--··- --· l ' I I fJj yg At V I CII Y'r eAcr tet rl t I ' If N 6'2- ' i INQUIRY IN 0 YOF THE T TIM THE E ECUTIVE IRECTOR OR OPERATIONS l FBI Agent Names or Other Identifying Information Must be Deleted Prior to Public Release VOLUME INTERVIEWS fEBRUARY 1978 DECLASSIFIED UNDER AUTHORITY OF THE INTERAGENCY SECURITY CLASSIFICATION APPEALS PANEL E O 13526 SECTION 5 3 b 3 NATIONAL SECURITY I N FOi fV1A TION ISCAP APPEAL NO 2012-004 document no 2 DECLASSIFICATION DATE March 18 2014 Una utho rl ze d Disclosu SulljeCt i1i'itln'tll s ·onotlons OIFifiCE O·F THE GENERAL COUNSEL OFFICE OF INSPECTO AUDITOR U St NUCLEAR REGULATORY COMMOSSRON '-·-·- - - -- · ·- ·- -- - ---- I ---- -- ---------- -- - - --- ---- -- --- - - - ------- -- -- ---- - ---- - -------- - ---- ----· - -·-- -- ---- -----­ i INQUIRY INTO THE TESTIMONY OF THE EXECUTIVE DIRECTOR FOR OPERATIONS VOLUME III - INTERVIEWS TABLE OF tQNTENTS Name Clifford V Smith Jr Robert F Burnett Gerald Page Roger J Mattson John G Davis William A Anders former Chairman Kenneth R Chapman Peter L Strauss Bryan Eagle C W Reamer Marcus A Rowden former Chairman Hugh L Thompson Jr George W McCorkle Robert A Erickson Paul F Goldberg Ben Huberman L D Y Ong Kenneth S Pedersen · Bernard J Snyder Joseph M Hendrie Chairman Frederick L Crane Thomas F Carter Jr Thomas C Thayer Joseph J Fouchard William J Dircks Richard T Kennedy Commissioner Lee V Gossick Carl Builder Edward Mason former Commissioner Carl Duckett Victor Gilinsky Col1lllissioner James H Conran 7 11 17 27 29 '40 43 48 53 60 65 70 72 75 78 82 106 109 li3 117 121 122 135 137 145 159 164 176 180 199 EXECUTIVE CORRESPONDENCE REPORT OF INTERVIEW Dr Clifford Smith Director Office of Nuclear 1aterial Safety and · Safeguards v as interviewed on January 12 1978 by Jerome Nelson William Ryan and James Fitzgerald in his office in the Willste Building Silver Spring Maryland Smith advised that he joined NRC on ·November 22 1976 and was employed as the Director of the Fuel Cycle Division In this capacity he was not involved in safeguards matters On either April 7 or 9 1977 he became Acting Director of the office when Kenneth Chapman left and shortly thereafter in April assumed the position of Director · Smith became involved in working on the MUF release package NRC had received a _Freedom of Information Request from a reporter by the name of Burnham for t1UF information At or about the same time the Nationa1 Security Council had approved the release of this type of information with the limitation that any data released had to be at least six months old Smith advised that in preparing the text of the MUF report and particularly the working on no evidence Bob Burnett dealt with the Department of Energy and it was decided to say that there was no evidence of theft and diversion because none of them had any evidence _According to Smith he had no evidence and of course he was not involved in the CIA briefing He said that Gerry Page agreed with him and urnett A draft of the report was prepared in early June as well as about 40 questions and answers covering the subject matter of the report Fred Crane now in the Test and Evaluation Branch was the lead man in preparing the report A meeting with the Commissioners was scheduled for June 3 1977 with Mr Crane as speaker The main thrust of the presentation was the difficulties in coordination between Department of Energy DOE and NRC The r-J c ' - desire for a common format was discussed and NMSS indicated how they interided to compromise The questions and answers were briefly mentioned Smith advised that the heat was on to get the data tog ther for release At the time according to Smith he was looking forward more to the press briefing which was scheduled to follow the release of the MUF report since he was among those who would personally give this briefing Smith advised that there was pressure to get the information out because 1 the British were about to release their report 2 a corrmitment had been made to Congressman Dingell to make the information available to his committee and 3 Burnham had requested the information under the Freedom of Information Act He said that in June DOE and NRC had agreed on a release date and announced the planned date to the world This was done with the blessing of the Commissioners 11 1 ' Before preparing the June draft according to Smith he had a meeting '-lith the National Security Council · Spe' ifically he met ttith Jean Tuckerman who was an aide to Mr Brezinski Smith recalled that Jim Partlow DO NOT WRITE ON THIS COVE AS JT IS INTENDE D FOR RE-USE RETURN IT WITH THE FJLE COPIES TO ORIGINATING OFFICE I 'i iI 2 I accompanied him to the meeting The council expressed concern to him that the report of NRC would be compatible with the report issued by ERDA DOE - Smith recalled that there was another meeting at about this time with James Schlesinger Both Giller and Starbird were with him They briefed Schlesinger and Smith nd Smit said that the e was brief discussion about the statement in the draft about no evidence The Department of Energy was firm that they had no evidence bf any theft or diversion According to Smith when the group first walked in the room Schlesinger placed his finger on the page ofthedraft which contained the no evidence statement and as ked Starbird are you sure 11 can we say this and Starbird replied I am and we can '' When the briefing was over the NRC representatives left but Starbird and Giller remained since Schlesinger had indicated that he wished to talk with them on other matters Smith was asked if he told Lee Gossick of this meeting and he replied that he didn't think so but couldn't remember · r - l Smith said that the no evidence question was a Constant thing while 11 -the report was being prepared Smith was asked what he cons ide the · ­ word evidence to mean and he re 1ed that 't meant hard -t tee m ca ev1 ence It di na Lroe an _s ecuJ atj Qo Mr Smi t said that he never rece' a me · · ners about the revi ous ly circu a e questions and answers Smith advised that about a week before the August briefing of the Commissioners a time was set for the report to go to the printers so that it would be ready in time for the press briefing The date had been set because in addition Congressman Dingell had been promised that he would receive a copy of the report 72 hours before its release They were under the gun Bob Burnett got the OK from the Office of Policy Evaluation At the same time Burnett received a telephone call from Cookie Ong Ong told Burnett that Commissioner Gilinsky ' 'as in Europe but that he apparently had a problem with the report Bu nett asked Ong what the problem was and Ong replied that he did not know Smith advised that Burnett told Ong we have to go '' and that he had had the material since June The alternative would have been to cancel out and reneg on NRC's commitments to the NSC Dingell and the DOE Smith stated that on August 1 a copy of the report was delivered to Congressman Dingell's staff On August 2 at the briefing of the Commission Smith and Burnett went over the format of the report Commissioner Gilinsky right away wanted to know what the rush was and whether it was too late to make changes Smith and Burnett pointed out to Commissioner Gilinsky that his office had the draft report for some time and they had not been advised tha t ne wanted a ny changes They also pointed out the tight time scnedule they were on Smith was asked if Lee Gossick was there and he advised tnat Gossick was there He was asked if Gossick said anything but it was Smith's recollection that Gossick said nothing J I I I i ·I 3 Smith advised that Commissioner Gilinsky indicated that he had a problem with the no evidence statement in the report Smith pointed out to Gil i nsky that the statement had been in the Q and A's submitted with the draft and · he had received no objection to it Smith stated at the time that he had no evidence and told Gil in sky that he Smith assumed that if there was such evidence that Gilinsky or the other Cotrnlissioners would have given theinforlilation to him Evidence was not defined Smith was asked if Gilinsky made any reply and Smith advised that he Gilinsky winced but said nothing hen Burnett pointed out to Commissioner Gilinsky that the NRC report ·covered the time period from 1968 forward Gilinsky seemed satisfied with the report Smith said that it was obvious that Gilinsky was bothered Smith said that when the briefing was over Commissioner Gilinsky huddled with Commissioner Kennedy Either Gilinsky or Kennedy called Gossick over to them Gossick then came over to Smith and Burnett and told them that the Commissioners wanted to meet with them Smith and eurnett then followed Gossick into a small room adjacent to the meeting room where both Commissioners were waiting · Smith recalled that while the briefing was in· progress and the matter of no evidence was being discussed Commissioner Kennedy stated I don't have any evidence Smith was asked what happened at the meeting in the small room He said that Commissioner Gilinsky did the talking Gilinsky advised them about a briefing by the CIA and said that when the CIA briefed them it did appear that suspicious things had gone on but there was nothing definite Gilinsky pointed out that apparently the intelligence community was divided over the question of whether or not there had been a diversion Gilinsky said that there was circumstantial evidence and specifically mentioned the movements of Shapiro Gilinsky told Smith and Burnett that they should be cautious on how they talk of lack of evidence and told them that they Smith and Burnett should have the CIA briefing The tone was If I were you I would be cautious about what I said Smith stated that he and Burnett knew no more after the meeting than they knew before He learned nothing new and that it was his personal feeling at that time that there sti11 is no evidence of a theft or dive sion He got the impression that in light of the MUF and some suspicious circumstances some intelligence people were saying the material could have gone to Israel Smith recalled that at one point in the meeting Lee Gossick was pulled out of tile room Smith was asked whether after th meeting he discussed it with Gossick and he replied that hedid not Smith was asked whetnerhe had ever received any guidance from the Commission on the no evi dence' question and he replied that he had not 11 1 4 Smith stated that after the meeting it was his view that there was no problem with the no evidence statement from 1968 and beyond but that one had to be cautious with the time before 1968 With regard to Commissioner Kennedy it was Smith's view that he did not believe there was any evidence er· Smith was asked his opinion of the testimony by Lee Gossick before the ---Udall and Dingell Committees on the 11 nO evidence matter Smith said t · · that he would probably have made the same statement and that he would make it today Smith was of the view that you have to efine evidence ' According to Smith evidence is not speculation or the possibility t - something happened but it means hard evidence now Smith recalled that in the August 2 briefing of the Commission that there was some discussion of using the term definitive evidence not concl sive evidence When this was discussed both he and Burnett pointed out to Gilinsky that to use this term you would have to be prepared to say something else about what you were talking about namely what evidence you had that was not definitive It would mean that you do have some evidence Smith was asked whether Gilinsky said anything in reply and he answered that he did not Smith said that this did not lead him to believe there was any evidence Mr Smith said there was no question that Gilinsky had a problem with evidence that he was happy with the statement for the period from 1968 on and that he cautioned them It was clear he had problems 11 and it appeared to Smith they were based on circumstantial speculation Smith advised that sometime after the release of the MUF report and perhaps before Gossick's testimony before the Udall Committee Lee Gossick showed him a copy of a memorandum prepared by Bill Reamer which was a synopsis of information that Bryan Eagle had furnished _the Conran Task Force According to Smith it was a bunch of suspicions After reading the memorandum he gave it to Burnett It was then given back to Lee Gossick It said that at the time of the NUMEC matter in 1966 Shapi o was close with high officials of the Israeli government It related to Shapiro's trips and movements and his advocacy of the State of Israel Smith stated that it was nothing much more than what Gilinsky said in the room and I felt this just confirmed that they did not have anything He considered that I did not say anything and that there was no need for them to have the briefing it was the sort of thing that a speculation could be made that because of Shapiro's movements connections and advocacy of an Israeli state he might have sent material Later Gossick asked Smith what he thought of the memorandum and according to Smith he told Gossick Hell I don't see anything there at all It was Smith's recollection that Gossick replied I agree Smith was asked if at the time of the press briefing he was aware of the fact that Gerry Page had seen a two or three page document at the CIA Smith replied that at that time he was not aware of the CIA document 4 5 Smith recalled that at the press briefing a reporter asked whether there was a CIA report and that Giller Starbird Burnett and he had answered that they did not know of any Smith did not recall if Page said anything A day or so later Page told him of the document he had seen at the CIA but it was not a report but several pieces of paper Smith told Page that it did not sound like a report to him When Page told him what was in the document according to Smith it sounded like the same thing Gilinsky had told him and Burnett in the meeting in the small room Smith advised it was the same speculation Smith noted with regard to the problem of MUF in general that if a new plant were built it would still have a 1UF problem because it is an integral part of the chemical process Smith was asked whether at the August briefing of the Commissioners or the small session following it he recalled Lee Gossick saying anything and he did not recall Smith again repeated that no guidance has been received from the Corrnnission on the no evidence matter Smith was asked what he meant by guidance and he replied A paper to the staff Smith was asked whether he recalled talking to Gossick about his testimony before the Congressional committees He replied that he-may have talked to him before his testimony before the Dinge11 Committee but he did not recall talking to him before his testimony before the Udall Committee His office helped with the testimony but he has no recollection with dealing with no evidence According to Smith sometime after Commissioner Gilinsky wrote his letter of December 12 1977 Gossick told him that at the time of the CIA briefing Gossick had asked if he should attend and was told that he did not need to know the information to do his job Smith said that after Congressman Udall wrote his letter Gossick was very upset and that he wanted to demand a meeting with Udall because he had nothing to hide or gain after 31 years of military service Gossick then asked the staff to pull together everything where the staff had used the no evidence phrase According to Smith Gossick at this time either told him Smith or he had asked Gossick how he recalled the meeting on August 2 in the small room Gossick replied that there was nothing much to it and that he Smith had told Gossick that was the way he remembered it Smith said he did not recall the exact words Smith was asked 1 e reca1led any Commission policy on the use of the no evidence phrase He replied that there was _ _ _y- CQ J l-i no n polic_x and that a hell of a lot of information flowed out saying no eVidence Smith feels that this whole issue need not have arisen if the NRC had given clear guidance in the question It was almost SOP to use the statement 6 Smith advised that within the last two weeks he had received more than one telephone call from Henry Myers of the Udall staff In one of the telephone conversations Myers impressed upon him the seriousness in which the matter of Gossick•s testimony was being taken on the Hill Smith said Myers told him that it was a matter of candor and that NRC is not trusted Myers wondered why it would take McTiernan four weeks to compiete an investigation Accor ding to Smith yers said that 20 or some people could be interviewed in two or three days _ Smith said that Myers told him that it was his feeling that Hendrie wished that it would blow over Smith also spoke with Chairman Hendrie six or seven times while Hendrie was preparing a response to Representative Udall Smith has also mentioned to Mr Gossick the meetings of August 2 1977 Smith told Gossick that he did not remember based on what was said by Gilinsky that there was any evidence I was surprised that Mr Gilinsky referred to the smal l session in his December 12 1977 letter '-----• I According to Smith if Gossick said the no evidence statement 'las Commission policy he would assume it was because it was SOP to use that terminology t The first time he ever heard of any problem with the phrase was August 2 -- J REPORT OF INTERVIEW Mr Robert F Burnett Director Division of Safeguards NMSS was i-nterviewed by Jerome Ne1son Wi 11 i am Ryan and James Fi tzgera 1d on January 12 1978 in his office in the Willste Suilding Silver Spring Maryland Burnett was advised of the purpose of the interview and the fact that the result of the inter iew would be reported to the Commisston and interested Congressional Committees Burnett advised that he had joined NRC as Difector Division of Safe uards on June 13 1977 Initially he set up a schedule of briefings by all his Branch Chiefs and Assistant Directors in which they were given an opportunity to inform him of the current activities in the branch and any problems they were encountering Burnett stated that he believed that at this time the Con an Task Force had completed its work into the allegations by James Conran and and the -Division of Safeguards was assigned the responsibility of developing an action plan to implement the recommendations of the Task Force Accordingly he assigned the review and evaluation of the Task Force Report to appropriite member of his staff who prepared a draft action plan which was forwarded to the Commission for approval which it received At about the same time the public release of MUF data information was in preparation Burnett advised that his staff had the primary responsibility for gathering the data and preparing the report Fred Crane of Burnett's division was the Project Manager on the preparation of the MUF report At about the same time according to Burnett he asked James Conran to give him a personal briefing on his concerns including Apollo Conran met with Burnett for several hours Burnett stated that Conran showed him several documents which he read and then returned to Conran Burnett stated that one of the primary problems in the preparation of the MUF report was to obtain the concurrence of NRC and the Department of Energy on the reporting format The reporting format of the t oJO agencies was different in that NRC and the predecessor agency ERDA had different reporting periods · Burnett stated that before the briefing of the Commission on the MUF report that perhaps as many as two earlier drafts were forwarded to the Commission and interested offices The Office of Policy Evaluation raised certain problems with the draft and they were acted upon by his Division To the best of his knowledge there were no comments on the no evidence statement on page 2 ofthe MUF release I I I I i I 2 Burnett stated that on about the Wednesday or Thursday of the week before the AUgust 2 briefing ofthe Commission he received a telephone · call from Cookie Ong Mr Ong told him that Commissioner Gilinsky · had a problem with the eport Ong did not know what the problem was Burnett advised Ong that there was a fixed date for release of the report to the printers and that the conterns should be identified prior to that date When Burnett did not receive any corru i1ents from Commissioner Gilinskis office by that date the report was forwarcled •according to the schedule to the printers Burnett pointed out that August 4 1977 was the date for release of the report to the public Piior to public release NRC had agreed to give a copy of the MliF report to Congressman Dingell's office on August 1 72 hours before public release Burnett advised that prior to the public release the State Governors of those states where installations were located were also briefed on the report Burnett was asked who made the decision to release the report to the printers and he did not recall who made the decision He was asked whether lee Gossick was involved in the decision and he replied that to the best of his knowledge 11 Gossick was not Burnett said that at the August 2 briefing for the Commission that Commissioners Kennedy and Gilinsky were present In addition he Smith Gossick and other staff members were present Burnett advised that Fred Crane of his staff handled the presentation According to Burnett's recollection the briefing did not deal primarily with the substance of the MUF report but was more about the scheduling of events surrounding the release of the report Burnett said that Commissioner Gilinsky expressed a concern about the statement on page 2 of the report that stated that there was uno evidence of theft or diversion His concern was about the absoluteness of the statement Burnett recal1ed that the use of certain modifiers was discussed perhaps such as no direct evidence ''no physical evidence no conclusive evidence According to Burnett he and Smith advised Commissioner Gilinsky that the use of the no evidence statement had been the subject of negotiation with the Department of Energy and that NRC had accepted ERDA use of that phrase Burnett said that he pointed out to Commissioner Gilinsky that the MUF report as indicated on page 1 of the report related only to the time period from January 1 1968 to September 30 1976 -lith this observation Commissioner Gilinsky agreed that the MUF report could be released Burnett was asked if Lee Gossick as present at the August 2 briefing and whether he had said anything Burnett recalled that Gossick was present but did not recall him saying anythi g Burnett said that it vas his view that the Apollo incident in 1966 was outside the scope of the report B 3 Burnett recalled Smith telling the Commission that if they had any evidence of theft or diversion it should be brought to his Smith's attention Burnett said that at this time he had been told that there had been a bf1efing of the Commission by the CIA in 1976 from his discussions with James Conran but that he was n6t familiar with the contents of that briefing Burnett advised that he could not recall hearing it from anyone during the August 2 MUF briefing Burnett said that when the MUF briefing of the Commission on August 2 was completed he and Smith were informed by Lee Gossick that Commissioners Kennedy and Gilinsky wished to talk with them Burnett Smith and Gossick went into a small outer office Kennedy and Gilinsky were present Burnett recalled that other persons kept sticking their heads in to coordinate matters with Gossick and Kennedy or others In this meeting Mr Gilinsky suggested to Smith and Burnett that they should have the CIA briefing Gilinsky mentioned that as a result of the CIA briefing he was aware that high officials in the intelligence community had different opinions on the possibility of diversion of material Burnett recalled that the information was not conclusive and there was no certainty on what had happened Gilinsky advised Smith Burnett and Gossick that the CIA briefing was not conclusive Burnett sa i d that he believed that Gilinsky was referring about Apollo Burnett could not remember that Commissioner Gilinsky discussed the substance of the CIA briefing but indicated that there were a lot of things that couldn't be answered It was his opinion that Commissioner Gilinsky was still concerned about the absoluteness of the no evidence statement It was Burnett's impression that the main purpose of the meeting in the outer office was to arrange the CIA briefing for Mr Smith and Burnett not to give guidance or caution Burnett was asked whether Gilinsky had said in the briefing that the CIA had said diversions had occurred and he did not recall any such statement It was Burnett's recollection that Gilinsky never used that direct a statement According to Burnett the first draft of the MUF report did not have the no evidence statement in it The statement was originated with the ERDA staff in coordinating the report with the Department of Energy Fred Crane worked it into the NRC report Burnett said the question was referred to the National Security Council by ERDA and ERDA informed NRC that it got a favorable answer from NSC on the 11 nO evidence usage According to Burnett the agreement with ERDA for releasing the MUF information was that if any question were asked about inventory differences before 1968 they were to be referred to ERDA I I 4 ·I I Burnett commented that after he came to NRC in June Q and A's were forwarded to the Commission · to support the draft of the MUF release package Another' set of Q and A's were prepared for the other hearings Burnett said that befor the August · 4 release of the MUF report and before the August 2 briefing of the Commission there were other briefings He recalled one whiCh took place in the Executive Office Building at which Huberman was present Apollo · was not mentioned at the MUF meeting Two days later there was a joint NRC-ERDA briefing of James Schlesinger by himself and Smith of NRC and Lyon and Starbird of ERDA Burnett did not recall any discussion of the no vid nce'' statement except he did recall Schesinger asking Lyon Harvey Gan we say that to which Lyon replied yes According to Burnett th matter was then dropped and he and Smith left It was Burnett's recollection that the people from ERDA remained in Schlesinger's office Burnett was asked if during this meeting Apollo was entioned and he replied that to his best recollection it was not Burnett stated that the word -ever on page 2 of the MUF report got by him'' since the report was limited to the period since 1968 Burnett was asked whether he had conversations with Lee Gossick ·about the no evidence statement and he advised that he had a meeting · with Gossick recently in Gossick's office in which Gossick asked him for his opinion on the no evidence statement and that at Gossick's request his office assembled materials for Gossick which set out where similar statements were made in the past It was Burnett's recollection that Jerry Page came up with a package Burnett was asked whether since he was employed by NRC he had seen any staff guidance of the ''no evidence matter and he replied that he was not aware of any such guidance Burnett was asked whether he had talked with Commissioner Gilinsky or Chairman Hendrie about this matter and he replied that he had not talked to either of them 10 11 I REPORT OF INTERVIEW Ralph G Page Deputy Director Division of Safeguards was interviewed on January 5 1978 by William E Ryan and James Fitzgerald in his office in the Willste Building He was advised that the interview related to certain testimony given by Lee V Gossick before Congressional committees in particular testimony by Gossick that there is no evidence of the theft or diversion of any significant amounts of special nuclear material Page was advised that Chairman Hendrie had directed that an inquiry be made into the accuracy of the Gossick testimony Page was also advised that based upon our inquiry a report would be submitted to the Commission and to the interested members of Congress Page was asked to describe the history of the safeguards program in AEC NRC Page advised that he has been dealing with safeguards matters · since 1966 while with the AEC In those days safeguards matters were not put into licensing requirements but rather were provided for by contractual provisions There were such provisions for NUMEC Apollo in early 1966 Page advised that in approximately March 1966 he prepared a memorandum tli'a t pointed out that the AEC could no longer rely as they had in the past on the intrinsic value of special nuclear material and the heavy penalties for theft in the Atomic Energy Act to safeguard special nuclear material As a result AEC began to develop regulations that provided an accounting procedure for special nuclear material Page advised that the AEC regulations had no provisions for safeguards This occurred in 1966 and the regulations were issued in 1967 Page said that in 1966 an Ad Hoc Advisory Panel on Safeguards was formed under the leadership of Dr Ralph Lumb This panel visited several sites throughout the United States that were involved with special nuclear material including NUMEC Apollo Page said that the Lu b panel had met Or Zolman Shapiro President of NUMEC and questioned him on safeguards matters The panel particularly discussed with Shapiro the causes for the past inventory differences at NUMEC Shapiro took the position that the reason for the difference was the high quality control of the material being processed at NUMEC which required in the processing that the material be recycled several times Page stated that as a result of the AEC investigation of the large inventory difference at NUMEC in 1965 66 there was no suggestion of a diversion of material nor was it even alluded to by the investigating team Page stated that he still questions whether there was any diversion of material at NUMEC 11 2 In 1967 according to Page when regulations were issued a safeguards organization as o posed to a nuclear materials mariagement office was first set up in AEC Two offices were established One was the Office of Safeguards and Materials Management under the General Manager The second was the Division of Nuclear Materials Safeguards under the Director of Regulation This latter office had to be established from scratch Page was assigned to this office in September 1967 In 1970 full responsibility for licensee safeguards was shifted to the Division of Nuclear Materials Safeguards Until that time responsibility for safeguards policy for AEC-wide programs was under the General Manager's safeguards organization Page stated that from 1967 to 1970 We felt our way along on material control and accounting safeguards Page stated that there was a need to tighten the program The Division of Nuclear Material Safeguards had the responsibility for licensing fuel cycle facilities They advised these facilities of safeguards requirements The plan was to require safeguards at all facilities that possessed five kilograms or more of special nuclear material According to Page the first license amendment was issued in 1969 but this amendment related only to material control and accounting In the case of NUMEC in 1966 Page advised that the AEC inquiry disclosed that the company had failed to close a material balance by taking a complete inventory for a number of years The company allowed losses to accumulate from one contract to another Quantities of special nuclear material were assumed to be present in the scrap pile which when finally measured was found to have l ss material than estimated Page stated that in 1967 and 1968 AEC started to work on regulations for physical security of special nuclear material The first were issued in 1969 and covered only protection of material in transit The regula­ tions required a tra king of material from one place to another In 1970 the first regulations controlling safeguards at a fixed site were issued These required barriers or fences including the use of barbed wire They did not require armed guards but did require a manned security force or an intrusion alarm Extensive improvements in physical pro­ tection were made beginning in 1971 or 1972 when AEC incorporated new security requirements as conditions of 1icensees l hen these were issued the AEC received much criticism from the industry Specifically the industry felt the AEC had violated the provisions of the Administrative Procedure Act in issuing the new requirements as license conditions rather than issuing them as regulations 12 3 Page advised that to his recollection in the case of the Apollo facility there was always physical security as such was required as an AEC contract requirement since the site handled classified material It was not like it is today but they did have armed guards although there were no routine searches of people entering or leaving the plant It was Page's view that in the early days special nuclear material could have been removed from the plant without detection Page stated that in 1968 or 1969 the General Accounting Office did a review on a number of AEC plants including the one at Apollo Page further stated that the annual inventory difference at Apollo was for several years about the same as it was in the pre-1966 pe iod He pointed out that in 1975 and 1976 an IE Task Force went to Apollo and discovered several new loss streams that had not been considered previously Examples were the incinerator a coolant system and the fact that the high enriched uranium area and the low enriched area utilized common sumps for floor drainage He pointed out that these same kind of problems existed long before 1976 when they were identified Page stated that We have learned a lot but another inventory difference could occur tomorrow Page advised that on the basis of his experience he believes materials have been diverted ·'·-· -- - ' th t n o Page referred to Jim Lovett who was employed by AEC and who left to join NUMEC at Apollo Page said that he had known Lovett for years professionally and had last seen him in Vienna in November 1977 Page said that Lovett expressed the view to him that no · diversion of materials had occurred at Apollo Page advised that since 1975 he has had little direct involvement with NUMEC on licensing cases in view of his position as Deputy Director His last visit to the Apollo site was made during 1976 Page stated that one day James Conran came into his office and expressed a concern about the 1965 66 inventory difference at NUMEC and the possible diversion of materials Page asked for information about Conran•s concern but was given nothing Page discussed Conran•s visit with Director Chapman who advised him that he was aware of Conran's concerns but believed that they were not justified Page stated that Conran prepared a draft overview report concerning the NRC safeguards program in 1976 consisting of three volumes This document was reviewed by a peer group who concluded that Conran took extreme positions on safeguards issues which were not supported by the facts 13 Withheld from public release under statutory authority of the Federal Bureau of Investigati on FOIA 5 USC §552 b 7 C • • 4 Page stated that during the week of May 3 1976 he was questioned by two FBI agents about the inventory difference at NUMEC The agents werel I The agents inquired if there was a summary document that dealt with the inventory differences at Ap oll o Page briefed the agents on the matter and used an appendix to the Conran paper for this purpose Page read to the agents from the Conran appendix The agents theri asked for copy of the entire Conran draft report Page checked with Chapman who gave his approval The agents gave Page a classified mailing address and Page mailed the draft report to the FBI Page stated that he has no record of the delivery of the report and that the agents asked him not to discuss that he had given them the report Page recalled that he had called Agent Conrad to determine if he had received the report and Conrad advised that he had Page stated that in early 1976 at about the time Chairman Anders was leaving Chapman called him in and told him to get with certain ERDA people and meet with the CIA Bob Tharp was the ERDA contact Page was advised by Chapman that Anders had spoken with the President and information was desired to determine whether ERDA NRC or CIA believed that material had been diverted from NUMEC According to Page he went to CIA Headquarters and met Tharp who ·arrived before he did They met with two persons one of whom he believes was on the Israeli desk at CIA Someone brought in some freshly typed pages · of paper There were two three or four pages of paper There was no heading Page was asked if he noticed whether there was any classification on the papers He did not recall any classification on the papers He did not recall an classification but observed it rna have been secret I 25Xl E 0 13526 According to Page the papers he saw at the CIA had no information about the diversion of special nuclear material In substance there was no information in the papers that there was any diversion of material or any diversion to Israel 14 ' I 1 5 Page said that he and Tharp prepared a handwritten summary of the CIA document which was typed for them by a secretary There were three copies of the summary CIA retained one ERDA retained one and the other was brought back from the meeting by him Page stated that when he returned from the CIA visit he did not follow through with the matter because of a previous commitment but George McCorkle did He recalled that McCorkle discussed the matter with Chapman and received a call from Tharp and McDowell at ERDA about certain minor changes in the summary McCorkle Tharp and McDowell met and thereafter Chapman asked McCorkle to brief the Commission on the document According to Page McCorkle briefed Commissioners Rowden and Kennedy He then briefed Chairman Anders Page did not recall if Commissioner Gilinsky was briefed When the Commissioners expressed no problem ·with the summary McCorkle told ERDA that they could send their copy of the summary to the White House Page was asked if he had discussed the matter of the summary with the FBI and he did not recall discussing it Page was asked about the letter dated July 30 1976 to Scowcroft He stated that Bob Erickson and some people from ERDA prepared the letter They were not instructed specifically to discuss NUMEC The letter was intended to discuss the status of safeguards According to Page the letter was prepared in response to an oral request of the National Security Council Page suspected that the request for the report related to the other summary document prepared by him with ERDA and the CIA Page stated that numerous letters had been written on the question of theft and diversion and the staff had always answered the question by saying that there was no evidence Page advised that he was present at the news conference which was held just prior to the release by ERDA and NRC of information on inventory differences He was asked to sit on the stage with Clifford Smith and Bob Burnett Both Smith and Burnett were new and wanted Page available to help in answering questions When a reporter asked whether there was any CIA report on t e Apollo inventory difference in 1966 the answer was given that no one was aware of any report Page wondered at the time what answer he would give if he was asked that question but the dicussion just drifted off and he was not asked to respond 15 6 Page stated that he was present at the August 1976 hearings before Congressman Dingell at which Lee Gossick testified Page stated thaLhe w u1d 9 aY Lt - -t hin 9_ Gossick said on the question of theft-· or d1vers1on Page referred to the Q and A's prepared in Secy letter 76­ 268 in connection with this hearing which said essentially the same thing According to Page no questions were raised by the Commission ese guestions and proposed answers Page stated that · he was unaware of an AEC NRC ERDA or CIA official believing that a theft or diversion of special nuclear material might have occurred until questioned by Cormnissioner Gil insky after r Gossick testified Page stated It was like a bolt from the blue Page was asked in conclusion whether Chapman had ever said anything to him about · the diversion of special nuclear material Page replied that if anything was said it did not filter down to the staff Page said he has not seen anything that indicates that a diversion occurred Referring to the Q and A's that were sent to Representative Udall on August 19 1977 Page said he received a call from Hugh Thompson who at the time was working as an assistant to Mr Gossick Mr Thompson said that after the document had been sent to Udall someone had proposed new wording for the answer to Question 12 which would have limited statements to post-1968 ·Page recommended against sending a clarifying letter because it would merely stimulate a follow-on question of what evidence do you have about diversions prior to 1968 and I would have to say that we have none 16 - REPORT OF INTERVIa Roger Mattson was interviewed in his office in the Phillips Building Bethesda Maryland on January 4 1978 by Thomas McTiernan and Wi 11 i am Ryan OIA and James Fitzgera 1d OGC He was advi sed of the purpose of the interview and the fact that a summary of interview will be made available to the Congress Mr Mattson had previously been interviewed by Jerome Nelson and Mr Fitzgerald of OGC on December 20 1977 on the same topic Roger Mattson started with a background observation--he understands that for years there has been speculation and rumor about a possible diversion of material from Apollo Many people in the staff had heard the speculation He recalled that ·in 1974 Senator Ribicoff had asked AEC spokesmen Dixy Lee Ray and Ed Giller about Apollo during hearings on the Energy Reorganization Act and their answers concentrated on known measurement uncertainties at that facility Then Conran in the course of his work heard about some sensitive information at ERDA concerning Apollo Conran tried to get the information but ERDA declined saying it was classified and Conran hadn't a need to know Conran's technical reports and his April 4 1977 letter to the Commission included questions about the Apollo information Mattson chaired a Task Force appointed by the Commission to address Conran's concerns Barry Rich of ERDA told the Task Force about the sensitive information held by ERDA as described in references 83 and 102 of the Task Force report of April 29 1977 The Task Force posed written questions to the Commission on Apollo attachment to reference 102 The Task Force proceeded in this formal manner because Gossick McTiernan Rich Eagle and Rowden had ascribed a highly sensitive nature to the Apollo information The Commission agreed with the Ta sk Force that it did not need the sensitive information to complete the work it had been assigned The Commission agreed instead t tell the Task Force about the process for receiving and acting on information provided by CIA and ERDA That is the Commission agreed to answer the questions posed by the Task Force in the attachment to reference 102 On Saturday April 23 1977 Eagle and Strauss briefed the Task Force responding for the Commission to its questions and describing how the Commission had received and acted on the Apollo information That meeting is recorded in reference 102 of the Task Force report A chronology of events concerning reference 102 is attached It was constructed from NRC records and logs and Mattson's memory Eagle started the briefing by reading a statement which he said had been approved by the Commissioners The statement was quoted by the Task Force in the first paragraph of reference 102 Its essence was that the CIA ERDA briefings raised serious questions and provided no conclusive 2 answers Strauss also indicated the Commission had stopped making no evidence of diversion statements after the CIA ERDA briefings Yet as the Task Force noted at page 4-15 of its report the Co11111ission had not given any new direction in this regard to the staff after the CIA ERDA briefings That is the Commission did not direct the staff to stop saying there was no evidence of diversion One of the recommendations of the Task Force report was that the Corrunission should direct the staff to qualify such statements Mattson recalls that the Task Force attributed the need for qualifiers to the impossibility of defending absolute statements of no diversion because of uncertainties in measurement technolo gy To substantitate his recollection Mattson cited the statements at the middle of page 4-12 of the Task Force report and Task Force recommendation number 3 at page 3-4 11 11 The Task Force asked the Commission through Eagle and Strauss what was done with the information gained in the CIA ERDA briefings The response was that individual Commissioners went to people in the Executive Branch to confirm the correctness of the information Eagle said that the Commissioners all made contacts See reference 102 for Eagle's char­ acterization of these activities Based on the Eagle and Strauss briefing Mattson said he personally concluded in the course of the Task Force deliberations that the Commis­ sioners and top management had probably been told in the CIA ERDA briefings that there was no conclusive evidence of a diversion from Apollo in the 1960s After the meeting with Strauss and Eagle Mattson sp6ke to Gossick and asked him to confirm the list of people at the CIA ERDA briefings He did and Mattson recalls Gossick mentioned he had a travel or other schedule conflict at the time of the CIA briefing and did not recall why he was not at the ERDA briefing On questioning Mattson said he was not aware of an Anders' decision to exclude Gossick on need to know grounds Mattson noted an inconsistency between statements by Builder and those of Strauss and Eagle regarding the CIA ERDA briefings One of the things Builder said in Task Force reference 91 was essentially that the staff received no direction from the Commission to do anything as a result of the CIA ERDA briefings The position of Eagle and Strauss was that senior staff people did not need direction on such matters The Task Force tried to rectify this inconsistency according to Mattson by recommending that the Commission direct the staff to use qualifiers on the no evidence'' of diversion type of statement just as th_a Lommission ad apparen ly_bee doing since the briefin s in early 1976 - Again an 1mportant d1st1nct1on as Mattson recalls 1s that the Task e J apparently thought that Strauss and Eagle meant that the Commission's reasons for qualification of such statements had more to do with un­ certainties in measurement technology than with evidence of diversion 18 c • • ­· 3 Fore of material from Apollo Mattson cited page 4-14 of the Task report to substantiate this distinction That page described the importance and relevance to safeguards that the Task Force would have attached to knowledge of evidence of diversion from Apollo 1 1 · - -- Mattson recalls that McTiernan told the Task Force on April 7 1977 that it needn't get into Apollo since the FBI had already addressed that issue It is not clear to Mattson what FBI investigation McTiernan was referring to but he believes McTiernan was advising the Task Forte that criminal prosecution aspects of Apollo had been addressed by others Reference 46 of the Task Force report says that the FBI declined to do an investigation of Apollo on February 25 1966 Reference 102 on the other hand refers to Department of Justice reports and investigations of Apollo known to the Commissioners Mattson recalls that the Task Force was told nothing further about FBI investigations of Apollo In the May 3 1977 briefing of the Commission by the Task Force the Commission overruled the Task Force recommendation that its report was unclassified and ordered that the report be sent to the National Security Council for classification review apparently due to the sensitivity of the Apollo information 1attson recalls that the Commission did not invite Gossi k or any NRC staff reporting to the EDO except the Task Force members to attend the May 3 briefing Mattson and Rowden met with Udall and Dr Myers on May 25 1977 to discuss the Task Force report Mattson recalls that Rowden advised Congressman Udall that if he needed more information on Apollo than that given to the Task Force and described in its report and references he should ask the National Security Council Mattson recalls that reference 102 was supplied to Dr Myers about July 20 1977 Gossick before his Udall testimony on July 29 1977 had access to the Task Force report and reference 102 Mattson recalls telling Gossick shortly before the testimony that the subcommittee probably had more interest in Apollo than in Conran Mattson recalled after reference to his desk calendar for 1977 that he attended meetings in Gossick's office on July 13 20 and 28 for the purpose of reviewing Gossick's testimony being prepared by others for the Udall hearing of July 29 Mattson also recalls asking Gossick in that time period if he had read reference 102 and Gossick replied No should I Mattson recorrrnended 19 4 that either Gossick should read 102 or talk to John Davis who attended the CIA briefing Mattson was not asked and did not volunteer to tell Gossick what to say about Apollo in his testimony Mattson expressed to us his view that the EDO should have been briefed about the CIA ERDA briefings by the Commissioners before testifying Mattson also said in response to questions that he would have insisted on being informed of the full content and specifics of the CIA ERDA briefings and Commission follow-up before answering questions on Apollo which went beyond the narrow scope of the Task Force inquiry into the process by which the information was handled At one of Gossick's weekly staff meetingsin late July or early August 1977 Mattson recalls hearing a discussion by Gossick and others on the impending release of MUF data and the potential questions on evidence of diversion The thrust of the discussion was how to properly qualify answers to the questions--no significant quantities etc Mattson recalls that a number of office and division directors were present and probably included Smith Burnett Volgenau Gossick and Fouchard He recalls that the sentiment expressed in that discussion was that ERDA should take responsibility for questions about material unaccounted for at Apo 11 o in the 1960s therefore there was felt to be a need for the temporal qualification of NRC responses to questions on evidence of diversion Mattson realized in late summer or early fall of 1977 following newspaper accounts and the exchange of letters between Udall and Hendrie that some people ' 'Jere making a distinction between no hard evidence and nO evidence In light of his present understanding of this distinction Mattson does not believe today that the information the Task Force was given could be reasonably interpreted to imply the existence of conclusive or hard evidence of diversion at Apollo To the contrary the Task Force was told there were serious questions and no conclusive answers 11 11 20 11 • • Chronology of Events Concerning Reference 102 of Conran Task Force Report Conran Task Force convened by Commission 4 7177 Mattson appointed authorized classifier by Gossick 4 7 77 Mattson advised by Division of Security to mark classified material treat as classified pending systematic review of all material generated by task force 4 8 77 Mattson delivers formal questions from task force to Rowden on Apollo attachment to Reference 102 4 18 77 Task Force met with Eagle and Strauss 4 23 77 Draft of Reference 102 marked treat as Secret NSI and sent to Eagle for comment 4 25 77 Reference 102 signed in ·fi na1 by Reamer one copy to Task Force Files another to ·Eagle marked treat as Secret NSI 4 27 77 Task Force Report completed and delivered to Commission 4 29 77 Commission briefed by task force on its report report ordered td be ''treated as classified and distribution limited to Gossick and Smith only 5 3 77 Task Force report referred by Eagle for Commission to NSC and ERDA for classificiation review and marked treat as confidential NSI 5 4 77 NSC and ERDA advised NRC that Task Force report not classified report placed in NRC public document room and given wide internal distribution by Gossick approx 5 25 77 Rowden and Mattson met with Udall and Myers to discuss task force report references offered for review 5 25 77 FOIA request by Kranish for task force references 5 25 77 Fialka FOIA request for 102 and other task force references 6 8 77 21 '· ·' -2­ Task force classified references including 102 transferred to NRC Division of Security for declassification review pursuant to FOIA requests 6 10 77 Reference 102 withheld from FOIA releases to Kranish by Mattson on the basis that it was pending classification review 6 10' 24' 30 77 Speth request for 102 and other task force references 6 13 77 Memorandum Brady to Grimsley saying reference 102 should be classified Secret NSI 7 14 77 Brady letter to ERDA requesting classification of reference 83 r view 7 15 77 Myers requests· access to all references 7 77 Task force classified ref rences including 102 transferred to Dambly by Division of Security 7 18 77 Task force classified references minus 102 returned by Dambly to Division of Security 7 18 77 Reference 102 transferred from Dambly to Gossick 7 18 77 Rehm asked t4attson to complete cl assifi cation review of reference 102 7 18 77 Mattson classified reference 102 as 7 19 77 11 Secret NSI II Gossick memo to Gilinsky and Kennedy requesting their views on propriety of making reference 102 available to Myers 7 19 77 Gilinsky memo to Gossick advising that Myers should see reference 102 requested CIA information package questioned irregularity of delay in formal classification date on reference 102 7 19 77 Fay delivered reference 102 to Myers for review and returned it to NRC uncopied Task force classified references other than 102 forwarded to other agencies CIA NSC ERDA FBI etc for declassification coordination 7 19 or 20 77 7 21 and 7 26 77 -3­ Moss letter requests Gossick to provide all documents relative to Conran and task force 7 22 77 ERDA letter to Brady correcting reference 83 concerning nature of ERDA fi 1es on Apol 1o 8 3 77 Gossick letter to Kranish including denial of reference 102 on FOIA appeal • 8 4 77 Rich internal ERDA memo correcting information in reference 83 8 4 77 Chilk letter to CEQ declining to provide reference 102 as Speth requested on 6 13 highly sensitive classified information being coordinated by NRC with NSC and ERDA 8 12 77 Fowler saw all classified task force references at NRC but did not request copy of 102 approx 8 26 77 Greene saw all classified task force references at NRC but did not request copy of 102 approx 8 29 77 Brady letter to CIA requesting permission to release task force references on Apollo to GAO 8 29 77 Weiss saw all classified task force references at NRC approx 9 29 77 Weiss received copy of 102 at his request CIA letter replying to Brady letter of 8 29 77 saying GAO fully briefed on Apollo NUMEC and release of NRC documents not necessary and Congressman Moss should not have them either because they contain misrepresen­ tation of CIA positJon 10 77 10 14 77 Beck saw reference 102 at NRC but did not request copy 11 16 77 Fay delivered copy of reference 102 to Myers 12 14 77 Mattson asked by Rehm to review basis for classification of reference 102 12 15 77 Brady letter to CIA requesting declassification review of reference 102 12 16 77 23 -4­ CIA letter to Brady raising no objection to release of reference 102 12 22 77 Brady letter to DOE requesting declassification review of reference 102 12 23 77 DOE letter to Brady raising no objection to release of reference 102 · 12 27 77 Brady to Mattson memo confirming that DOE basis for original classification of reference 102 no longer existed and CIA had no objection to its release 12 27 77 Mattson declassified reference 102 and notified Commission through the EDO Copy placed in NRC public document room with other task force references 12 27 77 DOE to Brady letter correcting paragraph number 2 of reference 102 - ERDA briefing of NRC in early 1976 was not Top Secret NSI or compartmented intelligence information 1 3 78 Dingell letter to Hendrie included discussion of reference 102 l 9 78 Gilinsky letter to Dingell clarifying a point in 1 9 78 Dingell letter with regard to reference 102 and attaching copies of Gossick and Gilinsky memos of 7 19 77 see above 1 16 78 r 24 -5­ R Beck Representing u S Congressman ·udall R Brady Director Division of Security NRC S Chilk Secretary · of the Commission NRC D Dambly Staff member Office of Executive Legal Director NRC J Dingell U S Congressman B Eagle Executive Assistant to the Chairman NRC E Fay Staff member Office of Congressional Affairs NRC J Fialka Reporter Washington Star Newspaper c v Fowler Representative of GAO Gilinsky Commissioner NRC L Gossick Executive Director for Operations NRC T Greene Representing U S Congressman Moss D Grimsley Staff member Division of Rules Records NRC J Hendrie Chairman NRC · R Kennedy Commissioner NRC A Kranish Trends Publishing Incorporated R Mattson Director Division of Systems Safety and Chairman of Conran Task Force NRC J U S Congressman r oss H• Myers Assistant to U S Congressman Udall w Staff member Office of General Counsel and member of Conran Task Force NRC Reamer Assistant to Executive Director for Operations NRC T Rehm 25 • -6­ M Rowden Former Chairman NRC c Smith Director Office of Nuclear Material Safety and Safeguards NRC G Speth Former Acting Chairman Council on Environmental Quality P Strauss Former General Counsel NRC M Udall U S Congressman L Weiss Representing U S Senator Glenn 26 REPORT OF INTERVIEW John Davis Deputy Director of the Office of Inspection and Enforcement was interviewed in his office on January 4 1978 at 9 00a m by Thomas J McTiernan and William Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel At the outset Mr Davis was advised of the purpose of the inquiry - to examine charges made and questions raised about EDO's testimony before House Subcommittees in July and August 1977 regarding lack of evidence of diversion of special nuclear material He was also advised that his statement would be made available to Congress Mr Davis first heard of the NUMEC Apollo investigation by the AEC in the 1960's while he was Director of Region II of the AEC He held that position from 1963 to 1973 While not personally involved in that i nvestigation as he recalls its conc lusion it was that the high inven­ ory discrepancy Material Unaccounted For or MUF experienced by that facility was a result of a carry-over of losses from several prior contracts which added up to large discrepancy at time of discovery He further indicated that about a month ago Mr Norman Haller of the Office of Inspection and Enforcement had found a copy of information dealing with this matter · Mr Davis was questioned about the ERDA CIA briefing he attended in February 1976 At that time he was Acting Director ·of the Office of Inspection and Enforcement He prefaced his discussion of the briefing by advising that his memory of that matter was not very clear as it occurred just before the onset of a serious illness He recalls that he got a phone call from someone that a briefing was scheduled and he is unsure he knew the topic prior to his arrival He recalls only one briefing attended by Commissioners Anders Gilinsky and Kennedy and Mr Kenneth Chapman and Carl Builder of the Office of Nuclear Material Safety and Safeguards If others were present they were few in number He believes Chairman Anders opened the briefing by describing the subject as very sensitive '' and that it was a matter of interest However he does not recall that the precise nature of the interest was delineated Harvey Lyon of ERDA spoke first To the best of his recollection Mr Lyon's presentation was confined to the circumstances surrounding the inventory discrepancy--that over several years the facility had a number of AEC contracts that the discrepancies were carried over from contract to contract and when they were finally audited a large discre- · pancy was revealed for which NUMEC ultimately paid over $1 million Mr Lyon talked from a folder but not in the manner of a formal prepared presentation His portion of the briefing took about 15 minutes and Mr Davis does not recall him offering to turn over any documents Mr Davis has _no recollection that any mention was made by Mr Lyon of a conclusion of diversion of the material from NUMEC Some questions were asked by those being briefed but it was not a grilling 27 2 I 25Xl E 0 13526 Mr Davis recalls that the CIA portion of the briefing was longer than Mr Lyon's and that the CIA was asked more questions He does not recall the substance of the questions He believes the CIA representative spoke from n tes but did not give a formal prepared briefing When the second speaker concluded he asked for questions and then the briefing terminated He recalls no wrap-up or summarization at the end From the standpoint of the Office of Inspection and Enforcement Mr Davis was interested in whether anyone had any facts about material moving out of the plant and if so how this was accomplished A possible diversion pathway would be relevant to future inspection efforts However Mr Davis recalls no such specific information being imparted at thg briefing The information was inconclusive At its conclusion he determined that no action was called for He did not sit _down and discuss the matter with his staff Mr Davis kept no notes of this briefing After the briefing he did not discuss the subject with anyone until the more recent interest in the matter When Mr Ernst Volgenau came on as Director of the Office of Inspection and Enforcement it did not occur to Mr Davis to brief him of the matter Nor did he have any discussions with Mr Lee V Gossick about the briefing until after publicity associated with a radio interview of Ken Chapman Only after the recent renewed interest in the matter did he discuss it with Commissioner Kennedy and Messrs Gossick and Volge au - If after the February 1976 briefing he was asked if he was aware of · Li any evidence that significant quantities of SNM had been diverted from -J NUMEC he would respond that hL k_n __QfJl Q__fE t s wlJich clearly established that any significant quantities of material had been diverted 9ut of the l ----- p1ant Mr Davis concluded the briefing was not the high point of my career REPORT OF INTERVIEW Wi11iam A Anders was interviewed on January 27 1 1978 at his General Electric · Company office in San Jose California by William Ryan and James Fitzgera l d Mr Anders was advised of the subject of the interview specifically the t estimony of Lee V Gossick before the Udall Committee and the Dinge11 · Committee that there was no evidence of a theft or diversion of a significant amount of special nuclear material and the position taken by Commissioner '· to Congressman Dingell that this did not comport wi th Gilinsky in a letter his view I • NRC View Change in Statements Anders stated that he probably would not have made so categorical or flat a_statement as made by Gossick in his testimony before the Committees because of a relatively gradual change in the Commission 1 S sensitivity concerning the issue of the possibility of diversion - from the less qualified and flat no evidence of diversionu statements made by the old AEC to generally more cautious statements This change was based on a gradual assimilation of background on safeguards including a number of meetings with other agencies and NRC staff The CIA briefing in February 1976 was one such meeting Anders recalled that at one time shortly before he left the NRC he received a letter for signature that contained a flat statement that there was no evidence of theft or diversion of material This letter had been cleared through the offices of the other Commissioners as was the general practice Before signing the letter he remembered that he talked to Commissioner Gilinsky whose· office had signed off on the text and pointed out to him that the statement in the 29 -2­ letter on theft and diversion did not appear to represent his ·Gilinsky•s view Gilinsky agreed with him and the statement in the letter was changed Anders observed that he gradually adopt d a more cautious position on thfs • question ti Jan what had been the position of the former Atomic Energy Corrrnission Anders also recalled a·n incident in approximately APril 1976 when in course of turning over the Chairmanship to Marcus Rowd n he reminded Rowden that the Commission should be careful not to make flat statements on the question of theft or diversion and that Rowden agreed with him Safeguards Concerns Anders said that from its inception in 1975 the NRC decided to take a hard look at safeguards because of the serious nature of the subject increa ing public interest iri this area the MUF situation e g the incident which · occurred at Erwin Tennessee and the fact that the Congress was very interested as expressed by their discussions surrounding the Energy Reorgani­ zation Act which formed the NRC According to Anders • Jim Conran•s concerns were not an important contributing factor and that his activities tended to be somewhat counter productive and disruptive to the Commission•s orderly and vigorous approach to safeguards Views on Diversion Anders said that his personal view for some time has been that there has been no significant diversion Anders explained that this view was not significantl changed by the CIA briefing which contained mostly suspicions and suppositions by the briefer and for reasons described be1ow appeared of somewhat dubious credibility 30 -3­ Anders said that his general impression was that the NUMEC plant at Apollo because of