ML20153F833
| ML20153F833 | |
| Person / Time | |
|---|---|
| Site: | Waterford  |
| Issue date: | 01/10/1984 |
| From: | Grimsley D NRC OFFICE OF ADMINISTRATION (ADM) |
| To: | Combs T NRC OFFICE OF THE SECRETARY (SECY) |
| Shared Package | |
| ML20153F619 | List:
|
| References | |
| FOIA-88-43 NUDOCS 8805110064 | |
| Download: ML20153F833 (14) | |
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, ) Janvery 10. IM4 e,,,,7 MMORANDUM PM Tom Combs MCY . '
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STAFF MC0804(NOAfl0N5 AttARDING 015CLO5Uti 0F 00 CUM (Nis SU6JtCT TO F01A 03406 l The docmts listed below are subject to FotA.83 506 and are enclosed.
Also identified below are roccamendations regarding their disclosure.
Please provide the Office of the Commissioners' concurrence or nonconcwrrence in these recommendations no later then 200N January 23, 1944.
Please returvi the documents with yevr response.
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- Donnte M. Griesley. Acting Chief Freedom of Information and Privacy l Atte tranch i
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O O ;
TESTIMONY OF BEN B. HAYES DIRECTOR, 0FFICE OF INVESTIGATIONS UNITED STATES NUCLEAR REGULATORY COMMISSION _
My name is Ben B. Hayes. I was appointed the first permanent director of the NRC Office of Investigations (01) in February 1983. I came to the NRC after 17 years of criminal investi5ative experience with the Internal Revenue Service, Criminal Investigation Division. My last assignment prior to coming to the NRC was as Chief of Criminal Investigations for the Cleveland District which covers Northern Ohio.
On March 26, 1987, I was deposed under oath by Mr. Stephen Ryan, Counsel for the Majority in the Senate Government Governmental Affairs Committee, by appearance at that deposition was as a result of a written request from Senator Glenn, the Comittee Chairman rather than on my own initiative. I subsequently was afford-Over this past
. ed .n opportunity to review the transcript of my deposition.
neeuend, I was infonned that the Committee w. 'd like me to sumarize the infor-mation that I provided during the deposition, and sponsor this sumary as my testimony today. I was not able to complete my review of this testimony until I returned from leave yesterday. I would like to emphasize that the opportunity to provide my testimony, either during my deposition or here today, is not a privilege that I particularly sought. To the contrary, it was thrust upon me.
Nonetheless, the information that I have provided to the Committee Staff, and which I am sumarizing today, is truthful and as accurate as I can make it.
01 is the NRC organization responsible for the conduct of all investigations ~~
involving NRC licensees, licensee vendors, and other persons or entities over which NRC has jurisdiction. The office is staffed with investigators having a broad range of experience gained with other Federal investigative agencies such as the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service, the Naval Investigative Service, and the Army Criminal Investigations Division. 01 investigations that uncover or document wrongdoing that appears to violate criminal statutes are referred to the U.S. Department of Justice. Investigative reports are also sent to the NRC official who requested the 01 investigation so that the NRC may take any necesswy actions to protect the public health and safety.
m '
There is a strong feeling within the industry and certain quarters of the Com-mission to "decriminalize" 01 investigations, i.e. not prosecute them criminal-ly.
There are significant and important persons in the Comission, both at the staff and Comission level, who desire far less emphasis on criminal prose-cutions. During the years that I have been Director, 01 has been in a constant battle to maintain its independence. There are people within the NRC, includ-ing some on the Comission itself, that want to decrease the level of confronta-tion that exists between 01 and the nuclear industry.
MID-SOUTH DOCUMENTS I have been asked to describe the circumstances surrounding the discovery by 01 investigators of a sensitive NRC document in the files of a senior official of Louisiana Power and Light (LP&L), the utility licensed to operate the Waterford Nuclear Plant near New Orleans, La. During the course of an investigation at Waterford in March 1985, ene of my investigators found this document in the
- personal files of the Vice President-Nuclear of LP&L. The NRC document is an internal NRC memorandum prepared by the Technical Assistant to then Cocinissioner Victor Gilinsky which had been addressed to the then Director of the Office of Insoection and Enforcement.
