A federal judge on Wednesday blocked the planned $367 million buyout of Waste Control Specialists by radioactive waste management rival EnergySolutions, raising new questions about the financially troubled company’s plans for interim storage of U.S. commercial nuclear reactor fuel and its future in total.
The merger announced in November 2015 would have brought WCS’ waste storage complex in West Texas into EnergySolutions’ broader portfolio of nuclear service offerings. But, in an antitrust lawsuit filed last November, the Justice Department said the deal would undercut competition for low-level radioactive waste disposal services that have kept consumer costs down and service up.
Federal attorneys appeared to persuade Judge Sue Robinson in a 10-day bench trial that ended May 5 in U.S. District Court in Delaware. In her order Wednesday, she “enjoined and restrained” the merger as laid out in the agreement by the holding companies for WCS and EnergySolutions.
Robinson’s full opinion had not been released as of Thursday. Her office said the judge has set a June 28 deadline for it to be made public, giving the parties a week to reach agreement on redactions to the public version of the document.
The ruling is a win for competition in an industry with high barriers to entry, acting Assistant Attorney General Andrew Finch, with DOJ’s Antitrust Division, said in a prepared statement: “While EnergySolutions’ preference was to buy its main rival rather than continue to compete to win business, today’s decision ensures that customers will benefit from the competitive process.”
Waste Control Specialists parent Valhi Inc. said the companies are evaluating whether to appeal the decision, while EnergySolutions’ separate statement did not mention a possible appeal.
“While this acquisition would have added a Class B and C Low-Level Radioactive Waste disposal facility to our portfolio, we remain confident in our capability as a company to lead the industry in radioactive waste management and decommissioning,” EnergySolutions President and CEO David Lockwood said in a press release. “We look forward to working with WCS to best serve the interests of our customers.”
Both companies did not provide additional comment on the ruling and their forward plans beyond their prepared statements.
Dallas-based Waste Control Specialists today operates a 14,900-acre facility in Andrews County, Texas, licensed for permanent storage of various forms of waste, including low-level and mixed-low-level waste.
Prior to the announcement of the merger, the company’s relationship with its would-be owner had been more combative than cooperative. In 2015, EnergySolutions and Waste Control Specialists filed dueling lawsuits over whether WCS would accept radioactive waste from a joint venture its rival had bought the year before.
The sale would have changed all that, with Valhi receiving $270 million in cash and $20 million in stock, and unloading $77 million in debt onto EnergySolutions. The companies presented the deal as good for their customers, providing greater efficiency and what Lockwood at the time called “a safe and seamless supply chain” in nuclear services.
The federal government disagreed, warning in its lawsuit of the loss of innovation and cost-competitiveness by combining the two primary providers of low-level radioactive waste services for commercial customers in 36 states, the District of Columbia, and Puerto Rico.
In closing arguments at the antitrust trial, Waste Control Specialists attorney Van Beckwith said the company had lost $130 million over a half-decade and faced $200 more in losses, Law 360 reported at the time. Beckwith said the company could by next month be unable to meet its obligations, and in the absence of the merger with EnergySolutions the West Texas waste storage facility could be closed and covered.
Storage of commercial spent fuel offered WCS another revenue stream as the Department of Energy looked for avenues to meet its legal obligation to take nuclear waste off the hands of nuclear utilities. Waste Control Specialists filed for a Nuclear Regulatory Commission license in April 2016 for a storage facility capable of holding up to 40,000 metric tons of waste, but a year later asked the agency to halt its review of the application pending completion of the merger with EnergySolutions. At the time WCS cited its tenuous financial situation as part of the reason for the request, but said it anticipated resuming licensing after the deal wrapped up later this year.
In a May filing with the U.S. Securities and Exchange Commission, Valhi said “we now believe it is no longer probable” that it will secure the interim storage license.
