More questions about the permitting and financing of Angus King's Record Hill Wind Project

 

The financial capacity requirements of the DEP permitting process are quite clear. 

Chapter 373:               

FINANCIAL CAPACITY STANDARD OF THE SITE LOCATION LAW

 

SUMMARY:These regulations describe the scope of review of the Board in determining a developer's compliance with the "financial capacity" standard of the Site Location Law (38 M.R.S.A., Section 484(1); the information which shall be submitted, when appropriate, within an application for approval; and, the terms and conditions which the Board may impose on the approval of an application to ensure compliance with the standard. 

1.   Financial Capacity to Meet Pollution Control Standards

   A.  Scope of Review.  In determining whether the developer has the financial capacity to meet state air and water pollution control standards,, the Board shall consider all relevant evidence to the effect that the developer has the financial capacity to construct, operate, and maintain all aspects of the development, and not just the pollution control aspects.

 

NOTE: The Supreme Judicial Court of Maine stated in the case of In re: Maine Clean Fuels, Inc. , 310 A. 2d 736, 755 (1973) that "it is clear that the ability to finance the cost of meeting pollution standards is inexorably a part of the ability to obtain total financing." Furthermore, the Board's experience with developers has shown that air and water pollution control equipment is usually installed after all other aspects of the development are completed.  If the developer's funds run low or run out toward the end of development, the pollution control aspects of the development may be slighted.  Therefore, in determining financial capacity, the Board requires proof of adequate funding for the completion of a development, including the pollution control aspects.

 

B.   Submissions.  Applications for approval of proposed developments shall include evidence that affirmatively demonstrates that the developer has the financial capacity to undertake the proposed development, including information such as the following, when appropriate:

 (1)  Accurate and complete cost estimates of the development.

 (2)  The time schedule for construction and for satisfying pollution abatement measures.

 (3)  A letter from a financial institution, governmental agency, or other funding agency indicating a commitment to provide a specified amount of funds and the uses for which the funds may be utilized.

 (4)  In cases where funding is required but there can be no commitment of money until approvals are received, a letter of "intent to fund" from the appropriate funding institution indicating the amount of funds and their specified uses.

 (5)  The most recent corporate annual report indicating availability of sufficient funds to finance the development together 'with explanatory material interpreting the report, when requested.

 (6)  Copies of bank statements or other evidence indicating availability of funds, when the developer will personally finance the development.

 

A standard permit condition is included with all DEP permits:

 “Prior to the start of construction, the applicant shall submit final evidence for review and approval that it has been granted a line of credit or loan by a financial institution authorized to do business in this State or evidence of another form of financial assistance determined by the Department to be adequate pursuant to Chapter 373(1) of the Department’s Rules.”

 

In their application for a DEP permit for their wind project in December 2008, Record Hill Wind LLC represented that a bank named "CoBank" was financing the project, although the letter from CoBank was not a commitment to finance but merely a letter expressing interest in financing if a number of conditions were satisfied including a long term contract for the sale of the project's electricity:

 

 

When the draft permit was issued in August 2009, it contained the standard condition that construction could not start until evidence of financial capacity was demonstrated.

 

When the final permit issued 5 days later someone had removed the word "construction" and inserted "operation" -   “Prior to the start of operation, the applicant shall submit final evidence for review and approval that it has been granted a line of credit or loan by a financial institution authorized to do business in this State or evidence of another form of financial assistance determined by the Department to be adequate pursuant to Chapter 373(1) of the Department’s Rules."

