LINCOLN — A state program that regulates well drillers has dug itself a hole through lack of spending oversight and fees too low to cover expenses, according to a new state audit.

The Nebraska State Auditor’s Office outlined the deficiencies in a 46-page report issued Wednesday on the program run by the Department of Health and Human Services. The program not only licenses well drillers, but also inspects domestic, irrigation and livestock wells and provides training programs.

The audit faulted HHS for using more than $1 million in fees paid by members of professions — from nurses and pharmacists, to physicians and cosmetologists — to finance the program. That money should be returned to the professional funds, the audit said.

The audit questioned whether well-drilling-related fees need to be increased to cover the program costs. HHS also was faulted for having no procedures to collect fees. Overall, the audit questioned whether the program would be financially sustainable after the funds from professional fees were returned.

Over 30 months, registration fees paid by well drillers — which are supposed to fund the unique aspects of the well-drilling program — covered only $800,000 of the $2 million in expenses.

The audit also found a potential conflict of interest: A program director of the well-drilling program, Tom Christopherson, is the brother of a co-owner of a company, Clean Well Technologies, that had a major contract with the state. About $29,000 in payments to Clean Well were found to be “questionable and likely overpaid,” the audit said, and there was another $40,000 in questionable payments to other entities.

An attorney who represents Christopherson said he had told HHS officials that his brother’s company was a bidder and had recused himself from the process of selecting the winning bid. Omaha lawyer Ryan Kunhart said his client was placed in the position of overseeing the contract by a superior, after the contract was awarded.

An HHS spokesman said the agency had asked the Auditor’s Office to look into the program after discovering problems. The authority to raise registration fees for wells and well drillers rests with the state Water Well Standards and Contractors’ Licensing Board, HHS said.

“DHHS takes seriously the responsibility of ensuring an effective and fiscally responsible Well Driller Program and took the lead to identify issues and to make corrections and improvements,” said HHS spokesman Matt Litt.

The department’s official response said that Christopherson had been removed as project leader with the program in September 2016 and that HHS did not renew its contract with Clean Well Technologies, which was co-owned by Christopherson’s brother Bill when the contract was awarded.

Kunhart said his client is contesting his exit from the state job.

Meanwhile, Sarpy County-based Clean Well Technologies filed a lawsuit in January against the state, Tom Christopherson, Bill Christopherson, (who was listed as a “former shareholder” in the company), as well as another contractor, Geo Spec Drilling of Gretna.

Clean Well asked for $2.9 million in damages for breach of contract and for interference in the contract. The lawsuit, which is still pending, also alleges that a “trade secret” of Clean Well’s was “misappropriated” by Geo Spec and Bill Christopherson, who now works for Geo Spec.

An official with Geo Spec, Bo Bonn, said that the lawsuit is totally without merit and that his firm was brought in so that Clean Well did not breach its contract with the state. Bonn said his firm has countersued because it was not paid for the work it performed.

Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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