The Waste Water Treatment Facility Project in Terre Haute has experienced another delay. Construction of the next PHASE of the $120 million dollar Sewer Plant has come to a stop.
According to a report in the Tribune Star newspaper, back in OCTOBER the company doing construction on a lift station located about 1000ft north of the Western Tar Corp. railroad tie factory hit contaminated water. The groundwater was being pumped into a holding pond on the International Paper Property when a fish kill was observed. The City Engineer says that another company will be contracted to clean the water in the ground of creosote before construction can resume.
The Board of Sanitary Commissioners has their Attorney Terry Modesitt working on negotiations for the contract of the contaminated water clean up.
Other negotiations are in the works for the construction company sitting idle, but unlike other contracts that Terre Haute has signed for the Sewer Plant, nobody has stated if these are real contracts or pretend ones like the Powerdyne Contract signed in 2015.
Terre Haute had signed a contract to provide sludge from its wastewater treatment plant to Powerdyne Terre Haute Holdings, which would convert the sludge into diesel fuel. The company would then sell 12 million gallons of that fuel to Terre Haute for $2.46 a gallon, and the city would then sell that fuel to Indianapolis-based Sodrel Fuels for $2.50 a gallon.
Mayor Duke Bennett, who promised about $3 million in new revenue the first year and another $3 million the next, said city officials had been working on the plan for a couple of years. He said he hoped it would make Terre Haute a model for other cities to follow.
The city would be essentially serving as the middle man in the deal, he noted.
“This is just a pass-through contract,” Bennett told the Tribune-Star. The city is “not going into the fuel business.”
The agreement amounts to $480,000 in income for the city per year, but officials indicated MUCH more income is likely. The city could provide more sludge than the contracted minimum. The city planned to take others sludge also and make money hand over fist.
Under the contract with Powerdyne, the city would have provided 200 tons of “green waste,” such as downed trees, limbs and leaves, every day for 20 years. That material would have also been converted into diesel fuel.
To meet that goal, the city was going to allow residents to place downed branches and trees from their own property for city pickup, Bennett said. Currently, the city hauls tree waste only from trees on city-owned property.
Bennett said the city negotiated upfront payments from its partners that guarantee $3 million the first year and $3 million the next year. After that, the agreement was expected to generate at least $2 million a year, he said.
“We’re not on the hook for anything except to pay someone to haul away our sludge, which we already do,” he said. In fact, the city will be paying less for sludge removal under this deal, he said.
Then came the lawsuits, the money trail, Rose-Hulman and those pesky engineering students, and the FBI.
After a Powerpoint presentation by Powerdyne President Hirson before the city council, he took questions regarding the related contracts with the city for the sludge-to-fuel project in front of a standing room only audience at Terre Haute City Hall.
In the end, Powerdyne said basically, if you don’t trust me, too bad. I’ll get on a plane and take my business somewhere else.
(Nobody else took his business)
Friction seemed to spark when Councilman Todd Nation — alleging secrecy in the plans and contracts with the city — provoked Hirson by asking him to see a facility with its existing technology, expressing implied skepticism in the legitimacy of the corporation.
Responding to that question regarding his business from Councilman Nation, Hirson stated he wanted to feel welcome in Terre Haute, “But when you push my buttons… all I want to know is, do you want me in the city or do you not want me in the city? For me, it’s get on a plane and go home, I got other projects,” he said. He then jested that if he were proposing opening a restaurant, for example, in the town, would his motives be questioned?
Aside from that conflict, a few of the council members were welcoming to Hirson. Councilman Norman Loudermilk, in particular, said he was willing to suggest a tax abatement for the project.
The FBI raided the Waste Water Treatment facility in Terre Haute and then shortly after that the Waste Water Treatment Plant Director Mark Thompson was found dead of an apparent suicide.
The lawsuits continued, and the Mayor Bennett was worried that Terre Haute wasn’t being very inviting to companies looking to relocate here.
Rose-Hulman Chemical Engineers said that two groups of Rose-Hulman Institute of Technology engineering students who studied the proposed Powerdyne biodiesel project have come to the same conclusion: If the city moves forward with its sludge-to-diesel plan, it stands to lose – at minimum – hundreds of millions of dollars over the next 20 years. That loss could reach, one team’s report states, nearly $2 billion
Mayor Bennett said in June 2015, “Powerdyne has obviously done a detailed process design along with their overall business plan to construct a plant and sell their product. This is a private company using its own funds to build the facility and any failures are on them and not the city or the taxpayers. They must continue to convince their investors (and not the city) in order to move this project forward and make a profit in the end.”
A U.S. District Court judge in New Jersey in Dec. 2018 dismissed a lawsuit brought by Overseas Lease Group, finding in favor of the city and other defendants on a series of legal arguments. This was the contracts/ no contracts. Did we have one. Yes, but not really.
Now the U.S. Third District Court of Appeals says that it has opened a case involving Overseas Lease Group vs. Plocher Construction Co., the City of Terre Haute and other partners in the failed sludge-to-diesel venture.
Overseas Lease Group alleged that those receiving city contracts were required to provide kickbacks.
Mayor Duke Bennett has denied the allegation.
No Powerdyne Facility has ever been located. The technology has never been proven. And even though the City of Terre Haute insists that the contracts it signed were not really contracts, the legal battle over Terre Haute and the money the was defrauded from several companies lingers. Terre Haute could have jumped in with both feet like the Mayor wanted to and this whole stink may have been avoided. The contract would have only cost the city up to $2 Billion dollars over 20 years according to RoseHulman Engineer’s. As Mayor Bennett noted, the chemical engineers did not have Powerdynes secret recipe.
The new negotiations over contracts only involve the clean up and unplanned delay in construction.