Secret donors: Who's paying for water lawsuit defense?

Private donors have paid $934,000 of the nearly $1.1 million legal tab racked up by three northern Iowa counties being sued by Des Moines Water Works over high nitrate levels — but county officials won't identify all of them.

Lawyers for Sac, Buena Vista and Calhoun counties, responding to records requests from The Des Moines Register, released heavily redacted checks, billing statements and other documents to keep private the names of those who have paid nearly 90 percent of the counties' legal fees so far.

The escalating monthly bills pay the legal fees for local, Des Moines and, until recently, Washington attorneys representing the counties in the potentially landmark case.

In keeping the information secret, the attorneys cite a state law that exempts the release of donations from private foundations that support government groups. The state law refers to a federal tax code that includes nonprofit groups.

David Wollenzien, an attorney for Calhoun County, said in an email that the donations have enabled the counties to "get most bills paid without burdening residents of Sac, Buena Vista and Calhoun."

But Wollenzien says the counties are seeking permission from their donors to "share all the information we know."

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The contentious legal battle over Iowa's water began a year ago when Des Moines Water Works sued the counties and 10 drainage districts over high nitrate levels in the Raccoon River, a source of drinking water for more than 500,000 central Iowa residents. The utility wants the federal government to treat farm drainage tiles as sources of nitrogen and phosphorus pollution, a legal challenge that could affect farmers in Iowa and across the nation.

Although the bulk of the donors paying the defense legal bills remains secret, the counties have provided details about donors to a local fund — Sac County Legal Defense — that contains nearly $200,000.

The counties' records, about 260 pages, were obtained through a request filed by the Iowa Freedom of Information Council, the Register, the Storm Lake Times and other newspapers.

Randy Evans, the council's executive director, said state law requires the release of donors — whether they're a defense fund, farm groups or large agriculture corporations. He pointed to a 2005 Iowa Supreme Court ruling that said donations to state university foundations must be made public, since the groups were "performing a government function."

"Money contributed for a fundamental responsibility of government cannot be hidden from the public," said Evans, formerly the Register's editorial editor.

Evans said the county information released so far has given northern Iowa taxpayers a better idea how much the lawsuit costs. But they still have "no idea who is paying several hundred thousand dollars" in legal bills, he said.

That's important, Evans said, because what's in the donors' best interest may not be in the best interest of taxpayers.

"Those who are paying the bills to fight the lawsuit may have a deep financial interest ... in not losing the lawsuit," Evans said. But "if the counties lose and there are damages to pay, it's the taxpayers who are on the hook."

The role of farm groups

The lawsuit has been closely watched, especially among farm groups that are investing heavily in defending the ag industry against the Des Moines utility's lawsuit.

Four statewide farm groups say they've contributed to the counties' legal defense — primarily through the Agricultural Legal Defense Fund, created by the Agribusiness Association of Iowa.

The Des Moines-based group, consisting of about 1,100 chemical, seed, fertilizer and other ag retailers, said in its annual report that it has been "actively guiding and supporting the defense strategy" and contributing money to support the "legal and technical defense of this potentially damaging and precedent-setting lawsuit against agriculture."

The report said members overwhelmingly agreed to pay 5 cents per ton of fertilizer sold over three years to support the legal defense fund and the Iowa Nutrient Research and Education Council, an initiative focused on improving water quality.

Joel Brinkmeyer, the association's CEO, said late last year that the fund is a separate nonprofit and is not required to release how much has been donated to the fund, or who donated.

"If contributors want to share that information, that’s up to them," Brinkmeyer said.

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The Iowa Corn Growers Association says it has donated $200,000 to the ag legal defense fund, and the Iowa Soybean Association has kicked in $20,000. It has also given $45,000 to the Iowa Drainage District Association's defense fund.

The corn and soybean associations say their donations came from membership fees.

The Iowa Farm Bureau Federation says it, too, has donated to the fund, but officials there declined to say how much.

Laurie Johns, a Farm Bureau spokeswoman, said the group has had many calls from members — farmers and nonfarmers — "outraged" that the state's largest utility had filed a federal lawsuit against "a handful of family farmers and rural landowners 200 miles away."

