, and we delayed entry 19 for some of those to show up at the regional office so 20 we can try to get qualified folks at the site to 21 support it. So its a never-ending challenge.

22 Specifically, to Davis-Besse, were maintaining site 23 coverage.

24 COMMISSIONER McGAFFIGAN: But do you have 25 -- is this more of a challenge in your region than the

105 1 other regions?

2 MR. DYER: Last week, the four regional 3 administrators and deputies got together and held a 4 discussion, and were all having challenges a little 5 different in each region for different reasons.

6 COMMISSIONER McGAFFIGAN: Well, we can 7 discuss that maybe at the annual meeting.

8 MR. DYER: Yes.

9 COMMISSIONER McGAFFIGAN: So I dont want 10 to get diverted. I think you have a -- I do want to 11 compliment staff. I think you have a very good web 12 page on Davis-Besse, but we also have another web page 13 on Davis-Besse which is the -- where a member of the 14 public might go to look at where they stand in the 15 reactor oversight process phase. And that web page 16 says, "current action matrix column under IMC 0350 17 process," and then everything on the page is green.

18 I mean inspection findings, performance indicators.

19 When are we going to have some 20 significance determinations made about the various 21 inspection findings that have been at least 22 preliminarily made and discussed in public, I believe, 23 in many cases? When are we going to start churning 24 out non-green color inspection findings to populate 25 the page, because weve been treating this Plant as if

106 1 its a multiple degraded cornerstone plant since 2 March, and Mr. Lochbaum has been quoted as saying he 3 doesnt really mind whether we ever color anything, 4 because weve been acting the right way. But I think 5 it does convey a bad message if we dont start getting 6 some of this stuff through the process. So what is 7 the current plan?

8 MR. DYER: I think Jack can share with you 9 the schedule.

10 MR. GROBE: Thanks, Jim. First, about a 11 month ago, we issued an inspection report that dealt 12 with the off-site and on-site radiological 13 performance.

14 COMMISSIONER McGAFFIGAN: Right. That one 15 is relatively trivial. Im talking about the real 16 things.

17 MR. GROBE: Okay. It included two white 18 findings, but the Cert Panel meets Thursday. This has 19 been a particularly challenging significance 20 evaluation. The entire design pressure boundary was 21 gone, and what was remaining was not designed to 22 retain pressure. So the evaluation of its failure 23 modes and failure mechanisms is very challenging.

24 Office of Research and NRR have been providing this 25 great support. In December, I believe it was the

107 1 first week in December, we received the results of 2 their research and analyses that went into an 3 assessment that didnt give us a specific probability 4 of failure of the cavity clad material. It gave us an 5 estimate of what that probability was with a broad 6 number of variables that are not well defined.

7 So Bill and I have been working closely 8 with the staff here in headquarters to try to take 9 that assessment and our Phase 2 risk analysis results 10 and meld those together into a significance 11 assessment. We believe weve been successful, and 12 were meeting Thursday morning with the Significance 13 Enforcement Review Panel to finalize that assessment, 14 and shortly after that it should be available 15 publicly.

16 COMMISSIONER McGAFFIGAN: Let me just 17 clarify, though, I mean thats one element of your --

18 of a very comprehensive set of inspections youve 19 carried out over the past year. There presumably are 20 others. I mean Mr. Gunther later will say, "Given 21 that containment sump system screens were subsequently 22 found to be grossly undersized, reanalysis of accident 23 consequences would likely show an undo risk to public 24 safety as well." Is there anything in any inspection 25 finding that you guys have -- thus far that applies to

108 1 some screens, and is there any probability of an 2 inspection finding -- a colored inspection finding 3 with regard to some screen?

4 MR. GROBE: The Licensee identified -- let 5 me step back. The sump was completely aligned with 6 its licensing basis design. So there was nothing 7 wrong with the design of the sump, the square footage 8 of the screen area or anything. The initiative that 9 the Licensee has taken is far beyond the licensing 10 basis.

11 COMMISSIONER McGAFFIGAN: All right. So 12 just to clarify, just on that item, there is no 13 inspection finding, there is no color coming, they are 14 within their design basis, and indeed theyre taking 15 something to go beyond what our requirements currently 16 require?

17 MR. GROBE: Thats correct. In 0350 18 space, individual inspection findings that are 19 continuing manifestations of the same problem do not 20 often result in additional substantive action on the 21 part of the Agency. The Licensee identified several 22 specific installation issues with the sump. They 23 werent part of our inspection findings, and theyre 24 addressing those. So the answer to your question is 25 we have a number of issues that the evaluation is

109 1 ongoing in the design engineering area, and those are 2 sticky wickets, theyre difficult design issues. Some 3 of those may result in substantive findings, I cant 4 project that at this point in time.

5 MR. DEAN: Im sorry, Commissioner, if I 6 may interject as well, as you know, we have recently 7 completed an STP Task Force, which has looked at 8 issues that I know that are of concern regarding 9 timeliness of significance determinations and of 10 course the Davis-Besse event has resulted in a fairly 11 lengthy significance determination process. And I 12 agree with you in terms of public perception looking 13 at the web page and so on. But in a lot of respects, 14 the way that the Agency has reacted is really kind of 15 a success story in terms of we didnt have to wait for 16 a completion of a risk analysis or a risk assessment 17 to take the appropriate action as to assure public 18 health and safety. And so thats the message that 19 Ive been conveying when Ive been questioned by the 20 press or public on this issue regarding the length of 21 time for the significance determination. Its almost 22 moot really in some respects.

23 COMMISSIONER McGAFFIGAN: I agree its 24 moot in terms of the actions weve been taking, but I 25 think its an important thing that we need to tie up,

110 1 and I fully understand that some of these are very 2 complex and unique. I think you once set for 3 yourselves an impossible goal of doing significance 4 determinations in 90 days, and I think for the really 5 complex cases you need more time than that, and you 6 should amend your system so that you dont set 7 yourself an impossible goal. But I think at some 8 point we have to make a call and, you know, Im glad 9 to hear that the Cert will be meeting later this week.

10 Mr. Chairman, Ive got other questions, but in light 11 of the third panel, I think Id better stop. Thank 12 you.

13 CHAIRMAN MESERVE: Thank you. Id like to 14 express appreciation to the 0350 Panel and to the 15 staff for all the work that theyve performed.

16 We have been going now for well over two 17 hours, and let me suggest that we take just a few 18 minute break and let people stretch their legs, and 19 then well get started with the third panel.

20 (Whereupon, the foregoing matter went off 21 the record at 12:44 p.m. and went back on 22 the record at 12:59 p.m.)

23 CHAIRMAN MESERVE: Okay, why dont we get 24 underway again. We have a third panel which 25 represents, is constituted by various stakeholders.

111 1 They include Paul Gunter who is the Director of the 2 Reactor Watchdog Project of the Nuclear Information 3 and Resource Service, NIRS. We have Jere Witt, who is 4 the County Administrator for Ottawa County in the 5 State of Ohio. And Alex Marion, who is the Director 6 for Engineering at the Nuclear Energy Institute.

7 Mr. Gunter, would you like to proceed?

8 MR. GUNTER: Thank you. My remarks today 9 are focused on the Task Force Evaluation, the Agencys 10 scrapping of the Davis-Besse Shutdown Order for 11 Bulletin 2001-01 Safety Inspections.

