Railroads & Clearcuts
Railroad Land Grant
Corporations in the News: 2005
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Court ruling early holiday gift. By Richard Boyce. Parksville Qualicum News, Dec 30, 2005.
The Winter Solstice marks the point where the Northern Hemisphere of the planet Earth faces the sun for the shortest time. Many people are privileged enough to be able to celebrate this season by giving and receiving gifts. In the past year Gordon Campbell's government has been giving gifts to giant logging and real-estate companies Weyerhaeuser and Brascan �" Perhaps in return for millions of dollars in contributions to the BC Liberal's campaigns.
However, a reality check has come in time for the holidays. B.C. Supreme Court Justice Lynn Smith released her decision in the Hupacasath First Nation lawsuit to quash the decision of the minister of forests that approves the privatization of 70,300 hectares of private land in Tree Farm License 44 (TFL 44).
The Court rejected arguments by the Crown and Brascan that Aboriginal title could not exist on fee simple or private land. Last winter the BC Liberals announced plans to privatize Crown forest land identified as TFL 44 running along the shores of the Port Alberni Inlet. This gift of public land to a private corporation is part of Campbell's commitment to industry.
One week after the B.C. Supreme Court released its decision Brascan changed its name to Brookfield. Coincidence? Fact: Nov. 3. 2005 B.C. Supreme Court released its decision, Nov. 10, 2005 Brascan changed its name.
During the proceedings of the court case Brascan paid Weyerhaeuser $2.4 billion for its B.C. coastal logging operations. Weyerhaeuser ran away to the U.S.A. with cash plus the plunder of seven years of logging while cutting thousands of jobs in B.C. In 1999, Weyerhaeuser, the largest logging company on the planet, bought MacMillan Bloedel. In October 2004, they posted third-quarter profit at $594 million US, third-quarter sales totaled $5.85 billion US.
May 30, 2005 Brascan bought Weyerhaeuser's B.C. coastal timber and gave the name Island Timberlands to all logging operations on Vancouver Island. Brascan laid-off thousands of workers, shut down several operations, and increased logging to seven days per week, 24 hours a day. Adding to the confusion, this multinational company hires subcontractors, which enables them to avoid unions and certain liability considerations. Meanwhile 43 people died at work in the B.C. forestry industry in 2005. On Vancouver Island three men died in the past two months while logging.
Brascan is a development company which had big plans to turn publicly-owned Crown land designated as forest land into private real-estate. On their corporate web site Brookfield states under the heading Higher and better use land sale strategy: Approximately 13,000 hectares of lands are viewed to have greater value in non-timber use, located on Vancouver Island and the mainland. It is expected that the constantly growing rural-urban interface will result in ongoing land sale opportunities.
Brascan is a global asset manager with $40 billion of assets interlisted on the New York and Toronto stock exchanges. There is no mention at www.brookfield.com of the Hupacasath First Nation court case against.
The courts have once again told the B.C. government that they cannot ignore the rights of First Nations while selling, trading, or giving public land to private corporations. As in the case of the Haida, the B.C. government must negotiate in good faith with First Nations before selling the resources and land that is in question.
Specifically, the court ruled that, "The decision to remove the land from the TFL was a decision with important ramifications for the future of that land." The court found that the Crown breached its duty to consult with the Hupacasath regarding the removal of the land from TFL 44, and regarding the consequences of the removal of that land on the remaining (Crown land) portion of TFL 44.
Paper giant settles suits, will take $25M charge. Triangle Business Journa[ Raleigh/Durham], Dec 28, 2005.
Weyerhaeuser Co. said Wednesday that it has settled several antitrust lawsuits that will cost the company an after-tax charge of $25 million, or 10 cents per share, in the fourth quarter.
Weyerhaeuser (NYSE: WY) settled with customers who opted out of a 2003 civil settlement of a class action lawsuit filed in 1999 against several containerboard and packaging producers that included Weyerhaeuser and International Paper. Customers who "opted out" of that settlement elected to pursue litigation on their own.
The complaints, according to the Federal Way, Wash.-based paper company (NYSE: WY), "alleged that Weyerhaeuser and other companies conspired to fix or manipulate the price of linerboard and thereby the prices of corrugated sheets and corrugated containers (that) are made from linerboard."
Responding to the settlement, Claire Grace, Weyerhaeuser acting general counsel said, "although these lawsuits were without merit, we determined that settling them was in the best interests of our shareholders given the complexity, time and cost of litigation and uncertainty of court proceedings."
Weyerhaeuser currently maintains a Raleigh sales office for its kraft fiber products that employs 12 people and runs two mills in Plymouth and New Bern that employs roughly 250 people each. The company also sold a plywood mill located in Moncure, which is south of Chapel Hill, to Greenwich, Conn.-based Wood Resources LLC earlier this year. The Moncure facility employed about 200 workers.
Weyerhaeuser is a Fortune 200 forest products company that grows and harvests timber. It also manufactures and sells forest products. The company claims annual sales of $22.6 billion. The company has operations in Raleigh, New Bern, Plymouth, Charlotte, Matthews, Newton, Lumberton, Greensboro, Elkin, Washington, Winston-Salem and Grifton in North Carolina, according to the Weyerhaeuser Company Web site.
$25 million charge to settle Weyerhaeuser lawsuits. Seattle Times, Dec 28, 2005.
Weyerhaeuser said Tuesday it will take an after-tax charge of $25 million to settle legal actions relating to a 1999 antitrust allegation.
The litigation stems from antitrust lawsuits filed six years ago in U.S. District Court in Pennsylvania that alleged that Weyerhaeuser and other companies conspired to fix or manipulate the price of linerboard.
Weyerhaeuser settled the class-action portion of two civil antitrust lawsuits in 2003, but some customers decided to opt out and pursue separate litigation.
The Federal Way wood-products company said the settlements announced Tuesday are with all but one of those plaintiffs.
Claire Grace, Weyerhaeuser's acting general counsel, said the company still thinks the lawsuits were without merit, but that it was in the best interest of shareholders to settle.
Conoco to buy Burlington for $35.6B: Deal, a bet on the profitability of natural gas, could put other producers in play. Reuters / CNNMoney, Dec 13, 2005.
Global oil major ConocoPhillips agreed late Monday to buy Burlington Resources Inc., a major independent producer of natural gas, in a cash-and-stock deal worth $35.6 billion, making a huge bet that natural gas will remain lucrative over the long term.
The deal's transaction value is $92 per share, based on the closing price of ConocoPhillips (Research)' shares on Dec. 9, the company said.
ConocoPhillips said it would pay $46.50 in cash plus 0.7214 of its own stock for each Burlington share, in a deal that would bring the No. 3 U.S. oil company's revenue within striking distance of the U.S. No. 2, Chevron Corp.
Together, ConocoPhillips and Burlington Resources (Research) will have "pro forma" reserves of about 10.5 billion barrels of oil equivalent, according to company records as of Dec. 31, 2004. "Pro forma" 2005 production will total about 2.3 million barrels of oil equivalent per day.
"With this transaction, ConocoPhillips will expand (its) portfolio of high quality, low-risk, long-lived gas reserves, and become a leading producer of natural gas in North America," said Jim Mulva, Chairman and Chief Executive Officer of ConocoPhillips.
He added that the deal enhances ConocoPhillips's production growth and North American gas supply in the near-term, through projects involving conventional and unconventional resources, and in the long-term through liquefied natural gas and Arctic gas projects.
Shares across the natural gas sector jumped during the day on speculation that other gas producers could become attractive takeout targets.
Adding Burlington to its portfolio boosts ConocoPhillips's natural gas production at a time when the fuel is pushing record high prices of $15 per million British thermal units (mmBtu). Prices on the NYMEX remain about $10 per mmBtu for delivery through the spring of 2007, an indication that markets expect gas to remain costly for the foreseeable future.
Natural gas bet
"It is a huge bet on natural gas. This is the most lucrative part in the energy chain," said Fadel Gheit, an analyst at Oppenheimer & Co, who spoke earlier on Monday as reports of the deal began to emerge.
The transaction is expected to be accretive to near-term production growth and cash flow per share, but slightly dilutive to ConocoPhillips's near-term earnings per share, the companies said.
ConocoPhillips expects to achieve pre-tax cost savings of about $375 million annually after the companies' operations are fully combined.
These savings will result largely from reducing corporate expenses, optimizing the company's exploration portfolio, and reducing operating expenses, ConocoPhillips said.
Existing ConocoPhillips shareholders will own about 83 percent of the new company, and Burlington Resources shareholders will own around 17 percent, the companies said.
ConocoPhillips said it will fund the deal through existing cash on hand and credit facilities, and new bank and bond debt. The company plans to use cash from operations in the years ahead to reduce its outstanding debt.
Upon completion of the merger, Bobby Shackouls, chairman, president and chief executive officer of Burlington, will retire. However, he will join ConocoPhillips's board.
Randy Limbacher, currently Burlington Resources Executive Vice President and Chief Operating Officer, will become Executive Vice President responsible for North and South America, reporting to ConocoPhillips's Mulva.
Burlington shares closed up 8.4 percent at $82.50 on the New York Stock Exchange.
ConocoPhillips closed down about 3 percent at $61.15.
While few companies might have the financial ability to make a competing bid, analysts did not dismiss the possibility, especially for companies looking to make a bet on gas.
"Since Burlington Resources is one of a scarce species, somebody might want to think of this as one of their few remaining opportunities," said Phil Dodge, an energy analyst at the Stanford Group.
"This is a strategic move as much as a move that would initially add a lot of value," Dodge said. "They're looking out over the next 10 to 15 years instead of the next two years."
ConocoPhillips May Buy Rival for $31 Billion. By Andrew Ross Sorkin and Simon Romero, New York Times, Dec 12, 2005.
ConocoPhillips is in advanced talks to buy Burlington Resources, one of the largest independent oil companies in the country, for more than $31 billion in the latest deal in the rapidly consolidating oil and gas industry, according to executives involved in the negotiations.
The acquisition would give ConocoPhillips, the nation's third-largest oil company, control of important natural-gas exploration areas in the United States, where Burlington has been using new drilling technologies in its search for new reserves. Other major oil companies, including ExxonMobil and Royal Dutch Shell, have been moving aggressively in recent months to increase their own natural-gas production in this country.
The negotiations come against a backdrop of soaring natural-gas prices around the nation following hurricanes this year that knocked out production at platforms in the Gulf of Mexico. Frigid temperatures in some parts of the country in recent days have pushed prices even higher. Last week, natural gas prices reached more than $15 per thousand cubic feet in trading, a near record. Talks between ConocoPhillips and Burlington are near completion, the executives said, but they warned that it was still possible the negotiations could collapse. If a deal is reached, it could be announced as early as this week. Details of the terms of the transaction under discussion could not be learned.
Burlington, based in Houston, has more than 2,200 workers. The company has about 12 trillion cubic feet equivalent of natural-gas reserves, mostly in North America. However, the acquisition would also help ConocoPhillips internationally, expanding its reach in countries like Ecuador and Canada where Burlington has made inroads.
A spokesman for Burlington declined to comment. A representative for ConocoPhillips could not be reached.
ConocoPhillips, a company formed through a string of earlier mergers, has been using acquisitions to help it grow. In late November, for instance, it acquired an oil refinery in Germany from a private concern, Louis Dreyfus, in a deal valued at about $2.5 billion, according to Deutsche Bank.
The transaction also signals an ambition by the chief executive of ConocoPhillips, James J. Mulva, to eventually secure a seat at the table with the elite international energy companies like ExxonMobil, Chevron, BP and Royal Dutch Shell. ConocoPhillips is the largest energy company in Houston, but it has been unable to attain the extensive international reach of its larger competitors.
The deal is expected to ignite interest in similar transactions in Houston, which has recently seen a jump in merger activity because of rising oil and natural-gas prices. The higher prices, coupled with difficulty at larger companies in discovering large new petroleum reserves, have encouraged some companies to consider acquisitions as a way of getting access to new areas of production and refining.
A deal with ConocoPhillips would also keep a foreign company from buying Burlington, though it is still possible one could submit a bid in the next several days. When Cnooc, a Chinese state-owned oil company, attempted to acquire Unocal earlier this year, it touched off a political firestorm in this country.
Cash to finance such deals is not an issue. ConocoPhillips, for instance, had net income of $3.80 billion in the most recent quarter, up from $2.01 billion from the same period a year earlier. Revenue at the company was $49.66 billion, compared with $34.74 billion in the year-earlier period. Earnings at other large energy companies are expected to remain near record levels through the end of this year.
ConocoPhilips could be buying Burlington at the height of the market, analysts said. As natural-gas prices have soared, so have Burlington's shares - they have almost doubled in the past year. The stock closed at $76.09 on Friday. Shares of ConocoPhillips, which have also risen, closed at $63.07.
Investors look to the hills as a unique way to boost portfolios. By Becky Kramer. Spokesman-Review, December 11, 2005.
Snow-covered stands of western larch in Idaho's Selkirk Mountains represent one of the hottest new Wall Street investments: trees.
In a search for hard assets, institutional investors are buying up billions of dollars worth of private U.S. timberland. The trend is playing out on a steep hillside west of Naples, Idaho.
Once, this land was owned by Crown Pacific, a Portland firm that used the trees to feed its three North Idaho sawmills. But Crown Pacific filed for bankruptcy and sold off its 250,000 acres of timber holdings in the Panhandle three years ago.
The new owner is Forest Capital Partners, a Boston-based company that represents pension funds, wealthy families and other well-heeled investors. Forest Capital owns no sawmills. It sells logs to 30 different Inland Northwest customers, including a former Crown Pacific mill, other lumber producers, a newsprint plant, and log-home companies.
Purchases like Forest Capital's represent an enormous shift in private forest land ownership. Burdened by debt, and squeezed by shareholders looking for higher profits, many integrated forest product companies are selling off vast tracts of fir, spruce, pine, cedar and hemlock once used to ensure cheap fiber supplies for paper plants and sawmills.
Louisiana-Pacific Corp. sold off nearly 1 million acres of land, and reinvested the money in manufacturing facilities. International Paper is mulling the possibility of putting some, or all, of its 6.8 million acres of timber holdings on the market. The unhitching of private forestland from production facilities is being watched carefully, and with some consternation.
"A number of stakeholders are very interested in this trend," said Mike Clutter, a forest finance professor at the University of Georgia, who has been tracking changing ownership patterns.
Environmental groups worry about institutional investors over-cutting to shore up annual returns, or splintering off parcels to sell as lucrative cabin sites or rural ranchettes. Hikers and snowmobile enthusiasts wonder if they'll have the same unfettered access to recreational use of the land that they enjoyed under corporate ownership.
On Forest Capital's lands, little has changed since the sale, said Kevin Boling, general manager of the company's Inland Northwest division.
On Tuesday, he chatted with Tom Foust, a Bonners Ferry logger overseeing harvesting operations. Foust's company has cut trees on this particular piece of the Selkirks for the last four successive landowners. Nearby, forester Kennon McClintock discussed seeing grizzly bear tracks on the ridge during the summer, and noted that December is a less disruptive time for logging, because the bears are hibernating. He, too, is a veteran on this parcel. Forest Capital hired many of Crown Pacific's foresters.
The public can still access Forest Capital's lands. And the firm's long-term strategy revolves around timber harvests, not real estate sales, Boling said. "We continue to meet an important need for logs in the local market."
$10 billion chasing trees
Forest Capital is indicative of the new class of owners snapping up land. Founded by two foresters turned MBAs, Forest Capital bought its first forestland in North Idaho in 2002. Now, the firm owns more than 2 million acres of trees in six states.
"When we started the company ... we knew that a large amount of forestland was coming up for sale," said Matt Donegan, Forest Capital's co-president. "The amount has exceeded our expectations."
The firm's acreage was cobbled together largely from the divestitures of three companies - Crown Pacific, Louisiana-Pacific and Boise Cascade. Earlier this year, Forest Capital bought 2.2 million acres from Boise Cascade for $1.6 billion - one of the largest timberland transactions in recent history.
In industry lingo, Forest Capital is a timber investment management organization - TIMO for short. TIMOs, still a relatively small pool, operate sort of like mutual funds. Buying in, however, is beyond the means of most individual investors. A stake in Forest Capital costs "well north of $10 million," according to Donegan, though other TIMOS accept starting investments for as low as $250,000. In addition to TIMOS, pension funds, university endowments and other types of institutional investors are competing for forest land.
Donegan and the firm's other co-president, Scott Jones, started their careers in the woods, eventually ending up at John Hancock Mutual Life Insurance Co. Jones helped set up the insurance company's first timber fund for institutional investors. Donegan worked as a timberland portfolio manager.
According to Yale University's Program on Private Forests, institutional investment in timberland has grown exponentially over the last 15 years - from $1 billion to more than $15 billion. Another $10 billion worth of investment money is chasing trees both in the United States and overseas.
Private forestland became a popular tool for rounding out portfolios after the stock market tanked in 2000. The attraction: investors generally get modest returns in exchange for modest risk.
Buying 1,000 acres of trees is simpler than buying an apartment complex, noted Tim Reinertsen, senior vice president for Realty Marketing/Northwest, a Portland firm that specializes in land sales. Investors do end up paying for things like fertilizer and pre-commercial thinning. But they don't have to worry about replacing roofs, repairing busted pipes or evicting deadbeat tenants, Reinertsen said.
In addition, timberland's performance doesn't correlate with stock market swings. And if lumber prices sag, investors can hold off on logging their land until lumber prices rise again. Meanwhile, the trees continue to grow, increasing in value.
Timberland investors can expect annual returns in the 6 percent to 10 percent range, after inflation. Some analysts liken it to buying high quality corporate bonds or Treasury bills. Since trees can take 80 years to reach harvest age, however, timberland isn't a short-term investment. Investors are usually locked in for at least a decade.
"It's not venture capital," Donegan said. "Timberland is for investors who are looking to stay rich, as opposed to investors looking to get rich. It's a capital preservation strategy."
