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Statement of J. Steven Gardner, PE
President and CEO
ECSI, LLC
Before the Committee on Natural Resources
Subcommittee on Energy and Mineral Resources
U.S. House of Representatives
November 15, 2011
My name is Steve Gardner. I am President and CEO of ECSI, LLC, an engineering consulting group based
in Lexington, Kentucky. ECSI’s core business is mining, in particular coal mining in the United States.
ECSI was subcontracted by Polu Kai Services (PKS) as subject matter experts to assist with the EIS for the
Stream Protection Rule.
Approximately 2 years ago, I received a call from someone at OSM who asked if ECSI would be
interested in being involved in drafting the Stream Protection Rule EIS that was going to be contracted.
He stated that the reason ECSI was being approached as a recommended subcontractor was our
reputation with both regulatory and regulated community. OSM intended the process to be a
minority/small business set aside contract so that they could issue quickly. OSM was recommending
subcontractor teams to be ECSI, a national geotechnical firm, and Morgan Worldwide (recognized for
their work in the environmental community).
In conversations with OSM personnel, it was our understanding that OSM had a preferred, minority
business contractor who would contact ECSI. In due course, we received a call from PKS who was
responding to an RFP issued by OSM to perform an Environmental Impact Statement on the Proposed
Stream Protection Rule. PKS advised us that they were assembling a team of consultants to perform this
complicated, nationwide programmatic EIS and that they were looking at our firm to be the mining
experts on the team. They were also retaining MACTEC, a large national consulting group to perform
geotechnical and environmental aspects, Morgan Worldwide to contribute their mining and
environmental expertise to complement and balance our involvement, and Plexus Scientific for their
NEPA experience, project management, logistics and final EIS drafting. ECSI assisted PKS in preparing
the proposal and budget, and eventually a contract was issued to PKS. We assembled a team of experts
in mining. These included nationally recognized academic experts in mining, hydrology, and reclamation
(some of whom are experts that OSM has utilized on a routine basis).
The EIS project kicked off in June 2010 with a meeting in DC between PKS, the subcontractors and OSM’s
team. During that meeting, we learned that OSM had two teams assembled. One was a rule writing
team and the other an EIS team. An immediate issue that came up was the short timeframe within
which OSM wanted the EIS prepared. PKS and the subcontractors voiced their collective concern that
the accelerated timeframe was overly ambitious. OSM team members agreed and advised that there
would likely be time extensions granted and budget increases to adequately prepare an EIS of this magnitude. The original date for delivery of the Draft EIS was February 2, 2011. The assignments were
allocated and ECSI was charged with reviewing the concepts of the proposed rule and predict
production impacts nationwide. A copy of the draft rule dated May 25, 2010 was provided to the PKS
team at that time.
There were two key issues that the PKS team brought to OSM’s attention during that kickoff meeting,
pertinent to the EIS and NEPA process:
• OSM did not believe that public meetings were necessary, and that the Notice of Intent (NOI)
and request for public input within the NOI, as published in the Federal Register, was adequate.
Virtually everyone on the PKS team agreed that the NEPA process called for public meetings to
be held so that affected communities could comment. The PKS team convinced OSM of the
necessity of public meetings, which added approximately 4 months to the process. Public
meetings (termed “open houses”) were held across the country. These meetings were poster
sessions where the various alternatives for the rule were outlined and the public was given the
opportunity to submit written comments or oral statements.

• It was unclear to the PKS team if the proposed rule applied to underground coal mining
methods. That question was repeatedly posed to OSM, and several months into the project at a
team meeting in Atlanta, the PKS team was informed that the decision had been made that the
proposed rule would be applied to underground mining. This took both the PKS team and many
of the OSM personnel present by surprise. The PKS team received a letter dated October 7,
2010 from OSM stating that it was disingenuous to suggest that the rule did not apply to
underground mining. The PKS team felt that the last minute inclusion of underground mining
impacts was a major change in scope and schedule to the EIS, and requested additional time and
budget to properly evaluate the impacts. OSM denied this request and insisted that
underground mining had been part of the original scope of work all along and that the
contractors were well aware of this. This disagreement is well documented in the record.
After this initial 4 month delay for scoping meetings, OSM began to embed its own engineering and
science personnel in the various contractor EIS working groups, ostensibly to speed up the process.
To determine impacts on coal production under the various Alternatives, including the proposed rule
(termed the “Preferred Alternative”), ECSI planned an analysis of production impacts utilizing “typical
mine” models of all mining methods from each coal producing region, and applying Alternatives to those
mines to determine production impacts. However, that effort proved to be impossible within the
prescribed schedule and budget. As an alternative to the “typical mine” analysis, an Expert Elicitation
methodology was proposed and approved by OSM. That methodology and the major assumptions are
described in detail within the Draft EIS at Section 4.0.6.1, as submitted by PKS on February 23, 2011. A
subgroup was formed to perform the expert elicitation production impact analysis, which included
members of ECSI, Morgan Worldwide, PKS, and OSM personnel. As an additional validation of the
elicitation process, ECSI proposed that selected coal companies from each coal region be surveyed on what they believed the production impacts would be under each Alternative. OSM originally approved
of this approach, but hours prior to sending the survey out, OSM withdrew its approval.
Coal production impacts under each Alternative were forecast and the results were distributed to the
rest of the PKS team, including the team members performing economic analyses. The production
impact numbers were then utilized to predict job impacts nationwide.
A joint PKS and OSM team meeting was held in February in OSM’s offices in DC. During this meeting,
OSM “suggested” that the PKS team revisit the production impacts and associated job loss numbers, and
with different assumptions that would then change the final outcome to show less of an impact. The EIS
team unanimously told OSM that it was not appropriate to change assumptions just to get a different
answer. The team was also very concerned with the specific instruction from OSM to make the
assumption that the 2008 Stream Buffer Zone (SBZ) Rule was in effect and being enforced across the
U.S., which was not true. No state with an approved SMCRA program had promulgated the 2008 SBZ
Rule, especially since the rule itself was subject to the litigation which brought about the SPR. If the PKS
team assumed that the 2008 SBZ was in effect as part of the baseline existing environment, the nexus
from the SBZ to the SPR would show less production, and therefore less job loss impact. The PKS team
unanimously refused to use a “fabricated” baseline scenario to soften the production loss numbers.
In order to meet the revised February 23, 2011, deadline for submission of a Preliminary Draft EIS, the
PKS team inserted “placeholders” in the narrative of the document and a general disclaimer into the
document to succinctly describe the situation with respect to OSM’s change in instructions to the PKS
team, assumptions and baseline data:
“[NOTE- As a direct result of recent instructions from OSM, the production impact analysis with a
baseline thermal energy balance adjustment using the 2008 EIA production figures will be changed to a
production/benefits analysis using the 2010 EIA dynamic production forecast as the baseline without a
static thermal balance component. Section 4.06, Methodology, will be revised to reflect the new OSMapproved methodology. In addition, OSM has indicated that:
• the SPR implementation timeline should be shortened from the previously approved 12 years to
8½ years;
• that Chapter 2 may be further modified (Alternative 5 as previously approved may not reflect the
current rule provisions and other Alternatives may have to be modified to reflect these changes);
and
• that the production impacts/benefits should be tested by applying the alternative analysis to
typical mines for each Region.
These new instructions will likely require substantial changes to Chapter 4, as well as changes to Chapter
2.]”
It is important to note that Chapter 2 of the EIS is the description of all Alternatives, including the
“Preferred Alternative,” upon which the entire EIS impacts analysis is based.Shortly after the February meeting with OSM in DC, the PKS team received a notice that the contract
with PKS was not going to be renewed.
I had the opportunity to review the testimony of Joseph G. Pizarchik, Director of OSM during the
November 4, 2011, Subcommittee on Energy and Mineral Resources Hearing and would like to address
comments made during the hearing:
1.Mr. Pizarchik made the statement that the job loss numbers were “placeholders” and were
“fabricated.” As I have previously stated, the EIS team, which included OSM personnel,
performed the analysis to the best of its ability given the deadline and budget. When OSM did
not like the result of the analysis, OSM asked that the team change the baseline conditions
and use alternative assumptions to alter the coal production and job loss numbers.
2.Plagiarism was alleged against the PKS team in drafting the EIS. Under NEPA, it is preferred that
the drafters of an EIS utilize as much existing information as possible and not “reinvent the
wheel.” While I cannot speak for the entire PKS team, ECSI utilized text from previous EIS
documents, as directed by OSM, where appropriate and cited those documents in its
references. In fact, ECSI posed the question to OSM personnel of whether we should simply
cite previous EIS documents or if we should put the actual text in the SPR EIS. ECSI was
directed by OSM to put the text in the SPR EIS rather than merely cite to another document
for ease of the reader.
3.Despite Mr. Pizarchik’s claim that OSM was at “arms length” during the process, OSM personnel
were intimately involved in the EIS throughout.
Thank you for the opportunity to appear before the Committee today to testify about our involvement
with the Stream Protection Rule EIS.

