City not off the hook with sludge-related contracts yet

ICN file photo

 UPDATE 8/4/17 -- Mark Thompson found dead from self-inflicted gunshot wound: See related story
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UPDATE 8/1/17---- Terre Haute Wastewater Treatment Plant Director Mark Thompson has been suspended with pay after a decision today by the Terre Haute Sanitary Board., pending FBI investigation.

By Lucy Perry
Indiana Central News

While a federal judge reportedly dismissed a similar lawsuit against the city last year, Terre Haute Mayor Duke Bennett, Wastewater Treatment Plant Director Mark Thompson and former City Attorney Chou-il Lee aren't fully off the hook since a new Powerdyne-related suit --- filed earlier this month, in another state -- alleges corrupt activity and secret meetings were held at the time.

Now, the New Jersey-based company, Overseas Lease Group, is going after the Illinois-based contractor, (Scott) Plocher Construction Company, Inc. for past sludge dewatering agreements.  The alleged "pay -to-play" scheme cost  Overseas Lease Group a loss of nearly $90 million, according to court documents filed July 5 in US District Court of New Jersey.  Although Bennett, Thompson and Lee are not defendants in this particular case, they're names as well as the city, board of public works and the treatement plant are listed as non-parties to describe the 20-year contract that didn't pan out due to legal considerations. Several of the sludge-to-fuel contracts were reportedly unenforceable at the time.

"The City, the utilities and the board agreed to 240 consecutive monthly payments of $719,326.58 for de-watering services," the court documents state. However,  the contract "collapsed as a consequence of defendant's (Plocher) misconduct before OLG was paid anything."

​Meanwhile -- just a couple weeks following an FBI raid of the wastewater treatement plant in a non- specific and currently sealed investigation--- city officials deny the wrongdoing Overseas Lease Group alleges they took part in as far back as three years ago. ​
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Plocher has had other involvements with the wastewater treatment plant --including expansion projects -- at the property located on S.R. 63. 

See related stories below:

Jan. 24, 2015 
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Gambill discusses various contracts involved in Powerdyne deal

By Lucy Perry
Examiner.com
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TERRE HAUTE-  Aside from conflicting language and contracts not specifying agreements made regarding them in other contracts signed in the Powerdyne deal, there are several other legal concerns regarding the documents. Attorney Noah Gambill asks that the city clear the disparities.

Are the contracts enforceable? How are we going to be able to supply what we’ve contracted for in the sludge-to- fuel agreement? Those are just a couple questions the public is asking.

Although it is known much of the sludge needed is coming from remote cities, Gambill notes that the amount anticipated is not close to the amount contracted for -- 200 tons of sludge, 365 days a year. Several people in the community,including Gambill’s client Pat Goodwin, former city engineer, question the science involved in the amounts of sludge needed. They allege the contracts in their current form, put the city at financial risk.

“What we’ve contracted for, is to provide them an astronomical amount of sludge and green waste-- 200 tons a day,” Gambill said yesterday.

The amount of 200 tons needed is reportedly about 80 semi-tractors full of sludge. If the amount agreed upon by the city is not provided, the city could be liable for breach of contract.

“These are the types of things we’re contracted for, so when somebody says we are not on the hook for anything, I would disagree with it,” he said.

Gambill, of Wagner, Crawford and Gambill Law Offices, met Thursday evening with a group of more than 20 concerned Terre Haute citizens regarding a potential Powerdyneclass-action lawsuit.

The meeting was an opportunity for residents to become more educated about the Powerdyne project plans and the potential suit. Gambill has voiced several concerns about the various contracts on the proposed sludge-to fuel facility in the city. He explained while there is no lawsuit right now, to file claim based in tort (alleging constructive fraud,) one must allow 180 days notice pursuant to state law.

“It went really well, the meeting was just to inform the public. Here’s how I read the contracts -- here are the provisions within them,” Gambill said Friday. “If the city starts from scratch, great. When they say they’re re-negotiating, what does that mean?” He noted that nobody seems to be asking how or why they’re re-negotiating. Normally, when contracts are signed, they're binding.

There are several contracts related to the proposed Powerdyne Renewable Fuel Plant. Essentially, there is what is called a non-appropriation clause, in the City of Terre Haute Wastewater Utilities contract that specifies if the city council opts to not fund the contract, it voids the contract.

“Now, city legal has indicated that the Powerdyne contract is not enforceable (Jan.16,) even though it has already been signed and approved, because its non-appropriation clause said, even if city council doesn’t choose to fund this project, this contract is still good," Gambill said.

While a paragraph within the Powerdyne contract indicates the obligations of purchaser set forth ( in Section 4.4 ) are absolute and unconditional, there is a question regarding a fee of $719,00 per day in costs to a company for hauling the sludge. Gambill asks why there wasn’t a bidding process to choose a shipper in the first place.

The city of Terre Haute administration has also mentioned a $3 million check expected from Powerdyne by Jan. 1 this year (not yet received,) but Gambill said there is no mention of it any of the contracts.

“I don’t know what the money was supposed to be for, all I know is the money was represented and was accounted for, for this year’s budget. That money is not (mentioned) in any of these contracts, whatsoever,” he said.

