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September 28, 1999

Owner of Connecticut Nuclear Plant Accepts a Record Fine

By MIKE ALLEN

H ARTFORD -- The owner of the Millstone Nuclear Power Station in eastern Connecticut admitted Monday that it had falsified environmental records and deliberately promoted unqualified plant operators. The owner, Northeast Nuclear Energy Company, pleaded guilty to 23 Federal felonies and agreed to pay $10 million in fines, the largest penalty ever for a nuclear plant in this country.

The violations took place from 1994 to 1996.

In entering the guilty plea in United States District Court here, Northeast admitted that hydrazine, a toxic chemical used to reduce corrosion of pipes, had gushed into Long Island Sound at a rate of one gallon an hour during 1996 and that testers at the company had diluted their samples with ocean water to hide the problem from Federal regulators.

Federal prosecutors said Monday that they were unable to prove environmental harm from the hydrazine.

The company also admitted that after it submitted fraudulent information to the Nuclear Regulatory Commission, 12 control-room operators received Federal licenses. Problems with the training program at Millstone came to light in 1996 when six of seven candidates for control-room operator licenses failed Federal exams, prosecutors said.

In presenting the evidence in court Monday, the prosecutors said the corner-cutting could have put the plant in the hands of workers unable to prevent a crisis.

The investigation, previously secret, came to light in court Monday when the company waived indictment and pleaded guilty. As part of the plea agreement, the company was put on three years' probation, which allows prosecutors to monitor operations more closely.

The Millstone case is just the second time that a nuclear power plant owner had been found guilty of felonies. Fifteen years ago, after the 1979 accident at the Three Mile Island plant near Harrisburg, Pa., which began the industry's plunge from public acceptance, Metropolitan Edison pleaded guilty to falsifying records at the plant.

Officials at Millstone said they hoped Monday's pleas would end the long period in which the plant has been considered a national symbol of mismanagement in the nuclear power industry. In 1997, Millstone was assessed a civil fine of $2.1 million by the Nuclear Regulatory Commission. In 1996, a Time magazine cover story treated the plant as an egregious example of lax enforcement of Federal regulations.

The three reactors in Waterford, Conn., were shut down under orders from the Nuclear Regulatory Commission because of problems with design, safety and paperwork. One of the three reactors is being decommissioned, while the other two have been restarted and are producing energy.

Since 1996, the utility has hired new executives and taken steps that it says would prevent violations in the future. Federal prosecutors, while describing the old offenses in harsh terms, said in Monday's proceedings that they had confidence in the new managers.

After the large number of Millstone candidates flunked their licensing tests, investigators discovered that they had not put in the required number of training hours nor mastered the maneuvers that Millstone had falsely claimed, the Government charged. Some of the candidates have since been retrained and are now on the job, the company said.

Federal prosecutors said economic pressure brought on by deregulation of the nuclear industry had contributed to the violations. "Rather than treat the problem," said Joseph C. Hutchison, an assistant United States Attorney, "the shortcut was taken so there was some economic saving."

Hutchison said complaints by community groups and workers at the plants had led to the three-year Federal investigation.

Stephen C. Robinson, the United States Attorney for Connecticut, said of the agreement, "No matter who you are, no matter how big or how powerful, if you endanger our citizens, if you violate the law, if you lie to regulators and choose profits over the public, we will come after you."

Michael G. Morris, the chairman and and chief executive of Northeast Utilities, the parent of Northeast Nuclear, did not dispute a statement that the violations were deliberate, but said the public had never been in danger. As he left the courthouse Monday, Morris attributed the violations to "inattention to detail" and "inadvertence," not deregulation. "The whole notion that you react differently in a competitive marketplace is true, but it doesn't cause this kind of behavior," he said. He said the lesson for plant owners was "it's better to operate within all of the laws and the requirements because these kind of fines, these kinds of embarrassments, will come your way if you don't."

Morris was hired in 1997, after the offenses took place. Nevertheless, Judge Robert N. Chatigny called him to the front of the court this morning and told him sternly he hoped the plea reflected a commitment by the company "to be a better citizen in the future than it was in the past."

Judge Chatigny added that despite the efforts of those who work in the public interest, "Ultimately, the public has to depend on the good faith, honesty and integrity of the people who manage our large companies."

A spokeswoman for Northeast Utilities, Mary Jo Keating, said the plea agreement should help with the plans to sell the plant, as required by state legislation deregulating the industry. "The worst thing in the market is any kind of uncertainty," she said from the company headquarters in Berlin, Conn.

David M. Pittinos of the Toxics Action Center, an environmental group in West Hartford, said today's plea vindicated residents who had been worried about mismanagement and safety at the plant. The admissions were especially damning, he said, because "these companies typically offer to do just about anything to weasel out of criminal charges and reach some out-of-court settlement."

In addition to the 23 counts involving the nuclear plant, another subsidiary, Northeast Utilities Service Company, pleaded guilty to two felonies resulting from the use of a fire hose to dilute water samples taken at Devon Station, a coal-fired power plant in Milford. Prosecutors said that their case against the service company was complete, but that their investigation was continuing and that individuals might be prosecuted.

As part of the $10 million in fines, Northeast Utilities agreed to donate $1 million to endow a business ethics chair at the University of Connecticut in Storrs, and $650,000 for an environmental clinic at its School of Engineering; $1 million to help local towns buy riverfront land for conversion into public parks, and $650,000 to Riverfront Recapture, a Hartford group, for its leadership camp for disadvantaged city youth.

The agreement specified that the gifts were not tax deductible. The company said it did not intend to pass the costs on to consumers.




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