http://naturalresources.house.gov/Uploa ... .18.11.pdf

Posted: Nov 19, 2011 7:54 PM EST
Updated: Nov 19, 2011 7:55 PM EST
By Pam Kasey - email
Government subcontractors testified in a Nov. 18 House hearing that the Office of Surface Mining Reclamation and Enforcement pressed its contractor for a job impacts analysis showing fewer coal mining jobs lost due to a draft regulation.

The testimony reiterated reports that appeared in The Wall Street Journal and other media outlets in March.

"OSM suggested that the (contractor's) team revisit the production impacts and associated job loss numbers, and with different assumptions that would change the final outcome to show less of an impact," said J. Steven Gardner, president of subcontractor ECSI, at the hearing.

OSM disagreed after the hearing in a brief written statement. Office spokesman Christopher Holmes said the subcontractor had been involved in an "early working draft."

The subject of the hearing was H.R. 3409, the Coal Miner Employment and Domestic Energy Infrastructure Protection Act, introduced Nov. 14 by Rep. Bill Johnson, R-Ohio. H.R. 3409 would prohibit the Secretary of the Interior from approving any new rules or regulations before Dec. 31, 2013 that could adversely impact employment in coal mines; cause a reduction in federal, state or tribal revenue from coal mining; or reduce the nation's ability to produce coal.

The OSM regulation under discussion at the hearing was a draft Environmental Impact Statement, or EIS, for a Stream Protection Rule that will replace the Bush-era Stream Buffer Zone rule.

As reported in March, the contractors who were hired to prepare the draft EIS, Polu Kai Services of Falls Church, Va., found that it would cost 7,000 coal-industry jobs, a preliminary calculation that became public in January.

OSM asked Polu Kai in February to change its analysis, according to Gardner's testimony. His company, ECSI, was a subcontractor to Polu Kai.

The disagreement, Gardner said, related to the proper baseline for calculating job loss.

OSM wanted the contractors to work from a scenario in which the Bush administration's Stream Buffer Zone rule was in effect everywhere, he said — essentially showing the difference between the existing regulation, if enforced, and the proposed regulation.

But because it has been challenged in court, the Stream Buffer Zone rule is not enforced everywhere. The consultants thought it was appropriate to calculate from the actual situation, which showed greater job loss.

OSM dismissed Polu Kai in March.

ECSI Vice President Joe Zaluski also offered testimony. No representative of the contractor itself testified.

OSM wants its process to be judged by the documents it eventually issues.

"OSM has not completed an EIS, nor has it offered draft rule language, so it is premature and misleading to characterize the work under way before it is properly offered for comment," OSM's Holmes said in the office's statement.

"When OSM completes the economic analysis now in preparation, it will be offered with all assumptions and calculations, including the analysis that supports OSM's recommendations," he said. "Because it remains a priority to develop our coal reserves while protecting the health of our waterways and the people that depend on them, OSM is committed to the development of a proposed rule and draft EIS, with an anticipated publication date of Spring 2012."

http://www.statejournal.com/story/16083 ... t-rehashed

Name:Pizarchik, Joseph
Current position: Director
One of President Obama’s most controversial nominations has been that of Joseph Pizarchik to be the Director of the Office of Surface Mining Reclamation and Enforcement (OSM), a bureau within the US Department of the Interior (DOI) charged with the competing tasks of promoting coal production in the US while also trying to protect and restore the land that has been ravaged by surface, or strip, mining. For the most part, OSM has been successful in implementing the first task and failed miserably at the second. The agency has long been viewed as a favored ally of the coal industry, much to the frustration of environmentalists and local activists in states like Kentucky and West Virginia. These activists, including the mainstream Sierra Club, sharply criticized the Pizarchik nomination, both because they wanted someone who had been an active critic of such practices as mountaintop removal mining and coal ash storage, and because they contend that Pizarchik has either evaded opining on mountaintop removal or denied the science regarding coal ash storage. Among Pennsylvania environmentalists, he is known as “Coal Ash Joe.” Pizarchik’s nomination was approved by the Senate November 6, 2009.

Pizarchik grew up on a farm in Southwestern Pennsylvania. He earned a B.A. in pre-law from Pennsylvania State University in 1979 and a law degree from the University of Arkansas at Little Rock School of Law in 1983. After completing law school and passing the Pennsylvania Bar, Pizarchik worked as a claims counsel and Workers’ Compensation subrogation supervisor for the Rockwood Insurance Co. from 1984 to 1985, and then as an associate at the York, Pennsylvania, law firm of Hoffmeyer and Semmelman from 1985 to 1986.

Pizarchik began his career in public service in 1986 as assistant counsel in the Office of Chief Counsel for the Pennsylvania Department of Transportation, where he served until 1991. In that year, he began his career at the Pennsylvania Department of Environmental Protection, serving as Assistant Director, Bureau of Regulatory Counsel, where he counseled the Pennsylvania mining program for 11 years. He was one of the authors of Pennsylvania’s Environmental Good Samaritan Act, which helps protect landowners from liability when they voluntarily clean up abandoned mines and oil and gas wells. Pizarchik helped develop Pennsylvania’s program for volunteers to clean up abandoned coal refuse sites and helped develop Pennsylvania’s program for mine operators to establish trust funds as a means of meeting their financial obligation to ensure funds are available to perpetually treat the discharges caused by their mining.

On October 4, 2002, Pizarchik took over as director of the Bureau of Mining and Reclamation within Pennsylvania's Department of Environmental Protection. In this position, he supported the practice of dumping waste rock into valley fills, and using abandoned mines to store coal-ash waste, a practice studies have shown to be environmentally harmful.

http://www.allgov.com/Official/Pizarchik_Joseph

Mining the Data:
Pizarchik’s Decisions Have Been Contrary to Fact, Overturned by Administrative Law
Judges, and Detrimental to Pennsylvania
I. Contamination of Groundwater from Placement of Coal Ash in Mines
Joseph Pizarchik, Director of the Bureau of Mining and Reclamation in the Pennsylvania
Department of Environmental Protection (PADEP) has been nominated to be Director of
the U.S. Office of Surface Mining Reclamation and Enforcement (OSM). Mr. Pizarchik
has championed a program to dump coal ash into Pennsylvania coal mines as “a
beneficial use” despite the fact that it waives safeguards such as liners, leachate
collection, and cleanup standards that scientists believe are necessary to protect
groundwater and surface water from contamination by the ash. At his Senate
confirmation hearing, Mr. Pizarchik categorically denied that this practice endangers
water supplies, stating: “we have not had any evidence of pollution of groundwater
caused by the use of coal ash at these mine sites.”

