Litigation and Advocacy, Part III: Protecting the Environment

July, 2026

Lincoln — In 2019, the board of the Nebraska Environmental Trust appeared to be turning the fund into a pay-to-play scheme.  Large political contributions to the governor from those associated with the ethanol industry were followed by cancellation of NET-funded conservation projects to pay for $1.8 million in grants to for-profit companies to install ethanol blender pumps at their gas stations.  It also appeared as if the governor-appointed board was acting in violation of the state Open Meetings Act in making these and other decisions.  

Two of us who observed this filed suit against these actions, as citizens and taxpayers.  The board soon dropped the blender pump grants before the case could get to discovery. The court approved a settlement for OMA violations, which included rarely-awarded payment to plaintiffs for litigation expenses.  

In 2025 and 2026, the subsequent governor proposed, and the state legislature agreed, to transfer NET funds to nominally conservation-related funds in another agency, but then transfer like amounts from those accounts to the state general fund, to help balance the state's budget.  Again, we filed suit as citizens and taxpayers on grounds that this violated a 2004 constitutional amendment of Nebraska voters to use NET funds only for conservation, not as part of a deceptive money-laundering scheme that resulted in an overall reduction in conservation support, itself a violation of a statutory requirement that NET funds be used only to "complement", not supplant other state and private conservation efforts.  

Gemini AI provides its own explanation:

The Nebraska Legislature cannot use a two-step transfer process to move funds from the Nebraska Environmental Trust (NET) to the General Fund because doing so is a constitutional violation of voter intent and an illegal evasion of statutory restrictions.

Legal experts and courts view this multi-step process as a "shell game" that fails to erase the legal protections attached to the money at its source.

The core legal barriers that prevent the Legislature from utilizing this two-step workaround include:

1. The Legal Doctrine of "Substance Over Form"

In constitutional law, a government body cannot accomplish an illegal act simply by adding extra steps to the process. The Nebraska Constitution strictly mandates that a dedicated portion of state lottery proceeds go exclusively to the NET to "conserve, enhance, and restore" the environment. [1]

• Moving the money to an intermediate fund first does not "wash away" its constitutional identity.
• The legal restriction follows the money, meaning the funds remain constitutionally earmarked for environmental grants no matter how many hands or accounts they pass through. [1, 2]

2. Violating the Statutory Ban on "Direct Assistance"

The Nebraska Environmental Trust Act explicitly prohibits NET funds from being used to provide "direct assistance to regulatory programs" or to offset standard state agency operating budgets.

• The Loophole Attempt: The Legislature attempted to route NET cash into specific agency cash funds (such as water or agricultural funds), arguing that these funds do relate to the environment.
• The Reality: By using NET dollars to substitute for money those agencies would normally receive from the General Fund, the Legislature freed up state cash to use for unrelated general expenses.
• The Verdict: Courts have recognized this as a backdoor way to use environmental lottery money to balance the state’s general budget deficit, which directly violates statutory law. [1]

3. Protection of Voter-Created Trust Funds

The NET was created via citizen-led ballot initiatives in 1992 and 2004. Nebraska courts heavily protect voter intent. When citizens vote to tax or generate revenue for a highly specific purpose (like environmental preservation), the Legislature does not possess the authority to redirect those funds to general government spending, whether done in one step or twenty steps.

Current Legal Precedent

This exact two-step defense was rejected by a Lancaster County District Court judge in the summer of 2026. The court granted a temporary injunction blocking a $13.5 million transfer, agreeing with plaintiffs W. Don Nelson and Jon Oberg that the multi-tiered cash sweep was an illegal attempt to bypass constitutional protections.