Risk of forest fragmentation
The scramble for timberlands has left some bidders behind, including Potlatch Corp.
The Spokane firm owns 1.5 million acres of forest in Idaho, Minnesota and Arkansas. For years, Potlatch has tried to buy more land, without success.
Prices rose rapidly, and Potlatch couldn't compete, said Penn Siegel, the company's chief executive officer. "We've looked for land in each of those places where we operate, but we haven't made any large purchases in the 15 years since the TIMOs became active," he said.
Siegel hopes that will change in the near future. On Jan. 1, Potlatch converts to a real estate investment trust, which will cut the company's tax rate. Raising money for land purchases will become easier, Siegel said.
As head of a wood products manufacturer that's held onto most of its acreage, Siegel eyes the broad shift in forestland ownership with caution. The long-term legacy will be greater forest fragmentation, he said.
As investors pull in and out of funds, timberland will change hands more frequently. Each transaction increases the chance that choice real estate will be sold off for cabins and golf courses, Siegel said. As the parcels become smaller, it's harder to manage the land for wildlife, he said.
Siegel also said public corporations are more responsive to public opinion. Their products can be boycotted, their annual meetings picketed, and the names of the largest shareholders are disclosed by law.
In the case of TIMOs, "You know that Forest Capital owns the land, but you don't know who owns Forest Capital," Siegel said.
Environmentalists share his concerns. During the 1990s, John Osborn bought stock in Boise Cascade. The Spokane physician used his shareholder status to lobby for corporate change, including an end to logging of old-growth timber. The maker of paper, pulp and other wood products eventually adopted extensive environmental principals.
But then, Boise Cascade split up and sold off its timber holdings to Forest Capital. Osborn was left with stock in an office-supply company. His leverage for reform is gone.
"There's always a lot of focus on public timberland, but as these large corporate owners go through reorganizations and the land titles change, people need to pay attention," said Osborn, the Sierra Club's conservation chairman in Idaho and Eastern Washington. "They have a huge impact on the environment and on the economy."
Osborn also worries about forest fragmentation. Investors intent on quick profits increase the risk of "double-liquidation," he said. First, they strip the land of its commercial timber, Osborn said. Then, they subdivide and sell lots.
Forest Capital doesn't compete with developers for timberland near towns or resorts, according to Donegan. The firm's focus is acquiring land for long-term timber harvest, he said.
When Forest Capital sells land, it tends to be in areas already experiencing development pressure, Boling said. Last year, the company sold off 160 acres overlooking Lake Coeur d'Alene's Gotham Bay. The forested parcel had become boxed in by homes, he said
Forest Capital also sold 195,000 acres of former Boise Cascade lands in southwest Idaho. The firm evaluated keeping the property in timber production, Boling said. But only one sawmill remained in the area, depressing the prices for logs. The next nearest mill was an eight-hour drive, Boling said.
When Forest Capital put the acreage up for sale, Boling was blitzed with calls. Most of the prospective buyers wanted to split off a little parcel for their dream cabin in the woods.
To Boling, the calls were one of life's ironies. The land could have been kept intact, he said, and spared from subdivisions, if southwest Idaho had retained an active sawmill industry.
Questions and answers
What's a TIMO?
How much does it cost to invest in a TIMO?
What's the average return?
Why invest in trees?
Containerboard prices seen lifting industry: Morgan Stanley upgrades several producers, industry view. MarketWatch, Dec 6, 2005.
"... Plum Creek shares are no longer set to outperform industry peers, according to Morgan Stanley's note, though the timber company should "begin to realize significant upside as it continues to move further down the path of land development."
Potlatch names new CEO. Dec 6, 2005.
Michael Covey, currently executive vice president of Plum Creek Timber Co. Inc., will succeed L. Pendleton Siegel as CEO of Potlatch Corp., effective Feb. 6.
In a Dec. 5 news release, Potlatch said Siegel will remain chairman of Potlatch through the end of 2006.
Over the past four years, Covey, who will also serve as president and director of Potlatch, has had primary financial and operational responsibility for 8.3 million acres of forestland in 19 states with 10 wood products facilities with annual revenue of $1.3 billion.
Weyerhaeuser restructuring includes closure, selling unit. Bloomberg News / Seattle Times, Nov 30, 2005.
Weyerhaeuser halted a box operation in North Carolina and plans to sell its composite-panels business, including two mills in Oregon, as Chief Executive Steven Rogel looks for ways to increase profit at the lumber company based in Federal Way.
The closure of the box operation in Plymouth, N.C., will affect 200 workers. The company will curtail production at the site while it awaits a board review of its decision to permanently close the plant.
The panel business, which makes fiberboard and particleboard, has five mills in the U.S., a mill in Ireland and 1,000 employees. Weyerhaeuser will continue to operate the business while it hunts for a buyer.
Rogel is reviewing businesses such as lumber, paper, boxes, homebuilding and logs after the company's shares fell as much as 9 percent this year. Tuesday's news gave the stock a boost, pushing it up $1.32, or 2 percent, to $66.25.
The containerboard operation isn't "economically sustainable," and the panels business isn't a "strategic fit," Rogel said.
The panel business has mills in Albany and Eugene, Ore.; Bennettsville, S.C.; Malvern, Ark.; Simsboro, La.; and Clonmel, Ireland.
Last month Weyerhaeuser announced plans to shut an 81-year-old sawmill in Aberdeen and a 50-year-old pulp mill in Cosmopolis, a plywood plant in Oklahoma, and paper and pulp operations in Saskatchewan.
Justices may review case of Weyerhaeuser. By Greg Stohr. Bloomberg News / SeattleTimes, Nov 29, 2005.
The U.S. Supreme Court is seeking the Bush administration's advice on Weyerhaeuser's appeal of a $78.8 million antitrust award for driving a competing lumber producer out of business.
Federal Way-based Weyerhaeuser, the world's biggest forest-products company, is fighting allegations that it monopolized the Pacific Northwest market for finished alder, a wood used in furniture, by overbidding for scarce hardwood logs. The 9th U.S. Circuit Court of Appeals upheld a jury award to Ross-Simmons Hardwood Lumber of Longview.
U.S. companies and corporate trade groups say the lower court ruling would set a dangerous precedent, opening companies to suits when they aggressively bid for raw materials and other supplies.
Dow Chemical, Verizon Communications and Microsoft are among the companies backing Weyerhaeuser's appeal to the high court.
The lower court ruling "will wreak havoc with the most basic purchasing decisions throughout the country," according to a brief filed by Coca-Cola and three other businesses.
The court directed its request to U.S. Solicitor General Paul Clement, the administration's top litigator. If ultimately granted review, the case would add to a very heavy load of antitrust cases before the high court, which already has three scheduled for decision by July.
The award in the Ross-Simmons case would be the largest so far in a set of suits against Weyerhaeuser over its finished alder business. The company has paid $62 million to resolve some of those claims, according to regulatory filings.
In addition, Weyerhaeuser is fighting a $16 million award to rival Washington Alder of Mount Vernon and a class-action lawsuit filed on behalf of purchasers of finished alder.
Ross-Simmons, which went out of business in 2001, accuses Weyerhaeuser of artificially increasing alder prices to deprive smaller competitors of needed supplies. Specifically, Weyerhaeuser paid higher-than-market prices for the wood, bought more than it needed, entered into exclusive agreements with suppliers and illegally bought logs from state forests, Ross-Simmons says.
A Portland jury in 2003 said Ross-Simmons was entitled to compensation of more than $26 million, an amount tripled under federal antitrust rules.
The San Francisco-based 9th Circuit, voting 3-0, said that "when viewed in its entirety, the evidence sufficiently supports a finding of specific intent to control prices and eliminate competition."
In its appeal, Weyerhaeuser says the 9th Circuit was wrong to approve a jury instruction that focused on whether the company bought more logs than it "needed" and paid a "fair price." The company said the standard was like "throwing a marshmallow at a jury," borrowing a phrase first used by federal appeals-court Judge Frank Easterbrook.
"Under the 9th Circuit's wholly subjective rule, it is impossible for businesses to know what pricing decisions conform with the law," Weyerhaeuser argued. "Firms accordingly will be forced to curb aggressive, and desirable, competitive bidding for fear of triggering unwarranted liability."
Weyerhaeuser says the 9th Circuit should have applied a legal standard the Supreme Court used in a 1993 predatory-pricing case. That case required proof that an antitrust defendant sold a product below cost and was likely to recoup its losses after rivals had been driven out.
Ross-Simmons urged the Supreme Court not to get involved, saying the 1993 ruling wasn't applicable because the Weyerhaeuser case involved overpayments for raw materials, not predatory price cuts.
"Weyerhaeuser's conduct, raising the costs of natural-resource inputs needed for production, is materially different from lowering the price of goods sold to consumers," Ross- Simmons argued.
Pension Officers Putting Billions Into Hedge Funds, New York Times, Nov 27, 2005.
Faced with growing numbers of retirees, pension plans are pouring billions into hedge funds, the secretive and lightly regulated investment partnerships that once managed money only for wealthy investors. The plans and other large institutions are expected to invest as much as $300 billion in hedge funds by 2008, up from just $5 billion a decade ago, according to a study by the Bank of New York and Casey, Quirk & Associates, a consulting firm. Pension funds account for roughly 40 percent of all institutional money. This month, the investment council that oversees the New Jersey state employees pension fund said it would put some of its money into hedge funds for the first time, investing $600 million over the next several months. While most pension plans have modest stakes in hedge funds, others have invested more than 20 percent of their assets. Weyerhaeuser, the paper company, has 39 percent of its pension fund's assets in hedge funds...
Weyerhaeuser's big position has significant benefits for the company. Accounting rules let companies factor expected pension returns into their operating income; Weyerhaeuser's hedge-fund-laden portfolio allows it to claim expected annual returns of 9.5 percent. By comparison, the 100 largest companies that sponsor pension funds predicted last year that their average long-term returns would be 8.5 percent, according to Milliman Inc., an actuarial firm. For Weyerhaeuser, each 0.5 percent increase in the expected rate of return is worth an additional $21 million to the company's pretax income this year, according to S.E.C. filings. Weyerhaeuser did not respond to phone inquiries about its hedge fund investments, but said in S.E.C. filings that its actual pension investment returns more than justify its assumption of 9.5 percent...
Plum Creek Completes Michigan Timberland Acquisition, BusinessWire, November 15, 2005
Plum Creek Timber Company, Inc. today announced that it has completed the purchase of 650,000 acres of timberlands in Michigan from Escanaba Timber LLC. The signing of the purchase agreement was previously announced on October 3, 2005.
The timberlands, which are certified to the Sustainable Forestry Initiative(R) (SFI) Standard, contain a diverse mix of timber species and age profiles, including mature mixed hardwood stands and conifer plantations. Plum Creek will continue to manage these forests to the SFI Standard, as it does all of its timberlands.
Plum Creek will sell a significant portion of the pulpwood harvested from these lands to the NewPage Corporation Escanaba, Mich., pulp and paper mill under a long-term supply agreement.
Weyerhaeuser Sells French Composite Panels Business to Financiera Maderera S.A. Webbolt, Nov 1, 2005
In connection with its ongoing strategic review, Weyerhaeuser Company, one of the world's largest integrated forest products companies, announced that it has sold 100 percent of its shares in its French composite panels businesses to Financiera Maderera S.A. (FINSA), the largest producer of medium density fiberboard and particleboard in Spain. Both companies expect to close the sale by the end of the fourth quarter. Weyerhaeuser will continue to serve existing customers until the sale closes. Terms of the agreement were not disclosed. Weyerhaeuser said the facilities are a better strategic fit for FINSA.
Big Moosetake two-minute flash movie from the Natural Resources Council of Maine
First in a two-part series.
When Plum Creek Timber Co. plunked down $180 million for nearly a million acres of woodlands around Moosehead Lake in 1998, Mainers weren't sure what to make of the newcomer from Seattle.
Unlike traditional forest owners, the company didn't own any paper mills in Maine and it had a history of selling off western forestland for development. What would it do with one of the most prized regions of Maine's North Woods?
Seven years later, the state's fourth-largest private timberland owner is pushing the most ambitious development plan ever seen in the Maine woods, with thousands of acres around Moosehead Lake slated for home lots, resorts and campgrounds. And, again, Mainers are asking the question: What is Plum Creek?
With roots in the railroad industry, the company is one of the most successful of a new generation of American timber barons that see forest as much more than just trees. To Plum Creek, timberland is an asset with newfound cachet on Wall Street and the ability to generate revenue in more ways than one.
In the business world, that fresh approach has won many admirers. In forest regions around the country, it has created lots of critics.
Not only is Plum Creek one of the most progressive timberland owners in the nation, it's also the biggest. Plum Creek owns 7.8 million acres of forest in 19 states, which means its business decisions can have far reaching effects on landscapes, livelihoods and ecosystems all over the country.
It's happening now in Maine.
Buyers who snatched up 89 home lots in Plum Creek's first Maine subdivision are putting year-round vacation homes next to picturesque First Roach Pond, east of Moosehead.
Plum Creek unveiled much larger plans for zoning and development in the Moosehead Lake region earlier this year and is now making changes to satisfy neighbors and state officials. The plan includes 975 home lots, a 3,000-acre resort, a lodge and three RV parks. It also calls for conservation of 55 remote ponds and keeping 417,000 acres zoned as working forest for at least another 30 years.
The plan has brought the company praise on one hand and organized opposition, even vandalism, on the other. While the future of fabled Moosehead Lake is at stake, the plan also is expected to create a model for other parts of the North Woods, where owners are watching.
Setting the pace would be nothing new for Plum Creek.
The company's roots date back to the 1860s, when the federal government granted western lands to the expanding railroad. But Plum Creek did not become an independent company until 1989 when Burlington Northern Railroad spun off land holdings.
As a new company based in Seattle, Plum Creek inherited a dark reputation for clear-cut checkerboards in forests of the Pacific Northwest. In 1990, The Wall Street Journal quoted Rep. Rod Chandler, R-Wash., as saying that "within the industry, they're considered the Darth Vader of the state of Washington."
The company's forestry practices have changed, along with the industry, over the past 15 years. Clear-cutting is now more the exception. Selective logging, although with varying degrees of intensity, is more the rule. The company now prides itself on its forest management. It started complying with Sustainable Forestry Institute standards "well before it was popular to do that," said Jim Lehner, Plum Creek's Maine-based manager of northeast operations.
Less controversial out west these days, the company's forestry practices are still criticized by those who dismiss the sustainable forestry certification as "greenwashing" and say the company is expert at a practice called "double liquidation."
"First they go in and cut the trees and then they go in and subdivide lands for real estate development," said John Osborn of Spokane, Wash., author of "Railroads and Clearcuts."
LEADING THE WAY
Plum Creek waded into the development business in the early 1990s, proposing a master-planned 6,000-acre resort along the Cle Elum river 95 miles southeast of Seattle.
After years of debate and negotiation, Plum Creek got the necessary zoning and sold the land to a developer now building Suncadia, an exclusive getaway with a lodge, inn, vacation homes and three golf courses.
The project raised land values and spurred secondary development that is transforming the region, said Doug Kilgore, a leader of a local citizens group that worked to scale back the project. "Lots of people are saying, 'If they can do it, we can do it,' " he said.
Plum Creek's arrival in Maine, meanwhile, was part of an aggressive nationwide expansion as the company took advantage of upheaval in the timber industry.
Paper companies were selling off land to investors, turning forests into a commodity that became "green gold" on Wall Street. At the same time, demand for second homes pumped up some rural land values well above what tree growth could generate.
Plum Creek saw the opportunities. It became the first timber company to convert to a Real Estate Investment Trust, or REIT, which means the corporation doesn't pay income tax - the shareholders do - attracting more institutional investors and enough money to finance more purchases of timberland. It also created a full-fledged real estate division, hiring a Texas developer to run the operation as a vice president of the company. With Plum Creek's rapid expansion into the south and east and its evolving business priorities, new neighbors around the country are still trying to size up the company.
Plum Creek arrived in Wisconsin in 2002 and is now the state's largest single landowner with more than 500,000 acres. The company is selling off parts of that state's North Woods in chunks of about 40 acres, which are subdivided and developed.
The company arrived in Georgia in 2001 and owns 896,000 acres there.
"They have not gone into development in a big way in Georgia," said Thomas Harris, a forestry professor at the University of Georgia. "They're in the tree-growing business and continue with that segment, but they're not blind to the real estate options."
Since buying the land around Moosehead in 1998, company officials have tried to reassure its neighbors in Maine.
They promised to practice environmentally sound forestry. They said they had no plans to develop pristine shorelines on Moosehead or surrounding lakes and ponds, but they did not rule out selling land for development in the future.
The company sold 29 miles of Moosehead shorefront to the state for conservation. It also has kept the land open to the public and worked to maintain snowmobile trails that are important to neighbors and to the region's economy.
Fred Candeloro, owner of the Kokadjo Trading Post in the middle of Plum Creek's timberlands east of Moosehead, said the company has been willing to enhance access. "They are good neighbors," he said.
The company's record in Maine includes some missteps, however.
A logging contractor working for the company near Spencer Pond cut down a tree holding a bald eagle's nest in 2001. The discovery of the nest embarrassed the company but did not lead to any penalties.
Some complain the company cuts trees too aggressively. But state officials say it practices responsible forestry and that the forest is in good shape. Plum Creek has been fined once for violating the state's Forest Practice Act. In 2002, a contractor conducted a 157-acre clear-cut without getting proper review and the company later paid a $9,000 settlement.
"They've conducted hundreds of harvests covering thousands and thousands of acres, and we've had one violation of the FPA," said Don Mansius of the Maine Forest Service.
Development of the woods has attracted more attention and controversy here than the company's logging practices.
