Offshore Power Systems, apparently, did not appreciate that putting land-based reactors out to sea was bound to raise new safety, environmental and regulatory questions. Concerns about ship collisions, off-shore fishing grounds, barge sinking and the challenge of creating a new regulatory process for floating reactors were just some of the unique issues facing regulators.
Even the trade press raised concerns. Nuclear News worried about the “incredibly tangled mass of overlapping jurisdictions, state, national, and international law, inter-agency authority” that included new players such as the U.S. Coast Guard.
Events conspired to worsen OPS’s prospects. The oil crisis that began in 1973 made construction financing expensive and slowed electricity consumption. Facing slack demand, PSEG postponed delivery of the first floating plant from 1981 to 1985 and later to 1988. Tenneco backed out of the OPS partnership in 1975. With the entire enterprise threatened, Westinghouse and the Florida Congressional delegation asked the federal government to purchase four plants. But, the prospect of “bailing out” OPS did not appeal to officials in the Ford Administration. The purchase proposal died.
Floating reactors did not solve regulatory or political problems. The production facility in Jacksonville needed an NRC manufacturing license. There were so many technical and regulatory uncertainties that the licensing review ran three years behind schedule. A 1978 report from the U.S. General Accounting Office criticized the NRC for what it believed was an incomplete safety review, particularly for not accounting for impacts on the ocean ecosystem during an accident where a melting reactor core broke through the bottom of the barge.
Local and state opposition to the plant was intense. Nearby counties voted in non-binding referendums 2 to 1 against the Atlantic Generating Station, and the New Jersey legislature refused to introduce a bill to turn the offshore site over to PSEG.
Westinghouse held out hope for a brighter future; PSEG didn’t. In late 1978, the utility announced it canceled its orders for all four of its floating plants. Slack demand, it noted, was “the only reason” for the cancellations. “We simply will not need these units” in the foreseeable future, a utility official admitted.
Others blamed excessive regulation. In March 1979, John O’Leary, a Department of Energy deputy secretary, provided to the White House a “grim—even alarming report,” as one staffer said, that the NRC delays with the OPS license were symptomatic of a larger problem. “It has become impossible to build energy plants in America” O’Leary said, due to excessive environmental regulations and an indecisive bureaucracy. Environmental laws, O’Leary complained, had created “a chain of hurdles which effectively kill energy projects” and damage to the nation’s economy. He wanted presidential action.
Events rendered O’Leary’s plea for action moot. Two and a half weeks later the Three Mile Island accident occurred, ending any hope of an imminent industry rebound. The accident raised anew questions about a core melt accident and further delayed the manufacturing license. The NRC did not issue a license until 1982. In 1984, Westinghouse formally abandoned the OPS enterprise, dismantled the Jacksonville facility, and sold its huge crane to China.
Going to sea, OPS discovered, did not allow it to escape the problems that beset nuclear power. A novel technological solution could not overcome public distrust and economic, technical and regulatory uncertainty. We shall see how Russia handles the challenges.
U.S. NRC Blog 
@Henry, and the “cooling” is then expected to “solve the problem”? Keep in mind those pesky radionuclides. The ocean is also considered the ultimate diluter as TEPCO shows appreciation for releasing ground water directly into the ocean in violation of internation law….”thank you so much for letting us break the law”…..
Corium would quickly be cooled by the ocean. Yes, some initial steam would be created, but steam explosions and massive plumes of radioactivity would not be expected. The ocean is considered the ultimate heat sink and would cool the corium in a time frame that could be measured in days, not decades.
Again, this is why small floating nuclear reactors should be deployed far away from coastlines for the production of ammonia and synthetic fuels. This avoids the local politics while allowing the safest and most environmentally benign energy source ever invented to replace the need for greenhouse gas polluting fossil fuels– far out to sea.
Marcel F. Williams
Fukushima is providing a great example of what happens when nuclear reactors go BAD near the ocean and hopefully if mankind is very lucky we will not learn what happens when super hot corium(s) meet ocean water, creating a non-controllable radioactive steam which will then be spread globally via the jet stream for decades if not longer!
When the Japanese started to use sea water to cool there melting reactors at Fukushima, radioactive steam explosions occurred and their fallout was measured in North America, Europe and beyond!