its age could have had a process loss of the magnitude of the unaccounted-for material and that this impression was supported by reports of more recent process losses at that facility February 1976 CIA Briefing Briefer Anders was asked about the 1976 'briefing by the CIA Anders said that the briefing was given by Carl Duckett of the CIA • Arrangements Anders was asked how the briefing by the CIA was set up He did not reca11 but speculated that it may have been set up by either CommissionerKennedy who pursuant to an informal understanding among the Commissioners nonnally took the lead responsibility on safeguards matters or Commissioner Gilinsky who a lso played a substantial role in such matters Other possibilities were Mr Chapman or Mr Eagle or himself although it was not Anders' general prac­ tice to set up meetings Classification Anders refused to discuss the substance of the CIA briefing unless he was · given what he considered to be proper clearance to do so from the CIA He stated that at the briefing Mr Duckett had emphasized the extreme sensitivity of the information He was advised that the interviewers had been informed verbally by CIA that there was no objection on their part to discussing the substance of the briefing as long as no disclosure revealed sources and methods of information but he was aware that Adm Turner had refused to declassify the subject matter Anders stated that even though much of the · -4­ information prov1ded at the briefing had already appeared in the press he was a stickler on classification and national security matters and that he would only discuss the substance of he briefing if proper declassifitatiorr or need to know procedures were followed An oral statement by the interviewers was not considered sufficient by him Nature of Information And rs said that his recollection of the details of the bri fing He said that there were things said at the briefing that made it apart from what was said about NUMEC-Apollo was dim nsitive He characterized some of the infonnation as speculation and not bearing directly on safeguards £§ se His impression was that some of the information was so speculative provoca­ tive and or sensitive that it should not have been given to this group Sty e Anders said that the style or ambience of the presentation raised questions in his mind as to accuracy and objectivity of the information presented Anders had known Duckett for some time and had had high regard for his competence and objectivity But at this briefing he observed that Duckett seemed very nervous and somewhat disorganized and that a considerable amount of sweat was on his brow I I Anders said that at the time he wondered if Duckett might be on some I sort of personal crusade or if he might be trying to run his own foreign policy nders said that he took what Duckett said with a grain of salt and carne out of the CIA briefing only with suspicions - both on the possibility of diversion and the objectivity of the briefing -- ' 32 · I I -5­ CIA File Anders was asked if he recalled a package of papers in the possession of Duckett at the CIA briefing and he did not recall it nor did he recall that any documents were offered to the NRC participants for inspection Anders said that he could not imagine CIA offering its file on the matter to the NRC and observed that we would not want it since if we needed it we could go back to the CIA and get it Anders was asked about the statement attributed to him that NRC had no proper storage facilities for the material allegedly offered to NRC by CIA He did not recall any such statement but replied that NRC in view of its charter and operation would have no need for their own storage facilities for such material Difference of Opinion Anders was asked whether Duckett in the CIA briefing told the group that there was a split in the intelligence community on whether there had been a theft or diversion of material He did not recall such a statement but Anders did recall that ERDA in another briefing had advised the NRC that ERDA and the FBI did not agree with Duckett It is Anders• present general impression that there was such a difference of opinion between CIA Duckett on the one hand and AEC ERDA and the FBI on the other hand ' Anders• Reaction Because of Duckett's demeanor the nature of some of his statements the possible foreign policy implications of such statements whether true o false and the importance of the safeguards question to the NRC and White House Anders thought th White House should know about the briefing and therefore be in a position to take whatever action the Executive Branch with its investigative authorities and capability thought was warranted 33 I I I I lI -6- i As a result Anders alerted Mr James Connor Secretary to the Cabinet at the White House · Anders said that he fe1t he could not tell Connor what had been said in the briefing because of classification considerations but recommended that White House personnel have the briefing Anders said that he had no further communications with the White House on the subject since he handed over the Chairmanship to Rowden shortly thereafter but he had recently read a New York Times report of a statement made by Mr Jody Powell about the Apo lo NUMEC investigation that seemed to support Anders' view that no diver­ sion had occurred ' Effect on Policy Anders was asked whether as a result of the CIA briefing there was any revision in the policy of NRC on the question of the theft of diversion of material He replied that the Commissioners had not articulated a ·specific policy on this subject at that time and that the CIA briefing did not cause the Commissioners to formulate a specific policy It was a period of transi tion and increasing sensitivity in this area and not one of a sudden shift of attitude In his Anders' view he had put the issue into the right hands since the White House Executive Branch now knew of the matter and the people who were involved with safeguards in NRC Chapman and mation and would act accordingly Builder had the infor­ He Anders left the NRC and went to Norway as U S Ambassador at the end of April 1976 Gossick's Role Absence from CIA Briefing Anders was asked why Lee Gossick was not involved in the CIA briefing Anders could not remember explicitly whether or not Gossick had been present 34 i -7- I at the briefing or if not specifically why he had not been invited stated that Gossick's absence might be explained by a combination of Anders factor including a strong request by the briefer that the size of the audience be kept to a bare minimum due to the sensitivity of the subject matter and a general practice by Anders of trying to balance the massive workload on · senior staff aggravated by their having to travel f equently between their offices in Bethesda and the Commissioner's Offices in the District of Columbia Gossick was physically located in Bethesda and not at H Street and because of this and his heavy workload Gossick would on occasion ask not to be required ' to attend certain meetings Anders said that when he determined that Gosstck did not have to be at a meeting he Anders would not require him to be there Anders stated that it was important to understand that the Energy Reorganiza­ tion Act of 1974 permitted direct communication between the Commissioners and the Directors of the major staff functions -­ without the irect participation of the Executive Director Anders' view was that this was a bad management · arrangement and that he Anders generally operated through the Executive Director Anders said that the question of whether there should be a so-called weak or strong Executive Director had not been resolved at that time Anders recalled that Ken Chapman the Director of Safeguards worked to maintain direct contact with the Commission on safeguards problems It was Anders' view that this tended to keep Gossick directly out of and not fully informed on all safeguards matters Also based on his recollection of the general situation Anders stated that it seemed credible to him that Gossick could have interpreted the lack of an 35 ·I 'I j I -8- I invitation to the briefing as a sign that he did not have a need to know 11 or a charter for action in this area even though that really was not the intent Secret Seven Anders further explained that it was necessary to set up procedures for determining who had a need to know certain very sensitive information such as that relating to nuclear weapon fabrication details Commissioner Gilinsky expressed the view to Anders that NRC should treat this as an i portant matter At Gilinsky's suggestion according to Anders a small group s etimes referred to as the 11 Secret seven was formed to have access to such i nfonnati on · Anders was asked why Gossick was not a member of this group Anders replied that Gossick generally dealt with nuclear safety issues and administrative problems and in this case did not have a need to know O scussions with Anders Anders was asked whether after the CIA briefing he had ever discuss d the substance of that briefing with Gossick or the matter of theft or diversion Anders stated that he did not recall any such conversation and that since he left the NRC Chairmanship a few months after the briefing he had no knowledge of what Gossick was or was not told subsequently ·' Gossick's Sensitivity By way of explanation Anders said based on his recollection of the general situation that it seemed quite possible that Gossick was not in a position to become as sensitive on safeguards questions at the time as were the Commission and key safeguards staff leaders According to Anders a lack of sensitivity on Gossick's part could well have been due to his lack of direct 36 I • -9­ involvement in safeguards matters his absen e focus on other NRC business and the fact tha from the CIA briefing his the Commission•s view on the · question of past diversions was in a state of transition and that no formal policy had been adopted lli seemed quite conceivable to Anders that the · gradual shift in the Commission•s attitude may not have been apparent to someone such as Gossick who was not directly involved and that Gossick may not have been sensitive to the issue in discussions he may have had with representatives of ERDA or others Gossick•s Character Anders stated that based on his working relationship with Gossick he con­ sidered Gossick to have the highest integrity and great devotion to public service Anders observed that he could not imagine Gossick lying to anyone Anders said that Gossick although not g nerally involved in sensitive and subtle policy issues was nonetheless quite an intelligent hard-working person who got things done and that his performance as Executive Director had been excellent Other Questions McCorkle Briefing Anders was asked if he recalled being briefed by George McCorkle of NRC on a sensitive matter just prior to his leaving the Commission and he did not recall the briefing Myers• Question Anders was asked a question posed by Henry Myers of the staff of the Udall Committee as to how he viewed Lee Gossick's knowledge of the question relating 3·7 -10­ to theft or diversion of material Anders commented that the question impTies that Gossick was sensitive to the issue and as stated above Anders believes that Gossick may well not have been sensitive to this issue letter to JCAE Anders was asked about an NRC le ter dated April 2 1976 to the Joint Committee on Atomic Energy which epclosed numerous questions and answers one -of which reflected that the NRC was of the view that there -had been no theft · or diversiori of material Anders replied that in his opinion JCAE Staff Director Murphy knew what was going on and may have had a briefing from Duckett himself Anders further replied that the AEC and NRC received hundreds of questions from Murphy many redundant and had developed over the years what was essentially a standard set of replies Anders said that on these questions he left it mainly to staff and particular Commissioners to screen and review the responses and could well have not focused on the particular question since NRC staff and Commissioners or their offices ·had signed off on the response as was the practice for all correspondence of the Commission Anders said that he has no present recollection of the letter or the question and the answer given Anders· added that he would probably not answer the question on the possibility of theft or diversion the same way now or then had he focused on it Anders• Recent Communications Anders was asked to whom he had spoken in recent months about this matter He advised that after he read about the issue in the nuclear trade press he had called former NRC Chairman Rowden who was a Commissioner and attended the CIA briefing with Anders in D C to find out what had happened at the i I I I 'I -11­ I hearings and what was going on as the debate developed He also had mentioned the issue very briefly to ex-Commissioner Mason after Mason had visited the Anders for dinner in their home in California Anders said that it was his · policy not to initiate contacts with the NRC and therefore he had' not dis­ cussed the issue wjth Commissioners Kennedy and Gilinsky Executive Director Gossick or any other person in attenda nce at the subject meeting lie recalled · having been contacted by NRC Genetal Counsel Jerome Nelson Director of Office of Inspection McTiernan and Udall committee staffer Henry Meyers seeking his recollection of the CIA meeting I 39 I REPORT OF INTERVIEW Kenneth Chapman was interviewed on January 6 1978 at 1 00 p m in his office at the National Aeronautics and Space Adm-i nistration by Thomas McTiernan and William Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel Mr Chapman was informed of the purpose of the interview and the fact that the interview summary would be made available to the interview summary would be made available to the Congress Mr Chapman was Director Office of Nuc 1ear lateri a1 Safety and Safeguards from 1975 until April 1976 He said he first became aware of NUMEC Apollo in the spring of 1975 in a conversation with t r Seymour Smiley of his staff While he does not recall the specifics of the conversation it planted the seed of interest A short while later one Commissioner asked Mr Chapman about the inventory discrepancies at NUMEC in the 1960's and he therefore spoke to Harvey Lyon ERDA who told him ERDA was reopening the matter Thereafter the NUMEC matter began to come up In the fall of 1975 James Conran told him that ERDA was keeping information on the subject from him Mr Conran Mr Chapman called Edward Giller of ERDA to inquire about Mr Conran's allegation Mr Giller said that Mr Conran was pressing for NUMEC information and did not apparently need the NUMEC infor­ mation and his requests had been turned down However if Mr Chapman insisted on the information being made available he would give it to him Mr Chapman declined this offer In October or November 1975 Mr Conran came back to him and also began to go to the Commissioners with his allegations which included claims about NUMEC material having been diverted Because of these claims Chairman Anders asked Mr Chapman to arrange a briefing on NUMEC Mr Chapman recalls that he went to Mr Giller to arrange for a briefing on what Harvey Lyon was doing and everything they had in their files relative to NUMEC Either Chairman Anders or Mr Giller suggested that the CIA also brief the Commissioners 1r Chapman believes he set up both briefings through Giller ERDA and CIA but Commissioner Kennedy may have arranged the CIA briefing Mr Chapman said that there was great concern about who should attend the briefings Previously for very sensitive information involving bomb construction details only seven people were cleared at NRC -- the five Commissioners Mr Chapman and Mr Carl Builder According to Mr Chapman the attendance at the briefing was supposed to be limited to these seven individuals When he arrived at the briefing he was surprised to see others present Mr Chapman had proposed that only the seven persons pre­ viously mentioned attend tk Lee V Gossick was not included by him There was no overt action to exclude Mr Gossick but he was not among the seven 40 2 cleared for sensitive information It should be noted however that Mr Chapman normally did not go through Mr Gossick in his dealings with the Commission on sensitive safeguards matters This was based on his i terpretation of the Energy Reorganization Act of 1974 which established the position of Director of Nuclear Material Safety and Safeguards and provides that he may report directly to the Commission as provided in section 209 As he recalls the briefing was set up as one meeting He does not recall separate briefings by the CIA and ERDA although this could have been the case There were two presentations -- one by Harvey Lyon of ERDA and one by Carl Duckett of the CIA Mr Chapman declined to discuss the details of the briefings because of their classification However he did state that Mr Lyon asserted that he had covered a11 the information that was in ERDA files Mr Lyon said there was an inventory discrepancy and that it had been paid for He did not speak to diversion When he left the briefing Mr Chapman felt that either Mr Lyon did not know the full story or was not being candid Mr Lyon did have a package of materials with him apparently to demonstrate that ERDA was being completely open These were offered but Chairman Anders refused them saying NRC had insufficient secure storage facilities Mr Chapman does not recall the CIA making any similar offer of documents nor does he recall Mr Duckett bringing any documents to the briefing I I No information was given that any I 25Xl E 0 13526 material had left the NUMEC plant in an improper fashion Mr Chapman thinks someone asked directly whether there was any evidence of diversion and Mr Duckett evaded it The briefing was inconclusive since Mr Duckett did not say material was diverted he did not say that it was not Mr Duckett said something to the effect I do not have evidence that there was a diversion and I do not have evidence that there was not a diversion However the President of the company Mr Shapiro had the opportunity to divert He said there was not enough evidence to prosecute but Mr Chapman got the impression that Mr D ckett was not happy with this result In response to questions 6f the interviewer Mr Chapman indicated some things that were not mentioned at the briefing neither Mr Helms nor the President were mentioned there was no mention of the classification level of the briefing other than it had sensitivity details printed in later Fialka articles were not given i e monitors encoded phones etc and there was no mention of the FBI There was no wrap-up to the briefing Notes were not taken 41 • • 3 After the briefing Chairman Anders took his own steps Mr Chapman did not know Mr Anders went to the White House Mr Chapman and Mr Builder did discuss the briefing's relevance to their tasks Essentially their position was based on what they had heard if there had been a diversion they thought it must have been done under sanction by U S Government officials at a very high level and under that circumstance it would not be relevant to the development of a safeguards security system Further if diversion had not occurred the matter was not relevant They therefore felt there was no need to follow the subject on their own Mr Chapman knew of no follow-up conversations with regard to diversion It was not talked about and no policy flowed from the briefing Before the briefing as far as Mr Chapman knows there were no NRC policy statements on the matter of diversion Similarly after the briefing there was no specific policy adopted The Commission always said it had no evidence of diversion After the briefing 1r Chapman considers that he had no evidence of diversion If the subject of conclusive or hard evidence was ever discussed he was not a party to it Later when the Conran allegations were coming to the fore Mr Chapman did mention NUMEC to Mr Gossick Specifically he told him that the briefing had not proved anything conclusively one way or the other In his opinion Mr Gossick's statement to Congress that the Commission had looked into the matter and found no evidence of diversion was too strong Mr Gossick should have followed that statement up with a phrase nor do we have evidence that it was not diverted On a related matter Mr Chapman had no recollection of Chairman Anders requesting an assignment be taken on by Mr Ralph G Page of Mr Chapman's staff 1nvolving a meeting with ERDA and CIA personnel on NUMEC in the latter part of April 1976 However if such a request was made Mr Chapman believes he could have gone to Mr Page with such an assignment1 since Mr Buili ler was at ERDA working on the Builder Report A2 - - · REPORT OF INTERVIEW Peter L Strauss was interviewed by Jerome Nelson and James Fitzgerald of the Office of the General Counsel and William Ryan of the Office of Inspector and Auditor at 10 30 a m on January 17 1978 at the offices of the Administrative Conference 2120 L Street N W Washington ·D C Mr Strauss was advised of the purpose of the inquiry and the fact that the summary of the interview would be made available to the Congress Because it was anticipated that a portion of the interview might involve discussion of classified information Mr Strauss was provided with a copy of a document signed by Chairman Hendrie setting forth the interviewers need to know such information Mr Strauss was further advised that he could call at the Central Inte lligence Agency to verify this He did so in the presence of the interviewers L __ _ Mr Strauss served as General Counsel to the Nuclear Regulatory Commission from June l 1975 to June 30 1977 In 1975 he was unaware of any Commission policy regarding statements of no evidence of diversion or Apollo NUMEC However he did become aware of a strong wish to believe there had never been a diversion of significant quantities of SNM He gathered this from conversations with people regarding questions of diversion possibilities of occurrence risk precautions insider threat and armed takeover These were concerns of NRC while he was there All Commissioners were familiar with these subjects and in his opinion Mr Lee V Gossick also would have to have been familiar with them Commissioners Gilinsky and Kennedy found the safeguards area particularly interesting Mr Strauss' recollection of Commissioner familiarity with this subject matter is based on observing the Commissioners' conversations and attendance at meetings and the CIA briefing in February 1976 He found that this institutional wish tended to persist even at the highest levels He recalls that Commissioner Mason on at least one occasion after the CIA briefing made a broad statement concerning the absence of diversions and Mr Strauss corrected him Mr Strauss recalls no guidance by the Commissioners to staff concerning any Commission policy regarding public statements on Apollo NUMEC or nO evidence of diversion other than that which emanated from the Conran Task Force report · 11 In February 1976 he did attend a one-hour briefing delivered by a man from the CIA in the Commissioners' conference room He did not attend an ERDA briefing at that time on Apollo NUMEC Mr Strauss has no recollection of how he got in on the briefing He did get in on it at the last minute either by walking in accidently on the assemblage or by demanding that the Chairman include him on the basis of his status as the Commission's lawyer He recalls that Howard Shapar did not attend 43 II l 2 I but could have and that Mr Gossick was not included He does not know the reason for this There was an agreement with other government agencies arrived at in the early days of NRC which restricted access to certain sensitive information involving manufacture and design of clandestine fission explosives to seven NRC representatives Agencies who possess infonnation of use to NRC could dictate who will attend briefings Therefore the attendees at thi Briefing could have been elected by ERDA or the CIA Mr Strauss recalls that on other occasions ERDA set numerical limits on attendance and he was met with objections to the effect Sorry you are not on the list It is ERDA's briefing and they do not want you there There is no question that someone had selected the people who were to attend and lack of an invitation is an indication that a person did not have a need to know the information Mr Strauss attributes Mr Gossick's absence from the briefing as the result of a determination that he had no need to know and Mr Gossick S acquiescence in this determination He does not know whether NRC requested the briefing or whether ERDA or the CIA notified the Commission that they possessed information NRC should know The briefing occurred at approximately the same time that several ma azine and newspaper articles appeared on the subject of an Israeli nuclear bomb articles which appeared to him to have been the result of deliberate leaks 1 I 25Xl E 0 13526 Mr Strauss got the impression that the CIA held a fairly strong belief that the inventory discrepancies at NUMEC and paid for by that firm represented material taken to Israel He considers that if the CIA information was accurate there was a strong circumstantial case missing material motive and opportunity Mr Strauss said that after the briefing he could not exclude the possibility of a diversion having taken place He came out of the briefing believing that the Commission had to assume that diversion had occurred However he cautioned that in light of the newspaper stories appearing at the time regarding an Israeli bomb he harbored some suspicion of the truthfulness of the infonnation · j e the briefing could be viewed as one ofa variety of techniques employed to forrh this belief in the public mind 44 I I 3 He does not specifically recall having any discussions regarding the briefing other than the meeting with the Conran Task Force reflected in Document 102 and on occasion referring to it in a guarded way intended to remind people who attended the briefing such as Commissioner Mason that qualifications should be made He might have discussed it with Ben Huberman When substantial losses of weapons grade material again appeared at the Apollo facility he felt that the prior experience contributed to the urgency of the situation After the briefing he personally would not say that there was no evidence of diversion However he is unaware of any other indications that the unaccounted for materials at Apollo NUMEC were in fact diverted The 11 people at the briefing heard statements which in his opinion should make them pause before making a statement that there is no evidence of diversion at Apollo NUMEC Mr Strauss posed the question of what evidence means He explained that if one meant hard conclusive information admissible in a judicial trial then one could say there was no evidence of diversion Knowing that the FBI was not bringing any charges against Apollo NUMEC personnel 'lould enforce this view In a more colloquial sense and in terms of its regulatory responsibilities the NRC could however characterize the briefing as giving it evidence Mr Strauss considers Conran Task Force Document 102 to be an accurate reflection of the briefing he and Bryan Eagle gave to the Task Force That document states that no specific instructions can be recalled to have been given at the briefing to the attending NRC staff officials to the effect that guidance should be given to the staff which would reflect the relevance and importance of the information It characterized the Eagle Strauss position as Senior safeguards and inspection management were present and would generally know what to do without being told Mr Strauss observed that the Commission often was not very direct in matters of this sort He reaffirmed his belief that the Commission ceased to make no evidence statements without qualifications Diversion and appropriate safeguards against it were major subjects of Commission concern and activity throughout the period in question Those present at the briefing were major actors in this continuing and often heated debate Mr Strauss set forth what he considered to be proper qualification The Commission must proceed on the assumption that risk of diversion by embezzlement is at least as strong as or stronger than the risk of diversion by force of arms During the time NRC has been in operation we have not been persuaded that diversions have occurred from any facility including Apollo A steady MUF curve is an indication that diversions have occurred but we have not been able to identify a diversion path or exclude other explanations for the losses 45 I ·I 4 Mr Strauss never directly discussed the CIA briefing with Mr Gossick It is possible however that he may have indirectl alluded to it in providing comments on staff papers For example in reviewing a staff paper prepared for Mr Gossick's or the Commission's signature he may have penciled in a change on a no evidence statement' with a recommendation to make a change vlhfle some of these documents might have been signed off by Mr Go ick Mr Gos ick probably would onlj have paid mini al attention to this as it was not his per onal work Mr Strauss' contact with Mr Gossick on this matter was not personal and direct He does recall a couple of conversations in which Mr Gossick said he was glad he was not at the CIA briefing but did not explain why Mr Strauss responded to the effect with good reason Since November 15 1977 when Representative Udall sent a letter to Chairman Hendrie on the matter of Mr Gos ick's testimony he had only a couple of conversations with Mr Gossick in which the subject was casually touched upon at a cocktail party given by Howard Shapar and a lunch with several attorneys for the General Counsel's ffice Nothing specific was discussed Mr Gossick may have asked him whether confining the no evidence statement to the post-1968 time frame was a valid defense Mr Strauss said that he considered that ·1r Gossick was being made a scapegoat for a system that has gone wrong in three respects 1 the problem of asking an agency outside the Executive Branch to make judgments based on information of such enormous sensitivity to the Ex cutive Branch He cited as an example in the export area Dr Clifford Smith's statement in the Washington Post on January 17 1978 regarding the sufficiency of IAEA safeguards 2 The safeguards area under the former Director Kenneth Chapman seemed to him overwhelmed by former military men Their approach was to consider in depth the possibility of a gang of ruffians terrorists who could surround a plant The possibility of conspiracy to embezzle at high corporate levels was the most difficult to generate mechanical solutions for and so the problem tended to be wished away In that milieu it was easy to say there is no evidence of diversion because no one has ever attacked a plant and we have never found a hole in a pipe where some material was being syphoned off 3 M r Strauss mentioned the combativeness surrounding the safeguards issue at NRC citing an incid ent at the Erwin faci1 ity and a Builder memorandum regarding th e difficulty of plants to meet GESMO numbers He saw anger that an outside group NRDC was trying to set NRC's safeguards priorities and this bred a tend ncy to hunker down · Difficult questions would sometimes be met by those responsiole for demands planning with responses understandable only in these terms Mr Gossick was 0ot_a leader of this tenaency but may well have been 1ts v1ct1m 46 I I i I I 5 I I I Mr Strauss believes that in expressing a Commission position Mr Gossick was not speaking for the Commissioners alone but the entire organization and •that the no evidence state111ent was expressed in the same manner that an ELD attorney might express a Commission position to a Licensing Board · t1r Strauss stated that Mr Gossick might have put the question he was · asked by the Congressional subcommittees off on other branches of government since his knowl dge could at best be derivative Mr Strauss noted that at the time the statements were made there were precious few people left at NRC who had been at the 1976 briefing --principally Commissioners Kennedy and Gilinsky whose recollections might not agree Earlier when the Commissioners were turning over the stewardship of the agency to Mr Gossick he was told there were conversations with Commissioners Gilinsky and Kennedy and Mr Gossick and informal understandings were arrived at whereby the Commissioners would be consulted by Mr Gossick on all matters and retain an informal veto power over his decisions 47 I I I REPORT OF INTERVIEW Bryan Ea 1e was interviewed by Hil1iam Ryan Office of Inspector and Auditor CIA and James Fitzgerald Office of the General Counsel OGC at 10 00 a m January 31 1978 at his home on 2804 0 Street N W Washington D C He was advised of the purpose of the interview and the fact that the summary of interview will be made available to the Congress · Mr Eagle joined the Nuclear Regulatory Commission NRC around the first of March 1975 when he was appointed Executive Assistant to the Chairman He served two Chairmen in that capacity - Hilliam Anders and Marcus·Rowden After Mr Rowden's term expired he closed up the Chairman's office and maintained an office of convenience in the Office of Policy Evaluation until October 30 1978 when he returned to private life He declared that there was very little that went through the Chairman's office that he did not to some extent become involved in He recalls that in 1975 there were a number of efforts for reevaluation of safeguards that were instituted Congress had mandated such things as the Security Agency Study by the Energy Reorganization Act There were a number of things going on in the January and February 1976 time frame For example at that time Kenneth Chapman and Carl Builder were working on safeguards upgrading and an Erwin MUF had been discovered James Conran was voicing his views on safeguards and his dissatisfaction with the personnel situation Mr Conran was talking with Commissioner Mason and other Commissioners from time to time In the latter part of February 1976 there was a briefing by CIA followed a couple of days later by an ERDA briefing He is unsure what triggered the request to hear from the CIA All of the events mentioned above vere going on While 1r Conran says that it was only because of his activities that NRC got involved Eagle is not sure this was entirely true The Commission was working on better relations with the CIA Department of State etc to obtain information that would be useful for safeguards efforts e g terrorist activities He does not remem­ ber how the briefing was set up Probably either Chairman Anders Commissioner Kennedy or he called up the CIA and arranged it Mr Eagle knew Mr Carl Duckett very well from prior associations in the intelligence community Mr Eagle cautioned that all of his answers or statements had to be prefaced with the caveat To the best of my recollection r Duckett re 1a ted to them that back in the 1960's when NUMEC came up an article appeared in the New York Times speculating on a diversion to Israel Mr Duckett ave an assessment of the nuclear otential of Israel 25Xl E 0 13526 2 I 25Xl E 0 13526 L- -- - ---- -___ - - ---- - --- - ---- - --- --- -' Mr Eagl e sa i e had cove re to the best of his recollection all information imparted at the briefing with the exception of CIA sources and methods 49 3 Mr Eagle said this was a classic case of trying to prove a negative ­ that it is hard to prove that NUMEC material did not get to Israel but there is no evidence that it did go there Mr Eagle stated that he believes Mr Duckett said there was no hard evidence that this material ·went to Israel and that 'the only thing they have is the long chain of circumstantial evidence He may well have said we can't prove the negative and declared that there is no way of tracing the NUMEC material to material in Israel if it is there Mr Eagle has the definite impression that they could not trace the source of any Israeli material bere was no clear conclusion from the CIA briefing · -- Mr Eagle observed that NUMEC's processes were incredibly sloppy It was an old plant with temporary workers It was under great pressure to produce an end product There was the further circumstance that when Atlantic-Richfield took it over it continued to have large MUFs This therefore tended to lead one away from a conclusion that anyone stole anything Mr Duckett was not ill at ease during the any indication that he was fru s trated with appear to be an advocate of any position lack of conclusiveness was a loose end and There were some questions and answers It informal briefing nor did he convey his own agency He did not He may have felt that the was unhappy about that was all very casual and Mr Eagle does not recall any prior clearance of attendees by the CIA nor does he recall that Mr Duckett announced any classification level He may have said the material is very sensitive and some of it is Top Secret While he has no recollection of Mr Duckett evidencing surprise at the size of the audience he could have been because the briefing was set up very fast To the best of his recollection Mr Duckett said that CIA not being a domestic intelligence agency had not investigated domestically what had gone on at NUMEC Mr Duckett did come with material to which he referred in the course of his briefing It was a file folder medium size Mr Duckett did not say he was going to leave the file or that it was an agency file No one asked to see it and it was not offered As a matter of fact NRC did not have adequate storage facilities Storage of intelligence information requires protection beyond that of Secret or Top Secret There are intelligence comunity specificatior1s for storage including alarms vaults etc NRC decided to have two such facilities - at H Street and the Willste Building Then development of those facilities was part of NRC's overall effort to establish better relations with the intelligence conununity 1r Chapman had had discussions and negotiations 50 • 4 with the intelligence agencies This process started before the briefings To discharge safeguards and nonproliferation responsibilities NRC needed intelligence information and to get that information NRC had to have facilities to protect the information Addressing the question of attendance at the briefing Mr Eagle said the briefing was set up quickly He is not sure of the precise reason for Mr Gossick not being included then cited a number of possible factors l desire to keep the meeting small 2 principal operating people were included and 3 r essrs Huberman and Strauss were included because of their close connection with Commission business and Mr Eagle because of his responsibilities He does not recall Chairman Anders saying Mr Gossick will not attend He was not specifically excluded just not specifically included This could have been because others were included he might have been out of town or might not have had the necessary clearances Chairman Anders probably made the selection Two days later he attended the ERDA briefing ERDA described its investi­ gation and stated their conclusion that there was no diversion Specific mention was made of the FBI investigation Shapiro's foreign associations the sloppiness of plant operations the payment for the MUF the continued problems under Atlantic-Richfield ownership and the fact that the plant was a problem one It had a much clearer conclusion The briefings did make people more aware of the possibility of an insider threat After the briefings Mr Eagle discussed their briefing with Mr Anders and maybe Commissioner Kennedy He never discussed them with Mr Gossick In July 1977 Mr Eagle looked over Mr Gossick's prepared testimony for the Udall subcommittee He told him that he had better be sure that what he was saying was consistent with Document 102 of the Task Force report Hugh Thompson had responsibility for pulling together the testimony and comments Mr Eagle may have suggested minor changes or given some language It was at a large meeting in the conference room next to Mr Gossick's office attended by Mr Gossick Mr Clifford Smith and others that he suggested changes that were incorporated He does not recall getting into any detail with Gossick and probably would c remember if he had On no other occasion did he discuss anything related to the briefings with Mr Gossick · Document 102 referred to above contained a statement to the effect· that since the briefings the Commission has not made statements that there is no evidence of diversion without qualification Mr Eagle said this reflects the point that the Commission was trying to be careful not to say it could prove a negative He said the Task Force had identi­ fied statements that no material is missing or no material is stolen NRC was not saying that material has not or has been stolen 11 11 51 5 II I · I ' As far as he knows no one from NRC has reviewed the ERDA files However he had the impression there was no problem with ERDA that if NRC wanted something it got it In recent times he had a conversation wit Ann Hodgdon of Commissioner Gilinsky's office She was looking for infonnation about a package of materials supposedly brought to the briefing by r r · Duckett Around July 19 1977 Mr Gossick had asked him about that package and · requested that he speak to Mr Gilinsky who wanted it Mr Eagle did at that time have a hurried conversation with Gilinsky and refreshed his recollection He pointed out that Mr Duckett had left _the CIA and that he did not know how to identify the package to ask for it The request faded out Ms Hodgdon wanted to know more She read a letter over the phone to him He said that a phrase to the effect that the document was not traceable needed clarification She said they were going to leave it alone and he could amplify on it at a later date Hr Eagle displayed a copy of the letter from Mr Gilinsky to Representative Dingell dated January 16 1978 He has not had conversations recently with Messrs Kennedy Gossick Rowden or Anders about the subject matter of this interview 52 SUMMARY OF INTERVIEW WITH C W REAMER JANUARY 11 1978 C W Reamer was interviewed by James Fitzgerald of the Office of the General Counsel at 3 30p m on January 11 1978 Mr Reamer was advised of the purpose of the inquiry and the fact that the summary of this interview will be available to the Congress Mr Reamer is an attorney in the Office of the General Counsel He states that he had no knowledge of the NUMEC Apollo inventory discrepancies of the 1960's or allega­ tions of diversion of SNM from that plant until his assign­ ment to the Task Force appointed to look into various allega­ tions made by NRC employee James Conran in April 1977 The only matter relevant to the inquiry which pre-dates April 1977 is a vague recollection that an early draft of a Com­ mission paper relating to the NRDC petition for emergency safeguards measures on which he worked may have had some statement regarding past diversion of SNM which Peter Strauss the General Counsel may have edited out without explanation On April 6 1977 he was assigned by the Commission to work on the Task Force He does not know why he was selected but speculates that it may have been on the basis of his experience in safeguards matters of the agency The Task Force was a team effort but he was either assigned by the Task Force or volunteered for that portion which dealt with 53 2 Mr Conran's allegations involving NUMEC The bulk of the NUMEC portion of the Task Force Report was ini tially drafted by him and all members were subsequently involved in review ing and finalizing it Mr Reamer recalls that there was discussion among the Task Force members on how hard they should pursue Conran's allegations about NUMEC i e should they push for receiv­ ing the classified briefing or was there a way of approach­ ing the matter without getting into the substance of the briefing There were arguments both ways He argued for a compromise position During the course of the Task Force Mr Reamer never learned of any evidence regardi ng diversion of SNM thing that he learned abo t Every­ allegations of diversion is contained in the Conran submissions and the interviews w th Kenneth Chapman Carl Builder and Barry Rich and the brief­ ing they received from Bryan Eagle and Peter Strauss He recollec ts the interview with • Gerry Page may also have touched on NUMEC He suggested that the documents attached to the Task Force Report memorializing these interviews be reviewed He recalls that Mr Ri was reluctant even to confirm for the Task Force that there was an ERDA file on the matter and that Mr Chapman said the question was still goosey 11 Mr Re amer wrote some of the inte r view summaries 3 The Task Force decided they did not need the ERDA CIA briefings What the Task Force did want to determine was that NRC had asked for and received all relevant information and had done what a manager with important nuclear safeguards responsibilities should do with it Mr Reamer refers to ·this approach as a procedural review From the written record it was impossible to make this determination so the Task Force felt it had to talk to some of the attendees of the ERDA CIA briefing of February 19 76 $ Mr Reamer recollects that Roger Mattson took this matter up with Chairman Rowden or Bryan Eagle and that Chairman Rowden perhaps after consulting the other Commissioners -- ulti­ mately selected Mr Eagle and Mr Strauss to talk to the Task Force Mr Eagle and Mr Strauss met with the entire Task Force around a table Mr Reamer recalls that Mr Eagle had a prepared statement with him At the beginning of the session in language that had been thought out in advance he verbally informed them of dates etc This material was 2 included in the beginning of Document 102 of the Task Force Report which Mr Reamer drafted He does not remember being given any document by either Eagle or Strauss No Task Force member asked questions such as Is there any ' evidence of diversion and whether there had been a 54 I II I I ·j 4 diversion from NUMEC was not really explored The statement attributed to Mr Strauss in Document 102 that since 1976 the Commission has not uttered the no evidence statement without qualification is almost a direct quote from Mr Strauss The Task Force did ot ask what he meant by it Mr Reamer thought it meant that one could not arrive at a definitive statement on diversion -- consistent with the earlier Eagle state ent that the ERDA CIA briefings raised questions and did not provide conclusive answers -- and that public state­ ments by the Commission had reflected this Mes srs Eagle and Strauss told the Task Force that the briefings raised questions and did not provide conclusive answers Mr Reamer interpreted what was said as follows the briefings did not provide sweeping assurances that there had or had not been a diversion at NUMEC -- for exafuple one might conclude that there 'had been no diversion but the information given at the briefing would not leave that conclusion free from all doubt that this uncertainty about whether a dive sion had occurred was not due simply to material accounting shortcomings at NUMEC and that the speculation involved in the Apbllo NUMEC case went beyond that raised in connection with other facilities ' Kerr- McGee NFS Erwin Mr Reamer stated that he did not pick up on the currency of the issues i e that the case might be still alive at 55 5 the FBI from what was said to the Task Force Further Strauss and Eagle were vague on precisely what cross­ checks the agency undertook to verify the information given at the CIA ERDA briefings He recalls that the Task Force had two meetings with the Commission after completion of its report At the first one the Report was presented at a closed session and Com­ missioners' questions and comments were received At the second meeting staff actions to implement the Task Force recommendations were discussed meetings and recalls no rl r Reamer attended both uestions about Apollo NUMEC There may have been questions or discussion about no evidence but not related to Apollo NUMEC instead they would have involved the point that accounting methods prevented un­ qualified statements meetings Mr Gossick probably attended both Mr Reamer does not recall Commissioner Gilinsky mentioning anything about NUMEC or evidence of diversion at these meetings In mid-July Mr Reamer received a phone call from Mr Gossick who indicated he had not been able to get in touch with James Kelley then Acting General Counsel Mr Gossick said he wanted to have Mr Reamer's help in preparing for the congressional testimony on the Conran matter Mr Reamer indicated 56 h was available Mr Reamer · 6 and Bernard Snyder of the Office of Policy Evaluation wrote the first and all later drafts of the Gossick testimony Hugh Thompson was also involved in preparing the testimony Mr Gossick told Messrs Reamer and Snyder how he wanted to approach the testimony -- Conran background safeguards background implementation of Task Force recommendations and Conran's reassignment N mention was made of NUMEC in the drafts because it simply did not fit into this struc­ ture Its exclusion from the prepared testimony was not expressly dictated by Mr Gossick except as noted below Hugh Thompson of EDO's staff coordinated distribution of the draft testimony and worked over the comments that were received on the drafts Mr Reamer tentativ ly recalls that at a meeting held during the drafting process the question of whether to in­ clude something about NUMEC came up and that the group assembled said no the meeting He cannot recall the date or who attended He seems to recall that the remarks and con­ sensus were to the effect that it was not the type of thing the Subcommittee was interested in and that if they were interested they would ask for it This was at one of two or three meetings that he attended in rllr Goss ick' s office on the draft testimony 57 - ' 7 Mr Reamer does not know whether questions and answers or a Briefing Book were prepared for Mr Gossick's con­ sideration in preparation for his appearance before Con­ gress He suggested that this information could be obtained from Hugh Thompson or Mr Gossick Mr Reamer recalls that near the end of the drafting process he was in Mr Gossick's office when Mr Gossick got a phone call from Dr Henry Myers of the Subcommittee staff Dr Myers apparently had a copy of the proposed testimony Mr Gossick after talking to Dr Myers told Mr Reamer and others present that Dr Myers had-stated the testimony would not fly that something would have to be included about Mr Gossick's conclusions on the adequacy of current safe­ guards Accordingly Mr Reamer went back and retooled part of the testimony to treat this subject Mr Reamer recollects that Mr Gossick did not at this time mention anything about NUMEC Mr Reamer observed that at the time when this phone call was made Dr Myers already had seen Document 102 which discussed Apollo NUMEC Mr Reamer believes that the testi- · mony was distributed to the two sitting Commissioners prior to July 29 As far as he knows there was no rehashing of the testimony a post-mortem after Mr Gossick's July 29 appear­ ance on the Hill but such could have occurred without his 58 I I I j i l 8 I knowledge Mr Reamer recalls no involvement in the draft- ing or review of the August 19 1977 submission of written answers to Subcommittee questions Mr Reamer knew during this general time frame about the 1968 distinction regarding the MUF release program viz that MUF data prior to 1968 was ERDA's responsibility to report and to explain He is not sure when he learned this but it was probably shortly before the MUF press release and his source was probably Norman Haller of OIE Mr Reamer did not take thi·s to mean that the agency had no position 11 or deferred to ERDA 11 on the question of whether material had ever been stolen from Apollo NUMEC Rather he took it to mean that ERDA would explain all MUF figures for pre-1968 and that ERDA was the agency that the public would look to for the explanation of the Apollo NUMEC mid-1960's MUF Mr Reamer had no knowledge of Commissioner Gilinsky's concerns such as the use of the term conclusive evidence He was aware that Mr Gdssick was to testify before the Dinge l l subcommittee in August and submitted comments to Hugh Thompson on at least one draft of proposed testimony prepared elsewhere in NRC i j REPORT OF INTERVIEW Marcus A Rowden was interviewed by William E Ryan of the Office of Inspector and Auditor and James A Fitzgerald of the Office of the General Counsel in his law offices at 2 p m January 25 1978 Mr Rowden was informed of the purpose of the inquiry and the fact that the summary of interview will be made available to the Congress Mr Rowden joined the Atomic Energy Commission in February 1958 and ultimately became General Counsel of that organization In January 1975 he became a Commissioner with the Nuclear Regulatory Commission and later served as Chairman from April 1976 to June 30 1977 At one time when at AEC he was counsel to the Division of Nuclear Materials Management It is his recollection that he had this position during · part of the time of the NUMEC inquiry in the 1960s He recalls that he gave advice to the AEC personnel who were conducting the NUMEC investigation on the respective roles of the AEC and the FBI The AEC had an understanding with the FBI that it was appropriate for the former to conduct an in­ house investigation up to the point in time when a possibility of a violation of law was uncovered Then the Commission was to refer it to the FBI He also advised theAEC investigators in regard to inform1ng interviewees of their legal rights Mr Rowden does not recall any violation of law being reported to him He also has no recollection of any discussion of the matter with the FBI He believes that one of the senior people in AEC's Inspection Division contacted the FBI at the outset of the investigation Nor does he recall whether he was involved when the matter came to a conclusion within the AEC He became Solicitor about 1966 and had different responsibilities · Mr Rowden does not recall any policy of the AEC on a response to questions about diversions Safeguards was an evolving item in the late 1960s and early 1970s At the NRC he does not recall ever sitting down and formally adopting a policy on how the Commission should answer an inquiry about diversion However there was discussion among the Commissioners and staff on the inherent technical and other limitations as respects materials measurements and the need to bear that in mind in writing NRC statements where these limitations were a relevant factor This limitation became relevant in the wake of Kerr McGee and Erwin events He also recalls being asked a question by a reporter about minute quantities of material that may have left the Kerr McGee facility In the context of what NRC was doing in th safeguards area including a survey of all SSNM facilities and the limitations on materia ls account­ 60 2 ability which NRC believed had to be compensated for by physical security and materials control measures categorical statements were not warranted Kerr McGee Erwin the survey and ·perhaps NUMEC may have impacted on this He does recall one instance involving a transportation EIS in which statements set forth in the draft were too categorical in his view and needed to- be revised in light of the referenced uncertainties Further­ more results of the safeguards survey were comin·g in and the Corrnnission had concluded that upgraded safeguards were in order as a matter of prudent regulation Mr Rowden stated that he has read Document 102 to the Conran Task Force report which states that since the February 1976 briefings by the CIA and ERDA the Commission had not made 11 no evidence of diversion 11 statements without qualifications The implication that some formal policy was · adopted by the Commission and the further implication that this stemmed from the February 1976 briefings are not consistent with Mr Rowden's recollection As indicated earlier there was no formal policy adopted nor does he recall that there was any one triggering event like the briefings which led to circumspection in statements about diversion Rather he sees the briefings as but one event which added to the total context of the way he and the other Corrmissioners looked at and spoke to safeguards Regarding the CIA briefing in February 1976 he does not recall how the individual attendees were determined They had been told that the matters to be discussed were sensitive and a consequent determination was made that only people with a substantive responsibility in the safeguards area should be present He does not recall the Commission as a body making the determination on who should attend It is most likely that Chairman Anders or the Chairman's office made the selection He stressed that this was an affirmative determination of who should be asked to attend not a negative choice of who would be excluded There would also be a sensitivity to the fact that some people would have to travel from Maryland down to the Commissioners' Conference Room in Washington This was a possible factor although certainly not dominant If substantive responsibility were the criteria Lee Gossick would not be one of the people included in the briefings because of the way the Commission was then structured and the role of the Executive Director for Operations Mr Rowden explained that the Energy Reorganization Act created three offices the Directors of which had statutory line responsibility for matters within the purview of the respective offices Nuclear Material Safety and Safeguards was one of these statutory offices EDO was not viewed as the NRC analogue to the AEC's General Manager 61 · · 3 The five Commissioners and six others attended the CIA briefing The CIA briefer was a Mr Duckett Mr Rowden would not discuss the sub­ stance of the briefing because of what he had been told was the classified nature of the briefing•s content He noted that the CIA memorandum which the interviewers showed him at the outset of this interview session had been equivocal about CIA objections or lack thereof to briefing attendees• discussing the briefing•s substance with the investigating team He stated that he did not recall any specific level of classification being mentioned in the meeting He did relate that the briefing dealt with circumstantial rather than direct evidence and lacked as he recalled a statement of CIA conclusions It involved circumstances that could lead one to conclude there was a possibility of diversion The CIA briefer 1r Duckett told them that some in his agency had come to the conclusion there was a possibility of diversion at NUMEC This was the briefer•s view at least but Mr Rowden said he did not know how widely it was shared or if it was endorsed by the CIA as an agency He does recall that the briefer went to some extent into the · FBI•s involvement Mr Rowden had not met Mr Duckett prior to that briefing and Mr Duckett•s demeanor at the briefing left no impression on him Mr Duckett as Mr Rowden recalled recited events and circumstances he thought were significant These were the matters that led Mr Duckett to conclude that a diversion could possibly have occurred Mr Rowden recalls that the briefing was not limited to circumstances bearing an opportunity and motive for diversion He recalls no summing up in conclusion by Mr Duckett Mr Rowden said that Mr Duckett came with a file of papers and that he scanned them du ing the course of the briefing and may have read from them He does not recall that the file was tendered by the briefer Mr Rowden•s attention was directed by the interviewers to Document 102 of the Conran Task Force report which stated An information package was put on the table before the Commissioners and staff but was not left No request that it be left was made and the NRC had inadequate secure document storage facilities for highly sensitive materials He indicated that it would be unusual given the source of the documents the CIA for such documents to be left with the Commission He cited to past experiences when the CIA had delivered sensitive documents for his review and the CIA representative had sat outside his office all the while he read them He did not attend the ERDA briefing in February 1976 but he does not remember the reason He is aware that ERDA took a different view from the CIA r-According to Mr Rowden the CIA briefing was based on ci cumstantial evidence and I was of the belief that yo _ could not conclude either way on whether there had been a diversion _ _j What 'Jas called for 62 4 was bringing the briefing and its information to the atte8tion of responsible Executive Branch authorities · Mr Anders did thereafter contact White · House personnel and a determination was made to reopen the FBI investigation Mr Rowden suspended judgment until the FBI investigation was completed He does not know the result of the FBI investigation Sometime after the CIA briefing but before the Task Force in April 1977 James Conran came to him and said he had been contacted by the FBI Mr Rowden to 1d him to respond to the Bureau's qu stions fully and candidly and if the agents did not seek information which Mr Conran deemed significant he should volunteer his information Mr Rowden never discussed the substance of the briefings with Mr Gossick Mr Rowden is sure that he discussed the briefing with one or more of the other Commissioners on occasion but does not remember in precisely what context It may have been when they were considering Mr Conran's allegations However he never discussed the substance of the briefing with Mr Gossick He does not recall that the Conmission ever gave Kenneth Chapman or Carl Builder any instructions as a result of the briefings With one exception he does not recall ever discussing the briefing or its substance in contacts with the Congress · In speeches or testimony he never addressed Apollo NUMEC or the question of evidence of diversion there The one occasion when he mentioned the briefing was in the spring of 1977 when he and Roger Mattson visited Representative Morris Udall in a meeting attended also by Dr Henry Myers of the Interior Corrrnittee's staff There had been a delay in transmitting the Task Force report to Chairman Udall because it was undergoing a classification review Ultimately the NSC said it was permissible to have the report itself un­ classified and he went 'to Mr Udall to deliver the report and explain the reasons for the delay He advised Messrs Udall and Myers of the · CIA briefing that there were those who held views based on the circum­ stantial evidence that there was a possibility of diversion and that others disagreed Mr Rowden told them that he could not relate the substance of the classified briefing such would have to be obtained from the Executive Branch that other agencies e g AEC ERDA had a view of the diversion question different from that of the briefing and that he was in no position to make a judgment as to diversion based on that briefing Another governmental agency was pursuing the matter Irrespective of the foregoing NRC safeguards were undergoing continuing upgrading as part of an overall long-range program He recalls one major staff briefing for the Commission on the proposed MUF release in the month before he left the agency He does not recall going over any draft of the proposed release or focusing on the questions and answers attached to SECY-77-268 He was firm that NRC should only be treating the post-l968 period in the release and that ERDA should handle the prior years since that was a period pre-dating regulatory responsibility for the subject facilities This was communicated to the staff 63 5 Mr Rowden characterized Mr Gossick as very honest and responsible based on his dealings with him Mr Gossick may have seen statements that were made that there was no evidence of significant materials diversion and may have related them out of context on the misunderstanding that the Commission had actually come to a conclusion on the Apollo NUMEC matter whereas there had been no Corranission position one way or the other Since the issue was raised by Representative Udall•s letter in November 1977 when people were trying to reconstruct what had happened Mr Rowden has spoken about the matter to Dr Myers Jerome Nelson Chairman Hendrie and Mr Kennedy and Mr Anders He also spoke to Bryan Eagle to ascertain how the briefings were set up He spoke to Mr Gossick at the latter's request after the matter came up in November Chairman Hendrie or Mr Kennedy had suggested to Mr Gossick that Mr Rowden he be contacted Mr Gossick was trying to refresh his recollection and indicated that Dr Hendrie was going to call Mr Rowden which he later did Mr Rowden did not brief Mr Smith on the NUMEC information when Mr Smith took over as Director of NMSS because of the nature of the information the facts that a significant intervening event had occurred - the FBI was investigating -- and the knowledge that the two remaining Commissioners knew of the briefings contents 64 II II I I I i i • REPORT OF INTERVIEW Hugh L Thompson Jr was interviewed at his office at the Nuclear Regulatory Commission 1730 H Street N W on January 23 1978 by William Ryan and James Fitzgerald Thompson advised that his present position was that of Technical Assistant to Commissioner Bradford and that he had occupied this position since November 1977 and that he had been employed by AEC NRC since October 1972 Prior to joining Bradford's staff he had occupied the position of Technical Assistant to Lee Gossick beginning on July 11 1977 Prior · to that time he had been a Technical Assistant to Chairman Rowden beginning in March 1976 Thompson said that before this he had been a member of the Program Support Branch