ML20092P573

Brief on Appeal from Partial Initial Decision Re Util Character & Competence.Certificate of Svc Encl

ML20092P573
Person / Time
Site:	South Texas
Issue date:	06/24/1984
From:	Sinkin L Citizens Concerned About Nuclear Power, INC.
To:	NRC ATOMIC SAFETY & LICENSING APPEAL PANEL (ASLAP)
References
OL, NUDOCS 8407090124
Download: ML20092P573 (134)

Text

M7 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION D E E G E g_IS E_6IgdIg_g 6 E gIY_S U O_61 g g dSIN G_6 Eg g 66_296E D T;gg In the Mattar of (

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I HOUSTON LIGHTING AND

)

( Decket Nos. 50-499 OL-i ./ $N1:55 l POWER CCMPANY, ET AL. ) 50-499 CL-(Scuth Te>:as Proj ect , (

Units 1 and 2) ( ,

1 CITIZENS CCNCERNED ABOUT NUCLEAR POWER, INC. (CCANP)

BRIEF ON APPEAL FROM PARTIAL INITI4L DECISION

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l Lanny Sinkin Craig Jordan, Michael Hall, Margaret Burns Representatives fcr Intervencr, Citizens Concerned Abcut Nuclear Power, Inc.

114 W. 7th, Suite 220 Austin, Te::as 76701 (512) 479-7197 Of Counsel: Robert Hager, Esquire I

Christic Institute 1324 North Capitel Street Washington, D.C. 20002 (202) 797-8106 June 24, 1994 a

t 8407090124 840624 PDR ADOCK 05000 G

IaR6E DE GOUIEUIE INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . i I. ISSUES . . . . . . . . . . . . . . . . . . . . . . . 1 A. The central issues in this proceeding arise i

at the direction of the Commission. . . . . . . 1 B. The parties engaged in a lengthy dispute as to the intant of the Commissioners as expressed in 12 NRC 231 . . . . . . . . . . . . 2 C. The PID ignores the issues as presentec by the Commission . . . . . . . . . . . . . . . . 3

1. Throughout the PID, the ASLB blurs the distinctions between the issues and the topics of concern, so that the Commission directive to consider whether there exist " independent and sufficient" grounds for license d c-n i al is avoided . . . . . . . . . . . . . . . . 5

a. The ASLB offers a confusing presentaticn of the issues . . . . . . 3

b. The confusion on the issues found in the PID results from an unwarranted and incorrect ASLS interpretation of both the law and the Commission's intent . . . . . . . 9

c. Having erred in its interpretation of the law and the Commissicn's intent, the ASLB proceeded to render an opinion and make findings of fact on issues defined for the first time in the PID itself . . . . . . . . . . . . . . . . 12

d. CCANP's understanding and formulation of the issues is within the authority provided the NRC by Congress, preserves the intent of the Commission, and is called for in this case . . . . . . . 18 II. COMPETENCE . . . . . . . . . . . . . . . . . . . . . 19 A. The ASLB's formulation of competence is f ar broader than the Commission envisioned . . . . . 19

TABLE OF CONTENTS continued B. Using the ASLB's measurement of competence, Applicants demonstrated incompetence far more pervasively than the ASLB concluded . . . 21 C. The level of incompetence demonstrated by Applicants is an " independent and sufficient basis" for dental of the operating license . . . 23 D. The record of Applicants' incompetence reflects on their character . . . . . . . . . . 23 III. INEXPERIENCE . . . . . . . . . . . . . . . . . . . 25 A. Inexperience was a significant characteris-tic of the STNP effort from its inception . . . 25 B. The ASLB uses "i n e::per i enc e " too broadly and thereby fails to adequately explain Applicants' f ailures . . . . . . . . . . . . . . 26

1. At the time the NRC finally discovered what was really going on at STNP, the key personnel for HL&P had been in place for years . . . . . . . . . . . . . . 2e

2. Harassment of GC inspectors is not, contrary to the ASLB's position, explained by i ne::p eri ence . . . . . . . . . 27

3. Contrary to the ASLB's position, Applicantc' long-term failure to take decisivce action regarding the inability of its prime contractor to perform is not' explained by ine::perience . . . . . . . 28

4. The tailure of HL&P to perform audits of B&R is not explained by inexperience . . . . . . . . . . . . . . . 30 C. The ASLB failed to ccme to grips with the obvious implications of the " inexperience" conclusion . . . . . . . . . . . . . . . . . . . 31 IV. CHARACTER . . . . . . . . . . . . . . . . . . . . . 32 A. The ASLB fcrmulaticn of the charactor issue ignores the commcnly undcrstood definition of character . . . . . . . . . . . . . . . . . . 34 S. After the ASLB rejection of the commonly understood definition, the ASLB engaged in an inappropriate search for ralevant character traits . . . . . . . . . . . . . . . 36 i

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TABLE OF CONTENTS continued C. The ASLB selected the four particular areas of 1ssue A inquiry as the performance areas to be enamined for indicia of character traits,-but then distorted those areas . . . . . 38 -

D. , The ~ ASLB uses the four redefined areas of inquiry- in a generally unsuccessful attempt to identify character traits, measure them, and judge them by the ASLB's standard . . . . . 39

1. Honesty and candor are generally recognized character traits, but the ASLS analysis of the evidence on these traits is inadequate and incorrect- . . . . 39 a..The ASLB found that- only deliberate and known false statements can reflect on character . 39

b. CCANP- stands by its findings in its allegation that the Eachtel study on QA alternatives was a deception . . .. . . . . . . . . . . . 41

c. In dealing with CCANP's allegation of a false sworn statement by HL&P to the NRC., the ASLB distorts CCANP's position and ignores the evidence . . . . . . . . . . .. . . . 42

d. The ASLB analysis of the evidence supporting CCANP's final.

allegation in. the integrity section is cursory and inadequato . . 43

2. Having altered-the second- subpart of .

Issue- A to focus on the responses to noncompliances' rather than .the

~noncompliances themselves, .the ASLB

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fails to render. an Lopinion on the character traits revealed in the nonccmpiiances themselves . . .. .. . . . . . "43

3. The - _ASLB's- examination of-

" responsibility" ignores the relevant testimony and evidence . . . .. . . . . . 47' L

24. In essence, thefASLB found'that- HL&P failed to keep informed,- but thatithic fail'ure was net a character defect z.- . . . . 53 E.:The .ASLB disregarded' LCCANP's efforts. to presentLa satisfactory model of charactor

' . .. . 54 l l

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_ TABLE OF CONTENTS continued '

l. CCANP presented a model similar to tne commonly understcod definition- . . . . . . 54 l

2..The ASLB erred by refusing to censider l CCANP's analytical model . . . . . . . . . 56 F. Had the ASLB adopted an analytical framework truly- relevant to the character decision in the. nuclear context, the operating license would have been denied . . . . . . . . . . . . . 53 1.'The ASLB standard for. character is hoc

- l ow . .~. . . . . . . . . . . . . . . . . . 58

a. "HLLP has been cpen and candid wi th the NRC. '" PID at 45 . . . . . . . 58

.b. Evaluating HL&P's' responses to noncompliances and nonccnferman-ces, the ASLB reveals how lcw its standard is for finding the requisite character . . . . . . . . . 59

c. For the issue of abdication of responsibility, the ASLB sets a .

standard far belcw excellence . . . . 60

d. The ASLB found that HL&P failed to keep-informed but that they tried . . 62

2. A rigorous analysis of past acts as an independent and sufficient basis for licence denial:would produce a decisicn to deny . .. . . . . . . . . . . . . . . . . 63' V. INTERVENOR CONTENTIONS . . . . . . . . . . . . . . . . 69 A. Centention 1.1 . - . . . . . . . . . . . . .- . . . 70 L D. Contention 1.2 . . . . . . . . . . . . . . . . . . . 72' C.' Contention 1. 7 (a) ' '

73 D. Contentic'n 1.7(e) . . . . . . . . . . . . . . . 74 E. Contention-1.S(a) and (b) . . . . .. . . . . . . 76

-F.~Centention l.G(c) . . .. . . . . . . . . . . .. -

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s 1:

IGELE GE BuIgog1I1gg JUDIGIS6 EB9GEEDld@3 9251 EUEBEd5 ggyBI UtibEMg vs Eldttdge, 424 U.S. 319 (1976) . . . . . . 96, 100 Ong Cotton Mills Inc. v. Admin of Labor

~5i5 0.s I56, iss II94IT-

• Dent,~. ! : .~T ~., . . 94 E9W2C 699G19C Dgygl2 gg y Elggtz, 367 U.S. 396 (1961) . . . . .......... 66, 67 UtSt C9 MCI 91 6992El3 GLtsz gi Wgst Gh(qcgo v. NPC, 701 F2d. 632, (7th Cir 1983) . . . . . . .......... 88 99h20 Xz E9Calgg, 412'F 2d 44 (5th Cir 1969) . . . . 94 l l

l 6909 121aOd BailC9ad C9x X UAEA, 1 318 FSupp 490 (E.D.N.Y. 1970) . . . . . . . . 87 NLSE v t gutns, 207 F2d 434 (8th Cir 1953) . . . . . 89 E4092L dc 09221 LQ9s yu EIG, 148 F2d 378 (2nd Cir 1945) . . . . . . . . . . . . . . . . 94 3225942$ 8011289119$190 b95992 Y- C92112, 572 F2d 872 (1st Cir. 1978) . . . . . . . . . . 87 Unitgd Ecggdcggitag get Inc. v. FCC, 565 FCd 699 (1977) . . . . . . . . . . . . . 3, 9, 10 UUGLE8B BE9968IOBX G0ddISelgN EBgggEDldQg E9G0iE2190 Hggsten Lighting qqd Egggt Qgs (Scuth Texas Project, Units 1 and 2), CLI-80-32, 12 NRC 281 (1980) . passim.

819s19 Safstr 20d 61990210s 8992e1 292Cd G2C91100 E9W2C s0d LiGbt C9: (Shearon Harris Nuclear Power Plant, Units 1, 2, 3, and 4),

10 NRC 42 (1979) . . . . . . . . . . . . . . . 45 G903902Ca E992C E909aOy (Midland Plant, Units 1 and 2), i AEC 152 (1973) . . . . . . . 44, 45

r TABLE-OF AUTHORITIES continued i

6199iE EAfRtY 4Gd biEEG2 IGE E9aC4 r

' GEMMQQWEAlth Edl1EG ggu(Byron Nuclear Power Station, Units 1 and 2), ASLEP-79-411-04 PE (January ,13, 1984) . . . . . . . . . . . . . . 104 sIeIyIgg ADMISTRATIVE-PROCEDURE ACT, 5 U.S.C. Section 550 et seg. . . . . _ . . . . . passim.

ATOMIC ENERGY ACT, 42 U.S.C. Section 2232(a) . . . . . . . 11, 23, 32, 97 BEGUL8IIGUS 10 C.F.R. Part 50, Appendi:: B . . . . . . . . . . . 108 10:C.F.R. Section 2.02-. . . . . . . . . . . . . . . 103 i 10 C.F.R. Section 2.206 . . . . . . . . . . . . . . 6 10 C.F.R. Section 2.714 . . . . . . . . . . . . . . 96

'10.C.F.R. Section 2.743(a) . . . . . . . . . . . . . 87 10 C'.F.R. Section 50.55(e) . . . . . . . . . . . . .- 108 UlEGEbb6MEQWE ,

SECY-84-124-(March'20, 1984), Nuclear Regulatory Commission: . . .. . . .. . .. . . . . . . . . . 27 Gardner, Shrinking the Case, 16 Ad.L".Rev. 5. . .. 97

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Lord,M "A Plea for Corporate Conscience," Harper's, '

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-June 1984 at 13 . . . . . . . . . . . . . . .. 59-  !

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TABLE OF CONTENT continued

- VI.~ ISSUE B . . . ... . . . . . . . . . . . . . . . . 76

'A. The ASLB erred in treating the ending of

, BLR's involvement in STNP as a remedial act that supported a conclusien that HL&P had remedied its character deficiencies . . . . . . 77 B. .The key management figures responsible for

.the failures of HL&P remain in place . . . . . . 78 C. The remedial actions by top management indicate very little real change in tneir attitudes er expertise . . . . . . . . . . . . . 79 VII. DUE PROCESS . . . . . . . . . . . . . . . . . . . . 79 A. In the opinion itself, the due process I: violations.are evident . . . . . . . . . . . . . SO

1. The ASLB showed a clear bias' toward HL&P . . . . . . . . . . . . . . . . . . . SO

2. The ASLB demonstrated repeated hostility toward CCANP's; efforts . . . . . 22

3. The. ASLB committed numerous procedural errors in its opinion and findings that denied CCANP's due process rights'. . . . . 55 B. The ASLB < failed tc accord CCANP its procedural ~ rights'under the Administrative

, < Procedure Act,' NRC; regulations, and the Fifth Amendment . . . . . . . . . . . . . = . - . .. 26-

1. CCANP was entitled to the procedural rights granted =by Section 554 of the Administrative Procedure Act- -. .. . . . . 26

a. The ASLB's bias in f avor of' the '

' Applicants -and hostility -towards CCANP. deprived. CCANP. of - tha

- i mp a.r ti al

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hearing required under the APA .. . . . . . . . . . .. . .s. . . 58' b; The'SASLB. used time pressures to-

' prevent CCANP -from- completing suf.f i ci ent - ' cross- examination

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, 'to

'ful-ly disclose material _ evidence

.. . SS c.LThe.. 'ASLB improperly :limitad-p

.CCANP's. . cress. enaminaticn' -f er '!

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. reasons .which. have-no basis in

, law :. ... . .- . . . . . - . .. . . .  ;. o . - - 90

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l TABCE OF5 CONTENTS continued o

d. The ASLB- failed to take into

- account the convenience of CCANP in setting the time for hearings to begin . . . . . . . . - . . . . . . . 92

< ; e. The ASLS failed to make findings on all issues of fact and law as required by the APA . . . . . . . . . 93 f.'The AELB restricted the scope of ,

cross examination to matters I raised in direct -testimony in -

violation of the APA . . 94

2. The ASLB deprived CCANP-- of its procedural rights under the Due Process Clause of the Fifth Amendment . . 95

a. CCANP's interest in this proceeding is protected by the due process' clause . . . - . .. . .. . .. . . 95 b.JThe AELB erroneously permitted the introduction of written testimony . .- 96

c. The AELB erroneously allowed the applicant to present its_ testimony in panels . .- .. . . . . . . . . . . . 98 3.- The ASLB failed to provide CCANP' ample' '

opportunity for discovery'in violation of NRC regulations . . .- . . ... ... . 100

4. The ASLB's cumulative failures .to

. respect'CCANP's_ procedural rights under the Constitution,. the Administrative Procedure Act, and_ NRC regulations ^

denied -CCANP:the' fair 1 hearing to which it was entitled. . . . . . . .. . .. .. . . 100 VIII.fRESPONSE TO FINDINGS-OF FACT .:. . . - . .

. c. . ... 102 g IX. EMOTION TO REOPENEPHASE IERECORD  :. ..: .. .. . . 116~

'X.' PRAYER FOR; RELIEF

.,. . .... .. . -.; . g. .n.. . . . . .. . 116 LAFPENDIX: R 4

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l Introduction The Partial Initial Decision Chereinafter "PID"3 under review in this appeal is the product of a very difficult and lengthy proceeding. Begun in 1978, ten years before the first unit of the South Te>:as Nuclear Project is due to go into service under the current schedule, this proceeding has become a trial by endurance for Intervenor Citi: ens Concerned About Nuclear Power, Inc. (CCANP).

After reviewing the PID of the Atomic Safety and Licensing Board thereinafter "ASLB"3 and considering whether to pursue.this appeal,.the main question was: Is it worth it?

That question was asked on a number of grounds. The first phase of this proceeding included hundreds of hours of preparation, 44 days of he'arings, and hundreds of hours to .do the findings and conclusions of law. The personal sacrifices required in terms of private life, career, income, and health were e::traordinary.

In addition, there was never a feeling on CCANP's part that CCANP' was getting a fair hearing from the ASLB. CCANP was constantly forced to go forward without adequate preparation; to travel to other communities to participate.in hearings; to be the {

I old shoe worried to death from three sides by the Board, -the,NRC

, attorneys, and the Applicants' attorneys (an image conveyed to CCANP's primary representative by a court reporter- who transcribed much of the Phase.I proceeding); and to~centend with f Board- rulings . demonstrating a bias toward the Applicants and hostility toward CCANP.

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The'PID is the cu....ination of . that abuse.. On first reading, u________ _ _ - _ _ _

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p it was clear-that the Board distorted the issues to be litigated I -

in- order to avoid a serious consideration of license denial. It was also clear that the Board had ignored the hundreds of hours of work CCANP had put into defining the major issue of corporate character -and into evaluating the record in the light of that definition. Finally, it was clear that the Board had simply ignored key pieces of evidence and crucial arguments which did not fit into the Board's preconceived idea of how .the opinion should turn out.

In the light of such an opinion from the ASLB after four years of work by CCANP, it was difficult for CCANP to consider an appeal within the NRC worthwhile. The task would be a major work of clarifying the many points at which the ASLB opinion is in error while also reviewing the record for purposes of documenting the due process violations rampant in this proceeding. CCANP had no enthusiasm for the prospect of going through with the appeal.

Upon further reflection, however, CCANP did decide to pursue this appeal. First and foremost, the NRC predicts 18,000 people would dia immediately if the South Texas Nuclear Project were to have a core melt down and containment building rupture. For the sake of those 18,000 people, CCANP could not let the abusiveness of the NRC system to date prevent CCANP from taking every step to keep this poorly. built plant from being turned on under the management of a cl.early unqualified company.

CCANP was also shared'up by the fact that the.. Appeal Board unanimcusly removed a judge from our proceeding for nostility

( -toward CCANP. He was, hcwover, put back on by a 3-2 vote of tho Commissicners.

b. ... . . . . . . .

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There is also the fact that the ASLB is using the PID to f drastically limit the issu7s and concerns the Board is willing to consider in the next phase of the licensing proceeding. See Memorandum and Order (Ruling on CCANP Motions for Additional Discovery and Applicants

• Motion for. Sanctions) dated May 22, 1984 and CCANP's Motion for Reconsidaration of that Memorandum and Order dated June 5, 1984. Apparently even if CCANP could prove in Phase II of this proceeding that Housten Lighting and I

Power permitted a chaotic and life threatening design and engineering process at the South Texas Nuclear Project, the Board would not consider changing its ruling in Phase I that HLLP has the necessary character to receive an operating license for a e

nuclear power plant.

Finally, there are other decisions by NRC boards, such as the Byron license denial, that indicate that it is possible within the NRC process for an intervenor to occasionally prevail, even if only for a time.

Given tnese considerations, CCANP set out to answer the PID and to demonstrate to the Appeal Board that not only was the PID in error and the proceeding itself abusive, but also that the operating license should in fact be denied.

CCANP respectfully suggests that the Appeal Ecard read CCANP's Findings of Fact and Conclusions of Law in their entirety

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before reviewing this appeal in order to gain a clearer idea of how CCANP approached the fundamental questions involved.

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l I. Issues I A. The central issues in this proceeding arise at the direction of the Commission.

As a direct result of an NRC Order to Show Cause (Staff E:: .

46) and Intervenors' response to that action, the NRC Commissioners issued a Memorandum and Crder calling into question Houston Lighting and Power Company's thereinafter "HLLP"3 character and competence. CLI-80-32, 12 NRC 281, 291 (1980); Sgg alsg PID at 3-4. A major decision facing the ASLAB is what CLI-80-32 directed the ASLB to determine. There are significant differences of opinion between the ASLB and CCANP on the direction the Commission gave the ASLB.

The Commission said:

I "Either abdication of responsibility or abdication of snowledge ... could form an independent and sufficient basis for ... denying a license application on grounds of. lack of competence (i . e. technical) or character qualification .... " 12 NRC 291, 291.

Specifically, CCANP contends- the ASLAB must address the following questions:

1). What did the Commission mean by " independent and

. I sufficient"7 12 NRC at 291.

2). What did the Commission mean by " competence"? Id. .

3). What did the Commission mean by " character"? Jg.

'CCANP offers its own answers to these questions in both its i l

Findings of Fact and Conclusions of Law and in this appeal. l 1). The Commission intended the.tsrm'" independent and sufficient" to mean that a major failure by the Applicant's could.

be tha' basis for license denial regardless of any other failures, any record of good parformance in other areau, or any- remedial

I measures . Applicants might take after the major failure became known.

When the Commission wrote CLI-80-32, they were well aware r

that Houston Lighting and Power had undertaken remedial measures.

I Sgg gsgt 12 NRC at'283. In fact, the Commission had read all the

, promises hLLP had made in response to the Order to Shcw Cause.

I Id. The Commission quotes from the Hcusten response a paragraph that is remakably similar to Issue D in this proceeding, to-wit:

"Thesa commitments, faithfully a::ecuted, provide

, assurance that the construction activities at STNP are, and will be, conducted in accordance with applicable requirements, and consistent with the public health and

safety, and therefore 2h991d Ogi bg stggggd." (emphasis l added) 12 NRC at 288.

HLLP is clearly responding to the mandate of the Order te l

Show Cause to in fact show cause,as to why the safety-related l construction activities at the South Texas Nuclear Project should not be stopped. A decision to stop all safety related work at I

STNP would have been tantamount to suspending the construction permit.' HL?P, in-the quoted portion of their response is arguing the permit should not be suspended.

(~ In demanding the response, rather than suspending the. con-struction permit outright, the. Director had made his decision on the appropriate remedial action for HLLP to take to' correct the

[ parformance deficiencias. The Director was making no judgment on I

whether those deficiencies constituted an adoquate basis for denial of the cperating license.

Fully aware that HLLP was undertaking remedial.moacures, the Commission instructed the ASLB to considor whether the history of 4

HLLP's performance warranted a-decision at this point to deny tho N . _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ .-

operating license. Nowhere in its definition of what the ASLE is to icok at does the Commission suggest that the remedial measures cccepted by the Director are to be considered in evaluating

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whether the past performance constitutes a basis tar license denial.

To the contrary, the Commission points the ALSB to the

" history of the South Te::as Project ," a history the Ccmmissioners f outlined in terms of the violations of NRC regulations prior to and including those leading to the Order to Show Cause.

"The history of the South Texas Project - at least 12 separate NRC investigations over a 2-1/2 year period, l

resulting in conferences with the licensee, several I prior items of non-compliance, a deviaticn, five immediate action letters, and EnJcw substantiated allegations of harassment, intimidation and threats directed to QA/QC personnel and apparent f alse statements in the FSAR - is relevant to the issue of the basic competence and character of Houston." 12 NRC l at 291.

The Commission raised the question whether these violations constitued an unacceptable abdication of responsibility or an unacceptable failure to remain informed on the part of HL&P.

Either of these failures is set cut by the Commission as an

" independent and sufficient" basis for license denial. 12 NRC at 291. Sgg 90itgd Ecgaggasting 9g22 Ing y2 EzGzgz, 565 F2d 699 (1977) cited in 12 NRC 281 at 294.

The Commission is clearly asking the Board to answer the question: Does the record of HL&P violations of NRC requirements f up to and including the period of the Order to Show Cause investigation disqualify HL&P from being considered for a license to operate a nuclear power plant? (The hearing process extended the evidentiary period through mid-1982.)

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l' To -answer that question requires an evaluation of the l'. ' behavior of HL&P which did not meet Commissicn requirements and of whether that behavior stands as a sufficient basis for denial I

.of the operating license. This evaluation must be done without regard to what HL&P may have done later to remedy its problems.

2). The Commission intended the term " competence" to mean the technical skills of the work force. The Commission itself' spoke of " competence (i . e. technical)." 12 NRC at 291. The plain meaning of the Commission's use and parenthetical e::pl anati on of this term is that tha welders know how to welo, the concrete craftspeople know how to pour concrete, the

' engineers- know how to engineer, the architects know how to f: design, the managers know how to set up a functional management structure, etc. These are, for the most part, the abilities to deal effectively- with the fabrication and installation of materials or the proper calculation of physical forces or the proper rendering of drawings -- in other words, the effective manipulation of inanimate objects to achieve a particular goal of physical performance.