The memo.randum dealt with allegations of collusion between the NRC and LP&L as well as cracks in the reactor base mat. The 01 investigator who found the documents, Mr. William J. Ward, imrredi6tely recog-nized the importance of the documents, initialed and dated the reverse of them
~. for evidentiary purposes, and brought them to my attention.
l 1 noted the following characteristics of the documents. First, the internal NRC l
memorandum appeared to have come cirectly out of Comissioner Thomas Roberts' Second, the memorandum was at-office or files in view of the initials on it.
ached to a transmittal memorandum on the letterhead of Middle South Services, l
Inc. which bore the date of June 15, 1983. It was addressed to Mr. John J.
Cordaro and was sent from a Middle South official by the name of George E.
The White. The memorandum was marked "confidental" with that terin underscored.
I brief text of that memorandum states, "Attached is a memorandum received from sources inside the NRC regarding Waterford quality assurance matters. This memorandum is for your information but I would hope that you would limit its distribution to protect the source witMn the NRC".
O I felt that the documents indicated that Middle South (the holding company for LP&L) had a source directly inside the NRC, especially inasmuch as the documents Particularly startling was the carne from the files of Comissioner Roberts.
fact that the document was received in Comissioner Roberts office on Thursday, June 9,1983, and was transmitted by Mr. White of LP&L only four working days later, June 15, 1983. The memorandum was important as it dealt with a base mat issue which was under active review by the NRC staff, and that it reports collusion with the licensee on the part of NRC personnel, a very serious alle-gation in my opinion.
The document also notes that LP&L may have withheld information on the base mat OI subsequently initiated an investigation of that issue.
cracks from the NRC.
For a licensee to know that the NRC was discussing the issues of possible This collusion and the base mat issue would give them a tremendous advantage.
is an example of someone within the NRC tipping a licensee of a potential inves-tigation. There have been instances where senior managers have tipped the fac
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that they intended to refer a matter to 01 for investigation, or advised licens-ees as to how to respond to an official inquiry by the Comission.
After leaving copies c ,'ee document at the Waterford Site, we returned to Wash-Having ington and consulted .;th other members of the 01 Headquarters staff.
concluded that the document in question came from the Office of Comissioner Roberts, based on various markings contained on the documents, I saw two options: take it to the Director of the NRC Office of Inspector and Auditor, or I elected to take the matter to the Chair-take it to the Chairman of the NRC.
rian who at that time was Nunzio J. Palladino. -
- met with the Chairman and the Chairman's Executive Assistant to I
m cumer.t with them, and to explain how it came into the possession of OI. Chair-ran Palladino asked a few questions about the circumstances, including wheth I The Chairman asked mc for had discussed the matter with Comissioner Roberts.
l my recommendation and I responded that the matter should be referred to l On March 14, 1985, I received a one page memorandum from the Director of OIA.
Chairman that was hand delivered to my office. That memorandum directed me to discuss the matter with Comissioner Roberts as soon as possible, and stated that the Chairman had given Comissioner Roberts the copics of the documents The memorandum also stated that the reorganization that I had provided him.
I O
plan of 1980 provides that supervision of the personnel within each Comission-er's office is that Comissioners' responsibility. That memorandum did not di-rect me to refer the matter to 01A. -
The next day, March 15, 1985, I and Mr. William Ward, Assistant to the Director of 01, met with Commissioner Roberts and Comissioner Roberts' legal Assistant, Mr. James Cutchin, in Comissioner Roberts' office. Comissioner Roberts held The memo-up what was apparently his file copy of the memorandum in question.
randum that he showed me appeared to be identical to the copy we found at the Comissioner Roberts indicated that he had inquired into the Waterford Site.
matter, talked to all members of his staff, and was convinced that no one on his staff had sent the documents; he suggested the documents might have been ob-tained by Janitorial personnel or perhaps part time help that had been working Comissioner Roberts asked me why I did not personally bring the in his office.
matter to him. I replied that I thought my first obligation was to notify the Chairman.
Commissioner Roberts then requested that I send him all copies of the documents I advised Comissioner Roberts that I had taken notes during my in 01 files.
