Four years ago, Nuclear Regulatory Commission Chairman Joseph M. Hendrie described the atomic power program of the Tennessee Valley Authority (TVA) as the "pacesetter" for the nation.

At the time, TVA had envisioned the most ambitious nuclear system in the United States, planning in three states to build 17 reactors capable of supplying 40 percent of the Tennessee Valley's power.

Today TVA is operating two atomic plants. Eight were abandoned while under construction. Three were shut down by TVA earlier this year following pressure from the NRC over serious safety concerns. Four others, now partially built, have experienced substantial construction delays or have been questioned for safety reasons.

In the intervening years, according to a recent NRC report, TVA has been cited for more than 1,000 violations of NRC regulations, twice as many as an unidentified utility of comparable size and three times the national average.

In addition to a record number of fines and penalties, TVA appears to suffer serious internal problems and has been criticized by the NRC for mismanagement. Nuclear engineers and safety officials at TVA say they have so little confidence in TVA management and the regional NRC that they have bypassed the usual channels and gone to Capitol Hill to make serious allegations about the adequacy of the reactors' design and construction.

Their complaints have prompted four federal investigations, which are examining a host of charges, ranging from inadequate safety standards to harassment of whistle blowers.

What went wrong?

Before beginning its nuclear power program, TVA seemed to have an exemplary record as a federal agency, developing energy and agricultural resources for what was then the nation's poorest region.

TVA, NRC and Capitol Hill sources suggested in interviews at least three explanations for TVA's nuclear power troubles.

Part of the problem appears to be the difficulty of the nuclear industry to grapple with the enormous changes in nuclear regulation and safety standards caused by the accident six years ago at Three Mile Island.

A second problem, according to some nuclear officials, is that TVA, the only federally owned utility, traditionally has had little oversight from Washington, has never had an inspector general's office and has seemed ill-equipped to manage an ambitious nuclear program.

Finally, TVA's directors have said it is in the midst of a "management crisis" resulting from the failure to retain enough competent plant managers and operators.

These problems, together with charges that TVA once concealed safety concerns and has not maintained an effective quality-assurance program, are the subjects of the federal investigations, three by congressional subcommittees and one by the NRC.

As early as 1980, the NRC raised questions about TVA's ability to assure the quality of its reactors' design and construction. Nuclear engineers and safety officials said recently that the authority had made little progress.

" Quality assurance here is just absolutely a joke," one engineer said. He cited the construction, inspection and design problems at two reactors being built at a plant south of Knoxville -- Watts Bar -- originally scheduled for completion in 1976 and 1977.

"We've had to essentially tear that one down and build it three times," he said.

Dozens of safety concerns were raised about Watts Bar in a June 20 report for TVA by the Institute of Nuclear Power Operations (INPO), an Atlanta-based consulting firm.

According to the report, maintenance manuals at the plant were outdated, gaskets had rotted, electrical connections were loose and bolts were missing. The report said that of 23 pipe supports inspected, 10 had not met TVA's guidelines, because of such problems as improper welds, loose screws or bent metal parts.

The report also found that low-quality material had been used in place of safety-grade equipment.

Construction officials at TVA said the INPO report probably is accurate and may have understated problems.

Other questions have been raised about Watts Bar.

A July 9 memorandum prepared by TVA's Nuclear Safety Review Staff said TVA has inadequately installed and inspected electrical cables there.

One Capitol Hill official investigating TVA said Watts Barr was not the only plant with quality-assurance difficulties.

For example, the problem-plagued Browns Ferry plant, which is in Alabama, was found to have valves that were not depicted on any plant drawings.

Richard M. Freeman, one of TVA's three directors, said the quality-assurance program is not the key to any of the utility's current problems.

"I think the problems that TVA is having are with management," he said.

Freeman also said TVA "has been most forthcoming" in informing the NRC of safety concerns.

But TVA engineers said internal disputes about safety issues, such as the adequacy of welds at certain plants, were not fairly presented to the NRC. That view was also expressed by high NRC officials.

Harold R. Denton, the NRC's director of Nuclear Reactor Regulations, told TVA officials at an April meeting that he felt he had "been snookered" by the utility for its failure to inform him of an internal dispute about welding problems at Bellafonte, in Alabama, and Watts Bar.

"We were ignorant of a major dispute at TVA," Denton said in an interview. "I've made it clear to the directors that they should've laid it out on the table in front of us."

Denton said the Washington office of the NRC became concerned about TVA's nuclear program last fall, when he heard from the new regional administrator and had received anonymous phone calls from TVA employes.

"I asked them if they had talked to their supervisors, and they said they were afraid to raise it for fear of retribution," he said. "The more we began to look into these things, the more we saw problems all around."

He said that, as a result of interviews with TVA employes, the NRC had identified about 2,000 complaints, 200 of which concerned safety.

Denton's complaint was not the first time TVA was accused of failing to disclose important safety issues.

On June 14, the NRC sent a strongly worded letter to the TVA for failure to inform the commission about possible problems with equipment designed to measure the pressure inside the containment building at the Sequoyah power plant in Tennessee.

According to NRC officials, the TVA office of engineering recognized in October the need to review the effectiveness of the equipment but did not inform management for nearly two months.

