· -- · ·- - -- -- - --­ • - - - -- - - - - -- r ' - I j I RfGul-1 - i -- -··-·--·- -- - ···--- - - _ _ _ _ -- d rtf l1f l o l ' l' -L--- - -- ­ SEOREi · 1 p P - JYt C I Jt ' tJA 6d H' ---- ___ _ ' - - -- - - · Ifi V I- DECLASSIFIED UNDER AUTHORITY OF THE Document No Q· pages ­ This document consists of INTERAGENCY SECURITY CLASSIFICATION APPEALS PANEL · C - LJ E O 13526 SECTION 5 3 b 3 No jj_of_ t l_copies Series __ a I ISCAP APPEAL NO 2012-004 document no 1 DECLASSIFICATION DATE March 18 2014 I UIRY INTO TIMO Y OF UTIV DIRECTO 0 TION T THE ·- FBI Agen Names or Other Identi_fy ing ' - 'J Informat1on Must be Deleted Pr1or to Public Release · ·- -·· __ ­ JF EBRUARY 1978 NATJONAC SECURIT IN FORMA TlON U nauth -orJ z d D H IlD iJjS Crlmm t San tJbnJ · · J 'B­ SECRET - ·- • j OfFfQCIE OIF 1'1Hl E GENERAIL COU S El OIFIF CIE OIF NSI IECTOR AIUlDHTOIR UaSa NUClEAR REGUlATORY COMM SSmON - - ---- --- - ---· ----- - -- ··· -· ···· ·- - ----·---··- - -- - -·· - - · - -· - - - -­ - · - ·· · -·-··- ··· · ·· - ·- ·· · ·· ---· --- ----· -·---· ____ _ j UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON D C 20555 February 17 19 78 MEMORANDUM FOR Chairman Hendrie Commissioner Gilinsky Commissioner Kennedy Commissioner Bradford FROM - _Thomas J McTiernan Director 1 · Office of Inspector and Auditor - - Jerome Nelson General Counsel · Office of the General Counsel ''William E yan Assistant for Invest1gat1ons CIA · 1 Director 1· James A Fitzgerald Attorney Office of the General Counsel SUBJECT INQUIRY INTO TESTIMONY OF TKE EXECUTIVE DIRECTOR FOR OPERATIONS BEFORE TWO HOUSE SUBCOMMITTEES BACKGROUND By memorandum dated December 22 1977 addressed to the General Counsel and the Director Office of Inspector and Auditor CIA the Chairman requested that an investigation be conducted which focuses on t he testi mony of Lee V Gossick the Executive Director for Operations EDO before the House Subcommittee on Energy and Environment on July 29 1977 and the House Subcommittee on Energy and Power August 8 1977 In his memorandum the Chairman noted that by letter dated November 15 1977 Representatives Udall and Tsongas had asked him to explain what they characterized as Mr Gossick ' s failure to present an accurate description of the current understanding of the Apollo matter in his July 29 testimony to the effect that the Commission has no evidence that significant amounts of s pecial nuclear material SNM have been stolen The Chairman's memorandum also noted that by letter dated December 12 1977 11 2 Commissioner Gilinsky wrote Congressman Dingell Chairman House Sub­ committee on Energy and Po t1er that t·1r Gossick s testimony on August 8 1977 did not represent his view about evidence of diversion The Chairman asked that our investigative re port inc l ude findings and con­ clus i ons and if there should be any disagreements on the findings and conclusions that separate views be furnished 1 The Apollo-NUMEC Matter - The subject of Apollo-NUMEC is not new On June 20 1967 the General Accounting Office issued a report dealing with a possible theft or diversion at NUMEC entitled 11 Review of Account­ ability Controls over Special Nuclear Materials Nuclear Materials and Equipment Corporation 11 The report reflects that the inquiry was instituted at the specif i c request of the Joint Committee on Atomic Energy As the GAO report states NUMEC owned and operated a uranium processing facility at Apollo Pennsylvania The major emphasis of the facility was on the conversion of uranium hexafluoride to uranium oxide or carbides and the fabrication thereof into products for use in nuclear reactors including corrmercial power research and governmental applications The Apollo facility also recovered uranium from various scrap and residue materials commercially and from its internally generated scrap Over the years NUMEC had significant amounts of SNM under its control and reported losses that became the subject of concern and investigation Regarding these losses the report states Although NUMEC made periodic physical inventories and AEC performed a number of accountability surveys a significant quantity of enriched uranium could not be accounted for in the spring of 1965 we were similarly unable to identify the specific disposition of this material ENCLOSURE 1 11 The condition of NUMEC•s records do not permit us to make a conclusive determination as to the time or the manner in which the losses occurred AEC reviews and other data suggest that the 1asses occurred over a period of years ENCLOSURE 1 11 Allegations In the interest of orderly presentation following are summaries of 1 the November 15 1977 letter from Congressmen Udall and Tsongas 2 Commissioner Gilinsky•s letter of December 12 1977 to Congressman Dingell and 3 a letter from Congressman Dingell to the Chairman dated Januar 9 1978 regarding Mr Gossick•s August 8 1977 testimony As noted below these letters are enclosures to this report and should be reviewed for a full understanding of the allegations in this matter 3 Congressmen Udall-Tsongas Letter ENCLOSURE 2 - The letter notes that the July 29 1977 hearing in part concerned allegations by James Conran an NRC employee that successful diversion of SNM might have occurred at NUMEC and elsewhere While the hearing is discussed hereafter in more detail the letter quotes in pertinent part a discussion between Congressman Tsongas and Mr Gossick in which the Congressman observes that Mr Conran stated that nuclear materials have been successfully stolen and asks Gossick whether he disputes that Mr Gossick replied We have investigated every incident that has come to our attention or has been alleged to us with regard to the theft or diversion of material I can say that we have no evidence that significant- and I use the word •significant• because there have been cases where small 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 stolen I think one should ask Mr Conran for the specifics of the things he is talking about Mr Tsongas later asked 8ut don•t you agree that the circumstances surrounding the NUMEC-Apollo plant would lead a reasonable person to wonder 11 Mr Gossick stated 11 I couldn•t respond to with the alleged circumstances about that indicated all kinds of answers have been something that happened · vell before tlRC•s that 11 that because I am not familiar event Certainly as has been rumored or speculated It is time I just can•t speak to The letter further states that The Congressmen cannot agree with Mr Gossick•s implication that a diversion at Apollo was 11 beyond the scope of his concerns 11 Since the July 29 hearing the Congressmen have developed a better understanding of the basis for suspicion having been briefed on the Apollo matter by the CIA the FBI and the National Security Council NSC staff The Congressmen additionally have careful l y followed press coverage' of the situation and noted as an item of particular interest the report that Chairman Anders became sufficiently apprehensive as a result of CIA and ERDA briefings to alert the White House after which President Ford initiated an investigation which still seems to be in progress A1so they believe it noteworthy that Mr Chapman stated in a public radio interview that he did not consider this matter closed 4 The Congressmen believed that Mr Gossick's suggestion that there is no evidence of a diversion was a serious misrepresentation of the facts and cannot be excused on the grounds that Mr Gossick was not informed or that the information was not relevant to his duties The Congressmen believed it necessary for the Chairman to explain Mr Gossick's failure to present an accurate description of the current understanding of the Apollo matter Commissioner Gilinsky's Letter ENCLOSURE 3 -On December 12 1977 NRC Commissioner Victor Gilinsky wrote Congressman Dingell to Correct the record in hearings before your subcommittee on a matter which concerns me directly The Commissioner notes that in reviewing Gossick's response to the Congressmen Udall and Tsongas charges he encountered Mr Gossick's testimony of August 8 1977 'lhich he described as amounting to a blanket denial on behalf of the Commission itself that any evidence existed to indicate any significant amount of SNM has ever been stolen or diverted The letter quoted Mr Gossick's testimony in part 11 I can only say Mr Ward that the statement the view of the Commission in making the statement there was no evidence that they had 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 that judgment that in their view there has been no evidence to indicate that any diversion has taken place The Corrmissioner wrote I should like the record to show Mr Gossick's statement did not represent my view - a view I made clear to him to the one other Commissioner and to the NRC staff at the time the agency issued its report on nuclear materials inventory discrepancies My view is now as it was then that no such categorial statement is possible The letter states that the Commissioner conveyed the substance of the Executive Branch briefing on Apollo-NUMEC to Mr Gossick before his testimony The Commissioner also noted that he does not see the basis for Mr Gossick's statement that the Corrrnission did make and has reaffirmed any judgment on nuclear losses since at that time there was no Commission and administrative powers had been delegated to Mr Gossick 11 Congressman Dingell 's Letter ENCLOSURE 4 - In a five page letter to the Chairman dated January 9 1978 Congressman Dingell made the follo ing points some of which became subjects of our inquiry The Congressman cannot and shall not accept anything less than total candor 5 There can be no disputing the fact that Mr Gossick provided the Subcommittee vith a categorical assertion of a Commission position that there is no ev i dence of a diversion 11 Excluding the Executive Director from the CIA briefing 1vould appear to be an indication of a lack of confidence in the Executive Director There is evidence that the briefing altered the Commission position on diversion as indicated by the Task Force notes on its meeting with Bryan Eagle and Peter Strauss which state that one impact of the briefing was that the Commission has not said since early 1976 that there is no evidence of diversion without adding qualifications The Task Force determined that NRC did not have access to intelligence information on NUMEC and concluded that it would be relevant to the safeguards program yet the Commission has not acted to obtain the information A most disturbing feature of the Reamer memo on the Task Force meeting with Strauss is the failure to request a copy of the packet of information provided by the CIA 11 and the absence of storage facilities to retain such sensitive materials 11 While document 102 establishes constructive knowledge on Mr Gossick's part Commissioner Gilinsky's letter to the Congressman establishes that Mr Gossick had actua1 knowledge of the substance of the Executive Branch's NUMEC briefing Mr Gossick also failed to advise the subcommittee of the dissension within NRC regarding the testimony and there were staff members present with him at the hearing who 1t1ere aware of the evidence and did not caution at contradict him The ultimate issue is one of candor The subcommittee was misinformed and misled Whether purposeful or neglectful the effect is the same and most importantly it was avoidable Mr Gossick should have acquainted himself with the issues The subcommittee cannot afford the luxury of receiving testimony from ill-informed witnesses The Congressman looks to the Commission to deal with Mr Gossick The opinion expressed by the Chairman in the December 10 letter to Chairman Udall that there is no conclusive evidence of a diversion after 1968 would seem to be fair but no agency from a regulatory standpoint has attempted to identify how a diversion cou ld have occurred from NUMEC 6 The August 2 meeti ng should have alerted Mr Gossic k to the dangers· of making such a broad assertion under oath · The December 10 letter does not mention Commissioner Gilinsky's dissent so the Chairman has repeated rather than resolved the problem of candor The letter concludes with an expression that the Congressman looks forward to receiving evidence of Corrrnission action which will justify reliance on testimony from NRC representatives Chairman Hendrie's reply to Congressmen Udall and Tsongas -On December 10 1977 Chairman Hendrie replied to the November 15 1977 letter received from Congressmen Udall and Tsongas regarding M r Gossick's testimony on July 29 1977 The letter enclosed a memorandum dated December 1 1977 prepared by Mr Gossick in response to the November 15 1977 letter from Congressmen Udall and Tsongas The Chairman's letter states that He has reviewed Mr Gossick's memorandum and testimony and discussed them with Mr Gossick staff members Commissioners Kennedy and Gilinsky and former Chairman Rowden Mr Gossick has told me that he was aware of the no evidence of diversion statements that had been made by the AEC before reorgani­ zation in 1975 and of such statements in connection with the draft inventory difference reports of ERDA and NRC The NRC draft report in final printing at the time of Mr Gossick's testimony contained the statement the Nuclear Regulatory Corrmission has no evidence that any significant amount of strategic SNM has ever been stolen or diverted Before the July 29 1977 hearing the Office of Policy Evaluation furnished Commission comments that did not address this no evidence statement The Chairman understood that some members of the staff construed the no evidence statement to apply only to the post January 1968 period but Mr Gossick did not so read the sentence Mr Gossick believed the Commissioners' collegial position as con-' trasted to the views of an individual Commissioner to be as he stated it at the hearing The Chairman believed Mr Gossick had a reasonable basis for his assumption and had no intent to misrepresent facts 7 Mr Gossick's testimony is consistent with the J uly 29 1977 testi·mony After a meeting of Commissioners and staff on August 2 1977 to discuss the release of the NRC inventory differences report Mr Gossick and