As everyone has probably heard the White House has a nasty little scandal brewing because a politically connected company, Solyndra a solar panel manufacturer, went belly up after receiving more than half a billion dollars in federally backed loans. Despite warnings from the Office of Management and Budget that the loan needed more “due diligence” there was a rush to approve a $535 million loan guarantee possibly because of pressure from the White House. The scandal is the close relationship between President Obama and a chief Solyndra investor and political fundraiser, George Kaiser.

President Obama toured the Solyndra plant in California last year and gave a rousing speech about his green energy initiative driving the economic future of the country.

…Less than a year ago, we were standing on what was an empty lot. But through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans. Since the project broke ground last fall, more than 3,000 construction workers have been employed building this plant. Across the country, workers—across the country, workers in 22 states are manufacturing the supplies for this project. Workers in a dozen states are building the advanced manufacturing equipment that will power this new facility. When it’s completed in a few months, Solyndra expects to hire a thousand workers to manufacture solar panels and sell them across America and around the world. And this, in turn, will generate business for companies throughout our country who will create jobs supplying this factory with parts and materials. So there’s a ripple effect. It’s not just localized to this area.

The significance of Obama’s speech for Coos County is that we have all heard the same speech from local developers and promoters, time and time again pushing LNG terminals and chromite strip mining and natural gas pipelines and rickety one track rail lines. It is not known if pressure to close the Solyndra deal to fit into VP Joe Biden’s public relations schedule impacted the actual approval of this financing but it is clear that staff of the OMB and the Department of Energy were uncomfortable and predicted the project would likely fail and that too is eerily similar to past investments made in Coos County.

According to testimony given before the Oregon House Revenue Committee in 2007 by Gary Bauer of NW Natural the Coos County 12″ pipeline was never expected to be economically viable! In this instance it would appear that NW Natural, at least, did some due diligence and worked over a business plan but the county, just as the DOE ultimately did in the Solyndra matter, chose to ignore the lack of a projected return on the investment and move ahead anyway promising 2,900 jobs. For NW Natural, because the taxpayer was picking up the losses, the pipeline became a doable project. (Until they found out later they might have to pay taxes, hence the testimony in Salem).

Listen to the testimony [audio:http://mgx.com/blogs/wp-content/uploads/2010/11/Nikki-Salem.mp3|titles=Oregon House Revenue Committtee April 30, 2007]

Solyndra is important to Coos County because it demonstrates both the importance of conducting proper due diligence before investing the public’s money and how one or two strong personalities disdainful of the facts can sell an enormous boondoggle to an inattentive citizenry. The county has a long history of spending hundreds of millions of dollars on economic development and jobs creation only to see unemployment rates double.

Currently there are several jobs schemes being pitched in Coos County promising jobs and economic prosperity. The Port of Coos Bay promises that an dual use LNG terminal and an associated 240 mile 36″ pipeline will bring local riches and rescue our ailing schools. The Port contends that a cargo terminal, even one saturating the capacity of a soon to be restored Coos Bay Rail Line and exporting carbon spewing coal will generate 3,000 regional jobs. Unfortunately the Port is loathe to share the fruits of its investment analysis, if indeed any analysis has actually been done, thereby denying the public any chance to weigh in on the strength of executive recommendations or to evaluate the investment being made on our behalf. In short, the Port doesn’t want public input.

A proposal to let the Coquille Tribe manage 58,000 acres of Coos Bay Wagon Road timber land and share proceeds with the county has raised a lot of questions, many still unanswered by either the tribe or the commission. For example the proposal promises 1,600 jobs and $185 million in ‘government revenue’ over ten years but it isn’t clear how the jobs figure has been determined or if the term government revenue means just the county or includes tribal and federal entities.

While I wait for answers to these questions I might be able to back into these numbers on my own if I am able to determine timber inventory and current and projected market value and from that I might be able to determine how many million board feet of timber the tribe plans to cut and therefore what management plan they would operate under. As a citizen I have a right and even a responsibility to vet this proposal but since I am not paid to do this, whereas the commissioners are paid to careful vet these projects and proposals I must admit to feeling a bit of resentment that detailed answers and explanations are not forthcoming from the board. If the commissioners have, in fact, done a proper review with a business model or some spreadsheets or calculations on the back of a cocktail napkin to show us, then lets see them.

There are other complicating factors involved with reverse engineering the proposal numbers. The summary says that “Management will be subject to Interior Department review under the guiding principles of the National Indian Forest Resource Management Act…” Ron Sadler has raised several questions relating to this point-

The National Indian Forest Resource Management Act is aimed at having the Federal government assist the tribes in bringing up the management of tribally-owned forest lands to the same level and intensity of the forest lands managed by the BLM and the Forest Service. In the case of the Coquilles, it would apply right now to the 5400 acres of CBWR lands that Congress has already given over to tribal ownership.”

Does the coop proposal envision all 59,000 acres of CBWR lands being transfered to Tribal ownership thus becoming legally covered by the NIFRMA, or is it envisioned that the CBWR lands remain in BLM ownership but managed by the Tribe in a manner consistent with the NIFRMA under a “trust”agreement?

Assuming the “trust” arrangement is what is intended, including compliance with the intent of the NIFRMA, the lands would be managed for sustainable forest production as a separate entity in a manner to benefit Tribal needs and aspirations. Currently, the BLM manages the O&C lands and the CBWR lands as a single entity for the purposes of providing for an age-class distribution consistent with the goals of the Endangered Species Act as well as determining the sustainable allowable harvest level.

The coop proposal would take the CBWR portion out to be managed by the Tribe to meet their own goals. It is not apparent that an analysis or computation of how this might effect the entire land base has been made. In fact, the coop proposal attempts to dodge the situation by stating “To the extent practicable, forest production from the Coop may count towards federal Allowable sale Quantity targets”.

The problem is this.

The BLM has looked at their entire land base and tried to determine an allowable sale quantity that is consistent with maintaining fish habitat, the old-growth ecosystem, and endangered plants and animals. If 59,000 acres were to be removed from the BLM land base and managed by a trust as a separate entity with differing goals, this could only be viable if the BLM continued to determine the timing, geographical location, and volume of all planned timber sales.

To do otherwise could, in the longer term, have the unintended consequence of lowering the flow of timber from the combined O&C/CBWR lands.

For example, if the volume and placement of timber sales under coop management of the CBWR lands differed substantially from the assumptions of the overall BLM allowable sale plan, it could negate the BLM plan and cause the flow of timber from the O&C lands to be diminshed by the unplanned changes in age-class distribution, including the need to maintain a viable distribution of the intermediate and older stands. There is a distinct possibility that increases in timber flow from the CBWR component could trigger an offsetting, or even greater, decline in timber production from the O&C component.”

It appears there is a lot of due diligence work left to do on the CBWR management swap which makes Parry’s claim that this is the “only way to make the county self sufficient” and the county, despite having $50 million in reserve, is in “serious trouble” and his trip to DC seem very premature or, as in the case of Solyndra, “rushed”.

Finally, I do suffer from a lack of faith in the ability of the Port executive management to implement a successful container dock or any other terminal and I am fearful that the CBWR lands may not remain as healthy under tribal management as they do under the BLM, however, outside of environmental issues, I am not opposed to these projects on their face if all the proper protections are in place and the proper due diligence is performed.