The company subdivided the 89 house lots around First Roach Pond in 2002. It was the biggest such development ever in Maine's North Woods and it sent a clear message that the region was ripe for more. The lots sold out fast at prices of $60,000 to $100,000 or more, and large year-round homes are now rising in the woods near one-room rustic camps that are centuries old.
While the new homes are set back from the lake and surrounded by conserved shorefront, some long-time camp owners say the area's character is changing and the wildlife retreating.
Now, with a much larger development plan on the table, company officials in Maine are trying to reassure people again.
"First and foremost, we're a timber company," Lehner said during a presentation on the plan in Orono earlier this month. The vast majority of the Maine land will remain a working forest, he said.
The company has a long-term contract to supply pulp to Sappi Fine Paper's mill in Skowhegan and also cuts trees for about 70 other Maine customers who make such products as building lumber, ice cream spoons, golf tees and toothpicks.
Lehner said the company prizes its Maine property because of the abundance of high-quality hardwoods that aren't as plentiful in the West and the South. He said the company's foresters plan to grow some 30-year-old maple and birch stands another 30 or 40 years to get the highest value hardwood.
"When the softwood market declines, we've got alternatives, we've got diversity. That is very attractive," he said.
David Field, chairman of the University of Maine forest management program, said Plum Creek is clearly attuned to real estate values, but it isn't giving up its best timber.
"The timberland value of what's being considered for development is relatively small," Field said. "It does not mean the company is primarily in the real estate business."
One place the company's reputation is not questioned is on Wall Street. As a publicly owned company, its stock is hot - up 40 percent in the last two years.
"It's a superb company," said Steve Chercover, a timber industry analyst for D.A. Davidson, a brokerage company based in Montana. "They're in a position (as a REIT) where they can outbid a traditional corporation for every plot of land."
And, Chercover said, they've tapped into the real estate value of the timberlands. "Instead of it being a side business, they've made it a central part of their strategy."
Real estate was the third-largest source of the company's revenue in 2004, after timber sales and income from a group of manufacturing plants in the northwest. But the real estate business is catching up fast, and the company is starting to explore other opportunities like sand, gravel and underground gas reserves.
Of its 7.8 million acres nationwide, 5.5 million are designated for timber growth and 2.3 million are targeted for sale as conservation, recreation or development land, according to the company's financial statements. Of the land to be sold, 1.3 million acres are considered the most valuable real estate, properties like those around Moosehead with high value for second homes or resorts.
KEEPING A CLOSE EYE
Plum Creek's latest proposal for development and forestry around Moosehead answered many of the questions about the company's intentions here. The proposal is unusual, even for Plum Creek, because it sets out a 30-year plan for an entire region rather than the sale of one piece at a time the way development is occurring in other states.
Lehner said the company has no additional long-range development designs for the land around Moosehead. It also has no immediate plans for development on its other Maine timberlands - more than 400,000 additional acres - although the company at some point will consider sales there, too, he said.
Plum Creek's trend-setting track record, and its influence on Maine's ecology and economy, means people will keep watching closely, said Ian Burnes, Maine Project Director for the Northern Forest Alliance, a group working to preserve forests.
"Looking at how sophisticated they are and how bottom-line oriented they are," Burnes said, "that's what makes us nervous."
PLUM CREEK BY THE NUMBERS
1,990 employees nationwide
PLUM CREEK TIMBER CO.
1989: Forms from a subsidiary of Burlington Northern Railroad, a descendant of Northern Pacific, which received federal land grants in the 1860s.
MAINE'S LARGEST TIMBERLAND OWNERS
1. Irving Woodlands: 1,550,000 acres
Huge Land Swap Enables Creation Of New State Forest In Yakima County. By Mike Conklin. KIMA TV, Oct 7, 2005.
The State of Washington and Plum Creek Timber Company traded about 35-thousand acres of forest land -- opening the way to creation of the new Ahtanum State Forest.
The deal fills in a checkerboard pattern of ownership between the state and Plumb Creek.
State Lands Commissioner Doug Sutherland says the new arrangement enables the state to manage forest lands in the area more efficiently.
Sutherland says creating a state forest will prevent the development of some sections for uses that are incompatible with the needs to protect the environment and leave elk migration routes unimpeded.
Weyerhaeuser Announces Indefinite Closure at Prince Albert Pulp & Paper. Company news release, Oct 4, 2005
As a result of poor market conditions, the Prince Albert pulp and paper mill in Saskatchewan faces indefinite closure, Weyerhaeuser Company announced.
"Today's announcement is an important step in strengthening Weyerhaeuser's overall portfolio to enhance shareholder value," said Steven R. Rogel, chairman, president and chief executive officer. "As part of a strategic review of our businesses operating in structurally challenged segments of the industry, we have determined the Prince Albert mill is no longer a strategic fit for Weyerhaeuser. We will continue to seek additional opportunities to unlock the value of our portfolio."
The uncoated free-sheet paper and pulp markets face fundamental challenges, including excess capacity, declining demand, mounting inventories and weak prices. Weyerhaeuser made its determination regarding the Saskatchewan operation as a result of these market conditions.
The company intends to explore all options with respect to the future of the mill, including identification of potential purchasers. Pursuant to Saskatchewan legislation, the company has given 90 days' notice to begin workforce reduction.
Prince Albert operations will commence a phased, indefinite closure starting Jan. 3, 2006. Paper operations will cease production on or about Jan. 2. The pulp mill will continue operating until spring to minimize risk of damage caused by cold winter weather.
"We fully understand the major impact of these changes for our employees, contractors, the community and customers, and we will work constructively in the weeks and months ahead to prepare for the transition," said Craig Neeser, senior vice president, Canada. "Unfortunately, market conditions have reached a point where we have no alternative."
The Prince Albert facility has an annual capacity of 280,000 tons of uncoated paper and 130,000 tons of market pulp. It employs 690 hourly and salaried employees.
Living in the Trees, and Raising a Few to Boot
By Kristina Shevory, New York Times, Sept 24, 2005
EATONVILLE, Wash. - All Richard and Donna Gleason wanted was five acres in the country with a good view.
They got a lot more than they bargained for.
In January, the couple bought a 20-acre mini-tree-farm for $200,000 from the Weyerhaeuser Company, the timber company based in Federal Way, Wash. They plan to build a three-bedroom, 2,800-square-foot house with views of nearby Mount Rainier. Their land is part of a "tree reserve community" Weyerhaeuser carved out of former timberlands south of Seattle. Prices range from $139,000 to $400,000 for a 20-acre plot, where buyers can build a home, harvest timber or do both. A 20-acre farm is about 15 football fields.
"It'll keep me busy for the rest of my life raising trees, picking blackberries and clearing brush," said Mr. Gleason, 57, of Des Moines, Wash., who is a software developer at Boeing.
Weyerhaeuser, like many timber companies, is converting former tree farms into small tracts of land for individual investors. It is selling land it considers too pricey to manage as timberland either because it is isolated, is too far from a mill or is close to a city and would earn more money if it was sold off.
"We're doing this to get a better return on our assets," said Frank Mendizabal, Weyerhaeuser's spokesman, as he rode with other company officials past the Nisqually River, which borders one of the tree reserves. "It's a creative way to dispose of assets. If this legacy of forestry management lives on, that's a bonus."
To be sure, the parcels do not make much of a dent in a forestry company's portfolio. Weyerhaeuser, which owns or manages a little more than seven million acres in the United States, has developed 5,500 acres in tree reserves in the last three years, while the International Paper Company has sold 182,000 acres of small parcels (less than 1,000 acres each) since 2001.
Encouraged by a booming real estate market, many forestry companies have set up formal land programs to trim back their holdings. International Paper of Stamford, Conn., is selling tracts from 20 to 1,200 acres in Michigan and across the South, while the Plum Creek Timber Company of Seattle is awaiting zoning approval to develop 975 lots in the Moosehead Lake region of Maine. Rayonier of Jacksonville, Fla., recently formed a company to develop its land in Florida and Georgia.
"They're taking a problem and turning it into an opportunity - that's brilliant," said Steven Chercover, a senior analyst at D. A. Davidson in Portland, Ore., who tracks the paper and forest products industries. "These companies can take one last bit of cash flow off them and then sell. It's all part of maximizing the land."
Weyerhaeuser, considered the pioneer, upgrades the roads, puts in electricity and telephone lines, builds trails with names like Blue Suede Shoes, gives buyers a forest management plan tailored to their property and even provides an electronic gate. Often, the company hides security cameras in wood birdhouses at each entrance to document all visitors.
The company's goal is not to turn timberland into subdivisions, but to keep it rural. In the reserves, thick stands of trees, including Douglas fir, alder, cedar and hemlock, still border many of the roads, where owners have not cleared for pasture to raise horses, and trees thickly cover the lots.
Wooden picnic tables are scattered throughout, often placed where the views are spectacular, like a hill overlooking the Nisqually River and Weyerhaeuser's 200,000-acre Vail Tree Farm to the south.
Lower taxes are an added bonus to owning forestland. If a buyer does not harvest the trees, taxes can be less than $100 a year because it is taxed as forestland. Mr. Gleason, for example, will pay $56 this year. Once a homeowner harvests the trees, he has to pay taxes on the timber.
For the last two years, Pope Resources, a small timber company in Poulsbo, Wash., that owns 115,000 acres in the state, has been quietly selling 10-acre and 20-acre parcels west of Seattle as it tests the market. Sales have gone well. The company sold its inventory of 140 acres in three months this year - and plans to kick off Rural Lifestyles, a residential program selling 5 to 80 acre plots early next year.
Pope, which expects to sell 100 to 200 acres every year in the program, will include gravel or paved roads, electricity and telephone, a forest management plan, company-backed financing and four to eight hours with an architect.
As land becomes more urbanized, "it becomes harder to manage with clear cutting and aerial spraying," said Jon Rose, president of the Olympic Property Group, Pope's real estate development subsidiary. "This is a polishing up of what was once a very boring project."
The rural land market has been transformed by people who want open space where they can build a home, hold the tract as an investment or use it as a hunting retreat. Median prices have risen from $901 an acre 10 years ago to $1,700 last year in the East Texas counties around Lufkin, according to the Real Estate Center at Texas A&M University.
"The sales have completely gone off the chart," said Dan Daniels, president of Greater Houston Market Services, which manages and brokers forestland sales. "Most people in their heart of hearts would like to own land to go out and enjoy."
At the 1,500-acre Nisqually River Forest Preserve, where the Gleasons bought, 85 percent of the parcels have sold since they went on the market last November. Weyerhaeuser is now scouting for other areas in Washington and might expand the program to the southern United States.
Mrs. Gleason, meanwhile, sent a photo of their tree farm and their view of Mount Rainier to her sister in Maryland last year. She soon received an e-mail message with questions like, "Where's the fire station?" and "How much does it cost?" Her sister liked the answers enough that by January, she had bought a lot next door.
"We see them once every five or six years," Mr. Gleason said. "When they move out, we'll see them every day and that will be a pleasure."
Round Valley neighbors unhappy with clearcutting
By Rocky Barker, The Idaho Statesman, Sept 13, 2005
Tim Blixseth, the new owner of 180,000 acres of Idaho timberland, says he wants to be a good neighbor.
Blixseth has plans to trade tens of thousands of acres of former Boise Cascade lands in the Payette River canyon to protect one of the state's most familiar scenic treasures.
Blixseth also has bought a place in downtown Boise and plans to hold on indefinitely to the large tree farm spread across south-central Idaho from Weiser to New Meadows to McCall, Cascade and southeast to around Idaho City.
"I've had many chances to sell the Idaho tree farm for a good premium," Blixseth said. "I told them it's not for sale."
But he has a lot of talking to do if he's going to convince Ed Wood of his good intentions. Loggers are clearcutting Blixseth's land next to Wood's Round Valley ranch. Wood, a 20-year resident, is skeptical Blixseth won't cut off the trees and build subdivisions.
The former Boise Cascade lands have always been open to hunters and recreation use. But much of the land could be valuable for development, especially in Valley County near the new Tamarack Resort, where land values have skyrocketed.
Blixseth says Idahoans shouldn't worry.
"We're not interested in selling property and will probably buy even more property," Blixseth said. "Development is a long way away."
Blixseth, 54, is the developer of the Yellowstone Club near Big Sky in Montana, a private golf and ski resort development marketed to people with a net worth of $3 million or more. He has bought and sold hundreds of thousands of acres of timberland in the past 20 years in the Pacific Northwest and Montana for logging, development and conservation.
Blixseth had wanted Boise Cascade land for years
Blixseth bought the land from Forest Capital Partners in March, only seven weeks after the Boston-based company bought all of Boise Cascade's approximately 2.2 million acres of timberland in Idaho, Oregon, Washington, Alabama, Louisiana and Minnesota for $1.65 billion in cash. Blixseth had attempted to buy the land from Boise Cascade for three years. He even made a play to buy the entire wood products company but was outbid by current owner Madison Dearborn.
He also bought 195,000 acres in Washington as a part of the deal with Forest Capital. He plans a 175,000-acre land trade with the state of Washington this week that will turn over much of that timberland to the state.
The initial sale from Boise Cascade gained national media coverage. But since both Forest Capital and Blixseth's company, Western Pacific Timberlands, are private, they did not make public announcements about their deal.
"We don't do press releases on all of our transactions," said Scott Jones, co-president of Forest Capital Partners, which still owns 280,000 acres in northern Idaho.
Sound of chainsaws heralded change
Wood is skeptical of Blixseth's neighborliness because Boise Cascade had not done clearcutting around him during the 20 years since he moved to Round Valley.
"The first time we knew anything was happening we heard chainsaws and tree processors," said Wood. "When we saw what on God's Earth was going on, we were outraged."
He is not convinced about the need for clearcutting or about the company's commitment to sustainable forestry.
Steve Gurnsey, land manager for Western Pacific Timberlands, said he's using the same forest prescription Boise Cascade did. He was Boise Cascade's manager of the same lands.
The clearcut is necessary because of beetles that are killing the white fir that dominates the stand of trees, said Gurnsey. He plans to replant the area in ponderosa pine, Douglas fir and larch.
"Right now the forest is dying faster than it's growing," Gurnsey said.
One difference from Boise Cascade's management is that the lands are no longer certified through the Sustained Forestry Initiative (SFI). Certification required extensive record-keeping and regular inspections by a third party. Gurnsey doesn't think the cost is justified.
But Forest Capital's Jones said he considers certification necessary.
"We are long-term timber operators," Jones said. "We believe SFI is consistent with good stewardship. It's how we do business."
Blixseth defers to his forester Gurnsey on the issue.
"I don't know much about it," Blixseth said. "I do know we're doing sustained yield forestry. We may even cut less timber than Boise."
Blixseth sees several conservation opportunities for land trades with the U.S. Forest Service and the Idaho Department of Lands. In addition to the Payette River corridor, he owns 10,000 acres on the back side of West Mountain - where Tamarack is located - that he thinks has scenic value and should be owned by the Forest Service.
He also wants to buy another unnamed tract that, when combined with some of his land, would fit into the Boise or Payette national forests. Overall, he could trade up to 115,000 acres to consolidate his holdings and meet public needs, he said.
That fits his record. In addition to the Washington land swap planned this week, he previously made land swaps in Washington, Oregon and Montana with the federal government. In the '90s, Blixseth purchased 164,000 acres of Plum Creek timber lands scattered throughout the Gallatin National Forest.
He proposed building a ski resort in the heart of the most valuable wildlife habitat north of Yellowstone National Park. After negotiations with the federal government and environmentalists, he agreed to sell and exchange 100,000 acres to the Forest Service, keeping the developable land near Big Sky - 22 square miles.
Bart Koehler, now with the Wilderness Society in Durango, Colo., negotiated with Blixseth on the Gallatin deals for the Greater Yellowstone Coalition, and he found him very savvy.
"Tim is a very capable person," Koehler said. "He's capable of making a lot of money in very smart ways, and he's very capable of reaching agreements that result in rock-solid conservation that will last over time."
Idaho Sen. Brad Little, R-Emmett, grazes cattle on some of Blixseth's land but has not yet met him. But Little wonders what Blixseth ultimately seeks in Idaho.
"He's got something he wants, if he has in mind a land trade," Little said.
A club for millionaires
In Montana, Blixseth's dream was the Porcupine ski resort he planned on lands he sold to the Forest Service. On the land he kept, he built the Yellowstone Club, billed as the world's first private ski and golf resort. Blixseth requires prospective members to prove a net worth of $3 million or more before paying a $250,000 initiation fee and $16,000 in yearly dues.
In addition to skiing, the club includes an 18-hole championship golf course, club house, ski lodge, tennis courts, equestrian center, health and fitness facilities, hiking trails, wilderness cabins, a lake for fly fishing and private home sites.
While building the resort, Blixseth violated federal and state water quality laws designed to keep sediment out of rivers and streams, resulting in fines exceeding $2 million.
Blixseth said he has ordered Gurnsey and his Idaho team to avoid "a single violation."
His latest dream is Yellowstone Club World, a global resort club with properties already in St. Andrew's, Scotland, Cabo San Lucas, Mexico, and Alaska. He eventually wants to buy resort properties around the world for use exclusively by his members. The membership fee is on a sliding scale up to $10 million.
Idaho's land has an uncertain future
Little hopes most of Blixseth's Idaho lands remain in sustainable forestry and eventually help attract a new timber industry in the region that can help the Forest Service thin and manage its forests. Wood, Blixseth's Round Valley neighbor, also wants to see the forest tracts remain intact, to continue as important wildlife habitat and beautiful scenery.
"This is a recreation treasure for Idaho," Wood said.
Blixseth said his intention is to manage the land for timber, but acknowledges he didn't buy the land simply to protect the Payette corridor.
"It does take quite a bit of money to buy these things," Blixseth said. "There has to be an up side for me."
Who is Tim Blixseth?
Tim Blixseth started life as the son of a disabled preacher on welfare in Roseburg, Ore., the youngest of five children. He worked in grocery stores and lumber mills through high school before unsuccessfully seeking a career in hollywood as a singer and songwriter.