"Comissioner Roberts then stated he wanted prior discussion with the Chairman.
all copies of my notes as well. I complied with Comissioner Roberts' in-As we were leaving his office, Comissioner Roberts comented that structions.
he would probably see this on the Hill. We assumed that Comissioner Roberts was referring to his upcoming confirmation hearings which would be held prior to After reflecting on the manner in his reappointment as an NRC Comissioner.
14, 1985, which the matter had been handled, I elected to annotate the March ~~
mernorandum to reflect Comissioner Roberts' request for the documentation relat-This annotation was made by me on March 18, 1985, at which ing to this matter.
time it was countersigned by Mr. Ward.
I have been specifically asked what I would have done had I been in charge of the investigation of this incident. I would have interviewed the Middle South and LP&L officials involved in this matter under oath, to include all recipients I would have placed Comissioner Roberts' staff under oath, of the document.
and have questioned each member about the extent of their knowledge concerning In short, I would have conducted a very extensive and exhaus-this memorandum.
tive investigation to determine who was leaking information to a licensee.
-S-O O The leaked document was definitely not the type of document that is publicly l released. I would have objected if the document were proposed to be released to the licensee within 7 days of it being provided to the NRC Staff. I have never i before seen an internal document of this nature given to a party at_ interest, either in this or any other agency where I have worked.
In response to specific questions during my deposition, I acknowledged that Comissioner Roberts' office has been, in general, a continual critic of 01 operations. Commissioner Roberts has raised proposals before the Connission that would limit in some respects 01's ability to initiate investigations, to make referrals to the Department of Justice, or otherwise to conduct the busi-ness of 01.
Another incident involved a second Middle South utility, Grand Gulf Nuclear Station in Mississippi. The then Regional Administrator of the NRC Region II Office in Atlanta, Georgia, or his immediate staff, reviewed draft documents
- that the licensee proposed to submit to the NRC. On detecting the fact that the documents appeared to contain a material false statement, the Regional Adminis-trator or his staff told the licensee to go back and resubmit the document be-cause it would be considered a material false statement.
TVA PROBLEMS
-- Another incident occurred that appeared to be an improper contact between the NRC's Executive Director for Operations (ED0), Victor Stello, and the Tennessee Valley Authority (TVA) Manager of Nuclear Power, Mr. Steven White. The EDO is essentially the chief operating officer of the NRC. Most of the day to day activities of the NRC to include inspection, enforcement, ifcensing, and other l regulatory activities are done under his general supervision. The general sub-ject of that contact was one of the major issues being investigated by 01 con-cerning the well publicized difficulties regarding the TVA nuclear program.
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By way of background, in December 1985, NRC Comissioner Asselstine was being briefed by NRC Region 11 personnel as well as TVA representatives on the status of the Watts Bar Nuclear Power Plant in Teraessee. I am told that during that briefing, members of the TVA Nuclear Safety Review Staff reported that the plant l
was not built in accordance with NRC requirements; specifically, that the Watts
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Bar quality assurance program was not in confonnance with the requirements of Appendix B to 10 CFR 50. Subsequent to this briefing, the NRC sent a January 3, 1986, letter to TVA asking TVA's official position as to whether Watts Bar was in compliance with Appendix B, and allowed TVA 7 days to respond irt writing.
The NRC letter was very important. If TVA were to have indicated that the plant was not in compliance with Appendix B, then the NRC Staff might have issued an imediate stop work order to halt construction. It was also noteworthy that Watts Bar was very close to licensing; in fact, they were anticipating licensing as early as April 1986.
I was informed by Harold Denton, Director, Office of Nuclear Reactor Regulation, that Mr. Stello had initiated a telephone call in his presence while the twc of then and other NRC staff were returning from a meeting at the Commission offices on H Street in Washington D.C.. Mr. Denton related that the telephone call was to Mr. Steven White, the TVA Manager of Nuclear Power, and that the conversation dealt with TVA's proposed response to the NRC's January 3 letter. Mr. Denton
- was very uncomfortable with that because of his view that White should respond without any advice from the Comission. Mr. Denton told me that James Taylor, Director, IE, was also present in the van during that telephone call. I then went to Mr. Taylor and asked him about it. Mr. Taylor confirmed that the call took place.
