ML20198H709

Ack Receipt of Mh Furbush 820315 Response to 820211 Notice of Violation Re Matl False Statements Made by Util Representatives at 811103 Meeting in Bethesda,Md.Notice of Violation Will Not Be Withdrawn Nor Severity Level Reduced

ML20198H709
Person / Time
Site:	Diablo Canyon
Issue date:	04/13/1982
From:	Deyoung R NRC OFFICE OF INSPECTION & ENFORCEMENT (IE)
To:	Mielke F PACIFIC GAS & ELECTRIC CO.
Shared Package
ML20198H614	List: IA-85-691, Ack Receipt of 820415 Ltr in Response to NRC 820413 Ltr. Positive Attitude for Addressing Past Regulatory Communication Problems Expressed in Ltr.Lack of Positive Approach Noted in 820315 Response to Notice of Violation ML20198H609 ML20198H686 ML20198H709 ML20198H740 ML20198H759
References
FOIA-85-691 EA-82-13, NUDOCS 8601310080
Download: ML20198H709 (4)

Text

. / UNITED STATES

.:' ! .. a NwLEAR RESULATORY COMMISSIOh, \

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APR 13 T382 i

Docket No. 50-275 License No. OPR-76 EA 82-13 l Mr. F. W. Mielke, Jr.

Chairman of the Board i Pacific Gas & Electric Company l P.O. Box 7442 '

77 Beale Street San Francisco, CA 94106 l Gentlemen:

l I as in receipt of Malcomb H. Furbush's March 15, 1982 letter submitted on l behalf of the Pacific Gas and Electric Company (PG&E) responding to the Notice of Violation issued by this office on February 11, 1982. The Notice of Viola-  ;

tion concerned material falso statements made by PG&E representatives at a 1 seating with NRC personnel on November 3,1981 at Bethesda, Maryland.  ;

Prior to receiving PG&E's response, which requests that the Notice of Violation be withdrawn, or, in the alternative, that the Severity Level III designation be reduced, Robert H. Engelken, the NRC Region V Administrator, and I on March 8, 1982 met with you, Mr. Furbush and Mr. Maneatis. The purpose of that meeting  ;

was to discuss steps to be taken by PG&E to assure that all employees of PG&E ,

understand that concunications with NRC must be complete and accurate. As a result of that neeting we were of the view that PG&E management at the highest

)

level had acquired a reccgnition of the causes of past difficulties in resolving regulatory issues and had made a clear commitzent to a change of corporate attitude and cpproach. However, PG&E's formal response to our Notice not only attnmpts to justify the inadequate coemunications by PG&E representatives at the Novester 3rd meeting and subswquent to that meeting, but also fails to i meet the spirit of the cotanitment made by you during our March 8 meeting. Fot-the reasons that follow, I decline to take either action PG&E suggests.

In Virginia Electric & Power Co. (Nortn Anna Power Station, Units 2 & 3), I CLI-7ti-22, 4 hTC 480 (1975) ("VI'PC0") the Commission made three fundamental determinations with respect to the meaning of a material false statement, under

$ 186 of the Atomic Energy Act, 42 U.S.C. 2236. These were: 1

1. Matariality under 5156 is dependent upon whether the information has l a natural tendency or capability to influence a reasonable agency '

expert .

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APR 131982 f l

Pacific Gas & Electric Company 2. Knowledge of the falsity of a material false statement is not necessary for liability under 5186.

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3. Section 186 requires full disclosure of material data and consequently material omissions are punishable to the same extent as affirmative material false statements.

Material falso statements may exist by virtue of omissions. Knowledge of the falsity of a material statement, i.e., intent, is simply not a relevant consid-eration with respect to the presence or absence of a material false statement, although it may be a relevant consideration in selecting the appropriate sanction a

to be applied. Consequently, PG&E's arguments, to the effect that there was no '

intent to mislead on the part of the senior PG&E representatives involved, have no bearing on the question of whether or not a material false statement actually occurred at the November 3, 1981 meeting.

PG&E's arguments with respect to the materiality of the false statements do bear upon the question of whether or not a material false statement was made. However, the arguments suggest that PG&E misperceives the concept of materiality under

1 186 of the Atomic Energy Act as construed by the Commission in the VEPC0 case.

To begin with, information is material within the meaning of $ 186 f f it would

' have a natural tendency or capability to influence a reasonable agency expert.

