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UNITED STATES OF AMERICA USNRC-

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NUCLEAR REGULATORY COMMISSION

Before the Presiding Board: J117 40:20

James L. Kelley, Chairman Omrr n- : .,,

Glenn 0. Bright DOW s'Jerry R. Kline

SERVEDyh3.y

In the Matter of Docket No. LRP

ASLBP No. 86-519-02 SPINQUIRY INTO THREE MILE ISLAND UNIT 2 '

LEAK RATE DATA FALSIFICATION July 16, 1986

MEHORANDUM AND CADER'

(Concerning Motion for Dismissal of Attorneys,Use of Prior Statements to Avoid Calling t

Witesses Additional Witnesses, andNotice of Telephone Conference Call)

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1. Aamodt Motion for Dismissal of Attorneys,

a. Background. On March 14, 1986, the Aamodts filed a " Motion

for Dismissal of Employees' Attorneys," seeking exclusion of all present

counsel for present or fonner employees of Met Ed participating in this

proceedins. The motion also charges improper conduct by Counsel for

GPUN, although it does not seek their exclusion. We spoke to this

motion in part in our Order of March 26, 1986, where we directed the

Aamodts to supplement their motion with an explanation of how existing

arrangements among Counsel and the employees conflict with generally

accepted rules of professional conduct. The Aamodts filed such ai

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0607100110 060716PDR ADOCK 000003200 PDR

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supplement on April 17, 1986 and the respective counsel filed responses

thereafter. We denied the Aamodts' motion in our Order of June 24,

1986, stating that we would provide reasons for that denial at our

earliest opportunity. Those renons follow.

Most of the Aamodts' strictures are directed against Counsel for

j the " Numerous Employees" -- the fims of LeBoeuf, Lamb, Leiby & MacRae

) and Killian & Gephart, working jointly. They represent twenty-four

j present and former employees'at TMI-2 who may have. potential conflicting

interests in this proceeding. We discuss these arrangements first. We

turn then to the arrangements between two individual supervisory,

employees and the separate law firms representing them, Hunton &

Williams and Isham, Lincoln & Beale. As to them, the Aamodts' complaint;

is that they were initially selected by Met Ed or GPU, rather than by4

the employees, and that they have other employment relationships with:

those related companies such that their independence would be

! compromised. Finally, we consider the Aamodts' attack on Counsel for

GPUN which arises out of the TMl-1 Restart " cheating" controversy.

b. Counsel for the Numerous Employees.

(1) The March 14, 1986 Motion. The Aamodts' original motion

includes several charges directed specifically against the LeBoeuf, Lamb

and Killian & Gephart firms or against them and the other firms. The

Aamodts begin with the claim that multiple representation of clients

with potentially conflictinj liiterests is unacceptable per g, a

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positionwehiveaIreadyre'jicted. Motion, p. 2. Memorandum and Order'

of March. 26,' 1986, p. 16.

I The 'amodts next contend that the indemnification arrangementsA,

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existing between GPUN and Met Ed and the various firms are

! " unacceptable". At a' subsequent prehearing conference, however, the

Aamodts withdrew their objection to' indemnification. Tr. 201. As

clarified at the conference, the Aamodts' objection.goes to the manner

of selecting attorneys, not 'their cSmpensation'. According to the

Aamodts, the employees should have been allowed to select their own

attorneys, who should then have been indemnified by Met Ed. Tr. 201.,

Instead, the Aamodts' complain that, Met Ed " enticed" the employees to

accept'''.ounsel of the company's choice "by only agreeing to

indemnification prior to the final disposition of the hearing" if the

firms selectell 'by the company were used. The Aamodts then contend that

these company-selected law fims would not represent the employees

independently because of their " prior connections" with GPU companies or

"cther nuclear accounts." We consider this complex allegation and its

j underpinnings one step at a time.