staff members who were to appear at the press con ference were cautioned to avoid broad assertions on diversions since the information available would not justify such a positive conclusion There was some di scussion of the proper form of the 11 nO evidence statement as well as the time frame to which it would apply Some felt the no evidence statement was correct others thought the statement shou l d be qualified to say no conclusive evidence or no hard evidence 1 ' Mr Gossick continued to feel that the no evidence statement fairly represented the agency position and he so testified The ERDA testimony at the same hearing expressed similar views With respect to Apollo a no conclusive evidence form is probably more appropriate The Chairman concluded that for regulatory purposes we must assume the circumstances were such that a diversion could have occurred and NRC must construct its safeguards requirew nts accordingly The accompanyi·ng memorandum of Mr Gossick makes the following points He testified to the best of his knowledge on July 29 1977 and the charge of misrepresentation is unfounded and unfair He intended no implication that NRC should not consider the possibility of a diversion at NUMEC in its safeguards requireme nts He made it clear at the August 8 1977 hearings that he was not present at the Executive Branch briefings on NUMEC-Apollo ENCLOSURE 5 July 29 1977 and August 8 1977 Hearings Following are summaries of what transpired at the July 29 and August 8 hearings with relevant quotations from the record The July 29 excerpts are from the published report on Allegations Concerning Lax Security tn the Domestic Nuclear Industry 11 Serial No 95-23 The August 8 excerpts are from the edited galley pages that went for final printing 8 July 29 1977 Hearings Before the Subcommittee on Energy and Environment House Committee on Interior and Insular Affairs The witnesses were Thomas B Cochran Natural Resources Defense Council Inc James H Conran Nuc l ear Engineer NRC 1aurice Eisenstein former Assistant Director for Program Development Division of Safeguards NRC and Lee V Gossick Executive Director for Operations NRC Congressman Tsongas opened the meeting stating that its purpose is to consider allegations concerning the adequacy of security at certain facilities regulated by NRC the adequacy of safeguards regulations and whether NRC has penalized a staff member who disagreed with its official position 1r Conran read his summary statement his full statement was incorporated in Appendix Mr Conran vas followed by Mr Gossick Mr Eisenstein then gave his statement Mr Cochran in his testimony noted that he had incorporated in his prepared testimony that portion of the Task Force report dealing with whether there was a diversion at NUMEC-Apollo in the mid-1960 1 S He questioned how as the Task Force stated a portion of the information on NUMEC-Apollo was sensitive if it proved there was no diversion He noted that there is a great deal of confusion about exactly what happened He stated that he thinks it is incumbent upon the Committee to get to the bottom of the NUMEC-Apollo issue and the allegations of whether or not material was in fact diverted to Israel Chairman Udall then assembled the witnesses side-by-side across the witness table and a question and answer period ensued Chairman Udall opened by mentioning his experience in the My Lai incident and there followed the following ·relevant statements Page 24 Mr Udall - So I do not put off that up at Apollo there is a MUF of 200 pounds or whatever it is of special nuclear material It does not seem really conceivable in a way that my Government would participate in that diversion or that the people running that operation have participated in a major diversion And ther is enough there of a connection that arouses my suspicion a little bit I think it is true with Watergate or the buy influence in Congress or any of the that are around these days that you get the facts come out one way or the other efforts of the Koreans to other kinds of evidence to the bottom of it and Lay it all on the table Page 25 Mr Udall - We are told that there is a sensitive area about what happened at the Apollo facility and the result is that you cannot get into it I intend to get into it and find just what it is 9 Page 26 Mr Udall -Mr Gossick how do I go about getting to the bottom of this Mr Gossick - I matter predated part of AEC I Dr Cochran has getting at it guess it is with some relief that I note that this the NRC and for that matter the whole regulatory really cannot disagree with the approach that suggested That seems to be a very thorough way of Page 27 Mr Conran - There are other instances of theft and material stolen than from the NUMEC installation thefts or suspected thefts That information is included in an appendix of my draft overview study Mr Conran - There have been other s ccessful attempts to steal nuclear material -not always a large quantity not always bomb grade material There have been a number of instances in which nuclear material was stolen Mr Lujan - Where Mr Conran - In some instances it was recovered so we know it was stolen Mr Lujan - Where Mr Conran - 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 of the information I have referred to is in the draft overview study report or I have identified it in some other way for the Subcommittee Mr Conran - I would get very specific in a closed hearing Mr Conran - I documented this information 1 year and 3 months before I was transferred I knew of it quite some time before then Page 37 '' Mr Tsongas - Let me make three points before I go One Mr Gossick Mr Conran made a statement that there have been nuclear · materials successfully stolen Do you dispute that 10 Mr Gossick - We have investigated every incident that has come to our attention or has been alleged to us with regard to the theft or diversion of material I can say that we have no eyidence that significant- and I use the word Significant'' because there have been cases where small 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 stolen I 11 I think one should ask Mr Conran for the specifics of the things he is ·talking about ' Page 38 I J I J ------- Mr Tsongas - Is 94 ki 1ograms significant I I Mr Gossick - Ninety-four would be a significant quantity We have no e ce that such an amount has been stolen We have inventory 1fferences- or a -of an amoun that I am sure you are allU cJ-1-ng to - - 't' Mr Tsongas - Would it be fair to say that you have no evidence thar··--- 1 - they have not been stolen Mr Gossick - One has to answer that in the light of the other measures that we apply in our safeguards functions He don't rely 1 on material accounting and checks for inventory differences as the sole measure for safeguarding material It has to be coupled with 1 our phy3-tca 1 security requirements '--- _ ----------- ---------------------'-- --· ' __ ____ ---- ------- -- --- -- Mr Tsongas ----aut don It you agree that the circumstances surrounding ' th --1i -Apo1lo plant would lead a reasonable person to • vender · _ • -•·• • ''''•o·• -o ·•- •• ' _ _ _ N _ --- ---·-·-- - Mr Gossick- I couldn't respond to that because I am not familiar - ' with the alleged circumstances about that event Certainly as has been indicated all kinds of answers have been rumored or speculated It is something that happened ' ell before NRCs time I just can't j ---·------ s pe a-k-t-o· th-at - ---- ·- ---- -- --· · w --- ·-- · · ·····--· ------------ '- -------------·--··--··· Q --- • • ••• • ' ' •• ' • ' -·•·•'• ' ·' · ' ·· •»• • ' ' ' ' •' _ __ _ __ _ --- --- - - -- Mr - Cochran - Statistically there is no way you can distinguish • whether those MUF's are process losses or diversions You can't · come to any conclusions but that you can't tell whether it was a diversion or not Mr Gossick's argument is that we don't rely on the MUF data We have the physical security data ell the physicai security data they can't rely on either There is just no way to te 11 '· ll Paae 39 Tsongas - I think the committee very seriously intends to follow up the possibility of an incident at Apollo The Chairman has indicated his intentions of doing that August 8 1977 Hearing Before the Subcommittee on Energy and Power House Committee on Interstate and Foreign Commerce Chairman Dingell opened noting that ERDA and NRC on the previous Thursday had publicly released figures on how much special nuclear material is presently unaccou ted for at facilities under their jurisdiction He stated that the hearing is for the ur ose of evalu in the ulness he r leased 1n ormation in detecting and preventing a po sible theft or rs1on ot th1s mater1al and to determine the basis for the strong surances from both ERDA and NRC that re has never been a diversion cant nuc ear rna er1 a s 1 e or theft of r resentatives from ERDA were sworn and gave the1r s atements first Representing ERDA were Robert W Fri Acting Administrator Alfred D Starbird Assistant Administrator for National Security ERDA Edward Giller Deputy Assistant Administrator for National Security ERDA and Harvey E Lyon Director Division of Safeguards and Security ERDA Mr Gossick then was sworn and cave his statement Michael Ward was counsel for the committee Following are pertinent excerpts from the hearing transcript Page 7 Mr Fri - This report alone cannot prove absolutely that no diversion or theft has occurred Indeed inventory accounting cannot prove the negative unless it involves only piece parts that we can count Page 1 Mr Fri - In 1965 a significant inventory difference was identified at Apollo The Atomic Energy Commission took immediate action to investigate the incident thoroughly and it interrogated employees They found after extensive investigation no evidence that a diversion had indeed occurred Page 14 ' Mr Fri - No positive information has been found of any theft of a significant quantity of this material and lastly to our knowledge no black market of materials has ever existed Page 19 Mr Gossick- Our report contains inventory difference data during the period-January 1 1968 through September 30 1976 12 Paae 24 Mr Goss i ck - An inventory difference vh i ch exceeds its expected measurement uncertainty may however be an indication of processing problems biased measurements or bookkeeping rrors as well as an actua l loss or theft of material Page 26 Mr Gossick - Material balance accounting is only one mechanism used to safeguard nuclear material The NRC requires licensees possessing significant quantities of strategic nuclear material to maintain an integrated safeguards system which incorporates physical security as well as material control and accounting measures Paae 50 Mr Ward- I would like to pursue the discussion of the Apollo situation and your assurance that no materials have ever been stolen Have you been briefed by the intelligence community regarding the NUMEC situation Mr Fri - I think I have seen whatever information may exist in the intelligence community related to that situation yes Mr Ward - And you are aware of their opinions as to what they believe occurred then Mr Fri - Yes I think I know that they have done We have been privy to everything Page 51 Mr Ward - Have many people in ERDA been privy to this or is this very controlled information Mr Fri - Any intelligence information on any subject is controlled quite carefully Mr Ward - Based upon what you know would you say that all of the intelligence agencies would concur in your assertion that no material has ever been diverted ' ' Mr Fri - I really can't speak for them r r Ward- Is it your impression that they would then concur Mr Fri - It is my impression based on all of the evidence I have seen both classified and unclassified that no diversion oc urred Mr Ward - But that would be in disagreement with one intelligence agency would it not J fl_ · ''' I 13 Mr Fri - I am not aware that it would be Mr Ward - You are not aware that one agency has certain questions Page 52 Mr Fri - I am not sure I have seen the information to the extent it exists and I know what the other agencies think to the extent that they have any thoughts on the subject at all And I am telling you my conclusion If you want their conclusion if they have one you really ought to ask them Page 53 Mr Ward - Have you received an oral briefing from the two intelligence agencies or did you just review documents Mr Fri - I have to the extent that this material exists I have both discussed it and seen written material Mr Ward - Mr Gossick Mr Gossick- I have not seen the material Mr Ward Mr Ward - Have you been briefed Mr Gossick - I have not Mr Ward - You have not been briefed Mr Gossick - I have not the Commission was briefed on this in February 1976 by the executive branch Mr Dingell -Well that brings up this question Mr Gossick do you feel your judgments here absent a a review of the wr i tten material and b a briefing by the intelligence agencies i nvolved is as hard as it should be with regard to safeguards and th proper custody and retention of the material involved and the mechanism for assuring the safeguard of the material in proper form '' 14 Paqe 54 Mr Gossick - Mr Chairman this was precisely the reason the Commission fe 1t it necessary to be briefed fully on this rna tter It· was something that had occurred in the time period preceding the establishment of the NRC of course but in the process of establishing and increasing the stringency of the safeguards program that we have in effect the Commission felt it important to know whether or not there was any factor here that would affect the measures it might wish to put in force in iis safeguards program Mr Dingell - Mr Ward Mr Ward - Now the Commission has also given assurance that they believe no significant quantities have ever been diverted or stolen Mr Gossick - That is correct Mr Ward- But you not having access to a11 of it cannot persona l ly give that assurance is that correct Page 55 Mr Gossick - 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 personal1y was not briefed on that matter the Commission did make and has reaffirmed the judgment that in their there has been no evidence to indicate that any Mr