At the November 3,1981 meeting, the NRC staff was clearly concerned with the objectivity of the reverification program undertaken by Dr. Cloud. The entire objective of a reverification program requires independence of judgment. It is clear that the staff was concerned at that meeting that the draft report to be generated by Dr. Cloud could be reviewed by PG&E and without sufficient control its objectivity could be affected. This was not a prospective concern on the part of the staff as you suggest at page 3 of your letter. Indeed, Mr. Denton's question was quite clear. "Do we get the same reports he gives to you?" (TR. 215).

Mr. Denton was clearly speaking of the present. So was Mr. Naneatis in his response 4

to Mr. Denton: "You just got it." (TR. 215). The response of Mr. Norton was similar.

Had the NRC been aware that draft reports had been generated by Dr. Cloud which had been submitted to PG&E for comment, such information clearly would have had a natural tendency or capability to influence a reasonable agency expert charged with judging >

the acceptability of the Cloud reverification review.

We also disagree with PG&E's comments to the effect that the eventual scrutiny by I

the NRC staff to see whether or not the PG&E commenting process had affected the objectivity of the report demonstrates the lack of wateriality. Whether a state-ment 10 material should be judged at the time the statement is made. An after-

the-fact determination that the PG&E commenting process was not prejudicial in no i way affects the materiality of information related to the absence or existence of i

such a process which had a potential for affecting objectivity. Such a commenting process would have a natural tendency or capability to influence the agency and indeed, in this case, did in fact influence the agency to undertake a substantial

effort to assure itself that bias was not present.

i

. L 4 '

APR 131982 Pacific Gas & Electric Company PG&E also suggested that there is some significance attributable to the failure on the part of the staff to " accept PG&E's offer of simultaneous delivery of drafts from RLCA to PG&E and the staff." While the argument may have some validity in the context of what was actually happening, i.e. , PG&E was in fact commenting on drafts from Dr. Cloud, a close review of the transcript of the November 3,1981 meeting makes clear that the staff was left with the impression that no commenting process was taking place. Mr. Norton states, "The report itself hasn't been prepared. If you want a copy of it before we get it, fine, or simultaneously."

In the context of Mr. Denton's question, this response clearly implies that there was no commenting process involving PG&E with respect to the Cloud report and so there would be no purpose served in having this report issued simultaneously to both PG&E and the NRC.

In regard to the argument concerning the severity level, we continue to believe that the material false statement was properly categorized under both the Interim and Final NRC Enforcement Policies. The false statement was significant, not because of the process which was actually employed which permitted prior PG&E review, but because notwithstanding our inquiry, we were not told of the existence of the review proces,s. Had we known of the process employed, we would have sought copies of the drafts in order to audit the process. Moreover, had we not learned of the process used and had the Cloud report been subject to improper influence resulting in a loss of objectivity, the inadequacy of such a report may have gone unnoticed, which clearly would have been material to safety matters.

In our view the lack of candor evidenced in this case is clearly unacceptable.

Therefore, the violation was properly categorized as a severity III violation.

Accordingly, we are neither withdrawing the Notice of Violation nor reducing the severity level. While we do not plan to take any further action on this matter, we intend to carefully monitor your future performance with respect to regulatory matters. I remain disturbed, however, that even after our March 8, 1982 meeting, which I thought was productive, the PGAE response may give a message, notwith-standing your statements to the contrary, that your employees may act similarly in the future on the basis that the senior levels of management in the company do not find the actions of November 3,1981 to be unacceptable. If there are i

questions of the NRC position on these matters, I suggest we meet promptly in my office.

Sincerely, j =- .

Richard C, oung, D ector Office of I pection 'nd Enforcement i

cc: Malcomb H..Furbush, Esq.

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Pacific Gas and Electric Company '

N j Distribution POR Chairman Palladino .

LPDR Comissioner Gilinsky NSIC Comissioner Ahearne TIC Comissioner Roberts ACR$ W. J. Dircks SECY E. Case CA Regional Directors, RI, RII, RIII, RIV RCDeYoung IE .

JSniezek', IE JLieberman, IE VStello,DED/ROGR HRDenton, NRR 88uckley, NRR -

FMiraglia NRR FIngram PA JPMurray, ELD JCummings, OIA JCrooks, AE00 Director El Staff RI, RII, RIII. RIV, RV h8kcke"E$,IE' CON IE Files CP Book E3 Reading File EDO Reading File Office of the Attorney General

• ATTN: Hon. George Deukemejian Attorney General 555 Capitol Mall, Suite 550 Sacramento,CA 90010 State Department of Health Services ATTN: Mr. Joseph 0. Ward, Chief Radiologtt Health Section-714 P Street Sacramento, CA 95814 Public Utilities Comission ATTN: Mr. John E. Bryson President 350 McAllister St. <

Sar. Francisco, CA 94012 .

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