ML20058D742
| ML20058D742 | |
| Person / Time | |
|---|---|
| Site: | South Texas  |
| Issue date: | 07/21/1982 |
| From: | Pieper W BROWN & ROOT, INC. (SUBS. OF HALLIBURTON CO.) |
| To: | Bechhoefer C Atomic Safety and Licensing Board Panel |
| References | |
| ISSUANCES-OL, NUDOCS 8207270340 | |
| Download: ML20058D742 (5) | |
Text
t 14 RELATED CORRESPufiDENCEt
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Brown f5' Root,Inc.
east orrice Box Three, souston, Texas 77001 A Halhburton Company
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W. Bernard Pieper Senior E=ecuthe W. President Operations (713) 676 4502 s
July 21, 1982 C1':..Y E,T.E n Judge Charles Bechhoefer
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Chairman, ASLB y,
U.S.N.R.C.
e-Washington, D.C.
20555
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RE:
Houston Lighting & Power Company, et Al.g"i,".9-South Texas Project Units 1 and 2
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Docket Nos. 50-498 OL and 50-499,OL
Dear Judge Bechhoefer:
The transcript df the June 15, 1982, hearing in the South Texas Project proceeding contains on pages 10414-10425 two exchanges between Mr. Sinkin and Mr. Goldberg relating to:
a) a meeting in Corpus Christi in April, 1981, attended by the Project participants and Brown & Root; and b) the circumstances surrounding Brown & Root's decision in November, 1981, not to remain on the Project as constructor.
Perhaps because of the manner in which the questions were formulated by Mr. Sinkin, this testimony conveys misleading impressions regarding the purpose of the Corpus Christi meeting and an incomplete and misleading description of the events leading to Brown & Root's November, 1981 decision not to remain as constructor.
The purpose of this letter is to provide you with more complete and accurate information on these two matters.
The Corpus Christi Meeting In late 1980 and early 1981, at the direction of the Texas Public Utilities Commission, Houston Lighting and Power prepared a cost quantification study detailing the reasons for the variations in the expected costs reflected in the various cost estimates which had been submitted by HL&P for the South Texas Project.
8207270340 820721
,gQ 3 PDR ADOCK 05000498 O
,s Judge Charles Bechhoefer rYiN.7A July 21, 1982 Page 2 On March 4, 1981, HL&P attorney Finis Cowan transmitted to Brown & Root counsel a copy of its proposed report with the advice that it was to be submitted to the PUC in mid-March.
A few weeks later, on March 16, 1981, we received a revised version of the report from Mr. Cowan with the explanation from him that the revisions were intended to appease strong objections expressed by the attorneys for HL&P's partners in the South Texas Project.
The original HL&P report did not attribute any of the cost increases to fault on the part of Brown & Root, and we were told that these attorneys objected to EL&P's submission of an official filing with the PUC which appeared to be inconsistent with a lawsuit against Brown & Root for increases in the Project's cost.
Copies of both the original and the revised drafts are attached hereto.
The revised draft with some additional changes was the version submitted to the PUC.
We were seriously concerned by this litigious posturing on the part of the STP owners.
We had previously expressed concern on a number of occasions that the pre-occupation of HL&P's lawyers with prospect o,f litigation against Brown & Root was interfering with the cooperative relations we felt were necessary to facilitate engineering and construction of the Project.
We thought that the initial draft of the study represented a refreshing change in approach by HL&P to the Project's problems, and we were disheartened by the second draft reflecting HL&P's apparent capitulation to its partners on this issue.
We requested and obtained a meeting with senior 4
officials of HL&P on April 3, 1981, to review this matter and to express our concern that this continued adversary posturing by the Project owners was interfering with necessary Project communications and could affect licensability of the j
Project.
Brown & Root's management was convinced that the owners manifested intent to attempt to build the Project and simultaneously subject Brown & Root to a continuing threat of litigation was causing a severe impediment to progress on the Project.
At that meeting, Don Jordan, President of HL&P, told us of the then next expected meeting of the Project participants.
He suggested that we attend that meeting and tell our concerns to the other participants.
We agreed and asked that the lawyers for the owners be invited to the meeting to hear about the dilemmas that their efforts to precipitate a lawsuit were creating for those who were I
trying to build a power plant.
,- s O
Judge Charles Bechhoefer N
A r
July 21, 19 82 W
M' Page 3 The meeting was held in Corpus Christi on April 10, 1981.