Office of Nuclear Reactor Regulation Thompson stated that while on the staff of Chairman Rowden he had a discussion with John Austin or Bryan Eagle on safeguards issues and was made aware that a briefing of Commission personnel by ERDA and the CIA had been held in early 1976 although no details had been passed on to him Thompson said that in July 1977 along with Bernard Snyder and C t Reamer he assisted in the preparation of Lee Gossick's testimony before the Udall Committee The substance of the testimony dealt with safeguards issues and the reassignment of James Conran within NRC The first draft of the testimony prepared by Messrs Synder and Reamer was distributed to all appropriate staff offices the Office of General · Counsel Executive Legal Director and Roger Mattson as Chairman of the Conran Task Force Comments from these sources said Thompson were sent back to him With the assistance of Bud Evans Snyder and Reamer Thompson said the comments were addressed in the revised testimony Thompson recalled that Henry Myers of the Udall Committee had a draft of the Gossick testimony and that he yers called Mr Gossick and said that the testimony should address the question of the adequacy of current safeguards Because of this said Thompson an insert for the last page of the testimony was prepared and was delivered during the actual testimony Thompson advised that he had read a copy of the transcript of the press briefing given upon the release of the MUF Report and the question of a CIA report came up at the briefing Thompson said that on the basis of the answers given at the briefing including the answer of Clifford V Smith Director Office of Nuclear Reactor Regulation one could not conclude whether or not there was a CIA report Thompson said that before the release of the MUF Report that he met Bob Burnett in the hallway outside of Lee Gossick's office He thinks that Gerry Page may have been there Thompson asked Burnett whether NRC dould make the statement in the report to the effect that there was no evidence of a theft or diversion of a significant amount of material 65 2 and whether this posi tion was consistent with the position of ERDA Burnett told Thompson that NRC's report related only to the post 1968 period as identified on the first page of the report and that this statement was identical with a statement in the ERDA report He further stated that had been coordinated with ERDA There was concern on ERDA's part that if the two agencies did not have the same statement concerning this matter it might imply that ERDA was holding back information Mr Thompson got the impression that ERDA was concerned that if NRC qualified the statement to apply to only the post 1968 time frame and ERDA did not similarly qualify its statement it would appear that NRC had information which ERDA either did not know or would not disclose Further Mr Burnett pointed out that if additional changes were made that they would have to be cleared with ERDA Thompson was asked whether the first draft of the Gossick testimony for the Udall Committee referred to the inventory difference at NUMEC Apollo and he did not recall Thompson said that in revising the initial draft of testimony was revised to give Conran some credit for the safe­ guards matters he had raised and to track the Task For·ce reconmendati ons verbatim Thompson again pointed out that after Henry Myers had reviewed the draft and called Mr Gossick and stated that he wanted the testimony to cover the adequacy of current safeguards Thompson recalled that both the early draft and the completed draft of the Gossick testimony went to the Commission for review and comment He said that some Q and A's were prepared to assist Mr Gossick in getting ready for the Udall hearing They were done by Bud Evans and other people in NMSS and coordinated with Norm Haller of IE C W Reamer also prepared background information i e what had been said to Repre­ sentative Udall in the past on the subject Thompson gave the package to Gossick Thompson recalled that before the testimony of Gossi ck before the Uda 11 Committee a large meeting was held with several people present to discuss the upcoming testimony According to Thompson's recollection the matter of Apollo never came out Thompson said that he identified the no evidence statement contained in the MUF Release Report to Commissioner Kennedy's office and Commissioner Gilinsky's office The reason for highlighting this sentence was that the two Commissioners were only persons around who attended the CIA briefing on Apollo Kennedy's office signed off on the draft Thompson could not recall that there was any problem raised by Gilinsky's office with the draft Thompson was asked whether he was present ai the hearings before Congressman Udall or Congressman Dingell and he said that he did not recall being at either hearing Thompson said he was not present at the August 2 1977 briefing of the Commission on the MUF ·Release Report He stated that he had reviewed the report for Lee Gossick 66 3 On return from the Udall hearing Gossick said to Thompson there was a batch of questions that would have to be answered He expressed no concern about the way he had testified or handled questions at the hearing Thompson recalled that sometime after the press briefing on August 4 1977 on the MUF release report and before Mr Gossick•s testimony before the Dingell Subcommittee he had a conversation with Lee Gossick The conversation according to Thompson concerned what Mr Gossick•s response would be to the question of whether or not there was a CIA report which dealt with theft or diversion Thompson suggested that they ought to have an answer for the question in case it came up since it had been asked at the press briefing While Thompson does not recall Mr Gossick•s answer he does recall being satisfied that Mr Gossick•s proposed answer was reasonable under the facts as he Thompson understood them · Thompson said that he understood from what Bryan Eagle had told him concerning the briefing in early 1976 by the CIA that the briefer had brought some files with him and he assumed from this that there was a CIA report on the possible theft or diversion of material Sometime that the not in a previous during this period from mid July to mid Augus Thompson reca1-E ' question of Apollo came up and Mr Gossick had aid that he was · position to say anything different than what had been said in public statements becuase he had not been at the CIA briefing -----­ Thompson stated that at Gossick•s request he helped prepare the Q and A•s that were submitted to the Udall Committee on August 19 1977 It was his recollection that the draft answers to the questions were provided by Clifford Smith Director Office of Nuclear Material Safety and Safe­ guards after coordinating some responses with IE Thompson was questioned about the Q and A's that were prepared for the Udall Committee and specifically Thompson was questioned about the answer to Question 12 which related to whether any material had been diverted in the past Thompson said that he had difficulty getting the two offices to concur in some of the responses but ultimately both offices signed off on the prepared responses Thompson recalled that in dealing with the question concerning evidence of theft or diversion that the emphasis in preparing the response was directed at the problem involving the inventory discrepancy at NFS Erwin Tennessee since that plant was within NRc•s regulatory responsi­ bility According to Thompson there was no statement about evidence of theft or diversion in the first draft of the responses but it was put in the final draft for completeness It was his recollection that this was done either by the Office of Inspection and Enforcement or by himself If he had put it in he copied it out of the MUF release which he was aware of and thought was the Commission•s position 67 ·zr- 1 4 Thompson said that in preparing the 11 Q and A's that were to be submitted to the Udall Committee that he had difficulty obtaining any comments from Commissioner Gilinsky's office Thompson said that the Office of Congressional Affairs was pressuring him to get the package out and according to Thompson he told Carl Kammerer that the only thing holding up the re 1ease was 1ack of concurrence from Commissioner Gi 1ins ky' s · office Thompson said that he told Kammerer this on August 19 1976 and that Kammerer told him he would go to Gilinsky's office and try to get things moving Thompson said that aoout two hours later that · Paul G6ldberg cleared the package of Q and A's including the answer to Question 12 and the package was sent out the same day It was Thompson's recollection that this was a Friday and that either the following Monday morning or some time later that day he received a call from Cookie Ong who told him that there was a bad problem in the Udall package and said that the statement in the answer to Question 12 concerning no evidence of theft or diversion was incorrect Ong inquired of Thompson wheth r Commissioner Gilinsky's office had signed off on the answers and Thompson replied that they had and suggested that Ong contact Paul Goldberg Thompson said that Paul Goldberg called him and said that there was a problem with the answer to Question 12 and asked if the letter had gone out yet Thompson told him that it had gone out Still later according to Thompson Ong called him with suggested new language for the answer Thompson supplied to the interviewers a copy of the language suggested by Ong and he recalled that copies of the language were telecopied to Bud Evans and Haller Thomps6n recalled that Evans and Haller approved the language suggested by Ong but stated that they preferred no change in the language of the answer to Question 12 because it would highlight a problem area Thompson said that he raised the issue with Gossick and Gossick told him that he Gossick and Commissioner Gilinsky would have to get together and deci e on a course of action Thompson noted that as he recalled Commissioner Kennedy's office had signed off on the revised language and indicated that in the Commissioner's view the revised language was somewhat better Thompson said that the first draft of to Chairman Hendrie's office and that those offices furnished no comments comment because the questions related Chairman's appointment the Q and A's'' had also been sent of Commissioner Bradford but that Hendrie's office declined to to testimony given prior to the Thompson said that after the problem with the language came up that he proposed alternative language limiting the answer to Question 12 to post 1968 Thompson said that he told Gossick that there were three choices One was to use the language which had already been used Another was to use the language submitted by Commissioner Gilinsky's office The third was to us the language which he Thompson had prepared 5 According to Thompson Gossick later met with Commissioner Gilinsky on the three alternative answers and that when Gossick returned from the meeting he told Thompson that there was no problem since Corrnnissioner Gilinsky did not know that the 1etter to Congressman Uda 11 had a1ready gone out Thompson advised that since receipt of the letter from Congressman Udall to Chairman Hendrie dated November 15 1977 he had talked with Lee Gossick about the subject matter of that letter and that he had looked at Gossick's response to Chairman Hendrie He also indicated that he had told Gossick of his general recollection was of the events but not in the detail of this intervfew Thompson said that in early December of 1977 he received a telephone call from Paul Goldberg who recalled that in July 1977 at the time of the MUF report review that he had told Thompson that Commissioner Gilinsky had problems with the report Thompson however has no recollection of the July call He did not recall that Gilinsky had a problem on a sentence in the MUF release Thompson said that if he had received such a call he would have passed the information on the Fred Crane who was responsible for preparing the MUF Release Report Thompson saw no problem with the sentence prior to August 22 1977 because he had specifically highlighted the sentence to the offices of the two Commissioners who attended the CIA briefing and had received no indication of any problems with that sentence from their offices 69 I 25Xl E 0 13526 REPORT OF INTERVIEW George W McCorkle was interviewed by l illiam Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel at 11 a m January 9 1978 Mr McCorkle was advised of the purpose of the inquiry including the fact that this summary of inter­ view would be made available to the Congress Mr McCorkle is Chief of the Physical Security Licensing Branch Division of Safeguards He has occupied this position since it was established in 1975 and performed in a similar capacity since he came to the AEC in late December 1974 In the spring of 1976 just prior to the departure of Chairman William Anders from the Corrnnission he received a short project from one of his supervisors At approximately 5 30 or 6 p m on a working day he received a call from either Kenneth Chapman or Ralph G Page He was advised to stand by for a call from Bob Tharp ERDA and that something would have to be brought to the attention of each of the Commissioners the following morning At that time he was told only that it involved a sensitive matter which could not be discussed on the telephone At approximately 7 p m Bob Tharp and Sam McDowell of ERDA arrived in his office They worked together until 10 or 10 30 p m drawing up a document which Mr McCorkle understands ERDA was going to send to the White House The document dealt with safeguards The reason for ERDA 1 s coordination with the NRC on th letter was Mr Tharp•s · desire to make sure that it contained an accurate representation of present safeguards implementation Mr McCorkle recalls that Mr Tharp brought with him a relatively brief 11 digest about six pages on the NUMEC problem in the 1960 1 s Mr McCorkle read this document which he recalls as containing allegations that nuclear material had been diverted from the Apollo plant and the conclusion that there was no evidence that a diversion had occurred He further 11 The digest stated that those a11 egations·i L______jhad been made and an exhaustive investigatio n ha-a b-e-en c o n a-uc t e a by the CIA FBI into them and no evidence had been developed to support such allegations Mr McCorkle said he read this with interest as it was the first time he had heard any of this The document that was composed that night was handwirtten No secretaries were available Mr McCorkle does not recall whether he was given a copy of this handwritten draft l tter If he had been given a copy he would have brought it back from his trip to the Commissioners sealed 0 I 25Xl E 0 13526 2 it marked it for Mr Page's attention and placed it in a safe In any event the next day he went alone to the Commissioners He briefed Commissioners Kennedy and Rowden individually Commissioner Rowden who was then Acting Chairman told him to brief Chairman Anders He therefore went to the Anders office and the secretary reached Chairman Anders at the State Department The Chairman said he would drop by and did so at noon Mr McCorkle then briefed him Commissioners Gilinsky and Mason were not available for the briefing Mr McCorkle recalls that they were out of town He never briefed them but assumes that Chairman Rowden did so None of the Corrnnissioners contacted had any problem with the letter ERDA intended to send to the White House In brief McCorkle advised the Commissioners that his purpose was to inform them that a letter was going to the White House from Mr Seamans and that ERDA wanted NRC aboard tnat either from the investigation digest or from information provided orally by Tharp there had been an allegation of a diversion of material to Israel that this matter had been investigated and the investigation indicated no evidence to support such allegations and that the letter set forth the transition in safeguards development over the years up to current safeguards requirements Other than the fact that the Commissioners express-ed agreement on the content of the proposed letter Mr McCorkle has no recollection of any substantive comments from them After the briefings he called Mr Tharp and related that NRC had no problems with the letter as written He never saw a copy of any letter ERDA actually sent although he assumes that the NRC probably did receive a copy Since that time Mr McCorkle has had no further connection with the NUMEC matter He never mentioned any of this to Lee Gossick a · REPORT OF INl ERVIEW _Robe_rt _A _ErJc_kson Chief Test and Evaluation Branch Division of · S feguards Office of Nuclear Material Safety and Safeguards was interviewed at his office in the Willste Building Silver Spring Maryland on J nuary 9 1978 by William Ryan OIA and James Fitzgerald QGC Erickson advi ed th t he had been in his present position for approximately two months · Prior to that time he had occupied the position of Technical Assistant to the Assistant Director for Operations and Evaluation beginning in approximately October 1975 Erickson advised that in the spring of 1976 either May or June Ken Chapman asked him to contact ERDA and prepare a report on the status of safeguards Chapman informed Erickson that Chairman Anders had had a conversation with the President and this had resulted in a request for a report Erickson was asked if the report that ultimately was prepared was a letter to Lt General Brent Scowcroft Assistant to the President for National Security Affairs from Alfred D Starbird and Kenneth R Chapman dated July 30 1976 He replied that it was Erickson stated that Chapman advised him that concerns had been expressed by the White House about safeguards The concern was how safeguards today compared with the 60's Erickson further stated that the report was to provide an evolutionary picture of safeguards from that time till now Erickson observed that we have a much better system now In preparing the report Erickson worked at ERDA with Len Brenner who worked in the Division of Safeguards and Security under Harvey Lyon and also Barry Rich He worked more closely with Rich than Brenner Erickson stated that since he had only joined NRC in 1975 he knew nothing about the 60's and the inventory difference at NUM EC Apollo Pennsylvania He wanted to know if there was anything there that was important to Safeguards and asked for somethin that would rovide him with a perspec­ tive I 25Xl E 0 13526 He was asked if he knew were the document originated and he replied that he did not Erickson said he read through the document It was just a collection of tid bits 11 and it was very raw intelligence data It didn't say anything about people stealing material 72 · 2 Erickson later received a copy of this same document from Ralph G Page and put it in his safe The document bothered him because of its raw unfinished nature and because it was about a person and was in the nature of character assassination Because of this he shortly after destroyed the - document After he destroyed the document according to Erickson he read an article by John Fialka in the Washington Star What was in the article about the relationships was almost exactly what was contained in the document he destroyed Erickson further described the document as comprising a half dozen pages It was not a professional typing job Erickson had described for him a document which had been shown Ralph G Page during his visit to the CIA with Bob Tharp of ERDA That document was described as a 2 3 or 4-page document that had been freshly typed Erickson advised that he does not think the document he saw was the same document It was his opinion that it was an earlier document I 25Xl E 0 13526 Erickson said that when he received the document from Ralph G Page he told Tom Thayer about the document He gave the document to his secretary She put it in a folder and put it in the safe About a month after the July 30 letter to Scowcroft he looked in his safe and noticed that the folder containing the document was labeled NUMEC-ISRAEL ' 1 · He considered that holding on to the document was too dangerous and it served no useful purpose so he destroyed the document Erickson was first asked who gave him the document he replied that he thought it came from Barry Rich He recalled that when Rich let him read the document he said something to the effect This thing is dynamite Erickson said the document was sensitive to him because it talked about · an individual and that it was like having somebody under surveillance It was not an original document and it contained nO bottom line as to theft or diversion Erickson advised that having seen the document helped him know why the White House was concerned with the preparation of the report on safeguards--the fear of a possibility rather than knowledge of a certainty of diversion 11 11 73 I I ·I I I I 3 Erickson could not recall if the document had any date on it It was his opinion that the document had negative utility for almost any purpose The thrust of the paper was that if you found that Shapiro had done something you could conceivably construct reasons and methods out of the paper's information Erickson stated that he did not discuss the document with Lee Gossick or the Commissioners He feels Mr Gossick's testimony is substantially correct and he knows of no evidence of criminal behavior f 74 II Ii I 'I il REPORT OF INTERVIEW Paul Goldberg was interviewed in his office at 1717 H Street N W Washington D C on January 17 1978 by William Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel He was advised of the purpose of the interview and the fact that the interview summary would be made available to the Congress Since June 6· 1977 Mr Goldberg has been Management Intern to Commissioner Gilinsky Prior to assuming his present position and commencing on September 27 1976 he was employed in the Office of Nuclear Materials Safety and Safeguards While at NMSS he had come across only passing references to NUMEC He knew of no policy in addressing the subject of the NUMEC MUF but it was not within his purview anyway He also knew of James Conran's allegations and read Mr Conran's report while he was there but only had occasion to read the Task Force report after joining Mr Gilinsky's staff in June 1977 Previously he had the impression that categorical statements of no evidence ought not to be made He considers that the only persons who might be abla to make categorical statements were those who atterided the CIA briefing in February 1976 which he learned about in the Conran Task Force report and Document 102 thereof Furthermore various people had expressed their opinions to him about what evidence there was of diversion or the likelihood of diversion ever having occurred James Conran He recalls that the Secretary sent to NRC staff a memo calling for an action plan to implement the recommendations of the Conran Task Force It got Commission-level attention but elicited no comments He noted NMSS was charged with issuing conservative operating assumptions to ·staff and that the NMSS action plan agreed that absolute statements about diversion with regard to MUFs should be avoided However it really was not focused on NUMEC In June and July 1977 he saw documents related to the pending MUF release These included an early draft of the MUF release and SECY-77-268 including supplements 268A 268B and 268C He also saw a set of OPE memoranda relating to meetings with ERDA and the NSC regarding efforts to make the NRC and ERDA releases compatible He does not recall that any of these documents dealt with NUMEC or no evidence Mr Goldberg mentioned a note from Secretary Chilk to Mr Gossick dated June 14 1977 Mr Goldberg called up Mr Ong and told him to make points 3 b and c and stated that this led to SECY-77-2688 He said that 3 b and c were intended to deal with that phrase ' that is the 11 no evidence of diversionu statement which was based on the absence of positive evidence of diversion and only low MUF's l Jhat I wanted to say was that low MUF's were not in themselves evidence of no diversion that they were not evidence of anything High low or zero MUFs cannot be anything more than indications In any case he felt NRC should not make statements of that sort even leaving MUF's out of consideration 75 2 He also indicated thai he did not like the last part of the first paragraph on p age 2 of the MUF release which read to assure itself that no diversion has occurred '' Mr Goldberg expressed dissatisfaction with t is phrase · because it was logically impossible to prove the negative Mr Goldberg did not express on the record his dissatisfaction regarding SECY-77-268B However he told · Mr Ong and Mr Crane that he ha·d reservations about the aragraph right up to the week before the release He was told by t he staff tha·t changes considered necessary by the Commissioners could be made and considering that Commission approval was sought for the release that they could be made following the August 2 briefi g But then staff said all that could be done was to issue an errata sheet Hugh Thompson had pointed out the no evidence statement at the top of page 2 of the release Mr Goldberg agreed that he Goldberg should talk to Mr Gilinsky about it He asked Mr Thompson why he had pointed this out and Thompson said that Commissioner Gilinsky is privy to some knowledge that the rest of the Commission just did not have Mr Goldberg had not discussed the sentence with Mr Gilinsky oefore he went to California on July 21 1977 The Commissioner did not have a copy of it out there In the July 21-23 time frame Mr Goldberg spoke with Mr Gilinsky He then told Mr Crane that the Gilinsky office had problems with the paragraph at the top of page 2 of the release and with the no evidence statement He spelled the problems out specifically for Mr Crane one time and more generally on another occasion in the context of forwarding several comments I said that we had stro'ng reservations about the wording and suggested also that they might include some expression of the idea that NRC's safeguards program and the low MUFs and the lack of positive evidence of diversion do not prove that significant amounts have not been stolen You have to counterbalance the 'no evidence' statement in some fashion I also suggested this to Commissioner Gilinsky He also told Hugh Thompson and probably Cookie Ong the same thing A couple of days later he spoke again to Mr Gilinsky who said that Mr Goldberg had better not spread that the problem too much because of security In other words he was cautioned to be discreet Mr Goldberg focused on the July 26 1977 Pedersen memo forwarding comments on the MUF release He said that by that time he had specifically told Mr Ong that he had a problem with no evidence and also the second pa t of the paragraph Mr Goldberg said that the absence of these conments from the Pedersen memo may have resulted either from a failure to communicate or a conscious choice by Mr Ong Mr Goldberg noted their omission on July '26 h n he got the memo but since he had already given thecoiTIJi1ents to Fred Crane he saw no neecl to put them in writing Th ese comments of Mr Gilinsky•s which were expressed in the Pedersen memo were not ·adequately dealt 'r'Jith according to Mr Goldberg He did not deal directly with Mr Gossick at this time 76 0 I • I 3 Mr Goldberg attended the August 2 briefing He recalls Mr Gilinsky making the point that the 11 no evidence statement did not belong in the release but he did not insist on the point in the open meeting Mr Gilinsky said the statement was appropriate for the period after 1968 Mr Goldberg recalls that Mr Burnett said that the document dealt with the post-1968 period Mr ·Goldberg stated that a Chi1k memorandum dated August 4 stated that the change requested by Commissio11er Gilinsky to the press release was made He does not reca11 Mr Crane speaking at the meeting However he did have a conversation with Messrs Crane Ong and Altman and Claudia Stetler at the elevators after this briefing Mr Goldberg told Crane that he was disappointed because he thought that changes could be made along the way Mr Crane said that he disagreed with the Goldberg Gilinsky changes that the sentence should not be taken out and that it was accurate Mr Goldberg concluded that it was out of his hands because the Commissioners were closeted with Burnett Smith and Gossick and the press release was going to be changed Mr Gilinsky had gotten agreement in the meeting that this was going to be done Mr Goldberg told Mr Crane that he thought the statement was valid for the post-1968 period and offered no conclusive evidence as a possibility for an errata sheet Other modifiers including 11 physica1 direct hard and ''positive were mentioned Mr Goldberg and Mr Gi1insky felt that an errata sheet would just flag the problem and would not serve the purpose Mr Goldberg said that the questions and answers sent to Rep Udall on August 19 1977 were circulated but as far as he can recall he did not focus on the no evidence phrase in the answer to Question 12 until it was called to his attention by Mr Ong on August 22 At that time he told Commissioner Gilinsky about the phrase and presented Mr Ong's pro­ posed correction which was to be sent to Representative Udall to replace the sentence in question the letter was sent August 19 The correction was rapidfaxed to Hugh Thompson that day Commissioner Gi1insky later told Mr Goldberg that he had agreed with Mr Gossick to let the matter drop as far as this specific letter was concerned and they had agreed to make appropriate corrections in all subsequent communications with Representative Udall He also believes that Mr Gossick's prepared testimony before the Udall and Dingell subcommittees was circulated Since August Mr Goldberg has not had any conversations with Mr Gossfck or the Staff on this matter 7 I ··i i I I ·J d jl i Ii' REPORT OF INTERVIEW Benjamin Huberman was interviewed in his office in the Executive Office Building at 3 00p m on January 31 1978 byJerome Nelson and James Fitzgerald of the Office of the Genera1 Counse1 and Wi 11 i am Ryan o f the Office of the Inspector and Auditor He was advised of the purpose of the interview and the fact that a summary of the interview would be made available to the Congress He came to the Nuclear Regulatory Commission in March of 1975 as Director of the Office of Policy Evaluation and departed in May 1977 He is now Assistant Director for National Security International and Space Affairs Office of Science and Technology Policy and jointly Senior Advisor for Technical Affairs nn the NSC staff Before joining the NRC he was Deputy Director of the Office of Program Analysis Staff of the National Security Council for 2 years and with the Arms Control and Disarmament Agency for over 6 years Prior to that he was in the Navy serving on Admiral Rickover's staff for 5 years He recalls that in 1975 the question of possible theft or diversion of nuclear material came up frequently in connection with GESMO the Smiley siting study and the work Henry Myers was doing on the Federal Guard Force proposal He does not recall being aware of the · NUMEC MUF's of the 1960's at that time It was not until early in 1976 perhaps in connection with other incidents of the Erwin facility or in connection with the CIA briefing that he first became aware of the NUMEC MUF data He recalls the briefings of February 1976 --first the CIA's and then ERDA's Regarding the CIA briefing he had been told it dealt with sensitive matters and that he was the only person from his office who would be allowed to attend It was held in the Chairman's conference room He thought that Bryan Eagle told him of the meeting about 2 days before it was held He had no advance information and was surprised about the subject of the briefing when it began Mr Duckett from the CIA was there as well as the five Commissioners and 1essrs Strauss Eagle Chapman and Builder He does not remember John Davis being in attendance He was very surprised to see that Mr Gossick was not there On various occasions he commented to two Chairmen Anders and Rowden on the management of the Commission with regard to Mr Gossick It was atrocious I criticized the five Commissioners for this without qualification They treated him Gossick unconscionably If he had been at the briefing he would not have been so poorly informed He was excluded from sessions such as this because in Huberman's opinion they treated him as a 11 second-class citizen 11 and could not resolve in their own mind the role of the EDO 11 I 25Xl E 0 13526 2 He recalls no package of materials being offered by Mr Duckett If there was anything tendered he believes he would have seen it He therefore believes nothing was offered Mr Duckett might have said he had some materials with him He does not r call any mention of inadequate storage facilities Mr Huberman recalled something to the effect that Helms had gone either to President Johnson or the FBI and that they had been turned off Mr Huberman addressed the subject matter of the briefing There were indications but not proof as he recalls that the NUMEC material had been diverted from the plant to Israel He believes Mr Duckett said that there was strong circumstantial evidence that diversion had occurred but no proof I Mr Huberman recalled asking Mr Duckett whether he had any physical - - - - - - - - proof that the NUMEC material went to Israel The answer was no The CIA or FBI or the Attorney General had gone to President Johnson with the information and was told to 1ay off This could have been for many reasons As far as he knew the Commission did not ask any questions on this He was surprised that Mr Duckett said this to the NRC In Mr Huberman's opinion it should not have been stated It demonstrated a great lack of judgment Mr Huberman mentioned this to Mr Anders afterwards He recalls that Mr Duckett said the infbrmation was closely held but does not recall whethe any mention was made about a difference of views in the intelligence community As far as here­ called there was no wrap-up by either Mr Duckett or the NRC although the Commissioners could certainly have met privately after the meeting I 25Xl E 0 13526 79 3 Mr Huberman recalled that Mr Duckett appeared somewhat ill at ease Upon questioning Huberman thought this impression was created because of certain mannerisms such as continual smoking but he was not sure on this He has had the occasion to observe Mr Duckett on previous occasions Mr Duckett was not particularly articulate on this occasion as far as he could recall After the briefing he mentioned to one of the Commissioners his surprise · at Mr Duckett mentioning the political asp ct to the NRC group and probably something was said about there being too many rumors or too much chitchat too much dependence on chitchat He never discussed the briefing with Mr Gossick because of the security aspects No one ever said do not discuss this with Mr Gossick but he thought that either Mr Duckett or Mr Anders said -- or should have said -- not to discuss it with anyone else in the Commission He never had a substantive discussion of the matter with anyone as far as he could recall Huberman was asked if he had discussed this issue with Henry Myers whom he had mentioned He said he had not even though he and yers were old friends He was asked whether there was any animosity between Myers and Gossick or any sign of vendetta Huberman said Myers had never complained to him about Gossick despite many opportunities to do so t lr Huberman is not sure that any policy flowed from the briefing but after it he personally was definitely more conscious of the insider threat potential in his own work However this was not the first time that he had come across the insider scenario In a study he was involved in while at ACDA Russ Wishow had told him about a study in which the diversion path they assumed had a tube to the plant manager's office for syphoning of plutonium nitrate in a chemical reprocessing plant that a Mr Huberman again addressed Mr Gossick's non-attendance at the briefings He indicated that he Huberman had complained to at least some of the · Commissioners about the cutting out of Mr Gossick from important matters Chairman Anders agreed to remedy this on particular occasions He also raised the role of the EDO generally with the other Commissioners He does not believe that despite many discussions on these subjects they ever resolved key questions such as whether the EDO was the Commission's man on the staff or the staff's man on the Commission The Commissioners had a habit of dealing directly with Office Directors especially Kenneth Chapman and Ben Rusche While he did not recall talking to 80 4 the Commissioners about Mr Gossick 1 s omission from the CIA ERDA briefings · Mr Huberman considers this to be the most blatant instance of cutting out Mr Gossick He said he would feel this way even if nothing ever happened to focus attention on Mr Gossick S absence from the briefings -- i e the Udall and Dingell testimony 1 Mr Huberman recalls that either Mr Anders or Mr Kennedy went to the White House after the briefing to tell General Scowcroft what they had heard since the information had political as well as substantial aspects When he left NRC Mr Huberman did not fill in his successor Kenneth Pedersen on the briefings nor did it occur to him to do so He believes that in any event the appropriate channel for passing on the information as new personnel came aboard would be from Chairman to Chairman and that the CIA briefing should be obtained for key new personnel Paragraph 8 of Document 102 to the Conran Task Force Report was read to Mr Huberman He was asked what qualifications referred to in Document 102 to no evidence statements were made by the Commission after the briefing He stated he was unaware of any qualifications but that it could have been something like diversions were conceivable or diversions In his recollection there was no conscious might have occurred Welshing on statements and no guidance or discussion about proper phrasing of such statements 11 11 11 11 11 11 11 In his OSTP hat Huberman on the MUF releases His releases utilize the same He was unaware of any NSC sat in on some of the briefings at the White House main concern was that both NRC and ERDA numbers and recalls that this problem was remedied blessing on a nO evidence statement 11 11 In recent months Mr Huberman has had no substantive discussions with any of the attendees at the February 1976 briefings or with Mr Gossick on the subject of Apollo NUMEC Mr Huberman was asked whether he w s aware of any previous explicit guidance to the staff of NRC on how they should address the question about theft or diversion and he said he did not reca Tl such guidance except insofar as it was imp 1i cit in Commission comments or guidance on such items as GESMO MUF problems and the Federal Guard Force Study 81 REPORT OF INTERVIEW Long D Y Cookie Ong was interviewed by William Ryan of the Office of Inspector and Auditor and James Fftzgerald of the Office of the General Counsel in hi office at 1717 H Stfeet ' N W Washington D C at 1 00 p m on January 23 1978 Mr Ong was told of the purpose of the interview and that the summary of the interview would be made avnilable to the Congress 11 Mr Ong is a Policy Analyst with the Office of Policy Evaluation a position he has occupied since November 7 1976 lmmediately prior to · this he was a member of the Office of the Executive Director for Operations for 1 1 2 years as a mathematical statistician He has been an employee of NRC AEC since 1958 He was transferred from the General Manager to Regulatory staff in 1968 Since January 1968 he has been involved with safeguards and considers himself an expert on safeguards especially MUF The AEC Office of Safeguards and Materials Management was established in 1967 under the General t anager Later in 1967 the Regulatory Staff had the Division of Nuclear r aterial Safeguards wi th a very small staff located at Headquarters and personnel in three safeguards districts The duty of the division was to develop and implement all safeguards as is done today essentially by the Office of Nuclear Material Safety and Safeguards NRR OSD and the Office of Inspection and Enforcement Mr Ong was aware of the MUF experienced by the NUMEC facility back in the l960•s but knew of no external intelligence information on it until the time of the MUF release in 1977 The MUF occurred before any safe­ guards controls existed The loss was attributed much to a failure to reconcile physical inventories for unmeasured discards which tended to inflate the MUF over an extended period of time To him a MUF means that one does not know the whereabouts of the material and therefore there is a need of an investigation to look into it He knew of the AEC survey under Mr Doug George in 1966 into the NUMEC MUF It involved mainly a reinventorying and examination of contractual obligations and the mixing of process lines Mr Ong finds it strange that people are excited about the NUMEC discrepancy of 1966 which occurred when there were no controls when on the other hand the Erwin facility experienced a big MUF in 1969 while under controls In his view a large MUF indicates the possibility of a diversion He repeated that he had never heard of any intelligence such as CIA or FBI reports on NUMEC All staff members he has contacted have had no knowledge of any outside information If there was hard evidence of diversion at NUMEC the AEC safeguards staff that was short-changed on manpower would have jumped at the justification for more manpower Up to recently he 82 I I I 2 II held no op1n1on ori whether there 0ere dive ions but was always uneasy about both NUt EC and Erwin He recalls that a 1970 investigation on Erwin was so i nten e ·that ai roorne survei 11 ance tnstrumenta ti on ·was used · to scan the area surrounding the NFS plant ·· for signs of high enriched uranium that might have oeen diverted He believes Commissioner Gilinsky's uneasiness has to do with highly sensitive intelligence information about NUMEC Mr Ong's uneasiness however is froni a technical standpoint regarding materials control and accounting especially plant shut-down criteria and the nature of investi­ gation that are carried out following large MUFs Commissioner Gilinsky had personal information very concerned about broad statements about no Mr Ong said he did not know this absolutely Mr Gilinsky was concerned but Paul Goldberg could not explain what his concern was · which caused him to be evidence of diversion He was bothered that the Commissioner's Assistant Mr Ong got an impression there was something he did not know about from the questioning of Mr Burnham a reporter at the press briefing on the MUF release He asked a question of each panelist about a CIA report In earlier times Mr Ong related there generally speaking was a policy addressing the issue of diversion -- that NRC AEC was not aware of any significant diversions Staff was thinking of hard evidence and did not include any information from outside intelligence He cannot specifically recall any particular place where the statement was made The Rosenbaum Report in 1974 may have had some such a statement Mr Ong got his impression of the policy from speech writing and writing staff papers We would usually say something to the effect that no diversion had been detected Statements like this were never called into question as far as he knows In preparation for the MUF release which occurred on August 4 1977 Mr Ong had occasion to attend a meeting in June 1977 at the NSC with representatives of ERDA and the NSC staff He does not recall any discussion at that meeting of a no evidence statement but NUMEC was mentioned in the general context of MUf He also attended another meeting in June ·1977 at ERDA in Germantown r d He was in the company of F ed Crane and William Altman of NMSS ERDA representatives included Len Brenner They went over ERDA's plans on MUF release It was an ERDA task force meeting on how they were handling their release There was no mention of either a no evidence 11 statement or 1966 events at NUMEC They talked about if there was a release it should be on a Thursday and that it was up to ERDA to discuss thepre-'68 figures Any pressure to relea e on August 4 1977 was not from the Corrtnissioners 83 i I I I II i I I I 3 Addressing the sentence in NRC 1 s MUF release at the top of page 2 to the effect that there is no evidence that th re ever has been a diversion Mr Ong said he did not know how it got into the text of the release Something similar had been in the Q and A•s of SECY 77-268 Mr Ong had prepared a chronology of his actions from about July 21 1977 through early August 1977 A copy of this paper in final form is attached to this summary He vouched for its accuracy in terms of best recall and therefore was only asked supplemental questions by the interviewers OPE sent in comments on the draft release on July 26 1977 They included both OPE•s and the Commissioners comments Later he said that was his understanding that Mr Gilinsky offered additional comments directly to the staff on or after July 26 He does not know the thrust of these comments Commissioner Gilinsky had a very important comment that might require a change in the report Mr Goldberg thought Mr Gilinsky might suggest a change to the release Mr Ong had an inkling of what might be the problem - that it had something to do with the page c6nt ining the nO evidence paragraph Indeed he had discussed with William Altman his individual taste to change no evidence to insufficient evidence entirely on statistical grounds The staff knew there was a comment coming but they did not appear to know what it was specifically 11 For Mr Ong August 2 1977 the briefing date was the day of enlight­ ment Prior to that time I didn•t know what the problem was specifi­ cally At the big briefing which had a large staff audience Mr Gilinsky wanted to voice his specific concern Dr Clifford Smith backed up by Mr Gossick said any changes would be too late Mr Gilinsky said something like Do you mean whatever I have to say is irrelevant · He said he would discuss this further at a subsequent meeting with fewer attendees At that point many of the attendees Mr Ong included were asked to leave Only those with a need to know remained Mr Kenneth Pederson Director of OPE remained Mr Pederson later told Mr Ong that Commissioner Gilinsky wanted the modifier conclusive part in the no evidence statement And that it had something to do with NUMEC Mr Ong was first aware of this desire within an hour before the briefing when Mr Goldberg told him that they wanted this specific change · Later Mr Ong asked Mr Goldberg why he had not told him that the addition of a word to the release was all he wanted Mr Goldberg said that it was because it was so highly sensitive and that no conclusive evidence'• was not necessarily the best solution As recently as a week ago Mr Goldberg told Mr Ong that the reason they did not tell him of the change was beq use it had something to do with the sensitivity due to the Apollo NUMEC connection but that in retrospect Mr Ong was inadvertantly not told specifically and should have been According to 84 I i i I i I I ·I I n 4 Mr Ong if Mr Goldberg tried to convey anything specific to him he failed Any comments he received he vould have forwarded to the staff He does not require a reason Commissioners of course do not have to justify their comments to him At no time did Mr Ong have any direct conversations with Mr Gossick On the MUF release he spoke to Mr Crane and Mr Altman of NNSS Later when commenting on the Q and A•s sent by Mr Gossick to Mr Udall on August 19 1977 he only went through Hugh Thompson an assistant to Mr Gossick However on August 22 1977 Mr Ong observed that the answer to question 12 had a no evidence statement that had apparently not been in earlier drafts In light of Mr Gilinsky•s previous concerns Mr Ong noted the statement to Hugh Thompson He then went to Paul Goldberg and the Commissioner to note the answer that had been sent They sat down and wrote out two alternative sentences and Mr Goldberg rapidfaxed them out to Mr Thompson Commissioner Kennedy concurred in the suggested change ·1r Ong later urged Mr Thompson to convey to r Gossick that this was an important point being made by the Commissioners Moreover in Mr Ong•s opinion it was never too late to make an important clarifica­ tion On or about August 26 Mr Thompson said something to the effect that to change the answer then would focus on it and cause more probiems than it would eliminate 85 ' Statement bv L D Y Ong hursday JGnuary JO 1978 July 21 The staff submitted a Co mnissioner Action paper SECY-77-268C CO FIDENTIAL cover memoiandum attached with a statement of purpose To obtain Comraission approval to re1ease the report of inventory differ­ ence data to tlle publ_ic The discussion section stated The date of release is scheduled for Thursday August 4 1977 subject to Commission approval of the proposed _z eport underlined for emphasis Fon rarding notation requested Coriunission comments by COB Honday July 25 It is important to note that Commissioner Gilinsky -never approved the proposed report 2 Friday July 22 Fred Crane had been designated by Cliff Smith and Lee Gossick as the staff contact for SECY-77-268C Fred however was on annual leave from July 21 through July 25 Bill Altman who was acting for him came to my office on July 22 to discuss the Commission Action paper that had been submitted the previous day I noted to him that in my opinion the staff had not allowed the Commissioners much time--only four days--to comment on such a major and complex action item It appeared that substantial changes had been made from the May 27 1977 version SECY-77-268 Moreover Commissioner Gilinsky already was on travel to California and did not expect to return until August 1 I further noted for example that the first paragraph on page 2 of th current issue was a noticeable addition to the text ·The last paragraph on page 2 of the May version had stated It is important to view the contents of this document in their entirety and to avoid misleading interpretations based on the tables alone Although inventory discrepancy analysis is a tool used by NRC and its lice sees for indication of processing problems and or possible theft of nuclear material inventory discrepancies arise naturally in nuclear material processing and are not in and of themselves evidence of lost or stolen material NRC and its licensees investigate significant inventory discrepancies It is also important to recognize that a licensee's material accounting system of which inventory discrepancy data comprises a small part is in itself only one component of the total overlapping safeguards system used to protect control process and account for nuclear material That statement remained essentially the same viz It is important to understand the contents of this report as they relate to the NRC safeguards program Inventory differences arise natur l11 v t rh n nucle 1r or non-nuclear m 1terial is processed par­ ticularl when chemical operations are involved These differenc s are not in anJ of the mselve s evidence of lost or stolen ma terial On the other hand in ento-ry difference data provide valuable inform 1 ion for t·hc 'RC s J cr u lrds progrnm Invcntorv di f fcrencc ntw l ysi s is on o the tl' 'ls L sed by Nl C 1nd the licensed inclustr • 86 - 2 ­ to look for processing problems for bookkeeping problems and for the possible theft of nuclear material NRC and the licensees investigate significant inventory differencei and if necessary a licensee's operation may be shut dmm until an inventory difference is resolved However this is only one of many steps taken to safeguard SNi· A material acCO Jnting system of which inventory difference analysis comprises a small part is itself only one component of a comprehensive multi-layered safeguards system used to protect control process and account for nuclear material However it was now supplemented at the top of page 2 with The Nuclear Regulatory Commission has no evidence that any signifi­ cant amount of str9tegic SNM has ever been stolen or diverted However because perfect measurement of nuclear material is impossible There will always be uncertainty associated with accounting data and accounting data alone cannot show with absolute certainty that theft has not occurred Therefore the NRC relies on a safeguards system that emphasizes stringent physical security and material control measures to gain grea t er assurance that material stays in authorized areas It is this total integrated safeguards system coupled with investigations of inventory differences and other safeguards events that the NRC uses to protect nuclear material and to assure itself that no theft of significant amounts of SNM has occurred As an aside voicing strictly my individual op n on as statistician I suggested changing no evidence to insufficient evidence in the first sentence Hy point vas that statisticians in concluding that a MUF is not significant commonly use a rigorous statement of assurance e g At the prescribed level of significance there was insufficient evidence to reject the null hypothesis that rillF is zero However we are concluding that MUF is not significantly different from zero at a risk of accepting an alternative hypothesis This is not unlike a coroner's inquest fol­ lo ving a reported death In reaching a decision whether the deceased has been a victim of foul play the inquest process runs the risk of concluding either that a crime had been corr itted when none had or that a crime had not been committed when one had In a decision that no crime has occurred the inquest is essentially concluding that there was insufficient evidence submitted to reject the null hypothesis of no foul play whil accepting a chance of not recognizing a crime My individual concern however was considered by Bill as substantive in a rigorously statis ical sense but counter-productive to the release's apparent basic objective to inform the public as clearly and simply as possible Furthermore the first s ntencc vas 1lrendy qualified to some extent with uncertainty considerations since the second sentence began with the word However Bill pointed out that the meaning of the sentence was intended to be in the context of the paragraph preceding it and concerning the function lid l · j tl ttion c1f t11VL'llllll ' dii fCrL'Il 'l'S in pL'r p ' l·tiVC tO r tc llrSt tl ' entenc s of the proposed report viz 87 - 3 ­ This is the Nuclear ReguL 1tory Commission's NRC fir s t periodic report of information concerning accounting for special nuclear material SN in the licensed sector of the nuclear industry The jnfor mation presented here covers the operation of major licensed nucl ar fuel m nufacturers and research laboratori s pr-oce-ssing s 1 gn i f i cant q Li- liiiliTesofstrateg fcsr rFi'r between January 1 1968 and September 30 1976 Underlined for emphasis 3 Tuesday July 26 A memorandum was sent from Ken Pedersen to Lee Gossick enclosing comments available from Commissioner Kennedy Commissioner Gilinsky and OPE attached It was actually signed after COB July 25 and I hand-delivered a riopy to Tom Thayer NMSS after 7 00p m July 25 The first specific comment was provided by Commissioner Gilinsky's office conveying that it was incorrect to imply that safeguards could show with absolute certainty that theft has not occurred underlined for emphasis I c onsidered the sixth general co ment calling for a staff briefing of the Commissioners on August 2 especially important since the st2ff paper explicitly stated that the release would be subject to Commission approval of the proposed report 4 Thursday July 28 Fred Crane told me that the staff was addressing all comments forwarded by the OPE memo of July 26 Fred also said that they were addressing add-on comments that had been received directly from Commissioner Gilinsky's office since July 26 He did not elaborate on the substance of the comments In all discussions with the staff that was preparing the release package I emphasized the need to be prepared to accommodate other Commissioner comments that might arise up to and in the August 2 briefing Nuch of our discussion centered on the first specific comment of the OPE memo which the staff considered substantive Both Crane and Altman believed the appropriate resolution _TOuld be the deletion of the rord absolute Their overall position was that the contents of the proposed document should be viewed in the entirety of the proposed report instead of possibly misinterpreting isolated statements They thought that the intent of uncertainty statements in the document was to avoid any mistaken belief that anv safeguards system could be sure to detect the diversion or theft of a significant amount of SNH 4 Friday July 29 Fred Cr 1ne tr lcl me th 1t P 1nl oldbcrg h 1d notified him th 1t Commissioner Cilinsky might if -mt ccrt 1in ci1 1n gcs m 1de hm ever Fred s 1 i d th 1t P tul v 'JS not sped ftc hrl t the proh em m1 r ht ht'--only th tt Commiss i oner Gil ins • t t llt ' ln l t c1 kl ' ' 1 · ll t lli L' m v tL tit 88 titik' r Lh c• u t J l me c li n g - 4 ­ Paul Goldberg confirmed this to me but J JS not clear as to exactly what Coffimis sioner Gilinsky's concerns were and in turn what specific change s HoulJ be requested Jlwt secomed abundantly clear lv ns that Commissioner Cilinsky l1ad a deep concern about certain statements in or in til vicinity of the first paragraph of the second pa ge Noreover lve could expect Commissioner Gilinsky to express his specific concern and request detailed changes at the August 2 briefing In subsequent phone calls to the staff I emphasized that they should be prepared to accommodate some important changes in wording of the report--apparently on page 2--to be requested by Commissioner Gilinsky on August 2 They said that changes were becoming more difficult to make logistically but that they would do their best They never said that it would be · impossible I advised them that they and their management should identify the options available to make changes physically i e the logistical options for the printing and issuance of errata sheets or the complete replacement of a page or pages 5 Monday August 1 I tried reaching Crane Altman Gerry Page Tom Thayer and Bob Burnette to inquire lvhat arrangements were being made to make any last minute changes that might arise in the briefing the next day Claudia Stetler said that just about everyone who had anything to do with the release was out briefing someone e g the Congress or State delegations She also said that Bob Erickson was coordinating printing and distribution efforts I then called Hugh McVeagh Chief Publications and Graphics Branch DDC ADM to inquire whether any printing arrangements had been made by the staff to handle possible last minute changes that could arise the next day He said no bJt that he would schedule a standby printing crew for the evening of August 2 Bob Erickson returned my call around COB I asked what thought had been given about making last minute changes that would likely be requested the next day His reply was essentially that they would address that problem if and when it arose I then called Hugh McVeagh to release his August 2 standby crew 6 Tuesday August 2 Shortly before the briefing Paul Goldberg told me that Commission r Gilinsky simply wanted no evidence changed to no conclusive evidence --at least as an alternative solution for satisfying his concern I thought that the purpose of deleting the word absolute in the sentence that followed •as to qualify the no evidence first sentence arid the no theft fourth sentence Nonetheless since I had independently questioned the same words on the basis of rigorous statistical hypothesis testing I ilou ht L·h ll i t vouhl he lwlt Cul cl trif-ic tt ion and a flimple cil tt1f C that would be re 1dilv nceommoclRtecl Enrly in tl1e briefing Commissioner Gilinskv said that he wished to comment tltl' L c ltit cnt nl Ll1-2 r·epur· t CJiCi Sn il lt l HJ LL'C c si ck rcpli t2d that l i tL' on report had already been printed and that the release process was too far 89 - 5 ­ along to make any changes at that time Commissioner Gilinsky asked whether t ha t meant that · hate v er he had to say would be irrelevant The an s 1 r er 1 r as positi ve The st ff said th a t a l l comments that had been received from the Co mmissioners and OPE had been accommodated Commissioner Kennedy confirmed tlwt all of h is comments ha d been addressed satisfactoril y Ken Ped e rsen said that he had been told by his staff that all comments forwarded by the OPE memo of July 26 had been addressed At that time I passed to Ken my copy of the report I had just marked up with no evidence changed to no conclusive evidence Commissioner Gilinsky then asked that this point be discussed in a meeting with fewer attendees shortly after ·the briefing I did not attend that subsequent meeting but have since been informed that Commissioner Gilinsky voiced his no conclusive evidence concern then to Commissioner Kennedy and key staff--including Lee Gossick--who had a definite need-to-know After the subsequent meet ng Ken Pedersen told me three things 1 Commissioner Gilinsky's specific concern had some connection with Apollo Ken h wever did not knmv what it was· · 2 Cliff Smith and Lee Gossick had agreed to qualify the no evidence '' statement in the press release 3 Commissioner Gilinsky nevertheless might not concur in the inventory difference report In retrospect it is apparent that Commissioner Gilinsky's concern to a large degree was related to his knowledge of intelligence information pertaining to the control and accounting of SNM at the NUMEC facility in Apollo Pennsylvania prior to 1968 Apparently he wanted to bring to the staff's attention shortcomings of broad categc rical statements about no evidence of diversion in light of other information Later in the briefing I called Bob Burnette and Fred Crane outside to ask them v-hy they couldn't make •v-hat seemed to be such a simple change-­ amounting seemingly to one word They said that Paul Goldberg had also informed them about the specific word change request just prior to the briefing They furthermore said that if that point had been raised earlier it would have been rejected for the same reason that Dr James Schlesin ger's request v-as for no direct evidence That was the first time that Dr Schlesinger's no direct evidence point had been conveyed to me I was completely ·surprised since I had argued earlier for ins uf­ ficient evidence on entirely different grounds Horeover last July my req uest to accomp any t he staff in a meetin g between NRC ERDA and Dr Schl esin g0 r at th e latter's office had been denied--in sp ite of a s ub s e­ quent call by Ken Pede rs en asking Cliff Sm ith to recon si der The onl y r l tlt 1t v C g l 0ct k L ll t hat me eting f ro m t be sta ff ·laS t ll t in ef f ect · •' d i dn' t mi s s muc h Ne ither my attcnd ll1C L no t· Jhc th c r Dr Schles inger v ic c d hi s no d i r ec t l' Vidc nce poin t t t th t mee t in g is r eally impo r- tant h'h H i s import mt i s tl 1 1t i n my opi n ion no m 1tt c r v hen su c it 1 point lv lS 90 • - 6 ­ raised explicitly by such a prominent source as Dr Schlesinger it should have been brought to the attention of the Commissioners before August 2-­ espccially since the first specific cotl Gent of the OPE memorandum of July 26 vhich was provided by Commissioner Gilinsky's office focused on that paragraph as being too strong Except for changing significantevidence to direct evidence the attached draft memorandum which was written by me on November 21 was partially forwarded to the Commission by Bernie Snyder on December 9 It elaborates on the above and cescribes subsequent events that I believe are pertinent I wish to note the following a On the morning of Monday August 22 the OPE copy of Lee Gossick's letter of August 19- - ras routed to me I shortly spotted th e no evidence of diversion 11 statement and iuunediately called Hugh Thompson vho was assisting Lee Gossick in EDO I noted to him that · Commissioner Gilinsky had argued vigorously against that same type of broad state­ ment less than three weeks ago Hmvever Hugh said that the letter had already been mailed b I immediately brought this matter to the attention of Paul Goldberg and Commissioner Gilinsky and helped the Commissioner draft· two sentences to more clearly convey NRC's position pertaining to Question 12 Com­ missioner Gilinsky's office later that day rapifaxed the suggested clarification to Lee Gossick c The attachments to my draft memorandum of November 21 were not forwarded to the Commission on December 9 Two notations in the attachments are important i The staff ' vorked the suggested clarification rapifaxed on August 22 into the answer to Question 12 identifying it in the margin as V G 's replacement ii It was apparently brought to Lee Gossick's attention and he considered it a 11 dead issue on August 26 based on his discussion of the matter with Commissioner Gilinsky d Question 12 asked Hmv much confidence do ' ve have that materials have not been diverted in the past Jhat confidence do we have that in light of lax perimeter security at Erwin that materials were not diverted in the past I and others vho were on the regulatory safeguards staff in 1968 were deeply concerned about the apparent marginal ability of both the NUNEC 11r mi um focility at i ollo Pe- nsvJvan i t and rbe Nuclonr Fuel Services facility at Erwin Tennessee to detect a significant Lhe f t 01 - uivcrsion if one occurreJ Of spe ial concern as an extremely Ln·ge UF that occurrccl at -lfS-Er vin in the late 1960's 1' ·- JG o t tc lt _ ll t rt'l ' lSL' rc 'orts an ir vc'ntor -' diffcn J1CC' of 73 7 i g -U-235 ltlg