[House Hearing, 106 Congress] [From the U.S. Government Publishing Office] WHISTLEBLOWERS AT DEPARTMENT OF ENERGY FACILITIES: IS THERE REALLY ``ZERO TOLERANCE'' FOR CONTRACTOR RETALIATION? ======================================================================= HEARING before the SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS of the COMMITTEE ON COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTH CONGRESS SECOND SESSION __________ MAY 23, 2000 __________ Serial No. 106-135 __________ Printed for the use of the Committee on Commerce U.S. GOVERNMENT PRINTING OFFICE 64-767 CC WASHINGTON : 2000 COMMITTEE ON COMMERCE TOM BLILEY, Virginia, Chairman W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts JOE BARTON, Texas RALPH M. HALL, Texas FRED UPTON, Michigan RICK BOUCHER, Virginia CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey Vice Chairman SHERROD BROWN, Ohio JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee CHRISTOPHER COX, California PETER DEUTSCH, Florida NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois STEVE LARGENT, Oklahoma ANNA G. ESHOO, California RICHARD BURR, North Carolina RON KLINK, Pennsylvania BRIAN P. BILBRAY, California BART STUPAK, Michigan ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York GREG GANSKE, Iowa TOM SAWYER, Ohio CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland TOM A. COBURN, Oklahoma GENE GREEN, Texas RICK LAZIO, New York KAREN McCARTHY, Missouri BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio JAMES E. ROGAN, California DIANA DeGETTE, Colorado JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin HEATHER WILSON, New Mexico BILL LUTHER, Minnesota JOHN B. SHADEGG, Arizona LOIS CAPPS, California CHARLES W. ``CHIP'' PICKERING, Mississippi VITO FOSSELLA, New York ROY BLUNT, Missouri ED BRYANT, Tennessee ROBERT L. EHRLICH, Jr., Maryland James E. Derderian, Chief of Staff James D. Barnette, General Counsel Reid P.F. Stuntz, Minority Staff Director and Chief Counsel ______ Subcommittee on Oversight and Investigations FRED UPTON, Michigan, Chairman JOE BARTON, Texas RON KLINK, Pennsylvania CHRISTOPHER COX, California HENRY A. WAXMAN, California RICHARD BURR, North Carolina BART STUPAK, Michigan Vice Chairman GENE GREEN, Texas BRIAN P. BILBRAY, California KAREN McCARTHY, Missouri ED WHITFIELD, Kentucky TED STRICKLAND, Ohio GREG GANSKE, Iowa DIANA DeGETTE, Colorado ROY BLUNT, Missouri JOHN D. DINGELL, Michigan, ED BRYANT, Tennessee (Ex Officio) TOM BLILEY, Virginia, (Ex Officio) (ii) C O N T E N T S __________ Page Testimony of: Carpenter, Thomas E., Director, Seattle Office, Government Accountability Project..................................... 11 Gutierrez, Joe, Assessor, Audits and Assessment Division, Los Alamos National Laboratory................................. 42 Hansen, Ronald D., President, Fluor Hanford, accompanied by: Jennifer Tolson Curtis, Managing General Counsel, Legal Services, Fluor Daniel Hanford, Inc.; and Richard W. Bliss, Attorney at Law............................................ 223 Sullivan, Mary Anne, General Counsel, accompanied by David Michaels, Assistant Secretary for Environment, Safety, and Health, U.S. Department of Energy.......................... 215 Van Robert L., Ness, Assistant Vice President for Laboratory Administration, University of California................... 219 Walli, Randall, West Richland................................ 38 Material submitted for the record by: Sullivan, Mary Anne, General Counsel, Department of Energy: Letter dated June 30, 2000, enclosing responses to questions 3, 4, 5, 7, and 8, for the record............ 331 Letter dated July 14, 2000, enclosing responses to questions 1 and 6, for the record...................... 334 Letter dated July 28, 2000, enclosing response to question 2 for the record.............................. 339 Letter dated August 18, 2000, enclosing response for the record................................................. 341 (iii) WHISTLEBLOWERS AT DEPARTMENT OF ENERGY FACILITIES: IS THERE REALLY ``ZERO TOLERANCE'' FOR CONTRACTOR RETALIATION? ---------- TUESDAY, MAY 23, 2000 House of Representatives, Committee on Commerce, Subcommittee on Oversight and Investigations, Washington, DC. The subcommittee met, pursuant to notice, at 9:30 a.m. in room 2322, Rayburn House Office Building, Hon. Richard Burr (vice chairman) presiding. Members present: Representatives Burr, Ganske, Bryant, Bliley (ex officio), Strickland, and DeGette. Staff present: Dwight Cates, majority investigator; Thomas DiLenge, majority counsel; Amy Davidge, legislative clerk; and Edith Holleman, minority counsel. Mr. Burr. This hearing of the Oversight and Investigations Subcommittee will come to order. The purpose of today's hearing is whistleblowers at the Department of Energy facilities: is there really zero tolerance for contractor retaliation? We have two panels. I know that more members will be in and out because of the schedules today. Let me take this opportunity to welcome all of our witnesses and to announce to them that we expect a series of votes in approximately 30 minutes. That series will probably last for about 45 minutes. It is a series of four to five votes. When that happens, we will take a recess for some period of time. It is my hope that Ms. DeGette and myself will have time to make opening statements and we will have an opportunity to hear the opening statements of at least the first panel before we recess. I would ask all of you to be patient with us as we work through those votes. The Chair would recognize himself for the purposes of an opening statement. Today the committee will review whistleblower retaliation at the Department of Energy facilities operated by its contractors. We will primarily focus on two issues: first, has the Department taken the necessary steps to ensure that contractor employees are encouraged to openly disclose violations of law, unsafe work conditions, and other examples of waste, fraud, and abuse without fear of retaliation, or has the Department's zero tolerance policy for reprisals against whistleblowers simply been a false promise that has died due to the vacuum of leadership? Second, is the Department's policy to reimburse its contractors' legal defense costs to fight a whistleblower an appropriate use of taxpayer funds, or has the Department all too willingly funded contractor defense costs in an effort to wear down whistleblowers, regardless of the merits of the whistleblower's claim? The committee has been studying these issues closely, and I am concerned that the Department has once again fallen into a very familiar cycle. This familiar cycle at DOE begins with a genuine understanding of a problem, then a commitment to reform, and then an announcement and lengthy press release from DOE headquarters describing how they will resolve the problem, but the Department always seems to forget to follow through on these reforms. In 1995, former Secretary Hazel O'Leary presented a package of whistleblower protection initiatives, including a zero tolerance policy for reprisals and a proposed limitation on the reimbursement of contractors' legal defense cost in certain cases, but the implementation of these reforms at DOE sites has been inconsistent due to the lack of a clear guidance from headquarters--again, an all-too-familiar problem at the Department of Energy. Soon after announcing these reforms, Secretary O'Leary realized that they were not being implemented. In March 1996, in a press release she quoted, ``These whistleblower initiatives have not been implemented to my satisfaction, and I want to get this effort back on track.'' Secretary O'Leary asked former Under Secretary Tom Grumbly to take the lead, but again implementation was derailed. In my mind, the real test of zero tolerance policy is whether contractor employees are now more willing to come forward with a legitimate workplace concern without the fear of retaliation from management and with confidence that DOE will protect them. Unfortunately, we will hear about the cases today of several whistleblowers who not only suffered acts of reprisal when they initially identified serious safety concerns, but who also, in some cases, were subject to ongoing and unrelenting retaliation by both DOE and its contractors throughout the complaint process. In all these cases, the Department of Labor investigated the complaints and issued findings in favor of these whistleblowers. Remarkably, the Department has responded by providing virtually no support to the whistleblowers, while providing generous taxpayer support for the contractors fighting these meritorious claims. First, the contractor and his lawyers have unlimited access to any information they need from the employee's files or from DOE files to build their case. The whistleblower, on the other hand, has to file a Freedom of Information Act request and wait months to see if DOE and the contractors will comply. In Mr. Lappa's case, the Department has withheld access to documents and prevented Mr. Lappa's attorney from interviewing DOE personnel, forcing Mr. Lappa to file a separate lawsuit just to gain access to this information. Earlier this month, the Federal judge in that case determined that the DOE ``Acted arbitrary and capriciously in denying the testimony of DOE employees'' sought by Mr. Lappa to prove his case and ordered DOE to make these individuals available at once. Second, the contractor has all the time and taxpayer-funded legal help it needs to slow down, wear down a whistleblower and the limited resources of a whistleblower. In Mr. Walli's case, Fluor Hanford knew it would lose its appeal of OSHA's initial ruling, but it appealed anyway and held out for months of costly litigation until they settled the night before the trial. Fluor Hanford has spent more than $200,000 in taxpayer funds over the past 3 years fighting Mr. Walli and his colleagues, and in Mr. Lappa's case the University of California has spent more than $300,000 in taxpayer funds for outside legal help. In both cases, the contractors likely will enjoy these free taxpayer-funded legal expenses even if they continue to lose their ongoing fights against these whistleblowers. Third, the relationship between DOE and its contractors is a close one. In many cases, the contractor receives full cooperation, strategic coordination from DOE to fight the whistleblowers. All of DOE's resources are available to the contractor, but DOE will not return the whistleblower's call. In Mr. Lappa's case, the Department has even entered into a joint defense privilege with the contractor to withhold information from Mr. Lappa. The judge in Mr. Lappa's suit found it incredulous that DOE would claim a joint defense privilege and agreed. How can DOE be both the independent enforcer of zero tolerance and also a willing codefendant? This pattern of behavior does not represent zero tolerance, but, unfortunately, this is what we should expect when there is poor leadership and follow-through by Secretary O'Leary, Secretary Pena, and most recently Secretary Richardson. If DOE decides to stop hiding behind its contractors and their contracts, perhaps the Department could establish a legitimate whistleblower protection policy that it is willing to consistently implement and enforce. This will require DOE to gain control of the contracts it writes and the contractors it hires, but it looks like we may have to wait for the next Secretary of Energy to provide this leadership. I will now yield to the ranking member for the purposes of an opening statement. Ms. DeGette. Thank you, Mr. Chairman, for holding this important hearing. Frankly, my statement echoes a number of the concerns that you expressed in your statement, as well. We in Congress and those in the executive branch have frequently praised the enormous courage and unmeasurable contributions of whistleblowers to building and maintaining policies and practices in the Federal Government that guarantee that all are treated fairly and that the public's health and safety is protected. We particularly note it--and I think it is particularly important--at our nuclear weapons and other nuclear sites, where the price of inadequate safety practices can be so costly. We do this even though we know that, once outside of the public's eye, whistleblowers are often punished for their actions with stagnant or destroyed careers, lost jobs, lost pay and benefits, unending legal proceedings, and uncompensated legal fees, continuing retaliation, and tremendous emotional isolation and stress. As someone who practiced employment law on behalf of workers for a number of years before I came to Congress, I know firsthand how this feels for people who are whistleblowers and who are suffering retaliation. Even a Congressional hearing--and, frankly, we have had many in this committee--can't change the personal toll that whistleblowing takes on people. Ernie Fitzgerald, a whistleblower from the Department of Defense, has labored in a closet for more than 15 years. Not very many people can do that. In 1988, when Congress authorized civil penalties under the Price Anderson Act for DOE contractors who committed serious safety violations, John Harrington, the Secretary of Energy, opposed all penalties. The contractors, according to Secretary Harrington, engage in special working relationships with the Department to operate Government-owned facilities that are vital to our national security. The Secretary went on to say, ``These relationships are founded on an understanding that the interests of the Department of its contractors are largely inseparable.'' Mr. Chairman, I will submit that the DOE has had this attitude under both republican and democratic administrations. Not too much, unfortunately, has changed since 1988. The Department of Energy continues to reimburse its contractors for the legal fees and other expenses involved in beating down the whistleblowers. Its lawyers strategizes, we have heard, with the contractors' lawyers and create these joint defense agreements. The DOE refuses to allow its employees to be deposed in whistleblower actions, and it authorizes punitive litigation against whistleblowers. The truth is--and this is true in government and also in private industry--no one in management wants a whistleblower around because they might tell the truth again and embarrass everybody. Frankly, it doesn't matter whether someone has worked successfully at a site for 1 or 20 years. As we heard, following on the 1988 law Secretary O'Leary announced this zero tolerance policy and it was affirmed, in turn, by both Secretary Pena and Secretary Richardson. Some changes were made. The Department set up the Office of Employee Concerns to attempt to informally resolve complaints. It announced a policy that it would not pay legal fees for contractors who received an adverse determination against a whistleblower action. But, as we will hear in testimony today, the Office of Employee Concerns of headquarters has only one full-time staffer and no policy for some very basic issues such as maintaining the confidentiality of hotline communications. The 708 process is so slow, inefficient, and faulty that whistleblowers have been forced to go to the Labor Department to get a full hearing. Labor, unlike DOE, allows discovery by the whistleblower, which gives them a real chance to prove their case. Labor, unlike DOE, has orders that are enforceable against the contractor and in court. And, as one whistleblower found out when he went to court to enforce his DOE order, DOE proceedings don't provide enforceable judgments. Moreover, the contractors have figured out how to settle the Labor cases just before receiving an adverse determination, with DOE paying all of the bills, and then they take new actions against the whistleblowers, either with retaliations or through different legal proceedings. DOE's counsel has overwhelmingly authorized these costs and cooperates with the contractors' lawyers in these situations. We heard a little bit about Hanford, where Fluor Daniel intervened in a dispute the pipefitters had with their union resulting from their layoff. DOE paid all those bills. Now, after continued retaliation, the pipefitters had to resort to the State courts for relief, and guess who is paying those bills--right again, the DOE, which has a zero tolerance policy against reprisal. In fact, the DOE claims a joint defense policy and is strategizing with Fluor. The whistleblowers must fight on against the resources not only of Fluor, but the Federal Government. We heard how much the whistleblowers have had to pay in legal fees. The taxpayers have spent over $500,000 in legal fees to keep the pipefitters off the jobs. David Lappa, another whistleblower, is fighting against the University of California in State court. Lappa, a nuclear engineer with 20 years experience, was harassed out of his job after he alleged safety violations. He, too, settled his case just before an adverse finding. The university, however, continued to retaliate. Mr. Lappa sued in State court. Who is paying the bills? Right again, the DOE. The Department said it doesn't need to investigate, it is just going to wait for Mr. Lappa to bleed himself dry financially while doing the public's work. Joe Gutierrez also ran up against the University of California when he revealed there were no radioactive monitoring records in a particular facility. Well, guess what? He got a negative performance rating, a reduced pay rate, and work taken away for that. Even after an adverse determination, the University still fights on. Mr. Gutierrez has amassed $50,000 in legal fees. Mr. Gutierrez apparently violated a U.C. code of ethical conduct which required him to ``exhibit loyalty in all matters pertaining to the affairs of the University of California and the Los Alamos National Laboratory,'' and ``refrain from entering into any activity which may be in conflict with the interests of the University of California and the Los Alamos National Laboratory.'' Now, $50,000 to an individual citizen is a lot of money to have to spend in legal fees, and especially if they have to wait to have any kind of recovery until an adverse determination. And what can happen when you have a large institutional entity, like a corporation or the Department of Energy, if they can just bleed these poor individuals dry? As far as we are concerned and can see, DOE takes no steps to protect these whistleblowers, and even most recently, in an April 28 letter for this committee, Mary Anne Sullivan said, ``I believe that the review of whether LLNL reprised against the individual and therefore any response by the DOE under its contract with U.S. has worked and should await the outcome of the proceeding.'' It just goes on and on. Mr. Chairman, I really am glad, as I said, we are having this hearing. I think it is an important hearing, and I am hoping it will be the first step, no matter who is in the Administration after the November elections, to making sure we protect these whistleblowers. I yield back. Mr. Burr. The gentlelady makes a good point. The gentlelady's time has expired. The Chair would recognize the chairman of the full committee, Chairman Bliley. Chairman Bliley. Thank you, Mr. Chairman, for holding this important hearing today on whistleblower retaliation at DOE facilities. Telling the truth about safety helps all Americans. When whistleblowers are afraid to come forward with safety concerns, the health and safety of all those within these facilities and all those who live nearby are jeopardized. In 1995, then Secretary O'Leary announced new protections for contractor employees who disclosed safety violations at DOE sites. Unfortunately, over the past 5 years these whistleblower protections have failed to take hold. It seems that no one at DOE is really interested in strengthening the Department's whistleblower protection policies. While Secretary Richardson again pledged a zero tolerance policy for reprisals against whistleblowers just last year, the reality is that the Department continues to show its willingness to work overtime to fight whistleblowers and to protect its contractors, even after a whistleblower's claim has been investigated and verified by the Department of labor. One of the most glaring failures has been limiting the taxpayer funding of contractors' legal costs in whistleblower cases. In 1995, 1998, and again in 1999 the Department proposed reforms so that the taxpayers would not continue to pay a contractor's legal bill when a whistleblower's claim has merit. However, the proposed reforms were never finalized. Why? According to a recent memo from DOE's Office of General Counsel, ``There is no one championing movement on this rule.'' The failure of leadership has resulted in a state of confusion, with inconsistent whistleblower protection policies and inconsistent contract provisions at the Department's different sites. Because whistleblower retaliation is just as serious at one DOE site as at another, there should be one policy on whistleblower protection that applies to all contracts and to all contractors. Without tough and clear contract provisions, contractors can continue to play games with both DOE and whistleblowers and avoid having to pay any real cost for retaliation. The whistleblower cases we will review today are not cases we have dug up from the past. These are active cases that demonstrate how far DOE and its contractors will go to fight whistleblowers who have identified significant safety issues. When serious safety issues were raised by David Lappa, Randy Walli, and Joe Gutierrez, the Department turned its back on them. Instead of protecting these whistleblowers and investigating their complaints, the Department sided with its contractors. When a contractor knows the Department is on its side, financially and otherwise, the contractor is encouraged to continue to retaliate against all whistleblowers. When employees find out that the DOE will work overtime to fight whistleblowers and protect its contractors, the message becomes clear: if you identify safety violations, you will be punished. The Department claims to have zero tolerance for retaliation against employees who blow the whistle on safety violations. Zero tolerance is supposed to mean that not a single case will be tolerated, that every instance will be punished. Five years have passed, and there have been numerous cases in which whistleblowers have been retaliated against by DOE's contractors, but where is the punishment, where is the accountability? After 5 years, the examples, if any, are few and far between. Secretary Richardson recently declared in another context that he wants to put an end to the cozy relationship between DOE and its contractors. Although we have heard that before, what better place to start than here, where nuclear safety is at issue? Thank you, Mr. Chairman. Mr. Burr. I thank the chairman. The gentleman's time has expired. The Chair would recognize Mr. Ganske for the purposes of an opening statement. Mr. Ganske. I thank you, Mr. Chairman. I would just echo the words of Chairman Bliley. I think it is very important that an oversight committee in Congress be able to get the information related to nuclear safety. Whistleblower protections are, I think, absolutely necessary. Senator Grassley, the senior Senator from my State, has been a strong proponent of whistleblower protection as it relates to the Department of Defense, and even strongly supports quit-type suits. I think it should be noted also that the House of Representatives passed a strong patient protection bill last October that had strong whistleblower protections in it, too. There are a lot of analogies between the type of whistleblower protection that we ought to have the people who are working in the nuclear industry in terms of health and safety and those who are working in the health industry, in terms of making sure that there are not abuses or risks. Those people need to be protected for stepping forward and drawing attention to potential problems. And so, Mr. Chairman, I thank you for having this hearing, and I look forward to the testimony. Mr. Burr. I thank the gentleman. We do have a series of votes, and for that reason I am going to wait until we get back to bring up the first panel and to swear them in. I will take this opportunity, as the Chair, to suggest that the problem is not cleared up even today. This subcommittee made requests of the Department of Energy for the last several weeks about other cases that we are not here to hear about from individuals, and it was specifically requests as it related to whether, in fact, the Department of Energy had reimbursed Kaiser Hill at Rocky Flats for legal fees, and we were assured that they had not and that the Department had not signed off on that issue, specifically with the Graff whistleblower case at Rocky Flats, only to be notified by the Department of Energy yesterday at 4:30 that they had discovered in the billings last week that all along they had been billed by Kaiser Hill for the legal costs of that fight. This brings a number of questions to this committee that we will explore today. One that is obvious is who is reading the invoices submitted by the contractors to DOE that were paid and how closely are they checking them if, in fact, invoices were paid with legal fees, yet those who are responsible to account for any legal fees paid out to contractors didn't know that the Department of Energy was, in fact, reimbursing Kaiser Hill. I am sure that we will get into this in greater depth on both sides of the aisle. At this time, I would ask unanimous consent to enter both the original response from the Department of Energy, as well as yesterday's response clarifying their participation into the record. Without objection, so ordered. [The information referred to follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Burr. This hearing will be adjourned until 11:15. [Brief recess.] Mr. Burr. The subcommittee will come back to order. At this time, the Chair would call up our first panel: Mr. Tom Carpenter, director, Seattle office, Government Accountability Project; Mr. Joe Gutierrez, assessor, audits and assessment division, Los Alamos National Laboratory; and Mr. Randy Walli from West Richland, Washington. Gentlemen, welcome. Let me first turn to Mr. Strickland for the purposes of an opening statement, if he has one. Mr. Strickland. Mr. Chairman, I have an opening statement I would like to submit for the record. Mr. Burr. Without objection, all statements of all members will be a part of the record. Gentlemen, it is the history of this committee to take testimony under oath. Do any of you have a problem with that? [No response.] Mr. Burr. It is also incumbent on the Chair to advise each of you that, under the rules of the House and rules of the committee, you are entitled to be advised by counsel. Do any of you choose to have counsel sworn in to advise you during this hearing? [No response.] Mr. Burr. None. Okay. I would ask all of you to stand up. Raise your right hand. Do you swear to tell the truth, the whole truth, and nothing but the truth, so help you God? [All witnesses respond in the affirmative.] Mr. Burr. Please be seated. Mr. Carpenter, we would recognize you for the purposes of an opening statement. TESTIMONY OF THOMAS E. CARPENTER, DIRECTOR, SEATTLE OFFICE, GOVERNMENT ACCOUNTABILITY PROJECT; RANDALL WALLI, WEST RICHLAND; AND JOE GUTIERREZ, ASSESSOR, AUDITS AND ASSESSMENT DIVISION, LOS ALAMOS NATIONAL LABORATORY Mr. Carpenter. Thank you, Congressman, and thank you for inviting my testimony here today about whether there really is a zero tolerance for reprisal policy against whistleblowers at Department of Energy nuclear facilities. I am an attorney and the director of the Seattle office of the Government Accountability Project, and I am primarily responsible for overseeing the activities of the Department of Energy nuclear weapons production facilities, a position I have held since 1985. Our organization provides nonprofit legal counseling and support for whistleblowers who suffer reprisal for exposing health, safety, and environmental abuses. With over 20 years of experience in successfully representing literally thousands of government and corporate employees who have challenged unsafe, fraudulent, and environmentally unsound practices, our organization has developed a unique and effective strategy for helping whistleblowers. Based in Washington, DC, GAP opened an office in Seattle in the summer of 1992 to effectively respond to the growing number of cases and issues at the Hanford nuclear site. We also represent or have represented employees at various Department of Energy sites nationally, including at Los Alamos in New Mexico, Knolls Atomic Power Lab in New York, Hanford in Washington, Oak Ridge National Laboratory in Tennessee, Savannah River site in North Carolina, Rocky Flats plant in Colorado, the Fernald site in Ohio, Idaho National Engineering Labs, Lawrence Livermore National Laboratories in California, and Pantex in Texas. The ability of employees to raise concerns is fundamental to safe and efficient operations, especially at nuclear facilities. The Department of Energy has for a decade recognized the important concept of protecting whistleblowers, but has not taken the necessary steps to change the culture to make a policy shift more than window dressing. In fact, in total contradiction of its oft-cited zero tolerance for reprisal policy, the Department has assisted its contractors in every possible way to fight whistleblowers, even when they prevail in court. After years of a zero tolerance policy, can the Department point to a single instance where the policy has actually been enforced? The Department has effectively dismantled safety oversight and regulation of its contractors in many ways, but has removed qualified safety professionals from the management chain for its most dangerous operations. The problems surfaced by whistleblowers are troubling symptoms of the lack of safety enforcement and in absence of safety professionals who are empowered in the management chain to heed the concern of whistleblowers. Since 1993, the Department of Energy has enacted a policy of zero tolerance for reprisal against whistleblowers. This started with Secretary Hazel O'Leary, who announced a set of whistleblower initiatives in 1994 and 1995 to address what she called a ``miserable, miserable history'' of reprisal within her agency. Her reforms were echoed and embraced by Secretaries Federico Pena and the current Secretary, Bill Richardson. Among the reforms pledged to by the Department was a commitment to curtail the practice of reimbursing contractor litigation expenses associated with whistleblower cases. Many contracts within the Energy Department were subsequently modified to explicitly disallow the payment of contractor costs associated with litigation in cases where an adverse determination was found against the contractor. Where costs were advanced by the Department of Energy and the contractor lost, the DOE required the repayment of any advanced fees. The Department has consistently ignored its own policies on zero tolerance. The agency continues to reimburse contractor costs, even when the whistleblower prevails. Earlier we talked about the case of David Lappa. Mr. Lappa is a nuclear engineer. He was formerly employed at the Lawrence Livermore National Lab. His case is a prime example of how the DOE has failed in its policies. Mr. Lappa refused to engage in a coverup of nuclear criticality safety violations as part of an Investigation Committee. The University of California removed his name from a final report, of which he was a part. Mr. Lappa was then removed from his position and subjected to harassment and intimidation. He filed a complaint with the U.S. Department of Labor, which investigates claims of whistleblower reprisals, and after an extensive investigation the Labor Department found that management had illegally retaliated against Mr. Lappa an ordered the lab to pay damages and to cease its harassment campaign. U.C. did not appeal this finding. It became the final agency order of the Labor Department. Yet, the Department of Energy refused to recognize this finding and reimbursed all of the University's expenses associated with Mr. Lappa's complaints. When the University continued to harass Mr. Lappa and denied him meaningful work, Mr. Lappa filed a lawsuit in State court. The Department continues to side with the University and has actively sought to block access to information and witnesses to Mr. Lappa, while at the same time paying the University's legal bills. It took a Federal judge to order the DOE to produce documents and to make DOE officials available for deposition. Meanwhile, Mr. Lappa, who has appealed for help repeatedly from the Department of Energy in his case, has been insulted and rebuffed by U.C. management and DOE. DOE managers have told him that they didn't put credence in the Department of Labor's findings and have attempted to create a joint defense relationship with the contractor in order to hide documents and witnesses from Mr. Lappa. After suffering repeated harassment and mental anguish, Mr. Lappa finally resigned due to the emotional toll and refusal of the university to provide him meaningful work. It is cases like this that have led to many employees within the Department to characterize the DOE's true whistleblower policy as ``zero tolerance for whistleblowers.'' For an agency with such critical safety and health responsibilities, effective financial management controls are also essential. The U.S. GAO describes DOE's contractor oversight as an undocumented policy of blind faith in contractors' performance, which it calls its ``least interference policy.'' This is no more apparent than at the DOE's Hanford site in Washington State. Over the past several years, David Carba, a former accountant for the Westinghouse Hanford Company, reported that Westinghouse was deliberately inflating cost, adding up to over $100 million, in violation of the Federal accounting system. These findings were subsequently verified in September, 1997, by the Defense Contracting Audit Agency. The agency also found that Fluor Daniel Hanford Company, which succeeded Westinghouse, not only continued these fraudulent practices, but refused to correct them. Shortly after the Hanford audit was completed, an internal request called a ``form 2000'' was filed to initiate a fraud investigation, but, for reasons that have not been provided, it was not acted upon. Despite these actions, the DOE has done little, if anything, to correct these and has closed ranks against Mr. Carba, who filed a False Claims Act case against the contractors. Given DOE's consistent blind faith in its contractors, we are concerned that DOE may be paying contractor legal fees to defense a False Claims Act case for the same contractors that were found to have violated the Federal acquisition cost accounting standards now subject to litigation. The Department of Energy could act differently. It need look no further than the Nuclear Regulatory Commission for help. The NRC, which is responsible for the commercial nuclear industry, has enacted policies that promote a safety-conscious work environment at commercial nuclear operations. Under NRC rules, licensees and contractors are routinely subjected to civil penalties and even license suspension and revocation for chilled reporting atmospheres. The DOE would be well advised to follow the NRC example if it is serious about changing its 50-year culture of reprisal. Protecting employees who speak about illegality, threats to public health and safety, mismanagement, and fraud deserve protection and encouragement. Congress can do its part by beefing up protection for these workers, which remain inadequate, and by passing legislation that resolves a conflict of interest situation at DOE by affording external regulation of these facilities to OSHA and the NRC. Thank you for inviting my testimony today. [The prepared statement of Thomas E. Carpenter follows:] Prepared Statement of Tom Carpenter, Director, Seattle Office, Government Accountability Project introduction and background Thank you for inviting my testimony today about whether there is really ``zero tolerance for reprisal'' against whistleblowers at Department of Energy nuclear facilities. My name is Tom Carpenter, and I am an attorney and the Director of the Seattle Office of the Government Accountability Project. I am primarily responsible for overseeing the activities of Department of Energy nuclear weapons production facilities, a position I have held since 1985. Our organization provides non-profit legal counseling and support for whistleblowers who suffer reprisal for exposing health, safety, and environmental abuses. We also work to ensure that whistleblower concerns are addressed through by appropriate federal agencies, public exposure in the media, Congress, and the courts. With over twenty years of experience in successfully representing over thousands of government and corporate employees who have challenged unsafe, fraudulent, and environmentally unsound practices, GAP has developed a unique and effective strategy combining first-hand investigation of whistleblower concerns with broad public education, grassroots coalition-building, congressional action, media pressure, and selective litigation. Moreover, our efforts have brought together diverse groups to press for reforms, such as industry, workers, local unions, grassroots organizations and citizens who face toxic exposures from nearby facilities. Based in Washington, D.C., GAP opened an office in Seattle in the summer of 1992 to effectively respond to the growing number of cases and issues at the Hanford Nuclear Site. GAP also represents or has represented employees at various Department of Energy sites nationally, including: Los Alamos National Laboratory in New Mexico; Knolls Atomic Power Laboratory in New York; Hanford Nuclear Reservation in Washington; Oak Ridge National Laboratory in Tennessee; Savannah River Site in South Carolina; Rocky Flats Plant in Colorado; Fernald Site in Ohio; Mound Laboratories in Ohio; Idaho National Engineering Laboratories in Idaho; Lawrence Livermore National Laboratories in California; and Pantex Nuclear Weapons Assembly and Disassembly Plant in Texas. In addition to providing legal representation to whistleblower employees, the Government Accountability Project also advances policy reform within the Department of Energy. For instance, in 1990, we filed the Rulemaking Petition that led to the establishment of the DOE's whistleblower protection program under 10 C.F.R. Part 708, and we have commented extensively on similar reforms. We have also affected policy reforms through Congress, where we helped draft and advocate for changes to the Nuclear Whistleblower Protection Act, to provide whistleblower protection to DOE contractor employees in 1992. At Hanford, the Department's most contaminated and dangerous site, I have represented dozens of employees who have blown the whistle on illegalities, threats to public health and safety, mismanagement and environmental abuses since 1987. I serve on the Hanford Advisory Board, which advises the Department of Energy, the Washington State Department of Ecology, and the Environmental Protection Agency on matters related to environmental cleanup and remediation and health and safety issues at Hanford. I was also instrumental in the formation and continued operation of the Hanford Joint Council for Resolving Employee Concerns, a highly successful and unique mediation board that resolves cases of whistleblower allegations and personnel actions at a low level, in a manner that protects the employee and the interests of the company and the government and in a full, final and fair resolution. GAP's Work with DOE Employees and Contractor Employees It has been repeatedly demonstrated that employees who have raised environmental, safety and health concerns (whistleblowers) at DOE nuclear weapons production facilities have subsequently experienced significant workplace reprisal that has impacted their careers, financial stability, and personal and familial relationships. Frequently, they are courageous people of integrity who have observed and documented health-threatening safety and environmental hazards, and refused to remain silent despite adverse consequences. Society should protect and applaud whistleblowers, who, in looking beyond narrow self- interest uphold a professional code of ethics, save lives and preserve not only public health and safety but also vital fiscal resources. The historical policy of retaliation against whistleblowers throughout the DOE complex has been well-documented. Reprisals have come in the form of poor performance appraisals, terminations, psychiatric evaluations, physical threats, harassment, creation of hostile working environments, transfers, layoffs, security clearance abuses and salary cuts. On November 6, 1993, Energy Secretary Hazel O'Leary, at my invitation, attended a national conference entitled ``Protecting Integrity and Ethics.'' The conference, held in Washington, D.C., was co-sponsored by the Government Accountability Project and Public Employees for Environmental Responsibility. Secretary O'Leary met privately with a number of DOE whistleblowers, and then gave the keynote address of the conference. She stated, And finally, not just to make whistleblowing acceptable, but to celebrate it. To have, not just me and you, but every manager and every employer in the DOE to understand that whistleblowing is simply being proactive. That's what it is. It's being proactive. It's saying, `for God's sake this is a problem let's handle it.' * * * * * * * * Here's my commitment. I've talked a lot in my life about zero tolerance for discrimination. How about zero tolerance for reprisals, doesn't that get everybody under the same tent? Now that's my piece and I own that . . . What we are going to do here is agree that that's the goal and we're going to stick on it . . . I commit today, zero tolerance, zero tolerance for reprisal. --Secretary Hazel O'Leary, November 6, 1993, Holiday Inn, Bethesda, Maryland, at the Protecting Integrity and Ethics Conference. Secretary O'Leary's commitments were an invitation to the public and the workforce to encourage the Department to examine and improve its own policies and practices in regards to whistleblower protection. Secretary O'Leary's commitments translated into a series of reforms which she adopted as ``Whistleblower Initiatives.'' On August 9, 1995, the DOE issued a press release announcing the adoption of a series of reforms to protect whistleblowers. The reforms were meant to carry out Secretary O'Leary's policy of ``zero tolerance for reprisal.'' The DOE announcement stated: The reforms adopted by O'Leary include measures to ensure that whistleblowers are not retaliated against by misuse of security clearance procedures; a limit on payment of contractor litigation costs in whistleblower cases, and establishment of an enhanced ``employee concerns'' program which would have the effect of strengthening DOE policies and programs to ensure that employee concerns are given full attention by DOE and DOE contractor managers and supervisors. The whistleblower reforms, and particularly the ``zero tolerance for reprisal'' policy was recognized by Secretary Federico Pena, and subsequently Secretary Bill Richardson, who issued a ``Safety and Accountability Policy Memorandum'' to all employees on March 10, 1999. The policy stated, There must be open communication between management and employees and a zero tolerance policy for reprisals against those who raise safety concerns. Free and open expression of employee concerns is essential to safe and efficient accomplishment of the Department's missions. However, the DOE's commitment to these reforms has flagged. Secretary O'Leary, in sworn testimony in a whistleblower case involving a DOE Resident Inspector in 1998, observed, ``. . . [W]hat I was after was what I then knew and know even more deeply after having spent four years in the Department of Energy, as the longest Secretary of Energy in this history of the government, has been a practice of repeated and long-term reprisal that visits the employee in the place that he or she is most vulnerable and that is, first of all, in the questioning of the employee's competence to do his or her work, and once that happens to any employee, that individual is almost dead in terms of promotion or having people even attend what is being said.'' doe's policy on reimbursing contractor litigation fees in whistleblower cases As part of the new era of employee protection ushered in by Secretary O'Leary, the Department took action by requiring the insertion of language in new contracts made by the Department specifically limiting the payment of contractor litigation fees in whistleblower cases. Subsequently, the Department issued a new regulation under its procurement rules, called DEAR (Department of Energy Acquisition Regulations) regulations, mandating the insertion of clauses relating to whistleblower cases against contractors in site contracts throughout the complex. Pursuant to 48 C.F.R. Part 970.2274-1(d) of the DEAR regulations, a contractor may not submit for payment by the Department costs incurred in connection with a final decision in Departmental whistleblower findings under 10 C.F.R. Part 708. Additionally, 48 C.F.R. Part 970 (h) states that contractors ``shall not be reimbursed if such liabilities were caused by contractor managerial personnel's (1) Willful misconduct, (2) Lack of good faith, or (3) Failure to exercise prudent business judgment,'' including in actions brought by employees. The DEAR regulations, however, only mention proceedings under 10 C.F.R. Part 708 proceedings, and are silent on other actions brought in other fora, such as a Labor Department or state court proceeding. Additionally, the Whistleblower Initiatives signed by Secretary O'Leary after an opportunity for public comment, clearly stated the Department's policy, and many site contracts were modified throughout the complex reflecting these new policies. However, a review of the various site contracts reveals little consistency in this area. For instance, the Hanford Site and the Savannah River Site contracts state that DOE may reimburse contractor litigation costs in connection with whistleblower cases before an adverse determination, which is defined as an initial determination under 10 C.F.R. Part 708, a finding by an Administrative Law Judge in the Labor Department, or a state or federal court ruling. If an adverse determination against a contractor is filed, the DOE will not reimburse costs or expenses associated with the case, and in fact requires the repayment of any such costs that were ``fronted'' by the Department for the litigation. The Hanford Contract states: C. Litigation costs and settlement costs incurred in connection with the defense of, or a settlement of, an employee action are allowable if incurred by the Contractor before any adverse determination of the employee's claim, if approved as just and reasonable by the Contracting Officer and otherwise allowable under the contract. Costs incurred in pursuit of mediation or other forms of alternative dispute resolution are allowable, if approved as just and reasonable by the Contracting Officer, and no adverse determination of the employee's claim has occurred. Additionally, the Contracting Officer may, in appropriate circumstances, reimburse the Contractor for litigation costs and costs of judgements [sic] and settlements which, in aggregate, do not exceed any prior settlement offer approved by the Contracting Officer and rejected by the employee. D. Except as provided in Paragraphs C, E and F of this clause, any other cost associated with an employee action (including litigation costs connected with, a judgement [sic] resulting from, or settlement subsequent to the employee action) are not allowable unless the Contractor receives a judgement or final determination favorable to the Contractor. In such event, reasonable litigation costs incurred by the Contractor are allowable, and the Contractor may submit a request for reimbursement for all such costs incurred subsequent to the adverse determination. Project Hanford Management Contract, Contract No. DE-AC06-96RL13200, Section H-40. The contract at the Rocky Flats site in Colorado is more open to interpretation. There, the contract provides, in whistleblower or labor actions, that ``if the dispute was occasioned by contractor actions which are unreasonable or were found by the agency or board ruling on the dispute to be caused by unlawful, negligent or other malicious conduct, the costs would be unallowable.'' The DOE has apparently ignored the policy enumerated in the Whistleblower Initiatives at Rocky Flats and in the DEAR regulations, which prescribe the insertion of a clause in all DOE contracts that prohibit reimbursement of claims reimbursed ``if such liabilities were caused by contractor managerial personnel's (1) Willful misconduct, (2) Lack of good faith, or (3) Failure to exercise prudent business judgment.'' The contract covering Lawrence Livermore National Laboratory and the Los Alamos National Laboratory is the most convoluted. While disallowing costs associated with whistleblower claims when there is an adverse determination, there are a few loopholes that still allow reimbursement. For instance, where the DOE ``approved the Contractor's request to proceed with defense of the action rather than entering into a settlement with the employee or accepting an adverse determination or other interim decision prior to a final decision,'' the costs are allowable. The Livermore contract provides for the ability of the contractor, subsequent to an adverse determination, to obtain ``conditional payment from contract funds upon provision of adequate security, or other adequate assurance, and agreement by the Contractor to