Ward - Did they mean documentary evidence and Mr Fri when you say no evidence do you mean there are no documents Mr Fri - Wel1 I am not dead sure of what you are driving at There are documents obviously The AEC proquced a pile of documents on the subject Mr Ward - Right Mr Fri -And the then Chairman concluded and wrote down on a of paper that conclusion that I support pi €e Page 56 Mr Ward - But when you say there is no evidence that there has ever been any significant quantities that have ever been stolen I 15 am t ry i ng to figure out i f you are trying to phrase it in a vay that would not necessarily exclude certain possibilities Fri - Well on the basis of inventory accounting one can never be 100 percent sure as I said in my statement you can't use this stuff to prove the negative The investigations in this case produced no evidence to suggest to me that a diversion occurred r Page 68 Mr Ward- yJhen did you learn other agencies had conducted investi­ gations into problems associated with NUMEC Page 69 Mr Fri - severa 1 months ago Mr Gi 11 er - 5 years ago Mr Starbird - close to 2 years ago Mr Lyon - Same time Mr l Va rd - When did the NRC learn of it Mr Gossick - The Commission was briefed in February 1976 by the executive branch Mr Ward and I presume at that time they were made aware of whatever investigations had been made RESULTS OF INVESTIGATION This investigation was conducted and the final report was prepared by Jerome Nelson Genera1 Counsel Thomas J McTiernan Director OIA William E Ryan Assistant Director for Investigations OIA and James A Fi tzgerald OGC Attorney all of whom are signatories on the report Because of weather problems and time constraints some interviews at the close of the investigation were conducted by John J Anderson OIA and Peter G - Crane OGC During the course of the inquiry 32 individuals were interviewed With the exception of former Chairman Anders and James H Conran write-ups were prepared on interviews and were reviewed and approved by the interviewees before inc1usion in the final report Mr Anders was interviewed in California When a draft of his statement was mailed to him for approva1 he preferred to re-draft the statement in his own words rather than edit the initial draft Mr Conran's 16 interview at his request was recorded and transcribed He later requested an additional recorded interview to put more information into the record Because of time constraints we asked Mr Conran to out his additional information in a memorandum but he declined Therefore as he requested there was a second transcribed interview Because of time constraints an unedited transcription of the second interview is incorporated in this report Mr Conran as did others assisted the investigators in assembling the documents referenced in this report All pages of the transcribed statements of Mr Conran are incorporated in this report In addition during the course of our inquiry Dr Henry R Myers Special Consultant on Nuclear Energy Matters House Committee on Interior and Insular Affairs forwarded a series of letters setting forth questions to be asked of certain individuals during the course of our inquiry To insure proper coverage we generally forwarded these communications to the individuals involved and obtained written responses in those instances where Dr Myers had suggested only a few questions v e asked them in our interviews The written responses to Dr Myers' questions are incorporated in this report Volume II - Exhibits SCOPE OF INVESTIGATION This investigation deals with testimony of Mr Gossick before two House subcommittees about the Commission having no evidence of a theft or diversion of SNM from NUMEC-Apollo We have attempted to ascertain what Mr Gossick knew about NUMEC-Apol l o when he testified as well as what the NRC knew about NUMEC-Apollo before and after it was briefed on the matter by the CIA and ERDA in February of 1976 including ' Jhat transpired at the briefings We a l so undertook to determine any apparent NRC position with respect to the no evidence of theft or diversion issue 1 during the period preceding the February 1976 briefing of the Commission and 2 during the period following the briefing This report should not be taken as an inquiry into whether there was in fact a theft or diversion from NUMEC-Apollo Further this report should not in any way be taken as an inquiry into the validity of any past investigation into NUMEC-Apollo ­ whether conducted by CIA FBI AEC ERDA or anyone else Due to ci rc mstances beyond our control we encountered difficulties in developing the full story of the CIA briefing which are explained more fully elsewhere in this report Following is a narrative account of the results of our inv'e stigation This narrative and summary of the witness statements and documents are prepared solely for the purpose of giving the Commission and readers an 17 overview of the matter We strongly urge that the readers review the individual statements of witnesses and the supporting documents to acquire full knowledge of the facts and circumstances i n this i nquiry NRC's Position on Theft or Divers on of Special Nuclear Materials Prior to t he February 1976 Briefings by CIA and ERDA -- Information developed on this aspect of the inquiry indicates that NRC was adhering to the basic AEC position that there has been no theft or diversion of SNM although it was in the late fall of 1975 t hat James Conran commenced his visits to NRC officials to discuss his various concerns including NUMEC-Apollo Following are summaries of relevant documents and interview statements Documents - t1a rch 3 1975--Letter from Chairman Anders to Secretary K1 ss i nger -transmitting proposed draft letter f om NRC to Senator Ribicoff dealing with nuclear material inventories The draft states ''We have discussed th i s subject thoroughly with our senior staff who are confident that there has not been illegal diversion of significant quantfties of strategic nuclear materials 11 An earlier draft apparently changed by Chairman Ander stated We are confident that there has not been illegal diversion of significant quantities of strategic nuclear materials Enclosure 6 November 18 1975--R G Page then Deputy Director Division of Safeguards Office of Nuclear Materials Safety and Safeguards NMSS made a statement before the Assembly Committee on Energy and Diminishing Material of the California Legislature that To date there is no evidence to indicate an loss b theft or diversion of si nificant uantities of s ecial nuclear materials 11 Enclosure 7 August 26 1975--Remarks by Commissioner Edward A Mason NRC before the U S Utility Meeting on Safeguards Washington D C August 26 1975 History does not indicate any attempt to steal special nuclear materials •• Enclosure 8 Interviews - Carl Builder former Director Division of Safeguards NMSS stated that it is his view there is no evidence of theft or diversion of significant amounts of material based upon all the information in the possession of NRC He said that this view was consistent with NRC policy both before and after the CIA briefing James Conran stated that commencing October 1975 he began discussing with NRC officials tre NUMEC problem and the unavailability of information from ERDA In December he met with Commissioner Mason and later on with Mr Chapman and Mr Anders plus others R G Page now Deputy Director NMSS stated that he has been dealing with safeguards matters since 1966 Mr Page stated he still questions whether there was a diversion at NUMEC Page recalled I i 1 J i t 18 that James Conran came to his office and expressed concern about the NUMEC inventory discrepancies Page said he discussed it with Kenneth Chapman then Director NMS and Chapman said he was aware of the Conran complaints but did not believe them justified Mr Chapman said he first heard of the NUMEC problem in the spring of 1975 in a conversation with Seymour Smi l ey and this planted seeds of interest Later a Commissioner asked him about NUMEC discrepancies in the mid-60's and he spoke to Harvey Lyon of ERDA who told him ERDA was reopening the matter In the fal1 of 1975 James Conran told Mr Chapman that ERDA was keeping information from him Mr Chapman said he called Mr Giller of ERDA to inquire about Conran's allegations Mr Giller said Conran was pressing for NUMEC information and apparently did not need the information he was requesting so he was turned down However 1r Giller offered to give the information to Conran if Mr Chapman insisted Mr Chapman aid he declined the offer · Thereafter Mr Conran began going to the Commissioners Mr Chapman said that before the briefing there was no policy statement on the matter of diversion Peter Strauss former General Counsel NRC said that in 1975 he was unaware of any Commission policy regarding statements on no evidence of diversion The CIA and ERDA Briefings At the outset of this inquiry it was deemed relevant by the investigators to have the full information on the ERDA and CIA briefings The allegations against Mr Gossick had criminal implications with respect to his sworn testimony on August 8 1977 and necessarily involved what transpired at at the briefings and what was communicated to him concerning them Also it was believed that reconstructing the CIA briefing would assist the Subcommittee in its evaluation of the matter Finally since we were expected to make findings with respect to Mr Gossick's testimony we felt compelled to know all aspects of the matter before rendering any such conclusions The CIA Briefing--We encountered some difficulties in obtaining the details of · the CIA briefing No written or electronic record of the briefing is known to exist Some of those interviewed refu ed or were reluctant to talk about the substance of the briefing The remarks of those who did comment on the substance of the factual information presented as noted below were frequently somewhat general Former Chairman Anders requested that permission be procured from the CIA for him to discuss the facts After several days of effort this permis si n was obtained orally from the CIA a few hours before he was interviewed in California Nevertheless Mr Anders insisting on a written authoriza­ tion from the CIA refused to discuss the substance of the briefing Former Chairman Rowden was interviewed while the CIA approval 'tJas still pending and refused to discuss substance Mr Chapman and Mr Builder also expressed reluctance to discuss facts It should be noted that 19 while declining to discuss substance former Chairmen Rowden and Anders as well as the others were helpful in providing procedural details regar ding the briefings including their assessments While the picture that emerges from these interviews regarding the CIA briefing is somewhat blurred most of the interviewees came away feeiing that the results were inconclusive from the standpoint of establishing whether there was a theft or diversion at NUMEC Some believed that the CIA bri fing official was expressing his own theories on what happened For example Mr Anders said the style and am iance of the presentation raised questions in his mind as to the accuracy and objectivity of the information presented Carl Builder said that he listened for hard evidence on NUMEC but all he heard were theories circumstantial evidence and much C01or He said it was not the kind of evidence on which to base rule changes John Davis Deputy Director Office of Inspection and Enforcement IE NRC said he was interested in whether anyone had any facts about material moving out of the plant and if so how this was accomplished No such specific information was imparted at the briefing He termed the information inconclusive He stated that afterwards he concluded the briefing called for no further action on his part Mr Chapman said the briefing gave no information that material had left the NUMEC plant improperly He too used the word inconclusive Mr Chapman said the CIA briefer said there was not enough evidence to prosecute and Mr Chapman got the impression that the briefing official 1 was not happy with he result Mr Anders also said that he took what the briefing official said with a grain of salt and wondered if he was on sort of a personal crusade In this regard it was Carl Builder's impression that the briefer seemed to be the advocate of theories that did not have the support of his agency 11 11 11 11 mmissioner 11 Kennedy said that he got th '-_i·mpression that the briefing about suspicions ·Nithout conclusions -- He described the briefing as rambling and disjointed and moved through a variety of circumstanc s The Commissioner said that throughout the briefing I had the distinct impression that I was getting hypotheses a series of hypotheses one building on another I kept looking for the links that would put them together that would give more than the aura of suspicion I did not find this 11 Peter Strauss said he got the impression that the CIA had a fairly strong belief that the inventory discrepancy represented material taken to Israel He said that if the CIA's information was ----- accurate there was a trng circumstantial case--missing material ' motive and opportunity Having been at the briefing Mr Strauss waul not personally say the was 11 no evidence 11 and believes that each of those who heard the briefing should pause before making such a statement Mr Strauss also said that if one defined the word evidence in a certain way hard conclusive evidence admissible in a judicial trial then the 11 no evidence 11 statement would be acceptabl was 11 I 25Xl E 0 13526 20 Bryan Eagle former Executive Assistant to Chairman Anders and Rowden recounted some of the circumstances mentioned by the CIA in connecting Shapiro with srael but said that the briefing presented no evidence that material had actually gone to Israel from NUMEC It was his impression that 1 there was no unanimity within the intelligence community 2 under the circumstances there was nothing CIA could do to resolve the uncertainties and 3 the FBI and AEC investigations showed no basis for further action Mr Eagle said the briefer did not advocate any position Mr Rowden said the briefing involved circumstances that could