First', Attachment 2 to the Numerous Employees' filing of February

14, 1986 shows that in 1980 Met Ed sclected the LeBoeuf Lamb and

Killian & Gephart fims ar,d offered their services to affected

employees, subject to an advance indemnification arrangement. The

employees accepted that offer individually in writing. In and of

itself, we me nothing wrong with this arrangement. While Met Ed might

have simply told all the employees to find their own separate attorneys,,

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offering separate indemnity to each, the course they chose in providing

representation initially six years ago was, we believe, reasonable under

the circumstances. As noted in Attachment 2, the two firms together

represent substantial experience and expertise in nuclear and

Pennsylvania law matters. The thrust of the Aamodts' complaint -- that

the fi ms now appearing for the employees represent "other nuclear

interests" -- presumably would bar representation by any finn'

specializing in nuclear regulation, thus depriving the employees of

needed expertise. Beyond that, for us to bar nuclear law firms at this

late stage, after years of representation by those firms, and to direct

each employee to retain a general practitioner of his choice -- in the

absence of the slightest indication that that is what the employees want

-- would be unwarranted and unfair to the employees. Furthermore, it

would delay this belated proceeding for a further indefinite period.

An entirely different matter would be presented if these particular

law firms were so aligned with GPUN - Met Ed interests by other

employment relationships that they could not represent the employees

independently. Which brings us to the second step in the Aamodts'

argument. As to LeBoeuf, Lamb and Killian & Gephart, the Aamodts do not

point to any specific relationship between those firms and the GPUN -

Met Ed companies. Rather, they state, incorrectly, that the firms "did

not report any connections" and that their alleged " failure to provide

an infomation, in view of the Board's interest, is tantamount to an

admission of other financial conflicts." (Emphasis in original.)

Motion, p. 4. Contrary tu these assertions, Met Ed stated in its letter

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of April 18, 1980 to the individual employees (Attachment 2 to the

Numerous. Employees' Response of March 3, 1986) that --

Neither of these firms now represents, or to the best of ourknowledge has ever represented, Met-Ed or its affiliates, norwill they be subject to Company direction. The LeBoeuf firmis outside counsel to the Edison Electric Institute and hasrepresented the Institute (of which Met-Ed is a member) andelectric utility groups including Met-Ed or its affiliates

,' from time to time. We and they do not believe that this givesrise to any conflict or compromises in any way their

, independence in representing you and other Met-Ed past or'present employees.that may be involved in the investigation,but you are, of course, free to make' other arrangements foryour own representation if you desire.

Apart from the quoted reference to the Edison Electric Institute, the

Board is aware that LeBoeuf, Lamb has represented other nuclear

utilities in NRC matters, but we regard those relationships as

irrelevant from a conflict standpoint in this proceeding. We have no

knowledge or reason to believe that Killian & Gephart is substantially

engaged in nuclear practice. Therefore, with regard to other employment

relationships, there is no basis to the Aamodts' claim of GPUN-Met Ed

control of these law firms.

The March 14 Motion goes on to cite "other evidence . . . to show

tha+ the attorneys are representing the company." Motion, p. 5. Fi rst ,

the Aamodts cite an apparently rhetorical statement by former United

States Attorney Queen before the federal district court in the leak rate

prosecution. That hearsay statement, coupled with the Aamodts'

interpretation of what they believe Mr. Dueen must have meant by it, can

scarcely serve as a basis for the drastic step of' excluding attorneys

from this proceeding.

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The Aamodts next seek support for their motion in an unlikely placei by the

-- the Memorandum of Judge Rambo rejecting a similar mot onThe pertinent

Justice Department in the leak rate criminal case.

language is as follows (Memorandum, p. 2):Counsel from the firms representing the employees have statedunequivocally that, if an offer of imunity were made to oneof their clients, that client would be advised to seekThere is undoubtedly a potential conflictseparate counsel.of interest in this multiple representation, but, until thatpotential ripens, judicial intervention would be premature.

