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Potlatch positions itself for change. Lewiston Tribune, Dec 31, 2006

It was a year of change for Potlatch Corp., its land and the people who use it for recreation.

The company completed its conversion to a real estate investment trust on the first day of the year. That change brought a new chief executive officer for the timber products company and an evolution of its public access policy.

Michael Covey replaced the retired L. Pendleton Siegel as the top man at the company. He was hired for his experience in moving Plum Creek timber company in Atlanta to a real estate investment trust, known as an REIT. The new status gives Potlatch a tax advantage when it buys and sells land. And the company has set a course to make a profit from its land. Under Covey the company has increased harvest of its Idaho timberlands by 25 percent.

Potlatch owns 670,000 acres of timberland in Idaho and is the state's largest private landowner. In the past its land has always been open to hunting, fishing, hiking and other recreation.

The company announced that it will end its policy of free public access to its timberland and in its place institute a pay-to-play access policy with a goal of adding to the company's bottom line. The new policy could include selling permits to those who want to use the land for recreation and exclusive leases for those willing to pay for the privilege. But the details of the new program have yet to be announced.

Potlatch also completed an analysis of its land holdings throughout the country. In November company officials announced they intend to sell large chunks of its timber base.

Potlatch officials want to rid themselves of land that is either scattered far from the company's manufacturing facilities or not well suited to growing timber. But the company also identified parts of its land it deems more valuable for development or backcountry recreation than it is as a timber base. Those lands will be sold.

But Covey said the company will also be purchasing more land and has a strategy to grow its timber base in places, such as the Intermountain West, the Great Lake states and the South. Earlier this month the company announced it is buying 76,000 acres of timber in Wisconsin.

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Two Timber Firms Pretending To Be 'Green,' Groups Allege. Environmentalists Want Companies' Lucrative Certification Revoked. By Blaine Harden. Washington Post, Dec 24, 2006.

Two of the nation's largest timber companies, Weyerhaeuser and Plum Creek Timber, have polished their public images for years by participating in a program that certifies that their logging is environmentally friendly.

But in separate challenges this month from the far corners of the United States, environmental groups in Washington state and in Maine are accusing Weyerhaeuser Co. and Plum Creek Timber Co. of using the forest industry's green-labeling program as a cover while they log in ways that harm endangered spotted owls in Washington and violate forestry laws in Maine.

The Seattle Audubon Society and the Natural Resources Council of Maine have demanded in documents sent to the Sustainable Forestry Board that it revoke certification for the companies until they comply with standards they have pledged to uphold.

Both companies say the demands are unjustified and show ignorance of relevant facts.

The requests mark the first time that mainstream environmental groups have publicly attempted to turn the forest industry's green certification process against big timber companies by insisting that they be suspended from the program, the Sustainable Forestry Initiative, said William H. Banzhaf, president of the forestry board, which oversees certification.

Green labeling is a major marketing tool in the timber industry. It allows companies to reach a bigger marketplace while assuring increasingly sophisticated consumers that their purchases are not harming the environment.

As worry about global warming increases, green building codes are becoming politically fashionable. They have recently been adopted for private construction in the District, Montgomery County and Pasadena, Calif. Eighteen states and 11 federal agencies use such codes for their own buildings. And green codes often give credit to builders who use timber certified to have been logged in a sustainable way.

The timber industry's main lobby, the American Forest & Paper Association, developed the Sustainable Forest Initiative in 1994. That was a year after the Forest Stewardship Council, a group of environmentalists, forestry experts, sociologists and indigenous groups, created another certification system that is often described as far less friendly to the interests of big timber companies.

The competing certification regimes are usually referred to by initialisms -- SFI and FSC -- that can be easily confused. Some environmentalists say this is an intentional industry effort to muddy the green-labeling waters and confuse the public. Timber companies dispute that assertion.

Unlike the industry-created SFI program, FSC rules allow virtually no cutting of old-growth forests, nor do they allow operators to log off a diverse stand of trees and replace it with a plantation forest dominated by a single species, which is often done to enhance the commercial value of forestland.

Home Depot, Ikea and Williams-Sonoma are among the major retailers that have announced their preference for FSC-certified lumber or paper. The U.S. Green Building Council, which oversees green standards for construction in the District and Montgomery County, among other places, credits only builders that use FSC lumber. But other retailers, such as OfficeMax, have preferences that do not distinguish between certification systems.

The Seattle Audubon Society and the Natural Resources Council of Maine argue that the Sustainable Forest Initiative could lose all credibility if its board does not suspend Weyerhaeuser and Plum Creek until they clean up their forestry practices.

Banzhaf, president of the Sustainable Forestry Board, said the complaints from responsible environmental groups in Washington and Maine are an "important" challenge to the certification system and will be thoroughly investigated.

At the same time, Banzhaf defends the integrity of the SFI certification process, noting that since 2002 it has been "independent of all influence by the forestry trade association."

The program hires third-party certification companies and is financed through licensing fees and foundation grants, he said. Its board members include leaders of major environmental groups, such as the Nature Conservancy, as well as senior state foresters and the heads of several major timber companies, including Plum Creek and Weyerhaeuser.

The separate but nearly simultaneous challenges to the forest industry's certification program appear to be a coincidence.

Over the past year, the Natural Resources Council of Maine has used the state's freedom-of-information law to uncover 18 previously unpublicized violations of state forestry laws by Plum Creek, the largest private owner of timberland in the United States, with more than 900,000 acres in Maine.

The council learned that Plum Creek, without public notice, had been fined $57,000 for its repeated forestry violations, the largest such fine in Maine's history. The violations included cutting too much timber without proper plans and failing to notify the state about clear-cuts.

"Our concern is that consumers in Maine are being routinely misled into thinking that Plum Creek is managing sustainably, when, in fact, they are not complying with basic laws," said Cathy Johnson, the group's project director for the North Woods.

Maine's chief forester, Alec Giffen, confirmed Plum Creek's violations between 1998 and 2002. "We have not had any other case that involved a $57,000 fine, nor have we had any other case where there was this number of noncompliant timber harvests," he said.

But Giffen said Plum Creek self-reported many of the violations and has taken corrective actions. "They have a good compliance history since 2002," he said.

An executive at Plum Creek said it would be "absurd" to revoke the company's SFI certification.

"We get it right 99 percent of the time," said Jim Lehner, who was general manager for Plum Creek's northeast region during the time of the violations and is now its director of community affairs. "It was certainly a mistake. We made a mistake. The fine was a big one. We haven't had any violations since."

Lehner said the Natural Resources Council of Maine is trying to discredit Plum Creek as part of its campaign to halt the company's plans for large-scale residential development in the North Woods around Moosehead Lake.

In Washington state, the Seattle Audubon Society does not allege that Weyerhaeuser, the largest manager of timberlands in the world, broke any state or federal laws. But Audubon says that the company logged its forestland in southwestern Washington in a way that harmed the habitat of four endangered Northern spotted owls and violated SFI certification standards by failing to "protect known sites" of imperiled creatures.

Northern spotted owls were placed on the federal endangered species list in 1990, but their numbers have declined by 50 percent since then in Washington state, in part because of continued loss of habitat.

To protect the reclusive birds, the U.S. Fish and Wildlife Service urges timber companies in the Northwest to refrain from logging more than 60 percent of older trees in areas around known owl nests. Those areas are called owl circles.

The Audubon group, however, cites government and industry estimates showing that circles around four owls on Weyerhaeuser land were much more aggressively cut, leaving between 8 percent and 22 percent of the suitable habitat.

That logging concerned James Michaels, a supervising biologist for the U.S. Fish and Wildlife Service and an expert on spotted owls. His agency wrote a letter to Weyerhaeuser last year, asking the company to stop.

"It was enough of an issue to raise a flag with us to say we wanted to work with Weyerhaeuser so as not to put those birds at risk," Michaels said.

After Weyerhaeuser was warned about the risk, Michaels said, it suspended further plans for cutting trees near the birds and has been willing to work with federal officials.

A Weyerhaeuser spokesman, Frank Mendizabal, said the company "has not received any notice from any public agency that we have caused any harm" to the owls.

He said that Audubon's assertions that the company has violated SFI standards are without merit and that Weyerhaeuser "operates at the highest standards" for sustainable forestry.

Weyerhaeuser and Plum Creek have 45 days to respond to the certification challenges by the Seattle Audubon Society and the National Resources Council of Maine. A full investigation by the SFI system is likely to take several months.

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76,000 acres will add to holdings in Lake states.

Spokane-based Potlatch Corp. will buy 76,000 acres of forestland in Wisconsin in a $64.5 million sale expected to close early next year, officials announced Tuesday.

The hardwood forest, located in north-central Wisconsin, is owned by Tomahawk Timberlands LLC and Tomahawk Highlands LLC. The majority of the land is located less than five hours from Chicago and Minneapolis.

The land complements Potlatch's other holdings in the Lake states, said Brent Stinnett, vice president of resource management. Potlatch also owns 310,000 acres in Michigan and operates two sawmills there. The company plans to continue working with current log customers but will also evaluate the land for future real estate sales.

Last week, the company announced that it expects to sell off 18 percent to 20 percent of its 1.5 million acres of timberland in Idaho, Minnesota and Arkansas during the next decade. With demand for recreational property rising, some parcels have become more valuable for cabins and trophy homes than growing trees, company officials said.

Potlatch put its timberlands into a real estate investment trust Jan. 1. The REIT is a more tax-efficient structure for buying and selling timberlands.

Mike Covey, Potlatch's CEO, said the Wisconsin purchase is timed to help the company avoid a large tax bill on future sales of company land.

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Potlatch, as we know it, is leaving town. Here are some signs:

Potlatch's new CEO, CFO and VP for land sales and development are all recent hires from Plum Creek. Plum Creek used to own hundreds of thousands of acres of Idaho timberland.

After liquidating the forest on it, they sold it all, giving cash to stockholders and spending the rest on timberland in Maine and other states. One week after Plum Creek's Mike Covey became Potlatch CEO, he announced the sale of 120,000 acres of Potlatch ground in Idaho: "Proceeds from the sales will be distributed to shareholders and used to acquire land more conducive to growing timber. The goal is to increase our core forest land holdings nationwide and in Idaho." (Lewiston Tribune, Dec. 12).

Potlatch has now completed its conversion from a regular corporation to a real estate investment trust.

REITs, established by Congress to encourage preservation of large working landscapes by giving corporate landowners significant income tax breaks, disconnect the land base from the manufacturing part of the company.

The last major capital investment Potlatch made at the Lewiston pulp mill was in 1992. Absent in the land sale announcement is mention of spending any of the money on upgrading Lewiston's rapidly aging mill.

Potlatch has until 2010 to meet the stricter water pollution requirements in their 2005 EPA permit for the Lewiston mill. Company estimates of that cost range from $50 million to $150 million.

There's more, including their plan to convert the No. 4 power boiler to a garbage incinerator. Get ready, Lewiston.

Mark Solomon
Moscow

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Less than a week after announcing plans to sell large chunks of the company's forest holdings, Potlatch Corp. officials said Tuesday they will purchase 76,000 acres of timberland in Wisconsin.

Potlatch is spending $64.5 million to acquire the property from Tomahawk Timberlands in north central Wisconsin. The move is consistent with the company's announced strategy to sell off pieces of its holdings that are either more valuable for development or not prime timberland, said Mark Benson, vice president of public affairs at Spokane. A key part of that strategy, he said, is using the money from land sales to acquire more property.

"This is a perfect example of the process we will use to grow our forest land base," he said. "The proceeds from higher valued lands will be used to acquire additional forest land."

Benson also said the company's strategy is to purchase land in areas where it already has land holdings and manufacturing facilities. Wisconsin is between Minnesota and Michigan, where Potlatch owns both land and mills. Eventually that strategy will see the company purchase more land in Idaho and the intermountain West, he said.

Company spokesman Matt Van Vleet at Lewiston said the purchase will make the company stronger and will help, rather than hurt, its Idaho operation.

"It reinforces the strategy that we are going to grow and we are going to acquire more forest land and add overall to our core industrial base," he said. "We are looking to do the same thing here in Idaho."

Last week Potlatch CEO Mike Covey said the company would sell 250,000 to 300,000 acres of its 1.5 million acres in Idaho, Minnesota and Arkansas over the next 10 years. That amounts to 18 percent to 20 percent of its holdings. In Idaho about 100,000 acres will be sold.