12 First Energys deliberate neglect 13 destroyed the Davis-Besse reactor vessel head and 14 significantly risked a nuclear accident. The 15 recurrent lack of effective NRC oversight further 16 eroded a hole in the publics trust of the Agencys 17 commitment to safety.

18 The Agencys reactor oversight process 19 erroneously represented that First Energy was 20 maintaining its focus on safety. NRC plant 21 assessments failed to even mention the blizzard of 22 corrosive boron snow driven by reactor coolant system 23 leakage inside containment.

24 While First Energy eventually admitted 25 that placing production over safety had become a

112 1 routine course of business for years, NRC has yet to 2 admit its role in prioritizing company profit margins 3 over public safety margins.

4 The final report fails to address the 5 Agencys justification for abandoning its risk 6 analysis technique as outlined in Regulatory Guide 7 1.174.

8 The NRC policy statement on probabilistic 9 risk assessments encourages greater use of this 10 analysis tool in safety decision making. It provides 11 the staff and the licensee with clearly established 12 governing safety policies and procedures through a set 13 of five principles.

14 The five principles were applied by staff 15 in September 2001 as the basis for issuing an order to 16 noncomplying licensees to perform inspections of 17 control rod drive mechanism nozzles per the request of 18 the Bulletin. Staff concluded that four of the five 19 safety principles were not met. And the fifth, a 20 special circumstance existed where current regulations 21 were inadequate.

22 Using the guidance, staff concluded that 23 Davis-Besse was not safe to operate beyond December 24 31, 2001 and "determined a potentially hazardous 25 condition may exist such that the integrity of the

113 1 reactor coolant pressure boundary may not be 2 maintained at the Davis-Besse Nuclear Power Station."

3 An order was finalized in mid-November to 4 shut down Davis-Besse for safety inspections and 5 presented to the Commission, but never issued.

6 Following the abandonment of the order on 7 November 29, 2001, staff requested that the assessment 8 of the five principles be discussed in a briefing to 9 the Executive Director of Operations and the 10 Commissions Technical Assistants. The staff vu-graph 11 acknowledged again that four of the five safety 12 principles were not met for the extension of Davis-13 Besses operation beyond the Bulletin Advisory. Staff 14 concluded if inspections were performed, current 15 regulations are not met. One barrier is likely 16 degraded. Safety margins are likely reduced. Only a 17 small increase in CDF or core damage frequency 18 results.

19 The risk measurement is monitored only by 20 performance of the inspection. We question the 21 Agencys confidence levels in the core damage 22 evaluation given the large and numerous uncertainties 23 in predicting cracks, given that the NRC staff knew 24 First Energy had never fully inspected the reactor 25 pressure vessel boundary, and given an internal NRC

114 1 communication dated November 8, 2001 where First 2 Energy Vice President of Nuclear Operations 3 acknowledges to the Agency that "there is a high 4 likelihood that they, Davis-Besse, have leaks in the 5 primary pressure boundary."

6 In fact, NRC daily status report on the 7 Bulletin dated November 30, 2001, staff acknowledged 8 that not one of the principles was met with 9 confidence. "Although operation in this condition 10 could result in core damage frequency and incremental 11 core damage probability values, that are above the 12 normally accepted guidelines of Reg. Guide 1.174 and 13 Reg. Guide 1.182. The analyses also indicate that the 14 consequences of such an event would not constitute 15 undue risk to the health and safety of the public."

16 Despite findings that said dont do it, 17 the process was derailed to extend the operation at 18 the Davis-Besse beyond Bulletin advisory. In so 19 doing, NIRS contends that the Agency unreasonably 20 gambled an accident.

21 Given the containment systems screens 22 were subsequently found to be grossly undersized, a 23 reanalysis of accident consequences would likely show 24 an undue risk to public safety as well.

25 The task force did not acknowledge,

115 1 evaluate, nor make recommendations on the NRC 2 management action to abandon the steady judgment of 3 the Agencys established risk analysis technique for 4 safety decision making.

5 The abandonment of the order and its 6 regulatory basis is the result of an Agency management 7 culture that prioritized the corporate and financial 8 concerns of First Energy executives. The task force 9 report outlines that Davis-Besses technical 10 specifications require the reactor to begin shutdown 11 within six hours of a determination of reactor leakage 12 and cold shutdown within 30 hours3.472222e-4 days <br />0.00833 hours <br />4.960317e-5 weeks <br />1.1415e-5 months <br />.

13 The task force finding that NRC does not 14 consistently enforce its licensing agreements for 15 maintaining the reactor pressure boundary is extremely 16 disturbing in light of the certainty that rust never 17 sleeps.

18 The Agencys inconsistency speaks more 19 clearly to an arbitrary policy of enforcement 20 discretion on matters vital to safety and internal e-21 mail from an NRC manager to the Commission states, "We 22 could have made an argument for immediate shutdown, 23 but we are exercising discretion in allowing them to 24 go to December 31st, but not beyond."

25 Another NRC internal communication states,

116 1 "I said we can justify today to shut these plants 2 down. However, we are exercising discretion, noting 3 it would clearly be punitive to immediately shut a 4 plant down and they sit there for a month waiting to 5 obtain the correct inspection equipment, etcetera."

6 NIRS questions the use of the word 7 "punitive" in what sense? We can only conclude that 8 early shutdown for safety inspections is punitive to 9 the companys maximum capacity factor and annual 10 financial reports.

11 Internal Commission communications dated 12 November 21, 2001 clarify that First Energy President 13 Bob Sanders had spoken earlier to NRR Director Sam 14 Collins to say that he did not want an order because 15 idling the plant would have financial impacts.

16 Interestingly enough, an e-mail from the 17 previous day by the Resident Inspector told staff that 18 he had sat in on the stations morning management 19 meeting and observed "that licensee management 20 expressed cautious optimism that the NRC could 21 approve, would approve their plans to defer 22 inspections until April 2002." Staff noted their 23 surprise as "this is contrary to the message that was 24 sent to DB on Thursday, 11/14/2001." The order was 25 never issued.

117 1 The task force did not review, nor make 2 recommendations regarding the significant missed 3 opportunity for NRC to restore a measure of public 4 confidence and trust by issuing the Davis-Besse order.

5 The Agency could have demonstrated its 6 commitment to public safety by enforcing the licensing 7 agreement with Davis-Besse as established by federal 8 law. NRC missed an opportunity to demonstrated a 9 lesson learned from 1996 when Time Magazine "caught 10 the Nuclear Regulatory Commission at a dangerous game 11 that it has played for years, routinely waiving safety 12 rules to let the plants keep costs down and stay on 13 line."

14 Millions of lives ride on NRC safety 15 decisions each day. NIRS concurs with the emergency 16 enforcement petition recently filed by Ohio 17 Congressman Dennis Kucinich. It is more appropriate 18 for NRC to set an example of a commitment of safety by 19 holding a revocation hearing of First Energys license 20 rather than proceed any further on the restart of the 21 Davis-Besse reactor.

22 Thank you.

23 CHAIRMAN MESERVE: Mr. Witt?

24 MR. WITT: Commission Members, thank you 25 for the invitation to address the Commission on this

118 1 important topic. I obviously do not provide you with 2 the expert technical information youve heard from 3 everyone else, but I believe I provide the common 4 sense approach to this issue.

