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The Co-issioners 5

d. This rule contains information collection requirements that were reviewed and approved by the Office of Management and Budget.

e. That a public announcement will be issued (Enclosure "G"). f. A Regulatory Analysis is attached as Enclosure "B".

g. That the Chief Counsel for Advocacy of the Small Business Adainistration will be informed of the certification and the reasons for it as required by the Regulatory Flexibility Act.

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Commissioners" comments should be provided directly to the Office of the Secretary by c.o.b. Wednesday, August 31, 1983.

Commission Staff Office comments, if any, should be submitted to the Commissioners NLT Wednesday, August 24, 1983, with an information copy to the Office of the Secretary. TIf the paper is of such a nature that it requires additional time for analytical review and comment, the Commissionars and the Secretariat should be apprised of when comments may be expected.

This paper is tentatively scheduled for affirmation at an Open Meeting during the Week of September 5, 1983. Please refer to the appropriate Weekly Commission Schedule, when published, fo a specific date and time.

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***** * *. UNITED STATES : * - - - o 3. NUCLEAR REGULATORY COMMISSION * : *Wou-- : WASHINGTON, D.C. 20555 * * ** ”, *- o - - - - - May 12, 1986 MEMORANDUM FOR: Ben B. Hayes, Director Office of Investigations FROM: James A. ::::::::::so Acting General coun i’s

SUBJECT: CONSULTATION ON REFERRAL TO THE DEPARTMENT OF JUSTICE (Case No. 3–85-013)

OGC has reviewed your draft referral letter to DOJ provided to us by memorandum dated April 16, 1986. The referral is based on possible violations of 18 U.S.C. 100 l (material falsification) and 371 (conspiracy). We will discuss them in turn.

Violation of 18 U.S.C. 1001

Apparently, we misinterpreted your earlier letter when we concluded that you were proposing to make a referral based on a possible false statement by omission. Your cover memorandum to us clarifits that you intend to refer for an actual false statement.

We consider the proposed referral in light of the elements of the 1001 crime which we set forth in our March 5, 1986 memorandum:

*This is less clear in the text of the revised draft referral where you say that the notification "omitted certain information and overtly misrepresented the known facts". p. 2. This suggests that the notification was not false as far as it went but became false as the result of an omission. You also state in a summing-up paragraph that "it appears there was a concealment of at least part of the information necessary to make an informed agency decision". p. 3. In any event, we accept the referral as you intend it and review it on that basis.

Contact:
Marjorie Nordlinger, OGC
x41493

LIMITED DISTRI BriTT on

(1) the making of a statement:

The making of a statement appears to be providing the NRC inspector on July 3, 1986 with the DER No. NP-85-0334 which described the operator error and concluded that criticality did not OCCur.

(2) the falsity of such statement:

There appears to be no dispute that the statement, insofar as it concluded that criticality did not occur, was false.

(3) knowledge of the falsity of such statement:

Your point here is apparently that the reliable known information was such that they must have known it was critical. The original entry noted criticality and was changed with insufficient reason in your view. While it is not entirely clear that this was the case, your investigative report contains circumstantial evidence to support this view. On the other hand there is evidence that there was a basis for doubt on whether criticality occurred and the utility moved forward to investigate. It appears to us that had they corrected their evaluation of whether criticality had occurred, you would be hard pressed to maintain that a crime had occurred at the point of delivery of the notification, since NRC was apparently advised that there was some doubt about the criticality conclusion. Thus, it really does appear to us that an omission to provide further facts when they were known or a failure to correct continues to play a role in evaluating this referral. Nonetheless, we cannot say that you are wrong in your investigatory conclusion that Fermi officials knew at the time of the statement that it was false, if we have correctly understood your conclusion.

(4) relevance of such statement to the function of a
federal department or agency:

Although this information, as you acknowledge, was not required by rule to be reported, we believe the relevance of knowledge about a criticality to NRC's regulatory mission is beyond doubt.

*The Staff suggestion that the information provided to the NRC inspector was enough to have alerted him to the seriousness of the problem is a two-edged sword. While it supports the view that NRC did not respond sufficiently, it suggests strongly that the licensee must also have had a heightened awareness and that the doubts about criticality may not have been genuine.

(5) the false statement was material:

Your account presents evidence that the licensing decision would have been made differently had the Region officials known of the criticality. There has been no suggs stion that this would have been an improper factor to consider.

In light of the foregoing discussion and recognizing the caveat with respect to omission, we conclude that your report supports this referral.

Violation of 18 U.S.C. 371

Your conspiracy referral is predicated on a conspiracy to commit the 1001 crime. Thus, if the knowledge of falsity element is a problem in consideration of that crime, it will be so here.

The elements of conspiracy are an agreement to commit a crime and one overt act in furtherance of that agreement. Case law has held that the terms of a conspiracy are seldom, if ever, express, and the conspiracy must almost always be gathered by implication from conduct. Moreover, the act itself need not complete the Cr1me.

Since you conclude (1) from testimony and from a continuing and consistent failure to correct that the Fermi officials agreed to provide false information on the criticality which they knew to be false and (2) the report was directed to be changed, and actually was changed, to that end by one of those agreeing, we concur that the elements of conspiracy are met. Thus, we advise that your report supports this referral, even though we recognize that it is possible to draw other inferences from the investigatory facts that you found.

Finally, we have a few editorial comments which we would be happy to share with you orally.

*It has been suggested that NRC officials should have been alerted by the information which was provided to them even without notice of the criticality. However, this may not contradict the assertion that knowledge of the criticality was material, indeed would have been dispositive, to the licensing decision. Investigative conclusions appear to support the view that the information was material and that Fermi officials recognized the materiality of the information.

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