THE LONE STAR AND THE ATOM: NUCLEAR ENERGY

IN TEXAS, 1945-1993

by

TODD WALKER, B.A., M.A.

A DISSERTATION

IN

HISTORY

Submitted to the Graduate Faculty of Texas' Tech University in Partial Fulfillment of the Requirements for the Degree of

DOCTOR OF PHILOSOPHY

Approved

Chairperso/i ot tlie Committee

Accepted

Dean of the Graduate School

August, 2002 ACKNOWLEDGEMENTS

I extend my thanks and much appreciation to the many people who helped and encouraged my efforts in completing this dissertation. Certainly, I must thank Dr. Paul Carlson for his guidance and unending patience and for devoting large amounts of his personal time in reviewing and editing my many drafts. His direction and knowledge were invaluable in helping me keep my focus. I also must thank the other members of my doctoral committee: Dr. Donald Walker, Dr.

Joseph King, Dr. James Harper, and Dr. Grant Hall. Their suggestions and encouragement helped greatly in preparing this dissertation. All of the faculty and staff in the Department of History were helpful and invaluable. In addition, I thank Steve Porter for allowing access to his papers. They supplied a wealth of information without which this dissertation would have been impossible.

No amount of thanks can show my gratitude towards my parents, Thomas and Martha Walker, for their support. Without their encouragement, this dissertation would not have been possible. I would also like to thank my sister and brother and their families who also supported me. Last, but certainly not least, I would like to express my gratitude to my fellow graduate students and friends in the Department of History. Without Les Cullen, Boyd Trolinger, Joe

Brown, Ron Power, Scott Sosebee, Dave Weir, Bill Clayson, Steve Short, Dana

Magill, Jenny Board and many others, graduate school would not have been as rewarding or entertaining. TABLE OF CONTENTS

ACKNOWLEDGEMENTS II

ABSTRACT iv

LIST OF ABBREVIATIONS vi

CHAPTER

I. INTRODUCTION 1

II. HISTORICAL OVERVIEW OF NUCLEAR POWER IN AMERICA 23 III. THE DECISION TO BUILD THE COMANCHE PEAK NUCLEAR POWER STATION 58

IV. MISMANAGEMENT AND CONFLICT AT COMANCHE PEAK 95

V. GOVERNMENT INTERVENTION AND THE COMPLETION OF COMANCHE PEAK 138

VI. THE EARLY YEARS OF THE SOUTH TEXAS PROJECT 176

VII. THE DISMISSAL OF BROWN & ROOT 225

VIII. THE COMPLETION OF THE SOUTH TEXAS PROJECT 274

IX. CONCLUSION 315

BIBLIOGRAPHY 328 ABSTRACT

Nuclear energy, since its inception in 1945, has been one the United

States' most controversial technologies. Even before the well-publicized incidences at Three Mile Island and Chernobyl, nuclear projects encountered a variety of problems and obstacles that decreased their cost-effectiveness.

Nuclear power, as time progressed, transformed from a possible answer to the world's energy needs into an economic, social, and political nightmare for many people and regions.

The experience of Texas with nuclear energy was no different. This dissertation is the first in-depth study of the development of nuclear power in the

Lone Star State. In Texas, utilities did not implement nuclear power until the early 1970s, much later than in many other areas of the country. Because of the state's abundant natural resources, utilities did not foresee an immediate need for alternative energy. The increases in energy requirements in the 1960s created a sudden surge in interest in nuclear power. Texas utilities rushed to develop nuclear projects, but, in doing so, failed to consider many of the unique characteristics of nuclear power.

Utilities completed two nuclear projects in Texas: the Comanche Peak

Steam Electric Station, near Fort Worth and owned by Texas Utilities, Inc., and the South Texas Project, near Houston and owned by the partnership of Houston

Lighting & Power, Central Power & Light, and the cities of San Antonio and

Austin. Both projects encountered lengthy delays and tremendous cost

iv overruns. Anti-nuclear activists, the Public Utility Commission of Texas, and consumer advocates opposed the projects because of safety and financial concerns. The Nuclear Regulatory Commission issued numerous citations and fines against the projects and, in both cases, came near to canceling the troubled projects.

Despite the problems, the owners of Comanche Peak and South Texas persisted in their attempts to implement nuclear power. By the time the projects reached completion, nuclear energy was, however, no longer cost effective nor considered safe by many citizens. After nearly twenty years of construction and licensing, the two nuclear facilities were two of the costliest plants in American history. LIST OF ABBREVIATIONS

ACORN - Association of Community Organization for Reform Now

ACRS - Atomic

A/E - Architect/Engineer

AEC - Atomic Energy Commission

ASLB - Atomic Safety & Licensing Commission

CASE - Citizens' Association for Sound Energy

CAT - Construction Appraisal Team

CFUR - Citizens for Fair Utility Regulation

CPRT - Comanche Peak Response Team

CPSES - Comanche Peak Steam Electric Station

DP&L - Dallas Power & Light

EPA - Environmental Protection Administration

ER - Environmental Report

FSAR - Final Safety Analysis Report

GAP - Government Accountability Project

GSU - Gulf States Utilities

JCAE - Joint Committee on Atomic Energy

LCRA - Lower Colorado River Authority

LWA - Limited Work Authorization

MAC - Management Analysis Company

NRC - Nuclear Regulatory Commission

vi NSSS - Nuclear Steam System

NUS - Nuclear Utility Services

PSAR - Preliminary Safety Analysis Report

PUC - Public Utility Commission

QA/QC - Quality Assurance/Quality Control

REA - Rural Electrification Administration

SER - Safety Evaluation Report

SPP - Steve Porter Papers

STIS - South Texas Interconnected System

STP - South Texas Project

SWEC - Stone & Webster Engineering Services

TESCO - Texas Energy Services Company

TMI - Three Mile Island

TMPA-Texas Municipal Power Association

TP&L - Texas Power & Light

TRT - Technical Review Team

TU - Texas Utilities

TUGCO - Texas Utilities Generating Company

TUSI -Texas Utilities Services, Inc.

WPPSS - Washington Public Power Supply System

VII CHAPTER I

INTRODUCTION

"Nuclear Reactors Make Good Neighbors" was the titie of a film shown to

Austin, Texas, residents in 1973.'' Using the film, utilities hoped to convince area

residents that nuclear power was safe, inexpensive, and the answer to their energy needs for the foreseeable future. The citizens of Austin, however, were

not persuaded and remained cautious about approving the city's involvement in the South Texas Project. Nonetheless, over the next twenty years, the city joined the nuclear project, but after a number of voter referenda, attempted to withdraw and subsequently got involved in several lawsuits regarding Austin's

involvement with the project.

The confusion, the uncertainty, and the litigation reflect not only Austin's experience with nuclear power, but also the larger state's experience with nuclear energy as a whole. Atomic energy in the Lone Star state has been controversial and nearly disastrous for those involved. Utility companies completed two large nuclear facilities but not before experiencing nearly every problem possible for a nuclear project.

Nuclear power in Texas began slowly and developed amid strong opposition from many areas. The full-scale implementation of the technology, as predicted in the 1950s when atomic energy appeared to be the future, never

^ Texas Obsen/er, November 16, 1973. occurred. The end of the 1970s energy crisis, safety concerns, and decreasing fuel costs removed the greatest reason for nuclear power. Additionally, federal courts and regulatory agencies became increasingly more sympathetic to the concerns of anti-nuclear activists. The larger problem, however, came from the general population.

Many people felt nuclear energy was not worth the environmental and safety risks. Opponents, already present to varying degrees wherever nuclear power existed, became more and more vocal. As the development of nuclear power progressed, the opposition organized and found sympathetic licensing boards. The combination of difficulties produced a situation in which the utility companies often felt beleaguered. The resulting situation in turn led to tensions within the utilities and betiween the utility companies and their contractors.

Frequent changes of personnel and adjustments in the management organization were symptomatic of the problems.^

Anti-nuclear advocates used the personnel changes as proof of their allegations of mismanagement. In the early stages of the projects, the opponents were not organized enough to impede the initial licensing hearings.

Most of the opponents were individuals without the financial resources to challenge legally the projects. Interestingly, the one group that might have

^ Two interesting examinations of the problems encountered by nuclear power are John N. Campbell, Collapse of an Industry: Nuclear Power and the Contradictions of U.S. Po//cy (Ithaca, N.Y.: Cornell University Press, 1988) and James M. Jasper, Nuclear Politics: Energy and the State in the United States, Sweden, and France (Princeton: Princeton University Press, 1990). efl'ectively confronted nuclear development, the major oil and gas concerns within Texas, did not oppose nuclear power publicly. Perhaps the companies never felt threatened by nuclear power. Whatever the case, large-scale nuclear power remains something for the future.

The history of nuclear power in Texas is not unlike that of the larger nation, but certain elements make it a unique part of the national story.

Moreover, a study of nuclear power development in the state helps toward

understanding why the promise of nuclear energy became for many something of an economic and social nightmare.

The nuclear age in America, although certainly not over, effectively came to a stop following the Three Mile Island Incident in 1979. Since then, although many projects reached completion, no new projects have been ordered, a number have been cancelled, and several, following the expiration of the licenses, have been dismantled. Recent events and growing concerns about the country's energy needs, however, have led many people to reconsider nuclear power as a potential energy source. A revival in the nuclear industry appears to be an increasing possibility, especially when world events cause concerns about the safety and reliability of Middle East oil supplies. Therefore, it is important to examine why the country's first attempt at implementing nuclear power failed, particularly in a state like Texas, one that has historically supported the energy industry. The beginning of the nuclear age was arguably one of the most important events of the twentieth century. The destructive power of the atomic warhead detonated over the Trinity Site in New Mexico on July 16, 1945, initiated an important new technology, but one with many associated potentials and fears.

Quickly after the September 1945 bombings of Hiroshima and Nagasaki, governments around the world strove to create nuclear arsenals. Some scientists connected with the atomic programs, however, realized that the power of the atom could be harnessed for peaceful purposes.

The rising costs of fossil fuels and dwindling supplies of natural resources, for example, encouraged many researchers to investigate the possibility of using an atomic reaction to produce power for civilian purposes. In the process of implementing nuclear power to produce energy, federal and state governments and individual utilities often experienced a variety of problems that led to lengthy delays, cost overruns, and possible cancellations. The history of the development and implementation of commercial nuclear power in the United

States has been a tumultuous one and the experience of Texas is no exception.

During the course of nuclear energy development, Texas encountered many of the same problems experienced elsewhere in the country. Although utilities discussed the construction of at least eight different nuclear facilities in

Texas, only two of them progressed to the building stage. The two projects, the

Comanche Peak Steam Electrical Station (CPSES) near the Dallas-Ft. Worth metro area and the South Texas Project (STP) near Houston, were among the most lengthy and expensive nuclear programs in the history of nuclear power in the United States. Surprisingly, while both were controversial, neither produced the degree of popular reaction encountered by more notorious projects, such as

California's Diablo Canyon, New Hampshire's Seabrook, and New York's

Shoreham facilities.'^

Public protest against nuclear energy in Texas was vocal and active but

not as strong as that encountered by its out of state counterparts. The relatively weak efforts of anti-nuclear activists in Texas may be partially due to the state's

unique relationship with extractive industries, and the state's historically few

environmental controls may have also played a role in diminishing opposition.

For many people, nuclear power was no more dangerous than either other kinds

of energy or the acres of chemical plants that continue to exist along the Texas

Gulf Coast."* Apparently, Texans saw nuclear energy as the next logical step in the progression of energy production.

Nuclear power in Texas was the result of energy shortages, both real and

perceived, that occurred in the early 1970s. Although the federal government

had been sponsoring research into the benefits of atomic energy, Texas, an energy state, did not participate in its development on a large scale until after

^ One examination of the protests can be found in Jerome Price, The Antinuclear Movement {Boston: Twayne Publishers, 1990).

^ Houston Post, June 11, 1979. 1970. Texas benefited from abundant natural resources, and utilities within the state paid only slight attention to nuclear power.

Meanwhile, utilities in areas across the country that did not possess abundant oil and coal supplies completed a number of reactors. Government subsidies and little public protest created an atmosphere conducive to large- scale investments in nuclear plant construction. Although nuclear power was expensive, most experts in the field considered it to be a wise, long-term investment. Thus, the decision to invest in nuclear energy by many utilities is easy to understand.

By 1970, however, the economic and social changes had prompted Texas utilities to reconsider the potential of nuclear power. The late 1960s experienced a tremendous growth in the energy needs of the country. Utilities rushed the construction of power plants to meet the requirements. Economists predicted that the growth would continue for the foreseeable future.^ The projections, coupled with the rising costs of fossil fuels, resulted in a potentially dangerous energy shortfall. Utilities investigated a variety of new technologies including solar, wind, and geothermal energies as well as variations of existing resources such as shale oil and lignite coal.

Problems existed with each power source: some were not efficient; others were expensive. Solar power, for example, while technically feasible, depended

^ Untitied Memorandum from Houston Lighting & Power manager, February 4, 1971, Steve Porter Papers, Box 118, Southwest Collection, Texas Tech University. on clear skies and was not a reliable energy source. Although the federal government supported a large-scale heliocentric project near Barstow, California, solar power was not ready for implementation.^ Not until after 1980 did a commercial solar power project come online. The effort, known as the

Crosbyton Solar Power Project located in Crosbyton, Texas, produced power for only a short time and never developed beyond the experimental stage before reduced federal funding after the end of the energy crisis led to its cancellation.^

Wind power, like solar, also had problems. The cost to construct wind farms was prohibitive and individual wind generators were not efficient or reliable.^ In addition, wind farms required large amounts of land. Problems with the alternative energies reduced their potential for remedying the energy crisis. Until changes in the technologies made them more efficient, utilities remained reluctant to invest in alternative energies.

At the same time, another possible power source began receiving attention. During the late 1950s and 1960s, nuclear power became a relatively

^ NSF/NASA Solar Energy Panel, Solar Energy As a National Energy Resource (Washington, D.C.: U.S. G.P.O., 1974), p. 89; John J. Berger, Charging Ahead: the Business of Renewable Energy and What It Means for America (New York: Henry Holt & Co., 1999), p. 29.

^ Texas Tech Crosbyton Solar Power Project Papers Collection, Southwest Collection, Texas Tech University; John C. Schweitzer, Sunrise, Sunset: The Story of the Crosbyton, Texas Solar Power Project (Lubbock: Texas Tech University College of Engineering, 1988), p. 5.

® Christopher Flavin, Wind Power: A rurn/ng Po/nf (Washington, D.C.: WorldWatch Institute, 1981), p. 24-35. common alternative for utilities across the country. The Atomic Energy

Commission (AEC) and reactor manufacturers marketed atomic power as trouble-free and inexpensive. In 1955 the first commercial reactor located at

Shippingport, Pennsylvania, came online. The federal government, with the assistance of local utilities, designed and constructed the majority of the facility.

The success of the Shippingport reactor increased confidence in atomic power.

According to the Atomic Energy Commission, atomic power was a technology easily mastered.

In the pro-nuclear environment that existed in the energy industry, the decision by many utilities to implement atomic power is easy to understand. The utilities in Texas were no different. Like their contemporaries elsewhere, they too were eager to find an answer to their energy needs. The result was two projects: the Comanche Peak Steam Electric Station and the South Texas Project.

Rising from the prairie southwest of Fort Worth, the Comanche Peak facility is an imposing presence over the nearby town of Glen Rose. Likewise, the twin reactors at the South Texas Project in Bay City almost hypnotically attract the eyes of those who travel nearby. Both economically and socially, the two nuclear power plants dominate the two towns and the surrounding areas.

Prior to 1970, Glen Rose and Bay City were small, primarily agricultural communities with little to no industry. When utilities announced plans to construct nuclear reactors near the towns, most residents, because of the potential economic gain, enthusiastically embraced the projects. A few citizens expressed concerns about the financial compensation offered for their lands, but supporters of the projects were correct in anticipating an economic boom. Each site employed four thousand workers on average. In fact, the South Texas Project at one time employed tiwelvethousan d workers.

Once construction began, restaurants, hotels, stores, laundries, and associated businesses flourished in Glen Rose and Bay City.

Unfortunately, although they experienced tremendous growth, the two communities' identities have changed and the troubles normally associated with urban life are evident. Crime and pollution both increased and some residents commented that they preferred the way the towns used to be.^ The residents of the towns now live with the occasional tests of the sirens from the nuclear facilities and the brief moment of fear that accompanies the sound. The transformations in each community, however, are only a small part of the history of nuclear power in Texas.

One of the key elements that makes an examination of nuclear power in

Texas so important is how little is known about it. Although several thousand visitors tour each facility every year, a large percentage of the state's population remains unaware that nuclear power exists within Texas. In the eyes of many citizens, Texas was and is an oil state and nuclear power was something almost mythical that was around only for a brief period in the 1970s.

Houston Post, January 23, 1985. The preoccupation with oil is understandable. Over the last hundred years, the oil industry made the fortunes of many Texans and brought great prosperity to the state. Supporters of the oil business continue to be influential in formulating the energy policy of Texas while only a small portion of the state's energy presently comes from oil-fueled power plants. Utilities and corporations involved in the energy business in the 1960s and early 1970s, however, were well aware of the rising costs of fossil fuels. The need to find an alternative source of energy led them to investigate the possibility of nuclear power.

While some government officials and a few oilmen saw nuclear energy as a threat to the oil industry, the majority of Texans involved in energy production

realized that nuclear power had the potential to meet the state's energy needs.

Even the large oil companies realized that there was only a finite supply of oil

and alternatives were necessary. As a result, there was little corporate

resistance against the implementation of nuclear power. In fact, the big oil

companies were mostly silent in regards to nuclear power. A few companies

compiled studies of the potential changes associated with nuclear power and the

state sponsored a few symposiums but, for the most part, oil companies

expressed little concern.

The utilities in Texas prior to 1970 were also not active in researching

nuclear power. Without a foreseeable danger of energy shortages, the state's

power companies pursued haphazardly only long-term research programs.

Often, their investigations did not even involve nuclear fission and instead

10 focused on fusion power. Fusion power was attractive because it lacked government controls and the possibility of profit was much greater. Furthermore, it was environmentally clean and the fuel supplies were potentially limitless. The choice to research fusion power over fission power further delayed any significant nuclear projects in Texas until an increase in government subsidies in the late 1960s.''°

Instead of opposition from the oil industry, the utilities themselves were often their own worst enemies. That the utilities involved never really understood the differences between conventional and nuclear power plants was one of the key issues that hindered nuclear development in Texas. Utilities approached nuclear projects in the same manner used with conventional power plants. Many of the problems that appeared arose from the utilities' inexperience and misunderstandings about nuclear energy.

Engineers and managers were unfamiliar with the technology and were ill prepared to resolve problems quickly. In fact, at the beginning of the two projects in Texas, neither of the main utility companies involved had a single employee who was familiar with nuclear power. As a result, the utilities relied on their contractors and the federal regulatory agencies to provide the necessary experience and knowledge. Unfortunately, the contractors had their own

interests in the project and often did not act in the best interests of the utilities.

^° Texas Observer, November 27, 1958.

11 Such reliance led to corporate mismanagement and disagreements with the major contractors, problems that plagued both projects. At different points, each utility fired major contractors and rebuilt major portions of the installations.

Such actions received tremendous publicity and strengthened the arguments of project opponents. More importantly, the conflicts betiA/een the utilities and the contractors led to numerous postponements in achieving project milestones.

Newspapers and anti-nuclear activists pointed out that the expensive delays were evidence that the projects should be abandoned.

The lack of corporate leadership and feuds between the major contractors was only part of the reason for delays at the sites. Also at fault was the changing relationship between the federal government and the nuclear power industry.

Prior to the 1970s, although it maintained tight controls over any aspect of atomic research and development, the federal government had been very supportive of private nuclear power development. The Atomic Energy Commission functioned primarily as a clearinghouse for information and provided valuable assistance to utilities interested in nuclear power. Most utilities did not view the AEC as an opponent in the licensing process and instead often viewed the commission as more of a partner.

In the early stages of nuclear power development, the assistance provided by the federal government was necessary and instrumental in convincing utilities to adopt nuclear power. Few utilities or research organizations had personnel with the knowledge to construct reactors or to

12 operate safely a nuclear facility. In addition, nuclear fuels were in the control of the AEC and the agency did not allow such materials to pass to private corporations. In the late 1940s and 1950s, any nuclear project in the country required the close cooperation and participation of the AEC. The relationship changed in the mid 1960s when new regulations allowed atomic fuels to pass into the hands of non-government facilities but the federal government remained closely tied to all nuclear projects.

The most drastic change in the government's role with nuclear power came in the mid 1970s. In 1974, the Nuclear Regulatory Commission (NRC) replaced the Atomic Energy Commission's oversight of nuclear projects. The

NRC, unlike the AEC, concentrated its efforts on the enforcement of regulations and ensuring safety in the nuclear industry. The hand-in-hand partnership between utilities and the federal government evolved quickly into an adversarial relationship. As fears of nuclear power spread, the NRC stepped up its efforts to enforce growing amounts of regulations. The federal government no longer promoted the use of nuclear power or helped subsidize its implementation.

Often, the NRC stopped construction at a nuclear project for weeks or months until the utility satisfied investigators that the plant was safe.

Unfortunately for both of the Texas projects, the change in the federal government's view of nuclear power came just as the two projects began construction. In each case, the NRC issued the construction permits with little difficulty. Investigators noted some concerns but no more than average for a

13 new plant. Once actual construction commenced, the regulatory changes began to take affect. Unlike their predecessors, Comanche Peak and South Texas had to justify continually that the facilities were safe.^^ When NRC investigators ordered moratoriums on construction over perceived safety concerns, both projects encountered numerous delays. Costly legal actions, construction delays, and constant adjustments resulted from the federal government's actions.

Many of the work stoppages were justified. One of the more serious issues involved large voids (holes or spaces where there was no material) in the walls of the containment building; some of the voids were in excess of fifty cubic feet.^^ Other issues were relatively simple and involved something as minor as the size of a bolt or the color of a warning sign. For the most part, both utilities worked quickly to resolve safety or design concerns but even trivial issues slowed construction.

Most of the delays occurred before the operating license process began, but in the case of Comanche Peak, as the plant neared completion, the federal government ordered almost the complete reconstruction of major portions of the facility. Allegations of severe safety violations and corporate mismanagement resulted in delays lasting nearly five years.

^^ Campbell, Collapse of an Industry, p. 55.

^^ Houston Post, February 20, 1980.

14 At South Texas, similar allegations occurred earlier in the construction process, but did not result in a construction moratorium. Instead, South Texas experienced a series of lawsuits betiween the utilities and contractors resulting, eventually, in the dismissal of the major construction contractor from the project.

In addition, because of the delays associated with changes in the regulatory environment, the utilities blamed the federal government for many of the problems related to the projects. Such blame is easy to understand but may not be completely justified.

Through the end of the 1970s, the nuclear industry moved onward despite experiencing some problems. A few observers noted the decreasing rate of construction and many utilities reconsidered nuclear power but many people still considered nuclear energy to be a viable option. The second oil shock in late

1978 caused an increase in support for nuclear power.

An unforeseen event in Pennsylvania changed the perceptions of many.

The accident at the Three Mile Island nuclear power plant on March 29, 1979, damaged the support for nuclear power in the United States and in Texas altered the future of nuclear energy. The release of a cloud of radioactive gas created a wave of hysteria against nuclear power. Although no one died in connection to the event, the fear of what could have happened shaped the perceptions of many people.

Fears of a "China Syndrome," or radioactive meltdown, led to anti-nuclear demonstrations throughout the country. Public perceptions about nuclear energy

15 changed drastically and support for the anti-nuke movement grew quickly.^^

Chants of "Hell No! We Won't Glow!" filled the air as protesters like professional activist Tom Hayden and Hollywood celebrity Jane Fonda led rallies in opposition to nuclear power.^"^ Similar demonstrations occurred in front of many of the nation's nuclear power facilities. Some of the protests resulted in mass arrests while others were relatively peaceful.

At the nuclear facilities in Texas, protesters picketed against nuclear power. The protests did not result in the termination of either Comanche Peak or

South Texas. They did, however, extend the public hearings concerning the projects and delayed the licensing process. The protests and the growing feelings against nuclear energy by the power companies themselves destroyed any plans for new nuclear reactors in the state. Similar reaction occurred across the rest of the nation and since 1980 no new sites have been planned. As a result, the power industry regards negative public opinion and the increased regulations of the government after the near catastrophe as insurmountable obstacles to future construction.

At the time of the incident at Three Mile Island, the United States possessed seventy-two reactors capable of producing 12% of the nation's power.^^ As more plants came on line during the 1980s, nuclear energy

^^ Dallas Morning News, March 30-31, 1979.

^"^ Price, The Antinuclear Movement, p. 96.

16 surpassed natural gas as a source of electrical power. In 1986, as still more of

the projects came on-line, the number of nuclear power plants reached one

hundred. The maximum number of nuclear plants occurred in 1991 when the

United States contained 111 reactors. They produced over 22% of the nation's

energy.^^ The number, since 1991, has declined as the older plants are shut

down.

Presently, one of the central issues in the nuclear power industry is how to shutdown and safely dismantle obsolete plants. The safe disposal of radioactive material as well as the fuel and radioactive waste has still not successfully been solved, although it appears that, despite a great deal of public protest, the government will soon begin storing the radioactive materials at the Yucca

Mountain Storage Area in Nevada.^''

The construction of the South Texas and Comanche Peak projects continued into the early 1980s. Occasional protests by environmentalists brought construction halts as NRC investigators examined the sites for safety violations. The majority of protests against the projects came from those people concerned about the continual cost overruns and construction delays. The utilities' customers were distressed to read continually about major mishaps at

^^ Nuclear Regulatory Commission, Nuclear Power Statistics; available from http://www.nrc.gov/reactors/history.html; INTERNET.

^^ Nuclear Regulatory Commission, List of Licensed Reactors; available from http://www.nrc.gov/reactors/power.html; INTERNET.

17 the sites. Judging from letters to local newspapers and to the utility, the customers knew that they, ultimately, would have to pay through their utility bills for the cost overruns. People demanded answers to the problems but the utilities turned a deaf ear to the protests. Instead of explanations, concerned citizens found only more bond issues or higher electric costs.

Even the projects' minority partners, when the completion of the power plants appeared to be in doubt, abandoned or attempted to abandon participation in the projects. In the case of Comanche Peak, all of the minor partners successfully sued for their release from the endeavor and the majority owner, Texas Utilities, Inc., paid what amounted to damages to its former partners. At South Texas, the city of Austin negotiated its release from the project after the public voted to end its participation, but legal technicalities still kept the city tied to STP. The abandonment of the projects by many of the minority partners reflected larger concerns within the nuclear power industry.

At present, Texas has two operating nuclear facilities. Each site has two reactors and the reactors are among the largest in the country. The Comanche

Peak site began operation in April of 1990 with energy-producing reaction in Unit

One. The second reactor became operational in August 1993. The plant's total cost approached $11 billion, approximately fifteen times the originally projected cost of $700 million.''^

^^ The opening of Yucca Mountain is currently being debated with the outcome in doubt.

18 The project also took thirteen years longer than planned. Citing such figures, many people considered Comanche Peak to be a mistake that should have been terminated early in its development, especially considering the end of the energy crisis in 1980. In fact, the power produced at Comanche Peak is more expensive than that produced at non-nuclear power facilities. To this day, the Comanche Peak Nuclear Power Plant, because of periodic safety violations and continued profitability questions, remains one of the more controversial power plants in the state. Such issues, however, are common to almost all the remaining nuclear power plants in the United States.

The South Texas Nuclear Project surpassed all other Texas nuclear energy programs in terms of size and in amount of opposition. A joint venture financed by the power companies of several cities, it combined all of the problems facing nuclear power. Huge cost overruns raised the final price to over

$10 billion from its initial estimate of $1.006 billion. Project officials blamed gross underestimation of materials and labor needed for the construcfion problems.^^

Safety problems, including the possibility of a dam break in the cooling pool, caused the NRC to delay construction on a number of occasions. Unit

One, the primary reactor, at the site finally came on-line in March 1988 and Unit

Two followed a year later. The two remain among the top twenty largest reactors

^^ Ibid.

^'Ibid.

19 in the world and are licensed to supply electricity to South Texas for the next twenty years.

In the early 1970s, when Texas utility companies finally began the construction of nuclear power plants, government regulation, support for fossils fuels within the state, and public protest combined to make the situation nearly impossible for nuclear energy to become widespread. The acceptance of atomic energy came late to the state and, by that time, the energy crisis was past and the anti-nuclear movement was strong. In 2002, Texas had only the two nuclear power sites, each with two reactors, and no concrete plans to develop any others. Despite its promise, nuclear power found little support in Texas and encountered many of the same problems as elsewhere within the country.

Like the rest of the country, Texas residents coped with the concerns about safety and pollution issues associated with nuclear energy. Texas,

however, like many other states in the 1950s and 1960s, did not join the rush to develop nuclear power. While some private companies researched the possibility of the reactors for the production of electricity, there was little immediate need for alternative energies in the state during the period. Unlike many areas in the North and East, Texas possessed both abundant fossil fuels and relatively cheap electricity. The stringent controls over atomic energy by the federal government deterred even those in the power industry interested in nuclear energy. Often, the power companies, in hopes of avoiding government

20 interference, looked towards future, long-term altemative energy sources such as fusion and solar power.

The costs of fossil fuels were relatively inexpensive in the immediate post­ war period and would remain so into the early 1970s. Economists and geologists in the 1950s, however, predicted an increase in prices as consumers exhausted oil, natural gas, and coal reserves. Nuclear power offered a solution to an energy shortage yet few understood the technological and social difficulties that would arise from the public implementation of atomic energy.

In summary, nuclear power in Texas began slowly and developed amid strong opposition from many areas. The full-scale implementation of the technology, as predicted in the 1950s, never occurred. The end of the energy crisis and decreasing fuel costs removed the greatest reason for nuclear power.

Many people simply believed nuclear energy was not worth the risk. The lack of opposition from the oil and gas concerns is another interesting aspect of the implementation of nuclear energy within the state. Perhaps nuclear power never threatened the oil and gas companies. Whatever the case, nuclear power remains primarily something for the future. Utilities in the United States have not begun a new nuclear project in almost twenty-five years.

The history of atomic power in the Lone Star state focuses on the

Comanche Peak and South Texas nuclear projects. The Comanche Peak project, which began earlier than STP, encountered more regulatory difficulties and most of its construction and licensing process dealt with satisfying the

21 concerns of the Nuclear Regulatory Commission. The South Texas project, in contrast, encountered more internal problems. Although the Comanche Peak project reached completion after the South Texas project, examining Comanche

Peak before South Texas allows the reader to understand the regulatory system and the role of the federal government in constructing a nuclear power plant.

The problems encountered by the South Texas project serve as a contrast to the regulatory problems and thus illustrate the various difficulties a nuclear project

might face.

An examination of the history of nuclear power in Texas can provide

important insights into possible future implementations of the technology. A brief

overview of early atomic energy development in the United States seems

appropriate.

22 CHAPTER II

HISTORICAL OVERVIEW OF NUCLEAR

POWER IN AMERICA

The history of nuclear energy in the United States is a complex story, one dependent on both time and place. In some areas of the country, people expressed little concern with nuclear power, while in other areas the mere mention of a possible atomic program resulted in waves of protest. Success in implementing nuclear power also depended on the construction's relation to the

1979 Three Mile Island Incident and the overall development of concerns about safety. The same can also be said for the economics of nuclear power. At various times, nuclear energy appeared to be more cost-affordable than during other periods and thus more appealing to utilities. The geographic and chronological scope as well as the wide variety of experiences make describing the growth of nuclear energy on the national level a difficult task. As a result, there has been little scholarly effort to provide an overview of nuclear power within the United States.

To understand how the Texas experience with nuclear power fits into the national story, a brief synopsis of the historical events surrounding the

implementation of atomic energy seems necessary. Accordingly, this chapter examines American efforts to develop nuclear power for civilian use on a national

level prior to its introduction in Texas. Because of the importance of the federal

23 government in supporting nuclear power in the first stages of its implementation, the majority of the early development focuses on the role of the Atomic Energy

Commission (AEC) and its activities. In addition, the early reaction or lack thereof in Texas to atomic power and reasons for the delay, at least in comparison to the rest of the country, needs investigation.

In the beginning, the federal government tightly controlled America's entry into the atomic age. During World War II, the U.S. Army supervised the

Manhattan Project and its subsidiary activities relating to atomic weapons development. The government kept the research and the manufacturing of the weapons highly secret and either employed scientists under the direct control of the Amny or closely monitored their activities. The story of the Manhattan Project

is well known and has been covered in a number of scholarly works; thus, there

is no need to reexamine its history.^

There are, however, some important consequences for civilian atomic

energy that arose from the Manhattan Project. One consequence was the

government's strict control of atomic materials and research. For security

reasons, the government did not allow much information or any materials relating

^ Richard Rhodes, The Making of the Atomic Bomb (New York: Touchstone Books, 1986); Herbert Feis, The Atomic Bomb and the End of World Warn (Princeton: Princeton University Press, 1966); Leslie Groves, Now It Can Be Told (New York: Harper & Row, 1962) are examples of the many works on the Manhattan Project.

24 to atomic energy out of its control.^ The restrictions after the war limited the ability of private researchers to develop nuclear programs on their own.

Another result of the Manhattan Project was the obvious emphasis placed on weapons development over peaceful applications of atomic power. Within a few years of the end of the war, fears about the Soviet Union and its attempts to develop an atomic arsenal led the country to concentrate its resources on assembling more nuclear warheads rather than finding alternative uses for nuclear reactions.

A third consequence for atomic energy was the concentration of scientific knowledge under the control of the project. By the end of the war, very few scientists knowledgeable about nuclear physics were not in the pay of the government.^ The Manhattan Project accomplished its goal of producing atomic weapons, but, in doing so, it set up a system that limited the development of

peaceful applications of atomic energy.

Although the government allocated few resources to the development of

non-weapon applications of nuclear energy during the war, scientists realized

that there existed a potential to use an atomic reaction for the purpose of

producing power.^ After the war, the government under the Atomic Energy Act of

1946 maintained its control over all atomic programs and materials. The new law

2 Atomic Energy Act of 1946, 79th Congress, 2nd Session, August 1, 1946

2 Mark Hertsgaard, Nuclear, Inc.: The Men and Money Behind Nuclear Energy (New York: Pantheon, 1983), pp. 22-46.

^ Ibid.

25 removed supervision of atomic programs from the Amiy's Manhattan District and placed them in the hands of the newly formed Atomic Energy Commission.^

The purpose of the AEC was two fold: it hoped to stimulate the spread of peaceful applications of atomic energy and to limit the proliferation of atomic weapons. Ideally, the AEC would have acted as a global administration to manage atomic weapons. Through such a system. President Harry Truman and his advisors hoped to limit the proliferation of nuclear warheads. Although it failed in its goal of consolidating the control of atomic weapons under an international body, the AEC established several programs to explore a variety of applications for atomic reactions, especially the production of civilian energy.^

In general, early supporters of nuclear power portrayed atomic energy as a wonderful new technology that would solve forever the energy needs of the world. Both professional journals and popular magazines published articles about atomic cars, planes, and ships, thus demonstrating the versatility people believed atomic power possessed.'^ Until the early 1950s, even though many people supported the broad implementation of atomic energy, government controls, technological concerns, and the tremendous expense involved in the development resulted in only mild efforts from private industry to develop any kind of atomic programs.

^ Atomic Energy Act of 1946, 79th Congress, 2nd Session, 1 August 1946.

^ Ibid.

'' Popular Mechanics, July 1953, p. 34.

26 Some of the possible uses considered for atomic energy illustrate how little scientists knew about radioactivity. Although the plan never reached beyond the planning stages, discussions about using atomic warheads to blast a large irrigation canal from the Mississippi River to West Texas reveal a misplaced trust in atomic energy as the answer to all problems.^ Other efforts, such as the

Plowshare Program, investigated the use of atomic weapons in the mining industry and other industrial and scientific applications.^ Under the Plowshare

Program that continued into the 1960s, the AEC detonated several atomic bombs in order to determine how effective they were in clearing out large volumes of earth. Although the weapons certainly displaced a mass of dirt, the process was not the most efficient (or safe) way to conduct excavations.^°

Nonetheless, both government officials and research scientists felt that if non-military applications of nuclear energy were to be explored fully, civilian control of atomic development was necessary.^^ The five-member commission possessed enormous power with complete ownership of all materials and facilities capable of producing atomic energy. The act virtually placed all aspects

^ Implications of Atomic Energy for Texas (Austin: Texas Legislature, 1955): p. 7.

^ Report on the Plowshare Program, 1960, Energy Information Collection, Packet 2, Southwest Collection (SWC), Texas Tech University (TTU).

^° Report on the Plowshare Program, 1964, Energy Information Collection, Packet 2, SWC, TTU.

" Implications of Atomic Energy for Texas, pp. 5-6.

27 of atomic energy under a government monopoly that remained intact until 1954.

The government, however, did not have the resources or desire to handle all the various tasks associated with the atomic energy projects. Therefore, during the early 1950s, the AEC contracted nearly all of its work to private companies.^^

The contractors, however, operated under the strict control of AEC regulations and supervisors. The AEC attempted to regulate other nation's efforts to develop atomic weapons and related research. Its failure to gain control over foreign nuclear programs would have profound consequences for atomic research in the United States. As other countries, especially the Soviet

Union, developed their own programs, many American scientists believed that

American atomic development had been surpassed. The result was a further concentration on weapons development that continued throughout much of the

19503.^'^ As some of the anxieties regarding atomic energy subsided and concern about keeping pace with foreign efforts increased, the government removed some of its controls from atomic programs.

In the late 1950s, the public perspective regarding atomic power also changed. Among the majority of Americans, fears of reactors exploding like atomic bombs and some concerns about radioactivity declined. As part of the effort to portray atomic energy as safe and to disassociate it from atomic bombs, government officials and scientists began to use "nuclear" instead of "atomic."

^2 Ibid.

^^ Hertsgaard, Nuclear Inc., p. 74.

28 With the wider acceptance of nuclear power and increased foreign competition, government officials determined that to regain a competitive edge over the

Soviets, the country needed independent nuclear research.""*

Between 1946 and 1954, under the government's control, nuclear energy research proceeded slowly. The Atomic Energy Commission in 1949 built a breeder reactor in Idaho at the National Reactor Testing Site. The reactor produced enough heat on December 20, 1951, to power a steam generator.''^

Although the event was well-publicized and subsequent expectations for nuclear power heightened, public companies found little incentive to investigate potential uses of atomic energy. The expenses involved in designing, constructing, and operating an atomic reactor were simply too high for private or public utilities.

The difficulty in obtaining radioactive materials even under government supervision and the provisions for nuclear testing under the AEC made conducting independent research for civilian applications virtually impossible for private enterprise. Realizing the problems caused by the current system, scientists convinced government officials to revise the 1946 Atomic Energy Act.

Accordingly, on August 30,1954, a new Atomic Energy Act became law. It was the government's response to the needed changes in nuclear regulation. It altered drastically the development of atomic energy in the United States and provided an environment beneficial to the spread of nuclear power. The act

^"^ Implications of Atomic Energy for Texas, p. 23.

^^ Department of Energy, "The History of Nuclear Power in the United States" (Washington, D.C.. G.P.O, 1996), p. 6.

29 allowed private industry to assume a greater role in the research and development of atomic energy thus ending the government monopoly.^^

Essentially, government regulations replaced complete government ownership.

Only the actual fissionable material remained under complete federal possession.

The new freedom allowed by the Atomic Energy Act of 1954 did not diminish the role of the AEC. The Atomic Energy Commission still licensed all research and controlled access to infomnation. Despite the provisions, little monetary assistance for the construction of private nuclear projects in the early stages came from the AEC. Thus, all financial burdens remained with industry and independent research organizations.

In September 1954, President Dwight Eisenhower spoke about nuclear power on national television. During the speech, given in Denver, Colorado,

Eisenhower signaled the groundbreaking of the Shippingport, Pennsylvania, project. The new reactor, the world's first commercial nuclear power plant, was a joint venture between the Atomic Energy Commission and the Duquesne Light and Power Company of Pittsburgh. The project, small by comparison to later reactors, was the showpiece of the "Atoms for Peace" program.

"Atoms for Peace" was a massive effort to promote atomic energy and safe nuclear practices. The program, which originated from an Eisenhower

^^ Atomic Energy Act of 1954, 83rd Congress, 2nd Session, August 30, 1954.

30 speech to the United Nations on December 8, 1953, called for the governments of the world to investigate peaceful uses for fissionable materials. In many ways, the "Atoms for Peace" initiative was a reaction to the Soviet Union's rapidly expanding nuclear arsenal and to the concerns of the non-nuclear nations of the world in regards to the arms race.^^ The program hoped to show the world that atomic energy was not dangerous and that the United States was more interested in peace than in war.

Despite its well-publicized beginning, "Atoms for Peace" was not successful. The main problem was the absence of funding. The lack of subsidies from the federal government left non-government groups facing imposing expenditures just to begin investigations into the field. As of late 1955, the federal government had already spent approximately $10.3 billion in the development of atomic energy and appeared ready to allow private enterprise an opportunity to assume some of the large cost.^^ And, many private companies, to compensate for such tremendous cost, almost immediately after passage of the act in 1954, pooled their resources and created research teams to investigate how they could enter into the atomic energy field.

The joint-research ventures became so popular that, by March 1,1955, eighteen different teams existed nation-wide.''^ The largest of the groups was the

^'' Http://www.tamu.edu/scom/pres/speeches/ikeatoms.html "Atoms for Peace" speech, INTERNET.

^^ Implications of Atomic Energy for Texas, p. 18.

31 Atomic Power Development Associates, a conglomerate of Detroit Edison and

some thirty smaller companies in the Midwest. Other regional ventures formed

throughout the country, although the Northwest, with its larger population and

tremendous power needs, possessed not only the most in number, but also the

most ambitious. The studies produced by such research found acceptance with

the owners of utility companies. By March 1955, nearly a dozen groups in the

East had plans for the construction of atomic power plants. The plants were

expensive even to the joint groups, and the total cost of the dozen projects

reached nearly $200 million.^"

The utility companies of the Southwest did not face the same problems as

their counterparts in the East. Fossil fuels in the region remained abundant and

relatively low in cost. Even so, utilities feared a future shortage, and projections

of increasing power demands inspired Texas companies and the state

government to investigate the potential of atomic energy for the state. On May

28, 1954, the Texas Legislature instructed its Legislative Council to prepare a

report on atomic power. The resulting study. The Implications of Atomic Energy

for Texas (1955), took nearly a year to complete.

The study examined the role of the state government in nuclear energy.

Its conclusions suggested that states would have to assume greater

responsibility for safety regulations. Traditionally, health and safety matters were

^9 Ibid., p. 25.

2° Ibid.

32 duties of the states, and a press release from the AEC issued in 1953 confirmed that state authorities "will be encouraged to assume increasing responsibilities for safety aspects of reactor operation."^^ To prepare for the new role of the state in nuclear energy. The Implications of Atomic Energy for Texas provided an outline of the new duties each state agency would have for regulating nuclear power.

The recommendations represented the belief of the authors of the report that states would soon replace the federal government as the primary regulatory agency of nuclear power.^^

Researchers based parts of the study on the 1955 Conference on Atomic

Energy, a meeting that discussed the effects of atomic energy on the state's energy industry. Presenters at the conference suggested that the atomic age was not something to be feared in Texas. They saw it, rather, as an opportunity.

Several presentations focused on the state's need to encourage nuclear industries to come to the state. The speakers did not mean public power in the form of electrical production. Instead, they talked in terms of uranium production and associated industries. Although Texas lacked the federal lands that most other western states possessed (and its uranium deposits were not as accessible as elsewhere), many of the conference attendees felt that the public lands of the state could be opened relatively easily for uranium mining.^^

2^ Ibid., p. 83.

^^ Ibid., pp. x-xi.

33 The conference's view of the potential of uranium mining was correct in believing that the regulatory system and economy favored uranium mining.

Existing state laws governing prospecting for minerals covered uranium and, in

most cases, favored the mining concerns.^'' Predictions from the Atomic Energy

Commission estimated that the uranium boom would last two or three decades

and many speculators, as a result, entered into uranium prospecting in hopes of

finding a quick profit.^^

In the first years of the 1950s, twenty-five companies in Texas received a

charter from the state. The exploration companies varied greatiy in size and

assets, anywhere from $1000 to $300,000. State securities officers raised some

concerns over the sale of stock in such endeavors for they feared that

unscrupulous businessmen might trick unsuspecting people into investing in

phony companies. The general public's lack of knowledge about uranium mining

certainly contributed to the fears.^^ Despite the best efforts of prospectors, in

only a few areas of Texas did uranium mining progressed farther than the

explorative phase. Several small mines near the Big Bend area and a few larger

efforts elsewhere around the state are all that remain of the state's attempt to get

involved in the uranium industry. The demands for uranium were met by the

23 Ibid., p. 89.

2^ Ibid., pp. 89-92.

2^ Wall Street Journal, February 4,1955.

2^ Implications of Atomic Energy p. 93-

34 plentiful and more easily accessed deposits in Utah and Colorado. In Texas, the costs were simply too great and the potential profits too small for large-scale development.^^

Uranium mining, despite its economic prospects, had the potential to be dangerous, a possibility presenters at the 1955 Dallas conference recognized.

Because of the amount of potentially hazardous material that might be transported through the state if uranium mining reached the expectations of its supporters, the conference attendees also suggested that the state set up an advisory committee on atomic energy. The committee, the conference delegates recommended, should consider regulations for transportation of nuclear materials and the effect of uranium mining on natural and wildlife resources. The conference, reflecting the same concerns of other states, groups, and individuals interested in nuclear power, also discussed how nuclear reactors faced tremendous insurance problems.

Some of the statistics produced by the conference and the staff report that followed, illustrate how people believed nuclear energy would spread. As of

1954, private industry across the country had invested over eight million dollars in atomic energy. In the year 2000, the 1955 report estimated, nuclear energy would provide 30% of the electrical power in the United States. The President of

Texas Utilities stated that, although atomic power was a threat, by the time it was fully developed the costs of fossil fuels might be too expensive anyway. Fossil

2^ Ibid.

35 fuel prices were not an immediate concern and the report estimated that the costs would have to increase for another twenty years before nuclear energy became necessary.

Several economists who worked on the 1955 study concluded that New

England, because of the higher utility costs in the area, would be the first region to adopt nuclear power. The 182 fossil fuel power plants in Texas, they reasoned, were sufficient to meet current energy demands. They did not rule out non-power use for atomic energy and discussed the possible use of nuclear reactions in desalinization projects and in irrigation. Finally, the report concluded that the real goal of nuclear energy was to supply the rest of the world with power and to create global goodwill towards the United States.^^

In summary, the conclusions of the Implications of Atomic Energy for

Texas report were several. First, nuclear power did not seem to pose any immediate threat to the state's oil and gas industry. Second, economists estimated that Texas would feel some impact as atomic power expanded but the price of natural gas would have to triple before nuclear energy became truly competitive. Third, in the long run, nuclear power would be a viable energy alternative and it would provide low cost power. Finally, the report discussed the possibility of a uranium industry. It noted that the uranium industry held

2s Ibid.

36 considerable promise for the state and that businesses affiliated with uranium mining had already begun to appear.^^

Not all of the report's conclusions were correct. As previously discussed, uranium prospecting, despite the optimism of the report, disappeared quickly and the boom expected from it never took place. Richer deposits with easier access and fewer environmental risks elsewhere in the West proved more attractive to the uranium industry. Despite the failure of the uranium industry, interest in reactors in the late 1950s increased in Texas and the first serious attempts at investigating the potential of nuclear power took place during the period.

The new freedom provided in the Atomic Energy Act of 1954 caused eleven of the largest public utility companies in the state to form the Texas

Atomic Energy Research Foundation.3° In 1956, with the aid of the Atomic

Division of General Dynamics Corporation, the foundation embarked on a four- year research project into the possibilities of constructing an energy-producing reactor. Its goal was not a fission reactor like most other projects, but a cleaner alternative, a fusion-powered reactor. Fusion energy (the same process that stars operate by) needed only water as fuel and produced little waste, and many people in the industry considered it to be the power source of the future. The president of the foundation, who also headed the Southwestern Public Services utility, J. E. Cunningham, said of the project, "We just want to use the Gulf of

29 Ibid.

3° Texas Obseiver, November 27, 1959.

37 Mexico as our fuel supply and we want to have enough smart Texans around to tell us how to do it."^^

The Texas Atomic Energy Research Foundation felt that atomic power would become economically competitive with fossil fuels, but a future shortage of fossil fuels, it believed, would be more apparent in areas outside of Texas. The shortage, the foundation concluded, was a long term problem and not likely to happen anytime soon. Even when it did occur, the foundation felt that it would affect Texas very little. Thus, its conclusions and the abundance of oil, gas, and coal in Texas led the Texas Atomic Energy Research Foundation to adapt a long-term approach common to many Texan investigations into nuclear energy.