repay all litigation costs if they are subsequently determined to be unallowable.'' In our experience, the current DOE policy on reimbursement of contractor litigation fees, however well-intentioned, serves to actually frustrate the Department's stated policy of ``zero tolerance for reprisal'' against whistleblowers. As an initial matter, taxpayers should not be subsidizing illegal retaliatory activities by contractors. Subsidizing a contractor's legal costs in these circumstances sends the wrong message to the work force as well as the contractor that DOE will support the contractor, until proven guilty. This policy actually promotes lengthy and expensive legal battles since the contractor can always count on a well-funded defense campaign that will financially and personally wear down the worker, who typically does not have access to large law firms or a big war chest. Typically, legal fights in administrative fora, such as that provided by the Department of Energy's 10 C.F.R. Part 708, can take years to ever reach a Hearing Officer. A final decision in Part 708 cases can literally take as long as ten years, accounting for the contractor's right to file an appeal of an agency action pursuant to the Administrative Procedures Act--a six year statute of limitations.1 --------------------------------------------------------------------------- \1\ In one case, involving a whistleblower named Larry Cornett, the DOE took over four years to issue a final decision in his favor, at which time the contractor, who was no longer employed by DOE, refused to pay. A district court likewise declined to order the agency to honor its commitment under 10 C.F.R. Part 708 to enforce the judgment on the contractor. Negative publicity against the agency and imminent Congressional action eventually forced the agency to itself pay Mr. Cornett's damages on behalf of the contractor. In the opinion of the author, the actions of DOE did not serve as much of a deterrent against contractor malfeasance. --------------------------------------------------------------------------- Even if the contractor realizes that it is culpable, it may decide to wait to settle the claim until the last possible minute before an adverse decision is rendered that might prevent the contractor from recovering its legal fees from the DOE. The advantage to the contractor using this strategy is multi-faceted:the complainant is not at work during the period of the pendency of the legal action, and the contractor may reason that it has successfully removed a ``troublemaker'' who was raising inconvenient safety or health issues; the absence of the complainant during the years of litigation sends a powerful message to the rest of the work force that those who raise concerns will face termination and a lengthy period of costly and stressful litigation--it is a deterrent to other employees to not raise health and safety issues; in many instances, the contractor may actually profit from the expenditure of litigation funds by adding on a ``cost-plus'' adder on expenditures (the more you spend, the more you make); In short, for the DOE to indemnify the contractor's legal fees in some cases actually facilitates and encourages reprisals and lengthy legal battles by subsidizing contractor malfeasance. This alone flies in the face of the Departmental policy on ``zero tolerance for reprisal'' against whistleblowers. There is another troubling aspect to the Department's current policy in that there are several cases where the policy has been ignored or subverted. In several recent high-profile cases, the contractor was adjudged guilty of reprisals, but still had its fees reimbursed by the DOE. This includes the case of David Lappa versus the University of California, where the Secretary of Labor issued a Final Agency Decision that found that the Lawrence Livermore National Laboratory contractor (UC) had violated the law by engaging in retaliation and discrimination against Mr. Lappa. Mr. Lappa, a twenty-year veteran of the Lab and an accredited nuclear engineer raised concerns about nuclear criticality violations. Ironically, DOE investigated Mr. Lappa's substantive concerns and issued a civil finding under the Price Anderson Act against the University of California for deliberate violations of nuclear safety protocols. Yet inexplicably, DOE has paid, and continues to pay, all expenses related to Mr. Lappa's claims against the University of California. The best that can be said about the DOE's attitude towards Mr. Lappa's case is that it is ``gaming'' the system to come up with the result that it wants--to reimburse the contractor no matter what. The Government Accountability Project therefore recommends that the DOE enact clear, comprehensive and effective rules that prohibit the payment of litigation fees in whistleblower cases in any circumstance other than when a contractor can clearly show a written directive from a DOE official ordering the behavior complained of by the whistleblower. need for a safety conscious work environment at doe It is fundamental to the mission of the Department of Energy that it protect the public safety and health in the regulation and control of its nuclear weapons production facilities. It is also fundamental to DOE's safety programs that DOE and DOE contractor employees be encouraged to voice environmental, safety and health (ES&H) concerns without experiencing reprisal. Past and recent revelations of long- standing ES&H deficiencies in DOE operations, along with a continuing stream of DOE and DOE contractor employees who allege reprisal for voicing concerns, indicate that DOE has not achieved what the commercial nuclear industry calls a ``safety-conscious work environment'' which is fundamental to DOE reliably accomplishing its mission. A safetyconscious work environment is defined as a work environment in which employees are encouraged to raise concerns and where such concerns are promptly reviewed, given the proper priority based on their potential safety significance, and appropriately resolved with timely feedback to employees. Attributes of a safetyconscious work environment include (1) a management attitude that promotes employee involvement and confidence in raising and resolving concerns; (2) a clearly communicated management policy that safety has the utmost priority, overriding, if necessary, the demands of production and project schedules; (3) a strong, independent quality assurance organization and program; (4) a training program that encourages a positive attitude toward safety; and (5) a safety ethic at all levels that is characterized by an inherently questioning attitude, attention to detail, prevention of complacency, a commitment to excellence, and personal accountability in safety matters. Indicators of lack of a ``safety-conscious work environment'' at DOE include: The deficient safety programs and situations described in the current annual Defense Nuclear Facilities Safety Board (DNFSB) report to Congress (as well as previous annual DNFSB reports). Wide-spread environmental, safety and health (ES&H) deficiencies at sites such as Hanford and Pantex, which represent a direct threat to the safety of the work force and the public. The numerous well documented cases of whistleblower reprisal for voicing ES&H concerns in DOE, as documented in independent studies such as by the National Academy of Public Administration (NAPA). Deficient implementation of employee concern programs by the responsible managers, as detailed in the audit by the NIC Corporation performed for headquarters DOE, which analyzed employee concerns programs at the Hanford Site. (See, Employee Concerns Program, Hanford Site Assessment Performed for the U.S. Department of Energy, Richland Operations Office, National Inspection & Consultants, Inc. (NIC), November 1996.) The many deficient safety and management conditions that led to the tank explosion at Hanford in May 1997, which unnecessarily exposed over a dozen Hanford workers to toxic and hazardous vapors and conditions, and led to the imposition of a $110,000 fine from the State of Washington. The DOE Environment and Health (EH) review of the radiation protection program in Transportation Safeguards Division (TSD) identified a complete breakdown in the employee concern program, noting that management threatened to fire employees who persisted in raising concerns about the lack of radiation protection provided in their jobs as nuclear materials couriers. The recent highly publicized allegations about deficiencies in DOE's safeguards and security program at Rocky Flats, and the recent Labor Department ruling that a high-ranking officer in the guard force was illegally retaliated against by management for voicing concerns. Tens of tons of plutonium 239 and highly enriched uranium remain in unsafe or questionable storage containers around the country. Unresolved problems abound--unstable nuclear solutions, residues, metals, and powders in deteriorating containers and tanks; nuclear weapon parts in ill-suited containers; a wide variety of fire and explosion risks; degraded equipment and safety systems; and deteriorating storage facilities--some dating back to World War II. Skilled personnel who can safely fix these problems are disappearing. The July 28, 1998 death of a worker severe injuries suffered by others when a high-pressure carbon dioxide fire suppression system unexpectedly went off in a facility at the department's Idaho National Engineering and Environmental Laboratory. Within seconds 13 workers found themselves struggling to escape a lethal atmosphere under zero visibility. The rescue team was put at great risk as they entered the building without breathing equipment. An investigation found that the accident could have been avoided. Several similar accidents at the laboratory, including two very serious ones, had been ignored. The investigators concluded that management ``had not been aggressive or effective in monitoring contractor performance . . . or in ensuring that corrective actions and improvements in hazard and work controls are completed or consistently applied.'' The recently publicized dissenting safety report by Frank Rowsome, a senior Energy Department safety expert, who wrote, ``The case of DOE's nuclear weapons program has been made particularly acute by some vicious circles . . . Those of us who help to cover up deficiencies are rewarded, and those that bring them to the fore . . . are at best ignored, resented, or dismissed as troublemakers.'' In his February dissent, Rowsome said that Energy Department officials heavily censored safety reports while engaging in wholesale removal of safety experts from the nuclear weapons management chain. ``No one in our management hierarchy is a safety professional today,'' he said. Many safety professionals ``are disaffected and are seeking to leave.'' In calling for the shutdown of Pantex, Rowsome also wrote, ``We have seen nuclear weapons accidentally destroyed but not exploded at Pantex in recent years. We might see an accident in which the chemical high explosive is detonated or burned while still in a nuclear weapon. That would destroy one bay or cell at Pantex, and kill the technicians . . . and possibly a few outside.'' Rowsome believes that an accidental nuclear detonation, even if it is a fizzle, would have much more serious consequences: It ``would destroy Zone 12 at Pantex, and kill the several hundred workers there, and induce the chemical explosive to go off in a few dozen other nuclear weapons, but probably not detonate them. It would produce radioactive fallout not unlike those resulting from one of our above ground nuclear weapon tests in the 1940s and 1950s.'' Higher-yield nuclear explosions are substantially less likely, he says, but they could create more radioactive fallout because they might ``vaporize the many plutonium pits'' stored at the site. Employees like Frank Rowsome are far and few between in attempting to warn the bureaucracy about the potentially fatal consequences of ignoring safety. Such actions suppress, or ``chill'' the reporting of concerns because employees understandably become fearful of suffering reprisal when they report a concern. The systematic dismantlement of safety systems within the DOE, and the suppression of the safety professionals like Mr. Rowsome will likely only lead to future preventable nuclear catastrophes. Even the DOE facilities with the most sophisticated programs and the most experience with employee concerns issues have been found to be in failure mode. The Hanford Site, which boasts a DOE employee concerns office with four staff members, the support of upper management, and a large array of contractor employee concerns mechanisms, was audited by the National Inspections and Consultants, Inc. at the request of DOE Headquarters in late 1996. NIC's report, entitled, ``Employee Concerns Program Hanford Site Assessment,'' concluded that senior management did not support the program and that ``the lack of support by management has not promoted a work environment in which workers were comfortable in identifying concerns to their supervision.'' Additionally, NIC reported-- there was a lack of training for program investigators; employee concerns staffing was inadequate; the program did not address concerns in a timely manner; employees who used the program were not informed of their case status; concerns filed by employees were turned over to the organization or manager that the employee had accused for investigation in a third of all cases reviewed; evidence was not available or maintained in the case file supporting disposition of the concern; all of the program users interviewed stated that their confidentiality was not maintained. A recent review by my office indicated that many of these problems persist. In over a third of the cases that come to the Hanford employee concerns program, the employee was simply referred back to the contractor, a practice that was harshly criticized by the NIC team. In many other cases, the Concerns Program simply decided that it did not have jurisdiction over the concern, and closed the concern without further action. More disturbingly, the Employee Concerns office at Hanford has divulged the identity of employees against their wishes, subjecting them to reprisals, and in one case even sent a warning letter to a contractor that an employee was seeking outside legal help and was likely to file a lawsuit against the contractor. This dismal assessment of the DOE's flagship site for handling employee concerns underscores the urgency of the need for immediate and deliberate reform. But appeals to the DOE bureaucracy have gone unheeded. zero tolerance for whistleblowers For nearly seven years, the Department of Energy, through the commitment of three Energy Secretaries, has pledged to institute a policy of ``zero tolerance for reprisal'' against those who raise employee concerns. Although the Department has made some efforts towards reform, the de facto policy of the Department, as embodied by the behavior of its personnel and its actions, remains a zero tolerance policy for whistleblowers. Several recent cases illustrate this point. i. david lappa David A. Lappa v. Regents of the University of California, et. al. Alameda County (CA) Superior Court No. V-015785-4 Background A square-mile complex of buildings southeast of suburban Livermore, California, Lawrence Livermore National Laboratory (LLNL) is one of three Department of Energy labs that conducts nuclear weapons research. It is run by the University of California on a long-term contract with DOE. But unlike nuclear power plants and other private, commercial users of radioactive material, which are monitored by the Nuclear Regulatory Commission, the lab's compliance with environmental and safety regulations is monitored by the Department of Energy itself. And while it doesn't take whistleblower David Lappa to realize that self- monitoring is a dangerous prescription in work involving deadly materials, both his disclosures and his subsequent treatment reveal exactly how wrong the continuing experiment can go. In the summer of 1997, manufacturing workers at LLNL's plutonium facility were preparing wafers of plutonium to be shipped to Nevada for underground nuclear weapons testing. Officials ordered an emergency work stoppage, however, when they discovered that some employees were placing excessive amounts of plutonium in enclosed handling platforms called glove boxes. Such actions placed the metal in danger of criticality, or uncontrolled nuclear reaction, in which the silvery substance explodes and/or releases lethal amounts of radiation into the surrounding environment. Following the incident, DOE officials appointed an Incident Analysis Committee to investigate what happened, and in July 1997, David Lappa, a nuclear engineer with 20 years service to the Lab, was appointed to the committee. To his shock, Lappa found that the statements of workers involved in the incident suggested that some of the safety violations were intentional. Lappa was convinced that the committee's report should explore the veracity of the allegations and publish its findings. The final report, however, contained no mention of possible deliberate violations. Lappa refused to sign it. Alan Copeland, the head of the IA-Committee, deleted the ``willful violations'' thesis from the report while Lappa was on vacation. When Lappa refused to sign the redacted report, Copeland threatened, ``I'll be damned if there's going to be a blank signature line on the cover of this thing.'' Copeland then whited out Lappa's name from the report and U.C. In pretrial discovery in whistleblower litigation filed by. Lappa against U.C. in state court, U.C. has now taken the position that Lappa was not really on the IA-Committee and did not have to sign the report, rather than admitting that Lappa was removed for dissenting. Later, during pretrial discovery in the state case, Lappa discovered that Ron Hoard, Lappa's immediate supervisor, who had him transferred after this dissent, sent two performance evaluations on Lappa--one positive version for Lappa and for general consumption, the other a negative secret evaluation that was critical of Lappa his activities on the IA-Committee. The secret evaluation contained the following direction: ``FYI--kindly destroy this after reading it.'' The secret evaluation explained that Lappa's reports of safety violations has made U.C. customers ``somewhat reluctant to continue offering [Lappa] assignments.'' The negative evaluation was circulated to managers. Lappa filed a Department of Labor administrative complaint, on which he prevailed. It is worth noting that throughout that investigation U.C. withheld production of the secret evaluation. Lappa found that job assignments were withdrawn from him and anticipated pay raises were withheld. Supervisors moved him into his new ``office''--an isolated, windowless storage closet. After he contacted national DOE officials and the DOE Office of Inspector General's office about the situation at LLNL, supervisors told him that he should not have done so and that he was ``unemployable.'' Seeing no action taken on his concerns and the work environment around him becoming ``unbearably hostile,'' Lappa filed a discrimination complaint with the Department of Labor in the spring of 1998. OSHA investigators found that the ``weight of evidence'' indicated that the lab was retaliating against Lappa, and ordered the lab to protect Lappa from further reprisal, eliminate negative references in his personnel file during the time in question, and provide him $32,500 for counseling and legal fees. While LLNL did not appeal the ruling, it also refused to address the hostile working environment against Lappa, and harassment continued. Continuing retaliation forced Lappa to sue LLNL in state court to protect himself and obtain remedy for the damage LLNL did to his career. During the pending suit, Lappa was forced by stress and exhaustion to quit his job at the lab on February 4, 2000. Quoted in the San Francisco Chronicle, Lappa said: ``It's pretty clear I have no future at the laboratory.'' Current Status Lappa's suit against the University of California, which manages LLNL, is currently in discovery. GAP attorneys are to uncover evidence demonstrating the scope of the unlawful retaliation against him after he raised safety concerns at the lab. The case is slated for trial in September 2000. DOE's Involvement in the Case Despite its avowed policy of ``zero tolerance for retaliation'' against whistleblowers, and despite DOE spokeswoman Susan Houghton's statement that ``perceptions may not be realities,'' DOE has conspired with the University of California in David Lappa's case to punish him for seeking a full investigation (per the Incident Analysis Committee's mandate) into evidence suggesting that dangerous safety breaches at LLNL involving plutonium--one of the deadliest substances known to humankind--were willful. The evidence is both plentiful and damning. DOE officials-- Have continually resisted Lappa's requests for permission to interview DOE's investigators and public documents necessary to his civil action against the University of California without offering justification. Lappa was forced to sue the agency under the Freedom of Information Act (FOIA) in U.S. District Court. His recent victory in that case, after several months of litigation, vindicated his assertions. Judge Maria-Elena James found the DOE's refusal to allow its investigators to be interviewed ``arbitrary and capricious,'' and, citing Department of Energy Secretary Bill Richardson's own memorandum calling for ``open communication between management and employees'' and ``zero tolerance for reprisals,'' criticized DOE for its demonstrated failure to live up to its word. As of this document's preparation, DOE is continuing despite the District Court decision to prevent GAP's attorneys from conducting depositions with its officials that were slated to occur on Wednesday, May 24, 2000, in D.C. Waived $153,000 in fines that the University would otherwise have had to pay the government for safety violations discovered by the DOE during its own investigation of the plutonium handling incident. Pledged to reimburse the University's legal fees in the lawsuit unless Lappa wins (in which case the university would have to pay its own legal fees and any judgment Lappa is awarded). Neglected to investigate Lappa's original disclosures to DOE officials and the DOE Office of the Inspector General. Should this Committee, or the public, care about the fate of David Lappa? The Government Accountability Project argues that employees like David Lappa are the public's first line of defense on nuclear safety. Without conscientious employees who are willing to challenge and expose safety and health threats, the public would often only discover these violations after it is too late--as happened in Tokaimura, Japan. On September 30, 1999, the worst nuclear accident in Japanese history occurred just 87 miles northeast of Tokyo after workers loaded 35 pounds of uranium into a mixing tank, nearly eight times the proper amount. The material reached criticality, and a self-sustaining nuclear reaction continued for more than 18 hours. Forty-nine workers were exposed to high levels of radiation; 160 people were evacuated, and 313,000 people were warned to stay indoors. Twelve hours after the accident began, radiation levels at one mile away from the plant measured 15,000 times greater than normal. Two workers have died as a result of the accident. In the aftermath of the nuclear criticality accident at the Tokaimura uranium plant in Japan, can a similar tragedy take place in the United States? After the accident, eyes are now turned to comparable commercial uranium processing plants in the United States, licensed by the Nuclear Regulatory Commission (NRC). Certainly, these facilities need to be carefully reviewed to ensure that a similar problem isn't lurking. However, what is not fully appreciated is that if such an accident were to take place, it would most likely be at a government-owned facility operated by the U.S. Department of Energy (DOE). Nearly all U.S. criticality accidents have occurred at federal facilities. DOE is responsible for one of the world's largest inventories of concentrated fissile materials. Hundreds of tons of these materials--principally plutonium and highly-enriched uranium produced for nuclear weapons and nuclear energy research--are stored at DOE sites across the nation. Nuclear criticalities are among the most serious accidents in the nuclear industry. A criticality event occurs when a relatively small amount of fissile material (as little as pound of plutonium or highly- enriched uranium) is concentrated and starts a nuclear chain reaction. This small nuclear explosion has a characteristic blue flash, produces levels of radiation in the form of neutrons and gamma rays lethal to nearby workers, and may release significant amounts of radioactive fission products to the environment. Controls to avoid a nuclear criticality accident in storage and processing facilities are of paramount importance. Unfortunately, these essential safety controls are diminishing at DOE sites, as tens of tons of fissile materials remain in unsafe or questionable storage modes. Since 1994, several official reviews have identified significant complex-wide environmental, safety and health vulnerabilities associated with DOE's storage of fissile materials-- many of which remain to be corrected. Dozens of problems were identified at sites such as the Hanford nuclear reservation in Washington, the Rocky Flats facility in Colorado, the Oak Ridge nuclear complex in Tennessee, the Los Alamos National Laboratory in New Mexico, the Idaho National Environmental and Engineering Laboratory, the Pantex weapons facility in Texas, the Savannah River Site in South Carolina, and Lawrence Livermore National Laboratory in California. They include unstable nuclear solutions, residues, metals and powders in deteriorating containers and tanks, nuclear weapons parts in ill-suited containers, fire and explosion risks, degraded equipment and safety systems, deteriorating storage facilities (some that date back to World War II), and a growing number of inadequately trained workers. Last year, the General Accounting Office found that: ``Leakage from corroded containers or inadvertent accumulations . . . pose health and safety hazards, especially in aging, poorly maintained, or obsolete facilities.'' The Y-12 nuclear weapons plant at the DOE's Oak Ridge, Tennessee site is a case in point. It holds the largest quantity of highly enriched uranium (HEU) of any DOE site, over 189 metric tons, or the rough equivalent of 9,450 Hiroshima-size atomic bombs. Sixty percent of the drums containing HEU at the Y-12 plant have never been opened. In fact, some HEU materials at Y-12 have been in their present storage form for almost 40 years. A very large amount is stored in decades-old wooden buildings that are vulnerable to fires and provide little protection if an accident occurs. According to a December 1996 DOE safety review, ``At some of the Y- 12 buildings, the available information is insufficient to determine if HEU is stored within nuclear criticality safety limits.'' The review concluded, ``The lack of controls necessary to ensure that systems are being kept fully operable jeopardizes barriers relied on to separate HEU from workers, the public and the environment.'' A subsequent follow-up in September 1998 by DOE's Office of Environment, Safety and Health found that ``. . . criticality risks remain unchanged'' for one of Y-12's most hazardous buildings. Of additional concern, skilled and qualified personnel needed to ensure safe storage and processing of fissile materials in the DOE are rapidly disappearing. ``Some sites are in danger of losing this expertise through retirement and have not implemented provisions to maintain the necessary knowledge base,'' says a September, 1998 DOE oversight report. This problem is made worse by contractor and DOE management blunders. At DOE's Hanford site, some 3.5 metric tons of unstable plutonium are stored at the Plutonium Finishing Plant (PFP), which was closed in 1996 because of criticality safety problems. The following year, in order to grab a financial incentive for cutting costs, the site-wide contractor, Fluor-Daniel Hanford Inc. (FDH), greatly weakened the site's nuclear safety function by moving key criticality experts off their payroll. As a result, DOE found in 1998 that ``the FDH Nuclear Safety organization does not have sufficient resources to staff an effective NCS [nuclear criticality safety] program.'' To date, this problem has yet to be fixed. Despite the fact that almost all of these problems were identified years ago, lengthy delays in fixing a large backlog of serious nuclear material safety vulnerabilities plague the system. As a result, the GAO finds that ``DOE is unlikely to meet its commitment date for stabilizing and storing plutonium . . .'' and concludes that ``These delays result in continued risk to workers' health and safety and have increased costs to DOE and taxpayers and likely will continue to do so.'' A major reason why these delays persist is that DOE has yet to establish an adequate tracking and safety enforcement system to ensure that these problems identified years ago are being corrected. In response to the Tokaimura accident, DOE recently launched a ``Nuclear Criticality Safety Self-Improvement Initiative.'' True to form, the DOE is, once again, investigating itself using an ``honor system'' without any enforcement follow up. What is needed is a truly independent assessment of the DOE's nuclear material risks. Finally DOE and the Congress must take immediate steps to hold people accountable for failing to address these long-standing and unacceptable safety problems. Otherwise, the growing risk of yet another ``blue flash'' awaits. The public's first line of defense against nuclear accidents is the workforce in our nuclear facilities. Employees must be free to speak out when there are violations; they should not be forced to choose between preserving safety and preserving their jobs. Tokaimura happened, in part, because workers willfully violated safety rules at the direction of their managers. A similar situation may have happened at Lawrence Livermore National Laboratory, and the American public has the right to know the truth about such events. The public owes employees like David Lappa its full support, and the laws protecting their careers should be enforced. Secretary Bill Richardson would do well to honor his commitment to a safety-conscious work environment that protects whistleblowers from reprisal, and encourage disclosures of wrongdoing, instead of assisting the University of California in its legal case with Mr. Lappa. ii. hanford pipefitters Brundridge et. al. v. Flour Daniel, Inc. et. al. Benton County (WA) Superior Court No. 99-2-01250-7 Background The Hanford Site has a long history of controversy regarding the issue of employee freedom to raise concerns either internally or externally without fear of reprisal. An open, non-retaliatory employment climate is critical to safety and environmental protection at Hanford. Recent developments have contributed to the perception that the Hanford employment climate chills safety disclosures by employees. As the U.S. government's first largescale plutonium production site, Hanford occupies 560 square miles of steppe, sand and sagebrush in southeastern Washington. Over the decades, about 50 tons of plutonium were produced there and as a result, some 440 billion gallons of contaminated liquids were poured into the ground--enough to create a lake the size of Manhattan, 80 feet deep. There are 177 large underground high-level radioactive waste tanks--the many which are 40 to 50 years old and are in significant states of deterioration and have leaked over 1 million gallons. Also, Hanford has some 1500 soil dumping sites containing very large amounts of radioactive and hazardous wastes, including as much at least a half ton of plutonium. Since the last free running 51-mile stretch of the Columbia River runs through the site, contamination from Hanford of this largest fresh water artery of the Pacific Northwest is not a trivial matter. In 1989, the Department entered into a tri-party environmental compliance agreement with the State of Washington and the U.S. EPA. The agreement sets forth several milestones that focus on waste stabilization, storage and removal actions. The two highest risk-based priorities in the agreement are: Stabilization and removal of some 3,000 metric tons of deteriorating spent nuclear fuel from leaking the K-reactor basins in near the Columbia River; and The conversion of wastes in Hanford's high-level radioactive waste tanks into glass for disposal--known as the Tank Waste Remediation System (TWRS). Other compliance milestones of importance include: Removal of as much liquid as possible from single-shell high- level waste tanks to reduce environmental contamination risks from aging and leaking tanks. Removal of soil that pose contamination risks to the Columbia River. Deactivation and interim entombment of 8 closed reactors near the Columbia River. Characterization and stabilization/removal of contaminants in soil disposal sites, mostly in the center of the site. In addition to environmental compliance requirements Hanford has a large amount of unstable nuclear materials, which pose significant safety risks. Some 4,000 metric tons of plutonium are stored in unstable forms, in questionable storage modes at a deteriorating facility, known as the Plutonium Finishing Plant. In the 200-West area of the Department of Energy's Hanford Nuclear Site, located along the Columbia River in eastern Washington, pipefitters and other workers labor amidst fields of massive storage tanks holding millions of gallons of the most radioactive waste in the custody of the U.S. government. Several years after whistleblower disclosures forced DOE to concede that dozens of the tanks were leaching contaminants in the porous soil beneath, DOE is undertaking emergency measures to transfer waste from the oldest, most decayed tanks into newer ones. And, while inherently dangerous, such transfers become even more hazardous when safety rules are dismissed. In May 1997, seven pipefitters--Terry Holbrook, Clyde Killen, Pete Nicacio, Shane O'Leary, Dan Phillips, James Stull, and Randy Walli-- discovered management's disregard for basic safety firsthand. Employed by Fluor Daniel Northwest (FDNW), the principal contractor at Hanford, the seven were instructed to work under conditions both dangerous and illegal. Their concerns included: Supervisor's instructions, despite the pipefitters' protests, to install underrated valves in pipes which were destined to carry high-level nuclear waste liquids from old tanks into new storage facilities Working in an area where another subcontractor's crew was performing high-intensity x-ray testing of pipe welds, despite regulations requiring that areas undergoing such testing be evacuated and guarded to prevent unnecessary radiation exposure Working in ``confined space'' areas, which are enclosed areas where air supply is limited, and workers are susceptible to gases that can displace oxygen and cause rapid suffocation, without proper adherence to federal safety regulations Workers were especially concerned about the installation of the underrated valves, because the failure of the pipes could result not only in death for workers in the immediate vicinity, but also jeopardize the structural integrity of the massive storage tanks themselves. Two days after the seven refused to install underrated valves, management notified them that they would be laid off. A week later, on June 5, 1997, they were unemployed. The Government Accountability Project (GAP) took on the representation of the Hanford pipefitters and filed a complaint in July 1997 pursuant to the Energy Reorganization Act with the Department of Labor (OSHA). Each of the original seven pipefitters sought to use the DOE- subsidized Hanford Joint Council, a mediation board that is supposed to resolve Hanford whistleblower cases at an early stage. Even though the contractor was a member of this Council, it refused to utilize the services of the Council, and chose to litigate instead--using free taxpayer money supplied by the Department of Energy. In October 1997, OSHA found that five of the seven had been retaliated against. Rather than undergo the administrative hearing set for February 1998, after extensive pre-trial discovery, Fluor Daniel settled with the pipefitters the day before the hearing, granting each reinstatement, full back pay, compensatory damages, and attorneys' fees. In order to ``make room'' for the returning pipefitters, however, Fluor Daniel laid off seven employed pipefitters. Evidence indicates that this layoff was not only unnecessary but also deliberately designed to create hostility toward them. Notably, four of the seven who were laid off--Don Hodgin, Ray Richardson, Jessie Jaymes, and Scott Brundridge--were vocal supporters and witnesses in the pipefitters' original claim. These four filed complaints with OSHA alleging that they were retaliated against for supporting their co-workers. Finally, having returned to work as part of the original settlement, the seven pipefitters found a hostile work environment. Not only were the pipefitters given discriminatory job assignments, denied overtime, and given strict surveillance, but they were told by fellow employees that they had to ``watch their backs'' around one particularly irate foreman and were laid off less than a year later. The Department of Labor is charged by Congress with investigating nuclear whistleblower complaints through the Energy Reorganization Act, 42 U.S.C. Sec. 5851. The Labor Department has tasked OSHA with the initial investigations of such complaints. The regional OSHA office, after an extensive investigation into the pipefitter allegations, found that Fluor Daniel NW had established and maintained a hostile working environment to retaliate against the pipefitters after raising safety and health concerns. The decision cited a handwritten statement signed by the pipefitters' foremen which reflected the resentment of the foremen about the reinstatement of the pipefitters to their jobs pursuant to a settlement agreement in March 1998. The same foremen chose the whistleblower-pipefitters for layoff within six months, and then immediately replaced them with other pipefitters. The decision also cited disparaging remarks made by foremen who directed the work of the pipefitters. In one case a foreman was quoted as saying ``. . . the complainants should have stayed laid off. I'll do anything in my power to get rid of them.'' The decision stated, ``Another foreman was so vocal in his hostility towards the complainants, they were warned by other employees to `watch their backs' around him.'' Fluor Daniel refused to make available key foremen for OSHA to interview, stated the report. The Labor Department ordered Fluor Daniel Northwest to immediately reinstate the pipefitters and pay them back pay, compensatory damages and attorney fees and costs. It also ordered-- ``Immediate and continuing cessation of harassment and intimidation and all acts of reprisal against complainants, or anyone of them, or anyone who acknowledges their support of the complainants for instituting or causing to be instituted any proceeding under the [Nuclear Whistleblower Protection Act].'' Fluor Daniel was also ordered to implement ``training and/or formal discipline for respondent's agents and representatives'' to ensure that they are aware of employee rights to raise concerns. Fluor Daniel refused to implement the findings, and filed an appeal. In March 2000, ten pipefitters who either raised safety concerns or supported their co-workers in doing so filed a state civil lawsuit against Fluor Daniel, Inc., and its local subsidiaries, alleging wrongful discharge and civil conspiracy against them for their terminations after having raised serious safety concerns. Current Status Due to strategic considerations involving the disclosure of key evidence, GAP attorneys and their clients decided that the administrative hearings that had been set for April 2000 to consider both the complaint of the second group of pipefitters and the second complaint of the original group of pipefitter whistleblowers should be dropped in order to focus attention on the larger, more significant civil case now pending in Benton County Superior County in Washington. The case is currently in the discovery phase, with GAP attorneys working to bolster an already-solid set of evidence documenting Fluor Daniel's violation of state employment law. The case's trial date is set for September 2000. Meanwhile, as the discovery process continues, more employees step forward with ever more incriminating information against the company. During the first deposition, taken on June 11, 1999, Fluor manager Ivan Sampson produced a page from his journal dated March 9, 1998. This was the same time period in which the original seven pipefitters had been reinstated, and the second set laid off. Sampson testified that Jim Holladay, the Constructions Operation Manager for FDNW (at the time), called Jerry Nichols, a foreman, while Sampson was in the room. Sampson could overhear the conversation. According to the Sampson, Nichols told Holladay that he had a place for a couple of the pipefitters who were being laid off. Holladay responded, ``no, you don't.'' Nichols persisted in trying to explain that he could find work for some of the pipefitters, and Holladay responded, ``you are going to lay off seven.'' Holladay then stopped and asked Nichols who else was in the room. Nichols responded that Sampson was in the room. Holladay told Nichols to tell Sampson that he ``would tear off [Sampson's] balls'' if Sampson were to tell anyone about the call. Sampson stated that he felt intimidated and feared that he would be retaliated against. On July 2, 1999, the deposition was reconvened. At that deposition, Mr. Sampson produced even more journal entries. He stated that on September 10, 1998 that he had been called into a meeting by Jim Holladay, along with two others, and told that the meeting was to be considered confidential. Holladay stated that they were to be members of a new audit team. Holladay stated that the FDNW auditor, a man named Arslanian, was ``a fucking idiot,'' and that he did not want ``that stupid motherfucker looking over his shoulder,'' and making him fill out 900 pages of paperwork. Holladay stated that he would call with an incident to investigate, and they were ``to drop everything and come running.'' Holladay stated he did not want them to take more than two or three hours looking at anything, but to make a quick overview and report it. Sampson stated, ``We would have no findings.'' Sampson testified that there had been three ``events''--a rigging event in the 100 Area, an asbestos event in the 100 Area and ``some event at S Plant.'' ``We were told that specifically, there would be no findings,'' by Jim Holladay. Sampson stated that the goal was audit the event before it ``got too big'' and Arslanian got involved. When asked-- Q. Was it your understanding that the purpose of your doing the audit was to somehow coverup what may have been improper conduct? A. Cover up anything. That we were to have no findings. Q. So did you understand at the time that Mr. Holladay was asking you to do something that was against company policy? A. Yes, I did. Later, Sampson testified that he attended a meeting on September 29, 1998, at the Jadwin Building (FDNW HQ) with ``a bunch of big managers'' including Holladay. Sampson testified that the managers were all worried that the three events on site could be perceived as ``setting a trend and had any possible liability for the Price Anderson Act.'' Immediately following the meeting, Holladay, in the presence of two other managers, stated, ``that we would go out and come back with a conclusion that they were just dumb mistakes, which was a quote.'' When asked why he had failed to report this obvious wrongdoing, Sampson stated that he had considered making the report but decided against it. He then related an event in 1995 (or 1994, which was when Kaiser was in charge, not Fluor Daniel) where he had walked into a meeting where top-level managers, including Dave Foucault, the Construction Manager for FDNW, were gathered around a conference table listening to a tape recording of a man's voice. A manager came over and informed Sampson that ``We're listening to the recording from DOE trying to figure out who made the call.'' Sampson stated, ``And that pretty much floored me, and I left. From that point forward, I never figured you could call any of these hot lines with any privacy.'' The testimony offered by Sampson, which is documented by his daily journal, evidences a high-level corporate conspiracy to not only deliberately establish a hostile working environment against employees who report safety concerns, but to deliberately engineer a cover-up of potentially significant safety events in order to evade the Price Anderson Act. DOE's Involvement in the Case Despite its avowed policy of ``zero tolerance for retaliation'' against whistleblowers, DOE has shown its willingness in the case of the Hanford pipefitters to facilitate Fluor Daniel's efforts to retaliate against them, undoubtedly silencing in the process other employees at Hanford with crucial safety and health disclosures. More specifically, the DOE: Not only failed to investigate the concerns of the pipefitters, otherwise intervene in Fluor Daniel's retaliation, or hold them accountable following adverse Department of Labor investigative findings, but actually reimbursed Fluor Daniel nearly $500,000 for expenses the company incurred in settling the original pipefitter case and in a frivolous suit against the pipefitters for filing union grievances, which was dismissed with costs assessed against Fluor Daniel by a Federal District Court. Has ignored the extraordinary findings of fact by a sister federal agency, and the finding of a hostile working environment that impacts safety at Hanford. Pledged to reimburse Fluor Daniel for legal costs associated with the current civil case. Participated, and continues to participate, in litigation strategy meetings with attorneys representing Fluor Daniel, and has entered into a ``joint defense'' relationship with the contractor despite the fact that DOE has not been named as a party. According to the testimony of a Fluor Daniel manager, allowed answering machine tapes from its own ``anonymous'' hotline for reporting safety disclosures at Hanford to fall into the hands of Fluor Daniel managers. FD manager Ivan Sampson testified in a July 1999 deposition that he accidentally interrupted a meeting where senior managers were listening to a tape of one such call, trying--as one of the senior managers informed him-- to determine the identity of the worker who made the call. Mishandled and corrupted an investigation into the allegation of the alleged hotline interception testified to by Sampson, and claimed that there was ``no evidence'' to support the allegation. However, a review of the DOE's investigation file turned up an e-mail message from a witness who had been interviewed by the DOE team who complained to DOE that the legal counsel Fluor Daniel had been allowed to attend his interview. The employee complained that he felt intimidated, and stated that he is sure that DOE will obtain ``the results you are looking for'' in its investigation. In summary, what started as a crew of seven pipefitters with a simple safety concern has tragically blossomed into major litigation involving over fifteen pipefitters, most of whom no longer work at Hanford, with a clear message to all Hanford employees that the price of making a safety disclosure is your job and years of expensive litigation--all paid for by the Department of Energy. Far from evidencing a ``zero tolerance for reprisal'' policy, the Department's behavior is more akin to a co-conspirator in that it has counseled the contractor, paid the contractor's attorney fees in violation of the Hanford Site contract, and stood by mute as the career death toll has mounted as more and more employees were laid off by the contractor because of their support for the original crew of seven. iii. david carbaugh and the $240 million fraud case The U.S. Department of Energy is responsible for the government's largest and most dangerous enterprise. With more than 2.4 million acres of land, some 100,000 employees and about 25,000 fixed assets, Energy would rank in the top 30 of America's ``Fortune 500'' corporations. If it were privately held, DOE would be filing for bankruptcy. Major elements of the DOE's complex are closing down leaving a huge unfunded and dangerous mess. As a result of a half century of making nuclear weapons, DOE possesses one of the world's largest inventories of dangerous nuclear materials and has created several of the most contaminated areas in the Western Hemisphere. Currently, two thirds of DOE's annual $17.4 billion budget goes for nuclear weapons activities and to address the daunting environmental, safety and health legacy of the nuclear arms race. Inadequate investments were made to upgrade facilities, infrastructure, waste management and environmental protection. These failures in recent years created a very large environmental liability for the DOE estimated in the range of $230 billion to a trillion dollars over the next 50 years. The single largest and most expensive environmental challenge in the United States is at DOE's Hanford site in Eastern Washington. Hanford site is one of the most contaminated areas in the Western Hemisphere and is responsible for roughly half it the DOE's volumetric environmental