The Aamodts infer from this a willingness by the attorneys to " abandon"their clients should ,imunity be provided to some and not others, andsuch " abandonment" is then equated with a lack of dedication to their

But this reasoning stands Judge Rambo'sclients. Motion, p. 6.In context, the Ju'dge was simply acknowledging

statement on its head.flict

the fact that, upon a grant of imunity to some employees, a conAfter all, the

might well arise between those employees and others.

usual purpose of granting imunity to some people is to obtain theirThus, the attorneys' statements with which

testimony against others.

the Aamodts find fault merely reflect a comendable sensitivity to

ethical constraints.The Aamodts go on to state that Counsel for the Numerous Employees

should be seeking the " clear remedy of imunity from prior testimony,"

suggesting that their failure to do so indicates divided loyalties.Suffice it to note that this Board does not have theMotion, p. 7.

power to grant imunity from adverse licensing action, let alone

criminal prosecutions.

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(2) The April 17, 1986 Supplen:ent. This Supplement was filed

in response to the following invitation from the Board:

Should the Aainodts wish to press this motion, they are tosupplement it with an explanation of how, in their view, thepresent arrangements for counsel conflict with the Rules ofProfessional Conduct cited above (or other principlesgenerally accepted by the courts), including specificreference to particulars of those arrangements. We would beparticularly interested in any judicial decisions (we know ofnone) indicating that the counsel arrangements in this inquiryare not acceptable, or an opinion of counsel experienced inquestions of this, nature.

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The Aamodts' Supplement adds nothing of substance to their. original

motion. The Response of the Numerous Employees effectively rebuts the

Supplement and we substantially agree with it. Therefore, extensive

restatement of these documents is unnecessary. We note the following

salient points:

-- The particular facts and circumstances of judicial decisions or

bar association rulings involving attorney disqualification are

important in assessing their relevance to this case. The Aamodts'

references to cases and rulings provide no facts and assertedly *

represent principles so general as to be of little assistance.

-- The Aamodts cite certain " ethical considerations", e.g., EC

5-15, 5-18. Such considerations are merely hortatory; they are not

binding on attorneys. Even assuming that some contravention of an

" ethical consideration" might have occurred here, that alone would not

be a valid basis for dismissal of an attorney.

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undercut, more than support, their motion, e.g., " Dual representation .

. . " (bottom of p. 2); "The mere fact . . ." (bottom of p. 4).

(3) Conclusion. Although the parties have not discussed it,

our consideration of this matter would be incomplete without some'

reference to our experience to date with counsel in this inquiry. From

our perspective, LeBoeuf, Lamb and Killian & Gephart have been

representing their clients vigorously, frequently taking positions

different from GPUN. Although the inquiry is in an early stage, the

nevertheless substantial track record to date contains no indication of

the " company control" thesis advanced by the Aamodts.

In conclusion, this case involves multiple representation where

potential conflicts exist among the Numerous Employees but no actual

conflict has surfaced. Counsel for the Numerous Employees believe that

they can represent their clients without conflict. We accept their

judgment at this juncture. Counsel further state that --

If an actual conflict arises in this proceeding, we willdiscuss it with the affected Dnployees and either withdraw orsecure their consent to our continued representation.

Although the ABA Model Code of Responsibility (DR S-105) appears to

generally authorize " consent to continued representation" when an actual'

conflict arises, the ABA Model Rules (Rule 1.7) indicate that in some

situations consent would not be effective. We will not prejudge a

situation, which may not-arise at all, out of its context . However, we

direct counsel for the Numerous Employees to advise the Board should an.

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actua1 conflict arise and should they wish to continue representatithe employee in question to enable the Board to consider

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such asituation in context.

With that caveat, the motion for dismissal isdenied as to Counsel for the Numerous Employees

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C_ounsel for Mr. Miller and Mr. Herbein.c.

Messrs. Miller and Herbein are represented by the law fi_

rms ofHunton & Williams and Isham, Lincoln & Beale, respectivel,

y. As notedabove, the Aamodts now concede that indemnification of these fir

ms byMet Ed or GPUN for fees and expenses incurred in representing Miller andHerbein is proper.

The only remaining question is whether any otherrepresentation arrangements between those firms and those co

mpanies

might compromise the independence of the attorneys' representatiwhether all such arrangements have been fully disclosed

on and

by Miller and Herbein. and consented to

Counsel for Mr. Herbein states in his response that Isham, Lincoln& Beale "has never been involved with GPU in any matter

other than therepresentation of Mr. Herbein."Response, p. 2, footnote.