5 I am Jere Witt. I am Ottawa County 6 Administrator for the past 25 years and a member of 7 the Davis-Besse Restart Overview Panel.

8 Ottawa County is the biggest stakeholder 9 in this process. The residents of Ottawa County are 10 most affected by the plant. Safe operation of the 11 plant has and always will be my first priority.

12 It should also be noted that Ottawa 13 Countys Emergency Management Agency has demonstrated 14 itself to be one of the best in the country. This has 15 been done involving drills with FEMA and the NRC and 16 more importantly real life scenarios of tornadoes, 17 floods and collapsed buildings.

18 The protection of the residents is their 19 only goal.

20 My role on the Restart Overview Panel is 21 to represent Ottawa County to ensure the plant is 22 ready to restart and operate safely. I have observed 23 the restart activities since Day 1, attending over 60 24 meetings, many all day long. These meetings include 25 Restart Overview Panel monthly meetings, two tours of

119 1 containment, NRC public meetings, updates from NRC 2 staff, three full days with groups of employees on the 3 safety conscious work environment, meeting with 4 employees individually, two meetings with the First 5 Energy Board of Directors Nuclear Committee and 6 observing many plant activities including the Restart 7 Readiness Review Board. Obviously, Ive been closely 8 involved.

9 We must evaluate the value of the 10 continued operation of Davis-Besse in terms of safety 11 and value to the community. Davis-Besse is the 12 largest employer and largest taxpayer in Ottawa 13 County.

14 Obviously, Davis-Besse and the NRC made 15 mistakes and we must ensure it never happens again.

16 I have personally been involved in the development of 17 the plan putting together the actions required to 18 safely and effectively operate Davis-Besse in the 19 future.

20 There is a new commitment to safety 21 developed and it will continue to grow. The 22 commitment started with the new management team and 23 demonstrated through their actions and involvement 24 with the staff. The leadership and action program is 25 making sure it permeates through all the staff from

120 1 the top to the bottom.

2 Employees are using the new systems as 3 evidenced by the many safety improvements being 4 brought to light and instituted, including major ones 5 such as the emergency sump and leak detection systems.

6 This will only help the safety culture continue to 7 grow.

8 There is a new system in place for 9 resolution of open issues. Employees are trained on 10 it and see the results. Management is out in the 11 plant observing the work and being directly involved 12 with the staff.

13 The CEO and Board of Directors are very 14 involved as evidenced by their time spent at Davis-15 Besse and meeting with the Restart Overview Panel.

16 The 0350 process has been a good one to 17 get to where we are today. We now need a better 18 process to ensure it does not happen again.

19 I have some recommendations and some 20 thoughts for the Board to consider. The NRC should 21 meet at least semi-annually with Ottawa County to 22 update on the status of the plant and any risk 23 significant issues. We should be a player in any 24 discussion of potential safety risk.

25 The Restart Overview Panel should continue

121 1 in some format to continually review the plant 2 operation and the NRCs review of these operations.

3 This panel gives an expert, independent review of the 4 plant. I am sure many plants have expert consultants 5 that review their operations. But my experience on 6 this panel has made me keenly aware of how much better 7 this review is done if they meet as a group. They 8 have asked the toughest questions throughout the 9 Davis-Besse incident and continuously challenge each 10 other and the staff.

11 I also believe the NRC should be involved 12 at least as an observer. I truly believe that 13 independent experts such as this, acting as a group, 14 could have possibly prevented this incident.

15 I also would echo some of the questions 16 asked by the NRC Commission before to other panel 17 members as to how theyre going to guarantee that 18 proper inspections are made to ensure safe operations 19 and what methods you would use to assess the 20 effectiveness of these changes and will there be 21 independent oversight of these changes.

22 I would also ask that the NRC consider how 23 it has -- it will change its safety culture as they 24 have asked Davis-Besse to provide information how they 25 will effectively change its own.

122 1 I know that First Energy has dealt with 2 the personnel issues of those involved and I would 3 hope that the NRC deals with its own appropriately, if 4 they have not already done so. This is vital to 5 public confidence. I will assure you that Ottawa 6 County will continue a more active role as a partner 7 in the future operation of Davis-Besse. We will 8 challenge and demand answers from both First Energy 9 and the NRC.

10 The systems and programs are in place to 11 safely operate Davis-Besse and Im confident with the 12 proper changes made by Davis-Besse, FENOC, First 13 Energy and the NRC, we will all continually monitor 14 all facets into the future to protect the residents of 15 Ottawa County.

16 My family lives in the area along with my 17 grandchildren and I would never suggest restart if I 18 believe a credible safety risk is involved. It is 19 time to move forward in the process with safety as the 20 number one and only goal.

21 A renewed stringent regulation by the NRC 22 must be part of this process. This regulation must be 23 based on knowledge and common sense and not one 24 influenced by political agendas.

25 I would personally like to thank the NRC

123 1 staff, especially Jim Dyer, Jack Grobe, Bill Dean and 2 Christine Lipa and others for their open and candid 3 discussions with the residents of Ottawa County and 4 myself. They have gone above and beyond to ensure 5 that we are informed.

6 I would also like to express my 7 appreciation to First Energy, especially Pete Burg, 8 Bob Saunders, Lou Meyers and others for allowing me to 9 participate on the ROP and giving me free access to 10 all facets of Davis-Besse.

11 Lastly, I would like to thank the 12 Commission for the opportunity to address you today.

13 I hope my comments provide you useful information as 14 you continue your oversight.

15 I would be happy to answer any questions 16 at the appropriate time.

17 Thank you.

18 CHAIRMAN MESERVE: Thank you. Mr. Marion.

19 MR. MARION: Thank you, Mr. Chairman, 20 Commissioners and fellow panel members, good 21 afternoon. I appreciate the opportunity to briefly 22 summarize to you on industry activities that have been 23 affected in response to the Davis-Besse head corrosion 24 event. My discussion today focuses on three industry 25 organizations, the Institute of Nuclear Power

124 1 Operations, the Nuclear Energy Institute and the 2 Electric Power Research Institute.

3 May I have the next slide, please?

4 (Slide change.)

5 MR. MARION: This summarizes a couple of 6 the actions that the INPO organization has undertaken.

7 Workshops were conducted in each region last year for 8 utility executives and senior management. These 9 workshops involved senior management from First Energy 10 as well as INPO and they facilitated a candid, open 11 discussion of issues and activities prior to and 12 subsequent to the Davis-Besse event. The primary 13 focus was on organizational human performance and 14 management issues.

15 After these workshops or I should say 16 concurrent with these workshops, INPO initiated an 17 evaluation of their internal cornerstone programs to 18 try to establish what they did know as a result of 19 their programs, what they did not know relative to the 20 conditions at the plant with additional focus on the 21 organizational factors that may have contributed to 22 the event.

23 The overall objective of this effort by 24 INPO was to try to identify those actions and 25 activities that had an impact on safety. And as a

125 1 result of this focus, INPO conducted an assessment of 2 their cornerstone programs and identified 14 3 recommendations. And the cornerstone programs are the 4 ones that deal with evaluations, assist visits, 5 training and evaluating and communicating operating 6 experience.

