Mr. GEJDENSON. Thank you, sir.
My neighbor, Mr. Carr.

Mr. CARR. No comment, sir.

Mr. GEJDENSON. Mr. Roberts.

Mr. ROBERTS. The Chairman's statement reflects my views. Thank you.

Mr. GEJDENSON. Let me ask a few questions to Mr. Asselstine. Let me go through the licensing process just for a moment. The staff does the initial review of an application; is that correct? Mr. ASSELSTINE. That is correct, Mr. Chairman.

Mr. GEJDENSON. And at the actual hearing, much like a number of regulatory agencies, the staff ends up making its own recommendations?

Mr. ASSELSTINE. That is right.

Mr. GEJDENSON. What happens if the staff has argued against an application being approved. Does it go to the full Commission?

Mr. ASSELSTINE. If the staff argues against an application being approved during the course of a hearing, a formal hearing will be held by a licensing board and the licensing board will make a written decision based upon the record it compiles. That decision then can be appealed, first to an Appeal Board that does an appellate review of the decision, and ultimately it can be reviewed by the Commission itself.

Mr. GEJDENSON. But if the staff finds in its decision, in favor of the utility, and it appears before the Commission, then it is basically the staff arguing for the utility and the utility arguing for the utility.

Mr. ASSELSTINE. That is correct. In fact, the way the process normally works, the NRC staff conducts an informal review of the license application before you ever get to the point of the hearing process. And in most all instances, the staff identifies its concerns with the application and usually obtains a commitment by the applicant to satisfy the staff's concerns.

So, as a practical matter, when the hearing process gets started and the public gets involved in the process, you have the NRC staff supporting the application. Their concerns have then been satisfied at that point and the staff, as an active participant in the hearing process, generally supporting the applicant right down the line. In fact, the NRC staff participates as a full participant not only in the technical issues but also on procedural matters. For example, whether members of the public should be admitted as parties to the proceeding at all; whether they have identified valid issues that warrant granting a hearing, those kinds of procedural issues.

The staff actually becomes an active participant in the process, again often as an advocate for the applicant's position.

Mr. GEJDENSON. Who presents the opposition? What happens? We are used to a court proceeding of some sort, where there is an individual and then there is an advocate for either side. And I understand the difference in regulatory procedures, but is there a prosecutor in this process, once we have gotten to this stage?

Mr. ASSELSTINE. Well, at that point the other side is represented by individual members of the public who have a concern about the application and who have identified issues that they wish to litigate in the hearing. So it is generally members of the public who

are trying to raise an issue that they are concerned about in terms of the other side of the case.

Mr. GEJDENSON. Thank you.

Mr. Smith.

Mr. SMITH. I have no questions.

Mr. GEJDENSON. Mr. Miller.

Mr. MILLER. Thank you, Mr. Chairman.

Chairman Zech, let me ask you, what is the status of the Comanche Peak situation that came to the attention of the Senate Committee?

Mr. ZECH. Comanche Peak. The Senate Committee on Governmental Affairs questioned the investigation that had been made by our Office of Inspector and Auditor of the Comanche Peak situation. We have determined at the Commission level after that hearing that we would review that decision that we made. Mr. MILLER. Which decision?

Mr. ZECH. The decision we had made to accept the Office of Investigation report concerning Comanche Peak, that the investigation was a valid investigation. The investigation was completed by our Office of Inspector and Auditor, but it was challenged at the hearing.

Mr. MILLER. Challenged by whom?

Mr. ZECH. Challenged by the committee. And there was some reason for challenge, because during the investigation, the investigator's final report was reviewed by the head of the Office of Inspector and Auditor, and there were some decisions made by the head of the office apparently that the investigator did not agree with. There was an exchange between them that did not satisfy everyone. The head of the office thought the decisions were

Mr. MILLER. Let me interrupt you.

What do you mean, an exchange between them?

Mr. ZECH. Between the investigator and the head of the office. There was not an agreement as to some of the conclusions that the investigators had drawn. The head of the office saw fit then to modify to a degree some of those conclusions.