contamination. Estimated to cost of some $50 billion dollars over several decades , the Hanford environmental cleanup effort rivals the Apollo Moon program in complexity and scope. Currently, the site spends about $1billion a year which is about 5 percent of the DOE's total annual budget. For an agency with such critical safety and health responsibilities, effective financial management controls are essential. There are at least 20 different contractor cost accounting systems, which make it virtually impossible for DOE to match them up and estimate basic expenses, like overhead costs, or compare the performance of contractors against each other. In essence, DOE is an early Cold War throwback that isn't even remotely comparable to the Defense Department (not exactly a paragon of financial management itself.) In the Defense Department it is possible to discover that a hammer costs 600 dollars and why it costs this much. In DOE, not only is it impossible to know how much a hammer costs, it is equally impossible to know if the hammer even exists. The U.S. General Accounting Office (GAO) describes this as ``an undocumented policy of blind faith in its contractors performance, which is called its `least interference policy'.'' For ten years, the U.S. General Accounting Office has identified the DOE as one of the government ``highRisk'' agencies susceptible to waste fraud and abuse. According to the GAO. ``DOE has had difficulty Completing Large Projects. From 1980 through 1996, DOE terminated 31 of 80 mission critical projects costing over $100 million, after expenditures of $10 billion. Only 15 percent of these projects were completed, most of which were behind schedule and over budget.'' ``DOE's organizational structure allows challenges to go uncorrected. DOE's ineffective organizational structure blurs accountability allowing problems to go undetected and remain uncorrected.'' ``Contract management remains vulnerable to Risk. DOE relies on contractors to perform about 90 percent of its work. In addition, although DOE originally planned to shift risk from the federal government to private contractors, as a means of enhancing its performance, it now considers risksharing more appropriate.'' ``DOE staff lacks technical and management skills. At an Idaho facility, DOE turned to a private contractor, in part because it lacked the inhouse expertise needed to evaluate technical cleanup proposals. At the Hanford site, where DOE entered into a multibilliondollar fixed price contract for the next 20 years [with BNFL], DOE has no experts in fixedprice contracting.'' In October 1998 the DOE Inspector General's Office underscored the GAO's concern about the Department's high risk to waste fraud and abuse because of the growing number of False Claim Act complaints filed against DOE. That year there were 25 open claims, ``the highest number ever'', ranging from $400,000 to $100 million. The number of complaints increased by 85 percent in that year alone and doubled over the past five years. Lack of Contractor Accountability From the 1940's to the 1980, DOE contractors were provided with blanket indemnification, even for acts of willful negligence. This changed over the past decade as DOE Secretaries attempted to impose greater contractor accountability with limited success. In April 1999 the DOE's Office of Inspector general reported that, ``The Department has not been successful in protecting the Government against contractor created liabilities in 16 of its 20 major forprofit operating contracts. Also the Department has not recognized the implications of adding contract reform liability provisions without obtaining a performance guarantee with indemnification provisions from parent companies of the Department's major operating contractors. As a result, the Department may be liable for monetary awards resulting from liabilities such as fines penalties, third part claims and damages to or loss of Government Property.'' Financial and Project Management Problems at Hanford Hanford has been plagued with delays and cost overruns on several critical projects. In 1994, the DOE's Contract Reform Team acknowledged that DOE's staff were not prepared to oversee contractors. The sites two most expensive and highest priorities the KBasins and the TWRS Projects have experienced the greatest problems. The KBasins project costs have ballooned from $274 million to more than $1 billion in three years and the completion date has slipped by 19 months. Because of cost and management problems, Congress enacted legislation creating a separate Office of River Protection to manage the TWRS project which involved several billions of dollars. Contractor cleanup work, with some exceptions, is behind schedule in the range of $100 million annually. There are several reasons for DOE's failures that stem to a large extent from inadequate financial management. For several decades the DOE has been exempted from the contracting and financial management statutes and regulations required of other major federal agencies. DOE has used its own Department of Energy Acquisition Regulation (DEAR) which was originally formulated to provide maximum flexibility to produce nuclear weapons and develop nuclear energy technologies. Because of the high importance given to nuclear weapons, combined with the need for experimental latitude involving ultra hazardous technologies, the DEAR, in effect required little contractor oversight and has vague enforcement policies and authorities subject to individual interpretation by DOE field offices. In September 1998, the DOE Office of Inspector General ``found varying interpretations of existing DEAR provisions'' The IG also noted that, ``the DEAR did not define or explain,'' policies and procedures to analyze the propriety of contractor fees. Thus, the DEAR is a product of the early cold war and has institutionalized cost maximization practices that remain deeply embedded in the agency. Only recently has DOE agreed to adopt the Federal Acquisition Regulation (FAR), a. more consistent and enforceable financial management requirement. The FAR was established to codify uniform policies for the purchase of products and services by federal agencies. Additionally, the DOE is now required to comply with Cost Accounting Standards (CAS), codified by the Congress. These standards require formal written and transparent a cost accounting that is consistent with proscribed regulations. It is the primary tool for the U.S. government to exercise budgeting, procurement and financial management. By the late 1980's the DOE began to adopt the FAR in its contracts, and now has policy that requires the FAR to apply to its contracts. However, in practice the DEAR, `` implements and supplements the FAR for the Department's unique needs.'' In effect the DEAR remains an integral element of DOE's financial and contract management, while compliance with the Federal Acquisition Regulation and the Cost Accounting System is not enforced by DOE field sites or Headquarters. At Hanford there appear to be several shortcomings in DOE's efforts to adopt the Federal Acquisition Regulation. DOE financial management staff lacks technical competency to apply Federal Acquisition Regulation and Cost Accounting System principals. The inability to provide effective oversight of public funds. Failure to hold contractors financially responsible for deliberate CAS noncompliance. Inability to effectively control unallowed indirect costs bill to the DOE by contractors. Limited presence by the Defense Contracting Auditing Agency (DCAA) DOE sites to ensure compliance with the FAR and CAS. Refusal of DOE staff at field sites to follow FAR and CAS Principals. David Carbaugh Uncovers Hanford Contractor's Systematic Cost Inflation David R. Carbaugh was first employed as an accountant at the Hanford site in 1979, and he served as an accountant there until his termination in April 1997 for reporting false claims against the government by his employers. During his tenure, Mr. Carbaugh served in the accounting departments of both Westinghouse Hanford Company and Fluor Daniel Hanford. He received a Masters degree in Business Administration from Washington State University. In 1992, he was licensed by the State of Washington as a Certified Public Accountant. Prior to his termination for attempting to blow the whistle, Mr. Carbaugh's served as a budget rate analyst for employee fringe benefit costs. Mr. Carbaugh discovered the fraud as part of his responsibilities to help ensure that the contractors' annual congressional budget requests fairly represented their expected costs and complied with federal Cost Accounting Standards. What he came to realize is that Westinghouse, and later Fluor Daniel, were actually bilking the government for millions of dollars each year by inflating their annual budget requests with phantom costs. Mr. Carbaugh learned that the contractors' financial accounting system, the Financial Data System or FDS--double charged fringe benefit ``absence'' costs--paid vacation holiday and sick leave, charging these ``absence costs'' once against regular time hours and then once again against the overtime. As a result, the FDS was creating fictitious statements of costs and building these into the contractors' statements of indirect costs in their annual budget requests. Once Mr. Carbaugh learned that the paid absence rates were being double charged against both regular time and overtime, he attempted to have Westinghouse reprogram the FDS to apply the absence costs rate solely to regular time hours. After Westinghouse refused to correct the double billing, he attempted to alert persons in DOE's Richland Office (DOE-RL) about the budget inflation caused by the FDS. Westinghouse used retaliation and harassment to prevent Mr. Carbaugh from communicating with DOE. As a result, Mr. Carbaugh was forced to file a qui tam False Claims Act suit in April of 1996. The September 1997 Defense Contracting Auditing Agency Report Mr. Carbaugh's suit is not mere supposition. The double charging of absence costs in the budgeting system has been documented in a Defense Contracting Auditing Agency (DCAA) audit and Fluor Daniel has actually acknowledged that it is wrong. In fact, a federal district court has recently ruled that there is sufficient evidence of budget inflation to allow Mr. Carbaugh to prosecute the quarter of a billion dollar case. However, DOE's oversight of its management contractors is so lax that it completely ignored the audit, and the contractors, coming to rely on DOE's ``least interference policy,'' have brazenly requested that the agency reimburse their legal expenses for attempting to quell Mr. Carbaugh's False Claims Act suit. The DCAA audit which confirms the double charging that Mr. Carbaugh alleged was submitted to DOE in September 1997. The DCAA was asked to perform a baseline assessment of contractor accounting at the time when DOE was in transition from a Management and Operating Contract it held with the Westinghouse Hanford Company (WHC) and a new Management and Integrating contract with the Fluor Daniel Hanford Company (FDH). The DCAA audit was done to evaluate `` whether FDH has complied with the CAS Board's rules, regulations and standards, and FAR Part 31.'' Specifically the purpose of the DCAA Audit `` was to determine if FDH has complied with the requirements of CAS 407, the Use of Standard Costs for Direct Material and Direct Labor.'' The DCAA audit disclosed four major areas of non compliance with respect to CAS 407. According to the Audit: 1. FDH does not have written practices as required by CAS 407 which describe the setting and revising of its labor rate standards, the use of such standards, or the disposition of variances from standard labor costs. The absence of such written practices has resulted in or may result in a material misstatement or missallocation of costs to final cost objectives . . . Because of its failure to meet basic documentation criterion, DH cannot use a standard costing system to estimate, accumulate, and record the cost of direct labor. 2. FDH does not set labor rate standards in accordance with labor grouping requirements of CAS 407. The failure to properly set such standards has resulted in or may result in a material misstatement or missallocation of costs to final cost objectives . . . in setting its standard rates for each [subcontractor] . . . FHD includes all employees in the groupings . . . The presence of highly paid indirect employees in the groupings will skew cost estimates, accumulation of labor upward. Consequently, there is no assurance that FDH cost estimates, accumulations of labor costs, and reported costs . . . are accurate or reasonable . . . 3. FDH does not record variances on the basis of production units as required by CAS 407. FDH does not accumulate variances in separate labor cost variance accounts for each production unit. The failure to properly record variances has resulted in or may result in a material misstatement or missallocation of costs to final cost objectives an entire company consisting of management, employees, engineers, accountants, and other professionals, scientists, skilled technicians, journeymen union employees, unskilled workers, and clerical employees cannot be considered a ``production unit'' in the sense defined in CAS 407 . . . there is no assurance that labor costs reported, accumulated and estimated at standard are either accurate or reasonable, and there is no assurance that labor accounting and estimating practices are being followed in a consistent manner from one accounting period to another.'' 4. FDH does not dispose of variances at the level of the production unit as required by CAS 407. FDH does not allocate variances related to direct labor on the basis of labor costs at standard . . . Finally, a pension liability from the predecessor contractor, Westinghouse Hanford Corporation, was transferred to FDH at the beginning of the contract. FDH proposes to `passback' this liability in FY 1997 or FY 1998. This disposition would be in noncompliance with the requirement that variances be disposed of annually . . . The Hanford pension plan is fully funded and at the end of FY 1995 and FY 1996 there was no funding obligation on the part of WHC [Westinghouse Hanford Company] to satisfy its fiduciary responsibilities with regard to the pension plan. Nevertheless, during FY 1995 and Fy 1996, WHC made entries in its books representing an $8.0 million over accrual of its pension liability . . . FHD plans to use the FY 1995 and FY 1996 pension variance to offset FY 1997 and FY 1998 program costs . . . on August 25 and August 29 [1997], in spite of our conversations with all interested parties. FDH ``distributed'' the $8 M million overaccrued pension cost . . . the $8.0 million . . . indirect expense was ``passed back'' as direct labors to offset program costs . . . to the targeted programs as follows: Tank Waste Remediation Program $2.975M Waste Management 1.415.5M Spent Nuclear Fuel .742M Facility Stabilization 2.559M Other Programs .316M Total $8,007M Furthermore according to the DCAA report: `` The distribution of overaccrued FY 1995 and FY 1996 pension cost violates CAS 406, CAS 407, CAS 412, GAAP, and ERISA. In the distribution process, FDH simply changed the costs from pension costs to direct labor and in so doing changed indirect to direct.'' DOE approved this transfer of funds in direct violation of law and regulations, on the basis of a ``White Paper'' submitted by FDH. The DCAA found that , ``the FDH ``White Paper'' sent to DOERL [ Richland Operations Office] . . . contains misstatement of fact, including its reference to the appropriateness of the use of cash basis accounting . . . CAS, FAR, ERISA and FSAB 87 all specifically state that cash basis accounting for pension cost is not acceptable.'' The Audit concluded that: ``The labor accounting practices followed by FDH and the major PHMC [Project Hanford Management Contract] subcontractors under its responsibility are not in compliance with the requirements of CAS 407. `` The contractor accounting system is not adequate for estimating, accumulating and reporting costs based on standards on government contracts . . . In our opinion, FDH does not meet any of basic CAS 407 criteria and consequently, FDH cannot use a standard costing system to estimate, accumulate, and report its costs of direct labor . . . FDH did not contest the fact that its practices . . . are not documented. FDH's response does not indicate any intention to correct this current CAS 407 noncompliance'' DCAA recommended that DOE: `` (i) . . . make a determination that FDH is on non compliance with CAS 407; (ii) require FDH to provide cost impact of the non compliance and (iii) disapprove of those portions of FDH's accounting system related to the use of standard labor costs in estimating, accumulating and reporting labor costs.'' The DCAA Report was not circulated and stamped ``Official Use Only'' to ensure that it could not be obtained under the Freedom of Information Act. The audit remained effectively secret until 1999. A DCAA Request for a Fraud Investigation at Hanford Shortly after the Hanford audit was completed, a ``form 2000'' or ``Suspected Irregularity Referral Form'' was filed by the DCAA employee who performed the audit. The form is meant to initiate an investigation based on ``information which suggests a reasonable basis for suspicion of fraud, corruption, or unlawful activity affecting Government contracts . . .'' Several irregularities were identified to justify further investigation including mischarging through the ``use of Standard Costs in Estimating, Accumulating, and Reporting Direct Labor'', accounting mischarging involving improper transfers through disposition of labor variances, Unallowable costs though the improper use of indirect funds in violation of CAS 407 and possible fraudulent performance fees. According to the investigation request: Mischarging the government ``FDH [Fluor Daniel Hanford] uses standard costs to estimate, accumulate, and report all labor costs. The FDH standard labor rates are composed of a base average rate, an ``absence adder'' factor to overtime and a `Continuity of Service' adder . . . It is not appropriate to apply [sic] the `absence adder' factor to overtime labor. Application of the `absence adder' to overtime labor results in overstated labor cost and cost estimates for fee proposals, baseline budget estimates, control point budget estimates, indirect expense forecasts, indirect cost budgets, estimates to complete, and final certified contract cost proposals . . . FDH's application of the `absence adder' to overtime labor results in a significant overstatement of both estimated and recorded labor costs . . . FDH management knows that it is improper to apply the `absence adder' to overtime labor . . . FDH management knows that the `absence adder' applied to overtime labor will generate a standard labor cost for which there can be no of setting payroll cost. FDH management staff members told the auditor they knew application of the `absence adder' factor to overtime was wrong. Improper Transfer of funds ``We are most concerned that the capability to manipulate the targets receiving `passbacks' of variances is built into the [Project Hanford Management Contract] `passback' program. FDH management can use the `pass back' of `pure' variances to offset `troubled programs' ie., overrun program costs. It appears the adjusting troubled program costs using `pure' variances will help earn contract performance fee'' The effective lack of control by the Department of Energy of its contractors' manipulation of the contracting system at the expense of the U.S. taxpayer is in and of itself an outrageous breach of the public trust. Compounding the outrage, however, is DOE's apparent willingness to reimburse the litigation costs of the contractors accused of defrauding the government. The Major Fraud Act, 41 U.S.C. section 256 disallows costs associated with fraud cases brought against contractors by either the government or a relator on behalf of the government in False Claims Act cases. ``Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the United States where the contractor is found liable or had pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification).'' DOE's regulations contain a provision which was not a part of the 1988 Act and is not in s 41 U.S.C. section 256(k). Specifically, DOE's regulations allow advancement of costs so long as the contractor repays them if it loses: ``During the pendency of any proceeding covered by paragraphs (b) and (f) of this section, the Contracting Officer shall generally withhold payment and not authorize the use of funds advanced under the contract for the payment of such costs. However, the Contracting Officer may, in appropriate circumstances, provide for conditional payment upon provision of adequate security, or other adequate assurance, and agreements by the contractor to repay all unallowable costs, plus interest, if the costs are subsequently determined to be unallowable.'' 48 C.F.R. 970.520461(g). This provision does not appear to be expressly in conflict with federal law but there is no evidence that the lawmakers intended that agencies should be free to adopt such a provision by regulation. Indeed, it appears that NO other agency has enacted any such regulation, and the general FAR provisions are silent about advancement of litigation costs under these circumstances. It would be ironic indeed if the DOE were to reimburse the contractor litigation costs in claims where the contractor is accused of defrauding the agency. This is tantamount to a business paying the attorney fees, expert witness costs and associated trial costs of an accountant accused of embezzlement. iv. jim bailey and the nuclear couriers In their daily travels along the nation's highways, few Americans realize that they may be sharing the road with a live nuclear warhead secured in an unmarked government vehicle. Until recently, the public had little reason to know-or worry about the activities of the U.S. Department of Energy's Transportation Safeguards Division, which ferries nuclear materials between military bases and nuclear weapons facilities. GAP whistleblower Jim Bailey has changed all that. Bailey was one of 238 special agents within the Transportation Safeguards Division (TSD) charged with transporting nuclear materials between sites. Through the bomb-building years of the Cold War and its aftermath, TSD couriers have traveled millions of miles along America's highways, logging over 3 million in 1996 alone. The work is grueling and dangerous; the couriers call themselves ``road warriors.'' The risks-of terrorist attacks or accidents-are detailed in government documents. ``The Department of Energy,'' reads one document, ``has taken the position that it is not a question of if a nuclear weapons shipment will be attacked, but when.'' The government has worked hard to prevent such a catastrophe. Couriers are trained to protect their cargo from the inherent dangers of transporting nuclear devices, including accidents and terrorist sabotage. Their schedules and activities are shrouded in secrecy. They carry badges and are permitted to use deadly force. They travel in convoys that include well-armed tactical teams of up to 23 agents. The tractor-trailers that carry the nuclear materials are technologically designed to protect their cargo. The armored 18-wheel ``Safe Secure Trailers' are built to withstand devastating collisions. They can endure raging fires without endangering the nuclear materials they carry. The trailers are accompanied by special vans carrying additional couriers and equipment ranging from night-vision goggles to pistols, M-16 rifles and 12-gauge shotguns. SST, or Safe Secure Transport Truck Carrying Nukes These safeguards arguably have served the government and the public well. The agency reports no terrorist attacks or deadly accidents involving a nuclear weapons shipment to date. The drivers, however, may not be so lucky. Evidence gathered in the case of whistleblowing courier James Bailey indicates that couriers suffer not only from punishing working conditions, but from potential exposure to dangerous levels of radiation. The bombs are protected. The public is protected. But who protects the protectors? For eight years, Jim Bailey ferried nuclear cargo around the country for the TSD's Southeast Courier Section, based out of Oak Ridge, Tennessee. Then, in March 1995, Bailey's wife gave birth to their first child, a daughter they named Kelly. The baby was born with a rare form of brain cancer. Afflicted with three aggressively malignant tumors at birth, Kelly survived for four painful months. By the time she died, her head had swelled to adult size. The shock of Kelly's illness and premature death led Bailey to question his potential exposure to radiation on the job. He was concerned about the hazards posed by some of the nuclear materials he had transported and the time his job required him to spend in contaminated areas. ``I wasn't hauling watermelons at the time,'' he said later. ``That ought to make the alarm bells go off.'' Bailey sought the advice of several medical experts, including Dr. Jay Hunt, a cancer specialist with expertise in genetic mutations. Dr. Hunt had Bailey tested and discovered chromosomal damage consistent with radiation exposure. After consulting with other medical experts in the field of pediatric genetics, Dr. Hunt advised Bailey that if he intended to father another child, he should take appropriate measures to protect himself. ``You've already had one child with a brain tumor,'' the doctor told Bailey, according to his later court testimony. ``There's absolutely no reason to take a chance. There's no reason to be driving these trucks without adequate monitoring.'' Bailey took his doctor's advice and refused to continue his courier travel. He used several months of leave time and performed light-duty desk work. After a few months, however, Bailey's supervisor told him to get ready for trip duty in the near future. Bailey was not about to give in, however. He wrote his congressional representative, Rep. John Duncan, in December 1995, describing his many concerns about radiation exposure and working conditions on the job. And he studiously gathered evidence from other couriers about the hazards they faced on the job. His coworkers described a range of health and safety concerns. Some involved the harsh working conditions, the stress and exhaustion experienced on 36-hour road trips. More troubling to Bailey were the tales of possible radiation exposure. Couriers are in routine contact with nuclear materials; they are required, for example, to enter the trailers to check that their cargo is securely tied down en route. Yet they travel in street clothes in order to deflect attention, protected only by dosimeter badges designed to register radiation exposure. The badges virtually always register ``zero,'' according to the couriers. Bailey learned of cases of contamination requiring officials to confiscate couriers' clothing and shoes. Some couriers were warned by management to ``get in and get out'' when they check tie-downs inside the trailers, raising fears of radioactive exposure. On occasion, tractor-trailers had set off radiation monitors located at the entrance and exit of DOE bases and ports of inspection at state borders. Couriers had observed workers at nuclear plants wearing full-body protection with respirators while loading, unloading, or positioning materials inside their trailers. Bailey's concerns mounted, along with his frustration at the DOE for failing to act on the health and safety hazards he reported. One DOE Health and Safety Manager told him bluntly that if the agency were to take inexpensive steps to protect couriers's safety-such as increasing radiation training, providing laundry facilities at work, and offering routine bioassay tests-the result would be to threaten couriers' morale by leading them to believe that there was reason for concern. Bailey's superiors, meanwhile, were not taking his resistance quietly. One of his supervisors publicly described Bailey's actions in raising health and safety concerns as tantamount to ``committing jobicide.'' In late June 1996, Bailey was told to report for travel duty. He refused the travel assignment, citing DOE's failure to correct unsafe practices. Bailey was fired on September 13, 1996. Soon afterward, he filed a complaint under the federal Whistleblower Protection Act challenging his removal, and asked the Government Accountability Project to represent him. Bailey's hearing began in late March 1997. The judge heard damning testimony about agency practices. Under cross-examination, the DOE's own expert witness, Gene Runkle, could not explain why a dosimeter badge did not register exposure even after suspicious couriers had positioned a badge on a known radiological source. He said only that the badges had to be placed ``just right'' to receive a reading. The judge was not persuaded by the agency's arguments. In an April 6 decision, he concluded, ``I find that a reasonable, prudent person would heed [Dr. Hunt's] advice and conclude that courier duties, without better health and safety measures, posed a specific and objective danger to health. I can imagine that anyone, having just lost an infant daughter to three types of rare brain cancers, and with chromosomal damage consistent with radiation exposure, would not come to the same conclusion the appellant did: that it was not safe for him to return to work.'' Showing little regard for the health and safety implications raised by the judge's decision, the Department of Energy refused to reinstate Bailey to his job, and appealed the ruling. The fallout from the Bailey case, however, forced the DOE to conduct a review to investigate the radiological safety practices of the courier program. The DOE's investigative panel issued its final report on the courier program in November 1997. Its findings are extremely damaging to DOE. The report confirms that couriers were subjected to radiological conditions that could result in unmonitored exposures to contamination. It points to the removal of monitoring equipment from TSD tractor-trailers in September 1996, for example, and identifies several potential contamination hazards in the ``bone yard,'' where vehicles are parked and the break rooms located. DOE management responded to the findings not by correcting the problems, but by retaliating against couriers who had taken part in the investigation. The retaliation was sweeping and systematic. Three managers formed a ``Blue Ribbon Panel,'' which met with every courier in the Oak Ridge Division. All courier assignments out of Oak Ridge were suspended until the panel had interviewed everyone. Couriers were told to answer three questions and informed that their answers would be reviewed and their futures in the program would be adjusted accordingly. Not surprisingly, the investigation had a chilling effect among the couriers at Oak Ridge. One courier described the experience to GAP investigators, ``I answered `don't know' to all three questions on the survey, and would soon regret it during my hearing before [the supervisors]. I spent approximately 35 degrading minutes before these individuals, who told me that my answering `don't know' would result in my [security clearance] being rescinded. I was provided a new questionnaire, which I hurriedly filled out the way they wanted (yes responses) and said, put me in the good guy club. I want to keep my job. Coercion. There was no question in my mind that this entire humiliating and debasing experience was done to seek out persons not considered loyal to the management of TSD. . .'' At stake is the health and safety of a large group of DOE employees. The couriers should have a right to question DOE's inexplicable failure to perform radiation testing on employees who have consistent and routine contact with radioactive materials-and who risk extreme exposures in case of an accident of attack. Jim Bailey does not regret his decision. After he stopped working as a courier, the damage to his chromosomes disappeared. The Baileys gave birth to a healthy child in 1996. Bailey's fellow couriers, meanwhile, are still working continuous shifts of up to 36 hours and are expected to check tie-downs in trucks carrying radioactive cargo without protection. Their confidence in DOE's concern for their safety is lower than ever. In February 1998, ABC National News aired a story critical of the Department's handling of Mr. Bailey's concerns and raising questions about the TSD program itself. The Departmental response was swift and overwhelming. Every single courier was ordered to report for a polygraph test, and to submit to a line of questioning that included such questions as to whether or not they agreed with Jim Bailey, whether they had been in contact with the news media, and other questions of an unconstitutional nature. Eighteen of the couriers refused to answer the questions, calling the investigation a witch-hunt for whistleblowers. They obtained counsel, and, two years later, remain on paid, suspended leave from their jobs. Meanwhile, I appealed to Secretary of Energy Frederico Pena to conduct an independent assessment of the situation and take immediate corrective actions. On February 4, 1998, Pena agreed and appointed a Management Review Panel to undertake a ``comprehensive review'' of operations of the TSD program. The six-member panel, led by Gordon Moe, issued its report in July 1998, vindicating the couriers' concerns. The Panel not only found serious management problems, but prescribed sweeping organizational changes and management fixes to address the problems. In November 1998, Gordon Moe and I met with Assistant Secretary Victor Reis to give him an update on the progress--or rather lack of progress--in implementing the changes. Secretary Reis promised action. However, as of this update, no action has been taken of any magnitude. Specifically-- Settlement has not been reached with Jim Bailey on outstanding legal issues, despite the Moe Panel recommendation; The 18 suspended couriers remain on leave, even though the FBI review is reportedly at an end; TSD management continues to rule through intimidation, hostility, and threats. Couriers are constantly warned to not complain to outside parties, and specifically told not to contact Gordon Moe. No settlement has been reached or even attempted in the Southern Cross training/exposure incident where numerous couriers allege that they were exposed to toxins, resulting in health effects. In conclusion, the Department's intolerance of employee's raising of safety and health concerns is by no means restricted to contractor employees--the Department has shown that its own employees will suffer egregious reprisals whenever they challenge the system. Even a DOE- sponsored investigation which found a prevalent culture of hostility and mismanagement was ignored, and the recommendations forgotten. Meanwhile, eighteen couriers who once had productive careers twist in the wind--at taxpayers' expense. solutions: the model offered by the nrc The commercial nuclear industry has a long history of dealing with the issue of employee concerns, and during the past 15 years has evolved principles and procedures that establish work environments encouraging safety reports and prohibiting retaliatory conduct that could chill such reports. The primary regulator of the nuclear industry is the Nuclear Regulatory Commission (NRC), which defines its mission as the protection of the public safety and health in its regulation of commercial nuclear facilities. Last year, DOE announced that it intended to put its nuclear safety program under NRC regulation, and pilot programs toward this end have been announced recently. One example of the NRC's approach to its regulation of licensees in the area of employee concerns involves a Connecticut nuclear station called Millstone, which has three reactors. Since the late 1980's, Millstone Nuclear Power Station has been the source of a high volume of employee concerns and allegations related to safety of plant operations and harassment and intimidation of employees. Following a TIME magazine cover story in March 1995 about the situation, in which the NRC IG faulted the NRC for not recognizing that the reactors had been operating outside their license requirement for many years, the Nuclear Regulatory Commission (NRC) concluded that the large number of deficiencies identified at all three Millstone sites implied that some employees were reluctant to identify safety issues. In an Order issued on August 14, 1996, the NRC mandated independent, third party oversight to address licensee noncompliance with regulatory requirements concerning, among other things, employee safety concerns. In this Order, the NRC directs that, prior to resumption of power operations, the Licensee shall develop, submit to the NRC, and implement a comprehensive plan for reviewing and dispositioning safety issues raised by the Licensee's employees and ensuring that employees who raise safety concerns are not subject to discrimination. Additionally, the Licensee was ordered to retain an independent third party, subject to the approval of the NRC, to oversee its implementation of a comprehensive plan. The plan for independent third party oversight will continue to be implemented until the Licensee demonstrates by its performance, that the conditions which led to the requirement of that oversight have been corrected to the satisfaction of the NRC. At commercial nuclear facilities, the NRC has made a clear and cogent determination that the ability of employees to raise concerns is integral to the protection of public health and safety. The hazards at DOE nuclear facilities are no less dangerous, and yet throughout the DOE complex, reprisals against employees continue unabated, and hostile working environments are instituted without challenge from the DOE. The DOE should take notice of the NRC's actions and promptly incorporate the NRC methodology for protecting employee concerns at its facilities. If DOE is serious about improving its operations consistent with its mission and in accomplishing a work environment that has a ``zero tolerance for reprisal'' in fact and not just in rhetoric, it will study and implement the NRC model. For instance, the DOE could-- 1. Establish Departmental policy in the Code of Federal Regulations that mandates the establishment of a ``safety-conscious work environment'' which actively encourages employees to report health, safety or environmental and other employee concerns at DOE-owned sites; This procedural step is necessary to clarify and formalize DOE's policy on prohibition of reprisals against employees who raise concerns. The Nuclear Regulatory Commission codifies its policy in 10 C.F.R. Part 50.7. The NRC's statement of policy could easily be modified to suit the purposes of the Department of Energy. A DOE version of this policy could read like this: 2 --------------------------------------------------------------------------- \2\ The language that is in bold typeface is different than that already appearing in the NRC's Statement of Policy at 10 C.F.R. Part 50.7. --------------------------------------------------------------------------- Employee protection. (a) Discrimination by an agency official, or a contractor or subcontractor of the Department against an employee for engaging in certain protected activities is prohibited. Discrimination includes discharge and other actions that relate to compensation, terms, conditions, or privileges of employment. The protected activities are established in section 211 of the Energy Reorganization Act of 1974, as amended, and in Departmental regulations codified at 10 C.F.R. Part 708 and in general are related to the administration or enforcement of a requirement imposed under the Atomic Energy Act or the Energy Reorganization Act. (1) The protected activities include but are not limited to: (i) Providing the Department or his or her employer information about alleged violations of either of the statutes named in paragraph (a) introductory text of this section or possible violations of requirements imposed under either of those statutes; (ii) Refusing to engage in any practice made unlawful under either of the statutes named in paragraph (a) introductory text or under these requirements if the employee has identified the alleged illegality to the employer; (iii) Requesting the Department to institute action against his or her employer for the administration or enforcement of these requirements; Testifying in any Department proceeding, or before Congress, or at any Federal or State proceeding regarding any provision (or proposed provision) of either of the statutes named in paragraph (a) introductory text. (v) Assisting or participating in, or is about to assist or participate in, these activities. (2) These activities are protected even if no formal proceeding is actually initiated as a result of the employee assistance or participation. (3) This section has no application to any employee alleging discrimination prohibited by this section who, acting without direction from his or her employer (or the employer's agent), deliberately causes a violation of any requirement of the Energy Reorganization Act of 1974, as amended, or the Atomic Energy Act of 1954, as amended. (b) Any employee who believes that he or she has been discharged or otherwise discriminated against by any person for engaging in protected activities specified in paragraph (a)(1) of this section may seek a remedy for the discharge or discrimination through an administrative proceeding as provided in Departmental regulations codified at 10 C.F.R. 708 or in the Department of Labor. The administrative proceeding must be initiated within 60 days after an alleged violation occurs with the DOE, and within 180 days with the Labor Department. The employee may do this by filing a complaint alleging the violation with the Department of Labor, Occupational Safety and Health Administration. In either proceeding, the agency may order reinstatement, back pay, and compensatory damages. (c) A violation of paragraph (a), (e), or (f) of this section by a contractor or subcontractor of the Department may be grounds for-- (1) Denial, revocation, or suspension of the contract. (2) Imposition of a civil penalty on the contractor or subcontrator. (3) Other enforcement action. (d) Actions taken by an employer, or others, which adversely affect an employee may be predicated upon nondiscriminatory grounds. The prohibition applies when the adverse action occurs because the employee has engaged in protected activities. An employee's engagement in protected activities does not automatically render him or her immune from discharge or discipline for legitimate reasons or from adverse action dictated by nonprohibited considerations. (e)(1) Each contractor or subcontractor shall prominently post the provisions of this policy at DOE-owned facilities. This form must be posted at locations sufficient to permit employees protected by this section to observe a copy on the way to or from their place of work. (f) No agreement affecting the compensation, terms, conditions, or privileges of employment, including an agreement to settle a complaint filed by an employee with either the Department of Labor pursuant to section 211 of the Energy Reorganization Act of 1974, as amended, or pursuant to a proceeding initiated under the provisions of 10 C.F.R. Part 708 may contain any provision which would prohibit, restrict, or otherwise discourage an employee from participating in protected activity as defined in paragraph (a)(1) of this section including, but not limited to, providing information to the DOE or to his or her employer on potential violations or other matters within DOE's regulatory responsibilities. 2. Empower the existing Office of Employee Concerns with the authority and the resources to set DOE policy on the issue of all agency and contractor employee concerns. Specifically, the Office of Employee Concerns-- should report directly to the Secretary of Energy, and must standardize DOE policy across the complex. should be given adequate funding and staffing and the authority to implement policy, conduct investigations, levy sanctions, and order corrective actions to abate violations. should institute rules, procedures and regulations requiring DOE managers and supervisory personnel as well as contractor and subcontractor employers to maintain a safety conscious work environment where employees are free to raise employee concerns without fear of reprisal. should require facilities to conduct independent and reliable employee surveys to measure whether employees feel free to raise concerns free of reprisal on a company-by-company basis (including at DOE) to use as a basis for determining whether corrective actions should be undertaken. Currently, the DOE's HQ Office of Employee Concerns is a shell of an office, with one full-time employee (the Director, Bill Lewis) and one and half Full-Time Equivalent (FTE) employees who are mostly contracted from the outside. The very existence of this Office is in constant doubt. The Office of Employee Concerns is window-dressing. In its current incarnation, it cannot effect change. The Office of Employee Concerns should have, at a minimum, a Director, one administrative support person, two policy staffers and two full-time investigators. The Office should be responsible primarily for setting and enforcing Departmental policy. Other duties should include-- developing language to insert into the Department of Energy Acquisition Regulations requiring contractors to maintain a safety conscious work environment; developing posters and employee communication vehicles to distribute for posting around the complex; inspecting and evaluating each facility in the complex to ascertain that the standards set by the DOE in the area of employee concerns are being reached; investigating and correcting extraordinary cases of hostile and chilled work environments, high-profile cases, or facilities experiencing a large number of discrimination complaints alleging reprisals for raising concerns. A revitalized and effective Office of Employee Concerns is of paramount importance for achieving employee protection and safer work environments. 3. Require DOE and DOE contractor ES&H and quality organizations to implement ``Differing Professional Opinion (DPO)'' processes, using NRC's DPO process as a model, to increase the autonomy of safety professionals employed by DOE and DOE contractor organizations. 4. Amend existing contract(s) at its nuclear weapons production and former nuclear materials production sites to ``incentivize'' the establishment and maintenance of a safety-conscious work environment, and to put contractors on notice that the contract can be conditioned, suspended and/or revoked upon a finding by the DOE that a company has engaged in a pattern and practice of whistleblower reprisals or has failed to maintain a safety- conscious work environment; This proposal follows the lead of the NRC, which has put licensees on notice that the license to operate the facility hinges upon maintaining a retaliation-free work environment. As the Department moves away from the Management and Operating (M&O) contracting model, and towards the performance-based contracts, there is a greater need to spell out DOE's policies in relation to prohibition against reprisals in the contract and to tie specific awards to this performance. The recent history of reprisals at Hanford, Oak Ridge, Rocky Flats and Pantex, illustrate that contractual financial incentives and penalties are necessary to encourage a climate free of reprisals. A substantial portion of every DOE contract in the nuclear complex should depend upon employee freedom to report and resolve employee concerns. 5. Address ``hot spots'' where the chilling effect now exists, based upon the investigative reports of the Labor Department, Office of Special Counsel, MSPB, OCEP, or OHA and where there may be a strong perception among employees that there will be reprisal. Corrective actions could include: training of supervisory employees and workers by employee concerns experts; developing guidelines for use of the ``holding period'' concept recommended by the Nuclear Regulatory Commission for contested proposed job actions; instituting a ``personal accountability'' rule to hold individual managers accountable for reprisals. These recommendations come from the ``Independent Panel Review'' of the Millstone Plant licensee action levied by the Nuclear Regulatory Commission. They represent ``state of the art'' thinking of some of the most experienced employee concern professionals in the nation. 