In fact a three-year study, Impacts on Water Quality from Placement of Coal Combustion
Waste in Pennsylvania Coal Mines (2007), researchers and groundwater scientists for the
Clean Air Task Force concluded that PADEP’s monitoring data indicates the ash is
contaminating nearby water supplies in ten of fifteen mines studied with toxic metals and
other contaminants exceeding safe standards often by orders of magnitude. Below are
examples of increases in concentrations of toxic ash metals repeatedly documented in
waters draining ash sites in Pennsylvania Mines in the 2007 Report:
Cadmium at MW-1, Ernest Mine Permit # 32950201
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
11/21/1994
11/21/1995
11/21/1996
11/21/1997
11/21/1998
11/21/1999
11/21/2000
11/21/2001
11/21/2002
11/21/2003
11/21/2004
11/21/2005
11/21/2006
11/21/2007
mg/L
Before Ash
After Ash
Linear (Before Ash)
Linear (After Ash)2
Pizarchik claims other samples at this monitoring point contained lower levels of
cadmium, but those lower concentrations are still far beyond the drinking water standard
and far higher than the concentrations of cadmium measured at this monitoring point
before ash was dumped at the site in western Pennsylvania.
Lead at the Gilberton Shaft, BD Mining Permit #54850202
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
11/27/1985
11/27/1986
11/27/1987
11/27/1988
11/27/1989
11/27/1990
11/27/1991
11/27/1992
11/27/1993
11/27/1994
11/27/1995
11/27/1996
11/27/1997
11/27/1998
11/27/1999
11/27/2000
11/27/2001
11/27/2002
11/27/2003
11/27/2004
11/27/2005
mg/L
MP006
A two year investigation of metals contamination at the BD Mining ash site has been
underway by USEPA’s Region III Superfund staff. Pizarchik states that higher lead
concentrations have occurred at other monitoring points upgradient of the ash, but those
monitoring points (MP007 and MP008) are actually downgradient of the ash and much
closer to it than this monitoring point (MP006). Their data reinforces concern that ash is
contaminating the water at this site in eastern Pennsylvania.
II. Failure to Monitor Migration of Pollutants Off-Site
Under Pizarchik, PADEP’s ash permits have not monitored waters draining ash sites
beyond mine boundaries. Federal and state administrative law judges have ruled this
illegal under SMCRA. In Robert Gadinski, 177 I.B.L.A. 373 (2009), the U.S.
Department of Interior’s Board of Land Appeals (IBLA) agreed with a complaint by a
former PADEP groundwater scientist that public drinking water wells used in Tremont,
PA are potentially threatened by PADEP’s failure to sufficiently monitor groundwater
flows from a nearby ash minefill. The IBLA remanded OSM’s dismissal of the
complaint, finding: 3
PADEP’s report, which, in large measure, provides the basis for the
Regional Director’s decision, lacks basic information that is indispensable
to an analysis of a surface coal mining site, beginning with the terms of
the permit itself. (pgs. 394–395)
Similarly, in Citizen Advocates United to Safeguard the Environment, Inc. v. PADEP,
EHB Docket No. 2006-005-L (consolidated with 2005-329-L) (issued Nov. 2, 2007), a
state administrative law judge found a monitoring system approved for a mine site in
Hazelton, PA that would “beneficially use” 10 million cubic yards of a river dredge-coal
ash mixture, was not capable of detecting offsite groundwater contamination:
If the Project results in groundwater pollution, no one will know it. The
monitoring plan merely creates the illusion of protection, which is
arguably worse than no monitoring at all. This is truly unacceptable, and
the Department acted unreasonably and in violation of the law in
concluding otherwise. (pg. 61)
A panel of scientists and legal experts from the National Research Council reached a
consensus that the safeguards enforced by PADEP and other states for ash minefilling
were not adequate and that a national regulation was needed to set minimum enforceable
standards for all states to follow (see Managing Coal Combustion Residues in Mines,
NRC, 2006). In June, 2009, Pizarchik proposed a regulation (Chapter 290 to
Pennsylvania’s residual waste regulations) that includes loopholes to allow PADEP to
continue ignoring key recommendations of the NRC to isolate ash from water in mines
and monitor it sufficiently.

Except the charge is that they were pressured to lie in the reports you are sourcing, so the very credibility of what you are posting is in question.

Except the charge is that they were pressured to lie in the reports you are sourcing, so the very credibility of what you are posting is in question.