We read thisto include not only GPU, but Met Ed and its affiliat de companies, asindicated by the letter of January

17, 1986 attached to the firm'sResponse.

Thus, there are no potentially conflicting relationshipfar as Counsel for Mr. Herbein is concerned.

s so

Mr. Maupin, Counsel for Mr. Miller, made a detailed disclosure of

his and his firm's employment relationships with GPU Corp. and

affiliated companies in an affidavit accompanying his initial response.

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He described an additional relationship on the record at the first

prehearing conference. Tr. 11-12. None of these relationships have_

anything to do with this leak rate proceeding. Furthermore, these

relationships have been disclosed to Mr. Miller and he has consented to

them. Beyond that, the Board notes that these relationships, as

described, do not appear to reflect major pieces of legal business such

that their continuation might exert any influence on a firm's

decision-making in this proceeding, at least in a large, diversified

firm like Hunton & Williams. Finally, as discussed above with respect

to Counsel for the Numerous Employees, the track record of these firms

: in this proceeding reflects independent representation and no suggestion8 .

; of " company control ."

The Aamodts' motion with respect to Counsel for Messrs. Miller and

Herbein is denied.

d. Counsel for GPUN.

The Aamodts' motion does not seek dismissal of Counsel for GPUN.,

Nevertheless, the Aamodts have chosen to level certain charges against

Counsel for GPUN in an effort to show their alleged propensity to

" coach" employee witnesses, including some represented by other counsel.3

These charges should not have been raised in this proceeding.

The charges arise out of the TMI-1 Restart " cheating" proceeding, a'

separate proceeding unrelated to this inquiry. The basic facts are' simple. Late in the hearing, which was being conducted under a

sequestration order, it developed in testimony that counsel for GPUN,

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Mr. Blake, had had a discussion during a hearing recess with two of the

witnesses. An off-the-record discussion ensued among all parties and_

the Special Master, who subsequently concluded that Mr. Blake had acted

in good faith and had not violated the literal terms of the Special

Master's sequestration order. Tr. 26,797; Memorandum and Order of

February 9,1982. The next day, the Aamodts moved for a stay of the

proceeding pending a hearing on the " integrity of the process." Tr.

26,788. The Aamodts alleged that

the integrity'of this proceeding has been defeated byinappropriate contacts between counsel for the licensee andwitnesses in the proceeding, that they have beeninappropriately coached.

The single specific instance of alleged evidence of coaching cited by

the Aamodts or any party was Mr. Blake's contact, discussed above. Tr.

26,791-26,796. Mr. Aamodt, accompanied by Mrs. Aamodt, stated on the

record that

[W]e viewed the incident yesterday as not in itself having theinferences of impropriety that we have attached to it here.The concern was that it appeared to us to indicate that bysome mechanism which we cannot ]ut our finger on, there hasbeen coaching of witnesses and .1ere was an example, andtherefore the question of preparing witnesses is one that wefeel should be looked at very carefully (emphasis added).

Now, four and a half years later in an unrelated proceeding, the

Aamodts claim to have "put their finger on" a " mechanism" for ." coaching

of witnesses" -- based on an alleged conversation "in the bathroom near

the hearing room" between Mrs. Aamodt and Ms. Bonnie Gottlieb, Mr.

Blake's co-counsel, a few days before the Aamodts' motion to stay the

proceeding. The pleading of Counsel for GPUN states that Ms. Gottlieb

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" denies the conversation described in Mrs. Aamodts' affidavit." We are

not in a-position to explore and determine whether the " conversation

described in Mrs. Aamodts' affidavit" or indeed any 1981 conversation

occurred between Mrs. Aamodt and Ms. Gottlieb in a bathroom or

elsewhere. The important point is that such a conversation, if it

supported a claim of impermissible witness " coaching," could and should

have been raised by the Aamodts before the Special Master at the time.'