I was very concerned on learning of that phone call as 0! had ongoing investiga-
- tions regarding TVA, and one investigation in particular had addressed the issue of whether a former TVA manager had lied to the NRC concerning readiness of Watts Bar for fuel load. There would be no reason for a licensee not to try to get a reading from the NRC as to how best to handle a very difficult situation tuch as a reply to that letter; however, in my view, it would be improper for
.he NRC to give it. Mr. Denton indicated that Mr. White appeared to be shopping for advice as to how to reply to the January 3 letter. At the time of the tele-Such a phone conversation, the NRC had not received a response to the letter.
response was not received until March 20, 1986.
Both Mr. Denton and Mr. Taylor felt the NRC should be dealing at arms lernth Because of my concerns about the possible with TVA on such a critical issue.
irpropriety of the telephone call, concerns that were heightened by the obvious concern expressed by Mr. Denton and Mr. Taylor, I elected to discuss the matter l
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.- h with Chairman Palladino. Chairman Palladino requested that I take the matter to Ms. Sharon Connelly, the Director of OIA, which I did that same day.
After reporting the matter to 0IA, I was deposed by investigators from that office shortly after making the initial report to Ms. Connelly. I subsequently read the OIA report concerning this matter and noted that the report consisted of my deposition and that of Mr.Stello, neither of which was taken under oath, it also consisted of memoranda of interview rather than depositions of Messrs. Taylor and Denton. The thrust of Mr.Stello's deposition ,vas that he advised White not to give a definitive response to the January 3, 1986 NRC let-ter which, in fact, asked for a very definitive response.
The March 20, 1986 TVA response was not, in fact, definitive, i.e., it did not provide a clear yes or no answer. Rather, it reported that Mr. White found that there was no "pervasive" breakdown in the quality assurance program at Watts Bar. The OIA report on this matter concluded that there was no misconduct by NRC
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officials.
My OIA deposition was taken four days after my initial report to Ms. Connelly (April 11,1986), but Mr Denton and tir. Taylor were not interviewed until the middle of June 1986. Mr. Stello was not deposed until July 30, 1986. In my view, this was a very serious, sensitive matter that deserved an expeditious review and investigation, and that especially considering the stature of Mr.Stello in the NRC structure, an investigation should be quick, complete, and thorough, Judging from the report, no one from TVA was interviewed regarding any aspect of -
the investigation. During my Committee deposition, in response to Mr. Ryan's cuestion, I acknowledged, that I would have placed Mr. White under oath and have taken a deposition concerning that telephone call. I agreed that a fair characterization of this matter was that a very senior NRC official was in ron-tact with the licensee in a way that creates the irrpression that the official tipped the licensee as to how they should answer a particular inquiry that was also the subject of an 01 investigation.
.. ]
THRE ATS BY STELL0_
In the latter part of 1985 -- late November or early December -- I-met with Chaiman Palladino to give him an update on ongoing investigations involving TVA. Responding to the Chairman's questions, I offered my impression that the Comission's handling cf the TVA matter appeared to be disorgarized, and that NRC had not in fact set forth a comprehensive program to identify the problems at TVA, much less a program geared toward resolving these issues.
Consequently, I recommended that the Comission appoint a senior executive to take the responsibility over the TVA project and provide that executive with the necessary resources. Later that day, I provided a similar briefing to then Comissioner, now Chairman, Zech. I subsequently drove to a management meeting The next morning at the NRC Region 1 Office at King of Prussia, Pennsylvania.
the management meeting commencei under the leadership of then EDO, Mr. William Dircks. That morning, Mr.Stello came up to me, and standing face to face and shaking his fist in my face said, "Ben if what you said comes to pass, I'm going to get you." At first I thought Mr.Stello was kidding, and I responded in a Mr. Stello's reply was jovial tone, "What are you doing Vic, threatening me?"
"I don't care how long it takes, I'm going to get you." I believe Mr.Stello was dead serious.
" A little later, Mr. Dircks, the EDO, met with me in a small conference room; in the presence of Mr. Denton, Mr. Taylor, and the Region II Administrator, Mr.
