AP recently ran a story outlining the top SuperPac SuperDaddies. To no one’s surprise, three Texans are among the top five. Perhaps less surprising, Harold Simmons ranks as the second-highest contributor, with an estimated donation of $16 million to the Republican cause. In the primaries, he was an equal-opportunity supporter, throwing millions behind the campaigns of Rick Santorum, Newt Gingrich, and Rick Perry. He’s known as a generous campaign contributor as well as someone who has a hard time playing by the rules.
How much Simmons gives to political campaigns is frequently in the news; people are fascinated by it. On the other hand, how Simmons spends his money when it comes to financial assurance of his radioactive waste site, Waste Control Specialists, there seems to be scant interest.
Here’s the gist: if you are a private entity who has been issued licenses in the state of Texas to dispose of radioactive waste, you must put up money as part of your license agreement. It’s referred to as financial assurance and it covers closure, post-closure, institutional action, and corrective action. Most of these costs are associated with the exit point, when the licensing period is up and the radioactive disposal site is relinquished to the state and federal government in perpetuity.
WCS is obligated to meet financial assurance in order to retain its licenses, and the amount isn’t peanuts: $140 million. The state, however, in lieu of a trust, surety bond, or insurance policy, has allowed Simmons to put up stock in another one of his holdings, Titanium Metals Corporation (TIMET). This arrangement will stand for five years. For details of the deal, go here.
Why should Texans be concerned? Because TIMET shareholder Bert Bauman has filed suit in a federal court, alleging “self-dealing transactions that were beneficial to sister entities he [Simmons] controlled at the expense of the Company.” According to the summary: “These transactions include below-market-rate loans made by TIMET to companies controlled by H. Simmons, complex insurance arrangements and the provision of other services in which TIMET and several related parties participate and jointly share costs, and TIMET’s purchases of the stock of an H. Simmons-controlled company at inflated values.”
And why should Bauman’s suit be of concern? As I wrote in D Magazine in 2010:
“[Simmons’] NL Industries has been the subject of continuous litigation. The most recent case involves plaintiffs who managed the company that cleaned up NL Industries’ environmental liabilities. They were also minority shareholders. In 2009, a Dallas County jury found NL Industries liable for not honoring contractual agreements and manipulating stock values. The plaintiffs were awarded $178.7 million in damages.”
Texans might want to shift their gaze away from incoming news on how much financial liquidity Simmons seems to have when it comes to elections and focus, instead, on the rise and fall of TIMET stock.