Although Cunningham and most members of the foundation explained the main purpose of their research as only a desire to examine any potential new sources of power, others involved with the foundation revealed that fusion power was important because it had not yet fallen under the control of the U.S.

Government. As one advocate effusion power stated, "Consider, if you will, the appeal of a source of fuel unlimited in quantity and easily obtained at moderate cost... a fuel not subject to control by our over-expanding federal bureaucracy."^^

The members of the foundation, most of whom were presidents of the leading Texas public utility companies, may have been motivated by fears of the

3^ Ibid.

32 Ibid.

38 federal government supplying cheap power and thus wanted to gain some element of involvement in its development. From their statements, the foundation members seemed not to want any government-owned power plants.

"It is neither necessary," one of them noted, "nor is it expedient to have the federal government construct large-sized atomic energy electric generating stations."33 The statement suggests that some of the reluctance towards nuclear power in the state came from the utility companies themselves who were fearful of government competition. Conversely, the first AEC chairman, David Lilienthal, opposed a monopoly by private business on the new resources.

The search for fusion power proceeded slowly. In 1959, the Texas Atomic

Research Foundation reported that no significant development had occurred.

Optimism remained high, and scientists from the General Atomic Division of

General Dynamics speculated that the major technological problems could be

overcome within five to ten years.^^ Even so, the foundation never achieved its

breakthrough, and by the early 1960s it had ended much of its investigation into

fusion power.

The efforts of the Texas Atomic Energy Foundation represent several of

the obstacles endemic to nuclear power in Texas. The presence of oil, natural

33 Ibid. ^ James J. Duderstadt, Nuclear Power: Technology on Trial (Ann Arbor: University of Michigan Press, 1979), p. 46.

3^ Texas Observer, December 14, 1973.

39 gas, and coal delayed any serious concerns about resource exhaustion.

Scientists recognized that a potential shortage was likely, but they believed it was years away. Such thinking led to a preference for long-term, profit-oriented research. The only large-scale acceptance of atomic energy-related applications was in the use of radioisotopes in oil fields. Technicians often used radioisotopes, a by-product of atomic reacfions, to test the flows through pipelines and to detect for weaknesses in pipe walls.^^ In 1960, Texas

possessed 454 of the 746 pipeline radiographers in the Southwest. The AEC feared that many of these radiographers lacked proper training or had

dangerously faulty equipment.^^

During most of the 1950s and 1960s, Texas utility companies made little

effort to construct a nuclear power plant. The lack of effort was somewhat

mirrored on a national basis. The federal government, discouraged by private

industry's reluctance to invest in nuclear energy, made a number of attempts to

involve and assist utility companies in such projects. The efforts, known from

1953 to 1958 as the Five-Year Program, included the support of small

experimental reactors in conjunction with regional power suppliers. In fact, the

first operational commercial atomic plant was a joint effort of the AEC and the

Duquesne Light Company of Pennsylvania.

^^Implications of Atomic Energy for Texas, pp. 52-53.

^'^Texas Observer, September 23, 1960.

40 The Shippingport, Pennsylvania, plant, as noted in the above discussion of the "Atoms to Peace" program, took a little over three years to complete. The costs of Shippingport, of which the AEC paid roughly 85%, were three times the cost of a conventional power plant. When its operating costs were factored in, the Shippingport atomic reactor supplied electrical power at nine times the expense of a fossil fuel plant.^^ The high cost is similar to subsequent early projects in Massachusetts, Nebraska, and Michigan. While the expense to generate power was excessive, Shippingport was a technical success, and it offered encouragement to others considering investing in atomic energy.

The AEC, in another effort to increase nuclear energy development, also began providing government subsidies to struggling nuclear power projects. By

1973, the agency was providing money to the nuclear industry at an annual cost of $250 million.39 By the mid-1960s, the federal government, in an effort to encourage the development of atomic energy, had decreased the AEC's control of the industry. In 1964, President Lyndon B. Johnson signed the Private

Ownership of Special Nuclear Materials Act. The new law allowed private industry to own fissionable fuel for nuclear reactors.

Perhaps the most controversial effort by the federal government to support nuclear power was the Price-Anderson Indemnity Act of 1957. The new legislation alleviated the difficulties for atomic power plants of finding insurance

3^ Ibid., December 14, 1973.

33 Ibid., March 2, 1973.

41 coverage from private sources. The possible liability of a nuclear plant, estimated by some insurance companies at up to $7 billion, was a strong deterrent against constructing a nuclear power plant. Insurers believed that third party payments to those injured in a nuclear accident would be crippling. The government, through the Joint Committee on Atomic Energy (JCAE), listened to the fears and responded with the Price-Anderson amendments to the Atomic

Energy Act.

At the time, 1957, there was very little objection to the legislation that assumed much of the liability of an explosion. The act provided up to $560 million in liability coverage for nuclear plants and, in the event of an accident, the federal government would pay seven cents on the dollar for damage caused by radioactive fallout or explosions.'*" In addition, the law rendered illegal any liability claims beyond the $560 million and made conditions difficult for an individual to file negligence suits against anyone connected with a possible accident."*^ Insurers estimated that it saved the utilities approximately $23 million in premiums. The Price-Anderson Act is a clear example of the federal government supporting private industry. The justification of the JCAE was that

'*° The Nuclear Almanac: Confronting the Atom in War and Peace (Reading, MA: Addison-Wesley Publishing Co., 1985), p. 71.

"^^ Mazuzan and Walker, Controlling the Atom: The Beginnings of Nuclear Regulation (Berkeley: University of California Press, 1984).

42 because atomic energy benefited the general public, the public should share in the financial risks.'*^

The new government support resulted in the construction of several additional nuclear power plants in the United States, including what are considered the first economically viable reactors. The success of General

Electric and Westinghouse Corporations at constructing relatively efficient nuclear energy plants led in the mid-1960s to a huge increase in construction orders. The two corporations offered complete, ready-to-operate nuclear power facilities at competitive prices. Called "turnkey plants" because of the ease by which local management could assume control, the plants became extremely popular to commercial power companies.'*^

Under a "turnkey," or "design-build" (as it was sometimes known), contract, the builder provided proprietary technology, architect and engineering sen/ices, and the actual construcfion of the facility under a single contract.'*'* The

idea behind the concept was the simplicity of the arrangement. The licensee

need only furnish the land and then take possession of the site upon completion

of construction. Nuclear reactors vendors saw the arrangement as an easy way

'*2 Joint Committee on Atomic Energy, Hearings on Development Grov\rth and the Sale of the Atomic Energy Industry (Washington, D.C.: U.S. Government Printing Office, 1955). ^3 John L Campbell, Collapse of an Industry: Nuclear Power and the Contradictions of U.S. Policy (Ithaca: Comell University Press, 1988), pp. 32-35.

^ Campbell, Collapse of an Industry, p. 88.

43 to convince utility companies during the 1960s to invest in nuclear power, particularly if they might be wary of the contributions needed to build a facility.

Unfortunately for the nuclear industry in general, "turnkey" plants, because of the cost to the vendors who often faced budget overruns and construction delays, were abandoned relatively quickly. In essence, by the 1970s, reactor vendors

had decided to let the utilities overcome such obstacles on their own."^

The end of the "turnkey" plants placed a greater degree of responsibility

on the utilities. Without the vendors willing to handle construction and licensing,

utilities were left with three options from which to choose. The utilities were now

responsible for building the actual plants and, as a result, the methods of design

and construction became very similar to that practiced in non-nuclear power

plants. The utility could design and construct the plan using its own engineers

and architects. But, because of the necessity of having a large number of

employees already familiar with nuclear operations, such a method was often

prohibitive.

Other possibilities were for the company to hire separate firms to perform

the engineering and construction. Or a single firm could do both tasks. The

advantages to the single Architect/Engineer-Constructor were that such a

method reduced the utility's manpower needs to oversee the project and it made

only one firm responsible to the utility. Other utilities argued in favor of the

separate engineer and constructor because two contractors provided an

^^ Ibid., p. 90.

44 additional level of review of each other's work. Despite the advantages and disadvantages of each, people in the nuclear industry considered all three methods perfectly acceptable.'*^

Even with the demise of turnkey plants, nuclear power became very popular. In the early 1970s, one of every two new power plants being constructed was nuclear. In 1973, there were twenty-five fully operational reactors in the United States though they only produced 3.4% of nation's electricity.'*'' Although nearly forty other projects were in various stages of development, there were signs that the trend would not continue.

Indications existed that the boom period for nuclear power was in danger.

In 1966, utilities placed orders for twenty new reactors, a number that matched the total ordered for the previous twelve years. The next year, 1967, saw the ordering frenzy continue with requests for thirty-one additional reactors. While the growth in orders was a positive for the nuclear industry, the pace was difficult to maintain. In 1968, the number of orders dropped to just sixteen new reactors.

Many utilities, even those that had already invested time and money in nuclear

power, reconsidered the use of nuclear energy. Forbes Magazine noted the sudden shift in views and cited tiwobasi c concerns. The first was that reactor

"^^ Nielsen-WursterPrudence Review, Vol. I, p. V-34, Steve Porter Papers, Box139, SWC, TTU.

^^ Department of Energy, "The History of Nuclear Power in the United States," (Washington, D.C.: G.P.O, 1996), p. 6.

45 companies were unable to maintain production schedules because of their limited numbers. The other concern was the rising costs of construction.'*^

The concerns noted by Forbes were valid. Only four companies capable of manufacturing a reactor existed: General Electric, Combustion Engineering,

Babcock & Wilcox, and Westinghouse. They simply could not meet the sudden surge in demand. Despite the production shortfall, they continued to accept new orders. The result of the supply problem was a delay in reactor delivery of between six months and a year.'*^ To a utility, even a few months delay often resulted in huge financial losses, sometimes in the millions of dollars. Combining the potential financial risk of having a reactor-less facility with the already staggering losses experienced by many utilities, the reluctance of utilities to continue to invest in nuclear power is understandable.

Others also began to notice that the nuclear industry was in trouble. An article in the December 23, 1968, issue of The Nation noted another problem for nuclear programs. "The fact is," the article stated, "that at the 1966-67 contract pace, nuclear power was going too far, too fast. The number of skilled, experienced nuclear power engineers is inadequate for such a rate of design, manufacture and checking."^" In 1969, the number of orders dropped to just seven. Nuclear advocates remained optimistic despite the warning signs and

"^ Forbes Magazine, November 15, 1968.

'*3 Ibid.

^° The Nation, December 23, 1968, p. 16.

46 growing concerns about increasing costs and lengthening plant lead times for plants to come on line.

Regardless of their hopes, supporters of nuclear power could not ignore the fact that the most important reason for nuclear power-inexpensive, reliable energy-had essentially disappeared. Utilities feared the rising costs, the long delays, the public criticism, and the safety concerns. Nuclear power, while not in danger of disappearing, was losing ground to conventional, fossil fuel plants.^^

Perhaps the best indicator of the future of nuclear power appeared in 1969 when the first plant cancellations began; a trend that continued into the 1990s. Despite the warning signs, nuclear energy was not dead and through the 1970s, companies continued to plan new nuclear reactors.

In Texas, also, utilities began to consider nuclear power. Noteworthy is the fact that the state's power companies began to investigate the possibility of constructing nuclear reactors at the same time that many other utilities across the country began to abandon atomic energy. Just considering the number of plants in construction across the United States, however, one can understand why several utilities in Texas wanted to join the nuclear industry. By this time, in the early 1970s, even the oil companies realized that nuclear power was becoming a major component of the energy business.

Through much of the 1960s and 1970s, scientists and state officials met annually in Austin at the University of Texas to discuss how nuclear power would

^^ Wall Street Journal, June 6, 1969.

47 affect the state. The symposiums included talks by engineers, geologists, and biologists. Many of the lectures referred to the growing energy crisis and how alternative energy sources needed to be developed to compensate for rising fossil fuel prices. The energy crisis, the result of the 1973 oil embargo by the

Organization of Petroleum Exporting Countries, caused fossil fuel prices to increase. The crisis affected both the domestic oil and energy industries and caused many people to reevaluate their position on nuclear energy.

Presenters at the 1973 annual atomic energy symposium in Austin possessed many of the same beliefs as those discussed in Dallas twenty years earlier. The shortage of oil and gas that had been predicted earlier in Dallas was occurring even as the energy crisis began to take hold. Texas remained the number one energy producing state in the country, and energy-related industries provided the greatest single source of incomes in the state. Insufficient oil and gas production jeopardized the atmosphere of plenty. Many economists in the state predicted a bleak future for the state's economy if nuclear power and other alternative energy sources developed further without a corresponding increase in oil and gas production.^^

Some experts in the field suggested that a simple expansion of oil and gas exploration and recovery would be enough to alleviate any potential crisis." The

^2 Symposium on the Implications of Nuclear Power in Texas (Austin: University of Texas, 1973), p. 5.

48 suggestion predated the effects of the oil embargo by over a year. When, in

October 1973, the Organization of Petroleum Exporting Countries enacted their embargo on the West, the move caught the Texas oil industry at a time when it was planning for expansion. The presenters at the March 1973 conference in

Austin, however, could not foresee the "oil shock" which seven months later

nearly paralyzed the country. They instead focused on the expansion of the oil

industry and the further development of nuclear power in preparation for the

eventual exhaustion of oil and gas reserves. Nuclear power, to most at the

symposium, remained a primarily long-term matter.

Following the October 1973 oil embargo, the federal government

envisioned nuclear power in somewhat different terms and placed great

emphasis on nuclear energy. The government in 1974 established a research

budget for nuclear energy of nearly $300 million.^'* The year also saw the

elimination of the Atomic Energy Commission and the creation of its

replacement, the Nuclear Regulatory Commission (NRC) under the Energy

Reorganization Act. The NRC had to deal with one of the greatest new

challenges to the nuclear industry-the implementation of the National

Environmental Protection Act of 1970. The Supreme Court, in a case involving

the Calvert Cliffs nuclear power plant in Maryland, ruled that environmental

impact studies of plant sites needed to be conducted to ensure that constmction

" Francis B. May, "The Energy Economy," Texas Business Review (September, 1972), p. 198.

^'* Texas Observer, March 2, 1973.

49 of plants did not violate the Environmental Protection Act.^^ The decision resulted in further delays for plants already being constructed and deterred many utility companies from developing atomic power.

Throughout the 1970s, the nuclear industry saw a change in the government's regulatory approach. The AEC had been a supporter of nuclear power and had assisted both financially and technically in the construction of new reactors. The Nuclear Regulatory Commission did not have quite the same relationship with utilities involved in nuclear projects. The NRC concerned itself more with the regulation of the industry than with its promotion. Although some authors have correctly noted that there was still a strong sense of unity between the NRC and utilities during licensing hearings against protesters, the fact remains that the amount of regulations produced by the NRC increased a hundred fold during the mid to late 1970s.^^

For the construction of new nuclear plants, the NRC issued literally thousands of new regulations and safety requirements.^'' Utilities found themselves spending millions of dollars and thousands of man-hours making sure that they met all of the new requirements. The effect the extra work had on

^^ Calvert Cliffs Coordinating Committee v. U.S. Atomic Energy Commission, U.S. District Court of Appeals, District of Columbia Circuit Court, 1971.

56 Campbell, p. 112.

^^ Peter Stoler, Decline and Fail: The Ailing Nuclear Power Industry (New York: Dodd & Mead, 1985).

50 the nuclear industry is easy to see. Construction schedules fell behind, costs increased, and many utilities either abandoned existing projects or reconsidered using nuclear power altogether. Nuclear projects continued through the 1970s, spending most of their time attempting to deal with the changing regulatory environment.

The nuclear industry, however, found that its biggest obstacle was just ahead. The accident at the Three Mile Island nuclear power plant in

Pennsylvania on March 29, 1979, altered the future of nuclear power in the

United States and in Texas. The release of a cloud of radioactive gas from the

Harrisburg, Pennsylvania, facility created a wave of hysteria against nuclear

power. Fears of a "China Syndrome" or radioactive meltdown, as noted in

Chapter I, led to anti-nuclear demonstrations throughout the country.

The problems at Three Mile Island were both simple and complex: a

pressure-relief valve remained stuck in the open position. The valve released

enough coolant water to cause the reactor core to heat up. It was a minor

incident and the emergency high-pressure pumps replaced the water.

Unfortunately, inexperienced and inadequately trained technicians misread the

instruments. Through a series of errors, they concluded that there was too much

coolant water. The operators turned off the emergency pumps and released

more water. The core, uncovered by the coolant water, was damaged and

250,000 gallons of radioactive water spilled out on to the containment-building

51 fioor. To prevent an explosion, the plant released radioactive steam into the air. Three days later, a bubble of hydrogen gas formed inside the reactor vessel.

Many scientists, including the NRC chairman feared that the hydrogen would explode. Engineers from Babcock and Wilcox, the makers of the reactor, disagreed and correctly concluded that there was no danger. The engineers shut down the reactor and the danger dissipated.

Even though the Three Mile Island incident was over without serious damage, the public relations fallout over the near disaster continued for several years. At every nuclear facility in Texas and in the rest of the country, protesters picketed against nuclear power. Although the protests did not result in the termination of any projects already under construction, the demonstrators and the growing feelings against nuclear power by power companies in a general sense destroyed any plans for new nuclear reactors in Texas. Similar reaction occurred in the rest of the nation and no new sites have been planned since

1980. One of the reasons for the lack of new construction was the hardening of public opinion against nuclear power. After the near catastrophe, the government increased its regulations and power industry officials regarded the new guidelines as insurmountable.

Because of Three Mile Island and other pre-existing problems, civilian nuclear power ceased to expand in the late 1970s. Although a few more plants came online, utilities after 1978 did not file any new applications for construction

^^ "A Nuclear Nightmare," Time, April 9, 1979.

52 permits. While Three Mile Island can be blamed partially for the problems of the nuclear power industry, the trends already present throughout most of the 1970s illustrate larger issues. The numbers of applications for construction permits declined after 1970. One of the reasons for the lack of new applications was the growing length of the application process. In the 1950s, a utility could expect a ten-month turn around on its construction permit. By the late 1970s, nearly forty months were necessary for the NRC to process an application.^^ The number of plant cancellations also increased during the decade. Companies cancelled nine plants betiween 1975 and 1978. Certainly the concerns raised by Three Mile

Island were not at fault for the cancellations occurring prior to the events at the facility.

At the time of the accident at Three Mile Island, the United States possessed seventy-two reactors capable of producing 12% of the nation's power.

As more plants came on line during the 1980s, nuclear energy surpassed natural gas as a source of electricity. By 1986, as more of the projects came on-line, the number of nuclear power plants reached one hundred. The maximum number of nuclear plants occurred, as indicated in Chapter I, in 1991 when the United

States contained 111 reactors. They produced over 22% of the nation's energy.

The number, since 1991, has declined as the older plants are shut down. The first nuclear plants, built during the early 1960s, did not operate past 1970.

Safety issues and inefficiency led to their shutdown.

^3 Campbell, Collapse of an Industry, p. 41.

53 The most significant event in the decision to close many nuclear plants was the accident at Three Mile Island. After the near disaster, power companies responded to public pressure (and often their own inability to make nuclear energy profitable) and closed many marginal reactors. The end of the energy crisis and the return to low oil prices further alleviated the demand for development of nuclear energy. In many ways, then, the events of March 1979 represented the beginning of a step back in the implementation of alternative energy.

One may be incorrect, however, in isolating Three Mile Island as the lone incident that ruined nuclear power. The nuclear industry, even after Three Mile

Island, experienced several more spectacular mishaps, although of a financial nature rather than a safety one. Through the early 1980s, some of the most ambitious nuclear power programs turned into financial disasters costing investors billions of dollars.

One of the largest was the Washington Public Power Supply System

(WPPSS). Twenty-three utilities in the Pacific Northwest designed the WPPSS to provide power for the region. The project included dams, fossil fuel power plants, and three nuclear power plants. The program had barely begun when other utilities joined. Quickly, WPPSS grew to 115 utilities in eight western states. To meet its financial requirements, WPPSS passed a series of bond issues but the money raised did not solve other problems. Construction costs rose dramatically, public opposition strengthened, and delays occurred. Worst of

54 all, at least from the utilities' point of view, was the decrease in the demand for electricity-the very reason for WPPSS evaporated and investors lost billions.

Although WPPSS was an extreme example of the problems facing the nuclear industry, similar events on a smaller scale were common.

Projects like the Shoreham Plant on Long Island generated waves of controversy. Thousands of protesters picketed against the tremendous cost overtuns, the lengthy delays, and the concerns about safety. Even though the plant construction reached completion, the utility that owned Shoreham never received a license and eventually abandoned the facility despite losing billions in the project. Amazingly, despite the rise in electric costs to cover the debacle, most of the public approved the closing.

Shoreham was not the only plant abandoned after significant construction milestones were reached.^" During the 1980s, utilities across the country ended nuclear projects at an alarming rate. For many utilities, it was more cost- effective, by this point, to cease nuclear projects than to deal with lengthy lawsuits and the whole licensing process.

In summary, after World War II, the power of the atom offered the promise of clean and cheap energy to the United States. While many states throughout the country investigated nuclear energy and commercial power plants, Texas remained confident in its abundance of fossil fuels. The reserves of oil, natural

^° Joan Aron, License to Kill?: The Nuclear Regulatory Commission and the Shoreham Power Plant (Pittsburgh: University of Pittsburgh Press, 1997).

55 gas, and coal created an atmosphere of security in the state. There were some fears from the utility companies towards government-sponsored atomic energy power plants, but, for the most part, in the opinions of state officials and businessmen any potential energy crisis existed only in the distant future.

Without a foreseeable danger of energy shortages, the state's power companies pursued haphazardly only long-term research programs. Often, their investigations did not even involve nuclear fission and instead focused on fusion power. Fusion power became attractive because it lacked the government controls and the possibility of profit was much greater. The choice to research fusion power further delayed any significant nuclear projects in Texas until an

increase in federal government subsidies occurred in the 1960s.

Once scientists and engineers proved the feasibility of nuclear power with

the success of the first commercial reactor, a number of utilities in the Northeast

investigated atomic power. Although only a few companies went so far as to

construct reactors, the success of early projects and the pro-nuclear propaganda

put forth by the Atomic Energy Commission caused a strong increase in the

numbers of reactors being considered throughout the 1960s. The growth of

interest showed promise for the nuclear industry but widespread construction of

nuclear plants remained impossible until the expense of the plants could be

overcome.

The Price Anderson Act and the success in the late 1960s of several

nuclear projects caused a building boom for nuclear reactors. Although a

56 number of projects began to appear in the nuclear industry, orders continued to be placed for new facilities. Texas was not alone in rushing to join the nuclear age. In the early 1970s, Texas utilities began construction of tiwo nuclear plants.

Unfortunately, the beginning of the construction of the nuclear plants in Texas coincided with the onset of the decline of the nuclear industry. By the late 1970s, the industry faced several large obstacles: soaring prices, increasing amounts of regulations, and growing public opposition.

The Three Mile Island Incident, as much a symptom as it was a cause of the decline of the nuclear industry, provides a watershed mark for the history of

nuclear power. It was not the sole reason for the death of the industry, however,

nor was it the beginning of the end. It was a dramatic event that raised

awareness of the problems that pre-existed with nuclear energy. Although it

certainly caused many people to reconsider whether the risks associated with

nuclear power were justified, it did not spell the doom of the industry. Nuclear

power continued to struggle on past Three Mile Island but other mishaps

occurred. The result was that after 1980, utilities ordered no more new projects

and many existing projects were cancelled. The effects that such events had on

Texas can be seen by examining the two nuclear endeavors in Texas: the

Comanche Peak and South Texas projects.

57 CHAPTER III

THE DECISION TO BUILD THE COMANCHE

PEAK NUCLEAR POWER STATION

Glen Rose, Texas, is a small agricultural and ranching community located approximately eighty miles southwest of Fort Worth. In the early 1970s, because of its location and the geography associated with the area, a utility chose the town for Texas's first nuclear power project. The principal owner of the project,

Texas Utilities, Inc. (TU) made the decision to construct the facility without consulting the residents of the community and with little realization of the potential problems that a nuclear project might entail. At the time of the decision to construct a nuclear reactor, many people believed nuclear power to be the answer to the energy demands of the region and the nation. Nearly one hundred different utilities around the country were in the process of either building or planning nuclear generating stations and there was little public opposition or reason to doubt the decision to implement nuclear power.

Upon hearing of the project, known as the Comanche Peak Steam Electric

Station (CPSES), many people in the greater Dallas-Fort Worth area reacted with little feeling either in support or opposition to the project. Nuclear reactors had been around for nearly twenty years and there was little fear of a nuclear disaster in many people's minds. In Glen Rose, the town nearest the proposed site of the reactor, little protest against the project existed. In fact, most of the inhabitants.

58 reasons but failed to consider many of the problems associated with nuclear power.

The history of the Comanche Peak nuclear reactor station began in the late 1960s when Texas Utilities management personnel became concerned about the rapid growth in the company's load rate and peak demand capacity.

Economic and population growth demanded an increasing energy supply that TU was not sure how it would meet. Between 1965 and 1970, peak demand had increased by more than 65%. The annual growth load rate rose in the period about 11 %, nearly 1/3 higher than the national average.2 Utilities around the country rushed to find ways to meet the energy demands.

In 1967, the TU operating companies, Dallas Power & Light (DP&L),

Texas Energy Services Company (TESCO), and Texas Power & Light (TP&L), increased their individual plant construction programs and discussed several joint operations to meet energy demands. The subsidiary companies possessed a great deal of experience in the power production industry. While Texas Utilities

Company was incorporated under the laws of the State of Texas in 1945 and has perpetual existence under the provisions of the Texas Business Corporation Act,

DP&L, TESCO, and TP&L had all been operating in Texas for over 100 years, since the late 1880s.

2 Texas Utilities Company, Texas Utilities Company 1967 Annual Report, p. 12.

60 In addition, the operating company president of TU, reacting to the rate of demand growth, pushed for even further increases in generating capacity. He chose, as one solution, to support the exploration of new technologies. TU management advanced the schedule of generating unit construction across all of the companies and investigated the implementation of significantly larger units than previously used. Such steps were reactions both to the already realized growth in the 1960s and to expected continued growth in the 1970s. Without a way to increase power production by the mid-1960s, experts in the energy business predicted a drastic shortfall in energy production.3

In response to the energy demand, TU accelerated its building program.

In 1968, the company announced the construction of Tradinghouse Creek No. 2.

In 1969, it expanded its construction program even further with Permian Basin

No. 6 and Lake Hubbard No. 2. The three new plants relied on natural gas as the primary fuel. The decision to use natural gas was controversial within the utility. One of the fears of many executives involved in energy production was that the price of natural gas was growing at a rate that would make it cost- prohibitive. Such a concern led to a push for alternatives to natural gas as a fuel.

One of the joint operations discussed at TU was the construction of a lignite fueled power plant. TU was already one of the few power companies in the Southwest to have some experience with lignite. In conjunction with ALCOA,

TU had been operating the Sandow unit near Rockdale, Texas. Sandow, a

3 Nuclear News, May 1968, p. 33.

61 lignite mine and generating facility owned by ALCOA, had provided power since

1954 to several nearby ALCOA facilities. Although owned by ALCOA, TU operated the power plant through a subsidiary. In addition, TU had acquired large lignite reserves throughout Texas. The purchase of the coal reserves, made during the 1950s and 1960s, was in anticipation of future needs."*

Despite its vast lignite holdings, TU did not immediately construct a lignite power plant. In the late 1960s, a rapid increase in the price of natural gas forced the exploration of alternative sources. In 1967, Texas Utilities approved the construction of the first new lignite plant, the Big Brown Electric Station (initially known as the Brown Creek Electric Station). The facility was not forecasted to begin operation until 1971 but TU hoped Big Brown would be completed before a potential energy shortfall occurred. The project was the first large-scale joint operation of TU subsidiaries.

In the late 1960s, TU owned a number of smaller companies that managed the actual production of power. The decision to incorporate the new method of joint construction by a number of power companies resulted from several studies that indicated that a plant sized for the full TU system would provide maximum economic benefit.^ Thus, instead of several smaller plants, TU embraced the idea of economy of scale. The decision was very similar to that

^ Texas Utilities Company, Texas Utilities Company 1969 Annual Report, p. 25.

^ Texas Utilities Company 1967 Annual Report, p. 12.

62 later made in concerning the size of the Comanche Peak nuclear station and the related decision to bring in additional outside minority owners. To implement the idea of jointiy owned and operated complex generafing units, TU created an

Administrative Committee made up of representatives from all of TU's member ufilities.^

As with lignite, TU was no stranger to nuclear fuel and began examining it as potential energy source. Since the early 1950s and the "Atoms for Peace" program of President Dwight D. Eisenhower, TU had funded various research programs to develop the technology. Individuals within the company also worked to keep abreast of industry publications, new developments in the field, and

Atomic Energy Commission (AEC) programs. In 1955, only one year after the

initial "Atoms for Peace" push, TU established an Atomic Energy Committee with the purpose of investigating the possible use of nuclear energy as a fuel for the system. Furthermore, TU hoped the committee would serve as a representative to the AEC and a point of contact for other energy groups. Together with other utilities within the state, TU helped fund both the Texas Atomic Energy Research

Foundation and additional efforts on nuclear reactor design. In an effort to increase knowledge sharing and efficiency, most of the funding was not done independently but through various industry associations such as the Electric

Power Research Institute.''

Ibid.

63 The leading TU figure during the early nuclear research phase was R. W.

Caudle, Manager of Mechanical Engineering for Texas Power & Light. Caudle

provided the main impetus for developing nuclear energy within TU and kept

other company officials well advised as to the latest advances in nuclear energy.

One step in the process was to visit other nuclear facilities, such as his trip in

mid-1970 to the nuclear projects of the Virginia Electric Power Company and the

Carolina Power and Light Company. Although not among the leading nuclear

energy developers on the East Coast, both companies possessed ambitious

construction programs at the time and were eager to showpiece their projects.

Caudle's post-trip report contained both an overall approval for nuclear

energy in general and specific recommendations for bringing TU into the nuclear

industry.^ His goal was not only to construct a plan but also to begin operation in

1980. The report contained the first recorded instance at TU of a targeted

completion date for a nuclear plant. Caudle's recommendations also included

the selection of key engineering personnel, the implementation of a college level

training program in nuclear technology, and the contacting of other companies to

study their nuclear operations plus problems they had encountered. Projected

cost for the project at this point was $779 million.^

7 Nielsen-Wurster Prudence Review, Vol. I, p. V-8, Steve Porter Papers (SPP), Box 139, Southwest Collection (SWC), Texas Tech University (TTU).

^ Nielsen-Wurster Prudence Review, Vol. I, p. V-16.

9 Dallas Morning News, August 21, 1972.

64 Acting upon Caudle's report, TU began asking for demonstrations about nuclear energy from the main industries involved in reactor production and plant construction. Betiween November 1970 and January 1971, Gulf General

Atomics, Stone & Webster, and the Nuclear Utility Services (NUS) all made presentations to TU officials and engineers. Gulf General, a noted reactor vendor, and Stone & Webster, a major plant architect/engineer and constructor, both offered programs on nuclear principles and power project planning.^° These early presentations were designed primarily to introduce TU management to the basics of nuclear energy and to the scope of the task, one well beyond the normal effort required of non-nuclear energy projects. In addition, NUS, one of the premier nuclear consulting firms in the industry, offered to provide an initial report looking at all of the preparation and training TU would need before beginning a nuclear project.^^

Later, when problems at the plant developed, the decision to build a nuclear power facility received a great deal of criticism. Some of the interveners and citizens' groups in the various legal battles associated with the plant blamed

TU for ignoring safety and cost factors in choosing nuclear fuel. In many ways, the critics profited from hindsight not available to TU management in the early

1970s. In its defense, TU, like all other Texas utilities at the time, needed to

^° Nielsen-Wurster Prudence Review, Vol. I, p. V-8.

^^ NUS Corporation Letter, Proposal to Prepare a "Planning for Nuclear Power" Report, January 20, 1971, Steve Porter Papers, Box 45, Southwest Collection, Texas Tech University.

65 diversify and expand its fuel sources to meet the increasing load requirements.

The federal government, through the Atomic Energy Committee, actively promoted nuclear power as a long-term substitute for lignite and natural gas availability.

TU's corporate culture was another factor that contributed to the company's decision to proceed with a nuclear project. Prior to the 1970s, TU possessed a history of success. The company was confident and its managers felt capable of completing any undertaking. Other utilities and investors on Wall

Street shared the perception that TU was a strong utility and capably managed.

The bond ratings and better than average stock earnings over the previous twenty-five years refiected the belief ^2

In addition, the regulatory environment in Texas reinforced the decision to proceed with a previously untried technology. TU's power system was intrastate and therefore not subject to federal regulation. Even within Texas, little regulation existed. Prior to the establishment of the Public Utility Commission in

1976, the state took few actions to govern electric utilities. Thus, when it decided to construct a nuclear power plant, TU had no previous experience with a heavily regulated business. The escalation of regulatory oversight that followed caught

^2 Joe B. George Interview, February 22, 1990; L.F. Fikar Interview, February 2, 1990, SPP, Box 38, SWC, TTU.

66 the utility and its contemporaries elsewhere ill-prepared to deal with the new requirements for design, construction, and testing.''3

Thus, TU based its decision to go fonward with nuclear energy on the best available information and after nearly twenty years of safe operation of nuclear power. The growing environmental movement also strengthened TU's decision to use nuclear power. The passage of the National Environmental Policy Act in

1969 followed by the Clean Air Act in 1970 led TU to believe correctiy that the

Environmental Protection Agency (EPA) would soon begin implementing a number of new regulations on utilities. A primary concern was that the EPA would soon require utilities to install elaborate and expensive air scrubbers on all lignite units. The utility was correct and the EPA issued new requirements in

December 1974.'"*

Meanwhile, within TU, the Operating and Planning Committee in January of 1971 considered plans for jointly owned units. The meeting notes contain references to having units completed in each of the years 1980, 1981, and 1982.

The schedule was ambitious but the committee members felt the goals were obtainable. The Operating and Planning Committee of TU also decided to place the projects under the control of the Administrative Committee, the same one that controlled joint projects such as Big Brown. The Administrative Committee first became involved in nuclear planning on May 5, 1971, when it reviewed the

^3 Ibid.

^'* Nielsen-Wurster Prudence Review, Vol. I, p. V-3.

67 previous efforts of Caudle and discussed the creation of a group to handle initial plant organization. The result was a nuclear group formed in June 1971 with the

TU Design and Construction Department. The intended purposes of the group were to learn the technology involved in nuclear energy, to develop TU's capability to design and construct nuclear plants, and to proceed as rapidly as possible with planning towards an operable nuclear unit.''^

As a newcomer, TU, like many utilifies considering the nuclear option, was very much at the mercy of the advice it received from outside companies and the

Atomic Energy Commission. Even though nuclear power had been around since the start of Shippingport in 1954, nuclear energy was still considered to be very much a "new" technology. As with any rapidly growing technology, the number of experts or experienced technicians and engineers was limited. TU, as a result, had to rely on outsiders to supply needed technical and engineering advice, thus limiting the direct control the utility could have over the project. The problem later hindered both TU and Houston Lighting & Power Company (principal owners of the other nuclear project in the state) as well as most other utilities seeking to enter into nuclear energy.

TU was aware of the problem from the beginning but chose to select its management talent from within its own subsidiaries. The decision refiected a corporate preference that had been pervasive since the late 1960s. The

^^Administrative Committee Minutes, May 12,1971, SPP, Box 3, SWC, TTU.

68 company's experiences with lignite mining and other plant programs were successful and TU executives saw no reason to hire outside management talent to oversee the nuclear program. Over the previous tiwentyyears , TU had also pursued a policy of rotating talented managers through different assignments.

The policy hoped to broaden the individual and provide managers with a wide variety of perspectives. Unfortunately, the policy did not coincide with nuclear power's need for practical knowledge and experience. In fact, the rotation of managers continued during the Comanche Peak project construction and often led to further confusion and delays.^^

In the early stage of its nuclear development program, TU's Administrative

Committee completed a schedule and budget for the group's activities and major preplanning decisions. The committee acted with some dispatch in this period because of concerns about the growing energy demand. Caudle recommended that no time be wasted in pursuing nuclear energy and that decisions to implement building design be made immediately. In May 1971, J. L. Forbis, the

Vice-President of Design and Construction presented to the Administrative

Committee a copy of his memorandum, one that he had previously sent to TU

Services President L. J. Blaize. The memorandum, titled "Development of

Capability to Design and Construct Nuclear Plants," was basically a preliminary schedule for constructing a nuclear unit somewhere in the lOOOMw range. It

^^ Nielsen-Wurster Prudence Review, Vol. I, p. VI-74.

69 included a number of "milestones" that needed to be met to complete construction by January 1, 1980.''''

Part of the preliminary schedule - and one of the milestones necessary for project completion - covered details about the site selection process. A good plant site was a critical element of the project and required contracting with several outside companies. According to the schedule, detailed evaluations of two preferred sites would be completed by March 1, 1973, with a proposed budget of $220,000.''^ A first consideration for the site was the availability of water. Unlike the better-known reactors that used cooling towers, the Comanche

Peak station would utilize a cooling reservoir, a decision that relied on the availability of river basins in which to construct a reservoir.

TU looked either for pre-existing reservoirs or for areas in which reservoirs could be constructed. The criteria limited site selection to the major river basins near Dallas-Ft. Worth: Red River, Sabine River, Trinity River, Brazos River, and the Colorado River. Relatively quickly, site selection personnel eliminated the other choices in favor of the Brazos River basin. The Brazos River offered such advantages as the availability of water on a consistent basis, close proximity to the major population centers, and a comparatively low population concentration

^'' Memo from J.L. Forbis, TU Services VP of Design and Construction to Administrative Committee, titled "Development of Capability to Design and Construct Nuclear Plants, May 14, 1971, SPP, Box 24, SWC, TTU.

^^Ibid.

70 in the immediate area. Because of the high cost of erecting transmission lines, the proximity to the major DFW load center was especially important.^^

Along the Brazos River, analysis of possible areas revealed tifl/o suitable locations: Squaw Creek and Paluxy River. On August 20, 1971, TU contracted with Stone & Webster Co. (SWEC) to perform preliminary investigations of the two sites. The goal of the study was to examine the locations' feasibility,

possible environmental impact of development, and the cost differential betiween constructions at the tsNO locations. After examining each site based on these

considerations, SWEC, in February 1972, presented a report recommending

Squaw Creek because it had a less regular stream flow and would affect a less

productive environment. Thus, construction of a facility at Squaw Creek would

require a smaller dam and spillway structure. In addition, the location had better

rail and highway access. The estimated savings in selecting Squaw Creek over

Paluxy River was $17.6 million. Based on the SWEC recommendation. Caudle

and other TU officials voted on February 11, 1972, to seek licensing for

construction at Squaw Creek.2°

Arrangements to acquire property had already been discussed at a

meeting on January 6, 1972. Texas Electric Service Company (TESCO) agreed

^9 Nielsen-Wurster Prudence Review, Vol. I, p. V-25.

2° U.S. Nuclear Regulatory Commission, Office of Nuclear Reactor Regulation, Final Environmental Statement Related to the Operation of Comanche Peak Steam Electric Station, Units 1 and 2, docket nos. 50-445 and 50.446: Texas Utilities Generating Company.

71 to acquire land for Site A (the Comanche Peak site) if Texas Power & Light agreed to acquire land for Site B (a possible future project very near to the

Comanche Peak location that never progressed beyond the early planning stages). The Squaw Creek site initially consisted of tiwenty deeded tracts of land totaling approximately six thousand acres. The initial cost estimate of the land to be purchased was $2.5 million at an average of $400 per acre.2''

Texas Utilities already possessed a well-established process of securing land for power plants. The policy stated that land would be acquired based on the best judgment of a trustee (representative appointed by the company) and

his agents and in accordance with the appraised value of the land. Reputable

realtors from the local area would conduct the appraisal and produce an

estimated cost to the company and the Trustee. The TU companies hired

attorney J. C. Wessler to be the trustee for the CPSES property. A study of

recent land sales revealed that similar land within Somervell County had sold for

betiween $175 and $225 an acre.22 The price was consistent with the current

market and was used as a basis for negotiation by the trustee.

The land acquisition policy also stated that once he had negofiated for

purchase of a tract of land, Wessler would submit a cost estimate to the

companies for approval. For land parcels that remained unobtainable, either

2'' Minutes of the Administrative Committee, January 6, 1972, SPP, Box 3, SWC, TTU. 22 Nielsen-Wurster Prudence Review, Vol. I, p. V-28.

72 because the owner refused to sell or the price was unreasonable, the

Administrative Committee would discuss whether to proceed with condemnation proceedings. Under the law, condemnation proceedings allowed a utility to acquire land regardless of the owner's wishes if the utility could prove it was for the public good. According to the initial schedule, all land purchase would be completed by March 1973.23

Despite the already defined policy for land acquisition, TU almost immediately ran into several delays. Beginning in late January 1972, TU attempted to acquire the J. L. Stufflebeam property, the largest of the land tracts to be used for the CPSES site. Stufflebeam responded to an initial offer for his land by saying, "the land was not for sale at any price at this time."2'* For the next four months, TESCO agents persistently attempted to negotiate with

Stufflebeam, but he refused to sell. The Administrative Committee was concerned about the delay because there was an urgent need to begin soil

investigation and preliminary mapping in order to start work on the Preliminary

Safety Report, a document that needed to be completed in order to receive a

Construction Permit. On January 26, 1972, TU contracted with Dames & Moore to prepare an Environmental Impact Report.2^ The report was a necessary part

23 Nielsen-Wurster Prudence Review, Vol. I, p. V-28.

2'* Memo from E.D. Scarth to L.J. Blazie, Febmary 1, 1972, SPP, Box 3, SWC, TTU. 25 Nielsen-Wurster Prudence Review, Vol. I, p. V-29.

73 of the application for a construction permit and one that would be heavily scrutinized by several government agencies.

The committee had hoped to begin the environment study activities in

March 1972 and told Wessler that the delay in acquiring Stufflebeam's property was "seriously retarding work on the Environmental Report, NSSS Evaluation and design of the dam."2^ Some talk about beginning condemnation proceedings occurred, but then, after further negotiations, Stufflebeam agreed to sell his land.

On August 2, 1972, Wessler made the purchase from Stufflebeam and, thus, opened the way for TESCO to begin acquiring the remaining tracts.

Unfortunately, early studies of the properties convinced Caudle that more land than originally anticipated would be needed.2^

The discrepancy was partially in response to new AEC standards for increased exclusion zones around nuclear sites. In addition. Caudle informed TU officials that the additional land was considerably more expensive than that previously purchased. The actual land amount purchased by TESCO was 7,335 acres, 1,335 more than the original estimate. The last tract, acquired in January

1975, put the total purchase price at $5.5 million rather than the original estimate of $2.5 million.2^ jy and its subsidiaries did not realize that the cost overrun and

26 Administrative Committee Meeting, May 17, 1972, SPP, Box 3, SWC, TTU. 2^ Memo from Caudle to Forbis, May 14, 1973, Titled "CPSES Estimated Project Cost," SPP, Box 3, SWC, TTU.

74 delay during the land acquisition phase set dangerous precedents for the entire

project.

The next step in the construction of Comanche Peak was the selection of

design and engineering firms. The nuclear industry in the 1970s had abandoned

the concept of "turnkey" construction as discussed in Chapter II. The end of the

"turnkey" plants placed a greater degree of responsibility on the utilities. With the

reactor vendors no longer building the actual plants, the method of design and

construction became very similar to that practiced in non-nuclear power plants.

To help TU make its decision on how to approach hiring an

architect/engineer (A/E), Nuclear Utility Services undertook an evaluation of

potential A/E firms. Among those NUS and TU considered in 1971 were some of

the leading companies in the nuclear energy industry: Bechtel Corporation, Gibbs

& Hill, Ebasco, Stone & Webster, Sargent & Lundy, United Engineers and

Constructors, and a Brown & Root/NUS joint venture.29 Brown & Root and NUS

were in the process of becoming part of the same corporation in the early 1970s

although the Justice Department eventually blocked the acquisition of NUS by

Brown & Root's mother company.

Officials from TU visited the main offices of each of the prospective

companies as well as plant construction sites at which the architect/engineers

were taking part. Interviews with the management personnel of each company to

2^ Nielsen-Wurster Prudence Review, Vol. I, p. V-30.

23 Nuclear Utility Services Report, Management Summary of Planning for Nuclear Power, August 1971, pp. 4-5, SPP, Box 9, SWC, TTU.

75 gauge their enthusiasm and willingness to devote their resources to CPSES were also made. The last part of the early selection process was a written proposal submitted by those firms interested in bidding for the job. For unknown reasons.

United Engineers and Constructors as well as Sargent & Lundy did not submit a written proposal.3° Stone & Webster responded to the bid invitation but appeared unwilling to perform only the A/E services. The withdrawal of Stone & Webster eliminated one potential problem. Many managers with TU were hesitant to employ a company that preferred union labor. The only one of the bidders that consistently worked with unions was Stone & Webster and its withdrawal

eliminated any potential problems that might relate to union labor.

Quite a bit of opposition to hiring the Brown & Root/NUS joint venture also

existed. In an office memorandum from February 1972, the TESCO Vice-

President of Operations told the President of TESCO that "We should not accept

Brown & Root as the Architect-Engineer for our first nuclear plant. First of all,

they have not been the Architect-Engineer for a nuclear plant and even though

they have teamed with Nuclear Utility Services (NUS) we would be well advised

to employ a more experienced firm-particularly if the plant uses the HTGH which

is also new."3^ HTGH referred to a new experimental turbine that had yet to be

implemented in any existing nuclear plant.

30 Ibid. 3^ Memo from TESCO Vice-President to the CEO of TU, Febmary 1972, SPP, Box 3, SWC, TTU.

76 At this point in early 1972, Gibbs & Hill and Bechtel seemed to be the preferred contractors. They possessed more experience than Ebasco and both were willing to perform only the Architect-Engineer services. Ebasco, on the other hand, had expressed more of an interest in performing both the A-E and the constructor services. Lastly, Gibbs & Hill possessed the most available resources to commit to the project. Both Ebasco and Bechtel, involved concurrently with thirteen other projects, had extensive backlogs of work and could not appropriate their most experienced team members to the Comanche

Peak project.32 Gibbs & Hill, however, was nearing completion of the Fort

Calhoun Unit 1 nuclear facility in Nebraska and offered the team as its personnel for CPSES.

R. W. Caudle, in a January 1972 meeting of the Advisory Committee,

recommended that Gibbs & Hill perform the reactor supplier evaluation. Gibbs &

Hill, by this point in time, had built or had under construction fifteen nuclear

facilities. Later, in a lawsuit brought against Texas Utilities by the other

participants in the project, even witnesses who were out to prove

mismanagement by TU admitted that Gibbs & Hill had significant experience and

that its hiring was a prudent decision.33 j^g committee, on August 15, 1972,

32 Texas Utilities, History of Comanche Peak (1991) p. 7, SPP, Box 130, SWC, TTU.

33 Reply Brief of Applicant Texas Utilities Electric Company, Docket No. 9300, Application of Texas Utilities Electric Company for Authority to Change Rates, Feb. 25, 1991.

77 endorsed the suggestion to employ Gibbs & Hill as the architect-engineer.

Likewise, the committee selected of Gibbs & Hill to perform preliminary engineering services. The next day, August 16, 1972, TU made the first public announcement of its decision to build CPSES. The primary reason, as stated in company records, for the selection of Gibbs & Hill was that it appeared most willing to work under the contract wanted by Texas Utilities.3^

Once the hiring of Gibbs & Hill took place, work progressed quickly. From the middle of January, Gibbs & Hill completed numerous early planning services for TU. Provided that they performed these to the satisfaction of TU, Gibbs & Hill would be retained as the architect-engineer of the entire project. The early services completed by Gibbs & Hill included the nuclear steam system (NSSS) bid specification preparation, the evaluation of NSSS vendors, part of the site evaluation and preparation, and a thermal study to determine the optimum plant location on the reservoir.35

The next step in the Comanche Peak project was to evaluate and select the construction contractor. TU's stated goal was to engage a single constructor who would be responsible for all field construction. In addition, the constructor needed to provide assistance to the Architect/Engineer in the development of engineering and design. Experience in the construction of large central station facilities, preference to operating in an open or merit shop environment, and the

3^ Ibid.