Blixseth got into the business of buying timberland by putting down $1,000 as earnest money on 360 acres for $90,000 he had to pay in 30 days. He went to the major timber company in the area and sold the land to it for a $50,000 profit.
By the early 1980s, he had made millions but got overextended and went bankrupt in 1981.
He started over and in 1988 started Crown Pacific with a partner. Crown Pacific bought more than 250,000 acres of timberland in northern Idaho and Oregon and later 194,000 acres from Scott Paper Co. Blixseth sold out his share in 1990 and with two brothers, Norm and Mel McDougall, bought 164,000 acres of timberlands in Montana from Plum Creek.
After two federal bills that approved land sales and trades, he started the Yellowstone Club and now the Yellowstone Club World with his wife, Edra. She was the operating partner of a hotel and restaurant company and owned seven other restaurants. They raised four children.
Edra Blixseth also is the author of the book "Uncharged Batteries." A center in Palm Springs for women and children suffering from abuse is named after her.
Tim Blixseth kept his musical dream alive by writing and recording a song in 2001, "Pray for Peace," to raise money for victims of the 9/11 attacks. He founded and heads Friday Records.
He lives mostly in Montana and Rancho Mirage, Calif., where he also has a private golf course on a 240-acre retreat 10 miles from Palm Springs. He also has a penthouse at The Grove in Boise.
"I love Boise's downtown," Blixseth said.
Community Forestry Bids to Preserve Scenic West
By Jim Robbins, New York Times, Sept 4, 2005
OVANDO, Mont. - When the Plum Creek Timber Company decided to sell its 88,000 acres in the mountain-ringed Blackfoot Valley near here in 2003, ranchers, conservationists and other locals worried that a crop of new houses would sprout. Dependent on the forest and mountains to make a living and for hunting and fishing, they formed a nonprofit group mostly made up of area residents to buy the land.
In a complex deal that will be complete in 2007, they are selling parts of the land to federal land agencies, to ranchers and to other private owners with strict easements on it. Combined with other easements, the agreement will keep more than 100,000 acres undeveloped. The group, called the Blackfoot Challenge, will keep 5,400 acres.
"Our goal is to maintain a large intact landscape and the character of our valley," said Hank Goetz, a retired forestry professor from the University of Montana.
The interest of local people in managing the neighboring woods for their benefit is known as community forestry, part of a growing international trend. A 2002 report by Forest Trends and the Center for International Environmental Law found that since the early 1990's the number of acres under some form of direct community management had doubled in the Southern Hemisphere, the only region that was studied.
"It's a dramatic new model for forest management," said Jeff Campbell, senior program manager for environment and development at the Ford Foundation, which has given $25 million to finance community forestry in the United States over the last five years.
In community forestry, traditional opponents like environmentalists and loggers often join to fight a common enemy, for example subdivisions, absentee landowners or the decline of a local economy. The concept has been embraced by the Bush administration, which held a conference on what is known as cooperative conservation in late August in St. Louis.
"It's a new way of doing business," said Kathleen Clarke, director of the Bureau of Land Management, who toured the Blackfoot project in August. "Ours is not a command-and-control operation. It acknowledges that the best hope of being stewards is to pull together folks who live on these lands with the federal agencies."
The idea, however, worries some environmentalists, who see it as a way for industry to co-opt environmental protections. It could, they say, lead to the sale of public lands.
"It's Sagebrush Rebellion light," said John Horning, executive director of Forest Guardians, an environmental group in Santa Fe, N.M., referring to an effort in the 1980's by some Western politicians to persuade the federal government to turn over federal land to the states. "It's sinister and it's frightening, because it comes at the same time federal environmental safeguards on public lands are being dismantled to allow logging, mining, and oil and gas development."
Community forests have long been a part of the landscape in Europe, Canada and elsewhere, and there are "town forests" in New England. Community forestry is different. It means that a community may or may not own the forest, but it recognizes that community members have a stake in what happens around them and gives different interest groups a voice in management.
"Part of it's fear," said Frank Reed, director of development for the New England Forestry Foundation, which is working to protect 342,000 acres of forest in Maine called the Down East Lakes. "People living in rural areas are worried about the cities advancing on them."
That is part of what drove the Blackfoot Challenge. Subdivisions are one of the biggest environmental threats in the West. So The Nature Conservancy is buying conservation easements on existing ranches, and with that money the ranchers buy the land newly acquired from the timber company. By the time the deal, involving dozens of transactions, is complete, much will be preserved as it is today.
But a major component of community forestry is that the protection is not like creating a park; it allows traditional uses of the land that benefit the local economy to continue as long as they meet community-set environmental standards.
The cobblestone-studded Blackfoot is the river made famous by Norman Maclean's novel "A River Runs Through It." But the movie version of the book was not filmed here. When Robert Redford came to scout the location, there were so many clear-cuts, he said, that they had to film elsewhere.
That is one thing the Blackfoot Challenge hopes to change. It will allow logging, which will keep a local sawmill and loggers in business, but with guidelines that protect wildlife, water quality and scenic values.
In the West, these kinds of collaboration often involve vast tracts of federal land, which is intermingled with private land, as is the case here. Ms. Clarke and other federal officials vow to work with local communities on these kinds of projects. To enable the Blackfoot project, for example, the Bureau of Land Management has bought 3,640 acres and will buy more than 20,000 more.
One large experiment in cooperative management is on the 89,000-acre Valles Caldera National Preserve, a cattle ranch just west of Los Alamos, N.M., which the federal government bought in 2000 for $101 million. The government wanted to protect the scenic area but not simply turn it into a park. It set up a nine-member board of presidential appointees, who represent a variety of interests, including agriculture, wildlife and history.
"It's the most open process I've ever witnessed in terms of getting people's views and managing land," said Ray Powell, a former New Mexico state land commissioner and the departing director of the preserve. "It has worked here."
Mr. Horning, however, contends that the preserve board has not enforced environmental standards when it comes to livestock grazing. "As result, every single stream is polluted and violating state water quality standards," he said.
Mr. Powell denies that cattle are the problem. Water quality is not what it should be, he said, largely because of historic timber clear-cutting. After a rain, he said, soil is washed into the streams. "We're bringing the stream quality to a level that will surpass what it has been," he said.
Ms. Clarke, the B.L.M. director, said cooperative management would not change the federal mission to manage land for all Americans. "It doesn't relieve the agencies of their laws or mandates," she said.
In Eastern forests, the issues are different. Out-of-state timber and real estate interests are buying forests and depriving local communities of their use.
In 2000, the Ford Foundation financed 10 community forest projects in New England. One was the Vermont Family Forest Partnership, an effort to involve low- and moderate-income people who had lost their jobs. With modest investments, 16 people are buying shares in a 120-acre forest plot. They can hike and hunt on the land, and as the project moves forward the land will be logged and the owners may do the work and will share in the profits.
But even collaborative decisions can run afoul of the powers that be. In the 1990's millworkers, timber company officials and environmentalists negotiated for seven years to devise a plan to reintroduce grizzlies into the Selway-Bitterroot Wilderness Area in Idaho and Montana. But the agreement was vetoed by Interior Secretary Gale A. Norton at the request of Gov. Dirk Kempthorne of Idaho.
Such actions "become a problem," Mr. Kemmis said, "because you can't ask people to go back to the table over and over again."
Port of Olympia and Weyerhaeuser Sign Lease. TimberWest Journal, Sept/Oct 2005
"Weyerhaeuser will be relocating its Tacoma port facility to Olympia, Wash. The Port of Olympia Commission approved a lease between the Port and Weyerhaeuser for a 24.5-acre site on the Port peninsula in Olympia for Weyerhaeuser's forest products export facility. The five-year lease contains options for three consecutive two-year extensions and start-up is expected in the spring of 2006. The Olympia facility is expected to handle up to 18 export vessels and 30 barges of in-bound logs annually. With the addition of the new business, over 100 million board feet of export wood is predicted to cross the Port docks each year — that’s up significantly from 41 million in 2004. "The Port has established itself as a regional log load center, and this move captures a market opportunity that is a natural extension of what we already do well," says Port Commission President Bob Van Schoorl."
Environmental activists launch campaign against Moosehead project. By Jerry Harkavy, AP/Boston Globe, July 26, 2005
A coalition of environmental groups on Tuesday launched what it billed as a national campaign aimed at blocking a proposal by Plum Creek Timber Co. for a massive development in the Moosehead Lake region.
Former Green Party gubernatorial candidate Jonathan Carter said the "Save Moosehead" campaign will pursue every "political, legal and legislative" avenue to halt what he and other opponents characterized as wilderness sprawl.
"We're going to attack from all sides," said Carter, director of the Forest Ecology Network. As a final resort, he said, opponents of the project are prepared to circulate petitions to force a statewide referendum to stop the project.
Plum Creek filed its 570-page application in April with the state Land Use Regulation Commission, which plans a series of public "scoping sessions" next month to discuss what issues the panel should consider in its review of the project.
The development calls for 975 house lots, two resorts, three recreational-vehicle parks, a golf course, a marina and rental cabins around Moosehead Lake.
The state's largest environmental advocacy organization, the Natural Resources Council of Maine, came out last month in opposition to what would be the state's largest subdivision, calling it out of scale and out of character for the region.
Cathy Johnson, NRCM's North Woods project director, said the emergence of a new coalition is further evidence that more people across the state are concerned about the huge changes that the Plum Creek development would bring.
"I wouldn't be surprised if you see other groups organizing in the future," said Johnson, adding that the opponents "are all talking to each other."
In defending the plan, Plum Creek said 98 percent of the 426,000 acres involved in the project would be left untouched. The Seattle-based company said the project would stimulate economic development and create much-needed jobs while preserving working forest and restricting future development.
Jim Lehner, Plum Creek's regional general manager, said opposition to the project by environmental groups was not unexpected or beyond the level that his company had foreseen.
"The opponents tend to be very vocal, the supporters tend not to be," Lehner said. "We're very pleased with the support we've received, particularly in the Moosehead Lake area."
Carter said Plum Creek deceived Mainers when it bought 900,000 acres seven years ago and said it had no plans to carve it up "for vacation homes and other types of development that are incompatible with Maine's wildland heritage."
He suggested $100,000 in fund-raising might be necessary to get the program under way. He declined to discuss details of a possible referendum campaign or say how the question might be framed. He said he didn't want to "tip our hand."
John Demos, representing American Lands, said the campaign will seek to focus national attention on the need to block the project.
Demos said the Moosehead region is of "tremendous national importance as part of the largest contiguous undeveloped forest region east of the Mississippi" -- land that should be protected forever for the benefit of future generations.
State Rep. John Eder, the Legislature's only Green Party member, said he will lead an effort to inform his colleagues about the magnitude and implications of the project.
Also joining in the coalition was Jym St. Pierre, director of RESTORE: The North Woods, a conservation group that has spearheaded the campaign for a national part in northern Maine.
"The Plum Creek development proposal is the greatest stingle threat to the ecological and economic integrity of the Maine woods in generations," said St. Pierre, who characterized the national park plan as an alternative "that would permanently protect what the public cherishes about this region."
Plum Creek's fine print important. By Cathy Johnson, Natural Resources Council of Maine, Bangor Daily News, July 16, 2005
Plum Creek, a real estate investment trust, has proposed to develop 975 house lots, two luxury resorts, a marina, three RV parks, and more in the beautiful Moosehead Lake Region in the heart of Maine's undeveloped North Woods. If you listen to Plum Creek's description of their project emphasizing all of the conservation they say they will do, you might well come away thinking "this sounds pretty good."
Beware the fine print. As Paul Harvey says, "Here's the rest of the story."
In addition to the 975 house lots, Seattle-based Plum Creek proposes two resorts. These resorts could include an unlimited number of additional housing units, both overnight and permanent, such as condos, houses, apartments, cabins, lodges, suites, rooms, etc.
In the Suncadia resort, on former Plum Creek land in Roslyn Wash., 3,785 new housing units, including condominiums and individual houses are planned. In a resort created on former Plum Creek land in Montana, The Yellowstone Club, individual house lots, not the houses themselves - just the lots, run from $1.1 million to $3.2 million and only those with $3 million or more in the bank are welcome.
In addition to houses, hotels, motels and condos, the Maine resorts may include a golf course, spa and fitness center, restaurants, gift shops, clothing stores, outdoor gear stores, beauty salons, horse stables, and tennis courts.
On the east shore of Moosehead Lake, right across the bay from Lily Bay State Park, Plum Creek proposes to build a marina. The marina would serve the residents of the resort and the proposed 190 houses to be built behind the 500 foot protected strip on Lily Bay. Motor boats and jet skis would be zooming by Lily Bay State Park, one of Maine's most beautiful, quiet and peaceful state parks.
The 975 house lots include more than 30 separate subdivisions scattered across the landscape. Two contain over 180 lots. None of these house lots are within organized towns so they would not contribute a bit to the local tax base.
And what details does Plum Creek fail to tell us about their proposed "conservation?" First of all, they fail to tell us that conservation is required by law when development this big is proposed. It is not a gift or being offered through the goodness of Plum Creek's corporate heart.
More importantly, the vast majority of the conservation they propose is not permanent. One of the proposed "conservation" measures is to zone 382,000 acres for "no development" for 30 years. The Maine Attorney General's Office has examined this proposal and found that the protection offered is no greater than what currently exists under the zoning rules already in place. In any event, it expires in 30 years, at which point, the whole area is subject to development.
And within this so-called "no development" zone, Plum Creek is proposing to allow four new sporting camps, each twice the size allowed under LURC regulations, and 116 rental cabins, four per township. So, in fact, development would be spread all across the landscape, even within the "no development" zone.
Plum Creek also proposes a 500-foot no-development easement on 55 remote ponds. However, 22 of those ponds are surrounded by wetlands that couldn't be developed anyway and eight of the ponds are already legally off-limits to development. In addition, seven of the ponds are partly in and partly out of the plan area, but still on land owned by Plum Creek, so Plum Creek could still develop those parts of the shoreline not included in this proposal. And nothing would stop development on Plum Creek land right behind the 500-foot no-development easement strip when the 30 years is up.
Other measures in the plan touted by Plum Creek are the proposed hiking and snowmobile trail easements. Permanent trail corridors for snowmobilers, hikers, skiers, bicyclists and others are unquestionably a benefit to the region. However, Plum Creek would retain the power to require that these trails be relocated at any time at taxpayer expense. In addition, Plum Creek would retain the right to clearcut, spray pesticides and build roads right up to and over the trails.
When looking at the Plum Creek proposal, be sure to read the fine print.
The spectacular beauty and character of the Moosehead region is at stake.
Primm for all time - Five Valleys Land Trust and Plum Creek Timber join forces to preserve old growth ponderosa. By Perry Backus. Missoulian, July 7, 2005.
Margrit Syroid made her first foray into Primm's Meadow more than 20 years ago.
It was a journey she never forgot.
"I've always said it was like walking into a cathedral," she said. "It's so amazingly beautiful."
Ever since that simple stroll, Syroid has spent countless hours calling, cajoling and coaxing anyone and everyone who might help to preserve the large stand of old growth ponderosa pine in the Gold Creek drainage 17 miles northeast of Missoula.
On Wednesday, that dream for Syroid and others came true when Plum Creek Timber Co. and Five Valleys Land Trust announced the recent signing of a conservation easement that will protect the area for generations to come.
In a short ceremony, Plum Creek officials dedicated the easement to David Leland, former Plum Creek chairman and chief executive officer who retired in May, with the unveiling of a sign on the edge of Primm's Meadow.
"Primm's Meadow is a unique and beautiful property which has long been valued by its many visitors who have come to enjoy its visual, historic and recreational attributes," said Plum Creek President and Chief Executive Officer Rick Holley said. "Plum Creek is pleased to permanently conserve this special place so that future generations can enjoy its rich assets in perpetuity."
The easement sets aside 112 acres of towering yellow-barked ponderosa pine that were already old when Lewis and Clark made their way through the area.
"Some of these trees are probably 400 to 500 years old," said Steve Arno, a retired research forester. "When Lewis and Clark went through here, there were miles and miles of this type of forest in the Bitterroot and Blackfoot drainages. They're not there anymore."
The pines of Primm's Meadow didn't survive this long without some help from humankind.
"It's a human-caused site," said Peter Kolb, Montana State University extension forestry specialist. "That's, in part, what makes it so unique."
In the future, Kolb and others would like to place some low-impact interpretive signs that point out some of the effects people have had over the years.
American Indians used the site to camp and harvest the sweet tasting cambium from under the bark of the pine trees. When they left each year, they'd often set fire to the area to clear out the smaller trees and ensure good forage for their horses for the next season.
In the 1890s, the meadow was homesteaded by Frank and Edna Parker, where they raised potatoes, hay and beef cattle. They eventually sold the timber rights of the property to the Anaconda Co.
The Parkers sold out in 1938 to Charles and Mahala Primm, who continued to raise a crop of hay under the large pines. To accomplish that, they kept invading trees clipped back and raked up the pine needles every year - the needles are toxic to cattle and can cause them to abort.
Even before the Primm family decided to sell the property to Champion International in 1979, Anaconda Co. officials had already recognized this special place, said Ernie Kurrick, a retired forester who worked for both the Anaconda Co. and Champion.
"I credit George Neff, the land manger for Anaconda Co., for saving this," Kurrick said.
It was Neff who decided back in the 1950s that the area wouldn't be logged.
When Champion acquired the surrounding lands and some developers started to talk to Primm's son, Morris, about the potential of building cabins on the homestead, the company stepped in and bought the land, said Kurrick.
"We had a hard time getting Morris to close the deal," Corrick remembers. "Finally, at the last meeting, he said he wanted a Champion hat and a Champion pair of suspenders before he'd close. Š I think we had them in about seven seconds."
Corrick proposed setting the area aside as a "Special Place in the Forest." To help the board of directors in making a decision, he suggested the area be called the "Director's Grove."
