STATEMENT BY JOHN R. SINCLAIR OPERATIONS OFFICER OFFICE OF INVESTIGATIONS U.S. NUCLEAR REGULATORY COMMISSION SUBCOMMITTEE ON GENERAL OVERSIGHT AND INVESTIGATIONS My name is John Sinclair. I am an Operations Officer with the U.S. Nuclear Regulatory Commission's Office of Investigations (OI). My federal career consists of a variety of positions in law enforcement covering more than 17 years. I began with the Washington, D. C. Metropolitan Police Department and later accepted a position with the Naval Investigative Service (NIS). As a Special Agent with NIS, I worked extensively in the area of criminal violations associated with government contracts and procurement. I came to the NRC in 1978 as an Investigator in the Office of Inspector and Auditor (OIA). In 1982, I accepted an investigative position with OI. Prior to the establishment of OI, NRC investigations concerning willful violations and potential criminal offenses were reviewed for referral to the Department of Justice by OIA. It was my responsibility to review most of the investigations concerning wrongdoing by NRC licensees. I also was the senior investigator responsible for conducting major OIA investigations at the South Texas Nuclear Project and the William H. Zimmer nuclear facility. 2 At the request of the Subcommittee, I will provide my observations concerning NRC staff actions in relation to OI's investigation of the Fermi Nuclear Facility (Fermi). in Washington, Within OI was responsible for review of the report as submitted by NRC's Region III. There was an operator error committed at Fermi that resulted in a premature criticality (an unplanned or premature nuclear reaction). The utility withheld from the NRC the severity of the operator error. Despite the utility's willful material false statements regarding its premature criticality and the OI report documenting the utility's course of action, the NRC has never taken any civil enforcement measures against Fermi for failing to report the premature criticality. Rather than using this information as a basis for regulatory action, the NRC staff took steps that had significant potential to, and in fact did, undermine OI's investigation. NRC staff (those people who work for the Executive Director for Operations) did not even wait for the OI investigation to be completed and the report to be made final before mounting a challenge. This culminated in a staff memorandum, the mere existence of which made any enforcement action based on the material false statement virtually impossible. In essence, the staff, either inadvertently or intentionally, undermined the OI investigative findings. Once the draft OI report was sent to Washington, we at OI spent much of the fall of 1985 carefully reviewing it. We had extensive discussions with those responsible for the 3 investigation and reviewed the documents and testimony that were the basis of the Region III report. During the fall and winter of 1985-86, we briefed the NRC staff, including the former Executive Director for Operations. It is the policy for OI to provide a briefing to the staff to ensure that any potential immediate health and safety issues arising out of the investigation can be identified and corrected. If OI's preliminary findings identify problems with the utility's operation of the plant, that could indicate that there is an immediate danger to health or safety. In such a case, the staff should be informed quickly to enable them to correct the problem. Normally, however, OI investigations are completed and the report issued before the NRC staff becomes involved in evaluating the information for possible enforcement. In this case, the NRC staff asked to review OI's investigative materials before the investigation was even completed. This was odd because Fermi was not in operation at that time. It is therefore difficult, if not impossible, to imagine how there could be immediate health and safety concerns. In the fall of 1985, the very first day after O1 briefed the NRC staff concerning the investigation and our initial conclusions, the staff sent an attorney from NRC Headquarters to the OI Field Office in Chicago to review the investigative material. Shortly afterwards, I began to receive reports from OI staff members that the NRC staff attorneys did not agree with OI's initial findings. On February 10, 1986, about a month prior to 01 issuing the report, Victor Stello (EDO), Ben Hayes (Director, OI), other senior NRC personnel and I met to discuss the Fermi investigation. As a result of the meeting, Mr. Stello requested a copy of the OI draft report stating there was an immediate health and safety issue. What was apparent was that the Fermi facility was approaching a restart decision and the status of certain Fermi managers was in question. Mr. Stello expressed concern over the scheduled restart and the fact that enforcement actions which removed certain managers could result in delaying Fermi's restart for six months. Near the end of this meeting a The question was raised by Mr. Stello, as to what was going to be OI's conclusion concerning the conduct of certain managers. Region III Administrator, Mr. Keppler, responded that he believed OI Region III was concluding there was wrongdoing on the part of management. I told Mr. Keppler and the EDO that OI headquarters supported that conclusion. The next major involvement with the staff came rather unexpectedly. About two weeks later, Mr. Hayes provided me with a copy of a document produced by the staff office of the Executive Legal Director. I will refer to this as the ELD Memorandum. This ELD Memorandum, dated March 19, 1986, could well have been written by the utility. It uses the facts selectively and mischaracterizes the law (as interpreted by the NRC's Office of General Counsel). It strains to put the utility in the most favorable light possible and tries to shift the blame to NRC 5 employees for failing to discover information being withheld by the utility. In essence, the memorandum reflects the views of an advocate, not of an objective observer, let alone a regulatory agency. ELD stated that there was no evidence to support a view that there was an intent not to tell the NRC of the premature criticality. OI report: 1. ELD failed to address the following facts from the Despite ample opportunity, the NRC's Resident Inspector was never informed that the utility had gone prematurely critical. The plant's Assistant Superintendent had promised to inform the NRC's Resident Inspector of the utility's final determination regarding the premature The NRC's Resident Inspector was at the utility site The utility sat silently at the Commission's licensing hearing, knowing that the Commission was unaware of the premature criticality. As EDO Victor Stello said, "The utility should not have just sat in the Commission licensing meeting listening to a glowing description of |