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Mr. GEJDENSON. Thank you. Mr. Sinclair, it is you, a couple of short questions, and then lunch. Mr. SINCLAIR. Thank you, Mr. Chairman. My name is John Sinclair. I am an Operations Officer with the U.S. Nuclear Regulatory Commission's Office of Investigations. My Federal career consists of a variety of positions in law enforcement covering more than 17 years. I began with the Washington Metropolitan Police Department and later accepted a position with the Naval Investigative Service. 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. 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. At the request of the subcommittee, I will provide my observations concerning NRC staff actions in relation to OI’s investigation at the Fermi Nuclear Facility. Within OI in Washington, I was responsible for review of the report as submitted by OI region III. As you have heard, there was an operator error committed at the Fermi facility that resulted in a premature criticality; that is, 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, the individuals who worked 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 investigation and reviewed the documents and testimony that were the basis for 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 an investigation can be identified and corrected.

When 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 and safety, the staff is informed to enable them to correct the problem. Normally, however, OI investigations are completed, and the report issued before the staff becomes involved in evaluating the information for possible enforcement. In this case, the NRC staff asked to review OI’s investigative material before the investigation was even completed. This was odd, because Fermi was not in operation at the time. It is therefore difficult, if not impossible, to imagine how there could have been an immediate health and safety concern. In the fall of 1985, the very first day after OI briefed the NRC staff concerning the investigation and our initial conclusions, the staff sent an attorney from NRC headquarters to 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 1 month prior to OI issuing the report, Victor Stello (EDO), Ben Hayes (Director, OI), and 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 6 months. Near the end of this meeting, a question was raised by Mr. Stello as to what was going to be OI’s conclusion concerning the conduct of certain managers. The 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 2 weeks later, Mr. Hayes provided me with a copy of a document produced by the staff Office of the Executive Legal Director, ELD. 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 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 premature criticality. ELD failed to address the following facts in the OI report: 1. Despite ample opportunity, the NRC's resident inspector was never informed that the reactor 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 criticality. This was not done. —The NRC's resident inspector was at the utility site for the entire week of July 8–12 and was never informed of the premature criticality. —The utility sat silently at the Commission licensing hearing, knowing that the Commission was unaware of the premature criticality. As EDO Victor Stello said—and this is a quote: The utility should not have just sat in the Commission licensing meeting listening

to a glowing description of itself which wasn't justified, without saying, “We ain’t that good yet.”

2. Even the utility readily acknowledged the importance of premature criticality. It was not the type of information that would be overlooked. —The utility changed logs, made telephone calls after midnight and on holidays, and conducted reviews and re-reviews, all on the premature criticality. —The assistant plant manager told his staff that the reactor had gone critical and “we really look bad on this one.” 3. The NRC was not told of the premature criticality until the day the utility had the license in hand. It is hard to believe that this was mere coincidence. The ELD Memorandum tries to transfer the blame for the utility's actions to the NRC employees. The memorandum states that the resident inspector was given enough information so that he could have investigated the matter further. From this it is concluded that since the NRC's resident inspector was informed of some material information, it removed the legal obligation of the utility to be open and honest with the NRC regarding other information. There are a number of problems with this approach: 1. It is my understanding that there is no legal basis, nothing in the statute or the regulations, for changing the burden of responsibility of full and complete disclosure from the utility to the NRC. The legal theory would apparently be that once you tell the NRC something of importance, it is the NRC's obligation to find out the rest for itself. 2. The NRC's own General Counsel disagreed with ELD's position. 3. Even if there were legal basis for transferring the blame, it is not supported by the facts. The utility did not fulfill its commitment to inform the NRC's resident inspector of the utility's criticality determination, nor did it inform the NRC of the information in its possession, despite the numerous opportunities I identified earlier. Finally, ELD alleges that there is little testimony to suggest that the existence of the premature criticality was material. This statement bears little relationship to the facts: 1. The subsequent statements of NRC officials all indicate that the premature criticality would have had a significant influence on them in issuing the license.

Mr. Darrell G. Eisenhut who signed the license for the NRC, stated that had he known about the unexpected criticality and reactor operator error, he would not have signed the license.

The two top NRC regional officials stated that they would have recommended that the Commission put off the Fermi hearing, had they known of the premature criticality.

The utility gave too much effort and attention to the issue of criticality to say that the premature criticality was not material.

In conclusion, the ELD Memorandum is written as an advocate rather than as an objective observer. It reflects an attitude by NRC staff to support the utilities. With its report on Fermi, OI gave the staff the opportunity to take meaningful enforcement action. The staff chose to support the cat and mouse game played by the utility. If staff's intention was to undermine an enforcement action against the utility in order to get Fermi up and running, it was successful. With the ELD opinion in circulation, it made it difficult, if not impossible, for the NRC to take any enforcement action based on the withholding of information regarding the premature criticality.

That concludes my statement, Mr. Chairman.

[Prepared statement of Mr. Sinclair, with attachments, follow:]

STATEMENT BY JOHN R. SINCLAIR
OPERATIONS OFFICER
OFFICE OF INVESTIGATIONS
U.S. NUCLEAR REGULATORY COMMISSION
BEFORE THE
SUBCOMMITTEE ON GENERAL OVERSIGHT AND INVESTIGATIONS
COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
U. S. HOUSE OF REPRESENTATIVES
JUNE 11, 1987

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.

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