"They approved it in no time," he said.
Plum Creek continued that preservation effort.
Leland said the company recognizes that there are places that need to be protected on its extensive landholdings.
"Just because we can't harvest them doesn't mean that they don't have a bigger value," said Leland. "By signing this conservation easement, we've been able to capture that value."
"This is a special place," he said. "I might even bring some of grandchildren here one of these days."
Plum Creek is one of the largest private timberland owners in the country, with about 8 million acres in 19 states.
Wendy Ninteman, executive director of Five Valleys Land Trust, said the conservation easement is testament to what can happen when a core group of dedicated people work together to protect a place special to them and there's a willing landowner on the other side.
It was eight years ago and Ninteman's first week on the job at Five Valleys when Syroid made her initial impassioned plea for help to save Primm's Meadow via the telephone.
"She was the first one who called me on my first week on the job," remembers Nineteman. "And she never let up. She just hounded Plum Creek and was constantly searching for help. That's how much she loves this place."
Syroid eventually found some additional support from a small group of folks who began calling themselves the Friends of Primm.
"There were a core dozen of them who kept their eye on this," Ninteman said. "And today just goes to show you that if you care about something enough, you can make it happen."
"The protection of Primm's Meadow with a conservation easement is a wonderful gift to all of us here in western Montana," said Ninteman.
"We want to thank Plum Creek for permanently conserving this property."
"We at Five Valleys Land Trust are honored to accept this easement and the responsibility for perpetual stewardship that it entails. This is a place where the land and the trees tell a valuable story of natural forces and human history."
"Now we know it will never be lost," she said.
Saskatchewan: The Province of Weyerhaeuser: A Clear-cut Case Study by the Rainforest Action Network.
NRCM Finds Big Flaws With Plum Creek Plan. MBPN.net. It's taken two months for analysts at [Natural Resources Council of Maine] Maine's largest environmental organization to review the 570 pages of details in Plum Creek's sweeping development plan for Moosehead Lake. And the more they read, the more they don't like it. Susan Sharon reports.
Group: Moosehead region won't benefit from Plum Creek plan. By Chris Churchill, Central Maine Morning Sentinel, June 24, 2005. A leading environmental group on Thursday took aim at the colossal development proposed for the Moosehead Lake region, saying the Plum Creek Timber Co. plan doesn't provide the benefits the company promises.
Plum Creek plan fails. Letter to the Editor, Bangor Daily News, June 23, 2005. We must seriously consider the plan by Plum Creek and what the effects on our state will be if it is allowed to be completed. The reason the Greenville-Moosehead Lake region has been such a popular destination is the majestic beauty and mystique of the area. Millions have traveled there, and would continue, because of the uniqueness the area has to offer.
North Woods project panned. By Clarke Canfield, Associated Press / MaineToday.com, June 24, 2005.
Natural Resources Council Of Maine Opposes Moosehead Proposal. WLBZ-TV, June 24, 2005.
S. King County site barred from development by land deal. By Craig Welch, Seattle Times, June 8, 2005
A wetlands-rich section of private forest near the Cascade foothills — a place where bird-watchers have been able to spot more than 60 species in two hours' time — will be among hundreds of acres near Black Diamond protected from development by a complicated land deal announced yesterday.
Plum Creek Timber yesterday agreed that Ravensdale Ridge, a 1,600-acre slope in southeast King County popular with horse riders and mountain bikers, will continue to be logged in perpetuity, instead of being paved for new homes or businesses.
And hundreds of additional acres in and around Black Diamond, some public and some private, will be set aside for parks and open space.
In exchange, 329 acres of Plum Creek land that had been outside Black Diamond will be annexed to the city so the timber company can develop it. The plans for the development haven't been ironed out.
"Black Diamond is a rural town, and this would still fit within the character of the community," said Karen Wolf, a policy adviser to King County Executive Ron Sims. "But it certainly offers [Plum Creek] a lot more potential for development."
Jason Paulsen, city administrator for Black Diamond, said the deal had been about a decade in the making. "This was a large part of what we hoped to hold on to in order to retain our rural character and remain a unique community," he said.
The Ravensdale Ridge area, just outside the city, is home to Buck Lake, a popular trout-fishing spot, and overlooks Rock Creek, a tributary of the Cedar River.
The ridge is covered with miles of trails and rises high enough that visitors can see the Olympic Mountains to the west and peek-a-boo views of Seattle's skyline.
Under the deal, the land can be logged but never developed. And it must remain open to the public.
Yesterday's complex transaction was worked out between the city, the county, Plum Creek and the Cascade Land Conservancy, a group that tries to protect land from development that often acts as a broker in such deals.
In addition to the Ravensdale land, the deal sets aside several smaller parcels for public use. One of them, King County's undeveloped 165-acre Sawyer Lake Park, will be mostly deeded to Black Diamond, which plans ultimately to rebuild it into a working public park.
Steve Dunphy, spokesman for the Cascade Land Conservancy, said this is a small example of the kind of deals the conservancy hopes to promote in coming decades. It will be trying to persuade community leaders to invest $7 billion over the next century to set aside more than 1 million acres in the Puget Sound region, Dunphy said.
And yesterday's transaction may only be the start for Black Diamond.
The federal government tentatively has agreed to consider matching yesterday's conservation effort at Ravensdale with a $3.6 million grant for the purchase of a few thousand acres of additional forestland near Black Diamond yet to be specified.
"This agreement is really just a big first step," city administrator Paulsen said.
Catellus to Be Bought by ProLogis. By Roger Vincent, Los Angeles Times, June 7, 2005
Catellus Development Corp., one of California's largest private landowners thanks to a lineage that dates to the earliest days of railroads in the West, has agreed to be sold for $3.6 billion in cash and stock to warehouse and distribution giant ProLogis.
Both companies are real estate investment trusts that develop and operate industrial properties. Catellus also owns Union Station in Los Angeles and a portion of the residential and office development at Mission Bay in San Francisco.
ProLogis will continue to develop Catellus' properties, including Kaiser Commerce Center, a 588-acre former Kaiser steel mill in San Bernardino County near truck routes that serve the ports of Los Angeles and Long Beach. Catellus also is constructing office buildings at Los Angeles Air Force Base in El Segundo with Kearney Real Estate Co.
Under terms of the deal, ProLogis would pay $33.81 a share, a 16% premium over Catellus' closing price Friday, or 0.822 share of ProLogis for each Catellus share. The total value of the deal is $4.9 billion including debt, the companies said, and marks the biggest U.S. real estate acquisition of 2005.
The announcement drove Catellus' shares up $3.75, or 13%, on Monday to $32.99. ProLogis' shares fell $1.26 to $40.11.
The combined company would have more than 350 million square feet of warehouse and distribution centers valued at $21 billion.
"Catellus has the best industrial portfolio in the United States," said Jeffrey H. Schwartz, chief executive of ProLogis. The majority of Catellus' holdings are in California, which Schwartz called the top industrial real estate market in the country, with six times more buildable land in the state than ProLogis.
"We wanted a much larger presence in Southern California, and that was a driving reason to do this" acquisition, Schwartz said.
Catellus is "one of the most aggressive of the developers of new industrial land at the moment," Jim Ulmer, a senior vice president at Baltimore-based LaSalle Investment Management, told Bloomberg News. LaSalle owns 3.2 million shares of ProLogis and no Catellus shares.
"It's a good deal for Catellus, and it's a very good deal for ProLogis," he said.
Nelson Rising, chairman and chief executive of Catellus, said, "We believe this is an excellent way for our shareholders to realize the value of the platform we have built and to participate in the future growth of ProLogis."
Rising, 63, has been Catellus' CEO since 1994 and previously was a senior partner at Maguire Thomas Partners, where he was in charge of major Los Angeles projects including the Library Tower and Playa Vista. Rising, whose 1.4% stake in Catellus is worth about $47 million, would join ProLogis' board of directors, but he would not have a management post.
Catellus' president of commercial development, Ted Antenucci, would become president of global development for ProLogis. Schwartz declined to speculate on possible layoffs of Catellus employees.
The union of the two companies "is very complementary in terms of what they bring to the table," said John Long, chairman of the Richard S. Ziman Center for Real Estate at UCLA and a private real estate investor through Highridge Partners and Golden Boy Partners.
Catellus, based in San Francisco, has a huge inventory of land and expertise at getting government approvals for new construction, while ProLogis is a respected large-scale developer, Long said.
Aurora, Colo.-based ProLogis owns and manages 2,043 warehouse and distribution centers totaling 310.8 million square feet in North America, Europe and Asia. Its customers include FedEx Corp., Home Depot Inc., General Electric Co., Sears Holdings Corp., Unilever and Wal-Mart Stores Inc.
Catellus became a REIT at the start of last year as it shifted its focus to building and operating industrial parks instead of developing urban mixed-used projects such as Union Station and Santa Fe Place in San Diego. It has 40.6 million square feet of property, mainly distribution centers, across the U.S.
Santa Fe Pacific Corp. spun off Catellus to shareholders in 1990.
Catellus was formed in 1984 to handle the non-railroad activities of the Santa Fe Pacific Corp. and to develop vast properties around its major transportation corridors.
*Although Catellus was the developer of some well known projects, it owns little or no property on some of them now.
Land for Maine's Future Reality Check. By Jim Dunton. Bangor Daily News, June 4, 2005.
The cost of any bond issued for the LMF is not limited to the bond itself. Properties involved may be taken off the local tax roles in part or entirely, placing a greater burden on the remaining taxpayers. LMF projects may be exempted from a municipality's state evaluation, having a negative economic impact on neighboring towns within the county or school district. Also, and perhaps most significant, those lands purchased outright or controlled by the state will require ongoing taxpayer support for maintenance, improvement and policing. Given the current condition of the state budget, can we afford the additional obligations?
Are the taxpayers of Maine the only resource available for LMF? Plum Creek has proposed a 426,340 acre development in the North Maine Woods. Their proposal includes nearly 11,000 acres in permanent shoreland conservation easements, over 21,000 acres in protected natural resources, 2,800 acres in open space and 382,000 acres in non-development working forest.
Wal-Mart recently granted the Downeast Lakes Forestry Partnership $6.1 million for a 339,000-acre conservation project in Washington County, part of a nationwide disbursement of $35 million administered by the National Fish and Wildlife Foundation. An anonymous owner recently granted a 169-acre conservation easement on Webber Pond in Vassalboro to the Kennebec Land Trust.
Other sources of support include the Forest Legacy Program, the Maine Outdoor Heritage Fund, The Nature Conservancy, the Maine Coast Heritage Fund and the Forestry Society of Maine, just to name a few. None of these required a vote of the citizenry of the state of Maine or any taxpayers dollars.
Recent letters to the editor and news articles have espoused the merits of the LMF program. They claim the LMF program is essential to guarantee continued access to private lands for Maine citizens for snowmobiling, four-wheeling, hunting, hiking, etc. The LMF Web site lists 103 projects completed to date. Of those 103 projects, five deny any public access without explicit permission, 96 prohibit four-wheeling and 72 prohibit snowmobiling. The projects are concentrated near the coast (26 projects in York and Cumberland counties alone); only 30 of the projects are in the inland region of the state - 12 projects in the Western Mountains Region. I think perhaps we have been hoodwinked to a degree.
As much as I enjoy the Maine outdoors (except May when it rained for 28 days), I do not rely on the state to pay for or guarantee access for my good walk spoiled (that would be golf for the uninitiated) and I do not believe taxpayers should be burdened with the cost of guaranteeing others the pursuit of their chosen outdoor activities. It is time to abandon the socialist doctrine of state ownership and start pursuing private enterprise; after all, that is what this country was built on.
Jim Dunton is a resident of Bingham.
Weyerhaeuser Rapped for Market Bullying, [Tacoma WA] News Tribune, June 2, 2005
Timber giant Weyerhaeuser Co. saw an appeals court uphold a 2003 jury verdict finding the company guilty of trying to drive smaller competitors out of business with "predatory" tactics.
Unless the company wins on further appeal, the plaintiff, a now-defunct Longview lumber company, will win triple antitrust damages totalling $78.8 million from Weyerhaeuser.
Weyerhaeuser's business practices in the alder industry in Washington and Oregon have come under heavy fire in the courts, and the Federal Way-based company has not fared well.
Counting the latest award, damages against Weyerhaeuser in cases related to its alder business now total $127 million. Several lawsuits are still awaiting trial or are on appeal; the company has settled out of court in two cases.
This pattern suggests that the company, which has long enjoyed a reputation as a progressive and forward-looking firm, lost its ethical compass in at least one segment of its business.
In its appeal, Weyerhaeuser argued that the jury had been wrongly instructed by the court about the applicable precedents; it also argued that the damages were improperly calculated.
A three-judge panel of the 9th U.S. Circuit Court of Appeals, however, unanimously rejected all of Weyerhaeuser's arguments. The panel ruled the record showed "direct evidence of Weyerhaeuser's injurious exercise of market power."
At a time when Weyerhaeuser's share of the Northwest hardwood market was 65 percent, the company paid inflated prices for logs, bought more logs than it needed and restricted the supply of logs with exclusive deals, the court said.
Facing higher log prices and declining prices for its lumber, the plaintiff, Ross-Simmons Hardwood Co., which employed 200 people at its peak, was forced to close in 2001.
Weyerhaeuser officials insist the company operated within the law and note that other plaintiffs making similar claims have lost in court. The issue, they contend, is interpretation of antitrust law.
No matter how you look it, the appeals court decision is an embarrassing and costly black eye for Weyerhaeuser. Size confers a lot of advantages in the corporate world, but even the biggest companies are required by law to play fair.
In the Northwest hardwood industry, at least for a time, it appears Weyerhaeuser tried to win by playing the bully.
Vandals Target Plum Creek Offices on Eve of Protest. Associated Press / Seattle Post-Intelligencer, May 31, 2005.
Workers arrived at Plum Creek's state headquarters to discover someone had cut down the sign in front of the building. Also, there were spray-painted messages including "Leave Our Land" and "Maine Is Not For Sale."
Seattle-based Plum Creek announced its development intentions for the Moosehead Lake region in December. As outlined in April, the project would include 975 house lots, four sporting camps, two resorts and a golf course.
"We see Greenville being more of a Kennebunkport or a Boothbay Harbor in the future if this happens," Jim Freeman of Earth First! told WLBZ-TV in Bangor. Freeman denied having anything to do with the vandalism.
Company officials said there would be ample opportunity for people to express their opinions as the proposal is reviewed by the Maine Land Use Regulation Commission.
The project is the largest subdivision ever proposed in the 10.5 million acres of unorganized territory that the Land Use Regulation Commission oversees.
As part of the plan, Plum Creek proposed setting aside 89 percent of the 426,000 acres as working forest land. Most of the development would occur in the next 10 to 15 years, Plum Creek officials have said.
Weyerhaeuser and Brascan Complete $1.1 Billion Deal. Seattle Times, May 31, 2005.
Toronto-based Brascan said the assets will be held by two newly created units. Cascadia Forest Products will take the mills and harvesting rights on public land, while the private forest lands will held by Island Timberlands.
The companies had announced the deal in February.
Federal Way-based Weyerhaeuser is keeping its forestry operations in the British Columbia interior region. It plans to use the proceeds from the sale to help pay down debt.
Brascan Completes Weyerhaeuser Acquisition: Immediately Splitting Assets into Two Companies, Island Timbers and Cascadia, the Beginning of the Restructuring of Coastal Industry. By Gordon Hamilton, Vancouver Sun, May 31, 2005.
Brascan Corp. completed its $1.2-billion purchase of Weyerhaeuser Co.'s coastal forestry operations Monday, immediately splitting the assets into two new companies and transforming much of the coastal forest industry in one sudden move.
BRASCAN'S B.C. EMPIRE:
CASCADIA FOREST PRODUCTS LTD.
ISLAND TIMBERLANDS LP
Objections to [Weyerhaeuser] Herbicide Spraying. Edmonton Journal, May 30, 2005.
The logging company is using the chemical glyphosate, which is used in commercial products such as Roundup, to spray between 700 and 800 hectares of forest in the Rocky Mountain House area.
Officials say the goal is to keep young trees thriving by eliminating competing vegetation.
Conservationist Martha Kostuch, who lives in Rocky Mountain House, objects to the chemical spraying and also to the treatment of Alberta's public forests.
"I am not opposed to logging . . . but I don't think we should be turning our public lands into crops,'' she said.
Kostuch noted that chemical spraying is a fairly new strategy for Alberta loggers, who used to cut back aspen and grasses manually. She worries about the effect of herbicides on wildlife and habitat. She also suggests frogs are disappearing at an alarming rate because chemicals in the environment are soaking into their permeable skin.
Dave Kent of Weyerhaeuser said glyphosate is a relatively mild herbicide that has been proven not harmful to animals or birds.
He said the company only intends to spray once in small areas, so the grasses and aspens that compete with spruce and pines for water and soil nutrients will eventually make a comeback.
Kent estimated at least 70 per cent of Alberta logging companies use chemical sprays.
He said Alberta government regulations require more stringent elimination of vegetation, so the only thing that will remove fast-growing grasses in some areas to provincial standards is a herbicide spray.
But Duncan MacDonnell, spokesman for Alberta Sustainable Resources, said government regulations haven't been changed to his knowledge.
The province has always required that competitive vegetation be kept in check while newly planted trees are growing. But how this is done is not specified in legislation, said MacDonnell.
He believes manual cutting works just fine and the use of herbicides is a business decision. "It's an easier, cheaper method.''
1,800 acres along Bull River set aside for wildlife. By Michael Jamison, Billings Gazette / Missoulian, May 30, 2005.
Before he made it five miles from his front door, Ryder had spotted elk, white-tailed deer and an eagle.
It was, he admits, an appropriate start to what would be a very special day in his neck of the woods.
Ryder, a naturalist and Audubon Society member, lives in the lowland forest along Montana's Bull River, a wild stretch of woods nestled between the East and West Cabinet Mountains south of Troy.