But it was not. The " coaching" allegation was' addressed before the

Special Master and resolved by him against the Aamodts. Belated

allegations about such a conversation have no place in this proceeding.

e. The Aamodts' Errata Sheet.

On May 3, 1986, the Aamodts submitted an unauthorized pleading

entitled " Errata, Aamodt Supplement, April 17, 1986." In addition to

transmitting certain transcript pages, the " Errata" contains further

allegations of " coaching" at the cheating hearing and some extremely

serious and totally unsubstantiated charges against Counsel for GPUN

(page 1, lines 13-15) and Counsel for the Numerous Employees (page 2,

lines 15-19).

In a letter dated May 6, 1986, Counsel for the Numerous Employees

responded briefly, saying first that the " Errata" pleading "is clearly

untimely and should be rejected for that reason alone." We agree. For

the record, Counsel supplied certain facts bearing on their involvement

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Although, as support for the Aamodts' motion for dismissal we

reject this pleading as untimely, we cannot ignore the fact that, once

again, the Aamodts have engaged in groundless and intemperate attacks

against counsel in this proceeding, despite our direction to refrain

from such attacks in our Memorandum and Order of March 26, 1986, pp.

5-6, note. Yet another groundless and intemperate attack by the Aamodts

had occurred in a later pleading, which we discuss below. This time, we'

wish to make it unmistakably clear that no fur'ther. such attacks will be

tolerated. We are placing the Aamodts on notice that should they again

violate our direction against such attacks, the Board will impose

sanctions against them, including, for a serious violation, the sanction

of permanent exclusion from this proceeding.

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f. The Aamodts' Motion for Reconsideration.

On April 18, 1986, the Aamodts' filed a " Motion for

Reconsideration" asking us, among other things, to withdraw our

determination that they had engaged in an intemperate attack and used

unnecessarily strident language against counsel. The Aamodts claim to

have " combed through our filing of March 19, 1986 to determine what

could have been thought to be an intemperate attack or strident

language." Motion, p. 1.

No such combing was necessary. In order to avoid any possibility

of misunderstanding on that score, we cited the specific pages and lines

of the Aamodts' pleading on which offending language was used. We

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adhere to those determinations. The motion for reconsideration is

frivolous and it is denied.

2. Use of Prior Statements to Avoid Calling Witnesses.

In its pleading of May 9,1986, GPUN proposed that "past statements

be used to avoid the unnecessary appearance of witnesses." GPUN

outlined a specific proposal whereby 15 persons to whom our letter of

December 31, 1985 had been s'ent would be exclu'ded from the proceeding

now, based on prior statements indicating they have little aor nothing to

contribute to the proceeding. In our Memorandum and Order of May 22,

1986, we invited comments from the parties on this proposal.

Counsel for Messrs. Miller and Herbein stated that they had no

objections to the GPUN proposal. Counsel for the Numerous Employees

supported the GPUN proposal, except that they objected to admission of

the prior statements of the 15 persons proposed for exclusion (an issue

we ao not reach at this point).

In their filing of June 6,1986, the Aamodts oppose GPUN's

proposal, basically on the ground of prematurity. They quote the

Board's prior statement that "following Phase I, based on Board review

of the record and suggestions of the parties, the Board will determine

what, if any, additional witnesses are needed in order to resolve tiie

issues." Memorandum and Order of May 22, 1986 at 5. In addition, they

take issue with GPUN's " assessment of the culpability" of 2 of the 15

employees proposed for exclusion.

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We agree with the Aamodts that the GPUN proposal is premature at

this time. Our view is not based on any assessment that there are

specific reascns to believe that the 15 named persons may have been

involved in leak rate falsifications. Indeed, we have not attempted to

review their prior statements in detail. Moreover, we agree with GPUN

that something more than mere suspicion of involvement should be present

as a predicate for Calling a person as a witness. Nevertheless, the

hearing in this case has not' yet taken place. In the course of the

hearing, significant new evidence of leak rate falsification may surface

and persons not now implicated may become so. We therefore believe that

the GPUN proposal, while sound in principle, should await the completion

of Phase I of the hearing.