3). The Commission intended " character" to mean the

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' performance of the Applicants outside the area of technical

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skill. This performance will emerge in -the interrelationships l

t; .among the-people' involved in the project and in the execution of tasks such as~ planning, communicating, and. implementing programs..

-This performance will- also reveal. the values held' by the Applicants during the perfnemance of their dutics.

3..The parties engaged.in a lengthy dispute as tc.the intant of the Commissioners ~as.enpresced'irt 12 NRC 2C1.

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The incorporation of the Commission's concerns into this proceeding- set off a vigorous discute which ultimately led CCANP to file an interlocutory appeal. See CCANP FCF 1.41. Since the ASLAB denied the interlocutory appeal solely on the basis of its l interlocutory nature, CCANP reasserts the same appeal now that there is a final order in Phase I, i.e. the PID. CCANP incorporates into this appeal by reference, therefore, all of the concerns and supportive material presented in CCANP's Notice of Appeal and Request for Directed Certification (March 22, icS1).

CCANP seeks relief as set forth below at lO6-LO7.

C. The PID ignores the issues as presented by the Commission.

The concerns leading to CCANP's interlocutory appeal referenced above were prophetic. The issues as CCANP perceived them to be presented by the Commission were mined into a coup of irrelevant and extraneous matters, producing an opinion that provides no direct responce to the Commission's charge.

1. Throughout the PID, the ASLB blurs the distinctions between the issues and the topics of concern, so that the Commission directive to consider whether there exist "incependent and sufficient" grounds for license denial is avoided.

a. The ASLB offers a confusing presentation of the issues.

The confusion of the issues begins early.

"The central focus of our inquiry in this first phase of the proceeding has been the ' character and competence' of HLLP to kylld and operate the facility."

(emphasis added) PID at 7. i This is an operating license proceeding only. The purpose of this I proceeding is to predict whether they will gggtatg the plant in conformance with NRC rules and regulations and in a mannar t- l

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here as to their character and competence to build the plant.

That was the inquiry in the construction permit phase.

In examining the issues, Issues A and B botn say " operate" STP; neither includes " build". Issue C says " operate" and does not . include " build". Issue D is the equivalent of a show cause hearing on why the construction permit should not be revoked.

Nowhere in CLI-80-32 does the Commission instruct tne Board to inquire as to the need to revoke the ccnstructicn permit. In fact, the Commission indicated to CCANP that a motion pursuant to 10 C.F.R. Section 2.206 to revoke the construction permit would most li kely be a useless undertaking. 12 NRC at 290. Rather than a construction permit revocation, the Commission pointed to operating license denial as the appropriate alternative to early revocation of the construction permit. 12 NRC at 289. That the ASLB included Issue'D in Phase I and wrote about Phase I as an inquiry into the character and competence of HLLP to build STNP are only reflections of the broader problem of the ASLB mixing issues together so that there is no clear distinction as to what the inquiry being made really is.

The " build" part of the ASLB's statement disappears in the remainder of the paragraph and would not be worth noting e::cep t that the Issue D focus distorts the Issue A inquiry. A concern with the continued building of STNP naturally leads to a close j i

look at gyttgat conditions. The conflict is between tho view that the purpose of -the hearing was to e:: amine past acts as a predictor of future performance and the view that the purpcse was to a:: amine past acts to ses if they have been ramedied. Firmly entrenched in the pursuit of the remedial approach, the Board 1

_m._

refused to consider the predictive value of past acts standing clone.-

On.the issue of competence, the ASLB says:

"Past incompetence is relevant, of course, to the extent i t- may be indicative of gtgsgni incompetence.

-Thus,- if HL&P has improved its competence, it is- that improved state that is determinative." (emphasis added)

PID at 22.

But, -Issue A asks whether the level of incompetence found to ex i st' in the past is indicative of irresponsible behavior in the future to such an extent that HL&P is disqualified. Tha only

. inquiry is how incompetent HL&P and its contractors were during

-the period set out in.CLI-80-32, that is, the-history of the South ~ Texas project through the issuance of the Order to Show Cause. The Commission's " independent and sufficient" delineation of' the question cannot be harmonized -with an ever-changing

" current" competence.

HL&P's current level of competence is -enly predictive of how HL&P will behave after others have exposed serious failuras in HL&P's performance.

This ALSB determination. of the relevance of past incompetence -is a particularly clear example of.how the Board distorted the issues being litigated. Under.the Board's "How are they now?" standard, applicants could get away with almost anything as long as'they cleaned up their act price to the-close of.the licensing hearings. Under this formulation, there is no meaning to "past practicas, in'themselves," PID at'21, as a basis

, l for' any decist'on. .The Scard essentially abolishes Issue A on' competence.

.On the issue of character,'the ASLB says:

7 - - _ _

"if an applicant, whose character may have beer. unsa-tisfactory in the past, demonstrates a reformed and adequate present character, then we may find *; h a t there is reasonable assurance that it will observe the Commission's health and safety standards." PID at 23.

The confusion continues. If the character was unsatisfactory in the past, i.e. not good enough to satisfy NRC requirements, does it matter how it changed? Is there a point where the past demon-strated character alone will be an independent and sufficient basis for denial? It does not appear that the ASLB considered such a possibility, i.e. Issue A was never considered in the writing of the opinion.

There is also the emerging critical distinction between predicting future performance based on corrective measures taken after being caught, as opposed to using past performance itself as the predictor of future performance. Here the Board seems to be saying that reformative acts are a better predictor. But they are the worse of the two, resulting as they do from an outside intervention into the ongoing process of HL&P. Promises to behave after being caught are of less probative weight than the actual behavior prior to being caught.

At times, however, the ASLB appears to recognize the original issues as drawn. The Board refers to "all evidence of corrective measures taken by the Applicants (Lue s, matters ,

1 f relevant to Issues B, C, D, and E)." PID at 21. The Board notes that "CLI-90-32 contemplated a determination whether past practicos, in themselves, should result in a denial of the operating licensa application ...." Id. Finally, the Ecard at times grants that " Issue A questions whether HL&P's record of

. compliance with NRC requirements is so inadequate that we should i B _ - - - - -

r i

determine that HL&P does not have the necessary managerial competence or character to be granted licenses to operate the i STP." PID at 30. .

b. The confusion on the issues found in the PID results from an unwarranted and incorrect ASLB interpretation "of both the law and the Commission's intent.

The- ASLB takes the position that only immutable character defects could possibly constitute a basis for denying a license without consideration of remedial measures, that is, only if remedi al measures were impossible would the ASLS truly entertain an Issue A decision. PID at 21-24: ggg 313g Third Prehearing Conference Order (Including Summaries of Subsequent Telephone Conference Calls) (April 1, 1981) at 9, 10-11.

CCANP's position is that certain failures of character or competence, whether subject to remedy or not, can serve as a basis- for license denial. CCANP contends that this position is precisely the position of the Commission in CLI-80-32.

Viciations of F.C.C. rules of technical operation are ob-viously subject to remedy, but it is precisely such violations the Commission cited as an example of what would constitute an independent and sufficient ground for license revocation or de-i nial. 90119d EC9adGestiD9 G9AA IOGs MA EAGzGA, 399Ca., cited in '

'CLI-80-30 at 294. Given the comparative dangers in cperating a radio station. and a nuclear power plant, tho-standard fcr a broadcast license must be lower than the standard.for a nuclear plant-operating license. If correctaclo violations can be a basis f or denying, a ' broadcast licanse, there is. no rational basis for setting the standard lower for a nuclear plant license, i.e.,

-that only irremedial defects are disqualifying.

The ASLS would have the mutability argument come in before the independent and sufficient determination is made, holding that only-immutable defects could constitute an independent and sufficient basis. But that position is at odds with the position of the court in United E tgagcasting, cited favorably by the Commission, and also certainly at odds with the plain meaning of CLI-80-32.

Abdication of responsibility and failure to keep informed can both be " remedied" under the ASLB approach to the issues; the applicants can hencef orth assume and e::ercise responsibility and organize and implement a process whereby applicants remain informed. Since these two failures can be " remedied," the Board would not consider them "so serious that they are in fact uncorrectable, at least in the absence of a ' radical change in the control of Ethe3 corporation.'" PID at 23.

The ASLB therefore would take the two inquiries the Commission considered " central" to the " independent and sufficient basis" for license denial question and permit Applicants to mitigate the effect of an adverse finding with evidence of remedial acts.

In narrowing the Issue A inquiry to uncorrectable defects and than indicating that only lack of truthfulness or candor would signal the possible existence of an uncorrectable defect, 1

the ASLB is hardly allowing room for the " broader ramifications" l of HLLP's acts that the Commission said chould be examinad as part of the character and competence inquiry. 12 NRC 291.

Furthermere, the -ASLS- in not really certain there are h - 10 - - - - .

t .t immutable character traits. "One of these Cuncorrectable] defect:

.might be evidenced by an intentional lack of truthfulness or cander condoned by management." PID at 23. Given the ASLS's position- that remedial measures can include " radical change in control of CtheJ corporation," even an " intentional lack of truthfulness or candor condoned by management" is in fact correctable by firing the manager who tolerated the dishonesty.

Egg PID. at 23. The Board would even consider the firing as possible proof of character. Id. i l

We, therefore, reach the point the ASLS was wbrking its way toward. Only uncorrectable defects in character found in the past record of HLLP are disqualifying and since the ASLB is unable to identify what such a defect could be, there is no question of denying the license for. lack of the necessary character, and there never has been since these hearings began. Issue A on character is, therefore, abolished by definition.

The ASLS holds that the Atomic Energy Act (AEA) and the Commission's Memorandum and Order require taking into account evidence of remedial acts. .PID at 22. The Board seems to asssrt that Issue A'is not only beyond the realm of possibility.but also legally forbidden.

But as the ASLB recogni:ed, the AEA says that only. the information . required by the Commission to be submitted need. be considered. PID at 8, n. 8. The ASLB could have restricted its inquiry to the " independent and sufficient" formulation of the Commission, taken evidence on the past acts of non-compliance alone,- and rendered an opinion on Issuo A- as inccrporated 1

11 L-J

originally into this. proceeding. Such a process wculd be acceptable under the AEA and conform CLI-SO-32, 12 NRC 281.

I" As the Commission stated: " decisions about licenses are predictive in nature." 12 NRC at 291. Which is more predictive of

\

future behavior: .past, primarily self-regulated performance or corrective activities undertaken only after being caught oerforming improperly?

CCANP contends that its position on how the issues should be crawn and litigated more closely reflects the proper manner to conduct the inquiry in light of the responsibility and demands placed on the NRC by the AEA and in light of the intent of the ,

Commission. The ASLAB will have to decide whether the position of CCANP or the position of the ASLB more completely fulfills the intent of Congress as expressed in the-AEA and which more closely tracks the Commission's intent as enpressed in 12 NRC 281.

I

c. Having erred in its interpretation of the law. {

and the Commission's intent, the ASLB proceeded to render an opinion and make findings of fact onLissues defined for the first

~

timo in the PID itself.

Issue A as originally accepted into these proceedings reads:

"without regard to the remedial steps." But the PID says: "CIssue A3 is derived from the Commission's instructions in CLI-SO-32 and i

explicitly encludes from consideration the glisctiygeggg-of 'any remedial steps taken by HL&P."'(emphasis added) PID at.30.- Issue

.A, as the ASLB has changed it, would read's "Taking into account any remedial steps taken, "

but not their effectiveness .... This-formulation. removes .the distinction CCANP f ought so hard to achieve in tho .

prehearing conference where ~the issues. Wero initially defined.

12-

After redefining the majcr asp 3ct cf the issue, the ASLB proceeds to alter the subparts of the issue. PID at 31. Tne t

second subpart changes from the " instances of noncompli ance set forth in the Notice of Violation and Order to Show Cause" to "the manner is which EHL&P] cg2gtgd to the noncompliances er I

nonconformances which occurred." (emphasis added) Id. See also 2

PID at 33. Issue B begins to swallcw Issus A.

Having blurred the distinctico between Issue A and Issue 3, the ASLB has trouble keeping the two apart, even in terms of the ASLB's new formulations. As part of its opinicn on Issue A, the ASLB looks at whether the violations recurred after boing addressed. The " manner in which HLLP responded" now includes how effective the respense was prevention of recurrence being one measure of effectiveness. But the ASLB said the consideration of Issue A " explicitly encludes frcm censideratien the effsctiveness of any remedial stepstaken by HLLP." PID at 20.

The mining of the issues' includes citing Issue B findings in l suppcrt of the Issue A opinicn.

"The circumstance that Mess.s. Jordan and Corea attempted to improve their ccmpetence in QA matters, as in attending the Crosby College seminar (Finding 215),

reflects favorably upcn their charactor (as well as that of HLLP)." PID at 43-44.

Finding 215 is a finding on Issuo B.

1. CCANP contends that this entire section of the opinion (ii),

FID at 38-42, simply has no place in Issue A the way the Ecard 1

has treated this subpart.

2. The Board also transforms the fcurth subpart from "the axtent to which HLLP failed to keep itself knswledgeable to "the degree to which CHL&P] att2 meted to stay informed." (emphasis added) PID at 31. The question is no Icnger how serious their failure to remain informed really was but rather h w hard P. hay stied to be inicrmed whatever the result in terr.s of successfulness.

13

}.= There- are even- parts of the Issue A opinion which incorporate evidence related to the eventual hiring of Eechtel and Ebasco.

"All witnesses addressing the programs (as they existed I both before the Show-Cause Order and as subsequently modified) considered them as in compliance with applicable regulatory. requirements, and we see no reason to disagree. (See, in particular, Findings 112, 143, 264, 268.)" PID at 47.

+

Findings 264 and 263~ refer to the Bechtel and Ebasco programs.

Eventually, the ASLB returns to the " build" confusion, a confusion contributing to the mixing of Issues A and B.

"Although Issue A excludas consideration of corrective actions, we do not believe we can fairly evaluate HL&P's competence tg ggmglgtg and operate STP without taking into account the qualifications and experience of the personnel who actually will be engaged in those tasks." (emphasis added) PID at 49.

In the ASLB's Findings of Fact on Issue A, ,

the presence of Issue D material is so pervasive'that thero are in fact almost no findings solely on Issue A. The Findings within Iscue A' that include Issue B evidence are:

'35 (" ability of management to learn from Eviolations3, the willingness and attitude of HL&P officials in responding to NRC observations and enforcement actions, and the promptness and nature of those responses") ,

38 (The finding is an early indication that this section is going to . include findings regarding " response to the Order to Show Cause," "the organi:ation and function of the Task Force ...Lthat'

-reviewed I&E Report 79-19 and the Show-Cause Order and developed ethe'HL&P:reponses-to it," " changes madeLin the=STP administrative controls in response to the Show-Cause Order and changes'in Lthe STP .QA program before _and after issuance of 'the Show-Cause Order," etc.)

96 ( Amaral 's view of '" steps to- resolve the communicatiens

' problem")

108 (Jordan's ' sensitivity'to the complexity'of nuclear power plants -has increased.and Ogg he spends more. time on STP matters" -

and'he "agg spends more time reviewing various aspects of the STP Ccite omitted3")- (emphasis added)

'14

110 (the " intensity" of Oprea's sensitivity had " increased since Investigation 79-19"; now he had "increasad the frequency Cof his site visits 3 to about once per week"; he uses tnese visits to collect information and demonstrate management visibility; and "Ca3t the time of his testimony," he was spending full time on nuclear mattars) 1 117 ("After 79-19, HL&P revised its auditing procedures to require direct observation of the work being performed": a f {

subsequent NRC investigation " concluded that HL&P had developed a l matrix to assure that all procedures would receive proper consideration in planning audits"; and a still later NRC investigation found "HL&P actually was performing effective audits at the prescribed frequency.") Note: In the PID, the Board initially created the distinction that the taking of remedial measures would be examined in Issue A but their eficctivengsc ,

would be the subject of the Issue B inquiry. But Finding 117 in l Issue A includes an NRC investigation into whether the remodi al measure was effective ("HL&P actually was perfcrming").

120 ("The increasing HL&P involvement from late 1980 on was confirmed by Mr. Goldberg" Ccite omitted3) 121 (The entire . finding deals with the reporting of noncompliances and the timeliness of corrective actions takon, not the substance of the noncompliances themselves) 125 ("HL&P's discharge of S&R and its replacoment of that contractor with Ecchtel and Ebasco" relying on the testimcny .c f Goldberg) 127 ("At the time of Mr. Jordan's testimony in May, 1981," Jordan was involved in many meetings about STNP) 128 ("At the time of CJordan's] testimony," he got a lot more reports and was more involved in STNP and "will continue to attend significant hearings and proceedings related to the project")

129 (Amaral concluded that the communications problem was calved by "HL&P changes in organi:ation")

134 (Jordan "was deeply disturbed by the findings of Investigation 79-19, but felt that Company management appreciatog the magnitude of the task at STP and 13 equal to it") (amphasis added) 136 (Jordan 4 "c on c l u t'ed that HL&P had had a substantial team all along, tut that the present (Maya 12Gi) team was much largar and had more technical;compotence Ccite omittod3" (emphasis added) 137 (Gub sequen t to 79-19, Oprea "roccgni:cd ths.t thare was a need to anamino the QA program thoroughly to make cortain that the requirements of Appendix B were fully recognized, understcod and I

i 15

embraced by all concerned"; "ti2n retrospect," he found the Order to Show Cause useful to HL&P) i 109 (Oprea " testified that Bechtel and Mr. Amaral would have been brought in anyway" to investigate STNP and might have found what f .the NRC found only "at a slightly later date" CCCANP: conducting

an investigation is itself remedial; the question is how bad are L the things the investigation found, whoever conducted it73) 142 (After an outside audit recommended

(.. personnel, bringing in "Et] hat was done"; this finding cites PID Fincing 212 new which is found in the soction titled "Iggug B1 Ad22uggv gi HL& Pig 8909 dial 69119D3", PID at 184.) (emphasis in the original) 140 C"The modified program analy:ed during a recent Eechtel audit did mest the requirements, including implementaticn, and cculd be classified as about the same as programs of other saccessfully constructed plants"; Amaral found some elements of the moolfied program " novel") Note: The Board again unes evidence of effectiveness (" including implementation") in Issuo A}

144 ("HL&P instituted several changes in accordance with those recommendations, including transfers of some perscnnel to different positions and additional training of others" Ccites omi tted 3 )

< 145 (Amaral was pleased with Oprea's " response to Bechtel input";

"EmJost of Bechtel's recommendations had been implemented at the I

time of the hearing")

152 ("HL&P had shown a willingness to implement corrective actions")

153 ("Further, assuming implementation of the camgdial stgtg ordered by the NRC and proposed by HL&P, the Staff believed that the STP would be in compliance with the NRC requirements for an operating license") (emphasis coded) 156 (" Management had not been deceptive in any way during or after the inspection and was not unwilling to correct any deficiencies when pointed out")

158 (HLLP had a good attitude when being investigatud by tha NRC) 159 (After finding out that the NRC investigation was uncovering numerous serious deficiencias, HL&P asked for a meeting "in which it proposed corrective actions" including a voluntary. cessation of complex concrate work) 160 (After being alerted to deficiencies by the NFC, HL&P hired consultants and made an unsucconsful attampt to investigata i harassment of inspectors) '

l f 161 ("HL&P responses to essentiallv all NRC .raports were l r

responsiblo, good and cooperativo, and wera 4clicued by_

16 l - - - - - - _

corrective actions"; corrective acticns were taken "voluntarti13y" after pending enforcement action was known) 162 ("HL&P moved to improve the situation by shifting key Houston management personnel to the STP site en a full-time basis";

" subsequently" Oprea would stop by NRC's office to see if there were problems

- 164 (the entire finding is about the resolution cf discovered

( problems) 176 (HLLP "was not unwilling to correct deficiencies when identified"; HL&P " initiated action to correct deficiencies" before the NRC formally filed its enforcement acticn) 177 ("Upon consideration of all of the evidence, the Board finds that the instances of noncompliance set forth in the Nctice of Violation and the Order to Show Cause are insufficient to determine that HLLP does not have the necessary character to be l granted licenses to operate the STP," i.e. consideration of the evidence on remedial measures as well as evidence of past failures) 192 ("Moreover, where particular personnel proved inadequate to their assigned tasks, they were replaced or transferred to other tasks more suited to their capabilities. To that extent, HLLP L

took steps to mitigate the prime area of competence in which it was weak")

194 ("As set forth in Finding 96, HL&P recognized its lack of experience and the e>:cessively long chain of command and took steps to remedy those deficiencies")

t 186 ("Through hiring of new personnel and organizational modification, however, HLLP took steps to allevi:.te these deficiencies")

187 (" Based on that evidence, the Board finds that the instances I

in which Houston management did not keep itself adequately knowledgeable reflect a defect in competence which, if not remedied, would raise serious questions of HLLP 's eligibili ty f or r operating license; but that, taking into account the fact that corrective actions were taken (but without regard to the effectiveness of those corrective actions), the instances are

insufficient in themselves to support a determination that HL&P does not have the necessary managerial competence or character to be granted licences to operate STP")

By the time the Board finishes witn redefining tne iscues and producing its opinion and findings, there is no meaning left to the " independent and sufficient" inquiry paced by the Ccmmission.

s 17

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d. CCANP's understanding and formulation of the issues is within the authority provided the NRC by Congress, preserves the intent cf the Commission, and is called for in this case.

CCANP would first take all the noncompliances in the record and evaluate them both individually and as to their broader ramifications. Included in this analysis would be the questions regarding abdicating responsibility and staying informed. CCAMP l l

would specifically reject the ASLB's positions that only immutable character defects can produce license denial and that Issue A includes remedial acts but not their effectiveness. :To the 1

e:: tent that a remedial act failed to prevent recurrence of a violation or made the situation worse, that act would be another violation of NRC requirements material to the Issue A decision.

@ee App en di:: , Figure 1] I CCANP would then answer Issue A as it was originally incorporated into this proceeding. If the answer was "yes" to

{

either the lack of character or the lack of competence, CCANP would and the inquiry.

If the answer was "no" to both the lack of character and competence, CCANP would then consider Issue B to see if the

. violations found not to be disqualifying on the whole.had in fact been corrected and measures taken to prevent recurrence.

CCANP contends this process should have been a two step process with Issue A heard first and Aecided before Issue B was even considered. The ASLB's failure to adopt this process unduly burdened CCANP with having to prepare and cross-e;: amine on the i

remedial acts which CCANP contends would never have been heard if a decision solely on Issue A had been rendered.

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Given that the ASLB insisted the two issues be combined into one set of hearings, CCANP contends the ASLS erred in not providing a clearly distinguished opinion and findings of fact on each issue as originally admitted to the proceeeding.

There- is nothing in the AEA precluding the process as laid out by CCANP. The Congress gave the NRC broad discretion to determine how best to protect public health and safety. The exercise of this discretion in 12 NRC 231, wherein the Commission 1

, formulated. their standard of an " independent and sufficient l l basis" for license denial, is well within the ambit of the AEA.

Given the history of HL&P at STP, the Commission was just ified in raising the possibility of an early license denial based on the lack of character and competence shown in the violations.

II. Competence A. The ASLB's formulation of competence is far broader than

.he Commission envisioned.

In the absence of a clear definition of " competence , ei ther-from the statute or from previous cases, the'ASLB begins with the plain mear.l ng .of the term. - PID at 12-13.

The_ASLB uses three lines of inquiry.to evaluate Applicants' competence:

"(1) whether the applicant's staff and management havo sufficient technical and managerial expertise and

-enperience; (2) whether that staff and management are organi:ationally structured so. as to permit and encourage :the unhindered application of their expertise and experience; and (3) whether. .the applicant's

-programs and procedures require the aoplication of-that

. . expertise and enperience _and .are consistent with

.. regulatory goals." PID at 46-47.

) , .An immediato problem arises in' the ASLB 's m:-asuring inquiry.

Whereas :the Commission said " competence (i . e.-

technical)," the

b. .

.. .m,. . . ...

ASLB is using competence to include " technical and managerial."