Dircks said, "All right, Ben, what in the hell did you tell the Commissioners I informed Mr. Dircks that I provided ,
because we've got to do damage control".
the Chairman and Commissioner Zech my personal views as they requested, that I report to the Chairman, and when asked for my views, I intend to give them to hin.
The threatening incident and the conversation with Mr. Dircks took place on December 5,1985. Within thirty days, Mr. Dircks retired, and Mr. Stello
! became the Acting EDO.
Subsequent to that meeting, there have been changes that affect the way in which 01 operates. One of these actions was the estabtishment of the Investigation Review Board (IRB). The purpose of the IRB is basically twofold, to establish l
I national priorities, and to assure that Staff investigative requests are l
n O-warranted. The IRB has been in existence for five months. Prior to the establishment of the IRB, Regional Administrators could refer suspected wrongdoing matters directly to 01. This is no longer the case. A Regional Administrator can no longer request an investigation without IRB concurrence.
The practical effect of the IRB has been a dramatic downturn in the number of wrongdoing matters referred to 01 for investigation. There have been a total of 8 requests for investigation in a five month period since the board has been in operation. In contrast, for a comparable five month period just or.e year earli-er, 01 received 42 referrals for investigation. For example, as of the date of my deposition, one of the five NRC Regional offices, Region I, King of Prussia, Pennsylvania, had not submitted r single request for investigation since the initiation of the IRB.
I agree with Comissioner Asselstine's statement that the IRB appears to be a
... thinly veiled attempt by the EDO to control OI by controlling what referrals
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are made, and thus what 01 investigates." After Mr. Stello expressed the view that cases were being referred to OI that should not have been, I wrote the EDO and asked for a list of such cases. Mr. Stello's response was a memorandum that basically stated that he didn't have,the resources to answer that question. I failed to see what the problem was that the staff was attempting to resolve.
Another change was SECY 85-369 which placed major limitations upon the NRC staff in its referral of matters to 01. That document establishes priorities for conducting investigations, defines wrongdeing, and provides a threshold for staff requests for investigations. I believe the effect of that threshold has been to direct the staff to make their own internal evaluation in a way usurping -
the ultimate goal of an O! investigation, i.e., the determination of whether the metter is or is not willful. The staff's interpretation of this threshold ap-pears to be that they are required to gather evidence indicating willfulness f
j rather than merely reporting wrongdoing. This appears to have "chilled" surfac-l ing of wrongdoing items to 01. It is the role of the investigator to determine l whether or not a particular act was done willfully.
Other limitations exist on the authority of 01 to initiate investigations re-garding the character and competence of licensees. To begin an investigation l solely relating to those issues, OI is required to make a recommendation to the l
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O Cornission as to whether the investigation is warranted, and then be guided by a rejority vote of the Comission as to whether or not to open the case.
inves-There is one instance where the Comission declined to authorize aTi tigation of this nature that involved senior officials at the Wolf Creek Gen-On Dec. 24, 1984, I wrote erating Station operated by Kansas Gas & Electric.
the Comission and outlined certain character issues pertaining to two senior Kansas Gas & Electric managers. Among the allegations described in that memoran-dum were senior officials of the licensee ordering licensee employees to break sexual harass-into the car of a licensee employee in order to remove files; ment; and "blackballing" by the person responsible for the quality assurance The latter involved an allegation that the official program at Wolf Creek.
prevented a former employee who had raised safety concerns from getting The Comission subsequently voted 4 to 1 not to elsewhare in the industry.
authorize the investigation. (Comissioner Asselstine desired an inves-tigation.)
There were other instances of attempts to curtail 01 authority, especially Ol's authority to self initiate investigations. A recent example of this was the February 13, 1987 memorandum from Comissioner Roberts to the balance of the Commission which criticizes certain investigations initiated by 01. Comissione Roberts' memorandum recomends to the Comission, that in the event that I not provide a satisfactory explanation, the Comission should, "... serious consider whether organizational and management changes are necessary to ass that 01 functions as we intend it to function, and that its activities are ade-quately supervised and controlled." -
- t is my understanding, based on his memorandum, that Comissioner Robe lieves that 01 no longer has the right to self-initiate investigations on As noted in our wrongdoing matters identified or reported by NRC employees.