While reviewing the final permit I did not notice this change, but when RHW sent a letter to the residents of Roxbury a few day after receiving the permit stating that construction was beginning I was curious if RHW had in fact obtained financing from CoBank.   I emailed Beth Callahan, the DEP staffer assigned to manage the RHW application:


From: Steve Thurston [mailto:thurston.steve@gmail.com]
Sent: Saturday, September 12, 2009 6:02 PM
To: Fisk, Andrew C; jim.cassida@maine.gov; Callahan, Beth
Cc: Rufus Brown

Subject: Fwd: Letter from Rob Gardiner and Angus King to Roxbury residents

The attached letter indicates that Record Hill Wind has begun construction. Please copy me on the evidence of financial capability that must be submitted to the DEP prior to construction that is a condition of the permit.
Thank you,
Steve Thurston

 

In response, she referred me to the altered condition allowing the project to be constructed without financing, but said she would ask the applicant to update DEP about financing:

 

From: Callahan, Beth a href="mailto:Beth.Callahan@maine.gov">Beth.Callahan@maine.gov>
Date: Mon, Sep 14, 2009 at 8:25 AM
Subject: RE: Letter from Rob Gardiner and Angus King to Roxbury residents
To: Steve Thurston a href="mailto:thurston.steve@gmail.com">thurston.steve@gmail.com>, "Fisk, Andrew C" a href="mailto:Andrew.C.Fisk@maine.gov">Andrew.C.Fisk@maine.gov>, jim.cassida@maine.gov
Cc: Rufus Brown a href="mailto:rbrown@brownburkelaw.com">rbrown@brownburkelaw.com>, "Richardson, Marybeth" a href="mailto:Marybeth.Richardson@maine.gov">Marybeth.Richardson@maine.gov>

Dear Mr. Thurston,

Please refer to Condition #4 on page 48 of 60. This condition of approval which refers to financial capacity states that the condition must be satisfied prior to operation, not prior to construction. However, I will contact Mr. Gardiner and request an update as to the status of finalized financial assistance.

All pre-construction conditions have been satisfied. A pre-construction meeting was held on August 28 and a third party inspector has been obtained. The licensee has also submitted a flagging and signage plan, a construction Spill Prevention Control & Countermeasures Plan, a blasting plan, and a Stormwater Pollution Prevention Plan.

Sincerely,
BETH CALLAHAN
Project Manager
ME Dept. of Environmental Protection
Division of Land Resource Regulation

I responded that the condition was a mistake:

9/14/09

Dear Beth, Please refer to Paragraph 1 on page 6 of 60. "Prior to the start of construction, the applicant must submit evidence for review and approval that is has been granted a line of credit or a loan by a financial institution authorized to do business in this State, or evidence of another form of financial assurance determined by the Department to be adequate pursuant to Chapter 373 (1)."   Note that this requirement is intended to provide proof that the applicant has the resources to construct the project and implement all pollution control measures,  and is not meant to be after the fact...  

It would seem that condition #4 on page 48 or 60 has a typo,  and the word construction should have been used instead of operation.  Therefore,  the developer must provide evidence of financial capacity prior to construction. Please clarify. Thanks for your consideration, Steve Thurston   

  

In response to Callahan's inquiry RHW president Rob Gardiner said they did not have financing but would have it before commencement of operation just as the permit allowed:

 

Forced to admit the condition was improper, DEP reversed itself and told RHW the altered permit condition was a "drafting and editing error" and that financing must be demonstrated or the project must suspend construction. In response RHW submitted a letter from Northern Trust Bank in Chicago stating that an unnamed majority partner in the RHW project had more than enough on deposit to construct the project, but the funds were not committed to the project and could be withdrawn at any time:

 

 

This letter was previously sent to DEP Commissioner David Littel,  but was not made part of the project record until appellants raised the issue of inadequate evidence of financing.

 

The DEP accepted this letter as evidence of financing and appellants appealed that decision as the letter clearly indicates that no commitment to finance the project was intended. In a stipulated settlement with project opponents RHW agreed to stop construction and provide additional evidence of financing prior to resuming construction. Construction ceased in January 2010 for more than a year.