lead one to conclude there was a possibility of diversion Mr Hub rman said there were indications but not proof as he recalls that NUMEC material had been diverted to Israel _ There were varying statements not very detailed on the factual information presented by the briefer As noted above not everyone discussed the facts Mr Chapman said the briefer spoke of Mr Shapiro's activit i es and said that Shapiro had the opportunity to divert Commissioner Kennedy said that the briefing included mention of Shapiro his associations with the Israel Government and private sector I Peter Strauss · said that Duckett told them that one or more NUMEC officials made several trips to Israel and how nuclear material might have been carried in a suitcase Bryan Eagle said the briefing covered Shapiro's numerous trips I I Mr Davis just recalled that the briefing covered the travel activities of the NUMEC President Mr H ' made numerous tri s - ----- ----- --------- - - l He a 1so said the CIA FBI or the Attorney General had gone to President Johnson and 1 as told to lay off The CIA ·briefer in our interview said that the purpose of his briefing was to give NRC facts and judgments regarding the possibility that NUMEC might have been the source of U-235 for Israel ·He told the Commission that Mr Shapiro the President of NUMEC had frequent contact with Israeli officials I I 25Xl E 0 13526 21 The ERDA Briefing--The ERDA briefing was given on February 25 1976 The interviewees indicate that there was no sensitive information included in the ERDA briefing and that it did not add much to their knowledge Mr Anders recalled that the ERDA briefer said that the· FBI and AEC did not agree with the CIA briefer Mr Chapman said Harvey Lyon said there was an inventorY discrepancy and that fines were paid He did not speak to diversion ornrnissioner Kennedy said the ERDA briefing covered the depth of the C investigation and noted that the FBI ad declined investi­ gation and GAO had reached the same conclusion as ER QVMr Eagle stated that the ERDA briefing reached a much clearer conclusion than the CIA briefing The Failure to Include Mr Gossick in the Briefings--As noted above Congressman Oingell 's letter observed that excluding the Executive Director from the CIA briefing would appear to be an indication of a lack of confidence in him The i terviews on this point do not support this surmisal Chairman Anders could not recall whether Mr Gossick was present but thought his absence was due to CIA's desire to limit the meeting and his not wanting to cause Mr Gossick to make unnecessary trips from Bethesda to H Street He also explained that at that time the question of whether to have a strong or a weak Executive Director had not been resolved by the Commission Mr Chapman believed that Chainnan Anders asked him to set up the briefings but he believed Commissioner Kennedy may have arranged the CIA briefing He said there was no overt action to exclude Mr Gossick but noted that he was not among the initial seven cleared for sensitive information Mr Chapman also observed that under the Energy Reorganization Act of 1974 he normally did not have to go through Mr Gossick in dealing with the Commission on sensitive safeguards information Commissioner Kennedy recalled that Mr Anders stated the briefing was restricted to a need­ to-know in the most strict sense He stated that Mr Gossick in the most strict sense did not have a need-to-know because at that time he wa the manager of the staff and did not involv himself in direct substance The Commissioner noted that the EDO's role is broader now than it was in 1976 Mr Strauss attributed Mr Gossick's absence to a determination that Mr Gossick did not have a need-to-know '' Mr Eagle said that he did not know why Mr Gossick was not in attendance mentioned possible reasons but said Gossick was not specifically excluded Mr Rowden said if substantive responsibility were the criteria Lee Gossick would not be included because of the way the Commission was then structured Steps Taken After Briefings--The interviews indicate that steps were taken after the briefing to apprise the White House and National Security Council NSC of what transpired at the CIA briefing In addition information developed indicates that ERDA and NRC joined in efforts to review CIA material on the NUMEC-Apo1lo matter and to brief the NSC on the safeguards program 22 Mr Anders said that he went to the White House because of the CIA br i efer's demeanor the nature of some of his statements the possible fore ig n policy implications of such statements and the importance of the safeguards question to the NRC and White House Commissioner Kennedy said he went to General Scowcroft to apprise him of the briefing and give him his impression of it He said it raised questions but no answers He said that Chairman Anqers asked him to do it Comm i ssioner Kennedy said that later General Scowcroft told him they did go into it and had satisfied themselves Bryan Eagle recalled that after the briefings Gerry Page NMSS was sent to CIA to revi ew some material He said Page re 1ayed that he did not know if he had seen everything the CIA had but he had not come back with great new lights He said Mr Page related informatibn similar to the chain of circumstances he had heard in the briefing Gerry Page advised that in 1976 Mr Chapman told him to get with certain ERDA people and meet with the CIA Bob Tharp was the ERDA contact He said he and Tharp went to CIA and someone brought in two to four pages of freshly-ty ed a er with no head in ------- --------- _ 1 2-s x-1- -E- 0- -13_5_2_6- The papers contained no i nformat1on a out diversion of SNM He and Tharp prepared a summary of the papers which was typed there He recalled that there were three copies of the summary one retained by CIA and one for ERDA and NRC Mr Page said that l ater George McCorkle NMSS worked with Mr Tharp and Mr McDowell of ERDA on minor changes of the summary He said that thereafter at Mr Chapman's request McCorkle briefed the Commission on the summary but only Mr Anders and Co Mlissioners Kennedy and Rowden He did not recall if Commissioner Gilinsky was briefed Mr Page said that when the Commis­ sioners had no problems McCorkle told ERDA to send it to the White House Mr Page also recalled that a letter was sent to General Scowcroft pursuant to NSC request He said Bob Erickson of NRC and some ERDA peop l e prepared it That letter was intended to discuss the status of safeguards and Mr Page suspected it was re l ated to the summary - ---- ··-- George W McCorkle Chief Physical Security licensing Branch NMSS _ said that in the spring of 1976 just prior to Chairman Anders' departure either Mr Chapman or Mr Page told him to stand by to work with ERDA on a sensitive matter That evening Mr Tharp and Mr McDowell of ERDA came to his office and they worked until about 10 00 p m dra ling up a document which he understood was for the White House It dealt with safeguards and the al l egations of theft or diversion at NUMEC NRC was assisting to make certain the document accurately represented safeguards implementation Mr McCorkle said Mr Tharp brought with hi m a six-page digest on the NUMEC problem which con uded that there was no evidence that theft or diversion had occurrect _J hey compil d a handwritten draf t and Mr McCorkle did not recall retaining a copy c qn the ne xt day he brief ed Chairman O nders and Commissioners Kennedy and Rowden who had no 23 problems He told them about the NUMEC information that it had been investigated that no evidence to support diversion allegations had been developed and that the letter traced safeguards deve l opments to the present He then called Tharp on the results C r McCorkle sa i d he never saw the final letter and never mentioned this incident to r1r Gossick Mr Anders Mr Rowden and C missioner Kennedy advised that they do not reca 11 the McCorkle bri efi n --- Robert H Erickson Chief Test and Evaluation Branch Division of NMSS recalled that in the spring of 1976 Mr Chapman asked him to contact ERDA and assist in preparing a report on the status of safeguards as a result of Mr Anders' going to the White House The letter was to describe the evolution of safeguards The ERDA people gave him a roughly-typed document classified Secret containing tid­ bits on r r Shapiro but nothing about diversion of materials Mr Erickson said he kept the memorandum for a while but eventually destroyed it He said he never discussed this with Mr Gossick He recalled that the letter he assisted ERDA in preparing ended up as the Scowcroft letter Enc·losure 9 Safegu rds Efforts by Mr Page to locate the documents referred to by him and Mr 1cCorkle resulted in two draft memoranda being furnished to him by ERDA as what was provided the NSC in 1976 Regarding NUMEC one draft memorandum said ••there was not a basis for assigning a high priority to diversion The second draft said No theft or diversion has been indicated by past inventory discrepancies and analyses Enclosure 10 NRC's Position on Theft or Diversion of Special Nuclear Subsequent to the February 1976 Br i efings and to Date Mater als Information developed on this aspect of the inquiry indicates that no definitive statements of policy or guidelines on how to treat the no · evi dence issue ere promulgated fallowing the February 1976 briefings Further as the following summary of relevant documents reflects as late as December 1977 at a time when the question of Mr Gossick ' s testimony on the Hill had become an issue between the Congress and NRC and a subject of media discussion the NRC issued a Final Environmental Statement on nTransportation of Radioactive Materials by Air and Other Modes hich contains the statement to date there is no ev i dence to i ndic t any loss y theft or diver- ion 0- unauthorized se of sig ifi ant r· quant1t1es of spec1al nuclear mater1a1s ' As the fo ll ow1ng summar1es of relevant documents and interviews reflect as a result of the Conran T sk Force report and the public release of t he report on inventory · discrepancies both of which occurred in 1977 there were discussions and some recognition withi n the agency of the need to qualify s t atements 11 11 24 diversion t relating to theft or the agency position remained un clear-- '- ·7 from the standpoint of the NUMEC matter One of the Conran Task rorce f recorrmendations was that all statements on missing or sto l en nuclear I materials reflect the uncertainties of material control and accounting technology The staff action plan on this recommendation agreed that absolute statements associated with reported MUFs should not be made an added that when circumstances warranted staff has stated tha t__ we have no evidence which indicates that there has been a diversion Thereafter1 __ the Ccrrmission found the staff comments on the report generally responsive to the Task Force recommendation With respect to the recommendation that statements on missing material reflect the uncertainties of material control and accounting the Commission advised that if a safeguards problem occurs NRC public statements should describe the circumstances the action taken the resolution of the problem and should clearly acknowledge inherent ncertainties such as measurement errors Commissioner Gilinsky in connection with the August 1977 release of MUF data questioned the use of language indicating there is no evidence of theft or diversion but after discussion his concern was alleviated by · amendment of the MUF report press release indicating that the no evidence statement in the report covered only the period from January 1968 forward and a general agreement that the report on l y covered that period · j Documents ' February 24 1976--According to the records of the Secretariat Chairman and Co111T1i ss i oner Kennedy commented on a series of proposed answers to questions propounded by the Joint Commi t tee on Atomic Energy The answer to question 22b stated While some MUFs have been large NRC has no indication of any theft or diversion of other than a miniscule quantity None of the Commissioner comments addressed question 22b of SNM Commissioners Rowden Mason and Gilinsky concurred without any comments Eventually on April 2 1976 Chairman Anders signed a letter transmitting the answers to the JCAE questions and the response to question 22b 1 ' 1 ' i n er n u Report of House su bcooni ttee on c r Energy and Environment on Problems in the Accounting For and Safeguarding of Specia1 Nuc1ear Materiais --NRC written response to Question 4 on whether SNM ever was diverted states The Cof 1T1issi on has no di rect ·evioence that there has been diversion of significant quantities of specia1 nuc1ear materialsfrom li ensed operations Enclosure 12 11 ·-71 July 19 1976--William J Dircks Assistant Executive Director for Operations wrote a l etter to Senator Jackson concurred i n by Mr Chapman and Mr Builder advising that to date there is no evidence to indicate 1 25 any diversion of s i gnificant quantities of special nuc1ear material from licensed operations Enclosure 13 July 26 1976--Mr Dircks wrote a letter to Senator Beil1l also cnncurred in by 1'vlr Chapman and Mr Builder stating we do not have evidence to support allegations of theft or deliberate diversion of SNM Enc l osure 14 October 11 1976--Former Commissioner Edward Mason in a speech before First Pacific Basin Conference on Nuclear Power Develooment and Fuel Cycle at Honolulu Hawaii stated We know of no instance where anybody has attempted to steal significant quantities of material However this statement was prefaced by a reference to plutonium and Dr Mason in his interview said he was referring to plutonium Enclosure 15 j April 20 1977--An unsigned memorandum for the record by the Conran Task Force setting forth results of a Task Force meeting with Barry Rich ERDA Division of Safeguards and Security The memorandum states ' Mr Rich confirmed the existence in ERDA files of a joint body of written materials on Apollo the NU '-1£C of three agencies--DOJ FBI CIA and AEC The joint file is Secret the reasons for classifying it are Top Secret This is not a formal report but rather a periodically updated body