The company completed an analysis of all of its land and divided it into three broad categories -- core forest land, land not conducive to growing timber and land more valuable for development or recreation. It will keep land seen as central to its goal of producing timber products.

Less productive land, described as either too isolated from the company's manufacturing facilities or land not well suited to growing trees, will be sold. Land that may be good for growing trees but is highly valued for development or recreation will also be sold.

Benson said the company will take the same approach to the Wisconsin land. The purchase is expected to close next month.

Covey said the Wisconsin purchase would help Potlatch offset capital gains taxes from the sale of land elsewhere.

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Potlatch to Acquire 76,000 Acres of Wisconsin Forestland. Business Wire, Dec 19, 2006

Potlatch Corporation (NYSE:PCH), a real estate investment trust (REIT), today announced its agreement to acquire approximately 76,000 acres of prime forestland in Wisconsin for $64.5 million from Tomahawk Timberlands, LLC, and Tomahawk Highlands, LLC. The transaction is expected to close in early 2007.

The forestland, located in the north-central part of the state, contains well-managed hardwoods and is made up of diverse age classes with significant amounts of mature timber. The vast majority of the land is concentrated in contiguous blocks less than five hours from Chicago and Minneapolis.

"The forestland, which consists of high-value mature timber, has been under excellent long-term forest management," said Vice President of Resource Management Brent Stinnett. "The land complements our existing holdings in Minnesota, has prime recreational values and will help further establish our presence as a leading forestland holder in the Lake States region."

Potlatch owns 310,000 acres in Minnesota, a sawmill in Bemidji, and has been operating in the region for more than 40 years. The company also owns a sawmill in Gwinn, Michigan.

"This acquisition is a perfect example of the execution of our strategy," said President and Chief Executive Officer Michael J. Covey. "Our objective is to maximize shareholder value through identifying and acquiring land with strong timber values."

"We are focusing our growth in areas where we have experience and know the lay of the land," added Covey. "Additionally, this purchase should allow us to utilize a 1031 exchange and avoid built-in gains taxes on any sales of like-kind properties that may occur."

"Through this acquisition, we will be able to better serve the needs of our existing long-term customers in the region while opening doors for new customers," added Stinnett. "And we very much look forward to working with the existing customers who have historically been supplied from these lands."

Potlatch is a REIT with 1.5 million acres of forestland in Arkansas, Idaho, Minnesota and Oregon. Through its taxable REIT subsidiary the company also operates 13 manufacturing facilities that produce lumber and panel products and bleached pulp products, including paperboard and tissue. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of our resources.

Contact: Potlatch Corporation, Media: Mark J. Benson, 509-835-1513, Investors: Douglas D. Spedden, 509-835-1549, www.potlatchcorp.com

Sale en masse. by Randy Stapilus. Ridenbaugh Press, Dec 17, 2006

The great forest lands of the Northwest are in largest part public - a whole lot are national forest lands, or state-owned lands. But big, significant portions of those forest lands are privately held, many by timber companies and others - a growing number - by companies simply managing them, with no particular tie to timber.

We’ve been accustomed to the idea that these lands are almost a supplement to the public lands - logged to a greater degree, yes, and privately held, yes, but seeming not so different. But they are different, always have been and most certainly will be, and a new report from Potlatch underscores that. (A hat tip here to the correspondent who pointed this out.)

Idahoans are accustomed to thinking of Potlatch as a timber production company, what with its big plants at Lewiston and elsewhere, and it still is to a point. But it has been formally reorganized as a REIT - a real estate investment trust - and while it did that for tax and other business reasons, the reorg also highlighted the way the company is changing and its ongoing direction. Potlatch is the owner of 1.5 million acres of land, about 100,000 to 120,000 acres in Idaho alone. Think about the value real estate has taken in recent years, and the development growth Idaho has seen, and the shape of things to come begins to emerge.

Here’s the key part of Potlatch’s statement from Monday:

"After reorganizing as a REIT earlier this year, we began a process of taking a very deep look at all of the values associated with our land holdings," said President and Chief Executive Officer Michael J. Covey. "Through this intensive land value stratification process, we have identified those lands that are non-strategic to our core forestland operations. These higher valued forestlands are available to be sold over time and the proceeds may be used to fuel the growth of the company through acquisitions, or to pay down debt or execute a share repurchase program."

Potlatch’s entire ownership of 1.5 million acres is located in desirable rural and mountain regions across the country. A significant portion of Potlatch lands have key attributes that make it superior recreational property. Additionally, in keeping with Potlatch’s long tradition of managing forestland using the highest levels of stewardship, our forestlands are third-party certified.

"Potlatch’s Idaho land holdings are located in the beautiful north-central part of the state, which has long been known for its spectacular wilderness, white water rivers, salmon, trout and steelhead fishing and big game hunting," said Vice President Land Sales and Development William R. DeReu. "Potlatch properties in Minnesota are rural, forested and located within a few hours drive from Minneapolis and St. Paul. The Arkansas ownership, like Minnesota, offers exceptional opportunities for hunting and outdoor recreation in a beautiful mixed hardwood and conifer forest," added DeReu.

This should be considered new-directional, since Covey took over as CEO only earlier this year - this has the mark of a direction with the new administration’s brand on it.

Imagine a large part of 110,000 acres up for sale in north-central Idaho: the region could be transformed.

Of course, we don’t yet know how many of those acres will actually be posted for sale or new use. And there are limitations. A correspondent notes that "Potlatch entered into an agreement a couple of years ago with Trust for Public Lands, The Nature Conservancy and the feds to place conservation easements (logging ok, no development) on up to 70,000 acres of their Idaho lands for which they were to receive $40M from the federal treasury" - and that may be a significantly limiting factor. Or, in the nature of these things, possibly not as limiting as we think.

But you can get some indication from recent developments in Oregon, where Plum Creek Timber has filed a huge Measure 37 land use claim which could open the door to development - residential, commercial, industrial? - of 37,000 acres of forest land in Lincoln and Coos counties. That claim could fail, for several reasons, and even if it passes legally it might never be (probably would not be) fully executed.

But it shows the direction publicly-held timber companies, with their huge asset base and limited ability to accelerate their quarterly profits the way some others do, may be looking. Some of those directions could change very face of the Northwest.

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One Response to "Sale en masse" msolomon Says: December 18th, 2006 at 6:56 am

Slight corrections to your post: Potlatch owns 660,000 acres in Idaho and have identified 120,000 acres for sale; Covey became CEO two weeks ago, one week before announcing the sell-off of land assets.

Reporting on the story in the Lewiston Tribune quotes DeRue saying $$ from sale will be distributed to shareholders (to a large extent that means the Weyerhauser family) and to purchase other timber land nationwide ala Plum Creeks move into the NE and SE. And OR as you point out. No mention of reinvesting any of the $$ in Potlatch’s aging mills, but that’s one of the wonders of an REIT: there is an actual tax disincentive to investing land/timber revenues in the manufacturing side of an REIT. Without access to that revenue stream, the outlook for needed major capital investments in the Lewiston pulp mill are very grim, especially as required water pollution permit requirements come due in May 2010 with an estimated price tag ranging (according to company estimates) of $50-150M.

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Weyerhaeuser Co. said it will change its lumber strategy in Washington by closing a sawmill in Toutle and building a new lumber mill at an existing operation in Longview.

Construction on the new Longview sawmill will begin next month. The facility will begin operating in mid-2008 and employ about 230 people.

When the Longview mill begins operation, the Federal Way-based wood-products company will close its Green Mountain mill in Toutle, putting 130 employees out of work.

Weyerhaeuser said Longview was a good choice for a new mill site.

"It has good rail and transportation links, good proximity to customers, will be relatively easy to construct and will provide room for future growth. The announcement indicates the level of confidence Weyerhaeuser has in the ability of this community to provide the people and resources for a new mill," said Rob Taylor, a Weyerhaeuser vice president, in a statement.

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Potlatch announces sale of timberlands. By Eric Barker. Lewiston Idaho Tribune, Dec 12, 2006

Strategic analysis identifies some land holdings as more valuable to developer

Potlatch Corp. will begin selling large swaths of its 1.5 million acres of timberlands in Idaho, Minnesota and Arkansas in an attempt to capitalize on booming population growth there.

The company announced plans Monday to sell 250,000 to 300,000 acres scattered across the three states in the next decade, equaling 18 percent to 20 percent of its holdings.

Potlatch officials recently completed a six-month strategic analysis of their timber holdings and identified as disposable land not well suited to growing trees and land that is more valuable to developers and those seeking recreational opportunities than it is to the timber products company.

Bill DeRue, vice president of land sales and development said in a conference call with reporters and financial analysts the company wants to take advantage of aging baby boomers seeking a piece of the rural good life.

"Three out of five boomers want to retire in rural areas or small towns," DeRue said. "That is our sweet spot."

Proceeds from the sales will be distributed to shareholders and used to acquire land more conducive to growing timber.

"The goal is to increase our core forest land holdings nationwide and in Idaho," said Potlatch spokesman Matt Van Vleet at Lewiston.

None of the lands to be put up for sale have been identified by the company. But 100,000 to 120,000 acres will be available in both Idaho and Minnesota and 50,000 to 60,000 acres will be available in Arkansas. The land will be offered through real estate brokers and could hit the market in one to three months, Van Vleet said. Potlatch owns about 670,000 acres in Idaho, 473,000 in Arkansas and 320,000 acres in Minnesota.

During its strategic analysis the company divided its land into three broad categories. It will keep land seen as central to its goal of producing timber products. Less productive land, describes as either too isolated from the company's manufacturing facilities or land not well suited to growing trees, will be sold.

Potlatch will also sell productive timber land that that borders, streams, rivers and lakes and is highly valued for its recreational or scenic amenities.

DeRue said Potlatch could double its earnings from the marginal land by selling it and profits from the high valued land could jump four fold if sold.

Chief financial officer Mike Covey said Potlatch would no longer seek to make money by selling conservation easements on its land.

"We will not do conservation easements for the purpose of selling development rights," he said. "We will consider conservation easements where the underlying amenity is wildlife or a habitat feature where we think that is the best way to provide protection."

Potlatch sold conservation easements on about 25,000 acres of land in the St. Joe drainage over the past five years and last month sold a conservation easement on 16,000 acres of land in Arkansas. In 2002 the company said it would consider selling conservation easements on up to 600,000 acres of its land in Idaho, a move that it said at the time could bring $40 million in revenue.

Covey said Monday some of the land in the St. Joe River basin currently under easements would have been considered for sale if not protected.

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Potlatch to sell off timber land. by Becky Kramer. [Spokane Wash] Spokesman-Review, Dec 11, 2006.

Potlatch Corp. will cash in on the nation’s growing appetite for recreational acreage by selling off 18 to 20 percent of its vast timber holdings over the next decade, officials said today.

Potlatch is the largest private timberland owner in Idaho, with about 670,000 acres. The land is located in the north-central part of the state, an area known for its wilderness, whitewater rafting, and salmon, steelhead and trout fishing. The company also owns about 800,000 acres in Minnesota and Arkansas.

All three of the states are experiencing rapid population growth. Potlatch officials recently finished a six month review of its land holdings. In some cases, the development value of the land is four times higher than its value for growing trees, said Mike Covey, Potlatch’s chief executive officer. The company wants to capture that value for its shareholders, he said.

Parcels near lakes and rivers, with easy driving access, experienced the highest increase in value.

"We’re all aware of the Baby Boomer influence," Bill DeReu, Potlatch’s vice president of land sales and development, said during a conference call. "Three out of five of those boomers want to retire in a rural area or a small town. That’s a sweet spot for us."

The company expects to sell between 15,000 and 20,000 acres of land next year.

Over the next decade, Potlatch has identified 100,000 to 120,000 acres for sale in Idaho; 100,000 to 120,000 acres for sale in Minnesota; and 50,000 to 60,000 acres for sale in Arkansas.

Potlatch put its land holdings into a real estate investment trust on Jan. 1. Company officials see a larger role for land sales and purchases in Potlatch’s future.

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Potlatch Announces Results of Land Value Stratification Analysis. Business Wire, Dec 11, 2006.