 

In November 2010 the town of Roxbury was notified that RHW had applied for a DOE federal loan guarantee. Prior to resuming construction RHW provided the following letter to Maine DEP:

 

Included with this letter was the following cover letter and statement from Mascoma Savings Bank in Lanconia New Hampshire:

 

 

 

 

DEP accepted this letter as evidence of financing and allowed construction to resume in the spring of 2011, even though the loan guarantee had not been granted.

 

When the DOE announced "conditional approval" of the loan guarantee the Yale Endowment Fund issued a press release saying that it was participating in the financing of the project and that the loan guarantee was critical to its involvement. Yale Endowment Fund owns Bayroot, the landowner and lease holder for the RHW project.

In an interview with Wind Powering America in August 2011, Robert Gardiner admitted that the project never had financing until the DOE loan guarantee was awarded:

"We would not be building that project today if it were not for the loan guarantee," Gardiner said. "The economic situation has not improved significantly over the past 3 years. Two years ago, we started construction because we had our permits and we wanted to get a head start, even though we hadn't finished all of our financing or received our power purchase agreement. We were in the economic downturn, but we still had optimism, thinking we could do it...."

"We spent considerable amounts of money building the access roads, getting the first few turbine pad plates in place, and developing the pads. Then our financial package that we were trying to bring together, which we thought was going to happen, didn't happen. Then it was basic economics. We actually put those same pieces back together, but without the DOE support we wouldn't have been able to pull them back together."

In my opinion RHW played a "moving shell game" with DEP, and never had anything under any of the shells until it obtained the DOE loan guarantee.   Why this circumvention of the law occurred remains an unanswered question today.  Would the DEP make this same "mistake" if the applicant had been other than Angus King and Robert Gardiner?  Did Angus King and Robert Gardiner believe they were entitled to different treatment than the law required?

When I asked Assistant Attorney General Peggy Bensinger, legal counsel to the DEP,  to find out who was responsible for the changed word in the final permit the following chain of emails resulted.  Read in reverse order. 

 

RE: Record Hill Wind question

From:   Bensinger, Peggy Peggy.Bensinger@maine.gov

Apr 5, 2012

 

Hi, Mr. Thurston.  In my attempt to answer your question and determine how the final Record Hill permit decision contained inconsistent financial capacity provisions and different provisions from the draft decision,  I have consulted with the Department staff involved, and they have checked their records and notes. I have also consulted with the attorney for the applicant and she has queried the applicant’s consultants who handled the permitting process.  As I previously reported, Beth Callahan simply does not remember how or why that change was made.  Neither does Jim Cassida, who was supervising her at that time.  Beth was able to find a phone note that may have caused the confusion. She apparently received a phone call from the applicant’s consultant, Mr. Ryan of Santec, on August 8, 2009, which was after the draft order had been sent out. 

The note states:

 “receive eagle activity info & Boreas Renewables submission?

 ? on change construction COA to operation COA”

COA is an abbreviation for condition of approval.

Mr. Ryan states that he was referring to one of the other Conditions of Approval, and he did not request such a change to the language regarding financial capacity. But it is possible that there may have been some confusion given that the phone log note doesn’t specify which condition of approval it is referencing.

I’m sorry I haven’t been able to resolve this, but as you know, the Department staff people have an extremely heavy work load.  It’s not surprising to me that they cannot remember each change made in the documents they produce and mistakes do sometimes happen. Luckily this error was noticed almost immediately and was rectified.

If you would like to discuss this further, please feel free to call me at 626-8578. I leave tomorrow for a vacation but will be happy to speak with you upon my return.

Peggy Bensinger

--------------------------------------------------------------------------------------

From: Steve Thurston <thurston.steve@gmail.com>

Date: Mon, Mar 5, 2012 at 5:18 PM

Subject: Fwd: Record Hill Wind question and noise rule amendment timeline question

To: "Bensinger, Peggy" <peggy.bensinger@maine.gov>

Peggy,

What is the status of this?  Six months have gone by since I asked for an explanation.