The report was sent to the Commission. The Commission read the report. I was satisfied with it. I think the majority of the Commissioners were satisfied with the report. I thought it was a good, tough report. The modifications simply didn't seem that significant, certainly to me. I was satisfied.

On the other hand, when it was challenged by the Senate Committee, I went back and, with my fellow Commissioners, we decided to have that investigation reopened. We, the Commission then appointed someone outside of the Office of Inspector and Auditor, one of the members of our Appeal Board, an administrative judge, to make an independent review of that investigation.

After we had done that and before the individual we had appointed had gotten very far into that, we were asked to turn that investigation of Comanche Peak over to an independent investiga

tor.

Mr. MILLER. Asked by whom? You were asked by whom to turn that over?

Mr. ZECH. We were asked by members of the House, various chairmen of our oversight Committees. As I recall, it was Chair

man Dingell, Chairman Udall, Mr. Markey, and Chairman Sharp. They asked us to have that Comanche Peak investigation turned over, not to an individual on the NRC staff, although a different office member was going to conduct our reinvestigation, but to an independent investigator.

At the Commission level, we received the request and the Commission agreed to do so. The Commission then has proceeded to try to get an outside investigator. We have worked diligently in that regard. The Congressmen who asked us to do this asked that we get an Inspector General from one of the other Government agencies or some independent outside investigator.

We did that. We looked at that carefully. We then chose to select another agency's Inspector General. We have worked to do so with some help from the President's Council on Integrity and Efficiency. We recommended an individual from the General Accounting Office to conduct the investigation. We have so informed the Congressmen who asked us to conduct this investigation. We were informed by the General Accounting Office and by others who assisted us in selecting the individual that it would be appropriate that the Congress itself ask the General Accounting Office if this individual would be available to conduct the investigation.

We have done so, and that is the status of that investigation at the moment. We are waiting to hear whether the gentleman that has been selected will be authorized by Congress through the GAO to perform the investigation.

Mr. MILLER. Mr. Bernthal, I assume this is the kind that you have grown tired of this kind of investigation?

Mr. BERNTHAL. Mr. Miller, if indeed there is reason to believe that our Office of Inspector and Auditor has not done its job properly, if the Congress wishes to exercise oversight investigation, then of course they have a duty and a right to do so.

In this particular case, it was the judgment of the Commission that that investigation had been carried out properly. I guess it remains to be seen whether or not it was carried out properly and what the practical consequences of the outside second look are.

Mr. MILLER. How did we get to the point where what appears to be a relatively routine investigation of a facility under construction seeking the ability to load fuel over a 10- or 12-year period-a relatively routine investigation of quality control and assurances and so forth at Comanche Peak-ends up with a full-blown involvement of the Congress, of seeking an outside investigator, and all of the procedural problems that Chairman Zech outlined.

How did we get to that? What went wrong in this process? Something went wrong. Whether you agree or not, obviously you cannot conduct agency investigations if this is going to be the end result. You will never get to the second one.

Mr. BERNTHAL. Mr. Miller, I have to say that my own perspective on what happened out there was it was predominantly an issue of management, certain management inadequacies, and personality conflicts, as such things very often are-management difficulties flowing both up and down the chain of command I might say. There are elements of that situation out there that I really should not comment in detail on at this point because there is still another separate investigation on one element of that.

But my general judgment there was that our management did not handle that situation in entirely the best way. It did not deal with our employees in some cases in entirely the best way. And I have to say that my judgment was that some of the in-line employees did not deal with their superiors in the way that might have been best under the circumstances.

So I felt that the problem flowed both ways; that it was a management difficulty, and I believe the Chairman and the Executive Director recently were out in the Comanche Peak area, they visited region IV, and attempted to address some of those difficulties.

Mr. MILLER. I think you probably described it somewhat correctly, and we will get into the nuances of it. But let me suggest to you that, if you read the sworn testimony in front of the Senate Committee on Government Operations, you see a procedure and management operation that start to spill over onto the accuracy of the investigations. You see a management style that does not appear to allow for the free flow of information.