tly L ari t l c'd f or iisc 1l y o r 1969 Tl te origirwlly 91 - 7 ­ reported loss value was much higher The inventory diE ference v Js adjusted dmvn to 73 7 Kgs follmving an intensive AEC investigation in 1969 th 1t was really inconclusive in my op n on Our special concern vas that the material was in an accessible form vas very highly enriched and therefore readily amenable to the manufacture of a nuclear device r oreover the IUF in effect covered a material balance period bet• reen 195 7-1968 while most of the processing occurred in the last two or three years Although the ending physical inveritory was taken in December 1968 I Vas a member of the AEC regulatory · staff's inspection team witnessing it and independently verifying its accuracy the relatively new type of process vhich contributed to the reported positive HUF spanned two or three years In my opinion any diversion of highly enriched uranium in the late 1960's could have occurred at NFS-Erwin just as well as at NUMEC­ Apollo--if at all--as far as the AEC safeguards system was concerned 92 UNITf O SIJ TC NUCLEAn flECULr TOrtY · WASHINGTON D C CO • MI SION - - · -- 20 July 26 1977 HH10R A NDUH FOR Gossick Executive Director for Operations Lee V I _ FROH Ken Pedcrsct t_ _ · t _ SUBJECT CmlNISSIONER Cmi -fENT ON THE RELEASE OF INVENTORY DIFFERENCE HUF DATA TO THE PUBLIC SECY-77-268C Enclosed are Commissioner and OPE cowJents on the staff's plans to release the report of inventory difference information to the public Enclosure As stated cc Commissioner Gilinsky Commissioner Kennedy James Kelley Samuel Chilk CONTACT Cookie Ong OPE 634-1727 93 Gener 1l Cnmr r nt s 1 It is undcr tood th t the Gtaff considers the investigations at R I T Apollo Leechburg and NFS-Erwin are s 1tisfactorily completed therefore FY 1976 inventory differences for these facilities are included in the release 2 Ii is noted that inventory differences will not be included in the un­ classified digest of the B W task fore report to be released with the package 3 It is understood that the staff has decided that the NRC should not adjust the B W and NFS inventory differences therefore present foot­ notes indicating possible later adjustment as a result of the task ' force's findings should be deleted and replaced with a statement to the effect that the task force has determined that specific amounts of the inventory differences for affacted facilities may be e lained 4 All five licenGees who replied that they consider the data to be pro­ prietary should be notified prior to the release date that their requests have been denied by C 5 The Commissioners agree with the staff's planned release date and they should be kept fully and promptly informed about how the release will ·be made in terms of the schedule of events planned for briefing those having a special interest in the public report e g the Congress governors of the nine states in which high interest facilities are located ERDA the N 1tional Security Council and the press coordin 1 i on with OPA OCA mJ OPE sho uld be continued 94 Close - 2 statu of the release packnr c and the NRC t 1sk force report SECY-77­ JBG on Aut ust 2 Specific · Co ents · 1 Page 2 paragrnph l second and third sentences -- These sentences incorrectly imply that material accounting together with stringent physical security and material control measures do show with absolute certainty that theft has not occurred 2 Page 4 paragraph 2 first sentence· Clarify Change'definite to apparent 3 Page 7 sumcary paragraph last sentence Bimonthly inventories are also required for uranium-233 4 Page 7 last paragraph second sentence ERDA absorbed the AEC Gemeral Hanager' s Office vhich is not necessarily the predecessor of ERDA 5 Part 5 Glossary of Terms Page 3 significant quantity of SSNl-1 Two kgs of uranium-233 would also constitute a significant quantity of SSNl'f 6 Appendix A last paragraph last sentence Delete in absolute value 7 Listing of FY 1976 Inventory Diffcrcnc0 s for hi i hly enriched urani ur 1 95 • • - 3 ­ 8 Enclosure 2 page 1 paragraph 1 first sentence SSNH also inclu dt s uraniu n-233 9 Enclosure 2 page 1 paragraph 3 third sentence The Commissioners should be informed about any staff plans to release inv entory difference information pertaining to loiv-enriched uranium 10 Enclosure 2 page 2 paragraph 1 second sentence Replace an · inventory by physical • hand to a physical inventory shotvs to be on hand at the end of a material balance period Last sentence change based on measurements to subject to measurement errors 11 Enclosure 3 page 3 paragraph 2 second sentence to strategic ' 96 Change significant 11 UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON D C 20555 November 21 1977 IE · IOR fu'lDUH FOR Chairman Hendrie Commissioner Gilinsky Commis sioner Kennedy Commissioner Bradford FRON Ken Pedersen SUBJECT THIRD ANNUAL REPORT ON DOMESTIC SAFEGUARDS SECY-77-585 I recommend approval of the reporg subject to the resolution of the follmving 1 Clarify the second sentence of the second paragraph · on the first page of the proposed joint ERDA NRC report viz Moreover no evidence has been found leading to the conclusion that significant quantities of strategic SNM have been stolen or that a black market exists for such materials The problem is with the meaning of the first half of that sentence The black market aspect could be readily incorporated in the sentenc e preceding it In Lee Gossick's letter of August 19 1977 to Congressman Ud all copy attached a similar statement was made in the second sentence of his answer to the 12th question viz ' Over the years a number of large inventory G ifferences have been investigated and in the course of these examinations no evidence was found of a theft of diversion of a significant quantity of special nuclear material i- In reviewing the proposed rele ase of inventory difference information to the public last August Commissioner Gilinsky expressed special concern about a similar stat ement in the text of the release per­ taining to no evidence of diversion He wanted no evidence changed to no conclusive evidence Furthermore I understand that at about the same time Dr Schlesinger was arguing for no direct evidence I am told th lt neither was accommodated at th t time on the grounds that the rele ase 1 Tas alrendy so far along that coordin a tion f or such 1 Llw ngc 1- i l h EIW NRC and NSC would be ·impractical Hon over it C0'JT C T C k ic O n l1l'E Ci1 1- 12 97 For the Commission - 2 ­ was felt th 1t such n ch wgl might contribute to a ·misinterpretation that there was knmvledge of either inconclusive or indirect evidence of diversion Shortly after Lee Cossick sent his letter to Congressman Udall Commissioner Gilinsky with the concurrence of Commissioner Kennedy Chairman Hendrie deferred judgment on the matter to the two Com­ missioners who were here at the time of the release suggested that he might wish to clarify his no evidence of diversion 11 state­ ment by replacing it with ''Since the regulatory staff assumed full responsibility for safeguarding SNM in the private sector in 1968 a number of large inventory differences have occurred These have all been investigated and the investigations have not supported the hypothesis that diversion has taken place The replacement was not made then but the staff promised to make such a clarifying statement the first opportunity This report which is supposed to be delivered to President Carter by Dr Schlesinger next week would be a good place to do it Our dis­ cussion with Gene Perchonok NMSS on Friday indicated that this pcint was inadvertently omitted and that the staff would want to make it in any case Since the annual report is to be a joint effort I agree with the NRC and ERDA staffs that an acceptable replacement would be No evidence has been found to indicate the existence of an imminent threat of theft of diversion of SNM or that a black market e x ists for such materials mile a number of large inventory differences have occurred these have all · been investigated and the investigations have not established that significant quantities of strategic SID1 have been stolen 2 Clarify the first sentence of the Conclusions by changing threat levels to hypo thetical threat levels to avoid possible mis­ interpretation that NRC has determined actual threat levels I believe t hat it is important in any case to address these points in t he Third Annual Report on Domestic Safeguards Symptomatic of such a need as I am told is an apparent concern voiced by a member of the Nr1SS staff --Sidney Moglewer--in a memorandum of October 25 1977 to Bob Burnette I understand that he charged to some extent an NRC wh itewas h or coverup in regard to the inventory difference release made last August He was r c H rtcdl c otH e rn d 'h e t hc ' r 1 ss uc1nccs of no d i vc r ion 'e r e· st raight­ forward Enclosure - l · sL lt vd T l rP H l ' I t 1 S 1m Cl ilk g8 - - ----· J e h m vflThomp so r Cl AUG 1 SECY Shapar i277 Smith ED0-2336 22 EVo1gc na u Tf 1cTi ern en The Honorable rlorris K Udall Chaiman Subcom ittea on Energy und the Enviror iiient Coromitt e on Int rior and Insular AffJirs United States House cf Representativ€ s Washington D C _20515 I r I Dear ftlr Chairman I am pleased to prov1d NRC's responses to the questions provided by your staff fo1Tm-Jir g th hearing he1d by your Subcorrmittee to address the safeguards concerns raised by t-ir Jan s Conran Also enc1osed is our respcnse to the additional question cc tained ·in youi August 2 1977 letter · I j NRC is ·ccr mitted to a regulatory progra 'il that assures aaequat safeguards fer licensed nuclear faciliti s u s ycu know our present prograrn not only inc1udes rcutine facility i nspectio 1s 'lith related enfort 2 T -ent sanctions but· also d tai1ed site evaluations ai ad at identifying potential weaknesses even ·1here · a facility meets existing license conditions We intend to keep you fu11y advised as to the results of t ase ongoing eva1uaticns I I trust that the enclosed is responsive t your requests · r appreciate your continuing interest in achieving ar d assuring e·ffective safeguards 1 j Since iy · J i - _ l I · Sig ced Lee V Go »id I ­ 1 · Lee V Gossi ck Executi ve Dircctcr for Operations ­ · i I r Enc1osure · Rzsponse to Questions f t • ' o _ J l U J'' -· -· ··o HT ir- ·n · E oo cAd v ___ _____ ·· - 1 - D - ·· l VGc --1· -k J'- - - · • r 1 ···············-······ L- 1 · · ' · · l _ · - _ - __ _ _ _ _ _ _ _ - _ _ ___ ·'_ _ _ · _ _ _ _ -l s 9' j - _'i_ _ _ _7___ ­ _ ------ --- - f-''l' _ J IJj ·- -----·---······- - -- · ·· ·· ­ - - - _· __ ·_ ·_-- I -·- · · ·_ _ _- __· __ t _ __- _ _ _ _ - · · RESr'O iSE TO QUESTIOi S tion 1 It is ou-r· un erstanding that t € s oper2ting under the aus ic- s of the Division of Safeguards have per·fon ed field evaluc ti c of the 2 bility to protect mat rials at fuel facilities Pro ­ tection is supposed to be afforded against violent detersir d attc cks by sr a 11 l'le 11-ar ed groups To 1·1hat extent have tn - s - field evaluations found deficiencies since August 1976 Ple enumerate orne of these deficiencies · Ans ·Jer I I I I I I I The safeguards at all fuel facilities are intended to protect wi h hioh assuranc against a postulated threat comprised of a determined violent assault by several persons Nith inside I knowledge or assistance The series of corrective actions im­ · · posed _by the NRC on certain f ciJi _ies in the Spring of 1977 brq_y_ght all fadliUes__to_ the above performance 1evel There --were sornevari atl ons noted 1n the CQQJ i d n c l ever at these facilities relative to their capabilities for meeting the external assault As a result the Commission directed correcti ve actions including an increase in the number of guards additionc · armament and hardening or increased patrols of stor·age areas Examples ·of other corrective actions since August 1976 include increased offsite communications capabilities and improved alarr 1 station procedures I I Question 2 Have your Test and Evaluation teams evaluated s curity at Babcock l·Iilcox fuel facility at Apollo Pa If so have you read reports of the team•s evaluation In the team's view could the security system provide protection against a determined violent assault by a sma11 group of determined • - ell­ armed indivic uals ho • ere aided by an insider Answer As a result of the upgrades that occurred in the Spring of 1977 which were the results of previous site eva1uations the Sabcoc Wilcox facility at Apo116 Pennsylvania is conside ed capable of protecting against the postulated threat identified in our answer to Question 1 This facility requited upgrad ing to increase its capability to assure comparability to othei' facilities Improvements included increase in the size of r r guard force and additional arma ent 8 ·J Apollo is or e of th facilities scheduled to be reexamined as part of our comprehe eva 1uati on program A1though the eva1uat ion at this fc cii ity has not yet started we expect these latest results to be available f or Staff and Commission review later this year i 1 J 'I I I I f I 10 1 • ' OL stic 1 11 Hm·1 rr uch confidence do '12 have that mate1·ial accounting techn c s will be able to detect diversion of sisnificant quantities of nuclear materiais Answer The material accounting system records the quantity locatio i of nuclear material l'lithin a licensed facility Th i s system provides an alert Hhen the inventory difference for a given inventory period exceeds preestablished limits The materia1 control system contains and controls the material in authorized and designated plant areas The physical protection system provides mechanisms to detect and respond to unauthorized access and removal When the accounting limits are exceeded for a given period action is taken to determine the cause of the situation and to apply corrective measures r ovesent A task force to examine the role of mate ial control and acco nting is under 1ay and nearing completion Jith regard to the detection capabilities provided by current requirements and practices the preliminary conclusion of the task force is that in general 10 CFR Part 70 provisions relating to formal procedures assign­ ments of responsibilities separation of duties measurements inventories and documentatiori whe considered in conjunction with the physical protection ·requirements of 10 CFR Part 73 for · access and egres controls provide extensive detection capabilitiesYte have reasonable confidence that theft or -di_versi'onOf a significant quantity of strategic special nuciear · _material ·IOuld be detected today Question 12 How much confidence do we have that materials have not been diverted in the past For example last year it was revealed that an honor system was in effect at ErNi n Tennessee ' herein employees were on their honor to check each other as they left the plant facilities What confidence do we have that i n light of lax perimeter security at En·1in th i materials ' ere not divert d in the past 1 · AnsHer -- - -- I ­ ···· ' • • •w P • - -· -- ••• • · · · ·- · · ··- - •• · ·- ' - · • • r- · · -v __ ' - 6 - - ·· In the parti cu lc r case ci tsd 7o -c 2 pi nt at En-lin Tenness2 a special ilRC Task Force exa nined c l cnJe inventory differenc2 involvi g an overage of materiJ l The T2sk Force datermine d that the inventory difference 1·1as caused primari ly by over­ stat ent of liquid discharges Neither this examination nor a separate investigation conducted by lRC of al1egations made by a ne1·1s reporter uncovered evidence of a theft or diversion of a significant quantity of special nuclear materi l The existence of the 11 honor system 11 Has uncovered during the examination of the inventory difference described above This 'las promptly corrected by the 1i censee The s creening of individuals for unauthorised SSNM prior to exiting a material handling area was but one of several detection measures used in the overall proteCtion system at En'lin · Other surveillance and · internal material' control oJere also employed during that period Question 13 Ans •ter Co n you assure us that materia 1s at these plants cannot be diverte i via the Haste streams Is there any significant staff disagreement with this conclusion A conceivable mode of attempted diversion cou1d be to illicitly obtain waste materials and clandestinely recover SNM for the ·waste From a realistic and practical standpoint waste materials have little or no attractiveness Wastes are released because of the difficulty of recovering useful quantities of SN even ·li th facilities built expressly for that purpose In addition a diverter would have to steal large quantities of waste even to obtain gram quantities of SNi'l Concealing attractive SNM material within a waste container was recognized long ago as a possible diversion path As a resu1t procedures have been imposed i'ihich require 1 h1o individuals to verify the nature of a Haste contain2r's contents just prior to sealing and tamper-safing the con t ai n e 2 tv1o individuals to 1-1itness and verify the sealing and taiTiper­ safing of each waste container 3 non-destructive assay measurements of each seale d vaste con­ tainer which are capable of detecting both total SNM cont nt and localized areas of hiah SNM concentration 4 various other conU ols s ch as t 2mper-s afe seal checks fa being intact and for number verification TV monitors personnel access 2ontro1s etc gh -r -1 -· · - - 192-S 29 7 Since the Reg lato y s£tfes-uarding of l rge S ·1 St3ff asst ed full responsibility for i 1 -the p i va te sector in 1968 a nu - ba inventory difference have occurred These have all been investigated and the investigations have not SU tJO t ted the hy othesis· that dive rsion has ta en place JtAS J _ · fCvlruprrf _ ANS NG r' Cor1 rY c -'l 7 1 I -0 -t 0 -v 1 f n _- I · 6_6 1tL 1 j i L ok M ' n c J ··-- -- - - - -····· l e r J v REPORT OF INTERVIEW Mr and and the Pedersen was interviewed at 3 45 p m on January 30 1978 by Mr Nelson Mr fitzgerald of OGC He was informed of the purpose of the interview the fact that a summary of the interview would be made available to Congress · · Mr Pedersen explained that he came to the AEC in July 1972 From the time the NRC was established in January 1975 until May 1975 he served as a special assistant to Chairman Anders with responsibility for staffing and organization He then became Assistant Director of the Office of Policy Eva1uation for Special Projects and has been Director of the Office of Policy Evaluation since June of 1977 Prior to assuming the position of Director he had no responsibility in the safeguards area and was not familiar with the specific issues surrounding the subject He had taken over as Director of OPE from Mr Benjamin Huberman but had received no transition briefing from Mr Huberman about the Apollo NUMEC situation He thus had no background in the matter and for that reason did not fully understand the significance of all that was said in the Commission meeting of August 2 1977 Mr Pedersen recalls attending that meeting Commissioners Gilinsky and Kennedy were present as were a large number of NRC staff people He recalls that he was seated at the table in front of the Commission as were Mr Gossick Mr Smith and Mr Burnett He believes that Mr Volgenau and an OGC representative were also at the table This meeting was to brief the Corrmissioners on the forthcoming release of MUF data - including the report to be issued and the public briefings which were scheduled Mr Pedersen explained that he had been involved in this project because OPE had played a coordinating role between the Commission and the Staff collecting and coordinating Commissioner comments on the draft report and passing them on to the Staff After some general discussion of th'e report and staff plans for its release and related briefings Mr Pedersen recalls that Mr Gilinsky asked if it were too late to make a change in the wording of the report Mr Pedersen remembers that someone from the Staff probably Clifford Smith told Mr Gilinsky that it was too late because the draft had gone to the printer Mr Gilinsky asked whether he was being told that any attempt to make a change was therefore irrelevant A Staff member stated that the Staff had already taken all Commissioner comments into account Mr Pedersen said that he believed that all Commissioner comments had been considered and said so at the meeting Mr Gilinsky said that all of his comments had not been considered and indicated that his specific concern was the ''no evi de nee sentence which appeared in the draft MUF report Mr Pedersen then recalls that there was some discussion about this ''no evidence statement He remembers that 1r Smith and Mr Gilinsky did 1 06 2 some also said that with talking about this statement and further believes that Mr Gossick took part in this discussion Mr Pedersen recalls that Mr Gilinsky 11 We can't make that kind of categorical statement or words to effect Mr Pedersen could tell that Mr Gil insky was ••uneasy the 11 nO evidence formulation Mr Pedersen recalls that Mr Smith and Mr Gossick arg ed for retention of the no evidence language stating that such language had been used before that it applied on1y to the period ftom 1968 and that it had been coordinated with ERDA They said that any change would involve stopping the presses and going back to ERDA · Mr Pedersen recalls that Mr Gossick took some part in this attempt to dissuade Mr Gilinsky from seeking a change in the no evidence formulation Mr Gilinsky indicated that he would prefer to discuss this before a smaller audience and not long thereafter it was decided to ask a number of Staff people to leave Mr Pedersen recalls that during the period in which Mr Gilinsky was trying to voice his concern Mr Ong of his office came up to him at the table and explained to him that Mr Gilinsky had been signaling some general dissatisfaction all week over the telephone from California to Paul Goldberg but his precise objection had not been known to the OPE staff until about half an hour before the general briefing began Mr Pedersen recalls Mr Ong saying that Mr Gilinsky evidently wanted to insert something like the word conclusive before the word evidence Up until this time Mr Pedersen explained the OPE Staff and he believes the Bethesda staff had only a 11 generCI l notion about Mr Gilinsky's concern The meeting then continued in the Commissioner's conference room but with a smaller group of staff in attendance Mr Pedersen recalls that among those remaining were CoiT'allissioners Kennedy and Gilinsky Mr Smith Mr Burnett Mr Gossick and himself He believes that Mr Volgenau and an OGC representative were also present · At this second portion of the Commission meeting Mr Gilinsky argued for changing the phrase to 11 nO conclusive evidence or words to that effect explaining that based on information NRC had received he did not feel that the Commission could make an unqualified statement like the no evidence 11 formulation Mr Pedersen recalls that Mr Gilinsky had a strong preference for words like no conclusive evidence and that Mr Gilinsky said we should not say no evidence and that it would be more accurate to use the 11 no conclusive evidence 11 approach l r Pedersen remembers that Mr Smith Mr Burnett and Mr Gossick discussed this question with Mr Gilinsky a gain arguing that the language had been used befor-e had been coordinated with ERDA had gone to press and covered only the period fY·om 1968 Mr Pedersen explained that this was the second time he heard a reference to 1'1968 and did not understand 1 o 3 the significance of that year Mr Pedersen further explained that at the time he assumed that Mr Gilinsky's desire to use no conclusive evidence reflected the need to qualify the statement because Of inherent accounting difficulties because Mr Pedersen was not aware of the Apollo NUMEC events prior to 1968 he could not have known that Mr Gil insky may have been talking about the possibility of diversion from Apollo NUMEC Mr Pedersen recalls that the discussion about changing the no evidence sentence went back and forth and involved Mr Gilinsky Mr Smith Mr Burnett and Mr Gossick H recalls the discussion coming to an end with Mr Gilinsky implying that he might not concur in release of the doc ment At the same iime Mr Pedersen states that at no time during the meeting did Mr Gilinsky issue or attempt to issue instructions not to go forward Mr Gilinsky made no flat statements telling the Staff not to go ahead with the MUF report Indeed Mr Pede sen believes that had there been such explicit instructions they would have been obeyed by Mr Smith and Mr Gossick even absent a quorum He can not imagine Mr Smith and Mr Gossick deliberately issuing the report if Mr Gilinsky had told them not to Mr Pedersen heard nothing more about the matter unti1 the report came out When the report finally came out -- with the no evidence sentence in it -- Mr Pedersen assumed that Mr Gilinsky had decided he could live with it Ultimately Mr Pedersen was left with the impression that momentum had carried the project forward He explained that the Staff obviously wanted to go forward that Mr Gilinsky's comments had been only generally and vaguely understood shortly before the meeting and that Staff was impatient with this attempt to make a last-minute change of one word Finally Mr Pedersen explains that this came at a time when there was no quorum and the ultimate authority was Mr Gossick Therefore in Mr Pedersen's view Mr Gossick had to make a decision and in the absence of an express prohibition from the Commission level decided to go ahead He never discussed the matter with either Mr Gilinsky or Mr Gossick 1 08 REPORT OF INTERVIEW Bernard Snyder was interviewed in his office by James Fitzgerald of the Office of the General Counsel at 8 45 a m on February 13 1978 Dr Snyder is presently Assistant Director for Policy Review in the Office of Policy Evaluation a post he assumed in August 1977 Pre­ viously he was senior policy analyst in that office commencing in September 1975 Dr Snyder joined the Atomic Energy Commission in 1966 Before coming to OPE Dr Snyder had nothing to do with the Commission's safeguards program Apollo NUMEC He first became aware of speculation associated with a NUMEC MUF of the 1960's when he was engaged in pre­ paration of a joint ERDA NRC report on safeguards for the NSC This was a special report transmitted in July 1976 He asked Mr Huberman the OPE Director · why this report was being prepared and Mr Huberman responded that there was some question about whether material had been diverted from the NUMEC facility to Israel Mr Erickson of NMSS drafted the report and Dr Snyder provided comments and support Dr Syder believes that the report did not contain a statement of no evidence in it but rather the limitations of mater'ial accounting methods especially in older facilities was pointed out In April 1977 Dr Snyder was assign d to the task force that was inves­ tigating James Conran's allegations There was a subgroup within the task force that tried to get a better handle on whether there was any substance to Mr Conran's claim that there was a diversion in the early 1960's at the NUMEC facility Dr Snyder C W Reamer Norman Haller and Mark Elliott were included in this subgroup Since Mr Conran had claimed that he had been stymied in this attempts to investigate the diversion question at ERDA the subgroup determined to go to ERDA for information Barry Rich of ERDA was identified as their contact for this purpose They notified Mr Rich that they wanted to talk about Apollo NUMEC and provided him with a list of questions Subsequently they had a long session with him which was written up as part of task force reference documents Mr Rich reviewed this write-up Mr Rich stated that the existence of any files on this matter was classified and that they contained no information of safeguards significance He further stated that the CIA and FBI had conducted inv stigations into the matter and that the results of these investigations were in the ERDA files Mr Rich insisted that there was no broad single reference document at ERDA rather that agency just had a collection of materials The task force did not get access to these ERDA files nor did they ask for such access The task force subgroup having been told by Mr Rich that the Commission had been briefed in 1976 about the matter decided to find out about that briefing to determine what output if any stemmed from that briefing or briefings and how it was transmitted to the staff They were particularly interested in whether anything tJas passed on to the staff which was relevant to the present-day safeguards program 109 2 They drew up a list of questions and gave it to the Commission contact on this issue Bryan Eagle This led to the Eagle Strauss briefing memorialized in Document 102 with the list of task force questions attached Dr Snyder did not attend this briefing as he was out of town when it was held Therefore he only knows what occurred from reading the document and from conversatfons with those who were in attendance He was shocked when he saw the statement in Document 102 attributed to Mr Strauss that the Commission had been avoiding since the 1976 briefings making statements of no evidence without qualifications Dr Snyder had seen enough pieces of paper which came through OPE with that type of statement included to know that the Document 102 statement was inaccurate Dr Snyder believes that of the Commissioners primarily Mr Gilinsky was cautious about making unqualified no evidence statements He exp 1a i ned that when Mr Gi 1i nsky persona11 y saw staff documents with unqualified statements or they were po i nted out to him he reacted by supplying comments or proposing changes Many of these Gilinsky comments came back through OPE Dr Snyder indicated that it was his impression that these comments were not solely related to Apollo NUMEC Based upon his recollection of such comments Dr Snyder thought that Mr Gilinsky was primarily expressing his skepticism of the accuracy of the accounting system itself 11 i-As a result of the tasJcJorce exercise Dr Snyder did not discover new _ L--evidence of diversion He said that the task force exercise did not · change his opinion wtiTcH was You can't make definitive statements because of the inaccuracy of the accounting systems 11 Dr Snyder indicated that a statement there was no evidence of d i-version is the sort of _L · categorical statement that he would avoid 1-Based on generally available r data You can't make a statement 'yes' _or 'no' to the question of whether there ever has been a diversion Dr Snyder did state that the importance of any past diversion questi'on was that today's safeguards must assume such diversion scenarios are possible and protection against successful diversion must be reasonably assured Dr Snyder said that the task force report its recommendations and the action plan developed by staff to implement the recommendations did not focus primarily on the NUMEC matter The NUMEC matter was not a key issue There was a recommen­ dation of the task force that information such as Mr Strauss was ta l king about in Document 102 concerning Commission qualification of no evidence statements be provided as guidance to the staff 11 11 Around mid-July 1977 Dr Snyder received a call from Kenneth Pedersen Director of OPE asking if he would be willing at Mr Gossick's re­ quest to assist in preparing Mr Gossit k's testimony on the Conran matter for delivery before the Udall subcommittee Dr Snyder agreed 1 t 0 i 3 and as a result he and Mr Reamer moved out to the EDO offices in Bethesda to collaborate on drafting tha testimony He recalls that at a pre-drafting meeting with Mr Gossick they discussed what they would be writing about Mr Gossick gave them an outline of his ideas and the testimony which ultimately was submitted to the Congress reflects to a large extent what Mr Gossick asked for Dr Snyder said that his contribution was mainly to the fir t draft of the testimony and that Hugh Thompson of Mr Gossick's office reviewed comments and finished the job He recalls th t Mr Reamer continued to be involved after he Snyder began to work on another project To the best of his recollection Dr Snyder raised two matters with · Mr Gossick probably at their initial meeting on his proposed testimony The first was that he had just read in the newspapers that ERDA had released thousands of pages of Apollo NUMEC documents as a result of an FOIA request Dr Snyder had the article with him and asked What do we know of this He felt it was important not from the viewpoint of drafting testimony but more generally that the staff should know what was in these documents Mr Gossick called Clifford Smith Director of · NMSS on the spot NMSS had not at that time seen the documents and ERDA had not notified them of the release As a result Mr Smith sent people to ERDA who reviewed these documents and late r word came back to Dr Snyder that they contained nothing the NRC did not already know Dr Snyder received this information from Mr Burnett of NMSS about a week later The second matter he raised very briefly with Mr Gossick was whether he was going to say anything in his testimony about the Apollo matter Mr Gossick did not have this included in the list of things he wanted covered Mr Gossick answered that he was not at the briefing the Commission received from the CIA and ERDA and did not know much about the subject Dr Snyder believes that he Snyder said that it wou 1d be a good idea to know somethi T g about it as it was a key contention of Mr Conran and Mr Gossick was acting for the Commission in his testimony before the subcommittee The question of no evidence · of diversion was not specifically discussed Dr Snyder recalls that Mr Gossick said that he did not think that it was really the subject of the Udall hearing Dr Snyder stressed that this second matter was mentioned only in a very brief conversation almost casually and that the matter was then dropped Later he went to the Udall hearing and he recalls that he was somewhat surprised at Mr Gossick's answers to the Apollo-related questions However he felt that Mr Gossick was a person who did not really know the area had not been at the relevant briefing and was not tuned to the details of the safeguards business The message that Mr Gossick tried to get across was that the subcommittee was talking to the wrong person Dr Snyder however does not feel that this got across to the subcommittee because of the tenor of the questions they v1ere putting to Mr Gossick The Congressmen and staff appeared to him to be 111 4 frustrated on the Apollo matter and as a result their questions were extremely pointed at Mr Gossick who was unable to hand e them Dr Snyder recalls that he felt sorry for Mr Gossick at this time The other impression he got from the hearing was that the subco ittee appeared not to be directing questions to the right agencies In particular if they wanted information about Apollo in the 1960's they should have pressed ERDA which did not even testify at the hearing Dr Snyder did not speak to Mr Gossick about his testimony after it was delivered until some time in November when at 1r Gossick request he aided Mr Gossick in preparing an answer to the November 15 letter from Representatives Udall and Tsongas Dr Snyder was asked by the interviewer whether he had any involvement in the questions and answers to Representative Udall which were dispatched on August 19 1977 Dr Snyder said that he did not review them before they went out and does not believe that anyone in OPE had any input into them Dr Snyder said that he had minimal involvement in the MUF release preparation He did attend the dry run of the press conference at the National Guard Building Apollo was not dwelt upon in this exercise He does not recall what discussion if any occurred relevant to whether there was any evidence of diversion He did not attend the actual press conference or the later Dingell subcommittee hearing In November through Mr Pedersen Mr Gossick requested Dr Snyder's assistance in responding to the November l5 letter from Representatives Udall and Tsongas Mr Reamer rec ived a similar request Dr Snyder brought to Mr Gossick's office everything that was in the OPE files on Apollo NUMEC They discussed the best approach for answering the Congressmen Mr Gossick brought out a copy of his testimony before the Dingell subcommittee Dr Snyder said that one contribution to Mr Gossick's response was the suggestion that a good format to use would be a memorandum from Mr Gossick to 1r Hendrie and a separate letter from Mr Hendrie to the Congress He and Mr Reamer roughed out a draft Gossick memorandum and a draft Hendrie response Dr Snyder was askeo by the interviewer whether he recalled any discussion by Mr Gossick at this time about his prior testimony Dr Snyder said that Mr Gossick expressed regret that he had not been more careful in answering the Apollo-related questions and that he had been surprised to get them Mr Gossick qlso told Dr Snyder that he believed he was repeating the party line i e the Commission position as best he understood it Dr Snyder recalls no other statements by Mr Gossick REPORT OF INTERVIEVJ Joseph M Hendrie Chairman Nuclear Regulatory- Commission was interviewed in his office at 1717 H Street N W on February 1 1978 by Jerome Nelson and William Ryan Hendrie advised that he had been Chairman since August 1977 Prior to coming to the NRC Hendrie advised he had been associated with the Brookhaven National Laboratory in New York beginning about August 1 1974 Prior to that time Hendrie was for two years a member of the staff of AEC During this time Hendrie was principally engaged in the licensing area not safeguards Before joining the AEC Hendrie was employed by Brookhaven Hendrie recalled that he came to Washington on July 11 1977 and met the President but that his nomination fqr the position of Chairman had been announced before that meeting Afte meeting with the P esident Hendrie spent a portion of the week in Washington familiarizing himself with NRC matters and meeting with appropriate members of the U S Senate v'ith Hendrie said that in his first weeks with the Commission he recalled a discussion with Lee Gossick about the upcoming release on MUF data Gossick related to him the ongoing negotiation with the National Security Council and ERDA on the format of the report but there was no discussion of the substance of the report itself Hendrie pointed out that there were substantial inventory difference numbers during the period for which NRC's report was responsible but people felt that they did not reflect a diversion of material Hendrie did not recall being at the August 2 1977 briefing of the Commission on the MUF report He understood that he was listed as being present at the meeting but could not recall the meeting Hendrie explained that on August 3 1977 he was confirmed by the Senate and returned to New York Hendrie was questioned about the November 15 1977 letter from Congressman Udall and his reply on December 10 1977 Hendrie replied that when he received the Udall letter he passed it on to LeeGossick with a request that he respond to the matters raised in the letter which Gossick did by memorandum dated December 1 1977 Hendrie recalled talking to Gossick about this time concerning the accusations contained in the Udall letter and Gossick's position on the matter was nothing different in thrust than the points he made -in his memorandum of December 1 11 1 _ 7 ·· V' • Joseph M Hendrie 2 Hendrie said that he obtained transcripts of the testimony of Gossick before the Udall committee and because Gossick had told him that he had also testified in the same fashion before the Dingell committee he also · obtained transcripts of that testimony Hendrie advised as noted in his December 10 letter that before receiving · Gossick's memorandum of December 1 he discussed the matter with Gossick Commissioners Kennedy and Gilinsky former Chairman Rowden Clifford Smith and Bill Reamer · Hendrie said that in talking to Commissioner Gilinsky that he Gilinsky outlined the bottom line of the early 1976 briefings by the CIA In substance Gilinsky told him that there was sure a lot of circumstaritial evidence of possible diversion at Apollo but there was not the type of direct evidence that would lead to an indictment and prosecution According to Hendrie it was Gilinsky's view that one should clearly be cautious in saying that nothing had been stolen Hendrie said that he discussed with Gilinsky what we mean by no evidence and it was Gilinsky's view that in light of Apollo such a statement was incorrect It was Gilinsky's position according to Hendrie that we should say that we have no direct evidence or no conclusive evidence According to Hendrie he talked with Corrnnissioher Kennedy about the no evidence statement Kennedy was of the opinion that evidence is that which proves something The 1976 briefing by CIA reported Kennedy concerned circumstantial events speculations and suspicions It was Kennedy's position according to Hendrie that the proper statement was that we have no evidence of a theft or diversion of material __ L ndrie observed that Kennedy means proof while Gilinsky means indicatio_ J 0 I n another discussion with Gilinsky Hendrie said that Gilinsky was much more concerned with Gossick's testimony before the Dingell committee that before the Udall committee Hendrie could not recall Gilinsky's exact words but recalled Gilinsky being of the view that Gossick's testimony before the Udall committee was possibly justified or under­ standable under the circumstances that Gossick was not briefed by the CIA the fact that others who had been briefed had left the NRC the Commission quorum had disappeared and there was an atmosphere of rushing to get agreement with ERDA to get the MUF report out However it was Gi1insky's view according to Hendrie that after the ad hoc meeting held after the August 2 briefing that it was improper for Gossick to go before the Dingell committee and make the statements that he did Hendrie advised that either Commissioners Kennedy or Gilinsky told him that it was agreed after the August 2 briefing of the Commission that since Smith Burnett and Gossick had not had the 1976 briefing by the Joseph M Hendrie 3 CIA that Kennedy and Gilinsky should talk to them As a result Hendrie was informed after the August 2 briefing was completed Kennedy Gilinsky Smith Burnett and Gossick went to a small adjoining office for a meeting Hendrie said that Smith told him that the group stood in the office and · · that the meeting lasted about five minutes Hendrie stated that Smith remembered hearing that the phrase no hard evidence 11 should be used because there were suspicions and that one should be cautious about broad assurances when discussing the matter of theft or diversio Hendrie said that Gilinsky believed that in the August 2 ad hoc meeting that he had made it very clear that one should f e very cautious and that · one should not say that the Commission has an assurance or a basis for saying that there has never been a theft or diversion of material The others Hendrie talked to Kennedy Gossick and Smith did not remember the meeting s a clear spelling out of these cautions but as a rath r disjointed and quite brief discussion that did not make much of an impression at the time Hendrie stated that he asked Gossick about his testimony before the Udall committee and the later briefing on August 2 and specifically why he went before the Dingell committee and gratuitously testified that the Commission had assurance that no material had ever been diverted or stolen Hendrie said he asked Gossick why he felt compelled to so testify Gossick told Hendrie that as a result of the August 2 briefing he did not remember any clear message to avoid saying that there was no evidence of theft or diversion and further that he did not know why he had testified in that way Hendrie said that he had a series of conversations with Gossick and Gilinsky During one of these Gilinsky told him Hendrie that he would have to write a letter to Dingell to correct the impression that Gossick had given the committee on the Commission's position Gilinsky and Hendrie discussed the language to be used in Hendrie's letter to Udall Gilinsky according to Hendrie sees it as clear that he told Gossick not to say that there is no evidence of theft or diversion but Hendrie believes that it was not clear and based this on the different impressions persons had of the August 2 meeting Hendrie said that at the time he wrote his December 10 letter to Congressman Udall he did not know whether or not Commissioner Gil insky had actually written to Congressman Dingell Hendrie said that he thought of putting a footnote in his letter to Udall to the effect that Gilinsky was going to write Congressman Dingell but did not because it seemed inappropriate since Gilinsky might or might not write the letter '11 5 Joseph M Hendrie 4 Hendrie said that he had a conversation with former Chairman Rowden at about this time According to Hendrie Rowden is a no conclusive evidence man and believed that the sentence on page 2 of the MUF report about no evidence of theft or diversion is too categorical It was Rowden 1 S view said Hendrie that the statement should have reflected some modifier or there should have been a clear indication that the statement was applicable to post 1968 matters · Hendrie said that Rowden told him that he had had a discussion with Gossick but Hendrie could not recall what Rowden said the conversation with Gossick was about It was Hendrie's impression that the discussion was sometime after the Udall letter was sent to him Hendrie recalled that Gossick told him that he had a conversation with Rowden about the MUF report just before the Commission ceased to constitute a quorum but Hendrie was unable to recall what the substance of the con­ versation was Hendrie recalled that in one of his conversations with Gossick he asked him why he had testified the way he did before the Dingell committee and Gossick said that he spoke too hastily and did not realize until now the difference between the shade of meaning between Ward's statement and the no evidence statement Hendrie said that Smith recalled a briefing of the Commission Rowden Kennedy and Gilinsky in June on the draft MUF report by Burnett Crane Page and Smith Hendrie recalled that Smith said that the briefing was concerned mostly with the differences in the NRC and ERDA figures but did not recall any discussion in that briefing that the phrase no conclusive evidence should be used Hendrie said he had been told that on June 21 the final draft of the MUF report went forwar evidence statement but according to Hendrie it was Smith and Burnett's recollection that the statement was later put in the report at the strong urging of ERDA -- Smith told Hendrie that at the August 2 briefing of the Commission that the briefers discussed the schedule for the release of the report and that Commissioner Gil insky was disturbed about the no evidence statement Hendrie said that Smith told him that when it was explained that the statement applied to only post 1968 that Gilinsky went along with the statement I I I i I REPORT OF INTERVIEW Fredrick Crane Test and Evaluation Branch Division of Safeguards Office of Nuclear Material Safety and Safeguards was interviewed on January 12 1978 at the OIA office Landow Building Bethesda Maryland by Jerome Nelson William Ryan and James Fitzgerald Crane adv ised that he was employed by NRC in August 1976 According to Crane the matter of the inventory difference at NUME Apollo came up in general discussions with other NRC staff within a few weeks after he was employed by NRC This was not related to the Inventory Difference release but derived primarily from informal discussions of newspaper articles In September 1976 he took over the job of preparing the MUF release package One of the questions that came up was who NRC or ERDA would handle the pre-1968 licensee data which happened to include the inventory difference at Apollo ERDA kept the records for that period Crane said that in May 1977 the first draft of the MUF release package was prepared It was his recollection that this draft contained no discussion of whether there was evidence of a theft or diversion of special nuclear material About this time ERDA had agreed to release the pre-1968 data Sometime after the preparation of this draft according to Crane he prepared a summary section'' for the proposed report This summary section did contain a statement about there being no evidence of theft or diversion Crane did not recall where he first heard this statement Crane recalled talking to Joe Fouchard about making that statement and being advised by him that•s what we say and that it had been used in public statements before Crane recalled that he had heard it in an ERDA briefing 11 11 Crane said that there was a Commission briefing on the proposed MUF Report in June of 1977 and the main question at that time was how the NRC report compared with ERDA's since there were differences in the way ERDA and NRC planned to present their reports partially because of differences in the way records were kept Crane said Chairman Rowden directed NMSS to contact the National Security Council to describe NRC's release plans ERDA had already briefed the NSC Crane said that he and others met with Huberman J Marcum and Jessica Tuchman of the National Security Council He recalled that someone from 0 1B and the President's Press Secretary's office were there Crane was asked who else was present He replied that ERDA people were there including at least Len Brenner and Tom Issacs He 117 2 also recalled that Page and Ong of NRC were there They were told by the representatives of the NSC that the releases by NRC and ERDA should be identical in format and tone Crane recalled that the NSC briefing occurred in June of 1977 and that when he returned from the NSC meeting · · he prepared a Commission paper Crane was questioned about the use of the word 11 ever on page 2 of the NRC MUF Report and he replied that it was his recollection that it was intended to cover the period after 1968 which was the period covered in the NRC Report Crane stated that he would check the draft of the Report to see where the word ever came in Crane aid that the first draft of the NRC MUF release report went to the Commission in May of 1977 The draft was accompanied by 11 Q and A's 11 Question 7 of the 11 Q and A's 11 touched upon the matter of whether there had ever been a theft or diversion of material because the staff felt that it was necessary to address the pre-1968 data because the question about pre-1968 would be coming up and that a lateral to ERDA would not completely divert the question Crane recalled that later ERDA became very upset with having such a Q and A in NRC's package when they received copies of the Q and A's in July because they had responsibility for releasing the pre-1968 data Crane expressed the view that there was pressure from ERDA and NRC's report to have a tone similar to that of ERDA but he does not recall that there was specific reference to the 11 no evidence question R ferring again to the briefing of the Commi ss ·i on in June of 1977 Crane said that it was during the first week of June During that briefing the Commissioners were concerned with how the NRC Report would compare with the ERDA Report and with any differences between the two reports Crane again mentioned that the Commission asked him and others working on the report to go to the National Security Council with the package which was done about a week later Crane was asked whether there was any discussion of the no evidence question with the Council and he did not remember it being discussed Crane said that as a result of this meeting he made certain changes in the NRC Report and ERDA made several changes Crane said that the Commission paper he prepared after this meeting was submitted on June 16 1977 As a result of the meeting he changed the format of the NRC report and wrote an overview Cralie was asked whether he received any comment from the Commission on his Commission paper and he replied that he did not recall any Subsequent to the NSC briefing the staff prepared the final draft of the release package and submitted it to the Commission on July 21 Crane recalled that he returned from leave on July 26 1977 When he returned • 0 3 from leave comments had been received from the Office of Policy and Evaluation OPE Together with Bill Altman they went through several comments provided by OPE During Crane•s leave Altman was on the phone several times with Ong as well as people in Inspection and Enforcement IE Crane recalled that on or about July 27 1977 he received a telephone call from Paul Goldberg of Commissioner Gilinsky•s staff Goldberg told Crane that the Commissioner might have changes that he wanted in the NRC MUF Release Report but that the Commissioner was out of town and he did not know what the changes were Crane said that he pointed out to Goldberg that it was necessary to go to the printers in a short time Grane said by the time Commissioner Gilinsky returned that NRC would be briefing Governors Congressmen and Senators and a briefing for the Press was scheduled on August 4 The following day according to Crane he received another call from Goldberg and Goldberg advised him that Commissioner Gilinsky was reserving the right to make changes in the MUF Release Report Crane stated that after talking with his supervisors it was decided there was no alterna­ tive but to go forward with the report Crane vas asked whether he had discussed this decision with Lee Gossick and he replied that he has never talked to Gossick in his life except to say he11o 11 11 On August 1 1977 in the morning a briefing on the report was given to Congressman Dingell •s staff according to Crane Crane said that it was his information that Chairman Rowden had promised Congressman Dingell J that he would receive the NRC Report 72 hours in advance of the release Crane said to the Dingell staff that with reference to the no evidence j statement that he had never been told of a CIA investigation Crane 1 felt that the no evidence statement was an honest statement and told 1 the D1ngell staff tnat the report covered post 1968 Crane said that they briefed the staff of other Senators offices possibly including Senator Glenn•s and also Senator Baker•s staff 11 11 11 The afternoon of August 2 1977 the Commission was briefed on the report Crane said Dr Smith made some introductory remarks and that he Crane then conducted the briefing Crane recalled Commissioner Giiinsky asking in effect this is it Don•t I have any comments and urs this the last word '' Crane said at this point Gossick turned to Pedersen and asked him whether all the Commissioner comments had been received and Pedersen replied that they had been received and included in the report 11 11 11 1 • 1­ 9 ' - 1 11 11 l 4 Crane recalled that at this point Commissioner Gilinsky ••leaned over 11 to Commissioner Kennedy and indicated to him a change he wanted Crane said that Commissioner Gilinsky appeared very upset and there was dis­ cussion about whether there could be more time before the report was released At this point Gilinsky said he wanted to talk in a sma11er group Crane then finished the briefing Crane did not reca11 any dis­ cussion at the briefing of the use of the phrase ••no conclusi ve evidence Crane recalled that Gossick commented that in light of Pedersen's state­ ment that all Commissioner statements were taken care of Shortly after the briefing Paul Goldberg told Crane what change Corrunissioner Gilinsky wanted namely no conclusive evidence rather than no evidence 11 After the briefing Crane recalled that Smith and Burnett met with Commissioners Kennedy and Gilinsky Crane was not present Crane recalled that ·Smith and burnett came out of the room where the meeting was he1d and walked to the elevator area Commissioners Kennedy and Gilinsky again called Smith and Burnett over to them and talked with them Crane did not recall if Gossick was present Following this Crane left the building with Smith and Burnett Crane said that on the way back to Silver Spring Smith and Burnett to1d him what had been discussed at the meeting with Kennedy and Gilinsky and talked about Commissioner Gilinsky's concern about the 11 no evidente 11 statement in the report Crane recalled that either Smith or Burnett felt that if there was evidence of a theft or diversion Commissioner Gilinsky would have to answer the questions regarding the nature of the evidence Crane stated that he believed the phrase 11 no conclusive evidence 11 could be ambiguous and that he had told Congressman Oingell 's staff that he felt this way about a similar statement namely no direct evidence Crane was asked whether he had heard Gossick testify in the hearing held by Congressman Dingell and answered that he had Crane pointed out that at the hearing the people from ERDA gave 99 percent of the testimony He was not a1armed at anything Mr Gossick said As far as he knows no evidence is a correct statement Crane stated that the staff had received no guidance on the 11 no evidence issue either before the release of the MUF Report or since its release Crane was asked whether he has discussed this matter with any member of · Lee Gossick•s staff and he replied that he had not REPORT OF INTERVIEW On Friday February 3 1978 William Ryan and Thomas J McTiernan met with Thomas C Thayer Assistant Director for Operations and Evaluation NMSS and Thomas F Carter Jr Chief Contingency Planning Branch NMSS to secure whatever assistance they could furnish on obtaining documents dealing with the NRC treatment of the theft or diversion issue and to obtain their views on how NMSS treated Mr Conran's reported continued pressing of the Apollo-NUMEC issue from a safeguards standpoint Mr Carter brought copies of Gerry Page's statement to the California legislature and the November 4 1977 lanning assumption document on intelligence information He also agreed to forward some other material and check the files on the assumption document · Mr Carter recounted his ontinuing efforts dating back to 1975 to develop a working relationship with the intelligence community and to assemble data regarding known incidents of possible theft and diversion He stated that he and his staff had analyzed Mr Conran's data regarding incidents in detail Most of the incidents have been discussed with ERDA personnel regarding completeness and authenticity of the data Mr Carter was questioned about Mr Conran's statements before the Udall committee that there have been other successful diversions and he said he did not know what Mr Conran could be referring to He said that he was present at the hearing and when Mr Conran was making those statements he recalled Mr Gossick turning to him and Mr Burnett and asking in effect what Conran can be talking about Mr Carter said he had his files on his lap and scanning through them he and Mr Burnett told Mr Gossick that Mr Conran must be referring to thefts involving pharmaceuticals Both Mr Thayer and Mr Carter recalled friendly conversations with Conran in late 1975 and early 1976 in which Mr Conran kept alluding to elusive files and files not being available but he never specifically mentioned Apollo-NUMEC They stated they repeatedly have sought to assure that the intelligence community is cooperating vith NRC and they believe they have made considerable progress in this regard · Mr 1 21 I i I I REPORT OF INTERVIEW On February 10 1978 Mr Joseph J Fouchard Office of Public Affairs PA U S Nuclear Regulatory Commission NRC was interviewed by John Anderson Office of Inspector and Auditor OIA NRC in the offices of OIA Mr Fouchard was advised of the nature of the inquiry OIA was conducting and was informed that OIA had four specific questions it wished to ask him relative to the inquiry 1 · Do you re c all talking with Fred Crane or anyone else regarding the · no evidence statement in the MUF release report circa July-August 1977 What was the exact release date 2 What do you understand to be the policy of NRC from 1975 to date with respect to statements and positions on whether thefts or diversions have occurred · 3 What are the details of the MUF report press release 4 Do you recall the discussion between Commissioner Kennedy and Mr Gossick in the doorway of Gossick's office in July 1977 about what he Gossick could or should say to the Committee in light of what was said about Apollo at the CIA briefing in February 1976 Following are Mr Fouchard's responses to the above questions 1 Yes the statement was issued on August 4 1977 for use in the morning newspaper of August 5 1977 '' Mr Fouchard said he had had a number of conversations with Mr Crane with respect to the statement that is in the MUF report It was his recollection that he raised some question with respect to the appearance of the statement · meaning for a11 times as opposed to a statement of whether there · had been any diversion since NRC or since the AEC regulatory arm took over the responsibility for safeguards in 1968 He said that the same statement that's in the MUF report had been made previously by officials of the AEC His concern he said for the statement was the Apollo situation He has no personal knowledge as to the results of the investigations by the AEC of the NUMEC incident back in the mid 1960's but does know it was headed by Howard Brown Assistant General Manager of the AEC Commission He said the NRC statement was consistent with statements made previously by the AEC He said further that our practice has been in the Office of Public Affairs to confine our statements with respect to diversion to the period for which the regulatory staff had responsibility and to refer any other questions to ERDA He was concerned that to go beyond that period was getting beyond our field of responsibility ·j I 2 2 Mr Fouchard said in response to Question #2 that his office has been saying as a matter of policy that there is no evidence of theft or dfversion of significant amounts of SNM since our responsi­ bility began in 1968 It has been the consistent policy of the Office of Public Affairs to discuss only the period of time when the NRC or its predecessor the regulatory arm of the old AEC was responsible for safeguards With respect to questions which preceded regulatory responsibility we have referred those questions to the Energy Research and Development AdminiStration - Mr Fouchard said he did not know if this was the policy of the 1 - Commission because the Corrmissioners have never to his knowl ge passed down any policy or guidance on this particular subject He could only relate to the policy of the Office of Public Affairs ' He stated specifiCally that after the CIA briefing of February 1976 no policy guidance was given to PA on this matter to his knowledge He said he relies upon information and guidance provided to us by the program divisions in this case it would be either IE or Safe­ guards or both He was asked if he ever got any direction from the Commission level He said Oh Yes indeed we do but not on this subject to the best of my knowledge but of course I was not director at the time but to the best of my knowledge no guidance was provided He said that as far as he was aware the statement of no evidence of diversion since 1968 with respect to regulatory or licens d activities is an accurate one Mr Fouchard felt certain that had John Harris former Director of PA received any policy guidance on this subject from the Commission he would certainly have passed it on He suggested OIA might want to interview Mr Harris in this regard 3 In response to the third question Mr Fouchard stated that the MUF report press release was developed by PA in conjunction with the Offices of Inspection and Enforcement and NMSS A draft of it was transmitted to the Commission on July 28 1977 in classified form it is now unclassified He said it contained a statement on page 2 of the draft which said NRC investigations have disclosed no evidence that significant quantities of these materials have been stolen 11 At the meeting of the two Commissioners early in the week of August 4 1977 Mr Fouchard said that Comnissioner Gilinsky raised some questions with respect to the breadth of the statement in the MUF report itself concerning no evidence of diversion Mr Fouchard said it was his impression that Mr Gilinsky felt that the statement was too broad that it dealt with all time as opposed to the period covered in the report which of course was 1968 forward The Commissioner was told according to Mr Fouchard that the report i tse 1f was a1ready printed and I reca 11 him 11 3 asking me with respect to the press release 11 was it too late to make a change 11 Mr Fouchard answered of course not it 1 S still in draft 11 Mr Fouchard stated that the press release was subsequently modified and it was modified at the table with all the participants listening to how it was modified Mr Fouchard was asked if Mr Gossick was there and he responded 11 Yes he was 11 The statement was changed to say according to Mr Fouchard 11 NRC investigations of licensee _inventory differences described in the report have disclosed no evidence that significant quantities of these materials have been stolen 11 making it clear in the press release and this was also subsequently made clear by Dr Smith and Mr Burnett at the press briefing that the period we were talking abo t was the period 1968 forward 11 4 Finally Mr Fouchard said in response to Question #4 that he did not recall precisely the details of the discussion but to his recollection PA had a call one afternoon in July 1977 from John Fialka of the Washington Star Fialka asked if the NRC had ever been briefed by the CIA on the Apollo NUMEC matter First PA checked with the Secretariat Fouchard said but 11 they said they did not handle the