commonly said that resident inspectors are the "eyes and ears" of the agency. They regularly provide a conduit of information from licensees to the agency. To hold otherwise could result in a licensee notifying individually each person in the agency that might need to consider the information in carrying out NRC's functions to assure that it had discharged its obligation to the Commission. Clearly, that is not the current practice before the agency or a requirement.

I recognize that during early July 1985 there were many communications between the licensee and the staff, as full power licensing was approaching. In fact, there was a SALP meeting held at the facility on July 2, 1985. It is unfortunate that the licensee did not choose to inform senior NRC officials at the SALP meeting or by phone thereafter. However, the failure to do so in the absence of a requirement is not a violation of the law.

Withholding Information Concerning Determination of Criticality

The third issue is whether the criticality determination was willfully withheld from the NRC. The factual basis for the analysis of this issue is found in section II E and III of the enclosed summary.

On

Over the holiday of July 4, 1985 the criticality analysis was completed. July 5th a meeting was held wherein the licensee concluded that the facility had gone critical on July 2, 1985. Prior to the July 5th meeting Parker was informed that a meeting was to be held that day to discuss the analysis done on the incident although he was not informed that the result would be that they had concluded the plant had gone critical. No attempt was made to discourage his attendance at that meeting.

There were numerous individuals involved in the evaluation and attending the meetings on the 5th and 6th of July. Parker was on the site attending meetings following the July 5th determination. However, there is no evidence to support a view that there was an intent not to tell Parker of the criticality. In fact, no one suggested that the criticality determination made the rod pull matter reportable and there was little testimony to suggest that the existence of criticality increased the significance of the rod pull error.

Thus, in view of the above, I can not conclude that prior to the Commission meeting there was an intent to withhold information from the Commission. Even if there was such an attempt, for the reasons given above, the withholding of the criticality determination was not material to the staff in view of the information the agency already had on the incident. 5/ That is not to

5/ Mr. Keppler did state to ΟΙ that criticality was important. Mr. Eisenhut stated that had he known about the event (unexpected (FOOTNOTE CONTINUED ON NEXT PAGE)

say the Staff would have ignored information concerning criticality. In this case there is evidence that indicates a determination of criticality would have jolted the Staff into action. However, the legal question is what information must be provided and whether it must be provided more than once. The fact that a licensee provides information that should influence a reasonable agency expert and then repeats the same information in a slightly different way finally getting the attention of the Staff, does not mean that a licensee who informs the staff only once with material information that should get the Staff attention has not discharged its obligation.

Failure to Correct Mr. Davis' Statement Before the Commission

The fourth issue considered is whether Lenart or Jens willfully failed to correct Davis' statement made during the commission meeting that the scram discussed during the meeting was the only operator error in the control room. The factual basis for the discussion of this issue is found in sections V and VI of the enclosed summary.

At the Commission meeting on July 10, 1985, the staff was briefing the Commission on full power licensing for the Fermi 2 facility. Personnel errors reported in LER's were being discussed. Following a discussion of a reportable event occurring the night before at Fermi 2, Davis was handed a note from a Region III staff member, Chrissotimos, that stated that since the fuel load there had been no other operator errors. After reading that statement, the issue of operator errors was not discussed by either the staff, the Commission, or the licensee. The note was not read in response to a question directed to either the staff or the licensee. It was a voluntary statement. It may be noteworthy that during this meeting, the licensee was spoken of in very positive terms.

The argument that willful failure to correct occurred is as follows. Lenart and Jens should have been aware that Davis was essentially stating to the Commission that the staff was unaware of significant operator errors. Both Lenart and Jens were aware that the control rod error was a significant error. Notwithstanding the Commission's interest in the issue of operator errors based on Commissioner Zech's questioning, neither Lenart or Jens came forward during or after the Commission meeting to either Davis or the Commission to correct Davis' statement which Lenart and Jens knew or should have known was incorrect. As a result, under this view, since neither

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criticality and reactor error) he would not have signed the license without further inquiring or explanation. However, these statements were made in the absence of knowledge of Mr. Parker's information. They were not asked if their view would be different if they had had earlier Parker's knowledge.

MAR 19 1986

Lenart or Jens had actual knowledge of whether or not the Commission was aware of the rod pull error, Lenart and Jens permitted the Commission to be misled on a matter that could influence the Commission if it had not known of the rod pull error.

Before addressing the question of whether there was a duty for the licensee to come forward to correct the statement of Davis, it must be determined if an incorrect statement was, in fact, made as there are three meanings that could be given to his statement.

Mr. Davis' statement could have meant that, in fact, no operator error had been made. Clearly, there had been operational errors at the facility. Not only did Lenart and Jens, Vice President-Nuclear Operations, know that errors had been made, but also Davis, Chrissotimos, and Byron, the senior resident who was in attendance, knew that there were other operational errors. Every facility has some operational errors. Thus, it does not appear that Davis was attempting to convey to the Commission the literal meaning of the words "only operator error in the control room."