By use of the term " management competence," PID at 13, the ASLB risks introducing conf usion into the analysis. In fact, it appears that the ASLS is deliberately widening the competence

( inquiry to include elements far beyond the technical e::pertise of the applicant and its contractors. The " management competence" incorporated by the ASLB deals with such questions as the "suf-ficiency of staffing and resources, the cuality of management, ,1 and the adequacy of organization of a utility." I d_ ._

These elements only increase the confusion. The adequacy of

} l f the staffing level and of the resources brought to bear to achieve the project goal of a quality nuclear power plant do seem to fall into the technical comoetence area -- there must be enough technically competent people, as well as necessary resources for real technical competence to be present.

But the quality of management seems more 1:.kely to inform l the inquiry into character than into technical competence.

Unlike the Three Mile Island case, the Commission made a distinction .i n South Te:-tas between character and competence --

"1.e. technical" -- which suggests that management competence is not a useful term for the inquiry mandated in this proceeding.

} CCANP would separate the technical acts of management (e.g.

structuring an organization), from the characteristics of management in actiong ( e.g. foresight, perception, Judgment, resolve, values, and integrity). Thus, whether HL&P knew hcw to set up an organizational chart for a comple>. conctructicn project f would be a technical question. Whether that organization in fact achieved its goals wculc be a character questicn, a question

[ - _ _ _ _ _ _ _ _ _ _

20

i i relevant to the nature of the f unctioning organi zation as opposed to the credentials of the organi:aticn.

B. Using the ASLB's measurement of comoetence, Applicants demonstrated incompetence far more pervasively than the ASLB concluded.

The ASLB's measurement of competence, PID at 46-47, divides into seven parts:

1). E::p erti se i

a). at the staff level b). at the management level 2). Experience a). at the staff level b). at the management level 3). appropriate crganicational structure 4), appropriate programs 5). appropriate procedures In its opinion and findings, the ASLB concluded that the staff lacked experience; that management controls were not working at I

the field level; that top management lacked both e::pertize and experience in nuclear design, engineering, and co-struction; that the organizational structure did not permit information to reach those charged with acting to correct problens; that even if the I information did reach the appropriate person, that person was incapable of understanding the information and acting upcn it;

, 3 gnd that procedures on the project were often inappropriate. So of the seven items in the definition of competence, the only one possibly 3atisfied at STNP was " appropriate programs".

Returning to the dafiniticn of competence first. accepted by the ASLS, PID at 12-13, CCANP finds the following:

21

,_-_-____a___

f j- 1. " Functionally adequate" means kncwing what to do and how to do it; this would apply to both HL&P and their centracters. At the time they began the South Texas Nuclear Project, was HL&P

\

functionally adequate to supervise the design, engineering, and f construction of a nuclear power plant? The ASLB concludes they

{ were not, even well into the project.

2. Having " sufficient knowledge" means that if the task requires a particular knowledge, the person has that knowledge.

j The- ASLB ccncluded that HL&P did not and could not adequately distinguish between a fossil ..d nuclear project. Sinc *e HLLP did not know the real difference, they lacked sufficient knowledge.

3. " Judgment" is one aspect of character in the CCAMP analysis; it can be used to encompass the technical skill of being able to judge the competence of a contractor by obscrving the work performed by the contractor. HL&P was apparently unable to tell that BLR was incapable of performing the task of designing, engineering, and constructing a nuclear power plant.

4 .' " Skill" means~having the technical ability to perform the particular. duty. Skill was what HL&P lacked the most.

5. " Strength" does not seem to be applicable.

6. Each of these aspects of competence.is task- or skill-

! specific "as_for a particular duty or in a particular respect."

There was not a single element of competence on which the

[ record would support a finding that HL&P achieved that element at a satisfactory level of performance.

0. Contrary .to the ASLS's representatien that "En2a party has raised 'any-question.with respect to the third line of' inquiry,"

a PID at: 47, the-third,line includes prccedures which came under

'entensive. questioning, Sgg CCANP FCF 5.31, with even. HL&P f doubting the efficacy-of their precedures.

i On

C. The level of. incompetence demonstrated by Applicants is an " independent and sufficient basis" f or denial of the cperating license.

The.ASLB stated:

"We apply this definition Cof competence] in accordance with the statutory mandate of Section 103 of the Atomic f Energy Act, 42 U.S.C. Section 2133, that applicants be l ' equipped to . observe' *** Cthe Commission's] safety standards." PID at 13.

There is no question'that the Applicants were not equipped l to achieve the safety standards set by the Commission. There is a clear showing of widespread and in-depth incompetence on the part i

of HL&P and the contractor brought tc the site by HL&P.

Having examined the definition of competence and taken the measure of Applicant's competence, the final step is to set the standard for competence. Using the scale from Appendix, Figure 2, CCANP would require a record of competence in the excellent range. Instead,.we find a record in the poor to fail range.

The ASLB considered these deficiencies as possibly serious I enough to warrant license denial, PID at 51,- but refused to render. an opinion on that issue without considering remedial steps taken by HL&P.

CCANP can without reservation > conclude that the record of Applicants' in the area of. technical competence is so far below tho' standard of excellence that.is required- for operating a nuclear. reactor, that a' denial of the operating license.is not

-merely warranted but required..

D. .The record of Applicants' inccmpetence.reficcts en their character..

,, In a root cause. analysis, as'this cace calls ~fce, ift enougn l'- symptomsf are found at one. level of the' analysis. . the analysis-I '23.

L _ _ _ _ _

moves- to a higher more encompassing level. The ASLB appears to

, . accept the idea-that ccmpetence can be one element of measuring character. "CW2hethor an applicant has developed technical ability may be relevant to and indicative of both its character and its competence." PID at 11.

But shortly thereafter, the ASLB appears to separate the two. "CW3e do not believe that character can be inferred from competence, or vicg Egtsa." Id. Here CCANP and the ASLB diverge.

CCANP would infer from a finding of excellent character that the applicant had ensured that people with the technical expertise and experience necessary to build a high quality nuclear pcwer plant.were in place at all times. Or, to put it ancther way, a finding that technical competence was missing would preclude a firding that the necessary excellent character was present.

Denying' the inference, the ASLB- transfers the inquiry to remedial measures and the present state of competence. PID at 22.

CCANP, on the other hand, contends the inference needs to be examined and ruled upon. One good example supports the inference sufficiently for the transition to character to be made.

"What we fault them for is not their lack of awareness of details but their lack of understanding of the fact.s which they had before them. This represents in our view a defect in competence rather than character." PID at 43.

The tcp management was receiving from the project all the infor-mation necessary to kncu ~the project was in trouble but the top management .did not have the ability to assimilate that informa-I -tion 11nto a coherant message. Thistis.a clear-example of CCANP's perceptien category-of character failures. The ASLB' prefers to call this. competence. The' difference'is that ths ASLB Iccks at I

I _

24:

. -the particular deficiency, e.g a lack of perception, and calls the pr1blem competence. CCANF looks at the cause for the lack of r

perceotion, e.g. the failure of the ASLB of Directors to put in place top managemert with adequate perception to perferm a task I which, iftnot performed well, could lead to major adverse health and safety consequences for the public, and calls the problem i character.

As the licensing decision is predictive, CCANP wculd find this conclusion by the ASLB to be a prediction that when faced l with a major complex task, HLLP will have in place people who lack the perception to know when something is going wrong. For an applicant seeking to operate a nuclear reactor, that prediction is disqualifying.

CCANP contends that Applicants' failure to have technically competent people in ' place at all levels of the project- is a failure of character as well as technical competence. CCANP further contends that the ASLB ould have reached a similar conclusion had it not ended its inquiry prematurely -- once the ASLB found inexperience, they stopped their ahalysis. CCANP proceeded .to ask why the inexperience was there and whether i.ts presence contributes to the character i1guiry.

III.: Inexperience i So much of the PID revolves around the ASLB's-use of the term " inexperience" that'a closer examination of the' role.this 4

term plays in the-ASLB analysis is necessary.

A. Inexperience was a significant characteristic of the STNP;effortffecm its inception.

CCANP ; dealt .wi th - the inexperience ccr.cep t in varicus ways in.

h 25'

its Findings of Fact. Sgg gtgu CCANP FOF 2.34, 2.44-2.47, 3.1-3.12, 4.1-4.20. CCANP's fundamental response to the discovery of widespread inexperience at STNP was to question the commitments and competence of the HLLP Board of Directors and management.

f- The ASLB agrees that experience was a missing element of technical competence, PID at 49, but uses inexperiance to build its argument that abdication of responsibility or failure to remain informed cannot constitute a basis for licen,se denial. The ASLB' finds that ine::perience is the reason f or Applicants appa-rent failures to exercise their responsibility and remain informed. But inexperience can be remedied, the ASLB found, so no 5

fatal defect could possibly be found in this deficiency.

" Experience, by its very nature, however, is obtainable by several means, including the hiring of experienced personnel or even by the mere passage of time (Ltgs, the more time one spends on a project, the more experience cne acquires)." PID at 49.

B. The ASLB uses " inexperience" too broadly and thereby f ails to adequately e:: plain Applicants' failures.

The PID explains almost every Applicant failure as resulting from inexperience. But some of these failures do not fit so 1

easily into such.an explanatory mold.

, 1. At the time the NRC finally discovered what was really-going on at STNP, the key personnel for HL&P had been in place for years.

.By'the time special investigation'79-19 began in November of 1979,; HL&P had been 'on the job for four years. There had. been essentially no turnover'in the top two HLLP managerial positions (Jordan and Oprea) nor in the key person responsible for Quality

4. 'The Boardd'oes accept' evidence which argues against the inex- '

perience conclusien. PID F0F 118.

FOOTNOTES CONTINL'ED ON NEXT PAGE i

26 j

,. . . , , , , , . ,c . , ,

Assurance (Fra:er). Hence, as far as becoming experienced by the

" mere passage of time," the HL&P personnel were at the peak of their experience during 79-19, an experience that consisted of many years on the job. How does the Board explain the apparently i

major deterioration in performance at the project in 1979-80 as being a product of inexperience, if in fact time had passed and experience had been acquired?

2. Harassment of QC inspectors is not, contrary to the ASLB's position, explained by inexperience.

The ASLB's position is that:

I "One of the most pointed reflections of HLLP's and B&R's lack of experience was the continuing ree ,earance of incidents of harassment of OC personnel by construction personnel. ... We view the existence of the incidents and of low OC inspector morale to be in part the result of lack of managerial experience with

____________- _=- - - - -

FOOTNOTES CONTINUE FROM FREVIOUS PAGE

5. There is, however, the possibility that the management of HL&P in fact lied to the NRC about the qualifications of its personnel and its contractors. There must have been a showing of I qualifications in order to receive a permit to construct STNP.

Inexperience could then be the indicator of a defect even the Board might entertain as disqualifying, See PID at 23. Had CCANP l known the record on inexperience would be so extensive, that this i finding would play such a central role in the PID, and that the Board wou'ld adcot such a restrictive definition of disqualifying character defects, CCANP would have explored the record of the constructicn permit application during Phase I. As it is, the NRC commissioned such an exploration wh.ich concluded that inexperience was indeed a problem. SECY-94-124 (March 20, 1984) l at A.21. The report concluded that the NRC f ailed to review the ability and experience of the Applicant and its contractor prior to the granting of the construction pccmit,' Id. at A.23, but a full review of the construction permit application process might well find that HL&P presented its qualifications and the qualifications of its prime contractor in such a way that the NRC was misled as to the actual competonce of the project team.

Having recently received the NRC report, CCANP will soon be filing a motion to reopen the Phase I record to admit the report and the study upon which the report is based. The report did not limit its explanation of the problems at STNP to inexperience;

" inadequate management support of quality" was also a major contributor. Id. at A.22 f

27

d projects involving QA/QC requirements such as those attendant to nuclear construction. As various witnesses pointed out, clashes among construction workers (including GC personnel) are to some extent to bo expected, given the nature of the work and the characteristics of persons engaged in it. But the continued reappearance of clashes and the persi stence of low morale reflects management's inadoquate experience in constructing facilities subject to nuclear QA/QC requirements." PID 48-49 HL&P knew that harassment of inspectors was one of the generic problems faced on large construction projects, so there is no real question of inenperience here. The Board would distinguish between GA/QC on any large construction project and on a nuclear

)

project, but that distinction is not self evident. Inspecting l concrete, welding, backfill, electrical conduit, etc. is common-place activity on almost any large constructic'n project and certainly on a large power plant construction project. - The stan-dards may be higher on nuclear construction .n d the inspection, and therefore, stricter, but the problem of inspector / constructor friction is still the same generic problem.

L Furthermore, the Board takes the position that experience can come from work over time. Yet the height of QC harassment apparently came after years of management involvement in nuclear QA/QC, an ',i nvol vement that management said increased significantly over time. Ege PID FQF 120.

The implication.is either that management is not capable of learning from doing, or that management never took-the problems at the project seriously enough to actually do something about them. Either conclusion supports license denial; neither is explained by. inexperience.

3.' -Centrary to'the'ASLB's position, Applicants'_lang-term failure to take decisive action regarding the inability .of L

28

its f prime contractor to perf orm is not explained by inexperience.

Early .in tne project, HL&P discovered that Brown and Root

- w'a s . not accurately . representing its achievements and not I

l performing anywhere near enpectations.-

l "Mr. Jordan testified .as to HL&P's expectation that around 50 percent of the design engineering work would have been completed at the time of NRC's-award of the f construction permit whereas, in fact, only about 8-9 percent of the engineering was actually ccmplete at that timeCcite omitted3. Moreover, given this notice, HL&P should have.taken steps earlier than it did to correct- the problems which were apparent Ecite omitted]. Although this delay is per eived by CCANP as a product of deficient character Ccite omitted3, we find that it more credibly may reflect a facet of

}I HL&P's-inenperienca. In our view, in the days prior to L the y Show-Cause. Order, HL&P was not sufficiently knowledgeable to reali:e that major corrective actions l were 'needed or to ascertain what those corrective l actions should be." PID at 40-41.

' First of all, the last sentence of the quoted statement from the PID speaks volumes about HL&P's failures. That sentence

, alone,- --i n CCANP's view, could provide an adequate summary i

position f or _ license' denial. .

The Board would attribute HL&P's failure'to get B&R off the

-job to inexperience. But HL&P is one of"the l'argest' utilities in the country. They have plenty of experiencefin,having contractors

~

' design and.-engineer La power! plant.

Discovering 'that_the engineering'was only 8-9_ percent- com-

.plete may have been difficultLfor.HL&P's inexperienced nuclear

' e n'g i n e e r .- .Dut .once the knowledge of 7the incompleteness :of .the:

engineering became ava'ilable, HL&P-management could-have taken l' -appropriate action -to get-anJarchitect-engineert who Jwou1'd

~

know how- completa?thefengineering:was and who:would~then-produce 1the:

inecessc.ry - ~ competent ~

engineering in a' timel'y f ashion.- 'There is s-p 4 '

]-' '

nothing uniquely. nuclear about such a response. I n.st ead , six years later B&R- was still on the job and still suffering 6

engineering productivity problems.

4. The failure of HL&P to perform audits of B&R is not Jexplained by inexperience.

The ASLB finds that "at lower levels, HL&P did not exercise effective con-trol prior to the Show-Cause Order in areas cuch as auditing (Finding 116). We attribute the lack of effec-tive control to inexperience and excessively long chains of command rather than to abdication of respon-sibility." PID at 42-43.

As Finding 116 documents, during the investigation reported in I&E report 79-19, the NRC discovered that HL&P had " failed to perform semi-annual audits of B&R site organizations and proce-dures and annual audits of B&R construction site activities, as 7

required by the PSAR and HL&P procedures."

A complete failure by HL&P to perform a major activity is not evidence of a l ac k _ of effective control" because it was HL&P, not BLR that was to perform the audits. What we-have is nonper-formance of an obligation by the Applicants, not lack of -affec-i tive control over their contractor. Inexperience might" lead to poor performance in the conduct of audits, but inexperience is not an explanation for a complete _ failure to even try_to perform

6. The'ASLB limits its finding of insufficient knowledge produced-by. inexperience to the period ~ prior to'the Order to Show Cause.

The -implication is -that after-the Order to. Show Cause, HL&P somehow. knew-there was a need for corrective action.-But the fact

~is that 'the Order to Shew Cause did-not deal with- engineering productivity at -all and B&R remained on the -job as a-e for seventeen months after-the issuance of the Order to Show Cause.

. 7. The-failure to' perform these audits may in fact be'a-far more

_ serious _ material _ false statement than reporting 3 that a certain

. number -of' roller passes were made over backfill- wheni in -fact f ewer passes wer'e 'made. : The audits were~ not perf ormed at .all . .

30 .

-the audits.

C.- The ASLB failed to come to grips with the obvious implications of the " inexperience" conclusion.

Lack of experience is used throughout the Board's decision to shift the context of discussing the facts away from the issue of character and toward the issue of competence. Surely lack of experience leads to incompetence, as the record shows it did in this case. But lack of experience is itself a problem which reflects upon the character of the company going fcrward with a dangerous project without taking compensatory precautions. See J- CCANP F0F 3.5-3.6, 3.10.

l.

The Board refuses to consider a long term lack of technical competence as representing a character failure. CCANP wculd cite a failure to put experienced people into critical jcbs- as evidence of a major character defect which can be analyzed first as a lack of foresight (planning f or a jcb where in house experience is lacking), second as a lack of judgment (hiring the necessary experience), third as a lack of perception (recognicing when the personnel in place do not have the necessary experience, whether they appeared to when hired or_not), fourth as a lack of resolve (removing people who are not performing for whatever.

reason,. including inexperience), and fifthRas a lack of. values (going the extra mile in performance at all stages, because the p -project is a nuclear i power plant).

At _the . roots of~the. inexperience found by the ASL3 is an

.even more damning cause.'One~of:the reasons given;for Applicantn*

lack of experience:is the problem of excessive: turnover. -PID F0F 105, 111._This is-a' problem which.every corporation must' address m

_ ___-- -- --_ 3 1'

? .

\

\ l l ,

i I

l

'if it occurs. No lack of e::perience with specifically nuclear

[

k projects can explain the failure of management to recognize high turnover- rates as a problem.

f More disturbing than one more instance where the ASLB j improperly uses inexperience as an explanation for lack of competence, however, is the actual explanation provided by the PID, that cost and schedule considerations led to high turnover.

PID FOF 105.

The Board completely fails to assess these findings as reflecting a fundamental value judgment by HL&P to choose finan-cial values over the values required to build a safe nuclear plant. This value judgment goes to the core element of character required of a commercial nuclear licensee. If the NRC has one

{

paramount criteria in selecting its commercial licensees, it must be that the licensees consistently give safety priority over profit. The single finding that HL&P tolerated the loss of experienced personnel- to "more lucrative offers from other companies" is a finding of a fatal failure of values disquali-fying HL&P from receiving a license.

IV. Character This is the first NRC pr'oceeding in which an ASLB has had to directly confront the issue of character. Character is one of the qualifications for an NRC license specifically established by the Atomic Energy Act. 42 U.S.C. Section 2232(a).

But this proceeding _is the first in NRC history to directly address the statutory issue of character 'the definition of character, the measurement of character, and the standard of

' character to be. adopted by the NRC. PID at 12, note 13.

32

Before. even beginning the hearings, the ASLB requested briefs from-the parties on the concept of character. PID at 7-3,

n. 6.

In its Partial Initial Decision, the ASLB devoted a separate section to the legal standards for determining character. Sgg PID at 7-12,.15-25.

The decision in this case will have far reaching effects in settingforthfor$pplicants, license holders, and the general

.public just'what " character" means to the NRC and in establishing how that meaning will manifest itself in regulatory decisions.

As noted by the ASLB, all parties in this proceeding agree character is a " fundamental" requirement for a license applicant, l- PID at 8, and one of the central foci of this entire proceeding, PID at 7.

When the licensing- proceeding' is an. inquiry into a

fundamental requirement, then the in.quiry should be both broad and in depth. A particular failure of an applicant becomes a vehicle for a retrospective probe into the nature of the failure,

) the importance of the. failure, the unique or repeated nature of the failure,. the failure as a symptom of a greater problem, and the

. greater- -problem as evidence.cf a failure to possess a- critical component of character.

The question. of whether the identif'ied failure reaches back

.to the;. fundamental root needs to be asked. The root; cause l'

analysis is the . major undertaking. . . Stopping too scan means -that

( the' fundamental _--inquiry- never takes-place. That is- what the w=

-licensing board did when it stopped-its analysis-at inexperience

.andi fail'edfto ask1whethar the presence of pervasive inexperience 1 1. . . - . . .

. . _ __ x

f I

reflected on character.

{.. Once the issue becomes either character or competence, something fundamental is at issue and the approach changes. The cases examining a lesser concept or a subpart of the general f concept are not appropriate precedents, as they do not call for the examination of the " broader ramifications." If even one element of the fundamental requirement,s is missing, the implications for licensing are far greater than they are

~

if an isolated violation occurs or a subpart of the general concept is impaired by several violations.

A. The ASLB formulation of the character issue ignores the )

l commonly understood definition of character.

The ASLB begins its analysis of character by- ostensibly accepting CCANP's assertion that the character issue in this case should be approached based on the commonly understood d ef i ni t i.on of character. PID at 15.

f. " Character is defined as 'a composite of good moral qualities typically of moral excellence and firmness blended with resolution, self-discipline, high ethics, force, and judgment.'" Id.

But after appearing to accept the various elements of that' definition, the ASLB begins to carve most of them away..

"No trait should be considered, hcwever, unless it is relevant to the contruction or- operation cf a nuclear plant. Therefore, a trait should only be considered if it evinces a willingness and propensity, or lack thereof, on the part of an applicant to observa the l

Commission's health and safety standards." PID at 15- '

16.

The ASLB's "therefore" is not self-evident. The Board gives a definition-that includes firmness, resolution, and force, but would have those equated with " willingness and propensity". Seing f "willing" or-being "mcre likely than not" or " inclining toward"

i. -

24

is far less substantive than demonstrating firmness, resoluticn, l

and force.

"Moreover, we not believe it is practical or necessary to attempt to enumerate all relevant

traits. Were we to undertake such an exercise, we i feel it would serve only to replace one label, l

' character,' with many; it would leave unresolved the factors determinative of each trait." PID at i 19.

f l l

First of all, if the trait is relevant and it is not i enumerated, there is a possibility that there would be no

. inquiry as to the presence or absence of that trait. The failure to make such an inquiry could result in granting a license to an-applicant lacking one of the relevant traits of' character. A potential for disaster would then exist.

Second, the definition of character quoted by the ASLB contains a finite number of traits to be considered. There is nothing impractical about using all of the elements in. the f definition.

Third, it is precisely by defining a word that we reach an understanding of the meaning of that word.

The ASLB is taking the position that there is no difference in treating character as one undividable concept and in treating

[.

f -it as composed of elements such as resolution, self-discipline, and high ethics. In order to. understand, measure, and . set a standard for character, CCANP contends that some attempt must be

( 'made to. define its elements and to establish the factors

' determining whether those. elements are present or"not. The- ASLS f

L identified elements of the competence concept; thera is no reason g to; avoid.that same task in the char'acter inquiry.

Y

-= -

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

f' ,

"What is necessary is a nexus of a particular. trait to

. particular performance standards contemplated by the Atomic _ Energy Act or NEPA and NRC's implementing regulations and guides." PID at 19 b From this statement it appears that the ASLB meant it was not necessary to enumerate all traits relevant to the measure of character as opposed to all traits relevant to character in the nuclear context. But surely the measurement of character in the

{

nuclear context will be the broadest possible measuro; the higher the risk if character is not present, the more breadth and depth O

should be devoted to the character inquiry. The stakes are hardly higher in any other activity. Furthermore, the ASLS does not l- indicate a single trait it considers irrelevant in the nuclear context, i.e. i t does not go back to its adopted definition and rule out any of the elements as unnecessary in this inquiry.

The ASLB says it seeks only those traits with a nexus to some performance standard contemplated in the nuclear context.

f TCCANP's position would be that traits relevant to measuring character and traits implied by the performance standards fcr the nuclear endeavor are identical. But assuming acgugndo that there are some traits relevant to character but not to character in the nuclear context, the ASLB gives no guidance as to which are f excluded.