Company identifies 250,000-300,000 acres of land with higher values than timberland

Potlatch Corporation (NYSE: PCH), a real estate investment trust (REIT), today announced details of the company's land stratification analysis during an investor webcast and conference call from New York City (webcast replay available at www.potlatchcorp.com). Potlatch management presented the company's analysis of its lands with higher values than timberland and its strategies for land value creation.

"After reorganizing as a REIT earlier this year, we began a process of taking a very deep look at all of the values associated with our land holdings," said President and Chief Executive Officer Michael J. Covey. "Through this intensive land value stratification process, we have identified those lands that are non-strategic to our core forestland operations. These higher valued forestlands are available to be sold over time and the proceeds may be used to fuel the growth of the company through acquisitions, or to pay down debt or execute a share repurchase program."

Potlatch's entire ownership of 1.5 million acres is located in desirable rural and mountain regions across the country. A significant portion of Potlatch lands have key attributes that make it superior recreational property. Additionally, in keeping with Potlatch's long tradition of managing forestland using the highest levels of stewardship, our forestlands are third-party certified.

"Potlatch's Idaho land holdings are located in the beautiful north-central part of the state, which has long been known for its spectacular wilderness, white water rivers, salmon, trout and steelhead fishing and big game hunting," said Vice President Land Sales and Development William R. DeReu. "Potlatch properties in Minnesota are rural, forested and located within a few hours drive from Minneapolis and St. Paul. The Arkansas ownership, like Minnesota, offers exceptional opportunities for hunting and outdoor recreation in a beautiful mixed hardwood and conifer forest," added DeReu.

The non-strategic lands identified in each region through the initial stratification efforts total approximately 100,000-120,000 acres in Idaho, 100,000-120,000 acres in Minnesota and 50,000-60,000 acres in Arkansas, or 18-20 percent of the company's current holdings nationwide.

Potlatch is a REIT with 1.5 million acres of forestland in Arkansas, Idaho, Minnesota and Oregon, and through its taxable REIT subsidiary the company also operates 13 manufacturing facilities that produce lumber and panel products and bleached pulp products, including paperboard and tissue. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of our resources.

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Seeing the Forest for the Trees. By Steve Thompson. Missoula Independent, Dec 7, 2006.

Home Depot, Plum Creek and the effects of media spin

When Missoula’s next big-box retailer moves onto Reserve Street next summer, western Montana’s forest activists might actually have something to celebrate.

That’s because Home Depot, the nation’s largest home improvement retailer, has pledged to stop selling wood products from environmentally sensitive old-growth forests and to give preference to green-label wood that has been independently certified as coming from well-managed forests.

Contrary to recent reports in the Missoulian, however, the "green" lumber on Home Depot’s shelves isn’t likely to carry the logo of Plum Creek Timber Company. And that relieves Montana conservationists who commonly refer to Plum Creek as the Darth Vader of the timber industry.

"Quite simply, Plum Creek hasn’t been a good neighbor in Montana," says Bob Ekey, regional director of The Wilderness Society. "They have liquidated their forests, degrading water quality and damaging wildlife habitat throughout western Montana."

Earlier this month, the Missoulian carried a front-page article about Plum Creek’s self-ballyhooed "environmental forestry" program. The news peg was accounting giant PriceWaterhouseCoopers’ audit that verified Plum Creek has complied with the guidelines of the so-called Sustainable Forestry Initiative (SFI), a creation of a national timber industry group.

Of particular interest to conservationists, the articles strongly implied that Plum Creek’s forestry practices meet Home Depot’s new guidelines for certified wood products. Plum Creek touted the accounting firm’s audit as the independent guarantee it needed to satisfy Home Depot’s environmental criteria.

Not so quick, said Kim Woodbury of Home Depot this week.

Plum Creek’s Sustainable Forestry Initiative does not provide the independent stamp of approval that Home Depot requires for certification, she said. In particular, Home Depot’s purchasing guidelines require the application of external standards developed outside the industry itself. Those standards must consider social as well as environmental issues.

"It’s important to look at all areas of forest management," said Woodbury from Home Depot’s Atlanta office. "We want to drive the industry to a higher standard."

Although a small step in the right direction, industry’s self-developed SFI guidelines do not achieve a higher standard, conservationists say. They are broad, weak and open-ended, with few on-ground performance requirements. A third-party audit using SFI standards doesn’t signify much.

Plum Creek is a particularly poor poster child for the Sustainable Forestry Initiative, enviros say. "Whatever you might say about Plum Creek, you probably wouldn’t use the word ‘sustainable,’ says Bruce Farling of Montana Trout Unlimited. "They can hire all the ad people they want, but the landscape tells the story. It doesn’t look sustainable to me."

In fact, Plum Creek has provided ample evidence that its management of 1.5 million acres in Montana has been anything but sustainable. A decade ago, Plum Creek earned the "Darth Vader" title in the Wall Street Journal after company executive Bill Parsons scoffed at the notion of sustainability.

"We have never said we were on a sustained-yield program, and we have never been on a sustained-yield program," Parsons said. "Let’s get to the heart of it. Sure, it’s extensively logged, but what is wrong with that?"

Parsons’ blunt assessment was confirmed in 1997 in documents Plum Creek filed with the Securities Exchange Commission. "By the year 2000, the [company] anticipates that it will have nearly completed the conversion of slower growing forests to younger, more productive stands in the Rocky Mountain Region, at which time it anticipates a moderate reduction in the region’s harvest levels." In other words, the big trees were converted to stumps much faster than new trees can grow.

Plum Creek’s rapid liquidation of its mature timber in Montana was near completion when the company shifted its investments last year to purchase a million acres in Maine. To feed its own mills in Montana, Plum Creek has increased its purchase of public timber in northwestern Montana, outcompeting smaller, independent mills.

Woodbury said that Home Depot endorses the process developed by the international Forest Stewardship Council, which includes environmentalists, timber companies and community advocates and which has certified 40 million acres worldwide. Similar independent certification efforts are being developed around the world, but the U.S. industry’s SFI does not pass muster, she said.

(In the interest of full disclosure, my work as a natural resource consultant has included coordination of FSC’s standards-development process in the Rocky Mountains by a 24-person working group of foresters, conservationists, loggers and scientists.)

Woodbury acknowledges that forest certification is complex and often confusing, creating confusion that environmentalists say has been compounded by misleading claims by companies like Plum Creek. However, as demonstrated by hundreds of thousands of comments on government organic agriculture standards a couple years ago, Americans increasingly care where products come from.

"People are very tuned into this topic and people are going to be paying attention," says Home Depot’s Woodbury. "We think it makes good business sense, and we want to do it right."

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Former Plum Creek executive to be chairman of Potlatch. Business Wire, Dec. 4, 2006

Chairman L. Pendleton Siegel to Retire; Board Names Michael J. Covey as Successor

The Board of Directors of Potlatch Corporation (NYSE:PCH) has announced the election of Michael J. Covey, 49, current President and Chief Executive Officer, to the position of Chairman of the Board, effective January 1, 2007. Covey will succeed L. Pendleton Siegel, 64, who will retire as Chairman and from the Board of Directors, effective December 31, 2006. Siegel also served as the company's Chairman and Chief Executive Officer from 1999 to February 2006, and is Chairman until the end of this year.

Covey joined Potlatch in February 2006 when he was elected President and Chief Executive Officer and a member of the Board. Prior to that, he spent 23 years with Plum Creek Timber Company. In his new role he will serve as Chairman, President and Chief Executive Officer.

Potlatch Corporation's Board consists of 11 directors, all of whom are independent other than Covey. The Board has a lead independent director who serves in the capacity of vice-chairman.

Potlatch is a REIT with 1.5 million acres of forestland in Arkansas, Idaho, Minnesota and Oregon, and through its taxable REIT subsidiary the company also operates 13 manufacturing facilities that produce lumber and panel products and bleach pulp products, including paperboard and tissue. Potlatch, a verified forest practices leader, is committed to providing superior returns to stockholders through long-term stewardship of our resources.

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Revealing the true game behind Measure 37. Oregonian EDITORIAL, Dec 4, 2006.

It was not really so much about fairness as it was a grab to open land to developers

Property-rights Measure 37 was sold to voters with the quaver of an elderly voice. The measure was crudely drawn, but when it was approved two years ago, voters had every reason to think they were freeing some of their fellow Oregonians from a cruel time warp.

An elderly widow, Dorothy English, and other backers of Measure 37 portrayed it not as a developer's bonanza -- wrecking farm fields, forests and Oregon land-use policies -- but as a way to alleviate an injustice, inflicted in part by time. Undeniably, some property owners purchased their land before the 1970s, when the state's land-use controls went into effect. Some of these Oregonians expected to build a home or create a modest development only to discover the ground rules had changed beneath their feet. The time sequence, the fact the purchase came before the rules changed, is what created the perception of unfairness.

But the rush to file Measure 37 claims before today's deadline shows it wasn't so much about righting wrongs as it was about razing farms and forests and enriching developers.

And never mind about the time warp, either.

As The Oregonian's Laura Oppenheimer reported last week, an out-of-state timber company just delivered the most massive claim yet filed under Measure 37, which could trigger development of 32,000 acres of coastal forestland in Coos and Lincoln counties. This company acquired its Oregon timber holdings five years ago as part of a merger with the subsidiary of another timber company. So, a perplexed voter might ask, how does this claim have anything to do with addressing a long-held property-rights grievance? The short answer is:

It doesn't.

The Seattle-based company, Plum Creek Timber, is apparently prepared to argue that its massive claim is valid, despite its relative newcomer status. But if the company's interpretation holds up, then all bets -- and land-use rules -- are off. This interpretation would trigger a land rush for developers. It's starkly at odds with the way Measure 37 was sold.

Remember that time warp we mentioned? Measure 37 said if the purchase had, indeed, come before new rules were applied, local governments had to compensate property owners or let them break the rules. That created a new injustice, for neighbors, and it was also objectionable in principle, in effect paying people to break the law or giving them a way to blackmail local governments. But you could understand why Measure 37 had some appeal for voters, especially given the stories of individual hardship -- and that quaver in the voice.

Apparently, it would have been more honest if appeals for Measure 37 had been accompanied by very different sound effects. The whine of chainsaws, for instance.

Or the rumble of bulldozers.

Two years after the voters approved it, Measure 37 appears to be not so much rectifying injustice as inflicting it. Oregonians, even now we hope, are waking up and recognizing we've been had. In truth, we are the ones caught in the time warp.

This destructive law is speeding our state toward a bleak and ugly future our land-use policies were carefully designed to avoid.

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Measure 37 claims beat deadline. By Laura Oppenheimer and Richard Cockle. The Oregonian, Dec 2, 2006.

Development - Counties are deluged with timber companies' proposals, covering tens of thousands of acres

Timber land owners from Oregon's coast to its northeast corner filed significant development proposals this week, squeaking in before a Monday deadline for the state's property rights law.

The vast and largely undeveloped East Moraine of picturesque Wallowa Lake could get a collection of new homes under a Measure 37 claim filed by the owner of Montana-based RY Timber Co.

Portland-based Stimson Lumber Co. -- the donor of this year's holiday tree at Pioneer Courthouse Square -- filed 135 claims with the state on Friday, land-use director Lane Shetterly said. He didn't know details, and a company representative could not be reached Friday evening. But three Stimson claims in Lincoln County asked to be excused from land-use restrictions on 3,400 acres.

Meanwhile, Plum Creek Timber Co. spelled out details of the largest known Measure 37 request: allowing housing on 32,000 acres of coastal forestland.

It's been two years since voters approved Measure 37, requiring governments to waive land-use restrictions or compensate owners when their investments are harmed. But claims have flooded county and state offices this week, reflecting the deadline to apply without extra steps and expenses.

"We'll start to get a sense of what's in the inbox, but it's going to take a long time," Shetterly said.

Plum Creek, a Seattle-based real estate investment trust, filed nearly 100 applications Thursday. The company proposes allowing residential development on 22,000 acres in Lincoln County and 10,000 acres in Coos County, spokeswoman Kathy Budinick said. Rules that prevent development on forestland have cost Plum Creek $94.8 million, the claims allege.

The company's shareholders want to keep options open on lower-producing land in areas where housing would be desirable, Budinick said Friday.

