The parent company of Waste Control Specialists (WCS) on Tuesday suggested deep doubts about the likelihood of securing a Nuclear Regulatory Commission license to build and operate an interim spent fuel storage facility for spent reactor fuel.
The statement from holding company Valhi Inc. comes as its subsidiary is said to be wrestling with ongoing financial losses in the hundreds of millions of dollars that threaten its future and a Department of Justice challenge to its planned merger with low-level radioactive waste management rival EnergySolutions.
Dallas-based Waste Control Specialists in April asked the NRC to suspend review of the application filed a year earlier for a facility designed to hold up to 40,000 metric tons of nuclear waste at the company’s storage complex in West Texas. At the time management cited the company’s financial challenges while it awaits buyout by Salt Lake City-based EnergySolutions, the increasing cost of the NRC license review, and failure to extend a cost-sharing deal with one of the partners in the spent fuel project.
Waste Control Specialists CEO Rod Baltzer last month said the company expected the spent fuel storage project would resume “at the earliest possible opportunity” after the sale is finalized – which is anticipated in the third quarter of this year. But Valhi offered a less optimistic message in a 10-Q form filed Tuesday with the U.S. Securities and Exchange Commission.
“We do not know if or when we would request the NRC to resume licensing review activities with regard to such proposed interim storage license,” the company said. “As a result, we expect to recognize an impairment charge in the second quarter of 2017 related to the write-off of interim storage license application costs previously capitalized, as we now believe it is no longer probable we would receive such license.”
Waste Control Specialists spokesman Chuck McDonald confirmed the situation facing the company but did not respond to requests for more detail: “That’s what Valhi filed. That’s what the situation is.”
Valhi said in the 10-Q it had by March 31 capitalized $3.3 million toward obtaining the NRC license. The agency has said the entire process would cost the company about $7.5 million in fees.
The NRC review would take roughly two years, but actually opening the new facility would also depend on legislation enabling the Department of Energy to take title to the waste and pay for storage, along with sealing a deal with DOE to hold the material. No revenue would be expected until 2022, Valhi said.
Waste Control Specialists today operates four distinct disposal facilities for low-level radioactive waste and other waste forms in Andrews County, Texas. The new facility would consolidate part of the roughly 75,000 metric tons of spent reactor fuel now stranded on-site at nuclear plants around the country – a goal supported by both the Obama and Trump administrations.
The company represents the entirety of Valhi’s waste management segment, which recorded $600,000 in operating income for the quarter ended on March 31, far above the $10.8 million loss in the same period of 2016, on the back of a $16.3 million spike in net sales.
“We recognized an operating loss in all prior years because we have not achieved sufficient revenues to offset the high cost structure associated with operating under our byproduct and LLRW disposal licenses relative to the waste treatment and disposal volume, in part because we have not consistently received sufficient volume of LLRW for disposal in both our Compact and Federal LLRW disposal facilities to overcome our fixed operating cost structure,” Valhi said in the 10-Q. “We continue to seek to increase our Waste Management Segment’s sales volumes from waste streams permitted under our current licenses.”
An attorney representing WCS in the federal antitrust lawsuit against the $367 million merger with EnergySolutions said in closing remarks at trial last week that the company has lost $130 million over five years and faces another $200 million in losses going forward, Law 360 reported.
Van Beckwith characterized WCS as a failing company that could as of next March be unable to meet its obligations. In the absence of the merger with EnergySolutions, the West Texas waste storage facility could be closed and covered, he said.
The Department of Justice opposed the deal on the grounds that it could suppress competition in dozens of states, along with Puerto Rico and the District of Columbia, for low-level radioactive waste disposal services. While WCS and EnergySolutions have publicly expressed confidence that the case would go their way, Valhi acknowledged this week that this was not the sure outcome. Senior Judge Sue Thompson, of the U.S. District Court for Delaware, is due to rule on the case before her retirement in June.
“There can be no assurance … that the parties will be successful in contesting and resisting such antitrust action, that receipt of U.S. anti-trust approval will be obtained, that all closing conditions will be satisfied, or that any such sale of WCS would be completed,” according to the Valhi 10-Q.
Should Waste Control Specialists’ license application fail, that would leave Holtec International as the only company currently seeking authorization for storage of spent fuel – the New Jersey company on March 31 submitted its NRC license application for an underground facility in southeastern New Mexico with capacity for 120,000 metric tons of waste.
There was no immediate comment this week from the NRC or Holtec regarding Valhi’s latest declaration.