B. After the -ASLB rejection of the comocnly understood l- definition, the ASLB engaged in an inapprcpriate search. for relevant character. traits.

The ASLB decided that-it would " adjudge" the Applicants' character by' considering those traits that are " naturally

. inferred" from the Applicants' performance.-PID at 19.

"Therefere, we d judge a' HL&P's.

character by

. consideration of-its past and present performance, and h 36

consider those traits, both positive and negative, that are naturally inferred therefrom." Id.

{

The ASLB decided to look at HL&P's actual performance and decide which traits were relevant by those traits, both negative and positive, that could be inferred from that performance.

This is backward. The AELB had earlier stated that what was

( necessary was a nexus between a trait and a particular performance standard. Both of these are the abstracted, generali:ed concepts emerging from the term " character" and the nature of the nuclear endeavor. Neither the trait nor the performance standard is plant- or applicant-specific.

The purpose of this entire proceeding is to determine whether the' character demonstrated by HLLP is the character to be expected from a nuclear power plant operator. The traits and the standards,must therefore be treated as applicable throughout the industry;. they must be standardized and transferable from

( ' applicant to applicant. To tie together character traits and performance standards is not the same e::amining specific acts .in order to generate traits.

The ASLB's approach suggests that there is no generali:ed stand.ard 'of. character possible in.the' nuclear context. If so, then it- wi11 be hard to-demcnstrate that the nuclear 1icensing process is not capricious and arbitrary.

If there are generalized traits of character relevant.to the nuclear content,; then' we must look to those traits and f their definition, measure -actual performance in the light of those traits, and decide if the measurements. indicate performance up to the ' standard demanded in the nuclear conte::t.

.. .. . __ _ __.-- _17_ _

The refusal of the ASLB, at the start of its character analysis, to try to define character contributes to the overall impression that the ASLB's opinion did not approach the necessary level of inquiry into what character is, how it is measured, and f what standard will be set for applicants for nuclear reactor operation licenses.

An inductive process can be used to identify character traits. CCANP derived its categories of character traits in part by examining the record. But the traits, their measure, and the standard thereby developed are still generically applicable in the nuclear context.

The fact that, by order of the ASLS, the parties briefed character as a concept prior to the taking of evidence is an indication that the ASLB initially recogni=ed the generic nature of the inquiry.

Because the character inquiry is relatively unchartered, the ASLB looked for guidance from in the deliberations of other NRC licensing boards. PID at 19. But in looking to other boards, the ASLB is depending on Issue B-type " remedial" inquiries as precedents.for this Issue A " independent and. sufficient" inquiry.

C. The ASLB selected the four particular areas of Issue A inquiry as the performance areas to be examined for indicia of character traits,.but then distorted those areas.

"In the present proceeding, the most significant '

character traits for us to evaluate are HL&P's truthfulness and candor, the manner in which it reacted to the noncompliances or nonconformances which

{ occurred, its' responsibility,. and the degree to which it attempted to stay informed-about STP." PID at 31.

These four elements are designed to track the four areas of particular inquiry in Isuue A. _See PID at 30-31. But the manner k .. .. . . .. .. . . .

38 _______ _

('

L in which HL&P reacted to noncompliances or nonconformances is i~

already part of the remedial measures taken by HL&P, i.e. Issue B. Furthermore, a failure to react would simply be another noncompliance. HL&P's not committing this further violation consideration measuring its should not be used as a key in character.

As to attempts to stay informed, the Commission used a failure to keep informed standard, not a failure to attempt to f

keep informed standard. Formulating the issue as " attempt" allows the ASLB to give HL&P credit for efforts made, no matter how unsuccessful. However, the Commission formulation of " independent l

L and sufficient" calls for an ultimate evaluation of the actual performance not HL&P's attempts to perform.

(

The ASLB mistakenly refers to these four elements as

" character traits." Though HL&P responses to NRC enforcement actions and HLLP attempts to keep informed might indicate some character traits, they are not in themselves character traits.

D. The ASLB uses the four redefined areas of inquiry in a generally unsuccessful attempt to identify character traits, measure them,-and judge them by the ASLB's standard.

1. Honesty and candor are generally recognized character traits, but the ASLB analysis of the evidence.on these traits is inadequate and incorrect.

Honesty and candor are particularly appropriate in the nuclear context where a highly dangerous activity is regulated by an agency heavily. dependent on the- self-policing of the

-regulatee. CCANP included these . concepts in its " integrity" section. Seg CCANP FCF 7.3-7.C.19.

a. .The ASLB found that only deliberate and known

. false statements can reflect on charactor.

L - - -

In their exploraticn of honesty and candor, the ASLB first looked at the alleged material false statements noted in the special investigation 79-19. PID at 32-33. In their analysis, the ASLB concluded that only if the false statements made were deliberately and knowingly made would their existence have implications for Applicants' character.

The ASLS, however, skipped a step in their analysis.

Unintentional and unknown false statements do not reflect on honesty and candor, but they may well reflect on character by demonstrating carelessness. Such statements also diminish the value of honesty and candor if in all honesty an applicant readily provides the Commission with information which, unkncWn to the applicant, is false.

Evidence of unintentional and unknown false statements could lead to. a conclusion that Applicants were careless in their representations to the Commission. CCANP contends such carelessness could in fact be a discualifying character defect.

One of the Commission 's two grounds f or deni al specified in this case was failure to remain informed. 12 NRC at 291. Making falso statements to the Commission unknowingly is surely an example of such a failure.

The evidence on the false statements at issue hcre is that HL&P did not know that the documentaticn preparsd for the Commission did not reflect what was actually going on at the project. Perhaps the NRC investigative finding simply mischaractericed the deficiency. Si mpl y finding a miscategcrl:ation, hcwevsr, dcas nct cure the deficiency. 92 g PID FCF 15, 16, 21, 25, 32.

b. CCANP stands by its findings in its allegation that the Bechtel study on OA alternatives was a dececticn.

Ironically, CCANP engaged in the examination of background to the study in good part because the questions and concerns of the Chairman of the ASLB suggested that the study was less than an objective piece of work. _See eigz Tr. 2258.1 9-12, 2259 L 11-14, 2260 1 10-18.

(

The ASLB says it "need stress only that the study in question analyzed the five forms" suggested by the NRC Director

[

of Inspection and Enforcement. PID at 35. Whether the five forms I

were analyzed is not the issue; limitations on which alternative could be selected is CCANP's concern. As CCANP findings demonstrate, had the criteria been objectively applied acccrding to the analysis, a different alternative would have been selected.

When the ASLB says HLLP gave Bechtel a " blank check" to perform the study, Id., the Board cites a finding (201) which l l

correctly notes that the blank check was for a study of the l l

existing QA program undertaken in January 1930, not for the 1

alternatives study responding to the April 1980 Order to Show

.Cause.-

( The fact that the NRC accepted' the Bechtel study as l

. satisfying the Order to Show Cause requirements, PID at 35-36, is irrelevant.. The NRC did not conduct any investigation to see. if f

.the study was limited by prior 1 conditions as to the alternative.

f to be selected..

As far as Mr. Amaral-being honest and forthright, Mr. Cprea I

. was -equally forthright in testifying that Pechtel was asked to Lt: .1 _______- _ -- ____ ___

N r

L qive considerat' ion only to alternatives within the scope of G&R's r

1 L

contract. Mr. Amaral was in fact less than forthright in not

[ responding directly to the Chairman's questions about why greater L

third party involvement was not recommended.

i L c. In dealing with CCANP's allegation of a falso sworn statement by HL&P to the NRC, the ASLB distorts CCANP's position and ignores the evidence.

CCANP alleges Mr. Oprea filed a false sworn statement with

[ the NRC. CCAMP FOF 7.3.17.

L "CCANP first claims that HL&P failed to meet a commitment made in response to the Notice of Violation.

s [ cite omitted] ... The evidence cited by CCANP [ cite omitted] indicates that HL&P failed to meet a deadline for taking certain actions with respect to HL&P's and B&R's audit programs, but we fail to see how i t even suggests that there was any intent by HLLP to deceive NRC. Certainly the inspector responsible for I&E Report 80-18 did not perceive any. The statement cited by CCANP as being untruthful is HL&P's representation in its response to the Show-Cause Order that HL&P and B&R had sub stan ti al l y revised and improved their audit programs [ cite omitted]. HL&P's representation is not inconsistent with the Staff's conclusion in ILE Report

[

80-1S that progress had been made [ cite omitted],

L altb999b CECla10 dgtglig gf that iggcgiegggt agt fgttb by tbs 89911 Genta 10 tbH ebsw:Causg Ccsac cgggenas may 091 bay 9 b990 G99919191Y EGCMCalgt Given CCANP's failure to raise the claim at a time when witnesses could have addressed it, we decline to consider it as affecting HL&P's character." (emphasis added) PID at 36-37.

There was no suggestion in CCANP's allegation that HLLP f

L tried to deceive the NRC personnel in the field; the ASLB is knocking dcwn a straw man they set up. The ASLB ignores the three specific representations CCANP called attenticn to, thereby making it appear that CCANP was challenging only the broad statement about revised and improved programs. The ASLS then' r

L acknowledges and immediately ignores Oprea's false statements r that are at the core of CCANP's allegation.

1 h

m. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Md MA meiB r

5

- There is also no reason for CCANP to call attention to everything being pr,aven by the record while the record is being made. The evidence speaks for itself; the statements ware falso.

d. The ASLB analysis of the evidence supporting i CCANP's final allegation in the integrity section is cursory and inadequate.

CCANP alleged there was evidence of incorsistent testimony by Mr. Jordan; the ASLB disagreed.

f

(

"The other claim by CCAMP regarding PL&P 's truthfulness and candor consists of allag,d inconsistencies in Mr.

Don D. Jordan's testimeny .concerning reasons for assigning Mr. Oprea f ul l-ti me to the STP Ccito omitted]. We do not regard the statements as necessarily inconsistent but only as elaborations of

[ earlier statements." PID at 37 In fact, the statements are contradictory -- one statement is an assertion of a fact and the other is a denial of the same fact. Such statements are "necessarily inconsistent."

Furthermore, the importance of the inconsistency is in how the denial reflected Mr. Jordan's attempt ta minimize the seriousness of the Order to Show Cause in one part of his r

[ testimony, while getting credit for being responsive to the NRC in other parts of his testimony. In other words, Jordan testified that the Order to Show Cause was not really serious (Jordan did not assign Oprea to STNP in response) but that HL&P is very responsive to NRC concerns (Jordan did assign Oprea to STNP in reponse to the OSC). Testimony based on What coint is being made rather than on the truth is evidence of a lack of can dor or 1

truthfulness.

2. Havi' rig altered the second subpart of Issue A to focus on the responses to ncncompliances rather than the noncompliances themselves, the ASLB fails to render an opinicn on the character traits revealed in the ncnccmpliancos themselves. ,

d'

~

When it changed the issue, the ASLB introduced confusion and disdirection into this inquiry.

[

"In terms of a character trait, the manner in which

( HL&P responded to noncompliances or nonconformances may be depicted as the willingness or desire cf corporate officials to carry out a OA program 'to the letter.'"

f PID at 38 citing Qgngumets Pgwet Qgmgany (Midland Plant, Units 1 and 2), 6 AEC 182, 184 (1973).

The ASLB finds that a willingness tc c espond to NRC notices of violations is probative. of character. But willingness to respond to NRC violation notices is the minimum necessary to avoid having the project shut down involuntarily.

9 More importantly, the ASLB equates responding to findir.gs of violations witn showing a willin,gness to carry out a OA program to the -letter. The presence of a violation shows that the QA program was in fact not carried out to the letter. A refusal to I

correct a violation would be a violation, so there is- no probative evidence of anything other than a desire not to be found in-further violation.

The ASLB cite to Midland demonstrates the false nature of the ASLB's characteri:ation of this type of evidence. The Midland Board in f act said:

"The presence - of police officers on the highways is, after all, not deemed to justify the issuance _ of a motor vehicle license to a person who does not offer a reasonable assurance that he both can and will -comply with _the traffic laws which those officers are charged to enfcrce." Midigng, supra.,at 184, note 7.

-In other' words, we cannot depend, as a basis for granting a license,. upon. the likelihood the Applicants will getfcaught if they . commit violations ofLNRC requirements. Instead we must depend cn them to-carry out their program:"to the letter" whether

~

there:is an'enforcementipresence or not..;One formulation offthis.

. .. _-A___m. _ _ _ _ - - -- - - -

approach is to look at a - ' e hearing record,

. assune the NRC was not present during the pericd covered oy that recorc, and decide whether the Applicants' record would support the granting of a license.

f The Midland Board is arguing against precisely the kind of thinking that the ASLB in this proceeding engages in.

1 The ASLB directs attention to NRC casos where inquiries similar

~

to (but not identical to) the character and competence inquiry in this case have been made. PID at 12 n. 13. Frcm cne of the cases cited.

"It is significant that management motivation is not one of the seven factors listed by NRR as having been used in evaluating CP&L management capability, although it may be subsumed in some of them. Ecite omitted] NRR EC9fEC; tg ggagut; egtiv3tiga by ggrigcmgaget Moreover,

) while motivation is an important factor, it is not an j overriding one. Ccite omitted]" Qatglina Pgwet and Light Ggs (Shearon Harris Nuclear Power P1 ant, Units 1, 2, 3, and 4), 10 NRC 42, F0F S1 (1979) (emphasis added)

CCANP would agree that motivatien or willingness are necessary and that their absence would be a sign of a very f sericas charact.er deficiency. But the~ fact that both technical qualifications a.nd a desire to perform are present does not end the inquiry. Actual performanco remains, and it must be analyzed.

'CbANPwouldagreewith the Midland and Shearon Harris Boards that performance is the proper measure and'that willingness is not an overriding factor. '

A willingness to respond when caught is particularly lacking

[ s i n. prgbative value for character. The category hardly has the same value as _ honesty, candor, taking ecsponsibility, and remaining informed.

When the NRC shows up^at the coce, there can always be a 45

q.,

sycophant in charge promising to take action whenever a violation occurs. But after the feds leave, the executive manager goes. back to h'is office, issues a memorandum.to a subordinate saying~"I promised the.NRC we would not violate their regulations I again so go do something to see that we don't," and then spend' e

his executive time folding and flying paper airplanes, with no y effort- to find out whether his memorandum produced the desired ieffect.

This type of approach i s .-apparent in the actions of both

, Jordan and Oprea, who seem to feel that policy statements from top management will result in the successful implemention of a QA program and the . building a safe plant. Or that having a subordinate tell Brown and Root to straighten up will result in

,J Brown and Root straightening up because they have been told to.

Willingness and desire are measured by the. amount of resolve,. 'i.e. follow through. If there is little follow through, then protestations.of, or.even appearance of, willingness are superficial ~ indications of character.. lThe actual performance is

^

a much more meaningful. measure.

An example from the-PID highlights how pernicious the ASLB's constant 1 search'for:any; sign of willingness can be.

_"Where 'necessary,- HL&P and;B&R were also willing to

' hire consultants or subcontractors." PID at 4'7.

Yet, the most important_ focus of inquiry in this proceeding. is-F.

-the Quality Assurance / Quality. Control program. In: this area, . HL&P hired a. consultant'toLdraw up the-original program but1did .not hire- a ' consultant.to. review the implementation of

. the program

.'until.1980..1CCANP calledEattention.to this fact,.. CCANP F0F ~3.10 H ,

g  ;-) ,

[.a _ ., _

.46

and. 8.61, but the-ASLB-chose to ignore that critical piece of evidence and find a willingness on the part of HL&P to hire consultants. This part of the ASLB's opinion reveals just how unimportant willingness can be when not accompanied by action ano f how' focussing too hard on manifestations of willingness can lead to unsupportable conclusions.

At the same time, ,the ASLE does not rigorously examine the willingness concept. Since willingness carries such importance in the ASLB analysis and since experience is the most important area where the ASLB finds HL&P lacking, the ASLB should have found a i

major character defect in HL&P's unwillingness to spend the resources to bring top flight, experienced nuclear personnel into their organization and into their contractor's organization

{.

during the first five years of the project.

3. The ASLB's examination of " responsibility" ignores the relevant testimony and evidence.

The ASLB tries to portray HL&P as responsible at the top management level.

"We also agree with the witnesses for both the Applicants and Staff that, at least at upper management levels, HL&P~did not abdicate responsibility to B&R for the QA/QC program-(Findings 114, 118-120)." PID at 42.

In' finding 114, it is the ASLB's position that . top management was

. " responsive and totally committed to quality acsuranco and quality control, but that their management controls down to the worker level were not working effectively."

{ .Sut the evidence of Jordan's commitment to. Quality Assurance and Quality Control is the very 1-imited training he saw fit to ge years .af ter tu? took-the position as CEC. The evidence of'Oprea's

, commitment is the -book learning- he gathered. These limited b 47 __

efforts to gain at least a superficial knowledge of what QA/QC is can hardly be characterized as total commitment, particularly in light of all of the evidence to the contrary.

Putting Fra:er in charge of Quality Assurance and leaving him there long af ter his incompetence was manif est, more clearly illuminates the attitude of HL&P top management. The treatment of Goldberg compared to the treatment of Frazer in terms of access and position is evidence of the favored status of cost and schedule over quality. This emphasis was recognized in Finding 116 as one of the causes for the QA/QC failures.

f The absence of any independent audits of the QA/QC program 1

until 1990 is additional evidence of how important top management considered the program.

In response to the Order to Show Cause revelations of widespread deficiencies in the QA/QC program, top tranagement

)

referred to those deficiencies as a "few kinks in our armor." Sgg CCANP F0F 5.33.

Which is the better test of management's commitment to CA/QC

-- the public relations efforts to please the NRC when concerns f

surfaced or the realities of the day-to-d'ay life of the plant where management failed to exercise effective control over the the actual program. As Finding 114 itself states: "NRC holds HL&P responsible for development and implementation of a viable QA/QC program."

The f'act that an NRC inspector "did not see any effort by the licensee or its contractors to orchestrate anything that would be anti-QA/QC", PID FCF 114, is cited by the Board as E _ - -- - 4

evidence of management's commitment; CCANP would cite the presence of enough evidence suggesting the necessity of an investigation into a pcssible conspiracy as proof of management's lack of commitment.

l f By ignoring abdication'of responsibility at the top, the ASLS more easily finds that there was no discualifying abdication.

[ "Furthermaro, particularly with respect to character, I

( only a limited group of corpcrate employees may truly (

be regarded as e::erci si ng a sufficient degree of l

. responsibility so as to be deemed to affect an t organization's character." PID at 24.

But, if nothing else, a centinual stream of unacceptable actions from the icwer levels of an organization demonstrates an

{- inability of the upper management to elicit loyalty, or at least quality work, from those for whom management is responsible.

There cannot be success at the top if there is failure at the bottom. When the Superintendent of the Quality Centrol force says that he operated within a system where quality was, a "necessary evil," then the management of that system must be held responsible. See CCANP F0F G.6 - 8.7.6.

L In PID Finding 44, CCANF accepts the ASLB's description of the pyramidal structure of the Quality Assurance program. CCANP would only add to this finding a particular emphaci s on the lowest level of the pyramid. Specifically, CCAMP wculd include in the finding the following observation: The proper functioning of .the lowest level of the pyramid is the most critical part of the program. If the detailed inspection program is functioning effectively, any failures in the upper part of the cyramid are mi ni mi::ed in their impact;- if'the-detailed inspecticn program is t . .

w . .

E compromised,' as by intimidation and harassment, the proper functioning of the upper' levels will not necessarily rectify the problem of defects not reported in the first place. There is little credit for HL&P in having numerous CA personnel on the site, PID FOF 58, ,if at the same time B&R is understaffed with QC inspectors. PID FOF 59.

The- most disturbing aspect of the ASLB's analysis is that the biggest failures were clearly at- the top, where the management system was breaking down at the time the NRC finally stepped in. PID F0F 150.

To support the proposition that HL&P did not abdicate responsibility to HL&P, the Board cites the testimony of ,

Jordan

( that- "HL&P had assigned highly qualified personnel in large numbers to manage STP." PID FCF 118. If Mr. Jordan's testimony is good evidence to support a finding that HL&P did not abdicate

( -responsibility, then that same testimony should be good evidence against a proposition- that HL&P had a major problem of inexperience. Otherwise, Mr. Jordan's' testimony would have to be read as saying that '" highly qualified" did not include

" experienced." , .

~

^

q But if these "large numbers" of people were inexperienced in constructing nuclear. facilities, then they were not, in fact, highly qualified, and assigning them to manage STP showed a-k failure by~HL&P to demonstrate that it took. responsibility, for STNP.

'The ~.ASLB L; '

, is..a1so aware that the Applicants knew about and ,

. acted to cure their inexperience more than once. _Sge CCANP. -FCF k . , .. . . ..

.50 _ .

. l

[

3. 5. .

Finding 119 does not in fact support the ASLB's conclusion on responsibility. Amaral expresses his opinion that-HL&P did not abdicate too much authority to B&R. Authority is a very differant concept than responsibility. To give someone authority is to give them-the power to conduct an activity. To give someone responsibility is to give them the ultimate oversight of that activity. In other words, HL&P could give B&R extensive authority to conduct the QA/QC program, but still should have retained the f responsibility for assuring the program was in fact conducted effectively. Finding 119 is of no probative weight as to abdication of responsibility.

The ASLB conclusion that HL&P top management did not abdicate responsibility raises a whole new challenge to HL&P's competence and. character. In Finding 120, the ASLS stresses that HL&P became "more involved in the project and more sensitive to the importance of its QA program." HL&P forced BLR to take actions and involved itself in more B&R decisions. All of these activities might be commendable, but in two very'real senses they condemn HL&P by their praise. If HL&P was in fact more involved as the years went by and more sensitive to the importance of tho QA program, then-the totally unacceptable conditions found in 79-19 .are more clearly the responsibility of HL&P and the QA deficiencies are even more serious in representing the best HL&P l found. necessary with its supposedly _ increased sensitivity. In

- other words,- if HL&P was actually calling the shots and truly I

s concerned' about GA, then-the viol'ations da'cumented in the Order L' to Show .Cause are not. evidence oF 'an abdication of 51

responsibility. They are instead the results of precisely what we can e::p ect to happen if HL&P_d_ges get involved and dggg take responsibility through " progressively closer supervision of the contractor ...." What happened in the building of STNP is then F e::actly what we can e::pect to happen with HL&P fully in charge of an operational STNP.

Furthermore, accepting HL&P testimony about greater involvement and sensitivity to QA only makes it that much more unacceptable that BLP, remained on the job and that the ultimate removal of BLR had nothing to do with concerns about the quality of their work.

If on the other hand, we return to the ASLB positicn that ine::perience was widespread, we find that upper management assigned people without e:-:perience in OA/QC to head the HL&P s

program. Of necessity upper manage nont would have to rely on the

( contractor to assure implementaticn of the QA/QC program; the very selection of unqualified people fcr the HL&P QA/Od prcgram is agt gg abdication of responsibility.

However the analysis is!made, the record clearly supports a finding that HL&P either abdicated its responsibility or conducted the project in a total 1y unacceptable manner. Whi1e the ASLB would have the deficiencies in this area reflect only_ on competence, PID at. 44, CCANP contends-the character defects

-demonstrated in the area of responsibility are so substantial and so severe as to ccnstitute an' abdication of responsibility and an independent and sufficient basis for li ense denial on grounds of both competence and character.

L s2

4

4. . In essence, the ASLB found that HL&F failed to keep l informed, but that this failure was not a character defect.

{ l "HLLP received a large quantity cf information abcut the STP but was unable to assess the significance of 1 much of it." PID at 44.

This conclusion is, of course, a classic example of what CCANP would-call a lack of perception.

I Cnce again the Ecard is giving credit for trying (" received a large quantity of information") rather than focussing on l I

successful implementation (" unable to assess the significance").

~

This example highlights rather dramatically why CCANP objects no strongly to the extraordinary emphasis the Board gives to willingness.. Imagine company management with numerous reports from operators on a problem which could lead to a catastrophic accident, but they areunable to understand the repcrts and authorize action to be taken to correct the problems and prevent the accident. Do Ne really care that much that the information reached the top, if the top is unable to assimilate and act upon i that information?