"Sometimes we do sell land or work with others to develop it," she said. "But I don't see any immediate planning efforts to that end."

Measure 37 claims cover 9 percent of the company's 375,000 acres in Oregon, most of it acquired when Plum Creek merged with a subsidiary of Georgia-Pacific in 2001. Budinick said the terms of the merger should qualify the company for Measure 37.

Timber companies footed most of a $1.2 million bill to pass the measure. Yet forestland has accounted for less than 20 percent of claims, according to analysis by the Institute of Portland Metropolitan Studies at Portland State University.

Forestland owners have said they supported the measure to prevent additional regulations and, perhaps, to be able to consider development on slivers of unproductive land.

During an earlier interview, Ray Wilkeson of the Oregon Forest Industries Council predicted "isolated instances of forestland being converted to other uses. But I think for good reason -- not because people are trying to get rich or cash out."

Leaders at 1000 Friends of Oregon, a land-use advocacy group that opposed Measure 37, have a different interpretation of this week's claims.

"Obviously they've known about this law for two years now," said spokesman Eric Stachon.

"I think they're doing it at the last minute to avoid negative publicity."

Linda Yanke of Boise, owner of RY Timber, filed a claim Thursday asking Wallowa County to waive land-use regulations that prevent her from subdividing land on the East Moraine of Wallowa Lake. As an alternative, she would accept $8 million in compensation, said attorney Rahn Hostetter of Enterprise. Yanke owns most of the moraine -- 1,604 acres, including roughly 14,000 feet of its 81/2 miles of shoreline. She and her late husband, Ron, bought the land in 1991.

Since then, state land-use regulations restricted development because of the property's scenic, cultural, geologic and archaeological values, Hostetter said. A waiver of the rules would allow Yanke to break the land into 160-acre parcels for 10 homes, he said.

The gravel moraine is zoned for agriculture and too steep to build on in many places, but its summit, east side and south end probably would be suitable for construction.

"I guess it depends on how it's done, and she would be very sensitive to how it's done," Hostetter said.

Other than a long-abandoned rodeo arena on the summit, the East Moraine has seen much less development than the West Moraine, where more than 100 homes are partially hidden within a forest.

Wallowa County commissioners must rule on the claim within 180 days of Thursday's filing. So far, they have waived land-use ordinances in Measure 37 cases rather than paying compensation.

The county doesn't have the resources to pay off such a large claim, so people might have to donate money to guarantee that the moraine won't be developed, said Wallowa County Commissioner Ben Boswell.

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Plum Creek Timber Co. proposes to build homes scattered across the coastal region in two counties. By Laura Oppenheimer. The Oregonian, Dec 1, 2006

A national timber company has filed the biggest development proposal yet under Oregon's property rights law, joining a mad dash to beat a Monday deadline for Measure 37 claims.

Seattle-based Plum Creek Timber Co. delivered nearly 100 applications at Lincoln and Coos county offices Thursday, asking to construct homes on forestland scattered across Oregon's coastal region.

Planning directors from both counties said they hadn't had time to analyze the applications Thursday afternoon. But they said a Plum Creek representative told them in separate meetings last week to expect claims on as much as 10,000 to 15,000 acres in each county.

Until now, Measure 37 has been fairly low-key in Lincoln County, said planning director Matt Spangler, who accepted 64 Plum Creek applications.

"We haven't generated a great deal of interest from surrounding property owners," he said. "With a large claim like this, it could be a different story."

Voters approved Measure 37 in 2004, requiring governments to waive planning rules that have restricted the way people use their land -- or pay for lost value. Because no money was raised, state agencies and county planning departments are giving the green light for development.

The application process gets more complicated after the two-year mark, which arrives this weekend. Most governments will still accept claims on Monday. By all indications, a tally of 3,600 claims statewide as of mid-November is ballooning.

At state offices in Salem, workers set up a conference room on Thursday as they accepted 568 applications. Claims were delivered by mail, by courier, by lawyers and by citizens lining up to turn them in, said Alice Beals with the Department of Administrative Services.

Even smaller governments, such as Wallowa County in northeastern Oregon, have seen an influx of Measure 37 claims this week. As planning director Lance Bailey put it, "The floodgates are just open."

Though the Plum Creek filings are technically separate claims, their collective impact would outstrip any other Measure 37 proposal. The largest claim through mid-November covered a little more than 6,000 acres, according to an analysis by the Institute of Portland Metropolitan Studies at Portland State University.

Plum Creek representatives could not be reached Thursday to discuss their plans. A company Web site says the real estate investment trust owns more than 8 million acres of timberland nationwide, including 285,000 acres in Oregon.

Oregon planning rules prevent forestland from being split and developed. Spangler and Patty Evernden, the Coos County planning director, said Plum Creek did not specify how many homes the company hopes to build -- or when. The planning directors said they got the impression company shareholders want to explore possibilities on their less productive lands.

The Plum Creek Web site describes the company's general philosophy like this: "We work to capture the most value from every acre that we own. This means continually assessing the value of the trees growing on the land, the value of the natural resources that reside below the surface, and the value of the land itself."

The biggest issue in evaluating Plum Creek's claim, Spangler said, will be ownership history. To qualify for Measure 37, landowners must have acquired their property before restrictions took effect.

Plum Creek acquired its Oregon land during a 2001 merger with a subsidiary of Georgia-Pacific. Similar ownership transfers have sunk other Measure 37 claims, but the company official told Spangler the terms of this business deal prevent such a problem.

Governments have 180 days to respond to Measure 37 claims, and county officials said these claims will be labor-intensive. They expect the proposal to be a hot conversation topic for the public.

Some Lincoln County residents want more development opportunities, said Terry Thompson, a county commissioner. The Plum Creek claims may test just how much.

"We're trapped between the ocean and the timber land," he said. "In one sense, this may allow some construction away from the ocean buffer zone. It may not be all that bad."

He paused. "I'm trying to look somewhere to find a silver lining."

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Justices question antitrust award in Weyerhaeuser case. By Greg Stohr. Bloomberg News. Seattle Times, Nov 29, 2006.

Justice David Souter critical of instructions to jury

U.S. Supreme Court justices voiced concerns Tuesday about a $79 million antitrust award against Weyerhaeuser as they struggled to establish rules for claims that a company tried to drive out competition by overbidding for supplies.

Federal Way-based Weyerhaeuser is fighting allegations it monopolized the Pacific Northwest market for finished alder, a wood used in furniture, by paying above-market prices for scarce hardwood logs.

A federal appeals court upheld a jury award to Ross-Simmons Hardwood Lumber of Longview.

In arguments Tuesday in Washington, D.C., several justices criticized an instruction to the jury that asked whether Weyerhaeuser bought "more logs than it needed" and prevented Ross-Simmons from acquiring logs at a "fair price."

Justices David Souter and Samuel Alito suggested the judge's instruction was too vague to provide meaningful guidance.

"That basically left the jury on a free float, didn't it?" Souter asked.

Other justices were hesitant to go as far as Weyerhaeuser wants in restricting so-called predatory buying claims.

Weyerhaeuser, the world's biggest forest-products company, wants the high court to apply a legal standard it used in a 1993 predatory-pricing case. That decision required proof an antitrust defendant sold its product below cost and was likely to recoup those losses after competition had been driven out.

Chief Justice John Roberts said the two situations are "a little different." He said courts have set a high bar for predatory-pricing cases because lower prices are "a direct benefit to consumers."

The Weyerhaeuser case is one of two antitrust fights before the court this week. The justices on Monday questioned the basis for claims Verizon Communications and three other local-telephone providers agreed not to compete in one another's territory.

The court is scheduled to rule by July in both cases.

Weyerhaeuser's lawyer, Andrew Pincus, said courts should be reluctant to penalize companies for trying to outbid a competitor for raw materials. "There's a high risk of mistaking aggressive competition for anticompetitive behavior," he said.

Michael Haglund, the lawyer for Ross-Simmons, said overbidding meant "moving prices in the wrong direction for consumers."

That argument drew resistance from Justice Stephen Breyer, who said federal antitrust laws are designed to protect suppliers as well as consumers. Breyer later said Weyerhaeuser might have been aggressively buying logs as a means of "storing up nuts for winter."

Ross-Simmons, which went out of business in 2001, accuses Weyerhaeuser of artificially increasing alder prices to deprive smaller competitors of needed supplies.

A Portland jury in 2003 said Ross-Simmons was entitled to more than $26 million, an amount that tripled under federal antitrust rules.

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Supreme Court hears antitrust suit against Weyerhaeuser. By Jennifer A. Dlouhy. Seattle Post-Intelligencer, Jan 29, 2006.

The lawyer for a now-defunct sawmill told the U.S. Supreme Court on Tuesday that timber giant Weyerhaeuser Co. broke federal antitrust laws by overpaying for more logs than it needed and then cutting its prices on the finished lumber used to make guitars and furniture.

The strategy drove the smaller timber processor, Ross-Simmons Hardwood Lumber Co., out of business at the same time it allowed Weyerhaeuser to strengthen its foothold in the Pacific Northwest alder saw-log market, said the lawyer, Michael Haglund.

"Weyerhaeuser artificially increased the log market above where it otherwise would have been," Haglund said. "We have a situation where they warehoused large -- unprecedentedly high -- volumes of lumber because they" wanted to keep it out of competitors' hands.

Ross-Simmons now wants Federal Way-based Weyerhaeuser to pay nearly $80 million in damages for the business tactics, which it says were part of a ploy to monopolize the market. The Longview-based sawmill says Weyerhaeuser's tactics forced it out of business in 2001 by driving prices for saw logs higher than it could afford and by depleting the supply of the trees.

The price of alder saw logs and that of finished lumber made from the material are usually tied together. But from 1998 to 2001, Ross-Simmons argued in court filings, the price of saw logs rose even as the price of finished lumber dropped.

In its defense, Weyerhaeuser contends it was only making smart business decisions and could afford to pay more for the logs because it was more efficient at processing the wood.

The two lumber mills are feuding over the appropriate legal standard for determining when buying practices are predatory, and therefore a violation of federal antitrust laws.

A federal district court in Portland ruled in favor of Ross-Simmons and said the lumber company did not have to prove Weyerhaeuser took a financial loss to prevail. Instead, the district court found, it was enough that Ross-Simmons proved in court that Weyerhaeuser had decided to cut its profit margin on finished lumber made from alder saw logs.

Ross-Simmons won a verdict of $78 million, an award that was affirmed by the 9th U.S. Circuit Court of Appeals, which said Weyerhaeuser had intended to monopolize the alder saw-log market in the Pacific Northwest.

Weyerhaeuser appealed to the Supreme Court. The company has the backing of the Bush administration, which says aggressive buying tactics make for good business competition by ensuring that companies have access to enough raw materials to manufacture more products.

Businesses far outside the Pacific Northwest are watching the case because it will force the justices to draw the line between savvy business strategies and illegal anti-competitive behavior.

Tactics that may appear underhanded may simply be aggressive -- but legal -- business competition, said Andrew Pincus, Weyerhaeuser's lawyer.

"It's very hard to distinguish ... between hard-fought competition and anti-competitive intent," Pincus said. "Increasing the prices that are paid for inputs -- like lowering sales prices -- is a mechanism by which a firm competes. It's a result that we would expect from a buyer's ordinary competitive instincts."

Chief Justice John Roberts noted that while predatory selling can benefit consumers by lowering prices, predatory buying does not help them. Given that, Roberts asked, shouldn't predatory buying be judged by a looser standard?

Justice John Paul Stevens seemed concerned that a ruling for Weyerhaeuser would mean an end to cases in which there is clear evidence -- such as internal company memos -- that a business paid more for raw materials as part of a ploy to drive a competitor out of business.

In the absence of evidence, Justices Stephen Breyer and Ruth Bader Ginsburg wondered how to judge what motivates a company's buying practices.

"If you're trying to decide whether people are hogging goods unnecessarily for bad purposes or (are) storing up nuts for winter for good purposes, then a very good key to that is (whether) these people expect in the long run to make money out of this," Breyer said.

The Supreme Court is expected to rule on the case by July. The case is Weyerhaeuser v. Ross-Simmons, 05-381.

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Group turns up heat on Plum Creek. By Kevin Miller, Bangor Daily News, Nov 16, 2006.