Statement of Joseph J. Zaluski
Executive Vice-President
ECSI, LLC
Before the Committee on Natural Resources
Subcommittee on Energy and Mineral Resources
U.S. House of Representatives
November 15, 2011
My name is Joe Zaluski, I am Executive Vice-President of ECSI, LLC, an engineering consulting group
based in Lexington, Kentucky. ECSI was subcontracted by Polu Kai Services (“PKS”) as a subject matter
experts to assist with the EIS for the Stream Protection Rule.
In preparation for addressing you today, I watched the entirety of recent testimony by Director Pizarchik
before this Committee. I would like to comment on several statements made by the Director.
We have submitted materials to the Committee for your review and those materials are rather
voluminous. I do not know if they were also supplied to you by the Office of Surface Mining. They have
been supplied to you today as a result of this Congressional Inquiry.
First, as to the credentials of the subject matter experts, I respectfully disagree with any implication that
the team was not well qualified. If you wish to elaborate upon that during the question and answer
period, I will be glad to do so. However, as to ECSI, I can tell you that the President of the company,
Steve Gardner, has spent nearly 30 years in the mining consulting business in virtually every aspect. He
is a Professional Engineer and has been involved in various state and national legislative efforts
concerning mining, as well as the every day permitting and operational aspects of all types of mining
operations. He is extraordinarily active in national organizations and has been recognized by them for
his achievements.
Without taking up too much time, I can advise that I became involved in SMCRA before there was a
SMCRA. As an attorney, I first worked for the Commonwealth of Kentucky while SMCRA was being
lobbied in Congress. I began my career involvement with the regulation of surface and underground
mining at that time and have continued, literally, ever since. I helped draft part of SMCRA, I served on
the first regulation drafting committee with Walter Heine who became the first Director of OSM in 1978;
and participated in the adoption and drafting of the first SMCRA based regulations. I helped in the
drafting of Kentucky’s program, both at the regulatory and statutory level. I have been involved with
mining in virtually every aspect, not just with rule making, but from the permitting, problem solving and
litigation perspective. I have been involved at the local and national levels and believe that I am well
respected by counsel and other professionals on virtually every side of the mining issues that have
arisen over the years. I served as one of the first chairmen of the Natural Resources Section of the
Kentucky Bar Association; and have served as President of the Energy and Mineral Law Foundation, a
nationwide nonprofit academic and continued education organization celebrating its 30
th
year in
existence. I have published in this area and know the subject matter very well. I hope that is why I was
asked to participate in this process. Contrary to the Director’s intimation that the subcontractors were inept, I believe that the train wreck of
an attempt at an EIS was caused by OSM’s constant change in direction, instructions, assumptions and
restrictions. All that is well documented in the materials we have supplied to the Committee. In fact, an
email that will give you some idea as to the relationship between OSM and the contractors is dated
December 15, 2010.
We were developing impacts to various types of mining across the nation and believed that our contract
specifically required us to solicit industry input on the impact of various alternatives on various types of
mining operations across the country. We had packaged up material and had lined up several
companies to review our work. At the last moment before sending the material out, we contacted OSM
to advise them that we were about to undertake that step. We received an email back through Polu Kai
that was written in red and stated “under no circumstance is the internal workings of this team and/or
the rule team to be released to outside parties. See suggestions below.” The actual email from OSM to
Polu Kai stated as follows:
As per my meeting with OSM Director Joe Pizarchik, no part of the SPR rule text or EIS are to be sent to
any parties for the purposes of the EIS preparation at any time. He indicated that this direction is nonnegotiable, and that violations would have extreme consequences.
His alternative suggestions for how to proceed are two-fold:
1. Contractor team members working with OSM staff should develop our “best estimates” based
on sound science and engineering, and provide those as a part of the draft EIS. He and I chatted
about the possibility of error, but agreed that the comment period for the draft EIS will give the
opportunity for all sides to provide us with additional information. Additionally, he indicated
that we should be able to explain exactly how the numbers and assumptions for impacts to coal
production were derived, including being able to explicitly list all factors used by the consultants
to generate their estimates.
2. The Director suggested that we develop an internal team of mining engineers and other
appropriate experts from OSM and other federal agencies to “peer review” the methodology
used by the consultants. His suggestion was to include mining engineers in OSM regional and
field offices, USGS, BLM and other DOI and non-DOI federal agencies.
My suggestion is that we have a call tomorrow to strategize on how best to proceed.
I think that email really sums up the relationship between OSM and the EIS team. The contractors were
threatened with “extreme consequences;” and in the alternative suggestions from the Director makes it
very clear that OSM understood that “best estimates” would be used; and, in the second paragraph,
that there was a very close working relationship between OSM and the EIS team. This was certainly not
the impression that the Director left when he testified before you.
Having been involved in the SMCRA at the national level and the rulemaking at that level, as well as at
the state level, I and others stated to OSM at the kickoff meeting for the EIS that the schedule for
accomplishing this task was absurdly short. A reasonable schedule for this process, which should have
involved all regulatory authorities, state and national, should easily have been set for three years. Contrary to what the Director stated, OSM was intimately involved throughout this process with not
only regularly scheduled face-to-face meetings and telephone conferences, but constant phone calls and
emails - most with conflicting instructions. As you will see from the documents supplied to the
Committee, OSM embedded dozens of its employees into the EIS Team. We met with them constantly.
They approved methodologies, especially with regard to production shifts. They supplied the team with
assumptions for financial models. Examples of the assumptions would include which production
numbers to use nationwide and requirement that as we determined production shifts that we maintain
a national thermal balance. These instructions came directly from OSM.
The assumptions that we were directed to take by OSM, contrary to the Director’s testimony, are set
forth in the exhibits to the February 15, 2011, letter tendered to the Committee. In addition to the
February 15, letter I just referred to, there is a second letter dated February 23, 2010, to the OSM
contracting officer responsible for the implementation of the consulting contract with PKS and
subsequently ECSI, LLC. I direct your attention in particular to the tab entitled “PKS Detailed Response
to OSM Cure Notice,” pages 1-20. Every statement made in that section is well documented by emails,
letters and other exhibits attached to that same letter.
I would direct attention to the following:
Attachment 1 – OSM, in December 20, 2010, confirms the methodology proposed by the contractors for
determining production shifts, if any.
Attachment 2 – as late as February 6, 2011 the consultants are still attempting to resolve with OSM the
baseline for calculating production shifts. This was approximately 2 days before OSM issued its Cure
Notice.
Attachment 4 – is also worth noting that OSM at this time had reversed its position that the national
thermal balance had to be maintained during implementation. These changes were very significant as
far as their impact on the work of the EIS team.
Attachment 5 – Bill Winters of OSM on February 18, 2011, changed the implementation timeline from 8
½ years to 12 years. This would be another significant change that would likely affect production shift
and job loss.
Let me conclude my remarks by again reflecting back on the development the initial SMCRA regulations
and what is known as the permanent program. The process took years to accomplish with the input
from states that had mining within their borders. A great deal of time and expertise went into that
effort. The Stream Protection Rule, although it may have a fairly innocent and noble name, seeks to
rewrite the very heart of the entire program. To try to accomplish this in short order was a mistake, a
big mistake. The experts involved asked very pointed questions of OSM that simply could not be
answered.
Thank you for this opportunity.

August 6, 2009 · The Senate Committee on Energy and Natural Resources met Thursday to discuss three of President Obama’s nominees, including OSMRE nominee Joe Pizarchik.
Pizarchik is currently the director of the Bureau of Mining and Reclamation with Pennsylvania's Department of Environmental Protection. But if the U.S. Senate confirms his nomination, he’ll oversee regulation of surface mining across the nation.

While Pizarchik has been lauded by some for his work in Pennsylvania, his work has drawn fire from environmental groups.

One of his more controversial programs includes disposing of coal ash from power plants in abandoned mines. The program says that the coal ash helps remediate the mines and control acid mine drainage, but environmentalists say the ash is polluting the groundwater.

At Thursday’s hearing, Sen. Jeff Bingaman (D-N.M.) told Pizarchik that there was a lot of concern about the program. Pizarchik said that science shows there has been no pollution from ash at mine sites.

“In Pennsylvania we have what’s been referred to by some as one of the best programs for ash placement in coal mines in the country,” he said.

“It was originally developed in the mid to late 1980s, and under the process not all ash is suitable for use at a mine site to assist in reclamation.

“The ash has to first be tested in accordance with EPA standards and tests to make sure it won’t leach out any hazardous metals or contaminants.”

But the toughest line of questioning came from Sen. Robert Menendez (D-N.J.). Menendez said that he received numerous phone calls and e-mails from constituents against Pizarchik’s nomination. Some of the complaints charged that Pizarchik isn’t open-minded.

Pizarchik said he does listen to others, and that many of the program’s changes were based on input from citizen and environmental groups. But he said ultimately he pays attention to science and the law.

“Where the requests have a valid basis in the law and in the sciences, we will act upon them,” he said.

“But as a member of the executive branch, I carry out the laws as they’ve been enacted, and I don’t go off and do things for one particular interest group or another that would be contrary to the law which I am charged with executing.”

Toward the end of the hearing, Menendez asked Pizarchik about mountaintop removal.

In June, the Environmental Protection Agency, the Army Corps of Engineers and the Department of the Interior signed a Memorandum of Understanding outlining the steps each agency would take to reduce the environmental impact of mountaintop removal.

But when Menendez asked Pizarchik what he would do about mountaintop removal, Pizarchik was vague, replying that he didn’t have a firm understanding of the facts and historical precedent.

Menendez pressed on.

“Well I appreciate your answer, but there is one common goal that the three agencies came to in their Memorandum of Understanding,” Menendez said.

“And that is that they will institute a plan that minimizes the environmental impacts in the short run and tighten the regulations in the long run. So I hope that if confirmed you’re going to pursue that with the vigor of what the agreement intended.”

Pizarchik replied:

“Senator, without knowing the nuances and the details of that, but if confirmed I will be working for the president and I will be carrying out the course charted by the administration on that.”

When the Senate returns from August recess after Labor Day, the full Energy and Natural Resources Committee will consider Pizarchik’s confirmation.

If they confirm him, his nomination will then be voted on by the whole Senate.

http://www.wvpubcast.org/newsarticle.aspx?id=10720

Can you please do some bolding or sum it all up? I don't have the longest attention span in the world

Yeah, better trust Fox instead

That particularly contractor won't get any more government work. He had better hope that his book deals and interviews on Fox News will make up for the loss of income.

The government hires far too many contractors, anyway. President Bush really made a big effort for the government to hire a lot of contractors. It was just plain stupid to begin with.

President Obama exaggerated when defending his administration’s approval of a $535 million loan guarantee to Solyndra, a now-defunct solar company.