briefing 11 so PA checked with Bryan Eagle and determined that there indeed had been such a briefing Before answering Fial ka Fouchard said he decided to consult with Mr Gossick who at that time was the Commission as it were under delegation sirice 11 We had no quorum Gossick and t 1r - Kennedy were in Mr Gossick•s office together When they emerged I told them of the inquiry from Fialka I told them that we PA had determined that there had been such a briefing and that I thought that we should acknowledge it and since it was a classified briefing obviously that was all - we•re going to say about it Both Mr Gossick and Mr Kennedy agreed to that course of action 11 Fouchard believed that Gossick then asked Kennedy if there was anything he should know or words to that effect Fouchard said he was preoccupied at that time with handling of Fialka query and does not recall precisely what Kennedy•s response was 11 but I do know that the question was raised As best as he can recall the Fialka inquiry and the meeting between Gossick and Kennedy all occurred several days prior to the July 29 1977 Congressional testimony of Gossick Also about this time subsequent to the Fialka query Fouchard said that Barbara Newman inq ired as to who had been in attendance at the CIA briefing Fouchard responded to Newman that the briefing was classified and that he could not discuss the briefing nor who attended At the conclusion of the interview Fouchard provided Anderson with a copy of a July 28 1977 memorandum for Gilinsky and Kennedy from PA through Gossick subject Press Briefing on MUF Release and a 4 copy of a news release No 77-151 subject NRC Issues Report on Nuclear Material Inventory Differences MUF at Licensed Commercial Nuclear Fuel Facilities Copies of these two documents are attached to the OIA file copy only of this interview UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON D C 20555 July 28 1977 MEMORANDUM FOR Commissioner Gilinsky Commissioner Kennedy FROM Joseph J Fouchard Acting Director Office of Public Affairs THRU Executive Director for SUBJECT PRESS BRIEFING ON MUF RELEASE Operatic The joint press briefing on release of NRC ERDA reports on nuclear material inventory differences is planned for 2 p m Thurhay August 4 at the auditorium of the National Guard facility at 1 Massachusetts Avenue N W Copies of the NRC and ERDA press package will be available to news media beginning at noon August 4 The release and report are em­ bargoed for morning newspapers of August 5 or 6 p m August 4 for radio and television Indications are that there is considerable media interest The press briefing schedule follows 1 Overview of National Security Council decision to release MUF information and ERDA programs by Alfred Starbird Assistant Administrator for National Security ERDA 2 Discussion of ERDA report by Edward Giller ERDA 3 Overview of NRC safeguards program by Dr Clifford Smith NMSS 4 Discussion of NRC report by Robert · Burnett Director of Safeguards S Questions from the press Our press package will include the press release draft of which is enclosed a summary of the report prepared b¥ NMSS and the full report i '1 ' _ -· J I -' '' J 'j - l - - ­ 1-' --- I - · • ­ •· - 2 ­ State Governors or their representatives will be briefed prior to the release next week as- ·will appropriate Congres­ sional Committees Joseph f ouchard Acting Director _ Office of Public Affairs cc Dr Cli·fford Smitll NMSS Ernst Volgenau I E r jj_ PA JFOUCHARD j ---­ 7- 2 a _ 1_____ NRC FORM 18 9·76 NRO 0240 c CJJ - ­ · jLdlt t ------- 1 2 '7 --_ · -­ U s h ···- GOVERNMENT PRINTING OFP'ICE a UJ7 - • a 'NRC ISSUES REPORT ON NUCLEAR MATERIAL INVENTORY DIFFERENCES MUF AT LICENSED COMMERCIAL NUCLEAR FUEL FACILITIES The Nuclear Regulatory Conunission in response t o requests has issued a report on inventory accounting differences at NRC­ licensed facilities possessing high enriched uranium pluto- · niurn and uraniurn-233 These are strategic nuclear materials because in sufficient qua tities they ha e the potential for being used ·t O make explosives This is the first report of its kind and covers facilities licensed by the former Atomic Energy Conunission between January 1 1968 and January 19 1975 and after that by the NRC sequent reports ill be issued periodically Sub­ This report covers the period from 1968 to September 30 1976 A similar report on government-owned facilities using these materials is being issued by the Energy Research and Development Administration ERDA's report also covers facil­ ities licensed by the former AEC before 1968 possessing low enriched ura ium Facilities primarily used for fuel in the current generation of power reactors are not included Such uranium is not a weapons-usable material The NRC-licensed facilities are owned and operated by private firms and are primarily involved in the product on of fuel for government reactors and for research reactors Inventory differences also have been referred to as mater lal unaccounted for or MUF These terms relate to the difference between the amount of material which bookkeep­ ing entries indicate is present and what a physical inventory 128 · alJfiHE1ffmtuN'riL RELEASE t ' - 2 - '_ shows to be on hand at the end of an accounting period Since the amount of material shown on the books and the amount on · hand are subject to measurement error the two figures · are · r seldom identical thus creating an inventory difference Several factors contribute to the differences which may appear as losses or gains in material from one inventory to another Some aterial at the time of an inventory is held up in process equipment therefore measurement fluctuations that result from the difficulty in measuring held-up material ili be reflected as inventory differences In addition while the quality of measurement equipment has improved in recent years even the most modern instruments cannot make totally accurate measurements Other contributing factors include clerical bookkeeping errors reporting mistakes operator errors and difficulties in measuring scrap If an invent ry difference appears excessive the licensee is required to take investigative action The licensee may be required to shut the plant dmm and conduct a thorough reinven­ tory including a cleanout of the entire system to reconcile - --l- the difference • -- NRC investigations have disclosed no evidence that signif- I -i icant quantities of these materials have been stolen I ___ -- - The total inventory difference at licensed facilities from January 1968 to September 1976 for high enriched uranium vas 543 kilograms Two licensees accounted for 52 percent 280 kilograms of the total Special NRC investigations at the licensees' facilities -- owned by Babcock Wilcox at Apollo and ·r-· UNTIL e ·fhi± J •• I 11·E sT -v il j 1 1 ' K i • l J n - f _ • ·· - 3 Leechburg Pennsylvania and by Nuclear Fuel Services at Erwin · Tennessee -- revealed previously unidentified and undocumented process losses at Apollo and Leechburg and errors in' ccounting and uncertainties in measurement s stems at all three facilities as major contributors to the differences For plutonium the total inventory differ nce for the 1968 to 1976 period was 32 8 kilograms Three facilities accounted for 70 percent of the difference The facilities are at Leech­ burg Pennsylvania owned by Babcock Wilcox t Crescent Oklahoma owned by Kerr-McGee but now shut down and at Erwin Tennessee owned by Nuclear Fuel Services which is not currently processing plutonium errors and material Measurement uncertainties accounting h ld up in process were major contributors to the differences On a year-to-year basis the figures show a downward trend in inventory differences for both ' high enr iched uranium and plutonium although the amount of material handled by the licensed facilities has been on the increase This is attrib­ uted to improved measurement techniques and a strenghtening of NRC regulations for controlling inventories in 1971 and 1974 Inventories ar only one mechanism u ed by the NRC and its licensees to protect against theft of nuclear materials Licensees with significant quantities of strategic special nuclear materials are required to protect against theft or diversion through the material accounting system and by main­ taining effective physical security and tight internal controls over materials 130 tQ esE - • • 0 - 4 ­ This integrated safeguards system coupled with investi­ · gc tions of inventory differences provides a high degree of assurance against theft Today•s physical security system employs armed guards multiple alarmed fences and sophisticated communications capabilities as the primary components against open theft The internal control system includes personnel searches a two-man rule no person allowed in key areas alone and sensitive detection equipment to protect against theft by insiders Recent proposals would require employees not already cleared to have security clearances and ould upgrade the u criteria for training and qualifying guards The material accounting system · us ing physical measure­ ments statistical tests and bimonthly inventories serves mainly to monitor the performance of the safeguards system as a whole Together these systems are designed to alert company management and the NRC to processing problems and material losses and to help determine whether an inventory difference is the result of accounting errors or a measurement problem • or the result of a loss or theft of nuclear material Copies of the NRC report are available for inspection in the Conuniss ion' s Public Document Room 1717 H Street N W Washington D C and at NRC offices in King of Prussia renn­ sylvania Atlanta Georgia Glen Ellyn Illinois Arlington Texas and Walnut Creek California # 13t UNITED STATES NUCLEAR REGULATORY COMMISSION OFFICE OF PUBLIC AFFAIRS WASHINGTON D C 20555 1I l 'J No Contact Tel 77-151 Carl Gustin 301 492-7715 HOLD FOR RELEASE In Morning Newspapers Friday August 5 1977 NRC ISSUES REPORT ON NUCLEAR MATERIAL INVENTORY DIFFERENCES MUF AT LICENSED COMMERCIAL NUCLEAR FUEL FACILITIES The Nuclear Regulatory Cornrnission in response to requests has issued a report on inventory accounting differences at NRC­ licensed facilities possessing high enriched uranium pluto­ nium and uranium-233 These are strategic nuclear materials because in sufficient quantities they have the potential for being · used to make explosives T is is the first report of its kind and covers facilities licensed by the former Atomic Energy Commission between January l 1968 and January 19 1975 and after that by the NRC Sub­ sequent reports will be issued periodically This report covers the period from 19Q8 to September 30 1976 · A similar report on government-owned facilities using these materials is being issued by the Energy Rese rch and Development Administration ERDA's report also covers facil­ ities licensed by the former AEC before 1968 Facilities possessing low enriched uranium primarily used for fuel in the current generation of power reactors are not included Such uranium is not a weapons-usable material The NRC-licensed facilities for which data are being released are owned and operated by private firms and are primarily involved in the production of nuclear fuel for defense and research purposes · Inventories are only one mechanism used by the NRC and its licensees to deter or detect theft of nuclear material The NRC requires licensees possessing significant quantities of strategic nuclear material to protect against theft by m in­ taining effective physical security internal control of material and accounting systems NRC investigations of licensee inventory differences described in the report have disclosed no evidence that significant quantities of these materials have been stolen 132 - - 77-151 Inventory differences also have been referred to as material unaccounted for or MUF These terms relate to the difference between the amount of material which bookkeep­ ing entries indicate is present and wh t a physical inventory shows to be on hana at the end of an accounting period Since the amount of material shown on th books and the amount on hand are subject to measurement error the two figures are seldom identical thus creating an inventory difference Several factors contribute to the differences which may appear as losses or gains in material from one inventory to another Some material at the time of an inventory is held up in process equipment therefore m asurement fluctuations that result from the difficulty in measuring held-up material will be reflected as inventory differences Other factors include clerical bookkeeping errors reporting mistakes operator error and difficulties in measuring scrap The report points out that inventory differences are not unique to the nuclear industry A number of other industries in which the final product cannot be ounted but rather require chemical or physical processing also experience inventory differences Significant improvements have been made in measurement techniques in he nuclear industry but it still is not possible for material balances to be closed perfectly If an inventory difference appears excessive the licensee is required to take investigative action The licensee may be required to shut the plant down and conduct a thorough reinven­ tory including·a cleanout 0f the entire system to reconcile the difference The total inventory difference at licensed facilities from January 1968 to September 1976 for high enriched uranium was 542 kilograms Two licensees accounted for 56 percent 306 kilograms of the total Special NRC investigations at the licensees 1 facilities -- owned by Babcock Wilcox at Apollo and Leechburg Pennsylvania and by Nuclear Fuel Services · at Erwin Tennessee-- revealed previously un- identified and undocumented process losses at Apollo and Leech­ burg and errors in accounting and uncertainties in measUrement systems at all three facilities as major contributors to the differences For plutonium the total inventory difference for the 1968 to 1976 period was 32 8 kilograms Four facilities accounted for 85 percent of the difference The facilities are at Leechburg Pennsylvania owned by Babcock Wilcox at Crescent Oklahoma owned by Kerr-McGee but now shut down and one each at Ertvin Tennessee a nd West Valley N ew York owned by Nucl ar Fuel Services neither of which is currently · 77-151 processing plutonium Measurement uncertainties accounting errors and material held up in process were major contributors to the differences On a year-to-year basis the industry wide figures show a downward trend in inventory differences for both high enriched uranium and plutonium although the amount of materialhandled by the licensed facilities has been on the incre se This is attributed to improved measurement techniques and a strengthening of NRC regulations for controlling inventories in 1971 and 1974 Inventories are only one mechanis used by the NRC and its licensees to protect against theft of nuclear m terials Licensees with significant quantities of strategic special nuclear materials are required to protect against theft or diversion through the material ccounting system and by main­ taining effective physical security and tight internal controls over materials This integrated safeguards system coupled with investi­ of inventory differences provides a high degree of assurance against theft Today's physical security system employs armed guards multip le alarmed fences and sophisticated communications capabilities as the primary components against open theft The internal control system includes personnel searches a two-man rule no person allowed in key areas alone and sensitive detection equipment to protect against theft by insiders Recent proposals would require employees not already cleared to have security cl rances and would upgrade the criteria for training and qualifying guards gation The material accounting system 1 using physical measure­ ments statistical tests and bimonthly inventories serves mainly to monitor the performance of the safeguards system as a whole Together these systems are designed to alert company management and the NRC to processing problems and mat rial losses and to help determine whether an inventory difference is the result of accounting errors or a measurment problem or the result of a loss or theft of nuclear materiai Copies of the NRC Report on Strategic Special Nuclear Material Inventory Differencea are a ailable for inspection in the Commission's Public Document Room 1717 H Street N W Washington D C and at NRC ffices in King of Prussia Penn­ sylvania Atlanta Georgia Glen Ellyn Illinois Arlington Texas and Walnut Creek California Copies will be available for purchase from the National Technical Informatioh Service Springfield Virginia 22161 at a cost of $4 50 each The report is designated NUREG-0350 Vol 1 No 1 ·i 13 4 # REPOR T OF INT ER VI EW William Dircks was interviewed by Thomas MCTiernan of t he Office of Inspector an d Auditor and James Fitzgerald of t he Office of the General Counsel at 1 00 p m on February l 1978 He was advised of t he purpose of the interview and informed that the summary of interview would be made available to the Congress Mr Dircks is the Assistant Executive Director for Operations and has s rved in that capacity sine April 1975 He related th t he was present at a meeting shortly before Mr Lee V Gossick's appearance before the Udall subcommittee on July 29 1977 Several individuals · including Mr Gossick Roger Mattson Norman Haller C W Reamer Bernard Snyder and possibly Clifford Smith and Robert Burnett had· assembled to go over Mr Goss i ck's draft testimony The que tion of formulating or modifying a no evidence of diversion statement never arose The NUMEC matter was only brushed upon--that Mr Gossick might get a question on NUMEC because it was a matter James Conran was interested in In essence what was said was if you get into it be careful how you get into it because NRC does not have a l l the facts on it This caution may have come fro m Mr Mattson who also may have said to stay clear of Apo11 o I t was a very busy meeting and Mr Dircks is not sure that Mr Gossic k picked this up Mr Gossick was busy taking a lot of notes There was much no i se in the room etc During this meeting he recalls that Mr Gossick received a phone call from Dr Myers indicating that he was not sati fied with a draft of the proposed testimony he had een After the meeting C W Reamer and Bernard Snyder who had been the physical drafters of the testimony were told to ·add something more to the testimony Mr Dircks stated that prior to the meeting mentioned above he had been as ked by Mr Gossick to call Dr Myers regarding what type of questions the subcommittee might ask He did so and the comments of Dr M yers were related to Mr Conran not the NUMEC MU F Mr Dircks had never focused on the no evidence 11 statements until recently since the Udall l etter of November 15 1977 In July of 1976 · he wrote two letters to Congressmen which included no evidence type statements He said he was under the general impression that the agency had always taken this line up to some line of demarcation around August 1977 Mr Dircks got the impression back in May or June 1977 that ERDA was going to handle pre-1968 figures in its MUF release He noted that Mr Conran had raised a number of issues which t urned out to be quite l egitimate On the basis of what he now knows · when NRC gets into what happened before 1968 it has to be more cautious and one should not go out and say no evidence Mr Dircks says he would not say ' 'no ev i dence prior to 1968 2 He is unsure whether questions and answers were prepared for the Udall testimony and referred the interviewers to Messrs Reamer and Snyder for the answer As far as he knew there were no postmortems after either the Udall or Dingell testimony an analysis or regrets ftir the way the hearings went Mr Gossick just indicated that he felt it went alright When the Udall letter was received Mr Dircks and Thomas Rehm thought it would be an easy one to answer and advised Mr Gossick that all he would have to say in explanation was that no evidence meant post-1968 Mr Gossick had not been to the CIA briefing although Mr Dircks feels that he should have been in attendance Mr Gossick did not seem to like the idea and turned to Mr Reamer and Mr Snyder to help put ·together the response Mr Gossick said that he told Representative Udall the same thing that he told Representative Dingell Mr Dircks still thinks that a fair reading of the Udall testimony shows that Mr Gossick was talking to the post-1968 time frame In his view the Udall testimony appeared to pose less of a problem when compared to the Dingell testimony wherein Mr Gossick stated that the Commission had made a judgment that there was no evidence of a diversion That highlighted the issue and forced its resolution Mr Dircks was not at the briefing on August 2 1977 and had no di scussions with Mr Gossick about what transpired at the briefing He knows nothing about the questions and answers addressed to Representative Udall dated August 19 1977 He said that he did not know why Mr Gossick was excluded from the 1976 briefings This was a sore point but at that time the Commissioners were unsure of the ro l e of the Executive Director for Operations Mr Chapman Director of NMSS was playing a very dominant role almost in a rivalry with Mr Gossick and the Commission was dealing directly with him and some other office directors on many issues that should have been referred to Mr Gossick As far as he knows Mr Gossick never complained about being excluded from the 1976 briefing It was not Mr Gossick's style to complain and he knows of no further conversations on this subject · Since the November 1977 Udall letter Mr Dircks has not discussed the substantive aspects of his recollections of the matter with any of the Commissioners On one occasion while Mr Gossick was on vacation over the holidays Chairman Hendrie said he was going to meet with Repre­ sentative Udall and asked him to tell Mr Gossi k there was no need to cut short his vacation in order to attend the meeting J 1 36 · · SUMMARY OF INTERV I EW Commissioner Richard Kennedy was interviewed in his office at 1717 H Street N W Washington D C at 9 30a m January 26 1978 by William Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel Jerome Nelson the General Counsel arrived late and participated in the latter part of the interview Commissioner Kenhedy had been previously advised of the purpose of the interview He was informed that the summary of interview would be made available to the Congress · He was appointed as NRC Commissioner effective on January 19 1975 when the agency was established Mr Kennedy stated that safeguards loomed large in the Commission's view early on and that there · was very intense interest in safeguards from the outset of the Commission by both Com­ missioners and the st ff The staff involved in safeguards was very small however since most of the Atomic Energy Commission's safeguards personnel were on the General Manager's side which became ERDA Therefore a major effort had to be devoted to recruiting and building an effective staff In 1975 the Commission was concerned with the implications of Materials Unaccounted For MUF Mr Kennedy observed that so long as MUF exists one cannot discount the possibility of a loss or diversion of material One needs therefore to devise a system creating the best system possible of material accounHng and control and physical security--so that if discrepancies occur a reasohable explanation for the discrepancies can be identified Mr Kennedy cited several specific examples of actions taken in 1975 which illustrated Commission concern in the safeguards area For examp le in April 1975 the Commission issued proposed Amendments to Part 75 of its regulations requiring advance notice of shipments of special nuclear material Other rule changes also were proposed in that period On February 2 1976 the National Resource Defense Council NRDC filed a petition for emergency safeguards actions Mr Kennedy repeated that there definitely was an NRC focus on safeguards in the first year of NRC's existence Commissioner Kennedy said that concerns had been expressed and they needed examination It is an established fact that NRC was trying to improve safeguards i e trying to get the best possible safeguards · program which would take into account all paths of possible diversion Therefore according to Mr Kennedy the NRC had people visiting facilities and examining MUFs for explanations and causes James Conran's suggestions had an influence in this context At that time Mr Conran had not spoken to him although he had met with some 1 37 2 other Commissioners Mr Kennedy understood generally what those suggestions for improvement wer The question of NUMEC arose as a past instance of a large MUF At the same time NUMEC was still exhibiting MUFs and these MUFs were being looked into The Commissioner recalls that sometime in February 1976 he attended two briefings The first given by the CIA and the second given by ERDA He does not recall what led NRC to have briefings on 1965-1966 events or who was responsible for setting the briefings up He assumes it was Chairman Anders The attendees were as set forth in Document 102 of the Conran Task Force Report At the CIA briefing he does not recall that any classification level was announced However if none was stated it was clearly implied that it was of the very highest classifiCation--top secret or secret--and involved compartmented material which is very restricted He believes the people who attended were cleared in advance by the briefing agency Commissioner Kennedy recounted his general impressions of the briefing From past experience he knew that the CIA representative Mr Duckett was a very good briefer But the February briefing was not up to Mr Duckett's standards 'tTt was not an organized polished presentation It was · rambling and disjointed and moved through a variety of circumstances Throughout the briefing I had the distinct impression that I was getting hypotheses a series of hypotheses one building on another -··­ kept looking for the links that would put them together which would · give more than the aura of suspicion where I would say 'Aha this really takes us somewhere ' I did not find this He stated that he came away with the pression that the briefing was about suspicions without conclusions -- · j He recalls someone asking Mr Duckett if the CIA or the intelligence community had stated a conclusion His recollection is that the answer was no that some people believed the circumstances · or seeming inter­ relationships and possible but not clear connections between events and activities pointed to a high likelihood of diversion but others con­ cluded that this was not so There were mixed views and no ultimate conclusions They were also told that the FBI had looked into the NUMEC situation and had concluded there were no g ounds to prosecute The briefin included mention of the President of NUMEC Mr- Sha I 25Xl E 0 13526 I 3 I25X1 I 25Xl E 0 13526 __ t h-e c_a_s_e- -------- ---- He does not know Mr Duckett's own view of Mr Kennedy indicated he had searched his memory rega ding files allegedly brought by lr Duckett to the briefing He does reca 11 a sma 11 fi 1e folder on the table the contents of which were used by Mr Duckett It contained a mixture of papers His impression was that it was the briefer's personal memory tickling file It was not a formal file If it was it would have been more organized and thicker He recalli only a file folder with approximately a half-inch mixture of papers N ar the end of the briefing Mr Kennedy recalls Mr Duckett saying some­ thing to the effect What I have just said is reflected in these · papers There is nothing here I haven't told you about Feel free to look at them No one took him up on this offer He does not recall any offer to leave the documents or anyone from NRC saying that the Commission had no place to keep them In fact however we did not have the kind of vault which is required to keep this type of material highly classified with compartmented intelligence classifications According to Mr Kennedy it would have been somewhat surprising if NRC had had such a vault since it is a domestic regulatory agency At the beginning it was not expected that NRC would have involvement in inter­ national intelligence Also the extent of NRC's role in exports was not entirely clear at the inception of the agency A few days later there was a briefing by Harvey Lyons of ERDA NRC was told that the NUMEC matter had been investigated in great depth and the extent of AEC ERDA investigations was described ERDA's concerns went in large part to checking out the efficiency of safeguards built on material accounting under the old theory that nuclear materials would be guarded like gold The value of the material was so high that it would be protected from an economic standpoint and backed up by the heavy penalties of the Atomic Energy Act · From the ERDA briefing it appeared that the AEC had done a thorough-going technical and accounting analysis of the MUF They employed outside accounting firms to assist them NRC was told that the FBI had declined to investigate further because they had seen no evidence of a crime While his recollection s a bit vague Mr Kennedy did not realize at that time that there were two different FBI referrals In addition the ERDA briefer said that the GAO had concluded the same as the AEC He now understands that later when the CIA was pursuing its review the FBI was again involved for a short time and developed nothing for prosecution ERDA made a I 4 clear statement that while they could not say that a diversion did not occur there was no evidence that a diversion had occurred Mr Kennedy believes this is what the Commission was saying--as long as MUF is there and cannot be resolved then one can never prove the negative i e that diversion did not occur Mr Kennedy recalls having heard casual statements in 1975 that diversion has never occurred 11 or ''there never has been a diversion In light of the briefings and a clear under­ standing of what MUF is suth a statement wou l d be misleading He would be disturbed about this The Commission after the briefings believed it was important not to make categorical statements of that kind Consequently NRC simply said that it had no evidence that diversions had occurred One of the purposes of having these briefings was to find out if anything that would bear on our safeguards responsibilities existed in the NUMEC information Mr Kennedy stated that he learned two lessons from the briefings 1 there was a need for continued effort to improve material control and accounting systems and in the transportation field However this was not a surprise since NRC observed this in present facilities It was clear from the ERDA briefing that the system employed in 1965­ 1966 was rudimentary But since 1968 when the Regulatory Staff had assumed safegards responsibility for licensed facilities a major effort to upgrade safeguards had taken place 2 the relationship of management to safeguards including the possibility of collusion insider influence had to be thought about This possibility had to be taken into account The hypothesis was that diversion could happen through insider action At one or both of the briefings it was his recollection that there was a closing discussion of lessons learned About a day after the CIA briefing Mr Kennedy went to Genera l Scowcroft at the NSC He told t r Scowcroft that NRC had received the briefing that at the time of the events there were differing views and that the highest government officials had been informed in 1966 and that it had now surfaced again through the briefing Mr Kennedy felt that it might be something they were interested in and that it was appropriate to apprise them If the briefing was being given to NRC it was probably being giver to others and a prior President had been informed It was also known that the Administration was doing a nuclear policy revievv the ''Fri Report The Commissioner tried to give General Scowcroft his impressiori of the briefing--that it raised questions but no answer General Scowcroft uttered his thanks and said he would look into it Later he advised Mr Kennedy that indeed they did go into it and satis­ fied themselves Mr Kennedy himself had gone to the NSC because he had known and worked 1vith Scowcroft The other Commissioners knew he was doing so and Chairman Anders suggested it He did not know at the time but later learned that Mr Anders had also contacted the White House The matter apparently had again been raised at the NSC staff and recently according to a newspaper report Mr Jody Powel l stated that this admin i stration has also looked at the matter and the incident is closed 5 Afterwards Mr Kennedy recalls discussing the briefing_with the other Commissioners and believes they discussed it with Mr Kenneth Chapman Mr Kennedy did not make any speeches or deliver any testimony on NUMEC or evidence of a diversion although he is aware of statements by others Mr Lee V Gossick was not pr sent at the CIA briefing and he never told Mr Gossick of his impressions of the briefing If he were to have done so he would have co nsulted with the Chairman There was no question that the information was sensitive and highly classified Therefore he recalls Mr Anders stating that it was restricted to need to know in the most strict sense In Mr Kennedy's view this explains the attendance at the meeting Mr Gossick in the most strict sense did not have a need to know becaDse he was the manager of the staff but did not involve himself in direct substance He does not know whether anyone told Mr Gossick of the reason for his exclusion The EOO's role is broader now than in 1976 · Mr Kennedy has no recollection of a briefing by George McCorkle in April 1976 or an ERDA letter to the White House On August 2 1977 the two sitting Commissioners received a briefing from the staff on the MUF release Messrs Gossick Smith Burnett and a large group were present Mr Kennedy does not recall whether Mr Gossick did any talking but several people did talk He thinks Mr Gossick was present at all times during the briefing However it is not unusual for people to get up and leave during a long briefing such as this one It was to give an outline of a content of the release b the questions and answers prepared c a review of the ERDA release and the ERDA NRC coordination and d a schedule of events Staff was not seeking guidance but would accept it Mr Kennedy stated that Commissioner Gilinsky wanted to be certain that no categorical statements were included that no theft or diversion had ever occurred Also there was discussion of what NRC's statements should embrace Everyone concluded that it should address the period from 1968 since that was when the Regulatory Staff NRC's predecessor got safeguards responsibilities in the licensed sector He does not remember a discussion of changing any wording in the release at that bri fing Mr Gilinsky did ask that this be discussed later• privately The Commissioners asked Messrs Gossick Smith and Burnett to go across the hall to Mr Gossick's convenience offices after the briefing A three to five minute session took place in these spaces most probably in the inner office with everyone sta'nd i ng Mr Kennedy does not believe Mr Gossick was there the entire tinie Mr Kennedy said I 11 1 41 6 have a recollection that he Gossick may have been absent longer than he was present I am absolutely confident no question in my mind that for some significant portion of this short meeting· Mr Gossick was not there There seemed to be traffic which is why he thought it may have been the front office However he concludes that it must have been the back room because of the subject matter and the desire to speak privately Commissioner Gil i nsky expressed concern about being categori ca 1 Gil i nsky and Kennedy agreed that the staff should know Df the briefings which raised questions which w rranted caution about stating that no diversion had ever occurred There was discussion about the use of modifters proposed by Mr Gilinsky to evidence to make sure NRC was not mak i ng a categorical statement such as conclusive direct hard Mr Kennedy expressed the view that if NRC says no conclusive evidence that it could be taken as meaning that the NRC knows of inconclusive evidence of diversion the same for the other modifiers He said that NRC should not implj that a diversion had occurred and that it should not mislead in any direction--neither that diversion did not occur nor that it had occurred He also expressed the thought that one cannot prove the negative Mr Kennedy said that he thought Mr Gilinsky understood the point he was making but was concerned that the impression that no diversion had ever occurred not be conveyed There had been previous discussons that one cannot prove the negative Mr Gossick would have been in attendance at some of these This was the only guidance they gave on the use of the no evidence phase He remembers no other guidance His recollection is they were not told ·that they must say any particular thing To the best of his recollection beyond a general statement that a brief­ ing has taken place and raised questions they did not mention anything of the detailed substance of the briefing It is possible that in respo'nse to something Mr Gilinsky may have said about something referred to in the briefing he may have said But that is not evidence There was no further attempt to brief Mr Gossick or the others though he and f-Ir Gil insky agreed that additional staff s hould be briefed Since they had been through the large effort of putting together the MUF data release package they hadall the guidance they needed lr Kennedy also answered questions on a variety of topics as follows Under the delegation of authority in effect in July and August 1977 Mr Gossick typically sought Commissioner guidance but he had the responsibility 142 7 He generally felt NRC should c nfine its questions and answers to 1968-Present The questions and answers dispatched to Representative Udall on August 19 1977 were reviewed and approved by both Commissioners He has no recollection of Mr Gilinsky differing on them If he had Mr Kennedy believes he would have sought out Mr Kennedy and they would have sat down and resolved their differences He does not recall any criticism of the answer to question 12 in the August 19 package He does not know how Mr Gossick arrived at the no evidence statement but he may have read it in the MUF release page proofs In response to a question whether it was NRC policy to avoid · questions on pre-1968 data he stated that there was not any such policy but that it was common sense to not answer questions you don't have the answers to He stated that such questions should be referred to other agencies He does not recall discussion of the word ever in the r UF release He is unaware of the NSC confirming the no evidence of diversion statement but the NSC reviewed this MUF release package It was a rational move to consult with the organization Colllllissioner Kennedy must have been consulted as a general proposition by Mr Gossick concerning his prepared testimony before the Udall and Dingell subcommittees He has no specific recollection of this now however Nor does he recall any mention of NUMEC with Mr Gossick · before his testimony on July 29 and August 8 1977 If he were asked right now about evidence of diversion he would say something like I have no conclusive evidence of any diversion that does not suggest that I have any evidence There are surmises rumors and speculations that there have been diversions Finally Mr Kennedy said that since November he has briefly discussed the matter with Mr Gossick who inquired whether he was aware of some documents where the no evidence statement appeared Mr Gossick indicated that he was aware of some but not all of them before he testified and he thought he was expressing the Commission's view Mr Kennedy does not remember Mr Gossick ever saying he wished he phrased his 1 L13 8 testimony differently In retrospect given the way some h ve apparently understood Mr Gossick's statement Mr Kennedy would not be surprised if this were the case However Mr Kennedy does not believe there is any difference in what Mr Gossick said and what others feel the statement would mean with qualifiers He talked with Chairman Hendrie while the Chairman was preparing his December response to Representative Udall He expressed his view of things as he recalled them and they were incor­ porated into the letter He has also spoken to Marcus Rowden Benjamin Huberman Bryan Eagle Jerome Nelson Robert Burnett Clifford Smith General Scowcroft and Peter Strauss He accepts without question that Mr Gossick would not lie to the Congress 144 REPORT OF INTERVIEW Lee V Gossick Executive Director for Operations Nuclear Regulatory Commission was interviewed in his office in the Maryland National Bank Building Bethesda Maryland on February 8 and 9 1977 by Jerome Nelson and James A Fitzgerald Office of the General Counsel and Thomas J McTiernan and William E Ryan Office of Inspector and Auditor Mr Gossick was accompanied on both occasions by Howard K Shapar Executive Legal Director Nuclear Regulatory Cornnission Mr Gossick was advised of the nature and purpose of the interview and in addition was advised of his constitutional rights since the interviews concerned allegations of possible criminal conduct by him namely the giving of false testimony under oath Mr Gossick said that he understood his rights under the constitution and that he wished to be interviewed · Mr Gossick said that he retired from military service on January 31 1973 and became employed immediately thereafter by the Atomic Energy Commission in the position of Assistant Director of Regulation Upon the formation of the Nuclear Regulatory Commission in January 1975 according to Gossick he became the first Executive Director for Operations EDO Gossick was questioned about his understanding in 1975 of the relationship between his position as EDO and other offices of the Nuclear Regulatory Commission Gossick said that there was much discussion of this in the early days of the Commission Gossick said that there was a meeting in January 1975 at Airlie House attended by the Commissioners designate at which his role was discussed The general gist of the discussions was that he would be responsible for the day-to-day operations of the Commission and that would include the coordination of policy options developed by the staff Gossick stated that for the first year or so there was a feeling on the part of some Commissioners that they should deal directly with the office heads and in fact there was a strong tendency for the Commissioners to deal directly with the office directors The incumbents of those offices read the languag of the Energy Reorgani­ zation Act of 1974 as giving them the authority to routinely deal directly with the Commissioners and this included the Director of the Office of Nuclear Material Safety and Safeguards According to Gossick Kenneth Chapman the Director of that office felt strongly about this and considered that Gossick•s position was not like the former General Manager•s position in the Atomic Engery Commission and that he Chapman was to deal directly with the Commissioners Gossick stated that he brought up this question involving the position of his office several times with the Commissioners Gossick said the situation remained essentially unchanged during the tenure of Chairman Anders but that when Chairman Rowden succeeded Anders Rowden tried to get the question settled Gossick advised that it was not settled until new NRC manuals for NRR and the EDO were approved and published Gossick pointed out that the EDO chapter was approved by the Commission on April 27 1977 and issued on May 13 1977 The chapter in effect now pr6vides that the office 1 45 2 directors will report to the EDO but that they still have the right to communicate directly with the Commission when they consider it necessary in carrying out their responsibilities Gossick was asked about his involvement in safeguards matters Gossick said that while with the Atomic Energy Commission he had some involvement with safeguards issues and that when he joined NRC there were many things going on in the safeguards are Gossick said that he was unable to be directly involved in all these issues but that Chapman k pt him generally informed Matters involving safeguards policy came across his desk and were involved in papers that were discussed with him · Gossick was asked whether his office originated any matters involving safeguards issues He repli d that it did not but there was a mass of things that he was involved with and his job was to coordinate them with other parts of NRC Gossick recalled that while he was with the Atomic Energy Commission the problem of safeguards had no organizational recognition However according to Gossick during the last days of that Commission a safeguards policy office was set up to pull the problem together This did not · involve the physical security of reactors but did involve other security considerations Gossick was asked whether during this t i me he became involved with the problem of MUF or inventory differences He replied that he did not become personally involved but knew that there were people who were working with the problem Gossick was asked when he first heard of the MUF problem at the NUMEC plant Apollo Pennsylvania He said that he first heard about it sometime after joining the AEC and became aware that the matter had been the subject of inquiry by the JCAE He believes he first heard _about the Apollo NUMEC MUF in late 1973 or 1974 Gossick said he first heard of an mployee by the name of James Conran in the time period of spring 1976 He recalled that Chapman had told him that Conran was going around to the offices of the Commissioners and that he had a problem having to do with safeguards According to Gossick he attended a meeting in early 1976 with Chairman Anders and Chapman to · discuss Conran and his problems ' Gossick was asked when he first heard of the special briefings that were given the Commission in February 1976 by the CIA and ERDA on the problems at NUMEC Apollo He replied that the first he learned that there had been briefings was in the summer of 1976 It was Gossick 1 S recollection that Chapman told him that briefings had taken place or that John Davis 3 had told him about the briefings Gossick placed the time of this information after his meeting with Anders and after the concerns of Conran came out but he was not absolutely sure of this Gossick said that when he reviewed reference 102 of the attachments to the Conran Task Force Report he became aware of some of the particulars of the briefings for the first time Until this time he had not been aware of these particulars but the document gave him details relating to who what and where Gossick observed that with respect to the substance of the briefings the information was about what he had understood from conversations with Chapman and John Davis and generally consistent with the press accounts that he had read Gossick was asked what his understanding was with regard to NUMEC Apollo · and he stated that he understood that there had been a reported MUF at · the plant and there was speculation and questions about whether it was a process loss or whether someome had made off with it According to Gossick his understanding was that the information was not conclusive and no determination had been made as to what actually happened Gossick was asked if he was familiar with the problem of releasing MUF data to the public and he replied that he was Gossick explained that during the last days of the Atomic Energy Commission in 1974 a Freedom of Information Request was received from a reporter by the name of Burnham As a result of this request meetings were held by the AEC Germantown Mary1and At one time a decision was made to release the information but later the decision was reversed and it was decided not to release the information This problem said Gossick was inherited by the Nuclear Regulatory Commission Gossick stated that he was not directly responsible for the release of the MUF information but that it was handled by the staff Gossick recalled papers going bac k and forth and meetings about the release of information Gossick could not specifically recall the number of meetings on this subject According to Gossick the MUF information to be released was to be si months old or older Gossick was asked about the circumstances leading up to his testimony before the Udall Comnittee on July 29 1977 · Gossick explained that on July 1 1977 the Commission lost a quorum by the expiration of Chairman Rowden•s term of office During the latter part of June a large number of decisions was made on pending items and a great volume of paper was generated by the Commission arid much of it flowed across his desk When the Commission went out of business according to Gossick he was in the postion of representing the Commission at -six upcoming Congres ional hearings At the same time Gossick said other Congressional hearings were coming up on various subjects At this time said Gossick he received a letter from Congressman Udall requesting that he testify on the open letter that Jim Conran had sent to the Commission Accordingly said Gossick he asked the Office of Policy Evulation and the Office of the General Counsel to make persons available to help prepare the testimony Gossick said that Bill Reamer and Bernie Snyder were made available 1 L1 7 ·1 4 Gossick said that he outlined for them the general nature of the testimony and that Reamer and Synder drafted the testimony and prepared backup books Gossic k said that his prepared testimony addressed the allegations made in the Conran letter plus the reason why Conran had been transferred within NRC Gossick stated that the Apollo question was not specifically addressed in the prepared testimony Gossick was asked whether or not prior to his testimony before the Udall committee he recalled Roger Mattson suggesting to him that he read re ference 102 He answered that he did not reca l l this but added that he had a 1ready read reference 102 anyway when it Alas sent down to the Commissioners for release to Henry Myers Gossick was questioned about his testimony before the Udall committee Gossick said that the testimony covered a wide range of matters but the matter of Apollo came up early Gossick recalled that Chairman Udall indicated that the Apollo matter bothered him and he as ked the four witnesses Thomas B Cochran Maurice Eisenstein Conran and Gossick how he could get to the bottom of the Apollo matter According to Gossick Cochran suggested that the committee should go to the FBI the CIA the JCAE and the GAO as those agencies may have investigated the matter Gossick said that when he was asked the question he said that he thought Cochran had given a good answer Gossick was questioned about his answer to Congressman Tsongas' question about the theft of nuclear material specifically Gossick's statement ha v e _frlv g t L ver x incjdent that has come tQ o J r Q tt n_tion or ha s__Q_een al l eged _tq us with regard to the theft or diversion of material I can sa ' y--th'aCwe -·hav·e· no ·e-vidence that significant--and I use the word 's-igniffc t'nt' · b'e-c ·a use ''fne'ri ·h ave been cas'es where small' minute quantities have been taken off the premises of a plant--but I say we have no evidence tat a significant amount of special nuclear material has been stolen Go ss i c_k__t gQ j _ JlUL R • Yt a 9J Is i_ Q g____ - -Q Sc- 2 - t NR£ 91 jp y_ l1 9E t e L nd Q lr tY jJU -t t9 t h - g u_ t _ o l za _ 9_fl _q L1 _ AE 9- - to 968 - t · v hen r e guJ a tO t Y ·ccon t 7 o s we r € J t ti_1 1 _E_ n_ _ t t - c g t h1 s f t I · '' ' l ter t t 5 t O FJ Q R r J Qr _t Q J W ' Goss 1ck adaed that tie naCf' 'hea rd · r · · and seen the no evidence statements many times and knew that this was - f - the view of the staff Gossick stated that he was aware that the '' s t'lt ­ Commission had made or approved similar statements and that he understood 'C -­ that the statement reflected the Commission's pos i tion Gossick noted C­ that in making that statement he was not tal king about Rocky Flats p so Oak Ridge or oth r facilities under the AEC's General Manager's or ERDA's program responsibilities but only with regard to a1 1 licensed facilities Gossick stated that when he used the word we i n the 'we ave no evidence answer that he meant the Nuclear Regulatory comm1ss1on that ex1s e u t 1 of _ t t e was no ware o any c ange 1n position o£ time he testified and that when he used t e 1 48 5 word evidence it related to licensed facilities going all the way said that the wo evidence to him means more than susojcion doubt ru or or specul Gossick note t at he was not speaking on behalf of the ent1re Federal Government or other agencies such as ERDA or CIA 5 Gossick Gossick was asked whether he was present at the briefing that was given the two sitting Commissioners on August 2 1977 on the MUF release package Gossick said that he was and observed the week before the briefing had been a time filled with much activity Gossick said that the staff was trying to keep all the activities on track and schedule As he recalls Commissioner Gilinsky was out of town during this week Gossick said that the purpose of the upcoming briefing was to review all the ongoing and planned activities and to answer any questions the Commissioners had Gossick said that at the briefing the Commissioners were advised that the release document _had already been printed and that the document had already been given to Congressman Dingell's staff and briefings had begun on August 2 for the Congressional committees and to appropriate state governors At the August 2 briefing Commissioner Gilinsky expressed a concern about the statement on page 2 of the report that there was no evidence that material had ever been diverted Gossick said that a day or two before the briefing Gilinsky had phoned him and asked about the status of the report Gossi k told him that the report was at the printers Gilinsky indicated he thought an ERRATA sheet should be issued with the printed report Gilinsky according to Gossick was concerned about the no evidence statement on page 2 of the report and wanted the word conclusive inserted before the word evidence Gossick said that he pointed out that a briefing of the Commission was scheduled fo August 2 and suggested that the matter could be discussed · at that time and that Gilinsky apparently agreed At the · August 2 briefing Smith Burnett and members of their staff were present and the no evidence statement came up Gossick said that he gathered from what went on that Gilinsky's concern was taken care of when it was agreed to modify the draft press release for August 5 to make it clear that the report related only to the period after 1968 Gossick was asked whether he recalled that there was discussion at the briefing that the report related only to the 1968-1976 time periodi and he did not specifically recall this ' Gossick in reconstructing the August 2 meeting said that at first there was a large group of people in the room but that toward the end of the conversation a number of people left the room Gossick recalled that Gilinsky thought that the no evidence statement was too strong and that it should be confined to the time period 1968 and after which was the period of NRC's responsibility for answering queries about the MUF information 149 6 Gossick stated that at the August 2 meeting it was pointed out to the Commissioners that the final draft of the report had been sent to them on July 21 1977 and that the Commissioner's comments on the draft had been collected by OPE and given to the staff It was further noted that the Commissioners had been provided for their review questions and answers to be used by Dr Smith and Mr Burnett at the August 4 press briefing and that no comments had been received Gossick was asked if he recalled the number of people at the meeting after being reduced in size He did not but believed that the people at this portion of the meeting included at least himself Burnett Smith and Pederson in addition to Cohlmissioners Gi linsky and Kennedy He stated his recollection of thi part of the briefing was hazy Gossick was asked whether he recalled Commissioner Gilinsky saying that unless a change was made in the report that he would not concur in it and he did not recall this Gossick said that the final decision was to leave the report alone and modify the press release to reflect that the report referred to 1968 and after · Gossick was questioned further about the telephone call he had received from Gilinsky prior to the August 2 briefing His best recollection was that the call was on August 1 and Gi1insky was interesteq in where we were in the MUF release According to Gossick Commissioner Gilinsky had seen the draft and inquired if there were Q and A's and he Gossick answered that they had all been sent down and that comments on the draft report had been received from OPE According to Gossick Gilinsky brought up the matter of the no evidence statement and said that it was a stronger statement than he felt could be made Gossick said that he told Gilinksy that the report was already being printed and had incorporated comments and changes that had been provided to the staff by OPE and that his Gilinsky's effie had bought off on and that a meeting was set for August 2 to discuss the status of the MUF release activities At this according to Gossick Commissioner Gilinsky expressed surprise that the report was already being printed but seemed to agree to let the matter stand until the August 2 meeting Gossick was asked about the date of the phone call specifica l ly was it before ·or after his testimony before the Udall committee He said that he couldn't be surei but did not think it was before the July 29 hearing Gossick said that even if the call had been received before the Udall testimony he would have answered the q estion in essentially the same way Gossick · said that he was present at all times during the meeting in the Commissioner's conference room on August 2 He recalled that a question about the no evidence statement came up and he was not sure if any discussion on the use of the word conclusive came up Gossick could 150 7 not recall if there was any discussion on the use of an ERRATA sheet but did recall that the conclusion was that the press release would take care of the problem Gossick recalled that there was some conversation about where ERDA stood on the question and the fact that there had been meetings with the National Security Council and Schlesinger at which Smith or Page were present During these meetings one of issues was whether or not there should be any change to ERDA's statement that there was no evidence of theft or diversion but that ERDA refused to modify the statement Gossick recalled that this matter was elaborated upon by either Smith or Burnett to the effect that any modification in the NRC statement would have to be cleared with ERDA since it would be like suggesting that we had something new in the way of information Gossick said the business about the pre- and post-1968 data had come up in previous discussions within NRC and that ERDA would handle questions regarding pre-1968 data Gossick said that it was clear to him that the NRC MUF report covered the period from 1968 and forward Gossick could not recall if the statement about no evidence of theft or diversion was in the May draft of the MUF report Gossick was asked about his acquaintance with Generals Starbird and Giller of ERDA Gossick said he did not know Starbird well and that he did not know him as a friend like he did Ken Chapman Gossick said that he had known Giller for a number of years and that Giller had recruited him for the AEC but that he did not have much contact with him since Giller worked mostly with Ken Chapman and Carl Builder Gossick said that prior to the Dingell hearings on August 8 he had not discussed the NUMEC matter in any detail with either Starbird or Giller and neither of them had asked him to use the no evidence statement in his testimony Gossick was asked if he knew why he was not included in the 1976 bHefings by the CIA and ERDA He just knew that he was not invited and did not discuss his not being at the briefings with anyone until after his testimony before the Udall committee He recalled that before he testified on July 29 he had discussed the matter of the briefing with Commissioner Kennedy and former Chairman Rowden and that there had been a discussion of the briefing on August 2 with Gilins y Kennedy Gossick Smith and Burnett present Gossick said that prior to these discussions it was his reaction that the briefings involved something that the Commission had concluded it was not necessary for him to know and he did not attempt to find out Gossick was asked about the statement in reference 102 of the Conran Task Force in which Peter Strauss is attributed with the statement that after the 1976 CIA ERDA briefing the no evidence statement was not made by the Commission without modification Gossick recalled talking to John Davis after seeing reference 102 and asking him what had happened at the briefings Davis told him what he got out of the briefings was essentially as characterized by reference 102 Eagle told him essentially 01 Jl ­ j 8 the same thing Gossick recalled that these discussions were before his testimony before the Udall committee He said he was under the impression that the Commission briefings by the CIA and ERDA contained nothing firm one way or the other Gossick said that when he read item number eight Strauss statement in the 102 document that he said to ·himse1f that it did not sound right Gossick said that he asked around to see if he had missed some message or that a signal had been given to change such statements but that he could not find any Gossick was asked when he first saw reference 102 and he replied that the document was formally given to him on July 18 1977 when it was being forwarded to the Commissioners for their approval to release it to Henry Myers It was Gossick's recollection that he had seen the document a week or ten days before this Gossick said that the Strauss statement in reference 102 was no signal to him to make a different statement and that the statement was not correct since the Commission had continued to make or approve the no evidence statements the same as in the past Gossick said that after seeing reference 102 but prior to the Udall hearing he had talked to John Davis and Bryan Eagle about the 1976 briefings because they were the only staff people who had attended the briefings who were still around Gossick said that he also talked to Commissioner Kennedy about the briefings Gossick said that what was on his mind was the sensitive nature of the briefings In his conversation with Commissioner Kennedy which Gossick recalled occurred in his Gossick's office he asked Kennedy what he should say if the question of the briefing came up Gossick said he told Kennedy that he planned to say that the Commission had been briefed by the Executive Branch without specifying what had been said and that the Commission was aware of what the Executive Branch had to tell them Commissioner Kennedy did not volunteer any facts to him but said that if the Udall committee wanted the information they should ask the Executive Branch fo r it Gossick said that when he asked John Davis about the 1976 briefings that he did not remember much of what had gone on and could not remember whether there were two briefings or one In his conversations with Eagle according to Gossick he was clear that there were two separate briefings but he added nothing in terms of substance or facts Gossick was questioned further about the meeting with the Commissioners on August 2 1976 He recalled Commissioner Gilinsky brought up the subject of MUF and particularly pluses and minuses Gilinsky's point was that we have big MUFs and we say we have no diversions but that even with a zero MUF it does not necessarily follow that we have no diversion and that this tied into why we should be more careful with statements about material accounting that we give to the public 152 Gossick said that he wonders now if the above statement by Gilinsky was · supposed to be a flag to him or if it was tied in with the statement on page 2 of the MUF report Gossick said that if the two Commissioners had said to change the statement that it would have been done but that it was unclear as to what Gilinsky's concerns were and he did not insist on a change Gossick said that when the period of the report was limited to the period after 1968 this seemed to alleviate Gilinsky's concern According to Gossick he did not know how he could explain an errata sheet that changed the statement to no conclusive evidence because the question would be if that was true now why wasn't it true all along and he wasn't aware of any evidence in the sense in which he understood the term Gossick advised that when the August 2 meeting broke up either Gilinsky or Kennedy signaled him to get Smith and Burnett which he did Gossick Smith and Burnett then went across the hall to a small suite of offices accompanied by Commissioners Kennedy and Gilinsky According to Gossick the group met in the outer office and no one else was present at the time Gossick said that he anticipated what was to be discussed since one of the Commissioners had told him Smith and Burnett should be told about the CIA and ERDA briefings prior to their participation in the August 4 press briefing Gossick said the group met just inside the door It was Gossick's recollection that