AUGUSTA - An environmental group is ratcheting up the heat on Plum Creek Timber Co. in a report released Wednesday that details fines against the company, permit problems and logging in areas important to deer survival during winter.

The Natural Resources Council of Maine said the report highlights serious concerns about Plum Creek's record on sustainable forestry, environmental protection and wildlife management. Group members contend that the documents also raise questions about the Seattle-based company's trustworthiness as it moves forward with development plans for the Moosehead Lake region.

A Plum Creek spokesman acknowledged past mistakes but said the company works closely with state agencies to correct them. One state official added that he was encouraged by the company's recent cooperation on protecting winter "deer yards."

Using internal state documents obtained through the Freedom of Access Act, NRCM compiled a list of violations and official complaints against Plum Creek, including:

* A $57,000 fine for violations of Maine's timber harvesting laws, the largest such fine in state history.

* Construction of a 7,500-foot-long power-line corridor outside of Greenville without the necessary permits.

* Water quality violations in Somerset County.

* Multiple instances of logging within areas that state biologists said was needed to protect northern Maine's fragile deer population during winter.

The report is NRCM's most serious salvo to date against Plum Creek and the company's petition to sell 975 house lots and land for two resorts near Moosehead. The proposal, which also includes more than 400,000 acres of permanent conservation, would be the largest subdivision ever in Maine if approved by state regulators.

Cathy Johnson, NRCM's North Woods project leader, said she believes Plum Creek's environmental and forestry record are relevant to the company's Moosehead plans, which the group contends will harm the region's wilderness character.

"Plum Creek is saying, 'Trust us, we'll do a good job in the development plan,"' Johnson said. "Yet when you look at their record, they cannot be trusted."

Jim Leaner, manager of Plum Creek's northeast region, interprets the company's record differently.

"We have been here [in Maine] eight years, and certainly we've made a few mistakes. We're not perfect," Lehner said. "But I think the key there is when we do have an issue, we get on it right away and work closely with the agency and resolve it."

Much of NRCM's report focused on logging on Plum Creek land that has been identified as winter habitat for deer, which are at the cusp of their range in northern Maine. These areas, known as "deer yards," offer shelter from the deep snow and bitter winter weather under the interlocking crowns of adult conifer trees.

In 2005 and early 2006, biologists with the Maine Department of Inland Fisheries and Wildlife sent a bevy of e-mails to their superiors in Augusta blasting Plum Creek for cutting in deer yards against their recommendations. Several biologists questioned whether the state's cooperative approach on deer yards with Plum Creek was working, suggesting instead a move toward the more heavy-handed protective zoning.

In a January 2006 e-mail cited in NRCM's report, DIF&W wildlife biologist Eugene Dumont called the company's history with deer yards "feeble and dismal" and suggested Plum Creek was the worst major landowner in the state on the issue.

In another e-mail, biologist Douglas Kane lamented the loss of additional deer wintering areas, or DWA, along the East Outlet of Moosehead Lake as well as what he described as years of unproductive negotiations with Plum Creek.

"Unfortunately, we have accomplished absolutely nothing in terms of conserving shelter for wintering deer on their ownership," Kane wrote in a January 2006 e-mail. "In fact, we have lost important acres and continue to loose [sic] what little DWA shelter is left on their ownership in my region."

On Wednesday, Lehner said the company has since halted harvesting in deer yards identified by DIF&W biologists and is working with the department.

Kenneth Elowe, head of DIF&W's Bureau of Resource Management, said many of those e-mails were sent at a time when staff were experiencing their "peak frustration" toward Plum Creek on the deer issue. Elowe said things have improved considerably and that he is encouraged by the change.

"Since then, I would say since April or May, we have seen a lot of progress with them," Elowe said. "They have become much more cooperative, especially on the biological basis of what deer need."

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Group assails Plum Creek. Associated Press. [Lewiston Maine] Sun Journal, Nov 16, 2006.

PORTLAND - An environmental group battling Plum Creek Timber Co.'s development plan for the Moosehead Lake region detailed Wednesday what it said was the company's pattern of disregard for Maine's forestry laws and wildlife habitat protections.

The Natural Resources Council of Maine said Plum Creek's illegal practices were spelled out in internal documents from state agencies that the group obtained under the state Freedom of Access law.

The NRCM said Plum Creek this year was fined $57,000, the largest such fine in state history, for repeated violations of Maine's Forest Practices Act that limit timber harvesting.

The group also documented incidents linking Plum Creek to destruction of deer wintering habitat and to polluting streams and developing land without a permit.

"There's a systematic avoidance of Maine's environmental laws," said Cathy Johnson, NRCM's North Woods project director, who told reporters that Plum Creek's record shows that it cannot be trusted.

Included in the documents released by NRCM are e-mail messages between state employees. Several messages sent in 2005 by Strong-based Department of Inland Fisheries biologist Chuck Hulsey addressed deer wintering areas.

Deer wintering areas are stands of forest that provide shelter and food sources for deer during the colder winter months. In the messages to DIFW regional management Supervisor Eugene Dumont, Hulsey outlines his concerns about ongoing harvest operations in Lexington Township near Kingfield, between Upper Pierce Pond and the Dead River in northern Somerset County and Indian Stream Township, southwest of Moosehead Lake.

"I asked Plum Creek to defer harvesting in this area until either an agreement was made between MDIFW and Plum Creek, or formally rejected," Hulsey wrote in a June 2005 memo regarding deer wintering areas near Upper Pierce Pond.

"Plum Creek ignored this request and cut the area so heavily it will not be a functional DWA for another 30 years," Hulsey wrote.

In an October 2005 message to Dumont, Hulsey again expressed concern and surprise that Plum Creek was continuing to heavily harvest deer wintering areas. He also details meetings he had with Plum Creek where he believed an agreement had been reached to modify the harvest levels but those agreements were not followed.

"This is now the third time that the landowner has gone in and harvested wood, without a plan, contrary to what was agreed upon, and without notifying MDIFW," Hulsey wrote. "This DWA cannot continually experience this level of poor management and sustain wintering deer now or in the future."

Jim Lehner, Plum Creek's general manager for the Northeast, acknowledged that the company has made mistakes but maintained it always works with the appropriate agency to resolve the issue.

"We can always do better. We learn from our mistakes," he said.

Seattle-based Plum Creek, the nation's largest private landowner, is seeking a zoning change on 420,000 acres in the Moosehead region as part of a 30-year plan to develop 975 house lots, two resorts and an industrial park. The Land Use Regulation Commission's review of the proposal is expected to last well into next year.

The NRCM has maintained that the project, which is the largest such development ever proposed in Maine, could have a damaging and irreversible impact on the region that serves as the gateway to the state's North Woods.

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Environmental group cites Plum Creek violations. Associated Press, Boston Globe, Nov 15, 2006.

PORTLAND, Maine --An environmental group battling Plum Creek Timber Co.'s development plan for the Moosehead Lake region detailed Wednesday what it said was

The Natural Resources Council of Maine said Plum Creek's illegal practices were spelled out in internal documents from state agencies that the group obtained under the state Freedom of Access law.

The NRCM said Plum Creek this year was fined $57,000, the largest such fine in state history, for repeated violations of Maine's Forest Practices Act that limit timber harvesting.

The group also documented incidents linking Plum Creek to destruction of deer wintering habitat and to polluting streams and developing land without a permit.

"There's a systematic avoidance of Maine's environmental laws," said Cathy Johnson, NRCM's North Woods project director, who told reporters that Plum Creek's record shows that it cannot be trusted.

Jim Lehner, Plum Creek's general manager for the Northeast, acknowledged that the company has made mistakes but always works with the appropriate agency to resolve the issue.

"We can always do better. We learn from our mistakes," he said.

Seattle-based Plum Creek, the nation's largest private landowner, is seeking a zoning change on 420,000 acres in the Moosehead region as part of a 30-year plan to develop 975 house lots, two resorts and an industrial park. The Land Use Regulation Commission's review of the proposal is expected to last well into next year.

The NRCM has maintained that the project, which is the largest such development ever proposed in Maine, could have a damaging and irreversible impact on the region that serves as the gateway to the state's North Woods.

"Our level of concern is heightened further by this information about Plum Creek's poor timber practices, the company's total disregard for the protection of deer wintering habitat and Plum Creek's failure to obey Maine's environmental laws," the group said.

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Report cites violations by Plum Creek. By John Richardson, Portland Press Herald, Nov 16, 2006.

Plum Creek Timber Co., one of Maine's largest owners of forestland, repeatedly violated environmental standards in the years before 2003, the Natural Resources Council of Maine said Wednesday.

The advocacy group, which issued a report citing state records related to the company's logging practices, also said the company continued to destroy established deer habitat until early this year.

The report, which challenges Plum Creek's corporate image as a protector of Maine's environment, noted, for example, that the company paid a $57,000 fine in June for a series of logging violations from 1995 through 2002, by far the largest such penalty ever imposed in Maine.

"This is really a systematic avoidance of Maine's environmental laws," said Cathy Johnson of the Natural Resources Council.

The group has been a leading critic of Plum Creek's plans for two resorts and about 1,000 house lots in the Moosehead Lake region. The company's logging record, Johnson said, indicates it shouldn't be trusted to develop sensitive areas in the North Woods.

Plum Creek's general manager in Maine, Jim Lehner, said the company has taken responsibility for its violations and works with the state agencies to avoid problems.

"Whenever an issue comes up, we address it immediately," he said. "We're proud of our record."

The company is certified by the Sustainable Forestry Initiative, he said. "Does it mean we don't make any mistakes? No, we do make mistakes."

The council's report focuses on improper clearcutting and other logging violations, and the destruction of crucial deer-wintering areas over the objections of state biologists.

The group also criticized the company for failing to get a permit before starting construction of a 7,500-foot-long powerline corridor near Moosehead Lake in 2003, and for altering stream beds near a logging road in 2002. The company cited a miscommunication and paid a $4,000 fine for the powerline violation, and it repaired what it said was unintentional damage to the waterway, according to the state.

The report also raises questions about how aggressively the state has regulated Plum Creek and whether state agencies have helped protect the company's image.

For example, a final news release from the Department of Conservation about the Plum Creek fine in Juneis missing a sentence from a draft that said the company was penalized $57,000. The final notice does not include the fine amount or otherwise indicate that the action was more than a routine technical settlement. Also, the word "clearcuts" in the draft was changed to "harvesting" and "harvests" in the final version. The action got little, if any, publicity at the time.

The leaders of several agencies that regulate forestry and land use in northern Maine said Wednesday that they have treated Plum Creek no differently than any other landowner.

"Nothing was done to accommodate or to alleviate Plum Creek's violations of the Forest Practices Act," said Conservation Commissioner Patrick McGowan. The information was available to anyone who was interested, he said.

The $57,000 fine imposed in June was in addition to a $9,000 fine the company paid in 2003 for a clearcut that violated the Forest Practices Act. The 2003 case led to a selective review of Plum Creek's logging practices back to 1995, the process that concluded in June with the $57,000 fine.

The review of the eight-year period found that Plum Creek violated the law at 48 previous harvest sites throughout its more than 900,000-acre property.

The discovery of so many past violations shows how difficult it is to monitor logging and enforce the law in a 10-million-acre forest, officials said. But it also shows that the Maine Forest Service did its job, said Director Alec Giffen.

Until June, the largest single fine imposed under the 17-year-old law was $19,500, assessed to International Paper in 1998 and Jay McLaughlin in 2001.

Lehner, the Plum Creek manager, said the violations were the result of not precisely measuring cuts as required by changes in the law in 1999.

"We were interpreting those rules incorrectly. It was a huge mistake for us," he said. The company has since retrained its foresters, he said.

State Forest Service officials say Plum Creek cooperated in the review of its lands and has not been found in violation of the law since the 2003 settlement.

Plum Creek's logging in deer-wintering areas has not violated any laws, but it did earn the company a bad reputation among some state officials last winter. The record also shows a clear disregard for protecting wildlife habitat when it interferes with profits, according to Johnson.

Deer-wintering areas are stands of mature spruce, fir and hemlock where deer can find shelter from cold, wind and deep snow. The so-called deer yards are considered critical for sustaining the species so far north.

Most deer yards are protected only through voluntary cutting limits agreed to by landowners and the state's Department of Inland Fisheries & Wildlife.