The fact that the information reached the top may be to the credit of whoever set up the manageorgnt organization but it has-

{

very little probative weigh.t in deciding whether'the company's t- license should be revoked or not.

If we are concerned with predictive evidence, the prediction to be made here is that HL&P will. gather information relevant- to serious problems, 'but it will be unable.to assimilate And act upon that information. Wo can,also predict that the corporate board will-put into top management people without the necessary perception to recogni:e sericus. problems, i

53

1

[

s i E. 'The ASLB disregarded CCANP's efforts to present a satisfactory model of character.

l. CCANP presented a model similar to the commonly understood definition.

CCANP proposed a set of character traits which are relevant I l

to the operaticn of a nuclear power plant and which are relevant to an analysis of HL&P's conduct on the record here --

" foresight", " Judgment", " perception", " resolve", " integrity",

and " values." CCANP does not insist that these traits e::haust the l

l list of relevant traits, but each item on- the list is an j essential trait. Significant failure to possess any one of these traits raises serious questions about HL&P's character.

The ASLB acknowledged that "These. traits are, of course, generally relevant to

{ character. Indeed they closely track,the definition of character which we havo found apprnoriate." PID at 18.

The ASLB definition of character included some traits CCANP used:

" firmness", " resolution", "self-discipline", and " force" all fall within CCANP's " resolve"; "high ethics" is within " values"; and

" judgment" is a one of CCANP's traits.

All parties agree that " integrity", e.g. honesty and' candor, is .a character trait relevant to the licensing decision in the nuclear context.

~

CCANP adds two other traits " foresight" and " perception" -

which emphasize the quality of interactions with the outside world. While' refusing to accept these categories, the ASLS.

appears to use them.

"Or, put another way by the Sta*f, 3bR's serving as construction manager, architect engineer and constructor was a 'very ambitious program, especially' l when you don't have much experienca* Ccito cmittad]."  !

FID at 48 (an example of failed foresight).

"What we fault them for is not their lack of awareness of details but their lack of understanding of the facts which they had before them. This represents in our view a defect in competence rather than character." PID at 43 (understanding is a crucial element of percsptien).

The latter finding is a clear example of CCANP's perception category of character failures. The difference is that the ASLB looks at the particular deficiency, e.g. an inability to understand particular information, and terms the problem a question of competence.

'. CCANP looks for evidence of a character trait and finds the lack of perception. An analysis shows perception to be missing from a critical segment of the corporation, of long duration, and responsible for major flaws in the performance of the corporation. Given the severity of the lack of perceptien, CCAN? -

concludes there is a character defect.

As a predictor .of future performance of the would be licensee, this defect suggests that HL&P will put people in critical places who lack the perception to know what is going on, and will leave them there for a long time. The seriousness of this prediction in terms of potential health and safety danger to

'the public is sufficient for'the evidence of this defect to provide an independent and sufficient basis- for denying the operating license.

This is the type of analysis CCANP believes Congress envisioned in the Atomic Energy Act and that the Commissioners' envisioned in.12 NRC.291.

'If for some reason CCANP is required to perform a remedial analysis of this defect, a possibility CCANP'specifically rejects W5 - - _ -----

since the defect was fcund to be severe enough to provide an independent and sufficient basis for license denial. CCANP then searches for the cause of this character deficiency. CCANP finds the cause of the deficiency to be the Board of Directors' failure to put in place capable managers and to exercise their oversight respcnsibilities.

If there have been no major changes in tne composition of the Board of Directors and in the top management, -CCANP would conclude that any remedial acts taken have been inadequate.

f For each of its character traits, CCANP provided an analysis j explaining the nexus of that trait to a character decision in the nuclear cente::t. geg CCANP FOF 3.1, 4.1, 5.1, 6.1, 7.1, 8.1.

2. The ASLB~ erred by refusing to censider CCANP's

{ analytical model.

The ASLB rejected CCANP's character trait analysis, terming the traits set out by CCANP as "so broad and ill-defined that analy ing them would give little assistance in providing answers to the questions raised by CLI-80-32." PID at 19.

The ASLB avoids using the CCANP analytical framework despite the fact that it closely tracks their accepted definiticn of character. The terms CCANP uses are no more broad and ill-defined than those of the dictionary adopted by the ASLB, e.g.

f " resolution", "self-discipline", "high ethics", "fcrce", and

" judgment". In fact, as noted above and by the ASLB the traits selected by CCANP clcsely parallel those of the definition accepted by the ASLB. To say that analyzing those traits would give the ASLB little assistance is to say either that we cannot f dafine character with cncugh specificity to reach a conclusion en L _ _ - - - - - --

56

whether the necessary character is present and therefore the entire inquiry proposed by the Commission is useless, or that the

(' Board. has in fact abdicated its responsibility to define, l

l measure, and set a standard for character.

One reason that- the ASLB rejected CCANP's analytical framework was that CCANP used the same facts to demonstrate more

~

than one character trait.

"In that connection, we note that, in applying the facts of record to determine whether HL&P possesses the q requisite character, CCANP has utilized many of the I same incidents or events as e::amples of several of the !

traits it enumerates." PID at 19. l f The ASLB suggests that using one incident to demonstrate more than one character trait is somehow not a legitimate approach.

Yet surely the various elements of a given incident can illuminate more than one character failing. In its " honesty" and

" candor" analysis, the ASLB did not hesitate to use one incident o r. event to demonstrate both these elements in one trait.

"We will recount just a few of HL&P's efforts which bear on its corporate character. As we have

{ demonstrated, it has been open and above-board in its relationship with NRC." PID at 39.

Here we have the ASLB doing what it says is improper - using one event or series of ovents to prove more than one character trait. The ASLB has already used the supposed openness of HL&P to

[ show its candor; now the ASLB wants to use the same openness to demonstrate a responsiveness when found in noncompliance which, for the ASLB is a separate trait. CCANP does not object to the ASLB using the same events to show more than one trait; CCANP merely asks that it be given the same oppor tunity.

f. Furthermore,-the idea that'cno piece of evidence can be used L_ L . . - - - - - -

s7 -

h

[ to prove only one proposition is clearly nonsense.

, Having met the ASLB's criteria for identifying character traits' relevant to thiscinquiry and having demonstrated ' support for the traits identified in the record, CCANP considers the ASLB to ;have been .under an obligation to analyze any such trait hl brought to their attention.

F. Had the ASLB adopted an analytical framework truly relevant to the character decision in the nuclear context, the operating license would have been denied.

1. The ASLB standard for character is too law.

In summari:ing the " facets of HL&P's character" which they find " pertinent" to the character. inquiry, PID at 45, the ASLB reveals the standard for character it intends to apply.

a. "HL&P has been open and candid with the NRC."

PID at 45.

This cne finding, if true, we'uld have some probative value in concluding HL&P had the character necessary to receive a license to operate a nuclear power plant.

As noted above, p. 39 et seq., supra., CCANP challenges the ASLB's findings and conclusions.on HL&P's honesty and candor.-Seg al3g CCANP F0F 6.19-6.20..

CCANP contends'the ASLB should.have-locked carefully at this finding in the light of the other ASLB findings. For the ASLB, the key HL&P defect'in competence was inexperience, but HL&P denied in its testimony that inexperience was a problem. For the ASLB, I&E Report 79-19

" indicated ' substantial deficiencisc- in- HL&P's construction quality.assuranco/ quality c=ntrol (QA/CC) program and icast serious doubt en HL&P's ability to f manage constructicn.cf the-STP.";FID at C.

L' f.1. .. . . . . . . ..

. .. . . . . Q:L__ _ _____ ___ _

h But HLLP , testified that these same finoings were only minor problems.

The ASLB should be quoting Federal District Court Judge Miles M.. Lord to HL&P:

f ' "It is not enough to say, 'I did not know,' 'It was not me,' 'Look elsewhere.' Time and again, each of you has used this kind of argument in refusing to acknowledge

{ your responsibility and in pretending to the world that the chief officers and directors of your gigantic i multinational corporation have no responsibility for I its acts and omissions." "A Plea for Corporate Conscience," Harper's, June 1994 at IC.

'Rather than admonish HL&P, however, the ASLB turns to

~

inappropriate ' sources to search for evidence of honesty and

{. candor.

"It demonstrated those same qualities in its relationship with

( CEU (which resulted withdrawal from the proceeding)." PID at 45.

in CEU's An the ASLB stated, PID at 27, CEU's goal was the removal of Brown and Root. Once Brown and Root was off the project, CEU f withdrew. Any openness and candor on the part of HL&P were irrelevant to the withdrawal of CEU. In fact, rather than merely withdrawing after achieving its. goal, CEU extracted from HL&P,.as the price of withdrawal, a promise to involve a CEU

{

representative in regular . quality assurance audits of tile f project. CEU also reserved the right to reenter the proceedings if, at a.later date, it was unsatisfied with-HL&P's performance.

b. Eva.aating HL&P's responses to noncompliances and .nonconformances, .the.ASLB revea'is how low'its standard' is for finding the requisite character.

{

.The breakdowns in'the OA/OC program ~ stand as perhaps the

. single most'significant evidence.cf HL&P's failure to -perform.

Ignoring the violations themselves in favor of HL&P. attempts to

+

k' L . 59

respond to those' violations, the ASLB concludes:

"It has done its best -- although not always with success -- to deal with the many CA/QC prcblems i:

faced." PID at 46.

{

The Board damns with faint praise. If the record of this proceeding reflects the best HL&P can do, then clearly denial is warranted. But is doing your best really a valid. standard? In the future,, will the character necessary to receive a license to operate a nuclear power plant be judged on the basis of the applicant corporation doing the best it can, whether that "best" is good enough or not?

The " manner in which Ethe Applicants] reacted to the noncompiiances" is no't a character trait at al1; it is simp 1y a

( series, of actions which require analysis in terms of character traits. This analysis the ASLB fails to do. Instead, the ASLB is satisfied to simply rely on the fact that HLLP made changes in response to problems that it did not identify (perception) and that it did not solve those problems (resolve)3 e.g. "pecblems f eventually resurfaced." PID F0F 59.

Rather than analy::ing the relationship between the changes made and the elements of character, the ASLB is content to rely upon " willingness to remedy" and the " steps it took" without

[

further analysis. PID at 43.

(. Again, willingness to remedy problems identified by~ the NRC says very little about the character of an applicant.

( c. For the issue of abdication of responsibility, the ASLB uets a standard far below excellence.

1 The ASLB -finds HL&P's abdication of responsibility not disqualifying because HLLP 1atar involved itsalf more in the )

{

f '

60 .

L l

STNP. '

"Although it perhaps at first ,1 eft too much responsibility to S&R, it remedied that situation and became more involved with the project." PID at 46.

This is an Issue B finding, i.e. after being found lacking f in the area of assuming responsibi1ity, the ASLB finds they have ,

now assumed responsibility. The first part of the statement is, however, relevant to an Issue A conclusion: HLLP clearly abdicated too much responsibility to B&R.

{

Again the ASLB has ignored the implications of the abdication standing alone. The essential problem was that there was no one to help. HLLP hired B&R and assumed tqey would do the job because HL&P had no idea how. When B&R had trouble, there was no one they could turn to for assistance. The abdication is really a function of being unab'e l to help. What good would it do f or HL&P riot _ to abdicate anyway, if all that would mean is that matters would get worse because HL&P involvement would be counterproductive? The ASLB ignores these issues in order to f consider only the remedial acts.

" Responsibility" cein be a character trait, but CCANP found it more usefdl to break this trait into several components including perception (the ability to stay informed), judgment (the ability to make appropriate decisions on the basis of the f information received and the demands of the situatien), and I resolve (the ability (the ability co follow through on decision and make sure they are carried out). CCANP showed that HL&P fai1ed on al1 three counts.

{-

The ASLB again relies upon " willingness to ren,edy , " PID at

( 4C, as a basis f cr now showing that ML&P took responsibility. The

[ _ . _. . , .

. _ _ _ . __ _ 61

ASLB also attributes any problems here, as elsewhere, to j

{

"i n e:-:p eri ence" rather than to lack of character, without doing any analysis of whether ine::perience itself is evidence of

. irresponsibility.

The ASLB standard is that an applicant willing to be f- responsible but unable to be, primarily because of iner:perience, qualifies under an NRC standard of character. Such a standard is set far below the standard of performance CCANP contends is e>:pected of a truly responsible applicant.

d. The ASLB found that HL&P failed to keep informed but that they tried.

"It also e:: posed itself to great quantities of pro.iect information, although i t was not always sufficiently

( knowledgeable to react properly to that information."

PID at- 46.

The quantity of information tells us nothing about the quality.

More ' importantly, the inability to understand the information says far more about character than does the amount of inf ormation that HL&P e:: posed itself to.

To summari:e the ASLB's findings on character:

1). Was HL&P honest and forthright? ASLB: Yes 2). Did HL&P respond to nonconformances and ncncompliarces when they arose? ASLB: Yes, but not always l successful 1y.

3). Did HL&P abdicate too much responsibility to BLR7 l

ASLB: Yes, but they.later acted more responsibly.

4). Did HL&P attempt to kacp infcrmed? Yes, but mainly Without success.

Even the ASLB findings on the issues as redefined by the b 62'

ASLB for purposes of the PID add up to what can be described at l

best as a fair-to poor record. To conclude from these findings i that g "HL&P has not demonstrated character deficiencies which t would preclude the Applicants from being granted operating licenses for the STP," PID at 46,

( -is to set too low a standard for a r.aclear licensee's character.

To even get HL&P that high on the scale required ignoring significant evidence and the implications of that evidence. A more realistic assessment using the ASLB-redefined issues is that ,

HL&P's record was poor and precludes them from being granted an operating license for STNP.

2. A rigorous analysis of past acts as an independent and sufficient basis for license denial would produce a decision i to deny.

If the acts of HL&P are not sufficient to provide a basis for license denial, then those acts will henceforth be available to other applicants who perform similarly to cite as precedent for non-denial. If it accepts the ASLB approach, the Commission will be moving along-the path suggested by the Staff position that HL&P's p'erformance was not so poor that they lacked the necessary character.

Trying to define what would in fact b'e conduct so poor as to require license denial is the "Icwest common dancminator" approach in contrast with emphasi:ing the level of - e::cel l enco i required which is the " highest common denominator" approach. The potentially ha:ardnus technology at issue requires the highest common denominator approach. . .

The nuclear' power industry is unique in that it .has been' k.. . ..

33

developed- from a technology created by the federal government, and its authority is carved out of a government monopoly. It is unlawful to possess nuclear materials or equipment without a license from the federal government. The industry has been

( subsidi::ed by the government. The federal government insures the industry and protects it against third party liability. Costs,

( even those which might result from the utility's negligence, are paid by utility ratepayers at regulated rates. The mancpoly

(

structure of the utility' industry insulates the industry from competition.

Moreover, thJ social costs of the industry, for example the generation of long-lived highly dangerous and toxic wastes, are largely assumed by the government or are transferred to the victims of radiation. The virtual impossibility of proving causation of individual radiation injuries by any particular amissions from a nuclear power plant precludes tort liability from serving its traditional role of deterring health and safety f viciations.

Since even losses of the utility's own capital plant may be recovered through increased utility rates in a monopoly market, this potential deterrent to careless construction or operation of a nuclear power plant is also weakened.

f These broader realities of the nuclear industry provide the context for this case. The lack of any other detarrent to careless practices in the nuclear industry places the full burden of deterance upon the regulatory prccess presided over by the

{

Nuclear Regulatory Ccmmission. The ASLB in this ;,roceeding has accurately described the fundamental cbjectiv? of this r?quistion L . .. ---

e

as follows:

"our ultimate finding of fact must determi ne , inter

[ alia, whether there is reasonable assurance that the l Applicants will (i t2., r have the character to) observe the Commissicn's health and safety standards." PID at 16.

The adequacy of the Applicants' character was drawn into question by avents and investigations leadine up to the Order to Show Cause. These hearings were held to determine whetner there should be an early decision to deny the license in light of the Applicants' failure to satisfy NRC requirements. The issue most crucial to that determination was to be the Applicants' f character.

The ASLB in this case has attempted to define for the first time the nature of the character traits necessary to receive an NRC license, and has attempted to apply its definition to the record of Applicants' performance. Though much of its analysis is f useful, the ASLB ultimately failed to develop a model for analysis of corporate character sufficient to satisfy the Atomic Energy Act.

CCANP contends that the failure to develop such a model resulted from the ASLB avoiding in every way possi bl e being i brought to the point where license denial would have to be seriously considered. Apparently at the heart of the ASLB's aversion to confronting the ultimate possibility of license denial is the ASLB view of such a denial as punishment.

"Moreover, our role in this proceeding is not to punish an applicant for past infraction 3." PID at 2C.

Rather than " punish" HL&P, the ASLB looks for an explanaticn h er reascn (e.g. inenperience), as well as repantance (e.g.

[ __ ___

63

' remedial acts), in order to forgive (i.e. not deny the license).

A natural result of this approach would be to focus on what f._

l happened after HLLP was caught, and not on the violations themselves.

CCANP contends that this ASLB view of its task is contrary to fact and law and that it led the ASLB to conduct the wrong kind of inquiry. - ~-

l l

Treating denial of a license as punishment directly contradicts the basic law underlying NRC licenses, that they are not rights but privileges. It has been long established that no amount of investment in a nuclear power plant vests any right to l,

a subsequent license. Pguet Reagtgt Devg1ggeent Ggt vt Elegttiqians, 367 U.S. 396 (1961). Whi1e this rule may be hard for some to accept, it is similar to other laws, such as strict liability, which exacts a high penalty from those who take the risk of engaging _in a dangerous enterprise but fail to per+orm i adequately.

' Denial, however, is not a punishment. Denial of the license is denial of a privilege to an applicant who has been found unworthy.

CCANP's analysis starts from the assumption, supported- by law, that a license is a privilege, not a right. The grant of this license requires a showing of good character, if that issuo is first raised by sufficient tacts. Once the licensoe's character-has been shown to bo inadequate, a heavy burden falls 1

upon the applicant to show that_its character han not been so unsatisfactory .that it is now disqualified. In making this k _

_ 66 .

k i

analysis, past established facts must be given greater weight than future untested assertions and promises.

By " punishment," the Board must mean lost investment resulting from the plant not going on line. Consideration by the ASLS of this investment is specifically forbidden. Pgwgt Rgactgt, supra.; Sgg alsg 12 NRC 289; CCANP FOF 2.10.

-The Applicants take the risk that their performance under

\

l I the construction permit will lead the NRC to predict that they

[

could not be trusted to protect public health and safety should they be given an operating license. The Applicants are given the opportunity to perform up to a certain standard and thereby to engender in the NRC confidence that their cperating performance will be of an equally high character. If the Applicants' performance does not engender such confidence, then denying the privilege of an operating license is not a punishment; it is simply the Commission telling the applicants that they have been found to lack the necessary qualities to be I

given the privilege of operating a nuclear reactor. Why else would they be called " Applicants"?

Giving a license to operate a nucicar power plant is a tremendous responsibility. The operation of a nuclear power plant is a tremendous responsibility. The seriousness called fer by the decision on licensing mirrors the seriousness of the danger if the decision is in errer.

In analy=ing the question of whether the privilege shculd bo granted, the ASLB took an extremely lenient approach with the Applicant, an approach that was unwarranted by law. The PID*c findings amount to little more than a holding of law that tho i

I . .

av _

~

f Applicants deserve a second chance. Such acts of mercy may be

. appropriate in the criminal courts whcre judges are given broad discretion to adjust punishments to take into account certain i 1

factors, such as rehabilitation since the time of the crime. But no such leeway is allowed in a nuclear power plant licensing f proceeding.

The public who could be injured by an unqualified nuclear licensee is not given a second chance. Thu weight of this consideration must far outweigh the ASLB's sentiments of forgiveness which might otherwise be worthy in a criminal

( proceeding. If the privilege.to operate ainuclear power plant is given based on some misplaced sense of ccmpassion fier the Applicants, thousands of lives could be lost. The only compassion that should be controlling here is a protector *s compassion for these potential victims.

The ASLB's decision and its conduct of the hearings fully I demonstrates the " promotional" attitude toward the nuclear industry for which the NRC has been repeatedly criticized. A record was presented to the ASLB which demonstrated a lack of

{

character. With little analysis, the ASLB concluded that certain

" remedial" actions, some of which were not even tested 'through the adjudicatory hearings, were sufficient to warrant immunity from the consequences of inadequate character.

In one sense the ASLB is correct. .It's role is not.to punish the' Applicants, so neither is its role to consider initigation to punishment.

In their findings of fact, CCANP has propcsed a set of i

character traits which are relevant to the operation of a nuclear power plant and which are relevant to an analysis of the Applicants' conduct shown on the record of this case. CCANP concludes that had the ASLB in Phase I of this proceeding f conducted an inquiry into and reached a decision on the character j of the Applicants in an appropriate analytical framework, the 1

decision would have been to deny the application for the license. I V. Intervenor Contentions In order to make maximum use of its limited rescurces in the areas of most importance, CCANP did concentrate on the central l issue

( of character and did not present findings on most of the contentions.

The Board takes the position that the contentions for which CCANP did not submit findings could be treated as abandoned and that the Board has the discretion to make findings and

( conclusions on those issues anyway. PID at 67. The Board proceeds

to render an opinion on all the contentions. PID at 67 et seq.

But the Board decided only to make findings and conclusions

" narrowly" on each deficiency standing alone, i.e. not to decide "whether the deficiencies when aggregated, are indicative of an overall construction OA/DC program that is or was so defective that there can be no reasonable assurance that STNP has been constructed adequately and can be operated safoly." PID at 66.

CCANP takes exception to the Board's refusal to consider

{

how, if at all, the findings and conclusions on the individual contentions affect the overall judgment en Issue A. As the Scord notes, "the specific allegatior.s contained in Contentions 1 and C t .-

69

f-are pertinent to the CLI-80-32 issues on which the Board is charged: with rendering- an opinion-by-the Commission." Having i s decided in their discretion to make findings and conclusions on these contentions, CCANP contends the Board was then bound to incorporate those findings and conclusions into the findings and f.

conclusions on Issue A.

The only reason for not incorporating these findings and contention would be that the particular deficiency identified _in the contention had'already been dealt with in the earlier parts of the opinion. There is no indication from the Board as to which of the contentions it considers to be previously dealt with in the opinion. .

Also, since the Board exercised its discretion to make

{

. -findings and conclusions, CCANP asserts its right to take-exception to the findings and-conclusions. In order to use 'its resources efficiently and concentrate on the- most -important contentions, CCANP will address only those contentions which -it believe represent both significant evidence of character and/or competence and on which CCANP holds a divergent view from that-of the Board.

A. Contention 1.1 -

CCANP agrecs for the most part with the Board's findings regarding .the substance- of'the , contention. But CCANP . takes.

exception to the Board's overall judgment of the importance of the' centention and the testimony of the- Applicants cn this contention.

The Applicants constructed a major building one foot' short' h of .its ' designed length. PID at 67. As the Board : notes, the f

l, 70 _

I b

Applicants admitted that this error resulted from peor surveying

' practices- and that there was no procedure.for or inspection of actual surveys at the time the error was mada. PID at 68.

( The ' Applicants l_ denied that the lack of an inspection procedure or of ac_tual inspection violated 10

(. C.F.R. Part 50, Appendi:: B. W The' Apolicants took the position that such inspection was impractical.

PID at 6o. Finally, the Applicants contended that the only Appendix 8 requirements relevant to surveying were reviewing survey procedures, calibration of f instrumonts, and annual auuits.of records. PID at 60, 71.

The Board properly rejected all of these positions. The Board found that Appendin B should not be. applied narrowly. but rather as requiring Lthe inspection of the zurveying of buildings.

The Board rejected the Applicants " impractical"- position, in part based on the f)tct the Applicants actually did set up an inspection program.'PID at 69-71.

But having found that Applicants violated Criterion X of Appendix B, PID at 72, the Board immediately gces'to-the remedial

, o a s ,

measures adopted.

