Strickland officially asks for USDA investigation
Published 12:00 am Sunday, October 5, 2003
Maybe an inquiry from a U.S. Congressman will motivate the U.S. Department of Agriculture to shed some light on questions regarding its tobacco disposal contract with Biomass Energy LLC.
After reviewing the information for several weeks, U.S. Rep. Ted Strickland (D-6th) has officially asked the inspector general of the USDA
to initiate an investigation into Biomass and the government agency's own actions.
Strickland submitted to Acting Inspector General Joyce Fleischman Friday a three-page letter as part of a more than 50-page document that included 53 attachments of articles from local newspapers.
The inspector general's function is to promote efficiency and effectiveness as well as detect fraud and abuse within the USDA and with non-federal entities working with the agency, Strickland said.
"The investigation should look at the procedures followed in granting of the contract and why it seems it was granted to a company that was inadequately capable of of carrying out the contract," Strickland said Friday.
After reading published reports that questioned why the government agency
awarded this contract and receiving a letter from South Point Village Councilman David Classing, Strickland said last month that the USDA's decision to award the contract to the Nicholasville, Ky.-based company was "puzzling," "appalling" and "indefensible."
At that time, he said he would ask for an investigation, but reviewing the history of the issue took longer than expected.
The Congressman outlined the facts of the situation and asked several questions including:
"How could the USDA enter into a multi-million dollar contract with Biomass to dispose of such a large quantity of waste when Biomass lacked the equipment, facility and necessary permits to undertake its obligations under the contract?"
"Did the USDA consider Biomass' financial standing when awarding this contract?"
"What led USDA officials to refute claims that Biomass owed delinquent taxes?"
"To date, how many taxpayer dollars have been received by Biomass, and does the USDA have plans to seek to recoup any of that money?"
Strickland said one of the most disturbing parts of this "royal mess" was that the federal agency seemed to ignore local entities and facts that show that the company is delinquent on taxes.
The Ironton Tribune has also continued to seek answers from the USDA. After previous attempts were not very successful, a list of questions was submitted in writing on Sept. 10.
So far, the USDA has not responded. Public affairs representative Eric Parsons has said he is checking into these questions.
Questions The Tribune would still like answered include: How many companies bid and who were they? What were their bids? Why was their no performance bond?
What were the technical requirements for the contract? How did Biomass meet those? What type of research was done on Biomass?
Where did the USDA get its info about Biomass' tax records?
If the government knew Biomass was delinquent, would they have still given them the contract?
This issue began in December of 2002 when Biomass was awarded a contract to destroy 121,448 tons of surplus tobacco for $19.25 a ton, totaling a $2.33 million deal.
Shipments began this spring but were stopped by the USDA in March after concerns were raised by the Ohio EPA about permits needed for the storage and disposal of the material. The EPA later ordered that the 10,181 tons already received to be removed.
All parts of the EPA orders to remove the product were not met on time, so the OEPA referred the case to Ohio Attorney General Jim Petro's office on July 22. Representatives for Petro's office are currently in discussions with Biomass to see if the situation can be resolved without litigation.
Randy Hendricks, vice-president for Montenay Power Corporation, a competitor for the tobacco contract said the USDA should have heeded numerous warnings.
In February, representatives for Montenay wrote a letter to the USDA stating that the Public Utilities Commission of Ohio questioned if the plant would be operational, that the Portsmouth Local Air Agency reported that there was no activity at the site, that the Lawrence Economic Development Corporation doubted if the facility will ever be operational and that Biomass owed thousands in delinquent property taxes.
The USDA responded to Montenay with a February letter that refuted all of the claims and stated that "it is the government's understanding that the $30,000 taxes is not delinquent and are due by the end of March 2003."
Biomass owes $107,915 in delinquent taxes for the 2001 and 2002 tax years on 13 parcels of land in South Point, most of which would have been delinquent at the time of the USDA's letter, according to Lawrence County Auditor Ray Dutey.
Biomass has been delinquent on more than $40,000 since Aug. 30, 2001, according to the auditors office.
Hendricks also questioned the feasibility of the time frame. The USDA contract said the tobacco had to be destroyed within 18 months of the the December 2002 contract award.
Biomass CEO Mark Harris said in the past the company would conduct a $100 million renovation of its plant that would begin in April and would be completed in 12 to 15 months. He later said the start date was October.
Harris did not return calls seeking comment.