May 6, 1998

John P. Shannon
262 Jones Road
Saratoga Springs, NY 12866

Mr. Michael Bassett, Special Agent, FBI
Mr. Robert P, Storch, Assistant U.S. Attorney
James T. Foley U.S. Court House
445 Broadway
Albany, NY 12207-2924

518-465-7551
518-431-7463(F)

Dear Mr. Bassett:

During our meeting of February 3, 1998, you requested specific examples of criminal activity at the Knolls Atomic Power Laboratory (KAPL). This letter presents rebuttals of various comments made in the General Accounting Office (GAO) report of 1990/1991, concerning alleged external independent oversight of the Kesselring Site Operations (KSO).

The GAO report makes the following comments concerning external oversight of the KSO:

(A) "The Environmental Protection Agency and state environmental agencies are also active in performing audits and inspections of Naval Reactors laboratories and sites." (Page 5) "External oversight of Naval Reactors laboratories and sites is basically provided by EPA and state agencies in the respective locations. These inspections are conducted to ensure compliance with a variety of current environmental programs and address compliance with regulations governing past problems arising from land disposal of chemical waste. For example, EPA conducts inspections of the Knolls and Bettis laboratories, including their prototype sites. However, EPA has delegated much of its regulatory authority to the states. Consequently, either the state conducts the inspections, or EPA and the state conduct joint inspections." (Page 34)

I have a letter from the Environmental Protection Agency(EPA), signed by Sandra Lee Hudnall (Director), dated March 31, 1997 which states that ". . . falls outside the jurisdiction of this Agency." I have also talked to the New York City office of the EPA, [Mr. Jim Reidy (February 5, 1998) and Mr. Len Voo (February 27, 1998)] and these two individuals have told me that they have no authority to inspect the KSO. Mr. Voo further informed me that the only information that they had about the KSO was that mixed waste [Radioactive Hazardous material mixed with Non-Radioactive Hazardous material] had been stored at KSO for many years without appropriate Federal permits. Mr. Voo informed me that the New York State Department of Environmental Conversation(DEC.) may have some inspection authority at KSO. Based on Mr. Voo's statement concerning the DEC, I talked to Mr. Gus Carayiannis of the NY State DEC. He informed me that the DEC is not allowed to conduct unescorted inspections of the KSO. The DEC representative is escorted to the hazardous waste storage facility and allowed to look at that facility, the representative is then escorted from the KSO. The EPA has never inspected the KSO with or without DEC accompaniments.

(B)"From January 1988 to June 1990, EPA conducted seven inspections at Knolls and the Kesselring site, either by itself or jointly with New York. Two deficiencies were reported as a result of the inspections." (Page 34).

Mr. Voo, of the New York City office of the EPA, informed me that the EPA has been at KSO only once since the mid 1980's and than only for the purpose of looking at the mixed waste being stored on that site.

(C) "New York State provides oversight of Knolls and its Kesselring site through the State Department of Conservation (DEC) and the Department of Health. These agencies monitor activities and conduct inspections to ensure that environmental and health laws are followed." (Page 34) "The New York State Department of Health does not issue permits, nor does it inspect the Knolls or Kesselring sites." (Page 35)

As noted in section (A) and (B) the New York State DEC conducts no unescorted inspections of the KSO. The New York State Department of Health, also, conducts no inspections of KAPL. I have talked with Dr. Elizabeth Marshall of the NY State Department of Health. She emphatically informed me that the Department of Health has never inspected any KAPL site. Furthermore, the statement on page thirty-four (34) is in direct conflict with the statement on page thirty-five (35).

The GAO report is clearly erroneous concerning Health and Safety inspections/audits/oversight by any Federal, State or local agencies. Furthermore, the Naval Reactors program has, since its inception, made much of the fact that they are "exempt" from oversight by "any" agency outside of the Naval Reactors program. As proof of this fact page 3 of the GAO Report states that: " While Naval Reactors has historically been exempt from most oversight some federal and state environmental agencies have recently been permitted access to Naval Reactors facilities for oversight functions." It is also a historical fact that even the Department of Energy (DOE) is not allowed to inspect any Naval Reactor facility without specific permission from the Director of the Naval Reactors Program.

Health and safety complaints filed by the Atomic Energy Workers Local 301 A.E.( IUE-AFL-CIO) are not directed to any outside agencies such as OSHA but, rather, are filed with the local office of Naval Reactors. The Contracting Officer, at the Knolls Atomic Power Laboratory, a Naval Reactors employee, is defined as "OSHA on site," "EPA on site," "DEC on site," "etc." . . . "

The entire discussion concerning external oversight, in the GAO report, is a hopeless series of contradictions within itself and a plethora of contradictions compared to realty. The entire discourse is a clear violation of 18 U.S.C. 1001 and is significant enough to warrant withdrawal of the document, and to prosecute those who are responsible for the outrageous statements made in the report.

John P. Shannon, Major USMCR (R)
Manager of Nuclear Criticality Safety, Industrial Safety and Industrial Hygiene
Knolls Atomic Power Laboratory (KAPL)
Nuclear Reactor Physicist
GE Employee June 1959 - January 1990