The purpose of the meeting was not, as suggested by Mr. Goldberg in reply to Mr. Sinkin's question, i
to ciscuss the alleged lack of experienced personnel on the I
Brown & Root project test.
It was to discuss our concerns, l
as set out above, that the participants' preoccupation with l
potential litigation -- as sanifest in the report to the PUC i
and several other project documents and decisions -- was disrupting our ability to perform.
Following that meeting, there was a brief side meeting where top management of the owners and Brown & Root did discuss mutual personnel problems, l
including some of the matters mentioned by Mr. Goldberg in h}
his testimony.
Indeed, for a brief period after the Corpus
=
Christi meeting, we thought we perceived signs of a more l
cooperative working relationship with HL&P; however, we were unable to obtain timely approvals from HL&P of proposed r
recruitment activities or to obtain a revision of HL&P 's quality assurance procedures along the lines of the procedures HL&P is now apparently adopting (See Tr. 10635).
Our proposals would have conforned with NRC requirements and yet allow work to proceed.
Brown & Root's November, 19El Decision As you know, we were told in September, 1981 of HL&P's decision to terminate Brown & Root as engineer and construction manager.
This came as a surprise to us and, of course, constituted a material breach of our design and construction contract with EL&P.
In light of the apparent litigious intentions of the Project participants, including those mentioned above, we believed that we should assess a
whether it made sense to continue as Constructor under the terms of the previous contractual arrangements, which had I
been breached by HL&P's unilateral removal of Brown & Root as engineer and construction manager, or to seek a revision of the contract.
As a result, in order to attempt to elimi-l nate this cloud which was hanging over the Project as a i
result of the litigation threats, we did take the position i
at the outset as indicated in Mr. Goldberg's testimony that l
we would require a new contract which included a settlement i
l i
of the past clains the participants apparently believed they had.
In addition, we sought a revision of the commercial i
i terms and a redefinition cf our responsibilities and liabili-ties in light of the more limited construction role requested of us.
Later, after further discussions with HL&P, and in l
l l
i 2
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.h Judge Charles Bechhoefer
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July 21, 1982 Page 4 an effort to minimize further delay to the Project, we advised HL&P that we were setting aside our request for the settlement of past claims and asked only for a revised
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contract which redefined our responsibilities.
This is not mentioned in Mr. Goldberg's testimony.
However, HL&P and the participants would not discuss any revision of the contract to take into account the change in our responsibi-3 lities.
Under the circumstances, we decided in November to discontinue our relationship with the Project.
In December, HL&P brought a lawsuit against Brown
& Root which, among other things, demanded that the Court require Brown & Root to perform construction on the Project under the previously existing contract.
In an effort to avoid this unnecessary litigation, we decided to accede to HL&P's demand and advised HL&P and the Court that we would perform the construction work under the previous contract, reserving our claim for damages.
At that point, however, HL&P withdrew its request of the Court and proceeded to obtain a new construction contractor.
I, of course, do not know how these matters might bear upon your decision.
I assume that your Board is not interested in the details of the HL&P interactions with Brown & Root which, in our view, have substantially inter-j fered over the years with performance on the South Texas Project.
These circumstances are certainly not a part of your present hearing record.
Nevertheless, in the interest of accuracy as to the matters discussed at your June 15 hearing, I thought it appropriate to submit this letter to
- you, i
i Respectfully,
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W. B. Pieper BP/ls b
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4-Judge Charles Bechoefer
<O'// ^ 'i'M July 21, 1982 Page 5 cc:
Mr. William S. Jordan, III (w/o attachments)
Mr. James F. McKibben, Jr. (w/o attachments)
Mr. Jon C. Wood (w/o attachments)
Mr. Albert De La Rosa (w/o attachments)
Mr. Lanny Sinkin (w/o attachments)
Dr. James C. Lamb, III (w/o attachments)
Mr. Ernest E. Hill (w/o attachments)
Mr. Brian Berwick (w/o attachments)
Mr. Jack R. Newman (w/o attachments)
Ms. Kim Eastman (w/o attachments)
Mrs. Peggy Buchorn (w/o attachments)
Atomic Safety & Licensing Board (w/o attachments) i.,
Atomic Safety & Licensing Appeal Board (w/o attachments)
Docketing & Service Section (w/o attachments) e M'
e
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