Steve

------------------------------------------------------------------------------------

From: Bensinger, Peggy <Peggy.Bensinger@maine.gov>

Date: Mon, Feb 13, 2012 at 3:38 PM

Subject: RE: Record Hill Wind question and noise rule amendment timeline question

To: Steve Thurston <thurston.steve@gmail.com>

Hi, Steve.  I am still trying to piece together how those two provisions ended up getting changed. I have gotten some phone notes which may help explain it and am trying now to get some other phone log notes to see whether the change might have been the result of comments made in a telephone conversation.  I will definitely get back to you once I have gathered everything that may be relevant.

Peggy

--------------------------------------------------------------------------------------

From: Steve Thurston [mailto:thurston.steve@gmail.com]

Sent: Saturday, February 11, 2012 12:28 PM

To: Bensinger, Peggy

Subject: Re: Record Hill Wind question and noise rule amendment timeline question

Peggy,

As we discussed in the cafeteria, there are serious unanswered questions about the word change in the final permit.  For the reasons I have explained in detail in prior emails,  Beth Callahan's claim of a "drafting and editing error" is not credible.    I am prepared to take this matter to your superiors and to the press if you do not give me a satisfactory explanation for who was responsible and why they intentionally changed the word. 

Steve

--------------------------------------------------------------------------------------

On Wed, Jan 11, 2012 at 2:56 PM, Bensinger, Peggy <Peggy.Bensinger@maine.gov> wrote:

Hi, Mr. Thurston,

I have been working on retrieving the relevant documents to try and figure out how it happened that the final DEP order said in the body of the permit (on page 6) that the applicant was required to submit final evidence of financial capacity “prior to the start of construction, and in the Conclusion (paragraph A, page 47) and the condition (Special Condition 4, page 48) said “prior to the start of operation….” 

While construction did begin prior to the provision of financial capacity, it was ceased once the DEP notified  the applicant of the discrepancy and was not resumed until the applicant had fulfilled that condition to the DEP’s satisfaction. As you recall, this conflict in the language was resolved during the administrative appeal to the Board and the language of the Board Order consistently required the provision of final financial capacity prior to the start of construction.

I have spoken with Juliet Browne, the attorney for the applicant, and confirmed that Verrill Dana did not submit comments on the draft Departmental order. I am now checking to see whether the consultants for the applicant submitted any comments on the draft order on this issue.

I will get back to you on this shortly.

With regard to your question about the approval of provisionally adopted amendments to the Noise rules (Chapter 375§10) by the Attorney General’s Office, this office approved the provisional adoption on November 3, 2011. The final version of the rule, assuming one is adopted, will also be sent to our office for review and approval.

If you have further questions, feel free to call me at 626-8578.

Peggy Bensinger

--------------------------------------------------------------------------------------

From: Steve Thurston [mailto:thurston.steve@gmail.com]

Sent: Wednesday, January 11, 2012 11:54 AM

To: Bensinger, Peggy

Subject: Re: Record Hill Wind permitting issues

I have been too patient.  It is time to respond.

-------------------------------------------------------------------------------------

On Sat, Dec 3, 2011 at 10:40 PM, Steve Thurston <thurston.steve@gmail.com> wrote:

Peggy,

May I remind you about your email to me on October 18th where you said you would get back to me?

Steve

-------------------------------------------------------------------------------------

On Tue, Nov 8, 2011 at 8:50 PM, Steve Thurston <thurston.steve@gmail.com> wrote:

Peggy,

I would appreciate an update on this matter. 

Thanks,

Steve

--------------------------------------------------------------------------------------

On Tue, Oct 18, 2011 at 11:03 AM, Bensinger, Peggy <Peggy.Bensinger@maine.gov> wrote:

Hi, Steve.  I will get back to you on this.  I’m in the middle of two matters right now and will be done with them in a day or two.

I appreciate your patience.

--------------------------------------------------------------------------------------

From: Steve Thurston [mailto:thurston.steve@gmail.com]

Sent: Sunday, October 09, 2011 9:49 PM

To: Bensinger, Peggy

Subject: Re: Record Hill Wind permitting issues

Peggy,

I would appreciate some kind of a response to this. 