35 Nielsen-Wurster Prudence Review, Vol. I, p. V-41.

78 willingness to devote "first-team" resources to the project were important considerations. Texas Utilities preferred an open shop because it anticipated cost savings using non-union labor. The belief was based upon studies conducted on lignite and gas fired plants constructed by TU betiween 1968 and

1972 in which the company believed it received 20% to 30% savings due to open shop construction.36

Meeting the criteria were three domestic constructors. Between 1971 and

1972, Brown & Root of Houston, Texas; the Zachry Company of San Antonio,

Texas; and the Daniel Construction Company of Greenville, North Carolina,

expressed their interest in the project. J. L. Forbis, the head of the Advisory

Committee, recommended in November 1972 that requests for proposals be

made to the three potential constructors. Each responded with a proposal. In

the subsequent debate, the committee eliminated Daniel from consideration

because of its heavy workload and its unwillingness to accept any of the project

risk. Brown & Root and Zachry, on the other hand, were both willing to accept a

contract in which the constructor would assume some of the potential risk for the

project. TU officials were also more comfortable with both firms because of

previous working relationships. A request for a detailed proposal was sent on

November 6, 1972, to both Brown & Root and Zachry.3^

36 CPSES Restrospective Audit, J.L. Forbis, Dated February 8, 1985, p. 3, SPP, Box 19, SWC, TTU.

3^ Nielsen-Wurster Prudence Review, Vol. I, p. V-48.

79 The request stipulated the proposal provide for a cost plus fee form of payment. In this form of contract, the base fee was subject to increase or decrease based on the actual man-hours expended versus a stipulated base man-hour target. Adjustments could also be made based on variations in man- hour rates due to infiation. Within a month. Brown & Root and Zachry submitted proposals meeting the requirement of TU. Both utilities, with the permission of

TU, also presented alternate proposals slightly different than that requested by yy_38

After reviewing the proposals, the Advisory Committee concluded that

Brown & Root's alternate proposal "provided a minimum fee with labor performance incentive advantage and is lower than the engineer's estimate. This proposal also takes a significant edge over the other bidder."3^ Perhaps the greatest difference between the two bids was the significantly lower amount

presented by Brown & Root. The result was the issuance of a Letter of Intent for

Brown & Root to provide constructor services.

The decision to use Brown & Root, in the face of later problems, received

lots of criticism as cost overruns, construction setbacks, and labor difficulties

became noteworthy. At the time, however. Brown & Root was one of the most

respected large constructor and engineering firms in the world and had been

38 Ibid. 33 Notes from AC meeting, J.L. Forbis, January 1973, SPP, Box 3, SWC, TTU.

80 ranked in the top five in the three years prior to its selection for the Comanche

Peak project. Also, Brown & Root had worked with TU on seven non-nuclear power plants and had an amiable working relationship with TU."*"

Now that the architect/engineer and the constructor had been selected, the next decision concerned the selection of a nuclear steam system (NSSS) vendor. The NSSS was the actual reactor core that would be installed in the facility. The AEC had been pushing for standardization in plant design. As part of the process, the AEC encouraged the NSSS manufacturers to select a single model as their standard plant. The federal government hoped that eventually there would be a standardized plant design that would not need to be repeatedly evaluated in the licensing process. The federal government's wishes, however, were not the reality and several companies competed for nuclear reactor contracts. In 1970, there were five companies - General Electric, Westinghouse,

Babcock & Wilcox, Combustion Engineering, and General Atomic - in the United

States that manufactured reactors of various types. General Electric produced boiling water reactors; General Atomic offered high temperature gas-cooled reactors, while the remainder dealt in pressurized water reactors.'*^

To expedite the process, Forbis presented a detailed schedule for the

NSSS selection. TU sent invitations for bids to the various firms and evaluations

40 Ibid.

^•' Prepared Testimony, Roger S. Boyd, December 31, 1986, Nielsen- Wurster Prudence Review, Vol. II, p. V-53.

81 of the proposals began once a proposal returned. Nuclear Utility Services undertook most of the early appraisals of bids and selection of the NSSS. NUS completed a draft specification of the requirements for the NSSS and circulated it within TU. In return, members of the TU management team, prior to selection of the architect-engineer, completed a list of NSSS specifications and made it available to the architect-engineer candidates.

As the NSSS selection process became more involved, Texas Utilities selected the Stoller Corporation to evaluate the purchase of nuclear fuels. Often, the same company that provided the NSSS supplied the fuel, but TU wanted to ensure that the NSSS companies being considered were all capable of meeting supply requirements. With Stoller's endorsement, TU selected Westinghouse to provide the NSSS. TU believed that Westinghouse's experience as the primary builder of NSSS units gave them a better chance of passing through the licensing process without any significant hold-ups.'*2

Once the major contractors and vendors had been chosen, TU was free to begin the long and perilous process of applying for a construction permit with the

Atomic Energy Commission. In February 1972, TU officials met with representatives of the AEC to discuss the necessary steps to complete the licensing requirements. At the meeting, Peter Morris, the Director of the Division of Reactor Licensing, stressed the differences between nuclear and fossil fuel

^2 Nielsen-Wurster Prudence Review, Vol, II, pp. V-54-55.

82 and the need for careful quality assurance.^3 y^j^^ ^^^ information, TU filed an application with the AEC for a construction permit for the Comanche Peak Plant.

The company submitted a lengthy document: a detailed design plan, a six- volume Preliminary Safety Analysis Report (PSAR), four volumes of information for the Justice Department anti-trust review, and a three-volume Environmental

Report (ER)."*^

The Atomic Energy Commission docketed the application on July 20,

1973, meaning that it viewed the application sufficiently complete to begin examination. A number of deficiencies existed (exactly 150 in the PSAR and twenty-five with the ER) in the application but none serious enough to prevent the start of the review process. TU officials promised to supply the necessary additional materials to correct the deficiencies with the application.'*^ The willingness of the AEC to begin reviewing the application despite nearly two hundred problems illustrates the comparatively more relaxed licensing atmosphere of the early 1970s as compared to the post-Three Mile Island era.

The first step in the AEC review of the application was to publish announcements in the Federal Register, various trade journals, and newspapers to give public notice to all interested parties in the Comanche Peak Steam

'*3 Public Utility Commission, Prudence Review of Comanche Peak Steam Electric Station, Volume 2, June 1990, SPP, Box 133, SWC, TTU.

'^ Nielsen-Wurster Prudence Review, Vol. II, p. X-29.

'*5 Nielsen-Wurster Prudence Review, Vol. II, p. X-31.

83 Electric Station project. The notices included instruction for those who may want to intervene in the licensing process and become a party to the public hearings to be held in the near future. The AEC also submitted copies of the Environmental

Report to various federal, state, and local agencies that had some level of interest in the proceedings.

A short list of such agencies included a wide variety of government entities, and each could intervene in the licensing of a nuclear power plant.

Some of them were the Advisory Council on Historic Preservation; Department of

Agriculture; Army Corps of Engineers; Department of Commerce; Department of

Health, Education, and Welfare; Department of Housing and Urban

Development; Department of the Interior; Department of Transportation;

Environmental Protection Agency; Federal Power Commission; Office of the

Governor, State of Texas; and the County Judges of Hood and Somervell

Counties.'*^

While other government agencies reviewed the Environmental Report, the

AEC also examined the document pursuant to the 1971 Calvert Cliffs decision,

which had resulted from the National Environmental Policy Act of 1969. In the

decision, the court ordered the AEC to require utilities to follow environmental

guidelines in the planning and construction of nuclear reactors. Thus, the AEC

examined the Environmental Report for Comanche Peak. After reviewing the

report, the AEC issued, on June 3, 1974, a Final Environmental Statement that

"6 Nielsen-Wurster Prudence Review, Vol. II, pp. X-33-34.

84 found seven areas where corrective action needed to be taken. None of the issues, however, was drastic enough to cancel the project or deny the

Construction Permit.'*''

The AEC also began a review of the Preliminary Safety Analysis Report.

This report provided the engineering and safety plans for Comanche Peak. It contained both technical infomnation and general descriptions of the construction

process. The reviewing process was intensive and took neariy fourteen months to complete. During the review, TU needed to make several amendments to its

safety analysis report as the AEC required additional information. Upon

completion of the review, the AEC issued on September 3, 1974, a Safety

Evaluation Report (SER).'*^

The SER contained several open items that Texas Utilities needed to

resolve, but essentially the SER validated TU's plan for Comanche Peak. The

open items included such issues as the size of "postulated tornado missiles"

(objects that might strike the facility during a tornado) assumed in the design of

structures and the design of on-site power generation systems.'*^ None of the

items was serious enough to merit denial of the Construction Permit and.

"^ Final Environmental Statement Related to the Operation of Comanche Peak, Units 1 and 2, p. 34.

"^^ Nuclear Regulatory Commission, Office of Nuclear Reactor Regulation, Safety Evaluation Report, docket nos. 50-445 and 50-446: Texas Utilities Generating Company.

^3 Ibid.

85 accordingly, the AEC staff formed an Atomic Safety and Licensing Board (ASLB) to begin hearings on the Comanche Peak Project. The members of an ASLB typically contained three members: a lawyer, an engineer, and an environmental scientist of some type. The ASLB posted notices about the upcoming hearings to local newspapers, professional journals, and interested governmental agencies.

Notices for the public hearings on Comanche Peak received little reaction from potential interveners. Only Charies L. Webster, a physician and resident of

Glen Rose, citing sixteen possible contentions, filed a petition to intervene.

Following a pre-hearing conference, the ASLB accepted Webster as an

intervener for the hearings set for eariy 1974. Most of Webster's contentions

focused on the possible negative impact of the plant on the area's watershed.

Before the hearings took place, however, Webster, for unknown reasons,

withdrew as an intervener.^" Thus, as of March 1974, no one contested the

hearings. As the Atomic Energy Commission staff had already passed on TU's

design for Comanche Peak, the ASLB hearings were essentially a formality.

Even the limited appearance of the State of Texas at the proceedings on July 31,

1974, did not change the status of the public hearings.

While the hearing process proceeded, Texas Utilities filed papers asking

for a Limited Work Authorization (LWA). The purpose of an LWA was to allow

the utility to begin work on site preparation and non-safety related construction.

5° Nielsen-Wurster Prudence Review, Vol. II, p. X-41

86 The LWA procedures were new to the Atomic Energy Commission and had only become procedure in April. TU, prior to the LWA authorization, requested an exemption in an effort to begin site work. The AEC did not respond to the TU's exemption request but informed TU of the new LWA regulations. As a result, on

June 10, 1974, TU requested a Limited Work Authorization. After the LWA request, the ASLB found no fault with TU's plans. In concordance with the decision of the ASLB, the AEC on October 17, 1974, issued the LWA. The

Atomic Energy Commission stressed that any activities undertaken would be entirely at the risk of TU and that the issuance of a LWA had no bearing on the granting of a construction permit.^^ If the AEC denied the pennit, TU would lose any investment in construction up to that point.

While the reception of a Limited Work Authorization was a major step for

TU, there still remained a number of hurdles before receiving the full

Construction Permit. The Advisory Committee on Reactor Safeguards (ACRS), another group within the Atomic Energy Commission, reviewed the application and on September 17, 1974, visited the Comanche Peak site. The ACRS found a few items needing attention but considered the project to be "without undue risk to the health and safety of the public." The only issue out of the ordinary that the

ACRS raised was the need to meet with state agencies to discuss emergency plans. The plans included evacuation routes and emergency response. The

5^ Nielsen-Wurster Prudence Review, Vol. II, pp. X-43-46.

87 plans were important, because at that time, Comanche Peak was to be the first nuclear plant in Texas and the state agencies had not been previously consulted.

Meanwhile, on November 25 and 26, 1974, the Atomic Safety and

Licensing Board hearings reconvened. Three individuals requested to make limited appearance statements. The limited appearance status reflected the ability of a citizen to make a public statement regarding the project but did not allow any legal action against it. At this round of hearings, besides hearing the statements, the ASLB examined the AEC review of the Comanche Peak application and a number of state issues.

Following the hearings, the ASLB issued on December 12, 1974, a favorable Initial Decision authorizing the Atomic Energy Commission to issue a

Construction Permit for both units of the Comanche Peak project. While the construction permit represented the completion of an important milestone in the construction of Comanche Peak, the decision also reflected the AEC's and

ASLB's support of the project. Of the tiwenty-threenuclea r units receiving construction permits in 1974, only tiwo were granted their permits in less time.

Based on the seventeen-month review of CPSES's application compared to the over fifty-month evaluation of several other projects at the time, one ought to conclude that not only did Texas Utilities present a well-organized plan but also that the AEC and other regulatory bodies fully supported the project.

An important related event, one that did not directly affect the issuance of a Construction Permit for CPSES, occurred concurrently with the review process.

88 The event was the signing in October 1974 of the Energy Reorganization Act.

The new law authorized the disbanding of the Atomic Energy Commission in favor of the Nuclear Regulatory Commission (NRC) and the Energy Research &

Development Association.

While the Energy Research & Development Association would continue the AEC's promotion of nuclear power, the NRC's sole responsibility was regulating the nuclear industry. The new development represented a drastic and far-reaching shift in the government's view towards nuclear energy. Previously, the governmenf s primary responsibility was to promote and encourage the use of nuclear energy. Now the government considered regulation to be more important. Initially, the transition did not affect Comanche Peak but other problems appeared.

One of the first problems that Texas Utilities experienced related to the fuel for the reactor. Westinghouse was the supplier of both the reactor system and the uranium fuel for the reactor. TU, based on the recommendations of outside firms, had chosen Westinghouse to fabricate fuel for its project. The contract, signed on May 11, 1973, stated that Westinghouse would furnish a total of 2.76 million pounds of uranium fuel at a base price of $7.15 per pound with delivery dates between 1978 and 1982.^2 The ability of Westinghouse to supply the uranium in a timely manner and with a relatively inexpensive price was

52 Administrative Committee Minutes, May 11, 1973, SPP, Box 88, SWC, TTU.

89 crucial to TU's decision to enter into a contract with the large firm.

Westinghouse, however, offered the same quick delivery and low price to many other utilities at the same time.

The result was a problem of supply. Westinghouse's aggressive marketing of their product meant that the company, by 1974, had offered nearly eighty million pounds of uranium to various utilities at prices comparable to that offered to TU. The company had essentially offered a product they could not deliver. It had only sixteen million pounds under its control. Unfortunately, the supply problem was only part of the difficulty. In the middle of 1975, the price of uranium had risen to nearly $26 per pound. Westinghouse, the main supplier of

reactors and uranium fuel in the country, faced economic ruin. If it met its contracts, the company saw a potential loss of $2.5 billion, an amount that would

have bankrupted the firm.53 On September 8, 1975, Westinghouse informed its customers that it could not meet its contractual obligations.

To justify its actions, Westinghouse used the doctrine of "commercial

impracticability," a regulation contained in the Uniform Commercial Code. The

Uniform Commercial Code stated that unforeseen events that presented a rise in

costs might alter the essential nature of a contract.^'* Westinghouse, in its

defense, blamed the rise in costs on foreign uranium cartels and foreign

governments.

53 Nielsen-Wurster Prudence Review, Vol. II, p. VIII-29

5'* Uniform Commerical Code, Section 2-615.

90 Because of Westinghouse's shortfall, Texas Utilities needed to find a new uranium supplier. Many utilities, including TU, found themselves trying to acquire uranium in a seller's market. To help meet its uranium needs, TU entered into additional contracts with Exxon, Kerr-McGee Conversion Service, and AEC

Enrichment Services at a substantially higher cost than initially planned. To cover the higher costs, TU filed a lawsuit against Westinghouse to pay damages or to provide the uranium at the price stipulated on October 8, 1975. Because other utilities were filing similar lawsuits against Westinghouse, the judge consolidated the lawsuits in the U.S. District Court in Virginia.

In February 1976, Judge Robert R. Merhige, Jr., ordered Westinghouse to supply a proportionate share of its uranium stocks to the utilities involved in the lawsuits as per an agreement by all parties.55 in addition, as part of its settlement with TU, Westinghouse agreed to supply various pieces of equipment, mining rights, training services, and cash valued at between $65 and $80 million.

The Public Utility Commission of Texas, in an Order in Docket No. 1903 dated

April 20, 1979, concluded that the "settlement provides substantial benefits to

TUSI [the Texas Utilities system]. . . Each of these benefits will ultimately inure to the customers of the operating companies . . Accordingly, the Commission concludes that the settlement is reasonable and in the best interest of the operating Companies and their customers."55 Thus, one of the first major

55 Nielsen-Wurster Prudence Review, Vol. II, p. VIII-30.

91 setbacks for CPSES was resolved with relative ease. The parties involved settled the issue for the benefit of the project as well as TU customers.

Unfortunately, later problems at CPSES would not end on such a positive note.

During the late 1970s, TU began considering opening up the Comanche

Peak project to outside investors. The operating subsidiaries of TU (Dallas

Power & Light, Texas Energy Service Company, and Texas Power & Light) had signed a Memorandum of Agreement on August 10, 1973, to design, construct, and operate a nuclear power station. Each of the companies owned 33.3% of the project but a routine inquiry from the Department of Justice into the construction permit application resulted in some questions concerning the ownership. In 1973, as part of any construction permit application, the

Department of Justice had asked local municipal utilities if they had any interest in joining the project. The Justice Department wanted to determine if there was a need for anti-trust action.

Earlier that year, four cities and the Brazos Electric Power Cooperative had already fomied the Texas Municipal Power Pool. Denton, Gariand, Bryan, and Greenville hoped that their pool would be attractive to TU for possible inclusion into the project. The pool informed the Justice Department that it would like to participate in the Comanche Peak project. In 1974, TU and its subsidiaries agreed to allow the outside pool to join, thus alleviating any potential anti-trust proceedings. In order to allow the new partners into the project.

56 Public Utility Commission, Order Dated April 20, 1979, Docket 9300, SPP, Box 23, SWC, TTU.

92 negotiations for a Joint Ownership Agreement began. The agreement was especially difficult in this case because of the municipal laws affecting each of the local utilities.

Finally on January 2, 1979, after four years of negotiations, TU signed the

Joint Ownership Agreement with the Texas Municipal Power Authority. On June

1, 1979, a similar agreement with the Brazos Electric Power Cooperative followed. Under the Joint Agreements, Texas Utilities Generating Company became the project manager, and Texas Municipal Power Authority and Brazos

Electric Power Cooperative purchased their shares from Dallas Power & Light.

The agreements set the ownership shares in the project as of mid-1979 to Texas

Power & Light-33.3%, Texas Energy Services Company-33.3%, Dallas Power &

Light-23.3%, Texas Municipal Power Authority-6.2%, and Brazos Electric Power

Cooperative-3.8%. The need to bring outside utilities into the project was clear at the time, for such a step negated potential anti-trust suits and helped to spread the monetary risk among several companies.

By the mid 1970s, the Comanche Peak project appeared to outsiders to be progressing well. Construction had begun on a number of buildings and the

Construction Permit had been granted. In addition, TU officials had started preparing the application for an Operating License and there seemed to be no significant obstacles ahead for the project. There had been a few problems in the early period, most notably the failure of Westinghouse to supply the necessary uranium, but they had all been resolved successfully. Delays in the

93 purchase of land, inflation, and unforeseen costs in some aspects of construction caused TU officials to adjust the expected price of Comanche Peak to $987 million. The rising cost and the failure to maintain the construction schedule were issues of concern, but there was little reaction to it. More serious problems

lay just ahead.

94 CHAPTER IV

MISMANAGEMENT AND CONFLICT

AT COMANCHE PEAK

"The S.O.B.s are letting us down."^ With that statement, one of the lead

Texas Utilities (TU) managers of the Comanche Peak Nuclear Project expressed his discontent with Brown & Root, the facility's main builder. The friction betiween

Texas Utilities and Brown & Root was one of the many problems the project faced. Construction at Comanche Peak progressed rapidly in the eariy 1970s, but the project encountered numerous delays and cost overruns towards the end of the decade. When the project began in 1970, Texas Utilities, Inc., the owners of the Comanche Peak Steam Electrical System (CPSES), felt confident that construction would be completed by 1980. As one of the nation's largest nuclear facilities, Comanche Peak, TU believed, would supply the energy needs for much of central and north Texas. The project began with little reaction. The federal government appeared to be fully in support of the system and the nearby community of Glen Rose voiced few concerns about Comanche Peak.

Unfortunately for the project and its supporters, the optimism of the mid-

1970s dissipated. Confusion, building delays, and negative public reaction replaced the project's once steady progression. Construction at the site became

^ Untitled, Undated Personal Summary of CPSES Summit Meeting between TU management and Brown & Root management, Steve Porter Papers (SPP), Box 1, Southwest Collection (SWC), Texas Tech University (TTU).

95 the target of federal investigations and public opposition. A variety of incidents and factors caused the public's sentiment towards the project to shift from relative calm to apprehension. Comanche Peak, at least in the view of its supporters, seemed beleaguered from all sides. National events within the

nuclear industry, outside audits by third parties. Nuclear Regulatory Commission

inspections, and a growing public opposition combined increasingly to hinder the

project after the eariy construction phase. The events that led to the near

cancellation need to be examined. They represent not only problems with

Comanche Peak but issues endemic to the nuclear industry as a whole.

Comanche Peak encountered several difficulties between 1975 and 1983.

The problems can be grouped into three categories. The first set of issues was

the changing regulatory environment. The government shifted from the

promotion of nuclear power to ensuring its safe operation. Even those who

postulate that the government remained in close cooperation with the nuclear

industry note the voluminous growth of regulations.2 TU devoted a large portion

of its management resources to meet the new requirements.

Public opposition was the second type of obstacle faced by Comanche

Peak. Protestors demonstrated in front of the site and took legal action against

the project. The growing awareness of the potential dangers associated with

nuclear power, especially after Three Mile Island, strengthened the support

2 Joan Aron, Licensed to Kilt?: The Nuclear Regulatory Commission and the Shoreham Power Plant (Pittsburgh: University of Pittsburgh Press, 1997).

96 against the power plant. While the protests and the lawsuits were the most visible aspect of the public's view of nuclear power, individual citizens expressed their dissatisfaction in other ways. Letters to the editors of local newspapers, notes of concern attached to electric payments, and even individual boycotts of

TU were all quiet fonns of protest used against Comanche Peak.

The last category of difficulty was internal. Neither Texas Utilities nor its main contractor. Brown & Root, had confidence in the management capabilities of the other. Minutes from organizational meetings, memorandums to executives, and angry letters between the tiwo companies reveal confusion and a general lack of cohesion. In addition, TU's and Brown & Root's relationship with the architect-engineer, Gibbs & Hill, was little better. Thus, when issues arose at

Comanche Peak, the companies could not present a unified effort to resolve them. Instead, managers looked for others to blame. The friction contributed to further delays, more cost overruns, and a growing sense of frustration in the project as a whole.

The project did not start out with such difficulties. Between 1975 and

1983, work proceeded on a steady basis. While at times problems arose and no one was completely satisfied with the rate of progress, there was little concern that the plant would not be finished, even in the wake of the 1979 Three Mile

Island Incident. In 1976, Texas Utilities submitted the application for the

Operating License to the Nuclear Regulatory Commission and reached

97 significant milestones in construction. At the same time, several outside consultant groups audited the project at the bequest of TU.

While the project appeared to be progressing on schedule, tiwodifficultie s arose: the significant turnover in project personnel and, in the wake of Three Mile

Island, the appearance of organized opposition to CPSES. Although such setbacks did not diminish TU's support for the project, the period 1975 to 1983 needs to be examined. The problems-especially the conflict between TU and its contractors-that eventually made CPSES one of the most controversial nuclear projects in history have roots in the time frame.

Prior to 1975, the federal government through the Atomic Energy

Commission (AEC) was a major promoter of nuclear power.3 The AEC provided oversight for nuclear plants but seldom acted to hinder nuclear development and often provided incentives for a utility to implement nuclear power even though the utility had little or no experience with nuclear technology. The creation of the

Nuclear Regulatory Commission (NRC) represented a transition in the federal government's position on nuclear power.'*

The NRC, unlike the AEC, did not play a direct role in encouraging utilities to construct nuclear reactors. Instead, the NRC focused on safety concerns associated with nuclear power. One of the key reasons that the government

3 Harold Green and Alan Rosenthal, Government of the Atom: The Integration of Powers (New York: Atherton Press, 1963).

4 James M. Jasper, Nuclear Politics: Energy and the State in the United States, Sweden, and France (Princeton: Princeton University Press, 1990), p. 98.

98 began to concern itself with safety was the near-disaster at Brown's Ferry,

Alabama. On March 3, 1975, a fire swept through the Brown's Ferry nuclear

plant. Workmen using a candle to check for air leaks in the plant's control cable

vault started a fire in the electrical insulation. The fire spread into the wiring.

Electrical shorts prevented a shutdown of the reactor.5 Operated by the

Tennessee Valley Authority, the plant had experienced no prior incidences or

mishaps of that magnitude and the installation had been of little note in the

history of nuclear power.

The fire, although safely resolved, placed the name "Brown's Ferry" firmly

in the minds of a growing number of people who felt concerned about nuclear

energy. The Brown's Ferry fire altered the nuclear regulatory environment and

hindered all concurrent and subsequent nuclear projects with numerous design

and safety alterations.^ The Comanche Peak Project (CPSES) was no different,

and it felt the backlash as a number of mandatory design changes were

implemented. Because of the design changes and other construction delays,

TU, in late 1975, revised the projected cost of CPSES to $987 million up from

eariier proposals. For the project and its supporters, the cost revision was

merely a sign of troubles to come.

5 Report on the Browns Ferry Fire, Nuclear Regulatory Commission, September, 14, 1975.

6 John N. Campbell, Collapse of an Industry: Nuclear Power and the Contradiction of U.S. Po//cy (Ithaca: Cornell University Press, 1988), p. 113.

99 Some of the difficulties must be blamed on the inexperience and complacency of TU personnel. They were largely responsible for a number of the problems. Throughout the mid-1970s, TU continued its operations with essentially the same management team that it had used in the early planning stages. TU relied on people from within its system and believed that the managers' experience with non-nuclear energy plants would allow them to make the transition to nuclear projects. Despite advice from the NRC and other groups involved with nuclear energy, TU executive management believed that its nuclear project was little different from previous fossil fuel systems. The failure to recognize the differences between nuclear and fossil power projects caused few conflicts in the beginning, but eventually the inexperience of TU engineers and managers with nuclear energy led to several long-term and almost fatal problems for the project.^

In October 1974, TU began to assume a greater role in the daily management of the project. A planning meeting produced an outiine for the new management organization with a greater number of TU personnel directly involved at the construction site. According to the new system, TU appointed a

Resident Manager at the site to provide oversight for Brown & Root activities.

The person chosen for the position had never worked on a nuclear project but

^ PUC Docket 9300, PUC Position Paper, Steve Porter Papers, Box 78; Audit of Comanche Peak by Cygna Energy Services for Texas PUC, p. 9, SPP, Box 90, SWC, TTU.

100 had proven management experience within the TU system.® Above the Resident

Manager was the Manager-Nuclear Operations, R.W. Caudle, who had only secondary nuclear experience but was responsible for initiating the entire TU nuclear program.3

At the top of the CPSES nuclear management team was L. F Fikar, the

TU Services Vice President for Engineering and Construction. Like the others in the TU nuclear management chain of command, Fikar had no background with

nuclear energy but TU selected him for his ability to accomplish objectives and

his people skills. He believed that strong management and clear lines of

authority were essential to the project. Fikar remained in the position until his

retirement in mid-1985 and provided most of the early leadership and decision­

making for the project.''" Thus, in the late 1970s, TU was confldent in its

management team and believed the organization could successfully complete

the project. The aftermath of the Brown's Ferry fire, because of the change in

government attitudes regarding nuclear energy, caused some concern.

The growing number of government regulations hindered progress. In

fact, some executives with TU, for a short time, considered canceling the

8 Nielsen-Wurster Prudence Review of Comanche Peak, Vol. 1, p. VI-10, SPP, Box 139, SWC, TTU.

3 R.W. Caudle's role in the development of the Texas Utilities nuclear program is discussed in the previous chapter.

^° Testimony of R.W. Caudle Before Texas Public Utility Commission, Nielsen-Wurster Prudence Review, Vol. 1, p. VI-11.

101 Comanche Peak project. In June 1976, the company ordered a study of the costs associated with canceling the project.^^ The study compared the costs of closing the tsNO nuclear reactors at Comanche Peak and replacing them with four coal units. Within the previous year, TU had acquired the rights to more than 200 million tons of coal in northwest New Mexico, and, at the time of the study, the company was negotiating additional coal purchases.

Among the issues the cancellation study considered were revenue requirements, capital requirements, fuel costs, and labor costs. The study indicated that the plan for "closing CPSES as a nuclear plant and installing fossil units results in greater revenue requirements, additional capital costs and much higher fuel costs during a period through 1987 "^2 jhe study concluded, "that the present plan of installing two 1150mw nuclear plants at Comanche Peak be continued."^3

Although the study recommended continuing construction, TU's investigation into abandoning the project reflected the company's uncertainty.

How widespread support for switching to fossil fuel was is impossible to determine, but the mere fact that TU acquired large amounts of coal and initiated a closure study reveals that at least some TU executives doubted the wisdom of

^^ Ibid.

^2 Public Utility Commission, Docket 9033, Attachment 13, RFI 9, SPP, Box 43, SWC, TTU.

^3 Ibid.

102 proceeding with a nuclear project. Nonetheless, at the time of the study, increasing government regulation caused concern. Regulations, however, were only part of the problem with the government.

TU personnel neither anticipated how difficult the licensing process would become nor how costly the project would ultimately be. TU could not foresee even a small portion of the difficulties it would later encounter. Had the company known what was ahead, the study would have likely recommended the fossil fuel option. In the late 1980s, TU's decision to proceed with nuclear power came under fire during several rate increase hearings before the state's Public Utility

Commission. Examinations by both the commission and independent auditing companies, based on the information known to the company at the time, defended TU's decision to continue at Comanche Peak.^'*

Other problems were government regulation and construction difficulties.

They led to differences between Texas Utilities and Brown & Root. At a meeting on January 6, 1977, betiween TU and Brown & Root supervisors, Fikar asked,

"how do we solve our problems on site including attitudes and communication?"

He directed the question at H. C. Dodd, an executive from Brown & Root. Dodd did not supply a clear response that resulted in Fikar again pressing for an answer. Dodd responded by asking if Fikar wished to "call a spade a spade and

^'' Nielsen-Wurster Prudence Review, Vol. 1, p. VI-12.

^5 Memorandum from H.C. Dodd to L.A. Ashley regarding meeting January 1, 1977, SPP, Box 127, SWC, TTU.

103 get down to the nitty gritty problems areas or if he wished to speak in gentlemanly terms."''^ Fikar, desiring a clear answer, replied affirmatively. Dodd then told him the major delays related to the inordinate amount of time spent by quality assurance personnel in satisfying both TU and Brown & Root procedures.

When Dodd went into detail about the communication problems (mostly involving technical disputes), Fikar expressed both shock and surprise, "I don't believe it.

How could we spend two weeks and many manhours to close out some simple unimportant items such as these? What are we going to do to correct it... I don't understand how this can happen between the two QA groups and also what we are going to do to correct it."''^ The manager's frustration is evident from the comments.

To help alleviate the problem of inexperience in its personnel and to

improve relations betiween the tiwocompanies , TU briefly granted Brown & Root

more power to control its own efforts. As construction advanced at the CPSES

site, responsibility for project control and the actual construction shifted to Brown

& Root, the constructor for CPSES. Beginning in 1976, Brown & Root assumed

primary responsibility for cost and schedule.'® According to the original contract

between TU and Brown & Root, the constructor agreed to keep accurate records

and accounts containing the detailed costs of all labor and equipment associated

'6 Ibid.

'^ Ibid.

'® Ibid.

104 with the project. TU maintained overall responsibility for the project, but soon had reason to doubt its decision to release even a little control.

Accordingly, in 1977 TU management began to take every major area of the project back under its control. It was a response to growing sentiment that construction and design goals were not being met. The Nuclear Regulatory

Commission, for example, undertook a trend analysis at Comanche Peak in late

1976. It examined the twelve NRC inspections conducted eariier in the year and the responsiveness of project personnel to inspection findings.'3 jhe NRC report concluded that although "the licensee has been generally responsive to enforcement correspondence, the Principal Inspector, has, within the past year, requested additional information in order to clarify corrective action taken in order to preclude recurrences."2°

The report was, essentially, a polite way of informing TU that there was a general weakness in their replies to NRC inquiries and the company was not being fully responsive to NRC concerns. The report noted that "improvement has been evident; however, an adequate level of confidence has not been fully achieved."2' Surprisingly, the NRC noted that one of the major problems for TU

'3 NRC Trend Analysis, Comanche Peak, Units 1 & 2, NRC Staff Exhibit 184, SPP, Box 11, SWC, TTU.

2° Ibid.

2' Ibid.

105 was its relationship with Brown & Root. Both TU and the NRC felt that Brown &

Root was not timely in implementing corrective measures to construction flaws.22

Hoping to remedy the concerns about Brown & Root, TU augmented

Fikar's ability to control the CPSES project with the appointment of a Project

General Manager. The company named Joe B. George to the position. At the site, he was to serve as the direct representative of Fikar. George possessed no nuclear experience but had worked previously with Fikar on a number of non- construction projects.23 In his position, he was to keep Fikar informed of the progress of construction and of other on-site activities. George, in October 1977, replaced the previous project manager who had been working out of Dallas. The change made George directly responsible for not only the progress of construction but also for the licensing activities. The selection of George to the position is interesting. Not only did he possess no prior experience with licensing, but also George had no previous power plant construction experience.2'* The NRC did not object and, in fact, encouraged the transition to greater utility involvement in all the nuclear projects.

Fikar told George to find ways to reduce expenditures at the site. In a long memorandum to George dated May 4, 1977, Fikar suggested several areas

22 Ibid.

23 Nielsen-Wurster Prudence Review, Vol. 1, p. VI-11.

2" Ibid, Vol. 1, p. VI-12.

106 that George needed to investigate. The text of the letter is informative because it reveals some of the concerns about Comanche Peak. Fikar wrote:

In looking through the definitive estimate more closely, I have come up with a number of things I would like you to investigate and give some fime and attention to. Under the general category of Construction Equipment as defined in the estimate, we are paying out approximately $18.5 million for purchased equipment for the project... It just seems to me we are spending too damn much money on these items. There is also the matter of fueling and lubrication of almost $4 million. This is an awful lot of money . . . Another major concern I have is in the amount of indirect man- hours and dollars that Brown and Root has in the project. The ratio of indirect to direct cost in this project is entirely too high compared to similar projects around the country, or even in comparison to the South Texas Project. There are, in my estimation, too many man-hours in the field engineering categories, including 178,000 man-hours for start-up engineers which I can't figure out why we need at all. . . Also under the category of watchmen and janitors, and I presume guard service, we have $4,374,000 in the estimate for this time, and it really needs to be investigated. It just looks too high. Another item in the indirects category that looks really high is maintenance of buildings and utilities, both labor and material. There is almost $12 million in this category. Warehouse salaries and labor also shows $4 million which looks too high. Temporary buildings and utilities labor and material look extremely high. The whole area of QA/QC man-hours and salaries looks entirely too high.25

The details of the memorandum illustrate how uncertain leading executives were about expenditures at Comanche Peak. Obviously one person could not know how every dollar was spent, but Fikar appears to base most of his estimates on a figure "looking" too high instead of concrete facts.

The appointment of George did not completely satisfy the NRC's concerns. To discuss the problems with Brown & Root and the overall

25 Memorandum from L.F. Fikar to J.B. George, May 4, 1977, SPP, Box 11, SWC, TTU.

107 degradation of quality assurance/quality control at Comanche Peak, senior TU management personnel and NRC Region IV ofllcials met on June 11,1976.

Additional meetings continued through January 1977 in hopes of fixing what the

NRC labeled "a domineering and overpowering control by the contractor's site construction management [Brown & Root]."26 The result of the meetings was the decision of TU, as noted above, to assert more control over every aspect of construction. In September 1977, TU and Brown & Root established a joint project management system. Under the plan, Brown & Root would direct the field construction while TU monitored and evaluated engineering and construction activities.

As part of the new organization, all the field engineering, including that of

Gibbs & Hill, Brown & Root, and TU, was integrated into the Comanche Peak

Pipe Engineering group under the control of a TU engineering manager. In this organization, all engineers reported directly to a TU manager even if they were in the employ of another company. TU managers were also placed at the Gibbs &

Hill office in New York and the Brown & Root office in Houston to provide additional oversight.2''

Site quality assurance/quality control also came under the direction of TU personnel during the period. In 1978, a TU field Quality Assurance (QA)

26 Ibid.

2^ Management Analysis Company (MAC) Audit of Quality Assurance Program at Comanche Peak SES, May 1978, p, 23, SPP, Box 5, SWC, TTU.

108 Manager assumed control of the QA program from Brown & Root.2® To help strengthen the quality assurance program at Gibbs & Hill, TU placed an experienced nuclear engineer at its headquarters. TU felt the move was necessary because of concerns about staffing and problem resolution at Gibbs &

Hill's New York office.23 With the installation of TU personnel directly above the contractors, there was now an additional layer of TU management betiween the contractors and the Project General Manager. Unfortunately, the extra level of oversight created the potential for experienced contractor managers having to pass information to the Project General Manager through the hands of inexperienced personnel.

The hourly workers, perhaps inspired by the managemenf s confusion, felt similar frustration. As a result, the labor force lost productivity and morale

plummeted. A quality assurance manager for Brown & Root informed his

superiors of several incidents involving workers. He stated, "There is great

unrest among our Comanche Peak personnel and a number have asked for an

opportunity to transfer off the job. We have temporarily delayed acting on these

requests."3° He observed that the main problem was the management style of

TU supervisors, "The methods and approach by Tolson, Fleck, and Hawkins

2® MAC Audit, 34.

23 Nielsen-Wurster Prudence Review, Vol 1, p. VI-13-14.

3° Letter from T.H. Gamon to J.G. Munisteri, May 5, 1978, SPP, Box 127, SWC, TTU.

109 [low-level foremen, first names unknown] has been unsettling to site QA/QC morale for a long time. They do not seem to be people oriented. This situation appears to be another case of TUGCO's overreaction to a problem that had not been previously discussed with Brown & Root. Mr. Tolson's solution to each disagreement is to replace personnel and change organizational structures."3'

Once again, TU responded to problems with yet another drastic overall of the management organization.

QA personnel were not the only workers unhappy with the project. The

Department of Civil Engineering at the University of Texas conducted a survey of craftsman and foremen to discern the views of workers at the construction site.

Out of 187 responses from craftsmen, eighty-six of them said the pay was what they liked most.32 Twenty-seven said the quality of supervision was what they like least. Many complained specifically about the lack of technical knowledge among supervisors and "lack of guts" when it came to making decisions. In the survey, eighty-nine workers stated that they had completed something they knew was wrong and would have to be redone.33

Of the fifty-seven foremen who responded to the survey, the most serious complaint was general confusion. One in three said that they had completed

31 Ibid.

32 Survey of Craftsmen and Foremen at Comanche Peak, UT Dept. of Civil Engineering, May 8, 1978, SPP, Box 127, SWC, TTU.

33 Ibid.

110 work they knew was wrong and over half answered that they had felt like quitting.

The most common reason cited for those who desired to quit was their supervisors.3'* Information in the survey suggests that the communication problems at Comanche Peak extended throughout the project, from executive management to the wage laborer.

Amazingly, TU did not investigate the complaints and no action resulted from the disclosure. Over one hundred craftsman complained that they did not have cleariy defined goals to accomplish and even more said they had to stop frequently or change work areas because other crews had either not completed their work or the designs were not complete.35 The concerns of the workers are some of the surest signs that major problems existed at the facility. The lack of response by Texas Utilities and Brown & Root can be traced to the management organization. Often through no fault of their own, inexperienced foremen and managers were put in charge of large-scale operations without clear directions or proper supervision. From the highest levels to the lowest-paid workers, the evidence suggests that the Comanche Peak project was in great danger. Not only was the completion of the project in doubt, but also the project appeared to represent a variety of possible safety risks.

Despite TU's problems, a blanket condemnation of the management team is unfair. The company, in its initial plan, attempted to ensure capable

3^ Ibid.

35 Ibid.

Ill leadership. Prior to the issuance of the Construction Permit, TU hoped that most of its management team would be able to receive training from the Nuclear Utility

Services Corporation (NUS) during the project planning and early construction phases.36 A Nuclear Training Program Catalog offered a plan by which TU personnel would be given training in nuclear projects. TU also assigned personnel to other utilities with nuclear plants, vendors, and engineering firms to gain practical experience.

The training program never realized its goals of providing a qualified staff.

By the time the full construction started, TU had some management personnel with training or experience or both. But the rapid growth of the project did not permit TU to keep up with its training program and resulted in workers with no background in nuclear project receiving supervisory roles.3^ Essentially, a substantial number of TU managers received on the job training at the project site. The situation was neither a safe nor a productive method of constructing a nuclear power facility.

Budgetary concerns further hindered the project and TU's solutions, instead of strengthening the projecfs personnel, eliminated many experienced engineers. In 1977, TU instructed Gibbs & Hill to make cutbacks on its CPSES staffing.3® The reduction started early in the year and lasted until the end of

36 Nielsen-Wurster Prudence Review, Vol, 1, p. VI-15.

3^ PUC Docket 9300, RFI 78, p. 2, SPP, Box 44, SWC, TTU.

112 1978. The personnel changes impaired the project somewhat because it weakened Gibbs & Hill's ability to maintain the design schedule, especially at time when most of the mechanical and bulk electrical installation was due to begin. In mid-1977, when TU initiated the switch to the "At Risk" design change control process", Gibbs & Hill advised against it.33

The "At Risk" system was potentially dangerous to both the budget and the construction schedule. Previously, if alterations were necessary, engineers validated design changes before actual construction. The system caused delays because construction could not take place until the design change was approved.

In hopes of eliminating delays, TU chose to allow construction to continue before engineers validated a design change, thus, the term "At Risk." The obvious danger was that by the time engineers examined the design change, a great deal of construction could have already taken place. If the engineers deemed the design change unacceptable, the construction would have to be completely redone. Even if only a small number of design changes had to be revised, the potential was great for both delays and cost overruns. TU felt that the possible benefits outiweighed the risks, especially in the wake of previous problems.'*"

The companies continued to have friction. Illustrative of the relationship betiween TU, Brown & Root, and Gibbs & Hill is a May 1977 memorandum

3® Nielsen-Wurster Prudence Review, Vol. 2, p. IX-17.

33 Nielsen-Wurster Prudence Review, Vol. 2, p. IX-25.

'*" Ibid.

113 between Brown & Root managers H.C. Dodd and L.A. Ashley. Dodd expressed his dissatisfaction with Gibbs & Hill's responsiveness, "It is becoming more and more evident that getting Gibbs & Hill to cooperate with our field construction group is getting more and more difficult."'*' Dodd described an instance in which it took Gibbs & Hill two weeks to respond to a simple request for information concerning a simple doorway in a wall. According to Dodd, it was "only one of the many instances I can detail to show that very little or no cooperation is being given to Brown & Root field or TU field personnel by G&H in New York. Local TU engineers on site have indicated that all they can do is present the problem to

G&H in New York and suffer the consequences.""2 Why Gibbs & Hill did not have adequate personnel on site to answer design questions is unknown but the situation may have resulted from TU's previous efforts to downsize the workforce.

Even Dodd was aware of the potential source of the problem. Because of the man-hour cuts ordered by Fikar, Gibbs & Hill delayed responding to field design change requests. "Since Mr. Fikar has told G&H to drop the Cap Crap

[limits on man-hours], they have not put G&H on a target manhours basis which will give G&H every excuse, not a reason, but an excuse, to delay answers to

any field originated problems. I think it is high time that management of TU got

^' Letter from H.C. Dodd to L.A. Ashley, May 31, 1977, SPP, Box 11, SWC, TTU.

'*2 Ibid.

114 involved with the main problem areas on site and instruct G&H to assist the field

in helping to build this nuclear power plant."'*3 Dodd concluded by saying, "I do

not mean to be detrimental to any individual, but there is no excuse for how little

some people at the managemeht level for the client are aware of this site's

engineering and construction.'"*^ Obviously, Brown & Root felt that TU was

ignorant of Gibbs & Hill's attitude. The lack of communication between the three

main companies involved in the Comanche Peak project was apparent. They did

not communicate with one another and often, the memos and records suggest,

did not respect each other.

The transition to "At-Risk" design control placed additional pressure on

Gibbs & Hill personnel to evaluate design changes. The personnel cutbacks

reduced their ability to accomplish the changes and caused engineers to search

for short cuts in the design change evaluation process.''5 The situation led not

only to the approval of faulty design changes, but also created hostility between

Gibbs & Hill engineers and Brown & Root construction supervisors. The division

among the project participants, because the licensing activities were proceeding

at an accelerated rate, was especially detrimental.

^3 Ibid.

^ Ibid. '^5 Cygna Systems Audit of Comanche Peak Steam Electric Systems, June 1984, pp. 17-19, SPP, Box 83, SWC, TTU.

115 One of the more controversial events that arose during the late 1970s was the Management Analysis Company (MAC) audit. It occurred on May 1978.

MAC conducted, at TU's request, an evaluation of the quality assurance program at Comanche Peak. TU initiated the audit with the hope of determining if quality assurance at CPSES was meeting current NRC requirements. The secondary goal of the audit was to examine how efficiently the QA program was running.

In an effort to determine where errors occurred, MAC conducted the audit between May 1 and May 12 at both the Dallas engineering office and the CPSES construction site. The auditors examined the efforts of both Gibbs & Hill and

Brown & Root. The report concluded, "in general, the QA activities were effective, there is a good team spirit between TUGCO/TUSI [Texas Utilities

Generating Company/Texas Utilities Services, Inc.] personnel and the A/E and the Constructor."'*6 j^^^ ^^^-^^ however, identified nine areas that the report's authors considered to be deficiencies. Most of the deficiencies were instances where the Comanche Peak QA program did not meet regulatory requirements.

TU disagreed with most of the findings and defended its practices. The principal author of the Management Analysis Company audit report was John P.

Jackson, an experienced QA examiner. MAC sent copies of the report to several

TU executives including R. J. Gary, President and General Manager of TU; L. F

Fikar, the Executive Vice-President of TU; and P. G. Brittain, the President of the

Texas Utilities Generating Company. None of the three TU officials had any

^6 MAC Audit, p. 27.

116 nuclear experience, but they disagreed, based on their own record, with most of the MAC findings.'*^

The nine findings in the MAC audit included both specific and general issues. Without going into the details of all nine findings, an examination of several reveals the types of problems at Comanche Peak. One issue in the audit was MAC'S concern that inconsistencies existed betiween the quality assurance plan, the plan submitted in the Preliminary Safety Analysis Report to the NRC, and the actual implementation of quality assurance at the construction site.'*® In other words, the inspectors believed that the ways in which personnel implemented quality assurance did not correspond to either the QA plan or the

PSAR. The primary focus of the allegation was that ambiguity existed in the lines of authority betiween Brown & Root and Gibbs & Hill employees. MAC felt the ambiguity would cause uncertainty and confusion in quality assurance.'*3 Fikar

and Gary disagreed with the evaluation and stated that quality assurance was

operating according to plan.

Another MAC concern was that design changes were being conducted at

50 the construction site and only cleared with the architect/engineer after the fact.

Jackson, the lead MAC auditor, found the "At Risk" design change system to be

'*^ Nielsen-Wurster Prudence Review, Vol. 1, p. IV-3.

^® MAC Audit, p. 29.

^3 ibid.

5°MACAudit, p. 31.

117 a critical deficiency with the quality assurance of Comanche Peak and a violation of NRC regulations. He believed that the original designer would be unlikely to challenge on-site design changes that had already been implemented because of the tremendous cost to go back and rebuild the component.

Gary and Fikar, again, disagreed with the MAC finding. According to their response to the MAC report, they reviewed the neariy tiwothousan d design changes that had already been issued and concluded that none presented a significant risk of error. Despite their objections, TU, in response to the allegation, instituted some policy changes in the quality assurance program. In addition, Gary and Fikar, with the justification that two different NRC inspectors had examined it and found it not to be non-compliant, denied that the QA plan violated any NRC directives or regulations.5'

While there is no way that the TU officials could have realized that the lack of action in response to the Management Analysis Company finding would let a significant problem go uncorrected until the NRC nearly cancelled the CPSES project, the lack of concern on the part of TU is surprising. In many ways, the inactivity undermined the whole purpose of the MAC audit because it showed how easily the MAC findings were either ignored or easily denied.

Three other issues MAC found all related to the QA plan and uncertainties with inspections. MAC concluded that there was a great deal of ambiguity with the inspection checklists, inspection reports, and the disposition of non-

5' Nielsen-Wurster Prudence Review, Vol 1, p. 111-26.

118 conforming items. Essentially, MAC believed that not only were inspectors unsure of what they were looking for, the reports they issued did not cleariy state what was wrong and the actions needed to correct problems were not always taken.