Biologists in the department grew frustrated last winter by Plum Creek repeatedly cutting down known deer areas. In one e-mail among staff members, a biologist said Plum Creek had a "dismal and feeble history" and probably the worst record of any major landowner in Maine. In January, another biologist warned that the cutting of deer yards had accelerated even as pressure was building for the company to stop.

Shortly after, the agency called for a meeting with Plum Creek and the two began negotiating an agreement regarding deer areas. That process is continuing, said Ken Elowe, director of resource management for Inland Fisheries & Wildlife.

"They have become more understanding to the needs of deer and more understanding that they should work with us," Elowe said. At the same time, state officials are now talking about protecting more deer habitat through formal regulation.

Lehner said the company is working to resolve the dispute and pointed out that the deer areas at issue are not legally off-limits. "This is all well above and beyond what is required by law," he said. "They asked us to stop cutting and we did."

The company is still planning to place house lots inside some deer-wintering areas, Lehner said. Those plans will be reviewed by Fisheries & Wildlife.

Johnson said some of the company's aggressive cutting has been on land it intends to develop.

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Investigation Exposes Plum Creek Timber Violations. Largest Fine for Logging Law Violations in Maine History. ENVIRONEWS, Natural Resources Council of Maine, Nov 15, 2006.

SEE FULL REPORT, GRAPHICS AND MORE AT http://www.maineenvironment.org/pc_foaa_report.asp

Documents gathered using Maine’s Freedom of Access Act (FOAA) disclose that this year Plum Creek was charged a $57,000 fine -- the largest fine ever assessed in history for breaking Maine’s timber harvesting laws. Other documents included in an investigation by the Natural Resources Council of Maine reveal that Plum Creek has destroyed wildlife habitat across its ownership in Maine that state biologists identified as priority areas for deer to survive Maine’s harsh winters. State documents also show that Plum Creek has polluted streams and developed land without a permit. This information was gathered through a FOAA investigation conducted by the Natural Resources Council of Maine, utilizing documents gathered from several state agencies.

"Plum Creek claims to be practicing sustainable forestry and acting as a good corporate citizen in Maine, but that’s not the picture that emerges from our investigation of internal documents," said Cathy Johnson, North Woods Project Director for the Natural Resources Council of Maine. "Quite the contrary, our investigation shows that Plum Creek has been willing to break Maine’s forestry laws, destroy wildlife habitat, and ignore repeated requests of biologists from Maine’s Department of Inland Fisheries and Wildlife."

A Republican congressman from Washington State once called Plum Creek Timber Company "Darth Vader," because of its aggressive logging practices, but the company has claimed that it has improved its forestry practices since that time.

"Actions speak louder than words," said Johnson, "and Plum Creek’s actions in Maine are deeply troubling. A company that receives the largest penalty for violating Maine’s timber laws does not jump to the top of anyone’s list of good corporate citizens."

NRCM’s investigation uncovered internal staff memoranda and e-mails in which agency staff expressed deep concerns and alarm about Plum Creek’s timber practices. Examples include:

* A LURC staffer expressed disbelief that a large and sophisticated company like Plum Creek would build a 7,500’ powerline corridor, without applying for a permit: "I would like to know more about the circumstances under which they ‘forgot’ to get a permit."

* A Maine Forest Service employee said in an e-mail that he had a CD-ROM full of pictures of Plum Creek’s violations of water quality laws – the highest concentration of them he had ever seen; and

* A Department of Inland Fisheries and Wildlife biologist described Plum Creek’s "feeble and dismal history to protect deer wintering areas. Probably the worse [sic] record of any major landowner in the State."

"These documents make for troubling reading, because they show the outrage felt by state agency employees and biologists over how Plum Creek has been managing their land," said Johnson.

"I've seen first hand what happens when deer yards are wiped out," said Gil Gilpatrick, a deer hunter and Maine Guide with a camp in Little Moose township. "The protection of deer wintering areas is key to the future of hunting and guiding in Northern Maine. By systematically destroying so many critical deer yards, Plum Creek is putting the future of hunting and guiding in the North Woods at risk."

One IF&W e-mail contained the following dispirited commentary: "By the time each of you read this short email another important patch of DWA [deer wintering area] shelter in Region E [the Moosehead Lake Region] will probably be on the ground."

Plum Creek purchased more than 900,000 acres in Maine in 1998, and claimed at the time – and repeatedly since – that the company would practice sustainable forestry in Maine and be a good corporate citizen. Over the past eight years, however, NRCM has heard from loggers, registered Maine guides, property owners, camp owners, and hunters that Plum Creek has logged in a very aggressive fashion – which some believed was destroying important wildlife habitat and possibly violating Maine’s laws for protecting our forests and environment.

NRCM conducted its review of internal documents about Plum Creek’s practices under Maine’s Freedom of Access Act. NRCM reviewed files relating to Plum Creek at the Maine Forest Service, Land Use Regulation Commission, Department of Inland Fisheries and Wildlife, and the Department of Environmental Protection (DEP). - end -

Judy Berk * Natural Resources Council of Maine * 3 Wade Street * Augusta, Maine 04330 * ph - 207-622-3101 X 203* fax - 207-622-4343 * e - jberk@nrcm.org * web - www.maineenvironment.org.

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Conservationists buy Turtleback Mountain; hikers can visit soon. By Stuart Eskenazi, Seattle Times, Nov 14, 2006.

Turtleback Mountain will remain undeveloped and become open to hiking as conservation groups have successfully raised the $18.5 million necessary to buy the Orcas Island landmark from the Seattle-based Medina Foundation.

"Turtleback Mountain will be a gift from our generation to those that will follow," said Tim Seifert, executive director of the San Juan Preservation Trust, one of three organizations involved in the deal, which closes Wednesday.

Although not the highest peak on Orcas Island, Turtleback turned into a symbol for maintaining the region's quality of life, eliciting passion from those not wanting to see luxury homes built on it. The fundraising effort drew more than 1,500 donors.

The San Juan County Land Bank, which contributed $10 million via a bond sale, will manage the property. Lincoln Bormann, land-bank director, said public access will be via existing logging roads until hiking trails are built, with the property opening in about two weeks.

Of the $18.5 million raised, $17 million is to purchase the land and the rest is for building trails and maintenance.

The Trust for Public Land, a national group, also helped in the fundraising. While residential and private-resort developers expressed interest in Turtleback, the Medina Foundation agreed to sell to the conservation groups at a lower price.

When he was Weyerhaeuser CEO, Norton Clapp began assembling Turtleback's 1,578 acres in the 1950s as a private retreat and, upon his death in 1995, bequeathed the land to the foundation.

Medina put the property up for sale in August 2005 to raise money for its philanthropic mission of alleviating poverty and improving education. The Turtleback sale will push its endowment to $104 million, said Tricia McKay, Medina's executive director.

"This is the ideal outcome," she said. "People in the Pacific Northwest have a treasure they can have access to, and more money can be invested in the community to address issues related to poverty."

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The Seattle area's congressional delegation racked up plenty of frequent-flier miles in the past year, with private interests footing the bill.

And Seattle-area companies -- led by Microsoft Corp. -- paid tens of thousands of dollars to fly those members of Congress and their colleagues around the country.

$62,216 Microsoft
$14,138 Plum Creek
$10,729 Amgen
$7,297 Weyerhaeuser
$2,543 Boeing

"There is ample evidence that the junket mentality continues, even after Abramoff," said Sheila Krumholtz, executive director of the Center for Responsive Politics, a watchdog group that released its own database of congressional trips this month. The database contains trips taken from July 2005 until August this year.

The practice of privately funded travel by congressional officials has been under scrutiny since details of improper trips paid for by disgraced former lobbyist Jack Abramoff emerged. Abramoff, who once worked in the Washington, D.C., office of Seattle law firm Preston Gates & Ellis LLP, has since pleaded guilty to related criminal charges.

In all, the city's congressional delegation and their staffs took more than 40 privately funded trips worth more than $100,000, according to a Seattle P-I analysis of travel data provided by Krumholtz's group.

Local companies underwrote a few of those trips but were very active sponsoring trips for other congressional officials. Sponsors based in Seattle or with major facilities here were responsible for at least $100,000 worth of trips, according to the center's data.

The most active was Microsoft, sponsor of at least 29 trips worth a total of more than $60,000. Also active were Weyerhaeuser Co. and Plum Creek Timber, according to the group's report of congressional records...

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The Supreme Court is about to plunge into an agenda laden with business sector issues, including cases involving the Weyerhaeuser Co. and Safeco.

Of the 38 cases the court has agreed to consider so far in the term that begins today, 17 are business related, "an unusually high fraction," Washington lawyer Roy Englert says.

Chief Justice John Roberts was managing partner of a major law firm that had a very sizable portfolio of business clients and is "comfortable with the issues presented in business cases in ways that Chief Justice William Rehnquist" was not, Pepperdine University law professor Douglas Kmiec says.

The Weyerhaeuser case is one of two antitrust cases set for this term so far. The Bush administration wants the justices to throw out a $79 million verdict against lumber industry giant Weyerhaeuser in a lawsuit brought by a smaller company. At issue is whether "predatory bidding," or paying too much for raw material, is an anti-competitive practice...

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Swan Valley adds protected land. By Vince Devlin. Missoulian, Sept 26, 2006.

The effort to preserve fisheries and wildlife habitat in the Swan Valley took another big step Monday, when several groups announced 1,761 acres of Plum Creek Timber Co. land had been protected.

A $10.7 million grant from the Bonneville Power Administration made it possible. BPA, Plum Creek and the Trust for Public Land made the announcement.

"It's part of a much broader project that started in 1998 to protect all the Plum Creek checkerboard land in the Swan," said Eric Love, Rocky Mountain program director for the Trust for Public Land.

Land ownership in the Swan Valley forms a checkerboard pattern, where one-square-mile sections alternate in private and public ownership. Plum Creek is by far the largest private landowner in the valley, with more than 70,000 acres.

Monday's agreement means that by 2008, a third of Plum Creek's land in the valley will be protected.

Love said the new additions - 640 acres in the Elk Creek drainage near Condon, and completion of a conservation easement on the final 1,121 acres of a 7,204-acre project on Plum Creek lands in the Goat and Squeezer creek drainages at the north end of the valley - were important for everything from bull trout to grizzly bears.

"The Swan has the highest grizzly bear population in Montana, and perhaps in the lower 48," Love said. "As a wildlife corridor between the Bob Marshall Wilderness and the Mission Mountains Wilderness, it's largely an intact ecosystem still. This is important for grizzly bears, bull trout and everything in between."

The Montana Department of Fish, Wildlife and Parks, the Confederated Salish and Kootenai Tribes and the Trust for Public Land played key roles in designing the projects.

The BPA will receive credit for its obligation to mitigate for fisheries losses resulting from the construction of Hungry Horse Dam and Reservoir in the deal. The agreement allows for sustainable timber harvest on the land, but prohibits subdivisions or other development, Love said.

The first phase of the Goat and Squeezer creek conservation easement, covering 6,083 acres, was completed in February. The U.S. Department of Agriculture's Forest Legacy Program, designed to conserve high-value forest lands at risk of conversion to non-forest uses, provided significant funding for that portion of the project. The addition of the 1,121 acres to the easement completes this element of the conservation protection strategy for the two watersheds.

The Elk Creek property has been conveyed equally to the Salish-Kootenai Tribes and the Swan Ecosystem Center. The BPA holds the conservation easement.

All three creeks have excellent spawning habitat, and the watersheds produce high-quality cold water that benefits many species.

"Bull trout has been a very important species of concern for the tribes," said Tom McDonald, division manager of Fish, Wildlife and Conservation for the tribes. "We need cooperative projects like this, particularly in these times, when it's getting harder and harder to pull off conservation projects of this size."

"This project makes a significant contribution to protecting habitat and public access in the heart of the Swan Valley," Anne Dahl, executive director of the Swan Ecosystem Center, said. "We're looking forward with enthusiasm to working on a cooperative management plan with the tribes."

The Trust for Public Land has worked with Plum Creek to acquire about 8,650 acres of fee title and 7,200 acres of conservation easement interests on its Swan Valley lands. Fee lands have been conveyed to the U.S. Forest Service, the Swan Ecosystem Center and the tribes, while state easements are held by the Montana Department of Fish, Wildlife and Parks.