7 May I have the next slide, please?

8 (Slide change.)

9 MR. MARION: Additionally, a Chief 10 Executive Officer Conference was hosted by INPO this 11 past November. The theme was building and maintaining 12 a safety culture. Additionally, INPO formed 13 a materials department to focus its effort on 14 materials issues as they relate to operational safety 15 issues and the basic objective was two-fold: to be 16 proactive in support of industry efforts in this area 17 and to have a good understanding of best practices to 18 ensure that best practices are implemented as far as 19 material performance is concerned.

20 Lastly, INPO initiated a review visit 21 program of reactor coolant system boundary integrity.

22 Two plants were piloted to establish the 23 reasonableness of the program and Im pleased to tell 24 you that the first official review visit begins this 25 week and the objective is to review all the plants and

126 1 evaluate the practices and programs in place to assure 2 the reactor coolant system pressure boundary is 3 maintained. That program will be completed in 4 approximately three years time.

5 May I have the next slide, please?

6 (Slide change.)

7 MR. MARION: This slide summarizes a 8 significant operating experience report that was 9 issued by INPO towards the end of last year. It 10 discusses, the report itself discusses conditions at 11 Davis-Besse relating to management and oversight, 12 boric acid control program, the corrective action 13 program, and the philosophy of justifying and 14 accepting boric acid on the top of the reactor vessel 15 head over a period of time.

16 It also discussed missed opportunities and 17 it really focused on the willingness of the plant 18 staff and management to operate the facility with 19 degraded equipment.

20 There were three recommendations that are 21 summarized briefly on this slide. Id like to speak 22 to them for a moment.

23 One of the recommendations calls for a 24 case study of the Davis-Besse experience for all 25 managers and supervisors and that all the utilities

127 1 periodically conduct a case study for new managers and 2 supervisors.

3 Theres a continuing emphasis in assessing 4 the organizations focus, the utility organizations 5 focus on root cause and corrective action, to evaluate 6 degraded equipment and material condition of the 7 plants.

8 Lastly, theres a recommendation to 9 identify and document abnormal conditions and evaluate 10 potential effects of these conditions, whether theyre 11 significant or whether theyre small, to evaluate 12 worse case outcomes of the condition if the condition 13 is not repaired and to look at these conditions 14 individually as well as collectively in aggregate.

15 May I have the next slide, please?

16 (Slide change.)

17 MR. MARION: From the perspective of the 18 Nuclear Energy Institute, in November of last year, 19 our Executive Committee adopted a resolution to 20 support an industry-wide effort to improve materials 21 degradation management programs in the industry and 22 Ill speak to those programs in a little bit of detail 23 later on.

24 This effort called for a self-assessment 25 of all the materials programs and that self-assessment

128 1 was driven by two main factors: recent events that 2 have occurred over the past couple of years, for 3 example, the Indian Point 2 steam generator tube 4 rupture in February of 2000; the BC summer hot leg 5 weld cracking in October of 2002; the circumferential 6 cracks in the CRDM nozzles at the Oconee plant at the 7 end of 2000 and into subsequent outages for the other 8 plants in early 2001 and obviously, the Davis-Besse 9 nozzle cracking experience, coupled with the corrosion 10 situation.

11 There are other plant experiences that 12 have been identified that are not necessarily at the 13 same level of notoriety as the ones Ive mentioned, 14 but the idea of this approach is to evaluate those 15 experiences and make adjustments in the program so 16 that the industry can be more proactive in heading off 17 these degradation -- identifying the degradation 18 problems and resolving them before they result in a 19 significant challenge to plant safety systems.

20 May I have the next slide, please?

21 (Slide change.)

22 MR. MARION: The self-assessment is 23 essentially a review of the current material programs 24 to identify barriers and gaps. To put it another way, 25 were trying to capture what is working well, which

129 1 programs are effective and why; what is not working 2 well and what needs to be done to improve the 3 particular program. Were also looking for areas of 4 duplication and overlap and were looking at whats 5 missing.

6 The second bullet, we identify some of the 7 programs that are captured in the self-assessment and 8 Im not going to read that, but I do want to make it 9 clear that these programs include the NSSS owners 10 groups activity related to some material performance 11 project.

12 And EPRI provides technical support to 13 their programs and theyre a significant contributor 14 in the self-evaluation.

15 The scope of the entire effort from the 16 standpoint of PWRs and BWRs includes the primary 17 system for primary water reactors, the dry well for 18 boiling water reactors, secondary side steam 19 generators for primary water reactors and materials 20 issues related to reactor fuel as an example of the 21 issues associated with axio-offset anomalies.

22 Next slide, please.

23 (Slide change.)

24 MR. MARION: From an EPRI perspective, I 25 mentioned earlier that theyre providing technical

130 1 coordination and support for the existing material 2 programs, but more importantly, theyre supporting the 3 industry and NEI in providing us technical basis to 4 respond to and deal with the NRC generic 5 communications that have been issued over the past 6 several years.

7 The primary focus from the standpoint of 8 the technical analyses and the programmatic elements, 9 if you will, focus on three areas: inspection, repair 10 and mitigation.

11 Additionally, EPRI and the Office of 12 Research in the NRC have been discussing opportunities 13 for collaboration and Im pleased to see there are 14 three areas that have been identified in the details 15 of the plan and obviously the costs are being worked 16 out as I speak. Hopefully to everyones satisfaction.

17 But the areas involve boric acid corrosion 18 to get an understanding of the corrosion mechanisms 19 and its effect on materials; to evaluate primary water 20 stress corrosion crack growth rates of Alloy 600. And 21 Alloy 600 is the primary material used in head 22 nozzles.

23 And do metallurgical analyses of the 24 specimen that was removed from the Davis-Besse reactor 25 vessel head as well as the specimens that have been

131 1 removed from the North Anna 2, J-groove welds.

2 Next slide, please.

3 (Slide change.)

4 MR. MARION: Our basic objective is to 5 capture the findings and recommendations from the 6 self-assessment, to review and seek approval of the 7 recommendations by the industrys chief nuclear 8 officers, and our expected completion date is May 9 2003.

10 And Id like to take a moment just to 11 identify several of the challenges that have already 12 been identified in this effort. Obviously, funding.

13 Money and resources is the key challenge. What weve 14 realized is each of these programs which are crucially 15 important to various elements of the industry are in 16 competition for research funds.

17 Prioritization, obviously. Communication, 18 within the industry as well as communication with the 19 NRC. Consensus resolution process as its applied 20 within the program advisory structure. Regulatory 21 interface which involves NEI and the individuals from 22 these programs as well as the NRC. Accountability in 23 terms of if one of these programs is not successful, 24 to whom is the leadership of that program held 25 accountable?

132 1 Implementation, of course, implementation 2 of the guidance documents that have been developed by 3 the respective programs. And monitoring the 4 implementation of those guidance documents over a 5 longer term.

6 Next slide, please.

7 (Slide change.)

8 MR. MARION: In conclusion, I would like 9 to indicate that we believe that the NRCs lessons 10 learned task force effort that evaluated the internal 11 programs and policies is a healthy and positive action 12 that the NRC had taken. And we are willing to work 13 with the NRC staff as the action plan supporting the 14 recommendations are developed and implemented over the 15 next several months to a couple of years.

