Is Noble flipping ownership?

November 7, 2008

—Op-Ed by Calvin Luther Martin


“Smells Fishy,” by Nate Owens

On October 24, 2008, Noble Environmental (there being many versions or layers of Noble, it turns out) applied to the NYS Public Service Commission for permission to do the following:

Pursuant to Part 8 of the New York State Public Service Commission’s (“Commission”) Rules and Regulations, 16 NYCRR Part 8, Noble Altona Windpark, LLC (“Noble Altona”), Noble Chateaugay Windpark, LLC (“Noble Chateaugay”), and Noble Wethersfield Windpark, LLC (“Noble Wethersfield”) (together, the “Noble Wind Companies), and EFS Noble II LLC(“EFS II” and together with the Noble Wind Companies, “Petitioners”), hereby petition the Commission for a declaratory ruling that the Commission will not review, under Section 70 of the Public Service Law (“PSL”), a proposed transfer of certain membership interests in the Noble Wind Companies’ upstream owner, Noble Environmental Power 2008 Hold Co. LLC (“NEP 2008”) to EFS II

As a result of this transfer, which will occur in connection with an equity contribution from EFS II to NEP 2008, Noble Environmental Power 2008 Hold Co. Prime, LLC (“Noble Holdco”) will hold all of the managing Class B membership interests in NEP 2008, and EFS II will hold all of the passive, non-controlling Class A interests in NEP 2008 (the “Transfer”) and neither any of the Class B interests nor any associated management rights. In addition, Petitioners hereby request that the Commission declare that EFS II and certain of its affiliates will not become electric corporations under the PSL as a result of their ownership of the Class A interests in NEP 2008. (Emphasis added.)

Does this signal that Noble is flipping ownership?  Hard to say.  RiverCityMalone sent the petition (read the petition, here) to two experts.  One an attorney and the other a business analyst. 

The attorney noted that the petition seems to be an effort to hand off tax credits to a special tier of investors now going by the name EFS Noble II (which, in turn, is a “wholly owned subsidiary of General Electric,” p. 5 of Petition).  One can only guess the reasons.  Are some of the EFS II investors in fact big corporations in financial distress, eager to reap the full benefit of tax credits?  (Note that the tax credits are none other than your tax dollars being turned over to wealthy corporations.)  Is Noble passing along big-bucks tax credits to EFS II investors in return for much-needed cash?  (“EFS II will make cash-only capital contributions to Noble Environmental Power 2008 in exchange for 100% of the passive, non-controlling Class A membership units of Noble Environmental Power 2008,” p. 7 of Petition.)  Can we go a step further:  Might this cash infusion into (apparently) cash-strapped Noble consist, perchance, of tax dollars doled out to Wall Street investment banks in the recent $700 billion bailout?

The business analyst went further than the attorney.  He felt the petition did indeed suggest transfer of ownership (witness the phrase, “transfer of certain membership interests”), though not of day-to-day control and operations.  In fact in his judgment, “the goal of this document is to eliminate legal oversight controls.”

“This is the beginning of the multiple ownership/control transfers that were predicted,” he continues.  “There will be more.  We can predict that local protections and/or income will be reduced (diluted) at each transfer.”

Read the petition yourself.  You connect the dots.

As I read it I’m struck by the layers and versions of what I thought was simply Noble Environmental Power.  A veritable torrent of them.  (Am I the only person who thinks “Enron”?)

Then, to ask the PSC please don’t review this transaction.  Why not review it, I ask?  This is followed by multiple loud assurances that the EFS II crowd won’t in any way control operations, and they really are not electric corporations—which brings to mind Shakespeare’s famous line, “Methinks the lady protesteth too much.”  As in, What are these people hiding?

But I digress.  Is Noble flipping ownership?  Maybe the better question is:  Who is Noble Environmental?  How many versions and iterations and layers and incarnations and legal entities are there of this company we all thought was Plain Jane Noble?   “Noble Environmental is, in turn, owned by JPMP Noble Wind Energy, LLC, and certain individuals, trusts and limited liability companies,” p. 4 of Petition.  (JPMP stands for JP Morgan Partners, LLC.  Not to mention the certain individuals, trusts and limited liability companies.)

Are you confused yet?  (Jeez, I always thought it was Chuck, John, Mark and the guys, driving around in little white trucks and that yellow Hummer, which I see disappeared.  Call me naïve.)

And which LLC within this Yellow Pages of Limited Liability Corporations now has master control of the lease you, dear reader, hold in your hand?  Which LLC is ultimately responsible, now, for discharging agreements (legal and “good faith,” such as the so-called Host Community agreements) made with the Town of Chateaugay, among others?  And what does the fine print say about each LLC’s legal and financial obligations to leaseholders and towns and school boards–and are those obligations now, shall we say, mutating?

But the burning question of this editorial:  Is Noble churning its identities?

Let me be clear, I ask these questions not to impugn Mother Noble’s integrity, but in the pursuit of clarity.  (“And now abide faith, hope, and clarity, and the greatest of these is clarity.” )  I consider myself pretty well educated—and I find anything but clarity and reassurance as I read this document (prepared, I see, by two turbocharged law firms).

When I was a professor I often counseled students, “If you read something and find it impenetrable and inscrutable, there’s a good likelihood it’s deliberately so.”  I decided long ago that if I read a document in the English language and it makes no sense, there’s something fishy. It’s not me, it’s it.  (Let’s call it Martin’s Fishy Principle of English Prose.)

Read this petition and apply Martin’s Fishy Prose Principle.  (It’s handing over your tax and electricity-rate dollars, so you’d better be able to understand it.) No, don’t surrender your God-given mental faculties and plead, “Well, Gee, I guess the lawyers understand it, so it must be okay.”  Big mistake!  If you, my friend, can’t understand this, the problem lies with the document–and the shrewd people who crafted it.

“If it doesn’t make sense–it isn’t true.”  Judge Judy