MAC took the position that the quality assurance system at Comanche

Peak did not adequately detect problems, provide corrections, or prevent them from reoccurring.53 Gary and Fikar, the TU managers in charge of responding to the report, believed the findings were incorrect and that the quality assurance plan used at CPSES met the industry norm.5'^ Furthermore, TU justified the QA plan by saying that the NRC had already accepted the QA plan and had found no fault with it. MAC'S last finding was that 24% of the scheduled internal audits, as mandated by the NRC, had not occurred. Gary and Fikar, as with the other findings, believed the current system was acceptable and met the needs of the project.55

Despite the serious nature of the concerns raised by MAC, Texas Utilities did not share the report with its partners in the project. The company provided neither Brown & Root nor the minority owners with copies of the report.

According to the agreements of ownership, however, TU was to provide such

52 Ibid.

53 MAC Audit, p. 73.

5'* Ibid., p. 33.

55 Nielsen-Wurster Prudence Review, Vol. 1, p. IV-62.

119 reports to the minority owners. TU's choice not to do so was subject later to legal action. In fact, the minority partners used TU's failure as a basis to withdraw from the project. In addition, TU, although required by the NRC, did not produce the document at the initial licensing hearings. As with the minority owners, the failure resulted in legal action against TU.

Opponents of the project who in February 1979 questioned the quality assurance program and the overall design of Comanche Peak found further evidence for their arguments. The architects originally designed Unit 1 and Unit

2 to be mirror images of one another, a very common practice in power plants, both nuclear plants and traditional, prior to the 1970s.56 By the mid-1970s, the mirror-image trend in design began to disappear in favor of a "slide-along" concept. Essentially, the slide-along concept placed identical units next to each other and did not attempt to "mirror" one another. The benefit to the slide-along design was that it would facilitate design and licensing as only one set of plans needed to be evaluated. Engineers, however, designed Comanche Peak before the new slide-along trend became common and, except for a few components,

planned it according to the eariier trend.5^

Unfortunately, TU and its contractors attempted to gain the benefits of

"slide-along" design by making minor changes to the original design. Architects

revised several areas, including the reactor pressure vessels and their supports.

56 Campbell, Collapse of an Industry, p. 203.

5^ Nielsen-Wurster Prudence Review, Vol. 3, p. XII-80.

120 In the process, TU, Westinghouse, and Gibbs & Hill all failed to catch a serious design fiaw with the reactor vessel supports in Unit 2.5® Gibbs & Hill and

Westinghouse submitted drawings and revisions to each other for neariy two years to implement the changes. No one with either firm noticed an error that would have made it impossible to install the reactor vessel as designed.

Eventually, as construction in the area was due to begin, a Brown & Root field engineer noticed the problem.53

The engineer, on February 19, 1979, brought the issue to the notice of TU management. Despite a 65 degree orientation error, surprisingly little modification was needed. As per regulations, TU notified the NRC of the problem but the company took the position that the error was not a safety-related

issue.6" The justification for the argument was that the reactor vessel could not

have been installed as designed and therefore presented no danger. The NRC

agreed with the assessment and did not pursue any additional action against TU.

A joint inquiry into the issue by all the parties involved stressed the need for more

intensive design checks. Gibbs & Hill produced an internal memo saying, "the

responsible job engineers, design reviews, and stmctural engineers who

approved the Westinghouse drawing should be advised of the importance of the

5® Ibid.

53 Ibid.

6° Ibid.

121 review functions and indoctrinated in the project procedures for review and approval of Gibbs & Hill and vendor's drawings."6'

As construction moved fonward, the licensing process continued. On

February 27, 1978, TU filed the CPSES Operating License application. It consisted of the license application, the Final Safety Analysis Report, and the

Environmental Report. In addition, several weeks later, TU forwarded information for an antitrust review by the U.S. Department of Justice through the

Nuclear Regulatory Commission. While similar to the application for the

Construction Permit, the Operating License material contained more detailed information concerning the operation of the plant, a proposed security plan, and the safety precautions to be implemented. The submission of the Operating

License application began the crucial second phase of the licensing process for

CPSES.

Upon receipt of the application, the NRC began its acceptance process. It needed to determine if the material warranted a more complete and full-scale

review. While somewhat superficial in scope, the acceptance review resulted in

nearly seventy pages of questions concerning the proposal. The large number of

issues may seem startling, but, for a new plant, it was not significantly above the

average. The NRC's greatest number of concerns pertained to the Security Plan

for CPSES.62 j^g ^RQ fQund the plan to be unacceptable and incomplete. The

6' Nielsen-Wurster Prudence Review, Vol. 3, p. XII-81.

122 NRC, despite the inadequacy of the Security Plan, did not consider the problems serious enough to disqualify the entire safety portion of the Operating License application.

The Environmental Report alarmed the NRC much more. NRC officials identified several large problems with the Environmental Report and found it insufficient to accept it for docketing.63 NRC examiners believed that Texas

Utilities had not addressed completely the plant's affect on water quality and aquatic ecology. The NRC findings resulted in TU having to resubmit the report.

While the NRC decision not to accept the Environmental Report was serious and resulted in some delays, it was not considered by either the NRC or TU to be critical. Most nuclear projects faced similar setbacks and TU had considered such problems when it had formulated the project schedule.

Despite the problems with the Environmental Report, the NRC chose to docket, or accept, the Final Safety Analysis Report (FSAR). The NRC notification to TU of its decision stated. The staff has determined that since the

FSAR is complete and acceptable, it is in the public's interest to commence the review of the FSAR at this time."6'* j^g ^RQ ^J^ ^Qt identify how the review was specifically in the public's interest but it can be reasoned that it was referring to

62 Nuclear Regulatory Commission Letter to Texas Utilities, Reply to Application for Operating License, April 21, 1978, SPP, Box 61, SWC, TTU.

63 Nielsen-Wurster Prudence Review, Vol. 2, p. VIII-3.

6'* Nuclear Regulatory Commission Letter to Texas Utilities, April 24, 1978, SPP, Box 61, SWC, TTU.

123 the energy needs of TU's customers. The NRC also sent notice of the docketing to the Federal Register where it appeared on May 12, 1978.

The NRC's evaluation of the FSAR and the resubmitted Environmental

Report were neariy identical to the eariier Construction Permit review. The process was delayed by events elsewhere in the nuclear industry. In the wake of

Three Mile Island (TMI), the NRC stopped all licensing activities and devoted its efforts to ensuring that operating plants did not present any risk to the public.

The licensing moratorium was not completely negative for Comanche Peak.

While the NRC investigated the near disaster, TU used the delay to remedy construction problems. In the aftermath of Three Mile Island, the NRC changed a large number of regulations. Therefore, it is necessary to examine how the event affected the Comanche Peak project.

The Three Mile Island incident occurred on March 28, 1979. It affected

Comanche Peak as much as, if not more than, any nuclear project at the time.

Texas Utilities responded immediately to the event by establishing several entities to examine how the reaction to TMI would affect the project. The

Technical Support Group was the most notable of these bodies. TU designed it to identify and implement necessary design changes arising from new NRC requirements.65 The Technical Support Group contained personnel from TU,

Gibbs & Hill, and Brown & Root.

65 Untitied Memorandum from L.F. Fikar, July 8, 1979, SPP, Box 14, SWC, TTU.

124 Meanwhile, large-scale public reaction to Three Mile Island began. On

May 10, anti-nuclear groups across the state announced a joint protest on June 2 at Comanche Peak and in Bay City at the South Texas Project. The protest was part of the planned International Days of Protest, a worid wide public demonstration against nuclear energy.66 While very little occurred at the initial demonstration, a protest on June 11 resulted in the arrest of forty-eight demonstrators. The protesters, evenly split betiween men and women and predominately young, represented a wide diversity in backgrounds. A few of the activists who desired to make a bigger statement against nuclear power scaled the fence surrounding the plant and refused to leave despite warnings from sheriff's deputies.6'^

The demonstrators did not resist their arrest and lined up in two lines to board schools buses to take them to the county jail. "In the 21 years I've been in law enforcement, they cooperated better than anyone else I've ever arrested," said one officer.6® Approximately fifty more protesters remained outside the fence and chanted, "Hell No, We Won't Glow!" while wearing red t-shirts with the logo "Comanche Peak Life Force Occupation Force."63 The local sheriffs

66 Dallas Morning News, May 11, 1979.

6^lbid., June 12, 1979.

6® Houston Post, June 11, 1979.

63 Ibid.

125 deputies encountered little difficulty from the protesters who were peaceful and law-abiding.

Despite the protest, most residents of Glen Rose felt the plant was a boon to the local economy. The tax base in Glen Rose increased sixty times betiween

1970 and 1980 with new housing, thousands of workers, and a million dollar payroll. "It's just like hitting oil in a county in West Texas," said Sheriff's Deputy

Sandra Montgomery, "That's the only comparison I guess you could make."^"

In Somervell County, home of Comanche Peak, the population doubled and several new supermarkets, lumberyards, and apartments appeared. In

1976, the county, historically one of the poorest in the state, began construction of a new $2.5 million high school. The publisher of the local newspaper, Dan

McCarty, said, "About one percent of the people of Somervell County are opposed to the location of the plant for all reasons, not just because its nuclear.

Probably 20% are actively for the thing and a vast majority of the people couldn't care less if it's nuclear or not. The fact if s a nuclear plant doesn't bother me at all."''' One resident, Doug Robinson, expressed what was probably the prevailing sentiment of area inhabitants, "I don't worry about it at all. If s no worse than living near a refinery or near a highway where they're transporting chemicals."^2

^" Houston Post, July 2, 1979. .

^' Ibid.

126 On November 26, another demonstration occurred. Led by the Comanche

Peak Life Force, it resulted in the arrest of nearly one hundred demonstrators.

The protest resulted from recent allegations of welding problems on the cooling towers. In 1979, three inspectors left jobs after expressing concerns with the poor quality control procedures. Two quit and a third inspector transferred to another project. One of the two that left said, "anybody that has any confidence in the main cooling water loop pipes would be out of their minds because of the welding problems."'^3 Brown & Root responded, saying the men left, "because they disagreed with somebody who was deemed to know more than they did."^'*

The Final Safety Analysis Report, like the Environmental Report, also received the scrutiny of the NRC and the review process. The NRC examined each aspect of the CPSES safety plan and issued a Safety Evaluation Report

(SER) upon completion of its analysis. Officials finalized the SER for Comanche

Peak in July 1981. Like the Draft Environmental Report, the Safety Evaluation

Report was delayed in the aftermath of Three Mile Island. The delay, however, was not necessarily detrimental to the project.

The respite gave TU officials time, in response to questions raised by the reviewers, to submit additional material to the NRC.^5 jhg Safety Evaluation

^2 Ibid.

^3 Houston Post, December 7, 1979.

^'' Ibid.

^5 Nielsen-Wurster Prudence Review, Vol. 2, p. X-60.

127 Report focused mainly on the Quality Assurance Program for the operation of

CPSES, the design of release materials, and emergency plans.^6 ^one of the issues were serious enough to merit the denial of the Operating License. And, as TU resolved outstanding issues, the NRC issued supplements to the SER

noting the changes. By February 1990, the NRC had issued a total of twenty- three supplements to the Safety Evaluation Report.''''

The licensing activities resumed in late 1981 when the Advisory

Committee on Reactor Safeguards conducted its review of Comanche Peak.

The committee met in Dallas on June 29, 1981, and examined the technical

plans for the safe construction at the site. Following its investigation, the

committee issued a favorable recommendation saying that CPSES could be

operated "without undue risk to the health and safety of the public."'^® The

committee, despite its endorsement of Comanche Peak, recommended several

areas in which improvements needed to be made. One of the concerns was the

lack of experience among senior TU employees with nuclear power projects. To

^6 Nuclear Regulatory Commission, Safety Evaluation Report for Comanche Peak Steam Electric Station, Units 1 and 2, July 1981, SPP, Box 15, SWC, TTU.

77 Ibid.

^® Advisory Committee on Reactor Safeguards, Untitled Letter to Texas Utilities, June 30, 1981, SPP, Box 15, SWC, TTU.

128 alleviate the situation, the committee recommended that TU hire additional personnel with experience in nuclear energy.'^3

With the endorsement of the Advisory Committee on Reactor Safeguards, the licensing process proceeded to Atomic Safety Licensing Board (ASLB) hearings. The NRC published notices of a public hearing on the Operating

License and included directions on how to raise contentions or make limited appearances during the hearing process.®" After several pre-hearings to listen to those who wished to submit contentions, the ASLB issued an Order identifying three petitioners who would be admitted as interveners during the ASLB public hearings. The interveners were the Citizens Association for Sound Energy

(CASE), Citizens for Fair Utility Regulation (CFUR), and the Texas Associations of Community Organization for Reform NowAA^est Texas Legal Services

(ACORN/WTLS).®' According to federal regulations, the ASLB also allowed the

State of Texas to be a party to the hearings.

The Atomic Safety & Licensing Board allowed tiwenty-fivecontention s from the three interveners and denied an additional tiwenty-three on various grounds.

A possible contention could be denied for a number of reasons, including the lack of adequate basis or specificity or the concern lay outside the jurisdiction of the

ASLB. During the hearings, CASE attempted to submit three more contentions.

^3 Ibid.

®° Federal Register, January 20, 1979.

®' Nielsen-Wurster Prudence Review, Vol. 2, p. X-64.

129 The ASLB denied all three. Interestingly, one of the contentions denied was

"Applicants do not have the character to receive an operating license for a nuclear plant."®2 Unlike the other contentions, both accepted and denied, the contention focused on a non-technical issue and struck directly at the ability and character of TU. The ASLB, however, felt the issue was outside its jurisdiction.

Later, when it ordered construction to stop at Comanche Peak, the NRC cited concerns about TU's ability. The NRC was not alone in doubting TU. During

Public Utility Commission hearings in the early 1990s, questions about TU's character rose again.

Once the ASLB accepted a contention, the sponsoring intervener had to prove its contention. TU was responsible for either proving the charge was unfounded or making modifications to accommodate those contentions that were valid. For financial reasons, in July 1981, the Association of Community

Organizations for Reform Now/West Texas Legal Services withdrew as an intervenor.®3 The Citizens for Fair Utility Regulation followed in February 1982.

With two of the three interveners gone in early 1982, only tiwo of the contentions remained. One contention involved construction quality control/quality assurance and design quality assurance. The other remaining contention focused on emergency planning.

®2 Ibid.

®3 Ibid., Vol. 2, p. X-68.

130 For nearly two more years, the contention regarding quality assurance/quality control (QA/QC) remained the central issue for the ASLB hearings. CASE attempted to demonstrate that construction at Comanche Peak was not in conformance with the CPSES QA/QC plan. On July 28, 1982, Mark

A. Walsh, a witness for CASE and former employee at CPSES, made a limited appearance statement at the hearings.®"* He questioned some of the QA/QC practices at the project. Another former employee. Jack Doyle, during a

September hearing supported Walsh's claims. The ASLB combined the concerns raised by Walsh and Doyle together as the Walsh/Doyle contention.

Following their allegations, the ASLB suspended the hearings in order to investigate the QA/QC practices at Comanche Peak. Specifically, it wanted to review the pipe support design, the primary area of concern for Walsh and

Doyle.®5

To conduct the investigation, the NRC sent in a Special Investigation

Team of personnel from NRC Region IV and its national office. From October

13, 1982, to January 18, 1983, the team spent over 1,300 man-hours as it closely examined the pipe supports at Comanche Peak. Additionally, it traveled to New

York to the Gibbs & Hill offices to speak with the design group. The team also reviewed the testimony of Walsh and Doyle but, for unknown reasons, chose not

®^ Ibid., Vol. 1, p. 111-33.

®5 Ibid.

131 to interview them. In the findings report, issued in February 1983, the team noted no violations.

The report was clearly favorable to TU, although it noted eight items that needed to be resolved. Of the nineteen specific areas the team investigated in response to Walsh and Doyle's allegations, the team concluded that three were not substantiated, three did not have a valid technical basis, four were considered incorrect, five had already been corrected, and two were acceptable deviances from design.®6 The other two were valid concerns but were only minor technical discrepancies. TU was told to correct the two areas. Thus, the

Walsh/Doyle investigation resulted in no major enforcement action.®^ The

allegations, however, would resurface and play a more important role in

determining the fate of the project.

Although not known at the time, Texas Utilities, in 1980, had violated

CASE'S Requests to Produce when it did not present the MAC Audit report. L. F.

Fikar personally made the decision not to turn over the report because, as he

said, it was "confidential" and "prepared solely for a few members of TU's

management."®® Other TU executives knew of Fikar's decision and took no

action. Later, in subsequent ASLB hearings, TU's legal counsel advised TU to

produce the report. The concealing of the report from CASE resulted in a

®6 Ibid.

®^ Ibid., Vol. 2, p. X-73-74.

®® Ibid.

132 number of filings by CASE for full disclosure of TU records and the loss of a great deal of credibility before the ASLB and the NRC.®3

R. E. Kahler, an engineer and manager with TU, in February 1982, supervised an In-House Evaluation of Comanche Peak. Kahler's investigation noted that there was a "major difference of opinion between TU corporate level and program level management concerning the support of the project."3° In his report, he suggested that corporate management was neither as committed nor as involved in the project as they should have been.3''

Kahler found a number of issues of concern about the project that reflected a lack of oversight and control. Among the problems he cited were the failure to implement a formal corporate level training program, continued confusion over reporting requirements by area managers, and the inability of TU to issue corporate policies regarding operational priorities and training.32

Records do not indicate whether any action occurred as a result of Kahler's findings, although his investigation may have led TU management to examine further the project.

89 Ibid.

3" R.E. Kahler, In-House Evaluation of CPSES, February 1982, Pg. lll-IV, SPP, Box 94, SWC, TTU.

3' Ibid.

32 Ibid.

133 Among the materials presented to the Public Utility Commission of Texas in one its investigations of the Comanche Peak project were a series of undated memorandums between TU managers. From the personnel named and the relationship described with Brown & Root, it is likely that the documents date from the late 1970s or early 1980s. One document contains comments from a

TU manager, probably Joe George, regarding a meeting betiween TU and Brown

& Root. Because of its descriptive nature, it is worth examining the lengthy note:

"I was extremelv disappointed in the B&R management. . . Apparently B&R was not acting in good faith ... I thought Joe M. [Munisteri] was evasive and less honest in what is happening in construction . . The S.O.B.'s are letting us down - we have got to get their attention somehow and get them to live up their commitments. Jack Dodd was at the site and had been told by [Harry] Austin and [Joe] Munisteri not to come to the meeting. Those two S.O.B.'s sat at the meeting not saying a damned thing while were all concerned about where Dodd was. Inconceivable!.. . All is not yet lost - but I'm glad that the B&R top management attitudes and ineptness has surfaced at this time. These "good ole boys" just aren't up to snuff in being able to handle the complexities and paperwork involved with our project. They are hiding their heads in the sand and failing to recognize and face up to the problems. The weakness that is apparent to me in the B&R organization is in their management. Between Jack Dodd and Harry Austin there are the following chain of managers and vice presidents: Ashley does sort of what Dodd does but doesn't bring that much support to our project and he is sort of a crybaby and excuser and negative thinker. Pyeatt - I'll be damned if I can figure out what he does - but Ashley reports to him. - NOTHING! Fitch - Jack is nominally the head that the others report to - but he can't do anything - he has to defer to Joe M. Munisteri - talks a good game but is not providing the support and management needed. I really don't think he knows whaf s going on because the others below him don't know or won't tell him or are protecting their own ASS - and he can't figure it out. Worse yet, he may know but can't handle it. I'm tired, frustrated and no little peed-off."33

33 Untitled, Undated notes from CPSES Summit Meeting, SPP, Box 1, SWC, TTU.

134 The comments certainly reflect a great deal of resentment and concern.

Obviously the lines of communication between Brown & Root and TU had deteriorated to the extent that it was impairing the project. TU was unsure of exactly who was in charge at Brown & Root. Even more interesting is the charges of "ineptness" and "not acting in good faith." Clearly, TU officials felt that

Brown & Root was attempting to deceive them either on purpose or through incompetence.

A letter to Joe George from Brown & Root reveals that the problems were not one-sided. Brown & Root felt increasingly that TU's supervision hindered its efforts and led to both delays and cost overrun. A Brown & Root letter to Joe

George indicates that, "Certain changes you have set forth would destroy and make useless the documentation we have compiled at CPSES . .. These changes would flagrantiy violate minimum standards of management for a project the size of CPSES."3'* interestingly, the letter noted the negative public impact changes would make, "Aside from the audit agencies of the regulatory groups that may require cost information, it could become a subject the press would exploit, having already made reference to the cost and schedule variances

announced to date for CPSES."35 j^^ ^^^^^ reveals that not only was Brown &

Root dissatisfied with TU, but also that there were concerns about the escalating

3^ Undated Letter from Brown & Root to Joe B. George, SPP, Box 1, SWC, TTU.

35 Ibid.

135 cost. Ultimately, the breakdown in relations betiA/een Brown & Root and Texas

Utilities was a major cause in the difficulties encountered at Comanche Peak.

The Comanche Peak project began the 1970s in a period of turmoil.

Increasing government regulation, tensions betiween TU and its contractors, organized public reaction and national concerns about nuclear energy created an almost impossible situation for the project. The inexperience of TU management and its inability to reconcile problems at Comanche Peak resulted in numerous delays and cost overruns. In addition, the decision to implement the "At Risk" design change process led to concerns from many parties that quality assurance was in doubt.

In 1981, because of the failure to meet construction milestones, TU

announced changes in the total cost and completion dates for CPSES.

According to its new estimates, the project would cost $3.44 billion, neariy five

times the first estimate of $779 million. TU, however, believed that the project

was nearly complete and predicted Unit 1 would be finished in 1984 followed a

year later by Unit 2.36 j^g minority owners, area citizen's groups, and the Public

Utility Commission of Texas expressed concerns about the escalating costs.

More importantly, and nearly disastrously for the project, the Nuclear Regulatory

Commission began to doubt the very safety of the plant. By the end of 1983, the

36 Public Utility Commission, Docket 9033, Attachement 1, RFI 34, SPP, Box 7, SWC, TTU.

136 eariier problems at Comanche Peak caused the NRC to enforce unheard of measures against the project.

137 CHAPTER V

GOVERNMENT INTERVENTION AND THE COMPLETION

OF COMANCHE PEAK

The Comanche Peak Project experienced turmoil and uncertainty in the early 1980s. Government inspections, outside audits, public opposifion, and deteriorating relations betiA/een Texas Utilities Electric Company (TU) and its contractors caused numerous delays and cost overruns for the project. Despite the problems, Comanche Peak's supporters, and even most opponents, believed that the nuclear reactors would be completed. Unforeseen events, however, soon threatened this belief and nearly led to the cancellation of the entire project.

In the 1980s, the story of Comanche Peak centered on the Nuclear Regulatory

Commission's (NRC) Order and Memorandum of December 1983 that caused the rebuilding of major sections of the facility and lengthy delays in the licensing process. Texas Utilities, to resolve the NRC's concerns, completely revised its nuclear organization and overhauled the entire project.

Project opponents, regardless of TU's efforts, saw the NRC's actions as confirmation of their complaints. The licensing process, which lasted almost twenty years, was the arena for numerous legal motions by interveners (parties that had been accepted by the licensing board to discuss concerns) who sought either drastic changes or the cancellation of the project. The minority owners of the project, many of which had invested tens of millions of dollars, were aware of

138 the problems.* When they joined the project, the minority owners believed the total cost would not exceed one billion dollars. As the years passed and the eventual time or cost of completion remained unclear, the minority owners found themselves facing bankruptcy; they simply could not afford to remain part of a project that cost over $10 billion.2

The problems that emerged in the mid-1980s were not evident when the decade began. Although some indications of trouble, such as the Management

Analysis Company's audit (see Chapters III and IV), existed, most people associated with the project believed that construction would progress without delay. As part of the project, TU continued its appearance before the Atomic

Safety and Licensing Board. The public hearings were a struggle between the utility and the Citizens Association for Sound Energy (CASE). CASE, founded and led by Juanita Ellis, attempted to prove that the project was unsafe. Most of the organization's efforts focused on the quality control/quality assurance program. As mentioned in Chapter IV, in early 1982 allegations by former inspectors Mark Walsh and Jack Doyle focused on the quality assurance system. 3

Opposition to the project as well as CASE'S ability to intervene increased with the addition of the Government Accountability Project (GAP), a citizens'

' Fort Worth Star-Telegram, July 8, 1987.

2 Nielsen-Wurster Prudence Review, Vol. 2, p. X-35, Steve Porter Papers (SPP), Box 139, Southwest Collection (SWC), Texas Tech University (TTU).

3 Nielsen-Wurster Prudence Review, Vol. 2, p. X-38.

139 group that opposed government waste. In the words of Billie Garde, the Director of the GAP'S Citizens Clinic for Accountable Government, GAP was designed to

"broaden the understanding of the vital role of the public employee, private citizens, and nuclear industry in preventing waste, corruption or health and safety dangers.'"* In a letter to the Atomic Safety and Licensing Board (ASLB), Garde said GAP, "offers legal and strategic counsel to whistleblowers, provides a unique legal education for law student interns, brings meaningful and significant reform to the government workplace, and exposes government actions that are repressive, wasteful, or illegal, or that pose a threat to the health and safety of the American public."5

In the nuclear industry, however, GAP had a reputation of creating difficulties for nuclear projects. Although it did not profess to be "anti-nuclear,"

GAP'S previous involvements with nuclear plant construction proved othenwise.

It began its opposition to nuclear power in 1980 against the Zimmer Power Plant in Ohio. The organization conducted its own extensive investigation of the

Zimmer plant. It then made several allegations concerning problems at Zimmer to the NRC, which, in turn, conducted a construction review and fined the plant

$200,000 for tiA/elveviolation s of the construction code. In addition, in November

1982, the NRC issued a stop-work order against Zimmer. Eventually, the

'* Nielsen-Wurster Prudence Review, Vol. 3, p. V-5.

5 Ibid.

140 licensee, in part because of GAP's interference, cancelled the plant, estimated to be 97% complete.6

GAP found similar success with the La Salle Nuclear Plant in Illinois. The plant, with construction complete, began its start-up procedures in the summer of

1982. Interveners employed GAP to investigate the plant which it did by interviewing dozens of current and former employs and then using the information against the plant in the licensing hearings. GAP's actions delayed startup by several months, a move that cost investors millions of dollars.

Although the plant achieved startup, GAP's actions made the startup uncertain for a brief period.

The organization was also the legal representative for the primary intervener at Illinois' Midland Nuclear Plant public hearings. Due to allegations and legal obstructions raised by the GAP, the licensee cancelled the Midland project.^ The Consumer Power Company, the licensee for Midland, in the June

1984 issue of Nuclear Industry, described GAP as "a thinly disguised anti-nuclear group that has been waging a relentiess campaign against the Midland nuclear plant and other nuclear power plants around the country. GAP's tactics include recruiting disgruntled employees, obtaining allegations of construction and

6 Ibid. ^ Jerome Price, The Anti-Nuclear Movement (Boston: Twayne Publishing, 1990), p. 120.

141 design problems, and then ultimately withholding the information it receives from the involved utilities while posturing before the media."®

GAP was not always successful and efforts at plants in Illinois and

California failed when NRC investigations revealed no substance to GAP's charges. But, as Nuclear Industry noted, "proving the falseness of GAP claims delayed operation of the plants and added millions of dollar to the costs."3 GAP had become, in many ways, a professional intervenor. When they lacked the funding or capability to oppose a nuclear project, local anti-nuclear groups called

in the Government Accountability Project.

GAP searched for whistleblowers and claimed poor and even dangerous work practices. The actions forced the NRC to devote time and resources to

investigating the charges. Critics of GAP blamed the organization for its "highly

dramatized presentation of testimony" and its "skillful use of the news media for treating the rehash of frequently old and discredited allegations as startling new

discoveries, which, if true, would pose threats to the lives of private citizens and

place in doubt the viability of multi-billion dollar utility investments."*"

The Government Accountability Project soon focused its efforts on

Comanche Peak. Prior to 1983, the group's involvement had been limited, but in

® "Taking GAP's Measure," Nuclear Industry, June 1984.

3 Ibid.

*° Nielsen-Wurster Prudence Review, Vol. 3, p. V-2-7.

142 February 1983, Juanita Ellis, the President of Citizens Association for Sound

Energy, began a close partnership with GAP to oppose the project. A series of newspaper articles about Comanche Peak and GAP's new involvement appeared in local papers. Many of the articles presented a bias against nuclear energy.

The Dallas Times Herald, in one article, lauded the valiant efforts of GAP and described TU officials as "trying frantically to cover up quality control problems that have prompted a federal licensing board to consider denying the plant an operating license. Our sources indicated that documents are being altered and shuttled around in a wholesale manner as the company scrambles to erase traces of falsification, mismatching, and other problems with documentation."** With Comanche Peak, however, GAP had little trouble in locating former workers who were willing to provide evidence against the project.

Over the next tiwo years, GAP enlisted dozens of workers who identified problems at the construction site.

The intervention of GAP annoyed TU officials, but it did not erode their optimism. At the end of 1983, TU issued a press release with a new schedule for completion. According to TU, Unit 1 would be completed in mid-1984 and Unit 2 would follow eighteen months later. TU also increased the total cost of the

** Dallas Times Herald, March 17, 1984.

143 project, previously estimated at $3.44 billion, to $3.89 billion.*2 TU president

Michael D. Spence defended the news: "Despite this change," he said in a news release, "Comanche Peak will still be beneficial to our customer."*3 He explained that the power produced by Comanche Peak would be substantially cheaper than that produced by other fuels.

TU believed that it had almost completed the project. "Construction of

Unit 1 is essentially finished," Spence said, "But the remaining work—such as painting, electrical cables, documentation, final inspections and testing activities is taking more time than we had previously allowed for in our scheduling."*'* The most significant reason for the delays and the problem most difficult to assess,

TU determined, was the time necessary to complete the changes mandated after the Three Mile accident. The new regulations were not entirely detrimental to the project. Spence concluded, "Comanche Peak will be one of the first nuclear plants completed in the nation to incorporate virtually all the safety medications which were indicated by the TMI experience."*5

Despite the assurances of TU, the NRC increased its oversight of the project. Even before the order to cease construction, NRC officials expressed

*2 Texas Utilities News Release, December 16, 1983, SPP, Box 108, SWC, TTU.

*3 Ibid.

*^ Ibid.

15 Ibid.

144 doubts concerning Comanche Peak. Robert Purple, the Deputy Director of the

Division of Licensing, after a meeting with TU management, stated that there was an "erosion of confidence" in TU.*6 An NRC Construction Appraisal Team (CAT) inspection in 1983 identified some deficiencies with the design control procedures and quality assurance programs.*^ The CAT inspection was a very thorough evaluation of the design, construction, and quality control procedures at a project. The NRC issued fines for procedural violations but did not stop construction unless it found actual construction mistakes. In most cases, further investigation revealed that procedural errors did not result in faulty construction.

TU officials stated that the NRC was singling its project out. TU officials also protested that their project underwent more inspections than any other project.

The evidence does not support the claim. The Zimmer Plant in Ohio faced similar problems to Comanche Peak. In both projects, the NRC lost confidence in the applicant's overall quality assurance program. Although document falsification and harassment took place at Comanche Peak, the issues were more prevalent at the Zimmer plant, where the applicant, because of the difficulties with its quality assurance program and, in part, due to the efforts of the

Government Accountability Project, cancelled the project.*®

*6 H.C. Schmidt memo from J.S. Marshall regarding NRC meeting, March 11,1983, SPP, Box 24, SWC, TTU.

*^ Nuclear Regulatory Commission, "Construction Appraisal Team Report on Comanche Peak Steam Electrical Station" July 1983 (Washington, D.C.: Government Printing Office, 1983), SPP, Box 24, SWC, TTU.

145 The sanctions against Zimmer undermined the allegations of TU officials who claim that Comanche Peak encountered harsher penalties than any other project.*3 The Seabrook Plant, one of the most notorious nuclear projects, experienced two Construction Appraisal Team inspections, one in 1982 and another in 1984. The NRC completed both Seabrook inspections before even looking at Comanche Peak.2° Unfortunately for Comanche Peak, the CAT inspection revealed serious problems. As one observer noted, "The NRC will beat you up for procedural deficiencies, but will not shut you down unless they start finding hardware deficiencies. When Seabrook goes back to look at inadequate welds, they prove to be ok. When CPSES goes back to look, it is chaos."2*

The CAT inspectors believed that the Comanche Peak design change process was complex and cumbersome but found the system within NRC guidelines. 22 TU moved quickly to rectify the specific issues of contention and a follow up report on October 3, 1983, eliminated any remaining CAT findings. TU, in late 1983, believed that Unit 1, nearly complete, would quickly receive its

18 Nielsen-Wurster Prudence Report, Vol. 2, p. VI11-20-25.

*3 Direct Testimony of Joseph E. Manzi, July 20-25, 1987, SPP, Box 120, SWC, TTU.

2" Ibid.

2* Ibid.

22 "Construction Appraisal Report for Comanche Peak Steam Electrical Station," p. 4-11.

146 operating license pending the conclusion of the licensing hearings.23 The Atomic

Safety and Licensing Board issued a Proposed Initial Decision on October 6 that did not identify any major problems. TU officials viewed the action as a precursor to the license and were optimistic.2'*

Two months later, the ASLB reversed itself. A combination of factors — the CAT inspection, the Walsh/Doyle allegations, rumors of harassment and intimidation, and a general feeling of "wrongness" — caused the board to halt the project. On December 28, 1983, the Atomic Safety and Licensing Board issued a "Memorandum and Order" that concluded that the field design change process did not identify and correct design errors in a reasonably prompt manner.25 The field design change process, the subject of much of CASE'S criticism of the

project, centered on the ability of the engineers and architects to approve

blueprint modifications in the field. The ASLB decision had dire consequences for the project. It required the applicant to justify large portions, if not all, of the

construction up to that point.

The Memorandum and Order was critical of both TU's actions and the

NRC's support of TU.26 The condemnation of the Nuclear Regulatory

Commission by its own staff was a unique situation. In effect, the Atomic Safety

23 Ibid.

2'* Dallas Morning News, October 7, 1983.

25 Atomic Safety and Licensing Board, "Memorandum and Order Regarding Comanche Peak Steam Electrical Station," SPP, Box 43, SWC, TTU.

26 Ibid.

147 and Licensing Board, an independent entity but closely affiliated with the commission, challenged the findings of NRC inspectors. The ASLB also urged

TU to perform an independent design review of the entire project. The NRC, now in the difficult and uncomfortable position of reevaluating work it had previously approved, sent in a Special Review Team. The investigators, in April 1984, generally approved TU's program but identified several potential issues and over

800 technical concerns.2^ TU, which had planned a September fuel loading in

Unit 1, was stunned. Until the utility satisfied the ASLB's concerns, the plant would not receive a license.

The NRC, in response to the ASLB's instructions, now had to re-examine the entire plant. The commission, to identify and resolve specific issues, formed a Technical Review Team (TRT). The review team issued three reports on the project. The first two reports found only minor problems and were prescriptive in nature. TU's response was to create a Comanche Peak Response Team

(CPRT) made up of representatives from TU and independent engineering firms, including Stone & Webster, Ebasco, and Impell Engineering.2® The CPRT program hoped to remedy any potential problems found at the site. At the time of the second review team report, November 29, 1984, Comanche Peak was within months of completion and near the end of the licensing process.

2^ Nielsen-Wurster Prudence Review, Vol. 3, p. IX-5-9.

2® Ibid.

148 The third Technical Review Team report, dated January 8, 1985, drastically altered the project. It identified significant deficiencies in numerous areas of the quality assurance/quality control program.23 Unlike the first two reports, the third report's findings did not focus on specific yet minor problems.

Instead, the report identified a potential breakdown in quality assurance at

Comanche Peak. The report provided several examples of discrepancies betiween designs and the actual construction. The documentation proved that changes in construction were not approved by engineers and often not examined by safety inspectors.3° The report, in essence, declared that the safety of the plant was in doubt, but no clear proof that the quality assurance inspected every portion of the plant existed.

Texas Utilities management instructed the CPRT to focus its efforts on the quality assurance issue. Unfortunately for Texas Utilities, the Comanche Peak

Response Team took neariy a year to develop a preliminary plan to correct the problems at the facility.^* The unreasonably long delay frustrated the NRC. The commission felt that TU was unwilling to put forth the effort to correct the problem and demanded several revisions to the plan, each requiring a more thorough investigation of the problems. Vince Noonan, head of the NRC investigating team, said that he needed evidence that the response team had a "clear

23 Nuclear Regulatory Commission, "Technical Review Team Letter, January 8, 1985," SPP, Box 71, SWC, TTU.

3" Ibid.

3* Nielsen-Wurster Prudence Review, Vol. 1, p. 1-31.

149 mandate" to repair the plant, "I don't see that mandate being made," he said, "I only hear words about this team going and fixing issues."32

Noonan and other NRC officials felt that the utility remained reluctant to accept criticism. In describing the character of TU, he said, "Number one is the attitude. Come in and convince me that you really want to fix the problem - because you want to fix it, not because the NRC is asking you."33 in May 1986, the NRC approved the CPRT program but did not end its careful watch over the project. Between August 1985 and August 1988, the NRC spent more inspector hours on the implementation of the CPRT program than it had spent on the entire licensing efforts of other units. ^

The Government Accountability Project, meanwhile, stepped up its efforts.

On March 19, 1984, it filed a petition on behalf of CASE, requesting that the NRC take action against Comanche Peak. It wanted a comprehensive management audit to protect the public health and safety. In addition, the Government

Accountability Project asked the NRC to stop work at the plant and launch an

investigation to determine what documents had been destroyed or falsified.3 5

The NRC did not ignore the complaints and, from April 3 to April 13, 1984,

32 Dallas Morning News, February 28, 1985.

33 Dallas Morning News, March 15, 1985.

3* Ibid.

35 Nielsen-Wurster Prudence Review, Vol. 3, p. VI-6-9.

150 conducted an inspection of the project. The inspection revealed no problems

and concluded that a stop work order was not warranted.3®

GAP, unwilling to accept the NRC's assurances that CPSES was safe,

then chose to declare that the NRC's entire Region IV (in which Comanche Peak

resided) was guilty of defects. Billie Garde, representing GAP, listed a significant

number of allegations against Region IV. The NRC could ignore neither the

accusations nor the ensuing newspaper articles. Headlines such as "NRC

Betraying Informants," "NRC Warned Comanche of Investigations," "NRC

Accused of Covering Up Poor Inspection," and "NRC Undermining Comanche

Peak Probe" swayed public opinion against both the NRC and Comanche

Peak.3^

As part of the NRC's evaluation of Comanche Peak, the Office of

Inspector & Auditor reviewed the actions of its Region IV office. It concluded that

there were serious deficiencies in Region IV's inspection program and suggested

a thorough evaluation of the local office. Noonan said, "We're not clean, I look at

my own agency—there were things that were not done right. I fully recognize

that."^® The ASLB soon faced additional problems. Dozens of allegations of

harassment, intimidation, and threats threatened to overwhelm the three-member

panel. To resolve the non-technical issues, a second ASLB convened. The

36 Ibid.

3^ Nielsen-Wurster Prudence Review, Vol. 3, p. V-6.

3® Dallas Morning News, March 15, 1985.

151 scope of the second ASLB, as hundreds more allegations of improper behavior arose, soon surpassed its partner. The NRC investigated the claims but found that no climate of intimidation existed at Comanche Peak. 33

Nonetheless, as a result of the uproar, on May 24, 1984, Harold Denton, the NRC's Director of the Office of Nuclear Reactor Regulation, responded to the allegations. He noted that the issues were under review and that the NRC would consider all relevant information.'*" Through the entire process, and over the next years, the public hearings became a battleground between Comanche Peak and the GAP-CASE opposition. GAP produced hundreds of allegations in an attempt to prove that TU disregarded safety procedures with the compliance of the NRC Region IV. The extent of GAP's efforts proved ambitious. William

Dircks, the NRC's Executive Director for Operations said, "we had a very active group down there that was developing affidavits as fast as we could read them.""*

The endless delays made financing the project difficult for both TU and the minority partners. From 1974 to 1989, TU raised over $9.6 billion through various methods.'*2 j^^^ majority came through common stock, preferred stock, and mortgage bonds. TU issued the debt instruments using the plant and

33 Ibid.

"" Ibid.

"* Ibid.

'*2 Nielsen-Wurster Prudence Review, Vol 2, p. lV-4-5.

152 equipment as collateral, thus allowing a lower rate on loans. In the eyes of many investors and the bond rating agencies, the method increased the financial risk.

As the price of Comanche Peak rose, TU turned to larger and larger bond issues. All told, between 1985 and 1989, forty-four bond issues raised $4.6 billion dollars.'*3 The bond issues, and the use of other credit lines, led rating agencies to decrease the value of TU stock. Public Utility Commission (PUC)

regulations did not allow TU to use rate increases to cover the cost of

construction work in progress. Therefore, TU found itself in a great deal of debt without possibility of repayment unless the plant came online. In 1984, as a

result of a rate case filed by TU, the PUC amended its regulations and allowed

TU to assign a portion of the cost of the work in progress to the rate base.

Even with the new allowances, TU and its partners still faced difficulty in meeting

their financial obligations.

In March 1985, Comanche Peak surpassed South Texas as the most

expensive plant in Texas. TU spokesman Jack Redding said, "in effect, I'd have

to say that the anti-nukes [advocates] won. By delaying the plant coming on line,

they've caused the cost of the plant to go up. Then they can say nuclear power

is not economical.""5 j^^^ Roisman, leader for Trial Lawyers for Public Justice,

'*3 Ibid.

^ Ibid.

"5 Fort Worth Star-Telegram, February 3, 1985.

153 felt that it was only a partial victory. "I think what's happened is we've taken a dip into the quality control-assurance program at Comanche Peak. Just a pinprick into the surface and what we found was some disease. And what is required now, in my judgment, is to really take a slice into the body and find out whether it's running through the whole body."'*6

For the minority owners, the rising costs of Comanche Peak undermined confidence in the project. By mid-1984, the minority owners began to doubt the feasibility of remaining with the project. The Brazos Electric Power Cooperative and the Tex-La Electric Cooperative had joined the project in late 1979. To finance their share of the construction, both cooperatives had established loans with the Rural Electrification Administration (REA). The REA used rigorous loan guidelines and limits to ensure that small utilities did not default on loan. In 1984, both Tex-La and Brazos neared their loan limits.

The REA, after visiting Comanche Peak and meeting with representatives from TU and the two cooperatives, increased the loan limits. The escalating cost of Comanche Peak, however, exhausted the new funds in less than a year. In

May 1985, Brazos Electric Power Cooperative reached the limits of its funds.

Since the REA refused to extend further loans to the cooperative, Brazos officials decided to cease making contractual payments to TU. TU understood the situation and was sympathetic. Negotiations to resolve the dilemma began and

TU did not pursue legal action against Brazos.

"6 Ibid.

154 One reason the minority partners did not want to continue their involvement was the changing energy situation. The justification for the

Comanche Peak project, that fossil fuel prices were too high and the country needed huge amounts of energy, were no longer applicable. In December 1985, the Atomic Industrial Forum released estimates that demonstrated that coal electricity, for the first time, was cheaper than nuclear.'*'' A spokesman for the organization blamed the change in favor of coal on the lengthy licensing and construction periods for nuclear. The time for completion of a nuclear plant averaged thirteen years. "No one will think of building another nuclear plant unless they think it can be done in six years," concluded the group's spokesman."®

Unfortunately, in early 1985, Texas Utilities managers, through a previously unheard of error, further compounded the problems at Comanche

Peak. On January 28, 1985, the Nuclear Regulatory Commission informed TU that as of August 1, 1984, its construction permit had lapsed. The failure of TU to renew the permit not only resulted in a Stop Work Order but also an investigation into the corporate character of TU and its ability to run a nuclear power plant.'*3

'*^ Fort Worth Star-Telegram, December 6, 1985.

'*® Ibid.

'*3 Nielsen-Wurster Prudence Review, Vol. 2, p. III-4.

155 The NRC and opponents of the project were incredulous that TU could ignore such a simple requirement as the renewal of the construction permit.5"

The process was a common task in the nuclear industry and usually accomplished without difficulty. TU blamed the failure to renew the construction permit on an administrative oversight. The event, however, was the only one of its kind in the industry and went beyond mere administrative oversight. The work stoppage, in addition to its other ramifications, resulted in the forced layoff of 250 workers.5* A separate hearing considered whether or not to reissue the construction permit. After several months of debate, and numerous arguments against renewal put forth by CASE, the NRC renewed the applicant's construction permit.52

The relationship between the NRC and Texas Utilities was a source of contention to CASE and other Comanche Peak opponents. CASE believed that the NRC worked too closely with Comanche Peak and was not objective about problems at the plant. Although the Atomic Safety and Licensing Board, an independent part of the NRC, did not receive the same criticism, project opponents alleged that the NRC repeatedly ignored problems at Comanche Peak

and often gave TU officials notice of upcoming inspections. In addition, CASE

5° Ibid.

5* Dallas Times Herald, January 31, 1986.

52 Ibid.

156 felt that some NRC officials, especially from the Region IV office, coached TU officials in how to answer licensing hearing questions. Various claims by former workers supported the allegations. Evert Mouser, a supervisor of plant inspectors, said, "If you screwed up, they [TU managers] walked you to the gate.

It applied to everyone at the site."53 Such harassment was not reported because, in Mouser's opinion, workers did not trust the NRC and were convinced that the commission would report whistie-blowers to plant management.

The allegations were similar to more than six hundred other reports of

intimidation and inadequate safety assurances. The NRC, as a result of the

hearings, announced on January 9, 1985, that Unit 1 would probably not be

online by the summer. Despite it being 98% complete, the NRC described its

license as, "probably the most uncertain from a licensing standpoint" of the

seventeen reactors it was monitoring.5" Q^g ^jgy later, on January 10, the NRC

released a new report identifying 110 potential safety hazards.55 The report said

that TU lacked the commitment to correct problems. Darrell Eisenhut, director of

the NRC's division of licensing, said, "I would be surprised if the utility did not

receive that letter [the report] yesterday and be in an extreme state of shock. If I

53 Dallas Morning News, January 6, 1985.

5'^ Ibid., January 9, 1985.

55 Ibid., January 10, 1985.

157 were on the receiving end of that letter, I would be very upset with my contractors and I would be very upset with my organization."56

The report noted more than 140 mistakes committed during construction.

Although some mistakes were as minor as broken cotter pins, others involved pipe supports that might interfere with the reactor's water supply.5^ Despite statements that the utility remained supportive of nuclear power, TU officials announced on January 27, 1985, that it was making a shift back to oil and natural gas. The utility also announced that it was studying how to switch four new lignite plants to natural gas.5®

The Government Accountability Project and CASE used the serious error concerning the license renewal to bolster their arguments against the project.

The two organizations attempted to portray the utility's management as inexperienced and often incompetent. Many of GAP's tactics focused on TU's lack of corporate character, an argument strengthened in May 1985 when the existence of the MAC Audit became public knowledge.53

TU, according to NRC regulations and "Requests to Produce" from interveners, should have made the report available as early as July 1980. At that time, L. F. Fikar, the head of TU's nuclear program, had chosen not to reveal the

56 Ibid., January 11, 1985.

5^ Ibid., January 14, 1985.

5® Ibid., January 27, 1985.

53 Nielsen-Wurster Prudence Review, Vol. 3, 111-28.

158 audit to either the NRC or TU's partners. Fikar's rationalization, which was supported by other TU executives, was that MAC prepared the report solely for a few members of TU's management and it was confidential.6° On May 29, 1985,

TU's legal counsel informed the ASLB of the report's existence. At this time,

none of the individuals responsible for the initial non-disclosure decision

remained in TU's nuclear program.

Both the NRC and ASLB considered TU's actions of questionable judgment. TU lost credibility. It also lost the favor of the ASLB, which started to allow a greater portion of CASE'S motions and requests.6* Over the next couple

of months, TU, in an effort to clear any trace of wrong doing, revealed several

other documents that should have been produced at the onset of the hearings.

The NRC ordered its Office of Investigation to examine TU's actions. A letter from the NRC to TU, dated September 22, 1986, described the findings of the

investigation. It said, "the utility made a material false statement by omission of the report in response to the intervener's request; however, the omission was not

made with the intention of violating the ASLB's order."62 Although the report's

6" Ibid.

6* Ibid.

62 Ibid.

159 language was not harsh, the NRC's conclusion that a material false statement was made undermined TU's corporate image and credibility.63

The discovery of the MAC Audit surprised the minority owners. They saw the report as evidence of TU's deceit and mismanagement. The small cooperatives, which often saw themselves as at the mercy of TU, used the new information to break free from the project. Tex-La, in a similar situation to

Brazos, had been late with its payments for several months. TU asked for the payments and threatened legal action. In response, and under protest, Tex-La provided the payments.

