Mandee Beerman
ralstonmmb@aol.com

Bad Faith in the Final Court Decision

In the case seen in the US district court of the Central Interstate Low-Level Radioactive Waste Commission (and other interested parties) versus the State of Nebraska (DEQ and NDHHS) the court ruled in favor of the Commission citing "bad faith" on Nebraska's behalf.

Defining "Bad Faith"

Bad faith refers to dishonesty or fraud in a transaction, such as entering into an agreement with no intention of ever living up to its terms or knowingly misrepresenting the quality of something that is being bought or sold. It may involve intent to deceive or mislead another in order to gain some advantage. It is often related to a breach of an obligation inherent in all contracts to deal with the other parties in good faith and with fair dealing, such as in paying claims, or issuing a cancellation under an insurance policy. Bad faith may also be claimed against a person who files suit solely for purposes of harassment. In this case, the defendant's attorney fees may be awarded if such bad faith motives are proven (U.S. Legal Forms Inc, http://www.uslegalforms.com/lawdigest/legal-definitions.php/US/US-BAD-FAITH.htm).

In the document of the court decision the "Memorandum and Order", the Judge Kopf goes over their ruling and the evidence that supports that decision. The following information was taken from this document which in its entirety can be found at http://www.ned.uscourts.gov/entopinions/opinion1.pdf . Page numbers that correspond to the original document are found in prentices throughout this document. Also, at the end of this document is a reference list of the people and organizations mentioned in this paper as defined by Judge Kopf.

The judge found that the State of Nebraska acted in bad faith in accordance to the contract with the Central Interstate Compact. The Judge Kopf sites eleven different areas in which they believe Nebraska acted in bad faith, which are numbered as within the memorandum and summarized in the below.

1.Governor Ben Nelson (pp. 85-88)

The judge found that the former Governor, Ben Nelson, acted in bad faith through interfering during the licensing process. The evidence that he cites to support this includes a large amount of documents that were hidden a member of his staff, Kate Allen- who had been assigned to work on the LLRW matters by Nelson. The judge also cites the public statements and legal motions that Nelson has made along with the meetings and relationships he had with people in key positions in the licensing process.

Nelson made a statement while campaigning for governor Ben Nelson promised that "[i]f I am elected governor, it is not likely that there will be a nuclear dump in Boyd County or in Nebraska."(p.85) which was confirmed by an associated press reported who was at the speech. Nelson later denied that he ever made this statement. Almost exactly 8 years later while running for Senate he was confronted by his opponent about the LLRW issue. When confronted about the issue Nelson proudly said, "I kept the waste out of Nebraska and he lost the case." He referring to his opponent, Don Stenberg, was the attorney general for Nebraska during the Nelson administration (p. 60).

With these statements and many others recorded in Allen's notes, the judge found that there was no plausible way that the Governor's statements could be squared with any notion of good faith and that "the entire licensing process was sullied beyond redemption" (p. 87).

2. Director of DEQ, Randy Wood (pp. 88-90)

Kate Allen took notes from a meeting between Nelson and site opponents in Boyd County and noted that the governor stressed that it was "important we get Director w/o agenda who we can trust" in order to "critically evaluate" the license application (p. 89). Gov. Nelson hired Randy Wood as director of DEQ who would be the primary decision maker regarding the application. In some of the discovery documents for the case some e-mail documents were found regarding the hiring criteria of Randy Wood.

Scofield, Nelson's chief of staff, sends an e-mail to Allen stating in pertinent part: "[A]lso, would you like to get on a conference call with me and call randy wood so he knows where the governor is going on llrw and what expectations for him will be. i think the two of us can give him the perspective he needs and also judge if he's up to the task."(p. 19)

Throughout the whole time of the licensing process Gov. Nelson had several meetings and forms of communication with Randy Wood and his staff at DEQ.

In summary the judge found that Nelson told site opponents exactly what type of regulator "we [must] get," and that was one "we can trust." In Randy Wood, Governor Nelson found that person, and Wood's conduct was plainly unreasonable (p. 90).