An engineering report was finally issued in March, although the seriousness of the problem could have shut the plant down. Apparently neither senior management nor the NRC was informed of the conern.

The June 14 letter said the event demonstrates "a breakdown in your management controls for evaluating and reporting potentially significant safety conditions."

James M. Taylor, director of NRC's Office of Inspection and Enforcement, said he was distressed to find that TVA officials had failed to act after learning that instruments measuring the pressure inside Sequoyah had been questioned.

"It was incomprehensible to me that a nuclear engineering group would identify a safety concern and while away the days, waiting for something to happen," he said.

Sequoyah was the site of an accident in 1984 that almost killed eight workers and was initially reported to the NRC as involving a relatively minor leak.

The NRC fined TVA $112,500 for failing to describe the accident accurately.

A July 3 letter and report from NRC's executive director for operations, William J. Dircks, to TVA Board Chairman Charles H. (Chili) Dean Jr. states that the commission and Congress have received "a number of allegations" from TVA officials about the authority's quality-assurance program.

"Many allegers have claimed that TVA would take retaliatory actions if these concerns were expressed through the normal TVA process," the report said. "Also, several allegations were received asserting that TVA had taken intimidating or reprisal type actions against certain employes."

One nuclear engineer, referring to officials who are supposed to assure the safety of the plants, said, "Anybody who does their job is throttled."

Another TVA engineer said that as a result of attempting to do their jobs, people in the quality-assurance program "were directly discriminated against."

The engineer confirmed accounts given by his colleagues of continuing morale problems associated with a 1980 incident involving whistle blower William Dan DeFord. A federal court of appeals in Cincinnati found in 1983 that the TVA had embarrassed, humiliated and transferred DeFord after he raised concerns to NRC regional officials about the quality-assurance program at Sequoyah.

Although DeFord ultimately won in court, internal TVA papers show that officials who testified on his behalf or supported him have not been promoted, while many of those who have testified against him have received one or more promotions.

"We refer to it as the DeFord massacre," a safety official at TVA said. "The whole affair has created a chill at TVA's [quality-assurance]program, which has never fully recovered from it."

DeFord, who is now a manager in the electrical-engineering branch, said he "can fully understand why anyone would feel inhibited by my case."

"When you see TVA promoting people who did the real harassing and the real tormenting -- the people who almost killed me -- it really has a chilling effect," he said.

Asked about allegations by employes that they have been harassed, TVA's Freeman said, "We have dealt with those allegations by hiring a firm to investigate. And when that investigation is over, I will be able to tell you about it."

He said TVA is seeking to find ways "and I think we have found ways, for those people who feel too timid to speak up to do so."

"To the extent that people are coming forward would suggest that we have taken any fear out of the system," Freeman said, referring to a new $3.6 million program at TVA to encourage employes to tell management their concerns.

Federal investigators have also been examining how effectively the NRC's regional office in Atlanta has been policing TVA.

Several of the officials who have contacted the NRC in Washington and have been in touch with congressional aides said they fear that the regional office would disclose their identities to TVA management.

One engineer said the NRC office, known as Region II, has had "a cozy relationship" with TVA.

"Many of the important people here are ex-Region II people," he said, "and so they are able to negotiate away violations. It's crazy. It's like the driver of a speeding car being stopped a second time down the road by the same cop and saying, 'Yeah, I sped once, so let's make a deal on this one.' And they get away with it."

J. Nelson Grace, Region II's administrator, said his office has been vigorous in enforcing safety standards. Grace, who has headed the regional office since earlier this year, said he does not know of any instances in which the NRC has given names of whistle blowers to TVA management.

"There is a hard and fast rule that we don't break rules of confidentiality," he said.

Investigators are also looking into charges that the utility has been mismanaged.

The 13-page July 3 NRC report stated that the number and severity of TVA violations "serves to highlight the overall management weakness." It noted that during the past six years, TVA had lost eight "key managers" and numerous reactor operators to other utilities.

Dean, testifying recently before a Senate Environment and Public Works subcommittee, said the nuclear program has been plagued by a "management crisis."

"We are so thin in management capability that we have severe doubts of our ability to finish construction on two plants -- one of which is nearly ready for operation," Dean said.

Dean has told senators and NRC officials that TVA has had difficulty retaining high-caliber managers because of the legally imposed salary cap of $72,300.

But a Capitol Hill official examining TVA's nuclear program said the management concern is "a smoke screen" concealing more serious problems with the reactors.

"It's an easy thing for him to say," the official said. "But what does he propose to do about all the defects that came about while they were in a crisis. The defects don't automatically go away when the crisis goes away."

The utility has said that, partially as a result of the costs of its nuclear program, its electrical rates will increase by as much as 9 percent in October.

While the investigations continue, TVA directors have announced a set of priorities for the coming months.

The first priority, according to a letter Dean sent the NRC, is the continued operation of the two units at Sequoyah, a facility that has been rated above average by the NRC. Sequoyah was the site of an accident Monday that resulted in the contamination of five employes.

Second, the utility has said it is trying to identify and fix problems at the three-reactor Browns Ferry site, one of the largest plants in the country, which TVA shut down in March.

Finally, according to the directors, the utility is seeking the successful completion of the four remaining sites.