The King wind saga: When Record Hill hit Capitol Hill 

It was a wind project that received federal funding based on the use of new technology to prevent turbulence, but the development certainly stirred up a political windstorm.

Eight years ago, then-former-governor, now U.S. Senator Angus King partnered with Rob Gardiner, the former president of the Maine Public Broadcasting Network, to form Independence Wind. What would follow would be a wind development that attracted fierce criticism from local critics as well as from a Republican committee and ultimately was built after King no longer was an owner.

Gordon R. Smith, attorney with Verrill Dana, a Portland law firm, helped King and Gardiner navigate the permitting process for Record Hill, the duo’s first project.

Independence Wind partnered with the new company, Record Hill Wind, as well as with Wagner Forest Management and other investors, to build wind turbines in Oxford County along the ridgelines of Record Hill, Flathead Mountain and Partridge Peak. King and Gardiner held a combined 10 percent share of Record Hill Wind, but both soon became lightning rods for criticism.

Steve Thurston, an opponent of wind power, sparred with the state over Record Hill back in 2011.

On Sept. 27, 2011, Thurston wrote to Assistant Attorney General Peggy Bensinger, who represented the Maine Department of Environmental Protection, challenging the way Record Hill was permitted.

“The draft permit contained the standard condition that financial capacity must be demonstrated prior to construction,” Thurston wrote. “In the final permit, issued 5 days later, the word ‘construction’ was replaced with ‘operation.’ … In my opinion RHW (Record Hill Wind) 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?”

Questions of influence would dog King. Although he was out of the governor’s office at the time and not yet a U.S. Senator, critics said he received favorable treatment from the Obama administration.

The greatest attention to Record Hill stemmed from a March 20, 2012 congressional report, which centered on Solyndra, the controversial solar company which received $535 million from the federal government in September 2009 and ultimately collapsed.

Congressional investigators took aim at not just Solyndra but a host of renewable energy projects, including Record Hill.

“After conducting a substantial review of the Department of Energy’s (DOE) loan guarantee program, it is clear that the significant losses absorbed by taxpayers as a result of Solyndra’s collapse is just the beginning,” the report read. “The investigation conducted by the House Committee on Oversight and Government Reform has uncovered numerous examples of dysfunction, negligence and mismanagement by DOE officials, raising troubling questions about the leadership at DOE and how it has administered its loan guarantee programs.”

By September 2011, the DOE had approved 27 projects totaling more than $14.5 billion in guaranteed loans the report noted. “Inexplicably, DOE management has turned a blind eye to the risks that have been glaringly apparent since the inception of the program,” the report continued.

One of those risks, according to the congressional report, involved the $102 million loan guarantee to Record Hill. Record Hill Wind received a loan guarantee with a BB+ rating, which was considered “speculative” and indicated “an elevated vulnerability to default risk,” the report stated.

Looking at federally backed renewable energy projects, the Republican-led committee argued that “in four cases, the borrower undercapitalized the project and refused to extend a parental guarantee. As a result, the taxpayer takes on greater risk, despite the borrowers’ ability to increase funding to the project. The most egregious use of this technique was in the case of Record Hill, LLC, where AAA rated Yale University created a project with a rating of only BB+. The idea that Yale would take a substantial taxpayer subsidy and still seek to protect its remaining assets from the liabilities of Record Hill reflects Yale’s view of the Record Hill project and its disregard for taxpayers.”

The report also concluded that the DOE knew that the Record Hill project did not use significantly innovative technology. “Much like First Solar’s ‘innovative’ projects, the Record Hill Wind project attempted to categorize minor modifications to existing commercial technology as ‘innovativeness.’ DOE eventually agreed with Record Hill Wind’s questionable reasoning. … After scheming about how to get the two applications through OMB (Office of Management and Budget) without problems, DOE allowed the Record Hill Wind project to continue as an ‘innovative’ project. DOE would eventually finalize a $102 million loan guarantee (guaranteed 100 percent by the federal government) in August 2011.”

According to the DOE, the loan guarantee was approved based on the company’s use of new technology to prevent turbulence.

Also, the project had its defenders. At the request of Gardiner, U.S. Rep. Chellie Pingree, D-Maine, wrote a letter of support for the application. King’s only involvement in the application process, he told media at the time, was to attend a meeting with investors and a DOE official to provide information about the permitting process.

On the Verrill Dana law firm website (http://www.verrilldana.com), Smith wrote that Verrill Dana obtained favorable rulings in appeals of Record Hill Wind’s permits issued by the Maine DEP. These legal wins included a positive finding by the Maine DEP on March 18, 2010, and a denial of appeal by the Maine Supreme Judicial Court on March 24, 2011.

As to King’s involvement with Record Hill, Smith said, “He was a private citizen at the time, he was just working as a developer, he’s been involved in energy development and energy policy for many years.”

The Portland Press Herald reported that after declaring his Senate candidacy, “King transferred his stake in Independence Wind to his business partner, Rob Gardiner.”

King transferred his interest in Independence Wind to Gardiner for $1, leaving behind a $338,000 investment in Highland Wind, another wind project in western Maine, the PPH reported. Taking into account all expenses and income, King earned just over $200,000 from Independence Wind over five years, news reports indicated.

(A call to Gardiner via a number on an Independence Wind website went to an answering machine which gave a number for the Angus King senatorial campaign office.)

The Phoenix contacted King’s Senate office, asking about what he learned from the experience. Spokesman Scott Ogden responded: “Senator King continues to believe that support for the development of a diverse portfolio of clean renewable energy sources – from biomass to solar to hydro to wind to energy conservation and beyond – should be central to our nation’s energy policies. Renewable energy sources will not only strengthen our economy by supporting the creation of high-skilled jobs here in the United States, but they will also reduce the amount of money Americans send overseas to pay for expensive foreign oil and have a substantial impact on long-term environmental sustainability. That’s why Senator King remains committed to advancing home-grown, innovative, clean, renewable energy that will help foster a brighter, more promising energy future for people in Maine and across the nation.”

King’s energy-related bills, Ogden said, include: The Energy Storage Promotion and Deployment Act, which sought to establish an energy storage portfolio standard for electric utility companies; the Marine and Hydrokinetic Renewable Energy Act, which sought to encourage the research and development of renewable energy generated through waves, currents, ocean tides, and free-flowing water in lakes and rivers; the Small HyDRO Act of 2015, which sought to help streamline the licensing process for hydroelectric dams; the Working Forests for Clean Energy Act, which aimed to provide a straightforward standard to account for emissions from biomass sources; the Biomass Thermal Utilization Act, which aimed to create incentives for the development of biomass; and the Free Market Energy Act of 2015, which sought to help foster individual energy independence.

As a footnote: Silicon Valley Business Journal reported last Thursday, “Palo Alto-based Tesla this month signed a lease to occupy a capacious manufacturing building a few minutes away from its existing car plant in Fremont, the company confirmed to the Business Journal on Wednesday. At more than 500,000 square feet, the deal for the Page Technology Center at 901 Page Ave. represents Tesla’s largest growth spurt in Silicon Valley since buying the former NUMMI plant in 2010. And it also closes the book on a chapter in Silicon Valley tech history, absorbing the last remaining vacancy related to the implosion of solar panel-maker Solyndra in 2011” (http://www.bizjournals.com/sanjose/news).