6. Require the Department of Energy's Office of Enforcement and Investigation, Environment, Safety and Health, to ascertain, through its normal inspection duties or upon request from the Office of Employee Concerns, whether departures from a ``safety-conscious work environment'' or a chilling effect on employee concerns exists at a specific facility or within any DOE division, and to order corrective actions to remedy such environment. Periodically, the Office of Oversight conducts inspections, evaluations and assessments at sites around the complex. A key part of their mission should be to assess the existence of a ``safety-conscious work environment'' and where departures from it exist, to require corrective actions. Failure to maintain such an environment, especially in a nuclear safety context, could lead to findings of violations under the Price-Anderson Act. In summary, the Department can only salvage its credibility on the whistleblower issue by-- establishing Departmental policy that calls for the positive presence of a ``safety conscious work environment in its facilities; instituting rules, procedures and regulations requiring DOE managers and supervisory personnel as well as contractor and subcontractor employers to achieve and maintain a ``safety- conscious work environment;'' requiring the Department of Energy's Office of Oversight, Environment, Safety and Health, to ascertain, through its normal inspection duties or upon request from the Office of Employee Concerns, whether a demonstrative ``safety-conscious work environment'' exists at a specific facility or within any DOE division, and to order corrective actions to remedy departures from such an environment; requiring DOE and DOE contractor ES&H and quality organizations to implement ``Differing Professional Opinion (DPO)'' processes, using NRC's DPO process as a model, to increase the autonomy of safety professionals employed by DOE and DOE contractor organizations; conclusion The ability of employees to raise concerns is the key to safe and efficient operations, especially in nuclear facilities. The Department of Energy has, for seven years, recognized this important concept but has not taken the necessary steps to change the culture to make the policy shift more than a rhetorical chimera. In fact, in total contradiction of its oft-cited ``zero tolerance for reprisal'' policy, the Department has assisted its contractors in every possible way to fight whistleblowers, even when they prevail in court. After seven years of a ``zero tolerance'' can the Department point to a single instance where the policy has actually been enforced? The Department has yet to take a single action against a single contractor or individual who has been found guilty of reprisal. The cases of David Lappa, the fourteen pipefitters at Hanford, Mr. Jim Bailey and many others testify to the ongoing state of affairs at the DOE--where the true message seems to be ``zero tolerance for whistleblowers.'' Congress needs to get serious about reforming, or getting rid of, this agency. The General Accounting Office has pointed out for nearly twenty years in numerous reports that the Department is seemingly incapable of managing itself, much less its contractors or the massive cleanup job that lies ahead. Protecting employees who speak about illegality, threats to public health and safety, mismanagement and fraud deserve protection and encouragement. Congress can do its part by beefing up protections for these workers, which remain inadequate, and by passing legislation that resolves the conflict of interest situation at DOE by affording external regulation of these facilities to OSHA and the Nuclear Regulatory Commission. Thank you for inviting my testimony today. Mr. Burr. I thank you, Mr. Carpenter. The Chair would recognize Mr. Walli for purposes of an opening statement. TESTIMONY OF RANDALL WALLI Mr. Walli. Thank you. Thank you for inviting my testimony today. My name is Randy Walli. I am a pipefitter by trade. I've worked 24 years in the construction industry. Some of my jobs have been at the Hanford Nuclear Reservation in southeast Washington State. I have come here today on my own accord and at great expense to my family and myself. Unlike some that will testify here today, I am not being paid to be here. But I am hopeful that, by being here today, that somebody is finally taking these matters seriously. I grew up in the Hanford area and my family is from the Hanford area. I have lived there and watched the Tri-Cities revolve around the ups and downs of the Hanford site. The last 3 years have been a real bad experience for me and my fellow pipefitters. This is because we believed in safety and we thought we had the right and the duty to talk and practice safety in our workplace. But because of the stand that we took on some safety issues in the tank farms, we have been labeled as ``whistleblowers.'' ``Whistleblower'' is a very tough name to live with once it has been pinned on you. People misjudge you. They don't want to be seen with you. They leave the room when they see you. They feel that they have to choose sides when they are around you. We've lost friends over this, and we've put great burdens on our families. We are still right in what we did and what we are doing. The Department of Labor has twice seen that we were wronged by this company, yet no one else beside the Government Accountability Project people have stepped in to help us fix these problems. This whole process has driven concerned people into the shadows because they have seen what happens to people who raise concerns. I have seen people demoted, transferred, laid off, harassed for bringing up concerns. This makes for a very bad work environment. In my case as a pipefitter foreman in the 200 west area of Hanford, we had a few issues come up. The last one was a safety issue related to under-rated valves in a radiation contamination zone. This issue was of great importance, because the use of the wrong valves--these were test valves--on a high- level waste transfer line could cause personal injuries and/or environmental contamination. If the valves failed, they could flood the nearby underground high-level waste tanks, which is both a safety and environmental concern. Two working days after, as a crew, we refused to use the wrong valves and stopped work over this issue on this project, we were told the entire crew was being laid off. At the end of that week, my crew and I were terminated. But the job was not over, because there was a DOE milestone to be reached in October of that year, and this was the first of June, so we were replaced by other workers. We ended up going through numerous avenues, where we found the Government Accountability Project people and ended up at the Department of Labor. The Department of Labor, after several months of investigations, found in our favor. The company appealed it, and, after months of discovery and depositions, settled it out of court the day before trial. They agreed to take us back under the Whistleblower Act, so we were supposed to be treated fairly. We were not. I've also learned that the Department of Energy has paid the cost of that settlement and the legal fees associated with it. The company paid us a total of $334,000 and hired us back to our former jobs. The company then sued myself and the other pipefitters because of union complaints that we filed. The Union complaints had nothing to do with this company, but the company held up our settlement checks and dragged us into Federal district court, saying we had breached the settlement. We hired lawyers to fight back. The Federal court ruled against the company and made the company pay the settlement amount with interest, as well as our attorney fees. Again, DOE paid for that, as well. It seems we are fighting a company and DOE and/or the company with DOE's money. A little over 6 months after being re-hired, we were laid off again. That's not unusual for construction people. That's part of our lives. The first day we go to work, we're working ourselves out of a job. But Hanford is our home and some of the people that we worked with there in construction have worked there continuously for 20-plus years. It is nice to be able to work at home and be able to come home to our families. Most of us have young families. But we have been labeled ``whistleblowers'' and we might not ever be able to work there again. Most of the people at the Hanford site, if they support us, it's from the back door. It is done quietly, because they don't want to be seen talking to us. Yet, they'll call us at home and want us to hear their concerns. We stood up for numerous safety issues and concerns and tried to keep people from getting hurt, but these companies and DOE don't seem to want to listen. They put window dressing on safety first, and that there is no price tag on safety--and there really is no price tag on safety if you're doing it the wrong way if DOE is going to keep paying for the contractor's mistake. After we were terminated a second time, we ended up going a different avenue, the Hanford Joint Council. This is a mediation board set up to resolve issues at the Hanford site. Fluor Daniel, the company that we work for, is a member of this DOE-supported council. Some of the gentlemen and I that worked together went to the Joint Council, told our story, and tried to resolve it out of court. Fluor Daniel Northwest, the company we were working for, refused in writing to meet with this agency to try to resolve these issues, so we pursued things through the legal system again, the Department of Labor ruled in our favor again, and the company appealed it again. The Department of Labor handed down an amazing finding, one of the stiffest findings ever handed a company, and yet here we are, we're going through it again. We are on our way to court in September, and we have got a lot more evidence this time than we ever had the first time. We've got documents that show malice, cover-ups, and how they have treated people that worked with us. We had people that were in carpools with us and just associated with us that were laid off. This is the new atmosphere at Hanford. This is the atmosphere that DOE is helping or allowing to create. When I grew up in this community, there was a great deal of pride. There was pride that Hanford was part of the war effort. This was the town that gave a day's pay for a bomber. There was a great deal of pride in this community. I don't believe you'll find this there again. You know, it is a sad thing that some people have to stand up alone and put so much on the line to try to make safety work. There are some sincere, honest people working out there, but they are not up front. We've got proof that DOE's counsel is helping the company fight us again, and this means that the people sitting in this room today are paying to fight us, the public. There was a DOE manager that once said in an interview, ``I don't expect we'll get zero concerns being raised.'' The zero is not for concerns raised. It's supposed to be zero tolerance for reprisals against those who bring them. Mr. Richardson also stated that there must be zero tolerance policy for reprisals linked to the contractor safety records of their performance reviews. I thought that would be a fine, not a payment. DOE should be out there guiding these companies and not paying for their mistakes. This is not the way to do business. There are a lot of good, skilled people out there. Let's back the workers. Let's clean up the mess and make it in a safe manner so that we can watch our children grow up. Thank you. [The prepared statement of Randall Walli follows:] Prepared Statement of Randall Walli I have worked numerous jobs at the Hanford Site in southeastern Washington for different contractors over a number of years. I grew up near Hanford. My family is from the Hanford area. You know, we have lived there and watched the Tri-Cities grow, and revolve around Hanford. We have seen a lot of people testify to the pride of this community. It's been a bad experience for me and some of my fellow pipefitters over the last three years, because we took a stance at the Hanford Site over some safety issues. We've since been labeled as whistleblowers. Which is a bad term for people that were concerned over safety issues or their fellow workers. In my case I was a pipefitter foreman, 200 West Area. We had some issues that came up over some testing of some new pipe systems that were being put in. And subsequently we were terminated. The whole crew that worked for me was terminated. We ended up going through numerous avenues, including lawyers, over a period of time. We tried to go through what we call the Hanford Joint Council, which is an agency that is set up to try to resolve issues here at the Hanford Site. Some of the gentlemen that I worked with, we all met with the Joint Council, told our stories, tried to get it resolved by keeping it out of court, kind of an in-house deal. The company we worked for refused in writing to meet with this agency that DOE has set up to handle these issues. We then pursued things through legal systems. The Department of Labor ruled in our favor. The company appealed it. The company, the day before we went to trial, settled this out of court. They agreed to take us back under the whistleblower acts. We are supposed to be treated fairly. I have learned that the Department of Energy paid the costs of that settlement and the company's legal fees associated with it. Then, the company sued myself and the other pipefitters because we filed a union complaint. The complaint had nothing to do with the company. But the company held up our settlement checks and dragged us into federal district court, saying that we breached the settlement. We had to hire lawyers to fight back. The federal court ruled against the company and made the company pay the settlement amounts, with interest, as well as our attorney fees. Again, the Department of Energy paid for that, as well. Six months and four days after we were rehired, most of us were laid off again. It's not a big deal to construction people to be laid off. I mean, it's part of our life. We know the first day we go to work, we are working ourselves out of a job. But to work near home was an honor. Most of us have families, young families. It would be nice to stay home once in a while and work with them, play with them, watch your kids grow up. But because we have been labeled as whistleblowers, we can't work out there anymore. Most of the people out there at the Hanford area, if they do support us, it's around the back door, it's quietly, they don't want to be seen talking to us, but yet they want us to listen to their concerns. We stood up for some safety concerns, numerous different safety issues, to try to help keep people from getting hurt. And these companies don't want to really listen to this. They put on a window dressing all the time about safety first, there's no price tag on safety. But it seems like it's window dressing. There are some very concerned people working out there, but they are getting harder and harder to talk to, and most of them are going into hiding, because if they bring up a safety issue, they are either demoted or they are replaced. After we were released the second time we ended up calling the Department of Labor again. They came in, looked at it. They handed down an amazing finding on our behalf again. One of the stiffest findings they have ever handed the company. Six months after they hired us back. And yet here we are, we are out of work, we are going through it again. The company has now appealed it again. And it will be a matter of time, we will be back in court. And we have got a hundred times more evidence this time than we had the first time. We have got truckloads of paperwork, documents that shows malice, cover-ups, how they've treated people that have worked with us. We have had people that were in car pools with us and just because they associated with us, they got laid off. This is the new atmosphere at Hanford. And I tell you, from people that have grown up here, thought Hanford did a good thing for this country, I mean, this was the town that gave a day's pay to buy a bomber for the war effort. I don't believe that would happen again, you know, and it's a sad thing that you have to have people that have a little bit of backbone and can stand up to a company and take it through the court system to try to make safety work. I know there's some sincere, honest people out there, but they're not up-front. And I just wish that maybe DOE could step in and help the workers instead of the company. We've got proof that DOE counsel is helping the company counsel fight us on our own lawsuits. That means that you people sitting there, your tax dollars are going to the government to help fight ourselves. My own tax dollars, I'm fighting myself. You know, this shouldn't be. DOE is supposed to be out there guiding these companies. I think they should step in and make them either toe the line or kick them out. This is not the way we do business. There's a lot of skilled people out there that know their jobs and they're willing to do their jobs. Let's get a company in here that will back the workers, let's do the work to clean up this mess that we've got sitting in our back yards so that our kids can grow up in a safe environment. Mr. Burr. Thank you, Mr. Walli. The Chair would recognize Mr. Gutierrez for the purposes of an opening statement. TESTIMONY OF JOE GUTIERREZ Mr. Gutierrez. Good morning, and thank you, Mr. Chairman. Thank you for inviting me to give this testimony. My name is Joe Gutierrez. I reside at Los Alamos, New Mexico, specifically White Rock. I have completed 11 years of employment with the University of California at Los Alamos National Laboratory. Since October 1992 through the present time, I have collected information about the management practices of officials and managers at Los Alamos National Laboratory, the University of California, the Department of Energy, some supporting government agencies, and, as I've heard today, I must add one more party. And let me preface my statement by stating that there is no I am castigating or criticizing Congress. We need your help. We are the ultimate body that we can defer to for help. However, I must include and ask you to investigate the relationship between those representatives and Senators who have a DOE facility located in their Districts, because that relationship is one that I feel, at least in my experiences, has a big bearing in this issue, because that is an underlying reason why the Department of Energy and the University of California, in particular, is remiss in not enforcing and implementing these zero tolerance safety policy. I will address that in more detail here in a minute. Let me state that in 1996, October 1996, I found it necessary, after having disclosed some information that the University of California and the Los Alamos National Laboratory was perpetrating a deception to the surrounding Los Alamos community and the Nation, as a whole. There was a claim that Los Alamos National Laboratory was in compliance with the Clean Air Act. I had personal knowledge and documentation to clearly show that that was not the case, so I found it necessary to blow the whistle. That was in 1996. In the spring of 1997, I met with Senator Pete Domenici, at his request, to address some very important and very critical employee concerns at Los Alamos. In that meeting, Senator Pete Domenici pointed at me in anger because I had blown the whistle. In his view, he felt that I had given the laboratory a black eye. But he completed his statement by stating that, ``I tell the University of California and Los Alamos to fight you guys to the hilt, and I'll give them all the support and all the money they need.'' And taking a pause and realizing what he said, he then added, ``Only if they're right.'' Well, who is making sure that they are right? Certainly he's not and certainly the DOE is not. That was in the spring of 1997. By the end of that year, during the August timeframe, when I received a performance appraisal, I detected some subtle retaliation. I pursued to investigate, and, in fact, I felt that there was retaliation being perpetrated against me and I filed a claim in November of that year. By the spring of 1998, the Department of Labor had made a determination and gave a favorable determination in my behalf. The University of California appealed that determination. In the spring--January 1999, after a 5-day hearing, again the administrative law judge for the Department of Labor issued a 72-page ruling on my behalf, again a favorable ruling in my behalf and determination on my behalf. The University of California has appealed that ruling, and I am now going through that appeal. If--the Administrative Review Board has that appeal in front of them. If that ruling should again be in my favor and the University of California chooses to again appeal, I am facing, as I understand it, in the 10th District, a potential 10-year wait before my case gets in front of that court. Again, not only do I have to wait and incur additional expenses, but at the end of that I am still probably expecting a large expense, and who knows how much longer for a final outcome in my favor. I'm hoping it will be in my favor. In closing, I would like to make two comments, one relating to recommendations and the other perhaps--it has been fashionable for officials at DOE to refer to these laboratories as the ``crown jewels of this country.'' I think we need to take a pause, in light of this issue, in light of the issues that surround this concern. We need to really stand back and take a look at it. What benefits are derived from the technical innovations at those laboratories I believe are greatly undermined and perhaps even there's a detraction from that benefit due to the waste, fraud, and abuse that surrounds the management of those technical endeavors. With that, I think I would like to close. I'd like to just add that I was quite impressed about the statements that were made this morning by you, Mr. Chairman, and the rest of the panel. They are quite strong, and I'm hoping that, in fact, there will be follow-up and corrective action. Mr. Burr. I thank you, Mr. Gutierrez. Let me make two comments. One, the purpose of this subcommittee and specifically this hearing is to try to get at the truth and to make sure that a zero tolerance policy, if has not been adopted, is adopted, because that's the stated objective of the Department of Energy. I'm sure that Mr. Carpenter will be very informative to this committee, because I think that he helped to set the draft policy with Secretary O'Leary, who I believe was well intended with her drafting. The second statement would be I thought I was very controlled in my comments this morning, much more controlled than last night at 11 when I was not only walking through today's testimony but looking at the hearing that we had a year ago and the answers that I got from the Department of Energy then that are inconsistent with the actions that have taken place since then, and with the testimony that I had in my lap in my bed last night reading. I can assure you that I think we will be much more specific and hopefully as controlled as this hearing goes on. The Chair would recognize himself for the purpose of questions. Mr. Carpenter, you did participate with Secretary O'Leary in the draft proposals, didn't you? Mr. Carpenter. Yes, sir. Mr. Burr. And share with everybody here what she intended to accomplish with those proposals, in your estimating. Mr. Carpenter. Secretary O'Leary attended a conference sponsored by our organization to look at the issue of whistleblower protection in 1993 and she became the keynote speaker at this conference and met privately with a number of DOE employees and DOE contractor employees following or right before that speech, and she was personally affected by what she heard and committed at that point in time with the zero tolerance for reprisal. So she recognized that this was bad business for the Department to countenance reprisal against whistleblowers. She committed to addressing that and tried to come up with a set of initiatives and policies that would change the course of the Department. Mr. Burr. Did you feel that her initiative was genuine? Mr. Carpenter. Absolutely. Mr. Burr. And did you ever read the points that she attempted to set? Mr. Carpenter. Sure. I read and commented on those points repeatedly and had numerous meetings with her and tried to tell her where they were falling down. Mr. Burr. How many of those points that you remember were in her initiative have been implemented at the Department of Energy? Mr. Carpenter. Well, to a degree, some of the points have been implemented, but, in my view, none of them have been implemented fully or effectively. Mr. Burr. How many of them have been enforced? Mr. Carpenter. Same answer, which is that, even when it comes to what was a no-brainer at the time to Secretary O'Leary and her staff, which was the contractor reimbursement policy, everyone agreed that this sent the wrong message. And this was the strongest thing she heard from whistleblower after whistleblower at her meetings, was: why is it that the Department is funding this litigation? And our position is that they ought not fund the litigation, even in advance, because most agencies don't fund their contractors' litigation for whistleblower discrimination cases and in advance of a ruling. So this was one that we thought--where we felt comfortable where there were going to be some changes made, and, in fact, the changes that were made occurred on a haphazard basis. I recently reviewed the contracts at the various sites--Los Alamos, Rocky Flats, Hanford, Savannah River--and took a look at the language in those contracts, and they are all different and they say different things, but generally they allow reimbursement of these cases for the contractors' costs until an adverse ruling, and then, at the point of an adverse ruling, it's supposed to cutoff and even cost paid back, but that hasn't happened. Mr. Burr. Clearly, an adverse ruling and the willingness to participate in an appeal of an admitted violation or an adverse ruling are two different things. Correct? Mr. Carpenter. Yes. Mr. Burr. Let me ask you specifically, on the contract with U.C. as it relates to Mr. Lappa and his case at Lawrence Livermore, do you feel that the Department of Energy has the ability under Price Anderson to do a notice of violation? Mr. Carpenter. Clearly. In fact, the Department, in--I believe it was December 1988, through its Environment and Health and Safety Office, put out a notice to all contractors saying--recognizing a Department of Labor ruling in favor of a whistleblower in the case of a man named Casey Rudee at the Hanford site, and said, ``Here is an example of the case where the Price Anderson Act allows the Department of Energy to take enforcement actions and civil penalties against contractors who engage in reprisal, and in the future you are on notice, contractors, that this might happen.'' So notice was given to the contractor community, but there was no follow-up. In Mr. Lappa's case, it was even more egregious, in our opinion, that it wasn't done, because Mr. Lappa was a witness to the very Price Anderson Act enforcement investigators that ended up issuing a notice of violation for the underlying safety problems and the nuclear criticality violations at the laboratory, and so he was a helpful witness to the DOE. Mr. Burr. Let me ask you, the 1st of January 1999 the Department of Energy was prepared to send a notice of violation, or at least a proposed notice of violation, to U.C., and I've got an e-mail--1/6/2000, excuse me--where--from Keith Christopher to Sharon Hurley. Let me just read you a portion of it. And this is referring to a decision that Ms. Sullivan has made. ``I advised her that, during the enforcement and conference and in responding to any subsequent PNOV, if one were issued, the lab would have an opportunity to make their case. Sullivan stated that she felt this process was inadequate due process without DOE conducting another separate investigation of the case, regardless of DOL findings.'' I would only ask you, in your opinion, do you believe that the Department of Labor's findings are substantial enough for them to pursue a notice of violation, even a proposed notice of violation, or is Ms. Sullivan's counsel right that they have not allowed due process? Mr. Carpenter. They were certainly allowed due process. The University of California, if it disagreed with the findings of the Labor Department, had an opportunity to appeal. They chose not to exercise that option. What resulted was a final agency order of the Department of Labor, which was, again, not appealed. So the due process was there. The University simply chose not to pursue it, and, in my view, admitted to the violations, which was an even stronger result than having an ALJ come out and make a finding. This was a great case for the Department to be able to vindicate zero tolerance for reprisal policy, but, instead, chose to, I think, getting the system to support the contractor. Mr. Burr. Let me read one additional sentence and just get your comment on it. This is the next paragraph. ``Sullivan stated that the laboratory was pressured by DOE to accept the DOL findings and did not appeal the findings, and had that not been the case the laboratory would have appealed DOL's findings.'' The Department of Energy pressured U.C. to accept DOL's findings, yet turn around and participate in continued litigation, unlimited, possibly, based upon the wording of a contract. Mr. Carpenter. I actually didn't know that the DOE had pressured the laboratory to---- Mr. Burr. I'm only going based upon somebody at DOE's e- mail referencing the meeting they had. Mr. Carpenter. That would be amazing to me in that the DOE has taken the position that the Labor Department finding has no credence to them. If they're going to tell the contractor to do one thing and accept this as a finding and let's all move on, and then turn around and fund their litigation, what kind of message is that sending to the rest of the workforce and to the contractor community? I think the message is, ``litigate these cases.'' Mr. Burr. And if I remember some of the comments of Secretary O'Leary, the intent was to make sure that we sent a loud message to employees that if you work in unsafe areas, if there is retaliation we want you to feel comfortable to come to the Department of Energy. We want you to feel comfortable to use whatever means you need to voice that opposition, with the confidence that no contractor will retaliate against you. Does that pretty much sum up some of the---- Mr. Carpenter. That was the intent of Secretary O'Leary, and the reality is that there is a great deal of fear out there, and we advise clients not to go to the Department of Energy with safety and health concerns. It is not the right place to go. The Department has a very bad track record of supporting whistleblowers. Mr. Burr. The Chair would ask unanimous consent to enter a significant amount of records into the record. My understanding is that minority and majority have---- Ms. DeGette. Reserving an objection, let me just review that. Thank you. Mr. Burr. The Chair has one additional question and then he will turn to the ranking member for questions. Mr. Walli, you remember those valves that you refused to put in? Mr. Walli. Yes. Mr. Burr. Are they in today? Mr. Walli. No, they are not. Those valves---- Mr. Burr. Did they ever go in? Mr. Walli. Yes, they did. Mr. Burr. For how long? Mr. Walli. A matter of hours. Mr. Burr. And they took those valves out why? Mr. Walli. The valves that we were objecting over were given to us as test valves. They were just to test the new systems that we were putting in. We were going to run a hydro test on them. When they were first given to us, we noticed right away that they were not rated for the pressures that we were going to be putting against them. We objected. We raised the concerns. We went through our company and through our management and our safety department and they tried to force us to use them. They backed myself and my colleagues, my crew into a corner, stating that, ``Yes, that was a--they weren't rated, but they were still okay to use.'' We agreed. I agreed that we could go ahead and use them if none of my personnel or the people I was responsible for were going to be anywhere near those valves when they were under pressure, and that they, as the company, took sole responsibility for anything that might happen to the system and/or the environment where they were going to be used. It came to a head to the fact that we either had to quit or use them. When they assured me that none of my personnel were going to be close to them and the safety of the personnel which I was responsible for would not be injured, we agreed to use them, but these were solely for test purposes. It came time to use these valves. The scope of work changed, and any time you change the scope of work from what the plan of the day was, you're supposed to stop work, reassess what is going to happen, and either make a new plan and have a new meeting and then move on. We went down there. We had what we call the ``pre-job.'' The scope of work changed. They wanted my personnel and the personnel of another company that had charge of this tank farm to go in and operate these valves under these high pressures that they were not rated for, which had changed from the agreement that we had said that we would install these valves. Now they wanted us in the confined space in the contaminated radiation zone operating these valves under the pressures that they weren't rated for, and that's not what we had agreed we would do. Now my personnel and these other people that were assisting us would be at danger if those valves come apart, blew up, or just let go. This was also at the end of two lines that had about three- quarters of a mile of water against them, that if those valves let go all that water would end up in the pit where they were at, which was just feet from the drain that went into the 101SY tank, which was one of the Hanford's watch list hydrogen tanks at the time. At that time, we stopped the work. We found out that the subcontractor that was working with us had the right valves all along, like we had been telling the company--my people in the company were out there some place. The company managers came down there, after yelling, cursing, throwing what we call an ``animal act'' on me and my personnel, got us the right valves. We installed those valves. We went ahead and did the test, like should have been done the first place, and we pulled the test off like was required. At the end of that test, we drained the system in the normal manner that we would have. Mr. Burr. I just want to make sure all the members understand. You objected to the installation of the valve originally because the valve was not rated at the pressure that you knew the system would be tested. Given an assurance of this safety of your personnel during testing, you agreed to go ahead and install the valves, and it wasn't until your people were put back in what might have been a dangerous position that you stopped work. Mr. Walli. Yes, that statement is true. Mr. Burr. And I would only ask one last question before I recognize Ms. DeGette. Mr. Carpenter, given that that was nuclear safety related solutions, or whatever was going through there, would this also be a Price Anderson violation? Mr. Carpenter. You bet, sir. This is a nuclear safety issue and it impacts the safety of a nuclear system at the Hanford site. There's probably no more sensitive nuclear area than the high-level nuclear waste tanks at Hanford, which, if you fool with those tanks, if you add materials to these tanks, they can become unstable. Millions of curies reside in these tanks. It could be an environmental disaster of the first magnitude. Mr. Burr. Are you aware of any investigation by the Department of Energy relative to Price Anderson authorities? Mr. Carpenter. No. And, in fact, we have been asking the Department of Energy to investigate and take action on these issues, and the Department of Energy has consistently refused to do so. Mr. Burr. Ms. DeGette has been very patient, so let me at this time recognize her. Ms. DeGette. First of all, Mr. Chairman, we have no objection to your entering---- Mr. Burr. Without objection, so ordered. Ms. DeGette. Thank you. [The information referred to follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Ms. DeGette. In his written testimony, Mr. Van Ness of the University of California makes the statement that, ``Whistleblowers aren't really hurt when the contractor is reimbursed for the legal fees because the whistleblowers can find counsel to take cases on a contingency fee basis.'' So I was wondering, Mr. Gutierrez, is your attorney doing the work on a contingency fee basis with no money out of your pocket? Mr. Gutierrez. No. Ms. DeGette. Tell me about what your legal fees are to date. Mr. Gutierrez. My estimate is at 50,000, but there is still some ongoing litigation. What that does not include, however, is opportunity cost, interest that is being lost in investments that I've had to take out to incur these expenses. The litigation that I have undertaken has been paid fully by my resources. I haven't been able to--I have appealed to the Department of Energy. I have appealed to my Congressman for help. Everybody has just simply turned the other way. Ms. DeGette. So you are paying that money to your lawyer out of your own pocket? Mr. Gutierrez. Yes. Ms. DeGette. Now, Mr. Carpenter, you folks were set up to defend whistleblowers, and I assume part of the reason was because many of them had a hard time finding attorneys. I'm wondering if you can comment on what you see with the whistleblowers who you deal with, whether attorneys are beating down the door to take these cases on a contingency fee basis. Mr. Carpenter. It is very, very difficult for these employees to find attorneys to represent them, much less on a contingency fee basis. The reason that we take as many cases as we do is that no one else will take on these kind of cases. Even in our representation, the client has to come up with expenses, because we are a small organization without the resources to front expenses on these kind of cases. It is very difficult. These cases are very difficult, very time consuming, can take up to 6 or 7 years to resolve, and commercial law firms don't see any profit in it, especially when the defense contractor has an unlimited source of funds to be able to just go and go and go, and they'll spend hundreds of thousands or even millions of dollars to avoid paying a $20,000 employee finding. I mean, how could you--as a private law firm, how could you possibly beat that? You know, you're not going to take on those kind of odds, especially for the reward at the end. You know, the name of the game in these kind of cases is wear down the other side, and have motions, have delays, you know, take numerous depositions, run up a cost, and the DOE is paying for that process. Ms. DeGette. And when they take all those numerous depositions and all of that, those are costs that even your clients have to pay out of their own pocket. Mr. Carpenter. Absolutely. Ms. DeGette. And that's not cheap in a major litigation either, is it? Mr. Carpenter. That's correct. It is oftentimes $2 a page for a transcript, and these pages can run thousands and thousands of pages. The costs are just phenomenal. Ms. DeGette. Do you think that the fact that these companies are reimbursed for their legal costs by the DOE if the litigation is ongoing is an incentive or a disincentive to early settlement and resolution of the cases? Mr. Carpenter. Certainly it is an incentive for the contractors to litigate the case. If they had to pay the cost of the litigation, they would have a much more realistic view of what these cases cost them, and, therefore, they would have a cost/benefit analysis done on these cases. They wouldn't say to themselves, ``Well, heck, the DOE will write us a blank check for our expenses and our costs.'' They'd have to say, ``Well, we're going to have to pay for this, so does it make sense for us to delay this case and run up the cost over time?'' And I think the answer would be a much better answer for everyone involved. So the DOE providing this amount of money to the contractors with no consequence at the end of it is certainly an incentive to drag it out. And even if they drag it out, they can always settle at the last minute by saying, ``Whatever you want in your hearing, you can have right now. We'll just settle for it,'' knowing that DOE will pay that, as well. Ms. DeGette. And yet--but what that has done to people like Mr. Gutierrez for all of those years, they have been having to pay out to their lawyers every month, and it is hard for the individual whistleblower to ever get to that settlement point a lot of times. Mr. Carpenter. That's correct. And, again, the name of the game is delay it, delay it, delay it. I mean, all this time that Mr. Walli and his fellow pipefitters have been litigating, they have mostly not been employed at the site. Ms. DeGette. Right. That's the other part. Mr. Carpenter. So they are kept out away from the work force, and it is a strong message to the rest of the work force. ``This is what happens to you. Don't go there.'' Ms. DeGette. Let me change focus a little bit. I think everybody could get the sense here that we'd all like to see the actual implementation of a zero tolerance policy for DOE contractors, but what we're hearing from you, I think, there has been a serious commitment on behalf of at least the last three DOE administrators, and yet the agency hasn't implemented the policy. Do you really think that we can achieve a zero tolerance policy, or is this just pie in the sky? Ms. DeGette. Absolutely. In fact, the Nuclear Regulatory Commission has such a policy. They don't call it that, but they call it a ``safety-conscious work environment.'' And if, at a commercial nuclear facility, a contractor retaliates against an employee, the manager that engaged in that retaliation can go to jail under 10 CFR appendix B. The contractor can be subjected to civil penalties up to $100,000 or $200,000. There was recently a $200,000 civil penalty in that case. And the agency, itself, will decide whether or not--the NRC will decide whether or not there has been reprisal or retaliation. They won't wait for the Labor Department. It will do its own investigation. This is what the Department of Energy could do. I've asked them to do it in rulemaking petitions, and they won't. If they want to get serious about it, they've got to change the culture. They've got to have consequences and penalties for contractor misbehavior. Ms. DeGette. It also sounds to me like you might need some statutory changes, because, of course, you can't promulgate criminal penalties by rule, last I heard. Mr. Carpenter. That's true. Ms. DeGette. Okay. It is my understanding that contractors can incur penalties for security or safety violations under both the Price Anderson Act and also in the contract for a site. Is that your understanding, as well? Mr. Carpenter. Yes. The Price Anderson Act is a tool that is available to the Department. Ms. DeGette. And so do you think that a system with two-- the two complementary penalties under the Price Anderson Act and the contractor would be the most effective, or do you think the NRC thing would be---- Mr. Carpenter. I'd prefer the approach of the NRC, which is more of a stand-off approach. The Price Anderson Act attempts to get there, but, let's face it, there are six people in charge of Price Anderson Act enforcement for the entire Leppins Complex, which is just a massive complex with numerous-- thousands and thousands of facilities. No way can six people get out there and do the job that they need to do. Plus, they don't enjoy the support of upper management of the Department of Energy, as we have been hearing from employees in that branch, even with what we heard with this e-mail right here. When they would like to take an action to support, for instance, Mr. Lappa, the general counsel slaps them down and says, ``No, we can't go there.'' Ms. DeGette. All right. Just one last question. There has been some argument made that the way we can fix this problem is contract by contractor, and by putting specific language into each contract, as they did with the new Rocky Flats one, for example, and that you can solve it that way. Others think that there needs to be generic boilerplate language, even, as you say, criminal penalties. Which do you think is the best approach, or can they both be used? Mr. Carpenter. Certainly, the contract-by-contract method is--that's something that the Department has said it is going to be doing for the last decade, and it is a failure. There needs to be institutionalized protections for these whistleblowers. There needs to be an institutionalized approach to changing the culture at these sites so that there is not fear, so that contractors feel the pinch and feel it that they cannot--it is not acceptable to retaliate against a whistleblower. Right now, the other message is being sent, which is that DOE will support that. So institutional changes are needed. Ms. DeGette. Thank you, Mr. Chairman. I'll yield back. Mr. Bryant [presiding]. The Chair would recognize the gentleman from Ohio, Mr. Strickland. Mr. Strickland. Thank you. Mr. Carpenter, in your opinion, what does ``zero tolerance'' mean? Mr. Carpenter. Well, I see that sign on the highway, when referring to either speed limits or drunk driving. And what it means to me is, if I'm doing 66 miles an hour in a 65 zone, I don't get cut any slack, I get a ticket. If I am over the drunk driving limit, then I go to jail. And whatever excuse you might have doesn't matter. That's what it means to me, is that they don't--in every case where there is a reprisal, the Department of Energy will take some action. Mr. Strickland. I think of it in terms of, if a child takes a gun to school, there is zero tolerance for that. Insofar as the DOE is concerned--and I would like for each of you to respond--do you see the DOE as an advocate for the whistleblower, a neutral observer of this process, or an adversary of the whistleblower? I'm just asking for your opinion? Mr. Carpenter. An adversary, sir, in most cases, and especially as indicated by the Department entering into joint defense relationships with the contractor in cases of whistleblowers suits, not only in the case of David Lappa, but in the case of the pipefitters at the Hanford site. We recently attempted to get information from a contractor who said, ``Well, a DOE attorney was in the room, and therefore it was privileged.'' And we fought out a motion to compel the testimony of that contractor manager, but the DOE came in with an affidavit that said, ``No, we are in legal privity with the contractor, and therefore you can't get to this information.'' And the judge, of course, then agreed that we couldn't get to the information in that case. That sent a very clear message to us exactly where the Department of Energy is and was on these issues, even while saying, ``We're going to wait and see what the court says about this.'' So I think they act as basically a support mechanism for the contractor. Mr. Strickland. Mr. Walli? Mr. Walli. I agree with Mr. Carpenter that that is part of our case, and we do know from testimonies of depositions of our ongoing case that some of these managers have met with DOE. They said they met with DOE, but they can't talk about that. And that we know that, through this investigation that we are ongoing through, that they are meeting with DOE's counsel. I don't feel comfortable that DOE is helping us. They haven't stepped up. We've asked for help and nobody has come forward. Mr. Strickland. Mr. Gutierrez? Mr. Gutierrez. My observation and experiences show that there is a revolving door between the Department of Energy and many of the contractor personnel, and that is one contributing factor, not all of it. But primarily it is an adversary, and that can be demonstrated quite well through chronological case histories of how DOE responds to these issues and appeals for help. Mr. Strickland. So we've got a situation where there is a department of Government that enunciates--talk is cheap. I understand that. But they say they have a policy of zero tolerance, and yet, in your experience, this Department is colluding with those who would retaliate against whistleblowers. I mean, I'm trying to just say it the way I think you are presenting it. Is that a reasonable way to---- Mr. Carpenter. Yes, sir. Mr. Gutierrez. Yes. Mr. Strickland. Now, Mr. Walli, I understand that Mr. Hansen from Fluor Daniel is going to testify today that Fluor has a ``stop work'' policy which ``gives every employee, both bargaining unit and unrepresented, the responsibility and the authority to stop work immediately without fear of reprisal when they are convinced a situation exists which places them, their coworkers, or the environment in danger.'' Did this policy protect you and your workers? Mr. Walli. I don't believe so. No. That policy is there. When I hired in, actually under Kaiser, and then the contract turned over to Fluor Daniel while I was employed there, they gave you stop work cards. They gave you the authority to do that. As I stated in my statement, we thought we had the right and the duty with these cards and the training that we had to be able to do that. This is why we brought up these concerns. This is what we were trained to do in our jobs. Like I said, when that--basically, we were backed into a corner. When this whole thing originally started with us, we had the option to either quit our jobs or do as they had told us to do, and we tried to work out a solution to protect us, our people, and try to work with the company, get the project and the job done and not get anybody hurt. And when this revolved into a situation where my people were going to be put in possible danger, we did stop work. Mr. Strickland. I understand. Now, is it your understanding that this ``stop work'' policy was in effect at the time that this incident occurred? Mr. Walli. Well, the policy existed, I guess, because we had the cards and the paperwork that said we had the authority to do it, but, as I stated, as soon as we did do it we had managers coming down there screaming and yelling and cursing at me and my people for doing it. Mr. Strickland. Yes, sir, I don't understand how---- Mr. Walli. They didn't want---- Mr. Strickland. I don't understand how you could have gotten into this kind of difficulty if the policy is--if the policy actually says, ``when they are convinced,''--``they'' I suppose meaning the employee--``are convinced a situation exists which places themselves or their coworkers in danger.'' And I assume that's what you expressed to whoever was giving you the direction. Mr. Walli. Yes, this is what we