The Iowa Farm Bureau and the Corn Growers Association have provided information to members about how farmers can donate to the Agricultural Legal Defense Fund.

Farmers are concerned about added regulations, said Aaron Putze, a soybean association spokesman.

"Our farmers want to be involved in defending the counties," Putze said. "They believe there's a better way to go about better water in Iowa" than an expensive lawsuit.

How much involvement?

Documents from the counties indicate the Farm Bureau's financial involvement could be more direct than just contributing money.

A March bill from Calhoun County's Wollenzien notes a telephone call about the "Farm Bureau funding D.C. law firm." Five days later, the three county boards met, partly in closed session, and agreed to hire David Chung of Crowell & Moring in Washington.

At the meeting were Farm Bureau attorneys Ed Parker and Chris Gruenhagen, and Brinkmeyer, CEO of the Agribusiness Association of Iowa. Attorneys from the counties' Des Moines legal firm, Belin McCormick, participated by phone.

After submitting bills of nearly $340,000, Chung is no longer involved with the case, said Gary Armstrong, a drainage district attorney for Buena Vista County. He wouldn't explain why.

The dangers of secret funding

Documents show eight checks were sent directly to Belin McCormick, with information about the payer redacted. Evans, of the Freedom of Information Council, said that raises questions about who the counties are shielding.

Little billing and payment information was provided by Chung's Crowell & Moring, despite the information council's request for details.

Evans said supporters of the Agricultural Legal Defense Fund can argue that its donors should be confidential, but direct payments to the counties' lawyers from corporations such as Monsanto or Koch Industries, or groups such as the Iowa Farm Bureau,  are, in essence, donations to the counties.

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"They work for the counties," he said.

Evans worries that taxpayers in those counties could be "left on the hook" if a corporation or association decides to back out of its promises to pay legal bills.

For example, the counties have nearly $39,000 in legal fees they have not decided how to pay.

Looking for more financing

Attorneys for the counties, who have said little publicly about the lawsuit, have spent considerable time over the past year trying to find ways to finance the lawsuit's defense — talking with insurers, other rural counties, farm groups and corporate leaders like billionaire seed entrepreneur Harry Stine, their notes indicate.

They've also sought political support from Gov. Terry Branstad, U.S. Rep. Steve King and Bill Northey, Iowa's ag secretary.

The counties acknowledged that they were notified last year that they would have no financial support from their insurers in financing their legal defense. Their policies have an exclusion in connection with pollution, the notes indicate.

Three counties in Iowa — Adams, Hamilton and O'Brien — have donated $15,500 directly to the local Sac County Legal Defense Fund. Other big contributions have come from the Iowa Drainage District Association, giving $100,000; the Agricultural Legal Defense Fund, $45,000; and Sac, Calhoun and Buena Vista, which each providing $10,000.

The drainage district association sent letters to Iowa counties asking for support. Altogether, the group has raised $153,000, its director has said, with about $90,000 coming from local governments and the remainder from the private sector.

Water Works' legal fees

Des Moines Water Works also has racked up significant bills — about $642,000. The utility's board has designated $700,000 for the lawsuit.

Central Iowa water customers are paying for the lawsuit, which the utility filed a year ago in federal court.

Bill Stowe, the utility's CEO, said he expects the remaining $58,000 will cover the costs through the trial, scheduled for August.

But an appeal — likely regardless of which side wins — would require the board to push its legal fund higher, he said.

The board initially approved spending $250,000 for legal costs when the lawsuit was filed.

Stowe said the utility has been careful not to accept donations from big national environmental groups. And despite rumors, Stowe said, the utility hasn't accepted money from environmental billionaires such as Tom Steyer or George Soros.

Des Moines Water Works has created a fund to support the lawsuit, which has nearly $600 from nine private Iowa donors from outside the metro area.

Stowe said the utility's board has avoided big alliances with big donors because they "can cloud judgement on negotiations" around the lawsuit.

"They've sold shares basically in the litigation, and getting the shareholders to agree to something other than moving forward with the litigation will be very difficult," Stowe said.