We agree with GPUN that "this proceeding does and should have as

one of its objectives to exculpate individuals whose names have arisen

in connection with the subject matter of falsified leak rate testing at

TMI-2." Comments, p. 3. We stress in that connection, however, that

our letter of December 31, 1986, was not intended to accuse or cast

suspicion of wrongful conduct on any of its recipients. Those 120

recipients ccmprised a ccmprehensive list of all persons who, by virtue

of their positions, might at least have had pertinent knowledge of leak

rate matters. Nevertheless, after Phase I of the bearing is complete,

we think it would be appropriate to make individual determinations of

exoneration as warranted by the record.

GPUN's proposal and the Aamodts' Response have led to a verbal

battle between them. The fault lies with the Aamodts. The pertinent

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pleadings are the GPUN Comments of June 16, 1986 and the Aamodts'

Response of July 3,1986. In our comments that follow, we will assume

knowledge of these pleadings and their context, including the Aamodts'

growing record of reckless and abusive language in this case. See pp.

12-13, above. As we read these June 16 and July 3,1986 pleadings in

context, the following points emerge:

a. The Aamodts take umbrage at the GPUN phrase " reckless and

derogatory assertions" as applied to the Aamodts' statements cbout 2 of

the 15 persons proposed by GPUN for exclusion from the proceeding. We

agree that GPUN's quoted phrase reflects an overreaction to those

particular Aamodt statements, but only when viewed in isolation.

b. Counsel for GPUN go on to request that we

admonish the parties (and particularly the Aamodts based ontheir performance to date) not to misperceive their obligationto argue their positions in this proceeding as a license toabuse the rights of individuals or assault their characterabsent a sound basis in fact. Comments, p. 4.

As we made clear in our earlier discussion (pp.12-13 above), that is

exactly what the Aamodts have been doing in this case. Despite a clear

Board warning, they continue to engage in groundless personal attacks in

their July 3,1986 pleading. See p. 3, line 4.

c. The Aamodts decry "GPUN's attack on us" as " vicious and

unwarranted." Response, p. 3. Viewed in the full context of the

Aamodts' repeated transgressions, GPUN's comments in its June 16, 1986

pleading were fully justified.

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3. Additional Witnesses.

The Board notes that two individuals, Martin V. Cooper and Dennis~

I. Olson, were, in the opinion of the 01 and NRR investigators, involved

in leak rate test manipulation at TMI-2 in 1978-79. The investigators'

analyses are summarized at pp. 18-20 and 22-25 of the OI Report and pp.

5, 20 of Enclosure 2 of the NRR Report. Other pertinent materials*

accompany these Reports.,

Our letter of December 31, 1985 inviting participation in this

proceeding was sent to Messrs. Cooper and Olson, but neither chose to

petition to intervene. We made it clear to each recipient of that

letter, however, that "should you decide not to participate as a party,

you may nevertheless be subpoenaed as a witness." In the present

circumstances, the Board finds reasonable cause to issue subpoenas to

Messrs. Cooper and Olson to appear and testify concerning their

participation in leak rate testing at TMI-2. Subpoenas will issue

shortly.

The Board's decision to subpoena Messrs. Cooper and Olson does not

imply that no further subpoenas will issue based upon the various

reports and materials now in the record.

4. Telephone Conference Call.

The Board is scheduling a telephone conference call with all

parties for Thursday morning, July 31, 1986 at 10 a.m. The principal

purpose of the call will be to discuss the status of matters leading to

the evidentiary hearing and particularly whether a prehearingi

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conference, tentatively scheduled for August 21, 1986, is necessary or

desirable. The call will be on the record. This is the only notice of !

this call you will receive.

THE PRESIDING BOARD

Q: -u &JaysL.Kelley,ChairmaftADMINISTRATIVE JUDGE

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AL~J. 82 |JGlenn 0. Bright yADMINISTRATIVE JUDGE

.2dm Y/JerryR.#llin~e*RDMINISTRATIVE JUDGE

Bethesda, Maryland

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