We all understand that different people will arrive at different conclusions based upon the same evidence. That is not what appears to be happening here. What you see is that people feel that they now have to move outside of regular procedures.

And, Commissioner Asselstine, apparently the first inspector, Mr. Phillips, felt that he was under such pressure with respect to his findings, both from within his unit of operation at the regional level-well, let's just start there because that is the responsibility of the Commission. He came to you.

Mr. BERNTHAL. Mr. Miller, if I may respond once more, please. Very early on, from the time that our Office of Inspector and Auditor, the head of that office went out and began to look into these difficulties out there, we had a very early report, and Commissioner Asselstine received it, all of us did at the same time.

The first step-and I believe I was the one that instituted that step that was taken by the Commission-was to suggest that at that point we isolate those individuals from the possibility of further interference as they saw it at that point-and I emphasize, as they saw it-from their superiors until this issue was resolved.

Things like this will happen. We are not perfect, as I said earlier, and I think the Commission at that point took immediate steps to attempt to reassure those employees that whatever it might have been that led to this unfortunate circumstance was no longer going to continue, and at that point the issue was taken out of the hands of their superiors, their immediate superiors, and indeed the director of that regional office, and had been escalated to the level of the Commission and to the investigatory offices of the Commission. I think that was an appropriate procedure. I find it unfortunate-more than unfortunate-it is not a circumstance that I like to see or that I think that anyone likes to see, where any employee of this agency feels so overwhelmed by actions taken by his superiors that somehow he feels that he no longer can go through normal channels. That is something that we simply cannot afford to have happen, and I think that, unfortunately, was the circumstance we reached here.

Mr. MILLER. Commissioner Asselstine.

Mr. ASSELSTINE. Mr. Miller, this was truly an unusual and nonroutine situation. We had a situation in which several people came to me, some of which are current employees of the agency, with fundamental concerns. Their concerns were that they had identified problems in the plant, they had identified problems in our previous inspection program, and that as a result of having identified those problems, they were being the subject of discrimination by their own managers within the staff.

They had no confidence in their ability to get any relief from their managemement in the regional office and particularly from their direct supervisors, because those were the people who in their view were doing the discriminating against them.

So they came to me and asked for advice and help on what they should do. I felt that the proper thing to do, if they were willing to do it, was to try to work within the system and have an investigation by our Office of Inspector and Auditor, and I was able to convince these people to do that with the agreement of the then head of that office to provide some procedural safeguards, namely that there would be transcripts of the interviews so there would be a firm record on everything that they had identified, and then if there were any problems later on with how the report was handled, at least there would be a firm documentary record of all of their concerns and the information that supported it.

My own view is that this situation raises a number of questions, but the most important question in my view is the effectiveness of the management of the regional office and the past performance of the Agency in carrying out our inspection responsibilities, because in essence what these people were arguing is that we had not done our job properly in the case of this plant; we had not properly inspected the plant over the years; and the utility had not satisfied our regulations, particularly in the area of quality assurance, over the years.

Their argument was when they had identified these concerns, when they had conducted inspections and surfaced these problems, the effect was retaliation against them by their superiors, some of whom had been involved over the long term in the past staff activities that they were criticizing.

That is an extraordinary situation. It required, in my view, a very careful and honest and objective evaluation, and then we found out when we had the hearing before the Senate Governmental Affairs Committee that there were serious questions being raised by the investigator who did the investigation about whether that report really was an accurate reflection.

Mr. MILLER. I guess that is one of the points. The person who is making the initial on-site audit and review of the procedures and standards of the NRC and compliance with those procedures by the utility and contractor for the utility in the construction of that facility, is saying that that process in and of itself has been interrupted. He thinks the investigation has been distorted and that undue pressure has been brought to bear. Now, we can argue about that.

But he independently went outside of the chain of command, if I read the testimony correctly, and he came to you as a commissioner. He asked that you look into it and also there is certainly the