The scenic five miles he traveled Wednesday put Ryder on the doorstep of the state's newest public wildland, the Bull River Wildlife Management Area.
Managed by the Montana Department of Fish, Wildlife and Parks, the Bull River WMA is a remarkable sprawl of wetlands and dryland forests, clean streams and ancient hemlocks.
Equally remarkable, perhaps, is the complicated web of political partnerships that led to Wednesday's hand-shaking, back-slapping, ribbon-cutting celebration.
Chris Smith of FWP called it "a tremendous example" of cooperation. Bob Anderson of Avista Utilities said it was "truly astonishing." Plum Creek Timber Co.'s Jerry Wolcott called the deal "a great opportunity." Don Morgan of the U.S. Fish and Wildlife Service called it "amazing," and the Conservation Fund's Mark Elsbree said it was "unprecedented," and "simply terrific."
Any one of them could have been talking about the wild landscape, but instead they were referring to the prickly long-term negotiations that made the 1,800-acre wildlife management area possible.
It's hard to say where the idea began, because each of the players started from a different spot on the philosophical map. But the beginning, if there is one, likely emerged from Avista's work to relicense its hydroelectric facilities on the lower Clark Fork River.
It was the late 1990s and Avista's 50-year leases were expiring on both the Noxon and Cabinet Gorge dams, the company's biggest hydroelectric producers.
Before going to the federal government for approval, the company first went to local stakeholders, hoping to hammer out an agreement that would uproot any opposition before it went to seed.
The result, after years of negotiations, was a "living license," a document signed by more than three dozen parties and outlining, among other things, Avista's obligations to conserve critical habitat.
A flexible plan, it called for ongoing habitat studies and land management responsive to the results.
Of course, it also greased the skids for Avista's license approval, and made good business sense.
After the negotiations, the stakeholders stuck together, meeting twice a year to talk about conservation options. It wasn't long before they learned the local mining company wanted to unload some ground along the biologically diverse Bull River corridor. Plum Creek had some adjacent land it also wanted to sell. And Montana Fish, Wildlife and Parks was interested too, as the area is considered critical to big game and bull trout.
"It was perfect," said Avista's Nate Hall, because it also happened to be just upstream from another Avista conservation project.
Problem was, his company didn't have the cash to seal the deal.
Enter the Conservation Fund. A national nonprofit that facilitates such conservation pacts, the fund has helped preserve 4 million acres nationwide and 75,000 acres in Montana. When Avista came knocking, it seemed a perfect marriage.
Avista already had a couple of million dollars to bring to the table. The feds, by way of the U.S. Fish and Wildlife Service, promised more than $4 million more (part of about $80 million granted nationwide). But that grant money would take a while to trickle down, and not everyone could wait.
So the Conservation Fund floated a "bridge" loan, $4.6 million, and the wheels started turning on a complicated $6.6 million deal, with private money leveraged by federal funds.
It's hard to imagine all those years of high-level and high-pressure machinations as you follow Cal Ryder's route into the Bull River Wildlife Management Area. The dusty road snakes through a marshy lowland, a spring-fed backwater growing cattails and turtles, where slick-headed ducks dip down to browse the bottoms.
A mature cedar-hemlock forest rings the vast wetland, with giant cottonwoods and stark snags leaning precariously against the skyhigh-rise apartments for woodpeckers and other cavity nesters.
Birdsong is everywhere, only giving way to wind-driven silence as you climb above the cedars and into a mixed upland forest of larch and pine and brushy browse.
The 1,800 wildly diverse acres nestle against a tremendous backdrop of rocky peaks, a protected wilderness still jacketed in winter's white. It is, without doubt, a place well beyond adjectives, straight out of the mythic West.
That myth, however rare, is no accident in today's world. The private citizens and companies who not so long ago owned this piece of paradise were interested in selling; and in today's market, selling means subdivision.
It is perhaps a new myth in the making, then, that so many people from so many backgrounds found the political will to make the Bull River their common ground.
His back to the ragged Cabinet summits, his gaze across 400 acres of rippling wetlands, Don Morgan of the Fish and Wildlife Service could see only the remarkable landscape of human intention.
"The thing that really strikes me is the partnerships," he said, adding that "this type of thing could not be accomplished without those partnerships."
Environmentalists and agencies, loggers and miners, real estate agents, hunters and anglers, and even local politicians shared a common vision and focused their combined will, he said.
"It was very complex," Avista's Anderson said of the deal, "and it took a lot of work."
Now, with the work done, FWP will manage about 1,300 acres to the north, and Avista will control nearly 600 adjacent acres to the south. It's all protected in perpetuity with conservation easements, open for hunting and fishing and even Ryder's birdwatching.
He's seen trumpeter swans here, flycatchers and buntings and warblers, some 90 species in all. Ryder waved his arm at an expanse of forested hillside across the valley, a roadless wildland separated from the WMA only by the thin ribbon of Highway 56, the Bull River Road.
The green bench he stands on, sandwich in hand, is winter home to 130 or so elk, and the area's two major drainages meet on this spot, a natural corridor for migrating animals. Far below, where the Bull River's spring rush sounds a bit like applause, bull trout are making a comeback, silent and unseen, the landscape's unconscious thought submerged beneath the alert presence of the East Cabinet peaks.
Submerged as they are, bull trout nevertheless remain keenly on the mind of Nate Hall, who manages lands, wildlife and recreation for Avista. His company's dams impede the native fish, and a big part of the collaborative agreement that brought him here hinges on helping the threatened species.
"This," said biologist Larry Lockard of the Fish and Wildlife Service, "is our primary recovery zone in terms of bull trout."
Plum Creek sells logs, land to post record year: Property sales nearly doubled in 2004 to $149 million, provide biggest potential. By Greg Lamm, Puget Sound Business Journal. May 27, 2005.
Like the rest of the forest products industry, Plum Creek Timber Co. is basking in good times.
The Seattle-based company has been posting record sales and earnings, including revenues of $1.53 billion at the end of 2004, up from $1.2 billion in 2003. Net income for 2004 was $362 million, up from $192 million the previous year.
"It was certainly the best year in our history," said Rick Holley, CEO of one of the nation's largest non-governmental timberland owners, with 7.8 million acres of holdings in 19 states.
Higher log prices allowed the company to realize a revenue increase on timber sales of $23 million in 2004. Last year's revenue from the company's manufacturing operations also increased by $59 million, thanks to a booming housing market and lower interest rates.
But Plum Creek's biggest revenue increase in 2004 was from real estate sales. Revenue from property sales nearly doubled from $77 million to $149 million last year.
The company's biggest potential for growth is in its real estate sales, said Taunya Sell, an analyst with Ragen MacKenzie in Seattle who tracks the company's stock.
Sell said few timber companies do a better job of researching and knowing when best to sell property for profit. She said the company continues to maintain a stable level of property holdings to support its core timber business by shedding lower-yielding timberlands and buying more productive forest lands.
The company estimates that it has nearly 2.3 million acres of property that it expects to sell off in the next several years, including 1.3 million acres of timberlands that are expected to become more attractive for development than for growing trees.
The company, which has 2,000-plus employees, produces lumber, plywood and fiberboard at 10 sites in the Northwest.
But it's the company's timber sales that will continue to fuel its core business, Holley said.
In 2004, Plum Creek cut 18.6 million tons of lumber; similar volumes were cut in 2002 and 2003. Holley said the harvest forecast for 2005 should remain near the same level.
Despite the high-volume cutting, he said Plum Creek does not deserve the lasting image etched in many people's brains of a company that aggressively clear-cuts timber and scoffs at sustainable forest practices. Holley said because of its extensive holdings spread across the Northwest, South, Great Lakes states and New England, Plum Creek has flexibility in how it harvests trees. It can ratchet up production when demand is high, while managing more forest lands that are growing trees than lands that are being logged.
Because Plum Creek is in the logging business, the company always will have its detractors. But Sell said the company does not solely focus on short-term gain when it comes to logging.
"I would say that they are not a company that when they have a bad year they go out and increase harvesting production to make up the money. They don't need to do that," Sell said.
In writing for The Motley Fool, stock watcher Rich Smith said Plum Creek continues to outperform Standard & Poor's returns through shrewd asset management, including its practice of buying timberland when it's a bargain and selling it for real estate development when demand for the land increases. Smith praised Plum Creek's practice of not cutting and selling more timber when demand is down.
"Plum Creek may be the kind of business that 'any idiot can run' -- but its managers are actually pretty sharp," writes Smith.
Holley expects strong demand to continue for his company's timber products. Although interest rates have been creeping up, forecasts still call for strong demand in housing. Demand for domestic logs continue to be strong, Holley said, and even though interest rates have been rising, they still are at the low end historically.
But the company does have some concerns, including a dry winter in the Northwest that could spark an intense fire season this summer. Holley recently told analysts that a wet spring has dampened those concerns somewhat. But Holley said there is still concern that a bad fire season could force logging to be restricted in late summer.
The Hightower Report: Weyerhaeuser and Corporate Free Speech, By Jim Hightower, May 12, 2005.
Of course, a corporation is a thing, not a person, and to see how absurd it is for corporate executives to claim that their entities should have democratic rights, just sneak a peek at how they treat the free-speech rights of shareholders, the actual people who own the corporations. In theory, shareholders are the ultimate bosses of any corporation, supreme over the executives who're the hired hands doing day-to-day management. In practice, however, the relationship is turned on its head, with the executives bossing the owners.
The annual shareholder meeting is when owners supposedly get to grill their hirelings and set corporate policy. But these meetings have become a sad farce. For example, at this year's gathering of the shareholders of Weyerhaeuser, the executives imperiously decreed that the owners would no longer be able to go to an open microphone on the floor and ask whatever they want. Instead of free speech, questions for the Weyerhaeuser CEO had to be submitted in writing, and only 15 minutes were devoted to answering the owners' questions.
Of the 30 questions submitted, management deigned to respond to only 12 of them. And even then Weyerhaeuser's autocratic executives cut short the 15-minute Q&A period. One rebellious shareholder had the temerity to rise and ask why. He was summarily ejected from the meeting by a burly security guard (a guard hired by management and paid with the shareholders' own money). It was a crude and rude move that The New York Times business columnist Gretchen Morgenson termed "Kremlinesque."
Why would we extend free-speech rights to totalitarian entities that deny the most basic rights to their own owners?
Haida Seize Logs in Protest Over Licence Transfer Sale: Companies, province ignore Supreme Court decisions: protestors, By Len Kruzenga, FP [First Perspective], May 6, 2005.
Development vs. Conservation at Moosehead Lake. National Public Radio Morning Edition, May 4, 2005. Timber managers, real estate developers and conservationists are struggling over control of Moosehead Lake in Maine. Areas around the lake remain largely undeveloped. Now, the Plum Creek Timber Company wants to put in nearly a thousand lots for houses -- as part of the largest development proposal in the state's history...
In March , 300 members of the United Steelworkers’ Local 1-184 ratified a four-year labor contract with a plywood plant in Hudson Bay and a sawmill in Carrot River in Saskatchewan, Canada, owned by Weyerhaeuser Co. The agreement, which was retroactive to April 2004, included a two percent wage increase each year, improvements to the pension plan, benefits and floating holiday pay language.
The company has placed the two operations for sale since last year, but at the same time, the firm has announced its intentions to keep its publicly-owned forest management agreement.
Weyerhaeuser has closed several profitable mills—including mills in Vancouver, the British Columbia Interior, Alberta and Saskatchewan. Additionally, the Canadian operation has contracted out jobs and imported an American drug and alcohol testing policy—without regard to USW members’ privacy, labor agreements or Canadian human rights laws.
On March 30, USW and PACE, unions representing over 10,000 Weyerhaeuser workers or nearly half the company’s unionized work force, held a joint solidarity day at over 60 facilities across North America.
The next day at Weyerhaeuser logging operations, sawmills, corrugated plants and pulp and paper mills from Vancouver Island to Florida, unionized workers handed out leaflets and wore stickers that stated "Respect Our Union."
Issues troubling the members include Weyerhaeuser’s demand for concessions in collective bargaining agreement negotiations; contracting out of union jobs; shifting the cost of health care, pensions and other benefits onto union members; excessive executive salaries and compensation; and company policies that the unions believe force accident and incident reporting underground.
In April, a delegation of members of the USW attended Weyerhaeuser Company’s annual shareholders meeting in Federal Way, Wash. They were met with a lack of respect and an absence of democracy at the meeting, according to union participants.
Company officials refused the shareholders’ right to speak on resolutions before the meeting. The company also denied questions about the board of directors during nominations or prior to voting. Only a limited number of questions were entertained—providing they were submitted in writing.
The USW delegation submitted over 15 written questions and only one was addressed. The question related to safety, which Weyerhaeuser CEO Steve Rogel evaded answering.
As shareholders and other delegates tried to address issues, the officials ordered them to sit down. When some questioners persisted, the chairman told them they would be subject to arrest. One financial analyst who tried to ask a question on behalf of a client was physically removed from the meeting.
The USW delegates from the United States and Canada are slated to meet in Florida in May 2005 to discuss conditions of employment at Weyerhaeuser locations throughout North America.
The combined total of over 10,000 organized union members was formed when the USW, representing approximately 3,500 members in 25 different operations across Canada, merged with the former Paper, Allied-Industrial, Chemical and Energy Workers Intl. Union (PACE) representing over 7,000 company employees in the U.S.
Managers to Owners: Shut Up, By Gretchen Morgenson, New York Times, April 24, 2005.
But even that may be too much for Weyerhaeuser, the giant forest products company based in Federal Way, Wash. At its annual meeting last Thursday, the company's board and management broke with their longstanding tradition of taking shareholder questions from an open microphone on the floor. Instead, they required that shareholder questions be submitted in writing, either before or during the meeting. And Steven R. Rogel, the company's chief executive, announced that his directors and managers would devote just 15 minutes to answering the written questions.
It's a disturbing precedent to abolish the single spontaneous interaction that executives - who, after all, are hired help - have with their owners every year. But Weyerhaeuser went even further, according to an investment manager who attended the meeting, by gaveling down several shareholders who tried to ask questions from the floor. And when management cut short the answer period and a proxy holder stood up to make a point of order and ask why, a beefy security guard removed him from the meeting.
"It was a show of force that shareholders should be seen and not heard," said Bruce T. Herbert, president of Newground Social Investment in Seattle, the man who was escorted from the room. "I have never been to an annual meeting that didn't have Q.& A."
To be sure, companies are not required by law to answer shareholders' questions from the floor at annual meetings. And it is certainly understandable that companies want to rein in gadflies and disruptive questioners whose agendas do not match those of most shareholders.
Still, controlling the give-and-take between shareholders and executives that occurs just once a year and lasts for only a few minutes does seem rather Kremlinesque.
Frank Mendizabal, a spokesman for Weyerhaeuser, said: "What we were trying to do was ensure the meeting was orderly and that as many questions as possible were answered. It's a business meeting, not a forum for special interest groups."
He said the company answered 12 of about 30 questions that were submitted and that it planned to communicate its responses to the remaining queries, though he said he did not know how it would do this. He added that Weyerhaeuser had not decided whether it would stick to the written-question format at next year's meeting, but that more questions were answered this year than in previous years when they came from the floor.
One question that Mr. Herbert hoped to ask of Weyerhaeuser management was how it planned to respond to the decision last Wednesday by Calpers, the big California public pension fund, to put the company on its focus list of corporate laggards. Calpers said it included Weyerhaeuser on its list primarily because it has a so-called classified board, meaning that its directors are elected in different years. That structure makes it easier for the company to combat a takeover and makes directors that much more entrenched. A majority of Weyerhaeuser shareholders voted to declassify the company's board in 2000, 2002 and 2003, and again this year - to no avail.
Weyerhaeuser prefers a classified board, Mr. Mendizabal said, because "we have to plan effectively over a long term and a staggered board assures that directors will have long-term experience and understand our business."
"We were certainly surprised and disappointed that Calpers took that action," he added. "We pride ourselves on our ethics and corporate governance."
The Weyerhaeuser meeting was well attended, Mr. Herbert said. He estimated that more than 500 people were in the audience at company headquarters, and he said that there was considerable tension in the room.
While it is surely no fun for executives to submit to questions about their performance, their pay or their companies' practices at annual meetings, it should be considered part of the job. Shutting off the microphone allows them to close their ears to shareholder concerns and helps keep them comfortably insulated from the real world.
And because there are typically time limits for each shareholder question at an annual meeting, the events usually end quickly. Weyerhaeuser, for example, limited questioners to three minutes in past years. The pain for executives, if there is any, doesn't last too long.
"It's the only time, once a year, when you can actually ask the C.E.O. or a member of the board of directors a question," said Adam M. Kanzer, general counsel and director of shareholder advocacy at Domini Social Investments. "One day a year doesn't really seem like too much to ask for."
Maybe Weyerhaeuser's executives and board should be applauded for letting investors know where they stand. Why should executives pretend, even for an hour a year, that they care about their owners' views?
Daniel J. Steininger, chairman of the Catholic Funds, a mutual fund company in Milwaukee, said the action by Weyerhaeuser looked like an attempt to gag shareholders. "This is the first time I've ever heard of anyone cutting off debate," he said. "Is there no limit to their failure to recognize who owns the company?"
Making the Weyerhaeuser move even more perplexing, Mr. Steininger said, is the trend in recent years among many corporations to argue that they should receive the same rights that United States citizens do, such as the right to free speech.
"If corporations are arguing for constitutional rights, how can they turn around and say to the shareholders who own them you have no right to speak?" he asked. "I just love the hypocrisy."
Addendum in New York Times, May 1:
Shouting drowns out positive Weyerhaeuser report, By Bill Virgin, Seattle Post-Intelligencer, April 22, 2005.
The meeting was held as usual at Weyerhaeuser's corporate headquarters but it came to a somewhat unusual end with Chief Executive Steve Rogel calling critics disruptive and the critics calling Rogel and Weyerhaeuser disrespectful.