March 20, 1987, response to Comissioner Roberts' memorandum, a response that we prepared at the direction of the Comission, I feel 01 must retain the a I
to self-initiate investigations regardless of the origin of the allegation.
l On one occasion, Comissioner Roberts' legal assistant criticized 0I's self l initiation of a recent hospital case, and stated during a telephone conver "Quite frankly, Ben, you may have comitted a material false statement with me, l
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before the Comission". (I of course did not.) I took the coment seriously, especially when I subsequently learned the legal assistant voiced the same con-cern to a member of the NRC Office of the General Counsel. Nonetheless, I be-lieve that 01 did the right thing, especially in the particular case-in contro-versy which was a blatant example of not allowing my office to conduct a thorough, aggressive investigation into some identified false documents.
That was not the first time Commissioner Roberts' assistant has suggested to 0!
staff members that their jobs may be in jeopardy. In one such incident, the he told Roger Fortuna, the Deputy Director of 01, that Ol's management could be replaced if "we or I" ever were to find 0! not abiding by the "will" of the Commission.
One way of controlling 01 would be to remove its independent status as a Commis-sion-level office and make it instead report to the EDO. There have been sever-al Commission initiatives to move 0! under the EDO. One such effort resulted in a two to two tie with one Comissioner, then Chairman Palladino, abstaining. The effect of such a move would be to remove 01's ability to go directly to the Commissioners; rather, 01 would have to go through the EDO. A strong letter from the Department of Justice opposed any movcment of O! under Staff.
The proposed movement of 01 under the EDO was of great concern to my staff and I because we do not feel that we could exercise the independeace, the thorough-
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ness, and completeness that we feel a professional Federal investigator must have to do a competent job were we to become a Staff office. If the Comission is going to have an investigative arm. I believe that investigations of wrongdoing matters must be supervised directly by the Comission rather then the .
WC Staff.
All cases involving potential violations of 18 USC 1001 have to be given to the Comission for consultation before being released to the Department of Justice.
Moreover, all referrals to the Department of Justice require consultation with the NRC Office of the General Counsel. In response to Mr. Ryan's question, I agreed that in disclosing these investigative results within the agency to the Comissioners and their staff and Office of the General Counsel, there would be a possibility that this information could get back to the licensee, especially in light of the situations where such tips have been made by NRC in the past.
O,
-, 12 O-I would like to emphasize, however, that although this is, of course, a pos-sibility, I do not have any indication that it in fact has ever occurred on a referred matter.
The Commission has the right to tell 01 not to refer cases to the Department of Justice. The 01 investigation related to the D.C. Cook Nuclear Plant, was referred to the Department of Justice. That investigation focused on willful material false statements made to NRC by the licensee regarding compliance with NRC fire protection guidelines. At the conclusion of that investigation, I ex-ercised the authority I then had to refer matters directly to the Department of Justice. I no longer have that authority.
The completed report of investigation was provided the NRC Staff. The Staff de-clined to make a decision whether the false statement was willful. They took it to the Commission. In one of the meetings subsequently held regarding the D.C.
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Cook matter, the Comnission voted 3 to 2 that it was a material false statement. '
but then voted 3 to 2 that the statement was not willful. I recall that during that meeting, there was a discussion on the record as to perhaps "unreferring" the matter from the Department of Justice. Apparently the Department of Justice disagreed with the Commission as they. sought and obtained criminal indictments of the utility officials and the utility itself regarding the material false statements issues. These indictments were recently dismissed on statute of limitations grounds.
It was subsequent to that investigation and the controversy surrounding the DC Cook referral that 01 was required to send any O! reports that we wished to refer to the Department of Justice to the Office of the General Counsel, and if -
they involved material false statement issues, to the Commission as well, prior
- c such referrals.
The Commission has specifically directed 01 not to conduct or perfect criminal investigations. Nonetheless, I believe criminal prosecution of those licensees who chose to deliberately violate Commission rules and regulations would have a deterrent effect on the conduct of other licensees. Notwithstanding these re-straints, however, the Commission has authorized technical and investigative support at the request of the Department of Justice once the matter has been referred.
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