something happened to interrupt or distract him from the conversation He recalled that he was in the room during the conversation which lasted from five to ten minutes and everyone stood Gossick recalled that Smith Burnett and Commissioner Gilinsky stood near the door but he cannot remember what Gilinsky said nor did he remember Commissioner Kennedy saying anything Gossick said that right after ·the meeting he talked with Smith and Burnett about what had been said and got the general impression that the CIA briefing only dealt with the suspicion that there had been a ·diversion and that the briefer may have indicated that some in CIA thought that a diversion had taken place but that this was not the agency view and that it was not conclusive that a diversion had occurred According to Gossick what Smith and Burnett told him was nothing more than what he understood from reference 102 and discussing with Davis and Eagle Gossick was asked whether or not during the meeting in the small office he was pulled out of the room at any time He replied that he thinks that he may have been or that there was some interruption such as a phone call because he cannot remember what was said It was Gossick's opinion that if he had stood there and listened to what was said that 153 10 he would have a clear impression of what had gone on Gossick was asked if he recalled being at the meeting when the meeting broke up and he said that he thought that he was Gossick said that when the small meeting was over he left and returned to Bethesda According to Gossick he at no time related what was said in the meeting to his prior testimony before the Udall committee When he later received the transcript of his testimony before that committee he ' reviewed it just to clean up the grammar and did not believe that there was any need to correct any matter of substance Gossick was asked whether between August 2 and August 8 the date of his testimony before the Dingell committee he discussed what had gone on at the small meeting with anyone and he replied that he did not recall discussing it Gossick said that there was much going on and he was working on his testimony before the Din gell committee Gossick advised that in his prepared testimony he did not address the no evidence statement Gossick was questioned about his testimony before the Dingell committee on August 8 Gossick said the panel of witnesses consisted of Fri Starbird and Giller of ERDA and himself Gossick said that Fri had to leave early so he was the first to present his statement The testimony concerned the general nature of the MUF problem · 11 Gossick was asked why he thought that this was the Corrmission'·s view He said it was his general understanding based on stat ments made or approved by the Commission although at the time of the July 29 hearing he probably could not have pointed to specific documents Gc iss·i ck advised that he understood that that was the Corrmission's view Gossick said that he did not discuss his testimony before the Dingell committee with anyone until the November 15 1977 letter was received from Congressman Udall Gossick ·said that the first time he aw a copy of that letter was when it was handed to him one evening by Ed Fay Gossick ' as questioned about his testimony before the Dingell committee in which in answer to a question · by Mr Ward he said as follows I can only say Mr Ward that the statement of the Commission that they had no evidence that indicated any diversion had taken place was made in full knowledge of the briefing that they had received So while I personally was not briefed on that matter the Commission did make and has reaffirmed the judgment that in their view there has been no evidence to indicate that any evidence to indicate that any diversion has taken place '' 11 Gossick stated that when he said that the Commission had reaffinned that judgment he had in mind the statement in the NUREG documeQU J L M ria h - W J X 9 2l Y-J£ 9 ' r Q gg P t t m D t si nc -tb9 do cume nt Q Q y_g_o e_s_p_ac L t£L1968 · · HQ 5 g_c _ -$J t M kw J t statement he a sg_h g_g_jn rrlTM'tneotne'r sta ell en s o_f _the W le- lJl_ill hg 'tliattiac ' ' o'eeii mtd Or' a'Q jff6Wa 'Dy tne c·cimni fsS i'a'W rrcfw11ich di'd not 1imit · 68 ' ' 'a f --r ' · - · · · _ L _j' ' ' '· ' l' emse ves o l· g an · a er -·- - -- ''· · 1 - _ ·• · · · · ·• •• ··--· · ·• - · th l -- ···t' ' Gossick was asked what he meant by the word Commission in his testimony He stated that what he had in mind was the co11egia1 body or the whole NRC organization Gossick said he meant more than the staff but not the positions or views of individual Commissioners Gossick explained that at the time there was no quorum and that he did not consider that he was the Commission but he considered that this was the vjew of the last Commission as it existed oefore it went out of existence at the end - Gossici Sa a-tnat--m -was not referring to the individual views of Comm1ssioners Kennedy or Gilinsky Gossick said that he knew that Commissioner Gilinsky had concerns but did not know precisely what they were and did not know whether they might stem from other sources 1 55 12 Gossjck said tha t_ in should have said that 'd not know what Gossick said that he was Gossick said that while testifying before the Dingell committee t bat neither the year 1968 or Commiss1oner · · sk 's concerns were in his min an oes no know why they were not According to Gossic k what he d have said was that not having been at the briefing he p rsonally caul d no gi vL_tha t assurance in answer to Mr War cL_s_ Q_I l $ti bUl --cna-t his understanding of the Commission's view was as tated in the lier answer Gossick observed that he believes evidence is something I can use to prove a point and that it is something that proves or tends or prove that something happened Gossick said that in his opinion evidence i more than suspicion speculation or the suggestion that something happened According to Gossick evidence is not the opinion of one CIA man but he noted that if it _was the view of the entire agency that he would look upon the matter differently Gossick said he had not heard that this was the case prior to his testimony before the Dingell committee Gossick said that probably during the week of November 27 1977 after the Udall letter had been received and after he prepared a draft of his memorandum to Chairman Hendrie in response to the letter Commissioner Gilinsky called him in Gi 1i nsky was apparently concerned not about hi s testimony before the Udall committee but before the Dingell committee Gilinsky told Gossick that at the little meeting on August 2 he had told Burnett that the CIA believed that a diversion had in fact occurred Gossick told Gilinsky that it was the first time he had heard this After meeting with Gilinsky Gossick said he talked with Smith Burnett and Commissioner Kennedy about what had gone on the little meeting Burnett did not recall that Gilinksy had sai this and neither did Sm i th Commissioner Kennedy said that there were some people in the CIA who thought that a diversion had occurred but that this was not an agency view Gossick said that on Decmeber 12 1977 Commission Gilinsky called him and asked him to come downtown Gossick did_fio and Gilinsky showed him the letter he had written to Congressman Dingell and asked him to read it Gossick recalled telling Gilinsky that he was sorry that there has been a problem over this but that he did not recall Gilinsky telling hi m that it was the CIA's conclusion that there had been a diversion and that if he did the oth r persons at the meeting would have remembered it Gil insky replied as Gossick recalls that he did not mean to say 156 ••• 13 that it was the agency's conclusion but there were some people in the agency who believed a diversion had occurred and that the briefer may have said that it was his personal view not the agency posistion the it Gossick noted that Commissioners Gilirisky and Kennedy had been advised of his testimony before the Udall committee in Carl Kammerer's memorandum of August 1 1977 plus the transcript of the testimony sent to them later and that no question was raised about his testimony until December Gossick was asked whether there was anything in the action plan prepared as a result of the recommendations of the Conran Task Force that impacted on the testimony which he had given and he replied that the action plan recommendation and the staff response did not suggest any qualification in the no evidence statement except to point out the inherent uncertainties in measurement Gossick was que tioned concerning the delegation of operating authority to him by the Commission Gossick said that there were several drafts prepared and that letters with the final version were sent to several members of Congress and a Federal Register notice of the delegation was issued Gossick said that before Chairman Rowden left that he met with the three Commissioners and they discussed the delegation and that Gossick would cont i nue to consult with the remaining Commissioners Gossick was asked whether he had attempted to get a briefing from the Commissioners on pending matters and he said that he had not because he felt that he was already sufficiently involved in the major things that were currently going on · · Gossick said that he set up different categories of matters ·According to Gossick one category involved matters that could wait for the new Commission another involved matters that could not wait and which · required him to seek counsel and advice of the Commissioners Gossick said that there was no instance of a confrontation with the Commissioners ' Gossick recalled that in June 1977 Burnham of the New York Times had received information in a brown envelop about the inspection history at Apollo Gossick said that he anticipated that Burnham would write something about it and after discussing it with Chairman Rowden it was decided to alert Congressman Udall Gossick recalled that on or about - r _ 1 14 June 24 he and others went to see Chairman Udall Henry Myers and several Congressmen and there was a candid discussion about the MUFs and the problem at Apollo Gossick said that they told Udall about the Executive Branch briefing Gossick recalled that he told Udall that he Gossick was not familiar with the details but that the committee should ask the Executive Branch if they wished the briefing At th· s time Mr Gossi ck recalled that Chairman Rowden said that the NRC had made contact with the Executive Branch concerning the CIA briefing Gossick understood that this was done so as to be sure thit the new President Ford was informed about the content of the briefing Mr Gossick explained that these facts had no impact upon his testimony because he kne from document 102 that the briefing had been inconclusive 11 Gossick was asked about the Q and A1 s that were sent to the Udall committee on August 19 1977 Gossick said that they were prepared by the staff and that Hugh Thompson had been responsible for coordinating the preparation According to Gossick packages were sent to the Commis­ sioners and to OPE and clearances were received from them with some changes After this said Gossick he signed the letter to Udall and sent the package out On the following Monday Hugh Thompson told him that there was a problem and that Commissioner Gilinsky wanted to modify an answer and had proposed rewording the answer to question 12 to relate only to after 1968 Gossick said that this was all right with IE and NMSS and Commissioner Kennedy had no problem and he would discuss it with Commissioner Gilinsky Gossick said that he saw Gilinksy and told him that there was no problem about the change but that the letter had already been sent based on the approvals and changes that had to be provided by OPE Gilinsky just let the matter drop and did not pursue it further Gossick said that he understood from Ken Pederson that at the next opportunity for the Commission we would revise the statement to construc­ tion it to post-1968 According to Gossick the next opportunity came up in the Joint Report on Safeguards that was issued toward the end of December 1977 and the statement on theft and diversion was modified to cover only the period of the report Mr Gossick was asked whether he had seen a DIA publication devoted i n part to nuclear proliferation matters He replied that he had seen it but did not give it great weight because it did not mention Apo l lo NUM£C and because he understood that it did not represent the intelligence community viewpoint • c 1S8 REPORT OF INTERVIEW Carl Builder was interviewed at the Office of Inspector and Auditor on January 18 1978 by Thomas J McTiernan William Ryan and James Fitzgerald Mr Builder stated that he is presently with The Rand Corporation and since September 1977 has held the position as Director Theater Conflict Research Prior to that he was Director Strategic Systems beginning in S ptember 1976 Until August 1976 and beginning in July 1975 he was Director Division of Safeguards Office of Nuclear Safety and Safeguards Nuclear Regulatory Commission Builder stated that while with the NRC a part of his responsibility was to see that the regulations for material accountability or MUF were adequate About one month after being employed by NRC he became aware of a past problem which had occurred at the NUMEC plant in Apollo Pennsylvania in 1966 According to Builder there were rumors and allegationsn about a significant loss of material at Apollo variously attributed to a diversion of material to Israel or that it had been buried or that it had been sold on the black market Builder said that these rumors were not based upon anything written to his knowledge but rather conversations These rumors did not focus on the specific events at Apollo but they were frequently associated with the large Apollo MUF Builder recalled that the conversations he referred to were most likely with Gerry Page and Larry Wirfs He did not specifically recall talking with Ken Chapman about the rumors 11 11 11 Builder said that early in the spring of 1976 briefings were given to a limited number of people by ERDA and the CIA The ERDA briefings had to do with the topic of crude nuclear explosives Builder did not recall that the ERDA briefings were related to the CIA briefing He recalled a subsequent ERDA briefing on the subject of MUF given by his ERDA counterpart a retired Navy Admiral Harvey Lyon The CIA briefing was specifically concerned with the problem which had occurred at · NUMEC That briefing was held in the Chairman's conference room Builder pointed out that prior to the briefing several concerns had been voiced about the construction of crude nuclear explosives The information was sensitive and it was limited to seven people within NRC the five Commissioners plus himself and Ken Chapman These seven people had a direct responsibility for the adequacy of nuclear safeguards There had been a series of meetings on this subject in 1975 · He was advised of a briefing to be given by Carl Duckett in 1976 as he recalled in a telephone call from one of the Commissioners' secretaries Builder recalled that all of the Commissioners were present at the briefing at least he could not recall any of them being absent Present in 1 59 I 25Xl E 0 13526 2 addition were Ken Chapman and himself Bui1der did not recall anyone else being present Builder said that he was nat advised in advance of the topic of the briefing but that he guessed it might be about NUMEC Apollo Builder reca11ed the CIA briefing was given by Duckett alone and that Duckett was not accompanied by anyone else from CIA Builder did not recall an announcement of the classification 1evel of the briefing but observed that it might have been top secret and sensitive 11 Builder stated that he was reluctant to go into the details of the briefing He described the briefing as mainly concerning Duckett's theoriesu of what happened to material at NUMEC Builder sa i d that because of his position he had a specific concern for what might have happened to · material at NUMEC Consequently he listened for something in the nature of hard evidence but a11 he heard were theories circumstantial evidence and much 11 color '' 1 11 L --- -----'1 Builder stated that he came out of the briefing with an 1mpression of having heard a colorful yarn about colorful people Bui l der did not believe that Carl Duckett had evidence with which to take legal action It was Builder's recollection that it was not the kind of evidence by itself on which to base rule chariges Builder said he came away from the briefing entertained but most of what he heard was old allegations I Builder estimated that the briefing took one hour or less Builder said that Lee Gossick was not present After the briefing said Builder he never discussed the substance of the briefing with anyone until this interview He had the impression that the Commissioners had very little further interest in the matter Atcording ·to Builder We had heard enough Builder was asked about a memorandum he had written concerning allegations about missing material at NUMEC Apollo Builder said he had written no such memorandum Sometime after leaving NRC Builder said that he I 25Xl E 0 13526 3 received a telephone call from 1ark Eliiott who v 1as then a member of the Conran Task Force Elliott wanted to know why no action had been taken on the Conran allegations about Apollo Builder said he explained to Elliott that he had determined not to take any action on the allegations However he pointed out that this was apparently not just his Builder's judgment alone Builder noted that the Commission had received a brief­ ing on the Apollo incident and also h ad not seen fit to take any action on the Conran allegations Builder said that in the course of his · conversation with Elliott he mentioned that the Commission had been briefed on the subject but did not reveal who had briefed Elliott then wrote the memorandum for the Task Force describing his conversation with Builder · Builder recalled that he had more than one telephone conversation with Elliott on this subject In one conversation Elliott told him that ' a request under the Freedom of Information Act had been received for the memorandum According to Builder he told Elliott that he thought it would be a great mistake for NRC to release ' the document but Elliott told him that the decision had been made to release it Builder advised that this disturbed him very much and for a time considered whether he had a cause for action against those who had released the document Builder pointed out that the Elliott memorandum had only mentioned there had been a meeting but had not gone into the details or source of the briefing Builder said that as a result of the release of the document he had several calls from the media'' about it but in answer to their 9Jiest_i_o_n_s_ _h_e_we_n_t_n_o_f_u_r_t_h_er_t_h_a_n_t_h_e_co_n_t_e_n_t_s_o- f-- -t-he_m_e- m o-- ra -_n_d_um_ _ ________ of a Builder was asked whether he d1scusse 1s v1ew with Lee Gossick and he said that he never discussed it with him Builder said that this view was consistent with the policy of NRC both before and after the CIA briefing and the CIA briefing did not change it The Commission's policy did not change one iota Builder said no word was heard from the Commission on the matter and that this remains his view today Builder said he had never discussed his view with any Commissioner or anyone outside the Office of Nuclear Material Safety and Safeguards Builder said that the events of NUMEC were known before Conran and Duckett mentioned them because he was forced to ask himself the question If the allegations about diversion were true were there actions that he should be taking to prevent a reoccurrence He volunteered that If I had to bet whether any significant amount of nuclear material had ever 161 1 't 4 been stolen I would bet that it had not However you cannot regulate on a bet 11 It was Builder's belief that even if the allegations were true the security provisions at NUMEC in 1966 were far different than those called for today It was Builder's opinion that even in light of these differences a theft or diversion was improbable in 1966 Builder in reference to the 1976 CIA briefing stated that Duckett was very quiet in manner and he could not recall that Duckett had a number of documents It was Builder's impression that when the briefing wa over the Commission was not interested in pursuing the matter any further There was no summing-up session by Duckett or the Commission to his knowledge Builder had no knowledge of a trip by Gerry Page to the CIA in the April 1976 time frame He said Page may have done so however and he might not have known about it because he was involved with a task force of his own at the time in another city Builder was asked whether he had heard that Chairman Anders had gone to the White House after the briefing and he advised that he did not know this Builder was asked because of reports in the press whether he recalled President Johnson's name coming up during the CIA briefing He recalled that it did but it was in the form of some irrelevant allegation that Johnson did not want someone told about Apollo but the source of Duckett's information on this was not clear According to Builder Duckett seemed to be having trouble with his own agency Builder recalled that it was not so much that Duckett was being curtailed but rather Duckett seemed to be the advocate for theories which were not supported by his agenc Y · ------------------------------------------------ 16 2 5 Builder said he thought that by taking no action the Commission had reaffirmed that position Builder recalled after the briefing that similar statements had been made a number of times and not questioned by the Commission According to Builder if the Commission does question such statements it is only since he left NRC Builder concluded by saying if the Commission now opposes that position it has taken them a long time to incubate that position Builder pointed out that while he was with the NRC Lee Gossick's priricipal duties involved administration and running the staff Builder reca 1led that Gossick frequently excused himself when substantive matters were to be discussed Builder said the fact that Gossick was excluded from the CIA briefing was more because he was not involved with very sensitive information about bomb making rather than because the briefing was about Apollo 163 l ···t f •' REPORT OF INTERVIEW Dr Edward A Mason Vice-President for Research Standard Oil Company Indiana was interviewed on February 9 1978 by John Anderson NRC OIA and Peter Crane NRC OGC The interview took place in Dr Mason ' s office in Naperville Illinois and lBsted for approximately 2-1 2 hours Dr Mason was an NRC Commissioner from January 19 1975 until January 15 1977 He started working for Standard Oil on January 17 1977 Dr Mason was advised that the purpose of the visit was to ask him questions relative to an ongoing inquiry into certain Congressional allegations that the NRC Executiv Director for Operations Mr Lee V Gossick had misrepresented facts before two House Subcommittees in July and August 1977 Dr Mason was told that the Chairman of NRC Joseph M Hendrie had directed OIA and OGC to conduct an inquiry into this matter As background Dr Mason was advised that Mr Gossick had testified before the Subcommittee on Energy and the Environment of the House Committee on Interior and Insular Affairs on July 29 1977 and before the Subcommittee on Energy and Power House Committee on Interstate and Foreign Commerce on August 8 1977 The thrust of those remarks of Mr Gossick that are now being challenged is as follows that the Commission has no evidence that significant quantities of SNM have ever been stolen or diverted and that the Commission takes this position after having been briefed by ERDA and the CIA in February 1976 regarding allegations related to inventory discrepancies at the Apollo NUMEC facility in the 1960s The interviewers advised Dr Mason that they had Q clearances and in order to pursue this matter thoroughly had a need to know what actually occurred and was said at the 1976 briefings Dr Mason was · given the name and phone number of the CIA contact to call if he wished to verify the interviewers' need to know in this matter ·or Mason said that that would not be necessary since he knew both interviewers personally and was aware of the ongoing inquiry having previously been contacted by Mr McTiernan OIA Director Dr Mason was informed that the results of his interview would after a c l assification review be provided to the Congress and might well be printed in the Congressional Record The interviewers thought it desirable for Dr Mason to read and make any necessary correction in a' preliminary draft prior to final submittal 2 The interviewers ad vi sed Dr Ia son that James Conran had stated that he had told Dr Mason all he knew about Apollo NUMEC on December 15 1975 This included the assertion that there was an intelligence estimate to the effect that material had been stolen from NUMEC Conran said that he told Dr Mason the name of the country to which the material was alleged to have been diverted and discussed with him the officers of NUMEC Or Mason confirmed that he first became aware of Conran's concerns in December 1975 Dr Mason Conran and James Hard Dr Mason 1 S technical assistant met at Dr Mason's house for several hours Conran Hard and Mason had become acquainted when all three were associated with the AEC's Advisory Committee on Reactor Safeguards and Conran apparently trusted them both Conran at the meeting at Mason's house was carrying around a briefcase full of classified material but he demonstrated to Dr Mason that he had covered himself'' legally Dr Mason nevertheless thought this unwise and cautioned him against being careless--for example leaving it on a bus Dr Mason agreed with Conran that it was important to learn from past experience with regard to safeguards and to use information on past problems to raise the consciousness of NRC personnel working in the area Dr Mason said that Conran told him that to facilitate the performance of his then current work assignment Seymour Smiley had helped Conran get access to doc ments at ERDA where in the course of combing the files he came across leads that caused him to inquire about Apollo On one occasion Conran indicated that he was permitted to see a classified document by the secretary of an ERDA official who had previously given permission by telephone to Conran to see the document The document referred to a CIA FBI NUMEC investigation According to Conran the official who was away from his desk when Conran arrived returned to his office where Conran was reading the document and snatched it out of his hands telling Conran that he was not permitted to see the docu­ ment Conran thus became convinced that there was something there and that there was a strong likelihood that special nuclear material had been stolen from NUMEC and that a cover-up was underway Conran according to Dr Mason was a hardworking individual although so convinced of the rightness of his own point of view and his inter­ pretation of facts that he could not accept the possibility of any other interpretation Conran was concerned that his own role in informing ' Or Mason be kept as confidential as possible out of fear for his future career 3 Dr Mason had for some years heard rumors regarding the loss of material from Apollo most of which he considered jokes in bad taste to the effect that Zalman Shapiro had personally taken the material to Israel He recalled jokes about Zal Shapiro's right arm having been lengthened by all that lifting about the high quality of the suitcases he bought and so on He had given them no credence at the time Following the meeting with Conran however Or Mason went to Chairman Anders and told him of Conran's allegations advising him that he thought that the NRC should investigate Conran's story and that a briefing of the Commission was desirable Dr Mason recalled stressing to Chairman Anders that it was a deplorable situation that ERDA security was so lax that Conran could read these documents but the Commissioners couldn't therefore a briefing was necessary Dr Mason believes he might also have discussed Conran's allegations with Commissioner Gilinsky Subsequently Dr Mason heard from Conran that he had been called in by Ken Chapman and asked about his concerns Dr Mason did not know whether Anders had spoken directly to Chapman or had mentioned the matter to Lee Gossick but he thought it unlikely that Gossick had been informed since the Secret Seven the five Commissioners Chapman and Carl Builder had already been established to limit access to just such information Dr Mason l·eviewed the background of the creation of the Secret Sev·e n Commissioner Gilinsky he said had some months earlier become concerned that NRC was not getting from ERDA all the safeguards information it needed and accordingly set up a contract hiring Carson Mark as a consultant ERDA in turn became concerned over Gilinsky's action and decided to compromise the five Commissioners plus Chapman and Builder were to have full access to the ERDA files Dr Mason repeatedly sa i d to Gilinsky that the group was too small for effective use of any ERDA information in NRC safeguards developments In particular he felt that Lee Gossick should be included Dr Mason was to l d however that Gossick did not have a need to know and that Gilinsky had made a dea l for NRC with ERDA Dr Mason said at the time that he thought this was a mi take that could one day get the Commission into trouble The term Secret Seven was Dr Mason's coined to indicate his lack of enthusiasm for the concept Or Ma on recalled that Chairman Anders had requested the CIA briefing He stated that he expressed to Gilinsky and Anders the view that Lee Gossick should be invited but according to the terms of the Secret Seven agreement Gossick was excluded Dr Mason did not recall the name of the CIA briefer To his surprise Dr Mason observed more than just the Secret Seven and the CIA briefer in the · room At the time he wondered at that but assumed the additional I 25Xl E 0 13526 4 personnel were from the CIA He recalled that special White House per­ mission was required to have the briefing in the first place thus he was puzzled at finding more attendees at the briefing than just the Secret Seven and the briefer He believed all five Commissioners were there but could not recall for sure Dr Mason described the briefer as somewhat agitated tense certainly not comfortable but added maybe he was just -a four-pack-a-day smoker Dr Mason got the impression that he would rather not be giving the briefing Dr Mason did not recall the specific classification level given to the meeting but he got the impression from the strength of the CIA admonitions that it was at least Top Secret Dr Mason stressed the difficulty of recalling the exact words spoken more than 2 years earlier but emphasized that this appeared to be the most sensitive briefing he had ever attended The CIA briefer stressed as forcefully as possible how sensitive the information was 11 11 an ow e s se n 1 a i nside or outside NRC The briefer said that a breach endanger American intelligence agents Dr Mason said the agency was concerned that its cover not be blown '-- ----- --- -- J 11 Dr Mason assumed that the briefer was speaking for CIA rather than for himself and recalled no disclaimer or mention of differences of opinion· within CIA or among agencies in the intelligence community The CIA briefer said Dr Mason recalled that enriched uranium material had turned up missing at NUMEC that they could not prove that the material had been stolen or diverted but that their best hypothesis was that a diversion to Israel had taken place Dr Mason did not recall the mentioning of Israelis working at NUMEC although there might have been mention of Israeli visitors to the facility Dr Mason did not recollect any discussion of how NUMEC paid the million­ dollar fine for the Apollo MUF any mention of suitcases loans or secure communications devices such as a scrambler telephone or any reference to Shapiro's relatives When asked whether there was anything by way of a fingerprint i e spe_c trographic analysis linking Apollo material with anything that was in Israel Dr Mason emphatically answered that there was no such reference That he said was precisely the sort of hard evidence that he was expecting to hear and nothing of the kind was presented Dr Mason recalled in response to a question that there might have been reference to an FBI investigation but if so he 11 I 25Xl E 0 13526 6 7 1 5 remembered no details Dr Mason recalled that the briefer indicated that the CIA did not consider the investigation closed but that this was being treated as a back-burner matter J Dr Mason stressed that all the information provided by the CIA briefer relating to possible diversion from Apollo NUMEC was circumstantial for example that Israel was known to be developing a missile capable of carrying a nuclear warhead and that the CIA therefore inferred that there must be nuclear warheads to arm the missiles I 25Xl E O l3526 ror Mason recalled that it seemed to him that the CIA had a ''weak case -·and that they were stretch i ng When he asked whether the Government - •- -- · intended ·to prosecute he was to 1d that _they__Jli_Q D Q1 b9 'L -Eill QIJ gJLJ Y iQ§ Q£ Dr Mason said The whole thing was so James Bond-ish They had woven ·· such a loose web I thought at the time that it was perhaps a good idea that this information was not public because Zalman Shapiro might have a right to sue for slander It made me realize what a tough job the CIA has having to draw hard conclusions from tenuous evidence While he thought that the CIA had made out a flimsy case for believing a diversion to Israel had taken place he found it sobering to realize that there were those in CIA who thought it likely it had happened In response to a question Dr Mason said that he thou ht the CIA briefer believed what he was saying although he was not sure that the briefer told everything he knew on the subject Dr Mason did not recall anyone offering documentary material if such material had been offered he believ d he would have asked when he could read it Dr Mason recalled the briefing as leaving a ''whimsical impression as far as he was concerned the information was so soft you couldn't do anything with it '' He emphasized that the CIA briefer did not represent that a theft was known to have occurred only t hat this seemed to be· the most probable explanation Dr Mason stressed that there was no bottom 1 ine summary or wrap-up of any kind either by the briefer or the Commissioners In response to a question Dr Mason stated that there was no provision made for the Commissioners to brief their successors on the informatio they had learned from the CIA It was his impression that as the individuals with the information left the agency the institutional memory of what had been learned would fade away 168 Dr Mason recalled no discussion of the briefing by the Commissioners and other NRC personnel after the briefer left He believed that the Commissioners may have remained in the room for at most a few minutes after the briefing ended Dr Mason was asked whether he personally agreed with the briefer's assessment that the most likely explanation of the MUF was theft and diversion to Israel He replied that he would not compound the CIA's circumstantial assertions by repeating them Dr Mason said that while he was not personally persuaded that such a thefthiversion had taken place the CIA briefing did suggest to him that it might have happened Dr Mason commented that he had visited some years ago and found it a dirty sloppy plant with dirt and other loose matter hanging from the ceilings It did not strike him as surprising that they might have lost what he remembered as on the order of a hundred pounds which in volume would be only about two liters of uranium metal of material' over the years Dr Mason noted that he was probably additionally conditioned to this view by his having heard that the waste pile at the facility had been dug up and some uranium found in it Dr Mason discussed in some detail the question of whether the Commission's policy with respect to the possibility of theft having taken place changed as a result of the briefing He emphasized that before the briefing there was no set policy on the question nor was there any significant discussion afterwards on the issue of theft or diversion of material The policy did not change because there had never been a policy although he believed that the Commissioners generally were more circumspect after the briefing in any references to possible thefts of special nuclear material in the past Dr Mason commented that he thought that the information received in the briefing had been a factor in the Commission's insisting on the upgrading of safeguards requirements As for himself Dr Mason knew that small amounts of special nuclear material had been removed from nuclear facilities The Karen Silkwood case was one example and he had heard from friends in the weapons program that the Oak Ridge lie detectors had uncovered instances in which workers took a gram or so of material home to show their families and then returned it Thus he was himself cautious always to speak in terms of significant quantities of material in the period before the CIA briefing when asked what he meant by significant he commented that pounds of material was significant but several grams was not After the briefing he became more sensitive to the issue and would review other Commissioners' speeches to make sure that no overly broad statements were made He emphasized that although he personally was not persuaded 7 on the basis of the CIA briefing that a theft and diversion to Israel had in fact occurred he considered it significant in itself that one agency thought that such a diversion had probably occurred Dr Mason recalled hearing a speech either by Robert Seamans or Robert Fri of ERDA in which the speaker stated that no significant amount of nuclear material had ever been stolen After the speech which he beli ved may have been given in Rio de Janeiro in September 1976 he asked either Seamans or Fri Would you regard 100 pounds as a 1arge amount '' When the answer was in the affirmative Dr Mason suggested that he inquire further Dr Mason does not recall whether he advised this person to consult with his own agency staff or with CIA --With 1 t_ respect to actual guidance going to the NRC staff as a result of - the briefing however Dr Mason believed that all the Commissioners · - ·· ·-' were of the view that no direct account of the information could be • provided owin to the extremely severe admonition from CIA that secrecy -was essential Dr Mason found this extremely frustrating By way of background he explained that he had been having a running disagreement with the safeguards peop l e of NRC over what he called the Bonnie-and­ Clyde syndrome--the notion that the most likely scenario for a theft and diversion of nuclear material was an assault on a facility by heavily armed terrorists allied with competent· metallurgists and engineers capable of building an explosive device As an engineer Dr Mason was much more inclined to be concerned about losses through the back door such as by recovery of material from the waste system or its seq estration in small increments over a period of time The safeguards people at that time had a conviction that no one person could be a threat because of the security clearance system Dr Mason was not persuaded that the clearance system was an abso l ute safeguard against the possibi l ity of an unreliable employee Dr Mason felt that it was essential that the substance of the CIA briefing be communicated to the staff but considered his hands to be tied The majority of the Commission was willing only to inform the staff that it must 11 assume that material can be obtained through diversion Dr Mason on the other hand told the Commission that it must insist that Ken Chapman tell his staff that materia l can be and perhaps has been diverted and that the point was not at all academic Or Mason did recall the Commission meeting with Chapman and Builder to impress them with the importance of stressing to the safeguards staff that it must be assumed that material can be stolen Because of the CIA warnings they were not to suggest that a theft might actually have occurred Dr Mason 8 believed that Commissioner Gilinsky agreed with him that it was essential that at l east a few of the safeguards people below Chapman and Builder know the substance of the information NRC was obtaining from ERDA regarding experi nce with the weapons program and other relevant matters Dr Mason believed that overall the briefing may have been more instrumental in raising the safeguards awareness of those Commissioners who had not been as concerned as he about the possibility of theft from wastes containing weapons--grade material Dr Mason said that he would have liked to have told the staff a fairy story --a hypothetical situation that would allow them to read between the lines arid get the message provided by CIA He did not do so however again because of the urgency of CIA's warnings He did not brief Lee Gossick and to the best of his knowledge neither did the other Commissioners Dr Mason recalled that after the briefing he would sometimes allude to what had been learned from the CIA although in an extremely veiled way This came up in the context of the safeguards staff's view that no one person could be a threat Dr Mason was thinking of Shapiro who he felt must have held a clearance from Admiral Rickover simply to be the president of a company processing uranium for naval fuel Dr Mason would therefore for example ask the safeguards officials if there were known to be persons with Q clearances who had taken materia 1 H e never received a definite response to this question nor did he know if the matter was ever ex plored This was part of his desire to get these answers into the open In hindsight he thinks that perhaps he should have gone public with the information but he felt that his responsibility under the terms of the CIA briefing precluded such act i on Dr Mason said that after the briefing he talked very very shallowly with Jim Hard about what had been said He felt t hat because Hard had heard Conran's allegations and knew that the CIA had come to brief the Commission Hard should be told that Conran might not be as flaky in his views as he might earlier have seemed · Dr Mason believed he may have told Hard what CIA's best guess was a nd discussed with him the problem of comm unicating the message to the safeguards staff but he would not have revealed the highly sensitive information He noted that Hard was used as a pulse-taker with Anders' knowledge to keep in touch with Conran and his views and problems He noted that Conran was distraught and believed himself to have been S iberianized by his su periors Dr Mason had agreed to Conran's request for help in getting a job with the ACRS but he could not recommend him on the terms Conran wished which was to have a free hand to pursue the same safeguards concerns t ry 1 I I 9 Dr Mason could remember no specific discussion of Apollo NUMEC with ERDA officials There were however several ERDA briefings relating to nuclear weapons design and safeguards for nuclear weapons-grade material ·He recalled that there also was at l east one in which a Nationa l Secur i ty Council order on releasing MUF information was discussed There had been an FOIA request for such information and the Congress had begun to take an interest in the MUF issue He recalled that in general ERDA briefers stuck closely to established facts · In response to a question Dr Mason said he did not recall any con­ versation with Peter Strauss in which Strauss cautioned him against an overly broad statement on the subject of theft and diversion He says that this could well have taken place but thinks it unlikely as he used to look for just such statements in other Comm i ssioners' speeches and had corrected either Seamans or Fri on this point as previously noted With regard to his October 11 1976 speech in Honolulu Dr Mason said that it was important that the speech be read in context He was dis ­ cussing plutonium at a nuclear power fuel cycle conference trying to advise people in the P-a cific Basin about possible changes in policies and attitudes in the United States He noted that the complete paragraph in which he referred to theft is as follows Given the tendency of some to stress the difficulties inherent in safe­ guarding the nuclear industry it is i mportant we keep the matter in perspective Although plutonium for military purposes has been produced for over 30 years - in the United States and abroad - we know of no instance where anybody has attempted to steal significant quantities of material nor do we have information suggesting any group may be planning to do so Furthermore the physical properties of plutonium normally recovered from fuel irradiated in light water reactors provide substantial deterents against i l licit use Reactor grade plutonium - especially that which would be present in a recycle economy - requires shielding if radiation injuries are not to be incurred These and other properties of reactor grade plutonium should be taken into account in considering the likelihood that LWR plutonium will form an attractive target for terrorist groups We should recognize the differences between such material and that produced in production reactors and in some research reactors with respect to both safety and explosive device capability for example the material used by India in the nuclear device it exploded in 1974 came from a natural uranium fue ed heavy water moderated research reactor- not from a power reactor It may well be that we can develop safeguards systems which could take more advantage of the differences which exist in the properties behav i or and enrichments of the various uranium and plutonium isotopes which may be pre­ sent in reactor feed and discharge fuel Ii I I 10 Dr Mason said that the reason for choosing the word material vias simply that he was having to use the word plutonium in virtually every sentence and was looking for a suitable variant in that context In making that statement in the speech he was expressing one of his pet peeves --that the domestic nuclear power industry has been discredited by MUFs that have occurred not of plutonium in civilian nuclear power facilities but of enriched uranium in facilities associated with the naval program His reference to significant quantities was intended to distinguish the Silkwood case and the Oak Ridge cases mentioned above Or Mason was advised by the interviewers that Conran had recently said that in August 1975 Dr Mason had given a speech at MIT in which he said that there was no evidence of diversion or theft of a large quantity of material Subsequently Conran indicated that the speech he had in mind was not delivered at MIT but at the U S Utility Meeting on Safeguards in Washington D C on August 26 1975 t the interview Dr Mason indicated that he was at a disadvantage as neither he nor the interviewers had a copy of the alleged speech at hand Moreover he recalled no speech at MIT in August 1975 Subsequent to the interview one of the interviewers advised him by telephone that the Washington D C speech included the following In assessing the safeguards threat we must recognize that significant amounts of special nuclear materials do exist outside of the domestic commercial nuclear power sector In this Nation alone there are military reactors fabrication facilities and weapons There are also foreign civilian and military facilities which produce significant amounts of special nuclear materials and are equally susceptible of sabotage Since the activities of terrorists may transcend national borders the theft of special nuclear materials in one nation can pose a menace to all Having shown factors which I believe illustrate the need for an effective safeguards system let me attempt to place the problem in its proper perspective History does not indicate any attempt to either steal special nuclear materials or sabotage the nuclear part of a power plant In fact terrorists have not shown much interest in using explosives the largest explosive ever so used was 1-1 2 - 2 tons employed to destroy a building at the University of Wisconsin a few years ago Nor have terrorists ever used such materials as nerve gases and poison A terrorist group so inclined could use a number of poisons which are more easily obtainable cheaper and equally effective I I I i 11 Nevertheless I would be extremely distressed were we to diminish our safeguards efforts based on this perspective Present concerns cannot be dismissed as hysteria The absence heretofore of any successful terrorist acts involving special nuclear materials or nuclear facilities does not in itself demonstrate the effectiveness of a safeguards system Until a few months ago there had never been a sabotage attempt against even the nonnuclear portion of a plant but two recent episodes in France involving terrorists illustrate the necessity of properly protecting nuclear facilities from sabotage As I have already mentioned the health and psychological effects of a significant breach of a safeguards system could have a serious impact on the entire commercial nuclear in­ dustry and the nation's supply of nuclear-generated ele tricity Taking this risk combining it with the recognition of the difficulty in assessing a credible threat and mixing in the increase of world-wide terrorist activity leads me to conclude that we must take such threats seriously and that the development and implementation of effective safeguards measures are justified Dr Mason indicated that the context of that part of the speech was to give some perspective to the public discussion going on at the time concerning the possibility of theft of special nuclear materials from civilian nuclear power facilities for the purpose of acts of terrorism in the United States Dr Mason noted that the date of the speech was some months before the meeting with Conran and the CIA briefing Dr Mason was asked to examine the April 2 1976 letter from Chairman Anders to George Murphy and the answers to questions 22b and 23 He commented that the reply was a pretty flat statement and ''pretty strong noting how soon this was after the CIA briefing but said that he recalled no conscious effort to mislead He suggested that this statement appeared to be more in the context of the Commission's being greatly concerned about its ovm actions since its inception than about responsibility for actions ta ken in the past by its predecessors br Mason said he did not now know whether the Commissioners assumed that the questions were directed solely to NRC actions and experience Or Mason commented that in NRC's first year Chairman Anders sent the other Commissioners all proposed responses to the Congress but gradually ceased to do this Dr Mason commented that it would be interesting to see whether the record indicates that he ha concurred in the letter He noted again that it was surprising that the response ca e so soon after the briefing and could not think of an explanation ' i I I 12 Dr Mason was asked to read over Lee Gossick's disputed testimony He commented that Congressman Tsongas was making Conran's charges stronger than they were Conran had not said that there have been nuclear materials successfully stolen but rather that there were serious indications that a successful diversion might have occurred Dr Mason commented that it appeared that Mr Gossick did not know Conran's specific charges and observed that Mr Gossick's reply to Mr Tsongas in his first Committee appearance was perhaps not carefully enough couched since Lee's not a lawyer · He suggested I think by using the word 'we' he was talking about actions taken by NRC or perhaps even during the period of time since he joined AEC The context Or Mason said seemed to suggest that he was talking about matters originating in recent years Dr Mason commented as he read the transcribed portion of Mr Gossick's testimony He's trying to tell them 'I don't know ' He may have known there was a CIA briefing but as far as I know he didn't know the contents I would guess that having been brought up in the military tradition when you've been excluded from a meeting you don 1 t ask youf boss 'What happened at the meeting ' Lee is an extremely honest guy His only deficiency would be that he didn't know not that he covered up or ·would be devious about something Dr Mason said he knew of no instance while he was on the Commission in which Mr Gossick had not been honest with the Commission or the Congress Dr Mason commented that by the time he testified on August 8 Mr Gossick certainly knew that the Commission had 9een briefed by CIA He commented that Mr Gossick did not appear completely knowledgeable in this situation but added that it was unreasonable to expect any one person -- even the EDO -- to know everything that went on in an agency of 2500 people especially when he was subject to being excluded from important meetings Dr Mason stated that he had no information to suggest that Mr Gossick's statements were not an honest representation of Mr Gossick's information and circumstances 1 75 I 25Xl E 0 13526 REPORT OF INTERVIEW Carl Duckett was interviewed in his office in Rosslyn Virginia at 9 30a m February 14 1978 by William Ryan of the Office of Inspector and Auditor and James Fitzgerald of the Office of the General Counsel He was informed of the purpose of the interview and the fact that a summary of interview would be made available to the Congress Mr Duckett is presently a private consultant to government and industry Before his retirement from the Federal service 18 months ago he was Deputy Director for Science and Technology in the Central Intelligence Agency a post he held for about 10 years The interviewers asked Mr Duckett how he came to brief the NRC on Apollo NUMEC in February 1976 t r Duckett advised that he did not now recal1 the precise date when it occurred but he received a call from Commissioner Richard Kennedy who asked if he could come down and brief the Commission about possible diversion of nuclear materials to Israel He assented and did not clear the matter with anyone at CIA since this was unnecessary in light of his position at the CIA He brought with him to the NRC notes made for him by his staff He did not bring a report or any formal document nor does he believe he left any document with the Commission He did not ask in advance who would be in attendance He personally knew Mr Anders and Mr Kennedy since he had dealt with them in their revious positions While these were the only attendees he knew he recalls that the attendees were a select group Mr Duckett said that his session with the NRC lasted an hour to an hour and a half and that he did not now have all the dates and figures readily accessible but would try to generally cover what information he presented to the NRC His purpose was to give the NRC facts and judgments regarding the possibility that NUMEC might hqve been the source of U-235 for Israel He advised he had been involved since 1964 with the subject I about one Kear after he joined the agency · 1 He explained to the Commission that a fair amount of · information had been accumulated that Mr Shapiro the President of NUMEC had fre­ quent contact v1ith Israeli officials· 176 I 25Xl E 0 13526 I 25Xl E 0 13526 2 Mr Duckett also discussed with the NRC that the thief investigator for the AEC inspection into th 1960's NUMEC MUF was hired by NUMEC during the investigation This man was supposedly very good at materials accounting and therefore it would make sense for a plant like NUMEC to · want him Nevertheless his employment at that time was a suspicious event He also mentioned that NUMEC had gone through the exercise of digging up some buried material looking for the MUF material and that this fell far short of the unaccounted for amounts He addressed the concern about MUF starting in the late 1950's He said that the substantial variance between accounting records at NUMEC and the material on hand in itself proves nothing However he does not buy the view that all the MUF material can be stuck in hundreds of miles of pipe If it were the plants would be going critical At the time he spoke to the Commission he felt there was an undue amount of MUF at NUMEC He told the NRC that while he was not legally qualified to make a legal judgment about Mr Shapiro's guilt or innocence he felt there was very clear circumstantial evidence that the NUMEC material went to Israel This was his judgment He was asked by the interviewers if he had stated an Agency viewpoint to the CofTUllission He did not recall doing so but commented that the attendees could justifiably assume that what he said represented the Agency's views This would have been self evident 11 Mr Duckett was trying to give the Commission facts The message he tried to get across was not to convince anyone of anything only to convey his concern that nuclear material may have gotten to Israel I This conclusion was not limited however to only NUMEC L---------' 177 ·----­ I 25Xl E 0 13526 3 I 25Xl E 0 13526 information They had other information such as a type of bombing practice done with A-4 aircraft that would not have made sense unless it was to deliver a nuclear bomb By the time of the NRC briefing the question of whether U-235 had been diverted from NUMEC was academic for the CIA because plutonium from the Dimona reactor was believed to be available The0efore from the CIA's intelligence point of view th diversion did not matter The last inspection of Dimona was in 1969 In his view it was less than an adequate investigation to determine whether lutonium was there After­ wards Israel refused to ermit ins ections Mr Duckett raised the question of whether the U S had intentionally allowed material to go to Israel He said that if any such scheme was under consideration he would have known about it and he never heard so much as a rumor about this He therefore does not believe there is any substance to this allegation In support of this view he related that CIA had drafted a National Intelligence Estimate on Israel's nuclear capability in 1968 I I I He s how _e'd- - - t--- -t-o M - -r- -7' H--el'm-s- ---- H e'l - -m - -s-t- -o-- l'd -- -h7i m n - o- t--- -to -' publish it and he would take it up with President Johnson Mr Helms later related that he had spoken to the President that the President was concerned and that he had said Don't tell anyone else even Dean Rusk and Robert McNamara Mr Duckett was asked about the reactions of NRC officials who were present at his briefing He said that lr Anders was very concerned and felt that already too many people had been exposed to the information After the briefing Mr Duckett went to Mr Kennedy's office · Mr Kennedy wanted to talk about more frequent interchange of information between the NRC and the CIA Mr Anders came in and wanted to apologize for having so many people present He said he id not realize how sensitive the information was and if he had he would have restricted the attendance even more Mr Anders said that in the future he should deal only ivith Mr Kennedy and him and that in light of the sensitive nature of _the information he was going to go to the White House During this session Mr Duckett recalls that one Corm1issioner probably Mr 1ason commented with mock jocularity My God I almost went to work for Zal Shapiro I came close to taking a job with him By the end of the meeting it was a pretty somber group Mr Duckett does not recall that the staff actively participated in the briefing He pointed out that it was not a formal briefing It was more of a discussion for the whole session I 25Xl E 0 13526 17 8 i I 4 He said he probably did not announce a classification level He does recall that t r Kennedy or Mr Anders in an opening statement said that the matters were sensitive He is sure he inserted sensitive half a dozen times during the session in discussing particuiar items Mr Duckett did not place any restrictions on the use or dissemination of the information he had given to the NRC He said it would not be routine to say this each time he met wit people Mr Duckett believes that the best record on the entire matter is in the files of Congress There was extensive testimony taken before the JCAE Hearings were held and he was told there is a very complete record George Murphy of the JCAE staff had personally visited NUMEC and informed that controls were so lax that he could have walked off with pockets full of pellets In a conversation one week ago Mr Udall said that he had requested the files from Sen Inouye and had not yet received them Recently Mr Helms has spoken to Sen Glenn and Mr Myers and apparently has a very limited recollection of the matter He understands that George Murphy also has only limited recall Mr Duckett believes that Senator Henry Jackson was probably involved in the relevant time period The interviewers read relevant portions of Mr Gossick's testimony before the Udall and Dingell subcommittees to Mr Duck tt and asked him for his reaction to it Mr Duckett responded that it depended on what meanings are attached to the word evidence He might use the word differently than an attorney He did not attempt to give the Commission evidence but to relate the story as best he knew it He would not label the information he gave to the NRC as evidence He believes Mr Gossick was very quick to use less than ideal words to describe the situation Mr Duckett would have· articulated it differently saying something to the effect ''there is no direct evidence but some infor­ mation causes concern Based on his experience in an organization like the CIA which holds information closely Mr Duckett believes that it is unlikely that in the period of over eighteen months since he spoke to the NRC information about his briefing would not have gotten around the NRC to Mr Gossick · Mr Duckett expressed a deep concern for the recent release by the CIA under the FOIA of a document dealing with this subject He provided he interviewers with a copy of the released document 2 16 78 REPORT OF INTERVIEWS WITH VICTOR GILINSKY JANUARY 10 1978 and FEBRUARY 2 1978 Commissioner Victor Gilinsky was interviewed in his office at 1717 H Street N w Washington D C on January 10 1978 and February 2 1978 by Jerome Nelson and James Fitzgerald of the Office of the General counsel and Ryan of the Office of the Inspector and Auditor 2 1978 Thomas McTiernan of OIA also interview villiam On February partic pated in the The following is a compilation from these two interviews each of which covered the entire range of subject matter Mr Gilinsky was advised of the purpose of the interviews and the fact that a combined summary of the interviews would be made available to the Congress interviews followed a question-and-answer format The For the most part the questions have been omitted Mr Gilinsky does not recall any formal consideration of the Apollo NUMEC MUF of the 1960's before 1976 However the question of nuclear inventory discrepancies and their explanation occupied the Commission from the outset in 1975 In response to a request for nuclear inventory informatio from Senator Ribicoff the Commission prepared a letter with a table of significant inventory discrepancies as an attach­ ment This was sent to Mr Kissinger in March 1975 for a decision on whether the release was consistent with national -2­ security considerations sent On NSC advice the letter was never The final version did however contain an interesting modification on the question of evidence of diversion Chairman Anders rewrote a sentence that started with We are confident that there has not been illegal diversion of significant quantities of strategic nuclear materials to read We have discussed _ h subject _horous hly with senior staff who are confident that emphasis added In the fall or winter of 1975 Mr Gilinsky spoke with James Conran but the conversation was limited to the s bject of Mr Conran's concern that NRC staff lacked information on nuclear weapon design However Mr Gilinsky attributes the briefings that the Commission received in February 1976 from the CIA and ERDA to allegations made b y Mr Conran that ERDA was not sharing its information and that NUMEC material may have been diverted As he understood it the briefings were expected to lay these matters to rest Mr Gilinsky does not recall how the briefings were set up or how the attendees were selected He got the impression that the briefing was intended to get the message to the various offices which dealt with these matters At the CIA briefing he remembers only one briefer Mr Duckett He had never met him before His i mpression of Mr Duckett's demeanor was that he was nervous and that his 181 -3­ hands were unsteady Mr Gilinsky does not recall Mr Duckett's having a package of papers with him at the briefing He does not recall a specific classification being placed on the information but inasmuch as Mr Gilinsky believes he arrived about a minute after the briefing got underway he would have missed the indication in any case Mr Gilinsky recalls Mr Duckett's saying that the matter was very closely held at the CIA that a handful of their personnel had been involved in the matter The interviewers questioned Mr Gilinsky about what Mr Duckett said about Mr Helms' role He answered that Mr Duckett said that Mr Helms had informed the President whose instructions were not to inform other federal agencies Mr Gilinsky did not recall when questioned whether Mr Duckett indicated that there were differing opinions