Obama referred to Solyndra’s loan at an Oct. 6 press conference as “a loan guarantee program that predates me.” That’s not accurate. It’s true that the Energy Policy Act of 2005 created a loan guarantee program for clean-energy companies developing “innovative technologies.” But Solyndra’s loan guarantee came under another program created by the president’s 2009 stimulus for companies developing “commercially available technologies.”

The president also overstated past Republican support for the program, saying “all of them in the past have been supportive of this loan guarantee program.” Republicans overwhelmingly opposed the American Recovery and Reinvestment Act of 2009, and some of them even voted against the Energy Policy Act of 2005 at a time when Republicans controlled both houses of Congress.

Lastly, the president deemed the loan guarantee program “successful” overall. But it is too soon to say.

Solyndra and the Stimulus
The Republican-controlled House has been investigating whether the administration ignored red flags about Solyndra’s financial condition when it offered a $535 million loan guarantee to the start-up company. The California company announced in August it would file for bankruptcy protection — about two and a half years after receiving the loan guarantee from the Department of Energy.

Asked whether the Solyndra controversy gave him “pause about any of the decision-making going on in your administration,” Obama first talked about the loan guarantee program.

Obama, Oct. 6: Solyndra — this is a loan guarantee program that predates me that historically has had support from Democrats and Republicans as well. And the idea is pretty straightforward: If we are going to be able to compete in the 21st century, then we’ve got to dominate cutting-edge technologies, we’ve got to dominate cutting-edge manufacturing.

The loan guarantee program that provided financing for Solyndra, however, does not predate Obama.

There are two loan guarantee programs for renewable energy companies. The first was created under section 1703 of Title XVII of the Energy Policy Act of 2005. It was designed to help support U.S. companies developing “a new or significantly improved technology that is NOT a commercial technology,” according to the Energy Department’s description of the program. It was a self-pay credit subsidy program, meaning the companies receiving the loan would have to pay the government a fee “equal to the present value of estimated payments the government would make in the event of a default.”

The second program was created with the passage of the American Recovery and Reinvestment Act of 2009, more commonly known as the stimulus law. The recovery act amended the Energy Policy Act of 2005 to create section 1705 for “commercially available technologies,” as the Energy Department explains on page 12 of a 2009 report on stimulus funding. The stimulus provided more funding for the loan guarantee programs. The loans under the new program also came with no credit subsidy fees, making them more attractive and less expensive than those under the program signed into law by President Bush. It was under this program that Solyndra was able to get financing, although the company initially applied under the section 1703 program.

In a March 2009 press release announcing a $535 million loan guarantee for Solyndra, the Energy Department said: “This loan guarantee will be supported through the President’s American Recovery and Reinvestment Act, which provides tens of billions of dollars in loan guarantee authority to build a new green energy economy.” Damien LaVera, an Energy Department spokesman, confirmed that Solyndra’s funding came solely from section 1705.

Solyndra was the first company to receive a loan guarantee under either program. Since then, the program has helped nearly 40 projects at a cost of about $36 billion — mostly under section 1705. Jonathan Silver — the former director of the Energy Department’s loan office who recently resigned — testified that the section 1703 program did not generate much interest perhaps because start-up companies found “the potential self-pay credit subsidy cost to be prohibitive.”

The president also overstated the level of Republican support for the program when he said “all of them in the past have been supportive of this loan guarantee program.”

Obama, Oct. 6: And by the way, let me make one last point about this. I heard there was a Republican member of Congress who’s engaging in oversight on this, and despite the fact that all of them in the past have been supportive of this loan guarantee program, he concluded, you know what? We can’t compete against China when it comes to solar energy.

The stimulus bill that funded Solyndra received no Republican votes in the House and only three in the Senate — including Sen. Arlen Specter, who later switched parties.

The Energy Policy Act of 2005 that created the section 1703 loan guarantee program had the support of a majority of Republicans — who controlled both houses of Congress at the time — but not “all” of them. The House passed the conference bill 275-156, and 31 Republicans opposed it. The Senate passed it 74-26, with six Republicans voting no. Sens. Joe Biden, now Obama’s vice president, and Hillary Rodham Clinton, Obama’s Secretary of State, voted against it, as did many other Democrats. Clinton criticized the bill as too generous to the oil industry and attacked Obama for voting for it, as we wrote during the 2008 Democratic primary.

An Overall Success?
Obama also defended the funding for Solyndra by saying that the loan program’s “overall portfolio has been successful.” But it may be too soon to say for sure.

So far, the Energy Department has finalized loan guarantees for 33 projects and has conditional commitments for five others. In total, the Energy Department says that it has put almost $36 billion into the program, according to information published on its website.

It says that “these projects plan to employ more than 60,000 Americans, create additional tens of thousands of indirect jobs, provide enough clean electricity to power three million homes, and save more than 300 million gallons of gasoline a year.” That’s all well and good if everything goes according to plan. But as the Solyndra episode demonstrates, it doesn’t always work out that way.

For one thing, the figures for jobs created are supplied by the companies themselves, but not independently verified by the Department of Energy. Furthermore, it is too early to say whether the government will get all of its loaned money back when all is said and done.

In the case of Solyndra, according to news reports, the company had drawn down all but about $8 million of its total loan allotment at the time that it announced it would file for bankruptcy. It’s not clear that taxpayers will get any of that money back. And while the Solyndra project was responsible for creating 3,000 construction jobs, according to the company, nearly 1,100 people lost their jobs when it announced it was shutting down operations at its solar plant.

A time may come when the program can be called a “success,” but doing so now may be premature.

– D’Angelo Gore and Eugene Kiely

POSTED BY DANGELO GORE ON FRIDAY, OCTOBER 7, 2011 AT 5:41 PM FILED UNDER THE FACTCHECK WIRE. TAGGED WITH CLEAN-ENERGY INNOVATION, PRESIDENT OBAMA, SOLYNDRA, STIMULUS.

http://www.factcheck.org/2011/10/obamas ... a-problem/

Factcheck.org just highlighted they are not legitimate anymore.

No, you just highlighted the fact that you're going to deny the legitimacy of any source that conflicts with your desire to paint Barack Obama as Satan's right-hand man.

Why don't you actually read the article. You might learn something.

Just going off what you quoted, I know that Factcheck isn't telling the whole truth.

The White House also noted to ABC News that the Bush administration was the first to consider Solyndra’s application and that some executives at the company have a history of donating to Republicans. The results of the Congressional probe shared Tuesday with ABC News show that less than two weeks before President Bush left office, on January 9, 2009, the Energy Department’s credit committee made a unanimous decision not to offer a loan commitment to Solyndra.
http://www.freerepublic.com/focus/blogg ... 8241/posts

What The Press Is Getting Wrong About Solyndra
September 19, 2011 5:01 pm ET — 77 Comments
In the rush to cover the bankruptcy of Solyndra, a solar panel manufacturer that received a loan guarantee from the federal government, many news media outlets have misrepresented or omitted key facts.