of information covering about 1964-71 Intelligence information is involved It also says to Rich's knowledge no one in NRC has seen the joint file Rich said the joint file is not relevant to Conran's concerns because other safeguards information indicates there is no proof of diversion 11 Rich in effect said the Task Force could not get the file because he did not think we had a need-to-know Enclosure 16 · I April 20 1977--Mr Rich in notes on the above Task Force Memorandum for the Record states the Apollo conclusion of non-diversion was based on a review of safeguard procedures plus an investigation of the historical material accountancy data and records for Apollo Enclosure 17 Apri 1 27 1977 --C W ·Reamer Leg a1 Advisor to the Conran Task Force wrote a memorandum to the file captioned Task Force Meeting with Bryan Eagle and Peter Strauss which meeting 1-1as structured to assist the Task Force in dealing with the NUMEC-Apollo matter The memorandum states in part that the Task Force was advised by Mr Eagle and Mr Strauss that The February 1976 briefi gs raised serious questions but did not ' provide conclusive answers The Commission and other senior officials had the benefits of this information in reaching their conclusions on current safeguards Chairman Anders worked out the specifics of l'ihO in NRC attend the briefings viz who had the ne d-t6-know •t- as to 26 An information package was put on the table before the Commission and staff but was not left No request that it be left was made NRC had inadequate storage for highly sensitive information The Commission took specific follow-up actions According to Mr Strauss the Commission has not said since early 1976 that there is no evidence of any diversion of material having ever occurred without qualification to such statements Enclosure 18 April 29 1977--The Conran Task Force in its final report stated we '-· --- _ have no information of this sort upon which to base a belief that significant amounts of nuc l ear materials have or have not been diverted from any U S nuclear facility Enclosure 19 Apri l 29 1977--At another point the report noted that procedures could be improved upon because there may have been a misunderstanding on guidance to staff The report stated the Commission aoparently expected its staff managers to take whatever action was necessary follovfing the I February 1976 briefings and the staff managers were apparently l ooking I to the Commission for guidance if further action was deemed necessary I Enclosure 20 __ J May 27 1977--SECY papers 77-268 from Clifford Smith Director NMSS on Public Release of Inventory Discrepancy MUF Data The ruroose of the paper was to provide Commission with information about these issues and to forward a draft of the initial release package for comment The paper notes that ERDA will maintain responsibility for the pre-1968 data and for any questions that such data wil l engender A sample question and answer portion included an answer regarding evidence of significant diversion It stated It is on the basis of the entire NRC safeguards program that NRC has assured the public that it has no evidence of theft or diversion of significant quantities of nuclear materials _ · En c 1osure 21 ·---- - - ·­ 11 June 3 1977--Unsigned memorandum from Commissioner Gilinsky to Chairman Rowden and Corrunissioner Kennedy on the proposed MUF release It states the document implies that a zero MUF is more or less an assurance that theft diversion has not taken place low reported MUFs are not necessarily an indication of no diversion Enclosure 22 ·---- __ 11 11 June 21 1977--t emorandum to Commission from Clifford Smith Director ' MSS through Mr Gossick entitled Action Plan on Recommendations of Mattson Task Force Report Task Force in Item 3 recommended that all statements on missing or stolen materials reflect the uncertainties of material control and accounting technology Mr Smith's response was 27 We agree that absolute statements associated with reported UFs shou l d not be made • hen circumstances warrant ve have stated t hat ·1e have no evidence which indicates that there has been a diversion The memorandum closed with We fee l that we have genera ll y comp l ied with these comments '' Enclosure 23 June 22 1977--Transcript of Commission meeting on the Task Force Action Plan On page 14 there is discussion of a recommendation regarding ensuring that all statements on missing or stolen nuclear materials reflect the uncertainties of material control and accounting technology r r Smith said he is in agreement Commissioner Gi1insky stated that he does not understand the recommendation Dr Mattson explained that the staff was making unqualified statements while Mr Strauss and Mr Eagle Task Force Document 102 told them that such bland statements were not encouraged as a matter of Corr mission policy but that evidently didn't get down to staff level Commissioner Kennedy said that the individua l making the statement could be convinced that nothing is missing but his statement is subject to the uncertainties of measurement Mr Smith and Mr Mattson agreed that this is what the whole thing is about Commissioner Gilinsky added that ''even when lUFs are zero it does not necessarily mean that nothing is stolen Chairman Rowden said there ought to be something that we can turn to that is a very carefully formed straightforward articulation of the basis for our position tn this regard t r Smith said I think we could probably dra 1 from th e_______ press release on the pr oposed MUF release data The transcript reflects Mr Gossick was present for this discussion Enclosure 24 11 July 21 1977--SECY paper 77-268C Release of Inventory Difference MUF Data to the Public forwarding NRC report on MUF for Commission approval for public release initialled by Gossick Noted release scheduled for August 4 1977 Page 2 of report says NRC has no evidence that any significant amount of strategic SNM has ever been stolen or diverted However because perfect measurement of nuclear mater i al is impossible there wil l always be uncertainty associated with accounting data Report also noted that it covers period from January 1 1968 Enclosure 25 _ June 28 1977--Memorandum to Mr Gossick from Mr Chilk Secretary · Office of the Secretary of the Commission advising that the Co mission · has concurred in the draft final environmental statement on transportation of nuclear materials Enclosure 26 The draft t hen approved contai ned ' the same language cf the final version issued in December 1977 that to · date there is no evidence to indicate any loss by theft or diversion to unauthorized use of significant quantities of special nuclear materials Enclosure 27 The Commissioners' concurrence is refl ed in a set of Commissioner Action I tem Response Sheets Enclosu r e 28 H is i nteresting 28 to note that at a Commiss i on meeting on the Conran Task Force reco mmendat i ons on June 22 1977 Chairman Rowden said '' One of the th i ngs that struck me when I read-- I think it was the proposed final version of the transportation statement there were statements in there fair l y categor i c about material be i ng stolen and I said I don't know what the right articulation is but that is not it go back and do Jt again and there ou ght to be somet hing that we can turn to that is very carefully framed straightforward articulation of the basis of our position in this regard Enclosure 29 _ - June 30 1977--Memorandum to Gossick from Chilk captioned Staff Guidance on Action Plan on Recommendations of the Task Force It states that the Comrni ss ion has noted the staff's comments on the Task Force report r' and believes that they are generally resptinsive to the Task Force's recomnendations As to item 3 The staff should continue efforts to 1 ensure that if a safeguards problem does occur NRC public statements j accurately describe the circumstances the remedial action taken and the resolution of the problem The statements should also clearly acknowledge inherent uncertainties such as measurements errors Moreover ' such problems should be presented in a perspective which makes clear that the NRC safeguards program comprises a balanced integrated set of safeguards measures including physical protection material control and material accounting Enclosure 30 --- --- ·--·· 1 j July 26 1977--Memorandum from Mr Pedersen Director Office of Pol icy Evaluation to Mr Gossick captioned Comrnissioner Comment on Release of · Inventory Difference Under Specific Comments the memorandum notes sentences on page 2 paragraph 1 incorrectly imply that material accounting together with stringent physical security and material control ' measures do show with absolute certainty that theft has not occurred Clarify The memorandum provides no corrments on the no evidence sentence Enclosure 31 August 1 1977--Memorandum from Carlton C Kammerer Director Office of Congressional Affairs to Commissioners Gilinsky and Kennedy on the July 29 1977 House Subcommittee on Energy and Environment hearing On Conran The memorandum summarizes generally what transpired at the hearing and states Mr Tsongas concluded t he question and answer segment of the hearing by asking Mr Gossick if material has been stolen at any nuclear facility When Mr Gossick responded with the statement that the NRC has no evidence that significant quantities of nuclear material has been stolen Mr Tsongas asked if the reverse were also true--i e that NRC has no evidence that they have not been stolen then stated that the Committee would follow up the incident at the Apollo Pennsylvania plant Enclosure 32 ·· · ··- · August 4 1977--Memorandum to Record from Mr Chi lk on Briefings on Release of MUF Data Tuesday August 2 1977 Commissioners' Conference Room '' It states Commissioners Gil ins ky and Kennedy were briefed by NMSS and IE on the public release of MUF data The Commissioners noted that among other things Commissioner Gilinsky indicated his preference 29 for a slight modification to the language of the release package subsequently a modHication v1as made to the press release Enclosure 33 August 5 1977-- Hold for Release August 5 1977 press release statement of Robert F Burnett Director Division of Safeguards on MUF report It notes report covers period since January 1968 and states To sum up NRC has no evidence of the theft of any significant amounts of strategic special nuclear materials during the period covered by this report Enclosure 34 I I I ' I I investigations - August 5 1977--NRC Press Release on MUF data states NRC of licensee inventory differences described in the report have disclosed no evidence that significant quantities of these materials have been stolen The release states that the report covers the period f rom 1968 to September 30 1976 At another point it states The NRC has no evidence that any significant amount of strategic SNM has ever been stolen or diverted Enclosure 35 August 5 1977--Memorandum of Joseph J Fouchard Acting Director Office of Public Affairs to Commissioners Gilinsky and Kennedy enclosing the transcript of the August 4 1977 press briefing on MUF Starbird said on page 8 Neither ERDA nor its predecessor the AEC found evidence leading them to conclude that significant amounts of strategic SNM were diverted from government plants or from licensed facilities He noted that in 1968 AEC reassigned safeguards from the General Manager to the independent Director of Regulatory Operations who reported directly to the Commission Giller's statement on page 14 is No evidence 11 of any theft attempt was reported from these surveys 11 Burnett said To sum up NRC has no evidence of theft of any significant amounts of strategic special nuclear materials during the period covered by this report However both NRC and ERDA recognize that material accounting offer s no absolute guarantees that theft or diversion will be detected At one point Giller said your statement assumes that there is a CIA report on NUMEC Jhether there is a CIA report what they did about it it's CIA business and should be discussed with them Cliff Smith said · ·I have not read any CIA report I am not aware that indeed there is such a report Giller also said regarding Conran's complaints that NRC has received the same set of information that we have received '' Starbird said •• there is no apparent evidence no definitive evidence on it in any material available to us of the actual theft of or diversion of material there's a GAO report recently made public and that repor states that we have no reason to question the AEC ' s conclusion relative' to diversion Giller said If there is a CIA report I have not seen it Starbird said My answer is the same as Ed's Enclosure 36 August 9 19ii--Memorandum from Mr Kammerer to Chairman Hendrie and Commissioners Gi1insky and Kennedy on the August 8 1977 House Subcommittee 1 · 30 on Energy and Power hearing I t states that Congressman Dingell cal l ed on both ERDA and NRC to detai 1 the ''basis for the strong assurances that there has never been a diversion or theft of significant quanti ti es of special nuclear materials It also notes that The problems associated with the NUMEC facility was another area of questions Enclosure 37 1 ' August 11 1977--Mr Kammerer memorandum to Chairman Hendrie and Commis­ sioners Gilinsky and Kennedy transmitting copy of transcript of August 8 1977 House Subcommittee on Energy and Power hearing on the NRC and ERDA MUF data reports Enclosure 38 August 12 1977--Letter to the General Accounting Office GAO from Congressman Dingell requesting an investigation to determine the extent and contents of the intelligence and safeguards information regarding a possible diversion from NUMEC and the extent to which this vital information was provided to ERDA and NRC for their use GAO was told to review all necessary files and reports including those of ERDA NRC CIA and FBI Enclosure 39 - f t Jgust 19 1977--L tter to ongressman Udall fr m r Gos ick transmitting responses to quest1ons subm1tted at Conran hear1ng-- uest1ons 14 and 15 asked what actions were taken by NRC based upon t e 1976 briefing Response said No immediate actions by NRC were deemed necessary followiog 1976 brief