expressed. Mr. Strickland. So even if you were wrong in your judgment, even if this valve was, in fact, a safe valve, it seems to me that, if you used your judgment and you informed the management or the supervisors that that was your judgment, that you perceived it to be unsafe, that you should have been protected from retaliation, even if you were wrong in your judgment. Mr. Walli. This is correct. This is what we thought, and this is what we were trained to do. I mean, you have to realize that these are not just people that walk in off the street and pick up a tool and go to work. They go through extensive training. We go through a lot of schooling. You just don't go out there and work on these plants. I mean, there's a lot of money spent on training these people, and to get them in to do the work, there's thousands and thousands of dollars in training in each employee that goes out there. And these are people that are trained to do this in a specific manner. We're following the rules that they set up, the guidelines. And, like I said, we had these cards. We thought we were doing what we were supposed to be doing. We were following their rules. Mr. Strickland. And, Mr. Carpenter, one quick statement, or I guess sort of a comment, but I'd like your reaction. If the Department has a zero tolerance policy and there are whistleblowers who come forward, it seems to me that the Department should partner with the whistleblower, not with the person or entity that may be opposed to the whistleblower. I mean, if the Department is not going to be neutral or objective, if they are going to take sides, if they are going to put resources into one side or the other, it seems to me that the resources should go into trying to help the whistleblower demonstrate the danger, and if there is an accusation of retaliation, to help the whistleblower at least equally support the whistleblower's point of view versus the exclusive support for the contractor. Would you say that is a reasonable point of view? Mr. Carpenter. I think it is reasonable, and especially when it come to cooperation with the whistleblower in trying to obtain information that the contractor has access to, the Department has access to, but the whistleblower is denied access to, in one cases, you know, needing to file a lawsuit under the Freedom of Information Act. Mr. Strickland. Have there been times when the whistleblower has requested such assistance or information from the department and that assistance has not been forthcoming? Mr. Carpenter. Yes, sir. In the case of David Lappa at the University of California, it required a lawsuit against the Department of Energy to get information through the Freedom of Information Act that the request was over a year old, to get access to employees of the Department that have knowledge that would be helpful to Mr. Lappa's case. DOE refused to provide information on both counts, refused even up to the point where finally, earlier last month, the judge--or I guess a couple of weeks ago the Federal judge ordered the Department to produce the documents under the Freedom of Information Act and produce the witnesses necessary for Mr. Lappa's case and chided the Department quite severely for, you know, failing to do this in the first place voluntarily. So, you know, this is a prime example of the Department taking sides once again against the whistleblower, and this is just inexplicable behavior on my--you know, I can't fathom why they would do this. Mr. Strickland. Thank you. Thank you, Mr. Chairman. I understand you didn't put on my time, but thank you. You have been very generous. Mr. Burr. I wanted the gentleman to fully explore every possibility he needed. The Chair would recognize the gentleman from Tennessee, Mr. Bryant. Mr. Bryant. Thank you, Mr. Chairman. I apologize to the committee and to the witnesses for not being here to hear all of your testimony, but I have just arrived and had to stay home last night to take care of some family business. I had not intended to make a long statement here, because I realize this is the time we question and we've members have already given statements. But I would like to say, from reviewing not all the testimony but some of the preliminary matters for this hearing and as one who typically and strongly sides often with business interests and believes that we need to support our businesses who provide our jobs as much as we can, and coming from also a background of some procurement law with the JAG Corps when I was in the Army, I saw the contracting process work and saw the good side of it and sometimes not-so-good side of it. I am concerned about what I am hearing from you, although not from you today because I haven't been here, but indirectly through reading some of the information about this file. You know, we have established as a Congress, I guess some time ago, a policy and enacted the Whistleblower's Act and other things that support that. But we do want people within businesses, who, again, I generally support, but we want employees to be able to have the freedom and confidentiality and incentive, even in some cases, to report dangerous practices, and so forth. It seems to me, if we've established that policy, that businesses ought to understand that's the policy and there's a good reason we do this. In order to help make that work, which that's one of the things that I also advocate a private sector, as much as possible, but to make the private sector really work properly you have to have people willing to do what they are supposed to do. That's why I'm concerned in this case where I hear examples of where businesses aren't doing what they are supposed to do. There are allegations of retaliation and doing things they shouldn't do. I read in the statement from the general counsel of DOE, who will testify next, that zero tolerance does not mean that every whistleblower claim must be accepted as valid without an opportunity for response or appeal by the Department contractors, and I agree with that totally. But, on the contrary, I think Mr. Carpenter mentioned zero tolerance as riding down a road and you've got a 65 speed limit, and you know if you go 66 you'll get caught. To have a zero tolerance policy, you've got to have some enforcement, and I guess that's where I'm going. I don't really see the enforcement of this being done, and particularly, as Mr. Carpenter testified--and I totally agree--it is very difficult to do that when there is an incentive not to cooperate or to extend, stretch out litigation, try to chase the plaintiff away, knowing in the end that you are going to be reimbursed fully for your attorney fees, and court costs if you win. So, given what I am hearing--and I hope I can hear from the second panel maybe some examples I have missed where actually there have been contractors who did not get awarded attorneys' fees or who had some sort of contractual consideration, made when they were, in fact, guilty of retaliation against whistleblowers. I hope I can hear some examples, because, quite frankly, all I've seen and read about so far is that zero tolerance makes a great sound bite for television and for coming before hearings like this, but, again, if you're not doing anything about it through the enforcement mechanisms, I think that sound bite rings very hollow. Again, I hope someone can cite me some examples where people, businesses are not being reimbursed for their cost of defending this litigation. Again, if it is not meritorious, if it is frivolous--again, I know not every complaint is legitimate, but the other way, too, some of these are, and I think the only way that we can strike a chord with apparently some businesses is to hit them in the pocketbook and not guarantee that we're going to reimburse them every penny of expense that they incur. The fact that we are using very expensive law firms around the country, the fact that--having, again, come from a private practice, I know how this works, and it is not right. Mr. Carpenter, I do have a couple of questions. I'll climb down off my little, short soap box there. In the testimony, DOE highlights the success also--I mentioned, in the statements of its counsel, general counsel-- they highlight the success of their employment concerns program. Now, what has been your experience with the effectiveness of this program? Mr. Carpenter. Well, I'm not impressed with the employee concerns program. There is a well-intentioned person that is there, but he is a person, and there is no other staff there. It has not received the budget. It has not received the authority or the resources to accomplish the mission. I work in the policy arena, but mostly I actually work around folks like Mr. Walli and Mr. Gutierrez and Mr. Lappa, and so I am very aware of how employees feel at these sites and whether or not they can raise concerns, and the Department has utterly and totally failed to address that culture and has not looked at the fear factor, which is so important to safety. If you're going to have safe operations, people have to be able to raise the concerns. Mr. Bryant. Are you speaking about confidentiality? Is there confidentiality in---- Mr. Carpenter. That's just one piece of it. You know, the Hanford site has one of the best employee concerns departments in the whole complex, and we did a little survey of their employee concerns program a few months ago and found that a third of the cases, employees that came to them simply got referred back to the contractor that was accused, and they didn't take jurisdiction in other cases at all, just failed to investigate. They did very little in the way of actually helping any employee that I could see. In one remarkable case the employee concerns program asked the contractor to write up a report about an employee's, you know, whistleblowing concerns. The contractor did write up such a report, but then the DOE simply put their own letterhead on it and filed it as if they had written it, down to where it said, ``We conducted investigations and found that the workplace was a safe place to work, raise concerns.'' And they had not conducted a single investigation or interview. It was all the contractor. Well, subsequently, the Department of Labor and other entities came in and said, ``This is a horrendous place work,'' and they fired the contractor manager, they fired the safety manager, they fired a foreman, all for engaging in very ugly reprisals at the Hanford site, and the employee was well reimbursed after that, but only because of the employee had some support behind him. But, according to the DOE, everything was fine just about a month before all this happened, relying on, again, the contractor's say-so. Mr. Bryant. Okay. Mr. Carpenter. So it's not there. Mr. Bryant. Let me ask Mr. Walli about your efforts to utilize DOE's employee protection processes, and even possibly the whistleblower hotline that DOE operates. What was your experience in using these types of protective processes? Mr. Walli. Well, when I worked out there, there was always rumors. You know, people talk. And it has always been rumored that, in the circle where I was at, that DOE had somehow released statements or a copy of a tape of workers calling into the DOE hotline. So the workers that I worked with, it was always talked about, you know, it didn't matter if you called the hotline because it would get back to your contractor. We later found out, after we started litigation and depositions, that one of the superintendents actually had walked in, or he says he walked in on this event happening, so the rumor that we had listened to over the years actually, according to the superintendent's testimony, was true--that somehow one of these tapes of a worker calling into a DOE hotline had gotten back to the contractors and the managers were listening to it trying to figure out who was on the tape. We called--I had an apprentice work for me while this issue had come up, had originally started. He called the Fluor Daniel hotline. Thirty-five minutes after he had called the hotline, our union stewart was over there chastising him for calling that and not coming to them and keeping it in-house. So the company hotline--I mean, there was a direct link that these things come back to your managers really fast. Mr. Bryant. Let me very quickly ask one question of Mr. Gutierrez. As I heard just the end of one of your answers, and another type of concern--something of the nature of the relationships of people moving back and forth--not moving back and forth, but moving, let's say, from the DOE to the contractor as an employee. Did I understand you to say people are leaving, have left DOE and gone to work for a contractor? Mr. Gutierrez. Yes. Actually, both cases. We have change of stations status, but, aside from that, we have employees from the University of California at Los Alamos National Laboratory that quit that entity and go to work for DOE, and vice versa-- managers and officials from DOE take an assignment or a job with University of California or at Los Alamos National Laboratory. That's done routinely. It is amazing, I guess. I've collected names over the period of time, but you lose track of it all, it just becomes so routine. Mr. Bryant. Why do you think that would have any effect on---- Mr. Gutierrez. It has an effect in this manner: if there is a complaint--I mean, you know, the individual that you file a complaint against at the University of California at Los Alamos then ends up at DOE having to oversee that effort on your complaint, and vice versa. Or you have the Department of Energy official that knows of your complaint--or it doesn't have to be yours, but, in general, knows of a series, a number of personnel that have filed complaints, then he goes to work at the University of California as counsel or in some other capacity, so now he has first-hand information about how to advise the University of California on how to protect themselves against this reprisals and concerns. It is a major problem, because, in trying to locate somebody that you can trust and have some confidence in, you end up against these people routinely. In some instances, when you do file a complaint, I've utilized the employee concerns program at DOE. That was my first choice. The response was, ``Well, you know, we only have 15 people, and we've got, you know, hundreds of complaints. It is going to be a year before I can get to yours. Just give me some time and bear with us and, you know, we'll take care of you.'' Well, you call back 2 weeks later, and that individual is no longer in that office. They've moved on back to the University of California at Los Alamos or I find out they're working at Los Alamos and somebody else comes into the slot and says, ``Well, I'm new here. I need to catch up, and it is going to take me, you know, a couple of weeks or 6 months to catch up.'' So you end up in this run-around. Mr. Bryant. Mr. Chairman, thank you for your consideration. Mr. Burr. I thank the gentleman, and I hope the graduation went well. I know there are several members that have just a few additional questions. I will take the opportunity to ask one myself. I want to go back to the e-mail that I was referring to earlier, Mr. Carpenter, and just get some comments. I want to read from the third paragraph. This, again, is Keith Christopher, director of the Office of Enforcement at the Department of Energy. He says in the third paragraph: ``While I disagree with this legal position-- '' he's referring to Ms. Sullivan's decision--``I have advised Dr. Michael that he should defer to the advice given by DOE's general counsel.'' Go down to the last paragraph, at the beginning: ``I recommended to Dr. Michaels that, while we may be precluded from issuing an enforcement action based on the general counsel's position, we should, given the facts that you now have another employee raising safety concerns at this lab and fearing retaliation, that we should at least issue an enforcement letter stating our concern and require them to provide a response demonstrating what management processes they have in place to ensure that employees will feel free to raise safety concerns.'' It is my understanding that there was never an enforcement letter sent. Do you find that as a shock? Mr. Carpenter. I find it shocking that the general counsel is dictating safety policies at the Department of Energy, No. 1. I guess I'm not too shocked that the DOE is not acting on this, because that has been their history all along. Mr. Burr. Having it laid out this starkly is unusual for us. Let me read you another one. Could I? Mr. Carpenter. Sure. Mr. Burr. Again, from Keith Christopher. This is 2/9/2000, and he says, in the concluding paragraph of that e-mail, ``I think the combination of the enforcement letter, having the lab director come in and meet with T.J. so DOE can express his concerns on this topic without reaching new conclusions outside of DOL's position, might give us a path forward. The biggest barrier I see is whether DOE is willing to accept responsibility for pressuring them to settle in the first place.'' What do you think of that? Mr. Carpenter. Well, again, I think DOE really put itself in a position here, and is conflicted as to what it should do, and they ought to be following their announced policies, which is having zero tolerance. Mr. Burr. I take for granted that these e-mails summarize meetings--at least there are other people referred to in the e- mails, stated that they met. Do you get the impression that the topic in those meetings were the adherence to stated policies for worker protection and safety? Mr. Carpenter. No, sir. I get the impression that this is simply image enhancement and control, how are they looking. Mr. Burr. I thank you, Mr. Carpenter. I believe Mr. Strickland has some additional questions and the Chair would recognize him. Mr. Strickland. Thank you. I just want to address Mr. Gutierrez and thank you for taking the time and bearing the expense to come here. I want to thank all of you for coming here today, as a matter of fact. Mr. Gutierrez, you have prevailed to the point of receiving adverse determination from an administrative law judge, but the University of California, your employer, has appealed, even though it is not supposed to receive any money from DOE for its efforts. Why do you think the university is going forward? Mr. Gutierrez. That has been a question that I have struggled with and also a number of people have asked me about. My experiences with the University of California is that, one, they do have an actual written policy. I located this policy on their website. The University of California board meets every month to review cases that are under litigation to look at the finances. But, in the course of doing that research, I located a policy that clearly states that the University of California will, in all instances, regardless of the merits of a case, litigate all cases, and that is their stated policy. It is in written form. I really didn't believe that until I started to look at-- searched the cases that were case filed against the University of California and found that, in fact, all cases are litigated, regardless of the merit. When I look at mine, I understand that probably one of the things--the reason they litigate this is, if my case stands, then the employees will have some very ground on which they can come forward and perhaps have a little more comfort to come forward with concerns, but it also is a precedent, and that's something the University of California does not want. That's my guess. Mr. Strickland. So it may be precedent and it may be intimidation. Mr. Gutierrez. Well, it is intimidation. I mean, that's part and parcel of it. If you look at the 72-page ruling by the administrative law judge, the judge goes through and he sorts through the evidence and actually discusses the many different types of pretexts that were used to intimidate and harass. Mr. Strickland. My understanding is that you're not asking for much. You want your raise and you want the removal of the offensive statement in your performance evaluation and you want your attorney fees. Is that correct? Mr. Gutierrez. That's correct. But at the outset, I was-- the only thing I was asking for was the removal of that one- sentence or two-sentence comment from my performance appraisal. That's all I was asking for. I wasn't even asking for reimbursement of any costs that I had incurred up to that time, I just wanted removal of that sentence. The University of California was adamant that they would not remove that comment. They were willing to give me $3,000, but those $3,000 weren't being classified as reimbursement of costs or anything, it was just, ``We'll give you 3,000 and get out of our sight.'' Since I have had to carry this case forward and I have incurred this cost, I feel it is just only right that I recover those costs. Mr. Strickland. One final question. What is the University's defense? Are they saying, for example, that there was acceptable data for the radioactive monitoring equipment that you ignored? Mr. Gutierrez. The claim was that there were 31 out of 33 stacks that were in compliance with the Clean Air Act--in other words, that they were being monitored correctly, that the emissions were below the threshold that might have presented a problem or below the threshold of the EPA requirement. I had assessed all of the nuclear facilities that contained those stacks. I had the documentation that clearly showed that they were in noncompliance, so they were essentially--they were lying to the judge. And it wasn't just the emissions, but the entire infrastructure that supported it, the configuration of the equipment was not being maintained. Some of the equipment was faulty or not operable. The procedures that were required to provide direction on how to install that equipment or how to maintain it and how to replace it were not in place. The individuals that were in charge of the program lacked training, lacked knowledge. There was a significant amount of turnover of personnel in those areas such that there was no continuity. I mean, my one area of specialty that I specialized in is quality assurance, and I don't know if you are familiar with that, but it is a set of management tools that help you assess vulnerabilities in the scope of work. There is essentially no quality assurance program at Los Alamos National Laboratory. That has been written up many, many times. Mr. Strickland. I want to thank all three of you. Mr. Chairman, I yield back. Mr. Burr. I thank the gentleman. The Chair would also like to thank this panel, especially Mr. Walli and Mr. Gutierrez, for your belief that it is important enough to come in here personally and tell about your specific instances that have happened to you. Again, to you, Mr. Gutierrez and to you, Mr. Walli, it is the deep belief of this committee that we are not going to let this go. We are not here to do anything other than to try to figure out what has transpired and what we need to do to make sure we have a system that functionally works, to make sure that the public statements of the Department of Energy are, in fact, fulfilled in the policies that not only they put out but that they live by. My hope is that we will be enlightened by the next panel and we will have an opportunity to thoroughly try to figure out their level of commitment to these policies. The first panel is excused. The Chair would call up the second panel: Ms. Mary Anne Sullivan, General Counsel, United States Department of Energy; accompanied by Dr. David Michaels, Assistant Secretary for Environment, Safety, and Health; Mr. Ronald Hansen, President, Fluor Hanford; Mr. Robert Van Ness, Assistant Vice President for Laboratory Administration, the University of California. Good afternoon, and the committee's apology for the delays that we have had so far. We thank each of you. You are aware that this subcommittee is an investigative subcommittee, and, as such, it has the practice of taking testimony under oath. Do any of you object to taking testimony under oath? [All witnesses respond in the negative.] Mr. Burr. The Chair then advises each of you that, under the House rules and the rules of the committee, you are entitled to be advised by counsel. Do any of you seek to have counsel advise you? Mr. Hansen. I do, Mr. Chairman. Mr. Burr. You do? Mr. Hansen. Yes. Mr. Burr. Would you identify that counsel, please? Mr. Hansen. Yes. Jennifer Curtis, Rich Bliss. There are some matters that could arise in which I may have to ask specific questions. Mr. Burr. You've introduced Jennifer. Mr. Hansen. Yes. Mr. Burr. Is this also a counsel? Mr. Hansen. Yes, Rich Bliss. Mr. Burr. Rich Bliss. I would ask the two counsels to continue to stand, as well as the witnesses. I'd ask you to raise your right hand. Do you solemnly swear to tell the truth, the whole truth, and nothing but the truth, so help you God? [All witnesses respond in the affirmative.] Mr. Burr. Consider yourself sworn and under oath for testimony. The Chair would recognize Ms. Sullivan for the purposes of an opening statement. TESTIMONY OF MARY ANNE SULLIVAN, GENERAL COUNSEL, U.S. DEPARTMENT OF ENERGY, ACCOMPANIED BY DAVID MICHAELS, ASSISTANT SECRETARY FOR ENVIRONMENT, SAFETY, AND HEALTH; ROBERT L. VAN NESS, ASSISTANT VICE PRESIDENT FOR LABORATORY ADMINISTRATION, UNIVERSITY OF CALIFORNIA, OAKLAND, CALIFORNIA; AND RONALD D. HANSEN, PRESIDENT, FLUOR HANFORD, RICHLAND, WASHINGTON, ACCOMPANIED BY: JENNIFER TOLSON CURTIS, MANAGING GENERAL COUNSEL, LEGAL SERVICES, FLUOR DANIEL HANFORD, INC.; AND RICHARD W. BLISS, ATTORNEY AT LAW Ms. Sullivan. Thank you, Mr. Chairman, members of the committee. I appreciate the opportunity to testify concerning Department of Energy whistleblower policies. More than 10 years ago, the Department took an important first step to protect its contractor employees from retaliation for disclosures relating to health and safety, fraud, mismanagement, waste, and abuse. Specifically, the Department proposed a formal process for resolving contractor employee complaints of retaliation. I think it is worth noting that, at that time, in 1990, Congress had not yet enacted statutory protections for DOE contractor employees apart from the relatively limited provisions contained in the Major Fraud Act. The Department took the initiative. The final DOE rule establishing the contractor employee protection program was issued in early 1992. It established procedures for adjudicating contractor employee complaints of reprisal by their employer for reporting what they believed in good faith to be unlawful, unsafe, or wasteful practices by the contractor. These procedures included independent fact finding and a hearing before a hearing officer at the affected DOE site, followed by an opportunity for review by the Secretary or his designee. Four years later, in a continuing attempt to improve its whistleblower protections, the Department invited the public, particularly those with experience under the contractor employee protection program, to recommend regulatory changes that would help streamline the process and make it more responsive. After considering the comments we received, the Department made substantial revisions to the process. Those became effective a year ago. Even more important than the steps the Department has taken to give whistleblowers a forum in which to present their claims of retaliation are the steps we have taken to encourage the early resolution of employee concerns, and thereby reduce the likelihood that employees will become whistleblowers. In 1996, the Department established the Office of Employee Concerns. Its goal is to have employee concerns receive full, fair, and final resolution, while involving management and employees directly in the resolution process. The Office of Employee Concerns' activity reports for 1996, 1997, and 1998 suggest that this objective is being met. These reports show that each year the Office of Employee Concerns, through its field office representatives, receives just under 500 concerns and resolves between 75 and 80 percent of them. This trend continued in 1999. These data suggest to me that a significant number of employees feel comfortable calling on the Office of Employee Concerns, and that the office does a pretty good job of closing out the concerns that are raised. I know that the director of that office, Bill Lewis, wants to continue to improve upon that record. It should be noted that DOE's Office of Employee Concerns supplements the employee concerns programs that individual contractors maintain. The joint efforts of employees and management at several of our sites have produced some wonderful prototypes for ensuring that concerns about safety, security, waste, fraud, and abuse get resolved promptly and directly in the work unit where they arise. Rocky Flats and Savannah River are among the sites where some of the most successful programs are found. My office has invited the Savannah River Guard Force Team that developed one of these programs to make presentations around the DOE complex, including to all of the DOE counsel and contractor counsel, so that we can all learn from them the many benefits of resolving issues early and directly between those most affected before they become whistleblower cases. In addition, the Department has taken steps to help ensure that its contractors are, if I may use what is probably not a word, ``disincentivized'' from retaliating against employees who come forward with information that they believe evidences unsafe, unlawful, fraudulent, or wasteful practices. The reimbursement of legal costs under management and operating contracts provides little incentive for the early resolution of employee complaints of reprisal, so we developed a model contract clause addressing the allowability of contractor defense costs in whistleblower cases. The model clause provides that contractor litigation and settlement costs are allowable costs if the employee complaint is resolved prior to an adverse determination. In order to achieve consistency in the Department's policy on the allowability of whistleblower defense costs, we issued a proposed rule in January, 1998, to incorporate the model clause into the Department of Energy acquisition regulations. In parallel with the rulemaking, we took steps to include the model clause in new contracts. Currently, most of the Department's major contracts contain either the model clause or a variation of the clause under which contractor defense costs are allowable only until the issuance of an adverse decision. In response to comments on the proposed rule which criticized the model clause as likely to encourage settlement of even non-meritorious complaints, we re-opened the comment period to invite consideration of an alternate approach, which would give contracting officers greater discretion to consider all the facts and circumstances of each case in making a determination of allowability. We are carefully considering the two alternative approaches in the allowability of whistleblower defense costs and plan to issue a final rule in the near future. Whichever approach we select, however, as far as my staff has been able to determine, we are the only Federal agency to disallow any contractor whistleblower defense cost as a matter of policy. In addition, retaliation against contractor employees may lead to the imposition of penalties under the Price Anderson Amendments Act of 1988. Under our implementing regulations, if an act of retaliation by a contractor results from an employee's involvement in matters of nuclear safety, the retaliation could constitute a violation of a DOE nuclear safety requirement and result in the imposition of civil penalties. Recently, the Department took steps to strengthen the connection between retaliation and the application of the civil penalty enforcement process by clarifying that information collected in a Department of Labor whistleblower proceeding could be used as the basis for such an enforcement action. In closing, I would like to emphasize that the Department continues to have zero tolerance for reprisal against whistleblowers, and we will continue to explore new and better ways to realize that goal. Zero tolerance does not mean that every whistleblower claim must be accepted as valid without an opportunity for response or appeal by the Department's contractors, but we are determined to make every effort to ensure that our contractors conduct their activities responsibly, safely, efficiently, and in an atmosphere which encourages their employees to raise concerns about unsafe, unlawful, or wasteful practices without fear of reprisal. In pursuit of that objective, we want to continue to provide both positive encouragement to resolve employee concerns early without assessing blame, as well as punitive measures such as the disallowance of costs and the imposition of penalties when retaliation is established. Thank you very much. [The prepared statement of Mary Anne Sullivan follows:] Prepared Statement of Mary Anne Sullivan, General Counsel, Department of Energy More than ten years ago, the Department took a decisive and unprecedented step to protect its contractor employees from retaliation by their employers for disclosures relating to health and safety, and fraud, mismangement, waste and abuse. The Department proposed a process for resolving complaints of retaliation by establishing procedures for independent factfinding and a hearing, followed by an opportunity for review by the Secretary or his designee. At that time--1990-- Congressional attention to contractor employee whistleblower concerns was very limited. For example, section 2 of the Major Fraud Act of 1988, 18 U.S.C. Sec. 1031, gave contractor employees a right of action against their employer for reprisals relating to the employee's participation in the government's prosecution of the contractor under that section for fraud against the United States. And section 210 of the Energy Reorganization Act, 42 U.S.C. Sec. 5851, granted employees of Nuclear Regulatory Commission licensees, and their contractors and subcontractors, the right to bring whistleblower complaints to the Department of Labor. (In 1992, this provision was amended to include employees of DOE contractors and subcontractors.) There was, however, no comprehensive statutory scheme to address whistleblower concerns of government contractor employees. The final DOE rule establishing the Contractor Employee Protection Program was issued in early 1992 and codified at 10 CFR Part 708. The rule established procedures for adjudicating contractor employee complaints of reprisal by their employer for reporting what they, in good faith, believed to be unlawful, unsafe or wasteful practices by the contractor. These procedures included an independent fact-finding and hearing before a Hearing Officer at the affected DOE field site, followed by an opportunity for review by the Secretary or his designee. Four years later, in a continuing attempt to improve its efforts in this area, the Department published a Notice of Inquiry in the Federal Register inviting members of the public, particularly those with experience under the contractor employee protection program, to recommend regulatory changes that would help to streamline the process and make it more responsive to the needs of both complainants and contractors. After considering those comments, the Department, in early 1998, issued a proposed rule suggesting substantial revisions to the Part 708 process and, subsequently, issued an interim final rule which became effective a year ago. To encourage the early resolution of employee concerns and thereby reduce the likelihood that employees will become whistleblowers, the Department, in 1996, established the Office of Employee Concerns at DOE Headquarters. Each of the DOE Operations Offices and major field offices also has an Office of Employee Concerns. This office's goal is to have employee concerns reach full, fair, and final resolution, while involving management and employees more directly in the resolution process. The Office of Employee Concerns Activity Reports for 1996, 1997 and 1998 show that the objective is being met. During this period, over 1000 concerns, out of approximately 1500, were resolved by DOE field element employee concern programs nationwide. Similarly, the data for 1999 indicate that approximately 75 percent of the concerns addressed by the field office employee concern programs were resolved. In addition to these efforts which provide mechanisms to address employee concerns and complaints of reprisal, the Department, as part of its Contract Reform effort, has taken steps to help ensure that its contractors are dissuaded from retaliating against employees who come forward with information they believe evidences unsafe, unlawful, fraudulent or wasteful practices. Recognizing that the reimbursement of legal costs under the Department's cost-type management and operating contracts provides little incentive for the early resolution of employee complaints of reprisal, we developed a model contract clause addressing the allowability of contractor defense costs in whistleblower cases. The model clause provides that contractor litigation and settlement costs are allowable costs if the employee complaint is resolved prior to an adverse determination. In order to achieve consistency in the Department's policy on the allowability of whistleblower defense costs, we issued a proposed rule in January 1998 to incorporate the model clause into the Department of Energy Acquisition Regulation. Prior to issuing this proposed rule, we took steps to include the model clause in competitive solicitations for the Department's site management contracts and to negotiate the clause into existing contracts. Currently, most of the Department's major contracts contain either the model clause or a variation of the clause which provides that contractor defense costs are allowable until the issuance of an adverse decision. After considering comments submitted in response to the proposed rule, which criticized the clause as overly prescriptive and encouraging settlement regardless of the merits of an employee's complaint, we issued a notice in March 1999 to reopen the comment period to invite consideration of an alternate approach. As an alternative approach we proposed a cost principle which would address the allowability of costs relating to labor disputes generally, including whistleblower actions. The cost principle would give contracting officers greater discretion to consider the circumstances of each case in making a determination of allowability. Specifically, the proposed cost principle provides that if a labor dispute results from contractor actions that are those of a prudent business person, then the contractor's costs related to settlement or defense of the action would be allowable. If, however, the labor dispute arises from contractor actions which are unreasonable or constitute unlawful, negligent or malicious conduct, then the contractor's costs would be unallowable. We are carefully considering the two proposed approaches to the allowability of whistleblower defense costs--the cost allowability clause and the cost principle--and plan to issue a final rule in the very near future. The review of allowable costs is not the only approach we have taken to address the issue of employee reprisal by Department contractors. Retaliation against contractor employees may also lead to the imposition of penalties under the Price Anderson Amendments Act of 1988, Public Law 100-49, implemented by the Department at 10 CFR Part 820. Under these regulations, to the extent an act of retaliation by a contractor results from an employee's involvement in matters of nuclear safety, the retaliation could constitute a violation of a DOE Nuclear Safety Requirement. The retaliation would therefore be subject to the investigatory and adjudicatory procedures of Part 820 and could warrant the imposition of civil penalties on the contractor. Recently, in response to issues raised in a whistleblower matter involving a Lawrence Livermore employee, the Department took steps to strengthen the connection between retaliation against an employee by a DOE contractor and the application of the Part 820 enforcement process. Two months ago, the Department amended the General Statement of Enforcement Policy appended to Part 820 to clarify that information collected by the Department of Labor in a whistleblower proceeding under its procedures at 29 CFR Part 24 could be used as a basis for enforcement action under Part 820. In closing, I would like to emphasize that the Department's efforts on many fronts over the past ten years to provide protection to contractor employees who raise legitimate concerns about contractor activities evidence a continuing, strong commitment to the goal of ``zero tolerance for reprisal.'' Zero tolerance does not mean that every whistleblower claim must be accepted as valid without an opportunity for response or appeal by the Department's contractors. Zero tolerance is a goal to which we remain committed, and we will continue to identify and explore ways of moving closer to it. To the best of our knowledge, no other Federal agency has undertaken comparable initiatives, particularly with respect to the allowability of whistleblower-related costs. We are determined to make every effort to ensure that our contractors conduct their activities responsibly, safely, efficiently and in an atmosphere which encourages their employees to raise legitimate concerns about unsafe, unlawful or wasteful practices without fear of reprisal. Mr. Burr. Thank you, Ms. Sullivan. Dr. Michaels, do you have a statement? Mr. Michaels. No, I did not come prepared with a statement. Mr. Burr. We'll be happy to let you make one. Mr. Michaels. I'm sure you will give me the opportunity in the future. Mr. Burr. I may give you the opportunity to answer some questions today. Mr. Michaels. I assumed as much. Thank you. Mr. Burr. The Chair would recognize Mr. Van Ness. TESTIMONY OF ROBERT L. VAN NESS Mr. Van Ness. Thank you, Mr. Chairman. I am thankful for the opportunity to appear before you today to discuss the committee's concerns about whistleblower protections for workers at DOE sites. I am the assistant vice president for lab administration at the University of California. My responsibilities with the labs involve oversight of administrative and operations activities. The concept of whistleblower retaliation is totally inconsistent with the culture of the university and labs that we manage for the Department of Energy. A constant in the culture of our campuses and the laboratories is open debate and consideration of varying ideas and approaches. Dissent is both commonplace and highly valued. Some of our campuses are seen as almost synonymous with diversity of opinion, protest, and dissent. Further, there is a sense of repugnance associated with the silencing of any voice. We believe at our core that such values are essential to great universities, great laboratories, and a great Nation. We take whistleblower protection very seriously. The University of California has had procedures in place since the 1980's, long before the Federal policies and subsequent contract requirements. We see the DOE's requirements as complementary to long-existing University of California policy. Across our nine campuses, five medical centers, and three laboratories, complaints are very rare and incidents of true retaliation even rarer. At the Lawrence Livermore National Laboratory we have about 8,000 University of California employees. During the past 10 years, 6--about 1 every 2 years--have made claims of retaliation. Of those 6, 4 resulted in findings of no retaliation. Of the 2 remaining, 1 was settled before there was a formal complaint filed, and the single remaining case is that of Mr. Lappa. The experience at Lawrence Livermore is consistent with statistics for the University of California's system overall. We employ over 100,000 people. We see less than ten claims per year system-wide, and most of those, just as at Livermore, do not result in a finding of retaliation. I would like to take a few minutes to outline the U.C. process. At the University of California, the campus chancellor--or, at our laboratories, the laboratory director--appoints a retaliation complaint officer who investigates complaints of retaliation. Complaints are made in writing within 1 year of the alleged incident of retaliation. The retaliation complaint officer conducts and investigation and furnishes draft findings to the complainant, who has 20 days to prepare any rebuttal or to provide supplemental information. A retaliation complaint officer then submits a finding to the chancellor or the laboratory director, who has 90 days--or within 90 days of the complaint being filed. The chancellor or lab director then makes a determination within 15 days and orders any appropriate relief. When retaliation is found to have occurred, the retaliating individual is disciplined. Finally, appeals can be made to the Office of the President of the University. Our employees at the laboratories can choose to use this U.C. process or the Department of Energy's process or, in the case of worker safety matters, the Department of Labor's process. Regardless of the process chosen, it is our objective to have fair and balanced reviews of all claims. It is our desire and continued commitment to ensure the full protection of any and all individuals from retaliation for protected disclosures. I thank you very much for the opportunity to speak with you this morning. [The prepared statement of Robert L. Van Ness follows:] Prepared Statement of Robert L. Van Ness, Assistant Vice President for Laboratory Administration, University of California Mr. Chairman and Members of the Committee, I am Robert L. Van Ness, Assistant Vice President for Laboratory Administration for the University of California (UC). The University operates three DOE laboratories--the Los Alamos National Laboratory (LANL), the Lawrence Livermore National Laboratory (LLNL), and the Lawrence Berkeley National Laboratory (LBNL). My responsibilities include administering the performance-based management aspects of our contracts with the Department of Energy (DOE) and conducting oversight of the administrative and operational activities of the laboratories. Thank you for the opportunity to appear before you today to address the Committee's concerns regarding the implementation of whistleblower protections for workers at DOE sites. It is an objective of the University's at the UCDOE laboratories to provide an atmosphere in which employees can openly communicate and have a frank and candid exchange of views. This is wholly consistent with the academic philosophies of critical review and debate that are the routine of daily life at the University. We believe the entire process benefits from such an approach. All of the federal and state procedures in place are intended to foster this result as well. Below, I briefly describe the internal procedures used by the University. In the rare instance where an employee feels that they have been retaliated against for the views they have expressed, the process to resolve these complaints needs to be fair to both the individual employee, the alleged retaliator, and the University. We believe the procedures we have in place effectively accomplish this and the following testimony will set forth how this occurs. The University provides a variety of protections of its employees-- both at University campuses and the UCDOE laboratories--against retaliation for notifying management, DOE, local authorities, the Congress, and the public of variances between any University activities and contractual or other legal requirements. These protections do not arise at the University solely from DOE's ``zero-tolerance'' policy and the provisions of 10 C.F.R. Part 708. In the 1980's the California State legislature codified what had been an evolving area of case law into California Government Code 10540 et seq. This law made it clear that public employees should not be retaliated against for disclosing public entity activities that were unlawful or inconsistent with the public trust.. The statute codified the type of conduct that employees could report and be protected from retaliation and established a right of judicial review. The University of California is a state entity. Pursuant to the code the University modified its internal grievance procedures to expressly cover issues of retaliation for protected disclosures. But even before that revision employees who felt they had been retaliated against for whistleblowing could file a grievance, obtain a full evidential hearing before an American Arbitration Association arbiter, and obtain judicial review in many instances if they were not satisfied with the outcome of the grievance process. The statute referenced above was revised recently and recodified as California Government Code 8547. Such protections were already in place in September, 1994, when the DOE whistle blower protection provisions were incorporated into UC-DOE contracts. More recent federal legislation extended DOL whistle blower protections to DOE contractual activities. Let me briefly outline the University's procedure: The campus Chancellor or Laboratory Director appoints Retaliation Complaint Officers (RCOs) who investigate or oversee complaints of retaliation. Complaints are made in writing and must be made with a year of the alleged incident of retaliation. The RCO conducts an investigation and furnishes draft findings to the complainant who normally has 20 days to prepare any rebuttal or supplemental information that will become a part of the record. Normally the RCO submits a finding to the Laboratory Director within 90 days of the complaint being filed. The Laboratory Director then makes a determination within 15 days and orders any appropriate relief. When retaliation is found to have occurred, the retaliating individual is disciplined. That discipline can include termination. Appeals can be made to the Office of the President. Employees are required under California law to utilize the internal procedure before seeking judicial review. However, Laboratory employees can elect to utilize the external procedures of the Department of Labor for claimed retaliation for disclosing worker safety issues and the Department of Energy for claimed retaliation for other protected disclosures. During the past 10 years, six employees at the Lawrence Livermore National Laboratory have made claims of whistle blower retaliation. Four of these cases resulted in a finding of no retaliation--1 solely through the independent administrative review at the University and 3 as a result of a federal administrative proceeding alone or through both the University and federal administrative proceedings. Of the remaining 2 cases, one resulted in a settlement before there was even a formal complaint and in one case a federal investigator made a finding of retaliation. This Committee has asked for and received substantial information about this latter case. Information from Los Alamos was not available due to the current emergency and we were unable to get information regarding the Lawrence Berkeley National Laboratory due to the short period of time to prepare this testimony. We believe that the data from Lawrence Livermore demonstrates that employees are aware of protections and that in almost all instances supervisors and managers are acting appropriately with regard to individuals who make protected disclosures. The experience of Livermore is consistent with statistics for the UC system. The University operates nine campuses, five medical centers, and the three UCDOE laboratories, employing nearly 100,000 people. Since the adoption of the California statute, the University has averaged less than 10 claims per year system-wide and most do not result in a finding of retaliation. The costs for all employee grievances and defense of external claims and judgement are generally reimbursable under cost-type contracts such as DOE's management and operating contracts. Every enterprise would like to have perfect relations with its employees and others, but that simply is not the case. Consequently costs of investigation, defense and payment of settlements and judgements are ordinary and necessary business expenses of all enterprises whether they are governmental, commercial, or educational. DOE federally-funded research and development centers (FFRDCs) are entities established by the federal government for its purposes. Contractors enter into agreements with DOE to operate these facilities with the understanding that DOE will reimburse all reasonable ordinary and necessary business expenses allocable to the contract work. There are exceptions that exist for certain types of cost that contractors, including the University, absorb through charging a fee to the government. One of these exceptions to reimbursement of reasonable and ordinary business expenses involves the cost of defending a claim of retaliation for a protected disclosure and a judgement when the contractor is determined after hearing by an administrative law judge or court to have retaliated. In all other circumstances, including a settlement before hearing, the costs are reimbursed to the contractor. For non-profit entities such as the University it would be preferable for the government to reimburse all costs and the University not charge a fee. If the record of performance is unsatisfactory, including its record on litigation costs and judgements, then a non- profit contractor could be terminated or the contract not renewed at its expiration. However, the Congress and DOE have determined that they believe it is better policy to decline to reimburse certain costs even though the government then pays a fee in the case of a non-profit contractor. The intent of the DOE non-reimbursement policy is to encourage contractors to use appropriate judgement with respect to the costs of litigation and to avoid conduct that can result in adverse judgements altogether. Because the University of California returns all fees not required for unreimbursed costs to research at or for the UCDOE laboratories, costs of litigation and judgements--whether reimbursed by the government or not--result in less funds available for research. Therefore laboratory directors and their management team are sensitive to these costs without regard to whether or not they are federally reimbursable. Settlements are often made in instances where management believes there was no wrongdoing as a means of avoiding greater costs and adverse impacts on the conduct of scientific research. Similarly, DOE policy is to reimburse the costs of settlements to promote lower cost resolutions regardless of fault. Nevertheless, on occasion, management does need to fully litigate claims where settlement demands are unreasonable in light of all the facts and circumstances. Does this reimbursement policy give an inappropriate advantage to management in contrast to the claimant? No for several reasons: 1. Claimants are able to find counsel willing to take cases on a contingency fee basis. 