In 1985, interest costs on the facility were running over $1 million per day.6'* There seemed to be no end in sight to the expenses. Texas Utilities, the majority owner, was not immune to the financial difficulties. Following the announcement of further construction delays, the company's bond rating plummeted. "It will be a minor miracle if they finish that plant for less than $7 billion [twice the cost projected at the time]," said one observer.65 The Public

Utility Commission of Texas noted the problems. Its concern was how the utilities would pass on the costs to the consumers. For TU to increase its rates to pay for the project, it needed PUC approval. The process involved a prudence hearing in which TU had to prove that a rate increase was necessary. The

63 Ibid.

6'* The Nuclear Monitor, December 2, 1985.

65 Ibid.

160 hearing, observers correctly believed, would be a major obstacle forTU because, in 1985, a glut of electricity existed.66

The continued delays in the completion of Comanche Peak caused Wall

Street to reevaluate its view of the utility's stability. The utility's stocks, which had long held an "A/\A" rating, one of the higher possible, were no longer considered a prime investment. First in 1983, and then again, in 1985, Moody's Investors

Service lowered TU's bond ratings. The move raised interest rates on future bond issues and utility officials believed it would also raise customers' bills.®^

Standard & Poor followed several weeks later and lowered TU's bond rating two

levels.6®

In May 1986, the REA informed Tex-La, like Brazos a year eariier, that it

reached the limit of its loans and no further loans would be released. The

minority owners, faced with huge financial obligations and no way to meet the

payment schedule, refused to make any additional payments to TU. The

companies claimed that TU failed to administer the project in a competent

manner and did not meet its responsibilities under the original Joint Ownership

Agreement. The Texas Municipal Power Administration continued to make

payments for another year, but only under protest.

66 Ibid.

6^ Dallas Morning News, March 2, 1985.

6® Ibid., March 22, 1985.

161 TU, obviously unwilling to allow its partners to renege on their contractual obligations, filed suit in May 1986 against Tex-La, Brazos, and the Texas

Municipal Power Administration. In the suit, TU claimed that each of the joint owners refused to make further payments or had been making allegations that

TU failed to construct Comanche Peak properiy. As compensation, TU requested damages against Tex-La for breaking of the Joint Ownership

Agreement and a judgment against all three requiring them to pay their share of the remaining costs.

The joint owners, not to be outdone, filed counter-suits against TU alleging breach of contract and statutory violations. Frank Bushnell, spokesman for

Brazos Electric, described his utility's position: "this is just one more approach in our effort to get out of the project so that our consumers won't have to bear the cost that we have in this project, which is too much for them."63 The fears of the minority owners were justified. TU's latest estimate for completion was the summer of 1988, nearly twelve years after the start of construction. Every month that the project dragged on cost an estimated $35 million.^"

Unfortunately for all involved, the lawsuits consumed a great deal of time and resources. Executives and managers from all the companies refocused their efforts on producing material for the lawsuits instead of maintaining the work

63 Dallas Times Herald, March 12, 1987.

^° Dallas Morning News, July 24, 1986.

162 schedule at Comanche Peak. In addition, the suits created procedural difficulties for the licensing efforts. The NRC, hesitant to become involved in the lawsuits, looked at the legal maneuverings as further evidence that Comanche Peak was a problem. In February 1987, a judge ordered TU to release to the minority owners

25 million pages of documents (enough to stretch 4,300 miles) about Comanche

Peak. TU, concerned that the release might jeopardize trade secrets and confidential information, protested the decision. The judge ignored the utility's protests.^*

Before the case proceeded to trial, TU moved to negotiate a settlement.

The utility feared that a trial might extend over a long period of time and consume even more resources. Attorney fees for TU's forty lawyers and the minority owners' twenty-four raised the cost of the trial into the millions. TU faced the additional danger of a potentially crippling judgment. Under the Texas Deceptive

Trade Practices Act, damages could be tripled, and thus, if the trial resulted in a judgment against TU, the damages could be as high as $3 billion.'^2 \^ j^pg

1987, TU approached the Texas Municipal Power Association and offered to repurchase its ownership shares.

After a lengthy negotiation, the two companies agreed to terms. On

February 12, 1988, TU and the cooperative signed a settlement for $456.9 million pending PUC and NRC approval. Shortly thereafter, on July 5, TU purchased

^* Ibid., February 25, 1987

^2 Ibid., August 8, 1987

163 Brazos' share for $297.7 million. Eventually, on March 23, 1989, TU reclaimed full ownership of the project with the acquisition of Tex-La's share for $163 million.^3 jhe repurchase of the minority shares was a prudent investment. The move allowed Texas Utilities to concentrate its resources on completing the project and avoiding a lengthy or costly legal battle.

Amidst the legal battles and allegations of mismanagement, the public's confidence in Comanche Peak continued to erode. While the majority of the area's residents did not take an active role in supporting or opposing, many of the utility's customers expressed dissatisfaction. Several letters a month arrived at the utility condemning its role in the project. In addition, letters to the editor in the region's newspapers displayed similar frustration. A December 1985 letter to

the editor in the Dallas Morning News called Comanche Peak Texas Utilities'

"Nuclear Edsel" and asked the company to give up and acknowledge their

mistake.^" In early 1986, allegations arose concerning TU and its relationship with

the Nuclear Regulatory Commission. A federal investigation revealed that a TU

quality control supervisor. Sue Ann Neumeyer, falsified inspection records under

pressure from her superiors.^5 Although the event took place in early 1983, the

^3 Ibid.

^" Dallas Times Herald, December 20, 1985

^5 Ibid., April 24, 1986.

164 potential ramifications of the incident caused the ASLB to reevaluate once again its trust in TU.

Neumeyer alleged, in the statements given to the ASLB, that at least one supervisor threatened to make her work extra hours until she filled out forms that had mistakenly been left incomplete for years. The falsification of the inspection reports was a dangerous issue because it certified work that was potentially unsafe.^6 Neumeyer's experience was not unique. Supervisor Harry Williams told quality control inspectors that they would be dismissed if they did not stop

"nit-picking." As a result, the NRC ordered TU to pay a fine of $40,000 for the alleged harassment.^^

Betiween 1984 and 1987, the Nuclear Regulatory Commission spent more than $10 million on Comanche Peak. The NRC efforts grew so large, in fact, that the agency created a special office in Washington to oversee daily developments at Comanche Peak. The development was part of a major reorganization of the

NRC resulting from the belief at the national headquarters that regional NRC management was fiawed and the safety of the plant could not be guaranteed.'^®

On February 11, 1987, Christopher Grimes, a longtime NRC official, took charge of regulating Comanche Peak. Aware of the enormity of the task, he noted, "ifs definitely going to be a challenge and ifs definitely going to take every skill I can

^6 Ibid., April 25, 1986.

^^ Ibid., April 25, 1986.

''6 Dallas Morning News, January 26, 1987.

165 muster."^3 j^^g change removed all responsibility over Comanche Peak from the regional NRC office, an unprecedented move. "We've had widespread quality concerns," said Grimes, "we've had major problems in confidence in this plant, and it's going to take an extraordinary effort to bring this project to completion."®"

Grimes' statement was not incorrect. In January 1987 alone, 9,384 employees nationwide worked on the project. Of those, betiA/een 3,000 and

4,000 worked on re-inspections and corrections. The result of their efforts was that, by March 1987, the plant was 94% complete. TU, despite the near completion of its embattled project, still did not have a clear plan to pay for the plant. Ratepayers were already covering interest costs on $1.3 billion, or roughly seven cents for every dollar of a utility bill.®*

In February 1987, contentions arose over the ownership of the land on which Comanche Peak resided. Milam County commissioners asserted that, in the 1800s, their county acquired certain land from Somervell and Hood counties.

Comanche Peak, which covered nearly 6,000 acres, rested in the middle of the disputed land. While it was not a major hindrance for Comanche Peak, the land question reflected the overall sense of confiict that surrounded the project.

^3 Ibid., February 11, 1987.

®°lbid., February 26, 1987.

®* Ibid., March 13, 1987

166 Eventually, Milam County dropped its allegations, but not before stirring a great deal of public debate.®2

In early April 1987, allegations arose of misconduct by NRC officials. In a senate hearing, a NRC employee claimed that top officials may have tipped off

TU about a secret investigation and may have deleted parts of a report concluding that NRC superiors intimidated their own inspectors. The NRC admitted some of the allegations. Juanita Ellis, the president of the Citizens

Association for Sound Energy, said the testimony, "confirms CASE'S long­ standing and often voiced concerns about the lack of independence and credibility of the NRC to adequately monitor design and construction of

Comanche Peak."®3

TU had been attempting to improve relations with CASE. On March 22,

1987, Bill Counsil, the TU Vice-President for Nuclear Affairs, sent Ellis a birthday card to reflect a new spirit of goodwill. The move was highly publicized and covered by all the local media outlets.®" Counsil was new to the position but had two decades worth of experience. TU hired Counsil to provide leadership for the beleaguered project. He not only worked to improve relations with CASE but also attempted to facilitate a better partnership with Brown & Root and Gibbs &

Hill.

®2 Ibid., February 12, 1987.

®3 Ibid., April 10, 1987.

®" Fort Worth Star-Telegram, March 22, 1987.

167 Counsil's efforts were not successful and new opponents appeared. One source of opposition came from a small portion of the Texas Utilities shareholders. Two religious communities owned 450 of the 143 million shares of

TU common stock. During the annual shareholder meetings in both 1986 and

1987, the Western Province of the Sisters of St. Mary of Namur in Fort Worth and the Medical Mission Sisters in Boston proposed that TU prepare an independent review of the cost of canceling the project. Each time, the TU board of directors recommended that the proposal be voted down. The Sisters knew that the proposal would be voted down, but they hoped to raise awareness of the problems with the Comanche Peak project.®5 Although 84% of the shareholders voted against the 1987 proposal, the Sisters considered it a victory. The protest from the two religious groups shows the diversity of the opposition.

After an accident on September 16, 1987, Texas Utilities halted construction briefly. A thunderstorm toppled a 180-feet tall crane onto several office buildings, killing two and injuring eight others. The accident brought the total number of worker deaths during construction to seven. In response to the incident, the Occupational Safety and Health Administration launched a six-week investigation into working conditions at the site. It found that the incident was not the result of poor safety practices but merely an accident. The deaths, however, contributed to suspicions about the competence of the parties involved at the project.

®5 Dallas Morning News, May 13, 1987.

168 On December 19, 1987, TU formally replaced Gibbs & Hill, the architect/engineer of the facility. Gibbs & Hill, as a result of a settlement to avoid a lawsuit, gave $25 million to TU in compensation for its role in the problems at

Comanche Peak. While TU felt relieved by the action, CASE felt that the replacement of Gibbs & Hill validated its view that the design of the facility was deficient.®® In December 1988, the Comanche Peak Response Team notified TU and the NRC that it had completed its mission. After five years of work, it had resolved all of the outstanding issues from the Memorandum and Order and the

Technical Response Team review.

In early 1988, the issues between CASE and TU found resolution in a negotiated settlement. CASE, almost at the end of its financial resources, dropped its contentions against TU. In return, TU credited CASE with contributing significantly to making Comanche Peak a safer plant, and the ufility reimbursed CASE for the costs it accrued in its role as an intervenor. The settlement resulted in the elimination of the last intervenor in the ASLB licensing hearings and the removal of the final barrier to an operating license.

On July 1, 1988, TU, CASE, and the NRC filed documents with the ASLB to dismiss the operating license hearings. The three organizations felt that all of the relevant material had been presented. The ASLB accepted the motion to end the hearings and two weeks later formally closed the hearings. The action did

86 Ibid., December 19, 1987.

169 not please everyone. In early August, the Citizens for Fair Utility filed an appeal with the ASLB to reopen the hearings and requested admission as an intervenor.

The ASLB declined the request and did not reconvene the hearings.

The agreement betiween CASE and TU received the attention of the federal government. In May 1989, the Congressional Subcommittee on Nuclear

Regulation held hearings to investigate secret agreements betiA/een the project and its workers. Brown & Root, the hearings revealed, had paid workers not to testify before the NRC or ASLB licensing hearings. The construction firm made

payments of $35,000, $30,000, and $15,000 to workers.®^ In addition, the committee examined the agreement betiA/een TU and the Citizens' Association for Sound Energy.

The payment of $4.5 million to CASE and the group's subsequent oversight of construction appeared suspicious to the Congressional committee.

Both arrangements diminished potential opposition to the project in return for monetary compensation.®® One senator stated: "the courts will not enforce a contract where one party gives consideration for the other party's agreement not to testify in an action, regardless of whether the action is criminal or civil."®3 He

®^ Comanche Peak and Rancho Seco Nuclear Powerplants, Hearing before the Subcommittee on Nuclear Regulation of the Committee on Environment and Public Works, US Senate, 101^' Congress, 1^' Session on The secret settlement agreements restricting testimony at the Comanche Peak Nuclear powerplant and economic incentives affectiving the operation of rancho seco nuclear powerplant, May 4, 1989, SPP, Box 42, SWC, TTU.

88 Ibid.

170 concluded, "presumably, no one has been stupid enough to try something like this for a long time."3°

The committee obtained the written agreements that included phrases such as, "Mr. Macktal [an electrical foreman who received $35,000] hereby agrees that he will not voluntarily appear as a witness or a party in any such proceedings, and Mr. Macktal further agrees that if served with compulsory process seeking to compel his appearance ... he will immediately notify the undersigned representatives of Brown & Root."3* When he appeared before the committee, Joe Macktal admitted that he knew of safety violations at the construction site. Macktal then went on to say, "I am hesitant and reluctant to bring any safety allegations to the staff of the NRC because of their incompetence. I feel that they [Region IV of the NRC] have a history of whitewashing safety allegations at the Comanche Peak site."32 The Government

Accountability Project regarded Macktal as a potential "smoking gun" for its case against Comanche Peak.33

In early 1989, the NRC felt sufficiently confident in Comanche Peak's

progress to return to its usual mode of licensing review. The NRC, in late

®3 Ibid.

3" Ibid.

3* Ibid.

32 Ibid.

33 Ibid.

171 January 1990, found TU ready to operate Comanche Peak and prepared to grant a low-power operating license. CASE, however, now chose to intervene one last time. The organization made several filings in an attempt to delay the license but the NRC rejected its petitions. Despite the objections of CASE, in April 1991,

Unit 1 of Comanche Peak began producing commercial power.

In April 1993, Unit 2 of Comanche Peak began low-level operation. The nuclear reaction marked the end of over twenty years of planning, construction, and licensing for the troubled project. In total, the duration of construction took tiA/o and a half times the original estimate. The facility also took approximately

$10 million to complete, about fourteen times the first projections. When

Comanche Peak came on line, the startup marked the end of one of the most highly regulated power plants completed in the United States. Although not as well known as Shoreham or Diablo Canyon or other famous nuclear sites,

Comanche Peak experienced many of the same problems and more than its share of controversy.

The Comanche Peak Steam Electric Station remains online in 2002. The energy produced by the tiA/oreactor s powers approximately 40% of the homes in the Dallas-Fort Worth Metroplex and the rest of North Texas. After being extended several times, its current operating license is due to expire in 2033.

Many environmentalists and other concemed citizens have already discussed the issue of what to do with the plant once it is closed down. Unfortunately, no one

172 has formulated a satisfactory answer to the question. The plant still experiences its share of problems.

Following completion, Texas Utilities attempted rate increases on several occasions. Each rate increase went before the Texas Public Utility Commission and met bitter opposition from consumer groups. Once again, as it had to before the Atomic Safety and Licensing Board, TU had to justify the facility and its actions during the construction and licensing phases. Thousands of pages of documents, countless motions, and volumes of testimony resulted from the hearings. TU found limited success in each rate hearing and often received a fraction of its initial request. Comanche Peak also continues to attract the attention of the Nuclear Regulatory Commission. Since coming online, NRC investigators have found dozens of violations at the facility. The infractions have been minor for the most part and not outside the norm for a nuclear power plant.

Texas Utilities' decision to build Comanche Peak is still debatable. The

utility felt that fossil fuel prices and increased demand made nuclear power

necessary. At the time of the decision to build the plant, TU managers reached

logical conclusions based on the information they possessed. The NRC and

other utilities supported the decision and made similar choices of their own. The

argument against Comanche Peak is also persuasive. Texas Utilities did not

recognize either the changing regulatory environment or the end of the energy

crisis. By 1982, the utility could have canceled the project and saved billions of

173 dollars. Had it known what lay ahead, TU might have chosen to accept its losses and cease construction.

The problems at Comanche Peak are likewise debatable. TU was responsible for many of the delays and cost overruns. The utility was often guilty of mismanagement, poor decisions, and, in the case of the MAC audit, outright deceit. Because other companies suffered from bad decisions and poor workmanship, it would be unfair to condemn TU for all of the problems at

Comanche Peak. Both of the major contractors, Gibbs & Hill and Brown & Root, contributed their share of mismanagement. In fact, their actions led to many mistakes and helped create the situation that led to the Memorandum and Order.

In several ways, an observer could argue that the contractors bear a greater share of the burden of responsibility. While it made mistakes, Texas

Utilities often acted out of ignorance and inexperience. Gibbs & Hill and Brown &

Root cannot use the same excuse. Gibbs & Hill had participated in several

nuclear projects and should have been more careful. Brown & Root was a large,

experienced construction firm and it, too, should have been more careful. Lastly,

the Nuclear Regulatory Commission is partially to blame for the problems at

Comanche Peak. Investigations prior to the Memorandum and Order identified

no serious safety issues. The NRC helped create an atmosphere of lethargy in

the quality assurance program. Because of the NRC's compliance with TU's

activities, the utility continued to make the same mistakes. In the end, a variety

174 of parties contributed to the problems at the project, but eventually the same entities completed the twin nuclear reactors at Comanche Peak.

175 CHAPTER VI THE EARLY YEARS OF THE SOUTH TEXAS PROJECT

The South Texas Project (STP), like the Comanche Peak Steam

Electric Station, encountered a variety of problems, delays, and cost overruns. Houston Lighting & Power Electric Company (HL&P) built the tiA/in

1,250 megawatt reactors in Bay City, a small town southwest of Houston.

Construction began in 1975 and lasted until 1989 and cost $5.9 billion.

During the construction and licensing process, mismanagement, construction problems, and public opposition plagued the project. The utility completed the facility after several lengthy legal battles betiA/een its partners and its contractors. Despite its problems, the project reached completion and the facility became the first nuclear power plant in Texas. The history of the

South Texas Project illustrates the similarity of some of the problems faced by

Texas nuclear projects with plants elsewhere in the country. More importantly, the South Texas Project's development demonstrates some interesting exceptions to the nuclear plant and shows how Texas' nuclear energy story is unique.

Like Comanche Peak, the South Texas Project met with resistance from anti-nuclear activists and the state's Public Utility Commission. Although the tiA/oproject s faced many of the same problems, the management of

Houston Lighting & Power made several key decisions that allowed the utility

176 to avoid some of the delays encountered by its counterpart at Comanche

Peak. The Nuclear Regulatory Commission (NRC) levied a number of fines against the project and cited numerous problems but never felt it necessary to force a reevaluation and inspection of the entire facility. One of the utility's

main obstacles did not deal with safety or with construction problems, but with justification and need for the plant. HL&P endured several long hearings on the cost of the plant and whether or not the utility would be allowed to pass on the cost to its customers.

During the projecfs duration, HL&P made a number of controversial

decisions. In 1982, it chose to dismiss Brown & Root, the primary

constructor and architect-engineer for the project. Although the firing resulted

in a series of lawsuits, the NRC viewed the replacement of Brown & Root as

an indication that the utility was serious about ensuring the safety of the plant.

The quick realization of Houston Lighting & Power that it needed experienced

nuclear management avoided serious NRC sanctions and allowed the utility to complete the plant while construction at Comanche Peak lagged. The

efforts of HL&P allowed the utility to complete the South Texas Project before

Comanche Peak. The South Texas Project should not, however, be viewed

as a success story in comparison. The companies involved in the tiA/o

projects made serious mistakes and deserve the blame for mismanagement

and poor decision-making. In the same light, the tiA/o companies also desen/e

177 some accolades for successfully implementing a complicated technology and for resolving a number of problems caused by others.

The history of the South Texas Project began in 1968. Houston

Lighting & Power commissioned a study to compare the cost of nuclear power to fossil fuel generated power.* The study, conducted by Ebasco Energy

Services, examined coal, fuel oil, natural gas, and nuclear energy. Ebasco

issued its findings in January 1969. Entitled "The Generation Source

Comparison Study," the report concluded that nuclear power would be more

economical for the utility.2 HL&P was looking for an inexpensive alternative to

natural gas and hoped that nuclear energy would provide it.

The utility used the information from the Ebasco study to begin

planning the construction of a nuclear facility near the town of Wallis. Known as the Aliens Creek Project, the plant was to consist of tiA/olarg e reactors.

The utility also considered the construction of two more reactors at nearby

Mills Creek. Although the second project never proceeded beyond the preliminary stages and Aliens Creek never reached the construction phase, the tiA/o projects represented a very aggressive nuclear program and demonstrated how strongly the utility embraced nuclear technology.

* Untitled Reconstruction of Events at the South Texas Project, p. 2-22, Steve Porter Papers (SPP), Box 4, Southwest Collection (SWC), Texas Tech University (TTU). (Hereafter cited as Reconstruction of Events.)

2 Reconstruction of Events, p. 3-1.

178 In October 1971, HL&P presented a preliminary plan to the South

Texas Interconnected System. The system was a netiA/ork of utilities and municipal power companies that provided electricity to most of central and

South Texas. The various groups first joined prior to Worid War II. The organization cooperated in system planning and energy exchange. The

South Texas Interconnected System (STIS) included HL&P, Central Power &

Lighting, the Lower Colorado River Authority, the city of Austin, and the city of

San Antonio.3 Based on HL&P's plan, the group formed a steering committee to consider the feasibility of constructing a nuclear power plant.

Two months later, in December 1971, the members of STIS signed a preliminary agreement to further pursue development of a nuclear project.

Under the articles of the agreement, HL&P would own 38%, Austin 19.6%,

Central Power 19.1%, San Antonio 12.4%, and the Lower Colorado River

Authority 10.9%."

Based on the agreement, development of the joint project proceeded without delay. In January, the steering committee formed a Nuclear Study

Committee to oversee a preliminary study for the project to be located somewhere west of Houston. The study, conducted by Nuclear Utility

Services Corporation (NUS), covered all of the issues that the cities and utilities needed to consider before entering into a nuclear project. NUS

3 Ibid.

" Ibid.

179 provided specialized consulting services to utilities interested in nuclear energy. The company had been in business since 1960 and had a good reputation in the nuclear community.5 In its report, NUS included cost and schedule estimates as well as staffing and training requirements and environmental studies, siting studies, and feasibility studies. The findings of the report were strongly in favor of nuclear power. The report said, "the development of nuclear power sources in the Texas area for service during the coming decade is not merely an option, it is a necessity."® Considering such information, HL&P's decision to proceed with a nuclear project is understandable.

The NUS report concluded that commercial operation of the first unit by the summer of 1981 should be "an easily attainable goal."'' It projected a,

"54 month total construction period, a tiA/enty-four month licensing process and eighteen months for site selection, evaluation and contract negotiation."®

Several weeks later, NUS submitted a preliminary cost estimate for the large nuclear plant that had been titled the South Texas Project. The company divided its estimates into a best and worst case scenario for the price of the

5 George W. Oprea, Testimony before the Public Utility Commission of Texas, p. 57, SPP, Box 136, SWC, TTU. (Hereafter cited as George W. Oprea Testimony)

6 Ibid.

^ Ibid.

® Reconstruction of Events, p. 3-3.

180 tiA/o unit facility. The lowest price was $674.7 million and the highest was $860.9 million. HL&P presented the findings of NUS to the Steering

Committee that then elected HL&P to head the project. HL&P did not lobby for the position of Project Manager but agreed to take it on at the request of the other participants.3 The other utilities wanted HL&P to head the project because it had a small nuclear staff that was attempting to build another nuclear reactor at Aliens Creek.

Thus, by 1970, Houston Lighting & Power planned three nuclear projects totaling six reactors. The utility had built a nuclear program from nothing within a matter of months. In doing so, HL&P made several decisions that would have unforeseen repercussions. A wiser approach for the utility would have been to concentrate its efforts on one project, complete it with all speed, and then move on to the other projects. Such an approach would have allowed the utility's personnel to gain experience without having to share their resources. A single project approach would have also allowed the utility to deal with one licensing process. The decision to implement three projects, although Mill Creek never developed beyond the discussion stage, was unwise because the utility did not have enough experienced personnel to supervise multiple construction efforts.

The Aliens Creek project began in April 1971. Although it never reached the construction phase. Aliens Creek consumed personnel and

George W. Oprea Testimony, p. 58.

181 financial resources over the next fifteen years and the problems of the tiA/o projects often overlapped. Aliens Creek was solely the responsibility of

Houston Lighting & Power and did not involve the other members of the STIS.

Early in 1972, the company began purchasing land in Austin County on which to build a total of four reactors, each larger than any of the tiA/enty-five reactors currently in operation in the United States.*" It was an ambitious project but the company felt success was attainable.

In March 1973, Agents for the utility, acting secretly to conceal the reason for the negotiations, purchased eight thousand acres.** The land included the site of Stephen F. Austin's original colony that would have been submerged for a cooling pond. News of the reason for the land purchases became public in April 1973. At Aliens Creek, the land acquisition resulted in little protest but at Mill Creek, approximately 75 local landowners formed the

Mill Creek Environmental Protection Association. The goal of the organization was to "block construction of the nuclear power plant or, if that is impossible, to strive for more just compensation for the land than the company has offered."*2

Although many landowners stated that they were concerned about the environmental implications of building a nuclear reactor, the comments in

*" Ibid., p. 54.

** Ibid.

*2 Texas Observer, March 12, 1973.

182 newspapers suggest that other factors played a role. Many of the landowners were ranchers with a long family history on the land and were reluctant to give up title to property that included a number of family graveyards. Others felt that the land was ideal for agricultural purposes and to do othenA/ise with it was wasteful. Although a number of landowners stated safety concerns, financial compensation was a central theme.*3 The utility offered approximately $600 per acre but many of the landowners wanted up to $1600 per acre. In addition, many area residents stated that they planned to move if the plant was built. The possible migration of residents, as well as broader safety issues, concerned county officials.

The Aliens Creek project was the primary nuclear project for HL&P

until 1976 when the utility, because of economic and licensing difficulties, decided to cancel the project. Although it later attempted to revive the Aliens

Creek plant, the utility never completed the project. The importance of the

Aliens Creek project is that it strained HL&P's limited personnel and financial

resources and the controversy over the project contributed to an overall cloud of suspicion surrounding HL&P. To examine the South Texas Project without considering the role of Aliens Creek is impossible.

Meanwhile, as the utility purchased land for the reactors for both projects, the company's nuclear personnel proceeded with training and education. Westinghouse provided courses and literature to HL&P

*3 Ibid.

183 employees and the Atomic Energy Commission (AEC) provided copies of the regulations and legislative requirements for nuclear power. The AEC (and later the NRC), were, in the words of George W. Oprea, the head of HL&P's nuclear program, "very helpful in educating me about the type of staff we would need."*" To further help prepare the company for the licensing process, Oprea contracted with an experienced Washington law firm. He and other HL&P officials felt that they "had a good understanding of the task we faced."*5 Unfortunately, a few months of training did not provide the knowledge or experience needed for building a nuclear project; a deficiency the utility would not recognize for neariy a decade.

Houston Lighting & Power believed it needed nuclear power. The company had an excellent record in the construction of fossil fuel plants and had built reliable plants on schedule and under budget. The company's managers, Oprea said, "were confident in our methods for managing with contractors on our fossil plants, and while we knew that specific nuclear expertise would be necessary, we also believed that many of the techniques we had used successfully in the past would prove useful in our nuclear program.

14 George W. Oprea Testimony, p. 60.

*5 Ibid.

*6 Ibid., p. 62.

184 As news of the nuclear projects spread, opponents started to question the need for nuclear power. The utility designed a publicity campaign to educate Houston residents on why the plants were necessary. As part of its efforts, the utility explained that it served the greater Houston area, one of the fastest growing in the country at the time. The publicity campaign discussed both the need for more energy and the utility's plan to satisfy the power requirements. HL&P, to meet the corresponding increases in energy demand, embarked on a rapid expansion program. Between the mid-1960s and early 1970s, the company completed six gas and coal power plants and began construction on two more. Concerns about its ability to supply the expanding region with power led it to pursue nuclear power without considering the possible consequences of its decision.

The campaign to rally support for nuclear energy met limited success and, almost immediately, problems for the South Texas Project started to develop. In September 1972, less than one year after joining, the city of

Austin announced its withdrawal from the STP. Citizens in the municipality voted against a bond issue needed to fund participation in the project.

Without the money from the bond issue, the city could not afford to meet its contractual obligations. The decision, while a hindrance for the project, did not make continuing impossible because the city had not yet contributed any money to the project. At the same time, the Lower Colorado River Authority also withdrew. The LCRA cited uncertainties about nuclear technology and,

185 showing a great deal of foresight, questioned the economics behind its decision.*^ LCRA was the smallest partner in the project and its decision to withdraw did not affect the project as HL&P assumed LCRA's share without difficulty.

The withdrawal of tiA/o of the partners did not cause the others to reconsider. The next step for the project was to determine a site for the STP facility. In October 1972, Brown & Root submitted a proposal to conduct site selection to the Study Committee. In response, the committee authorized

Brown & Root and Nuclear Utility Services to conduct a site selection study.

Over the next year the tiA/o companies studied several sites around Houston.

The site needed to have a low population density, access to a river or large lake, and a reasonable proximity to the city.*® The tiA/o companies suggested an 11,500-acre plot near Bay City. Bay City was a small agricultural community to the southwest of Houston. The Steering Committee accepted the recommendation and, in June 1973, publicly announced its intent to build a nuclear plant.

The selection of the architect-engineer was the next step. HL&P officials reviewed industry publications and discussed the process with other utilities. They then identified the companies they believed had the capability to complete the project. The firms selected for consideration were Bechtel,

*'^ Reconstruction of Events, p. 3-9.

*® Ibid., pp. 3-11. 186 Brown & Root, Ebasco, and Stone & Webster Engineering.*3 HL&P was unique in also wanting the firm to be able to handle both the design and the construction tasks. With most nuclear projects, the owner used separate architect-engineer and construction companies. Other utilities believed that having separate companies perform the tasks provided a system of mutual oversight. HL&P, however, felt that a single company could achieve the lowest cost.2° Although HL&P's decision was rare, other utilities and the

Atomic Energy Commission did not see the use of a single design engineer and constructor as unacceptable.2* In hindsight, the utility could be accused of allowing cost considerations to override safety. Opponents of the project

later attacked the decision and the evidence provides justification for the

argument against having a single company perform both tasks.

For the next step, HL&P officials asked the four firms to submit

documentation that related to their capability to engineer, design, and

construct a nuclear plant. In addition, the utility requested that the

prospective contractors make presentations to the Steering Committee.

Oprea and other officials used the materials and presentations to formulate

additional questions for the candidates. The selection process was tedious

*3 Management Analysis Company Audit, 1979, p. 13, SPP, Box 24, SWC, TTU.

2" George W. Oprea Testimony, p. 42.

2* Ibid. 187 and personnel from both HL&P and the firms under consideration made a

number of trips between their companies. Although it made many mistakes

during the project, the utility executed the selection process effectively.

One issue under consideration that especially worried HL&P was the

workload of each firm.22 HL&P wanted the South Texas Project in operation

in time to meet the peak demands of the summer of 1981. To ensure that the

goal was met, HL&P wanted a firm that would give STP priority over any

others. The nuclear industry was highly competitive and nuclear projects

required a wealth of resources that only a few construction companies had

the means to fulfill. Thus, it was important to ensure that the company

chosen for the project was willing to place STP ahead of any others.

Bechtel was the first company to respond to HL&P's invitation for bids,

and it made a presentation on February 14, 1972, just tiA/o months after the

STIS decision to build a nuclear power plant. Oprea and other HL&P officials

then went to Bechtel's Los Angeles headquarters for additional meetings.

They also toured the Rancho Seco and San Onofre nuclear plants, tiA/o of

Bechtel's projects. Although they felt that Bechtel possessed a great deal of

experience and a strong corporate organization, Oprea and the others with

him worried that Bechtel did not have the resources necessary for the South

Texas Project.23 j^ the eariy 1970s, Bechtel took part in the engineering or

22 Ibid.

188 construction of fifty-eight nuclear plants. The HL&P managers worried that the company did not have the personnel to devote an experienced and talented engineering team to their project. Oprea said, "While I was not told directly that Bechtel was not interested in STP, I developed the definite impression that they had all the work they could effectively handle."2"

Ebasco, on February 22, 1972, was the next company to present its bid to HL&P Then, in late February, HL&P officials traveled to New York,

Vermont, and Florida to visit the Ebasco headquarters and to inspecttiA/o o f its plants. Oprea concluded that Ebasco hadtiA/o problem s that made its selection undesirable. Like Bechtel, Ebasco faced a large backlog of other projects and, thus, was unlikely to devote "first-team" personnel to the project.25 One element of the backlog was the Aliens Creek project. Ebasco was the principle contractor there and HL&P managers believed that it would not be prudent to select Ebasco for both. The utility feared that if Ebasco needed certain personnel or equipment resources for both projects, HL&P might be seen as biased in deciding the allocation of the resources betiA/een the two projects.26 Because of the heavy financial commitment by all parties,

HL&P did not want its partners in STP to believe that it was favoring the

23 Ibid., p. 47.

2" Ibid.

25 Ibid.

26 Ibid., p. 49. 189 Aliens Creek facility. Therefore, the Steering Committee, upon Oproa's

suggestion, removed Ebasco from consideration. Oprea's argument against

Ebasco was justified. The history of STP contained several examples of the

minority partners raising concerns about HL&P placing the importance of

Aliens Creek above the South Texas Project. The fears of the minority

partners would certainly have been greater if a single company acted as the

design engineer and constructor for both projects.

Stone & Webster, in early March 1972, was the next to meet with the

utility. Following the presentation, HL&P officials toured the Connecticut

Yankee and Nine Mile Point, tiA/oSton e & Webster-built nuclear facilities.

Like the other tiA/o potential contractors. Stone & Webster had a large backlog

of ongoing work. The firm had about tiA/enty-fivenuclea r projects and made it

clear to HL&P that it would handle business on a "first come, first serve"

basis. Because of the reluctance of Stone & Webster to prioritize STP, HL&P

removed the company from its list.2''

The last firm under consideration was Brown & Root, a subsidiary of

the Halliburton Corporation. Brown & Root (and Halliburton) were large

companies with good reputations, especially within the state of Texas. As

with the other firms. Brown & Root made a presentation and allowed HL&P

executives to visit its offices and nuclear projects. Oprea and others described the visits as "very positive." Brown & Root, based in Houston,

2^ Ibid. 190 made a strong management commitment to the project and promised to give it the highest priority.

Brown & Root wanted to become a major force in the nuclear industry, and, although it had been involved in several nuclear projects, it had never before taken so large a role.2® The success of STP was very important to

Brown & Root's plans for future nuclear projects and such was the reason it

placed major emphasis on acquiring the contract. The company also

arranged to have the resources of Nuclear Utility Services, a firm that its

parent corporation, Halliburton, was trying to purchase, to assist them in the

design phase. Brown & Root had an excellent reputation and was ranked in

the early 1970s as the number one constructor in the world.

Although HL&P had never previously used Brown & Root, several of

the other project participants had used the company with good results. The

AEC also approved of Brown & Root. In January 1972, Ernest B. Tremel, an

official with the AEC, recommended Brown & Root for its reputation, its

access to NUS, and its strong incentive to perform well on its first nuclear

project.^" The last characteristic of Brown & Root that attracted HL&P was its

2® MAC Audit, p. 27.

23 Ibid.

30 Ernst & Whitney Review of the Prudence of Management and the Reasonableness of Costs Associated with the South Texas Nuclear Project, Prepared for the Public Utility Commission of Texas, June 6, 1989, p. 2-y, SPP, Box 40, SWC, TTU. 191 preference for non-union labor. HL&P officials believed that a non-union

labor force would lower project costs. All such factors contributed to the

selection of Brown & Root as both the architect-engineer and the

constructor.3* The AEC approved the choice and affirmed HL&P's belief that

the other firms were overextended. Therefore, on August 1, 1973, HL&P

formally announced the hiring of Brown & Root to construct the South Texas

Project.

Unbeknownst to the utility. Brown & Root officials feared that it would

not get the contract, and, if it did, the company would have difficulties meeting

the projecfs schedule. On February 24, 1972, when Oprea visited a Brown &

Root project in Brunswick, a manager for the construction firm wrote his

superiors, "we were doing well with Oprea, but if we 'blew it,' we did it at

Brunswick.32 Larry [a Brown & Root manager at the project] couldn't answer

many of the questions about construction, nor did he have anyone available

that could. It was pitiful."33 The comments of the Brown & Root manager do

not reflect well on the company and it is clear that even those associated with the company's nuclear projects were not knowledgeable. The failure of

Brown & Root to notify HL&P, while understandable in light of the company's

3* Ibid.

32 Confidential Memorandum to Mr. Munisteri from Mr. Marselli, February 24, 1972, SPP, Box 40, SWC, TTU.

33 Ibid.

192 desire to become a force in the nuclear energy, was a major mistake and led to many subsequent problems. No good justification exists for Brown &

Root's actions.

Brown & Root's deficiencies as a nuclear construction company did not take long to appear. Several HL&P executives, within a few months, regretted the decision to hire Brown & Root. The project manager for HL&P,

Frank O'Brien, wrote a letter to his senior management complaining about

Brown & Roofs inefficiency. O'Brien condemned the firm and said, "of far

more importance to the schedule and the overall success of the project, is a

serious deficiency in Brown & Root's capabilities, specifically in the area of

planning, scheduling, and status reporting."3" O'Brien blamed the company

for not being able to handle essential aspects of a large project. O'Brien said,

"Apparently Brown & Root's ability to plan major subtasks, and to forecast

and schedule the work involved is not adequate to meet HL&P's needs." He

said, "we judge that most utilities would be similarly unsatisfied. Perhaps the

lack of schedule control is symptomatic of a larger Brown & Root problem-the

absence of a larger plan and schedule."35 pespite O'Brien's statements, the

utility continued to allow Brown & Root to oversight its own efforts.

The problems with the design engineer were, in part, the result of the

projecfs being Brown & Roofs first independent nuclear project. In a

3" Letter from Project Manager Frank O'Brien to George Bierman, September 10, 1973, SPP, Box 100, SWC, TTU.

35 Ibid. 193 Management Committee meeting in December 1973, HL&P officials

discussed the lack of experience with Brown & Root and within their own

company. The members of the committee noted a lack of people who could

be relied upon to complete independent assignments. The committee blamed

the problem on a lack of experience and, because of a low salary structure,

the failure to attract quality personnel.36 Although the utility knew the

problems existed, there appeared to be no clear way to correct them. The

frustration of the utility was evident, but without a solution. Brown & Roofs

slow progress continued.

In December 1973, fifteen months after leaving, the city of Austin

rejoined the project. City officials, unaware of the growing rift betiA/een HL&P

and Brown & Root, believed that the plant was necessary in ensuring a

continued energy supply for the city. Colder than normal temperatures and fuel shortages during the early winter of 1973-1974 triggered the change in

opinion 3^ City Councilman Bob Binder said, "the plant is going to be built and

ifs on schedule, so the question is should we have access to it. I have no

problem in answering to the affirmative."3® After a very public campaign to

36 Minutes from Management Committee, December 1973, SPP, Box 100, SWC, TTU.

3'' Texas Obsen/er, January 9, 1979.

3® Ibid., November 16, 1973.

194 convince voters of the same, the city endorsed the project and passed a new bond issue.

The vote was not without controversy. Dr. Barrie Kitto, a chemistry

professor at the University of Texas, condemned the city council's actions. In

response to the presentation of the film "Nuclear Reactors Make Good

Neighbors" at a city council hearing, Kitto said he had never seen such

"blatantly one sided pro-nuclear information."33 |n response to allegations that

the city council was pro-nuclear. Councilman Beri Handcox said, "I wouldn't

say I'm pro-nuclear. I'm pro-energy.""" The council justified the support of

nuclear power with statistics that demonstrated its environmentally friendly

and inexpensive aspects. The election was close and the bond passed by a

margin of only 122 votes.

The South Texas Project, following Austin's re-admittance, generated

some national attention. On December 13, 1973, Ralph Nader attacked

nuclear energy in a speech presented in Houston. Nader, the leader of the

anti-nuclear group Critical Mass, described nuclear power as the "greatest technological mistake this country has ever made.""* To convince the audience of the dangers of atomic power, Nader compared a possible nuclear disaster at the South Texas Project to the infamous Texas City fire of 1947.

39 Ibid.

"° Ibid.

"* Ibid., December 14, 1973.

195 The fire killed 550 and wounded thousands more. Nader said that a nuclear accident would be one hundred times more destructive and could potentially kill 45,000-50,000 people. "2

Despite the opposition from several sources, the project proceeded through 1974. In May of that year, the utility filed the Preliminary Safety

Analysis Report (PSAR) and Construction Permit application with the AEC.

The reports were a vital component of the licensing process and consumed the resources of HL&P, Brown & Root, and Nuclear Utility Services. While the AEC examined the documents. Brown & Root engineers worked to complete the designs for the facility. The utility, according to its contract with

Brown & Root, required that ninety percent of the design work would be completed by the time the project received its construction permit."3

In October 1974, HL&P conducted an audit of Brown & Roofs activities at the site. The utility's executives were not pleased by the results of the audit, and the strained relationship betiA/een the tiA/o companies increased.""

Neither of the two companies felt comfortable with the amount of effort that the other put forth on meeting schedule milestones or ensuring quality control.

The audit identified a need for better communication and clearer lines of

"2 Ibid.

"3 Reconstruction of Events, p. 3-22.

"" HL&P Audit of Brown & Root, October 31, 1974, SPP, Box 48, SWC, TTU.

196 authority. HL&P also believed that Brown & Root personnel were hiding problems from the utility and trying to solve them without ever informing HL&P officials of the difficulties."5 Despite the confiict betiA/een the tiA/ocompanies , the project appeared to be on schedule.

The potential benefits of nuclear power and the progress at STP encouraged officials with the city of San Antonio to consider building

additional nuclear facilities. In May 1974, San Antonio officials asked Austin

city leaders to consider a joint nuclear plant to be built somewhere between the tiA/ocities." 6 Although nothing further developed, the idea suggests that the apparent ease at which STP had begun created among the partners in the project, a somewhat cavalier attitude towards nuclear power. On

January 17, 1975, the tiA/ocities , citing a downturn in the economy, ceased

discussion of the new plant."'' The consideration of an additional nuclear

project is ironic in that within ten years, both Austin and San Antonio

questioned the necessity of nuclear power and attempted to abandon STP

The other owner of the project. Central Power & Light, also

demonstrated its support of nuclear power. On May 9, 1974, Clark Councill,

the public relations manager for Central Power and Light, whose

headquarters was in Corpus Christi, attended the Atomic Industrial Forum's

"5 Ibid.

"6 Texas Observer, May 10, 1974.

"^ Ibid., January 17, 1975.

197 annual conference. At the meeting, he presented a speech entitled "Texas

Goes Nuclear" in which he talked about how beneficial nuclear power was and how the people of Texas fully endorsed it. He also discussed the publicity campaign his utility had launched to reassure residents about the safety of nuclear power. In the speech, Councill stated that only 17% of consumers in the service area opposed nuclear energy."®

The rapid growth of nuclear power in the state caused some Texans to object to the seemingly haphazard way in which utilities began nuclear power projects. Several anti-nuclear activists alleged that the state was moving forward towards nuclear power without adequate planning."3 The congressional representatives from Texas did not share the sentiment and some expressed pride in the state's acceptance of nuclear power. U.S.

Representative Tiger Teague of Bryan on September 19, 1974, told the

Dallas Morning News, "nuclear power plants are so safe that he could sleep soundly if they built one across from my house."5°

Other politicians stated similar views. U.S. Representative Jim Collins of Dallas attacked anti-nuclear protestors and said, "We need to give positive thinking people an opportunity to move forward."5* Senator John Tower

"® Ibid., May 10, 1974.

"3 Houston Chronicle, September 20, 1974.

5" Dallas Morning News, September 20, 1974.

5* Ibid. 198 proposed new federal regulations to help utilities to cover the cost of liability insurance for nuclear plants. The immense cost of liability insurance, he and many people in the nuclear industry believed, was the reason that more plants were not being built. Tower said the cost of liability insurance "can be borne by the government with no cost, unless or until there is an accident."52

Several newspapers joined Tower in supporting nuclear power and government support of the technology. Anti-nuclear advocates criticized the

Austin American-Statesman and Houston Chronicle for their support of "going nuclear." An editorial in the newspaper dismissed fears about nuclear power.

It said, "of course there is some risk. Life involves risk."53

The widespread acceptance and support of nuclear power in the state did not extend to the use of nuclear weapons. The Energy Research &

Development Administration, in 1975, proposed exploding atomic bombs in the salt domes along the gulf coast to create steam for energy. The idea was to fill salt domes with water and then heat the water using nuclear blasts. The steam released in the explosion would then be used to power large turbines.

The idea, which never evolved beyond the theoretical stages, caused many people to think that the nuclear mania had gone too far. Anti-nuclear activists

52 Ibid.

53 Texas Observer, January 17, 1975.

199 protested the plan and Dolph Briscoe, Governor of Texas, urged the government agency to proceed with caution.5'*

As opponents and supporters discussed the possibilities of nuclear power, Houston Power & Light reached several important milestones for its project. In August 1975, HL&P received a limited work authorization for the

South Texas Project. The date was about three months later than expected

but the projecfs managers were still pleased. The limited work authorization was not a standard part of a nuclear project. The NRC did not always grant the project and encouraged utilities to be careful in pursuing one. Under such an authorization, the utility could begin construction but under the realization that any work was subject to cancellation if the Atomic Safety & Licensing

Board (ASLB) later denied the construction permit. Brown & Root produced a

large quantity of engineering documents to support the beginning of

construction. Work proceeded without delay and by April 1976, all work

allowed under the authorization, such as excavation and non-safety related construction, was complete.

The limited work authorization did not reassure the city of Austin.

Several indicators of problems betiA/een Brown & Root and HL&P and rising costs caused the city to reconsider its participation in the project. In May

1976, the Austin City Council voted to sell its interest in STP. The council

5" Ibid., May 9, 1975.

200 cited rising construction and fuel costs for its decision.55 Some council members also expressed concern about the reliability of the plant. The city, despite its decision, could not withdraw from the project until it found a buyer,

a prospect that, because of cost, appeared unlikely.

In June 1976, Brown & Root issued an updated cost estimate of $1.23

billion. It cited a considerable increase in the number of man-hours required to compete the project. The increased cost did not affect the schedule and

officials believed the project would be completed on time.

The project reached a major milestone in December 1976. The

Nuclear Regulatory Commission, after a series of hearings before the Atomic

Safety & Licensing Board, granted the construction permit for the project.

Unbeknownst to HL&P or the NRC, Brown & Root did not, at that time, have a

majority of the engineering documents completed. In fact, although Brown &

Root was in violation of its contract with HL&P because it did not have a

sufficient amount of the engineering completed, the company chose to begin

safety-related construction. Brown & Root justified the decision because it

was under pressure from the utility and did not want to contribute to further

delays on its first major nuclear project.56 Brown & Root management, when

55 Reconstruction of Events, pp. 4-2.

56 Ernst & Whitney Audit, p. 3-17. 201 questioned by HL&P executives, expressed "strong confidence" in its ability to continue meeting the projecfs scheduled milestones.5'^

In May 1977, despite Brown & Roots reassurances, concerns began to surface about the project's schedule. Several HL&P executives expressed a lack of faith in the ability of Brown & Root to meet STP's milestones. To detennine if the fears were true, HL&P hired the Management Analysis

Company (MAC) to evaluate and audit the projecfs management. As the audit proceeded. Brown & Root notified HL&P that it was behind schedule.

STP's Management Committee questioned the firm's ability to complete the project but did not take any action.

In April 1978, the MAC audit reported that the cost and schedule estimates were incorrect and recommended that the completion date be moved back to December 1982.5® j^g j^^c report, citing possible delays, recommended that Brown & Root continue to serve as the design engineer and constructor for the project. The company based its recommendation on the belief that Brown & Root had finished the majority of the design work for the plant.53 Brown & Root, without the knowledge of MAC or HL&P, concealed the amount of design work completed and it, in fact, had only

5^ Ibid.

5®MACAudit, p. 31.