i ng--the briefing enabled some staff management officials to decide that no additional information regarding this matter was needed by their staffs to fulfull their responsibilities in assessing the adequacy of current safeguards and developing and implementing desirable upgrade NRC and ERDA further reviewed the Apollo situation and jointly submitted a classified report to the NSC on the evolu t·­ current status and future outlook for US nuclear safeguards The ' answer to Question 16 says Based on evidence available toN to date the re l evance of the inventory problems at Apollo in the mid-1960's is minor The answer to Question 12 says Over the years a number of large inventory differences have been investigated and in the course o these examinations no evi dence was found of a theft or diversion of a s i gnificant quantity of special nuclear material Enclosure 11 J l 11 4 _ '---­ August 26 1977 approximately --Handwritten notes on response to the -- --­ above Question 12 House Subcommittee on Energy and Environment question from Hugh Thompson to Bud Evans NMSS and Norm Haller IE saying The above sentences have been proposed as a replacement for the second sentence in the first paragraph answer to Question 12--Any comment signed Hugh The recommended sentences read Si nee the Regula tory staff assumed full responsibility for safeguarding SNM in the private sector in 1968 a number 31 of large inventory differences have occurred These have all been investigated and the investigations have not supported the hypotheses that diversion has taken place On the following page was a handwritten note Hugh--Gilinsky's problem dead issue now He wasn't aware the letter had already been signed LVG 8 26 Enclosure 41 August 25 1977--Mr Kammerer memorandum to Commissioners forwarding House Subcommittee on Energy and Environment July 29 1977 hearing transcript Enclosure 42 Cas November 4 1977--Memorandum from Mr Gossick to staff Smith Levine Volgenau Minogue Pedersen and Shapar captioned 11 0perating j Assumption Covering the Use of or Reliability Placed in Information from the Intelligence Community The memorandum noted that the assumption w s formulated in response to the Commission's memorandum dated June 30 I 1977 giving staff guidance on the Conran Task Force recommendations I It further noted that the assumption should be used by NRC staff in performing safeguards-related functions Under the caption Degree of Conservatism 11 the assumption state To date the U S Intelligence Community has not to our knowledge developed information of planned or actual thefts sabotage or diversions of SNM or sabotages of nuclear facili­ ties To our knowledge there have been no such serious acts perpetrated in this country and we know of no current or historic evidence that any organized or known groups presently intend to commit such acts of sabotage theft or diversion Enclosure 43 I II December 1977--''Final Environmental Statement on the Transportation of Radioactive Material By Air and Other Modes which states to date there is no evidence to indicate any loss by theft or diversion to j unauthorized use of significant quantities of special nuclear materials 1 Enclosure 44 ______ ______ ___ June 14 1977--Memorandum from Mr Chi l k to Mr Gossick and others captioned Staff Requirements Public Release of Inventory Discrepancy MUF Data June 3 1977 Commissioners' Conference Room The memorandum notes that the Commission requested that the release package be modified to provide expanded information on b The concept that even small MUFs may require investiqation because of inaccurate accountinq systems and c why pre-1968 dates were used Enc losure 45 32 January 26 1978--Contact ·lith FBI by Thomas J f1cTiernan Director OIA confirmed that the FBI investigation invol ing NUMEC-Apollo is stil l pending February 17 1978-- lemorandum to the · fi 1es from Peter Crane OGC captioned Supplemental Leads from Mr Conran covering notes of Sidney Moglewer NMSS on NUREG-0350 Enclosure 46 February 13 1978--Mr Gossick's responses to questions posed by Dr Henry Myers These questions were submitted to the investigators by Dr Myers in response to Chairman Hendrie's uggestion that he do so Enclosure 47 January 16 1978--Memorandum from Robert F Burnett Director Division of Safeguards to Thomas J McTiernan Director OIA providing an answer in writing to a question which Dr Henry Myers provided Enclosure 48 Statements on Post-Briefing Position on Theft or Diversion Interviews--Mr Anders said that the Commissioners had not articulated a specific policy on theft or diversion statements at the time of the briefing and it did not cause the Commissioners to formulate a specific policy Mr Builder said statements like those in Mr Gossick's testimony _ have been made a number of times and were not questioned by the Commission According to Mr Builder The Commission's policy did not change one iota Mr Page said if anything was ever said about a diversion occurring it did not filter down to the staff Peter Strauss recalled no guidance by the Corrrnissioners to staff concerning any Commission policy regarding public statements on Apollo NUMEC or no evidence of diversion other than what emanated from the Conran Task Force Report Mr Huberman recalled no hedge being placed on public statements Mr Eagle said that he could not say that the Commission ever sat down after the briefing and said Now we have to modify our statements Mr Rowden did not recall ever sitting down and formally adopting a policy on how the Commission should answer an inquiry on diversion i1r Chapman said that he and Mr Builder did discuss the briefing's relevance to their tasks He said their position was that if there had been a diversion based on what they heard 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 He said that they felt there was no need to follow the subject on their own Mr Chapman said that after the briefing there was no specific policy adopted on evidence of diversion Mr Smith said there never was any Commission policy on the use of the no evidence phrase Dr Bernard Snyder Office of Policy and Evaluation said he was shocked when he saw Mr Strauss' statement in Document 102 that the Commission after the briefings was avoiding no evidence statements because he had seen enough documents to indicate the statement was inaccurate Commissioner Kennedy said that the Commission after the briefing believed it was important not to make categorical statements so consequently NRC simply said that it had no evidence that diversions had occurred 11 33 The August 2 Briefing of the Commissioners on the UF Report--Mr Pedersen recalled that Commissioner Gilinsky asked whether it was too late to make a change in the report and was told that the draft had gone to the printers and that all Comm i ssioner comments had been taken into account Commissioner Gi 1insky then said that all of his comments had not been considered He mentioned the no evidence sentence Commissioner Gilinsky said tha·t we cannot make that kind of categorical statement Mr Pedersen said Mr Smith and Mr Go sick argued for its retention because it was used before and covered only the post 1968 period as well as having been coordinated with ERDA r r Pedersen said they also stated that any change involved stopping the presses and going back to ERDA Commissioner Gilinsky asked for a smaller meeting In the course of changing to the smaller meeting Mr Pedersen was told that the staff first heard of Mr Gi 1insky' s no evidence objection just before the meeting In the smaller meeting 1r Gilinsky argued for changing to ·llno conclusive evidence Mr Gflinsky took the view that nO conclusive evidencell more accurately reflected information which NRC had received and the CoiTI11ission should not say no evidence Pedersen said that Smith Burnett and Gossick argued again for the draft language for the same reasons Mr Pedersen remembers that the discussion ended with Mr Gilinsky replying that he might not concur in release of the report Mr Pedersen said that Mr Gilinsky did not however issue any clear instruction not ··­ to go forward with the MUF report '-· -- ----------­ 11 Fred Crane Test and Evaluation Branch Safeguards Division NMSS said that on July 27 1977 Paul Goldberg of Commissioner Gi1insky 1 s office told him that the Commissioner was out of town but might have changes for the MUF report He told Mr Goldberg it must go to the printers in a short time The next day he received another call from Goldberg who said Commissioner Gilinsky was returning tonight to make changes in the report He said NMSS decided to go forward with the report On August 1 he briefed Congressman Dingell 's staff on the report He said that at the Cornmissioners briefing on August 2 Commissioner Gilinsky asked regarding the report 11 Is this the last word The Commissioner was told the Commission comments had been reviewed Commissioner Gilinsky then called for a smaller meeting at which point Mr Crane departed Mr Crane said that in his briefing of the congressional staff he dis­ cussed the no evidence statement and said that it was misleading to say 11 no conclusive evidence 1 Mr Smith recalled that at the August 2 briefing Commissioner Gilinsk asked whether it was too late to make changes He said they pointed out the tight time schedule Commissioner Gilinsky indicated he had a problem with the no evidence statement Mr Smith said that when Mr Burnett pointed out that the report covered the time period from 1968 Commissioner Gilinsky seemed satisfied Mr Smith also said that it was obvious the Corrnni ss i oner was bothered 11 11 11 11 34 Commissioner Kennedy reca l led that at the August 2 br i efing Commissioner Gi l insky wanted to be certain that no categorical statements were included that no theft or diversion had ever occurred He said that everyone concluded that it should address the period from 1968 since that Jas when the regulatory staff NRC's predecessor got safe­ guards responsibility in the licensed sector Commissioner Kennedy said that Commissioner Gilinsky asked that this be discussed later Mr Fouchard Director Office of Public Affairs stated that Commissioner Gilinsky raised quest i ons about the breadth of the no evidence statement and was told the report already was printed The Commissioner then asked if it was too late to make a press release change Mr Fouchard said it was still in draft They thereupon changed the draft to state that the report covered only the period 1968 forward Commi 55 i oner Gi 1ins ky' s Oi scus s·i on With Comrni ss i oner Kennedy Mr Gas sick Mr Smith and Mr Burnett Irrmediately Following the August 2 Briefing on the Report--Commissioner Kennedy recalled that the Commissioners asked Gossick Smith and Burnett to go across the hall to Mr Gossick•s convenience offices after the briefing There a 3-5 minute session took place Commissioner Kennedy did not believe Mr Gossick was there the entire time It was his recollection that Mr Gossick was absent longer than he was present He said he was absolutely confident that Mr Gossick was not present for some significant portion of the meeting Commissioner Kennedy said that Corrrnissioner Gilinsky expressed concern about being categorical He and the Commissioner agreed the staff should know of the briefings which raised questions warranting caution on diversion Commissioner Kennedy said there was discussion of modifiers such as conclusive 11 direct and ••hard 11 but he said that NRC should not mislead in any direction on diversion Commissioner Kennedy stated that he thought Co missioner Gilinsky understood the point he was making but was concerned that the impression that no diversion had ever occurred not be conveyed This was the only guidance they gave on the use of the no evidence phrase 11 Mr Smith said that when the August 2 briefing was over Mr Gossick came over to him and Bob Burnett and said the Commissioners wanted to meet with them Thereupon Mr Gossick r r Smith and Mr Burnett joined Commissioners Kennedy and Gilinsky in an adjacent room Commi ssioner Gilinsky advised them about a CIA briefing and said that it did appear that suspicious things had gone on but there was nothing definite Commissioner Gilinsky pointed out that apparently the intel l igence community was divided over the question of whether or not there had been a diversion Mr Smith said Commissioner Gilinsky said there was circumstantial evidence and specifically mentioned the movements of Shapiro The Commissioner told 1r Smith and Burnett that they should be cautious on how they talk of lack of evidence and told them they hould have the CIA briefing Dr Smith sa i d that he and Burnett knew no more after the meeting than they knew before and that it was his personal feeling at that time that there still is no evidence of a theft or diversion 11 35 Mr Smith recalled that at one point in the meeting Lee Gossick was pulled out of the room 11 Mr Burnett said that after the August 2 briefing Lee Gossick informed him and Mr Smith that the Commissioners wished to ta l k to them They joined the Commissioners in a small outer office Commissioner Gilinsky told Burnett and Mr Smith that they should have the CIA briefing that he was aware that high officials in the intelligence community had different opinions on the possibility of diversion l r Burnett could not remember that Corrmissioner Gilinsky discussed the substance of the CIA briefing but he be l ieved the Commissioner was referring to Apollo Mr Burnett recalled that the information was not conclusive and there was no certainty on what had happened He said Commissioner Gilinsky advised hem that the CIA briefing was not conclusive Mr Burnett said that the Commissioner indicated there were 11 lots of things that couldn ' t be answered 11 It was Mr Burnett's impression that the main purpose of the meeting in the outer office was to arrange a CIA briefing for them and not to give guidance or caution It was Mr Burnett's recollection that Commissioner Gilinsky never stated the CIA had said diversions had occurred Mr Burnett recalled that other persons kept 11 Sticking their heads into the meeting room to coordinate matters with one or more