16 The benefits of such objective critical 17 review, both by the NRC and the industry is extremely 18 crucial and I think the industry, historically, has 19 demonstrated the discipline to systematically conduct 20 such critical reviews. It results in enhancement of 21 the industry programs and it results in continuous 22 feedback on implementation issues.

23 The bottom line is all of these efforts, 24 both from the NRC and the industry point of view 25 clearly demonstrate a continuing focus on assuring

133 1 plant safety. And that concludes my presentation and 2 I thank you.

3 CHAIRMAN MESERVE: Id like to thank all 4 of the panels for their presentations. In light of 5 the lateness of the hour, Ill just have a question 6 for each of you.

7 First for Mr. Gunter, first a comment and 8 then a question. Your presentation relied principally 9 on the principles that were drawn from Reg. Guide 10 1.174. That is a Reg. Guide that is intended to be 11 used for changes in the licensing basis, that would be 12 license amendments that involve permanent changes in 13 the plant and by its literal terms would not be the 14 document which one would rely for temporary action 15 such as the one that the staff was making in allowing 16 six weeks of continued operation.

17 I recognize that you were invited into 18 reliance on it and the staff made reference to it in 19 some documents that NRC made available to you, but it 20 literally is not something by its terms was applicable 21 to the decision that was before the staff.

22 Question, we had an extensive presentation 23 by First Energy, the variety of actions it has taken 24 to try to deal with the circumstances at the Davis-25 Besse plant. I wonder if you have any criticisms or

134 1 comments on the actions that the licensee has taken to 2 deal with the situation?

3 MR. GUNTER: Well, the first question that 4 came to mind today was am I correct in that there are 5 four reactor coolant pumps at Davis-Besse?

6 CHAIRMAN MESERVE: Four.

7 MR. GUNTER: Two have been refurbished.

8 Well, I guess my question is is that given the other 9 two were not refurbished, I guess there is a question 10 with regard to the material condition, particularly in 11 light of the age of those other two reactor coolant 12 pumps compared to the two that were refurbished.

13 Is there some way to get some comment on 14 that?

15 CHAIRMAN MESERVE: I dont think the 16 Commission is in a position to comment on that, but 17 Im sure the staff would be in a position to be able 18 to answer your question about the reactor coolant 19 pumps.

20 MR. GUNTER: Or Davis-Besse.

21 CHAIRMAN MESERVE: Or Davis-Besse, Im 22 sure.

23 MR. GUNTER: I guess one concern that 24 remains though is that the -- with regard to the 25 destruction of the trust that First Energy engaged in,

135 1 more than just material condition of the plant. There 2 is currently no metric system, lets say, right now 3 for restoring public confidence that the management 4 culture has done anything but shift seats and that the 5 same agenda probably even under more pressure right 6 now with regard to a restart plan, may not have 7 changed.

8 How is the Commission, how is the 0350 9 Panel to engage that broad area of uncertainty in 10 light of the fact that your trust should have been 11 torpedoed by this plants actions?

12 CHAIRMAN MESERVE: Let me say I think that 13 is a fair comment and question and a lot of discussion 14 weve had today has dealt with the problems of 15 assessing how safety culture has changed and not being 16 able to monitor that. And I think that is going to be 17 a challenge for the panel, the 0350 Panel to assess, 18 evaluate the restart decision.

19 Mr. Witt, that does tie directly to the 20 question I had to you and the staff has had extensive 21 activities in trying to outreach in the community and 22 to try to get a sense of the community concerns.

23 Have those activities been effective? Are 24 there things that we should learn from this experience 25 as to how to do that job better and to communicate

136 1 with the affected community in a better fashion than 2 we have?

3 MR. WITT: I assume when you refer to the 4 staff, youre talking about the NRC staff?

5 CHAIRMAN MESERVE: Yes.

6 MR. WITT: No. I think theyve been very 7 effective in doing that. They certainly have gone 8 above and beyond in keeping the local governments 9 involved, answered our questions, met with us to 10 explain issues.

11 I think theyve done a very good job of 12 that. I cant think of anything quite honestly that 13 they could do to improve on that, other than Jack 14 Grobe suggested the sound system.

15 (Laughter.)

16 Thats certainly not a reflection on the 17 NRC. That was just the facilities available.

18 But no, I think theyve done everything 19 they can to keep people involved. I know that they 20 stay after the meetings to answer more specific 21 questions so someone is not taking up all the time.

22 We asked for and they certainly followed 23 our request in asking that the local public be allowed 24 to ask their questions first, so someone cannot 25 dominate the program. And theyve done all that and

137 1 done a very good job of it, frankly.

2 CHAIRMAN MESERVE: Mr. Marion, you spent, 3 I think appropriately, the bulk of your time talking 4 about the self-assessment activity that the industry 5 is completing.

6 Let me ask the question about how youre 7 going to deal with the circumstance that maybe the 8 Davis-Besse plant presents for us in that we have a 9 high level effort to try to assemble information and 10 to make sure that the situation is analyzed, but 11 before the event of Davis-Besse we had a situation 12 where the people who were there were comfortable and 13 that they thought they had their hands around the 14 problems that existed in the plant and were not 15 necessarily open to receiving advice from outside in 16 this sort of area.

17 How are you going to deal with the problem 18 of getting to the plants that may not be actively 19 involved in assessment process itself, may be 20 comfortable with the world as it exists and they have 21 some problems that need to be addressed?

22 MR. MARION: Mr. Chairman, thats an 23 excellent question. I think it was mentioned before 24 by the representatives from First Energy that there 25 was a sense of complacency and isolationism on the

138 1 part of the management and staff at that plant.

2 And thats one of the human performance 3 and management issues that the INPO program is going 4 to focus on. And INPO is going to conduct their 5 evaluations of all the plants.

6 I mentioned communication is a significant 7 element in terms of a challenge before us as we move 8 forward and INPO makes it a point to communicate 9 within their advisory structure, their findings as a 10 result of these evaluations and review visits, 11 etcetera. And they also obviously communicate with 12 the utilities and their peers, but most importantly, 13 they communicate with the Chief Executive Officers in 14 the industry.

15 As I mentioned from an NEI perspective, 16 the same Chief Executive Officers are on our board of 17 directors of NEI and weve been communicating with 18 them our intent and objectives relative to the self-19 assessment and materials programs. And we are unique 20 at NEI as compared to the other industry organizations 21 because we are the only organization that brings 22 together the chief nuclear officers in the industry.

23 And we have been communicating with them also, 24 relative to the results of our review of the materials 25 programs and INPO attends our meetings and also

139 1 communicates to that body, that level in the industry, 2 their findings as a result of these evaluations.

3 And I think having said all that, the 4 heightened level of awareness and sensitivity and all 5 of the documentation and information thats been 6 brought to bear relative to the technical conditions 7 at the plant and relative to the human performance and 8 materials conditions at the plant, I feel comfortable 9 in saying at every level within the industry, that 10 information is being integrated into the way the 11 utility personnel operate and manage their facilities.

12 And its not the kind of thing thats going to change 13 overnight or improve overnight, but we have a number 14 of processes in place through the various 15 organizations.

16 CHAIRMAN MESERVE: Thank you.

17 Commissioner Dicus?

18 COMMISSIONER DICUS: Thank you, Mr.

19 Chairman. First of all, I do want to thank all of our 20 stakeholders for coming. You provide extremely 21 valuable input into the processes we deal with. I 22 want to thank you for that.