3 & 7 Allen's Documents & Litigation (pp. 90-96 and pp. 114-120)

In the documents hidden in Allen's basement were found meeting notes that state, "If we don't proceed fairly, then they will file a suit against the state for bad faith" but "I'm not afraid yet"(pg 23). Also in her documents were notes talking about using litigation as a tactic to keep the other side off balance. This is further backed up by the actual litigation that took place. All together Nebraska filed six lawsuits against the Commission, three of which Governor Nelson personally authorized. Of these six Nebraska lost five and settled the other. The judge reviewed all the cases and found them to be ceaseless and meritless and therefore illustrate another account of bad faith on Nebraska's part (p 114-115).

4. Silence for Job Assistance (pp.96-100)

Kate Allen was fired on September 18, 1992 because the Governor had determined that she was a "legal liability" according to Allen's notes. Her notes then reflect a deal made between PRO and Allen. The deal essentially was in exchange for Allen's silence she would get help finding a new job via letters of recommendation (p.97). The judge found that "given the damaging information and documents that Allen possessed and the fact that the Nelson administration knew that Allen was very biased, the effort to keep her quiet reflects a guilty knowledge on the part of Nebraska and an improper, but partially successful, attempt to hide evidence of bad faith" (p. 99).

5. The "Fatal Flaw"? (pp.100-110)

Nebraska denied the application due to the presence of wetlands on the selected site. That was, wetlands and floodplains existed on the proposed site, but no structures were going to be constructed in designated wetland or floodplain areas (p. 101).

Nebraska had hired Collier, Shannon as a consulting law firm out of Washington D.C. during the licensing process. They reviewed Nebraskan's regulations, NRC regulations and other important and relevant documents to come to the conclusion:

Nebraska need not reject US Ecology's proposed Boyd County site under the Title 194 citing criteria simply because of the existence of a floodplain and wetlands. In our opinion, the site could be used so long as the disposal units are not located in floodplain or wetland areas and engineering techniques are used to prevent flooding or frequent ponding (p. 101).

Nelson's office and DEQ were well aware of the ability to engineer the site so the so-called "wetland" wouldn't be an issue before they filed the intent to deny the application, according to documents/communications found in the discovery (p. 103).

The judge found that the 1993 tentative license denial was yet another product of bad faith. He sited the actions taken by the Governor's office as "directly interfering with the regulatory process". The judge also brings up the fact that Wood and Horton made the licenses denial decision after consulting the Attorney General and disregarding that opinion (pp. 109-110).

Overall the judge found that the license for denial was not based upon the fact that groundwater did discharged into wetlands but based "upon the mere existence of wetlands." This bases for denial was inconsistent with regulations and they had been told this by lawyers at Collier, Shannon (p. 110).

6 & 9 Money and Time (pp. 110-114 and pp. 129-131)

The judge found that the lack of budget and timetable had severe and negative consequences. It was found that there was an expenditure of huge and unnecessary amounts of money and an unduly prolonged licensing process. The auditor made recommendations that the judge found reasonable and it was Nebraska's failure to apply those recommendations that amounted to yet one more sign of bad faith. The judge also thought that the deadline set by the Commission was also reasonable and the failure of Nebraska to meet the deadline was the product of bad faith. (130)

8. The Statute "exempts Health from being involved in the licensing" (pp.120-128)

The judge found it both unnecessary and unwise for him to decide the precise extent of DOH's licensing jurisdiction. But the fact that the Nelson administration (in the 1996 denial process) doubted whether DOH had the legal power to grant or deny a license to USE and upon coming to that realization, and instead of seeking to resolve the question, the Nelson administration did nothing. In so doing (or in doing nothing), Nebraska was found to have acted in bad faith.

10. Handpicking a Financial Analyst (131-137)

This section has to do with the second (1998) denial decision with regards to the claim of lack of financial assurance.