of the parties present February 14 1978--Memorandum for Jerome Nelson ·aG C from Commissioner Kennedy providing documents from the files of his office re l ating to l r Gossick' s testimony before the House Subcommittees Subcommittee on Energy and Environment and Subcommittee on Energy and Power and infor­ mation concerning the questions and answers attached to SECY-77-268 Enclosure 49 '' 36 SUMMARY OF LEE V GOSSICK'S INTERVIEW Lee V Gossick advised that he became the Executive Director for Operat i ons when the NRC was formed in January 1975 and said that he first heard of the special briefings that were given the Commission in February 1976 about NUMEC Ape 11 o in the summer of 1976 and that eithe e n Chapman or John Davis told him that the briefings had taken place Gossick said he V was not aware of the particu1ars of the brief n s until h - read document 102 of the Conran Task Force Repo t · Gossick said that it was his understanding that there had been a MUF at NUMEC Apol l o and there was speculation or questions about whether it was a process loss or whether someone had made off with it His understanding was that the information was not conc l usive and no determination had been made as to what actually happened Gossick said that in July 1977 after the Commission lost a quorum he received a letter from Congressman Udall requesting that he testify on the open letter that Jim Conran had sent to the CoiTITlission The testimony was prepared and addressed the allegations made in the Conran letter plus the reason why Conran had been transferred within NRC but not the NUMEC Apollo matter Gossick stated that when he testified before the Udall committee that the matter of Apollo came up early Chairman Udall indicated that Apo1 1o bothered him and asked the four witnesses at the hearing what he could do to get to the bottom of that matter One of the witnesses suggested that the corrvnittee should go to the FBI the CIA the JCAE and the GAO as those agencies may have investi ated the matter and Gossick agreed with this suggestion I I 1 When Gossick in answer to a question by Congressman Tsongas about the f 1 theft of nuclear material replied to the effect that we have investi' gated every incident and concluded that • ve have no evidence that a significant amount of special nuclear material has been stolen'' he was 1 king about 1'Lt La LNRC b a d-in v e s tiC@_ted and what had been investiga_ted by the Regulatory or92-11ization ofA fjl'l E-ng event'S 'iJFlor 8 h f roe 1 when regulatory controls were established Gossic'k sai tnat ad 4'l 11 heard and seen no evidence --statements many times and kne•H that this £ was the view of the staff He was aware that the Commission had made or • I approved similar statemen and he understood that the statement reflected S t the Commission•s position ' the Commission he meant the CommissiCX - tha existed up to Julyl- -19i7 He tJas not speakin2 on behalf of the reL i- - ent1 re Federal government or other agenc1es such as RDA or CIA fa' __ I J JSY Gossi ck said tha t on August 1 1977 before the August 2 1977 briefing of the two sitting Commissioners on the release of r1UF data that he received a telephone ca1 1 from Commissioner Gilinsky on the status of 11 1 o --- j 11 ' fs 5'1 37 the report Gossick told Gilinsky that the report was at the printers and Gilinsky said that he wanted the word conclusive inserted before the word ••evidence on page 2 of the report and when Goss i ck suggested that it could be discussed at the August 2 briefing Gi li nsky apparently agreed When the matter came up at the August 2 briefing Gossick recalled 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 NRC report related only to the period· after 1968 With reference to the August 1 phone call from Commissioner Gilinsky Gossick did not think that the call might have been received before his testimony before the Udall committee but that even if it had he would have answered the ••no evidence question in essentially the same way Gossick did not discuss his not being invited to the 1976 briefings by the CIA and ERDA until after his testimony before the Udall committee Before he testified before the Udall committee he did discuss the matter of the briefings with Commissioner Kennedy and former Chairman Rowde n Gossick said that prior to his testimony before the Udall committee he talked to John Davis and Bryan Eagle about a statement in reference 102 of the Conran Task Force by Peter Strauss to the effect that after the 1976 briefings the no evidence statement 'las not made by the Commission without modific tion He said that the St auss statement did not sound right because the Commission had continued to make or approve the ·•no evidence'• statements after this Davis did not remember much of what had gone on and Eagle added nothing in terms of substance or facts Gossick also questioned Commissioner Kennedy prior to his testimony before the Udall committee about what he should say if a question relating to the 1976 briefings came up and 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 Conmission was awa·re of what the Executive Branch had to tell them Gossick said that when the August 2 briefing was over that he Smith and Burnett met with Commissioners Kennedy and Gilinsky Gossick did not remember what was said at that meeting but recalls that after it he asked Smith and Burnett what had been said Jhey told him that it was about the 1976 CIA briefing and that it Q_ealt with the suspicion that a diversion of materia l had taken plac '­ · Gossick said that in his testimony before the Dingell committee on the · ·· ' ----r on of theT r d 1on tl'lat it ' va h1 understandin that 1t s _Commis_sion's view that there was no evjdeoce o t eft or 38 He st ated that if he v 'ere to testify today he 'tlo ul d either lim it t he answer to the question to t he time covered in the MUF report or use the phrase no conclusive evidence or no hard evidence ·Jhen he said that the Commission had reaffirmed its posit i on §9ssick said he hag in mi d the MUF re a as ' a other s t s made or approved by the EQ'iiliiis - t In using the word ommiss10n ossic sa1 e a -rit' mind the late-Commission before it went out of existence in June 1977 ---· __ ____ -- ---···-·--·· --···· ' ' --·· - •w _ - - 39 SUMM ARY OF COMMISSIONER VICTOR GI LINSKY'S INT ERVIEW Co mmi ssioner Victor Gilinsky did not recall any formal consideration of the Apol l o 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 He attributed the briefings that the Corrunission received in February 1976 from the CIA and ERDA to al l egations made by James 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 The CIA briefer was a Mr Duckett Gilinsky did not recall that Duckett had a package of papers with him Duckett said in his briefing that the matter was very closely held at the CIA and that former Director Helms had informed the then President and was instructed not to imform other federal agencies that Mr President I 25Xl E O l3526 I '-- ' --- -_ a nd that there was no satisfactory explanation for the 1960's MUF Duckett told the group that he thought a diversion had taken place Commissioner Gilinsky said that although the material was identified as highly sensitive no specific instructions not to disseminate it were given h re was no guidance to the staff issued after the briefing and no forma#Y pol icy on statements of evidence or no evidence was formulated Except for the Mattson Task Force he did not know of anyone in the V Commission being briefed on the subject pr or to August 2 1977 After the 1976 briefing the Commission took the subject safeguards much more seriously particularly the insider· threat _j 11 --- Co rrmissioner Gilinsky said that he considers categorical no evi dence statements always to have been inappropriate even more so after the br i efing He uses the work evidence as meaning information or reason for belief bearing on an issue He said that he tried to keep NRC staff from making categorical statements but that he was inhibited by the need for nat connecting his cautions to his NUMEC concerns 11 As he recalled the ERDA briefing did not say much It simply described the AEC investigation and that the NUMEC MUF was apparently due to material accounting deficiencies He added that the government safeguarders in AEC ERDA and NRC had traditionally been too ready to explain away MUF's because inventory differences in themselves are not evidence of diversion but merely reflect accounting differences He pointed out that what this really meant was that the accounting system was not working properly 40 Commi ss ion er Gi l i nsky noted that dur i ng the period when the Comm issi on was preparing to release MUF inf6rmat i on it was his i mpress i on tha t there was pressure from ERDA to adhere to a party li ne that everything was all right with safeguards He said that between July 21-31 that he was in California He did not have a copy of the f i nal draft of the MUF report which had been circulated on July 21 after he left for Californ i a He said that he communicated with his assistant Paul Goldberg about the release After the no evidence statement was brought to his attention he instrutted Goldberg in talking with Mr Gossick's assistants about effecting a change of wording to be discreet and not to connect i t directly with NUMEC because of the sensitive background When the staff briefed Mr Kennedy and Mr Gilinsky on the upcom i ng MUF report three matters were covered 1 the MUF report for 1968 and beyond 2 the press release to accompany the MUF report and 3 the briefing statements to be used by the staff to brief the public Commissioner Gilinsky said that he was surprised to find out at the briefing that the report had already been printed and expressed his strong disapproval of the no evidence statement in the report He · suggested that at a minimum some modifier to evidence should be added - - and when he was questioned about this he responded Because there i s evidence At this point tommissioner Kennedy asked about the evidence ·-- ··· Mr Gilinsky said You mean tangible evidence 1r Kennedy said · · · Yes Mr Gilins ky said that was too narrow a definition of evic ience j Mr Gi l i ns ky wanted an ERRATUM issued to change the sentence at least to put the word conc l usive before evidence but he was also concerned that this wouJd high'l ight the matter unduly l r Gilinsky finally __________ agreed to the re 1ease of the report when everyone agreed that the no evidence statement 1 1as to be used as appl icable only to the post-1968 period that NRC briefers would publicly so interpret the statement that the press release and briefing statement he modif i ed accordingly and that quest i ons on the pre-1968 MUF's would be referred to ERDA Mr Gossick was present at the meeting and although he was opposed t o making changes he ultimately agreed with the point that the statement in question app li ed only to post-1968 Commiss i oner Gilinsky stated that in light of t r Smith's statement in the briefing that he knew of no evidence and the fact ·of his and Burnett's responsibilities for safeguards it was agreed between Mr Gilinsky and Mr Kennedy to talk to Smith and Burnett Gossick when informed of this asked to sit in No- v i-R c tt Kui b-r ' ' 'f 5 - ' - _ r3 VI M f - -f o - 1 i r 1 '71 -f l • The group moved across t he hall to an office Gili nsky to l d the m t hat there was information they should know which would exp l ain his own insistence en qualify i ng statements about lack of evidence of diversion 41 He to l d them that the Commission had been briefed by the CIA on Apollo iiU EC and information vas presented which related to the possibility of diversion at NUM EC and raised serious suspicions He told them that it was cir­ cumstant ial in nature and he was not entirely pursuaded by the CIA briefing but that the CIA at least in the person of the briefer was pursuaded by the evidence and had considered that diversion had occurred At the conclusion Mr Gossick said it was about what he had surmised Mr Burnett said something to the effect You've told me something because I have just come from the intelligence community and I know they do not reach such conclusions lightly During this session Mr Gilinsky had a vague recollection of r-1r Gossick going to the door at some point - that there was some interruption and that he waited for it to pass o before he resumed talking Commissioner Gil insky stated that either shortly before or shortly after August 2 1977 Gossick mentioned to him that he had made the unqualified no evidence statement before the Udall subcommittee and Gil insky told him that regardless of what he may have said previously NR C has to - 7 state this one correctly 11 11 Mr Gilinsky recalled discussing with Mr Gossick the questions and - answers that were sent to Congressman Uda 11 and remembers that Gos s i k · · ck s was reluctant to change them The response to Udall clearly dealt w1 th · ___s' l r' ' licensees which implied a post-1968 period but he wanted to state thi - exp l icit ly When he l earned that the letter had already been sent he ·· did not pu sue the matter ·C ommissioner Gilinsky said that he did not recall seeing the actual wording of the July 29 testimony before Congressman Uda l l until November and could not pinpoint any mention to Mr Gossick of reservations he had about NUMEC prior to Mr Gossick's testimony on July 29 1977 He said that about 1 week after the November 15 1977 letter from Congressmen Udall and Tsongas was received he 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 rep ly was unresponsive and that cited testimony before Congressman Dingell 's subcommittee mischaracterized a Commission position on evidence of diversion At the Chairman's suggestion he talked to Mr Gossick who replied that he did not think that he had but would consider this in his second draft After the second draft was circulated Mr Gossick came to his office and Mr Gilinsky asked him 1t- h ether he understood the lim itation on the no evidence stateme nt in the MUF report as referring to post-1968 Mr Gossick said that he did not think that the NRC MUF press relerse was so limited