CLAIM: Bush Administration Rejected Solyndra's Application

ABC News: Under Bush administration, credit committee "made a unanimous decision not to offer a loan commitment to Solyndra." [ABC News, 9/13/11]
Fox Nation: "Bush Admin. Voted AGAINST Solyndra Loan." [Fox Nation, 9/14/11]
FoxNews.com: Bush credit committee "decided 'not to engage in further discussions with Solyndra.'" [FoxNews.com, 9/14/11]
America's Newsroom: "In January of 2009 the Bush Administration considered it. They backed away from it. But then the checks started going out." [Fox News, America's Newsroom, 9/16/11]
Bill O'Reilly: The Bush administration "shut it down. And then as soon as the president, the current president, Obama took office they started it up again." [Fox News, The O'Reilly Factor, 9/16/11, via Nexis]
Fox's David Asman: Bush administration "nixed the loans." [Fox Business, America's Nightly Scoreboard, 9/17/11, via Nexis]
Fox's Stephen Hayes: "Bush administration "cut off the discussions with Solyndra." [Fox News, Special Report, 9/15/11, via Nexis]
FACT: Same Panel Of Career Officials Approved The Loan Guarantee

Bush Admin. Advanced 16 Projects, Including Solyndra, Out Of 143 Submissions. The Department of Energy's Loan Guarantee Program was created by the Energy Policy Act of 2005 and expanded by the American Recovery and Reinvestment Act of 2009. At a congressional hearing, Jonathan Silver, the Executive Director of Department of Energy's Loan Programs Office, testified that the Bush administration's DOE [Department of Energy] selected Solyndra from 143 submissions to move forward in the process:

SILVER: The 2006 solicitation resulted in 143 submissions. The loan program staff and others at the department reviewed those for eligibility, which is a thinner review than the full due diligence, and recommended 16 applications to file a full application. A dozen did so. Solyndra was one of those. And the department conducted due diligence on all of those 11. [House Energy and Commerce Committee, 9/14/11, via Nexis]
Under Bush Admin., The Credit Committee Remanded The Project "For Further Development Of Information." During the final days of the Bush administration, the Department of Energy's loan guarantee credit committee, consisting of career officials, said that although the Solyndra project "appears to have merit," the committee needed more information in several areas before it could recommend approval of a conditional commitment. The committee "remand[ed]" the loan "without prejudice" for "further development of information." [Credit Committee, 9/9/09, via Huffington Post]

DOE Under Bush Admin. Set Out Timeline For Completing Solyndra Review. After the credit committee remanded the project for further information, officials at the Department of Energy under the Bush Administration developed a schedule for due diligence on the Solyndra project, envisioning completion in March 2009. [Department of Energy, 9/14/11]

In March, The Same Credit Committee Of Career Civil Servants Recommended Approval. As Climate Progress noted, in March 2009, "The same credit committee [consisting of career civil servants with financial expertise] approves the strengthened loan application. The deal passes on to DOE's credit review board - political appointees within the DOE issue a conditional commitment setting out terms for a guarantee." [Climate Progress, 9/13/11]

DOE Official: "It's The Same Group Of Career Professionals That Were On The First Committee." In his testimony, DOE's Silver stated that the credit committee that remanded the project during the Bush administration "is also exactly the same credit committee that then approved the transaction several months later." He added that the loan guarantee "didn't close until September and so additional due diligence takes place from the conditional commitment through the close of the loan." [House Energy and Commerce Committee, 9/14/11, via Nexis]
CLAIM: Email Saying Deal Was "NOT Ready For Prime Time" Was Warning About Financial Risk

ABC reported that internal emails "show the Obama administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved. 'This deal is NOT ready for prime time,' one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan." [ABC News, 9/13/11]
CNN claimed "prime time" email showed "some White House budget analysts questioned early on how financially sound Solyndra was." [CNN, CNN Newsroom, 9/15/11, via Nexis]
Fox's Neil Cavuto: "Prime time" email was warning that "the loan could be very risky for taxpayers." [Fox News, Your World with Neil Cavuto, 9/14/11, via Nexis]
Wash. Examiner: "Prime time" email showed "some officials in the Obama Administration thought the loan was a lousy idea." [Washington Examiner, 9/14/11]
FACT: The Email Did Not Voice Any Concerns About Risk Of Loan

Email Concerned Timing Of Announcement, Not The Merit Of The Loan Guarantee. Republicans on the Energy and Commerce Committee released some of the context around this email, which was written by an analyst with the Office of Management and Budget, according to House Republicans. In response to an email about a potential announcement of the Solyndra loan during the President's visit to California on March 19, 2009, the analyst argued that the presidential announcement should not be made before the loan deal was completed. The email argued that "This deal is NOT ready for prime time" because there were more steps to be completed before the loan guarantee could be finalized -- namely, OMB had to review the credit rating and Solyndra needed to raise an additional $200 million in private capital. [House Energy and Commerce Republicans, 9/14/11]

Obama Did Not Announce A Deal During His March California Trip. On March 19, 2009, Obama visited California and held a town hall meeting in Los Angeles. He did not announce the Solyndra deal. The conditional commitment to Solyndra was issued on March 20 and announced by Energy Secretary Steven Chu in a press release. [Department of Energy, 3/20/09]

VP Announcement Came After Loan Guarantee Was Finalized In September. The Solyndra loan guarantee was formally issued by DOE on September 3, 2009. On September 4, Vice President Joe Biden announced the deal via satellite at the groundbreaking of the plant along with DOE's Chu and Arnold Schwarzenegger, who was the Governor of California at the time. [Department of Energy, 9/4/09; Contra Costa Times, 9/5/09]

OMB Reviews Credit Subsidy Cost; It Does Not Select Loan Guarantee Recipients. From the Congressional testimony of Jeffrey Zients of the Office of Management and Budget:

ZIENTS: Pursuant to Section 503 of FCRA, OMB reviews and must approve credit subsidy cost estimates for all loan and loan guarantee programs, including the credit subsidy cost estimates generated by DOE for the Title XVII program, to ensure that costs are accounted for appropriately. The Title XVII program provides relatively large-dollar guarantees and because their characteristics, terms, and risks vary greatly from project to project, OMB assesses cost estimates on a loan-by-loan basis. This is the same approach OMB uses for loans or loan guarantees of other similar programs that involve large deals or varied structures, such as those administered by the Overseas Private Investment Corporation and the Export-Import Bank.

In performing its statutory role under FCRA, OMB delegates the modeling of credit subsidy costs to agencies, and issues implementing guidance to ensure consistent and accurate estimates of cost. For new programs or programs issuing their first loans or loan guarantees, such as the Title XVII program in 2009, OMB works closely with agencies to create or revise credit subsidy models. Based on these models, OMB reviews and exercises final approval authority over credit subsidy costs to ensure that the costs of direct loans and loan guarantees are presented, and reflect estimated risks, consistently across Federal agencies so that taxpayer funds are invested in a prudent and effective fashion. By contrast, the final decision on whether to issue the loan or guarantee rests with the agency implementing the applicable program - DOE in the case of Title XVII. [House Energy and Commerce Committee, 9/14/11, emphasis added]
CLAIM: Obama Fundraiser George Kaiser Is Personally Invested In Solyndra

ABC's Brian Ross: "One of Solyndra's principal investors, George Kaiser, who was a big Obama fund-raiser, visited the White House at least four times before the loan's final approval." [ABC, World News with Diane Sawyer, 9/1/11, via Nexis]
AP: "One of the company's investors, George Kaiser of Oklahoma, helped raised money for Obama's presidential campaign." [Associated Press, 9/8/11, via CBS News]
CNN's Lisa Sylvester: "Records show the main private investor in Solyndra is a man named George Kaiser, a key fund-raiser for Mr. Obama." [CNN, CNN Newsroom, 9/15/11, via Nexis]
CBS's John Blackstone: "The biggest investor in Solyndra is Oklahoma billionaire George Kaiser, a major fundraiser for the Obama presidential campaign." [CBS Evening News, 9/14/11, via Nexis]
Politico: "One of Solyndra's primary investors is George Kaiser, a bundler who raised $50,000 for Obama's campaign in 2008." [Politico, 9/15/11]
LA Times: "Solyndra is backed by one of Obama's key fundraisers, George Kaiser of Tulsa." [Los Angeles Times, 9/2/11]
Michelle Malkin: "One of the hugest investors in the massively failed enterprise just happens to be one of Obama's largest funders, a man named George Kaiser ... You got crony capitalism." [Fox News, Hannity, 9/14/11, via Nexis]
Weekly Standard: "It's probably not surprising to learn that one of Solyndra's key investors, Tulsa billionaire George Kaiser, was an Obama campaign bundler." [Weekly Standard, 9/12/11]
FACT: Kaiser's Nonprofit Foundation Made The Investments, Along With Conservative Walton Family

George Kaiser Family Foundation Made Investment Through Argonaut Ventures. Tulsa World reported:

The filing indicates that Argonaut Ventures, an investment arm of the Tulsa-based foundation [George Kaiser Family Foundation], holds almost 39 percent of Solyndra's parent, 360 Solar Degree Holdings Inc.