Lost amid the hubbub was Weyerhaeuser's report of first-quarter earnings that were nearly double its profit in the year-ago period. Weyerhaeuser also announced its first increase in the quarterly dividend in 10 years.
Annual shareholder meetings in this region are normally sedate affairs; even when there are controversial issues or proposals on the agenda, question-and-answer sessions tend to be orderly and muted.
That wasn't the case yesterday as groups ranging from the Haida nation to the United Steelworkers union to the Rainforest Action Network had representatives on hand to pose questions to Rogel.
Labor representatives said they wanted to ask about issues ranging from safety in the mills and forests to executive compensation to wages and benefits.
"Every round of bargaining we go into in Canada, we're fighting takebacks and concessions," said Scott Lunny with the Canadian office of the United Steelworkers of America. "We read the annual report too. (The company) seems to be making a fair amount of money. We wonder why we're fighting when the executives are doing quite well."
Lunny said union members and others wanted to speak at the meeting to "call them out on the bull- - - -," to counter what he called the company's line that "we get along with everybody."
Tribal and environmental groups, meanwhile, said they wanted to take Weyerhaeuser to task for such issues as logging in cedar forests on the British Columbia coast and its relations with the Haida nation.
The testiness began when David Ortman of the Northwest Corporate Accountability Project, presenting a resolution on Weyerhaeuser's purchase of federal timber, said he wanted to address other subjects as well. Rogel told him to limit his comments to the resolution.
"Your presentation went on for 30 minutes," Ortman said.
"My job is to report on company operations," Rogel said. "We're moving on."
In past years, Rogel has taken questions from the floor; this year, shareholders were asked to fill out question and comment cards. Rogel said the change was made because of disruptions at past meetings during the Q-and-A.
Even before the Q-and-A started, audience members began asking questions. When Rogel ruled one questioner out of order, he answered, "Are you telling me as a shareholder I can't ask questions?"
Rogel answered questions that were read off cards by another company official. When he concluded that portion of the meeting and moved to the announcement of the vote on directors and shareholder proposals, audience members again started yelling questions and complaining that their questions hadn't been answered. Rogel said those questions not answered at the meeting would be answered in writing, then adjourned the meeting to boos and applause. "I'm sorry we've got such disruptive" people in the audience, he said, having tried at several points to gavel the meeting back to order.
After the meeting, union and environmental groups issued statements blasting Weyerhaeuser. The Rainforest Action Network said, "Weyerhaeuser is not only out of touch with moral values and best practices but ... is uninterested in learning what shareholders think about important issues."
"Obviously there are elements of society that want to have their views heard in any way possible," Rogel said afterward. "What people don't realize is every one of these groups we've had extensive discussions with."
Weyerhaeuser reported first-quarter net income of $239 million, or 98 cents a share, up from $121 million, or 54 cents a share, a year ago. Revenues rose 10 percent to $5.5 billion. Increased earnings in Weyerhaeuser's timberlands, pulp and paper, container board and packaging and real estate operations were partially offset by a decline in the wood-product segment.
It also increased the quarterly common-stock dividend by 10 cents a share to 50 cents.
"We think it's time to reward shareholders," Rogel said. The company's efforts in recent years have been focusing on reducing debt accumulated through its acquisition of Willamette. With that accomplished, cash flow appears sufficient to support a $2 a year dividend, he said.
If cash flow continues to improve, he added, "We'll look at it more often, not just every 10 years."
Although the company isn't likely to make any big acquisitions, it might consider what Rogel termed "bolt-on opportunities" to add operations.
Despite the improvement and the dividend increase, Weyerhaeuser stock fell $1.42 a share, to $64, on a day when the markets overall were up.
Paul Latta, an analyst with McAdams Wright Ragen Inc. in Seattle, sad the stock's drop could be blamed on earnings coming in short of expectations, as well as a recent report on a sharp drop in housing starts, which are a key indicator for lumber producers such as Weyerhaeuser.
But Latta said he was "a little surprised" by the degree of the decline. "The results were a touch worse than expected, but the outlook was a touch better than expected."
As for the dividend increase not providing any offsetting lift to the stock price, "The type of people who sell on short-term disappointments are not dividend people," he said.
A shareholder resolution calling on Weyerhaeuser to record stock options as expenses was approved by 68 percent of the votes cast. The company has said it will do so now that the Financial Accounting Standards Board has enacted rules.
Shareholders voted in favor (74 percent) of a proposal to elect all directors every year, but only 32 percent of shares were cast in favor of a proposal for performance-based executive stock options. A proposal calling on the company to report on the impact of ending all federal timber purchases got just 4 percent of shares; Weyerhaeuser says less than 1 percent of the raw material used in its U.S. mills came from federal lands.
Canadian Natives want more say over Queen Charlotte Islands timber, By Marcelene Edwards, Knight Ridder/Tacoma News Tribune, April 21, 2005.
These protesters plan to bring their complaints about management of a region known as Haida Gwaii to the company's annual meeting at its Federal Way headquarters today. The Haida Nation has nominated Guujaaw, president of the council of the Haida, to the company's board of directors.
The conflict between the forest products company and the residents around its operations stems from a longtime battle between the Haida Nation and the B.C. government over who controls the ancient timber on the Queen Charlotte Islands.
The Native people want more control over the management of the forests and more oversight of timber companies. Their cause has been adopted by environmentalists who hope to pressure Weyerhaeuser into changing the way the company harvests old-growth trees.
It's a dispute on land the company is getting rid of. Weyerhaeuser announced in February that it planned to sell the sawmills and 600,000 acres of timberlands it owned on the islands for nearly $1 billion. The transaction triggered anger from members of the Haida Nation who claimed they weren't consulted about the sale and weren't allowed to comment.
Residents surrounding the logging operations set up roadblocks to keep Weyerhaeuser workers from cutting down trees or removing logs. They say that logging companies are making money off trees that should be theirs and that the B.C. government is not monitoring the operations as it should.
Weyerhaeuser spokesman Frank Mendizabal said loggers haven't been able to get to their equipment for several weeks.
"Once a day one of our harvest managers asks, 'Are you going to let us work today?' They say 'no' and we say 'OK,'" he said.
Last Friday the roadblocks were removed while Haida Nation representatives negotiated with government representatives, said Haida member Bob Mills, who was acting as spokesman for Island Spirit Rising Committee.
"Even though the checkpoints are down we maintain a presence," he said.
Mendizabal said Weyerhaeuser has ongoing discussion with the Haida Nation about a range of issues. Both groups met Wednesday and plan further discussions today.
"They have approved every harvest we have done up there," he said.
But the company had no responsibility to let the Nation know of the upcoming sale. That's something the Nation and the B.C. government need to work out, he said.
The Rainforest Action Network has adopted the cause and organized the Federal Way protest as well as protests at the Toronto Stock Exchange and New York Stock Exchange on Thursday.
More than 50 activists were expected at today's annual meeting, said Brant Olson, campaign director for Rainforest Action Network. About a dozen were going into the meeting. The rest would congregate on the north side of the company's campus.
Lack of Respect for Shareholders, Democracy Shown by Rogel; Weyerhaeuser Shuts-Down Shareholder Questions at Annual Meeting. United Steelworkers, April 21, 2005.
The Steelworkers delegation submitted over fifteen written questions and only one was addressed. The question related to safety and even then CEO and Chairman of the Board Steve Rogel evaded the question.
"When I stood up to ask about the fatality of one of my friends at the New Westminster Sawmill late last year, I was told my question was out-of-order," said Grazio Odorisio, chairman at the New West sawmill. "How can Steve Rogel in good conscience say that discussing the death of a Weyerhaeuser employee is out of order?"
Others from the delegation and other shareholders tried to ask questions and were told to sit down. When they persisted, they were threatened with arrest. One financial analyst who tried to ask a question on behalf of a client was physically removed from the meeting.
"It's shameful that the CEO of Weyerhaeuser, who made almost $7.5 million last year, refuses to deviate from his prepared script and only responds to soft pitch questions," said Local 1-3567 vice president Barry King.
Weyerhaeuser had beefed-up security and had police on hand for the meeting as the USW and several other groups tried to make their voices heard. The Haida Nation, Rainforest Action Network, Amnesty International and representatives of the Teamsters, among others, also attempted to present concerns to the company.
"All-in-all, we think things aren't as rosy as Mr. Rogel wants shareholders to believe," said Steelworkers representative Scott Lunny. "We want shareholders to be aware of the growing list of concerns regarding labour issues, corporate governance, shareholder rights, environmental stewardship and community investment."
Contacts: United Steelworkers, Scott Lunny, 604-329-5308.
Weyerhaeuser To Screen Shareholder Questions at Annual Meeting Tomorrow, by William Baue, SocialFunds.com, April 20, 2005.
For the last month, members of the Haida Nation on the Queen Charlotte Islands in British Columbia have blockaded Weyerhaeuser (ticker: WY) access to two of its lumberyards in protest over being excluded from decision-making over logging rights on its ancestral lands. Perhaps to avoid potentially embarrassing questions, tomorrow Weyerhaeuser will block its shareholders from open access to address management and the Board of Directors at the company's Annual General Meeting in Federal Way, Washington.
"I called the company's corporate secretary yesterday and found out that they will break from a long-standing practice of holding an open-mic Question and Answer period, and instead will require that all questions be submitted ahead in writing," said Bruce Herbert of Newground Social Investment. "As relayed to me by the company, no shareholder will be allowed to speak at the meeting--CEO and Chair Steve Rogel will read and respond to selected questions for 'as long as there is time' and then other questions will purportedly be answered later in an a written format that has yet to be determined."
Frank Mendizabal, director of media relations for Weyerhaeuser, confirmed this information.
"This change is designed to ensure the meeting is orderly and as many questions as possible are answered during the meeting," Mr. Mednizabal told SocialFunds.com. "We have received information that some people may have intended to dominate the Question and Answer period with very narrow questions to the exclusion of other shareholders opportunity to ask their questions."
Brant Olson, director of the Rainforest Action Network (RAN) campaign that seeks to improve Weyerhaeuser's environmental and social policies and practices, points out that the company is enacting exactly that which it intends to avoid.
"Limiting the opportunity to speak in this case is clearly being done by Weyerhaueser," Mr. Olson told SocialFunds.com. "Weyerhaeuser has a hundred year legacy of disregarding communities and the environment, and this latest move extends that legacy even to the company's own shareholders."
The controversy between the Haida Nation and Weyerhaeuser came to a head in February 2005 when the company sold its BC Coast Group assets, including harvesting rights on Haida lands, to the Brascan Corporation for $970 million without consulting Haida leaders. Both sides advance claims that could be viewed as valid by an objective, impartial observer. In order to best understand the complicated controversy between the Haida Nation and Weyerhaeuser and its potential impact on shareholder value, not to mention many other controversial issues facing the company, shareholders need transparent access to information.
Larry Dohrs of Newground Social Investments notes the impact of Weyerhaeuser's new policy on transparency.
"If there are questions from the floor and the company essentially declines to answer, then that decision is visible to the shareholders at large," Mr. Dohrs told SocialFunds.com. "If there's a question on a card and the company declines to respond to it, it's invisible to shareholders that they took that affirmative action to not reply."
Mr. Mendizabal of Weyerhaeuser did not respond to SocialFunds.com's questions about the decision-making process for changing the question and answer protocol, whether shareholders were consulted, and how the company weighed potential benefits against potential detriments. He also did not answer where shareholders were informed of the change.
Members of the investment community expressed alarm at the policy change.
"This is not just troubling, it is completely unacceptable," said Mark Regier, stewardship investing services manager at MMA Praxis Mutual Funds, the investment arm of Mennonite Mutual Aid. "Interactivity--being able to see, hear from, and question your company's leadership on the rare occasion--is the very basis for live annual meetings and a cornerstone of the concept of shareholder democracy."
"This is the very literal and visual representation of corporate management sticking its head in the sand to hear only what it wants," he continued.
Damon Silvers, associate general counsel for the AFL-CIO, expressed the concern of the country's largest union in a letter to Mr. Rogel, the CEO and Chair.
"The AFL-CIO urges you to conduct the annual meeting of Weyerhaeuser in a manner consistent with your fiduciary duty to protect the informed exercise of your shareholders' governance rights," Mr. Silvers wrote. "In our view that includes protecting your shareholders' right to speak candidly and without management pre-approval to each other and to the board of Weyerhaeuser at the company's annual meeting."
Haida open Seattle front in forest fight: Weyerhaeuser riles tribe with rich deal to sell logging rights, By Paul Shukovsky, Seattle Post-Intelligencer, April 20, 2005.
Weyerhaeuser target of protest by B.C. activists, By Craig Welch, Seattle Times, April 20, 2005.
Moosehead plan's impact weighed. Bangor Daily News, April 7, 2005.
Debate ensues over Moosehead proposal. By John Richardson, Portland Press Herald, April 7, 2005.
Officials and conservationists weigh in on proposed development. Associated Press/Maine Today, April 7, 2005.
Timber firm files to develop Maine woods: Environmentalists worry that others will follow. Associated Press/MSNBC, April 6, 2005.
Haida, supporters blockade to demand sustainable forestry. Sale of Weyerhaeuser's B.C. assets, including timber rights in Charlottes, trigger protest. By Michael McCullough. Vancouver Sun, April 4, 2005.
Haida Roadblocks Shut Down Logging Operations. By Stephanie Woodard. Indian Country Today, April 3, 2005.
Haida nation seizes logs during protest. By James Vassallo, The Daily News, March 30, 2005.
Plum Creek's Big Plan. By Phyllis Austin, Maine Environmental News (www.meepi.org), Feb 10, 2005
In mid-December of 2004 Plum Creek announced its plans for the largest subdivision in Maine’s history – approximately 1,000 house lots, two resorts and other enterprises -- on an array of high quality lakes and ponds.
When Plum Creek Timber Company bought 900,000 acres – 1,400 square miles – of Maine woods in 1998, it bought more than trees. It bought mountains along the Appalachian Trail, tens of wild trout ponds, miles of land flanking the Kennebec and Moose rivers and over 60 miles of shoreline along Moosehead Lake.
The acquisition made conservationists nervous. On its lands in the Pacific Northwest and Rockies, the Seattle-based company had earned a reputation for spinning off parcels of land to the highest bidder and subdividing timberlands. But Plum Creek denied intentions to subdivide the newly acquired Maine lands, saying it was only interested in doing sustainable forestry in the Pine Tree state.
In 2002, however, Plum Creek created an 89-lot development on relatively remote First Roach Pond (see Phyllis Austin story) north of Greenville. The lots sold quickly, but a Plum Creek spokesman said no more development was on the horizon.
In mid-December of 2004 Plum Creek announced its plans for the largest subdivision in Maine’s history – approximately 1,000 house lots, two resorts and other enterprises -- on an array of high quality lakes and ponds. All of the proposed development would be sited in the Moosehead Lake area, a gateway to Maine’s vast northwestern backcountry.
Not only does the sale further fragment the Maine woods – the country’s largest expanse of undeveloped woodlands east of the Mississippi – it also promises to stress the capacity of the Land Use Regulation Commission (LURC), the planning and zoning agency for Maine’s 10.5-million acre unorganized territory, where there is no local zoning. LURC has never considered a proposal even a quarter the size of this one.
Details Emerge Slowly
Plum Creek expects to submit its permit application to LURC by March. The agency is already bracing for the review. "It’s big, huge, unprecedented, the biggest project we’ve seen since Big A [dam plan], the largest development proposal in our history," says LURC’s director Catherine Carroll.
Until Plum Creek submits the application, there are few official details of the project. Plum Creek Communications Director Kathy Budinick says the plan was only recently hatched, and the specifics are still being worked out.
The company will seek approval of its proposal under the "lake concept" zoning option, which allows a faster pace of development than usual in exchange for conservation. The key hurdle for a landowner is to offer enough publicly beneficial conservation to "balance" the impact of development. Lake concept zoning was designed to encourage landowners to do long-range planning as an alternative to haphazard, incremental development.
What is known about Plum Creek’s proposal is this basic outline:
Of the 415,000 acres included in the plan, about half the Maine land it owns, Plum Creek would develop 14,000 acres, leaving 95 percent of that tract in commercial timberland management. Six thousand acres would go to about 1,000 camp lots – half on the shoreline of various waters with existing development and half on back lots (with one exception, all of the lakes already have some development). Another 6,000 acres would go to resort development. One thousand acres in Greenville would be allocated to a business park and another 1,000 acres to low-income housing. To balance the development, Plum Creek is willing to place in permanent conservation a 500-foot buffer around the shoreline of 50 undeveloped ponds.
Plum Creek is also proposing other conservation initiatives, although they are outside the lake concept plan. The company has offered to create permanent easements for 43 miles of new hiking and cross-country ski trails and 75 miles of existing snowmobile trails. It is willing to sell to the state 37,000 acres bordering the Appalachian Trail’s Hundred Mile Wilderness. Included in that deal would be No. 5 Bog near Attean Pond and land around Second and Third Roach ponds – tracts the Bureau of Parks and Lands has been wanting for some time.
It seems the company’s large Maine holdings include a carrot to dangle before every interested nose. But this should be no surprise; Plum Creek’s shrewd business deals have made it a very profitable real estate company. While Plum Creek likes to characterize itself as a timber company, it has been organized as a Real Estate Investment Trust for several years. Buying, logging, subdividing and then selling woodlands has been a lucrative practice for Plum Creek.
Promises Made and Broken
The first lands Plum Creek acquired in New England were the 905,000 acres it bought from SAPPI Fine Paper. SAPPI had owned the land only four years, after purchasing it from S. D. Warren, part of the old Scott Paper domain. The acquisition was part of a recent cascade of timberland deals. In the last six years, seven million acres of Maine’s commercial forestland have been sold, much of it to short-term financial investors and wealthy individuals.