2. DOE FFRDC contractors pay for litigation with a reduction in research and therefor are ``losers'' whenever litigation occurs and reasonable settlements cannot be achieved. Similarly, DOE FFRDC contractors are not motivated to protract litigation and run up expenses: typically extensions of time are driven by plaintiffs counsel in hope of securing a richer settlement. 3. DOE contractors are not absolutely assured of reimbursement in these types of claims. In summary, the University has a history of affording protection to employees who identify misconduct or improper activities and the University's policies and practices predate federal regulation in this area. Employees know of these protections and they are being used. The rate of adverse determinations against University managers, both in internal and external proceedings, suggest that although not perfect the University does do a good job of appropriately treating employees who make protected disclosures. The University is already motivated to avoid inappropriate conduct as well as minimize any litigation, reimbursed or not, due to the adverse impact on the cost of research. Finally, DOE's policy of limiting non-reimbursability of defense costs to those situations in which there is an adverse determination after an administrative or court hearing, represents an appropriate balance for FFRDC contractors to encourage limiting defense of retaliation claims to those cases which the contractor believes are most compelling. Mr. Bryant [presding]. Thank you, Mr. Van Ness. Our next witness is Mr. Hansen. TESTIMONY OF RONALD D. HANSEN Mr. Hansen. Thank you, Mr. Chairman. My name is Ron Hansen, and I am the President of Fluor Hanford, Incorporated. The title of today's hearings is, as I wrote on my statement, both intriguing and disturbing. I can state from the offset that Fluor neither condones nor tolerates retaliation against employees of any form. As the President of Fluor Hanford, I take the responsibility of ensuring a safety conscious work environment very seriously. Fluor is one of the largest engineering, construction, maintenance, and diversified services companies in the world. We are also recognized as a leader in on-the-job safety. Our incident rates--OSHA, lost work day--are consistently less than the national averages for major contractors. This does not mean from time to time that we have disputes regarding facts or motivations that arise. However, they are generally resolved in an amicable fashion. Our success as a company is indicative of our commitment to employees and their wellbeing. Safety, therefore, is a clear value at every level within Fluor. Contractors are successful if they create an environment of safety and well-being for their employees. If workers are retaliated against and an environment exists where safety concerns and issues are not routinely raised and addressed, then you will fail. Fluor's record of success strongly suggests that retaliation is not part of our ethic and would, quite frankly, be extremely counterproductive. At Hanford, increased employee involvement, labor partnerships, and a focus on defining our safety management system have produced significant results. There has been a 76 percent reduction in lost work day injuries, a 64 percent reduction in OSHA reportable injuries, and a 32 percent reduction in radiological dose of recent years at the Hanford site. We have achieved these results by not only encouraging employee input, but by actively involving employees in recognizing, preventing, and resolving safety concerns. Throughout Fluor, including our operations at Hanford, there are numerous policies, procedures, and programs, both defined by contract and those that we use throughout our worldwide operations, geared toward accident prevention and safe work practices. We provide multiple mechanisms for our employees to address and seek remedies for any unsafe work condition or perceived hazard. These remedies enable employees to go to the highest levels of management without fear of retribution. And our employees also have the right to stop work if necessary and have their concerns addressed and resolved. Our contract at Hanford, by law, demands that Fluor provide a comprehensive environmental safety, health, and quality program to assure that workers, the community citizens, and the environment are protected. Every employee, regardless of position, is expected to contribute to the safety consciousness required by the serious nature of our work that are currently being performed at Hanford. It is a consciousness that demands worker involvement, and an attitude that all accidents are preventable. We've added, of our own initiative, worker involvement into all our work planning, processes, and practices. The bottom line is quite simple: there is a culture of safety within Fluor and all our Fluor employees. We strive to create an atmosphere where employees, the communities in which we work, and our clients are valued. To condone any form of retaliation against employees is just not tolerated. Thank you, Mr. Chairman. That concludes my remarks. [The prepared statement of Ronald D. Hansen follows:] Prepared Statement of Ronald D. Hanson, President, Fluor Hanford, Inc. Mr. Chairman and Members of the Committee, my name is Ron Hanson and I am President of Fluor Hanford, Inc., a subsidiary of Fluor Corporation. I am the corporate official responsible for overseeing Fluor's activities at the Hanford Site, in Richland, Washington. The title of today's proceeding is intriguing, and disturbing. It seems to conclude that there is contractor retaliation and that retaliation is condoned by the Department of Energy (DOE). One would hope that a question of this nature would not have to be asked. I can state categorically that retaliation of any kind against any employee of Fluor is neither condoned nor tolerated. As the President of Fluor Hanford, Inc., I take the responsibility for ensuring a safety conscious work environment very seriously. This, of course, does not suggest that disputes regarding facts or motivations will never arise about safety issues. Nor does it mean that in most circumstances disputes cannot be amicably resolved, or that ``perception'' is never a factor in determining the best course of action. Concerns or actions that affect worker safety should never be used manipulatively. This is Fluor's philosophy, which is not only morally right, but it promotes efficiency as well as safety. That is in our interest and our client's. Fluor is one of the largest engineering, construction, maintenance and diversified services companies in the world. With more than 40,000 employees, working in some 125 countries, the company currently manages about 2,000 projects. Fluor's partnering and alignment approach has become internationally known for producing results in the form of accelerated schedules, improved safety and quality, and reduced costs. More importantly, Fluor is a recognized leader of on-the-job safety worldwide. Our incidence rates (OSHA, Lost Workday) are consistently less than the national averages for major contractors. The true meaning of this accomplishment is best shown by the safety achievements of Fluor's employees throughout the United States. Many projects have established long and continuing periods of safe work performance ranging from two to seventeen years. It should be noted that the world safety record for contractors was established by Fluor in 1993--24,000,000 safe work hours on an individual project without a lost time accident. This achievement is without question a true milestone in the industry, and it represents a profound demonstration of what absolute management commitment to employee involvement and accident prevention can accomplish. To have such a continued outstanding record of growth and success, while also being one of the safest contractors, is no small achievement. It is also indicative of Fluor's commitment to its employees and their well being. Contractors who are committed to their employees will succeed. As you can deduce, safety is clearly a value at every level--top to bottom--for every Fluor manager and employee at every Fluor project site--including Hanford. Does that mean there are not incidences--of course not. What it does mean is that safety is viewed as a key to success and is treated as an absolute corporate priority. I have taken the time to expound on this topic because it goes to the heart of the issue before us. No contractor, including Fluor and my operation at Hanford, can be successful if it does not create an environment of safety and well being for its employees. If workers are retaliated against and an environment exists where safety concerns and issues are not routinely raised and addressed--then you will fail. I believe that the record of success that I have outlined above strongly suggests that ``contractor retaliation'' is not part of Fluor's ethic and would, quite frankly, be extremely counterproductive to doing our work and being recognized as one of the leading firms in the world. At Hanford, for example, increased employee involvement, labor partnerships and a focus on defining our safety management system have produced significant results. We have seen a 76% reduction in Lost Workday injuries, a 64% reduction in OSHA recordable injuries, and a 32% reduction in radiological dose in recent years. We have achieved these results by not only encouraging employee input, but by involving employees in recognizing, preventing and resolving safety concerns. We depend upon and reward employee involvement in safety management systems, job hazard analyses, and enhanced work planning. Overall, Fluor uses a number of procedures and incentives to actively seek input from and to reward employees for raising safety concerns. Thus, as set out in our corporate Zero Tolerance Policy, we are committed to ``sustaining an open work environment where employees feel free to raise concerns.'' Fluor uses safety orientations to reinforce our belief that safe work practices are a job necessity. At many Fluor projects each employee is required to attend regular toolbox safety meetings to discuss specific safety subjects as well as current safety performance and issues related to recent, current or future work activities. Other safety activities include the Job Safety Analysis, a basic procedure for establishing the safe approach for performing a task, and setting up Safety Task Assignments. Safety Task Assignments are given to one or more employees to spot job hazards and to actually demonstrate how the job can be performed safely. Additionally, several years ago, Fluor launched a Zero Accidents Program that not only meets, but also exceeds, the Construction Industry Institute's Zero Accidents task force model for excellent safety performance. Specifically at Hanford, there are additional policies and procedures both defined by contract and those that we brought to the site from other projects. The contract, by law, demands that Fluor provide a comprehensive environmental, safety, health and quality program to assure that workers, community citizens and the environment are protected from the hazards of the chemicals, machinery and operations that are used to perform the work. In fact, a requirement of the Integrated Safety Management System (ISMS) is that the value and culture of safety is embedded into every work plan, every work process and practice at all levels. Every employee, regardless of position, is expected to contribute to the safety consciousness required by the ISMS program. It is a consciousness that demands worker involvement and an attitude that ``all accidents are preventable.'' Fluor, by its own initiative, added ``worker involvement'' to the ISMS list of Guiding Principles. This addition is not required by law or contract--we simply felt that a truly safety conscious work environment must be based upon the needs of those closest to the work and its potential hazards. Those who know those needs best have numerous opportunities to positively effect the work process. All facets of work planning--the Automated Job Hazard Analysis, pre-job briefings, Stop Work Authority and post-job reviews require worker involvement. Workers are intimately involved in the ISMS program. In support of ISMS initiatives, an Enhanced Work Planning/ISMS Activity Level Core Team consisting of 16 bargaining unit employees meets bi-monthly to focus on improving work control practices. There have been several notable accomplishments achieved by these ISMS project teams. One team redesigned the risk/complexity screening criteria for the Job Hazard Analysis. Another drafted and taught ISMS training. Fluor and the Hanford Atomic Metal Trades Council (HAMTC) co- sponsored three ISMS Workshops for 2,500 employees. Each workshop was designed and conducted with heavy involvement from represented labor. Fluor was the first contractor to involve bargaining unit representation on the National Enhanced Work Planning Steering Committee. We are also eliciting worker involvement from the building trades. Worker involvement, along with other tenets of the ISMS program, are also being passed down to subcontractors in their contract terms and conditions. Contractual enforcement is another vital tool in the successful implementation of ISMS. Yet another initiative that we use to elicit employee involvement in preventing and resolving safety issues is the President's Zero Accident Council (PZAC). PZAC was formed to champion safety awareness at every level. The Path to Zero Accidents campaign is on going. It is based on the premise that each management level must reflect an interest in company safety objectives, set a good example of compliance with safety rules, and effectively and consistently communicate to the workers in order to achieve zero accidents. It has been found that a worker is most apt to believe in safety only to the degree that the company or management believes in it. Management interest must, therefore, be vocal, visible, and continuous--from top management to departmental supervisors. In fact, managers must ``manage by walking around.'' They must maintain an active presence in the field and advocate worker involvement. PZAC works to improve the health and safety of all Hanford employees and visitors by demonstrating commitment to affect positive change within the elements of the Department of Energy's Voluntary Protection Program. Union Representatives, including stewards, meet with Fluor's project directors, the director of ES&H, the Chief Operating Officer and me, to deliver reports on emerging issues or changes in the safety program. We commission investigations and evaluations of workplace injuries, share success stories from project safety efforts and formulate action plans to resolve concerns with performing work safely. Finally, PZAC is a method of recognizing outstanding safety performance through the ``Path To Zero Accident Program.'' PZAC serves as an excellent opportunity for employees to raise safety concerns and receive feedback regarding resolution each and every month from the highest levels of management at Hanford. Moreover, PZAC and Employee Zero Accident Councils (EZAC) are proponents of two of the most powerful tools for worker, stakeholder and environmental safety. Those tools are the Hanford site ``Stop Work'' responsibility and the ``Project Hanford Worker's Bill of Rights.'' The Stop Work policy gives every employee, both bargaining unit and unrepresented, the responsibility and the authority to stop work immediately, without fear of reprisal, when they are convinced a situation exists which places themselves, their coworkers or the environment in danger. As part of the ``Stop Work'' authority, employees are expected to report any activity or condition that they believe is unsafe--first, to possibly affected worker(s), then to the supervisor or his/her designee where the condition exists. After notification, the responsible supervisor must resolve the issue. Thus, an employee who reasonably believes that an activity or condition is unsafe is expected to stop or to refuse to perform work without fear of reprisal by management or co-workers, and is entitled to have his or her safety concern addressed prior to participating in the work. The Project Hanford Worker's Bill of Rights guarantees every employee performing work a set of rights, to be exercised without fear of reprisal. Among the guaranteed rights are: the right to file a complaint to request a workplace inspection or otherwise address a safety or health concern; the right to contribute to accident investigations, hazard evaluations, pre-job planning, assessments, policy/procedure development, safety goals; the right to be informed about the results of accident investigations and workplace inspections; and the right to hazard information associated with work tasks, provided in a timely manner. All Fluor management, employees and unions at Hanford are committed to upholding these rights and respect those that invoke them for their personal safety or the safety of others. Another route to resolve safety concerns is through union safety representatives. We increased bargaining unit involvement in safety through use of safety representatives at Hanford. We expanded both worker involvement and partnering with labor by identifying Union Safety Representatives within projects and subcontractors. The safety representatives promote open communication and feedback between employees and management on safety concerns, policy, and safety improvements. This program has resulted in better communication with employees and better responses to safety concerns. Additionally, senior management at Hanford meet with the bargaining unit safety representatives monthly to discuss emerging issues and employee safety concerns. At these meetings, the ``shop floor'' safety efforts are assessed and the workers provide any issues or concerns that are not being adequately addressed to senior management for special attention. It should be noted that if an employee has a safety concern there are several specific options available to address those concerns. Should an employee feel uncomfortable or unsatisfied with one process or mechanism, the employee can go to the next mechanism. Experience shows, however, that concerns are most effectively managed by the level of the organization closest to the employee. That is the immediate supervisor, the work group EZAC or union. If the employee is uncomfortable reporting at that level or feels that the problem has not been adequately addressed, the employee can go to a mid-level manager or his safety representative for resolution. From there the employee can approach me through the Open Door Policy. In addition, the WORKPLACE HARASSMENT policy specifically states that an employee who believes he is experiencing harassment in the workplace and is uncomfortable with the first level of management MUST take the issue either to Human Resources, Industrial Relations or any higher level of management. Finally, non-bargaining unit employees can utilize the Employee Concerns Program. Workers can approach the Employee Concerns staff in confidence to investigate, report back and assist in resolving safety- related issues. Moreover, workers can engage other site-related investigation mechanisms. Employees can submit their concern either anonymously or by identifying themselves to the Office of Contractor Employee Protection within the Department of Energy (DOE). The DOE can investigate and resolve the complaint or forward the complaint to Fluor for Fluor's investigation and resolution. Alternatively, non-bargaining unit workers can approach the Hanford Joint Council (HJC), a forum consisting of a neutral facilitator, whistleblower representatives, a former union representative and company representatives. The HJC is a body that provides a mechanism for an employee to take his concerns out of, perhaps, a confrontational or uncomfortable atmosphere of his work site and have the Council investigate, report back and resolve the concern through a variety of techniques. We support the operations of the HJC as specified by our contract. Bargaining unit employees at the Hanford site are obligated to use the binding grievance/arbitration procedures to resolve their concerns, including safety. Represented workers and Fluor have an agreed procedure and forum in which to receive a full and fair hearing and resolution of issues. Workers have expert representation, free of charge, who can fully express the issue in controversy. The arbitration process is usually quick, inexpensive and binding. The typical grievance-arbitration process goes on daily, many times over in the workplace. However, it is the cornerstone of dispute resolution between workers represented by organized labor and Fluor. Often, issues-- including safety concerns--are resolved prior to filing grievances. During Fluor's tenure at Hanford the number of grievances filed has dropped 50%. This is an indication that issues, including safety concerns, are being resolved, particularly through increased use of worker involvement mechanisms. It is our sincere hope and expectation that employees who have safety concerns utilize the systems provided by the company. Even after all that I have outlined, however, there is still one more way an employee may chose to resolve his or her concerns. He can file an administrative complaint with the Department of Labor under 10 CFR 708 or 29 CFR 24 for redress of retaliatory or discriminatory action by Fluor. Under the terms of the Project Hanford Management Contract such retaliation or discrimination is defined as discharge, demotion, reduction in pay, coercion, restraint, threats, intimidation or ``other similar negative action taken against the employee'' as a result of certain protected activities, such as reporting safety concerns. Paragraph H.40 entitled ``Costs Associated with Whistleblower Actions'' requires us to segregate the cost of defending an action brought under 10 CFR 708 or 29 CFR 24. The contract does provide that litigation costs and settlement costs incurred in connection with the defense of, or settlement of, an employee action are allowable if incurred by Fluor before any adverse determination of the employee's claim, if approved as just and reasonable by the Contracting Officer. If Fluor suffers a final ``adverse determination'' as defined in our contract, the DOE can direct us to repay all litigation costs, as well as costs associated with any interim relief granted. Additionally, there are very detailed terms and conditions in the Litigation Management Plan, approved by the DOE, by which administrative claims and particularly litigation, must be handled. Allowability of certain costs and expenses is determined by application of the management plan. The bottom line is quite simple--there is a culture of safety within Fluor and with all Fluor employees. We value our employees because they are what make us successful. We strive to create an atmosphere where employees, the communities in which we work, and our clients are valued. To condone any form of retaliation against employees is counterintuitive to this philosophy--and is just not tolerated! Mr. Bryant. Having concluded the testimony of the panel, I would yield time to my colleague from Colorado, Ms. DeGette. Ms. DeGette. Thank you, Mr. Chairman. I'm so happy that everybody in this room today agrees that we need a zero tolerance policy, and maybe we can explore a little bit how we can come to some common agreement how we can coordinate between what the two panels said. Let me start with you a little bit, Ms. Sullivan. First of all, you said that the goal is to have positive encouragement for an early resolution of these complaints of these retaliation complaints; is that correct? Ms. Sullivan. What I said was that the goal is to have in place mechanisms that encourage early resolution before things become retaliation complaints. That should be our first goal. Ms. DeGette. And I---- Ms. Sullivan. To have people raise their concerns in their work unit, get them resolved. Ms. DeGette. Okay. Ms. Sullivan. If that doesn't succeed, then you want to have additional mechanisms in place to try to achieve early resolution. Ms. DeGette. So I would assume that the stated goal would be you want early resolution all along the way. Somebody comes up with a whistleblowing concern, you want to get that resolved. And if there is an allegation of retaliation, you want to get that resolved before formal complaint. If a formal complaint is filed, you want to get that resolved as early as possible. I would assume you would want incentives for early resolution throughout the process. Wouldn't that be correct? Ms. Sullivan. Yes, that is correct. Ms. DeGette. And so I guess I'm wondering how the policy, whether a stated policy or a de facto policy, of paying the contractors' attorneys' fees all along the route would help to achieve the early resolution that you would hope to have. Ms. Sullivan. We don't have a policy to pay contractors' defense costs all along the route. We have policies--and, as I pointed out, as far as we can tell, we are the only Federal agency that has any policy like this--to cutoff the reimbursement. The point at which it is cutoff---- Ms. DeGette. Let me stop you here---- Ms. Sullivan. [continuing] varies depending on the contract. Ms. DeGette. Excuse me, ma'am. Let me ask you a question. Is it your testimony today that the DOE is not reimbursing these contractors for defense costs---- Ms. Sullivan. No. Ms. DeGette. [continuing] along the way? Ms. Sullivan. It is not. I said it's not all along the way. Ms. DeGette. It is happening, isn't it? Ms. Sullivan. What I said is that our policy is to cut it off at some point along the process. Ms. DeGette. Which point would that be? Ms. Sullivan. The point at which it is cutoff is a function of the provisions of individual contracts. There is a balancing act here. Not every person who identifies himself as a whistleblower has a legitimate concern. Ms. DeGette. Of course not, but---- Ms. Sullivan. One of the things we discovered during the reductions in force, for example, was that many employees who saw themselves at risk of losing their jobs suddenly tried to create themselves as whistleblowers as a way to try to protect their employment. You don't want to create incentives where employers have legitimate reasons for, for example, downsizing the work force being precluded by somebody just labeling themselves as whistleblower without substantiation---- Ms. DeGette. Let me stop---- Ms. Sullivan [continuing]. So you want to have a process that allows enough looking into the facts to determine---- Ms. DeGette. Let me stop you right there, because I understand that. As I just said, I practiced employment law for about 15 years, and same thing as with whistleblowing--a lot of the claims are--you know, may be specious, or whatever. But it would seem to me that a policy that allows the payment of legal fees all along the route would encourage the drawing out of the litigation versus the early resolution, because the contractor knows that its legal fees are going to be reimbursed by the DOE. It also knows that it is litigating, oftentimes, against one worker who is spending their life savings here. How is that an incentive to early resolution, even in a case that is determined--I mean, let's say they make an informal allegation of retaliation, and that's investigated and found to be unwarranted, so let's say they make a formal filing, and that's, at the initial stage, found to be unwarranted. There is no incentive for the contractor to cut it off at some point. Ms. Sullivan. Well, in fact, we have a number of contracts under which they get no reimbursement if there is an adverse decision. We have other contracts that they get no reimbursement after a single adverse decision. In other words, they can't keep litigating and litigating at the Government's expense. Ms. DeGette. But they get reimbursed after the adverse decision is made, right? So there is no incentive for them. I mean, there has to be an adverse decision for them to not get reimbursed, right? Ms. Sullivan. Under some contracts, yes, that's right. Ms. DeGette. Right. Ms. Sullivan. They have an opportunity to defend themselves. Ms. DeGette. Right. So there is an incentive for them to just litigate and litigate up to the eve of the decision and then to resolve it. Ms. Sullivan. The balance we are trying to draw--and let me say I don't think we've reached it--as evidenced by the fact that we don't yet have a final rule on this, I don't think the Department has concluded where the best place to draw the line is to achieve the policy result we want, which is encouraging early settlement. Ms. DeGette. So you are still trying to work this out within the agency? Ms. Sullivan. Consistent with allowing contractors to defend themselves against unsubstantiated claims. The Office of Employee Concerns report for 1998 found that something like 42 percent of the cases they pursued were unsubstantiated. Ms. DeGette. Right. Now, let me ask you this. For legitimate claims, would you say it is your and your agency's position that you want zero tolerance for retaliation? Ms. Sullivan. Absolutely. Ms. DeGette. Okay. And what is happening now, it sounds to me like, you're trying to figure out how to work that out contract by contract, right? Ms. Sullivan. No. We're trying to come to a decision that we'll put in a final rule. Ms. DeGette. Okay. When is that rule expected? Ms. Sullivan. Soon. Ms. DeGette. How soon? Ms. Sullivan. We have---- Ms. DeGette. Six months? One year? Five years? Ms. Sullivan. I would say it will certainly be before the end of the year. Ms. DeGette. Okay. Now, you heard testimony from the previous panel that what might help in a situation like this is a procedure similar to that of the NRC. How do you feel about that, if Congress were to, for example, enact some criminal penalties to really put some teeth into this? Ms. Sullivan. Well, we have the authority already to impose civil penalties. Ms. DeGette. Right. But you know what I have found in many years is that, for corporate employees, they oftentimes don't feel upset about civil penalties, but if they think that they might go to jail--I mean, if your goal is to change the corporate culture in these places, to really institute a zero tolerance policy, what would be wrong with having a criminal statute on the book, as well, so before someone retaliated against these workers, that the person about to do the retaliation might think, ``You know, if I really do this, I could go to jail.'' Would you object to that kind of a procedure? Ms. Sullivan. I would not object. Ms. DeGette. Great. Thank you very much. I think at this time I'll reserve time. I might have a second round. Thank you. Mr. Bryant. Thank you. Ms. Sullivan, as a result of the Department's 1995 policy announcement, there were also other avenues of sanctions that exist to discipline a contractor, including suspension or debarment or penalizing them in the award fee evaluation context. Can you give me any examples where the Department of Energy has taken any such actions to sanction a contractor for whistleblower retaliation? Ms. Sullivan. I can't, but that doesn't mean there aren't some. I just am not personally aware of a debarment or a fee adjustment based solely on a whistleblower claim. Mr. Bryant. Okay. Dr. Michaels? Mr. Michaels. I know of none. I wouldn't necessarily know. Mr. Bryant. It kind of gets to the point that I was rambling through in my statement that, you know, we have a zero tolerance policy, which sounds great, but in reality that speed limit sign sounds great, but you and I both know if they never have a policeman out there enforcing it and they never take anybody to court on a ticket, over a period of time it is not going to be worth the metal the sign is on or the paper that the zero tolerance policy is written on. So, in terms of examples, there aren't any that come to mind about where you've gone back and made some adjustment on attorneys' fees that the contractor has incurred in one of these issues? Ms. Sullivan. We certainly have---- Mr. Bryant. Okay. Beyond this now on attorneys' fees. Ms. Sullivan. I just--I don't know of any. That's a contracting officer function. That's not handled in my office, so I'm not sure that I would know. Mr. Bryant. I want to be clear, because I asked the question involving suspension, debarment, or penalizing an award fee evaluation. Beyond that, is there any situation you are aware of where a company has been through this type of litigation that we're talking about today and then come back to be reimbursed for their attorneys' fees? Are you aware where there has been any example of that being denied or reduced in any fashion? Ms. Sullivan. I am aware of several instances of ongoing cases where no final decisions have been made about whether attorneys' fees will be paid. Mr. Bryant. Okay. I was---- Ms. Sullivan. And where contractors have been advised provisionally that they will not be paid. Mr. Bryant. Okay. If you could provide those list of cases you are familiar with that might be ongoing where this could be--I guess where you're saying this could be a factor. I don't know. Ms. Sullivan. Yes. I, in fact, thought that information had already been provided to committee staff, but we'll be happy to provide it again. [The following was submitted for the record:] The following is a list of on-going cases in which the Department has denied, or provisionally denied, reimbursement of the contractor's litigation costs: U.S. ex rel. Natural Resource Defense Council, Inc., et al. v. Lockheed Martin Energy Systems, et al. (D.D.C.) This is a qui tam action in the Oak Ridge office. The contractor's costs have been provisionally denied. O'Connor v. Boeing North American, Inc. and Rockwell International Corp., (C.D.Cal.) This is a toxic tort suit in the Oakland office. The contractor's cost have been provisionally denied. U.S. ex rel. Ridenour, et al. v. Kaiser-Hill Company, L.L.C., et al. (D.Colo.) This is a qui tam case in the Rocky Flats office. The contractors costs have been provisionally denied. U.S. ex rel. Stone v. Rockwell International. (10th Cir.) This is a qui tam case in the Rocky Flats office. The contractor's costs were denied subsequent to the government's intervention in the lawsuit. Shepherd, et al. v. Babcock and Wilcox of Ohio. (S.D.Ohio) This case, in the Ohio field office, alleges age discrimination and violation of section 3161 provisions. The contractor's cost have been provisionally denied. U.S. ex rel. Mock and Lebow v. Lockheed Martin Idaho Technologies, et al. (D.Idaho) These are two qui tam actions, one filed in 1996 and one in 1998, in the Idaho Operations Office. The contractor's costs have been provisionally denied. U.S. ex rel. Harrison v. Westinghouse Savannah River Corporation. (D.S.C.) This is a qui tam case in the Savannah River office. The contractor's costs have been provisionally denied. U.S. ex rel. Becker v. Westinghouse Savannah River Corporation. (D.S.C.) This is a qui tam case in the Savannah River office. The contractor's costs have been provisionally denied. Christos, et al. v. Westinghouse Savannah River Corporation. (D.S.C.) This is a case, in the Savannah River office, involving severance pay. The contractor's costs have been denied. U.S. ex rel. Carbaugh v. Westinghouse Hanford Company and Fluor Daniel Hanford, Inc. (E.D.Wash.) This is a qui tam case in the Richland office. The contractor's costs have been provisionally denied. Mr. Bryant. I've read about two cases where there were some problems, and one case actually full attorneys' fees were granted. Again, like my colleague from Colorado, I guess a lot of us have been in litigation before, so it's not anything unique to me or to her, but it does--if you've got a Goliath and a David out there and Goliath is getting their attorneys' fees paid and David is on his own pretty much, there is not much of an incentive there to continue the battle. Again, hence you lose your incentive in this issue of the whistleblower cases and the public policy we're trying to have in this country. Let me ask you--again, in your testimony, an issue that I didn't mention, but this model contract clause that I'm concerned about. In your testimony you assert that DOE did draft a model contract clause in response to the 1995 whistleblower reforms from Secretary O'Leary and that this model was used by the field sites in negotiating new contracts, yet apparently our committee staff has asked your office for a copy of this model clause and no one can find it, and we were told actually that there never was really a single, final model clause, but rather that there were several different drafts that were circulated within the Department at various times. Why didn't the Department of Energy provide its field offices with a single model clause separate and apart from all these troubled efforts you have had in rulemaking which you've discussed in your testimony? Why haven't you already given a single model clause out there to be used? Ms. Sullivan. If we want to apply a uniform clause in all our contracts, that has to be done through a rulemaking, and that's why we issued the proposed rule containing the format-- what I think of as the model clause. In response to the notice of proposed rulemaking, we received a number of comments expressing concern that it gave the contractors an incentive to settle even nonmeritorious cases, and it has been in response to those comments that we have had different approaches that are reflected in the contracts so that there is not a single model clause. But there was a proposed rule that was at the time the approach we proposed to take, and now we are taking into account the comments we received and, in addition, the experience we've had under the different approaches reflected in our contracts. Mr. Bryant. Let me ask you another question in follow-up to that. When these sample models were sent out--and your office has indicated that there have been variations that have occurred, arisen from this, and really some of them quite different--did your office approve all of these variations? And if you did, why? I've seen different variations at---- Ms. Sullivan. There are definitely---- Mr. Bryant. Did you approve those? And why? Ms. Sullivan. [continuing] different variations. We do not--my office does not negotiate the contracts. Those are negotiated typically at individual sites. I believe my assistant general counsel for procurement does review contracts, the entire contract. They tend to be a couple binders deep. And I just don't know the answer to whether they have focused in each case on this particular clause. Usually they focus their attention on areas that are viewed as problems in particular contracts. Mr. Bryant. Yes. But you would have the power to review and approve this particular---- Ms. Sullivan. I can give you a recent example. The Rocky Flats negotiations got quite far along and had no version of the clause in the contract, and that came to my attention, and I said, ``We are not going to enter into a contract that doesn't have some restriction on contractor litigation-- reimbursement of contractor litigation costs.'' So if those things come to my attention, I have taken an aggressive posture to make sure that we are not giving contractors an incentive to engage in unlimited litigation against whistleblowers. Mr. Bryant. The Rocky Flats situation, are you saying that the contract did not have any provision for reimbursement to the---- Ms. Sullivan. For disallowing reimbursement. Remember, our contracts are what are, generally speaking, cost-plus contracts. We reimburse the contractor for all of its costs, including its litigation costs for discrimination--racial discrimination, for example, as to which we also have zero tolerance. Mr. Bryant. When did this particular contract come to your desk? Ms. Sullivan. Months ago. Mr. Bryant. Months? Ms. Sullivan. Months ago. Some months ago. Mr. Bryant. Some time in the year 2000? Ms. Sullivan. I can't remember if it was the end of 1999 or beginning of 2000. Mr. Bryant. I think that points out just maybe an institutional problem. Maybe that's what we're dealing with, to some extent, that you said this contract had gotten way down the road and you had to step in. Ms. Sullivan. And everybody admitted it was an oversight. Mr. Bryant. Yes. Ms. Sullivan. And it was caught. Mr. Bryant. Yes. Ms. Sullivan. We had a process in place and it was renegotiating an old contract. As I say, we caught it because people are concerned about this and do believe this is something we need to be on top of. Mr. Bryant. Is the rulemaking process--are we in the fifth year of that? Ms. Sullivan. Pardon me? Mr. Bryant. I mean, 1995 is when it was initially announced that the Secretary of Labor wanted to do this--Secretary of Energy, Ms. O'Leary, wanted to do this. Are we 5 years into this trying to get this rule on the uniform--the model clause? Ms. Sullivan. We are 5 years into finalizing a rule. We have a provision--a variety of different provisions disallowing contractor whistleblower defense costs in virtually every one of our major contracts. So we haven't sat on our hands by virtue of the absence of a final rule, but we do need to move to a final rule. Mr. Bryant. And that's my point. It has taken much too long to get through this process to establish a uniform model clause for this purpose. You've got a variation of these provisions out there which we've seen, that some are much better than others, and you are sitting back, letting the contracting officers negotiate these things, and even to the point, like I said, the Rocky Flats where they forgot to put it in there. So they are so negligent in reading this thing that they didn't catch that that wasn't in there or they simply didn't care. There is---- Ms. Sullivan. They used an old contract as a starting point that predated the policies. Mr. Bryant. And they had gotten far down the road on that. Ms. Sullivan. And they had gotten far down the road. But, as I say---- Mr. Bryant. Obviously, for you to step in, it got way on down the road. I'm saying---- Ms. Sullivan. I was not the first one to raise it. The chief counsel at Rocky Flats raised it and the contractor was saying, ``Gee, we've negotiated everything else. We've priced everything else out.'' So it was brought to my attention and I said, ``No way we are going to close this contract without the provision.'' Mr. Bryant. Well, I think--and I appreciate your efforts there, but I think the adequate and right priority has not been put on this during that 5 years, and I think it is time that you develop a uniform model clause to be used here so you don't leave it to the negotiating skills or the position where one of the witnesses testified that, they're swapping back and forth in these. To allow people like that to negotiate an important provision of a contract like this---- Ms. Sullivan. Mr. Chairman, I agree with you entirely. Mr. Bryant. And it shouldn't take 5 years to do it. And I would suggest that, if it could be done, then we need to enforce it and implement it and not--I like to think I am just as pro-business as they come, and I'd like to think it is a perfect world out there where everything would be done the right way, but I know it is not, and I guess the fact that there are no examples of where people are being denied their recovery under their attorneys' fees and so forth, there's not one example---- Ms. Sullivan. There are examples. Mr. Bryant. I'm sorry. I misunderstood your testimony. Ms. Sullivan. No, I'm sorry. We have advised contractors that--and the cases I'm aware of are pending cases---- Mr. Bryant. Right. They're ongoing. Ms. Sullivan. [continuing] since I have been general counsel where we have advised contractors that we are not approving---- Mr. Bryant. Okay. My point is there has not been---- Ms. Sullivan. [continuing] reimbursement. Mr. Bryant. [continuing] any in 5 years where it is final. It has not been done. I read an example where you were telling somebody you were going to do it, and in the end you turned around and paid them anyway. I'll get that, if you don't recall which one that is. I have been very vague. I'll find that reference to that case and get it to you. Anyway, you folks are, I know, very good at what you do. I know all these witnesses here are very good at what they do. But I think, again, from a pro-business Member of Congress, I am greatly concerned about this issue and especially the legal side and not getting a uniform standard, model, clause out there in all of our Government contracts in the Department of Energy and then enforcing it once you get it out there. Thank you very much. The gentleman from Ohio? Mr. Strickland. Thank