Other groups, such as the Nature Conservancy, the Montana Land Reliance and Vital Ground Foundation have protected another 5,000 acres in the valley.

The Trust for Public Land maintains an option to purchase approximately 10,000 additional acres from Plum Creek.

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Weyerhaeuser Company (NYSE: WY) today announced the election of Kim Williams, 50, to the company’s board of directors effective Oct. 1. Williams replaces Robert J. Herbold who retired from the board earlier this year.

Williams recently retired from Wellington Management Co. LLP where she had served as a senior vice president and partner since 1995. In her 26 years in the investment management business, Williams established strong credentials as a financial analyst with more than 20 years experience covering industries including paper and forest products, publishing, metal and mining, and home improvement. During her career, Institutional Investor Magazine repeatedly recognized Williams as a "Best of the Buy Side" analyst.

While at Wellington, Williams was directly responsible for managing $1 billion in client assets, which included investments in Weyerhaeuser.

"We are extremely fortunate to have someone of Kim’s stature join our board," said Steven R. Rogel, chairman, president and chief executive officer. "As our board works with our management team to chart our strategic direction, we will benefit from Kim’s investment experience and understanding of industrial companies."

Williams began her career as an investment analyst with the Imperial Chemical Industries Pension Fund in London, England in 1979. She also worked at Loomis, Sayles and Co., Inc. in Boston before joining Wellington in 1986. Williams holds a masters in economics from the University of London.

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Windfall creates investment opportunity. Missoulian, August 13, 2006.

With the Schweitzer administration now projecting a state general fund balance of some $500 million by mid-2007, ideas for spending the extraordinary windfall are hatching like mayflies. Gov. Brian Schweitzer is proposing a $400-per-household rebate totaling $100 million statewide. He also wants to use $20 million to replace a tax for sorting out water rights, and he's kicking around a few more big-ticket ideas. Republicans, meanwhile, are calling for nearly $200 million in tax reductions. Everybody quietly acknowledges the deep pool of red ink massing in state-employee retirement funds, and at least some of the surplus will probably flow into that abyss.

In the weeks and months leading up to the 2007 legislative session, expect to see many, many more ideas. Many legislators also can be trusted to head for Helena next winter relaxed, freed of the anxiety that comes from having to make hard decisions about budget priorities. Five hundred million extra dollars buys a lot of freedom from hard choices.

But no one believes the surplus is anything other than a budgetary blip. More than likely, it's a one-time windfall resulting from a brisk economy and high energy prices coming at the end of a period of relatively restrained spending. Montana's never had $500 million in spare change before, and it may be a good long while before such a windfall comes again.

So, we should use it wisely. And we have an idea for doing so.

Of course, rebating to taxpayers a large portion of the money makes sense and is only fair. The state accumulates a surplus by taxing more than it needs. Giving "extra" dollars back to taxpayers is good economic and political policy.

But we know much of the money's going to be spent. If it's used to expand government programs and services, we'll all be sorry when the windfall's gone and we face a choice of cutting those programs and services or raising taxes to sustain them.

Instead, we'd suggest investing much of what isn't rebated to taxpayers - investing in land.

The state windfall arrives as Montanans increasingly worry about the fate of tens of thousands of acres of lands owned by the state's largest private landowner, Plum Creek Timber Co. A wood products company-turned-real estate investment trust, Plum Creek is working to sell some of its timberland for residential or recreational development. Plum Creek has a policy of selling off lands that can't be logged or that have higher value for other uses and using the money to buy new timberlands - most likely elsewhere.

Although there's nothing wrong with this, legally, economically or morally, Plum Creek's strategy spells trouble for Montanans.

Converting industrial timberlands to residential subdivisions will erode the state's timber base. It will create suburban and rural sprawl. It could geometrically expand the so-called wildland-urban interface, vastly increasing the property and lives at risk from wildfires and complicating wildland firefighting. It will fragment wildlife habitat and close to the public access to lands the company has traditionally (and generously) made available for hunting, fishing and other recreation. With all this development will come new demands on local and state governments and public safety agencies, driving up the cost of government for everyone. The sale of each parcel, every subdivision proposed, every change of land use contemplated will spawn much controversy and conflict.

We propose that the state dedicate a significant portion of the windfall to acquiring land that Plum Creek has for sale. One hundred million is a nice, round number. We're talking strictly willing-seller, willing-buyer deals at fair market value.

Plum Creek, once open and engaging on the subject, has turned squirrely and won't publicly discuss its land sales. Its secrecy does nothing to ease public concerns about what may be in store for a state where boundary lines between public land and Plum Creek property have never been posted. A spokewoman for the company indicated, however, that the company would be open to offers from the state.

Lands acquired from Plum Creek could be added to existing state forests, part of the State School Trust, managed under a mandate to produce the maximum long-term revenue while also protecting the environment. They would produce revenue for Montana schools for generations to come, as well as provide a host of other public benefits - from recreation to watershed protection to better-managed growth.

Years later, these acquired lands would be worth as much or more, paying us all dividends of one sort or another. Today's windfall would become part of a legacy for the future. That's at least worth considering alongside the inevitable legislative proposals for conventional spending on things that would leave us with little or nothing to show at the end of the next budget cycle.

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Special Report: Moosehead: Furor in the Forest. By Jeff Clark. Down East Magazine, August 2006

Plum Creek is proposing the largest development in Maine history around Moosehead Lake. Is this the end of the North Woods or its economic salvation? Either way northern Maine will never be the same.

Luke Muzzy figures that twenty years from now the people of Greenville will either consider him a saint or they'll be burning him at the stake. He doesn't have to wait. Some feel that way already. Muzzy works for Plum Creek.

Study a satellite photograph of New England taken at night and civilization is easy to see. Blotches of white light mark towns, cities, and suburbs. The New York-New Jersey metroplex sprawls across the landscape, and Cape Cod tails away from the huge urban area surrounding Boston. Maine's own southern coast and Portland, Lewiston-Auburn, Bangor -- all are easily identified by their collective coronas of streetlights and neon signs and vehicle headlights.

But look north and it all fades away. Greenville and Jackman and Fort Kent are dots of light bounding a blankness where nothing shines bright enough to make its mark from orbit. That is the North Woods, the largest undeveloped area east of the Mississippi. Not wilderness exactly -- this is working forest after all -- but definitely a place quite unlike anyplace else.

It is also where Plum Creek Timber Company wants to create the largest development in the history of Maine. The Seattle-based real estate investment trust has filed an application with the state Land Use Regulation Commission (LURC) to carve out and sell 975 building lots on and near Moosehead and the surrounding lakes, along with two resorts and a campground.

In exchange, Plum Creek says, it will give the state conservation easements on 71,000 acres and set up a locally controlled loan fund for recreational trails and local education financed with a donation of 1 percent of every lot sale. If the plan is approved, a separate deal with three major environmental groups would protect another 330,000 acres.

The plan is staggering in its scope, encompassing some seventy lakes and ponds and more than four hundred thousand acres scattered across ten townships. The application alone runs to more than one thousand pages. At just the prospect of facing the project, LURC won extra funding from the legislature to hire two new staffers and a handful of consultants, as well as permission to drastically increase its fee schedule.

It also promises to be one of the hardest-fought environmental battles in more than two decades. For the first time in Maine, a developer has mounted a sophisticated public relations campaign that includes television ads urging public support for the project. Plum Creek has hired the four top environmental and politically connected law firms in the state, used the promise of land protection to split its potential opponents in the conservation community, and courted endorsements from businesses, towns, and statewide organizations such as the Sportsman's Alliance of Maine and the Maine Snowmobile Association. Its point man in Greenville is Luke Muzzy, a fifth-generation native whose family built the landmark Indian Hill Trading Post. He enthusiastically insists that the project will turn Greenville from a rural 1,600-person community in decline into a year-round boomtown with an increasing population, a thriving school system, and a healthy future.

On the other side is the Natural Resources Council of Maine, the Maine Audubon Society, and a loose coalition of local opponents organized as the Moosehead Regional Futures Commission. At stake, they say, is nothing less than the soul and the future of the North Woods and Moosehead Lake. And perhaps even of Maine.

"This is all about the character of Maine's future -- who we are going to be and, more important, who will control our destiny," declares Brownie Carson, director of the Natural Resources Council of Maine. "Will it be the Plum Creeks and the Wal-Marts and other big corporations, none of them based in Maine? Or will it be Maine's people?"

Plum Creek first came to Maine in 1998 and quickly became one of the state's largest landowners when it acquired more than nine hundred thousand acres of former Sappi Paper Company territory. Today it owns some 929,000 acres in Maine and more than 8.1 million nationally.

Created in 1989 as an offshoot of the resource management arm of Burlington Northern Railroad, Plum Creek's hard-cutting forest management practices in the West earned it a reputation as the Darth Vader of the timber industry.Com pany officials have worked vigorously in Maine to persuade skeptics that those days are past. It also has played down its history of selling off its high-value property as recreational land, although company officials flatly deny they ever publicly or privately took real estate development off the list of options when the company acquired its Maine forestlands.

In 2001 the company created and sold an eighty-nine-lot subdivision on First Roach Pond, near Kokadjo, east of Moosehead Lake. Three years later, Plum Creek announced plans to carve out up to 1,200 lots, two six thousand-acre resorts, and an industrial park on more than a dozen ponds and lakes in the Moosehead region [Down East, March 2005], some of them remote and undeveloped. Rather than permanent land conservation, Plum Creek proposed only a thirty-year nondevelopment agreement.

The proposal set off a firestorm of protests. "When Plum Creek first came into this area, some folks were afraid something like this would happen," recalls Greenville resident Sandy Neilly, staff coordinator for the Moosehead Region Futures Committee, which has offered its own, more limited vision for development in the area. "Now it's happening. There's a real fear we'll end up looking like Sebago Lake or Winnipesaukee."

LURC and Plum Creek held a series of four "scoping sessions" to hear comments and concerns about the plan -- among them worries that the proposed subdivisions were too scattered and that the sheer scale threatened to overwhelm the region's character and infrastructure. Emotions ran so high that one night last November vandals mounted a coordinated attack on three offices and three homes associated with Plum Creek and its employees, smearing manure, animal carcasses, paint, and foul-smelling chemicals on buildings in Greenville, Oakland, Fairfield, and Hallowell. The vandals have not been caught.

In April Plum Creek unveiled a revised thirty-year concept plan that called for 975 house lots, a four-season resort on Big Moose Mountain near the existing Big Squaw Mountain ski area, and a five-hundred-acre resort on Lily Bay -- some 4,200 acres altogether. Subdivision proposals were pulled off eight backwoods ponds and concentrated along Moosehead and Brassua lakes and a handful of other ponds. Plum Creek would donate conservation easements on 71,000 acres and give permanent public access to 144 miles of hiking and snowmobile trails.

The release of the revised plan came only a few days after the company announced a startling deal with the Maine chapter of the Nature Conservancy, the Appalachian Mountain Club, and the Forest Society of Maine -- an agreement to protect 330,000 acres east and west of Moosehead either through easements or outright purchase. No price was announced, but estimates ran from $25 million to $35 million and up.

All three organizations insist that their participation does not constitute an endorsement of Plum Creek's plan, but Plum Creek officials freely admit that the deal depends on state approval of their development application. Nor has Plum Creek been shy about trumpeting the agreement as part of the plan's conservation component, even though it's not part of the LURC application and there are no assurances the three groups will be able to raise the money to pull it off.

Tying the two issues so closely together has raised accusations that Plum Creek is intentionally muddying the waters of the debate to make the project look more "green" than it actually is. Critics also accuse the company of holding the conservation plan hostage to put more pressure on regulators and silence some of its potential opponents.

So why not defuse the criticism by separating the two issues? Jim Lehner, a forester who is Plum Creek's general manager in Maine, offers a complicated reasoning for the linkage that boils down to preserving the larger property's development potential if the concept plan doesn't go through. "Part of what we're offering is the frontage on seventy ponds," he explains. "The easement strips out all of that value. If we go ahead with the conservation deal and don't get the ability to develop in the areas proposed under the concept plan, we would lose the value of that shorefront for the future."

"It raises the issue of trust," Carson allows. "Plum Creek says it has changed from the bad old days. But if it's serious about conservation and devoted to timberland management, like its Web site says, why is it doing this?"