within the intelligence community He could not say for certain whether Mr Duckett referred to an AEC view which differed from the CIA's Mr Gilinsky pointed out to the interviewers that the AEC was in fact a member of the intelligence com­ munity I 25Xl E 0 13526 1 82 I 25Xl E 0 13526 -4­ land that there was no -------------------------------------- satisfactory explanation for the 1960's MUF Someone asked Mr Duckett for the bottom line of all this and he gave it -- that he believed that a diversion had taken place In response to specific questions from the interviewers Mr Gilinsky said that he did not recall any mention of Mr Shapiro's family funding of NUMEC by Israel how Mr Shapiro got the money to pay for the MUF the number of bombs Israel was supposed to have or whether they were made from high enriched uranium although Mr Gilinsky has received informa­ tion on these matters from other sources or any fingerprint or spectographic analysis of Israeli nuclear material which could be traced to NUMEC I ---------------- The FBI may have been mentioned but Mr Gilinsky said he cannot be sure of this To the best of his recollection although the material was identified as highly sensitive no specific instructions not to disseminate it were given 'l'he Commissioners did not sit down and discuss NUMEC immediately after the briefing 183 I 25Xl E 0 13526 -5­ However he believes that the matter arose in connection with safeguards on later occasions He noted that in the period before the Sunshine Act meetings were more informal than today and allowed for this type of discussion There was no guidance to the staff issued after the briefing and no formal policy on statements of evidence or ho evidence was formulated Until the August 2 1977 briefing mentioned below he has no direct knowledge of anyone in the Commission being briefed on the subject other than the Mattson Task Force as indicated in Document 102 of the Task Force Report There was no explicit provision for the attendees to pass the information on to their successors After the briefing however the Commission took the subject of safeguards much more seriously particularly the insider threat After the briefing he recalls talking with Chairman Anders who was surprised both at what he had heard and the fact that the story related at the CIA briefing would be given to as large a group as was in attendance He does not recall that he knew at the time that Chairman Anders went to the White House or that Mr Kennedy went to the NSC about the briefing ' He did know that the White House was aware of the briefing from talking with James Connor of the White House staff 184 -6­ Mr Gilinsky considers categorical no evidence state­ ments always to have been inappropriate even more so after the briefing He uses the word evidence as meaning informa­ tion or reason for belief bearing on an issue As a personal policy Mr Gilinsky tried to keep NRC staff fiom making categorical statements in this area He was inhibited however by the need for not connecting his cautions to his NUMEC concern Mr Gilinsky said he did not remember very well the ERDA briefing which took place a couple of days after that of the CIA He did not think that ERDA had much to say ERDA simply described the AEC investigation and its conclu­ sion that the NUMEC MUF was apparently due to material accounting deficiencies They said they had not found any evidence of diversion beyond the fact of the discrepancy itself after checking employees etc Mr Gilinsky was questioned by the interviewers about his knowledge regarding statements made in 1976 by Chairman Anders and Mr Mason at the time they were uttered Mr Gilinsky stated that he has no recollection of the statement contained in a group of questions and answers _forwarded to the JCAE by Chairman Anders on April 2 1976 that while some MUF's have been large NRC has no indication of any theft or diversion of other than a miniscule quantity of 185 · -7­ SNM He does not recall seeing the statement although the transmission to the JCAE in which the statement was contained apparently did go through his office Since this was a few days before Chairman Anders left for an ambassadorship Mr Gilinsky wonders whether the Chairman actually saw it must have been drafted either in OPE or NMSS phra e It As for a in a speech by Mr Mason delivered October 11 1976 Mr Gilinsky noted that the sentence is less precise than it could be but in its context clearly refers to plutonium He has no recollection of seeing a copy of the speech before it was delivered The interviewers asked whether he recalled any discus­ sion of NUMEC or the no evidence statement when dealing with the Conran Task Force Action Plan He does not recall these matters corning up in that context He added that the government safeguarders in AEC ERDA and NRC had traditionally been too ready to explain away MUF's In the face of inventory differences it was common for them to say there was no cause for serious concern because suth Mr Mason stated Although plutonium for military purposes has been produced for over 30 years - in the United States and abroad -- we know of no instance where anybody has attempted to steal significant quantities of material nor do we have information suggesting any group may be planning to do so Further­ more the physical properties of plutonium -8­ differences in themselves are not evidence of diversion but merely reflect accounting differences Actually this really meant the accounting system was not working properly In the spring and summer of 1977 the Commission was preparing to release MUF information hension about the release There was much appre­ The AEC and NRC had sat on the release for over two years The NS C wanted NRC and ERDA to get together on a release format · Mr Gilinsky said that there was a reluctance in NRC to get out of step with ERDA on safeguards matters and it is his impression that there was pressure from ERDA to adhere to a party line that everything was all right with safe­ guards For example toward the end of the process he recalls there were six issues outstanding between NRC and ERDA Through negotiation NRC went along with ERDA on five of the issues although it got ERDA to agree on the use of cumulative figures The no evidence statement was not then an issue Mr Gilinsky was in California between July 21-31 1977 He did not have a copy of the final draft of the NRC MUF release which had been circulated on July 21 after he· left for California but he was in touch with Paul Goldberg 1 87 -9­ his assistant about the release He referred the inter­ viewers to Mr Goldberg for the details of his communications regarding his objection to the no evidence statement which was brought to his attention In voicing his objection he worked through Mr Goldberg but instructed him in talking with Mr Gossick's assistants about effecting a change of wording to be discreet and not to connect it directly with NUMEC because of the sensitive background Mr Gilinsky always assumed in line with a previous Commission decision that he and Mr Kennedy would have the last word on the release He expected that it would pass in front of him and that he would have the opportunity at the end of the process to line out the offending statement In the first few days of August he encountered Jim Bishop who handled public affairs for Mr Schlesinger in the halls of the Executive Office Building Mr Gilinsky told Mr Bishop to be careful not to allow Mr Schlesinger to buy off on a categorical no evidence statement in ERDA's public statement On August 2 1977 the staff briefed Mr Kennedy and Mr Gilinsky on the upcoming MUF release were covered Three matters 1 the MUF report for 1968 and beyond 1 88 2 -10­ the press release to accompany the MUF report and 3 the briefing statements to be used by staff to brief the public Mr Gossick Mr Smith and perhaps Mr Burnett were seated at the table At the briefing Mr Gilinsky was surprised to find that the MUF report was already printed He expressed his strong disapproval of the statement at the top of page 2 of the report which said that the NRC has no evidence that any significant amount of strategic SNM has ever been stolen or diverted He felt the statement was impermissibly categorical and suggested that at a minimum some modifier to evidence should be added Wnen asked why the Conunission could not say there was no evidence Mr Gilinsky responded Because there is evidence Mr Smith at some point said that as far as he knew there was no evidence Mr Kennedy asked where the evidence was said You mean tangible evidence Yes Mr Gi linsky 'Mr Kennedy said Mr Gilinsky said that was too narrow a definition of evidence Mr Gilinsky recalls that there was tremendous resistence ' to making any change He originally wanted an erratum issued to change the sentence 1 at least to put the word conclusive before evidence but he was also concerned that this would highlight the matter unduly Someone then -11­ suggested that the impasse could be resolved by reading the no evidence statement in the context of the report which deals only with the post-1968 period Mr Gilinsky still did not like the sentence because it contained the word ever but agreed not to hold up the release of the document he never approved it if the staff agreed that the no evidence statement was to be read as applicable only to the post-1968 period that NRC briefers would publicly so inter­ pret the ambiguous statement if a question carne up at the briefing or later that the press release and brie£ing statement be modified to conform with this view and that questions on the pre-1968 MUF's would be referred to ERDA Mr Gilinsky recalls that agreement was reached on this As there was no quorum there was no Commission vote on the matter but he carne away from the meeting with the clear impression that the agreement was the sense of the table He recalls that Mr Gossick was a participant in the discussion set forth above Mr Gilinsky does not remember anything specific about Mr Gossick's participation except that he was opposed to making changes and that he ultimately agreed with the point that the statement in question applied only to post-1968 To the best of his recollection Mr Gossick was present throughout the briefing 190 -12­ After the briefing the NRC press release and Mr Burnett's public statement were modified to reflect the post-1968 point ERDA also later qualified its statement In light of Mr Smith's statement in the briefing that he knew of no evidence of diversion and in view of his and Mr Burnett's responsibilities for safeguards Mr Gilinsky felt that it would be unfair and improper to allow Mr Burnett and Mr Smith to face the public without some knowledge of the February 1976 briefings Accordingly he spoke to Mr Kennedy when the briefing adjourned and $xpressed this view Mr Kennedy agreed and said Let's do it now and suggested that Mr Gossick be told of this intention Mr Gossick said words to the ffect Fine but could I sit in since I have never been briefed on the matter They then spoke to Messrs Smith and Burnett and they all went across the hall to a small office of convenience used by the staff The door was closed and Mr Gilinsky recalls standing facing the door behind him Mr Gossick was to his right Mr Kennedy ' Mr Gilinsky spoke directly to Smith in front and Burnett to Mr Gilinsky's left He explained to them that in view of their responsibilities and particularly because they were about to brief the public on nuclear 191 I -13­ material inventory discrepancies there was information they should know This would also help explain his own insistence on qualifying statements about lack of e idence of diversion ---·· ·· i l He said that the Commission had been briefed on Apollo NUMEC l v by the CIA that information was presented which related to ------- 'I the possibility of diversion at NUMEC and raised serious suspicions ••• ' He told them the information was circumstantial in nature and that he was not entirely persuaded by the CIA briefing He advised them that since he did not find the information conclusive he considered a no conclusive evidence formulation literally correct - ' But there was a - -- fact that could not be dismissed -- and this was perhaps the most significant thing which came out in the briefing -- that the CIA -at least in the person of the briefer was persuaded by the evidence and had concluded that diversion had occurred He does not recall going into further detail At the conclusion Mr Gilinsky said something like I don't know whether I've told you anything you haven•t read in the papers and didn't already suspect it was about what he had surmised to the effect Mr Gossick said Mr Burnett said omething You've told me something because I have ' just come from the intelligence community and I know they do not reach such conclusions lightly -14­ During the course of this session Mr Gilinsky recalls Mr Kennedy's saying something-- he does not remember what -- to qualify what Mr Gilinsky had stated Mr Gilinsky believes Mr Gossick was present throughout this session He was defini ely there at the start and at the end Mr Gilinsky has a vague recollection of Mr Gossick's going to the door at some point He thinks there was some inter­ ruption and that he waited for it to pass before he resumed talking This was the first time Mr Smith and Mr Burnett were cut in on the CIA briefing Mr Gilinsky does not recall specifically instructing them not to say no evidence but the implication of the message was clear Mr Gilinsky said that either shortly before or shortly after August 2 1977 he had a donversation with Mr Gossick who mentioned that he had made an unqualified no evidence statement before the Udall subcommittee Mr Gilinsky told Mr Gossick that regardless of what he may have said previously NRC has to state this one correctly Mr Gilinsky said that he regarded what was said at the main briefing on August 2 as more important than what was said at the small meeting across the hall afterwards That latter session is relevant only to whether Mr Gossick was personally briefed about evidence The qualification to -15­ the no evidence statement -- from 1968 onward -- was made at the briefing itself The interviewers asked Mr Gilinsky if he had discussed with Mr Gossick a no revidence statement contained in questions and answers sent by Mr Gossick to Congressman Udall on August 19 1977 He recalled that he had discussed it with him and remembers that Mr Gossick was reluctant to change his statement The August 19 response as opposed to the July 29 statement in cont e xt clearly dealt with licensees whi c h implied a post-1968 period wanted to state this explicitly Nevertheless Mr Gilinsky He also recalls · that when this discussion took place he learned that the letter had already been sent He did not pursue the matter Mr Gilinsky does not recall having seen at the time a memorandum from Carleton Kammerer dated August 1 1977 which pointed out that Mr Gossick had said no evidence before the Udall subcommittee He did learn of Mr Gossick's Udall testimony around the time of the August 2 meeting but Mr Gilinsky was principally concerned with correcting the NRC MUF release and does not recall seeing the actual wording of the July 29 testimony until November Mr Gilinsky did not think he could pinpoint any mention to Mr Gossick of reserva­ tions he had about July 29 1977 NUM C prior to Mr Gossick's testimony on -16­ About one week after the November 15 1977 letter from Congressmen Udall and Tsongas was received Mr Gilinsky saw Mr Gossick's proposed response and became aware for the first time of Mr Gossick's testimony before the Dingell subcommittee He told Chairman Hendrie that the memorandum was unresponsive to the question posed by Congressmen Udall and Tsongas and that cited testimony before Congressman Dingell's subcommittee rnischaracterized a Commission position on evidence of diversion Chairman Hendrie advised Mr Gilinsky to talk to Hr Gossick Accordingly Mr Gilinsky told Mr Gossick the same thing that the letter was unrespon­ sive and that Mr Gossick had improperly characterized the Commission's views before Congressman Dingell Mr Gossick replied that he did not think that he had but would consider this in his second draft After his second draft was circulated Mr Gossick came to Mr Gilinsky's office Mr Gilinsky asked him whether he understood the limitation on the no evidence statement irt the MUF release as referring to post-1968 as discussed at the main briefing on August 2 1977 Mr Gilinsky recalls that Mr Gossick did not give a clear answer to this ques ion and said he thought the NRC MUF press release was not so limited Mr Gilinsky asked Mr Gossick if he recalled the small meeting across the hall after the August 2 briefing in -17­ which he Gilinsky said that the CIA a theft of the NUMEC material thou ht there had been Mr Gossick said that he remembered the meeting but had no recollection of the state­ ment and that this was the first he had heard of it Mr Gilinsky mentioned Mr Burnett's reaction and Mr Gossick said that if he had heard it that way he too v1ould have reacted in a similar fashion Mr Gossick said that he had had a conversation with Chairman Rowden in June 1977 which he felt supported his view and that he had had a conversation with Mr Kennedy before the testimony Mr Gossick did not make clear whether this was the July 29 or August 8 testimony concerning what to say if a question about evidence of diversion came up vir Gossick said that Mr Rowden and Mr Kennedy supported his view had reiterated that support in the previous few days and that he felt his statement represented the prior Commission's views Mr Gilinsky asked Mr Gossick whether he was adopting a narrow definition of evidence n to mean physical evidence Mr Gossick said he was not ' When he saw Mr Gossick's final draft Mr Gilinsky did not note much difference from the earlier ones In the face of apparent lack of agreement among commissioners on how to respond to Congressmen Udall and Tsongas there never was a -18­ Commission meeting on the matter Chairman Hendrie decided to answer the Congressmen personally Mr Gilinsky told Chairman Hendrie that he could not join in the Chairman's interpretation of events Mr Gilinsky told him that he intended to write to Congressman Dingell to clear up the August 8 testimony and sketched the contents of his proposed letter After the Chairman's letter was sent Mr Gilinsky wrote his letter to Congressman Dingell which was dispatched on December 12 1977 Before he sent it however he called Mr Gossick who carne down to his office and read it Gossick had no comment on the letter Mr Their conversation was desultory and Mr Gossick said sornething 1 to the effect that he did not know why he had said that before Congress­ man Dingell The interviewers asked Mr Gilinsky why he wrote to Congressman Dingell and not to Congressmen Udall and Tsongas Mr Gilinsky stated that he wrote to Congressman Dingell because he considered himself directly and personally involved in Mr Gossick's testimony before that subcommittee in which Mr Gossick was purporting to represent a Commission view at the time when Mr Gilinsky was one of two sitting' Co issioners He therefore felt personally compelled to correct the record before Congressman Dingell's subcommittee He also believed the matter was unambiguous of this letter to Congressman Udall 197 He sent a copy -19­ Mr Gi l insky viewed the questions raised by the Congressmen's letter about f 1r Gossick' s · testimony as less readily answered at the time The issue of whether Mr Gossick mis­ represented the facts could be properly addressed only by weighing and sifting statements made in relevant documents and taking into account recollections of individuals some­ thing Mr Gilinsky was not equipped to do Nor did he feel it was something for him to undertake as ah individual commissioner Mr Gilinsky observed that Mr Gossick was not pressed to go as far as he did in his testimony before the Dingell subcommittee He volunteered it He could have answered the question with a simple yes Instead he elaborated - ec C L' February 16 1978 19 8 - CONRAN INTERVIEW McTiernan Let the record be open I'll -introduce the participants · J- in this conference I think the record should also reV fleet that it is being recorded at the request of t r Conran · jl Of course we have no objection Present are McTiernan 0-li ' 1 Director OIA and John Anderson OIA staff Mr Anderson 'rli r H v is here because he handled the principal portion of our ·h i J 1 · r'i li earlier inquiry regarding Mr Conran's complaints In ' I J · the event Mr Conran needs something from our files Y ' 0 Mr Anderson can acquire it Mr James Fitzgerald from j t Y · ' the Office of General Counsel OGC is also present s J • ' His office and my office are sharing the inquiry that we · · are discussing with Mr Conran and Mr Ron Clary is here th as a representative of 1r Conran and he is appearing at - - · Mr Conran's request · r I J 'J ' Now it is appropriate for some preliminary statement with regard to our present assignment OGC and OIA have been requested by the Chairman Hendrie to conduct an inquiry into t he allegations that Mr Gossick Executive Director for Operations made misstatements unintelligible in his appearance before the Udall Committee in July 1977 and the Dingell Committee in August 1977 and we thought it appropriate to discuss the investigation with you because of your extensive background in the area of positions taken by NRC in the past on the possibility of theft or diversion of special nuclear material This is not a rehash of all the material you have given us in the past and all the material you have given the Conran Task Force This is an attempt to have the benefit of your experience in this area to see if you have anything that will help us in wrapping this matter up and I guess the first question is are you sufficiently familiar with the issues in this thing or should we fill you in in more detail on the statements Mr Gossick allegedly made Conran I thin k that it wouldn't hurt to just briefly reiterate so that we all know that we are all working from the same basic data Fitzgerald I have it Tom represented in what r think is an accurate excerpt of a transcript from a Udall letter of November 15 and also Mr Gossick's memorandum of December l 1977 This was the give-and-take at the Udall hearing on J uly 29 1977 McTiernan Here is a rel vant quote from the Udall hearing and you were present Jim so it might come back to you Congressman Tsongas said for the record let me make three points before I go 1 j i 99 Conran Interview -2­ Mr Gossick Mr Conran made a statement that there have been nuclear materials successfully stolen Do you dispute that Mr Gossick We have investigated every incident that has come to our attention or has been al leged to us with regard to the theft or diversion of material I can say that we have no evidence that's significant and I use the word significant because there have been cases where sm ll minute quantities have been taken off the premises of a plant but I say we have no evidence that a significant amount of special nuclear material has been stole I think one should ask Mr Conran for the specifics of the things he is talkabout Now have you got the statement in the other Fitzgerald Yes it is quoted in Mi Gossick's memorandum to Chairman Hendrie of December 1 1977 McTiernan Now Mr Gossick made a similar statement at the so­ called Dingell hearing August 8 1977 and it was in answer to a question by Mr Dingell Mr Dingell said Well that brings up this question Mr Gossick do you feel your judgments here absent a review of the written material and a briefing by the intelligence agencies involved is as hard as it should be with regard to safeguards and the mechanisms for showing the safeguard of the material in proper form Mr Gossick said Mr Chairman this was precisely the reason the Commission felt it necessary to be briefed fully on the matter It was something that had occurred in the time period preceding of course the establishment of the NRC but in the process of establishing the safeguards programs that we have in effect and that we are increasing the stringency thereof the Commission felt it important to know whether or not there was any factor here that might affect the measures that the Commission might wish to put into force in the afeguards program Then continue on down Mr Ward who was counsel for the committee said But you not having access to all of t is cannot personally give that assurance is that correct And Gossick says I can only say and this is a critical paragraph Jim Gossick says that I can only say 201 Conran Interv i ew -3­ Mr Ward that the statement i n view of the Commission in making this statement there was no evidence that they had indicated that any diversion had taken place was made in full knowledge of the briefing that they had received so while I personally was not briefed on the matter the Commission did make and has reaffirmed that judgment that in their view there has been no evidence to indicate any diversion has taken place In effect what Mr Gossick has said there is no evidence which in some degree has been stated in the past that material has been stolen Now what we would like to talk to you about is do you have any recollection of documents remembering again that 0e have the Task Force material available to us and we have all the material you gave us in the past do you have any documents that might hel p us first determine or give some indication of Commission policy at any time on this statement of whether materi als have been stolen or iverted and did you have any conversations with people like the Commissioners and Gossick that might be relevant to this situation That's all we need to know for now and then later on we can always talk to you if we need to get more specific Conran As to the sequence in which this information became available the Commission I had of course heard rumors that it was alleged that there had been diversion for a long time A lot of people within the agencies NRC and ERDA had It was not until October 16 1975 that I identified and became aware of information in ERDA's files that seemed to give substance to what I had regarded as sort of titillating rumors up until that time That information incidently was characterized to me by Herbert Hahn and Martin Dowd of ERDA as a Top Secret report ERDA personnel characterized information in their internal security file as Top Secret information probably containing or derived from intelligence information At the time I really didn't understand how they determined that but in retrospect I believe it was from Mr Hahn being told by the ERDA central files clerk that the information that I had asked for I had asked for a certain file I saw crossed referenced in some NUMEC material that I had been reading the cross reference referred to a file on Zolman Mordeciah Shapiro and I asked to see that file Mr Hahn called down to the central files area and the clerk I was listening to j ust one end of the conversation said something to hi m that 2 'u ' J Conran Interview -4­ apparently she couldn't send up this batch of material as she had sent up several others previously And there was a short conversation and he hung up and turned to me and said Well they don't have it in central files it is Top Secret information a Top Secret file And I believe he said in fact th t it was in the Director's · office the Director in this case being Admiral Lyon The storage arrangements for this information were obviously different and special and that is apparently what lead· Mr Hahn to conclude that quite probably it contained intelligence information Hell as I say that was the first hard indication that I had every had that there was some substance to the story or the allegation that material had been stolen from the NUMEC facility and diverted to the purpose of a foreign power that was late afternoon I returned to my work location at the Maryland National Bank Building and reported it immediately to Maury Eisenstein Maury Eisenstein told me that he would fill the boss Chapman in on what I had reported to him And incidentally after reporting it to him I recommended very urgently that someone in NRC obtain this information and review it and try to find out exactly what it said and that I thought there was considerable urgency in the matter I attached a great deal of importance to this information for several reasons I thought that if there was information of this sort that it was diametrically opposite to statements that this agency and ERDA made both publicly and internally · to their staff ell McTiernan This will help us What statements do you have in mind This would be prior to October 1975 wouldn't it Conran That's right McTiernan Can you think of any or maybe you can fish them out l ater Conran Not specifically McTiernan Because I 've tried to pin that down too Fitzgerald When you say diametrically opposed what were the type of statements even if you can't come up with the specifics Q n - 0 Conran Interview Conran 1cTi ernan -5­ The type of statements are the ones that appeared in Mr Page's testimony for example to the California Legislature in November 1975 see Enclosure 20 They were almost identical to the words that are being fought over these days and basically they say there is no evidence or indication of theft of significant quantities of SNM I believe that I'veseen that statement in testimony of Chairman Ray AEC and General Giller AEC We're really thinking of NRC now AEC material · We've got a lot of Conran What I'm trying to establish is that prior to this timethe myth that had been perpetuated and promulgated widely within this agency and to Congress and to the public was that there was absolutely no evidence or indication that a significant quantity of bomb grade material had ever been stolen As I said I think that I remember seeing · that same statement in testimony to the Joint Committee by Chairman Ray and General Giller that came out at the time of Ribicoff's hearings in the context of reorganizing the agency There was a discussion of these very matters and I've read that transcript and I think Note It was in testimony to the Senate Governmental Operating Committee February March 1974 See Enclosure 4 McTiernan Do you know where we might get our hand on it Conran I think the Governmental Operations Committee staff McTiernan You mean you don 't have it floating around in your material Conran Quite possibly I could lay my hands on it I'll try to find it Those are by no means the only two incidents This notion that there had never been any theft or any evidence or any indication of theft was so pervasive and so widespread it was a product of a deliberate policy I believe in trying to mislead the public the Congress and even the working-level people in NRC McTiernan unintelligible We're hooting blanks already · Did anybody ever acknowledge to you even at AEC or NRC that there was a deliberate policy to mislead the public or the Congress or is this the conclusion you reached as a result of all the work you've done in this area Conran Interview -6­ Conran Well its certainly my conclusion McTiernan Do you recall the conversation that Conran It was not just in the context of the NUMEC intelligence information It is exact l y the same sort of thing that happened with respect to 1 the question of relative ease and likelihood of success of making a fission explosive 2 whether or not there have ver been credible nuclear · threats that is incidents in which someone credibly threatened to use a home made nuclear explosive against the public or against the Government In almost every area that I sought information in connection with my Special Safeguards Study assignments and that included the MGTRE Threat Study and the Taylor Unauthorized Uses Study it was exactly the same pattern Very sens i tive highly-classified most relevant information was very systematically suppressed and even misrepresented and so it was not really a surprise to find out the same thing happened with respect to the NUMEC information There was perhaps even a little more excuse for it because it was intelligence information very sensitive intelligence information It it was hard information it would have d to come from an agent planted somewhere so to talk about · it freely might very well have disclosed the identity of that person That's why incidentally it was very important to try to track down exactly what was said and who had said it and how much confidence there was in the intelligence assessment that there had in fact occurred a diversion and we knew where the material went or we thought we knew where the material went If that statement was based on information from an agent that was operating in another government for example and there was no denying it that would be extremely important If on the other hand it was based on a very circumstantial evidence why one could adjust one's thinking on that basis as well I reported it to Maury Eisenstein on October 16 1976 He told me personally that he would tell the boss and that was G neral Chapman what we knew about this that evening He was in a car pool with General Chapman and his expression was that he intended to do a data dump on the boss that night and to the extent I guess that they could talk about things on the way home why that could be done and if it couldn't be discussed in the car whythey would stay over for awhile and talk about it Conran Interview 1 g Fitzgerald -7­ Weli naturally I was concerned about this · information and I kept asking Maury afterward what was hap pening It was not obvious that anybody was making any effort to check It was certainly obvious that that information was not being factored into a1 ·1 the activities of the safeguards Division I worked with I talked to peop l e almost constantly that's sort of my style of doing my work and from talking to working level members in every organization in the Safeguards Division most particularly Tom Carter's group the group that should know this information and factor it in to our assessments of threat capabilities that sort of thing i t was obvious that this information was not finding i t s way back into t he work that everyone in the Division was doing As a matter of fact quite to the contrary it was pretty obvious that it was not and that it was being withheld because as I say Mf Page the Deputy Director of the Division on November 17 I think 1975 made a statement formal statement to the California legislature in which he said that there was no evidence or indication of any uch thing happening Do you have that statement in your files McTiernan If you don ' t we'll try to get it from Page but in case we miss on that Conran As a matter of fact you O iA may have i t or you should have it because I gave it o you McTiernan Do you remember that Anderson No McTiernan Take a look after the meeting wil l you run this one down Conran I don ' t know if you've seen it or not but I made a listing in response to an FOIA request of i nformation at least this is a partial listing of information that I ' gave to OIA when I was first talking to you guys about this in April or May of 1976 That information was included in the information that I handed over to you McTiernan Uni ntelligible in our raw material it i' _ 0 We'll have to I don't remember Conran Interview -8­ Conran It's possible that you don't have the because some of it was returned to me and that's the material I have listed you all have some additional material to me · material itself last year by Sid Butterfield here I think that that was not returned McTiernan We don't see outgoing FOIA responses Do you have any objection to xeroxing that thing as a double check on documents that we may have missed Conran No as a matter of fact this has been turned into the FOIA office and so as a copy of all the material listed here incidentally · McTiernan Can I bum it now or do you want to go down and see your reco 11 ecti on on other documents We' 11 xerox afterwards Conran Well to pin it down specifically on the tape it is · Enclosure I dated November 17 1977 to a memo from Conran to Forehand subject Response to FOIA Requests 77-170 nd 77-188 The memo itself is dated November 30 1977 Well to continue with the chronology then Eisenstein indicated to me that he did in fact discuss the matter in some detail with Chapman and that Builder was also advised of the existence of this information I kept seeing indications that nothing was being done with it nothing effectively at the working level I made a point of asking people regularly whose assignment it was to know about such things if they -had any information to this effect Incidently this was at the same time that an assessment team was operating at NFS Erwin and another assessment of the Apo 11 o faci 1ity was being planned Emphasize the Apollo facility that's the facility that this material allegedly was stolen from It seemed to be pretty relevent background that the assessment team which was going to look at the current safeguards for that facility should be aware of the fact that there was this kind of a history That simply wasn't done None of the people that I talked to as far as I could tell knew anything about this information McTiernan You said something that I think I intended to cover anyway before this investigation was completed Who in the so-called Safeguards Division at the time or the so­ called Special Safeguards Study could we contact and talk to on what steps they took to locate the NUMEC material and get the story on NUMEC s ' '- J I 7· Conran Interview -9­ Conran I would say Eisenstein Builder Chapman Page McTiernan I'm thinking of the rank and file types that may have had immediate drafting arid writing responsibilities Conran Tom Carter Joe Yardumian George McCorkle McTiernan Where those people aware of your concern about the fact that we may not have meaning NRC the whole story on NUMEC Apollo Conran Yes when it became obvious to me that the management was not responding to this really very significant revelation I began t lling these people without going into the classified details · McTiernan Could you focus down to maybe the specific persons that you talked to You gave us five or six names but could you think of any specific conversation that will really get us into it Conran I'd have to think about it McTiernan Would you give me a call Conran I think as a matter of fact if you would go down the list of Tom Carter's organization and Stan Dolin's organization and George McCorkle's organization McTiernan But you think for sure you talked to Tom and McCorkle Conran I'm not sure that I ever talked to George McCorkle but I know that I talked to Tom Carter and Tom Thayer and Ron Brightsen A very significant fraction of the people who worked in that group became aware eventually of the fact that at least I thought there was this sort of information in existence McTiernan Did they make any effort as far as you know to get it Conran I don't know no I don't know I think the most im·p ortant fact is that the management of the organization didn ' t make an effort to disseminate at least the substance of this information 20 Conran Interview McTiernan -10­ You see what we're trying to do as a part of this inquiry just to refresh your recollectidn for talking here is to establish the history of the treatment of this issue and that's why anybody you ta 1ked to and what actions they - took becomes relevant Hbw about documents are there any more documents that you can think of that might get us into you see we're revie ing all I'm again reminding you reviewing all of the Task Force material and we're reviewing what you've giVen us Conran Yes very early on I prepared a handwritten summary entitled Appendix D What is Known with Respect to SNM Diversion- 1ajor Known Incidents McTiernan We've got that Conran That's some of the material that I gave to you McTiernan I recognize that Conran As a matter of fact it was eventually Appendix M in my Draft Overview Study McTiernan Now M was the Appendix originally Jim didn't give us remember7 Wasn't it Conran No Appendix I was the one that I originally did not give you because it had what I knew to be a very highly classified very sensitive information Incidently that's I think that's an i mportant point My actions with respect to discussing this information the NUMEC information with other people were premised on the fact that I didn't know its level of classification but at the same time it was very important to get this information out to people McTiernan We're in the same boat now Conran Well if I had ever been shown the information and instructed that even its · very existence was considered to be Secret as opposed to Top Secret or Confidential I would have felt compelled to be much more careful about the way that I discussed this with even other working level people within the organization By that time however a very obvious pattern of deception and suppression of information and even attempted deception as to the existence of information had been established in my dealings with ERDA And I was not so sure but what they would intentionally mislead me as to the level of classification of this information 209 Conran Interview · -11­ McTiernan Can you think of any documents in the nature of the one you just told us about on Page and his trip to California in November l975 public statements Conran Yes and incidentally they continue to this day As of December 1977 in an official Commission document the same statement that's in contention right now was made in an ·official publication of the Commission So it's obvious that the communication problems which worried me so badly back in the Fall of 1975 are still very much with us Its almost incredible that with the Chairman and Mr Gossick being publicly critcized and scathed by Congress that the safeguards organization management would ' permit to be published in an official document from the Commission McTiernan What is it Jim Conran A Final Environmental Statement on the Transportation · of Special Nuclear Materials by Air and Other Modes Page 7-11 Volume I see Enclosure 1 McTiernan Do you recognize it Jim Fitzgerald from your work Fitzgerald I've heard of the document but I don't recognize it in this context Conran It's dated December 1977 It contains almost exactly the same statements the Draft Environmental Statement for the Clinch River Breeder Reactor contained in the Fall of 1975 McTiernan There's another document then isn't there We'd better get that one down too Clary These are just examp1es uninte1ligible Conran These examples incidentally are not exhaustive they're just typical McTiernan Yes we don't have to be exhaustive we've got to have something which shows pattern Conran The Clinch River Breeder Reactor Draft Environmental · Statement in the Fall of 1975 the Division of Safeguards input to that document which went out over Mr Page's Conran Interview -12­ s1gnature contained the same statement There is no evidence to date of diver ion of significant quantities of SNM Incorrect example Similar treatments of the CFE question appear in the two documents cited McTiernan Any other documents occur to you off hand helpful Conran Well as a matter of fact a speech by Commissi oner Mason McTiernan We have that Conran But that was very much earlier of is August 1975 Fitzgerald Mason's speech in August McTiernan We don't have that one Fitzgerald No McTiernan What do you recall was stated Conran In the August 1975 speech Roughly that there was no evidence of diversion or theft of a large quantity of material It was a much more general statement not as exact Fitzgerald To whom Jim Conran I think it must have been a speech at MIT in August of 1975 correction August 1975 speech was in Washington D C see Enclosure 7 There is simply no question that at every level at both agencies this notion was pervasive McTiernan That was ERDA's testimony at the Dingell hearing Conran And it was not by accident I think It was not simply a lack of information It was because of positive statements which were designed I believe to be misleading on the su ect McTiernan But again did anybody specifically tell you that that it was designed to mislead in a coverup sense or is this a conclusion you ·have been forced to reach in all the work you have done These are In Hawaii The one I'm thinking I've got one in October 1976 Conran Interview -13­ Conran I don't think any of the safeguards management ever told me outright that we are setting out to deceive the · Congress the public and the staff McTiernan That's important because that has been the thrust of the newspaper stories Conran I think it is also important however to say this The law prohibits the unauthorized disclosure of classified information and makes the provision for its protection And you do that by controlling access and establishing a need to know for people to have access to classified information But it's a widespread practice particularly among the management of the old AEC and ERDA and NRC to take that legitimate prohibition under the law and misconstrue it to be a mandate to do anything to protect that information including lie about its existence Or if you do say something about it to carefully measure and artfully word your statements so as to be deliberately misleading As I say that was never said to me as a policy pronouncement but the practice is so widespread and so dangerous that that's why I've fought against it for the better part of two and a half years now Clary And in your discussions with these key management officials it is clear this was an important issued What was the response about this pattern and practice cTi ernan That's going to be my next ser1es of questions Conran Maybe I should finish 'the chronology of how this information became known to various levels of managem nt officials in the agency to my knowledge 1 Conran learned of it on October 16 1975 at ERDA 2 reported to Eisenstein 3 within no more than a day certainly it was known to Chapman to my knowledge 4 nothing was done with it and my 1eve·l of concern kept rising and 5 on December 15 1975 at my request I met with Commissioner 1ason and Jim Hard his technical assistant a four hour meeting All of the details of what I knew about this and its su·ppression or lack of use within my organization was told to Mason In another FOIA listing I've listed all the documents that I provided to Commissioner Mason at that time see listings in Enclosure 3 j I Conran Interview -14­ The next event to my knowledge was a meeting with Mr Chapman sometime in January I believe it was January of 1976 Yes January 12 1976 I had a meeting with Mr Chapman and the purpose of that meeting was to report to him information relating to an alleged threat to attack a nuclear installation but in the same meeting we discussed or alluded to the NUMEC information see Enclosure 21 So in January 1976 to my own knowledge Chapman was aware of this information And as a matter of fact he told me thot i the investigations that were going on relating to the NFS facility that Roger I'm ·fishing for a name I'll have to go back to it correct name Bob Erickson that a member of his staff had been made aware of this information so that it could be factored into a Task Force assessment that was being made at one of the facilities of a great concern at that time That next event that stands out in my mind is a meeting with Chairman Anders on February 23 I went into this information in considerable detail with him and finally apparently someone within the agency made the right move It was my understanding that either the same day or very shortly thereafter the Chairman Anders arranged for briefings by the CIA and ERDA officials - Well after that there were other meetings with Mr Chapman around the first of April 1976 sometime Again the NUMEC information was discussed Also in the beginning of April 1976 I met with Chairman Rowden and discussed this NUMEC information with him Fitzgerald · What did he say Conran Incidentally the context of that meeting was I had been contacted by the FBI and told that they were doing an investigation I told the Chairman that I had been con­ tacted and it was my intention to cooperate fully with the FBI investigation and if he had any objections or any legal guidance that he could give me in that context that that's what I was there to talk to him about He instructed me to cooperate fully and put no constraints on me at all Well for the early chronology 1cTiernan What did he say about NUMEC did he give you a reaction to the problem Anything to indicate policy and think­ ing · f 'i 1'1 · l • J Conran Interview Conran -15­ No in retrospect as a matter of fact it 1 S rather surprising My impression of Chairman Rowden was that this was new information to him completely new information As it turns out in the records that have been released under FOIA he was involved as the OGC counsel who pro­ vided legal advice to an investigation of the NUMEC incident when it was current back in the mid-60 S 1 McTiernan For your information in our June 15 1976 report John Anderson pointed out that this was one of the problems that he was concerned about right Anderson Right McTiernan Conran to the Commission before we ever launched our inquiry · into your concerns Well I should be careful I 1 m not suggesting incidentally that Chairman Rowden knew about the intelligence information that I 1 m talking about I 1 m not sure that he had any prior knowledge of that before the briefing in February 1976 But he was very intimately involved with the AEC investigations of that incident in the mid-60 S --­ 1 McTiernan Did he make any statement indicative of NRC policy on the statements with respect to theft or diversion at that time Conran I don 1 t recall that he did I know that one of the topics that I discussed was this same concern which still seemed to be-there about the misrepresentation of crucial safeguards information At the time the overriding concern was our public posture on the adequacy of existing safeguards They were in fact t that time dangerously inadequate and I think that a great deal of work has been done since then points that up very clearly Nevertheless safeguards officials at this agency were regularly saying to Congress to the public and at the Office director and Division director level apparently to the Commission these are all documented statements that existing safeguards were adequate These kinds of statements fit exactly the pattern of suppression misrepresentation of sensitive embarrassing but crucial information Very similar to the way that the NUMEC information was handled Conran Interview -16­ 1cTi ern an I guess you're saying and I'm not putting words in your mouth I'm just trying to keep the ball rolling that nothing was said by Chairman Rowoen in that con­ versation indicating any policy determination on past theft or diversion This is our focus Conran If there was guidance given to the staff relating to the NUMEC diversion question and what its implications might be or should be in the work of the working level staff I'm not aware of it And I think that I might very well be aware of it because there was a very distinct change in thinking and policy guidance with respect to the Clandestine Fission Explosive question McTiernan Right Conran Sometime in March 1976 I remember it was announced at a staff meeting one morning Maury Eisenstien commented on the ·fact that we were going to start treating this question differently In fact it was the widespread notion among the staff at that time that it was either impossible or almost impossible to make fission explosives with stolen SNM That was changed I don't think it was ever written down at that time but very definitely tne staff was given different guidance on this question down through the management chain And in fact at a meeting with Mr Chapman and Mr Builder the content of which was otherwise very unpleasant this was March 8th 1976 1r Chapman and Mr Builder made a point of saying to me sort of in the sense that Well I hope your satisfied now having caused all of this trouble that the way that we view this mater officially and internally is that the design and fabrication of fission explosives must be considered relatively easy and likely to succeed Very positive statement very clear guidance but if there was any similar policy guidance given to the staff with respect to the NUMEC information I'm not aware of it And in fact my opinion is and I have a very strong opinion on · this that the staff was not given any policy guidance on this question · McTiernan I gather your almost doing that now Conran Well what I'm saying is that in my view from what I know of the situation there was a -very distinct line of demarcation between the old official view internally and '-· Conran Interview -17­ the new one on the question of Clandestine Fission Explosive design and fabrication sometime in March of 1976 If the Commission•s change of thinking with respect to the NUMEC information was ever promulgated to the staff either informally or formally however I•m unaware of it And as a matter of fact as I say I continued to bitch about the fact that apparently it was not I should say here incidentally that I have never talked to General Gossick about the NUt EC information McTiernan How about Commissioner Gilinsky Conran I had a meeting with Commissioner Gilinsky February 20 1976 I didn•t mention that meeting because I•m not at all sure that I told Commissioner Gilinsky this information It was my intention at the time to meet with the Chairman on February 23 1976 and since I knew that this vo as very likely to lead to a considerable donnybrook I can•t remember that I had the intention to talk to Gilinsky about this and I don•t recall that I did McTiernan How about Commissioner Kennedy Conran I never spoke with Commissioner Kennedy at all until January of 1976 McTiernan January 1976 Conran I•m sorry January 1977 He•s the one Commissioner of the original five man Commission that I did not contact personally through the first year and a half of this development McTiernan Did you discuss diversion with him Conran I made an outline of topics to discuss at that January 1977 meeting I'm quite sute that I did because one of the principle topics that I was discussing with him trying very desperately to have an input to the decision that was imminent on the NRDC Emergency Measures Petition was generally the question of adequacy of safeguards One of the topics that is most relevant to that concern is safeguards risk and I had done a safeguards risk estimate a very preliminary one The results were alarming to see the quantitive expression of just how bad our safeguards are relative to our approach to reactor regulation and analysis Conran Interview -18­ McTiernan Do you have any recollection right now talking with Commissioner Ke nedy Conran Yes now that I think about it I discussed the matter very explicity I believe with Commissioner Kennedy If in fact it was a fait accompli that a diversion had occurred in a quantitative assessment of safeguards risk that's an extremely important piece of information with respect to to the question of frequency of attempts and more specifically frequency of successful attempts to steal the material e g the NUMEC incident It's the difference between having no data and one datum That difference incidentally is the difference between not being able to estimate really on the basis of hard evidence what this frequence might be McTiernan Do you recall what he said Conran and the fact that you've already had the experience McTiernan Do you recall what he said that might be relevant to what we are asking today Conran No I don't McTiernan How about Commissioner Mason Conran Commissioner t ason as I indicated knew everything that I knew about the NU MEC information with the possible exception of the name of my intelligence contact on December 15 1977 There's a possibility that I had alluded to that information in a meeting with him earlier but I'm not at all sure about that McTiernan And just for the record did he state anything do you recall anything he said that gave some indication that his thinking from the policy standpoint · Conran l ell I believe his comment was that that was certainly the sort of information that should be taken into account in our safeguards thinking Incidentally I remember an exchange of comments and even notes on this subject with respect to Mr Page's testi ony see Enclosure 20 I was in fairly frequent contact with Jim Hard at that time He was Commissioner Mason's technical assistant And when I saw the statement in Mr Page's testimony that Conran Interview -19­ I considered to be false I told Jim Hard about this Commissioner Mason 1 S office obtained a copy of the Page testimony and I pointed out what I thought were the misleading portions And the questions that occurred to Commissioner Mason at the time were Well if this were true how would it effect our safeguards thinking and Do you think that this information should be made public and that sort of thing McTiernan Was this the Commissioner Conran This was the Commissioner talki g or Jim Hard In no way do I mean to imply by those remarks I guess they can be interpreted a couple of different ways but my impression is that Dr Mason considered that information to be relevant and if it existed it should be known and it should be properly factored into our safeguards approach McTiernan We are just tracing the history Fitzgerald You mentioned an exchange of notes Did you see documents to Hard from Page or something like that Conran Well I remember seeing a note from Jim Hard to Commissioner Mason and I believe underlined portions of Page s testimony and Hard s comment that this is the kind of think Conran is talking about the misleading information category general l y And I also remember seeing a return scribbling by Commissioner Mason to the effect that Well how· do you think this should be said Are you suggesting it be made public You know that sort of thing That was around the first of December of 1975 see Enclosure 20 1 1 McTiernan Did it end there as far as you know Conran As far as I know it did Well no it didn t end there That was one of the incidents that contributed to the December 15th 1975 meeting the very long meeting with Commissioner Mason It was background for that meeting 1 Another significant incident that I should mention in this record I have already recorded it incidentally in reports to you on December 1 1975 I finally talked to Carl Builder personally about this among other things Builder s reaction was appalling I m not really sure 1 1 Conran Interview -20­ what prompted it First of all he questioned my credibility and would say things like How come you're the only person that ever comes to me ith this suspicion that people are holding out on us That incidentally was my claim ERDA had withheld this information from the Commission itself not just from me They of course denied me access to it nd as far as I could tell they had withheld it from the Commission itself Even though they had made an agreement incidentally with the Commission an informal agreement with ERDA would supply this sort of information to the Commission They had worked out some ground rules on how the handling of very sensitive information of this sort should be done Even with that agreement and the understanding that there would be very 1imited dissemination of this information ERDA withheld this information from even the Commission to my knowledge To get back to the conversation with Builder on December lst 1975 he even expressed the idea that even if it had bappened it was water under the bridge and he didn't see how it would affect the safeguards scene today because we surely did things much differently today than · we did then It was just a rehash of problems of the past that was not necessary to pursue it A couple of days later perhaps a week later on December 12th as a matter of fact I received a telephone call from Mr Builder and in the course of the conversation he instructed me very specifically not to seek further information of this sort from any Government agency McTiernan Did he name NUMEC specifically Conran He named intelligence information specifically It was quite clear to me that he was talking about sensitive classified information that was relevant to my assignments at the time His comment was that I was ·making people out at ERDA very nervous by asking questions in these areas and he instructed me not to seek information further And in fact r had already made contacts that I was awaiting coming to fruition so I asked him what if somebody contacts me as a fol1ow-ufi to earlier contacts His response was Don't accept it His instructions to me were so clear in that regard that when I found out for example about the threat that had been made in January 1976 as had been reported by an ACRS consultant that a dissident group was planning to attack a nuclear facility sometime during 1976 I was afraid that Builder 19 ·-' Conran Interview -21­ would considet it a violation of his instructions to me if he knew I had that information So instead of going to Builder I went to Chapman and told him about it There is no question in my mind what Builder's view was and what his instructions were in this respect McTiernan Let's see we've run down the list of Commissioners and we have got Chapman and Builder But Gossick for sure you do not remember discussing NUMEC with Conran I never discussed NUMEC with Gossick but Mr Gossick certainly came into possession of the information that I knew about as a matter of record· see Commission meeting transcript for April 4 1977 on April 4 1977 That was the day that you McTiernan and Mr Gossick and some other people were sitting around talking about my letters to Udall Carter and the Commission Gossick was making comments that he had not yet seen my March 10 1977 report to OIA and he was asking if he could see a copy of it and it was given to him at that time There was a fairly detailed discussion of what I know of this matter in that report · I think that's another important comment that should be made incidentally I'm not sure what your 'office OIA did with the information but your office knew about the existence of the information and my knowledge of it in early April 1976 April 12 1976 I think it was our first conversation about it McTiernan We covered it in our June 15 1976 report didn't we John Conran and at the same time the allegations that this information was being misrepresented publicly and to the Congress and was not being factored into our safeguards program was reported to OIA So that's one other bit in the chronology that I think should be in the record McTiernan All that was fully recorded that in · Clary You characterized and described a sequence of meetings and discussions Did you initiate these meetings or were they in response to a request 220 That's right we'll crank Conran Interview -22­ Conran All of these meetings were at my initative and usually under considerable pressure to sit down and shut up As a matter of fact what finally made me come to you McTiernan and document the whole thing was that Chapman called me into his office one day and made a very overt threat to fire me if I continued seeking information relevant to my safeguards assignments as I had been Fitzgerald I thought Marty Daugherty sent you over McTiernan That 1 S what I recollect Conran Well as a matter of fact yes you ve tripped off another recollection After the instruction from Builder this was on December 12 1975 that I shouldn 1 t seek this information any more this kind of information I went to the personnel people and had a conversation with Jerry Black I think was his name The gist of the conversaton was IS there a regulation which I can quote which would require Mr Builder to put this instruction in writing because I thought it was something that should be taken up with higher levels And at that meeting I alluded to this information It was exactly this kind of information and its suppression and mishandling that concerned me I can t recall that I met with Daugherty at that time a couple of months later was the time frame in which Daugherty 6ecame generally aware of it Incidentally these con­ versations with O P personnel people were not detailed It was as general an allusion as I could make to this intelligence information just to give them the flavor of the sort of information that it seemed to me was being covered up without disclosing details unnecessarily But I guess it is relevant that in mid-December 1975 O P learned of this in the context of what I thought was an illegal order by Builder not to seek information relevant to my assignment and not even to accept it if it was offered You were over on the in-step 1 11 11 1 McTiernan And of course the Task Force report treated your concerns in this area too Conran The Task as badly of it I comments 1 Force treated my concern in this area just about as I think it could be treated 1 m very critical ve made my criticisms in that respect in formal to Udall they 1 re dated August 19 1977 As a ·l Conran Interview -23­ Withh eld from public release under statuto ry autho rity of the Federal Bureau of Inv estigation FOIA 5 USC §552 b 7 C matter of fact discussed that very same issue the Task Force Report with Roger Mattson in late April 1977 and with Chairman Rowden in late-April 1977 So Chairman Rowden and Roger Mattson certainly knew my very strong feelings on the fact that the Task· Force treatment of the NUMEC incident was inadequate McTiernan There are two things we want to cover for sure on the details of the FBI inquiry in the sense that any indication of who else they talked to at the agency You see that's still a pending investigation in the FBI and I don't know what we can get out of them But I am trying