CCANP would go'en to fit the contention findings'and opinion o 3 ,

into the issues. Under Issue;A, 'CCANP would' find'that the total s

l absence of any effort to verify a} survey prior to construction is J

evidence of a negligent' attitude.

) While this particular deficiency did not end up being safety-related, the Applicants still had to reengineer the penetrations into the building and design a new equipment layout. A simple-common'sonsa concern for h \

ccstly errces would lead to an. inspection process for such a 4 m i l potenti'al 1 y encensive error. Such' a nogiigent attitudo is i L n+ '. 1

evidence of a lack of character.

l. - Even accepting - acquendg the Board's inexperience excuse,

.this deficiency hac nothing to do with experience since B&R is

~

.one of the most experienced. building contractors and HL&P is one f of the largest utilities in the United States.

l Furthermore, the Applicants' testimony denying that Appendix l B- required such- inspections is at least one indication that throughout the project the Applicants interpreted Appendix B very narrowly.

}.

I Finally, the insistence as late as the hearings on the operating license that no such inspections were required by Appendix B is an indication that no true remedy of this situation ever. took place. Adopting a procedure simply to satisfy'the NRC while denying the underlying rationale for the p r.oc edur e ,. i.e.

the implementation of Appendix B, is evidence of a failure to truly remedy the deficiency.

B. Contention 1.2 The Board's findings and conclusions on the concrete voids

\

are an excellent example of ,how the Board's use of the concept of experience is inappropriate. Egg PID at 74-75. The voids detected in the concrete containment walls' occurred primarily in the upper portions of those walls after-numerous similar lower pours had been completed, providing experience in just such pours.

Furthermore, the. factors contributing to such voids were not

.uniquety_ nuclear factorc, e.g. restricted access and visibility, insufficient vibration, equipment malfunctions, delays, fatigue,

^

and inadequate lighting are potential _ problems in any -complex

-concrete pour.

f. .: 72' _.

r i-r Finally, DLR is one of the largest constructcrs in the United States. Are we really to balieve that they lacked tne experience to pour a ten foot section of wall four feet thick, particult.rly since they had done so on this project numerous times prior to the pours containing voids?

g The Board's ine: perience excuse simply does not ring true in light of the evidence. A more logical e::p l an a ti on is tnat cost and- schedule pressures produced conditions where actions were p taken that would otherwise have been avoided and that these actions produced safety-related deficiencies in the work.

{ If Brown and Root was feeling cost and schedula pressures, those pressures were coming frcm the Applicants. That safety-related deficiencies resulted from such pressure is a refler. tion of the Applicants' lack of concern for safety compared to cost and sc h e'd ul e , a reflection on their values and therefore on their

_ character.

i The last two sentences of the opinion on this contention, r PID at 74, should be read in the light of S&R's lengthy prior and J

on the job e::p er i enc e. CCANP would rephrase the conclusions to read:

) An s,<perienced constructor like B'own r and Root would never have permitted a pour under the conditions reflected in this record had there not been cost and schedule pressures brought by the Applicants. Mcroover, Brown and Root DC might well ha"e prevented and/or caucht such deficiencios had it not been fcr the

__ translation of the Applicants' cost and schedule

_~

pressure through D&R construction to B&R CC.

C. Contention 1.7(a)

CCANP disagrecs with the Board's approach to the function of CC inspectors. CCANP contends that if an inspector has a question 2

R 73 i

---ww. v ,- m r..- - -

about whether a revised design was in fact aoproved by an appropriate engineer, tnat concern may well arise from the CC inspector's personal knowledge of other jobs or of previous parts of the same job. If there is any doubt, the DC should be allowad to eliminate that doubt. The Board saying that verifying desijn enanges is the function of Design Engineering and not CC ignores

. the fact that what CC was trying to do was confirm that Design Engineering had in fact aoproved the design change. The evidence in the record supports tnat a memorandum was written to prevent

( CC inspectors from confirming that Ap pend i:: B had been ccmplied

• with.

CCANP would find this contention to ce confirmed and find a violation of Criterton I (in that the authority and organicational independence of QC was restricted) and Criterion III (in that when a question about design arose, the opportunity to assure proper design changes were being made was denied).

D. Contention 1.7(e)

The Board correctly finds that the " incidents of harassment of OC inspectors at STP were frequent enough to represent a serious indictment o'f BLR 's manageri al competence." The Board also finds correctly that:

"Although SLR (assisted by HL LP) took steps to eliminate the harassment, the retord does not reflect whether, if it had remained on tte project, B&R would likely have succeeded in doing so. The recurrence over the course of several years of incidents of harassment, notwithstanding attempts to eliminate them, create certain doubts in this regard."

The Board is cor:cluding that all the corrective measure taken by DLR and HLLP to eliminate harassment and intimidaticn of inspectors were unsuccessful and wculd probably have continued to

( 74 l

be unsuccessful had Brown and Rcot remained on the job.

I CCANP would consider this a devastating finding on Issue A, both for character and competence. Since the removal of Brown and Root had nothing to do with the quality of their performance, apparently the continuing harassment and intimidation of the inspection fccce was not a matter of sufficient concern for HL&P to fire Brown and Root, even though HL&P knew what was going on.

HL&P's continued indulgence of B&R's violations of fundamental safety-related requirements is a. character defect demonstrating a f lack of values and lack of resolve.

The fact that HL&P could not get Brown and Root to effectively controi harassment and intimidation of inspectcrs is highly probative evidence of a lack'of competence on the part of HL&P (assuming we are using the Board's concept of ccmpetence, not- just technical competence as the Ccmmission used the term in CLI-80-32).

CCANP would find that the chronic and widespread i intimidation and harassment violated not only Criterion.II.as the j Board finds, PID at 82,. but also Criterion I (f ailure to retain l responsibility for- the QA/QC program, failure to assure the establishment and implementation of_an appropriate OA/CC program, and failure ta= ensure the authority and organizational independence of quality. assurance inspectors), Criterion. X

~

(f ailure to establish 1and execute a program for inspection' of

activities af f ecting quali ty) , and Critorion XV'I (failureL-to-take af f ective corrective action to prevont~ racurrance of - intimidaticn ..

and harcssment ofTinspectcrs).

Q ,

.75

i E. Contention 1.3(a) and (b)

"Moreover, the Applicants' unimpeached and uncontroverted testimony demonstrates that HL&P acted decisively and promptly to correct the access engineering problem." PID at 84.

In fact, just the reverse is true. The whole reason the allegations in I&E Report 81-28 arose was the failure of Brown and Root to respond to the repeated nonconformance reports of HL&P GA regarding access engineering. HL&P OA wanted to issue a stop work order on all Brown and Root work because-HL&P had been unable to get B&R to respond to this concern.

F. Centention 1.8(c)

Contrary to the Board's position, the evidence demonstrates that the HL&P QA director made a statement in conflict with NRC requirements and then issued a clarifying letter after an NRC investigation began. Egg CCANP FOF 6.31.1.

G. Contention 1.8(d)

Contrary to the Board's position, the entire affair regarding the inspection process revoals that'HL&P did not have available the procedures necessary to implement their DA program effectively ~and refused to permit the OA inspectors to use higher

~

tier documents to do the job.

V. Issue B CCANP, of cour se, contended that Issu'e B'never' belonged in this : proceeding.- 1: ailing to win that argument, LCCANP concluded that HL&P had not adequately remedied:its lack of chcracter and that HL&P's current ccmpetanca,was unknown. Ee3 CCANP F0F 10.0-10.32 ,

[ , ,

76-

A. The ASLB - erred in treating the ending of B&R's involvement in STNP as a remedial act that supported a conclusion

{ ,that HL&P had remedied its character deficiencies.

Repeatedly, the ASLS treats the removal of B&R as a dramatic remedial step by HLLP having great probative weight for both character and competence. The ASLB says the .emoval was the most L significant response by HL&P to nonconfermances and noncompliances, PID at 40, an "important step," Id , "the most 1

extreme corrective action possible," Id., and "a testimony to CHL&P's] character." Id.

( The ASLB earlier said:

"CA] Ccharacter3 trait should only be considered if it f evinces a willingness and propensity, or lack thereof, on the part of an applicant to observe the Commission 's health and safety standards Cfootnote omitted2." PID at 15-16.

{

While the removal _of B&R is not Egt sg a trait, presumably l the act of removal somehow demonstrated to_the ASLB the presence of the_ willingness and propensity the ASLB is looking for.

A careful examination of the B&R removal leads to an opposite conclusion.

First of all, if B&R had stayed on the job, the ASLB says it woul'd have considered license denial on competency grounds. PID at 51.

Second, it is important to note that HL&P fired BLR only from its position as archi tect , - er.gineer , and- construction manager. HLLP wanted B&R to remain as constructor and QA/QC. Egg CCANP F0F'6.32.

Third, HL&P took an inordinately long time = to realize that '

B&R could'not succeed-as:architsct, engirrer, and : construction manager. Sgg CCANP FDF 6.33.

77

Fi nal l y ^, . the partial firing of B&R did ogt result from concerns about the quality of B&R's work, PID at 40, but rather from lack of productivity, PID FOF 125.

,Given'these facts, the removal of B&R in no way demonstrates a willingness and propensity to observe NRC regulatory standards.

B. The key management figures responsible for the f ailurer, cf. HLLP remain in place.

The problem for HLLP is at the top. Changing the prime contractor does nothing about the lack of ability at the top.

Those who . failed to perceive the inability of their previous-j.

prime. contractor to achieve a quality. plant are not fit to f continue as the msjor superviscrc of the construction.

More importantly, when the construction is finished, Bechtel and Ebasco.will be gone. The decisions on continuing operation will be made by the same two top people who let the project get out of control in the first place. The selection of Bechtel and Ebasco. to complete construction predicts nothing about. operation.

J when Houston Lighting and Power will be on its own.

To predict operations performance, we'must look both at the performance of those who will be in charge ~ of operation, i.e.

Jordan and Oprea, and at:the performance'of those responsible for those in charge holding their. position, i.e. the Board' of Directors.;What)we find is that Jordan and'Oprea failed-miserably-L when it came to ensuring a1 quality plant _ was being built ar.d that h theJ Board ofLDirectors: failed to discipline cr remove these .two

. . officers when their failing became a scandal.- -The' failure to:

cemove. . discipline, or even.give special instructions.to' Jordan

~

y and- Oprea 1 demonstrates the -lack: ofiany; remedialf action at.!all .

((< . l78 _

L The prediction then must be that if HL&P is entrusted with b Lthe- operation of STNP, Jordan and Oprea will probably let p problems ~get out of control again and the Board of Directors will t

do nothing about it.

C. The remedial _

actions by top management indicate very little real change in their attitudes or expertise.

"The circumstance that Messrs. Jordan and Oprea attempted'to improve their competence in OA matters, as in attending'the Crosby College seminar (Finding 215),

reflects favorably upon their character (as well as i that of HL&P)." PID at 43-44.

Were this proceeding;not such a matter of great seriousness, this . finding by the ASLB would constitute an attempt at humor.

f The seminar proffered as evidence that Mr. Jordan cought out training in QA to improve his competence lasted ' precisely one

-day. 32g CCANP F0F-8.7.2. Rather than reflecting favorably -on

[ ' HL&P 's char acter , this desultory swipe at gaining competence in (4

QA is further evidence of a lack of concern for qual'ity on the part of top HL&P management.. .That.the ASLB. would find' thisL eviden'cw convincing as even a remedial actLisfa clear indication-of how--anxious the ASLB is to find:something to e::cuse HL&P's dismal performance.

VI. Due Process CCANPE-contends 'that-both in=the PID'and in-the conduct -of '

the ; proceeding. itself,- the dueiprocess rights of CCANPc 1 as- -an-

'intervenor -were systematically violated.1 .These violations took the form.of bias.byLthe ASLB toward HL&P,_ hostility;byEthe -ASLB

~

Jt o w a r d .-- C C A N P ,j and procedural? error detracting-from CCNNP's-right to -a- fair ; hearing 'andian opinion rendered on. thei issues- as

^~

h ~

? litigated: and the ; evidence l.as L admi tted.-

4

On.the issue of bias, the finding is to some extent in l l

[ the eye of the beholder -- certainly an advocate will be quicker to cry foul when on the losing end of a decision. CCANP can only highlight what it considers to be evidence of bias and leave to f the objective judgment o'f the ASLAB whether those instances are harmless differences of opinion or favoritism by the ASLB toward the Applicants.

A. In the opinion'itself, the due process violaticns are

{. evident.

1. The ASLB showed a clear bias tcward HL&P.

The clearest bias in favor of HL&P was the manner in which f the ASLD addressed the issues,in this proceeding.

Fi rst ,: the.ASLB-severely narrowed the possible traits which f.' could produce license denial (for competence, none; for character, . immutable defects). Then the ASLB brought.in remedial

{

material at every opportunity while ostensibly making findings or conclusions on Issue A.- These ASLB actions directed attention away from the serious violations committed by'HL&P and into areas where HL&P looked better.

The ASLB also showed bias toward HL&P bysusing negative or

. neutral evidence as.if it were favorable ~to HL&P._

.The ASLB qives: favorable. credit in the character inquiry-'to HL&Pebecause.

"Ed3uring NRC's .79-19 _ Investi gati on , - af ter'_ ' earl y preliminary reports of. numerous ~nonconformances in many h, areas,- HL&P' beganiccrrective actions well.befcre -the L NRC had.. completed ~ its-investigation and ; issued its report."_PID at 39.

HL&P' was. fully _ aware the NRC was finding noncompliances. Their--

( , actions were no more.thanfan attamot:tc head off'an. en'forcement W< ; . .

.. 'BO: --

[ '

( l f

1 action they knew has coming. The ASLB is reaching out for actions j i

with no real value in demonstrating good charactor and moving

[ them to center stage.

L The evidence surrounding the end of BLR's involvement in STNP is no credit to HL&P but the ASLB gives the event a major role in showing HL&P's good character.

When harassment becomes so bad that HLLP has to require BLR

( to adoot a special procedure for resolving disputes, not required at ather nuclear plants, the adoption of the procedure is favorable in 'the ASLB view, rather than clear evidence of a breakdown more serious at STNP than at other plants. PID at 39.

Aga.in, as in the removal of B&R, HL&P gets favorable f treatment for letting things get so out of hand that only drastic action can correct them.

Sometimes the ASLB takes negative evidence and simply makes it disappear. Even thougn HL&P's failure to hire any consultants in the QA/OC area over a t ive year period constituted a major

( failing, the ASLB can still find that "tw2here necessary, HL&P and B&R were also willing to hire consultants or subcontractors."

( PID at 47.

There is a due process question involved in the ASL3's heavy i

{

reliance on ine::p eri ence for its opinion and findings. The

( Applicants, with the burden of proof, put on their case arguing that they had highly qualified pocple in charge of STNP. The Applicants in fact take that position throughout the prcceeding.

$3g PID FCF 118. When the ASLB finds ine::perience as a major

{

cause of the prcblems at STNP, the ASLS is finding that hLLP did not meet its burcen of proof. But rather than fc11cw a logical l I

______-__-___------@l_

~

L progression from a failure to meet the burden of proof, the ASLB turns this failure into a success, i.e. assumes the testimony of the -Applicants was simply in error as to their capabilities anc encuses their. performance on the basis of inexperience. CCANP was h

certainly not on notice that the ASLB intended to use Anexcerience in this manner. In fact, the logic of the Board's

(

position is that CCANP should have proven that HL&P did in fact have highly qualified people (experience being part of their qualifications) in place at all times when things were going wrong at STNP. Reason dictates that CCANP could not possibly have

{ known that such proof was required by the intervenor.

Finally,. the ASLB takes all the evidence on how HL&P responded after being caught violating NRC regulations and elevates that evidence into a major positive character trait, an elevation unwarranted by the nature of this evidence.

( Furthermore, the ASLB treats this, evidence as equally valuable to predict futura performance as is the evidence of past acts .not taken in response to an enforcement action. But the remedial actions the- ASLB concentrates on are the ecuivalent of coerced l.

acticns, coming as they do in respense to enforcement actien.-As f fsuch, these' actions say little about the character of the acter.

2. .The ASLB ' demonstrated repeated hostility- toward CCANP's efforts.

The ASLB dismissed CCANP's entensive work on the' definition

? .of character as being " broad," "ill-defined," and of "littic

(- assistance." PID at'1S.

L The ASLB criticized CCANF for using one piece of evi dence o.-

(

~

one event to illuminate more than cn :haracter trait.

L .

-- . m

The ASLB repeatedly distorted CCANP's actual position in order to make CCANP appear more rigid or in order to avoid the

~f ull implications of.CCANP's arguments.

{

"But if by this claim CCANP rueans to assert -- as wo

[". .believe it does -- that attempts to achieve quality t -should not be taken into . account in evaluating character (irrespective of the degree of success of

g. those. attempts), ther we must demur from that position.

( In our view, attempts to achieve quality are pertinent to character.' PID at 41.

.The CCANP findings cited by the ASLB Just before this statement do not, support the ASLB's characterization of CCANP's position.

First of all CCANP is answering a position asserted by the Staff, a very broad position that trying manifests good character. CCANP FOF 2.17 specifically rejects a willingness- to f . implement corrective actions as irrelevant and argues that a'show of' willingness cannot e:<cuse violations of NRC requiremants; 2.19 demonstrates that the broad use of the term willingness is not helpful to.the analysis; '2.27 looks for try.ing "in ways pertinent to relevant qualities of charactsr"; 2.29 states. that "Cm] ore-than mere gestures that can be' cited as 'tryingare necessary to

.  ; reflect' good character"; 2.42 e:<pressly rejects the position that there must be a lack of trying in order "to reject an application

{ on character grounds." From these citations, it:should be. clear that'CCANP)never said " attempts to achieve, quality shculd not be taken- into-account."'The ASLB is merely discrediting a pesitien

-CCANP did not take. This is part of an ASLB pattern of . making CCANP. appear. more doctrinaire and rigid in its . positions: than

{ CCANP really11s..'CCANP. agrees that= attempts to-achieve -quality u

provide. ~ circumstantial evidence of values :and are :therefare p

p- 7relevantlto the character inquiry.

~

I

.-...,_m . . . . . - _ ,. . . . .. .-

. .- M '

h "For. example, the record citations Eby CCAMP3 which are f said to demonstrate a 1ack of fami1iarity with detai1s on the part of Messrs. Jordan and Opera do in fact reflect that neither office was aware of every single project detail. Nor would we e::pect them to be. In our

{ view, both of them have been exposed to a level of detail commensurate with their corporate positions Ccite omitted]." PID at 43.

[

The record citations cited, i.e. CCANP F0F 5.24.[1]'- 5.24.8, do not supoort the conclusion that CCANP's position was that Jordan and Oprea should have been " aware of every single project detail." This is a deliberate distortion by the Board of CCANP's position; the ASLAB can look at the citations and decide whether

{

CCANP has idantified the type of information Jordan and Oprea should have known.

g "The gist of CCANP's claim is that HLLP never really l perceived the difference between building a nuclear and-a f ossil-fired plant and, for that reason,- was unable to deal successfully with the QA/QC requirements f inherent in constructing a nuclear plant." PID at 45.

In fact, while spending some_ time on the lack of a nuclear versus fossil fuel perception on the part of-HL&P, CCANP' stated:

j- "While obviously of great importance, HL&P's failure to I adequately. distinguish =between fossi1 and nuc1 ear-p1 ants is =on1y one in a long series of failed perceptions." CCANP'F0F 5.20

( .CCANP procsaded then to. document many of those. other failed j f . perceptions, almost al1-cf wh'ich~are ' generic, i.e. not related to the fact that-a nuclear. plant was being built, such:as the need to continually use : strong'words th.get the attention of the contractor,; the need for a special dispute resolution procedure,

(.

and the high; turnover of ~ contractor supervisors. CCANP pointed to h: these as. problems of HL&P unrelated to whether they- knew -they-were building a nuclear plant cr.' noti For the ASLB's purpose of

-using': inexperience to excuse practically. everything, ~it- was

_g *

=

L useful to characterize a major finding of CCA?!P as the " gist" of CCANP's position, since HLLP is clearly experienced in hiring a j contractor to bui1d a 1arge power p1 ant and, therefcre,

{

. experienced in the types of problems that arise on any large

' construction project, whether nuclear or not. The ASLB can then credit CCANP's observations as "well founded" but then sweep them away with the lack of experience broom.

t f 3.' The ASLB committed numerous procedural errors in its opinion and findings that denied CCANP's due process rights.

First and foremost, the ASLB approach to this proceeding as

{

a " punish or forgive" question colored the entire record and the PID.

The ASLB never provided a clear explication of the standard that would be used to judge character.

f The ASLB made numerous conclusions ccntrary to.the eviden'ce.

"Here, however, the record shows that the history of nonconforming or noncomplying conditions (including the

( incidents of harassment) was caused not by a lack- of corporate character but, instead, by inexperience on j the part of both HL&P and its contractor, B&R." PID at t 40.

The record evidence is in f act to the contrary on the issue

-of intimidation. HL&P knew from direct experience that on large

{ construction projects such :f riction generally occurred. CCANP_FOF

.s.

The ASLB decided that for purposes of the character analysis in this proceeding, the- parties and ASLB would analy:::e only character traits that have a nexus to a carticular nuclear f- performance standard and that are reascnably inferrable from the record. The ASLB,-therefore,-should nave rendered an opinion and made findings'en the CCANP traits or axplain'ad why any particular

__ M&__ ___ __--_ _ __

trait lacked the aopropriate nexus or was not properly inferrable

(_ from the record.

The ASLB rejects a major analysis by CCANP regarding the preconditions on the Bechtel study of HL&P's possible QA

( organizational options for HL&P. The ASLB states:

"They Cthe CCANP allegatics3 are based on statements out of context and, in fact, amount to a distortion of

( the record when viewed as a whole." PID at 35.

There is no explanation as to which statements are taken out of

{

context or how the record as a whole is distorted. It is

( impossible for CCANP to appeal this attack when no specifics are given.

This same statement shows hostility toward CCANP. For the "most important" item, we would expect the ASLB give a

(_ to detailed reacon for rejection rather than a thin blanket dismissal. CCANP spent a great deal of time piecing together the proof -of this allegation. Just like CCANP's wcrk on defining corporate character in t e nuc1aar c:ntext, the ASLB ignores f' CCANP's work on showing a deliberate deception of the Commission by the Applicants.

{. B.' The ASLB failed to accord CCANP its procedural rights under the Administrative. Procedure Act, NRC regulations, and'the Fifth Amendment.

1. CCANP was entitled to the procedural rights granted by Section 554 of the Administrative Procedure Act.

Operating license' proceedings are governed by.Section 554 of

{ the Administrative Procedure Act (APA). 5 U.S.C. Sectior. 550 et seq. Section 554 governs any-adjudication required-to be "on the record." .An operating license proceeding is an "on the record"

-hearing as that phrase is used in Section 554(a). Although-

-- . _ _ , , , , . _ , _ _ - _ _ _ _ - - _ _ _ _ - - - - - . _ - - - - - a

Section 189(a) of the Atomic Energy Act does not use those exact

(. words, straight-forward analysis compels this conclusion.

j It is well settled that no great magic resides in the phrase l-

"on the record." Instead, the applicability of Section 554(a) f turns on the substantive nature of the hearing Congress intended to provide. ggggggst 6011-E91195190 b24999 V A Ggstig, 572 F2d 872, 876 (1st Cir. 1978). Congress certainly intended licensing hearings to be held pursuant to Section 554 of the APA. Although the Atomic Energy Act does not elaborate on the type of hearing  ;

f required prior to the issuance of an operating license, tne legislative history of Section 189(a) states that the procedures required by the APA should be used. Since an operating license hearing is clearly adjudicatory, and since Section 554 is the sole APA provision concerning the' procedures to be used in an adjudication, Congress could only have intended that operating license proceedings be governed.by Section 554.

~

In any case, the NRC has, as' a matter of practice, f traditionall / conducted its hearings as "on the record" ' hearings.

