Wisconsin firm receives energy grant despite chronic pollution problems

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Last December, when Wisconsin Gov. Jim Doyle announced $14.5 million in federal stimulus funds for energy-efficiency projects involving nine companies, he called it “a tremendous opportunity to be one of the greenest manufacturing states in the country.”

What Doyle did not mention was that ethanol producer Didion Milling Inc., which got $5.6 million and the largest share, is one of Wisconsin’s most chronic air and water polluters— a firm designated by the federal government as a “high priority violator.”

Less than a month before Doyle’s announcement, a federal judge ruled that Didion — headquartered in Johnson Creek, Wis. — had violated the federal Clean Water Act numerous times in 2008 and 2009. Among the violations: use of excessive amounts of chlorine and other chemicals, and the discharge of a murky yellow liquid with solids down a company wastewater pipe into a tributary of a fishing lake. The ruling came in a lawsuit filed by residents who lived near the company’s Cambria, Wis., plant, about 45 miles northeast of Madison, the state capital in central Wisconsin.

The company also settled a state lawsuit in April by agreeing to pay $1.05 million for 23 air and water claims that stretched from 1999 to 2010 — a move that effectively ended three federal lawsuits filed by residents living near the plant.

Documents obtained by the Wisconsin Center for Investigative Journalism under open records laws show that officials evaluating Didion’s application for a U.S. Energy Department stimulus grant did not ask about — and Didion didn’t disclose — details of its environmental compliance record.

And once it won the grant, Didion’s project was exempted from having to conduct an analysis of its environmental impact as required by the National Environmental Policy Act — just like 99 percent of the $33 billion in stimulus projects funded by the Energy Department, according to an investigation by the Center for Public Integrity, a nonprofit investigative news organization in Washington and the Wisconsin Center for Investigative Journalism, a nonprofit based in Madison.

Doyle’s office did not respond to e-mail and phone messages seeking response.

Didion’s vice president of operations, Dale Drachenberg, declined to address questions about the company’s environmental record or the process that led to the grant. Instead, he issued a statement touting the job-creation and clean energy benefits of the stimulus-funded project.

“Since the day we started construction on our ethanol production facility, we’ve made innovation and conservation top priorities,” Drachenberg said.

On its website and in statements, Didion has cast itself as an eco-friendly company. It was one of 50 companies that in August won a grant from the state Department of Commerce’s Wisconsin Profitable Sustainability Initiative to examine and reduce its waste streams. And in September, the company hosted a Green Energy Expo at the Cambria plant, where people could learn about recycling, energy conservation and the future of alternative fuels.

To Karen Dettman, who lives across the street from Didion and has lived with its spills, smells, noise, traffic, and murky discharges, the company’s federal grant is “green energy at any cost.”

Environmental advocates in Wisconsin also believe federal and state regulators should have taken companies’ environmental into account before awarding stimulus grants or NEPA exemptions.

“You’d think it would be a normal part of the check, whether they’re in compliance with environmental laws. That’s a phone call or two at the most,” said George Meyer, a former Wisconsin Department of Natural Resources secretary who is now executive director of the Wisconsin Wildlife Federation, a nonprofit environmental advocacy organization.

Consultants working for the state’s Focus on Energy program acknowledged they recommended Didion’s plant-expansion proposal for a grant without considering the company’s past environmental problems.

Focus on Energy, established by the Wisconsin Legislature to encourage renewable energy and energy efficiency, worked through a private contractor, CleanTech Partners of Middleton, Wis. Focus on Energy solicited applications from Wisconsin industries for federal energy efficiency stimulus grants. CleanTech picked nine, bundled them up and sent them off to the Energy Department.

CleanTech got about 25 applications — from paper companies, a lawnmower engine manufacturer and others — and winnowed the field using American Reinvestment and Recovery Act and Energy Department criteria: whether the project would preserve or create domestic jobs, how the project would be managed, how much it would cost and the potential energy savings.