to get out of them what is relevent to our investigation I'm in touch with t he FBI and they're reviewing who was interviewed Do you remember the name of the agents Conran I think I could probably dig that up I McTiernan And the next question is did they tell you who else they talked to at the agency Conran With respect to the question of FBI investigation in this matter on May 18 1976 I finally met two FBI agents and discussed everything that I knew about the NUMEC information and what I considered to be relevant background That includes incidently very specifically what seemed to be absolutely insensible actions on the part of ERDA and NRC management officials a pattern and practice well-established by t hat time of suppressing and even outright misrepresenting information in a number of areas including the NUMEC information I thought that that was relevant to their investigation and so I discussed it in great detail This conversation with the FBI incidently was one item referred to in my conversations with Chairman Rowden McTiernan You came out to see me remember and I advised you to talk to the FBI too Conran Yes McTiernan And I speculated with you that it involved NUMEC it had been in the paper at that time Conran As a matter of fact the initial FBI contact don't have an exact record of it but it was about a month earlier as I recall by telephone 222 b cause Conran Interview -24­ McTiernan Did they tell you who sent them to you Conran They said that the Attorney General had ordered the investigation of the NUMEC matter McTiernan How did they get your name do you know I am trying to see who else they may have talked to in the agency so we can establish some liaison with them and get what happened Conran I think that that FBI investigation was triggered by some fallout or some follow-up to my attempts to verify what I had begun to suspect of the NUMEC information hen it seemed apparent to me that my organization my ' management up through the NMSS Office Director level was not going to do anything with this information except cover it up I made a decision to go to the Commission with it To go to the Commission with it I wanted to be damn sure of what I was talking about I was so worried about the signs that I saw and again these were the very strange handling of very relevant information that I told Maury Eisenstein that within the constraints that were upon me I was going to try to verify the information That would necessarily involve people out the Government because of Builder 1 s constraints on my contacts I had been working with a group at Mitre on a Threat Analysis study that group was still under contract to NRC The subject of their investigation was safeguards Threat Analysis and if someone had shown the capability to dive r t mater i al that was certainly relevant to the ques t ion of threat So putting all these constraints and circumstances together I finally decided to ask Mr Chi k Brennen of t he Mitre study group to help me make contact with someone who might be able to give a go no-go indication of what I knew of the matter and what I suspected McTiernan Chick Brennen is an FBI agent Conran Chick Brennen is the former Director of the Domestic Intelligence Division of the FBI I layed out the whole story for him the reason for my concern and the reason for this sort of unusual request and procedure He thought that there was enough reason for concern and he agreed to try to help me McTiernan When was that Jim Conran Well I think it was in McTiernan April 223 • • • Conran Interview -25­ Conran No my best recollection is that it was in early-November perhaps McTiernan 1975 And then the FBI didn 1 t interview you till •• Conran 1975 Early to mid November 1975 I think If it is extremely important I could pin a date on it I have never pinned a date down incidentally because I agreed We finally met incidentally with an individual that I think could be accurately characterized as being a knowledgeable member of what is generally thought of as the intelligence community But at the time not an employee of the Government • McTiernan You said we finally met with Conran Chick Brennen and I Chick arranged the meeting and we discussed what I knew of the matter and he the intelligence · contact verified what I knew of the matter in a very authoritative manner I thought After that meeting I felt very confident about going to the Commission I know what I know It has been verified two ways and something should be done something more than what Builder and Chapman had done -- Fitzgerald Who is that Who did you meet with Conran I agreed the source would be unattributable and that 1 s why I have never pinned down the date on this as a matter of fact McTiernan Could you give us an approximation You were interviewed by the FBI in either April or May 1976 and you contacted Chick sometime in the Fall of 1975 When did Chick set up this meeting Roughly do you know Conran November of 1975 McTiernan here Conran I don t think that necessary McTiernan See we are reporting everything that happened because · we don t want to be accused of a cover up We re even into the briefing did you meet 1 1 1 S relevant I don t think it is 1 1 I I I Conran Interview -26­ Conran Okay' 1et me say that I don It intend to te11 anyone except Jell my intention right now is not to tell anyo e details of the meeting that would disclose his identity If I'm pushed to the wall it would just be very select people ' McTiernan We are leaving this entirely up to you Jim just going to report to the Conran I am not trying to withhold information I am giving all of the relevent information I think these details as far as · I can tell they are not necessary It is not necessary to know them If that becomes important later why · ' McTiernan Just so that you understand our position I think that we are going to complete an investigation whereby we know everything and dealing with everything so we are not accused of engaging in a cover up So we will just report that this happened and let somebody else talk to you Conran· I'm trying to be forthcoming and if it becomes vital to know that • I don't think it is vital because all of the facts and details that I knew about that this person erified for me have been published by now McTiernan Sitting here now the only Conran As a matter of fact it's my very strong impression that Congressional investigators in all of the people they have talked to in this matter have touched with this person McTiernan Today The only relevance present time is that there the intelligence community And clearly the FBI in the concerns Conran That's the track that I was following I think the FBI i nvestigation was tripped off by the actions of Mr Brennen and this other person after my conversation McTiernan See a newspaper column said that Anders was tripped to the White House We are that strikes me at this is clearly somebody high in that seems to agree with you Fall of 1975 knew about your Conran Interview -27­ Conran They made contact with Congressional sources I'm aware specifically of contacts with members of the Congress who would be part of intelligence oversite and nuclear energy oversite McTiernan Did Chick tell you who made the contacts Conran Yes He didn't tell me a lot of detail about it but he did tell me that they had made contact and later come to find out there was an FBI investigation going on McTiernan In effect we have a situation here which is interesting in · the sense that you gave notice to the FBI somebody in a high level in the intelligence community and the FBI notified the Congress on your concerns much earlier than the time it broke Conran I suppose that's true McTiernan That's its relevance Conran I think as a matter of fact that in the overall scheme of things it appears that the people outside of this agency who didn't have the responsibilities that we do for knowing enough about the facilities that we regulate to regulate them knowledgeably and effectively did act properly when they were notified of my concerns That's in stark contrast to the reaction of my management McTiernan So just for the record and I leave this entirely up to you because we are just going to report everything that happens and let the chips fall where they may could you tell us who he contacted on the Hill if you knew Conran o McTiernan Do you know Conran It would only be hearsay McTiernan Hearsay in the sense that he told you Conran Yes I have no direct knowledge from having participated in the meeting who they contacted McTiernan Did the FBI give you any idea who else they talked to in NRC I wouldn't 226 Conran Interview -28­ Conran They indicated that they wanted to talk to someone in the Regional Office that had responsibility for Nut4EC and NFS McTiernan I am particularly interested in whether they had mentioned they talked to anyone here in Headquarters like Mr Gossick for instance Conran I suggested people they could talk to here As far as I can recall they didn't mention that they had talked to anyone yet McTiernan Who did you suggest Conran My chain of management in NRC starting with Builder No starting with Eisenstein Eisenstein Builder I had a note from Jerry Page by that time formally notifying me that he didn't know anything about this so I didn't suggest that they talk to Mr Page But I suggested that they talk to Eisenstein Builder Chapman I can't · recall that I referred them to Mr Gossick but certainly to the Commission I had talked to four of the Commissioners by that time everyone except Commissioner Kennedy I also suggested names that they could contact at ERDA and they indicated that they wanted to talk to someone in the Regional Office who had responsibility for NFS Erwin and Apollo I'm not sure but I think the NFS Erwin interest might have been my doings I had done an analysis in December of 1975 on Apollo MUF data and on NFS MUF data As a matter of fact on the MUF data for all the facilities but those two were very unique in the respect that over the last 10 years they stood out as facilities that had not only not improved their performance but had actually deteriorated So since they both fell in the same category I mentioned that perhaps they might also be interested · in looking at NFS Erwin The connection incidentally was that by this time I had begun to considerthe possibility that someone at a very high level within ERDA might very well be involved in the misappropriation of nuclear material not from just one facility but from other facilities McTiernan That's my next question I'm looking to make certain that we cover all loose ends that seem to exist as a result of our go around on this one While I was at the hearing July 29 1977 before the Udall Subcommittee I didn't quite pick this up but I want to make certain that if it hasn 1 t been followed- up that somebody takes the responsibility for following it up 227 Conran Interview -29­ On page 24 of the transcript and I'm not working with the final report Jim• there are other instances this is Conran speaking 11 There are other instances of theft and materials stolen than from the NUMEC installation Theft or suspected thefts That information is incluoed in an Appendix of my Draft Overview Study That's one statement you made Conran Yes may I address that · McTiernan Well let me give you the whole summary then I'll just add one simple little question And then you say on the same page 11 There have been other successful attempts to steal nuclear material not always a large quantity not always bomb grade There have been a number of instances in which nuclear material was stolen and in some instances was recoved so we know it was stolen And Mr Lujan says 11 Where 11 And then you say The documentation that I have in my head is so extensive that I really cannot remember which part is classified and which is not So I would really rather not say in public But all the information that I have referred to is in the overdraft study or I have identified it in some other way for the Subcommittee I would get very specific in a closed meeting 11 And in another place you say 11 I documented this information l year and 3 months before I was transferred I knew of it quite sometime before And then Mr Tsongas picked up on this and where he asked the question 11 Mr Gossick Mr Conran made a statement that there had been nuclear material stolen do you dispute that · Now the only thing I want to make certain that I have covered in this thing because it looks like a loose end has NMSS ever asked you any further to make certain they got all the things that are in your mind or hav they ever had a coordination with the Committee on th1ngs you may have told the Committee on this matter Conran Absolutely not And I want to have on the record that that's typical that's not unexpected That's the standard way of NMSS management doing safeguard's business · Because of the context I want to clarify something The instances of successful theft that 11 I was talking about here I've qualified tnY remarks Not always SNM not 22R Conran Interview -30­ always bomb grade material and if it was bomb grade matefial not always large amounts There are documented within ERDA and NRC files of at least six instances of theft and in some instances we know the material was stolen because it was recovered and there was a prosecution Chick Brennen himself has knowledge of one instance in which several tons of yellow cake had been stolen That material was recovered and there was a prdsecution based on that That's the sort of thing that I'm talking about McTiernan Well the thing that really sticks out here in my reading is the fact th at you had discussions with the Subcommittee staff and I want to make certain that NMSS and the Subcommittee staff coordinated on that Conran I have not told the Subcommittee staff anything that I have not banged on the table about and written about in great detail to my organization for two and a half years As a matter of fact I have told the Subcommittee staff less I'm quite sure than I've discussed with everyone else in this agency including yourself McTiernan incidentally I'm not holding out anything on this agency I have a record of when I gave what material to whom It should come as no surprise to Gossick Chapman Builder Smith Burnett and Page that there are other instances of theft They are a matter of record I dug them out in the Fall of 1975 and I gave that information to my management Nothing has been done with it and that's the reason for finally going outside the agency to see if we couldn't get it handled in the right way Clary Jim you mentioned Burnett Now he is relatively new to Safeguards in this scene How do you characterize the policy and the practice in that division since his joining that Office Has there been any change Conran At best it's unchanged Some people think that the · management now is not even up to Mr Builder's par in that regard I wanted to make one more comment about NFS I mentioned NFS to the FBI and you picked up on that comment and I thought you had perhaps related it to my statement to the Committee I'm not making the accusation that I know of any records of theft from the NFS facility However I am aware of a sequence of events that are a matter of record which are consistent in every way with the scenario that would include systematic diversion of material in Conran Interview -31­ that facility over a long period That's documented in Exhibit A to the March 10 1977 report that I gave you I knew of it at that time and that's why I told the FBI These two facilities Apollo and NUMEC have very strange MUF performance histories One of them in fact had an allegation of theft connected with it and so it was particularly of concern But NFS is very much like Apollo in that respect in that it has a staggering cumulative t·1UF In December 1975 and January 1976 there were found accounting practices which are sufficiently questionable I'm not making an accusation but I say categorically they do fit a scenario in which people who work at that facility are involved in a diversion of material at that facility That's something that should be looked into All of the investigations and assessments that are made at NFS should be done with that background It makes a difference in whether you put implicit trust and faith in the contractor personnel in doing inventories and in doing all kinds of assessments that have been done under the Integrated Assessment Plan as have been done by the Division of Safeguards over the last year There has occurred at NFS a sequence of events that if you take safeguards seriously you simply have to admit that they could fit in a pattern a scenario of diversion of materials from that facility There has been no follow-up on that information by Builder Chapman Burnett or Smith to my knowledge Another relevant point is that currently I understand there's a very large out-of­ tolerance MUF which has occurred at that facility within the last accounting period McTiernan What I referred to just so you know when I picked up on that NFS · Conran May I make one 'more comment In a CIA report that was released accidently recently is the only other place that I have seen written ·what I have written in the regard The CIA assessment is that Done competently diversion of materials from our facilities could be done undetected I think that's true And I think this agency has an obligation to find out what the hell the CIA knows and thinks about this subject which seems to be very close to what I think that no one else in the Division of Safeguards thinks or at least is permitted to say 11 11 Conran Interview -32­ Clary There are documents too to support that they were submitted by staff independent of Mr Conran Conran All of this may be getting away from the quest on of Gossick's involvement in this whole thing I don't really think so I think the whole situation that Gossick found himself in the midst of contributed very directly · to his present problems In that regard since he was responsible for the Information Control Policies in his organizat on he is culpable But I think all of this background may very well be relevant to the question of whether· his lack of knowledge about NUMEC was intentional or not ·I'm not prepared to say that Gossick's lack of knowledge about NUMEC was deliberate or malevolent on anyone's part The fact of the matter is the way relevant safeguards information is handled in thi agency set him up very likely set him up It's still going on I mentioned the fact that the same statement that Gossick is in trouble for and the Chairman has been criticized for defending now appears in an official document of the Commission issued in December of 1977 after this whole furor broke in the press It's incredible It's basis for a continuing concern that the basic fundamental problem that caused this whole mess over the last two and a half years is still there And its the reason incidentally that I'm still insisting on the right to finish my study to document very explicitly these conditions and to recommend ways of clearing them up Because it's apparent that even the new Safeguards M nagement is not moving in this direction · McTiernan Well you know the Subcommittee has been briefed by all the interested agencies Now they are better briefed than this agency is · They got a CIA NSC and FBI briefing· they say in the letter right ·Fi tzgera 1d There were several agencies Conran That's the cause of my statement that if the management in this agency is not going to take seriously the obligation to know what there is to know in order to regulate safeguards knowledgeably a d effectively then we should get out of the business of regulating bomb grade material completely · 231 Conran Interview McTiernan Conran -33­ Based upon your knowledge of this issue and everything you've said and everything you know about the issue do you think that was a deliberate mistake on the part of Lee Gossick in those two hearings Well 1 think this matter is so serious that I'm somewhat reluctant to offer an opinion in that regard but I'll · say this to my knowledge Mr Gossick did not know in detail from conversations with me the relevant NUMEC intelligence information After April 4 1977 Mr Gossick had in his possession if the Commission meeting transcript that I've been given is to be believed he had the infor­ mation in his possession • At the same meeting there was discussed some paragraphs in my Open Letter April 4 1977 ·to the Commission that alluded to the fact that perhaps Govenment nfficials themselves were either involved or culpable in the theft or misappropriation of the material Somebody picked up on that statement in the context that I was a little bit flaky for having made it So it's clear that in the same Commission meeting in which Gossick participated the question of the theft of a large amount of material and who might have been involved in it and that sort of thing came to the fore So it's quite possible that Gossick didn't go home and read the entire 60cr or 700 pages that comprised that report but I think there is no question that if he was unaware of that information when he talked to the Committee he was culpably unaware of that informati n Again in that regard Mr Gossick should not be singled out for special treatment by the Committee That's not to say that I think he should be excused by the Committee I think the entire chain of command in the safeguards organization should receive the same sort of attention that Gossick does in this regard Another example of who I have talked this matter over with is Mr Burnett the new Division Director When he came ab9i lrd I made a Oint of going in and talking to him and having a series of conversation with him He knows as well as anyone in this agency on a much more current basis what the reasons for my concerns and the sources and the quality of the information that I had And yet he sat through the same hearing and didn't say anything to correct Gossick's statements The same can be said of Smith And I can't really say no offense intended the same of you McTiernan 232 Conran Interview • -34­ I'm saying that Gossick is not alone in this situation He's the focus of attention because he was since there was no Commission at the time he was 1r NRC McTiernan Of course the thing you have to recognize since you encompassed me into this thing too is there is no doubt that everybody wasn't aware of NUMEC The first one who mentioned i t was a Congressman in Gossick's testimony of the NUMEC issue The real question is whether you deem that evidence or not Conran Well you see the haggling over the word evidence here is symptomatic of what I'm talking about There are still a number of people in this agency who think it's all right to pick and choose your words to artfully word and carefully construct your sentences so that without outright lying you can give a completely misleading impression And that's what I take an exception with for two ·and a half years and that's what the Congress finally took exception with Those people have a right to know this information and if we had to go into a closed session to cover that information with them we had an obligation to do that That obligation still exists and as a matter of fact this is a good place to get it into the record That sort of thing is still going on The same sort of misleading statements are still on the record misleading the same committees of Congress regarding 1 the relative ease and likelihood of success of making fission explosives 2 whether or not there has ever occurred a credible threat to use a homemade · nuclear weapon against society there have been such threats 2 whether or not we do thingSlil a sufficiently conservative way and 4 what we make of the reams of intelligence information that is available to us about threats that have been made the capabilities of organi­ zations the intentions of organizations what has actually occurred in the past Incidents which if you look at them in retrospect without having the full information about the incident if you look at that information and treat it conservatively you would be forced to conclude that something malevolent very well might have occurred How that influences our picture of the current and future safeguards threa is extremely important It has been entirely completely misrepresented to the Oversite Committee in Congress that deserve that information They still don't have it the correct information incidentally because although I've talked • Conran Interview -35­ to the Oversite Committees of Congress I have not given them classified information I want to say that specifically because you Mr McTiernan were among the people who made some pretty serious allegations against me McTiernan ••• 1 don't remember • Conran regarding the way that I've treated classified information and whether or not I was a security risk with respect to my intentions to give away information to the press McTiernan I never mentioned security risk Conran These are things that came out of those Commission meet­ ing transcripts McTiernan I remember that when they were talking about what they should do about the material you were carrying around I said you had access to your ·safe in my office and I was getting concerned about the hours you were keeping coming in and I remember it well Conran Well I was working my butt off to produce the report that was already late That's why I was set up over here It was convenient to my house I needed a safe storage facility If I carried classified documents around I· always met every regulation it was double wrapped John Anderson can tell you about that McTiernan I asked for the safe to be moved out of my office Conran Your organization itself got me the 11 Courier card that was the 1ast step in authorizing me to do these things McTiernan I asked for the safe to be removed from my office I didn't want to be responsible for it Conran That's one reason incidentally that I insisted on a very exact record of this meeting today McTiernan Jim I don't care Conran Because I think I have dealt squarely with this agency on all of these matters in the past And as a matter of fact at a very critical moment April 4 1977 and in some subsequent Commission meetings people who should Conran Interview -36­ have known the most about this whole situation I feel misrepresented very badly my role and my intentions and my actions And as a matter of fact I mentioned that on this record because I think it is very possibly relevant to this whole question that the Committee is following McTiernan Well everybody is entitled to their opinion but we played you pretty straight You know I was deeply con­ cerned about how you would handle me in that relationship with us with that supervisors name too that I ordered you not to give him access to your report Conran That's what I'm talking about my role • McTiernan You misrepresented what I said to you Conran I've tried to straighten it out with you since McTiernan I told you to write a memo to file you haven't done it yet Conran Yes and · Fitzgerald I've got a question You indicated that you had a con­ versation with an fBI agent who put you in touch with this man in the private sector · Conran An Ex-FBI agent he was McTiernan This Mr arennen is an Ex-FBI agent Conran He's the Ex-Director of the Domestic Intelligence Division McTiernan He was in the FBI then wasn't he Conran No he was retired He was under contract to MITRE who was under contract to us in the midst of a Threat Study Fitzgerald And my understanding is this was in November 1975 and you indicated that this other individual who you don't want to name verified what you already knew Could you tell us what your talking about there Can you give me the substance of that conversation That misrepresented He had left then Conran Interview -37­ Conran Generally that an intelligence assessment existed to the effect that material had been stolen from a licensed facility in the United States and diverted to the purposes of a foreign power Fitzgerald Was this intelligence assessment related to NUMEC or was it more general and just an unnamed facility Conran I don't remember specifically I believe that the gentleman's statement was just that general that he had seen a report an intelligence assessment he was verifying what I was already aware of at that point He said that he himself had seen a report an intelligence assessment to the effect that material had been stolen a large quantity had been stolen and diverted to the purposes of a foreign power He didn't get any more explicit than that I don't think he did Now you have to realize that this was in the context of a conversation in which I was not constrained not to mention the NUMEC facility But I don't believe that this contact was that explicit and I think that there was probably a reason for that I think he was making· judgments all along as to what Fitzgerald Did he indicate what this intelligence assessment that he had seen was based on any specifics about what led them to that conclusion · Conran He was reluctant to discuss any further details and I think properly so The ground rule for the meeting was that to the extent that a go no-go validation could be made of the information that I already knew or suspected that was the purpose of the meeting And recall again that this was so that I could have added assurance that I was on firm ground going to the Commission and insisting that something should be done with this information Clary Now I've heard this conversation describing the verifying of what you knew at the time I ask did you discover or did this individual volunteer this information to you at that time Conran Relevant to the NUMEC matter I think not Fitzgerald You also mentioned that the I guess the former FBI man had notified members of Congress Conran I say that what actually occurred in that area I think you should talk to Brennen about it Anything that I cou1d 2 36 Conran Interview -38­ Fitzgerald You indicated that it was hearsay Conran Yes Fitzgerald I'm willing to receive hearsaY Conran · I'm unwilling to pursue it because it's hearsay as far as I'm conc rned I think if your really interested in knowing what happened you should contact Brennen Fitzgerald Well why won't you tell us Conran I say because it's a very serious matter and I'm trying to relate what I either know directly or have a very firm defensible -basis for alleging or suspecting I think it's not improper for this organization to contact Mr Brennen who 'jas at the time under contract with NRC McTiernan Did he talk it over with the FBI at that time do you know because I thought I heard a discussion that he was still with the FBI Conran I don't know Fitzgerald What was your title in the 1975 Conran It's included · in the report that I gave to McTiernan It was Senior Safeguards Analyst The job description very clearly required me to seek the information I was seeking Part of the job description says frequent contact with high level officials both inside and outside the agency I think it was not at all outside the scope of my job The only thing that worried me at the time was the suggestion by my own organization that I should not be seeking further information relevant to this assignment Fitzgera 1d I have no further questions McTiernan Any final comment Jim Conran No I just hope that these comments are helpful in coming to whatever is the equitable resolution of this matter · McTiernan I thought that new documentation helped us considerably Fitzgera 1d And you will try to find some of those documents • • Conran Interview -39­ Conran Listen I should say that if in the matter of course you have not received the listings that I have provided to the FOIA office recently there may very well be some information there that would be relevant to your inves­ tigation For example there are Outlines and Meeting Agendas for the meetings I had with the Commissioners and Chapman Those might be of interest to you because they do establish as well as can be established who talked about what and when they talked about it and that sort of thing Clary I would like to make a point here too to reiteriate what we have already requested of Chairman Hendrie there are still outstanding several items of documentation that Jim has not had the opportunity to review I seriously suggest that this documentation be addressed separately in the conclusions of this investigation and if possible that Jim review it and comment on it McTiernan I don't know what docum nts your talking about but is thiS in connection with the grievance Conran No it's in connection with my study that was terminated uncompleted McTiernan And your being denied your own study Conran I was specifically reassigned to a non-safeguards job so that I couldn't pursue those studies McTiernan You said there were documents you were being denied that I should know about I don't follow you I'm sorry Clary Mr Burnett has some They are references cited in the Task Force report Conran Yes Burnett confiscated my safe fu l l of material McTiernan I understand that you Conran No it has not been given back to me Mr Gossick understood that too It's another example of the lack of communication in this organization That material has not been returned to me 11 of that has been given back to Conran Interview · McTiernan -40­ rt•s my understanding Conran As a matter of fact I have never been given an account­ ing of the material that was confiscated from me even though it included Secret Restricted Data National Security Information eapon Data I have never been given an accounting for that material I guess if I could Clary That constitutes a security infraction McTiernan Let me tell you this Jim Conran To make a wrap up statement I hope that this inves­ McTiernan Conran McTiernan tigation doesn•t lead to just the tensure of just one person or criticism of one person The whole system · needs some very fundamental safeguards policy and information control policy decisions have to be made and implemented I hope that's what comes out of this investigation I was not involved in this total and complete final confiscation of your documents My understanding was that they we·re going to be 1ooked at and given back to you and I've always ·taken that position and I think Well- they haven't been and rive discussed that matter · with Burnett personally on a number of occasions and as · a matter of fact all the way up to the Commission Well you can I've told you what my position is I'm sure Okay now transcription we're going to crash on the transcription of this thing e will have somebody type it and you can come over and look at it in draft John will you kind of work with the girls on this thing too Conran I'll be happy to help on any basis I can If maybe to help it along I can start reviewing as it starts becoming available rather than getting the whole package if you want to do that SOMEONE SPEAKING - COULD NOT DI TINGUISH WHO OR WHAT WAS SAID a 2 Conran Interview -41­ McTiernan I beg your pardon If Mr Conran authorized you to have access to it that's fine with me Jim would you give me a note Conran Mr Clary is already authorized McTiernan I mean he wants the transcript and ·I don't mind giving the transcript but I'd like a note from you Conran On what McTiernan That you want me to give him a copy of the transcript That's all fine with me because he is your representative Conran I'm not sure that's necessary given access McTiernan Then I'll give you a copy · and you make a copy of yours and give it to him all right Conran Yes I say for the record Clary has been authorized access to all of the classified information that I require to document my grievance McTiernan You see I don't know anything about Mr Clary's role I'm not involved in your grievance at all Anything you want to give him is fine with me all right Conran Okay McTiernan I have no · objections of him being here I have no objections of recording this thing all I want is the facts Conran Okay I hope it helped McTiernan Yes those documents were very helpful ll nderson This terminates the interview ' J ' S 4 Mr Clary has been Good enough CONRAN INTERVIEW Anderson Okay Jim for the record you indicated you had more information to add to the previous interview last week I forget what was the date Conran February 1 1978 Anderson The individuals present are John Anderson Ron Clary Carlos Yanez and Jim Conran Today's date is February lO 1977 This interview is being conducted in the Office of OIA Conran On the conversation with Tom McTiernan as a follow-up to the interview last week I requested a supplemental interview or an interview to supplement the record that we had already made February l 1978 to document subsequent conversations with McTiernan John Anderson Mr Fitzgerald OGC and a number of others within and · outside the agency regarding the matter at issue here If this is a little bit sketchier and disorganized than you might have wished it's because we anticipated this interview Monday and I thought I would have the weekend to prepare for it but we're happy to come by and try to provide the supplemental information on as expeditious basis as we can Anderson I apologize for the short fuse but as I explained to you we're under a time constraint and we're having typing problems and so on so it's best that we do it now so that we can get this typed up hope­ fully tomorrow Conran One thing that I had wanted to do prior to this follow-up interview was to review all of the references to the Matson task force I had asked for access to those references a number of times in the past and nothing was ever worked out on them I have had the chance just previous to this meeting in Mr Gossick's office to look at a couple of the classified references that I though were particularly germane Anderson Was that today Conran Today yes It is my intention and Mr Gossick agreed that I could have a chance to review all of the task force references on a more leisurely basis and a more thorough basis so if anything else develops out of finalizing that review it may be necessary to supplement the record again But as a matter of fact there is plenty to put in the record today so we will get on with it Well I've written down a list of items that I thought it was necessary to address on the record and I have not really had the chance to organize it so I'll just jump into them The first item that I have is the involVement 2 41 2 extensive involvement and a rather comprehensive knowledge of the early development as a matter of fact of the whole situation that I was involved in in Safeguards but in particular how I came to acquire and report the NUMEC information I was in very frequent contact with Mr Hard in the summer and fall of 1975 and all of 1976 while Commissioner Mason was still here As an example very shortly after Chic Brennen arranged for an interview or a meeting with an intelligence source that verified the information that I had already acquired or suspected about the NUMEC business ah very shortly thereafter I recorded the results generally the results of that meeting with Mr Hard and indicated that it appeared that the suspicion that had been growing in my mind was confirmed and that this infor­ mation should be made known to the Commission Anderson Did you ta 1k to this i nte 11 i gence source persona 11 y Conran Yes Anderson Do you have his name Conran We went through this the other day Anderson Is Brennen s Conran n me Chip or Chic It•s actually Charles o Brennen His nickname is Chic I think it is important that in the course of this investi­ gation that OIA touch base at least with Jim Hard if you haven•t already He ·can verify a number of the details of my reported involve­ ment in the chronology that I mentioned Specifically and particularly Commissioner Mason•s knowledge of this situation The second item that I have on my list is titled Maurice Eisenstein Gerry Page Sometime in March or April 1976 I had been involved in sort of a crash dive task force to examine the concept of resident safeguards inspector program Our agency had been torqued up by the Joint Committee on this question at the Appropriation Hearings in mid March 1976 so I was involved in this task force and after the task force reported · I took the trouble to write a letter to Carl Builder and tell him it was enjoyable being a part of the task force and I hoped it would con­ tribute to the understanding and resolution of the problem there was if there was any But that the recommendations of the task force I thought would only be valid and prattical if the people who ran the facilities themselves understood the need for such a program As a recommendation I suggested that they should be given at least the substance of the information that had so changed my thinking on safe­ guards For example the relative ease and likelihood of success nd clandestine fission explosive design and fabrication The fact that apparently there had been credible nuclear threats made and the fact Chic ell 3 that it appeared that diversion of the large amount of material from a licensed facility was already a fate de complete At least there was some opinion and serious indication from that direction Oh when Page read that letter to Builder he wrote me a very short note back and said that he didn't have any knowledge of diversion of material from any facility and so my reference to that fact bothered him very greatly I caul d hardly believe what I read because the situation was that people in the organizational structure on both sides of Page so to speak Builder Chapman on the top side and t·1aurice Eisenstein and myself on the bottom side knew this infor­ mation and yet the Deputy Division Director was disclaiming any knowledge of it Another bit of relevance of this thing yet to the subject at hand may be it goes to the question of candor just how honestly and candidly the information that already was inside the agency was being handled by the management of the organization I mentioned that I had had a chance to review one of the classified references to the task force report just prior to this meeting That document was the interview of Mr Page by the task force and although I only ad a chance to skim it it's quite clear and some of the quotes that stand out in my mind are as follows Mr Page didn't· have direct knowledge by looking at intelligence information of the NUMEC situation prior to sometime in ea ly 1976 but he admitted that he strongly suspected that there was intelligence information A second fact is and it came as a revelation to me that Mr Page had been asked to go to the CIA following the CIA briefing of the Commission and the top safeguards managers of the agency in February 1976 I'm not sure Ken Chapman Carl Builder Anderson How do you know he was asked to go Conran He said so in the transcripts He and Bob Tharp of ERDA went to the CIA and looked at documents there relating to the NUMEC diversion situation or the intelligence information relating to that possi- · bility He didn't pin down any date and so it's impossible for me to know whether he made that tri to the CIA Headquarters before or after he wrote this letter to me I am talking about that I referred to earlier Either way however it seems to be something lacking in the candor of Mr Page's treatment of this subject in his conver­ sations dr correspondence with me · If he strongly suspected it I think the wording of his letter leaves a little to be desired as far as candor goes and if he had already been to the CIA Headquarters then there is no excuse for hi writing what he did There is another important relevance I think very important relevance to the fact that Page went to the CIA along with a ERDA representative and reviewed information relating to the NUMEC diversion information intelligence 4 information And the relevance is this If Mr Page if the CIA provided Mr Page and Mr Tharp in their review of intelligence information information which has been disclosed within the last several months that•s not consistent with Mr Page•s final judgment on whether or not material had been di erted from NUMEC He states very clearly in the transcripts for example that nothing in the · inv stigattons or the MUF information that he had seeh indicated to him that any material had ever been diverted from an · facility That may not be very well put The point I•m trying to make is that the CIA may in fact not have given Page and Tharp information that existed that was quite relevant to the question at issue here and the principal' reason for their being at Langiey I remember now why Page went to the CIA He said that a letter had come from the White House asking NRC for information relating to the question of possible diversion of mat rial from NUMEC As a result of that he · was tasked to prepare a joint report to the National Security Counsel So the situation that we have is that the White House is asking NRC to look into the situation NRC looks into the situation jointly with ERDA and noting it•s clear whether they were misinformed or properly informed but either way whether the CIA intended to with­ hold information from them or whether they provided them with misinfor­ mation or false information or incomplete information Page•s con­ clusion about the relevance of that information and the meaning of it when he c_ame back to NRC and prepared a report to the National Security Counsel is simply not consistent with information that•s on the record now Anderson What period -of time was that you•re talking about month and a year Conran No I can•t Anderson Was it before February 1976 or after February 1976 Conran No It was after February 1976 The closest that I can try to pin it down is that it was sometime around and it is not clear to me whether it was before or after Page wrote the short note to me in which he disavowed any knowledge of the situation Anderson What was the date of the note Conran Can you pin a Because Page did it himself r•m looking for the date of the note now March or April 1976 2 44 It was sometime in 5 Anderson Okay well that's close enough Conran It was April 9 1976 The memo from Page to me was an QUO memorandum dated April 9 1976 The other possible relevance of this information to the issue in question Gossick's culpability in making what had been termed misrepresentations to the Udall Committee and the Dingell Committee is this General Gossick delivered testi­ mony to both those committees It's highly unlikely that General Gossick wrote that testimony It's highly likely that it was staff in the usual fashion In restrospect Mr Smith and Mr Page were brand new to the agency at that time regular noviaros and so it's unlikely that they prepared the · testimony for Gossick The next down on the usual chain of command in staffing such testimony was Mr Page So clearly of the time that General Gossick's testimony to the Udall Committee and to the Dingell Committee was staffed for him at least down to the Page level in the organization People had been exposed to intelligence information relating to the NUMEC diversion incident 1ind now there is still a question as to whether they had been exposed to correct information or complete information 4ell the only other thing that I can add to this topic is that there has been a suggestion made to me recently in conversations -with people outside the agency that there is some indication in information recently released by ERDA under an FOIA request that bears on the question of whether Page was aware of the intelligence information presented at the briefing the CIA briefing on February 23 1976 I simply haven't had a chance to check it out yet Anderson Do you know whether or not he was at that briefing Conran I've asked ·a number of people and they don't know Reference 102 to the task force cites a list of people who were at both the CIA briefing on February 23 and the ERDA briefing on February 25 Anderson You haven't had access to that Conran Not until very recently Anderson And do you recall having seen the list then ' Conran I have seen the list and that list does not include Mr Page Although there is nothing in the wording of the memo that suggests or assures that the listing provided therein is inclusive Other people may in fact have been present in other words and it would not be inconsistent with information given in Reference 102 6 · Anderson How was the list of attendees selected do you have any idea What was the criteri·a for attendance Or criteria for being excluded Conran I have no information As far as I know materially judgment on the part of Chairman Anders ' Anderson Conran Was there just a small a large g oup · gro p of people at the meeting Or was it · Yes The listing of people in Reference 102 for both the CIA briefing and the ERDA briefing subsequent ERDA briefing is very limited Five or six people no perhaps five to 10 people Anderson Five to 10 Conran Yes The last item on this topic think it's quite relevant I think I may have referred in the earlier interview to knowledge of someone within the safeguards management staff of the presence of an intelligence report in Mr Builder's or Mr Page's safe sometime in the Spring or Summer 1976 The wording of Reference 102 suggests strongly and I think intends to convey the impression that the intelligence information which was presented at the briefing in February was not obtained was not asked for by the agency and therefore the intelligence information never existed within NRC Ron Brightsen has told me personally on several occasions that he has seen and read a document which sounds very much like an intelli­ gence report because of the content of that report So I think that it's important that OIA try to run that down Anderson You know it's very difficult to go out and find a document that all you know is that it's an intelligence document You know 14 million files to go through · · Conran It might not hurt to contact Ron Brightsen he may have more Anderson Can you pin a subject and a date on this intelligence document Conran Oh yes I can very definitely pin a subject not a date some details mentioned Anderson From to things like that Conran No but the details indicated quite clearly that it was the result I 25Xl E 0 13526 1' 11 f lc J 6 7 Anderson By whom Conran I 25Xl E 0 13526 r Anderson Do you think NRC has this document in its files Conran I think we had this document in our files Anderson You think it doesn't exist anymore Conran I think it doesn't exist anymore Anderson So it would be difficult for us to find it if you think it doesn't exist Conran I'm not suggesting that you find the document itself but rather check into the question of whether or not there may have been intelligence informaton in ERDA secure spaces available to Safeguards Division management personnel down through the Assistant Director level It's all relevant to the question of how did Gossick's testimony get written the way it di d Anderson And you think that this document is in the ERDA files Conran I don't know its present location Anderson But you think that Ron Brightsen might know where it is Conran LJ ell he can certainly give you first hand information on it from having seen the document and read it Anderson And at what period of time did he see it Conran As I say sometime i n the Spring or perhaps early Summer 1976 Well the third item I have is entitled FBI Interviews and GAO Interviews If I didn't pin them down before I was interviewed by the FBI in May 1976 and in October 1977 about the NUMEC i nfor mation or a possib l e diversion incident I was i nterviewed by the GAO in October 1977 as well I provided names of the agents the FBI agents who interviewed me in one of the enclosures to a memo that I have given to Mr McTiernan documenting our last interview The name of the person interviewing me from GAO I'll have t o give you later The next item I have is entitled NUREG 0350 In conver­ sations subsequent to t he February 1 intervi ew I discussed wi t h I believe OGC personnel and Mr McTiernan the relevance of the I 2 4 '7 s· 7 month long effort approximately 7 months long effort to develop NUREG 0350 which in simpler terms was the MUF release made by this agency on August 4 1976 I provided copies of documents relating to that effort Again as enclosures or attachments to the memorandum that I referred to·earlier I was not involved intimately in that effort and I might add here that I think that was by design of the management of the safeguards organization But because it was of great interest to me I kept track of it from a distance as well I could and whenever something would appear in the reading file that seemed particularly relevant I made a copy of it for myself and it is these copies that I have provided in the context that I noted The one memo that seemed to have particular relevance in this respect is dated February 11 1977 It's a memo from Fred Crane of the Test and Evaluation Branch He was sort of the project leader in developing this NUREG 0350 to Thomas Thayer his Assistant Director the subject was MUF Release among other things Mr Crane says as a result of the meeting with Mr Chapman Mr Harris Mr Fouchard and Bill Altman the statement that we have no evidence of diversion will be included in NUREG MUF Release when it's finally made That's a very categorical statement and it indicates very clearly that as of February ll 1977 it was the intention of this organization to make tha_t categorical statement in a public release of MUF information ·I would emphasize again that was as a result of a meeting with Mr Chapman who most definitely was at the CIA briefing in February 1976 Well there are five or six other memos which track the history of develop­ ment of NUREG 0350 and it's clear that somewhere around March or April 1977 there were discussions at the Commission level Going to the· question of whether or nbt Well who was going to be responsible for pre-1968 MUF data And of course the reason one reason that pre-1968 MUF data is such a tough subject to handle is because of the NUMEC infor­ mation So other than to say that clearly in February 1977 the intention of this agency the policy of Mr Chapman of the NMSS Office Director was to make a categorical statement which was not consistent with what was known of the NUMEC incident at that time as early as February 1976 Another classified document which I have reviewed recently that was among the material confiscated by Mr Burnett so it had to be re­ viewed following our earlier interview on February 1 is a transcript of the Commission meeting in June I think it's June 6 1977 I believe Mr Gossick was present at that meeting so of course was Mr Crane One of the principal topics at that meeting and the Commission gave particular emphasis to this question was that we should not make categorical statements about the ·MUF data that we were going to re­ lease that we were going to participate in with ERDA in the release of August 1977 So again it's a verY clear indication of an almost incredible screw-up in conveying and implementing policy guidance from 2 48 9 the Commission to the lower levels of management and staff of NRC I don't have all the information of course but I think it's rele­ vant to your inquiry to look into the discussions that happened at the Commission level sometime around March or April 1976 and who decided and why it was decided that we would want to remain aloof and disavow pre-1968 data and why we shouldn't make categorical state­ ments about MUF and why we did anyway when NUREG 0350 was finally published August 1977 Ag in tn the context of that topic if I hadn't said it before I want to say categorically that two of the safeguards staff who were very intimately involved very deeply involved in the development of NUREG 0350 Bill Altman and Fred Crane I made a point of personally discussing my knowledge of the NUMEC affair with both those people The next topic that I have is Burnett J H C conversations regarding the NUMEC intelligence infor­ mation I alluded to it sort of in passing in the earlier interview I think it should be emphasiZed again in the context of why it came to pass that Mr Gossick's testimony said what it said having been most likely reviewed by all subordinate levels of management down through Mr Page all of whom had every opportunity and every reason to know the substance of the intelligence information available with respect to NUMEC I mention Mr Burnett specifically because I made a point of going in and talking to him on at least three occasions and the dates of those meetings and the topics of those meetings are in Enclosure XI which I provided attached to my memo to McTiernan I was very specific and very emphatic in my conversations with Mr Burnett that I knew what I knew about what I had said in this area I even offered to bring in Mr Chic Brennen to verify what I knew about that matter as I later did incidentally with Chairman Hendrie in October to try to convince him that the matter was being treated incorrectly and dishonestly in our public pronouncements and just generally the way we were handling that information and applying it or not applying it c Anderson What was the date of the Burnett meeting Conran June 24 27 and 28 1977 The next item I have listed for comment is as a result of a very recent conversation with Maury Eisenstein I referred earlier to the QUO note I received from Mr Page in August 1976 which he disavowed any knowledge of NUMEC At that time as I say it was difficult for me to believe that he didn't be­ cause people on both sides of him in the organization knew it and Well at that time I had butted heads with Mr Page on a couple of occasions concerning my views about the Hell I had some disagree­ ments some run-ins with Mr Page because of my views relating to the merit of material accounting s a safeguards measure so I wasn't 249 10 really in the I didn't reallj want to lock horns with him so to speak or antagonize him s·aying something which he was given the indication that he considered of concern to him about NUMEC So I asked Maurice Eisenstein if he would inform Mr Page of the top secret report for example that I had learned about · p Anderson Do you know when you talked to Eisenstein Conran Well it was either the same day or the next day after rece1v1ng Mr Page's April 9 1976 memorandum Yes it's very shortly thereafter Anyway I asked 1r Eisenstein if he would answer Mr Page's request for information in this area recalled by that time that I had of course become aware of the tcip secret file containing intelligence information at ERDA in October 1976 and had verified it by contacts with an intelligence source Anderson Can you tel l me the intelligence source who he worked for Conran No I think we have covered that topic Anderson You can't tell us what agency or of course I know you have said 11 no name in this matter Conran Right Mr Eisenstein said that he would bring Page up to speed on all the · intelligence information that we knew about from one source or the other We l l I don't know whether he did that or not The purpose of my call to Mr Eisenstein recently was to find out if he had done that and he has already told me he can ' t recall doing that You may want to pursue that question with him a 1ittle more I mention this incident because my recent conversations with Mr Eisenstein and from previous conversations with Mr Eisenstein it has been clear to me that when I told aury in October 1976 the information that was so shocking to me that he didn't find it shock­ ing at all and a very strong impression exists on my part is that Mr Eisenstein knows a great deal more about these matters than you may be aware of and I would recommend strongly He wor ks for ACTA Anderson Downtm'ln i Conran ' ·r could find a telephone number for you iater yes Okay the last item one that I want to emphasize very strongly is this I said things about the existence of intelligence information relating to a possible diversion at the NUMEC facility that outraged my management and a number of other people Quite frankly they didn't believe me or if they did they denied the relevance of that information I think developments subsequent to my cashiering out of the Division of I I 11 l Safeguards last July had borne out almost 100 percent and maybe more What I had said on that subject Not just the fact that the information existed but the fact that the existence of the infor­ mation was lied about or misrepresented that that information was not provided on a timely basis by ERDA to management of this agency including all the way up through the Commission and that we had not properly taken that information into account in the analysis and design of safeguards I have said very similar things about other very important very crucial aspects of safeguards I am even more sure of what I am talking about in those other areas For example the fact that fission explosive clandestine fission explosive information has been withheld misrepresented not used properly Also information relating to whether or not credible nuclear threats have been made What I am talkihg to here and another of the enclosures that I have included in my submittal to r r McTiernan relates to that general theme that the way the NU EC intelligence information was handled or mishandled is just symptomatic of the very much more general problem of the way that all kinds of very important very crucial safeguard information is mishandled The one outst nding example of this was the is a package of material that as I indicated before that r•ve included in the submittals to Mr McTiernan and has to do with the Clinch River breeder reactor and the way that the question of relative ease and likelihood of success of clandestine fission explosive design and fabrication as handled in the context of the Clinch River breeder reactor proceedings Without belaboring the point more than I have to I want to emphasize that I contend seriously that that sort of information was handled so badly in the context of ' the Clinch River breed r reactor proceedings before the duly constituted litensing board that the Division of Safeguards input to that proceeding constituted a material false statement I read a response to a request for admissions by an intervenor organization The response was signed off by Mr Page It did not reflect information which I myself brought into ' this agency relative to that question very crucial information the sort of information that would make a difference in a licensing board•s decision The CFE question was an admitted contention in that proceeding that means that the licensing board would be making its decision on information specifically encompassed by the contention It was contention number five I challenged the infor­ mation provided in the affidavit signed by the sworn affidavit signed by Mr Page which went back to the intervenors In this case it was NRDC ·I challenged it at a number of different levels and in a number of different ways including contacting the Executive Legal Director organization Mr Gibbner Mr Englehardt Mr McTiernan OIA Commissioner Kennedy and Chairman Rowden Aside from the fact that my input to this question was not only never solicited but was suppressed by the way it was handled The handling of this issue is simply not 2 51 I • • 12 consistent with statements which are on the record in Congressional hearings recently going to the question of whether or not licensing boards are advised of significant developments relating to the issue or the application under consideration by that licensing board Despite the fact that I had challenged as a material false statement a sworn affidavit put in to the Clinch River proceedings by my organization even though I challenged it and complained to ELD OIA and the Commission itself the licensing board Chairman Marshall Miller was never brought into the picture To complete my statement despite the fact · that I authoritatively knowledgably challenged the input of the Division of Safeguards to the Clinch River proceedings as a material false state­ ment to the Executive Legal Director organization the agency inspector and to a Commissioner and the Chairman the licensing board chairman at Clinch River was never notified of that development bi anyone except myself I eventually took the bit in my teeth myself and called Mr Miller on October 7 1977 to determine whether or not he had ever been advised of these developments He had not been He said that he was interested in hearing more and asked me if I would document what I wis telling him and I promised that I would on a time available basis The reason for my calling Mr Miller incidentally was that a hearing was coming up for Senator Hart on exactly this sort of question noti­ fication of licensing boards I had seen a statement a rather categorical statement in the newspaper a short time earlier by Chairman Hendrie in which he was making a very strong point that although we had slipped up a little bit in the North Anna proceedings with respect to reporting the fault at the North Anna site that fer the last 2 years or so we didn't do things that way anymore we very promptly notified licensing boards of'signficant developments I thought that before he said that to Senator Hart someone should call to his attention that there was another incident which might be brought up at that hearing in a rather embarrassing fashion So I talked to Bill Gory in the Chairman's office about this very thing and strongly urged him to make sure that the Chairman was aware of this Clinch River breeder reactor information I think that's all that r have to say today Are there any questions about any of this John Anderson No I want to thank you very much for providing this additional infer­ formation I don't have any questions that I can think of off-hand at the moment but after reviewing the transcript and having it typed up if we have any questions we will be in touch Is that alright Conran Fine Anderson Thank you very much • This concludes the interview · · 2s2 i