An "on the record" hearing has been defined as one in which the parties have the rigth to know and to meet the evidence upon which the decision-maker will base-its~ conclusions. 6999 _lalged BallCggd Ggsggay yz_ UzSz, 318 F.Supp 490 (E.D.N.Y. 1970). 'NRC-regulations clearly contemplate such a hearing. Parties have the right~to introduce all relevant evidence, and all decisions'must

-be. substantially supported by the record.- 10 C.F.R. Section 2.743(a). . Having -already conducted.this' hearing-'without prior

(

notice- that existing practice would not.be followed, the NRC.

h _

w culd now be estopped from characterizing this hearing'as not "on i _ .-

e7 __

c the record." Gity gf. hst Ghigagg n tjRG , 7 F2d 632 (7th Cir.

1983)~.

r a. The ASLB's bias in favor of the Applicants and

( hostility towards CCANP deprived CCANP of the impartial hearing required under the APA.

h The conduct of these hearings is further evidence of bias in the panel. APA Section 556(b) requires the employees participating in decisions such as this one to conduct their functions impartial 1y. CCANP chal1enged Judge Hi11 for bias. The Atomic Safety and Licensing Appeal Board. voted to remove Judge f Hill from the panel in this case. Although the Commission reversed at decision, CCANP contends that the presence of Judge {

Hill en this panel infected this proceeding with incurable bias.

Only if' CCANP prevails in its position, i.e. the license is denied, would this tiaint be harmless error. CCANP i s the only remaining party to the Phase I proceeding prejudiced by the conduct of the hearings.

It would be unwise to e:< amine the record in this case without being. mindful of the relationship between bias' and the

{

manner' in- which_ these hearings were conducted. Many of the panel 's rulings can be e::plained .in no other way. As the actions of . the' ASLB are e:< posed in the course of this appeal, it should be clear. that this hearing was not conducted impartially- as required by Section 556(b).

b. The ASLB used time pressures to prevent f- CCANP' from completing suf ficient cross-e:< amination to fully.

k disclose material evidence.

r Section 556(d) provides that parties are entitled to such l

cross-e:< amination as may _be required for .a full and fair f: . disclosure of the' facts. This right is limited only to the e:: tent 9- go 1

l that the cross-examination becomes irrelevant, immaterial, or l l

I Lunduly repetitious. Failure to allow relevant, material, ncn-repetitious cross-examination is grounds for reversal, if the failure is prejudicial. ggg LORE v Bucgs, 207 F.2d 434 (8th Cir 1953).

At Tr. 5060, the ASLB required CCANP to supply a cross-examination plan. The ASLB announced that it would cut off cross-

~

examination at the end of what they considered to be redsonable j

time. Clearly, this is a purely arbitrary limitation which has nothing to do with the only acceptable criteria for limiting l

cross-examination: irrelevancy, immateriality, or repetiousness.

Even if the ASLB was basing its decision to cut off cross-examination on these criteria, the proper sanctions would be'to strike the improper questions, rather than to entirely deprive a

(- party of its rights to proper cross-examination.

The ASLB actually forced or threatened to enforce this method of time limitations on several occasions. E'gg Tr. 6818, 9482, 9917. Even if it had not ever carried out its threat, it would be grounds for revesal. Conducting cross-examination in such an oppressive atmosphere, could only have been impaired the 1

effectivenes of CCANP counsel. Assuming arguendg that the j measure did expedite the hearing, it could only do so by impermissibly _ abridging CCANP's right- to careful cross-f examination. Having no permissible benefit, and imposing needless burdens non cross-examining counsel,- even if -never actually; y enforced, 'this measure ~would be contrary to the APA policies of-

[ ~

free admissi*cn of evidence.

-On tne occasions when the ASLB actually cut off cross-0 ., .

examination, CCANP was attempting to probe critical areas of

( . testimony. The ASLB*s refusal to allow this probing prejudiced CCANP's efforts to bring relevant material evidence into the record. CCANP contends that the attitude of the ASLB encouraged

( the Applicants to engage in delaying objections in order to force CCANP to decide between introducing evidence and conducting cross-examination. See ECCANP3 Motion to Resume Cross Examination (dated July 15, 1980). -

Furthermore, the ASLB has threatened to use similar l impermissible limitations on CCANP's cross-examination in the future. PID at 100. The ASLB criticized CCANP for not filing many proposed findings on technical. issues which were the subject of extensive cross-examination. Because CCANP did not file as many findings as the ASLB would have liked, the ASLB threatened to limit CCANP's future cross-examination. Id.

This threat is impermissible'for-tne same reasons that the ASLB's previous threat, Tr. at 5060, was impermissible. It is all the more onerous since it was the ASLB that originally enccuraged CCANP to concentrate its findings on those issues it felt were mo s'. important. Tr. at 10656-57; PID at 29.

The ASLB's-threat during the hearings,. Tr. at 5060, and the resulting limitations on. CCANP's cross-examination severely prejudiced. CCANP ability to build a complete. record. The new threat made- in the ASLB*s~PID indicates that the ASLB will

~

continue to abridge CCANP's rights in the future.

-c. The ASLB improperly limited CCANP's cross examination for reascns which having no basis'in law.

The ASLB: sustained cbjections to CCANP's. questions because e

90

A y

they ma'e d assumptions as to what the witnessas testimony would y

[ '

be, Tr. .at 9775-74, because the ASLB felt semo questions were tco 7 broad, Sgg gigt Tr. at 9374, and because the ASLB did not liko

'the wording of some questions, Tr. 9937-39, 9914. These errors

[ were not isolated incidents but rather occurred between 1traliscript pages 9326 and 9914, a period of roughly three days of f . hearings.

i In this part of the hearing, members of the NRC Staff were on the stand. Among other things,. they testified that HL&P had the character and the competence required to receive an operating

, license. In the PID, the ASLB relied her ily en this testimony.-

CCANP's objectives in cross examination were~to determin'e the reliability- and completeness'of the information upon which the Staff based its testimony and to determine the NRC Staff's f definitions- of character and competence, as used. in their testimony.

The ASLB thwarted CCANP's every attempt-to accomplish these objectives. In _ addition to the examples of erroneous rulings cited, there are- at least thr.ity five (35) erroneous rulings concerning CCANP's cross-examination. while- the NPC Staff witnesses were on the stand. The ASLB participated actively. in

( the harassing land groundless objections and arguments made by the

- Applicants-and NRC Gtafd attorneys.' Given the: space limitations.

-imposed on this brief., ~ it ris (iinpassible' t'o 'f ully explicate .the improper 1 . behavior of'the ASLE during this crucial part of the

~

hearing. Instead, CCANP' can only direct the. attention of~ the.

JASLAB- to-the.following sections 1of the transcript: ~9403-9504,.

19769-90,-9829-9919,-9974-81.

~

h

A reading of these pages compels the conclusion that the

? ASLD- turned the hearing into a free-for-all, thereby depriving CCANP of~its cross-examination rights during a critical phano of the testi' ony. Incidentally, it should be noted that thin section

( of the transcript ontains one of the instancos where the ASLD decided- to actually enforce its threat to arbitrarily cut off

'CCANP'n' cross examination after a cortain parted of time. ggg Tr.

-at 9482, 9917.

To account for the actions of the AGLB during this cart of t-

[ the hearing without ultimately finding substantial bias with the

. ASLB would be very difficult. The ASLB's failure to respect CCANP's cross-examination rights. greatly. prejudiced CCANP's ability to- contribute to the record of this proceeding and

{

amountad to a protection of the Applicants from tho' rigors of the-adversary process,

d. The ASLB failed to take into: account the h -convenience. of CCANP in-setting the timo for the hoarings to' .

bogir, Gection 554(b) of'the APA requires the ASLD to considor the f.

convenience of the parties in setting the time and place for: the

. hearings. Tho'ASLB set the hearings to begin on May 12, 1901, in spite of the fact'that CCAMP's pro so representative was tc take -l final examinat' ions in his first year of law school that- came f  ; week. CCANP.was forced to expend its. limited resourcos to bring-

~

in; outside counsel, limited in his. prior. knowledge of the:cano, h in' ceder forlCCANP to participato. 'CCANP was unable _to havo~ tho-1 individual .monti familiar with:tho1 details of.this caso- present- .

during an important;phaso_of tho:haarings.-

I n .: ~~ making itu decision not-to' postpone-the hearings for a t-

- 1;

[.

.; 5

'92'

Tm week, the ASLB: cited the Commission's mandate that these hearings

[7 -

( l be expedited.-The Commission's order encouraging an early hearing on i ssues raised by CCANP was made in 1980. Phase I of th'ese hearings did not end until mid-19S2. It is doubtful that f postponing the start of the hearings by one week would have seriously altered the completion date of these proceedings.

The ASLB misconstrued the Commission's order for e:: pedi ted hearings. That order was the result of CCANP's request for a hearing on the Order'to Show Cause. The Comm'ission, rather than

. granting CCANP a hearing on the Order to Show Cause, enccuraged the ASLB to adopt the early hearings plan already proposed by the ASLB to the parties. 12 NRC 291. The purpose of' expedition was to determine if there were grounds for an early denial of the

[

operating license. Expedition was solely for CCANP's benefit and-to' protect the public from a poss'ibly unworthy license applicant.

To prejudice CCANP's' ability to participate fully in the' hearings on the grounds the Commission wanted the hearings expedited is a clear abuse of-the ASL3's discretion.

l

e. The ASLB failed to make findings on all issues of fact and law as required by the APA.

Secticn. 557(c) of the APA requires that all decisiens. in f hearings conducted under Sectic'n 556 include findings of fact and conclucions, of law' on all material issues of fact and. law

~

presented on the record.- Issue A, as set forth in the pre-trial-order, required a yes or no. answer to the.following fact and law

{

question:~ Apart .from any remedial,offorts, did the acts and ,

( . omissions of- HL&P demonstrate that.there can be no reasonable assurance that-HL&P has.the requisite = character and competence ti L .. . . .. . . .

.93

I operate a nuclear power plant? The ASLB purportec to answer this question in the negative, but only after considering HL&P's remedial efforts. In doing so, the ASLB failed to answer Issue A.

answering Issue B twice'instead.

.The ASLB did not find that Issue A was not the correct statement of the law. If it had, perhaps it could have avoided a fact finding and legal conclusion. At no point did it make any statement to that effect, nor did it supply any rationale for such a conclusion as would have been required by Section 557(c).

l Instead, the Board purported to make a finding on the issue, but erroneously considered HL&P's remedial actions in making that f i n di n'g .

Throughout the course of-this proceeding, CCANP consistently argued'that Issue A is the correct statement of the law and f should be answered affirmatively. CCANP devoted the greatest part of its energies to this issue.- By. refusing to make a finding on the issue, the ASLB arbitrarily denied CCANP the'most important of its litigation objectivos and left CCANP in the position of *

{

never having really been on notice of.what was being litigated in p

I this proceeding.

f. .The ASLB restricted the scope of cross f a:: amination to matters raised in direct testimony in violation'of

~

the APA.

I f Section 556(d) of the APA sets'down principles-for admission '

of evidence and cross-e:: amination in - administrative hearings, such. as .the one. leading to thic appeal. Unlecc 1specifically I granted statutory authority to do so. agencies _may not- depart from-these princip1cc. Egg, Cghgn v s Petales, 412 F.2d 44-(5th l

Cir. 1969)'. Essentially, .the APA'smeks to ensure that a partyfs f '

ls 94-1 - _

efforts to bring probative evidence into the record are not

~

hindered by technical ru.es of evidence. Sgg, ggg Qgitgg Mills 2 109 Ms 6dOiOialCaI9C2 EMEIA gf LabgC, 312 U.S. 126, 155 (1941),

.[

S30921 ds U9224 105: Ms EIG, 148 F.2d 37G (2d Cir. 1945) (per f curiam decision by C1 ark, A. Hand, L. Hand).

The federal rule of evidence limiting cross-examination to matters raised by direct testimony is controversial in the federal courts. The rule has been criticized because it promotes too many technical arguments over the propriety of otherwise l permissible cross-examination. In enacting the APA, Congress sought to eliminate this type of technical hair-splitting. By reintroducing it into this proceeding, the ASLB unnecessarily complicated this hearing and erroneously refused to permit

{

otherwise proper cross examination by CCANP. @ee gtgs rulings at 2029-41, 2279-96, 3080, 5500, 5513, 5231, 5533, 7337, 8233, 9321-23, 9763, 10115, 10116.

2. The ASLB deprived CCANP of its procedural rights under the Due Process Clause of the Fifth Amendment.

] a. CCANP's interest in this . proceeding is protected by the Due Process Clause.

CCANP has two types of interests in this proceeding, both of which are protected by the Due Process Clause. First, CCANP seeks to preserve the lives and property of its members. CCANP was f granted leave to intervene because the health and safety of its members are directly affected by this project. These interccts

( are obviously protected by the Fifth Amendment.

Second, CCANP stands as the representative of all the persons whose health and safety is affected by'+.his project. NRC f rules of practice deny the right to intervene to a. party whose l 95

interests are identical to a party already admitted to the

( proceeding.. 10 C.F.R. 2.714. Realistically then, all persons who

.are similarly situated to the members of CCANP must look to CCANP

( .to protect their interests. This broader public interest, being simply a conglomeration of all interests identical to those of CCANP's members enjoys the same degree of protection as those private interests.

7

b. The ASLB erroneously permitted the

[ introduction of written testimony.

The United States Supreme Court uses a balancing approach to determine whether the Due Process Clause requires a given procedure. n t!attlews v,_ El siti d_ge , 424 U.S. 319 (1976) the Ccurt

{

balanced the interest affected, the risk of erroneous deprivation

(' of that interest, and the value of additional safeguards against the fiscal and administrative burdens that additional procedures would entail. The Court refused'to require procedures which might have increased th'e accuracy or fairness of the hearing before

( it unless the procedures

• benefits outweighed the costs.

In an operating license hearing, the benefits of oral

. testimony clearly outweigh its costs. Compared to most' types of hearings where the use of written testimony is proper, the value f of the interests affected in a hearing to license a nuclear power plant is e:< tremel y high. Thousands of lives and billions of_

dollars worth of property are at risk if.an erroneous result is reached in an operating license proceeding.

The -use of written -testimony, as.it-was -used in this f proceeding, has been criticized as an abomination leading to the withholding- 'of the true facts from the ' hearing c::aminer and

([ . 96-

l assuring that the case will be decided on grcunds other than the evi dence . in the record. Gardner, Shrinking the Big Case, 16 Ad.L.Rev. 5. The primary reason for the problems associated with written testimony are: lessened ability to determine the credibility of-the witness; no opportunity to police the manner in which the testimony in prepared; and the natural tendency of f' people ~ to pay more attention to the live aspects of cross-examination and unconsciously deemphasi:e the content of the

.( written testimony. These problems would be eliminated by the use of oral testimony only. The risk of an erroneous result wculd be sharply reduced. ,

The cost of substituting oral testimony for written in operating license hearings would not be nearly as great as it would be in other types of hearings where the use .of written-testimony is constitutionally permissible. Compared to the number of hearings held by the ICC or-FTC, there are relatively few operating license hearing held by the NRC. Although the cost' of this change per hearing would be higher, the aggregate cost to the NRC would be smaller than it would likely be to either of-these agencies.

The use of written testimony,- though constitutionally permissible in many types of administrative hearings, is 'not permissible .i n ' operating license hearings such as this one-because,the protected-interest here is many times more valuable..

I- The risk of erroneous' deprivation of that interest,itherefore, is much greater. The cost of additional safeguards, in-the_ form of oral testimony,- is substantially~less than it is iniotheritypes of hearings. In sum,- the: constitutional cost / benefit analysis 19 7

requires the use of oral testimony in coerating license hearings.

This conclusion is even more compelling, given the ns.ture of the testimony in this hearing. Written testimony is only

[ appropriate for technical testimony. Gener al l y. , the credibility of this testimony rests in the qualifications of the e:: pert and

[,

the technical merits of the testimony itself. Demeanor evidence f evidence and the other indicia of credibility observable in live testimony are less useful in this' type of testimony.

Testimony relevant to character, however, generally depends heavily on the credibility of the witness testifying. The use of written testimony makes it e::tremel y difficult to judge a

( witness' credibility because demeance evidence cannot be observed.

Although cross-examination can be used to test credibility to some degree, the use of written testimony substantially blunts

{ _

the effectiveness of cross-examination. Prior to cross-t examination, the cross examiner suf f ers the same disabilities as the trier of fact in judging a witness' credibility - not having seen the witness testify yet. As a result, the cross examiner cannot plan questions relating to credibility effectively.

. Finally, prefiled written testimony is a constantly available ancher to the witness. While testifying, i.e. the witness can always go back to. check'an answer- already' given .

to a particular line of questicning under way. by the. cross f examiner and then conform live answers to the printed dccument.

c. The ASLS erroneously allowed the Applicants to present their testimony in panels.

The use of panel-testimony, while perhaps not a harmful way 98.

k

enm xn W s

h g

+

of introducing technical expert testimony, is perhaps the worst way possible to introduce evidence concerning the acts and C omissions of a corporation and its employees relevant to character. The ASLB's decision to use panels during the testimony of HLLP management personnel and GC inspectors essentially

~

-7 precluded any meaningful inquiry into the matters with which those witnesses were concerned.

M The cost of eliminating panel testimony would be slight.

e Rarely are questions addressed to the panel as a whole. }_

Generally, each member of the panel is questioned i ndi vi dual l y.

The main difference between panel testimony and individual. -

testimony is the order of questioning. In panel testimony, questioning on each topic is done all together. When individuals 1 testify separately, questioning on each subject is split among the witnesses. Since the real difference between panel testimony and individual testimony is the order of questions, rot the number of questions, the additional cost of individual testimony a would slight.

~

be In the aggregate, the practice of using  ;

individual testimony in non-technical testimony would be very limited, since NRC proceedings are typically dominated by "

technical testimony.

The benefits from substituting individual i testimony for panel testimony are great whenever non-technical issues are in i question. Permitting panel testimony allows the witnesses to educate each othcr, facilitating their efforts to corroborato ,

each other's testimony. A prin e exampl e of the potential for abuse was the panel of CC inspectors being que'stioned about the 3-card rar_. Here was a group of witnesses, each being asked if he

had engaged in activities for which he could be discharged or held in violation of federal law, being allowed to listen to each other's testimony. It would be unrealistic to expect meaningful testimony in such a situation. Having each witness testify individually would have been a cost effective way to gather meaningful information $ bout these events. Under the balancing '

test of Mathews vs Eldtidge, suqtas, it is the only constitutionally permissible way.

3. The ASLB failed to provide CCANP ample opportunity for discovery in violation of NRC regulations.

NRC regulations require that all parties be given ample opportunity for discovery. CCANP was unable to exercise its discovery right due to the illness of outside ccunsel retained for that purpose. Even if CCANP's attorney n

' ad attempted discovery, the time allotted was insufficient given the range of issues covered in the hearing. The ASLB refused to permit additional discovery, forcing CCANP to begin the hearings withcut~

sufficient preparation.

When CCANP moved far discovery on matters which had come to light after the time for discovery was near, the ASLB denied the motion, even though it apparently felt the motion had some merit.

Instead of granting additional discovery time, the ASLS said it would permit CCANP to expand the scope of its cross examination.

As discussed earlier, the ASLS failed to permit CCANP to conduct the cross examination it was entitled to. The promised extra L

cross examination was never grantad. This failure to grant CCANP adequate discovery and the subsequent failure to provide the alternate remedy the ASL3 had promised substantially pr e f'idi ced I

r 100 i .

CCANP's ability to contribute to the record in this procaeding.

f 4. Tha ASLB's cumulative failures to respect CCANP's procedural rights under the Constitution, the Administrative Procedure Act, and NRC regulatiens denied CCANP the fair hearing to which it was entitled.

\

While each of the procedural errors discussed above is an independent ground' for reversal, when the effects of each are 2xamined cumulatively, reversal is the only possicle result. Fce example, the failure of the ASLB to permit adequate discovery f made it difficult for CCANP to conduct cross-examination. The combination of written testimony and the rule limiting the scope cf cross-examination to matters raised in direct testimony effectively precluded CCANP from calling the credibility of the direct testimony into question. The combination of written testimony and panel testimony on non-technical issues parmitted

, Applicants to completely mask any inconsister.cies which might have arisen if live individual testimony were used instead. The ASLB's refusal to allcw CCANP to exercise its cross-examination rights further exacerbated these problems.

Finally, it should be noted that because CCANP is constrained in the length of this brief, many errors have been omitted. For the most part, these errors involve factual disputes over whether a particular question was relevant, material, or f

repetitious. While many of the ASLB's rulings foreclosed inquiry into important areas, it would be impossible to argue all of these errors individually. The followinc citations are examples of these kind of errors: Tr. at 1726-27, 1716-17, 7572, 7168, c

[ 7335, 2330-31, 1089, 2341, 2381-93, 43G9-90, 6485-95, 7173-74, G531-32, 8479-81, 9936-38, 8207-09, 3751, 4433, 4116, 3331, 3315-r 101 l

a 17, 2310-11, 3312-14, 9895-96, 9831-34, 3914, 1177-81, 6239-41, 9979, 9910, 9905, 9901, 9371, 7337, S233, 876!, 10118, 10116, 8321-23, 5262, 5219-20, 9249, 9252, 9356, 9390, 9593, 9836, 9542, j 9899, 9809, 9217.

VII. RESPONSE TO FINDINGS OF FACT What fellows are CCANP's direct responses to the findings of the ASLB. The numbering corresponds to the numbering of the Findings in the PID.

F0F 6: The ASLB refused to let CCANP adcpt the cententions

'[ of CEU, other than Contention 4. CCANP contends this ruling was in error. The ASLB can dismiss issues on substantive grounds, but not on a procedural nicaty that an issue is f oreclosed simply by a change in the intervenor presenting the issue. It is more impcrtant that the issue be subject to adversarial proceedings

=

than that the party-issue alignmment be kept in tidy arrangement.

Since CCANP had t'he right of cross-examination on the CEU contentions and trusted'CEU to vigorously pursue them, CCANP saw no need to explicitly embrace those cententions when CEU brought them up. Had CCANP knnwn that CEU was going to leave the proceeding prior to litigation of the contentions, CCANP might well have asked to be joined on the contentions. As it is, there would be no prejudice to the Applicants from continuing the inquiry into issues they already knew were to be explored. There was prejucice to CCANF in removing issues CCANP thought it was going to have the right to explore.

F0F 14 - 34: When the Grcer to Shcw Cause was issued, the Applicants had the option of admitting or denying each 102

allegation. 10 C.F.R. 2.202 (5) (b) . The Applicants admitted the allegation of false statements in the FSAR. Once that admission was made by the Applicants, 10 C.F.R. 2.202 provided that such

admission constituted a waiver of the Applicants rights to a hearing, findings of fact, conclusions of law, and of all right to seek Commission review or to contest the validity of the order

in any Snrum, to C,F_P: 2,202: In claer contradictinn en this prevision and over-CCANP's objections, Applicants were allowad to contest the validity of the false statement allegaticn in the licensing hearing. The ASLB then proceeded to enter findings of fact and legal conclusions on that subject contrary to the original position of the NRC investigators and the admission by the Applicants. CCANP contends that only the seriousness of the admitted act should have been considered, not whether the act constituted a falso statement, i.e. the fact of a false statement should have been assumed and then evaluated on the basis of how serious a reflection on Applicants' character and/or ccmoetence that false statement was. The Applicant was able to avoid the public hearing on the Order to Snow Cause which intervenors _so f vigorously sought and- then avoid the consequences of not I requesting that public hearing. CCANP contends that the findings made in PID FOF 14-34 are made in contradiction of NRC-regulations and are therefore without legal significance and should :theref ore be struck from the opinion,.

f. FDF'35: The ASLB says, starting on 118,-that the ovaluation

, cf HL&P's compliance record "must-include .... prior knowledge and k

involvement = cF " ~

management in them .... In other words, if we find that management ~was aware of what was going cn and involved 103

i l what in was going on there will be greater respcnsibility for what happened. But there is another arm of the same inquiry. If we find that the management was not-aware of what was going en and not involved in what was going on, we then have a potential finding of lack of knowledge or abdication of responsibility. The pecblem appears as a Catch 22 for the Applicants created by the seriousness of their failures. Either the deficiencies were not f serious - the position of the Applicants - so that it dces not matter whether they knew abcut them cr not ncr whether they were involved in the activities producing the deficiency cr not OR the deficiencies wgte serious and either their lack of knowledge and involvement constitute a serious failure or their knowledge and involvement constitute a sericus failure. In an enforcement c on t e:< t , prior knowledge or involvement might show wilfulness and thereby increase the level of penalty and- seriousness of the violation; in the licensing conte:<t, wilfulness appears to :aise

(

a mere serious challenge- to rharacter than would lack of .