23 Mr. Witt, I particularly appreciate the 24 kind statements you made about the NRC staff. I also 25 appreciated your recommendations and I think you were

140 1 positively critical and thats a very good statement.

2 I also have dealt extensively in my former life with 3 local governments and I do appreciate the efforts that 4 you go to.

5 I have a question. I know when I was out 6 of the room I was able to listen to your comments.

7 Given the fact that INPO has a process, NEI has its 8 efforts, do you see anything changing in how INPO and 9 NEI may work down the road?

10 MR. MARION: Let me just answer that 11 question.

12 COMMISSIONER DICUS: Youve got two 13 different goals.

14 MR. MARION: Absolutely. We do our best 15 to work together, all three industry organizations in 16 a complementary fashion to support the needs of the 17 industry.

18 Now INPOs mission focuses on maintaining 19 operational safety, doing all the necessary work 20 associated with evaluating operating experience, 21 making recommendations, etcetera, etcetera.

22 We maintain a boundary in our relationship 23 and interactions in terms of NEI is the organization 24 that was put in place to deal with the regulatory 25 issues. INPO provides them some support, but you will

141 1 hardly ever see INPO at a public meeting to discuss 2 some regulatory issue and they defer to NEI.

3 From the perspective of EPRI, EPRI 4 provides technical support to both organizations. So 5 I dont see any significant change in the way the 6 three organizations interact. Quite frankly, Ive 7 been in Washington for approximately 15 years when I 8 first came to the predecessor organization, NUMARC.

9 And I think the organizations work very well together.

10 And the greatest advantage we have is when we can 11 integrate our efforts on a particular problem that 12 needs to be solved, where all three organizations are 13 supporting the needs of the industry and I think in 14 this area you have that.

15 COMMISSIONER DICUS: Okay, in light of the 16 hour, Im going to stop.

17 CHAIRMAN MESERVE: Commissioner Diaz.

18 COMMISSIONER DIAZ: Thank you, Mr.

19 Chairman. I think that out of all of this, we of 20 course, I conclude and maybe my fellow Commissioners 21 too, that we have significant deficiencies that we are 22 facing. Were not perfect, not that we ever claimed 23 to be perfect, but we do try hard.

24 In this respect, I think they mentioned in 25 the last panel the fact that we are held to very high

142 1 standard. I think this is an issue that sometimes we 2 need to reflect on, that we are here facing this issue 3 which has consumed tremendous amount of our time, the 4 time of all stakeholders, because not that there were 5 really consequences to the public, but because there 6 could have been, and the fact that we cared about the 7 fact that there could have been consequences and 8 dedicate all of these amounts of time to show the very 9 high level of standards that we apply to all of our 10 processes.

11 And having said that, Mr. Gunter, I know 12 that you have in your presentation, you made some 13 strong statements regarding why we issued the order.

14 I dont want to visit that. I dont agree with that.

15 I think the processes that were surrounding that were 16 well justified. I also do not agree on the 17 implications that we put considerations on financial 18 conditions. I dont think we did. Im sure the 19 Commission did not.

20 However, I am really intrigued by the fact 21 that Im sure you want these processes to be better.

22 Outside of the order and the implications of financial 23 consideration which I disagree, what do you think we 24 could do better to communicate publicly what went 25 through and what are we doing? What do you see out

143 1 there that were not doing that you think is important 2 to restore public confidence?

3 MR. GUNTER: Well, very briefly, I think 4 that adherence to enforcement of the licensing 5 agreement.

6 The public sees a tech spec, the limited 7 condition of operation which is the technical judgment 8 thats been established based on safety. The question 9 remains in our minds why wasnt the technical 10 specification enforced at the appropriate time when 11 First Energy admitted to the NRC that they agreed 12 there was leakage on the reactor pressure boundary.

13 Why wasnt the technical specification put into action 14 at that time?

15 Im just saying that would provide the 16 public with a demonstrated commitment that the NRC is 17 willing to enforce its license agreement with nuclear 18 power operators. If thats abrogated, you dont gain 19 the public trust.

20 COMMISSIONER DIAZ: Right. I understand.

21 So maybe we should have made better effort to explain 22 the difference between the nozzle heads and the actual 23 hole in the head of the reactor in the reactor head.

24 Thats -- there is a difference.

25 MR. GUNTER: Leakage is the question.

144 1 COMMISSIONER DIAZ: Leakage, but we can 2 have leakage and I dont want to get into an argument.

3 Its too late. We can have leakage from the reactor 4 coolant seal and the tech spec allowed certain amount 5 of leakage from a series of components in the plant.

6 MR. GUNTER: I understand.

7 COMMISSIONER DIAZ: And thats not 8 considered a violation of tech spec until they reach 9 a certain level, say two gallons per minute or 10 whatever the tech spec says.

11 But I do see your point. Thank you so 12 very much.

13 Mr. Witt, very quickly, you said -- a 14 question was asked to you whether the staff was 15 communicating properly and so forth. I think they 16 tried very well.

17 From your perspective, is there anything 18 else the NRC could have done with the county to make 19 sure that you were properly informed? Is there any 20 other thing that we could have improved on?

21 MR. WITT: You mean as part of the 0350 22 process?

23 COMMISSIONER DIAZ: No, no, as part of the 24 entire Davis-Besse process.

25 MR. WITT: I think -- first of all, I

145 1 think as I said in my presentation, some type of semi-2 annual meeting with NRC staff, resident inspectors at 3 Davis-Besse would be appropriate. I believe its 4 important enough for the residents of Ottawa County 5 that when a decision was made to allow the plant to 6 continue operating for the extra extended period of 7 time, that the county in the future should be 8 involved, at least know about that process. Frankly, 9 thats great hindsight right now and Im not laying 10 blame on anybody for that, but I think its a lesson 11 learned from this that the county who obviously has 12 the most to risk in this process, could be better kept 13 informed.

14 COMMISSIONER DIAZ: Okay. Mr. Marion, I 15 have said in a public document that I firmly believe 16 that we are never going to have another Davis-Besse.

17 Why? Well, thats why were here. No matter what 18 anybody thinks, it is almost -- its very, very, very 19 difficult to envision another type of that same 20 phenomena happening, the same place, leading to those 21 conditions.

22 However, thats not the issue that we have 23 to face, you as an industry and we as a regulator.

24 What is the other phenomena that might come out that 25 is totally different and that might come up in little

146 1 steps by steps? Can you tell me in simple words how 2 is the industry preparing not for corrosion of the 3 head, which I think we probably will not see another 4 one, but to the other type of phenomena that will 5 challenge the potential safety of public health and 6 safety, what are you doing?

7 8 MR. MARION: Well, from a material 9 performance point of view, the first step is to have 10 a system in place where you can identify and capture 11 operating experience, not only in the U.S. but in the 12 world. And INPO is positioned to do that.

13 One of the key elements of our 14 recommendations is to improve that particular area so 15 the information is available as soon as possible. To 16 give you an example, if I can, I was involved in 17 representing the industry and dealing with a head 18 nozzle cracking issue about 10 years ago when the 19 experience was identified at the Bougey facility. And 20 all the information, the data at that time indicated 21 that you would likely have axial cracks as opposed to 22 circumferential. And over that period of time up 23 until the Oconee experience, all of the experiences 24 with cracks and faults have been actually oriented.