In an emailed statement to the Tulsa World, a representative of the George Kaiser Family Foundation said the organization made the investment through Argonaut.

"George Kaiser is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan," the statement said. "GKFF invests in a globally diversified portfolio across many different asset classes." [Tulsa World, 9/7/11]
Argonaut Is A "Wholly Owned Subsidiary" Of The Foundation. A spokesperson for the George Kaiser Family Foundation clarified that Argonaut is a "wholly owned subsidiary of the foundation" and that money made or lost by Argonaut was made or lost for the foundation. [Phone conversation, 9/19/11]
Second Largest Investor In Solyndra Was A Major Donor To Republicans. The Los Angeles Times reported:

Although Solyndra's biggest private investor was a venture capital fund affiliated with Kaiser, its second largest investor was a fund linked to the Walton family, of Wal-Mart renown, a major donor to Republicans. Kaiser has denied he ever spoke to the Obama administration about the Solyndra loan.

The chief executive of Solyndra, Brian Harrison, is a registered Republican, according to the San Jose Mercury News. [Los Angeles Times, 9/13/11]
Politico: Solyndra Had "Close Ties To Both Political Parties." Politico reported:

In fact, Solyndra's top brass, its board and its paid lobbyists bring close ties to both political parties.

President and CEO Brian Harrison is a registered Republican. Billionaire George Kaiser, an Obama campaign bundler, was one of the venture capitalists who poured private funding into the clean technology startup.

And another venture capital firm, Madrone Capital Partners, which is tied to the GOP-leaning Walton family, was one of 10 firms that helped Solyndra raise about $144 million in November 2008.

In Washington, Victoria Sanville, one of the company's two in-house lobbyists, had previously worked for four House Republicans: Sam Graves of Missouri, Peter Roskam of Illinois, John Sweeney of New York and George Gekas of Pennsylvania.

When it comes to campaign contributions, Solyndra officials gave much more to Democrats while still giving money to some Republicans, according to a POLITICO analysis of donation data compiled by OpenSecrets.org. [Politico, 9/14/11]
CLAIM: Administration Restructured Loan To Favor Kaiser Rather Than Taxpayers

AP Headline: "Obama admin reworked Solyndra loan to favor donor." [Associated Press, 9/16/11]
ABC's Brian Ross: "Even though administration officials knew the company was facing bankruptcy, they agreed to restructure the loan so that in case the company did fail, the first $75 million recovered would go not to taxpayers but to the private investors." [ABC, World News with Diane Sawyer, 9/14/11, via Nexis]
New York Times reported that Argonaut alone provided $69 million in new loans, before adding a correction. [New York Times, 9/16/11]
Fox's Andrea Tantaros: "The real scandal" is "that George Kaiser, a bundler for Obama, put $75 million of his own money into the company ... and he got preferential treatment over the taxpayers in bankruptcy court." [Fox News, The Five, 9/16/11, via Nexis]
FACT: Walton's Firm Also Part Of The Deal, Which DOE Expects Will Result In Higher Recovery For Taxpayers

Memo: Walton Family's Firm Was Part Of The Restructuring Deal. A memo released by the House Energy and Commerce Committee states that both Argonaut Venture Capital, the fund tied to Kaiser's foundation, and Madrone Capital Partners, which is tied to the Walton family, "negotiated the terms and conditions of an agreement to restructure the Solyndra loan guarantee":

In the fall of 2010, DOE told Solyndra that, due to the company's financial problems, the department would refuse its request for a loan disbursement unless Solyndra obtained additional capital. Solyndra, DOE, and two of Solyndra's lead investors -- Argonaut Venture Capital and Madrone Capitol Partners --began negotiations to restructure the Solyndra loan guarantee agreement. On November 3, 2010, Solyndra announced that it was closing its older manufacturing facility, resulting in the layoff of 135 temporary employees and approximately 40 full-time employees.

From December 2010 through February 2011, DOE, Solyndra, and two of its investors, Argonaut Venture Capital and Madrone Capitol Partners, negotiated the terms and conditions of an agreement to restructure the Solyndra loan guarantee. Throughout this process, DOE consulted with OMB about the proposed terms and conditions of this arrangement.

On February 23, 2011, the parties signed an agreement to restructure the Solyndra deal. Under that agreement, Solyndra's investors agreed to a $75 million credit facility, with the option of a second $75 million. DOE agreed to extend the term of Solyndra's loan guarantee from seven to 10 years, and to postpone the first repayment installment by one year, from 2012 to 2013. In addition, the agreement provided that, in the event of the company's liquidation before 2013, the investors have the senior secured position with respect to the first $75 million recovered. DOE has the second senior secured position with respect to the next $150 million recovered in liquidation. If Solyndra had not liquidated or declared bankruptcy by 2013, the investors would have lost their senior secured position to DOE. [House Energy and Commerce Committee, 9/12/11]
AP: "Two Private Investors" Provided The Emergency Loans. Despite its headline, "Obama admin reworked Solyndra loan to favor donor," the AP article stated that Madrone Partners LP was also part of the deal:

Under terms of the February loan restructuring, two private investors -- Argonaut Ventures I LLC and Madrone Partners LP -- stand to be repaid before the U.S. government if the solar company is liquidated. The two firms gave the company a total of $69 million in emergency loans. The loans are the only portion of their investments that have repayment priority above the U.S. government. [Associated Press, 9/16/11]
DOE Determined "That The Facility Would Be More Valuable, Even In The Event Of A Future Liquidation, Once Complete." In his testimony before the House Energy and Commerce Committee, Director of DOE's Loan Programs Office Jonathan Silver stated that "DOE determined, as part of the restructuring, that the facility would be more valuable, even in the event of a future liquidation, once complete." He went on to say that "DOE determined that restructuring the loan guarantee gave the U.S. taxpayer the best chance of being repaid":

SILVER: Unsuccessful in its efforts to raise additional equity, Solyndra approached DOE, in late 2010, asking DOE to increase its loan commitment. DOE refused, indicating that any additional funds would need to come from other sources. Solyndra then sought to secure a new $75 million emergency loan from its current equity investors. The proposed new loan provided terms that were expected to be more favorable to taxpayers than any other financing options that were available to the company at that time. As is typical in cases where distressed companies seek new debt financing, the new financing would have priority, in the event of liquidation, over the company's existing debt--including the DOE loan guarantee (the investors' almost $1 billion of original equity investment was, and remains, subordinated to the debt owed to the government).

DOE faced a choice: whether to (1) refuse to allow the restructuring, thereby ensuring that Solyndra would close its doors immediately, and that the U.S. taxpayer would recover only a modest amount of the loan; or (2) allow the company to accept the emergency financing, thereby giving it and its almost 1,000 workers a fighting chance at success, and the government a higher expected recovery on its loan.