Thanks,

Steve

--------------------------------------------------------------------------------------

On Tue, Sep 27, 2011 at 10:54 AM, Steve Thurston <thurston.steve@gmail.com> wrote:

Peggy,

As we discussed at the BEP meeting I believe the final permit for the Record Hill Wind project contains language that is inconsistent with the law, and unsupported by anything in the record.  The appeals did not address these issues in any meaningful way. 

The draft permit contained the standard condition that financial capacity must be demonstrated prior to construction.  In the final permit, issued 5 days later, the word "construction" was replaced with "operation".  (The final permit contained many changes to the language in the draft that benefited the developer,  such as "road ways will be revegetated" became "roadways will be allowed to revegetate", meaning instead of topsoil, seed and mulch the developer would do nothing and over time weeds would grow on the gravel road.)   The record is empty about who requested any of these changes. 

When Record Hill Wind began construction immediately after the final permit was issued I emailed DEP project co-ordinator Beth Callahan to inquire about updated financial capacity information.  In response she referred me to the condition that substituted "operation" for "construction".  Obviously she was aware of the condition, relied on it in her response to me, and did not at the time believe there was a drafting error in the final permit.  If she had made the "drafting error" wouldn't she have recognized it rather than point me to it as a legitimate condition? 

She also said she would ask the applicant for updated information.  Rob Gardiner responded by email (Subject: Thurston) that they did not have financing in place but would have by the time the project became operational, in accordance with the permit condition.  Something went on behind the scenes because Callahan responded to Gardiner that the condition Gardiner referred to was a "drafting and editing error" and that DEP needed updated financial capacity information.  Gardiner responded with the "Northern Trust" letter that Rufus challenged because it specifically said there was no commitment to finance the project.  The project was voluntarily stopped by stipulated agreement before the BEP ruled on whether or not the "Northern Trust" letter met the requirements of the law.

This has been a matter of concern because there has never been a rational explanation of how these changes from the draft to the final permit were created.  In particular the change of one word from "construction" to "operation" essentially removed any burden on the applicant to demonstrate financing until the project became operational which is a serious breach of the financial capacity section of the DEP rules.

It is a serious matter because the applicant relied on the changed language of the permit condition to begin construction,  which should not have happened since the condition was in conflict with the site law.   I think your office should investigate all of this and determine why and how these changes were made.  The emails I mentioned are all part of the record.   I have not asked Rufus or any other attorney to represent me in this issue, so I see no reason why we cannot communicate directly.  

Thanks,

Steve Thurston

 

 

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Comment by Donna Amrita Davidge on November 12, 2014 at 7:03am
We know first wind and angus king and his cronies are liars and sadly do anything in this conspiracy to get their way- as Brad said at the summit last Saturday in Freeport the facts are there- but the media spin makes us seem like the crazy ones- how sad is that-
Comment by Donna Amrita Davidge on September 15, 2012 at 9:36pm

yes thank you Steve

Comment by Harrison Roper on September 13, 2012 at 9:03am

Brad, You've got it right.  I have a suggestion: let's require 100% pre-construction and  decommissioning "financng" in the form of gold bars locked up in a vault.  That will force these finance wizards to put up real value, not the smoke and mirrors evidenced in Steve Thurston's exchange of correspondence with the DEP.  Thank you, Steve, for running this down and reportgin it so well.

Harry Roper  Houlton/Danforth

Comment by Brad Blake on September 12, 2012 at 8:30am

We common folk get more scrutiny regarding our personal finacial capacity when applying for a car loan than these politically well connected thieves get!  But they have an LLC structure that allows them to walk away from financial failure after reaping huge up front taxpayer-funded benefits.  Then the taxpayer gets to pick up the default.  It is truly criminal.

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Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT (excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010  http://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?"  http://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” http://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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