Didion proposed to install a host of new technologies at its Cambria plant that would produce more ethanol from corn with less energy usage, thus allowing the company to expand production. The new technology would also extract a new product in the process, corn oil, to get more value out of the corn.

The Energy Department grant money, matched by Didion’s utility, Alliant Energy, would help the project pay for itself in 3.9 years, according to Didion’s application. It would save 11 million kilowatt-hours of energy — enough to power 828 homes for a year.

Past pollution never came up, said Thomas Reitter, a consultant for CleanTech, who worked on the applications for Focus on Energy. The only environmental issue he addressed was to make sure companies fully filled out DOE’s boilerplate environmental questionnaire. “It’s DOE’s evaluation,” he said.

The questionnaire is designed to help the Energy Department decide whether a project should trigger a detailed environmental review under the National Environmental Policy Act, or NEPA. Such reviews can take months or even years to complete.

The form asked questions including what permits would be required, how solid waste would be hauled and what emissions would result. But nothing in the 12-page form asks firms about their compliance history.

And Didion did not offer much information in response to several of the queries.

“Describe any issues that would generate public controversy regarding the project,” the form says.

Didion checked “None.”

“Summarize the significant impacts that would result from the proposed project,” the last question on the form states, asking for details.

Didion left that one blank.

If federal officials who approved the stimulus grant had examined Didion’s record, they would have found a lengthy list of violations.

Aside from the 2009 Clean Water Act lawsuit, a second group of residents sued Didion last year under the federal Clean Air Act for years of air violations that the state had documented — but for which it had never punished the company.

Those and many other violations dated back to 1999. Among them: Didion built 15 grain silos, three mills, and a grain dryer without applying for the required air pollution permit. The company exceeded emission limits and ran a grain dryer outside permitted times. And it falsely claimed on a permit application that it was complying with the law, according to court records.

A U.S. Environmental Protection Agency database shows Didion has received 11 notices of violation in the past five years — one of the most among all Wisconsin companies. The notices signify that state regulators believe they have solid evidence the company has broken the law, and they are the first step toward punishing the company with a formal enforcement action.

“It’s highly unusual for us to have a source that we’ve sent this many notices of violation to,” said Tom Roushar, DNR air management program supervisor for the region. “Usually if we send one, the source corrects it, and we don’t have to repeat it.”

In late 2009, while the governor was trumpeting the grant for Didion, the state Department of Justice was taking the company to task. Assistant Attorney General Steven Tinker alleged in a letter before it sued Didion that the company had racked up thousands of air permit violation-days, a measure of the number of days that each violation continued, though the total number was never counted in the Columbia County Circuit Court case that followed.

In March, the state sued Didion, and the two parties reached a settlement in April: The company would pay $1.05 million for 23 air and water claims from 1999 to 2010 and folded in the violations from three citizen lawsuits. The settlement in state court effectively rendered the federal lawsuits moot.

Residents in Cambria, a village of 746 people in south central Wisconsin, are divided over whether the plant is good for the community. At a county planning and zoning meeting earlier this year, Didion’s expansion plans were approved unanimously.

Joelle DeBoer, a Didion employee, said her company has been a good neighbor by supporting local charities and providing local jobs. She wrote a letter supporting the expansion plans.

“I believe it’s really going to help Cambria’s community, just because we’ll be bringing more jobs to the community,” DeBoer said.

Other residents said they were infuriated by the state and federal governments’ lack of attention to companies’ environmental record.

“It’s crazy not to consider their background and their history,” said John Mueller, a Cambria resident who lives a half-mile from Didion’s mills, and is co-founder of Cambrians for Thoughtful Development. The group sued the company twice for violations that were later included in the state’s settlement.

“We know they’re not trustworthy,” he said.

Editor’s note: Christa Westerberg, a Madison attorney who provides pro bono legal services to the Wisconsin Center for Investigative Journalism, has represented Cambrians for Thoughtful Development, a citizens group, in two federal environmental lawsuits against Didion Milling Inc. Westerberg provided the Center with information about the suits that has been independently verified. She did not provide the Center with legal services or participate in the writing or editing of this report.

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