53 Ibid. 202 completed eight percent. A follow-up investigation by MAC discovered the discrepancy.®"

On June 8, 1978, Project Manager Henry Key told a meeting of HL&P executives of his frustration with the project. He said, "I need to make an announcement. If anybody here is sensitive, you need to get up and get the hell out of the room. I have some things to say and I will appreciate it if you hold your questions and comments to the end."®* Key then proceeded to attack Brown & Root. He said to the senior HL&P executives present, "I have absolutely nothing to report to you today that is supportive of the schedule evaluation requested by the Management Committee. However, I am going to tell you why. There are tiA/o reasons: 1) HL&P is not in control of the job, and 2) Brown & Root is not leveling with the client."62

Key also complained of the lack of a coherent plan for completing the project and Brown & Roofs refusal to be honest with the utility. "Brown &

Root smoke screens continue to mask the real project problems," he said.

One example Key noted dealt with Brown & Roofs failure to handle a simple task. "For over three months Brown & Root has been complaining that a ten inch water line is holding up the job in certain areas," he said, "how in the hell

6° Ibid.

6* Minutes from Meeting, June 8, 1978, SPP, Box 100, SWC, TTU.

62 Ibid. 203 is it that the number one construction company in the worid can be stumped by a ten inch water line?"63

The problems at STP did not deter the HL&P from the decision to restart the Aliens Creek project. The second oil shock in the late 1970s convinced the utility that it needed the electiical output of a second nuclear power plant. The company informed the NRC that it wanted to reconvene hearings on the project. On October 20, 1978, the Atomic Safety and

Licensing Board for Aliens Creek posted notices for a public hearing on the construction permit. The board received several petitions to intervene, including one from the Texas Public Interest Research Group. The hearings, once they began, degenerated into mudslinging and accusations of improper behavior. The Nuclear Regulatory Commission urged citizens not to raise arguments against the location of the site, as it was not the right forum for such protests. The delays for the hearings, in 1978, cost consumers $18 million.6" The decision to proceed with Aliens Creek was not an indication that HL&P had resolved the problems at STP but was, instead, the result of real concerns about its power supply.

Meanwhile, in January 1979, for the fourth time in eight years, the

Austin City Council polled voters on its continued participation in the South

63 Ibid.

6" Texas Observer, October 20, 1978.

204 Texas Project. The most recent poll was the result of the staggering cost overruns. HL&P had informed Austin officials that it needed an additional

$160 million to finish the project Austin, to meet the required financial commitment, needed a new public bond issue equal to its initial share.

The problems at STP, however, led many to lose confidence in the project. Construction delays and grossly inaccurate cost estimates undermined support for Austin's participation. An anti-nuclear organization,

Austin Citizens for Economical Energy, waged a campaign to defeat the most recent bond election. The group was unsuccessful in convincing residents to vote against the project and the results allowed the city to remain a partner.

Still, Austin officials wanted out and as they had since 1976, searched in vain for a buyer.

While Austin searched for a way out of the project, the licensing process for STP continued. The licensing hearings developed into an arena for HL&P and several citizens' groups to attack each other. The legal representation for HL&P urged the ASLB to deny requests to intervene because of the lack of qualified interveners. According to regulations, interveners, if they raised valid contentions, were allowed at operating permit hearings. HL&P attorneys, however, argued that the prospective interveners had no legal standing for their contentions. The chair of the ASLB, Charles

Bechhoefer, said that the case had several novel issues and the board was

65 Ibid., January 9, 1979.

205 considering them all.66 After a month of debate, the ASLB accepted three

interveners in the permit hearings and rejected tiA/enty-tiA/oothers . One of the groups rejected was a union labor organization that supported the plant.

Houston Lighting & Power faced similar problems with Aliens Creek.

Madeline Framson, a Houston environmentalist, was one of many area

residents who said that the utility's customers should vote on the site for the

plant. The Nuclear Regulatory Commission saw no problem with the

intended site and expressed doubts that a better site could be found. In

regards to the idea that citizens should vote on the site, the NRC

environmental manager said tongue in cheek "thaf s an excellent idea, take it

up with HL&P."6^

The arguments of nuclear power opponents found support in February

1979. Scientists concerned about the proliferation of nuclear energy revealed

a list of reactor accidents and improper procedures to the nation's press. The

South Texas Project was not one of the facilities included but the breadth of the reactors covered demonstrated widespread problems. Because of the

negligence of the utilities involved, some of the accidents created a great deal

of concern.

In one example cited in the report. Atomic Energy Commission

investigators found a drinking fountain connected to a radioactive waste

66 Houston Post, January 12, 1979.

6^ Houston Chronicle, February 9, 1979.

206 storage tank. The official AEC report commented on the potentially deadly

mistake, "the coupling of a contaminated system with a potable water system

is considered poor practice." Another infraction cited in the report was the

accidental discharge of 14,000 gallons of radioactive water into a river after a

pipe opened. The AEC investigators discovered that a basketball had been

used as a plug in the pipe.6®

The report generated immense public reaction against nuclear energy.

In his campaign for president. Governor John Connally dismissed the findings

of the report and called for a speedup of nuclear plant building. The

governor's views regarding nuclear energy were not popular and many

people felt that nuclear energy was simply too dangerous. Peggy Buchorn, the executive director of Citizens for Equitable Utilities, condemned utilities for

not caring for the people.63 Even politicians started expressing opposifion against nuclear power. Representative Ron Waters, a Democrat from

Houston, presented a bill that would require nuclear waste to be stored at the corporate headquarters of any company involved in the nuclear industry.

Although it never progressed far, the bill reflected the hostility that many people felt towards the utility companies.'^"

6® Kamanoff Report on Nuclear Power, p. 22, SPP, Box 21, SWC, TTU.

63 Houston Post, March 3, 1979.

^° Ibid.

207 The fears about nuclear power found support in March 1979. In the aftermath of Three Mile Island (TMI), HL&P attempted to reassure the public that its plants were safe. Its efforts found few believers. Milton Lee, an official with the Public Utility Commission expressed his belief that the Three

Mile Island incident would not create an anti-nuclear sentiment in Texas. He said, "I don't think and I'm speaking for myself and not the commission that there will be any strong backlash against the projects because of the TMI problem. At least I certainly hope not"^*

Events proved his hope ill founded. Opponents of Aliens Creek said that human error could not be eliminated or prevented.''2 In Bay City, the home of the South Texas Project, residents exhibited worry and fear following

TMI. Leroy Jackson, a local farmer, said, "It [TMI] made my blood run a little colder." Other residents shared his sentiment. Maudie Janise said, "I don't like it [STP]. I never did. Before I see that thing started up, I'd rather go back to coal oil lamps."''3 The Texas Public Interest Research Group used the accident at Three Mile Island to call for a postponement of hearings for Aliens

Creek. The organization was an offshoot of Ralph Nader's Critical Mass and consisted mostly of college students. Regardless of what the group desired, the ASLB postponed indefinitely the licensing process. Despite HL&P's

^* Houston Chronicle, March 31, 1979.

^2 Houston Post, March 31, 1979.

^3 Ibid., April 1, 1979.

208 protests, the hearing for Aliens Creek, as well as those for other plants across the nation, came to a halt in the wake of Three Mile Island.^"

Texas officials did not express similar concerns about nuclear energy.

Governor Bill Clements backed the continued development of nuclear plants.

When asked how the state would deal with an emergency similar to what

happened at Three Mile Island, the governor responded, "We in Texas do not

have a plan."^5 Clements denied that nuclear power was unsafe and told

reporters that the state "needs nuclear power capacity" unless Texans want to see gas prices as high as $1 per gallon.^6

Representative Henry Gonzalez, a Democrat, represented what was

probably the majority view of Texans. He was a former proponent of nuclear

power who now feared that the plants were not safe. He described himself,

"like a lot of other Americans, I lost my innocence after the accident at TMI."^^

His new viewpoint was "that the commercial development of nuclear plants and safety are incompatible goals. It just won't work because companies insist on cutting corners and human safety is sacrificed for economic gain."^®

The governor and representative's comments reflected an overall belief by

^" Ibid., April 11, 1979.

^5 Ibid., April 7, 1979.

^6 Ibid.

^^ Houston Chronicle, April 20, 1979.

^® Ibid.

209 state officials that regulating nuclear power was a difficult task best left up to the federal government. Texas never developed a nuclear inspection agency of any kind nor did it develop a system of safety regulations.

Across the nation, opponents of nuclear energy led demonstrations.

Because of the problems at the South Texas Project, a large anti-nuclear

protest in Washington on May 7 received a lot of coverage. A crowd of

70,000 demonstrators demanded an end to nuclear power. A statement

made by anti-nuclear activist and celebrity Jane Fonda - "Putting pro-nuclear

Energy secretary James Schlesinger in charge of nuclear power is like putting

Dracula in charge of a blood bank" - reflected the fears of many people that

the federal government was too closely allied with the utility industry.^3

Newspapers, especially the Texas Observer and the Houston Post, in support

of anti-nuclear activism described the demonstration and attempted to relate it

to local sentiments about nuclear power.

Although many Houston area residents feared that the plant needed

stronger regulations, a demonstration against the facility received mediocre

support. On May 8, 1979, leaders of anti-nuclear groups announced plans for

mass protests at South Texas and Comanche Peak.®" The protests, which

took place on June 2, included representatives from groups with interesting

and wordy names such as the Mobilization for Survival, the Mockingbird

^3 Dallas Morning News, May 7, 1979.

®" Houston Chronicle, May 8, 1979.

210 Alliance, Citizens Concerned about Nuclear Power, the Piney Woods

Coalition, Matagorda County Nuclear Awareness, and the Armadillo

Coalition.®*

An estimated 1,500 activists attended the protests at Bay City. The average age of the demonstrators was in the early 20s and the majority was from Austin. The protest, held in a steady drizzle, lasted five and a half hours and was non violent. A Texas Department of Public Safety trooper said, "they assured us it would be non-violent and there would be no trouble. They are doing a good job of policing themselves." The protesters received the support of U.S. Representative Henry Gonzalez and State Representative Ron

Waters. Both spoke briefly at the event and Waters called for a congressional investigation into the project.®2

In Austin, residents used Three Mile Island to hold, once again, a referendum on whether to continue participation in the South Texas Project.

The issue on the ballot was whether to seek another $215 million in bonds to pay the city's share of the STP or to sell its share to the highest bidder. If residents sought the second option, then the city would have to borrow money to build a new coal-fired plant.®3 The vote was close but the result was that Austin voters chose to remain in the project. In a humorous story.

®* Houston Post, May 24, 1979.

®2 Reconstruction of Events, p. 5-2.

®3 Ibid.

211 the Austin American-Statesman suggested that the vote was a sign of the

times for the United States. If, in the newspaper's opinion, nuclear power

could not be defeated in a city with the political climate of Austin, then it could

not be defeated anywhere.®"

The Three Mile Island incident caused religious leaders to contribute

their opinions on nuclear energy. According to a report from the National

Council of Churches, most church leaders found nuclear power lacking in

morality. The critics of nuclear power said that the faith in science and

technology has reached an extent to which it rivals religious beliefs. A few

clergymen supported nuclear power. Dr. G. William Pollard expressed his

pro-nuclear sentiments in a pamphlet entitled "Let's Talk About Theology and

Nuclear Energy."®5 He proposed that nuclear energy was part of God's plan

for creation and one of the creator's blessings for humankind. The council

found that most of its members believed nuclear power was a difficult issue it

which to take a stand because of its great potential and great hazards.®®

The accident at Three Mile Island caused the Nuclear Regulatory

Commission (NRC) to place a moratorium on licensing. Although the

decision did not affect construction at STP, it delayed STP's licensing process. Following its investigation of the near disaster at TMI, the NRC

^"^ Austin American-Statesman, April 9, 1979.

®5 Houston Post, May 17, 1980.

®6 Houston Chronicle, April 7, 1979.

212 issued an expansive set of new regulations. The changes required by the new guidelines consumed a large amount of engineering and construction resources. In June 1979, George Oprea, during a rate review case, testified

before the Public Utility Commission. He informed the state board that STP was four years behind schedule and the cost was an estimated $2.7 billion.

He blamed the problems on Three Mile Island and the moratorium on

licensing for the revised figures.

Opponents of the project, however, alleged that the real reason was

the gross underestimation of material and labor cost.®'' The ballooning cost of

STP was not the only issue that created controversy. NRC officials

suggested that safety concerns at the plant were a large problem. The

inspectors cited low moral among workers and inspectors. Brown & Root

employees, both current and former, said that the inspection system was

"very, very fiawed." Inspections revealed huge air pockets up to several cubic

feet in volume inside the walls of the containment vessel. HL&P spokesmen

denied the reports and said they were based on "supposition, hearsay

information, and opinions." Residents in Houston saw few reports regarding

the NRC comments. According to the Texas Observer, Houston

businessmen conspired to cover up the cost overruns and safety issues and

88 to keep the problems out of the newspapers.

®^ Texas Observer, July 13, 1979.

®® Ibid. 213 Despite the incident at Three Mile Island, the response from most Bay

City residents towards the plant in mid-1979 was positive.®3 A few criticized the plant for straining city services. With a workforce that reached as high as tiA/elve thousand, the plant brought thousands of new residents to the town.

The population doubled from 1970 to 1980. Although the rapid growth

caused problems, many people credited the plant with bringing new grocery

stores, restaurants, and shopping centers. Several apartment complexes and

hundreds of new homes appeared. The town also received its first movie

theatre and, ironically, it featured the nuclear meltdown movie "The China

Syndrome" less than a month after the Three Mile Island incident. The

population expansion did bring problems associated with larger cities. Some

residents expressed concerns about increased traffic and crime. To combat

the problems, the town increased its police force from four officers and one

90 car to tiA/enty-fourofficer s and eleven cars.

But, at the STP site, trouble existed. The NRC, in late 1979, identified

several problems there. The difficulties were in the concrete pours and some

of the design verification. Brown & Root quality control inspectors approved

some of the concrete pours without physically inspecting the actual pours,

resulting in several faulty pours. Some of the pours were on unstable

®3 Howston PosUuly 3, 1979.

3" Ibid.

214 surfaces and others contained pockets of air. As a result of the issues and a change in national policy, the NRC placed a full-time investigator at the site.3*

The investigator's mission was to discover such problems and, hopefully,

inspire HL&P and Brown & Root to perform better.

The cities of Austin and San Antonio expressed concern that

construction at the site had too many problems. The two cities accused

HL&P and Brown & Root of mismanaging the project and asked for an

independent audit. HL&P denied the allegations of wrong doing and released

a statement that revealed that Brown & Root had lied to the owners.32 j^g

report on the incident said that, when construction began in March 1976,

Brown and Root had only completed ten percent of the engineering for the

facility but told HL&P that it had completed sixty percent.

George Oprea, the head of HL&P's nuclear program, blamed Brown &

Root for the cost overruns. He stated that the original estimates of $900

million were erroneous because of the faulty information Brown & Root

supplied.^^ On June 6, 1979, Oprea issued a memo to his executives

regarding Brown & Root's recent troubles at the site. In the memo, he said, "I

feel sure that there will be a demand for heads to roll."3" Jim Boyle, Counsel

3* Reconstruction of Events, p. 4-22.

32 Ernst & Whitney Review, pp. 3-37.

33 Houston Post, September 29, 1979.

3" George W. Oprea Testimony, p. 71. 215 for the Office of Public Utility, said, "It was impmdent that Brown & Root was not removed in 1979. We felt that they were impmdent in selecting Brown &

Root in the first place, but year in and year out they knew Brown & Root was not performing to the standards of the industry, but they did nothing about it."

Oprea, on May 21, 1979, met with Brown & Root Vice-President Joe

Munisteri. Oprea's account of the meeting said, "several times during the conversation, it was strongly stressed that Brown & Root has to be fully accountable for any and all results whether positive or negative. Houston

Lighting and Power Company can no longer protect them . . . We, in essence, left the meeting restressing to Mr. Munisteri that our patience has run out and we are displeased with their performance."35

The NRC's concerns about the shoddy concrete work at STP coincided, in mid-1979, with a Federal Bureau of Investigation examination of the project. The FBI investigation lasted four months and looked at a variety of issues including the falsification of construction records, the lapse of safety inspections, bribery, and charges of intimidafion.36 The FBI began its investigation at the bequest of U.S. Representative Henry B. Gonzalez.

Gonzalez heard Dan Swayze, a former Brown & Root safety inspector, allege on a national news broadcast that the project had gone five months without quality control checks on the concrete work.

35 Houston Post, June 11, 1985.

36 Reconstruction of Events, pp. 4-23. 216 Swayze filed a $2 million lawsuit against the contractor for his firing but

withdrew his suit before it went to trial. Swayze, however, continued to

accuse Brown & Root of mismanagement. He said that he witnessed in July

1977 a foreman physically assault a quality control inspector. According to

Swayze, following the fight, the inspectors voted to stop doing anything

except to sign inspection forms. He said, "For five months, we did no

inspection work whatsoever. We sat in our office. We had radios. When

they wanted a concrete pour signed off, the man assigned to that area went

down, signed the pour card, came back and played cards for the rest of the

day."3^ When asked why the inspectors acted in such a way, Swayze

responded, "Nobody wanted to go in the field . . because they were afraid

to."3® The foremen, Swayze alleges, were often irate over delays and once

threatened to kill him.

Brown & Root denied the charges and Charles M. Singleton, a quality

control supervisor under Swayze at the time, said, "there was some card

playing because we did not have enough work to keep us busy all the time.

But there was no vote among the inspectors to stop inspecting."33 Swayze, in

response, dismissed Singleton's claims and said that Singleton was under the

3^ Houston Post, October 3, 1979.

3® Ibid.

33 Charies M. Singleton Testimony before the Public Utility Commission of Texas, p. 15, SPP, Box 135, SWC, TTU.

217 control of Brown & Root. Although the NRC investigated the charges and agreed with some, the commission found that most of the problems had been corrected. Swayze, upset over the lack of action against his former employer, called the NRC investigators "a bunch of clowns."*"" The validity of Swayze's claims weakened when Brown & Root produced tiA/enty-onedeficienc y reports on the concrete work from the time period in which Swayze said inspectors did nothing.*"*

At Aliens Creek, other concerns were present. On October 15, 1979, the NRC's Atomic Safety & Licensing Board held a pre-hearing conference for the Aliens Creek construction permit. Several opponents spoke out against the project. One contention raised by a Wallis resident was the growth of the population in the area. The resident said that HL&P was ignoring the spread of Houston and predicted that the city would encompass Aliens Creek by

1997.*"2 The NRC denied the man's comments and said that the delay in the permit weakened the ability of the utility to meet the energy demands of the area.

In August 1979, HL&P warned Brown & Root that its work at STP was

unacceptable and it faced the possibility of losing the job if its performance did not improve. HL&P told the constructor that it had not assigned its best

*"" Ibid.

*"* Ibid., p. 16.

*"2 Houston Post, October 17, 1979.

218 talent to the project and had not properly supervised constmction. The utility said, "A high percentage of the work force can regulariy be seen walking around, standing around, or talking in groups."*"3 Despite HL&P's warning.

Brown & Root continued to have problems with its personnel.

The NRC, in November 1979, found new reason to investigate the

South Texas Project. Two Brown & Root quality control inspectors had reported that they were verbally abused and threatened by construction workers at the plant. The tiA/ofemal e inspectors alleged that workmen threatened to throw the pair out of a building and warned that something could fall on the tiA/o. One of the accused men, a foremen, told NRC investigators that he was joking when he caufioned the inspectors about falling objects.*"" The NRC investigation concluded that there was not enough evidence to act upon the charges.

In December 1979, HL&P and Brown & Root signed a legal agreement that prevented the STP owners from filing suit against Brown & Root for two years. In return. Brown & Root promised to improve its efforts at the project and to increase productivity. The agreement was the result of several meetings between HL&P and Halliburton, the parent company of Brown &

Root. Neither company desired a lawsuit that could easily turn expensive.

The other owners of the project joined in the agreement that appeared to

*°3 Ernst & Whitney Review, pp. 4-5.

*"" George W. Oprea Testimony, p. 77.

219 repair the relationship betiA/een Brown & Root and HL&P. It did not, however, restore the other owners' confidence in the project.

In early January 1980, Austin Mayor Carole McCllelan, because of the cost overruns and construction delays, demanded that HL&P hire an outside firm to conduct an independent audit of Brown & Roofs work to the current point*"5 The auditor chosen by the utility was Gibbs & Hill of New York.

HL&P was aware at the time of the selection of Gibbs & Hill that the auditor

and Brown & Root had a current working relationship at Comanche Peak.

Opponents of the project feared that Gibbs & Hill would not be objective

because of the partnership at Comanche Peak. They alleged that the hiring

of Gibbs & Hill was yet another example of mismanagement by HL&P.*"® The

opponents of STP did not need an outside audit to find problems at the

project and, within a matter of days, new allegations of major mistakes at the

plant appeared. On February 13, 1980, quality assurance inspectors discovered large

voids in the concrete pours in the reactor containment walls similar to others

found in 1978 and 1979.*"^ While small voids were not uncommon, the voids

at STP were unusually large. A survey of the walls revealed betiA/een fifty and

^°^ Austin American-Statesman, January 1, 1980.

*°6 Ibid.

*°^ Safety Evaluation Report, South Texas Project, Units 1 and 2, February 13, 1980, SPP, Box 61, SWC, TTU.

220 sixty gaps in the walls. Most were small and only a few cubic inches in size but some were several cubic feet One void in particular was tiA/enty-seven feet long and several feet wide. The voids were a definite safety concern but the NRC, when informed of the problem, did not take any additional actions other than to send another team of investigators to survey the containment building.

The new team of inspectors noticed a large bulge in the side in the containment wall. The bulge covered one hundred square feet and was the result of an immense void in the wall behind.*"® The survey revealed that there were, in fact, a total of seventy-seven major voids in the walls.*"3 Word of the problems spread to the public and within a matter of days, opponents of the project demanded that the NRC take action. The utility and Brown & Root worked quickly to fix the problems but the public relations damage was done.

The discovery of the concrete voids led to new allegations of mismanagement from the projecfs detractors. Lanny Sinkin, the head of

Citizens Concerned About Nuclear Power said, "I think Brown & Root is doing everything in its power to prevent ratepayers who are stuck with the bill for this project from learning how poorly ifs constructed."**" Houston Lighting &

Power assured the public that it had found all the gaps in the walls after

*°® Ibid.

*°3 Ibid.

**" Houston Post, February 20, 1980.

221 drilling numerous test holes to find the voids. As part of the ASLB hearings, opponents of the project received full access to the project's records. After searching the records vault for three days, several representatives of the interveners located dozens of construction mistakes.

Besides additional voids, the records revealed that inspectors found trash and other foreign objects in the concrete and that several of the walls tilted off center.*** In addition, the search discovered that several thousand welding reports were absent. The interveners notified the NRC of the faulty paperwork.**2 Brown & Root, in February 1980, ordered an immediate halt on welding until the papenA/ork procedures could be fixed.

The problems at STP also undennined HL&P's efforts in the Aliens

Creek hearings. Foes of Aliens Creek alleged that HL&P did not have the corporate character or financial resources to build the facility safely. The problems of HL&P led the ASLB for Aliens Creek to consider allowing new interveners in the hearings.**3 The NRC also began to doubt whether HL&P possessed the capability to run the project. The issue would be a central focus of the Nuclear Regulatory Commission's licensing hearings for the next five years.

*** Ernst & Whitney Review, pp. 4-10.

**2|bid.

**3|bid. 222 Looking back from a vantage point of February 1980, one can see the

South Texas Project moving fonA/ard erratically through jumps and stoppages.

Progress occurred, but as at Comanche Peak, the public heard much about the difficulties and the development of opposition to the project was understandable. The decision to build the facility, however, is just as understandable.

Houston Lighting & Power considered nuclear power to be the answer to its search for new energy sources and embraced the technology. In 1971, the utility, without experienced personnel, began several nuclear plants

including the South Texas Project. The South Texas Project was the joint effort of most of the power suppliers for South Texas and the Texas Gulf

Coast. The project received its construction permit in near record time.

Unfortunately, the award of the construction permit did not coincide with the

completion of the engineering and design.

Brown & Root, the main contractor at the plant, ran into a variety of

difficulties. The company had some experience in nuclear power projects but

had never served as the design engineer. Opponents of the project, aware of the inexperience of the parties involved in the construction of STP, feared that the plant was unsafe and moved to block its completion. In addition, the

minority owners of the project sought, without success, to distance themselves from the beleaguered project.

223 Prior to 1980, Houston Lighting & Power made several mistakes.

Although the utility could not foresee the problems it would have with Brown &

Root, it failed to act when the first signs of problems with the construction company appeared. In the early years of the project, the failure to recognize that Brown & Root could not perform its contractual obligations and guarantee either the timely or safe completion of the plant was HL&P's biggest failure.

Brown & Root deserves its share of the blame for the problems at the project, and there is no justification for its decision not to reveal the problems it was having. Ultimately, however, the utility was responsible for the delays and mishaps at the South Texas Project.

Thus, at the beginning of 1980, the project appeared to be in trouble.

A great amount of friction existed between Houston Lighting & Power and

Brown & Root. The NRC doubted the competence of the utility and allegations of major construction deficiencies arose. The utility, despite the problems, still believed in the project and construction proceeded. Aliens

Creek, however, drained many of HL&P's corporate resources from the South

Texas Project and created controversy of its own. The tiA/o troubled nuclear facilities made it difficult for HL&P to generate public goodwill or to convince the Nuclear Regulatory Commission that its nuclear program was competent.

In April 1980, the NRC, frustrated by several years of mishaps at STP, issued an Order to Show Cause as to why it should not shut down the project.

Resolving the order would be the major issue for the next few years.

224 CHAPTER VII

THE DISMISSAL OF BROWN & ROOT

On April 30, 1980, the Nuclear Regulatory Commission's (NRC) Office of

Inspection and Enforcement identified tiA/enty-tiA/o non-compliances at the South

Texas Project (STP) including substantial deficiencies in the quality assurance/ quality control program. The NRC issued a Notice of Violation and Order to

Show Cause and fined the utility $100,000. According to the Order to Show

Cause, the NRC required Houston Lighting & Power (HL&P) to justify why safety- related construction should not be halted.* The NRC issued the notice because it had determined that HL&P and Brown & Root had failed to establish, implement, and maintain a program sufficient to ensure STP would meet NRC requirements.

The fine caused serious problems for the South Texas Project. The relationship between Houston Lighting & Power and Brown & Root was already strained. Neither company had confidence in the other. As one result of the

Order to Show Cause, the utility dismissed the contractor. For the next few years. Brown & Root and HL&P became involved in a lengthy and costly legal battle. The other participants in the project also became involved in the situation.

Despite the problems caused by the termination of the contractor, the dismissal

* Nuclear Regulatory Commission, Notice of Violation, South Texas Project, May 1, 1980, Steve Porter Papers (SPP), Box 131, Southwest Collection (SWC), Texas Tech University (TTU). (Hereafter cited as Notice of Violation.)

225 of Brown & Root marked a significant turning point in construction. HL&P modified its management structure and hired more experienced companies to replace Brown & Root. The actions of HL&P solved a number of problems and restored the NRC's confidence in the utility.

Prior to the NRC's Notice of Violation and Order to Show Cause, HL&P and Brown & Root completed major portions of the engineering and construcfion on the South Texas Project. Although the tiA/ocompanie s had made progress, the project faced several major problems. Prior to the notice, NRC inspections revealed serious engineering and construction flaws. The quality control program, in the opinion of the NRC, did not work and some members of the commission expressed doubts as to whether the utility had the character or competence to run a nuclear facility. The project also faced opposition from several citizens' groups that sought to find problems at the plant.

As mentioned in the previous chapter, HL&P was aware of many of the problems at the plant. Utility audits and inspections discovered many of the engineering flaws and the relationship betiA/een HL&P and Brown & Root was contentious. The NRC Notice of Violation, in some ways, represented a wake up call to the utility and design engineer. The commission, because of the many problems and the apparent lack of response from the utility, was not confident in the projecfs safety or completion. Following the 1980 NRC decision, the utility spent the next four years attempting to resolve the deficiencies and improve its image.

226 The utility, acting on the recommendations of the NRC, replaced some of its personnel in an attempt to find experienced workers and managers. HL&P hired managers and engineers from other nuclear projects around the country.

In order to reassure the NRC that the project was in experienced and capable hands, for example, HL&P in October 1980 hired Jerome Goldberg as its new

Vice-President of Nuclear Engineering and Construction. Goldberg had worked

in the nuclear industry for nearly tiA/enty years and had the reputation as a

competent and dedicated manager of nuclear projects.

Besides improving the management team, HL&P attempted to upgrade

other areas. As with the Comanche Peak Project, the South Texas Project did

not have an efficient quality control program. The NRC Notice of Violation said

there was a "failure to systematically identify quality control problems and a

failure to routinely correct and prevent identified problems."2 For the various

safety infractions and primarily because of the quality control problems, the NRC

fined HL&P $100,000. The NRC notice cited chronic construction deficiencies

and directed HL&P to submit a list of corrective measures within ninety days or

face suspension of the construction permit.

The fine and threat of suspension was a serious blow to the project. The

NRC focused on Brown & Roofs quality control program and said that the

contractor emphasized cost-saving measures at the expense of safety. Federal

2 Notice of Violation.

3 Ibid.

227 officials also feared that quality control inspectors at STP worked in an environment that did not allow them to do their job effectively. They reported numerous examples of inspector intimidation by construction foremen. In one incident in 1979, an inspector questioned a concrete pour. In response to his intervention, a general foreman warned the inspector, "You long haired hippie fuck, get your shit together or I'll kick your ass.""

The same foreman later threatened to come across a table at another inspector during a conference on concrete pour problems. All told, betiA/een

1977 and 1980, tiA/enty-four workers reported instances of threats and intimidation. A quality control inspector was told after questioning a concrete pour, "Don't give us any trouble. We'll throw you off the wall and you can pick the side."® One quality control supervisor said he had been threatened three times in the last two years. In one instance, a construction foreman threatened to hit him with a shovel until the supervisor picked up some rebar to defend himself

A few weeks later, a construction worker after failing an inspection told the supervisor that he would be waiting for him in the parking lot with a .357 magnum.6 Needless to say, there was a high rate of turnover among inspection

" Nuclear Regulatory Commission, Atomic Safety & Licensing Board, In the Matter of Houston Lighting & Power, et al.. Docket Nos. STN 50-498-OL, STN 50-499-OL, May 1, 1980. (Hereafter cited as STP Hearings.)

5 Ibid.

6 Ibid.

228 personnel, a trend that the NRC noted. The average worker was aware of the problems. In talking to the work force, the NRC noted that morale was low and many felt that the job was "all fouled up."' NRC investigators reported to their superiors that they believed that Brown & Root and HL&P tried to con them about the events at STP. Because of the ovenA/helming evidence against the project,

HL&P agreed to pay the fine and promised to develop a program to correct the deficiencies.

The threats and intimidation betiA/een construction foremen and safety inspectors was somewhat common at large construction projects. The conflicts at STP were the result of tiwocontradictor y goals. On one hand. Brown & Root wanted to complete the work on schedule; on the other hand, the company needed to ensure the safety of the project. Both foremen and inspectors blamed their counterparts for making their jobs more difficult. Although the threats are not justified, the friction resulting from the pressure and stress caused by the need to accelerate construction is understandable. Brown & Root failed to take appropriate measures to mediate the conflicts or to ensure that they did not occur. The incidences reflect a breakdown in management by the construction company.

' STP Hearings, May 8, 1980.

® Ibid.

229 The minority partners in the project, upon hearing of the Notice of

Violation, publicly announced that they held HL&P solely responsible for the infraction and would not pay any part of the fine.3 Project opponents used the fine as evidence in their battle against the nuclear facility. At a news conference,

Peggy Buchorn of Citizens for Equitable Utilities and Lanny Sinkin of Citizens

Concerned About Nuclear Power urged the NRC to revoke the construction permit for STP. They alleged that there was a great a risk of other construction mistakes, and as a result the plant could not be safely operated. Buchorn said,

"That plant should be shut down right now. People down there [in Bay City] don't believe this plant is ever going to generate one kilowatt of electricity."*" Sinkin agreed and asked, "What is undiscovered in the plant right now because some inspector didn't want to get his head beaten in?"** The concern of Buchorn and

Sinkin is legitimate in light of the severity of the threats.

Sinkin and Buchorn were not alone in the questioning of the project

Congressman Bob Eckhardt of the House Subcommittee on Oversight and

Investigations said that his committee was considering holding public hearings on the embattled project. He questioned whether Brown & Root had "bitten off more

3 STP Hearings, May 29, 1980.

*° Houston Post, May 30. 1980.

** Ibid.

230 than it can chew." Another member of the committee. Representative Edward

J. Markey, argued that the NRC should withdraw the construction permit and proclaimed that the "people in Houston are not safe."*3 Eckhardt also believed that the NRC mishandled its inspections of the plant and called for an independent third party investigation of the site. The comments of Eckhardt and

Markey are significant because they mark a decided change in the attitude of the government towards the project. For Eckhardt to vocalize such doubts about

Brown & Root demonstrates a lack of faith in the company.

HL&P tried to respond to the charges of the politicians. The utility, in late

July 1980, denied that a third party audit was necessary and, in response to the fine and Eckhardt's statements, it revised the quality control program and said that it would direct Brown & Roofs quality control activities in the future.*" The utility also stated that it would not hire an independent firm to handle the quality control duties at the plant. An HL&P spokesman said, "such a move would be counter-productive in that Brown & Roofs sense of responsibility for building quality might possibly be impaired."*5 HL&P believed that a new inspection team would cause additional delay at the project

*2 House Subcommittee on Oversight and Investigations, Hearings on the South Texas Project, June 5, 1980, SPP, Box 4, SWC, TTU.

*3 STP Hearings, June 26, 1980.

*" Texas Observer, July 30, 1980.

*5 Houston Post, August 3, 1980.

231 HL&P'S statements are revealing for the NRC reported that Brown & Root had no sense of responsibility in dealing with quality control.*6 The NRC suggested that Brown & Root personnel might be less inclined to intimidate or threaten a third party inspector. HL&P, however, did not accept the NRC recommendations and vowed that it would handle quality control. Part of HL&P's attitude of entrenchment against outside interference possibly resulted from obstacles it encountered at Aliens Creek. HL&P, because of delays in receiving a construction permit for the site, felt that the NRC opposed the Aliens Creek project.

The attitude of HL&P is understandable. The delays in the licensing process frustrated the utility. Although they had little to do with the duration of the licensing proceedings, HL&P officials often received blame. Many observers of the project faulted the utility for any delays, even if the government, or the regulatory process in general, were responsible. The problem was common to the nuclear industry as a whole. The situation made it difficult for utilities to implement nuclear power. Even if construction reached completion without incident, the licensing process could take years. The reluctance of utilities to start a nuclear project, in light of the time a license required, was a common theme. The events at STP support the view in the nuclear industry that the

*6 Notice of Violation.

232 government was, at least in part, to blame for the increasing length of time required to complete a nuclear facility.*'

The NRC announced in August 1980 that the public hearings for the

Aliens Creek construction permit would resume in mid-January. HL&P wanted to reconvene the hearings earlier but its appeals went unheard. The Atomic Safety

& Licensing Board (ASLB) also ignored requests from the interveners for further postponement and said that it would not tolerate any further delay.*® HL&P claimed that every month of delay cost ratepayers nearly $20 million and accused foes of the facility of trying to kill the project through "procedural assassination."*3 It alleged that the NRC and the interveners conspired to destroy the project

Some evidence in support of the claim of a conspiracy betiA/een the NRC and opposition groups existed. In December 1980, an investigation by the

United States Office of the Comptroller into the activities of the NRC revealed that the agency supplied financial help to the foes of nuclear projects.2°

According to NRC policy, interveners received free transcripts of meetings and legal motions in addition to other documents. The cost of copies of a single week

*' John N. Campbell, Collapse of an Industry: Nuclear Power and the Contradiction of U.S. Po//cy (Ithaca: Cornell University Press, 1988), p. 211.

*® Untitled Reconstruction of Events at the South Texas Project, SPP, Box 4, SWC, TTU, p. 4-20. (Hereafter cited as Reconstruction of Events.)

*3 Houston Post, August 14, 1980.

2° Reconstruction of Events, pp. 4-21.

233 of hearings, with all of the documentary evidence, averaged almost $2,000.2*

Although many interveners protested that they could not afford to make their own copies, the comptroller investigation ordered the NRC to end its practices. In contrast, HL&P's expenses with Aliens Creek in September 1980 reached an estimated $192 million.

Meanwhile, the NRC announced in late August 1980 that it found a drastic turnaround in attitude at the South Texas Project.22 The agency felt that HL&P and Brown & Root management supported the new quality control system. Once again, however, new allegations of dangerous practices arose. On September

10, 1980, Peggy Buchorn, one of the leading foes of the project, filed charges with the NRC that a man was buried alive in the walls of STP.23 The Matagorda

Sheriffs Office investigated the claim but found no evidence to support the charge. A utility spokesman described the allegation as "far-fetched" and

"baseless."2"

Despite the problems at the South Texas Project, progress appeared to be underway at Aliens Creek. A public pre-hearing on the Aliens Creek project took place in mid-January 1981.2® The preliminary hearing was similar to one held in

2* Ibid.

22 Reconstruction of Events, p. 5-2.

23 Houston Post, September 11, 1980.

2" Ibid.

25 Ibid.

234 March 1975 when plans for the project contained tiA/o reactors. After a long delay, HL&P reduced the size of the facility to just one reactor. HL&P hoped that the smaller size and the correspondingly reduced area of the cooling lake would decrease opposition from environmentalists.26 The original 1975 hearing lasted only tiA/oday s and officials adjourned the proceedings due to a lack of opposition.

Only ten people appeared to speak before the panel.

The next round of Atomic Safety & Licensing Board hearings was quite different. Over one hundred people attempted to speak against the plant. The increased activism reflected the growth of anti-nuclear sentiment after the Three

Mile Island incident and a general concern about the safety of nuclear power.

The pre-hearing focused on public health, safety issues, siting, and environmental concerns. The ASLB limited most statements to ten minutes.

Formal hearings, held later, allowed recognized interveners longer appearances.

Of the people who spoke at the preliminary hearings, most were farmers or local townspeople. One of the concerns expressed was the rapid growth of Houston.

The city expanded westiA/ard in the 1970s and 1980s. Many people feared that the plants location would soon be within a heavily populated area.2''

26 Nuclear Regulatory Commission, Atomic Safety & Licensing Board, Public Hearings on the Aliens Creek Nuclear Project September 19, 1980. (Hereafter cited as Aliens Creek Hearings.)

27 Ibid.

235 Of the thirty people allowed to speak at the public hearings, about one- third expressed some form of opposition against the plant The remaining third consisted of local government and business groups who supported the project

They believed that the construction would attract new industries to the area and increase the tax base. The opposition, in response to the promises of economic growth, accused community leaders of "putting dollars ahead of public safety."2®

They cited the Three Mile Island incident, of course, plus construction problems

at STP as evidence of the danger of nuclear power.

The town leaders, however, had little choice but to support the Aliens

Creek plant. The mayor of Wallis, a town of 1,100 residents closest to the

intended site, explained that recent improvements to the town made increased

tax revenue vital. The area surrounding Wallis relied heavily on agriculture and

was not wealthy. The town council, in anticipation of the plant, created a police

department, expanded its fire department, and built a $5 million high school.23 ^

few townspeople supported the plant Dan Holub, a 62 year-old resident, told

anti-nuclear speakers to "go home to Houston and solve your garbage

problems."3° Another pro-project speaker said it would help the town's economy

2® Aliens Creek Hearings, January 13, 1981.

23 Houston Post, January 13, 1981.

3" Ibid.

236 because of the sale of "a lot of six packs of beer every evening to the 6,000 or so construction workers."3*

Other local people dismissed the safety concerns. Tommy Cathey, a resident of Sealy, expressed his faith in the project. He said, "I don't believe

HL&P and the government would allow something to be built that could wipe out halfofTexas."32

The board recessed several times during the daylong hearings when no speakers were present The next day saw similar reaction. Thirty more presenters expressed their opinions on the project A unique characteristic of the hearings was the gender division among the speakers. Most supporters were men and most opponents were women.33 Sealy minister Leslie Page accused

"nuclear negativists" of greatly increasing the cost of the project with delaying tactics. Dick Schinnow, an opponent of the project, said, "since Houston will use most of the plant's power and if ifs as safe as proponents say it is, then they ought to build the damn thing right next to the City Hall in Houston."3" As the hearings continued, more and more residents came forth to speak against the project.

3* Ibid.

32 Ibid.

33 Houston Post, January 14, 1981.

3" Ibid.

237 The preliminary hearings moved to Houston on January 15. Although most people who appeared in front of the panel opposed the plant, the number of speakers was much fewer than in Wallis.35 At the hearings in Houston, experts hired by each side presented scientific testimony. The ASLB panel also listened to people concerned about safety and economic issues. On March 21, 1981, the first phase of the hearing for Aliens Creek ended. After thirty-four days and

10,000 pages of testimony, the Atomic Safety & Licensing Board appeared frustrated by the tactics used by both sides. The board chairman, Sheldon J.

Wolfe, said, "this has been the most disruptive—and disrupted—case I've ever presided over."3® Wolfe claimed that James M. Scott, the attorney for the Texas

Public Interest Research Group, used improper tactics in the hearing. Wolfe repeatedly confronted Scott during the proceedings and classified Scott's methods as "scattershot cross examinations using the creep and pounce technique."3' Scott blamed his methods on a lack of resources and attempted to make up for the deficiency by trying to surprise HL&P officials into blurting out some kind of incriminating statement

The Aliens Creek hearings set the NRC record for the number of contentions, eighty, and the number of interveners, tiA/elve. Although they claimed to represent the public good, the interveners received little visible

35 Houston Post, January 15, 1981.

36 Aliens Creek Hearings, March 21, 1981.

37 Ibid.

238 support from the population. Few people attended the hearings and, once they moved to Houston, often less than three or four spectators were present.3®

HL&P accused the board of allowing the interveners to delay the process. The

utility noted that it had brought in twenty expert witnesses from all over the

country while the interveners have presented just one.33 A few days later, the

utility's executives, frustrated by the long delays, informed the NRC that, if it did

not receive a construction permit by early 1982, it would abandon the project.

The utility, according to a company spokesman, was investigating alternatives

because it could not afford any more delays.

HL&P's frustration over the Aliens Creek hearings was understandable in

light of resurgent problems at the South Texas Project. On March 18, several

citizens groups raised new allegations of mismanagement and wrong doing at

STP. The groups, supported by evidence from former workers, claimed that

Brown & Root worked to prevent the NRC from conducting inspections and

HL&P failed to keep itself informed of the constructor's activities."" The

intervenor said that Brown & Root hid electrical work from the commission's

investigators. The ASLB told the tiA/o interveners to name their sources within

ten days or face sanctions in the hearings. Once the opponents released the

information, the NRC spent tiA/oweek s investigating the claims.

3® Ibid.

33 Ibid.

""Aliens Creek Hearings, March 18, 1981.

239 Unfortunately for the project, the NRC discovered that a "conspiracy to obstruct an NRC investigation" existed at the plant."* Three Brown & Root employees admitted that they moved cases of equipment and records to prevent investigators from discovering them. In addition, the NRC concluded that other company foremen intimidated employees who tried to discuss problems with the

NRC investigators. HL&P fired four of the people responsible for the problems but Brown & Root denied any wrongdoing. The company defended itself and said that those who wanted to discredit the project hid the missing documents."2

Both the utility and the constructor objected to the NRC's classification of the problems as a "conspiracy."

Opponents of the South Texas Project, in response to the obstruction charges, attempted to discredit the projecfs participants even further. Peggy

Buchorn, the head of Citizens for Equitable Utilities, claimed that the utility tapped her telephone in an attempt to discover the identities of the workers who informed on the project. She also said that the constructor, "is making sure anyone who might testify for the interventors at an upcoming NRC hearing is being transferred out of the jurisdiction to other projects around the country.""®

The NRC supported the allegations of the opponents. It reported that it was

"* Nuclear Regulatory Commission, Safety Evaluation Report, May 5, 1981, SPP, Box 71, SWC, TTU.

"2 Houston Chronicle, May 6, 1981.

"3 Ibid.

240 aware of an incident where a project quality manager told the fifty quality control

inspectors under his command that he knew when anyone went to the NRC with complaints and that the NRC was sick of their complaints."" The NRC said that it was looking into the issue.

The problems at Bay City and the growing opposition caused Brown &

Root to re-evaluate its role at the plant. Of special interest was its failure to

maintain the schedule concerning design drawings. A confidential Brown & Root memorandum from 1981 revealed that the company's top executives expressed concerns that they would lose the job at STP when its lack of engineering progress became known. James C. Bazor, the author of the memorandum, called it his "swan song statement on the troubled plant." He continued on to say, "I think the project is in real trouble, as everyone knows, due to engineering support. I think there is a real danger that the client, when engineering is actually exposed as being as far behind as they are, will shut down the project for six months. If they do, I doubt very seriously that Brown & Root will remain the constructor.""5 Bazor resigned a few weeks later to seek employment elsewhere.

Eugene Saltarelli, another senior vice-president said, "the project personnel appear to have a morale problem from the point of view that every day is a surprise. Although they are responding to the direction that they are given.

44 STP Hearings, May 15, 1981.

"5 Untitled Memorandum from James C. Bazor, July 13, 1981, SPP, Box 71, SWC, TTU.

241 the inexperienced people are mnning scared and do not display the confidence in their management that one would desire at this state of the project.""®

Meanwhile, an internal Brown & Root memorandum surfaced that warned of friction betiA/een the quality control inspectors and the construction force at

STP. The memo concluded, "If friction is allowed to continue, it is felt that it could affect the quality of the work.""' The constructor issued the memo because of a recent physical confrontation at the site. The memo also mentioned the firings of tiA/o quality control inspectors for taking amphetamines while working."® Another memo revealed that the chief construction engineer had filed complaints with

Brown & Root management. He stated that some of the construction foremen could not read or write and told his field engineers and quality control inspectors to monitor the "semi-literate" construction foremen's activities."3

The views of Brown & Root personnel reflect widespread dissatisfaction and near panic and suggest that the company, in early 1981, was in trouble. The problems Brown & Root faced were not unique to the nuclear industry but they were of such a magnitude that the company felt helpless. The inexperience of

"6 Untitied Notes from Meeting by Eugene Saltarelli, June 13, 1981, SPP, SWC, TTU, Box 71.

"' Untitled Memorandum from Joe Munisteri to George Turner, February 5, 1981, SPP, Box 71, SWC, TTU.

48 Ibid.

"3 Untitled Memorandum from Unknown Person to Joe Munisteri, March 5, 1981, SPP, Box 71, SWC, TTU.

242 the company with nuclear projects had finally stmck a telling blow. The company was in involved in a project that many officials believed was beyond Brown &

Roofs capabilities. Unfortunately for the construction company, the problems became increasingly evident to others.

The ASLB noted the high turnover among Brown & Root personnel at the project. It questioned why the constructor employed six different project managers and seven site managers betiA/een 1976 and mid-1981. Brown and

Root defended its actions and explained that some managers had been removed because of construction delays and cost overruns. HL&P was also unhappy about the personnel changes. Part of the personnel turnover resulted from infighting among the Brown & Root staff. Various managers blamed one another for the problems and none were willing to accept responsibility for the actions of the company.5"

NRC inspectors discovered in June 1981 that a Brown & Root quality control supervisor overruled an inspector's decision not to approve a concrete pour. The inspector, who was put on probation for "not having a proper attitude towards his work," refused to approve the pour because the surface had sand, paper, cigarette butts, candy wrappers, scrap wire, and other debris on the pour

5" Ernst & Whitney Review, p. 9-2.

243 surface. The supervisor ignored the inspector's recommendation and approved the pour.5*

The working conditions did not endear the project to local labor unions. In

1981, Brown & Root, which had a history of not employing union labor, discouraged the unions from becoming involved in protests against the plant.

The constructor was an open shop company and had been emphatic in its opposition to labor unions. Unions, however, were reluctant to oppose the company in hopes that they would receive future jobs. Opponents of the project attempted to gain financial support from the unions and asked for funding. Local unions chose to deny the requests. Not wanting to solidify further Brown &

Root's anti-union sentiment, the Houston Gulf Coast Building and Construction

Trade Council denied $25,000 in funds to Citizens Concerned About Nuclear

Power. Lanny Sinkin, the director of the group, blamed HL&P for sabotaging his efforts to get union support for the project. He accused the utility of offering to use union labor on future jobs if the union did not fund the intervenor. HL&P and the union both denied the allegations. A union spokesman described his organization's position: "we're against Brown & Root 100% and think they're building a shoddy plant. But we have not a thing against HL&P - we do a lot of work for them."52

5* Nuclear Regulatory Commission, Notice of Violation, South Texas Project June 17, 1981.

