Harkin help kept Postville plant open
DES MOINES, Iowa (AP)--The Agriprocessors Inc., kosher meatpacking plant in Postville might have closed four years ago if Sen. Tom Harkin hadn't helped the company get a nearly $8 million grant to build a water treatment plant.
The grant came from an environmental program that Agriprocessors would normally not qualify for. It is intended to help small towns improve their sewage systems. The Agriprocessors sewage plant doesn't serve the town.
Critics, such as Drake University law professor Jerry Anderson, called Harkin's intervention a "slight of hand on this deal."
"We thought it was a misuse of the law," Anderson said.
Harkin spokeswoman Jennifer Mullin said Harkin understood the damage Postville would suffer if the plant closed.
"A variety of Postville area leaders requested this assistance," Mullin said in a written statement. "The meat plant was the major employer in the area, and we understood that its loss would do major damage to the community--a loss that is quite obvious at this point."
Agriprocessors filed for bankruptcy after an immigration raid in May. It is now for sale and operating far below capacity.
Mullin said the city agreed to be responsible for wastewater from the company years before, when the company was under different ownership.
While Mullin said the U.S. Department of Agriculture provides "help of this kind to cities like Postville," USDA officials said the deal was unusual.
The agency wasn't aware of another case where the program paid for a private business' sewage treatment plant.
USDA spokesman Weldon Freeman said the wastewater assistance program wasn't designed to pay for projects that would only benefit a private business.
"That's not the way the program normally works," Freeman said.
He said, however, that members of Congress frequently bend the rules to help constituents.
Patti Cale-Finnegan, an administrator of the Iowa Department of Natural Resources, said supporters of the Postville project asked the state for money but the request was denied because the project was only going to help the Agriprocessors plant.
Susan Heathcote, water program director of the Iowa Environmental Council, said without the sewage treatment plant, the Postville meatpacker would have to shut down.
"They were in constant violation," Heathcote said.
Agriprocessors paid $600,000 in fines in 2006 to settle pollution complaints before the treatment plant was built.
The money to Agriprocessors included a $3.3 million grant and a $4.5 million loan to be paid back over 20 years. The loan was made to the city, which agreed to stand as the plant's owner so it could qualify for the funding. In return, the company agreed to make monthly payments of $25,000 on the loan.
A bankruptcy trustee, who is temporarily running Agriprocessors, said any new owner would assume responsibility for the loan. If the company goes out of business, the city would be responsible for the $4 million still owed.
Postville Mayor Robert Penrod said that would be hard for the city.
"It would be kind of disastrous," he said.
Penrod said he's working with the governor's office on the repayment schedule.
The sewage treatment plant could be adapted for residential use, but Penrod said that would require significant retooling of the city's current sewage system.