Mr Gi l insky asked Mr Gossick whether he reca l led the 42 meeting at which he Gilinsky said that the CIA thoug ht there had been a theft of the NU MEC material and Gossick replied that he remembered the meeting but had no recollection of the statement a nd that this was the first he had heard of it ·1r Gilinsky mentioned r·1r Burnett s reaction and Mr Goss i ck replied that if he had heard it that way he too would have reacted in a similar fashion 1 Commissioner Gilinsky stated that Mr Gossick S final draft was not much different than t he earlier ones and because of the apparent lack of agreement among Commissioners on how to respond to Congressmen Udall and Tsongas Chairman Hendrie decided to answer the Congressmen personally 1 Mr Gilinsky said that he did not agree with the Chairman S i nterpreta­ tion of events and told him that he intended to write Congressman Dingell to clear up the August 8 testimony After Chairman Hendrie wrote his letter Mr Gilinsky dispatched his on December 12 1977 Before sending it he showed it to Mr Gossick In conversation Mr Gil i nsky recalled Mr Gossick saying something to the effect that he did not know why he had said that before Congressman Oingell r i rtc Ui svJ --bJ 1 Commissioner Gilinsky said that he wrote to Congressman Dinge Tl and not Congressmen Uda ll and Tso ngas because he felt himself directly and personally involved in Mr Gossick S testimony before that subcommittee i n which Mr Gossick was purporting to represent a Commission view at a time when he was one of two sitting Commissioners He felt personally compelled to correct the record before the Oingell subcommittee and sent a copy of this letter to Congressman Udall He did not consider that he was in a position to answer the questions raised i n the letter from Congressmen Udall and Tsongas 1 ' 43 FINDINGS CONCLUSIO NS AND RECOMMENDATIONS Our f i ndings and recommendations are the end products of an extensive investigation· conducted within an understandably tight t ime frame The investigators and supporting staff who assisted in this matter were fully aware of the significance of this inquiry to the individuals concerned the cdngressional subcommittees and NRC _and made their best efforts within the deadline to render a full and accurate account of all relevant facts Our findings conclusions and recon- mendati-ons are submitted with the realization that they pass upon issues concerning · which reasonable people hold and will probably continue to hold differ­ ing views We also recognize that there are investigative leads and areas which might have been further examined had there been more time We can only state that the findings conclusions and recommendations represent our best and most forthright judgment under the circumstances - I hould be noted too that wh i le t mphasiz our 11 lesti ation we have no reas to believe that the· aro_se · o u l_ f- na J- ammos ity Finally we no e that neither the NRC nor he i a - any o C §ion as revtewed -thi-s-repor _ - - - -------------··--····· In stating these findings and recommendations we make no judgment on whether there was in fact a theft or diversion of SNM at NUMEC-Apollo e made every effort to develop from all participants a full account of the February 1976 briefing but despite our need-to-know and the significance of the matter involved we encountered some diffi culties as previously noted We commend Chairman Udall's publicly expressed intention to get to the bottom of the NUMEC-Apollo case and tJe hope that this report might be of some assistance in this regard A --- While past and present me Commissioners have expressed 1 individual concern ave the appropriateness of statements about no evidence of theft or diversion the Commission I took no action to establish -new policy or guidel ines regard- 1 ing such statements after the February 1976 br iefings Except for Commissioner Gilinsky's expression of concern in August of 197i about the no evidence statement in the NRc MUF report there was a pattern of Commission and staff actions from 1975 to December 1977 which reflect the position that there is no evidence of theft or diversion of SNM If the Commission believed that the CIA briefing warranted particular caution or circumspect i on in publ i c statements it failed t o i communicate that message In our view because the inherent 11 11 11 I f I 11 l _ j 44 ambiguity in he no evidence phrase could and apparently did create a misleading impression some such message shou l d have been sent 2 We believe that the prob l ems posed by Mr Gossick•s testimony should be viewed in the context of the evolving role of the Executive Director of Operations EDO The statute authorizes Directors of certain components to corrmunicate with or report directly to the Commission when they deem it necessary 1 Apparently this opt i on was utilized by Mr Chapman the head of the Office of Nuclear 1ateria1 Safety and Safeguards at the time of the CIA briefing who stated that he normally did not go through Mr Gossick in deal in g 'lith sensitive safeguards matters Mr Huberman the Director of the Office of Policy Evaluation at the time of the CIA briefing commented upon the cutting out of Mr Gossick from important matters He characterized th i s pract i ce as atrocious and said it had left Mr Gossick a Second-c1ass citizen We understand that in April of 1977 an attempt was mad to correct this practice hen a Commission quorum l apsed Mr Gossick took over the stewardship of the agency -- confronting heavy new responsibility and several upcoming congress i onal hearings --without having been regularly informed about rrany things 11 3 Much of r Gossick•s difficulties before the t· yo subcommittees was due ·to the degree of secrecy which was attached to the CIA briefing Only a few knew the facts and the few justi­ fiably or otherwise failed to communicate to Mr Gossick enough information of substance to permit him to independently make a rr eaningful assessment of the accuracy of the no evi dence statement This problem 'las compounded by the turnover among high-level off icials who attended the briefing adherence to secrecy should never be permitted to become so pervasive that it impedes effectives continu i ty in management 1 ' B Testimony on July 29 1977 before the House Subcorrrnittee on Energy and Environment '' 1 Mr Gossick•s testimony on NUMEC-Apollo on J u1y 29 1977 before the House Subcorrrn i ttee on Energy and Envi ronment is not entirely clear Parts of it disavow knowl dge of NUMEC-Ap6llo other parts such as the no evidence statement seem to suggest knowledge i oreover on page 25 speaking of i'IUMEC- pollo ' l Sec 209 b Energy Reorganization ct of 19711 45 r·lr Gossic k said '' t hi s matter predated the NRC But on page 37 in a statement which Mr Gossick acknowledged encompassed the NUMEC-A pollo matter he said e have in vestigate d every i ncident I can say we have no evidence that a significant amount of SNM has been stolen Later in an apparent reference to NUMEC-Apollo he said Ninety-four kilograms wou l d be a significant quantity We have no evidence that such an amount has been stolen Shortly thereafter when asked vhether the Apollo circumstances would cause a reasonab l e person to wonder he replied I am not familiar with the alleged circumstances about that • al l kinds of answers have been rumored or speculated I just can't speak to that 11 2 Whether no evidence accurately describe d NRC's knowle dge about NUMEC-Apollo -- as distinguished from Mr Gossick's knowledge -­ is debatable Some of those who hear d the CIA briefing agree with the term others who heard the same briefing would qua l ify it We believe that the phrase is so inherently ambiguous as t o have the potential to mislead lGY Jinder al1 the circumstances we belie v e-tl la t-J1r - Gossick - hav1 ng'G_1rcrserr·to- te-stirya5out t lill1EC-Apo11 o shou l d have beenrrioreexpa·n-s y_e -- ei tbgr by detail in9_ _Q _rnu c h_o f _the matter as he then knew or by clearly his_ t erms -----·- -defining ---- ··- - 4 In our view Mr Goss i c k believed and still be l ieves that there is no evidence of divers i on from · NUMEC-Apollo Whether he was right or wrong is a different issue Mr Gossick believed that his statement on evidence of theft or diversion did not differ from a number of simi lar statements made by the Commission and staff both before and after the February 1976 briefings As noted above the Collll1ission furnished no guidance on public statem nts on t heft or di version after the briefing ·c '-·--· 7 We found no information indicat i ng that Mr Gossic k 1 knew any deta i ls about the substance of the Februa ry 1976 l CIA briefing which he did not attend except for the con- el usion in document 102 of t he Conran Task Force report 46 that it raised serious questions and did not provide con­ clusive answers Also there are indications that at least one person who was at the briefing and perhaps more had advised Mr Gossick without furnishing substance t hat the briefings were inconclusive Mr Gossick was aware of Mr Strauss' caution in document 102 about qualifying no evidence statements but Mr Gossick discounted this because NRC has continued to make unqualified no evidence statements after the briefings Mr Gossick also was aware of media reports on NUMEC-Apollo and knew the CIA briefing had caused NRC to contact the Executive Branch But he discounted these events because he knew that the briefing had been inconclusive In the final analysis Mr Gossick chose to adhere to what he believed to be the NRC position on the matter while expressing his personal lack of knowledge regarding NUMEC-Apollo We find that in these circumstances Mr Gossick did not intentionally misrepresent facts 11 5 Because of emphasis on the NUMEC-Apollo matter the public record on other possible thefts or diversions of SNM remains unclear in light of Mr Conran's testimony in the July 29 1977 hearing that There are other instances of theft and material stolen than from the NUMEC-Apollo installation thefts or suspected thefts '' There have been other successful attempts to steal nuclear material - not aiways a large quantity not always bomb grade material There have been a number of instances in in which nuclear material was stolen In some instances it was recovered so we know it was stolen 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 of the information I have referred to is in the draft overview study report or I have identified it in some other 't ay for the subcommittee I would get very specific in a closed hearing C Testimony on August 8 1977 before the House Subcommittee on Energy and Power 1 While we have no information indicating that it was done with an intent to deceive or mislead the subcomnittee Mr Gossick I I 47 1 t 0n hi o s August 8 1977 test i estifie ncorrectly many before the House Subcommittee when he agreed that the Commission in - y- -- o sreleasing the 1UF reeort has also g1ven assurance tnat they y De l ieve no s1gnificant quantities have ever been diverted or Y stolen Referring to the same report Mr Gossick also testi­ ' fied incorrectly 1n stating ''The statement of the Corrrnission 'J t that they have no evidence that indicated any diversion had taken g · place was-made in full knowledge of the briefing that they had c received So while I personally was not briefed on that matter the Commission oid make and has reaffired that judgment that in their view there has been no evidence to indicate that any diversion has taken place 11 This testimony is incorrect because it failed to tq_Ke__ into · consideration the act tba£ the IJE report as earlier stated --- by Mr Gossick in his prepared testimony at the hearing covered only the period beg_io ning an Januacy-l- 1968 It was this 1968 liffination regarding no evidence of theft or diversion that was particularly significant to Commissioner Gilinsky in the August 2 1977 briefing about the MUF report in which r Gossick had participated and in the rewriting and approving dS1 1 1of the press release accompanying the 1UF report Mr Gossick 4 f J - lr'-in his interview admitted that in his August 8 no evidence ' Q -lo' testimony he shoul have 1imited his testi --- ence to 11 v 1- f 1968 or bJectives sue as conclusive or hard ' Because qc y 61 bv Mr recognizes that he should have used such 1imita­ 0 v - t l sL-tions we do not reach the question whether circumstances reS r- be including the August 2 briefing and the meeting 'tlhich followed ¥' ' t '' should have in any event led Mr Gossick to articulate those vJ·Climitations in his testimony ie agree that Mr Gossick should __t · have 1imited his testimony to the period covered by the 1UF · report or used adjectives such as 11 Conclusive or ''hard 1 a ' e 3 Mr Gossick's absence from the February 1976 briefings was not due to any lack of confidence in him 4 No CIA packet of information was offered to or refused by NRC at the February briefings The results of the intervie•tJs indicated genera11y that the briefer spoke informally from a folder or loose papers Recommendations On the basis of the information developed in this inquiry it is recommended that I • If further information about the possibility of theft or diversion at NUMEC-Apollo is relevant to NRC's continuing safeguards responsi­ bilities then the Corrrnission should arrange for briefings from the 48 FBI and the General AccouDting Office both of which are conducting current inquiries into the matter and from the NSC which agency briefed Congressmen Udall and Tsongas 2 In the future NRC should adhere to the position adopted in the August 1977 MUF report with respect to theft or diversion -- that is that NRC speaks only for 1968 and thereafter and further such statements should be qualified by language reflecting the inherent uncertainties in the material accounting system 3 The Commissi n should consider the propriety of continuing to use the term no evidence in view of our experience in this matter 4 NRC safeguards experts should identify clarify publicly and take whatever action may be appropriate with respect to the other alleged successful thefts or diversions mentioned by Mr Conran in his July 29 1977 testimony ''