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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, 01 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 staffs 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 (01). 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 01.

Prior to the establishment of 01, 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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At the request of the Subcommittee, I will provide my observations concerning NRC staff actions in relation to 01's investigation of the Fermi Nuclear Facility (Fermi). Within 01 in Washington, I 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 01 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 01's investigation. NRC staff (those people who work for the Executive Director for Operations) did not even wait for the 01 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 01 investigative findings.

Once the draft 01 report was sent to Washington, we at 01 spent much of the fall of 1985 carefully reviewing it. We had extensive discussions with those responsible for the

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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 01 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 01'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, 01 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 01'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 OI briefed the NRC staff concerning the investigation and our initial conclusions, the staff sent an attorney from NRC Headquarters to the 01 Field Office in Chicago to review the investigative material. Shortly afterwards, I began to receive reports from 01 staff members that the NRC staff attorneys did not agree with 01's initial findings.

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On February 10, 1986, about a month prior to 01 issuing the report, Victor Stello (EDO), Ben Hayes (Director, 01), 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 01 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 question was raised by Mr. Stello, as to what was going to be 01's conclusion concerning the conduct of certain managers. The Region III Administrator, Mr. Keppler, responded that he believed 01 Region III was concluding there was wrongdoing on the part of management. I told Mr. Keppler and the EDO that 01 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

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