you. Ms. Sullivan, you used a statistic, and if I jotted it down correctly you said some 42 percent of the whistleblower cases had been determined to be invalid? Ms. Sullivan. Let me be very clear, because I am relying on the 1998 Office of Employee Concerns activity report, and for 1998 what the report indicates is that, of the cases they pursued--they concluded that a certain number of cases were not their jurisdiction. They were discrimination cases, civil rights cases---- Mr. Strickland. But of those they pursued? Ms. Sullivan. Of those they pursued, 42 percent had--were concerns that were unsubstantiated, 58 percent were substantiated in whole or in part. Mr. Strickland. So--I mean, I say this respectfully, but it seems to me that someone who is charged with protecting whistleblowers, if they were to share information with us, would put the emphasis on the substantiated case, rather than emphasize the 42 percent who were nonsubstantiated. Would say, ``58 percent seemed to be substantial.'' That leads me to this question: do you see yourself---- Ms. Sullivan. Let me be clear. These were not whistleblower cases. These were employee concerns. These were cases resolved in the very early stages before they got to litigation. Mr. Strickland. Okay. But it leads me to a question that I think is a legitimate question. Do you see yourself in your office as more concerned with protecting whistleblowers or mostly concerned with protecting contractors from unsubstantiated accusations, because it seems to me that there is a--that you can't be--you can't set both of those priorities as the No. 1 priority. What is your top priority and your office's top priority? Ms. Sullivan. Our top priority is to carry out the Secretary's policy of zero tolerance for reprisal. Mr. Strickland. That's not what I'm hearing from you. I mean, it seems to me that you talk in terms of trying to make sure that unsubstantiated cases are not pursued to a greater-- with a greater emphasis than in making sure that substantiated cases are pursued. You know, if I am mischaracterizing what your position is here, I'm sorry, but---- Ms. Sullivan. I really think you are. What I am concerned about is the law of unintended consequences--that if you create a system that is entirely weighted in one direction or in the other, people behave in ways that produce bad results. Mr. Strickland. If I can--I mean, that's my point. There is no balance here. You know, I have here a case that was brought by constituents who lived within six miles of the uranium enrichment facility in Piketon, Ohio, in 1990. In 1996, this post-settlement offer was put forth. There has been no response. I believe that the Department is accepting responsibility for the litigation expenses. It has been going on for 10 years. I think there is no balance. As my colleague from Colorado says, here is the Department, and the contractor, perhaps in an adversarial relationship with an individual employee who has limited resources, and there is every incentive, it seems to me, for the litigation to continue. I mean, what I would hope to see from the Department is at least some balance. If we are going to assist--if we are looking for the truth and we are going to assist the contractor by paying expenses, ought you not also assist the whistleblower in gathering information and helping them make their case, as well? Ms. Sullivan. In fact, in the case that has been referred to several times today, the Department had provided thousands of pages of documents to the whistleblower at the time the judge issued a decision saying we had provided nothing, and I can't explain why--it was actually a magistrate--why the magistrate did not have the correct facts that we had provided virtually all of the documents the whistleblower was seeking. Mr. Strickland. Was the witness provided with this information and were--in other words, were you doing everything you could to make sure that the truth came out by assisting the whistleblower in every possible way, legitimate way? Ms. Sullivan. I don't know which situation you're talking about. In general, I encourage all of my staff to be cooperative with document requests, to not be overly formal about following procedures; that if we have documents available that people want, to try to provide them, assuming they're not privileged documents. Mr. Strickland. Our counsel tells me that you have a joint defense agreement with the University of California. Is that correct? Ms. Sullivan. I would very much like to speak to the issue of joint defense agreement, because the implication today has been that that means we support the University of California's position. We have joint defense agreements that enable us to obtain privileged documents from our contractors as part of our ability to oversee our contractors. All it means is that they share privileged documents with us, but we are then under an obligation to keep them as privileged documents. It does not mean necessarily, in a particular case, that we are supporting the contractor's position. It means we have--``legal privity'' I think was the term Mr. Carpenter used, and I think that is a fair term. But when a contractor provides us with a privileged document under a joint defense agreement, it means we have to keep it confidential because it is a privileged document. They haven't waived their privilege by sharing it with us. That's all it means. Mr. Strickland. Does that extend to the payment of fees? Ms. Sullivan. The payment of fees is governed by our contracts with the particular contractor. Mr. Strickland. Who determines what those contracts say? Ms. Sullivan. Contracting officers in their negotiations. And, as the chairman has pointed out, we need to get to a final rule so that we have a uniform policy across the system. Mr. Strickland. And you said that would require formal rulemaking. Ms. Sullivan. We've already done a proposed rule. We just need to issue a final rule. In fact, we have been through two comment periods on the rulemaking. Mr. Strickland. Ms. Sullivan, in 1998, former---- Mr. Burr. Would the gentleman yield for 1 second? Mr. Strickland. Absolutely. Mr. Burr. Just for a clarification---- Mr. Strickland. Sure. Mr. Burr. [continuing] on his last inquiry. I just find it interesting. I've got a document here that I think was to Bob Emmett from Amy--and I believe the last name is Roiden. I may have the spelling incorrect. And I think they are in your office. I would just flip to the second page. Is there a Mary Ann Masterson present? Let me just ask if this is an accurate depiction. This is under the section, ``reimbursement of contractor whistleblower litigation costs.'' The last point is, ``DOE has issued a final rule. According to Mary Ann Masterson, there is no one championing a movement on this rule.'' Is that an accurate depiction? Last bullet point. I think this is dealing with the model clause, isn't it? Ms. Masterson. I don't recall. Mr. Burr. So---- Ms. Masterson. It had a champion, but I just don't recall this exchange. Ms. Sullivan. I think what would be fair to say is the Office of General Counsel typically is not the moving party in a rulemaking. There is a program office. This rule did not start out as our rule, and the folks who promoted it have left the Department. We have picked it up because no one else picked up the rule. Again, I would go back to the point that the---- Mr. Burr. Well, I think that's what she said right here is ``there is no one championing movement of this rule,'' or what somebody has at least put in this memo, according to Mary, that nobody is championing this final rule. Ms. Sullivan. I don't know who the author of this document is, and the points---- Mr. Burr. I go to the front of it. Is Amy Royden not in your office? Ms. Sullivan. Amy Royden used to be in my office. Mr. Burr. She used to be in your office? Ms. Sullivan. She is at the State Department now. Mr. Burr. She's at the State Department. But clearly when Amy Royden was in your office this pertained to the general counsel's office, because it was a document produced---- Ms. Sullivan. No. I think it pertained to the Department. I think the point--and I don't know what Mary Ann said, but I think the point was the Office of General Counsel doesn't initiate rulemakings in the ordinary course. It comes from the program office. This rule is somewhat unusual, and so we have taken it over because there has been no natural champion for it. Mr. Burr. The gentleman was very kind to yield, and I would---- Mr. Strickland. Well, I would just like to ask who initiated this if it was not your office. Ms. Sullivan. I assume that it came out of the Office of Procurement Policy. It predates my time as general counsel, and so I am not certain who---- Mr. Strickland. Would you please find out for us and let us know? Ms. Sullivan. Sure. [The following was submitted for the record:] The whistleblower costs clause was developed in parallel with the Department's Contract Reform Team effort to address concerns raised by Former Secretary O'Leary and a Steering Committee which she established in late 1993 to consider whistleblower issues. Many of the Contract Reform action items, including an item addressing defense costs in whistleblower actions, were incorporated as contract provisions in the Model Contract for Profit Making Contractors released for comment in February 1995. See Commerce Business Daily February 13, 1995. As a result of comments received from the public in response to the release of the Model Contract for Profit Making Contractors and experience gained by the Department from negotiating the contract provisions into its management and operating contracts, many of the provisions were determined ready for the public rulemaking process. The Department proceeded with its Contract Reform rulemaking initiative covering these provisions, publishing a notice of proposed rule on June 24, 1966, 61 FR 32588, and a notice of final rule on June 27, 1997, 62 FR 34842. At that time, there were also a number of provisions with unresolved issues, and the whistleblower costs clause fell into this category. Issues relating to the whistleblower costs clause were subsequently resolved and a notice of proposed rule prepared. Since this clause added legal defense costs, the Office of Assistant General Counsel for Procurement and Financial Assistance prepared the initial draft of this rulemaking and then coordinated the draft with the Office of Procurement Policy, which would normally have the lead for a procurement regulation. The Office of General Counsel provided concurrence on the rulemaking package, following concurrence by the Deputy Assistant Secretary for Procurement and Assistance Management, in July 1997. The notice of proposed rule was published simultaneously with the notice of the proposed rule amending 10 CFR Part 708; the Department's whistleblower protection program regulation on January 5, 1998, 63 FR 386. As a result of comments received in response to the notice of proposed rule, a notice to reopen the comment period was prepared which contained an alternate cost principle proposal. The Office of Assistant General Counsel for Procurement and Financial Assistance drafted this rule and then coordinated the issuance of the notice with the Office of Procurement Policy. The notice to reopen the comment period was published on March 24, 1999, 64 FR 14206. It is anticipated that a final rule will be issued in the near future. Mr. Strickland. I would like to switch my questioning, if I could quickly, to Dr. Michaels. Ms. Sullivan. Good. Mr. Strickland. One of my favorite people. Dr. Michaels, are you familiar with the Rocky Flats contract provision concerning Price Anderson fines? Mr. Michaels. Yes. Mr. Strickland. The Price Anderson Office of Enforcement reports to you, does it not? Mr. Michaels. It does. Mr. Strickland. As I read this provision, it appears that the DOE field contract officer will now set the amount of Price Anderson fine and offset any fines with any performance fee reductions that might also result; is that correct? Mr. Michaels. It is my understanding that, while that exists in the current contract, I've already informed the program office responsible for that, that that is unacceptable to me and I have been told it will be removed. But yes. Mr. Strickland. Who will remove it? Mr. Michaels. The Department of Energy contracting officer will contact the contractor at Rocky Flats to make it clear that that has to be removed from the contract. Mr. Strickland. Why is it there in the first place? Mr. Michaels. That's a very good question. My office--my staff who looked at it claimed they didn't see it. Mr. Strickland. Did anyone from the counsel's office ask you to review this provision for its impact on Price Anderson enforcement? Mr. Michaels. The counsel's office doesn't particularly get involved. The contracting--the program office, environmental management, that negotiated that contract sent us a number of contracts to review. My staff look at parts, evidently missed that, and when I heard about that I was obviously very upset. Mr. Strickland. Is it your position that the provision may contravene section 234(A) of the Atomic Energy Act and will substantially, if kept in place, undermine DOE's regulatory authority under Price Anderson? Mr. Michaels. I can't speak to the specific provision, but yes, I think that the concept is basically there that that's-- it is contrary to our policy in the way we set fines, that we can use fines. We can set the level of fines higher when we see no mitigation by the contractor or lower if we see a good faith attempt to mitigate. This approach really eliminates that ability of our Price Anderson office to work with the contractors that enforce what we need to enforce. So we question, in fact, the legality of that, that we may be contrary to either public rule or law. Mr. Strickland. Ms. Sullivan, did you approve that provision? Ms. Sullivan. No. Mr. Strickland. No? Did your office have any involvement? Ms. Sullivan. Not as far as I know. This is the first I'm hearing it. Mr. Strickland. Do we know where it originated? I mean, could you give us some insight? Mr. Michaels. I inquired. I can only give you second-hand information, but when I inquired I was told that it was in the agreement between--in the discussions between the Environmental Management program and the Rocky Flats contractor, and we were not told of it, and I assume the general counsel was not told of it, either. I believe the general counsel would have reacted to it the same way I did. Ms. Sullivan. I would have. Mr. Michaels. No. We---- Ms. Sullivan. This is the very first I'm hearing it. Mr. Michaels. Yes. Mr. Strickland. So it would appear to me that the contractor attempted to slide something in this contract without certainly full exploration on the part of those of you who should have had some involvement, I would think. Is that a reasonable assumption? Mr. Michaels. It's certainly not unreasonable. Between the contractor and--the various parties negotiating that contract certainly agreed to something that I think neither Ms. Sullivan nor I would have agreed to. Mr. Burr. Would the gentleman yield for just one clarification? Mr. Strickland. Sure. Mr. Burr. Ms. Sullivan, would it be correct on my part to believe that there is a chief counsel for the DOE at Rocky Flats? Ms. Sullivan. Yes. Mr. Burr. And would it be also correct on my part to believe that any contractual agreement negotiated at Rocky Flats, that the chief counsel would be party of that negotiation? Ms. Sullivan. Yes. Mr. Burr. And would it also---- Ms. Sullivan. In this case it was. Mr. Burr. Would it also be correct to assume that that chief counsel at Rocky Flats would, in fact, report to you? Ms. Sullivan. Yes, she does. Mr. Burr. And if such a negotiation took place, is it also reasonable for the committee to believe that the chief counsel would have shared with you what had been negotiated? Ms. Sullivan. She shared with me certain issues that she was concerned about. I have not heard about this issue before today. Mr. Burr. But this very crucial piece that Mr. Strickland has run, you are completely sure that that was not shared, even though it was part of the chief counsel's responsibility to negotiate? Ms. Sullivan. It---- Mr. Burr. It never came to your attention? Ms. Sullivan. The contracting officer--as a formal matter, the contracting officer negotiates contracts for the department. The chief counsel at Rocky Flats was involved. I don't recall that I have ever heard of this provision. I think I would have had the same reaction Dr. Michaels did immediately--that it undercuts what we are trying to accomplish with Price Anderson. As I say, I don't recall that it has ever been brought to my attention before today, and it surprises me because the chief counsel did bring to my attention a number of provisions that she correctly concluded I would be concerned about, and she was looking for my support to take a more aggressive position. Mr. Burr. Could it be at all because Price Anderson is something that the chief counsel's office has chosen not to use in any way, shape, or form in any of these cases? Ms. Sullivan. The chief counsel doesn't use Price Anderson. That's the Office of Environment, Safety, and Health that administers that program. Mr. Burr. When I said chief counsel, I should have said ``general counsel.'' I was, in fact, directing that to you-- that you had counseled in one of the e-mails that Dr. Michaels not use Price Anderson. Ms. Sullivan. We had a very specific notice problem there, as I explained to Dr. Michaels, which was that his guidance-- not his guidance, but the guidance issued with the nuclear safety regulations that he administers--said that findings in part 708 proceedings, whistleblower proceedings conducted within DOE, would be taken into account, made no reference to Department of Labor proceedings, and we had separately indicated that we wouldn't rely on other agency findings without providing specific notice. Mr. Burr. So the general counsel's office has a very specific view of Price Anderson, or you have a very technical-- -- Ms. Sullivan. No. I have a specific---- Mr. Burr. No, you understand it. Ms. Sullivan. [continuing] view of due process---- Mr. Burr. But you understand---- Ms. Sullivan. You have to put people on notice of what the potential penalties are before you impose penalties. Mr. Burr. I'm just--please don't take anything that is not meant out of my inquiry. I'm only trying to understand how the general counsel's office understands Price Anderson specifically but the chief counsel on the site at this facility butchered it in these negotiations and they didn't understand it quite as well as what you do. Ms. Sullivan. Without knowing how that provision evolved, I don't want to characterize it. I do want to look into how that provision got into the contract. Mr. Burr. I thank you. And I thank the gentleman for yielding. Mr. Strickland. Thank you. I've had more than my time. Thank you, Mr. Chairman. Mr. Burr. I thank the gentleman. The Chair would recognize himself. Ms. Sullivan, let me give you an opportunity to try to convey to the committee the discrepancies in the two memos that I referred to before we started with panel one, and that deals with the May 18 notification to the committee--and this is in reference to the Graff case--that Kaiser Hill was not reimbursed for legal fees and the May 22 notification yesterday to the committee that they had been reimbursed. Ms. Sullivan. Mr. Chairman, let me first preface my comments by saying I think you found out about this maybe 10 or 15 minutes before or after I did, so this is very new information to me. I will tell you what I understand to be the situation. The chief counsel at Rocky Flats directed the contractor not to reimburse its subcontractor--in this case, I believe Wackenhut--for these defense costs as the matter was proceeding and said, ``We'll look at it at the end.'' That was her instruction. That was what she understood to be occurring. She received no invoices. When a contractor is getting its litigation expenses reimbursed, our Office of Chief Counsel reviews invoices from the law firms providing legal services and approves them. In this case, no invoices were being provided. As I understand it--and, as I say I don't have the full facts, but, as I understand it, the subcontractor was submitting these costs to Kaiser Hill and they were getting lumped into a larger amount. When Kaiser Hill's management discovered that these payments had been made, contrary to the instructions of the DOE chief counsel at Rocky Flats, the DOE chief counsel, Kaiser Hill wrote a check to the government. And the issue of whether and how much of the subcontractor's legal expenses will be reimbursed has to be determined. It's not---- Mr. Burr. So, I mean, if this subcommittee had not had this hearing, would we have caught this? Ms. Sullivan. As I understand it, the question of how much of the legal expenses were reimbursable was being looked at. Mr. Burr. Let me redefine my question, if I could, restate my question. Ms. Sullivan. Okay. Mr. Burr. Our request of DOE was, ``Have you reimbursed Kaiser Hill for legal fees?'' The response that we got back was, ``No, we have not.'' Ms. Sullivan. And that's what we believed to be the case-- -- Mr. Burr. Now---- Ms. Sullivan. [continuing] based on our instructions. Mr. Burr. My question was: had we not held this hearing where we asked you, ``Have you reimbursed Kaiser Hill for legal fees,'' would this have been caught? Would, in fact, the revelation that you've now gone through that you did reimburse for legal fees, when would it have been caught? Ms. Sullivan. In fact, that's what I was trying to explain. There are two different processes: one, reimbursement as you go along, and, two, a determination of allowability. We sometimes pay costs--a whole variety of costs--as they are incurred and subsequently conclude that, under the terms of the contract, they are not allowable costs and they are recouped. Mr. Burr. I would take for granted---- Ms. Sullivan. The recoupment process would have occurred in this case, because review of the legal costs incurred in the Graf case had commenced. Mr. Burr. I'm less concerned with the recovery, because that has already taken place. I'm more concerned with my apparent belief that these did not show up--whatever mechanism was turned over to DOE for payment, for reimbursement, apparently on that it didn't say, ``For legal reimbursements.'' Ms. Sullivan. Apparently it didn't, but I don't know. I haven't seen any of the documentation here. What I know is that my chief counsel at Rocky Flats directed that the costs not be reimbursed---- Mr. Burr. Who at DOE---- Ms. Sullivan. [continuing] and they were---- Mr. Burr. Who at DOE looks at that on whatever monthly, weekly, whatever basis it is turned in for reimbursement? Who looks at it to determine whether, in fact, the charges are appropriate to be reimbursed? Ms. Sullivan. What charges are you referring to? Are you talking about legal charges, in particular? Mr. Burr. I'm talking about all charges. At Rocky Flats, does Kaiser Hill turn over to DOE on a monthly basis an invoice that says, ``Here is what we are to be reimbursed for''? Ms. Sullivan. I don't know the answer to that question. I know what we do with respect to legal costs incurred by our contractors. Those are the only costs that my office---- Mr. Burr. So had it been reimbursed as a legal cost, you would be aware of it, correct? Ms. Sullivan. As a contractor legal cost. This issue of subcontractor legal costs not getting the review that contractor legal costs get is a problem that we had identified some time ago, and we are in the process of adding to our contractor litigation management review process a requirement that subcontractor legal costs be looked at in the same way we look at our contractors legal costs. Mr. Burr. My question is slightly broader than that. If Kaiser Hill is seeking reimbursement for legal costs, whether it was a separate invoice to DOE or part of an invoice for other things, my understanding is that your department would look at those charges and would sign off on the reimbursement for legal fees. Is that a correct understanding on my part? Ms. Sullivan. That is a correct understanding with respect to legal costs incurred by our contractors. We are in the process of adding to that legal costs incurred by our subcontractors. Mr. Burr. So you---- Ms. Sullivan. This system is fairly new. Mr. Burr. You reimbursed Kaiser Hill, or you reimbursed Wackenhut? Ms. Sullivan. We reimbursed---- Mr. Burr. Kaiser Hill? Ms. Sullivan. [continuing] Kaiser Hill. Mr. Burr. Okay. And that's your---- Ms. Sullivan. And they were not--as I understand it---- Mr. Burr. So---- Ms. Sullivan. [continuing] what we reimbursed was not identified as a legal cost. Mr. Burr. So what you reimbursed was not identified as a legal cost; therefore, it did not come to the general counsel's office to be approved? Am I correct? Ms. Sullivan. That's correct. Mr. Burr. Now, can you think of any other instance where a legal cost, a reimbursement for litigation for any retaliatory actions like what we're looking at today have not been billed to the DOE as a legal cost, where it has been lumped into a contractor operations? Ms. Sullivan. I'm not aware of any others. Mr. Burr. Share with me, if you will, now that you know, what recommendations, if any, you might suggest to the Secretary or to whatever division might be your enforcement division. What penalty are you going to place on Kaiser Hill for not billing you legal costs and billing them as something different? Ms. Sullivan. First, I want to find out exactly what the facts are, and then I'll decide what penalty is appropriate. But the other thing we are doing and were doing before this situation came to light, to get better control over legal costs, is to include subcontractors by rulemaking in the requirements our direct contractors are already subject to, which is a whole series of procedures for approval and review of legal costs. Mr. Burr. Let me turn to a letter dated April 28. And this is a letter from you, I believe. Yes. It's from you to Chairman Bliley. I want to read from the first page, the fourth paragraph. Ms. Sullivan. Is somebody going to share a copy with me? Mr. Burr. It is about six pages, so I wouldn't expect you to remember the entire thing. First page, fourth paragraph, second sentence: ``When the DOL decision was issued, the Oakland operations office met with Mr. Lappa and reviewed the DOL decision, and Lawrence Livermore Nuclear Labs plans to comply with its terms and conditions. Oakland accepted the deal, the decision, as an equitable resolution of Mr. Lappa's concerns and concluded no contractual action was appropriate, provided that Lawrence Livermore complied with the terms and conditions of the DOL decision and engaged in no retaliation against Mr. Lappa.'' Have, in fact, charges of additional retaliation been filed? Ms. Sullivan. Yes, they have. Mr. Burr. And, given that, what has DOE done? Ms. Sullivan. DOE is awaiting the determination of whether retaliation, in fact, occurred--a determination that will be made in a State court in California because that was the forum in which Mr. Lappa chose to bring the retaliation claims. Mr. Burr. And does that preclude you from using Price Anderson? Ms. Sullivan. I believe under the new policy that we issued it would not, but I'd want to look at the specific terms of the policy. Mr. Burr. Now, you believe that prior to this--well, share with the committee, if you will, why you counseled Dr. Michaels that a proposed notice of violation was inappropriate. Ms. Sullivan. Because the published guidance accompanying the Price Anderson rules said that we would rely on findings in DOE part 708 whistleblower proceedings, and separately we had said that we would not rely on proceedings of other agencies without providing specific notice, roughly to that effect. And so, in my view, we had not given the contractors adequate notice that accepting a preliminary determination of the Department of Labor and allowing it to become final could provide the basis for a Price Anderson enforcement proceeding. Mr. Burr. Let me share with you, if I can, a June 29, 1999, subcommittee hearing here, worker safety at DOE nuclear labs. Page 115 of that testimony--I'll just read the whole-- ``Separately, through the enforcement process of 10 CFR part 820, DOE has the discretionary authority to issue notice of violation when appropriate to a contractor who is determined to have retaliated against a contractor employee for raising a nuclear safety concern. ``In the case of Mr. Lappa, the Department of Labor issued an opinion that Mr. Lappa was subject to reprisal. DOE is awaiting information from the Department of Labor to determine whether there is sufficient basis upon which to issue a notice of violation.'' These were questions, as I understand it, that were posed to the Department of Energy at the conclusion of the hearing where they had ample time to determine the answers, to have your office go through those answers to make sure that they were accurate and depicted DOE's position, and the answer was, ``DOE is awaiting information from the Department of Labor--'' that information came--``to determine whether there is sufficient basis--'' it concluded there was--``upon which to issue a notice of violation.'' You counseled Dr. Michaels after you reviewed the material that DOE couldn't do that. Ms. Sullivan. I counseled Dr. Michaels that he couldn't do it solely on the basis of the preliminary determination by the Department of Labor. I further counseled Dr. Michaels that his staff could conduct an investigation which could include information developed in the Department of Labor proceeding. Mr. Burr. Is that what the answer said a year ago? Ms. Sullivan. I think that is a legitimate interpretation of this answer. I mean, I don't know who the author of this answer is, but we have not said that there is no way to pursue a Price Anderson penalty---- Mr. Burr. In the case of Mr. Lappa, the Department of Labor issued an opinion that Mr. Lappa was subject to reprisal. ``DOE is awaiting information from the Department of Labor to determine whether there is a sufficient basis upon which to issue a notice of violation.'' Now, I would interpret that so say that if you did not issue a notice of violation there was not sufficient basis, not that you couldn't, based upon the Department of Labor's investigation, but that, if there was sufficient basis. Was there sufficient basis? Ms. Sullivan. I don't know. I haven't looked at---- Mr. Burr. Dr. Michaels, was there sufficient basis? Ms. Sullivan. The problem we have is published guidance to our contractors telling them the circumstances under which they can be subject to a Price Anderson penalty. Mr. Burr. Why---- Ms. Sullivan. Code of Federal Regulations published guidance. Mr. Burr. Why---- Ms. Sullivan. This does not have---- Mr. Burr. Why did the counsel's office---- Ms. Sullivan. [continuing] the same standing. Mr. Burr. [continuing] allow this answer then if there is another issue? Ms. DeGette. Would the gentleman yield? Mr. Burr. I'd be happy to yield. Ms. DeGette. Were you, in fact, in this position a year ago when these answers were written? Ms. Sullivan. Yes, I was. Ms. DeGette. And was it your responsibility to review those answers before they were submitted? Ms. Sullivan. No. I do not typically review answers. They are reviewed in the counsel's office, not by me. Again, I would point out that I think where the disconnect may occur is the author of this answer may have thought that this meant the Department of Labor conclusion would, standing alone, be enough. The reviewing lawyer may have thought this answer allowed a further investigation by the Department of Energy. Ms. DeGette. Well, now, let me ask you something. These are questions from this committee, a Congressional committee. I would assume anybody drafting those answers would want them to be as clear and without--so no one could misinterpret the meaning. Wouldn't you agree with that? Ms. Sullivan. Yes, I would agree with that. Ms. DeGette. And this seems to me that it is open to wide interpretation, just based on my colleagues' questioning and your interpretation here of words that aren't even there. Ms. Sullivan. When it used to be my responsibility to review Q's and A's that were on their way to the Hill, I spent a fair amount of time trying to make them as clear as possible. We may have failed in this case have an answer that was as clear as it should have been, or we may have just made a mistake. Ms. DeGette. Let me just say--and you realize this, but I hope you go back to your staff. This is exactly why you want unequivocal, clear answers is because a year later people come back and they interpret your actions based on those words. I'll yield back to my colleague. Mr. Burr. The same person that answers Congressional inquiries doesn't review invoices from contractors, do they? [No response.] Mr. Burr. Thank you for that opportunity to have a little fun. Dr. Michaels, I'd like for you to answer that question about whether there was, to use their term, a ``sufficient basis upon which to issue a notice of violation from the Department of Labor's conclusion.'' Mr. Michaels. We certainly believed that there was. It's the legal and jurisdictional issue which I think has stopped us from moving forward in issuing a notice of violation in this case. It wasn't a question of the amount of information available or the quality or the content of it. Ms. Sullivan. In fact, I'd like to just clarify. It is a question of the quality of the information in the sense that the University of California declined to go the next step in the process, to go to a hearing at which witnesses would be questioned, the judge could ask answer questions. What Dr. Michaels' staff could look at, because it is all there was, was a paper record that involved no hearing. As a lawyer, I like to think that the hearing process is valuable in developing the truth. So I think that may explain why the policy previously was that we were not going to rely on a preliminary decision based on one guy's investigation--in fact, Dr. Michaels' staff indicated that that level of decision in the Lappa case is not a level of decision that they---- Mr. Burr. When you say ``one guy's,'' are you referring to the Department of Labor? Ms. Sullivan. The investigator for the Department of Labor. Mr. Burr. So the Department of Labor's investigation is not a sufficient investigation in worker retaliation? Ms. Sullivan. It is a sufficient investigation to kick off a process. In the Department of Labor system, after a preliminary determination, you go to a hearing, or, as happened in this case, you simply accept the recommendations. Mr. Burr. In this particular case, at the time that they brought a PNOV to you, you had had a contractor---- Ms. Sullivan. They did not bring a PNOV to me. Mr. Burr. You counseled them that one was not appropriate; am I correct? Ms. Sullivan. I counseled them that, given their guidance, their published guidance---- Mr. Burr. And Dr. Michaels thought your were wrong. I think that's what he said. He---- Ms. Sullivan. I don't think he disagreed with me on the law. Mr. Burr. Keith Christopher, the director of the Office of Enforcement, said in his e-mail, ``While I disagree with this legal position, I've advised Dr. Michaels that he should defer to the advice given by DOE's General Counsel,'' and that would be you; am I correct? Ms. Sullivan. That would be me. Mr. Burr. The Chair would notify the members that he has some questions that he just can't make before this vote. Ms. DeGette. Will the Chair yield for a minute---- Mr. Burr. I'd be happy to yield. Ms. DeGette. [continuing] because I just have one more question, and I'll try to make it back after the vote, but I can finish this question. Mr. Burr. You feel free to go ahead. Ms. DeGette. Thank you so much. Mr. Van Ness, I just wanted to ask you a question to clear up the record. I believe that you testified that you had one complaint at Livermore, and that was Mr. Lappa that ended up being legitimate; is that right? Mr. Van Ness. We had six complaints overall. Four had a finding of no retaliation, one---- Ms. DeGette. And two---- Mr. Van Ness. [continuing] was settled prior to---- Ms. DeGette. And the other was Mr. Lappa? Mr. Van Ness. Right. Ms. DeGette. Well, I was a little bit curious, both in your written and oral testimony, because, you know, you testified about Livermore, but we just heard from Mr. Gutierrez about Los Alamos, and I guess I was wondering what the situation was at Los Alamos. Mr. Van Ness. Well, to my understanding it is very similar. The problem with Los Alamos is we were notified very late that there was going to be a--that Mr. Gutierrez was going to be a witness and that that would be part of the discussion, so I didn't have as much time to review that. Ms. DeGette. So you don't have the statistics for how many whistleblower retaliation complaints you have? Mr. Van Ness. I don't have it for Los Alamos in the same specifics I have it for Livermore, but I would be glad to submit it. Ms. DeGette. I would appreciate that. Here's the concern--and I think we all share this concern-- when you have an atmosphere that retaliation or that whistleblowing can create, that can often exist throughout one facility, so you might have one facility that you oversee, like Livermore, where there is a healthy attitude of management toward resolving whistleblower complaints. You might have another facility like Los Alamos where there is fear of retaliation, and that is creating a very, very negative atmosphere toward whistleblowing, which is why I get back to what I was talking about before--we should have generalized standards for all facilities, including criminal penalties, as well, because you might have one model situation and then you might have another one where it is very different, and a lot of it is based on management of the facility and on actual supervisory personnel. Just one final thing, to clarify--and I appreciate the Chair's indulgence. You detailed the complaint process quite in depth. And, as I hear it, that is the academic route if people should choose to make complaints through the U.C. system, not the DOE process. Mr. Van Ness. That's correct. Ms. DeGette. Would that be correct? Mr. Van Ness. That's correct. Ms. DeGette. And so that's a very different process, and you decided, for whatever reason, not to talk about that process today, even though that is the subject of this hearing. Mr. Van Ness. Well, I want to clarify that the DOE--the University of California at a DOE laboratory has the right to choose that U.C. process that I described. Ms. DeGette. No, I understand, but that's the process you described-- Mr. Van Ness. Right. Ms. DeGette. [continuing] even though what we're talking about is the DOE process, correct? Mr. Van Ness. Well, I believe that DOE would be best suited to describe their process. Ms. DeGette. Okay. Great. Thank you very much. Thank you, Mr. Chairman. Mr. Burr. I thank the gentlelady. The Chair would announce that we have three votes, a fifteen and two fives. I think it will be fairly short. The Chair would try to reconvene about 2:35. The hearing is in recess. [Brief recess.] Mr. Burr. We'll reconvene the subcommittee hearing. I know Congressman Strickland is on his way back. Again, I apologize for how long this has taken, but I know this is a very important hearing. Ms. Sullivan, let me turn to something I think Mr. Strickland pointed out and just get a clarification. I think you defined what the joint defense relationship was between DOE and the University of California. Ms. Sullivan. Actually, what I was trying to do was describe what I think of as our joint defense agreements, generally. I wasn't speaking to any particular one. Mr. Burr. Would there be a different interpretation of the joint defense agreement with U.C. as it relates to the Lappa case? Ms. Sullivan. Not that I am aware of. Mr. Burr. Well, let me ask you. You said that when the contractor shares documents with you under a joint defense---- Ms. Sullivan. Privilege. Mr. Burr. [continuing] relationship---- Ms. Sullivan. Privilege. Mr. Burr. [continuing] they're privileged. You can't share that---- Ms. Sullivan. No. Mr. Burr. [continuing] with any person, including the whistleblower; am I correct? Ms. Sullivan. No. When a contractor shares privileged documents with us, attorney/client privileged documents with us, then we can't share those. Mr. Burr. Would it be--and I'm not a lawyer by profession, so would it be correct for me to assume that the reverse is also true? When you join a joint defense with a contractor, any DOE documents that you might share with them fall under the same protection? Ms. Sullivan. Attorney/client privileged documents, if we shared them. The joint defense example I'm most familiar with and was directly involved in was a joint defense agreement we had with our contractor when we were trying to get the Waste Isolation Pilot Plant opened in New Mexico, and Westinghouse was the contractor. They were also on the permit with us. We entered into a joint defense agreement, which meant that we shared attorney/client privileged documents freely with all the lawyers for both the contractor and DOE---- Mr. Burr. But for those documents, they are then privileged documents? Ms. Sullivan. They were privileged documents to start with and they stayed privileged, even though we shared them with the contractor with whom we have a joint defense agreement. Mr. Burr. What, if any, effect does DOE entering into a joint defense agreement with a contractor do to limit a whistleblower's access to information? Ms. Sullivan. It does not, because the documents that we would be talking about would be privileged documents. Mr. Burr. So even if you had not entered into a joint defense agreement, every document that would have been available to a whistleblower upon their request would have been available? Ms. Sullivan. I was---- Mr. Burr. It doesn't renew---- Ms. Sullivan. I was not directly involved in the document dispute that I think you are referring to, so I'm speaking generally and not to that specific case, but typically, when you share a privileged document with another party, it loses its privilege. If you share it with someone you have a joint defense agreement with, it doesn't lose its privilege. That's the only point I'm trying to make. So typically it wouldn't-- the result of not having a joint defense agreement would be the privileged document wouldn't be shared with us, because the contractor would be wanting to preserve the privilege. It's a way that we can see a document they would otherwise---- Mr. Burr. Why did the judge that looked at this joint defense privilege between you and the contractor in Mr. Lappa's case refer to it as incredulous? Ms. Sullivan. I don't know. Mr. Burr. No idea? Ms. Sullivan. No. Mr. Burr. But you're familiar with the court's findings? Ms. Sullivan. I have read that--I read that decision some time ago. I don't remember it in its entirety. Mr. Burr. He just said that it was incredulous that you would claim a joint defense agreement with a contractor. Ms. Sullivan. We do it all the time as a way of ensuring that we can get access to privileged documents of our contractors. Mr. Burr. How many times have you done a joint defense agreement with a contractor on a whistleblower issue? Ms. Sullivan. I don't know. Mr. Burr. But you said you do it all the time? Ms. Sullivan. We do joint defense agreements with our contractors all the time in all kinds of matters. Mr. Burr. Do you--can you think of one where you have entered into a joint defense agreement on a whistleblower? Ms. Sullivan. I believe the issue recently arose in connection with the pipefitters case in Hanford, and the court, I believe, upheld that. Mr. Burr. Mr. Van Ness, let me ask you, as the representative from University of California, was this your idea that you enter--that DOE enter into a joint defense agreement? Mr. Van Ness. I don't know whose idea it was. I think it is done to allow the Department of Energy to have access to information that they otherwise would not have access to, so it is generally at their initiation. Mr. Burr. Are you aware of whether anything might become privileged that was not privileged prior to the joint defense agreement? Mr. Van Ness. No. I don't believe that. Mr. Burr. Before you gave your testimony today, was your testimony approved by the Department of Energy? Mr. Van Ness. No. Mr. Burr. And did they read it prior to hearing you give it today? Mr. Van Ness. I doubt it. Mr. Burr. Did you share your testimony with the Department of Energy? Mr. Van Ness. I did not. Mr. Burr. Okay. Dr. Michaels, today Mr. Gutierrez shared with us how the Department of Labor determined he was retaliated against for identifying nuclear safety violations in Los Alamos. Why haven't you investigated the University of California under Price Anderson for retaliation against Mr. Gutierrez for raising nuclear safety violations at Los Alamos? Mr. Michaels. This is the first I've heard of Mr. Gutierrez' allegations or of the Department of Labor's findings. Mr. Burr. Is that the case with you also, Ms. Sullivan? Ms. Sullivan. Yesterday was the first time I heard of Mr. Gutierrez, as far as I can recall, and that was just to hear that he would be a witness at the hearing today. Mr. Burr. Dr. Michaels, today Randy Walli explained how he was retaliated against for refusing to install faulty valves on a nuclear waste transfer pipe; that the Department of Labor determined Fluor Daniel retaliated against Mr. Walli. Can you explain why your office has refused to investigate this retaliation under Price Anderson? Mr. Michaels. I wouldn't say we've refused to investigate. We pick and choose our cases very carefully. As you know, we have a small staff. We try to use them around the complex in places where we think we'll have the biggest impact. We've just recently, a year ago, since we took on the question of whistleblower retaliation as something we would take on in Price Anderson, previous to Mr. Lappa's case we had not taken on any Price Anderson---- Mr. Burr. How many whistleblower cases have you used Price Anderson? Mr. Michaels. That was the first we considered, and obviously we---- Mr. Burr. It has never been used by you? Mr. Michaels. Correct. Mr. Burr. Is there any reason for the committee to believe that the Department of Energy will choose to use this in the future, given that we've got three what seem to be fairly substantial cases that have been won by whistleblowers pointing out specific retaliation, and that nobody questions whether they dealt with nuclear safety? Mr. Michaels. As of March 22, 2000, with the publication of the final rule in 10 CFR Part 820, we can now use Department of Labor findings as the basis for our Price Anderson notices of violations. We plan to do that for new cases. Mr. Burr. Was Mr. Christopher's e-mail correct that it was your understanding that Ms. Sullivan's legal opinion was that you not move forward on Price Anderson as it related to Mr. Lappa's case? Mr. Michaels. Yes. There were two issues that she raised. Correct. One was due process and the other was, because we hadn't notified the contractors, we didn't have the legal basis for going there. Mr. Burr. Did you hold Mr. Christopher's view that you agreed or disagreed with the legal opinion that you received? Mr. Michaels. Well, I'm not an attorney---- Mr. Burr. No, but you are in a very, very important role-- -- Mr. Michaels. That's correct. Mr. Burr. [continuing] and we look to you for the guidance and wisdom for the Energy Department's actions. Mr. Michaels. Correct, and the Energy Department looks to Mary Anne Sullivan as their general counsel for legal opinions on--as the final arbiter---- Mr. Burr. The only reason I ask you is that he went on, in his e-mail, to say, ``I have discussed with Dr. Michaels that he should defer to the advice given by DOE's general counsel,'' which suggests to me that at some point a question was posed, ``What do I do?'' Mr. Michaels. Correct. Mr. Burr. ``Should I follow what DOL's conclusion is and take that, or should I follow general counsel's legal opinion?'' Mr. Michaels. No. And Mr. Christopher suggests that I defer to the general counsel. Mr. Burr. Did you have some reservations about her conclusion? Mr. Michaels. Not legally. I felt it was very important that we use the Price Anderson program to take on whistleblower issues. Mr. Burr. What concerns did you have about her decision or her guidance? Mr. Michaels. Well, I was primarily concerned they came so late in the game, that we already had moved forward on this. But her guidance was her guidance, and we deferred to her on that. Mr. Burr. Were you involved in last year's hearing in this subcommittee? Mr. Michaels. I certainly was. Mr. Burr. And would you agree that the information that is on the record in that hearing suggests that there was no hesitancy by DOE officials to not use DOL's findings? Mr. Michaels. That is correct. We were preparing a notice of violation on that basis. Mr. Burr. So it was a surprise when Ms. Sullivan came in and said, ``Based upon our interpretation of things, you can't go forward''? Mr. Michaels. Yes, sir. Mr. Burr. Okay. Let me ask you, Mr. Van Ness, did the Department of Energy pressure U.C. to accept DOL findings and not to appeal, to settle the Lappa case? Mr. Van Ness. I don't know on that specific incident. I know that it is the general DOE policy to settle where that is appropriate, that that would be a preferred course. Mr. Burr. Is there any whistleblower case at the University of California that is bigger than Mr. Lappa's case? Mr. Van Ness. Not that I am aware of. Mr. Burr. And your role at U.C. is what? Mr. Van Ness. I'm the assistant vice president for laboratory administration. Mr. Burr. And