Lehner and other company officials readily allow that Plum Creek could have gone ahead with a piecemeal development strategy along the lines of its original First Roach Pond subdivision without anywhere near the level of review and conservation in its concept plan. On a floatplane flyover of the company's Moosehead properties, Luke Muzzy points out a remote pond surrounded by forest and says, "I could sell that whole piece to you today without any LURC review at all."

Asked why the company prefers a single huge plan over a more gradual approach, Lehner falls back on the explanation he has offered for the past several years: "It's a matter of predictability," he offers. "The advantage to us, once the plan is approved, is that we know exactly where we're going to go and what we're going to do when we get there."

"I would argue that the Plum Creek plan takes the development that's going to happen anyway, organizes it, and tries to mitigate its impact," says John Simko, Greenville's town manager. "Absent that, we're going to have a little bit here and a little bit there and end up with the North Woods that everyone loves being ruined by all the people who love it."

Brownie Carson remembers canoeing across Moosehead from Rockwood to Kineo to Northeast Carry as a teenager back in 1961. "It was then and still is stunningly beautiful," he says. "Where can you find another virtually pristine lake that size? You can't, not in this country. It's a magical place. Maine is one of the few places left in the United States where, within a day's drive of eighty or ninety million people, you can have a wilderness experience like that."

That treasure is becoming more valuable every day as the traditional forest industries in Maine shrink. Greenville has largely made the transition to a tourist town, and the region's future increasingly depends on nature-based tourism. "What's the value of paddling along the shore in Lily Bay and looking up at a subdivision full of McMansion-size 'cottages' on the slope above?" Carson asks rhetorically. The Moosehead region's future depends on a wilderness reputation that might be difficult to justify in the face of development on Plum Creek's scale.

No one, not even Carson, denies that development in the region is inevitable. The big debate is where. The Natural Resources Council is willing to cede the southwestern side of the lake between Greenville and Rockwood, where the Big Squaw Mountain Ski Resort already creates a natural focus for seasonal home and recreational development. Carson admits that the shift of a planned resort from Brassua Lake to Big Moose Mountain, near the ski area, is a significant improvement.

"There's a way to do [development] so that the character and values of the area are protected," Carson insists. "But if the state allows multiple sprawling subdivisions on Prong Pond and Brassua Lake and elsewhere, that would be a very serious loss."

Liz Munster, owner of Spalding, Mellon & Munster Real Estate in Rockwood, says protecting the unique atmosphere of the community where she grew up is more important to her than selling more house lots. "What makes people come here and spend their money is what we have -- the quiet, the solitude, the peacefulness," she explains. "If we change too soon too fast, you'll start hearing people say, 'I want streetlights. I want paved roads. I want a 7-Eleven.' Well, guess what? Most folks live here and visit here because we don't have a frigging 7-Eleven."

Luke Muzzy counters that Greenville has seen its school population drop by almost half in twenty-five years to 255 students, the local hospital is operating at 40 percent capacity, and housing prices are already too high for young families to be able to live in Greenville. "We've lost a lot of the year-round population," he states, although U.S. Census figures show the town's population has stayed at about 1,600 since 1990. "The second-home market is keeping us alive right now." He points to an economic impact study by economist Charles Colgan of the Muskie School at the University of Southern Maine predicting that the Plum Creek project alone would bring in 1,200 new jobs -- and the families that go with them.

It's a claim many people view with skepticism. Munster has served on the Greenville planning board and the local economic development committee. She has watched hundreds of new seasonal homes be built in the area. "I didn't see the taxes go down or the school enrollment go up or a ton of new businesses come into town because all those new subdivisions were built in the past ten years," she observes. "Why should anyone think hundreds more cottages will make a difference?"

Wendy Weiger looked all over the United States for a new home outside the cities. A physician who had spent most of her career in research at Harvard University, she chose Moosehead Lake in 2002 because it was close to Boston but on the edge of that big blank spot on the satellite photo. And she promptly bought a lot on First Roach Pond from Plum Creek.

Today Weiger admits she bought the land, which remains empty, without understanding the issues and trends it represented. "I didn't come up here to be involved in environmental activism," she says. "I was coming from Boston, where the population density is more than 12,000 people per square mile, and going to Piscataquis County, with a density of four people per square mile. The whole area looked vast and unlimited. My urban viewpoint changed drastically when I moved here and realized how fragile and endangered the North Woods are."

Ninety-nine percent of the people saying that this is a great plan have never seen the places that are going to be destroyed," adds John Willard, owner of the 11,000-acre Birches Resort near Rockwood. "People in Augusta, Portland, Bangor, outside Maine, they don't understand the impact this will have." He includes Simko and other Greenville town officials in that list, noting wryly that none of the development they support so avidly will occur in their town.

Willard has some experience in the matter. His four-season resort includes some shorefront development designed as part of a concept plan in conjunction with LURC, as well as a large piece of land protected with conservation easements.

"The smart way to do this would have been to go to the public before they had a plan," Willard muses. "Meet with people in every town and lake association. Explain to them: 'We need to make money on our investment. How would you like to see it done?' That's what I did. That's what Big Squaw Mountain did. That's not what Plum Creek did."

And doing it smart now will mean a lot down the road, Willard adds. "What's going to happen when the next million-acre landowner comes along with a big development plan?" he asks. "What happens now sets the pattern for the next one. We've been lucky that most of the land up here has been managed for timber production. But a development like this instantly pushes up the value of the land far beyond its timber value. There's a guy who owns twenty thousand acres on the east side of the lake. Who knows what he will do now?"

And there may lie the single most important principle to come out of the Plum Creek application process. "I can point to at least five other landowners who are watching this and waiting to see how it turns out," says Brownie Carson. "I think everyone is looking at how LURC handles this project as a signal for what the northern forest will look like in a generation or two. Will we still have large tracts of working forest, three- or four-week canoe trips through the wilderness, guide services, and sporting camps as the underpinnings of a new forest economy as the pulp and paper industry continues to shrink?"

The project faces at least a year of public hearings, LURC staff study, and public debate before any decision comes from the commission itself. And whatever it decides will almost undoubtedly spark legal challenges.

"We have to emerge from this with a plan that protects the fundamental character and economy and natural resources of the region and also provides a clear map of where appropriate development may occur," Carson says. It needs to be a plan, he adds, "that at the end of the process we can all say will work for a generation, two generations. Maine and the Moosehead region are too valuable not to think that far ahead."

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Plum Foolish. By Ted Williams. Audubon, July 2006

If the plan for Maine’s biggest development ever goes through, it could spell disaster for millions of acres of forestland across the northeast.

For 40 years I’ve been collecting images from Maine’s north woods: the unbroken canopy of green flashing past as my crewmates from the old Kennebec Log Drive Company and I floated down the Roach River on our backs, hauling ourselves onto logjams and breaking them up with peaveys; moose draped with lily pads; the fragrance of balsam and sphagnum moss; the tremolos and yodels of loons on a hundred wilderness ponds and New England’s biggest lake; wild brook trout with ivory-trimmed fins and flanks the color of the sunset sipping my mayfly and caddis imitations; bats flittering through twilight; hills and mountains going from green to purple to black; the banter of barred owls; spruce smoke rising into brilliant northern nights undefiled by ambient light. . . .

The north woods haven’t changed much in my lifetime, but the Seattle-based Plum Creek Timber Company—the nation’s largest private landholder, with 8.5 million acres—is telling me and other reporters how it’s going to fix that. April 4, 2006, is a "great day" for Maine, an "exciting day," a "pivotal day." Something "grand" is about to unfold in the East’s wildest forests, near its best trout ponds, along the remote headwaters of the Penobscot, Kennebec, Moose, Roach, St. John, and Allagash rivers, on the spectacular, mostly unpeopled shores of 40-mile-long and 12-mile-wide Moosehead Lake. Video cams track the speakers. Tape recorders, including mine, are thrust in their faces. Plum Creek is holding a press conference at the Maine State House in Augusta to announce a development plan whose size dwarfs anything the north country or even the state has ever seen.

Jim Lehner, Plum Creek’s regional manager, proclaims that his firm, which abandoned its original plan last January after being pilloried at four public hearings, has heeded the people of Maine: "You spoke. We listened." His case seems weak. There has been scant change in the project’s size or footprint, and the number of housing units remains about the same. Flipping through charts, Lehner shows us how the proposed resort at Lily Bay has been scaled back, how a second resort has been expanded but moved to a less remote area near Big Moose Mountain, how one of the four RV Parks has been canceled. But the company has clearly ignored the public’s plea that the 10,000 acres of development be centered in and around the existing lakeside communities of Greenville and Rockwood instead of wandering off through the wildest sections of the watershed and thereby degrading thousands more acres with roads, powerlines, traffic, sewage, fertilizers, pets, and all the other blights that drive fish and wildlife from suburbia. >From Long Pond, 30 miles north of Greenville on the west side of the lake, to Lily Bay, 15 miles north of Greenville on the east side, there will be 1,725 dwelling units—975 of them house lots, the others connected with the resorts. A conservation easement on 71,000 acres is included in the revised plan, and Plum Creek promises that if its development is approved by the state, it will sell easements on an additional 269,000 acres to nonprofit entities at prices of its choosing.

Plum Creek calls to its podium one George Smith, director of the 14,000-member Sportsman’s Alliance of Maine (SAM), who rhapsodizes about how all the guaranteed access makes this massive development a terrific deal for hunters, anglers, and snowmobilers. Other invited speakers extol the economic boom the development will bring. But after Plum Creek’s speakers finish, the pillorying resumes. "We’re very disappointed," Cathy Johnson of the Natural Resources Council of Maine (NRCM) tells the TV networks. "Plum Creek may have listened, but it didn’t hear."

"As goes Plum Creek so goes the rest of the large landowners and all of that big block of undeveloped forestland. We have one chance here to do it right."

My press packet asserts that Plum Creek has offered a new "legacy for the Moosehead region." Indeed it has. But there’s another possible legacy—not just for Moosehead but for the 26-million-acre Northern Forest that embraces it, the last really wild woods and water in the East and a stronghold for Canada lynx, bobcats, pine marten, forest-interior birds, loons, and countless other species we’re running out of elsewhere. Plum Creek by itself cannot extinguish all this wildness. But other large landowners, not just in Maine but in New Hampshire, Vermont, and New York, can, and they are watching carefully. "As goes Plum Creek so goes the rest of the large landowners and all of that big block of undeveloped forestland," says Johnson. "We have one chance here to do it right."

Plum Creek cuts and sells pulp and saw timber, but it is also a developer recently reorganized as a real estate investment trust (REIT), an investor-owned company excused from corporate income taxes by paying out at least 90 percent of its taxable profit in dividends—a prescription for land abuse. "Here’s Plum Creek’s unrelenting MO," declares Bruce Farling, director of Montana Trout Unlimited. "Buy it, log the hell out of it, subdivide it, log it again, and put it on the recreational real estate market. And when the neighbors politely ask the company to ease up, the reply is always: Buy it or else. . . . The company bloats its environmental reputation with ad-agency spin. Meanwhile, many professional foresters quietly ridicule the company’s silvicultural practice of whacking the best trees while leaving scraggly, genetically inferior stock for reseeding weed-infested clearcuts that, in a masterful Orwellian broad-brush, the company no longer calls clearcuts. They are ‘regeneration cuts,’ or ‘overstory removals.’ "

When I asked Mark Vander Meer, a highly respected independent forester and soil scientist in Montana’s Swan Valley, to assess Plum Creek’s land stewardship, he said: "About as bad as you can get. Plum Creek is entirely untrustworthy. They’ll tell you whatever you want to hear. They kept saying, ‘Why would we sell timberlands; we’re in the business of growing timber.’ " Plum Creek officials repeatedly offered the same assurances when they showed up in Maine eight years ago, and within two years they had announced an 89-lot development on First Roach Pond, pristine trout and landlocked salmon habitat in the Moosehead watershed. "Plum Creek promised us they’d be ‘good neighbors,’ " says Joan Wisher, president of the First Roach Pond Improvement Association. "Then they took the big hardwoods, destroying our shade canopy, making a permanent dust bowl, and silting the pond. The dust covered everything and gave me prolonged fits of coughing. We went to them as an associ