25 And when the Oconee experience occurred, lo and behold

147 1 we found out that there was a plant in France that had 2 indeed experienced the circumferential crack and we 3 recognized that. And the point of evaluating 4 operating experience is to get that information, all 5 of the information together, so that we could 6 determine what the potential degradation mechanisms 7 are and what form they would take. Thats a lessons 8 learned thats more responsive to your particular 9 question.

10 COMMISSIONER DIAZ: Thank you, Mr.

11 Chairman.

12 CHAIRMAN MESERVE: Commissioner 13 McGaffigan?

14 COMMISSIONER McGAFFIGAN: Mr. Marion, one 15 of the issues that staff is grappling with and I know 16 youre grappling with is the ASME code currently for 17 vessel head inspections is clearly not adequate for 18 what we need to do going forward. And how quickly do 19 you think we can put in place something that is a 20 revision to what we have today and we can have 21 confidence in the vessel head inspections going 22 forward?

23 MR. MARION: Ill give you a direct 24 response to the question which Im sure you will 25 appreciate. The best level of effort by the standard

148 1 development organizations has typically been on the 2 order of three to five years. I was recently 3 appointed to the ASME Board of Nuclear Codes and 4 Standards. We do have a meeting later this week and 5 I will make it a point to see if they can find a way 6 to expedite changes to the code to deal with this 7 issue so that subsequently we can get NRC adoption.

8 But at this particular point, were a couple of years 9 away.

10 COMMISSIONER McGAFFIGAN: You understand 11 in the interim we may have to do something?

12 MR. MARION: Absolutely. As a matter of 13 fact, Ive made those kinds of comments to the NRC 14 staff that if there is a gap, they need to determine 15 a way to fill it.

16 COMMISSIONER McGAFFIGAN: Okay, and I 17 think we fully intend to do that.

18 Mr. Gunter, one of the issues that -- I 19 fully endorse everything that Commissioner Diaz said 20 to you in terms of disagreeing with many of the 21 elements in your presentation today. I think the 22 Chairmans response to the Inspector Generals Report, 23 Mr. Hollahans response to the Inspector Generals 24 report which state our case, one of the issues you 25 were raising earlier was your interpretation of the

149 1 tech spec. This diagram shows where Davis-Besse 2 stood. Its one of our performance indicators for the 3 -- as part of the reactor oversight process. And they 4 were so far into the green range and reactor coolant 5 system leakage prior to February that there really was 6 no tech spec. We expect some leakage and this plant 7 was at the very top of the green band.

8 So I think youre misinterpreting our tech 9 specs which is your -- we get to interpret them. I 10 guess you get to try to interpret them. But theres 11 a fundamental difference there.

12 Let me get to my question. If 13 we had issued the order which a 14 unanimous staff felt it was not a safety case 15 for, but lets say we went ahead and issued the order, 16 we then would have found approximately January 20th, 17 we would -- instead of March 6th, we would have been 18 told that theres a full reactor head. How would you 19 have behaved differently since then? Would you have 20 not called for the reactor to be shut down? Would you 21 not be expressing no lack of confidence in us or the 22 licensee? Youre milking our internal communications 23 about this draft order in ways that I dont agree 24 with, but just say we had done exactly what you know 25 we didnt do. We still would have had a problem. We

150 1 still would have had issues that we had to deal with.

2 The licensee would have had issues that they had to 3 deal with. But how would your behavior have been any 4 different?

5 MR. GUNTER: I think we would have taken 6 note of the process by which the Agency had engaged.

7 COMMISSIONER McGAFFIGAN: Really?

8 MR. GUNTER: Certainly. What were 9 looking for right now is demonstration of enforcement.

10 COMMISSIONER McGAFFIGAN: Well, I will 11 never forget your organization coming in in early 12 December of 1999 with three rulemaking petitions, 13 basically asking us to shut down all the plants on 14 January 1, 2000 because it was your judgment that they 15 couldnt be operated safely.

16 We had had a process in that case that 17 went back at least three and a half years to totally 18 kill the Y2K problem in this industry. I mean just 19 absolutely be technically on top of it, be ahead of 20 all the other industries. And we, of course, did not 21 grant your petitions for rulemaking and we operated 22 through the night of Y2K and indeed we were on 23 heightened alert just in case wed done something 24 wrong. And it was a fairly, it was a smooth 25 transition. We didnt need to shut the plants down,

151 1 nor did any other nation need to shut their plants 2 down.

3 We had a process in that case. We had a 4 process that extended back three and a half years that 5 was technically deep. And yet, your organization at 6 the eleventh hour, 59th minute comes in with petitions 7 for rulemaking, asking us on a noncredible technical 8 basis to shut down all the plants.

9 MR. GUNTER: I think they were more 10 focused on compensatory actions, as I recall, 11 particularly with regard to emergency diesel 12 generators back ups and that. I think thats a more 13 appropriate characterization.

14 COMMISSIONER McGAFFIGAN: I totally 15 disagree that there was any Y2K issue with regard to 16 emergency diesel generator backups.

17 So your answer to the question is you 18 would have given us some credit for having issued the 19 order, but would you today not be calling for the 20 plant not to be started up?

21 MR. GUNTER: I think indeed we wouldnt --

22 we would be calling for the same revocation hearing.

23 Thats right. Because of the degree of degradation, 24 the breach of trust. Those are issues that are not 25 necessarily resolved by the order, even, but what

152 1 would have been established by the order was a 2 demonstration to reflect an Agency bias on the side of 3 conservative bias on the side of public safety.

4 COMMISSIONER McGAFFIGAN: I think we have 5 a very conservative bias on the part of public safety.

6 I do think you need to look at the biases of your own 7 organization and Ive been here now six and half 8 years. I dont think youve ever given us credit for 9 anything, but thats -- Ill leave it at that.

10 Thank you, Mr. Chairman.

11 CHAIRMAN MESERVE: Commissioner 12 Merrifield.

13 COMMISSIONER MERRIFIELD: I think theres 14 a respectful difference of opinion, going to Mr.

15 Gunter, a difference of opinion on the motivation and 16 process that we use for getting to the decision that 17 we did.

18 I would agree with you that even if the 19 order had been followed along the lines that you would 20 have wanted us to, I too would believe that we would 21 still be here having this meeting today. Its 22 obviously a very serious issue and I think we still 23 would have been -- we obviously still would be in a 24 process going through the 0350 process and hearing 25 from our own staff.

153 1 Im interested in hearing from you focused 2 on the process and actions that the NRC and FENOC have 3 taken to resolve the issues associated with head 4 degradation and how that has moved its way through the 5 0350 process.

6 MR. GUNTER: I think that were still, 7 there are still a number of questions with regard to 8 how the tech spec failed us. I mean as Commissioner 9 McGaffigan has pointed out, the indications in the 10 tech spec that everybody was still agreeing, but in 11 reality the plant was eroding and it seems to me that 12 thats -- that we were all under false impressions of 13 the margins of safety that were at this plant. That 14 is a very disturbing insight.

