Nebraska fights court action by seed companies to block AltEn from transferring funds

Source: By Chris Dunker, Lincoln Journal Star • Posted: Sunday, January 29, 2023

Six companies that formerly supplied AltEn with pesticide-coated seed have asked a federal judge to stop the defunct ethanol plant from taking steps to avoid paying for an environmental cleanup at its facility near Mead.

Filed last year by Corteva, AgReliant, Beck’s Superior Hybrids, Winfield Solutions, Bayer and Syngenta, the lawsuit accuses AltEn of mishandling treated seed and the solid and liquid byproducts of its ethanol manufacturing and leaving the cleanup to those companies.

Unlike other ethanol companies, which use harvested grain to manufacture ethanol, AltEn used seed coated in insecticides, herbicides and fungicides, leaving behind toxic material that spilled over into the surrounding Saunders County farmland.

When the lawsuit was filed last year, the six companies asserted they had spent millions of dollars to remediate the site in the six months since they assumed cleanup responsibilities at the request of the Environmental Protection Agency and the Nebraska Department of Environment and Energy.

In its request for an injunction, attorneys representing the seed companies allege AltEn has continued paying employees, accountants and consultants with cash and made efforts to sell property without ever having “paid a dime toward actual remediation.”

Now, as U.S. District Court Judge Brian Buescher prepares to hear arguments by both sides at a hearing Friday, the state has sided with the ethanol plant, asking the court to reject the seed companies’ request.

The Jan. 24 amicus brief written by the Nebraska Attorney General’s Office said the state was concerned that any relief granted to the six companies would leave AltEn “unable to fund the few activities it has been performing for permit compliance.”

While the state reinforces the seed companies’ assertion that AltEn “has not conducted any substantial remediation efforts on or off” its property, the company has performed quarterly groundwater monitoring as required under a state permit.

AltEn has also — at the request of the state environmental department — prepared a work plan to determine the presence and extent of pesticide pollution both at its facility approximately 1 mile south of Mead as well as in other areas of Saunders County.

Last summer, over the opposition of area residents and others who raised concerns about the Kansas-based company’s ability to adhere to the law or fund cleanup activities, the state renewed AltEn’s wastewater permit for five years to allow remediation efforts to continue.

And again in December, the state renewed an industrial stormwater permit requiring AltEn to monitor and reduce any pesticides discovered in rain runoff from the site. The permit was approved over similar objections raised by community members.

Janece Mollhoff of Ashland, a member of the Perivallon Group that has served as a watchdog for cleanup efforts at AltEn, was among a handful of people who told state regulators in April 2022 she didn’t believe AltEn had the financial resources necessary to adhere to the conditions of its permit.

“The LLC is habitually delinquent on taxes, is currently being foreclosed upon for tax certificates sold on one of AltEn’s parcels, has not paid utilities nor met other financial obligations,” Mollhoff said at a public hearing on the permit renewal.

A brief filed by the seed companies said AltEn appears to be “propped up by cash infusions from a related entity” that is not party to the case despite the ethanol plant appearing to be insolvent “since at least 2016” and having no ongoing business operations.

Attorneys representing the seed companies filed a series of subpoenas last year that sought bank records and financial reports from AltEn and its parent company, Earth Energy & Environment LLC — better known as E3 — as well as sibling entities like Mead Cattle Company and Green Disposal that also operated at the site.

The seed companies also subpoenaed financial records belonging to Tanner Shaw, who oversaw several companies at the site, and AltEn general manager Scott Tingelhoff, according to court records.

Mead Cattle Company was purchased by the Texas-based Champion Feeders in 2021 over the objections of the seed companies, while those same companies have accused Shaw of attempting to sell off Green Disposal’s biochar equipment.

Documents related to the subpoenas have been sealed by the court at AltEn’s request.

Also sealed is AltEn’s brief responding to the request for an injunction, and two settlement proposals dated March 15, 2022, and Sept. 30, 2022.

Many of the arguments made by the company appear to be echoed by the state’s amicus brief filed last week. The state also has a civil suit against AltEn that remains active — but restricted from public view — in Saunders County District Court.

Assistant Attorney General Megan Woita, who authored the amicus brief, argued the motion to prevent AltEn “from transferring, selling, moving, or otherwise concealing any and all cash funds, assets, or any real or personal property” could jeopardize the few activities the former biofuel plant is currently conducting.

“These activities are an important part of determining the presence and/or extent of the pollution to areas on and off the AltEn site caused by wastes generated by AltEn’s use of discarded treated seed as feedstock for ethanol production,” Woita wrote.

The six seed companies, which formed the AltEn Facility Response Group in June 2021 and entered into a voluntary cleanup plan with the state to clean up the site, “have not voluntarily assumed duties related to the quarterly groundwater monitoring” required by the permits, she added.

Woita asked the court, if it were to grant the preliminary injunction sought by the seed companies, to consider including language that would allow AltEn to access and use funds to remain in compliance with its permits, as well as a Feb. 23, 2022, consent order.

“The inclusion of such language would allow the state to protect and regulate the lands and waters of the state impacted by AltEn’s use of discarded treated seed for ethanol production,” the state concluded.

Todd Weidemann, an Omaha attorney representing the seed companies, said AltEn “should not be allowed to continue paying multiple employees for a business that does nothing other than, from time to time, sign off on documents as required by the NDEE.”

“(AltEn) cannot avoid the relief sought in this motion by contending they ‘will go out of business’ or will be ‘forced into insolvency’ when they are already out of business and AltEn has been insolvent for years,” he added.

The seed companies suggested that if Buescher was inclined to reject the injunction as requested the judge could put in place an arrangement where AltEn would be required to get court approval before accessing any funds to conduct activities related to its permits.

The court will give each side one hour to present its case Friday.