February 28, 2024

The Nerve Archive

Where Government Gets Exposed

Power play by S.C. attorney general in $600M settlement?


The state’s top court next week will consider whether S.C. attorney general Alan Wilson could legally pay two private law firms – one of which he formerly worked at – $75 million out of a $600 million settlement with the federal government over plutonium storage in South Carolina.

“That’s money that should be and is the property of the state of South Carolina,” said Greenville attorney Jim Carpenter, one of the lawyers who represent the plaintiffs in the case, when contacted Thursday by The Nerve. “It’s not the attorney general’s money to dole out.”

Carpenter represents longtime government activist John Crangle of Columbia and the South Carolina Public Interest Foundation, a not-for-profit organization in Greenville County known over the years for suing state and local government on behalf of citizens.

“Executive officers possess no authority to appropriate funds,” the foundation and Crangle said in their written appeal to the S.C. Supreme Court. “Such authority lies exclusively with the General Assembly, which has directed that all such funds be deposited in the State’s general fund.”

The plaintiffs in their legal brief contend that a “prompt decision is necessary” because it is “likely that the same situation will recur,” noting that Wilson “plans to continue to issue” contingency-fee contracts to outside law firms to handle civil cases.

On the defendants’ side in next week’s case before the Supreme Court, the attorneys representing Willoughby & Hoefer, one of the two Columbia-based law firms that collectively received the $75 million, include two state lawmakers – Rep. Todd Rutherford, D-Richland, and Sen. Gerald Malloy, D-Darlington, records show.

Wilson, a Republican, worked at Willoughby & Hoefer before he was first elected as the attorney general in 2010. Neither Rutherford nor Malloy responded to The Nerve’s written requests Thursday for comment on the case.

In South Carolina, lawmakers elect Supreme Court, Court of Appeals, circuit and family court judges. South Carolina and Virginia are the only states where their legislatures play primary roles in electing judges.

The Nerve last month revealed that at least six law firms with ties to current or former state lawmakers will share part of South Carolina’s $300 million-plus proceeds from a national opioid settlement, though a Wilson spokesman said most of the legal fees will go to lawyers representing counties and cities, who were not hired by the attorney general.

In 2019, The Nerve revealed that the Attorney General’s Office (AGO) over the previous four fiscal years settled a total of 33 civil cases for nearly $210 million, $40 million of which collectively went to the AGO and outside law firms hired in the cases.

From fiscal 2019 through fiscal 2020, the AGO settled 20 civil cases totaling $41 million, nearly $9 million of which was kept by the AGO, as The Nerve reported then.

Wilson in 2020 announced a $600 million settlement with the federal government over the longtime storage of weapons-grade plutonium at the Savannah River Site (SRS), publicly touting the deal as the “single largest settlement in South Carolina history.” SRS is a 310-square-mile, U.S. Department of Energy site encompassing parts of Aiken, Barnwell and Allendale counties.

The five-member state Supreme Court is scheduled Wednesday to hear oral arguments involving the $75 million in legal fees that Wilson paid to the Willoughby & Hoefer and Davidson, Wren & DeMasters law firms from the SRS settlement. The justices are expected to publicly issue their ruling at a later date.

Wilson, who is a defendant in the case, will be assisted in the hearing by two veteran attorneys in his office – solicitor general Robert Cook and deputy solicitor general J. Emory Smith, records show.

$600M in ‘past due and future rent’

In his interview Thursday, Carpenter said the law requires that all funds from settlement awards to the state be deposited in the state’s general fund, except for “investigative costs or costs of litigation awarded by court order or settlement.” He said no judge gave advance approval of the $75 million payment, and that the settlement specified that each side was responsible for paying its own attorney fees.

Another state law requires the Legislature to appropriate federal funds that the state receives, Carpenter said, adding, “So there are two statutes that I think make it pretty clear that wherever the money comes from, it has got to go into the general fund and then gets doled out like every other dollar that comes in, which is by the General Assembly.”

In addition, Wilson in an earlier court filing acknowledged he had no authority as the attorney general to appropriate the SRS settlement funds, Carpenter said.

“It was basically $600 million for past due and future rent to keep the nuclear waste in South Carolina when they (the federal government) promised to take it out,” Carpenter said in describing the settlement. “So they’re paying $600 million, and they bought themselves another 15 years to leave it there.”

In his formal response to the Supreme Court, Wilson said he “concurs” with the legal briefs filed by the two defendant law firms, and asked the justices to affirm a circuit court judge’s earlier dismissal of the case.

Among other arguments, Willoughby & Hoefer in court papers contend Wilson had the legal authority to pay the $75 million in legal fees without depositing it into the state’s general fund, and that he didn’t need a judge’s advance approval of the payment.

Given Supreme Court tradition, the public likely won’t know immediately whether the court will decide on the larger questions raised in the case or release a more narrow ruling.

To put the $75 million at issue into some context, it’s larger than the total budgets of dozens of state agencies, including, for example, the Criminal Justice Academy and the Department of Agriculture. As for the remaining $525 million of the settlement, state House budget writers have proposed using $223.1 million toward the development of a rail yard and barge system near a new terminal, named after the late state Sen. Hugh Leatherman, at the Port of Charleston.

The House version of the fiscal 2022-23 state budget, which takes effect July 1, also designates much of the settlement proceeds for pricey projects in Aiken, Allendale, Barnwell and Edgefield counties, including, according to budget records:

  • $105 million through the Department of Education (DOE) for a new consolidated high school and career center in Barnwell County;
  • $30 million through the DOE for a new career and technology center in the Aiken County School District;
  • $20 million through the state local-government fund for “redevelopment and economic development” in downtown Aiken;
  • $20 million through the Adjutant General’s Office for a “national lab” in Aiken County;
  • $18 million through the Department of Public Safety for a law enforcement center in Edgefield County;
  • $15 million through the Adjutant General’s Office for a “cyber initiative” project in Aiken County connected to the Fort Gordon Army Cyber Command Center;
  • $15 million through the Department of Health and Environmental Control for the New Savannah Bluff Lock and Dam in Aiken County; and
  • $15 million through the DOE for capital improvement in the Allendale County School District.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 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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