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Big Ox Energy

The Big Ox Energy plant is shown April 19 at the Roth Industrial Park in South Sioux City. 

DAKOTA CITY -- A judge has limited some of the claims that 15 homeowners can raise at trial against the city of South Sioux City in their lawsuits against the city and Big Ox Energy.

In a separate ruling, the same judge denied Big Ox's motion to dismiss the lawsuits, which accuse the company and city of failing to maintain, operate and modify wastewater treatment facilities and sewer systems to handle waste from the plant and prevent the release of hydrogen sulfate and other toxic gases into homes near the South Sioux City plant.

District Judge Paul Vaughan ruled that Nebraska's Political Subdivision Tort Claims Act prevents the homeowners in the 15 lawsuits from demanding a jury trial against the city. The law also prevents the homeowners from seeking recovery to attorney fees for some of their claims and raising certain liability claims. If the suits proceed to trial, only a judge, not a jury, would be able to determine a judgment against the city. A jury still would be able to hear the claims against Big Ox.

Vaughan's rulings in favor of the city were expected, said Omaha attorney David Domina, who is representing the homeowners.

Domina said he raised the issues so Vaughan would deny them, thus preserving the right to appeal the decision in the future, if necessary.

Vaughan's rulings leave the homeowners' nuisance and inverse condemnation claims against the city intact, Domina said, and do not affect the amount a judge could order the city to pay the homeowners. State law limits the amount of damages recoverable from a political subdivision to $5 million for all claims rising from a case, though Domina said it's possible he could present evidence and make legal arguments that could double that amount in this case.

South Sioux City's city attorney, Michael Schmiedt, did not return a message seeking comment.

The homeowners filed their suits in Dakota County District Court in 2017 and 2018 saying that hydrogen sulfide and other toxic gases from the now-idled biofuels plant damaged their homes and caused health problems soon after it began operations in September 2016. The residents reported odors and that sewer gas permeated some homes in a five-block area near the plant, forcing some residents to leave their homes. Many have been unable to return. They are seeking damages totaling approximately $7.4 million for home replacement or repair costs and medical expenses.

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The lawsuits allege that Big Ox and the city knew or should have known that the city's sewer system would be unable to handle the pressures and waste being released into it, leading to the release of gases that escaped through manholes and into residences.

In asking Vaughan to dismiss the lawsuits, Big Ox said they did not sufficiently allege how hydrogen sulfide gas and other gases moved from Big Ox to their homes and that it did not operate the city's sewer system.

Vaughan said the motion was without merit. Enough evidence supporting the homeowners' claims has been submitted thus far to allow the case to proceed to a trial in which a jury can rule on the facts.

"With these facts, it is easy to ascertain, or at least infer from the facts, that (homeowners) have alleged ultra-hazardous or abnormally dangerous behavior by the defendants that resulted in certain damages. The damages are specified," Vaughan wrote in his ruling.

The city and Big Ox have paid hundreds of thousands of dollars to reimburse homeowners for living expenses since they were displaced. The city has also spent $1.5 million for sewer upgrades and modifications.

The plant, which accepts organic waste from local food and beverage manufacturers and converts it to methane and also treats wastewater from other South Sioux City industries, has had problems with repeated venting of hydrogen sulfide gas into the atmosphere and solid waste spills.

The Denmark, Wisconsin-based company ceased operations in April after its wastewater discharge permit was not renewed by the city of Sioux City because of approximately $3 million in unpaid fines and treatment fees. The company had previously suspended its biogas production operations in order to determine the cause of the spills and perform maintenance.

State and federal regulators have issued Big Ox numerous citations for environmental violations, and the company is set to appear before the Nebraska Department of Environmental Quality on July 8 in Lincoln for a show cause hearing to justify why it should be allowed to keep its permits.

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