52 Houston Post, June 20, 1981.

244 Union labor could possibly have solved some of the labor problems at the plant or at least reduced some of the threats and intimidation betiA/een supervisors and workers. In September 1981, G. Thomas Warnick, the former quality assurance and quality control manager at STP testified before the ASLB licensing hearing. The former employee of Brown & Root reported that he knew of several threats by construction foremen against the inspectors who worked under him. He recounted threats that included "being taken care of in the parking lot" with a gun, beaten with a shovel, and thrown off the dome of the containment building. Warnick, however, dismissed the seriousness of the complaints and explained that language often gets rough at a construction site.53 Possibly

Warnick did not want the incidences to reflect on his managerial control or ability to run a large project.

Brown & Root alienated its employees further in late August. The company announced the temporary layoff of 250 construction workers. The company did not have enough blueprints to work with and the workers were not needed. When news of the action reached HL&P, officials alleged that the engineering bottleneck dated back some time, but the utility told the constructor that it would give Brown & Root an opportunity to correct the deficiency. The inability of the company to supply design documents is understandable. The company had never designed a nuclear project before and did not have enough

53 Public Utility Commission, Hearings in Regard to Houston Lighting & Power Rate Request, Testimony of G. Thomas Warnick, September 15, 1981. (Hereafter cited as PUC Rate Hearing.)

245 experienced engineers to complete the work in an efficient manner. Unlike the

Comanche Peak project and most other nuclear projects. Brown & Root had to divide its engineering staff betiA/een design and construction tasks. The company did not have the resources to perform both responsibilities. HL&P can, in part, be blamed for the situation. The utility made the decision to proceed with construction despite being aware of the lack of engineering blueprints.

Houston Lighting & Power now faced tiA/osever e problems with its design engineer and constructor. The charges of threats and intimidations and the failure to maintain the work schedule caused HL&P to make an important decision. The utility no longer felt that it could employ Brown & Root. On

September 21, 1981, the utility announced the firing of the design engineer. As an indication that it had planned the move in advance, the utility also announced that it had hired the Bechtel Power Corporation to replace Brown & Root as the design engineer for the South Texas Project HL&P, in an effort to avoid giving detractors of the plant more ammunition, said that it reached the decision based on concerns about productivity and cost and not the problems with design or the quality of engineering.

Although HL&P asked Brown & Root to remain as the constructor, spokesmen for the constructor said the company would "cooperate fully in the change but has the question of its future under study."5" HL&P blamed Brown &

Roofs inability to retain a nuclear engineering force capable of keeping pace with

5" Houston Post, September 25, 1981.

246 construction. In addition to announcing the hiring of Bechtel, the utility announced that it had revised the projecfs costs upward $400 million to $4.8 billion. It acknowledged, however, that the estimate was provisional and, because of the change in design engineer, was "based on a bunch of premises which no longer hold."55

The Public Utility Commission (PUC) investigated HL&P's decision to fire

Brown & Root. Documents released during the study revealed information critical of both companies. One of the items examined dated back to the issue of the construction permit five years eariier. The decision to proceed with construction in 1976 was an example of the "calculated risk" approach the tiA/o companies used with the project. The testimony of Joe Munisteri, a former

Brown & Root executive, discussed the start of construction.56 Munisteri said that HL&P knew that "damn few" engineering drawings had been completed.

The testimony contradicted the testimony of George Oprea, the former head of

HL&P's nuclear program. He made repeated claims to the PUC panel that

Brown & Root had misled the utility.

Munisteri also explained that some of Brown & Roofs problems stemmed from the NRC.5'' In the past, the NRC issued construction permits after an average three to four years of discussion and hearings. For STP, the NRC

55 Ibid.

56 Joseph Munisteri Testmony before the Public Utility Commission of Texas, SPP, Box 18, p. 34, SWC, TTU.

5' Ibid.

247 issued the construction permit after onlytiA/o years. The move caught the architect-engineer by surprise and put great pressure on the engineers. It also caused Brown & Root management to consider how the company would look to the rest of the nuclear industry if it did not start constmction immediately. The strong reputation of a company was vital in the nuclear industry and it would potentially damage the company's chances of future contracts if it delayed.5®

Brown & Root, according to Munisteri who resigned from the project in 1979, informed HL&P of the problem but the utility authorized Brown & Root to proceed with construction.53

The NRC and many opponents of the project approved the replacement of

Brown & Root. Bechtel was the nation's most experienced builder of nuclear plants and had been involved in several of the more successful nuclear projects.

The company, as of late 1981, had completed forty nuclear facilities and was involved in forty currently under construction. The company also possessed the reputation of being able to correct problems caused by other companies. The replacement of a design engineer midway through construction was unprecedented, but the utility deemed it necessary.

Some opponents criticized the decision and cited the six to nine months transition time before Bechtel personnel would assume responsibility for

5® Ibid., p. 35.

53 Ibid., p. 37.

248 engineering and design.®" The majority, however, felt it was time for Brown &

Root to leave. William S. Jordan, a representative for Citizens for Equitable

Utilities called the move, "a very positive step. Our position, we've always felt, is very similar to HL&P's position, and that is to build the plant right. We've felt the way to do that is to get rid of Brown & Root."®* Lanny Sinkin, a long-time opponent of the plant dismissed the actions as a publicity move. He said, "I think they [HL&P officials] are trying to make Brown & Root a scapegoat for their

own failures. There is no question that legally, as the permit holder, HL&P is

responsible for the mismanagement that has gone on for years at this project."62

In an effort to refute contentions that the change to Bechtel would delay

the project, Don Beeth, the nuclear infonnation director for HL&P, assured the

public that construction would not stop nor would there be a massive layoff of

workers. Beeth said, "we're certainly not going to stop work - that would defeat

our whole purpose in making the change."63 Although he acknowledged that

there would be some adjustments in the size of the work force, Beeth noted that

there would be no major layoffs or delays. The hiring of Bechtel, however,

caused the postponement of the licensing hearings. The ASLB board spent tiA/o

6° PUC Rate Hearing, September 23, 1981.

6* Ibid.

62 Ibid., September 24, 1981.

63 Houston Post, September 26, 1981.

249 weeks assessing how the change in the design engineer would affect the hearings.

When it notified Brown & Root of its decision to terminate the contract,

HL&P presented a report listing fifty-nine critical construction and design errors

the utility blamed on the construction company. The report, entitled "Significant

Brown & Root Initiated STP Goofs", was a harsh attack on the former architect-

engineer and constiuctor. The report detailed Brown & Roofs failure to perform

adequate welding, to maintain an efficient quality control program, and to correct

other deficiencies. The public, because of a judicial gag order, did not learn of

the "goof list' until June 1985 when the tiA/ocompanie s reached a settlement.

John Hardin, the Chief Executive Officer of Halliburton, when told by George

Oprea that he had terminated Brown & Root, responded, "the whole STP has

been a headache and perhaps Brown & Root ought to withdraw completely and

not even be involved as the contractor.

The changes at the South Texas Project did not affect the Aliens Creek

project. The plans involved neither Bechtel nor Brown & Root. Instead, HL&P

contracted Ebasco Services Inc. to design and build the facility. Ebasco, while

not as experienced as Bechtel, had completed tiA/elvenuclea r power plants and

maintained a good reputation within the nuclear industry. At the time of the

6'* PUC Rate Hearing, June 4, 1985.

250 Brown & Root firing, Ebasco had finished about sixty-five percent of the design and engineering work for Aliens Creek. 65

Meanwhile, at the Public Utility Commission proceedings, the existence of what was called the Quadrex Report became public knowledge. The disclosure

of the document, an examination of Brown & Roofs design and engineering

progress, occurred less than three weeks after the removal of Brown & Root as

the design engineer. The utility had received the report in May 1980 but kept it

confidential. HL&P, which had hired Quadrex, a nuclear consulting firm, to

conduct the review, did not tell its partners of the report's existence. HL&P

notified the NRC about the existence of the report but did not submit a copy to

the commission until October 1, 1981.

The Quadrex Report was controversial. It detailed a number of defects in

the design engineering and was highly critical of Brown & Roofs performance.

The report claimed "there was very little evidence of a well thought out and

consistent basis for design."66 it added that "design criteria reflect industry

standards for the 1973-1975 time frame but they do not adequately address

more recent developments."6'

65 Reconstruction of Events, p. 5-20.

66 Quadrex Audit of the Design Engineering at the South Texas Project, May 4, 1980, SPP, Box 22, SWC, TTU.

67 Ibid.

251 When news of the Quadrex Report surfaced. Brown & Root protested the findings. It called many of the technical findings, "inaccurate and misleading," and denied that any of the problems identified by Quadrex would affect safety or the ability of the project to receive a license.®® The NRC reviewed the Quadrex

Report and found some of its findings to be "significant" The regional NRC director, Kari V. Seyfrit said that the issues needed to be resolved. As they stood, the deficiencies could jeopardize the licensing of the plant if the problems were not resolved. "If construction were to continue with lagging design work and without proper design verification," Seyfrit observed, "there could be some real serious problems down the road."63

The upheavals and revelations at the South Texas Project caused the city of San Antonio to reevaluate its participation in the nuclear project. Mayor Henry

Cisneros asked HL&P to begin formal negotiations to release San Antonio from the agreement of participation. The mayor, speaking at a meeting with 3,000 members of the anti-nuclear group. Citizens Organized for Public Service, said, "I will be happy to ask the City Public Service Board to work with officials of HL&P in a more formal fashion than they have to flnd out if Houston is possibly a buyer and, if so, under what terms and at what prices."'" In response to Cisnero's comments, the Houston-based utility denied having taken part in any discussion

6® Houston Post, October 13, 1981.

63 Ibid.

'" Houston Post, October 23, 1981.

252 on the matter and announced its opposition to any party withdrawing from the project.

But Houston Lighting & Power also noted that it would not ignore offers to

buy out its partners. It said, however, that its funds were limited and it would be

unable to conclude any short-term deals.'* Its spokesman Don Beeth said, "We

might need San Antonio's share. We might want it. But if we don't have the

money, we can't buy it."'2

Several factors made the possibility of any deal remote. San Antonio's

share of the project in October 1981 was almost $600 million. For it to remove

itself from the project, the city would have to find a buyer as well as some other

way to provide power to its consumers. A decision to sell its share would be

easier for San Antonio than for Austin. Unlike in Austin, San Antonio's City

Council could vote on the issue without requiring a public referendum.

In late 1981, the new revelations of problems at STP caused the city of

Austin once again to reconsider its participation in the project Residents voted

in a November 3 referendum whether to stay in the project. Councilman Roger

Duncan described the reasons for the vote, "I think the attitude in the city has shifted quite a bit. A lot of people here are pro-nuclear power, but they're anti-

STP. I personally think ifs an economic disaster."'® Another councilman, Larry

'* Ibid.

'2 Houston Post, November 19,1981.

^^ Austin American-Statesman, September 20, 1981.

253 Deuser, said, "I lost faith in the project due to cost overmns, continued scheduling delays and the concern that it may never turn on. We may end up with a big lemon."'"

Although some council members suggested HL&P as a potential buyer for the city's share of the project, an HL&P spokesman denied that the utility had any interest in releasing Austin from its commitment. The spokesman said, "to assume HL&P stands ready and or willing to purchase any or part of Austin's share is to assume a very great deal. We have a 10-year plan. Purchase is not included, even as a contingency. It simply is not an issue."'5 He described the idea as a "fantasy" and said that the politicians incorrectly believed that the utility had lots of money to spare.

The residents of Austin ignored the comments and, on November 3, 1981, voted to withdraw from the project. Of the almost 60,000 people who voted, 58% supported selling the city's sixteen percent share. The vote was the sixth in nine years and many people thought it represented the culmination of a long battle over the nuclear power plant at Bay City. Austin Mayor Carole McCllelan expressed disappointment at the decision but vowed that she would move

'" Ibid.

75 Ibid.

254 without delay to find a buyer.'6 The city spent several weeks investigating its options, including legal action against HL&P.

The project appeared to be in trouble and the minority partners wanted out Their position is understandable, but the utility was in a position where it could not let the other owners leave. HL&P could not afford the project on its own and, therefore, the release of the other owners was unacceptable to the utility.

Meanwhile, on November 6, 1981, Brown & Root announced that it had decided to withdraw completely from the project. Although HL&P terminated the

company from its position as design engineer, the utility claimed that it wanted to

retain Brown & Root as the constructor. Brown & Root claimed it withdrew

because it was unable to complete a new contract with the utility." The decision,

however, was due more to a desire to quit the project for good. Brown & Root

had spent many years on the project and had little to show for its efforts.

Houston Lighting & Power, in response to the decision, searched for a

new constiuctor. As a result, work halted on December 1, 1981, with the layoffs

of five hundred workers. The utility planned for the stoppage to last six months

while a new construction firm took over. Although some critics alleged that the

delay was another example of mismanagement, the postponement of

'^^ Austin American-Statesman, November 5, 1981.

" Reconstruction of Events, p. 6-2.

255 construction allowed Bechtel to finish the necessary steps to take over as design engineer.'®

The relationship betiA/een Brown & Root and HL&P did not end with the construction firm's decision to withdraw from the project On December 16,

1981, the utility filed a breach of contract lawsuit against its former contractor.

The suit was a preliminary suit and did not identify specific issues or claim damages. The purpose of the suit in light of the statute of limitations, was to preserve the right to file future lawsuits. The action was the first step in a lengthy legal battle that would last neariy five years.

Other partners in the project supported the move. San Antonio Mayor

Henry Cisneros said, "those responsible for hurting something this important, those responsible for putting a dagger into the chest of the people of San

Antonio, must be held accountable. I think ifs the only course that could be taken in light of the history of Brown & Root on the project."'3 The city of Austin joined the lawsuit against Brown & Root but still sought a buyer for its share. The city council, despite its support of the suit, reacted angrily at HL&P's failure to notify them of the move. The mayor exclaimed at a news conference, "ifs absolutely inexcusable we're not getting accurate and timely information from

HL&P. It looks like they have one agenda they're sharing with the city of Austin

'® Ibid.

'3 Ernst & Whitney Review, p. 7-38.

256 and another they're operating off of"®" In addition, the mayor, Carole McClellan, threatened to sue the utility. She said, "Whoever is responsible for the mismanagement, they're the ones who ought to pick up the tab, not the ratepayers of Austin. If it was HL&P, they ought to pay."®*

Brown & Root was also angered by the lawsuit. The company claimed that HL&P deceived it with the timing of the lawsuit. Officials for the former constructor alleged that they offered to extend the statute of limitations in order to avoid a lawsuit.®2 It was their understanding that HL&P also wanted to avoid a potentially costly legal battle. The Brown & Root executives said that the lawsuit and the utility's overall attitude was precisely why it chose to leave the project.

Houston Lighting & Power chose perhaps to initiate the legal action because it had just finished the licensing hearings for Aliens Creek; it could afford to devote its legal resources to the lawsuit. The hearings ended on December 9,

1981, after eighty-six days and 20,000 pages of testimony. The hearings for

Aliens Creek were the longest in NRC history and the ASLB board members expressed their frustration with the pace of the hearings and the tactics of the interveners. The NRC, because of the record length of the hearings, promised to streamline the licensing process and pass new regulations to limit the ability of

^° Austin American-Statesman, December 30, 1981.

®* Ibid.

82 PUC Rate Hearing, December 31, 1981.

257 interveners to stall such proceedings.®® The NRC's efforts to improve the licensing process did not affect the hearings for HL&P's other nuclear project.

On January 20, 1982, opponents asked the NRC to expand the licensing hearings for the South Texas Project They hoped that the NRC would consider the ramifications of the Houston Lighting & Power-Brown & Root lawsuit on previous HL&P testimony in which the utility stated that it believed the contractor was doing a good job of building the plant.®" The STP hearings, in progress since May 12, intended to see if the HL&P had the character and competence to run a nuclear power plant.®® A recent NRC staff report, however, concluded that

HL&P's record was "not sufficiently poor to deny it an operating license."®® The report, the result of two years of investigations, identified the lack of experience as the main problem of both HL&P and Brown & Root The authors of the report praised HL&P's response to problems at STP and said that the utility worked to the best of its ability to improve safety at the plant.®' The NRC especially approved of HL&P's choice of Bechtel as the replacement for Brown & Root.®®

®3 Aliens Creek Hearings, December 10, 1981.

®" STP Hearings, January 20, 1982.

®5 Ibid.

®6 Nuclear Regulatory Commission, Safety Evaluation Report, January 4, 1982, SPP, Box 18, SWC, TTU.

®' Ibid.

®® Ibid.

258 The minority partners also believed that Bechtel was a wise choice.

Representatives of the owners gave Bechtel a vote of confidence on January 23.

The mayor of San Antonio, Henry Cisneros, despite having opposed the project, announced that he now supported the project and wanted to protect the city's investment.®3

Brown & Root, however, did not share in the recent surge in support for

STP. The contractor alleged that HL&P had been planning the lawsuit for at least tiA/oyears . A Brown & Root spokesman said that "everything HL&P has done at STP has been done with one eye on a lawsuit and Brown & Root has had to conduct its business at STP under the cloud of threatened litigation by

HL&P. "3"

Brown & Roofs accusations first appeared in a letter sent to workers at the facility and local newspapers. The letter stated that Brown & Root did not walk off the project the previous September as HL&P charged but was instead forced to withdraw by HL&P. The contractor felt that its refusal to renegotiate the contract between the tiA/o firms led to HL&P's action. In conclusion, the letter stated that it would file a counter-suit within the next month.3* The construction firm took out large ads in the Houston Chronicle and Houston Posf defending its

®3 PUC Rate Hearing, January 21, 1982.

3" Ibid., January 29, 1982.

91 Ibid.

259 actions over the previous ten years. The ads stated a position similar to the one expressed in the letter.

The change from Brown & Root to Bechtel resulted in a change in the projected cost of the project. New figures released on January 31, 1982, estimated a final cost of $4.8 billion.32 But the new cost projections did not deter the utility from proceeding with the project

Even the Nuclear Regulatory Commission appeared to be more supportive of the project. At the hearings for the South Texas Project, seven federal inspectors testified that they believed the utility had the competence and character to operate the plant. They told the Atomic Safety & Licensing Board that HL&P was cooperative and responsive to their inquiries. In the opinion of the inspectors, the plant was safe and needed to be licensed. Evidence to the contrary existed, however, and opponents pointed out that the project had accumulated fourteen citations for violations from the NRC since the 1980 fine.33

Meanwhile, the Aliens Creek project remained uncertain. On February 6,

1982, the ASLB reconvened the hearings to hear testimony from the interveners.

The board felt some pressure from the utility to speed up the process. February marked one year since HL&P's threat to cancel the project if hearings did not

32 Reconstruction of Events, p. 7-11.

33 STP Hearings, February 10, 1982.

260 result in a construction permit by early 1982.3^ The utility was, in fact, considering ending the project.

HL&P, in early 1982, launched an evaluation into abandoning Aliens

Creek. The utility, which had already spent more than $262 million on the project, had been seeking a construction pennit since January 1981. The Aliens

Creek project had begun in 1972, but the utility had suspended the licensing hearings for a year in mid-1976. The delays at the project caused many ofllcials to reconsider its financial viability. HL&P President Don Jordan said, "Aliens

Creek was a prudent, workable project when it was conceived a decade ago, but conditions have changed to the point that re-evaluation is necessary."35

Ebasco Services was the primary design engineer and constructor for

Aliens Creek. On February 15, 1982, HL&P named Ebasco the builder at Bay

City. The move was the result of Brown & Roofs decision to remove itself from the project. Ebasco, which had built about twenty nuclear plants, was very experienced and had worked with HL&P on several other power plants. The

NRC approved the hiring of Ebasco and announced that it felt that HL&P's management had improved. The hiring of Ebasco coincided with the end of latest step in the licensing of STP.

The Nuclear Regulatory Commission, on March 14, 1982, announced the results of the public hearings for the South Texas Project. The NRC ruled that

3" Aliens Creek Hearings, February 6, 1982.

35 Ibid., February 12, 1982.

261 HL&P possessed enough "managerial competence and character" to merit an operating license. The 287-page decision concluded that eariier problems appeared to be corrected. The main cause of the difficulties was, in the NRC's opinion, the result of the inexperience of HL&P and Brown & Root. The board believed, "with both HL&P and Brown & Root lacking the necessary experience, the result was a synergistic magnification of the problems which resulted."3® In other words, the inexperience of the two companies caused simple problems to develop into large-scale breakdowns in design and construction.

The report placed blame on HL&P Chairman of the Board Don Jordan and

Executive Vice-President George Oprea. It said, "what we fault them for is not their lack of awareness of details, but their lack of understanding of the facts which they had before them."3' The NRC also stated that it may have denied the license if HL&P had not fired Brown & Root Although the NRC praised HL&P for being cooperative, Lanny Sinkin and other opponents attacked the NRC for its conclusions. Sinkin, of Citizens Concerned About Nuclear Power, was incredulous that the NRC could use the word "inexperience" countiess times in its report and then consider the utility competent. He said, "the licensing board is saying that if you don't know what you're doing, then you are excused for anything you have done. But we didn't expect much from this licensing board.

They've been looking for an excuse from the first day to take HL&P off the

36 Ibid., March 18, 1982.

3' Ibid.

262 hook."3® The interveners appealed the NRC decision and said that it would review the 10,722 pages of testimony from the fifty-six witnesses in hopes of finding some method to cancel the problem.33

The success of the licensing hearings did not resolve other delays at the plant. The addition of Bechtel and Ebasco to the project resulted in a construction moratorium of neariy a year while the tiA/o new companies examined the work of Brown & Root The replacement of Brown & Root also delayed the licensing hearings. On June 15, 1982, the hearings resumed minus one of the tiA/o remaining interveners. Citizens for Equitable Utilities, which had opposed

STP since its inception, announced its withdrawal from the project Peggy

Buchorn, executive director of the group, cited the changes at STP for the decision to end its opposition to the project.*"" The round of hearings lasted until early July and revealed no major problems.

Although the hearings appeared to take the project in a positive direction, tiA/o problems developed shortly thereafter. In early August 1982, Bechtel announced that it had reviewed the work remaining and revised the cost estimates for STP upwards by $1 billion to $5.5 billion. The new figures did not surprise many observers of the project*"* The other problem was a wildcat

3® Houston Post, March 15, 1982.

33 Ibid.

*"" STP Hearings, June 16, 1982.

*°* Reconstruction of Events, p. 8-1.

263 strike at the plant on August 10, 1982. Approximately one-third of the craftsmen failed to report to work in honor of a one-man picket line.*"2 The picketer protested his dismissal for refusal to wear a hard hat. Both project and union officials opposed the walkout. The issue was important because Ebasco, unlike

Brown & Root, preferred union labor and was trying to reassure HL&P of its decision to employ union labor. The strike last only one day but demonstrated the dissatisfaction of the workers.

In an unrelated event, Houston Lighting & Power ofllcials, on August 26,

1982, cancelled the Aliens Creek nuclear project. The utility made the decision because of delays associated with the licensing process. The NRC, which had originally planned on issuing a decision on the construction permit in February, postponed its decision to November. HL&P President Don Sykora said, "we can't go on any longer with the uncertainity."*"® The NRC, as of late 1982, had not issued a new construction permit for a nuclear project since the Three Mile

Island incident. Following the decision to cancel Aliens Creek, HL&P asked the

Public Utility Commission to allow the utility to increase its rates. It hoped to recover the $361 million it had spent on the project. Fifty-tiA/o cities served by

*"2 Letter from Houston Lighting & Power to the Nuclear Regulatory Commission Regarding Events at the South Texas Project, August 11, 1982, SPP, Box 111, SWC, TTU.

*°3 Houston Post, August 27, 1982.

264 HL&P opposed any rate increase.*"" For almost a month both sides debated the issue before the state's Public Utility Commission.

The cancellation of Aliens Creek caused severe economic problems for some of the towns in the area. The residents of Wallis, in anticipation of the plant, had incorporated their city, established police and fire departments, and built a new school.*°5 With the decision not to construct the plant, town leaders faced the difficult task of trying to pay for the improvements without the additions to the town's tax base. The failed project also affected land speculators. Several real estate investors had bought large plots of land in and around Wallis in anticipation of an increase in population. The cancellation caused the land's value to plummet and made it near impossible to sell. Wallis Mayor Frank Fetter called the projecfs demise, "a song and dance that never did play."*"®

To the residents of Wallis, the mayor's statement summarized their experience with nuclear power. Aliens Creek, after ten years of planning and hundreds of millions of dollars, was a failure. Federal regulations, a changing economic environment, and the incident at Three Mile Island created a situation

in which it was wiser for the utility to abandon the project than to complete it.

The cancellation of Aliens Creek allowed HL&P to focus its efforts on the

South Texas Project. The result was a team of more qualified personnel with

*°" Ibid.

*"5 Houston Post, September 19, 1982.

*°6 Ibid.

265 more resources. The end of Aliens Creek, however, created a storm of controversy and led many detractors to question the managerial competence of the utility.

On January 5, 1983, the city of Austin filed a lawsuit against Houston

Power & Lighting. The move was, in part, a reaction to the cancellation of Aliens

Creek. The city alleged that the utility mismanaged the South Texas Project and caused hundreds of millions of dollars of cost overruns.*"' The city, which had spent $437 million on the project, wanted a full refund and asked the state district court to release it from the participation agreement it had signed in 1973. The main issue that concerned Austin was the original hiring of Brown & Root as the constructor and architect-engineer. The lawsuit claimed that HL&P should have fired Brown & Root much eariier than 1981 and the city was also unhappy with

HL&P's failure to share the results of the Quadrex Report.*"®

In an effort to bolster consumer confidence in nuclear energy, HL&P and other utilities launched a $40 million publicity campaign.*"3 The effort included a series of television and radio ads paid for, in part, by expenses passed on to the ratepayers. The campaign generated complaints from several consumer groups, who objected to the utility's decision to force ratepayers to pay for the ads. The

107 Ernst & Whitney Review, p. 5-14.

*°® Ibid.

*"3 PUC Rate Hearing, January 19, 1983.

266 ads promoted the need for energy security and often included film clips of anti-

American demonstrations by Iranian mobs.**"

In early February 1983, the utility announced that the South Texas Project was under budget and on schedule. Although it only applied to the construction from January, the announcement demonstrated that the project appeared to be improving. The Nuclear Regulatory Commission and the projecfs minor owners congratulated the utility for increasing the rate of construction. After years of delays and cost overruns, the news shocked many observers of the project.

Even some HL&P officials expressed their surprise at the news. One manager with the utility said, "but ifs much too early to call this a trend."*** The official was correct in his observation. Periodic delays continued to plague the project.

Many of the events surrounding the South Texas Project in 1983 dealt with HL&P's rate request before the Public Utility Commission. The commission chastised the utility for its mismanagement of the nuclear power project and allowed HL&P a rate increase of only $182.6 million out of the requested $336 million. **2 The decision was, in the words of PUC officials, a message to the utility that it needed to reform its oversight of the project. The commission also denied HL&P's attempts to pass on the cost of the cancelled Aliens Creek project to its consumers. HL&P, in response, appealed PUC's decision and claimed that

**" Ibid.

111 Houston Post, February 13, 1983.

**2 Public Utility Commission, Partial Decision in Regards to HL&P Rate Request July 9, 1982, SPP, Box 41, SWC, TTU.

267 the state agency had no power to penalize the utility.**® The dispute lasted almost six months and occupied the resources of HL&P at a time when it needed to focus its efforts on completing STP

In fact while the utility protested the PUC decision, the lack of oversight at

Bay City may have caused construction problems at the plant. In September

1983, inspectors at STP detected tiA/o major flaws. The reactor dome, which

Bechtel completed on September 8 amid much fanfare, contained concrete flaws on an estimated seventy to eighty percent of its surface.**" The NRC faulted the concrete workers. The commission claimed the workers had insufficient experience in the type of work and had no "apparent prior instruction" in pouring concrete on the sloping dome.**® The other deficiency was even more serious.

The reactor vessel inside the dome tilted at enough of an angle possibly to impair the release of control rods into the reactor core.**® The utility and constructor corrected the problems within tiA/o weeks but not before the problems generated another wave of protest against the plant.

Opponents of STP, in November 1983, received additional ammunition for their arguments against the project. A report by the Cambridge Energy Research

Association concluded that the electricity produced by the South Texas Project

**3 Ibid.

**" Ernst & Whitney Review, p. 3-51.

**5 Ibid.

**6 Ibid.

268 would be triple the cost of an oil-fueled power plant The study attributed the high cost of nuclear power to the regulatory changes caused by Three Mile

Island and the decline of oil prices following the end of the oil embargo. Early nuclear power, in the opinion of the consulting firm, was cost effective but the changes in the economy and the nuclear industry no longer made it a viable energy source. The utility denied the findings of the report and claimed the study used faulty statistics.**'

The announcement of the study coincided with a ten-day work stoppage at

STP. Bechtel and Ebasco ordered the halt to safety-related construction on

December 14 after it determined that the quality assurance/quality control system at the site was not working. The company released four hundred workers during the construction moratorium. HL&P officials expressed surprise at the move but reassured the public that they supported any effort to make the plant safer.

Construction resumed after Bechtel revised its document control system.**®

The South Texas Project made little headway in 1983. Despite the best efforts of the utility and the new design engineer and constructor, the project appeared to be little better off than it had been at the start of the year. Three and a half years eariier, in April 1980, the NRC had issued the pivotal Notice of

Violation and Order to Show Cause regarding STP. In the NRC's opinion, in

1980, the project contained major flaws that threatened the safety of the plant.

**' Houston Post, November 23, 1983.

**® Reconstruction of Events, p. 8-1.

269 Houston Lighting & Power spent the next few years trying to resolve the issues and prove to the commission that the project was safe and the utility was competent. But at the end of 1983, little real progress was evident

Clearly then, betiA/een 1980 and 1983, HL&P, as part of its efforts to improve the project, had made a number of controversial decisions regarding the

STP and its own nuclear program. The firing of Brown & Root as the design engineer at the plant in late 1981 received both criticism and support.

Documents and public testimony before the NRC and PUC soon revealed that the two companies had experienced difficulties originating back to the beginning of the project. The working relationship between the two no longer benefited either of the companies, the project, or the utility's consumers. The decision to fire Brown & Root was correct but the evidence supports those observers who claim the decision should have been made years eariier.

Houston Lighting & Power, despite assurances to Brown & Root that it would not take any legal action, moved to reclaim some of its financial losses from its former contractor. The utility filed a lawsuit against Brown & Root without consulting its partners in the project Although they supported the actual suit, the minority owners and many of the projecfs opponents were upset with the HL&P's unilateral decision. The legal proceedings revealed a number of issues highly critical of HL&P's management. In addition, the lawsuit consumed personnel and financial resources and dragged on into the mid-1980s.

270 In response to the problems at the plant, the minority partners in the South

Texas Project attempted to remove themselves from the enterprise. Despite the best efforts of San Antonio and Austin, however, the tiA/o cities were unable to find a way out. Rising costs and lengthy delays made conditions difficult for the tiA/o cities to meet their financial obligations to the project, and both considered filing lawsuits of their own against the HL&P for what they perceived as the mismanagement of the project.

Houston Lighting & Power, during the early 1980s, also made the decision to cancel the Aliens Creek project. The endeavor, which had been unable to receive a construction permit despite four long years of public hearings, languished without apparent resolution. HL&P, in late 1982, cancelled the project but, in doing so, caused financial hardship to the small communities around which Aliens Creek would have been built. The cancellation of the project, however, was the right decision. Changing economic conditions no longer made the plant financially viable. The facility would likely have cost more than STP and there is no way to determine how long construction would have taken. The end of Aliens Creek allowed the utility to concentrate its efforts on the

South Texas Project.

The decision to fire Brown & Root, however, was the main event of the period. In many ways, the action defined the South Texas Project and made it different from any other nuclear project in the country. Although a few other utilities dismissed either a design engineer or a constructor-most notably the

271 decision by Texas Utilities to fire Gibbs & Hill, the engineer for Comanche Peak- no other utility fired both its constructor and design engineer. The firing of Brown

& Root is important because it demonstrates the severity of the problems at the plant For HL&P to make such a drastic move, the utility had to have lost complete confidence in the construction company.

Houston Lighting & Power received both criticism and accolades for the dismissal of Brown & Root. The other project participants and the Nuclear

Regulatory Commission approved of the action but, as details of the long-term problems became known, questioned why the decision was not made eariier.

Opponents of the project voiced similar concerns. Some of the interveners considered the firing of Brown & Root to be sufficient and removed themselves from the licensing process. Other interveners viewed the action as a first step in the struggle to end the project. Whether the observer was for or against the project, the delays caused by the removal of Brown & Root frustrated all who followed the construction at the site.

The decision to pursue legal action against Brown & Root is questionable.

Although the utility, due to the statute of limitations surrounding the decision to hire the construction company, was close to running out of time for a lawsuit, the action caused unnecessary distractions for the project In addition, the lawsuits heightened tensions betiA/een project participants and gave opponents of the project more evidence in their argument against the plant. The lawsuits drained

272 personnel and monetary resources from the utility and recovered only a portion of the damages sought.

Problems at the plant still remained, however, and the utility would spend most of the remainder of the decade attempting to conclude the project.

Completion of the project required overcoming many more obstacles.

273 CHAPTER VIII

THE COMPLETION OF THE SOUTH TEXAS PROJECT

As it entered the year 1984, the South Texas Project (STP) faced several

difficult obstacles. Construction, projected to reach completion in 1982, lagged

several years behind schedule with no apparent end in sight. Cost overruns had

raised the price of the plan from $780 million to almost $6 billion. The project

was in dire trouble and faced either the loss of its construction permit or

cancellation by the utility. Despite the firing of Brown & Root, the design

engineer and constructor of the nuclear plant, many opponents of STP still

considered STP to be beyond redemption. The Nuclear Regulatory Commission

(NRC) maintained a close watch on the building program and noted several deficiencies in the construction. Houston Lighting & Power (HL&P), the primary owner of the generating plant, faced additional pressure from its partners. The cities of Austin and San Antonio attempted to remove themselves from the project and accused HL&P of mismanagement and deception. Nonetheless, construction at the Bay City site continued through the mid-1980s and, despite the objections of STP's opponents, reached completion at the end of the decade.

During the years 1984 to 1989, the project experienced many of the same problems that it had faced throughout its construction history. Unlike previous years, however, the utility now took an aggressive role in overcoming the obstacles. The lawsuit betiA/een HL&P and Brown & Root, for example, reached

274 a settlement after several years of hostile negotiation. Other lawsuits relating to the project such as one that would be filed by the city of Austin against HL&P, were settled with relative ease. As the project neared completion, one of the major issues that faced HL&P was how to recover the enormous building expense of the South Texas Project. The utility filed a rate increase request before the Public Utility Commission of Texas (PUC) that resulted in a lengthy legal battle. During the course of the rate request hearings, many details relating to the project became known, often with embarrassing or damaging consequences.

One obstacle that remained before the utility came from one of its partners. In early January 1984, the city of Austin once again reconsidered its participation in the South Texas Project. The City Council, after receiving a report it commissioned on the project, said that any benefit Austin would receive from the power plant would be small. The report recommended to the council that it should continue to seek a buyer for its share or convince HL&P to convert the facility to coal.* HL&P said that in had no plans to switch to coal, but it ordered a feasibility study to discuss the ramifications of a change. Sargent and

Lundy, a Chicago firm respected in the nuclear industry, conducted the investigation. HL&P said that it would resolve the issue and meet the partners' demands, but did not indicate how it would do so. During the annual meeting of

* Untitled Reconstruction of Events at the South Texas Project, Steve Porter Papers (SPP), Box 4, p. 7-7, Southwest Collection (SWC), Texas Tech University (TTU). (Hereafter cited as Reconstiuction of Events.)

275 stockholders, discussion of a possible switch lasted ninety minutes.2 After the discussion, the utility chose to continue with nuclear power - regardless of the wishes of its partners.

The decision to remain with nuclear power was controversial. A recent federal study revealed larger problems in the nuclear industry. In January 1984, the country saw the cancellation, since 1974, of the 100*^ reactor and the Sargent

& Lundy study predicted that 75% of completed reactors cost consumers double the original estimates.® Many utilities involved in nuclear projects abandoned them in favor of more conventional fuel sources. The regulatory environment and the growth of public opposition made nuclear power unattractive to investors.

Nuclear power, despite the optimism that surrounded the technology just a few years eariier, had become a troubled industry.

The same month, January 1984, saw the appearance of new allegations of corruption and mismanagement in the nuclear industry. The president of a

Houston fireproofing company testified in congressional hearings that kickbacks were widespread in the power industry. Jim Young of the Chemtrol Corporation expressed his opinion. He said, "fifty percent of the contracts in nuclear power projects have some gratuity involved. The bidding takes place and then you

2 Ibid.

3 Sargent & Lundy Report on the Nuclear Industry, January 18, 1984, SPP, Box9, p. 21, SWC, TTU.

276 have to grease somebody's palm to get the job."" Young, however, knew of no kickbacks at either of the tiA/oTexa s projects. "Most of this kind of activity is in

Yankee country," he said when asked what projects were involved.® Several opponents of STP urged the government to investigate if there was a connection

betiA/een Young and HL&P. The NRC did not respond to the requests. The

allegations, however, cast further suspicion on the nuclear industry in general.

Like the Comanche Peak project, STP encountered resistance from

stockholder religious groups. The Sisters of the Sorrowful Mother and the

Christian Brothers of St. Louis, tiA/o small stockholders in HL&P, attempted tiA/ice to block the project. In 1983 and 1984, the groups proposed to the annual

stockholders meetings that they hold a referendum on continuing the project.

Although neither vote resulted in more than seven percent of the shares in

support of canceling the project, the tiA/oreligiou s organizations felt that they had

achieved a victory by voicing their concerns.® Despite their opposition to the

project, the sisters and brothers retained their stock in the utility.

Meanwhile, HL&P announced that it had spent $8.5 million to replace equipment because of rust damage.' Lengthy delays and inadequate

" Hearing before the Subcommittee on Nuclear Regulation of the Committee on Environment and Public Works, US Senate, 95'^ Congress, 1^* Session, January 19, 1984.

5 Ibid.

6 Reconstruction of Events, p. 7-10.

'Ibid., p. 7-11.

277 maintenance left tons of equipment exposed to the elements. The equipment included forty-five miles of steel cable that was left over from the Brown & Root era. HL&P said that it hoped to recover the costs in its damage suit against the construction firm. The lawsuit, which had been filed previously, listed, as of

August 1984, over $6.3 billion in damages against Brown & Root. The utility asked for the damages under the Texas Deceptive Trade Practices Act. The potential reimbursement of some of the projecfs expenses generated a great deal of anticipation. In mid-1984, San Antonio and the other partners, not wanting to be left out of the potential windfall, joined the lawsuit against the contractor.

Brown & Root, in its defense, accused HL&P of concealing problems at the site. The utility, according to Brown & Root, ordered the contractor to suppress a cost estimate because of fears that the minority partners would leave the project. Spokesmen for the construction firm said that HL&P removed all reference to rising costs that showed the price had doubled. The event in which the order alleged by Brown & Root occurred took place in 1976 as Austin debated withdrawal from the project.® For most of 1984 and 1985, despite a judge's order restricting comments on the suit, both sides continued to trade accusations. HL&P attorneys presented a memo from a 1981 meeting betiA/een the partners and Brown & Root. The memo reported that the constructor's

®lbid., p. 8-1.

278 project director, "showed a hostility, an antagonistic attitude, it was a very unhealthy signal from a contractor who had much to gain. . . It just stmck me that he was shooting himself in the foot"3 Attorneys for the tiA/o sides presented a number of similar documents.

As the tiA/ocompanie s waged their legal battle, construction continued. In

May 1984, the project reached the halfway point. During the previous tiA/o months, the progress of construction was ahead of schedule. HL&P managers attributed the recent strides to good weather and the experience of the new construction team.*" Bechtel announced that it had almost corrected, at a cost of

$31 million, the mistakes of Brown & Root** HL&P, however, expressed concern that the new constructor could not keep pace with the aggressive schedule.

An HL&P executive revealed at a Public Utility Commission hearing that the owner had rebuked Bechtel several times for falling behind on the project.

Bechtel struggled to keep pace with the ambitious schedule and blamed its delays on intolerable safety conditions and low productivity left over from the

3 Untitled Memorandum presented at the Public Utility Commission Hearings on the South Texas Project, May 5, 1982, SPP, Box 55, SWC, TTU.

*" Ernst & Whitney Review of the Prudence of Management and the Reasonableness of Costs Associated with the South Texas Nuclear Project, Prepared for the Public Utility Commission of Texas, June 6, 1989, SPP, Box 40, p. 6-44, SWC, TTU.

11 Ibid.

279 Brown & Root era.*2 HL&P's attitude created tension betiA/een the tiA/o companies and Bechtel executives issued a report complaining of HL&P's mistrust of the company. The report said that the utility displayed an attitude that

Bechtel was not to be trusted.*®

The growing conflict betiA/een Houston Lighting & Power and Bechtel was reminiscent of the utility's feud with Brown & Root. Although the utility's problems with Brown & Root justified its attitude towards that constructor, the problems with Bechtel stemmed more from the utility's apprehensions and less from evidence of wrongdoing. HL&P, by late 1984, was reluctant to trust any contractor. The experience with Brown & Root made the utility fearful that similar problems would develop with Bechtel. Unfortunately for the project, the fears of the utility became self-sustaining. Bechtel reacted to HL&P's paranoia in an understandably negative manner. Only the progress in construction and the desire to complete the project prevented the frictions between the two companies from developing into something serious.

Despite the progress on the facility, the Austin City Council, on October 5,

1984, reiterated its calls for the cancellation of the project It cited safety factors and expressed its belief that the plant would never be licensed. The council passed a cancellation resolution that had no real clout but was a way to

12 Ibid.

*3 Testimony before the Public Utility Commission's Hearings on the South Texas Project September 4, 1984, SPP, Box 55, p. 11, SWC, TTU.

280 demonstrate its resignation toward the tiA/elve-year-old project. One council member voiced his frustration, "for us, we don't know anything else to do at this point but to express our opinion."*" One development which shows the complexity of the relationship between the partners and firms involved in the project occurred in October 1984. Brown & Root and the city of Ausfin discussed over several months a potential buyout of Austin's share of STP by the

contractor.*® Nothing came from the discussions, but the addition of Brown &

Root as an owner would have created an interesfing new dimension to the

HL&P-Brown & Root lawsuit. If it had bought out Austin's share. Brown & Root

would have become involved in a lawsuit against itself

Meanwhile, in late 1984, HL&P initiated a rate increase request before the

Public Ufility Commission. The PUC, in anficipation of the request, had been

studying STP for several months. Dennis Thomas, a new commissioner on the

PUC, vowed to take a hard-line stance against the rate request. He told the

Austin American-Statesman that nuclear power was economically obsolete and

he did not see the need for it*® Jim Boyle, the state's Consumer Advocate,

agreed with Thomas. Boyle opposed HL&P's request and said the ufility should

not be allowed to pass on the costs of STP to its consumers. HL&P wanted to

include $617 million in costs in its rate base. The admission of STP expenses to

*" Austin American-Statesman, October 5, 1984.

*5 Ernst & Whitney Review, p. 6-45.

*® Austin American-Statesman, August 29, 1984.

281 the rate base was, in Boyle's opinion, acceptance of mismanagement.*' The rate increase, which would net HL&P a total of $554 million per year in additional revenues, was the largest ever sought by a Texas utility.

A local consumer's group argued against the increase and demanded justification for HL&P having spent $2.3 million on advertising, donations, and contributions over the previous year. The consumer's group also wanted an explanation from HL&P on why it operated a company discount appliance store and repair service for employees. The Department of Energy also expressed interest in the rate hearing and sent lawyers to examine the documents relating to the case. Officials from the federal agency wanted to ensure that HL&P, which maintained a large percentage of the nation's strategic energy reserves, was not in financial danger.*®

One of the central issues of the PUC hearing was HL&P's selection of

Brown & Root as the architect-engineer and constructor.*3 Robert Traylor, an auditor with the Management Analysis Company conducted an investigation into the decision-making process behind the hiring of Brown & Root. It was, in

Traylor's opinion, the right decision. Brown & Root was the only one of the potential firms that promised to assign top talent to the project. Traylor, however.

*' Ibid.

*® Houston Post, September 30, 1984.

*3 Testimony Before the Public Utility Commission's Hearings on the South Texas Project, September 30, 1984, SPP, Box 31, p. 14, SWC, TTU.

282 noted that HL&P maintained no records on the decision. He was unable to find anyone who could explain why the utility kept no records relating to the hiring of

Brown & Root, a very significant event in the history of the South Texas Project.

Taylor found the lack of records interesting, but he did not suggest that there was any kind of purposeful cover-up. Instead of documentary evidence, Traylor had to rely on the memory of George Oprea and other key HL&P executives in order to review the hiring of Brown & Root.2°

Brown & Root feared that the allegations would attract public criticism.

The company protested the allegations and attempted to redirect the blame for the problems back to HL&P. The firm, in its defense, said that HL&P had made it a scapegoat. "Negative conclusions are devastating to Brown & Roofs standing in the industry and harmful to its defense in the multibillion dollar suit brought against it by STP owners," said a Brown & Root spokesman.2* The claims of innocence by the constructor lost credence when HL&P presented information that showed deception by Brown & Root. In 1974, when construction began.

Brown & Root had only completed eight percent of the engineering work but told

HL&P that it had finished almost sixty percent of the design drawings.22

Also at issue was the alleged HL&P manipulation in 1973 of potential partners. An interesting memo appeared in which Paul H. Robinson, the HL&P

2" Ibid.

2* Ibid.

22 Ibid.

283 Chairman of the Board at the time, told potential minority owners that he would be "as fiexible as a go-go giri" to get the project off the ground.23 Sam Skinner, the state engineer, testified to the PUC that he doubted that HL&P could complete the project on schedule. He estimated an additional tiA/elvemonth s of delay and recommended that the utility scrap the second unit.2"

In order to reach an agreement on the rate request, the PUC and other key participants held a private meeting to negotiate a settlement. Specifically, the parties discussed how to share a rate hike betiA/een residential and commercial ratepayers. Consumer groups and PUC representatives wanted to decrease the effect that a rate hike would have on families.25 HL&P, on the other hand, wanted an annual rate increase of almost ten percent.

Jim Boyle led a coalition of organizations against HL&P's request. Boyle, the South Texas Cancellation Campaign, the city of Houston, and PUC attorneys claimed the utility did not need or deserve further revenues. Boyle stated the coalition's views: "if these undisputed facts do not constitute imprudence or inefficiency by HL&P, then those terms will have no meaning and the legislative mandate to make sure that ratepayers are not paying for imprudency [sic] and

23 Untitled Memorandum from P.H. Robinson, April 3, 1973, SPP, Box 78, SWC, TTU.

2" Testimony Before the Public Utility Commission's Hearings on the South Texas Project, October 3, 1984, SPP, Box 31, p. 17, SWC, TTU.

25 Houston Post, November 11, 1984.

284 inefficiency will be rendered null and void."26 The PUC believed that the cost of the facility was too great to impose on consumers in one rate increase. It recommended that HL&P conduct the increase in phases so as to avoid consumer rate shock and, after several months of hearings, the PUC awarded the utility a rate increase of almost $400 million. The decision gave HL&P some financial relief and bolstered confidence in the project.

In February, HL&P presented its annual report for the year 1984. The

utility felt vindicated by the PUC's decision, but realized that the South Texas

Project remained in peril. The report stated that 45% of the construction at the site was behind schedule. The figure contradicted the periodic announcements from the utility that the project was ahead of schedule. An internal HL&P

memorandum supported the report's conclusions. It said that some tasks were as much as two hundred days behind schedule. Despite the report, Jerry

Goldberg, the new head of HL&P's nuclear group, told reporters that he believed the project could still be completed on schedule.2' "I'm convinced we're going to do it," claimed Goldberg.2®

In mid-February, Ebasco took steps to increase productivity. Tardiness and workers leaving eariy had been ongoing problems and the firm moved to

26 Statements Before the Public Utility Commission's Hearings on the South Texas Project, November 3, 1984, SPP, Box 31, p. 21, SWC, TTU.

2' Houston Post, February 7, 1985.

2® Houston Post, February 14, 1985.

285 eliminate it BetiA/een February 11, 1985, and February 18, 1985, the construction company fired 129 workers who left the job eariy. Most left betiA/een thirty seconds and tiA/o minutes early. In addition, Ebasco fired eighty-four foremen for protesting the earlier firings. Supervisors replaced the foremen and the firings did not disrupt construction. A few days later, Ebasco relented and allowed many of the foremen to return to work.23

Construction problems aside, the attention of the utility, after 1984, focused on the licensing process. On February 28, 1985, the NRC condemned

HL&P for the handling of the Quadrex Report. The Quadrex Report was a critical evaluation of the utility's management of the project. The utility had ignored many findings from the report, including concerns about fundamental defects in

Brown & Roofs engineering design. The NRC felt that HL&P's inactivity again raised questions about the company's character and competence. The new

NRC comments led many observers to believe that the agency would reverse the eariier ruling in favor of the license.®"

The NRC comments reinforced what the Citizens Concerned About

Nuclear Power had repeatedly contended. The intervenor group charged HL&P with concealing the unfavorable Quadrex Report from the NRC.3* The issue of the Quadrex Report and whether the utility's failure to disclose it in a timely

23 Reconstruction of Events, p. 8-2.

3° Houston Post, Febmary 28, 1985.