15 COMMISSIONER MERRIFIELD: I appreciate 16 that observation. But the focus of my question is we 17 are in a process right now --

18 MR. GUNTER: Moving forward. Of moving 19 into restart. I understand.

20 COMMISSIONER MERRIFIELD: Well, we are 21 going through a process of reviewing the activities 22 being undertaken at the plant to make sure that the 23 plant is put in the condition where we have a comfort 24 level of the safety.

25 MR. GUNTER: I understand.

154 1 COMMISSIONER MERRIFIELD: So thats sort 2 of the focus on that question is the process were 3 using through 0350 to get there --

4 MR. GUNTER: Again, my concern is that we 5 lost confidence in the technical specifications 6 reliability for actually monitoring plant condition 7 and that trust has not been restored in the restart 8 process. If, in fact, the plant could have been in 9 the green, in terms of reactor pressure coolant 10 boundary surety and the damage existed, it does --

11 its disturbing to us that we could be moving along 12 the same lines under the same false assurances on 13 other systems.

14 COMMISSIONER MERRIFIELD: Well, I 15 appreciate that comment. I would make the observation 16 and others have made the observation about the tech 17 specs and Im not going to -- I havent looked at that 18 separately and I leave it to them, to their 19 assurances.

20 The one other, I think, instructive thing 21 is that when we actually took a look at the control 22 rod drive mechanism as a result of the inspections 23 taken after February of last year, we identified that 24 the nozzle cracking, in fact, identified after the 25 shut down was well within the levels that were

155 1 predicted by the staff. So I mean at least in terms 2 of that level, we did, as it relates to the control 3 rod drive mechanisms themselves, Im not talking about 4 obviously the problem with the degradation on the 5 control rod drive mechanisms, it did in fact, meet our 6 predictions.

7 Mr. Marion, a quick question. On Slide 6, 8 you go into some detail about how you are going to try 9 to integrate a variety of industry programs while 10 facially this seems to be a good initiative, 11 historically, the industry as faced challenges with having 12 a variety of ongoing activities that it needs to balance, 13 given issues that are coming forward on an ongoing 14 basis.

15 Can you elaborate a little bit further on 16 how youre going to integrate these programs and 17 manage them in such a way as to be able to identify 18 those historic issues that are still out there that 19 youre grappling with separately in these programs?

20 MR. MARION: As I mentioned, one of the 21 early findings was that each of these programs are 22 somewhat -- well, not somewhat, but they are in the 23 competition for resources and support and attention, 24 etcetera. And one of the preliminary thoughts that 25 were considering and this is under active

156 1 consideration. Its not a final. But its responsive 2 to the question, is that were seriously considering 3 an executive level oversight body as well as a 4 technical advisory group that would be structured to 5 evaluate all of the information relative to operating 6 plant experience with materials performance issues.

7 That technical advisory group, as an example, would 8 make an initial determination of what has potential 9 impact on similar materials in nuclear power plants.

10 And not only impacts from the standpoint of a 11 regulatory compliance issue, but impact from the 12 standpoint of operational safety and business 13 economics, quite frankly.

14 One of the things that we found as a 15 result of the effort thus far is that theres -- were 16 dealing with humans and speaking of human performance, 17 one of the first characteristics when a problem is 18 identified is that it cant happen here. Its someone 19 elses problem. And then when you work through that 20 realization, then you start looking at the regulatory 21 process and try to bound the significance of the 22 process based upon NRCs current regulations.

23 Well, one of the questions that were 24 struggling with and I suspect that well be discussing 25 that with the NRC staff at some time in the future, is

157 1 whether or not the tech spec action statements 2 relative to unidentified and identified leakage are 3 adequate and sufficient. We dont have an answer to 4 that, but thats one of the questions that were 5 willing to come to grips with ourselves and also 6 engage the NRC on.

7 As I mentioned earlier to Commissioner 8 Diaz question, the key advantage is to put in place 9 a process that allows the identification of operating 10 experience and does an expeditious review and 11 assessment of the impact of that experience in a more 12 holistic manner than what we used to do previously.

13 Quite frankly, the industry has been reactive. A lot 14 of these programs were put in place primarily because 15 of NRC concerns with material performance issues. And 16 we want to get beyond that reactive mode and get into 17 one thats more proactive.

18 Im pleased to see a lot of good, 19 constructive, out of the box thinking. Its going to 20 help us in that regard.

21 COMMISSIONER MERRIFIELD: My last question 22 goes to Mr. Witt. I would second the comments made by 23 Commissioner Dicus in terms of the appreciation for 24 the work and the contribution made by our local 25 stakeholders, as you mentioned, live with these

158 1 facilities each and every day.

2 Our Agency, there have been a number of 3 commenters and editorialists who have been opining and 4 questioning the NRCs commitment to safety. Having 5 been a member of the Restart Overview Panel and having 6 interacted with our staff, is it your view or not that 7 the NRC is treating this issue seriously and that our 8 Agency has a sufficient commitment to safety?

9 Do you want to comment on that?

10 MR. WITT: Certainly. First of all, to 11 your first question, I believe that they are treating 12 it very seriously. Everything Ive seen has 13 demonstrated that. And I think the NRC does have a 14 commitment, definitely to safety. Thats my opinion.

15 Thats your main goal.

16 I think we all know what happened here and 17 there was some -- you know, obviously wrong decisions 18 made and a lot of issues behind making those wrong 19 decisions, but I dont think that changes the fact 20 that the NRC is committed to safety and I think you 21 have to learn from these experiences and go forward.

22 One of the other things that I learned and 23 I forget who asked the question, but the question has 24 been asked a couple times is just by changing 25 management at the top, has that changed the safety

159 1 culture of the employees? My answer to that would be 2 because I talked to the employees. I spent three days 3 at the beginning of this process talking to employees 4 about safety culture. My belief is the only reason 5 the safety culture, the safety conscious work 6 environment failed in this system is because top 7 management didnt reinforce it and in fact, someone 8 would raise -- right a condition report or raise an 9 issue and nothing ever happened to it, so the 10 employees got complacent to the point where they said 11 well, if nothing happens with it, why should I write 12 a condition report?

13 I really believe now that the top 14 management has changed and they are paying attention 15 to the details of the condition reports and responses 16 are getting back to the employees, the employees 17 always had a safety conscious work environment 18 mentality, but they lost that because top management 19 was not paying attention to it. And I think by 20 changing top management and in fact, them seeing the 21 results of that, will make that safety culture develop 22 more and more with the employees.

23 Ive seen it happen. I personally, 24 obviously, have observed a lot of these happen.

25 COMMISSIONER MERRIFIELD: I appreciate

160 1 that comment and I do appreciate a recognition as to 2 the commitment of our staff to safety.

3 I would tell you although youve had 4 little interaction with the Commission and senior 5 staff, but at least from my viewpoint the commitment 6 of the Commission and our senior staff is no different 7 and that safety is our priority.

8 Thank you, Mr. Chairman.

9 CHAIRMAN MESERVE: Good. Obviously, 10 Davis-Besse is a very important event for the NRC and 11 were putting a lot of time into making sure that we 12 understand it and deal with it properly.

13 I very much appreciate the insights that 14 all of the panels today have brought to us. Its been 15 very helpful.

16 With that, were adjourned.

17 (Whereupon, at 2:06 p.m., the meeting was 18 concluded.)

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