Mr. Davis' statement could have meant that there had not been reportable (LER) operator errors. In the view of Chrissotimos, the author of the note, only significant matters are reported to the Commission at Commission Meetings and the statement of Davis was made in the context of an LER discussion. Byron had a similar observation. He did not object to the statement because the rod pull error was not a reportable event. There had been no LER reportable errors not listed on the slides other then the event the previous night that was just discussed. Thus, the statement of Davis could be viewed as correct. Lenart stated in his testimony that the only significant difference between the item discussed at the Commission meeting and the rod pull matter was that the item discussed was reportable under the LER rule. Under this view there was no need for the licensee to correct the statement since the rod pull matter was not a reportable event.

Mr. Davis' statement could have meant that there had not been significant control room operator errors. The statement could be interpreted consistent with the tone of the meeting that this was a solid applicant for a full power license and there were no significant problems at all.

For

Given the three possible interpretations, it is unclear what was meant. enforcement consequences to follow the agency would need to show first that the licensee heard the statement, and second that the licensee understood it to be wrong. 6/ The investigation did not develop evidence to demonstrate

6/

Knowledge that a statement is wrong is not needed before finding that an erroneous, affirmative material false statement is a material false (FOOTNOTE CONTINUED on next PAGE)

that either Lenart or Jens knew that Davis' statement was incorrect. Neither were asked whether they thought Davis' statement was correct or why the statement was not corrected. Persons who may have been in contact with either of them following the meeting were not asked whether either Lenart or Jens discussed the issue of Davis' statement. In fact, Lenart responded to a question from OI stating that he thought both Davis and the Commission knew of the incident because the resident inspector had been informed. Therefore, in the absence of indications that Lenart or Jens knew that information was being provided to the Commission in error, the staff will not be able to support its burden to show by a preponderance of the evidence that Lenart or Jens failed to correct the information.

Even if there was awareness of the incident by either Lenart or Jens, it is not clear that a violation occurred by failing to correct the statement. A failure to correct the statement must be material. As noted above, material information had been provided to the staff. However, in Vepco, the licensee was charged with an omission for failing to provide information to a Licensing Board even though the staff had been aware of the information. The Commission specifically held that the staff's failure to come forward with the information did not excuse the licensee. Vepco at 491, n.11. However, Vepco is not clearly applicable here. Vepco was an adjudication based on a record. In an adjudication the only information the Commission and the Licensing Board has access to is that which is placed in the record. Clearly, staff knowledge could not be charged to the Commission in the absence of the staff placing it in the record. Tennessee Valley Authority (Browns Ferry Nuclear Plant), ALAB-677, 15 NRC 1387, 1394 (1982). In Fermi, the Commission was not conducting an on-the-record adjudication. Presumably, the Commission was basing its decision as to full power licensing on the briefing as well as the staff's reviews and inspections over the years. Thus, it is not unreasonable to charge the Commission with knowledge of the staff in the same way that regional administrators and the directors of staff offices are charged with knowledge of their agents. To hold otherwise, would suggest that licensees should regularly inform the Commissioners directly of significant matters. For example, licensees could choose to file copies of all required reports directly with each of the Commissioners to assure that it would not be subjected to a charge of failing to provide significant information to the Commission. It is not clear that such a result is desirable. It should also be recognized that

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statement since there is an obligation to provide complete and accurate information to the Commission. However, it would be unreasonable to charge a person with failing to correct a statement, assuming there is a duty to so, in the absence of knowing that there was a statement that required correction.

holding the licensee responsible for the staff's statements would represent an extension of the Vepco decision. 7/

In considering whether one should seek an extension of the Vepco material false statement interpretation of section 186 such that a licensee would be required to correct an erroneous statement of the staff made to the commission, where the licensee had reason to know the staff knew of the correct information, in the context of other than an on the record adjudication, the natural hesitancy of a person to correct a statement of another unless the person believes that statement to be clearly in error and believes the effect of the error will be significant should be considered. In my view Vepco should be extended to create such an obligation only where the person failing to correct clearly understands that an error has been made and believes that the error could have an important impact on a regulatory decision. This is not such a case.

It may

Licensees should be dealing with the Commission with candor and frankness. The Commission must rely on the trustworthiness of managers of licensees. Where managers or licensees demonstrate a lack of trustworthiness, such that their statements could not be relied upon by the Commission, there is sufficient authority for the Commission to take regulatory action even in the absence of a finding of a violation such as a material false statement. The evidence compiled in the report does not demonstrate by a preponderance of the evidence a lack of trustworthiness on the part of Jens or Lenart. be that the reason Mr. Davis' statement was not corrected was that they thought the Commission knew of the matter since the resident had been told and, therefore, negligently they did not correct it because they saw that the staff did not correct it. It may be that they thought the statement only concerned reportable items. It may be that they intended to mislead the Commission. The evidence does not suggest any reason for them not coming forward. Consequently, assuming intent to withhold information is merely speculative.

It is noteworthy that the evidence in the record concerning Detroit Edison's past practice of fully reporting information to the Commission was not refuted. In fact on the night before the Commission meeting, a scram had been reported. If the licensee was inclined to conceal information to obtain a license, one could question why that information wasn't delayed until after the meeting.

7/ The closest case applying the Vepco decision to a duty to correct involves a material false statement charged to Pacific Gas & Electric Company arising out of a meeting with the staff on Diablo Canyon. There the licensee's agents failed to correct a statement of the licensee made in a transcribed meeting. (EA 81-13)