3* Reconstruction of Events, p. 8-4.

286 manner represented a lack of corporate character remained central to the licensing hearings.

The U.S. Department of Justice, as part of an anti-trust investigation into

Halliburton, Brown & Roofs parent corporation, said that it had discovered a number of revealing documents relating the South Texas Project. The Justice

Department had initiated the anti-trust lawsuit in 1981 when Halliburton attempted to acquire Ebasco after HL&P hired the company to replace Brown &

Root.32 The documents, officials claimed, revealed that Brown & Root senior managers expressed doubt about their company's ability to design and build a nuclear power plant. Also, the documents, many of which dated from up to a year before Brown & Root received the contract in 1974, included a statement from one executive (name unknown) who said, "there was no way the firm could perform if it obtained a nuclear power job."33 HL&P awarded the contract to

Brown & Root one week after the executive manager made the comment.

Because of the ongoing problems, the NRC took an unusual action. In order to assess the sentiments of Bay City residents and allow them to ask questions, the agency, on May 2, 1985, conducted a hearing in the town. One

hundred people attended the meeting and eleven residents spoke. The views

represented at the hearings are surprising. Only five of the eleven voiced

concerns while the rest urged that the NRC force HL&P to accelerate the project.

32 Ibid., p. 8-9.

33 Ibid.

287 One resident, retired farmer A. H. Johnson, asked what precautions existed in the event of a "kamikaze type attack" on the reactor building. George Knighton, one of the NRC officials at the meeting, responded, "we do not take into consideration acts of war "when licensing a plant.3" The support for the project, and the efforts to get the NRC to speed up the licensing of the plant demonstrate that the majority of Bay City residents preferred a resolution to the project over safety concerns.

On May 30, 1985, HL&P and Brown & Root officials announced a settlement of their lengthy and expensive legal battle. HL&P and its partners requested $6.3 billion in damages but after lengthy negotiations, accepted $750 million, the largest cash settlement in legal history to that point. The partners did not pursue a larger settlement because of fears that it would bankrupt

Halliburton, the parent company of Brown & Root. Of the $750 million, HL&P received $231 million while Central Power & Light and San Antonio split the

remainder. Austin, because its efforts to leave the project had delayed the settlement, received nothing.35 Austin Mayor Frank Cooksey said that his city would continue its lawsuits against both HL&P and Brown & Root.

HL&P expressed its pleasure at the settlement and said that it would

reduce the cost of power by fifteen percent. They also hoped that the settlement

3" Public Hearings on the South Texas Project, Nuclear Regulatory Commission, May 2, 1985, SPP, Box 81, SWC, TTU.

35 Reconstruction of Events, p. 8-11.

288 would help HL&P regain the confidence of its investors, ratepayers, and state regulators. One economic analyst said, "the utility cut loose the albatross that hung around the neck of Houston Lighting & Power, regarding allegations of poor management and the much-maligned decision 3.5 years ago to fire Brown &

Root as design engineer."36 Critics of the settlement, however, noted that the final agreement, with payments and inflation, would actually result in $200 million less than the $750 million awarded.3' The settlement also resolved several equipment issues. When it fired Brown & Root, HL&P seized equipment from the constructor and did not release it. Brown & Root, in return, sent monthly bills to

HL&P for the equipment.

The court settlement did not improve relations between the two companies. Once the legal actions concluded, the judicial silence orders no longer applied and both companies took the opportunity to "sling mud" at their former business partners. Brown & Root told the media that HL&P lied to it repeatedly and had prepared the lawsuit for tiA/o years prior to Brown & Roofs termination. John Harbin, a vice president of Brown & Root, when his company was fired, said, "If the project is successfully finished, it will be the first time a nuclear plant has ever been completed with a law firm in charge."®® In response.

36 Ibid.

3' Houston Chronicle, May 31, 1985.

3® Houston Post, June 8, 1985.

289 HL&P released documents showing that Brown & Root, in early 1981, had tried to quit several times before the firing.33

The settlement of the Brown & Root lawsuit did not bring resolution to the

PUC hearings. In September 1985, the Kansas consulting firm of Lubow,

McKay, Stevens & Lewis began a $2 million audit of the South Texas Project.

The purpose of the audit, conducted at the request of the Public Utility

Commission, was to determine how much of the cost of STP would be passed on the ratepayers. The auditor, however, created controversy of its own when, in early 1986, infonnation appeared that the PUC placed little or no restraints on its expenses."" The auditors stayed in expensive hotels, made frequent trips with their spouses, and billed the state agency for up to fourteen hours of work each day. The charges were true, but Lubow was unrepentant. Lubow representatives, in fact, accused the PUC of obstructing their investigation and company officials made several public comments on the lack of cooperation they received from PUC personnel.

Although minor in nature, the tiA/o complaints illustrate the complex and combative atmosphere that surrounded the project and seemingly anyone who came into contact with it. The Lubow audit report, when finished, estimated that

HL&P misspent almost $1.8 billion on the project and approximately $1 billion

33 Rate Increase Hearing Before the Public Utility Commission Regarding the South Texas Project, June 9, 1985, SPP, Box 22, SWC, TTU.

"" Houston Post, January 1, 1986.

290 more than the utility claimed."* Both the PUC and HL&P, for opposite purposes, questioned the results of the audit and considered much of it to be incomplete, a claim that Ludow representatives acknowledged. The auditors requested an additional $275,000 to finish its investigation but the PUC denied further funding.

"It seems to be ironic that a study that was set up to study cost overruns has a cost overrun," said PUC Commissioner Dennis Thomas."2

Meanwhile, the city of Austin continued to seek a method to remove itself from the project The South Texas Cancellafion Campaign, a consumer advocate group of Austin residents, offered the City Council several suggestions on how to sell its sixteen percent share of the project. The beleaguered City

Council discussed a few possible solutions of its own but reached no conclusions."® After years of public referendums and negotiations, the city seemed no closer to its goal of leaving the project Residents and Austin's partners both expressed frustration with the city's inability to resolve its position.

The South Texas Project encountered new difficulties in early 1986. In early February, a federal inspection discovered significant deficiencies at the plant This time, a Construction Appraisal Team found problems in the design control system and in the electrical work. The thorough inspection was similar to

"* Lubow, McKay, Stevens & Lewis Audit of the Prudence of the South Texas Project, SPP, Box 17, SWC, TTU.

"2 Rate Increase Hearing Before the Public Utility Commission Regarding the South Texas Project, March 14, 1986, SPP, Box 22, SWC, TTU.

"^^ Austin American-Statesman, January 15, 1986.

291 the one conducted in 1983 at the Comanche Peak Steam Electric Station, an inspection that resulted in the near cancellation of the project. The problems discovered at STP were not of the same seriousness. The team's report mandated changes but did not recommend any drastic alterations to either the construction or management programs. HL&P announced that it would correct the problems quickly and ensure that there would be no future violations.""

Two weeks later, the opponents of the project became targets of the

Nuclear Regulatory Commission. The NRC ordered Lanny Sinkin, the leader

and attorney for Citizens Concerned About Nuclear Power, to show cause why

the board should not discipline him for letters he had sent to HL&P attorneys.

The letters threatened HL&P's legal representation with perjury and criminal

charges. Sinkin denied that the letters were threatening. He argued that the

letters were nothing more than sincere attempts to resolve the issues

surrounding the project. The NRC investigated the letters but chose not to

censure him from practicing before NRC boards."®

While the various legal battles and investigations continued, on March 15,

1986, construction at the project reached the 75% completion milestone.

Although the plant remained behind schedule, HL&P officials continued to

believe that it would be finished on time. The completion of large portions of the

facility allowed HL&P to dismiss tiA/othousan d employees from its 12,000-

"" Reconstruction of Events, p. 8-23.

"5 Houston Post, February 14, 1986.

292 member work force. Despite the large work force reduction, the project continued to be the largest single construction project in the nation."6

Unfortunately, worid events played a greater role than reports of progress in shaping public opinion towards STP. The Chernobyl nuclear disaster on April

26, 1986, caused many South Texas residents to re-evaluate their feelings about nuclear power and the South Texas Project. HL&P officials attempted to reassure the public that a similar accident could never occur at the Texas facility.

The Chernobyl plant, built betiA/een 1977 and 1983, did not have containment buildings - as all American nuclear reactors did. Houston City Councilman Dale

Gorczynski requested HL&P officials to present an explanation to the council on how the two plants differed. He also expressed his displeasure with the project and called it "the largest abuse of public money I've seen during my time on the

City Council."' Jerry Goldberg, vice president of the nuclear project dismissed fears of a Chernobyl-type accident at STP He, in fact, welcomed addifional federal inspections at the facility because they would, he believed, vindicate existing safety precautions.

Opponents of the project did not agree. On May 8, 1986, several anti­ nuclear activists, citing the Chernobyl incident, urged the NRC to halt construction at STP. Tom Harrison, spokesmen for the South Texas

Cancellation Campaign, said, "this event is proof that nuclear technology leaves

"6 Reconstruction of Events, p. 8-24.

"' Houston Post, May 1, 1986.

293 no margin for error and is unforgiving in its consequences. Bringing the problem close to home, the South Texas Nuclear Project is a clear example of human errors.""® The NRC declined to halt work and, on the same day as the protests, released a new 650-page report on the project that concluded that the plant was safe and could be operated without endangering the public."3

The South Texas Cancellation Campaign found unexpected assistance in

its attack on STP. The Gulf Coast chemical and manufacturing industry feared that HL&P to pay for the nuclear project would attempt to raise its rates by as

much as ten percent.®" For the industrial companies in the area, electrical costs were very high, often between thirty and sixty percent of their operating budgets.

Harry Whitworth, the director of the Texas Chemical Council, said, "when and if the STP goes into the rate base, our clients are going to have a choice of either

shutting down completely or getting out of the state."5* The chemical and

manufacturing companies were especially upset because they felt that the utility was misleading them about the benefits of nuclear power. Although the

organization did not pursue the issue against HL&P, the comments refiected a widespread dissatisfaction with the project.

"® Houston Chronicle, May 8, 1986.

"3 Final Safety Evaluation Report on the South Texas Project, Units 1 & 2, Nuclear Regulatory Commission, May 15, 1986.

5" Houston Post, May 25, 1986.

5* Ibid.

294 On May 29, 1986, the Advisory Committee on Reactor Safeguards, an outside panel of technical experts that advised the NRC, conducted an inspection of the facility. The investigators found some positives at the plant but took the overall position that many problems still existed. A NRC supervisor who reviewed the document said the investigation report "appears to indicate a step backward in the management of the project"52 The committee, however, recommended that the plant, once the utility corrected the few remaining problems, appeared to be safe and would present no danger to the public.53 in response to the findings of the investigation, the ASLB licensing board, on June

14, 1986, ruled that the South Texas Project deserved an operating license.®"

The long-awaited decision removed the last major obstacle in the licensing process and opened the way for HL&P to start loading fuel in Unit 1 of the facility.

Based on the NRC's ruling, the utility planned to initiate a low-level startup in one year. The ASLB's decision contained three hundred pages of findings.

Although the board was critical of HL&P's failure to produce the Quadrex Report in a timely manner, Charies Bechhoefer, the board's chairman, said that "none of

52 Inspection Report on the South Texas Report, Advisory Committee on Reactor Safeguards, Nuclear Regulatory Commission, June 26, 1986.

53 Partial Decision Relating to the Operating License for the South Texas Project, Unit 1, June 14, 1986, Atomic Safety & Licensing Board, Nuclear Regulatory Commission.

54 Ibid.

295 us thought it was significant enough to conclude that HL&P lacked integrity and shouldn't get a license."55

Lanny Sinkin, the long-time opponent of the project, said that he expected nothing from the ASLB and thus was not disappointed in the board's decision.

He told a news conference that there "seems to be no limit to the behavior the

NRC will tolerate on the part of those seeking and holding operating licenses for nuclear power plants."5® In a warning to all Americans, he said that "when the next Chernobyl comes in the United States, we will have to look no further than the lack of NRC regulatory oversight for the cause."®'

The Atomic Safety & Licensing Board's decision did not weaken the Public

Utility Commission's opposition to the project The Lubow report continued to raise concerns about the economic viability of the South Texas Project. Many opponents of the project supported the auditor's suggestion that it would be more cost effective to cancel the plant than to complete it. HL&P disagreed with the report and launched an aggressive plan to strengthen support for the project and to reassure HL&P consumers. It hoped to counter negative attitudes about the plant with a public relations campaign.5®

55 Ibid.

56 Houston Post, June 14, 1986.

5' Ibid.

5® Reconstruction of Events, p. 9-2.

296 HL&P was not alone in its efforts to keep the project alive. The Texas

AFL-CIO labor union expressed its concerns that canceling the facility would place the projecfs ten thousand workers on the unemployment line. The union funded a strong lobbyist group to convince the PUC to allow construction to continue. AFL-CIO President Harry Hubbard said, "it would be a waste of money and a total lack of vision, at this point, to stop construction on Unit 2."53

In return for the union's assistance, HL&P, on September 1, 1986, hosted a large Labor Day picnic. Several politicians and labor leaders attended the

picnic to express their support. U.S. Secretary of Labor William Brock told the

crowd of six thousand protestors, "what you're doing is not just building a facility

that will serve people, but you're setting an example of what can be done by

people."®" Other speakers echoed the secretary's words and spoke of the

benefits of the alliance of management and labor. In response to the speeches,

many workers expressed disagreement. "This is bullshit," said Chuck Hooper,

president of a local labor union, "did you see any local labor leaders up there?

This is a management party."6* Opponents of the project also objected to the

$50,000 picnic because the utility passed the cost onto the consumers in the

electric rate.62

53 Houston Post, July 25, 1986.

6" Houston Post, September 2, 1986.

6* Ibid.

62 Ibid.

297 In late November 1986, opponents got support from an unexpected, but related, source. The national nuclear industry suffered a setback when Gulf

State Utilities (GSU) announced that it faced bankmptcy due to the cost of its nuclear program. The utility, which served southern Louisiana, Mississippi, and a part of southeast Texas, had recently completed the River Bend nuclear plant.

Unfortunately for GSU, the energy produced by the $4.3 billion facility was no longer needed. Consumer advocates accused the utility of bad management and an ill-conceived construction plan. They claimed that the investors in the utility, and not the ratepayers, should pay for the embattled plant.

To pay for the plant, GSU requested an emergency rate increase in 1986 of $82 million in Texas and $100 million in Louisiana. For 1987, the utility wanted an additional $62 million in Texas and $102 million in Louisiana.63 Consumers, if the rate increases passed, would see about a twenty-five percent increase in their utility bills. Officials for GSU said that if the utility commissions did not grant the rate increases, the utility, within a few months, would be forced to claim bankruptcy.

Construction of the River Bend plant had begun in August 1979, five months after the Three Mile Island accident; critics of the project believed that the utility proceeded unwisely amid the storm of anti-nuclear controversy. "They were hell-bent, they were going to join the nuclear fraternity no matter what it cost, "said Louis Lambert, a member of the Louisiana Public Service

63 Houston Chronicle, November 13, 1986.

298 Commission.6" In Texas, the Public Utility Commission predicted that, if it

granted GSU's request, ratepayers in the state would see their rates rise one

hundred percent within five years. Gulf State Utilities' president, E. Linn Draper,

defended the decision to build the plant and said that the original studies

projected savings of $20 billion over a coal-fired plant. Draper, in asking for the

rate increase, said, "Our position is that bankruptcy would be a tragedy. We will

be the second largest company in terms of assets to file bankruptcy in U.S.

history. I just can't believe responsible people would allow the company to file

bankruptcy."65

Arguments against the rate increase centered on the ill-fated decision to

build the River Bend plant despite the fact that it cost more than the assets of the

company.66 The poor financial judgment of the utility caused Beaumont and

eleven other cities to protest the rate increase request. On February 23, 1987, the Texas Public Utility Commission issued its decision. The commission denied the inclusion of half of the costs associated with the River Bend plant.

Commission members believed that management and construction problems led

6" Review of Gulf States Utilities' Rate Increase Request, Public Utility Commission of Texas, November 24, 1986, SPP, Box 33, SWC, TTU.

65 Ibid.

66 Ibid.

299 to large cost overruns.6' Although it did not get the rate increase it wanted, the amount awarded allowed GSU to continue operation.

The problems at GSU contributed to greater mistmst in nuclear power. In the PUC hearings on STP, opponents of the project referenced repeatedly the

GSU fiasco. Nonetheless, opposition to the HL&P rate increase lost one of its biggest supports. Jim Boyle, the Public Utility Counsel, in late 1986, resigned from the post in protest against recent political changes. Since its inception,

Boyle had been an opponent of the project and had created for himself a reputation as a champion against abusive utilities. Boyle's role in STP began in

1983 when Governor Mark White created the Office of the Public Utility Counsel to act as a consumer advocate in rate cases. White appointed Boyle to the position and Boyle soon became one of the chief opponents to nuclear power in the state. He worked actively, until his resignation, to limit rate increases by utilities.

Between 1983 and 1986, Boyle and his fifteen staff members intervened in twenty-five cases and decreased rate increase requests by $2.1 billion. Boyle resigned from the position in November but not before generating many headlines within the state with attacks on extravagant spending by utility corporations. One utility executive said of Boyle: "I don't like him. I don't like what he does. But you don't want to go around calling him names. He's smart enough and he's got enough access to the media to kill you if you go one-on-one

67 Ibid., February 24, 1987.

300 with him." Govemor Bill Clements, however, was not one of Boyle's many supporters and his promise to terminate the position led to Boyle's resignation.6®

Boyle's resignation removed a powerful adversary from the PUC hearings

Boyle's resignation coincided with the appearance of an experienced anti­ nuclear group. In early 1987, the Government Accountability Project (GAP) joined in the efforts to stop the South Texas Project. Bille Garde, the Midwest regional director of GAP, announced that the group had begun a probe into the plant. It had reviewed, or so it claimed, complaints from several dozen former and current workers at the project and had compiled a list of safety-related defects, intimidation of inspectors, and price-fixing scams by the contractors.

Houston Lighting & Power, despite GAP's successful records of intervention in nuclear power projects, expressed little concern. A spokesman for the utility said the group, "frequently comes in near the conclusion of a project and tries to delay the project by raising issues that in many cases have already been raised and resolved in the past. Ifs almost like a construction milestone to have anti-nuclear forces from around the country show up. This means progress is really being made down there and the project is nearing completion."'"

GAP'S threats did not immediately cause a disruption in the project. On

January 29, eight days after the group's announcement, on January 29, the first

6® Houston Post, November 30, 1986.

63 Reconstruction of Events, p. 9-9.

'" Ibid.

301 nuclear fuel bundles arrived at the facility. Each fuel bundle cost $400,000, contained enough energy equivalent to 250,000 barrels of oil, and consisted of

264 uranium fuel rods. Loading of the fuel was not scheduled to begin until June and a total of 193 bundles arrived betiA/een January and June.'*

In June, however, the NRC refused to allow the ufility to initiate loading

until the utility corrected some deficiencies. Security was one area that concerned the NRC. During a drill on July 16, 1987, a team of intruders penetrated the facility's security and reached the Unit 1 control room.'2 The drill's results led to a revision of the security plan and further delayed fuel

loading. The various issues that arose raised the cost of the facility by $100 million and led to the first cost overrun in five years.'®

In March 1987, GAP's first efforts to halt the plant began to appear. GAP represented Ronald J. Goldstein, a former construction supervisor, in his lawsuit against Ebasco. Goldstein claimed that he was fired after protesting several lapses in quality control at the plant. Ebasco management, according to

Goldstein, demoted and then fired him in an effort to cover-up safety problems in the facility's control room. GAP petitioned the NRC for a special review and

'* Reconstruction of Events, p. 9-11.

'2 Preliminary Security Report on the South Texas Project, July 25, 1987, Nuclear Regulatory Commission, SPP, Box 41, SWC, TTU.

'3 Reconstruction of Events, p. 9-13.

302 investigation of five hundred allegations of problems at the plant.'" The group did not want the local Region IV office, under fire for possible misconduct at

Comanche Peak, to conduct the investigation but, instead, asked for an outside probe. HL&P, in response, said that it had asked in vain for the anti-nuclear group to turn over any reports of wrongdoing so that it could correct them. An

HL&P spokesman said, "Up until now, GAP has not shared any information with us but has chosen to use the charges for publicity."'® GAP denied that it sought publicity and cited worker requests not to turn over information to the utility.

A long-time opponent of the project. Citizens Concerned About Nuclear

Power, perhaps encouraged by the efforts of the Government Accountability

Project, called for new investigation into STP It wanted an independent NRC board to review the licensing hearings and Region IV's role in the process. No evidence, however, existed that showed how Region IV's enforcement lapses at

Comanche Peak may have occurred at STP The NRC did not comment on the unique request to investigate a completed hearing.

Meanwhile, the NRC ordered the Government Accountability Project to release the names of workers at the project and their complaints. GAP refused to release the names and sought to maintain anonymity for the whistie-blowers.

The NRC rejected a GAP motion to withhold the names and said that it would not launch an investigation until it had more information. The NRC, in addition, went

'" Houston Post, May 29, 1987.

'5 Ibid.

303 so far as to accuse GAP, because of its refusal to cooperate with the NRC, of endangering public health.

As the completion date for the project neared, residents in Bay City and other nearby communities expressed little concern. Whether from resignation or a lack of fear, most people tried to find "good" in the project and feared only that the end of construction and the disappearance of 9,000 jobs would harm the economy. Sue Meyers, a waitress, expressed her feelings: "ifs sure been good for business. Maybe 90 percent of the people who live in all the new apartments and subdivisions in Bay City work at the plant, so in that respect ifs been good.

But what happens when the construction is completed?""

She also laughed half-heartedly about the safety of the plant, 'We joke about will it fire up in December or blow up? But I don't really think about it much. What can we do? Ifs already here."'® Darlene Gilmer, the manager of a convenience store near the plant, shared the apathy towards the plant. She said that she did not think about the plant much but it came to mind when her son in

Colorado asked, "if we started to glow yet."'3 Francisco Gutierrez expressed perhaps the most resigned view, "Why be frightened? If anything happens, by

'6 Houston Post, April 26, 1987.

" Ibid.

'® Ibid.

'3 Ibid.

304 the time ifs happened, ifs all over with. So why worry about something with no remedy?"®"

Not everyone was as unperturbed as Gutierrez and several local farmers who lived near the plant felt uncomfortable about its safety. Jim Murray, a farmer and member of the county school board said, "I don't believe HL&P is telling the public about all the potential problems. If ifs so safe, why isn't it in Houston?"®*

Another farmer said the plant, "just scares me to death."®2 The majority of comments, however, demonstrate that most residents believed that either a disaster was unlikely or, if one did occur, it would be of such a magnitude that it would not matter.

On August 21, 1987, at long last, the NRC granted STP its low-power operating license. The license allowed the utility to initiate fuel loading. The project was two months behind schedule but HL&P hoped to begin commercial operation in February.®® The utility, as part of the emergency plan for the facility, issued alert radios to the 2,000 homes within a ten-mile radius of the plant

Residents of nearby communities appeared more excited than frightened by the measure. One elderly rancher dismissed any fears: "this is the same as when electricity got here. That was back in the '20s, when we got electricity, and they

®" Ibid.

®* Ibid.

®2 Ibid.

®3 Reconstruction of Events, p. 10-2.

305 were all leery of it So, really, we're going through the same thing as back

..84 then." Patsy Cartwright received her radio a week eariier than most and was unaware that a test was to be held. "I came home from fishing and the radio was going off- shrilling away. I thought, 'Oh my God.' But it was just a test"®®

Despite Cartwrights understandable panic, most residents maintained a cavalier attitude towards the danger. One couple said, "we've talked it over and by the time we got our pets and belongings packed ... well, who knows? If something happened out there, we wouldn't run. We'd stay. Everything we own is here. And you could get run over. I think everybody would panic."®® The fatalism expressed by the couple was not unique. Many of the people simply felt that they were at the mercy of the plant.

The utility, on August 26, 1987, completed fuel loading in half the scheduled time. The milestone did not reassure opponents of the project and the city of Austin completed its negotiations to leave the project. HL&P and Austin, on September 4, agreed settle their lawsuit, thus putting an end to Austin's six- year effort to withdraw from STP.®' The agreement gave Austin's sixteen percent share to HL&P and, in return, Austin received $57 million and a share of an

®" Houston Post, August 25, 1987.

®5 Ibid.

®6 Ibid.

®' Reconstruction of Events, p. 10-4.

306 HL&P lignite-fueled generating plant in Central Texas.®® The utility and Austin's

City Council expressed mutual happiness at the conclusion of their lengthy legal battle.

The agreement also prohibited Austin officials from commenting on or taking any negative action against the project. Austin Mayor Frank Cooksey, in regards to the last provision, said, "That part of the agreement was something that was requested by HL&P and we agreed to it because, frankly, once we're out of the plant we want to be completely out of it."®3 The tiA/o parties reached the settlement in September 1987 but the PUC objected to certain provisions. It examined the project and the proposed buyout for almost a year and, on August

24, 1988, approved the buyout but only if HL&P paid for the settlement out of stockholder profits and not from the rate base.3" PUC Commissioner Jo

Campbell said, "if HL&P wants to buy themselves out of a suit with the city of

Austin, their shareholders should pay for it, not HL&P's ratepayers."3* j^^g pyQ.g provision, however, was unacceptable to HL&P. The utility backed out of the agreement and a stunned city of Austin remained in the project.

The failure to settle the problems with Austin did not dismay the utility.

Instead, it focused its efforts on the allegations of the Government Accountability

6® Ibid.

®3 Ibid.

3" Austin American-Statesman, August 25, 1988.

3* Austin American-Statesman, October 25,1988.

307 Project. The refusal of GAP to release the names of its sources to the NRC led to a five-month battle before a federal court. On October 23, 1987, a federal judge expressed his fmstration with the stubbornness of both sides.32 Judge

Thomas Hogan chastised the NRC and GAP for their harsh language, their rhetoric, and their general unwillingness to settle their disagreement. The judge, however, ruled that GAP did not have to release the names of the whistle- blowers and cited constitutional freedoms and the protection of employees from retaliation. The NRC, although displeased with the ruling, continued its refusal to proceed with an investigation at STP until it received more information from

GAP.33

Two months later, in December 1987, the NRC and GAP reached an agreement that allowed the two sides to share information without revealing the names of workers.3" As a result of its examination of GAP's allegations, the NRC investigated the site in late January 1988. The NRC team examined ten areas of contention and talked to the employees who had raised concerns. After several days, the team concluded that there were no significant problems relating to the various GAP allegations. An unrelated NRC inspection report that coincided with the GAP investigation, however, revealed un-related errors in STP's startup. The

32 Reconstruction of Events, p. 10-7.

33 Ibid.

3"lbid., p. 10-9.

308 NRC, in response, fined the utility $75,000 for violations that, if the plant had been in full operation, would have been serious.35

The utility, perhaps because it felt beleaguered by the investigation, attempted to forestall any additional legal activity. On January 8, 1988, HL&P petitioned both state and federal courts to delay new lawsuits that might arise over the South Texas Project until it could be completed. A spokesman for HL&P revealed that the action was, in part, a response to indications that San Antonio might sue HL&P for its release from the project3®

The South Texas Project received another setback in eariy March 1988 when a labor dispute occurred. As Unit 1 prepared for full operation, tiA/o hundred foremen on Unit 2 walked off the job in protest of Ebasco's personnel practices. The work stoppage coincided with a visit by a committee of national presidents of the building trades unions. The foremen claimed that HL&P did not allow the union presidents to hear workers' complaints. Ebasco replaced the foremen with supervisors and managers from elsewhere. The contractor also chose, perhaps without much consideration, to terminate the jobs of 392 other workers. Ebasco planned to layoff the additional workers in three weeks but the shortage of foremen allowed the company to proceed ahead of schedule.

35 Notice of Violation and Report on Deficiencies at the South Texas Project, Units 1 &2, January 22, 1988, Nuclear Regulatory Commission.

3® Houston Post, January 9, 1988.

309 The labor force, despite Ebasco's reassurances that the layoffs were not punitive, went on strike. About eight hundred workers refused to cross the picket lines even though the plant was being built under a no-strike contract.3' Workers described the walkout as the result of building anger against Ebasco management. One worker said, "We're not animals, we're people and we like to be treated like people."3® Another, as he dismissed claims that a labor problem existed at the plant, said, "There's no labor problem out here - there's a management problem."33 Many of the workers cited a reduction in pay as the source of their unrest. Ebasco had recently switched the classification of several hundred workers from construction to maintenance pay scales. The company had also fired one hundred workers who entered the plant but refused to work.*""

The strike lasted only one day and dispersed when a court issued a no-strike order. The strike was not without cost. Ebasco dismissed neariy eight hundred craftsmen for refusing to work.*"*

On March 8, 1988, just a few days after the controversial walkout

Houston Lighting & Power operators created a chain reaction in Unit 1. Although the energy was not used to produce electricity, the reaction was an important

3' Houston Post, March 4, 1988.

3® Ibid.

33 Ibid.

*"" Ibid.

*"* Houston Post, March 5, 1988.

310 step in bringing the plant to full power. The project appeared to be almost ready for commercial operation.

But ten days later, anti-nuclear groups made a last attempt to block the licensing of the plant occurred. Citizens Concerned About Nuclear Power led a coalition of groups opposed to STP in filing a motion with the U.S. Circuit Court of

Appeals to prevent the issuance of a full-power operating license.*°2 The coalition, which included Earth First, Gray Panthers of Austin, Lone Star Green,

Public Citizen, South Texas Cancellation Campaign, and the Travis County

Democratic Women's Committee, claimed that it had new evidence that revealed

numerous safety violations at the project. The court denied the motion and, on

March 21, the NRC issued a full-power operating license. Opponents of the

project dismissed the NRC as a "carefully orchestrated dog and pony show."*"®

Supporters, on the other hand, expressed their elation at the culmination of their

arduous journey.

The commercial operation of the plant allowed HL&P to request from

Public Utility Commission, on March 30,1988, a $400 million rate hike. The

utility hoped that the rate increase, which would be phased in over several years,

would recover the costs of the $5.8 billion nuclear project. If accepted by the

PUC, ratepayers would see an average cost increase of 38% over four years.

*°2 Reconstruction of Events, p. 10-21.

*°3 Ibid., p. 10-22.

311 The PUC ordered an audit of STP to determine how much of the cost of the plant could be passed on to ratepayers. While the PUC examined the rate request,

HL&P consumers expressed resentment with the rate hike. The Houston Post conducted a survey of Houston residents and one hundred percent of respondents opposed the hike.*""

The Office of Public Utility testified before the PUC that mismanagement raised the cost of the South Texas Project by 79%. After tiA/o years of investigation, the state agency issued, during hearings over a HL&P rate increase request, a report on August 5, 1988, that accused HL&P and Brown &

Root of costing the ratepayers billions of dollars.*"® The financial cost of the project, in 2002, remained controversial. Although the utility continues to support its decision to build the plant, the same energy could have been supplied using less expensive fossil fuels. Mismanagement and poor decision-making caused the cost of the project to exceed reasonable levels. The Public Utility

Commission's refusal to pass on the full cost of the project to ratepayers was justified.

The rate request hearings did not interfere with the operation of the plant.

On August 25, 1988, STP's Unit 1 produced its first commercial power.

Unfortunately, operation of Unit 1 did not last long. Critics of the project who had long insisted that the plant was unsafe appeared vindicated when, in February

*"" Houston Post, May 11, 1988.

*"5 Rate Increase Hearing Before the Public Utility Commission Regarding the South Texas Project, August 5, 1988, SPP, Box 22, SWC, TTU.

312 1989, as Unit 2 approached operational capability, a fire broke out in Unit 1.

Although minor in nature, the fire resulted in a shut down that lasted one month.

The Nuclear Regulatory Commission investigated the incident, but determined that the fire was not the fault of the utility. During the shut down, opponents of the plant attacked HL&P. Their protests did not affect the project and, on June

19, 1989, Unit 2 produced its first commercial power and, in doing so, at long last ended the construction and licensing process.

Houston Lighting & Power, after spending seventeen years and $6 billion, had completed the South Texas Project The facility was the first nuclear plant completed in the Lone Star State and represented the culmination of years of effort. The South Texas Project encountered numerous problems and overcame them all, although often not without difficulty. Like Comanche Peak, STP came after the decline in interest and need for nuclear power had begun. The utility recognized neither the changing regulatory environment nor the changing economy. HL&P built STP despite indications that the plant was not necessary or cost effective. In doing so, the utility created great controversy.

The employment and subsequent termination of Brown & Root was one of the most significant events in the history of STP. Like the utility. Brown & Root had little nuclear experience. The company, because STP was its first nuclear

project, faced tremendous pressure. Brown & Root had great hopes in expanding its nuclear program and wanted the project to succeed. Perhaps the

pressure was too great. For whatever reason, the company did not employ the

313 necessary personnel to execute its responsibilities. It failed to deliver the necessary engineering designs and did not establish effective supervision of construction. While blaming Brown & Root for the problems at STP was easy,

HL&P held the ultimate responsibility for the project

An examination of the South Texas Project reveals several characteristics about nuclear energy in Texas. The majority of residents, in the beginning, welcomed nuclear energy. They saw the economic benefits of the project and did not appear concerned about safety issues. As construction progressed, numerous delays and cost overruns undermined support. Safety problems appeared and a few people expressed doubts about the project, but economic issues, not safety concerns, drove opposition. Unlike the anti-nuclear activism that appeared in the rest of the country, opposition to STP focused on the cost of the project Only a few small groups protested safety conditions at the plant. No matter the cause of opposition, the project reached completion and in 2002 continued to supply a large portion of southeast Texas with electrical power.

314 CHAPTER IX

CONCLUSION

The Lone Star state's experience with atomic power has been tumultuous.

Constructing the power plants was a long, difficult process. Through the late

1960s and early 1970s, power utilities within Texas considered the building of several nuclear facilities, but only tiA/oreache d completion. In 2002, the South

Texas Project and the Comanche Peak Steam Electric Station, each of which has tiA/o nuclear reactors, provide electricity to neariy tiA/enty percent of the state.

The two power plants are the result of billions of dollars and almost tiA/enty years of effort. Both plants encountered problems similar to those faced by nuclear projects in other states. Public opposition, regulatory obstacles, and mismanagement caused billions of dollars of cost overruns and years of delay.

The problems were common to other nuclear projects elsewhere in the country.

In Texas, however, the problems manifested themselves in different ways. The characteristics unique to Texas's experience with nuclear energy make it an important chapter in the history of nuclear power in America.

Public opposition in the Lone Star state, which had been driven by safety concerns in most other areas of the country, centered on the exorbitant costs of the facilities. Although the financial burden of nuclear power caused concern among citizens in every area in the country, in Texas the effect of nuclear power on rates charged to users was much more significant. Even the disasters at

Three Mile Island and Chernobyl raised only a limited reaction against the Texas

315 projects. Comments from residents near the plants reflected concern but also faith in the safety changes enforced by the federal government in the wake of the incidences.

The type of opposition was another characteristic of Texas' relationship with nuclear energy. In Texas, little organized protest existed. Both Comanche

Peak and South Texas encountered a few citizens' groups who were highly active in opposing nuclear power. The groups were not large and often dominated by only one or tiA/ooutspoke n individuals. Despite the various groups represented by the interveners, the actual number of opponents of nuclear power in the state was minimal. Few residents played an active role in the opposition.

Unlike such notorious projects as Long Island's Shoreham Power Plant or

California's Diablo Canyon, where mass protests occurred, the Texas sites rarely experienced large protest movements. The cause of the lack of reaction is difficult to determine. Whether most individuals felt at the mercy of the big utilities or whether they simply did not care is unknown. Regardless of the reasons, the number of demonstrations at the tiA/o projects were few.

In the 1960s and early 1970s, nuclear energy was considered the answer to the country's energy needs. Many utilities did not want to be left behind in the rush to implement the technology. The rapid growth of the nuclear industry meant that utilities often entered into the field without considering the unique differences betiA/een it and conventional power. In the country as a whole, the few experienced nuclear engineers were spread thinly throughout a variety of

316 government agencies, private industry, and local utilities. Training new engineers and reactor technicians required time and a great deal of money.

The msh to train plant operators resulted in personnel incapable of handling the responsibility of mnning a nuclear plant. Control rooms were not built to accommodate inadequately trained engineers; large panels with hundreds of identical gauges and switches dominated the area. At many plants, some gauges could only be read by climbing ladders. At others, identical switches that raised and lowered the fuel rods lay side by side. The operators at one plant, frustrated by the confusing setup, attached Heineken and Michelob wooden tap handles to the control levers.* The setup and gauge placement of the control room of the Three Mile Island and the inexperience of the operators were, in part, responsible for the accident

The utilities were also guilty of gross mismanagement. Around the country, potentially deadly mistakes resulted from poor decision-making. Many utilities pushed construction forward regardless of safety concerns. At Diablo

Canyon in California, one of the reactors was installed upside down and construction continued for several weeks before anyone noticed. In many cases, utilities refused to revise their quality control systems. Despite indications to the contrary, utilities stubbornly maintained an air of infallibility.

Likewise, both Texas Utilities and Houston Lighting & Power ignored several outside audits that found serious problems in their safety assurance

* Adam Reed, "Who Caused Three Mile Island," Reason, August 1980.

317 programs. The unwillingness to admit the presence of difficulties stemmed, in part, from the success with so many fossil-fuel plants. Nuclear plants, however, presented a unique challenge that many utilities failed to recognize.

The Nuclear Regulatory Commission contributed to the problems in the nuclear industry. The regulatory environment underwent a transition in the early

1970s. After the commission replaced the Atomic Energy Commission, the federal government became more concerned with ensuring the safety of nuclear plants than with promoting their construction. The change caught many utilities, including the ones in Texas, off guard. The nuclear industry went from having relatively few guidelines to an almost ovenA/helming set of regulations. The change caused further delays and additional cost overruns as utilities reconstructed significant parts of their facilities.

In addition, the Nuclear Regulatory Commission held tiA/o different and often contradictory responsibilities. Inspectors often found themselves having to justify their reports about a specific plant before the Atomic Safety & Licensing

Board. On several occasions, boards denied the validity of reports and went against the findings of commission inspections. The situation put the utilities in a difficult position. Texas Utilities, for example, received positive inspections through most of its history. Despite some minor problems, the Nuclear

Regulatory Commission gave little indication that significant portions of the plant were inadequate. When the utility sought an operating license, the Atomic Safety

& Licensing Board shocked utility officials with an Order to Show Cause why the

318 facility should not be shut down. The event illustrates the speed in which the federal government could reverse its support of a plant.

Texas did not develop nuclear power until long after many other states. In the 1950s, when nuclear power first became a reality, government officials and businessmen studied the effects the new technology would have on the state.

Although the rest of the country considered nuclear power to be the answer to the nation's energy needs, some Texans feared that the implementation of atomic power would undermine the state's oil industry. Various state agencies and organizations studied the potential problem and concluded that nuclear energy posed no threat and was a necessary replacement for fossil fuels. Rising oil and coal costs led to many power industry officials to believe that the dominance of nuclear power was inevitable, but still many years away. The view resulted in very little interest in nuclear power within Texas. A few companies mined for uranium in selected spots around the state and Texas became one of the largest suppliers of the ore. Uranium mining, however, never approached oil in size or economic impact. Although a few uranium mines still exist in Texas in

2002, such mining has declined in importance.

Texas Utilities, the owner of Comanche Peak, and Houston Lighting &

Power, the owner of the South Texas Project, initiated their nuclear projects because they, like many other utilities elsewhere in the country, believed that energy needs would continue to rise. The tiA/o utilities feared that the cost of fossil fuel would become prohibitive, but the choice to build nuclear plants, in light

319 of the energy projections made by neariy every economist at the time, is understandable. Indications existed that hinted at a possible decline in the nuclear industry. The tiA/o utilities failed to understand that the nuclear industry was, in fact, in a great deal of trouble.

After making the decision to implement nuclear power, Texas Utilifies and

Houston Lighting & Power talked to representatives from the Atomic Energy

Commission, leading nuclear construction companies, and the builders of nuclear reactors. The three groups, obviously not the most objective advisors, supported the technology and any attempts to construct nuclear facilities. Both utilities received a wealth of information promoting the economics and safety of nuclear power. They appeared, however, to ignore several warning signs that nuclear energy was not the modern wonder that some believed. The tiA/outilitie s knew of the sudden cancellations of several nuclear projects and the decline in the number of licenses being sought, but did not reconsider their course. They also remained undeterred by the escalating cost of nuclear reactors and the lengthening time required to complete a project

More importantly, and something that warrants criticism, the tiA/outilifie s underestimated the differences betiA/een nuclear power plants and conventional fossil fuel plants. The requirements to build a nuclear facility differed immensely from those for a fossil fuel plant. Neither utility realized the need to hire a number of experienced experts in the field. Instead, each proceeded under the assumption that their personnel could adapt to the new technology. The

320 assumption was incorrect and caused many setbacks to Texas Utilities and

Houston Lighting & Power. Even when outsider auditors, such as the

Management Analysis Company, cautioned about the necessity to hire experienced nuclear engineers, the utilities resisted such suggestions and, in turn, encountered numerous difficulties.

Despite the problems encountered in constructing the nuclear facilities in

Texas, nuclear power within the state is no longer as controversial a topic. In fact, nuclear power has faded into relative obscurity. Protests against the nuclear facilities have disappeared. The minority partners in the projects no longer attempt to leave their partnerships. Even the cities of San Antonio and

Austin remain in the projects. Many Texans, possibly even a majority, are unaware that nuclear energy exists within the state. The projects affected few people outside of the greater Dallas-Fort Worth and Houston areas and often caused little concern even within those communities.

Nuclear energy never fulfilled the expectations of its supporters. No new applications for a construction permit for a nuclear plant have been filed since

1979. Since 1971, tiA/enty-tiA/oplant s have closed. The last American nuclear

plant to come online was the Watts Barr plant in Tennessee in 1996.2 ^^ ^|^g

current time, several nuclear facilities are being considered for deactivation, a

lengthy and often difficult process. Decommissioning has decreased the number

2 Nuclear Energy Institute, Significant Nuclear Milestones; available from http://www.nei.org; INTERNET.

321 of nuclear plants by about ten percent over the last decade although changes in regulations have allowed nuclear plants to extend the operating licenses over longer periods.

Perhaps the United States should have followed the example of France.

Its nuclear power program today provides neariy eighty percent of the country's electricity. France encountered a few problems, but overcame many of the obstacles that hindered nuclear energy in the United States. For example,

France had few design and construction problems because it imposed a careful set of regulations governing reactor and plant design. Unlike in the United

States, French utilities worked off of a single model. The limitation allowed

French utilities to share the cost of training personnel and developing expensive modifications.3 The single design also eased the duties of French government regulators who only could focus on training and operation and not on construction and engineering. In the United States, federal regulators spent tens of thousands of work hours verifying dozens of different plant designs. The custom building of nuclear plants by each utility caused the price of American nuclear plants to escalate and contributed to design flaws, construction mishaps, and inadequate federal oversight. The problems explain why utilities, since the

3 Ibid., Statistics on International Nuclear Power; available form http://www.nei.org; INTERNET.

322 beginning of the nuclear age, cancelled 124 plants in various stages of completion."

Despite the problems, the nuclear industry is not as troubled as it may seem. In the year 2000, nuclear energy supplied approximately tiA/entypercen t of the nation's energy. One hundred three reactors were in operation.

Technological improvements and the reflning of operating procedures have made them more efficient; the additional generating capacity is equivalent to tiA/enty- three new reactors over the last decade.® Amazingly, nuclear power has finally achieved its goal of providing affordable and clean energy. Nuclear plants run at an average of ninety percent of capacity (percentage of time online), up greatly from a dismal sixty percent that was common to the industry in the 1970s. In comparison, coal plants run at sixty nine percent, oil and natural gas at thirty percent, and hydroelectric dams at forty percent of capacity.® The cost of oil and natural gas is so expensive that utilities, whenever possible, shut down the generators to save money. Nuclear plants, because uranium costs are at an all time low, can operate nonstop. Unlike coal plants that have to be shut down every few weeks for maintenance, nuclear plants can operate for long periods of

" Significant Nuclear Milestones; available from http://www.nei.org; INTERNET.

5 Ibid.

6 Ibid.

323 time. For example. Three Mile Island Unit 1 set a record in 1999 for having operated for tiA/oyear s without interruption.

Most of the utilities, but not all, have finished paying off the costs of the plants, thus allowing more affordable operation. Today, nuclear plants produce power at half the cost of natural gas and without any of the harmful, climate- changing emissions of a fossil fuel plant Most Americans are unaware of the changes in the industry. Tom Shiel, spokesman for nuclear operations at Duke

Power expressed the view of many nuclear power officials. "We've [the nuclear industry] been happy to stay out of the public eye for awhile," he said, "As far as this industry is concerned, no news is good news."'

Shiel's comment refiects one of the major obstacles to the resurrection of the nuclear industry. The technology is still considered dangerous. Many older people remember the events surrounding the Three Mile Island incident whenever nuclear power is mentioned. Reactors are still seen as ominous.

Nuclear power continues to frighten a significant percentage of the population.

In recent years, public opinion has started to change. Many young people's only knowledge of nuclear power comes from watching Homer

Simpson, the father on the popular animated television series The Simpsons, work at the local nuclear plant. The show illustrates the common image of nuclear power. The plant is filled with radioactive waste, the employees are ill- trained and constantly causing accidents, and the owner is only concerned about

' The Weekly Standard, April 2, 2001.

324 money. A popular image from the series is Homer Simpson, the chief safety inspector, asleep in front of his control panel while warning lights blink around him. The television show plays upon common perceptions about nuclear power and, in tum, reinforces those perceptions. However, the light-hearted manner in which nuclear power is portrayed reflects the easing of fears.

Interest in nuclear power has resurfaced in recent years. In fact, a Gallup

Poll conducted in late 2001 showed that more than sixty percent of Americans no longer oppose nuclear energy and slightly more than half of those polled support the construction of new reactors.® Global economic changes have caused a revitalization of interest in nuclear power. In the last five years, engineers have developed several new reactor designs. Although no utility has gone so far as to investigate building a new plant, some level of interest exists. Increases in the price of oil and concerns about global warning often result in cries for alternative energy. Nuclear energy, a technology feared by many people, seems to be experiencing a resurgence in activity. Many owners of nuclear power plants have applied for twenty-year extensions to their original forty-year operating licenses, most of which have been granted. Other countries, such as China,

Japan, and Russia, have expanded their nuclear industries.

Problems remain in the industry, however, and they will hinder any attempt to build a new plant. The most serious obstacle is the expense of construction. Few utilities possess the means or desire to sink billions of dollars

Gallup Poll, August 15, 2001.

325 into a nuclear project without the certainty of completion. Another problem is what to do about radioactive waste. No safe way to dispose of spent energy rods and other radioactive byproducts exists. Nuclear plants, since their inception, have produced about 35,000 tons of radioactive waste. The majority of the waste is stored at the individual plants, either in special pools or canisters.

The plants, however, are running out of storage space and recent worid events, especially the terrorist attacks on the World Trade Center in New York

City, have brought increased attention to the security of the plants. Several government officials have questioned the wisdom of storing thousands of tons of radioactive material in nuclear plants that may become the targets of terrorism.

The federal government spent millions of dollars to build the Yucca Mountain waste site in Nevada, but public opposition remains strong and the opening of the facility may be delayed indefinitely.

Despite its problems and the lack of a clear future, nuclear power is not gone completely. The worid's growing energy needs and the rise of fossil fuel prices have caused many scientists and economists to reconsider nuclear power.

Although the future of nuclear power is unclear, the probability of a rebirth of the industry appears likely. What effect a new wave of nuclear plant construction will have on Texas is unknown, but past experiences may make the state's utilities more cautious in dealing with nuclear power.

Clearly, then, the history of the Lone Star and the atom has been unique.

The story of the tiA/omajo r facilities in Texas has been dominated by their

326 construction history more than by their successful operation since going online.

The large cost overruns, the shocking construction mismanagement, the growing bitterness and distrust between builders and operators, and the unusual relationship between minority and majority owners dominated the overly long period of construction. Once they went online, however, the plants attracted little new attention. Indeed, the nuclear power plants at Comanche Peak and South

Texas have faded into relative obscurity.

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