Another question is, what contracts of the four, are being re-negotiated? Other related contracts include: A subsidiary of Powerdyne, Highland TH LLC, Sodrel Fuels and Renewable Transportation Services, Inc.

Another interesting observation and legal concern, is a Highland merger, as shown in documents registered with the Indiana Secretary of State Oct. 30 2014 between company entities in Indiana and Delaware just a day earlier. It is noted that the Project Development Agreement contract has been signed not by Powerdyne or HIghland President Geoffrey Hirson, but rather by an individual by the name of H. Milton Stewart, signing as president of Highland.

“These were both signed on the same day, according to the contract, but we have two different individuals signing them as president,”Gambill said.

Mayor Duke Bennett responded yesterday that he feels the opposition being reported through the news media is politically motivated.

“It is very unfortunate. I completely understand that there are legitimate questions that the public has about the project and we address those as we receive them,” Bennett said yesterday. “We are currently working to modify the contracts to clean up some language and establish new timelines. This will help address many of the complaints and we will share that information once it is finalized”

Gambill responded that the interest from his side is not political, but , rather based on law.

“There are a lot of complicated legal concepts-- and you’re talking about contract law, and you’re talking about tort law,” he said, adding, “If the city says, hey look, we agree that there are some issues with these contracts-- we’re going back to the drawing board,then great, we don’t have a claim.”

The city council has invited Powerdyne representives to speak to residents Feb. 12. Gambill is hoping the public will get some answers at that time. Meanwhile, Bennett is concerned about the negative attention to the deal and how it affects the image of the city.

“My biggest concern is the negative image that is currently being presented to those who are considering bringing a new business or industry to Terre Haute,” Bennett said. “It is a very competitive environment when dealing with business location decisions, job creation, etc. and we must be known as a community that is inviting and supportive of that growth.”

Follow more information on the issues related to Powerdyne in Terre Haute, see the Facebook community page Terre Haute Inquiries - THinq

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Feb.13, 2015

SEWAGE SLUDGE MEETING FUELS POWERDYNE PRESIDENT’S TEMPER

​By Lucy Perry
NewsBarb.com

TERRE HAUTE – Up until last night, during a special city council meeting, the residents of Terre Haute had yet to hear from Powerdyne representatives about the proposed renewable fuel facility and the contracts regarding the sewage sludge- to-diesel fuel plans.

Powerdyne Chief Exectutive Officer/President Geoff Hirson, a native of South Africa now residing in California,  made a strong first impression. He was quick to defend the privately held company’s technology, which he admitted he “holds close to his chest.”.

“I really hope we can put this project together, get rid of all the– I don’t want to use swear words, but — get rid of all the stuff that’s been going on, and make it good for both Powerdyne, the city and the community,” Hirson said.

After a Powerpoint presentation 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, Hirson basically just said take it or leave it.

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.

All the contracts with Powerdyne and the related companies are being renegotiated and officials hope to have them ready to go in time for next month’s city council meeting for review. Terre Haute Mayor Duke Bennett said Powerdyne and its related contracts are being revised by Mark Thompson, director of wastewater plant, city attorney Chou-il Lee and himself, due to recent opposition in the community and alleged flaws.

Consultants and engineers spoke to the audience to explain the formalities involved in transporting the required sludge to meet the demand from remote cities and the process to alter it into fuel to clear up months of confusion in the talks so far.

Hirson outlined the waste- to- fuel project, explaining there are currently nearly 200 such facilities in the United States, of which 114 are bio-fuel projects. He noted that negative press in Terre Haute has, in fact, brought favorable attention and interest in his company. In the event the project gets the go ahead locally, Hirson said he is prepared to issue a $3 million “concession” check at groundbreaking for the facility.

“I know everyone is asking ,how are we going to make all this fuel with so little sludge? Well, we don’t only use sludge, obviously,” he said, explaining they would use feedstock — or, raw materials — in place of the previously stated green waste. “We can convert any kind of organic material into synthetic gas.”

He explained the concept is nothing new and actually is environmentally friendly. The carbon gasification process has been around 180 years and there is no waste or harmful emissions. He noted that the finished fuel product, created in the process, looks as clear as water. It is due to a clean fuel process, a “closed loop system” needed in today’s environment, he said.

“Our fuel facility that we’re going to build is going to be owned and operated without any city financial investment, “Hirson assured the audience. “We never came to this city and said, ‘Help us to build this plant.'”

During the building of the proposed plant, 2,000 construction jobs could be created. About 100 to 130  employees would be needed to keep the plant running, he said, noting the jobs would be in the $30 and above- per-hour range.
A scientist, Roger Ward, and an engineer, Craig Shumaker, each spoke from the podium, voicing their concerns of the practicality of the sludge-to-fuel plans.

“It would be one thing if this plant was located in the center of Indianapolis. Even that wouldn’t be enough sewage sludge,” Ward said.

And, the process of dewatering the sludge is another concern.

“The particular problem with the sludge, is much of the fuel in the carbon in sludge is used to dry out the sludge,” Shumaker said.