Lawmakers bypassing normal budget process to spend $600M settlement

June 16, 2021

Investigative Reports

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Gavel on Money

By RICK BRUNDRETT

Proceeds from a $600 million settlement with the federal government over plutonium storage in South Carolina weren’t included in any state budget versions crafted by lawmakers for the upcoming fiscal year.

But that doesn’t mean they aren’t planning to spend the massive windfall.

Last month, a joint resolution was quietly introduced in the Senate to spend the settlement funds, though the proposal didn’t contain any specifics on who would receive the money or how much of it would be appropriated. The “shell” resolution was sponsored by longtime Senate Finance Committee chairman Hugh Leatherman, R-Florence, and was referred to his budget-writing committee.

In written responses Tuesday to The Nerve, Sen. Brad Hutto, D-Orangeburg, who co-sponsored the resolution, said the “bulk of the money” under the resolution will be appropriated through a “separate budget committee process” that “likely starts” in August.

“Plaintiff counties will submit proposals, but ultimately it is up to (the) General Assembly,” said Hutto, who district includes all or parts of Allendale, Bamberg, Barnwell, Colleton, Hampton and Orangeburg counties.

Hutto, an attorney, represented Allendale and Barnwell counties in a lawsuit filed last September against S.C. Attorney General Alan Wilson. The suit was aimed at getting a court to designate the settlement proceeds “solely for the benefit” of counties “significantly impacted” by the storage of plutonium at the Savannah River Site (SRS), and by the cancellation of a federal project there to convert the plutonium into fuel for nuclear reactors.

Bamberg and Colleton counties filed a similar suit against Wilson. Court records show that the plaintiffs’ attorneys included state Sen. Margie Bright Matthews, D-Colleton, and Bakari Sellers, a former Democratic state House member who represented Bamberg County.

Both lawsuits were voluntarily dismissed by the counties and Wilson earlier this year, according to court records.

“The goal all along was to ensure that the money was segregated and not simply deposited in the (state) general fund and added to funds for (the) budget,” Hutto said Tuesday when asked why his clients’ suit, which was filed last year in Barnwell County circuit court, was dismissed.

“We reached agreement that the funds would go through a separate budget process which will begin soon and be taken up (by the Legislature) in September,” he added.

The $600 million settlement stemmed from the federal government’s failure for years to dispose of tons of weapons-grade plutonium stored at SRS, located in Barnwell, Allendale and Aiken counties. The federal government in 2018 halted construction of a plant at SRS designed to convert the plutonium into nuclear reactor fuel; when completed, the project was expected to create 1,120 direct jobs, according to court records.

To put the $600 million in some context, it’s easily larger than the total annual budgets of the vast majority of state agencies.

And it’s not part of the $1.8 billion in designated new state funding that a joint House and Senate budget committee will debate how to spend as part of a proposed $32 billion fiscal 2022 state budget – versions of which contain plenty of lawmakers’ pet projects, as The Nerve has reported. The new fiscal year starts July 1.

Wilson has publicly touted the $600 million deal with the federal government, which was finalized last August, as the “single largest settlement in South Carolina’s history.”

Overpaid lawyers?

In September, the nonprofit South Carolina Public Interest Foundation (SCPIF) and Columbia lawyer John Crangle sued Wilson, contending he didn’t have legal authority to approve a collective $75 million in legal fees out of the settlement to two Columbia-based law firms – Willoughby & Hoefer and Davidson Wren & DeMasters – which represented the state in the case.

Among other things, the lawsuit, which was filed in Richland County circuit court, contended all of the settlement proceeds must be deposited in the state general fund, and that “only the Legislature controls its appropriation.”

The suit also claimed that the settlement wasn’t the result of work by the private lawyers hired by Wilson, but instead was a “political resolution brokered by elected leaders,” including Gov. Henry McMaster and U.S. Sen. Lindsey Graham, both Republicans.

In addition, it alleged that Wilson “expedited” the $75 million transfer to the two private law firms just hours before a scheduled court hearing on an initial motion in the case.

Wilson, a Republican, worked at the Willoughby & Hoefer firm before he was first elected as attorney general in 2010, according to his official online biography. Court records show that Willoughby & Hoefer, which is a defendant in the suit, is represented by two state lawmaker-attorneys – Rep. Todd Rutherford, D-Richland, and Sen. Gerald Malloy, D-Darlington.

Neither Rutherford nor Malloy responded to written requests Tuesday from The Nerve seeking comment.

Wilson in court papers contended the $75 million was legally authorized and denied other claims by the plaintiffs. Two circuit judges later separately dismissed the suit, ruling that the SCPIF and Crangle didn’t have standing to bring it.

But the state Court of Appeals last week denied Wilson’s motion to dismiss the case, records show.

Contacted Tuesday by The Nerve, Columbia attorney Jim Griffin, one of the lawyers representing the SCPIF and Crangle, said his clients and Wilson have asked the S.C. Supreme Court – the state’s highest court – to take the case on direct appeal without allowing the Court of Appeals to first rule on the merits of the case. The Supreme Court has not decided whether to accept the appeal, he said.

The Nerve last October revealed that Wilson, the state’s chief lawyer, sought to keep $10 million to $15 million out of the $600 million settlement for his own agency, which, if allowed, would be the single-biggest payout to the agency in recent years.

In 2019, The Nerve revealed that over the previous four fiscal years, Wilson’s office retained a total of about $13.2 million in 33 settlements – some of which involved well-known corporations – including $3.1 million in 10 cases in which the office kept all of the settlement proceeds.

The Nerve on Tuesday sent written questions to Wilson spokesman Robert Kittle about the $75 million in private legal fees out of the $600 million settlement. He didn’t respond.

Kelly Brady, a policy analyst with the South Carolina Policy Council, the parent organization of The Nerve, contributed to this story. Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 

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