The judge found that the state of Nebraska acted in bad faith by claiming lack of financial assurance and said that the claim was pretextual. The reasons for this finding he lists: (1) Kate Allen in effect told Wood how to squeeze USE, and she emphasized to him that USE would need a license before it could get financing; (2) after appropriate investigation, the regular reviewers were satisfied that sufficient written assurances had been provided; (3) normal construction practices assumed licensing conditioned upon a subsequent specific showing of acceptable financing arrangements; (4) outside the regular review process, Wood relied upon a political confidant and friend of Governor Nelson's to locate a financial analyst; (5) the specially retained financial analyst's reports were of such a limited scope that they ignored crucial financing sources and methods; (6) Wood tried to pressure Dale Jacobson to change his mind, and suggested a disingenuous way of dealing with the matter; (7) whatever serious financial problems AE earlier faced, by the time the final decision was reached those deficiencies had largely evaporated and both DEQ and DOH knew it; (8) DOH did not join in the decision regarding financial assurance; and, (9) there was absolutely no risk to Nebraska issuing a license conditioned upon providing construction financing acceptable to the regulators within 120 days after issuance of the decision as proposed in the draft safety evaluation report.

11. Ground water decision (138)

This is mostly related back to the "fatal flaw" problem but this time for the second decision to deny the license in 1998.

Judge Kopf found that the second decision to deny the license because of concerns about water was pretextual, unreasonable, and unfair. Bad faith was found due to several facts surrounding this decision. The first is that Nebraska promised one thing but did the opposite with the hydrographs (misuse of requested data). Next the judge recognizes how Wood tried to disguise how the real decision was reached and how he had essentially instructed the project consultants to write just what he wanted. He also sites Wood's admission that his decision was made ", not about health and safety, but was based upon some vague, and ultimately unreasonable, concept of regulatory interpretation". Lastly he found that the fact that the final decision was reached failing to follow the advice of Nebraska's own scientists was strong evidence of bad faith. (153)

 

In the case seen in the US district court of the Central Interstate Low-Level Radioactive Waste Commission (and other interested parties) verses the State of Nebraska (DEQ and NDHHS) the court ruled in favor of the Commission citing "bad faith" on Nebraska's behalf.

Names

These are the people and organizations involved as defined by Judge Kopf in the Memorandum for reference.

AE
American Ecology, a publicly traded company and the parent of US Ecology.
Kate Allen
A lawyer who worked at the Governor's policy research office. Later, she served on the staff of a state senator while doing legal work for a group of site opponents. When working for the Governor, she was assigned to work on low-level nuclear waste matters.
Tim Becker
At one time, the Governor's chief of staff. He previously held other positions on the Governor's staff.
Boyd County
The Nebraska county where the disposal site was to be situated.
Collier, Shannon
A Washington, D.C., law firm that served as a consultant to Nebraska during the licensing process. With others, that firm also served as trial counsel in this case. A lawyer for Collier, Shannon authored a legal opinion that was not followed.
DEQ
The Nebraska Department of Environmental Quality.
DOH
The Nebraska Department of Health.
Dale Jacobson
An environmental engineer employed by JHC who was responsible for managing all the consultants. He also served as the review manager for qualifications of the applicant.
Lamson, Dugan & Murray
The successor law firm to Kennedy, Holland that Nelson rejoined after leaving the Governor's office. Tim Becker also joined that firm.
LLRW
Low Lever Radioactive Waste
NDHHS
Nebraska Department of Health and Human Services
Ben Nelson
E. Benjamin Nelson, the Governor of Nebraska during most of the licensing process and now United States Senator. He is a lawyer.
W. Don Nelson
A political confidant and friend of Governor Nelson's. Also a friend of Randy Wood's. He later went to work on Ben Nelson's U.S. Senate staff.
NRC
The Nuclear Regulatory Commission.
Don Stenberg
Attorney General for the State of Nebraska.
USE
U.S. Ecology
Randy Wood
Director of the Department of Environmental Quality, and the primary decision maker regarding the application.