The decision was not an easy one, and it was made only after significant analysis and deliberation, using the same sort of tools and rigor that private sector lenders use in such scenarios. DOE had commissioned a new and comprehensive analysis of Solyndra's prospects in the global solar market (conducted by Navigant, a leading market research firm), and undertook -- with the aid of experienced financial consultants -- a complete review of the company's financial condition, business plan, and assets.9 Both the market study and the financial modeling suggested that the company's value as a going concern was greater than what the government was likely to recover in liquidation at that time. Accordingly, DOE determined that restructuring the loan guarantee gave the U.S. taxpayer the best chance of being repaid on the loan. [House Energy and Commerce Committee, 9/14/11]
DOE Expects Recovery of Taxpayer Money To Be Larger Due To Restructuring. During the hearing, John Dingell said: "I would note that the government's chance of recovery from that reorganization are better both in amount and certainty than if we had seen Solyndra go into bankruptcy earlier. Is that right?" Silver replied:

SILVER: We expect so. We'll have to see what happens, actually, in the bankruptcy process. But we have a completed an operating plant fully fitted out, inventory and all kinds of things that did not exist during the first restructuring. [House Energy and Commerce Committee, 9/14/11]
NY Times: Experts Said DOE's Decision To Restructure "Is Routine In The Commercial World." From a September 16, New York Times article:

Bankruptcy experts said Friday that the normal pattern was for the management of a bankrupt company to be given first crack at developing a plan, one that would either distribute ownership of the company to its creditors, in some agreed-upon proportion, or end in liquidation. The Energy Department believes that Solyndra has valuable patents.

Experts said the decision made by the Energy Department in February is routine in the commercial world. "It happens all the time," said Evan Flaschen, head of the financial restructuring group at Bracewell & Giuliani. But, he said, "A new lender coming in is going to want to be the first money out. The new money would want to be senior."

Martin Bienenstock, of Dewey & LeBoef, said that letting in another lender was often "the smart thing to do even though it's painful," because at worst, it would increase the company's scrap value. [New York Times, 9/16/11]
VentureWire: DOE "Squeezed The Terms Of Its Loan In Its Favor." VentureWire reported in March:

Making matters worse for the venture backers, the federal government has squeezed the terms of its loan in its favor, in hopes of increasing the chance of repayment even as the loan is being scrutinized. The Department of Energy could change some terms of the loan with each increment that it puts forward.

Solyndra agreed to change the terms of the federal loan so that it is now secured by all the assets of the company, including Solyndra's intellectual property. Previously, the loan was secured only by the solar panel factory it is helping fund. This is also true of the loan provided by private investors. [Dow Jones VentureWire, 3/3/11, via Factiva]
CLAIM: It Was Obvious Before Loan Guarantee Was Granted That Solyndra Would Fail

Diane Sawyer: "Did a half billion dollars of your taxpayer money go to a company certain to fail? And why?" [ABC, World News with Diane Sawyer, 9/14/11, via Nexis]
Investor's Business Daily: "Solyndra was not a good investment and the White House knew it." [Investor's Business Daily, 9/14/11]
Fox's Trace Gallagher: "[M]any experts say there was nothing about this company that was at all promising." [Fox News, America Live, 9/15/11]
David Webb on Fox: Solyndra "was never viable." [Fox Business, America's Nightly Scoreboard, 9/15/11, via Nexis]
Forbes op-ed: "Few, if any, lenders thought that giving [Solyndra] money was a very good idea." [Forbes.com, 9/13/11]
FACT: Solyndra Was Seen By Many As Promising

Solyndra Raised $1 Billion In Private Capital. Time noted that "in addition to government loan guarantees, Solyndra also scored over $1 billion in private capital--including from GOP-friendly investors like the Walton family of Wal-Mart." [Time, 9/15/11]

WSJ Ranked Solyndra As The Top U.S. Clean Tech Company. In 2010, the Wall Street Journal ranked Solyndra the top clean-tech company with the "capital, executive experience and investor know-how to succeed in an increasingly crowded field." The "research firm VentureSource (owned by NewsCorp., which also owns Dow Jones & Co., publisher of the Journal) calculated the rankings, applying a set of financial criteria to some 350 U.S.-based venture-backed businesses in clean technology." [Wall Street Journal, 3/7/10]

WSJ Also Ranked Solyndra In Top Five "Next Big" Venture-Backed Companies. The Wall Street Journal ranked Solyndra number five in a list of the "top 50 venture-backed companies." The rankings were calculated based on "the track record of success for the venture-capital investors who sit on the company's board (Board Ranking); the amount of capital raised by the company over the last three years, in comparison to its peers (Total Equity Ranking); the track record of success for the company's founders and chief executive (Executive Ranking);" "the recent growth in the value of the company (Valuation Ranking)" and the rankings of Dow Jones venture capital reporters and editors. [Wall Street Journal, 3/9/10]

MIT's Technology Review Chose Solyndra As One Of The World's 50 Most Innovative Companies. The Technology Review evaluated companies based on their "business model[s], strategies for deploying and scaling up its technologies, and the likelihood of success." [Technology Review, 2/23/10]

Analyst Cited Solyndra As A Company That Could Have A "Breakthrough Around Cost And Efficiency." From an April 2009 San Jose Mercury News report:

Craig Irwin, an energy analyst with Merriman Curhan Ford in San Francisco, agrees the current slowdown in the solar industry ''will filter out the most innovative companies and really help promote the next generation of leaders'' to produce lower cost solar technologies.

"As the economic equation is really squeezed, people want to see better performing (solar) panels and lower costs,'' he said.

Irwin cited Fremont-based Solyndra as a company he believes has some "very interesting technologies that could allow a real breakthrough around cost and efficiency.'' [San Jose Mercury News, 4/17/09, via Nexis]
Reuters: Venture Capitalists Point To Solyndra As One Of The Top 10 Companies "Ripest" To Go Public. Reuters reported in August 2009:

An informal poll of venture capitalists and others pointed to six privately held companies as the ripest for acquisition or readiness to go public, out of 34 cited in industries ranging from alternative energy to social networking.

For now, the Silicon Valley Six say they intend to keep growing rather than agreeing to be acquired or go public during the recession.

The top four are business social network LinkedIn, solar panel maker Solyndra, smart grid company Silver Spring, and Zynga, a casual games company whose products run on social networks like Facebook. [Reuters, 8/19/09, via CNNMoney]
Market Conditions Shifted Significantly from 2009 to 2011. A Bloomberg News report noted that Solyndra had "advantages that were more important in 2009 when it received a $535 million U.S. loan guarantee to build a factory" than they are now, noting that the price of the silicon-based panels with which Solyndra was competing "has fallen 46 percent since then." The article also quoted Julian Hawking of Abound Solar Inc., who stated: "When Solyndra started up it was a completely different time for the industry. Nobody expected the huge drop in polysilicon prices."


http://mediamatters.org/research/201109190020
[Bloomberg, 9/14/11]

Oh, sure! What all of this means is that the department of government that manages surface mining has been badly micro-managing some of the contractors and subcontractors who work for them. One of their little "suggestions" finally caused someone to blow a fuse, and now you're seeing this "scandalous" fallout. Personally, I find the micro-management to be more than bit sleazy, and I don't like the fact that they seemed intent on politicizing their results. Although the OSM's behavior has hardly been laudable, it's not exactly what the "scandal" reports are making it out to be. They weren't demanding an actual lie, but they were asking the people to choose a model (technically a valid one, mind you) that would make them look better. They probably had decent reasoning behind their arguments, but it is still micro-management.

I'm also posting some supplementary material demonstrating that it was already known that the Director of the OSM was an offensive sleaze-bag, although he certainly isn't as glamorously evil as some environmental groups have made him out to be. Sure, he's qualified and talented, but he causes my "slimeball" alarms to jingle a bit more than I like.

Make better sense?

I mean come on even Jon Stewart thinks this is really damaging to Obama.