( \

t knowledge / involvement.

But there is still another way to 1cck at'the problem. If the failure to keep informed or to retain responsibility resulted t from the deliberate decisions of HL&P, then there is a congruence in the inquiry, i.e. did the. management decisions of HL&P produce a ' system- wherein HL&P abdicated its responsibilities to- 3&R and/or failed to remain. informed abcut B&R's activities? The

. possibilities then become:

f 1. HL&P management set up a system which shculd -have oroduced' direct management involvement by HL'kP . in the STNP and an-~

L. .

2 +

.apprcpriate flow of information to apprcpriate decisicn makers.

The system failed to perform.

2. HL&P management set up a system which minimized

! , direct management involvement by HL&P in the STNP and which shielded top management from receiving infcrmation about the project. The system performed as designed.

Gi ven the -ASLB's contral finding of Icnq lince of communication and the extensive prior experience of HL&P in large construction projects, possibility 2 seems to fit the pattern of actual events. Furthermore, given the inadequacies in upper management found by the ASLB , the motivation to set up a system minimizing upper management involvement and knowledge .were i

present.

FOF 36: As the ASLB notes, the recced of this proceeding in s

Phase .I covered the period from the beginning of the project through December 31, 1991, i.e. it did not stop with;79-19 as many of the ASLB *s findings seem to indicate. Finding 42 reflects the post-79-19 testimony as well.

-F0F 44: CCANP accepts the ASLB's description of the pyramidal structure of the Quality Assurance program. CCANP woul d-only . add to this' finding the follcwing observation: The proper-functioning of' this ' lowest level of the pyramid is the most critical part of th'e program; if theLdetailed inspection orogram is f unctioning ef f ectively, _ any f ailures in the upper part of 'the pyramid are--minimi:ed in their impact; if.the detail ~ed inspection

(

program is compromised, as by intimidaticn and harassment, the.

[

proper ~ functioning of the upper levels will not. necessarily f

rectify the problem of defects not repcrted,in the.first place.

I 105

For. example, there is little credit for HL&P in having numerous

• CA' personnel on the site, PID F0F 58, if at the same time B&R is e

understaffed with QC inspectors, PID FOF 59.

\

F0F 58: Apparently for their to be harassment and inti nidation of the OA/QC personnel sufficient to consider denial, that harassment and intimidation must have been a coordinated plot on the part of management. See algo CCANP's response to F0F.74, 170, and 177, infra.

F0F 74: The recurring theme of production pressures driving events at the project is a commentary on HL&P's values. The finding that there were no " irreparable construction deficiencies" is the ASLB's competence equivalent to its

- immutable character defects. There must be a breakdown so severe as to- be uncorrectable before the applicati-on for the license j will be in any jeopardy CCANP rejects these highly restrictive views of- wh'at consti tutes .a disqualif ying deficiency; FOF 79: There is hardly a need for more to conclude the license'rshould.be denied.

FOF 80: There are some' generic concerns that arise in the findings,. often 'with different can'clusions from- finding t.o finding. One 'of these concerns is the involvement of HLLP

! management in the project. In FOF EO, the NRC Staff testify about

" lack-of. detailed involvement" as a cause of QA/GC organizatinal.

. problems and Mr.- Amaral testifies about "too little: management involvement" as an underlying'cause for all the major. problems at the project'.

FOE 83:- 'CCANP contends;that all of HL&P's. responses-to the 4 f-f :106' I . ,; , . . , ,. -

i l

l l

l revelations of the NRC in January 1980, FOF 69, were no mere than efforts to avoid or mitigate enforcement action known to be contemplated by the NRC.

~

FCF 84: The Brown and Root brochure is such a classic case of abdication of responsibility and failure to keep informed that this finding deserves more attention than the ASLB gives it. The

. lecture formina the basis of the brochure was sucocsed to be a remedial measure to show management support for GA/QC; HL&P left all the the deta.ls of the lecture to B&R; the' lecture in fact stressed cost and schedule over inspection; the NRC had to further discipline the project as a result of this " remedial measure."

FOF E5: The f alse sworn statement by Oprea alleged by CCANP was part of this response, a response which was supposed to restore NRC confidence in HL&P.

FQF 86: The ASLB finds it significant that there was no

" total breakdown of QA/QC." The ASLB seems to use this standard as the QA/DC equivalent for immutable defects in character and irreparable errors in construction. Only at the very edges of poor performance will license' denial be considered. at See PID--- ---

38. There is an ambiguity in how the word i'breakdcwn" gets used.

Mr. Oprea thought there was never a breakdown in the QA/QC program, even. as documented in 79-19. FOF 140. .The NRC Staff recognize the widespread violations but'do not consider a total j r  !

I breakdown to have occurred. FOF-155. CCANP rejects the position I that- cnly an immutable character defect, an irreparable

~

construction error, or a total-CA/GC breakdown' can -load' to

. license-denial. In fact, such'a standard is no standard at. all l

l

and therefore very dangerous. Standards for acceptable character and competence should set some boundaries within which licensees operate and are constrained. The immutable, irreparable, and total standard has no real limits. The Staff seems to make much of HL&P's record of reporting construction defects pursuant to 10 C.F.R. Section 50.55(e), but as the ASLS noted, the obligations under ~that regulatinn ara vary Hi4ferent from the cbligation created by 10 C.F.R. Part 50, Appendix 3. PID at 60 The major difference is that 50.55(e) creates an obligation to notify the NRC of a potentially safety related defect and report such defects if actually confirmed, while Appendin B requires an in depth inspection effort on a continuous basis whether any defects are found or not. HL&P failed in the latter and far more important task.

FOF 87: The Staff's "not so poor" standard is one of the worst failure in the entire proceeding, i.e. worse than the failures of HL&P. If the regulators are satisfied with poor performance, the public is in grave danger. CCANP rejects the concept that inexperience and irrespcnsibility are separate,

) alternative assessments; CCANP contends that-uso of inoxperienced people in critical positions is irresponsible. HL&P's perfcrmance during construction is viewed by the Staff as " relevant to, and probative of, hcw HLLP would perform under an operating license,"

but- this same behavior'is "not considered by Staff reviewers to

.be determinative." If a ' licensing proceeding is to be predictive,

'there is no better evidence available than the perfcrmance of the applicant under the construction permit. CCANP has the sense that the NRC Staff.would agree with this position were i t 'not f or the 108

l fact that HL&P's performance was so substandard.

F0F 89: HL&P's performance from Ap-il 1980, when tne Order JS to.Show Cause came out, ano December 1981 remained about the same

'in terms of the violations of NRC regulations. This evidence I would seem to argue for the failure of remedial measures to do

-any real good.

FGF 94: Bechtel did not recommend either a third party OA/OC or the removal of B&R. The absence of any such reccmmendations reflects badly on Bechtel's qualifications. The ASLB took no notice of this possibility.

FOF 96: An experienced corporation, HL&P set up a management network that shielded the top officers from the nuclear ' project. CCANP contends that this was a deliberate abdication of responribility by people'who knew their knowledge and expertise in the nuciear field was too limited to handle much responsibility. Having Frazer be the key to resolving the communications problem is like trying to put out a fire . with gasoline.

F0F 97: This set-up was guaranteed to keep information and hence responsibility.for action away from Oprea. The organization is also a commentary-on the low priority glven-to'OA/QC by top.

HL&P management.

FOF 'C9: Again we 'have Amaral testifying to too little management involvement.

FCF 99: It took Don Jordan three years to figure'out how

. difficult ~ itLwas to design, engineer, and construct a nuclear pcwer- plant.- 'Perhaps- it took so :long because he paid .little att'ention to the (project, not having .the skills or ' background to ~

1 h ..

-109

)

I understand 'the' project. For such a person to be the CEO of a nuclear utility is simply not acceptable.

F0F 99-lO2:

~

Jordan, Oprea, Turner, and Frazer all lacked r .

I i

nuclear experience and HL&P failed to spend the resources to attract someone who had such experience.

FOF 103: When Warnick got overwhelmed at the site, there was

- no one in'HL&P who could help him. Everywhere Amaral looked were

- people who could not perform the tasks given to them by HL&P and

- S&R.

F0F 107: This finding is an excellant finding for demonstrating the dangers involved in giving to much weight to willingness. Amaral is a quality assurance professional. He concludes that-HL&P simply has not put quality as the first goal.

Cprea disagrees. Perhaps Oprea honestly believed he put quality first and was willing to do whatever he could to encourage quality work,- but'his performance and that of his lower managers

. was so . def i ci en t' that a professional'like Amaral came to the

~

be' the.

conclusicn quality must 'not highest value of the corporation. In'the nuclear context, such a ccnclusion by someone with Amaral 's credentials is devastating.

• FOF 108:- The 'ASLB' should- give no credibility' to-

. representations of quality concerns by Mr. Jcedan. . .His " crafts h ' build in quality" view.is just another form of abdication; the construction crew is responsible fo.- building it right the 'first -

time, iso there-is no'real value in.an inspection force. Since he L

' personally-would not,know how to inspect anything at 5TNP, it'is; not- surprising for him to take the attitude that quality is t the-h ' resp onsi b i l i ty.- of~'the crafts. Jordan- says 1ho did nct . get k .- g.

.l 1-l- -

i - . . y. ,gi.er-g . .- _ . _ _ m__. , _

information he needed. This contrasts with the HL&P position that Jcrdan. did receive the information appropriate tc his position.

The ASLB found that the flow of information to Jcrdan and Oprea was not the problem; instead it was their inability to understand the information. _ I -f so neither Jcrdan nor Cprea ever admitted to that deficiency. Jordan consistently refused to admit HL&P had abdicated any resocnsibility to B&R or that HL&P failed to keep informed. There is not even any repentance from Mr.' Jordan.

FOF 109: Oprea, too, says he lacked the information.

FGF 112: A different NRC panel concludes there was a lack of detailed involvement in the project by HL&P. But now the ccnclusion is that they were involved in details cf the project but the wrong ones. Production pressures surface again. HL&P knew f

from the beginning that it either had to bring in top management familiar with the nuclear undertaking er rely on its contracter.

HL&P chose reliance / abdication. ,

i- UF 115: The NRC Staff offers the findings the Commission requested in 12 NRC 281. HL&P did. abdicate to B&R in the QA/QC area. That should be enough for license denial right there.

FOF 116: Abdication proceeded up and down the pyramid. There was no protection, no management backup for the GC in the field.

.The middle level of the pyramid - auditing - did 1ot function.

~

f And the top of the pyramid stayed so far away that the messages of troubla could not (cr'wculd not) be heard.

FDF ~11S: Jordan testified that an abdicatien conclusion would be unfair to HL&P. Here is truth and cander at.HL&P's best.

CCAMP does not understand why the ASLB never pulled together h findings :like 115 and 116 with 118.to conclude'that Jordan could

[L -

. ill-

i not bc. trusted to perceive HLLP's fai1ings cr, alternativaly, to admit to them if he did. Such a conclusion weighs in heavily en f: 'the side of character defects which should disqualify an applicant.for a nuclear license.

( FDF 120: Oprea too denies continuously that there are any real problems. The excessively long lines of communication argue j against the premise that "Co3ver the years, HLLP management had become more involved in the project." Placing decision making and monitoring far from top management argues precisely the reverse, i.e. that top management insulated itself from the project.

[ FDF 122: CCANP disagrees with the ASLB that it we.s an i i

exercise of responsibility to send .Fra:or to tell B&R's management to shape up. Mr. Frazer did not have the stature or

{

the confidence to pull B&R into line and keep them there. Sending Frazer is just another form of abdicating responsibilty, not assuming it.

FCF 124: Similarlv, sending a memorandum from a technical consultant, rather than a high officer in the corporation is not the way to get the attention of BLR.

F0F 131: It-is hard to know what to do with a top -manager

. who claims to have been well informed and then dumbfounded when he learned what was really going on. Mr. Oprea's competence and f character are both called' into questior, by' his repeated recresentations that.all was well between him-and the project.

F0F 136: For Jordan, the whole problem was the competent

/ people who-had let the project down, not the incompetent pecole l-who were_ inexperienced and over' whelmed.

h FGF-133: Mr. .Oprea certainly. considered himself experienced.

112

FOF 139: Mr. Opraa's considering the hiring of a consultan t had gone en 'for months and could best be described as I procrastination.

.FOF 141: While throughout this opinion much is made of experience and how different everything would have been had their been experienced pecole in charge, it is worth noting that the only cperating license denial in NRC histcry was diracted at ene of the most experienced nuclear utilities in the country.

L G900GOtLeBltb Edi390 gg2 (Byron Nuclear Pcwer Station, Units 1 and 2), ASLBP-79-411-04 PE, January 13,-1994.

FOF 146: While much is inade of the communications problem in I 1980. the evidence is that in 1978. HL&P was warned by the NRC that communication between the tcp management and the field personnel, particularly the inspection fcrce, were so limited that the inspector f el t there was a lack of management support.

F0F 159: CCANP takes exception to the ASLS attempting' to portray HL&P's correctiv'e actions in late 1979 and early 1990 as if they were initiated by the company with nc knowledge of pending NRC enforcement action. NRC came on the site in early November-and by the end of the year was making known its findings to HLLP. That HL&P tcok' actions to mitigate t h e .. potential enforcement action is without. weight as character evidence.

Whether the violations had actually been written up c: not, HLLP was aware of the areas and the types of violation being found.

FOF 161: There is simply nothing voluntary accut moving to i

head c4f an enforcement-action that is clearly ccminc.

FOF 162: In the face of his campanv's record,- Mr. Cprea s h "ex;aressions of intent" are certainly not weighty evicence of his h _

113 .

]

\

character.

FCF 163: This is an impcrtant finding in its understated way. The ASLB finds it.wceth noting that HLLP did not fail in every area, again suggesting the total breakdown standard. But for a nuclear plant operator, a failure in only one area can l

destroy the entire project and threaten the lives of thcusands of l

people. There is no balancing of success stories against l t

(

failures. The technology is too unforgiving to allow any failures. Yet in this finding the NRC concludes there were areas where HL&P f ailed completely. All the willingness and supposed I commitment to quality could not prevent a total failure. FGF 157.

The weakness of the " willingness" argument cculd hardly be acre clearly highlighted.

{

F0F 170: If no one has found an irreparable defect, CCANP's burden to achieve license denial then becomes to show the absence of such a defect is "a matter of luck." This proposition would be very difficult to prove directly. CCANP would contend that given the record of construction and inspection at STNP documented in this proceeding, the conclusion can be inferred, not withstanding any testimony to the contrary.

F0F 172: Mr. Shewmak'er of the NRC engages in another form of the balancing process where one element of a fundamental requirement can be missing, in this instance a major component c4 competence, and the analysis conducted then looks for positive elements to offset the missing one. This type of analysis is not acceptable. In CCANP's analysis, an applicant missing any one of the key ingredients of character or competence is missin'g something too important to be entrusteo with a nuclear power 114

F plant. Furthermore, the positive example Mr. Shewmaker turns to t is the bringing in of competent outside consultants to solve a

-problem. The fact is that after using a consultant tc write the LGA program, HL&P waited six years before bringing in another QA consultant.

F0F

~

173: At least one NRC witness does not accept the inexperience explanation. He- viewed HL&P management as professional people making occasional mistakes. The ASLB, at one point appears to agree. F0F 180. Inconsistencies of this sort are common in the opinion and the findings.

FOF 177: The evidence available just from 79-19 is sufficient for license denial. When combined with the pre-Order to Show Cause evidence and the April 1980 to December 1981 evidence, the case is open and shut.

FCF 179: Fcr the ASLB to consider denial, .a noncompliance must produce a construction defect which is " irreparable," cause the complete loss of the function or integrity- of a safety l.

system, result from . deliberate acts of management, represent i

encouragement to evade regulation, or, result from putting ~ cost before safety. CCANP would argue-that some of these are in fact proven in-the record, but the point here is that the standard is simply too low.. Rather than looking for extreme acts of

{ wecngdoing, an applicant- should be Judged by. an "encellence" standard (as opposed to a "not a complete failure" ctendard). Seg Appendix,~ Figure 2.

FDF 180s- Total incompetence is another' f orm of the same low standard.

, . . . . . . . . . . , . . .. . . . , . , ._ ._1._..

H VIII.-MOTION TO' REOPEN PHASE I RECORD While denying CCANP motion to reopen the Phase 1 reccrd, PID

, at 87 et seq., the Board states:

{ -.

"Although the information might bolster our view of HL&P's former questionable managerial competence, it

(- would not do so to a degree which would offset our view that HL&P has taken adequate steps to improve its competence."

'CCANP reads this part of the Board's opinion to say that if the Board had in fact made a decision on Issue A as potentially  !

1 determinative of the license, i.e. on the independent and i

sufficient grcunds for denial question, the ' evidence offered in E the OIA report might have influenced the Board's decision as to i

HL&P's competence. Since the Scard has already indicated that the lack of competence found in HLLP might have been sufficient to warrant license denial, PID at 31, CCANP was entitled to have the additional evidence included in the record as possibly leading the Board to a denial decision under Issue A.

Furthermoro, there is evidence on centantion 1,7(e) regarding the card game that wat not available to the Board and might well have changed the Board *s opinior on that part of the contention subpart.

IX. PRAYER FOR RELIEF As should be apparent by1now, 'CCANP takes e:<ception to the

~

conduct

~

of this proceeding an'd'to the opinion therein almost in Ltheir entirety. Further, CCANP has no e::pectation that a remand to the same ASLB for additional consideration wculd be worthwhile..

,CCANP ;' therefore, moves. the'ASLAB to ccrrect the numerous 116

i Errors in the PID by rencering an opinion ab initig. Such an

~

action is within the authority of an ASLAB when an ASLB has erred

.in defining its_ task and the record is sufficient for the ASLAB to reach a decision. Qgagymers Pgggt Ggmgany (Midland Plant,

. Units-1 and 2),_6 AEC 182 (1973).

CCANP would urge that the new opinion and findings encompass:

-- the issues as originally admitted in'to- this 4

proceeding,

-- all character trai ts reasonably related to operating l I

a nuclear power plant and reasonable inferred by the record,

-- all the' evidence relevant to each trait, and

-- use of evidence to its fullest material entsnt.

CCANP believes there is enough evidence in the record to

> support ' license denial despite the due process violations which 1

limited CCANP's, ability to make its case.. Should the ASLAB find, '

I e

however, that there is not sufficient evidence'to warrant license denial, CCANP moves the ASLAB to remand the case to a new and different ASLB with instructions to cure the due ' process violations to the extent possible, that is, permit' -improperly

~ denied discovery, cross onamination questions, and admission of evidence,- including the-most recent evidence offered to reopen f the record.-Sge p. 116, gugta.

t. The-latter. remedy is less than' satisfactory in_that most of the personnel at'STNP during the initial discovery phase and the hearinns are now' gene. Should the ASLAB decide'to remand to a-new

, ASLB, CCANP - may find it necessary to seek additional rolief.

Furthermore, given .the limitatibns on; time and length of

_m-c._-.__mu_m

t f this appeal, .CCANP did not have the ability to call to the attention of the ASLAB every ruling by the ASLB which violated CCANP's- rights. If the ASLAB decides to remand to a new ASLB, CCANP urges the ASLAB to review the decisions made throughout this proceeding in order to identify for the new ASLB where corrective relief is warranted.

Respectfully submitted, 15- f. A

~

Lanny Sinkin Craig Jordan, Michael Hall, and Margarst Burns Representatives for Citi: ens Concerned About Nuclear Power, Inc.

114 W. 7th, Suite 220

, Austin, Texas 78701 (512) 478-7197 r

Of Counsel: Robert Hager, Esquire (1

Christic Institute 1324 North Capitol Street Washington, D.C. 20002 (202) 797-8106 L

Dated: June 23, 1984 Austin, Texas f

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e 1

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APPENDIX p

i I

k l

[-

r -- - - - _ _ _ - - - _ - - - - _ --

l-FIGURE 1 r.

4 COMPLIANCE WITH NRC REQUIREMENTS l

VIOLATION (O I  :

_ _ _ _ _ _ = - - _ _ - - - - - - - _ _ -

l---Applicant' Reports ---!

---Applicant Detects (2) -----

--! to NRC (3)  :

i  :

.: Applicant Fails to --

1 Repcrt to NRC (4)  :

(VIOL 4 TION)

?  :  :

I  :---NRC Detects and Informs Applicant ($' ----------------------

'l  !

---Violation Undetected (6)

Applicant corrects Applicant fails to violation (7) correct violation (8)

(VIOLATION)

! 'l t

i l-Applicant prevents Applicant fails to

( recurrence (9) prevent recurrence (10)

-(VIOLATION)

( .

,. . ___.__._1._______.__._

FIGURE 2 THE STANDARD FOR CHARACTER / COMPETENCE / PERFORMANCE l

EXCELLENT GOOD FAIR POOR FAIL l l t 1  :  !

! CCANP  !  ! l NRC STAFF  ! ASLB t S 9 7

.# .B . . .

100 80 60 40 20 0 1

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l L l UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION

@EEQBE IHE QIQdlQ S@EEIZ 6MQ (ICEdglNG @EEg66 gg68Q In the Matter of (

)

HOUSTON LIGHTING AND ( Docket Nos. 50-498 OL

{ POWER COMPANY, ET AL. ) 50-499 OL l (South Texas Project, (

Units 1 and 2) (

CERTIFICATE OF SERVICE -

e I hereby certify that ccpies of CITIZENS CONCERNED ABOUT NUCLEAR POWER, INC. (CCANP) BRIEF ON APPEAL FROM PARTIAL INITIAL DECISION were served by deposit in the U.S. Mail, Express Mail

(*) or first class postage paid to the folicwing individuals and entities on the 25th day of June 1994.

• Alan S. Rosenthal, Esquire

• Christine M. Kohl Chairman Administrative Judge Atomic Safety and Lic. Appeal Bd. Atomic Saf. & Lic. App. Bd.

U. S. Nuclear Regulatory Commission U. S. Nuclear Reg. Ccmm.

Washington, D.C. 20555 Washington, D.C. 20555

• Dr. W. Reed Johnson Brian Berwick, Esquire

( Administrative Judge Atomic Safety and Lic. Appeal Bd.

Aust. Atty. Een.

State of Texas U. S. Nuclear Regulatory Commission Environmtl. Protection Washington, D.C. 20555 P. O. Sox 12548, Capitol Sta.

Austin, Texas 78711

• Robert G. Perlis, Esquire

( Office of the Exec. Leg. Dir.

• Jack R. Newman, Esquire -

% U.S. Nuclear Regulatory Comm. 1025 Connecticut Avenue, N.W.

Washington, D.C. 20555 Washington, D.C. 20036

(. Melbert Schwar=, Esquire Atomic Safety and' Licensing Bd.

I Baker and Botts U.S. Nuclear Regulatory Comm.

300 One Shell Plaza Washington, D.C. 20555

( Houston, Texas 77002 Mrs. Peggy Buchorn Executive Director, C.E.U. Atomic Safety and Licensing

( Route 1, Box 1684 Appeal Board I Era:oria, Texas 77422 U.S. Nuclear Regulatory Comm.

William S. Jordan, III, Esq.

Harmon, Weins & Jordan Docketing and Survice Section

. 2001 S Stroot, N.W., Suite 430 Office of the Secretary l Washington, D.C. 20009 U.S. Nuclear Regulatory Ccom.

~

Waghington, D.C. 20555 Pat Coy ,

.,- l 5106 Casa Oro __ __ ,

dhes________________.

3an Antonio, Texas .73233 Lanny/ Sinkin

_ _ _ _ _ _ _ m_____.m. _ . . _ _ . _ _ _ _ . _ _ _ s._._ _ . . _ _ _