When news got out that SAPPI was selling, a spokesman reassured the public that the company had no intention of selling the land to a developer but soon inked the deal with Plum Creek, whose meteoric rise was based on cutting its timberlands hard, then subdividing them. Rod Chandler, a Republican congressman from Washington, once characterized Plum Creek as a "Darth Vader" of the forest industry because of its rapacious forest practices.
But Plum Creek officials professed to be interested only in timber management on its new Maine lands. Rick Holley, Plum Creek’s president and CEO, told the Portland Press Herald on Oct. 7, 1998, that the company had no plans to sell land for vacation homes, camps or other types of development. In the Maine Sunday Telegram four days later, Bill Brown, Plum Creek’s vice president of business development, reiterated that Plum Creek wasn’t really in the development business. The Western shorefront lots listed on its website for sale had "no other use" than for vacation retreats, he explained.
Bruce Farling, executive director of Montana Trout Unlimited and a longtime Plum Creek observer, says Brown was brought into the Plum Creek operation from Texas to use his real estate experience to further the company’s fortunes. With Brown on board, Plum Creek became "far more savy" about development than timberland management, according to Farling, and greatly expanded the real estate side of the business in Montana and elsewhere. Before putting up parcels for sale, Farling says, Plum Creek does a lot of homework determining what neighbors’ reactions will be and what the value of the land is to the public.
Plum Creek’s first development undertaking in Maine turned out to be plenty valuable to the company, as lots went like hotcakes. The quick success of the 89-lot subdivision on First Roach Pond in Kokadjo, a logging and fishing outpost 18 miles north of Greenville, stirred up latent fears about Plum Creek’s real game plan for Maine. "They’re doing exactly what we feared – slicing and dicing the best of Maine’s North Woods into second home development," commented Cathy Johnson of the Natural Resources Council of Maine.
First Roach was the largest development ever to go before LURC.
First Roach was the largest development ever to go before LURC. Plum Creek’s director of land management, Mike yea Yeager, stated there were no more First Roaches on the horizon, despite the fact there were more than 100 lakes and ponds and sizeable rivers in the company’s ownership. Yet the Wall Street Journal reported that Plum Creek intended to accelerate its subdivision pace.
In 2003, Plum Creek representatives began meeting with LURC staff to talk about a comprehensive development/conservation project. The company hired planner Brian Kent of Gardiner to come up with a design. (He did the First Roach plan.) Also joining the Plum Creek team were consultant Elizabeth Swain, a former LURC chairperson and once on the staff of Maine Audubon and realtor Luke Muzzy, who had handled the lot sales on First Roach Pond.
Despite Plum Creek’s contradictory statements about developing its Maine lands, company spokeswoman Budinick says Maine conservationists should feel confident that the company will do the right thing.
"People in Maine should trust Plum Creek because we have carefully considered them in our plans," says Budinick. "The company is developing a comprehensive plan that takes into account the important community values and needs of the area. "Our plan – which ensures that 95 percent of the land the company owns in the plan area will be retained a a working forest – will help maintain the economic viability of the forest products industry, preserve lands with significant conservation values, promote permanent recreation access to key trails, and stimulate job creation and economic development."
Overwhelming the Overseers
As Plum Creek’s application looms, there’s a real question about LURC's ability to handle a project of this size. In recent years, the agency has been downsized so much that director Catherine Carroll doesn’t know at this point how the staff will handle such an enormous proposal. She is weighing how to allocate her agency’s skimpy staff and budget resources to the deal with Plum Creek, as well as the agency’s routine work.
"We’ve got to pull back our ears, pull up our bootstraps and do what we can," Carroll says. It will take months to review the application and hold a series of public hearings. Carroll plans to assign one of her senior planning staffers to the project fulltime and go to outside help for an economic analysis of Plum Creek’s application. Plum Creek has offered to provide the money needed for LURC to "keep on top of this," Carroll says, but she doesn’t yet know what a "fair and reasonable fee for our services" would be.
LURC never anticipated that the lake concept plan would be used to rezone so much of the unorganized territory, especially in such short a time as is being proposed. The option sat unused for several years, after it was created in 1990. Large paper companies still owned most of LURC jurisdiction, and they weren’t interested in large-scale subdivision.
When landowners finally began to take advantage of the option, it was for no more than a few ponds at a time. Lowell & Company Timber Associates, a Boston investment group, was the first to propose a concept plan, three years after purchasing 17,000 acres of forestland on Attean and Holeb ponds from the Coburn Lands Trust. William Gardner proposed a lake concept plan for Snake and Carpenter lakes north of Baxter State Park, but it was rejected by LURC. Both subdivision proposals were smaller than Plum Creek’s First Roach Pond project.
John Willard designed a 50-lot lake concept plan for Brassua Lake, and there was little fanfare when LURC approved it in 2004. Linkletter & Sons Inc. recently proposed a concept plan for Whetstone, Foss and Hilton ponds near Abbott. Others may be in the works, and some environmentalists think it’s time for LURC to re-evaluate the impact of concept plans, especially given the scale of Plum Creek’s.
The Plum Creek proposal is so enormous that it will further delay LURC from attending to its big picture planning responsibilities. Carroll agrees that work updating LURC’s comprehensive land use plan inevitably will be slowed down. The plan is required by law to be updated every 10 years, and the deadline is 2007. Carroll still aims to have it completed in 2006, but only time will tell if that’s possible.
LURC’s capability to move forward with prospective zoning will be zero. Prospective zoning, which involves intense community participation, is designed to reinforce the special character of a region for the long-term, including commercial and natural resources. It’s also designed to control new development based on historic growth. The first such plan was approved for the Rangeley Lakes area in late 2001, and either Greenville or Carrabassett Valley was scheduled to be next.
Whether Plum Creek’s proposal could be allowed under a prospective zoning plan is unclear, according to Carroll. If LURC were to delay processing the development application until the comprehensive plan and prospective zoning for Greenville are in place, the agency would be in a proactive, not a reactive, position to respond to Plum Creek. But that would take years, and nobody is suggesting such a delay.
Drumming Up Support
Before last Christmas, Plum Creek met local officials and other guests at the Greenville Inn to outline the development proposal and also announce an agreement to purchase 48,500 acres from Hancock Timber Resources in the Moosehead and Sebec regions. But Plum Creek had already been meeting with environmental groups – The Natural Resources Council of Maine (NRCM), RESTORE: the North Woods, Maine Audubon and the Appalachian Mountain Club (AMC) – to introduce them to the plan and try to enlist their support.
Jim Glavine, co-founder of Friends of Moosehead Lake and a director of the NRCM board, was among those present at the Greenville Inn. "Friends of Moosehead have been campaigning hard for the conservation of Plum Creek lands," says Glavine. The plan includes a large percentage of what the Friends wants saved, but not all. Glavine pressed Plum Creek officials on the issue of permanent versus temporary conservation aspects of their proposal but says they "didn’t really answer the questions." Still, Glavine believes there are potential benefits to the project. "My concern is that we not start off kicking [Plum Creek] in the nose."
Although Glavine spoke out against the First Roach Pond development, neither he nor Friends are ready to take a position on the new Plum Creek proposal. He credits the company with being smart and professional and believes it will be willing to make changes in the plan to assuage peoples’ concerns. "But when it comes down, it’s not us they will make deals with but LURC," he says.
Maine’s major environmental groups are still open-minded about the project. Their decisions will likely hinge on how much conservation land is included and whether the conservation is permanent. Some news reports mistakenly had the AMC on the endorsement list. The club has not yet taken a position, says AMC’s deputy director, Walter Graff, but he adds that already the organization sees the proposal "could have a lot of merit." Graff commends Plum Creek for being willing to work out a plan with local communities, the state and other stakeholders, but the conservation part needs to be long-lasting, he says.
AMC is one of the many groups that had reason to be on Plum Creek’s good side. Plum Creek owns a large chunk of the Hundred Mile Wilderness region, and it’s the only landowner between AMC’s recent acquisition in the area and the hundreds of thousands of acres of contiguous conservation lands bordering Baxter State Park.
Groups such as NRCM and RESTORE want permanent conservation of significant lands. They point out that Plum Creek’s conservation commitment would extend only 30 years, the life of the special lake concept zoning under which the company will apply. After that time period, Plum Creek would be free to propose more development. Environmentalists also point out that Plum Creek is being tight-lipped about plans for the other half of its ownership, south of Greenville. They are concerned that the company may have big development plans there, too, especially since Plum Creek is talking about completing the subdivision of their northern tract in 10 to 15 years, not 30 years.
After two meetings with Plum Creek representatives, Cathy Johnson says the major issues for NRCM are the amount and location of development and the kind of conservation. The number of lots being proposed is five to 10 times more than the largest subdivision ever reviewed by the agency, she says. To put the scale of development in perspective, Johnson points out that the town of Greenville has a total of 700 residences. Based on the average rate of development of new homes in the unorganized territory, "we would expect to see about 250 new homes in an area of this size over the next 30 years, Johnson says.
Fred Todd, LURC’s division manager of planning and administration, has done some figuring himself. His preliminary calculation is that Plum Creek, by jumping through the proper hoops, could develop 900 to 1,000 lots over the next 30 years without using the lake concept plan option. That’s about the number Plum Creek is proposing. However, by using the lake concept alternative, Plum Creek can achieve development predictability on half of its ownership and avoid the unknowns of piecemeal subdivision.
Cathy Johnson notes that Plum Creek’s lots north of Greenville will be far from municipal services, such as police and fire protection, schools, hospitals and mail delivery. As with sprawl elsewhere in New England, diffuse development often ends up having a high price tag in terms of municipal, state and federal dollars.
In its last briefing with NRCM, Plum Creek named the ponds it has targeted for development, in addition to Brassua and Moosehead lakes: Long, Luther, Knight, Fish, Center, Burnham, Indian, Prong, Upper Wilson, and Ellis ponds; also Moose River. If the proposed sale of Second and Third Roach ponds aren’t sold to the state, Plum Creek will subdivide those, as well as Penobscot.
Most of the ponds are rated as Class 7 by LURC. Brassua, Long and Indian are Class 3 (potentially suitable for development) and Upper Wilson is in Class 4 (high-value, developer). Burnham, in Class 7, is the only pond on the list with no development. When LURC devised its rating system many years ago, Moosehead was deemed approaching heavily developed status, or Class 5.
Besides LURC’s limited staff, the statutory deadlines for filings worry NRCM. They may not provide enough time for evaluating such a huge project and allowing adequate public involvement, Johnson says. "It is important that LURC should not feel pressured to rush through the permitting process."
"Ideally the state would have a comprehensive plan for areas of this size, developed with public input," Johnson says. "Such a plan would designate those areas that are priorities for conservation and those areas suitable for development, and the amount and location of orderly development before being faced with development of this magnitude."
Jym St. Pierre, Maine director of RESTORE, has been by his own admission the "most consistent critic of the lake concept plans done to date. I have argued that none of the lake plans presented so far – including Attean Lake, Snake and Carpenter ponds, First Roach and Brassua -- met the conservation/development balance test," says St. Pierre, a former LURC staffer.
"While some of the projects have had good conservation aspects, I believe none has met the legal test to merit approval," he says. The new Plum Creek project pushes the question of whether the concept plan "has failed as an experiment," in St. Pierre’s opinion.
RESTORE has been promoting a Maine Woods National Park proposal for over a decade. The Plum Creek subdivision is in stark contrast to St. Pierre’s vision for the area.
"If these lands were part of a national park and preserve, they would be protected for their natural features and made available forever for appropriate public use," he says. "There would be no subdivision of lakeshores into hundreds of second home lots. There would be no resorts sited in high visibility areas to capitalize on the views. Rather people would be able to enjoy the wild character of the region in traditional ways."
Not everyone is anxious about the plan. For some residents of the Greenville-Rockwood area, Plum Creek’s proposal sounds like a godsend because of the economic boost it would produce. Greenville Town Manager John Simko is supportive, predicting that the project would attract new business to the area, increase the population and attract more tourists. Some organizations are already on board with Plum Creek, notably the Sportsman’s Alliance of Maine and the Maine Snowmobile Association.
Maine Woods Mega-Resorts?
Among those keeping a close eye on Plum Creek’s proposal are other Maine woods developers. John Willard’s lake concept plan will share Brassua Lake with Plum Creek, which owns most of the rest of the shoreline.
Willard has lived and worked in the Moosehead area for decades, and offers that he isn’t in a position to complain about Plum Creek’s proposal since he is a subdivider himself. A founder of Friends of Moosehead, he asserts that he took steps he didn’t have to do to insure that his Brassua development is environmentally sensitive and attractive to people who value quiet and low-key recreation.
He questions whether Plum Creek’s development will be expensive, glitzy and high impact. But "no one wants to stand up and say it’s lousy" now because the details aren’t available, Willard says. He reported that people he has talked with wonder if the project will increase the area’s population to the point that current residents "wouldn’t want to be here anymore."
Larry Warren of Western Mountains Foundation (WMF) has been negotiating with Plum Creek for three years to identify a corridor between Carrabassett and Moosehead for a cross-country ski hut and trail corridor (see Phyllis Austin story). Plum Creek is the largest landowner WMF has to deal with to secure the route.
"We’ve presented them with a concept plan of where we want to go, and they’ve given their preliminary approval." WMF would buy a permanent easement on the Plum Creek land because, Warren says, we need to "nail down the corridor while we can, given changing ownership patterns."
Warren thinks Plum Creek’s proposal is decidedly ambitious yet credits the company with being willing to be candid with its neighbors about the long-term desires for the ownership. Because of his background in the ski resort business, Warren is curious about Plum Creek’s resort plans.
Warren was a key official at Sugarloaf Mountain Resort for years and still lives at Sugarloaf. He has witnessed dramatic development on the mountain and, just in the last two years, significant development despite the financial troubles of owner American Ski Company. "What is moving and the prices is somewhat startling," Warren says, reporting that condos are selling for up to a half million dollars, with building "change orders" of equal magnitude from buyers. With plenty of disposable income and individuals’ interest in owning "kingdom tracts" and vacation mansions, he speculates that interior Maine may be more interesting than ever to the wealthy, now that many Western resort areas have become saturated with development.
Warren believes that Maine may be ready for mega-resorts, such as the Yellowstone Club in Montana and Club Intrawest in Tremblant, Quebec, and seven other locations in Canada and the U. S. The Yellowstone Club is an ultra-private resort for the very rich, and membership is tightly controlled. It is sited on land that Plum Creek sold to club founder Tim Blixseth, a rags-to-extreme riches entrepreneur who has consistently run afoul of environmental regulations. He thinks Maine may be ripe for exclusive resorts with golf courses, marinas and ski areas – the model for the most expensive developments. "I’m sure Plum Creek is aware of them," Warren says. Indeed, Plum Creek has mentioned a marina as part of the resort plan for Moosehead Lake’s Lily Bay, the location of one of Maine’s most attractive state parks.
The resort aspect of the deal is nebulous so far. The company is not a resort developer, so it would sell its development rights to another party to build such a facility. "I’m going to want a clear idea [about Plum Creek’s resorts]," says LURC’s Carroll. "Will they be the Las Vegas-type or Little Lyford Pond Camps? Will they have hotel and condominium development associated with them?"
This is just one of the many questions people are asking about Plum Creek’s plans, now that the development question has shifted from if to when and how.
Go to archive of Phyllis Austin Reports for Maine Environmental News (www.meepi.org).
A version of this story appeared in the February issue of Northern Sky News.
Weyerhaeuser Named to Global 100 Most Sustainable Corporations.
Weyerhaeuser Forced To Pay Millions To Clean Up Kalamazoo River. Environmental News Service, Jan 5, 2005.
Forest and paper giant Weyerhaeuser has reached a $6.3 million settlement with the Justice Department and U.S. Environmental Protection Agency to clean up contamination of the Plainwell Mill and 12th Street Landfill in Plainwell, Michigan, which are portions of the Kalamazoo River Superfund site
The settlement will require Weyerhaeuser to reimburse the EPA for approximately $138,000 in costs incurred in connection with the mill and landfill.
In addition to paying EPA's past costs, Weyerhaeuser will pay $6.2 million which EPA will use to fund the cleanup of polychlorinated biphenyl (PCB) contamination in the Kalamazoo River.
Weyerhaeuser is one of several companies responsible for PCB contamination at the Kalamazoo River Superfund Site, which includes the mill, the landfill, a portion of the Kalamazoo River, and other areas.
The PCB contamination at the site resulted from the paper companies' production and processing of carbonless copy paper continaing PCBs along the river between the 1950s and 1970s.
The EPA estimates that there are hundreds of thousands of pounds of PCBs in the soil and sediment at the site. Investigations at the site indicate that PCB contamination has had an adverse impact on bird and fish populations. For several decades, fish consumption advisories have urged consumers to limit the type and amount of fish that they eat from the river.
"Cleaning up the mill and landfill are important steps to keeping additional PCBs from getting into the Kalamazoo River," said Richard Karl, director of the Superfund Division for EPA Region 5, headquartered in Chicago. "And the money Weyerhaeuser will pay under the settlement will kick start the ongoing study of how best to clean up the river itself."
The settlement also requires Weyerhaeuser to withdraw its objections to a related settlement with Plainwell, Inc., its corporate parent and several affiliated companies, which is now pending in bankruptcy court. Implementation of the Plainwell settlement will make additional cleanup funds available for cleanup and investigation of the site.
"This settlement demonstrates that even at big, complicated sites, with creative enforcement we can fashion settlements that are fair to all parties and keep the cleanup moving forward," said Thomas Sansonetti, assistant attorney general for the Justice Department's Environment and Natural Resources Division.
The settlement does not resolve Weyerhaeuser's liability for the cleanup of PCBs at any part of the site other than the mill and landfill. Nor does it resolve Weyerhaeuser's liability for natural resource damages at the site.
The settlement agreement was filed Monday with the U.S. District Court for the Western District of Michigan and is subject to a 15 day public comment period.