who in the makeup of administration at U.C. would be in charge of making sure that safety existed at all the facilities that you contract with DOE to oversee? Mr. Van Ness. At the University of California? Mr. Burr. Yes. Mr. Van Ness. I would have that responsibility. Mr. Burr. You would have that responsibility. So you would be fairly well versed on Mr. Lappa's case and claims as it related to U.C? Would that be a correct assumption on my part? Mr. Van Ness. I have a good deal of information. Yes. Mr. Burr. But you don't know whether DOE pressured U.C. in any way to agree with the findings of DOL and choose to settle? Mr. Van Ness. That's correct. Such a matter would be dealt with by our attorneys rather than my office. Mr. Burr. Let me remind you that a year ago I asked you this question: ``Would you share with this committee in writing what procedures, in fact, took place at your directive or based upon the procedures in place at the University of California relative to his complaint?'' meaning Mr. Lappa's complaint. Your answer was yes. We're still waiting for that information. I'm not sure whether it is normal practice at U.C. to make agreements with requests of Congress and not to fulfill the requests that were asked for, but I will assure you I won't wait until next year to read this year's testimony. Will you supply that for me? Mr. Van Ness. Yes, I will. Mr. Burr. Okay. Mr. Van Ness. And I apologize for the delay. Mr. Burr. Let me ask you how much you know about the Lappa case. Mr. Van Ness. Well, I know the circumstances in which it came to happen, and I know the laboratory's view of what has transpired since that time to some level. I don't know that I know everything about it, but I know a fair amount. Mr. Burr. Do you agree with the statement that the University of California retaliated against Mr. Lappa? Mr. Van Ness. No, I do not. Mr. Burr. You don't agree with that? Mr. Van Ness. No. Mr. Burr. Was that not the findings of the Department of Labor? Mr. Van Ness. That was the findings of the individual investigator who reviewed the case. Mr. Burr. You had an opportunity to appeal, but you chose not to? Mr. Van Ness. Yes. Mr. Burr. And what was the reason for not appealing? Mr. Van Ness. To settle the matter if it could be settled and move beyond it. Mr. Burr. You are---- Mr. Van Ness. We thought we had done that. Mr. Burr. You are still in litigation? Mr. Van Ness. Because Mr. Lappa chose to file a subsequent---- Mr. Burr. Has Mr. Lappa ever requested documents from the University of California that he has been denied? Mr. Van Ness. I don't know that. Mr. Burr. Isn't that one of the cases that he brought up in civil court, that he made a request under the Freedom of Information Act originally? Are you familiar with any of those? Mr. Van Ness. I'm not. Again, that would be on the legal side of---- Mr. Burr. Did the Department of Energy ever talk to you as their representative from U.C. about the possibility of a notice of violation being sent? Mr. Van Ness. Not to my recollection. Mr. Burr. What would a notice of violation do to the trustees of the University of California? Would that make them a little bit edgy? Mr. Van Ness. They are always concerned when there is a notice of violation, and it represents some kind of a lapse. Mr. Burr. Is that a frequent thing that you receive at the University of California? Mr. Van Ness. Not frequent, but it has happened. Mr. Burr. So in this particular case would you have found it surprising to receive a notice of violation, given that you had just chosen not to appeal? Mr. Van Ness. Well, I think that the basis on which one was not issued is that the facts have not been determined yet in this case, and I don't know as much as Dr. Michaels may know about the basis that he would view for issuing such a notice. But I believe that it would be inappropriate to do that before the facts are determined. Mr. Burr. Dr. Michaels openly admitted that he thought it was appropriate. Now, he was counseled that he shouldn't and he didn't, and I appreciate the fact that he listened to his counsel. I think that there was also a belief--at least I got it from this e-mail, Dr. Michaels--that an enforcement letter would be sent. Was there ever an enforcement letter sent to the University of California? Mr. Michaels. No, sir. Mr. Burr. And what was the--who made the decision relative to the enforcement letter? Mr. Michaels. Essentially, I was counseled that that same issue applied. Mr. Burr. Counsel at the Department of Energy suggested to you that you couldn't send an enforcement letter based upon the fact that DOE had not done their own investigation, that they couldn't rely on a conclusion that was arrived by the Secretary of Labor, and that for an enforcement letter due process and notification would have been needed? Mr. Michaels. That's my recollection. Yes. Mr. Burr. Can you share with me the basis that they made that opinion on? Mr. Michaels. Well, the enforcement letter would focus on the same issue, essentially. Mr. Burr. The enforcement letter is a significantly different thing than exercising Price Anderson, isn't it? Mr. Michaels. My recollection is that I was---- Mr. Burr. You must have gotten the opinion from Ms. Sullivan, then, didn't you? Mr. Michaels. That was my understanding. Yes. Mr. Burr. Then let's let Ms. Sullivan try to state for me exactly what the opinion was based on. Mr. Michaels. I'm reminded that an enforcement letter is a Price Anderson action and it has the same--it has to be based on the same considerations. It is--and I would essentially not be able to go into a Price Anderson action because I hadn't--we hadn't notified the contractor that we could use a Department of Labor finding to get there. Mr. Burr. Do you conclude with that, Ms. Sullivan? Can you issue an enforcement letter using the conclusions of the Secretary of Labor--an institution, a contractor that chooses not to appeal, and clearly there is a nuclear safety issue, can you send an enforcement letter without notification? Ms. Sullivan. What Dr. Michaels is telling me is that an enforcement letter is a lesser form of penalty than a notice of violation, but it---- Mr. Burr. He is, in fact, correct. And we understand the same thing. Ms. Sullivan. Based on the same regulations that have the guidance that was the problem with issuing the notice of violation. I, frankly, don't remember discussing this issue separately. Mr. Burr. I find it somewhat amazing to me that Dr. Michaels could have been in disagreement with your legal opinion on the proposed notice of violation, and when we chose to go to a lesser use of Price Anderson he voluntarily chose the same basis not to send that. Ms. Sullivan. He's saying he relied on my advice, and all I'm saying is I don't remember discussing an enforcement letter as separate and apart from the general issue of the problem I've already described, which is that the regulations and the guidance accompanying the regulations did not put contractors on notice that enforcement action under Price Anderson would have been taken based on a Department of Labor preliminary finding. Mr. Burr. Okay. Let me go a step further. Now we know that there was no notice of violation. There was--even though there was a recommendation for an enforcement letter, there was no enforcement letter. Let me go to Mr. Christopher. Again, he is the director of the Office of Enforcement. Let me go to Mr. Christopher's e- mail of 2/9/2000, last paragraph: ``I think the combination of an enforcement letter, having the lab director come in and meet with T.J. so DOE can express his concerns on this topic.'' Did we have the lab director come in? Mr. Michaels. No, sir. Not to my knowledge. Mr. Burr. Now, is that because of Price Anderson? Mr. Michaels. No. I didn't recommend that. What I did in that case, once I realized I couldn't pursue this under the Price Anderson direction, I said, I'm still very concerned about this, and it struck me that the other direction was to look at this as a contract matter. And, given I don't have direct role in contract disputes but still was very concerned, I called up the Oakland area office and inquired whether there had been an investigation into this matter so an appropriate penalty could be taken within the contract system. In my conversation with them, the Oakland area office, I was not satisfied that they had done a sufficient investigation so they could do that, I then drafted a letter. Unfortunately, I couldn't--I can't direct the Oakland area office to audit anything because it is part of the NNSA. It is outside my purview. But I could write a letter--a memo to General Giaconda requesting that the facts and circumstances of the situation be examined a part of the contract process. That's as close as I could get. Mr. Burr. And the letter is dated what? Mr. Michaels. March 3. Mr. Burr. Of this year? Mr. Michaels. This year. Mr. Burr. So just a couple months ago? Mr. Michaels. Yes. Once we decided in February that---- Mr. Burr. Share with me his response, if you would. Mr. Michaels. He then wrote back a letter. He wrote a letter to me saying that he had--the manager of the Oakland operations office has committed to take immediate actions to reinforce DOE's zero tolerance policy--essentially said that they're looking at the case. Mr. Burr. Read the rest of that response, if you would. When? Mr. Michaels. This was April 22. Mr. Burr. No. When are they going to follow through? Mr. Michaels. Excuse me? Mr. Burr. They're going to investigate it when? Mr. Michaels. I'm sorry. Let me see if he addressed that. Ms. Sullivan. The new director at the Oakland operations office has issued a letter to Livermore reiterating the Department's zero tolerance policy. Mr. Burr. I'd like to get the remainder of---- Mr. Michaels. This is the letter on April---- Mr. Burr. [continuing] the response to you. Mr. Michaels. The April 27 response to my letter. It discussed how there's a court case going on and this will be looked at. Mr. Burr. When? Mr. Michaels. At the conclusion of the State court proceedings. Mr. Burr. At the conclusion of the case? Mr. Michaels. Excuse me? Mr. Burr. At the conclusion of the case, right? That's where I was trying to get you. Mr. Michaels. At the conclusion of the State court's proceeding. Mr. Burr. I haven't got that letter sitting in front of me, but I have read that letter and I remember that one point. Mr. Strickland. Mr. Chairman? Mr. Burr. I would yield to the gentleman. Mr. Strickland. Could we ask that those letters be included in the record, please, unanimous consent? Mr. Burr. I would ask you to provide not only your letter, but the response to your letter if it is not already in the---- Mr. Michaels. I think you have my letter and the response I'm referring to. Mr. Burr. I have been told that it has not been entered into the record, and I would ask unanimous consent that they be supplied and entered into the record. [The following was received for the record:] Dr. Michaels letter to General Gioconda dated March 3, 2000, and the General's response to Dr. Michaels (EH response) dated April 27, 2000. [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Burr. I would also, as a follow-up question to you, ask you, Dr. Michaels, what precludes the Oakland office from doing this prior to the conclusion of the civil trial? Mr. Michaels. I know of no legal reason, but I am, again, not an attorney here. Mr. Burr. Well, maybe Ms. Sullivan can share that with us. Ms. Sullivan. I don't know that they are precluded. I think it is not unreasonable for the process that Mr. Lappa has chosen for the resolution of his retaliation claim to work itself through, so that he gets that issue resolved where he chose to have it resolved. He could have chosen to come to the Department. He chose not to. Mr. Burr. I think several of the witnesses were very specific in why the preference of whistleblowers is not to go to the Department of Energy. Ms. Sullivan. Could I speak to those, because I was quite concerned about some of the things that were said in that regard? Mr. Burr. I have you here to speak to anything you'd like to, and we would love to hear it. Ms. Sullivan. In the Office of Employee Concerns report, the 1998 report, that I was reading from earlier, it reports fewer than 25 percent of the cases took more than 6 months to resolve. In the prior years, roughly 30 to 32 percent took more than 6 months to resolve. That means the overwhelming majority of cases that went through the Office of Employee Concerns were resolved in less than 6 months. Somebody made reference to the fact that the Office of Hearings and Appeals, doesn't provide for discovery. Before I went to the Department, I used to litigate before the Office of Hearings and Appeals. No matter what kind of case, they do require a showing of need for discovery. It is not that they prohibit discovery altogether. And, in addition, there were some problems about how long cases were taking in the part 708 process, DOE's whistleblower adjudication process. That was why we went through a rulemaking to try to streamline it, and the process has been considerably streamlined. So I think there were some problems. We have taken steps to try to address those and, as you know, whistleblowers are entitled to bring their claims wherever they want, but at the moment I'm not sure they're giving the DOE process a fair shake. Mr. Burr. Mr. Strickland has been very patient with me, and I need to recognize him, but is it really difficult for the Department of Energy to understand Mr. Lappa's reluctance to come to the Department of Energy when you are in a joint defense agreement with the contractor who has retaliated against him? Ms. Sullivan. I feel as if I've adequately explained the purpose of a joint defense agreement, which is not to agree with the contractor. It is to ensure that we have access to documents we wouldn't otherwise be entitled to so that we can conduct the oversight of our contractors that I think this committee expects us to conduct. Mr. Burr. I would only make this point, and then I would recognize Mr. Strickland. Given that this is the one case where we've used the joint defense agreement on a whistleblower case, I'd be happy for you to supply to us any other cases on a whistleblower where the Department of Energy has entered into a joint defense agreement. [The following was received for the record:] A more precise description of the term ``joint defense agreement'' is ``joint defense privilege'' or ``common interest privilege.'' In most cases, as in Lappa, the Department does not enter into a written agreement with the contractor with regard to documents related to the case. Rather, the Department chooses to exercise the joint defense privilege. As I explained earlier, the reason for exercising this privilege is to ensure that the Department has access to documents and information in order to conduct oversight of the contractors. Without the use of the privilege we would not otherwise be entitled to see the documents. The joint defense privilege was also invoked in one of the pipefitter cases in the Department's Richland office, Brundridge, et al. v. Fluor Daniel, Inc., which is being litigated in state court in Washington. Mr. Burr. I don't find it too unusual to understand Mr. Lappa's decision not to seek review through the Department of Energy but to seek a review through the court system. Ms. Sullivan. Mr. Lappa chose to go to the courts 2 years before the issue of joint defense arose, so I don't think that can be his reason. Mr. Burr. Well, I'm not suggesting that I know his reason. I'm trying to piece together a puzzle that has been as difficult for this subcommittee to put together as I think it is for whistleblowers to obtain documents from the Department of Energy and from contractors. But I will assure you that we are going to continue to try to figure out what the picture looks like of the puzzle. With that, I would yield to the gentleman from Ohio. Mr. Strickland. Thank you. I would just like to say that I am wondering where the decision to enter into these joint defense agreements comes from. Does that come from your office? I mean, do you have the discretion to not enter into such an agreement or to enter into the agreement? That's your legal judgment, is it? Ms. Sullivan. It is the judgement of somebody in counsel's office. It doesn't necessarily come to me. It may be a decision made in the field. But I want to emphasize, all it does for us is get us access to contractor documents that we would not otherwise be able to see. Mr. Strickland. I understand, but---- Ms. Sullivan. And it doesn't keep anything away from a whistleblower that they would be able to see. Mr. Strickland. Doesn't it keep the whistleblower from getting access to that information that has been provided to you? Ms. Sullivan. Not, it does not. Mr. Strickland. It does not? Ms. Sullivan. No. It is a privileged document to begin with. It is an attorney/client document. The whistleblower would have no access to that document. The question is whether only the contractor has access to the document or whether the contractor is forced to share it with DOE because we insist on a joint defense agreement, by which we are simply saying, ``We will keep this as a privileged document.'' Mr. Strickland. So you keep that information away from the whistleblower? So the whistleblower---- Ms. Sullivan. He couldn't get it otherwise. Mr. Strickland. But why do you need it if you are, in fact, a passive or an impartial participant? Why do you need it? For what purpose do you need it? Ms. Sullivan. For example, I believe that one of the privileged documents was a communication between somebody at the University of California or at Livermore--I don't remember--and counsel for the University of California describing Livermore's efforts to comply with the original settlement of Mr. Lappa's case. Mr. Strickland. You know what? It seems to me---- Ms. Sullivan. That is of interest to us. Mr. Strickland. Well, I understand it is of interest to you, but it seems to me, when this occurs, you and the contractor are viewed--and I think accurately so--as being together against the whistleblower. If I were the whistleblower, that's how I would see it. I could see this information being used between DOE and the contractor to conspire, to strategize, to develop arguments, for all kinds of reasons. I do not see why the Department of Energy should place itself in that kind of compromising position unnecessarily. There may be some legitimate benefit, but when you weigh the legitimate benefit against the down side--you know, the impression of impartiality and the lack of confidence that it generates--I don't see why you would do it. Ms. Sullivan. With due respect, if we didn't ask for these documents, I can well imagine sitting here being asked, ``Why didn't you ask to see whether Livermore was, in fact, complying with the Department of Labor direction?'' We ask for the information as part of our oversight function, and if that is being interpreted as taking sides against the whistleblower, that is unfortunate and it is not an accurate understanding of the reason why we want access to those documents. Mr. Strickland. Why don't you do your own investigation without depending upon the contractor to do that with or for you? Ms. Sullivan. Well, just as you are interested in seeing internal documents of ours as a way of better understanding what is really going on, we think there is a value in seeing-- -- Mr. Strickland. Can you subpoena documents or---- Ms. Sullivan. Subpoena documents? No. We have no subpoena authority. Mr. Strickland. What access do you have to gathering information? How did the Department of Labor reach their conclusion, for example, in the case that we have been discussing? Ms. Sullivan. They sent out an investigator who did interviews, as I understand it. I was---- Mr. Strickland. And couldn't DOE conduct a similar kind of investigation without depending upon the contractor for---- Ms. Sullivan. In fact, I advised Dr. Michaels that, if he wanted to pursue a Price Anderson penalty against the University of California, he could send somebody out to do an investigation. What he concluded was that, since there was already an ongoing process and since his staff--his Price Anderson staff had limited resources, that he didn't want to do that. I mean, we can do as many duplicative investigations as people want to support, but if there is already a process in place that we believe will provide us good information, taking advantage of that information seems wise. Mr. Burr. Will the gentleman yield for one point of clarification? Mr. Strickland. Yes, I will. Mr. Burr. When you made that recommendation that Dr. Michaels could pursue a Price Anderson case if he did his own investigation, was that at the conclusion of the trial in California or was that now? Ms. Sullivan. No. I said they could do it any time. Mr. Burr. So what would be different with him pursuing an investigation under Price Anderson and the question that I asked you before, Dr. Michael, where it required you to wait, or the recommendation you were given was that you would have to wait until the trial was over with? I think that was pertaining to a letter of enforcement or even pulling in Giaconda's response. Ms. Sullivan. All Giaconda said was that he was going to wait until the---- Mr. Burr. So he doesn't have to wait? Ms. Sullivan. He didn't say he had to. He said he would, rather than duplicate a process that is already ongoing and that is the process the whistleblower himself chose. Mr. Burr. But that doesn't restrict---- Ms. Sullivan. What if Dr. Michaels went out---- Mr. Burr. [continuing] The Department of Energy from doing an investigation. Ms. Sullivan. [continuing] and did an investigation and concluded there was no retaliation? Mr. Lappa might feel as if that was interfering with his right to get that issue decided in the court he chose, the State court of California. Mr. Burr. I thank the gentleman for yielding. Ms. Sullivan. I don't think it is suspicious. It is just-- -- Mr. Strickland. You know, based on our discussion here today, do you have any second thoughts regarding this joint arrangement or do you have any plans to change your former practices regarding entering into such joint defense agreements, or are you satisfied with the way things are currently, even if the perception is there that it is out of balance and unfair to the whistleblower? Ms. Sullivan. We absolutely must continue to enter into joint defense agreements with our contractors. What this hearing has taught me is that doing that in whistleblower cases is perceived in a way that it is not perceived in other cases, and so yes, of course, we should rethink it, because we are not trying to send a message to whistleblowers that we are on the side of the contractor and against them. The whole program that I described in my testimony is designed to send a different message, and so if that is how people are perceiving it, it has us operating with our hands tied behind our backs and it doesn't make sense to me. But if that is how it is being perceived, then we should rethink our position. Mr. Strickland. I made reference earlier to a case in my District, Theresa Boggs, et al. versus Divested Atomic Corporation, et al. Ms. Sullivan. I'm sorry. What's---- Mr. Strickland. Theresa Boggs, et al. versus Divested Atomic Corporation, et al., a case that was brought in 1990 and is still ongoing. Could you provide me with the total cost to the taxpayer through the Department of Energy that has gone to the contractor for continuing to litigate this case? I just think it would be instructive, at least in one case that is 10 years old, to know how many tax resources have gone into providing attorney fees and the like. Would you be able to do that? Ms. Sullivan. We began collecting that information in a systematic way several years ago, and we certainly can provide it for the period that we have been collecting information, and I will explore whether we have information from the beginning of the case. If I could get---- Mr. Strickland. I would hope that information would be available. Ms. Sullivan. I would hope so, too. I just am unfamiliar with the particular case. Mr. Strickland. Thank you. [The following was received for the record:] The costs of outside counsel in Teresa Boggs, et al. v. Goodyear Atomic Corporation and Martin Marietta Energy Systems, Inc. are $10,580,277.05. These costs cover the period from the beginning of the case in June 1990 through the second quarter of FY 2000. It should be noted that most of the outside costs were incurred prior to the DOE 's implementation of contractor litigation management policies and procedures in 1994. Only $1,835,051.05 of the total outside costs have been incurred since the policies were promulgated. Ms. Sullivan. Could I just get the citation to the case before I leave? Mr. Strickland. Sure. Absolutely. I'm going to ask a question about a separate issue, but I think it pertains to perhaps the operation of the counsel's office here. Mr. Burr. The gentleman has the microphone. Mr. Strickland. When the uranium enrichment was privatized--one of those facilities was located in my District, one in Mr. Whitfield's District in Paducah, Kentucky--two memorandum of understanding were entered into for the purpose of providing resources for worker transition, and I think a total of $60-plus million was to be set aside through those MOUs to provide for worker transition. There has been an announcement of a significant layoff at those two facilities, and we are very interested--I am, as well as others--in trying to make resources available to the laid off--the workers to be terminated so that they can have access to early retirement, so that jobs can be saved for the younger employees and the older employees can get resources for early retirement. We have asked both DOE and we've asked the Enrichment Corporation to provide resources for that purpose. I especially think it is morally defensible, given the fact that the CEO of the privatized corporation has negotiated for himself a $3.6 million golden parachute so that if he is fired or laid off he walks away with $3.6 million, and there are employees at these facilities who have worked decades in life- threatening situations, I think we are finding out through Dr. Michaels' research, and they are not being offered such an early retirement. When we asked your office if moneys from this MOA source could be used to provide early retirement for these folks, I think we were told that that was, in your opinion or your office's opinion, not legal. Is there any opportunity for a review or second opinion? And I would like to know if you would commit with me today that there could be an independent legal assessment as to whether or not the conclusion of your office is, in fact, the only possible conclusion that could be reached in the use of these MOU funds. Ms. Sullivan. I would certainly be happy to have that issue re-looked at and to look at it personally. I'm not sure what you mean by an ``independent legal review,'' but I am the chief legal officer for the Department, so---- Mr. Strickland. And once a decision is made by your Department, is there any recourse at all, or is a decision from you or your department a final decision with no potential appeal or recourse for additional opinion? Ms. Sullivan. Well, I am frequently asked to re-look at an issue, and sometimes I have been known to find some new facts that enable me to come to a different conclusion. Mr. Strickland. Would you---- Ms. Sullivan. Or I can be sued and proved wrong. Mr. Strickland. I don't know if I can do that, but I'm looking for the options. Ms. Sullivan. I know we have worked very hard to try to be supportive of the workers who are being laid off there. I have a labor lawyer on my staff who, I have been told by a number of people, has really made an enormous difference in helping the contractor and helping the Enrichment Corporation find their way clear to do more. We are very sympathetic to that situation. Mr. Strickland. But if you would take an additional look at that issue, I would be appreciative. Ms. Sullivan. I'd be happy to. Mr. Strickland. Mr. Van Ness, in your testimony you state that the University of California provides an open environment for frank discussions, and, having worked in an academic institution, I know how important that is. You say that the University protects its employees against retaliation for notifying management, DOE, local authorities, the Congress, and the public of any variance between any University activities and contractual or other legal requirements. Now, that sounds really, really good, but both Mr. Gutierrez and Mr. Lappa did that and the University seems to be pursuing them with some kind of vengeance. Can you explain why that would be the case? Mr. Van Ness. Well, it's not that we are pursuing them with some kind of vengeance. They are really two different cases. In the case of Mr. Lappa, the facts have not yet been settled in that case, and our view of it is that he has not been retaliated against, that there is no basis for that finding. In the case of Mr. Gutierrez, it is a situation that focuses on his job, which is an internal auditor at the Los Alamos National Laboratory, and the principle at stake here is an internal auditor has a responsibility--it is the core of their job--to go out and determine whether there are inappropriate activities happening in the laboratory. It is very important for the success of their job for people to have confidence that they are going to work within the rules of the laboratory, and in this case, he chose not to do that. He did not take this information to his management. He went directly to the press. And that issue, we believe, is related to a recent Supreme Court decision that talks about weighing the proper interest of the employer with such activities on the part of the employee. It's really not about whistleblower retaliation in that circumstance. Mr. Strickland. Is your statement to me consistent with what the administrative law judge found in this case or determined to be? Mr. Van Ness. In which case are you referring to, Lappa or---- Mr. Strickland. The case involving Mr. Gutierrez. Mr. Van Ness. It is the--what we are appealing is the administrative law judge's decision, which we don't believe took into account the Supreme Court decision or this principle adequately, and what we are trying to do is make sure that that point is appropriately reviewed. That is our endeavor. Mr. Strickland. Now, I mean, if that's the case, then it seems to me that you don't protect them against retaliation for notifying management, DOE, local authorities, the Congress, and the public. There is a code of conduct that apparently you asked Mr. Gutierrez to sign, and that code of conduct seems to put the interests of the University of California above the interests of DOE and the public when it comes to public or worker health and safety. According to the decision by the administrative law judge, several of your employees told him that his biggest error was telling outsiders about the lab's problems, particularly its lack of effective monitoring equipment. Is that what you are referring to when you say he didn't follow the procedure? Mr. Van Ness. His obligation was to bring that to the attention of his management. If his management was not responsive, then he would have--if he had proceeded, he would have been properly a whistleblower. In our situation, the issue of whether he is a whistleblower or not remains somewhat uncertain here. It is the laboratory's position that he didn't do what he was supposed to do in terms of his job. Mr. Strickland. Apparently, U.C. employees told Mr. Gutierrez and the administrative law judge that Mr. Gutierrez violated the lab's confidentiality rules by telling Congress and others that the lab was missing radioactive emissions monitoring data and therefore couldn't demonstrate that the equipment was working properly. Is this the University's position that unclassified quality assurance reports concerning radioactive emissions are secret documents? Mr. Van Ness. No, it is not. Mr. Strickland. Well, there seems to be a contradiction then in the response of the University and your response to me just then. I mean, isn't this what Mr. Gutierrez alleges at least has happened, that he made information of this nature public and, consequently, there is retaliation against him? I mean, are we dealing with who is telling the truth here? I mean, is it that simple? Or are we---- Mr. Van Ness. I'm not sure it is about who is telling the truth. I think it is about---- Mr. Strickland. So it is about procedure? Mr. Van Ness. It'd about the view of what happened in this specific circumstance and does that constitute a whistleblower activity. Mr. Strickland. And---- Mr. Van Ness. That's at issue right now with our laboratory. Mr. Strickland. Yes. You know, it seems to me, if there is a safety matter, that the public has a right to know, and that there ought not to be a procedure in place that would prevent the public from knowing. Now, perhaps it is also a part of the procedure that, once a manager, or whoever, is informed, that at that point the public would be given the information, but it seems to me that there is a whole lot of fairly intense response here directed toward Mr. Gutierrez if the only thing we're talking about here is a procedural thing and not an actual substantive issue as to whether or not there were violations in terms of his concerns. Does that seem reasonable to you, that we're engaged in this, I don't know, contest, confrontation, litigation, or whatever, over something that is not substantive in nature? Let me ask you this: was he correct in what he said about safety and health concerns? I mean, are you contesting his conclusions that there was a problem there? Mr. Van Ness. The laboratory's perspective on that is that what he brought up was out of context, and it is the reason why we would not want an employee, based on that individual's slice of the picture, to say to the press, ``My gosh, we have a tremendous problem,'' especially at a nuclear laboratory. What you want to do is to have management operate so that the whole picture is brought into place and that we don't alarm needlessly the public. If, on the other hand, as that process proceeds, it doesn't do its job effectively, that's what whistleblowing is about and that's what we protect. Mr. Strickland. Okay. Mr. Lappa was a nuclear engineer with 20 years experience, a successful career at Lawrence Livermore. Surely, with all of the controversy this case has generated, you have made some legitimate efforts to try to determine if, in fact, his concerns were valid concerns and need to be raised. Now, you say the lab says this or the lab says that. Do you feel confident that the concerns he was raising were not legitimate or not valid and, therefore, did not merit the kind of response that he gave to it? Mr. Van Ness. I don't have enough information on the specifics of this case to make that judgment. Mr. Strickland. That seems like a fairly basic place to begin. Otherwise, we are just arguing about process and procedure, and I guess I would be interested to know if there has been any change in procedure, any change in equipment or anything as a result of concerns that he has raised. I mean, it's sort of like the valve. Did they use the valve? That was thought to be---- Mr. Burr. I'm going to urge the gentleman from Ohio to wrap up as quickly as he can. I think we have kept them here quite a bit. Mr. Strickland. I'm finished. Mr. Burr. You're finished? I thank the gentleman, and I just want to follow up with a couple of questions. Prerogative of the Chair. Ms. Sullivan and Dr. Michaels, both of you I think told me that today was the first day you've heard about Gutierrez; was that correct? Ms. Sullivan. I said I heard yesterday afternoon. Mr. Burr. Yesterday. Yesterday or today. Mr. Van Ness, how long has this been going on? Twenty-two months? Mr. Van Ness. I don't know the answer. Mr. Burr. I'm pretty close though, aren't I? Mr. Van Ness. That's probably a reasonable guess. Mr. Burr. Have you ever been reimbursed for any litigation costs yet? Mr. Van Ness. I assume---- Ms. Sullivan. The answer to that is no. That I do know. That's the one piece of information I got when I heard about this case. Mr. Van Ness. I don't know the answer. Mr. Burr. Their answer is I think you've done a majority of it in house. Mr. Van Ness. I don't know the answer. Mr. Burr. But you have been reimbursed for what you've done in house? Mr. Van Ness. I don't know the answer to the question. Mr. Burr. Do you know? Am I correct in that, Ms. Sullivan? Ms. Sullivan. My understanding is it has been done in house and so there is no separate reimbursement. Mr. Burr. But would it be correct to assume that it is treated separately from a standpoint of whatever report is made to the Department of Energy? Would it not be for reimbursement of in-house counsel for litigation in the Gutierrez cases? Ms. Sullivan. I'm not sure I follow your question. Mr. Burr. Well, I started off this morning with you trying to determine how a situation could have existed where over $200,000 was reimbursed to a contractor for subcontractors' litigation, and the Department of Energy, in response to this committee, said, ``No, we haven't reimbursed anything,'' and then reversed it a week later and sent us a letter yesterday that said, ``In fact, we did pay for the litigation costs.'' I was trying to determine how that could slip through the payment system at the Department of Energy, the reimbursement system, without knowing that part of that went for litigation. What I'm simply trying to get to on this is that I believe that the Department of Energy has reimbursed the University of California for their in-house counsel to litigate the Gutierrez case, which would mean somewhere at the Department of Energy, hopefully seen by your office, would have been charges for reimbursement in the Gutierrez case, and I'm trying to figure out why until yesterday nobody told you that there was another whistleblower case being litigated by the University of California. Ms. Sullivan. We have a cost tracking system that is designed to track the cost of outside counsel--we put it in place 4 to 6 years ago--because we discovered we were paying very high outside counsel costs. The cost of laboratory counsel is part of the overhead that they get reimbursed for, but there is not an additional charge that we pay because they have one particular case or another. Mr. Burr. I'm told that they are supposed to separate it out. I would hope that, for the purposes of this committee, that you would supply for us whatever directives exist at DOE that Mr. Van Ness and the University of California and other contractors follow for, one, outside litigation, outside counsel in whistleblower cases; two, in-house counsel reimbursements and how those would be claimed under whatever procedures DOE has in effect. If they don't have anything in effect, then I hope you would point that out to us. [The following was received for the record:] The following documents, which are attached, provide guidance to the contractors regarding the reimbursement of litigation costs: 1) Litigation Management Procedures issued by General Counsel Nordhaus on March 23, 1994. 2) Memorandum on Outside Litigation Costs from General Counsel Nordhaus dated October 14, 1994. 3) Article 35, Costs Associated with Discriminatory Employee Actions, from model contract for profit making contractors. The model contract was distributed in the spring of 1995. 3) Notice of final policy statement on Contractor Litigation Cost Policies; Policies, Terms of Law Firm Engagement, and Allowability of costs, published at 61 FR 14763 (April 3, 1996). (The notice of interim policy statement was published at 59 FR 44981 (August 31, 1994)). 4) Final Rule, published on June 27, 1997, at 62 FR 34842, which amended the Department of Energy Acquisition Regulations (DEAR) to implement contract reform initiatives. In particular, sections 970.5204-13, Allowable costs and fixed-fee (management and operating contracts); 970.5204-31, Insurance-litigation and claims; and 970.5204- 61, Cost prohibitions related to legal and other proceedings. 5) Notice of proposed rulemaking for acquisition regulation related to the Department's Management and Operating Contracts. This notice, published on January 5, 1998, at 63 FR 386, proposed a clarification of what costs are allowable and unallowable in whistleblower cases. 6) Supplemental proposed rule, published on March 24, 1999, at 64 FR 14206, on the acquisition regulation for costs associated with whistleblower actions. (Note: The Department currently has in its internal review process a final rule on whistleblower costs. This rule is expected to be published by the end of this fiscal year.) [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Burr. Whatever that tracking system is that you put in 4 or 6 years ago, apparently, given the Kaiser Hill case this morning, doesn't work. Ms. Sullivan. As I explained this morning, that is directed to contractor counsel, and we are in the process of expanding it to cover subcontractor counsel. We had not previously identified that as a significant cost that needed to be tracked, and we have--not as a result of this, but some other situations--discovered that there can be significant legal costs at the subcontractor level, and therefore we have determined to expand the system to cover subcontractors. Mr. Burr. Mr. Hansen, I felt like I have cheated you today. I must admit, I got so little out of your opening statement that I read last night relative to the issue that we were dealing on, other than a buffet of different programs that your company supported and that you had in place personally, all of which apparently failed in the case of Mr. Walli and his associates, or, in fact, his issue would have never gotten to the point that it had. You also said in your conclusion to your statement, ``Additionally, there are very detailed terms and conditions in the litigation management plan approved by the Department of Energy by which administrative claims and particularly litigation must be handled.'' What are those detailed terms and conditions? Mr. Hansen. Our contract that we have with the Department of Energy requires us to have a litigation plan by which we can engage in conversation with them with respect to our desire, recommendation to proceed to do any litigation that we have at the site. Mr. Burr. So it is spelled out specifically in your contract? Mr. Hansen. That's correct. Mr. Burr. Is that the case with the University of California, too? Mr. Van Ness. Yes. Mr. Burr. But there has been some question in the case of the University of California as to whether, one, there may be some faulty areas as it relates to our contract on what we will reimburse for and how lenient we are; or, two, on our ability to alter the performance bonus, based upon any adverse outcomes on liability cases; is that correct? Mr. Van Ness. I wouldn't describe them as weaknesses. I think the---- Mr. Burr. If we, in conjunction with Department of Energy-- if they share with us--which I think they have, in some documents that I just can't put my hands on right now--if they share with us we can't do that because of our contractual agreement, would the University of California be willing to, given the commitment that everybody has expressed toward whistleblowers, be open to rewriting that portion of the contract to make sure that nobody hid behind an existing contract for either the reimbursement or potential penalties that might come into play? Mr. Van Ness. I think we would be open to certainly looking at that kind of a situation, and if it made sense---- Mr. Burr. I will certainly instruct the counsel on our side and to also work with the minority on this side to work with the Department of Energy to identify any areas of the contract as it relates to U.C. to figure out whether some revisions need to be made. Let me ask you one last question as it relates to Mr. Lappa. I don't want to beat a dead horse, but the Department has reimbursed the University of California over $300,000 in legal costs to fight Mr. Lappa's DOL complaint and subsequent civil suit. Also, in response to a Freedom of Information request, the Department refused to provide documents to Mr. Lappa, refused to make DOE personnel available for interviews. He sued DOE, and last month the judge ordered DOE to provide Mr. Lappa with the information and called the Department's actions arbitrary and capricious. Ms. Sullivan, can you share with us what basis the Department of Energy used to refuse the request for documents or the interview of personnel? Ms. Sullivan. The document requests were not refused. There was a FOIA request, and it was being processed. Mr. Burr. How long has that been in process? Ms. Sullivan. A long time. Mr. Burr. How long is a long time? Ms. Sullivan. I don't know exactly in this case, but---- Mr. Burr. Dr. Michaels, can you help us with it at all? Mr. Michaels. I'm not familiar with the request or the case. Ms. Sullivan. The documents were ultimately provided, almost the entirety of what was requested. I think the only documents not provided were attorney/client privileged documents, although I'm not---- Mr. Burr. Before or after the judge's decision? Ms. Sullivan. Before. Mr. Burr. Before the judge's decision? Ms. Sullivan. Before the judge's decision. Mr. Burr. How about the interview of DOE personnel? Ms. Sullivan. We received a request--one of my staff attorneys received a request for interviews with three witnesses. He determined that two of the witnesses had no relevant information, offered the third witness, and that was unsatisfactory to--I think it was Mr. Carpenter. And he subsequently sought to depose a significantly larger number of witnesses. He did not follow the regulations. They're called the Touhey regulations under which Federal Government employees are made available in third-party litigation, and the Oakland office, in conjunction with the U.S. Attorney's office in California, defended against the argument we should make the witnesses available. The magistrate disagreed with us---- Mr. Burr. So you lost? Ms. Sullivan. [continuing] and the witnesses are being made available starting tomorrow. Mr. Burr. You lost? Ms. Sullivan. Yes, we did. I would have preferred that case had been handled differently. Mr. Burr. Tell me how the decision at the Department of Energy not to make those witnesses available, not to supply the documents until suit was at least taken out--and maybe the documents were supplied before the judge's decision--tell me how that is an example of zero tolerance. Ms. Sullivan. I think the slowness in providing the documents is a reflection of a slower process in providing documents in response to FOIA requests than I would like to see generally in the Department and generally in the Federal Government, that---- Mr. Burr. We started this hearing today with an acknowledgement that it was Secretary O'Leary's belief that the Department of Energy can do better, that the Federal Government could do better in creating an atmosphere for individuals who were concerned with their safety, the safety of others, and the integrity of the program; could raise those questions of this agency with this agency about subcontractors, about contractors, and, yes, about the agency; and that this would be a responsive agency. My biggest concern is that, for a majority of this hearing, it has done nothing but reconfirm what I thought I read last night, and that was a willing participation by the Department of Energy to prolong the whistleblower cases, to wait out, in many cases, the individual's financial capabilities to fight, even though in some cases, like U.C., they chose not to appeal the Secretary of Labor's decision, and in many cases it seemed like and does seem like more of a partnership than it does the spirit of what Secretary O'Leary set out to design. What have we learned today? First, the Department has several tools available to enforce zero tolerance policy. Unfortunately, the Department uses few of these tools, and in several cases has decided to side with contractors to fight whistleblowers. Second, the Department could take steps to fully implement reforms announced by Secretary O'Leary, including limiting reimbursement of contractors' legal defense costs. But, unfortunately, the Department seems to prefer to indiscriminately approve its contractors' legal costs and team with its contractors to defeat the whistleblower, sometimes never even knowing that they reimbursed the contractor. So what we are left with are weak whistleblower protection policies that are inconsistently applied at different field sites. There is no real leadership here, and the whistleblowers are left waiting while they face insurmountable odds. There is no way to run the Department, and the DOE ought to find the backbone to finally implement fully whistleblower procedures. If, for some reason, the ability to utilize existing laws on the books--be it Price Anderson or anything else--is not clear, I hope that at the end of this hearing the two of you will sit down and determine what the tools are that we can use at the Department of Energy to investigate safety concerns by workers. My hope is that this committee will continue to work to make sure that we complete this puzzle, to make sure that, if there is appropriate action for us to take, that we do it, and I do hope that the Department of Energy will be a willing participant in that process. With that, I'd like to thank panel two. I'd like to thank all the witnesses for their attendance. At this time, the hearing would adjourn. [Whereupon, at 3:47 p.m., the subcommittee was adjourned.] [Additional material submitted for the record follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]