February, 2022
Lincoln — In early 2020, the Nebraska Environmental Trust (NET) board, a state agency, took several unusual actions that caught my attention.
The board was preparing to make millions of dollars of infrastructure grants to for-profit companies in the ethanol industry, violating statutory prohibitions. The board was coming up with the funds by cancelling grants for conservation easements, a proper, popular, and traditionally funded purpose. It was proceeding to do this with fewer votes than necessary under its own bylaws. According to a newspaper account, one of the board members cautioned his colleagues about private communications among board members prior to the vote, raising a possibility that these actions were being taken in violation of the state's open meetings laws.
Those four red flags made me think back to my own work in Nebraska government many years ago, which involved making certain all payments that went through the fiscal machinery of the state were properly vetted, through the pre-audit process. I wondered if in 2020 there were still such checks and balances, given recent, multiple findings of mismanagement in state government. No one I talked to had any confidence that these grants would be stopped, as the board's plan clearly was developed with the governor's imprimatur. His department heads and appointees were pushing it; he had previously replaced a board member to get another vote on the board against conservation easements, which he openly and vociferously opposed.
That left a lawsuit by citizens and taxpayers as the only remedy. W. Don Nelson, a friend and colleague of mine for many years and former publisher of the conservation-oriented, good government newspaper Prairie Fire, came to the same conclusion. Together, we filed a lawsuit in 2020 against the Trust board.
From the outset, I was also concerned that the proposal looked like a pay-to-play arrangement, at least with the ethanol industry and perhaps with opponents of conservation easements. Ethanol interests had made large political contributions to the governor's campaign fund and would, under these grants to the ethanol industry, be getting back their investments many times over.
I contacted the Nebraska Accountability and Disclosure Commission (NADC) to ask if Nebraska law requires disclosures in cases like this, which give the appearance of pay-to-play, especially since the political contributions continued well after the 2018 elections. The answer: yes, if in doubt, public officials are required to make potential conflicts-of-interest filings for the commission to review. There had been no filings, however, despite two five-figure ethanol industry contributions to the governor during the very time he and his appointees on the Trust board were developing their proposal for millions of dollars in grants to the ethanol industry at the expense of NET conservation grants.
By 2021, the lawsuit proceeded to a stage in which depositions and discovery could soon be taking place, to determine where the ethanol grant proposal had come from and how much it had been discussed by the Trust board and others privately, before the public became aware of it. Because the proposal had been advanced most prominently by Jim Macy, director of the Nebraska Department of Environment and Energy, he would have been a primary focus.
His department, however, became embroiled in 2021 in a massive environmental catastrophe involving pesticide-treated grain at the AltEn ethanol plant in Mead. The Trust board quickly and quietly dropped the ethanol grant proposal — bad optics was likely a factor — but in so doing it prevented us from getting to the bottom of who and what was behind the proposal.
Dropping the ethanol grant proposal also deflected obvious questions as to why the NDEE director had been spending his time advancing ethanol industry interests rather than properly regulating them. And AltEn was an unmitigated environmental disaster involving not only NDEE's failure to protect the public, but failures by other agencies represented on the Trust board as well. Steven Wellman, the director of the Department of Agriculture, and Gary Anthone, director of Public Health, both had separate regulatory authority over AltEn but did little to explore how their respective departments could face up honestly to the dimensions of the disaster.
Because the Trust board had dropped the ethanol grant proposal, we had our day in court only on questions of board compliance with its own bylaws and with the state's Open Meetings Act. When the judge's rulings soon pointed toward our ultimate victory at trial, settlement talks began. When the board finally demonstrated it would henceforth follow the rule of law procedurally, we settled for reimbursement of attorneys fees pertaining to those issues.
Although the lawsuit succeeded in that it stopped the illegal ethanol grants, enforced the Trust board's compliance with the Open Meetings Act, and required reimbursement of attorney's fees in settlement, it did not resolve the question of why it took citizen action to bring this about. Citizens should not have to step into the breach to see that state government functions properly.
Going forward, the success of the lawsuit should encourage others to do the same to protect public interests and enforce the rule of law. Ideally, agencies will take note before that becomes necessary.
In other words, Trust board members got caught. Will they now go straight?
There's not much indication that they will. A dark cloud hangs over Nebraska state government in that no parties so far have acknowledged an understanding that they must be held accountable for the lows to which the state has sunk both substantively and procedurally in these matters of public health and protection of our natural resources.
Moreover, it is not encouraging that bills have been introduced in the legislature to place even more state government boards under greater control by the governor. It is likewise not encouraging that there have been no investigations of linkages between political contributions and favorable government treatment of the industries from which they came, both in terms of look-the-other-way regulation and outright paybacks in subsidies. The NDAC's growing reputation as toothless seems well-deserved.
Finally, there has been no adequate explanation as to why state agencies have repeatedly tried to excuse themselves from responsibility for an environmental disaster by claiming lack of authority, only to find they indeed had the authority because their own records show they actually, affirmatively permitted it all to happen. Conversely, the very same agencies had no hesitation to grasp at expansive authority in the contemporaneous scheme to fund millions in ethanol grants from termination of conservation grants.
The hypothesis waiting to be investigated is that the state agencies have all along been oriented toward reciprocating political favors, rather than doing the job expected and required of them by citizens and taxpayers, under law.
